BIR Ruling [DA-362-99]

June 23, 1999 BIR RULING [DA-362-99] Mr. Virgilio Q. Marcelo 32 Bansalangin Street UPS, Paraaque City S i r : This refers to your letter dated October 14, 1998 requesting on behalf of the Spouses Renato G . Tababa and Yolanda E . Tababa for exemption from the payment of capital gains tax and documentary stamp tax on the sale and transfer of a piece of land by said spouses to you. It is represented that sometime in December 1992, you sold and transferred a certain parcel of land identified as Lot 11-B, Psd 007404-024504-D, being a portion of Lot 11, Block 14 (LRC) PCS-17887 situated at Brgy. Holy Spirit, Matandang Balara, Quezon City, to Aeropagita Evangelista , a widow for which TCT No. 74881 was accordingly issued; that due to an honest typographical error which the parties to the Deed of Absolute Sale did not notice, "Lot 11-A" of the subdivision plan for Aeropagita Evangelista was typed, instead of "Lot 11-B", and that Lot 11-A should be for you; that Aeropagita Evangelista introduced improvements on Lot 11-B, that you introduced improvements on Lot 11-A; that the TCT issued to you was on Lot 11-B which should be Lot 11-A; that on April 27, 1998, Aeropagita Evangelista sold and transferred the said property under TCT No. 74881 to the Spouses Renato and Yolanda Tababa wherein TCT No. N-193453 was subsequently issued for Lot 11-A; that on January 28, 1999 you and Spouses Renato and Yolanda Tababa executed a Deed of Exchange involving the two properties; and that the Deed of Exchange did not involve any monetary consideration considering that there was an honest error in assigning the corresponding lot numbers that the parties concerned voluntarily agreed to have it corrected in accordance with their actual occupation on the area. In support of your request you submitted photocopies of the following documents, viz: 1. Deed of Exchange; 2. TCT 74882 of Virgilio Q. Marcelo; 3. TCT 74881 of Aeropagita Evangelista; 4. Deed of Absolute Sale of real property executed by Aeropagita Evangelista in favor of Spouses Renato G. Tababa and Yolanda E. Tababa; 5. TCT 193458 of the Spouses Renato G. Tababa and Yolanda E. Tababa; 6. Affidavit of Virgilio Q. Marcelo that he sold the property to Aeropagita Evangelista; 7. Affidavit of Aeropagita Evangelista that there was an error in the Deed of Absolute Sale in the assignment of lot numbers wherein, instead of Lot 11-B, Lot 11-A was typed; 8. Affidavit of Spouses Renato G. Tababa and Yolanda E. Tababa that there was an error in the assignment of lot numbers; 9. Subdivision plan under PSD 007404-024504-D; and 10. Technical description of PSD 007404-024504-D 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 the Spouses Renato G. Tababa and Yolanda E. Tababa 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. 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. (BIR Ruling No. 27-93 dated January 15, 1993) LibLex Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group