Request for Exemption from Capital Gains Tax and Documentary Stamp tax on Deed of Assignment Executed to Rectify a Mistake and Without Monetary Consideration

November 7, 1997 BIR RULING NO. 122-97 21(e) 000-00 122-97 Mr. Marcelo M. Reyes 24 Kentucky Street San Francisco del Monte Quezon City S i r : This refers to your letter dated March 4, 1996 requesting for exemption from the capital gains tax and the documentary stamp tax on the Deed of Assignment which was executed by spouses Rodolfo C. Garcia and Elizabeth B. Garcia to rectify a mistake and without any monetary consideration. It is represented that Spouses Rodolfo C. Garcia and Elizabeth B. Garcia signed on the documents of eligibility as accommodation parties in favor of Spouses Marcelo M. Reyes and Estrella M. Reyes, in the application for a Pag-ibig or Home Development Mutual Fund (HDMF) loan of the latter spouses, which loan is under the Home Financing Program of the National Home Mortgage Finance Corporation (NHMFC); that by virtue of the accommodation extended and the aforementioned transaction, TCT No. T-116139 of the Registry of Deeds for Calamba, Laguna was issued in the names of "Sps. Marcelo M. Reyes & Estrella M. Reyes; and Rodolfo Garcia married to Elizabeth B. Garcia . . ."; that the Spouses Marcelo M. Reyes and Estrella M. Reyes actually and exclusively shouldered the amortizations of the loan until fully paid; that as such, Spouses Marcelo M. Reyes and Estrella M. Reyes are deemed the exclusive owners of subject property; that to set things in their proper perspective and to rectify the evidence of true ownership, a Deed of Assignment was executed by spouses Rodolfo C. Garcia and Elizabeth B. Garcia assigning, ceding and transferring all their rights, interests and participation over a parcel of land situated in Barrio Calaboso, Bian, Laguna with an area of 150 square meters, together with the improvements thereon as covered in the above-mentioned title, without any monetary consideration; and that the intention of the parties is to have TCT No. T-116139 cancelled and another title be issued in lieu thereof, in the name of the true owners, "Sps. Marcelo M. Reyes and Estrella M. Reyes" only. In reply, please be informed that since the subject transaction is without any monetary consideration, and that the execution of the Deed of Assignment is merely to have TCT No. T-116139 issued in the names of "Sps. Marcelo M. Reyes & Estrella M. Reyes; and Rodolfo Garcia, married to Elizabeth B. Garcia . . ." cancelled and thereby corrected the evidence of true ownership of the above-described property by issuing another TCT in the name of the true owners thereof, "Sps. Marcelo M. Reyes and Estrella M. Reyes" only, the above-mentioned Deed of Assignment executed on October 19, 1995 by the Spouses Rodolfo and Elizabeth Garcia and Spouses Marcelo and Estrella M. Reyes is not subject to the capital gains tax imposed under Section 21(e) of the Tax Code, as amended, nor to the creditable expanded withholding tax imposed under Revenue Regulations No. 12-94, as amended. Likewise, the same Deed of Assignment is not subject to the documentary stamp tax imposed under Section 196 of the Tax Code, as amended. However, the notarial acknowledgment to the said deed is subject to the documentary stamp tax of P10.00 only pursuant to Section 188 of the Tax Code, as amended by Republic Act No. 7660. aisadc This ruling is 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, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue