BIR Ruling [UN-419-95]

1995 BIR RULING [UN-419-95] City-Land Development Corporation CityLand Condominium 10 Tower I, 2nd/3rd Floor 6815 Ayala Ave., 1200 Makati City Attention: Atty . Emma G . Jularbal AVP-Legal Gentlemen : This refers to your letter dated October 4, 1995 stating that on June 24, 1992, you executed a Deed of Absolute Sale in favor of Violeta Pascua for the purchase of Cityland Condominium 10 Units 1408 and 1110 and Parking Lot Nos. 205 and 206; that upon use of the parking lot, Violeta Pascua discovered that it was hard to park her car due to the existence of a concrete post on the rear side of the parking lot; that as a consequence, she requested for a change of parking lot which will make parking easier and more convenient; that acting on the said request, you changed her Parking Lot Nos. 205 and 206 to Parking Lot Nos. 222 and 223 which is better located by executing a Deed of Exchange to effect such change; and that there was no consideration involved nor any gain was derived from such exchange. cdta Based on the foregoing representations, you are now requesting for a ruling that the said exchange is not subject to capital gains tax, because while there was swapping or exchange of real properties, no consideration was involved nor did the parties derive any gain resulting from such exchange; and that the Deed of Exchange is subject to documentary stamp tax under Section 188 of the Tax Code, as amended. 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 Nos. 205 and 206 to parking lot Nos. 222 and 223, 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 Violeta Pascua whereby the former exchanged parking lot Nos. 222 and 223 for the latter's parking lot Nos. 205 and 206 is not subject to the capital gains tax imposed under Section 21(e) of the Tax Code, as amended and, consequently to the creditable withholding tax prescribed under Revenue Regulations No. 6-85 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 188 of the Tax Code, as amended by Republic Act No. 7660. (BIR Ruling No. 355-92 dated December 16, 1992) 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. cdtech Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)