Collection of Real Property Tax c.
Yes, more than 10 years had lapsed for the period 1990 to
Chapter 5
Collection of real property tax
• Tax liability must arise from law, not from contract
• The owner operator of a Build-Operate-Transfer (BOT)
and not the ultimate owner is subject to real property taxes
Date of accrual of real property tax & special levies
• Real property tax: On the first day of January each year
➢Such tax shall constitute a lien superior to any other
lien
• Special Levy: First day of the quarter next following
effectivity of ordinance imposing it
Collecting Authority
• City or municipal treasurer
• Barangay treasurer if deputized by city or municipal
treasurer
a. To collect within the barangay
b. Properly bonded
Duty of assessor to furnish treasurer with assessment
rolls
• To be done by assessor on or before 31st day of December
each year
• Assessment roll contains the list of all persons whose real
properties have been newly assessed or reassessed & the
property values
Notice of time for collection of tax
• LGU treasurer shall post on or before January 31 each year
(other date for other real property tax) notice of the dates
when basic real property tax & SEF may be paid without
interest
• Posting shall be in conspicuous & publicly accessible place
• Publication shall also be made in newspaper of general
circulation once a week for 2 consecutive weeks
Periods within which to collect real property tax
• Within 5 years from date taxes become due
• In case of fraud or intent to evade payment, within 10 years
from its discovery
Suspension of Prescriptive Period
• Treasurer is legally prevented from collecting
• Owner requests for reinvestigation & executes waiver in
writing
• Owner is out of the country
• Owner cannot be located
Multiple Choice
Ka Tato owns a parcel of land in San Jose, Batangas declared
for real property taxation, as agricultural. In 1990, he used
the land for poultry feed processing plant but continued to
declare the property as agricultural. In December 2011, the
local tax assessor discovered Ka Tato’s change of use of his
land and informed the local treasurer who demanded
payment of deficiency real property taxes from 1990 to
2011. Has the action prescribed?
a. No, the deficiency taxes may be collected within 5 years
from when they fell due
b. No, the deficiency taxes for the period 1990 to 2011 may
still be collected within 10 years from December 2011
2000, hence the right to collect the deficiency taxes has
prescribed
d. Yes, more than 5 years had lapsed for the collection of the
deficiency taxes for the period 1990 to 2005.
Payment of real property tax in installments
• Applicable to basic & SEF only
• Special levy shall be governed by an ordinance
• Quarterly deadlines without interest:
• First quarter – March 31
• Second quarter – June 30
• Third quarter – September 30
• Fourth quarter – December 31
• LGC SEC. 250
Application of payments
1. Prior year delinquencies, interest and penalties (if any)
2. Current period taxes
Tax discount for early payment
• Sanggunian may grant discount not exceeding 20% of the
basic and SEF if payment is made way ahead of deadline
• LGC SEC. 251
Interest on unpaid real property tax
• 2% per month on unpaid amount until full paid
• Interest to be collected should only be up to 36 months
• LGC SEC. 255
Payment of delinquent tax on property subject to tax
• In any action involving ownership of real property, the
court or upon representation of LGU treasurer may award
ownership to any party to an action involving ownership of
real property upon payment to the court of the taxes, interest
& all costs that accrued to the delinquent tax
• LGC SEC. 268
Treasurer to certify delinquencies remaining uncollected
• Treasurer shall prepare certified list of all real property tax
delinquencies which remained uncollected for at least 1 year
& submit it to the sanggunian on or before December 31 of
the year immediately succeeding the year in which
delinquencies were incurred
• LGC SEC. 269
Condonation of real property tax
• Sanggunian may condone or reduce, wholly or partially,
the taxes & interest because of general failure of crops or
calamity through an ordinance passed prior to January 1 of
any year LGC SEC. 276
• President may condone or reduce real property tax &
interest for any year when public interest so requires LGC
SEC. 277
Issuance of notice of delinquency for real property tax
