BIR Ruling [DA-158-01]

September 07, 2001 BIR RULING [DA-158-01] 24 (D) (1); 196 DA-145-2000 Mr. Agustin M. Satimbre Jr . St. James Subdivision, Barangay Nagkaisang Nayon, Novaliches, Quezon City S i r : This refers to your letter dated September 20, 2000 requesting on behalf of Spouses Wilfredo Amparo and Ma. Victoria Amparo 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. It is represented that E.C. Gozum Co., Inc., owner and developer of a parcel of land covered by Transfer Certificate of Title No. N-149350 and was later subdivided into two lots namely: (1) Lot 27-A, 90 sq. m., and covered by Transfer Certificate of Title No. N-212340 which was retained by the former and (2) Lot 27-B, also 90 sq. m., and covered by Transfer Certificate of Title No. N-212341 which was sold to Spouses Wilfredo Panelo and Cecilia Panelo; that Spouses Panelo constructed their house on the said parcel of land; that the latter parcel of land with improvements thereon was purchased by Spouses Amparo from Spouses Panelo; that both parcels of land are of equal proportion and located at St. James Subdivision, Brgy. Nagkaisang Nayon, Novaliches, Quezon City; that the error was discovered only when Spouses Amparo caused the transfer of the land title in their name; that after the sale was consummated between Spouses Panelo, as the seller and Spouses Amparo, as the buyer, all taxes due to the government including the capital gains tax and documentary stamp tax, were already paid as evidenced by payments made to Equitable Bank-Binondo Branch as herein attached; that since you have already paid the corresponding capital gains tax and documentary stamp tax due on the purchase of such parcel of land with improvements, 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 E.C. Gozum Co., Inc. and Spouses Panelo 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; that in support of your request, you submitted a copy of the Transfer Certificates of Title of the subject properties. 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 a mistake, the exchange of land only by and between Spouses Wilfredo Panelo and Cecilia Panelo and E.C. Gozum Co., Inc., as represented by their administrator, Alicia P. Fabian, is not subject to the capital gains tax imposed under Section 24(D)(I) of the Tax Code of 1997, nor to the withholding tax imposed under Revenue Regulations No. 2-98. Likewise, the said swapping of subject two (2) parcels of land is not 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.) EDMUNDO P. GUEVARA Deputy Commissioner Legal & Inspection Group