Exemption of Royalties Paid by National Book Store, Inc. from Taxes

September 8, 1989 BIR RULING NO. 196-89 24 (e) 000-00 196-89 Gentlemen : This refers to your letter dated July 2, 1989 requesting a ruling as to whether the royalties being paid by your client, National Book Store, Inc., as the exclusive publisher and seller of several books on the Ateneo de Manila University Press are subject to the 20% withholding tax imposed by Section 24(e) of the Tax Code. In reply, please be informed that your query is answered in the negative. Under BIR Ruling No. 324-88, this Office has ruled that Ateneo de Manila University (Quezon City), Inc. being a non-stock, non-profit educational institution is exempt from taxes, pursuant to paragraph 3, Section 4, Article XIV of the 1987 Constitution which provides: "(3) All revenues and assets of non-stock, non-profit educational institutions used actually, directly and exclusively for educational purposes shall be exempt from taxes and duties. . . ." From the foregoing constitutional provisions, assets of non-stock, non-profit educational institutions used actually, directly and exclusively for educational purposes are exempt from taxes. Undoubtedly, said books are assets of the Ateneo de Manila University and the royalties derived therefrom are revenues of the University. Said assets and revenues are used actually, directly and exclusively for educational purposes; hence, the same fall within the purview of the above-quoted constitutional provision. cd Very truly yours, (SGD.) JOSE U. ONG Commissioner