Payment of Documentary Stamp Tax

December 27, 1979 BIR RULING NO. 140-79 Payment of documentary stamp tax This refers to your letter dated September 10, 1979 requesting exemption of your client, Total Exploration S.A. Philippine Branch, a service contractor, from the payment of documentary stamp tax. It is represented that Section 6.2 of the Service Contract entered into by and between your client and the Ministry of Energy provides that your client is exempt from all taxes, except income tax. Section 12 of Presidential Decree No. 87 provides: "Sec. 12. Privileges of contractor . 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: cdt (a) Exemption from all taxes except income tax. xxx xxx xxx xxx xxx xxx 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 tax prescribed in the following transactions 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, accepted, 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 your client is a party to a contract, which is in connection with its petroleum explorations covered by its service contract, and considering that your client, Total Exploration S.A. Philippines Branch, is 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, your client assumed the payment of the documentary stamp tax, your client thereby becomes directly liable for the tax and since it is exempt from tax, the said document is exempt from the documentary stamp tax. (BIR Ruling No. 097-79 dtd. Oct. 31, 1979) casia