Mr. Manolo Samson

September 20, 2007 BIR RULING [DA-502-07] 041-01 Mr. Manolo Samson 146 E. Rodriguez Avenue Concepcion, Marikina City S i r : This refers to your letter dated August 16, 2007 stating that on January 9, 2007, a Deed of Absolute Sale was executed by Spouses Manolo P. Samson and Lenita S. Samson in favor of Van Mico International Co. Ltd., Inc., a domestic corporation duly registered with the Securities and Exchange Commission (SEC) with principal office address at 162 Almond Nut Street, San Roque, Marikina City, covering a vacant lot located at Green Park Village Phase IX, Barangay Dela Paz, Pasig City containing an area of 1,230 square meters and covered by TCT No. 52681 issued by the Register of Deeds for Pasig City under Tax Declaration No. E-010-02919 issued by the City Assessor Office of Pasig City; that the corresponding capital gains tax in the amount of P442,800.00 had been paid on January 12, 2007 as evidenced by BIR Tax Payment Deposit Slip of Land Bank, Pasig City Hall Branch and the documentary stamp tax in the amount of P110,700.00 has likewise been paid on January 12, 2007 as evidenced by BIR Tax Payment Deposit Slip of Land Bank, Pasig City Hall Branch; that the tax base for the computation of the capital gains tax and documentary stamp tax was P5,500.00 per square meter, the zonal value of residential lots located at Pasig Green Park Phase IX, Barangay Dela Paz, Pasig City; that the zonal value for residential lot was used by the taxpayer because the Tax Declaration No. E-010-02919 classified the lot as residential and a certification to that effect was issued on February 21, 2007 by Atty. Benjamin C. Angeles, City Assessor of Pasig City upon the request of Mr. Stephen Samson in compliance with Revenue Audit Memorandum Order No. 1-88 dated February 4, 1998; that however, the Revenue District Officer of Revenue District Office No. 043, Pasig City ordered the recomputation of the capital gains tax and documentary stamp tax on the sale on the ground that said property is located in a predominantly commercial area and must be classified as commercial for purposes of zonal valuation of real properties for Revenue District No. 43, Pasig City; and that as such, its zonal value shall be P10,000.00 per square meter, the zonal value of commercial properties in Pasig Green Park Phase IX, Barangay Dela Paz, Pasig City. aCHDAE Based on the foregoing representations, you now request for the recomputation of the capital gains tax and the corresponding documentary stamp tax based on the predominant use of real properties located at Green Park Village, Phase IX, Barangay Dela Paz, Pasig City. In reply thereto, please be informed that this Office had already occasioned to rule on the matter, when it said in BIR Ruling No. 041-01 dated September 18, 2001 , that ". . . the classification and valuation of properties located in . . . have already been determined under Department of Finance Order No. 06-2000, supra , the properties along . . . had already been classified as residential and commercial. The zonal valuation thereof had already been determined. Residential properties are valued at P20,000.00 and commercial properties are valued at P25,000.00 per square meter. Further, the real property under consideration is used for residential purposes as shown in Tax Declaration Nos. xxx and as certified by the Office of the City Assessor, . . . . Therefore, the RDO of RDO No. 038 has no jurisdiction to determine the classification or valuation of the properties located in pertinent area. The computation of the capital gains tax and documentary stamp tax shall be based on the zonal value of residential real properties . . . . A contrary ruling would improperly penalize a taxpayer who had faithfully relied on the Schedule of Zonal Valuation for Real Property issued by the BIR." AEIHaS Inasmuch as the above-cited ruling is in all fours similar to the instant case, this Office holds that the recomputation of the capital gains tax and documentary stamp tax based on the zonal value of P10,000.00 per square meter for commercial properties is erroneous. Instead, the tax base to be used for the said taxes should be P5,500.00 per square meter, since the properties located at Green Park Village, Phase IX, Barangay Dela Paz, Pasig City, are predominantly used for residential purposes. 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. HTASIa Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service