January 9, 2003
DAR OPINION NO. 01-03
Datu Uga I. Adil
73 Quezon Avenue
Cotabato City
Dear Mr. Adil:
This refers to your letter dated 04 October 2001 requesting for the interpretation of Section 9 of Executive Order No. 229 which provides: DCaSHI
"SECTION 9. Voluntary Offer to Sell. The government shall purchase all agricultural lands it deems productive and suitable to farmer cultivation voluntarily offered for sale to it at valuation determined in accordance with Section 6. Such transactions shall be exempt from the payment of capital gains tax and other taxes and fees." (Section 9, E.O. No. 229, dated 22 July 1987)
You stated that in accordance with the abovequoted provision, you should be exempt from paying real property tax or refunded of the amount already paid since you offered the subject agricultural lands under the voluntary offer to sell (VOS) scheme; that, however, your request for refund was not given due course based on the opinion rendered by the City Legal Officer of Cotabato City stating, among others, that: "the 'other taxes and fees' referred to in Section 9 of R.A. No. 6657 [sic] do not include realty taxes imposable by the local government unit. It refers to other taxes in relation to any transaction incidental to the voluntary sale of the subject land. Realty taxes are due to real property whether the same are offered for sale or not to the government pursuant to R.A. No. 6657." Hence, your request.
Section 66 of R.A. No. 6657 (Comprehensive Agrarian Reform Law) provides, quote:
"SECTION 66. Exemption from Taxes and Fees of Land Transfers. — Transactions under this Act involving a transfer of ownership, whether from natural or juridical persons, shall be exempted from taxes arising from capital gains. These transactions shall also be exempted from the payment of registration fees, and all other taxes and fees for the conveyance or transfer thereof: Provided, That all arrearages in real property taxes, without penalty or interest, shall be deductible from the compensation to which the owner may be entitled." (emphasis supplied)
Section 9 of Executive Order No. 229 should be read and interpreted in conjunction with Section 66 of R.A. No. 6657. The contemplated exemption from "other taxes and fees" as provided in both provisions of law refers specifically to other taxes and fees related to the subject conveyance or transfer under said laws and does not include real property taxes which are deductible from the landowner's compensation.
It is clear under Section 66 of R.A. No. 6657 that arrearages in real property taxes, without penalty or interest, shall be deducted from the compensation due the landowner. Moreover, it should be noted that under Section 24 of R.A. No. 6657, the rights and responsibilities of the beneficiary shall commence from the time the DAR makes an award to him, which means that the FB is responsible for the payment of the real property taxes that accrue on the land only from the date of said award.
We hope to have clarified the matter.
Very truly yours,
(SGD.) VIRGILIO R. DE LOS REYES
Undersecretary for Policy Planning
and Legal Affairs Office