Non-stock non-profit organization

THE Bureau of Internal Revenue on Feb. 23, 2012 issued Revenue Memorandum Circular No. 7-2012 in relation to the circularization of BIR Ruling No. 023-10 dated Aug. 4, 2010 on the capital gains tax and documentary stamp tax liability of a non-stock non-profit organization on its disposition of real property.

The last paragraph of Section 30 of the Tax Code clearly subjects to tax the income of whatever kind and character derived by any organization otherwise exempt, from any of its properties or activities conducted for profit, regardless of the disposition made of such income.

The provision is literal in its language and plain and categorical in its meaning. Moreover, a cardinal rule of statutory construction is that legislative intent must be ascertained from a consideration of the statute as a whole, and not of an isolated part or a particular provision alone.

Furthermore, Section 30 of Revenue Regulations No. 2, as amended, provides among others, that the income of such tax-exempt corporation which is considered as income from its properties, real or personal, includes profits from the sale of property.

Accordingly, any sale of a non-stock non-profit corporation of its real property is subject to capital gains tax based on the gross selling price or current fair market value as determined in accordance with Section 6(E) of the Tax Code, whichever is higher, of such land and/or buildings pursuant to Section 27(D)(5) of the same Code. The Deed of Absolute Sale of the said real property shall also be subject to documentary stamp tax imposed under Section 196 of the Tax Code.

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