Mr. Alvin R. de Leon

March 30, 2009 BIR RULING [DA-(I-011) 174-09] 24 (D) (1); 196; DA-173-03 Mr. Alvin R. de Leon 27 Appaloosa St., Rancho IV West Concepcion II, Marikina City Sir : This refers to your letter dated March 2, 2009 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. aSDCIE Documents submitted disclosed that you and your spouse, Mercedita de Leon, are the registered owners of a parcel of land with existing improvements found thereon, situated in Bayanbayanan, Marikina, with an area of sixty-three (63) square meters, covered and embraced by Transfer Certificate of Title (TCT) No. 421044 of the Registry of Deeds of Marikina, with the description as Lot 3, Block M, of the subdivision plan, Psd-13-005825; that on the other hand, Elvira Tara is the registered owner of the adjacent parcel of land of the above-mentioned property, having the same size, covered by TCT No. 429659, and with the description as Lot 5, Block M, of the subdivision plan, Psd-13-005825; that when you and your spouse applied for a bank loan, your above property was appraised; that you were informed by the bank that in the appraisal report it appeared that the property titled in your and your spouse's names is the property being occupied by Elvira Tara and that the property where you built your house is the one belonging to her; that this error was brought about in the titling of the subject properties; that to correct this mistake, you and your spouse, Mercedita de Leon, agreed to exchange the above property registered in your names with that of the property registered in the name of Elvira Tara, hence, the execution of the Deed of Exchange dated March 2, 2009; and that said Deed of Exchange was executed without any monetary consideration. In support of your request you submitted photocopies of the following documents, viz. : 1) Deed of Exchange of real properties dated March 2, 2009; 2) TCT Nos. 421044 and 429659, both of the Registry of Deeds of Marikina; 3) Corresponding Tax Declarations; and 4) Appraisal Report. 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 your spouse, Mercedita de Leon, and Elvira Tara, 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) STcHEI 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. 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