How to pay capital gains tax and documentary stamp tax at the BIR

This is an actual process we went through when we processed the payment of capital gains tax (CGT) and documentary stamp tax (DST) with the Bureau of Internal Revenue (BIR)

1.) Fill-up the proper eBIR forms  1706 and 2000-OT (check BIR website)  and have a printout of these forms. You can do this at home thru online or offline which requires downloading of the app from the BIR website.

(indicate the name of the seller in the forms even if he/she is represented by an attorney-in-fact)

2.) At the BIR Revenue District Office (RDO), proceed to TIN Verification Section and fill-up Form 1904-Application for Registration, for both the seller and buyer.

3.) Next is at the ONETT (One-Time Transactions) section and have the taxes computed (thru a Computation Sheet) based on the Deed of Sale and Tax Declaration (Certified True Copy)

4.) Proceed to any of the RDO's Accredited Banks

-          (Better to know which bank submits/reports payments to BIR the earliest)

-          Fill–up deposit slips (1 for DST and 1 for CGT)

-          Submit the BIR forms 1706 and 2000-OT

-          Get Official Receipt of deposits and bank-stamped forms

5.) Back to BIR again. Secure and fill-up Form 0605 (Payment Form). Photocopy 2 copies. 

6.) Proceed to AAB and fill-up deposit slip (1 for each title) and pay P100 per title as Certification Fee. Attach 3 copies of forms

7.) Submit to ONETT – Original copies of Verified TINs, bank deposit slips and forms showing payment of Certification Fee, two copies of Deed of Sale (with special power of attorney, if any), original Tax Declaration, Certified True Copy of Title (must be nearest the time of transaction), Bank Deposit slips and Forms 1706 and 200-OT. And 1 set of photocopies of the same documents.

8.) Get Claim Slip with contact numbers for making follow-up calls.

9.) Claim the Certificate Authorizing Registration (CAR) and the original copies of the documents previously submitted. Make sure that what your receiving are original copies which would also be required by the Registry of Deeds. This will save you time and the hassle of returning to the BIR just to get the originals.

Guidelines for The Enforcement of A.M. No. 99-10-05-0., as amended.

CIRCULAR NO. 7-2002

TO: ALL EXECUTIVE JUDGES, CLERKS OF COURT, SHERIFFS IN THE OFFICE OF THE CLERK OF COURT AND BRANCH SHERIFFS IN THE REGIONAL TRIAL COURTS

SUBJECT: GUIDELINES FOR THE ENFORCEMENT OF SUPREME COURT RESOLUTION OF DECEMBER 14, 1999 IN ADMINISTRATIVE MATTER NO. 99-10-05-0 (RE: PROCEDURE IN EXTRA-JUDICIAL FORECLOSURE OF MORTGAGE), AS AMENDED BY THE RESOLUTIONS DATED JANUARY 30, 2001 AND AUGUST 7, 2001

These guidelines are issued pursuant to the Supreme Court En Banc Resolution of December 14, 1999 in Administrative Matter No. 99-10-05-0, as amended by the resolutions of January 30, 2001 and August 7, 2001, directing the Office of the Court Administrator to prepare the guidelines for the enforcement of A.M. No. 99-10-05-0 on the extra-judicial foreclosure of mortgages.

Sec. 1. All applications for extra-judicial foreclosure of mortgage, whether under the direction of the Sheriff or a notary public pursuant to Art.No. 3135, as amended, and Act  1508, as amended, shall be filed with the Executive Judge, through the Clerk of Court, who is also the Ex-Officio Sheriff (A.M. No. 99-10-05-0, as amended, March 1, 2001).

Sec. 2. Upon receipt of the application, the Clerk of Court shall:

a.  Examine the same to ensure that the special power of attorney authorizing the extra-judicial foreclosure of the real property is either inserted into or attached to the deed of real estate mortgage (Act No. 3135, Sec. 1, as amended);

b.  Give a file number to the application and endorse the date and time of its filing and thereafter docket the same, keeping, in this connection, separate docket books for extra-judicial foreclosure sales conducted by the Sheriff and those conducted by notaries public;

c.  For the conduct of extra-judicial foreclosure of real estate or chattel mortgage under the direction of the sheriff, collect the appropriate filing fees and issues the corresponding official receipt pursuant to the following schedule:

If the amount of the indebtedness or the mortgagee’s claim is:

(1)     Less than P50,000.00 ………………….. P275.00

(2)     P50,000.00 or more but less than

P100,000.00 ……………………………..... 400.00

(3)     P100,000.00 or more but less than

P150,000.00 ………………………………. 500.00

(4)     P150,000.00 or more but less than

P200,000.00 ………………………………. 650.00

(5)     P200,000.00 or more but less than

P250,000.00 …………………………….. 1,000.00

(6)     P250,000.00 or more but less than

P300,000.00 ………………………….…. 1,250.00

(7)     P300,000.00 or more but less than

P400,000.00 …………………………….. 1,500.00

(8)     P400,000 or more but less than

P500,000.00 …………………………….. 1,750.00

(9)     P500,000.00 or more but not more than

P100,000,000.00 ……………………..…. 2,000.00

(10)   For each P1,000.00 in excess of

P1,000,000.00……………………………….. 10.00

(Section 7 (c), Rule 141, Rules of Court, as amended by A.M. No. 00-2-01-SC, February 1, 2000).

Cooperatives, thrift banks, and rural banks are not exempt from the payment of filing fees and other fees under these guidelines (A.M. No. 98-9-280-RTC, September 29, 1998; A.M. No. 99-3-93-RTC, April 20, 1999; and A.M. No. 92-9-408-0).

d. In case the application is for the extra-judicial foreclosure of mortgages of real estates and/or chattels in different locations covering one indebtedness, issue, apart from the official receipt for the fees, a certificate of payment indicating the amount of indebtedness, the filing fees collected, the mortgages sought to be foreclosed, the real estates and/or chattels mortgaged and their respective locations, for purposes of having the application docketed with the Clerks of Court in the places where the other properties are located and of allowing the extra-judicial foreclosure to proceed thereat. (A.M. No. 99-10-05-0, par. 2(e)).

Sec. 3. The application for extra-judicial foreclosure shall be raffled under the supervision of the Executive Judge, with the assistance of the Clerk of Court and Ex-Oficio Sheriff, among all Sheriffs including those assigned to the Office of the Clerk of court and Sheriffs assigned in the branches of the court. A Sheriff to whom the case has been raffled shall be excluded in the succeeding raffles and shall participate again only after all other Sheriffs shall have been assigned a case by raffle (Administrative Circular No. 3-98, Feb. 5, 1998).

Sec. 4. The Sheriff to whom the application for extra-judicial foreclosure of mortgage was raffled shall do the following:

a.  Prepare a Notice of Extra-judicial Sale using the following form:

“NOTICE OF EXTRA-JUDICIAL SALE”

“Upon extra-judicial petition for sale under Act 3135 / 1508 filed __________________ against (name and address of Mortgator/s) to satisfy the mortgage indebtedness which as of ___________ amounts to P _________________, excluding penalties, charges, attorney’s fees and expenses of foreclosure, the undersigned or his duly authorized deputy will sell at public auction on (date of sale) _______________ at 10:00 A.M. or soon thereafter at the main entrance of the ___________ (place of sale) to the highest bidder, for cash or manager’s check and in Philippine Currency, the following property with all its improvements, to wit:

”(Description of Property)”

“All sealed bids must be submitted to the undersigned on the above stated time and date.”

“In the event the public auction should not take place on the said date, it shall be held on _______________, _______________ without further notice.”

________________ (date)

“SHERIFF”

b. (1) In case of foreclosure of real estate mortgage, cause the publication of the notice of sale by posting it for not less than twenty (20) days in at least three (3) public places in the municipality or city where the property is situated and if such property is worth more than four hundred (P400.00) pesos, by having such notice published once a week for at least three (3) consecutive weeks in a newspaper of general circulation in the municipality or city (Sec. 3, Act No. 3135, as amended). The Executive Judge shall designate a regular working day and definite time each week during which said notice shall be distributed personally by him for publication to qualified newspapers or periodicals as defined in Sec. 1 of P.D. No. 1079, which distribution shall be effected by raffle (A.M. No. 01-1-07-SC, Oct. 16, 2001). Unless otherwise stipulated by the parties to the mortgage contract, the debtor-mortgagor need not be personally served a copy of the notice of the extra-judicial foreclosure.

For real estate mortgages covering loans not exceeding P100,000.00, exclusive of interests due and unpaid, granted by rural banks (RA No. 7353, Sec. 6) or thrift banks (RA No. 7906, Sec. 18),publication in a newspaper shall be dispensed with, it being sufficient that the notices of foreclosure are posted for a period of sixty (60) days immediately preceding the public auction in the most conspicuous areas of the municipal building, the municipal public market, the rural bank, the barangay hall, and the barangay public market, if any, where the land mortgaged is situated. Proof of publication shall be accomplished by an affidavit of the Sheriff and shall be attached to the records of the case.

(2) In case of foreclosure of a chattel mortgage, post the notice for at least ten (10) days in two (2) or more public places in the municipality where the mortgagor resides or where the property is situated (Sec. 14, Act No. 1508, as amended).

Sec. 5. Conduct of the extra-judicial foreclosure sale –

a.  The bidding shall be made through sealed bids which must be submitted to the Sheriff who shall conduct the sale between the hours of 9 a.m. and 4 p.m. of the date of the auction (Act 3135, Sec. 4). The property mortgaged shall be awarded to the party submitting the highest bid and, in case of a tie, an open bidding shall be conducted between the highest bidders. Payments of the winning bid shall be made either in cash or in manager’s check, in Philippine currency, within five (5) days from notice.

b.  The sale must be made in the province in which the real property is situated and, in case the place within the said province in which the sale is to be made is the subject of stipulation, such sale shall be made in said place in the municipal building of the municipality in which the property or part thereof is situated (Act No. 3135, as amended, Sec. 2);

in case of a chattel mortgage, the sale shall be made at a place in the municipality where the mortgagor resides or where the property is situated (Sec. 14, Act No. 1508, as amended).

Sec. 6. After the sale, the Clerk of Courts shall collect the appropriate fees pursuant to Sec. 9(1), Rule 141, as amended by A.M No. 00-2-01-SC, computed on the basis of the amount actually collected by him, which fee shall not exceed P100,000.00 (A.M. No. 99-10-05-0, March 1, 2001, 2[d]). The amount paid shall not be subject to a refund even if the foreclosed property is subsequently redeemed.

Sec. 7. In case of foreclosure under Act No. 1508, the Sheriff shall, within thirty (30) days from the sale, prepare a return and file the same in the Office of the Registry of Deeds where the mortgage is recorded.

Sec. 8. The Sheriff or the notary public who conducted the sale shall report the name/s of the bidder/s to the Clerk of Court.

Sec. 9. Upon presentation of the appropriate receipts, the Clerk of Court shall issue and sign the Certificate of Sale, subject to the approval of the Executive Judge or, in the latter’s absence, the Vice-Executive Judge. Prior to the issuance of the certificate of Sale, the Clerk of court shall, in extra-judicial foreclosure conducted under the direction of the sheriff, collect P300.00 as provided in Section 20(d), Rule 141, as amended, and in extra-judicial foreclosure sales conducted under the direction of a notary public, collect the appropriate fees pursuant to Rule 141, §20(e), which amount shall not exceed P100,000.00 (Minute Res., A.M. No. 99-10-05-0, August 7, 2001).

Sec. 10. After the Certificate of Sale has been issued, the Clerk of Court shall keep the complete records for a period of one (1) year from the date of registration of the certificate of sale with the Register of Deeds, after which the records shall be archived. Notwithstanding the foregoing, juridical persons whose property is sold pursuant to an extra-judicial foreclosure shall have the right to redeem the property until, but not later than, the registration of the certificate of foreclosure sale which in no case shall be more than three (3) months after foreclosure, whichever is earlier (R.A. 8791, Section 47). In case the property is redeemed, the Clerk of Court shall assess the redemptioner’s fee as provided in Section 7 (k), Rule 141, as amended. If the property is not redeemed, the Clerk of Court shall, as a requisite for the issuance of the final Deed of Sale, assess the highest bidder the amount of P300.00 as provided in Section 20(d), Rule 141, as amended.

Sec. 11. These guidelines shall take effect on April 22, 2002.

Issued this 22^nd day of January 2002.

(Sgd.) PRESBITERO J. VELASCO, JR.

Court Administrator

Extra-judicial Foreclosure of Mortgage - Procedure

EN BANC

[A.M. No. 99-10-05-0.  August 7, 2001]

(AS FURTHER AMENDED, AUGUST 7, 2001)

PROCEDURE IN EXTRA-JUDICIAL FORECLOSURE OF MORTGAGE

In line with the responsibility of an Executive Judge under Administrative Order No. 6, dated June 30, 1975, for the management of courts within his administrative area, included in which is the task of supervising directly the work of the Clerk of Court, who is also the Ex-Office Sheriff, and his staff, and the issuance of commissions to notaries public and enforcement of their duties under the law, the following procedures are hereby prescribed in extrajudicial foreclosure of mortgages:

1.  All applications for extra-judicial foreclosure of mortgage whether under the direction of the sheriff or a notary public, pursuant to Act 3135, as amended by Act 4118, and Act 1508, as amended, shall be filed with the Executive Judge, through the Clerk of court who is also the Ex-Officio Sheriff.

2.  Upon receipt of an application for extra-judicial foreclosure of mortgage, it shall be the duty of the Clerk of Court to:

a)  receive and docket said application and to stamp thereon the corresponding file number, date and time of filing;

b)  collect the filing fees therefore pursuant to rule 141, Section 7(c), as amended by A.M. No. 00-2-01-SC, and issue the corresponding official receipt;

c)  examine, in case of real estate mortgage foreclosure, whether the applicant has complied with all the requirements before the public auction is conducted under the direction of the sheriff or a notary public, pursuant to Sec. 4 of Act 3135, as amended;

d)  sign and issue the certificate of sale, subject to the approval of the Executive Judge, or in his absence, the Vice-Executive Judge.  No certificate of sale shall be issued in favor of the highest bidder until all fees provided for in the aforementioned sections and in Rule 141, Section 9(1), as amended by A.M. No. 00-2-01-SC, shall have been paid; Provided, that in no case shall the amount payable under Rule 141, Section 9(1), as amended, exceed P100,000.00;

e)  after the certificate of sale has been issued to the highest bidder, keep the complete records, while awaiting any redemption within a period of one (1) year from date of registration of the certificate of sale with the Register of Deeds concerned, after which, the records shall be archived.  Notwithstanding the foregoing provision, juridical persons whose property is sold pursuant to an extra-judicial foreclosure, shall have the right to redeem the property until, but not after, the registration of the certificate of foreclosure sale which in no case shall be more than three (3) months after foreclosure, whichever is earlier, as provided in Section 47 of Republic Act No. 8791 (as amended, Res. Of August 7, 2001).

Where the application concerns the extrajudicial foreclosure of mortgages of real estates and/or chattels in different locations covering one indebtedness, only one filing fee corresponding to such indebtedness shall be collected.  The collecting Clerk of Court shall, apart from the official receipt of the fees, issue a certificate of payment indicating the amount of indebtedness, the filing fees collected, the mortgages sought to be foreclosed, the real estates and/or chattels mortgaged and their respective locations, which certificate shall serve the purpose of having the application docketed with the Clerks of Court of the places where the other properties are located and of allowing the extrajudicial foreclosures to proceed thereat.

3.  The notices of auction sale in extrajudicial foreclosure for publication by the sheriff or by a notary public shall be published in a newspaper of general circulation pursuant to Section 1, Presidential Decree No. 1079, dated January 2, 1977, and non-compliance therewith shall constitute a violation of Section 6 thereof.

4.  The Executive Judge shall, with the assistance of the Clerk of Court, raffle applications for extrajudicial foreclosure of mortgage under the direction of the sheriff among all sheriffs, including those assigned to the Office of the Clerk of Court and Sheriffs IV assigned in the branches.

5.  The name/s of the bidder/s shall be reported by the sheriff or the notary public who conducted the sale to the Clerk of Court before the issuance of the certificate of sale.

This Resolution amends or modifies accordingly Administrative Order No. 3 issued by then Chief Justice Enrique M. Fernando on 19 October 1984 and Administrative Circular No. 3-98 issued by the Chief Justice Andres R. Narvasa on 5 February 1998.

The Court Administrator may issue the necessary guidelines for the effective enforcement of this Resolution.

The Clerk of Court shall cause the publication of this Resolution in a nuewspaper of general circulation not later than August 14, 2001 and furnish copies thereof to the Integrated Bar of the Philippines.

This Resolution shall take effect on the 1^st day of September of the year 2001.

Promulgated this 7^th day of August 2001 in the City of Manila.

Davide, Jr., C.J., Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Panganiban, Quisumbing, Pardo, Buena, Gonzaga-Reyes, Ynares-Santiago, andDe Leon, Jr., JJ., concur.

Sandoval-Gutierrez J., on leave.

Prescription of Action to Foreclose

          Under Article 1142 of the Civil Code, a mortgage action prescribes after ten (10) years. Jurisprudence, however, has clarified this rule by holding that a mortgage action prescribes after ten (10) years from the time the right of action accrued, which is obviously not the same as the date of the mortgage contract. Stated differently, an action to enforce a right arising from a mortgage should be enforced within ten (10) years from the time the right of action accrues; otherwise, it will be barred by prescription and the mortgage creditor will lose his rights under the mortgage. The right of action accrues when the mortgagor defaults in the payment of his obligation to the mortgagee. (HERMINIA CANDO vs. SPS. AURORA OLAZO and CLAUDIO OLAZO, G.R. No. 160741, March 22, 2007)

Interruption of Prescription of Action to Foreclose

          Art. 1155 of the Civil Code provides that prescription of actions is interrupted when they are filed before the court, when there is a written extrajudicial demand by the creditors, and when there is any written acknowledgment of the debt by the debtor.

Maceda Law (RA 6552)

AN ACT TO PROVIDE PROTECTION TO BUYERS OF REAL ESTATE ON INSTALLMENT PAYMENTS. 

(Rep. Act No. 6552)

Section 1. This Act shall be known as the "Realty Installment Buyer Act."

Section 2. It is hereby declared a public policy to protect buyers of real estate on installment payments against onerous and oppressive conditions.

Section 3. In all transactions or contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments but excluding industrial lots, commercial buildings and sales to tenants under Republic Act Numbered Thirty-eight hundred forty-four, as amended by Republic Act Numbered Sixty-three hundred eighty-nine, where the buyer has paid at least two years of installments, the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments:

(a) To pay, without additional interest, the unpaid installments due within the total grace period earned by him which is hereby fixed at the rate of one month grace period for every one year of installment payments made: Provided, That this right shall be exercised by the buyer only once in every five years of the life of the contract and its extensions, if any.

(b) If the contract is canceled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty per cent of the total payments made, and, after five years of installments, an additional five per cent every year but not to exceed ninety per cent of the total payments made: Provided, That the actual cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer.

Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made.

Section 4. In case where less than two years of installments were paid, the seller shall give the buyer a grace period of not less than sixty days from the date the installment became due.

If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act.

Section 5. Under Section 3 and 4, the buyer shall have the right to sell his rights or assign the same to another person or to reinstate the contract by updating the account during the grace period and before actual cancellation of the contract. The deed of sale or assignment shall be done by notarial act.

Section 6. The buyer shall have the right to pay in advance any installment or the full unpaid balance of the purchase price any time without interest and to have such full payment of the purchase price annotated in the certificate of title covering the property.

Section 7. Any stipulation in any contract hereafter entered into contrary to the provisions of Sections 3, 4, 5 and 6, shall be null and void.

Section 8. If any provision of this Act is held invalid or unconstitutional, no other provision shall be affected thereby.

Section 9. This Act shall take effect upon its approval.

Approved: August 26, 1972.

Land Registration Authority (LRA) now under Department of Justice (DOJ)

President Noynoy Aquino (PNOY) transferred the Land Registration Authority (LRA) to the Department of Justice (DOJ) by virtue of Executive Order No. 30 which was dated March 14, 2011.

The LRA was formerly under the Department of Environment and Natural Resources (DENR). Read the full text of the Order below.

MALACAÑAN PALACEMANILA

BY THE PRESIDENT OF THE PHILIPPINES

EXECUTIVE ORDER NO. 30

TRANSFERRING THE LAND REGISTRATION AUTHORITY (LRA) FROM THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES (DENR) TO THE DEPARTMENT OF JUSTICE (DOJ), REPEALING FOR THE PURPOSE EXECUTIVE ORDER NO. 690, SERIES OF 2007

WHEREAS, the Land Registration Authority (LRA) was transferred to the Department of Environment and Natural Resources (DENR) pursuant to Executive Order No. 690, dated December 28, 2007;

WHEREAS, the government is committed to pursue a more responsive and efficient bureaucracy by adopting homogenous grouping of functionally related government agencies;

WHEREAS, with due regard to the quasi-judicial functions being performed by the LRA in land registration cases, and given the present mandate, organizational capability, expertise and experience of the LRA and its Registries of Deeds throughout the country, it is more appropriate that the LRA and its Registries of Deeds continue to perform its land registration functions under the Department of Justice (DOJ);

WHEREAS, Section 31, Chapter 10, Title Ill, Book Ill of Executive Order No. 292, series of 1987, otherwise known as the “Administrative Code of 1987″, provides that the President, subject to the policy in the Executive Office and in order to achieve simplicity, economy and efficiency, shall have continuing authority to reorganize the administrative structure of the Office of the President.

NOW, THEREFORE, I, BENIGNO S. AQUINO Ill, President of the Philippines, by virtue of the powers vested in me by the Constitution and existing laws, do hereby order:

Section 1. Transferring LRA from DENR to the DOJ. – The LRA is hereby transferred from the DENR to the DOJ in order to ensure a more effective and efficient execution of laws relative to land registration.

Section 2. Repealing Clause. – All executive orders, including Executive Order No. 690, series of 2007, rules and regulation, and other issuances or parts thereof that are inconsistent with the provisions of this Executive Order, are hereby either revoked or modified accordingly.

Section 3. Effectivity -This Executive Order shall take effect immediately upon publication in the Official Gazette or in a newspaper of general circulation.

DONE in the City of Manila, this 14th day of March, in the year of Our Lord, Two Thousand and Eleven


By the President:

(Sgd.) BENIGNO S. AQUINO III

(Sgd.) PAQUITO N. OCHOA, JR.

Executive Secretary