Bureau of Local Government Finance Opinion

May 17, 2001 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 2nd Indorsement Respectfully returned to the Regional Director for Local Government Finance, Department of Finance, Region VII, 3rd Floor, BF Building, N. Escario Street, Cebu City, the preceding Indorsement dated March 8, 2001, which in effect, is requesting for comment and legal opinion on the attached copy of Ordinance No. 2001/017 enacted by the Sangguniang Panlungsod of Mandaue City, amending Sections 22 and 35 of the City Ordinance No. 052, series of 1999, otherwise known as "An Ordinance Enacting the Revised Real Property Tax Code of Mandaue, particularly on the following issues, viz: a) The frequency of general revision of real property assessment tending to contradict the provisions of the Local Government Code specifically the General Revision of Assessment and Property Classification which shall be made only once every three (3) years; b) The 5-year limitation on the imposition of back taxes; and c) The retroactive effect and other clauses Apparently, the amending Ordinance will, in effect result in: 1. a shortened period of the effectivity of the last general revision when the reduced assessment levels are affected. This provision will definitely violate the "once every three (3) year" principle in assessment and the particular provision of Section 1 (c) of Local Assessment Regulations No. 1-92 dated October 6, 1992 of the Department of Finance, which provides: "Section 1. G eneral Revision of Assessment and Property Classification . "xxx xxx xxx. "(c) The general revision of assessments and property classification shall commence upon the enactment of the schedule of fair market values but not later than two (2) years from the effectivity of the Code. Thereafter, the provincial, city or municipal assessor shall undertake the general revision of real property assessments and property classifications once every three (3) years." ScCEIA 2. a shortened period of five (5) years within which back taxes could be collected. This is clearly allowed under Section 222 of R.A. No. 7160 as the same only restricts the imposition back taxes "for more than ten (10) years prior to the date of initial assessment;" and 3. a reduced revenue that will be realized in implementing the said amending ordinance that will definitely affect the finances of the city government of Mandaue. However, it is worthwhile to note hereon that Section 187 of the Local Government Code of 1991 (R.A. No. 7160), provides as follow: "SEC. 187. Procedure for Approval and Effectivity of Tax Ordinances and Revenue Measures . The procedure for approval of local tax ordinances and revenue measures shall be in accordance with the provisions of this Code: Provided, That public hearings shall be conducted for the purpose prior to the enactment thereof: Provided, further, That any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days from the date of receipt of the appeal: Provided, however, That such appeal shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax, fee, or charge levied therein: Provided, finally, That within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice acting upon the appeal, the aggrieved party may file appropriate proceedings with a court of competent jurisdiction." It is clear therefore, that any question on the constitutionality or legality of local tax ordinances or revenue measures enacted by the local sanggunian concerned should be forwarded to the Department of Justice within the prescribed period, which is thirty (30) days from the effectivity of the said ordinance from which the Secretary of Justice shall render a decision within sixty (60) days from the date of receipt of the appeal. It is also clear that the Department of Finance no longer exercises the power to review tax ordinances passed or enacted by the local sanggunians, pursuant to the abovecited Section 187 of the Code. IEAacS (SGD.) BENJAMIN A. GERONIMO Executive Director