R.N. Pelaez Foundation, Inc.

July 1, 2009 BIR RULING [NSNP-(S30E-079) 419-09] Section 30; BIR Ruling No. S30-080-2007 R.N. Pelaez Foundation, Inc. Rodolfo N. Pelaez Blvd. Kauswagan, Cagayan de Oro City Attention: Ms. Ursula I. Trio Officer in-charge Gentlemen : This refers to your letter dated February 20, 2008, indorsed to this Office from Revenue District Office No. 98-Cagayan de Oro City, requesting for a Certificate of Tax Exemption. Documentary evidence submitted disclosed that R.N. PELAEZ FOUNDATION, INC., with Taxpayer Identification No. 001-219-170, is a non-stock, non-profit charitable corporation registered with the Securities and Exchange Commission (SEC) under SEC Registration No. CE00470 dated October 13, 1985. Its purposes are as follows: "1. To establish, maintain, operate and manage educational, social welfare, scientific, cultural, charitable and/or philanthropic activities or undertakings for the benefits and welfare of the whole community; 2. To undertake or assist in scientific research in the fields of agriculture, forestry, fisheries, computer, energy development, medicine, environment and biological sciences for the public interest; 3. To provide scholarships and financial assistance to poor but deserving students of schools, colleges and universities in the Philippines, as well as establish professional chairs in various fields of educational endeavor; 4. To undertake and/or assist in the amelioration of the living conditions of distressed citizens particularly those who are handicapped by reasons of poverty, youth, physical and mental disability, illness, old age and natural disasters; 5. To uplift the living conditions of the community through the establishment of small scale livelihood projects and enterprises; 6. To acquire, hold lease, purchase, exchange, borrow, mortgage or otherwise deal in real and personal properties, and to build, construct, acquire, lease purchase mortgage buildings and offices as may be necessary and useful, to receive contributions, grants, and donations from any source, public or private, and to invest funds or utilize properties in such activities as may be necessary and useful to carry out the objectives of the foundation and incidental thereto; 7. To manage, maintain communication and other facilities as may be necessary and useful to carry out the objective and purpose of the foundation; 8. To enter into all contracts arrangements, agreements or joint ventures with government or private entities that will help promote attainment of its goals and purposes." In reply, please be informed that under Section 30 (E) of the Tax Code of 1997, as amended, a non-stock corporation or association organized and operated exclusively for religious, charitable, scientific, athletic, or cultural purposes, or for the rehabilitation of veterans, no part of its net income or asset shall belong to or inure to the benefit of any member, organizer, officer or any specific person is exempt from income taxation. DSAEIT Accordingly, as a non-stock, non-profit charitable organization, R.N. PELAEZ FOUNDATION, INC., therefore, is exempt from tax on all revenues derived in pursuance of its purpose as a charitable organization and used actually, directly and exclusively for charitable purposes. 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, R.N. PELAEZ FOUNDATION, INC. 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. 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. AIHaCc Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service