Welfare Fund Administration for Overseas Workers Subject to Documentary Stamp Tax on Deed of Sale

March 8, 1984 BIR RULING NO. 056-84 245-056-83-056-84 Gentlemen : This refers to your letter dated December 23, 1983 stating that the Welfare Fund Administration for the Overseas Workers, a government agency attached to the Ministry of Labor and Employment is seriously considering the purchase of a parcel of land situated at the corner of Ortigas and Epifanio de los Santos Avenue, Mandaluyong, Metro Manila, together with the multiple storey building and other improvements standing thereon which is owned by Delta Motor Sales Corporation, a private domestic corporation; and that as vendee, you will assume the documentary stamp tax due on the Deed of Sale. You now request exemption from documentary stamp tax on the said deed of sale. In reply, I have the honor to inform you that Section 222 of the Tax Code which reads: "Sec. 222. Stamp taxes upon documents, instrument, and papers. Upon documents, instruments, and papers and acceptances, assignments sales, and transfers, of the obligation, right, or property incident thereto, there shall be levied, collected and paid, for and in respect of the transaction so had or accomplished, the corresponding documentary stamp taxes prescribed in the following sections of this Title, by the person making, signing, issuing, accepting, or transferring the same, and at the time such act is done or transaction had," places the burden of paying the tax upon the parties to the contract and leave the tax to be paid indifferently by either party, and accordingly, the party assuming payment of said taxes becomes directly liable therefor. (Sta. Clara Lumber Company, Inc. vs. Jose Araas, CTA Case No. 502, June 12, 1959) In the instant case, therefore, the vendee Welfare Fund Administration for Overseas Workers has become directly liable for the tax; and although it is a government unit, it is subject to the documentary stamp tax imposed by Section 245 of the Tax Code, pursuant to Section 23 of P.D. No. 1177. However, it is entitled to either a tax subsidy or payments constituting equity contributions in which case, it shall not be required to pay cash or its equivalent. The revenue collecting agencies shall instead issue a "Payment Compliance Certificate" indicating the nature of the assessment and amount due. The subsidy shall be effected through journal vouchers or their equivalent. (See Joint Budget Circular No. 289 and Pars. 4, 6 and 9, Finance Circular No. 2-78, implementing Section 23, Presidential Decree No. 1177). Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner