Saint Louis UniversityBaguio City, Philippines A Paper on Documentary Stamp Tax for Taxation 2 __________________ In Partial Fulfilment of the Requirements for the Degree of Bachelor of Laws __________________ By Lyndon J. Cena 2015-07-14 DOCUMENTARY STAMP TAX Table of Contents I. IN GENERAL .................................................................................................................................. 3 II. TRANSACTIONS/DOCUMENTS SUBJECT TO DOCUMENTARY STAMP TAX .. 5 a. Original Issuance of Shares, Sec. 174, NIRC, as amended by Rep. Act No. 9243 ....................... 5 b. Transfer of Shares Sec. 175, NIRC, as amended by Rep. Act No. 9243 ...................................... 6 c. Foreign-Issued Bonds, Debentures, Shares or Certificates of Indebtedness, and Other Instruments, Sec. 176, NIRC .......................................................................................................................... 6 d. Issue and Transfer of Certificate of Interest in Property or Accumulations Sec. 177, NIRC . 7 e. Bank Checks, Drafts, Certificates of Deposit not Bearing Interest Sec. 178, NIRC ................... 7 f. Debt Instruments Sec. 179, NIRC, as amended by Rep. Act No. 9243 ........................................... 8 g. Bills of Exchange or Drafts Sec. 180, NIRC, as amended by Rep. Act No. 9243 ........................ 8 h. Acceptance of Foreign-Drawn Bills of Exchange Sec. 181, NIRC ............................................... 10 i. Foreign Bills of Exchange and LCs Sec. 182, NIRC ......................................................................... 10 j. Life Insurance Policies Sec. 183, NIRC, as amended by Rep. Act No. 9243 ............................... 10 k. Non-Life Insurance Policies Sec. 184, NIRC ..................................................................................... 11 l. Fidelity Bonds and Other Insurance Policies Sec. 185, NIRC ........................................................ 11 m. Annuities and Pre-Need Plans Sec. 186, NIRC, as amended by Rep. Act No. 9243 ................ 11 n. Indemnity Bonds Sec. 187, NIRC ........................................................................................................ 12 o. Certificates Sec. 188, NIRC ................................................................................................................... 12 p. Warehouse Receipts Sec. 189, NIRC .................................................................................................. 12 q. Jai-Alai, Horse Race, Lotto, etc. Sec. 190, NIRC ............................................................................ 12 r. Bills of Lading or Receipts Sec. 191, NIRC ....................................................................................... 13 s. Proxies Sec. 192, NIRC ........................................................................................................................... 13 t. Powers of Attorney Sec. 193, NIRC ..................................................................................................... 13 u. Leases of Real Property Sec. 194, NIRC ............................................................................................ 13 v. Mortgages, Pledges and Deeds of Trust Sec. 195, NIRC ................................................................ 13 w. Deed of Sale of Real Property Sec. 196, NIRC ................................................................................. 14 x. Charter Party and Similar Instruments Sec. 197, NIRC ............................................................... 16 y. Assignment, Transfer, and Renewal of Certain Instruments Sec. 198, NIRC ........................... 17 III. TRANSACTIONS/DOCUMENTS NOT SUBJECT TO DOCUMENTARY STAMP TAX, Sec. 199, NIRC, as amended by Rep. Act No. 9243 ........................................................... 17 IV. PAYMENT OF DOCUMENTARY STAMP TAX, Sec. 200, NIRC .............................. 19 V. EFFECT OF NON-PAYMENT OF DOCUMENTARY STAMP TAX, Sec. 201, NIRC 20 2 signing. accepted or transferred. and in respect of the transaction so had or accomplished. assignments. signed. it shall not be recorded (i. February 29. It is an excise upon the 1 G. accepting or transferring the documents pays the tax. 1964. in the Registry of Deeds) or admitted or used as evidence in any court until the requisite stamp is affixed thereto and cancelled. the tax return shall be filed and the tax due shall be paid at the same time within 10 days after the close of the month when the taxable document was signed. Furthermore. there shall be levied. or transferring the same wherever the document is made. assignment. Except as otherwise provided by rules and regulations. It is not imposed upon the business transacted but is an excise upon the privilege.R. Instruments and Papers. . loan agreements and papers. L-16340. No. whenever one party to the taxable document enjoys exemption from the tax. The person making. accepted or transferred when the obligation or right arises from Philippine sources or the property is situated in the Philippines. and the same time such act is done or transaction had: Provided. v. accepting. Failure to stamp a taxable document shall not invalidate the same. That whenever one party to the taxable document enjoys exemption from the tax herein imposed. sale or transfer of an obligation. instruments. a documentary stamp tax is in the nature of an excise tax.Upon documents. by the person making. 10 SCRA 372 3 . issuing. issuing. the tax may be paid either through purchase of documentary stamp tax stamp and actual affixture. The amount of tax is either fixed or based on the par or face value of the document or instrument. no notary or other officer authorised to administer oaths shall add his jurat or acknowledgment to the document unless the proper documentary stamp is affixed thereto and cancelled.e. In lieu of the foregoing. 173. loan agreements and papers evidencing the acceptance. IN GENERAL SEC. Stamp Taxes Upon Documents. the corresponding documentary stamp taxes prescribed in the following Sections of this Title. collected and paid for. instruments. the other party thereto who is not exempt shall be the one directly liable for the tax. right or property incident thereto. issued. HEALD LUMBER COMPANY1. However. and upon acceptances. issued. DOCUMENTARY STAMP TAX I. rights. opportunity or facility offered at exchanges for the transaction of the business. signing. However. The documentary stamp tax is an excise tax levied on documents. the other party who is not exempt shall be the one directly liable for the tax. sales and transfers of the obligation. or property incident thereto. In the case of COMMISSIONER OF INTERNAL REVENUE. or by imprinting a secured stamp on the taxable document through the web- based Electronic Documentary Stamp Tax (eDST) System. Loan Agreements. INC. rights. which gives rise to the obligation to pay documentary stamp tax. In the case of MICHEL J. it is the exercise of the privilege to enter into an accessory contract of pledge. is inconsequential to and has no bearing on the taxability of contracts of pledge entered into by pawnshops. COMMISSIONER OF INTERNAL REVENUE2. The fact that the entries contained in a pawnshop ticket spell out a contract of pledge and that the exercise of the privilege to conclude such a contract is taxable under Section 195 of the NIRC. documentary stamp tax is levied on the document and not on the property. which it described. Section 195 already covers these pledges and to create a separate provision especially for them would be superfluous. Neither should the definition of pawnshop ticket. exempt it from the imposition of documentary stamp tax. 114.. In both cases. Section 195 of the National Internal Revenue Code (NIRC) imposes a documentary stamp tax on every pledge regardless of whether the same is a conventional pledge governed by the Civil Code or one that is governed by the provisions of P. sale or transfer of an obligation. instruments. As Justice Learned Hand pointed out in one case. 166786. unless there is a law exempting them in clear and categorical language. For purposes of Section 195. a documentary stamp tax is essentially an excise tax. It was correctly defined as such because the ticket itself is not the security but the pawn or the personal property pledged to the pawnbroker. This explains why the Legislature did not see the need to explicitly impose a documentary stamp tax on pledges entered into by pawnshops.R. loan agreements and papers evidencing the acceptance. LHUILLIER PAWNSHOP. All pledges are subject to documentary stamp tax. to separately impose stamp tax on all debt instruments. like a simple loan agreement. as not an evidence of indebtedness. is that in COMMISSIONER OF 2 CIR. as distinguished from a contract of loan. Rather. pawnshop tickets need not be an evidence of indebtedness nor a debt instrument because it taxes the same as a pledge instrument. it is levied upon the privilege of issuing them. G. It is for this reason why the definition of pawnshop ticket. May 3. the Supreme Court ruled that documentary stamp tax is an excise tax. thus it is neither a tax on the property itself nor a tax on the document itself. not on the money or property received by the issuing company of certificates. v. then there would be no use for Section 179 of the NIRC. Neither is it imposed upon the share of stock. 2006 4 . or property incident thereto. The difference between the two cases. assignment. With respect to stock certificates. If the documentary stamp tax under Section 195 were levied on the loan or the exercise of the privilege to contract a loan. it is not an imposition on the document itself but on the privilege to enter into a taxable transaction of pledge.D. as not a security. No. No. Then too. it levied on documents. facilities used in the transaction of the business separate and apart from the business itself. NIRC. Documentary stamp tax is an excise upon the privilege. as amended by Rep. that the tax in question imposed on the privilege of issuing certificates. Whatever documentary tax due is due. Original Issuance of Shares. II. HEALD LUMBER COMPANY. Stamp Tax on Original Issue of Shares of Stock. . 174. LHUILLIER PAWNSHOP. as is apparent from the foregoing discussion. whether on organisation. of such shares of stock: Provided.D. reorganisation or for any lawful purpose. of the par value. That in the case of the original issue of shares of stock without par value. company or corporation. Sec. at that time. or fractional part thereof. v. COMMISSIONER OF INTERNAL REVENUE. It is an excise upon the facilities used in the transaction of the business separate and apart from the business itself. TRANSACTIONS/DOCUMENTS SUBJECT TO DOCUMENTARY STAMP TAX a. which may be received therefor in the future.. Whereas in MICHEL J. That in the case of stock dividends. Thus. The Supreme Court ruled that the basis for the documentary stamp tax on certificates of stocks without par value shall only be the actual consideration received by the corporation at the time of the original issuance of the certificates. are neither of any consequence. the petitioner is not liable for the additional documentary stamp tax on the surplus capital because the Tax Code only imposed documentary stamp tax on the original issues of no par value certificates of stock. the amount of the documentary stamp tax herein prescribed shall be based upon the actual consideration for the issuance of such shares of stock: Provided. on the actual value represented by each share. No. the respondent corporation in a resolution transferred the surplus available for dividends from its subscription of stocks with no par value to its capital account. 9243 SEC. v. there shall be collected a documentary stamp of One peso (₱1. the Supreme Court ruled that the NIRC and P. opportunity or facility offered at exchanges for the transaction of the business.00) on each Two hundred pesos (₱200). The reason is because a certificate is issued only once. 174. further. additional considerations. As mentioned in the case of COMMISSIONER OF INTERNAL REVENUE. 5 . 114 did not exclude pledges from the imposition of documentary stamp tax and emphasised that documentary stamp tax is not imposed on the pledge ticket but on the on the privilege to enter into a taxable transaction of pledge. INC.On every original issue. then the tax may be collected only once: when the certificates are first or originally issued. HEALD LUMBER COMPANY. Therefore. INTERNAL REVENUE. of shares of stock by any association. v. Act No. 9243 SEC. Debentures. COMMISSIONER OF INTERNAL REVENUE3. as amended by Rep. there shall be collected a documentary stamp tax of Seventy-five-centavos (¢75) on each Two hundred pesos (₱200). 175. or fractional part thereof. 133834. c. 2006 6 . a claim for refund of overpaid capital gains and overpaid documentary stamps taxes. Stamp Tax on Bonds. or to secure the future payment of money. August 28. Petitioner then. . b. of the par value of such stock: Provided. petitioner corporation transferred its eight per cent (8%) equity interest in the Makati Shangri-La Hotel and Resort. or corporation. certificates of obligation. NIRC. Incorporated to Kerry Holdings Ltd. or deliveries. Shares or Certificates of Indebtedness. Deliveries or Transfer of Shares or Certificates of Stock. That in the case of stock without par value the amount of the documentary stamp tax herein prescribed shall be equivalent to twenty-five per cent (25%) of the documentary stamp tax paid upon the original issue of said stock. 175. NIRC SEC. indorsed. Debentures. Petitioner alleged that the transfer of deposits on stock subscriptions is not a sale/assignment of shares of stock subject to documentary stamps tax and capital gains tax. or transfer 3 G. Stamp Tax on Sales. Sec. Foreign-Issued Bonds. or memoranda of sales. or by any paper or agreement. 176. company.. Transfer of Shares Sec. Or transfer of shares or certificates of stock in any association. and Other Instruments. or transfer of due-bills.R. Petitioner paid the documentary stamps tax and capital gains tax on the transfer under protest. The Supreme Court Ruled that based on Section 176 of the National Internal Revenue Code. Compagnie Financiere Sucres et Deneres v. certificates of obligation or certificates of stock are liable for documentary stamp tax. 176. Act No. as shown by a Deed of Sale and Assignment of Subscription and Right of Subscription. or delivered in pursuance of such sale or transfer: and Provided. Agreements to Sell. Certificate of Stock or Indebtedness Issued in Foreign Countries. or deliveries. – On all sales. or by delivery. or corporation. filed with the Commissioner of Internal Revenue. or shares of certificates of stock in any association.On all sales. or agreements to sell. company. herein respondent. Memoranda of Sales. or for the future transfer of any stock. regardless of whether or not a certificate of stock is issued. further. or transfer of such securities by assignment in blank. or memorandum or other evidences of transfer or sale whether entitling the holder in any manner to the benefit of such stock. sales to secure the future transfer of due-bills. or agreements to sell. No. That only one tax shall be collected on each sale or transfer of stock from one person to another. assignment of deposit on stock subscriptions is subject to documentary stamp tax and capital gains tax wherein it provided that. or memoranda of sale. Issue and Transfer of Certificate of Interest in Property or Accumulations Sec. — On all bonds. Provided. indorsed. In sum. That in the case of stock without par value the amount of documentary stamp tax herein prescribed shall be equivalent to twenty- five per cent (25%) of the documentary stamp tax paid upon the original issue of said stock. or any certificate or memorandum showing interest in the property or accumulations of any association. regardless of whether or not a certificate of stock or obligation is issued. — On all certificates of profits. 178. In cases of stocks without par value the documentary stamp tax shall be twenty-five per cent (25%) of the documentary stamp tax paid upon the original issue of said stock. sold or transferred in the Philippines. of such securities by assignment in blank. or by delivery. Simply put. or certificates of indebtedness issued in any foreign country. NIRC SEC. That only one tax shall be collected on each sale or transfer of stock or securities from one person to another. of the face value of such certificate or memorandum. certificates of obligation or stock. every time a security is sold or transferred. Stamp Tax on Bonds. documentary stamp tax is imposed. of the par value of such due-bill. Stamp Tax on Certificates of Profits or Interest in Property or Accumulations. certificate of obligation or stock. The documentary stamp tax shall be imposed on every single sale or transfer of the said securities from one person to another. 178. the tax rate for securities issued outside the Philippines shall be ₱1. or for the future transfer of any due- bill. certificate of obligation or stock. there shall be collected a documentary stamp tax of Fifty centavos (¢50) on each Two hundred pesos (₱200).00 or less. d. or fractional part thereof. and on all transfers of such certificates or memoranda. 7 . Drafts. debentures. Debentures. or memorandum or other evidences of transfer or sale whether entitling the holder in any manner to the benefit of such due-bills.50) on each Two hundred pesos (₱200) or fractional part thereof. e. NIRC SEC. 177. 177. such as tax as is required by law on similar instruments when issued. Provided. Certificates of Deposit not Bearing Interest Sec. further. Certificate of Stock or Indebtedness Issued in Foreign Countries. or to secure the future payment of money. or delivered in pursuance of such sale or transfer: and. certificates of stock. there shall be collected a documentary stamp tax of One peso and fifty centavos (₱1. company or corporation. or by any paper or agreement. Bank Checks. there shall be collected from the person selling or transferring the same in the Philippines.50 per ₱200. The law seeks to impose documentary stamp tax on loan agreements. Act No. – On all bonds. COMMISSIONER OF INTERNAL REVENUE 5. a time deposit transaction is covered by a certificate of deposit while petitioner's Investment Savings Account transaction is through a passbook. instruments and securities issued by the government or any of its instrumentalities or certificates of deposits drawing interest and others not payable on sight or demand. or order for the payment of any sum of money drawn upon or issued by any bank. bills of exchange. It may be any "written acknowledgement by a bank of the receipt of money on deposit. certificates of deposits drawing interest. 173602. Deposit Substitute Debt Instruments. trust company. 180. and Other Instruments. Drafts. or certificate of deposit not drawing interest. f. 179. Drafts.R. Investment Savings Account transactions bear a fixed term or maturity because the bank acknowledges receipt of a sum of money on deposit. 9243 SEC. (Emphasis supplied) In. as amended by Rep. at sight or on demand. 2006 8 . Loan Agreements. Despite the differences in the form of the documents. they are not liable to documentary stamp tax. wherein the object of the contract is located or used in the Philippines. bearer. October 16. NIRC. Like time deposit. orders for the payment of any sum of money otherwise than at sight or on demand. Stamp Tax on All Bonds. deposit substitute debt instruments. board resolutions and cash vouchers were not included in the list thus. 179. or board resolutions are not in the nature of a promissory note. whether negotiable or non- 4 G. there shall be collected a documentary stamp tax of One peso and fifty centavos (₱1. loan agreements. Certificates of Deposit not Bearing Interest. or any person or persons. promissory notes. Section 180 of the 1997 NIRC does not prescribed the form of a certificate of deposit. Inter. Instruments and Securities Issued by the Government or Any of its Instrumentalities. vouchers. – On each bank check. as amended by Rep. Stamp Tax on Bank Checks. draft. Bills of Exchange or Drafts Sec. instruments and securities issued by the Government or any of its instrumentalities. promissory Notes. 2007 5 CTA Case No. drafts. Certificates of Deposits Bearing Interest and Others Not Payable on Sight or Demand. drafts. In BANCO DE ORO UNIVERSAL BANK v. bills of exchange (between points within the Philippines). 6156. BELLE CORPORATION v. which the bank promises to pay the depositor. Bills of Exchange. COMMISSIONER OF INTERNAL REVENUE4. NIRC. the inter-company advances evidenced by inter-office memorandum. January 15.50). 180. companies or corporations. Debt Instruments Sec.office memoranda. or to the order of a bearer on a specified period of time. 9243 SEC. the CTA en banc ruled that a time deposit and Investment Savings Account have essentially the same attributes and features. on all promissory notes. including those signed abroad. Act No. g." The definition of a certificate of deposit is all encompassing to include a savings account deposit such as ISA. drafts. appliance or furniture shall be exempt from the payment of the documentary stamp tax provided under this Section. Inter. It also refers to an instrument. revision. Court of Appeals. As held by the Supreme Court in the case of Philippine Home Assurance Corporation. instruments. they are not therefore subject to documentary stamp tax. COMMISSIONER OF INTERNAL REVENUE6. a sum certain in money to such other person or to bearer. engaging to pay on demand. or termination of specific legal relationship through the execution of specific instruments. promissory notes. and on each renewal of any such note. instruments and securities issued by the government or any of its instrumentalities or certificates of deposits drawing interest and others not payable on sight or demand. there shall be collected a documentary stamp tax of Thirty centavos (¢30) on each Two hundred pesos (₱200). documentary stamp tax is an excise tax upon documents. the elements and the form of any of the specific instruments mentioned in the law. draft. whichever will yield a higher tax: Provided. loan agreements and papers.000) executed by an individual for his purchase on instalment for his personal use or that of his family and not for business. signed by the maker. they are not liable to documentary stamp taxes. v. except bank notes issued for circulation. and usually without coupons. or promissory notes issued to secure such loan. and upon acceptances. As ruled by the CTA in BELLE CORPORATION v. There is nothing in Section 180 that clearly and expressly declares inter-office memorandum covering inter-company advances made by BELLE to its affiliates making it subject to documentary stamp taxes. or a fixed or determinable future time.office memoranda. or fractional part thereof. however. That loan agreements or promissory notes the aggregate of which does not exceed Two hundred fifty thousand pesos (₱250." Since board resolutions and cash vouchers do not partake the nature. motor vehicle. "documentary stamp taxes are levied on the exercise by persons of certain privileges conferred by law for the creation. 301 SCRA 447. whether negotiable or non- negotiable. Section 18 seeks to impose documentary stamp tax on loan agreements. al. sales and transfers of the obligation. right or property incident thereto. bill of exchange. assignments. lot. whereby the maker agrees to pay a sum certain in money or its equivalent at a definite time. free from restrictions as to registration or transfer. resale. of the face value of any such agreement. or note: Provided. et. negotiable. barter or hire of a house. bills of exchange. certificate of deposit. board resolutions and cash vouchers were not included in the list thus. 6 ibid 9 . A promissory note is an unconditional promise in writing made by one person to another. That only one documentary stamp tax shall be imposed on either loan agreement. 181. or the Philippine equivalent of such face value. i. 7 BIR Ruling No. each time a portion of the premium is paid. According to the PLIA. there is only one documentary stamp tax (which is now based on the premium) due on the entire life insurance policy and the amount of documentary stamp tax should be based on the initial premium collected. Act No. of the face value of any such bill of exchange or letter of credit. Stamp Tax Upon Acceptance of Bills of Exchange and Others. or fractional part thereof. NIRC SEC. 2005 10 . thus. Stamp Tax on Life Insurance Policies. Therefore. 183. DA-182-2005. April 20. j. Acceptance of Foreign-Drawn Bills of Exchange Sec. by telegraph or otherwise. 9243 SEC. of the face value of any such bill of exchange. h. in the case of payment by instalment. NIRC SEC. or order. whereby any insurance shall be made or renewed upon any life or lives. 183. The Philippine Life Insurance Association (PLIA) sought reconsideration of the policy regarding the collection of documentary stamp tax on life insurance policies. 182. documentary stamp tax will be imposed thereon7. The BIR ruled that the law simply provides that the documentary stamp tax shall be based on the amount of premium collected. – On all foreign bills of exchange and letters of credit (including orders. or fractional part thereof. NIRC. if expressed in foreign currency. Life Insurance Policies Sec. documentary stamp tax will be paid. Stamp Tax on Foreign Bills of Exchange and Letters of Credit.On all policies of insurance or other instruments by whatever name the same may be called. if expressed in foreign currency. which is being done every time the premium is paid by the insured. or the Philippine equivalent to such value. as amended by Rep. of the amount insured by any such policy. there shall be collected a documentary stamp tax of Fifty centavos (¢50) on each Two hundred pesos (₱200). Foreign Bills of Exchange and LCs Sec. or fractional part thereof. The BIR interpreted this to mean that each time a premium is collected. there shall be collected a documentary stamp tax of Thirty centavos (¢30) on each Two hundred pesos (₱200). there shall be collected a documentary stamp tax of Thirty centavos (¢30) on each Two hundred pesos (₱200). subsequent payments of the portion of the premium should not be subject to documentary stamp tax anymore. 181. . 182. for the payment of money issued by express or steamship companies or by any person or persons) drawn in but payable out of the Philippines in a set of three (3) or more according to the custom of merchants and bankers. – Upon any acceptance or payment of any bill of exchange or order for the payment of money purporting to be drawn in a foreign country but payable in the Philippines. The premium may be payable annually or on instalment. municipality. 2005 11 . whereby an annuity may be made. fidelity. for as long as the properties which are the object of insurance are situated in the Philippines. for the doing or not doing of anything therein specified. – On all policies of insurance or bonds or obligations of the nature of indemnity for loss. including rents or profits. NIRC. l. k. Stamp Tax on Policies of Insurance Upon Property. – On all policies of insurance or other instruments by whatever name the same may be called. or guaranteeing any mercantile credits. Annuities and Pre-Need Plans Sec. there shall be collected a documentary stamp tax of Fifty centavos (¢50) on each Four pesos (₱4. glass. transferred or redeemed. 184. 184. as amended by Rep.On all policies of annuities. Stamp Tax on Policies of Annuities and Pre-Need Plans. steam. employer’s liability. elevator. Non-Life Insurance Policies Sec. and fire insurance). there shall be collected a documentary stamp tax of One peso and fifty centavos (₱1. June 27. or recognisances. NIRC SEC. Conversely. 185. company or corporation transacting the business of accident. damage or liability made or renewed by any person. of the premium charged. there shall be collected a documentary stamp tax of Fifty centavos (¢50) on each Four pesos (₱4. however. company or corporation. automatic sprinkler. Stamp Tax on Fidelity Bonds and Other Insurance Policies. where the property is situated outside the Philippines. which may be made or renewed by any such person. . boiler. or should this be 8 BIR Ruling No. and on all obligations guaranteeing the title to any real estate. 185.00). burglar. Fidelity Bonds and Other Insurance Policies Sec. by which insurance shall be made or renewed upon property of any description. and on all obligations guaranteeing the validity or legality of any bond or other obligations issued by any province. and all bonds. conditioned for the performance of the duties of any office or position. 186. against peril by sea or on inland waters. city. undertakings. or fractional part thereof. Act No. NIRC SEC. even if such policies are signed or issued abroad. marine. plate. association. 9243 SEC. In the case of the Philippine corporation’s branch in Hong Kong.00).50) on each Two hundred pesos (₱200) or fractional part thereof. of the capital of the annuity. That no documentary stamp tax shall be collected on reinsurance contracts or on any instrument by which cession or acceptance of insurance risks under any reinsurance agreement is effected or recorded. inland. or by fire or lightning. or other instruments by whatever name the same may be called. the property insurance policies issued by the said Hong Kong branch will be subject to documentary stamp tax imposed under Section 14 of the Tax Code. 186. m. or fractional part thereof. DA-288-2005. of the amount of premium charged: Provided. or other branch of insurance (except life. or other public body or organisation. the documentary stamp tax imposed on property insurance under Section 184 will not apply8. there shall be collected a documentary stamp tax of Ten centavos (¢10): Provided. firm or corporation who shall become bound or engaged as surety for the payment of any sum of money or for the due execution or performance of the duties of any office or position or to account for money received by virtue thereof.00). NIRC SEC. the documentary stamp tax shall be Fifty centavos (¢50) on each Five hundred pesos (₱500). o. or are otherwise provided for herein. etc. an additional tax of Ten centavos (¢10) on every One peso (₱1. Thus. . shall be collected. On pre-need plans. Sec. Warehouse Receipts Sec. and on each certificate of any description required by law or by rules or regulations of a public office.00) shall be subjected to documentary stamp tax amounting to one peso (₱1. That no tax shall be collected on each warehouse receipt issued to any one person in any one calendar month covering property the value of which does not exceed Two hundred pesos (₱200). 190. Stamp Tax on Jai-Alai. there shall be collected a documentary stamp tax of Fifteen pesos (₱15. Horse Race. horse race ticket. p. there shall be collected a documentary stamp tax of Thirty centavos (¢30) on each Four pesos (₱4. or other person acting as such.00). of the value or amount of the plan. there shall be collected a documentary stamp tax of Fifteen pesos (₱15. and on all other bonds of any description. marine surveyor. Horse Racing Tickets. n. Section 12 . Stamp Tax on Indemnity Bonds. NIRC SEC.00) per ticket. – On each jai-alai.00). 189. and on each certificate issued by a notary public. – On each certificate of damages or otherwise. 187. Stamp Tax on Certificates. or fractional part thereof. q.00. unknown. and on every certificate or document issued by any customs officer. or establishing proof of a fact. or other authorised number games. Lotto. 189. of thirty-three and one-third (33⅓) times the annual income. or fractional part thereof. Jai-Alai. Stamp Tax on Warehouse Receipts. then on each Two hundred (₱200) pesos. NIRC SEC. lotto or Other Authorised Numbers Games. Indemnity Bonds Sec. or fractional part thereof. That if the cost of the ticket exceeds One peso (₱1. 190. lotto. – On all bonds for indemnifying any person. Moreover. 187.On each warehouse receipt for property held in storage in a public or private warehouse or yard for any person other than the proprietor of such warehouse or yard.00): Provided. Certificates Sec. 188. or which is issued for the purpose of giving information. NIRC SEC. or fractional part thereof. except such as may be required in legal proceedings. and not otherwise specified herein. 188. a lotto ticket that is worth ten pesos (₱10. of the premium charged. if the value exceeds One thousand pesos (₱1. s. 192. u. 194. – On each proxy for voting at any election for officers of any company or association. – On every mortgage or pledge of lands. or fractional part thereof. and an additional One peso (₱1. 192. there shall be collected a documentary stamp tax of Five pesos (₱5. (Emphasis added) r. or contract for hire. That freight tickets covering goods. 190 provides that each jai-alai. NIRC SEC.00) t. 193. merchandise or effects carried as accompanied baggage of passengers on land and water carriers primarily engaged in the transportation of passengers are hereby exempt. NIRC SEC. Stamp Tax on Leases and Other Hiring Agreements. 191. city or municipality. in excess of the first Two thousand pesos (₱2.00).000) for each year of the term of said contract or agreement.000) or fractional part thereof. NIRC SEC. use or rent of any lands or tenements. 195. except acts connected with the collection of claims due from or accruing to the Government of the Republic of the Philippines. 195. there shall be collected a documentary stamp tax of Three pesos (₱3.000): Provided. there shall be collected a documentary stamp tax.On each lease. Mortgages. or portions thereof. or other authorised number games. Proxies Sec. estate. NIRC SEC. charitable or literary purposes. or the government of any province. or to any foreign port. or property.00) for the first Two thousand pesos (₱2. lotto. v. agreement. 193. Stamp Tax on Mortgages. however. – On each set of bills of lading or receipts (except charter party) for any goods. . there shall be collected a documentary stamp tax of Fifteen pesos (₱15. Stamp Tax on Proxies. Ten pesos (₱10). if the value of such goods exceeds One hundred pesos (₱100) and does not exceed One Thousand pesos (₱1. whatsoever. Pledges and Deeds of Trust. Powers of Attorney Sec. 194.00) for every One Thousand pesos (₱1. real or personal. there shall be collected documentary stamp tax of One peso (₱1.00).On each power of attorney to perform any act whatsoever. merchandise or effects shipped from one port or place in the Philippines to another port or place in the Philippines (except on ferries across rivers). Pledges and Deeds of Trust Sec. except proxies issued affecting the affairs of associations or corporations organised for religious.000). where the same shall be made as a security for the payment of 13 . Leases of Real Property Sec. Hence. or for any other purpose. heritable or movable. Stamp Tax on Powers of Attorney. . jueteng tickets and other numbers games whether legal or illegal should also be subjected to documentary stamp tax.000). Bills of Lading or Receipts Sec. 191. horse race ticket. NIRC SEC. memorandum. Stamp Tax on Bills of Lading or Receipts. NIRC SEC. granted under the mortgage. pledge or deed of trust shall be computed on the amount actually loaned or given at the time of the execution of the mortgage. granted under the mortgage. or to any other person or persons designated by such purchaser or purchasers. pledge or deed of trust. pledge or deed of trust. That if the full amount of the loan or credit. That if the full amount of the loan or credit. or fractional part thereof in excess of Five thousand pesos (₱5. however. instruments. pledge or deed of trust. (b) On each Five thousand pesos (₱5. pledge or deed of trust is specified in such mortgage. in trust or to be sold. deeds. or property whatsoever. pledge or deed of trust. or writings. if subsequent advances are made on such mortgage. either by express stipulation or otherwise. based on the consideration contracted to be paid for such realty or on its fair market value determined in accordance with Section 6(E) of this Code. 14 . - On all conveyances. 196. Stamp tax on Deeds of Sale and Conveyances of Real Property.000). there shall be collected a documentary stamp tax. whereby any land.000). or purchasers. the documentary stamp tax prescribed in this Section shall be paid and computed on the full amount of the loan or credit granted. patents or original certificates of adjudication issued by the Government. estate. On any mortgage.00). or otherwise converted into money which shall be and intended only as security. additional documentary stamp tax shall be paid which shall be computed on the basis of the amount advanced or loaned at the rates specified above: Provided. 196. additional documentary stamp tax shall be paid which shall be computed on the basis of the amount advanced or loaned at the rates specified above: Provided. pledge or deed of trust shall be computed on the amount actually loaned or given at the time of the execution of the mortgage. or other realty sold shall be granted. However. an additional tax of Ten pesos (₱10. whichever is higher: Provided. there shall be collected a documentary stamp tax at the following rates: (a) When the amount secured does not exceed Five thousand pesos (₱5.000). tenement. w. however. pledge. being payable and on any conveyance of land. Twenty pesos (₱20. the documentary stamp tax on such mortgage. That when one of the contracting parties is the Government the tax herein imposed shall be based on the actual consideration. other than grants. any definite and certain sum of money lent at the time or previously due and owing of forborne to be paid. at the rates herein below prescribed. where the same shall be made as a security for the payment of a fluctuating account or future advances without fixed limit. assigned. Deed of Sale of Real Property Sec.00). or deed of trust. transferred or otherwise conveyed to the purchaser. it proposes to sell some of its assets and liabilities to Y Co. 2005 11 BIR Ruling No. 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. DA-065-2005. (b) For each additional One thousand Pesos (₱1. Furthermore. “taxable income”. no taxable gain would be realised.000) of such consideration or value. or fractional part thereof in excess of One thousand pesos (₱1. Stockholders of a liquidating corporation owning various condominium units shall realise capital gain or loss. The conveyance of realty was made not in connection with a sale11. from the assessment rolls or other reliable source of information. Hence. as the case may be. the transfer at book value.00). as defined in Section 32 of the 1997 Tax Code. The BIR ruled that since the transfer of assets will be made at book value. The conveyance of condominium units in the form of liquidating dividends and without consideration shall not be subject to documentary stamp tax10. or value received or contracted to be paid for such realty after making proper allowance of any encumbrance. shall be subject to ordinary income tax at the rates provided under Section 24(a)(1)(c) of the Tax Code. consisting of the difference between the fair market value of the liquidating dividends and the adjusted cost to the stockholders of their respective shareholdings in the corporation. it is not subject to income tax. March 14. when the latter distributes to the former its remaining assets. (a) When the consideration.000) fifteen pesos (₱15. the liquidating corporation shall not be subject to tax either on the transfer of its assets to stockholders or on the receipt of shares surrendered by stockholders. at book value. being a capital investment. As part of the restructuring of X Co. fifteen pesos (₱15. The transfer by stockholders of real property to a corporation in the nature of paid-in surplus without shares being issued. X Co. DA-076-2005 10 BIR Ruling No.000). The real property transferred should not be treated as income to the corporation. considering that the real property was transferred without the corresponding issuance of additional shares in favour of the stockholders. and Y Co. assuming the same to beat arms’ length shall not result in a taxable gain or loss pursuant to Section 40(A) of the Tax Code9. does not exceed One thousand pesos (₱1. instrument or writing subject to such tax the Commissioner.00). DA-084-2005. provincial or city Treasurer.. assess the property of its true market value and collect the proper tax thereon. 