OUR tax laws provide that before documents transferring real properties are registered, it is first required that the Bureau of Internal Revenue (BIR), through its commissioner or duly authorized representatives, has certified that such transfers have been reported, and the corresponding taxes thereon have already been paid.
To comply with this, the BIR issues Certificates Authorizing Registration (CARs). It is also required that the Registry of Deeds (RD) notify the regional director or the revenue district officer of the place where his office is located, if he discovers that property has been transferred without the proper payment of the taxes due on such transaction. Thus, the law creates a dual relationship between the BIR and the RDs under the Land Registration Authority (LRA) in relation to transactions involving real properties.
Currently, the LRA has set in place a Land Titling Computerization Project (LTCP), which allows for full computerization of its operations, and all documents, deeds and instruments involving real properties are electronically registered. Similarly, the BIR has also implemented the electronic CARs System for the processing and generation of CARs. To integrate these two systems, the BIR, under the Department of Justice, and the LRA executed a memorandum of agreement (MOA) to evidence their agreement to set up the necessary infrastructure to link the two systems that each agency has set in place. This was executed to enable the LRA, through its RDs, to verify all real-property transfers against BIR clearances and, simultaneously, to enable the BIR to check that all of such transfers have the corresponding BIR clearances.
Under the said MOA, the BIR undertook to ensure the implementation of a comprehensive information campaign to inform the public of the changes brought about by the automated verification process adopted by the two agencies. Thus, in line with this, the BIR, on April 17, issued Revenue Memorandum Circular (RMC) 28-2015, which published the full text of the joint memorandum circular (JMC) between the LRA and the BIR dated April 6, 2015. The JMC implements the use of the LRA’s Philippine Land Registration and Information System (Philaris) for the automated verification of the BIR eCARs.
The LRA-BIR JMC, as published by RMC 28-2015, covers all transactions involving transfer of real properties processed by RDs requiring the presentation of the eCAR, which shall be automatically verified using the Philaris prior to the processing of a transfer transaction. Generally, the eCAR-verification procedure will involve the following steps:
- The BIR will provide the LRA with data relevant to the eCAR by directly updating the LRA-BIR eCAR database;
- The BIR shall issue the eCAR only after successfully updating the LRA-BIR eCAR database;
- The eCAR shall contain a bar code, which will be scanned by the RD for verification, after the entry into the Electronic Primary Entry Book of the eCAR as a supporting document of a transaction;
- The eCAR presented shall then be automatically validated against the data provided by the BIR in the LRA-BIR eCAR database, and only transactions that have validated eCARs shall be approved by the RD; and
- The LRA shall provide the BIR relevant data relating the eCAR to its corresponding Certificate of Title.
Though eCARs are already being issued by most BIR offices, manually issued CARs are still valid, provided they were issued within one year prior to the implementation of the eCAR system. Those that have not yet been presented within their validity period can no longer be used. Thus, they are to be replaced by eCARs by the concerned revenue district officer/LT division chief, if the new eCAR system is already being implemented within their Revenue District Office (RDO). If not, a new CAR will be manually issued, instead.
The circular also provides that only one eCAR will be issued per title in case of registered land and/or improvement, and one eCAR per tax declaration in case of those which are unregistered. Such eCARs will have a validity period of one year from the date of their issuance and, if not presented by the taxpayer within such period, a new eCAR will be issued. If the eCAR is lost or destroyed, it will just be reprinted by the RDO/LT division chief concerned.
The circular reiterates that there shall be no registration of any deed or instrument resulting in the transfer of real property, unless the BIR has issued the corresponding eCAR, which should now be properly verified under the LRA-BIR eCAR Verification System Project. When the RDs issue new certificates of title over real properties under names of the transferees, the RD should annotate on the canceled certificates of title the following information:
- eCAR number;
- Date of issuance of eCAR;
- RDO number;
- Name of revenue district officer; and
- Type and amount of taxes paid
The implementation of this integrated automated system between the LRA and the BIR is a welcome development in setting up a more efficient process for registration of real properties. Not only does it serve the purposes of the law, but it also serves to provide efficient service to taxpayers who wish to comply with the legal requirements for registration of their newly acquired properties.
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The author is a junior associate of Du-Baladad and Associates Law Offices (BDB Law), a member-firm of World Tax Services Alliance.
The article is for general information only and is not intended, nor should be construed, as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported therefore by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at esther.weigand@bdblaw.com.ph, or call 403-2001, local 340.