Mr. Nicanor Alcantara

March 6, 2007 BIR RULING [DA-139-07] Sec. 24 (D) (1); DA-173-03 Mr. Nicanor Alcantara Marcela St., Santolan Pasig City S i r : This refers to your letter dated February 20, 2007 requesting that the Deed of Exchange of real properties made to correct an inadvertence be exempted from the payment of the capital gains and documentary stamp taxes. The facts as represented are as follows: On February 5, 2007, a Deed of Exchange was executed by and between NICANOR ALCANTARA, married to Marilyn Alcantara, and LIZA SAMSON, married to Antonio Samson to correct an inadvertence, the pertinent portions of which state as follows: DIETcC "WHEREAS, the FIRST PARTY is the lawful and registered owner of a certain parcel of land situated in the Barrio of Santolan, Pasig City, as evidenced by TCT No. PT-119926, . . . ; WHEREAS, the SECOND PARTY is the registered owner of that parcel of land, situated in the Barrio of Santolan, Pasig City, as evidenced by TCT No. PT-67462, . . . ; WHEREAS, the FIRST PARTY has already constructed a Residential House on the land of the SECOND PARTY, as evidenced by Tax Declaration No. 024-06486, registered under his name;" The technical description of the land registered in the name of the FIRST PARTY, covered by TCT No. PT-119926, described the lot occupied by the SECOND PARTY; Likewise, the technical description of the land registered in the name of the SECOND PARTY, covered by TCT No. PT-67462, described the lot occupied by the FIRST PARTY. Hence, the above inadvertence led to the construction by the FIRST PARTY of a residential house in the lot titled in the name of the SECOND PARTY. aDHCEA In order to correct the said inadvertence herein parties mutually agreed to exchange titles over the properties for it will be physically impossible to transfer the improvement the FIRST PARTY has already introduced in the lot titled in the name of the SECOND PARTY. cSEAHa In support of your request you submitted photocopies of the following documents, viz.: 1. Deed of Exchange of Properties; 2. Corresponding Transfer Certificates of Title; 3. Corresponding Tax Declarations; and 4. Other pertinent documents. In reply, please be informed that since the above exchange transaction 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 NICANOR ALCANTARA, married to Marilyn Alcantara, and LIZA SAMSON, married to Antonio Samson, is not subject to the capital gains tax, imposed under Section 24 (D) (1) of the Tax Code of 1997, as amended, and the documentary stamp tax prescribed under Section 196 of the same Code. (BIR Ruling No. DA-173-03 dated June 3, 2003 citing BIR Ruling No. 469-93 dated December 1, 1993) TAIDHa However, the acknowledgment to the said deed of exchange 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. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service