Ms. Lirio Paz R. Saborre

September 18, 2007 BIR RULING [DA-495-07] 24 (D) (1); 196 DA-173-03 Ms. Lirio Paz R. Saborre No. 69 Don Jose Ave cor. Ernestito St. Don Jose Heights, Brgy. Commonwealth Quezon City M a d a m : This refers to .our letter dated September 12, 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. cSCADE Based on your representations, as well as from the documents submitted, it appears that Emmanuel T. Pineda is the registered owner of a parcel of land (Lot 25) covered by Transfer Certificate of Title (TCT) No. N-292262 while Spouses Virgilio and Cynthia Martinez are the registered owners of a parcel of land (Lot 23) covered by TCT No. N-302823; that Emmanuel T. Pineda purchased Lot 25 from Jose E. Desiderio & Co., Inc. on June 23, 2006 and the corresponding capital gains and documentary stamp taxes due thereon were already paid; that Spouses Virgilio and Cynthia Martinez purchased Lot 23 from Country Bankers Life Insurance Corporation on April 10, 2007 and the corresponding capital gains and documentary stamp taxes due thereon were likewise paid; that per Affidavit executed by Geodetic Engineer Patricio C. Cabalo dated September 14, 2007, said engineer deposed that when he conducted a relocation survey on Lot 25, Block 18, Geraldine St., Don Jose Heights Subdivision, Commonwealth, Quezon City, he inadvertently relocated Lot 25, Block 18 on the adjacent lot which should have been Lot 23, Block 18, Geraldine St., Don Jose Heights Subdivision, Commonwealth, Quezon City; that because of said inadvertence committed by the geodetic engineer which was relied upon by the Spouses Martinez, the latter constructed a house on Lot 23; and that in order to correct the said error, Emmanuel T. Pineda and Spouses Martinez executed a Deed of Exchange of Real Property dated September 10, 2007 wherein the parties agreed to exchange their respective properties with that of the other without any monetary consideration. In support of your request you submitted photocopies of the following documents, viz.: 1) Deed of Exchange of Real Properties; 2) TCT Nos. N-292262 and N-302823; 3) Capital gains and documentary stamp taxes returns; 5) Deed of Absolute Sale from previous owners; and 6) Affidavit executed by the geodetic engineer. DTEIaC 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 Emmanuel T. Pineda and Spouses Virgilio and Cynthia Martinez, is not subject to the capital gains tax, imposed under Section 24 (D) (1) of the Civil Code of 1997, as amended, and to 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. caDTSE Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service