7. PHIL BANKING CORP VS CIR, G.R. NO. 170574, JANUARY 30, 1009Facts: Petitioner Philippine Banking Corporation, a domestic corporation duly licensed as a banking institution, offered its SSDA to its depositors. SSDA is a form of a savings deposit evidenced by a passbook and earning a higher interest rate than a regular savings account. Petitioner believes that the SSDA is not subject to Documentary Stamp Tax (DST) under Section 180 of the 1977 National Internal Revenue Code (NIRC), as amended.

CIR sent a Final assessment notice (FAN) to petitioner assessing deficiency DST based on the outstanding balances of its SSDA. Petitioner claims that the SSDA is in the nature of regular savings account since both types of accounts have the following common features: They are both evidenced by a passbook; and the depositors can make deposits or withdrawals anytime which are not subject to penalty; and both can have a Automatic Transfer Agreement with the depositor’s current or checking account.

Petitioner alleges that the only difference between the regular savings account and the SSDA is that the SSDA is for depositors who maintain savings deposits with a substantial average daily balance, and as an incentive, they are given higher interest rates than regular savings accounts. These deposits are classified separately in petitioner's financial statements in order to maintain a separate record for savings deposits with substantial balances entitled to higher interest rates.

Petitioner maintains that the tax assessments are erroneous because Section 180 of the 1977 NIRC does not include deposits evidenced by a passbook among the enumeration of instruments subject to DST. Petitioner asserts that the language of the law is clear and requires no interpretation. Section 180 of the 1977 NIRC, as amended, provides: xx

Petitioner insists that the SSDA, being issued in the form of a passbook, cannot be construed as a certificate of deposit subject to DST under Section 180 of the 1977 NIRC.

Petitioner argues that the DST is imposed on the basis of a mere inference or perceived implication of what the SSDA is supposed to be and not on the basis of what the law specifically states.

Petitioner also argues that even on the assumption that a passbook evidencing the SSDA is a certificate of deposit, no DST will be imposed because only negotiable certificates of deposits are subject to tax under Section 180 of the 1977 NIRC. Petitioner reasons that a savings passbook is not a negotiable instrument and it cannot be denied that savings passbooks have never been taxed as certificates of deposits.

Petitioner alleges that prior to the passage of R.A 9243, there was no law subjecting SSDA to DST during the taxable years of 1996 and 1997. The amendatory provision in RA 9243 now specifically includes "certificates or other evidences of deposits that are either drawing interest significantly higher than the regular savings deposit taking into consideration the size of the deposit and the risks involved or drawing interest and having a specific maturity date." Petitioner admits that with this new taxing clause, its SSDA is now subject to DST. However, the fact remains that this provision was non-existent during the taxable years 1996 and 1997 subject of the assessments in the present case.

Respondent contended that the SSDA is substantially the same and identical to that of a time deposit account; that under Section 180 of the 1977 NIRC, certificates of deposits deriving interest are subject to the payment of DST. Petitioner's passbook evidencing its SSDA is considered a certificate of deposit, and

being very similar to a time deposit account, it should be subject to the payment of DST.

Respondent also argues that Section 180 of the 1977 NIRC categorically states that certificates of deposit deriving interest are subject to DST without limiting the enumeration to negotiable certificates of deposit. Based on the definition of a certificate of deposit in Far East Bank and Trust Company v. Querimit, a certificate of deposit may or may not be negotiable, since it may be payable only to the depositor.

The CTA ruled that the petitioner should pay the DST.

Issue: WON the SSDA is subject to DST under Section 180 of the 1977 NIRC prior to the passage of RA 9243 in 2004

Held: Section 180 of the 1977 NIRC, as amended, provides:Sec. 180. Stamp tax on all loan agreements, promissory notes, bills of exchange, drafts, instruments and securities issued by the government or any of its instrumentalities, certificates of deposit bearing interest and others not payable on sight or demand. — On all loan agreements signed abroad wherein the object of the contract is located or used in the Philippines; bills of exchange (between points within the Philippines), drafts, instruments and securities issued by the Government or any of its instrumentalities or certificates of deposits drawing interest, or orders for the payment of any sum of money otherwise than at the sight or on demand, or on all promissory notes, whether negotiable or non-negotiable, except bank notes issued for circulation, and on each renewal of any such note, there shall be collected a documentary stamp tax of Thirty centavos (P0.30) on each Two hundred pesos, or fractional part thereof, of the face value of any such agreement, bill of exchange, draft, certificate of deposit, or note: provided, that only one documentary stamp tax shall be imposed on either loan agreement, or promissory note issued to secure such loan, whichever will yield a higher tax: provided, however, that loan agreements or promissory notes the aggregate of which does not exceed Two hundred fifty thousand pesos (P250,000) executed by an individual for his purchase on installment for his personal use or that of his family and not for business, resale, barter or hire of a house, lot, motor vehicle, appliance or furniture shall be exempt from the payment of the documentary stamp tax provided under this section. (Boldfacing and underscoring supplied)

In Far East Bank and Trust Company v. Querimit, the Court defined a certificate of deposit as "a written acknowledgment by a bank or banker of the receipt of a sum of money on deposit which the bank or banker promises to pay to the depositor, to the order of the depositor, or to some other person or his order, whereby the relation of debtor and creditor between the bank and the depositor is created ." A certificate of deposit is also defined as "a receipt issued by a bank for an interest-bearing time deposit coming due at a specified future date.”

Petitioner treats the SSDA as a regular savings deposit account since it is evidenced by a passbook and allows withdrawal. Respondent treats the SSDA as a time deposit account because of the higher interest rates and holding period. It is then significant to differentiate a regular savings deposit and a time deposit

vis-à-vis the SSDA to determine if the SSDA is a certificate of deposit drawing interest referred to in Section 180 of the 1977 NIRC. A comparison of a savings account, time deposit account, and SSDA is shown in the table below: (table very confusing) Based on the definition and comparison, it is clear that a certificate of deposit drawing interest as used in Section 180 of the 1977 NIRC refers to a time deposit account. As the Bureau of Internal Revenue (BIR) explained in Revenue Memorandum Circular No. 16-2003, the distinct features of a certificate of deposit from a technical point of view are as follows:

a. Minimum deposit requirement;b. Stated maturity period;c. Interest rate is higher than the ordinary savings account;d. Not payable on sight or demand, but upon maturity or in case of pre-termination,

prior notice is required; ande. Early withdrawal penalty in the form of partial loss or total loss of interest in case of

pre-termination.

The SSDA is for depositors who maintain savings deposits with substantial average daily balance and which earn higher interest rates. The holding period of an SSDA floats at the option of the depositor at 30, 60, 90, 120 days or more and for maintaining a longer holding period, the depositor earns higher interest rates. There is no pre-termination of accounts in an SSDA because the account is simply reverted to an ordinary savings status in case of early or partial withdrawal or if the required holding period is not met. Based on the foregoing, the SSDA has all of the distinct features of a certificate of deposit.

Petitioner argues that a deposit account evidenced by a passbook cannot be construed as a certificate of deposit subject to DST under Section 180 of the 1977 NIRC. In International Exchange Bank v. Commissioner of Internal Revenue, this Court categorically ruled that a passbook representing an interest earning deposit account issued by a bank qualifies as a certificate of deposit drawing interest and should be subject to DST. The Court added that "a document to be deemed a certificate of deposit requires no specific form as long as there is some written memorandum that the bank accepted a deposit of a sum of money from a depositor."

Petitioner also argues that prior to the passage of RA 9243, there was no law subjecting SSDA to DST. In International Exchange Bank v. Commissioner of Internal Revenue, the Court held that the amendment to include "other evidences of deposits that are drawing interest significantly higher than the regular savings deposit" was intended to eliminate the ambiguity. The Court explained:

If at all, the further amendment was intended to eliminate precisely the scheme used by banks of issuing passbooks to "cloak" its time deposits as regular savings deposits. This is reflected from the following exchanges between Mr. Miguel Andaya of the Bankers Association of the Philippines and Senator Ralph Recto, Senate Chairman of the Committee on Ways and Means, during the deliberations on Senate Bill No. 2518 which eventually became RA 9243:

Documentary stamp tax is a tax on documents, instruments, loan agreements, and papers evidencing the acceptance, assignment, sale or transfer of an obligation, right or property incident thereto. A DST

is actually an excise tax because it is imposed on the transaction rather than on the document. A DST is also levied on the exercise by persons of certain privileges conferred by law for the creation, revision, or termination of specific legal relationships through the execution of specific instruments. Hence, in imposing the DST, the Court considers not only the document but also the nature and character of the transaction.

Section 180 of the 1977 NIRC imposes a DST of P0.30 on each P200 of the face value of any certificate of deposit drawing interest. As correctly observed by the CTA, a certificate of deposit is a written acknowledgment by a bank of the receipt of a sum of money on deposit which the bank promises to pay to the depositor, to the order of the depositor, or to some other person or his order, whereby the relation of debtor or creditor between the bank and the depositor is created. Petitioner's SSDA has the following features:

1. Although the money placed in the SSDA can be withdrawn anytime, the money is subject to a holding period in order to earn a higher interest rate. Otherwise, in case of premature withdrawal, the depositor will not earn the preferred interest ranging from 8% or higher but only the normal interest rate on regular savings deposit.

2. In order to qualify for an SSDA, the depositor must place a substantial amount of money of not less than P50,000. This amount is even larger than what is needed to open a time deposit which is P20,000. Aside from the substantial amount of money required, this amount must be maintained within a certain period just like a time deposit.

