Joint Implementing Guidelines for the Implementation of the Social Amelioration Program for the Second (2nd) Tranche

September 21, 1971 Messrs. Quasha, Asperilla, Blanco, Zafra & Tayag Hongkong Bank Building 117 Juan Luna, Manila D-405 Gentlemen : This refers to your letter dated August 18, 1971 requesting a ruling as to the tax consequences of the proposed sale by your client of its 25-hectare property located in Quezon City. cdt It is represented that your client, an institution or organization allegedly organized exclusively for religious purposes (hereinafter referred to as the corporation) owns a 25-hectare property in Quezon City where it has its school site and operates its school; that the place is becoming inadequate for its school and campus needs; that the adjacent areas are fast becoming filled with commercial establishments and amusement places and the immediate vicinity is ceasing to be a residential district; that the corporation wants to sell the entire property and reinvest or use the proceeds from such sale in the acquisition of another property located outside of Manila, and construction of the necessary buildings to attain the objectives and purposes for which it was organized; and that because of the size of the corporation's present property in Quezon City and the estimated price is so high that it is not within easy reach of an ordinary buyer, the corporation proposes to subdivide the property in smaller parcels to be sold to several buyers of the property. In reply thereto, I have the honor to inform you that the profits which may be realized from the proposed sales of the aforesaid property by the corporation are not subject to tax, it appearing that the proceeds of such sale will be used for the acquisition of another property outside of Manila where it can relocate its school site, and the construction of the necessary buildings thereon. In the case of the 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 properties was granted with the condition that the proceeds of such sale were to be used exclusively to acquire and develop another property essential for the purposes for which the club was organized. Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue