Bureau of Local Government Finance Opinion

February 10, 1993 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 2nd Indorsement Respectfully returned to the Municipal Treasurer, Makati, Metro Manila. This refers to the request of Ambassador Abdulazim Hashemi Nik, Extraordinary and Plenipotentiary, Embassy of the Islamic Republic of Iran, for refund of transfer tax paid under protest in the amount of P132,247.50, which was forwarded by that Office to this Bureau for comment and recommendation. It is represented that the Embassy of the Islamic Republic of Iran purchased a real property in the Republic of the Philippines for official use as the ambassador's residence. It is contended that they are tax and duty exempt as a diplomatic mission pursuant to the Vienna Convention. However, to facilitate the transfer of title, the Embassy paid the tax to that municipality under protest. Hence, the above request. In this connection, attention is invited to Section 135, Chapter 2, of the Local Government Code of 1991 (RA 7160), as implemented under Article 224, Rule XXX of the Implementing Rules and Regulations (IRR) thereof quoted hereunder: "Art. 224. Tax on Transfer of Real Property Ownership . (a) The province may impose a tax on the sale, donation, barter, or on any other mode of transferring ownership or title of real property at the rate of not more than fifty percent (50%) of one percent (1%) of the total consideration involved in the acquisition of the property or of the fair market value in case the monetary consideration involved in the transfer is not substantial, whichever is higher. The sale, transfer, or other disposition of real property pursuant to RA 6657 shall be exempt from this tax. The fair market value as used herein shall be that reflected in the prevailing schedule of fair market values enacted by the sanggunian concerned. (b) For this purpose, the Registrar of Deeds of the province concerned shall, before registering any deed, require the presentation of the evidence of payment of this tax. The provincial assessor shall likewise make the same requirement before cancelling an old tax declaration and issuing a new one in place thereof. Notaries public shall furnish the provincial treasurer with a copy of any deed transferring ownership or title to any real property within thirty (30) days from the date of notarization. It shall be the duty of the seller, donor,. transferor, executor, or administrator to pay the tax herein imposed within sixty (60) days from the date of the execution of the deed or from the date of the property owner's death." cd On the basis of the aforequoted provisions, it is the seller of the property who is liable for the payment of the transfer tax due thereon. Moreover, embassies, consulates, and other diplomatic offices are deemed part of the territory of the country they represent and, therefore, are exempt from any national or local taxes based on the generally-accepted principle that the tax laws of one country are not applicable in another. Accordingly, that Office is hereby instructed to cause the immediate refund of the tax on transfer of real property ownership paid to that municipality by the Embassy of the Islamic Republic of Iran, subject to the usual accounting and auditing procedures. By Authority of the Secretary: JUANITA D. AMATONG Undersecretary