Lilia O. Castillo

December 19, 2008 BIR RULING [DA-(PV-003) 563-08] 6 (E); 24 (D) (5); 196; #041-2001 Lilia O. Castillo No. 796, G. de Borja St. Pateros, Metro Manila Madam : This refers to your letter dated December 2, 2008 requesting for a ruling regarding the proper zonal valuation to be applied in the computation of capital gains tax and documentary stamp tax on the sale of a parcel of land where the subject realty is classified in the Tax Declaration as "ricefield", although at present, the real properties adjacent to the same are being utilized as residential. DSIaAE It is represented that on April 9, 2008, you sold an unregistered parcel of land, through a Deed of Absolute Sale, located at Barrio Ususan, Taguig City, covered by Tax Declaration No. FL-011-01882 containing an area of 7,957 square meters in favor of Household Development Corporation, a domestic corporation; that you entered into the said sale on your behalf and as attorney-in-fact of Leticia R. de Borja, Jacoba B. Doroteo, Aurora B. Torres, Corazon O. Mag-iba, Miguelito B. Limaco, Rogelio B. Limaco, Jr. and Isidro B. Limaco; and that the Tax Declaration covering the property classified the subject realty as "agricultural", although at present, the real properties adjacent to the same are being utilized as "residential". In reply, please be informed that No. 2 (b) of the "Certain Guidelines in the Implementation of Zonal Valuation of Real Properties for RDO No. 44 Pateros/Taguig, which is attached to the Department of Finance Order No. 30-93 dated April 5, 1993", provides, to wit: "CERTAIN GUIDELINES IN THE IMPLEMENTATION OF ZONAL VALUATION OF REAL PROPERTIES FOR RDO NO. 44 PATEROS/TAGUIG xxx xxx xxx 2. PREDOMINANT USE OF PROPERTY. xxx xxx xxx b) THE PREDOMINANT USE OF OTHER CLASSIFICATION OF PROPERTIES LOCATED IN A STREET/BARANGAY/ZONE, REGARDLESS OF ACTUAL USE SHALL BE CONSIDERED FOR PURPOSES OF ZONAL VALUATION." It is the considered opinion of this Office that the afore-quoted guidelines apply in cases where a classification has already been prescribed by the Assessor's Office in the respective Local Government Units where the subject real property is located and the BIR likewise has already prescribed a zonal value for said particular classification. However, the subject realty, although classified as agricultural and a corresponding zonal value for agricultural land has been prescribed by the BIR, the same is not presently being used as such while the adjacent properties therein are being utilized as residential. SaCIDT In this case, the classification and valuation of the properties located in Barangay Ususan, Taguig City have already been determined. Under Department Order No. 30-93, supra, the properties located in the "All Other Streets" had already been classified as commercial, residential and agricultural. The zonal valuation thereof had already been determined. Commercial properties are valued at P5,000.00 per square meter, residential properties are valued at P2,500.00 per square meter and agricultural properties are valued at P2,000.00 per square meter. It should be noted that the real property under consideration, although classified as agricultural, the predominant use of other classification of properties located in all "Other Streets"/Barangay Ususan, Taguig City is "Residential". Hence, for purposes of computing the capital gains tax and documentary stamp tax on the sale of the subject realty covered by Tax Declaration No. FL-011-01882, the tax base to be used for determining the fair market value pursuant to Section 6 (E) of the Tax Code of 1997, as amended, shall be residential which is valued at P2,500.00 per square meter. (Department Order No. 30-93 dated April 5, 1993 and No. 2 (b) of the Certain Guideline in the Implementation of Zonal Valuation of Real Properties for RDO No. 44 Pateros/Taguig) IESAac Accordingly, for purposes of computing the capital gains tax and documentary stamp tax on the sale of an unregistered parcel of land covered by Tax Declaration No. FL-011-01882, the zonal value for residential real properties located at "All Other Streets" in Barangay Ususan, Taguig City shall be used. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be discovered that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service