House passes bill exempting from estate taxes the unpaid just compensation to original landowners

The House of Representatives has approved on third and final reading House Bill 6093 seeking to exempt from estate taxes the unpaid balance of just compensation due the original landowners or their descendants whose agricultural lands were acquired by the government under certain agrarian reform laws or orders.

The bill principally authored by Rep. Rufus Rodriguez (2nd District, Cagayan de Oro City) seeks to exempt from the decedent owner or his or her legal heirs or successors in interest of agricultural land acquired by the government under Presidential Decree 27, Executive Order 22, EO 229, Republic Act 6657 and R.A. 9700, amending for the purpose Section 87 of the National Internal Revenue Code, 1997, as amended.

Presidential Decree 27 decrees the emancipation of tenants from the bondage of the soil, transferring to them the ownership of the land they till and providing the instruments and mechanism therefor; Executive Order 228 declares full land ownership to qualified farmer beneficiaries covered by PD 27, determines the value of remaining unvalued rice and corn lands subject to PD 27, and provides for the manner of payment by the farmer beneficiary and mode of compensation to the landowner; Executive Order 229 provides the mechanisms for the implementation of the comprehensive agrarian reform program; Republic Act 6657 is otherwise known as the Comprehensive Agrarian Reform Law of 1988; and, RA 9700, is An Act Strengthening the CARP Program, Extending the Acquisition and Distribution of  All Agricultural Lands, Instituting Necessary Reforms, Amending for the Purpose Certain Provisions of RA 6657 or the CARL, as Amended, and Appropriating Funds Therefor.

Rep. Rufus Rodriguez (2nd District, Cagayan de Oro City), principal author of HB 6093, said agrarian reform has affected the rights of countless landowners whose lands were taken some 38 years ago with the advent of PD 27.

After the lapse of the 15 year payment period provided by PD 27, countless original landowners and their descendants still await full payment of just compensation according to him. “The years passed brought about many changes and amendments in the laws and orders relative to land valuation and payment procedures which have affected and made it more difficult to collect the just compensation due to the landowners,’ he said.

Rodriguez said the payment of just compensation has also been delayed because of administrative matters, documentation requirements as well as valuation issues that plague the government agencies involved.

To make matters worse for these landowners, he said the payments as just compensation that they are to receive are still charged estate taxes, which at times exceed the amount of compensation offered for their properties.

“Many of these landowners already passed away without receiving just compensation leaving their descendants the tasks of awaiting payment only to discover that they still have to pay estate taxes,” said
Rodriguez.

He said while the transfer of agricultural property taken by the government for land reform purposes is already exempted from the payment of capital gains taxes, there is likewise a compelling necessity to exempt the same from estate taxes should the original landowner die without being paid just compensation.

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