BIR Ruling

November 12, 1975 The Philippine Commercial & Industrial Bank T. M. Kalaw Street Ermita, Manila Attention: Mr . Ramon S . Martinez VP/Operations Gentlemen : In reply to your letter of the 4th instant, I have the honor to inform you that the talent fee of P726,999.53 paid to performers of the Disney on Parade group of Nawal Productions by the Folk Arts Theater, a Division of the Cultural Center of the Philippines (Center for short) is subject to Philippine income tax, and consequently to the 30% withholding tax prescribed by Section 22(b) in relation to the Section 53(b)(1) both of the Tax Code, as amended, notwithstanding the fact that pursuant to the Agreement executed on March 25, 1975 by and between the Folk Arts Theater, Cultural Center of the Philippines and Nawal Productions, the former "assumes full and complete responsibility for the collection and payment of all the taxes accruing or which may accrue to the government by virtue of the presentation of the Show, permit and license fees, including income tax of Nawal Productions which may be withheld by Promoter as withholding agent of the government." casia In this connection, it may stated that the alleged ruling of this Office of January 25, 1968 to the effect that the Center being a government agency is exempt from income tax is not applicable to this case. This is so because if the herein tax exemption is granted based on the tax exemption privilege of the Center which is now specifically provided under Section 13 of P.D. 15, as amended by P.D. 179, the Center, in effect, assigned or transferred their privilege of tax exemption in favor of parties who are directly and personally liable for the payment of the tax. The general rule is that such assignment and transfer cannot be done without the consent of the legislature in clear and unmistakable terms." (see B.I.R. Ruling No. 75-002 dated March 23, 1975) Very truly yours, (SGD.) EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-1456-040-3