BIR Ruling

February 3, 1976 Messrs. C. J. Valdes & Associates 1130 Perez St., United Nations Avenue Paco, Manila Attention: Mr . Hector A . Reyes Gentlemen : This refers to your letter dated October 16, 1974 requesting exemption in behalf of your client, the Human Development Foundation, Inc., from the payment of income tax under Section 27(e) of the Tax Code. cdta Investigation conducted by this office disclosed that the Human Development Foundation, Inc., is a non-stock, non profit corporation organized in 1971 mainly for the purpose of promoting, encouraging and initiating scientific research and development project in atomic energy, physical sciences engineering and social science or humanities; to establish, set-up and maintain scholarship or professional chairs in order to foster, promote and encourage the study and improvement of fundamental work and/or economic evaluation in the fields of atomic energy, etc. Investigation further disclosed that as of December 31, 1973, the corporation solicited donations from different persons and entities. Part of the proceeds of said donations was expended to pursue the purposes and functions of the Foundation, while the rest was invested so that it could earn interest and dividends. In other words, part of the income derived by the Foundation comes from dividends and interests earned on its short-term and long-term investments, which constitutes income from its personal properties and from activity conducted for profit. It appears, however, that no part of the net income of the Foundation inures to the benefit of any private individual. Based on the foregoing facts, this office is of the opinion as it hereby holds that the Human Development Foundation Inc., falls within the purview of a corporation organized for scientific purposes, as contemplated under Section 27(e) of the Tax Code. Accordingly, it is exempt from the payment of income tax on income earned by it as such corporation and therefore, need not file an income tax return covering such income. However, it is 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. Such being the case, the Foundation should file an income tax return declaring therein the dividend and interest income derived by it from short-term and long-term investments and pay the tax due thereon. In this connection, whether or not taxable income is earned, the Foundation 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. cdtech Very truly yours, EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-1456-040-3 "TAXPAYERS SHOULD INDICATE THEIR TAN IN ALL COMMUNICATIONS TO THE BIR."