Bureau of Local Government Finance Opinion

April 30, 2010 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 2nd Indorsement Respectfully returned to the Regional Director for Local Government Finance, Region III, Capitol Compound, Sto. Nio, City of San Fernando, Pampanga, the within Indorsement dated March 26, 2010, relative to the letter-request dated March 25, 2010 of Ms. MARY ANN P. BAUTISTA, ICO-City Treasurer, same city, seeking an opinion on the propriety of accommodation of transfer tax payment when there is no final deed of absolute sale on real properties. Documents submitted show that after a series of Orders and Resolution issued by the Courts relating to Civil Case No. Q-06-58366 (Consignation), the Regional Trial Court, Branch 101, Quezon City, in its Order dated March 2, 2010, directed the Register of Deeds of Pampanga as follows: "WHEREFORE, upon payment of the necessary legal fees by the plaintiffs, the Register of Deeds of Pampanga is hereby ordered to: 1. Cancel the Transfer Certificate of Title Nos. 154516-R and 154515-R under the name of Philippine National Bank, and HcACST 2. Issue new titles in lieu of no. 1 above under the name of the Spouses Eligio P. Mallari and Marcelina I. Mallari." Based on said Order, Atty. Eligio P. Mallari, in his letter dated March 5, 2010, submitted to the City Treasurer's Office (CTO) of San Fernando City, among others, photocopy of O.R. NO. 5508353 dated December 20, 1990, marked as Annex "D" thereof, evidencing the payment of transfer tax to the Province of Pampanga amounting to P5,912.50, based on the consideration of Two Million Three Hundred Sixty-Five Thousand (P2,365,000.00) stipulated in the Deed of Promise to Sell executed by and between the PNB and spouses aforementioned on July 10, 1980. On March 17, 2010, ICO-Treasurer Bautista returned to Atty. Mallari the Manager's Check No. 0000004591 dated March 10, 2010, in the amount of P55,211.67 and informing the latter that his request will be submitted to the City Legal Office and the Bureau of Local Government Finance for guidance and/or opinion to properly address the request to accommodate the payment of transfer tax. Ms. Bautista declined to the accept the payment offered by Atty. Mallari on the opinion that her Office does not have the authority to hold the payment without the legal basis, to which she quoted Sections 28 and 30, Article 7 of the 2008 Revised Revenue Code of the City of San Fernando, which provides: TSHIDa "Section 28. Imposition of Tax. There is hereby levied a tax on the sale, donation, barter, or on any other mode of transferring ownership or title of real property at the rate of fifty percent (50%) of one percent (1%) of the total consideration involved in the acquisition of the property or the fair market value in case the monetary consideration involved in the transfer is not substantial, which is higher. "Section 30. Time of Payment. It shall be the duty of the seller, donor, transferor, executor or administrator to pay the City Treasurer 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." Based on the abovequoted provision of the Revised Revenue Code of San Fernando City, it is the view of Ms. Bautista that Atty. Mallari must submit the Deed of Absolute Sale before she can act on the request to accommodate the payment. On this note, Ms. Bautista, on March 18, 2010, sought the guidance of Honorable OSCAR S. RODRIGUEZ, City Mayor of San Fernando City, thru Atty. RAMSEY L. OCAMPO, City Legal Counsel, same city, on the request of Atty. Mallari to accommodate payment of transfer tax for the properties acquired through legal proceedings via said Civil Case No. Q-06-58366. ESIcaC On March 18, 2010, Atty. Mallari sent a follow up letter (4th letter-tracer) furnishing the Office of the City Treasurer, relative to his previous request, the following documents: 1. Certificate Authorizing Registration No. 00298472, involving the 6,338 sq. m. lot, covered by TCT No. 14515-R dated 17 March 2010; and 2. Bank of Commerce Manager's Check No. 1415533 dated September 28, 2009 to become STALE on March 29, 2010, in the amount of P53,795.00, payable to the REGISTER OF DEEDS of Pampanga to cover the registration expenses. On the other hand, Atty. RAMSEY L. OCAMPO, City Legal Officer of San Fernando City, in his reply-letter dated 22 March 2010, stated that the Order of the Honorable Court (RTC, Branch 101) is silent on the payment of transfer taxes hence, the CTO of San Fernando cannot presume that Atty. Mallari is bound to pay transfer taxes. The CTO cannot also presume that it has the obligation and authority to accept the payment being offered by Atty. Mallari. Atty. Ocampo opined further that "[T] he duty of the CTO to accept payment of transfer taxes is far from being ministerial in this case, because there are factors to be considered and the situation demands careful scrutiny, more so, since the case between Spouses Mallari and PNB under Civil Case No. Q-06-58366 still lacks finality ." AIDSTE With all due respect to the opinion of the Honorable City Legal Office that the Order dated March 2, 2010 issued by the Regional Trial Court, Branch 101, San Fernando City lacks finality, this Bureau believes otherwise. It is our view that the said Order dated March 2, 2010 is final and executory thus, the ICO-City Treasurer of San Fernando is compelled to accept the BPI Manager's Check No. 04591 dated 10 March 2010 amounting to P55,211.67, representing the amount of transfer tax due from the transfer of title or ownership of real properties aforecited, computed based on the amount of P11,042,334.05 pursuant to Section 135 of the Local Government Code (LGC) of 1991, quoted as follows: SEC. 135 . 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 the 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 . . . . . ( Boldfacing and underscoring supplied ) Clearly, the abovequoted provision of law expressly provides that the transfer of ownership or title of real property may be effected, as in the instant case, through other mode aside from the conventional documents of conveyance such as Deeds of Sales, Donation or Barter. AHcDEI It is clarified however that the amount of P11,042,334.05 represents the Spouses Mallari's full payment of the outstanding balance of the Sales Contract Receivable (SCR) under the Deed of Promise to Sell dated July 10, 1980. ( Resolution dated 22 January 2008 ) Further, it may be noted from the Order of March 2, 2010 that the directive to the Registrar of Deeds of Pampanga was based on Section 107 of P.D. No. 1529 quoted thereof. Furthermore, the view that the Order of March 2, 2010 is final and executory finds support from the directive of the Court embodied in the WRIT OF EXECUTION issued, in relation to Resolution dated January 22, 2008, on 26 May 2008 by Regional Trial Court, National Capital Judicial Region, Branch 215, addressed to MR. ADOLFO P. GARCIA, JR., Sheriff IV, Regional Trial Court, Quezon City as follows: "NOW, THEREFORE, you are hereby commanded to enforce the Resolution of this Court dated January 22, 2008, to direct the defendant Philippine National Bank represented by its President & CEO Omar Byron T. Mier to execute a Deed of Absolute Sale in favor of the plaintiffs-spouses Eligio P. Mallari and Mercelina I. Mallari over Lots 3664 and 3843 subject of the Deed of Promise to Sell dated July 10, 1980 covered by TCT Nos. 154516-R and 154515-R of the Registry of Deeds of Pampanga to direct the said defendant-bank to pay the expenses of consignation and the cost." Moreover, it may be argued that in the said Order of March 2, 2010, there was no express or explicit order directing the ICO-City Treasurer of San Fernando to accept the payment of transfer tax for properties subject of the Court proceedings, however, we reiterate our view that the Order is final and executory and unless the defendant-bank can secure a temporary restraining order (TRO) or a writ of preliminary injunction from the Court, the ICO-City Treasurer of San Fernando has no other recourse but to accept the payment offered by Atty. Mallari covered by BPI Manager's Check No. 04591 dated 10 March 2010 amounting to P55,211.67 for the transfer tax due on the properties, Lot Nos. 3664 and 3843 of the San Fernando Cadastre, Pampanga, covered by T.C.T. Nos. 154516-R and 154515-R of the Registry of Deeds of Pampanga, without prejudice to any adjustment on the amount of transfer tax paid in case the total consideration stipulated in the Court Order will be found out later to be insufficient. SDTIHA Viewed in the light of all the foregoing, this Bureau therefore directs the ICO-City Treasurer of San Fernando City (Pampanga) to accept the payment being offered by Atty. Mallari amounting to P55,211.67 for the transfer tax due on the properties, Lot Nos. 3664 and 3843 of the San Fernando Cadastre, Pampanga, covered by T.C.T. Nos. 154516-R and 154515-R of the Registry of Deeds of Pampanga. Be guided accordingly. (SGD.) MA. PRESENTACION R. MONTESA Executive Director