DOJ Opinion No. 078, s. 1984

DOJ OPINION NO. 078 , s. 1984 2nd Indorsement May 10, 1984 Respectfully returned to the Commissioner, Land Registration Commission, Quezon City, his within request for opinion on the query of Atty. Mario Santos, Manager, Collection Department of the Land Bank of the Philippines as to the right of the Land Bank to claim for exemption from payment of registration and other fees being imposed by the Office of the Register of Deeds on properties foreclosed by the bank in connection with the annotation of the sheriff's certificate of sale issued under Act 3135, as amend, and consolidation of foreclosed properties in the name of the Land Bank. The Land Bank claims exemption from payment of registration fees pursuant to Section 98 of RA No. 3844, as amended, which reads: "Section 98. Tax Exemptions . The Land Bank shall be exempt from all national, provincial, municipal and city taxes and assessments now enforced or hereinafter established. dctai "The exemption authorized in the preceding paragraph of this Section shall apply to all property of the Bank, to the resources, receipts, expenditures, profits and income of the Bank as well as to all contracts, deeds, documents and transactions related to the conduct of the business of the Bank; Provided, however, That said exemption shall apply only to such taxes and assessments for which the Bank itself would otherwise be liable and shall not apply to taxes or assessments payable by persons or other entities doing business with the bank". (Emphasis supplied) LexLib The position of the Land Bank on the matter is quoted under: "Relative to the first case, the highest bidder is the Land Bank and most often the debtor-mortgagors fail to redeem the foreclosed properties. Even assuming that redemption is effected, still the annotation of the sheriff's certificate of sale is aimed at protecting the interest of the Land Bank and not that of the mortgagors. As regards the second case, the Bank, being the highest bidder, becomes the vendor and the vendee of said properties. Within this context, the Land Bank is in effect, liable for the taxes and assessments. As such, the Bank has the right to claim for exemption on these payments as provided for in the aforementioned Decreed". The Land Bank also invokes LRC Circular No. 256 dated September 6, 1974. The said Circular states: "In LRC Consulta No. 952, Register of Deeds, Manila, pet.: dated August 22, 1974; this Commission held that in a deed of sale where the Land Bank is the purchased of real property, the Land Bank may validly stipulate that "all documentary and science stamps, registration fees, and other expenses necessary in connection with the registration of the document shall be for the account of the Land Bank." This commission considers said stipulation as valid and not contrary to Law, public policy, or morals; hence, all Registers of Deeds are duty-bound to register deeds of sale of real property in favor of the Land Bank relating to the conduct of business of said Bank, and containing similar stipulations free from all national, provincial, municipal and city taxes and assessments, including registration fees and documentary stamps". The herein clarification as to the application of Section 98 of R.A. No. 3844, as amended is sought by the Land Bank in view of the varying interpretations of the provision of said section by the different Offices of the Register of Deeds. The Acting Commissioner of the Land Registration Commission has endorsed said request to this Ministry in order that a uniform guideline may be established for all registers of deeds. It may be mentioned at the outset that the instant query has been rendered academic by the provisions of Section 23 of Presidential Decree No. 1117 ("Budget Reform Decree of 1977") which has repealed or withdrawn all tax exemptions granted to all units of government, including government-owned or controlled corporations (see Ops., Min. of Justice, No. 30, C.S.; No. 1, s. 1980; No. 98, s. 1979 and No. 133, s. 1977). said provision provides: "SEC. 23. Tax and Duty Exemptions . All units of government, including government-owned or controlled corporations, shall pay income taxes, customs duties and other taxes and fees as are imposed under revenue laws ; Provided, That organizations otherwise exempted by law from the payment of such taxes/duties may ask for a subsidy from the General Fund in the exact amount of taxes/duties due: Provided, further, That a procedure shall be established by the Secretary of Finance and the Commissioner of the Budget whereby such subsidies shall automatically be considered as both revenue and expenditure of the General Fund" (Emphasis ours) Since the tax exemption privilege of the Land Bank under Section 98 of R.A. No. 3844, as amended, is already deemed withdrawn by Section 23 of P.D. No. 1177, supra , its present claim for exemption from payment of registration fees, which is anchored on Section 98, may be said to have already lost its legal basis. Be that as it may, and solely for the purpose of discoursing on the accepted distinction between a tax and a fee under provisions of law authorizing exemptions from payment of taxes and/or fees, the following extended discussion is given for the enlightenment of all concerned. Under the aforequoted provision of Section 98 of R.A. No. 3844, as amended, the Land bank is exempted from the payment of all "taxes" and "assessments. A tax is a financial obligation imposed by the state on persons, whether natural or juridical, within its jurisdiction, for property owned, income earned, business or profession engaged in, or any such activity analogous in character for raising the necessary revenues to take care of the responsibilities of government. (Republic vs. Philippine Rabbit Bus Lines, Inc., 32 SCRA 215, [1970]). The term "assessment" is defined in the Real Property Tax Code (P.D. No. 464 [1974]) as "the act or process of determining the value of property, or proportion thereof, subject to tax, including the discovery, listing and appraisal of properties". (Section 3[e]). In practice and as generally understood, a broad distinction between the two terms is recognized. Taxes are public burdens imposed generally upon the inhabitants of the whole state or upon some civil division thereof for governmental purposes without reference to peculiar benefits to particular individuals or property while assessments have reference to impositions for improvements which are specially beneficial to particular individuals or property, and which are imposed in proportion to the particular benefits supposed to be conferred. (Black's Law Dictionary, Special de Luxe Ed., [1979], p. 1307. Broadly, however, it is said that taxes include assessments and that the right to impose assessment has its foundation in the taxing power of the government. (Ibid.) LexLib The test to determine whether a "fee" may be considered a tax was laid down by the Court in the case of Calalang vs. Lorenzo and Villar (97 Phil. 212, 213 [1955]). The Court held in the said case as follows: "The question posed by the appeal is whether motor vehicle registration fees come within the purview of the above provision of the Backpay Law on the theory that they are taxes. "The charges prescribed by the Revised Motor Vehicle Law for the registration of motor vehicles are in section 8 of the law called "fees". But the appellation is no impediment to their being considered taxes if taxes they really are. For not the name but the object of the charge determines whether it is a tax or a fee. Generally speaking, taxes are for revenue, whereas fees are exactions for purposes of regulation and inspection and are for that reason limited in amount to what is necessary to cover the cost of the services rendered in that connection. Hence, a 'charge fixed by statute for the service performed by an officer, where the charge has no relation to the value of the services performed and where the amount; collected eventually finds its way into the treasury of the branch of the government whose officer or officers collected the charge, is not a fee but a tax'. (Cooley on Taxation, Vo. 1, 4th ed. p. 110)" The registration fees prescribed by the Revised Motor vehicle Law were considered taxes because only a small portion about five per centum, of the total collection from the motor vehicle registration fees represents the expenditure of the Motor Vehicle Office and the money collected is not intended for the expenditures of said office but for the express purpose of providing revenue with which the Government is to discharge one of its functions, the construction and maintenance of public roads, streets and bridges for everybody's use. Moreover, the Court took note of the provision of the Motor Vehicle Law (Section 70, subsection [b] as amended) which, the Court stated, regards those fees as taxes, for it provided that "no other taxes or fees than those prescribed in this Act shall be imposed for the registration or operation or on the ownership of any motor vehicle, or for the exercise of the profession of chauffeur, by any municipal corporation . . . ." With regard to the entry fee and registration fee collected by the Register of Deeds under P.D. No. 1529, the property Registration Decree, the said Decree expressly provides that the aforementioned fees are collected by the Registers of Deeds "for all services rendered by them under this [said] Decree" (Section 114[c]) Unlike the Motor Vehicle Law referred to in the above-cited case, the Property Registration Decree does not prohibit the imposition of "other taxes". In fact, real properties are subject to real property tax under the Real Property Tax Code (P.D. No. 464) LLjur Considering the above-mentioned provisions of the Property Registration Decree which authorizes the collection of entry registration fees, said fees may not be deemed taxes but service fees and would not therefore come within the contemplation of the exemption from taxes and assessments" accorded to the Land Bank under R.A. No. 3844. (See also Op. No. 137, s. 1974, citing Luzon Stevedoring Corporation vs. Land Registration Commission, 5 SCRA 145) In view of the foregoing, it is believed that Registers of Deeds are empowered to collect entry and registration fees from the Land Bank with respect to the entry and registration of documents/transactions of the Land Bank covered by the Property Registration Decree in view of the absence of a legal basis for exempting the Land Bank from the payment of said fees. For the Minister of Justice: (SGD.) JESUS N. BORROMEO Deputy Minister