Siguion Reyna Montecillo & Ongsiako Law Offices

March 20, 2009 BIR RULING [NSNP-(S30E-040) 228-09] Sec. 30 (E); S-30-102-2008 Dtd. 06/11/2008 Siguion Reyna Montecillo & Ongsiako Law Offices 4th and 6th Floors Citibank 8741 Paseo de Roxas Makati City Attention: Attys. Edgardo G. Balois, Rommel U. Mercado Jocelyn E. Dee, Deborah S. Acosta and Olivia Rosita S. Dimaano Gentlemen : This refers to your letter dated February 15, 2008 requesting on behalf of your client, PTT Philippines Foundation, Inc. for exemption from the payment of income tax, filing of the corresponding income tax return under Section 30 of the Tax Code of 1997, as amended, and from payment of donor's tax. DTEIaC Documents submitted to this Office disclosed that PTT Philippines Foundation, Inc. is a non-stock, non-profit corporation under Section 30 (E) of the Tax Code of 1997, as amended; that it is duly registered with the Securities and Exchange Commission under SEC Registration No. CN200713476 dated August 29, 2007 with Taxpayer Identification Number (TIN) 006-865-251; and that the primary purposes for which the corporation was formed are the following: a) To conduct and/or fund studies on scientific, technological, economic and social problems and to fund scholarship programs and professorial chairs in these fields; and b) To advance non-traditional informal education through literacy and other programs. In reply, please be informed that this Office cannot yet issue the requested ruling/certificate of tax exemption. You have to prove by actual operation for at least three (3) years that you are really an organization/association exempt from income tax under Section 30 of the Tax Code of 1997, as amended. You can file the necessary annual information return instead of an income tax return on or before April 15 of each year following the start of your operation as an exempt organization as required under Section 24 of Revenue Regulations No. 2. Based on such information return, we shall conduct the necessary investigation on your activities undertaken during the period. The letter of exemption shall thereafter be issued depending upon the result of our investigation. However, PTT Philippines Foundation, Inc. shall be subject to the corresponding internal revenue taxes imposed under the Tax Code of 1997, as amended, on income derived from any of its properties, real or personal, or activity conducted for profit regardless of the disposition thereof, which income should be returned for taxation. SDHAcI Likewise, interest income from currency bank deposits and yield or any other monetary benefit from deposit instruments and from trust funds and similar arrangements, and royalties derived from sources within the Philippines are subject to 20% final withholding tax; provided, however, that the interest income you derive from a depository bank under the expanded foreign currency deposit system shall be subject to a final withholding tax of 7 1/2% pursuant to Section 27 (D) (1) in relation to Section 57 (A) of the Tax Code of 1997, as amended. Moreover, you are required to file on or before the 15th day of the fourth month following the end of your accounting period a Profit and Loss Statement and Balance Sheet with Annual Information Return under oath, stating your gross income and expenses incurred during the preceding period and a certificate showing that there has not been any change in your By-Laws, Articles of Incorporation, manner of operation and activities as well as sources and disposition of income. It should be understood that PTT Philippines Foundation, Inc. shall be constituted as a withholding agent for the government if it acts as an employer and any of its employees receives compensation income subject to withholding tax, or if it makes payments to individuals or corporations subject to the withholding tax provided for in Section 57 of the Tax Code of 1997, as amended. Moreover, inasmuch as the Foundation being a scientific institution, donations to it are exempt from the payment of donor's tax pursuant to Section 101 (A) (3) of the Tax Code of 1997, as amended, subject to the condition that not more than thirty percent (30%) of said gift shall be used for administration purposes. Finally, your books of accounts and other pertinent records shall be subject to periodic examination by revenue enforcement officers of this Bureau for the purpose of ascertaining whether you have been complying with the conditions under which you may be granted tax exemption or tax incentives and tax liability, if any, pursuant to Section 235 of the Tax Code of 1997, as amended. This ruling is being issued on the basis of the foregoing facts as presented. However, if upon investigation it will be disclosed that the facts are different, then this ruling shall be considered null and void. cAHDES Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service