BIR Ruling [DA-573-06]

September 22, 2006 BIR RULING [DA-573-06] BIR Ruling No. DA-390-06 The Most Worshipful Grand Lodge of Free & Accepted Masons of the Philippines Plaridel Masonic Temple 1440 San Marcelino St. Ermita, Manila Attention: Ms. Gloria G. Compendio Finance Officer Gentlemen : This refers to your letter dated September 15, 2006 requesting on behalf of The Most Worshipful Grand Lodge of Free & Accepted Masons of the Philippines for a ruling that the Manila Electric Company (MERALCO) refund to the Corporation is not subject to the twenty-five percent (25%) creditable withholding tax. Documents show that you are a non-stock, non-profit corporation duly registered with the Securities and Exchange Commission formed exclusively for the following purposes: "a) To inculcate the principles of ancient free and accepted Masonry. b) To issue charters to, and preserve the regularity of all Masonic Lodges within the Philippines, to operate under the Masonic Lodge system for the exclusive benefit of the members of the fraternity, with each subordinate chartered Lodge providing within its respective By-Laws the mode of benefit to be rendered in case of death, sickness, accident, or necessity as the case may be. c) To develop the moral character and usefulness of its members, to improve the spiritual, intellectual, social and physical condition of young men and women through membership in its appendant bodies De Molay, Rainbow Girls, Job's Daughters, Order of Amaranth and Eastern Star. d) To identify Masonry with Charity and therefore engage in charitable works for the benefit of all men. e) To acquire, own, administer, sell, and transfer such real and personal property as may be necessary for the use of the corporation. caSDCA f) To enter into and operate such business enterprises as may provide sources of income to support and accomplish the beneficiary aims of the fraternity" On April 13, 1983, this Office issued a BIR Ruling exempting The Most Worshipful Grand Lodge of Free & Accepted Masons of the Philippines from income tax pursuant to Section 27(c) of the National Internal Revenue Code, as amended (now Section 30(C) of the Tax Code of 1997). In reply, please be informed that in BIR Ruling No. DA-390-2006 dated June 23, 2006, a non-stock, non-profit corporation has a refund of the excess utility payments with MERALCO covering the period 1995 to 2003. It is not engaged in any profitable activities that would result in the imposition of income taxes, consequently, it has not claimed the above utility payments as deductions for income tax purposes. It is not subject to income tax, thus, it has not claimed the utility payments as deductions resulting in a benefit. This Office ruled in said case that ". . . considering that LSHA is an organization exempt from income tax and it has not been engaged in any profitable activities that would result in the imposition of taxes, thereby it has not claimed the above utility payments as deductions for income tax purposes, the refund of the excess utility payments in its favor, therefore, will not give rise to or create a taxable income. Consequently, said refund is not subject to the withholding tax prescribed under RR No. 8-2005 ." In view of the foregoing, the refund of the excess utility payments in favor of The Most Worshipful Grand Lodge of Free & Accepted Masons of the Philippines will not give rise to or create a taxable income. Consequently, said refund is not subject to the twenty-five percent (25%) withholding tax. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service