Date of Execution or Signing of Documents in Foreclosure Sale Reckoned on the Date of Issuance of the Certificate of Sale

June 29, 1998 BIR RULING NO. 102-98 46,47-000-00-102-98 Maceda Olalia Ortiz Ortega-Pollisco & Pollisco Suite 309 Sunrise Condominium 226 Ortigas Avenue, Greenhills San Juan, Metro Manila Attention: Atty . Claro B . Ortiz Gentlemen : This refers to your request for confirmation of your opinion that the date of execution or signing of the document in a foreclosure sale should be reckoned on the date of issuance of the Certificate of Sale and not on the date of the Notice of Sale; and reconsideration of the assessment for surcharges and interests against your client, Crown Savings and Loan Association, Inc. on its payment of documentary stamp tax and capital gains tax on a foreclosure sale of mortgaged property. Documents submitted show that the case at bar involves a foreclosure sale at public auction or a forced sale which has been the subject of Examiner's Verification on capital Gains; that it is the contention of Revenue Officers Marcelo and Flores that the reckoning period for the payment of documentary stamp tax and the capital gains tax should be from the date of the notice of sale which was on February 9, 1996 and not on the date of issuance of Certificate of Sale (April 18, 1996), citing the report issued by Revenue Officer III Reymarie T. dela Cruz on March 7, 1996; that in essence, the said report states that the reckoning date for the payment of documentary stamp tax should be "on the date of execution or signing of the document by the parties thereto, and NOT at the time of its notarization"; that you completely agree with the report but beg to disagree with its application; and that based on the foregoing, you now seek reconsideration of the surcharges and interests assessed in the payment of the documentary stamp tax and capital gains tax. In reply, please be informed that a certificate of sale is an evidence of the perfection of a contract or a sale. The said certificate comes after the actual sale, (BIR Ruling No. 050-96 dated April 11, 1996). The operative act in the execution of foreclosure sales is the issuance of the Certificate of Sale and not the notice of the public auction. The instant case involves a foreclosure sale at public auction. prcd Accordingly, your opinion that the "date of execution or signing of the documents" should be reckoned on the date of issuance of the Certificate of Sale and not on the date of the Notice of Sale is hereby confirmed. In view of the foregoing, your request for reconsideration of the assessment for surcharges and interests against your client on its payment of documentary stamp tax and capital gains tax on a foreclosure sale of mortgaged property is hereby granted. This ruling is being issued on the basis of the forgoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue