BIR Ruling [DA-188-97]

April 21, 1997 BIR RULING [DA-188-97] Mr. Alexander D. Virata 3571 Durango Street Brgy. Palanan Makati City S i r : This refers to your letter dated February 4, 1997 seeking exemption from the payment of the capital gains tax and documentary stamp tax on the swap of lots together with the improvements thereon which you and your brother, Eduardo D. Virata have effected. cdti It is represented that Mr. Eduardo D. Virata is the owner of a three-door apartment with individual titles located at Durango Street, Palanan, Makati City, which have been designated as Lot 6-A covered by TCT No. 197506, Lot 6-B covered by TCT No. 197507 and Lot 6-C covered by TCT No. 197508, all of which were issued by the Register of Deeds of Makati City; that you are supposed to buy Lot 6-C together with the improvements thereon located at 3571 Durango St., Palanan, Makati City where you and your family has been staying for the past 3 years; that when the Deed of Absolute Sale was executed by and between your brother, Eduardo D. Virata and you on December 19, 1996, the property that was the subject of the sale was Lot 6-A instead of Lot 6-C; that on said date, you paid the documentary stamp tax (DST) while the capital gains tax was paid on January 10, 1997; that the Certificate Authorizing Registration (CAR) was issued on your favor by BIR, Makati West on January 15, 1997; that on January 20, 1997, you caused the registration of the aforesaid Deed of Absolute Sale with the Registry of Deeds of Makati City and TCT No. 208057 was issued after TCT No. 197506 was cancelled; that you discovered that there was a mistake made by your brother in the designation of the lot 6-C covered by TCT No. 197508 what was sold to you is Lot 6-A covered by TCT No. 197506; that to rectify the same, you and your brother executed a Contract of Rescission with Deed of Absolute Sale specifying that was is being sold is Lot 6-C covered by TCT No 197508; and that the area of Lot 6-C is exactly the same and the improvements (apartment) constructed on both are the same. In reply, please be informed that since the sale transaction is without any monetary consideration and considering further that the execution of the same is merely to correct the mistake in the designation of the lot in question, this Office is of the opinion as it hereby holds that the aforementioned sale of realties covering TCT No. 197506 and TCT No. 197508 between you and your brother, Eduardo D. Virata is not subject to the capital gains tax imposed under Section 21(e) of the Tax Code nor to the creditable withholding tax imposed under Revenue Regulations No. 12-94 implementing Section 50 (b) of the Tax Code, as amended. Furthermore, the said Contract of Rescission with Deed of Absolute Sale is not likewise subject to the documentary stamp tax imposed under Section 196 of the Tax Code, as amended. However, the said deed shall be subject to the P15.00 documentary stamp tax imposed under Section 188 of the same Code. (BIR Ruling No. 027-93 dated January 15, 1993) Very truly yours, ALICIA L. TOMACRUZ Head Revenue Executive Assistant (Legal Service)