BIR Ruling No. 491-12

July 30, 2012 BIR RULING NO. 491-12 Section 24 (D) (1) NIRC Rebecca P. Concepcion 1709 Bishop St., Brookside Hills Cainta, Rizal Ma'am : This refers to your letter dated November 09, 2009, requesting on behalf of the Heirs of Alexander C. Concepcion and Mindasol C. Belen, exemption from the payment of capital gains tax (CGT) as well as documentary stamp tax (DST) on their swapping of real properties to correct a mistake and without any consideration. Documents submitted show that Alexander C. Concepcion and Mindasol C. Belen, among others, are co-heirs to two parcels of land covered by Original Certificate of Title (OCT) No. (1809) B-230, issued in the name of the late Bernardino Concepcion, and OCT No. (P-10646) P-3033, issued in the name of the late Juan Concepcion; that Alexander C. Concepcion and Mindasol C. Belen, together with their co-heirs, agreed to consolidate the two lots and subdivided them into nine lots (Lots 1 to 9); that pursuant to a Consolidation and Subdivision Plan approved by the heirs, Lot 1 was allotted to Alexander C. Concepcion, while lot 3 was allocated to Mindasol C. Belen; that however, when the corresponding Transfer Certificates of Title (TCT) was finally released to them, it was found out that Lot 1 assigned to Alexander C. Concepcion was registered in the name of Mindasol C. Belen, while Lot 3, which was set aside for Mindasol C. Belen, was registered in the name of Alexander C. Concepcion; and that to rectify the mistake through the fault not of their own making, a Deed of Exchange was executed by and between the heirs of Alexander C. Concepcion and Mindasol C. Belen without any consideration involved. IECcAT In reply, please be informed that the Deed of Exchange to Correct Error executed by the Heirs of the Late Alexander C. Concepcion and Mindasol C. Belen in March 2009 states that the error which they intend to correct is that "Lot 3 (consisting of 30,261 sq.m.) of the Consolidation and Subdivision Plan was drawn as Lot 1 and should be in the name of the FIRST PARTY (the Heirs of the Late Alexander C. Concepcion), while Lot 1 (consisting of 33,830 sq. m.) of the same plan was drawn as Lot 3 and should be in the name of the SECOND PARTY (Mindasol C. Belen)." Further review, however, of the aforesaid Plan reveals no error or mistake because Lot 3 still consists of 30,261 sq. m., which, as shown in the Deed of Exchange, belongs to Mindasol C. Belen, as in fact, she was issued TCT No. T-255816 for the said lot. The same is true as regards Lot 1, the area of which remains 33,830 square meters, which, per Deed of Exchange, belongs to Alexander C. Concepcion as in fact title thereto was already issued to him (TCT No. T-255814). Also, there is no prior agreement between the parties ( i.e. , prior to the approval of the Plan in 2008) that Lot 1 should be in the name of Mindasol C. Belen and Lot 3 in the name of Alexander Concepcion. The Deed of Exchange, wherein the supposed error in the Plan was alleged, was only executed in 2009, or after the approval of the Plan. Thus, the alleged error, if any, is just a mere afterthought and a self-serving assertion by the parties. In view of the foregoing, this Office hereby denies your request for exemption from the payment of CGT and DST. Please be guided accordingly. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue