Bureau of Local Government Finance Opinion

October 12, 2000 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 1st Indorsement Respectfully returned to the Officer-in-Charge, Provincial Assessor's Office, Iba, Zambales, the within letter dated August 9, 1999 of that Office, relative to the letter dated July 13, 1998 of Messrs. Perpetuo E. Yap and Prospero Yap, requesting assistance concerning the cancellation of Tax Declaration Nos. 012-0634 I and 007-0995 I, respectively. AHSaTI The subject parcels of land covering an area of 32.2512 and 23.54 hectares, respectively, were previously declared as agricultural land in favor of the Yaps under Tax Declaration Nos. 003-07434A (Perpetuo) and 012-0561A (Prospero), effective 1994, with notation therein reading thus: "revised pursuant to Section 219 of R.A. 7160." Moreover, the same parcels of land registered under Transfer Certificate of Titles Nos. T-41641 and T-41649, were reclassified from agricultural to industrial land under Tax Declaration Nos. 012-0634 I and 003-0995 I, effective 1998, this time with notation stating: "Re-classification into I-1 is made per letter request dated May 13, 1997 of Atty. Tiburcio A. Edano, Jr., (alleged) counsel for the land owner. Also Resolution No. 82-96 of Sangguniang Bayan of Masinloc, Zambales declaring Barangays Baloganon, Taltal and Bani open for industrial concerns, and order dated January 28, 1997 issued by DAR granting exemption from CARP coverage of the land." Mr. Yap, in his letter dated May 22, 1998 to the Provincial Assessor, informed that he was objecting/protesting the reclassification of his property (land) from agricultural to industrial land for the following reasons: 1. He did not ask nor request the Provincial Assessor's Office for the reclassification of his land into industrial. 2. His land cannot be classified as industrial land for reason that there was no industrial plant in the area or even in the entire barangay of Taltal, Masinloc, hence, the principle of "Actual Use" in assessment was not the basis of the reclassification. 3. Resolution No. 82-96 of the Sangguniang Bayan of Masinloc, Zambales, is allegedly, not yet approved by the Provincial Board of same province. 4. The reclassification of his land into industrial has created a financial trouble for him for reason that the 1997 assessed value of his land of only P136,300.00 has increased to P35,476,320.00 in 1998. In 1997, the real property tax due on his subject land was only P2,726.00, which increased to P712,000.00 in 1998. In this connection, and in order to determine on whether or not the abovementioned request of Mr. Yap may be given due course this Bureau directed to conduct an ocular inspection/investigation of the subject lands, to ascertain, the actual use of the same. The representatives of this Bureau who conducted the said ocular inspection/investigation submitted among others, the following findings: EADCHS 1. The subject lands were declared by the said Provincial Assessor as follows: Declared Owner TD NO. Area Class Assessed Effectivity Value Prospero E. Yap 003-0743A 23.54 has. Agri. P118,740.00 1994 Perpetuo E. Yap 012-0561A 32.25 has -do- P163,300.00 1994 Prospero E. Yap 003-0995I 23.54 has Ind. P25,894,110.00 1998 Perpetuo E. Yap 012-0634I 32.25 has Ind. P35,436,320.00 1998 2. Mr. Tiburcio A. Edano, Jr., in his letter dated March 25, 1999 addressed to the Provincial Assessor of Zambales, submitted that he mistakenly included Tax Declaration No. 012-0634I in the name of Perpetuo E. Yap and, apparently, also the tax declaration issued in the name of Prospero Yap, in his request for reclassification from agricultural to industrial land. 3. The parcel of land covering an area of 223,042 square meters adjoining the lands owned by the Yap's was also reclassified from agricultural to industrial under Tax Declaration No. 003-0994I in the name of Ana Nannette G. Paculdo and Pedro Paulo G. Paculdo with notation that states: "Revision and re-classification to I-1 is made per letter request of declarant dated April 24, 1997. See also Resolution No. 82-96 of Sangguniang Bayan of Masinloc, Zambales declaring barangays Baloganon, Taltal and Bani open for industrial concerns." 4. The actual physical verification of the subject real property revealed the following. 4.1 The said land of Prospero Yap is located along the municipal road of barangay Taltal, Masinloc, same province; 4.2 It is mountainous, with no source of water and no industrial building is erected thereon; aTIEcA 4.3 It is planted with small bamboo shoots, cogon grass and trees, such as mango trees, etc.; 4.4 In the case of the land owned by Perpetuo Yap, it is located along the barangay road of Taltal, said municipality. No industrial building/improvement is erected, and similarly has no source of water. 4.5 It is mountainous, planted with cogon grass and some trees such as small bamboo shoots, mango trees, etc. 5. In the approved Schedule of Market Values for lands the criteria for the first class industrial land are as follows: 5.1 "Along concrete or asphalted public road, pier or port, navigable river or sea cost; 5.2 "Located within a distance of not more than 10,000 meters to the major trading centers of the city/municipality; 5.3 "Where the vicinity is extensively used for industrial purposes ; and 5.4 "Commands the highest industrial land value in the city/municipality. 6. The said parcels of land were previously declared as agricultural (mango and suitable for cultivation) under Tax Declaration Nos. 003-743A and 012-0561A both effective, 1994. From the documents and information gathered, this Bureau noted that the reclassification from agricultural to industrial land made by the former Provincial Assessor of Zambales was not in accordance with R.A. No. 7160 and its implementing Rules and Regulations (IRR), particularly on the concept of "actual use." It is worthwhile to note that "industrial land" under the Code Section 199(n)] is clearly defined as land devoted principally to industrial activity as capital investment, . . . while "Agricultural land" is land devoted principally to the planting of trees, raising of crops livestock and poultry, dairying, salt making, inland fishing and similar aquacultural activities, and other agricultural activities, commercial or industrial. IEDaAc Moreover, Section 11(E) of Assessment Regulations No. 1-92 dated October 6, 1992 of the Department of Finance (DOF) provides as follows: "Section 11. Rules for assessment of lands . "xxx xxx xxx. "E. Agricultural land convertible into urban subdivisions such as residential, commercial or industrial shall be classified, valued and assessed as agricultural until such time that they shall have been converted and developed into such subdivisions. This rule shall also apply to lands already approved by proper authorities as subdivision but have not yet been actually developed for the purpose." "xxx xxx xxx." It is evident from the abovequoted provision of the said Assessment Regulations that agricultural lands convertible into urban subdivision such as residential, commercial or industrial shall be classified, valued and assessed as agricultural until such time that they shall have been actually converted and developed into such subdivisions. The said rule also applies to lands already approved by proper authorities as subdivisions but have not yet been actually developed for the purpose. In the letter dated November 24, 1995, copy enclosed, treating on a similar subject matter, specific clarification was made, thus: ". . ., this Bureau has consistently ruled that collection of real property taxes shall be based solely on correct assessments. Erroneous assessments resulting from improper or non application of existing laws, rules or regulations should be corrected, the effectivity of which shall be the same as the date of effectivity of the erroneous assessments being rectified." In view of the foregoing, and considering the glaring error committed in reclassifying the subject parcels of land into "industrial land", that Office is hereby instructed to restore its previous classification, that is, as agricultural, effective retroactively (1994) when the said error was made pursuant to the abovementioned letter dated November 24, 1995 of this Bureau. Likewise, the Provincial Treasurer thereat, for his part should be advised of the said corrections for his immediate appropriate action. Report of action taken hereon soonest is requested. CAaDTH (SGD.) BENJAMIN A. GERONIMO Executive Director