BIR Ruling

November 24, 1975 Philippine Military Academy Alumni Association, Inc. Camp Crame, Quezon City Attention: Major General, Fidel V . Ramos Gentlemen : This refers to your request in effect for exemption from the payment of income tax and the filing of the corresponding income tax return under Section 27 of the Tax Code and that you be allowed to establish your qualification as a donee or legatee in order that the benefits of Presidential Decree No. 507 may be availed of. It appears that the Philippine Military Academy Alumni Association, Inc., is a non-stock, non-profit association duly registered with the Securities and Exchange Commission; that the primary objectives for which the Association was organized are: a) To promote the general welfare of its members; b) To preserve military professionalism and patriotism; c) To contribute to our national well-being; d) To strengthen the spirit of comradeship and foster mutual respect and assistance among its members; e) To safeguard the interests and live up to ideal of the Philippine Military Academy; and f) In general to do such acts or undertake such activities within the framework of laws of our country and of this Constitution and by-laws for the accomplishment of the objectives of the organization; and secondarily a) To extend material and moral assistance to its less fortunate members; b) To publish an official organ that will promote the interest of the Association; c) To provide a mutual assistance program for the common benefit of its members; and d) To assist, within its capabilities, in the socio-economic advancement of our people; that the association is maintained and financed by means of initial fees, monthly fees, from its members and from donations and contributions and that no part of its net income inures or accrues to the benefit of any member, director or officer. cdta "In general organization engaged in promoting the welfare of mankind, . . . are exempt under the broad "social welfare" clause of this provision. The American Legion has been held exempt under this class; so have the Military Training Camps Association, and the Navy and Marine Memorial Association, an association performing work auxiliary to the police department and active in prevention suppression and punishment of crime, and the Foundation for World Government, An organization engaged in the promotion of sound and economical Government operations is exempt as an organization engaged in promoting the welfare of mankind." (Mertens, Vol. 6, Par. 34-18, Chap. 34, page 88). In view thereof, this Office believes and so holds that the Philippine Military Academy Alumni Association Inc., is a civic league or organization not organized for profit but operated exclusively for the promotion of social welfare as contemplated under Section 27(g) of the Tax Code. Accordingly, it is exempt from the payment of income tax. 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. As the Association is a social welfare organization, pursuant to Presidential Decree No. 507, all gifts, bequests, donations and/or contributions to that Association 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 Association for administration purposes. In this connection, you are further advised that in order that the Association 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 as annual information, 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 donors or testators, the amount or market value of each donation or bequest and the disposition thereof. This list should be certified to the President or Treasurer of the organization; (b) A list of the activities and/or projects undertaken by the organization and the cost of each undertaking or project, 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 administration 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 Regulation No. 8-74 dated September 24, 1974). aisa dc Very truly yours, (SGD) EFREN I. PLANA Actg . Commissioner of Internal Revenue