BIR Ruling [DA-019-05]

January 19, 2005 BIR RULING [DA-019-05] R.A. No. 9243 Platon Martinez Flores San Pedro & Leao Law Offices 6/F, Tuscan Building, 114 Herrera Street Legaspi Village, Makati City Attention: Atty . Saklolo A . Leao Gentlemen : This refers to your letter dated August 10, 2004 requesting for a confirmation of your opinion that the assignment by The Hongkong and Shanghai Banking Corporation Limited (HSBC) to your client, Josephine G. Antolin Cang, of all its rights, interests and participation in a promissory note and an Indenture of Mortgage is exempt from the payment of the documentary stamp tax by virtue of Section 9 of Republic Act (RA) No. 9243, An Act rationalizing the provisions on the Documentary Stamp Tax of the National Internal Revenue Code of 1997, as Amended, and for other Purposes. It is represented that on December 3, 1997, Peter Cang Ho Cho executed Promissory Note No. TST97-0055 in favor of HSBC whereby for value received, he promised to pay the amount of P15,300,000.00 on or before December 3, 2002, with interest at the rate of 29% per annum; that on March 2, 1998, Peter Cang Ho Cho and HSBC executed an Indenture of Mortgage, entered into a Notarial Register and duly registered in the Office of the Register of Deeds of Makati City, annotated as per Entry No. 8192\T-124973 upon Transfer Certificate of Title No. 124973; that on April 21, 2004, a Deed of Assignment was executed by HSBC in favor of Josephine G. Antolin Cang, whereby HSBC assigned and conveyed to Josephine G. Antolin Cang all its rights, interests and participation in the above Promissory Note No. TST97-0055 and Indenture of Mortgage; and that the Deed of Assignment contained no provisions changing the conditions of the assignment of the mortgage nor the maturity or remaining period of coverage of the promissory note from that of the original instrument. In reply thereto, please be informed that paragraph (f) of Section 199 of the 1997 Tax Code, as amended, provides, viz.: "Section 199. Documents and papers not subject to stamp tax . The provisions of Section 173 to the contrary notwithstanding, the following instruments, documents and papers shall be exempt from the documentary stamp tax: xxx xxx xxx (f) Assignment or transfer of any mortgage, lease or policy of insurance, or the renewal or continuance of any agreement, contract, charter or any evidence of obligation or indebtedness, if there is no change in the maturity or remaining period of coverage from that of the original instrument. 2005cdtai Based on the foregoing and since the Deed of Assignment executed by HSBC merely transferred all its rights, interests and participation in the promissory note and in the indenture of mortgage to Josephine G. Antolin Cang without any provisions changing the conditions of the mortgage nor the maturity or remaining period of coverage of the promissory note from that of the original instruments, your opinion that the transfer by HSBC of all its rights, interests and participation in (1) Promissory Note No. TST97-0055 and (2) Indenture of Mortgage dated March 2, 1998 in favor of Josephine G. Antolin Cang is exempt from the payment of documentary stamp tax by virtue of R.A. No. 9243, therefore, is hereby confirmed. CTEDSI 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.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group