Sheriff's Certificate of Sale

December 7, 1990 BIR RULING NO. 229-90 173: 196 000-00 239-90 S i r : This refers to your letter dated October 30, 1990, requesting clarification as to whether a Sheriff's Certificate of Sale is subject to the documentary stamp tax. cdta It is represented that your client won a suit for damages against a corporation and was awarded by the trial court the total amount of P12 million; that accordingly, the sheriff conducted an auction sale of the levied property (factory building) owned by the judgment debtor; that since your client was the only bidder, it purchased the property for P5 million in partial satisfaction of the judgment; that upon presentation of the Sheriff's Certificate of Sale for registration with the Register of Deeds, the latter required the payment of the corresponding documentary stamp tax, if subject, or a certificate of tax exemption, if exempt; that the Revenue District Officer of Pasig assessed your client the amount of P50,000.00 (1% of P5 million) plus surcharge of 25% in the amount of P12,500.00; that you are of the opinion that a Sheriff's Certificate of Sale is not subject to the documentary stamp tax imposed by Section 196 of the Tax Code, it being a conditional sale subject to one year redemption period under the Rules of Court; and that the law applicable is Section 165 of Regulations No. 26 which provides that if the judgment debtor fails to redeem the property within the one-year period, the sheriff is mandated to execute the final deed of sale which is subject to the documentary stamp tax. In reply, please be informed that your contention is not meritorious. Section 165 of Regulations No. 26 otherwise known as the Documentary Stamp Tax Regulations refers to a final deed of sale executed by a sheriff after the expiration of the one-year redemption period while Section 171, also of said Regulations, speaks of sheriff's certificate of sale. Accordingly, since in the instant case there is as yet no final deed of sale but only a sheriff's certificate of sale, the applicable provision is Section 172 of Regulations No. 26 which provides, viz: "Sec. 172. Deeds Conveying Property Sold under Foreclosure or Execution ; Tax How Paid . Deeds executed by sheriffs, clerks of court, etc., to cover transfer of property sold under a foreclosure or execution are subject to tax. The grantee or vendee may be required to pay the tax or the cost of revenue stamps may be included in the expenses of foreclosure sale." This Office has ruled that the certificate of sale issued by the sheriff is subject to the documentary stamp tax on deed of sale and conveyance of real property pursuant to Section 209 (now Section 196) of the Tax Code. (BIR Ruling No. 013-86 citing BIR Ruling No. 174-85) Likewise, in BIR Ruling No. 304-88 dated July 11, 1988, this Office ruled that the document subject to the documentary stamp tax imposable on deeds of sale and conveyance of real property under Section 196 of the Tax Code is the Sheriff's Certificate of Sale. You are also informed that the imposition of the 25% surcharge in the amount of P12,500.00 is correct. Under Section 173 of the Tax Code, it is provided that the documentary stamp tax shall be paid at the time the "act is done or transaction had." The implication is that the documentary stamp tax shall be affixed to the taxable document at the time it is issued or executed. Accordingly, in the instant case, the documentary stamp tax on the Sheriff's Certificate of Sale should have been paid on or before June 5, 1990, the date of the execution thereof. Consequently, since the tax was not paid on the said date, there was already a late payment thereof. aisadc Please be guided accordingly. Very truly yours, (SGD.) VICTOR A. DEOFERIO, JR. Deputy Commissioner