Collection of Real Property Tax

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
c. Yes, more than 10 years had lapsed for the period 1990 to 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
• LGC SEC. 231
End