Carmel of the Most Holy Trinity, Inc.

April 29, 2009 BIR RULING [NSNP-(S30E-050) 295-09] Section 101 (A) (3);S30-056-2001 Carmel of the Most Holy Trinity, Inc. Corinthian Heights, Dontogan Road Baguio City Attention: Sr. Mary Evelyn Columba, OCD Prioress Gentlemen : This refers to your undated letter requesting for the following: 1. For a revalidation of a previously issued ruling by this Office dated November 7, 1990 confirming that Carmel of the Most Holy Trinity, Inc. is a non-stock, non-profit religious corporation; 2. For exemption from donors taxes on a parcel of land with TCT No. T-49987 of the Register of Deeds for the Province of Benguet with an area of 2,254 square meters, more or less, donated to the Carmel of the Most Holy Trinity by the Carmelite Missionaries on a Deed of Donation executed on January 26, 2009. It appears that Carmel of the Most Holy Trinity, Inc. with TIN 004-030-622 is a non-stock, non-profit religious organization registered with the Securities and Exchange Commission on March 2, 1984; and that the purpose for which it was created among other, is as follows: 1. To administer its temporalities, and to organize and maintain a community of religious sisters approved by the authorities of the Roman Catholic Church and the accomplishment of any manual labor suitable for religious sisters, and other such acts as may be necessary in carrying out the above purposes. DSEIcT Based on the foregoing, this Office is of the opinion and so holds that the Carmel of the Most Holy Trinity, Inc. falls within the purview of an organization as contemplated under Section 30 (E) of the Tax Code of 1997. Accordingly, it is exempt from the payment of income tax on income received by it as such organization, and therefore, need not file an income tax return. However, it is subject to the corresponding internal revenue taxes imposed under the National Internal Revenue Code of 1997 on its income derived from any of its properties, real or personal, or any activity conducted for profit regardless of the disposition thereof, which income should be returned for taxation. Likewise, interest income from currency bank deposits and yield or any other monetary benefit 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 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 27 (D) (1) in relation to Section 57 (A),both of the Tax Code of 1997. Moreover, it is required to file on or before April 15 of each year a profit and loss statement and balance sheet with the annual information return under oath, stating its gross income and expenses incurred during the year and a certificate showing that there has not been any change in its By-Laws, Articles of Incorporation, manner of operation and activities as well as sources and disposition of income. It should be understood that the said exempt organization/foundation shall be constituted as withholding agent for the government if it acts as an employer and its employees receive compensation income subject to the withholding tax under Section 79 (A), Chapter XIII, Title II of the Tax Code of 1997, as implemented by Revenue Regulations No. 2-98, or if it makes income payments to individuals or corporations subject to the withholding tax pursuant to Section 57 of the Tax Code of 1997, also as implemented by Revenue Regulations No. 2-98. It is of course understood that your books of accounts and other pertinent records shall be subject to periodic examination by revenue enforcement officers of this Bureau for the purpose of ascertaining whether you have been complying with the conditions under which you have been granted tax exemption or tax incentives and your tax liabilities, if any, pursuant to Section 235 of the Tax Code of 1997. Secondly, Section 101 (A) (3) of the Tax Code of 1997, as amended provides: "SEC. 101. Exemption of Certain Gifts . The following gifts or donations shall be exempt from the tax provided for in this Chapter: (A) In the Case of Gifts Made by a Resident. (1) ... (2) ... (3) Gifts in favor of educational and/or charitable, religious, cultural or social welfare corporation, institution, accredited non-government organization, trust or philanthropic organization or research institution or organization: ..." Accordingly, inasmuch as the donee is a religious organization, the aforementioned donation is exempt from the payment of donor's tax pursuant to Section 101 (A) (3) of the Tax Code of 1997. DIEACH This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service