As Between the Pawnshop and the Pawner, Who Shall Bear the Documentary Stamp Tax on the Pawn Ticket?

March 19, 1992 BIR RULING NO. 095-92 173; 195 000-00 095-92 Bangko Sentral ng Pilipinas Maynila Attention: Mr . R . P . Lirio Managing Director In-Charge of SES IV, SES V and SRCAD Gentlemen : This refers to your letter dated October 3, 1991 requesting our opinion on the following queries: "1. As between the pawnshop and the pawner, who shall bear the documentary stamp tax on the pawn ticket? "2. In case the pawnshop bears the cost of the documentary stamp, may it legally shift the burden of the cost to the pawner?" In reply, please be informed that under Section 173 of the Tax Code, as amended by P.D. No. 1994, documentary stamp tax is payable by the person making, signing, issuing, accepting or transferring the document, instrument or paper. This provision leaves the tax to be paid indifferently by either party. (Sta. Clara Lumber Company, Inc. vs. Jose Araas, CTA Case No. 502, June 12, 1959) Accordingly, either the pawnshop or the pawner is liable for the payment of the documentary stamp tax imposed by Section 195 of the Tax Code on the pawn ticket issued. If the pawnshop assumes payment of the documentary stamp tax, it is the party directly liable therefor; hence, your question as to whether it (pawnshop) may legally shift the burden of the cost to the pawner is answered in the negative. Very truly yours, JOSE U. ONG Commissioner of Internal Revenue