Question & AnswerQ&A (BIR REVENUE MEMORANDUM CIRCULAR NO. 58-2008)
Republic Act No. 8791, also known as The General Banking Law of 2000, governs the foreclosure of real estate mortgage by banks, quasi-banks, and trust companies.
The redemption period for individual mortgagors is one year from the date of the confirmation of the auction sale, which is the date when the certificate of sale is issued.
Juridical persons have the right to redeem the property until registration of the certificate of foreclosure sale with the Register of Deeds, which should not exceed three months after foreclosure, whichever is earlier.
The purchaser at the auction sale has the right to enter upon and take possession of the property immediately after the date of confirmation of the auction sale.
The petitioner must file a bond in an amount fixed by the court, conditioned to pay all damages the bank may suffer due to the enjoining or restraint of the foreclosure proceeding.
The capital gains tax becomes due within 30 days following the expiration of the redemption period.
The creditable expanded withholding tax must be paid within 10 days following the end of the month in which the redemption period expires.
The documentary stamp tax must be paid, and the return filed within 5 days from the end of the month when the redemption period expires.
The mortgagee banks, quasi-banks, and trust companies are considered the statutory sellers in foreclosure sales of foreclosed real properties.
The venue for payment and filing of returns of taxes, except VAT, is at the place where the foreclosed real property is located.
The VAT-registered mortgagor must pay the VAT by filing the required return at the Revenue District Office where the mortgagor is registered.
If classified as a Large Taxpayer, the payment of capital gains tax, creditable withholding tax, and documentary stamp tax on the foreclosure sale shall be made at the concerned office of the Large Taxpayers Service.
No, the CAR must be issued upon proof that the statutorily required taxes by the mortgagee have been paid, without waiting for the mortgagor's VAT compliance.
The classification of the asset as ordinary or capital asset depends on the nature of the asset in the hands of the mortgagor.
The BIR office having jurisdiction over the statutory seller must notify the RDO where the mortgagor is registered to collect the VAT on the transaction.