Bureau of Local Government Finance Opinion

December 27, 2006 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 1st Indorsement Respectfully returned to the Assistant City Assessor, Valenzuela City, his within letter dated November 16, 2006 requesting comment and/or legal basis relative to Ordinance No. 058, series of 2006, enacted by the Sangguniang Panlungsod thereat, entitled "An Ordinance Granting Amnesty on Voluntary Disclosure by Owners of Buildings, houses and other Structures without the required building permits or have not been declared as such with the City Assessor for taxation purposes". The abovementioned Ordinance proposes to grant amnesty until April 30, 2007 to the owners of real properties which have not been declared by the City Assessor's Office for taxation purposes and which have been built without the required permit or occupancy permits. Item No. 2 of the said Ordinance for instance provides that commercial and industrial buildings and structure shall be assessed at the fair market value of P1,500.00 per square meters and residential at P500.00 per square meter. This Bureau believes that the abovementioned market values are violative of the provision of Section 198 (a) of the R.A. No. 7160 otherwise known as the Local Government Code of 1991 which provides that "Real property shall be appraised at its current and fair market value". It is emphasized that the basis for the appraisal and assessment of real properties including buildings and other structures is the approved Schedule of Base Unit Construction Cost (SBUCC), which is an integral part of the approved Schedule of Fair Market Value (SFVM) of a particular LGU. If it has not enacted an amending Ordinance adopting the revised SFMV, the existing SMFV shall be the basis for the appraisal and assessment of real properties. Relatedly, the subject Ordinance will be violative of the following provision of the Local Government Code of 1991 with respect to real properties declared for the first time: "Section 222. Assessment of Property Subject to Back Taxes Real Property declared for the first time shall be assessed for the taxes for the period during which it would have been liable but in no case for more than ten (10) years prior to the date of initial assessment: Provided, however, That such taxes shall be computed on the basis of the applicable schedule of values in force during the corresponding period. "If such taxes are paid on or before the end of the quarter following the date the notice of assessment was received by the owner or his representative, no interest for delinquency shall be imposed thereon, otherwise, such taxes shall be subject to an interest at the rate of two percent 2% per month or a fraction thereof from the date of the receipt of the assessment until such taxes are fully paid." The above views are expressed in accordance with Article 287 of the Implementing Rules and Regulations (IRR) of the said Code and should not be construed as a declaration of the legality or constitutionality of Ordinance No. 058, series of 2006, for reason that said function falls exclusively with the jurisdiction of the Department or Justice (DOJ). (SGD.) FLOSIE F. FANLO-TAYAG (ICO-Deputy Executive Director) Officer-in-Charge