BIR Ruling

August 24, 1966 The Radio Communications of the Philippines, Inc. P.O. Box 2071 Manila Attention: Mr . Agapito S . Braga General Manager Gentlemen : This refers to your letter dated February 22, 1966 requesting (a) refund of the amount of P2,010.00 as alleged erroneously paid basic and additional residence taxes for 1965 and 1966, and (b) information as to whether or not under your franchise, Republic Act No. 4054, you are exempt from the documentary stamp tax prescribed in Section 210 of the Tax Code. cdti For ready reference, Section 14, Republic Act No. 2036, as amended by Section 2, Republic Act No. 4054 is quoted hereunder: "Sec. 14. In consideration of the franchise and rights hereby granted and any provision of law to the contrary notwithstanding, the grantee shall pay the same taxes as are now or may hereafter be required by law from other individuals, co-partnerships, private, public or quasi-public associations, corporations, or joint stock companies, on real estate, buildings and other personal property except radio equipment, machinery and spare parts needed in connection with the business of the grantee , which shall be exempt from customs duties, tariffs and other taxes, as well as those properties declared exempt in this section. In consideration of the franchise, a tax equal to one and one-half per centum of all gross receipts from the business transacted under this franchise by the grantee shall be paid to the Treasurer of the Philippines each year, within ten days after the audit and approval of the accounts as prescribed in this Act. Said tax shall be in lieu of any and all taxes of any kind, nature or description levied, established or collected by any authority whatsoever, municipal provincial or national, from which taxes the grantee is hereby expressly exempted." (Emphasis supplied). cdta It is clear from the foregoing provision that Radio Communications of the Philippines, Inc., is liable to pay taxes on its real estate, buildings and other personal property. It is, however, exempt from taxes on its radio equipment, machinery and spare parts needed in connection with its business as well as any other tax on its gross receipts upon payment of the 1% franchise tax thereon. Since documentary stamp taxes are imposed upon documents, instruments, and papers, and upon acceptances, assignments, sales, and transfers of the obligation, right or property incident thereto, the same are deemed not within the purview of the exemption provided for in the aforequoted law In view of the foregoing, this Office is of the opinion and so holds that Radio Communication of the Philippines, Inc. is not exempt from the documentary stamp tax prescribed in Section 210 of the Tax Code. Your request for refund will be referred to the Appellate Division, this Bureau, for appropriate action. cdt Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue