BIR Ruling [DA-116-00]

February 22, 2000 BIR RULING [DA-116-00] Genato Investments, Inc . 18 Jose Bautista Avenue Malabon, Metro Manila Attention: Mr . Ronaldo M . Ocampo Corporate Secretary Gentlemen : This refers to your letter dated January 24, 2000 requesting for exemption from capital gains tax and documentary stamp tax on the Deed of Exchange executed by the spouses Bernardo C. Go and Ma. Corazon Santos Go and Ma. Belina G. Sandejas It appears from the records of the case that the Spouses Bernardo C. Go and Ma. Corazon Santos Go and Ma. Belina G. Sandejas bought condominium units at Grace Court Condominium, owned and developed by Genato Investments, Inc., located at No. 12 Mariposa St., Cubao, Quezon City identified as Condominium Unit No. 3B-A at Bldg. No. 3-B and Condominium Unit No. 2B-D at Bldg. No. 2-B, respectively; that the Corporate Secretary of Genato Investments, Inc. overlooked the Deeds of Sale he prepared for the Spouses Bernardo C. Go and Ma. Corazon Santos Go and Belina G. Sandejas, both dated August 22, 1997, such that Condominium Unit No. 3B-A at Bldg. No. 3-B intended for the spouses Bernardo C. Go and Ma. Corazon Santos Go erroneously went to Belina G. Sandejas while Condominium Unit No. 2B-D at Bldg. No. 2-B intended for Ma. Belina G. Sandejas went to the Spouses Bernardo C. Go and Ma. Corazon Santos Go, that the error was discovered by the parties only recently; that in order to correct the mistake, the parties executed a Deed of Exchange; and that no monetary consideration was involved in the exchange. In reply, please be informed that since the exchange transaction in question is without any monetary consideration, and considering further that the execution of the Deed of Exchange s merely to correct a mistake, this Office is of the opinion as it hereby holds that the aforementioned exchange of realties between the Spouses Bernardo C. Go and Ma. Corazon Santos Go and Ma. Belina G. Sandejas is not subject to the capital gains tax imposed under Section 24(D)(1) of the Tax Code of 1997 nor to the creditable withholding tax prescribed by Revenue Regulations No. 2-98, implementing Section 57(B) of the Tax Code of 1997. Furthermore, it 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 is subject to the documentary stamp tax of P15.00 only pursuant to Section 188 of the Tax Code of 1997. (BIR Ruling No. 027-93 dated January 15, 1993) This ruling is issued on the basis of the foregoing facts as represented. However, if upon investigation it shall be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group