Accrual of Documentary Stamps Tax Liability on Deeds of Sale

September 7, 1988 REVENUE MEMORANDUM CIRCULAR NO. 45-88 SUBJECT : Accrual of Documentary Stamps Tax Liability on Deeds of Sale TO : All Internal Revenue Officers and Others Concerned In view of the divergence of interpretations regarding the time of accrual of the documentary stamps tax liability on Deeds of Sale required under Sec. 196 of the Tax Code as amended, the following clarificatory guideline are hereby issued: The pertinent provisions of law involved are Sec. 173 and 201 of the Tax Code, as amended: aisa dc Sec. 173 provides that: I. In general documentary stamps are to be affixed a) Upon documents, instruments and papers; and b) Upon acceptances, assignments, sales and transfers of obligation, right of property incident thereto. II. The responsibility to pay the documentary stamps are lodged on The person making, signing, issuing, accepting and transferring the same. III. Time of Payment of the documentary stamps is: AT THE SAME TIME SUCH ACT IS DONE OR TRANSACTION HAD On the other hand, Sec. 201 1) Gives the effect of failure to stamp documents: a) That the document shall not be recorded; and b) The record of transfer shall not be admitted or used in evidence in court. 2) Reminds the Notary Public or other officer authorized to administer oaths: a) Not to add his jurat or acknowledgment to documents subject to documentary stamps unless the same are affixed and cancelled. These two codal provisions are plain, clear and unambiguous and leaves no room for interpretation considering that while Sec. 173 fixed the time for payment and affixture of documentary stamps by the person making, signing, issuing, accepting or transferring the same and AT THE SAME TIME SUCH ACT IS DONE OR TRANSACTION HAD Sec. 201 on the other hand, merely provides the effect of failure to affix the stamps and prohibits the notary public from adding his jurat to a document where no documentary stamps are affixed. Documentary stamps should therefore be bought and/or affixed on the documents at the time such ACT IS DONE OR TRANSACTION HAD (meaning the date of execution or signing of the document). The time of execution is not extended to the time of the notarization of the Deed of Sale as this subsequent act of the Notary Public merely attests to the authenticity of the signatures of the parties to a Deed of Sale but does not confer validity or completion to the contract. The conclusion that the phrase "at the time such act is done or transaction had" should be construed to mean to be the same as the time when the Notary Public adds his jurat or acknowledgment to the document is therefore, not in place. aisa dc All internal revenue officers and others concerned are enjoined to be guided accordingly and to give this circular as wide a publicity as possible. BIENVENIDO A. TAN, JR. Commissioner