BIR Ruling [DA-163-01]

September 18, 2001 BIR RULING [DA-163-01] Secs. 24 (D) (1); 196 387-97; UN-418-95 Mr. Constantino C. Fernandez 1484 C. Chua Street, Parkview Homes Brgy. Sunvalley, Paraaque City S i r : This refers to your letter dated March 28, 2000 stating that you are the owner of Lot 3-A of the subdivision plan Psd-007604-023935-D, a portion of Lot 3, Psd-13-006195, L. R. C. Rec. No. 16296, situated in Barangay San Dionisio and Kay Biga, Paraaque, Metro Manila, and covered by TCT No. 68481; that likewise, spouses Renato C. Salvador and Adelaida C. Salvador are the owners of Lot 3-B of the subdivision plan Psd-007604-023935-D, a portion of Lot 3, Psd-13-006195, L. R. C. Rec. No. 16296, situated in Barangay San Dionisio and Kay Biga, Paraaque, Metro Manila, and covered TCT NO. 74569; that in 1992, due to oversight, Spouses Salvador constructed a house in your lot, Lot 3-A; that two years thereafter, in 1994, seeing Lot 3-B as the remaining vacant lot in Lot 3 of the subdivision plan, you constructed a house thereon, thinking that it was your property; that said mistake was discovered only recently when you requested for an approved location/vicinity map from the developer; and that in order to preserve the houses which were built on both lots, you and your wife and the Spouses Salvador executed a Deed of Exchange on March 6, 2000, whereby you exchanged the two adjoining lots, of the same size, without monetary consideration. Based on the foregoing representation and documents submitted, you now request in effect exemption from the payment of the corresponding taxes due on the above exchange transaction. In reply, please be informed that since the exchange transaction in question is without any monetary consideration, and considering further that the execution of the Deed of Exchange was merely to correct a mistake, this Office is of the opinion as it hereby holds that the aforementioned exchange of realities between you and your wife and the Spouses Salvador is not subject to the capital gains tax imposed under Section 24(D)(1) of the Tax Code of 1997 nor to the creditable withholding tax imposed under Section 57(B) of the Tax Code of 1997. Furthermore, the Deed of Exchange is not likewise subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997 but the same shall be subject only to the P15.00 documentary stamp tax imposed under Section 188 of the same Tax Code. Accordingly, the Certificate Authorizing Registration (CAR) and/or Tax Clearance Certificate (TCC) may be issued by the Revenue District Officer concerned, authorizing the registration of the said properties. [BIR Ruling Nos. UN-418-95 dated November 27, 1995 and 387-97, dated September 16, 1997] IDTcHa 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.) EDMUNDO P. GUEVARA Deputy Commissioner Legal & Inspection Group