Berino C. Cruz & Bayani C. Dela Cruz

June 29, 2007 BIR RULING [DA-351-07] 24 (D) (1); 196 DA-173-03 Berino C. Cruz & Bayani C. Dela Cruz Area A, Camarin, Caloocan City; Gil Salanatin Blk. 17, St. Joseph Townhouse Tandang Sora, Quezon City; and Melchor Dela Cruz 504 Socorro St., Caloocan City Gentlemen : This refers to your letter dated March 1, 2007 requesting that the Deed of Exchange of real properties made to correct an inadvertence be exempted from the payment of the capital gains and documentary stamp taxes. The pertinent facts as contained in the Deed of Exchange dated February 20, 2007 are as follows: Berino C. Cruz and Bayani C. Dela Cruz are the registered owners of a parcel of land situated in Novaliches (Camarin), Caloocan City covered by Transfer Certificate of Title (TCT) No. C-316201 of the Registry of Deeds of Caloocan City. On the other hand, Gil Salanatin and Melchor Dela Cruz are the registered owners of the adjoining lots of the above-mentioned property covered by TCT Nos. T-116084 and C-52153, respectively. The above parties have just discovered that they are presently in possession of their lots with their houses erected thereon which titles do not correspond accordingly to wit: 1) Gil Salanatin is the registered owner of Lot 1197-B-6 covered by TCT T-116084 but in actual possession with his house erected thereon of Lot 1197-B-5 registered in the name of Melchor Dela Cruz covered by TCT No. C-52153; 2) Melchor Dela Cruz is the registered owner of Lot 1197-B-5 covered by TCT No. C-52153 but in actual possession with his house erected thereon of Lot 1197-B-7 covered by TCT No. C-316201 registered in the name of Berino C. Cruz and Bayani C. Dela Cruz; and 3) Berino C. Cruz and Bayani C. Dela Cruz are the registered owners of Lot 1197-B-7 covered by TCT No. C-316201 but in actual possession with their house erected thereon of Lot 1197-B-6 covered by TCT No. T-116084 registered in the name of Gil Salanatin. The above parties have mutually agreed to exchange their respective titles as above described in order to hold the correct title to the lots in their respective possession. Thus, Melchor Dela Cruz transfers to Gil Salanatin Lot No. 1197-B-5 covered by TCT No. C-52153, while Gil Salanatin transfers to Berino C. Cruz and Bayani C. Dela Cruz Lot No. 1197-B-6 covered by TCT No. T-116084, and Berino C. Cruz and Bayani C. Dela Cruz transfer to Melchor Dela Cruz Lot No. 1197-B-7 covered by TCT No. C-316201. In support of your request you submitted photocopies of the following documents, viz.: 1) Deed of Exchange of Real Properties dated February 20, 2007; 2) TCT Nos. T-116084, C-52153 and C-316201; 3) Corresponding Tax Declarations; and 4) Vicinity Map. 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 by and between Melchor Dela Cruz, Gil Salanatin, Berino C. Cruz and Bayani C. Dela Cruz, 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) HaTAEc 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. 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.) JAMES H. ROLDAN Assistant Commissioner Legal Service