Single Sale by Public Auction of Various Shares of Stocks of Several Firms Requires Single CGT Return

February 5, 1998 BIR RULING NO. 013-98 33 (2) (c)-000-00-013-98 The Law Offices of King Capuchino Tan & Associations 2nd Floor, Belman II Building Quezon Avenue corner Cordillera Street Quezon City Attention: Atty . Lincoln L . Tan , Jr . Gentlemen : This refers to your letter dated October 16, 1977 stating that your client, Marcopper Mining Corporation (Marcopper), a domestic corporation duly registered and organized under Philippine laws and engaged in the mining business, is the owner of various shares of stock of different corporations; that as a consequence of the accidental spillage of mine tailings from Marcopper's tapian pit into the Boac River system last March 25, 1996, the DENR issued a cease and desist order on Marcopper resulting in its total stoppage of operations; that thereafter, the DENR cancelled Marcopper's Environmental Compliance Certificate (ECC) thereby making the cessation of operations of the company permanent, or until such time that the ECC is restored by the DENR; that due to these unfortunate events, Marcopper defaulted in all its loan obligations with the various creditors, one of which is its loan with MR Holdings Limited (MR Holdings), thus forcing the latter company to finally enforce collection through a foreclosure proceeding last September 15, 1997 over the personal properties owned by Marcopper and mortgaged to MR Holdings to secure the former's loan obligation; that as a normal occurrence, the public auction sale of the mortgaged personal properties of Marcopper consisting of different shares of stock in several companies, among others, yielded only one bidder, MR Holdings itself; and that on final notice including receipt of the Certificates of Sale over the foreclosed properties, consisting mainly of shares of stock of different corporations, Marcopper, at great efforts and through the forced use of other assets, caused the payment of the documentary stamp taxes due on the transaction, while the company submitted a capital gains tax return with the BIR showing a capital loss on the forced sale transaction over the same shares of stock. prcd Based on the foregoing, you now request for confirmation of your opinion that the single sale of different shares of stock of several corporations by Marcopper in favor of the bidder, MR Holdings, constitutes only one (1) sale transaction requiring only one (1) capital gains tax return. In reply, we confirm your opinion that the single sale of different shares of stock of several corporations by Marcopper in favor of the bidder, MR Holdings, in the public auction last September 15, 1997 constitutes only one (1) sale transaction having been done at the same time by the same parties. Accordingly, only one (1) capital gains tax return is required in view of Section 7(a)(2) of Revenue Regulations No. 2-82 which provides, that: "(2) Tax on gains on sale of shares of stock not traded through any local stock exchange . The tax on net capital gains shall be paid by seller on a per transaction basis upon filing the required return within 30 days following each sale or other disposition of shares of stock." (emphasis supplied) Very truly yours, (SGD.) LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue