BIR Ruling [UN-418-95]

November 27, 1995 BIR RULING [UN-418-95] Mr. Angel Fajardo Lot 5, Block 2, Green Valley Subdivision San Nicolas, Bacoor, Cavite S i r : This refers to your letter dated August 15, 1995 stating that you and your wife, Delma Bandagosa Fajardo are the owners of Lot 5, Block 2 of Subdivision Plan Psd-69355 located in Barrio San Nicolas, Bacoor, Cavite and covered by Transfer Certificate of Title (TCT) No. 223868; that the Spouses Serafin and Marilyn Espino are the owners of Lot 6, Block 2 of same Subdivision Plan Psd-69355 located in Bo. San Nicolas, Bacoor, Cavite and covered by TCT No. T-158385; that due to oversight, you and your wife constructed a house in Lot 6 and came to know about the mistake only recently when Lot 6 was surveyed at the instance of the Spouses Espino; that on June 27, 1995, a Deed of Exchange was executed by and between you and your wife and the Spouses Espino as the two (2) lots are of the same size and adjoining and in order to preserve the house which was built on Lot 6; and that the agreement requires that you and your wife retrieve the TCT of Lot 5 from the NHMFC/DBP now used as collateral to your housing loan so that it could be cancelled in favor of Spouses Espino while Lot 6 will also be cancelled in your favor. cdtech 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 a mistake, this Office is of the opinion as it hereby holds that the aforementioned exchange of realties between you and your wife and the Spouses Espino 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. Furthermore, it is not likewise subject to the documentary stamp tax imposed under Section 196 of the Tax Code. However, the notarial acknowledgment to the said deed is subject to the documentary stamp tax of P10.00 only pursuant to Section 188 of The Tax Code, as amended by Republic Act No 7660. (BIR Rulings No. 027-93 dated January 15, 1993). cdi Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)