Payment of Documentary Stamp Tax Involving a Transaction Expropriating a Private Property to the Government

December 26, 1991 BIR RULING NO. 273-91 173; 196; 199 000-00 273-91 Gentlemen : This refers to your letter dated October 2, 1991 stating that sometime in 1990, the National Government embarked on a road-widening project along A. Santos Avenue, Sucat, Paraaque, Metro Manila; that as a result, a portion of the property owned by Group Developers, Inc., owner of Loyola Memorial Park, was expropriated by Urban Road Project Office, the government agency in charge of the road widening project; and that a deed of sale covering the expropriated property was executed between Group Developers, Inc. as seller and Urban Road Project Office as buyer. The question posed by you is whether such transaction which is not a regular sale but an expropriation of private property for public use and wherein one of the contracting parties is the government is subject to the documentary stamp tax and if so, the one who is liable and when and where to pay the tax. In reply, please be informed that the fact that you were forced to sell, thru expropriation, a portion of your property to the government to enable the latter to use said land for public purpose, does not make the sale exempt from the documentary stamp tax imposed by Section 196 of the Tax Code. Your contention that Section 212 (now Section 199) of the Tax Code which enumerates the documents and papers not subject to the documentary stamp tax does not include expropriation sale. Inasmuch as you are the seller of the property in question, you are the one primarily liable for the payment of the corresponding documentary stamp tax. However, if Urban Road Project Office has agreed to shoulder the payment of the documentary stamp tax, then it will be the one directly liable therefor. This is so because the government or any of its instrumentalities, is no longer exempt from the payment of taxes including the documentary stamp taxes. Payment of the documentary stamp tax is effected by the purchase, affixture and subsequent cancellation of the documentary stamps (or notation of payment of documentary stamp tax with denomination of P100.00 or more) on the document at the time such ACT IS DONE OR TRANSACTION HAD, meaning on the date of the execution or signing of the document by the parties thereto. aisadc Lastly, you can purchase documentary stamps anywhere. Very truly yours, (SGD.) JOSE U. ONG Commissioner