BIR Ruling No. 316-2020

REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF FINANCE

BUREAU OF INTERNAL REVENUE

Quezon City

Section 30 (H) of the NIRC of 2013;RMC No.051-14 1997, as amended: RMO No. 20-

BIR Ruling No.466-2014 S410-0316-2020 JUN 0 9 2020

Northern Poblacion,Plaridel,Misamis Occidental 7209 SAINT NICHOLAS SCHOOL OF PLARIDEL,INC.

Attention: CLEMENTE A.BALAORO

School Head

Gentlemen:

NICHOLAS SCHOOL OF PLARIDEL,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 January 15, 2019, applying on behalf of SAINT

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. Taxpayer's Identification No. (TIN) It is represented that SAINT NICHOLAS SCHOOL OF PLARIDEL,INCwith BIR dated December 04, 1997, is a non-stock, non-profit association duly organized and Certificate of Registration No.OCN

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

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

XXX XXX XXX

(H) A nonstock and nonprofit educational institution:"

XXX XXX XXX

trustees, or officers" and that any profit "obtained as an incident to its operations shall, whenever 'Non-stock" means "no part of its income is distributable as dividends to its members.

necessary or proper, be used for the furtherance of the purpose or purposes for which the corporation was organized".I "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 to the institution's purposes and all its activities conducted not for profit" 2

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 National Internal Revenue Code of 1997, as amended, its

or any specific person. The following are considered "inurenints" of such nature: earnings or assets shall not inure to the benefit of any of its trustees, organizers, officers, members

2

SAINT NICHOLAS SCHOOLF PLARIDEL,INC. PAGE2OF2 SH20-0316-2020 JUN o 9 2U20

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

was disclosed that Board of Trustees are entitled to Honoraria. Treasurer's Certification by Corporate Treasurer Rev. Fr. Victor L. Serino of SAINT NICHOLAS SCHOOLOF PLARIDEL,INC., dated December 31, 2017, states that: In the submitted documents of SAINT NICHOLAS SCHOOL OF PLARIDEL, INC., it

emoluments excent the honorarium received during the Board meeting twice a year Resolution No. O1 duly approved by the same. " CFO, Rev. Fr. Edgardo B. Calog, OTR, Mr. Clemente A. Balaoro, OTR, and Mrs. Virginia T."Razonable, COS do not receive any income, salaries or amounting to "That the Most Rev. Martin Jumoad, President, Rev. Fr. Victor L. Serino, only (P ) in accordance to the Board

and operation of a non-stock, non-profit corporation. This act violates the requirement that no part distribution of the equity (including the net income) SAINT NICHOLAS SCHOOL OF PLARIDEL, INC. This is a form of private inurement which the law prohibits in the organization of the net income or assets of the corporation shall inure to the benefit of any individual or specific person. Thus, SAINT NICHOLAS SCHOOL OF PLARILEL,INC.cannot be qualified as a non-stock, non-profit corporation under Section 30 (H) of the National Internal Revenue Code of 1997, as amended. The giving of honoraria to the members of the Board of Directors is considered a

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 reason alone, completely exempt an institution from tax." are construed strictissimi juris against the taxpayer and liberally in favor of the taxing authority A claim of tax exemption must be clearly shown and based on language in law too plain to be claimed.4 (BIR Ruling No. 466-2014 dated November 19, 2014) Please bear in mind that, "being a non-stock and/or non-profit corporation does not, by this 3 Thus, "statutes granting tax exemptions

SCHOOL OF PLARIDEL, INC. shall be treated as an ordinary corporation subject to thirty INC. to be 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, SAINT NICHOLAS percent (30%) income tax rate pursuant to Section 27 (A) and other internal revenue taxes imposed In view of the foregoing, the request of SAINT NICHOLAS SCHOOL OF PLARIDEL

by the National Internal Revenue Code of 1997, as amended.

Please be guided accordingly.

Very truly yours,

rausonna

CAESAR R.DULAY Commissioner of Internal Revenue * 033719 K-1-JAC

COPY FURNISHED:

REVENUE REGION NO.16- Cagayan De Oro City Attention: Revenue District Office No. 100 -- Ozamiz City

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