Review of BLGF Indorsement Re: Issuance of Tax Declarations

May 16, 2002 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION MEMORANDUM FOR : Undersecretary Juanita D. Amatong FROM : Assistant Secretary Emmanuel P. Bonoan Attorney Ramil E. Bugayong SUBJECT : Review of BLGF Indorsement Re: Issuance of Tax Declarations We have reviewed the proposed 1st Indorsement of the Bureau of Local Government Finance (BLGF) to the OIC-Provincial Assessor of Zambales regarding the letter of Ms. Fe Bautista Educalane relative to the cancellation and transfer of tax declarations covering certain parcels of land located in Masinloc, Zambales and we believe a revision is in order. In her January 2, 2002 letter to the BLGF, Ms. Educalane (allegedly representing the Heirs of Alberto and Marcelino Bautista) sought BLGF's assistance in seeking the cancellation of Tax Declaration Nos. 012-0230A, 012-0363A and 012-0231A (collectively, the Tax Declarations) registered in the name of Dolores Edquiban and the transfer of the same in the name of the Heirs of Marcelino Bautista and Heirs of Alberto E. Bautista on the strength of an instrument entitled "Confirmation and/or Ratification of Partition" (the Instrument) dated January 22, 2001 executed by some of the heirs of Dolores Edquiban. The Instrument reveals that the parcels of land covered by the Tax Declarations were among those that were acquired by Dolores Edquiban Bautista during her lifetime. Upon her death, her five children (Alberto, Modesto, Florentino, Bernarda and Marcelino) had "partitioned, designated and segregated their respective shares" from the parcels of land left by their mother. The parcel of land covered by Tax Declaration No. 012-0231A went to Alberto while those covered by Tax Declaration Nos. 012-0230A and 012-0229A went to Marcelino. aTSEcA Thereafter, the Instrument was presented by Ms. Educalane to the Municipal Assessor of Masinloc, Zambales and later on to the Provincial Assessor of Zambales for the purpose of transferring the Tax Declarations in the name of Alberto and Marcelino. However, the Provincial Assessor informed Ms. Educalane that it cannot cancel and transfer the Tax Declarations as requested unless she submits an affidavit from the heirs of Florentino stating that they (the heirs of Florentino) are aware of the execution of the Instrument and they interpose no objection to it. Additionally, the Provincial Assessor noted that the Instrument was not registered with the appropriate Register of Deeds. Ms. Educalane, however, has not been able to submit the affidavit thus the Provincial Assessor has not cancelled and transferred the Tax Declarations. Based on the foregoing and without going into the sufficiency of the contents of the Instrument, we believe that the Provincial Assessor cannot effect the cancellation and transfer of the Tax Declarations on the strength of the Instrument on the ground that the same is not registered with the appropriate Register of Deeds in accordance with Section 113 of P.D. No. 1529. We must make it known here that upon the death of Dolores Edquiban, her heirs became co-owners of her undivided estate. From the moment of death of the decedent, and pending the actual partition of the estate, the heirs become co-owners of such estate, each one having an undivided interest in the property to the extent of his share therein. The estate has ceased to be property of the deceased and has become property owned in common by the heirs. III Tolentino, Civil Code of the Philippines 590 (1992) During the time that the estate is undivided and is owned in common by the heirs, Section 205 (b) of the Local Government Code (LGC) is relevant as far as the listing of the real property component of the estate for real property tax purposes is concerned. Said section provides that "[t]he undivided real property of a deceased person may be listed, valued, and assessed in the name of the estate or of the heirs and devisees without designating them individually ". ( Emphasis supplied ) However, where the heirs of an undivided real property have divided and distributed the property among themselves, Section 205 (a) of the LGC applies, which in relevant part states that "[r]eal property shall be listed, valued and assessed in the name of the owner or administrator, or any one having legal interest in the property ." ( Emphasis supplied ) The reason behind this is that after the mutual agreement among the heirs for the division of the estate, either actually distributing their respective shares or leaving the same undivided, the property ceases to be the estate of the deceased, and becomes the undivided property of the heirs. III Tolentino 622 . Once the heirs agree on a partition or an actual division of the property among themselves, such partition if legally made confers upon each heir the exclusive ownership of the property adjudicated to him. Art. 1091, Civil Code of the Philippines . In that sense, partition is of the nature of a conveyance of ownership. Evangelista v. Bonilla, 46 O.G. 4258, September 1950 cited in III Tolentino 596 . In the case at bar, it is evident that the heirs of Dolores Edquiban had ceased to be co-owners of her estate when they agreed to partition the estate and the heirs "took physical control and possession of their designated shares and had exercised the right and attributes of ownership over the same." In other words, after the partition, each heir had acquired exclusive ownership of the parcels of land actually distributed to him. Subsequent to the partition, the heirs of Dolores Edquiban executed the Instrument that now stands as the written record of the partition and reflects which particular parcel of land went to which heir. That the partition preceded the execution of the Instrument is of no moment since a public instrument is not essential to the validity of the partition. This is not one of those contracts in which form is of the essence. III Tolentino 594 . That is not to say, however, that the Instrument is not important. While a public instrument is not necessary for the validity of a partition, it is necessary for the registration of the contract. III Tolentino 594 . And in this particular case where the Instrument is the document that conveys parcels of unregistered land to the respective heirs, registration of the Instrument is necessary. Section 113 of P.D. No. 1529 requires that the Instrument be registered, otherwise the Instrument does not bind third parties. Said section provides: "No deed, conveyance, mortgage, lease, or other voluntary instrument affecting land not registered under the Torrens system shall be valid, except as between the parties thereto, unless such instrument shall have been recorded in the manner herein prescribed in the office of the Register of Deeds for the province or city where the land lies." Here, the Provincial Assessor observed that the Instrument has not been registered with the Register of Deeds. This means that, in view of Section 113 of P.D. No. 1529, the Instrument does not bind the Provincial Assessor, or any third party for that matter. For this reason, the Provincial Assessor may not cancel and transfer the Tax Declarations on the basis of the Instrument. In this connection, the BLGF has previously opined that, where real property is being conveyed, cancellation and transfer of tax declarations may be effected only upon the submission of the instrument conveying real property duly registered with the Register of Deeds of the place where the real property is located. ( See, BLGF 2nd Indorsement to the Provincial Assessor of Malaybalay, Bukidnon dated May 26, 1993 ) Accordingly, unless it is presented with an instrument that conveys the parcels of land to the heirs duly registered in the office of the appropriate Register of Deeds in accordance with Section 113 of P.D. No. 1529, the Provincial Assessor cannot cancel and transfer the Tax Declarations in the name of the heirs of Marcelino and Alberto Bautista. The sufficiency of the Instrument for registration on the other hand, is a matter that should be addressed by the Register of Deeds concerned. We recommend, thus, that the subject indorsement be revised substantially in the manner provided in the draft indorsement attached hereto. For the Undersecretary's consideration.