Private Document Authorizing a Bank to Debit from Savings Account the Full Amount of the Loan

December 5, 1960 BIR RULING NO. 527-60 Messrs. Taada, Teehankee and Carreon Attorneys-at-Law Suite 503, China Bank Building Dasmarias, Manila Gentlemen : This is in connection with your letter dated November 16, 1960 requesting the opinion of this Office on the following query: "A is a depositor of X Bank. As a security for the payment of a loan obtained by B from X bank, A executes a simple private document authorizing X bank to withhold as much of A's savings accounts or time deposit with the said bank to secure payment thereof by B, with the understanding that if the said loan granted to B shall remain unpaid on the date of maturity, X bank shall have the authority to debit from A's savings account or time deposit the full account of the Loan plus other bank charges without further advice to A. "Query: Is it necessary to affix documentary stamps to such a document under the Tax Code?" In reply, I have the honor to inform you that the private document executed by A whereby he authorized X bank to debit from his savings account the full amount of the loan plus other bank charges in case the loan granted to B is not paid on the date of maturity thereof, is subject to the documentary stamp tax of seventy five centavos prescribed in section 224 of the National Internal Revenue Code. Very truly yours, MELECIO R. DOMINGO Commissioner of Internal Revenue