Southern Luzon Teachers Savings & Loan Association, Inc.

November 12, 2008 BIR RULING [DA-(TSF-010) 425-08] Sec. 27 (D) (1); R.A. 8367; DA-560-07 Southern Luzon Teachers Savings & Loan Association, Inc. (Formerly Candelaria Teacher's Savings & Loan Association, Inc.) De Alday St., Candelaria, Quezon Attention: Mrs. Ma. Jasmine J. Crisologo Manager Gentlemen : This refers to your letter dated July 7, 2008 requesting tax exemption of Southern Luzon Teachers Savings & Loan Association, Inc. HSIDTE It is represented that Southern Luzon Teachers Savings & Loan Association, Inc. ("SLTSLAI" for brevity) formerly known as Formerly Candelaria Teacher's Savings & Loan Association, Inc. is a non-stock savings and loan association of teachers registered with the Securities and Exchange Commission (SEC) under SEC Reg. No. 0108510 on November 25, 1982; that the purposes for which it was organized are: ". . . to engage in the operations of a non-stock savings and loan association; to encourage industry, frugality and accumulation of savings among the members; to extend loans to members and/or make investments in the securities of productive enterprises or in securities of the Government or any of its political subdivisions, instrumentalities or corporations; and generally to exercise and execute all the powers, prerogatives and privileges inherent in and granted to corporations and such savings and loan associations, primarily for the benefit and interest of its members. that the Central Bank of the Philippines issued to SLTSLAI Certificate of Authority No. NS-76 on December 10, 1982; that SLTSLAI has not applied for a certificate of exemption from any of the BIR offices; that SLTSLAI transacts only with its member-teachers; and that in support of your request, you have attached the following: a) BIR Certificate of Registration, b) SEC Certificate of Registration, c) Amended Articles of Incorporation and By-laws, d) Audited financial statements for 2005, 2006 and 2007, Certificate of License to Operate from the Bangko Sentral ng Pilipinas and e) Certificate of Non-Derogatory Record from the SEC. In reply, please be informed that Section 5 of Republic Act (R.A.) No. 8367 otherwise known as the "Revised Non-Stock Savings and Loan Association Act of 1997" provides that: "Sec. 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." (Underscoring supplied) From the foregoing, this Office hereby holds that SLTSLAI, as a non-stock savings and loan association duly registered with the Securities and Exchange Commission under SEC Registration No. 0108510 and with the Central Bank of the Philippines under Certificate of Authority No. NS-76 dated December 10, 1982, the interest income derived by SLTSLAI from its bank deposit and yield or any other monetary benefit from deposit substitutes shall be exempt from the 20% final withholding tax imposed under Section 27 (D) (1) of the Tax Code of 1997, as amended by R.A. 9337. (BIR Ruling No. 138-97 dated December 29, 1997) IaECcH 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 as represented 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