Sale of Land thru Public Bidding - Bases of Tax

July 8, 1993 BIR RULING NO. 300-93 SALE OF LAND THRU PUBLIC BIDDING BASES OF TAX 50 (b) 00-00 00-93 Mr. Alfredo V. Misajon Revenue District Officer, RDO 54 Revenue Region No. 6-A Iloilo City This refers to your letter dated February 2, 1993 addressed to the Regional Director, Revenue Region No. 6-A, Iloilo City, which was referred to this Office for a ruling on your following queries relative to the attached Certificates of Sale of delinquent property to the City of Iloilo: cdtech "1. The amount of consideration are incredibly low, can we not impose the zonal value? "2. Inasmuch as these are sales of assets of the City of Iloilo, is it within our legal prerogatives to ask for the Sangguniang Panlungsod Resolution showing the sale of these properties at this low price? "3. Are we not imposing additional requirements not being regularly required in other types of sale of real properties?" Documents submitted show that Ledesco Development Corporation, Florete Building, Mapa Street, Iloilo City, is the declared owner of the real properties mentioned in the Certificate of Sale in question; that the said real properties had been sold to different buyers for the amount of taxes and penalties due on the properties as bidder at public auction, and that Atty. Philip Uy, Merryville Building, Delgado Street, Iloilo City, represents the purchasers and request in their behalf for immediate issuance of a Certificate Authorizing Registration (CAR) from the Revenue District Officer. In reply, please be informed that your queries are answered as follows: 1. Under Revenue Memorandum Order No. 41-91 dated November 11, 1991 among the exceptions to the use of zonal valuation as tax base in computing the capital gains tax/creditable withholding tax and documentary stamp tax on sale, exchange and other disposition of realties are those sales of realties effected through public bidding, e.g. judicial sale or extrajudicial foreclosure sale where both the 5% capital gains tax/creditable withholding tax and documentary stamp tax are computed based on the highest or winning bid price (BIR Ruling Nos. 101-89, 118-91). Accordingly, the sale of realties in the instant case, having been effected through public bidding, the bid price rather than the zonal valuation established in the areas where the properties are located shall be used as tax base in computing the corresponding creditable expanded withholding tax on such sale transactions of the City of Iloilo. 2. Under Section 2 of the Tax Code, as amended, for the purpose of ascertaining the correctness of any return, taking a return where none has been made, determining the liability of any person for any internal revenue tax, or collecting any such liability, the Commissioner is authorized, among others, "to obtain information from any Office or Officer of the national and local governments, government agencies or its instrumentalities . . . . . . ." Such being the case, it is within the legal prerogative of this Office to ask for the Sangguniang Panlungsod Resolution showing the sale of the realties in question. 3. This Office does not impose additional requirements not being regularly required in other types of sale of real properties, considering that there are different modes of transfer or disposition of real property, each of which, in order to be valid, has to follow certain prescribed legal requirements. Thus certain requirements for a mode of transfer of realty may not necessarily be the same in the case of another mode of transfer of realty. LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue