Documentary Stamp Tax (DST) and Annotation Fees in a Pag-IBIG Housing-Loan Transaction
Philippine legal and practical guide
1. Overview of the Pag-IBIG housing-loan package
Pag-IBIG Fund (HDMF) grants long-term housing loans to qualified members under Republic Act No. 9679 (HDMF Law of 2009). After a loan is approved the borrower signs two key instruments that trigger government charges:
- Real-Estate Mortgage (REM) – the collateral document registered on the Torrens title.
- Promissory Note / Loan Agreement – the evidence of indebtedness.
Both instruments are subject to Documentary Stamp Tax (DST) imposed by the Bureau of Internal Revenue (BIR). Registration of the mortgage on the title also incurs annotation and registration fees collected by the Registry of Deeds (RD) under the Land Registration Authority (LRA).
2. Documentary Stamp Tax (DST)
2.1 Statutory basis
| Law / Issuance | Provision | What it covers | Current rate* |
|---|---|---|---|
| National Internal Revenue Code (NIRC), as amended by RA 10963 (TRAIN), § 179 | Loan Agreements, Promissory Notes, Mortgage Scrip, etc. | Every “obligation for the payment of money” | ₱ 1.50 for every ₱ 200 (or fraction) of the principal amount |
| NIRC § 195 | Mortgages, Pledges and Deeds of Trust | When the secured amount cannot be determined at execution | Graduated but rarely used for Pag-IBIG loans because the principal is fixed |
| Revenue Regulations (RR) No. 4-2021 | Consolidates TRAIN-adjusted DST matrix | Confirms above rate and exemption threshold | |
| TRAIN proviso | DST exemption for personal loans ≤ ₱ 250,000 payable within 5 years | Not applicable – Pag-IBIG housing loans exceed ₱ 250 k and run up to 30 years |
* Rates unchanged since 1 January 2018.
2.2 How Pag-IBIG applies DST
Pag-IBIG files and pays the DST centrally (BIR Form 2000-OT) and simply withholds the cost from the loan proceeds. The borrower sees the amount in the “Schedule of Loan Deductions” issued at take-out.
Formula
DST = Principal Loan Amount × (₱ 1.50 ÷ ₱ 200)
= Principal × 0.0075Example
| Loan principal | Computation | DST payable |
|---|---|---|
| ₱ 2,000,000 | ₱ 2,000,000 × 0.0075 | ₱ 15,000 |
| ₱ 450,000 | ₱ 450,000 × 0.0075 | ₱ 3,375 |
| ₱ 250,000 | Exempt only if personal/consumer loan – Not exempt for housing | ₱ 1,875 |
2.3 Timing and proof of payment
- Pag-IBIG settles the tax within five (5) days after the end of the month of loan take-out, using its eFPS account.
- The borrower receives a copy of the eDST or BIR-stamped Form 2000-OT as part of the loan folder.
- Failure to pay DST results in surcharge (25 %), interest (12 % p.a. under Sec. 249), and compromise penalties—all for the borrower’s account because Pag-IBIG will charge back any deficiency.
2.4 DST on the Deed of Absolute Sale (separate)
If the Pag-IBIG loan is used to buy a brand-new or pre-owned property, the Deed of Absolute Sale is also subject to DST under NIRC § 196 (₱ 15.00 for the first ₱ 1,000 and ₱ 15.00 for every succeeding ₱ 1,000 of the selling price, fair-market value, or zonal value, whichever is highest). This is normally borne by the buyer, outside the loan proceeds.
3. Annotation & Registration Fees
3.1 Legal basis
- Presidential Decree 1529 (Property Registration Decree) – empowers the RD to collect fees.
- LRA Circular No. 35-2019 (latest nationwide schedule) – sets specific amounts per bracket.
- Rule 141 of the Rules of Court – imposes a 1 % Legal Research Fund (LRF) on the basic fee.
- IT Service Fee – ₱ 50 per transaction (supporting the e-Title system).
3.2 How the Registry computes the fee
For a Real-Estate Mortgage:
Registration / Annotation Fee
= Basic Fee + 1 % LRF + ₱ 50 ITFBasic Fee (quick guide)
0.25 % of the loan amount up to ₱ 1 million, plus 0.20 % of the excess over ₱ 1 million, Minimum ₱ 50.
(LRA’s table gives exact peso amounts per bracket; figures below use the formula to illustrate.)
Example
| Loan Principal | Basic Fee | LRF (1 %) | IT Fee | Total Payable to RD |
|---|---|---|---|---|
| ₱ 2,000,000 | ₱ (1,000,000 × 0.0025) + (1,000,000 × 0.0020) = ₱ 4,500 | ₱ 45 | ₱ 50 | ₱ 4,595 |
| ₱ 500,000 | ₱ 500,000 × 0.0025 = ₱ 1,250 | ₱ 12.50 | ₱ 50 | ₱ 1,312.50 |
Local RDs sometimes round up to the next ₱ 10.
3.3 Other RD-related charges
| Purpose | Typical amount (May 2025) | Remarks |
|---|---|---|
| Entry fee | ₱ 30 | Per document lodged |
| Cancellation of existing mortgage | Same rate as new annotation but based on amount cancelled | Often needed in refinancing |
| Release / Cancellation fee | ₱ 20 – ₱ 200 | Paid upon full payment of loan |
The RD likewise collects fees for the issuance of a new owner’s duplicate title (₱ 1,080 base) showing the Pag-IBIG lien, and again upon cancellation of that lien.
4. Step-by-Step Fee Flow in a Pag-IBIG Loan
| Stage | Responsible Party | Fees triggered | How and when they are settled |
|---|---|---|---|
| 1 Approval & loan take-out | Pag-IBIG Fund | DST on Promissory Note / REM | Deducted from proceeds; Pag-IBIG remits to BIR |
| 2 Notarization | Borrower | Notarial fee (₱ 300 – ₱ 1,000) | Paid in cash to notary |
| 3 Registration / Annotation | Borrower (or Pag-IBIG-accredited RD runner) | RD annotation fees, IT fee, LRF | Usually advanced by borrower; reimbursed by Pag-IBIG or netted from proceeds |
| 4 Title issuance | RD | Title issuance fee; photocopy charges | Borrower cash out |
| 5 Post-release | Borrower | Cancellation fees when loan is paid in full | Paid upon request for release of mortgage |
5. Exemptions and Preferential Rules
- Socialized Housing Under RA 7279 (UDHA) and its Implementing Rules, sales and mortgages for socialized housing projects priced not more than ₱ 580,000 (HDMF ceiling effective 2024) are exempt from Capital-Gains Tax and DST on the Deed of Sale, but not from DST on the mortgage.
- Pag-IBIG Corporate Exemption RA 9679 exempts Pag-IBIG Fund itself from “all taxes, fees, charges and duties.” The benefit does not extend to its borrowers except where expressly stated in another law.
- Transfer to immediate family A refinancing from parents to child may be exempt from DST on the Deed of Donation—but the mortgage securing the new Pag-IBIG loan still pays DST.
6. Frequently Asked Questions
| Question | Quick Answer |
|---|---|
| Who really pays the DST and RD fees? | Legally the borrower; Pag-IBIG only advances or nets out the amounts. |
| Can I roll the fees into the loan amount? | Yes, if your approved loan value (80-95 % of appraisal) leaves enough head-room. |
| Are fees refundable if the loan is cancelled? | BIR DST is non-refundable. RD fees may be recouped if no entry was made yet, but practically that stage happens the same day the mortgage is filed. |
| Does Pag-IBIG give discounts to OFWs or first-time buyers? | Not on statutory taxes/fees; relief is only on interest‐rate repricing or insurance. |
| Why is my DST higher than my friend’s? | Compare loan principal, term, and date of take-out (rates changed in 2018). |
7. Practical Tips to Minimize Out-of-Pocket Costs
- Double-check the loan amount you really need. Fees are ad-valorem; borrowing ₱ 1.9 M instead of ₱ 2 M saves ₱ 7,500 in DST.
- Pay the difference in cash if your purchase price is only slightly above a bracket. A ₱ 5,000 cash add-on could keep your loan within the lower fee tier.
- Submit complete documents the first time. Every re-lodging at the RD incurs another entry fee and runner’s charge.
- Time your take-out near month-end so Pag-IBIG files DST faster and your title with mortgage annotation comes out sooner—important if you plan to resell or transfer.
- Keep certified true copies of the stamped BIR Form 2000-OT and RD Official Receipts. They are required for loan assumption, refinance, or tax audit later.
8. Compliance Checklist (borrower’s perspective)
- Signed and notarized Loan Agreement / Promissory Note
- Signed and notarized Real-Estate Mortgage
- BIR Form 2000-OT (eDST) stamped “Paid”
- Registry of Deeds Official Receipt for annotation fees
- New Owner’s Duplicate Title bearing Pag-IBIG lien
- Updated Tax Declaration in borrower’s name
- Fire/MRI insurance policy endorsed to Pag-IBIG
9. Conclusion
Documentary Stamp Tax and annotation fees are mandatory, statutory charges in every Pag-IBIG housing-loan transaction. DST is governed by the NIRC (TRAIN-adjusted) at ₱ 1.50 per ₱ 200 of the loan, while annotation fees follow LRA schedules at roughly 0.25 % of the first ₱ 1 M plus 0.20 % of the excess, plus minor surcharges. Although Pag-IBIG facilitates collection, the financial burden is ultimately on the borrower. Careful loan sizing, bracket awareness, and proper documentation keep these costs predictable and prevent delays or penalties. Always check the latest BIR Revenue Regulations and LRA circulars, because fee matrices can be amended by Congress or by administrative order at any time.