BIR Ruling [DA-204-00]

April 4, 2000 BIR RULING [DA-204-00] 30; 101-98 The Provincial Superior of the Siervas de San Jose Holy Family Province Inc . 65-A Mapagkawanggawa Street Teachers Village Quezon City Attention: Sr . Lilian O . Ocenar, SSJ Provincial Superior Gentlemen : This refers to your letter dated September 7, 1999 requesting for the confirmation of your opinion that the sale by the Provincial Superior of the Siervas de San Jose Holy Family Province Inc. of its property is exempt from the payment of income tax. It is represented that the Provincial Superior of the Siervas de San Jose Holy Family Province Inc. is a non-stock, non-profit corporation with its Amended Articles of Incorporation duly registered with the Securities and Exchange Commission on July 14, 1997; that the main objective for which the corporation was formed is to foster the dignifying and sanctifying value of work, to evangelize and develop the poor working world and to prevent unemployed poor women from the danger of going stray to enable them to face life and to work with dignity through education, convivence, (schools vocational/skills training dormitories, sheltering homes); manual work and missionary work; that your religious congregation has a house and lot located at No. 7-G Batino Street, Quirino District, Barangay Amihan, Project 3, Quezon City, covered by Transfer Certificate of Title No. N-144390 issued by the Registry of Deeds of Quezon City; that it is actually, directly and exclusively used for religious purposes as a formation house, registered with the Roll of Tax-Exempt Properties issued by the Quezon City Assessor's Office under Tax Declaration Nos. D-002-00635 and D-002-00636; that since your property could no longer answer the needs of your formation house, you decided to sell the property to Spouses Roberto G. Salonga and Alma V. Salonga of Block No. 46 Lot No. 11 Salmon Street, Longos, Malabon, Metro Manila; that the proceeds of the sale will be used to partially cover your expenses for the acquisition of another parcel of land located at No. 78, 18th Avenue, Murphy, Quezon City, as well as the construction of a house which is presently used actually, directly and exclusively for religious purposes as a formation house; that the property is likewise declared as a tax exempt property by the Quezon City Assessor's Office under Tax Declaration Nos. 102-04246 and D-102-04251; and that the proceeds of the sale of your property will be use for religious purposes. In reply, please be informed that the income to be derived from the sale of the subject parcel of land is not within the contemplation of the last paragraph of Section 30 of the Tax Code of 1997, and will not result from the productive use of real properties but from a single transaction which is merely incidental to the religious purposes, hence, exempt from the capital gains tax. (BIR Ruling No. DA-101-98 dated March 20, 1998) LexLib The aforesaid opinion has been sustained and adopted by the Court of Tax Appeals in CTA Case No. 1468 dated October 14, 1968 (Congregacion de la Mission de San Vicente de Paul). Accordingly, the profit or income resulting from the sale transaction would be merely incidental to the religious purposes for which your corporation was created. And as a new site will not be acquired for speculation or as an investment to be eventually sold primarily for monetary gain, there is reason enough to say that income to be derived from the sale of said property is not within the contemplation of the proviso of Section 30 and will therefore, not render such profit taxable as income (BIR Ruling No. 115-92 dated April 2, 1992 and Opinion of Secretary of Justice, GC No. V-287 dated April 7, 1959.). 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. cdlex Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)