July 6, 1994

DAR OPINION NO. 41-94

Chairman Celso D. Gangan

Commission on Audit

Commonwealth Avenue

Quezon City

Dear Chairman Gangan:

This has reference to your request for DAR comment regarding the claim of Ms. Maria A. Matti for a refund of the penalty imposed for the delayed payment of real estate taxes. Said request for refund is anchored on Section 66 of RA 6657, which provides:

"SECTION 66.        Exemptions 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)

It is clear from the aforequoted provision that only arrearages in real property taxes are deductible from the compensation due the landowner under CARL. It is likewise clear that neither penalty nor interest is deductible from said compensation. Since the law is clear, no interpretation is necessary. The interpretation called for pertains to whether or not the phrase "without penalty or interest" found in said Section 66 amounts to a condonation of said penalty and interest.

It is noted that while the law under said Section 66 ensures the payment of arrearages on real property taxes by providing their deductibility from the compensation due the landowner under CARL, it likewise provides that no penalty or interest on said arrearages are so deductible. There is therefore no other conclusion except that the payment of said penalties and interests on lands transferred to beneficiaries pursuant to CARL has been condoned. Said condonation is believed applicable to unpaid penalties and interest as of the date of the effectivity of CARL on 15 June 1988 and only with respect to lands placed under CARP coverage. With specific application to Ms. Matti's claim for refund, it is believed that since the penalties unpaid as of 15 June 1988 were condoned whatever penalties she may have paid after said date should be refunded to her as she had no obligation to pay the same in the first place.

Very truly yours,

(SGD.) HECTOR D. SOLIMAN
Assistant Secretary
Legal Affairs Office

Copy furnished:

Clifford C. Burkley

Head Executive Assistant

DARCO, Q. C.

Doc. No. 94060470