BIR official: More taxes can be slapped on CJ Corona’s luxury condo if selling price was ‘underdeclared’

 

My Exclusive

By Raïssa Robles

When Chief Justice Renato Corona bought his luxury penthouse overlooking a golf course for P14.5 million, the government taxed the transaction at under a million pesos.

Iluminada Lucio, acting Chief of the Asset Valuation Division of the Bureau of Internal Revenue, confirmed to me that the transaction paid the correct taxes, if based on the P14.5 million selling price of the 303.5 square meter condo unit and three parking spaces.

However, Lucio said that if it could be established that the selling price stated on Corona’s Deed of Absolute Sale was “underdeclared”, the BIR was empowered to make a reassessment of the taxes due and collect the unpaid balance.

“Dapat the Deed of Sale should reflect the true value (of the condo unit) through the selling price,” she said. “Pag hindi niya dineclare actual selling price, most likely may underdeclaration of the selling price.”

If that happens, she said, “Yes, we can still go back. The RDO (Revenue District Office) has the right to assess and collect. The seller would have the primary liability.”

Lucio’s unit has a say in real property valuation.

The seller, in this case Megaworld Corporation, paid the creditable withholding tax, while the buyer, CJ Corona, paid the documentary stamp tax – both based on the selling price.

I asked Lucio how they would find out whether or not the selling price on CJ Corona’s Deed of Absolute Sale was correct. She said they could compare the selling price given to Corona to those of other purchased properties in the same building and in the area around the same time. A marked difference would warrant further investigation.

Earlier, I wrote a piece wherein I quoted a realty broker as saying that the selling price at which CJ Corona had bought his Bellagio Tower 1 condo was “a steal” and that the taxes paid were quite low. See my story – Realty broker: Corona’s posh condo “a steal” at P14 million

Not knowing why the taxes paid were so low, I did a follow-up by interviewing BIR Revenue District Officer Gerry Dumayas who had personally signed and issued the Certificate Authorizing Registration or CAR, attesting that CJ Corona’s purchase had already paid the transaction taxes and the property could therefore be transferred to his name.

Dumayas said he had no choice but to base the taxes due on CJ Corona’s purchase on the low selling price of P14.5 million even if he had heard that other condo units were being sold at far higher rates. He said that under the law, such taxes had to be based on the highest figure among the following three: the zonal valuation set by the BIR for the condo; the market/zonal value set by the city government, in this case, Taguig; or the selling price stated on the Deed of Absolute Sale.

Problem is, Dumayas said, the BIR had no zonal valuation for residential condominiums in the richest part of Metro Manila where CJ Corona bought his condo. It only had a zonal valuation of P100,000 per square meter for land at The Fort. Since the city of Taguig used a very low market/zonal value of P19,200 per sq m for residential condominiums which was even lower than the selling price, Dumayas said he had to use the condo selling price as basis for computing the transaction taxes.

I had asked Dumayas whether he himself did not find CJ Corona’s purchase price too low. He told me that even if he had heard at that time that similar condo units were being sold at much higher prices, he had no choice but to comply with the law: use the selling price as basis without questioning its veracity.

Lucio of the Asset Evaluation Division, however, indicated to me that an RDO like Dumayas possessed a certain amount of discretion on the matter. She said that a revenue officer would be able to sense more or less the price at which condo units were being sold in one particular building. “Pero, if within the same condo, napakalaki and diperensiya sa mga presyo, magdududa sila. Bakit ganito ang pricing nitong condong ito?”

So what if CJ Corona got his condo at such a low price?

Those defending CJ Corona see nothing wrong with the Chief Justice buying an expensive condo on installment at bargain basement prices.

However, two of my commenters, named parengtony and wil15, give us the following food for thought:

Even if it turns out that Corona will say during the trial that indeed there was an in internal agreement between buyer and seller as to transferring title to buyer’s name even as installment payments are yet to be paid in full and Megaworld corroborates this with some sort of an unregistered mortgage agreement, Corona is still not off the hook because:

1. Like commenter wil15 explained earlier here, the acceptance of a huge discount is equivalent to the acceptance of a huge amount of money. It does not take a Bobby Ongpin to figure out that Corona could easily “flip” (resell) the property for 25M and make a 10m profit. If he chose not to flip, as he has, then he is sitting on at least a 15M paper profit from an investment that he has not, he claims, fully paid for.