BIR Ruling

February 6, 1968 Mr. Go Seng Guan Philippine Chinese High School, Inc. Caloocan City S i r : This refers to your letter dated August 2, 1967 requesting that the tax exemption granted to the Philippine Chinese High School, Inc., 1253 Jose Abad Santos St., Manila, be extended to its newly established branch housed in an annex school building located at 8th Avenue Street, Grace Park, Caloocan City. It appears that the Philippine Chinese High School, Inc., (hereinafter referred to as the School) is a duly registered non-stock corporation organized and maintained exclusively for educational purposes; that its operating capital comes from contributions, donations, tuition and diploma fees; that no part of its net income inures to the benefit of any stockholder or individual; and that a tax exemption was granted to the said School under Section 27(e) of the Tax Code in a letter of this Office dated November 4, 1963. You stated that the School established and formed a branch which is presently housed in an annex school building located at 8th Avenue Street, Grace Park, Caloocan City. In reply, I have the honor to inform you that the establishment of a branch by the School did not substantially affect, modify or change its articles of incorporation, by-laws or manner of operation, the said branch having been established in pursuance of its principal objective, namely: educational. Such being the case, the Philippine Chinese High School, Inc. including the aforementioned branch are exempt from 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. Consequently, the income of the School from the operation of its store is subject to tax imposed on ordinary corporations regardless of the disposition made thereof in accordance with the ruling of this Office dated November 4, 1963. Moreover, the Philippine Chinese High School, Inc. 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. atdc Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue