BIR Ruling [DA-265-01]

December 19, 2001 BIR RULING [DA-265-01] United Coconut Planters Bank Makati Avenue, Makati City P.O. Box 4230, MCC P.O. Box 3029 Attention: Ms. Denden S. Liao Branch Head New Manila Branch Gentlemen : In reply to your letter dated October 22, 2001 requesting clarification on some issues regarding the tax exemption of non-stock, non-profit educational institutions, please be informed as follows: 1. Revenue Memorandum Circular No. 3-2001 which authorizes all BIR Regional directors, including those in acting capacity, to sign certain rulings with established precedents, does not invalidate existing rulings issued by former and present officials of the BIR. Thus, a tax exemption previously granted to a non-stock, non-profit educational institution pursuant to Section 4(3), Article XIV of the 1997 Philippine Constitution by a duly authorized official of this Bureau, e.g., Assistant Commissioner (Legal Service) remains valid unless sooner revised, revoked or modified by the Commissioner of Internal Revenue. It must be emphasized herein that RMC No. 3-2001 is not a delegation of authority to the Regional Directors to revise, revoke or modify any existing ruling of the Bureau since such power cannot be delegated to subordinate officials, pursuant to Section 7(b) of the 1997 Tax Code. ECaScD Rulings of the BIR can be modified by the Commissioner (1) if the taxpayer deliberately misstates or omits material facts in his request for ruling; or (2) where the facts subsequently gather by the BIR are materially different from the facts on which the ruling is based or (3) where the taxpayer acted in bad faith. In these instances, the revocation, modification or reversal of the ruling/s can be given retroactive application even if the revocation, modification or reversal is prejudicial to the taxpayer, pursuant to Section 246 of the 1997 Tax Code. 2. As aforestated, rulings issued by the proper officials of the BIR and those issued by Regional Directors pursuant to RMC No. 3-2001 remain valid unless sooner reversed, revoked or modified by the commissioner on any of the aforementioned grounds. 3. There are no other requirements to be submitted by a non-stock, non-profit educational institution seeking a ruling for tax exemption from the 20% withholding tax pursuant to the 1997 Philippine Constitution, except those specifically enumerated in Department Order No. 145-95. 4. The person who should be held liable should the educational institution violate the terms of the tax exemption granted by the BIR is the officer or employee of the educational institution who is under a duty to perform the act in respect of which the violation occurs. (Sec. 247(c), Tax Code of 1997) We hope that we have sufficiently clarified the issues raised by you. Very truly yours, Commissioner of Internal Revenue By: (SGD.) MILAGROS V. REGALADO Acting Assistant Commissioner Legal Service