Anna Maria Reantaso

July 8, 2008 BIR RULING [DA-(I-002) 011-08] 24 (D) (1); 196 DA-127-2001; DA-158-2001; DA-155-2002; DA-159-2002 Anna Maria Reantaso No. 47, Stockholm St., BF Homes International Las Pias City M a d a m : This refers to your letter dated May 8, 2008 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. TCcIaA Background Anna Maria Reantaso-Lim ("First Party") is the registered owner of a parcel of land situated at Lot 1, Block 2, Munich St., BF International, Las Pias City, with an area of 127 square meters and covered by Transfer Certificate of Title (TCT) No. T-103145, (hereinafter referred to as "Lot 1"). Katherine Reantaso-Tajanlangit, ("Second Party") on the other hand, is the registered owner of a parcel of land situated at Lot 2, Block 2, Munich St., BF International, Las Pias City, with an area of 129 square meters and covered by Transfer Certificate of Title (TCT) No. T-103149, (hereinafter referred to as "Lot 2"). Furthermore, Spouses Joseph and Jocelyn Macuha ("Third Party") are the registered owner of a parcel of land situated at Lot 3, Block 2, Munich St., BF International, Las Pias City, with an area of 132 square meters and covered by Transfer Certificate of Title (TCT) No. T-104730, (hereinafter referred to as "Lot 3"). During the construction of their mirror-image design residential units, The First and Second Parties were informed by the geodetic engineer of Lot 3 that they constructed their house at the wrong lot. According to said engineer, the residential units were constructed at Lot 2 and Lot 3, instead of Lot 1 and 2. Due to the foregoing mistake, the First, Second and Third Parties executed a Deed of Exchange on July 2, 2007 to rectify the above error wherein the parties have mutually agreed to exchange their respective properties, as follows: (1) First Party will convey Lot 1 in favor of the Third Party; (2) Third Party will convey Lot 3 in favor of the Second Party; and (3) Second Party will convey Lot 2 in favor of the First Party, without monetary value of any kind, each free from all liens and encumbrances. In support of your request, you submitted the following: (1) Deed of Exchange among Anna Maria Reantaso-Lim, Katherine Reantaso-Tajanlangit and Spouses Joseph and Jocelyn Macuha; (2) Affidavit executed by Alfredo G. Collera, Geodetic Engineer; (3) Letter-Request; (4) Copy of TCT No. T-103145 registered in the name of Anna Maria Reantaso; (7) Copy of TCT No. T-103149 registered in the name of Katherine R. Tajanlangit; (8) Copy of TCT No. T-104730 registered in the name of Spouses Joseph and Jocelyn Macuha; (9) Copies of Tax Declarations of the three properties; and (10) Memorandum of Agreement between the parties. ICAcTa In reply, please be informed that since the exchange transaction is without any 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 realties by and among Anna Maria Reantaso-Lim and Spouses Joseph and Jocelyn Macuha, Katherine Reantaso-Tajanlangit and Spouses Joseph and Jocelyn Macuha and Katherine Reantaso-Tajanlangit and Anna Maria Reantaso-Lim is not subject to the capital gains tax imposed under Section 24 (D) (1) of the Tax Code of 1997, nor to the Withholding Tax imposed under Revenue Regulations No. 2-98, as amended. Furthermore, the said swapping of real properties is not likewise subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997. 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. (BIR Ruling Nos. DA-159-2002 dated September 12, 2002 and DA-155-2002 dated September 11, 2002) 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