BIR Ruling

November 17, 1972 Mr. Genaro V. Ong, Jr. P. O. Box 2156 Manila S i r : This is in reply to your letter dated October 6, 1972 requesting tax-exemption for and in behalf of the SCC Development and Research Foundation (formerly Ang Tao Foundation, Inc.), 3892 Magsaysay Blvd., Cor. Santol Rd., Manila. It is represented that the SCC Development and Research Foundation (hereinafter referred to as the Foundation) is a non-stock and non-profit corporation duly registered with the Securities and Exchange Commission; that the purposes for which the Foundation is organized are: to promote, encourage, sponsor, organize, establish and maintain projects aimed or designed to improve, develop, stipulate, awaken and arouse the social, civic and economic consciousness and conditions of the common man, in particular, the rural and barrio people, so that the latter may enjoy a fuller and more meaningful life; to bring out, develop and improve the latent powers of the common man by the involvement of his faculties in the wide use of his resources, thereby contributing to the development of an enlightened citizenry, and assisting and aiding in the fight against poverty, disease, ignorance and social, civic and economic spathy; to inform, advise, acquaint, apprise, instruct and in general to make available to the common man, by the use of all kinds of modern media of mass communications, the findings and discoveries of modern science and technology especially insofar as they are applicable to the improvement of his own social, civic and economic condition and that of his community; to conduct and sponsor researches and development projects in social sciences; to establish, set-up, operate and/or maintain scholarships or professional chair in social sciences in all its branches, and in aid of this purpose, to receive grants, bequests and donations from all sources whether it be in cash, property or otherwise; to print, publish, produce, import, circulate and distribute periodicals, magazines, books and any other printed matter, to exchange views, conduct seminars, forums, public gatherings or meetings, and to make regular use of other modern media of mass communications such as radio and television, as a means of generating the social and economic development of the common man and as a means to awaken, stimulate and inspire constructive thinking on the social, civic and economic problems of the Philippines particularly those relating to the common man; that in furtherance of its objectives, the Foundation shall have the following powers, viz: to purchase, take, receive, hold, lease or otherwise acquire real and personal property; of any and all kinds and in particular, lands, buildings, machinery, tools, trademarks, tradenames, patents, licenses, concessions, copyrights, stocks, bonds, notes securities, or other obligations of any organizations or association, domestic or foreign, and any other interest in real and personal property; to acquire, receive, take title to and hold any property real and personal, or any interest therein, by way of grant, gift, devise, bequest, legacy, endowments or any other form of voluntary contributions or donation from donors here and abroad; to sell, convey, transfer, or otherwise dispose of any such property acquired under the foregoing two provisions, and to invest, deal with and expand the principal and income thereof as the purposes or objectives of the corporation may require; to make, execute, enter into, perform and carry out contracts of every kind or description pertaining to the purposes or objectives of this corporation and for any lawful purpose necessary or expedient thereto with any person, firm, association or corporation; to borrow or raise money without limit as to amounts, if and when necessary to promote the best interests of the corporation and consistent with its purposes and objectives set forth above, and in pursuance thereof, to make any instruments and other evidences of indebtedness, execute any pledge, mortgage or other liens, or issue and endorse any debentures, bonds, notes, securities or other obligations secured by any or all of the assets and properties of this corporation; and, in general, to exercise any, all and every power which a non-stock, non-profit corporation may be authorized by law now existing or which may hereafter be enacted; that the Foundation shall be funded by grants, gifts, devises, bequests, legacies, endowments or any other form of voluntary contributions or donations from donors here and abroad as well as from the proceeds of its investments and activities; that the Foundation shall be managed by a Board of Trustees consisting of five (5) members, who shall be elected every year by the members of the corporation and who shall serve until the election and qualification of their successors; that the said Trustees, as such, shall not receive any compensation for their services; that any and all income of the Foundation will be devoted to the accomplishment of its aims and purposes; that the members shall not be entitled to any dividend or benefit from the income of the Foundation and shall have no right, interest or participation in the properties and assets of the Foundation either during its corporate existence or upon its liquidation; and that no part of its net income shall inure to the benefit of any of its members. It appears also that the Foundation has been determined by the National Science Development Board to have been organized for scientific advancement and that said Foundation and its funds are dedicated to scientific pursuits within the meaning of Section 24 of Republic Act No. 2067, as amended by Republic Act No. 3589 (see NSDB Certification 68-5-27 dated November 19, 1968) cdt A non-profit educational and/or charitable corporation, institution, foundation, trust or philanthropic organization and/or research institution or organization shall be exempt from the payment of the donor's and donee's gift taxes pursuant to Sections 109 and 110 of the Tax Code, as amended. For gift tax purposes, a non-profit educational and/or charitable corporation, institution, foundation, trust or philanthropic organization and/or research institution or organization is a school, college or university and/or charitable corporation, foundation trust or philanthropic organization and/or research institution, or organization, incorporated as a non-stock entity, without stockholders, paying no dividends, governed by trustees who receive no compensation, and devoting all its income, whether student's fees, or gifts, donations, subsidies or other forms of philanthropy, to the accomplishment and promotion of the purposes enumerated in its articles of incorporation. Since the Foundation is a non-profit charitable, educational and/or research organization, all donations made in its favor, and all properties transferred to and received by it in trust are exempt from the donor's and donee's gift taxes prescribed by Sections 109 and 110 of the Tax Code, as amended, provided that the same will be used exclusively for the benefit of philanthropic, educational or research institutions or organizations established, maintained and operated by it, and/or for research, educational or charitable purposes. In this connection, it shall be the duty of the person or persons in charge of the Foundation or recipient of the gifts to submit within ninety days after the end of each calendar year a report to the Commissioner of Internal Revenue on the use and disposition of the gift received during the year which shall be subject to the verification of said Commissioner. (See Sec. 110, N.I.R.C. as amended) Moreover, the Foundation is exempt from the payment of income tax under Section 27(e) of the Tax Code; and all income of whatever kind and character which it may derive from any of its properties, real or personal, or from their investments in pursuance of its objectives shall be tax-exempt pursuant to the provisions of Section 24 of Republic Act No. 3589. Such being the case, it is exempt from the filing of income tax returns. It is, however, required to file on or before April 15 of each year, a balance sheet, profit and loss statement together with an 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 operations and activities as well as sources and disposition of income. This Office may, however, revise or modify this ruling, if upon investigation, it will appear that the facts are different from those upon which the ruling was predicated. Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue