CTA Case No. 4583 (Decision)

-, REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY LINCOLN PHILIPPINE LIFE INSURANCE COMPANY, INC., Petitioner, COMMISSIONER OF INTERNAL C.T.A. CASE NO. 4583 REVENUE, 0N RP.snonden t. X .�. - -- -- - - -x DEc Rev enue, r.ic>nv'nq rJet j t; i oner ' s ..) lifl C I IIll''nt,':\t'V c-. t:i:1 mn tii\Her.;, inL":tusivt, of' pennlties, " n I " ~~ n d " () �;:�� " . r1.. I ���- 9. 1.: I'f) t � P cot' d s ) � .r, m[') IJ t a t; i (\ n n'f I thP. fol '' !?OO j fll~ d~fic:i.e ncy rl o c 1 1m " 11 t at' v ~:;' I�� : U'l n 1: ,, >< ~ s i �; a s f o I l o w!5 : On i 'o Jicies l SS I_\Pcl:: P2, 3 B(l ~ 0'34. 50 lut0 l poli cy i~ s ued during 1, 9~ 5, L~':35. 7_~ t~ile yeal ' P 4EA , 5'38. 75 I)r:) \'I.' mP. n t at' y c; t i':\ ITf p i~ a X ... ��-�- . - . _39Q.�.Qfd clue t h e l'' e o n -� ~~ ---..!!bl~ 8':1~. 75 (PI .. .3f::, o, O ~'"i'~, ()1 -,() , (H.l cj i Vi d cd by ~<,::rH) .. (l(l m,_,_]t� iL))iecl by P0.35) L c !:' ~; : P a v rn P n t P ��� f' i ~~ i f'~nc y !'lr Ir I :� C orn rn' 'l m i "" P 0 n "-" l t y 1�11I f' ! (.)JYIUI.J i'i l )) I W�: R� CL1U E ! :T I BL.E I.

DECISION - C.T.A. CASE NO. 4583 - 2- ( 1!) ~ �: I � ,- � I ( f) i. V i r I ,. r �. �� I I " " If p rj � v I i I � 1� ,. ' ' ' I �i I I ' I ! i �~ :- " ''' i d "1 ' i. T1 rJ f I 1 r> y f: i�~ 1- i : ..... '< t' !_~!._,_�~\ll.!'...~J (_) (-2.:._ (l~=~ f \ �� ( �� ' 'I ,.., n t t~i \,' fM ,_ 'l. !Jf f' P1 or., .191 . ,~~ 5 , f,,r, thf'1 1" ( 1 11 q��''l, :: r)7,~:; !",,., , .,, ., ��J i �.. it-f!? d by 21' !500. oo. r� ;�- �r H_l.(ll) f!l11, lt� �inJiPc1 b y PL1 ( l) p 78. C':l 1. ~-::5 !.. r-' <; r: ~ Pi:".V I!I PTlt e.-�-�- ;~.QO!J~~~! p.-, 1� i 1 � i_~-~ nc:v L~ ~~'?J,.~s.~ f'l r l d: !.'nmrn�� n11,:i.�.: ~" 1.'0T 1r:\.lty ,, .1 I () I ' (-)IYJUI II'll Til If.:: & ['() I ,I I "C l [ DU~' 'Il l<' f acts of the Ci:".~� e r.:n~e not i n dispute. is do me s t i c co 1~ o o ~ ~ ;;:; t i on t~ fl q i s t e re d \�.' j t h t h P S P c 1 w i t i ,.., "'� .-~ n d E H c h an n eo C o mmi s r.; j o n a nd <HI.t l l"�,� i.:?f.:'d l'.>v thP 1nr::u, ��r~ nc�e Commissio n to Pnqage in I i. F ,-, ~~ 1..\ r' i. n p s r.; � abn vem Pnt i oned rlefi. r: i l'l'lC ~I d o r '-' rn P n t a 1' y st;01.m p t ax assessm e nt f at~ ' t ~j f i. ;-; ',' II I t h f' ,, o f '�~hi rh is 1i i r.:, t i T~ [f 1. '� i r t 1 i Tlll i. n ,,, r. i'l s r> i11 the sum I ., n ,., "+ C' fl1 ,-, t i c t J�,r ,'\L i-.cli nmrnt by t h e I �i.ns " "o' Pd '""it t�1p'pt: t:hro nPP.d of issuinq a new polic y. s t .~ mp t '"' >< i s pa i d on ly on the ind:-i..:,.!. su m as s ul ~ ed and no documentary stamp tax is pc.\id o n th e inc l ~e ase o n th e ~p~ound th at no 1new poli. r.:v 111' r:lo cumPT1t is iss'.te d fot~ the said increa se. th at c:~dditional d ocumentary !"hOI.\) (1 he con�~espon di.nq to the i Tl c \�" c ;1 : (0 u .I

