BIR Ruling

November 16, 1977 Messrs. Sycip, Gorres, Velayo & Co. Certified Public Accountants P. O. Box 589, Manila Attention: Atty . B . V . Abela Tax Division Gentlemen : This refers to your requests in behalf of the Doreen B. Gamboa Foundation for Childhood Education, Inc., (a) 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 and (b) for a certification as a donee or legatee entitled to the benefits provided for in Presidential Decree No. 507. The documentary evidence submitted show that the Foundation is a non-stock, non-profit Foundation duly registered with the Securities and Exchange Commission; that the purposes for which the Foundation is formed are: a) to promote and undertake the educational development of children in the Philippines so that they may become better and useful members of the community in which they live in through the establishment of programs of education, training, seminars, workshops, research and management; b) to establish, operate, maintain, equip and/or extend financial assistance to pilot schools or projects and special study centers devoted to childhood education and child development; c) to create learning environments where each child may be finest person he is capable of being and which enable him to make a continuing contribution to his community; d) to foster studies for technical research, scientific services and guidance to parents, teachers, individuals and institutions devoted to childhood education and child development; e) to help and provide teachers working for child development and childhood education with financial assistance, training programs seminars, workshops, mutual assistance projects, library and teaching aids, and diagnostic and assessment facilities f) to establish and/or provide incentives, including financial assistance for the establishment of a research center in the field of child development and childhood education; g) to assist and recommend in the formulation, adoption and implementation of policies directly involved in childhood education and child development; h) to encourage and develop government and private awareness and concern for develop government and childhood education and child development; i) to help set up and implement school and special class educational and training standards, as well as teachers' qualifications and their service conditions; j) to undertake studies and surveys of trends in childhood education and child development here and abroad for the purpose of recommending measures that will make the attainment of the aforementioned goals effective; k) to disseminate the results of scientific studies, findings and researches, including, but not limited to, the printing of materials, related to childhood education and child development; l) to solicit and/or accept any gift, donation, grant, contribution, endownment plan, bequest or devise of any kind and all real or personal properties necessary, desirable or proper for the corporation to hold, acquire or administer; m) to hold, purchase, acquire, sell, exchange, lease, mortgage or otherwise deal in real and/or personal property, and to invest its funds, moneys or properties in such undertakings and to pursue such activities as may be desired or necessary provided the profits do not inure to the benefit of the members or officers and n) to generate funds and establish and secure credit facilities to meet the financial requirements of the corporation; that the Foundation shall be maintained primarily from membership, fees, dues, contributions gifts, bequests, donations, devises and endownments from members, persons, partnerships, corporations and other entitles and supporters; and that no part of its net income inures or accrue to the benefit of any private individual or members. In view thereof, that Foundation falls within the purview of an organization organized and operated exclusively for cultural 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 sources thereof and the expenses incurred during the preceding year, attaching thereto a) a profit and loss 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 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 activities and/or projects undertaken by the organization and the cost of each undertaking or product, 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