All Regional Directors for Local Government Finance; Provincial, City and Municipal Assessors and Treasurers; and Others Concerned

May 14, 2014 BLGF MEMORANDUM CIRCULAR NO. 020-14 TO : All Regional Directors for Local Government Finance; Provincial, City and Municipal Assessors and Treasurers; and Others Concerned SUBJECT : Guidelines and Procedures on the Payment of Estate and Real Property Taxes on Agrarian Reform Covered Agricultural Lands For information and guidance of all concerned, quoted hereunder are relevant portions of the Joint DAR-DOF-DOJ-LBP Memorandum Circular No. 18 dated October 29, 2013, relative to the Guidelines covering the implementation of Joint DAR-DOF-DOJ-LBP Administrative Order No. 01, series of 2013, Re: "Streamlining the Procedures in the Release of Unclaimed Land Compensation Due to Unpaid and Outstanding Estate and Other Related Taxes". Coverage "SEC. 2. Private agricultural lands covered under the Comprehensive Agrarian Reform Program (CARP) pursuant to Presidential Decree (PD) 27, Executive Order (EO) 228, Executive Order (EO) 229, and Republic Act (RA) 6657, as amended by Republic Act (RA) 9700, where the heirs of landowners or their successors-in-interest have pending compensation claims with the LBP due to non-payment of estate tax, real property tax and related taxes, including applicable interest, penalties, and surcharges. Policy Statement "SEC. 3. . . .: "SEC. 3.1 It is likewise the responsibility of the concerned local government units (LGUs) to assess and collect real property tax and related taxes including applicable interests, penalties and surcharges. However, effective June 10, 1988, the promulgation of R.A. No. 6657, otherwise known as the Comprehensive Agrarian Reform Law (CARL), all CARP covered agricultural lands with accrued and delinquent real property taxes shall cease to be subject to penalties and interests. With respect to penalties and interests that have accrued prior to June 10, 1988, the same shall remain to be collected and/or deducted from the compensation to be released to the landowners or successors-in-interest in accordance with DOF Local Finance Circular No. 2-94, dated March 7, 1994. "For PD 27/EO 228 land transfer claims, the cut-off date for the payment of real property taxes is October 21, 1972, or the date the property was covered by an Order of Placement (OP) for landholdings tenanted after October 21, 1972 until August 17, 1987. For RA 6657 and RA 9700 land transfer claims, the cut-off date payment or real property taxes is up to the year when the title was transferred in the name of the Republic of the Philippines." "SEC. 3.2 It is the duty of the DAR to provide the BIR and the LGU with a complete listing of all landholdings covered by this Circular to serve as reference for the computation of estate and real property tax liabilities. "SEC. 3.3 On the basis of a duly signed undertaking of the heirs of their successors-in-interest, it is the responsibility of the LBP to deduct the estate taxes and real property taxes including applicable interests, penalties, and surcharges from the landowners' compensation claims. "SEC. 3.4 It is incumbent upon the BIR and the LGU through the concerned Revenue District Office (RDO) and Local Treasurer, to issue to the heirs or successors-in-interest, the corresponding Certificate Authorizing Registration (CAR) and Real Property Tax Clearance Certificate (RPTCC), respectively, within five (5) days upon receipt of payment and complete set of supporting documents. "SEC. 3.5 The above policies shall not apply if there is a pending just compensation case filed by the heirs of the deceased landowner before the DARAB, Special Agrarian Court or a Higher Court having jurisdiction unless the heirs submit a notarized written undertaking expressing acceptance to the BIR/LGU assessment on the computed Estate and Proper tax liabilities and/or deficiency tax which shall be deducted from the land compensation claim held by the LBP. Operating Procedures "SEC. 4.2 The Local Government Unit Shall: "a. Review and validate through the Local Assessor the list of CARP covered landholdings forwarded by DARPO vis--vis the records in the Assessor's Office; "b. Submit through the Local Assessor an updated Assessment Roll on CARP covered properties to the Local Treasurer; "c. Compute on the basis of the updated Assessment Roll thru the Local Treasurer, the real property taxes due including penalties and interests that have accrued prior to June 1988 or the date R.A. No. 6657 took effect; "d. Submit through the Local Treasurer the Real Property Tax Bill of all taxable CARP covered lands to the LBP-AOC/HO through the heir or successor-in-interest; "e. Within five (5) working days from receipt of payment of the delinquent real property tax including applicable penalties and interests, issue through the Local Treasurer concerned the Real Property Tax Clearance Certificate; "f. Submit through the heir or successor-in-interest, the Real Property Tax Clearance Certificate to the LBP-AOC/HO to ensure that all real property taxes including penalties and interest due are paid before release of compensation proceeds to the landowner or successor-in-interest; "g. Take into account that all succeeding real property tax liabilities shall commence on the year following the transfer of ownership of the land to the beneficiary. Compliance with the above directives specifically Section 4.2 by all concerned is hereby enjoined. Accordingly, all Provincial, City Assessor and Treasurer are hereby instructed to disseminate this Circular, including the full text of the Joint DAR-DOF-DOJ-LBP Memo Circular, to the Municipal Assessors and Treasurers within their respective jurisdiction. (SGD.) SALVADOR M. DEL CASTILLO Executive Director ATTACHMENT October 29, 2013 JOINT DAR-DOF-DOJ-LBP MEMORANDUM CIRCULAR NO. 18-13 SUBJECT : Guidelines Covering the Implementation of Joint DAR-DOF-DOJ-LBP Administrative Order No. 01, Series of 2013, Re: "Streamlining the Procedures in the Release of Unclaimed Land Compensation Due to Unpaid and Outstanding Estate and Other Related Taxes" ARTICLE I Prefatory Statement SECTION 1. Pursuant to Joint DAR-DOF-DOJ-LBP Administrative Order (AO) No. 1, Series of 2013, the Department of Agrarian Reform (DAR), the Department of Finance (DOF) through the Bureau of Internal Revenue (BIR) and the Bureau of Local Government Finance (BLGF), the Department of Justice (DOJ) through the Land Registration Authority (LRA), and the Land Bank of the Philippines (LBP), shall formulate policies and procedures to facilitate the release of land compensation claims on agricultural lands covered by agrarian reform without sacrificing revenue collection efforts. In view of the foregoing, these guidelines and procedures on the payment of estate and real property taxes on agrarian reform covered agricultural lands of deceased landowners and the release of unclaimed land compensation proceeds are hereby prescribed. ARTICLE II Coverage SECTION 2. Private agricultural lands covered under the Comprehensive Agrarian Reform Program (CARP) pursuant to Presidential Decree (PD) 27, Executive Order (EO) 228, Executive Order (EO) 229, and Republic Act (RA) 6657, as amended by Republic Act (RA) 9700, where the heirs of landowners or their successors-in-interest have pending compensation claims with the LBP due to non-payment of estate tax, real property tax and related taxes, including applicable interest, penalties, and surcharges. TCaEAD ARTICLE III Policy Statements SECTION 3. In general, the DAR, the DOF through the BIR and BLGF, the DOJ through the LRA, and the LBP shall strictly observe the policies prescribed hereunder. SECTION 3.1. It is the responsibility of the BIR to assess and collect the estate tax, including applicable interest, penalties, and surcharges. It is likewise the responsibility of the concerned local government units (LGUs) to assess and collect real property tax and related taxes including applicable interests, penalties and surcharges. However, effective June 10, 1988, the promulgation of R.A. No. 6657, otherwise known as the Comprehensive Agrarian Reform Law (CARL), all CARP covered agricultural lands with accrued and delinquent real property taxes shall cease to be subject to penalties and interests. With respect to penalties and interests that have accrued prior to June 10, 1988, the same shall remain to be collected and/or deducted from the compensation to be released to the landowners or successors-in-interest in accordance with DOF-Local Finance Circular No. 2-94, dated March 7, 1994. For PD 27/EO 228 land transfer claims, the cut-off date for the payment of real property taxes is October 21, 1972, or the date the property was covered by an Order of Placement (OP) for landholdings tenanted after October 21, 1972 until August 17, 1987. For RA 6657 and RA 9700 land transfer claims, the cut-off date for payment of real property taxes is up to the year when the title was transferred in the name of the Republic of the Philippines. SECTION 3.2. It is the duty of the DAR to provide the BIR and the LGU with a complete listing of all landholdings covered by this Circular to serve as reference for the computation of estate and real property tax liabilities. SECTION 3.3. On the basis of a duly signed undertaking of the heirs or their successors-in-interest, it is the responsibility of the LBP to deduct the estate taxes and real property taxes including applicable interests, penalties, and surcharges from the landowners' compensation claims. SECTION 3.4. It is incumbent upon the BIR and the LGU through the concerned Revenue District Office (RDO) and Local Treasurer, to issue to the heirs or successors-in-interest, the corresponding Certificate Authorizing Registration (CAR) and Real Property Tax Clearance Certificate (RPTCC), respectively, within five (5) days upon receipt of payment and complete set of supporting documents. LibLex SECTION 3.5. The above policies shall not apply if there is a pending just compensation case filed by the heirs of the deceased landowner before the DARAB, Special Agrarian Court or a Higher Court having jurisdiction unless the heirs submit a notarized written undertaking expressing acceptance to the BIR/LGU assessment on the computed Estate and Property tax liabilities and/or deficiency tax which shall be deducted from the land compensation claim held by the LBP. DEFINITION OF TERMS: Administrator The person appointed by the court to handle the estate of someone who died without a will, with a will but no nominated executor, or the executor named in the will has died, has been removed from the case or does not desire to serve. Assessed Value is the fair market value of the real property multiplied by the assessment level. It is synonymous to taxable value. Documentary Stamp Tax is a tax on documents, instruments, loan agreements and papers evidencing the acceptance, assignment, sale or transfer of an obligation, rights, or property incident thereto. Estate 1.) All that one owns in real estate and other assets; 2.) commonly, all the possessions of one who has died and are subject to probate (administration supervised by the court) or the subject to extrajudicial settlement and distribution to heirs and beneficiaries. Estate Tax Generally, a tax on the transfer of a dead person's assets to his heirs and beneficiaries. Although a transfer tax, it is based on the amount in the decedent's estate (including distribution from a trust at the death) and can include insurance proceeds. Executor The person appointed to administer the estate of a person who has died leaving a will which nominates that person. Unless there is a valid objection, the judge will appoint the person named in the will to be executor. Heir One who acquires property upon the death of another, based on the rules of descent and distribution, namely, being the child, descendant or other closest relative of the dear departed. It also has come to mean anyone who "takes" (receives something) by the terms of the will. DEacIT Market Value the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion." (Philippine Valuation Standards as promulgated by DOF Order No. 37-09) Real Property all the rights, interests, and benefits, related to the ownership of real estate. Real property is a legal concept distinct from real estate, which is a physical asset. (Philippine Valuation Standards) Real Property Tax is an ad valorem tax which is a levy on real property determined on the basis of a fixed proportion of the value of the property (R.A. 7160). Successor-in-interest A successor to another's interest in property. Transfer Tax A tax imposed on the transfer of property. ARTICLE IV Operating Procedures SECTION 4. DAR Provincial Office (DARPO) shall : a. Coordinate with the LBP-Agrarian Operations Center (AOC) or Landowners Compensation Department (LCD) for the preparation of the list of CARP-covered landholdings whose deceased landowners or the latter's successors-in-interest have pending claim on land compensation with the LBP due to non-payment of estate taxes and/or real property taxes. The said list and the complete details marked as Annex "A" shall contain the following information: Name of deceased landowner/s per title; Mailing Address/Email Address/Contact Number of heir/administrator/executor; Title Number; Tax Declaration Number; Lot No. and Approved Survey No.; Area per Title; cTDaEH Area acquired; Location of Property; and Status of the landholding ( i.e. , with or without just compensation case filed before the DARAB, SAC or high court having jurisdiction). Complete addresses of the deceased landowner, indicating the street number Barangay; City/Municipality and Province. b. Forward the abovementioned list to the BIR-Revenue District Office having jurisdiction on the place of the residence of the deceased landowner, copy furnish the Assessment Service of the BIR National Office. c. Furnish the Assessor's Office a copy of the RP title/CLOA and approved subdivision plan (ASP), if any. SECTION 4.1. The Bureau of Internal Revenue shall : a. Within five (5) working days from receipt of the list of CARP Covered landholdings with related data from the DARPO and the documents submitted by the heir/successor-in-interest as provided for in Annex "A" hereof, the concerned RDO shall determine the estate tax liability of the decedent and submit to the LBP the corresponding computation sheet through the heirs/successors-in-interest or duly authorized representative. b. The BIR-RDO shall require the heirs/successors-in-interest to file the estate tax return (BIR Form No. 1801) within three (3) days from receipt of above computation sheet, and pay the estate tax through the LBP. c. If upon verification, there are other documents required to be submitted in addition to the documents listed in Annex "A" hereof, that are necessary in order to determine the correct estate tax liability of the decedent, the RDO shall immediately inform the heirs/successors-in-interest, authorized representative in writing, copy furnished the BIR-AS. In such cases, the five (5) working day period shall not apply. However, the RDO shall ascertain the computed estate tax liability within three (3) working days from receipt of other required documents. TcEaDS d. After evaluation and processing of the aforesaid documents and within two (2) working days upon receipt of the proof of tax remittance of estate tax liability from the LBP, the RDO shall issue the corresponding CAR to the heir, executor/administrator or authorized representative. SECTION 4.2. The Local Government Unit shall : a. Review and validate through the Local Assessor the list of CARP-covered landholdings forwarded by DARPO vis--vis the records in the Assessor's Office; b. Submit through the Local Assessor an updated Assessment Roll on CARP-covered properties to the Local Treasurer; c. Compute on the basis of the updated Assessment Roll thru the Local Treasurer, the real property taxes due including penalties and interests that have accrued prior to June 1988 or the date R.A. No. 6657 took effect; d. Submit through the Local Treasurer the Real Property Tax Bill of all taxable CARP-covered lands to the LBP-AOC/HO through the heir or successor-in-interest; e. Within five (5) working days from receipt of payment of the delinquent real property tax including applicable penalties and interests, issue through the Local Treasurer concerned the Real Property Tax Clearance Certificate; f. Submit through the heir or successor-in-interest, the Real Property Tax Clearance Certificate to the LBP-AOC/HO to ensure that all real property taxes including penalties and interest due are paid before release of compensation proceeds to the landowner or successor-in-interest; g. Take into account that all succeeding real property tax liabilities shall commence on the year following the transfer of ownership of the land to the beneficiary; SECTION 4.3. Land Bank-AOC/LCD shall : cETCID a. Upon receipt of deceased Landowner's Estate and Real Property Taxes Liabilities forwarded by the BIR-Revenue District Office and LGU-Local Treasurer's Office through the heir, advise concerned heir or successor-in-interest to submit an Undertaking to pay the tax liabilities, a pro-forma copy of which is hereto attached as Annex "B." b. Within Five (5) days upon receipt of the Heir's Undertaking to Pay Tax Liabilities, copies of the pertinent Judicial/Extra-Judicial settlement of Estate and death certificate, prepare the payment of the taxes due. c. Remit, through the heirs or successors-in-interest, the payment of taxes due together with the copies of the statement of accounts, to the BIR-RDO and the LGU Local Treasurer, and secure the necessary CAR and Real Property Tax Clearance, respectively, preparatory to its submission to the concerned Register of Deeds. d. Upon receipt of the duly registered Judicial/Extra-Judicial Deed of Settlement of Estate, Real Property Tax Clearance and all other requirements for payment, release land compensation proceeds to the heirs or successors-in-interest. SECTION 4.4. The Land Registration Authority shall : The concerned Register of Deeds shall, upon entry of the pertinent Judicial/Extra-Judicial Settlement of Estate with complete set of supporting documents as provided for in Annex "C" hereof, process the registration of said deed in accordance with its rules. ARTICLE V Miscellaneous Provisions SECTION 5. Repealing Clause. All administrative orders, circulars, memoranda and other issuances or portions thereof inconsistent herewith are hereby revoked, cancelled or modified accordingly. SECTION 6. Effectivity. This JMC shall take effect ten (10) days after its publication in two (2) national newspapers of general circulation and acknowledgement of its registration with the Office of the National Administrative Register (ONAR). DHITCc Quezon City, Philippines, October 29, 2013. (SGD.) CESAR V. PURISIMA Secretary Department of Finance (SGD.) VIRGILIO R. DELOS REYES Secretary Department of Agrarian Reform (SGD.) KIM S. JACINTO-HENARES Commissioner Bureau of Internal Revenue (SGD.) GILDA E. PICO President Land Bank of the Philippines (SGD.) EULALIO C. DIAZ Administrator Land Registration Authority (SGD.) SALVADOR M. DEL CASTILLO Executive Director Bureau of Local Government Finance Published in The Manila Times and Malaya Business Insight on November 6, 2013. ATTACHMENT CERTIFICATION This is to certify that Joint DAR-DOF-DOJ-LBP Memorandum Circular No. 18, Series of 2013 entitled "GUIDELINES COVERING THE IMPLEMENTATION OF JOINT DAR-DOF-DOJ-LBP ADMINISTRATIVE ORDER NO. 1, SERIES OF 2013, RE: "STREAMLINING THE PROCEDURES IN THE RELEASE OF UNCLAIMED LAND COMPENSATION DUE TO UNPAID AND OUTSTANDING ESTATE AND OTHER RELATED TAXES" is published today, Wednesday, 06 November 2013 at Malaya Business Insight and Manila Times newspapers. Issued this 6th day of November 2013 for whatever purpose it may serve. (SGD.) ERLINDA M. MANLUCTAO OIC-Director IV Public Assistance and Media Relations Service ANNEX A List of CARP Covered Lands with Pending Compensation Claims at Landbank ANNEX B LAD Tax Payment Form No. 2 Republic of the Philippines LANDBANK OF THE PHILIPPINES LANDOWNER'S UNDERTAKING TO PAY TAX LIABILITIES The President and CEO Landbank of the Philippines Malate, Manila Thru : The Agrarian Operations Center (AOC)/Landowner's Compensation Department (LCD) Sir/Madam: Pursuant to the Joint Department of Agrarian Reform-Department of Finance-Department of Justice-Landbank of the Philippines (DAR-DOF-DOJ-LBP) Administrative Order No. 1, Series of 2013 and implemented by Joint DAR-DOF-DOJ-LBP Memorandum Circular (MC) No. ____, Series of 2013, do hereby undertake the following: 1. That I/We the legal heirs or successor/s-in-interest of _______________ (name of deceased landowner/s) whose land/s was/were covered under Comprehensive Agrarian Reform Program (CARP), as described herein: OCT/TCT-No.: ___________________________________ Tax Declaration No. _______________________________ Lot No. and Approved Survey Plan No.: _______________ Total Area (has) per Title/TD: _______________________ Area Acquired (has): _______________________________ Location of Property: _______________________________ 2. That I/We apply to avail of tax break/relief from BIR and LGU in order to transfer and release the land compensation proceeds by LBP, as embodied in the abovementioned Joint DAR-DOF-DOJ-LBP A.O. No. 1, Series of 2013 and Joint DAR-DOF-DOJ-LBP M.C. No. ____, Series of 2013. CDScaT 3. That I/We authorized the LBP-AOC of _________________/LBP-LCD to deduct from the landowner's compensation the Estate Tax Liabilities and/or Real Property Tax Liabilities of the abovementioned deceased landowner/s computed by the BIR-Revenue District Office (RDO) of _________________ and/or LGU-Local Assessor's Office (LAO) of ________________ in accordance with pertinent revenue existing guidelines. 4. That I allow the Landbank of the Philippines to pay and remit on my behalf the tax due for the account of the BIR-RDO of ______________________ and/or LGU-Local Assessor of __________________________. 5. That I/We oblige to submit the duly registered Deed of Judicial Partition/Deed of Extra Judicial Settlement of Estate, Certificate of Authorizing Registration, Real Property Tax Clearance, and other requirements to the LBP prior to release of compensation proceeds. In consideration of the foregoing, I/We hereby affix my/our signature and/or right thumbmark/s to this instrument correspondingly: Signature/Right Name of Heir/s Address (Mail/Email) Thumbmark __________________ __________________ __________________ __________________ __________________ __________________ __________________ __________________ __________________ REPUBLIC OF THE PHILIPPINES ) MUNICIPALITY OF _________________) PROVINCE OF ______________________ Subscribed and sworn to before me this ________ day of ____________, 20___, and to me known by the same person/s who executed this sworn of Undertaking to pay Tax liabilities after exhibiting to me the hereunder Identification (IDs): DCAHcT Name of Heirs/ Identification (ID) Successor-in-interest Number Date Issued Issued by: Name of Office) _________________ _____________ _____________ _____________ The abovenamed heir/s or successor-in-interest acknowledged to me under that the same is his/her/their free and voluntary deed of full comprehension of its legal consequences. WITNESS MY HAND AND OFFICIAL SEAL this _________ (date) , day of _________ (month) , __________ (year) at _________________ (city/municipality) , _______________ (province) , Philippines. NOTARY PUBLIC: Doc. No. _____ Page No. _____ Book No. _____ Series of ______ Copy Distribution: Original : LBP-AOC/LCD Duplicate : Heir/s/Successor/s-in-interest Triplicate : DARPO ANNEX C Extra-Judicial Settlement of Estate Main Document: Deed of Extra-Judicial Settlement of Estate Supporting documents: Realty Tax Certificate Owner's Duplicate Certificate Transfer Tax Receipt/Clearance Tax Declaration (Certified Copy) BIR CAR/Tax Clearance Certificate Affidavit of Publication of Settlement Judicial Settlement of Estate Main Document: Judicial Settlement of Estate Supporting documents: Certificate of Finality Realty Tax Certificate Owner's Duplicate Certificate Transfer Tax Receipt/Clearance Tax Declaration (Certified Copy) BIR CAR/Tax Clearance Certificate Court Order Approving Project of Partition