Bahay ni Maria Home for Abandoned Elderly and Children with Special Needs, Inc.

April 29, 2010 BIR RULING [NSNP-(S30E-007) 018-10] Section 30; BIR Ruling Nos. DA-252-99, S30-095-99, S30-096-99, DA-237-07, & S30-080-08 Bahay ni Maria Home for Abandoned Elderly and Children with Special Needs, Inc. St. Joseph Street, Cardinal Village Sampiruhan, Calamba City Attention: Rev. Mo. Ma. Concepcion R. Realon, MSOLF Administrator Gentlemen : This refers to your letter dated March 9, 2009, indorsed to this Office from BIR Revenue Region No. 9-San Pablo City, requesting for tax exemption. IHcSCA Documents show that you are a non-stock, non-profit charitable corporation with Taxpayer Identification No. 007-203-141-000 registered with the Securities and Exchange Commission (SEC) under SEC Registration No. CN200834637 on January 5, 2009. Your purposes are as follows: "To pursue the mission and charism of the congregation of the Missionary Sisters of Our Lady of Fatima (Peach Sisters),Inc. We found, operate and manage residential homes for abandoned older persons, the physically and mentally challenged, abandoned, orphaned and neglected elderly and children with special needs and women and family in crisis ... To provide basic needs of our clients including formal education for children in our care, (tutoring for children incapable of formal schooling)." In reply, please be informed that this Office cannot as yet issue the requested ruling/certificate of tax exemption because you have to prove by actual operation for at least three (3) years that you are really an organization/association exempt from income tax under Section 30 of the Tax Code of 1997, as amended. You can file the necessary annual information return instead of an income tax return on or before the 15th day of the fourth month of the preceding accounting period following the start of your operation as an exempt organization as required under Section 24 of Revenue Regulations (Rev. Regs.) No. 2 ( Collector vs. Sinco ,G.R. L-9276 dated October 23, 1956).Based on such information return, we shall conduct the necessary investigation on the activities undertaken during the period. The letter of exemption shall thereafter be issued depending upon the result of our investigation. However, you are subject to the corresponding internal revenue taxes imposed under the Tax Code of 1997, as amended, on your income derived from any of your properties, real or personal, or any activity conducted for profit regardless of the disposition thereof, which income should be returned for taxation. Likewise, the interest income from currency bank deposits and yield or any other monetary benefits from deposit substitute instruments and from trust funds and similar arrangements, and royalties derived from sources within the Philippines are subject to the 20% final withholding tax provided, however, that interest income derived by you from a depository bank under the expanded foreign currency deposit system shall be subject to 7-1/2% final withholding tax pursuant to Section 27 (D) (1) in relation to Section 57 (A), both of the Tax Code of 1997, as amended. Moreover, you are required to file on or before the 15th day of the fourth month following the close of the accounting period a Profit and Loss Statement and Balance Sheet with the Annual Information Return under oath, stating your gross income and expenses incurred during the year and a certificate showing that there has not been any change in your By-laws, Articles of Incorporation, manner of operation and activities as well as sources and disposition of income. It should be understood that you shall be constituted as a withholding agent of the government if you act as an employer and your employees receive compensation income subject to withholding tax under Section 79 (A), Chapter XIII, Title II of the Tax Code of 1997, as amended, and as implemented by Rev. Regs. No. 2-98, as amended, or if you make income payments to individuals or corporations subject to the withholding tax provided for in Section 57 of the Tax Code of 1997, as amended, and as implemented by Rev. Regs. No. 2-98, as amended. CETIDH Finally, your books of accounts and other pertinent records shall be subject to examination by the Bureau of Internal Revenue for the purpose of ascertaining whether you are complying with the conditions under which you have been granted tax exemption and your tax liability, if any. For purposes of securing a permanent exemption after the three (3)-year period, you are required to submit the following documents pursuant to Revenue Memorandum Circular No. 14-2001: 1) SEC Registration; 2) Articles of Incorporation which must include the following provisions: i) that the corporation is non-stock, non-profit; ii) that the primary purpose for which it was created is one of those enumerated under Section 30 of the Tax Code of 1997; iii) that no part of the net income shall inure to the benefit of any of its members; iv) that the trustees do not receive any compensation; and v) in case of dissolution, assets of the corporation shall be transferred to similar institution or to the government; 3) By-laws; 4) Annual Information Returns for the past three (3) years; and 5) Financial Statements (balance sheet) for the past three (3) years. 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. aACHDS Very truly yours, Commissioner of Internal Revenue By: (SGD.) MARISSA O. CABREROS OIC-Assistant Commissioner Legal Service