Jaka vs CIR

7/25/2019 Jaka vs CIR

1/17

JAKA INVESTMENTS

CORPORATION,

Petitioner,

- versus-

COMMISSIONER OF

INTERNAL REVENUE,

Respondent.

G.R. No. 147629

Present:

CORONA, C.J.,

Chairperson,

VELASCO, JR.,

LEONARDO-DE CASTRO,

DEL CASTILLO, and

PEREZ,JJ.

Pro!"#ated:

J!"$ %&, %'('

) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - )

D E C I S I O N

LEONARDO-DE CASTRO,J.:

*e+ore the Co!rt is a petition +or reie o+ the D!"#"o$(/

o+ the Co!rt o+Appea"s dated A!#!st %%, %''' s!stainin# the Co!rt o+ Ta) Appea"s in den$in#

petitioners 0JA1A Inestents Corporations2 3"ai +or re+!nd o+ its a""e#ed

oerpa$ent o+ do3!entar$ stap ta) and s!r3har#es, as e"" as

the R#o%&'"o$%/dated 4ar3h %5, %''( "i6eise den$in# petitioners 4otion +or

Re3onsideration.

The ante3edent +a3ts are !ndisp!ted.

Soetie in (778, petitioner so!#ht to inest in JAKA E(&"'"#

Co)*o)+'"o$ JEC, hi3h as then p"annin# to !nderta6e an initia" p!9"i3

o++erin# 0IPO2 and "istin# o+ its shares o+ sto36 ith the Phi"ippine Sto36

E)3han#e. JEC in3reased its a!thoried 3apita" sto36 +ro One ;!ndred Ei#ht$-


2/17

4i""ion Ei#ht ;!ndred Si) Tho!sand To ;!ndred Pesos 0P='&,&'>,%''.''2 o!t

o+ the in3rease in the a!thoried 3apita" sto36 o+ JEC thro!#h a ta)-+ree e)3han#e

!nder Se3tion ?80320%2 o+ the Nationa" Interna" Reen!e Code 0NIRC2 o+ (755, as

aended, hi3h as e++e3ted 9$ the e)e3!tion o+ a S!9s3ription A#reeent and

Deed o+ Assi#nent o+ Propert$ in Pa$ent o+ S!9s3ription. @nder thisA#reeent, as pa$ent +or its s!9s3ription, petitioner i"" assi#n and trans+er to

JEC the +o""oin# shares o+ sto36:

0a2 (=8,%'&,8'8 shares in Rep!9"i3 "ass ;o"din#s Corporation 0R;C2,

092%,&%%,='' shares in Phi"ippine "o9a" Co!ni3ations, In3. 0PCI2,

032 5,87=,8&& shares in @nited Co3on!t P"anters *an6 0@CP*2, and

0d2(,?(?,(5> shares in ==/

On O3to9er (5, (778, Reen!e Distri3t O++i3er 0RDO2 Att$. Si)to S.

Es!iias IV 0RDO Es!iias2 iss!ed three Certi+i3ations,>/as +o""os:

Cert. No. Shares o+ Sto36 Do3!entar$ Staps
http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn3http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn4http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn5http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn6http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn3http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn4http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn5http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn6


3/17

78-('-(5-'5 5,87=,8&& @CP* shares P %?,8%?.(8

78-('-(5-'& (=8,%'&,8'? R;C shares 8&(,7'(.&&

78-('-(5-(8 %,&%%,='' PCI shares &&,%'?.(?

P=7?,=%&.(=

Petitioner, a+ter seein# the RDOs 3erti+i3ations, the tota" ao!nt o+ hi3h

as "ess than the a3t!a" ao!nt it had paid as do3!entar$ stap ta), 3on3"!ded

that it had oerpaid. Petitioner s!9se!ent"$ so!#ht a re+!nd +or the a""e#ed e)3ess

do3!entar$ stap ta) and s!r3har#es it had paid on the Aended S!9s3ription

A#reeent in the ao!nt o+ .

On O3to9er ((, (77>, petitioner +i"ed a petition +or re+!nd 9e+ore the Co!rt

o+ Ta) Appea"s, do36eted as C.T.A. C+# No. 423, hi3h as denied in

a D!"#"o$&/dated Jan!ar$ (7, (777. The Co!rt o+ Ta) Appea"s "i6eise denied

petitioners 4otion +or Re3onsideration in its R#o%&'"o$7/dated 4ar3h (, (777.

Petitioner appea"ed to the Co!rt o+ Appea"s 9$ a$ o+ petition +or

reie. The Co!rt o+ Appea"s s!stained the Co!rt o+ Ta) Appea"s in its D!"#"o$onCA-.R. SP No. =(&?8 dated A!#!st %%, %''' as e"" as in its R#o%&'"o$dated

4ar3h %5, %''( o+ petitioners 4otion +or Re3onsideration.

;en3e, petitioner is no 9e+ore this Co!rt to see6 the reersa" o+ the

!estioned De3ision and Reso"!tion o+ the Co!rt o+ Appea"s.

Petitioners ain 3ontention in this 3"ai +or re+!nd is that the ta) 9ase +or

the do3!entar$ stap ta) on the Aended S!9s3ription A#reeent sho!"d hae9een on"$ the shares o+ sto36 in R;C, PCI, and @CP* that petitioner had

trans+erred to JEC as pa$ent +or its s!9s3ription to the JEC shares, and sho!"d not

hae in3"!ded the 3ash portion o+ its pa$ent, 9ased on S!'"o$ 176o+ the

Nationa" Interna" Reen!e Code o+ (755, as aended 9$ Rep!9"i3 A3t No. 5>>',

or the Ne Do3!entar$ Staps Ta) La 0the (778 Ta) Code2, the "a app"i3a9"e
http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn7http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn8http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn9http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn7http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn8http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn9


4/17

at the tie o+ the transa3tion. Petitioner ar#!es that the 3ash 3oponent o+ its

pa$ent +or its s!9s3ription to the JEC shares, tota"in# Three ;!ndred Seent$

4i""ion Seen ;!ndred Si)t$-Si) Tho!sand Pesos 0P?5',5>>,'''.''2 sho!"d not

hae 9een 3har#ed an$ do3!entar$ stap ta). Petitioner 3"ais that there as

oerpa$ent 9e3a!se the ta) d!e on the trans+erred shares as on"$ o+ the (778 Ta) Code. Petitioner ar#!es that the do3!entar$

stap ta) iposed !nder Se3tion (5= is d!e on ori#ina" iss!an3es o+ 3erti+i3ates o+

sto36 and is 3op!ted 9ased on the a##re#ate par a"!e o+ the shares to 9e iss!ed

and that these 3erti+i3ates o+ sto36 are iss!ed on"$ !pon +!"" pa$ent o+ the

s!9s3ription pri3e s!3h that !nder the *!rea! o+ Interna" Reen!es 0*IRs2 Reised

Do3!entar$ Stap Ta) Re#!"ations,

('/

it is stated that the do3!entar$ stap ta)on the ori#ina" iss!an3e o+ 3erti+i3ates o+ sto36 is iposed on +!""$ paid shares o+

sto36 on"$. Petitioner a""e#es that it is the iss!in# 3orporation hi3h is priari"$

"ia9"e +or the pa$ent o+ the do3!entar$ stap ta) on the ori#ina" iss!an3e o+

shares o+ sto36.Petitioner +!rther ar#!es that the do3!entar$ stap ta) on Se3tion

(5> o+ the (778 Ta) Code is iposed +or eer$ trans+er o+ shares or 3erti+i3ates o+

sto36, 3op!ted 9ased on the par a"!e o+ the shares to 9e trans+erred, and is d!e
http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn10http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn10


5/17

hether a 3erti+i3ate o+ sto36 is a3t!a""$ iss!ed, indorsed or de"iered p!rs!ant to

s!3h trans+er. It is the trans+eror ho is "ia9"e +or the do3!entar$ stap ta) on the

trans+er o+ shares.

Petitioner 3"ais that the do3!entar$ stap ta) !nder Se3tion (5= atta3hesto the 3erti+i3ates o+ sto36 to 9e iss!ed 9$ irt!e o+ petitioners s!9s3ription hi"e

the do3!entar$ stap ta) !nder Se3tion (5> atta3hes to the Aended

S!9s3ription A#reeent, sin3e it is this instr!ent that eiden3es the trans+er o+

the R;C, PCI and @CP* shares +ro petitioner to JEC.

Petitioner 3ontends that at the tie o+ the e)e3!tion o+ the Aended

S!9s3ription A#reeent, the JEC shares or 3erti+i3ates s!9s3ri9ed 9$ petitioner

3o!"d not hae 9een iss!ed 9$ JEC 9e3a!se the sae ere $et to 9e so!r3ed +rothe in3rease in a!thoried 3apita" sto36 o+ JEC, hi3h in t!rn had $et to 9e

approed 9$ the Se3!rities and E)3han#e Coission 0SEC2. Petitioner th!s

reasons that the do3!entar$ stap ta) !nder Se3tion (5= 3o!"d not hae a33r!ed

at the tie the Aended S!9s3ription A#reeent as e)e3!ted 9e3a!se no ri#ht to

the shares had neither 9een nor 3o!"d 9e esta9"ished in +aor o+ the petitioner at

s!3h tie. Petitioner theories that the ear"iest tie that the s!9s3ription 3o!"d

a3t!a""$ 9e e)e3!ted o!"d 9e hen the SEC approes the in3rease in the

a!thoried 3apita" sto36 o+ JEC.On the other hand, !pon the e)e3!tion o+ the

Aended S!9s3ription A#reeent, the assi#nent or the trans+er o+ R;C, PCIand @CP* shares in +aor o+ JEC 0hi3h is eiden3ed 9$ said a#reeent2, is

deeed iediate"$ en+or3ea9"e as this is a ne3essar$ re!ireent o+ the SEC.

Petitioner points o!t that Se3tion (5= o+ the (778 Ta) Code iposes a

do3!entar$ stap ta) on eer$ ori#ina" iss!an3e o+ !)'""!+'# o #'o!5,

hereas Rep!9"i3 A3t No. &8%8, the Ta) Re+or A3t o+ (775 0the (775 Ta) Code2,

aended this proision and iposed a do3!entar$ stap ta) on the ori#ina"

iss!an3e o+ #+)# o #'o!5. Petitioner ar#!es that !nder Se3tion (5= o+ the (778Ta) Code, there as no do3!entar$ stap ta) d!e on the ere e)e3!tion o+ a

s!9s3ription a#reeent to shares o+ sto36, and the ta) on"$ a33r!ed !pon iss!an3e

o+ the 3erti+i3ates o+ sto36. In this 3ase, the 3han#e in ordin# introd!3ed 9$ the

(775 Ta) Code 3annot 9e ade app"i3a9"e to the Aended S!9s3ription

A#reeent, hi3h as e)e3!ted in (778, 9e3a!se it is a e""-sett"ed do3trine in

ta)ation that a "a !st hae prospe3tie app"i3ation.


6/17

Last"$, petitioner a""e#es that it is entit"ed to re+!nd !nder the NIRC.((/

In his Co$' To P'"'"o$ o) R"8,(%/respondent aers that the

"oer 3o!rts did not err in den$in# petitioners 3"ai +or re+!nd, and that petitioneris raisin# iss!es in this petition hi3h ere not raised in the "oer 3o!rts.

Respondent aintains that the do3!entar$ stap ta) iposed in this 3ase

is on the ori#ina" iss!e o+ 3erti+i3ates o+ sto36 o+ JEC on the s!9s3ription 9$ the

petitioner o+ the P='&,&'>,%''.'' shares o!t o+ the in3rease in the a!thoried

3apita" sto36 o+ the +orer p!rs!ant to Se3tion (5= o+ the NIRC. The do3!entar$

stap ta) as not iposed on the shares o+ sto36 oned 9$ petitioner in R;C,

PCI, and @CP*, hi3h ere"$ +or part o+ the partia" pa$ent o+ the s!9s3ri9edshares in JEC. Respondent aers that the ao!nts indi3ated in the Certi+i3ates o+

RDO Es!iias are the ao!nts o+ do3!entar$ stap ta) representin# the

e!ia"ent o+ ea3h #ro!p o+ shares 9ein# app"ied +or pa$ent. Considerin# that the

ao!nt o+ do3!entar$ stap ta) represented 9$ the shares o+ sto36 in the

a+oreentioned 3opanies ao!nted on"$ to P=7?,=%&.(=, hi"e the 9asi3

do3!entar$ stap ta) +or the entire s!9s3ription o+ P='&,&'>,%''.'' as

3op!ted 9$ respondents reen!e o++i3ers to the t!ne o+ P&'?,((>.5%, e)3"!sie o+

the pena"ties, "eain# a 9a"an3e o+ P%'7,=&&.=5, is a 3"ear indi3ation that the

pa$ent ade ith the shares o+ sto36 is ins!++i3ient.

Respondent 3"ais that the 3erti+i3ations ere iss!ed 9$ RDO Es!iias

p!rpose"$ to a""o the re#istration o+ trans+er o+ the shares o+ sto36 !sed in

pa$ent o+ the s!9s3ri9ed shares in the nae o+ JEC +ro petitioner 9$ the

Corporate Se3retar$ o+ the @CP* and are not eiden3e o+ the pa$ent o+ the

do3!entar$ stap ta) on the iss!an3e o+ the in3reased shares o+ sto36s o+ JEC.(?/

Respondent ar#!es that the do3!entar$ stap ta) atta3hes !pon a33eptan3e9$ the 3orporation o+ the sto36ho"ders s!9s3ription in the 3apita" sto36 o+ the

3orporation, and that the ter ori#ina" iss!e o+ the 3erti+i3ate o+ sto36 eans the

point at hi3h the sto36ho"der a3!ires and a$ e)er3ise attri9!tes o+ onership

oer the sto36s.(8/Respondent +!rther ar#!es that the sto36s 3an 9e a"ienated the

diidends or +r!its deried there+ro 3an 9e enFo$ed and the$ 3an 9e 3one$ed,

p"ed#ed, or en3!9ered that the 3erti+i3ate, irrespe3tie o+ hether or not it is in
http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn11http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn12http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn13http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn14http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn11http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn12http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn13http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn14


7/17

the a3t!a" 3onstr!3tie possession o+ the sto36ho"der, is 3onsidered iss!ed 9e3a!se

it is ith a"!e and, hen3e, the do3!entar$ stap ta) !st 9e paid and 3on3"!des

that a person a$ on shares o+ sto36 itho!t possessin# a 3erti+i3ate o+

sto36. Respondent 3itesCommissioner of Internal Revenue v. Construction

Resources of Asia, Inc.,(=/here the Co!rt he"d:The de"ier$ o+ the 3erti+i3ates o+ sto36s to the priate

respondentGs sto36ho"ders hether a3t!a" or 3onstr!3tie, is not essentia"

