BIR Ruling [DA-039-03]

February 11, 2003 BIR RULING [DA-039-03] 27 & 196 469-93 Atty. Eudivigio G. Roxas 67 D. Samiano St. Calauan, Laguna S i r : This refers to your letter dated July 26, 2002 requesting on behalf of the Spouses Crisanto and Elena Mendoza ; and Fructuosa A. Brion and Spouses Cesar and Alma Comia for exemption from the payment of capital gains tax and documentary stamp tax on the exchange of realties without monetary consideration by the said parties. It is represented that TCT No. T-184678 with an area of 302 sq.m. and situated at Marfori Subdivision, Poblacion Calauan, Laguna, more particularly described as "A parcel of land (Lot 152-G-4 of the subdivision plan (LRC) Psd-309760, approved as a non-subdivision project, being a portion of Lot 152-G (LRC) psd-305343, LRC Record No. 1201), situated in the Barrio of Masiet, Mun. or Calauan, Province of Laguna, Island of Luzon. Bounded on the NE., points 3 to 4 by Lot 152-G-5; on the SE., points 4 to 1 by Lot 152-G-9 (Existing Road); on the SW., points 1 to 2 by Lot 152-G-3; all of the subd. plan; and on the NW., points 2 to 3 by Lot 152-F (LRC) Psd-305343. Beginning at a point marked "1" on plan, being N. 4 deg. 13'W., 381.00 m. from BLLM No. 2, Mun. of Calauan, Laguna; thence N. 26 deg. 53'W., 14.53 m. to point 2; N. 60 deg. 15'E., 20.82 m. to point 3; S. 26 deg. 43'E, 14.54 m. to point 4; S. 60 deg. 17'W., 20.78 m. to the point of beginning; containing an area of THREE HUNDRED TWO (302) SQUARE METERS, more or less. . . . " is registered in the names of Spouses Crisanto and Elena Mendoza; that TCT No. T-220834 with the same area of 302 sq.m. also situated in Marfori Subdivision, Poblacion Calauan, Laguna, more particularly described as "A parcel of land (Lot 152-G-3 of the subdivision plan (LRC) Psd-309760, approved as a non-subdivision project, being a portion of Lot 152-G (LRC) Psd-305343, LRC Record No. 1201), situated in the Barrio of Masiet, Mun. of Calauan, Province of Laguna, Island of Luzon. Bounded on the NE., points 4 to 1, by Lot 152-G-4; on the SE., points 1 to 2, by Lot 152-G-9 (Road Existing); on the SW., points 2 to 3, by Lot 152-G-2 all of the subdivision plan; and on the NW., points 3 to 4 by Lot 152-F (LRC) Psd-305343. Beginning at a point marked 1 on plan, being N. 4 deg. 13'W., 381.00 m. from BLLM No. 2, Municipality of Calauan, Laguna; thence S. 60 deg. 17'W., 20.82 m. to point 2; N. 26 deg. 54'W., 14.52 m. to point 3; N. 60 deg. 15'E., 20.82 m. to point 4; S.26 deg. 53'E., 14.53 m. to the point of beginning; containing an area of THREE HUNDRED AND TWO (302) SQUARE METERS, more or less, . . ." is registered in the names of Fructuosa A. Brion and Spouses Cesar and Alma Comia, that on July 25, 2002, Spouses Mendoza and co-owners Fructuosa A. Brion and Spouses Comia executed a Deed of Exchange of Real Properties without monetary consideration; and that the swapping of the above-described real properties was due to the erroneous construction of improvements (residential house) on Lot 152-G-4 covered by TCT No. T-184678 in the name of Spouses Mendoza, by co-owners Fructuosa A. Brion and Spouses Comia. cDSaEH In support of your request you submitted photocopies of the following documents, viz. : 1. Deed of Exchange of Real Properties; 2. TCT No. T-184678; 3. TCT No. 220834; 4. Tax Declaration No. 99-06-012-01070; 5. Tax Declaration No. 99-06-012-01069; 6. Capital Gains Tax Return/BIR Form No. 1706 7. Documentary Stamp Tax Declaration/BIR Form No. 2000 8. Certificate Authorizing Registration 9. China Banking Corporation Official Receipt No. 526338 10. China Banking Corporation Official Receipt No. 526339 In reply, please be informed that since the exchange transaction in question is without monetary consideration, and considering further that the execution of the deed of exchange is merely to correct a mistake, this Office is of the opinion as it hereby holds that the aforementioned exchange of realties between Spouses Crisanto and Elena Mendoza on one hand and Fructuosa A. Brion and Spouses Cesar and Alma Comia is not subject to the capital gains tax, imposed under Section 24(D)(1) of the Tax Code of 1997, and the documentary stamp tax prescribed under Section 196 of the same Code. However, the acknowledgment to the said deed of conveyance is subject to the documentary stamp tax of P15.00 on certification pursuant to Section 188 of the Tax Code of 1997. 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. ( BIR Ruling No. 469-93 dated December 1, 1993 ) Very truly yours, Commissioner of Internal Revenue By: (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service