Taxation 2, Part 3 (DST)

Lecture Notes

I. DOCUMENTARY STAMP TAX (DST) under RA 9243; RA 10963 (Tax Reform for Acceleration
and Inclusion Law); Revenue Regulations (RR) 9-2000, RR 4-2018

A. Accrual; What is Taxed; Who is Liable to Pay the Tax; Exception

A.1. Nature

• It is an excise tax levied on documents, instruments, loan agreements and papers

evidencing the acceptance, assignment, sale or transfer of an obligation, rights, or
property incident thereto. It is the purpose and intent of subsection (i) of section 1449 of
the Administrative Code that a stamp tax of 4 centavos should be placed on each P200
or any fraction thereof, on all foreign bills of exchange and letters of credit drawn in but
payable out of the Philippine Islands in accord with the customs of merchants and bankers,
regardless of the fact as to whether such foreign bills of exchange are drawn in duplicate
or "in a set of three or more." (BPI v. Trinidad, 47 Phil. 496)

• In ruling that the documentary stamp tax is not levied upon the shares of stock per se but
rather on the privilege of issuing certificate of stock, the Court reiterated its prior rulings
that 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. (Lincoln
Philippine Life Insurance v. CA, GR 118043, July 23, 1998)

• A documentary stamp tax is in the nature of an excise tax. As such, it is imposed on the
privilege of conducting a particular business or transaction and not on the business or
transaction itself. Thus, the documentary stamp tax on insurance policies is, in effect,
imposed on the privilege to conduct insurance business and not on the insurance business
itself or on the premiums paid under the said insurance policies. This means then that the
documentary stamp tax accrues when the said privilege is exercised. (Philippine Home
Assurance Corporation, et. al., vs. Court of Appeals, et. al., G.R. No. 119446, 21 January
1999)

A.2. Accrual; What is Taxed; Persons liable; Exception

• In General - The documentary stamp taxes under Title VII of the Code is a tax on certain
transactions. It is imposed against "the person making, signing, issuing, accepting, or
transferring" the document or facility evidencing the aforesaid transactions. Thus, in
general, it may be imposed on the transaction itself or upon the document underlying such
act. Any of the parties thereto shall be liable for the full amount of the tax due: Provided,
however, that as between themselves, the said parties may agree on who shall be liable
or how they may share on the cost of the tax.

Exception - Whenever one of the parties to the taxable transaction is exempt from the tax
imposed under Title VII of the Code, the other party thereto who is not exempt shall be
 the one directly liable for the tax. (ING Bank N.V. Manila Branch vs. CIR, G.R. No. 167679,
20 April 2016)

• 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. (Fort Bonifacio Development Corp. v. CIR, G.R. Nos. 164155 and
175543, February 25, 2013)

• For the documentary stamp tax on original issue of certificates of stock to attach, the
certificates of stocks only need to be issued but not delivered. The delivery of the
certificates of stocks to the private respondent's stockholders whether actual or
constructive, is not essential for the documentary stamp 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. (CIR v. Construction Resources of Asia, Inc., 145 SCRA 673)

• The documentary stamp tax is imposed on every original issue of a certificate of stock (the
document evidencing ownership of shares of stock in the corporation), and that a
documentary stamp tax is in the nature of an excise tax because it is levied upon the
privilege, the opportunity and the facility of issuing certificates of stock. It being a levy on
the original issue of a certificate of stock. The documentary stamp tax under this provision
of the law may be levied only once, that is upon the original issue of the certificate". Bearing
in mind that the cost of this imposition is borne by the corporation originally issuing the
stock certificate, a literal interpretation of the word "issue" must necessarily mean at the
time of release of the stock certificate (document as properly filled up) to the stockholder,
the actual or constructive possession by the stockholder of the certificate of stock being
immaterial and of no consequence. (Phil. Consolidated Coconut Industries vs. CIR, 70
SCRA 22)

