Winners of Jollibee-DECS Gawad Lampara Award Contest Exempt from Income/Withholding Tax

March 16, 1993 BIR RULING NO. 107-93 WINNERS OF JOLLIBEE-DECS GAWAD LAMPARA AWARD CONTEST EXEMPT FROM INCOME/WITHHOLDING TAX 28 (b) (8) (E) 000-00 107-93 Fast Track Consumers Access Technology, Inc. 9-B LSH Bldg., East Capitol Drive Pasig, Metro Manila Attention: Ms . Ma . Agnes S . Itchon Finance & Operations Director This refers to your letter dated February 1, 1993 stating that you are currently organizing the Search for the Country's 10 Outstanding Working Students; that this project denominated as the Jollibee-Gawad Lampara is sponsored by Jollibee Foods Corporation in cooperation with the Department of Education, Culture and Sports (DECS); that all candidates must be nominated by their school or department dean and their employer; that there will be 10 winners, each receiving P25,000 cash plus trophy, who are able to meet the following criteria: 1. Superior academic performance 35% 2. Achievement as an employee 35% 3. Responsible leadership or active participation in school/company activities 10% 4. Personal values anchored on maintaining harmony between the requirements of his school and work, and has responsibility towards family and society 20% 100% === and that in addition to this, Jollibee, will likewise sponsor a similar project called The Jollibee Sipag Awards wherein Jollibee shall recognize 5 outstanding working students employed with them with the same mechanics as the aforesaid project. Based on the foregoing representations, you now request a ruling exempting the awardees of both projects from paying the withholding tax on the prizes they will receive considering that the projects may be classified as civic projects. aisadc In reply, please be informed that under Section 28(b)(8)(E) of the Tax Code, as amended by P.D. No. 1994, prizes and awards made principally in recognition of religious, charitable, scientific, educational, artistic, literary or civic achievement but only if: (1) the recipient was selected without any action on his part to enter the contest proceeding; and (2) the recipient is not required to render substantial future services as a condition to receiving the prizes or award shall not be included in gross income and shall be exempt from income tax. Such being the case, and since in the mechanics of both projects. The Jollibee Sipag Awards and the Jollibee Gawad Lampara, the recipients of the awards or prizes therein are selected without any action on their part in entering the contest proceeding and are not required to render substantial future services as a condition to receiving the prizes or awards, this Office is of the opinion as it hereby holds that the awards to be given under both projects are exempt from income tax and consequently from the withholding tax imposed by Section 21 of the Tax Code in relation to Section 52(c) of the same Code. EUFRACIO D. SANTOS Deputy Commissioner of Internal Revenue