Request for Exemption from the Coverage of Memorandum Circular No. 34-91

April 20, 1992 BIR RULING NO. 125-92 91 000-00 125-92 Puruganan Chato Chato Tarriela & Tan Law Offices 9th Floor Strata 200 Building, Emerald Avenue Ortigas Commercial Complex, Pasig, Metro Manila Attention: Atty . Reno R . Gonzales, Jr . Gentlemen : This refers to your letter dated August 7, 1991 requesting in behalf of your client, Ms. Jasmin E. Acua, exemption from the coverage of Memorandum Circular No. 34-91. It is represented that on December 22, 1982, Mrs. Lina Espiritu executed a Deed of Donation in favor of her daughters, Mesdames Jasmin E. Acua, Mary Joy E. Cayetano and Cynthia E. Cayetano; that by virtue of the said deed, Mrs. Espiritu conveyed to her three abovenamed daughters a parcel of land situated at Tandang Sora Avenue, Tierra Bella Subdivision, Diliman, Quezon City; that the property is registered under Transfer Certificate of Title No. 209291 of the Register of Deeds of Quezon City; that the said deed was duly notarized by Atty. Rudegelio D. Tacorda on the same date and entered in his notarial registry as Document No. 139, Book No. II, Page No. 28, Series of 1982; that per its 1979 Tax Declaration, the assessed value of the property is P123,000.00; that the said Deed of Donation was, however, never registered with the Registry of Deeds, Quezon City, nor the donor's tax thereon paid within the period prescribed by law; that to the date title to the property remained in the name of Mrs. Espiritu although your client, Ms. Jasmin Acua, for herself and in behalf of the other donees, have since been paying the real property taxes thereon; that sometime in March 1991, your client retained your services in connection with the registration of the deed and payment of all taxes and fees required for the transfer of the donated property in the names of the donees; that on April 1991, you requested from the BIR Revenue District Office, North Sector, a computation of the donor's tax due on the conveyance of the said property; that in response, you were furnished by the said BIR Revenue District Office, the total donor's tax due based on the 1979 Real Property Tax Declaration amounting to P8,052.00 inclusive of increments thereon; that aside from the aforesaid request, you likewise requested list of the required documents and papers for the payment of the donor's tax; that these include the birth certificate of the donees, affidavit of relationship, certificate of improvement, the Tax Declaration of Improvement for the taxable year 1982 and the Transfer Certificate of Title of the property; that on May 11, 1991, after having gathered all the required documents, you undertook to pay the donor's tax on the said donation; that upon presenting the said required documents you were, however, informed by the Officer of the Day at the said Revenue District Office that the donor's tax liability of your client should be computed on the basis of the 1988 BIR Zonal Valuation of the donated property pursuant to Revenue Memorandum Circular No. 34-91 resulting in increasing of your clients donor's tax liability to P344,980.00; and that you are of the opinion that your client should be required to pay on the original computation of P8,052.00 and not of the recomputed amount of P344,980.00 since there was in fact no ante-dating of the Deed of Donation in question. In reply, please be informed that under No. 2 of Revenue Memorandum Circular No. 43-91 clarifying among others, Revenue Memorandum Circular No. 34-91 dealing on ante-dating of Deed of Sale involving real properties, in order to remove doubts as to what rules to apply and when to impose penalties for late filing of tax return and payment of tax, the following rules are hereby prescribed. a. When there is only a delay in the presentation of sales document, the rules on the kind of tax, rate of tax, zonal or fair market value, obtaining at the date of notarization shall be applied but the penalties for late filing of return and payment of tax shall be imposed. There is a delay in the presentation of sales document when the taxpayer submits said document to the BIR after 30 days from date of notarization. The delay could be in terms of days, months or even years. For this purpose, taxpayers have the burden of proving by the submission of other documents such as a cancelled checks, official receipts, contract to sell, or certification of the archive official, to show that there is no ante-dating of public instrument. b. When the document is presented to the BIR after three months from date of notarization and the taxpayer cannot present additional receipts or documents to show that the same is not ante-dated, when the rules applicable at the time of presentation of the document shall be applied but no penalty shall be imposed. It is expected that by applying the current rules, a higher tax will be collected from the taxpayer than when the old rules plus penalties had been imposed. From the foregoing rules, and since the facts of the instant case where properly supported by documentary evidence, this Office is of the opinion as it hereby holds that the Deed of Donation in question was not ante-dated as envisioned in Revenue Memorandum Circular No. 34-91 and therefore, the Donor's Tax liability of your client, Mrs. Lina Espiritu should be computed under rule 2(a) of Revenue Memorandum Circular No. 43-91 to arrive at the correct amount of donor's tax due under the circumstances. Very truly yours, JOSE U. ONG Commissioner of Internal Revenue