Last updated: November 3, 2025 (Philippine context). This article is for general information and does not substitute for legal advice on specific facts.

Executive summary

A bank’s sale of a foreclosed condominium is generally valid between the parties even if the Documentary Stamp Tax (DST) has not yet been paid—because sales are consensual contracts under the Civil Code.
However, failure to pay DST has powerful disabling effects under the National Internal Revenue Code (NIRC): the deed cannot be registered, cannot be used in evidence, and is not given legal effect against third persons until the proper DST (and penalties, if any) is paid and the BIR issues the electronic Certificate Authorizing Registration (eCAR).
In practical terms, title will not transfer at the Registry of Deeds without proof of DST and other tax clearances. The buyer’s risk profile, access to financing, and ability to resell or encumber the unit are all impaired until compliance is complete.

Legal framework

1) Civil Code: nature and perfection of sale

Sales are consensual (Civil Code Art. 1315 and 1475): they are perfected by mere consent upon object and price.
Form is generally for enforceability and publicity: notarization and registration are not elements of validity between the parties, but they are required to make the sale effective against third persons and to allow registration.

2) National Internal Revenue Code (NIRC): DST on real property conveyances

DST is imposed on “deeds of sale and conveyances of real property.”
Timing and filing: DST becomes due upon the making/signing/acceptance/transfer of the taxable document; filing/payment is done via the BIR’s DST return (e.g., BIR Form 2000-OT under current procedures).
Effect of non-payment (NIRC “effect of failure to stamp” rule): a document not duly stamped (i.e., without the proper DST) shall not be recorded, nor used in evidence, nor given legal effect until the tax and penalties are paid and the stamps are properly affixed/cancelled.
Surcharges/interest/compromise: the NIRC provides administrative additions to tax for late payment; these accrue until compliance.

Key implication: DST non-payment usually does not void the sale between bank and buyer, but it blocks registration and enforceability steps until cured.

3) Land Registration Authority (LRA) and Registry of Deeds (ROD) practice

No registration without tax clearances. The ROD requires BIR eCAR and official proofs of payment of DST, capital gains tax (or creditable withholding tax, as applicable), and local transfer tax before accepting a deed for registration and issuing a new Condominium Certificate of Title (CCT).
Notarization is also required for registrability; a private (unnotarized) deed cannot be registered.

4) Special context: banks, foreclosure, and ROPOA

Banks acquire foreclosed assets (often called ROPOA—Real and Other Properties Acquired) via judicial or extrajudicial foreclosure. After the redemption period, title is typically consolidated in the bank’s name, then the bank resells the unit.
Tax characterization (overview only): banks’ ROPOA are generally treated as ordinary assets; tax consequences (e.g., VAT vs. capital gains tax, and creditable withholding tax) depend on facts such as classification, VAT registration, and use in business. Regardless of the income tax/VAT posture, DST on the deed of sale remains separately due.

Is a bank’s sale valid without DST payment?

A. As between the bank and the buyer

Yes, typically valid: The absence of DST does not per se invalidate the consensual sale between parties. Ownership may transfer obligationally (the bank is bound to convey; the buyer is bound to pay), and the parties may enforce duties once DST is settled to unlock evidentiary and registration avenues.

B. As to third persons and the public registry

No opposability until compliance: Without DST (and resulting eCAR), the deed cannot be recorded, the CCT cannot be transferred, and third persons are not bound to recognize the buyer as registered owner.
Practically, lenders will not accept the unit as collateral, and resale will be difficult, because the buyer lacks registered title.

C. In court or administrative proceedings

Admissibility bar: A deed lacking DST is not admissible in evidence until the tax is paid with penalties. This is curable—once paid, the evidentiary bar is lifted.

Related tax and regulatory touchpoints in condo foreclosures

On consolidation of title in the bank
- Foreclosure leads to a Certificate of Sale, a final deed after redemption lapses, and consolidation. These steps have their own DST touchpoints (e.g., conveyance/mortgage/assignments), separate from the bank-to-buyer conveyance.
On the bank-to-buyer resale
- DST on the deed of sale of the condo unit.
- Income tax/VAT:
  - Capital gains tax (CGT) generally applies to capital assets; however, ROPOA of banks are commonly treated as ordinary assets, in which case creditable withholding tax (CWT) and possibly VAT may apply, depending on facts.
- Local transfer tax (city/municipal) and registration fees.
BIR eCAR
- ROD requires eCAR referencing the specific CCT and deed. No eCAR, no registration—even if the parties already executed and notarized the deed.
Condominium-specific clearances
- Condominium dues/assessments: Developers/associations typically require statement of account/clearance before issuing move-in or turnover documents. Arrears may attach to the unit; parties often negotiate who settles these.
- Right of first refusal / restrictions: Check the Master Deed, By-Laws, and annotated restrictions on the CCT. Some projects require developer/association consent to transfer.

Consequences and risks of closing without DST compliance

Registration risk: Inability to transfer the title blocks ownership formalization.
Enforcement risk: The deed may be unusable in evidence until DST is paid.
Financing risk: Banks and buyers’ lenders will not proceed without clean tax compliance and registrable documents.
Penalty risk: Surcharges, interest, and compromise accrue for late DST payment.
Chain-of-title fragility: Any subsequent buyer from the original buyer inherits the same registration blockage until the first conveyance is regularized.

Who should pay DST, and when?

Allocation: Parties are free to allocate DST by contract (common practice: buyer pays DST, seller/bank pays CGT or CWT; VAT allocation varies).
Default: In the absence of stipulation, taxes follow the law, but commercial custom often governs who shoulders which tax.
Timing: Pay promptly upon execution of the deed (or as set in BIR rules—generally within the monthly filing cycle) to avoid penalties and to enable eCAR issuance.

Curative steps if a sale closed without DST

Compute and pay the DST (including surcharges/interest/compromise).
Secure the eCAR from the BIR (submit deed, tax proofs, IDs, CCT, and other documentary requirements).
Register the deed at the Registry of Deeds with: notarized deed, eCAR, proof of DST, CGT/CWT/VAT payment as applicable, local transfer tax receipt, tax clearance, real property tax clearance, and condo association clearance (if required).
Obtain the new CCT in the buyer’s name.

Effect of cure: Once paid and stamped, the deed becomes registrable and admissible; third-party effectiveness is restored upon registration.

Practical drafting pointers for bank ROPOA sales

Tax allocation clause “Buyer shall pay the Documentary Stamp Tax and local transfer tax. Seller shall pay applicable capital gains tax (or creditable withholding tax) and any VAT, if due. Each party shall cooperate in securing the BIR eCAR.”
Closing conditions precedent “The Parties shall notarize the Deed of Absolute Sale and jointly process DST payment and eCAR issuance. Transfer at the Registry of Deeds shall occur within ___ days from eCAR release.”
Post-closing cooperation “Seller shall execute any supplemental deed or affidavit required by the BIR/ROD and deliver original owner’s duplicate CCT, tax clearance, and association clearance.”
Risk allocation for dues and utilities “Condominium assessments, utilities, and penalties as of Closing Date shall be for Seller’s account; amounts accruing after Closing Date shall be for Buyer’s account.”
Disclosure of encumbrances List all liens/annotations (e.g., Notice of Lis Pendens, restrictions, easements) and require their cancellation prior to or at closing, or price in the risk.

Frequently asked questions

1) Is a DST-unpaid bank deed void? No. The sale is typically valid between the parties but disabled for registration and evidentiary use until DST is paid.

2) Can I move in without DST compliance? Possibly, if the bank turns over possession. But you will not get title in your name, and you’ll have difficulty obtaining financing or reselling.

3) Can I register first and pay DST later? No. ROD will not accept the deed without eCAR and proof of DST (and other taxes) paid.

4) Who pays DST in practice? Often the buyer, but it can be negotiated. Spell it out in the contract.

5) What if the bank insists the buyer handle all taxes? This is negotiable. Ensure the purchase price reflects the tax burden and that the timeline for eCAR and registration is realistic.

Checklist: compliant bank sale of a foreclosed condo

Due diligence: CCT, annotations, tax declarations, arrears, developer/association clearances
Executed and notarized Deed of Absolute Sale (or Deed of Assignment)
DST paid and return filed; official receipts retained
CGT (or CWT) and, if applicable, VAT paid; BIR eCAR issued
Local transfer tax paid; tax clearance and RPT up to date
ROD submission and new CCT issued to buyer
Turnover of possession, keys, and association records/clearances

Bottom line

A bank’s sale of a foreclosed condominium remains a valid contract between bank and buyer even without DST payment, but it is legally crippled until DST and related taxes are settled: no registration, no opposability, and no admissibility of the deed. For real-world purposes—title transfer, financing, security, and resale—DST compliance (with eCAR) is indispensable.