Documentary Stamp Tax on the Mortgage Loan Contracts Executed by GSIS Members

December 16, 1960 BIR RULING NO. 070-60 3rd Indorsement Respectfully returned to the Honorable, the Secretary of Finance, Manila. Atty. Severo P. Boncat, Acting Branch Attorney of the Southern Luzon Regional Office of the Government Service Insurance System, Naga City, has posed the question of whether or not mortgage loan contracts executed by members of the Government Service Insurance System in GSIS Form No. 6-1 come within the purview of the exemption granted in Section 28(c) of Commonwealth Act No. 186, as amended by Republic Acts Nos. 660 and 728, the pertinent provision of which reads as follows: lexlib "SEC. 28(c) Except as herein otherwise provided, the GSIS, all benefits granted under this Act, and all its forms and documents required of the members shall be exempt from all taxes, documentary stamps, duties and contributions, fiscal and municipal, direct or indirect, established or to be established . . . .." The particular portion of the aforequoted provision of the law that need to be interpreted is " all its forms and documents required of the members ". Is GSIS Form No. 6-1 one of such forms and documents? It will be noted that the law (Commonwealth Act No. 186, as amended) was enacted primarily for the purpose of providing insurance and retirement benefits for members of the Government Service Insurance System. Such being the case, the forms and documents therein referred to must be those used or to be used in connection with the insurance or retirement of said members. Although Form No. 6-1 is one prepared and provided for by the GSIS, it is not used in connection with the members' insurance or retirement. It is a document ordinarily executed by one mortgages and is intended for use not only by members of the GSIS but by everyone acquiring any loan from the GSIS and securing its payment with a mortgage. Under the circumstances, mortgage contracts executed by members of the system in GSIS Form No. 6-1 cannot be considered within the purview of the exemption granted by Section 28(c) of Commonwealth Act No. 186 as amended. This appears to be also the view of the Government Service Insurance System, for GSIS Form No. 6-1 specifically provides that " the mortgagor shall pay the notarial fees and documentary stamps necessary for this transaction and other transaction which may hereafter be executed in connection herewith and the fees for registration of this and other documents related thereto". The aforequoted condition stated in GSIS Form No. 6-1 may be taken as an interpretation on the part of the Government Service Insurance System that mortgage loan contracts executed on said form do not come within the purview of the exemption granted by Section 28(c) of Commonwealth Act No. 186, as amended. This interpretation of the law by the office affected thereby and which obviously suggested the enactment of the provision in question should be given great weight. "The practical interpretation of an ambiguous or uncertain statute by the executive department charged with its administration or enforcement is entitled to the highest respect from the courts, specially when . . . the enactment of the statute was suggested by such agency , and although not controlling, the court's decision as to the proper construction of a statute will not be disturbed for very cogent and persuasive reasons." (42 Am. Jur. 393) (Emphasis supplied). In view of all the foregoing, this Office has come to the conclusion that mortgage loan contracts executed by members of the Government Service Insurance System on GSIS Form No. 6-1 are subject to the documentary stamp tax. cdtech MELECIO R. DOMINGO Commissioner of Internal Revenue