Gloria Diaz

February 26, 2009 BIR RULING [DA-(I-005) 123-09] 24 (D) (1); DA-(I-002) 011-08 Gloria Diaz Lolomboy, Bocaue, Bulacan Lucila Libiran Pulong Gubat, Balagtas, Bulacan Mesdames : This refers to your undated letter 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. CAaSHI The facts of the case are as follows: Gloria Diaz ("First Party") is the registered owner of a parcel of land situated at Borol 1st, Balagtas, Bulacan, with an area of 240 square meters and covered by Transfer Certificate of Title (TCT) No. T-377826 (M), (hereinafter referred to as "Lot 9 Blk. 4"). Lucila Libiran, ("Second Party") on the other hand, is the registered owner of a parcel of land situated at Borol 1st, Balagtas, Bulacan, with an area of 240 square meters and covered by Transfer Certificate of Title (TCT) No. T-266518, (hereinafter referred to as "Lot 7 Blk. 4"). The First Party mistakenly occupied, built her house in real property of the Second Party, as described above, and they now came to a voluntary agreement by and between themselves to exchange their respective properties. A Deed of Exchange was executed on December 04, 2008 by and between the First Party and the Second Party whereby the former voluntarily exchanged with the latter the first property above-described and likewise the latter voluntarily exchanged with the former the second property above-described. 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 and between Gloria Diaz and Lucila Libiran is not subject to the 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 properties 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. (BIR Ruling DA-S-20-035-2008 dated May 29, 2008) EcaDCI 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