REAL PROPERTY TAXATION

25 MAY 2020
TOPIC OUTLINE (5-20)

Intro to Real Property Taxation

2
General Principles

SECTION 198. Fundamental Principles. — The appraisal, assessment, levy and

collection of real property tax shall be guided by the following fundamental
principles:

(a) Real property shall be appraised at its current and fair market value;
(b) Real property shall be classified for assessment purposes on the basis of its
actual use;
(c) Real property shall be assessed on the basis of a uniform classification within
each local government unit;
(d) The appraisal, assessment, levy and collection of real property tax shall not be
let to any private person; and

(e) The appraisal and assessment of real property shall be equitable.

4
Definition of Terms

SECTION 199. Definition of Terms. — When used in this Title, the term:

(b) "Actual Use" refers to the purpose for which the property is principally or predominantly utilized
by the person in possession thereof;

(c) "Ad Valorem Tax" is a levy on real property determined on the basis of a fixed proportion of the
value of the property;

(i) "Commercial Land" is land devoted principally for the object of profit and is not classified as
agricultural, industrial, mineral, timber, or residential land;

(l) "Fair Market Value" is the price at which a property may be sold by a seller who is not
compelled to sell and bought by a buyer who is not compelled to buy;

(m) "Improvement" is a valuable addition made to a property or an amelioration in its condition,

amounting to more than a mere repair or replacement of parts involving capital expenditures and
labor, which is intended to enhance its value, beauty or utility or to adapt it for new or further
purposes;

(o) "Machinery" embraces machines, equipment, mechanical contrivances, instruments, appliances

or apparatus which may or may not be attached, permanently or temporarily, to the real property. It
includes the physical facilities for production, the installations and appurtenant service facilities, those
which are mobile, self-powered or self-propelled, and those not permanently attached to the real
property which are actually, directly, and exclusively used to meet the needs of the particular industry,
business or activity and which by their very nature and purpose are designed for, or necessary to its 5
manufacturing, mining, logging, commercial, industrial or agricultural purposes
Machineries

• In the case of Board of Assessment Appeals vs. Manila Electric Co. (January 31, 1964)
MERALCO's steel towers were considered personal property. It should be noted that the steel
towers:

(a) are neither buildings or constructions adhered to the soil;

(b) are not attached to an immovable in a fixed manner – they can be separated without
breaking the material or deterioration of the object;
(c) are not machineries, receptacles or instruments, and even if they are, they are not intended
for an industry to be carried on in the premises.

Local Finance Circular 001-2002 (April 25, 2002)

 
• To avoid any doubt as to treatment, for real property tax purposes, of machinery that is not
permanently attached to real estate, we make this clarification: such machinery and equipment
shall be considered as real property – and hence, subject to the real property tax – if it is an
essential and principal element of an industry, work or activity without which such industry, work
or activity will be unable to function. Otherwise, such machinery or equipment shall not be subject
to the real property tax.

• Cash registers, typewriters, etc. usually found and used in hotels, restaurants, theaters, etc. are
merely incidentals and are not and should not be considered immobilized by destination, for
these businesses can continue or carry on their functions, without those equipments. Airline
companies use forklifts, jeepwagons, pressure pumps, IBM machines, etc. which are incidentals,
not essentials, and thus retain their movable nature
9
Machineries

• Local Finance Circular 001-2002 (April 25, 2002)- continued

Section 28(3), Article VI of the 1987 Constitution, which provides:

"Charitable institutions, churches, parsonages or convents appurtenant thereto,

mosques, non-profit cemeteries, and all lands, buildings, and improvements actually,
directly and exclusively used for religious, charitable, or educational purposes shall
be exempt from taxation.“

In relation to the Special exemption for non-stock non-profit educational institutions,

Article XIV, Section 3(3) of the 1987 Constitution states:

"All revenues and assets of non-stock, non-profit educational institutions used

actually, directly, and , for educational purposes shall be exempt from taxes and
duties.

Thus, the RPT treatment of machineries taking into consideration the Constitutional
provisions are as follows:

1. Machinery that is permanently attached to land and buildings is subject to

the real property tax, even though this is actually, directly and exclusively used
for religious, charitable or educational purposes.
10
Machineries

• Local Finance Circular 001-2002 (April 25, 2002)- continued

2. Machinery that is not permanently attached

a. Subject to the real property tax if it is an essential and principal

element of an industry, work or activity without which such industry, work or
activity cannot function; and

b. Not subject to the real property tax if it is not an essential and principal
element of an industry, work or activity.

3. Notwithstanding rules 1 and 2, machinery of non-stock, non-profit

educational institutions used actually, directly, and exclusively for educational
purposes is not subject to real property tax.

11
Cases- Power barges

• Fels Energy, Inc. vs. Province of Batangas (February 16, 2007)

Issue: NPC entered into a lease contract with Polar Energy, Inc. over diesel engine power
barges moored at Batangas. Subsequent Polar Energy assigned its rights under the
contract to FELS. The issue is whether power barges, which are floating and movable,
are personal properties and therefore, not subject to real property tax.

The SC Ruled: No. Article 415 (9) of the New Civil Code provides that "[d]ocks and
structures which, though floating, are intended by their nature and object to remain at a
fixed place on a river, lake, or coast" are considered immovable property. Thus, power
barges are categorized as immovable property 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 on a piece of land and which tend directly to meet the
needs of said industry or work.

Also, FELS cannot escape liability from the payment of realty taxes by invoking its
exemption in Section 234 (c) of R.A. No. 7160. The agreement between Polar and NPC
states that “POLAR shall own the Power Barges and all the fixtures, fittings, machinery
and equipment on the Site.” The law states that the machinery must be actually, directly
and exclusively used by the government owned or controlled corporation.

16
Cases – What is a government instrumentality

• Manila International Airport vs. Paranaque City (July 20, 2006)

Issue: Whether or not the airport lands and buildings are exempt from real estate tax.

Held: Yes. MIAA is a government instrumentality vested with corporate powers to perform efficiently
its governmental functions. MIAA is like any other government instrumentality, the only difference is
that MIAA is vested with corporate powers. Section 21 (10) of the introductory provisions of the
administrative code defines a government instrumentality as follows:

10.) Instrumentality refers to any agency of the national government, not integrated within
the department framework, vested with special functions or jurisdiction by law, endowed
with some if not all corporate powers, administering special funds, and enjoying operational
autonomy, usually through a charter.

A government instrumentality like MIAA falls under section 133 (o) of the local government code,
which states:

Sec 133 Common limitations on the taxing powers of the local government units – Unless
otherwise provided herein, the exercise of the taxing power of the provinces, cities,
municipalities and barangays shall not extend to the levy of the following:

xxx

o.) Taxes, fees or charges of any kind on the national government, its agencies and
instrumentalities and local government units.
17
Cases – Is MIAA a GOCC?

• Manila International Airport vs. Paranaque City (July 20, 2006)- continued

A government-owned or controlled corporation must be "organized as a stock or non-stock

corporation." MIAA is not organized as a stock or non-stock corporation. MIAA is not a stock
corporation because it has no capital stock divided into shares. MIAA has no stockholders or voting
shares

Section 3 of the Corporation Code defines a stock corporation as one whose "capital stock is divided
into shares and x x x authorized to distribute to the holders of such shares dividends x x x." MIAA has
capital but it is not divided into shares of stock. MIAA has no stockholders or voting shares. Hence,
MIAA is not a stock corporation.

MIAA is also not a non-stock corporation because it has no members. Section 87 of the Corporation
Code defines a non-stock corporation as "one where no part of its income is distributable as
dividends to its members, trustees or officers.

Since MIAA is neither a stock nor a non-stock corporation, MIAA does not qualify as a
government-owned or controlled corporation

18
Cases

• Philippine Fisheries Development Authority vs. C.A. (July 31, 2007)

The Court rules that the Authority is not a GOCC but an instrumentality of the national
government which is generally exempt from payment of real property tax. However, said
exemption does not apply to the portions of the IFPC which the Authority leased to private
entities. With respect to these properties, the Authority is liable to pay real property tax.
Nonetheless, the IFPC, being a property of public dominion cannot be sold at public auction to
satisfy the tax delinquency.

Thus, the Authority which is tasked with the special public function to carry out the
government’s policy "to promote the development of the country’s fishing industry and improve
the efficiency in handling, preserving, marketing, and distribution of fish and other aquatic
products," exercises the governmental powers of eminent domain, and the power to levy fees
and charges. At the same time, the Authority exercises "the general corporate powers
conferred by laws upon private and government-owned or controlled corporations.”

In the same vein, the port built by the State in the Iloilo fishing complex is a property of the
public dominion and cannot therefore be sold at public auction. Under Article 420 of the Civil
Code, the following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers,
torrents, ports and bridges constructed by the State, banks, shores, roadsteads,
and others of similar character;
(2) Those which belong to the State, without being for public use, and
are intended for some public service or for the development of the national 19
wealth
Cases

• Mactan Cebu International Airport Authority vs. City of Lapu-Lapu (June 15, 2015)

All the more do we find that petitioner MCIAA, with its many similarities to
the MIAA, should be classified as a government instrumentality, as its
properties are being used for public purposes, and should be exempt from
real estate taxes

Under Article 420 of the Civil Code, the Airport Lands and Buildings of
MIAA, being devoted to public use, are properties of public dominion and
thus owned by the State or the Republic of the Philippines.

20
Cases

• Government Service Insurance System vs. City Treasurer of Manila (December 23,
2009)

The SC ruled that GSIS an instrumentality of the National Government

While perhaps not of governing sway in all fours inasmuch as what were involved
in Manila International Airport Authority, e.g., airfields and runways, are properties of the
public dominion and, hence, outside the commerce of man, the rationale underpinning
the disposition in that case is squarely applicable to GSIS, both MIAA and GSIS being
similarly situated. First, while created under CA 186 as a non-stock corporation, a status that
has remained unchanged even when it operated under PD 1146 and RA 8291, GSIS is not, in
the context of the aforequoted Sec. 193 of the LGC, a GOCC following the teaching of Manila
International Airport Authority, for, like MIAA, GSIS’s capital is not divided into unit shares.
Also, GSIS has no members to speak of. And by members, the reference is to those who,
under Sec. 87 of the Corporation Code, make up the non-stock corporation, and not to the
compulsory members of the system who are government employees. Its management is
entrusted to a Board of Trustees whose members are appointed by the President.

Second, the subject properties under GSIS’s name are likewise owned by the Republic. The
GSIS is but a mere trustee of the subject properties which have either been ceded to it by the
Government or acquired for the enhancement of the system. This particular property
arrangement is clearly shown by the fact that the disposal or conveyance of said subject
properties are either done by or through the authority of the President of the Philippines. x x x.
21
Cases

• National Power Corporation vs. Province of Quezon (July 15, 2009; MR on

January 25, 2010)

Issue: Can Petitioner claim exemption from the RPT given the BOT arrangement with
Mirant?

The SC ruled NO. To successfully claim exemption under Section 234 (c) of the LGC, the
claimant must prove two elements: a) the machineries and equipment are actually,
directly, and exclusively used by local water districts and government-owned or controlled
corporations; and b) the local water districts and government-owned and controlled
corporations claiming exemption must be engaged in the supply and distribution of water
and/or the generation and transmission of electric power. Since neither the Petitioner
nor Mirant satisfies both requirements, the claim for exemption must fall. 

22
Cases- Interpretation of “Exclusive of this Franchise”

• Digital Telecommunications Philippines, Inc. vs. City Government of Batangas

(December 11, 2008)

FACTS: Petitioner was granted a 25-year franchise to install telecommunications systems

under a law which states that “The grantee shall be liable to pay the same taxes on its
real estate, buildings, and personal property exclusive of this franchise x x x.” As they
were not being issued a Mayor’s permit, Petitioner paid the Real Property Tax under
protest arguing that the phrase “exclusive of this franchise” means that only the real
properties not used in furtherance of its franchise are subject to Real Property Tax while
those real properties which are used in its telecommunications business are exempt from
Real Property Tax.

The SC Ruled: Petitioner’s real properties, whether or not used in its telecommunications
business, are subject to Real Property Tax. The phrase “exclusive of this franchise”
qualifies the term “personal property.” This means that Petitioner’s legislative franchise,
which is an intangible personal property, shall not be subject to taxes. This is to put
franchise grantees in parity with non-franchisees as the latter obviously do not have
franchises which may potentially be subject to realty tax. There is nothing in the first
sentence of Section 5 which expressly or even impliedly exempts Petitioner from Real
Property Tax.

23
Cases- Interpretation of “Exclusive of this Franchise”

• City Government of Quezon City Vs. Bayan Telecomunications (March 6, 2006)

Whether or not Bayantel’s real properties in Quezon City are exempt from real property taxes under
its franchise

The legislative intent expressed in the phrase “exclusive of this franchise” cannot be construed other
than distinguishing between two (2) sets of properties, be they real or personal, owned by the
franchisee, namely, (a) those actually, directly and exclusively used in its radio or telecommunications
business, and (b) those properties which are not so used. It is worthy to note that the properties
subject of the present controversy are only those which are admittedly falling under the first category.

Necessarily, other properties of Bayantel directly used in the pursuit of its business are beyond the
pale of the delegated taxing power of local governments. In a very real sense, therefore, real
properties of Bayantel, save those exclusive of its franchise, are subject to realty taxes. Ultimately,
therefore, the inevitable result was that all realties which are actually, directly and exclusively used in
the operation of its franchise are "exempted" from any property tax.

Since R. A. No. 7633 was enacted subsequent to the LGC, perfectly aware that the LGC has already
withdrawn Bayantel’s former exemption from realty taxes, the Congress using, Section 11 thereof with
exactly the same defining phrase “exclusive of this franchise” is the basis for Bayantel’s exemption
from realty taxes prior to the LGC. In plain language, the Court views this subsequent piece of
legislation as an express and real intention on the part of Congress to once again remove from the
LGC’s delegated taxing power, all of the franchisee’s (Bayantel’s) properties that are actually, directly
and exclusively used in the pursuit of its franchise.

24
Cases

• City of Pasig vs. Presidential Commission on Good Government (August 24, 2011)

Section 234(a) of Republic Act No. 7160 states that properties owned by the Republic of the
Philippines are exempt from real property tax except when the beneficial use thereof has been
granted, for consideration or otherwise, to a taxable person. Thus, the portions of the properties not
leased to taxable entities are exempt from real estate tax while the portions of the properties leased
to taxable entities are subject to real estate tax

• Philippine Reclamation Authority vs. City of Paranaque (July 18, 2012)

This Court is convinced that PRA is not a GOCC either under Section 2(3) of the Introductory
Provisions of the Administrative Code or under Section 16, Article XII of the 1987 Constitution.
Instead, PRA is a government instrumentality vested with corporate powers and performing an
essential public service pursuant to Section 2(10) of the Introductory Provisions of the Administrative
Code. Being an incorporated government instrumentality, it is exempt from payment of real property
tax

The subject lands are reclaimed lands, specifically portions of the foreshore and offshore areas of
Manila Bay. As such, these lands remain public lands and form part of the public domain. In the case
of Chavez v. Public Estates Authority and AMARI Coastal Development Corporation, the Court held
that foreshore and submerged areas irrefutably belonged to the public domain and were inalienable
unless reclaimed, classified as alienable lands open to disposition and further declared no longer
needed for public service. The fact that alienable lands of the public domain were transferred to the
PEA (now PRA) and issued land patents or certificates of title in PEA’s name did not automatically
make such lands private. This Court also held therein that reclaimed lands retained their inherent
potential as areas for public use or public service 25
Cases

• Lung Center of the Philippines vs. Quezon City (June 29, 2004)

What is meant by actual, direct and exclusive use of the property for charitable purposes
is the direct and immediate and actual application of the property itself to the purposes for
which the charitable institution is organized. It is not the use of the income from the real
property that is determinative of whether the property is used for tax-exempt purposes

The petitioner failed to discharge its burden to prove that the entirety of its real property is
actually, directly and exclusively used for charitable purposes. While portions of the
hospital are used for the treatment of patients and the dispensation of medical services to
them, whether paying or non-paying, other portions thereof are being leased to private
individuals for their clinics and a canteen. Further, a portion of the land is being leased to
a private individual for her business enterprise under the business name Elliptical Orchids
and Garden Center.

The portions of the land leased to private entities as well as those parts of the hospital
leased to private individuals are not exempt from such taxes. On the other hand, the
portions of the land occupied by the hospital and portions of the hospital used for its
patients, whether paying or non-paying, are exempt from real property taxes.

26
Cases

• Provincial Assessor of Marinduque vs. Court of Appeals (April 30, 2009)

The records yield no allegation or evidence by respondent that the subject property was
actually, directly and exclusively used for pollution control and environmental protection
during the period covered by the assessment notice under protest. Rather, the finding of
the CBAA that said property “apparently out of commission and not apt to its function as
would control pollution and protect the environment” stands undisputed; [and] that the
siltation dam was damaged in 1993 when a typhoon hit Marinduque.

• Light Rail Transit Authority vs. Central Board of Assessment Appeals (October 12,
2000)

Issue: Whether or not petitioner’s carriage ways and passenger terminal stations are
subject to real property tax.

Held: YES. Under the real property tax code, real property owned by the Republic of the
Philippines or any of its political subdivisions and any government-owned or controlled
corporation so exempt by its charter, provided, however, that this exemption shall not
apply to real property of the above named entities the beneficial use of which has been
granted, for consideration or otherwise, to a taxable person.
27
Cases

• City Assessor of Cebu City vs. Association of Benevola De Cebu, Inc. (June
8, 2007)

Petitioner claimed that the building is used as commercial clinic/spaces for

renting out to physicians and thus classified as commercial. Benevola de Cebu
contended that the building is used actually, directly and exclusively part of
hospital and should have an assessment level of 10%

We hold that the new building is an integral part of the hospital and should not
be assessed as commercial. Being a tertiary hospital, it is mandated to fully
departmentalized and be equipped with the service capabilities needed to
support certified medical specialist and other licensed physicians. The fact that
they are holding office is a separate building does not take away the essence
and nature of their services vis-a-vis the overall operation of the hospital and to
its patients.

28
Cases

City of Lapu-Lapu vs. Philippine Economic Zone Authority (November 26, 2014)

The Philippine Economic Zone Authority is exempt from payment of real

property taxes.

The PEZA is an instrumentality of the national government. An

instrumentality is "any agency of the National Government, not integrated
within the department framework, vested with special functions or
jurisdiction by law, endowed with some if not all corporate powers,
administering special funds, and enjoying operational autonomy, usually
through a charter

29
Special Levies

•Special Levies
• Special
Education Fund
(SEF) – 1% of AV
• Ad Valorem Tax
on Idle Lands –
not exceeding 5%
of AV
• Special levy on lands specially benefited by public
works projects funded by the LGU
―Not to exceed 60% of actual cost of the project
―Through an ordinance and should be payable in 5-10
years
―Apportioned to various land owners benefited

• Demaala vs. Commission of Audit (February 17, 2015)

30
EFFECTIVITY OF ASSESSMENT

• General revision of assessments and property classification

― Every 3 years
― Effectivity: January 1 of the succeeding year

• Reassessment due to partial or total destruction, or to a major

change in actual use, or to any great and sudden inflation or
deflation of real property values, or to the gross illegality of the
assessment when made or to any other abnormal cause
― Within 90 days from the date any such cause or causes
occurred
― Effectivity: beginning of quarter following the reassessment
COLLECTION AND ENFORCEMENT

Accrual of tax
January 1
COLLECTION AND ENFORCEMENT

Notice of Time for Collection

To be posted on or before January 31 at
conspicuous place in the city or municipal hall

To be published in a newspaper of general

circulation once a week for 2 consecutive weeks
COLLECTION AND ENFORCEMENT

Payment of tax
January 31
COLLECTION AND ENFORCEMENT

1st installment:
March 31
2nd
installment:
Option to June 30
pay in
installments
3rd installment:
September 30

4th installment:
December 31
COLLECTION AND ENFORCEMENT

Discounts for prompt payments

• pertains to payment of the installment payment before its
due date
• maximum of 10% of annual tax due

Discounts for advance payments

• refers to the payment of the entire RPT within the first
quarter of the year
• maximum of 20% of annual tax due
PROTESTING ASSESSMENT

• No protest shall be entertained unless the taxpayer pays first the

tax.
• Procedures:
― Owner pays tax (protest or appeal does not suspend payment;
protest cannot be entertained without payment but surety bond may
be filed)
• Requirement for Surety Bond:
– The amount of the bond must not be less than the total realty taxes
and penalties due as assessed by the assessor nor more than
double said amount;
– The bond must be accompanied by a certification from the
Insurance Commissioner (a) that the surety company is duly
authorized to issue such bond; (b) that the surety bond is approved
by and registered with said Commission; and (c) that the amount
covered by the surety bond is within the writing capacity of the
surety company; and
PROTESTING ASSESSMENT

– The amount of the bond in excess of the surety company’s writing

capacity, if any, must be covered by Reinsurance Binder, in which
case, a certification to this effect must likewise accompany the
surety bond.
• “Paid under protest” annotated in the tax receipts
• Protest submitted within 30 days from payment
• Treasurer to decide within 60 days
• 60 days from Treasurer’s decision or inaction appealable to Local
Board of Assessment Appeals (LBAA)
• LBAA to decide within 120 days from receipt of appeal
• LBAA decision appealable to Central Board of Assessment Appeal
(CBAA) within 30 days from receipt of decision
• CBAA decision is final and executory (appealable to Court of Tax
Appeals)
ASSESSMENT APPEALS

Local Board of Assessment Appeals (LBAA)

• Who may appeal
― property owner or person having legal interest or claim in the
real property not satisfied with the assessment
• When to appeal
― within 60 days from date of receipt of the written notice of
assessment
• Where to file appeal
― LBAA of the province where the property is situated
― In the case of municipalities within Metro Manila, with the
Municipal Board of Assessment Appeals of each municipality
where property is situated
RPT ASSESSMENTS

• Period of collection: within 5 years from the date they become

due

• Prescriptive period is suspended when --

― Treasurer is legally prevented from assessing or collecting the tax
― Taxpayer requests for reinvestigation and executes waiver in
writing before the 5-year expiration period
― Taxpayer is outside the Philippines or cannot be located

• In case of fraud: tax due may be collected within 10 years from the
discovery of fraud
 CASES- REMEDIES

• Camp John Hay Development Corporation vs. Central Board of Assessment Appeals
(October 2, 2013)

In support of the present petition, petitioner posits the following grounds: (a) Section 225
(should be Section 252) of RA No. 7160 or the LGC of 1991 does not apply when the person
assessed is a tax-exempt entity; and (b) Under the doctrine of operative fact, petitioner is not
liable for the payment of the real property taxes subject of this petition.
 
To begin with, Section 252 emphatically directs that the taxpayer/real property owner
questioning the assessment should first pay the tax due before his protest can be entertained.
As a matter of fact, the words "paid under protest" shall be annotated on the tax receipts.
Consequently, only after such payment has been made by the taxpayer may he file a protest in
writing (within thirty [30] days from said payment of tax) to the provincial, city, or municipal
treasurer, who shall decide the protest within sixty (60) days from its receipt. In no case is the
local treasurer obliged to entertain the protest unless the tax due has been paid.

Petitioner did not present any documentary evidence to establish that the subject properties
being tax exempt have already been dropped from the assessment roll, in accordance with
Section 206. Consequently, the City Assessor acted in accordance with her mandate and in the
regular performance of her official function when the subject ARPs were issued against
petitioner herein, being the owner of the buildings, and therefore considered as the person with
the obligation to shoulder tax liability thereof, if any, as contemplated by law.
CASES- REMEDIES

• Talento vs. Escalada (June 27, 2008)

With the issuance of a Warrant of Levy against its machineries and pieces of equipment,
Petron filed on September 24, 2007, an urgent motion to lift the final notice of delinquent
real property tax and warrant of levy with the LBAA. It argued that the issuance of the
notice and warrant is premature because an appeal has been filed with the LBAA, where it
posted a surety bond in the amount of P1,286,057,899.54.

The requisites for the issuance of a writ of preliminary injunction are: (1) the existence of a
clear and unmistakable right that must be protected; and (2) an urgent and paramount
necessity for the writ to prevent serious damage. The urgency and paramount necessity
for the issuance of a writ of injunction becomes relevant in the instant case considering
that what is being enjoined is the sale by public auction of the properties of Petron
amounting to at least P1.7 billion and which properties are vital to its business operations.
If at all, the repercussions and far-reaching implications of the sale of these properties on
the operations of Petron merit the issuance of a writ of preliminary injunction in its favor.
 CASES- REMEDIES

• Talento vs. Escalada (June 27, 2008)

Section 11 of Republic Act No. 9282, 23 which amended Republic Act No. 1125 (The Law
Creating the Court of Tax Appeals) provides:

Section 11. Who may Appeal; Mode of Appeal; Effect of Appeal; —

xxx xxx xxx

No appeal taken to the Court of Appeals from the Collector of Internal Revenue . . . shall
suspend the payment, levy, distraint, and/or sale of any property for the satisfaction of
his tax liability as provided by existing law. Provided, however, That when in the opinion
of the Court the collection by the aforementioned government agencies may jeopardize
the interest of the Government and/or the taxpayer the Court at any stage of the
processing may suspend the collection and require the taxpayer either to deposit the
amount claimed or to file a surety bond for not more than double the amount with the
Court.
 CASES- REMEDIES

• National Power Corporation vs. Municipal Government of Navotas (November 24, 2014)

Indeed, the CTA, sitting as Division, has jurisdiction to review by appeal the decisions, rulings
and resolutions of the RTC over local tax cases, which includes real property taxes. This is
evident from a perusal of the Local Government Code (LGC) which includes the matter of
Real Property Taxation under one of its main chapters.

Rather, the term "local taxes" in the aforementioned provision should be considered in its
general and comprehensive sense, which embraces real property tax assessments, in line
with the precept Generalia verba sunt generaliter inteligencia — what is generally spoken
shall be generally understood. Between the restricted sense and the general meaning of a
word, the general must prevail unless it was clearly intended that the restricted sense was to
be used.

As correctly pointed out by petitioner, when the legality or validity of the assessment is in
question, and not its reasonableness or correctness, appeals to the LBAA, and subsequently
to the CBAA, pursuant to Sections 226 14 and 229 15 of the LGC, are not necessary.
 
RPT ASSESSMENTS

• Period of collection: within 5 years from the date they become

due

• Prescriptive period is suspended when --

― Treasurer is legally prevented from assessing or collecting the tax
― Taxpayer requests for reinvestigation and executes waiver in
writing before the 5-year expiration period
― Taxpayer is outside the Philippines or cannot be located

• In case of fraud: tax due may be collected within 10 years from the
discovery of fraud
RPT ASSESSMENTS

• Interest on unpaid RPT = 2% per month; maximum of 36 months

• No surcharges or interest should be included in the computation of

deficiency tax where taxpayers honestly paid their taxes within
the time required by the Code, but that due to the wrong
interpretation and erroneous assessments subsequently by the
municipality, this resulted in the under collection of the tax due.
(BLGF Opinion dated September 7, 1987)
RPT ASSESSMENTS

• In case of installment, computation of interest should be based on

the unpaid installment not on the total tax due. (Quimpo vs.
Mendoza, GR No. L-33052, dated August 31, 1981)

• Back taxes – Real property declared for the first time shall be
assessed for back taxes for not more than 10 years prior to the
date of initial assessment computed on the applicable schedule of
values in force during the corresponding period (Sec. 222, LGC)