DST on the Original Issue of Certificates of Stock to Stockholders

August 10, 1989 BIR RULING NO. 170-89 176 24 (a) 000-00 170-89 Gentlemen : This refers to your letter dated May 13, 1988 in behalf of your client, Philippine Telegraph and Telephone Corporation (PT&T) requesting opinion as to whether it is exempt from the payment of documentary stamp tax on its original issue of certificates of stock to stockholders. It appears that PT&T is a holder of legislative franchise under Republic Act No. 4161 as amended by Republic Act No. 5068 which provides that said company shall pay 5% franchise tax on gross receipts in lieu of all taxes; and that you believe that said privilege of your client was not withdrawn by P.D. No. 1955 inasmuch as its implementing rules, viz: Ministry Order Nos. 35-84 and 39-84, respectively provide that the withdrawal of tax exemption under said Decree "does not affect those covered by the non-impairment clause of the constitution such as franchise" and "does not apply to exemption or preferential treatment embodied in the following laws: a) The National Internal Revenue Code as amended . . ." citing BIR Ruling No. 267-000-00-031-85 dated February 27, 1985. In reply, please be informed that "in lieu of all taxes" privilege of your client has been withdrawn effective March 10, 1987 by Executive Order No. 93. Such being the case, PT&T is subject to documentary stamp tax on its original issue of certificates of stock pursuant to Section 175 of the Tax Code as amended by Executive Order No. 273. Moreover, pursuant to Section 24(a) of the same Code as amended, it is now subject to income tax in addition to the 5% franchise tax. aisadc Very truly yours, (SGD.) JOSE U. ONG Commissioner