BIR Ruling

March 16, 1972 Congressman Jorge A. Abad House of Representatives Manila S i r : This refers to your letter dated January 19, 1972 requesting a ruling as to whether or not the Pasce Oves Management Corporation is exempt from the payment of taxes. It is represented that the Pasce Oves Managing Corporation is a domestic corporation organized on September 13, 1971; that the purposes for which the corporation is formed are: (a) to hold title to, and invest the money or property of the Saint Dominic Development Foundation, Inc.; to collect the income derived from such money or property of the Saint Dominic Development Foundation; and to distribute said income in a definite proportion to the instrumentalities of the Prelature and even to the Prelature itself as well as the Foundation; to purchase, own, hold, acquire or otherwise accept such property, real or personal, as may be necessary, convenient, or appropriate for any of the purposes herein expressed; to do every other act or acts, incidental or appurtenant to or connected with the aforesaid business or powers or any part or parts thereof; Provided, the same be not in conflict with the law under which this corporation is organized; to perform all and everything necessary and proper for the attainment of the purposes or furtherance of any of the powers above set forth, either alone or in association with other corporations or individuals; that the corporation has no authorized capital stock and shall operate solely on donations, gifts and voluntary contributions and that the members of the Board of Trustees shall not have any right or interest in any monies, gains, profits, dividends or property of the corporation or any proprietary interest in any membership or to any residuary in case of dissolution of the Foundation. In reply thereto, I have the honor to inform you that Section 27(k) of the Tax Code provides, viz: "Section 27. Exemptions from tax on corporations . The following organizations shall not be taxed under this Title in respect to income received by them as such xxx xxx xxx (K) Corporation or association organized for the exclusive purpose of holding title to property, collecting income therefrom, and turning over the entire amount thereof, less expenses to an organization which itself is exempt from the tax imposed by this Title. (As amended by Sec. 5, Republic Act No. 82) A careful perusal of the purposes for which the corporation was organized disclosed that the corporation was not created for the exclusive purpose of holding title to property, collecting income therefrom, and turning over the entire amount thereof, less expenses, to an organization which itself is exempt from the tax imposed by law. It will be observed under the foregoing purposes, that the corporation is not prohibited from subsequently selling the assets it acquired from the Foundation and to invest the proceeds thereof. Neither is the corporation prohibited from investing the profits and income of the money or property of the Foundation. Furthermore, one of the recipients of the income of the Corporation is the Foundation which does not appear to be an organization exempt from income tax. In view thereof, this Office is of the opinion and so holds that the Pasce Oves Corporation is not exempt from the payment of income tax under Section 27(k) of the Tax Code. Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue