REPUBLIC OF THE PHILIPPINES
BUREAU OF LOCAL GOVERNMENT FINANCE
DEPARTMENT OF FINANCE,
{8th Ploor EDPC Building, Banko Sentral ng Pilipinas Complex
Roxas Boulevard, Manila 1004 * Telefax Nos, 527-2780 527-2790
E-mail: bgt@blgtgov.ph
June 1, 2011
Ms, Pura R. Nunal
City Treasurer
City Hall
Isabela City, Basitan
a
‘Madam:
This refers to your separate first Tracer Letters all dated March 8, 2011, addressed to
Mr, Alfredo Oyao, General Manager of Basilan Electric Company; Atty. Josette Adrienne A.
Abarca and Atty. Norina Aileen C. Sanchez, both of Globe Telecom, Inc.; and Ms. Loraine
F, Gallevo of Chevron Philippines, Inc., copies of which were furnished this Bureau, relative
to Isabela City Ordinance No. 11-328, dated February 17, 2011, granting amnesty on
surcharges, interests and penalties of delinquent real property taxes due in CY 2010 and prior
years based from the provisions of Section 192 of R.A. No. 7160, otherwise known as the
Local Government Code of 1991
We take note that an amnesty was earlier granted by that city on unpaid real property
taxes due in CY 2009, under City Ordinance No. 08-2008, dated August 7, 2008, on account
of the financial crisis.
In the letter dated January 5, 2009, to the City Mayor of Naga City, Cebu, this Bureau
clarified the authority of local governments to grant amnesty on delinquent real property
taxes, as follows:
“The Local Government Code of 1991, authorized the condonation ot
reduction of real property taxes and interests either through the local
ssanggunian or the President of the Philippines, viz:
‘SEC. 276. Condonation or Reduction of Real Property
Tax and Interest. ~ In case of a general failure of crops or
substantial decrease in the price of agricultural or agribased
products, or calamity in any province, city, or municipality, the
sanggunian concemed, by ordinance passed prior (0 the first
(1°) day of January of any year and upon recommendation of
the Local Disaster Coordinating Council, may condone or
reduce, wholly or partially, the taxes and interest thereon for
the succeeding year or years in the city or municipality affected
by the calamity.
‘SEC. 277. Condonation or Reduction of Tax by the
President of the Philippines. ~ The President of the Philippines
may, when public interest so requires, condone or reduce thereal property tax and interest for any year in any province or
city or a municipality within the Metropolitan Manila Area.’
Section 276 allows the condonation or reduction of real property tax
and interest, wholly or partially, in the event of: 1) general failure of crops; 2)
substantial decrease in the price of agricultural or agri-based products; ot 3)
calamity, for the succeeding year or years affér the occurrence of any of the
events mentioned, through an ordinance passed before the 1° day of January
of any year, on recommendation of the Local Disaster Coordinating Council
It must be noted that the presence of an economic crisis is not one of the
conditions by which condonation or reduction of real property tax or interest
may be granted by the sanggunian.
‘The condonation or reduction contemplated under Section 276, is
prospective in application, meaning, only real property taxes or interests due
the succeeding year or years, after any of the abovementioned incidents
happened which adversely affected the taxpayer's ability to pay, may be
condoned or reduced, and not unpaid real property taxes or interests of the
past year or years. Further, as such applicability or nature of the condonation
or reduction is prospective, what are covered therefore are real property taxes
and interest, not penalties or surcharges.
Incentive or relief as reason for condonation or reduction of real
property tax and interest_may not_be appropriate for the reason that tax
incentives or reliefs as authorized under Section 192 (Authority to Grant Tax
Exemption Privileges) of the Local Government Code of 1991, are deemed
applicable for local taxes such as business taxes covered in Title One, Book I
of the same Code.”
“Section 276 of the same Code may be the basis for such condonation
or reduction of taxes and interests provided the requirements or conditions set
forth therein are satisfied to ensure that such condonation or reduction would
be an effective means of generating additional revenues without undermining
confidence in tax collection and enforcement, and not to discourage diligent
taxpayers.” (emphases supplied)
Please be guided accordingly.
Very truly yours,
MA. PRE! (ON R. MONTESA, CESO IIL
Executive Director