BIR Ruling [DA-175-00]

March 24, 2000 BIR RULING [DA-175-00] 30; 101-98; DA-175-2000 Iglesia ni Cristo Legal Department No. 1 Central Avenue, New Era Diliman, Quezon City Attention: Atty . Restituto S . Lazaro Head, Legal Department Gentlemen : This refers to your letter dated December 17, 1999 requesting exemption from the payment of capital gains tax on the sale of a parcel of land by the Iglesia Ni Cristo. It is represented that the Iglesia Ni Cristo is a corporation sole duly registered with the Securities and Exchange Commission; that the main objective for which the corporation was formed is the propagation of the pure and undefiled doctrines and teachings of the gospel of Christ in the Philippines and in other places which may be reached by ministers and members, and to bring mankind to the service of God based on the gospel or holy scriptures as it is the duty of Iglesia Ni Cristo to propagate the above teachings; that Iglesia Ni Cristo has a parcel of land located at Quiapo, Manila consisting of Fifty One square meters and Seventeen square decimeters (51.17) covered by Transfer Certificate of Title No. 122262 issued by the Registry of Deeds for the City of Manila; that it decided to sell the property to Spouses Inocencio A. Versoza and Veronica Versoza of No. 177 T. Claudio St., San Juan Metro Manila; that the proceeds of the sale will be use for religious purposes, like acquiring real properties for the construction of a new chapel to accommodate the ever growing population of the members of the Iglesia Ni Cristo; In reply, please be informed that the income to be derived from the sale of the subject parcel of land is not within the contemplation of the last paragraph of 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, hence, exempt from the capital gains tax. (BIR Ruling No. DA-101-98 dated March 20, 1998) 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 sale transaction would be merely incidental to the religious purposes for which your corporation was created. And as a 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 income to be derived from the sale of said property is not within the contemplation of the proviso of Section 30 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). This ruling is being issued in 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.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)