BIR Ruling [UN-186-94]

June 27, 1994 BIR RULING [UN-186-94] Fojas Ulep Listana & Associates Rm. 303 A & T Building 244 Escolta St., Manila Attention: Atty . Rodolfo P . Orticio Gentlemen : This refers to your letter dated August 16, 1993 stating that Tsang King King of Mabini St., San Pedro, Laguna is the registered owner of a parcel of land (Lot E) situated at (Landayan) Poblacion, San Pedro, Laguna with an area of 858 square meters and covered by Transfer Certificate of Title (TCT) No. 158515 of the Registry of Deeds for Calamba, Laguna, that Tsang Shan Shan, Tsang King King's sister, is likewise the registered owner of the adjacent lot, Lot D, with an area of 877 square meters, and covered by TCT No. 158514; that the Tsang sisters bought the said adjacent lots at the same time from their father, Chan Choan Juan; that through confusion, errors were inadvertently committed in the preparation of the corresponding deeds of sale, such that the property sold to Tsang King King, which should be Lot D, with an area of 877 square meters, then covered by TCT No. T-78830 was stated in the Deeds of Sale executed in her favor as Lot E, with an area of 858 square meters, then covered by TCT No. T-78331, and the Deed of Sale executed in favor of Tsang Shan Shan, which should be for Lot E, was inadvertently stated therein as Lot D; that pursuant to the said Deeds of Sale, the Tsang sisters have paid the corresponding capital gains and documentary stamp taxes; that after the perfection of said Deeds of Sale, up to the present, the Tsang sisters have taken possession of the lots actually pertaining to each of them, Lot D for Tsang King King and Lot E for Tsang Shan Shan; and that to correct the error, Tsang King King and Tsang Shan Shan have voluntarily agreed by and between themselves, without any monetary consideration to exchange the subject parcels of land inadvertently interchanged as to its registration, by virtue of the error committed in the preparation of the corresponding Deeds of Sale, in and to each of their respective names, as above-described. Based on the foregoing representation and documents submitted, you now request in effect exemption from the payment of the corresponding taxes due on said exchange transaction. In reply, please be informed that since the exchange transaction in question is without any monetary consideration and considering further that the execution of the deed of exchange is merely to correct the mistake resulting from the typographical error committed in the preparation of the sales documents, this Office is of the opinion as it hereby holds that the aforementioned exchange of realties covering TCT No. 158515 and TCT No. 158514 between Tsang King and Tsang Shan Shan is not subject to the capital gains tax, imposed under Section 21(e) of the Tax Code nor to creditable withholding tax imposed under Revenue Regulations No. 1-90. cdtech Furthermore, 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 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) Very truly yours, ALICIA P. CLEMENO Acting Assistant Commissioner Legal Service