Bureau of Local Government Finance Opinion

June 21, 2006 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION The OIC-City Assessor Pasay City S i r : This refers to your letter dated January 2, 2006, requesting opinion on the propriety of Resolution No. 2088, series of 2005, passed and approved by the Sangguniang Panlungsod of Pasay City. A careful reading of the subject Resolution reveals that the Sanggunian thereat intends to value and assess all government lands being used by utility companies in the name of the beneficial user as provided for under Sections 234 (a) and 205 of the Local Government Code of 1991 (R.A. No. 7160). Sec. 234 of the Local Government Code : "Sec. 234. Exemptions from Real Property Tax. The following are exempted from payment of 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;" CDaSAE The above provision of the Local Government Code and its Implementing Rules and Regulations (IRR) categorically provide that real properties owned by the government or any of its political subdivisions (provinces, cities, municipalities and barangays) are exempt from the payment of real property tax. However, once these real properties have been granted for consideration (either for lease or Build Operate Transfer (BOT) or otherwise to a taxable person, that person shall be considered as the beneficial user, and therefore, subject to real property tax. Further, section 205 of the same Code provides the following: "Sec. 205. Listing of Real Property in the Assessment Rolls . (a) In every province and city, including the municipalities within Metropolitan Manila Area, there shall be prepared and maintained by the provincial, city or municipal assessor an assessment roll wherein shall be listed all real property, whether taxable or exempt, located within the territorial jurisdiction of local government unit concerned. Real property shall be listed, valued and assessed in the name of the owner or administrator, or anyone having legal interest in the property." "xxx xxx xxx "(d) Real property owned by the Republic of the Philippines, its instrumentalities and political subdivisions, the beneficial use of which has been granted, for consideration or otherwise, to a taxable person, shall be listed, valued and assessed in the name of the possessor, grantee or of the public entity if such property has been acquired or held for resale or lease ." (Emphasis Supplied) A research made to one of the LGUs in Metro Manila reveals that these utility companies are paying monthly/yearly rentals to the LGU concerned for the use of the said government lands. Hence, it is but logical and proper that the subject lands be listed, valued and assessed in the name of the grantee or of the public entity, as the beneficial user in line with provision under Section 234 (a) of the LGC. Furthermore, it is worth to mention the applicable provision under Article III, Section 472 (b) (6) and (7) of the Code which provides the following: "Sec. 472. Qualifications, Powers and Duties . . . . "(b) The assessor shall take charge of the assessor's office, perform the duties provided for under Book II of this Code, and shall: "xxx xxx xxx "(6) Conduct frequent physical surveys to verify and determine whether all real properties within the province are properly listed in the assessment rolls. "(7) Exercise the functions of appraisal and assessment primarily for taxation purposes of all real properties in the local government unit concerned;" "xxx xxx xxx" It is emphasized however that the above views are expressed in accordance with Article 247 of the IRR of the Code and shall not be construed as a declaration of the legality of the corresponding local tax ordinance for reason that such function falls exclusively within the jurisdiction of the Department of Justice. Attached for your guidance and ready reference is a photocopy of the opinion rendered by this Bureau on a case similarly situated. HSaEAD Very truly yours, (SGD.) MA. PRESENTACION R. MONTESA Executive Director