Tax Exemption Granted to a Mutual Savings Bank Organization

October 6, 1960 BIR RULING NO. 443-60 The Chairman Board of Trustees P.N.B. Provident Fund Philippine National Bank Bldg. Escolta, Manila S i r : Reference is made to your letter dated August 18, 1960, requesting that organization be exempted from the income tax pursuant to section 27(b) of the National Internal Revenue Code. In support of said request, you submitted (1) a copy of Republic Act No. 1576 (Revised Charter of the Philippine National Bank), authorizing the creation and establishment of a provident fund for the benefit of the officers and employees of the Philippine National Bank (PNB); (2) a copy of Resolution No. 901 adopted by the PNB Board of Directors, prescribing the rules and regulations for the establishment and administration of that organization; (3) an affidavit of the organization's administrative officer, stating the character of the organization, the purpose for which it was created, and other relevant facts; and (4) the latest financial statement, showing the assets, liabilities, receipts and disbursements of the organization. In answer thereto, I have the honor to inform you that, it not appearing that the organization is a mutual savings bank not having a capital stock represented by shares nor a cooperative bank without capital stock organized and operated for mutual purposes and without profit, your said request for exemption under section 27(b) of the Tax Code is hereby denied. However, the organization may, as an employees' trust, be exempted from the income tax pursuant to section 36(b) of the same Code, provided that the following requisites are present: (1) Said trust must be part of a pension, stock bonus or profit sharing plan of an employer for the benefit of some or all of his employees; (2) Contributions are made to the trust by such employer, or employees, or both; (3) The contributions are made for the purpose of distributing to the employees both the earnings and principal of the fund accumulated by the trust; (4) The fund is accumulated by the trust in accordance with the plan of which the trust is part; (5) The trust instrument makes it impossible (in the taxable year or at any time thereafter prior to the satisfaction of all liabilities to employees covered by the trust) for any part of the trust corpus or income to be used for, or diverted to, purposes other than for the exclusive benefit of said employees. cdtech Very truly yours, MELECIO R. DOMINGO Commissioner of Internal Revenue