BIR Ruling [DA-101-98]

March 20, 1998 BIR RULING [DA-101-98] Christ's Commission Foundation, Inc. 2F St. Francis Square Julia Vargas Avenue cor. Bank Drive, Ortigas Center Mandaluyong City Attention: Ms . Elisa H . Buising Finance Manager Gentlemen : This refers to your letter dated January 6, 1998 requesting for the confirmation of your opinion that the sale by the Christ's Commission Foundation, Inc. of its properties are exempt from income tax. LLpr It is represented that you are a non-stock, non-profit corporation duly registered with the Securities and Exchange Commission on March 25, 1993 under SEC. Registration No. 125705; that you are engaged in religious and charitable activities for the purpose of building up the spiritual, social and economic well-being of the members of the Body of Christ; that your are contemplating to sell your properties located at 209 Reposo Street, Bel-Air, Makati City and the other one located at Ayala Avenue Extension, also in Makati City covered by Transfer Certificate of Title Nos. 169659 and 198830, respectively, all registered under the name of your Foundation; that a portion of the proceeds of the sale of the properties shall be used to fully pay your obligation for another piece of land with a bigger area consisting of 8,749 square meters located at Bo. Ususan, Taguig, Metro Manila which you have acquired; that the remaining portion of the proceeds of the sale will be used to build your Foundation's principal offices, bible study center, central sanctuary or worship hall and a school, on the land at Bo. Ususan, Taguig, Metro Manila, all of which are in furtherance of your purposes. In reply, please be informed that the income to be derived from the proposed sale of the subject parcels of land is not within the contemplation of the last paragraph of Section 26 of the Tax Code, as amended [now 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 and charitable purposes for which it was created office, exempt from the capital gains tax. (BIR Ruling No. 115-92 dated April 2, 1992). 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 would be 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 26 of the Tax Code, as amended [now 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) cdtech 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, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal & Enforcement Group)