Exemption from Internal Revenue Taxes and the Regulations

August 13, 1979 BIR RULING NO. 074-79 This is in reply to your letter dated January 19, 1979 requesting a ruling on whether your client, the Daughters of St. Paul, Missionary Sisters of the Catholic Press, Inc. is subject to internal revenue taxes and the regulations issued thereunder as well as the registration of books of accounts and invoices insofar as its alleged religious activities are concerned. In your letter, you represented that your client is a religious corporation: "1. The Pious Society of the Daughters of St. Paul is a religious congregation of the Roman Catholic Church. It was founded in Alba, Italy in 1915 by Fr. James Alberione and on May 15, 1953 received approval of the Holy See. This religious congregation has houses (convents) all over the world, particularly in Europe, the United States, South America, India, Pakistan, Japan, Taiwan, Hongkong, Macao and Africa. "2. Members of this Congregation came to the Philippines in 1938. There are now 144 Filipino sisters and 8 foreign sisters. The Congregation has five Filipino sisters in Rome and fifteen Filipino sisters in foreign lands. Its mother house in the Philippines is situated at 2650 F.B. Harrison, Pasay City. It has fifteen (15) convents all over the Philippines, from Northern Luzon to Mindanao. "3. The general and special purposes of this Congregation are spelled out in its Constitution, as approved by the Holy See. These are: '1. The general purpose of the 'Pious Society of the Daughters of St. Paul' is the glory of God and the sanctification of its members through the faithful observance of the three vows of obedience, chastity and poverty, and by ordering one's own life according to the norms of the Sacred Canons and of the present Constitutions. '2. The special purposes of the Pious Society of the Daughters of St. Paul consists in this: that the religious work with all their energies for the glory of God and the salvation of souls in the spreading of Catholic doctrine with apostolate of the editions: press, cinema, radio, television, and in general with the most expeditious and fruitful means; that is, the inventions which human progress furnishes and the necessities and the conditions of the times require. '3. In its efforts to accomplish this special purpose the Pious Society of the Daughters of St. Paul will do nothing for profit. Therefore the offerings of money are not to be accepted except insofar as they are required for necessities, the proper development and the economic and financial security of the Congregation and of its works, according to the prescriptions of Sacred Canons and the prudent judgment of the higher superior.' "4. In carrying out its apostolate in the Philippines, the Congregation has established a printing press and fifteen 'stores' or reading rooms' where the public may read and acquire religious publications. All publications of the Congregation are of a religious character; it does not even print textbooks or other educational materials. It also distributes religious publications received from abroad. "5. In carrying out this religious activities relating to the communications media, the Congregation does not employ any lay people. Its printing press is staffed completely with members of the Congregation; its 'stores' or 'reading rooms' are staffed exclusively with members of the Congregation. "6. In the distribution of religious publications, the Congregation accepts offerings of the faithful which enable the Congregation to carry out this religious activity, but the offering is not compulsory and the publications and reading materials (prayer books, missals, bibles, religious articles and tracts theological works, biographies for saints, in English and the local dialects are offered to the faithful for edification and not for profit, the sisters also go from house to house, in the cities and barrios throughout the Philippines, offering these religious publications to the faithful." In reply, I have the honor to inform you that, under the foregoing representations, the activities of your client consisting of the printing, dissemination and distribution of religious literatures and informations, are in furtherance of the religious purpose for which it was created. Accordingly, this Office is of the opinion, and so holds, that such activities, being purely religious, are not subject to internal revenue taxes and the bookkeeping regulations. However, the income derived from any of the properties of the religious organization, real or personal, or any activity conducted for profit regardless of the disposition thereof, shall be subject to the corresponding internal revenue taxes imposed under the National Internal Revenue Code. (Section 27(e) of the Tax Code, as amended by P.D. No. 1457). The above ruling is based on your representation and the same will be revoked if, after investigation, it is ascertained that the facts are different from those represented.