CHAPTER 18

DOCUMENTARY STAMP TAX

TRUE OR FALSE
1. Documentary stamp tax is a form of business tax.
2. Documentary stamp tax does not apply when the transaction is void or voidable.
3. If one party is exempt in a transaction subject to DST, the other non-exempt party is taxable.
4. The documentary stamp tax return shall be files within 5 days from the close of the month the
transaction is executed.
5. A single transaction may result in payment of several documentary stamp taxes.
6. Documents pertaining to the same taxable transactions are taxable as on transaction.
7. The taxpayer shall file documentary stamp tax return on loose stamp.
8. Non-payment of documentary stamp taxes shall invalidate the contract.
9. Once DST is unpaid, the document can never be presented as evidence in court.
10. The person benefited by the transaction usually pays the DST.

MULTIPLE CHOICE: THEORY

1. Which of the following bills of exchange is not subject to documentary stamp tax?
a. Drawn and payable in the Philippines
b. Drawn abroad but payable in the Philippines
c. Drawn in the Philippines but payable abroad
d. Drawn and payable abroad

2. Which of the following instrument is not subject to DST on assignment?

a. Mortgage
b. Lease
c. Charter
d. Traded debt Securities

3. Statement 1: Loans not exceeding P250,000 made by individuals during a month for personal
purposes is exempt from documentary stamp tax.
Statement 2: Loans not exceeding P250,000 made by a corporation during a month is subject to
documentary stamp tax.
a. True; True
b. True; False
c. False; True
d. False; False

4. Which is not subject to DST on bills of lading?

a. Shipment of goods bound for abroad
b. Shipment of goods between places in the Philippines
c. Import shipment of goods from abroad
d. None of the above

5. Which does not belong to the group for purposes of documentary stamp tax?
a. Mortgages
b. Pledges
c. Deed of trusts
d. Loans

6. Statement 1: Stocks issued by foreign corporation in foreign countries are subject to Philippine
documentary stamp tax.
Statement 2: Stocks issued by domestic corporation in foreign countries are subject to Philippine
documentary stamp tax.
a. True; True
b. True; False
c. False; True
d. False; False
7. Which is not subject to documentary stamp tax?
a. Issue of a domestic stocks
b. Assignment of a domestic stocks
c. Issue of a foreign stocks
d. Assignment of a foreign stocks

8. Which is subject to documentary stamp tax?

a. Savings deposit
b. Time Deposit
c. 5-day interbank call loan
d. Traded bonds securities

9. Which is not subject to documentary stamp tax?

a. Bank Notes
b. Promissory Notes
c. Bonds
d. Mortgage notes

10. Which is subject to documentary stamp tax?

a. Accounts payable for services rendered
b. Credit card receivables
c. Accounts receivables on sales of goods
d. Promissory note for intercompany advances

11. Which of the following leases is not subject to DST?

a. Lease of equipment
b. Lease of vessels
c. Lease of real estate
d. None of these

12. Documentary stamp taxes are

a. Ad valorem taxes
b. Specific taxes
c. Both ad valorem and specific taxes
d. Either ad valorem or specific taxes

13. Which of the following advances is not subject to documentary stamp tax?
a. Employee advances
b. Advances by a parent company to its subsidiary
c. Advances by the home office to its branch
d. Advances between sister companies

14. Which of the following bills of exchange is not taxable?

a. Those made by a Philippine drawer in favor of a Philippine drawee
b. Those made by a Philippine drawer in favor of foreign drawee
c. Those made by a foreign drawer in favor of a Philippine drawee
d. Those made by a foreign drawer in favor of foreign drawee

15. Which do not belong to the group?

a. Checks
b. Drafts
c. Bills of exchange
 d. Warehouse receipts

16. Statement 1: Leases not exceeding 1 year in duration is exempt from documentary stamp.
Statement 2: Loans not exceed 1 year in duration is exempt from documentary stamp tax.
a. True; True
b. True; False
c. False; True
d. False; False

17. A check is subject to a documentary stamp tax of

a. P 1
b. P 3
c. P 5
d. P 8

18. Which of the following is an ad valorem documentary stamp tax?

a. Stamp tax on proxies
b. Stamp tax on certificates
c. Stamp tax on checks
d. Stamp tax on lease agreements

19. Which documentary stamp tax is a specific tax?

a. Stamp tax on warehouse receipts
b. Stamp tax on loan agreements
c. Stamp tax on issue of stocks
d. Stamp tax on deed of conveyance of properties

20. Which is subject to documentary stamp tax?

a. Contribution of real estate property as capital in a partnership
b. Transfer of real property from the decedent to an heir
c. Donation of a car to children
d. Pledge of property to answer for any default of obligation

21. A and B, both non-resident citizens, entered into a lease contract involving a land owned by B in
the Philippines. A shall rent the same for his business. Which is correct?
a. The lease agreement is not subject to documentary stamp tax since both parties are non-
resident.
b. The lease is subject to documentary stamp tax since the property is a real estate.
c. The lease agreement is not subject to documentary stamp tax since the lessor is not a resident
in the Philippines
d. The lease is subject to documentary stamp tax the object of the contract of lease is a real
property located in the Philippines.

MULTIPLE CHOICE: COMPUTATIONAL

1. Teddy sold a piece of lot with zonal value of P4,000,000 to a buyer for P4,500,000. Compute the
documentary stamp tax.
a. P 270,000
b. P 67,500
c. P 63,750
d. P 60,000

2. In the immediately preceding problem, compute the documentary stamp tax assuming the
properties were sold to the government.
 a. P 270,000
b. P 67,500
c. P 63,750
d. P 60,000

3. Juan donated a piece of land. He was assessed a basic donor’s tax of P30,000. Compute the
documentary stamp tax.
a. P 30,000
b. P 12,000
c. P 11,250
d. P 7,500

4. Casablanca Corporation issued shares 1,000,000 P10-par value shares to various shareholders for
a total consideration of P12,000,000. One of the shareholders is Japeth who subscribed for
120,000 shares, Japeth sold the shares for P140,000. Compute the documentary stamp tax on the
issues of stocks.
a. P 120,000
b. P 100,000
c. P 90,000
d. P75,000

5. Compute the documentary stamp tax on Japeth’s sale of shares.

a. P 10,500
b. P 9,000
c. P 1,050
d. P 900

6. Pedro contracted Juan to mortgage his land for P3,272,000. His land has a zonal value of
P5,000,000 and an assessor’s fair value of P4,500,000.
a. P 13,120
b. P 12,000
c. P 14,500
d. P 15,000

7. Jomar invested P200,000 in the stocks of SMB, a listed corporation. The shares had P100,000
par value. Jomar disposed the shares in the open market for P240,000.
a. P 0
b. P 750
c. P 1000
d. P 1,500

8. Kulas loaned Tomas P1,000,000 evidenced by a 12% interest bearing note due in one-year time.
Compute the documentary stamp tax.
a. P 0
b. P 5,000
c. P 7,500
d. P 8,400

9. Assuming that the loan in the preceding problem is due for 146 days, compute the documentary
stamp.
a. P 0
b. P 2,000
c. P 3,000
d. P 3,360
10. German company issued shares of stocks to Mr. Wong, an OFW in Germany. The stocks had
P2,000,000 par value in the Philippine Pesos. Compute the documentary stamp tax.
a. P 0
b. P 7,500
c. P 15,000
d. P 20,000

11. Compute the documentary stamp tax if Mr. Wong is a resident Chinese in the Philippines.
a. P 0
b. P 7,500
c. P 15,000
d. P 20,000

12. Compute the documentary stamp tax assuming that bonds instead of stocks were issued to Mr.
Wong who is a resident of the Philippines.
a. P 0
b. P 7,500
c. P 15,000
d. P 20,000

13. Assume Mr. Wong sold the stocks to Wealth Corporation in the Philippines for P2,000,000, what
is the documentary stamp tax on the sale?
a. P 0
b. P 7,500
c. P 15,000
d. P 20,000

14. Ken Loaned Mario P5,000,000 under a written loan agreement. The principal of the loan will
mature in 5 years and pays 10% annual interest. Ken required Mario to submit promissory note to
secure the loan. After a year, Mario incurred delay in interest payment prompting Ken to require
Mario to mortgage his residence with a total fair value of P4,000,000 as security to the loan.
Compute the documentary stamp tax on the loan agreement.
a. P 0
b. P 37,500
c. P 50,000
d. P 56,250

15. Compute the documentary stamp tax on the mortgage.

a. P 0
b. P 30,000
c. P 16,020
d. P 20,020

16. Assuming Mario was not able to pay for the mortgage principal and executed a deed of
conveyance of his residence as full payment for the loan, what is the documentary stamp tax.
a. P 0
b. P 30,000
c. P 60,000
d. P 75,000

17. Jem Enterprises of Davao City ordered a custom-built equipment from Tyler Company in Baguio
City for P500,000. Tyler shipped the goods through Mando Logistics to Kim’s Warehousing in
Davao. Jem Enterprise issued a bills of exchange in favour of Jem Enterprise ordering Metro
 Baguio to pay P550,000 on sight. After Metro Baguio’s payment, Tyler Company ordered the
release of the bills of lading and the warehouse receipt to Jem Enterprise.

Compute the documentary stamp tax on the account receivable.

a. P0
b. P 3,750
c. P 4,125
d. P 5,500

18. Compute the documentary stamp tax on the bills of lading.

a. P 0
b. P 20
c. P 30
d. P 50

19. Compute the documentary stamp tax on the warehouse receipts.

a. P 0
b. P 20
c. P 30
d. P 50

20. Compute the documentary stamp tax on the bills of exchange.

a. P 0
b. P 1,000
c. P 1,500
d. P 1,650

21. Compute the documentary stamp tax if Jem Enterprise issues a check for the full payment of
Tyller’s bill.
a. P 0
b. P 3
c. P 20
d. P 30

22. Oppa Enterprise leased a commercial spaced owned by Pyto Industries at a rental of P440,000 a
year. The lease covers a a non-cancellable period of 5 years. Compute the documentary stamp
tax.
a. P 0
b. P 3,996
c. P 4,002
d. P 5,008