BIR Ruling No. 119-83

June 28, 1983 BIR RULING NO. 119-83 Gentlemen : This refers to your letter dated November 15, 1982 requesting exemption from the payment of withholding tax on income/earnings of the trust fund of the University of North Carolina at Chapel Hill, Institutional Development Foundation, Inc. (U.S.A.). It is represented that the University of North Carolina at Chapel Hill, Institutional Development Foundation, Inc. (UNC) expects to receive as donation/grant from Nestle Coordination Center for Nutrition, Inc., the amount of US$500,000; that an Investment Management Agreement was entered into between UNC and the Philippine National Bank (PNB) for the management of said fund; that the fund shall be deposited by PNB in the savings account to be opened and maintained by PNB in the name of UNC; that as trustee of said fund, PNB is authorized, among others, "to invest and reinvest the "FUND" and have the same invested, without distinction between the principal and income in money market instruments such as Treasury bills, Central Bank Certificates of Indebtedness and other commercial papers, including TRUSTEE's PHILNABANK bills and other issues as well as those issued by corporations, associations, firms or financial institutions wherein the TRUSTEE's directors or officers are also directors/officers/stockholders thereof or may have related interest therein, and to collect and receive the interest and/or sums accruing to or due upon said securities. The TRUSTEE is further authorized to commingle the TRUSTOR's fund with other trust funds for the purpose of collective investment and reinvestment"; that the trust fund under PNB Trust Account No. 7610 in the name of UNC as well as its income will be used to support and finance the research and other allied activities of UNC particularly the studies in infant feeding and maternal health care in the Philippines; that the research entitled "Infant Feeding Study: Patterns and Determinants', shall be conducted jointly by the UNC, the University of San Carlos in Cebu City and the Nutrition Center of the Philippines; and that such funds will not be spent in any way outside the Philippines. In reply thereto, I have the honor to inform you that while under the foregoing facts UNC is a scientific organization and no part of its net income inures to the benefit of any private stockholder or individual, income of whatever kind and character of UNC from any of its properties, real or personal, regardless of the disposition made of such income, shall be subject to income tax. Accordingly, the income/earnings of the Trust Fund of UNC which is managed by the Bank is subject to income tax. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner Bureau of Internal Revenue