Philippine Institute of Petroleum, Inc.

October 27, 2009 BIR RULING [NSNP-(S30F-005) 677-09] Section 30 (F); DA-467-07 Philippine Institute of Petroleum, Inc. Unit 201 Centrum II bldg.,150 Valero St., Salcedo Village, Makati City Attention: S.C. Monteiro Executive Director Gentlemen : This refers to your letter dated August 26, 2009 which was received by this Office by way of 1st Indorsement dated September 8, 2009 by Revenue District Office No. 50, Revenue Region No. 8, South Makati requesting for the issuance of a certificate of exemption as a tax exempt corporation. Documentary evidence submitted disclosed that the Philippine Institute of Petroleum, Inc. with TIN 050-005-034-609 is a non-stock, non-profit corporation registered with the Securities and Exchange Commission under SEC Registration No. A199602936 dated July 23, 1996; and that the purposes for which the corporation is organized, among others are as follows, viz. : 1. To function as an association representing the production, refining, blending, trading, transport and marketing sectors of all branches of the petroleum and related industry (referred to as Industry) and to do, perform, engage in any and all acts, matters and things which may be reasonably necessary, proper and convenient for the exercise, accomplishment or achievement by the Corporation of any and all rights, privileges, powers and attributes allowed or permitted by law such as but not limited to the following: a. To facilitate the consultation with the Government (national and local) and private organizations on matters of public interest for purposes of considering, formulating, amending any laws/regulations relating to the Industry so as to increase the efficiency and effectiveness of the service of the Industry to the general public. AaITCS b. To improve communication and understanding between the Industry and other similar corporations/associations, opinion leaders, government educators, media, special interest groups and the community so as to increase public awareness on the role of the Industry in the Philippine economy; c. To promote, conduct, encourage and coordinate research in order to achieve technical advances and innovations in the Industry and disseminate knowledge and information relating to the Industry as may benefit and aid the development of all sectors of society. Based on the foregoing, this Office is of the opinion and so holds that the Philippine Institute of Petroleum, Inc. falls within the purview of a non-stock, non-profit organization as contemplated under Section 30 (F) 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 from 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 resources and disposition of income. It should be understood that the said exempt non-stock, non-profit organization 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. DISEaC 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 purposes 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. 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, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service