BIR Ruling [DA-382-03]

October 22, 2003 BIR RULING [DA-382-03] 24 (D) (1); 196; 188 DA-194-2000 Ms. Lydia Caseas Gozon Judge Roldan Street San Roque, Navotas Metro Manila M a d a m : This refers to your letter dated September 11, 2003, requesting for exemption from capital gains tax and documentary stamp tax on the swapping of real properties between you and your sister Virginia Caseas David. It is represented that you are the registered owner of a parcel of land located in Navotas, Metro Manila, covered by Transfer Certificate of Title No. M-25350 for the Register of Deeds of Malabon; that your sister, Virginia Caseas David is the registered owner of a parcel of land located in Malabon, Metro Manila, covered by Transfer Certificate of Title No. M-25347 for the Register of Deeds of Malabon; that in good faith and honest mistake, you erroneously constructed a house on the lot of Virginia Caseas David; that after a series of conferences and negotiations, an agreement between the parties concerned was reached; and that the parties agreed to swap and exchange their properties without any consideration, through the execution of a Deed of Exchange on April 11, 2003. In reply, 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 to correct the mistake resulting from the erroneous construction of a house on the lot owned by Virginia Caseas David, the same is not subject to the capital gains tax, imposed under Section 24(D)(1) of the Tax Code of 1997, nor to the withholding tax imposed under Revenue Regulations No. 2-98. Furthermore, the said exchange of real properties is not likewise subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997. However, the notarial acknowledgement to the said deed is subject to the documentary stamp tax of P15.00 only pursuant to Section 188 of the Tax Code of 1997. (BIR Ruling No. DA 068-98 dated March 2, 1998) This ruling is issued on the basis of the foregoing representations. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. EIAaDC Very truly yours, Commissioner of Internal Revenue By: (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service