aioe OPINION NO Republika ng Pilipinas KAGAWARAN NG KATARUNGAN Department of Justice Manita COGAN RECOROS2018-00018 ows foo fi ene MIG, a NINO RAYMOND B. ALVINA Officer-in-charge Executive Director AUNT 2018 Bureau of Local Government Finance 8" Floor EDPC Building, BSP Complex, Roxas Boulevard, Manila Deer Director Alvina: This refers to your 26 March 2018 letter-referral to this Department requesting for a legal opinion on the proper interpretation and application of the 5-year prescriptive period in the collection of real property taxes under Section 270 of Republic Act (‘RA.") No. 7160, otherwise known as the Local Government Code ("LGC") of 1991 The request, it appears, stemmed from the letter-request for fegal opinion ‘addressed to the Department of Finance, dated December 1, 2017 by the President of Aristocrat House of Lamps, Inc. (‘AHLI"), Mr. Jose B. Uy. Mr. Uy's letter states that sometime in the late 1990's, AHLI entered into a joint venture with FiEstate for the construction of Paragon Plaza, on the lot owned by the former. By virtue of the sald joint venture, AHLI turned over the TCTs, Tax Declarations and other documents of ownership pertaining to the said lot to FitEstate for the constructisn of a condominium building, which was eventually built sometime in the year 2000. Prior to the transfer, AHL! had openly admitted to the ownership of the subject property and had seasonably settled the corresponding real property taxes thereon without delay. It also states that since turning over the lot with its documents of ownership to Fil- Estate, AHL! has not received any notice of demand for the payment of real property taxes. However, on September 1, 2014, a Notice of Demand dated August 13, 2014 was received by AHL! from the City Treasurer of Mandaluyong City (‘City Treasurer’) asking the former to pay real property taxes for its units in Paragon Plaza for the years 2001- 2014, under 66 separate Tax Declarations. AHLI, thru a letter reply to the City Treasurer conveyed its willingness to comply with its obligation to pay the real property taxes on the subject properties but requested a recomputation of the same based on Sections 270 and 255 of the LGC. It also argued that the City Treasurer can no longer collect the real Property taxes on AHLI's properties for the years 2001-2008, as they had already prescribed. The letter further states that the City Treasurer, in its letter-reply dated September 10, 2014, denied AHLI's request for recomputation, stating that no protest shall be entertained unless the taxpayer first pays the tax and that estoppel does not lie against the government, particularly regarding tax matters,OPINION f Under the Final Notice of Demand dated 3 August 2017, the City Treasurer demands paymient for 68 Tax Declarations in the total amount of Php44,040,402.30, AHLI maintains its position that the five (5) year prescriptive period under Section 270 of the LGC applies to it, as follows: SEC. 270. Periods Within Which to Collect Rea! Property Taxes. - The basic real property tax and any other tax levied under this Title shail be collected within five (5) years from the date they become due. No action for the collection of the tax, whether administrative or judicial, shall be instituted after the expiration of such period. in case of fraud or intent to evade payment of the tax, such action may be instituted for the collection of the same within ten (10) years from the discovery of such fraud or intent to evade payment. The period of prescription within which to collect shall be suspended for the time during which: (1) The local treasurer is legally prevented from collecting the tax; (2) The owner of the property or the person having legal interest therein requests for reinvestigation and executes a waiver in writing before the expiration of the period within which to collect, and (9) The owner of the property or the person having legal interest therein is out of the country or otherwise cannot be located. With regret, we have to decline to render the legal opinion requested. It appears that there is already an actual controversy between the City Treasurer and AHLI. In whatever way we resolve the issue/inguiry raised, our resolution thereon as stated earlier would not be binding upon the parties whose substantive rights may be affected by said opinion and who may, in all probability, contest the opinion before the court of competent jurisdiction. As a matter of policy, therefore, the Secretary of Justice has consistently refrained from rendering opinion on questions that are justiciable in nature or can be the subject of litigation before the courts.’ This department does not want to preempt or influence the decision that may be rendered by the appropriate quasi- judicial agency or tribunal which has the jurisdiction to settle the conflict between the parties. Nonetheless, for your information and guidance only, we refer you to the following law and jurisprudence which you may find relevant to your query, to wit: "DOU Opinion No. 41, s. 2017.OPIMKon Io. 48, 208 Prescription under the Civil Code, is defined as follows: “Art. 1106. By prescription, one acquires ownership and other real rights through the lapse of time in the manner and under the conditions laid down by law. In the same way, rights and conditions are lost by prescription.”@ Relative thereto, the LGC of 1991 provides for a five-year prescriptive period in colieoting real property taxes, viz: SEC. 270. Periods Within Which to Collect Real Property Taxes. - The basic real property tax and any other tax levied under this Title shall be collected within five (5) years from the date they become due. No action for the collection of the tax, whether administrative or judicial, shall be instituted after the expiration of such period. In case of fraud or intent to evade payment of the tax, such action may be instituted for the collection of the same within ten (10) years from the discovery of such fraud or intent to evade payment. The period of prescription within which to collect shall be suspended for the time during whieh, (1) The local treasurer is legally prevented from collecting the tax; (2) The owner of the property or the person having legal interest therein requests for reinvestigation and executes a waiver in writing before the expiration of the period within which to collect; and (2) The owner of the property or the person having fegal interest therein is out of the country or otherwise cannot be located, In the case of Commissioner of intemal Revenue v. Philippine Global ‘Communication, Inc.,2 the Supreme Court had the occasion to reiterate that preseription for collection of taxes benefits both the govemment and its citizens. Thus: In a dissenting opinion, in the case of Collector of internal Revenue v. Suyoc Consolidated Mining Company,‘ it identified the potential loss to the taxpayer if the collection of taxes are not promptly made. Prescription in the assessment and in the collection of taxes is provided by the Legislature for the 2 The Civil Code of the Philippines, Til V, Chapter 1 1 GAR, No, 167146, October 31, 2606, #104 Phil 819, 633-834 (1958),benefit of both the Government and the taxpayer; for the Government for the purpose of expediting the collection of taxes, so that the agency charged with the assessment and collection may not tarry too long or indefinitely to the prejudice of the interests of the Government, which needs taxes to run it; and for the taxpayer so that within a reasonable time after fling his return, he may know the amount of the assessment he is required to pay, whether or not such assessment is well founded and reasonable so that he may either pay the amount of the assessment or contest its validity in court xxx It would surely be prejudicial to the interest of the taxpayer for the Government collecting agency to unduly delay the assessment and the collection because by the time the collecting agency finally gets around to making the assessment or making the collection, the taxpayer may then have lost his papers and books to support his Claim and contest that of the Government, and what is ‘more, the tax is in the meantime accumulating interest which the taxpayer eventually has to pay. tn Republic of the Philippines v. Ablaza.* the Court explained that the statute of limitations of actions for the collection of taxes is justified by the need to protect law-abiding citizens from possible harassment The law prescribing a limitation of actions for the collection of the income tax Is beneficial both to the Government and to its citizens; to the Government because fax officers would be obiiged fo act promptly in the making of assessment, and to citizens because after the lapse of the period of prescription citizens would have 8 feeling of security against unscrupulous tax agents who will always find an excuse to inspect the books of taxpayers, not fo determine the latters real liability, but to take advantage of every opportunity to molest, peaceful, law-abiding citizens. Without such legal defense taxpayers would furthermore be under obligation to always keep their books and keep them open for inspection subject to harassment by unscrupulous tax agents. The law on prescription being @ remedial measure should be interpreted in a way conducive to ringing about the beneficient purpose of affording protection to the taxpayer within the contemplation of the Commission which recommended the approval of the law, 5408 Pri. 1105, 1108 (1960)OPINION I6.s, 20.8 And in the case of Bank of the Philippine Islands v. Commissioner of internal Revenue,® the Court, pronounced that; Though the statute of limitations on assessment and collection of national internal revenue taxes benefits both the Government and the taxpayer, it principally intends to afford protection to the taxpayer against unreasonable investigation. The indefinite extension of the period for assessment is unreasonable because it deprives the said taxpayer of the assurance that he will 1no longer be subjected to further investigation for taxes atter the expiration of a reasonable period of time. With regard to the second query, relative to the payment of interest on unpaid real property tax, Section 255 of the LGC provides that SEC. 255, Interests on Unpaid Real Property Tax. - In case of failure to pay the basic real property tax or any other tax levied under this Title upon the expiration of the periods as provided in Section 250, or when due, as the case may be, shall subject the taxpayer to the payment of interest at the rate of two percent (2%) per ‘month on the unpaid amount or a fraction thereof, until the delinquent tax shall have been fully paid: Provided, however, That in no case shall the total interest on the unpaid tex or portion thereof exceed thirty-six (36) months. (Emphasis supplied) We hope that this would be helpful. Very truly yours, wan MENARDOT. GUEVARRA Secreta Dep monte iam © GR. No, 139736, 17 October 2005, 473 SCRA 205, 225, 5