BIR Ruling [DA-060-04]

February 10, 2004 BIR RULING [DA-060-04] Mr. Danilo C. De Guzman 431 Tibag, Pulilan Bulacan S i r : This refers to your letter dated February 9, 2004 requesting for a ruling as to whether the Deed of Exchange executed by and between Virginia Crudo-Dueas and Herminia Crudo-Cruz relative to the swapping of real properties in order to correct a mistake and without any monetary consideration is not subject to capital gains tax and documentary stamp tax. It is represented that Virginia Crudo-Dueas is the absolute and registered owner of a parcel of land together with the improvements thereon located in Pulilan, Bulacan covered, by TCT No. T-55247 issued by the Registry of Deeds for the Province of Bulacan containing an area of 8,525 square meters; that on the other hand, Herminia Crudo-Cruz is the absolute and registered owner of a parcel of land located at Pulilan, Bulacan containing an area of 8,524 square meters; that the two (2) properties are adjoining each other and unfortunately an error was committed during the registration of the said properties; and that both parties mutually agreed to exchange their respective properties by virtue of a Deed of Exchange in order to correct the mistake committed by sheer oversight and inadvertence by simply swapping their respective titles to the properties without any monetary consideration. In reply thereto, please be informed that since the exchange transaction is without any monetary consideration, and considering further that the execution of the Deed of Exchange is merely for the purpose of correcting the mistake above-described, the exchange of realties by Virginia Crudo-Dueas and Herminia Crudo-Cruz is not subject to the capital gains tax imposed under Section 24(D)(1) of the Tax Code of 1997. Moreover, the said swapping of real properties 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 Exchange is subject to the documentary stamp tax of P15.00 only pursuant to Section 188 of the said Code. (BIR Ruling No. DA145-00 dated March 10, 2000) 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. ESCTaA Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service