BIR Ruling

October 27, 1976 Messrs. Joaquin Cunanan & Co. Certified Public Accountants 8th Floor, Rufino Building 6784 Ayala Avenue Makati, Rizal Gentlemen : This refers to your request for exemption in behalf of your client, the Greenhills Shopping Center Association, Inc., from the payment of income tax and the filing of the corresponding income tax return under Section 27(f) of the Tax Code. cdt Investigation conducted by this Office disclosed that the Greenhills Shopping Center Association, Inc.,is a non-stock, non-profit Association duly registered with the Securities and Exchange Commission, the main purpose of which is to promote and advance the interest, general welfare, prosperity and safeguard the well-being of the owners, lessees and occupants of the property in the Center. Its secondary purposes are: to promote the commercial and civic interests of the members by developing a new and modern merchandising community and maintain close cooperation with the developers of San Juan, other property owners, businessmen and the proper government authorities and agencies; to adopt such measures as may be necessary for the protection and safeguard of the members of the Association and their property; to make and adopt such rules and regulations concerning the proper use, enjoyment and occupancy of all the property in the area; to supervise and provide for all needful rules and regulations concerning the construction, maintenance, sanitation and cleanliness of buildings and improvements in the area; to erect, construct, improve equip, operate, supervise and maintain ornamental and functional structure in said area; to improve, light, provide for, beautify, equip, operate, supervise and maintain streets, sidewalks, pedestrians' malls, garden, playgrounds and recreational areas for public use or for general use of the owners, lessees, customers and store occupants in the area; to provide for the cleaning and maintenance of streets, collection and disposal of street sweepings, garbage, rubbish, and the like, and for the construction and maintenance of such public utilities or services as may be necessary in the premises; to enforce the covenants, restrictions, reservations, servitudes, easements, liens, and charges which exist or may hereafter be imposed for the benefit of the property in the area under the jurisdiction of the Association and enforce the decisions and rulings of the Association; to levy and collect the dues, assessments and charges on the property under its jurisdiction as may be required or necessary for the maintenance and other expenses of the Association, and those required by the business and activities of the Association; to acquire, own, hold, enjoy, lease, operate, maintain, and to convey, sell, lease, transfer, mortgage or otherwise encumber, dedicate for public use, or otherwise dispose of real or personal property in connection with the business and activities of the Association; to enjoy such other powers as are requisites and necessary or incidental to those hereinbefore mentioned; and that the Association is maintained through dues and assessments from the members which are made payable monthly, quarterly, semi-annually or at such time as may be fixed by the Board of Directors; and that no part of the net income inures or accrues to the benefit of any private individual or member. In determining whether a particular organization is a business league, or chamber of commerce under Section 27(f) of the Tax Code, "the touchstone is that the organization is devoted to the improvement of the business climate in a community as a whole or of the conditions in an entire industry." (34 Am. Jur. 2d p. 658) Based on the foregoing facts and applicable ruling, the Greenhills Shopping Center Association, Inc., is a business league as contemplated under Section 27(f) of the Tax Code because it is an association of persons having some common business interest, which limits its activities to work for such common interest and does not engage in regular business of a kind ordinarily carried on for profit. (Section 31, Revenue Regulations No. 2). Accordingly, that Association is exempt from the payment of income tax as well as the filing of income tax returns. However, it is required to file on or before April 15, of each year, a profit and loss statement and a balance sheet with the annual information return under oath, stating its gross income and expenses incurred during the preceding year and a certificate showing that there has not been any change of its By-Laws, Articles of Incorporation, manner of operation and activities as well as sources and disposition of income. Very truly yours, EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-1456-040-3