BIR Ruling No. 357-13

September 26, 2013 BIR RULING NO. 357-13 Philippine Institute for Supply Management, Inc. 1706-A East Tower Philippine Stock Exchange Centre Exchange Road, Ortigas Center Pasig City Attention: Alicia D. Pascual, C.P.M., DSM Treasurer Gentlemen : This refers to your letter dated 20 January 2011 for the issuance of a certificate of tax exemption enjoyed by a non-stock, non-profit organization pursuant to Section 30 of the Tax Code of 1997, as amended. ATCEIc It is represented that PHILIPPINE INSTITUTE FOR SUPPLY MANAGEMENT, INC. with Tax Identification No. 000-492-233-000, is a non-stock, non-profit corporation duly organized under the laws of the Philippines and that it is registered with the Securities and Exchange Commission (SEC) under Registration No. 36799. In reply, please be informed that Section 30 of the Tax Code of 1997, as amended, provides: "SEC. 30. Exemptions from Tax on Corporations . The following organizations shall not be taxed under this Title in respect to income received by them as such: (A) Labor, agricultural or horticultural organization not organized principally for profit; (B) Mutual savings bank not having a capital stock represented by shares, and cooperative bank without capital stock organized and operated for mutual purposes and without profit; (C) A beneficiary society, order or association, operating for the exclusive benefit of the members such as a fraternal organization operating under the lodge system, or a mutual aid association or a nonstock corporation organized by employees providing for the payment of life, sickness, accident, or other benefits exclusively to the members of such society, order, or association, or nonstock corporation or their dependents; (D) Cemetery company owned and operated exclusively for the benefit of its members; (E) Nonstock corporation or association organized and operated exclusively for religious, charitable, scientific, athletic, or cultural purposes, or for the rehabilitation of veterans, no part of its net income or asset shall belong to or inure to the benefit of any member, organizer, officer or any specific person; (F) Business league, chamber of commerce, or board of trade, not organized for profit and no part of the net income of which inures to the benefit of any private stockholder or individual; (G) Civic league or organization not organized for profit but operated exclusively for the promotion of social welfare; (H) A nonstock and nonprofit educational institution; (I) Government educational institution; (J) Farmers' or other mutual typhoon or fire insurance company, mutual ditch or irrigation company, mutual or cooperative telephone company, or like organization of a purely local character, the income of which consists solely of assessments, dues, and fees collected from members for the sole purpose of meeting its expenses; and (K) Farmers', fruit growers', or like association organized and operated as a sales agent for the purpose of marketing the products of its members and turning back to them the proceeds of sales, less the necessary selling expenses on the basis of the quantity of produce finished by them. DISaEA Notwithstanding the provisions in the preceding paragraphs, the income of whatever kind and character of the foregoing organizations from any of their properties, real or personal, or from any of their activities conducted for profit regardless of the disposition made of such income, shall be subject to tax imposed under this Code." Applying the foregoing, the purposes of PHILIPPINE INSTITUTE FOR SUPPLY MANAGEMENT, INC. under its Amended Articles of Incorporation show that is not a non-stock, non-profit corporation qualified under any of the exempt corporation under Section 30 of the Tax Code of 1997, as amended, to wit: 1) "To promote the recognition of Supply Management profession as a science, and to stress its importance in commerce and industry"; 2) "To undertake the promotion of research and study or local and international market conditions"; 3) "To promote the establishment of acceptable basic standards of product, and to influence manufacturers to improve the quality of their goods"; 4) "To promote local and international exchange or Supply Management experience and knowledge"; 5) "To extend Supply Management technology and training of personnel of member companies"; 6) "To foster closer, more mutual understanding and more friendly relations among members of the profession"; 7) "To unify and bring into one compact organization the entire Supply Management profession in the Philippines"; and 8) "To publish and circulate among members, an organ for the dissemination of activities of the corporation and such other information useful to the Supply Management profession." Notwithstanding that the Amended Articles of Incorporation states that the PHILIPPINE INSTITUTE FOR SUPPLY MANAGEMENT, INC. is a non-stock, non-profit corporation, it has to prove that it is really a corporation organized and operated as contemplated under Section 30 of the Tax Code of 1997, as amended, by actual exclusive operation for at least three (3) years. Being a non-stock and non-profit corporation does not, by this reason alone, completely exempt an institution from tax. (Commissioner of Internal Revenue vs. St. Luke's Medical Center, Inc. [G.R. No. 195909 & G.R. No. 195960, 26 September 2012]) Thus, statutes granting tax exemptions are construed strictissimi juris against the taxpayer and liberally in favor of the taxing authority. A claim of tax exemption must be clearly shown and based on language in law too plain to be mistaken. Otherwise stated, taxation is the rule, exemption is the exception. The burden of proof rests upon the party claiming the exemption to prove that it is in fact covered by the exemption so claimed. (Quezon City and The City Treasurer of Quezon City vs. ABS-CBN Broadcasting Corporation [G.R. No. 166408, 6 October 2008]) CAaEDH In view of the foregoing, your request for the exemption of PHILIPPINE INSTITUTE FOR SUPPLY MANAGEMENT, INC. as a non-stock, non-profit corporation under Section 30 of the Tax Code of 1997, as amended, is hereby denied for lack of factual and legal basis. Please be guided accordingly. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue