BIR Ruling [DA-171-98]

April 24, 1998 BIR RULING [DA-171-98] Saint Francis of Assissi Orthodox Catholic Church, Inc. (Old Catholic Apostolic Succession) 143-A Banlat Road, Tandang Sora Quezon City Attention: Most Rev . Delfin A . Cleofas, OSF Apostolic Vicar and Bishop Gentlemen : This refers to your letter dated January 20, 1998 stating that the Saint Francis of Assissi Orthodox Catholic Church, Inc . (OCC) , is a Christian fellowship of clergy and laity whose core value is to give expression to life in the divine; that the primary goal of the OCC is to bring the loving message of the Gospel of Jesus Christ to the world, accomplished thru the Liturgy, the sacramental rites, Christian teachings and pastoral care; that OCC is duly registered with the Securities and Exchange Commission under SEC Registration No. 179010 dated July 9, 1990 as a non-stock, non-profit religious corporation; that it has a small congregation in Banlat, Tandang Sora, Quezon City where it holds office; that for certain reasons, OCC failed to thrive in Quezon City although its outreached programs which reaches as far as Bulacan and Quezon, City deprived areas continue to grow and remain very strong; that this led the church to decide to move its operations to the countryside, as embodied in a resolution passed by the OCC Board of Trustees; and that the same resolution moves to dispose of its 250 sq.m. lot in OCC's name so that the proceeds of the sale will be used for the transfer of the Church operations. Based on the foregoing, you now request for a confirmation that the Saint Francis of Assissi Orthodox Catholic Church, Inc. is exempt from income tax on the proceeds of the aforesaid proposed sale. In reply, please be informed that the income to be derived from the proposed sale of the subject parcel 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 purposes for which it was created, hence, 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, since the proceeds resulting from the proposed sale transaction will be used in furtherance of the religious purpose for which the corporation was created and that the new site will not be acquired for speculation or as an investment to be eventually sold primarily for monetary gain, there is reason enough to say that the income to be derived from the proposed 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 proceeds as taxable income. (BIR Ruling No. 115-92 dated April 2, 1992 and Opinion of Secretary of Justice, GC No. V-287 dated April 7, 1959) 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. prll Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal & Enforcement Group