Request for Exemption of the Philippine Plaza Holdings, Inc. (PPHI) from the Payment of Documentary Stamp Tax on Its Original Issuance of Certificates of Stock

January 29, 1991 BIR RULING NO. 013-91 175 000-00 013-91 Gentlemen : This refers to your letter dated August 29, 1990 which was referred to this Office by the Assistant Secretary, Revenue Operations Group, Department of Finance, under 1st Endorsement dated September 10, 1990, relative to your request for exemption of the Philippine Plaza Holdings, Inc. (PPHI) from the payment of documentary stamp tax on its original issuance of certificates of stock. It is represented that in connection with the scheduled privatization of Philippine Plaza Hotel, the GSIS formed PPHI which is a 100% subsidiary corporation; that during the public bidding, GSIS will sell all of its shares in PPHI; and that the par value of shares to be issued to GSIS or its nominees is P800M. It is your contention that under Section 32 of its charter, P.D. No. 1146, GSIS is exempt from all taxes, assessments, fees, charges or duties of all kinds; and that considering that PPHI is 100% wholly-owned by GSIS, you now request that PPHI be exempt from the payment of documentary stamp tax. In reply, please be informed that your request for exemption of PPHI can not be granted for lack of legal basis. Although PPHI is a subsidiary corporation, it has a personality separate and distinct from that of the GSIS. To broaden the scope of the tax exemption privilege of GSIS to include those of its subsidiaries is contrary to the well-settled principle that tax exemptions are construed strictissimi juris against the person or entity claiming exemption. Accordingly, we maintain that on its original issuance of certificates of stock, PPHI is subject to the documentary stamp tax imposed by Section 175 of the Tax Code, as amended. Very truly yours, (SGD.) JOSE U. ONG Commissioner