BIR Ruling [DA-268-96]

July 23, 1996 BIR RULING [DA-268-96] Ms. Corazon C. Cenon 19-3 Teacher's Bliss Condominium II Balongbato, Quezon City M a d a m : This refers to your letters dated February 12, 1996 and July 2, 1996 stating that a proposed Deed of Absolute Sale was entered into between Spouses Romeo and Gloria Conchino (vendors) and Spouses Jonathan and Corazon Cenon (vendees), involving one (1) unit of Bliss Condominium located at Teacher's Bliss Condominium Balintawak. Quezon City, with a floor area of 60 square meters and covered by Condominium Certificate of Title No. 10454 of the Register of Deeds of Quezon City, for a consideration of P150,000.00, provided that the vendees shall shoulder all the taxes and expenses relative to the said transaction; that the vendors have acquired said unit from the National Housing Authority (NHA) thru a Lease Purchase Agreement which was executed on August 29, 1994; that the said condominium project was constructed by the NHA pursuant to R.A. No. 4726, otherwise known as the Condominium Act; that the NHA has offered the condominium units for sale and their pro-indiviso share of the land for lease to qualified applicants; that on January 13, 1995 a certification was issued by the NHA certifying that the Teacher's Bliss Condominium located at Balintawak, Quezon City, is a low cost housing project intended to benefit teachers who belong to the low income group; and that on July 11, 1996, the NHA issued a certification to the effect that the "Teacher's Bliss Condominium II located at Barangay Balon-Bato Balintawak, Quezon City is a low-cost socialized housing project of the National Housing Authority." Field verification conducted in this case disclosed that indeed the "said property is a two-storey dwelling with an area of 24 square meters per storey which is classified as low cost housing by the National Housing Authority" and therefore recommended that the zonal valuation of P1,500.00 per square meter be used or the selling price whichever is higher as the basis in computing capital gains tax. Based on the foregoing representations, you are now requesting for a ruling as to the correct tax base for purposes of computing the capital gains tax due on the aforesaid sale of the above-described property. In reply, please be informed that pursuant to Revenue Memorandum Order No. 41-91, amplifying Section 21(e) and Section 196, both of the Tax Code, as amended, in all cases involving sale, exchange, or any disposition of real property, the tax base for documentary stamp tax purposes shall be the same as the tax used in the computation of the capital gains tax which means, gross selling price, fair market value, or zonal value of the real property, whichever is higher. Such being the case, and considering that the property sold to you by Mrs. Gloria L. Conchino for P150,000.00 has been certified to by the NHA as belonging to its low-cost socialized housing project; and likewise verified by the Revenue District Office No. 38, North Quezon City as property covered by the zonal valuation of P1,500.00 per square meter, this Office is of the opinion as it hereby holds, that the actual consideration of P150,000.00 appearing in the Deed of Absolute Sale executed by an between the spouses Romeo and Gloria Cochino and Spouses Jonathan and Corazon Cenon is the correct tax base in computing the capital gains tax and documentary stamp tax respectively imposed under Section 21(e) and Section 196 both of the Tax Code, as amended, (BIR Ruling No. 002-94 dated January 4, 1994) cdlex 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, then this ruling shall be considered null and void. cdtech Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service) By: ALICIA L. TOMACRUZ Head Revenue Executive Assistant Legal Service