Mrs. Elenita Q. Maluya

June 24, 2008 BIR RULING [DA-377-08] 24 (D) (1); DA-149-2001 Mrs. Elenita Q. Maluya Unit 219, Cityland Vito Cruz Tower 1 720 Pablo Ocampo Sr., Ave., Malate, Manila M a d a m : This refers to your letter dated May 02, 2008 requesting for a ruling as to whether or not you are liable to pay capital gains tax on your transfer of rights with assumption of obligation. Documents submitted show that Spouses Edgardo and Elenita Maluya are the registered owner of a certain condominium unit more particularly described as follows: UNIT 1019, 10th FLOOR THE PACIFIC REGENCY PABLO OCAMPO SR., AVE. MALATE, MANILA FLOOR AREA: 28.55 sq.m. CTC No. C380045 that the total contract price of the condominium is Nine Hundred Thirty Seven Thousand Nine Hundred Sixty Two Pesos (P937,962.00); that Spouses Edgardo and Elenita Maluya would like to transfer their rights over the said property in favor of Spouses Hilarion and Laurie Ramiro the above described condominium unit for and in consideration of the total amount of Six Hundred Forty Seven Thousand One Hundred Thirty Eight Pesos (P647,138.00); and that Spouses Edgardo and Elenita Maluya warrant that the subject condominium is free from all claims from any third person or persons or entities. In reply, please be informed that under Section 24 (D) (1) of the Tax Code of 1997, as amended, a final tax of six percent (6%) based on the gross selling price or current fair market value determined in accordance with Section 6 (E) of the Tax Code of 1997, as amended, 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 assets, including pacto de retro sales and other forms of conditional sales, by individuals, including estate and trusts. The contemplated sale of rights over the condominium in favor of Spouses Hilarion and Laurie Ramiro is not subject to the capital gains tax under Section 24 (D) (1) of the Tax Code of 1997, as amended. The said Section necessarily requires that there be a conveyance of title to a real property and not merely rights over real property as you are presently transferring. However, any income received in excess of the amount originally paid to the seller by Spouses Edgardo and Elenita Maluya shall be subject to the graduated income tax rates under Section 24 of the same Tax Code of 1997, as amended. Moreover, the Deed of Assignment of Rights to be executed for the purpose is not likewise subject to the documentary stamp tax prescribed under Section 196 of the Tax Code of 1997, as amended, considering that what is being conveyed or assigned is not the real property itself, but only the rights pertaining to such real property. However, the acknowledgment thereof is subject to the P15.00 documentary stamp tax imposed under Section 188 of the Tax Code of 1997, as amended. 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.) JAMES H. ROLDAN Assistant Commissioner Legal Service