DECISION - C.T.A. CASE NO. 4583 - 3- �il1e othc>l ' deficiP.ncy documentat�� y ~; tamo tax fi�� om t he i~;!0- " �"lllce by oetitiorH?l'� of stock divide nd s of" !:.",0,000 sh .?.t"r><:; t�J it:h '"'oat' val1te of P100 . 00 per s h at'f.! Ot' a tot,:d oat�� va 1 ue of P5, 0C'0 , 000. 00. Docum P ntat'Y sta mp tax was paid based only on the par value of P5,000,000.00. It is t'espondent' s positi. on that the documentat'Y st.:-:\mp tax should be on actual value of said shares renresented by its book value of P19,307,500.00. lhe iss tt~?s t' aised fo~' t'.esolution of this Court are purely l eaa l questions. These are: Whethel"' 01�' not petitionel'' is liable doc u men t a I'' y st~..'=lmp trx on the -'H ttomc""At .ic incJ�'f.?r.."F' P .i n sum AS '-ll''ed nl thou _qh no n ~"' /.11 .lif'e ins~.trance po.licies r ~ ove1��.ina 5'.tc::h .z'nr::l'��eases .:ll''e is sued dur-�ina i he t t?l.'( ; �1 b .1 e r,..� e a 1'7 � h..-~ v i n q pa i d the rfocumen '(7 r":!l" \' 5 tr3m p t a.>< an the po .l1 c i e 5 ; r:: s u e d b c.~ s e cJ o h the a 1'' i g i n a 1 s 1..1 m as s u red ; c"'T7d r::. t.Jh e t-�hr-" 1' Ol�'' not documentai''Y stamp taxes on stcc h dividends involving shares t~'ith pc"ll'' Vc"llue ~hould be comput�ed using r.l. �' tax . b ,:.~ _c; e th e pal'' va 1 ue o~� the act ua 1 .) Vc."l.lUP. repl�'ese nted by SUCh shc;wes. 1. Un autom .:'ltic increase in s um as sured with no new po licie s :issued I Res pond~nt is of the v iew th at documentary stamp tax Qn life insur ance policies is imposed or ~omcuted on the basis of the amount of policy which i n ,...~ I ll ri r <; t h e i n c t�� e a s e i n t h e s u m i n i t i a 1 1 y a s s u t' e d I�

DECISION - C.T.A. CASE NO. 4583 - 4- r.> v 0 n �~ 1 n u q h n n n r~ I" r� p 1 j f' v i s i s r; ' � r- cl t c:, j n c I" ll !? s a i d j_,�����;�n,��n ir. r.:>'l � r�,-:) 1''" me.clc c":\ n i. nlf'f'lt' i'\1 oar�� t: of tht:> f\f1 I i r::'' , I) 1.1 i. .I rl ('I\" Po 1. i r�v " of T\ i"' t l..ll ' ('. of an nbl i.rJ i'.'. t i. o n suspensive condition und et' 118:1 of the f\lew Civi 1 Code, since the P f f i r~ '" c v o f t h e o b 1 i q a t i o n an cl t h f:' a c q u i s i t i o n o f l�' i q I�� l; :; .::n' e mad r to de f1 end upon the f u 1 f i 1 1m en t of the C'Pnclit ion, th,"\t. is , thet'e will be a n automatic j 11c r� P. i:':\ s e i n t h r-> s u m a s s u t ' E~ d u p o n at t a i n me n t o f a cel'tc"lin a~:~e by the inr.� ut'ed without the need of .i. ~= :, u j_ n rt i:\ n E� t-J p o J i c y � Th e do cumentary stamp t aM on C:\ l l d o nlv in t h f~ when the c�nqd i �1: �ion wa s comn lied ~~ith, m .~ l ino thr> po licy o n C.' 1' :' �1- i v e o n t 11r.- i. 11 c 1 � P. a ~; ~~ d s 1t m a s s 1l t' f? d � IJ r rw hi s oetitioper contends that no ~; ' .1 m�= ,., s s 'J 1�' e d hPl'P. s uc~h inc1�� eases at'e not covet' ed by i. 11 r.; u t' a n c e n o 1 i c i P. s i s s u f~ d d 1..w i n g t h e t a >< a b 1 P. ' ,I Undet' Section c~3;:;:: (now 183) in t'elation to Section 222 (now 173> and Section 249 <now 200) of the Co de, d oc umentary stamp tax o n ' life I i n s til, c:n1c e p o 1 i c i e s i s i mp o s e d on 1 y once ba s e d on the c:'lrnount in stwed at the time of actu;:.'\1 issuance (") f "' 1_\f" h p 0 J. i C j (-' r:; � I t is t�J~" 1 'l-~.e tt 1 ed that the

DECI SI ON - C.T.A. CASE NO. 458 3 - 5- d I) r: 'IITI f! T1 t; ::\l 'V r; �l: ,., 111 r' t '" H .. he�inq an e><cise ta><, is �i. mr) n �; r.�d o n t h r:' rl n c� �1mP n t '" n d �n :"' � he coJ l.ected only O 'i'' c�r� i.f. t in.?~ l:l v ir:.c:qP.d .. i. n '�' 1 w t� n c: (~ c P v P ,- :HJ r' +� 1- P. r., �.1 J i n q f Y' o m fl n 1 i c i e �; a l t ' e ad y �: 1 .1�� :i c r' l; c t1 t.: n t: m y d "lf � '-' r.- n i'\ , .. s �t ,~, mp t a >{ at t h (' t i me o f of policies :i. s not suhject to I n thr ahsence of any clear Ho~ Pl''nvi s:inn of 1.~v1 involved is Section 232 �:;t �:i"..~ :- ( n n1,r Stamo ti::\H ; ~ -'-��-I �� nn :1 :if,, ill '-;1.\l"a ncc' oo:l icies. On a ll of I' , insurance or 0 t h P.t' in"h't .ll'l''rd;c t>v 'l,rh;yt: e vPt' narnP the s~me mav f l'> e c;:~ 1. I. P( 1 . ��Jl -.r��1 � e bv :=q' y n �Jl' �:ITlce sh21 1 l be fT!"�:1f' cq �� l''f'!H' I''"' (~l t~Pr>Tl nn l v l:ife n t' l i ves, .. ,,~~~-� e r.�! ,;�, I I t-)1? col J Pctt>d ;:>. documentat'V ��: t i'11'1 o tax n. 'f' t h i t' t v ( n rn�J ~)0) c r> n t "' v o ~; n n P ;F ' h t 1�-!0 h 1.1n rh ��,., d 1r30 <::. o s o1�� 'fT�;:.. ct i. on C\ 1 oal't 1'11Pl'enf .', nf tho amou nt i ~><:. ' IPcl b v a ny !? U C.~). rlf'ljc y ., " (I...Jndf.n���s r. ol ' inn sunD li f'd. ) rn out in the pl ' Dpet' context the ml?ani ng of T h ese .=.we as follows': " ~;<.�c l�inn ;::�;::� ;=~(nnw 1.73). Sti?.\mp t a><es �trH�n diJ'"~'..I ITJF�n l�c . instt' l.tm ents, ancf pape r�s.�- '' r:"lll c:locu. rr�~'n'\':r;,, iJlstt'l..lments, ancl pap!?t's, �Jqri �JrYJ" i H'' r'en+;e.nc'pc-, ,! assiDnmc>nts, saJes , �~� n�~l 1�.:,�','"111"' ! '"r'~ of the ob 'l j qat i.on. r:i oht Ol' �.I �

- DE~lSION C.T.R. CASE Nn. 4583 - 6- u �. I ' l ' (l p r l. I " ' - .,.. ; "'~~ Tl ~- r l ' p t ('I I l h ' 1" p 5 h c:d l I::J 0'. I '�' v i. P r 1 . ' - r , J J r� r �� +- P r I .=1 n d [ 1 <� :i ri f n 1' , ,':\ n cl :i. n �r �i?~P" "' ~I-.: , . ( th<:-: tt~�P:\ns~::~. c; tion r.;o ht\d or ..H.' l'r~f'lr���l ; ��l , r-d . t: hr- rnl ' l��esn nnd:i. ng_ r 1rot:"-tt'tr"�TJI r ' "\' ;�l i:l. fr'fJ t;.:~ l{�'15 f')l r!;Cl'ibed :in the f o J 1 rn� �.; n ,., c: rw t :i on r: o l t h i. c; "I :i. t 1 e. h. y the ' ' <' r' s c n m.o-11< :i n n. s i q n inn, :i s ~. u :i. n q , ;:-r�:c!�~r� t: i Tlf) Ol' tJ�'i'Hl:-,feJ��r���i nn thP same, and -<t thr> !:''''!l! r> time such act is done en~. transn~t:inn had = Provided. Thnt whenever m 1P p n ,. t� v t o t h P t i:\ >< a b J e d o c u me n t en j o y s 1 >< e mp t i n n tT !:' m t h '-'"' ti::1>< h I'?,., e i n i mp o s e d , the oth f'J�� Pi''1.l~tv tl"lPl''rto ttlht1 is not P><empt d1all hP �t-l1r' on�> rli1 'P.rt1v liable fen� the t ;" >< � 11 ( I In d r �, ' r::, r~ rH ' i n [] s 1..1 n fJ 1. i P d � ) �:::on>. 11 F;P" .. ion ;;::t+~'J (nn~-.� Pavme nt of 'I o c �J 11' r 11 \; ,.,,, - v �:- t .-:1m r:> t '"' ><. C 21 n r. e ] 1 ;:;~ t i on o f �:�l; ,::;~mp ..... D<�r��.tmr>nt: "'�ll��v . st;:\mP ti::lxP.s �.hAJJ ...b~. r> <~i.d I'V thP p�..\l'ch.:. se. ancl affi>< tu t'P. of d oc�.tm e nl �'ll ' V s t- .::I ITI P~ to t h c> d ocum py�,t: 01~ inst l' '.ttn f'P' : t;.-,,~pr1 C'i' to such . othPl' oapP.t~. ,,r, !Tln�; t>n in<hcat ~' r 1 b v lt~l�J 'H' l'�P.p t..dr:Ytio n s ,.~ s t h 0' r~�� 1 � r H ' r�/ l'' P r' i r~ i e n t o f 1:. h I? s t a mp . an rl ''" �t: l 1:.: .,_ th<;pqu~>Td; C'i''lncn ]J ,-::~tio n t�:J be i"CC' Offif' . l i r l , rd bv I�J1 ' i t; i.nn. ,st:;."\mnin~r~ Or' fH'1'fcn��;>"i !1 n l:hr.> rli"'t[' nf t�hf' CMllC'e lJ .?t iC'll i"\'1-� c>~" rc +t �,r �. f,-; r � p Clf e<"'C ' h ~:t;=rmp i n t::l.\~h 'l HHl ~"' ' � �': ~ �. �"'� t t::' .::~ 1- t of t he l:'��, � 'iti. nrr , il'll"l'' IJ ~';t: i (.l 'l� . Dl" DPl"fPl'r"ltiPn sha l l I><? on tli r> .,-tarr!l�' it~o )f <1nrl pa1 ' t on the ll '\f.1er�� to " '1i c1h i t is .-"1.t:t:prhPd~ PJ�n.r�idPcf: !'hat if' l�lir.:� r � .'. Tlf '' P �I �I,~,t~ ~ f\11 ir:- acco mp lishr:r d I ' \' 1.- Jl" i +" i n II ' 11 r' y S t C\ mp i n q t h P d a !; P. 0 �f c��mr_~,�~l. l ��,:�:orl., ;,~ ho:le r::ufficiPnt ly lal'\~e Ln be �i.r.-Jh:tr to thP n a l<rr1 eye shall be nunc hc?tl. c�Jt cnl pf' l' for�;::ttf'rl on bot1�1 the st amp .n d the do c ument either by thn use 'l f a h i'Hl ri punch ., k n j_ f e , pet' f o t ' a t j_ n g m.~<chi.ne':; ~ scir:;~.;or'�;, ot�� any othet' CLl t t i ,,nq i n s t 1�' u me n t ~ b u t i f t t1 f' can c e 1 1 at i on i s 0cc ompJ.i :.hr:>d hv pel���fo rYtt inq the date of ca n c e l l.;yl~ �i n n. no o the t' h o 1 e need be made on th r. s t <'lmn .. 11 I n 21 p p r�' o p t' j at e c i:\ s e s , i:\n d in the discr'r?1::iqT, of thE' Commissioner, ,��l q r:: '-' me n 1.: ;" 1 � v s t a mr:>s may be impt'inted on r~ e r' t i1 i n ' I o c t.t mp n t; s upon paymE?nt of the 2 '/fJ .I

DECISION - C.T.n. CASE NO. 4583 - 7- ' ' .. (;:\ vi' t '1' i ' i lr,tll :i C h L i"\ �~ P � ' , I�� r' ~ I <' l. ;-� !TI 1>!; nr>"'d not bf~ ,.,. , iqrli r.:.'l t<er1 J. n thn o~~ecrdjnll "- "PPI ied.) \( ){ )~ H){){. II J " t..lh!i C1 f'!'l('�l l I r..'illCP .I l e~t jon t h e1�� P. of 01 ~ in �'r'!1'1 ''' '' � i ate c: p I.;~,, ~:: by i mp1~ j n t :i n [! on d r�r:�"' '''t'J ll:;s '-IJ.:'<'l � n"~vmPnt nf thP f.:!cc� Vc?. ) �_tp pf' suc h ~~ u:t :i l'lll'~ .. In Pevenue ,, �~; I nf\ rl ~~� t: p rl s e r~ ~- (I mh (~ ~�� 7 ~ '- .�_,_),,,., e:.L.'Ite d thr--\ t II Un c ,,. mon t r.n�� v s t a mp s I l � h c: time SIJCh act is dor~ e or The documentary st amp sh<:\11 be r <�1 f i :� f" c1 at thr- time the taxable dociJm e nt' is e~or:t.t tr:!d <BJn Hulinq 1\i o. 30'+ �- 88 ) and at the t~ates th en �i. n foy�cto wrp l~� .tl.ing No . :~2 i? 7 ..- B8>.

DECI SION - C.T.A. CASE NO. 4583 - 8- l i ,��; l� �� ; � �- of cil�l.' l.�:n r�-nt: ,,,,��� v ::Li "l lnfJ t a >( i.n t he ca<;e of "n cl t' ("' '�' m(' n t: '"' ,., v ~; t '"' mf) t a)( i s . i n the n ot ll i:\ "i.:" IJt 'f..' o�f r-:\ J"l ~XCi. 10� l' tA )( . Jt lS but �i rT1 r~� o s e r:l u D n n t: h f~ b u s j_n e s s t t' <'1 n s a c t e d is an P><rise uron the privile~e, c r � fJ o t' t �.1 n i. t v o t' fa c i 1 i t y o f f e t~ e d at "~r hanqP s for t h e tran sact i on of the busine~s. lt is an excise upon the L -Jc :i. .1. �i.t i.r~ r. f\ ';c d i n the tt' an sact io n of the l '~.ts i. n<0'�i'i "~",,.,,,,1-� <:1te a nd p.:n��t f l"'O m the h�ts in e~:;�:=. it~�c>Jf". <Un Pont v. US�� , 300 U.S. 150: Thomas v. U.S., 1'32 U.S., 363; Nicol v. Ames, 173 U.S. 50'3). With ; f.? so e c t: t: o s t o c ~< c e t' t i fica t e s, it � i s I. P v i. e d �' r) on t h e Cll ' i vi l e g e of issuing f� i H:? m; nr.>t o n th e mo TH'Y a t~ pt'opet' ty \'Pc eivecl bv the issui nq com n~n y fat' s�J ch r� , ,.., t i f {C D t " ''�. 1\1 C' i t hI? t' i ~; i t i m[) 0 5 P. d Up 0 fl 1:11<? sh;;~1""�C c~f stoc+ . As Ju s t ice L<?at' necl ll ,..�r lf.:l fJo1 n 1� pc l out jn on r Ct-\se, doc um entat' Y. "' t :,:;n1 IJ t 'l H i. c:. l e '' i c d a n t h e d o c u f!l.P n t an d r>~>t.: th e r��l �I�C"�C�'l �� tv i t dr!s r.:: l'ibPd. <Empire rt~u st Co. v. ' Hoe y, 103 F 2 d 4 30) If l.: 11 e. t ' <? f o 1 �. (�' ., "' s i ~= a n IJ <�n ��e n t f t' o m t h e r ,, 1�. r) IJ o i. n t 1 r I i s c �t s s :i. or. , ' t h .:1 t the tax in e ""!'I:~ S t i. (1 1"1 i c: j Ill f~ 0 <:; !~ ci 0 li t; h C) 01"' i V i 1 Q r-) 0 "f 1. �: s u i THl ( :P 1�+ i I' i. c '""' t e s � t h E' n t, t1 e__ t ""� x ...IT! i=' Y...J?.~.. r�rJ J..l<;: c t . er:l OTlJ.v.\ once: ~~~t:!~E.':...n. _______j; l�~- ,. <.. ~�~l' ti.fi n .:~l�ps ,;:,1 ~ e ftt~st. o 1~ ori_ [li .!J .~ltY. .."""' i ,., '"��w cL ' Th P t' <-? '"" s o n is b e c a 1.1 s e a c: e ~-� t i f j c: ,:::, l P :i. ~' i s sued on l y o rice i l�.ll:1 ate v er' d ncu m~.n. t9J.~.Y..... t~lL_i.2,__.Q!.-1fLs...._ J.....?.. ___g_t.Lf;:'.. at ..tt1 at t i 111 e .. ( Em o i 1�~ e T t"' us t Co � v . Hoe y , supra> . <Unde l�~sco t'ing supplil? d.) Y. ; ' I n.t l. of th~ foreqoinq discussions can oiJ'"l 1 .. be i n t f? t' r.w e t e d . t o rn e i':\ n th at do cument at~ y stam p t a>< "i !; l evied a nd paid only once at the time the taxable d IJ c u ,., '�' n t i ~; i s s u P c.l � Ev irlent 1 y, the documentary f ) �~J h- { �,.-:.., I.

DECISION - C.T.A. CASE NO. 4583 - 9- <;�I� ,-,r'n t a>< c: h '"' 1 :t b 0 como u ted us j n q as tax base the Vi-)' ' '" at thf' t:i. m<? of is�~ Ui?. nce of the instl~ument. Tn t he of l if!" ins ut~ance polici es, the a mount i S !H\ed bv s uch policy c1riqinally. !:l11hc::eq uent inct' AF.ISP. S in the sum assured with no n ew I i.h? instn��anc~> ofl] jciPs issued at~e not subject to c1 n ,, '-' m~~ n t .:;~ 1�' v r.; t; am " t ax � At the time the insurance d �i d n n t; f n , -. ITl o =< ,.-- t o f t: h P am n 11n t i s !5 u E� d by s u c h f\ 'l I i_r~ v. .I 'H:\11 i n ct' e H s P r~ in the c " v <' r' ,J. o e D c> 1' t c"\ �i n t o p o 1 i c i e s :i s s u e d a n u mb e t~ o f v r' .-~_ , ., "' back . I t is int e 1��e~;tinq to note that r ~~~ ~ rec~ntly de c ided by this C ourt~ namely: American Hom e !�. Assurance Company vs. Hon. '� Commis si on er of Internal, Revenue , CTn Case No. American Interhational Underwriters (Phils. ), Inc. vs. Commissioner of Intern al Reven ue , CTA Case Ph ilippine American General Insurance Co� pan~ vs . Commissioner of Internal Rev en ue , CTA ' Cas e No . �. I

DECTSION - C.T.A. CASE Nf . 4583 - 10 - P ~ili o~i~~ nm~ric2~ Acciden Insurance Co mpany '� � It l ,. Phi li oo�ne- Home Assurance Corporation vs. Co"'mic;si oner of In ternal Rev pnue, CH.:j Case No. l''f)<'. f"f1Tlr:IPnt isHuerl an assessment but on He was 2rquing in i n the same mann Pt' Pf't it i onet' i s ; ; �11��ir1n nnw �in tl �, p inc; t:~nt C'ar., p., In those ci ted r , �"� .: ~ I : ~ t; h; r:; r� n 111-� t t-J .� th T n 1" "' ~- n '"'� ] f ~ PV Pn ' lP t h at th e 1I "' +� ,, 1 � 1'1 i 11 e d '"' + t: hp timr> of n o t �c: ! l'.) ' .l I ( j r~ n pr-ncl Pn t on some eve nt s. II , i .. �i r: c c. 11� r t "' �.. n r p v p ~ �~ '"' l nf hi s in th e that the r; [ ll j r r~ n fi' '" i ~ � � i q n r~ \.. f 1 t l n t.. e 1�"n c'1. l ~~ e v P. n u f~ 1 t 1::\ h o '--' g t1 o t... i mC\l�~ i 1 y J. :�.. I � . ' 1-J i. th r� t�, J)r�ct :ibn of t'P. VPn l.le sh ould like wi se r> r� (1 '� i 11~ ~ st ;:1'hi ., i l: v tn the ;. nt et��pret at ion of the ,I rn�� \,/ i~ 1 � j (' II':} P " ; r.:iplJC:: of the Tax Cod e in orde r to L' ,.� u r' " t�� I. y !=JU j d e t� h e b u s i n e s s s e c t o r a s we 1 1 a s a I 1 I L:.-.' J< "' i.\Vt~ t's in thP Dt' nnet' condul.'t of theit~ b;.usiness Pthet' . aff .�\:il'' S which may in volve payment of t il Y"" .. .I

DECI SION - C.T.A. CASE NO. 4583 11 I )" �- J� n, I' r' i '/ i r�t n Tl , I .. r. ,, Tl ~ i �~ I� i T \ r� n r- � r he st.=tmu t ax i. T1 �f� h ca ~:; P n'f' st pr~ t < r1 i v :i. cl('nrl s., t (~\{ i Ill DP ,. rrf ()tl the Act t.IA l value ;- h :> \ � " �; o f s �1- n r � I : b ,., \I<J i t h D ,"\ 1" v .~ ] u !" o t~ w i t h o u t pat~ v ., I " ~ ., Dointctl out that d'stinction <. 1- �; ~!I I l t ,"\ ){ nn i c:~ r '�'� P c of of �"'� 1: " ,., I � c; ( 1 T') OTIP i rn n " �~ i t i o n of <I n r � ,' '" r\ n \~ ,-:, 1"' \' ,.. �1- n�n r> t ,:-))( on s t. o c I< cl i. v i d �! n cl s on t h e +� r l i " I� ; Tl I . 1-; nnd rlj -( r� 1 � P 11 +: f ' J' [\fll I')J1r> i\ T1 n h P t' . n t�� e a d i n o 11 .,. I r.ct i f1fl .. �; � 'I (nn ~o-~ 1 l '~.) o-t thP. 1 ax Corl e, as ' n '"'' fl' I,. r! ., \�'-.l '} ' l. 1. ('I '"' r-hn w ~- hi::\t , r.�n mm"' i. !�� 1.1c; f' cl to ':. ,~ n :�, ,... , 1: r:o~ r 1,.._. ,,'' ( ..,_ �i f\T1 wit:h t'E' r, pect t (1 en~ i q in a J D oct..t me nt at' V " n C' r:> c::n' v a 1 u e " , the>n on the act �.1 al is t-,,,sp d on thP act u F.~ J value t'eoresent f!c:l 1 by e ac h .I

DECI S ION - C.T.A. CASE NO. ~ 5B3 - 12 - 1� ,-, I; i I� �i � .. ,. ,. , I i �� 1 "1 1: ,. �~ t h o c~ n -t- i rc i P n c ' d P r ��"l f: n tat"� v (~ I � ; ''TI I ' 1:; �'' ~ ' nn +: h n n 1��� n �.J n<i th a t ( n OI>'J l '' ' I I<>['! r l (.'>!I 'I; J ,. i n 1 c� ' �1.11' P t i'\ t� :i o n :; n �~ t :i t i nn " �~-�� r-: v i pw th at only st ncl< c.1i vi de nds v ;.'l 1. !) !') ., , .lr:>r:t l vi n ct t h e < I 0 ' '1.:: � i. 110 cd F.~n +: f.' CP rl r>nt, i t i s "'V i r:lent t o ( 1\ I Jl' l 1/~i ) 0 �f� t ll f' T .?t>< C o dr.> s t C1 c I< d i v i den d s l, n n t� h (~ a c t; 1 � ;.-, �1. v ::-, 1. 1 ~~ t�� P r t '' P s e n t e d b y e t :\ c h 5 h at' e." i 5 rl l' n 11 i r.; P t' e f e t ' t ' in Q t o 1-'' i t h D U t; IJ i:'\ ,..� Th e in th e . ca s e o f 1"r.:�;-' o v .i d F.' d, T h i3. t t hP rwj~~in .~ l i.<:;'�'� '� ' e o f s to cl< wjth out paY�. v a lue___ th ~?.. t'\m Dim t .. of t he d o c um Pnt at' Y shaJ l ba s ed i r,; s e p iO\ t' at ed not only by 1 a comma ft�nm the m r.:~ in cJ a u se of Se c t i on 22 4 (novl 175) of T a x Co d p to ori qi nal i s sue of i+; is als o ' ) t~� ,- r.v/ 0 .I

DECISION - C. f .~. CASE NO. 4583 - 13 - [ l V F\ coln11 and the qu~lifving 11 Pt �o v.i ded 11 .. l� lr,n c' <�', th e phr� .::,~;e "a n d in tl1e case of �; t o r:~ I< rJ j v i cl P 11 d s o n t h f> a c t u ~ J. v a l u e ,~ e p ,~ e s e n t e d b y can only modify its immediate a n t ~? C" ~? d e n t 11 h ,.. <�I s e ,.~ e f e t~ ,~ i n g t o o t~ i ~ i n a 1 i s s u e o f stn~~l< withnui~ pat~ value. ,.~ u 1 I�' t h at t h P. c1 o c u me n t ;n~ y �; t �"~ mr:1 t ,;:~ x 1 i a b i l i t y i s d e t f~ ~~ 111 i. n e d b v l~ h e f o t ' m an cl f <~ c e o f t h e d o c u me n t , <'.I" r< l i P c; j 11 I~ h e c e:\ s e n f en' i r i n a J issue with par val'J.~ jncll\dinrl stoc ~< dividends with p?~ l�~ value. r h i. ~; d �~ t e ,., mi n ;, t j o n can n o t b e a f f e c t e d b v p ,~ o o f o f fact s 8Utside of the instrument itself, s uch as the F\1-:i;'''"l. net h!'nl< vaJue 0f the stoc~<, in view of the .) ext st~ nce of PC'Ir value . In u.s.. . Y.~ .-- :I..~h~."' ' 17 Wall. 495 ~ 8~ U.S. 496, the U.S. SuprPme Court enunc ia ted thf? followinq ba .sic . t~ules qover' nino documentar~y '� �; t << 111 11 l i. a b i. l i +; y ~ 11 X><H XXX X X){. 11 .~~ r��c1 � 1Th e 1j abi l i t y of an i n s t ,~ u \nf? n l; t CJ a s t a mp cl u t y , a s we 1 1 a s t h e "" mo ,_m t o f s u c h d u t y , i s d e t e Y' mi n e d by the fcn~m and face of the instt'ument:, and cannot be affected by proof of facts o uts ide of the instrument itself. "'+th . If thet'e is doubt as to the liabi. li.ty of an instt~ument to taxation, the construction is in favor of the exemption~ becausP in the language of P <.:lll ocl<. C .. B., in Git' t~ v. Scudds, 1 F x c h f? o '�\P r�� . 1 '3 l ( s e e a l s o C o m�~ o y v � l..J;n~r'f?n . -7: J nhnson' s Cas.es, 25'3, to the .I

DECISION - C.T.A. CASE NO. 4583 - 14 - 1 111 ('~ r.,f�fr-� r �- ~� ) I I ;::t, t .'1 H c."'n nn t� r> im n \ls f'd ,, , .; �~�h ("II.' 1- r� �1 " .-. , -. a n cl F~ >< D t- P <= S lfJ D t ' c:f S f ot' th a t >.1 t '� F� nt� i.ni n t' J. )( >< ){ � " .) V�::\l ue . it i 5 -1: ~ I ' j \ ' fJ i'H' t V ::> IJ 0 ., r.f t h e� cn nt l ' Cl VPt' S Y i s thP s t i'l tutot' y " H c~ c t :i " n c';>tf ( n n ~�~ 1.1 :s ) . S t ,., mr~ t <='l'< on 0 t' i ~J i 11 ..., '� i '-� r. u r o f c e ,-. t i f :i. c C'\ t e ~; o f s t n c ~< � Cln ev f' l ' V Ol ' igjnal i ssue. whr.:>t:hPl' on n ,- n �':!. n j :z. c.t: :i r> n rn' t' r o t ' Q an i 7 a t i o n o f f (n �� .::\ n y I ,, ,,,J' �.tl. r, , , � ron <= p, n f C !?l ' tifi C' <=~ t es of s tocl< "y '"' n '' '"' <." �.; n r. i at j n n . p om n a 11 v 7 o t�� r' n t' o r11 �. d i. n n. th e t '' e s h a 1 J b e . co 1 ] e ct' e d a r l n c 1\ m" T1t� <' 1� v '=' i; "' mo t c:1 \( n f o n P Cl P s o a nd +: f? n C: l�:> n �l- rl V!' '' ~ n nw onr r.:�� e!;fl <=~ nd s1:1v en t y I ' "' n �l: ;~ 1J 11 r� ) (> 1'1 ~ i"\ C h t \~ P h 1J T1 cf t��!? r1 0 "' <:; ("o r; � D l ' �r '''" r'l: ; Ill'! : ' 1 n .'' '�t thPl ' t:'of~ o f th P p at' v;q Ju e o 'f' s 1\ ,., h ~ �~ r., ,.-. t ':i i' i c�;:d� <? 5 : P ' ' o v .i de d . T h :" t i n +:h P c:����:f'� . ,.d . tl �l!' nl - i. o :i fli'\ l i.ss " P of st: P c ~< . t1h n ' ., i . �I; ,., r) II I� I),, i ' 'l ; ?, ] I If' �"~ ITI p "n t: rd t; h P. (ip r �' II ITI ! �~ Tlt � ,-. , c;�I�,"'ITII'l tii'l >' h l? l '' Pin !J l���eS C l' j b e d " '' �"'- 1 :1 !���( ' b.':l.f-\ P <I � .t .,n' ~ th e . a c tua l r� n n s�i d! �, -�.-d : ipn I r��pcf:'jvpr1 bv th e a 5 ~; o c :i'{\ +� i n n ., c o mp ,;\ Tl v , o 1' r:� rn -� po t' at i o n f o t~ l�he j r.. r.; �. 1.n nr:~"' of s ~t c h s t o c l<. and jn th~ C-=\S f? cd c::t: nr: l< di.vic!.f'nds . on . th.e ~ct �,ta!_ v a lue t' P r:wt>sented...... _by ea_� h __��--~h a t~ e.� " <Unc:fpy�~, col ' inq s upnlied.) I t'ttle of s tatutot'Y construction l�' <?CHtit' PS th e c ow��� t to qive effect to the ~eneral f oUt' c o l' n e t' s of the li3W .. Wh e n the object ; n; I' TH Jr.�cl t n he:- -"'' compl j s hecl bv thf? stat�.�te i s once .I

DECISION - mc":\Y be C.T.A. CASE NO . 4583 - 15 - 1:' 1. P .".\)' I v ,.. ~< rJ r-::\ Tld t~rl to it' t:o effectuat; e the The <Bort"" OmP.o v. Mariano .. '+1 ~~hi J .. 3i:::;=:>,. r:n�w �l-: ha s no r:othPt-� choice b�xt to anply the law accn1 �rlinn to it~; evident intent. (Regalad o v. Yulo . E.1 PhiL 173). A clo se rPadin n of Section 224 (now 175), t n n '' �': 11 t' ,, w i t h t h C' at' q u mf' n t s of bot; h t h P o e t. i t ion e t' '' TH:l I" P s n o n rl P n t: � convin ce d t h i c; C <Jt..w�t: that stock r1i v �irlr?nd s i.. nvo l.vi n n d th va] 1..1e at'e -r ,. v .'1 I, IJ r> t h '! "� f? (1 rn' i r1 i n :.~ 1 i c; s u r-' o f c e t" t i f i cat e c: o f s t n c I<" i n d i cat e s "l; h ; I; i t coyp1�� ~ sto c l-< dividends Ot' :i. qinal lv issue d. VC\)UC'. with, pat' value ancf th ose ThP t ' Ci t io n a 1 e fot' the to rl oc ument.arv s tamp tax as well as the amount of ,I su r-� IJ tc:n< i s detet�� min e d by the fot' m anc1 fa ce of the in st rument and cannot be aff ected by proo f of facts 1 n u t s i d e o f t h <" i n s t n ..1me n t i t s e 1 f . l 7 I..Ja ] l 48 G., RL~ U. B. -4-9E ) � n t ' i n i n '''� .1. iss ue of stoc~: jncl ud inq s tock �, I

DECISION - C.T.A . CASE NO. 4583 - 16 - �: �f� ,.., '~ ' r' t. r:~ >: ~ �, ,-, �� " d f' n t h I? n a 1�~ v n J '-' r� .. Lin th E> o the t' .. ,, ,.,., ,. -: 1:-J j \: h" ,_, ., D !.\l' Vi'> ] I I f' up n n the .::\c t ual i n thP c~se of , or iqinal ,, h iW' ~~ i n t h f' ~c i:\ c; f' 0 f s t 0 c I< d i. v i fi P. n d <; � In the case o f r.;'o rnm .i.'5s .ionr"' l�' oF lnter' T1 r1. l R e ~y�enue v . ... f-!e ald. L.,u'"-.QJ?.t..' r; �.�r ����r> mn Co�.'.1"'t hr-~ ld ttE '\ t " S o f ;:n �� a s th \)Sf' ter�ms './ t?. ., ' t !�'� ' �".T1 rl ' �"' r� t �1'"' ., rnn r.; j d P.t~ a t i. on' at' e ~~ \' n n" v mo u s .. 11 .. WHEREFORE, the deficiency documentary stamp ta>< nssessme11ts in th e amo1.1nt of P464,H98. 7G and P'TB, I:J':H. 25 or� a tot a 1 of P5'+3, 890. 01. at"e h!H"eby C <"ii.T1C f' J.J. ed lack of met� i t. Respondent Commissioner of Intern a 1 ,Revenue is ot"d er. ed to desist from co llectin~ said de fici ency documentary stamp taxes fnr the s\ame are consider ed withdrawn. SO ORDERED Quezon City, Metro Manila, 30, 1993. ~~~~~I , _ ' RAMON 0. teDEJ~ ~:H Associa �. ' .

DFr.: 1~TnN -- C. T.0. CASE ln. 4~83 - 17 - I�IE Cni'ICUR: ~Q... ~ ERNESTO D. ACOSTA Prp s i rl :i. Tll1 GRUBA .Juc1 qe r.:--:ERT IF I CA D"'-1 I dror.ision was t �r .'1r.hr>c1 af'tf'r' d�.tf' co nsul.t ati.on 0\monu thr> membet' of 1 >:. nt � tir. tr- \.IJJJ pf thP. Constjt� .ttion . <e:~~~ ERNESTO D. ACOSTA rl�~ rs i d i no Jt.tdq e c; om �t of Ti''\>< f"lppeals '28 .~ .I