BIR Ruling

May 29, 1969 Father Bruno Hicks, O.F.M. St. Francis School Guihulagan, Negros Oriental Reverend Father : This refers to your letter dated October 18, 1966 requesting exemption of the Saint Francis School, Guihulagan, Negros Oriental, from the payment of income tax and the filing of the corresponding income tax return under Section 27(e) of the Tax Code. It appears that the Saint Francis School, (hereinafter referred to as the School) was established and organized on June 15, 1963 as a non-stock corporation exclusively for educational purposes. The School is financed and maintained by an initial capital of P153,000.00 as well as matriculation fees, laboratory fees, library fees and tuition fees. The initial capital was used in the purchase of school supplies, books, equipment, apparatus and school site as well as the construction of school buildings; and that no part of its net income inures to the benefit of any individual. In view of the foregoing, this Office is of the opinion and so holds that the Saint Francis School is exempt from the payment of income tax under Section 27(e) of the Tax Code. The School 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. Moreover, the school 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 substantial change in its By-Laws, Articles of Incorporation, manner of operation and activities as well as sources and disposition of income pursuant to Revenue Regulations No. 7-64 dated November 4, 1964. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue