Publishing the Ruling of the Land Registration Commission on Real Properties Forfeited for Delinquent Taxes

June 11, 1974 REVENUE MEMORANDUM CIRCULAR NO. 32-74 SUBJECT : Publishing the Ruling of the Land Registration Commission on Real Properties Forfeited for Delinquent Taxes TO : All Internal Revenue Officers and others concerned For your information, guidance and reference, there is reproduced hereunder a Resolution issued by the Land Registration Commission entitled "Land Registration Commission Consulta No. 832" which was promulgated on February 20, 1973, as follows: "RESOLUTION "The record shows that on October 19, 1972, the Revenue District Officer, Revenue District No. 51, Masbate, Masbate, requested the Register of Deeds of said province to issue, pursuant to Republic Act No. 5203, transfer certificates of title in the name of the Republic of the Philippines covering the following real properties owned and registered in the name of Laureano Sia: Tax Present Dec. No. Title No. Location Area 2775 TCT No. T 3 Pawa, Masbate, Masbate 17.4053 Has. 2814 TCT No. T 9 Biong, Masbate, Masbate 10.7866 Has. 2702 TCT No. T 216 Ibingay, Masbate, Masbate 3.0462 Has. 4076 TCT No. T 217 Macalangcag, Mas., Mas. 11.1103 Has. 2753 OCT No. P 118 Masbate, Masbate (SP) .1966 Has. 2838 OCT No. P 111 Masbate, Masbate (MSP) .0286 Has. 3752 TCT No. T 177 Usab, Masbate, Masbate 4.5259 Has. 4877 TCT No. T 258 Pasig-Bankay, Claveria 94.5633 Has. 2773 TCT No. T 200 Biong, Masbate, Mas. 17.6301 Has. 2786 TCT No. T 226 Pawa, Masbate, Mas. 23.9572 Has. 2786 RT No. 25 Pawa, Masbate, Mas. 23.9340 Has. The above-mentioned properties were forfeited in favor of the government in view of the failure of Laureano Sia or his heirs to redeem the same within the time prescribed by law and their declaration of forfeiture was registered by the Register of Deeds on April 1, 1971 (See p. 11 of t.s.n., Hearing on December 6, 1972) In his reply-comment dated October 26, 1972, however, said Register of Deeds informed the Revenue District Officer that their request for registration could not be given due course by his office "on the ground that the corresponding eleven (11) certificates of title Nos. T-3, T-9, T-216, T-217, P-118, P-111, T-177, T-258, T-200, T-266 and RT-25 were not submitted for cancellation, and that said titles have never been mentioned in the ' Declaration of Forfeiture of Real Property ' registered on April 1, 1970 . . . ." Such being the case, the Register of Deeds advised the Revenue District Officer to file the necessary petition in the proper court to protect the interest of the government as required in Sections 111 and 112 of Act No. 496. This comment prompted the Revenue District Officer to write a lengthy letter, the pertinent portion of which is hereunder quoted: "The levy made on the real estate in question is part of an administrative proceeding which was executed under the authority of Sections 315-330 of the National Internal Revenue Code, as amended. It is one of the summary remedies for the collection of internal revenue taxes and, being administrative in nature, does not require judicial participation even in the matter of issuance of new certificates of title. If a proceeding under the said law has culminated in forfeiture of the properties levied upon, as in this case, it is enough that there is legal sufficiency in the documents filed or registered in that Registry to serve as support for transferring titles to the new owner. Thus, the role of your office to transfer titles under such proceeding constitutes the last step in the administrative process availed of by this Office to collect taxes . . . "If the Bureau of Internal Revenue had chosen to collect by judicial action the estate and inheritance taxes due from the aforementioned estate, then an order to condemn the properties of the deceased to satisfy the tax obligations of the estate would be part of the judgment. But the Bureau of Internal Revenue has elected to collect them by the administrative process of levy on real estate not only because it is speedier but also because it is less costly. To suggest, therefore, at this stage that this Office go to court for authority to transfer to the Republic of the Philippines title to the property in question would operate not only to delay the collection of the taxes involved but to render nugatory as well the powers conferred upon the Commissioner of Internal Revenue and his deputies to collect taxes by summary remedies, something beyond the clear intendment of the law." On the question of the surrender of the owner's duplicate certificates of title, the Revenue District Officer quoted Section 351 of the Internal Revenue Code as follows: "Sec. 351. Failure to surrender property placed under distraint and levy . Any person having in his possession or under his control any property or rights to property, upon which a warrant of constructive distraint or of actual distraint and levy has been issued shall, upon demand by the Commissioner of Internal Revenue or any of his deputies executing such warrant, surrender such property or right to property to the Commissioner of Internal Revenue or any of his deputies, unless such property or right is, at the time of such demand, subject to an attachment or execution under any judicial process. Any person who fails or refuses to so surrender any of such property or right shall be liable in his own person and estate to the Government in a sum equal to the value of the property or rights not so surrendered but not exceeding the amount of the taxes (including penalties and interest) for the collection of which such warrant has been issued, together, with costs and interest, if any, from the date of such warrant. In addition, such person shall be punished by a fine of not more than three hundred pesos or by imprisonment for not more than six months, or both. Not satisfied with the above explanation, the Register of Deeds elevated the matter en consulta pursuant to Section 4, Republic Act No. 1151. In the resolution of this consulta , this Commission has taken particular note of the recent Presidential Decree No. 69 which took effect on January 1, 1973, amending certain sections of the National Internal Revenue Code, the pertinent section of which is hereunder quoted as follows: "Sec. 328. Forfeiture to Government for want of bidder . In case there is no bidder for real property exposed for sale as hereinabove provided or if the highest bid is for an amount insufficient to pay the taxes, penalties, and costs, the Internal Revenue Officer conducting the sale shall declare the property forfeited to the Government in satisfaction of the claim in question and within ten days thereafter shall make a return of his proceedings and the forfeiture which shall be spread upon the records of his office. It shall be the duty of the Register of Deeds concerned upon registration with his office of any such declaration of forfeiture to transfer the title of the property forfeited to the government without the necessity of an order from a competent court." In view of the said decree, this Commission feels constrained to allow the registration sought hereunder by the Bureau of Internal Revenue through its duly authorized representatives, all the grounds from the Register of Deeds' doubt as to their registrability notwithstanding. The present provisions of the law, as quoted above, is mandatory, and the official concerned has no alternative but to comply with the same. As regards the particular ground interposed by the petitioner herein to the effect that there is no sufficient identification between the properties covered by mere Tax Declarations as listed in the DECLARATION OF FORFEITURE and those covered by the certificates of title whose cancellation in favor of Republic of the Philippines is now being sought by the Bureau of Internal Revenue, suffice it to say that this Commission cannot but rightly presume that a coordinate agency of the Government has properly performed its duties in taking due diligence to insure the proper identification of the properties covered by their Declaration of Forfeiture and in ascertaining that in no case should the rights of any private citizen be unduly prejudiced as a result of their procedures. However, if despite this assumption some mistake should have resulted and the private rights have thereby been prejudiced, the private citizen has always his recourse in court for a proper ventilation of all the rights involved. All the foregoing considered, therefore, this Commission believes and hereby rules that the cancellation of the certificates of title in question may be given due course and in lieu thereof new transfer certificates of title be issued accordingly in the name of the Republic of the Philippines, with the exception only of Transfer Certificate of Title No. T-216 covering the land situated in Ibingay, Masbate, containing an area of 3.0462 Has. and declared under Tax Declaration No. 2702, inasmuch as the same is not included among those land listed in the "Declaration of Forfeiture" by the Bureau of Internal Revenue. SO ORDERED. Quezon City, Philippines, February 20, 1973. (Sgd.) GREGORIO BILOG JR. Commissioner" The aforementioned Resolution is a valuable guide for collection enforcement actions under the administrative summary remedies provided for in the Tax Code to effect collection of delinquent internal revenue taxes, especially if the real property levied upon is titled. Please be guided accordingly. MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5