Immediate Payment of the Capital Gains Tax

August 9, 1988 BIR RULING NO. 376-88 21 (e) 000-00 376-88 Gentlemen : This refers to your letter dated April 20, 1988 requesting in effect a ruling as to whether you must pay immediately the capital gains tax in order that you can register the Sheriff's Certificate of Sale arising from extra-judicial foreclosure proceedings. It is represented that it has been your experience that the Office of the Register of Deeds refuses to register the aforesaid Sheriff's Certificate of Sale unless the capital gains tax is paid by you with the appropriate revenue district officer. In reply, I have the honor to inform you that your query is answered in the negative. Pursuant to Revenue Memorandum Order No. 16-88 dated April 18, 1988 amending paragraph 2.2 of RMO No. 29-86, in cases of extra-judicial foreclosure sale under Act No. 3135, as amended by Act No. 4118, the 5% capital gains tax "shall become due only upon the consolidation of title in the name of the financial institution (banks, finance and insurance company) concerned." Accordingly, beginning April 18, 1988, you are required to pay the 5% capital gains tax only upon the consolidation of title in your name of the real property classified as capital asset acquired thru extra-judicial foreclosure sale from individuals including estates and trusts. However, the Sheriff's Certificate of Sale is subject to the documentary stamp tax imposed by Section 196 of the Tax Code, as amended by Executive Order No. 273 based on the bid price. The tax shall be paid on the date of issuance of the Certificate of Sale. (Sec. 173, Tax Code) Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner