BIR Ruling No. 462-14

November 13, 2014 BIR RULING NO. 462-14 Section 30 of the Tax Code of 1997, as amended; BIR Ruling No. 121-13 Buyagan-Wangal Operators and Drivers Association, Inc. AE-222 Western Buyagan, Poblacion La Trinidad, Benguet 2601 Attention: Miguel P. Luma-ang President Gentlemen : This refers to your letter dated 24 April 2013 requesting for the issuance of a Certificate of Tax Exemption enjoyed by non-stock, non-profit association operating for the exclusive benefit of the members under Section 30 of the Tax Code of 1997, as amended. It is represented that BUYAGAN-WANGAL OPERATORS AND DRIVERS ASSOCIATION, INC., with Taxpayer Identification Number (TIN) 434-107-684-000, is a non-stock, non-profit association duly organized under the laws of the Philippines; that it is registered with the Securities and Exchange Commission (SEC) under Registration No. CN201325280 dated 22 February 2013; and that the purposes for which BUYAGAN-WANGAL OPERATORS AND DRIVERS ASSOCIATION, INC. is incorporated are: 1) "To provide a well-organized and descent transportation services to the riding public within its authorized designated routes as per Certificate of Public Convenience (CPC)"; 2) "To assist all members of their problems encountered regarding transportation services"; 3) "To educate members of their road courtesy, value formation and the proper observance of traffic Rules and Regulations"; 4) "To advocate the maintenance of good relationships and camaraderie among operators, drivers and the riding public"; 5) "To establish and maintain an office of the association to entertain members and the riding public"; and 6) "To perform such other acts in accordance with the rules and regulations promulgated by the proper authorities and the Resolutions of the Officers and the General Assembly". aAHSEC 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 HScaCT (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 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." Notwithstanding that the Amended Articles of Incorporation states that it is a non-stock, non-profit corporation, the enumerated purposes of BUYAGAN-WANGAL OPERATORS AND DRIVERS ASSOCIATION, INC. under its Amended Articles of Incorporation do not appear to fall within the contemplation of the foregoing exempt 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. 1 It is a governing principle in taxation that tax exemptions are construed in strictissimi juris against the taxpayer and liberally in favor of the taxing authority. The basic principle in the construction of laws granting tax exemptions has been very stable. He who claims an exemption from his share of the common burden of taxation must justify his claim by showing that the Legislature intended to exempt him by words too plain to be beyond doubt or mistake. 2 (BIR Ruling No. 121-13 dated March 22, 2013) In view of the foregoing, your request for the exemption of BUYAGAN-WANGAL OPERATORS AND DRIVERS ASSOCIATION, 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 Footnotes 1. Commissioner of Internal Revenue vs. St. Luke's Medical Center, Inc. [G.R. No. 195909 & G.R. No. 195960, 26 September 2012]. 2. City of Iloilo, et al. vs. Smart Communications, Inc., G.R. No. 167260 dated February 27, 2009.