BIR Ruling No. 598-2020

REPUBLIC OFTHEPHILIPPINES

DEPARTMENT OF FINANCE

BUREAU OF INTERNAL REVENUE

Quezon City

Section 30 (H) of the NIRC of 1997.

RMC No.051-14 as amended; RMO No. 20-2013;

BIR Ruling No. 466-2014 SH30-0598-2020

JC 2 0 2U20

Pangasinan 2404 GOLDEN WEST COLLEGES, INC. Poblacion, Alaminos City,

Attention:DOMINI P.VALDEZ

President

Gentlemen:

WEST COLLEGES, INC. for tax exemption certificate being enjoyed by non-stock, non- profit corporation or association under Section 30 (H) of the National Internal Revenue Code (NIRC) of 1997, as amended. This refers to your letter dated October 12, 2018, applying on behalf of GOLDEN

organized and existing under the laws of the Republic of the Philippines; that it is registered with the Securities and Exchange Commission (SEC) under Company Registration No. Commerce, Engineering, All TESDA Courses, Elementary and Secondary Courses" Identification No.(TIN) establish and operate an educational institution or learning center which shall provide courses of study in Medical, Teacher Education, Technological, Computer, Criminology, Accountancy, It is represented that GOLDEN WEST COLLEGES, INC. with BIR Taxpayer's ; and that the purposes for which the corporation was incorporated is "to , is a non-stock, non-profit corporation duly

Section 30 (H) of the National Internal Revenue Code of 1997, as amended, provides, viz: organizations that are exempt from income tax in respect to income received by them as such. 1997. as amended, enumerates the non-stock and/or non-profit corporations/associations/ In reply, please be informed that Section 30 of the National Internal Revenue Code of

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

(H) A non-stock and non-profit educational institution;"

XXX XXX XXX

trustees, or officers" and that any profit "obtained as an incident to its operations shall, to the institution's purposes and all its activities conducted not for profit" 2 whenever necessary or proper, be used for the furtherance of the purpose or purposes for which the corporation was organized" "Non-profit" means that "no net income or asset accrues to or benefits any member or specific person, with all the net income or asset devoted "Non-stock" means "no part of its income is distributable as dividends to its members.

2 ClR vs. St. Luke's Medical Center, Inc., G.R. Nos. 195909 and 195960 dated 26 September 2012 Section 87,Corporation Code

GOLDEN WEST COLLEGES, INC. PAGE2OF2 SH30-098-2020 OCT 2 0 2020

Revenue Memorandum Circular (RMC) No. 51-2014 has clarified that in order for an entity to qualify as a non-stock and/or non-profit corporation/association/organization exempt from income tax under Section 30 of the NIRC of 1997, as amended, its earnings or assets shall not inure to the benefit of any of its trustees, organizers, officers, members or any specific person. The following are considered "inurements" of such nature:

1.The payment of compensation, salaries, or honorarium to its trustees or

organizers; xxx.

In the submitted documents of GOLDEN WEST COLLEGES, INC., it was disclosed

that the members of the Board of Trustees are entitled to compensation: The Certification

executed by GOLDEN WEST COLLEGES, INC.'s President, Domini Valdez, dated August 2, 2019, shows that Deogracias Valdez, being a member of Board of Trustees, received

a monthly compensation of

: This is a form of private inurement which the law prohibits in the organization and operation distribution of the equity (including the net income) of GOLDEN WEST COLLEGES, INC. The payment of compensation to the members of the Board of Trustees is considered a

of a non-stock, non-profit corporation. This act violates the requirement that no part of the net income or.assets of the corporation shall inure to the benefit of any individual or specific person.Thus, GOLDEN WEST COLLEGES,INC.cannot be qualified as a non-stock,non profit corporation under Section 30 (H) of the NIRC of 1997, as amended.

this reason alone, completely exempt an institution from tax.3 Thus,"statutes granting tax exemptions are,construed strictissimi juris against the taxpaver and liberally in favor of the Please bear in mind that, "being a non-stock and/or non-profit corporation does not, by

taxing authority. A claim of tax exemption must be clearly shown.and based 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 exemption to prove that it is in fact covered by the exemption so claimed.34 (BIR Ruling No. 466-2014-dated November 19, 2014)

exempted from income tax on its income as a Section 30 (H) corporation is hereby denied as it failed to prove that it is a non-profit corporation. Therefore,GOLDEN WEST COELEGES, In view of the foregoing, the request of GOLDEN WEST COLLEGES, INC. to be

INC. shall be treated as an ordinary corporation subject to thirty percent (30%) income tax rate pursuant to Section 27 (A) and other internal revenue taxes imposed by the National Internal Revenue Code of 1997, as amended.

Please be guided accordingly.

-V.ery truly. yours,

eoim

CAESAR R.DULAY Commissione'r of Internal Revenue

K-1-JAC 036956 O

4Quezon City and The City Treasurer of Quezon City vs. ABS-CBN Broadcasting Corporation G.R.No. 166408, 6 October 3 Ibid.

2008.