July 25, 1994

DAR OPINION NO. 50-94

Mr. Pedro M. Garcia

Facilities Centre

548 Shaw Boulevard

Mandaluyong City

Dear Mr. Garcia:

This has reference to your letter dated 17 June 1994 seeking the opinion of this Office on the following queries, to wit:

1.         What are the DAR rules and regulation regarding the sale of area retained area?

2.         Is there a need to file an application for conversion for an area of a little more than 1 hectare?

3.         Is it enough that I subdivided the retained area and sell it to those who wish to have a place to build their homes?

4.         Do I have to make a subdivision plan for such a small area?

5.         Can I established a selling price or impose a price based upon agreement of the parties?

6.         Do I have to pay capital gains tax on every sale, according to the agreed selling price?

Anent your first query, DAR Administrative Order No. 1, series of 1989 requires the landowner to execute an affidavit that the property sold is his retained area or is a portion of said retention. Moreover, the buyer must execute an affidavit that the aggregate area of his 5 hectares, pursuant to the first paragraph of Section 70 of RA 6657 (Comprehensive Agrarian Reform Law or CARL). The landowner must likewise file an application for PARO Certification that the property involved is part of his retained area. Attached is a copy of DAR AO 1, s. of 1989 for reference.

Anent your second and third queries, there is a need to file an application for conversion to enable the landowner to legally convert an agricultural land (regardless of area) to non-agricultural purposes.

Anent your fourth query, if you are selling your property to private individuals, then we believe that a subdivision plan is necessary to determine the metes and bounds of the area covered by the sale. However, if the sale is thru an approved Voluntary Offer to Sell under CARP, the survey shall be under DAR Supervision.

As regard your fifth query, if made in favor of private individuals, then you may sell it at the price agreed upon between you and the vendees. However, if under VOS, valuation shall be determined by the Land Bank of the Philippines according to DAR Administrative Order No. 6, Series of 1992. (copy attached)

Anent your last query, if the transfer is under an approved Voluntary Offer to Sell, you need not pay capital gains tax pursuant to Sec. 66 of CARL. However, if it, is not made in favor of a CARP Beneficiary, then each sale is subject to capital gains to tax.

We hope we have clarified matters for you.

Very truly yours,

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

Copy furnished:

OSEC