BIR Ruling No. 382-15

October 29, 2015 BIR RULING NO. 382-15 Section 30 (I) of 1997 NIRC, as amended; BIR Ruling No. 357-13 Association of Pang. Public Librarians (APPLI), Inc. Pangasinan Provincial Library, Lingayen, Pangasinan Attention: Teresita F. Victorio President Gentlemen : This refers to your letters dated October 2, 2013 and December 13, 2013 duly indorsed by Revenue Region No. 1-Calasiao, Pangasinan through 2nd Indorsement dated January 7, 2014, requesting for tax exemption pursuant to Section 30 (I) of the Tax Code of 1997, as amended. It is represented that ASSOCIATION OF PANG. PUBLIC LIBRARIANS (APPLI), INC. with Taxpayer's Identification No. 437-296-145-000, is organized as a non-stock, non-profit corporation duly registered with the Securities and Exchange Commission (SEC) under Registration No. CN201325780 dated June 11, 2013; and that the purposes for which it was incorporated are the following: 1) To promote the common and effective library service throughout the province. 2) To uphold the dignity and honor of the Library profession. 3) To work for the professional advancement and material welfare of the members. 4) To seek the support of Government Officials and the general public in the establishment and maintenance of more public libraries in the province opportunity of the Community to educate themselves effectively for the enrichment of their personal lives. that it is further represented under oath that the manner of its activities entail only "the conduct of meetings, special programs such as anniversaries, Lakbay Aral and Christmas party during the Annual General Assembly to foster camaraderie and oneness" ; and that the source of its income will be annual dues and registration as funds for conventions, projects and other related activities of public librarians within the country. HEITAD In reply, please be informed that ASSOCIATION OF PANG. PUBLIC LIBRARIANS (APPLI), INC. does not qualify as a corporation within the contemplation of the invoked provision, Section 30 (I) of the Tax Code of 1997, as amended, which pertains to "Government Educational Institutions". Government educational institutions refer to schools rendering educational services that are created by legislative acts or charters and are accredited by the Department of Education (DepEd), Commission on Higher Education (CHED) or the Technical Education and Skills Development Authority (TESDA). Moreover, considering the organizational purposes of ASSOCIATION OF PANG. PUBLIC LIBRARIANS (APPLI), INC. as stated in its corporate papers, and its manner of operation, it does not fall within the contemplation of the corporations under Section 30 of the Tax Code of 1997, to wit: 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. Notwithstanding that the ASSOCIATION OF PANG. PUBLIC LIBRARIANS (APPLI), INC. was registered as a non-stock, non-profit corporation with the SEC, it has to prove that it is really a corporation organized and operated as among the corporations under Section 30 of the Tax Code of 1997, as amended. 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) In view of the foregoing, your request for the exemption of ASSOCIATION OF PANG. PUBLIC LIBRARIANS (APPLI), 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. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue