Mr. Jose Nilo D. Mayor

April 20, 2009 BIR RULING [DA-(I-013) 199-09] 24 (D) (1); 196; 188; DA-282-97; UN-020-98 Mr. Jose Nilo D. Mayor No. 13 A. Gamban Street Pasay City Sir : This refers to your letter dated June 6, 2007, requesting for exemption from capital gains tax and documentary stamp tax on the swapping of real properties. TEAcCD It is represented that that a Deed of Exchange and an attached Explanation dated December 8, 2005 was executed by the parties namely Rafael de Guzman and Jose Nilo Mayor, et al.;that they agreed to exchange their properties, without monetary consideration; that the subject parcels of land with improvements situated in Barrio San Roque, Pasay City are covered by Transfer Certificate of Title Nos. 147155 and 111299 containing an area of 143 square meters and 168 square meters respectively; that an error was discovered only when a neighbor tried to sell their property where the required plotting of its land was made; that out of curiosity, you also had your property plotted by a geodetic engineer; that as a result you discovered that the specifications and measurement of your lot does not correspond to that stated in your title (TCT No. 111299) so you proceeded to the Assessor's Office and Register of Deeds to check the original TCT; that you discovered that the measurements correspond to TCT No. 147155 which belong to a certain Rafael de Guzman; that you sought the services of a professional surveyor/geodetic engineer to issue a certification to the effect that the lot under TCT No. 147155 issued at Pasay City is presently the domain of Jose Nilo Mayor and Lot No. 97 under TCT No. 111299 is presently the domain of Rafael de Guzman. 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 by Rafael de Guzman and Jose Nilo Mayor, et al. is merely to correct the mistake resulting from the designation of the lot owned by the developer, the same 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. AaSIET Furthermore, the said exchange of real properties is not likewise subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997. However, the notarial acknowledgement to the said deed is subject to the documentary stamp tax of P15.00 only pursuant to Section 188 of the Tax Code of 1997. (BIR Ruling No. DA 068-98 dated March 2, 1998) However, since the subject parcels of land are not of the same size, namely, Transfer Certificates of Title No. 147155 and 111299 containing an area of 143 square meters and 168 square meters respectively, the difference in the size shall be subject to the capital gains tax at the rate of 6% based on the gross selling price or the fair market value as determined in accordance with Section 6 (E) of this Code, whichever is higher and to the documentary stamp tax pursuant to Section 196 of the Tax Code of 1997, where a conveyance or deed whereby land is assigned or transferred to another is subject to documentary stamp tax based on the consideration contracted to be paid for such realty or on its fair market value or zonal value whichever is higher. (BIR Ruling No. 029-96 dated February 27, 1996, as reiterated in BIR Ruling No. DA-282-97 dated August 20, 1997) This ruling is issued on the basis of the foregoing representations. 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