Girl Scouts of the Philippines

March 19, 2008 BIR RULING [DA-179-08] CA 542; DA-307-2005 Girl Scouts of the Philippines 901 Padre Faura Street Ermita, Manila Attention: Teresita B. Choa National President Gentlemen : This refers to your letters dated December 15, 2006 and March 20, 2007 requesting for a ruling that the sale by Girl Scouts of the Philippines (GSP) of its real property is exempt from capital gains tax (CGT). As represented, GSP under Commonwealth Act No. 542 as amended by Republic Act No. 4375, P.D. No. 720 and Executive Order No. 267 is a non-stock, non-profit corporation organized and operated exclusively for the development of girls and young women. The main source of revenue for the GSP is the membership fees which significantly plunged due to the decline in membership. The rising cost of operations is beginning to drain the coffers of the GSP and this has affected its program implementation. It is for this reason that GSP is constrained to offer for sale its properties in San Bartolome, Novaliches, Quezon City consisting of One Hundred Two Thousand One Hundred Sixty Eight (102,168) square meters more or less covered by TCT Nos. RT-100580, RT-100581, RT-100582 and RT-95673. The proceeds of the sale will provide GSP with the much needed funds to promote Girl Scouting in the Philippines. In connection therewith, you are requesting a ruling to the effect that the sale by the GSP of its aforementioned properties are exempt from the capital gains tax. CEDHTa In reply thereto, please be informed that under Section 9 of Commonwealth Act No. 542 as amended by Republic Act No. 4375, P.D. No. 720 and Executive Order No. 267 "An Act to Create a Corporation to be Known as the Girl Scouts of the Philippines and to Define its Powers and Purposes", GSP shall be exempt from payment of all taxes, duties, imposts and other charges. In view thereof, this Office is of the opinion as it hereby holds that the proceeds from the sale of GSP's real properties located at San Bartolome, Novaliches, Quezon City covered by Transfer Certificate of Title Nos. RT-100580, RT-100581, RT-100582 and RT-95673 cannot be considered income from the productive use of its properties and, therefore, the same is not subject to capital gains tax, income tax and consequently, to the creditable expanded withholding tax. (BIR Ruling DA-307-2005 dated July 05, 2005) However, the Deed of Absolute Sale of said real property shall be subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997, as amended, in relation to Section 173 of the same Code which provides that whenever one party to the taxable document enjoys exemption from documentary stamp tax, the other party thereto who is not exempt shall be the one directly liable for the tax. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service