BIR Ruling

December 12, 1969 Ed. A. Keller & Co. Ltd. Shurdut Bldg., Gen. Luna St. P. O. Box 319 Manila Attention: Mr . John N . Baylis Manager Gentlemen : This is with reference to your letter dated November 18, 1969 regarding the marine insurance coverage on the importations of goods by the various Open Messes at Clark Air Base & John Hay Air Base. In your letter you alleged that in the years past, marine insurance coverage on the importations of goods by the various Open Messes have been covered under U.S. Dollar policies issued outside the Philippines; that under the set-up the premiums were paid outside the Philippines and consequently, no documentary and science stamp taxes have been involved. You further alleged that the circumstances now obtaining had changed, and that your insurance company issued recently marine open policies in favor of the following Messes: 1. Airmen's Open Mess 2. Non-Commissioned Officers' Open Mess 3. Clark Air Base Officers' Open Mess 4. Clark Air Base Central Base Fund 5. Clark Locker Sundry Fund 6. John Hay Air Base Consolidated Open Mess Fund Accordingly under these open policies both the premiums and the claims are payable in Philippine currency. The premiums are recorded in the books of your company and are subject to the local premium and income taxes. Under ordinary circumstances you would also charge the Messes with documentary and science stamp taxes. It is noteworthy to state in this connection that while the Clark Air Base Staff Judge Advocate admits liability of the Open Messes for regular documentary stamp tax, he however, claims that they are not liable for the science stamp tax by virtue of the provisions of the Military Bases Agreement. In reply thereto, I have the honor to inform you that the Military Bases Agreement contemplates exemption only from taxes to which the Open Messes, as part of U.S. Military Bases, are directly liable. The documentary and science stamp taxes due on the insurance policies in question are the direct tax liability of your Company since you were the one which issued them. The fact that the taxes were charged by your Company to the Open Messes does not make the latter liable to the Government for the payment thereof. LibLex Since you are the party liable for the payment of the regular documentary stamp tax on the policies in question, you are also liable for the payment of the science taxes. The Science stamp tax is not any other kind of tax, but only an additional documentary stamp tax. Pursuant to Republic Act No. 5448, the science stamp tax is collected at the same time, in the same manner and subject to the same penalties as the documentary stamp tax imposed by the Tax Code. Hence, documents subject to the regular documentary stamp tax shall perforced also be subject to science stamp tax. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue