Bureau of Local Government Finance Opinion

July 29, 2003 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION The OIC-City Assessor Iligan City S i r : This refers to your letter dated September 25, 2002, requesting opinion on whether it is legal to rectify the erroneous valuations previously made during the conduct of the general revision of real property assessment in CY 2001, considering the limitations imposed under Sections 220 and 221 of R.A. No. 7160, also known as the Local Government Code of 1991, and if legal, when the corrected valuations shall take effect. It appears that the abovementioned request is being made in view of the results of the assessment review conducted with the end in view of improving the real property tax collection of the city particularly on industrial companies operating thereat. As revealed, the valuation of machineries reflected in the Sworn Statements of the owners, differs from the actual acquisition costs as reflected in the Balance Sheets of the companies. In this connection, attention is invited to the Report of Investigation/Verification dated January 21, 2003, conducted by the Project Evaluation Officer II, BLGF Regional Office-Region X, Cagayan de Oro City, in compliance with the instructions embodied under our 1st Indorsement dated December 18, 2002, submitting, among others, the following findings and observations, to wit: 1. During the conduct of the general revision in CY 2001, the City Assessor adopted the previous assessed values of real properties; and 2. It is evident from the sampling made that there were indeed discrepancies in the Sworn Statements made by property owners and the acquisition costs as reflected in the Balance Sheets of their companies. TEaADS It may be worth noting hereon that: 1. In the absence of a new Schedule of Market Values (SMV) approved by the local sanggunian thereat that might have affected the valuation of real properties when general revision of real property assessments was conducted in CY 2001, the adoption of the previous assessed values by the then City Assessor is deemed in order; and 2. The discrepancies in the valuation of machineries as discovered were seemingly a result of reliance solely on the Sworn Statements made by real property owners. The issue to be resolved is whether the said discrepancies can be rectified in accordance with the provisions of Sections 220 and 221 of the Code, which provides as follows: "SEC. 220. Valuation of Real Property . In cases where (a) real property is declared and listed for taxation purposes for the first time; (b) there is an ongoing general revision of property classification and assessment; or (c) a request is made by the person in whose name the property is declared, the provincial, city or municipal assessor or his duly authorized deputy shall, in accordance with the provisions of this Chapter, make a classification, appraisal and assessment of the real property listed and described in the declaration irrespective of any previous assessment or taxpayer's valuation thereon: Provided, however, That, the assessment of real property shall not be increased oftener than once every three (3) years except in case of new improvements substantially increasing the value of said property or of any change in its actual use. SDECAI "SEC. 221. Date of Effectivity of Assessment or Reassessment . All assessments or re-assessments made after the first (1st) day of January of any year shall take effect on the first (1st) day of January of the succeeding year: Provided, however, That the reassessment of real property due to its partial or total destruction, or to a major change in its actual use, or to any great sudden inflation or deflation of real property values, or to the gross illegality of the assessment when made or any other abnormal cause, shall be made within ninety (90) days from the date any such cause or causes occurred, and shall take effect at the beginning of the quarter next following the reassessment ." (Emphasis ours) In view hereof, attention is invited to the Supreme Court Decision (G.R. No. 115253-74) dated January 30, 1998, copy enclosed, the pertinent portions of which read as follows: "xxx xxx xxx. `An assessment fixes and determines the tax liability of a taxpayer. As soon as it is served, an obligation arises on the part of the taxpayer concerned to pay the amount assessed and demanded.' ". . . `the assessment is deemed made when the notice to this effect is released, mailed or sent to the taxpayer for the purpose of giving effect to said assessment.' "With respect to real property taxes, the obligation to pay arises on the first day of January of the year following the assessment. Corollarily, on the same date, the right of the local government to collect said taxes also arises. And where the taxpayer fails to question such assessment within the reglementary period provided by law, the local government's right becomes absolute upon the expiration of such period with respect to that taxpayer's property." Similarly, therefore, this Bureau is of the opinion that considering that Notices of Assessment had already been sent out by that Office and received by the property owners concerned, and considering further the above pronouncements of the Supreme Court, the herein request for rectification of the erroneous assessments on the subject real properties previously made by that Office, during the general revision of real property assessments conducted in CY 2001, would already be considered as illegal notwithstanding the abovequoted provisions of Sections 220 and 221 of the Code. In view of the foregoing, we regret that your abovementioned request cannot be given favorable consideration for lack of legal basis. It may be advised, however, that the rectification of the said erroneous assessments can be made during the conduct of the next general revision of real property assessments thereat. That Office is further advised to exert extra effort in securing other pertinent documents/data in support of the market values indicated by the real property owners concerned in their Sworn Statements, to avoid the occurrence of similar problems in the future. IaECcH Very truly yours, (SGD.) MA. PRESENTACION R. MONTESA Executive Director