BIR Ruling [DA-637-06]

October 27, 2006 BIR RULING [DA-637-06] Sec. 24 (D) (1); DA-173-03 Judge Francisco C. Rodriguez, Jr . Regional Trial Court, Branch 77 San Mateo, Rizal S i r : This refers to your letter dated March 29, 2006 requesting that the Deed of Exchange executed to correct errors in the titling of real properties be exempted from the payment of the capital gains and documentary stamp taxes. It is represented that you and Spouses Ignacio and Cresencia Zuiga were co-owners of a parcel of land covered by Transfer Certificate of Title No. N-50780/T-253; that the said real property was equally divided between you and the above spouses and the resulting lots are Lot 2-A of the subdivision plan (L.R.A.) Psd-352077 and Lot 2-B, Psd-352077; that the two lots were registered in your respective names dissolving in effect the co-ownership; that Lot 2-B was registered in your name covered by TCT No. 249947 and Lot 2-A was registered in the name of Spouses Zuiga covered by TCT No. 249946, both of the Registry of Deeds of Marikina City; that after the subdivision, the geodetic engineers requested you and the spouses to visit the actual site; that it was only then that you discovered that the geodetic engineers committed an error in designating the lots that should belong to you and the spouses, respectively; and that to correct the said mistake you and Spouses Zuiga agreed to swap the above lots such that Lot 2-B will now belong to the spouses and Lot 2-A will belong to you, as originally intended. In support of your request you submitted photocopies of the following documents, viz: 1. Deed of Exchange of Real Properties; 2. Corresponding TCTs; 3. Corresponding Tax Declarations; and 4. Vicinity Map. TcDIEH 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 Ignacio and Cresencia Zuiga, 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 imposed 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, as amended. 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.) GREGORIO V. CABANTAC Deputy Commissioner