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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$-
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4i""ion Ei#ht ;!ndred Si) Tho!sand To ;!ndred Pesos 0P='&,&'>,%''.''2 o!t
o+ the in3rease in the a!thoried 3apita" sto36 o+ JEC thro!#h a ta)-+ree e)3han#e
!nder Se3tion ?80320%2 o+ the Nationa" Interna" Reen!e Code 0NIRC2 o+ (755, as
aended, hi3h as e++e3ted 9$ 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
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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
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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
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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.
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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$ed,
p"ed#ed, or en3!9ered that the 3erti+i3ate, irrespe3tie o+ hether or not it is in
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the a3t!a" 3onstr!3tie possession o+ the sto36ho"der, is 3onsidered iss!ed 9e3a!se
it is ith a"!e and, hen3e, the do3!entar$ 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$, as proided in Se3tion (5? o+ the Ta) Code.
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In its R*% 'o R#*o$/$'# Co$' '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$ent o+ the ta)es d!e on thetrans+er o+ the shares +ro petitioner to JEC, not on the ori#ina" iss!an3e o+ shares
o+ JEC.
The parties respe3tie eoranda 3ontained reiterations o+ the a""e#ations
raised in their respe3tie p"eadin#s as dis3!ssed a9oe.
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T #o% "##& 'o 0 )#o%/ "# 8') *'"'"o$) "# $'"'%/ 'o + *+)'"+%
)&$/ 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>
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>'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
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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$ent o+ S!9s3ription.
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4oreoer, the do3!entar$ 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:
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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:
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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.
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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.
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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.%?/