ITAD Ruling No. 051-00

February 10, 2000 ITAD RULING NO. 051-00 Art. XIV, Phil. Consti. Section 30, NIRC FDO 149-95 511-88 Commission on Filipinos Overseas Citigold Center, 1345 Pres. Quirino Avenue cor. South Superhighway, Manila, Philippines Attention: Jose Z . Molano, Jr . Gentlemen : This refers to your letter dated October 7, 1999 seeking the opinion of this Office on the tax obligations of the Philippine School in Doha, Inc., (PSD) located in Doha, State of Qatar. It is represented that PSD is a non-stock, non-profit organization duly registered with the Securities and Exchange Commission (SEC) established under the laws of the Philippines and the existing guidelines and regulations prescribed by the Department of Education Culture and Sports (DECS) and the Department of Foreign Affairs (DFA) for overseas Philippine schools; that it is a Philippine educational institution offering the DECS prescribed school curriculum on pre-school, elementary and secondary education to children of the members of the Filipino community in Qatar as well as to other nationalities. In reply, please be informed that par. 3, Section 4, Article XIV of the Philippine Constitution provides: "All revenues and assets of non-stock, non-profit educational institutions used actually, directly, and exclusively for educational purposes shall be exempt from taxes and duties . . ." LibLex Non-stock, non-profit educational institutions are exempt from taxes on all their revenues and assets used actually, directly and exclusively for educational purposes. They shall however, be subject to internal revenue taxes on income from trade, business or other activity the conduct of which is not related to the exercise or performance by such educational institution of its educational purpose or function. (Sec. 2 Finance Department Order No. 137-87 as amended by Finance Department Order No. 92-88 and 149-95) Such being the case, the Philippine School in Doha, Inc. being a non-stock, non-profit educational institution, is exempt from taxes and duties on all its revenues and assets used actually, directly and exclusively for educational purposes. (BIR Ruling No. 511-88 dated October 19, 1988) However, notwithstanding such exemption, the income of whatever kind and character of the said institution from any of its properties, real or personal, or from any of their activities conducted for profit regardless of the disposition made of such income, shall be subject to tax imposed under the Tax Code of 1997. (Section 30, NIRC of 1997) For your information and guidance. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group