BIR Ruling [DA-119-05]

April 6, 2005 BIR RULING [DA-119-05] 24 (D) (1); 196; DA-096-03 Mr. Jacinto Gonzales Lolomboy, Bocaue, Bulacan S i r : This refers to your letter dated January 26, 2004 requesting for exemption from the payment of capital gains tax and documentary stamp tax on the swapping of real properties to conduct a mistake and without consideration. It is represented that Jacinto Gonzales and Felicisima Gonzales-Soriaga are siblings and previous co-owners of Lot 7320-A-1; that as stated in the Deed of Exchange, you have previously caused the dissolution of your co-ownership and the partition of Lot 732-A-1 which is located in Bunducan, Bocaue, Bulacan into Lot 732-A-1-A covered by Transfer Certificate of Title No. T-391945 (M) with an area of Four Hundred Ninety Three (493) square meters issued by the Registry of Deeds of Meycauayan, Bulacan, registered in the name of Jacinto Gonzales, and Lot 732-A-1-B covered by Transfer Certificate of Title No. T-16.371 (M) with an area of Four Hundred Ninety Four (494) square meters likewise issued by the Registry of Deeds of Meycauayan, Bulacan, registered in the name of Felicisima Gonzales-Soriaga; that all through the years you believe that the lots you have respectively occupied which incidentally you have personally chosen are the very lots that were respectively partitioned to you; that you have confidently made your respective improvements thereon; that a recent re-survey of the properties showed that Jacinto Gonzales is actually occupying Lot 732-A-1-B while Felicisima Soriaga is actually occupying Lot 732-A-1-A; that to correct your honest mistake and to give full effect to your real and original intention, you decided to exchange the real properties without cost from either of them; and that in support of your request, you submitted a copy of the Transfer Certificates of Title of the subject properties, deed of exchange and other pertinent documents. In reply, 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 realty by Jacinto Gonzales and Felicisima Gonzales-Soriaga is not subject to capital gains tax imposed under Section 24(D)(1) of the Tax Code of 1997, nor to the withholding tax imposed under Revenue Regulations No. 2-98. ACTISE Furthermore, the said swapping 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 of 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. DA-096-03 dated March 26, 2003) 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. Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group