Bureau of Local Government Finance Opinion

June 2, 1998 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Atty. Oswaldo C. Santos 99 West Point Street Cubao, Quezon City S i r : This refers to your letter dated March 27, 1998 requesting opinion on the manner of determining and computing the correct transfer tax collectible by the local government units if a deed of absolute sale was executed and notarized sometime way back 1972 but the same was applied for payment of transfer tax only in 1998. The issue is whether the computation of the said transfer tax should be based on the prevailing market value then in 1972 plus the appropriate penalties and interest up to 1998, or the present zonal valuation of the property covered. It is informed that as a matter of policy, this Bureau does not express official views on hypothetical queries. However, for information purposes only, enclosed is a copy of the 2nd Indorsement dated December 26, 1996 of this Bureau addressed to the In-Charge of Office, Office of the City Treasurer of Makati, the pertinent portion of which is quoted hereunder: ". . . under the same Section 135, it is clear that the tax base should only be either the total consideration involved in the acquisition of the property, or its fair market value which, it may be presumed, is the market value of the subject property reflected or indicated in the prevailing Schedule of Market Values prepared by the City Assessor and duly-enacted by the Sangguniang Panlungsod. It must be borne in mind that local government affairs and operations are governed by the LGC and, therefore, unless there are express and explicit provisions that a local tax shall be based on zonal values prescribed by the BIR or any valuation determined by a national agency, the same may not serve or be utilized as basis for determining a local tax." CcaDHT It may be stated, therefore, that the transfer tax should be based on the total consideration involved in the transaction, or on the fair market value of the property which is the market value of the subject property reflected or indicated in the Schedule of Market Values prepared by the City Assessor and duly-enacted by the Sangguniang Panlungsod prevailing at the time of the transfer of the property, whichever is higher. Very truly yours, (SGD.) LORINDA M. CARLOS Executive Director