BIR Ruling [DA-216-97]

June 5, 1997 BIR RULING [DA-216-97] ISAP Incorporated Room 448, Regina Building Escolta, Manila Attention: Atty . Victoria Roman-Florez President Gentlemen : This refers to your letter dated May 8, 1997, requesting that non-life insurance companies be exempted from complying with the requirements of revenue Regulations No. 5-97 and instead be allowed to continue the present practice of lump sum payments of documentary stamps through constructive stamping of receipt system, based on the following grounds: "1. The BIR can collect in advance the revenue accruing to the government, and allows it to verify the correctness of payments made by the companies with convenience. "2. This is a labor saving and efficient method for checking and auditing purposes, as it is relatively easy to monitor. "3. The method to implement and can effectively be controlled. "4. Should the present practice be disallowed, then the insurance companies will be forced to purchased a BIR Registered Metered Machine for each and every office or branch which issues policies. This will involve a substantial cost to each company, which is not even considered an admitted asset by the insurance Commission." In reply, please be informed that in view of the above meritorious reasons, this Office has decided to approve your aforesaid request for extension of time in complying with the present system, but subject to the same condition previously imposed upon that Association, viz: cdta 1. The authority to pay DST in lump sum, without the necessity of affixing the stamps to the documents, does not apply to surety bonds; 2. Each non-life insurance company shall maintain a documentary stamp inventory in their books against which credit shall be made for its daily transactions requiring affixture of documentary stamps and shall see to it that the same does not result to a negative balance at any day within a month. Should a negative balance exist, the surcharge and other civil penalties for late affixture shall automatically be imposed; 3. BIR Form 3008 and its attachments will still be accomplished and filed by the non-life insurance companies; 4. The Company head Office shall be responsible in buying the documentary stamps requirement of its branches and agencies; and 5. The production/premium registers from branches and agencies are received anytime by their head office. The head office shall prepare and consolidate these production reports and enter them accordingly to a Journal approved by the BIR. This authority shall be for a period of three (3) months only counted from May 1, 1997, after which non-life insurance companies should comply with the procedures on the manner and affixture of documentary stamp upon taxable documents as prescribed under Revenue Regulations No. 5-97. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue