BIR Ruling

June 1, 1970 Atty. Crispin Llamado 20 Victory Avenue Quezon City S i r : This is with reference to your letter dated March 28, 1970 requesting opinion as to the amount of documentary and science stamp taxes to be paid on the conveyance of real property (consisting of land and improvements thereon which has been converted into a memorial park cemetery known as Evergreen Memorial Garden and related facilities therein), pursuant to a Deed of Absolute Sale with Assumption of Mortgage entered into by and between Financing House, Inc., as Vendor, and the Group Developers and Financiers, Inc. as Vendee on December 26, 1969. It appears in the deed of sale that the property was sold for a consideration in the total sum of P4,263,556.85. Included as part of the said total consideration is the assumption by the Vendee of certain loans and other obligations contracted by the Vendor with third parties. One of these obligation is the overdraft line contracted by the Vendor with the Philippine Bank of Communication in the amount of P1,500,000.00. To guarantee the payment of this overdraft line, a first mortgage was constituted on the parcels of land subject matter of this conveyance. There is no other encumbrance on the said land, except the said overdraft line of P500,000.00. It appears further that the total consideration includes the sale of furniture, equipment and tools related to interment of human bodies with a total value of P26,173.22. In reply, I have the honor to inform you that, in accordance with Section 233 of the Tax Code, the documentary stamp tax due on a deed of conveyance of real estate is based on the consideration or value received or contracted to be paid for the realty, after making proper allowance for any encumbrances thereon. In the instant case, therefore, the incumbrance on the land amounting to P1,500,000.00 should be deducted from the total consideration of P4,263,556.85. Furthermore, the amount of P26,175.22 representing the value of the personal properties which is also included in the consideration, is not subject to the documentary and science stamp taxes, because Section 233 of the Tax Code imposes documentary stamp tax only on sales of real properties and real rights on properties. Accordingly, after deducting the said sum of P26,175.22 from the total consideration, there is a net difference amounting to P2,737,381.63 which shall be the basis of the documentary and science stamp taxes due on the deed of conveyance in question. cdti Pursuant to Section 233 of the Tax Code, the amount of documentary stamp tax, for the first P1,000.00, is P0.75 plus P3.00 for each additional P1,000.00, or fractional part thereof in excess of P1,000.00 of such consideration. Such being the case, the documentary stamp tax due on the said sum of P2,737,381.63 amounts to P8,211.75. Added to this amount is a 100% science stamp tax, thereby making a total of P16,423.50 representing the documentary and science stamp taxes on the deed of conveyance in question. Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue