Faustino M. Sunico, Jr.

June 19, 2008 BIR RULING [DA-370-08] 24 (D) (1); DA-420-2003 Faustino M. Sunico, Jr. # 75 Simoun Street, Sta. Mesa Heights Quezon City Regino U. Demafelix, Jr. 335 Dona Maria Street, Don Jose Heights Subd. Quezon City Sps. Romeo A. Carriaga and Aida G. Carriaga Blk. 26, lot 13, Chico Street Greenfields 1, Novaliches Quezon City Gentlemen : This refers to your letter dated August 07, 2007 requesting for exemption from the payment of capital gains tax and documentary stamp tax on the swapping of real properties to correct a mistake and without consideration. It is represented that: 1. Faustino M. Sunico, Jr. is presently the registered owner of a parcel of land with all the improvements thereon evidenced by TCT No. RT-49138 (N-282397) identified as Lot 9, Block 2 of the consolidation subdivision plan Pcs-11864; 2. Regino U. Demafelix, Jr. is likewise presently the registered owner of a parcel of land, with all the improvements thereon evidenced by TCT No. 206153 identified as Lot 11, Block 2 of the consolidation subdivision plan Pcs-11864; 3. Sps. Romeo A. Carriaga and Aida G. Carriaga are also presently the registered owners of a parcel of land evidenced by TCT No. 243062 identified as Lot 12, Block 2 of the consolidation subdivision plan Pcs-11864; 4. Sometime in September 1999, Mr. Regino Demafelix, Jr. constructed a residential house on Lot 11, Block 2 evidenced by TCT No. 206153 under an approved loan from BPI Family Bank which was completed in June 2000 and thereafter Demafelix family resided peacefully for about seven (7) years. 5. Subsequently in 2007, Mr. Regino Demafelix, Jr. was surprised when Dr. Aida Carriaga, also one of the requesting parties and a neighboring lot owner of the same subdivision approached Mr. Regino U. Demafelix, Jr. and informed him that based on the investigation regarding her application for a housing loan, it was found out that the lot where Dr. Carriaga is constructing her residential house should actually belong to Mr. Regino Demafelix, Jr. and that the lot registered in the name of spouses Romeo A. Carriaga and Aida G. Carriaga is located adjacent to the lot registered under the name Mr. Regino U. Demafelix, Jr. which is presently vacant; 6. Upon discovery of the error/mistake made, Mr. Regino U. Demafelix, Jr., together with Dr. Aida Carriaga made inquiries with the subdivision developer and proper government agencies and subsequently, it was revealed that the lot (Lot 11, Block 2) presently occupied by Mr. Regino U. Demafelix, Jr. should actually belong to Mr. Faustino M. Sunico, Jr., also one of the requesting parties.; 7. Faustino M. Sunico, Jr., Regino Demafelix, Jr. and Sps. Romeo Carriaga and Aida Carriaga have voluntarily agreed to barter and exchange the properties presently registered in their names together with the improvements thereon as specified in the Deed of Exchange of Real Property without any monetary consideration from any of the parties involved wherein Faustino M. Sunico, Jr. (Lot No. 9, Block 2) barters and exchanges his property together with the improvements thereon with that of Regino U. Demafelix, Jr.; likewise Regino U. Demafelix, Jr. (Lot No. 11, Block 2) barters and exchanges his property with that of Spouses Romeo Carriaga and Aida Carriaga; and Sps. Romeo Carriaga and Aida Carriaga also barter and exchange (Lot No. 12, Block 2) their above-described property with that of Faustino M. Sunico, Jr.; 8. In support of their allegation and to settle permanently the ownership and occupancy of the lots in question Sps Romeo A. Carriaga and Aida G. Carriaga submitted sketch/special plan identifying Lot 11, Block 2 (LRC) Pcs-11864 situated in Commonwealth, Quezon City certified by Pedro Valentino P. Garcia, Geodetic Engineer as correct plan plotted based on the technical description appearing on the TCT No. 206153; Regino U. Demafelix, Jr. married to Rosario Hernaez Demafelix submitted sketch/special plan identifying Lot 9, Block 2, (LRC) Pcs 11864 situated in Commonwealth, Quezon City certified by Pedro Velentino P. Garcia, Geodetic Engineer as correct plan plotted based on the technical description appearing on TCT No. RT 49138 (282397); and likewise Faustino M. Sunico, Jr. submitted sketch/special plan identifying Lot 12, Block 2 (LRC) Pcs. 11864 situated in Commonwealth, Quezon City certified by Pedro Valentino P. Garcia, Geodetic Engineer as correct plan plotted based on the technical description appearing on TCT No. 243062 as intended in the Deed of Exchange of Real Property executed by the parties. They further requested that the said transaction be exempt from the payment of Capital Gains Tax. 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 among FAUSTINO M. SUNICO JR., REGINO U. DEMAFELIX, JR. and Sps. ROMEO A. and AIDA G. CARRIAGA, 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 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 tax of P15.00 only pursuant to Section 188 of the Tax Code of 1997, as amended. (BIR Ruling No. DA 145-00 dated March 10, 2000, and further reiterated in BIR Ruling No. DA 420-2003.) 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