BIR Ruling

March 20, 1972 The Philippine Petroleum Corporation P. O. Box 451, Manila Attention: Mr . Marcelo N . Fernando Secretary Gentlemen : This refers to your letter dated March 16, 1972, requesting a ruling on your exemption from the payment of the documentary and science stamp taxes under R. A. No. 5186. It appears that your company, a BOI registered pioneer industry engaged in the production of lube oil base stocks, is the Vendor of several parcels of land; and, it is stipulated in the Deed of Sale that as the Vendor you pay one-half of the total costs of the documentary and science stamps to be affixed on the said document, the other held thereof to be paid by the Vendee. In reply, I have the honor to inform you that notwithstanding the fact that your company assumed to pay one-half of the documentary and science stamp taxes due on the said Deed of Sale, it is nevertheless exempt from the payment thereof by virtue of Sec. 8(a) of R. A. No. 5186, the pertinent portion of which is quoted as follows: "Sec. 8. Incentives to a Pioneer Enterprise . . . . (a) Tax Exemptions . Exemption from all taxes under the National Internal Revenue Code, except income tax, to the following extent: (1) One hundred per cent up to December 31, 1972; . . ." In this connection, it is to be stated that this Office had consistently ruled that where a tax exempt person is party to a taxable transaction, the tax is nonetheless due and payable, the same to be paid by the other party to the transaction. However, since the propriety and legality of the agreement between your company and the Vendee to equally pay the documentary and science stamps to be affixed on the Deed of Sale has been recognized in the case of Sta. Clara Lumber Co., Inc. vs. Aranas, (CTA Case No. 502, June 12, 1959), only the Vendee is required to pay its share of the value of said stamps. Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue