WELLOFLIFE Community Development, Inc.

March 5, 2010 BIR RULING [NSNP-(S30G-001) 004-10] Sec. 30 (G); S-30-023-99 WELLOFLIFE Community Development, Inc. Purok 9, Pagkakaisa, Lower Lubogan Toril, Davao City Attention: Mr. Jeffrey Smith Trustee Gentlemen : This refers to your letter indorsed to this Office from BIR Revenue Region No. 19, Davao City, requesting for a certificate of tax exemption in favor of the WELLOFLIFE COMMUNITY DEVELOPMENT, INC. ("WCDI"), a nonstock, nonprofit civic organization, with Taxpayer Identification No. 263-332-052, duly registered with the Securities and Exchange Commission (SEC) under SEC Registration No. CN200829818, on July 23, 2008. The primary purpose of WDCI is to use CHE "Community Health Education" for doing community development projects, to provide participatory agricultural development training to local farmers and to conduct medical outreaches to render free medical service and programs to the poor. The funds of WDCI are coming mainly from donations and members contributions. The members, trustees or officers of the organization are not receiving any fees or compensation. In reply, please be informed that this Office cannot as yet issue the requested ruling/certificate of tax exemption because WDCI has to prove by actual operation for at least three (3) years that it is really an organization/association exempt from income tax under Section 30 (G) of the Tax Code of 1997, as amended. It can file the necessary annual information return instead of an income tax return on or before the 15th day of the fourth month of the preceding accounting period following the start of its operation as an exempt organization as required under Section 24 of Revenue Regulations (Rev. Regs.) No. 2 ( Collector vs. Sinco, G.R. L-9276 dated October 23, 1956). Based on such information return, the Bureau of Internal Revenue (BIR) shall conduct the necessary investigation on the activities undertaken during the period. The letter of exemption shall thereafter be issued depending upon the result of said investigation. (BIR Ruling No. S-30-023-99 dated March 15, 1999) EcICSA However, WDCI is subject to the corresponding internal revenue taxes imposed under the Tax Code of 1997, as amended, on its income derived from any of its properties, real or personal, or any activity conducted for profit regardless of the disposition thereof, which income should be returned for taxation. Likewise, the interest income from currency bank deposits and yield or any other monetary benefits from deposit substitute instruments and from trust funds and similar arrangements, and royalties derived from sources within the Philippines are subject to the 20% final withholding tax provided, however, that interest income derived by WDCI from a depository bank under the expanded foreign currency deposit system shall be subject to 7-1/2% final withholding tax pursuant to Section 27 (D) (1) in relation to Section 57 (A), both of the Tax Code of 1997, as amended. Moreover, WDCI is required to file on or before the 15th day of the fourth month following the close of the accounting period a Profit and Loss Statement and Balance Sheet with the Annual Information Return under oath, stating its gross income and expenses incurred during the year and a certificate showing that there has not been any change in its By-laws, Articles of Incorporation, manner of operation and activities as well as sources and disposition of income. It should be understood that WDCI shall be constituted as a withholding agent of the government if it acts as an employer and its employees receive compensation income subject to withholding tax under Section 79 (A), Chapter XIII, Title II of the Tax Code of 1997, as amended, and as implemented by Rev. Regs. No. 2-98, as amended, or if it makes income payments to individuals or corporations subject to the withholding tax provided for in Section 57 of the Tax Code of 1997, as amended, and as implemented by Rev. Regs. No. 2-98, as amended. Further, under Section 235 of the Tax Code, as amended, any provision of existing general and special law to the contrary notwithstanding, the books of accounts and other pertinent records of tax-exempt organizations or grantees of tax incentives, i.e., WDCI, shall be subject to periodic examination by the BIR for purposes of ascertaining compliance with the conditions under which they have been granted tax exemptions or tax incentives, and their tax liabilities, if any. For purposes of securing a permanent exemption after the three (3)-year period, WDCI is required to submit the following documents pursuant to Revenue Memorandum Circular No. 14-2001: 1) SEC Registration; 2) Articles of Incorporation which must include the following provisions: i) that the corporation is non-stock, non-profit; ii) that the primary purpose for which it was created is one of those enumerated under Section 30 of the Tax Code of 1997; aSTAIH iii) that no part of the net income shall inure to the benefit of any of its members; iv) that the trustees do not receive any compensation; and v) in case of dissolution, assets of the corporation shall be transferred to similar institution or to the government; 3) By-laws; 4) Annual Information Returns for the past three (3) years; and 5) Financial Statements (balance sheet) for the past three (3) years. 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 as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) GREGORIO V. CABANTAC Deputy Commissioner