BIR Ruling [DA-313-05]

July 6, 2005 BIR RULING [DA-313-05] 27 (D); DA-013-02 Southeast Asian Regional Center for Graduate Study And Research in Agriculture (SEARCA) Los Baos, Laguna Attention: Mr. Gil C. Saguiguit, Jr. Deputy Director Gentlemen : This refers to your letter dated June 8, 2005 requesting this Office to issue in your favor a certificate of tax exemption from the payment of the 20% final tax on interest earnings derived from treasury bonds, treasury bills and other bank notes relative to your desire to purchase government securities directly from the Bureau of Treasury. It is represented that SEARCA is a non-stock, non-profit educational institution located at Los Baos, Laguna; that it was established through an enabling instrument in accordance with the Charter of the Southeast Asian Ministers of Education Organization formed by the Ministers of Education of the Philippines, Indonesia, Malaysia, Lao PDR, Singapore and Thailand in order to provide high quality graduate education and training in agriculture in the region; that SEARCA is both an international organization and educational institution at the same time, hence qualified to be exempt from the 20% final tax; and that BIR Ruling No. DA-013-02 dated January 30, 2002 has been issued in your favor exempting SEARCA from the payment of the 20% final tax on interest earnings derived from treasury bonds, treasury bills and other bank notes. In reply, please be informed that rulings issued by this Office are still valid and in effect until revoked. Inasmuch there is no ruling revoking BIR Ruling No. DA-013-02, the same is still in effect. Thus, SEARCA is exempt from payment of the 20% final tax on interest earnings derived from treasury bonds, treasury bills and other bank notes. With regard to savings and time deposit, the treasury bills, treasury bonds and other bank notes of SEARCA also form part of its assets used for educational purposes. As such, it is exempt from tax by virtue of the proviso of Section 4(3) Article XIV of the 1987 Constitution which reads: "(3) All revenues and assets of non-stock, non-profit educational institutions used actually, directly, and exclusively for educational purposes shall be exempt from taxes and duties. Upon the dissolution or cessation of the corporate existence of such institutions, their assets shall be disposed of in the manner provided by law. xxx xxx xxx" This ruling is being issued on the basis of the foregoing facts as represented. However, is upon investigation it shall be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service