Bombo Radyo Philippines Foundation, Inc.

January 13, 2009 BIR RULING [NSNP-(S30G-002) 015-09] Section 30; BIR Ruling No. S-30-096-99 Bombo Radyo Philippines Foundation, Inc. R. Florete Building, Corner Rizal-A-Iznart Streets Iloilo City 5000 Attention: Mr. Enrico O. Jacomille Incorporator Gentlemen : This refers to your letter, indorsed to this Office by Revenue Region No. 11, Iloilo City, for tax exemption in favor of Bombo Radyo Philippines Foundation, Inc. Documentary evidence submitted disclosed that Bombo Radyo Philippines Foundation, Inc. is a non-stock, non-profit charitable corporation registered with the Securities and Exchange Commission (SEC) under SEC Registration No. CN200731148 dated November 15, 2007. The primary purposes for which it was organized are as follows: "To establish, maintain, operate, administer and manage a non-stock, non-profit charitable foundation; To engage in philanthropic, humanitarian and charitable purposes, all for the public welfare; To help conduct and maintain radio and television broadcasting; To produce and distribute radio and television shows and programs for charitable, educational and cultural purposes in all formats and through any media now known or hereafter developed; To solicit aid, donations and contributions, through radio broadcasting, web streaming and telecasting and other forms of media, as to assist, help aid and alleviate the plight of the poor and needy, children and the youth by airing the condition or situation of those in dire need of help, which conditions are occasioned by or are the result of occurrence of disease, natural calamities such as typhoon, floods, earthquakes and the like; DEcTCa To use, distribute and allocate with planned schedules and programs in accordance with existing laws to victims of natural calamities or disasters, either for relief or rehabilitation measures, the proceeds of charitable gifts, donations as well as such other income realized from radio, web streaming or TV programs or shows intended for such fund raising campaign; To receive, hold, care for, invest in, and operate real and personal property, and to use and distribute, from time to time, all the income and all principal, as well, which it shall receive, in all charitable gifts, donations and contributions, to be applied, consistently with existing laws, for the benefit of an indefinite number of sick and needy persons, or by assisting them to establish themselves in life. Such funds may be used and distributed for all of said purposes, or for any one or more; To finance and implement projects and programs and conduct and encourage researches and studies in environmental and wildlife protection and natural resources conservation; To conduct conservation-related communications programs and advocacy campaigns; To manage projects in natural resources and wildlife conservation in cooperation with agencies, corporations and foundations; To establish, operate, administer, manage museums or relic houses of whatever kind or nature, for the safekeeping, exhibition, display and care of artifacts, memorabilia, antiques, relics and other objects which, by their nature, are worthy of preservation and exhibition; To establish, manage, operate and superintend libraries and study centers, consistent with the requirements of law and the regulations imposed by the government administrative agencies or such other competent authorities; To provide scholarship grants to poor but deserving students or children of the Florete Group of Companies employees; It is the intent and purpose that the said foundation shall be organized for charitable, educational or humanitarian purposes and no part of the net earnings nor of the principal shall inure to the benefit of any private member or individual; EITcaD To establish and provide information technology, creative arts and other special classes and offer tutorial services, to publish, circulate, distribute, buy and sell and deal in publication and multi-media materials and implement related undertakings; To publish, circulate, distribute, buy, sell and deal in publications and multi-media materials and implement related undertakings; To conduct, facilitate and provide seminars, training, lectures and courses on various socio-cultural topics, such as but not limited to strengthening the community and family, and values formation. xxx xxx xxx" In reply, please be informed that this Office cannot as yet issue the requested ruling/certificate of tax exemption because Bombo Radyo Philippines Foundation, Inc. has to prove by actual operation for at least three (3) years that it is really an organization/association exempt from income tax under Section 30 of the Tax Code of 1997, as amended. It can file the necessary annual information return instead of an income tax return on or before the 15th day of the fourth month of the preceding accounting period following the start of its operation as an exempt organization as required under Section 24 of Revenue Regulations (Rev. Regs.) No. 2 ( Collector vs. Sinco ,G.R. L-9276 dated October 23, 1956).Based on such information return, we shall conduct the necessary investigation on the activities undertaken during the period. The letter of exemption shall thereafter be issued depending upon the result of our investigation. However, Bombo Radyo Philippines Foundation, Inc. is subject to the corresponding internal revenue taxes imposed under the Tax Code of 1997, as amended 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, the interest income from currency bank deposits and yield or any other monetary benefits 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, as amended. Moreover, it is required to file on or before the 15th day of the fourth month following the close 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 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. cIACaT It should be understood that Bombo Radyo Philippines Foundation, Inc. shall be constituted as a withholding agent of the government if it acts as an employer and its employees receive compensation income subject to withholding tax under Section 79 (A), Chapter XIII, Title II of the Tax Code of 1997, as implemented by Rev. Regs. No. 2-98, as amended or if it makes income payments to individuals or corporations subject to the withholding tax provided for in Section 57 of the Tax Code of 1997, as amended, and as implemented by Rev. Regs. No. 2-98, as amended. Finally, the corporation's books of accounts and other pertinent records shall be subject to examination by the Bureau of Internal Revenue for the purpose of ascertaining whether it is complying with the conditions under which it has been granted tax exemption and its tax liability, if any. For purposes of securing a permanent exemption after the three (3)-year period, Bombo Radyo Philippines Foundation, Inc. is required to submit the following documents pursuant to Revenue Memorandum Circular No. 14-2001: 1) SEC Registration; 2) Articles of Incorporation which must include the following provisions: i) that the corporation is non-stock, non-profit; ii) that the primary purpose for which it was created is one of those enumerated under Section 30 of the Tax Code of 1997; iii) that no part of the net income shall inure to the benefit of any of its members; iv) that the trustees do not receive any compensation; and v) in case of dissolution, assets of the corporation shall be transferred to similar institution or to the government; 3) By-laws; 4) Annual Information Returns for the past three (3) years; and IEaATD 5) Financial Statements (balance sheet) for the past three (3) years 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