An Ordinance Repealing Article 31, Chapter V, of Ordinance No. SP-91, S-1993, Otherwise Known as the Quezon City Revenue Code of 1993, Which Imposes Clearance Fees and Thus Removing the Collection of Such under the Office of the City Treasurer

April 21, 2009 BIR RULING [DA-(I-015) 203-09] 24 (D) (1); DA-60-2004 Cruz Cruz & Navarro III 1804 The Centerpoint Julia Vargas Avenue Ortigas Center Pasig City Attention: Atty. Felipe P. Cruz Sir : This refers to your letter dated January 9, 2009 requesting for a ruling on the tax consequences of the reconveyance of property to Mr. Elmer S. Layaoen. It is represented that Elmer Layaoen is the owner of a parcel of agricultural land with an area of Three Thousand Ten (3,010) square meters designated as Lot 14582 situated in Barangay Subec, Municipality of Pagudpud, Ilocos Norte, adjoining another parcel of agricultural land owned by Mr. Emilio T. Yagyagan, Jr. During the Pagudpud Cadastre conducted on November 22, 1982 to August 9, 1983 which was made the basis of the issuance of Original Certificate of Title (OCT) P-73329 in the name of said Emilio T. Yagyagan, Jr. covering an area of SEVENTEEN THOUSAND THREE HUNDRED TWENTY (17,320) square meters, the aforementioned Pagudpud Cadastre erroneously included in said OCT P-73329, the parcel of land owned by Elmer Layaoen originally designated as Lot 14582 consisting of Three Thousand Ten (3,010) square meters. Mr. Emilio Yagyagan agreed that the only way to rectify the error committed to the prejudice of Elmer Layaoen is for that area consisting of Three Thousand Ten (3,010) square meters to be segregated from OCT P-73329 which was issued in the name of Emilio Yagyagan. Consequently, the said area of 3,010 square meters with appropriate technical description was segregated from OCT P-73329 and a Transfer Certificate of Title No. T-24286 was issued by the Registry of Deeds for the Province of Ilocos Norte but still in the name of Emilio Yagyagan. Subsequently, in order to implement the agreement to rectify the erroneous inclusion in Mr. Yagyagan's OCT P-73329 of the subject 3,010 square meters, which is now covered by TCT No. T-24286. Mr. Yagyagan executed in favor of Elmer Layaoen a Deed of Assignment assigning, ceding, transferring, and reconveying to Elmer Layaoen all of Mr. Yagyagan's rights, title and interest in and to that area of 3,010 square meters now covered by TCT No. T-24286 without monetary consideration since the transfer and assignment is being done in order to rectify a mistake/error committed during the said Pagudpud Cadastre and return to Elmer Layaoen the area of 3,010 square meters which rightfully belongs to him. In reply, please be informed that since the assignment is without any monetary consideration and considering further that the execution of the Deed of Assignment is merely for the purpose of correcting the mistake above-described, the assignment of realty by Emilio Yagyagan, Jr. to Elmer Layaoen is not subject to the capital gains tax imposed under Section 24 (D) (1) of the Tax Code of 1997. Moreover, the said assignment of real property is not likewise subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997. However, the notarial acknowledgment to the said Deed of Assignment is subject to the documentary stamp tax of P15.00 only pursuant to Section 188 of the said Code. (DA-060-2004 dated Feb. 10, 2004) 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. ECaHSI Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service