I. Introduction

In the Philippines, the tax base for transactions involving real property is almost always tied to two things:

the fair market value (FMV) of the property, and
the date the transfer document was executed—in practice, the date of notarization.

This becomes especially important when dealing with old deeds notarized before 2011 but only presented to the BIR or the local government years later. Taxpayers often ask:

Which fair market value should apply—the value at the time of notarization, or the value at the time of BIR processing or registration?
Which tax rules and rates govern a sale or donation perfected long ago?
What proof is needed for the government to recognize a pre-2011 transaction date?

This article walks through the legal and practical rules on tax base calculation for pre-2011 notarial dates, focusing on the Philippine tax environment and real property transfers.

II. Legal Framework: Real Property Transfers and Tax Base

Several national and local taxes may be triggered when real property is transferred:

Capital Gains Tax (CGT) – on sales/exchanges of real property classified as capital asset
Income Tax – on sales of ordinary assets (e.g., real property held primarily for sale or used in business)
Documentary Stamp Tax (DST) – on deeds of sale, assignments, donations, etc.
Donor’s Tax – on transfers made by donation or when sales are considered below-value transfers
Local Transfer Tax – imposed by provinces, cities and some municipalities
Registration Fees and Related Charges – payable to the Register of Deeds (not taxes but ride on the same base)

Almost all of these require a tax base determined as the higher of:

the stated consideration (contract price), or
the fair market value of the property at the time of the transaction.

For real property, fair market value is usually derived from:

the BIR’s zonal value; and/or
the Schedule of Market Values issued by the local assessor.

By rule, the higher of those two is taken as the FMV, and the higher of price vs FMV becomes the tax base.

III. Why the Notarial Date Matters

Under Philippine law:

A sale is perfected when the parties agree on the object and the price.
However, for tax purposes and registrability, the notarized deed is key.

Once a deed of sale or donation is notarized:

It becomes a public document, with a presumption of regularity.
It typically marks the date of “execution” referred to in tax laws and regulations.
It often serves as the reference date for:
- Which law and tax rates apply; and
- Which FMV schedule applies to determine the tax base.

For pre-2011 transactions, this means:

The tax base should be computed using the FMV as of the notarial date, based on the zonal values and assessor’s schedule in force at that time—not the values that may have been issued later.
However, the BIR and LGUs may scrutinize old deeds presented late to ensure they are not antedated or simulated.

IV. Tax Base Calculation Per Tax Type (Pre-2011 Notarial Dates)

A. Capital Gains Tax (CGT) on Real Property (Capital Assets)

Who is covered (typical pre-2011 scenario):

Individuals (resident or nonresident) selling real property in the Philippines classified as capital asset;
Domestic corporations selling lands and/or buildings held as capital assets were also subject to a final tax on capital gains.

General rule for the tax base:

CGT is based on the higher of:

the gross selling price stated in the deed, or

the fair market value of the property at the time of sale (usually, the notarial date).

For pre-2011 deeds:

Identify the notarial date of the deed.
Obtain the BIR zonal value and assessor’s market value in force on that date.
Determine the FMV = higher of the zonal value and assessor’s value.
Compare:
- Contract price vs FMV as of notarial date.
The higher figure is the tax base for CGT.

Example (simple):

Deed of Sale notarized: June 15, 2010
Contract price: ₱800,000
BIR zonal value as of June 15, 2010: ₱1,000,000
Assessor’s value as of June 15, 2010: ₱900,000

Step 1: FMV is ₱1,000,000 (higher of ₱1,000,000 and ₱900,000). Step 2: Compare price (₱800,000) vs FMV (₱1,000,000). Step 3: Tax base is ₱1,000,000.

If the CGT rate is 6%, the CGT would be:

6% of ₱1,000,000
= ₱60,000.

Even if the document is filed with the BIR only in, say, 2015, the base remains the FMV as of the 2010 notarial date, not the possibly higher zonal values in 2015.

Installment sales (pre-2011)

Where a sale is on installment:

The tax base still starts from the higher of price vs FMV at the time of sale, which is tied to the notarial date.
The manner of timing CGT payment (full upfront vs per installment) is a separate issue from how the base is derived.

B. Ordinary Asset Sales (Subject to Regular Income Tax)

When real property is classified as an ordinary asset (e.g., held for sale by a real estate dealer, or used in business), the gain is subject to regular income tax, not to final CGT.

Key points:

For income tax, the tax base is generally the gain (selling price minus cost and allowable deductions).
However, for DST and local transfer taxes arising from the same transaction, the base is still the higher of contract price vs FMV as of the notarial date.
The BIR may also use the FMV as of the notarial date to challenge under-declared selling prices and adjust the income tax computation.

So, even though the computation mechanics differ from CGT, pre-2011 notarization still anchors the FMV that the BIR may use as a reference.

C. Documentary Stamp Tax (DST)

DST applies to documents such as:

Deeds of sale or conveyance of real property;
Deeds of donation, assignments, and similar instruments.

Tax base rule (simplified):

The DST on deeds of sale of real property is computed on the consideration or the fair market value, whichever is higher, at the time the document is executed (practically, the notarial date).

For pre-2011 notarial dates:

Identify the notarial date.
Determine FMV as of that date (zonal vs assessor, pick the higher).
Compare with contract price.
Use the higher amount as the DST base.
Apply the applicable DST rate then in effect.

Using the earlier example:

Notarized: June 15, 2010
Contract price: ₱800,000
FMV as of 2010 (higher of zonal/assessor): ₱1,000,000

DST base is ₱1,000,000, not ₱800,000.

If the DST rate works out to an effective 1.5% (for illustration):

DST = 1.5% of ₱1,000,000 = ₱15,000.

If the deed is only presented to the BIR after 2011, but no new deed is executed, the 2010 FMV remains the correct tax base.

D. Donor’s Tax

Donor’s tax applies when:

There is a pure donation, or
A sale is so substantially below FMV that it is considered partly a donation.

Key rule for the tax base:

Donor’s tax is based on the net gift, which starts from the fair market value of the property at the time of donation.

In practice:

Identify the date of donation (usually the notarial date of the donation deed, or the date the donee accepts, if different).
Determine FMV as of that date (zonal vs assessor, pick the higher).
Subtract any allowed deductions (if applicable).
The resulting figure is the tax base for donor’s tax.

For pre-2011 donation deeds presented later:

The FMV at the time of donation (pre-2011) is the relevant base—even if values increased after 2011.
The applicable donor’s tax brackets and exemptions are those in force at the time of donation, not later laws (like those introduced by TRAIN years later).

E. Local Transfer Taxes

Local government units (LGUs) often impose a transfer tax upon registration of deeds of sale, donation, or other transfers with the Register of Deeds.

Typical features:

The tax base is usually the higher of the consideration stated in the deed or the fair market value as per local assessor at the time of execution.
Some LGUs explicitly reference BIR zonal values, others rely purely on the assessor’s market values.

For pre-2011 notarial dates:

The assessor’s schedule of market values in force as of that date should be the one used.
If new schedules took effect after 2011, they should not retroactively increase the tax base of a transaction already perfected and notarized before that date.
However, delay in registration may still result in surcharges and interest based on local tax ordinances, even if the base stays anchored to pre-2011 FMV.

V. Deeds Notarized Before 2011 but Presented After 2011

This is the most contentious practical situation.

1. General Principles

Tax laws are generally prospective.
The taxable event (sale, donation) is deemed to occur when the contract is perfected and executed, not when the document reaches the BIR.
For genuine pre-2011 deeds, the tax base and rate should be determined using the law and FMV in force at that time, subject to penalties for late payment.

Thus, if a deed was genuinely notarized in, say, 2010:

The FMV to be used for CGT, DST, donor’s tax and local transfer tax should be the 2010 FMV.
Interest and surcharges will still accrue from the statutory due date (e.g., 30 days from sale for CGT) until actual payment, regardless of when the deed is presented.

2. The Problem of Antedating and Simulation

Because FMV and tax rates often increase over time, there is a strong incentive to “backdate” deeds to earlier years to take advantage of lower values and older tax rules.

To prevent abuse, the BIR and LGUs may:

Examine the credibility of the notarial date;
Require supporting documents (notarial register entries, receipts, possession history, etc.);
Treat obviously antedated instruments as simulations, effectively ignoring the earlier date and using the actual date of execution or filing as the taxable date.

Where the BIR believes a deed is not genuinely pre-2011, it may:

Use the FMV applicable at the time it finds the sale actually occurred (e.g., based on admissions, payments, or circumstances);
Assess deficiencies plus penalties;
In extreme cases, pursue criminal action for tax evasion or falsification.

VI. Proving a Pre-2011 Notarial Date

For a taxpayer seeking to have the pre-2011 FMV recognized as the tax base, documentation is crucial. Common evidence includes:

Original Notarized Deed
- With clear notarial acknowledgment indicating the date and the notary public’s details (commission number, place).
- With documentary stamp impressions or stamps showing they were canceled around the same time.
Notarial Register Certification
- A certification from the notary public, or from the proper court (if required), showing that the deed has a corresponding entry in the notarial register for the relevant year (e.g., 2010).
- This supports the authenticity of the notarial date.
Evidence of Consideration and Possession
- Payment receipts, checks, or bank records showing that the purchase price was paid around the claimed period.
- Affidavits and utility bills showing that the buyer took possession or used the property shortly after the claimed sale date.
Registry of Deeds Records
- Sometimes, earlier annotations or related documents in the Registry can show that the parties treated the sale as effective since the claimed pre-2011 date.
Old Zonal Values/Assessor’s Schedules
- Copies of BIR zonal value tables and assessor’s schedules applicable before 2011.
- These support the correct computation of the tax base.

The stronger and more consistent the documentary trail, the more likely the BIR and LGUs will accept the pre-2011 notarial date and its associated FMV as the proper tax base.

VII. Worked Example: Late Payment for a 2010 Sale

Facts:

Deed of Absolute Sale notarized: October 10, 2010
Presented to BIR and LGU: March 2014
Contract price: ₱2,000,000
BIR zonal value as of October 10, 2010: ₱2,500,000
Assessor’s market value as of October 10, 2010: ₱2,300,000
BIR zonal value as of March 2014: ₱3,200,000 (but this is later)

Step 1: Determine the proper FMV date.

Because the deed was genuinely notarized in 2010, the sale is deemed to have occurred in 2010.
Thus, use 2010 FMV, not 2014 FMV.

Step 2: Compute FMV as of 2010.

Higher of zonal value (₱2,500,000) and assessor’s value (₱2,300,000) is ₱2,500,000.

Step 3: Determine tax base.

Compare contract price (₱2,000,000) vs 2010 FMV (₱2,500,000).
Tax base for CGT and DST: ₱2,500,000.

Step 4: Compute CGT (assuming 6%).

6% of ₱2,500,000
= ₱150,000.

Step 5: Compute DST (illustrative effective rate, say 1.5%).

1.5% of ₱2,500,000
= ₱37,500.

Step 6: Penalties.

Even if the base is anchored to 2010 values, interest and surcharges will be computed from the statutory due date (e.g., 30 days after October 10, 2010) up to the date of actual payment in 2014.
The BIR may compute:
- Surcharge (e.g., 25% for late filing/payment), and
- Interest per annum (as allowed by law at the time), applied on the basic tax due (e.g., ₱150,000 CGT, ₱37,500 DST).

The higher 2014 zonal value of ₱3,200,000 should not be used as the tax base, as it corresponds to a later schedule and a different economic reality than the 2010 transaction.

VIII. Interaction with Later Tax Reforms (Post-2011)

Although the topic here is pre-2011 notarial dates, it is worth noting:

Later tax laws and regulations (including major reforms enacted after 2011) often changed rates, procedures, and exemptions, but did not change the fundamental principle that:

For transfer taxes, the tax base is determined at the time of the taxable event (execution of the sale/donation), using FMV applicable at that time.

Thus, for pre-2011 instruments:

The old rules on rates and brackets typically apply, even if the returns are filed or the CAR/eCAR is issued under a newer regime.
What may change is the formality of requirements (e.g., electronic systems, updated forms), but the substantive tax base remains anchored to the pre-2011 FMV.

IX. Practical Tips and Best Practices

Do not assume the current zonal value applies. Always check the FMV at the notarial date of the deed. For pre-2011 instruments, this may require digging up old zonal values and assessor schedules.
Secure documentary proof of the notarial date. Keep (or obtain certified copies of):
- The notarized deed;
- Notarial register entries;
- Proof of payment and possession;
- Other corroborating documents.
Expect penalties if you are regularizing an old deed. Even if the tax base is lower because it’s pre-2011, penalties for late payment can be substantial. It’s still generally better to settle sooner than later.
Be realistic about antedating risks. If a deed was actually executed later but artificially dated pre-2011, you risk:
- Deficiency assessments;
- Interest and penalties;
- Possible administrative or criminal liability.
Coordinate BIR and LGU positions. The BIR and LGUs both look at FMV, but sometimes apply different schedules (zonal vs assessor). Make sure your documentation can satisfy both.
Consult competent tax and legal advisors. Old transactions can be complicated, especially when combined with subsequent improvements, multiple transfers, inheritances, or adverse claims.

X. Conclusion

For pre-2011 notarial dates in the Philippines, the core principle is:

The tax base for CGT, DST, donor’s tax, and local transfer taxes on real property should be computed using the higher of the contract price or the fair market value at the time of the transaction, with the notarial date serving as the practical reference point.

Even if the deed is only filed or registered many years later, the fair market value and tax rules applicable at the time of notarization remain the basis for computing the core tax liability, while penalties and interest reflect the delay.

Understanding this framework helps taxpayers correctly compute liabilities, avoid disputes, and make informed decisions when regularizing old deeds or planning property transfers that may later be examined under changing tax regimes.