BIR Ruling

June 19, 1969 Action Line The Manila Times Manila S i r : This refers to the query addressed to your column by Mr. Manuel B. Balagtas of 13 Lanete St., Project 7, Quezon City D-504, dated September 19, 1968 regarding the origin of requiring the payment of documentary stamp tax on bank checks. In reply, please be informed that the documentary stamp tax is one of the principal sources of revenue when the Philippine Archipelago was under the Spanish regime. The sale of stamped paper and adhesive stamps, which the law required to be used, constituted the stamp tax. Upon the American occupation of the Philippines, the fairly complete system of taxation which had been enforced during the Spanish regime was continued in force by the military authorities with but few changes, until the Civil Government assumed charged of the subject. A clearer view of the origin of the imposition of the documentary stamp tax can be gleaned further by tracing the origin of our internal revenue laws. The original internal revenue law of the Philippine is Act No. 1189 of the Philippine Commission enacted on July 2, 1904 and better known as the "Internal Revenue Law of 1904" which was intended to supplant the old Spanish laws on the subject. (Sixth Annual Report of the Philippine Commission.) Act No. 1189 was patterned after the Internal Revenue Law then in force in the United States and which at the time was the Act of Congress of July 13, 1866 (14 Stat. at L., ch. 184, p. 152) as amended by the Act of June 6, 1872 (17 Stat. at L., ch. 315, p. 257.) About ten years after the approval of Act No. 1189, said Act and its amendments were revised and compiled and the result was the enactment of Act No. 2339, otherwise known as the "Internal Revenue Act of 1914". Upon the codification of the political laws of the Philippines, the Internal Revenue Act of 1914 was incorporated in the Administrative Code of 1916 and later in the Administrative Code of 1917, and finally in the present Commonwealth Act No. 466, otherwise known as the "National Internal Revenue Code" which was approved on June 15, 1939. (Wee Poco & Co. v. Posadas, 64 Phil. 640). Originally, the law requires the payment of two (2) centavos documentary stamp tax as provided under Section 216 of Commonwealth Act No. 466 but this provision was amended by Section 5 of Republic Act No. 40 which took effect on October 1, 1946 increasing the documentary stamp tax to four (4) centavos. The pertinent provision on documentary stamp tax on bank checks is found in Section 216 of Commonwealth Act No. 466 as amended by Republic Act No. 40, which is quoted below: "Sec. 216 Stamp tax on bank checks, drafts, certificates of deposit not bearing interest, and other instruments. On each blank check, draft or certificate of deposit not drawing interest or order for the payment of any sum of money drawn upon or issued by any bank, trust company, or any person or persons, companies or corporations, at sight or on demand, there shall be collected a documentary stamp tax of four centavos." cdt Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue