BIR Ruling

January 21, 1976 The Good Shepherd Convent Banawa, Cebu City Attention: Sister Mary Leonie Tocmo Superior Mesdames : This refers to your letter dated December 11, 1975 requesting a ruling as to whether or not the gain realized from the sale of your corporate property in Banawa, Cebu City, is exempt from tax. cdtech It is represented that for and in consideration of P187,185.00 your aforesaid property with an area of 8,243 square meters was sold on November 11, 1975 all the proceeds of which will be used exclusively for the following purposes: 1. To secure funds for the support and maintenance of the Congregation; 2. To save cost of maintaining parts of the property which are not presently used for the apostolate; 3. To support the works of the institution which, if suspended will affect detrimentally indigent families and other beneficiaries of the Congregation; 4. To be able to attain the goals and aims of the Corporation and the corresponding operational expenses attendant thereto since the Philippine Charity Sweepstakes has stopped providing the regular quarterly allocation for the support of the wards of this charitable institution; and 5. To augment donation received by the Corporation which are nominal in amount and which with the imposition of income tax, would hinder the continuance and implementation of planned services to the poor and marginal families of the area served. In reply thereto, I have the honor to inform you that based on the foregoing representations, this office is of the opinion and so holds that the gain realized by you from the sale of the aforesaid property is not subject to tax it appearing that the proceeds of such sale would be used in furtherance of the religious and charitable purposes for which the corporation was organized. In the case of Manila Polo Club v. Collector of Internal Revenue (CTA Case No. 293, promulgated Aug. 31, 1959), exemption from the payment of income tax on profits derived from the sale of real properties was granted considering that the disposition was not only incidental but was also necessary to accomplish the purposes for which the Club was organized. (see also Xavier School, Inc. vs. Commissioner, CTA Case No. 1682, October 8, 1969) aisadc Very truly yours, EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-1456-040-3 "TAXPAYERS SHOULD INDICATE THEIR TAN IN ALL COMMUNICATIONS TO THE BIR."