Philippine Challenge, Inc.

October 19, 2009 BIR RULING [DA-(C-241) 614-09] Sections 24 (A) & 32; BIR Ruling No. 198-91, DA-304-98, DA-072-02, DA-514-05 & DA-198-06 Philippine Challenge, Inc. P.O. Box 13919, Ortigas Center 1605 Pasig City Attention: Mrs. Norma P. Movido Office/Business Manager Gentlemen : This refers to your letter dated February 19, 2009 requesting for a confirmatory ruling to the effect that the financial support received by Philippine Challenge, Inc.'s (PCI) local missionaries in the Philippines from their supporters and coursed through PCI is exempt from income tax as well as withholding tax. As represented, PCI (formerly Philippine Crusades, Inc.) is a non-stock, non-profit religious organization duly registered with the Securities and Exchange Commission (SEC) under SEC Registration No. 8377 dated December 14, 1953. The primary purpose for which it was organized are "to co-labor with all who would claim sole allegiance to the Lord Jesus Christ in creative and strategic ways to multiply healthy, maturing, churches among all people. The local society desires to incorporate for the administration of its temporalities and or the management of its properties or estates". Initially, PCI recruited foreign missionaries in the Philippines to further the proclamation of God's Word and to assist the local churches in its evangelism and church growth program. The foreign missionaries were required to raise their financial support from Christian friends, churches and relatives prior to overseas assignment, which support is channeled through the organization's sending office designated for the ministry of the missionaries. Such funds were remitted to PCI for the account of the foreign missionary concerned. Currently, PCI sends out not only foreigners, but Filipino missionaries to various parts of the Philippines. Some Filipino missionaries are sent abroad. Just like their foreign counterparts, the Filipino missionaries raise their financial supports, prior to their assignment from friends, churches and relatives, which funds are then given to the Filipino missionaries by way of financial assistance for their necessary living expenses. These Filipino missionaries do not derive any income or livelihood from PCI or elsewhere. On March 7, 1995, this Office issued in favor of PCI BIR Ruling No. UN-094-95 exempting from income tax and withholding tax the financial support being received by the foreign missionaries of PCI. Since as represented, PCI's Filipino missionaries receive financial assistance for their necessary living expenses and do not derive any personal income from their pastoral ministry/missionary work, they are exempt from income tax and consequently from withholding tax prescribed by Section 79, Chapter XIII, Title II of the Tax Code of 1997, as amended. 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. CcADHI Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service