Tax Exemption Cannot Be Granted Absent an Exempting Provision

July 28, 2005 BIR RULING NO. 007-05 RR 2-98 000-00 Ms. Milagros M. Bibal #5 Bambang Street Bayan, Los Baos 4030 Laguna M a d a m : This refers to your letter dated March 22, 2000 which was referred to this office by Regional Director Ruben B. Buenaventura, relative to your request for exemption from income tax. It is represented that you are a taxpayer residing in Los Baos, Laguna who has been awarded a research fellowship contract with the Philippine Rice Research Institute (PRRI) at Muoz, Nueva Ecija from February to December 1999; that you have been informed that for the duration of the contract, you will be receiving a monthly stipend of P14,538.00 which is considered a non-taxable income; that no withholding tax was deducted from your income during the duration of the contract since the stipend you were receiving is non-taxable; that the administrative officer informed you that they could not give you a BIR W-2 form because of the above reason; that you are filing your income tax return as you have done in the past years when you were working in other government institutions and receiving a salary; and that you are filing your income tax return early because you have a deadline to meet at the Office of Student Affairs at UP Los Baos for the scholarship privileges of your two (2) children in college. In reply, please be informed that it is a well-settled rule that he who claims exemption should prove by convincing proofs that he is exempted. ( Visayan Cebu Terminal Co., Inc. vs. Commissioner ,L-19530 & L-19444, February 27, 1965) Exemptions from taxation are highly disfavored in law; and he who claims an exemption must be able to justify his claim by the clearest grant of organic or statute law. An exemption from the common burden cannot be permitted to exist upon vague implications. ( Asiatic Petroleum Co. vs. Llanas ,49 Phil. 466 cited in Collector vs. Manila Comm. Of Customs ,L-28731, 28902, Mar. 29, 1979) Accordingly, your request cannot be granted for lack of legal basis. In the absence of an exempting provision, this Office cannot exempt you from payment of your income tax. CcAITa Moreover, the stipend you received during the duration of the contract is subject to withholding tax pursuant to Section 2.57.2 (A) (8) of Rev. Reg. No. 2-98 because PRRI is a withholding agent required to deduct and withhold the creditable tax on your income payments at the rate of 10% under the said provision. 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.) JOSE MARIO C. BUAG OIC, Commissioner of Internal Revenue