Request to Pay the Documentary Stamp Tax on the Transfer of Real Properties Involved in Tax-Deferred Exchanges

January 7, 1992 BIR RULING NO. 004-92 196 000-00 004-92 San Miguel Corporation 40 San Miguel Ave., Mandaluyong, Metro Manila Attention: Mr . Leoncio S . Cao Asst . Vice-President Gentlemen : This refers to your letter dated November 18, 1991 stating that the San Miguel Corporation (SMC), a domestic corporation engaged in manufacturing, has spun-off its Magnolia and Feeds & Livestock Division into wholly-owned subsidiaries known as Magnolia Corporation (MC) and San Miguel Foods, Inc. (SMFI) respectively; that the reorganization involves the transfer or exchange of properties of SMC with shares of stock of the subsidiaries, a tax-free exchange under Sec. 34(c)(2) of the Tax Code and confirmed in BIR Rulings Nos. 216-91 dated October 28, 1991 and 222-91 dated October 31, 1991 respectively, that in the transfer of real properties, SMC anticipates serious difficulties in complying with existing BIR issuances requiring the purchase of documentary stamps from the Revenue District Office having jurisdiction over the locality where the real property sold/transferred is located at the time of the execution or signing of the transfer documents by the parties and not at the time of notarization; that considering that the real properties of SMC to be transferred to the subsidiaries are located in different cities scattered all throughout the Philippines, it would be very difficult not to say physically impossible to effect purchase of DST thru the various RDO's where the real properties are located at the time of deeds of transfer are signed/executed. In connection therewith, you are requesting that SMC be authorized to pay the DST on the transfer of real properties involved in the aforementioned tax-deferred exchanges with the RDO of Mandaluyong (RDO No. 31) where its principal office is located within five (5) days from the execution and/or signing of the transfer documents. In reply thereto, I have the honor to inform you that the stamp tax on instrument of sale or conveyance of real property shall be paid through the Revenue District Office having jurisdiction over the locality where the real property sold/disposed is located (par. 3(3.1), RMC 44-86). Moreover, payment of the documentary stamp tax is effected by the purchase, affixture and subsequent cancellation of documentary stamps (or notation of payment of documentary stamp tax with denomination of P10.00 or more) on the documents at the time such act is done or transaction had, meaning in the date of execution or signing of the document by the parties thereto, and not at the time of its notarization (RMC 57-91). Furthermore, since as represented the real properties of SMC to be transferred to the subsidiaries are located in different cities scattered all throughout the Philippines, that it would be very difficult not to say physically impossible to effect purchase of DST through the various RDO's where the real property are located, your request that you be authorized to pay the DST on the transfer of the real properties involved in the aforementioned tax-deferred exchanges with the RDO of Mandaluyong (RDO No. 31) where your principal office is located is hereby granted. However, your request that the payment of the documentary stamp tax on the documents to be effected within five (5) days from the execution and/or signing of the instrument of transfer is denied for lack of legal basis. Very truly yours, (SGD.) JOSE U. ONG Commissioner of Internal Revenue