• The Government stands to lose nothing in imposing the documentary stamp tax only on
those stock certificates duly issued, or wherein the stockholders can freely exercise the
attributes of ownership and with value at the time they are originally issued. As regards
those certificates of stocks temporarily subject to suspensive conditions they shall be liable
for said tax only when released from said conditions, for then and only then shall they truly
acquire any practical value for their owners. The deposit on stock subscription is merely
an amount of money received by a corporation with a view of applying the same as
payment for additional issuance of shares in the future, an event which may or may not
happen. The person making a deposit on stock subscription does not have the standing
of a stockholder and he is not entitled to dividends, voting rights or other prerogatives and
attributes of a stockholder. Hence, respondent is not liable for the payment of DST on its
deposit on subscription for the reason that there is yet no subscription that creates rights
and obligations between the subscriber and the corporation. (CIR v. First Express
Pawnshop Company, Inc., G.R. No. 172045-46, June 16, 2009, 607 Phil 227-251)

• In foreclosure sale, there is no actual transfer of the mortgaged real property until after the
expiration of the one-year redemption period as provided in Act No. 3135 and title thereto
is consolidated in the name of the mortgagee in case of non-redemption. In the interim,
 the mortgagor is given the option whether or not to redeem the real property. The issuance
of the Certificate of Sale does not by itself transfer ownership.

RMO No. 6-92, as amended by RR No. 4-99 provides:

SEC. 4. DOCUMENTARY STAMP TAX. –

(1) In case the mortgagor exercises his right of redemption, the transaction shall
only be subject to the P15.00 documentary stamp tax imposed under Sec. 188 of
the Tax Code of 1997 because no land or realty was sold or transferred for a
consideration.

(2) In case of non-redemption, the corresponding documentary stamp tax shall be

levied, collected and paid by the person making, signing, issuing, accepting, or
transferring the real property wherever the document is made, signed, issued,
accepted or transferred where the property is situated in the Philippines. x x x

Although the subject foreclosure sale and redemption took place before the effectivity of
RR No. 4-99, the Court gives retroactive effect to the provision in this case. Hence, since
the mortgagors exercised their rights before the expiration of the one-year redemption
period, only the sum provided in Sec. 4(1) of RR No. 4-99 shall be paid by the mortgagor
since there is no actual sale. (Supreme Transliner, Inc. v. BPI Family Savings Bank, Inc.,
G.R. Nos. 165617 & 165837, February 23, 2011, 659 Phil 126-142)

• A party to a taxable transaction who "accepts" any documents or instruments in the plain
and ordinary meaning of the act (such as the shipper in the cited case) does not become
primarily liable for the tax. In the same way, Philacor cannot be made primarily liable for
the DST on the issuance of the subject promissory notes, just because it had "accepted"
the promissory notes in the plain and ordinary meaning. In this regard, Section 173 of the
1997 NIRC assumes materiality as it determines liability should the parties who are
primarily liable turn out to be exempted from paying tax; the other party to the transaction
then becomes liable. Philacor is not a party to the issuance of the promissory notes, but
merely to their assignment, thus, not liable to pay the DST. On the face of the documents,
the parties to the issuance of the promissory notes would be the buyer of the appliance,
as the maker, and the appliance dealer, as the payee. (Philacor Credit Corp. v.
Commissioner of Internal Revenue, G.R. No. 169899, February 6, 2013, 703 Phil 26-46)

• In a merger, the real properties are not deemed “sold” to the surviving corporation and
the latter could not be considered as “purchaser” of realty since the real properties subject
of the merger were merely absorbed by the surviving corporation by operation of law and
these properties are deemed automatically transferred to and vested in the surviving
corporation without further act or deed. Therefore, the transfer of real properties to the
surviving corporation in pursuance of a merger is not subject to documentary stamp tax.
(Commissioner of Internal Revenue v. La Tondeña Distillers, Inc., G.R. No. 175188 , July
15, 2015, 764 Phil 42-53)

• In determining whether certain instruments were subject to documentary stamp taxes,

substance would control over form and labels. “The fact that the ISA deposit is
evidenced by a passbook is immaterial considering that the rule on equality and uniformity
 in taxation requires the imposition of Documentary Stamp Tax on documents evidencing
transactions of the same kind, in this case on all certificates of deposits drawing interest.”
(Banco De Oro Universal Bank v. Commissioner of Internal Revenue, C.T.A. EB No. 165,
August 16, 2006)

