Mr. Ramil Marticio

March 5, 2009 BIR RULING [DA-(I-008) 136-09] 24 (D) (1); 196; DA-173-03 Mr. Ramil Marticio Authorized Representative 215 Masinop St., Tawiran Ext. Santolan, Pasig City Sir : This refers to your letter dated December 22, 2008 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. aEDCSI The facts as represented are as follows: On December 12, 2008, a Deed of Absolute Sale was executed by Mauricio Trinidad whereby he transferred his ownership over a parcel of land covered by Transfer Certificate of Title (TCT) No. N-99702 of the Registry of Deeds of Antipolo City, located at Mambugan, Antipolo City, to Rachel M. Sanchez. However, upon processing the transfer of title of the above subject property, it was found out that the property registered under the name of Mauricio Trinidad and bought by Rachel Sanchez, is actually titled in the name of Carmen Ramnani. Survey conducted showed that Carmen Ramnani mistakenly constructed her house in the lot of Mauricio Trinidad. This fact was verified only after Mauricio has sold already his supposed lot to Rachel and when Rachel had it surveyed. In order to correct the foregoing mistake or inadvertence, Rachel Sanchez, as the buyer/successor-in-interest over the parcel of land owned by Mauricio Trinidad, deemed it right to execute a deed whereby she and Carmen Ramnani will swap their respective properties. Hence, the execution of a Deed of Exchange of Real Property whereby it is stated therein that Rachel and Carmen swapped their respective properties by transferring the title of the property described in the title held by Carmen to Rachel, and vice versa . The said exchange is made without any monetary consideration. In support of your request you submitted photocopies of the following documents, viz .: 1) Deed of Exchange of Real Properties by and between Rachel Sanchez and Carmen Ramnani; 2) TCT Nos. N-99702 and 379110, both of the Registry of Deeds of Marikina; 3) Corresponding Tax Declarations; 4) Deed of Absolute Sale by and between Mauricio Trinidad and Rachel Sanchez; and 5) Other pertinent documents. 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 by and between Rachel Sanchez and Carmen Ramnani, 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 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. ACDTcE 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