Bureau of Local Government Finance Opinion

November 6, 2002 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 2nd Indorsement Respectfully returned, thru the Regional Director for Local Government Finance, Department of Finance, Region III, Benigno Aquino Memorial Hall, Capitol Compound, San Fernando City, to the Municipal Assessor, Mabalacat, Pampanga, the attached October 14, 2002 follow-up letter of Mr. Nicolas M. Cruz of No. 1142 Jake Gonzales Blvd., Angeles City to his letter dated June 14, 2002, in effect, requesting clarification on whether apartment for rent which is allegedly being used exclusively for residential purposes, may be classified for taxation purposes, as commercial. It may be recalled that this Bureau under its 1st Indorsement dated July 12, 2002, referred the matter to that office but, to date, no response has been received by this Bureau. At any rate, attention is invited to the 1st Indorsement dated February 11, 2002, of this Bureau, copy enclosed, treating on a similar subject matter, the pertinent portions of which read as follows: "xxx xxx xxx "Section 198. Fundamental Principles . The appraisal, assessment, levy and collection of real property tax shall be guided by the following fundamental principles: "xxx xxx xxx "(b) Real property shall be classified for assessment purposes on the basis of its actual use;" "(c) Real property shall be assessed on the basis of a uniform classification within each local government unit;" "The abovecited fundamental principles in real property tax assessment were further amplified under Section 217 of the same Code, which reads as follows: "Sec. 217. Actual Use of Real Property as Basis for Assessment . Real Property should be classified, valued and assessed on the basis of its actual use regardless of where located, whoever owns it and whoever uses it." aDcTHE "Moreover, be reminded that when PD 464, (otherwise known as the Real Property Tax Code, as amended), was still in force and in effect, that is, before the promulgation of R.A. No. 7160, the Department of Finance, in clarifying the principle of "Actual Use" as basis for assessment of real property, has issued Department Order No. 3-74 dated January 31, 1974, copy attached. The pertinent portion thereof reads, to wit: "xxx xxx xxx "3. A building actually used for residential purposes by persons other than the owner on rental basis shall be classified and assessed as residential based on its current level of assessment . . .; Similarly, therefore, and considering that the said apartments are used by the occupants/inhabitants as residence, notwithstanding that, as submitted, the same are for rent, this Bureau maintains that the classification of the subject apartments should be residential. Be guided accordingly. (SGD.) MA. PRESENTACION R. MONTESA Executive Director