Townsite Reservation Association of Lungsod Silangan, Inc.

April 24, 2009 BIR RULING [NSNP-(S30C-010) 276-09] Section 30 Townsite Reservation Association of Lungsod Silangan, Inc. Lot-21, Blk. 32, Unit-IV Pagrai, Brgy. Mayamot Antipolo City Attention: Mr. Ramon Q. Gruba Secretary General Gentlemen : This refers to your letter dated February 27, 2009 requesting for a certificate of tax exemption. Documentary evidence submitted disclosed that Townsite Reservation Association of Lungsod Silangan, Inc. ("TRALSI" for brevity) with Taxpayer Identification No. 222-930-084-000 is a non-stock, non-profit beneficiary organization registered with the Securities and Exchange Commission (SEC) under SEC Registration No. CN200305586 dated March 4, 2004. It is accredited with the Office of the Sangguniang Panlungsod of the City of Antipolo. Its primary purposes are as follows: "1. To unite different duly registered associations, as well as community-based people's organization (Pos) and organized other groups of less privilege settlers, under accredited chapters of our organization in accordance of the presidential proclamations addressing to our landless and homeless citizens, to wit: 1.1 To extend assistance and services to our under privilege citizens regarding social, political, and economic issues. To create socio-economic, livelihood, health and education programs; 1.2 To acquire property by any modes of acquisition; provided by law from any natural and juridical persons for the attainment and furtherance of its primary objectives; 1.3 To identify the problems and issues then provide solutions for the community groups of our less privilege settlers under the constitutional mandate. xxx xxx xxx" In reply, please be informed that under Section 30 (C) of the Tax Code of 1997, as amended, a non-stock corporation or association organized and operated exclusively for the benefit of the members is exempt from income taxation. EAIcCS Accordingly, as a non-stock, non-profit beneficiary organization, TRALSI, therefore, is exempt from tax on all revenues derived in pursuance of its purpose as a beneficiary organization and used actually, directly and exclusively for the aforesaid purpose. However, it is subject to internal revenue taxes on income from other activities the conduct of which is not related to the exercise or performance of its purposes or functions. Moreover it is subject to the corresponding taxes imposed under the Tax Code of 1997, as amended, on its income derived from any of its properties, real or personal, regardless of the disposition thereof, which income should be returned for taxation. Likewise, interest income from its currency bank deposits and yield or any other monetary benefits from deposit substitute instruments and from trust funds and similar arrangements received by the organization, and royalties derived from sources within the Philippines are subject to the 20% final withholding tax: provided, however, that interest income derived by it from a depository bank under the expanded foreign currency deposit system shall be subject to 7-1/2% final withholding tax pursuant to Section 28 (A) (7) (a), in relation to Section 57 (A), both of the Tax Code of 1997, as amended. Moreover, as a tax-exempt organization, TRALSI should file an annual information return on or before the 15th day of the 4th month following the end of its taxable year. Under Section 235 of the Tax Code of 1997, as amended, any provision of existing general and special law to the contrary notwithstanding, the books of accounts and other pertinent records of tax-exempt organizations or grantees of tax incentives shall be subject to examination by the BIR for purposes of ascertaining compliance with the conditions under which they have been granted tax exemptions or tax incentives, and their tax liabilities, if any. HOWEVER, this ruling is subject to the condition that the Foundation shall submit copy of its Annual Information Returns for the past three (3) years in compliance with Revenue Memorandum Circular No. 14-2001. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. AaDSEC Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service