CIR V.

FIRST EXPRESS PAWNSHOP

G.R. Nos. 172045-46

June 16, 2009

FACTS: Respondent was assessed P12, 328.45 on deposit on subscription with

compromised penalty of P2,000. Within the 30-day period, respondent filed a protest
and submitted along with it its General Information Sheet (GIS) and balance sheet.
It protested the assessment on the ground that the P800,000.00 represents a
deposit on a future subscription of shares of stocks. Petitioner required respondent to
submit proof but respondent did not reasoning that the proof required was already
submitted together with the letter of protest (GIS and Balance sheet).

For its failure to submit the required proof, petitioner deemed the assessment
final and unappealable.

ISSUEs: whether or not deposits on future subscription are liable to Documentary Stamp
Tax (DST).

HELD: No, they are not.

RATIO: A 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.