Prohomes Development Incorporation

April 17, 2009 BIR RULING [DA-(IL-005) 191-09] E.O. 226; RR 2-98; BIR Ruling No. DA-425-07 Prohomes Development Incorporation Unit 203, 2nd Floor FGU Bldg., Biliran Road Cebu Business Park, Ayala, Cebu City Attention: Ms. Beverly M. Dayanan President Gentlemen : This refers to your letter dated April 4, 2009 requesting, in effect, for exemption from income and expanded withholding taxes since Prohomes Development Incorporation ("PDI" for brevity) is entitled to income tax holiday (ITH) on account of its registration with the Board of Investments (BOI) under Executive Order No. 226, otherwise known as the "Omnibus Investments Code of 1987". Documents show that PDI is duly registered with the Securities and Exchange Commission (SEC) under SEC Registration No. CS200430279 dated December 21, 2004. Its primary purpose is "to operate and develop residential or commercial building, acquire, buy, own, hold, sell, assign, mortgage, lease, manage, enter joint venture, operate and develop agricultural, residential, industrial, eco-tourism and plants project, plantations or any business devoted to do any and everything necessary, suitable and proper for the accomplishment, of any of the projects or for the furtherance of any of the powers herein set forth." It is also registered with the BOI as a "New Developer of Mass Housing Project", on a non-pioneer status under Certificate of Registration No. 2008-289 dated October 14, 2008 for its project, the St. Bernadette Homes-Mactan-Suba Masulog, Basak, Lapu-lapu City. PDI has been granted a four-year ITH from January 2009 or from the actual start of commercial operations/selling, whichever is earlier but in no case earlier than the date of registration. Under the terms of its BOI incentives, revenues from units with selling price exceeding Three Million Pesos (P3.0 M) shall not be covered by the ITH. PDI was given by the Housing and Land Use Regulatory Board (HLURB) a License to Sell on the saleable lots/units of its project in St. Bernadette Subdivision, Basak, Lapu-lapu City, Cebu, under License to Sell No. 18397 dated October 30, 2007. In reply, please be informed that under Section 2.57.5 (B) (2) of Revenue Regulations (RR) No. 2-98, as amended, implementing Section 57 (B) of the Tax Code of 1997, as amended, the withholding tax prescribed in the said Regulations shall not apply to income payments to person enjoying exemption from the income tax provided by Republic Act No. 7916 and the Omnibus Investments Code of 1987. EcHIAC Accordingly, since PDI is a BOI-registered enterprise, enjoying exemption from payment of income taxes pursuant to the provisions of Section 39 (a) (1) of the Omnibus Investments Code of 1987 for a period of four (4) years reckoned from January 2009, this Office is of the opinion as its hereby holds, that PDI is exempt from the payment of the creditable withholding tax imposed under RR 2-98, as amended, on income payments received by it during the aforementioned period with respect to its sales of housing units, the price of which, per unit, does not exceed the amount of Three-Million Pesos (P3.0 M). (BIR Ruling No. DA-425-2007 dated July 27, 2007) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered as null and void. SEDIaH Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service