50% Exemption on the Proceeds Derived from the Exhibition of the "Martin Luther" Film

December 23, 1959 BIR RULING NO. 642-59 The Executive Secretary Philippine Federation of Christian Churches P. O. Box 1767, Manila S i r : Reference is made to your letter dated October 20, 1959 and its inclosures, requesting 50% exemption on the proceeds derived from the exhibition by that Federation in 1957 of the film, "Martin Luther", elimination of the 25% surcharge imposed for late payment of the amusement tax, and reduction of the compromise penalty. As reasons for said request, you stated that "While we are not really registered officially as a charitable organization, . . . we are in truth and in fact engaged in the distribution of charity to the indigent people of the country"; that the delay in paying the amusement tax was not by reason of a deliberated intent on your part but rather because of the negotiations for the 50% exemption; that immediately after the exhibition in question, you deposited with this Office the sum of P500.00 as partial payment of the tax pending the outcome of your request for exemption; that the reason for not registering the tickets used in the film exhibition was a misunderstanding on your part (when you and the undersigned talked over the telephone) that registration is not necessary, and that, as a matter of fact, immediately upon learning of the necessity for registration you came to this Office to clear up the matter. Based on the foregoing representations, I have the honor to inform you as follows: In order to enjoy the 50% exemption provided for in Section 261 of the National Internal Revenue Code, it is necessary that the admission fees or charges be collected by or for and in behalf of a duly registered charitable institution or association. Such being the case, and considering that Federation is not a duly registered charitable institution or association, this Office has no other alternative than to deny your request for exemption, it being a cardinal rule of taxation that exemption statutes are construed strictly in favor of the government and against the taxpayer. As regards the 25% surcharge for late payment of the tax in question, it is now well settled that the Commissioner of Internal Revenue has no power to waive the imposition thereof. That negotiations are going on relative to the 50% exemption is not a valid excuse for not paying the tax on time. However, if as alleged, you had made a deposit of P500.00, the basis for computing the surcharge would be difference only between the tax due and the amount deposited, provided the deposit was made within the period prescribed by law for the payment of the amusement tax. With respect to the compromise penalty of P300.00, this Office hereby reduces the same to P20.00 only, considering the good faith on your part to comply with the requirement on registration of admission tickets. A copy of this letter, as well as your letter and its inclosures, has on even date been referred to the Regional Director, Regional District No. 3, Manila, for his information and appropriate action. prcd Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue