Deed of Redemption is Not Subject to the DST

May 11, 1989 BIR RULING NO. 100-89 196 530-88 100-89 S i r : This refers to your letter of even date requesting a ruling as to whether or not the Certificate of Redemption dated April 27, 1989 covering the three (3) properties therein described, is subject to the documentary stamp tax under Section 196 of the Tax Code. cdta It is represented that on January 7, 1988, real properties covered by TCT Nos. (33699) 117865, (292439) S-176 and (292438) S-177 were sold at public auction by the Sheriff of Makati pursuant to an extra-judicial foreclosure instituted by the mortgagee, Prudential Bank; that you and your wife, Mrs. Patria Z. Torres, are the mortgagor of said properties; that on April 27, 1989, you and your wife redeemed the aforementioned properties by virtue of which a Certificate of Redemption was executed in your favor (Spouses Mariano P. Torres and Patria Z. Torres) by Prudential Bank; and that you are of the opinion that the said Certificate of Redemption is not subject to documentary stamp tax because no transfer of title or ownership is involved. In reply, please be informed that the provision of law involved in this case is Section 196 of the Tax Code, as amended, which reads as follows: "Sec. 196. Stamp Tax on Deeds of Sale and Conveyance of Real Property . On all conveyances, deeds, instruments, or writings, other than grants, patents, or original certificates of adjudication issued by the Government, whereby any lands, tenements or other realty sold shall be granted, assigned, transferred, or otherwise conveyed to the purchaser, or purchasers, or to any other person or persons designated by such purchaser or purchasers, there shall be collected a documentary stamp tax at the following rates: a. When the consideration, or value received or contracted to be paid for such realty, after making proper allowance of any encumbrance, does not exceed one thousand pesos, ten pesos. b. For each additional one thousand pesos, of fractional part thereof in excess of one thousand pesos of such consideration or value, ten pesos. When it appears that the amount of the documentary stamp tax payable hereunder has been reduced by an incorrect statement, of the consideration in any conveyance, deed, instrument or writing subject to such tax the Commissioner, provincial or city treasurer, or other revenue officer shall from the assessment rolls or other reliable source of information, assess the property of its true market value and collect the proper tax thereon." The Deed of Redemption is not subject to the documentary stamp tax imposed under the above quoted provision. It is noted that under said provision, the transaction which is subject to the documentary stamp tax is the conveyance of real property to the purchaser . This is not so in redemption of real property which involves restoration of the property to the mortgagor-debtor from the purchaser. Said Deed of Redemption is, however, subject to the three-peso documentary stamp tax imposed by Section 188 of the Tax Code. cdtech Very truly yours, (SGD.) JOSE U. ONG Commissioner