Documentary Stamp Tax — Party to Contract Liable for Its Payment

October 31, 1979 BIR RULING NO. 097-79 Documentary stamp tax party to contract liable for its payment This refers to your letter dated June 27, 1979 requesting that a certificate be issued exempting you from the payment of documentary stamp tax. Section 12 of Presidential Decree No. 87 provides: "Section 12. Privileges of Contractors . The provisions of any law to the contrary notwithstanding, a contract executed under this Act may provide that the contractor shall have the following privileges: cd (a) Exemption from all taxes except income tax. xxx xxx xxx xxx xxx xxx It is represented that Article 6.2(a) of the Service Contract entered between your corporation and the Bureau of Energy Development provides that you are exempt from all taxes, except income tax. In reply, I have the honor to inform you that the law applicable in this case is Section 222 of the Tax Code of 1977 which provides: "SEC. 222. Stamp taxes upon documents, instruments, and papers . Upon documents, instruments, and papers, and upon 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." It will be noted from the abovequoted provision that the documentary stamp tax is payable by either the person making, signing, issuing, accepting , or transferring the document, instrument or paper. Said provision leaves the tax to be paid indifferently by either party. (Sta. Clara Lumber Company, Inc. vs. Jose Aranas, C.T.A. Case No. 502, June 12, 1959). Thus, in case you are a party to a contract, which is in connection with your petroleum operations covered by your service contract, and considering that you are exempt from the payment of the documentary stamp tax under the abovequoted provisions of P.D. No. 87, the other party who is not tax exempt, shall be liable therefor. On the other hand, if under the terms of the contract, you assumed the payment of the documentary stamp tax and thereby become directly liable for the tax, the said document is exempt from the documentary stamp tax in view of your exemption under P.D. No. 87. aisa dc