Please pay extra

Once upon a time, a buyer purchased a pre-selling condo from a developer and made multiple installments. Sadly, the turnover of the condo got delayed because of the pandemic.

Once the unit was ready for turnover, the Developer asked for an extra amount stating that the increase in zonal values increased the relevant taxes that needed to be paid.

See, Developers base the taxes they pay on the higher of the (VAT-exclusive) selling price or the zonal value (i.e., if the selling price is higher, then they use the selling price; if it's the zonal value, then they use the zonal value).

But what if the zonal value increases right before the signing of the Deed of Absolute Sale/turnover of the property and it becomes higher than the selling price? Is it correct that the Developer uses the new zonal value as the basis for taxes?

No–because the reckoning date for the sale is the signing of the Contract to Sell–not the Deed of Absolute Sale. In fact, the BIR requires developers to report the sale to the BIR the moment a buyer executes a Contract to Sell. Therefore, the final payment should be the same amount initially documented in the payment schedule.