St. Martin's Foundation, Inc.

August 6, 2009 BIR RULING [NSNP-(S30E-101) 498-09] Section 30 (E);S-30-023-2004 St. Martin's Foundation, Inc. 127 Sta Catalina St.,cor. Biak na Bato Sts. Brgy. Siena 1114, Quezon City Attention: S. Ma. Cecilia Calaguas, OP President and Chair Gentlemen : This refers to your letter dated May 9, 2009, which was received by this Office by way of 1st Indorsement dated June 3, 2009, by the Office of the Mayor, Quezon City requesting for exemption from the 20% final tax on interest on bank deposits pursuant to Section 30 of the Tax Code of 1997. Documentary evidence submitted disclosed that the St. Martin's Foundation, Inc. with TIN 001-860-638-000 is a non-stock, non-profit corporation registered with the Securities and Exchange Commission under SEC Registration No. AN091-190540 dated May 13, 1991; and that the purpose for which it was created are as follows: 1. To function, engage, and operate as a non-stock and non-profit private foundation under Philippine laws that will undertake the provisions exclusively for one or more of the following purposes: (a) religious and catechetical programs; (b) charitable programs; (c) health, medical and dental services; (d) youth development; (e) food feeding program; (f) educational and cultural; (g) scholarship and study grants; (h) occupational training and skills training; (h) social welfare programs; and (i) rehabilitation of disabled persons, with preferential option for the poor and underprivileged. Based on the foregoing, this Office is of the opinion and so holds that the St. Martin's Foundation, Inc. falls within the purview of a social welfare institution 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. SaIHDA 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. Accordingly, this Office hereby holds that St. Martin's Foundation, Inc. request that it be exempt from the 20% tax on interest on bank deposits is hereby denied for lack of legal basis. Please be guided accordingly. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service