Bureau of Local Government Finance Opinion

April 12, 2004 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Cesar C. Meneses Manager Tambo Realty Inc. 2150 Roxas Boulevard Malate, Manila Dear Mr. Meneses : This refers to your "Memorandum of Appeal" dated 12 March 2004 which you filed with the Department in behalf of Tambo Realty, Inc . ("TRI" for brevity) praying that the Letter-Resolutions dated 02 October 2003 and 04 February 2004 of the Bureau of Local Government Finance (BLGF), in relation to the classification and assessment of three (3) parcels of land situated in Paraaque City, be reversed and set aside. The BLGF, in the questioned 02 October 2003 letter-recommendation, opined as follows: "However, this technical supervision of the DOF over local assessors does not include the jurisdiction to entertain any request for a readjustment either to increase or decrease the revised value, when the notice of assessment (RPTOP or TD) has been sent and received by the taxpayer concerned. The appropriate forum where the aggrieved or dissatisfied party may bring his appeal is the Local Board of Assessment Appeals (LBAA), as provided under Section 226 of the Local Government Code of 1991, which we quote hereunder: xxx xxx xxx "SEC. 226. Local Board of Assessment Appeals . Any owner or person having legal interest in the property who is not satisfied with the action of the provincial, city or municipal assessor in the assessment of his property may, within sixty (60) days from the date of receipt of the written notice of assessment, appeal to the Board of Assessment Appeals of the province or city by filing a petition under oath in the form prescribed for the purpose, together with copies of the tax declarations and such affidavits or documents submitted in support of the appeal. "A case in point is the Supreme Court Decision dated January 30, 1998 under G.R. Nos. 115253-74, in the case of Antonio Callanta vs. the Office of the Ombudsman and City Government of Cebu which held, thus: ". . . Whenever the local assessor sends a notice to the owner or lawful possessor of real property of its revised assessed value, the former shall thereafter no longer have any jurisdiction to entertain any request for a review or readjustment. Indeed, the long-standing practice adverted to by petitioners does not justify a continuance of their acts. We cannot sanction such comprising situations. Henceforth, whenever the local assessor sends a notice to the owner or lawful possessor of real property of its revised assessed value, the former shall thereafter no longer have any jurisdiction to entertain any request for a review or readjustment. The appropriate forum where the aggrieved party may bring his appeal is the LBAA, as provided by law. "The assessment is deemed made when the notice to this effect is released, mailed or sent to the taxpayer for the purpose of giving effect to said assessment. In the same vein, we have said that `assessment is deemed made when the notice to this effect is released, mailed or sent to the taxpayer for the purpose of giving effect to said assessment.' " Where the taxpayer fails to question such assessment within the reglementary period provided by law, the local government's right becomes absolute upon the expiration of such period with respect to that taxpayer's property . With respect to real property taxes, the obligation to pay arises on the first day of January of the year following the assessment. Corollarily, on the same date, the right of the local government to collect said taxes also arises. And where the taxpayer fails to question such assessment within the reglementary period provided by law, the local government's right becomes absolute upon the expiration of such period with respect to that taxpayer's property." (Emphasis supplied) "Beyond doubt, aggrieved owners who are not satisfied with the assessment of their property should file an appeal with the LBAA within sixty (60) days from receipt of the Notice of Assessment. TRI should have, within 60 days upon receipt of Notice of Assessment in 1994, filed an appeal with the LBAA of Paraaque City and should not have waited until 1997 to file the request for reclassification retroactively for 1994-1996. Failure on the part of the taxpayer concerned to file within the prescribed sixty (60) day, after receipt of the Notice of Assessment means forfeiture of his right to appeal. IcSADC "With regard to your allegation that the City Assessor of Paraaque City erroneously assessed your property as commercial instead of residential, please be informed