BIR Ruling No. 236-82

August 17, 1982 BIR RULING NO. 236-82 027-e 002-78 236-82 Chief Justice Fred Ruiz Castro Memorabilia Commission Office of the Minister of Justice M a n i l a Attention: Mr . Ricardo J . Romulo Member and Legal Counsel Gentlemen : This refers to your letter dated December 10, 1981 requesting a ruling to the effect that Chief Justice Fred Ruiz Castro Memorabilia Commission is a tax exempt organization and is therefore exempt from payment of withholding tax on interest income derived by the Commission from its time deposit. In reply, please be informed that under Section 27(e) of the Tax Code of 1977, corporation or association organized and operated exclusively for religious, charitable, scientific, athletic, or cultural purposes , or for the rehabilitation of veterans, no part of the net income of which inures to the benefit of any private stockholder or individual is exempt from paying tax in respect to income received by them as such. However, pursuant to the last paragraph of Section 27 of the Tax Code, as amended by Presidential Decree No. 1457, income of whatever kind and character of all the organization enumerated therein derived either from any of their properties, real or personal, or from any of their activities conducted for profit is subject to internal revenue taxes, one of which is income tax, regardless of the disposition made of such income. Consequently, although you are a cultural organization and, therefore, exempt from income tax, the interest income of your time deposits being income derived from personal property are subject to income tax (BIR Ruling No. 78-002 dated May 11, 1978). Such being the case, said interest income are subject to the final withholding tax of 20% prescribed by Section 24(cc) of the Tax Code, as amended by Presidential Decree No. 1739. Very truly yours, RUBEN B. ANCHETA Acting Commissioner