BIR Ruling [DA-124-02]

July 23, 2002 BIR RULING [DA-124-02] 24 (D) (1); 196; 188 DA-194-2000 Mr. Dennis V. Cruz 5205 San Bernardo Street San Antonio Valley 5 Sucat, Paraaque City S i r : This refers to your letter dated January 10, 2001, requesting for exemption from capital gains tax and documentary stamp tax on the swapping of real properties between the late Daniel A. Cruz and Emmanuel L. De Vera. It is represented that the late Daniel A. Cruz was the owner of a parcel of land, containing an area of one hundred eighty (180) square meters, more or less, covered by Transfer Certificate of Title No. 98033, located at Barangay San Antonio, Paraaque City; that due to an honest mistake, the deceased Daniel A. Cruz constructed a house on the lot of Mr. Emmanuel L. De Vera; that the lot owned by the deceased Daniel A. Cruz is situated two lots adjacent (same block, same street, same barangay, identical areas, shapes and values) to the lot of Emmanuel L. De Vera; that the lot of Emmanuel L. De Vera is covered by Transfer Certificate of Title No. 348795; and that after a series of conferences and negotiations, an agreement between the parties concerned was reached whereby the parties agreed to swap and exchange their properties without any consideration, through the execution of a Deed of Exchange. 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 to correct the mistake resulting from the erroneous construction of a house on the lot owned by Emmanuel L. De Vera, the same is not subject to the 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 Furthermore, the said exchange 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 acknowledgement 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. DA 068-98 dated March 2, 1998 ) This ruling is issued on the basis of the foregoing representations. 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, Commissioner of Internal Revenue By: (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service