of the Supreme Court Decision in the case of Victorias Milling Co., Inc., vs. Court of Appeals (No. L-24213, 13 March 1968, 22 SCRA 1008), which held, thus: "It is settled in our jurisdiction that where an assessment is illegal and void , the remedy of a taxpayer who has already paid the tax under protest, is to sue for refund in the competent Court of First Instance. On the other hand, where the assessment is merely erroneous, his recourse is to file an appeal in the Provincial Board of Assessment Appeals within sixty (60) days from receipt of the Assessment . (Emphasis supplied) "xxx xxx xxx "An assessment is illegal and void when the assessor has no power to act at all. It is erroneous when the assessor has the power but errs in the exercise of that power. "Likewise, it is your contention that Section 226 of the Code does not apply because what is involved here is the request for refund of the amount paid by the company, and not an appeal on the assessment of the said property. "Please be informed that the classification of real property is part and parcel of the assessment process. Assessment as defined under Section 199 of the Local Government Code of 1991 (R.A. No. 7160) means the "act or process of determining the value of a property, or properties thereof subject to tax, including the discovery, listing, classification, and appraisal of properties for assessment purposes. Article 306 implementing Section 215 of the Code is quoted as follows: "Article 306. Classes of Real Property for Assessment Purposes . Real property shall be classified as residential, agricultural, commercial, industrial, mineral, timberland, or special by the provincial and city assessors including the municipal assessors of MMA. The city or municipality within MMA shall, through their respective sanggunian, have the power to classify lands as such in accordance with their zoning ordinances provided that for purposes of assessment, real property shall be classified on the basis of actual use regardless of where located as provided for under Article 308 of this Rule. xxx xxx xxx "In view hereof, we regret that your abovementioned request for the reclassification of the subject lots, and the subsequent refund/tax credit of the payments made thereon for the year 1994-1996 cannot be given due course for lack of legal basis. The classification made by the City Assessor of Paraaque City on your properties for the period 1994-1996, as commercial, is final and executory." Thereafter, TRI sent a letter dated 24 October 2003 requesting for reconsideration of the foregoing opinion. However, the BLGF, in the questioned letter-resolution dated 04 February 2004, maintained its earlier stand stating that: "With regard to your claim that MMC Zoning Ordinance 81-01 classified the subject lots as Residential (R-2), this Bureau would like to emphasize that per ocular inspection conducted by BLGF's representatives and as appearing in the Tax Declarations, the location of the TRI's property is not Calle Bataan and Sampaguita Sts., but, MIA Road (formerly Quirino Ave.) "The attached Certification of the City Planning and Development Coordinator's Office shows that MIA Road, where the property of TRI is located, is classified as Commercial 3 "High Intensity Commercial Zone" as shown in City Ordinance 97-08 (Comprehensive Land Use Plan & Zoning of the City of Paraaque). This is contrary to your allegation that 'Zoning Ordinance No. 97-08 which took effect in 1997, classified the said lots as residential." "Relatedly, please be informed of the provision of Section 252 of the Local Government Code of 1991, which we quote hereunder: "Section 252. Payment Under Protest . (a) No protest shall be entertained unless the taxpayer first pays the tax. There shall be annotated on the tax receipts the words "paid under protest". The protest in writing must be filed within thirty (30) days from payment of the tax to the provincial, city treasurer and municipal treasurer, in the case of a municipality within Metropolitan Manila Area , who shall decide the protest within sixty (60) days from receipt. (Emphasis supplied) "(b) The tax or a portion thereof paid under protest shall be held in trust by the treasurer concerned. "(c) In the event that the protest is finally decided in favor of the taxpayer, the amount or portion of the tax protested shall be refunded to the protestant, or applied as tax credit against his existing or future tax liability. "(d) In the event that the protest is denied or upon the lapse of the sixty-day period prescribed in subparagraph (a), the