PRE-WEEK NOTES ON LOCAL

and, REAL POROPERTY TAXES,

Prepared by Dr. Jeannie P. Lim

1. What entities are exempt from local taxation?

a) Local water districts
b) Cooperatives duly registered under RA 6938 (Cooperative Act of the Philippines)
c) Non-stock and non-profit hospitals
d) Non-stock, non-profit educational institutions

2. What are the taxes imposable by (a) Provinces, (b) Municipalities, (c) Cities and (b) Barangays:

Provinces Municipalities Cities Barangay

1. On store and retailers of not
1. Real property tax including more than P50K (in cities)
special levies on properties Tax on all kinds of All kinds of taxes imposable and P30K (in Municipalities)
2. Business of Printing businesses operating within by provinces and of capital
and Publication its territorial jurisdiction municipalities 2. Service fees or charges
3. Franchise tax except printing press 3. Barangay clearance
4. Sand, gravel and 4. Other fees and charges –
other quarry resources breeding of fighting cocks,
5. Professional tax cockfights and cockpits,
6. Fixed annual tax on recreation, billboards,
7. vehicles used signboards, outdoor ads
for delivery of goods 5. Public utility charges – toll
7. Transfer tax on real fees on roads, bridges,
Properties wharves, piers.
8. Amusement tax

3. What are the limitations and restrictions on the power of the local government to tax?

Yes. The constitutional, inherent, statutory and contractual limitations on national taxation are also applied to local taxation.

a) Constitutional limitations – (1) due process and equal protection clauses, (2) non-impairment of obligations of contracts, (3)
non-imprisonment for non-payment of poll tax, (4) rule on uniformity in taxation, and (5) tax exemptions of religious and
charitable institutions.

b) Inherent restrictions – (1) public purpose, (2) territoriality, (3) direct double taxation, (4) exemption of government or
instrumentalities from taxation.

c) Statutory limitations – those expressly provided by law and applicable to all levels of local government – denominated as
“common limitations on the taxing powers of local government units”

d) Tax privilege granted by the government under a valid contract limits the exercise of the power of taxation within the terms and
conditions of the said contract.

 A tax ordinance that imposes a tax beyond any of the limitations is VOID, it being ultra vires.

4. Distinguish local taxation from internal revenue tax and real property tax:

Internal Revenue Tax Local Tax Real Property Tax

All types of national taxes levied by the All types of imposts which local Taxes levied by provinces, cities and
national government government units are empowered to municipalities on real properties and
enact on businesses, occupations, their improvements
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Collected by the Bureau of Internal
Revenue through accredited banks
Exercise by the national government
under its inherent power of taxation
Internal revenue taxes are payable on
different rates
Not subject to discounts even if paid on
or before due date
Gen. Rule - cannot be paid on
installment
Internal Revenue Tax
Self-assessing (Paid together with the
required tax returns)
Prescriptive period for assessment and
collection are different
regulated privileges and activities, utility
charges carried and within their
respective territorial jurisdiction
Collected by provinces, cities, Collected by provinces or cities where
municipalities and barangays the property is located
Exercise by the local government units under its delegated power of taxation
Payable on or before January 20 of each calendar year
Subject to discounts when paid in full on or before due date
The yearly tax may be paid in four (4) quarterly installments
Local Tax Real Property Tax
Not self assessing (no tax return is required)
The local government has 5 years to assess from due date and 5 years to collect from
assessment.

5. How much is the share of the local government units in the internal revenue allotment?

Local government units shall receive:

a) 30% on the first year of the effectivity of the Local Government Code
b) 35% on the second year;
c) 40% on the third year and thereafter, the 40% shall be divided as follows:

1. 23% thereof to the provinces

2. 23% thereof to the cities
3. 34% thereof to municipalities, and
4. 20% thereof to barangays.

6. How much is the share of local governments in the proceeds from the development and utilization of national wealth?

Local government units shall have the share of 40% of the gross collection derived by the national government from excise taxes on
mineral products, royalties, taxes, fees, charges, surcharges, interests, fines, share from any co-production, joint venture or production
agreement (referred to as the proceeds on the development of national wealth) - components cities get 45% from that share. For natural
resources located in highly urbanized cities or independent cities, 40% of its share shall be automatically apportioned in the following
manner: City - 65% and Barangay - 35%.

7. Allocation Rule defined:

This rule applies only to manufacturers, assemblers, contractors, producers and exporters with factories, project offices, plants and
plantations in the pursuit of business. 30% of all sales recorded in the principal office shall be taxable by the city or municipality where
the principal office is located, and 70% of all sales recorded in the principal office shall be taxable by the city or municipality where the
factory, project office, plant or plantation is located.

NOTE: This is applicable ONLY if there is no branch or sales office.

8. How are the sales of branch offices taxed by the local government?

All sales made in a locality where there is a branch or sales office or warehouse shall be recorded in said branch or sales office or
warehouse and the tax shall be payable to the city or municipality where is same is located.

9. Power of the local government to impose taxes on pioneer industries registered with the Board of Investment (BOI):

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 A pioneer enterprise registered with the BOI has a clear and unmistakable right to be exempt from paying local taxes under the
Local Government Code. However, if the entitlement has already expired, the local government has the right to collect local taxes from
said enterprise. (The Mun. of Alfonso Lista, Ifugao vs. CA, et. al., GR No. 191442, July 27, 2016)

10. What are the limitations as to imposable rates in local taxation? (Cagayan Electric Power & Light Co., Inc. vs. City of
Cagayan De Oro, November 14, 2012)

A city may exceed by not more than 50% the tax rates allowed to provinces and municipalities. A municipality may impose a
business tax at a rate not exceeding 2% of gross sales or receipts of any business subject to VAT under the Tax Code. A city may
impose a business tax of up to 3% of a business’ gross or receipts of the preceding calendar year. In the case of “CDO”, the 10% tax
rates imposed by the Ordinance in question clearly violates Sec. 143 (h) of the LGC. In view of the lack of separability clause in the
Ordinance, the SC declared void the entirety of the Ordinance without prejudice to the enactment of the City of Cagayan de Oro of a tax
ordinance that complies with the limits set by the Local Government Code.

11. The general rule provides that taxes already enumerated under the NIRC are now beyond the taxing authority of the local
government. Can the provincial government validly collect excise taxes on quarry resources independent of the national
government? (Lepanto Consolidated Mining Company vs. Hon. Mauricio B. Ambanloc, June 29, 2010)

Yes, provincial government is specifically given the authority to tax quarry resources (sand, stones and the like) extracted within and
from their territorial boundaries independent of the national government. What the Tax Code taxes are the goods/products themselves
whereas what the local government taxes is the privilege of extracting the products from the riverbeds.

12. RA 6055 granted educational institutions that converted themselves into non-stock, non-profit educational foundations
exemptions from payment of all taxes, import duties, assessments and other charges imposed by the Government on all
income derived from property, real or personal, used exclusively for the educational activities of the Foundation. X, now a
foundation believes that it is exempted from building permit fees as the same is covered by its exemption under “other
charges” Is X correct? (Angeles University Foundation vs. City of Angeles, et. al., June 27, 2012)

X is not correct. Building permit fees are not impositions on property but on the activity subject for government regulations. Under the
National Building Code, only public buildings and traditional indigenous family dwellings are exempted from the payment of building
permit fees. Charges and fees are not the same. A “fee” is an imposition fixed by law or ordinance for the regulation or inspection of a
business or activity while “Charges” refer to pecuniary liability, as rents or fees against persons or property or an amount of money
paid for services rendered. An exemption from tax does not include exemption from regulatory fees and/or charges.

13. Where should the local business tax be based, on gross receipts or gross revenues? (Ericson Telecom, Inc. vs. City of
Pasig, November 22, 2007)

As provided under Sec. 143 of the Local Government Code, the local business tax should be computed based on gross
sales/receipts. “Gross sales/ receipts” include money or its equivalent actually or constructively received in consideration of services
rendered or articles sold, exchanged or leased, whether actual or constructive. Computing the local business tax on the basis of gross
revenue will inevitably result in double taxation, inasmuch as the taxpayer’s revenue or income for a taxable year will definitely include its
gross receipts already reported during the previous year and for which the local business tax has already been paid.

14. Does the local government have the power to impose a franchise tax on a business enjoying a legislative franchise?

Yes. The local government may impose a local franchise pursuant to the authority granted by the LGC which provides that,
notwithstanding any exemption granted by law, the province/city may impose a franchise tax on all businesses enjoying a franchise.
There was thus an implied repeal by the LGC of PD551 insofar as the latter imposes a 2% tax “in lieu of all taxes and assessments of
whatever nature.” The Local Government Code explicitly authorizes the province and cities notwithstanding “any exemption granted by
any law or other special laws” to impose a tax on businesses enjoying a franchise.

The LGC did not violate the non-impairment clause of the Constitution, as the former was enacted in pursuance of the constitutional
policy to ensure autonomy to local government. Likewise, local legislative bodies are granted direct authority by the Constitution to levy
taxes. The Constitution also reserves to Congress the right to amend, alter or repeal all franchises when the public interest so requires.

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 But even without such reservation clause, franchise are subject to alterations through a reasonable exercise of police power and the
power to tax, both of which cannot be contracted away. (1999 case)

15. X believes that the tax ordinance passed by the City government is unconstitutional, where should he file is appeal? Is it
before the SF, DOJ, CTA or the Regular Courts? (Sec. 187, LDC; Hagonoy Vendor Association vs. Mun. of Hagonoy, 2002)

Before filing an appeal X may secure the opinion of the City prosecutor about the legality of the tax ordinance, thereafter, X may file
an appeal before the Secretary of Justice. Any question on the constitutionality or legality of a tax ordinance may be raised on appeal
with the Secretary of Justice within 30 days from the effectivity thereof.

16. X files a complaint assailing the validity of the tax ordinance and praying for a tax refund of its perceived overpayments
without protest. Will his claim prosper?

Yes. X may file a complaint assailing the validity of the ordinance and praying for tax refund of its perceived overpayments without
first filing a protest to the payment of taxes due under the ordinance. However, failure of X to interpose the requisite appeal to the Sec. of
Justice is FATAL to his complaint for a tax refund. (2003 case)

NOTE: The local tax has to be contra-distinguished from a real property tax which cannot he protested without payment.

17. Remedies of taxpayers aggrieved by a tax ordinance:

There are three (3) administrative remedies available to an aggrieved taxpayer: A tax ordinance may either be (a) reviewed or
suspended by the Provincial Treasurer or the Secretary of Finance, (b) the subject of a formal protest with the Secretary of Finance, or
(c) question the tax ordinance as to its legality and refer for the opinion of the Provincial fiscal.

18. Procedure for assailing the validity of a tax ordinance: (Cagayan Electric Power & Light Co., Inc. vs. City of Cagayan De
Oro, November 14, 2012)

The LGC requires a dissatisfied taxpayer who questions the validity or legality of a tax ordinance to file his appeal to the Secretary
of Justice within 30 days from the effectivity thereof. In case the Secretary of Justice decides the appeal, the aggrieved taxpayer has 30
days to go to court. If there is inaction thereon within 60 days, the subject taxpayer could proceed to seek relief in court. These three
separate periods are clearly given for compliance as a prerequisite before seeking redress in a competent court. Such statutory periods
are set to prevent delays as well as enhance the orderly and speedy discharge of judicial functions. These provisions of statutes are
mandatory

19. X questions the validity of an ordinance which has appropriated money for the construction of a public market, including the
validity of contracts entered into by the local government for the occupancy of stalls in the said public market, X argues that
there was no publication of the ordinance such that it operated unfairly against those who were interested to lease a space
but were not given the opportunity to make deposits for the market stalls. X’s locus standi to bring the suit was questioned
because he is not a party to the contract. Will the suit of X prosper?

In a taxpayer’s suit, the petitioner need not be a party to the contract between the government and a private party to challenge its
validity. But, he must clearly establish that such ordinance operated unfairly against those who were not notified. X’s unsubstantiated
allegation that the public was not notified does not suffice to overcome the presumption of regularity in the performance of official
functions.

The general rule for a taxpayer’s suit is that: “Any taxpayer may impugn the validity of a tax measure or the expenditure of public
funds if he has locus standi or standing in court (a personal and substantial interest in the case, such that the party has sustained or will
sustain direct injury as a result of the challenged act”

NOTE: In the recent case of Coconut Oil Refiners Association, Inc. vs. Torres, July 29, 2005, a taxpayer’s suit may be allowed to prosper
even where there is no direct injury to the party claiming the right of judicial review where serious constitutional questions are involved.
20. Are provinces prohibited from imposing amusement tax in the form of percentage tax? ( Pelizloy Realty Corp. vs. The
Province of Benguet, April 10, 2013)

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 No. They are not. Amusement taxes are fixed at a certain percentage of the gross value in money of goods sold, bartered or
imported; or of the gross receipts or earnings derived by any person engaged in the sale of services. Provinces are categorically allowed
to impose amusement taxes on the proprietor, lessees or operators of theaters, cinemas, concert halls, circuses; boxing stadia and other
places of amusement. These are places where performances, events, shows, exhibitions, spectacles, performances and other events
meant to be viewed by an audience are held. Operators of swimming pools, resorts, bath houses, hot springs and tourist spots do not
belong to the same category or class as theaters, etc. it follows that they cannot as among the other places of amusement contemplated
by Sec. 140 of the LGC to be covered by amusement taxes of the province.

21. May the regular courts enjoin the collection of local taxes?

Unlike the NIRC, the LTC does not contain any specific provision prohibiting courts from enjoining the collection of local taxes. Such
statutory lapse or intent may have allowed preliminary injunction where local taxes are involved. But it cannot negate the procedural
rules and requirements under Rule 58 of the Rules of Courts. ( Valley Trading Co vs. CFI of Isabela, March 31, 1989) Hence, the regular
courts may enjoin the collection of local taxes subject to Rule 58 (Preliminary Injunction).

22. Can the local government avail of the remedy of distraint and levy of personal property such as the issuance of warrants to
garnishment over bank deposits of erring taxpayers?

Yes. (Meralco vs. Barlis, May 18, 2001)

23. X, a domestic condominium corporation is engaged in selling of real property within the city proper; it received an
assessment from the City Government of its unpaid local business taxes. X contends that it is not liable because the
business of selling real property is exempt from local taxation. Is X correct?

X is correct. While the power of the LGUs to impose taxes within their territorial jurisdiction is derived from the Constitution itself,
which recognizes the power of these unit “to create their own resources of revenue and to levy taxes, fees and charges”, such authority
is subject to the guidelines and limitations as the Congress may provide, consistent with the basic policy of local authority. Among the
limitations set by the Congress in the Local Government Code, is that proviso which generally exempt condominium corporations from
local business taxation, Irrespective of any local ordinance that seeks to declare otherwise. (2005 case)

24. Doctrine of Usage defined: This is the gauge used in determining taxability of real properties. Real properties are taxed according to
how they are used and not based on where they are located or ownership thereof.

25. Are properties owned by GOCCs subject to real property taxes?

Yes. In the case of Mactan-Cebu Int’l. Airport Authority, the Supreme Court held that properties owned by GOCCs are subject to
real property taxes “unless otherwise provided.” The exemption from real property taxes under Sec. 234 of the RPTC specifically states
that only real properties owned by the Republic of the Philippines or any of its political subdivisions (local governments) are exempted.

26. Government instrumentalities of the national government are not subject to real property taxes except those portions that
are leased to private persons or entities. Such as: Philippine Fisheries Development Authority, Lucena Fishing Port
Complex; Mactan International Airport Authority; Philippine Reclamation Authority among others.

 Government agencies (PNB, Land Bank, DBP) performing proprietary functions are taxable including GOCCs and they are
subject to tax audit by the BIR like an ordinary taxpayer.

 Properties of public dominion are not subject to execution or foreclosure sale. (RP represented by the Phil. Reclamation
Authority vs. City of Paranaque, July 18, 2012)

27. Is tax declaration or real property tax payments proof of ownership of real property?

A tax declaration by itself is not sufficient to prove ownership of real property it may serve as sufficient basis for inferring possession
and are considered good indicia of possession in the concept of an owner and payment of taxes is not proof of ownership either, it is, at
best, an indicium of possession in the concept of ownership because no one in his right mind would be paying taxes for a property that is
not in his actual or constructive possession.

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28. Are power plant barges and its accessory equipment mounted on the barges subject to real property taxation? (Province of
Batangas et. al., vs. Napocor, Feb. 16, 2007)

Yes. These are intended by their nature and object to be immovable properties by destination, being in the nature of machinery and
other implements intended by the owner for an industry or work which may be carried on in a building or a piece of land and which tend
directly to meet the needs of said industry or work. Further, subject accessories are mounted on the barges and attached to gas turbine
power plants designated to generate electric power installed at a specific location with a character of permanency.

29. Is the opinion of the Department of Finance that “power barges are not real properties” binding on the local government
thereby exempting the same from real property taxation?

No. An opinion cannot override the power of taxation especially when the opinion has no leg to stand on. In several cases, the
highest court held that movable properties installed at a specific location with a character of permanency will be considered real
properties for purposes of real property tax in consonance with the definition of real property under the Civil Code.

30. “Giant Electric” is a domestic corporation engaged in the supply and distribution of electricity in the region. It was assessed
real property taxes on its steel towers, electric posts, barges, transformer and transmission lines that it installed for its
operations. “Giant” contends that the said properties are personal properties and therefore not subject to real property tax. Is
“Giant’s” contention tenable?(Cotabato Electric Cooperative vs. CBASA, CTA EB Case No. 377, October 2, 2009)

The CTA en banc held that the steel towers, electric posts, barges, transformers and transmission lines are now included in the
term machinery provided under Sec. 199 (o) of the LGC. Under the said provision, facilities which are permanently attached to real
properties which are actually, directly and exclusively used to meet the needs of the particular industry, business or activity are
considered as machineries subject to real property tax

31. The local government of X province learned that several business companies within the locality use pipelines to transport
petroleum products to their dealers. May the local government impose taxes on the gross receipts on petroleum companies
that use said pipelines to transport petroleum to other localities and dealers?

In the case of First Phil. Industrial Corporation vs. CA, December 29, 1998, The Supreme Court held that pipeline operators are in
the truest sense of the word common carriers and are therefore exempt from the gross receipt tax imposed by the local government.
Therefore, there are two reasons why the local imposition should be considered null and void. (a) Under the NIRC, the right to impose
tax on the gross receipts of a common carrier belongs to the national government, and (b) The petroleum companies that use pipelines
are common carriers transporting their goods by land as defined under Sec. 133 of the Local Government Code.

32. Three (3) big oil companies jointly financed the installation of pipelines from the shore to their respective oil/gas depot to
facilitate the transfer of such products to their facilities. The local government imposes business taxes against the pipelines
contending that such are common carriers. May the local government impose business taxes on the pipelines? [First Phil.
Industrial Corp. (1998)]

Local government cannot impose “common carriers taxes” because such tax is already imposed under the NIRC to prevent a
duplication of the same tax.

33. X owns a big track of land beside a river where sand, gravel, earth and other quarry resources are extracted. The Province
where said property is located imposes taxes on said goods. X objected to the imposition thereof. Can the province validly
tax X on the products extracted from his private properties? [Province of Bulacan (1998)]

A province has no authority to impose taxes on stones, sand, gravel, earth and other quarry resources extracted from private lands.
It may not also levy excise taxes on such articles as they are already taxed by the NIRC. A province may not invoke the Regalian
Doctrine to extend that coverage of its ordinance to quarry resources extracted from private land, because taxes, being burdens are not
to be presumed beyond what the applicable statute expressly and clearly declares, tax statutes being construed strictissimi juris against
the government.

34. The City Assessor’s Office of “X” City issued Tax Declaration with increased values for certain properties within the City. The
owners were not amenable to the values assigned and sought reconsideration from the same office. Thereafter, the
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 Assessor reduced the assessed values of the properties. Is the Assessor justified in doing so? (Callanta vs. City of Cebu,
January 30, 1996)
No. Once the local Assessor sends notice to the owner or lawful possessor of real property of its assessed value, the former is
automatically divested of any jurisdiction to entertain any request for a review or readjustment. The proper remedy of the property
owners is to appeal the valuation made by the Assessor to the Local Board of Assessment Appeals within 60 days from receipt of the
assessment.

The Local Board of Assessment Appeals (LBAA) has 120 days to decide the protest. In case property owner is adversely affected
by the LBAA’s decision he may within 30 days appeal to the Central Board of Assessment Appeals (CBAA) who has a 12 month period
to resolve the appeal. Thereafter, from the CBAA the aggrieved taxpayer may file an appeal to the CTA En Banc within 30 days from
receipt of CBAA’s decision and to the Supreme Court within 15 days in case of need. .

35. X, received a copy of the latest Tax Declaration on his real property from the Office of the Assessor, X believes that there
should be no increase in the assessed market value on his realty because for the last 10 years he has not introduced any
additional improvement thereon, the house constructed within the property that he and his family presently occupy is the
same house he inherited from this deceased mother. What remedies are available to X if the local government enforces real
property tax collection based on the latest tax declaration. Reason.

