Dividends, Interest and Other Income of Clark Welfare Coordinating Council Educational Fund, Inc.

February 10, 1960 BIR RULING NO. 093-60 Messrs. Sycip, Gorres, Velayo & Co. Certified Public Accountants P.O. Box 589, Manila Gentlemen : Reference is made to your letter dated May 12, 1959, stating, among other things, the following: "Your client, Clark Welfare Coordinating Council Educational Fund, Inc., is a non-stock, non-profit corporation, organized primarily for the purpose of raising, administering, granting, or otherwise making available funds to educational institutions for the benefit of dependents and orphans of members of the Philippine Air Force for educational purposes. Its Board of Directors is empowered to receive, hold, invest and disburse property and money of every name and nature, donated, bequeathed, devised, conveyed, generated and transferred to it and to do all such other things as are necessary and/or incidental for the promotion and attainment of its objectives. The fifth paragraph of its Articles of Incorporation provides that no member of the corporation shall at anytime, either upon its dissolution or in any other event, be considered to be the owner or entitled at anytime, to any of its assets, funds or property, all of which assets, funds, or property, shall be exclusively and forever devoted to the educational trust fund; and that no officer or member of the Board of Directors shall receive directly or indirectly, pecuniary gain through its operation, except its executive secretary who may receive a reasonable compensation for service rendered. "Sometime in January, 1958, Clark Welfare Coordinating Council, Inc., a domestic corporation having its principal office at Clark Air Base, Pampanga, conveyed and warranted to Clark Welfare Coordinating Council Educational Fund, Inc. by way of trust, the amount of P125,000.00 for the purpose of attaining the latter's objectives. Under the trust agreement, Clark Welfare trustee, is empowered to hold and invest the said amount and the income therefrom to be devoted or made available to educational institutions for the benefit of dependents and orphans of members of the Philippine Air Force for educational purposes. The trust agreement further provides that the principal of said trust shall remain intact and only the income therefrom shall be utilized to carry out the purposes of the trust and that upon the expiration and dissolution of the Educational Trust Fund to be advantageous, the funds of the trust shall be given to the Philippine Air Force Aid Society or similar organization of the Philippine Air Force." Based on the foregoing, you now request information whether or not the dividends, interest and other income derived from the different investments made by your client of the trust fund are subject to income tax. In answer thereto, I have the honor to inform you that said dividends, interest and other income are subject to the individual income tax, pursuant to section 56 of the Tax Code. cdta Very truly yours, MELECIO R. DOMINGO Commissioner of Internal Revenue