B. Documents and Transactions subject to DST; Rates

• 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. (Sec.
173, NIRC)

• For the documentary stamp tax on original issue of certificates of stock to attach,
the certificates of stocks only need to be issued but not delivered. The delivery of the
certificates of stocks to the 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.
(CIR v. Construction Resources of Asia, Inc., 145 SCRA 673)

• The documentary stamp tax is imposed on every original issue of a certificate of stock (the
document evidencing ownership of shares of stock in the corporation), and that a
documentary stamp tax is in the nature of an excise tax because it is levied upon the
privilege, the opportunity and the facility of issuing certificates of stock. It being a levy on
the original issue of a certificate of stock. The documentary stamp tax under this provision
of the law may be levied only once, that is upon the original issue of the certificate". Bearing
in mind that the cost of this imposition is borne by the corporation originally issuing the
stock certificate, a literal interpretation of the word "issue" must necessarily mean at
the time of release of the stock certificate (document as properly filled up) to the
stockholder, the actual or constructive possession by the stockholder of the
certificate of stock being immaterial and of no consequence. (Phil. Consolidated
Coconut Industries vs. CIR, 70 SCRA 22)

1. Original issue of shares of stock (Sec. 174, NIRC, as amended by RA 10963; Sec. 3,
RR No. 4-2018)
• Whether on organization, reorganization or for any lawful purpose, of shares of stock
by any association, company, or corporation.
o With par value – Two peso (P2.00) on each Two hundred pesos (P200), or
fractional part thereof of the par value of shares of stocks.
o Without par value – Two peso (P2.00) on each Two hundred pesos (P200), or
fractional part thereof of the actual consideration for the issuance of shares of
stocks.
 o Stock Dividend – Two peso (P2.00) on each Two hundred pesos (P200), or
fractional part thereof of the actual value represented by each share.

• 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. It 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. Thus,
DSTs 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 (Jaka Investments Corp. v.
CIR, G.R. No. 147629, July 28, 2010)

2. Sales, Agreements to Sell, Memoranda of Sales, Deliveries or Transfer of Shares or

Certificates of Stock (Sec. 175, NIRC Sec. 174, as amended by RA 10963; Sec. 3, RR
No. 4-2018)
o With par value – One peso and fifty centavos (P1.50) on each Two hundred pesos
(P200), or fractional part thereof of the par value of stock.
o Without par value – fifty percent (50%) upon the original issue of the said stock.

• Only one tax shall be collected on each sale or transfer of stock from one person to
another, regardless of whether or not a certificate of stock is issued, indorsed, or
delivered in pursuance of such sale or transfer.

3. Debt Instruments (Sec. 179, NIRC, as amended by RA 10963; Sec. 6, Rev. Reg. No. 4-
2018)
o One peso and fifty centavos (P1.50) on each Two hundred pesos (P200), or
fractional part thereof of the issue price of any such debt instruments or a fraction
of 365 days for instrument with term of less than 1 year.

• Only one documentary stamp tax shall be imposed on either loan agreement, or
promissory notes issued to secure such loan.

• Debt instrument shall mean debt instrument representing borrowing and lending
transactions including but not limited to debentures, certificates of indebtedness, due
bills, bonds, loan agreements, including those signed abroad wherein the object of
contract is located or used in the Philippines, instruments and securities issued by the
government or any of its instrumentalities, deposit substitute debt instruments,
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, orders
for payment of any sum of money otherwise than at sight or on demand, promissory
notes, whether negotiable or non-negotiable, except bank notes issued for circulation.

• DST on intercorporate loans - the instructional letters as well as the journal and cash
vouchers evidencing the advances corporation extended to its affiliates qualified as
 loan agreements upon which documentary stamp taxes may be imposed. (CIR vs.
Filinvest Development Corporation, G. R. Nos. 163653 & 167689, 19 July 2011)

4. Life Insurance Policies (Sec. 183, NIRC, as amended by RA 10963; Sec. 10, Rev. Reg.
No. 4-2018)

o If the amount of insurance does not exceed P100,000.00 – Exempt

o If the amount of insurance exceeds P100,000.00 but does not exceed
P300,000.00 – P20.00
o If the amount of insurance exceeds P300,000 but does not exceed P500,000 –
P50.00
o If the amount of insurance exceeds 500,000 but does not exceed 750,000 –
P100.00
o If the amount of insurance exceeds P750,000 but does not exceed P1,000,000 –
P150.00
o If the amount of insurance exceeds P1,000,000 – P200.00

• Payment of DST 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. 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. (CIR v. Lincoln Phil. Life Insurance, G.R. No. 119176, March 19, 2002)

• The documentary stamp tax on insurance policies, though imposed on the document
itself, is actually levied on the privilege to conduct insurance business. “A simple
reading of respondent’s guaranteed continuity clause will show that it is significantly
different from the "automatic increase clause" in Lincoln. x x x 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.” (CIR v. Manila Bankers Life Insurance
Corp., GR No. 169103, March 16, 2011)

11. Mortgages, Pledges and Deeds of Trust (Sec. 195, NIRC, as amended by RA 10963;
Sec. 19, Rev. Reg. No. 4-2018)
o Forty pesos (P40.00) when the amount secured does not exceed Five thousand
pesos (P5,000.
o Additional tax of Twenty pesos (P20.00) on each Five thousand pesos (P5,000),
or fractional part thereof in excess of Five thousand pesos (P5,000).

• If executed as security for payment of fluctuating account or future advances without

fixed limit, documentary stamp tax on such mortgage, pledge or deed of trust shall be
 computed on the amount loaned or given at the time of the execution of mortgage,
pledge, or deed of trust.
• If the full amount of the loan or credit, granted under the mortgage, pledge or deed of
trust is specified in such mortgage, pledge or deed of trust, the documentary stamp
tax shall be paid and computed on the full amount of the loan or credit granted.

12. Deeds of Sale and Conveyances and Donation of Real Property (Sec. 196, NIRC, as
amended by RA 10963; Sec. 20, Rev. Reg. No. 4-2018; Rev. Memorandum Circular No.
19-2018)
o Fifteen pesos (P40.00) for the first One thousand pesos (P1,000).
o Fifteen pesos (P15.00) for each additional One thousand Pesos (P1,000), or
fractional part thereof in excess of One thousand pesos (P1,000) of such
consideration or value

• Exempt– (1) Gifts made to or for the use of the National Government or any entity
created by any of its agencies which is not conducted for profit, or to any political
subdivision of the said Government; and (2) Gifts in favor of an educational and/or
charitable, religious, cultural or social welfare corporation, institution, accredited
nongovernment organization, trust or philanthropic organization or research institution
or organization: Provided, however, That not more than thirty percent (30%) of said
gifts shall be used by such donee for administration purposes.