3. On the issue of penalty, in an SSDA, if the depositor withdraws the money and the balance falls below the "minimum balance" of P50,000, the interest is reduced. This condition is identical to that imposed on a time deposit that is withdrawn before maturity.

Based on these features, it is clear that the SSDA is a certificate of deposit drawing interest subject to DST even if it is evidenced by a passbook and non-negotiable in character . In International Exchange Bank v. Commissioner of Internal Revenue, we held that:

A document to be deemed a certificate of deposit requires no specific form as long as there is some written memorandum that the bank accepted a deposit of a sum of money from a depositor. What is important and controlling is the nature or meaning conveyed by the passbook and not the particular label or nomenclature attached to it, inasmuch as substance, not form, is paramount.

Moreover, a certificate of deposit may be payable to the depositor, to the order of the depositor, or to some other person or his order. From the use of the conjunction or, instead of and, the negotiable character of a certificate of deposit is immaterial in determining the imposition of DST.

In Banco de Oro Universal Bank v. Commissioner of Internal Revenue, this Court upheld the CTA's decision and ruled:

The CTA en banc likewise declared that in practice, a time deposit transaction is covered by a certificate of deposit while petitioner's Investment Savings Account (ISA) transaction is through a passbook. Despite the differences in the form of any documents, the CTA en banc ruled that a time deposit and ISA

have essentially the same attributes and features. It explained that like time deposit, ISA transactions bear a fixed term or maturity because the bank acknowledges receipt of a sum of money on deposit which the bank promises to pay the depositor, bearer or to the order of a bearer on a specified period of time. Section 180 of the 1997 NIRC does not prescribe the form of a certificate of deposit. It may be any 'written acknowledgment by a bank of the receipt of money on deposit.' The definition of a certificate of deposit is all encompassing to include a savings account deposit such as ISA. (Emphasis supplied)

(There were further discussions on tax amnesty which I no longer included)

8. FORT BONIFACIO DEVELOPMENT VS CIR, G.R NO. 164155 AND 175543, FEB 25 2014Facts: Congress enacted RA 7227 creating the Bases Conversion Development Authority (BCDA) for the purpose of raising funds through sale to private investors of military camps. To do this, the BCDA established the FBDC, Fort Bonifacio Development Corporation for the purpose of enabling it to develop a 440 hectare area in Fort Bonifacio for mixed residential, commercial, business, institutional, recreational, tourism, and other purposes. At the time of its incorporation, FBDC was a wholly-owned subsidiary of BCDA.

The Republic of the Philippines transferred by land grant to FBDC through a special patent a 214 hectare land as part of its scheme that would enable BCDA to raise funds through FBDC. FBDC in turn executed a promissory note in favor of the republic who assigned such promissory note to BCDA which assigned it back t FBDC as full and complete payment of BCDA’s subscription to FBDC’s authorized capital stock.

The Republic executed a deed of absolute sale with quitclaim in favor of FBDC. The Register of deeds issued an OCT replacing the special patent and in the same month, the Congress enacted R.A. 7917, declaring exempt from all forms of taxes the proceeds of the Government sale of the Fort Bonifacio land. Subsequently, fulfilling its task of raising funds for specified government projects, BCDA sold at public bidding 55% of its shares to FBDS to private investors, retaining ownership of the remaining 45%.

More than 3 years later, CIR issued a Letter of Authority providing for the examination of FBDC’s books and other accounting records. The CIR issued a final assessment notice to FBDC for deficiency of documentary stamp tax based on the Republic’s 1995 sale to it of the Fort Bonifacio land. FBDC protested the assessment and wrote a letter to the CIR invoking RA 7917 which exempted the proceeds of the sale of the Fort Bonifacio land from all forms of taxes. When CIR failed to act on the request for tax exemption despite the lapse of the 180 day period, the FBDC filed a petition for review with the CTA.

CTA denied FBDC’s petition and affirmed the CIR’s DST assessment. The CTA treated the Republic’s issuance of the Special patent separate and distinct from the deed of absolute sale that it executed. The former, said the CTA, was tax exempt but that latter was not. The CA affirmed the CTA’s decision.

During the pendency of the petitions, FBDC informed the court that the disputed assessment had already been paid through a Special allotment release order issued by the DBM and that such amount covered the payment of DST, transfer fees, 5% withholding tax and registration fees relative to the sale of portion of the Fort Bonifacio, chargeable against the Military camp sale proceeds funds. The CIR claimed that the

payment was illegal since it breached the scope of the tax exemption provided in Section 8 of RA 7917 and since BCDA paid the tax for the benefit of FBDC, a private corporation.

Issue: WON CA erred in ruling that FBDC was liable for the payment of the DST and a 20% delinquency interest on the deed of absolute sale of the Fort Bonifacio land that the republic executed in FBDC’s favor

Held: The CTA ruled that, while the Special Patent that the Republic issued to FBDC in consideration of P71.2 billion plus was exempt from the payment of DST, the Deed of Absolute Sale that the Republic subsequently executed in FBDC’s favor covering the same land is not.

Section 196 of the NIRC, as amended by Republic Act 7660, provides:Sec. 196. Stamp tax on deeds of sale and conveyance of real property. – On all conveyances, deeds, instruments, or writings, other than grants, patents, or original certificates of adjudication issued by the Government, whereby any lands, tenements or other realty sold shall be granted, assigned, transferred, or otherwise conveyed to the purchaser or purchasers, or to any other person or persons designated by such purchaser or purchasers, there shall be collected a documentary stamp tax at the following rates: x x x. (Emphasis supplied)

But the two documents—the Special Patent and the Deed of Absolute Sale—covered the Republic’s conveyance to FBDC of the same Fort Bonifacio land for the same price that the FBDC paid but once. It is one transaction, twice documented.

On February 7, 1995 the Republic through the President, issued Special Patent 3596 to FBDC pursuant to an Act of Congress or R.A. 7227. That legislative act removed the public character of the Fort Bonifacio land and allowed the President to cede ownership of the same to FBDC, then a wholly-owned government corporation under the BCDA, for the price of P71.2 billion plus, covered by a negotiable promissory note. The Republic could not just spend or use the money it received from the sale without authority from Congress. In this case, the basis for appropriation is found also in R.A. 7227 which earmarked the proceeds of the sale of the Fort Bonifacio land for use in capitalizing the BCDA. Section 6 of R.A. 7227 thus provides:

Section 6. Capitalization. – The Conversion Authority [BCDA] shall have an authorized capital of One hundred billion pesos (P100,000,000,000) which may be fully subscribed by the Republic of the Philippines and shall either be paid up from the proceeds of the sales of its land assets as provided for in Section 8 of this Act or by transferring to the Conversion Authority properties valued in such amount. (Emphasis supplied)

At the time the sale subject of this case was entered into, FBDC was a wholly-owned subsidiary of the BCDA pursuant to Section 16 of R.A. 7227 . Notably, the Republic sold the Fort Bonifacio land to FBDC and the latter paid for it with a promissory note. When the Republic in turn assigned that promissory note to BCDA, not only did it comply with its obligation under the above provision to capitalize BCDA from the proceeds of the sales of its land assets but it also enabled the latter to fully and completely pay for its subscription to FBDC’s authorized capital stock. Consequently, to tax the proceeds of that sale would be to tax an appropriation made by law, a power that the Commissioner of Internal Revenue does not

have.

The Republic’s subsequent execution of a Deed of Absolute Sale cannot be regarded as a separate transaction subject to the payment of DST . The Republic’s sale of the land to FBDC under the Special Patent was a complete and valid sale that conveyed ownership of the land to the buyer . Notably, FBDC paid for the land with a negotiable promissory note. Indeed, paragraph 4 of the Deed of Absolute Sale acknowledges the absolute and irrevocable nature of the sale made under the special patent. Thus, the pertinent portion of paragraph 4 states:

4. To implement the transfer and registration of the Subject Property in the name of the Buyer [FBDC], the Seller [Republic] has issued or shall hereafter cause to be issued, a Special Patent which will absolutely and irrevocably grant and convey the legal and beneficial title to the Subject Property to and in favor of the Buyer. x x x. (Emphasis supplied)

Clearly, in acknowledging that the Republic “has issued x x x a Special Patent which will absolutely and irrevocably grant and convey” the legal title over the land to FBDC, the Republic in effect admitted that the Deed of Absolute Sale was only a formality , not a vehicle for conveying ownership, that it thought essential for the issuance of an Original Certificate of Title (OCT) covering the land. The issuance of the OCT lent itself to unrestricted commercial use that helped attain the law’s objective of raising through the BCDA and its subsidiaries the funds needed for specified government projects.

DST is by nature, an excise tax since it is levied on the exercise by persons of privileges conferred by law. These privileges may cover the creation, modification or termination of contractual relationships by executing specific documents like deeds of sale, mortgages, pledges, trust and issuance of shares of stock. The sale of Fort Bonifacio land was not a privilege but an obligation imposed by law which was to sell lands in order to fulfill a public purpose. To charge DST on a transaction which was basically a compliance with a legislative mandate would go against its very nature as an excise tax .

Besides, it is clear from Section 8 of R.A. 7227 that the capital of BCDA, which shall come from the sales proceeds and/or transfers of certain Metro Manila military camps, was not intended to be diminished by the payment of DST. Section 8 states:

SEC. 8. Funding Scheme. — The capital of the Conversion Authority shall come from the sales proceeds and/or transfers of certain Metro Manila military camps, including all lands covered by Proclamation No. 423, series of 1957, commonly known as Fort Bonifacio and Villamor (Nichols) Air Base , namely: x x x x x x x

The President is hereby authorized to sell the above lands, in whole or in part, which are hereby declared alienable and disposable pursuant to the provisions of existing laws and regulations governing sales of government properties: Provided, That no sale or disposition of such lands will be undertaken until a development plan embodying projects for conversion shall be approved by the President in accordance with paragraph (b), Section 4, of this Act. However, six (6) months after approval of this Act, the President shall authorize the Conversion Authority to dispose of certain areas in Fort Bonifacio and Villamor as the latter so determines. The Conversion Authority

shall provide the President a report on any such disposition or plan for disposition within one (1) month from such disposition or preparation of such plan. The proceeds from any sale, after deducting all expenses related to the sale, of portions of Metro Manila military camps as authorized under this Act, shall be used for the following purposes with their corresponding percent shares of proceeds: x x x (Emphasis supplied)

Had FBDC paid the amount on February 8, 1995 when it was supposed to be due, such payment would have resulted in diminishing the proceeds of the sale that the Republic received and turned over to BCDA to capitalize it. The above-quoted provision of Section 8 clearly exempted the proceeds of the sale of the Fort Bonifacio land from all forms of taxes, including DST.

As it developed, while this case was pending before this Court, the BCDA paid the DST assessment for the benefit of FBDC through a government release of funds from the national treasury, chargeable against the Military Camps Sale Proceeds Fund. Clearly, by allowing such payment, the government acknowledges that it made the private investors who submitted bids to acquire 55% of the capital stock of FBDC believe that the proceeds of the government’s sale of the land that capitalized FBDC was exempt from all forms of taxes as the law provides. Indeed, the government warranted under the Deed of Absolute Sale it executed in FBDC’s favor that “[T]here are no x x x taxes due and owing on or in respect of the subject property or the transfer thereof in favor of the buyer.”

With the Court’s above ruling, it would be useless to resolve the further issue of whether or not the case has been rendered moot and academic by BCDA’s payment of the DST assessment.

9. CIR VS MANILA BANKERS' LIFE INSURANCE CORP, G.R. NO. 169103, MARCH 16, 2011Facts: Respondent Manila Banker’s life insurance corporation is a duly organized domestic corporation primarily engaged in the life insurance business. Petitioner CIR issued a Letter of Authority authorizing a special team to examine Respondent’s books of accounts and other accounting records. Petitioner issued a preliminary assessment notice for deficiency internal revenue taxes to which respondent agreed to except to the amount representing the documentary stamp tax on its policy premiums and penalties.

Petitioner issued a formal letter of demand and one of the assessment notices pertained to the DST due on respondent’s policy premiums. The Respondent filed its protest with the BIR but since the latter did not act upon on the protest, the respondent filed with the CTA a cancellation of assessment notice invoking similar cases of Jardine-CMA life insurance vs CIR wherein the CTA held that the tax base to be used in computing the DST is the value at the time the instrument is issued because the DST is levied and paid only once, which is at the time the taxable document is issued.

CTA granted the respondents’ petition and ordered the cancellation and withdrawal of the assessment. The CA upheld that decision of the CTA. Court of Appeals sustained its ruling, and stated that the Lincoln Case was not applicable because the increase in the sum assured in Lincoln's insurance policy was definite and determinable at the time such policy was issued as the automatic increase clause, which allowed for the increase, formed an integral part of the policy; whereas in the respondent's case, "the tax base of the disputed deficiency assessment was not [a] definite or determinable increase in the sum assured.”

Issue: WON Manila Banker’s is to pay for the deficiency DST on the increase the coverage premium policies

Held: As can be gleaned from the facts, the deficiency documentary stamp tax was assessed on the increases in the life insurance coverage of two kinds of policies: the "Money Plus Plan," which is an ordinary term life insurance policy; and the group life insurance policy. The increases in the coverage of the life insurance policies were brought about by the premium payments made subsequent to the issuance of the policies. The Money Plus Plan is a 20-year term ordinary life insurance plan with a "Guaranteed Continuity Clause" which allowed the policy holder to continue the policy after the 20-year term subject to certain conditions. Under the plan, the policy holders paid their premiums in five separate periods, with the premium payments, after the first period premiums, to be made only upon reaching a certain age. The succeeding premium payments translated to increases in the sum assured. Thus, the petitioner believed that since the documentary stamp tax was affixed on the policy based only on the first period premiums, then the succeeding premium payments should likewise be subject to documentary stamp tax. In the case of respondent's group insurance, the deficiency documentary stamp tax was imposed on the premiums for the additional members to already existing and effective master policies. The petitioner concluded that any additional member to the group of employees, who were already insured under the existing mother policy, should similarly be subjected to documentary stamp tax.

The resolution of this case hinges on the validity of the imposition of documentary stamp tax on increases in the coverage or sum assured by existing life insurance policies, even without the issuance of new policies.

In view of the fact that the assessment for deficiency documentary stamp tax covered the taxable year 1997, the relevant and applicable legal provisions are those found in the 1977 National Internal Revenue Code (Tax Code) as amended, to wit:

Section 173. Stamp Taxes Upon Documents, Loan Agreements, Instruments and Papers. — Upon documents, instruments, loan agreements 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 taxes prescribed in the following sections of this Title, by the person making, signing, issuing, accepting, or transferring the same wherever the document is made, signed, issued, accepted, or transferred when the obligation or right arises from Philippine sources or the property is situated in the Philippines, and the same time such act is done or transaction had: Provided, That whenever one party to the taxable document enjoys exemption from the tax herein imposed, the other party who is not exempt shall be the one directly liable for the tax.

Section 183. Stamp Tax on Life Insurance Policies. — On all policies of insurance or other instruments by whatever name the same may be called, whereby any insurance shall be made or renewed upon any life or lives, there shall be collected a documentary stamp tax of fifty centavos on each two hundred pesos or fractional part thereof, of the amount insured by any such policy. (Emphases ours.)

Documentary stamp tax is a tax on documents, instruments, loan agreements, and papers evidencing the acceptance, assignment, sale or transfer of an obligation, right or property incident thereto. It is in the nature of an excise tax because it is imposed upon the privilege, opportunity or facility offered at exchanges for the transaction of the business. It is an excise upon the facilities used in the transaction of the business distinct and separate from the business itself.

To elucidate, documentary stamp tax is levied on the exercise of certain privileges granted by law for the creation, revision, or termination of specific legal relationships through the execution of specific instruments. Examples of these privileges, the exercise of which are subject to documentary stamp tax, are leases of lands, mortgages, pledges, trusts and conveyances of real property. Documentary stamp tax is thus imposed on the exercise of these privileges through the execution of specific instruments, independently of the legal status of the transactions giving rise thereto. The documentary stamp tax must be paid upon the issuance of these instruments, without regard to whether the contracts which gave rise to them are rescissible, void, voidable, or unenforceable.

Accordingly, the documentary stamp tax on insurance policies, though imposed on the document itself, is actually levied on the privilege to conduct insurance business. Under Section 173, the documentary stamp tax becomes due and payable at the time the insurance policy is issued, with the tax based on the amount insured by the policy as provided for in Section 183.

Documentary Stamp Taxon the "Money Plus Plan"The petitioner would have us reverse both the CTA and the Court of Appeals based on our decision in Commissioner of Internal Revenue v. Lincoln Philippine Life Insurance Company, Inc.

The Lincoln case has been invoked by both parties in different stages of this case. The respondent relied on the CTA's ruling in the Lincoln case when it elevated its protest there; and when we reversed the CTA's ruling therein, the petitioner called the Court of Appeals' attention to it, and prayed for a decision upholding the assessment for deficiency documentary stamp tax just like in the Lincoln case.

It is therefore necessary to briefly discuss the Lincoln case to determine its applicability, if any, to the case now before us. Prior to 1984, Lincoln Philippine Life Insurance Company, Inc. (Lincoln) had been issuing its "Junior Estate Builder Policy," a special kind of life insurance policy because of a clause which provided for an automatic increase in the amount of life insurance coverage upon attainment of a certain age by the insured without the need of a new policy. As Lincoln paid documentary stamp taxes only on the initial sum assured, the CIR issued a deficiency documentary stamp tax assessment for the year 1984, the year the clause took effect. Both the CTA and the Court of Appeals found no basis for the deficiency assessment. As discussed above, however, this Court reversed both lower courts and sustained the CIR's assessment.

This Court ruled that the increase in the sum assured brought about by the "automatic increase" clause incorporated in Lincoln's Junior Estate Builder Policy was still subject to documentary stamp tax, notwithstanding that no new policy was issued, because the date of the effectivity of the increase, as well as its amount, were already definite and determinable at the time the policy was issued. As such, the tax base under Section 183, which is "the amount fixed in the policy," is "the figure written on its face and whatever increases will take effect in the future by reason of the 'automatic increase clause .”

This Court added that the automatic increase clause was "in the nature of a conditional obligation under Article 1181, by which the increase of the insurance coverage shall depend upon the happening of the event which constitutes the obligation."

Since the Lincoln case, wherein the then CIR's arguments for the BIR are very similar to the petitioner's arguments herein, was decided in favor of the BIR, the petitioner is now relying on our ruling therein to support his position in this case. Although the two cases are similar in many ways, they must be distinguished by the nature of the respective "clauses" in the life insurance policies involved, where we note a major difference. In Lincoln , the relevant clause is the " Automatic Increase Clause " which provided for the automatic increase in the amount of life insurance coverage upon the attainment of a certain age by the insured, without any need for another contract. In the case at bar, the clause in contention is the " Guaranteed Continuity Clause " in respondent's Money Plus Plan, which reads:

GUARANTEED CONTINUITYWe guarantee the continuity of this Policy until the Expiry Date stated in the Schedule provided that the effective premium is consecutively paid when due or within the 31-day Grace Period.

We shall not have the right to change premiums on your Policy during the 20-year Policy term.

At the end of each twenty-year period, and provided that you have not attained age 55, you may renew your Policy for a further twenty-year period. To renew, you must submit proof of insurability acceptable to MBLIC and pay the premium due based on attained age according to the rates prevailing at the time of renewal.

A simple reading of respondent's guaranteed continuity clause will show that it is significantly different from the "automatic increase clause " in Lincoln . The only things guaranteed in the respondent's continuity clause were: the continuity of the policy until the stated expiry date as long as the premiums were paid within the allowed time; the non-change in premiums for the duration of the 20-year policy term; and the option to continue such policy after the 20-year period, subject to certain requirements . In fact, even the continuity of the policy after its term was not guaranteed as the decision to renew it belonged to the insured, subject to certain conditions. Any increase in the sum assured, as a result of the clause, had to survive a new agreement between the respondent and the insured. The increase in the life insurance coverage was only corollary to the new premium rate imposed based upon the insured's age at the time the continuity clause was availed of . It was not automatic, was never guaranteed, and was certainly neither definite nor determinable at the time the policy was issued.

Therefore, the increases in the sum assured brought about by the guaranteed continuity clause cannot be subject to documentary stamp tax under Section 183 as insurance made upon the lives of the insured .

However, it is clear from the text of the guaranteed continuity clause that what the respondent was actually offering in its Money Plus Plan was the option to renew the policy, after the expiration of its original term. Consequently, the acceptance of this offer would give rise to the renewal of the original policy.

The petitioner avers that these life insurance policy renewals make the respondent liable for deficiency documentary stamp tax under Section 198. Section 198 of the old Tax Code reads:

Section 198. Stamp Tax on Assignments and Renewals of Certain Instruments. — Upon each and every assignment or transfer of any mortgage, lease or policy of insurance, or the renewal or continuance of any agreement, contract, charter, or any evidence of obligation or indebtedness by altering or otherwise, there shall be levied, collected and paid a documentary stamp tax, at the same rate as that imposed on the original instrument.

Section 198 speaks of assignments and renewals. In the case of insurance policies, this section applies only when such policy was assigned or transferred. The provision which specifically applies to renewals of life insurance policies is Section 183:

Section 183. Stamp Tax on Life Insurance Policies. — On all policies of insurance or other instruments by whatever name the same may be called, whereby any insurance shall be made or renewed upon any life or lives, there shall be collected a documentary stamp tax of fifty centavos on each two hundred pesos or fractional part thereof, of the amount insured by any such policy. (Emphasis ours.)

Section 183 is a substantial reproduction of the earlier documentary stamp tax provision, Section 1449 (j) of the Administrative Code of 1917. Regulations No. 26, or The Revised Documentary Stamp Tax Regulations, provided the implementing rules to the provisions on documentary stamp tax under the Administrative Code of 1917. Section 54 of the Regulations, in reference to what is now Section 183, explicitly stated that the documentary stamp tax imposed under that section is also collectible upon renewals of life insurance policies, viz.:

Section 54.Tax also due on renewals. — The tax under this section is collectible not only on the original policy or contract of insurance but also upon the renewal of the policy or contract of insurance.

To argue that there was no new legal relationship created by the availment of the guaranteed continuity clause would mean that any option to renew, integrated in the original agreement or contract, would not in reality be a renewal but only a discharge of a pre-existing obligation. The truth of the matter is that the guaranteed continuity clause only gave the insured the right to renew his life insurance policy which had a fixed term of twenty years. And although the policy would still continue with essentially the same terms and conditions, the fact is, its maturity date, coverage, and premium rate would have changed. We cannot agree with the CTA in its holding that "the renewal, is in effect treated as an increase in the sum assured since no new insurance policy was issued." The renewal was not meant to restore the original terms of an old agreement, but instead it was meant to extend the life of an existing agreement, with some of the contract's terms modified . This renewal was still subject to the acceptance and to the conditions of both the insured and the respondent. This is entirely different from a simple mutual agreement between the insurer and the insured, to increase the coverage of an existing and effective life insurance policy.

It is clear that the availment of the option in the guaranteed continuity clause will effectively renew the Money Plus Plan policy, which is indisputably subject to the imposition of documentary stamp tax

under Section 183 as an insurance renewed upon the life of the insured.

Documentary Stamp Taxon Group Life InsuranceThe petitioner is also asking this Court to sustain his deficiency documentary stamp tax assessment on the additional premiums earned by the respondent in its group life insurance policies.

This Court, in Pineda v. Court of Appeals has had the chance to a discuss the concept of "group insurance," to wit:

In its original and most common form, group insurance provides life or health insurance coverage for the employees of one employer.

The coverage terms for group insurance are usually stated in a master agreement or policy that is issued by the insurer to a representative of the group or to an administrator of the insurance program, such as an employer. The employer acts as a functionary in the collection and payment of premiums and in performing related duties. Likewise falling within the ambit of administration of a group policy is the disbursement of insurance payments by the employer to the employees. Most policies, such as the one in this case, require an employee to pay a portion of the premium, which the employer deducts from wages while the remainder is paid by the employer. This is known as a contributory plan as compared to a non-contributory plan where the premiums are solely paid by the employer.

Although the employer may be the titular or named insured, the insurance is actually related to the life and health of the employee. Indeed, the employee is in the position of a real party to the master policy, and even in a non-contributory plan, the payment by the employer of the entire premium is a part of the total compensation paid for the services of the employee. Put differently, the labor of the employees is the true source of the benefits, which are a form of additional compensation to them. (Emphasis ours.)

When a group insurance plan is taken out, a group master policy is issued with the coverage and premium rate based on the number of the members covered at that time. In the case of a company group insurance plan, the premiums paid on the issuance of the master policy cover only those employees enrolled at the time such master policy was issued. When the employer hires additional employees during the life of the policy, the additional employees may be covered by the same group insurance already taken out without any need for the issuance of a new policy.

The respondent claims that since the additional premiums represented the additional members of the same existing group insurance policy, then under our tax laws, no additional documentary stamp tax should be imposed since the appropriate documentary stamp tax had already been paid upon the issuance of the master policy. The respondent asserts that since the documentary stamp tax, by its nature, is paid at the time of the issuance of the policy, "then there can be no other imposition on the same, regardless of any change in the number of employees covered by the existing group insurance.”

To resolve this issue, it would be instructive to take another look at Section 183: On all policies of

insurance or other instruments by whatever name the same may be called, whereby any insurance shall be made or renewed upon any life or lives.

The phrase "other instruments" as also found in the earlier version of Section 183, i.e., Section 1449 (j) of the Administrative Code of 1917, was explained in Regulations No. 26, to wit:

Section 52."Other instruments" defined. — The term "other instruments" includes any instrument by whatever name the same is called whereby insurance is made or renewed, i.e., by which the relationship of insurer and insured is created or evidenced, whether it be a letter of acceptance, cablegrams, letters, binders, covering notes, or memoranda. (Emphasis ours.)

Whenever a master policy admits of another member, another life is insured and covered. This means that the respondent, by approving the addition of another member to its existing master policy, is once more exercising its privilege to conduct the business of insurance, because it is yet again insuring a life . It does not matter that it did not issue another policy to effect this change, the fact remains that insurance on another life is made and the relationship of insurer and insured is created between the respondent and the additional member of that master policy. In the respondent's case, its group insurance plan is embodied in a contract which includes not only the master policy, but all documents subsequently attached to the master policy . Among these documents are the Enrollment Cards accomplished by the employees when they applied for membership in the group insurance plan. The Enrollment Card of a new employee, once registered in the Schedule of Benefits and attached to the master policy, becomes evidence of such employee's membership in the group insurance plan, and his right to receive the benefits therein. Everytime the respondent registers and attaches an Enrollment Card to an existing master policy, it exercises its privilege to conduct its business of insurance and this is patently subject to documentary stamp tax as insurance made upon a life under Section 183.

The respondent would like this Court to ignore the petitioner's argument that renewals of insurance policies are also subject to documentary stamp tax for being raised for the first time. This Court was faced with the same dilemma in Commissioner of Internal Revenue v. Procter & Gamble Philippine Manufacturing Corporation, when the petitioner also raised an issue therein for the first time in the Supreme Court. In addressing the procedural lapse, we said:

As clearly ruled by Us "To allow a litigant to assume a different posture when he comes before the court and challenges the position he had accepted at the administrative level," would be to sanction a procedure whereby the Court — which is supposed to review administrative determinations — would not review, but determine and decide for the first time, a question not raised at the administrative forum. Thus it is well settled that under the same underlying principle of prior exhaustion of administrative remedies, on the judicial level, issues not raised in the lower court cannot generally be raised for the first time on appeal. . . . .

However, in the same case, we also held that:Nonetheless it is axiomatic that the State can never be in estoppel, and this is particularly true in matters involving taxation. The errors of certain administrative officers should never be allowed to jeopardize the government's financial position. (Emphasis ours.)

Along with police power and eminent domain, taxation is one of the three basic and necessary attributes of sovereignty. Taxes are the lifeblood of the government and their prompt and certain availability is an imperious need. It is through taxes that government agencies are able to operate and with which the State executes its functions for the welfare of its constituents. It is for this reason that we cannot let the petitioner's oversight bar the government's rightful claim.

This Court would like to make it clear that the assessment for deficiency documentary stamp tax is being upheld not because the additional premium payments or an agreement to change the sum assured during the effectivity of an insurance plan are subject to documentary stamp tax, but because documentary stamp tax is levied on every document which establishes that insurance was made or renewed upon a life.

10. H. TAMBUNTING PAWNSHOP VS CIR, G.R. NO. 171138, APRIL 7, 2009Facts: The CIR issued a pre-assessment notice against Tambunting, among others, for DST. Thereafter, the CIR issued an assessment notice with the corresponding demand letters for the payment of the DST and the corresponding compromise penalty. Tambunting filed a written protest to the assessment alleging that it was not subject to DST under Section 195 of the NIRC because DST were applicable only to pledge contract, and the pawnshop business did not involve contracts of pledge.

When the written protest was not acted upon by the CIR, Tambunting filed a petition with the CTA who partially granted the petition and ordered petitioner to pay deficiency VAT but was not subjected to pay DST. But the CA reversed the decision and ordered Tambunting to pay the DST.

Issue: WON CA erred in finding petitioner liable for the DST on pawn tickets?

Held: Petitioner contends that it is the document evidencing a pledge of personal property which is subject to the DST. A pawn ticket is defined under Section 3 of Presidential Decree No. 114 as "the pawnbroker's receipt for a pawn [and] is neither a security nor a printed evidence of indebtedness ". Petitioner argues that since the document taxable under Section 195 must show the existence of a debt, a pawn ticket which is merely a receipt for a pawn is not subject to DST.

Petitioner further contends that the DST is imposed on the documents issued, not the "transactions so had or accomplished". It insists that the document to be taxed under the transaction contemplated should be the pledge agreement, if any is issued, not the pawn ticket.

On the other hand, the CIR, through the Office of the Solicitor General, argues that Section 195 of the NIRC expressly provides that a documentary stamp tax shall be collected on every pledge of personal property as a security for the fulfillment of the contract of loan. Since the transactions in a pawnshop business partake of the nature of pledge transactions, then pawn transactions evidenced by pawn tickets, are subject to documentary stamp taxes. The CIR further argues that the pawn ticket is the pledge contract itself and thus, it is subject to documentary stamp tax.

After considering the submission of the parties, we find that the instant petition lacks merit.

First, on the subject of pawn tickets, the Bangko Sentral ng Pilipinas Manual of Regulations for Non-Bank

Financial Institutions provides:Sec. 4322P. Pawn Ticket. — Pawnshops shall at the time of the loan, deliver to each pawner a pawn ticket which shall contain the following:a. Name and residence of the pawner;b. Date the loan is granted;c. Amount of the principal loan;d. Interest rate in percent;e. Period of maturity;f. Description of the pawn;g. Expiry date of redemption period;h. Signature of the pawnshop's authorized representative;i. Signature or thumbmark of the pawner or his authorized representative;

andj. Such other terms and conditions as may be agreed upon between the

pawnshop and the pawner.

Notably, a pledge is an accessory, real and unilateral contract by virtue of which the debtor or a third person delivers to the creditor or to a third person movable property as security for the performance of the principal obligation, upon fulfillment of which the thing pledged, with all its accessions and accessories, shall be returned to the debtor or to the third person. The pawn ticket is required to contain the same essential information that would be found in a pledge agreement . Only the nomenclature of the requirements in the pawn ticket is changed to refer to the specific kind of pledge transactions undertaken by pawnshops. The property or thing pledged is referred to as the pawn, the creditor (pledgee) is referred to as the pawnee and the debtor (pledgor) is referred to as the pawner.

Petitioner's explanations fail to dissuade us from recognizing the pawn ticket as the document that evidences the pledge. True, the pawn ticket is neither a security nor a printed evidence of indebtedness. But, precisely being a receipt for a pawn , it documents the pledge . A pledge is a real contract, hence, it is necessary in order to constitute the contract of pledge, that the thing pledged be placed in the possession of the creditor, or of a third person by common agreement. Consequently, the issuance of the pawn ticket by the pawnshop means that the thing pledged has already been placed in its possession and that the pledge has been constituted.

Second, on the subject of documentary stamp tax, the NIRC provides:SEC. 173.Stamp Taxes Upon Documents, Loan Agreements, Instruments and Papers. — Upon documents, instruments, loan agreements 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 taxes prescribed in the following Sections . . . (Emphasis supplied.)

SEC. 195.Stamp Tax on Mortgages, Pledges and Deeds of Trust. — On every mortgage or pledge of lands, estate, or property, real or personal, heritable or movable, whatsoever, where the same shall be made as a security for the payment of any definite and certain sum of money lent at the time or

previously due and owing or forborne to be paid, being payable, and on any conveyance of land, estate, or property whatsoever, in trust or to be sold, or otherwise converted into money which shall be and intended only as security, either by express stipulation or otherwise, there shall be collected a documentary stamp tax at the following rates:

a. When the amount secured does not exceed Five thousand pesos

(P5,000), Twenty pesos (P20.00).

b. On each Five thousand pesos (P5,000), or fractional part thereof in excess

of Five thousand pesos (P5,000), an additional tax of Ten pesos (P10.00). (Emphasis supplied.)

xxx xxx xxx

The law imposes DST on documents issued in respect of the specified transactions, such as pledge, and not only on papers evidencing indebtedness. Therefore, a pawn ticket, being issued in respect of a pledge transaction, is subject to documentary stamp tax.

Third, the issue in this case is not novel. The question of whether pawnshop transactions evidenced by pawn tickets are subject to documentary stamp taxes has been answered in the affirmative in Michel J. Lhuillier Pawnshop, Inc. v. Commissioner of Internal Revenue. There the Court held:

xxx xxx xxxSection 195 of the National Internal Revenue Code (NIRC) imposes a DST on every pledge regardless of whether the same is a conventional pledge governed by the Civil Code or one that is governed by the provisions of P.D. No. 114. All pledges are subject to DST, unless there is a law exempting them in clear and categorical language. . . .

xxx xxx xxx

. . . No law on legal hermeneutics could change the fact that the entries contained in a pawnshop ticket spell out a contract of pledge and that the exercise of the privilege to conclude such a contract is taxable under Section 195 of the NIRC.

Even so, we note that the present case was filed with the Supreme Court before September 11, 2006, when the Court resolved for the first time the matter of surcharges and interest for failure to pay documentary stamp taxes on pledge transactions in Michel J. Lhuillier Pawnshop, Inc. v. Commissioner of Internal Revenue. Hence, as in the said case, we can still ascribe good faith to petitioner. Consequently, the imposition of surcharges and interest in the present case must also be deleted.  11. CIR VS LINCOLN PHILIPPINE LIFE INSURANCE, G.R. NO. 119176, MARCH 19, 2002Facts: Lincoln Philippine Life insurance co. is a domestic corporation engaged in the life insurance business. In the years prior to 1984, private respondent issued a special kind of life insurance policy known as the “Junior Estate Builder Policy,” the distinguishing feature of which is a clause providing for an automatic increase in the amount of life insurance coverage upon attainment of a certain age by the insured without the need of issuing a new policy. DST due on the policy were paid by petitioner only on

the initial sum assured.

In 1984, private respondent also issued 50,000 shares of stock dividends with a par value of P100.00 per share or a total par value of P5,000,000.00. The actual value of said shares, represented by its book value, was P19,307,500.00. Documentary stamp taxes were paid based only on the par value of P5,000,000.00 and not on the book value.

Subsequently, petitioner issued a deficiency DST assessment for the year 1984 corresponding to the amount of automatic increase of the sum assured on the policy issued by respondent corresponding to the book value in excess of the par value of the stock dividends.

The deficiency assessment was questioned by private respondent and sought their cancellation in a petition filed in the CTA who found no valid basis for the deficiency assessment on the stock dividends as well as on the insurance policy. The CA affirmed the decision.

Issue: WON the CA erred in imposing no deficiency DST on the increases of the amounts? – Yes

Held: Section 173 of the National Internal Revenue Code on documentary stamp taxes provides:Sec. 173. Stamp taxes upon documents, instruments and papers. — Upon documents, instruments, loan agreements, 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 taxes prescribed in the following section of this Title, by the person making, signing, issuing, accepting, or transferring the same wherever the document is made, signed, issued, accepted, or transferred when the obligation or right arises from Philippine sources or the property is situated in the Philippines, and at the same time such act is done or transaction had: Provided, That whenever one party to the taxable document enjoys exemption from the tax herein imposed, the other party thereto who is not exempt shall be the one directly liable for the tax. (As amended by PD No. 1994)

The basis for the value of documentary stamp taxes to be paid on the insurance policy is Section 183 of the National Internal Revenue Code which states in part:

Sec. 183. Stamp tax on life insurance policies. — On all policies of insurance or other instruments by whatever name the same may be called, whereby any insurance shall be made or renewed upon any life or lives, there shall be collected a documentary stamp tax of thirty (now 50c) centavos on each Two hundred pesos per fractional part thereof, of the amount insured by any such policy.

Petitioner claims that the "automatic increase clause" in the subject insurance policy is separate and distinct from the main agreement and involves another transaction; and that, while no new policy was issued, the original policy was essentially re-issued when the additional obligation was assumed upon the effectivity of this "automatic increase clause" in 1984; hence, a deficiency assessment based on the

additional insurance not covered in the main policy is in order.

The Court of Appeals sustained the CTA's ruling that there was only one transaction involved in the issuance of the insurance policy and that the "automatic increase clause" is an integral part of that policy.

The petition is impressed with merit.

Section 49, Title VI of the Insurance Code defines an insurance policy as the written instrument in which a contract of insurance is set forth. Section 50 of the same Code provides that the policy, which is required to be in printed form, may contain any word, phrase, clause, mark, sign, symbol, signature, number, or word necessary to complete the contract of insurance. It is thus clear that any rider, clause, warranty or endorsement pasted or attached to the policy is considered part of such policy or contract of insurance.

The subject insurance policy at the time it was issued contained an "automatic increase clause ." Although the clause was to take effect only in 1984, it was written into the policy at the time of its issuance . The distinctive feature of the "junior estate builder policy" called the "automatic increase clause" already formed part and parcel of the insurance contract, hence, there was no need for an execution of a separate agreement for the increase in the coverage that took effect in 1984 when the assured reached a certain age.

It is clear from Section 173 that the payment of documentary stamp taxes is done at the time the act is done or transaction had and the tax base for the computation of documentary stamp taxes on life insurance policies under Section 183 is the amount fixed in policy, unless the interest of a person insured is susceptible of exact pecuniary measurement. What then is the amount fixed in the policy? Logically, we believe that the amount fixed in the policy is the figure written on its face and whatever increases will take effect in the future by reason of the "automatic increase clause" embodied in the policy without the need of another contract.

Here, although the automatic increase in the amount of life insurance coverage was to take effect later on, the date of its effectivity, as well as the amount of the increase, was already definite at the time of the issuance of the policy. Thus, the amount insured by the policy at the time of its issuance necessarily included the additional sum covered by the automatic increase clause because it was already determinable at the time the transaction was entered into and formed part of the policy.

The "automatic increase clause" in the policy is in the nature of a conditional obligation under Article 1181, by which the increase of the insurance coverage shall depend upon the happening of the event which constitutes the obligation. In the instant case, the additional insurance that took effect in 1984 was an obligation subject to a suspensive obligation, but still a part of the insurance sold to which private respondent was liable for the payment of the documentary stamp tax .

The deficiency of documentary stamp tax imposed on private respondent is definitely not on the amount of the original insurance coverage, but on the increase of the amount insured upon the effectivity of the "Junior Estate Builder Policy."

Finally, it should be emphasized that while tax avoidance schemes and arrangements are not prohibited, tax laws cannot be circumvented in order to evade the payment of just taxes. In the case at bar, to claim

that the increase in the amount insured (by virtue of the automatic increase clause incorporated into the policy at the time of issuance) should not be included in the computation of the documentary stamp taxes due on the policy would be a clear evasion of the law requiring that the tax be computed on the basis of the amount insured by the policy.

12. JAKA INVESTMENT CORP VS CIR, G.R. NO. 147629, JULY 28, 2010Facts: Petitioner Jaka investment sought to invest in Jaka equities corporation (JEC), which was then planning to undertake an IPO and listing of its shares with the PSE. JEC increased its authorized capital stock to which petitioner proposed to subscribe a portion of the increase in the authorized capital stock through a tax-free exchange under section 34 (c) (2) of the NIRC which was effected by the execution of a Subscription agreement and deed of assignment of property in payment of subscription. Under this agreement, as payment for its subscription, petitioner will assign and transfer to JEC following shares of stock: xx (shares of stocks in 4 corporations)

The intended IPO and listing of shares of JEC did not materialize but JEC still decided to proceed with the increase in its authorized capital stock and petitioner agreed to subscribe thereto, but under different ters of payment. Thus, petitioner and JEC executed an amended subscription agreement wherein shares of stocks in 3 corporations were transferred to JEC and in lieu of the 4th corporation; it paid the subscription in cash.

Petitioner paid DST and a 25% surcharge for the late payment but petitioner concluded that it had overpaid the DST so it sought for a refund. Petitioner filed a refund in the CTA was this was denied. The CA sustained the CTA’s decision.

Issue: WON petitioner is entitled to the claim of refund of the DST?

Held: Petitioner's main contention in this claim for refund is that the tax base for the documentary stamp tax on the Amended Subscription Agreement should have been only the shares of stock in RGHC, PGCI, and UCPB that petitioner had transferred to JEC as payment for its subscription to the JEC shares, and should not have included the cash portion of its payment, based on Section 176 of the National Internal Revenue Code of 1977, as amended by Republic Act No. 7660, or the New Documentary Stamps Tax Law (the 1994 Tax Code), the law applicable at the time of the transaction. Petitioner argues that the cash component of its payment for its subscription to the JEC shares, totaling Three Hundred Seventy Million Seven Hundred Sixty-Six Thousand Pesos (P370,766,000.00) should not have been charged any documentary stamp tax. Petitioner claims that there was overpayment because the tax due on the transferred shares was only Five Hundred Ninety-Three Thousand Five Hundred Twenty-Eight and 15/100 Pesos (P593,528.15), as indicated in the certifications issued by RDO Esquivias. Petitioner alleges that it is entitled to a refund for the overpayment, which is the difference in the amount it had actually paid (P1,003,895.65) and the amount of documentary stamp tax due on the transfer of said shares (P593,528.15), or a total of Four Hundred Ten Thousand Three Hundred Sixty-Seven Pesos (P410,367.00).

Petitioner contends that both the Court of Appeals and the Court of Tax Appeals erroneously relied on respondent's (Commissioner of Internal Revenue's) assertions that it had paid the documentary stamp tax on the original issuance of the shares of stock of JEC under Section 175 of the 1994 Tax Code.

Petitioner explains that in this instance where shares of stock are used as subscription payment, there are two documentary stamp tax incidences, namely, the documentary stamp tax on the original issuance of the shares subscribed (the JEC shares), which is imposed under Section 175; and the documentary stamp tax on the shares transferred in payment of such subscription (the transfer of the RGHC, PGCI and UCPB shares of stock from petitioner to JEC), which is imposed under Section 176 of the 1994 Tax Code. Petitioner argues that the documentary stamp tax imposed under Section 175 is due on original issuances of certificates of stock and is computed based on the aggregate par value of the shares to be issued; and that these certificates of stock are issued only upon full payment of the subscription price such that under the Bureau of Internal Revenue's (BIR's) Revised Documentary Stamp Tax Regulations, it is stated that the documentary stamp tax on the original issuance of certificates of stock is imposed on fully paid shares of stock only. Petitioner alleges that it is the issuing corporation which is primarily liable for the payment of the documentary stamp tax on the original issuance of shares of stock. Petitioner further argues that the documentary stamp tax on Section 176 of the 1994 Tax Code is imposed for every transfer of shares or certificates of stock, computed based on the par value of the shares to be transferred, and is due whether a certificate of stock is actually issued, indorsed or delivered pursuant to such transfer. It is the transferor who is liable for the documentary stamp tax on the transfer of shares.

Petitioner claims that the documentary stamp tax under Section 175 attaches to the certificate/s of stock to be issued by virtue of petitioner's subscription while the documentary stamp tax under Section 176 attaches to the Amended Subscription Agreement, since it is this instrument that evidences the transfer of the RGHC, PGCI and UCPB shares from petitioner to JEC.

Petitioner contends that at the time of the execution of the Amended Subscription Agreement, the JEC shares or certificates subscribed by petitioner could not have been issued by JEC because the same were yet to be sourced from the increase in authorized capital stock of JEC, which in turn had yet to be approved by the Securities and Exchange Commission (SEC). Petitioner thus reasons that the documentary stamp tax under Section 175 could not have accrued at the time the Amended Subscription Agreement was executed because no right to the shares had neither been nor could be established in favor of the petitioner at such time. Petitioner theorizes that the earliest time that the subscription could actually be executed would be when the SEC approves the increase in the authorized capital stock of JEC. On the other hand, upon the execution of the Amended Subscription Agreement, the assignment or the transfer of RGHC, PGCI and UCPB shares in favor of JEC (which is evidenced by said agreement), is deemed immediately enforceable as this is a necessary requirement of the SEC.

Petitioner points out that Section 175 of the 1994 Tax Code imposes a documentary stamp tax on every original issuance of certificates of stock, whereas Republic Act No. 8424, the Tax Reform Act of 1997 (the 1997 Tax Code), amended this provision and imposed a documentary stamp tax on the original issuance of shares of stock. Petitioner argues that under Section 175 of the 1994 Tax Code, there was no documentary stamp tax due on the mere execution of a subscription agreement to shares of stock, and the tax only accrued upon issuance of the certificates of stock. In this case, the change in wording introduced by the 1997 Tax Code cannot be made applicable to the Amended Subscription Agreement, which was executed in 1994, because it is a well-settled doctrine in taxation that a law must have prospective application.

Lastly, petitioner alleges that it is entitled to refund under the NIRC.

In his Comment (To Petition for Review), respondent avers that the lower courts did not err in denying petitioner's claim for refund, and that petitioner is raising issues in this petition which were not raised in the lower courts.

