Deeds or Conveyances Which Transfer Title to Lands, Tenements, or Other Realty

August 30, 1960 BIR RULING NO. 429-60 Messrs. Ross, Selph & Carrascoso P. O. Box 781, Manila Gentlemen : This is in connection with your letter requesting the opinion of this Office on the following: "A' and 'B' both domestic corporations, executed a 'Deed of General Conveyance' whereby 'A' Conveyed to 'B' all its assets, namely, "'all of its mining claims and patents; all of its other real property; all of its personal property; all of its contractual rights and obligations, whether beneficial or onerous; all of its licenses; privileges; property rights; rights of way; claims, pending court suits; business interest; leases; bank deposits; stocks; bonds and other securities; accounts receivable and payable; plants; machinery; tools; supplies and equipment; in short, all corporate rights; claims; suits; contracts; properties of every kind and nature; and interests and privileges; and all the properties of every kind and wheresoever situated' "in exchange for 1,500,000 shares of 'B' with a par value of P1,500,000 and the assumption by "B' of its liabilities in the total amount of P1,561,860.00 "1. Is the 'Deed of General Conveyance' subject to documentary stamp tax? "2. If the document is subject to the tax prescribed in Section 233 of the Tax Code (on sales and conveyances of real property), what would be the basis for determining the amount of tax to be paid? "3. If the tax is based on the total consideration received by 'A' from 'B', how will the 1,500,000 shares of 'B' be valued? "4. It should be noted that the assets transferred include real as well as personal property. How will the consideration of the real property be ascertained considering that the tax is levied only on conveyances of real property?" In reply thereto, I have the honor to inform you that deeds or conveyances which transfer title to lands, tenements, or other realty, are subject to the documentary stamp tax prescribed in section 233 of the National Internal Revenue Code. Deed of sale of personal property is not subject to any documentary stamp tax. However, the acknowledgment which forms part of the said document is subject to the 30-centavo documentary stamp tax prescribed in section 225 of the Tax Code. Inasmuch as the "Deed of General Conveyance" covers real as well as personal property, the actual consideration received by the vendor for such real property shall be made the basis for computing the documentary stamp tax prescribed in section 233 of the Tax Code. Mining claims, leases, rights of way and other rights over real property shall be considered as real property. In this connection, attention is invited to the provision of the last paragraph of section 233 of the Tax Code which reads as follows: "SEC. 233. . . . "When it appears that the amount of the documentary stamp tax payable hereunder has been reduced by an incorrect statement of the consideration in any conveyance, deed, instrument, or writing subject to such tax, the Collector of Internal Revenue, provincial or city treasurer, or other revenue officer shall, from the assessment rolls, or other reliable source of information, assess the property at its true market value and collect the proper tax thereon." casia Very truly yours, MELECIO R. DOMINGO Commissioner of Internal Revenue