BIR Ruling [DA-237-03]

July 23, 2003 BIR RULING [DA-237-03] 24 (D) (1); DA 145-00 Ms. Marietta Cabusao B25 L5, Phase II Bagong Nayon II Resettlement Antipolo City M a d a m : This refers to your letter dated June 20, 2003 requesting for a ruling as to whether the Deed of Exchange executed by me and Jelly G. Cabusao relative to the swapping of real properties in order to correct a mistake and without any monetary consideration is not subject to capital gains tax and documentary stamp tax. It is represented that Jelly G. Cabusao is the owner in fee simple of a parcel of land located at Bo. of Bagong Nayon, Antipolo City covered by TCT No. 154598 issued by the Registry of Deeds for Marikina and containing an area of 60 square meters; that he has acquired the said property by virtue of a Deed of Sale executed by the National Housing Authority (NHA); that on June 12, 1988, you were the legitimate awardee of a home lot situated at B25, L5 Phase II, Bagong Nayon II Resettlement, Antipolo City covered by TCT No. 154535 issued by the Registry of Deeds for Marikina and containing an area of 70 square meters; that you erroneously built your house on the lot covered by TCT No. 154598 believing that it was your lot; and that to rectify the error committed, both of you have mutually agreed to exchange your respective properties by virtue of a Deed of Exchange in order to correct the mistake committed by sheer oversight and inadvertence by simply swapping your respective titles to the properties without any monetary consideration. In reply thereto, 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-described, the exchange of realties by you and Jelly G. Cabusao is not subject to the capital gains tax imposed under Section 24(D)(1) of the Tax Code of 1997. acIHDA Moreover, 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 to the said Deed of Exchange is subject to the documentary stamp tax of P15.00 only pursuant to Section 188 of the said Code. (BIR Ruling No. DA 145-00 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, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service