BIR Ruling [DA-329-99]

May 31, 1999 BIR RULING [DA-329-99] Augustinian Monastery "Mother of Good Counsel" Augustinian Contemplative Nuns Carmel Farms, Purok 8, Tungkong Mangga San Jose del Monte, Bulacan Attention: Sr . Domenica Gianfrancesco, OSA Gentlemen : This refers to your letter dated March 12, 1999 requesting for a ruling that the proposed sale by the Association of Augustinian Contemplative Nuns, Incorporated of its real estate property is exempt from capital gains tax. It is represented that you are a non-stock, non-profit religious and charitable corporation duly registered with the Securities and Exchange Commission (SEC), on January 23, 1995 under SEC Registration No. ANO-95-00217; that you are contemplating to sell your aforementioned real estate property which is covered by TCT No. T-390778 and located at No. 302 Matimyas St., United San Pedro Subdivision, San Pedro Laguna, because it is no longer suited to your prayer life; and that the proceeds of the sale will be used in constructing another house in a peaceful place. In reply, please be informed that the income to be derived from the proposed sale of the aforementioned real property 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 property but from a single transaction which is merely incidental to the religious and charitable purposes for which, it was created, hence exempt from the capital gains tax. (BIR Ruling Nos. 115-92 dated April 2, 1992; DA-101-98 dated March 20, 1998) 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 proposed sale transaction is merely incidental to the religious and charitable purposes for which the corporation was created. And as the new site will not be acquired for speculation or 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 of the Tax Code of 1997 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. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)