Bureau of Local Government Finance Opinion

February 17, 2005 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 4th Indorsement Respectfully returned to the City Assessor, Marikina City, his within preceding 3rd Indorsement dated November 30, 2004, relative to the letter dated October 11, 2004 of Mrs. Roraima D. Silva of 302 Acacia Ave.,Ayala Alabang Village, Muntinlupa City, requesting for refund/tax credit amounting to Two Thousand Eight Hundred Sixty Two and 29/100 Pesos (P2,862.29) corresponding to the payment of an additional idle land tax imposed by that Office. It appears that the subject property located at Rancho Estate III, Brgy. Concepcion II, Marikina City, was previously declared in the name of Ernesto J. Plata Under PIN No. 115-02-013-041-079 with ARPN 2002-13-225098, covered by TCT No. 274560, per Declaration of Real Property Value (DRPV)-Land effective April, 2002. In the attached Statement of Account dated April 02, 2003, the subject property was assessed as idle land per Tax Ordinance No. 224, S. 1995 for the year 2003, in the total amount of P2,862.29, in addition to the Basic and SEF taxes. Records show that the real property taxes covering the said property for the years 2003 and 2004 were paid by Mrs. Silva under protest thru a mailed check per her attached letter dated March 26, 2004, amounting to P11,564.47 tax2005 That Office in its 3rd Indorsement of November 30, 2004, in response to this Bureau's 1st Indorsement dated October 13, 2004, submitted the following findings: 1. A letter questioning the abrupt increase in real property tax was filed by Mrs. Roraima Silva with the Treasurer's Office thereat on March 31, 2004; SIEHcA 2. The subject property was "tagged" as idle land; where in fact and in truth the same is a developed lot; 3. It was discovered that there was a mere computer error when the subject lot was classified as idle land; but was consequently untagged/corrected by his Office accordingly; and 4. Had his Office been informed at once of Mrs. Silva's protest, the error should have been corrected immediately. Consequently, a DRPV in the name of Evangeline R. David, to take effect 2005 was issued by the Assessor's Office in September 27, 2004; correcting/untagging the "idle land" classification of the subject property. However, Mrs. Silva insisted that the additional payment made on the subject property (presently owned by her sister),as idle land be refunded/credited and applied to future real property tax obligations. Sections 236 and 237 of the Local Government Code of 1991 (R.A. No. 7160) provide the following: "SEC. 236. Additional Ad Valorem Tax on Idle Lands . A province or city, or municipality within Metropolitan Manila Area, may levy an annual tax on idle lands at the rate not exceeding five percent (5%) of the assessed value of the property which shall be in addition to the basic real property tax. "SEC. 237. Idle Lands, Coverage . For purposes of real property taxation, idle lands shall include the following: "xxx xxx xxx. "Regardless of land area, this Section shall likewise apply to residential lots in subdivisions duly approved by proper authorities, the ownership of which has been transferred to individual owners, who shall be liable for the additional tax: Provided, however, That individual lots of such subdivisions, the ownership of which has not been transferred to the buyer shall be considered as part of the subdivisions, and shall be subject to the additional tax payable by subdivision owner or operator." DTISaH Briefly, the issue to be resolved is: Can the payment made by Mrs. Silva corresponding to the erroneous imposition of an additional idle land tax be refunded and or credited? Sections 252 and 253 of the said Code are likewise quoted hereunder for your ready reference: "SEC. 252. Payment under Protest . "(a) No protest shall be entertained unless the taxpayer first pays the tax. There shall be annotated on the tax receipts the words "paid under protest".The protest in writing must be filed within thirty (30) days from payment of the tax to the provincial or city treasurer, or municipal treasurer, in the case of a municipality within Metropolitan Manila Area, who shall decide the protest within sixty (60) days from receipt. "(b) The tax or a portion thereof paid under protest shall be held in trust by the treasurer concerned. "(c) In the event that the protest is finally decided in favor of the taxpayer, the amount or portion of the tax protested shall be refunded to the protestant, or applied as tax credit against his existing or future tax liability. "(d) In the event that the protest is denied or upon the lapse of the sixty-day period prescribed in subparagraph (a), the taxpayer may avail of the remedies provided for in Chapter 3, Title II, Book II of the Code." "SEC. 253. Repayment of Excessive Collections . When an assessment of basic real property tax, or any other tax levied under this Title ,is found to be illegal or erroneous and the tax is accordingly reduced or adjusted, the taxpayer may file a written claim for refund or credit for taxes and interests with the provincial or city treasurer within (2) years from the date the taxpayer is entitled to such reduction or adjustment .(Emphasis supplied) aIAHcE "The provincial or city treasurer shall decide the claim for tax refund or credit within sixty (60) days from receipt thereof. In case the claim for tax refund or credit is denied, the taxpayer may avail of the remedies as provided in Chapter 3, Title II, Book II of this Code." Obviously and as stated earlier, real property tax was paid under protest on March 2004 and that a written claim for refund was made on October 11, 2004, well within the 2 year prescriptive period (the period being contested is for year 2003) within which a taxpayer is entitled to the refund/tax credit. Accordingly, this Bureau is of the opinion that the herein request of Mrs. Silva for a tax credit on the additional idle land tax paid amounting to P2,862.29 on the subject property, be given due course. (SGD.) MA. PRESENTACION R. MONTESA Executive Director