INCOME TAX; Exemption of a non-stock, non-profit educational institution - The Blessed Child

Montessori Foundation, 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. However, it shall be subject to internal revenue taxes on its income from trade, business
and other activity the conduct of which is not related to the exercise or performance of its
educational purposes or functions. It must be emphasized that the tax exemption does not cover
withholding taxes. As an educational institution, it is constituted as withholding agent for the
government and required to withhold the tax on compensation income of its employees, or the
expanded withholding tax on income payment to persons subject to tax pursuant to Section 59(b) of
the Tax Code, as amended. (BIR Ruling No. 065-99 dated May 13, 1999)

INCOME TAX; Single and Isolated Sale of Property - The proceeds of the sale of a portion of
property along Aurora Boulevard by the Good Shepherd Convent , Inc. a non-stock, non-profit
religious corporation, to the Light Rail Transit authority (LRTA), which sale is not voluntary but
compelled by public authority, is exempt from capital gains tax. Having been derived from a single
and isolated transaction in furtherance of the purposes for which the Good Shepherd Convent, Inc.
is organized, the proceeds from the sale of a portion of its property in Aurora Blvd., cannot be
considered income from the productive use of its property. Moreover, on the basis of the same
arguments, the use of the proceeds of the sale to redevelop its remaining property for the general
improvement thereof, is in effect, use of the proceeds of the sale of real property for the furtherance
of the purpose for which Good Shepherd Convent, Inc. was organized. Thus, the same shall be
treated as a transaction of incidental character which does not constitute engaging in business and
not subject to capital gains tax. However, the said transaction is subject to documentary stamp tax
imposed under Section 196 of the Tax Code of 1997. (BIR Ruling No. 080-99 dated June 22, 1999)

DONEE INSTITUTION; Accreditation - Pursuant to Section 2(b),(e) and (f) of Revenue Regulations
newly organized and existing non-stock, non-profit corporations and NGO's shall apply for
accreditation and submit to a process of examination and evaluation from the Philippine Council for
NGO Certification (PCNC) as a pre-requisite for their registration with the BIR as qualified-donee
institutions under Section 34(H)(1) and (2)(c) of the Tax Code of 1997. Hence, the request for
registration as a donee institution under Section 34(H)(1) and (2)(c) of the Tax Code of 1997 even
without the requisite certification from the PCNC is hereby denied for lack of legal basis. (BIR Ruling
No. 196-99 dated December 9, 1999)

ACCREDITATION OF A FOREIGN CORPORATION AS DONEE INSTITUTION - A Foreign

Corporation, whether resident or non-resident, cannot be accredited as donee institution. As donee
corporation, considering the requirements of the Tax Code of 1997 and RR No. 13-98 that a non-
stock, non-profit corporation or organization must be created or organized under Philippine laws, and
that an NGO must be a non-profit domestic corporation, a foreign corporation like Conservation
International, whether resident or non-resident, cannot be accredited as donee institution (BIR
Ruling No. 019-2001 dated May 10, 2001)