BIR Ruling

January 24, 1977 Mr. Jose V. Ramos Certified Public Accountant Suite No. 212, Cuenca-Gonzaga Bldg. San Juan St., Bacolod City S i r : This refers to your request on behalf of your client, the Bacolod-Murcia Sugar Farmers Corporation, Bacolod City for exemption from the payment of income tax and the filing of the corresponding income tax return under Section 27(a) of the Tax Code. cd Investigation conducted by this Office disclosed that the Bacolod-Murcia Sugar Farmers Corporations, is an agricultural non-stock, non-profit corporation duly registered with the Securities and Exchange Commission; that the purposes for which the corporation is formed are: (l) To promote the development and improvement of the sugar industry in the Bacolod-Murcia District, and to adopt and execute rules and regulations for such purposes: (2) To establish, conduct, and maintain experiment stations and laboratories whenever and wherever necessary, and upon approval of such by the Board of Directors, or upon demand by the majority of the members in an annual meeting; (3) To render and to make effective any aid, which the Board of Directors may deem just and reasonable in case of force majeure or fortuitous events that may occur in the plantation or plantations asking or requiring such aid; (4) To advice and assist planters in their fight against plant and animal diseases and to effect ways and means to control or eradicate them; (5) To solicit, or render assistance to its members in obtaining crop loans from the Central, or from any banking institution, or from any financing house, with which to purchase fertilizers and to insure better crops. Investigation also disclosed that the Corporation derives its income with which to finance its service activities principally from assessment and collection of annual percentage dues from its members based on one percent (1%) of the gross production in sugar of every crop year; and that no part of its net income will inure or accrue to the benefit of any private individual or member although in case there is excess revenue at the end of a fiscal year, said excess shall be returned or refunded to the members as rebates. Based on the foregoing facts, this Office believes and so holds that the Bacolod-Murcia Sugar Farmers Corporation, Davao City, falls within the purview of an agricultural organization not organized principally for profit as contemplated under Section 27(a) of the Tax Code. Accordingly, it is exempt from the payment of income tax and the filing of the corresponding income tax return. However, it is required to file on or before April 15 of each year a balance sheet, profit and loss statement together 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 substantial change in 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