BIR Ruling No. 63-2018

RTPUBLIC OF THE PHILIPPINES O :PeRtiulgN'I OF FINANCE tsURE/IJ OF' INTERNAL REVENUE J Quezon Ciry RMC No. 9-2013; R.A. No. 9904; R.A. No. 8424 BIR Ruling No. 103-14; BiR Ruline No. 105-14 T- ;nlaI: )-a:Jrna !9Q PUNTA FUEGO Vil,LAGE F{OMEOWNERS' ASSOCIATION, INC. Peninsula de Punta Fuego, Barangal' Balaytigue, Nasugbu. Batangas Attention : Engr. Ben.iamin D. Del Castillo L'illage Manager Gentlemen: This refers.to your letter dated Ar-rgust 8,20i4, r'equesiing on beiralf of PUt'iTA FLIEGO VILLAGE HOMEOW\]E.RS' ASSOCIATION, iNC. for a Certificate of Tax Exemption enjoyed by Homeowners' Associations under Republic Act No. 9904 otherwise knotvn as tlre "Magna Carta for Homeowners and Homeowners' Associatiolts". as enunciated,in Revenue Mernorandum CircularNo. 9-2013 which clarifies the taxabilitl'of associatiou dues, membership fees, and other assessm'ents/charges collected by Homeowners' Associations. Documents subrnitted disclosed that PLINTA FUECO VILLAGE HOMEO\INERS' ASSOCIATION. NC. is a resideirtial homeowners' association with Tarpayer's Identification Number (TIN) and duly registered with the Housing and Land Use Regulatory Board (HLURB) under Certificate of Registration No. dated Septernber 13, 1999;' that Punta Fuego Village is situated and within the .jurisdrction of the rnunicipality of Nasugbu, Batangas; and that among the purposes for which the Association was incorporated are the following: I. To promote and adt,ance the best interest and general u,eAare o.f the residents. lot otlners, Iessees, lenan.ts, and- occupants in the Peninsula de Punta Fuego L'illage,'

si$- Punta Fuego [ri! Iage tr{onzeoy,'ners' .4s,sobicrlion, Inc. Pegi 2 of 5 2. To provide serrices relating io safet-v', securiryt, cleaniiness and beautificution, order, ond the general upkeep and- mcilxlenance o.f the c o m m u.n i t'r;' s c o niln o n ar e a, i nfr a s ty u ct u t e, l ands c ap e a-n d fa c i l i r i e s,' These sei'vices inch.de hztt are ftot limited to {he foilotving: G. Senu'ir1, and safe6;,' b. Graunds man{lgement,' c. Comnton areu building and.iacilitie.g: d. Garbage collection; and e. Conmtunitl; relations. J. To construct. improve, tnanage, maintain, and oDerate adequcte .facilities und sen,ices.for its merubers; 1-o construct, improve, oprcte, rlxsnage and rrt.aintain coinmon oreo" 5. ,rtructut e s and -faciliti e s ; mointain such pwblic utilities as ma1.,be To construct, aperate, and necessary,.for the accomplishrnent oi the purpose af the Corporatian; 5. To acquire, accepl dorua(ions, purchase, ov,rz, hold, develop, lease, inortgage, pleclge, exchange, sell, tra.nsfey, or cthen'tise invesi, cied! itt, or trade. in en-,,, manner perrnitted by lav,, real and persona! pyoprty qf everv' kincl crncl description, or anv inlerest Ih.erein, as may be necesso-r-r, .for the acconrplishment of the purgoses.of the Corporatiott; 7. To borrou, and othetu,ise contract inc\ebledness afid issue notes, bonis, ' and other et,idence of ind"ehtedttess and to secure pcrymerct therefor b7, lTtortgage, pleclge, or deed of trust o-f, or through enc'.,r.t'nbi'ance an an)) or all o-f its then-ov,ned or after-ecquired real or personal properties uncl assets,' c!. To enter inlo. ntake, perJorn, anci cct'ry ctff, or cencel c.nd res'cind cotltracts of et:ery, kincl ctnd.fo, ,rn-r, ls.l'fwl put"l:ose with anlt person, 9. .firii:, as,;ociatioit, torporatiort, s.;,t.tiicale, damestic .or-fcreign, olhers: To !e",t' fees a.nt! c/targes tliat inay be reqa:ired o!. necesso"tl, 1br the ' rnaintenance of ihe Corporation and its aclittities as m&), be necesso.4, to cart)'out its i:u,rposes a;td cb.jectiv4s; a:td 10. To cio and petform anv other acts and things, rsnd to have and exercise r:in1t olhgr ra\l'ers v,hic/t nsay be necessaty, convenient and rtppropriote to accontplish the aw"poses for.y;ltich the Corporation is organized. that the Office of thc Municipai Ma1'ol of Nasugbu, Batangas certified rhat PLINTA FUEGO VILLAGE HOI\iEOWNERS' ASSOCIATION, INC.: "orovicles and.fLn'tds the ba,sic ser,,ices fct' ils homeatvnersitnen,tbers, such as bu.t riot iimited to scfe4; sitd ,security,, garbage collection and c{isposa!, tpkeep o-f tirc comrnon areas aiid beaches, repait",s rsnd rnainfen(utce o/'the vil!oge .fctcilities sucll as styee{ ligltls, s*tsge s:l-stem, ;'o;ds uttd ot/ier it tfi'Ltsrt'ucturL'.

te|>r.rt' t*Z-i*a0-Jg Pwtta Fuego L.illage Hameoryners' A,ssobiaiiot,t, Inc. Page 3 o1'5 Our loc:al gov'Jrnmenl c{ttlt'to! cater {he abor,,e-mentioited, services being recluirei antl providea .,br b), the Ptli'{TA FLEGC VLLLAGE HCMEOtr'y'7VERS'l"9SCCiATIOl,l, IA\C. to its homeowners or rnentbers, far ,lack oJ resources to render such services." In support of its raquest, PLTNTA FUEGO VILLAGts F{OMEOWNERS' ASSCCIATIOII. [h]C. has submitted ttre folloi.r'ing required docurnents: 1) I-etter applicalion for tax exempricn; ^2;) Cetification issued b,y the i{OA Registration Officei:, HLURB Southem Tagalog Region)certifying tnat a Certificate of Registration with Registration , I.UVO. WAS iSSUEd tO F{JNTA FUEGC VII-LAGE HCVTECWNERS' ASSOCIAT'ION, INC. on September 13, 1999; I 3)- HLURB Certified true cony of the Amendeci Articles of incorporation; 4) 'HLI,IRB Ceriii'ied trlle copy of the amendeci ts1'-Laws; 5)' Certifiecj rrue r:opy of the Annual information R.eturn and Financial Starements for tire last ti-rree (3) years of operai.ion; 6) tslR Certifrcate of Registration; 7) Certification issued by rhe Revenue District Cifice Nc. 58. Batangas City certiff ing that tire Corporation is not the subject oiany pending investigation, on-goiitg audit. pending iax assessffient, administrative protest, claim for refund or issuance of tax ciedit certificare, coiiecticn proceedings, or a judicial appeal as of March 3.201211 and 8) Other pei-tinent ciocuments. l P{-NI-A FIJEGO VILLACE HCMEOWNERS' ASSOCIATtrOI..I, lNC. bases iis exernption on Sectiorr 18 of R.A. No. 9904. which provides: "SECTXON lE. R"elationslaip with LGUs. Homeowners' associations shall cornplement, support and strerrgthen LGUs in providing viral services to their members anci help in-ipien'lent local goveinment poiicies. programs. ordinances, alid rules. Associations are encouraged to actively cooperate with LGUs in furtherance of their comrnon goals and aciiviiies ior ihe benefit of the residents of the sr,rbdivisions/villages and their environs. associations shall errdeavor to tap ihe rneans to provide for the same. in recogniiion of the associations'ei'lofts io assist the I-GUs in proviciing such basic services. association dues anctr income der:iveci from rentals of tireir

-r.1_-*:r1.i fi t- -- .** j .J Ji; Piintu Fuego I'iilctge ifcnte Lt-,t't'ters' ^4.;sotiarion, ln:. P"t.tr' -.1 uf 5 iacilities shall be tax-exeryipt: ProvideoL Thai sucli incorne aiiC dues shaii be usec fitr ttie cieaniiness. satbt)'. securitv and oilier basic services rieeded b."* the nrernbers. including 'the rnaintenance of ihe iaciiities ol thcir respective subclir,,isIons or rriI!ag,es. x>,,x" In renli' tirereto. ccrLsidering tire fact that PL|NTA FUEGO Vil-LAGE FIOIIEOVvNER"S' .A,SSOCIATION. INC. is a duiy registered Homeor.r,ners Associaiion' w'ith tlie HLUR.ts; that irs rinancial staretneilrs shov,, the d.eliverl, oi basic communiil. services defineci under Sec. 3 (d) of ft.A. 9904; and that the l-ocal Goriernment units cot'ering the jurisdiction of the Homeow'rrers Association irave issued Cerrificate that thel, lack the resources to provide these senrices to ihe Association, hence, this Olfice herebl' hoids that the income cleri,,'eci from associatiorllues and rentais cf facilities of, Fl,llrlTA FUEGO ViLLAGE HOMEOVv'NERS' ASSOCIATIOI{, INC. is exempt irorn income tax, r,'alure-acidecitax or percentage tax, rrrhichever is applicable. Frovicied, thai such income and ciues shali be used for the cleanliness. safety. security arrci other basic services needed by the menibers. inclr.rding the nraintenance of tlre f-acilities of the rr respective subdivisions or villages. (BIR Ruling l{o. lAi-l-J dated,\,[arch 25. 2A1]) 1_{ Or.r.ever. PUNTA F1,] EG O VI LLA GE I{O}'4EC \\T.J E RS' A S S OC iATIO}i. iN C. shaii be sub-iect to the auplicab,ie inier,:ai revenue raxss o1r its orher income rtom rraie. business or o'rirer actii, ities. Soecificalll': inconie ! uu it shail be subject io the correspondirig interiial reven'ue raxes imoosed Lrnder the Tax Code oi'i997 on it.s incoine not derived from association CLies nor rentais of iis facilities, which incouie should be returned ior taxation. L-bikeenwefiisr ef,roinintedreesptoisnicr osmr,iebsfrii'toilmle currenc]' bani< deposits and i'ieiC or any other monetary instruments and from trust funcis arid sirniiar arrangements. and royalties derived ircm sources withiri tiie Philippiries are subject io the 2ArA final withholding tax; pror,ided. irorver,'er. that interest iucorre derived fj-oni it {l-oin a oeilositor}, bank unCer the exparrded ioreign currencv deposit s-rStern shali be sLlb.ject 'ta 7 t.,zo/o fonal ivithholding rax pursuani to Section 27 (D) ( 1) in reiation to S,^ction 57 (A). botir oithe Tax Code cf I 997. N,4oleover, it is requireci to rlte on oi beiore April 15 of each )'ear a profit and loss sraiement ailci balance slieet rr'ith tire alinual inf,ormatiou return under oath, srating its gross income and expenses incurred dui'ing lhe ;,,ear and a certificate sirowing rhat there has not been arrv change in its By-Lar.r's. Articles of hrcorporation, niarinei of operation and actir. ities as rveli as resoLrrces and ciispositioir of income. (BIR Rulingl:o. 103-1,/ daled llat"cit 26, 201-/) Value-,4Cdetl Tax or FerceiltftEe Tax Likervise. PLINT4. FLTEGo !'iLI-AGE i-ich4EC\&NERS' ASSoCIA'ft/,)N. trNC.'s gross receipts lrc',i,r operatioils not derived froln asscciation Cues nor rentals of its iacilities shail be subject to the l2o,/oVAT as imposed under Sectior.r i08 of the Tar Code of i997, as amendecj. ri'hich tax paymeni nray legitirnately be passed on to buyers oi'sucl-l goodsandserl!ccs,or39'6percentagetaxirnposeciuncierSectioii li6lnreiaiiontosectiorr

l:trfrif; Punta Fuego l/illage Honreou,ners' ,lssocicttion, Inc. I09(W) of the same Code if the gross sales or receipts fi"om such sile of goods and serl,ices do not exceed One Million Nine Hundred Nineteen Thousand Five Hundred Pesos (P1,919,500.00). (BIR Rtling No. 105-11 dated March 26, 2011.) It is requested that a cop)' of this letter of exemption be attached to the annual information return r.vhich PLNTA FUEGO VILLAGE HOMEO\\NERS' ASSOCIATION, INC. u'ill file on or before the l5th day of th3 fourlh month of each 1,ear. UnderSection235oftheTarCode of lggT,asamended,anypror,'isionoferisting general or special lar.v to the contrarl' notwitlistanding, the Revenue District Officer shall conduct an audit of annual infonnation return filed, the books of accounts and other pertirient records of PLNTA FUEGO VILLAGE HOMEOWNERS' ASSOCTATION. INC. to determine compliance with the conditions set forth in this letter of tax exemption and tax liabilities, if any. It should be undelsrood that PLNTA FUEGO VILLAGE HOMEOWNERS' ASSOCIATION. INC. shall be constituted as withholding agent of the govemment if ir acts as an employer and its employees receive conipensation income subject to the ivithholding tax under Section 57.of the Tax code of 1997, as amended. ' Finalll', PLNTA FUEco VILLAGE HOMEOWNERS'ASSoctATioN. INC. is also subject to the payrnent of ttre annual registration fee of PhP500.00 as prescribed in Section 236 (B) of the Tax Code of 1991, as amendetl. It is also required under Section 6 (C) in relation to Section 237 of the same Code to issue duly registered receipts for services re.ndered which do not comprise inoome from association dues and rentals of their facilities. This ruling is being issued on the basis of the foregoing facts as represenred. However, if upon investigation, it will be disclosed that the facts are different, then rhis ruling shall be considered null and void. K-I.JAC Ver'1'truly y0urs. JV-, s<^-x-e"^,A{{-1 - CAESAR R. DULAY Commissionet of Internai Revenue 0127s?