BIR Ruling

January 31, 1974 Mr. Alfredo M. Velayo Chairman, Board of Trustees Union Church of Manila P. O. Box 184, Makati, Rizal S i r : This refers to your letter dated January 21, 1974 requesting a ruling as to the tax consequence of the proposed sale by the Union Church of Manila of its piece of land and the improvements thereon situated at the corner of Buendia and Makati Avenue, Makati, Rizal. aisa dc It is represented that the Union Church of Manila is a non-stock and non-profit Philippine corporation organized and operated exclusively for religious and charitable purposes; that it owns the abovementioned piece of land and improvements thereon consisting of the church building and personages; that it intends to sell said land and improvements to the Ayala Corporation all the proceeds of which shall be need exclusively for the following purposes: "1. Acquisition of the use of suitable land, under appropriate long term lease or comparable arrangements, on which a new church building for the Union Church shall be constructed; "2. To construct on such land a new church building and related facilities for the Union Church; "3. To acquire the use of, or to construct, a new manse (Personage) and related facilities; "4. To amortize and liquidate the outstanding financial obligations of the Union Church related to the construction of the present church, manse and related facilities; "5. The balance of the proceeds, if any, shall be exclusively used for and in promotion of the religious and charitable functions and activities of the Union Church." cdta It is also represented that 65% of the total membership of Union Church are United States citizens; hence, the sale as necessary in order to comply with the constitutional requirement that ownership of lands in the Philippines shall be limited to Filipino citizens or to corporations or associations, 60% of the capital of which is owned by such citizens. In reply, I have the honor to inform you that based on the foregoing representations, this Office is of the opinion, and so holds, that the profits to be realized from the proposed sale are exempt from income tax, considering that the proceeds thereof will be used exclusively in acquiring the use of another suitable site, construct a new church building and other facilities of the Church and for other purposes incident to and in furtherance of the religious and charitable purposes for which Union Church was organized. (Manila Polo Club vs. Collector, CTA Case No. 293, August 31, 1959; Xavier School, Inc. vs. Commissioner, CTA Case No. 1682, October 8, 1968) cd Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5