Bureau of Local Government Finance Opinion

April 13, 2003 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Atty. Zenaida S. Hernandez Legal Counsel International Baptist Church of Manila 140 H.V. dela Costa cor. Tordesillas Streets Salcedo Village, Makati City Madam : This refers to your letter dated March 12, 2003 requesting exemption, among others, from payment of transfer tax on the following property which the International Baptist Church, Incorporated (IBCI) purchased from the Philippine Baptist Missions, Inc. (PBMI) described as follows: AcISTE TCT No. : S-29332 Tax Declaration No. : E00200476; E00200477 Location : #27 Hercules St., Bel-Air II Makati City Classification : Residential Kind : Land & Improvement Former Taxpayer : Philippine Baptist S.B.C., Inc. Representations are made that the above-described property is being used as a parsonage of your Pastor and his family and as a retreat/seminar house for the members of your Church. It is your claim that such conveyance should be exempted from transfer tax based on the following: 1. The property is actually, directly and exclusively used for religious purposes; 2. Article VI, Section 28 (3) of the Philippine Constitution provides as follows: "ART. VI, Sec. 28. . . . (3) Charitable institutions, churches and parsonages or convents appurtenant thereto, mosques, non-profit cemeteries, and all lands, buildings, and improvements actually, directly, and exclusively used for religious, charitable, or educational purposes shall be exempt from taxation." On the other hand, Section 135 of R.A. 7160, the Local Government Code (LGC) of 1991 provides as follows: "SEC. 135. Tax on Transfer of Real Property Ownership . (a) The province may impose a tax on the sale, donation, barter, or on any other mode of transferring ownership or title of real property at the rate not more than fifty percent (50%) of one percent (1%) of the total consideration involved in the acquisition of the property or of the fair market value in case the monetary consideration in the transfer is not substantial, whichever is higher. "xxx xxx xxx." Perusal of the attached documents, shows that both the PBMI and IBCI are religious corporations and as such are covered by the provisions of the abovequoted provisions of Article VI, Section 28 (3) of the Constitution. In addition, the Bureau of Internal Revenue in its letter dated September 1, 1993 opined that IBCI, for being a non-stock, non-profit corporation and operating for purely religious purposes, is exempt from the payment of income tax imposed under Section 26 (e) of the National Internal Revenue Code. In view thereof, and considering that the purchase of the abovementioned property was executed by and between the PBMI and IBCI, both tax-exempt institutions, it is the opinion of this Bureau that the said transaction is not subject to the payment of transfer tax pursuant to Section 135 of the LGC as implemented by a duly-enacted tax ordinance of the City of Makati. CAaEDH Very truly yours, (SGD.) MA. PRESENTACION R. MONTESA Executive Director