Bureau of Local Government Finance Opinion

November 10, 1998 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Carlos J. Reyes SOLID MILLS, INC. Barrio Sukat Muntinlupa City S i r : This refers to your letter dated September 9, 1998 requesting clarification whether the provision in Section 2D.01 of the Makati City Revenue Code which states that "For purposes of determining the fair market value of lands, the zonal values established by the Bureau of Internal Revenue shall be used" is legal considering that it has no basis under R.A. 7160. In this connection, enclosed for your information and reference is a copy of the 2nd indorsement dated December 26, 1996 of this Bureau addressed to the In-Charge of Office, Office of the City Treasurer of Makati, the pertinent portion of which is quoted hereunder: " . . ., under the same Section 135, it is clear that the tax base should only be either the total consideration involved in the acquisition of the property, or its fair market value which, it may be presumed, is the market value of the subject property reflected or indicated in the prevailing Schedule of Market Values prepared by the City Assessor and duly-enacted by the Sangguniang Panlungsod. It must be borne in mind that local government affairs and operations are governed by the LGC and, therefore, unless there are express and explicit provisions that a local tax shall be based on zonal values prescribed by the BIR or any valuation determined by a national agency, the same may not serve or be utilized as basis for determining a local tax. cSCADE "This Bureau, therefore, is of the view that Section 2D.01 of the Makati Revenue Code which provides that the BIR zonal values should be used as basis for determining the fair market value of lands for purposes of the transfer tax partakes the nature of an amendment to the LGC and, thus, beyond the authority of the Sangguniang Panlungsod of Makati City which enacted the Makati Revenue Code." We hope that this will help clarify matters. Very truly yours, (SGD.) ANGELINA M. MAGSINO (Deputy Executive Director) Officer-In-Charge