BIR Ruling [DA-414-03]

November 18, 2003 BIR RULING [DA-414-03] Sec. 24 (D) (1); 196, 188 DA-027-2003 dtd 1/30/03 Mr . Joselito C . Valt #189 Brgy. Miswa Infanta, Quezon and Mr . Ernesto Gonzales #17 P. Tuazon St., Project 4 Quezon City S i r s : This refers to your letter dated October 17, 2003 seeking assistance for the rectification of the errors caused through oversight in your respective Transfer Certificate of Titles (TCTs) in order to avoid future inconveniences. It is represented that both of you owned parcels of land adjacent to each other consisting of 121.5 sq.m. each, embraced under TCT No. PT-121499 and TCT No. PT-75198 of the Register of Deeds for Pasig City, respectively; that you found out that your respective land titles do not match with the location map; that you actually occupied the right lot assigned to you, however, your TCT's show otherwise; that the location description in the TCT's were interchanged; that you executed a Deed of Exchange on October 6, 2003 at Paraaque City to correct the errors in the TCT's; and that the said exchange entails no monetary consideration. In reply, please be informed that since the exchange transaction was 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 entry of the location description in the TCT's, 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 Acknowledgment to the said deed is subject to the Documentary Stamp Tax (DST) of P15.00 only pursuant to Section 188 of the Tax Code of 1997 (BIR Ruling No. DA-068 dated March 2, 1998) . 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. ASHaTc Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service