December 13, 1996

DAR OPINION NO. 124-96

PARO Alexis M. Arsenal

DAR Provincial Office

Luna St., La Paz,

Iloilo City

Dear PARO Arsenal:

This has reference to your letter addressed to Director Elmo A. Bañares which was referred to us concerning your request for intervention regarding Memorandum Circular No. 2-95 issued by the Iloilo Provincial Assessor's Office directing all the field units to require all taxpayers to update payment of taxes prior to processing and signing of all assessment transactions.

You state that the MARO's of Balasan and Tigbauan have requested the Municipal Assessor of their respective municipalities to issue true copies of tax declaration and adjustment in area as supporting documents in claim folder processing; that the Assessors have cited the effectivity of Memo Circular No. 02-95, dated 31 July 1995, directing all Municipal Assessors to adopt as a prerequisite policy in all assessment transactions the payment of land taxes in line with their campaign for tax collection under the Local Government Code; that due to said Circular, the Municipal Assessors are extending the effectivity of the Order to your interagency transaction; that you are anticipating that the problem will crop up from the different municipalities of the province due to the fast-tracking activity in the processing of claims; and that you are recommending that a joint DAR-DILG. Memorandum of Agreement be effected exempting your inter-agency transactions from the coverage of the above mentioned circular.

As regards the problem that you are anticipating, Section 66 of RA 6657 clearly provides that "Transactions under this Act involving a transfer of ownership, whether from natural or juridical person, shall be exempted from taxes arising from capital gains. These transactions shall also be exempted from the payment of registration fees, and all other taxes and fees for the conveyance or transfer thereof; Provided, that all arrearages in real property taxes, without penalty or interest, shall be deductible from the compensation to which the owner may be entitled". On the assumption of conflict between Memorandum Circular No. 02-95 of the Provincial Assessors Office of Iloilo and RA 6657, the proper action is not to uphold one and annul the other but to give effect to both by harmonizing them if possible. Municipal governments are only agents of the national government. Local councils exercise only delegated legislative powers conferred on them by Congress as the national lawmaking body. The delegate cannot be superior to the principal or exercise powers higher than those of the latter. By and large, however, the national legislature is still the principal of the local government units which cannot defy its will or modify or violate it. The evident intent of the law in providing for said exemption is to free the beneficiary of CARL from the burden of paying the same prior to the transfer of their awarded lots in their name. Imposing said fines would be in contravention of Sec. 66 of CARL. By implication, said Memorandum Circular has the force and effect of an ordinance, and being such, it is a settled rule that an ordinance admittedly cannot prevail against a statute.

Please be guided accordingly.

Very truly yours,

(SGD.) LORENZO R. REYES

OIC-Undersecretary
LAFMA

Copy furnished:

Director Elmo A. Bañares

DAR Region VI

La Paz, Iloilo City

MARO Leila Carole V. Sangco

Tigbauan, Iloilo

MARO Joy Fuentes

Balasa, Iloilo

The Provincial Assessor

Provincial Capitol Building

Iloilo City

Director Gloria J. Fabia

BLAD

USEC Hector D. Soliman

Doc. No. 021006.171.21