X is still required to pay real property tax under the latest assessed market value of his property as stated in the tax declaration he
received. Whenever the local assessor sends a notice to the owner or lawful possessor of real property of its revised assessed value, the
property owner who does not agree thereto must dispute such assessment within 60 days from receipt of notice/Tax Declaration.
Thereafter, upon receipt of an adverse decision he may file an appeal before the Local Board of Assessment Appeals questioning the
taxability and/or increase of the market value of real property. Failure on his part to question such assessment within the reglamentary
period provided by law, the local government’s right to collect becomes absolute upon the expiration of such period with respect to that
property. (1998 case)

36. Is an appeal before the Local Board of Assessment Appeals (LBAA) covered by the rule “Pay-Now-Protest-Later”?

Yes. Sec. 252 of the RPTC requires that payment to the local treasurer shall be made on or before protest. In the event that the
protest is denied or there is inaction upon the lapsed of the 60-day period for the treasurer to decide. The property owner may file a
complaint/appeal before the LBAA. An appeal to the LBAA without payment first is deemed a premature appeal. (CTA En Banc case No.
1390-91, April 26, 2017)

37. The local government reclassified machineries and the control house being used by X on its business operation. X moves
that the subject properties be reclassified back to its original tax-exempt status. In case the treasurer denies X’s Motion. Is
this case appealable to the CTA?

Yes. The action brought by X to the LBAA is in effect an appeal questioning the correctness or reasonableness of the assessment
made by the local treasurer. For the appeal to prosper X must “pay-first-before-Protest the real property taxes on the subject property as
assessed.

38. X, dissatisfied with the local treasurer’s denial of or inaction on his protest over an assessment filed within 30 days a petition
for certiorari under Rule 65. Did he avail of the correct remedy in questioning the local treasurer’s decision? (Team Pacific
Corp. vs. Daza as Mun. Treasurer of Taguig, July 11, 2012)

X erroneously availed of the wrong remedy in filing a petition for certiorari under Rule 65 to question the treasurer’s decision or
inaction on his protest. The local treasurer cannot be said to be performing a judicial or quasi-judicial function in assessing X of business
taxes and/or effectively denying X’s protest. For this reason, the treasurer’s actions are not the proper subject of Rule 65 on petition for
certiorari. Certiorari is an extraordinary remedy designed for the correction of errors of jurisdiction and NOT errors of judgment. It is
likewise considered mutually exclusive with an ordinary appeal. Furthermore, question of facts is not allowed in a petition for certiorari,
prohibition and mandamus.

As a special civil action, certiorari is available only if the following requisites concur: (a) it must be directed against a tribunal, board,
or other officer exercising judicial or quasi-judicial functions; (b) the tribunal, board or officer must have acted without or in excess of
jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction, and (c) there is no appeal nor any plain, speedy
and adequate remedy in the ordinary course of law. Judicial function entails the power to determine what the law is and what the legal
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 rights of the parties are and then undertakes to determine these questions and adjudicate upon the rights of the parties. Quasi-judicial
functions, on the other hand, refers to the action and discretion of public administrative officers or bodies, which are required to
investigate facts or ascertain the existence of facts, hold hearings and draw conclusions from them as a basis for their official action and
to exercise discretion of a judicial nature.

X should have brought on appeal the treasurer’s denial or inaction of his protest as the case may be to the RTC. Judgments,
resolutions or orders of the RTC in tax collection cases originally decided by them in their respective territorial jurisdiction must be filed
with the CTA within 30 days from receipt of said adverse decision of the regular court. Note as well that CTA has no jurisdiction over
decisions or inaction of a local treasurer.

39. X seasonably protested to the assessment of the local government of his alleged deficiency tax liabilities. The local treasurer
denied his protest. Thereafter, X filed an appeal before the RTC labeling said review as an appeal. Is X correct? (The Mun.
of Magallanes, Agusan Del Norte, CTA AC No. 68, January 5, 2012)

The review taken by the RTC over the denial of the protest by the local treasurer would fall within the court’s original jurisdiction.
The review is the initial judicial cognizance of the matter because the decision of the local treasurer is not a decision of a court but an
administrative officer. Hence, labeling said review as an exercise of appellate jurisdiction is inappropriate, the denial of the protest is not
a judgment or order of a lower court, but a local government official.

40. The taxpayer (LRT) resisted the assessment on the carriageways and terminal stations for realty taxes upon the theory that
such real properties are for public use similar in nature to public roads. Is the contention valid? (LRT Case)

The court held that it was not for public use since only those who are riding the LRT use them and that there is no grant of real
property tax exemption in the Charter of the LRT was provided.

Unlike public roads which are open for use by everyone, the LRT is accessible only to those who pay the required fare. It is thus
apparent that petitioner does not exist only solely for public service, and that the LRT carriageways and terminal stations are not
exclusively for public use. Moreover, the charter of petitioner does not provide for any real estate tax exemption in its favor. Even
granting that the national government indeed owns the carriageways and terminal stations, the exemption would not apply because their
beneficial use has been granted to petitioner (LTR), a taxable entity.

41. Sec. 252 of the LGC provides that a taxpayer must first pay the real property tax assessed before he is allowed to protest
the assessment. Is a taxpayer required to pay the real property tax if he is questioning the authority of the local assessor to
assess real property taxes? Or is he required to pay the real property taxes if he claims that the real property is exempt from
real property taxes?

The SC held that by claiming exemption from realty taxation, the taxpayer is simply raising a question of the reasonableness or
correctness of the amount assessed, as such; the real property tax must be paid prior to the making of a protest. On the other hand, if
the taxpayer is questioning the authority of the local assessor to assess real property taxes and of the treasurer to collect, it is not
necessary to pay the real property taxes prior to the protest. A claim for tax exemption, whether full or partial does not question the
authority of local assessor to assess real property taxes.

42. Does the RTC and the MTC, MTCC, MetTC have exclusive original criminal jurisdiction of tax cases?

Yes. When the amount involved is less than Php 1.0 million, the jurisdiction of the RTC and the MTC depends on the imposable
penalty. The MTC, MTCC, MetTC, has exclusive original jurisdiction if the imposable penalty does not exceed imprisonment of 6 years or
fine not exceeding Php 4 thousand, in excess of these imposable penalties, exclusive original jurisdiction falls with the RTC.

43. May the regular courts enjoin the collection of local taxes?

Unlike the NIRC, the LTC does not contain any specific provision prohibiting courts from enjoining the collection of local taxes. Such
statutory lapse or intent may have allowed preliminary injunction where local taxes are involved. But it cannot negate the procedural
rules and requirements under Rule 58 of the Rules of Courts. ( Valley Trading Co vs. CFI of Isabela, March 31, 1989) Hence, the regular
courts may enjoin the collection of local taxes subject to Rule 58 (Preliminary Injunction).
44. Where is the reckoning of the prescriptive period for collection of real property taxes? (Tacloban City Government vs. Leyte
Park Hotel, Inc. CTA OC No. 012, November 15. 2011)
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 The local government unit concerned has five (5) years counting from the end of each quarter rather than on a yearly basis to
initiate either an administrative or judicial action to collect the deficiency tax for said period.

45. What are the remedies of a taxpayer under the Local tax Code?

A. Administrative
Before payment –
a. Appeal – any question on constitutionality or legality of tax ordinance within 30 days from effectivity thereof to the
Sec. of Justice (Sec. 187, LGC)
b. Declaratory relief whenever applicable

After payment -
a. Protest – within 60 days from receipt of assessment (Sec. 195, LGC).Payment under protest is not necessary.
b. Payment and subsequent refund or tax credit – within 2 years from payment of tax to the local treasurer (Sec.
196, LGC)
c. Right to redemption – 1 year from the date of forfeiture (Sec. 181, LGC)
B. Judicial.
1. Court action – within 30 days after receipt of decision or lapse of 60 days of Secretary of Justice’s inaction (Sec. 187,
LGC)
a) Within 30 days from receipt when protest of assessment is denied.
b) If no action is taken by the treasurer in refund cases and the 2 year period is about to lapse (Sec. 95)
c) If remedies available do not provide plain, speedy and adequate remedy.

2. Action for declaratory relief

3. Injunction – if irreparable damage would be caused to the taxpayer and no adequate remedy is available.

46. What are the remedies of taxpayer under the Real Property Tax Code?

A. Administrative –
a) Protest – payment under protest is required. Filed within 30 days from date of payment to provincial, city or municipal
treasurer.
b) Refund or tax credit – within 2 years from the date the taxpayer is entitled thereto (Sec. 253, LGC)
c) Redemption of real property within 1 year from date of sale (Sec. 261, LGC)
d) Appeal – within 60 days from assessment of provincial, city or municipal assessor to LBAA, Within 30 days from
receipt of decision of LBAA to CBAA, within 30 days from CBAA to the CTA and within 15 days from CTA to the SC.

B. Judicial –
a) Court action – appeal of CBAA’s decision within 30 days to CTA
b) Suit assailing validity of tax; recovery of refund of taxes paid (Sec. 64, PD 464)
c) Suit to declare invalidity of tax due to irregularity in assessment and collection (Sec. 64, PD 464)
d) Suit assailing the validity of tax sale.

47. What are the administrative remedies available to a real property owner to contest the assessment (valuation of real
properties) for real property tax?

A real property owner who is not satisfied with the assessment or reasonableness of the real property tax sought to be collected by
the city or province where the property is located, he should:

a) Pay the realty tax under protest – The protest in writing shall be filed within 30 days from payment of the tax assessed. The
Treasurer has a period of 60 days to act on the protest.
b) In the event of a denial or inaction, the appellate procedure is to file a verified petition with the LBAA within 60 days from denial
of protest or receipt of the notice of assessment.
c) In the event of a denial, an appeal may be taken to the CBAA by filing a notice of appeal within 30 days from receipt thereof.
d) From the CBAA, the dispute may be taken to the CTA En Banc by filing a verified petition for review under Rule 43 of the Rules
of Court.

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 The foregoing procedure is indispensable if what is being questioned by the taxpayer is the correctness of the assessment.
This involves a question of fact which could not be subject to a petition for certiorari, prohibition and mandamus.

48. LAST REMINDER ON TAXPAYER’S JUDICIAL REMEDIES:

a) Civil/Criminal cases involving Php 1 million and above – CTA Division. (Rule 42, RRC)
b) Civil/Criminal tax cases involving less than Php 1 million – RTC, MTC, MCTC, MeTC (Rule 42, RRC)
c) Decisions of CIR, CC, SF, STI , SA, RTC exercising an original jurisdiction – Petition for Review to CTA Division (Rule 42,
RRC)
d) Decisions of the CBAA on real property from LBAA – Petition for Review to CTA EN BANC (Rule 43, RRC)
e) Decision of RTC in the exercise of its appellate jurisdiction – Petition for Review to CTA EN BANC (Rule 43, RRC

Don’t you QUIT! The very moment you decide to quit, that
is the exact time our Almighty Lord had wanted to answer
your prayers! You were just a split of a second early in
your wrong decision……Don’t you QUIT!

88888888 GOOD LUCK 8 8 8 8 8 8 8 8

JPL/ALL RIGHTS RESERVED

10
 PRESCRIPTIVE PERIODS
NIRC, Local, Real Property Taxation and Tariff Code
Particulars NIRC
Gen. Rule: 3 years from due date of
tax or actual payment whichever
is later.
Assessment of EXCEPTIONS:
taxes 1) 10 years in cases of fraud or
failure to file a tax return.
2) Waiver
3) Valid written agreement entered
into between Taxpayer and
CIR to extend period
1) During the time of an assessment
(3 years) but without one made
in cases of self-assessing
taxes
Collection of 2) With assessment and with valid
taxes protest within 5 years from the
finality of an assessment
3) With an assessment but w/out valid
protest, within 5 years from
assessment
4) Within 10 years from discovery of
fraud or omission to file a
return
1) Within 15 days from receipt of the
pre-assessment notice (PAN) “T”
must explain why he should not
be the subject of an assessment.
2) Within 30 days from receipt of
official or formal or final
assessment (FAN) when no
agreement was arrived at
Disputing an between CIR and “T” during the
assessment pre-assessment level/stage.
1)After formal dispute “T” submits all
documentary evidence within 60
days from dispute in support of his
protest. Failure to do so will
dissolve his valid dispute as if “T”
has not disputed at all.
2) After submission of all
evidentiary documents CIR has
180 days to resolve “T’s” dispute.
LTC
Within 5 years from due date of
subject tax
Within 5 years from
assessment. Within 10 years
from discovery of fraud
60 days from receipt of an
assessment
a) Any affected “T” may ask for
an opinion/query from the
Provincial Fiscal (for
provincial, municipal or
barangay tax ordinances) or
City fiscal (for city tax
11
RPTC
Within 5 years from due date
of subject tax
Within 5 years from
assessment
An owner of a real property
who is not satisfied with the
assessment (valuation) of his
property may within 60 days
from receipt of an assessment
appeal to the Local Board of
Assessment Appeals (LBAA),
if an adverse decision has
been rendered to appeal to
the CBAA – within 30 days,
then to the CTA En Banc – 30
days, and 15 days to SC.
Payment under protest must
be made before “T” is allowed
to question the excessiveness
of the amount of property tax.
NOTE: Solutio indebeti and
issues questioning validity of
tax ordinance do not require
payment of real property tax
under protest.
TCC
Protective duties are
imprescriptible
Collectible until
importation has ended
1) At the time when
payment is made or within
15 days thereafter file a
written protest against the
assessment before the
Collector of Customs. (NO
PAYMENT NO DISPUTE)
2) Upon receipt of adverse
decision of the Collector,
“T” has 30 days to appeal
to the Commissioner of
Customs
3) From Commissioner T
has 30 to appeal to the
CTA and thereafter 15
days to appeal to the SC.
 ordinances or barangay
ordinances within the city)
Contesting the about the legality of the
validity of a tax subject ordinance
ordinance
b) Within 30 days from
effectivity of the ordinance
appeal to the Sec. of Justice
questioning its legality

c) Within 30 days from adverse

decision of the Sec. of
Justice appeal to the RTC

D) In case of inaction (60 days)

of SOJ, T may appeal within
30 days from expiration of
the 60-day period to the
RTC.

NOTE: This procedure is not

applied in questioning the
validity of a “FEE.” Or
regulatory imposition.
a) When the owner,
importer, consignee or
interested party after due
notice fails to file an entry
within 30 days (non-
When may extendible) from the
customs officials discharge of the last
consider goods package from the vessel
abandoned in or aircraft OR
favor of the
government? (b) Having filed the entry
for his shipment fails to
claim the importation
within 15 days (non-
extendible) from date of
posting the notice to claim
such importation.
1) To an individual taxpayer - the 2
year period to claim is from
payment of the tax if said payment
was made on or before due date;
If payment was made after due
date the 2 year period to claim for
Refund of taxes TR or TC is reckoned from
invalidly paid payment of the tax.
(Sec. 229, - do - - do - - do -
NIRC) 2) If “T” is a corporate taxpayer the 2
year period is reckoned from the
date of submission of the final
adjustment return (FAR).

3) If Corporation is operating inside

the Freeport Ecozone Zone, 6
years from payment.
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 a)VAT-registered T must file his
claim within a 2-year period
reckoned from the last day of the
last month of quarter of export.

b)CIR is given 120 days to resolve

Refund of validity of claim. (the 120-day
unutilized input period commences to run from
taxes under the submission of complete
0% rate VAT documents to CIR)
(Sec. 112,
NIRC) c) If T receives an adverse decision
from CIR within the 120-day
period T has 30 days to appeal to
the CIR from receipt thereof. If
there is inaction T may ONLY
appeal within 30 days from the
expiration of the 120-day period.
Any appeal beyond this point will
be considered time-barred.

NOTE: Under the TRAIN Law, CIR

has only 90 days to resolve the
claim.

a) Within 30 days from express or Within 30 from adverse

implied denial of request for decision of the Commr.
reconsideration or of Customs.
reinvestigation by the CIR
Within 30 days from
b) Within 30 days from the adverse decision of the
expiration of the 180-day period STI or SA on imposition
to resolve without any action of dumping duties or
Appeal to CTA from the CIR. Within 30 days from adverse Within 30 days from adverse countervailing duties as
decision of the RTC decision of the CBAA the case may be
NOTE: Appeal to CTA in Division
first then to CTA En Banc except
real property taxes and an
appeal from RTC exercising an
appellate jurisdiction (direct to
CTA En Banc) before an appeal
in certiorari to the SC
Criminal action Within 5 years from commission of
for violation of the offense or from discovery of
the Tax Code the violation whichever is later.

