Effect of Late Payment of the DST

July 11, 1988 BIR RULING NO. 304-88 248 000-00 304-88 1st Indorsement Returned to the Revenue District Officer, Revenue District No. 32, Makati East, Makati, Metro Manila, thru the Regional Director, Revenue Region No. 4-B-2, Makati, Metro Manila, the entire docket bearing on the protest of the Development Bank of the Philippines (DBP) against the imposition of the 25% surcharge for alleged late payment of documentary stamp tax, relative to its execution of the affidavit of consolidation dated October 22, 1986 on properties sold to it at public auction on January 25, 1984. The records show that on January 25, 1984, in an extra-judicial foreclosure sale made under a Special Power of Attorney inserted in a Deed of Real Estate Mortgage executed by Monarch Estate Development Corporation and Philippine Singapore Hotel Corporation in favor of DBP, the ex-Officio Sheriff of Makati has sold at public auction to DBP as the highest bidder for P49,361,575.00, real properties located in Makati covered by TCT Nos. S-10814, S-10813, S-10815, S-1611, S-1612, S-10816, S-1613, S-1614, S-104596 and S-1602; that DBP did not pay any more the sale price of these properties in the amount of P49,361,575.00, instead, DBP merely credited the said amount as partial and/or full satisfaction of the mortgage debt; that the Sheriff's Certificate of Sale was issued on January 30, 1984 and was registered with the Register of Deeds on October 26, 1984; that the period of redemption for the above-described properties is one (1) year from and after the registration of the certificate of sale; and that for failure of the mortgagor to redeem said properties, DBP executed an Affidavit of Non-Redemption for Consolidation of Ownership on October 12, 1986, pursuant to Section 63 of PD No. 1529 known as the Property Registration Decree. Since DBP has already paid the basic documentary stamp tax of P493,620.00 on March 16, 1987, the sole question to be resolved in this case is whether or not DBP is still liable to 25% surcharge for late payment of said tax pursuant to then Section 282 (now Section 248) of the Tax Code, as amended by PD 1994, which took effect on January 1, 1986. From the foregoing facts, it is clear that the document subject to documentary stamp tax imposable on deeds of sale and conveyance of real property under Section 209 (now Section 196) of the Tax Code, is Sheriff's Certificate of Sale. (Sec. 171, Regulations No. 26 or the Revised Documentary Stamp Tax Regulations). Then Section 222 (now Section 173) of the Tax Code provides that the corresponding documentary stamp taxes shall be paid at the time the "act is done or transaction had." The implication is that the documentary stamp shall be affixed to the taxable document at the time it is issued or executed. Accordingly, in the instant case, the documentary stamp tax due on the Sheriff's Certificate of Sale, should have been held on/or before the same was executed by the Sheriff on January 30, 1984. Consequently, since the tax was not paid on the said date, there was already a late payment thereof . However, it is noted that at the time that late payment of the documentary stamp tax occurred, there was no provision yet in the National Internal Revenue Code imposing the civil penalty of 25% for late payment. As heretofore stated, said provision took effect only on January 1, 1988. Consequently, DBP cannot be held liable for the payment of the 25% surcharge for late payment . The Affidavit of Non-Redemption for Consolidation of Ownership executed by DBP on October 22, 1986 is not subject to the documentary stamp tax imposable on deed of sale and conveyance of real property. It is subject only to the documentary stamp tax on certificates which is P3.00 imposed under Section 201 (now Section 188) of the Tax Code. Please be guided accordingly. aisadc Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner