71 Dreams Foundation, Inc.

May 28, 2009 BIR RULING [NSNP-(S30E-065) 357-09] 27 (D) (1);S-30-008-2006 71 Dreams Foundation, Inc. ELJ Communication Center Eugenio Lopez Drive Diliman, Quezon City Attention: Father Carmelo A. Caluag II Managing Director Gentlemen : This refers to your letter dated April 3, 2007, which was referred to this Office by Revenue Region No. 7, Quezon City, by way of its Ist Indorsement dated January 21, 2008, requesting for exemption from the payment of income tax and the filing of the corresponding income tax return under Section 30 of the Tax Code of 1997. Documents submitted to this Office disclosed that the 71 Dreams Foundation, Inc. with Tax Identification Number (TIN) 244-601-352 is a non-stock, non-profit corporation duly registered with the Securities and Exchange Commission (SEC) under SEC Registration No. CN200604703 dated March 24, 2006; that the primary purpose for which the corporation was formed is to "To establish and maintain a non-stock, non-profit, charitable foundation which aims to help less-fortunate, poor and disadvantaged individuals, including, but not limited to those affected by natural calamities, disasters and other similar events, in fulfilling their dreams of a better future by providing access to livelihood, educational, economic, financial, social, spiritual, and other developmental opportunities, by itself or through other entities authorized to engage therein; to establish, manage, operate and maintain a technical and skills training center for livelihood and entrepreneurial projects, including but not limited to vocational, technical and other similar courses; to conceptualize, develop, implement and institutionalize a holistic approach in extending support to qualified beneficiaries by providing both beneficiaries and benefactors a formation experience leading to a personal and communal transformation towards a better citizenry; to provide a venue or channel for individuals, corporations, partnerships and other entities to help less-fortunate individuals and families by coordinating, liaising and combining such persons' and entities' efforts and contributions into a unified and continuing endeavor; to receive, hold, care for, invest in and operate real and personal property, and to use and distribute, from time to time, all income and principal which it shall receive, in all charitable gifts, donations and contributions, to be applied, consistently with existing laws, for the benefit of the less-fortunate, the poor, the sick, and the needy, or by assisting them to learn skills for a more productive life; to receive and accept donations, endowments, grants, legacies, bequest, and other similar instruments and devices to carry out any or all of its primary purposes. It is the intent and purpose that the said foundation shall be organized and operated exclusively for charitable purposes." that no part of the income which the corporation may obtain as an incident to its operation shall be distributed as dividends to its members, trustees or officers. DTISaH Based on the foregoing, this Office is of the opinion and so holds that the 71 DREAMS FOUNDATION, INC. is a corporation organized for charitable purposes 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 concerning such income. However, it is subject to the corresponding internal revenue taxes imposed under the Tax 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 the 15th day of the fourth month following the end of the accounting period a Profit and Loss Statement and Balance Sheet with the Annual Information Return under oath, stating its gross income and expenses incurred during the preceding period 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 is requested that a copy of this letter of exemption be attached to the annual information return which your corporation will file on or before the 15th day of the fourth month of each year. Under Section 235 of the Tax Code of 1997, any provision of existing general and special law to the contrary notwithstanding, the books of accounts and other pertinent records of tax-exempt organization 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, or payment of their tax liabilities, if any. It should be understood that the said exempt organization shall be constituted as a 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, as implemented by Revenue Regulations No. 2-98, as amended. (BIR Ruling No. DA-S-30-79-98 dated December 29, 1998) ESDHCa 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. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service