The Bengzon Law Firm

November 5, 2008 BIR RULING [DA-(C-120) 391-08] UN283-95 The Bengzon Law Firm 9th Floor, Ayala Life-FGU Center 6811 Ayala Avenue Makati City Attention: Atty. Manolito S. Soller and Atty. Kenneth Joey H. Maceren Gentlemen : This refers to your letter dated August 14, 2008 stating that your client, ACA Foundation, Inc. (ACA), is a non-stock, non-profit corporation duly registered with the Securities and Exchange Commission (SEC) under SEC Registration No. CN200513184; that ACA is primarily organized to undertake philanthropic, charitable and educational activities to help the underprivileged and marginalized sectors of the society; that among its secondary purposes is to establish an educational institution devoted to technical and vocational education or to donate equipment, materials and tools to an educational institution devoted to technical and vocational education; that in order to raise funds for the purpose of establishing an educational institution that will be devoted to technical and vocational education and to accomplish its primary purpose, ACA is to engage in a fund raising activity and the said activity involves the production of a musical play; and that the Technical Education and Skills Development Authority (TESDA), among others, favorably endorsed the application of ACA to operate or offer technical-vocational courses. In connection therewith, you now request for a ruling that ACA is not liable to pay income tax, value-added tax (VAT) and percentage tax when it produces a musical play as a fund raising activity considering that the net proceeds thereof will not inure to the benefit of any member, trustee or officer of ACA. In reply thereto, please be informed that this Office had already occasioned to rule on the matter, when it said in BIR Ruling No. UN283-95 dated July 31, 1995, as follows: ". . . the proceeds to be derived by you in connection with the one performance of 'EVITA' scheduled on October 3, 1995 and a bingo night on August 1, 1996 to be held at the Christ the King Social Hall, which shall be used to finance part of the cost of a mobile dental unit to be used for the University's outreach program are not subject to income, VAT and other percentage taxes." Considering that ACA is a non-stock and non-profit corporation which is primarily organized for the purpose of undertaking philanthropic, charitable and educational works, the proceeds it will derive from a musical play it produces as a fund raising activity is not subject to income and business taxes. SUCH BEING THE CASE, this Office holds that ACA is not liable to pay income, VAT and other percentage taxes when it produces a musical play as part of its fund raising activities in order to accomplish its primary purpose. 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 null and void. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service