BIR Ruling [DA-656-06]

November 7, 2006 BIR RULING [DA-656-06] 24 (D) (1); 196; DA-096-03 Mr. David T. Harvey Presiding Elder Bible School of the Air Apostolate, Inc. Resources for Biblical Communications Apostolate, Inc. 332 P. Guevarra St., San Juan, Metro Manila S i r : This refers to your letter dated October 6, 2006 requesting for exemption from the payment of capital gains tax and documentary stamp tax on the swapping of real properties to correct a mistake and without consideration. It appears that a donation of a parcel of land was made by Christian Missions in the Philippines, Inc. to the Presiding Elder of the Resources for Biblical Communications Apostolate, Inc. and the Presiding Elder of the Bible School of the Air Apostolate, Inc.; that said donation was given an exemption from payment of donor's tax under BIR Ruling No. DA-341-2006 dated May 26, 2006; that during the turn over of the donated land to both donees, a mistake was made that resulted to a wrong property assigned to each of them; that it was only discovered when the Transfer Certificates of Title were issued to both corporation that you noticed a mistake; that Lot 2-C (TCT-12672-R) should have been to the Presiding Elder of the Resources for Biblical Communications Apostolate Inc. and Lot 2-A (TCT-12670-R) should have been issued to The Presiding Elder of the Bible School of the Air Apostolate, Inc.; that both properties are exactly of the same size and value but have different layouts; that since plans have already been drawn up for a new building on Lot 2-C, for the Presiding Elder of the Resources for Biblical Communications Apostolate Inc., and recognizing the importance of having the right properties registered in the correct name of the two ministries, a Deed of Exchange was made on October 05, 2006 in order to correct the mistake committed by sheer oversight and inadvertence by simply swapping their respective titles to the properties without cost from either of them; and that in support of your request, you submitted copies of the Transfer Certificates of Title of the subject properties, Deed of Exchange and certificate of exemption from payment of donor's tax. In reply, please be informed that since the exchange transaction is without 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 realty by and between Presiding Elder of the Resources for Biblical Communications Apostolate, Inc. and the Presiding Elder of the Bible School of the Air Apostolate, Inc. is not subject to capital gains tax imposed under Section 24(D)(1) of the Tax Code of 1997, as amended, nor to the withholding tax imposed under Revenue Regulations No. 2-98, as amended. Furthermore, the said swapping of real property is not likewise subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997, as amended. However, the notarial acknowledgment of the said deed is subject to the documentary stamp tax of P15.00 only pursuant to Section 188 of the Tax Code of 1997, as amended. EACIaT 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