HLC Construction & Development Corp.

November 11, 2009 BIR RULING [DA-(IL-036) 664-09] Sec. 57 (B); DA(IL-014) 332-2009 dtd. 6/20/09 HLC Construction & Development Corp. HLC Compound, R. Castillo St. Davao City Attention: Henry N. Lopez Chua President and CEO Gentlemen : This refers to your letter dated May 15, 2009, requesting exemption from taxes pursuant to Revenue Regulations No. 2-98, as amended, on account of your registration with the Board of Investments (BOI) under Executive Order No. 226, otherwise known as the "Omnibus Investments Code of 1987". Documents submitted disclosed that HLC Construction & Development Corp. (HLC Construction, for short), is a real estate developer habitually engaged in the business of developing and constructing affordable housing units; that its project are registered with the Housing and Land Use Regulatory Board (HLURB) under Certificate of Registration No. 00849 and License to Sell No. 00849 pursuant to Batas Pambansa 220; that HLC is likewise registered with the Board of Investments (BOI) as New Developer of Low Cost Mass Housing Project (of its Phase 3 Emily Homes Subdivision Cabantian, Davao City) on a Non-Pioneer status under the Omnibus Investments Code of 1987 (Executive Order No. 226); that pursuant to the provisions of Rule X, E.O. 226 (Duration of Incentives), all the Fiscal and non-fiscal incentives available to it shall be enjoyed within the period specified therein, for those that do not contain a specific period, the same shall terminate after a period of not more than ten (10) years from start-up of commercial operations and/or date of registration; that it shall be entitled to an Income Tax Holiday (ITH) for a four (4) years from April 2008 or actual start of commercial operations/selling, whichever is earlier, but in no case earlier than the date of registration; and that the ITH shall be limited only to the revenue generated from its registered activity (Phase 3 Emily Homes Subdivision Cabantian, Davao City). EaIDAT In reply, please be informed that under Section 2.57.5 (B) (2) of Revenue Regulations No. 2-98, as amended by Revenue Regulations No. 6-2001 implementing Section 57 (B) of the Tax Code of 1997, as amended, withholding tax prescribed in the said Regulations shall not apply to income payments to persons enjoying exemption from the income tax provided by Republic Act No. 7916 and the Omnibus Investments Code of 1987. Accordingly, since HLC Construction & Development Corp. is a BOI registered enterprise, enjoying exemption from payment of income taxes pursuant to the Omnibus Investments Code of 1987, this Office is of the opinion as it hereby holds, that it is exempt from the payment of the creditable withholding tax imposed under Revenue Regulations No. 2-98, as amended by Revenue Regulations No. 6-2001 on income payments received by it during the specified period in connection with its registered activity covered by ITH, i.e., Phase 3 Emily Homes Subdivision, Cabantian, Davao City. 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 null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service