Chapter 20
INTERNAL REVENUE STAMPS
THE PURPOSE AND MANNER OF USING INTERNAL REVENUE STAMPS SINCE JANUARY 1, 1905

The idea of using revenue stamped paper and adhesive revenue stamps as a means of insuring an honest accounting by the tax-collecting officers of the revenue which they collected originated during the Spanish regime. It was primarily for this purpose that stampede paper for the collection of fines (Multas) and restitutions (Reintegros) was created in 1853, that adhesive stamps for the collection of judicial fees (Drecho Judicial) was created in 1855, and that adhesive stamps for the collection of signature fees (Derechos de Firma) was created in 1857. The same principle was also applied in 1884 to the personal cedula (Cedulas Personales) issued as receipts for the payment of the annual poll tax. The price of each cedula was printed on its face, and the cedulas were serially numbered. Hence, the cedula, like stamped paper and adhesive stamps, were an “accountable paper” of the State. The tax collecting officer could therefore, be required to produce either the blank cedulas which had been issued to him or the money which he has received in exchange for them.

This idea of using an accountable form as evidence of the payment of the tax ion order to insure an honest accounting by the tax-collecting officers was applied by the Internal Revenue Law of 1904 to all internal taxes imposed thereby. This Act (No. 1189) provided that all internal revenue taxes should be paid by the use of INRTERNAL REVENUE stamps, documentary stamps or cedulas. In his annual report for the year ending July 31, 1905, the Collector of Internal Revenue, Mr. John S. Hord, wrote the following:
 

“Internal Revenue Stamps. – All of the taxes imposed by Act No. 1189 are made payable by the use of internal revenue stamps, documentary stamps or cedulas. Internal revenue stamps are printed in thirteen denominations, as follows: P200, P50, P20, P10, P5, P2, P1, P0.50, P0.20, P0.10. P0.05, P0.02 and P0.01……”

“Documentary Stamps. – These stamps are printed in nine denominations, as follows: P0.02, P0.04, P0.10, P0.20, P0.50, P1, P3, P10 and P20.”

“Cedulas. – The cedula blanks or certificates of registration, are of four classes, as follows: Class A – 1-peso cedula, sold to persons buying a cedula before the delinquent period arrives on the last Saturday of April of each year; Class B – 2-pesos cedula, sold to persons who were residents of These Islands prior to the last Saturday of April, but who failed to purchase their cedulas before that time; Class C – certificate of exemption, issued to persons who are specifically exempt under the internal revenue law….; Class D – 1-peso cedula issued to persons who were not residents in these Islands prior to the last Saturday of April, but who arrived after such date and should not therefore be made to pay the delinquency charge. All cedulas are serially numbered before issue from this office, a separate series being run for each class of cedula."

The idea of splitting revenue stamps, so that one half of the stamps would be attached to the document subject to the tax and the other half would be attached to the stub, seems to have originated in the Office if the General Administration of Finance at Madrid. The Royal order of April 15, 1886, creating Philippine Recargo de Cedulas Personales stamps for collection of the surtax for delinquent payment of the personal cedula tax, required those stamps to be affixed that, when the cedula was separated from its stub, one half of the stamp would be attached to the cedula and the other half to the stub, “so that it may be a means of proof.” The Royal Decree of May 19, 1893, and a Circular of the Philippine General Superintendency of Finance, dated September 16, 1893, provided that the 10-centimos Recibos y Cuentas stamp required on certificates of payment of the industrial tax, on the cedulas issued to Chinese minors, and on the receipts issued for the payment of entrance fees and monthly dues by members of “academies, circles and casinos” should be so affixed that one half of the stamp would be attached to the stub and the other half to the certificate, cedula or receipt. There are still (in 1941) preserved in the Archives Division of the National Library in Manila several specimens of cedulas issued to Chinese minors to which split Recibos y Cuentas stamps were affixed in this manner. There are also preserved several such cedulas, issued in 1898, to which split 10-centimos Timbre Movil Especial stamps were affixed in this manner. It is to be noted in this connection that on January 1, 1898, Timbre Movil Especial stamps replaced the 10-centimos Recibos y Cuentas stamp which had been in use prior to that date.

The Internal Revenue Law of 1904 provided that the INTERNAL REVENUE stamps affixed in payment of the excise tax to the official evidence, covering each removal from the place of manufacture of goods subject to excise taxes, should be so affixed that one half of each stamp would be attached to the official invoice and the other half to the stub. In all other cases where internal revenue stamps were to be used, and in all cases where Documentary Stamps were to be used, the entire stamps was to be affixed to the license or document as evidence of payment of the tax.

The Internal Revenue Law of 1904, which became effective on August 1, 1904, provided that until such time as internal revenue stamps were available the Collector of Internal Revenue might issue temporary instructions for collecting the taxes imposed by the law. Internal Revenue stamps of the required denominations did not become available until January 12, 1905. In the meantime, Circular No. 1 of the Collector of Internal Revenue, dated August 1, 1904, provided temporary instructions for the collection of the internal taxes during the remainder of the year 1904. Detailed instructions as to the manner of collecting the taxes as soon as stamps became available were embodied in the Internal Revenue Law of 1904.