BIR Ruling

July 11, 1977 Rev. Fr. Pedro Iballo Foundation, Inc. c/o Philippine Independent Church Olongapo City Attention: Bishop Isabelo delos Reyes III Chairman Gentlemen : This refers to your request for exemption from the payment of income tax and the filing of the corresponding income tax return under Section 27 of the Tax Code. Investigation conducted by this Office disclosed that the Rev. Fr. Pedro Iballo Foundation, Inc., is a non-stock, non-profit, non-sectarian association duly registered with the Securities and Exchange Commission; that the purposes for which the Foundation is formed are: a) to honor the late Rev. Pedro Iballo, a Priest of the Philippine Independent Church, perpetuate his memory, and give concrete recognition and meaning to those ideals which characterized his life and the ecumenical leadership which he rendered to his country and to Christianity in the world; b) to develop a systematic program of scholarship awards to deserving and financially handicapped persons in the Philippines and other countries in the world whose activities in the different fields of the Christian service and endeavor best exemplify the life and ideals of the Rev. Fr. Pedro Iballo his greatness of spirit, integrity and devotion to Christianity; c) to acquire properties, real or personal, received contributions, gifts, bequests, legacies and donations here and abroad from members and non-members who believe in the ideals of the Rev. Fr. Pedro Iballo, engage the services of persons and firms, invest its funds moneys and properties in such undertakings and pursue such activities as the corporation may desire or need from time to time to carry out its purposes and objectives; d) to provide an orphanage for abandoned children and establish a maternity hospital for unwed mother; (As amended on December 16, 1975) that the Foundation is maintained by donations from here and abroad, particularly the Ford Foundation of the United States of America, and its initially underwritten by its President in the amount of Five Thousand Pesos (P5,000.00), Philippine Currency and that no part of its net income inures or accrue to the benefit of any private individual or member. In view thereof, that Foundation falls within the purview of an association organized and operated exclusively for cultural and charitable purposes, pursuant to Section 27(e) of the Tax Code, and therefore, exempt from the payment of income tax on income earned by it as such organization. However, it is subject to income tax on income derived from any of its properties, real or personal, or any activity conducted for profit, regardless of the disposition thereof, which income should be returned for taxation. If it did not earn such taxable income, it need not file an income tax return. However, even if the Foundation has not earned any taxable income it should file on or before April 15 of each year an annual information return, stating under oath its gross income and the source thereof and the expenses incurred during the preceding year, attaching thereto a) a profit and less statement; b) a balance sheet; c) a certificate stating that there has not been any change in its By-Laws, Articles of Incorporation, and its activities and manner of operation. As the Foundation is a cultural and charitable organization, pursuant to Presidential Decree No. 507, all gifts, bequests, donations and/or contributions to that Foundation are exempt from the donor/s and estate taxes and shall be deductible in full in computing the taxable net income of the donor, subject to the condition that not more than 30% of the donation or bequest shall be used by that Foundation for administration purposes. However, in order that Foundation may maintain its status as a qualified recipient of tax free donation, it should file within three months from the end of its fiscal or calendar year period an annual information return, with the Chief, Legal Branch of the Regional Office having jurisdiction over the principal address of the organization to which shall be attached the following: (a) A list of the donations and bequest received during the year, which should show the name and address of the donor or testators, the amount or market value of each donation or bequest and the disposition thereof. The list should be certified to by the president or treasurer of the organization; (b) A list of the activities and/or projects undertaken by the organization and the cost of each undertaking or project, which should also be certified to by the president or treasurer of the organization; (c) A certification by the president or treasurer of the organization that not more than thirty per centum (30%) of the total gifts, bequest and donations received during the year was used for administrative purposes; (d) A certification by the president or treasurer of the organization that no part of its net income inures to the benefit of any private stockholder or individual. (Sec. 9, Revenue Regulations No. 8-74 dated September 24, 1974). Very truly yours, EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-P4519-F2828-A-8