C. Documents/Transactions NOT subject to DST

1. Policies of insurance or annuities made or granted by a fraternal or beneficiary society,

order, association or cooperative company, operated on the lodge system or local
cooperation plan and organized and conducted solely by the members thereof for the
exclusive benefit of each member and not for profit
2. Certificates of oaths administered by any government official in his official capacity or
acknowledgement by any government official in performance of his official duty
3. Written appearance in any court by any government official in his official capacity
4. Certificates of the administration of oaths to any person as to the authenticity of any
paper required to be filed in court by any person or party thereto, whether the
proceedings be civil or criminal
5. Papers and documents filed in court by or for the national, provincial, city or municipal
governments
6. Affidavits of poor persons for the purpose of proving poverty
7. Statements and other compulsory information required of persons or corporations by
the rules and regulations of the national, provincial, city or municipal government
exclusively for statistical purposes and which are wholly for the use of the Bureau or
office in which they are filed, and not at the instance or for the use or benefit of the
person filing them
8. Certified copies and other certificates placed upon documents, instruments and
papers for the national, provincial, city or municipal governments made at the instance
and for the sole use of some other branch of the national, provincial, city or municipal
governments
9. Certificates of the assessed value of lands, not exceeding P200 in value assessed,
furnished by the provincial, city or municipal Treasurer to applicants for registration of
title to land
10. Borrowing and lending of securities executed under the Securities Borrowing and
Lending Program of a registered exchange, or in accordance with regulations
prescribed by the appropriate regulatory authority: Provided, however, That any
borrowing or lending of securities agreement as contemplated hereof shall be duly
covered by a master securities borrowing and lending agreement acceptable to the
appropriate regulatory authority, and which agreement is duly registered and approved
by the Bureau of Internal Revenue (BIR)
11. Loan agreements or promissory notes, the aggregate of which does not exceed Two
hundred fifty thousand pesos (P250,000), or any such amount as may be determined
by the Secretary of Finance, executed by an individual for his purchase on installment
for his personal use or that of his family and not for business or resale, barter or hire
of a house, lot, motor vehicle, appliance or furniture: Provided, however, That the
amount to be set by the Secretary of Finance shall be in accordance with a relevant
price index but not to exceed ten percent (10%) of the current amount and shall remain
in force at least for three (3) years
12. Sale, barter or exchange of shares of stock listed and traded through the local stock
exchange (R.A 9648)
13. 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, if there is no change in the maturity date or remaining period of
coverage from that of the original instrument.
14. Fixed income and other securities traded in the secondary market or through an
exchange.
15. Derivatives: Provided, that for purposes of this exemption, repurchase agreements
and reverse repurchase agreements shall be treated similarly as derivatives
16. Inter-branch or interdepartmental advances within the same legal entity
17. All forbearances arising from sales or service contracts including credit card and trade
receivables: Provided, That the exemption be limited to those executed by the seller
or service provider itself.
18. Bank deposit accounts without a fixed term or maturity
19. All contracts, deeds, documents and transactions related to the conduct of business
of the Bangko Sentral ng Pilipinas
20. Transfer of property pursuant to Section 40(C)(2) of the National Internal Revenue
Code of 1997, as amended
21. Inter-bank call loans with maturity of not more than seven (7) days to cover deficiency
in reserves against deposit liabilities, including those between or among banks and
quasi-banks
22. Donations or gifts that are exempt from donor’s tax:
a. Gifts Made by a Resident:
o Gifts made to or for the use of the National Government or any entity created
by any of its agencies which is not conducted for profit, or to any political
subdivision of the said Government; and
o Gifts in favor of an educational and/or charitable, religious, cultural or social
welfare corporation, institution, accredited nongovernment organization, trust
or philanthropic organization or research institution or organization: Provided,
however, that not more than thirty percent (30%) of said gifts shall be used
by such donee for administration purposes. For the purpose of this
exemption, a 'non-profit educational and/or charitable corporation, institution,
accredited nongovernment organization, trust or philanthropic organization
and/or research institution or organization' is a school, college or university
and/or charitable corporation, accredited nongovernment organization, trust
 or philanthropic organization and/or research institution or organization,
incorporated as a non-stock entity, paying no dividends, governed by
trustees who receive no compensation, and devoting all its income, whether
students' fees or gifts, donation, subsidies or other forms of philanthropy, to
the accomplishment and promotion of the purposes enumerated in its
Articles of Incorporation.
b. Gifts Made by a Non-resident not a Citizen of the Philippines:
o Gifts made to or for the use of the National Government or any entity
created by any of its agencies which is not conducted for profit, or to any
political subdivision of the said Government; and
o Gifts in favor of an educational and/or charitable, religious, cultural or social
welfare corporation, institution, accredited nongovernment organization,
trust or philanthropic organization or research institution or organization:
Provided, however, that not more than thirty percent (30%) of said gifts
shall be used by such donee for administration purposes.

D. Returns and Payments

BIR Form 2000 (Documentary Stam Tax Declaration Return)

1. Person(s) to File:

o In the case of constructive affixture of documentary stamps, by the person making,

signing, issuing, accepting, or transferring documents, instruments, loan
agreements and papers, acceptances, assignments, sales and conveyances of
the obligation, right or property incident thereto 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 at the same time
such act is done or transaction had;

o In the case of Electronic Documentary Stamp Tax (eDST) System user, by the
taxpayers belonging to the industries mandated to use the web-based eDST
System in the payment/remittance of DST liabilities and the affixture of the
prescribed documentary stamp on taxable documents and taxpayers who, at their
option, choose to pay the DST liabilities thru the eDST System pursuant to
Revenue Regulations (RR) No. 7-2009; and

o By a revenue collection agent for remittance of sold loose documentary stamps.

2. When and Where to File

o The return shall be filed within five (5) days after the close of the month when the
taxable document was made, signed, issued, accepted or transferred or upon
remittance by revenue collection agents of collection from the sale of loose
documentary stamps, with the Authorized Agent Bank (AAB) within the territorial
jurisdiction of the Revenue District Office where the residence or place of business
of the taxpayer is located or where the collection agent is assigned, or in case
there is no AAB, the return shall be filed directly with the Revenue Collection
Officer (RCO) within the Revenue District Office which has jurisdiction over the
 residence or place of business of the taxpayer or where the collection agent is
assigned.

3. When and Where to Pay

o Shall be paid to the AAB where the return is filed within five (5) days after the close
of the month when the taxable document was made, or in the absence thereof, to
the Revenue Collection Officer who shall issue an Electronic Revenue Official
Receipt (eROR) therefor.

E. Effect of Failure to Attach DST

• An instrument, document or paper which is required by law to be stamped and which

has been signed, issued, accepted or transferred without being duly stamped, shall
not be recorded, nor shall it or any copy thereof or any record of transfer of the same
be admitted or used in evidence in any court until the requisite stamp or stamps are
affixed thereto and cancelled.

• No notary public or other office authorized to administer oaths shall add this jurat or
acknowledgment to any document subject to documentary stamp tax unless the proper
documentary stamps are affixed thereto and cancelled.

• A petition for probate of the notarial will was dismissed on the ground that it does not
bear a documentary stamp tax. T he Court held that what the probate court should
have done was to require the petitioner or proponent to affix the requisite documentary
stamp to the notarial acknowledgment of the will which is the taxable portion of that
document. Thus, it was held that the documentary stamp may be affixed at the time
the taxable document is presented in evidence. (Gabucan v. Manta, 95 SCRA 752)

• The plaintiff acquired the ownership of the note in question by virtue of its indorsement,
without being aware of the fact that the note had an unlawful origin, since he was not
given notice, as the court found, of any conditions existing against the note. The note
in question, not being stamped, did not give the holder thereof the right to bring an
executive action and could not, therefore, be the basis of such an action; but it was a
valid document in that it was proof of a purely civil obligation and could be utilized as
such in an ordinary action. There is no law which provides that the lack of a stamp on
an instrument of this kind cannot be supplied. Therefore, the court below should have
allowed the plaintiff to supply this deficiency when he tendered the stamp for that
purpose. (Rodriguez v. Martinez, 5 Phil 67)

• With reference to the lack of a documentary stamp on the document of indebtedness,

the decree of May, 16, 1886, and the instructions for its application do not declare the
nullity of any document unprovided with such stamp; it limits itself, by article 82 thereof,
to imposing a fine on whoever should violate the decree by executing and issuing a
document without a proper stamp. (Azarraga v. Rodriguez, 9 Phil 376)
• For want of a one-peso documentary stamp in a special power of attorney for pre-trial
purposes, in lieu of the personal appearance of the plaintiff, the petitioner in this case,
the respondent Judge declared him non-suited and dismissed the complaint "for failure
of the plaintiff to appear for pre-trial conference. The court held that the respondent
Judge manifestly erred as could have easily required the counsel for the plaintiff to buy
the required one-peso documentary stamp outside the court room and affix the same
to the special power of attorney. (Del Rosario v. Hamoy, GR No. 77154, June 30,
1987)