Exemption from the Payment of Income Tax

February 18, 1988 BIR RULING NO. 050-88 26 (f) 000-00 050-88 S i r : This refers to your letter dated November 19, 1987 requesting a ruling as to whether or not Presidential Decree Nos. 1955 and 1959 both dated October 15, 1984 have the effect of withdrawing the exemptions under then Section 27 [now Section 26(f)] of the Tax Code. In reply, please be informed that pursuant to Section 2 of P.D. No. 1955, and to clarify further the scope of said decree, the Ministry (now Department) of Finance issued its Ministry Order No. 39-84 which provides that the withdrawal of exemptions from, or any preferential treatment in the payment of duties, taxes, fees, imposts and other charges as provided for under P.D. No. 1955 does not apply to exemptions or preferential treatment embodied, among others, in the National Internal Revenue Code, as amended. Such being the case, since the exemption from income tax of your client, the Realty Owners Association of the Philippines was granted under then Section 26(f) of the Tax Code, the same is not affected by the passage of P.D. No. 1955 on October 15, 1984. Accordingly, it is still exempt from the payment of income tax in respect of income received by it as such organization, and therefore, need not file an income tax return concerning such income. However, it is subject to the corresponding internal revenue taxes imposed under the National Internal Revenue Code on its income derived from any of its properties, real or personal, or any activity conducted for profit regardless of the disposition thereof, which income should be returned for taxation purposes pursuant to Section 26 of the Tax Code as amended by P.D. No. 1457. cdt Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner