BIR Ruling [DA-706-99]

December 23, 1999 BIR RULING [DA-706-99] Mr . Frederick S . Pada and Ms . Aurelia R . Pada 28 Bartville Road, Bartville Subdivision Dela Paz, Pasig City Sir and Madam : This refers to your letter dated November 26, 1999 requesting exemption from the payment of the capital gains tax (CGT) in connection with the assignment of your rights over Unit Nos. SP 2J, SP 3M, LG 05 and 1624 situated at City land Shaw Tower, Shaw Blvd. Cor. St. Francis, Mandaluyong City, in favor of Messrs. Frederick R. Pada, Jr., Frederick Emmanuel R. Pada III and Frederick Edgar R. Pada IV, the titles of which are still in the name of the developer. In reply, please be informed that assignment of rights in real properties is not subject to the capital gains tax under Section 24(D)(1) of the Tax Code of 1997 because in assignment of rights, the assignee merely steps into the shoes of the assignor without acquiring a better right than what the assignors had in the properties to which the right assigned pertain while the titles or ownership thereof still remain with the developer. (BIR Ruling No. 174-90 dated September 10, 1990) However, any gain realized by you from and as a consequence of such assignment is subject to income tax. The Deeds of Assignment, however, are subject to the P15.00 documentary stamp tax imposed under Section 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 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)