Prescribing Guidelines for the Review, Verification, and Investigation of Papers Submitted to the Register of Deeds for the Purpose of Transfer of Real Properties

July 28, 1987 REVENUE MEMORANDUM ORDER NO. 20-87 SUBJECT : Prescribing Guidelines for the Review, Verification, and Investigation of Papers Submitted to the Register of Deeds for the Purpose of Transfer of Real Properties TO : All Internal Revenue Officers Concerned In the initial examination conducted under RSO No. 53-86, dated August 5, 1986, it was found that some documents submitted to and registered by the Register of Deeds affecting the conveyance of real properties disclosed that some BIR clearances, authorizing the transfer of title to real property, confirmation receipts for capital gain tax, documentary stamp tax, and donor's tax were found spurious or fake resulting in the loss of substantial revenues to the government. Moreover, it was found that some "Deed of Sale" were made to appear to have been executed before the amendment of the capital gains tax law in 1979 in order to avoid payment of capital gains tax. Any deficiency tax due from such transactions will prescribe in ten (10) years from date of discovery. cd In view of the foregoing, and in order to protect the interest of the government, there shall be created in the Collection Office a special investigating team whose work will be assisted and/or cooperated by the authorized representative of the Land Registration Authority and the National Bureau of Investigation. The composition of the team shall be designated by a Revenue Special Order to be issued by this Office. I. Powers and Duties of the Special Team - The Special Team shall have the following powers and duties: a) To examine/review documents relating to registration and transfer of real property in the Register of Deeds, such as, but not limited to, BIR clearance, deed of conveyance, confirmation receipts for payment of capital gains, donor's, or documentary stamp tax; cd i b) Obtain machine copies of these documents initially suspected as spurious or fake from the Register of Deeds, or any other office concern upon proper receipt thereof; c) Submit a list of the documents to the Assistant Commissioner for Collection, accompanied with a progress report on a weekly basis; d) Request for the necessary records, documents, or dockets of any case from the Regional Offices, investigating units, or offices with the Bureau of Internal Revenue; and e) Obtain/examine other documents, summon, and take testimony from both government and private agencies, offices, or persons in accordance with the power of the Commissioner under section 7 of the National Internal Revenue Code, as amended. II. In investigating the criminal aspect of the case, the team shall assist the authorized representative of the National Bureau of Investigation by - a) Furnishing them copies of the documents obtained from the Register of Deeds; b) Provide clerical support during the investigation of the cases by the NBI agents; c) Assist the NBI Agents in serving summons and subpoenas addressed to taxpayer-vendors and other parties/witnesses; and d) Participate in the interrogation of the witnesses for the purpose of ascertaining the actual market value and consideration of the real estate transaction. III. In ascertaining the deficiency capital gains tax, documentary stamp tax and donor's tax, if any, the team shall - a) Prepare for the signature of the Assistant Commissioner for Collection, the request addressed to any Regional or National Offices within the Bureau, for the docket or record/s, if any of taxpayers whose documents filed with the Register of Deeds were initially found to be defective, spurious or fake; b) Recommend to the Assistant Commissioner to recommend for the issuance of "Authority to Investigate" for the signature of the Commissioner, after showing prima facie evidence that there is fictitious payment or under payment of capital gains tax, documentary stamp tax or, donor's tax due to insufficient consideration; cdt c) Prepare for the signature of appropriate authorities, summons and subpoena "duces tecum" requiring witnesses to produce documents relevant to the investigation of deficiency taxes; d) Issue a preliminary notice of assessment, for the signature of the Assistant Commissioner for Collection, for any deficiency tax found to be due; e) Prepare the final notice of assessments, for the signature of the appropriate authorities and send follow-up collection letters; f) Prepare the warrants of distraint, levy or garnishment, for the collection of the tax and execute the same; g) Prepare a monthly report under BIR Form No. 40.00 and submit the same to the Receivable Accounts Division for its inclusion in the General Control Ledger; and h) Perform any other activities in order to achieve the purposes for which the team was created. IV. The team should be entitled to the following : a) Transportation allowance for the purpose of serving summons and subpoena duces tecum issued by the NBI Agents, and for the purpose obtaining documents from other government agencies as indicated above. b) A petty-cash fund of P5,000 subject to auditing rules and regulations, and subject to replenishment for petty expenses for obtaining machine copies of documents from the office of the Register of Deeds and other Offices. V. Authority of the Assistant Commissioner for Collection - The Assistant Commissioner is authorized to ask assistance from the Revenue Regional Director or Revenue District Officers in case the investigation shall be extended to places outside Metro Manila. This Order shall take effect immediately. (SGD.) BIENVENIDO A. TAN, JR. Commissioner