Respondent maintains that the documentary stamp tax imposed in this case is on the original issue of certificates of stock of JEC on the subscription by the petitioner of the P508,806,200.00 shares out of the increase in the authorized capital stock of the former pursuant to Section 175 of the NIRC. The documentary stamp tax was not imposed on the shares of stock owned by petitioner in RGHC, PGCI, and UCPB, which merely form part of the partial payment of the subscribed shares in JEC. Respondent avers that the amounts indicated in the Certificates of RDO Esquivias are the amounts of documentary stamp tax representing the equivalent of each group of shares being applied for payment. Considering that the amount of documentary stamp tax represented by the shares of stock in the aforementioned companies amounted only to P593,528.15, while the basic documentary stamp tax for the entire subscription of P508,806,200.00 was computed by respondent's revenue officers to the tune of P803,116.72, exclusive of the penalties, leaving a balance of P209,588.57, is a clear indication that the payment made with the shares of stock is insufficient.

Respondent claims that the certifications were issued by RDO Esquivias purposely to allow the registration of transfer of the shares of stock used in payment of the subscribed shares in the name of JEC from petitioner by the Corporate Secretary of the UCPB and are not evidence of the payment of the documentary stamp tax on the issuance of the increased shares of stocks of JEC.

Respondent argues that the documentary stamp tax attaches upon acceptance by the corporation of the stockholder's subscription in the capital stock of the corporation, and that the term "original issue" of the certificate of stock means "the point at which the stockholder acquires and may exercise attributes of ownership over the stocks." 14 Respondent further argues that the stocks can be alienated; the dividends or fruits derived therefrom can be enjoyed; and they can be conveyed, pledged, or encumbered; that the certificate, irrespective of whether or not it is in the actual constructive possession of the stockholder, is considered issued because it is with value and, hence, the documentary stamp tax must be paid; and concludes that a person may own shares of stock without possessing a certificate of stock. Respondent cites Commissioner of Internal Revenue v. Construction Resources of Asia, Inc., where the Court held:

The delivery of the certificates of stocks to the private respondent's stockholders whether actual or constructive, is not essential for the documentary and science stamps taxes to attach. What is taxed is the privilege of issuing shares of stock and, therefore, the taxes accrue at the time the shares are issued. The only question before us is whether or not said private respondents issued the certificates of stock covering the paid-in-capital of P17,880,000.00.

Respondent claims that it is well-settled as a general rule of Corporation Law that a subscriber for stock in a corporation or purchaser of stock becomes a stockholder as soon as his subscription is accepted by the corporation whether a certificate of stock is issued to him or not, and although he may have no certificate, he is thereupon entitled to all the rights and is subject to all the liabilities of a stockholder.

Respondent argues, based on the above, that the contention of petitioner that the documentary stamp tax under Section 175 of the 1994 Tax Code could not have accrued at the time the Amended Subscription

Agreement was executed since the increase in capital stock of JEC had yet to be approved by the SEC was inaccurate. He states that it is evident from the Amended Subscription Agreement that the subscribed shares from the increase in JEC's stock were fully paid through cash and shares of stock.

Respondent submits that the change in wording, from "certificates" to "shares" of stock, introduced to Section 175 by the 1997 Tax Code, was a mere clarification and codification of the foregoing principle or policy.

Respondent stresses that the documentary stamp tax can be levied or collected from the person making, signing, issuing, accepting, or transferring the obligation or property, as provided in Section 173 of the Tax Code.

In its Reply to Respondent's Comment to the Petition, petitioner contends that respondent erroneously insists that the documentary stamp tax sought to be refunded is the one imposed on the subscription by petitioner to P508,806,200.00 new shares of JEC. Petitioner further contends that since the documentary stamp tax due on the issuance of new shares or on original shares is P2.00 for every P200 under Section 175 of the Tax Code, then the documentary stamp tax on petitioner's subscription to JEC shares should amount to P5,088,062.00, which is much higher than the P803,116.72 basic documentary stamp tax paid under ATAP No. 1511920. Petitioner argues that at the time the documentary stamp tax was paid, before a taxpayer was allowed to pay the taxes due, a BIR revenue officer would first compute the tax due and then issue an authority to accept payment (ATAP) and it was very unlikely that the revenue officer could have made such a glaring mistake.

Petitioner alleges that there is no BIR certification requirement prior to the issuance of original shares of stock; and that it is only upon the regular annual audit of the books of a corporation that the BIR determines if the documentary stamp tax on new or original issuances of shares, if any were issued, had in fact been paid. If not, then a deficiency assessment, with penalties and surcharges, would then be made by the BIR. Petitioner further alleges that, on the other hand, before the transfer of issued and outstanding shares to a new owner is recorded in the books of a corporation, the capital gains tax thereon and the documentary stamp tax on the transfer must first be paid, and a BIR certification must be presented to the Corporate Secretary authorizing the corporation to record the transfer, otherwise, the corporate secretary shall be subjected to penalties.

Petitioner claims that the three BIR certifications in this case specifically allow the registration of the UCPB, RGHC, and PGCI shares in the name of JEC, the transferee, and that said certifications evidence payment of the taxes due on the transfer of the shares from petitioner to JEC, not on the original issuance of shares of JEC.

The parties' respective memoranda contained reiterations of the allegations raised in their respective pleadings as discussed above.

The sole issue to be resolved is whether petitioner is entitled to a partial refund of the documentary stamp tax and surcharges it paid on the execution of the Amended Subscription Agreement.

In claims for refund, the burden of proof is on the taxpayer to prove entitlement to such refund. As we held in Compagnie Financiere Sucres Et Denrees v. Commissioner of Internal Revenue—

Along with police power and eminent domain, taxation is one of the three basic and necessary attributes of sovereignty. Thus, the State cannot be deprived of this most essential power and attribute of sovereignty by vague implications of law. Rather, being derogatory of sovereignty, the governing principle is that tax exemptions are to be construed in strictissimi juris against the taxpayer and liberally in favor of the taxing authority; and he who claims an exemption must be able to justify his claim by the clearest grant of statute.. . . Tax refunds are a derogation of the State's taxing power. Hence, like tax exemptions, they are construed strictly against the taxpayer and liberally in favor of the State. Consequently, he who claims a refund or exemption from taxes has the burden of justifying the exemption by words too plain to be mistaken and too categorical to be misinterpreted. . . . .

It was thus incumbent upon petitioner to show clearly its basis for claiming that it is entitled to a tax refund. This, to our mind, the petitioner failed to do.

The Court of Tax Appeals construed the claim for exemption strictly against petitioner and held that:The focal issue which is presented for our consideration is whether or not the transfer of the 1,313,176 FEBTC shares under the "Amended Subscription Agreement and Deed of Assignment of Property in Payment of Subscription" should be excluded in the taxable base for the computation of DST, thus entitling petitioner to the refund of the amount of P410,367.00.

We find nothing ambiguous nor obscure in the language of Section 173, taken in relation to Section 175 of the 1994 Tax Code . . . insofar as the same is brought to bear upon the circumstances in the instant case. These provisions furnish the best means of their own exposition that a documentary stamp tax (DST) is due and payable on documents, instruments, loan agreements and papers, acceptances, assignments, sales and transfers which evidenced the transaction agreed upon by the parties and should be paid by the person making, signing, issuing, accepting or transferring the property, right or obligation.

Sec. 173.Stamp taxes upon documents, instruments, and papers. — Upon documents, instruments, and papers, and upon acceptances, assignments, sales, and transfers of the obligation, 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 taxes prescribed in the following sections of this Title, by the person making, signing, issuing, accepting, or transferring the same, whenever the document is made, signed, issued, accepted or transferred when the obligation or right arises from Philippine sources or the property is situated in the Philippines, and at the same time such act is done or transaction had: Provided, That whenever one party to the taxable document enjoys exemption from the tax herein imposed, the other party thereto who is not exempt shall be the one directly liable for the tax. (as amended by R.A. No. 7660) xxx xxx xxx

Understood to mean what it plainly expressed, the DST imposition is essentially addressed and directly brought to bear upon the DOCUMENT evidencing the transaction of the parties which establishes its rights and obligations .

In the case at bar, the rights and obligations between petitioner JAKA Investments Corporation and JAKA

Equities Corporation are established and enforceable at the time the " Amended Subscription Agreement and Deed of Assignment of Property in Payment of Subscription " were signed by the parties and their witness, so is the right of the state to tax the aforestated document evidencing the transaction . DST is a tax on the document itself and therefore the rate of tax must be determined on the basis of what is written or indicated on the instrument itself independent of any adjustment which the parties may agree on in the future . . . . The DST upon the taxable document should be paid at the time the contract is executed or at the time the transaction is accomplished . The overriding purpose of the law is the collection of taxes. So that when it paid in cash the amount of P370,766,000.00 in substitution for, or replacement of the 1,313,176 FEBTC shares, its payment of P1,003,835.65 documentary stamps tax pursuant to Section 175 of NIRC is in order.

Thus, applying the settled rule in this jurisdiction that, a claim for refund is in the nature of a claim for exemption, thus, should be construed in strictissimi juris against the taxpayer (Commissioner of Internal Revenue vs. Tokyo Shipping Co., Ltd., 244 SCRA 332) and since the petitioner failed to adduce evidence that will show that it is exempt from DST under Section 199 or other provision of the tax code, We rule the focal issue in the negative. (Emphases ours.)

In the questioned Decision, the Court of Appeals concurred with the findings of the Court of Tax Appeals and we quote with approval the relevant portions below:

Petitioner alleges, though, that considering that the assessment of payment of documentary stamp tax was made payable only to the aforesaid issuances of certificates of [stock] exclusive of that of FEBTC shares of stock which were paid in cash, and that it has paid a total of Php1,003,895.65 inclusive of surcharges for late payment, the petitioner is entitled to a refund of Php410,367.00. This argument does not hold water. As discussed earlier, a documentary stamp is levied upon the privilege, the opportunity and the facility offered at exchanges for the transaction of the business. This being the case, and as correctly found by the tax court, the documentary stamp tax imposition is essentially addressed and directly brought to bear upon the document evidencing the transaction of the parties which establishes its rights and obligations, which in the case at bar, was established and enforceable upon the execution of the Amended Subscription Agreement and Deed of Assignment of Property in Payment of Subscription.

Moreover, the documentary stamp tax is imposed on the entire subscription (i.e., subscribed capital stock) which is the amount of the capital stock subscribed whether fully paid or not. It connotes an original subscription contract for the acquisition by a subscriber of unissued shares in a corporation, which in this case is equivalent to a total par value of Php508,806,200.00.

Besides, a tax cannot be imposed unless it is supported by the clear and express language of a statute; on the other hand, once the tax is unquestionably imposed, a claim of exemption from tax payments must be clearly shown and based on language in the law too plain to be mistaken. And since a claim for refund is in the nature of a claim for exemption the same is

likewise construed in strictissimi juris against the taxpayer. Furthermore, it is a basic rule in taxation that the factual findings of the Court of Tax Appeals, when supported by substantial evidence, will not be disturbed on appeal unless it [is] shown that the said court committed gross error in the appreciation of facts. In this case, the tax court did not deviate from this rule.

We find no error in the above pronouncements of the Court of Appeals.

A documentary stamp tax is in the nature of an excise tax. It is not imposed upon the business transacted but is an excise upon the privilege, opportunity or facility offered at exchanges for the transaction of the business. It is an excise upon the facilities used in the transaction of the business separate and apart from the business itself. Documentary stamp taxes are levied on the exercise by persons of certain privileges conferred by law for the creation, revision, or termination of specific legal relationships through the execution of specific instruments.

Thus, we have held that documentary stamp taxes are levied independently of the legal status of the transactions giving rise thereto. The documentary stamp taxes must be paid upon the issuance of the said instruments, without regard to whether the contracts which gave rise to them are rescissible, void, voidable, or unenforceable.

The relevant provisions of the Tax Code at the time of the transaction are quoted below:Sec. 175.Stamp tax on original issue of certificates of stock. — On every original issue, whether on organization, reorganization or for any lawful purpose, of certificates of stock by any association, company, or corporations, there shall be collected a documentary stamp tax of Two pesos (P2.00) on each two hundred pesos, or fractional part thereof, of the par value of such certificates: Provided, That in the case of the original issue of stock without par value the amount of the documentary stamp tax herein prescribed shall be based upon the actual consideration received by the association, company, or corporation for the issuance of such stock, and in the case of stock dividends on the actual value represented by each share.

Sec. 176.Stamp tax on sales, agreements to sell, memoranda of sales, deliveries or transfer of due-bills, certificates of obligation, or shares or certificates of stock. — On all sales, or agreements to sell, or memoranda of sales, or deliveries, or transfer of due-bills, certificates of obligation, or shares or certificates of stock in any association, company or corporation, or transfer of such securities by assignment in blank, or by delivery, or by any paper or agreement, or memorandum or other evidences of transfer or sale whether entitling the holder in any manner to the benefit of such due-bills, certificates of obligation or stock, or to secure the future payment of money, or for the future transfer of any due-bill, certificates of obligation or stock, there shall be collected a documentary stamp tax of One peso (P1.00) on each two hundred pesos, or fractional part thereof, of the par value of such due-bill, certificates of obligation or stock: Provided, That only one tax shall be collected on each sale or transfer of stock or securities from one person to another, regardless

of whether or not a certificate of stock or obligation is issued, endorsed, or delivered in pursuance of such sale or transfer: and Provided, further, That in the case of stock without par value the amount of the documentary stamp herein prescribed shall be equivalent to twenty-five per centum of the documentary stamp tax paid upon the original issue of said stock: Provided, furthermore, That the tax herein imposed shall be increased to One peso and fifty centavos (P1.50) beginning 1996.

We find our discussion in the case of Commissioner of Internal Revenue v. First Express Pawnshop Company, Inc. 22 regarding these same provisions of the Tax Code to be instructive, and we quote:

In Section 175 of the Tax Code, DST is imposed on the original issue of shares of stock. The DST, as an excise tax, is levied upon the privilege, the opportunity and the facility of issuing shares of stock. In Commissioner of Internal Revenue v. Construction Resources of Asia, Inc., this Court explained that the DST attaches upon acceptance of the stockholder's subscription in the corporation's capital stock regardless of actual or constructive delivery of the certificates of stock. Citing Philippine Consolidated Coconut Ind., Inc. v. Collector of Internal Revenue, the Court held:The documentary stamp tax under this provision of the law may be levied only once, that is upon the original issue of the certificate. The crucial point therefore, in the case before Us is the proper interpretation of the word 'issue'. In other words, when is the certificate of stock deemed 'issued' for the purpose of imposing the documentary stamp tax? Is it at the time the certificates of stock are printed, at the time they are filled up (in whose name the stocks represented in the certificate appear as certified by the proper officials of the corporation), at the time they are released by the corporation, or at the time they are in the possession (actual or constructive) of the stockholders owning them?xxx xxx xxx

Ordinarily, when a corporation issues a certificate of stock (representing the ownership of stocks in the corporation to fully paid subscription) the certificate of stock can be utilized for the exercise of the attributes of ownership over the stocks mentioned on its face. The stocks can be alienated; the dividends or fruits derived therefrom can be enjoyed, and they can be conveyed, pledged or encumbered. The certificate as issued by the corporation, irrespective of whether or not it is in the actual or constructive possession of the stockholder, is considered issued because it is with value and hence the documentary stamp tax must be paid as imposed by Section 212 of the National Internal Revenue Code, as amended.

In Section 176 of the Tax Code, DST is imposed on the sales, agreements to sell, memoranda of sales, deliveries or transfer of shares or certificates of stock in any association, company, or corporation, or transfer of such securities by assignment in blank, or by delivery, or by any paper or agreement, or memorandum or other evidences of transfer or sale whether entitling the holder in any manner to the benefit of such certificates of stock,

or to secure the future payment of money, or for the future transfer of certificates of stock. In Compagnie Financiere Sucres et Denrees v. Commissioner of Internal Revenue, this Court held that under Section 176 of the Tax Code, sales to secure the future transfer of due-bills, certificates of obligation or certificates of stock are subject to documentary stamp tax.

Revenue Memorandum Order No. 08-98 (RMO 08-98) provides the guidelines on the corporate stock documentary stamp tax program. RMO 08-98 states that:All existing corporations shall file the Corporation Stock DST Declaration, and the DST Return, if applicable when DST is still due on the subscribed share issued by the corporation, on or before the tenth day of the month following publication of this Order.xxx xxx xxx

All existing corporations with authorization for increased capital stock shall file their Corporate Stock DST Declaration, together with the DST Return, if applicable when DST is due on subscriptions made after the authorization, on or before the tenth day of the month following the date of authorization. (Boldfacing supplied)

RMO 08-98, reiterating Revenue Memorandum Circular No. 47-97 (RMC 47-97), also states that what is being taxed is the privilege of issuing shares of stock, and, therefore, the taxes accrue at the time the shares are issued. RMC 47-97 also defines issuance as the point in which the stockholder acquires and may exercise attributes of ownership over the stocks.

As pointed out by the CTA, Sections 175 and 176 of the Tax Code contemplate a subscription agreement in order for a taxpayer to be liable to pay the DST. A subscription contract is defined as any contract for the acquisition of unissued stocks in an existing corporation or a corporation still to be formed. A stock subscription is a contract by which the subscriber agrees to take a certain number of shares of the capital stock of a corporation, paying for the same or expressly or impliedly promising to pay for the same. (Emphases ours.)

Petitioner claims overpayment of the documentary stamp tax but its basis for such is not clear at all. While insisting that the documentary stamp tax it had paid for was not based on the original issuance of JEC shares as provided in Section 175 of the 1994 Tax Code, petitioner failed in showing, even through a mere basic computation of the tax base and the tax rate, that the documentary stamp tax was based on the transfer of shares under Section 176 either. It would have been helpful for petitioner's cause had it submitted proof of the par value of the shares of stock involved, to show the actual basis for the documentary stamp tax computation. For comparison, the original Subscription Agreement ought to have been submitted as well.

All that petitioner submitted to back up its claim were the certifications issued by then RDO Esquivias. As correctly pointed out by respondent, however, the amounts in the RDO certificates were the amounts of

documentary stamp tax representing the equivalent of each group of shares being applied for payment. The purpose for issuing such certifications was to allow registration of transfer of shares of stock used in partial payment for petitioner's subscription to the original issuance of JEC shares. It should not be used as evidence of payment of documentary stamp tax . Neither should it be the lone basis of a claim for a documentary stamp tax refund.

The fact that it was petitioner and not JEC that paid for the documentary stamp tax on the original issuance of shares is of no moment, as Section 173 of the 1994 Tax Code states that the documentary stamp tax shall be paid by the person making, signing, issuing, accepting or transferring the property, right or obligation.