Reckoning point of prescriptive periods under the NIRC:

 Tax refund or tax credit of invalid payments under Sec. 229, NIRC:

a) Individual taxpayers – If the invalid payment was paid on or before the due date, the 2-year period
commences to run from payment whereas, if the invalid payment was paid after the due date, the 2-
year period is reckoned from due date.

13
 b) Corporate taxpayers – The 2-year period to claim for tax refund or tax credit is reckoned from the
date of submission of the final adjustment return (FAR) to the BIR.

c) Corporations operating inside the export processing zones - Claim for an invalid payment is 6-
years reckoned from payment.

d) In case of substantial amendment of a tax return, the 2-year period is reckoned from date of
amendment.

 Claim for unutilized input taxes under a 0% VAT transaction:

The qualified exporter may file a claim for tax credit within 2 years reckoned from the last day of
the last month of quarter of export. (March 31, June 30, September 30 or December 31)

 Period to appeal to the CTA if claim for unutilized input taxes under the 0% VAT is denied:

a) Once the claim is validly filed, the CIR is given 120 days (90 days under the TRAIN Law) to resolve
the validity of the claim. The 120-day period commences to run from submission of complete
documents in support of the claim.

b) If CIR resolves the claim within the 120 day period, the aggrieved taxpayer may appeal to the CTA
in Division within 30 days from receipt of the denial;

c) If there is inaction on the part of the CIR, the claimant may appeal to the CTA within 30 days from
the expiration of the 120-day period to resolve. (Any appeal beyond this period is time barred)

 3-year period provided for government to assess taxpayer of deficiency tax or delinquent
tax under a valid or regular tax return:

If the IR was paid on or before due date, the 3-year period to assess commences to run one day
after due date or actual payment whichever is later.

 10-year period to assess if there is a finding to a fraudulent return or omission or failure to

file a tax return:

If there is finding of a fraudulent tax return or failure to file when one is required. The right of the
government to assess is automatically extended to ten (10) years which is reckoned from discovery of
the fraud or failure to file the tax return.
 The CIR is given 180 days to resolve a valid taxpayer’s dispute or tax protest.

The 180 days is counted from submission by taxpayer of all his documentary evidences in support
of his protest or dispute. (NOTE: If the particular month of the year is not given, we count the period by
using 30 days per month. Example: 2 months = 60 days only. )

Example No. 1: T submitted all his documentary evidences in support of his tax protest on March 7,
2015. CIR has 180 days to resolve the protest which will expire on September 3, 2015. NOT on
September 7, 2015!

No. 2: On May 11, 2016 T submitted all complete documents in support of a claim for tax credit of his
unutilized input taxes under the VAT zero-rate sale. The CIR is given 120 days to resolve the validity of
the claim. The last day of the 120-day period is September 8, 2016. NOT September 11, 2016!

This is important in cases of an appeal to the CTA.

 Local taxes and real property taxes:

14
 Local government has 5-years to assess local or real property taxes reckoned from due date
(January 20) and 5 years to collect from assessment.

Taxes Due date

Income Tax (Individual Taxpayers April 15 of each calendar year
and Corporate taxpayers using
calendar period
Corporate taxpayers using fiscal Add 4 months and 15 days to the last month of the fiscal period.
period
Quarterly corporate income tax Within the first 60 days of the following quarter
(first 3 Qrts)
Estate Tax Within 6 months from death of decedent (TRAIN Law – 1 year from
death)
Donor’s Tax Within 30 days from date of donation or gift
Capital Gains Tax on Real Within 30 days from date of sale of capital asset
properties
Capital Gains Tax on Foreclosure Within 30 days from the expiration of the 1 year period to redeem the
of Mortgages foreclosed property without exercising right of redemption
Documentary Stamps Tax Within 5 days after the close of the month when the taxable document
was made, signed, issued, accepted or transferred
Percentage Taxes (8 kinds) Within 20 days of the first month of the succeeding quarter
Excise tax on certain goods Upon release or removal of domestic products from place of production
(local) 11 kinds
Excise tax on certain goods Before release of goods from the customs’ custody
(imported) 11 kinds
Value Added Tax Within 25 days following the close of each taxable quarter
Fringe Benefit tax Within the first 25 days of the succeeding quarter
Withholding of creditable VAT by Within 10 days following the end of the month the withholding was
the national or local made
government units and GOCC
Final withholding taxes Within 10 days following the end of the month the withholding was
made
Creditable withholding taxes On or before the last day of the month following the close of the quarter
during which withholding was made
Local taxes and business permits January 20 of each calendar year
or licenses
Real Property taxes January 20 of each calendar year

Community Development tax On or before February 28 of each calendar year

(cedula)
Professional Taxes On or before January 31 of each calendar year
Imported goods from customs Upon release of the goods from customs custody or within 15 days
custody from submission of entry to the BoC, whichever is earlier.

JPL/ALL RIGHTS RESERVE 0–0-0–0–0–0

15
 Whatever you dwell upon grows and expands in your life.
Whatever you concentrate upon and think about
repeatedly increases in your world.
Therefore, you MUST focus your thinking
on the things you really want in your life.

Difficulties come not to obstruct, but to instruct.

Within every setback or obstacle lie seeds
of an equal or greater benefit or opportunity.
Turn your stumbling blocks into
stepping stones to success.

LUCK is when opportunity meets PREPARATION.

Perfect performance comes from painstaking preparation,
often for weeks, months and years in advance.
The most successful people in every area
Invariably spend far more time in preparation than
the least successful.

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