Supreme Court halts QC's real property tax hike

The Supreme Court (SC) on Tuesday stopped the Quezon City government from implementing a resolution that raises the city’s real property tax rates by 100 to 500 percent.

Sitting en banc, the High Court issued a temporary restraining order (TRO) against QC Ordinance No. 2556 (Series of 2016), which approved the fair market value of lands and basic unit construction costs for buildings and other structures towards a revision of real property assessments in Quezon City. 

The ordinance meant to increase existing real property values from 100% to 500%, to be effective this year for land, and in 2018 for buildings and other structures.

The QC government earlier estimated that the local measure would increase its collection by P700 million on the first year of implementation. 

The SC order was in response to a petition by the Alliance of Quezon City Homeowners’ Association Inc. (AQCHI), which sought relief from the ordinance, arguing that its rates were “unjust and excessive.”

Acknowledging the need to increase property valuation in the city, AQCHI is calling for smaller or staggered increases.

The court ordered respondents QC Mayor Herbert Bautista, the City Assessor’s Office, and the City Treasurer’s Office to file their comment on the petition within 10 days.

Bautista earlier asked the city council to make the necessary revisions on real property rates to comply with the recommendations of the Commission on Audit (COA) and Department of Finance (DOF), asserting that the rates were last updated 21 years ago, on December 19, 1995.

In an official statement, the QC government had said “[c]learly, the P5,000 per square meter land value is unrealistic, and no property owner in that area will transact at this rate.”

The QC government compared its rates with those of Caloocan City and Makati City at P55,000-P80,000 per square meter.

The local government further stressed that under the Local Government Code, “a general revision of real property assessments should be conducted every three years.”

source:  ABS-CBN News

CA junks PH Heart Center's bid for real property tax exemption

MANILA - For failure to exhaust all available administrative remedies, the Court of Appeals (CA) has dismissed the Philippine Heart Center's (PHC) bid for exemption from payment of real property tax.

In a 14-page decision, the appellate court's 13th Division dismissed PHC's appeal of an earlier ruling that junked PHC's petition that seeks an exemption from payment of unpaid real property taxes in 2004 amounting to P36.5 million. The PHC invoked an exemption granted to it by the late President Ferdinand Marcos.

The appellate court stressed that PHC should have filed the petition before the Quezon City Local Board of Assessment Appeals (LBAA), then to the Central Board of Assessment Appeals (CBAA), and eventually the Court of Tax Appeals (CTA).

"The premature invocation of the intervention of the court is fatal to one's cause of action. The doctrine of exhaustion of administrative remedies is based on practical and legal reasons.

"The availment of administrative remedy entails lesser expenses and provides for a speedier disposition of controversies," the CA ruled.

In 2006, the Office of the Government Corporate Counsel (OGCC) informed PHC that consistent with the Supreme Court (SC) ruling in the case of Manila International Airport Authority (MIAA) v. Court of Appeals, PHC is exempt from paying real property taxes.

PHC then stopped real property tax payments which led the local government to issue final notices of delinquency with corresponding warrants of levy.

This led PHC to elevate its case before the appellate court.

source:  ABS-CBN News

ADB: LGUs lack technical, financial know-how in PPP implementation

To fill in the infrastructure gap at the local government level, Manila-based multilateral lender Asian Development Bank (ADB) has recommended coming up with specific guidelines that will cover local public-private partnership (PPP) projects.

In a report titled “Philippines: Public-Private Partnerships by Local Government Units,” the ADB noted LGUs have already been tapping PPP  arrangements to build infrastructure as early as 1991, the first of which was the commercial building used as a public market in Mandaluyong City.

A number of LGUs pursued big PPP projects not only in infrastructure but also in power generation and bulk water supply in the subsequent years, but some of these initiatives “met many obstacles along the way,” the ADB noted.

Major impediment

According to the report, “lack of technical and financial resources for project preparation, monitoring, and implementation has always been cited and continues to be a major impediment to LGUs undertaking PPP projects.”

“These needs have to be addressed simultaneously and comprehensively by technical assistance and financing facilities,” it said.

The ADB said LGUs should come up with guidelines on doing local PPPs through joint ventures.

“The lack of guidelines for LGUs forming joint ventures with the private sector has been the source of uncertainties for LGUs interested in that particular form of PPP, which does not fall under the ambit of the Build-Operate-Transfer Law, as amended,” the ADB said.

The Manila-based multilateral firm added LGUs can also enact their own PPP code or omnibus ordinance covering all applicable PPP modes.

Local PPP codes may include fiscal and nonfiscal provisions to better attract investors, it said.

Legal front

On the legal framework, the ADB recommended the following: Clarification of an approval authority for LGU PPP projects costing above P200 million; establishing a deadline for the confirmation of LGU PPP projects; streamlining National Economic and Development Authority-Investment Coordination Committee (ICC) and Regional Development Council review processes, including ICC forms tailored for LGUs; and clarifying the audit scope of national and local PPP projects done through joint venture arrangements.

The ADB also pointed out that a transparent regulatory body must be set up.

“Having a competent, independent, and transparent regulatory body in the sectors where PPPs are being welcomed is very important to protect the interests of all concerned—the customers, private investors, and government entities involved,” it said.

source:  Inquirer

Big business buys into QC land value audit

QUEZON City Mayor Herbert Bautista welcomed the participation of big businesses in the consultation of the proposed revised schedule of fair market values of land within the city.

He tasked the city council’s committee on ways and means to comply with the recommendation of the Commission on Audit and Department of Finance to update the city’s obsolete land and property values.

Among those who took part in last Thursday’s consultations at the city hall were SM Prime Holdings and Megaworld Corp.

“Quezon City is merely complying with the provisions of Republic Act 7160 and adjusting the schedule of the fair market values based on real-estate market realities, and to support various urban and social developmental projects of the administration,” city administrator Aldrin Cuña told the Manila Standard.

Cuna said the big businesses posed no objection to the proposed adjustment of property values.

Still, SM Prime Holdings and Megaworld Corp. urged the city government to grant tax incentives to small players or businesses with small capitals.

Fe Wong, tax officer of SM Prime Holdings, the parent company of the SM Group, said they are not objecting to the proposed legislation. 

“Yes we support it. We will submit our position paper later,” she said.

“We are definitely very supportive of this measure,” Megaworld corporate advisory and compliance division manager John Joseph Sy added. “We have always been supportive of the endeavors of the city government as long as it is beneficial to us and to the interests of our clientele, tenants, and buyers.”

Megaworld owns and developed  the 17-hectare Eastwood City, the commercial and residential property in Bagumbayan area.

Trade organizations such as the Association of Filipino Franchisers Inc. said they will look into the proposed adjustments.

“Yes, we support it. As much as we want to oppose it, we would appreciate having no increase, but the city government was able to explain that it has been a long time since the last increase,” said Rafael Canare, executive director of AFFI.

Canare appealed to Bautista to provide small businesses with tax incentives since they would expect an increase in leasing fees to be imposed by property owners, such as malls and commercial buildings affected by the adjustment of real property tax.  

SOURCE:  Manila Standard

Cagayan de Oro officials asked to explain dumpsite violations

CAGAYAN DE ORO CITY, Philippines – The Office of the Ombudsman summoned city mayor Oscar Moreno and other past and current local officials to answer the charges against them over violations of the Ecological Solid Waste Management Act.

Moreno, former city mayor Vicente Emano, and councilors of the 17th and 18th city council will face members of the Environmental Ombudsman in Davao City on Wednesday, October 26.

The charges against the city officials stem from the open dumpsite located in Upper Dagong, Zayas in Barangay Carmen.

The dumpsite has been one of the crucial issues that has haunted Moreno since he became mayor in 2013.

The dumpsite, covering 17 hectares of land, was designed to hold 1.8 million cubic meters of garbage. But recent figures showed that the dumpsite now holds twice that amount – at least 4 million cubic meters.

City's defense

City environment office chief Edwin Dael, one of the respondents in the case, said that city officials will present what they have done with the dumpsite since taking over in 2013.

Dael said he and Moreno fought off an Emano-dominated city council that denied a budget proposal from Moreno for the controlled closure and rehabilitation of the dumpsite, and the opening of a new landfill.

"Despite the challenges, we were able to close and rehabilitate 50% of the Zayas dumpsite," Dael said.

"We are confident that with what we have done in 3 years, we will be able to defend our position. In the last administration, it was not their priority to comply with the law," he added.

In 2010, the city government sought the assistance of the Environment Management Bureau-Department of Environment and Natural Resources (EMB-DENR) in Region 10 for a proposed new landfill project.

But EMB-DENR Assistant Regional Director Sabdullah Abubakar said the proposed 30-hectare landfill in Barangay Pagatpat was not approved.

The P300-million project was too expensive, and the land suggested by the city was not a suitable site.

The city government of former mayor Emano instead focused on privatizing the garbage collection of the city.

New landfill proposed

The city's environment chief said a new sanitary landfill in Barangay Pagalungan is now pending approval.

The 25-hectare site, located 17 kilometers from the city proper, will be able to accommodate 20 years worth of garbage.

Dael said the proposed sanitary landfill will have modern garbage technologies, including methane gas harvesting and leeching pipes, among others.

Scavengers will also be banned from the new landfill.

Dael added that the city has strengthened its garbage collection at the barangay level.

“It is mandated by the law that the barangay will enforce the law, starting with the in-source garbage segregation, frameworks on garbage collection," Dael said. – Rappler.com

Agusan Sur mayor, 6 others charged over land deal

THE Office of the Ombudsman has found basis to file graft and technical malversation cases before the Sandiganbayan against Mayor Johnmark Billanes of Trento town in Agusan del Sur over alleged irregularities in a P1-million land deal brokered with his brother in 2012.

Also facing indictment for alleged graft are former Vice Mayor Victoria Plaza; Sangguniang Bayan members Edwin Demegillo, Pedro Mordeno and Leona Magno; incumbent Sangguniang Bayan member Ludy Andale; and the mayor’s brother Romeo Billanes Jr., owner of the 7,775-square-meter property located along the national highway of Poblacion in Trento.

The Ombudsman’s ruling is subject to a motion for reconsideration.

A statement issued by the Ombudsman on Wednesday said the accused officials allegedly gave unwarranted benefits, advantage or preference to Romeo supposedly through manifest partiality or evident bad faith because his property was allegedly identified for acquisition prior to the appraisal of the land.

The Ombudsman further alleged in its resolution that no ordinance was passed by the Sangguniang Bayan to realign the P1-million fund and the land acquisition was for a different purpose from the original appropriation.

To facilitate payment, the Sangguniang Bayan allegedly passed a resolution supposedly to borrow P1 million from the 2012 appropriations for the rehabilitation of the farm-to-market road to finance acquisition of lot for the proposed rice processing center.

The Ombudsman also found Billanes, Demegillo, Plaza, Andale, Mordeno and Magno administratively liable for grave misconduct and conduct prejudicial to the best interest of the service and ordered their dismissal.

The accused also face cancellation of eligibility, forfeiture of retirement benefits and perpetual disqualification from reemployment in the government service.

In its decision, the Ombudsman directed the Department of the Interior and Local Government to implement the dismissal order, which is convertible to a fine in case the respondents are no longer in the service.

source:  Manila Times

Payment under protest: Local business tax

Local government units (LGUs) are constitutionally granted the power to generate their own sources of revenues. This power necessarily includes devising procedures and remedies aimed at providing means for the effective and efficient collection of taxes. Such rules, however, which are enacted through local tax ordinances, should be made in accordance with the guidelines and limitations set by Congress through the Local Government Code (LGC) of 1991, and its amendments.

Controversies usually arise when there are differences between the guidelines provided in the LGC and in the local tax ordinance. One area where differences are usually encountered is with respect to the remedies available to taxpayers in contesting tax assessments issued by LGUs. There is no doubt that under the LGC, when an LGU issues a notice of assessment, the concerned taxpayer may contest the assessment by filing a written protest within a prescribed number of days from the receipt of the assessment. The same rule had been incorporated in the local revenue codes of LGUs.

The controversy lies on the requirement by some local revenue codes for the payment under protest, before said protest can be entertained. With respect to real-property taxes, this is not an issue since the LGC is explicit on this matter. To be specific, Section 252 of the said code provides that no protest shall be entertained unless the taxpayer first pays the tax. This is very specific to real property-tax assessment.

There is no similar provision insofar as local business-tax assessment is concerned. In the absence of a specific provision in the LGC, some LGUs have applied the same rule required in protesting real property-tax assessment. These local governments contend that since there is no prohibition in applying the rules in real property-tax assessment, the LGU is not prohibited from extending the same requirement in local business-tax assessment. To them, this is part of the power granted to the LGUs to devise means to accomplish tax collection in an effective manner. Hence, some local revenue codes include provision similar to real property-tax assessment requiring payment as a condition for the validity of a protest against local business-tax assessment.

This is one of the issues brought before the Court of Tax Appeals in C.T.A. AC 139, promulgated on August 11. In this case, the city treasurer of Davao refused to act on the protest of the taxpayer assailing the assessment of deficiency local business taxes. The city treasurer did not act on the protest because there was no prior payment as required by the Revenue Code of the city. The court ruled that payment under protest is not required for local business taxes. The court reminded the basic rule that all ordinances should be in conformity with the law. Since payment under protest is not required under the LGC, a local ordinance cannot require such prior payment. In fact, the court held that the city of Davao should not supply additional requirements onerous to the taxpayer. The provision in the Revenue Code of Davao has no legal basis.

With this ruling, it is hoped that the issue will be finally put to rest. Requiring payment under protest in contesting real property-tax assessment is acceptable and reasonable and with legal basis, but certainly not for local business-tax assessments.

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The author is a junior associate of Du-Baladad and Associates Law Offices (BDB Law), a member- firm of World Tax Services (WTS) Alliance.

The article is for general information only and is not intended, nor should be construed as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported, therefore, by a professional study or advice.  If you have any comments or questions concerning the article, you may e-mail the author atayesha.matanog@bdblaw.com.ph or call 403-2001 local 170.