Philnabank Employees Savings and Loan Association, Inc.

November 23, 2009 BIR RULING [DA-(TSF-009) 696-09] RA 8367; DA-308-98; DA-580-2007 Philnabank Employees Savings and Loan Association, Inc. 2/F, PNB Financial Center Pres. Diosdado Macapagal Boulevard Pasay City Attention: Mr. Lino S. Carandang President Gentlemen : This refers to your letter dated October 30, 2008 requesting in effect for exemption from the payment of the 20% final withholding tax on the interest income derived by Philnabank Employees Savings and Loan Association, Inc. from its deposit with the PNB Trust Banking Group in accordance with Section 5 of Republic Act (RA) No. 8367, entitled: "An Act Providing for the Regulation of the Organization and Operation of Non-Stock Savings and Loan Associations". In reply, please be informed that Section 5 of RA No. 8367 provides viz. : "SECTION 5. Tax Exemption. An Association shall be exempt from payment of tax in respect to income it receives, including interest on its deposits with any bank; Provided, however , That income derived from any of its properties, real or personal, or any activity conducted for profit, regardless of the disposition thereof, is subject to the corresponding internal revenue taxes imposed under the National Internal Revenue Code. Interest earnings on deposits of members with Associations, as well as the shares of its members from the net income of the Associations shall be exempt from income tax." Accordingly, the interest income derived by Philnabank Employees Savings and Loan Association, Inc. from its deposit with the PNB Trust Banking Group is exempt from the 20% final withholding tax imposed under Section 27 (D) (1) of the Tax Code of 1997, as amended, as implemented by Revenue Regulations No. 2-98, as amended, under Sec. 2.57.1 (G) thereof. (BIR Ruling Nos. DA-308-98 dated July 6, 1998 & DA-580-07 dated November 17, 2007) ACcDEa 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. Commissioner of Internal Revenue By: (SGD.) GREGORIO V. CABANTAC Deputy Commissioner