Chapter 7

COLLECTION OF BUSINESS TAX

Collection of buslness tax

A. Tax period and manner of payment

1. Tax period. "Tax Period xxx xxx. -Unless otherwise

provided in this Code,the tax period of all local taxes,

fees and charges shall be the calendar year.xxx xxx."

（LGC,Sec.165, 1“ sentence, paraphrasing supplied)

2. Manner of payment.

Manner of

XXX XXXn

Payment.-xxx xxx.

Sucti taxes, fees and charges

may be paid in quarterly instaliments.'" (LGC,Sec. 165,2nd

sentence,paraphrasing supplied)

B. Accrual of tax

1. Accrual,defined. When the amount of the tax starts

to be determined.

a. Accrual of tax.

＂Accrual of Tax.-Unless

otherwise provided in this Code, all local taxes, fees,

and charges shall accrue on the first (1st) day of

January of each year.However, new taxes, fees or

charges,or changes in the rates thereof,shall accrue

on the first (1st) day of the quarter next following the

effectivity of the ordinance imposing such new levies or

rates." (LGC,Sec.166,emphasis and underlining supplied)

Summary

outline of
accrual of local

government taxes, fees and charges.

a. January 1 of each year for old taxes, fees and

charges.

b.

First day of the quarter next following the

affectivity of the ordinance imposing such new levies or rate

for new taxes, fees and charges.(Sec.166,LGC,numbering and

arrangement supplied)

2.Accrual of the tax distinguished from time of

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payment.Accrual means the time for the start of

computing the tax or in short when the amount of tax to be:

paid is determined; time of payment means the period of.

payment without any surcharges, penalties or interests.

The tax may have accrued but if it is not required to be

paid yet, then the imposition surcharges, penalties or

interest does not also start to run.

lllustration: The Community Tax shall accrue on the first

（1s#) day of January of each year, but the time of payment is

not later than the first day of February of each year. [Sec. 161

（a),LGC]

ESSAY QUESTION:

MNO Corporation was organized on July 1,2011, to

engage in trading of. school supplies, with principal place of

business in Cubao, Quezon City. Its books of accounts and

income statement showing gross sales as follows:

July 1,2011 to December 31, 2011.

P 5,000,000.
January 1,2012 to June 30,2012

P10,000,000.

July 1,2012 to December 31,2012

P15,000,000
！
Since MNO Corporation adopted fiscal year ending June

30 as its taxable year for income tax purposes, it paid its 2%

business tax for fiscal year ending June 30, 2012 based on

gross sales of P15 million. However, the Quezon City

。Treasurer assessed the corporation for deficiency business tax

for-2012 based on gross sales of P15 million alleging that local

business taxes shall be computed based on calendar year.

Is the position of the city treasurer tenable ? Explain.

（2008, dates supplied)

。SUGGESTED ANSWER: Yes. Local government taxes are to be

assessed based on the calendar year basis.

3. Time

of

payment.

Codal

provision, Local

Govemment Code of 1991.

＂Time of Payment. - Unless

－
otherwise provided in this Code, all local taxes, fees, and

charges shall be paid within the. first twenty (20) days of

January or of each subsequent quarter, as the case may be.

The sanggunian concemed may, for a justifiable reason or

cause, extend the time for payment of such taxes, fees, or

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charges without surcharges or penalties,but only for a

period not exceeding six(6)months."(LGC,Sec.167)

Ouitline summary of time of payment.

a.As provided for in the Local Govemment Code.

xample:Sec.161(a)provides that the Community Tax

shallbe paid not later than the last day of February of each

year.

b. If not provided for in the LGC,within twenty (20)

days of January of each year or of each subsequent quarter,

as the case may be.

c.Within such time as may be extended by the

Sanggunian concemed but only for a period of not

exceeding six (6) months.

（Sec. 167, LGC, numbering,

arrangement and example suppled)

4. Penalties on unpaid taxes, fees or charges.

＂Surcharges and Penalties on Unpaid Taxes,Fees,

or Charges.-The sanggunian may impose a surcharge

not exceeding twenty-five percent (25%) of the amount

of taxes,fees or charges not paid on time and an

interest at the rate not exceeding two percent(2%) per

month of the unpaid taxes, fees or charges including

surcharges,until such amount is fully paid but in no

case shail the total interest on the unpaid amount or

portion thereof exceed thirty-six (36)months." (LGC,Sec.

168)
Summary outline of surcharges and penaltles on

unpaid taxes,fees or surcharges.

a. To be imposed by the Sanggunian through an

Ordinance.

b. Surcharge must not exceed twenty five percent

（25%) of the amount of taxes, fees and charges.

C. Interest must not exceed two percent (2%) per

month of the unpáid taxes, fees or charges including

Surcharges,until the amount is fuliy paid.

d. Interest shall not exceed thirty six (36) months.(Sec.

168,LGC,numbering and arrangement suppied)

。Interests on other unpald revenues."Interests

On Other Unpald Revenues,-Where the amount of any

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other revenue due a local government unit,except

voluntary contributions or donations, is not paid on the

date fixed in the ordinance, or in the contract,

expressed or implied, or upon the occurrence of the

event which has given rise to its collection, there shall

be collected as part of that amount an interest thereon

at the rate not exceeding two percent (2%) per month

from the date it is due until it is paid, but in no case

shall the total interest on the unpaid amount or a

portion thereof exceed thirty-six (36) months." (LGC, Sec.

169)

Summary outline of interests on other unpaid

revenues which are not taxes, fees charges, or

voluntary contributions or donations.

a. No need for ordinance as provided for in the LGC.

b. Interest must not exceed two percent (2%) per

month of the unpaid amount.

c. Interest shall not exceed thirty six (36) months. (Sec

169, LGC, numbering and arrangement supplied)

6. Authority

of treasurer

in

collection

and

inspection of books.

a. Authority_ of treasurer in collection_of _taxes.

“Ail local taxes, fees and charges shall be collected by

the appropriated local government unit treasurers, or

their duly authorized deputies.

The provincial, city or municipal treasurer may

designate the barangay treasurer as his deputy to

collect local taxes, fees, or charges. In case a bond is

required· for the purpose, the provincial, city or

municipal govemment shall pay the premiums thereon

in addition to the premiums of bond that may be

required under this Code."(LGC, Sec. 170, emphasis and

underlining supplied)

Summary outline of collection of local revenues

by the treasurer.

a. All local taxes,fees and charges shall be collected

by the appropriated local govemment unit treasurers,'·or

their duly authorized deputies;

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b.by the appropriated local govemment unit treasurers,

or their duly authorized deputies.

The barangay treasurer may be deputized by the

C.

provincial, city or municipal treasurer,Bond premiums to be

paid by the provincial, city or municipal govemment that

Buthorized the deputization of the barangay treasurer.(Sec

170,LGC,numbering and arrangement supplied)

b. Authority of treasurer in the inspection of

books.“Examination of Books of Accounts and

Pertinent Records of Busirassnen by Local Treasurer.

－The provincial,city, municipal or barangay treasurer

may,by himself or through any of his deputies duly

authorized in writing,examine the books,accounts,and

other pertinent records of any parson, partnership,

corporation,or association subject to;local taxes, fees

and charges in order to ascertain, assess, and collect

the correct amount of the tax, fee,or charge.Such

examination shall be made during regular business

hours, only once for every tax period, and shall be

certified to by the examining official. Such certificate

shall be made of record in the books of accounts of the

taxpayer examined. In case the examination herein

authorized is made by a duly authorized deputy of the

local treasurer, the written authority of the deputy

concerned shall specifically state the name, address,

and business of the taxpayer whose books, accounts,

and pertinent records are to be examined, the date and

place of such examination, and the procedure to be

followed in conducting the same.For this purpose,the

records of the revenue district office of the Bureau of

Internal Revenue shall be made available to the local

treasurer,

his

deputy or

duly authorized

representative." (LGC, Sec. 171,emphasis and underlining

supplied)

Summary utline of examination of books and

accounts and pertinent records of businessman by

local treasurer.

a. lf by the provincial,city, municipal or barangay

treasurer himself:

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1) Examination

of. the books, accounts,

assessment, and collection of the correct amount of

the tax, fee or charge.

2)The transactions shown in the books,

accounts, assessment, and collection must be

subject to local taxes, fees and charges.

3)·Examination is for the

purpose. of
ascertaining, assessment and collection of. the

correct amount of the tax, fee or charge.

4)The examination shall be made only during

regular business hours.

5) The examination shail be made only once for

every tax period.

6) Examination must be certified by the.

examining official and made of record in the books of'

account of the taxpayer examined. (LGC Sec. 171,1"

par.)

b. if examination is to be made by a deputy

1) Authority must be in wniting specifically

stating:

a) The name. address and business of

the taxpayer whose books, accounts and

records are to be examined.

b)The date and place

of the

examination.

c) The procedure to be conducted in con-

ducting the examination. (lbid., Sec.171, 2"d par.,

numbering and arrangement supplied), which

should be similar to no. a, supra.

In both a and b, supra the records of the revenue

district offices of the BIR shall be made available. (last par.,

Sec.171, LGC, numbering and arrangement supplied)

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Chaptor 8.

TAXPAYER'S REMEDIES

A. Periods of assessment and collection of local

taxes,fees or charges.

＂Periods of Assessment and

Collection.-(a)Local taxes, fees or charges shall be

assessed within five (5)years from the date they

became due.No action for the coliection of such taxes,

fees, or charges, whether administrative or judicial,

shall be instituted after the expiration of such period:

Provided, That, taxes, fees or charges which have

accrued before the effectivity of this Code may be

assessed within a period of three (3) years from the date

they became due.

（b) In case of fraud or intent to evade the payment

of taxes, fees, or charges, the same may be assessed

within ten (10)years from discovery of the fraud or

intent to evade payment.

（c) Local taxes, fees, or charges may be collected

within five (5) years from the date of assessment by

administrative or judicial action. No such action shall be

instituted after the expiration of said period: Provided,.

however,That,taxes, fees or charges assessed before

the effectivity of this Code may be collected within a

period of three (3) years from the date of assessment.

（d) The running of the periods of prescription

provided in the preceding paragraphs shall be

suspended for the time during which:

（1) The treasurer is legally prevented from

making the assessment of collection;

（2)The taxpayer requests for a reinvestigation

and executes a waiver in writing before expiration

of the period within which to assess or collect;and

（3) The taxpayer is out of the country or

otherwise cannot be located." (LGC, Sec. 194)

1. Protest of assessment."When the local treasurer

or his duly authorized representative finds that correct

taxes,fees,or charges have not been paid, he shall

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issue a notice of assessment stating the nature of the

tax, fee or charge, the amount of deficiency, the

surcharges, interests and penalties. Within sixty (60)

days from the receipt of the notice of assessment, the

taxpayer may file a written protest with the local

treasurer contesting the assessment; otherwise, the

assessment shall become final and executory. The local

treasurer shall decide the protest within sixty (60) days

from the time of its filing. If the local treasurer finds the

protest to be wholly or partly meritorious, he shall issue

a notice canceling wholly or partially the assessment.

However, if the local treasurer finds the assessment to

be wholly or partly correct, he shall deny the protest

wholly or partly with notice to the taxpayer. The

taxpayer shall have thirty (30) days from the receipt of

the denial of the protest or from the lapse of the sixty

（60) day period prescribed herein within which to appeal

with the court of competent jurisdiction otherwise the

assessment becomes conclusive and unappealable."

（LGC,Sec.195)

a. Assessment, defined. A notice issued by the local

treasurer that the amount stated therein is due as a local tax

and demand made for the payment thereof.

b. Nature of a notice of assessment. The notice of

assessment, stands as the first instance the taxpayer is

officially made aware of the pending tax liability. It should

be sufficiently informative to apprse the taxpayer of the

legal basis of the tax.

While the Local Govemment Code does not expressly

require that the notice of assessment specifically cite the

provision of the ordinance involved, it does require that it

states the nature of the tax, fee or charge, the amount of

deficiency,.surcharges, interests and penalties.

Reference to the local tax ordinance is vital, for the

power of the local government units to impose local taxes is

exercised through the appropriate ordinance enacted by the

sanggunian, and not by the Local Govemment Code alone.

What determines tax liability is the tax ordinance, the Local

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Govemment Code being the enabling law for the local

eeislative bodoao eer cominean

Ce no tax collecte if thee is no tax ordinance old

authorizes its imposition and collection.

c.Summary outline of taxpayer's remedles for

local tax assessments.

1.Period of Assessment-within five (5) years

from the date they become due

a)In case of fraud of intent to evade payment

－ within ten (10)years

2. Period of Collection - within five (5) years

from tne date of the assessment.

Suspension of Prescriptive Periods:

a) Treasurer iegally prevented from making

the assessment or collection.

b) Taxpayer requests for reinvestigation and

executes waiver in writing.

c) Taxpayer out of the country

d)

Taxpayer cannot be located.(LGC,Sec.194)

3.

Protest of Assessment

a) Assessment made by local Treasurer.

b) Taxpayer has 60 days from receipt to file

written protest ith Treasurer, otherwise, it shall

become final and executory.

c) Treasurer has 60 days within which to

decide.

1)

Treasurer cancels assessment.

2)

Treasurer denies protest.

（a) Taxpayer

appeals.to
the

competent court within 30 days.after

receipt of denial.

d)

Treasurer does not act within 60 days.

1) Taxpayer has 30 days from lapse of

60 days period to appeal to competent court.

（LGC,Sec,195,numbering and arrangement supplied]

（a) The competent court referred to

is the Regional Trial Court which acts in the

exercise of its originial jurisdiction.

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（b) An adverse decision of the RTC

may be appealed to the Court of Tax

Appeals (Division) within thirty days from

receipt of the RTC decision through a

petition for review.

（c) The adverse decision of the Court

of Tax Appeals (Division) may be the

subject of a motion for reconsideration or a

motion for new trial directed to the Court of

Tax Appeals (en. banc) within fifteen (15)

days from receipt of the adverse decision.

d)) The adverse decision of the Court

of Tax Appeals (en banc) may be the

subject of a petition for. review on certiorari

directed to the.Supreme Court within fifteen

（15) days from receipt of the adverse

decision of the CTA extendible for thirty (30)

days.

d. No court shali have authority to enjoin or

restrain the collection of any local tax, fee or

charge. "No appeal taken to the CTA from the decision

of the xxx xxx the Regional Trial Court, provincial, city

or municipal treasurer xxx xxx, as the case may be

shall suspend the payment, levy, distraint, ad/or sale

of any property of the taxpayer for the satisfaction of

his tax liability as provided by existing law." (R A No.

1125,Sec. 11,4'h par.,as amenoed by R A No 9282,paraphrasing

supplied)REASON:Lifeblood theory.

e. No injunction rule does not apply to Court of

Tax Appeals. When “in the opinion of the Court of Tax

Appeals

the collection by

the

aforementioned

government agencies may jeopardize the interest of the

，government and/or the taxpayer the Court at any stage

of the proceeding may suspend the said collection and

require the taxpayer either to deposit the amount

claimed or to file a surety bond for not more than

double the amount with the Court." (R A No 1125, Sec 11.

4'"par., as amended by R A No.9282 words in italics suppued)

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The provisions of R.A 1125 which authorizes the

court of Tax Appeals, tse order the suspension ofs the

clection of the tax assessed is considered as an exception

to the no injunction rule,

NOTES AND COMMENTS:The reader should note that an

mjunctive writ is different from an order suspending the collection

of a tax. The grounds for the issuance of an injunctive writ are

more stringent than that for an order suspending the collection of a

tax. While this may be so, the effects are the same.

1) Conditions for issuance of an order

suspending the collection of taxes by Court of Tax

Appeals. The Court of Tax Appeais may enjoin collection

of taxes if in its opinion

a) the same may jeopardize the interest of the

government and/or the taxpayer.

b. In this instance,the court may require the taxpayer

either to deposit the amount claimed or file a surety bond for

not more than double the amount with the court. (R. A. No.

1125,Sec. 11,4th par.,as amended by R. A. No. 9282)

NOTES AND COMMENTS: The doctrine in Valley Trading

Co.,Inc.v. CFI of Isabela, 171 SCRA 50,which recognized the

issuance of an injunctive writ to restrain the collection of local

taxes does not find application anymore because of the provisicns

ofR.A.No.9282.

The Court of Tax Appeals could issue an order suspending

the collection of taxes only in cases pending before it.

While this may be so, the author is at a loss in what manner

the collection of taxes may jeopardize the interest of the

government and justify the issuance by the Court of Tax Appeals

of an order suspending the collection of taxes. After all,the need

for collecting taxes is of an urgent character under the lifeblood

theory.

MULTIPLE CHOICE QUESTION:

Which statement on prescriptive periods is true?

a. The prescriptive periods to assess taxes in the

National Intemal Revenue Code and the Local Govemment

Code are the same;

b. Local taxes shall be assessed within five (5) years

from the date they became due;

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c. Action for the collection of local taxes may be

instituted after the expiration of the period to assess and to

collect the tax;

d. Local taxes may be assessed within ten (10) years

from discovery of the underpayment of tax which does not

constitute fraud. (BAR:2012)

SUGGESTED ANSWER:b

C. Clalm for refund or tax credit for erroneously or

illegally collected tax, fee or charge.

1. Claim for refund or tax credit for erroneously or

illegaily collected tax,fee or charge.

“Claim

for

refund or Tax Credit.-No case or proceeding shall be

maintained in any court for the recovery of any tax,fee,

or charge erroneously or illegally collected until a

writteni claim for refund or credit has been filed with the

local treasurer. No case or proceeding shall be

entertained in any court after the expiration of two (2)

years from the date of the payment of such tax, fee, or

charge, or from the date the taxpayer is entitled to a

refund or credit." (LGC, Sec. 196)

2. Procedure for refund of. local government

taxes, fees, or charges.

a. A written claim for refund or,credit is filed with the

local treasurer. This is a mandatory requirement without

which a court will not entertain any case or proceeding for

the recovery of any tax, fee or charge,claimed to be

erroneously or illegally collected. There is no requirement

for the payment to be protested.

b. A claim or proceeding is then filed with the court of

competent jurisdiction (depending upon the jurisdictional

amount).within two (2) years from the date of the payment of

such tax,fee,or charge, or from the date the taxpayer is

entitled to a refund or credit. (LGC,Sec.196)

a. Claim for refund, defined. A claim for refund is a

claim for the retum of the tax money.

b. Claim for tax credit, defined. A claim for tax credit

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is an application lo utilize the tax paid in payment of future

tax liabilities.

3. Grounds

for refund or credit of local

government taxes,fees,or charge.

a.

Ermoneouisly collected.

b.

lllegally collected.

（Sec.196,LGC.numbering and

arrangement supplied)

a. Erroneously collected tax, defined.

A tax

collected on the mistaken belief that a tax is due.

b.lllegaly collected tax, defined. A tax collected

without any factual or legal basis.

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Chapter 9

CIVIL REMEDIES BY THE LGU FOR

COLLECTION OF REVENUES

A. Local government's lien for delinquent taxes,

fees or charges,“Local Govemment's Lien.-Local

taxes,fees,charges and other revenues constitute a

lien superior to all liens, charges or encumbrances in

favor of any person, enforceable by appropriate

administrative or judicial action not only property or

rights subject to the lien but also upon property used in

business, occupation, practice of profession or calling,

or exercise of privilege with respect to which lien is

imposed. The lien may only be extinguished upon full

payment of the delinquent local taxes, fees and

charges, including related surcharges and interest."

（LGC,Sec. 173, emphasis and underlining supplied)

1. Nature of local government's lien for delinquent

taxes,fees or charges. Local taxes, fees, charges and

other revenues constitutes a lien superior to all liens,

charges or encumbrances in favor of any person. (LGC,Sec.

173,1st sentence,paraphrasing supplied)

2. Manner by which local government's lien for

delinquent taxes, fees or charges is enforced. It is

enforceable by appropriate administrative or judicial action

a. not only property or rights subject to the lien

b. but also upon property used in business,

occupation,practice of profession or calling, or exercise of

privilege with respect to which lien is imposed. (LGC,Sec.173,

1st sentence,paraphrasing supplied)

3. How local government lien is extinguished. The

local govemment lien for delinquent taxes, fees or charges

may only be extinguished upon full payment of the

delinquent local taxes,fees and charges, inciuding related

surcharges and interest.(LGC,Sec.173,last sentence,paraphras-

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paraphrasing supplied)

B. Remedles for the collection of revenues. The

following are the remedies that “may be availed of for the

collection of any delinquent local tax, fee, charge, or

other revenue" (LGC, Sec.172)are the

1. civil remedies; and

2. judicial remedies.

1. Clvll remedles, in_general. “Civll -Remedles.

The civil remedies for the coliection of local taxes, fees,

or charges, and related surcharges and Interest

resulting from delinquency zhall be

（a) By administrative action through distraint of

goods, chattels, or effects, and other personal property

of whatever character, inciuding gtocks and other

securities, debts, credits, bank accounts, and interest in

and rights to personal property, and by levy upon real

property and interest in or rights to real property; and

（b) Judicial action.

Either of these remeclies or all may be pursued

concurrently or simultaneously at the discretion of the

local govemment unit concemed."(LGC,Sec.174)

2. Summary outline of civil. remedies for the

collection of local taxes, fees, or charges, and

related surcharges and interest resulting from

delinquency.

a. Administrative action through

distraint of goods and

2)

levy

b. Judicial action.

Either of these remedies or all may be pursued

concurrently or simultaneously at the discretion of the local

government unit concerned. (LGC,Sec.174,arrangement and

numbering supplied)

The remedies of distraint and levy may be repeated if

necessary until the full amount due, including all expenses,

is collected.(lbid.,Sec.184)

C.Administrative action

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1. Distraint of personal property..“Distraint of

personal property.- The remedy by distraint shall

proceed as follows:

（a) Seizure- Upon failure of the person owing any

local tax, fee, or charge to pay the same at the time

required,the local treasurer or his deputy may, upon

written notice, seize or confiscate any personal property

belonging to that person or any personal property

subject to the lien in sufficient quantity to satisfy the

tax, fee, or charge in question,' together with any

increment thereto incident to delinquency and the

expenses of seizure. n such case, the local treasurer or

his deputy shall issue a duly authenticated certificate

based. upon the records of his office showing the fact of

delinquency and the amounts of the tax, fee,or charge

and penalty due. Such certificate shall serve as

sufficient warrant for the distraint of personal property

aforementioned, subject to the taxpayer's right to claim

exemption under the provisions of existing laws.

Distrained personal property shall be sold at public

auction in.the manner herein provided for.

（b) Accounting of distrained goods-The officer

executing the distraint shall make or cause to be made

an account of the goods, chattels or effects distrained,

a copy of which signed by himself shall be left either

with the owner or person from whose possession the

goods, chattels or effects are taken, or at the dwelling

or place of business of that person and with someone

of suitable age and discretion, to which list shall be

added a statement of the sum demanded and a note of

the time and place of sale.

（c)Publication - The officer shall forthwith cause a

notification to be exhibited in not less than three (3)

public and conspicuous places in the territory of the

local government unit where the distraint is made,

specifying the time and piace of sale, and the articles

distrained. The time of sale shall not be less than twenty

（20) days after notice to the owner or possessor of the

property as above specified and the publication or post-

posting of the notice. One place for the posting of the

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notice shall be at the office of the chief executive of the

local government unit in which the property is

distrained.

（d) Release of distrained property upon payment

prior to sale-If at any time prior to the consummation

of the sale,all the proper charges are paid to the officer

conducting the sale, the goods or effects distrained

shall be restored to the owner.

（e) Procedure of sale-At the time and place fixed in

the notice,the officer conducting the sale shall sell the

goods or effects so distrained at public auction to the

highest bidder for cash.Within five (5) days after the

sale, the local treasurer shall make a report of the

proceedings in writing to the local chief executive

concerned. Should the property distrained be not

disposed of within one hundred and twenty (120)days

from the date of distraint, the same shall be considered

as sold to the local govemment unit concemed for the

amount of the assessment made thereon by the

Committee on Appraisal arid to the extent of the same

amount, the tax delinquencies shall be cancelled. Said

Committee on Appraisal shall be composed of the city

or municipal treasurer as chairman,

with

representative of the Commission on Audit and the city

or municipal assessor as niembers.

（f)Disposition of proceeds - The proceeds of the

sale shall be applied to satisfy the tax, including the

surcharges, interest, and other penalties incident to

delinquency, and the expenses of the distraint and sale.

The balance over and above what is required to pay the

entire claim shall be retumed to the owner of the

property sold. The expenses chargeable upon the

seizure and sale shall enibrace only the actual expenses

of seizure and preservation of the property pending the

sale, and no charge shail be imposed for the services of

the local officer or his deputy.Where the proceeds of

the sale are insufficient to satisfy the claim,other

property may, in like manner, be distrained until the full

emount due,including all expenses,is collected."(LGC,

Sec,175,emphasis and underining supplied)

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Summary outline of remedy of distraint.

a.· Personal property subject of distraint:

Goods,

chattels, or effects ,and other personal property of whatever

character, including stocks and other securities, debts,

credits, bank accounts, and interest in and rights to personal

property. [LGC, Sec. 174 (a), LGC]

b. Effected through seizure

1) Upon failure to pay at time required

2) Local Treasurer upon written notice

3) Duly

authenticated

certificate

of

delinquency serves as warrant

4)Subject to claim of exemption. [Sec. 175 (a).

LGC, numbering and arrangement supplied]

c. Accounting of distrained. goods.

The officer

executing the distraint shall

1) make or cause to be made.

2) an account of the goods, chattels, or

effects distrained,

3) a copy of which signed by himself shall be

left either with the owner or person from whose '

possession the goods, chattels or effects are

taken, or at the dwelling or'place of business of

that person and with someòne of suitable age or

discretion. (Sec. 175 (b). LGC, numbering and

arrangement supplied]

d. Publication of Sale

1) Not less than three (3) public and

conspicuous places in the local government unit's

territory where distraint made. One place should

be the office of the Chief Executive of the local

government unit where distraint made.

2) Sale not less than 20 days after notice and

publication

e.Procedure of Sale

1) Public Auction

2) highest bidder for cash

3) within 5 days after sale, treasurer reports to

the local govemment unit's Chief Executive the

proceeding

4) property not disposed of within 120 days

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from distraint date, considered sold to local

govemment unit for the amount assessed by

the Committee on Appraisal:

a) Chairman-Local Treasurer

b) Members - COA Representative

and Local Assessor. [LGC, Sec. 175 (c),

numbering and arrangement supplied)

NOTES AND COMMENTS:There is no right of redemption

for property distrained and soid at public auction or to the

govemment.

2. Levy of real property, procedure. "Levy on Raal

Property.-After the expiration of the time required to

pay the delinquent tax, fee, or charge, real property may

be levied on before, simultaneously, or after the

distraint of personal property belonging to the

delinquent taxpayer. To this end, the provincial, city or

municipal treasurer, as the case may be, shall prepare a

duly authenticated certificate showing the nanie of the

taxpayer and the amount of the tax, fee, or charge, and

penalty due from him.Said certificate shall operate with

the force of a legal execution throughout the

Philippines.Levy shall be effected by writing upon said

certificate the description of the property upon which

levy is made. At the same time, written notice of the levy

shall be mailed to or served upon the assessor and the

Registrar of Deeds of the province or city where the

property is located who shall annotate the levy on the

tax declaration and certificate of title of the property,

respectively,and the delinquent taxpayer or,if he be

absent from the Philippines,to his agent or the manager

of the business in respect to which the liability arose,or

if there be none, to the occupant of the property in

question. in case the levy on real property is not issued

before or simultaneously with the warrant of distraint on

personal property,and the personal property of the

taxpayer is not sufficient to satisfy his deliniquency, the

provincial,city or municipal treasurer, as the case

may be, shall within thirty(30) days affer execution of

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the distraint, proceed with the levy on the taxpayer's

real property. A report on any levy shall, within ten (10)

days after receipt of the warrant, be submitted by the

levying officer to the sanggunian concerned.” (LGC, Sec.

176)

3. Advertisement and sale. “Advertisement and

Sale. - Within thirty (30) days after levy, the local

treasurer shall proceed to publicly advertise for sale or

auction the property or a usable portion thereof as may

be necessary to satisfy the claim and cost of sale; and

such advertisement shall cover a period of at least thirty

（30) days. It shall be effected by posting a notice at the

main entrance of the municipal building or city hall, and

in a public and conspicuous place in the barangay

where the real property is located, and by publication

once a week for three (3) weeks in a newspaper of

general circulation in the province, city or municipality

where the property is located. The advertisement shall

contain the amount of taxes, fees or charges,and

penalties due thereon, and the time and place of sale,

the name of the taxpayer against whom the taxes, fees,

or charges are levied, and a short description of the

property to be sold. At any time before the date fixed for

the sale, the taxpayer may stay the proceedings by

paying the taxes, fees, charges, penalties and interests.

f he fails to do so, the sale shall proceed and shall be

held either at the main entrance of the provincial, city or

municipal building, or on the property to be sold, or at

any other place as determined by the local treasurer

conducting the sale and specified in the notice of sale.

Within thirty (30) days after the sale, the local treasurer

or his deputy shall make a report of the sale to the

sanggunian concerned, and which shall form part of his

records.After consultation with the sanggunian, the.

local treasurer shall make and deliver to the purchaser a

certificate of sale, showing the proceedings of the sale,

describing the property sold, stating the name of the

purchaser and setting out the exact amount of all taxes,

fees, charges, and related surcharges, interests, or

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penalties:Provided, however,That any excess in the

proceeds of the sale over the claim and cost of sales

shall be turned over to the owner of the property. The

local treasurer may,by ordinance duly approved,

advance an amount sufficient to defray the costs of

collection by means of the remedies provided for in this

Title,including the preservation or transportation in

case of personal property, and the advertisement and

subsequent sale, in cases of personal and real property

including improvements thereon."(LGC,Sec,178)

Notice and publication, as well as the legal

requirements for a tax delinquency sale, are

mandatory,Failure to comply therewith can invalidate the

sale. The prescribed notices must be sent to comply with the

requirements of due process. (De Knecht, et al,. v. Court of Appeals,

De Knecht,et al.,v.Honorable Sayo,290 SCRA 223,236)

b. The reason behind the notice requirement. Tax

sales are administrative proceedings which are in personam

in nature.(Puzon v.Abellera,169 SCRA 789,795;De Asis v.I.A.C.,169

SCRA 314)

4.Redemption of real property sold."Redemption

of Property Sold.-Withir one (1) year from the date of

sale, the delinquent taxpayer or his representative shall

have the right to redeem the property upon payment to

the local treasurer of the total amount of taxes, fees, or

charges,and related surcharges,interests or penalties

from the date of delinquency to the date of sale, plus

interest of not more than two,percent(2%) per month on

the purchase price from the date of purchase to the date

of redemption.Such payment shall invalidate the

certificate of sale tssued to the purchaser and the owner

shall be entitled to a certificate of redemption from the

Provincial,city or municipal treasurer or his deputy.The

provincial,city or municipal treasurer or his deputy,

upon surrender by the purchaser of the certificate of

sale prevlously issued to him,shall forthwith retum to

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the latter the entire purchase price paid by him plus the

interest of not more than two percent (2%) per month

herein provided for, the portion of the cost of sale and

other legitimate expenses incurred by him, and said

property thereafter shall be free from the lien of such

taxes, fees, or charges, related surcharges, interests,

and penalties: The owner shall not, however, be

deprived of the possession of said property and shall

be entitled to the rentals and other income thereof until

the expiration of the time allowed for its redemption.".

（LGC,Sec.179)

a. Final deed to purchaser upon failure to redeem.

“Final Deed to Purchaser. - In case the taxpayer fails

to redeem the property as provided herein, the local

treasurer shall execute a deed conveying to the

purchaser so much of the property as has been sold,

free from liens of any taxes, fees, charges, related

surcharges, interests, and penalties. The deed shall

succinctly recite all the proceedings upon which the

validity 'of the sale depends.” (LGC, Sec. 180, emphasis

suppliied)

b. Purchase of property by the Local Government

Units for Want of Bidder. “Purchase of Property By

the Local Government.Units for Want of Bidder.-In

case there is no bidder for the real property advertised

for saie as provided herein, or if the highest bid is for an

amount insufficient to pay the taxes, fees, or charges,

related surcharges, interests, penalties and costs,the

local treasurer conducting the sale shall purchase the

property in behalf of the local government unit

concerned to satisfy the claim and within two (2) days

thereafter shall make a report of his proceedings which

shall be reflected upon the records of his office. It shall

be the duty of the Registrar of Deeds concerned upon

registration with his office of any such declaration of

forfeiture to transfer the title of the forfeited property to

the local government unit concerned without the

necessity of an order from a competent court. Within

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one (1) year from the date of such forfeiture,the

moperty by paying to the local treasurer the full amount

of the taxes,fees,charges,and related surcharges,

nterests,or penalties,and the costs of sale. lf the

property is not redeemied as provided herein,the

ownership thereof shall be fully vested on the lcca!

govemment unit concerried." (LGC,Sec.181)

1)Resale of real estate taken for taxes, fees,

or charges.“Resale of Real Estate Taken for Taxes,

Fees,or Charges.-The sanggunian concemed may,by

ordinance duly approved, and upon notice. of not less

than twenty (20) days, sell and dispose of the real

property acquired under the preceding section at public

auction. The proceeds of the sale shall accrue to the

general fund of the local government unit concerned."

（LGC,Sec.182)

5. Further Distraint or Levy.

＂The remedies by

distraint and levy may be repeated if necessary until the

full amount due, including all expenses, is collected.”

（LGC,Sec.184)

a. Exemption of personal property from distraint

or levy."Personal Property Exempt from Distraint or

Levy.-The foliowing property shall be exempt from

distraint and the levy, attachment, or execution thereof

for delinquency in the payment of any local tax,fee or

charge,inciuding the related surcharge and interest:

a. Tools and implernents necessarily used by the

delinquent taxpayer in his trade or employment;

b.One(1)horse,cow,carabao,or other beast of

burden,such as the delinquent taxpayer may select and

necessarily used by him in his ordinary occupationi

C. His necessary clothing, and that of all his

family;

d.Household fumiture and utensils necessary for

housekeepingehnd used for that purposo by the deli

ent taxpayer,such as he may select,of a value not

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exceeding Ten thousand pesos(P10,000.00);

e.

Provisions, including crops, actually provided

for individual or family use sufficient for four (4)months;

f. The professional libraries of doctors,engineers,

lawyers and judges;

g. One fishing boat and net, not exceeding the

total value of Ten thousand pesos (P10,000.00), by the

lawful use of which a fisherman eams his livelihood;

and

h. Any material or article forming part of a house

or improvement of any real property.” (LGC, Sec. 185)

NOTES AND COMMENTS: The above enumeration should

be distinguished from the Property exempt from execution under

the Rules of Court, Rule 39,Sec.13.

6. Penalty on local treasurer for failure to issue

and execute warrant of distraint and levy. “Penalty

or Failure to Issue and Execute Warrant.-Without

prejudice to criminal prosecution under the Revised

Penal Code and other applicable laws, any local.

treasurer who fails to issue or execute the warrant of

distraint or levy after the expiration of the time

prescribed, or who is found guilty of abusing the

exercise thereof by competent authority shall be

automatically dismissed from the service after due

notice and hearing.” (LGC, Sec. 177)

Summary

outline

of the

administrative
procedure for enforcement of the collection of local

government taxes using the remedy of levy upon

real property:

a. Levy upon real property and interest in or rights to

real property

1)

after expiration of time required to pay

2)

Treasurer prepares duly authenticated

certificate of delinquency with force of legal execution

3) 'made by writing on the certificate the

description of the property levied

a)

mailed to Assessor

mailed to Register of Deeds who

（q

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annotates·the levy

c) mailed to delinquent taxpayer.

4) Time to levy
司
before distraint

b) simultaneous with distraint

after distraint

（1)perscnal property insufficient

（2) 30 days afier execution of distraint.

b. Advertisement For Sale

1) Within 30 days after levy.

2) publicly effected by:

a) Posting a notice for 30 days at

（1) main entrance of Municipal hall or

City Hall

（2) public and conspicuous place in the

barangay where the real property is located.

b) Publication orice a week for three(3)

weeks in a newspaper of general circulation in the

province, city or municipality where the property is

located.

c. Sale Procedure

1) Made after completion of advertisements

2)Delinquent axpayer fails to pay

3) Held at the main entrance of the provincial, city

or at any other place as detemined by the Treasurer.If

no sufficient bidder,Treasurer purchases for the

govenment.(LGC,Sec.178,181)

d. Redemption of Property

1)Within one (1) year from the date of sale

2) During redemption period, owner entitled to

possession. (ibid., Sec.179)

7.Authority to compromise.

＂The sanggunlan

concerned may authorize the city or municipal treasurer

to settle an offense not involving the commission of

fraud before a case therefor is filed in court,upon the

payment of a compromiso penalty of not less than Two

hundred pesos."(Sec.148(b) in relation to Sec.151,LGC]

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D.

Judicial action

1. Procedure for judicial action.

＂Collection of

Delinquent Taxes,Fees,Charges or other Revenue

through Judicial Action. - The local government unit

concerned may enforce the collection of delinquent

taxes,fees,charges or other revenues by civil action in

any court of competent jurisdiction. The.civil action

shall be filed by the local treasurer within the period

prescribed in Section 194 of this Code.” (LGC, Sec.183,

emphasis and underlining supplied)

NOTES AND COMMENTS: The period prescribed in Section

194 of the LGC is within five (5) years from the date of

assessment by administrative.or judicial action. No such action

shall be instituted after the expiration.of·said period. [LGC, Sec.

194(c)]

Summary outline of judicial action for

collection. The local govemment unit concerned may

enforce the collection of delinquent taxes, fees, charges or

other revenues

a. by.civil action

b. in any court of complement jurisdiction.

c. The civil action shall be filed by the local treasurer

d. within five (5) years from date taxes, fees or

charges become due. (LGC,Sec. 138,in relation to Sec. 194,

numbering and arrangement supplied)

NOTES AND COMMENTS: The local government unit files

an ordinary suit for the collection of sum of money before the

Municipal Trial Court,the Regional Trial Court or the Court of Tax

Appeals (divísion) depending upon the jurisdictional amount.

2. Appeal does not suspend the collection of any

local tax,fee or charge. No appeal taken to the CTA

from the decision of the Regional Trial Court,provincial, city

·or municipal treasurer, as the case may be shall suspend

the payment, levy, distraint, and/or sale of any property of

the taxpayer for the satisfaction of his tax liability as

provided by existing law. (R. A. No. 1125, Sec. 11, 4'h par., as

amended by R. A. No. 9282, paraphrasing supplied)

a. No injunction rule does not apply to Court of

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Tax Appeals.(R.A No.1125,Sec.11,4h par.,as amended byR.

A No.9282,paraphrasing suppliad)

NOTES AND COMMENTS:The Court of Tax Appeals could

issue injunctions only in casos pending before it,

b. Conditions for issuance of an Injunction by

Court of Tax Appeais.The Court of Tax Appeals may

enjoin collection of taxes if in its opinion the same may

jeopardize the interest of the govemment and/or the

taxpayer. In this instance, the court may require the

taxpayer either to deposit the amount claimed or file a

surety bond for not more than double the amount with the

court. (R.A. No. 1125,Sec. 11,4th par.,as amended by R.A.No.9282,

paraphrasing supplied)

NOTE: The doctrine in Valley Trading Co.,Inc. v. CFI of

Isabela, 171 SCRA 50,which recognized the issuance of an

injunctive writ to restrain the collection of local taxes does not find

application anymore because of the provisions of R.A.No.9282.

3. Exclusive originai jurisdiction of Municipal Trial

Courts in tax collection cases. Metropolitan Trial

Courts,Municipal Trial Courts,and Municipal Circuit Trial

Courts shail have exclusive original jurisdiction over civil

actions including grant of provisional remedies in proper

cases,where the amount of the demand

a.

Does not exceed Three Hundred Thousand pesos

（P300,000.00),or

b. In Metro Manila where such personal property,

estate, or amount of the demand does not exceed Four

Hundred Thousand pesos(P400;000.00),

exclusive of interest, damages of whatever kind,

attomey's fees,litigation expenses and costs,the amount of

which must be specifically alleged,

Provided,that.interest, damages of whatever kind,

atomey's. fees,litigation expenses, and costs shall be

included in the determination of the filing fees, (B.P. Blg.129,

Sc.33(1),as amended by Rep.Act No. 7691, paraphrasing,

arangement and numbering supplied)

Exclusive original jurisdiction of Regional Trial

Courts in tax collection cases. Civil actions for tax

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collection where the principal amount of taxes and fees,

exclusive of charges and penalties claimed exceeds Three

hundred thousand pesos (P300,000.00), or in Metro Manila

where the amount of the demand exceeds Four hundred

thousand pesos(P400,000.00),provided that the amount

claimed is less than One million-pesos (P1,000,000.00).

（Sec.19, B.P.Blg: 129,as amended by R. A. No. 7691 in relation to Sec.

5,R.A. No.7691 and Sec. 7, R. A. No. 1125 as amended by R. A. No.

9282)

NOTES AND COMMENTS: Tax collection cases that are

below the threshold amounts of P300,000.00 and P400,000.00 fall

within the jurisdiction of the Municipal Trial Courts, the Municipal

Trial Courts in Cities, the Municipal Circuit Trial Courts, or the

Metropolitan Trial Courts. Where the amount is P1 million or more,

exclusive original jurisdiction is vested with the Court of Tax

Appeals, division.

5. Exclusive appellate jurisdiction of Regional

Trial Courts in tax collection cases. Regional Trial

Courts shall exercise appellate jurisdiction over all cases

decided by Metropolitan Trial Courts, Municipal Trial Courts

and Municipal Circuit Trial Courts in their respective

temitorial jurisdiction. (Sec.22,B.P. Blg.129)

6. Exclusive appellate jurisdiction of Court of Tax

Appeals to review by appeal decisions, 'orders or

resolutions of the Regional Trial Courts.

a. In local tax cases originally decided or resolved by

them in the exercise of their original or appellate jurisdiction.

（R.A. No.1125,Sec. 7,as amended by R.A.No.9282)

b. Over appeals from the judgments, resolutions or

orders of the Regional Trial Courts in tax collection cases

decided by them, in their respective territorial jurisdiction.

（lbid.)

c. Over petitions for review of the judgments,

resolutions or orders of the Regional Trial Courts in the、

exercise of their appellate jurisdiction over tax collection

cases originally decided by the Metropolitan Trial Courts,

Municipal Trial Courts and Municipal Circuit Trial Courts, in

their respective jurisdiction. (Ibid.)

NOTES AND COMMENTS:If the 'decision being reviewed is

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period within which to appeal an adverse ruig

regional Trial Court to the Court of Tax

Aopeals. To appeal an adverse decision or ruling of the

ATC to the CTA, the texpayer must file a Petition for

Review with the CTA within 30 days from receipt of said

adverse decision or ruling of the RTC.

It is also true that the same provisions are silent as

to whether such 30-day period can be extended or not.

However,Section 1.1 of Republic Act No. 9282 does state

that the Petition for Review shall be filed with the CTA

following the procedure analogous to Rule 42 of the

Revised Rules of Civil Procedure. Section 1, Rule 42 of

the Revised Rules of Civil Procedure provides that the

Petition for Review of an adverse judgment or final order of

the RTC must be filed with the Court of Appeals within:(1)

the original 15-day period from receipt of the judgment or

final order to be appealed; (2) an extended period of 15

days from the lapse of the original period; and (3) only for

the most compelling reasons, another extended period

not to exceed 15 days from the lapse of the first extended

period.

Following by analogy Section 1, Rule 42 of the

Revised Ruies of Ćivil Procedure, the 30-day original period

for filing a Petition for Review with the CTA under Section 11

of Republic Act No. 9282, as implemented by Section 3(a),

Rule 8 of the Revised Rules of the CTA, may be extended

for a period'of 15 days. No further extension shall be

allowed thereafter, except only for the most compelling

reasons,in which case the extended period shall not exceed

15 days.(The City of Manile, et al.,v.Coca-Cola Bottlers Philippines,

Inc.,G.R.No.181845,August 4,2009,bold facing in the original)

7. Exclusive original.Jurlsdlction of the Court of

Tax Appeals (division) in tax collection cases. The

Court in Divisions shall exercise "Exclusive jurisdiction over

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tax collection cases, to wit:

1) Original jurisdiction in tax collection cases involving

final and executory assessments for taxes, fees, charges

and ponalties,where the principal amount of taxes and fees,

exclusive of charges and penalties claimed is one million

pesos or more; and

2)Appellate jurisdiction· over appeals from: the

judgments, resolutions or orders of the Regional Trial Courts

in tax collection cases originally. decided by them within their

respective territorial jurisdiction." [R. A. No. 1125, Sec. 7,as

amended by R.A.No. 9282;RRCTA,,Rule 4,Sec.3(c)]

8. Exclusive original appellate jrisdiction of the

Court of Tax Appeals (en banc) over decisions of

the Court of Tax Appeals (division) in tax collection

cases. The Court en banc shall exercise exclusive

appellate jurisdiction to review by appeal decisiens or

resolutions on motion for reconsideration or new trial of the

Court in Divisions in the exercise of its exclusive appellate

jurisdiction. [R. A. No.1125, Sec.7,as amendéd by R.A.No.9282]

9. Exclusive review jurisdiction of the Supreme

Court over decisions of the Court of Tax Appeals

（en banc) in tax collection cases. “A party adversely

affected by a decision or ruling of the CTA en banc may file

with the Supreme Court a verified petition for review on

certioran pursuant to Rule 45 of the 1997 Rules of Civil

Procedure." (R.A. No. 1125, Sec. 19, as amended by R.A. No.9282)

10.Writ of execution over final judgments in tax

collection cases."Upon the expiration of the period to

appeal from a judgment or order that disposes of the action

or proceeding and no appeal has been duly perfected,

execution shall issue as a matter of right, on motion.

If an appeal has been duly perfected and finally

resolved, execution may be forthwith applied for in the court

of origin, on motion of the judgment obligee,submitting

therewith a certified true copy of the judgment or final order

sought to be enforced and of its entry, with notice to the

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