BIR Ruling

March 22, 1976 Bicol Christian Mission, Inc. Dayangdang Subdivision Naga City Attention: Mrs . Concepcion G . Rabulan Secretary/Treasurer Gentlemen : This refers to your requests: (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 of your qualification as a donee or legatee entitled to the benefits provided for in Presidential Decree No. 507. From the documentary evidence submitted to this Office, it appears that the Bicol Christian Mission, Inc., is a non-stock, non-profit religious corporation duly registered with the Securities and Exchange Commission; that the purposes for which the corporation is formed are: to propagate the Gospel of Our Lord Jesus Christ through the Mission Orphanage, Mission Hospital and Clinics, Mission School and Christian Gospel Church, to purchase, hold, convey all leases, mortgage and otherwise deal with such real and personal property as the purpose for which will deal with such real and the transaction of the business may reasonably and necessarily requires that the corporation is maintained primarily by gifts, donations, helps of Christian friends; and that no part of its net income inures or accrues to the benefit of any private individual or member. aisa dc Bases on the aforestated facts, the Bicol Christian Mission, Inc., is obviously organized and operated exclusively for religious purposes as contemplated by Section 27(e) of the Tax Code and therefor exempt from the payment of income tax in respect of income received by it as such organization. It is, however, 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 has not earned any taxable income it is also exempt from the filing of income tax returns. However, it is required to file on or before April 15, of each year, a profit and loss statement and balance sheet with the annual information return under oath, stating its gross income and expenses incurred during the preceding year and a certificate showing that there has not been any change in its By-Laws, Articles of Incorporation, manner of operation and activities as well as sources, and disposition of income. Although the organization may be undertaking charitable activities, such undertakings are merely incidental to the purpose for which it was organized, which is religious. (See BIR Ruling No. 75-001 dated January 14, 1975) Such being the case, it is not a qualified donee or legatee under Presidential Decree No. 507, which specified only three kinds or organization that can avail of the benefits provided for in said law, namely: charitable, cultural and social welfare organizations. That organization is however, a qualified donee under Section 112(a)(3) of the Tax Code, as amended. Donations to it are exempt from the donor's gift tax. In other words, the person donating to that organization shall be exempt from the donor's gift tax. However, as you are not a qualified donee under Presidential Decree No. 507, your donor's right to deduct donations to you shall be limited to the percentage provided for in Section 30(h) of the Tax Code. cd Very truly yours, EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-1456-040-3