+or the do3!entar$ and s3ien3e staps ta)es to atta3h. Hhat is ta)ed is

the prii"e#e o+ iss!in# shares o+ sto36 and, there+ore, the ta)es a33r!e at

the tie the shares are iss!ed. The on"$ !estion 9e+ore !s is hether or

not said priate respondents iss!ed the 3erti+i3ates o+ sto36 3oerin# the

paid-in-3apita" o+P(5,&&','''.''.

Respondent 3"ais that it is e""-sett"ed as a #enera" r!"e o+ Corporation

La that a s!9s3ri9er +or sto36 in a 3orporation or p!r3haser o+ sto36 9e3oes a

sto36ho"der as soon as his s!9s3ription is a33epted 9$ the 3orporation hether a

3erti+i3ate o+ sto36 is iss!ed to hi or not, and a"tho!#h he a$ hae no 3erti+i3ate,

he is there!pon entit"ed to a"" the ri#hts and is s!9Fe3t to a"" the "ia9i"ities o+ a

sto36ho"der.

Respondent ar#!es, 9ased on the a9oe, that the 3ontention o+ petitioner thatthe do3!entar$ stap ta) !nder Se3tion (5= o+ the (778 Ta) Code 3o!"d not hae

a33r!ed at the tie the Aended S!9s3ription A#reeent as e)e3!ted sin3e the

in3rease in 3apita" sto36 o+ JEC had $et to 9e approed 9$ the SEC as

ina33!rate. ;e states that it is eident +ro the Aended S!9s3ription A#reeent

that the s!9s3ri9ed shares +ro the in3rease in JECs sto36 ere +!""$ paid thro!#h

3ash and shares o+ sto36.

Respondent s!9its that the 3han#e in ordin#, +ro 3erti+i3ates to shares

o+ sto36, introd!3ed to Se3tion (5= 9$ the (775 Ta) Code, as a ere 3"ari+i3ation

and 3odi+i3ation o+ the +ore#oin# prin3ip"e or po"i3$.

Respondent stresses that the do3!entar$ stap ta) 3an 9e "eied or

3o""e3ted +ro the person a6in#, si#nin#, iss!in#, a33eptin#, or trans+errin# the

o9"i#ation or propert$, as proided in Se3tion (5? o+ the Ta) Code.


8/17

In its R*% 'o R#*o$/$'# Co$' 'o ' P'"'"o$,(>/petitioner

3ontends that respondent erroneo!s"$ insists that the do3!entar$ stap ta) so!#ht

to 9e re+!nded is the one iposed on the s!9s3ription 9$ petitioner

to P='&,&'>,%''.'' ne shares o+ JEC. Petitioner +!rther 3ontends that sin3e thedo3!entar$ stap ta) d!e on the iss!an3e o+ ne shares or on ori#ina" shares

is P%.'' +or eer$P%'' !nder Se3tion (5= o+ the Ta) Code, then the do3!entar$

stap ta) on petitioners s!9s3ription to JEC shares sho!"d ao!nt

to P=,'&&,'>%.'', hi3h is !3h hi#her than the P&'?,((>.5% 9asi3 do3!entar$

stap ta) paid !nder ATAP No. (=((7%'.(5/Petitioner ar#!es that at the tie the

do3!entar$ stap ta) as paid, 9e+ore a ta)pa$er as a""oed to pa$ the ta)es

d!e, a *IR reen!e o++i3er o!"d +irst 3op!te the ta) d!e and then iss!e an

a!thorit$ to a33ept pa$ent 0ATAP2 and it as er$ !n"i6e"$ that the reen!eo++i3er 3o!"d hae ade s!3h a #"arin# ista6e.

Petitioner a""e#es that there is no *IR 3erti+i3ation re!ireent prior to the

iss!an3e o+ ori#ina" shares o+ sto36 and that it is on"$ !pon the re#!"ar ann!a"

a!dit o+ the 9oo6s o+ a 3orporation that the *IR deterines i+ the do3!entar$

stap ta) on ne or ori#ina" iss!an3es o+ shares, i+ an$ ere iss!ed, had in +a3t

9een paid. I+ not, then a de+i3ien3$ assessent, ith pena"ties and s!r3har#es,

o!"d then 9e ade 9$ the *IR. Petitioner +!rther a""e#es that, on the other hand,

9e+ore the trans+er o+ iss!ed and o!tstandin# shares to a ne oner is re3orded inthe 9oo6s o+ a 3orporation, the 3apita" #ains ta) thereon and the do3!entar$

stap ta) on the trans+er !st +irst 9e paid, and a *IR 3erti+i3ation !st 9e

presented to the Corporate Se3retar$ a!thoriin# the 3orporation to re3ord the

trans+er, otherise, the 3orporate se3retar$ sha"" 9e s!9Fe3ted to pena"ties.

Petitioner 3"ais that the three *IR 3erti+i3ations in this 3ase spe3i+i3a""$

a""o the re#istration o+ the @CP*, R;C, and PCI shares in the nae o+ JEC,

the trans+eree, and that said 3erti+i3ations eiden3e pa$ent o+ the ta)es d!e on thetrans+er o+ the shares +ro petitioner to JEC, not on the ori#ina" iss!an3e o+ shares

o+ JEC.

The parties respe3tie eoranda 3ontained reiterations o+ the a""e#ations

raised in their respe3tie p"eadin#s as dis3!ssed a9oe.
http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn16http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn17http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn16http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn17


9/17

T #o% "##& 'o 0 )#o%/ "# 8') *'"'"o$) "# $'"'%/ 'o + *+)'"+%

)&$/ o ' /o!&$'+) #'+* '+ +$/ #&)!+)# "' *+"/ o$ ' !&'"o$

o ' A$// S&0#!)"*'"o$ A)$'.

In 3"ais +or re+!nd, the 9!rden o+ proo+ is on the ta)pa$er to proeentit"eent to s!3h re+!nd. As e he"d in Compagnie Financiere Sucres Et

Denrees v. Commissioner of Internal Revenue(&/-

A"on# ith po"i3e poer and einent doain, ta)ation is one o+

the three 9asi3 and ne3essar$ attri9!tes o+ soerei#nt$. Th!s, the State

3annot 9e depried o+ this ost essentia" poer and attri9!te o+

soerei#nt$ 9$ a#!e ip"i3ations o+ "a. Rather, 9ein# dero#ator$ o+

soerei#nt$, the #oernin# prin3ip"e is that ta) e)eptions are to 9e

3onstr!ed instrictissimi jurisa#ainst the ta)pa$er and "i9era""$ in +aoro+ the ta)in# a!thorit$ and 8o !%+"# +$ *'"o$ ' 0 +0%

'o ;'" "# !%+" 0 ' !%+)#' )+$' o #'+'&'.

) ) ) Ta) re+!nds are a dero#ation o+ the StateGs ta)in# poer.

;en3e, "i6e ta) e)eptions, the$ are 3onstr!ed stri3t"$ a#ainst the

ta)pa$er and "i9era""$ in +aor o+ the State. Conse!ent"$, he ho 3"ais

a re+!nd or e)eption +ro ta)es has the 9!rden o+ F!sti+$in# the

e)eption 9$ ords too p"ain to 9e ista6en and too 3ate#ori3a" to 9e

isinterpreted. ) ) ).

It as th!s in3!9ent !pon petitioner to sho 3"ear"$ its 9asis +or 3"aiin#

that it is entit"ed to a ta) re+!nd. This, to o!r ind, the petitioner +ai"ed to do.

The Co!rt o+ Ta) Appea"s 3onstr!ed the 3"ai +or e)eption stri3t"$ a#ainst

petitioner and he"d that:

The +o3a" iss!e hi3h is presented +or o!r 3onsideration is

hether or not the trans+er o+ the (,?(?,(5>


10/17

>'2

) ) ) )

@nderstood to ean hat it p"ain"$ e)pressed, the DST

iposition is essentia""$ addressed and dire3t"$ 9ro!#ht to 9ear !pon the

DOC@4ENT eiden3in# the transa3tion o+ the parties hi3h esta9"ishes

its ri#hts and o9"i#ations.

In the 3ase at 9ar, the ri#hts and o9"i#ations 9eteen petitioner

JA1A Inestents Corporation and JA1A E!ities Corporation are

esta9"ished and en+or3ea9"e at the tie the Aended S!9s3ription

A#reeent and Deed o+ Assi#nent o+ Propert$ in Pa$ent o+

S!9s3ription ere si#ned 9$ the parties and their itness, so is the ri#ht


11/17

o+ the state to ta) the a+orestated do3!ent eiden3in# the

transa3tion. DST "# + '+ o$ ' /o!&$' "'#% +$/ ')o) ' )+'

o '+ ' 0 /')"$/ o$ ' 0+#"# o 8+' "# 8)"''$ o)

"$/"!+'/ o$ ' "$#')&$' "'#% "$/*$/$' o +$ +/;'$'

8"! ' *+)'"# + +) o$ "$ ' &'&)) ) ).The DST !pon the

ta)a9"e do3!ent sho!"d 9e paid at the tie the 3ontra3t is e)e3!ted orat the tie the transa3tion is a33op"ished. The oerridin# p!rpose o+

the "a is the 3o""e3tion o+ ta)es. So that hen it paid in 3ash the ao!nt

o+P?5',5>>,'''.'' in s!9stit!tion +or, or rep"a3eent o+ the (,?(?,(5>

= do3!entar$ staps ta)

p!rs!ant to Se3tion (5= o+ NIRC is in order.

T, +**%"$ ' #''%/ )&% "$ '"# ;&)"#/"!'"o$ '+', + !%+"

o) )&$/ "# "$ ' $+'&) o + !%+" o) *'"o$, ', #o&%/ 0

!o$#')&/ "$ strictissimi juris++"$#' ' '+*+) Co"##"o$) o

I$')$+% R$& #. To5o S"**"$ Co., L'/., 244 SCRA ==2 +$/

#"$! ' *'"'"o$) +"%/ 'o +//&! "/$! '+' 8"%% #o8 '+' "' "#

*' )o DST &$/) S!'"o$ 199 o) o') *)o"#"o$ o ' '+

!o/, 5.''. This ar#!ent does not ho"d

ater. As dis3!ssed ear"ier, + /o!&$'+) #'+* "# %"/ &*o$ '

*)""%, ' o**o)'&$"' +$/ ' +!"%"' o)/ +' !+$# o)

' ')+$#+!'"o$ o ' 0"$##. T"# 0"$ ' !+#, +$/ +# !o))!'%

o&$/ 0 ' '+ !o&)', ' /o!&$'+) #'+* '+ "*o#"'"o$ "#

##$'"+%% +//)##/ +$/ /")!'% 0)o&' 'o 0+) &*o$ '

/o!&$' "/$!"$ ' ')+$#+!'"o$ o ' *+)'"# 8"! #'+0%"##

"'# )"'# +$/ o0%"+'"o$#, hi3h in the 3ase at 9ar, as esta9"ished and

en+or3ea9"e !pon the e)e3!tion o+ the Aended S!9s3ription A#reeent

and Deed o+ Assi#nent o+ Propert$ in Pa$ent o+ S!9s3ription.


12/17

4oreoer, the do3!entar$ stap ta) is iposed on the entire

s!9s3ription 0i.e.,s!9s3ri9ed 3apita" sto362 hi3h is the ao!nt o+ the

3apita" sto36 s!9s3ri9ed hether +!""$ paid or not. It 3onnotes an ori#ina"

s!9s3ription 3ontra3t +or the a3!isition 9$ a s!9s3ri9er o+ !niss!ed

shares in a 3orporation, hi3h in this 3ase is e!ia"ent to a tota" par

a"!e o+ Php='&,&'>,%''.''.

*esides, a ta) 3annot 9e iposed !n"ess it is s!pported 9$ the

3"ear and e)press "an#!a#e o+ a stat!te on the other hand, on3e the ta) is

!n!estiona9"$ iposed, a 3"ai o+ e)eption +ro ta) pa$ents !st

9e 3"ear"$ shon and 9ased on "an#!a#e in the "a too p"ain to 9e

ista6en. And sin3e a 3"ai +or re+!nd is in the nat!re o+ a 3"ai +or

e)eption the sae is "i6eise 3onstr!ed instrictissimi jurisa#ainst the

ta)pa$er.

+indin#s o+ the Co!rt o+ Ta) Appea"s, hen s!pported 9$ s!9stantia"

eiden3e, i"" not 9e dist!r9ed on appea" !n"ess it is/ shon that the

said 3o!rt 3oitted #ross error in the appre3iation o+ +a3ts. In this 3ase,

the ta) 3o!rt did not deiate +ro this r!"e.

He +ind no error in the a9oe prono!n3eents o+ the Co!rt o+ Appea"s.

A do3!entar$ stap ta) is in the nat!re o+ an e)3ise ta). It is not iposed

!pon the 9!siness transa3ted 9!t is an e)3ise !pon the prii"e#e, opport!nit$ or

+a3i"it$ o++ered at e)3han#es +or the transa3tion o+ the 9!siness. It is an e)3ise !pon

the +a3i"ities !sed in the transa3tion o+ the 9!siness separate and apart +ro the

9!siness itse"+. Do3!entar$ stap ta)es are "eied on the e)er3ise 9$ persons o+

3ertain prii"e#es 3on+erred 9$ "a +or the 3reation, reision, or terination o+

spe3i+i3 "e#a" re"ationships thro!#h the e)e3!tion o+ spe3i+i3 instr!ents.%'/

Th!s, e hae he"d that /o!&$'+) #'+* '+# +) %"/

"$/*$/$'% o ' %+% #'+' o ' ')+$#+!'"o$# ""$ )"# ')'o. The

do3!entar$ stap ta)es !st 9e paid !pon the "##&+$!o+ the saidinstr!ents, 8"'o&' )+)/ 'o 8') ' !o$')+!'# 8"! + )"# 'o '

+) )#!"##"0%, o"/, o"/+0%, o) &$$o)!+0%.%(/

The re"eant proisions o+ the Ta) Code at the tie o+ the transa3tion are

!oted 9e"o:
http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn20http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn21http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn20http://sc.judiciary.gov.ph/jurisprudence/2010/july2010/147629.htm#_ftn21


