An Ordinance Amending Article G, Section 3 of the Municipal Ordinance No. 03, Series of 2020 Otherwise Known as "Updated Local Revenue Code of 2020"

October 25, 2006 BIR RULING [DA-631-06] Sec. 24 (D) (1); DA-173-03 Spouses Saladin and Rhodie Teo Iba St., San Isidro Labrador La Loma, Quezon City and Spouses Alejandro and Estrella Gloria Almira No. 2 Tocs Ave., Summerville Subdivision Mayamot, Antipolo City Gentlemen : This refers to your letter dated October 4, 2006 requesting that the Deed of Exchange of real properties made to correct error in the titling of said properties be exempt from the payment of the capital gains and documentary stamp taxes. The facts as represented are as follows: On October 2, 2006 a Deed of Exchange of Properties to Correct Inadvertence was executed by and between Saladin S. Teo, married to Rhodie Teo, and Anacleta Sevilla Tobias, married to Isidro Tobias, represented by their Attorney-in-fact, Alejandro E. Almira and Estrella Gloria T. Almira, by virtue of a Special Power of Attorney executed on July 31, 2006 in their favor, the pertinent portions of which state as follows: "WHEREAS, the FIRST PARTY is the registered owner of a parcel of land, with improvements thereon, situated in Iba St., San Isidro Labrador, Quezon City, covered by TCT No. 359436 of the Registry of Deeds of Quezon City and known as Lot 20-A, Blk. 65, Psd-334573 with an area of 80 sq. m., more or less; WHEREAS, the SECOND PARTY is the registered owner of a parcel of land situated in Iba St., San Isidro Labrador, Quezon City, covered by TCT No. RT-21277 (358093) of the Registry of Deeds of Quezon City and known as Lot 20-C, Blk. 65, Psd-334573 with an area of 80 sq. m., more or less; WHEREAS, the technical description of the land registered in the name of the FIRST PARTY, covered by TCT No. 359436, described the lot occupied by the SECOND PARTY; Likewise, the technical description of the land registered in the name of the SECOND PARTY, covered by TCT No. RT-21277 (358093), described the lot occupied by the FIRST PARTY; WHEREAS, the above inadvertence in the titling of the subject properties, of which both parties had purchased from one and the same developer, was discovered only when one of the parties was going to mortgaged their property to a bank, who in turn noticed the discrepancies in the titles; WHEREAS, to correct the said inadvertence in the titling of the subject properties, herein parties mutually agreed to exchange titles over the properties for it will be physically impossible to transfer the improvements they have respectively introduced in the lots; NOW, THEREFORE, for and in consideration of the foregoing premises, the FIRST PARTY hereby transfers and conveys unto the SECOND PARTY, their successors-in-interest and assigns, the title to his above property, free from all liens and encumbrances. Likewise, the SECOND PARTY hereby transfers and convey unto the FIRST PARTY, his successors-in-interest and assigns, the title to their above property, free from all liens and encumbrances. The improvements found in their respective lots will not be included in this act and deed." In support of your request you submitted photocopies of the following documents, viz: 1. Deed of Exchange of Properties to Correct Inadvertence; 2. Corresponding TCTs; and 3. Corresponding Tax Declarations; In reply, please be informed that since the above exchange transaction is without 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 Sps. Saladin and Rhodie Teo and Sps. Isidro and Anacleta Tobias is not subject to the capital gains tax, imposed under Section 24(D)(1) of the Tax Code of 1997, as amended, and the documentary stamp tax prescribed under Section 196 of the same Code. (BIR Ruling No. DA-173-03 dated June 3, 2003 citing BIR Ruling No. 469-93 dated December 1, 1993) However, the acknowledgment to the said deed of exchange is subject to the documentary stamp tax of P15.00 on certification pursuant to Section 188 of the Tax Code of 1997. 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. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service