Case Study : A family inherited several real properties in Metro Manila from their parents in the mid 1980s and recently sold one of their properties. Certified True Copies of the following : Transfer Certificate of Title, Tax Declaration of both Land and Improvement, Tax Clearances for Land and Improvement and traceback were also done for the previous estate taxes as three members of the family have passed away. All pertinent documents were updated and given to the Buyer and was verified by their Lawyer. The date was set for the Deed of Absolute Sale to be signed and full payment to the Seller and for the necessary government taxes such as Capital Gains Tax and Documentary Stamps Tax were prepared. The Sale was finalized several months ago.
Upon presentation of documents to the Bureau of Internal Revenue, it was then found that the Certificate Authorizing Registration ( a document released by the Bureau of Internal Revenue that states that the proper taxes due on the sale has been paid and the Title is now clear to be transferred to the new owner ) did not coincide with what was in the computer records and therefore, it was subject to investigation ( red flag ). Simply meant, if no record of payment is found in the system, how valid is the Certificate Authorizing Registration ( CAR ) ? Either a glitch in the system or probably, the Estate Tax may have never been paid.
For every property ownership that goes through Death within the family, payment for an Estate Tax is a prerequisite and is simply proven by a Certificate Authorizing Registration prior to transfer of Title to the heirs.
The concern was then brought to the Seller’s attention which was forwarded to the Firm hired by the Seller to do the documentation of the release of the Certificate Authorizing Registration ( CAR ) . The Firm insisted that they had paid the required Estate Tax then and even gave a copy of the CAR released by the Bureau of Internal Revenue then. The CAR was reviewed carefully and didn’t match with the date in system. In other words, the CAR is labeled a “Fake” as per BIR. A last ditch effort to prove that the Estate Tax was paid was done by searching for the Bank’s file on the supposed deposit made but no records were found !
Take note, all this was on going for eight months and the Buyer is now very concerned and running out of patience. All Buyers want Title transferred to their names as soon as possible !
Final Analysis : The Bureau of Internal Revenue Examiner finds the Certificate Authorizing Registration ( CAR ) presented by the Firm invalid and unacceptable as the payment of Estate Tax doesn’t appear in their records. So what could have gone wrong ? Most likely, the Liason of the Firm coursed the transaction through a Fixer who may have been a part of a syndicate. The Liason who has been with the Firm may have also been a victim of the Fixer !
Since this experience, we recommend that for every documentation received from Seller for “due diligence” ( Certified True Copy of Title, Certified True Copy of Tax Declaration, Certificate Authorizing Registration ), should be verified with the respective department for authencity. Clearly states, a Certified True Copy of the Title should be verified with the Register of Deeds ; Certified True Copy of the Tax Declaration both Land and Improvement should be verified with the Assessor’s Office and Certified True Copy of the Certificate Authorizing Registration should be verified with the Bureau of Internal Revenue.
Take note that times have changed. In fact, we as Licensed Real Estate Brokers prefer that all this “Documentation” process should now be processed by a Service Provider unless offered by a Liason of the Licensed Broker and will take responsibility for any irregularities. Fees for this “Reputable Service Provider” ranges from Php 20,000 – Php 40,000 and excludes any fees or taxes due the Seller and Buyer.
Just assure yourselves that you are dealing with someone credible and to AVOID FIXERS !!!
have a great day !
Robert G. Sarmiento Properties
Professional Affiliation :
Real Estate Broker’s Association of the Philippines
President, Greenhills Chapter 2008-2009
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Email : [email protected]
Website : www.robertgsarmiento.org
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