BIR Ruling [UN-109-95]

March 16, 1995 BIR RULING [UN-109-95] Dr. Genaro B. Valencia, Jr. No. 29 (First Block), Barangay City Heights, General Santos City S i r : This refers to your letter dated February 15, 1995 stating that on June 28, 1979, you and your spouse, Mrs. Resurreccion C. Valencia bought a parcel of land located along Capareda St., Lagao, General Santos City from Mrs. Rosalina B. Nicolas; that at the time of the sale, Mrs. Rosalinda B. Nicolas told you that the land she pointed and showed to you was Lot 39, Pls-209-D-10; that in the Deed of Absolute Sale executed by Mrs. Rosalinda B. Nicolas, the land sold to you was denominated as Lot 39, Pls-209-D-10; that based on said Deed of Absolute Sale, TCT No. T-33658 covering Lot 39, Pls-209-D-10 was issued to you by the Register of Deeds of General Santos City; that recently, you were informed that due to confusion arising from Mrs. Rosalinda B. Nicolas substantial real property holdings, Mrs. Rosalinda B. Nicolas erred in describing your land as Lot 39 Pls-209-D-10; that your lot is actually Lot 50, Pls-209-D-10 and covered by TCT No. T-29248 registered likewise in the name of Mrs. Rosalina B. Nicolas; that to solve the problem, you entered into a Deed of Exchange with Mrs. Rosalina B. Nicolas on January 18, 1995 in which you transferred to Mrs. Rosalina B. Nicolas TCT No. T-33658 covering Lot 39, Pls 209-D-10 in consideration of her transfer to you of TCT No. T-29248 covering Lot 50, Pls-209-D-10 which you are actually occupying and have introduced permanent of the substantial improvement on said lot; that the objective of the exchange is to enable you to become the registered owner of Lot 50, Pls-209-D-10 which you have been occupying and for Mrs. Rosalina B. Nicolas to become the registered owner of Lot 39, Pls-209-D-10 of which she continues to be the owner, and that the Deed of Exchange has no monetary consideration. In connection therewith, you are requesting confirmation of your opinion to the effect that the aforementioned exchange of Lot 39, Pls-209-D-10 (TCT No. T-33658) and Lot 50, Pls, 209-D-10, (TCT No. T-29248) along Capareda Street, Lagao, General Santos City between Mrs. Rosalina B. Nicolas and yourself, being without monetary consideration, is exempt from capital gains tax and other taxes, fees or charges. cdtech In reply thereto, please be informed that since the exchange transaction is without any monetary consideration and the execution of the Deed of Exchange is merely to correct an honest mistake committed by Mrs. Rosalina B. Nicolas, this Office is of the opinion as it hereby holds that the aforementioned exchange of realties that is Lot 39 Pls-209-D-10 covered by TCT No. T-33658 and Lot 50, Pls-209-D-10 covered by TCT No. T-29248 between you and Mrs. Rosalina B. Nicolas on January 18, 1995 is not subject to the capital gains tax imposed under Section 21(e) of the Tax Code, as amended nor to the creditable withholding tax imposed under Revenue Regulations No. 12-94. Moreover, it is not likewise subject to the documentary stamp tax imposed under Section 196 of the Tax Code. However, the said deed shall be subject to the P10.00 documentary stamp tax imposed under Section 188 of the same code (BIR Ruling No. 027-93 dated January 15, 1993). 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, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)