BIR Ruling [UN-127-95]

March 31, 1995 BIR RULING [UN-127-95] Ms. Ester G. Cruz 55 Tangali, Quezon City M a d a m : This refers to your letter dated February 16, 1995 seeking exemption from the payment of capital gains tax and documentary stamp tax on the swap of lots which you and your brother, Ricardo Guison have effected. It is represented that lot 14-C and 14-B of subdivision plan in Lot 14, Block 380, located at Barangay San Jose, Quezon City with an area of 183.64 square meters and 183.62 square meters are owned by Ester Guison Cruz and Ricardo Guison, respectively; that the parties discovered that there was a mistake in the designation of the lots; that to rectify the same, the parties executed a Deed of Exchange; that in securing a tax clearance, you were required to pay the total sum of P72,821.75 representing the capital gains tax and documentary stamp tax; that you consider the amount too onerous considering that the lots are almost of equal measure; and that there was no sale involved in said transfer as there was no consideration or gain realized by the parties. In reply, please be informed that since the exchange transaction is without any monetary consideration and considering further that the execution of the same is merely to correct the mistake in the designation of the lots in question, this Office is of the opinion as it hereby holds that the aforementioned exchange of realties covering TCT No. RT-69518 and TCT No. RT-102872 between Ester G. Cruz and Ricardo Guison is not subject to the capital gains tax imposed under Section 21(e) of the Tax Code nor to the creditable withholding tax imposed under Revenue Regulations No. 1-90 implementing Section 50(b) of the Tax Code, as amended. Furthermore, the said Deed of Exchange is not likewise subject to the documentary stamp tax imposed under Section 196 of the Tax Code, as amended. However, the said deed shall be subject to the P3.00 (now P10.00) documentary stamp tax imposed under Section 188 of the same code. (BIR Ruling No. 027-93 dated January 15, 1993) cdt Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service) By: ALICIA L. TOMACRUZ Head Rev. Executive Assistant (Legal Service)