Spouses Samuel and Emely Go

August 21, 2007 BIR RULING [DA-457-07] 24 (D) (1); 196 DA-173-03 Spouses Samuel and Emely Go No. 906 Meiling Tower No. 1133 Aguilar St., Sta. Cruz Manila Gentlemen : This refers to your letter dated February 9, 2007 stating that Dionisio Condominium, a six storey commercial and residential building owned by Spouses Giok Hian Dionisio was built in 1977, situated in No. 850 Luzon Street, Tondo, Manila; that it was originally intended as a family residence while some units were rented; that sometime in 1988, the owners converted the building into a condominium; that during the conversion the engineer who prepared the floor plans used his own direction without verifying the actual numbering of units existing; that the developers failed to notice the error in the numbering of units from the second to the six floor in the floor plans, hence, when they sold some units to the existing lessees they transferred the Condominium Certificates of Title (CCTs) to the said buyers based on the actual numbering of units and not according to the floor plans of which the CCTs were based; and that as a result, the CCT you are holding does not correspond to the unit you are actually occupying since in actuality you are occupying unit 601 but the CCT you are holding is for unit 602, while the occupants of unit 602, Spouses Wilson and Adela Dionisio, are holding the CCT for unit 601. In view thereof, you are requesting that the Deed of Exchange of real properties made to correct the above described inadvertence be exempted from the payment of the capital gains and documentary stamp taxes. In support of your request you submitted photocopies of the following documents, viz.: 1) Copies of the Deed of Exchange; 2) Copies of the corresponding CCTs; 3) Copies of the corresponding Tax Declarations; 4) Copies of the Floor Plans approved by the HLURB; 5) Copy of the Master Deed; and 6) Other pertinent documents. AHCcET 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 Spouses Wilson and Adela Dionisio, 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. 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