Bureau of Local Government Finance Opinion

October 14, 2014 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Ms. Zarrah R. Camerino Acting Secretary to the Sangguniang Office of the Second Sangguniang Panlungsod City of Imus Madam : This refers to SP RESOLUTION NO. 02-2014-91 enacted by the Sangguniang Panlungsod of Imus entitled "A RESOLUTION AUTHORIZING AND EMPOWERING THE OIC-CITY TREASURER, MR. MANUEL REYNOLD W. DELA FUENTE, TO PUT ON-HOLD ALL REMITTANCES WITH THE PROVINCIAL TREASURER'S OFFICE UNTIL SUCH TIME THAT THE PROVINCE OF CAVITE HAS REMITTED AND TRANSFERRED LOCAL TAXES, INCLUDING LOCAL FRANCHISE TAX THAT ARE DUE TO THE CITY OF IMUS." ISHCcT Said Resolution was referred to the Provincial Treasurer of Cavite and City Treasurer thereat for comment under a letter and an endorsement both dated August 27, 2014. Under a 2nd Indorsement dated September 10, 2014, the OIC-City Treasurer informed that he is requesting the Provincial Treasurer of Cavite, Ms. Josephine D. Daza, to remit and transfer to the City of Imus the local franchise tax remitted by the Manila Electric Company (MERALCO) from July 2012 up to April 2014. On the other hand, the Provincial Treasurer, under a letter dated September 11, 2014 informed that MERALCO has remitted the franchise tax to the province pending upon the submission of an Ordinance of the City of Imus and the corresponding approval of the Energy Regulatory Commission (ERC). The Provincial Treasurer informed further that with regards to the temporary stoppage of the remittance of real property tax due the Province, it was mentioned that Imus became a component city on June 30, 2012 and its City Ordinance was only enacted on March 10, 2014, thus it is evident that the City of Imus shall have to remit to the Provincial Government the corresponding shares for prior years RPT collections. Moreover, the Provincial Treasurer informed that several communications, including the legal opinion of the Provincial Legal Office on local taxes, fees, and charges imposed by the City of Imus, vis-a-vis the Province of Cavite were sent to the Office of the City Treasurer. In this connection, it is worth pointing out that in the said Legal Opinion of the Provincial Legal Officer dated 18th of June 2014, BLG letter dated March 13, 2012 addressed to the Provincial Governor of Cotabato which embodied the opinion in the case of the Province of Surigao del Sur and the City of Bislig, was cited, the pertinent portion of which is quoted as follows: CAacTH ". . . proceeds from real property taxes that accrued and were collected by the then Municipality of Bislig and later as City of Bislig on the basis of the Real Property Tax Ordinance of the Province of Surigao del Sur prior to the enactment of Ordinance No. SP-2000-10 of the City should be distributed in accordance with the aforequoted par. (a), Section 271 of the Local Government Code of 1991. "Succinctly stated, proceeds of real property taxes collected by the City of Bislig by virtue of its own Real Property Tax Ordinance accrues (sic) exclusively thereto. However, real property taxes collected by the then Municipality of Bislig and later as City of Bislig prior to the enactment of its own Real Property Tax Ordinance and on the basis of the Real Property Tax Ordinance of the Province of Surigao del Sur should be shared with the province." Moreover, please be informed that this Bureau has consistently expressed the view that before any tax, fee or charge may be collected from a taxpayer, the same must first be levied under a duly-enacted tax ordinance. In the absence of such tax ordinance, there will be no basis for the collection of any tax, fee or charge from taxpayer. On the basis of the foregoing, it may be stated that the City of Imus should remit the share of the Province of Cavite of real property tax collected prior to the enactment of its City Ordinance. Likewise, the City of Imus is advised to submit a copy of its Ordinance enacted after its conversion into a component city together with the copy of the approval of the ERC before the franchise tax remitted by MERALCO to the Province be transferred to and remitted to the City of Imus. We hope that this will help clarify matters. Very truly yours, (SGD.) SALVADOR M. DEL CASTILLO OIC-Executive Director