Bureau of Local Government Finance Opinion

July 20, 2004 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION The Provincial Treasurer Bulacan, Malolos City M a d a m : This pertains to your letter of March 18, 2004, requesting an opinion on the propriety of imposing real property tax on road lots within a subdivision. It is represented that a certain Mr. Henry Lim is the owner of a land situated in Malolos City, covered by TCT No. T-30507. The said parcel of land is a road lot within a subdivision being used by the homeowners of said subdivision leading to the Main Road of Barangay Tikay. It is represented further that Mr. Lim has not been paying the real property tax due on the said road lot. He argued that under PD No. 957 dated July 12, 1976, as amended by PD No. 1216 dated October 14, 1977, subdivision developers are required "to provide adequate roads, alleys, sidewalks," and that upon completion of such roads, alleys, sidewalks and playgrounds, the same "shall be donated by the owner or developer to the city or municipality and it shall be mandatory for local government to accept" (Citing Section 31, PD No. 957), ( White Plains Association Inc. vs. Legaspi 193 SCRA 765, 778 [1991]). TcEaAS Considering the abovementioned law, Mr. Lim claimed that the subject property is considered donated to the city or municipality and therefore, no realty taxes should be assessed against the registered owner. In this regard, it is informed that the case cited by Mr. Lim ( White Plains Association Inc. vs. Legaspi , G.R. No. 95522, 193 SCRA 765), copy attached, was not the final judgement in that case. The said case was the subject of several Motions for Reconsideration by both the Association and the Quezon City Development & Financing Corporation (QCDFC). The Court further held that: ". . . the dictum in White Plains Association, Inc. vs. Legaspi found in the published reports had been modified on the basis of a second motion for reconsideration. It is wrong to accept as settled the doctrine still not clearly resolved that a subdivision developer may be forced to donate a street to the city against the owner's will. Conclusively so, if the road to be donated was intended for a national highway which has been since abandoned. This is not what this court finally promulgated in that case." The final judgement in that case was embodied under G.R. No. 128131 entitled " White Plains Homeowners Association Inc. et al. vs. Court of Appeals and the Quezon City Development and Financing Corporation (QCDFC), on October 8, 1998, wherein the Supreme Court ruled among others, that: "The reservation or lien on Road Lot 1 intended for a highway or parkway is LIFTED. Rights of full ownership including the development of the property or the collection of fees and rentals from the gardeners therein are restored to the Quezon City Development & Financing Corporation." Relatedly, in the subject Supreme Court Decision (G.R. No. 128131), the court further held, thus: ". . . As stated by QCDFC, this is because the area has never been donated; title remains with the developer; the purpose for which the reservation was made can no longer be implemented; and under the law, even indisputably, subdivision streets belong to the owner until donated to the government or until expropriated upon payment of just compensation." AETcSa Likewise, please note of the following pronouncements of the Supreme Court Decision on the above case: "(d) . . . "The registered owner or developer of the subdivision or condominium project, upon completion of the development of said project, may at his option convey by way of donation the roads and open spaces found within the project to the city or municipality wherein the project is located. Upon acceptance of the donation by the city or municipality concerned, no portion of the area donated shall thereafter be converted to any other purpose or purposes unless, after hearing, the proposed conversion is approved by the (National Housing) Authority. [Italics supplied] "Please note the phrase 'at his option.' There is also the provision that any portion thus donated cannot be converted to a purpose other than the original purpose. The approval by the National Housing Authority is required only in genuine donations. Donation has an established meaning in law. Any change from the original purpose always results in reversion of the donated property to the donor or his heirs. At any rate, the law calls for a 'donation.' "(e) P.D. 1216, Section 2 gives the owner or developer the option of donation to either the Homeowners Association or the local government. There is nothing about forcible donation. What is mandatory is for the local government to accept a developed road or open space given as a donation . (Emphasis ours) "These provision of the law are only a carryover from existing jurisprudence. In the early case of Young vs. City of Manila 1 , this Court ruled: "We are therefore of the opinion and so hold that the plaintiff cannot compel the defendant City of Manila to purchase from him the street areas described in his complaint. Neither can he be compelled to donate said land and transfer his title to the city so that the latter may build and maintain the streets. But as long as the plaintiff retains title and ownership of said street areas, he is under obligation to pay the land taxes thereon as well as to reimburse to the city the expenses of filing the same." (Emphasis supplied) CHIEDS Section 11(E) of Local Assessment Regulations No. 1-92 dated October 6, 1992 of the Department of Finance, implementing among others Section 201 of the Local Government Code of 1991 (R.A. No. 7160) provides the following: "Sec. 11. Rules for Assessment of lands : "xxx xxx xxx. "(E) . . . "Roads or streets in urban subdivision, unless already donated or turned over to the barrio (barangay), municipality or city, shall be listed in the name of the subdivision owner and shall be valued on the basis of the cost of cementing, asphalting or paving them with gravel and sand per square meter. The roads or streets shall be assessed at the rate not exceeding the assessment level applicable to lands located in the subdivision ." (Emphasis supplied) Accordingly, the herein subject property (Road Lot) which as submitted, is owned by a certain Mr. Lim, is subject to real property tax in accordance with the provisions of law as discussed above. Very truly yours, (SGD.) MA. PRESENTACION R. MONTESA Executive Director