Documentary Stamp Tax Exemption — Checks

February 5, 1980 BIR RULING NO. 012-80 2nd Indorsement Returned to the Director, Security Printing Plant, Central Bank of the Philippines, East Avenue, Diliman, Quezon City, the within papers requesting recommendation and clarification whether the checks ordered to be printed and for the use of the following are subject to documentary stamp tax, viz 1. The Philippine National Bank; 2. AFP Retirement and Separation Benefit System; 3. Metals Industry Research and Development Center (MIRDC); 4. Peoples Development Bank; and 5. Inday Tarciana Borromeo Foundation, Inc. 1. The Philippine National Bank being a government-owned corporation is subject to documentary stamp tax on the checks issued by it, in view of Section 23 of P.D. No. 1177. (BIR Ruling No. 127-79 dated December 13, 1979. cdti 2. P.D. No. 361 created the AFP Retirement and Separation Benefit System, prescribing the payment of retirement and separation benefits provided under existing laws to military members of the Armed Forces and such other laws as may be enacted in the future applicable to Commissioned officers and enlisted personnel of the Armed Forces. Section 2(c) of P.D. No. 361 provides: "(C) All earnings of the System which shall not be subject to any tax whatsoever." It is very clear that the exemption of the System is limited to taxes on income. As the documentary stamp tax is not a tax on income, it follows that the System is not exempt from the payment thereof. 3. The Metals Industry Research and Development Corporation Center, under Section 4 of R.A. No. 6824, is a non-stock, non-profit corporate entity. However, said law creating the Center does not exempt it from internal revenue taxes. Such being the case, it is subject to documentary stamp taxes. 4. Peoples Development Bank . Section 10 of R.A. No. 4093, as amended by R.A. No. 4887 provides: "Sec. 10. All private development banks, with net assets not exceeding ten million pesos for Class C, twenty million pesos for Class B, and thirty million pesos for Class A banks excluding the counterpart capital subscribed and paid-in by the Development Bank of the Philippines, shall be totally exempt from payment of all taxes, charges and fees of whatever nature and description except from compensating tax and tariff duties. . . ." Since, as certified by the Central Bank, the Peoples Development Bank, a class B bank, has no asset amounting to P4,345,000.00 as of June 30, 1979, it is exempt from the payment of all taxes. Hence, said bank is exempt from the payment of the documentary stamp tax. 5. Inday Tarciana Borromeo Foundation, Inc. is only exempt from the income tax as a charitable organization, under Section 27(e) of the Tax Code of 1977, as amended. Therefore, said Foundation is not exempt from documentary stamp taxes. Very truly yours, RUBEN B. ANCHETA Acting Commissioner