by Jake Jefferson S Riego
In the advent of automation of businesses and operational transactions both in the private and public sector, the government is constantly challenged to meet the ever-growing demand for efficient and reliable services. The Bureau of Internal Revenue (BIR), in particular, with its vital role in the Philippine economy, is not exempted from the demand to maneuver through these technological challenges.
In its effort to innovate its services, the BIR has introduced the Electronic Certificate Authorizing Registration (eCAR) System. The BIR, in developing the eCAR System, aims to ensure the delivery of efficient government services and to likewise guarantee accurate payment of transfer taxes. Accordingly, the issuance of Certificate Authorizing Registration (CAR) has been converted from the original manual processing to one that is automated.
As a brief background, a CAR is a document issued by the BIR relative to the process of transferring title and ownership of properties. The issuance of a CAR means that the BIR duly certifies that all taxes and dues in relation to the sale or any other mode of transferring of ownership or title of property have been properly paid in full. Thus, it is a mandatory requirement to secure such certification before the title to the property subject of conveyance is transferred to the new owner.
Previously, the processing and issuance of CAR is manually done. However, it is notable that there were instances in the past where spurious CARs had been presented to the Registry of Deeds (RD) in order to facilitate transfer of ownership. To address this issue, the BIR has developed the eCAR System. The said database is a stand-alone system of the BIR for the automated preparation and issuance of eCAR. This BIR-developed system is likewise linked with the Land Registration Authority (LRA) thru the LRA-BIR eCAR Verification System (LRA-BIR CVS). Using this system, the LRA-RD will be able to verify on-line the authenticity of the eCAR presented in support of the transfer.
With the introduction of the eCAR System, the manual issuance of CAR has been effectively discontinued. Revenue Regulation (RR) No. 3-2019 which prescribes the use of the eCAR System provides that in order to stop the usage of spurious CARs, the eCAR shall bear a security feature of having a system-generated barcode. The barcode inscripted in the eCAR is an optical and machine-readable representation of the eCAR data that includes details of transaction bearing the specified or specific code. The eCAR shall likewise be printed on an accountable security paper.
The issuance of RR No. 3-2019 strengthens the crusade of both the BIR and the LRA in fully eliminating the presentation of spurious CAR/eCAR. The said revenue regulation prescribes that an eCAR duly issued by the BIR and retrieved by the RD from the LRA-BIR eCAR database, whether for taxable or tax-exempt transactions, shall be the only basis for the RD to effect the transfer. Any eCAR not recorded in the database is deemed spurious.
Further, RR No. 3-2019 has extended the validity period of eCAR to five (5) years reckoned from the date of issuance for purposes of presenting the same to the RD.
The same revenue regulation, specifically Section 6 thereof, provides that all manually-issued CARs that are either due for revalidation or has not been presented to the RD within the validity period and manually-issued CARs with partial transfer of properties as prescribed in existing BIR issuances are considered expired, and as such, shall no longer be valid for presentation to the RD. The said CARs shall be replaced with an eCAR by the concerned Revenue District Officer or Large Taxpayers Division who issued the CAR upon presentation of the expired manual CAR.
Section 4 of RR No. 3-2019 provides that in case of transfer of a registered land and/or improvement(s) thereon, one (1) eCAR per title shall be issued. In case of unregistered land and/or improvement(s) thereon, one (1) eCAR shall likewise be issued for each tax declaration. On the other hand, a separate eCAR shall be issued for all personal properties.
In order to achieve the objective of preventing the transfer of ownership of real properties without the proper and accurate payment of transfer of taxes, good coordination with the proper government agencies is necessary. Thus, the BIR has joined forces with the LRA through a Memorandum of Agreement (MOA). The MOA has mandated the LRA to utilize the eCAR System. Pursuant to the MOA, the BIR has been obligated to upload its data to the LRA’s PHILARIS or Philippine Land Registration and Information System. It is further provided that both systems of the BIR and LRA are linked to make use of the LRA-BIR CVS. Such mandate aims to ensure an accurate and secured exchange of information.
The same revenue regulation likewise mandates that the Provincial, City and Municipal Assessor’s Offices of all Local Government Units (LGUs), banks, and other issuers of stock certificates, bonds and similar paper securities are mandated to accept only the eCAR printed and issued by the BIR before any transfer of ownership is changed to the new owner. The eCAR System, however, in meantime is limited to the use of BIR and LRA until such time that all LGUs, banks and other entities processing the transfer of properties are ready with their systems to link with the BIR eCAR System in the future.
Venturing into innovation highlights the continuing effort not only of the BIR but of the government as a whole to deliver efficient public service. Notwithstanding these initiatives, the BIR and the LRA are however constantly reminded that these linkages between government agencies entail accountability and an utmost duty to ensure a secured exchange of information. Truly, it is a paramount concern that data should always be well-protected from any threat of security breach. Needless to say, the public should always be assured that the security of their information will not be exposed, in any way, to any compromise.
Jake Jefferson S. Riego is a Supervisor from the Tax Group of KPMG R.G. Manabat & Co. (KPMG RGM&Co.), the Philippine member firm of KPMG International. KPMG RGM&Co. has been recognized as a Tier 1 tax practice and Tier 1 transfer pricing practice by the International Tax Review.
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