BIR Ruling [DA-058-02]

April 01, 2002 BIR RULING [DA-058-02] 40 (C) (2) (6) (c); S-40-072-2001/8-29-01 Benguet Ebara Real Estate Corporation 10th Floor, Sage House, 110 Herrera Street, Legaspi Village, Makati City Attention: Mr. Kerwin Tiu Gentlemen : This refers to your letter dated January 14, 2001 requesting for a correction of the fair market value of the property with TCT No. T-143194 located in Barangay Pittland Cabuyao, Laguna from P2,200 per square meter to P1,400 per square meter, which will be transferred by BEREC to BEREC Land, Inc. in exchange for the latter's shares in relation to BIR Ruling No. S-40-072-2001 dated August 29, 2001. In the said BIR Ruling, this Office confirmed your representation that the fair market value of the real property to be transferred is in the amount of P105,595,600.00 computed at P2,200 per square meter (47,998 sq.m. x P2,200.00). However, you now assert that the correct zonal value should be at P1,400 per square meter or in the amount of P67,197,200. In view of the foregoing, you are requesting in effect for a ruling modifying the said BIR Ruling to reflect the correct zonal value and amount of the said property. In reply, please be informed that upon proper verification of the zonal value of the property to be transferred with the Asset Valuation Division, BIR-NOB, this Office hereby confirms your request that the zonal value of the property to be transferred should be at P1,400 per square meter and not P2,200 per square meter. Thus, the second paragraph of page 2 of BIR Ruling No. S-40-072-2001 dated August 29, 2001 is hereby modified insofar that the zonal value of the real property to be transferred by BEREC to BEREC Land, Inc. in exchange for the latter's shares of stock shall be based on the zonal value at P1,400 per square meter or in the amount of P67,197,200 to read as follows: "BEREC is the registered owner of a real property, which is more particularly described herein below, to wit: TCT No. Area Acquisition Fair Market Cost Value T-143194 47,998 P36,900,183.50 P67,197,200.00" Consequently, the premium on capital stock is hereby reduced from P68,695,400.00 to P30,297,000.00. Thus, the matrix in paragraph 3, page 2 of the said Ruling should read as follows: Name No. of Amt. of Paid-Up Premium % Shares Capital Stock Amount on capital Ownership Subscribed Subscribed stock Benguet Ebara Real Estate Corporation 468,497 P46,849,700.00 P39,462,200.00 P30,297,000.00 99.999% Roland P. De Jesus 1 100.00 100.00 0.0002% Salvador P. Pabalan 1 100.00 100.00 0.0002% Alberto M. Leano 1 100.00 100.00 0.0002% Valentino O. Niocena 1 100.00 100.00 0.0002% Kerwin C. Tiu 1 100.00 100.00 0.0002% 468,502 P46,850,200.00 P39,462,700.00 P30,297,000.00 100.00% ====== =========== =========== =========== ====== This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, and/or any of the requirements imposed in this letter are not complied with, then this ruling shall be considered null and void. SIcCEA Very truly yours, Commissioner of Internal Revenue By: (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner Legal & Inspection Group