Bureau of Local Government Finance Opinion

March 6, 2003 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION The Incharge-of-Office Office of the Provincial Treasurer of Negros Oriental Dumaguete City Sir : This refers to the Notice issued by that Office on the Payment of Real Property Tax for Calendar Year 2003 stating that: "Accordingly, if the portion of the real property tax due for the first quarter of a tax year is not paid on or before the thirty first (31st) day of March of the same year, the interest shall be reckoned from the first (1st) day of January at the rate of two (2%) percent for every month of delinquency on the basis of the total amount due for the entire year and not only on the amount due for the said first quarter of the year." (Underscoring supplied) In this connection, attention is invited to Sections 246, 250 and 255 of R.A. No. 7160 otherwise known as the Local Government Code (LGC) of 1991 and Article 342 of its Implementing Rules and Regulations (IRR) quoted as follows: "SEC. 246. Date of Accrual of Tax . The real property tax for any year shall accrue on the first day of January . . . ." "Sec. 250. Payment of Real Property Taxes in Installments . The owner of the real property or the person having legal interest therein may pay the basic real property tax and the additional tax for Special Education Fund (SEF) due thereon without interest in four (4) equal installments; first installment to be due and payable on or before the thirty-first (31st) of March; the second installment, on or before the thirtieth (30th) of June; and the third installment, on or before the thirtieth (30th) of September; and the last installment on or before the thirty-first (31st) of December, except the special levy the payment of which shall be governed by ordinance of the sanggunian concerned. cESDCa "The date for the payment of any other tax imposed under this Title without interest shall be prescribed by the sanggunian concerned. "Payments of real property taxes shall first be applied to prior years delinquencies, interests, and penalties, if any, and only after said delinquencies are settled may tax payments be credited for the current period." "Sec. 255. Interests on Unpaid Real Property Tax . In case of failure to pay the basic real property tax or any other tax levied under this Title upon the expiration of the periods as provided in Section 250, or when due, as the case may be, shall subject the taxpayer to the payment of interest at the rate of two percent (2%) per month on the unpaid amount or a fraction thereof, until the delinquent tax shall have been fully paid: Provided, however, That in no case shall the total interest on the unpaid tax or portion thereof exceed thirty-six (36) months." "Art. 342. Tax Discount for Advanced Prompt Payment . If the basic real property tax and the additional tax accruing to SEF are paid on time or in advance in accordance with the prescribed schedule of payments as provided under Article 341, the sanggunian concerned may grant a discount not exceeding twenty percent (20%) of the annual tax due. For purposes of this Rule, prompt payments may be given a discount of ten percent (10%), while advanced payments may be entitled to the maximum discount of twenty percent (20%)." On the basis of the aforecited provisions of the law, it is apparent that the real property tax for any year shall accrue on the first day of January. However, the owner of the real property or the person having legal interest therein may pay the basic real property tax and the additional tax for the SEF without interest in four (4) equal installments on or before the end of each quarter as prescribed under the law. If no interest may be imposed on payment by installment, then it follows that the payment of the tax may be considered on time or prompt, advance and delinquent based on by the quarter period as provided under Section 250 of the Code abovequoted. If the tax for a quarter is paid before, within or after the quarter it is due, the tax payment shall be considered advance, prompt or delinquent, respectively. The advance and prompt payments shall be entitled to a discount at the rates provided in the local tax ordinance subject to the limitation provided in the Code aforequoted. HTAIcD If the tax due for the 1st quarter is delinquent, the interest on the delinquency shall be computed not only on the amount of tax due for the quarter but based on the whole year tax due, then the imposition of the interest amounts to considering the amount of tax due for the other quarters (2nd, 3rd & 4th) also delinquent which is contrary to the foregoing mandate in the law. Hence, that Office is advised to amend said paragraph or the subject notice to conform with what is in consonance with the provisions of the law. Report of the action taken hereon within ten (10) days from receipt hereof is desired. Very truly yours, (SGD.) MA. PRESENTACION R. MONTESA Executive Director