Benitez Legaspi Barcelo Rafael & Salamera Law Offices

January 8, 2007 BIR RULING [DA-006-07] 24 (D) (1); 196; DA-096-03 Benitez Legaspi Barcelo Rafael & Salamera Law Offices 2nd Floor, The West Wing Bldg., 107 West Avenue Quezon City Attention: Atty. Gioan Fernand A. Legaspi For the Firm Gentlemen : This refers to your letter dated November 27, 2006 requesting on behalf of your clients, Spouses Edgard P. Mamuyac and Elizabeth P. Mamuyac, for exemption from the payment of capital gains tax and documentary stamp on the swapping of real properties to correct a mistake and without consideration. It appears that on February 28, 2003, Sps. Edgardo P. Mamuyac and Elizabeth P. Mamuyac entered into a Contract to Sell with Rowena de Jesus-Pascual whereby the former agreed to sell to the latter and the latter agreed to purchase from the former a parcel of land covered by Transfer Certificate of Title No. 363116, that through inadvertence and sheer mistake, what was documented in the Deed of Absolute Sale dated October 5, 2004 between Sps. Mamuyac and the buyer Rowena de Jesus-Pascual was a parcel of land covered by Transfer Certificate of Title No. 363121 (now TCT 451027) instead of Transfer Certificate of Title of No. 363116 which still remains in the name of Sps. Mamuyac; that Lot 8 which is covered by Transfer Certificate of Title No. 363121 (now TCT 451027) and Lot 3 which is covered by Transfer Certificate of Title No. 363116 are both located almost adjacent to each other; that notably since Lot 3 (TCT 363116) was the true subject of the sale between the parties, the same has been occupied by the buyer/purchaser, Rowena de Jesus-Pascual as her residence since the consumption of the Deed of Sale; that this fact is even reflected in Transfer Certificate of Title No. 451027 wherein her address as stated therein described as Block 2, Lot 3, Richhope Ville, Champaca St., Parang, Marikina City; that it was only lately when the Sps. Mamuyac realized that the title that was transferred to Rowena de Jesus-Pascual was Transfer Certificate of Title No. 363121 (now TCT 451027) pertaining to Lot 8 instead of Transfer Certificate of Title No. 363116 which pertains to Lot 3 and which is the correct Title that ought to have been transferred to Rowena de Jesus-Pasucal; that in order to rectify the said mistake in the Deed of Sale between Sps. Mamuyac and Rowena de Jesus-Pascual that led to error in the registration of Transfer Certificate of Title No. 451027 in the name of Rowena de Jesus-Pascual, the parties agreed to enter into a Deed of Exchange of Real Estate dated November 24, 2006; and that the execution of the said Deed of Exchange of Real Estate between the parties was without any monetary consideration as it was entered into merely to correct the said mistake. In reply, please be informed that since the exchange transaction is without monetary consideration, and considering further that the execution of the Deed of Exchange is merely for the purpose of correcting the mistake above-described, the exchange of realty by and between Sps. Edgardo and Elizabeth P. Mamuyac and Rowena de Jesus-Pascual is not subject to capital gains tax imposed under Section 24(D)(1) of the Tax Code of 1997, as amended, nor to the withholding tax imposed under Revenue Regulations No. 2-98, as amended. Furthermore, the said swapping of real property is not likewise subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997, as amended. However, the notarial acknowledgment of the said deed is subject to the documentary stamp of P15.00 only pursuant to Section 188 of the Tax Code of 1997, as amended. cISDHE 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