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In 2018, spouses Romeo and Juliet, both Filipino citizens are owners of a residential house and lot in Quezon City. After the recent wedding of their son (Pedro) to Clara, the spouses donated the said real property to Item. At the time of donation, the real property has a fair market value of P2,000,000. The property was mortgage for P200,000 not assumed by the donees. Which of the following statements is correct?