Certificate Authorizing Registration Can Only be Issued Upon Full Payment of Capital Gains tax and Corresponding Documentary Stamp Tax Together with the Interest and Surcharge, Whenever Appropriate

October 21, 1996 BIR RULING NO. 107-96 173 000-00 107-96 Mr. Hanson G. So No. 21 Santol St., Quezon City S i r : This refers to your letter dated November 21, 1995 stating that you were the vendee of several parcels of land located in Sampaloc, Manila; that a Deed of Absolute Sale was executed by Mr. Especacio B. Villaflor sometime in January, 1991; that in good faith and without malice, the vendor was not able to cause the transfer of the title in your name for reasons beyond your control; that on May 22, 1995, said deed was notarized and presented to the BIR, Revenue District No. 32, Revenue Region No. 6, Quiapo-Sampaloc, Manila for payment of the corresponding capital gains tax and documentary stamp tax (DST); that Revenue District Officer Mr. Rogelio B. Zambarrano, affirmed the ruling of the Chief of the Legal Division, holding that the Deed of Absolute Sale between Messrs. Especacio B. Villaflor and Hanson G. So is subject to interest and surcharge for late payment of the capital gains tax and documentary stamp tax, since "the time of execution is not extended to the time of notarization of the deed as this subsequent act of the Notary Public merely attest to the authenticity of the signatures of the parties to a deed but does not confer validity or completion to the contract." casia Based on the foregoing representations, you are now requesting for a reconsideration of the aforementioned decision of Revenue District Officer Zambarrano affirming the ruling of the Legal Division of Revenue Region No. 6. In reply, please be informed that your request is hereby denied for lack of legal basis. Pursuant to Section 173 of the Tax Code, payment of the documentary stamp tax is effected by the purchase, affixture and subsequent cancellation of documentary stamps (or notation of payment of documentary stamp tax with denomination of P10.00 or more) on the documents at the time such act is done or transaction had, meaning on the date of execution or signing of the document by the parties thereto, and not at the time of its notarization. Any delay, therefore, in the purchase and affixture (or notation of DST payment, as the case may be) of the documentary stamps on the deeds of sale shall render the same subject to the statutory penalties of 25% surcharge, or plus 20% interest per annum prescribed by Sections 248 and 249 of the Tax Code, as amended. (RMC No. 57-91). Such being the case, the imposition of interest and surcharge for late filing of the capital gains tax return and payment of capital gains tax and the corresponding documentary stamp tax on the transfer of real property pursuant to a Deed of Absolute Sale executed by Messrs. Especacio B. Villaflor and Hanson G. So in January 1991, is correct. Accordingly, the Certificate Authorizing Registration (CAR) can only be issued by the Revenue District Officer upon full payment of the capital gains tax and the corresponding documentary stamp tax together with the interest and surcharge, whenever appropriate are imposed. LLjur Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue