Mr. Abraham M. Camaddo

August 11, 2009 BIR RULING [DA-(I-028) 455-09] Sections 24 (D) (1) & 196; BIR Ruling No. DA-486-05 Mr. Abraham M. Camaddo 54 Ilang-Ilang St., De Castro Subd. Sta. Lucia, Pasig City Sir : This refers to your letter dated December 16, 2008 requesting for a ruling exempting from the payment of capital gains tax the exchange of real properties in order to correct an error. Documents show that Sps. Abraham Moreno Camaddo and Lourdes Adao Camaddo ("Sps. Camaddo" for brevity) are the absolute owners of a parcel of land (Lot 17-A of the subdivision plan Psd-04-159942, being a portion of Lot 17, Blk. 114, Pcs-04-002114) covered by Transfer Certificate of Title (TCT) No. R-15853 of the Registry of Deeds for the City of Antipolo, situated in the Brgy. Mayamot, Municipality of Antipolo, Rizal containing an area of 102 square meters, more or less. On the other hand, Rogelio Rodriguez Manansala ("Mr. Manansala" for brevity), married to Maria Begona Santos Manansala, is the absolute owner of a parcel of land (Lot 17-B of the subdivision plan Psd-04-159942, being a portion of Lot 17, Blk. 114, Pcs-04-02114) covered by TCT No. R-15854 of the Registry of Deeds for the City of Antipolo, situated in the Brgy. Mayamot, Municipality of Antipolo, Rizal containing an area of 102 square meters. IcTEaC Lot-A and Lot-B, which have identical technical descriptions, contain the same areas and are adjoining each other, were bought, by you and Mr. Manansala who are close friends, at the same time or on July 30, 2003. As soon as you received your respective TCTs, both of you proceeded to build and construct your respective residential houses on your respective parcel of land. However, you were informed by the Bank of Commerce that the lot description in your TCT is not correct. It appears that the lot description of your TCT should be that of Mr. Manansala's TCT and the lot description of Mr. Manansala's TCT should be that of your TCT. The TCTs did not correctly jibe and refer to your and Mr. Manansala's personal choices and preferences. In fact, the parcel of land referred to in your respective TCT refers to a parcel of land which either of you did not intend or expect to own. Thus, on October 21, 2008, you and Mr. Manansala executed a "Deed of Exchange of Real Property" in order to correct the above errors. aAEHCI In reply, please be informed that considering that the exchange transaction in question is without any monetary consideration, and considering further that the execution of the "Deed of Exchange of Real Property" is merely to correct the above mistake in registering your property in the name of another, this Office is of the opinion, as it hereby holds, that the aforementioned Deed of Exchange is not subject to the capital gains tax imposed under Section 24 (D) (1) of the 1997 Tax Code, as amended. Moreover, the "Deed of Exchange of Real Property" is, likewise, not subject to the documentary stamp tax imposed under Section 196 of the same Code. However, the Acknowledgment on the said Deed is subject to the documentary stamp tax imposed under Section 188 of the same 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 as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service