Certificates of Stock Issued by a Corporation

November 4, 1959 BIR RULING NO. 564-59 Messrs. Sycip, Gorres, Velayo & Co. Certified Public Accountants 490 San Luis, Manila Attention: M . Gutierrez Tax Department Gentlemen : This is in connection with your letter dated October 31, 1959 requesting the ruling of this Office on the question of whether or not the certificates of stock issued by a corporation under the following facts are subject to documentary stamp tax: casia "One of our clients is contemplating to reorganize under the provisions of Section 35(c) of the National Internal Revenue Code, as amended by Republic Act No. 1921. Under its proposed plan of reorganization, the transferor corporation will transfer all its assets to the transferee corporation solely in exchange for shares of stock of the latter and the assumption by the transferee corporation of all the liabilities of the transferor corporation. The shares of stock will be issued by the transferee corporation to the transferor corporation for the account of, and thereafter to be immediately distributed to the latter's stockholders in proportion to their holdings in the transferor corporation. The transferor corporation will thereupon cease to do business, and will be completely liquidated and dissolved, its stockholders surrendering their shares of stock to the transferor corporation for cancellation. . . ." Under the above facts, the transferor corporation will be completely dissolved, hence the certificates to be issued by the transferee corporation to the former stockholders of the dissolved corporation are original issues and therefore subject to the documentary stamp tax prescribed in section 212 of the National Internal Revenue Code. cdta Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue