BIR Ruling No. 751-2019

REPUBLIC OF THE PHILITPINES

BUREAU OF INTERNAL REVENUE DEPARTMENT OF FINANCE

Quezon City

BIR Ruling No. 466-2014 Section 30 (H) of the NIRC of 20-2013: RMC No. 051-14 1997. as amended; RMO No. 0751-209 DEC_g 9 2019

60-68 Honorio Lopez, St.. Balut, Brgy. 126. Zone 10. Dist. I. Tondo. Manila 1012 WESTMINSTER HIGH SCHOOL.INC

Attention: VICTORIA A. FRONDA Principal Gentlemen:

Revenue Code (NIRC) of 1997, as amended. non-stock. non-profit corporation or association under Section 30 (H) of the National Internal WESTMINSTER HIGH SCHOOL, INC. for tax exemption certificate being enjoyed by This refers to your letter dated October 23. 2017. applying on behalf of

and existing under the laws of the Republic of the Philippines; that it is registered with the the purposes' for which the association was incorporated are: Securities and Exchange Commission (SEC) under Company Registration No. Identification' No.(TIN) It is represented that WESTMINSTFR HIGH SCHOOL, INC. with BIR Taxpayer's dated January 1, 1997, is a non-stock, non-profit association duly organized and Certificate of Registration No.' OCN : and that

1 To establish and operate a sectarian primary, elementary, and secondary

A To propugale the teachings of Protestantism among the student body in school in the city of Manila, from kindergarten to high school, open to all physically. mentally and morally sound individuals conscious of their responsibility: to God and society: the highest tenets of Proiesiant Christiunity und prepare ihem to become persons of any nationality, race and creed with view of inculcating in them

2 To maintain at all times the highest standards of instruction in all grades: conjunction with the approved curriculum: 4 To purchuse such books. materiais and equipment which may be necessary.

6 T To purchuse. lease or hire such machineries. tools. motor vehicles and other : : To purchase. lease or othernvisc acquire such real and personal properties or huildings as the corporation mar' need from tine to time: To enguge the services of such professors, teachers, employees and other equipment and their spare paris which said corporation may need for its persons as man be desired or needed in the operation of the said school who use or use of its personnel from time to time: are quulified in accordance with the rules and regulations of the Bureau of Privatc Schools: to maintain the operation of the said school in accordance with the highest stundards of the sccondarv education:

Amended Anicles of Incorporation udopted o1: Augus! 20. 2018 : (

T ? e

W'ESTMINSTER HIGH SCHOOL, INC. PAGE2OF3

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

Section 30 (H) of the National Internal Revenue Code of 1997: as amended, provides. viz:

shall not be tuxed umder this Title in respeci to income received by them as Sec. 3o. Exempt from Tax on Corporarions. - The following orguni-ations

Such: XXX XXX XXX

(H) A mon-stock and non-profit cducautional insiituion:

XXX XXX XXX

trustecs. or officers" and that 'any profit "obiuined as an incident to is operations shall "Non-stock" means "no part of its inconme is distributable as dividends to its members

wheneyer necessary or proper. be used for the furtherance of the purpose or purposes for which the corporation was organiced". uccrues to or benefits uny: member or specific person, with all the net income or asset devoted to the institution's purposes and all its activities conducted not for profit".? "Non-profit" means" that "no net income or asser

Revenue Memorandum Circular (RMC) No. 51-2014 has clarified that in order for an entity to quaiify as a non-stock and/or non-profit corporation/association/organization exempt from income tax under Section 30 of the National Internal Revenue Code 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:

I. The puyment of conipensation, salaries, or honorarium to its trustees or

organiters: xxx.

In the submitted documents of WESTMINSTER HIGH SCHOOL, INC., it was diselosed that members of Board of Trustees are entitled to compensation. The Affidavit of Corporate Treasurer Cherry M. Chiok dated December 27. 2017 states that:

benefits for the year 201 7: xxx Trustees and its officers huve received the following compensation and'or "That as a treasurer of the said corporation. I attest that the board of

The giving of conpensation to the members of the Board of Trustees is considered a distribution of the equity (including the net income) of WESTMINSTER HIGH SCHOOL INC. This is a form of private inurement which the law prohibits in the organization and operation of a non-stock. non-profit corporation. This act violates the requirement that no part

specific person. Thus. WESTMINSTER HIGH SCHOOL, INC. cannot be qualified as a non-stock. non-profit corporation under Section 30 (H) of the National Internal Revenue Code of the nei income or assets of the corporation shall inure to the benefit of any individual or

of1997. as amended.

this reuson ulone. completeh' cxcnpt"an institution from iax.:4 Thus. -"statutes granting tax Please hear in mind that. "heing a non-stock and or non-profit corporarion does not. hy

exempiions ure construed strictissimi juris against the taxpaver and liberally in favor of the tuxing authorin. A claim of tax exenption must be clearly shown and based on language in lav ioo plain to he misiaken. Otherwise stated. tuxation is the rule, exeniption is the exception.

: Sectiot. 8:. ( oration Code ClK v:. Si. i.ukes Nedical C.enter. Inc.. (i.R. Nos. 195909 and 195960 dated 26 September 2012 r

Ibie.

0751-2U

PAGE3OF3 W'ESTMINSTER HIGH SCHOOL. INC.

corered hy the exemption so claimed."- The hurden of proof rests upon the parn' claiming the exemption to prove that it is in facr 5 (BIR Ruling No. 466-2014 dated November 19, 2014)

as it failed to prove that it is a non-profit corporation. Therefore. WESTMINSTER HIGH income tax rate pursuant to Section 27 (A) and other internal revenue taxes imposed by the National Internal Revenue Code of 1 997. as amended. be exempted from income tax on its income as a Section 30 (H) corporation is hereby denied SCHOOL, INC. shall be treated as an ordinary corporation subject to thirty percent (30%) In view of the foregoing. the request of WESTMINSTER HIGH SCHOOL,INC. to

Please be guided accordingly.

Very truly yours.

uowv

K-Y-JAC Commissioner of Internal Revenue CAESAR R. DULAY 031138

COPY F('RNISHED

Attention: Revenue District Office No. 29 REVENUE REGION NO. 6

6/F SCC Bldg.. CFA-MA Compound. Sta. Mesa 1016 Manila PHILIPPINE COUNSIL FOR NGO CERTIFICATION (PCNC) 4427 Interior Old Sta. Mesa Road

:

:

Quezor: Cit and The City Treasurer of Quezon City vs. ARS- B\ Broadcasting Corporation!G.R. No. 166408. 6 Octo 2(j8}