Philippine Association of Court Employees National Level, Inc.

June 18, 2009 BIR RULING [NSNP-(S30G-043) 381-09] 30 (E); S-30-102-2008 Philippine Association of Court Employees National Level, Inc. c/o Office of the Clerk of Court (RTC) Manila City Hall Attention: Atty. Virgina R. Coloma-Rafael Gentlemen : This refers to your letter dated June 20, 2007, as indorsed by the Regional Director, Revenue Region No. 6, Manila, requesting in effect, for exemption from the payment of income tax and the filing of the corresponding income tax return under Section 30 of the Tax Code of 1997. Documents submitted to this Office show that the Philippine Association of Court Employees National Level, Inc. with Tax Identification No. (TIN) 006-509-945, is a non-stock, non-profit corporation duly registered with the Securities and Exchange Commission (SEC) under Company Registration No. CN200618071 dated November 20, 2006. It was organized primarily to take an active part in any reform or such other legitimate activities that would redound to the improvement of public service and advancement among court employees or the duly constituted authorities without engaging/acting in government unionism activities. In reply, please be informed that this Office cannot yet issue the requested ruling/certificate of tax exemption. Philippine Association of Court Employees National Level, 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 should file the necessary annual information return instead of an income tax return on or before the 15th day of the fourth month of the year following the start of its operation as an exempt organization as required under Section 24 of Revenue Regulations No. 2. Based on such information return, the BIR shall conduct the necessary investigation on the corporation's activities undertaken during the period. The letter of exemption shall thereafter be issued depending upon the result of our investigation. cHSTEA However, Philippine Association of Court Employees National Level, Inc. shall be subject to the corresponding internal revenue taxes imposed under the Tax Code of 1997, as amended, on income derived from any of its properties, real or personal, or 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 instruments and from trust funds and similar arrangements and royalties derived from sources within the Philippines are subject to 20% final withholding tax; provided, however, that the interest income it derives from a depository bank under the expanded foreign currency deposit system shall be subject to a final withholding tax of 7 1/2% pursuant to Section 27 (D) (1) in relation to Section 57 (A) of the Tax Code of 1997, as amended. Moreover, Philippine Association of Court Employees National Level, Inc. is hereby required to file on or before the 15th day of the fourth month following the end of the accounting period a Profit and Loss Statement and Balance Sheet with Annual Information Return under oath, stating its gross income and expenses incurred during the preceding period 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 Philippine Association of Court Employees National Level, Inc. shall be constituted as a withholding agent for the government if it acts as an employer and any of its employees receives compensation income subject to withholding tax, or if it makes payments to individuals or corporations subject to the withholding tax provided for in Section 57 of the Tax Code of 1997, as amended. Finally, its 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 it has complied the conditions under which it may be granted tax exemption or tax incentives and/or has paid its tax liability, if any, pursuant to Section 235 of the Tax Code of 1997, as amended. This ruling is being issued on the basis of the foregoing facts as presented. However, if upon investigation it will be ascertained that the facts are different, then this ruling shall be considered as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service