(General information; not legal advice.)

I. What Documentary Stamp Tax (DST) is—and why “who pays” is often misunderstood

Documentary Stamp Tax is an excise tax on the privilege of executing, issuing, transferring, or accepting certain documents and instruments. It is not primarily a tax on “income” or “sale” itself, but on the documented transaction—the paper (or legally recognized electronic record) that evidences the obligation, conveyance, or right.

Because DST is tied to the instrument, there are two different “incidences” of payment that people mix up:

Legal incidence (who is liable to the BIR under the Tax Code)
Economic incidence (who ultimately shoulders the cost under the parties’ contract or market practice)

A contract clause can shift the economic burden, but it does not necessarily eliminate the legal liability of the person(s) the Tax Code treats as responsible.

II. The general legal rule: the person who makes/signs/issues/accepts/transfers

As a baseline, DST is imposed on taxable documents and is payable by the person making, signing, issuing, accepting, or transferring the instrument.

A. Practical meaning of the general rule

If only one party issues the document (e.g., an insurer issues a policy; a corporation issues shares; a bank issues a certificate), that issuer is usually the party legally responsible to pay DST (though the cost may be passed on).
If a document is bilateral (e.g., deed of sale, loan agreement, lease), more than one party can fall under “making/signing/accepting.” In enforcement reality, the BIR can look to the party treated by law or by implementing practice as the proper filer/payor, and the parties can allocate the burden by agreement.

B. A key enforcement reality: “the one who needs the document processed” often pays

Even where both parties sign, DST commonly ends up paid by whoever needs the document for:

registration (e.g., transfer of title),
release of proceeds (banks often require payment before disbursement or booking),
compliance (corporate issuances, regulatory filings),
proof in future transactions.

That is practice, not always the same as the pure theoretical incidence.

III. Contractual allocation: you can agree who pays, but the BIR is not bound by your cost-sharing clause

In many private contracts, parties stipulate:

“Buyer shall pay DST and transfer expenses,” or
“Borrower shall shoulder DST and all bank charges,” or
“Tenant shall pay DST on the lease.”

These clauses govern reimbursement between parties, but the BIR’s power to assess DST generally follows the Tax Code’s allocation and the nature of the taxable instrument. If the “wrong” party paid, the document is still typically treated as properly stamped/taxed; disputes then become private reimbursement disputes rather than tax disputes.

IV. Transaction-by-transaction: who typically pays DST in Philippine practice (and why)

1) Sale or transfer of real property (Deed of Absolute Sale / Deed of Sale / Conveyance)

Typical payor in practice: Buyer/Transferee Why it ends up that way: The buyer needs the documentary trail to obtain tax clearances and proceed with transfer/registration, so the buyer commonly pays DST as part of “closing costs.”

Legal nuance: The deed is signed by both parties, so parties can contractually allocate payment either way. But in ordinary transactions, it is common that:

Seller shoulders income-type taxes on the transfer (depending on the nature of the transaction), while
Buyer shoulders DST and local transfer-related costs.

2) Real estate mortgage (REM) and chattel mortgage

Typical payor in practice: Borrower/Mortgagor Why: The mortgage is executed to secure the borrower’s obligation; lenders usually require the borrower to shoulder DST on the mortgage instrument (and related notarial/registration fees) as a condition for loan release.

3) Loans, promissory notes, and “debt instruments”

Typical payor in practice: Borrower / Issuer of the note (often collected by the lender and remitted) Why: Loan documents and promissory notes are classic DST-bearing instruments. In bank and formal lending, it is standard for the lender to charge DST to the borrower as part of loan booking, then remit DST through the proper tax process.

Common issue: Apps or informal lenders sometimes label charges as “service fees” or “processing fees.” That does not automatically remove DST exposure if the underlying instrument is a taxable debt instrument.

4) Lease agreements

Typical payor in practice: Varies (often lessor as the one “issuing” the lease, but commonly shifted to lessee by contract) Why: Leases are DST-taxable instruments. Many landlords require tenants to shoulder DST as part of move-in costs; other leases place DST on the lessor. The enforceable allocation is usually whatever the lease says, but the taxability exists regardless.

5) Insurance policies

Typical payor in practice: Insurance company pays and passes the cost through the pricing/premiums Why: The insurer issues the policy (the taxable instrument). The DST cost is usually embedded in the charges to the insured rather than separately billed in consumer-facing contexts.

6) Bank checks

Typical payor in practice: Ultimately the account holder/drawer (even if operationally handled by the bank) Why: Checks are subject to DST on issuance. In practice, banks either factor this into charges for checkbooks or account maintenance structures, or reflect it as a pass-through cost tied to check usage.

7) Shares of stock and securities

Original issuance of shares (primary issuance):

Typical payor in practice: Corporation/issuer (cost often built into issuance expenses)
Why: The corporation issues the shares/certificates.

Sale/transfer of shares (secondary transfer):

Typical payor in practice: varies (often buyer in negotiated deals, but can be seller or split)
Why: DST attaches to the taxable transfer instrument/event, and parties frequently allocate it in the stock purchase agreement. For listed trades, mechanics differ because transfers run through trading/settlement systems and established fee/tax collection practices.

8) Other common DST-bearing documents (general tendencies)

Certificates and instruments issued by institutions (e.g., certain deposit or investment certificates): issuer often bears legal responsibility but passes cost.
Assignments of rights, deeds of donation, settlement instruments: payor often becomes the party driving registration/compliance, with cost allocated by agreement.

V. If both parties sign, can the BIR collect from either?

For bilateral documents, liability can be practically shared because both parties “make/sign/accept” the instrument. In real-world enforcement, disputes usually do not turn on “the BIR charged the wrong party,” but on:

whether DST was paid at all, and
whether the paying party can seek reimbursement under the contract.

Where payment is a prerequisite to registration or to processing (title transfer, mortgage registration, corporate record updates), the party who needs the next step completed often pays first and argues reimbursement later if the contract so provides.

VI. Timing: when DST becomes due and why delay becomes expensive

DST liability generally arises upon execution/signing/issuance/acceptance/transfer of the taxable instrument. Payment is expected within the statutory/administrative deadlines applicable to DST returns and remittances (which operate on short timelines). Late payment typically triggers surcharges, interest, and compromise penalties.

VII. Consequences of nonpayment: it can block registration and even court use

DST is not just a tax line-item; nonpayment can have practical legal consequences:

Registration obstacles Registries and counterparties frequently require proof of tax compliance before processing (especially for real property transfers and mortgages).
Evidence/admissibility problems Historically and as a practical matter, a document required to be stamped/taxed may face restrictions on being recorded or used in evidence unless the proper DST is paid and the deficiency is settled. Even if ultimately curable by paying the tax, it causes delay and leverage problems in disputes.

VIII. Exemptions and special cases: “who pays” can become “nobody pays” only if a true exemption applies

DST exemptions exist under the Tax Code and special laws, and some entities or transactions may have DST relief (for example, certain government-related instruments or transactions covered by specific incentive regimes). The existence and scope of an exemption depend on the exact instrument and legal basis. Absent a clear exemption, DST is presumed due if the instrument falls within taxable categories.

IX. Practical checklist: determining who should pay DST in any deal

Identify the instrument (deed of sale, loan agreement, promissory note, lease, mortgage, policy, share transfer, etc.).
Check the governing DST rule for that instrument type (some instruments are issuer-driven; others are transfer-driven).
Read the contract clause on taxes and closing costs (this governs who ultimately bears it between parties).
Ask who needs the document processed (registration, release, compliance)—that party often pays first.
Pay on time and keep proof (DST issues are easiest to fix early; hardest when a document is needed urgently for registration or litigation).

X. The distilled answer

As a matter of law, DST is generally payable by the person who makes, signs, issues, accepts, or transfers the taxable document.
As a matter of practice, DST is commonly paid by the party who needs the document processed (buyer in real property transfers; borrower in loans and mortgages), with the ultimate burden controlled by the parties’ agreement and commercial norms.