BIR Ruling

May 23, 1969 RM de los Reyes Real Estate Co. Room 208-A Burke Building Escolta, Manila Gentlemen : This refers to your letter dated May 19, 1969 requesting information as to whether or not the gains, if any, to be derived from contemplated sale by the Seventh Day Adventists of its real property at Baesa, Caloocan City, and the improvements thereon consisting of buildings, classrooms clinics, student dormitories, canteens, church, assembly halls, staff houses and other facilities comprising the Philippine Union College shall be exempt from income tax. cdta It is represented that proceeds of the sale shall be utilized in the acquisition of a new site and the construction of facilities thereon for the Philippine Union College by virtue of the desire to convert the college into a university. In reply, I have the honor to inform you as follows: It is not clear from your representation whether or not the Philippine Union College is owned and operated by the Seventh Day Adventists or is an independent entity. For purposes of your inquiry, however, this reply assumes that the Philippine Union College is owned by the Seventh Day Adventists and are, therefore, one and the same entity. It had already been sufficiently established by jurisprudence and by an opinion of the Secretary of Justice that the gains derived from sale of the properties of an exempt organization used for the purposes for which it was organized for the purpose of utilizing the proceeds thereof in the purchase of similar property and for similar purposes is exempt from income tax. (Bishop of Nueva Segovia vs. Collector of Internal Revenue, 50 Phil. 613; Sagrada Orden de Predicadores vs. Trinidad, 42 Phil. 397, 263 U.S. 578; Op. Sec. of Justice, April 7, 1959) Accordingly, any gain which may be derived by the Seventh Day Adventists from the sale of its Baesa property shall be exempt from income tax provided that the proceeds thereof shall be utilized for the acquisition of similar property and for similar purposes. It is informed in this connection, however, that should it appear after verification that the proceeds of the sale are not utilized as represented the corresponding tax shall be assessed and collected plus all interests and penalties that shall accrue and arise by reason of delinquency and misrepresentation. aisadc Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue