Mr. Lucio Reclusado

April 21, 2009 BIR RULING [DA-(I-014) 202-09] DA 526-05 Mr. Lucio Reclusado c/o Alejandro S. Reclusado Davao City Sir : This refers to your letter dated September 26, 2008 stating that you are the absolute and registered owner of a parcel of land located at Upper Guianga, Davao City covered by TCT No. T-427178 issued by the Registry of Deeds for Davao City containing an area of 13,341 square meters; that on the other hand, Germana Almerol-Reclusado, Ludivica Magtulis-Reclusado, Ruperto R. Reclusado, Benita Reclusado-Patol, Julieta Reclusado-de los Reyes, Bernarda Reclusado-Gonzales with TIN 123-946-849, Medelina Laada-Reclusado and Adelino R. Reclusado, are all co-owners of a parcel of land covered by TCT No. T-427177 issued by the Registry of Deeds for Davao City containing an area of 13,431 square meters; that the parties have committed a mistake in the process of titling of the above-mentioned properties, wherein the title pertaining to the property belonging to you, and of which was assigned to you was the property titled in the name of the above-mentioned co-owners while the property occupied and assigned to the latter is titled in your name; that the parties are desirous of exchanging their respective properties for that of the other in order to correct the mistake in the titling of the properties herein involved; and that on February 2, 2008, a Deed of Exchange was executed by the above-named parties whereby they exchanged the titles of their respective properties without any monetary consideration. Based on the foregoing circumstances, you now request for exemption from the payment of capital gains tax and documentary stamp tax relative to the swapping of real properties to rectify an error, effected through a Deed of Exchange and made without monetary consideration. In reply thereto, please be informed that considering that the swapping of the above-mentioned properties is without any monetary consideration, and considering further that the purpose of executing a Deed of Exchange is merely to correct a mistake inadvertently committed in designating the metes and bounds of the above-described properties, this Office holds that the said swap transaction is not subject to the capital gains tax imposed under Section 24 (D) (1) of the Tax Code of 1997 nor to the creditable withholding tax imposed under Section 57 thereof, as implemented by Revenue Regulations No. 2-98, as amended. DHAcET Furthermore, the Deed of Exchange is not subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997, as amended, but only to the P15.00 documentary stamp tax imposed under Section 188 of the said Code. 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