BIR Ruling

May 4, 1973 Mrs. Josefina R. Navarro Superintendent of City Schools, Bureau of Public Schools Manila M a d a m : This refers to your letter dated March 21, 1973, to the Secretary to the Mayor of Manila, Mr. Roman Gargantiel, which was referred to this Office for appropriate action. In said letter you contend that since PTA's are not really contractors in the real sense of the word when they undertake, by negotiation self-help projects in schools financed by the City School Board, they need not pay the 3% contractor's tax. cdtech In reply, I have the honor to inform you that Section 12 of Republic Act No. 5979, otherwise known as the Public Works Act of 1969, provides as follows: "The provisions of existing laws to the contrary notwithstanding, the Civic Organization, Parent-Teacher's Association or Barrio Council undertaking any community development projects the appropriation of which do not amount to more than P25,000.00 and which do not require complicated methods of construction nor highly specialized techniques, shall be exempt from any kind of proposal or performance bond, and from all taxes and imposts relating thereto." It is clear from the aforequoted provision of law that Parent-Teacher's Association undertaking the construction and/or repair of a school building project by negotiated contract is not subject to the 3% contractor's tax imposed by Section 191 of the Tax Code, subject to the following conditions: 1. That the appropriation for the project amounts to not more than P25,000.00; and 2. That the project does not require complicated methods of construction nor highly specialized techniques. (BIR Ruling No. 73-012, dated April 5, 1973). Very truly yours, (SGD.) CONRADO P. DIAZ Acting Commissioner of Internal Revenue