Nila N. Mendiola and Company

August 26, 2009 BIR RULING [NSNP-(S30G-060) 524-09] Section 30 (G);NSNP(S30h-058) 289-2008 Nila N. Mendiola and Company Units 2105 & 2106 21st Floor, Cityland Condominium 10 Tower 1, Ayala Avenue, Makati City Attention: Ms. Nila N. Mendiola Managing Partner Gentlemen : This refers to your letter dated July 21, 2009 requesting in behalf of your client, Ten Accomplished Youth Organizations Awards Foundation, Inc. (TAYO) for tax exemption as a non-stock, non-profit organization pursuant to Section 30 of the Tax Code of 1997. Documentary evidence submitted disclosed that Ten Accomplished Youth Organizations Awards Foundation, Inc. with TIN 229-719-154-000 is a non-stock, non-profit corporation registered with the Securities and Exchange Commission (SEC) under SEC Registration No. CN200403159 dated March 1, 2004; and that the purposes for which the corporation is organized, among others are as follows, viz. : a. To conduct an annual nationwide search for the country's outstanding societies and clubs called search for Ten Accomplished Youth Organizations or TAYO; b. To prepare the rules, mechanics and guidelines for the search and to organize logistical and secretariat requirements thereof; c. To document and make known to the public the purposes of the search, and more importantly, the remarkable efforts of the winning youth organizations, as catalysts for change and as everyday heroes who seek to improve the conditions in the barangays, schools and communities; IHCESD d. To raise funds to support the TAYO search and to endure its continuity; e. To promote the values of communitarian industry, collective efforts and less individualistic mindset that will pave the way for greater cooperation and unity, beginning with the youth, and ending with a more prosperous nation. Based on the foregoing, this Office is of the opinion and so holds that the TAYO falls within the purview of a non-stock, non-profit organization not organized for profit but operated exclusively for the promotion of social welfare, as contemplated under Section 39 (G) of the Tax Code of 1997. Accordingly, it is exempt from the payment of income tax on income received by it as such organization, and therefore, need not file an income tax return. However, it is subject to the corresponding internal revenue taxes imposed under the National Internal Revenue Code of 1997 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, interest income from currency bank deposits and yield or any other monetary benefit 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 from it 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. Moreover, it is required to file on or before April 15 of each year 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 resources and disposition of income. It should be understood that the said exempt non-stock, non-profit organization shall be constituted as withholding agent for the government if it acts as an employer and its employees receive compensation income subject to the withholding tax under Section 79 (A), Chapter XIII, Title II of the tax Code of 1997, as implemented by Revenue Regulations No. 2-98, or if it makes income payments to individuals or corporations subject to the withholding tax pursuant to Section 57 of the Tax Code of 1997, also as implemented by Revenue Regulations No. 2-98. It is of course understood that its books of accounts and other pertinent records shall be subject to periodic examination by revenue enforcement officers of this Bureau for the purposes of ascertaining whether it has been complying with the conditions under which it has been granted tax exemption or tax incentives and its tax liabilities, if any, pursuant to Section 235 of the Tax Code of 1997. 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. DITEAc Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service