When claiming capital gains tax exemption, the law presumes the applicant will be using the full amount of the sale proceeds to purchase a new home.
If, for example, the applicant will only be utilizing 30%, then he has to pay capital gains tax on the 70%. This is why in BIR Form 1706, there's a line for "Unutilized Portion".
For example, if an elderly couple sold their house in a gated subdivision for P100 Mn, and was planning to purchase a condo for P30 Mn, then they would have to pay capital gains tax on the P70 Mn, or equivalently P4.2 Mn. The savings then would only be P1.8 Mn (P30 Mn x 6%).
If the couple filed CGT exemption for the full value of the house (placed the full amount of P6 Mn in escrow), they will be penalized 25% surcharge and 20% annual interest on the P4.2 Mn that was supposed to be paid from the beginning. The BIR expects that they should have only placed P1.8 Mn in the escrow and paid the BIR P4.2 Mn.
The BIR will bill them for the P4.2 Mn and the penalties when they submit the documents for the release of funds from the escrow.