Imposition of the 25% Surcharge and 25% Penalty

May 16, 1988 BIR RULING NO. 207-88 173 & 248 (a) (3) & (d) 000-00 207-88 M a d a m : This refers to your letter dated May 12, 1988 stating as follows: cd "A) An unnotarized Deed of Sale was executed in Manila on April 30, 1988 and was presented to BIR Baguio on May 3, 1988 for the purchase of documentary stamps. The same is being subjected to a 25% surcharge for late payment. "B) A Deed of Sale notarized in Manila on May 9, 1988 was presented to the BIR Baguio on the same date also for documentary stamps. The same is also being charged a 25% penalty." In connection therewith, you now request clarification as to whether or not the imposition of the said 25% surcharge and 25% penalty is proper since you are of the opinion that the date of notarization is the date of the execution of the documents. In reply, please be informed that pursuant to Section 173 of the Tax Code, as amended, documentary stamps taxes prescribed under Title VII of the same Code shall become due and payable at the same time the transaction is had or accomplished. Moreover, Section 201 of the Tax Code, as amended, provides that no notary public or other officer authorized to administer oath shall add his jurat or acknowledgment to any document subject to documentary stamp tax unless the proper documentary stamps are affixed thereto and cancelled. Accordingly, the documentary stamp is due at the same time the document or instrument evidencing a particular transaction is notarized. Such being the case, the unnotarized Deed of Sale executed in Manila on April 30, 1988 and presented to BIR Baguio on May 3, 1988 is not subject to the 25% surcharge imposed under Section 284(a)(3) of the Tax Code, as amended, for late payment. Likewise, the Deed of Sale notarized in Manila on May 9, 1988 and presented to BIR Baguio on the same date is not also subject to the 25% penalty for failure to affix the proper documentary stamps to a document or instrument under Section 248(d) of the Tax Code, as amended. Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner