Cebu-Ermita Community Foundation, Inc.

August 7, 2009 BIR RULING [NSNP-(S30E-103) 504-09] Section 30; BIR Ruling No. S30-080-2007 Cebu-Ermita Community Foundation, Inc. Old Veco Compound, Ermita Cebu City Attention: Mr. Edilburgo G. Silva Corporate Secretary Gentlemen : This refers to your letter dated April 17, 2009, indorsed to this Office from BIR Revenue Region No. 13-Cebu City, requesting a ruling for tax exemption. Documentary evidence submitted disclosed that Cebu-Ermita Community Foundation, Inc. is a non-stock, non-profit charitable corporation registered with the Securities and Exchange Commission (SEC) under SEC Registration No. CN199900770 dated August 17, 1999. Its purposes are as follows: "1. To plan, develop, implement and manage socio-cultural and livelihood projects that will contribute to the improvement of the quality of life in the sitios of Barangay Ermita, Cebu City such as: a) Livelihood; b) Family Health and Child Care c) Skills and Human Resource Development d) Environmental Safety and Sanitation e) Disaster Preparedness (Fire and Other Calamities) f) Peace and Order TaCSAD g) Cultural and Heritage Development h) Sports and Youth Development i) Parks and Playground j) Other forms of community services and facilities 2. To implement sustainable programs and projects such as the above with the participation of the Barangay officials, community leaders, NGOs and barangay residents in order to make the projects sustainable; and 3. To coordinate and solicit assistance from local and external private and/or public organizations in terms of funding and other assistance that can be extended to the foundation in order to pursue Items 1 and 2." 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. Accordingly, as a non-stock, non-profit charitable organization, Cebu-Ermita Community 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. cHDEaC Moreover, as a tax-exempt organization, Cebu-Ermita Community 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. HOWEVER, this ruling is subject to the condition that the Foundation shall submit its 2009 Financial Statements (balance sheet), in addition to its Annual Information Returns for the past three (3) years which it has already submitted to this Office, in compliance with RMC No. 14-2001. 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