You are on page 1of 1

HSBC Ltd.-Phil. Br. v.

COMMISSIONER OF INTERNAL REVENUE


G.R. No. 166018 | June 04, 2014 | Leonardo-De Castro, J.

Facts:
HSBC received emails from its foreign clientele to debit funds from their accounts for the payment of
shares and securities in the Philippines. After debiting the appropriate taxes to the BIR, HSBC then
requested that the latter rule on whether or not such email transactions were negotiable instruments
subject to documentary stamp tax (DST). The BIR responded in the negative, holding that such emails
were not transactions contemplated in Sec. 181 of the 1997 Tax Code. On the strength of this response,
HSBC proceeded to demand the return of their tax payments advanced on the presumption that DST was
applicable. However, as BIR did not heed HSBCs requests for the return of the payments, HSBC filed
with the Court of Tax Appeals. CTA ruled in their favor. CA reversed, holding that Sec. 181 does not
apply to the instrument or bill of exchange per se, but on the acceptance or payment of said order. Hence
this petition for review on certiorari before the SC.

Issue: W/N the emails are negotiable instruments subject to DST

Ruling: No. Under Section 1 of the Negotiable Instruments law, the emails fail to conform to all the
requirements listed therein. Ergo, the emails are not negotiable instruments. They are not written and
signed by the maker or drawer; they do not contain an unconditional order to pay a sum certain in money
as the payment is supposed to come from a specific fund or account of the investor-clients; and, they are
not payable to order or bearer but to a specifically designated third party. Thus, the electronic messages
are not bills of exchange. As there was no bill of exchange or order for the payment drawn abroad and
made payable here in the Philippines, there could have been no acceptance or payment that would
trigger the imposition of the DST under Section 181 of the Tax Code.

You might also like