BIR Ruling No. 560-2017

REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE Quezon City , LIPPT

Section 30 (E) of thc NIRC of

20-2013: RMC No. 051-14 1997. as amended: RMO No.

BIR Ruling No. 466-2014 1- 560-2017 -2017

3rd Floor. Veterans Center. Camp Aguinaldo. DEFENDERS OF BATAAN AND CORREGIDOR, INC. Quezon City

Attention: RAFAEL E. EVANGELISTA National Commander

Gentlemen:

This refers to your leller dated March 31. 2014 applying in behalf of DEFENDERS OF BATAAN AND CORREGIDOR, INC. for tax exemption certificate being enjoyed by non-stock, non-profit corporation or association under Section 30 (E) of the National Internai Revenue Code (NIRC) of 1997, as amended, which was forwarded to this Office by Revenue Region No. 7. Quezon City, through 3rd Indorsement dated November 7, 2014.

RIR T'axpaver's identification No. (TIN) It is represented that DEFENDERS OF BATAAN AND CORREGIDOR,INC. with dated October 2. 2002, is a non-stock, non-profit association duly and Certificate of Registration No.

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. and that the purposes' for which the association was incorporated are:

To uphold and defend the Constitution of the Republic of the Philippines:

2 To re-dedicate our lives to the service of God, our country und our

fellowmen;

3. To live up to. foster und perpetuate the noble traditions and ideals of our

people: more particularly among our corporate members. namely. the Philippine Army (USAFFE) veterans of the Battles of Bataun und : or Corregidor. their surviving spouses and direct descendants:

To promote peace and good will on earth and maintain lav and order: and

5 To strengthen the bonds of comradeship und keep ulive the memories of our military service in Bataan and Corregidor: to help one unother and those whom our deceased brothers-in-arns lefi behind: and to safeguard and transmit to posterity the principles of justice, freedom. and democracy.

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

Second. Amended Articlcs of Incorporation

DEFENDERS OF BATAAN AND CORREGIDOR. INC. 15CC-2C7 2-3-X17

shall not be taxed under this Title in respect to incone received by them us such: "Sec.. 30. Exempt fron Tax on Corporations. - The following organizations

XX XXX XXX

to or imure to the henefit of amy menber. orgamizer, officer or uny specific exctustvelv for religious. charitahle. seientific. athletic. or culturul prposes. o for the relubilitotion of veterons. mo purt of its met income or usset shall helong persom tE) Nonstock corporation or association orguniced and operuted XXX XXX XXX

trustees. or officers" and that 'any profit "obtuined as un incident to its operations shall. 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". whenever necessary or proper, be used for the furtherance of the purpose or purposes for which the corporaition "was organized".2' "Non-profit" means that "no net incone or asse? "Non-stock" means "no part of its income is distributable as dividends to its members.

earnings or assets shall not inure to the benefit of any of its trustees. organizers, officers. members or any specific person. The fotlowing arc considered "inurements" of such naturc: 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, as amended. its Revenue Memorandum Circufar (RMC) No. 51-2014 has clarified that in order for an

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

organizers: xxx.

IV. of the New By-Laws states that: INC., it was disclosed that the Board of Trustees are entitled to per diems. Section 8. Article In the submitted documents of DEFENDERS OF BATAAN AND CORREGIDOR.

compensation. but shall be entitled to per diems for attendance at am' regular or special meeting as muy fron time to time be fixed by the bourd. "Section 8. Compensation. Trustees as such shall not receive uny

distribution of the equity (including the net income) of DEFENDERS OF BATAAN AND CORREGIDOR, INC. This is a form of private inurement which the law prohibits in the requirement that no part of the net income or assets of thc corporation shall inure to the benefit Section 30 (E) of the National Internal Revenue Code of 1997, as amended. organization and operation of a non-stock, non-profit corporation. This act violates the of any individual CORREGIDOR, INC. The giving of per diems to the members of the Board of Trustees is considered a or cannot be qualificd as a non-stock, non-profit corporation under specitic person. Thus, DEFENDERS OF BATAAN AND

this reason alone. completely exempt an institution fron tar taxing authority. A claint of tax exemption must he clearly shown and hased on lunguage in low too plain to be mistaken. Otherwise stated. taxation is the rule, exemption is the exception. exemptions are construed strictissimi juris against the taxpaver and liherallv in favor of the Please bear in mind that. "being a non-stock and/or non-profit corporation does not, by T'hus. "'statutes granting tax

CIR vs. St. Luke's Medical Center. Inc. {G.R. No. 195909 & G.R. No. 195960. 26 Seplember 2012]. CIR vs. St. Luke's Medical Center. Inc.. (.R. Nos. 195909 and 195960 dated 26 September 2012 Section 87. Corporatjon Code

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DEFENDERS OF BATAAN AND CORREGIDOR, INE: # 560-20 17 12-6-2017

covered hy the exemption so cluimed."5 (BIR Ruling No. 466-2014 dated November 19, 2014) The burden of proof resis upon the party claiming the exemption to prove that it is in fact

internal revenue taxes imposed by the National Internal Revenue Code of 1997, as amcnded. CORREGIDOR, INC. to be exempted from income tax on its income as a Section 30 (E) corporation is hereby denied as it failed to prove that it is a non-profit corporation. Thcrcfore DEFENDERS OF BATAAN AND CORREGIDOR, INC. shall be treated as an ordinary corporation subiect to thirty percent (30%) income tax rate pursuant to Section 27 (A) and other In view of the foregoing. the request of DEFENDERS OF BATAAN AND

Please be guided accordingly.

Very truly yours.

Ae

Z K-I-LMAT Commissioner of Internal Revenue CAESAR R.DULAY M y 011510 COPY FURNISHED:

REVENUE REGION NO. 7 - QueZon City Attention: Revenue District Office No. 40 -- Cubao, Quezon City

Quezon City and The City: Treasurer of Quezon City vs. ABS-CBN Broadcasting Corporation [G.R. No. 166408. 6 October 20