Ms. Remedios Limjoco

March 14, 2007 BIR RULING [DA-159-07] Sec. 24 (D) (1); DA-173-03 Ms. Remedios Limjoco San Agustin, San Fernando Pampanga M a d a m : 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. It is represented that Spouses Ramiro and Regine Villavicencio were desirous to acquire the parcel of land, with improvements, owned by Remedios Limjoco containing an area of 330 sq. m. located in Penelope, Bagumbayan Murphy, Quezon City. A Deed of Absolute Sale was executed by Remedios Limjoco in favor of Ramiro Villavicencio on April 3, 2006 whereby the former conveyed to the latter a 330 sq. m. parcel of land, with improvements, covered by Transfer Certificate of Title (TCT) No. 15251 of the Registry of Deeds of Quezon City for the amount of P17 million. The above title consequently was transferred in the name of Ramiro Villavicencio married to Regine Villavicencio under TCT No. 288758. Construction of additional improvements was made in the above property. Recently, it was found out by the above parties that the title delivered by Remedios Limjoco to the Spouses Villavicencio is not the title covering the property they are now occupying. The title covering the property they wanted to buy is TCT No. 290194, which has an identical land area with the other property and is adjacent or contiguous to it. Thus, 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 spouses have already introduced in the lot the title of which belongs to Remedios Limjoco. cECTaD In support of your request you submitted photocopies of the following documents, viz.: 1) Deed of Exchange of Real Properties dated January 26, 2007; 2) Deed of Sale dated April 3, 2006; 3) TCT Nos. 15251, 290194 and 288758; 4) Corresponding Tax Declarations; and 5) 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 Remedios Limjoco and Ramiro Villavicencio, married to Regine Villavicencio, 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) 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. caIETS Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service