Atty. Natalio M. Panganiban

October 4, 2007 BIR RULING [DA-523-07] 24 (D) (1) DA-60-2004 Atty. Natalio M. Panganiban Rm. 206 Margarita Bldg. J.P. Rizal cor. Cardona Sts. Makati City S i r : This refers to your letter dated July 31, 2007 requesting for a ruling on the tax consequences of the exchange of property between John Benedict P. Panganiban and Joel Benjamin P. Panganiban. cACEHI It is represented that John Benedict is the registered owner of the property covered by TCT No. 169976 issued by the Register of Deeds of Paraaque, more particularly described as follows: TRANSFER CERTIFICATE OF TITLE NO. 169976 "A PARCEL OF LAND (Lot 22-A of the subdivision plan Psd-00-062600, being a portion of Lot 22, Block 14, Pcs-5883, LRC Record No. ___), situated at Brgy. San Dionisio, Paraaque City, Metro Manila, Island of Luzon. Bounded on the South along line 1-2 by Lot 24, Block 14; on the West along line 2-3 by Road Lot 11; both of Pcs-5883; on the North along line 3-4 by Lot 22-B of the subdivision plan; and on the East along line 4-1 by Lot 21, Block 14, Pcs-5883 . . . containing an area of NINETY (90) SQUARE METERS, more or less . . ." aHTDAc that Joel Benjamin is the registered owner of a property covered by TCT No. 169977 issued by the Register of Deeds of Paraaque City, more particularly described as follows: TRANSFER CERTIFICATE OF TITLE NO. 169977 "A PARCEL OF LAND (Lot 22-B of the subdivision plan Psd-00-062600, being a portion of Lot 22, Block 14, Pcs-5883, LRC Record No. ___), situated at Brgy. San Dionisio, Paraaque City, Metro Manila, Island of Luzon. Bounded on the South along line 1-2 by Lot 22-A, of the subdivision plan; on the West along line 2-3 by Road Lot 11; on the North along line 3-4 by Lot 20; and on the East along line 4-1 by Lot 21, both of Block 14, all of plan Pcs-5883 . . . containing an area of NINETY (90) SQUARE METERS, more or less . . ." DSHcTC that the parties have constructed a duplex house on the said lot, which improvements are duly registered with the City Assessor's Office of the City of Paraaque; that since then, John Benedict has been occupying Lot 22-A, PSD-00-062600 together with the improvements thereon and on the other hand, Joel Benjamin has been occupying Lot 22-B, PSD-06-2600 together with the improvements thereon; that thru an honest mistake when the Deed of Partition was executed, the lot intended to John Benedict was erroneously typed by your secretary to Joel Benjamin and vice versa; that to correct the said mistake, a Deed of Exchange was executed; that this exchange transaction has no monetary consideration because no gain or loss shall redound to any party as the two (2) parcel of land covered by this exchange are of the same area and adjacent to each other; and the sole purpose of this deed of exchange of real estate property without monetary consideration is to set the records straight and correct an honest mistake. 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 for the purpose of correcting the mistake above-described, the exchange of realties by John Benedict and Joel Benjamin is not subject to the capital gains tax imposed under Section 24 (D) (1) of the Tax Code of 1997. cADaIH Moreover, the said swapping 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 of Exchange is subject to the documentary stamp tax of P15.00 only pursuant to Section 188 of the said Code. (DA-060-2004 dated Feb. 10, 2004) 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. HATICc Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service