BIR Ruling [DA-155-02]

September 11, 2002 BIR RULING [DA-155-02] Sec. 24 (D) (1); 196 DA-145-2000 Sonia B. Maristela Mt. Isarog St., Los Baos, Subd., Los Baos, Laguna M a d a m : This refers to your undated letter requesting for exemption from the payment of capital gains tax and documentary stamp tax on the swapping of real properties to correct a mistake and without consideration. cCAIaD It is represented that a certain Generosa Masikip previously owned a parcel of land covered by Transfer Certificate of Title No. T-3277 and was later subdivided into two lots namely: (1) Lot 24-A, 225 sq. m., and covered by Transfer Certificate of Title No. T-409994 which was sold to Benefa M. Dayao and Alicia H. Rillo and (2) Lot 24-B, also 225 sq.m., and covered by Transfer Certificate of Title No. T-409995 which was sold to you and your son Allan B. Maristela; that both parcels of land are located at Batong Malake, Los Baos, Laguna; that both owners constructed their respective houses on the said premises; that the error was discovered only when you tried to mortgage the property with the bank where the required plotting of its Technical Description was made; that the error was committed in the preparation of the corresponding Deed of Absolute Sale which was, after payment of all taxes due to the government including the Capital Gains Tax and Documentary Stamp Tax, registered before the Office of the Registry of Deeds, Calamba, Laguna, and became the basis of the issuance of the said Transfer Certificates of Title; that since you have already paid the corresponding Capital Gains Tax and Documentary Stamp Tax due on the purchase of such parcel of land, you now request for exemption from the same taxes in the event of the exchange or swapping of the parcels of land subject of the mistake or error, that the parties agreed to amicably rectify the mistake by simply swapping their properties without cost from either of them as evidenced by the deed of exchange of properties, hereto submitted as Annex "A"; that in support of your request, you submitted a copy of the Transfer Certificates of Title of the subject properties 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 and between Sonia B. Maristela and Allan Nicasio B. Maristela and Benefa M. Dayao and Alicia H. Rillo 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 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-145-2000 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. Very truly yours, Commissioner of Internal Revenue By: (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service