Clarification of the RMO No. 16-88

April 7, 1989 BIR RULING NO. 066-89 21 (e) 514-88 066-89 Gentlemen : This refers to your letter dated December 14, 1988 stating that BIR Ruling No. 402-88 dated August 23, 1988 held that the capital gains tax on property foreclosed extrajudicially by banks and other financial institutions shall be due only upon the consolidation of title and that the documentary stamp tax due on the transaction is to be paid at the time "the act is done or the transaction had" which shall be on or before the execution by the Sheriff of the Certificate of Sale; that on the basis of this ruling, your representative went to the concerned revenue district office to pay the documentary stamp tax required preparatory to the registration of the Certificate of Sale with the Register of Deeds; that your representative was required by the Revenue District Officer thereof to pay also the capital gains tax or else payment for the documentary stamp tax will not be accepted; and that you are of the opinion that since RMO No. 16-88 is clarificatory in nature, it applies not only to Certificate of Sale executed after its effectivity but also to Certificate of Sale prior to its enactment. cd Based on the foregoing representations, you now request a ruling to the effect that RMO No. 16-88 being clarificatory in nature could be applied retroactively to Certificate of Sale executed prior to April 18, 1988. In reply, please be informed that your request cannot be granted. This Office has consistently ruled that RMO No. 16-88 dated April 18, 1988 which allows payment of the 5% capital gains tax due on real property acquired thru mortgage foreclosure sale by financial institutions only upon consolidation of title in the name of said institutions shall be applied prospectively. (BIR Ruling Nos. 398-88, 446-88 and 514-88). Accordingly, if the mortgage foreclosure sale is held prior to April 18, 1988, RMO No. 29-86 shall govern which requires payment of capital gains tax after the auction sale but before the registration of the Certificate of Sale issued by the auctioneer conducting the auction sale. cdt Very truly yours, (SGD.) JOSE U. ONG Commissioner