BIR Ruling [DA-214-97]

May 30, 1997 BIR RULING [DA-214-97] Pilipinas Shell Petroleum Corporation Shell House 156 Valero St., Salcedo Village 1227 City of Makati Attention: Mr . Michael P . Ramolete Network Planning Manager Gentlemen : This refers to your letter dated May 20, 1997 stating that your company, Pilipinas Shell Petroleum Corporation, is engaged in the manufacturing, distribution and marketing of petroleum products; that in order to make your products readily accessible to your customers, you build service stations all over the country; that the service station sites are mostly owned by individuals with whom you execute a Lease Agreement; that it is in the Lease Agreement where a description of the leased property, duration of lease and rate of rentals are stipulated in detail and each party, the lot owner as Lessor and your company as Lessee, express conformity to the agreed terms by signing on the Agreement; that the first to sign the Agreement is the Lessor, who in most instances is based in the province; that a Notary Public who witnessed the affixture of the Lessor's signature is required to affix his own Notarial Seal and signature on the Agreement; that copies of the signed and notarized Lease Agreement are then sent to your Head Office in Makati City, where it is also signed by your company's representative; that similarly, a Notary Public who witnessed the signing of your company's representative is required to affix his own Notarial Seal and signature; that the whole process requires the notarization of the same document twice, first for the Lessor's side, and second, for Shell's side; and that it is your belief that the agreement is binding and enforceable only upon company's representative's signature and its subsequent notarization. cdta Based on the foregoing, you now request for confirmation of your opinion that the documentary stamp tax accrues only upon the affixture of your representative's signature on the documents. In reply, please be informed that the Lease Agreement becomes binding and enforceable upon your company's representative's signature. Pursuant to Revenue Memorandum Circular No. 57-91, payment of the documentary stamp tax is effected by the purchase, affixture and subsequent cancellation of documentary stamp (or notation of payment of documentary stamp tax with denomination of P10.00 or more) on the documents at the time such act is done or transaction had , meaning on the date of execution or signing of the document by the parties thereto, and not at the time notarization. (BIR Ruling No. 004-92 dated January 7, 1992) Accordingly, we confirm your opinion that the documentary stamp tax accrues upon the affixture of your representative's signature. Very truly yours, SIXTO S. ESQUIVIAS IV OIC, Assistant Commissioner (Legal Service) By: ESTHER R. IBAEZ OIC-Head Revenue Executive Assistant (Legal Service)