BIR Ruling No. 322-11

August 22, 2011 BIR RULING NO. 322-11 Sec. 27 (c), 1997 NIRC, as amended; BIR Ruling [DA-(VAT-104) 730-09] dated December 4, 2009; and BIR Ruling No. 007-05 dated July 28, 2005 Liga ng Mga Barangay City Hall, Baguio City Attention: Joel A. Alangsab ABC President and City Councilor Gentlemen : This refers to your letter dated 11 March 2011, on behalf of the Liga ng mga Barangays, Baguio Chapter, requesting for a certificate of tax exemption for the business activity which the Liga ng mga Barangay has undertaken during the recently concluded Session Road in Bloom held from February 28 to March 6, 2011. It is represented that during the recently concluded Panagbenga Celebration, the Baguio Flower Festival Foundation, Inc. (BFFI) generously granted twenty-five (25) stalls to the Liga ng mga Barangay (Liga) at Session Road, Baguio City. These stalls were utilized by the Liga for free and no rentals were paid to BFFI. In return, the Liga shouldered all the necessary expenses for the installation of lightings, maintaining cleanliness as well as peace and order, among others. It is further represented that for the past two (2) years, the barangays were never required to pay tax considering your opinion that barangay fundraising activities are tax exempt. The proceeds of the business endeavor undertaken by the barangays, grouped through their respective districts, are utilized by the barangays in whatever program or activity they deem fit or that which they agree upon, to benefit the barangays or the districts as a whole. In reply, please be informed that this Office has previously ruled in BIR Ruling [DA-(VAT-104) 730-09] dated December 4, 2009 that a taxpayer claiming a tax exemption must point to a specific provision of law conferring on the taxpayer, in clear and plain terms, exemption from a common burden. Any doubt whether a tax exemption exists is resolved against the taxpayer. (PLDT vs. City of Davao, G.R. No. 143867, March 25, 2003) In a much earlier ruling, BIR Ruling No. 007-05 dated July 28, 2005, this Office held that it is a well-settled rule that he who claims exemption should prove by convincing proofs that he is exempted. (Visayan Cebu Terminal Co., Inc. vs. Commissioner, L-19530 & L-19444, February 27, 1965) Exemptions from taxation are highly disfavored in law; and he who claims an exemption must be able to justify his claim by the clearest grant of organic or statute law. An exemption from the common burden cannot be permitted to exist upon vague implications. (Asiatic Petroleum Co. vs. Llanas, 49 Phil. 466 cited in Collector vs. Manila Comm. of Customs, L-28731, 28902, Mar. 29, 1979) In view of the foregoing, this Office hereby denies your request for tax exemption for lack of legal basis. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue