BIR Ruling

August 20, 1971 Messrs. Atienza, Tabora & Del Rosario 12th Floor, G. E. Antonino Building 540 T. M. Kalaw St., Ermita, Manila Gentlemen : This refers to your letter dated February 16, 1971 requesting a ruling as to whether or not the gain to be derived from the proposed sale or exchange of a parcel of land owned by your client, The Servants of the Holy Ghost are subject to tax. It is represented that your client, the Servants of the Holy Ghost is a non-stock, non-profit domestic corporation organized and operated exclusively for religious, educational and charitable purposes; that no part of its net income inures to the benefit of any private stockholder or individual; that prior to the outbreak of World War II, the corporation acquired adjacent parcels of land situated at Mendiola St., Manila, with a total area of 25,734.93 square meters, exclusively for the purpose of establishing a training center for its members who are to become teachers of the various schools it was intending to operate under its charter and of providing a house for its members, as soon as it would be financially able to do so; that at the time it acquired the property, the corporation did not have the finances with which to construct the training center and the house; that in the meantime, it utilized a portion of the property as a school site for the College of the Holy Spirit, a school the members of whose Board of Trustees are also all members of the Servants of the Holy Ghost; that the College of the Holy Spirit is intending to continue operating as an educational institution and will therefore continue to occupy a substantial portion of the property for sometime to come; that said property has become impracticable and unsuitable for the purpose for which it was initially intended by the corporation; that the corporation is planning to sell or exchange the aforementioned parcel of land, the proceeds thereof to be used for the acquisition of a new and suitable site for its proposed training center and house for its members and to defray the cost of the construction of said training center and house. cd In reply thereto, I have the honor to inform you that the profits which may be realized from the proposed sale or exchange of the aforesaid parcel of land by the Servants of the Holy Ghost are not subject to tax, it appearing that the proceeds of such sale or exchange will be used for the acquisition of a new and suitable site for its proposed training center and house for its members and to defray the cost of the construction of said training center and house. In the case of the Manila Polo Club vs. Collector of Internal Revenue (CTA Case No. 293, promulgated August 31, 1969), exemption from the payment of income tax on profits derived from the sale of real properties was granted with the condition that the proceeds of such sale were to be used exclusively to acquire and develop another property essential for the purpose for which the club was organized. Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue