Romulo, Mabanta, Buenaventura Sayoc & De Los Angeles

March 8, 2007 BIR RULING [DA-143-07] 27 (A) & (D) (5); 196; 209-91 Romulo, Mabanta, Buenaventura Sayoc & De Los Angeles 30/F Citibank Tower Paseo de Roxas, Makati City Attention: Atty. Ma. Liza A. Lopez-Rosario Gentlemen : This refers to your letter dated July 31, 2006 requesting for a ruling confirming your opinion that no capital gains tax, expanded withholding tax or documentary stamp tax is due on the transfer of properties registered in the name of Roman Catholic Archbishop of Manila (RCAM) to the newly-created dioceses of Pasig, Novaliches, Kalookan, Cubao and Paraaque for purposes of administration. It is represented that RCAM is a corporation sole which administers and manages the affairs, properties and temporalities of the Catholic Church. Canonically, all properties registered in the name of RCAM belongs to the Universal Church with RCAM acting only as the sole administrator and trustee of these properties. Canons 1254, 1255 and 1257, paragraph 1 of the Code of Canon Law of 1983 provides that: cHCIDE "CANON 1254. S 1. The Catholic Church has an innate right to acquire, retain, administer, and alienate temporal goods in pursuit of its proper ends independently of civil power. CANON 1255. The Universal Church and the Apostolic See, the particular churches as well as any other juridic person, whether public or private, are capable of acquiring, retaining, administering, and alienating temporal goods in accord with the norm of law. CANON 1257. S 1. All temporal goods which belong to the Universal Church, the Apostolic See, or other public juridic persons within the Church are ecclesiastical goods and are regulated by the following canons as well as by their own statutes." IDASHa In 2002 and 2003, His Holiness Pope John Paul II issued Papal Bulls segregating Pasig, Novaliches, Kalookan, Cubao and Paraaque from the Archdiocese of Manila. Consequently, the RCAM was mandated to transfer the management and administration of the properties located within the jurisdiction of the newly-created corporations sole to each of them. The transfer of the title to the properties merely involves transfer of administration over said properties in compliance with the Papal Bull and there is no consideration involved in the transfer and also there is no change of beneficial ownership. The beneficial owner of the said properties continues to be the Universal Church. Last January 16, 2006, you sought the advice of Mr. Benedicto Ulep, Administrator of the Land Registration Authority (LRA), on how RCAM could effect the transfer and the administration of these properties to the newly-created dioceses. In his letter dated May 26, 2006, he confirmed that the transfer of title may be done by means of a Deed of Trust. IADCES In reply, please be informed that a change of trustee does not result in a change in the beneficial ownership of the properties nor does it involve any consideration, therefore the same is not considered a taxable event. (BIR Ruling No. 209-91; DA 397-04 dated July 21, 2004; DA-044-04 dated February 4, 2004) The transfer of title to properties registered in the name of RCAM to the newly-created corporations sole for administration purposes and without any consideration is analogous to the transfer of properties by a trustee to a successor-trustee. Section 110 of the Corporation Code states that: "Sec. 110. Corporation Sole. For the purpose of administering and managing, as trustee , the affairs, property and temporalities of any religious denomination, sect or church, a corporation sole may be formed by the chief archbishop, bishop, priest, minister, rabbi or other presiding elder of such religious, sect or church organization." (emphasis supplied) Accordingly, this Office is of the opinion as it hereby holds that no capital gains tax, expanded withholding tax or documentary stamp tax is due on the transfer of real or personal properties currently registered in the name of RCAM to the newly-created dioceses of Pasig, Novaliches, Kalookan, Cubao and Paraaque for purposes of administration and in compliance with the mandate of the Papal Bulls creating such dioceses. ASHaTc 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.) GREGORIO V. CABANTAC Deputy Commissioner