BIR Ruling [DA-174-02]

September 23, 2002 BIR RULING [DA-174-02] 24 (D) (1), 196; DA-145-2000 Interhouse South Corporation 11th Floor, Park Trade Centre 1716 Investment Drive, Madrigal Business Park Alabang, Muntinlupa City Attention: Mr. Felix Y. Hofilea Executive Vice-President Gentlemen : This refers to your letter dated October 2, 2001 requesting for an opinion on the swapping of real properties to rectify an error in the execution of a Deed of Absolute Sale. Documents submitted disclosed that: 1. Interhouse South Corporation, a corporation duly registered and existing under the laws of the Philippines is the owner and developer of Park Trade Centre Condominium; 2. By virtue of a Deed of Absolute Sale, two parking slots located at the lower basement level, with an area of 13 sq.m. each, more particularly identified as Parking Slot No. 21 and 22 and covered by Transfer Certificates of Title (TCT) Nos. 55898 and 55897, respectively, were registered in the name of one of the buyers, Wilhelmina Lara Armstrong; 3. There was an error/inadvertence in the allocation of the said stated parking slots when it was entered and type in the Deed of Absolute Sale, because the correct subject matter and consideration of the sale were parking slots nos. 8 and 9, located at the Third Floor level of the same size of [13.0] square meters each, and not Park Slot No. 21 and 22 as described above; 4. There being an error/inadvertence in the allocation of the said parking slots in the name of Wilhelmina Lara Armstrong, a Deed of Exchange was executed by and between the above-named parties in order to correct the error in the assignment of parking slots and transfer the parties respective parking area without any monetary value or consideration. AIaSTE 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-mentioned, the exchange of realties by and between the aforestated parties 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 properties are 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 of Exchange 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)