BIR Ruling No. 166-14

May 30, 2014 BIR RULING NO. 166-14 Tiu Gan Temple Corporation 3rd Floor, 1111 Narra Street Tondo, Manila Attention: Jose Uy Reyes President Gentlemen : This refers to your letter dated September 7, 2011 requesting for confirmation of the tax exemption of Tiu Gan Temple Corporation as a nonstock, nonprofit corporation under Section 30 (G) of the National Internal Revenue Code of 1997, as amended (NIRC). It is represented that Tiu Gan Temple Corporation is a nonstock nonprofit corporation duly organized in accordance with the laws of the Philippines. The principal purpose of Tiu Gan Temple Corporation is for "purely civic purposes and not for financial gain". Section 30 (G) exempts from income tax a civic league or organization not organized for profit but operated exclusively for the promotion of social welfare. An organization is operated exclusively for the promotion of social welfare if it is primarily engaged in promoting in some way the common good and general welfare of the people of the community. An organization embraced within this section is one which is operated primarily for the purpose of bringing about civic betterments and social improvements. An organization that primarily benefits a private group of citizens cannot qualify for exemption. Along with police power and eminent domain, taxation is one of the three basic and necessary attributes of sovereignty. Thus, the State cannot be deprived of this most essential power and attribute of sovereignty by vague implications of law. Rather, being derogatory of sovereignty, the governing principle is that tax exemptions are to be construed in strictissimi juris against the taxpayer and liberally in favor of the taxing authority; and he who claims an exemption must be able to justify his claim by the clearest grant of statute. The burden of proof rests upon the party claiming exemption to prove that it is in fact covered by the exemption so claimed. In case of doubt, non-exemption must be favored. Taxes being the lifeblood of the government that should be collected without unnecessary hindrance, every precaution must be taken not to unduly suppress it. (BIR Ruling No. 310-2011 dated August 22, 2011) CacEID A review of the documents submitted in support of the request shows that the primary activity of Tiu Gan Temple Corporation is the leasing of real property. Its financial statements reveal that it raises revenues from rental fees. Such activity is of a kind ordinarily carried on for profit. Moreover, there is no proof that it is engage in social welfare activities as all its expenditures pertain to general and administrative expenses related to leasing of property. An organization is not exempt from tax merely because it is nonstock and nonprofit. An organization cannot use its corporate form to prevent its profitable activities from being taxed. IN VIEW OF THE FOREGOING, this Office is of the opinion that Tiu Gan Temple Corporation does not qualify for exemption under Section 30 (G) of the NIRC. It is therefore liable for income taxes imposed under Title II of the NIRC and other applicable taxes. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue