Retail Credit Investigation Bureau, Inc.

April 8, 2010 BIR RULING [DA-(C-007) 045-10] Section 195; DA-022-02 dated 02-18-02 Retail Credit Investigation Bureau, Inc. Unit 208 Lady of Fatima Bldg. 1849 Asuncion corner Pililia Sts. Brgy. Valenzuela, Makati Attention: Ma. Lourdes T. Fabie President Gentlemen : This refers to your letter dated December 22, 2008 requesting for legal opinion on the issue of documentary stamps required for Chattel Mortgages with Deeds of Assignment. caADIC Background: Retail Credit Investigation Bureau, Inc. as an accredited registrant of BPI Family Bank; that as such, it is handling the annotation of Chattel Mortgage of the following accounts: Account Name Loan Amount Documentary Stamps Affixed a) Dennis Navarra P753,900.00 P3,770.00 (loan amt./P200) b) Edlyn P. Roda 904,428.00 4,523.00 (loan amt./P200) that both of the above borrowers reside in Cavite City, thus RCIB presented the mortgage documents at Register of Deeds of Cavite City; that however, RCIB encountered a problem wherein RD Officer refused to annotate the mortgage due to lack of documentary stamps payment for Deed of Assignment; and that according to the Register of Deeds, the client must pay double for stamp tax, one for the mortgage and a second computation for the Deed of Assignment. In reply, please be informed that Section 8 of Revenue Regulations No. 9-94 implementing R.A. 7660 provides viz. : "SECTION 8. Loan Agreement/Promissory Notes Secured by a Pledged Mortgage. Where only one instrument was prepared, made, signed and executed to cover a loan agreement/promissory note, pledge/mortgage, the documentary stamp tax prescribed in Section 195 of the Tax Code, as amended, shall be paid and computed on the full amount of the loan or credit granted. In this regard, the instrument shall be treated as covering only one taxable transaction, subject to the higher documentary stamp tax. [Emphasis supplied) It is clear from the foregoing that notwithstanding the execution of several instruments to cover loan, mortgages, pledges, and assignments, only one DST is payable. Thus, in BIR Ruling No. 230-95 dated June 26, 1995, this Office ruled that ". . . Your opinion that the Agreement executed by PEC and the Lenders and the Sponsors to PEC which consolidates the loan agreements, the pledge, mortgage and other security devices shall be subject to only one documentary stamp tax based on the full amount of the loan is hereby confirmed. (BIR Ruling No. UN 20-94) likewise, the Agreement for purposes of providing additional security to the Lenders will not be subject to the documentary stamp tax as long as there is no change in the original amount of the loan secured (Emphasis Supplied). (BIR Ruling No. DA-166-98 dated April 22, 1998; 218-90; 059-91) aIAEcD Considering that only one document instrument was prepared, made, signed and executed, i.e. , Promissory Note with Chattel Mortgage, the documentary stamp tax prescribed in Section 195 of the Tax Code, as amended, shall be paid and computed on the full amount of the loan or credit granted and the instrument shall be treated as covering only one taxable transaction subject to the higher documentary stamp tax. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) GREGORIO V. CABANTAC Deputy Commissioner Legal & Inspection Group