December 2, 1998

DAR OPINION NO. 116-98

ATTY . DANILO S. VELASQUEZ

Chief, Legal Services Division

DAR Provincial Office

Naval, Biliran

Dear Atty. Velasquez:

This refers to your inquiry dated 09 October 1998 on whether or not CARP Implementors should stop processing Land Distribution Folders involving lands whose taxes remain unpaid and therefore no Tax Clearance can be produced to complete the documentation of the land sought to be covered under CARP.

Section 66 of R.A. No. 6657 provides:

"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."

Based from the aforequoted provision of law, transactions and documents, which are required or necessarily related to or connected with the implementation of the mandate under CARL to acquire and redistribute the land are exempt from taxes and fees. Otherwise stated, Section 66 of CARL exempts from taxes and fees all documents and certifications issued by all government agencies and instrumentalities which are required for the processing of the land transfer claim in pursuance of CARP implementation.

In view of the above tax exemptions, we submit that CARP implementors can proceed in the processing of Land Distribution Folders. Moreover, even assuming that there is non-payment of taxes, where the same are due (e.g., estate taxes), CARP implementation should nonetheless continue. Taxes partake of the nature of a personal obligation which are legally due and demandable by the government from the landowner or his heirs, thus, the same should perforce be paid and settled by the latter to the former. Furthermore, as explicitly provided in the aforecited provision of law, all arrearages in real property taxes shall necessarily be deductible from the compensation of the landowner or his heirs.

It is the DAR's primary mandate to acquire and distribute lands to as many tenants and farmworkers as possible, hence, to stop or suspend the processing of land distribution, folders by reason of mere non-payment of taxes would unduly delay or derail the implementation of the Program and frustrate the very purpose for which the law was enacted and envisioned. The CARP coverage documentation process must therefore proceed without interruption and should never be put at the mercy of other persons' inability or delinquency in the payment of their legally demandable tax obligations. Accordingly, proper representation with the Office of the Bureau of Internal Revenue (BIR) or local government unit concerned should be made informing them, along with the landowner, that the land subject of non-payment of tax shall nonetheless be covered under CARP (inspite of the absence of a tax clearance) and that should the taxes still remain unpaid, the DAR through the LBP shall be constrained to automatically deduct the unpaid taxes from the compensation to which the landowner may be entitled and the same shall outrightly be paid to the taxing authority concerned.

Please be guided accordingly and we hope to have enlightened you on the matter.

Very truly yours,

(SGD.) DANILO T. LARA

Undersecretary for Legal Affairs, and Policy and Planning