13/17

S!. 17. Stamp tax on original issue of certificates of stock. O$

) o)""$+% "##&, hether on or#aniation, reor#aniation or +or an$

"a+!" p!rpose, o !)'""!+'# o #'o!5 0 +$ +##o!"+'"o$, !o*+$,

o) !o)*o)+'"o$#, ') #+%% 0 !o%%!'/ + /o!&$'+) #'+* '+ o

T8o *#o# P2.>> o$ +! '8o &$/)/ *#o#, o) )+!'"o$+% *+)'

')o, o ' *+) +%& o #&! !)'""!+'#: Proided, That in the 3ase

o+ the ori#ina" iss!e o+ sto36 itho!t par a"!e the ao!nt o+ the

do3!entar$ stap ta) herein pres3ri9ed sha"" 9e 9ased !pon the a3t!a"

3onsideration re3eied 9$ the asso3iation, 3opan$, or 3orporation +or

the iss!an3e o+ s!3h sto36, and in the 3ase o+ sto36 diidends on the

a3t!a" a"!e represented 9$ ea3h share.

S!. 176.Stamp tax on sales, agreements to sell, memoranda of

sales, deliveries or transfer of due-bills, certificates of obligation, orshares or certificates of stock. On a"" sa"es, or a#reeents to se"", or

eoranda o+ sa"es, or de"ieries, or trans+er o+ d!e-9i""s, 3erti+i3ates o+

o9"i#ation, or shares or 3erti+i3ates o+ sto36 in an$ asso3iation, 3opan$

or 3orporation, or trans+er o+ s!3h se3!rities 9$ assi#nent in 9"an6, or

9$ de"ier$, or 9$ an$ paper or a#reeent, or eorand! or other

eiden3es o+ trans+er or sa"e hether entit"in# the ho"der in an$ anner

to the 9ene+it o+ s!3h d!e-9i""s, 3erti+i3ates o+ o9"i#ation or sto36, or to

se3!re the +!t!re pa$ent o+ one$, or +or the +!t!re trans+er o+ an$ d!e-

9i"", 3erti+i3ates o+ o9"i#ation or sto36, there sha"" 9e 3o""e3ted

a do3!entar$ stap ta) o+ One peso 0P(.''2 on ea3h to h!ndredpesos, or +ra3tiona" part thereo+, o+ the par a"!e o+ s!3h d!e-9i"",

3erti+i3ates o+ o9"i#ation or sto36:rovided, That on"$ one ta) sha"" 9e

3o""e3ted on ea3h sa"e or trans+er o+ sto36 or se3!rities +ro one person

to another, re#ard"ess o+ hether or not a 3erti+i3ate o+ sto36 or

o9"i#ation is iss!ed, endorsed, or de"iered in p!rs!an3e o+ s!3h sa"e or

trans+er: androvided, furt!er, That in the 3ase o+ sto36 itho!t par

a"!e the ao!nt o+ the do3!entar$ stap herein pres3ri9ed sha"" 9e

e!ia"ent to tent$-+ieper centumo+ the do3!entar$ stap ta) paid

!pon the ori#ina" iss!e o+ said sto36:rovided, furt!ermore, That the ta)

herein iposed sha"" 9e in3reased to One peso and +i+t$ 3entaos 0P(.='29e#innin# (77>.

He +ind o!r dis3!ssion in the 3ase o+ Commissioner of Internal Revenue

v. First Express a"ns!op Compan#, Inc.%%/re#ardin# these sae proisions o+

the Ta) Code to 9e instr!3tie, and e !ote:


14/17

In Se3tion (5= o+ the Ta) Code, DST is iposed on the ori#ina"

iss!e o+ shares o+ sto36. The DST, as an e)3ise ta), is "eied !pon the

prii"e#e, the opport!nit$ and the +a3i"it$ o+ iss!in# shares o+ sto36.

In Commissioner of Internal Revenue v. Construction Resources of Asia,

Inc., this Co!rt e)p"ained that ' DST +''+!# &*o$ +!!*'+$! o

' #'o!5o%/)?# #&0#!)"*'"o$ "$ ' !o)*o)+'"o$?# !+*"'+% #'o!5

)+)/%## o +!'&+% o) !o$#')&!'" /%") o ' !)'""!+'# o

#'o!5. Citin#!ilippine Consolidated Coconut Ind., Inc. v. Collector of

Internal Revenue, the Co!rt he"d:

The do3!entar$ stap ta) !nder this proision o+

the "a a$ 9e "eied on"$ on3e, that is !pon the ori#ina"

iss!e o+ the 3erti+i3ate. The 3r!3ia" point there+ore, in the

3ase 9e+ore @s is the proper interpretation o+ the ordGiss!eG. In other ords, hen is the 3erti+i3ate o+ sto36

deeed Giss!edG +or the p!rpose o+ iposin# the

do3!entar$ stap ta) Is it at the tie the 3erti+i3ates o+

sto36 are printed, at the tie the$ are +i""ed !p 0in hose

nae the sto36s represented in the 3erti+i3ate appear as

3erti+ied 9$ the proper o++i3ia"s o+ the 3orporation2, at the

tie the$ are re"eased 9$ the 3orporation, or at the tie

the$ are in the possession 0a3t!a" or 3onstr!3tie2 o+ the

sto36ho"ders onin# the

) ) ) )

Ordinari"$, hen a 3orporation iss!es a 3erti+i3ate o+

sto36 0representin# the onership o+ sto36s in the

3orporation to +!""$ paid s!9s3ription2 the 3erti+i3ate o+

sto36 3an 9e !ti"ied +or the e)er3ise o+ the attri9!tes o+

onership oer the sto36s entioned on its +a3e. The

sto36s 3an 9e a"ienated the diidends or +r!its deried

there+ro 3an 9e enFo$ed, and the$ 3an 9e 3one$ed,

p"ed#ed or en3!9ered. The 3erti+i3ate as iss!ed 9$ the3orporation, irrespe3tie o+ hether or not it is in the a3t!a"

or 3onstr!3tie possession o+ the sto36ho"der, is 3onsidered

iss!ed 9e3a!se it is ith a"!e and hen3e the do3!entar$

stap ta) !st 9e paid as iposed 9$ Se3tion %(% o+

the Nationa" Interna" Reen!e Code, as aended.


15/17

In Se3tion (5> o+ the Ta) Code, DST is iposed on the sa"es,

a#reeents to se"", eoranda o+ sa"es, de"ieries or trans+er o+ shares

or 3erti+i3ates o+ sto36 in an$ asso3iation, 3opan$, or 3orporation, or

trans+er o+ s!3h se3!rities 9$ assi#nent in 9"an6, or 9$ de"ier$, or 9$

an$ paper or a#reeent, or eorand! or other eiden3es o+ trans+er

or sa"e hether entit"in# the ho"der in an$ anner to the 9ene+it o+ s!3h3erti+i3ates o+ sto36, or to se3!re the +!t!re pa$ent o+ one$, or +or the

+!t!re trans+er o+ 3erti+i3ates o+ sto36. In Compagnie Financiere Sucres

et Denrees v. Commissioner of Internal Revenue, this Co!rt he"d that

!nder Se3tion (5> o+ the Ta) Code, sa"es to se3!re the +!t!re trans+er o+

d!e-9i""s, 3erti+i3ates o+ o9"i#ation or 3erti+i3ates o+ sto36 are s!9Fe3t to

do3!entar$ stap ta).

Reen!e 4eorand! Order No. '&-7& 0R4O '&-7&2 proides

the #!ide"ines on the 3orporate sto36 do3!entar$ stap ta) pro#ra.

R4O '&-7& states that:

(. A"" e)istin# 3orporations sha"" +i"e the Corporation Sto36

DST De3"aration, and the DST Ret!rn, i+

app"i3a9"e 8$ DST "# #'"%% /& o$ ' #&0#!)"0/

#+) "##&/ 0 ' !o)*o)+'"o$, on or 9e+ore the

tenth da$ o+ the onth +o""oin# p!9"i3ation o+ this

Order.

) ) ) )STDE;

?. A"" e)istin# 3orporations ith a!thoriation +or in3reased

3apita" sto36 sha"" +i"e their Corporate Sto36 DST

De3"aration, to#ether ith the DST Ret!rn, i+

app"i3a9"e 8$ DST "# /& o$ #&0#!)"*'"o$#

+/ +') ' +&'o)"@+'"o$, on or 9e+ore the

tenth da$ o+ the onth +o""oin# the date o+

a!thoriation. 0*o"d+a3in# s!pp"ied2

R4O '&-7&, reiteratin# Reen!e 4eorand! Cir3!"ar No. 85-75 0R4C 85-752, a"so states that hat is 9ein# ta)ed is the prii"e#e o+

iss!in# shares o+ sto36, and, there+ore, the ta)es a33r!e at the tie the

shares are iss!ed. R4C 85-75 a"so de+ines iss!an3e as the point in hi3h

the sto36ho"der a3!ires and a$ e)er3ise attri9!tes o+ onership oer

the sto36s.


16/17


17/17

Last"$, e dee it appropriate to reiterate the e""-esta9"ished do3trine that

as a atter o+ pra3ti3e and prin3ip"e, this Co!rt i"" not set aside the 3on3"!sion

rea3hed 9$ an a#en3$, "i6e the Co!rt o+ Ta) Appea"s, espe3ia""$ i+ a++ired 9$ the

Co!rt o+ Appea"s. *$ the er$ nat!re o+ its +!n3tion, it has dedi3ated itse"+ to the

st!d$ and 3onsideration o+ ta) pro9"es and has ne3essari"$ dee"oped an e)pertiseon the s!9Fe3t, !n"ess there has 9een an a9!se or iproident e)er3ise o+ a!thorit$

on its part, hi3h e +ind is not present here.%?/

Jaka vs CIR

Documents

Transcript of Jaka vs CIR