Bureau of Local Government Finance Opinion

July 16, 2002 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 2nd Indorsement Respectfully returned, thru the Regional Director for Local Government Finance, Department of Finance, Region IV, People's Mansion Compound, Batangas City, to the Provincial Treasurer, Baler, Aurora. This refers to the request of the said Provincial Treasurer for an opinion as to whether Ordinance No. 2002-85, entitled: " An Ordinance Granting Relief to Delinquent Real Property Taxpayers of the Province of Aurora with Respect to Interests and Penalties on their Real Property Taxes Payable as of December 31, 2001 Subject to Certain Conditions ," of the Sangguniang Panlalawigan thereat, is in order and implementable. It is the contention of the Provincial Treasurer that the said Ordinance is, in effect, repugnant to Section 255 of R.A. No. 7160, also known as Local Government Code of 1991, and at the same time, not in accordance with Section 276 and 277 thereof, which the said Regional Director under the preceding Indorsement dated April 24, 2002, concurs in. A perusal of the subject Ordinance reveals, among others, that the same was enacted in pursuance of Section 192 of R.A. No. 7160. Section 1 of the subject Ordinance specifically provides, as follows: "SECTION 1. All interests and penalties on delinquent real property taxes as of December 31, 2001 are hereby given relief and are condoned, with respect to the following real properties: "a. Those which are declared but the real property taxes due thereon have not been paid; "b. Those undeclared properties subject to back taxes; "c. Those properties subject to public auctions conducted by the Provincial Government but were not purchased by private persons or entities." In this connection, attention is invited to the abovementioned Sections 192, 276 and 277 of R.A. No. 7160, which are quoted below: Section 192 : "SEC. 192. Authority to Grant Tax Exemption Privileges . Local Government Units may, through ordinance duly approved, grant tax exemption, incentives or reliefs under such terms and conditions as they deem necessary." Section 276 : "SEC. 276. Condonation or Reduction of Real Property Tax and Interest . In case a general failure of crops or substantial decrease in the price of agricultural or agribased products, or calamity in any, province, city or municipality, the sanggunian concerned, by ordinance passed prior to the first (1st) day of January of any year and upon recommendation of the Local Disaster Coordinating Council , may condone or reduce, wholly or partially, the taxes and interest thereon for the succeeding year or years in the city or municipality affected by the calamity. (Emphasis supplied) Section 277 : "SEC. 277. Condonation or Reduction of Tax by the President of the Philippines . The President of the Philippines may, when public interest so requires, condone or reduce the real property tax and interest for any year in any province or city or a municipality within the Metropolitan Area." The issue to be resolved, therefore, is which of the aforequoted provisions of law has been more appropriately considered in the enactment of the subject ordinance. It may be worthwhile to note that although Section 192 of the Code refers to the authority of the LGU's to grant tax exemption privileges, incentives or reliefs, the same appropriately applies to, among others, business taxes. This provision of the Code was clarified under Article 282 of its Implementing Rules and Regulations (IRR), which provides as follows: "ART. 232. Authority to Grant Tax Exemption Privileges. . . . "xxx xxx xxx. "(2) On the grant of tax incentives: (i) The tax incentive shall be granted only to new investments in the locality and the ordinance shall prescribe the terms and conditions that must be complied with for such grant of tax incentive; (ii) The grant of the tax incentive shall be for a definite period not exceeding one (1) calendar year; (iii) The grant of tax incentives shall be by ordinance passed prior to the first (1st) day of January of any year; and (iv) Any tax incentive granted to a type or kind of business shall apply to all business similarly situated." On the one hand, Section 277 of the Code refers to the authority of the President of the Philippines to condone or reduce the real property tax and interest for any year in any province, city or municipality. On the other hand, Section 276 of the same Code is evidently specific on the condonation or reduction of real property taxes and interests due thereon by an LGU, upon the enactment of an ordinance by the local sanggunians, together with the recommendation of the Local Disaster Coordinating Council of the locality on any of the following causes, to wit: 1. General failure of crops; 2. Substantial decrease in the price of agricultural or agribased products; and 3. Calamitous events. In view hereof, it is believed that Section 276 should prevail over Sections 192 and 277 of R.A. No. 7160 on matters concerning the authority of the LGU's on granting real property tax condonation or reliefs including the interests due thereon. In view of the foregoing, this Bureau concurs in the opinion of both the Regional Director of Region IV and the Provincial Treasurer of Aurora that the subject Ordinance should have been enacted in accordance with Section 276, instead of Section 192 of R.A. No. 7160. CSDcTH However, unless the subject Ordinance No. 2002-85 is submitted for nullification before a court of competent jurisdiction by any party in interest, like a taxpayer, the same is deemed implementable. Very truly yours, (SGD.) JUANITA D. AMATONG Undersecretary and Officer-in-Charge, BLGF