Sale of Realty pn Installment Basis Will be Subject to Documentary Stamp Tax When the Title to the Properties is Vested on the Vendee

December 7, 1987 BIR RULING NO. 390-87 209 000-00 390-87 S i r : This refers to your letter dated October 29, 1987 requesting in behalf of your clients, Brilliante Realty Corporation (Brilliante) and Philippine Automotive Manufacturing Corporation (PAMCOR) a ruling as to when the documentary stamp tax would attach on contracts of sale of realty when the title passes to the vendee only upon payment of the last installment of the purchase price. It is represented that on July 1, 1987, your abovenamed clients, as vendors, both executed Deeds of Sale in favor of San Miguel Corporation (SMC) as vendee. The deed of sale between Brilliante and SMC covers seven (7) parcels of land situated in Calamba, Laguna with a total consideration of P14,500,800.00 while the deed of sale between PAMCOR and SMC, with a consideration of P38,499,200.00, covers certain buildings and improvements erected on the lands covered by the deed of sale between Brilliante and SMC. Both deeds have identical features, e.g., that the consideration shall be payable by the vendee in three (3) installments, the first upon the signing of the contract, the second within sixty days from signing and the third within one hundred twenty days from the signing. Likewise, both deeds expressly stipulate in Article II thereof that ". . ., title to the properties, subject of this Deed, shall remain with VENDOR and shall be deemed transferred to VENDEE only upon full payment to VENDOR of the consideration of this sale stipulated in Article IV hereunder." In reply, please be informed that agreements to sell real property on installment basis are not subject to the documentary stamp tax imposed under Section 209 of the Tax Code unless they vest title on the vendee . (Sec. 163, Regulations No. 26 or the Revised Documentary Stamp Tax Regulations) Under the foregoing facts, the deeds of sale in question will become subject to the documentary stamp tax when the title to the properties is vested on the vendee, i.e., upon full payment by SMC of the consideration which took place upon payment of the last installments. iatdc Very truly yours, (SGD.) EUFRACIO D. SANTOS Officer-in-Charge