BIR Ruling

August 6, 1976 Congregacion De Religiosas Dominicas De Sta. Catalina De Sena Sta. Catalina St. Corner Biak-na-Bato Quezon City Attention: Sister Ma . Stella Salao, O . P . Superior General Gentlemen : This refers to your letter dated July 7, 1976 requesting, on behalf of the Dominican Sisters, Inc., a ruling on whether or not the difference between the acquisition cost and the proceeds from the proposed sale or exchange of a parcel of land owned by the Incorporation is subject to capital gains tax. It is represented that the Congregacion de Religiosas Dominicas de Sta. Catalina de Sena, otherwise known as the Dominican Sisters of St. Catherine of Siena, a religious corporation aggregate organized and existing under the laws of the Philippines, is organized exclusively for the promotion of vocations to its religious order, for the taking care of the members of its community, for undertaking apostolate programs, for administering its schools and formation centers and for carrying on social action projects; that sometime in 1960, the Dominican Sisters acquired a parcel of land in Baguio City townsite, with an area of 10,000 square meters more or less, for educational purposes; that due to the developments in the field of education, particularly in Baguio City where large colleges and universities are presently operating, the original purpose of the purchase was not immediately pursued; that the acute demand on the Congregation for facilities for its members and religious community and the need to safeguard its historical and valuable records by providing archival facilities convinced the Council (of the Congregation) to dispose of the property. In reply, I have the honor to inform you that the profits that may be derived from the proposed sale of the aforesaid real property are not subject to tax, since, as represented, the proceed of that sale will be used for the construction of additional housing facilities for the religious community of the Congregation, archival facilities and building and for the construction of a road that will give the proposed vendee right of way and access to the main road, and in case of excess, for the improvement of its mission school and for the Congregation's medical, social action and welfare projects. In the case of Manila Polo Club vs. Collector of Internal Revenue (CTA Case No. 293, promulgated August 31, 1959), exemption from the payment of income tax on profits derived from the sale of real property was granted with the condition that the proceeds of such sale were to be used exclusively to acquire and develop another property essential to the purpose for which the club was organized. aisa dc 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."