When real property tax or special levy becomes delinquent,
LGU treasurer shall immediately cause notice of
delinquency to be:
1. Posted at the main entrance of capitol, city or
municipal hall
2. In a publicly accessible & conspicuous place in each
barangay of LGU
3. Published once a week for 2 consecutive weeks in
newspaper
Local government lien
• A legal claim on the property subject to the real property
tax as security for payment of tax obligation
• Constituted on the property subject to tax from the date real
property tax accrued, i.e., January 1
• Superior to any lien of any other kind
• Enforceable by administrative or judicial action
• Extinguished only upon payment of tax
LGU Remedies for the collection of real property taxes
a. Administrative Action
1. Distraint of personal property
2. Garnishment
3. Exercise of lien on property subject to tax
4. Levy of real property subject of the tax
b. Judicial Action
Levy of real property subject to tax
• Done after expiration of time required to pay tax
• Treasurer shall prepare duly authenticated certificate of
delinquency containing name of delinquent owner, property
description & tax due
• Certificate of delinquency shall be mailed to owner,
assessor & registrar of deeds
Importance of Notice to Delinquent Owner
• It is a mandatory requirement in the law
• Failure to comply therewith can invalidate the auction sale
Advertisement of sale
• Done within 30 days after service of the warrant of levy
• Publicly effected by:
a. Posting notice at main entrance of provincial, city
or municipal building
b. Publicly accessible & conspicuous place in the
barangay of property location
c. Publication once a week for 2 weeks in
newspaper
Sale procedure
• Made after completion of advertisements
• Delinquent taxpayer fails to pay within the intervening
period
• Held of main entrance of provincial, city or municipal
building
• If no sufficient bidder, treasurer shall purchase property for
the LGU
Action Assailing Validity of Tax Sale
• Owner first deposits with court the amount his property was
sold together with interest of 2% per month from sale to the
time of institution of action
• The amount so deposited shall be paid to the purchaser at
the auction sale if the deed is declared invalid but it shall be
returned to the depositor if the action fails
• Failure to comply w/deposit requirement warrants
dismissal of action
• LGC SEC. 267
Redemption of property sold
• Within 1 year from the date of sale
• During this redemption period, owner is entitled to
possession of fruits of the property
• Redemption period is counted from the date of annotation
of certificate of sale in the Register of Deeds
• LGC SEC. 261
Final Deed to Purchaser
• To be conveyed by the LGU treasurer upon failure of the
owner to redeem the delinquent property within 1 year
• The deed shall briefly state the proceedings upon which the
validity of the sale rests
• LGC SEC. 262
Purchase of property by LGU for want of bidder LGC.
SEC. 263
• Local treasurer shall purchase the real property in behalf of
the local government if no bidder or offer of highest bidder
is insufficient
• Registrar of deeds shall transfer title of property to the LGU
without necessity of an order from a competent court
• Subject to 1 year redemption period by property owner
Resale of real estate taken for taxes, fees or charges LGC
SEC.264
• By ordinance duly approved, sanggunian upon notice of
not less than 20 days, sell and dispose real property acquired
for want of bidder
• Proceeds shall accrue to the general fund of LGU
concerned
Further distraint or levy LGC SEC. 265
• Distraint or levy may be repeated, if necessary, until the
full amount due, including expenses, is collected
Real properties owned by Republic of the Philippines
• Exempt from real property tax
• Exempt from sale at public auction
• Subject to real property tax & public auction if leased to
taxable entities
Former owner may be held liable for back real property
taxes
• To impose the tax on the subsequent owner which was
neither the owner nor beneficial user during the designated
periods when the tax accrues would not only be contrary to
law but also unjust
Collection of Real property tax through judicial action
• To be made in any court of competent jurisdiction
• Filed by local treasurer
• Must be made within 5 years from the date the real property
taxes and special levies become due
• LGC SEC. 266
Penalty of treasurer for failure to issue & execute
warrant
• Imposed if the treasurer fails to issue or execute the warrant
of levy within 1 year from the time tax becomes delinquent
or 30 days from date of issuance thereof
• If found guilty, he shall be dismissed from service
• LGC SEC. 259
Fees and charges
• Court actions instituted by LGU treasurer or assessor shall
be exempt from payment of court and sheriff’s fees (LGC
SEC. 280)
• Registration of papers or documents on sale of delinquent
property to province, city or municipality shall be exempt
from documentary stamps tax & registration
fees (LGC SEC. 281)
• Real property assessment notices or owner’s copies of tax
declaration sent through mails by assessor shall be exempt
from postal charges or fees (LGC SEC.282)
Municipal trial courts
• Have exclusive original jurisdiction over tax collection
cases where amount of demand (excluding interest, penalties
& litigation expenses):
a. Does not exceed P300,000
b. In Metro Manila, amount does not exceed P400,000
Regional trial courts
• Have exclusive original jurisdiction over tax collection
cases where amount of demand (excluding interest, penalties
& litigation expenses):
a. Exceeds P300,000
b. In Metro Manila, amount exceeds P400,000 but less
than P1,000,000
• If amount involved is P1M or more exclusive jurisdiction
is with Court of Tax Appeals (CTA)
Exclusive original jurisdiction of CTA (division) in tax
collection cases
• Tax collection cases involving final & executory
assessments where principal amount of taxes & fees,
excluding charges & penalties is P1 million or more
Collection of tax not suspended even with an appeal
• An appeal from taxpayer will not suspend collection of real
property taxes
• It will just be adjusted depending on final outcome of
appeal
Refund or Credit of Real Property Tax
Chapter 6
Procedure of payment under protest
• Taxpayer first pays the tax
• “Paid under protest” is annotated on the face of the tax
receipts
• If not paid under protest, taxpayer can make the protest
within 30 days from payment
• LGC 252
When protest is required
• When there is question of reasonableness of the amount
assessed
• Not when question raised is on the very authority & power
of assessor to impose assessment & treasurer to collect the
tax
Basis of requiring payment under protest
• Consistent with lifeblood doctrine
• Collection cannot be curtailed by injunction or any like
action
Payment under protest condition precedent for court
case
• Payment is a condition sine qua non before a trial court
could assume jurisdiction over the case
Imposition of back taxes
• Imposition by Local Board of Assessment Appeals
(LBAA) and Central Board of Assessment Appeals (CBAA)
does not violate the constitutional prohibition that no ex post
facto law shall be enacted
When payment under protest is NOT required
• When taxpayer paid under a mistaken belief that it is
required by law, he can file a claim for refund without protest
• This is application of solutio indebiti, where payor can
recover what has been made by mistake
Repayment of excessive collections
• Applicable when real property tax is found illegal or
erroneous & tax is accordingly reduced or adjusted
• Taxpayer may file written claim for refund or credit
w/LGU treasurer within 2 years from date taxpayer is
entitled to reduction/adjustment
• Treasurer shall decide within 60 days from receipt of
written claim
• If denied, taxpayer may avail of remedies available to him
• LGC SEC. 253
Grounds for claim of refund
• Tax was illegally collected
• Tax was excessively collected
• There was a mistaken payment under the concept of solutio
indebiti
Prescriptive period for filing claim for refund
• For illegally paid tax, it must be filed with the local
treasurer within 2 years from the date of payment
• For those under solutio indebiti (payment by mistake),
claim for refund must be commenced within 6 years from
date of payment
Review of protest denials by treasurer
• Municipal Trial Court or Regional Trial Court (depending
on amount) has the original jurisdiction, the review being the
initial judicial cognizance of the matter
Original Jurisdiction vs. appellate jurisdiction
• Original jurisdiction is the power of the court to take
judicial cognizance of a case instituted for judicial action for
the first time
• Appellate jurisdiction is the authority of a court higher in
rank to reexamine the judgment of a lower court elevated for
judicial review
Taxpayer’s Remedies
Chapter 7
Summary of Remedies
Contesting an assessment of value of real property may be
made by:
• Appeal through a petition, to the Local Board of
Assessment Appeals (LBAA)
• Appeal to the Central Board of Assessment Appeals
(CBAA)
• Petition for review to the Court of Tax Appeals, en banc
• Petition for review on certiorari to the Supreme Court
Appeal to the LBAA
• To be made by owner of property within 60 days from the
date of receipt of written notice of assessment, if he contests
it LGC SEC. 226
• LBAA needs to decide on the appeal within 120 days from
receipt of appeal from the taxpayer LGC SEC. 229
• Adverse decision by LBAA can be appealed by taxpayer to
the CBAA within 30 days from receipt thereof LGC SEC.
229
Composition of LBAA
• Registrar of Deeds as Chairman
• Provincial or city prosecutor as member
• Provincial or city engineer as member
• LGC SEC. 227
LBAA’s jurisdiction
• To hear appeals of owners or persons having legal interest
in a property who are not satisfied with the action of the
assessor on an assessment
Who may appeal an assessment
• The owner (declared owner in TCT or tax declaration)
• Person with legal interest in the property (person legally
burdened to pay the tax imposed on the property)
Notice of assessment is not subject to motion for
reconsideration
• Allowing motion for reconsideration would open the gates
to graft and corruption as nothing prevents the assessor from
making high assessment & after illegal payment is given
would reduce the same
To whom appeal should be directed
• Local board of assessment appeals (LBAA) of the province
or city where the property is located
Mode of Appeal
• Taxpayer has to make a petition under oath in the
prescribed form
• Attachments include copies of tax declarations & such
affidavits or documents submitted in support of the appeal
Effect of failure to appeal to LBAA
• Assessment shall become final, executory and demandable
• Precludes the taxpayer from questioning the correctness of
the assessment
• CBAA findings are normally respected by the Supreme
Court, except when it committed grave abuse of discretion
Appeal of CBAA decisions
• Court of Tax Appeals en banc shall exercise exclusive
appellate jurisdiction to review by appeal decisions of
CBAA
Effect of appeal on the payment of tax
• Appeal on assessments of real property shall not suspend
the collection of the corresponding realty taxes
• Adjustment shall be made depending on final outcome of
appeal
Elevating CTA en banc decision to Supreme Court
• Any aggrieved party may seek reconsideration or new trial
of any decision, resolution or order of the Court
• To be made within 15 days from receipt of CTA’s decision
Grounds of motion for new trial
• Fraud, accident, mistake or excusable negligence which
ordinary prudence could not have guarded against
• Newly discovered evidence, which he could not, with
reasonable diligence, have discovered and produce at the
trial and, which, if presented, would alter the result
Requisites for motion of new trial based on newly
discovered evidence
• Evidence was discovered after the trial
• Such evidence could not have been discovered & produced
at the trial with reasonable diligence
• It is material, not merely cumulative, corroborative or
impeaching
• It is of such weight that, if admitted, will probably change
the judgment

Meetings & expenses of LBAA

• Once a month and as often as necessary for prompt
disposition of appealed cases
• Expenses shall be charged to the general fund of province
or city

Central Board of Assessment Appeals (CBAA)

• Composition: 1 chairman and 2 members to be appointed
by the President
• Qualifications: at least 40 years old, member of the Bar or
CPA for at least 10 years
• Has jurisdiction to hear appeals from the decision of LBAA

Remedy of one not satisfied w/LBAA’s decision

• Appeal to the CBAA within 30 days after receipt of the
decision made by LBAA

Who may appeal to CBAA

• Owner of property
• Person having legal interest on property
• Assessor not satisfied with LBAA’s decision

Other roles of CBAA

• It can be appointed by Supreme Court to act as a court-
appointed fact-finding commission to assist it resolving
factual issues raised in the cases before it
• CBAA has no authority to hear purely legal issues as these
are handled by regular courts