Imposition of Business Tax on a Mining Company by a Municipality Where Said Mining Company Has No Branch or Sales Outlet

October 21, 1988 BIR RULING NO. 514-88 21 (e) 000-00 514-88 Gentlemen : This refers to your letter dated August 2, 1988 requesting that a certificate authorizing transfer of title to real property be issued in your favor for the purpose of registering the Sheriff's Certificate of Sale, covering the properties you have acquired by virtue of a Sheriff's sale, with the Register of Deeds. It is represented that you are a government financing company; that Mr. Honorato Oregano, Revenue District Officer of Ilagan, Isabela had assessed you for the payment of capital gains tax in the amount of P128,114.67 on the Sheriff's Certificate of Sale you intend to register with the Register of Deeds inspite of Revenue Memorandum Order No. 16-88; and that you will initiate consolidation of titles to the properties after the lapse of the one year period of redemption reckoned from the date of registration. In reply, please be informed that RMO No. 16-88 dated April 18, 1988 applies to real property classified as capital asset purchased by a bank, finance and insurance company thru mortgage foreclosure sale on or after April 18, 1988. In other words, RMO No. 16-88 is applied prospectively. Accordingly, if the mortgage foreclosure sale in this case was held on or after April 18, 1988, RMO No. 29-86 as amended by RMO No. 16-88 shall govern the same, wherein the 5% capital gains tax which is based on the selling price shown in the mortgage foreclosure sale (Sheriff's Certificate of Sale) should be paid you as mortgagee-transferee upon your consolidation of titles to the said properties. (BIR Ruling No. 298-88) On the other hand, if the mortgage foreclosure sale was held prior to April 18, 1988 then RMO No. 29-86 prior to its amendment by RMO No. 16-88 shall govern the same wherein the 5% capital gains tax which is based on the selling price shown in the mortgage foreclosure sale (Sheriff's Certificate of Sale) should be paid by you as mortgagee-transferee after said foreclosure sale but before the registration of the Certificate of Sale issued by the auctioneer conducting the foreclosure sale. (BIR Ruling No. 138-87) cdta Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner