Bukidnon SP: collect P35-M tax arrears from Del Monte

MALAYBALAY CITY (MindaNews/31 July) —  The Bukidnon provincial board  has passed another resolution expressing “the strong sentiment and recommendation” for the provincial treasurer to proceed with the collection of  P35 million in real property tax arrears from the fruit giant, Del Monte Philippines, Inc. (DMPI).

The tax due covers five years from 2006 to 2010,  P26.35 million of that in basic tax and the rest in penalties.

In an earlier resolution passed on June 29, the Sanggunang Panlalawigan (provincial board) opted to collect only the basic tax. But the board included about P8.65 million of penalties in the July 27 resolution.

The Provincial Assessor’s Office had computed in March 2011 the basic tax of P26.35 million which was due for payment on July 7.

On July 7, DMPI in a letter requested reconsideration or recall of the June 29 resolution on the grounds that it is the DMPI Employees Agrarian Reform Beneficiaries Cooperative (DEARBC), which should be taxed, citing among others that it is the cooperative that has beneficial use of the land.

After the passage of the Comprehensive Agrarian Reform Law in 1988, the land leased by DMPI was distributed to its workers who then formed an agrarian reform beneficiaries’ cooperative.  The firm then leased back the land from the cooperatives.

Emmanuel R. Nisperos, DMPI group head for Mindanao operations, said in the letter that as a cooperative, DEARBC  is exempt from paying real property tax under Section 234 of the Local Government Code.

He asserted that cooperatives with accumulated reserves of not more than P10 million, like DEARBC, are exempt from all national, city, provincial, municipal, or barangay taxes, as provided for in Article 61 of the new Cooperative Code of the Philippines.

After receiving DMPI’s July 7 letter for reconsideration, the Provincial Treasurer’s Office issued a 10-working day final notice of delinquency due to expire on July 21. The provincial government would have issued a certificate of distraint on that day, but DMPI officials appeared at the session on July 20. They were invited by the provincial board to “afford the company due process.”

In that session, lawyer Ramon Velez, DMPI lawyer and senior manager, said DMPI and DEARBC had an earlier agreement that DMPI would pay if the reserves exceed P10 million.

In the July 7 letter, Nisperos said DMPI noted the excess in the second quarter of 2011 and asked for a statement of account so they can settle it. He said that prior to 2011, they owed the provincial government no taxes as DEARBC was tax-exempt.

The provincial board invited the DMPI officials in their July 20 regular session “to afford the company due process.”

Board member Nemesio Beltran, author of the two resolutions, recommended garnishment in case of failure of collection.

The P26.35 million principal tax due is only a portion of the P105.23 million real property tax the company owes the province. According to the notice of distraint issued June 7 by the Provincial Treasurer’s Office to DMPI, the provincial government was collecting from DMPI a total of P105.23 million, representing unpaid taxes from 1992 to 2010.

The figure was pegged at P26.23 after lawyers invoked that prescription for collection of real property tax delinquency is only five years.

The Local Government Code provides that in case of real property tax delinquency, there is a prescription rule that nly five years back will be covered for collection.

Jeffrey Sayson, Bukidnon provincial legal counsel, clarified to MindaNews Wednesday that the province needs to issue another assessment of the P35-million tax arrears because the original assessment was for the P105.23 million assessment.

The July 27 resolution noted that DMPI and the DEARBC has an existing contract to the effect that any tax due on cooperatives  under R.A. 9520 or the Cooperative Development Act, is no longer tax exempt if its accumulated reserves have already exceeded P10 million.

“It must be stressed, however, that DMPI and DEARBC, by fiction of law, are separate and distinct entities, each having its own distinct personality and therefore, the tax liability of DMPI is separate from DEARBC, and vice versa,” the resolution added.

The resolution added that it was agreed by the members and representatives of the Provincial Government of Bukidnon to make a final assessment on DMPI  in the amount of P35,043,021saying it failed to factor in the penalties.

The audited financial report of DEARBC presented in the session showed that its accumulated reserves over the last five years did not exceed P10 million. But in the copy of the Provincial Treasurer’s Office,  the cooperative had accumulated reserves of P11 million in 2009.

The versions used by DMPI and DEARBC did not match the financial report used by the PTO.

DMPI noted that the Department of Finance–Bureau of Local Government Finance in July 1993 affirmed the firm’s position that they are tax exempt, in response to DMPI’s March 1993 letter for an opinion on the matter.

The firm’s officials also said the provincial government accepted DMPI’s explanation that it is not liable for real property taxes since the firm was able to prove that DEARBC’s accumulated reserves did not exceed P10 million as of the June 28, 2010 letter to DMPI by then outgoing Governor Jose Ma. Zubiri.  Zubiri, now vice governor, presides over the SP sessions.

Sayson, however, stressed that the provincial government is asserting collection based on the beneficial use principle.

He said Supreme Court decisions invoke the principle of collecting taxes from the one who is actually using the land, in this case DMPI, not the DEARBC.

DMPI lawyer Velez told the provincial board on July 20 that DEARBC, not DMPI, has the beneficial use in their transaction. (Walter I. Balane/MindaNews)