Bureau of Local Government Finance Opinion

October 19, 2012 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 1st Indorsement Respectfully referred to the OIC-Regional Director for Local Government Finance, Department of Finance, Region III, Benigno Aquino Memorial Hall, Provincial Capitol Compound, San Fernando City, Pampanga, the within letter dated May 17, 2012, of Atty. AD HERBERT P. DELOSO, Municipal Mayor, Iba, Zambales, posing the following queries: 1. Whether commercial rice mills should be assessed as commercial? As submitted the Provincial Assessor of Zambales is of the opinion that rice mill should be assessed as "Agricultural". However, the Municipal Assessor believed that it should be assessed as "Commercial" in view of the Supreme Court Decision entitled " Rileco vs. Mindanao Congress of Labor-Ramie United Workers Assn. , 26 SCRA 224 (1968)", which reads in part, as follows: "Agriculture includes farming in all its branches and among other things includes the cultivation and tillage of the soil, dairying, the production, cultivation, growing, and harvesting of any agricultural or horticultural commodities , the raising of livestock or poultry, and any practices performed by a farmer on a farm as an incident to or in conjunction with some farming operation, but does not include the manufacturing or processing of sugar, coconuts, abaca, tobacco, pineapples or other farm products." 2. How to issue tax declaration to the beneficial user of a government lot? It was informed that the Municipal Assessor intends to issue a separate tax declaration in the name of the beneficial user of a municipality-owned real property. 3. Whether the practice of the Provincial Assessor to approve tax declaration without the endorsement or any intervention from the Municipal Assessor is appropriate and correct? DSTCIa As alleged, until now, the Provincial Assessor does not delegate, at the very least, some of his functions to the Municipal Assessor of Iba. Real property assessment transactions never went through the Municipal Assessor's Office (MAO) of Iba, but were issued tax declarations by the Provincial Assessor of Zambales. As a result, for example, a certain property has been assessed by the Provincial Assessor's Office as residential building when in fact, the same is actually commercial based on ocular inspection conducted by the said MAO. 4. In relation to the preceding item, whether or not the Municipal Assessor Office is still necessary? In this connection, attention is invited to our letter of same date, addressed to the Honorable Mayor of Iba, Zambales, which reads in part, as follows: "xxx xxx xxx. "Evidently, real properties owned by the Government or any of its political subdivisions, like the Municipality of Iba in the instant case, are exempt from the payment of real property tax. However, once these real properties have been granted for consideration or otherwise, to a taxable person, that person or entity shall be considered as the beneficial user thereof and therefore, subject to real property tax. "It is informed further that all real property, whether taxable or exempt should be appraised/assessed and such appraisal/assessment should subsequently be listed in the name of the owner/administrator or the beneficial user thereof, or anyone having legal interest in the property pursuant to Sections 201 and 205 of the same Code. "In view hereof, there is no need to issue a separate tax declaration to beneficial user of real property owned by that municipality. The name of the said beneficial user should only be indicated in the "Administrator/Beneficial User" portion of the tax declaration issued in the name of the Republic of the Philippines. "xxx xxx xxx. "In view of the foregoing, tax declarations approved/issued by the Provincial Assessor without the indorsement or any intervention from the Municipal Assessor is valid. It is likewise deemed appropriate and correct, when public interest so requires and being the prerogative of the taxpayers where to transact business, for the Provincial Assessor to act accordingly upon any request/concerns of the said taxpayers within his jurisdiction. What is important is that the Provincial Assessor maintains the integrity of tax declarations. Hence, we answer your query no. 3 in the affirmative. "On the other hand, and if indeed, the ocular inspection conducted by the Municipal Assessor's Office of Iba warrant a different classification for the abovementioned property previously assessed by the Provincial Assessor's Office of Zambales as residential, it is advised that representations should be made to the said Provincial Assessor. Likewise, it is imperative that the Municipal Assessor of Iba be informed by the Provincial Assessor of Zambales of any changes/corrections made in classification, appraisal and assessment of real properties in order to maintain synchronized records of assessments, particularly tax declarations, in both offices. DTAESI "It is worth emphasizing, further, that the said approval/issuance of tax declaration can also be delegated to Municipal Assessor of Iba on the discretion of the concerned Provincial Assessor with certain limitations. Hence, we have likewise instructed the said Regional Director of Region 3, to look into the matter in order to determine whether the Provincial Assessor of Zambales can already delegate approval/issuance of tax declarations with certain limitations, to the Municipal Assessor of Iba. "Lastly, on the issue whether the Municipal Assessor's Office is still necessary, the answer is yes. Except for the exclusive powers vested upon the Provincial Assessors as discussed above, the Municipal Assessor shall perform the other essential duties/functions of an assessor as provided for under Section 472 of the LGC of 1991. We likewise agree with your opinion that the Municipal Assessor of Iba has better appreciation of the current status of all real properties and other circumstances thereat." In view hereof, that Office is hereby instructed to conduct fact-finding investigation and/or ocular inspection, and at the same time, render technical assistance in order to finally resolve the remaining issues: 1. The appropriate assessment for the subject rice mill; 2. Whether the Provincial Assessor of Zambales can already delegate approval/issuance of tax declarations with certain limitations, to the Municipal Assessor of Iba. In the negative, enjoin both the Provincial and Municipal Assessors to maintain synchronized records of assessment, particularly tax declarations; and 3. Other relevant issues to concerns of Hon. Deloso. Report of action taken hereon soonest will be highly appreciated. (SGD.) SALVADOR M. DEL CASTILLO OIC-Executive Director