BIR Ruling [DA-248-00]

May 19, 2000 BIR RULING [DA-248-00] 30; 101-98, 481-98 Disciple Christian Church, Inc. 2735 P. Guevarra St., Sta. Cruz Manila Attention: Mr . Dolorsindo I . Paner Counsel Gentlemen : This refers to your letter dated February 12, 2000 requesting for the confirmation of your opinion that the sale of a parcel of land by the Iglesia ni Cristo (Disipulos) Sa Sta Cruz, Inc. to the Disciples Christian Church, Inc. is exempt from the payment of capital gains tax and documentary stamp tax. It is represented that the Iglesia ni Cristo (Disipulos) Sa Sta. Cruz, Inc. is a non-stock, non-profit religious corporation duly registered with the Securities and Exchange Commission on January 27, 1959; that the primary purpose for which the corporation was formed is to spread the gospel of our Lord Jesus Christ, evangelization not only of the community but also to the whole world and propose to undertake its objectives through christian education, prayer, worship, witnessing, stewardship and to administer church properties; that it is the registered owner of a parcel of land situated in the District of Sta. Cruz, Manila consisting of One Hundred Thirty (130) square meters covered by Transfer Certificate of Title No. 54810 issued by the Registry of Deeds for the City of Manila; that the proceeds of the sale will be used for the church construction of the said religious corporation; and that the members of the Iglesia ni Cristo (Disipulos) Sa Sta. Cruz, Inc. decided to change its corporate name to Disciples Christian Church, Inc. with the same members and with the same board of directors. 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 (Congregation 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). Moreover, the Deed of Absolute Sale executed for the purpose is not subject to documentary stamp tax. However, the acknowledgment on said deed is subject to the documentary stamp tax of P15.00 imposed under Section 188 of the Tax Code of 1997. (BIR Ruling No. DA-481-98 dated November 9, 1998) TIaDHE 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.) MILAGROS V. REGALADO Acting Assistant Commissioner (Legal Service)