BIR Ruling [DA-201-02]

November 13, 2002 BIR RULING [DA-201-02] 27, 188 & 196 DA-194-2000 Sps. Manuel & Rosario Vergara 14 Yakal St. Evergreen Executive Village Antipolo City Sir & Madam : This refers to your letter dated October 22, 2002 requesting for exemption from the payment of capital gains tax and documentary stamp tax on the exchange and transfer of a piece of land by Spouses Almer C. Soria and Adelina F. Soria to you. It is represented that you are the registered and absolute owners of a certain parcel of land situated at Lot 14, Block 12, Phase I Evergreen Executive Village, Antipolo City, which consists of an area of One Hundred Twenty (120) sq.m., more or less and covered by Transfer Certificate of Title No. 250228 of the Registry of Deeds of Marikina City under the name of Manuel I. Vergara married to Rosario B. Vergara; that when you constructed your residential house, the same was constructed not on the above described property but erroneously on the adjoining property located at Lot 12, Block 12, Phases I, Evergreen executive Village, Antipolo City which also consists of an area of One Hundred Twenty (120) sq.m., more or less and covered by Transfer Certificate of Title No. 408182 of the Registry of Deeds of Marikina City under the name of Sps. Almer C. Soria and Adelina F. Soria; that this mistake was discovered through a relocation survey requested by Sps. Soria who had accepted your apologies with kind and patient understanding; that you agreed to the execution of a Deed of Exchange to transfer the ownership of Lot 12, Block 12, from the name of Sps. Soria to your name and Lot 14, Block 12, from your name to the name of Sps. Soria on the condition that you will shoulder and pay all the necessary expenses related to the said exchange; and that the transfer of ownership will be made with no intention to sell or alienate the properties concerned but to amicably settle your problem and render a solution that will correct an unintentional mistake that had adversely affected both your properties. In support of your request you submitted photocopies of the following documents, viz: 1. Deed of Exchange; 2. TCT 250228 of Sps. Vergara; 3. TCT 408182 of Sps. Soria; 4. TCT 193458 of the Spouses Renato G. Tababa and Yolanda E. Tababa; 5. Affidavit of Manuel I. Vergara; 6. Tax Declaration No. AA-001-00394; 7. Tax Declaration No. AA-001-13744; 8. Tax Declaration No. AA-001-12449; 9. Vicinity and Location Plan; 10. Certification of Relocation Survey Lot 12; and 11. Certification of Relocation Survey Lot 14 In reply, please be informed that since the exchange transaction in question 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 you and Spouses Almer C. Soria and Adelina F. Soria is not subject to the capital gains tax, imposed under Section 27(D)(5) of the Tax Code of 1997 nor to the creditable withholding tax under Revenue Regulations No. 2-98. Furthermore, it is not likewise subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997. However, the acknowledgment to the said deed of conveyance is subject to the documentary stamp tax of P15.00 on certification pursuant to Sec. 188 of the Tax Code of 1997. ( BIR Ruling No. DA-194-2000 dated March 30, 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 as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service