Bond-Servants of Love Christian Church, Inc.

May 2, 2007 BIR RULING [DA-278-07] 21 (e) 108-98 Bond-Servants of Love Christian Church, Inc. 7349 Greenwood Street Marcelo Green Village, Paraaque Metro Manila Attention: Ma. Lucita I. Petate Gentlemen : This refers to your letter dated September 15, 2006 requesting exemption from the payment of capital gains tax, documentary stamp tax and donors tax on the reconveyance of the property in favor of Bond-Servants of Love Christian Church, Inc. (Bond-Servants) without monetary consideration. It is represented that Bread of Life Ministries, Inc. (BLM) is a non-profit religious corporation duly organized and existing under Philippine laws; that it is registered with the Securities and Exchange Commission under SEC Registration No. 11774; that Bond-Servants of Love Christian Church, Inc. is likewise a non-profit religious corporation duly organized and existing under Philippine laws; that it is the true owner of a parcel of land more particularly described under Transfer Certificate of Title No. 69040; that said property has been registered in the name of BLM as trustee of Bond-Servants subject to the express understanding that as soon as the latter has been duly registered with the SEC, said title will be reconveyed to Bond-Servants; and that at the regular meeting of the Board of Bread of Life Ministries, Inc. on August 28, 1997 a resolution was passed viz: "RESOLVED, as it is hereby RESOLVED that the corporation be, as it hereby is, authorized to reconvey unto Bond Servants of Love Christian Church, Inc. the parcel of land situated in 7349 Greenwood St., Marcelo Green Village, Paraaque, Metro Manila, considering the said property was in fact purchased from funds of said Bond Servants of Love, Christian Church, incorporated prior to its incorporation." In reply, please be informed that under Section 21 (e) of the Tax Code, as amended, capital gains presumed to have been realized from the sale, exchange, or other disposition of real property located in the Philippines classified as capital assets, including pacto de retro sales and other forms of conditional sales by individuals, including estates and trusts, shall be taxed at the rate of 5% based on the gross selling price or the fair market value prevailing at the time of sale whichever is higher. In the instant case, there is no sale, exchange or disposition of property involved since Bond-Servants is the real owner of the aforesaid parcel of land while BLM acted merely as trustee. Accordingly, the transfer of title over the said lot from the trustee to the real owner thereof, without monetary consideration under and by virtue of the Deed of Reconveyance executed by the parties, is not subject to the capital gains tax. Moreover, the said Deed is not subject to the documentary stamp tax on deeds of sale and conveyances of real property imposed under Section 196 of the Tax Code as amended by Republic Act No. 9243, but only to the documentary stamp tax on certificates of sale under Section 188 of the same Tax Code. (BIR Ruling No. 108-98 dated June 29, 1998) Likewise, considering that there is no donative intent on the part of the parties, the same will not be subject to donor's tax imposed under Section 98 of the Tax Code of 1997. cAIDEa This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling will be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service