BIR Ruling [DA-231-01]

November 07, 2001 BIR RULING [DA-231-01] Sec. 176 Unnumbered Ruling Dated May 11, 1973 MCCI Corporation 2/F Salamin Building 197 Salcedo St., Legaspi Village Makati City Attention: Mr. Florando P. Pableo Accounting Supervisor Gentlemen : This refers to your letter dated May 24, 201 stating that one of your stockholders died without leaving a will for the disposition of his shares of stock in your company; that an extrajudicial settlement of his estate was made and the corresponding estate and documentary stamp taxes were paid; that your company issued new certificates of stock to the heirs replacing the original certificates of stock. In view of the foregoing, you are requesting, in effect, for a ruling on the following questions: 1. Is the issuance of new stock certificates to the heirs of a stockholder subject to documentary stamp tax considering that it is only doe to replace the certificates of stock in the name of the decedent? If yes, what is the rate? 2. What other taxes are due on the transaction, if any? Who will pay for the tax? In reply, please be informed as follows: 1. Pursuant to an unnumbered Ruling Issued on May 11, 1973 to the Philippine Bank of Communication, the transfer of certificates of stock by operation of laws as in the case of intestate succession is not subject to the documentary stamp tax imposed in Section 213 of the Tax Code (now Section 176 of the Tax Code of 1997). Such being the case, the issuance of new certificates of stock to the heirs of a stockholder-decedent in order to replace the certificates of stock in the name of the latter is subject to the documentary stamp tax imposed under Section 176 of the Tax Code of 1997. 2. In the issuance of new certificates of stock in favor of the heirs, as a consequence of the distribution of the estate of the decedent and as replacement of the stock certificates owned by the latter, the heirs are required to submit a Tax Clearance Certificate (TCL) to the Corporate Secretary as proof of payment of the estate tax. Unless said certificate is submitted to the Corporate Secretary, there shall be no issuance of new certificates of stock in favor of the heirs. (Sec. 97 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, Commissioner of Internal Revenue By: (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner Legal and Inspection Group