BIR Ruling No. 544-2017

REPEBLGO HHI PHHPPINFS DEPARTMI NTOF TIANCE BURFAU OF INTERNAI.REVENUE

Quezon City

Sec. 30 (E) of thc RMC64-2016 amended: NIRC of 1997. as 54017 Tel. Nos.: 926-55-36/ 927-09-63 Person to Contact: Chief. Law Div

Date: Novet:0er 25, 217

THE PHILIPPINE FOUNDATION FOR CULTURAL AND EDUCATIONAL DEVELOPMENT INC.

Legaspi Viliage, Makati City 1229 Rm. 202 Alexander House. 132 Amorsolo St.

Attention: Executive Director / Corporute Secretan JOYCELYN K. TANADA

Gentlemen:

This reters to your ietter dated November 24, 2016 duly indorsed by Revenue District

cultural and educational purposes under Section 30(E) of the Tax Code of 1997. as amended. Office No. 47. East Makati. requesting revalidation of a ccrtificate of tax exemption enjoyed by a non-stock corporation or association organized and operated exclusively for

Development Inc. with Taxpayer's Identification No. non-profit corporation duly organized under the iaws of the Philippines: that it is registered that the purposcs for which it was incorporated are the following: with the Securities and Exchange Commission (SEC) under Registration No. 28182: and It is reprcsented that The Philippine Foundation for Cultural and Educational is a non-stock.

I) To establish. maintain, subsidize and operate centers for cultural. cducational and spiritual formation of students, professional men and all others who may be so interested in such a formation. such as residences. culiural centers, school of all levels, vocational and technical schools:

2) To promote human, technical and spiritual formation of farmers and skilled non-skilled laborers;

3) To promote and undertake research activities and projects in the physical, technologica! and agricultural sciences in order to contribute to the scientific and technological advancement of the Phils.:

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Page 2 of 4 HF PHHLIDPINE ROINDATION FOR CUTUURAL AND) EDUCATIONAL DENHLOPMENT IN

4) To promote and undertake the publication and distribution or sale of books. To "promote eventually the formation of associations of persons who are interested in helping the Foundation accomplish its aim; magazines. pamphlets and other publications:

6) To establish. Set up and maintain scholarship funds, endowment funds. whether it be in cash. property or otherwise: institutions. as well as individuals pursuing the goals of the foundation. and in aid of these purposes to receive grants. requests, donations from all sources Foundation and utilize such funds to give scholarships. fellowships. assistantships. grants-in-aid. research grants, publication grants. building and/or equipment grants, operationai grants. and the like to deserving professorial chairs. special funds, etc. in any school or center put by the

7) To build, improve, eniarge, equip. subsidize or similarly assist technicat bc it run by Foundation or other institutions: schools. libraries, laboratories, workshops and other educational accessories.

8) To purchase such materials. equipment and supplies as may be necessary for the opcrations of the centers conducted by the Foundation;

9) To cngage the services of such workers. employees or agents as may be desired or needed in the accomplishments of the goal of the Foundation:

10) To contract for thc purchase, lease or hire of such rights, leases. licenses. said Foundation may desire or need for its purpose: franchises. certificates or permits of such equipment. materiats or supplies as

I 1) To purchase, lease or otherwise acquire such land with or without buildings conditions as the Board may deem necessary, proper or convenient in carrying out its purp5ses; and other improvements as the Foundation may require; and to sell, mortgage or dispose of and transfer such land or portions thereof. together with its improvements, for such considerations and under such terms. stipuiations and

12) To issue bonds, with or without mortgage of properties off any nature of this Foundation. under such terms. stipulations and conditions of the Board: 13) To accept donation of properties, movable or immovable, in fee simple, or in to the primary purposes for which the Foundation is organized; trust. and in the latter cases, under such terms and conditions as maybe imposed

14) To lease or convey by way of grant grounds. buildings equipment or other real and movable property of the Foundation to any institution engaged in activities which are within the specific aims and purposes of the Foundation.

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Page 3 of 4 THE PHILIPPIN} ROENDATION FOR CUT TURAI AND FDUCATIONNI DFYFUOPNFNT NG

amended. provides. viz: In reply. Section 30 (E) of the National Internal Revenue Code (NIRC) of 1997. as

hy them as such. orgunizations shall not be taxed under this Title in respect to income received "Sec. 30. Exempt from Tax on Corporations. - The following

XXX XXX XXX

test: (a) must be organized and operated for one or more of the specified purposes: and (b) (RMC 064-2016) kind and churacter from its properties, reul or personal) if such corporation meets two no part of its nct income must inure to the benefit of private stockholders or individuals Thus, a corporation is exempt from tax on its income (other than income of whutever Officer or any specific person. " (Emphusis supplied) purposes. or for the rehabilitation of veterans, no purt of its net income or usset shull belong to or inure to the benefit of any memher, organizer. exclusively for religious. charitable. scientific." athletic. or cultural (E), Non-stock corporations, or ussociutions organized and operuted

the benefit of any of its trustees or officers as provided under RMC 064-2016 dated June 20. 2016. and Fducational Development Ine. however, provides that if the trustee serves as an officer of the Foundation: he may receive compensation as may bc set by the Board of Trustees. which is contrary to the requirements that its earnings or asset shall not inure to Section 7. Article III of the By-Laws of The Philippine Foundation for Cultural

desire or need for its purpose; (b) to purchase. lease or otherwise acquire such land with or without buildings and other improvenients as the Foundation muy require: and to sell. mortgage or dispose of and transfer such land or portions thereof. together with its improvements. for such considerations and under such terms. stipulations and conditions as the Bourd may deem necessary, proper or convenient in carrving out its purposes: (c) to issue bonds. with or without morigage of properties off any nature of this Foundarion. properties, movable or immovable, in fee simple, or in trust, und in the latter cuses. under such terms and conditions as maybe imposed to the primary purposes for which the these tests, it appears that the activities being carried on by the Foundation is similar to are: (a) to contract for the purchuse, lease or hire of such rights. leuses. licenses. franchises. certificutes or permits of such equipment. materials or supplies as said Foundation may under such terms. stipularions und conditions of the Board: and (d) to accept donation of Foundation is organized: all of which are contrary to the organizational and operational tests provided under RMC 064-2016. Sincc the corporation or association failed to mcct organizations operated for profit. Thus, The Philippine Foundation for Cultural and Educational Development Inc. is organized and operated principally for profit. by this reuson alone. completely exempi an institution from tux." Please bear in mind that, "heing a non-stock and/or non-profit corporution does not. Moreover the amended Articles of Incorporation provides that among its objectives IThus, "stututes grunting

:CIR vs. St. t.uke's Medicaf Center. Inc. [G.R. No. [95%09 & G.R. No. 195960. 26 Seplemher 2012]

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THE PHILIPPINE FOU ND NTION FOR C ULTURAL AND ED(ICATIONAL DEVELOPMENT ING Page 4 of 4

exemption to prove that it is in fact covered by the exemption'so claimed." on language in law too plain to be mistaken. Otherwise stated, taxation is the rule. exemption is the exception. The burden of proof rests upon the party claiming the

Foundation for Cultural and Educational Development Inc. does not qualify for exemption Added Tax (VAT) or Percentage Tax. under Section 30 (E) of the Tax Code of 1997, as amended. It is therefore liable for Income Taxes imposed under Title H of the same Code and other applicabie taxes such as Value- IN VIEW OF THE FOREGOING. this Office is of the opinion that The Philippine

Very truly yours.

ACuaw G

Commissioner of Internal Revenue CAESAR R. DULAY 011.366

Revenue District Office No. 47, East Makati CC: The Revenue District Officer

K-1/spf

:Quezon City and The City Treasurer of Quezon City vs. ABS-CBN Broudcasting Corporation [G R.No166408. 6 Octoher 200