Bureau of Local Government Finance Opinion

November 29, 2011 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Atty. Augusto Yu Cubias, Jr. No. 30 Wilson Street, West Greenhills San Juan City, Metro Manila Sir : This refers to your letter of May 6, 2011, on behalf of your clients, Eduardo P. Ramos and Anna B. Zuccheto, owners of certain real properties located in Bacoor, Cavite, covered by Transfer Certificate of Title Nos. T-828842 and T-8288433, with Tax Declaration Nos. 03-0017-10033 and 03-0017-10032, respectively. Per your representation, sometime in April 2011, two unsigned Real Property Tax Order of Payment were obtained apparently from the Office of the Municipal Assessor of Bacoor, each demanding for the payment of real property taxes due from the aforementioned properties amounting to Php15,232.32, for the years from 2002 to 2010. Allegedly, no prior notices of realty tax payments were sent to your clients. Nonetheless, they tendered payment in the amount of Php6,520.24, pursuant to the provisions of Section 270 of R.A. No. 7160, otherwise known as the Local Government Code of 1991, providing for the periods within which to collect real property taxes, viz. : "SEC. 270. Periods Within Which to Collect Real Property Taxes. The basic real property tax and any other tax levied under this Title shall be collected within five (5) years from the date they become due. No action for the collection of the tax, whether administrative or judicial, shall be instituted after the expiration of such period. In case of fraud or intent to evade payment of the tax, such action may be instituted for the collection of the same within ten (10) years from the discovery of such fraud or intent to evade payment. The period of prescription within which to collect shall be suspended for the time during which: cDCaTH (1) The local treasurer is legally prevented from collecting the tax; (2) The owner of the property or the person having legal interest therein requests for reinvestigation and executes a waiver in writing before the expiration of the period within which to collect; and (3) The owner of the property or the person having legal interest therein is out of the country or otherwise cannot be located." However, the Municipal Treasurer of Bacoor allegedly refused to accept the tender of payment of your clients. Hence, the instant request for an opinion on the appropriate applicability of the aforecited provisions of Section 270. A similar issue was earlier clarified by this Bureau under the 2nd Indorsement dated July 24, 2009, as follows: "Section 270 explicitly provides that real property tax shall be collected within five years from the date it becomes due and that no action, administrative or judicial, shall be instituted after the expiration of such period. In case of fraud or intent to evade payment, the period within which to collect is ten years from the discovery thereof. However, the prescriptive periods shall be suspended under any of the following circumstances: HDIaET 1. The local treasurer is legally prevented from collecting the tax; 2. The owner of the property or the person having legal interest therein requests for reinvestigation and executes a waiver in writing before the expiration of the period within which to collect; and 3. The owner of the property or the person having legal interest therein is out of the country or otherwise cannot be located. . . ., the wisdom behind the provision of the Local Government Code of 1991, on the prescriptive periods to collect is to compel local treasurers to promptly perform their duty to collect real property tax for the benefit of the taxing authority, the local government unit. The prescriptive periods were provided to enforce the collection of real property tax within a specific time. Thus, no action for collection, whether administrative or judicial, shall be instituted after the lapse of the five-year or ten-year periods, as the case may be. Please take note that under the ten-year prescriptive periods, fraud or intent to evade payment must be alleged and supported by clear and convincing proof. There have been clarifications earlier made by this Bureau that if the local treasurer has been sending notices of delinquency and/or reminder letters for the payment of delinquent real property tax preparatory to the application of administrative and/or judicial remedies in the collection thereof as provided for by law in observance of due process, the delinquent real property tax may be collected even beyond the five-year period. It is only when the local treasurer neglected or deliberately failed to perform his/her mandated duties giving rise to the prescription of the period to collect that the taxpayer may validly invoke the provision on prescriptive period. Otherwise, taxpayers may circumvent the law by not paying their taxes at all and will just wait for the lapse of the periods to collect." Apparently, the refusal of the Municipal Treasurer of Bacoor to accept the tender of payment of your clients raises a factual issue. Consequently, this Bureau further holds the view that the claim of no prior notice of payment sent to the taxpayer must be proven, and should not be used as a shield for failure to pay real property tax which is a statutory obligation of every real property owner. Trusting that the foregoing clarification will suffice. Thank you. TECcHA Very truly yours, (SGD.) SALVADOR M. DEL CASTILLO OIC-Executive Director