Bureau of Local Government Finance Opinion

May 14, 2012 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 2nd Indorsement Respectfully returned to the OIC-Regional Director for Local Government Finance, Department of Finance, Region X, 6th Division, Corner Tejero St., Patag, Cagayan de Oro City, the within preceding Indorsement dated March 26, 2012 relative to the real property tax liabilities of Misamis Occidental Electric Cooperative, Inc., (MOELCI 1) located in Barangay Magcumiguin, Calamba, Misamis Occidental invoking Section 270 of the Local Government Code of 1991 (R.A. 7160). The Provincial Treasurer of Misamis Occidental in her attached letter dated February 27, 2012 addressed to the OIC-Regional Director of Region X, submitted the following information for evaluation and consideration, among others, viz. : cDHAaT That MOELCI 1 incurred a real property tax liabilities to the lgu of Calamba, Misamis Occidental from CY 1998 up to the present; That from June 25, 2004 to April 27, 2007, a series of Notices of Real Property Tax Delinquencies was sent to MOELCI 1 by the Municipal Treasurer of Calamba, same province, informing of their obligation to pay said tax. On September 24, 2007 Atty. Malcolm T. Enerio, Jr., Legal Retainer of said electric cooperative requested for a reassessment on the subject properties; Thereafter, on October 2, 2007, a final notice of tax delinquencies were served based on the new assessment; On April 22, 2010, Mr. Noel B. Dumalangan, General Manager of MOELCI 1 signed a Promissory Note promising to pay the amount of P3,173,324.86 to the said local government unit (lgu); Further, on September 27, 2010 Atty. Diogenes Apao, Jr. of Apao Law Office, wrote the said Provincial Treasurer invoking Section 270 of R.A. No. 7160. He likewise informed that the said cooperative is willing to pay the tax but not beyond the 5-year prescriptive period; The stand of the concerned Provincial Treasurer of Misamis Occidental in the case at bar stated under the abovementioned letter dated February 27, 2012 is that: MOELCI 1 is liable to pay real property tax from 1998 up to the present by virtue of Local Finance Circular No. 1-07 dated June 28, 2007 particularly Sections 1, 2, 3 & 4 thereof. The said Office likewise believes that Section 270 of the LGC of 1991 is not applicable to the herein case. In this regard, attention is invited to this Bureau's 2nd Indorsement dated July 24, 2009 on the interpretation of the provisions under Section 270 of R.A. No. 7160 or the LGC of 1991, addressed to the Assistant City Treasurer for Operations of Cebu City, the pertinent portions of which provide as follows: "Apparently, the wisdom behind the provision of the Local Government Code of 1991, on the prescriptive periods to collect is to compel local treasurers to promptly perform their duty to collect real property tax for the benefit of the taxing authority, the local government unit (lgu). The prescriptive periods were provided to enforce the collection of real property tax within a specific time. Thus, no action for collection, whether administrative or judicial, shall be instituted after the lapse of the five-year or ten-year periods, as the case may be. Please take note that under the ten-year prescriptive period, fraud or intent to evade payment must be alleged and supported by clear and convincing proof. SHTaID "There have been clarifications earlier made by this Bureau that if the local treasurer has been sending notices of delinquency and/or reminder letters for the payment of delinquent real property tax preparatory to the application of administrative and/or judicial remedies in the collection thereof as provided for by law in observance of due process, the delinquent real property tax may be collected even beyond the five-year period. It is only when the local treasurer neglected or deliberately failed to perform his/her mandated duties giving rise to the prescription of the period to collect that the taxpayer may validly invoke the provision on prescriptive period. Otherwise taxpayers may circumvent the law by not paying their taxes at all and will just wait for the lapse of the periods to collect." Accordingly, this Bureau hereby confirms the opinion of the said Provincial Treasurer of Misamis Occidental that MOELCI 1 is liable to pay real property tax from CY 1998 up to the present pursuant to Section 4 of Local Finance Circular No. 1-07 dated June 28, 2007. Be guided accordingly. (SGD.) SALVADOR M. DEL CASTILLO OIC-Executive Director