BIR Ruling

July 10, 1970 Mr. G. Garcia P. O. Box 1870 Manila S i r : This is with reference to your letter dated May 12, 1970 containing observations and suggestions regarding the payment of documentary and science stamp taxes on the registration of sales of real property. In the letter, you stated the following: "On several occasions I had registered sales of property entailing the use of hundreds of pesos in documentary and 'science' stamps. As in Quezon City stamps are hard to procure because the Registry of Property in so far away from where Internal Revenue officers could have stationed themselves to sell these stamps, the usual thing being done is that said stamps, even in denominations of P100, are procured from Registry of Deeds employees who, unwittingly, could be selling privately printed stamps. Considering that in the registration of property in the Philippines sale of such stamps could amount to several hundred thousands, or even millions, in a year the thought that stamps being peddled have been privately printed would be quite disturbing. If bogus twenty peso bills are so hard to detect even by those who ordinarily use them, how can ordinary persons who rarely use them know the difference between a bogus P100 documentary or 'science' stamp from a real one? After the affixture of these stamps on the documents, they are punctured with holes beyond recognition how then can it be discovered that fake stamps have been used? cdta "To curtail or minimize the urge to privately print these stamps, which must be good business, may it be suggested that in cases of sales of real property the use of such stamps be done away with and their value be collected in the same official receipt wherein the registration fee is collected?" In reply thereto, I regret to inform you that although your suggestion as regards the payment of the stamp taxes may seem to be meritorious, the same cannot be adopted for lack of legal basis. Under Section 237 of the Tax Code, documentary stamp taxes, shall be paid by the purchase and affixture of stamps to the document or instrument taxed and by the subsequent cancellation of the same. The law further provides that, in appropriate case, and in the discretion of the Commissioner of Internal Revenue, the stamps may be imprinted on certain documents upon payment of the face value of the stamp, in which case, the imprinted stamp need not be cancelled. Science stamp taxes are also paid in the same manner as the documentary stamp tax. (Republic Act No. 5448.) Unless the law is changed, this manner of payment of the stamp taxes should be followed. In this connection, please be informed that this Office has already taken the necessary steps to minimize, if not altogether, stop the use of fake documentary stamps. Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue