July 27, 2004 Atty. NORBERTO N. CAPARAS Caparas Law Office Maharlika Highway Sto.

Tomas, Batangas Sir: This refers to your letter dated April 27, 2004, regarding reclassification of land classified by the Assessor as agricultural but allegedly because it is situated within a commercial or industrial area, the Bureau of Internal Revenue (BIR) wants them to be reclassified as either commercial or industrial. Further the writer wants to be clarified on the following: 1. Whether the reclassification can only be made by the Assessor; 2. Under what situation or condition can the Sangguniang Bayan conduct reclassification? In reply, please be informed of the provision of Section 215 of the Local Government Code of 1991 (R.A. No. 7160), as implemented under Article 306 of its Implementing Rules and Regulations (IRR) which are quoted hereunder: SECTION 215 Section 215. Classes of Real Property for Assessment Purposes. For purposes of assessment, real property shall be classified as residential, agricultural, commercial, industrial, mineral, timberland, or special. The city or municipality within the Metropolitan Manila Area shall, through their respective sanggunian, have the power to classify lands as residential, agricultural, commercial, industrial, mineral, timberland, or special in accordance with their zoning ordinances. ARTICLE 306 Article 306. Classes of Real Property for Assessment Purposes. Real property shall be classified as residential, agricultural, commercial, industrial, mineral, timberland, or special by the provincial and city assessors including the municipal assessors of MMA. The city or municipality within MMA shall, through their respective sanggunian, have the power to classify lands as such in accordance with their zoning ordinances provided that for purposes of assessment, real property shall be

classified on the basis of actual use regardless of where located as provided for under Article 308 of this Rule. (Underscoring supplied) Clearly, the function of reclassifying real property for assessment purposes is vested upon the local assessors of local government units concerned as provided under Section 472 (b) (7) of the Local Government Code (LGC) of 1991which provides, among others, as follows: SEC. 472. Qualifications, Powers and Duties. xxx (b) The assessor shall take charge of the assessors office, perform the duties provided for under Book II of this Code, and shall: x x x (7) Exercise the functions of appraisal and assessment primarily for taxation purposes of all real properties in the local government unit concerned; However, local Sanggunians may, in the exercise of its police power and through an ordinance enacted for the purpose, declare a certain area for zoning purposes in accordance with Section 20 of the Code which provides as follows: Section 20. Reclassification of Lands. A city or municipality may, through an ordinance passed by the sanggunian after conducting public hearings for the purpose, authorize the reclassification of agricultural lands and provide for the manner of their utilization or disposition in the following cases: (1) when the land ceases to be economically feasible and sound for agricultural purposes as determined by the Department of Agriculture or (2) where the land shall have substantially greater economic value for residential, commercial, or industrial purposes, as determined by the sanggunian concerned: x x x x x x. Granting that the land referred to in your letter has already been classified for real property taxation purposes as agricultural by the Assessor, once the local Sanggunian concerned sees the need for the reclassification as either industrial or commercial for the zoning and development of the area, that determination by the Sanggunian concerned for zoning purposes, shall prevail.

The Supreme Court in the case entitled Alfredo Patalinghug vs. Court of Appeals, et. al., (G.R. No. 104786, January 27, 1994) held, in part thus: xxx The reversal by the Court of Appeals of the trial courts decision was based on Tepoots building being declared for taxation purposes as residential. It is our considered view, however, that a tax declaration is not conclusive of the nature of the property for zoning purposes. A property may have been declared by its owner as residential for real estate taxation purposes but it may well be within a commercial zone. A discrepancy may thus exist in the determination of the nature of property for real estate taxation purposes vis--vis the determination of a property for zoning purposes. (Underscoring ours) Needless to say, even if we are to examine the evidentiary value of a tax declaration under the Real Property Tax Code, a tax declaration only enables the assessor to identify the same for assessment levels. In fact, a tax declaration does not bind a provincial/city assessor, for under Sec. 22 of the Real Estate Tax Code, appraisal and assessment are based on the actual use irrespective of any previous assessment or taxpayers valuation thereon, which is based on a taxpayers declaration. In fact, a piece of land declared by a taxpayer as residential may be assessed by the provincial or city assessor as commercial because its actual use is commercial. (Underlining supplied) The trial courts determination that Mr. Tepoots building is commercial and, therefore, Sec. 8 is inapplicable, is strengthened by the fact that the Sangguniang Panlungsod has declared the questioned area as commercial or C-2. Consequently, even if Tepoots building was declared for taxation purposes as residential, once a local government has reclassified an area as commercial, that determination for zoning purposes must prevail. (Underscoring supplied) We trust that these clarify matters. Very truly yours,

MA. PRESENTACION R. MONTESA Executive Director

MNS/jo CCS#094-04 N. Caparas