Philippine Radio Educational & Information Center, Inc.

December 7, 2009 BIR RULING [DA-(C-299) 739-09] RR No. 8-2005; BIR Ruling No. 004-06; DA-390-06, DA573-06, DA602-06 & DA-97-07 Philippine Radio Educational & Information Center, Inc. P.O. Box 2642, Quezon City Attention: Rev. Fr. Roberto M. Ebisa, SVD General Manager Gentlemen : This refers to your letter dated June 30, 2009 requesting for a ruling that the Manila Electric Company (MERALCO) Phase IVB refund to you is not subject to creditable withholding tax. As represented, you are a non-stock, non-profit corporation with Taxpayer Identification No. 001-270-036-000. You are registered with the Securities and Exchange Commission (SEC) under SEC Registration No. 18722 dated May 3, 1961. You were organized for the following purposes: "1. To serve as center, thru the media of radio, television and other similar means of transmission, for the dissemination of information calculated to foster the democratic way of government and to evoke a genuine love for God and country. 2. To enlighten and instruct the people, and to direct their minds and hearts towards higher and spiritual things. 3. To use all modern media of mass communication to serve the people by giving them wholesome programs of information and entertainment. 4. To encourage various types of religious educational, cultural and information programmes and to organize and coordinate them with one another. aHTcDA 5. To strengthen the bonds between people thru education and information so that they may have a more respectful understanding of each other and assist one another in times of crisis. 6. To construct, maintain and operate radio broadcasting and television stations as well as private fixed point-to-point relay and land based stations in the Philippines for educational, cultural and informational purposes and in the public interest. 7. To own and acquire, by purchase or lease, such real and personal. . . . 8. To acquire, by donation, such real and personal property as may be. . . . 9. In general, to carry on any other lawful venture whatsoever in. . . ." On October 10, 1979, you were issued BIR Ruling exempting you from the payment of income tax pursuant to Section 27 (e) of the Tax Code [now Section 30 (E) of the Tax Code of 1997]. Your refund was approved by the Energy Regulatory Commission (ERC) in ERC Case No. 2001-243 and the new EVAT Law (RA 9337). The full amount of refund is from your transmitter site located in Barrio Dakila, Malolos, Bulacan under Service Identification Number (SIN) 800127301 with the gross amount of PhP1,141,820.75 and from your head office in Buick St., Fairview Park, Quezon City under SIN 801156301 amounting to PhP1,180,553.39. In reply, please be informed that in a similar case, a non-stock, non-profit corporation exempt from income tax under Section 30 of the Tax Code of 1997 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 held in the above 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 deduction 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." (BIR Ruling No. DA-390-2006 dated June 23, 2006) AScTaD Since you are an organization operated for the promotion of social welfare which is exempt from income tax under Section 30 (G) of the Tax Code of 1997, the refund of the excess utility payments in your favor will not give rise to or create a taxable income. Consequently, said refund is not subject to 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, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service