LOCAL GOVERNMENT TAXATION REMEDIES

Local Government Taxation

GOVERNMENT REMEDIES

1. LIEN 2. CIVIL REMEDIES a. ADMINISTRATIVE ACTIONS b. JUDICIAL ACTIONS

Local Taxation - Government Remedies

LIEN Definition:
A lien in its modern-acceptation is understood to denote a legal claim or charge on property, either real or personal, as security for the payment of some debt or obligation. (HSBC v Rafferty) SEC. 173. Local Government'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 upon any property or rights therein which may be 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 the 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
Local Taxation - Government Remedies

Legal Basis:

CIVIL REMEDIES
SEC. 174. Civil Remedies. - The civil remedies for the collection of local taxes, fees, or charges, and related surcharges and interest resulting from delinquency shall be: (a) By administrative action thru distraint of 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, and by levy upon real property and interest in or rights to real property; Notice of sale to the delinquent land owners and to the public in general is an essential and indispensable requirement of law, the non-fulfillment of which invalidates the sale (SERFINO v CA)

Legal Basis:

Jurisprudence:

Local Taxation - Government Remedies

CIVIL REMEDIES

Legal Basis: SEC. 175., LGC Distraint of Personal Property

DISTRAINT

Legal Basis:

SEC. 176. Levy on Real Property

Local Taxation - Government Remedies

Written Notice

Certificate of Fact of Deliquency

D I S T R A I N T

Seizure

Accounting

Signed Account of Goods

Submitted to Taxpayer

exhibited in not less than three (3) public and conspicuous Publication places in the territory of the local government unit

Sale

Public Auction

Report within 5 Days After Sale

If not disposed within 120 days, sale

Disposition

The proceeds of the sale shall be applied to satisfy the tax

Local Taxation - Government Remedies

LEVY
After the expiration of the time required to pay the delinquent tax, fee, or charge, real property may be levied

Authenticated Certificate

Written Notice of Levy to Assessor, ROD and Taxpayer

Within 10 Days

Report of the Levying Officer

Treasurer, shall within thirty (30) days after execution of the distraint, proceed with the levy on the taxpayer's real property

Local Taxation - Government Remedies

What happens after the Levy

Levy

Advertisement
shall cover 30 days

Sale

Treasurer issues a Report

Issue Certificate

In case there is no bidder If Payment is made prior to Sale

Local Taxation - Taxpayer's Remedies

What happens after the Sale

Sale

Redeemed
Within 1 year

Not Redeemed

Local Taxation - Government Remedies

SEC. 185. Personal Property Exempt from Distraint or Levy

(a) Tools and the implements 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 occupation; (c) His necessary clothing, and that of all his family; (d) Household furniture and utensils necessary for housekeeping and used for that purpose by the delinquent taxpayer, such as he may select, of a value not exceeding Ten thousand pesos (P=10,000.00); (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 (P=10,000.00), by the lawful use of which a fisherman earns his livelihood; and (h) Any material or article forming part of a house or improvement of any real property.

Local Taxation - Government Remedies

JUDICIAL

Treasurer to submit certified statement of delinquency

Provincial Atty file civil action

MTC/RTC

CTA

SC

Legal Basis:

SEC. 183. Collection of Delinquent Taxes, Fees, Charges or other Revenues 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.
Real Property Taxation Government Remedies

PRIOR TO ASSESSMENT: 1.APPEAL TO THE SECRETARY OF JUSTICE AFTER ASSESSMENT: 1. PROTEST ON ASSESSMENT OF LOCAL TAX 2. CLAIM OF REFUND OR TAX CREDIT

Local Taxation - Taxpayer's Remedies

APPEAL TO SOJ

Legal Basis

Section 187, LGC - That any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days from the date of receipt of the appeal: Provided, however, That such appeal shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax, fee, or charge levied therein: Provided, finally, That within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice acting upon the appeal, the aggrieved party may file appropriate proceedings with a court of competent jurisdiction.
N Local Taxation - Taxpayer's Remedies

APPEAL TO SOJ

Within 30 days from effectivity of Ordinance

SECRETARY OF JUSTICE

RTC

SC

Local Taxation - Taxpayer's Remedies

APPEAL TO SOJ

Within 30 days from effectivity of Ordinance

SECRETARY OF JUSTICE

RTC

SC

ROC, RULE 45, Section 2. Time for filing; extension. The petition shall be filed within fifteen (15) days from notice of the judgment or final order or resolution appealed from, or of the denial of the petitioner's motion for new trial or reconsideration filed in due time after notice of the judgment. On motion duly filed and served, with full payment of the docket and other lawful fees and the deposit for costs before the expiration of the reglementary period, the Supreme Court may for justifiable reasons grant an extension of thirty (30) days only within which to file the petition. Local Taxation - Taxpayer's Remedies

PROTEST ON ASSESSMENT OF LOCAL TAX

Legal Basis

Section 195 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 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. Local Taxation - Taxpayer's Remedies

PROTEST ON ASSESSMENT OF LOCAL TAX

Local Treasurer

MTC/RTC

CTA

SC

Grants

Denies

Fails to Decide

Local Taxation - Taxpayer's Remedies

CLAIM OF REFUND
SEC. 196. Claim for Refund of 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 written 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.

Legal Basis:

Jurisprudence:

TOLEDO V METRO MANILA: Based on Section 196 of R.A. No. 7160, there are two requisites for a refund claim or tax credit of local taxes, namely: (1) a written claim for refund or credit must be filed with the local treasurer before filing an action for refund with the appropriate court; (2) the refund claim or tax credit must be filed before the court within two (2) years from the date of payment of the tax, fee or charge.

Local Taxation - Taxpayer's Remedies

CLAIM OF REFUND

Written Claim for Refund

Local Treasurer

MTC/RTC

CTA

SC

Grants

Denies

Fails to Decide

Payment of tax when erroneously charged or illegally collected

Local Taxation - Taxpayer's Remedies

REAL PROPERTY TAXATION REMEDIES

Real Property Taxation - Remedies

REAL PROPERTY TAXATION REMEDIES GOVERNMENT REMEDIES

1. LIEN 2. CIVIL REMEDIES a. ADMINISTRATIVE ACTIONS b. JUDICIAL ACTIONS

Real Property Taxation Government Remedies

LIEN

Legal Basis

SEC. 257. Local Governments Lien. - The basic real property tax and any other tax levied under this Title constitutes a lien on the property subject to tax, superior to all liens, charges or encumbrances in favor of any person, irrespective of the owner or possessor thereof, enforceable by administrative or judicial action, and may only be extinguished upon payment of the tax and the related interests and expenses.

Real Property Taxation Government Remedies

LEVY
Assessor and ROD to annotate

Notice and Publication of Delinquency

Issue Warrant of Levy

Issue Warrant of Levy

Public Advertisement by posting and publication

Report of Levying Officer

10 days after receipt of warrant by taxpayer

Legal Basis:

SEC. 258. Levy on Real Property

Real Property Taxation Government Remedies

What happens after the Levy

Levy

Advertisement
Posting and Publication

Sale

Treasurer issues a Report

Issue Certificate

In case there is no bidder If Payment is made prior to Sale

Local Taxation - Taxpayer's Remedies

What happens after the Sale

Sale

Redeemed
Within 1 year

Not Redeemed

Local Taxation - Government Remedies

JUDICIAL

Treasurer to submit certified statement of delinquency

Provincial Atty file civil action

MTC/RTC

CTA

SC

Legal Basis:

SEC. 256. Remedies For The Collection Of Real Property Tax. - For the collection of the basic real property tax and any other tax levied under this Title, the local government unit concerned may avail of the remedies by administrative action thru levy on real property or by judicial action.
Real Property Taxation Government Remedies

1. Protest on assessment of Land Value

2. Protest on Assessment/Collection of Real Property

Real Property Taxation Taxpayers Remedies

PROTEST ON ASSESSMENT OF LAND VALUE

File verified Petition 60 Days after Notice

Assessment Notice

For purposes of giving effect to such assessment, it is deemed made when the notice is released, mailed or sent to the taxpayer. As soon as the notice is duly served, an obligation arises on the part of the taxpayer to pay the amount assessed and demanded.
Meralco v Barlis Real Property Taxation Taxpayers Remedies

PROTEST ON ASSESSMENT OF LAND VALUE

30 Days Assessment Notice LBAA

JURISDICTION OF LOCAL BOARDS OF ASSESSMENT APPEALS: The Local Board shall have the ORIGINAL jurisdiction to hear and decide appeals of owners/administrators of real property from the action of the Provincial or City Assessors, or the Municipal Assessors in the Metro Manila Area, in the assessment of their real properties, and from the action of the Provincial or Municipal Treasurers in the Metro Manila Area, regarding the collection of real property taxes, special levies, or other real property taxes under Title Two, Book Two, RA 7160 LBAA shall decide within 120 days

Meralco v Barlis Real Property Taxation Taxpayers Remedies

PROTEST ON ASSESSMENT OF LAND VALUE

Petition for Review 30 Days If the taxpayer fails to appeal in due course, the right of the local government to collect the taxes due becomes absolute upon the expiration of such period, with respect to the taxpayers property

Assessment Notice

LBAA

CBAA

JURISDICTION OF THE CENTRAL BOARD OF ASSESSMENT APPEALS:

The Central Board shall have exclusive jurisdiction to hear and decide all appeals from the decisions, order and resolutions of the Local Boards involving contested assessments of real properties, claims for tax refund and/or tax credits or overpayment of taxes

Real Property Taxation Taxpayers Remedies

PROTEST ON ASSESSMENT OF LAND VALUE

Petition for Review on Certiorari 15 Days

Assessment Notice

LBAA

CBAA

CTA en banc

A judgment or ruling of the Regional Trial Court acting in its original jurisdiction on tax cases may be appealed to the Court in Division within a period of thirty (30) days from receipt thereof, pursuant to Section 9 of Republic Act ('R.A.') No. 9282 JURISDICTION OF COURT OF TAX APPEALS (en banc), RCTA, Rule 4, Sec 2(e) Decisions of the CBAA in the exercise of its appellate jurisdiction over cases involving the assessment and taxation of real property originally decided by the provincial or city board of assessment appeals
Real Property Taxation Taxpayers Remedies

PROTEST ON ASSESSMENT OF LAND VALUE

Assessment Notice

LBAA
shall decide within 120 days

CBAA

CTA

SC

Legal Basis:

SEC. 226. Local Board of Assessment Appeals. - Any owner or person having legal interest in the property who is not satisfied with the action of the provincial, city or municipal assessor in the assessment of his property may, within sixty (60) days from the date of receipt of the written notice of assessment, appeal to the Board of Assessment appeals of the province or city by filing a petition under oath in the form prescribed for the purpose, together with copies of the tax declarations and such affidavits or documents submitted in support of the appeal. Real Property Taxation Taxpayers Remedies

PROTEST ON ASSESSMENT OF REAL ESTATE PROPERTY TAX

Payment Under Protest Protest 30 Days

Section 252, LGC Real Property Taxation Taxpayers Remedies

PROTEST ON ASSESSMENT OF REAL ESTATE PROPERTY TAX

Treasurer has 60 days to decide Payment Under Protest Treasurer decides Fails to Decide

Appeal within 60 days

Grants

Denies

Apply as Tax Credit for future liability

Real Property Taxation Taxpayers Remedies

PROTEST ON ASSESSMENT OF REAL ESTATE PROPERTY TAX

Payment Under Protest

Treasurer decides

LBAA

Appeal within 30 days

Real Property Taxation Taxpayers Remedies

PROTEST ON ASSESSMENT OF REAL ESTATE PROPERTY TAX

Payment Under Protest

Treasurer decides

LBAA

CBAA

Petition for Review 30 days

Real Property Taxation Taxpayers Remedies

PROTEST ON ASSESSMENT OF REAL ESTATE PROPERTY TAX

Payment Under Protest

Treasurer decides
within 60 days

LBAA

CBAA

CTA

SC

SEC. 252. Payment Under Protest. - (a) No protest shall be entertained unless the taxpayer first pays the tax. There shall be annotated on the tax receipts the words "paid under protest". The protest in writing must be filed within thirty (30) days from payment of the tax to the provincial, city treasurer Legal Basis: or municipal treasurer, in the case of a municipality within Metropolitan Manila Area, who shall decide the protest within sixty (60) days from receipt. (b) The tax or a portion thereof paid under protest, shall be held in trust by the treasurer concerned. (c) In the event that the protest is finally decided in favor of the taxpayer, the amount or portion of the tax protested shall be refunded to the protestant, or applied as tax credit against his existing or future tax liability. (d) In the event that the protest is denied or upon the lapse of the sixty day period prescribed in subparagraph (a), the taxpayer may avail of the remedies as provided for in Chapter 3, Title II, Book II of this Code.

Real Property Taxation Taxpayers Remedies

TAX REFUND

Claim for Refund

Treasurer decides

LBAA

CBAA

CTA

SC

Legal Basis:

SEC. 253. Repayment of Excessive Collections. - When an assessment of basic real property tax, or any other tax levied under this Title, is found to be illegal or erroneous and the tax is accordingly reduced or adjusted, the taxpayer may file a written claim for refund or credit for taxes and interests with the provincial or city treasurer within two (2) years from the date the taxpayer is entitled to such reduction or adjustment. The provincial or city treasurer shall decide the claim for tax refund or credit within sixty (60) days from receipt thereof. In case the claim for tax refund or credit is denied, the taxpayer may avail of the remedies as provided in Chapter 3, Title II, Book II of this Code.

Real Property Taxation Taxpayers Remedies

LEVY v LIEN

Tax Lien is the government's statutory right that encumbers property to secure the ultimate payment of a tax.
The term "levy" in this narrow technical sense denotes an administrative action by the proper government agency (i.e., without going to court) to seize property to satisfy a tax liability. The levy is the actual act of seizure of the property.

Local Taxation - Taxpayer's Remedies

SEC. 226. Local Board of Assessment Appeals vs SEC. 195. Protest of Assessment

Assessment referred to in Sec 226 pertains to the valuation made by the local assessor on a real property for realty tax purposes. The appeal process is via LBAA ->CBAA On the other hand, Sec 195 refers to the notice of assessment that the local treasurers are required to issue upon a local tax, fee or charge becoming delinquent. Aggrieved party may file a written protest to the local treasurer. If the protest is denied, taxpayer may appeal to courts of competent jurisdiction

Local Taxation - Taxpayer's Remedies

Assessment in Sec 194 vs Assessment in Sec 195

Assessment mentioned in Sec 194 refers to the determination of the amount of tax base as basis for computing tax due, which may either be by selfassessment of the taxpayer or assessment by the treasurer
If the assessment is by the treasurer, he is required to issue the Notice of Assessment on the taxpayer pursuant to Sec 195, otherwise the taxes due prescribe after 5 years from such assessment.

Local Taxation - Taxpayer's Remedies

Effect of Appeal on Collection of Taxes

An Appeal shall not suspend the collection of the corresponding realty taxes on the real property subject of the appeal as assessed by the assessor concerned without prejudice to subsequent adjustment depending on the final outcome of the appeal.

Local Taxation - Taxpayer's Remedies

Sec 252, LGC: PAYMENT UNDER PROTEST General Rule NAPOCOR v QUEZON It was an ill-advised move for Napocor to directly file an appeal with the LBAA under Section 226 without first paying the tax as required under Section 252. Sections 252 and 226 provide successive administrative remedies to a taxpayer who questions the correctness of an assessment. Section 226, in declaring that "any owner or person having legal interest in the property who is not satisfied with the action of the provincial, city, or municipal assessor in the assessment of his property may x x x appeal to the Board of Assessment Appeals x x x," should be read in conjunction with Section 252 (d), which states that "in the event that the protest is denied x x x, the taxpayer may avail of the remedies as provided for in Chapter 3, Title II, Book II of the LGC [Chapter 3 refers to Assessment Appeals, which includes Sections 226 to 231]. The "action" referred to in Section 226 (in relation to a protest of real property tax assessment) thus refers to the local assessors act of denying the protest filed pursuant to Section 252. Without the action of the local assessor, the appellate authority of the LBAA cannot be invoked. Napocors action before the LBAA was thus prematurely filed.
Local Taxation - Taxpayer's Remedies

Sec 252, LGC: PAYMENT UNDER PROTEST

EXCEPTION: Where the petitioners are questioning the very power of the assessor to impose the assessment, and/or the authority of the treasurer to collect the tax as these involve questions of law and not of fact, hence, not appealable to LBAA

Local Taxation - Taxpayer's Remedies

NAPOCOR v QUEZON

It was an ill-advised move for Napocor to directly file an appeal with the LBAA under Section 226 without first paying the tax as required under Section 252. Sections 252 and 226 provide successive administrative remedies to a taxpayer who questions the correctness of an assessment. Section 226, in declaring that "any owner or person having legal interest in the property who is not satisfied with the action of the provincial, city, or municipal assessor in the assessment of his property may x x x appeal to the Board of Assessment Appeals x x x," should be read in conjunction with Section 252 (d), which states that "in the event that the protest is denied x x x, the taxpayer may avail of the remedies as provided for in Chapter 3, Title II, Book II of the LGC [Chapter 3 refers to Assessment Appeals, which includes Sections 226 to 231]. The "action" referred to in Section 226 (in relation to a protest of real property tax assessment) thus refers to the local assessors act of denying the protest filed pursuant to Section 252. Without the action of the local assessor, the appellate authority of the LBAA cannot be invoked. Napocors action before the LBAA was thus prematurely filed.
Local Taxation - Taxpayer's Remedies

Sangguniang Panglungsod of the City of Makati, et al vs. Chevron Holdings, Inc., CTA AC No. 70, October 21, 2011 & Res. Dec. 26, 2011
The issue of constitutionality or unconstitutionality of a local ordinance may be invoked as a ground to protest the assessment under Section 195 of the Local Government Code (LGC). The City Assessors Office assessed the taxpayer for business taxes pursuant to the Revised Makati Revenue Code (RMRC). Taxpayer filed a protest which was later denied by the City Treasurer. The taxpayer filed an appeal before the RTC. The City of Makati argued that although the taxpayer used the protest against the assessment as basis of its appeal before the RTC, the latter was actually questioning the legality of the provision of RMRC. The City asserts that the issue of constitutionality or unconstitutionality of a local ordinance may not be invoked as a ground to protest assessment under Section 195 of the LGC. The Court held that Section 195 of LGC does not enumerate nor restrict a protest of assessment to specific grounds; thus, respondent has the right to raise as an issue the constitutionality of the tax ordinance, which became the sole basis of the disputed assessment
Local Taxation - Taxpayer's Remedies

Province of Cagayan v. Philippine Long Distance Telephone Company, C.T.A. AC No. 63 (RTC Civil Case No. 07-077), September 15, 2010 Local Tax; Notice of Garnishment deemed denial of protest. Claim for refund not sine qua non to right toappeal; Franchise tax; Bureau of Local Government Finance Opinions. Jurisprudence dictates that a final letter for payment of delinquent taxes may be considered a decision on a disputed or protested assessment. Hence, the issuance of notice of Garnishment is deemed a denial of respondents protest; The Supreme court ruled in Vda. De San Agustin vs. CIR that to require the taxpayer to claim for refund of the taxes paid as a condition precedent to his right to appeal, would in effect require him to go through a useless and needless ceremony that would only delay the disposition of the case, for the Commissioner would certainly disallow the claim for refund in the same way, as he disallowed the protest again the assessment; Taxpayer is not liable to pay franchise tax to the province on gross receipts realized within the city (that is within the territory of the province); BLGF s interpretation of local tax laws in not authoritative and persuasive. It has not express powers to interpret the tax code and other national laws, unlike the Commissioner of Internal Revenue. Section 195, 196, 137 and 151 of the Local government Code.
Local Taxation - Taxpayer's Remedies

END

Local Taxation - Taxpayer's Remedies