Payment of Real Property Taxes Tendered by Beneficiaries of the Agrarian Reform Program

July 30, 2002 DOF LOCAL FINANCE CIRCULAR NO. 02-02 FOR : The Bureau of Local Government Finance and All Local Treasurers Sorsogon Sangguniang Panlalawigan Resolution No. 68-02 and Agusan del Norte Sangguniang Panlalawigan Resolution No. 072-2002 were passed urging this Department and the Department of Agrarian Reform (DAR) to resolve alleged efforts of some local treasurers to collect from farmer-beneficiaries realty tax deficiencies incurred by landowners prior to the re-distribution of their land/s under the Agrarian Reform Program. Section 66 of Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform Act of 1988, expressly provides, "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 interests. shall be deductible from the compensation to which the owner may be entitled ." (emphasis supplied) Realty taxes that accrued prior to redistribution of the land are obligations incurred by the landowner. The landowner is obliged to pay the real property tax and, in addition, penalties and interest on unpaid real property tax that accrued prior to the effectivity date of R.A. 6657 (see local Finance Circular No. 2-94, dated 7 March 1994). Hence, it is improper to enforce collection thereof from farmer-beneficiaries. Accordingly, it is hereby directed that Local Treasurers shall not, under any circumstance, refuse payment of real property taxes tendered by beneficiaries of the Agrarian Reform Program. Collection of real property tax deficiencies/liabilities incurred by landowner that remain outstanding despite full payment of just compensation shall be enforced through judicial or administrative action against the landowner himself. aACEID This Circular shall take effect immediately and all concerned Regional Directors of the Bureau of Local Government Finance and Local Treasurers shall be guided as prescribed. (SGD.) JOSE ISIDRO N. CAMACHO Secretary of Finance