Determination of Tax Base in Computation of Documentary Stamp Tax in the Sale, Exchange or Disposition of Property

August 27, 1992 BIR RULING NO. 236-92 24 105-91 236-92 Land Bank of the Philippines 119 Sen. Gil J. Puyat Ave. Ext. Makati, Metro Manila Attention: Mr . Reynauld R . Villafuerte Acting Head Banking Legal Office Gentlemen : This refers to your letter dated May 29, 1991 requesting for a ruling on whether the tax base computed per zonal valuation may be reduced or reconsidered due to the altered use of the property being assessed. It is represented that you acquired thru foreclosure a lot declared with the local assessor's office as residential/agricultural land containing an area of 2,198 square meters located at Interior Gusa, Cagayan de Oro City and covered by Transfer Certificate of Title No. T-57251; that adjacent to the said lot is a public cemetery which has no proper management, hence, the people in the area thought that subject lot is still part of the cemetery; and, that as a result, about 40% of the lot has been used by the residents of Gusa as cemetery with about 20 cadavers already buried. In reply, please be informed that pursuant to Revenue Memorandum Order No. 41-91, 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 base 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 except in sale of real property effected through public bidding, e.g. judicial sale, extrajudicial foreclosure sale, where both the 5% capital gains tax and the documentary stamp tax are computed based on the highest or winning bid price. aisadc In view thereof, the tax base in the instant case should be based on the highest or winning bid price and not on the zonal valuation. Very truly yours, JOSE U. ONG Commissioner of Internal Revenue