Final Tax of 20% on Raffle Prizes in Excess of P3,000.00

March 23, 1990 BIR RULING NO. 032-90 21 (c) (1) 000-00 032-90 Gentlemen : This refers to your letters dated November 28, 1989 and January 3, 1990, stating that the Grand Draw of the Bayan Muna Car Raffle Fund Campaign has been moved to Araw ng Kagitingan on April 9, 1990; that your major prizes include one (1) brand new Nissan Maxima, three (3) Sony Color T.V. Sets, three (3) 12 cu. ft. Kelvinator refrigerators, three (3) Astron Symphony Stereo Components and four (4) Astron Single Cassette Karaoke; that the purpose of the fund campaign is to raise funds to erect a fitting memorial for the brave men and women who provided shining examples of martyrdom by sacrificing their lives in the fight against the past oppressive regime; that the memorials shall be in the form of scholarship for the poor but deserving students, halfway homes for street urchins, vocational training and livelihood programs and publication of books on the lives of these unsung heroes to be used as teaching aids in schools. It is further represented that the Bayan Muna Bago Ang Sarili Movement (Bayan Muna) is a marketing communication and fund raising arm of the Bantayog Ng Mga Bayani Foundation, a non-stock, non-profit organization established purposely to honor the brave men and women who provided shining examples of martyrdom by sacrificing their lives in the fight against the past oppressive regime; that the Foundation is authorized under Presidential Proclamation No. 45 issued November 21, 1986, to conduct a fund campaign for one year. Based on the foregoing, you now request for a ruling supporting the above fund campaign effort by waiving all taxes due on your prizes. In reply, your request is answered in the negative. Tax exemption laws are strictly construed. One claiming the benefit thereof must bring himself substantially within the terms of the statute or justify his claim by the clearest grant of the organic or state law. (House V. Posadas, 53 Phil. 338; Asiatic Petroleum Co. vs. Llanes, 49 Phil. 466) Accordingly, in the absence of a clear grant of tax exemption, your raffle prizes in excess of P3,000.00 shall be subject to a final tax of 20% pursuant to Section 21(c)(1) of the Tax Code, which shall be withheld by you, as withholding agent, pursuant to Sections 50(b) and 51 of the same Code. cdtech Very truly yours, (SGD.) JOSE U. ONG Commissioner