Bureau of Local Government Finance Opinion

July 8, 1998 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 2nd Indorsement Respectfully returned, thru the Regional Director for Local Government Finance, Region VII, 3rd Floor Cebu Kang-ha Foundation Bldg., corner Lapu-Lapu and Juan Luna Streets, Cebu City, to the Municipal Assessor, Naga Cebu. This refers to the letter dated May 6, 1998 of that office requesting opinion or ruling regarding the imposition of penalties on the delay of payments of transfer taxes. Article 224(b) of the Implementing Rules and Regulations (IRR) implementing Section 135(b) of the Local Government Code (LGC) of 1991 provides as follows: "SEC. 135. Tax on Transfer of Real Property Ownership . . . . "(b) . . . "It shall be the duty of the seller, donor, transferor, executor or administrator to pay the tax herein imposed within sixty (60) days from the date of the execution of the deed or from the date of the decedent's death." (Emphasis supplied.) It is clear from the aforequoted provisions of law that the payment of the transfer tax should commence from the date of execution and notarization of the deed of sale or from the date of the decedent's death. Upon failure to pay said tax on time, a "surcharge" is automatically imposed on the amount due and unpaid at the rate of not exceeding 25% thereof pursuant to Section 168 of the same Code. As additional penalty, an interest is likewise imposed at the rate of not more than 2% per month on the total amount of the unpaid tax. Such "interest charges", however, are limited to not more than 36 months reckoned from the date the obligation became due and payable. ETHCDS It is informed, however, that the tax on the transfer of ownership of real properties may be imposed only by provinces and cities and not by municipalities, except those located in Metro Manila. Accordingly, such surcharges and penalties should be incorporated under a duly-enacted tax ordinance of the province of Cebu. Be guided accordingly. (SGD.) ANGELINA M. MAGSINO Deputy Executive Director (Officer-in-Charge)