Bureau of Local Government Finance Opinion

October 13, 1997 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION The Provincial Treasurer Malolos, Bulacan M a d a m : This refers to the letter dated March 19, 1996 of Ms. Mercia C. Aquino of No. 5 Cairo St., Merville, Paraaque, Metro Manila. Mrs. Aquino is seeking assistance of this Bureau for her to settle the realty tax on a piece of land under Tax Declaration No. 00634 in the name of her deceased grandmother, Juliana Pantangco de Leon by paying the principal tax without penalties. The Municipal Treasurer of Hagonoy in reply to our request for comment in a 1st indorsement dated April 10, 1996, under a letter dated June 10, 1996 answered in part that his office does not have legal authority to condone payment of penalties for real property taxes. The letter of Ms. Aquino was further referred to that Office under our letter dated October 16, 1996 for comment/recommendation on the matter and requested also for information on whether the province granted the condonation of penalties on delinquent real properties for the municipalities thereat during calendar years 1986-1995. In a 1st indorsement dated May 8, 19997, that Office informed that "the Province of Bulacan granted relief and condonation of taxes and penalties on real properties only in 1986 . . . . Since the delinquent taxes in question are for the years 1986-1995, same could not be covered by the condonation authorized under Executive Order No. 42." Ms. Aquino also wrote the Department of Agrarian Reform for assistance regarding subject properties of Juliana Pantangco located at Iba and Hagonoy, that province, embodied in T.D. No. 00634. The said Department in response to Ms. Aquino, wrote to the Municipal Treasurer and Municipal Assessor Offices of Hagonoy, that province, in a letter dated January 23, 1996 wherein it stated that "According to her (Mrs. Aquino) from 1985 up to 1995 this property was transferred to the tenants pursuant to PD 27 and accordingly Tax Declaration were issued to them by your office. However, on September 21, 1995, the Office of the President dismissed the appeal of the tenants from the Decision of Secretary Garilao that the same is not covered by PD 27. As a result thereof, the Tax Declaration was reverted back to Juliana Pantangco by your Office. ADEacC "The problem now is the failure of the tenants to pay their realty tax for the period that they held the property or for the period of ten (10) years. "They are now desirous to pay the realty tax for the year 1996 but according to your office the arrears should be paid first. Then who will pay now? How about the penalties? According to Mrs. Aquino they are very willing to help the government by paying the arrears of the tenants, however the penalties should not be applied considering that they were not the ones who incurred the arrears. "In the meantime they need to pay the 1996 realty tax as a requirement for the titling of the property. "In the interest of justice and considering that this scheme will benefit the government, may we request your good office to accept the payment of the realty tax of Juliana Pantangco for the subject property for the year 1996 and the ten (10) year arrears to be paid within the year without penalties." The aforecited averments of Ms. Aquino find support in the Department of Agrarian Reform's Order dated June 4, 1993 ruling that: "Considering that the landholding which is the subject of the Petition for Exemption under P.D. 27 were acquired by the petitioners prior to the effectivity of P.D. 27 on October 21, 1972 by operation of law of which each of the petitioners were allotted less than seven hectares as their separate properties, the same should be outside the coverage of Operation Land Transfer program of the government pursuant to P.D. 27". Lastly, the same tenants filed an appeal dated March 28, 1994 as against the Order of DAR with the Office of the President which dismissed the same under a Resolution dated September 11, 1995. Said Resolution reflected the TDs, area and location of the lands owned in common by Ramon and his two sisters as well as the land owned by Pantangco and the tenants lessees thereon as follows: "Ramon de Leon and his two sisters Catalina de Leon and Mercedes de Leon-Robles are owners of the following described properties: "TAX DECLARATION AREA LOCATION NO. (SQ. M. ) 17832 1,103 Tambo, Malolos, Bul. 10814 147,090 Hagonoy, Bul. 7488 1,718 - do - 7425 2,414 - do - 4709 62,633 Caingin, Malolos, Bul. 10916 900 Hagonoy, Bul. Total 215,858 sq. m "On the other hand, Juliana Pantangco is the owner of the following properties: "TAX DECLARATION AREA LOCATION NO. (SQ. M. ) 11811 (6736) 4,089 San Miguel, Hagonoy, Bul. 11812 (6737) 36,493 - do - 11816 (6738) 47,252 - do - 11848 (3451) 2,405 Iba, Hagonoy, Bul. 11817 (3450) 101,688 - do - 7403 25,589 - do - 11815 62,999 San Juan, Hagonoy, Bul. Total 280,317 sq. m. (sic) Under the circumstances, the accrued realty taxes and the penalties on the land during the time the possession and ownership were with the tenants (from CY 1985 up to 1995 as alleged) shall be their responsibility and not of the dispossessed owner landlord. The landlord shall only be responsible for the tax on the land beginning from the year (CY 1996) when ownership was restored to her until the present. CaAcSE The ruling on similar situation is manifested in a 3rd indorsement dated December 20, 1988, 5th indorsement dated June 11, 1991 both of the Department of Finance, (xerox copies enclosed) and most recently, in a letter dated November 3, 1993, same Department, addressed to a private person wherein the ruling of the Supreme Court in the case of the City of Manila vs. Salvaros Roxas, et. al . No. 39671, was quoted in part wherein the Supreme Court states "at the time of the appropriation of the property by the city, the owners were entitled to be relieved of all burdens incidental to their ownership." The Department of Finance further stated that "In line with the foregoing decision of the Supreme Court, it follows that the burden of the payment of the real property taxes on the subject properties by the owner thereof ceased on the date the same was taken over by the government." In view of the foregoing, this Bureau holds the view that Ms. Mercia A. Aquino, for and in behalf of Juliana Pantangco de Leon, is liable to pay real property taxes due on the properties referred to beginning only from the year the TDs of the lands were returned in the name of her grandmother, Juliana Pantangco de Leon pursuant to the Resolution of the Office of the President dated September 11, 1995. During the time that the possession and ownership of said lands were with the tenants as evidenced by the CLTs and TDs issued to them from CY 1985 up to CY 1995, they were the ones liable to pay the corresponding real property taxes, including penalties/interests. It will, therefore, be beneficial for the province if that Office will accept the offer of Ms. Aquino for her to pay the arrearages of the delinquent tenants on the principal tax alone without penalties considering the fact that she is not even liable therefor. In this connection, it is hereby informed that if the said taxes are paid on or before the end of the quarter following the date the notice of assessment of tax was received by the owner or his representative, no interest for the delinquency shall be imposed thereon, otherwise, such taxes shall be subject to an interest at the rate of two percent (2%) per month or a fraction thereof from the date of receipt of the assessment until such taxes are fully paid. (Sec. 8, LAR No. 1-92, October 6, 1992) Report of action taken hereon is desired within fifteen (15) days from receipt hereof. Very truly yours, (SGD.) LORINDA M. CARLOS Executive Director