BIR Ruling No. 602-12

October 25, 2012 BIR RULING NO. 602-12 Section 30, National Internal Revenue Code of 1997, as amended; and Section 1 of Revenue Regulations No. 13-98 Father Saturnino Urios University Policy Center, Inc. San Francisco Street, Butuan City 8600 Region XIII CARAGA, Philippines Attention: Atty. Josefe C. Sorrere-Ty Executive Director Gentlemen : This refers to your letter dated November 14, 2011 ,requesting on behalf of Father Saturnino Urios University Policy Center, Inc. for the issuance of a certificate of tax exemption enjoyed by an organization pursuant to Section 30 of the Tax Code of 1997, as amended. TcHCIS It is represented that Father Saturnino Urios University Policy Center, Inc. with Taxpayer's Identification No. 293-817-359-000, is a non-stock, non-profit corporation duly organized under the laws of the Philippines; that it is registered with the Securities and Exchange Commission (SEC) under Registration No. CN201028092; and that the purposes for which it was incorporated are the following: 1.) To provide Father Saturnino Urios University, the policy makers and people in CARAGA, the country and the world with information, research, analysis and proposed policy recommendations on issues of city, provincial, regional and international importance; and 2.) To receive and accept grants, donations, and gifts from government and non-government organizations. In reply, please be informed that Section 30 of the National Internal Revenue Code of 1997, as amended, enumerates the organizations exempt from taxation, 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; aTEScI (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 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." In relation to Section 30 of the National Internal Revenue Code of 1997, as amended, Section 1 of Revenue Regulations 13-98 defines a non-stock, non-profit organization as a corporation referred to under Section 30 (E) and (G) of the Tax Code created or organized under Philippine laws exclusively for one or more of the following purposes: "(i) religious; (ii) charitable; (iii) scientific; (iv) athletic; (v) cultural; aACHDS (vi) rehabilitation of veterans; and (vii) social welfare." A reading of the above cited law and revenue regulation would establish that the purpose for which Father Saturnino Urios University Policy Center, Inc. was incorporated is too vague for it to qualify as a tax exempt entity. It is a well settled principle in taxation that exemption 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. [P.I.], Ltd. versus Llanes [49 Phil. 466]). In view hereof, your request for the issuance of a certificate of tax exemption is denied for lack of legal basis. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue