BIR Ruling

October 8, 1974 St. Francis Xavier Seminary of Davao, Inc. Catalunan Grande Davao City Attention: Most Rev . Clovis Thibault , P . M . E ., D . D . Chairman, Board of Trustees 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(e) of the Tax Code. aisa dc In reply, thereto, I have the honor to inform you that, pursuant to Section 24(a) of the Tax Code, as amended by Presidential Decree No. 305, beginning July 1, 1974, as the case may be, non-stock private educational institutions; e. g., the St. Francis Xavier Seminary of Davao, Inc., Catalunan Grande, Davao City, are already subject to a tax of 10% of their taxable net income from the operation of the school, related school activities, and on their passive investment income consisting of interest, dividends, royalties and the like. However, prior to the effectivity of Presidential Decree No. 305 the corporation was exempt from income tax as investigation disclosed that the St. Francis Xavier Seminary of Davao, Inc., is a non-stock, non-profit religious-educational corporation duly registered with the Securities and Exchange Commission; that the purpose for which the said corporation is formed is to teach Special Secondary and Special Collegiate Classical Courses of instruction in preparation for priesthood and in addition thereto, such religious subject as may, from time to time be determined by the Board of Trustees; that the place where the Seminary is being conducted is in the barrio of Catalunan Grade, Davao City; that the affairs of the Corporation shall be governed by a Board of Trustees consisting of five (5) members who shall serve for three (3) years until their successors shall have been appointed and qualified, or until their offices become vacant by death, resignation or removal, as provided in the By-Laws; that the Corporation shall be maintained by the Holy See and from tuition fees of students and the sum of Twenty Thousand (P20,000.00) Pesos is set aside for that purpose; and that its income is used to defray its expense, and that no part of its net income inures or accrues to the benefit of any private individual or member of the Corporation. Based on the foregoing, this Office believes and so holds that the St. Francis Xavier Seminary of Davao, Inc., Catalunan Grande, Davao City, falls within the purview of a Corporation or Association organized and operated exclusively for religious-educational purposes as contemplated under Section 27(e) of the Tax Code, (before amendment by Presidential Decree No. 305). Accordingly, before the amendment of said law it was exempt from the payment of income tax. However, it was subject to income tax on income derived from any of its properties, real or personal, or from any activity conducted for profit, regardless of the disposition made of such income. If it had not earned any taxable income, it was also exempt from the filing of income tax returns although it should file during the years that it was exempt from tax an information return under oath, to which shall be attached the profit and loss statements and balance sheets corresponding to such year. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN 1601-593-5