Mrs. Jennylen T. Lee

April 26, 2007 BIR RULING [DA-265-07] 24 (D) (1); 196; DA-173-03 Mrs. Jennylen T. Lee No. 47 Gregory Street St. Charbel, Executive Village Quezon City M a d a m : This refers to your letter dated April 2, 2007 requesting an exemption from the payment of capital gains and documentary stamp taxes on the Deed of Exchange to correct inadvertence. It is represented that you and your husband, Avelino P. Lee, were desirous to acquire a parcel of land, with improvements thereon, from Elizabeth G. Dela Pea, married to Roberto Dela Pea, containing an area of 100 sq. m. located in Ilocos Sur St., Bago Bantay, Quezon City. A Deed of Absolute Sale was executed by Elizabeth G. Dela Pea in your favor on July 7, 2003, whereby the former conveyed in your favor a 100 sq. m. parcel of land, with improvements, covered by Transfer Certificate of Title (TCT) No. N-229828 of the Registry of Deeds of Quezon City for the amount of P500,000.00. The above title consequently was transferred in your name under TCT No. 255392. AcSEHT Recently, you found out that the title delivered to you by Elizabeth Dela Pea was not the title covering the property you are now occupying. The foregoing inadvertence was due to the fact that the above property you occupied has an identical land area with the adjacent property also owned by Elizabeth Dela Pea, which, at the time you purchased your above property, also had an existing improvement identical to the one you were occupying. Thus, in order to correct the said inadvertence you and Elizabeth Dela Pea mutually agreed to exchange your titles over the above properties. In support of your request you submitted photocopies of the following documents, viz .: 1) Deed of Exchange dated December 11, 2006; 2) Deed of Sale dated July 7, 2003; 3) TCT Nos. 255392 and 255393; 4) Corresponding Tax Declarations; and 5) Other pertinent documents. In reply, please be informed that since the above exchange transaction 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 Elizabeth G. Dela Pea, married to Roberto C. Dela Pea, is not subject to the capital gains tax, imposed under Section 24 (D) (1) of the Tax Code of 1997, as amended, and the documentary stamp tax prescribed under Section 196 of the same Code. (BIR Ruling No. DA-173-03 dated June 3, 2003 citing BIR Ruling No. 469-93 dated December 1, 1993) However, the acknowledgment to the said deed of exchange is subject to the documentary stamp tax of P15.00 on certification pursuant to Section 188 of the Tax Code of 1997. TSHEIc 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.) JAMES H. ROLDAN Assistant Commissioner Legal Service