RR No. 04-99: Amends the RMO relative to the payment of Capital Gains Tax and Documentary Stamp Tax on extra-judicial foreclosure sale of capital assets initiated by banks, finance and insurance companies

Key points

1. Title while redemption is possible. While the mortgagor still has a right of redemption, the mortgagor’s certificate of title is not cancelled even after the foreclosure sale. Only a brief memorandum is annotated at the back of the title.
2. Transfer to the buyer. Cancelling the title and issuing a new one to the purchaser or highest bidder depends on whether the mortgagor redeems within one year from the issuance of the certificate of sale. No transfer can be made until that one-year period lapses.
3. If the mortgagor redeems. No Capital Gains Tax is imposed, because the mortgagor derived no capital gains and no sale or transfer of real property took place.
4. If there is no redemption. Capital Gains Tax becomes due on the bid price of the highest bidder, but only when the one-year redemption period expires. It is paid within thirty (30) days from the expiration of that period.
5. Documentary Stamp Tax. The person making, signing, issuing, accepting or transferring the real property levies, collects and pays it, wherever the document is made, signed, issued, accepted or transferred, where the property is situated in the Philippines.

Who is affected

• Banks, finance and insurance companies initiating extrajudicial foreclosure sales
• Mortgagors
• Highest bidders or purchasers

Deadlines and effectivity

• Redemption period: one year from issuance of the certificate of sale
• Capital Gains Tax payment: within thirty (30) days from expiration of the redemption period