CEBU City Mayor Michael Rama adopted the stand of the city attorney that Filinvest Land Inc. (FLI) should not be made to pay P3 million in transfer tax.
Rama said he will just request the City Council to confirm the legal opinion of City Hall lawyer Ferdinand Cañete and City Attorney Joseph Bernaldez, who said FLI does not have to pay the transfer tax since it is not the seller of the South Road Properties (SRP).
Citing Section 135 of the Local Government Code, the City’s lawyers said it is the seller of the property, in this case the City Government, which has the duty to pay the transfer tax.
“As far as I am concerned, the issue on the transfer tax is already resolved. The City Attorney’s Office already gave a legal opinion that Filinvest does not have to pay.
The stand of the city legal will be the stand of the mayor,” Rama told Sun.Star Cebu.
City Councilor Jose Daluz III, who earlier proposed a resolution seeking to exempt FLI from the transfer tax payment, said he will just wait for the City Treasurer’s Office to endorse to the council the legal opinion it sought from the City Hall lawyers.
With the legal opinion, City Treasurer Ofelia Oliva said she will issue the tax clearance so FLI can start processing at the Register of Deeds and the City Assessor’s Office the transfer of the two parcels of land to their name.
The City Treasurer’s Office earlier tried to collect from FLI some P3 million in transfer taxes for its purchase of two parcels of land at the 10.6-hectare Pond F at the SRP.
In collecting the transfer tax, Oliva cited a provision of the joint venture contract the City and FLI entered into in February 2009, which states: “Transfer tax shall be for the account of Filinvest but without prejudice to the City of Cebu committing to secure or grant an exemption to Filinvest as may be allowed.”
In his reply, FLI vice president for Visayas and Mindanao Tristan las Marias did not agree to issue an undertaking to pay the local transfer tax, saying they were not informed of any transfer obligation prior to their payment for the two parcels of land.
The matter was then referred to the legal office for a legal opinion.
Bernaldez said they do not have to discuss whether or not FLI can be exempted from the tax payment because under the Local Government Code, it is not liable to pay the said tax.
“After going over the laws and jurisprudence applicable to the issue at hand, this office is of the opinion that FLI is not liable for the payment of transfer tax in connection with the sale by the City of Cebu to FLI of SRP lots, simply because FLI is not the seller or transferor of the lots, but the buyer or transferee thereof,” the legal opinion read.
When asked why FLI allowed the provision that they would shoulder the transfer tax to be included in the contract if they were not willing to pay for it, las Marias said they believed the City would exempt them, as provided for in the contract.
During the unveiling of the joint venture project, Citta di Mare, last Saturday, Rep. Tomas Osmeña (Cebu City, south district) said he hopes the misunderstanding on the transfer tax issue will not destroy the P25-billion investment of FLI in the SRP.