2005 15 . Any capital gain. 9 BIR Ruling No. deed. no documentary stamp tax was due. February 23. is not within the purview of the term. On the other hand. or other revenue officer shall. Consequently. are both PEZA registered companies. A’s favour is exempt from the payment of capital gains tax and documentary stamp tax prescribed under Section 196 of the Tax Code of 1997.000). DA-640-2004. 2004 13 BIR Ruling No. The BIR ruled that partition of properties among co-owners without any consideration is not subject to capital gains tax. Stamp Tax on Charter Parties and Similar Instruments. 12 BIR Ruling No. agreement. – On every charter party.00 documentary stamp tax under Section 188 of the same Code13. contract or agreement for the charter of any ship. and on any renewal or transfer of such charter. 21. DA-648-2004. 197. A and her eldest son over a parcel of land for the purpose of securing a housing loan from the SSS. (b) If the registered gross tonnage exceeds one thousand (₱1. Five hundred pesos (₱500). an additional tax of One hundred pesos (₱100) shall be paid. The agreement is subject however to the ₱15. and for each month or fraction of a month in excess of six (6) months.000) tons. vessel or steamer does not exceed one thousand (₱1. an additional tax of Fifty pesos (₱50. Charter Party and Similar Instruments Sec. A’s heirs and to put everything prospectively to avoid confusion and problems in the future. 197. documentary stamp tax under Section 196 of the Tax Code of 1997 and VAT considering that there is no sale. and the duration of the charter or contract does not exceed six (6) months. However.000) tons.00) shall be paid. and for each month or fraction of a month in excess of six (6) months. again for convenience and without monetary consideration. vessel or steamer. the notarial acknowledgement is subject to the ₱15. the reconveyance of the same in Ms. and the duration of the charter or contract does not exceed six (6) months. 2004 16 . In 1964 a deed of sale was executed between Ms. vessel or steamer. To be fair among all of M.000) tons and does not exceed ten thousand (₱10. One thousand pesos (₱1. vessel or steamer. master or owner. or any letter or memorandum or other writing between the captain. Dec. The said deed of sale has been executed for convenience and without monetary consideration. or other person acting as agent of any ship. NIRC SEC. exchange or disposition of property. there shall be collected a documentary stamp tax at the following rates: (a) If the registered gross tonnage of the ship. A. 188 of the Tax Code of 199712.00 documentary stamp tax as prescribed in Sec. The BIR ruled that considering that the transfer of the subject property is without consideration and was executed only as a requirement for the granting of the SSS loan. and any other person or persons for or relating to the charter of any such ship. December 17. x. contract. letter or memorandum. a deed of sale was executed in 1975 to revert back the property to Ms. or the renewal or continuance of any agreement. III. and not at the instance or for the use or benefit of the person filing them. provincial. Transfer.500). 199. Documents and Papers Not Subject to Stamp Tax. One thousand five hundred pesos (₱1. instruments and papers for the national. city or municipal governments. 198. NIRC SEC. city. documents and papers shall be exempt from the documentary stamp tax: (a) Policies of insurance or annuities made or granted by a fraternal or beneficiary society. an additional tax of One hundred fifty pesos (₱150) shall be paid. provincial. charter. and Renewal of Certain Instruments Sec. affidavits of poor persons for the purpose of proving poverty. whether the proceedings be civil or criminal. – Upon each and every assignment or transfer of any mortgage. 198. 199. written appearance in any court by any government official. Sec. and certificates of the assessed value of lands. as amended by Rep. statements and other compulsory information required of persons or corporations by the rules and regulations of the national. or municipal governments. provincial. NIRC. made at the instance and for the sole use of some other branch of the national. or any evidence of obligation or indebtedness by altering or otherwise. there shall be levied. collected and paid a documentary stamp tax.000) tons and the duration of the charter or contract does not exceed six (6) months. y. provincial. at the same rate as that imposed on the original instrument. papers and documents filed in courts by or for the national. certificates of the administration of oaths to any person as to the authenticity of any paper required to be filed in court by any person or party thereto. (c) If the registered gross tonnage exceeds ten thousand (₱10. lease or policy of insurance. . contract. the following instruments. not exceeding Two hundred pesos (₱200) in 17 . (b) Certificates of oaths administered to any government official in his official capacity or of acknowledgment by any government official in the performance of his official duties. 9243 SEC. operated on the lodge system or local cooperation plan and organised and conducted solely by the members thereof for the exclusive benefit of each member and not for profit.The provisions of Section 173 to the contrary notwithstanding. TRANSACTIONS/DOCUMENTS NOT SUBJECT TO DOCUMENTARY STAMP TAX. city or municipal governments exclusively for statistical purposes and which are wholly for the use of the bureau or office in which they are filed. Assignment. Stamp Tax on Assignments and Renewals of Certain Instruments. in his official capacity. order. certified copies and other certificates placed upon documents. Act No. association or cooperative company. city or municipal governments. and for each month or fraction of a month in excess of six (6) months. in exchange for shares and debt instruments issued by B Inc. g.00 for every ₱200. h. lease or policy of insurance. whereby A Inc. However. In addition to the above list: a. Fixed income and other securities traded in the secondary market or through an exchange. Loan agreements or promissory notes. of the issue value.000). if there is no change in the maturity date or remaining period of coverage from that of the original instrument. All contracts. that for purposes of this exemption. Interbank call loans with maturity of not more than seven (7) days to cover deficiency in reserves against deposit liabilities. or the renewal or continuance of any agreement. Bank deposit accounts without a fixed term or maturity. or a fractional part thereof. f. shall not be subject to documentary stamp tax provided that there is no increase in the amount 18 . b. the aggregate of which does not exceed Two hundred fifty thousand pesos (₱250. Provided. appliance or furniture: Provided. barter or hire of a house. transfer or amendment of such debt instruments by A Inc. however. documents and transactions related to the conduct of business of the Bangko Sentral ng Pilipinas. including those between or among banks and quasi-banks. c. transferred Receivables to B Inc. that the exemption be limited to those executed by the seller or service provider itself. that the amount to be set by the Secretary of Finance shall be in accordance with a relevant price index but not to exceed ten per cent (10%) of the current amount and shall remain in force at least for three (3) years. contract. e. and B Inc. executed by an individual for his purchase on instalment for his personal use or that of his family and not for business or resale. repurchase agreements and reverse repurchase agreements shall be treated similarly as derivatives. charter. furnished by the provincial. the subsequent assignment. i. barter or exchange of shares of stock listed and traded through the local stock exchange. as amended. Assignment or transfer of any mortgage. j. The BIR ruled that the documentary stamp tax due on the issuance of the debt instruments should be subject to ₱1. All forbearances arising from sales or service contracts including credit card and trade receivables. lot. Inter-branch or interdepartmental advances within the same legal entity. Provided. entered into a tax-deferred exchange transaction under Section 40(C)(2) and (C)(6) of the Tax Code of 1997. A Inc. city or municipal Treasurer to applicants for registration of title to land. value assessed. or any such amount as may be determined by the Secretary of Finance. Derivatives. d. motor vehicle. deeds. Sale. Transfer of property pursuant to Section 40(C)(2) of the National Internal Revenue Code of 1997. k. or any evidence of obligation or indebtedness. or a fixed or determinable future time. documentary stamp tax is an excise tax upon documents. (B) Time for Filing and Payment of the Tax. revision. upon recommendation of the Commissioner. Court of Appeals. 924314. loan agreements and papers. al. any person liable to pay documentary stamp tax upon any document subject to tax under Title VII of this Code shall file a tax return and pay the tax in accordance with the rules and regulations to be prescribed by the Secretary of Finance. "documentary stamp taxes are levied on the exercise by persons of certain privileges conferred by law for the creation. free from restrictions as to registration or transfer. 200. sales and transfers of the obligation. Inter. There is nothing in Section 180 that clearly and expressly declares inter-office memorandum covering inter-company advances made by BELLE to its affiliates making it subject to documentary stamp taxes. assignments. instruments. whether negotiable or non- negotiable. June 7. a sum certain in money to such other person or to bearer. board resolutions and cash vouchers were not included in the list thus. signed by the maker. 301 SCRA 447. whereby the maker agrees to pay a sum certain in money or its equivalent at a definite time. IV. 6156. As held by the Supreme Court in the case of Philippine Home Assurance Corporation. engaging to pay on demand. et. promissory notes. - (A) In General.—The provisions of Presidential Decree No. as amended by Republic Act No. Sec. A promissory note is an unconditional promise in writing made by one person to another. right or property incident thereto. NIRC SEC. they are not therefore subject to documentary stamp tax. instruments and securities issued by the government or any of its instrumentalities or certificates of deposits drawing interest and others not payable on sight or demand. bills of exchange. 200. As ruled by the CTA in BELLE CORPORATION v. Payment of Documentary Stamp Tax. 1045 notwithstanding. drafts.office memoranda. v. It also refers to an instrument. COMMISSIONER OF INTERNAL REVENUE15. or termination of specific legal relationship through the execution of specific instruments. PAYMENT OF DOCUMENTARY STAMP TAX. Section 18 seeks to impose documentary stamp tax on loan agreements. upon 14 BIR Ruling No. and usually without coupons." Since board resolutions and cash vouchers do not partake the nature. 2006 19 . and upon acceptances. they are not liable to documentary stamp taxes. or change in the maturity date from that of the original instrument pursuant to Section 199(F) of the Tax Code of 1997.—Except as provided by rules and regulations promulgated by the Secretary of Finance. October 16. DA-244-2005. the elements and the form of any of the specific instruments mentioned in the law. 2005 15 CTA Case No. the tax may be paid either through purchase and actual affixture. EFFECT OF NON-PAYMENT OF DOCUMENTARY STAMP TAX. recommendation of the Commissioner. in the manner as may be prescribed by rules and regulations to be promulgated by the Secretary of Finance. (D) Exception. nor shall it or any copy thereof or any record of transfer of the same be admitted or used in evidence in any court until the requisite stamp or stamps are affixed thereto and cancelled. issued. the tax return prescribed in this Section shall be filed within ten (10) days after the close of the month when the taxable document was made. the return shall be filed with the Revenue District Officer. accepted or transferred without being duly stamped. issued. (C) Where to File. V. or duly authorised Treasurer of the city or municipality in which the taxpayer has his legal residence or principal place of business. signed. NIRC SEC. document or paper which is required by law to be stamped and which has been signed. Effect of Failure to Stamp Taxable Document. 20 . on the taxable document. or by imprinting the stamps through a documentary stamp metering machine. or transferred. In places where there is no authorised agent bank. collection agent. shall not be recorded. Sec.—In lieu of the foregoing provisions of this Section. 201. 201. and the tax thereon shall be paid at the same time the aforesaid return is filed. – An instrument.—Except in cases where the Commissioner otherwise permits. the aforesaid tax return shall be filed with and the tax due shall be paid through the authorised agent bank within the territorial jurisdiction of the Revenue District Office which has jurisdiction over the residence or principal place of business of the taxpayer. accepted. upon recommendation of the Commissioner.