January 11, 2000

BIR RULING [DA-026-00]

Ms .Marilyn B. Angeles
21 Apollo St., Acropolis
Quezon City

Madam:

This refers to your letter dated November 24, 1999 stating that you are
presently paying a four-year installment plan under the Contract to Sell for a
condominium unit of 37.28 sq. m. (Unit 2725) of "The Mega Plaza", a building
project of City & Land Developers, Inc. located at Bo. Oranbo, Pasig City; that
the contract price of aforesaid condominium unit is Nine Hundred Thirty
Eight Thousand Eight Hundred Twenty One Pesos (P938,821.00) (excluding
interest) of which you have already paid Six Hundred Sixty Two Thousand
Four Hundred Forty Seven Pesos (P662,447.00) [P187,764.20 as
downpayment plus P474,682.80 equivalent to twenty four (24) months
amortization]; that at present you are assigning your rights under this
contract to Mr. Gerardo J. Espina., Jr. because of financial reasons; that in
consideration of the transfer of rights, Gerardo J. Espina, Jr. will pay you back
the payments you have made for the said condominium unit; and that in this
regard, the developer, City & Land Developers, Inc. requires the payment of
capital gains tax of six percent (6%) and documentary stamp tax of one and
one-half percent (1.5%)
Based on the foregoing representation and documents submitted, you
are now requesting for a ruling that you are exempted from the payment of
capital gains tax and documentary stamp tax on your Assignment of Rights
with Assumption of Obligations in the Contract to Sell in favor of Gerardo J.
Espina, Jr. cdasia

In reply, please be informed that under Section 24(D)(1) 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 your property in favor of
Gerardo J. Espina, Jr. 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 24(D)(1) 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
CD Technologies Asia, Inc. © 2021 cdasiaonline.com
 which the assigned right pertains.
Moreover, a Deed of Assignment of Right 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.
Accordingly, the assignment by Marilyn B. Angeles, married to
Leonardo C. Angeles in favor of Gerardo J. Espina, Jr. of her rights over the
said property is not subject to the capital gains tax imposed under Section
24(D)(1) 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. cdll

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.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group

CD Technologies Asia, Inc. © 2021 cdasiaonline.com