BIR Ruling [UN-227-95]

June 22, 1995 BIR RULING [UN-227-95] Cityland Development Corporation Cityland Condominium 10 Tower I 2nd/3rd Floor, 6815 Ayala Avenue Makati, Metro Manila Attention: Ma . Emma G . Julareal Senior Manager Legal Department Gentlemen : This refers to your letter dated 14 March 1995 stating that on 16 March 1992, you executed a Deed of Absolute Sale in favor of Erlinda M. Maalac for the purchase of Cityland Condominium 10 Units 508 and Parking Lot No. 46; that upon use of the parking slot, it was discovered that it was hard to park the car due to the existence of the wall on the left side of the parking lot, hence, Erlinda M. Maalac requested for the change of parking slot which will make parking easier and more convenient; that Cityland therefore changed her Parking Lot No. 46 to Parking Lot No. 93 with a better location and a Deed of Exchange was then executed to document the change; and that there was no consideration involved and the parties did not gain from such exchange. cd Based on the foregoing representations, you are now requesting for a ruling that the said exchange is not subject to capital gains tax/withholding tax, because while there was swapping or exchange of real properties, no consideration was involved and the parties were subject to neither gain nor loss resulting from such exchange; and that the Deed of Exchange is subject to documentary stamp tax under Section 188 of the Tax Code. In reply, please be informed that since in the instant case there is no actual sale, exchange or disposition of real property, but a mere changing of parking lot No. 46 to parking lot no. 93, coupled with the fact that there was no consideration involved in the said change, this Office is of the opinion as it hereby holds that the Deed of Exchange executed by and between Cityland Development Corporation and Erlinda M. Maalac whereby the former exchanged parking lot No. 93 for the latter's parking lot No. 46 is not subject to the capital gains tax imposed under Section 21(e) of the Tax Code, as amended and to the creditable withholding tax prescribed under Revenue Regulations No. 6-05 as amended by Revenue Regulations Nos. 12-94 implementing Section 50(b) of the Tax Code, as amended. Moreover, the said Deed of Exchange executed for the purpose is not likewise subject to the documentary stamp tax imposed under Section 196 of the Tax code, as amended. However, the notarial acknowledgment is subject to the documentary stamp tax of P10.00 under Section No. 188 of the Tax Code, as amended by Republic Act No. 7660. 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. (BIR Rulings No. 355-92 dated December 16, 1992) Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)