February 4, 2004

BIR RULING [DA-042-04]

27 (D) (5); 196; DA-542-99

Filinvest Alabang, Inc.

FAI Administration Bldg., Alabang-Zapote Road
Alabang, Muntinlupa City

Attention: Mr. Efren M. Reyes

Senior Vice-President

Gentlemen :

This refers to your letter dated September 2, 2002 requesting for a

confirmation of your opinion that the assignment by Filinvest Alabang, Inc. (FAI) of
its parking rights to purchasers of condominium units is exempt from the creditable
withholding tax, capital gains tax and the documentary stamp tax.

It appears that FAI is a domestic corporation and is the developer of several

condominium projects, particularly the Aspen Tower and Vivian Flats in Alabang,
Muntinlupa City, and Pioneer Pointe in Mandaluyong City; that individuals and
juridical persons purchase units in these condominium projects from FAI and
ownership of these units are transferred to the purchasers upon full payment and
compliance with certain requirements; that at the option of the purchaser, said buyers
may also request for the assignment of parking spaces located in the condominium
projects; that FAI shall grant the purchaser the right to use the parking spaces subject
to the following conditions:

1. FAI shall retain perpetual ownership over the parking space.

2. The right to use the parking space by the purchaser shall be terminated
once he ceases to be an owner of a condominium unit.

3. The purchaser shall not lease, assign, mortgage or encumber the parking

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 space.

that you are of the opinion that FAI's assignment of right to use the parking space to a
purchaser of a condominium unit is not subject to the expanded withholding tax,
capital gains tax and stamp tax; that you believe that such transaction does not partake
the nature of a sale or assignment of real property since the assignment refers only to
the use of the property but ownership thereof is retained by the assignor; and that a
Deed of Assignment of Parking Space Rights is not a Deed of Sale of real property
itself but only the rights pertaining to such property.

In reply, please be informed that under Section 27(D)(5) of the Tax Code of
1997, a final tax of six percent (6%) based on the gross selling price or current fair
market value as determined in accordance with Section 6(E) of the Tax Code of 1997,
whichever is higher, is imposed upon capital gains presumed to have been realized
from the sale, exchange or other disposition of real property located in the Philippines
classified as capital asset including pacto de retro sales and other forms of conditional
sales by individuals, including estates and trust.

In the instant case, however, the transfer of FAI's parking rights in favor of
purchasers of condominium units was not a sale, exchange or disposition of real
property classified as capital asset located in the Philippines, but rather an assignment
of right pertaining to such property, hence, not included within the provision of
Section 27(D)(5) of the Tax Code of 1997. This is so, considering that in assignment
of right, the assignee merely steps into the shoes of the assignor without acquiring a
better right than what the assignor had in the property to which the assigned right
pertains.

Moreover, a Deed of Assignment of Parking Space Rights is not a Deed of

Sale because what is conveyed by the assignor is not the property itself but the rights
pertaining to such property. It is, however, understood, that the gain derived by the
assignor from and as a consequence thereof, is subject to income tax. TcCEDS

Accordingly, the assignment by FAI of its parking space rights over the said
property is not subject to capital gains tax imposed under Section 27(D)(5) of the Tax
Code of 1997, nor to the documentary stamp tax prescribed under Section 196 of the
same Code. The notarial acknowledgment of the deed however, is subject to P15.00
documentary stamp tax pursuant to Sec. 188 of the Tax Code of 1997.

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

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 this ruling shall be considered null and void.

Very truly yours,

Commissioner of Internal Revenue

By:

(SGD.) JOSE MARIO C. BUÑAG

Deputy Commissioner
Legal and Inspection Group
Bureau of Internal Revenue

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