Amendment of Transitory Rules on Valuation of Real Property for Internal Revenue Tax Purposes

May 12, 1987 REVENUE AUDIT MEMORANDUM ORDER NO. 2-87 SUBJECT : Amendment of Transitory Rules on Valuation of Real Property for Internal Revenue Tax Purposes TO : All Internal Revenue Officers and Others Concerned Pending establishment of real property zonal values for internal revenue tax purposes, pursuant to the provisions of Section 16(e) of the National Internal Revenue Code, as amended by Presidential Decree No. 1994, and to achieve the objective of limiting discretion on valuation of realty without in the process unduly prejudicing the Government's interest, Paragraph 2 of Revenue Audit Memorandum Order No. 3-86 dated May 19, 1986, as amended by Revenue Audit Memorandum Order No. 3-86A dated June 10, 1986, is hereby further amended, to read as follows: cd i "2. Real property valuation during transitory period . Pending final determination of zonal values and as a short-run measure to establish a more realistic basis for real property valuation, the following internal revenue taxes shall be assessed either on the basis of the selling price of the real property as shown in the deed of sale or the fair market value thereof, whichever is the higher amount. The transitory valuation rules shall be as follows: (a) In general, the fair market value of the real property (land and/or improvement) per its latest tax declaration filed in the Provincial/City Assessor's Office, shall be increased by ten per cent (10%) thereof, to cover inflationary value; (b) If the real property is located in exclusive villages or subdivisions within the jurisdiction of Revenue Regional Office No. 4-B, the same shall be increased by fifty percent (50%); (c) If the real property is classified in the tax declaration as a commercial or industrial property, the same shall be increased by fifty percent (50%), regardless of regional location; (d) If the real property is classified as a fishpond, the same shall be increased by fifty percent (50%) also regardless of regional location. 2.1 Income tax on capital and ordinary gains from real property transactions and documentary stamp tax on deeds of make and conveyance of real property; 2.2 Estate tax; 2.3 Donor's tax; and 2.4 Other applicable taxes. If the taxpayer does not agree with the said 10% or 50% increase, based on the fair market value per the said latest tax declaration of the real property, the certificate to be issued by the corresponding Revenue District Officer authorizing registration of the real property as required under existing rules and regulations shall be plainly marked "TENTATIVE FAIR MARKET VALUE FOR INTERNAL REVENUE TAX PURPOSES PENDING ESTABLISHMENT OF THE APPLICABLE ZONAL VALUE". Upon establishment of the zonal value applicable to the property in question, the assessment shall be revised accordingly. If the taxpayer does not interpose any objection against the said 10% or 50% increase, the fair market value computed in accordance with the above prescribed rules of valuation shall be considered final, regardless of the zonal value that may later be established." EFFECTIVITY . This Order shall take effect fifteen (15) days after its publication in the Official Gazette. (SGD.) BIENVENIDO A. TAN, JR. Commissioner