BIR Ruling [DA-252-05]

June 10, 2005 BIR RULING [DA-252-05] Section 279 (B);S-30-030-2003 Morning Dew Montessori 269 Sunset Drive, Brookside Hills Subd., Cainta, Rizal Attention: Mr. Joseph Salvador F. Sanchez III Finance Officer Gentlemen : This refers to your letter dated February 15, 2005 requesting for a revision of ENPS 026-95 dated September 12, 1995. Documentary evidence submitted disclosed that the MORNING DEW MONTESSORI is a stock and profit corporation registered with the Securities and Exchange Commission under SEC Reg. No. ANO93-01183 dated March 9, 1993; that the Department of Education issued Government Recognition No. K-004 s. 1994 dated April 13, 1994 granting recognition for the Pre-Elementary Course, Government Recognition No. K-008 s. 1994 dated April 13, 1994 granting recognition of Grades I-VI of the Elementary Course, Government Recognition No. 004 s. 1994 dated April 26, 1994 granting recognition for the Complete Secondary Course (NSEC);and that the primary purpose for which the corporation is organized, are as follows, viz : 1. To organize, establish, maintain and conduct a progressive institution of learning of a high academic standing which will emphasize cultural development, moral character, and value formation and to this end, operate schools giving pre-school/pre-elementary, elementary courses and high school courses in accordance with up-to-date and modern technical theories and methods, to organize, establish and maintain schools of similar nature in any province, city or municipality of the Philippines; and to engage in any activity and perform any such act which would contribute to the further growth and development of the school or which would be incidental or conducive to the attainment of any and all of the abovementioned goals. In reply, please be informed that this Office cannot issue the requested ruling/certificate of the exemption since you are a stock and profit corporation. Accordingly, you are subject to the corresponding internal revenue taxes imposed under the Tax Code of 1997 on your income derived from any of its properties real or personal, or any activity conducted for profit regardless of the disposition thereof, which income should be returned fork taxation. Likewise, interest income from currency bank deposits and yield or any other monetary benefit from deposit substitute instruments are subject to 20% final withholding tax as well as its interest income under the expanded foreign currency deposit system are subject to a final withholding tax of 7 1/2% pursuant to Section 27(D)(1) in relation to Section 57(A) of the Tax Code of 1997. Moreover, you are required to file on or before the 15th day of the fourth month following the end of the accounting period 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 period 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. LLpr It should be understood that the MORNING DEW MONTESSORI shall be constituted as withholding agent of the government if it acts as an employer and any of its employees receives compensation income subject to withholding tax, or if it makes income payments to individuals or corporations subject to the expanded withholding tax provided for in Section 57 of the Tax Code of 1997. (BIR Ruling No. S30-52-99 dated May 28, 1999) Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service