October 7, 1997
DAR OPINION NO. 112-97
MARO Henry A. Pascual
Department of Agrarian Reform
Municipal Office
Bangui, Ilocos Norte
Dear MARO Pascual:
This has reference to your request for legal opinion whether or not estate tax is included in the exemption as provided for under Section 66 of R.A. No. 6657, to 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."
We wish to inform you that only transactions involving transfer of ownership under R.A. No. 6657 is tax exempt. Strictly speaking, "estate tax is not among the taxes included as exempt under Section 66 of R.A. No. 6657. Considering, however, that since estate tax is mandated by law to be levied on the transmission of the properties of the decedent to his heirs by reason of the former's death, we may in effect treat it as of the same class or nature as that of a real property tax as contemplated under the abovequoted proviso. Although an estate tax is payable to the national government while a real property tax (which is a tax on the property itself and not on the transfer of the property from the decedent to his heirs) is payable to the local government, both taxes partake of the nature of a personal obligation legally and rightfully due and demandable by the government from the landowner or his heirs. Accordingly, an estate tax shall likewise be deductible, without penalty or interest, from the compensation to which the landowner or his heirs may be entitled under the provisions of R.A. No. 6657 in the same token as a real property tax.
From the aforegoing, it is hereby submitted that the Register of Deeds concerned should go ahead and register the subject titles notwithstanding the non-payment of estate taxes since the same shall eventually and necessarily be deductible from the aforesaid compensation of the landowner or his heirs under R.A. No. 6657. In this way, the successful implementation of the Comprehensive Agrarian Reform Program (CARP) will not be unduly derailed or frustrated.
We hope to have clarified the matter with you.
Very truly yours,
(SGD.) ARTEMIO A. ADASA, JR.
Undersecretary for Legal Affairs, and Policy and Planning
Copy furnished:
Dir. Nestor Acosta
DAR Region I
Jean Lee Bldg., Lingsat
San Fernando, La Union
PARO Rogelio Arquilio
DAR Provincial Office
Laoag City, Ilocos Norte