Bureau of Local Government Finance Opinion

February 7, 2012 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Noel I. Munar Municipal Assessor Gasan, Marinduque Sir : This has reference to your letter dated August 24, 2011 seeking opinion on the tax implication of the planned expropriation of properties due to the reconstruction of the Gasan public market, which was gutted down by fire sometime in December 2009. The plan is to construct a bigger and wider market space for the convenience of the public. However in the proposed expansion project, properties adjacent to the old market would be affected. HADTEC Chapter 8 (Miscellaneous Provisions) of the Manual on Real Property Appraisal and Assessment Operations, provides that: "Section 1. Provincial/City Appraisal Committees . "Executive Order No. 132 dated December 22, 1987 as amended authorizes the creation of an Appraisal Committee in a Province and City. The Provincial/City Appraisal Committee is tasked generally to determine the market value of real property to be acquired by the government for public purpose." Likewise, attached herewith for your information and perusal is a copy of Executive Order No. 1035 dated June 25, 1985, entitled: "Providing the Procedures and Guidelines for the Expeditious Acquisition by the Government of Private Real Properties or Rights thereon for Infrastructure and Other Government Development Projects". HADTEC The answer on the query raised therein is covered under Section 9, Title C of the said Executive Order, which states: "Title C Procedure for Payment and Registration of Property/Row Acquisitions. Section 9. Assessment of Taxes Due . The Bureau of Internal Revenue and respective Provincial/City/Municipal treasurers shall assess the following taxes, where applicable, on the property being acquired: "a) Capital gains tax due on the gains derived from the sale of the real property to the government; "b) Estate tax due on the portion of the estate of a deceased owner to be acquired by the government; and HADTEC "c) Unpaid real estate taxes on the property up to the time the government took possession thereof. "Such assessment shall be made and transmitted to the government implementing agency/instrumentality concerned within one (1) week from the submission of the complete requirements." In view thereof, it is advised that reference be made on the above quoted provision for your guidance. HADTEC Very truly yours, (SGD.) SALVADOR M. DEL CASTILLO OIC-Executive Director