BIR Ruling

February 24, 1970 Northern Negros Planter's Association, Inc. Sagay, Negros Occidental Attention: Mr . Alfredo Montelibano, Jr . President Gentlemen : This refers to your letter dated April 21, 1969 requesting exemption of the Northern Negros Planters' Association, Inc., Sagay, Negros Occidental, from the payment of income tax and filing of the corresponding income tax return under Section 27 of the Tax Code. Investigation disclosed that the Northern Negros Planters' Association, Inc. (hereinafter referred to as the Association) is a non-stock corporation duly registered with the Securities and Exchange Commission; that the purposes for which the Association is formed are: to promote the welfare of the members of the Association and that of their employees and laborers; to promote harmonious relationships between members of the Association and the sugar central where they mill their sugar cane without at the same time neglecting the interests of the members of the Association; to promote efficiency and economy in the production of sugar, thus avoiding wastes and loss; to promote mutual cooperation and mutual help among the members of the association; to foster agricultural development in the Philippines; to provide among the members a medium for the free exchange of ideas concerning agriculture; to gather, prepare, disseminate and publicize authentic information relative to agriculture in general and real estate and personal property as may be reasonably necessary to enable the Association to carry out the purposes for which it was created; and to do generally all such things as may reasonably be necessary to accomplish the purposes for which it is organized; that the Association derives income principally from fees collected from the members which is 1% of the gross sugar production, and additional pro-rata assessments in case of the funding of special projects; That with the exception of interest which was earned as an incidence to the deposit of the Association's funds in banks, all other income are derived from membership assessment fees as regular dues or special assessments which are paid in cash or in kind; and that no part of the net income of the Association inures to the benefit of any private stockholder or individual. In view of all the foregoing, this Office believes and so holds that the Northern Negros Planters' Association, Inc. 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 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, MISAEL P. VERA Commissioner of Internal Revenue