BIR Ruling No. 061-15

March 10, 2015 BIR RULING NO. 061-15 Boy Scouts of the Philippines 181 Natividad Almeda-Lopez St., Ermita, Manila Attention: Wendel E. Avisado SVP & Acting Secretary General Gentlemen : This refers to BIR Ruling DA-307-05 dated July 5, 2005, issued in favor of Boy Scouts of the Philippines (BSP) wherein it was ruled that the sale of BSP's real property located at J.P. Laurel Avenue, Lanang, Davao City covered by Transfer Certificate of Title No. T-56707, cannot be considered income from the productive use of its property and therefore, the same is not subject to income tax. Please be informed that a review of the said ruling shows that the same is contrary to law and jurisprudence. In the said ruling, BSP was recognized as a corporation organized for charitable, scientific, athletic or cultural purposes; operated exclusively for the promotion of social, and for other non-profitable purposes pursuant to Section 30 (E), (G) and (H) of the National Internal Revenue Code of 1997, as amended, (NIRC). The last paragraph of Section 30 of the NIRC provides: "Notwithstanding the provisions in the preceding paragraphs, the income of whatever kind and character of the foregoing organizations from any of their properties, real or personal, or from any of their activities conducted for profit regardless of the disposition made of such income, shall be subject to tax imposed under this Code." The exemption granted to BSP under BIR Ruling DA-307-05 dated July 5, 2005 is expressly disallowed by the very wording of the NIRC which mandates that the income of exempt organizations (such as the BSP) from any of their properties, real or personal shall be subject to the tax imposed by the same Code. Moreover, in CIR v. CA, CTA and YMCA, G.R. No. 124043 dated October 14, 1998, the Supreme Court ruled that the income received by organizations described under Section 30 (E) of the NIRC is, as a rule, exempted from the payment of tax "in respect to income received by them as such. However, this exemption does not apply to income derived from any of their properties, real or personal, or from any of their activities conducted for profit, regardless of the disposition made of such income. . ." as clearly stated in the last paragraph of the same Section. For these reasons, BIR Ruling DA-307-05 dated July 5, 2005 issued in favor of Boy Scouts of the Philippines (BSP) being contrary to law is hereby revoked. EICScD Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner Bureau of Internal Revenue