taxpayer may avail of the remedies as provided for in Chapter 3, Title Two, Book II of this Code." "As stated earlier, payment under protest (for real property taxes paid for 1994-1996) was made by TRI only in 1997, instead of filing it within the prescriptive period provided under the abovequoted provision of Section 252. "Lastly, we reiterate that TRI should have exercised their right to appeal before the Local Board of Assessment Appeals (LBAA) of Paraaque City in 1994 yet ( sic ); or 60 days after the receipt of the tax Declaration or any Notice of Assessment, and not in 1997. In the case of Montinola vs. Gonzales (G.R. No. 36155, 26 October 1980, 178 SCRA 677) the Supreme Court (citing Spouses Ramon A. Gonzales and Lilia Yusay vs. Province of Iloilo , 38 SCRA 209) held thus: "If no appeal to the Board of Assessment Appeals is made by the property owner within the statutory period, the assessment becomes final and unappealable. The owner cannot go to court to question any errors in the assessment and to seek refund of the realty taxes paid . Since as held in Victorias Milling Co., Inc. vs. Court of Tax Appeals (22 SCRA 1008), 'By the doctrine of primacy of administrative remedy, the Provincial Board of Assessment appeals had jurisdiction over the dispute to the exclusion of the Court of First Instance,' and the party's resort to the Court of First Instance instead of appealing to the Board of Assessment Appeals was held fatal to his claim for refund." (Emphasis supplied) TRI then filed with this Department a "Memorandum of Appeal" dated 12 March 2004 praying that the afore-quoted Letter-Resolutions dated 02 October 2003 and 04 February 2004 of the BLGF, be reversed and set aside. In the said Memorandum, TRI submitted the following arguments: 1. The BLGF has jurisdiction over the case; 2. The City Assessor has no authority or legal personality to represent the City of Paraaque in the instant case; 3. The BLGF violated TRI's right to due process when it did not consider the evidence presented by TRI nor furnish TRI with a copy of the City Assessor's Reply/Comment and other pleadings and even researched and sought evidence for the City Assessor; 4. In researching and seeking evidence for the City Assessor, the BLGF did not only violate TRI's right to due process but manifested undue bias in favor of the City Assessor; 5. TRI was further deprived of due process when the BLGF conducted its ocular inspection of subject lots without prior notice to and the presence of TRI; 6. The Decision/Letter-Resolution of the BLGF dated 02 October 2003 is void; 7. The BLGF can order the City Assessor to reassess the subject lots as residential, or simply order the Treasurer to issue the corresponding tax credit; 8. Even before 1994, the property in question is residential in nature; 9. TRI is entitled to the tax credit for the period 1994-1996; 10. The City of Paraaque is liable to pay interest on the tax credit; and 11. TRI must be given a 10% Discount on its tax obligations. The Department finds no justifiable reason to warrant the reversal of the decision of the BLGF. aIDHET As sufficiently explained by the BLGF, the appropriate remedy of any owner or person having legal interest in the property who is not satisfied with the action of the provincial, city or municipal assessor in the assessment of his property is to appeal the same to the Board of Assessment Appeals of the province or city within sixty (60) days from the date of receipt of the written notice of assessment, pursuant to Sec. 226 of the LGC. In view thereof, TRI should have, within 60 days upon receipt of the corresponding Notice of Assessment in 1994, filed an appeal with the Local Board of Assessment Appeals (LBAA), failing in which rendered the assessment final and unappealable, and local government's right to collect the local tax absolute. TRI's allegation that Sec. 226 would not apply in this case since this is a claim for tax refund for the alleged overpayment of real property taxes for the period 1994-1996 does not merit any consideration. TRI's alleged right to tax refund simply does not exist in the absence of any ruling from the LBAA that the questioned properties were erroneously assessed for the period 1994 to 1996. TRI cannot now seek relief from this Department invoking latter's alleged authority to exercise control and supervision over local assessors when it clearly appears that TRI failed to pursue the remedies provided for by law. We trust that this clarifies the position of the Department. Very truly yours, (SGD.) JUANITA D. AMATONG Secretary