Printing, Distribution, Accountability and Issuance of Certificates Authorizing Registration of Transfers of Real Property

December 1, 1982 REVENUE MEMORANDUM ORDER NO. 37-82 SUBJECT : Printing, Distribution, Accountability and Issuance of Certificates Authorizing Registration of Transfers of Real Property TO : All Internal Revenue Officers and Others Concerned Information reaching this Office is to the effect that Certificates of Clearance/Exemption are being issued in the different revenue regional and district offices by those authorized to do so without proper control and procedure. Because of this, there have been instances uncovered where fake certificates of clearance are presented to Registers of Deeds, thus making it possible for title to real property to be transferred to the buyer even without the payment of the capital gains tax due from the seller. In order to clearly define the responsibility of the revenue officials authorized to issue certificates and to ensure the collection of capital gains taxes due on sales of real properties, the following procedure is hereby promulgated for compliance by all concerned: I. Certificates Authorizing Registration to be Accountable Forms : A. Heretofore, all certificates of clearance and certificates of exemption shall be denominated Certificates Authorizing Registration and shall be printed as an accountable form with consecutive serial numbers printed at the upper right hand corner thereof. Each of such forms shall be printed in four copies and bound in pads of fifty sets to each pad. The forms shall be printed only upon the written authority and approval of the Commissioner of Internal Revenue and shall be in such forms as shown in Annexes 1 and 2 attached hereto and which are made integral parts hereof. B. The Accountable Forms Division in the National Office shall be the custodian of the blank forms of the certificates. It shall maintain a permanent record book where entries are to be made everytime blank forms of such certificates are requisitioned by officials authorized to do so. The record book shall contain the following data: 1. serial numbers of the certificates issued to the requisitioning officer 2. date of requisition 3. requisitioning office 4. name and designation of requisitioning officer C. Serial numbers of Certificates Authorizing Registration Certificates Authorizing Registration on account of payment of the capital gains tax due or exemption from capital gains tax shall be numbered consecutively, starting from CGC-00001 and CGE-00001, respectively, with the components thereof having the following signification: CGC - Capital Gains Clearance CGE - Capital Gains Exemption 00001 - main serial number II. Officers Authorized to Requisition Certificates A. Only Revenue Regional Directors are authorized to requisition Certificates Authorizing Registration (BIR Forms 1954 and 1954A) from the Accountable Forms Division. B. Revenue District Officers shall in turn requisition their certificates from the Regional Directors. C. General Form No. 8.05 for requisitioning accountable forms shall be used for this purpose. All such certificates shall be accountable by the abovementioned officials. D. It shall be mandatory for the Chief, Accountable Forms Division to fill the requisition of the revenue regional directors for Certificates and to forward the requisitioned forms to the Revenue Regional Director after indicating in the record book the pertinent information required. E. Regional Directors shall keep a record of the Certificates issued to Revenue District Officers showing the following: 1. Inclusive serial numbers of certificates issued listed in numerical sequences 2. Revenue District Officer to whom issued 3. Date issued 4. Person to whom certificates were delivered. III. Issuance, Disposition and Reporting of Certificates A. Requirements for Issuance of Certificates 1. The Vendor/Transferor shall be required to (i) present the original copy of the latest Tax Declaration of the real property sold; and (ii) a certified true copy thereof as duly certified by the corresponding Provincial/City Assessor. After examination of the documents, the original copy of the Tax Declaration shall be returned to the Vendor/Transferor. However, the certified true copy thereof shall be retained by the Revenue District Officer which he shall cause to be filed with the docket of this case. 2. Where the Vendor/Transferor claims expenses of sale in computing his capital gains tax, the documentary evidence supporting such claim must be submitted and caused to be filed with the docket of the case for post-audit purposes. 3. Where the fair market value of the real property sold/disposed as shown in its corresponding latest Tax Declaration is higher than what is shown in the deed of sale/disposition, the amount in excess of the purported selling price shall be prima facie treated as a gift subject to the donor's gift tax. The Revenue District Officer shall not issue the BIR Certification unless, in this connection, the corresponding (i) capital gains tax; and (ii) donor's gift tax have been paid. 4. Likewise, payment of the corresponding documentary stamp taxes due on the instrument of sale/disposition shall be made a condition precedent for the issuance of the BIR Certification; and 5. The payments of the foregoing internal revenue taxes shall be clearly shown on the face of the BIR Certification. The detailed computation of the applicable internal revenue taxes found to be due shall also be shown in the Certification. If not practical to show the same on the face of the Certification, such detailed computations shall be shown at the back thereof. B. Disposition of Copies of the Certificate The authorized revenue official shall prepare the required certificates in four (4) copies to be issued and distributed as follows: Original to the taxpayer for presentation to the Register of Deeds Duplicate to be retained by the issuing revenue official Triplicate to be attached to the docket of the case Quadruplicate to be sent to the Regional Director. C. Record-Keeping of Certificates of Clearance A certificate register shall be kept by every Revenue District Officer where all certificates issued shall be listed in numerical order. The register shall contain the following information: 1. serial number of certificate 2. date issued 3. name and address of seller and buyer 4. date of sale 5. nature and location of real property sold 6. land area in square meters 7. selling price 8. capital gains tax paid 9. if exempt, reason for exemption. D. Report of Certificates Authorizing Registration Issued All Revenue District Officers shall prepare a list of Certificates (ANNEX 3) issued during the month which shall be transmitted to the National Assessment Office not later than the 10th day of the succeeding month, copy furnished the Regional Director. The quadruplicate copies of the certificates shall be attached to the copy of the report transmitted to the Regional Director. IV. Verification of Certificate Register and Monthly Report The Revenue Service Chief, National Assessment Office, may at any time authorize a spot verification during office hours of the certificate register of any Revenue District Officer, as well as the monthly reports of certificates issued, to determine the number of certificates issued and those unissued as of a particular date, so as to ensure that every certificate is duly accounted for. Any provision of Revenue Memorandum Order No. 21-80 dated May 28, 1980 which is inconsistent herewith is hereby revoked or amended accordingly. The procedure and the forms prescribed herein shall be in force beginning January 1, 1983. Strict compliance herewith is enjoined. RUBEN B. ANCHETA Acting Commissioner ANNEX 1 Form No. 1954 Certificate Authorizing Registration (Taxable Capital Gains on Real Estate Transactions) ANNEX 2 Form No. 1954-A Certificate Authorizing Registration (Taxable Capital Gains on Real Estate Transactions) ANNEX 3 List of Certificates Authorizing Registration