Bureau of Local Government Finance Opinion

April 15, 2002 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 3rd Indorsement Respectfully returned, thru the ICO-Regional Director for Local Government Finance, Department of Finance, Region IX, 3/F Ramon Tan Bldg. Campaner St., Zamboanga City, to the Provincial Treasurer of Zamboanga del Sur, Pagadian City. This refers to the request of the said Provincial Treasurer for opinion concerning the following issues, to wit: 1. Appeal of the Heirs of the late Agaton Fernandez, for their real property (Agricultural Land) located in San Jose, Mahayag, said province and declared under Tax Declaration Nos. 5531 and 7808; and 2. Applicability of Section 268 of R.A. No. 7160, The Local Government Code of 1991, which provides: "SEC. 268. Payment of Delinquent Taxes on Property Subject of Controversy . In any action involving the ownership or possession of, or succession to, real property, the court may, motu proprio or upon representation of the provincial, city or municipal treasurer or his deputy, award such ownership, possession, or succession to any party to the action upon payment to the court of the taxes with interest due on the property and all other costs that may have accrued, subject to the final outcome of the action." It appears that the abovementioned appeal of the Heirs of the late Agaton Fernandez is being made in view of the Notice of Delinquency issued on July 23, 2001 by the Municipal Treasurer, said municipality, in the total amount of P47,352.46 for CY-1992 up to CY-2001. HCEISc Apparently, the said real property tax delinquency accrued during the period when the subject real property had been under litigation with the Department of Agrarian Reform (DAR) under CCRC Case No. 1-903-0006-99 re. "Petition for Exemption from the Coverage of CARP and/or cancellation of Emancipation Patents," which have been resolved on May 17, 2000 as evidenced by the attached copy of the Order issued by the Regional Director, DAR, Regional Office No. IX, Zamboanga City. With regard to item 1 hereof, attention is invited to Section 234 of the said Code (R.A. No. 7160) which provides: "SEC. 234. Exemptions from Real Property Tax . The following are exempted from payment of the real property tax: "(a) Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person, "(b) Charitable institutions, churches, parsonages or convents appurtenant thereto including mosques, nonprofit or religious cemeteries and all lands, buildings, and improvements which are actually, directly and exclusively used for religious, charitable or educational purposes; "(c) All machineries and equipment that are actually, directly and exclusively used by local water districts and government-owned or -controlled corporations engaged in the supply and distribution of water and/or generation and transmission of electric power; "(d) All real property owned by duly registered cooperatives as provided for under R.A. No. 6938; and "(e) Machinery and equipment exclusively used for pollution control and environmental protection. Except as provided herein, any exemption from payment of real property tax previously granted to, or presently enjoyed by, all persons, whether natural or juridical including all government-owned or -controlled corporations are hereby withdrawn upon the effectivity of this Code." Evidently, real properties which had been subjected to the abovecited litigation, is not among those enumerated under the Code that can be declared exempt from the payment of real property taxes. In view hereof, this Bureau cannot give favorable consideration to the request for real property tax exemption by Ms. Fernandez. Nevertheless, this Bureau wants to point out that the request of Ms. Fernandez for tax relief may be addressed to the local legislative body in Zamboanga del Sur which, in its sound discretion, may grant tax relief in accordance with Section 192 of the LGC, to wit: "SEC. 192. Authority to Grant Tax Exemption Privileges . Local government units may, through ordinances duly approved, grant tax exemptions, incentives or reliefs under such terms and conditions as they may deem necessary." With respect to the issue regarding the applicability of Section 268 of the LGC, this Bureau finds the provisions not applicable to the present case. It is worthwhile to note that Section 268 categorically pertains to real property that is the subject of an action in court, which should exclude those that are under administrative proceedings like the present case which DAR has resolved. In any case, the plain language of Section 268 does not afford relief from payment of real property taxes on a parcel of land during the time that an action involving ownership, possession or succession to it is pending. It does not prevent the accrual of real property tax on the land, neither does it excuse liability for real property taxes. Section 268 simply allows the court, pending resolution of the action, to award the land subject of the action to any party provided: (a) the taxes with interest due on the property and all other costs that may have accrued are paid to the court; and (b) the award is subject to the final outcome of the action. aDHCcE In view of the foregoing, concerned Provincial and Municipal Treasurers are hereby instructed to exert all efforts in collecting the real property taxes due on the subject real property applying the remedies provided for under Section 256 of the Code and Article 347 of its Implementing Rules and Regulations (IRR), if necessary. Be guided accordingly. (SGD.) JUANITA D. AMATONG Undersecretary and Officer-in-Charge, BLGF