June 20, 2000

BIR RULING [DA-263-00]

24 (D) (1); DA-466-99

Ms. Marilyn B. Angeles

21 Apollo St., Acropolis
Quezon City
Madam:
This refers to your letter dated April 12, 2000 stating that you are
presently paying a four-year installment plan under a Contract to Sell for a
condominium unit of 31.22 sq.m. (Unit 912) of the Cityland Shaw Tower, a
building project of Cityland, Inc. located at Shaw Blvd. cor. St. Francis St.,
Mandaluyong City; that the contract price of the aforesaid condominium unit
is One Million Two Hundred Thirty One Thousand One Hundred Eighty Three
Pesos and Seventy Five Centavos (P1,231,183.75) (excluding interest) of
which you have already paid Seven Hundred Sixty Four Thousand Nine
Hundred Ninety One Pesos and Seventy Five Centavos (P764,991.75)
[P246,236.75 as downpayment plus P518,755.00 equivalent to twenty (20)
months amortization]; that at present you are assigning your rights under
this contract to Spouses Ricardo and Estela Bernabe because of financial
reasons; that in consideration of the transfer of rights, spouses Ricardo and
Estela Bernabe will pay you back the payments you have made for the said
condominium unit; and that in this regard, the developer, Cityland, 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 Spouses
Ricardo and Estela Bernabe.
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. cdlex

In the instant case, however, the transfer of your property in favor of

Spouses Ricardo and Estela Bernabe was not a sale, exchange or disposition
of real property classified as capital asset located in the Philippine 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,
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 considering that in assignment of right, the assignee merely steps into the
shoes of the assignor without acquiring a better right that what the assignor
had in the property to which the assigned right pertains.
Moreover, a Deed of Assignment of 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. Cdpr

Accordingly, the assignment of your rights over the said property in

favor of Spouses Ricardo and Estela Bernabe 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 pursuant to Sec. 188 of the Tax Code of 1997. (DA-466-
99 dated August 13, 1999)
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.) LILIAN B. HEFTI

OIC, Deputy Commissioner
(Legal and Inspection Group)

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