Procedure for Issuing Certification for Purposes of Registration of Real Properties Under the Schedular Capital Gains Tax Law

October 1, 1979 REVENUE MEMORANDUM ORDER NO. 18-79 SUBJECT : Procedure for Issuing Certification for Purposes of Registration of Real Properties Under the Schedular Capital Gains Tax Law TO : All Revenue Service Chiefs, Chiefs of Branches, Revenue Regional Directors, Revenue District Collecting Officers and Others Concerned A. CERTIFICATION REQUIREMENT Pursuant to Section 34(h) of the National Internal Revenue Code as amended by Batas Pambansa Blg. 37, capital gains realized from the sale or other disposition of real property by citizens of the Philippines or resident aliens shall be subject to a final schedular capital gains tax. No registration of any document transferring real property shall be effected by the Register of Deeds unless the Commissioner or his duly authorized representative has certified that such transfer has been reported and the tax therein imposed, if any, has been paid. B. POLICY It is the policy of this Bureau, to expedite the issuance of certifications of capital gains tax payment or exemptions therefrom (hereinafter referred to as "certification") required by the law and thus to avoid unnecessary delay in the processing of applications for such certifications. Accordingly, the following procedural rules are hereby promulgated and shall be strictly observed by all concerned. C. REVENUE OFFICERS AUTHORIZED TO ISSUE CERTIFICATION The Revenue Regional Director or the Revenue District Officer (hereinafter referred to as the "authorized revenue officer") under whose administrative jurisdiction the taxpayer falls, is hereby authorized to issue the certification, the form for which is prescribed in Annex "A" hereof, to be presented by a casual seller of real property to the Register of Deeds. The said authority to issue certification shall not be delegated to any other revenue officer or employee. D. SCOPE OF CERTIFICATION Certification will be issued to an applicant who sells real property under the following circumstances: (1) The capital gains tax as declared in the return is fully paid. (2) Portions of the capital gains tax due or payable up to the time of certification are actually paid in cases where the taxpayer elected to pay the tax in installment. (3) The capital gains tax is exempt under Section 35 of the National Internal Revenue Code or under special law. (4) The capital gains tax it not required to be paid because the (i) the-real property sold is used in the seller's trade or business (ii) the real property was held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business (e.g., the seller is engaged in the business of buying and selling real property) (iii) The real property was offered for rent (5) The seller elects to report the capital gain under Section 21, in relation to paragraph (a), (b), (c) and (d) of Section 34 of the Tax Code, where the property was sold to the government or any of its political subdivisions or agencies or to a government-owned or controlled corporation. (6) The capital asset transaction resulted in a loss. E. PROCEDURE FOR ISSUANCE OF CERTIFICATION 1. Application for issuance of a certification . The filing of a capital gains tax return on BIR Form No. ______, including a copy of the instrument of sale or exchange or disposition, with an authorized revenue officer shall constitute and will serve as an acceptable application for issuance of a certification. 2. Processing of the application (a) The declaration contained in the capital gains tax returns shall not be investigated for purposes of issuing the certification. A separate Revenue Memorandum Order prescribing the procedure for processing capital gains tax returns and investigation thereof will be issued. The authorized revenue officer shall see to it that the return contains adequate information necessary to identify the real property sold and to be transferred and registered with the Register of Deeds. (b) If the capital gain is taxable, the seller must be required to present the (1) Revenue Tax Receipt, together with the Confirmation Receipt, or the Revenue Official Receipt, as the case may be, evidencing payment of the capital gains tax declared per return; and (2) The seller's copy of the capital gains tax return. Capital gain from deferred-payment sales which do not qualify for installment sales reporting under Section 43(b) of the Tax Code (whether or not title was retained by the vendor or transferred to the vendee) is nevertheless subject to the capital gains tax. (c) If the taxpayer claims that the capital gains is exempt under existing special laws, a sworn declaration (BIR Form No. ____) must be attached to his application for issuance of a certification. (d) If real property is sold in installment and the seller qualifies for reporting of the capital gain in installment, the authorized revenue officer shall require the presentation of Revenue Tax Receipt (together with the Confirmation Receipt) or the Revenue Official Receipt, as the case may be and should see to it that the capital gains tax corresponding to the installment payments already received by him were paid on time. (e) After the applicant for issuance of a certification has complied with the above documentation requirements, the authorized revenue officer shall issue a certification in a form prescribed for each of the situations described in paragraph D ( SCOPE OF CERTIFICATION ) G. DISPOSITION OF COPIES OR CERTIFICATION . The authorized revenue officer shall prepare copies of the required certification to be distributed as follows: 1. Original to the seller for presentation to the Register of Deeds. 2. Duplicate to be retained by the authorized revenue officer. 3. Triplicate to be forwarded to the Direct Taxes Division. 4. Quadruplicate to the Administrative Branch. Additional copies may be prepared for the taxpayer. All revenue officials and employees concerned are hereby enjoined to be guided accordingly. cdt EFREN I. PLANA Acting Commissioner