BIR Ruling [DA-393-04]

July 21, 2004 BIR RULING [DA-393-04] RR4-99 & RMO 66-99 BIR Ruling No. DA-059-2004 Land Bank of the Philippines 319 Sen. Gil Puyat Ave. Ext., Makati City Attention: Atty. Melissa S. Mamauag Head, Special Legal Team Gentlemen : This refers to your letter dated April 10, 2003 requesting a ruling/legal opinion on the propriety and legality of the practice of BIR-Trece Martirez to wait for three (3) months from the date of annotation of the Certificate of Sale before issuing the Certificate Authorizing Registration (CAR). It is represented that Metrobank Trust Banking Group acting as trustee for and in behalf of Landbank of the Philippines, Metrobank, Asiatrust and RCBC Savings filed a Petition for Extrajudicial Foreclosure on January 9, 2003 over assets of a juridical person located in Dasmarias, Cavite; that public auction was held on February 6, 2003 of which Metrobank was declared as highest bidder; that the Certificate of Sale (COS) was registered with the Register of Deeds of Dasmarias, Cavite on March 30, 2003; and that when representatives from Landbank went to BIR-Trece Martirez to pay the expanded creditable withholding tax and documentary stamp tax for purposes of consolidating the titles in the name of said banks, representatives from said office informed that while they accept payment for said taxes, issuance of the CAR will be made only on June 30, 2003 or three (3) months after the registration of the COS. In reply, please be informed that under Republic Act No. 8791, otherwise known as the "General Banking Law of 2000," a mortgagor-juridical person shall have the right to redeem the foreclosed property in accordance with the procedure set forth under the first paragraph of Section 47 thereof until, but not after, the registration of the certificate of foreclosure sale with the applicable Register of Deeds which in no case shall be more than three (3) months after foreclosure, whichever is earlier. The capital gains tax herein due shall be paid within thirty (30) days from the lapse of the said period of redemption and shall be based on the highest bid price in accordance with Revenue Memorandum Order No. 41-91 and Section 3 of Revenue Regulations No. 4-99. The documentary stamp tax due under Section 196 of the Tax Code shall be paid within five (5) days after the close of the month when the right of redemption lapses pursuant to Section 200 of the Tax Code as implemented by Revenue Regulations No. 4-99, as amended by Revenue Regulations No. 6-2001, which shall, likewise, be based on the highest bid price in accordance with Revenue Memorandum Circular No. 41-91 and Revenue Regulations No. 4-99. Upon presentation of the creditable withholding tax and documentary stamp tax returns duly validated by an authorized agent bank (AAB) evidencing full payment of the creditable withholding and documentary stamp taxes due, the RDO concerned shall issue the Certificate Authorizing Registration (CAR) to Metrobank as the highest bidder immediately after approval of the verification report at the RDO level (Section II(H), RMO No. 66-99). In cases where issuance of CARs need to be made immediately due to meritorious reasons, the RDO may authorize the audit/verification of these tax returns provided that extra efforts were exerted by the concerned revenue officers and officials to establish the authenticity of the return presented by the taxpayer and the validity of the information contained therein. Otherwise, the concerned revenue officers and officials shall be held responsible for any act of omission or commission found to be connected therewith (Section II(G), RMO No. 66-99). Finally, pursuant to Section II(P) of Revenue Memorandum Order (RMO) No. 66-99, CARs shall be issued within five (5) days from the issuance of the Tax Verification Notice (TVNs). For cases covered by Letter of Authority (LAs), CARs shall be issued within two (2) days from receipt of the original copies of Confirmation Letters (CLs) duly issued by the Regional Directors. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group