DST on the Representative Copy of a Private Commercial Paper

December 11, 1989 BIR RULING NO. 241-89 180 000-00 241-89 Gentlemen : This refers to your letter dated August 15, 1989 requesting a ruling as to whether private commercial papers (CP's) issued by private companies are subject to the documentary stamp tax and in the affirmative, the amount due on the original issuance and on the subsequent transfer thereof. In reply, please be informed that the representative copy of said commercial paper submitted by you shows that it comes within the legal definition of a promissory note, that is, "an unconditional promise in writing by one person to another signed by the maker engaging to pay on demand or at a fixed or determinable future time, a sum certain in money to such other person or to order or to bearer, free from restrictions as to registration or transfer and usually without coupons." (Section 40, Documentary Stamp Tax Regulations) Accordingly, said commercial paper (CP), being a negotiable promissory note, is subject to documentary stamp tax at the rate of P0.20 per P200.00 of the face value of such document or fractional part thereof, pursuant to Section 180 of the Tax Code, as amended, payable by the company which originally issued the note. The subsequent transfer of said promissory note is also subject to the documentary stamp tax at the same rate prescribed in said Section 180 of the Tax Code, payable by the party transferring the note. Section 42 of the Revised Documentary Stamp Tax Regulations (Regulations No. 26) provides: "Sec. 42. Responsibility for Payment of Tax on Promissory Note . The person who signs or issues a promissory note and any person transferring or using a promissory note can be held responsible for the payment of the documentary stamp tax." aisadc Very truly yours, (SGD.) JOSE U. ONG Commissioner