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TAXATION II (Carag) ReviewerAnn, Dana, David, Jenin and Sandy

TAXATION II

(5) Issuance of Final Deed to Purchaser for Failure to Redeem

Sec. 262, LGCSEC. 262. Final Deed to Purchaser. - In case the owner or person having legal interest therein fails to redeem the delinquent property as provided herein, the local treasurer shall execute a deed conveying to the purchaser said property, free from lien of the delinquent tax, interest due thereon and expenses of sale. The deed shall briefly state the proceedings upon which the validity of the sale rests.Art. 353, IRR of LGCARTICLE 353. Final Deed to Purchaser. — In case the owner or person having legal interest therein fails to redeem the delinquent property as provided herein, the local treasurer shall execute a deed conveying to the purchaser said property, free from lien of the delinquent tax, interest due thereon and expenses of sale. The deed shall briefly state the proceedings upon which the validity of the sale rests.

Issuance of Final Deed to PurchaserWhen: upon failure of the delinquent taxpayer to redeem the property within 1 year from the date of sale.

Redemption of Real Property (Sec. 261)1. Within 1 year from the date of the sale, the owner of the delinquent real property, or person having legal interest or his representative, shall have the right to redeem the property upon payment to the local treasurer of the following:

a. amount of delinquent taxb. interest thereonc. expense of sale from date of delinquency to date of saled. interest of not more than 2% per month on the purchase price from the date of sale to date of redemption

2. A certificate of redemption shall be issued, and the certificate of sale issued to the purchaser shall be invalidated.

ii. Judicial ActionSec. 266, LGCSEC. 266. Collection of Real Property Tax Through the Courts. - The local government unit concerned may enforce the collection of the basic real property tax or any other tax levied under this Title 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 270 of this Code.Art. 357, IRR of LGCARTICLE 357. Collection of Real Property Tax Through the Courts. — The delinquent basic real property tax or any other tax levied under this Rule shall constitute a lawful indebtedness of the taxpayer to the LGU. Collection of such indebtedness can be enforced thru civil action in any court of competent jurisdiction, as follows:(a) The provincial or city treasurer, or municipal treasurer of a municipality of MMA shall furnish the provincial attorney or city or municipal legal officer a certified statement of delinquency who, within fifteen (15) days after receipt, shall file the civil

action in the name of the province, city, or municipality in the proper court of competent jurisdiction. The jurisdiction of the court is determined by the amount sought to be recovered exclusive of interests and costs. Thus, where the delinquent tax due does not exceed Ten Thousand Pesos (P10,000.00), the competent court is the municipal or city trial court, and where the amount due is in excess of Ten Thousand Pesos (P10,000.00), the proper court is the regional trial court.(b) Where cognizable in an inferior court, the action must be filed in the municipality or city where the delinquent property is located. Where the regional trial court has jurisdiction, the plaintiff LGU shall file the complaint in the city or province where the property is situated.(c) In both cases, that is, where the claim is either cognizable by an inferior court or by the regional trial court, the provincial or city treasurer shall furnish the provincial attorney or the city or municipal legal officer concerned the exact address of the defendant where he may be served with summons.

Judicial action (civil action) under Sec. 266 of LGC- filed by the local treasurer within 5 or 10 years as provided for in Sec. 270 of the LGC. Jurisdiction: regular courts since CTA has no jurisdiction thereover.

(d) Resale of Real Estate Taken for Taxes, Fees or Charges

Sec. 264, LGCSEC. 264. Resale of Real Estate Taken for Taxes, Fees, or Charges. - The sanggunian concerned may, by ordinance duly approved, and upon notice of not less than twenty (20) days, sell and dispose of the real property acquired under the preceding section at public auction. The proceeds of the sale shall accrue to the general fund of the local government unit concerned.Art. 355, IRR of LGCRTICLE 355. Resale of Real Estate Taken for Taxes, Fees, or Charges. — The sanggunian concerned may, by a duly approved ordinance, and upon notice of not less than twenty (20) days, sell and dispose of the real property acquired under the preceding Article at public auction. The proceeds of the sale shall accrue to the general fund of the LGU concerned.

When LGU may purchase Real Property Advertised For Sale:1. if there is no bidder; or2. if the highest bid is for an amount insufficient to pay the real property tax, fees, charges, surcharges, interests or penalties (Sec. 263, LGC)

(e) Further Levy until full payment of amount dueSec. 265, LGCSEC. 265. Further Distraint or Levy. - Levy may be repeated if necessary until the full amount due, including all expenses, is collected.Art. 356, IRR of LGCARTICLE 356. Further Distraint or Levy. — Levy may be repeated if necessary on the same property subject to tax until the full amount due, including all expenses, is collected.

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NOTE: Unlike other local taxes where administrative remedies to enforce collection include distraint of personal property and levy upon real property, Sec. 256 of the LGC expressly provides that in case of RPT, administrative action may only be thru levy on real property.

(f) Special rules on actions involving real propertyi. Deposit required for actions assailing

validity of tax saleSec. 267, LGCSEC. 267. Action Assailing Validity of Tax Sale. - No court shall entertain any action assailing the validity of any sale at public auction of real property or rights therein under this Title until the taxpayer shall have deposited with the court the amount for which the real property was sold, together with interest of two percent (2%) per month from the date of sale to the time of the institution of the action. The amount so deposited shall be paid to the purchaser at the auction sale if the deed is declared invalid but it shall be returned to the depositor if the action fails. Neither shall any court declare a sale at public auction invalid by reason of irregularities or informalities in the proceedings unless the substantive rights of the delinquent owner of the real property or the person having legal interest therein have been impaired.Art. 358, IRR of LGCARTICLE 358. Action Assailing Validity of Tax Sale. — (a) No court shall entertain any action assailing the validity of any sale at public auction of real property or rights therein under this Rule until the taxpayer shall have deposited with the court the amount for which the real property was sold, together with interest of two percent (2%) per month from the date of sale to the time of the institution of the action. The amount so deposited shall be paid to the purchaser at the auction sale if the deed is declared invalid but it shall be returned to the depositor if the action fails.(b) No court shall declare a sale at public auction invalid by reason of irregularities or informalities in the proceedings unless the substantive rights of the delinquent owner of the real property or the person having legal interest therein have been impaired.

ii. Award of property subject of court action upon payment of delinquent taxes

Sec. 268, LGCSEC. 268. Payment of Delinquent Taxes on Property Subject of Controversy. - In any action involving the ownership or possession of, or succession to, real property, the court may, motu propio or upon representation of the provincial, city, or municipal treasurer or his deputy, award such ownership, possession, or succession to any party to the action upon payment to the court of the taxes with interest due on the property and all other costs that may have accrued, subject to the final outcome of the action.Art. 359, IRR of LGCARTICLE 359. Payment of Delinquent Taxes on Property Subject of Controversy. — In any action involving the ownership or possession of, or succession to, real property the court may, motu proprio or upon representation of the provincial, city, or municipal treasurer or their respective deputies, award such ownership, possession, or succession to any party to the action upon payment to the court of the taxes with interests due to the property and all other costs that may have accrued, subject to the final outcome of the action.

E. Taxpayer’s Remedies1. Contesting an Assessment of Value of Real Property

Protest by: Owner or person legally interested in the property who is not satisfied with the action of the assessor in the assessment of his propertyHow: Appeal to LBAA (then the CBAA, if necessary) When : within 60 days from the date of receipt of the written notice of assessmentWhat: petition under oath, in the form prescribed, together with the copies of the tax declaration and affidavits or documents.Effect of Appeal on Payment of RPT: does not suspend collection for payment of the RPT, subject, however to adjustments should it be decided that another amount should be paid.

(a) Appeal to the Local Board of Assessment Appeals

Sec. 226, LGCSEC. 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.Art. 317, IRR of LGCARTICLE 317. Local Board of Assessment Appeals. — (a) Any property owner or person having legal interest or claim in the property who is not satisfied with the assessment of his property made by the provincial, city, or municipal assessor pursuant to the provisions of this Rule may, within sixty (60) days from the date of receipt of the written notice of assessment, appeal to local board of assessment appeals of the province or city where the subject property is situated by filing a petition under oath in the standard form prescribed therefor, together with copies of the tax declaration and such affidavits or documents in support of the appeal.(b) In the case of municipalities within MMA, the appeals may be filed with the municipal board of assessment appeals of each municipality as provided in Article 318 of this Rule.

(i) Action by LBAASec. 229, LGCSEC. 229. Action by the Local Board of Assessment appeals. - (a) The Board shall decide the appeal within one hundred twenty (120) days from the date of receipt of such appeal. The Board, after hearing, shall render its decision based on substantial evidence or such relevant evidence on record as a reasonable mind might accept as adequate to support the conclusion.(b) In the exercise of its appellate jurisdiction, the Board shall have the power to summon witnesses, administer oaths, conduct ocular inspection, take depositions, and issue subpoena and subpoena duces tecum. The proceedings of the Board shall be conducted solely for the purpose of ascertaining the facts without necessarily adhering to technical rules applicable in judicial

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proceedings.(c) The secretary of the Board shall furnish the owner of the property or the person having legal interest therein and the provincial or city assessor with a copy of the decision of the Board. In case the provincial or city assessor concurs in the revision or the assessment, it shall be his duty to notify the owner of the property or the person having legal interest therein of such fact using the form prescribed for the purpose. The owner of the property or the person having legal interest therein or the assessor who is not satisfied with the decision of the Board, may, within thirty (30) days after receipt of the decision of said Board, appeal to the Central Board of Assessment appeals, as herein provided. The decision of the Central Board shall be final and executor.Art. 320, IRR of LGCARTICLE 320. Action by the Local Board of Assessment Appeals. — (a) From the date of receipt of an appeal, the local board of assessment appeals shall, on the basis of substantial evidence or such relevant evidence on record adequately acceptable to support a conclusion, decide such appeal within one hundred twenty (120) days.(b) In the exercise of its appellate jurisdiction, the board shall have the power to summon witnesses, administer oaths, conduct ocular inspection, take depositions, and issue subpoena and subpoena duces tecum. The proceedings of the board shall be conducted solely for the purpose of ascertaining the facts without necessarily adhering to technical rules applicable in judicial proceedings.(c) The secretary of the board shall furnish the owner of the property or the person having legal interest therein and the provincial or city assessor or municipal assessor within MMA with a copy of the decision of the board. In case the provincial or city assessor or municipal assessor within MMA concurs with the revision or the assessment, it shall be his duty to notify the owner of the property or the person having legal interest therein of such fact using the form prescribed for the purpose.The owner of the property or the person having legal interest therein or the assessor who is not satisfied with the decision of the board may, within thirty (30) days after receipt of the decision of the board, appeal to the Central Board of Assessment Appeals as herein provided. The decision of the Central Board shall be final and executory.

Callanta v. Office of the Ombudsman City Assessor reassessed the values of properties after notice of assessment was sent to property owners. The reassessment was made without the authority of the LBAA and resulted in the reduction of assessed values.Held: City assessor did not have the power to reassess the subject properties. Once the notice of assessment is sent to property owners, the City Assessor’s office is done and whatever complaints owners have with the assessment must be made to the LBAA pursuant to the LGC.

(b) Appeal to the Central Board of Assessment Appeals (CBAA)

Sec. 230, LGCSEC. 230. Central Board of Assessment appeals.- The Central Board of Assessment appeals shall be composed of a chairman and two (2) members to be appointed by the President, who shall serve for a term of seven (7) years, without reappointment. Of those first appointed, the chairman shall hold office for seven (7) years, one member for five (5) years, and the other member for three

(3) years. Appointment to any vacancy shall be only for the unexpired portion of the term of the predecessor. In no case shall any member be appointed or designated in a temporary or acting capacity. The chairman and the members of the Board shall be Filipino citizens, at least forty (40) years old at the time of their appointment, and members of the Bar or Certified Public Accountants for at least ten (10) years immediately preceding their appointment. The chairman of the Board of Assessment appeals shall have the salary grade equivalent to the rank of Director III under the Salary Standardization Law exclusive of allowances and other emoluments. The members of the Board shall have the salary grade equivalent to the rank of Director II under the Salary Standardization Law exclusive of allowances and other emoluments. The Board shall have appellate jurisdiction over all assessment cases decided by the Local Board of Assessment appeals.There shall be Hearing Officers to be appointed by the Central Board of Assessment appeals pursuant to civil service laws, rules and regulations, one each for Luzon, Visayas and Mindanao, who shall hold office in Manila, Cebu City and Cagayan de Oro City, respectively, and who shall serve for a term of six (6) years, without reappointment until their successors have been appointed and qualified. The Hearing Officers shall have the same qualifications as that of the Judges of the Municipal Trial Courts.The Hearing Officers shall each have the salary grade equivalent to the rank of Director I under the Salary Standardization Law exclusive of allowances and other emoluments. The Hearing Officers shall try and receive evidences on the appealed assessment cases as may be directed by the Board.The Central Board Assessment appeals, in the performance of its powers and duties, may establish and organize staffs, offices, units, prescribe the titles, functions and duties of their members and adopt its own rules and regulations. Unless otherwise provided by law, the annual appropriations for the Central Board of Assessment appeals shall be included in the annual budget of the Department of Finance in the corresponding General Appropriations Act.Art. 321, IRR of LGCARTICLE 321. Central Board of Assessment Appeals. — The Central Board shall be composed of a chairman and two (2) members to be appointed by the President, who shall serve for a term of seven (7) years, without reappointment. Of those first appointed, the chairman shall hold office for seven (7) years, one member for five (5) years, and the other member of three (3) years. Appointment to any vacancy shall be only for the unexpired portion of the term of the predecessor. In no case shall any member be appointed or designated in a temporary or acting capacity.The chairman and the members of the Central Board shall be Filipino citizens, at least forty(40) years old at the time of their appointment, and members of the Bar or Certified Public Accountants for at least ten (10) years immediately preceding their appointment. The chairman of the Central Board shall have the salary grade equivalent to the rank of Director III under the Salary Standardization Law exclusive of allowances and other emoluments. The members of the Central Board shall have the salary grade equivalent to the rank of Director II under the Salary Standardization Law exclusive of allowances and other emoluments. The Central Board shall have appellate jurisdiction over all assessment cases decided by the local board and assessment appeals.There shall be hearing officers to be appointed by the Central Board pursuant to civil service law, rules and regulations, one each of Luzon, Visayas, and Mindanao, who shall hold office in the

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City of Manila, Cebu City, and Cagayan de Oro City, respectively, and who shall serve for a term of six (6) years, without reappointment until their successors shall have been appointed and qualified. The hearing officers shall have the same qualifications as those of the Judges of the Municipal Trial Courts.The hearing officers shall each have a salary grade equivalent to the rank of Director I under the Salary Standardization Law exclusive of allowances and other emoluments. The hearing officers shall try and receive evidences on the appealed assessment cases as may be directed by the Central Board.The Central Board, in the performance of its powers and duties, may establish and organize staffs, offices, or units, prescribe the titles, functions and duties of their members, and adopt its own rules and regulations.Unless otherwise provided by law, the annual appropriations for the Central Board shall be included in the annual budget of DOF.

(c) Effect of Appeal on Payment of RPT Sec. 231, LGCSEC. 231. Effect of appeal on the Payment of Real Property Tax. - appeal on assessments of real property made under the provisions of this Code shall, in no case, suspend the collection of the corresponding realty taxes on the property involved as assessed by the provincial or city assessor, without prejudice to subsequent adjustment depending upon the final outcome of the appeal.Art. 322, IRR of LGCARTICLE 322. Effect of Appeal on the Payment of Real Property Tax. — Appeals on assessments of real property made under the provisions of this Rule shall, in no case, suspend the collection of the corresponding real property taxes on the property involved as assessed by the provincial or city assessor, or the municipal assessor within MMA, without prejudice to subsequent adjustment depending upon the final outcome of the appeal.

2. Payment of Real Property Tax under Protest

Sec. 252, LGCSEC. 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 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.Art. 343, IRR of LGCARTICLE 343. 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 or city treasurer, or municipal treasurer, in the case of a municipality within MMA, 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 local treasurer concerned. Fifty percent (50%) of the tax paid under protest shall, however, be distributed in accordance with the provisions of this Rule on the distribution of proceeds.(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 paragraph (a) hereof, the taxpayer may avail of the remedies provided in Articles 317 and 320 of this Rule.

Procedure: 1. Pay the tax under protest2. File written protest with Local Treasurer )within 30 days from payment of tax)3. Treasurer decides (within 60 days from receipt of protest) 4. If approved, the amount shall be refunded or applied as tax credit;If denied, appeal to LBAA (in case of denial or inaction of the treasurer, after the lapse of 60 days)5. Appeal with the CBAA (within 30 days from receipt of adverse decision by LBAA)

Sec. 252 requires taxpayer to first pay the tax. “PAYMENT UNDER PROTEST”. The protest may be filed within 30 days from the payment of the tax. Thereafter, the words “paid under protest” shall be annotated on the tax receipt. The Tax or portion thereof paid under protest shall be held in trust by the treasurer concerned.

Protest contemplated in Sec. 252 is needed where there is a question as to the reasonableness of the amount assessed, NOT where the question raised is on the very authority and power of the assessor to impose the assessment and of the treasurer to collect the tax (Ty. v. Trampe)

No MR for the adverse decision of the Local Assessor or Treasurer- the remedy is to appeal to the LBAAThe last action of the local assessor on a particular assessment shall be the notice of assessment; it is this last action which gives the owner of the property the right to appeal to the LBAA. The procedure likewise does not permit the property owner the remedy of filing an MR before the local assessor (FELS Energy v. Province of Batangas)

(a) File protest with local treasurer

(b) Appeal to the LBAASec. 226, LGCSEC. 226. Local Board of Assessment Appeals. - Any owner or

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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.Art. 317, IRR of LGCARTICLE 317. Local Board of Assessment Appeals. — (a) Any property owner or person having legal interest or claim in the property who is not satisfied with the assessment of his property made by the provincial, city, or municipal assessor pursuant to the provisions of this Rule may, within sixty (60) days from the date of receipt of the written notice of assessment, appeal to local board of assessment appeals of the province or city where the subject property is situated by filing a petition under oath in the standard form prescribed therefor, together with copies of the tax declaration and such affidavits or documents in support of the appeal.(b) In the case of municipalities within MMA, the appeals may be filed with the municipal board of assessment appeals of each municipality as provided in Article 318 of this Rule.

(c) Appeal to the CBAASec. 230, LGCSEC. 230. Central Board of Assessment appeals.- The Central Board of Assessment appeals shall be composed of a chairman and two (2) members to be appointed by the President, who shall serve for a term of seven (7) years, without reappointment. Of those first appointed, the chairman shall hold office for seven (7) years, one member for five (5) years, and the other member for three (3) years. Appointment to any vacancy shall be only for the unexpired portion of the term of the predecessor. In no case shall any member be appointed or designated in a temporary or acting capacity. The chairman and the members of the Board shall be Filipino citizens, at least forty (40) years old at the time of their appointment, and members of the Bar or Certified Public Accountants for at least ten (10) years immediately preceding their appointment. The chairman of the Board of Assessment appeals shall have the salary grade equivalent to the rank of Director III under the Salary Standardization Law exclusive of allowances and other emoluments. The members of the Board shall have the salary grade equivalent to the rank of Director II under the Salary Standardization Law exclusive of allowances and other emoluments. The Board shall have appellate jurisdiction over all assessment cases decided by the Local Board of Assessment appeals.There shall be Hearing Officers to be appointed by the Central Board of Assessment appeals pursuant to civil service laws, rules and regulations, one each for Luzon, Visayas and Mindanao, who shall hold office in Manila, Cebu City and Cagayan de Oro City, respectively, and who shall serve for a term of six (6) years, without reappointment until their successors have been appointed and qualified. The Hearing Officers shall have the same qualifications as that of the Judges of the Municipal Trial Courts.The Hearing Officers shall each have the salary grade equivalent to the rank of Director I under the Salary Standardization Law exclusive of allowances and other emoluments. The Hearing Officers shall try and receive evidences on the appealed assessment cases as may be directed by the Board.The Central Board Assessment appeals, in the performance of its powers and duties, may establish and organize staffs, offices, units, prescribe the titles, functions and duties of their members

and adopt its own rules and regulations. Unless otherwise provided by law, the annual appropriations for the Central Board of Assessment appeals shall be included in the annual budget of the Department of Finance in the corresponding General Appropriations Act.Art. 321, IRR of LGCARTICLE 321. Central Board of Assessment Appeals. — The Central Board shall be composed of a chairman and two (2) members to be appointed by the President, who shall serve for a term of seven (7) years, without reappointment. Of those first appointed, the chairman shall hold office for seven (7) years, one member for five (5) years, and the other member of three (3) years. Appointment to any vacancy shall be only for the unexpired portion of the term of the predecessor. In no case shall any member be appointed or designated in a temporary or acting capacity.The chairman and the members of the Central Board shall be Filipino citizens, at least forty(40) years old at the time of their appointment, and members of the Bar or Certified Public Accountants for at least ten (10) years immediately preceding their appointment. The chairman of the Central Board shall have the salary grade equivalent to the rank of Director III under the Salary Standardization Law exclusive of allowances and other emoluments. The members of the Central Board shall have the salary grade equivalent to the rank of Director II under the Salary Standardization Law exclusive of allowances and other emoluments. The Central Board shall have appellate jurisdiction over all assessment cases decided by the local board and assessment appeals.There shall be hearing officers to be appointed by the Central Board pursuant to civil service law, rules and regulations, one each of Luzon, Visayas, and Mindanao, who shall hold office in the City of Manila, Cebu City, and Cagayan de Oro City, respectively, and who shall serve for a term of six (6) years, without reappointment until their successors shall have been appointed and qualified.The hearing officers shall have the same qualifications as those of the Judges of the Municipal Trial Courts. The hearing officers shall each have a salary grade equivalent to the rank of Director I under the Salary Standardization Law exclusive of allowances and other emoluments. The hearing officers shall try and receive evidences on the appealed assessment cases as may be directed by the Central Board.The Central Board, in the performance of its powers and duties, may establish and organize staffs, offices, or units, prescribe the titles, functions and duties of their members, and adopt its own rules and regulations.Unless otherwise provided by law, the annual appropriations for the Central Board shall be included in the annual budget of DOF.

(d) Appeal to the CTARepublic Act 9282March 30 2004

AN ACT EXPANDING THE JURISDICTION OF THE COURT OF TAX APPEALS (CTA), ELEVATING ITS RANK TO THE LEVEL OF A COLLEGIATE COURT WITH SPECIAL JURISDICTION AND ENLARGING ITS MEMBERSHIP, AMENDING FOR THE PURPOSE CERTAIN SECTIONS OR REPUBLIC ACT NO. 1125, AS AMENDED, OTHERWISE KNOWN AS THE LAW CREATING THE COURT OF TAX APPEALS, AND FOR OTHER PURPOSES

Section 1. Section 1 of Republic Act No. 1125, as amended is hereby further amended to read as follows:

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"SECTION 1. Court; Justices; Qualifications; Salary; Tenure. - There is hereby created a Court of Tax Appeals (CTA) which shall be of the same level as the Court of Appeals, possessing all the inherent powers of a Court of Justice, and shall consist of a Presiding Justice and five (5) Associate Justices. The incumbent Presiding Judge and Associate Judges shall continue in office and bear the new titles of Presiding Justice and Associate Justices. The Presiding Justice and the most Senior Associate Justice shall serve as chairmen of the two (2) Divisions. The additional three (3) Justices and succeeding members of the Court shall be appointed by the President upon nomination by the Judicial and Bar Council. The Presiding Justice shall be so designated in his appointment, and the Associate Justices shall have precedence according to the date of their respective appointments, or when the appointments of two (2) or more of them shall bear the same date, according to the order in which their appointments were issued by the President. They shall have the same qualifications, rank, category, salary, emoluments and other privileges, be subject to the same inhibitions and disqualifications, and enjoy the same retirements and other benefits as those provided for under existing laws for the Presiding Justice and Associate Justices of the Court of Appeals.

"Whenever the salaries of the Presiding Justice and the Associate Justices of the Court of Appeals are increased, such increases in salaries shall be deemed correspondingly extended to and enjoyed by the Presiding Justice and Associate Justices of the CTA.

"The Presiding Justice and Associate Justices shall hold office during good behavior, until they reach the age of seventy (70), or become incapacitated to discharge the duties of their office, unless sooner removed for the same causes and in the same manner provided by law for members of the judiciary of equivalent rank."

Section 2. Section 2 of the same Act is hereby amended to read as follows:

"SEC. 2. Sitting En Banc or Division; Quorum; Proceedings. - The CTA may sit en banc or in two (2) Divisions, each Division consisting of three (3) Justices.

"Four (4) Justices shall constitute a quorum for sessions en banc and two (2) Justices for sessions of a Division: Provided, That when the required quorum cannot be constituted due to any vacancy, disqualification, inhibition, disability, or any other lawful cause, the Presiding Justice shall designate any Justice of other Divisions of the Court to sit temporarily therein.

"The affirmative votes of four (4) members of the Court en banc or two (2) members of a Division, as the case may be, shall be necessary for the rendition of a decision or resolution."


"SEC. 3. Clerk of Court; Division Clerks of Court; Appointment; Qualification; Compensation. - The CTA shall have a Clerk of Court and three (3) Division Clerks of Court who shall be appointed by the Supreme Court. No person shall be appointed Clerk of Court or Division Clerk of Court unless he is duly authorized to practice law in the Philippines. The Clerk of Court

and Division Clerks of Court shall exercise the same powers and perform the same duties in regard to all matters within the Court's jurisdiction, as are exercised and performed by the Clerk of Court and Division Clerks of Court of the Court of Appeals, in so far as the same may be applicable or analogous; and in the exercise of those powers and the performance of those duties they shall be under the direction of the Court. The Clerk of Court and the Division Clerks of Court shall have the same rank, privileges, salary, emoluments, retirement and other benefits as those provided for the Clerk of Court and Division Clerks of Court of the Court of Appeals, respectively.'


"SEC. 4. Other Subordinate Employees. - The Supreme Court shall appoint all officials and employees of the CTA, in accordance with the Civil Service Law. The Supreme Court shall fix their salaries and prescribe their duties."


"SEC. 5. Disqualifications. - No Justice or other officer or employee of the CTA shall intervene, directly or indirectly, in the management or control of any private enterprise which in any way may be affected by the functions of the Court. Justices of the Court shall be disqualified from sitting in any case on the same grounds provided under Rule one hundred thirty-seven of the Rules of Court for the disqualification of judicial officers. No person who has once served in the Court in a permanent capacity, either as Presiding Justice or as Associate Justice thereof, shall be qualified to practice as counsel before the Court for a period of one (1) year from his retirement or resignation."


"SEC. 6. Place of Office. - The CTA shall have its principal office in Metro Manila and shall hold hearings at such time and place as it may, by order in writing, designate."


"Sec. 7. Jurisdiction. - The CTA shall exercise:

"a. Exclusive appellate jurisdiction to review by appeal, as herein provided:

"1. Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue or other laws administered by the Bureau of Internal Revenue;

"2. Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relations thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue, where the National Internal Revenue Code provides a specific period of action, in which case the inaction shall be deemed a denial;

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"3. Decisions, orders or resolutions of the Regional Trial Courts in local tax cases originally decided or resolved by them in the exercise of their original or appellate jurisdiction;

"4. Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees or other money charges, seizure, detention or release of property affected, fines, forfeitures or other penalties in relation thereto, or other matters arising under the Customs Law or other laws administered by the Bureau of Customs;

"5. Decisions of the Central Board of Assessment Appeals 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;

"6. Decisions of the Secretary of Finance on customs cases elevated to him automatically for review from decisions of the Commissioner of Customs which are adverse to the Government under Section 2315 of the Tariff and Customs Code;

"7. Decisions of the Secretary of Trade and Industry, in the case of nonagricultural product, commodity or article, and the Secretary of Agriculture in the case of agricultural product, commodity or article, involving dumping and countervailing duties under Section 301 and 302, respectively, of the Tariff and Customs Code, and safeguard measures under Republic Act No. 8800, where either party may appeal the decision to impose or not to impose said duties.

"b. Jurisdiction over cases involving criminal offenses as herein provided:

"1. Exclusive original jurisdiction over all criminal offenses arising from violations of the National Internal Revenue Code or Tariff and Customs Code and other laws administered by the Bureau of Internal Revenue or the Bureau of Customs: Provided, however, That offenses or felonies mentioned in this paragraph where the principal amount o taxes and fees, exclusive of charges and penalties, claimed is less than One million pesos (P1,000,000.00) or where there is no specified amount claimed shall be tried by the regular Courts and the jurisdiction of the CTA shall be appellate. Any provision of law or the Rules of Court to the contrary notwithstanding, the criminal action and the corresponding civil action for the recovery of civil liability for taxes and penalties shall at all times be simultaneously instituted with, and jointly determined in the same proceeding by the CTA, the filing of the criminal action being deemed to necessarily carry with it the filing of the civil action, and no right to reserve the filling of such civil action separately from the criminal action will be recognized.

"2. Exclusive appellate jurisdiction in criminal offenses:

"a. Over appeals from the judgments, resolutions or orders of the Regional Trial Courts in tax cases originally decided by them, in their respected territorial jurisdiction.

"b. Over petitions for review of the judgments, resolutions or orders of the Regional Trial Courts in the exercise of their appellate jurisdiction over tax cases originally decided by the Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in their respective jurisdiction.

"c. Jurisdiction over tax collection cases as herein provided:

"1. Exclusive original jurisdiction in tax collection cases involving final and executory assessments for taxes, fees, charges and penalties: Provided, however, That collection cases where the principal amount of taxes and fees, exclusive of charges and penalties, claimed is less than One million pesos (P1,000,000.00) shall be tried by the proper Municipal Trial Court, Metropolitan Trial Court and Regional Trial Court.

"2. Exclusive appellate jurisdiction in tax collection cases:

"a. Over appeals from the judgments, resolutions or orders of the Regional Trial Courts in tax collection cases originally decided by them, in their respective territorial jurisdiction.

"b. Over petitions for review of the judgments, resolutions or orders of the Regional Trial Courts in the Exercise of their appellate jurisdiction over tax collection cases originally decided by the Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts, in their respective jurisdiction."


"SEC. 10. Power to Administer Oaths; Issue Subpoena; Punish for Contempt. - The Court shall have the power to administer oaths, receive evidence, summon witnesses by subpoena duces tecum, subject in all respects to the same restrictions and qualifications as applied in judicial proceedings of a similar nature. The Court shall, in accordance with Rule seventy-one of the Rules of Court, have the power to punish for contempt for the same causes, under the same procedure and with the same penalties provided therein."


"SEC. 11. Who May Appeal; Mode of Appeal; Effect of Appeal. - Any party adversely affected by a decision, ruling or inaction of the Commissioner of Internal Revenue, the Commissioner of Customs, the Secretary of Finance, the Secretary of Trade and Industry or the Secretary of Agriculture or the Central Board of Assessment Appeals or the Regional Trial Courts may file an appeal with the CTA within thirty (30) days after the receipt of such decision or ruling or after the expiration of the period fixed by law for action as referred to in Section 7(a)(2) herein.

"Appeal shall be made by filing a petition for review under a procedure analogous to that provided for under Rule 42 of the 1997 Rules of Civil Procedure with the CTA within thirty (30) days from the receipt of the decision or ruling or in the case of inaction as herein provided, from the expiration of the period fixed by law to act thereon. A Division of the CTA shall hear the appeal: Provided, however, That with respect to decisions or rulings of the Central Board of Assessment Appeals and the Regional Trial Court in the exercise of its appellate jurisdiction appeal shall be made by filing a petition for review under a procedure analogous to that provided for under rule 43 of the 1997 Rules of Civil Procedure with the CTA, which shall hear the case en banc.

"All other cases involving rulings, orders or decisions filed with

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the CTA as provided for in Section 7 shall be raffled to its Divisions. A party adversely affected by a ruling, order or decision of a Division of the CTA may file a motion for reconsideration of new trial before the same Division of the CTA within fifteens (15) days from notice thereof: Provide, however, That in criminal cases, the general rule applicable in regular Courts on matters of prosecution and appeal shall likewise apply.

"No appeal taken to the CTA from the decision of the Commissioner of Internal Revenue or the Commissioner of Customs or the Regional Trial Court, provincial, city or municipal treasurer or the Secretary of Finance, the Secretary of Trade and Industry and Secretary of Agriculture, as the case may be shall suspend the payment, levy, distraint, and/or sale of any property of the taxpayer 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 any stage of the proceeding may suspend the said 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.

"In criminal and collection cases covered respectively by Section 7(b) and (c) of this Act, the Government may directly file the said cases with the CTA covering amounts within its exclusive and original jurisdiction."


"SEC. 13. Decision, Maximum Period for Termination of Cases. - Cases brought before the Court shall be decided in accordance with Section 15, paragraph (1), Article VIII (Judicial Department) of the 1987 Constitution. Decisions of the Court shall be in writing, stating clearly and distinctly the facts and the law on which they are based, and signed by the Justices concurring therein. The Court shall provide for the publication of its decision in the Official Gazette in such form and manner as may best be adopted for public information and use.

"The Justices of the Court shall each certify on their applications for leave, and upon salary vouchers presented by them for payment, or upon the payrolls under which their salaries are paid, that all proceedings, petitions and motions which have been submitted to the Court for determination or decision for a period required by the law or the Constitution, as the case may be, have been determined or decided by the Court on or before the date of making the certificate, and no leave shall be granted and no salary shall be paid without such certificate."

Section 11. Section 18 of the same Act is hereby amended as follows:

"SEC. 18. Appeal to the Court of Tax Appeals En Banc. - No civil proceeding involving matter arising under the National Internal Revenue Code, the Tariff and Customs Code or the Local Government Code shall be maintained, except as herein provided, until and unless an appeal has been previously filed with the CTA and disposed of in accordance with the provisions of this Act.

"A party adversely affected by a resolution of a Division of the CTA on a motion for reconsideration or new trial, may file a petition for review with the CTA en banc."

"SEC. 19. Review by Certiorari. - A party adversely affected by a decision or ruling of the CTA en banc may file with the Supreme Court a verified petition for review on certiorari pursuant to Rule 45 of the 1997 Rules of Civil Procedure."

Section 13. Distraint of Personal Property and/or Levy on Real Property. - Upon the issuance of any ruling, order or decision by the CTA favorable to the national government, the CTA shall issue an order authorizing the Bureau of Internal Revenue, through the Commissioner to seize and distraint any goods, chattels, or effects, and the personal property, including stocks and other securities, debts, credits, bank accounts, and interests in and rights to personal property and/or levy the real property of such persons in sufficient quantity to satisfy the tax or charge together with any increment thereto incident to delinquency. This remedy shall not be exclusive and shall not preclude the Court from availing of other means under the Rules of Court.

Section 14. Retention of Personnel; Security of Tenure; Upgrading of Positions and Salaries. - All existing permanent personnel of the CTA shall not be adversely affected by this Act. They shall continue in office and shall not be removed or separated from the service except for cause as provided for by existing laws. Further, the present positions and salaries of personnel shall be upgraded to the level of their counterparts in the Court of Appeals.

Section 15. Transitory Provisions. - In consonance with the above provision, the incumbent Presiding Judge and Associate Judges shall comprise a Division pending the constitution of the entire Court.

Section 16. Appropriations. - The amount necessary to carry out the provisions of this Act shall be included in the General Appropriations Act of the year following its enactment into law and thereafter.

Section 17. Repealing Clause. - All laws, executive orders, executive issuances or letter of instructions, or any part thereof, inconsistent with or contrary to the provisions of this Act are hereby deemed repealed, amended or modified accordingly.

(e) Appeal to the Supreme Court

Summary of Procedure for RPT Protest

1. Assessor submits assessment roll to Local Treasurer (LT), Posting of notice of deadline for payment at a conspicuous place at the LGU Hall or publish the same in a newspaper of general circulation in the LGU once a week for 2 consecutive weeks. LT collects the tax starting January 1 of that calendar year.2. Owner pays the tax. Written protest must be filed within 30 days from payment with the LT. 3. LT must decide within 60 days from receipt of protest (Sec. 252). If LT does not decide within 60 days, or if LT rejects protest, taxpayer may appeal within 60 days from receipt of notice or lapse of 60 days (for inaction) to the LBAA (Sec. 252). Refund or tax credit must be claimed with the LT within 2 years from the date the taxpayer is entitled to such refund (Sec. 253). If LT does not act on claim for

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refund/tax credit within 60 days, OR does not grant the refund/tax credit, taxpayer may appeal within 30 days from receipt of notice or lapse of 60 days (for inaction) to the LBAA (Sec. 226).4. LBAA must decide within 120 days from receipt of appeal.5. If LBAA rejects protest/refund, taxpayer may appeal to CBAA within 30 days from receipt of notice. 6. If CBAA rejects protest/refund, taxpayer may appeal to CTA en banc within 30 days from receipt of decision (Rule 43, ROC).7. Appeal the CTA en banc decision to SC within 15 days.

3. Claim for Refund for Illegal or Erroneous Tax Payment

Sec. 253, LGCSEC. 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.Art. 344, IRR of LGCARTICLE 344. Repayment of Excessive Collections. — When an assessment of basic real property tax, or any other tax levied in this Rule, 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 this Rule.

Claim for refund or Credit- when an assessment is found to be illegal or erroneous and the tax is accordingly reduced or adjusted (Sec. 253).

Procedure: 1. TP files a written claim for refund or credit with the treasurer (within 2 years from the date the taxpayer is entitled to such reduction or adjustment).2. Provincial or city treasurer should decide the claim within 60 days from receipt of the claim 3. In case of denial, appeal to the LBAA within 30 days as in protest case

F. Special Levy on Real PropertyIn addition to the basic RPT, special levies may be imposed by the same LGU on real property.

1. Special Education Fund

Sec. 235, LGCSEC. 235. Additional Levy on Real Property for the Special Education Fund. - A province or city, or a municipality within the Metropolitan Manila Area, may levy and collect an annual tax of one percent (1%) on the assessed value of real property which shall be in addition to the basic real property tax. The proceeds thereof shall exclusively accrue to the Special Education Fund (SEF).Art. 326, IRR of LGCARTICLE 326. Additional Levy on Real Property for the Special Education Fund. — A province or city, or a municipality within MMA, may levy and collect an annual tax of one percent (1%) on the assessed value of real property which shall be in addition to the basic real property tax. The proceeds thereof shall exclusively accrue to the special education fund.All provinces and cities, and the municipalities within MMA shall enact their respective tax ordinances imposing the additional tax for the special education fund.No public hearing shall be required before the enactment of a local tax ordinance levying the additional one percent (1%) special education fund tax.

SEF: 1% additional real estate tax to finance the SEF (Sec. 235)RA 5447 created the SEF for specialized activities (like purchase of educational materials, etc.) with its fund to be derived from additional tax on real property and from certain portion of the taxes on Virginia-type cigarettes and duties on imported leaf tobacco.

2. Additional Ad Valorem Tax on Idle LandsSec. 236, LGCSEC. 236. Additional Ad Valorem Tax on Idle Lands. - A province or city, or a municipality within the Metropolitan Manila Area, may levy an annual tax on idle lands at the rate not exceeding five percent (5%) of the assessed value of the property which shall be in addition to the basic real property tax.Art. 327, IRR of LGCARTICLE 327. Additional Ad Valorem Tax on Idle Lands. — A province or city, or a municipality within MMA, may levy an annual tax on idle lands at the rate not exceeding five percent (5%) of the assessed value of the property which shall be in addition to the basic real property tax.

Additional ad valorem on idle lands: not exceeding 5% of the assessed value of the property

Rationale for imposing ad valorem taxes on idle lands: to penalize property owners who do not use their property productively, and to encourage utilization of land resources in order to contribute to national development.

(a) Coverage of Idle LandsSec. 237, LGCSEC. 237. Idle Lands, Coverage. - For purposes of real property taxation, idle lands shall include the following:(a) "Agricultural lands, more than one (1) hectare in area, suitable for cultivation, dairying, inland fishery, and other agricultural uses, one-half (1/2) of which remain uncultivated or unimproved by the owner of the property or person having legal interest therein." Agricultural lands planted to permanent or perennial crops with at least fifty (50) trees to a hectare shall not

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be considered idle lands. Lands actually used for grazing purposes shall likewise not be considered idle lands.(b) Lands, other than agricultural, located in a city or municipality, more than one thousand (1,000) square meters in area one-half (1/2) of which remain unutilized or unimproved by the owner of the property or person having legal interest therein. Regardless of land area, this Section shall likewise apply to residential lots in subdivisions duly approved by proper authorities, the ownership of which has been transferred to individual owners, who shall be liable for the additional tax: Provided, however, That individual lots of such subdivisions, the ownership of which has not been transferred to the buyer shall be considered as part of the subdivision, and shall be subject to the additional tax payable by subdivision owner or operator.Art. 328, IRR of LGCARTICLE 328. Idle Lands, Coverage. — For purposes of real property taxation, idle lands shall include the following:(a) Agricultural lands, more than one (1) hectare in area, suitable for cultivation, dairying, inland fishery, and other agricultural uses, one-half (½) of which remain uncultivated or unimproved by the owner of the property or person having legal interest therein. Agricultural lands planted to permanent or perennial crops with at least fifty (50) trees to a hectare shall not be considered idle lands. Lands actually used for grazing purposes shall likewise not be considered idle lands.(b) Lands, other than agricultural, located in a city or municipality, more than one thousand (1,000) square meters in area one-half (½) of which remain unutilized or unimproved by the owner of the property or person having legal interest therein.Regardless of land area, this Article shall likewise apply to residential lots in subdivisions duly approved by proper authorities, the ownership of which has been transferred to individual owners, who shall be liable for the additional tax provided that individual lots of such subdivisions, the ownership of which has not been transferred to the buyer shall be considered as part of the subdivision, and shall be subject to the additional tax payable by the subdivision owner or operator.

Lands considered idle:1. Agricultural lands:a. more than 1 hectare in area- if more than ½ of which remains uncultivated or unimproved by the owner of the property or person having legal interest therein. b. Not considered idle lands:

i. agricultural lands planted to permanent or perennial crops with at least 50 trees to a hectare;ii. lands actually used for grazing purposes shall likewise not be considered idle lands

2. Non-agricultural lands: more than 1000 sq. m in are, if more than ½ of which remain unutilized or unimproved by the owner of the property or person having legal interest therein.

(b) Exempt Idle LandsSec. 238, LGCSEC. 238. Idle Lands Exempt from Tax. - A province or city or a municipality within the Metropolitan Manila Area may exempt idle lands from the additional levy by reason of force majeure, civil disturbance, natural calamity or any cause or circumstance which physically or legally prevents the owner of the property or person having legal interest therein from improving, utilizing or cultivating the same.

Art. 329, IRR of LGCARTICLE 329. Idle Lands Exempt from Tax. — A province or a city or a municipality within MMA may exempt idle lands from the additional levy by reason of force majeure, civil disturbance, natural calamity, or any cause or circumstance which physically or legally prevents the owner of the property or person having legal interest therein from improving, utilizing, or cultivating the same.

Idle lands may be exempted from the idle land tax by reason of:1. force majeure2. civil disturbance3. natural calamity 4. any cause which physically or legally prevents the owner of the property or the person having legal interest therein from improving, utilizing or cultivating the same.

(c) Listing of idle lands by the assessorSec. 239, LGCSEC. 239. Listing of Idle Lands by the Assessor. - The provincial, city or municipal assessor shall make and keep an updated record of all idle lands located within his area of jurisdiction. For purposes of collection, the provincial, city or municipal assessor shall furnish a copy thereof to the provincial or city treasurer who shall notify, on the basis of such record, the owner of the property or person having legal interest therein of the imposition of the additional tax.Art. 330, IRR of LGCARTICLE 330. Listing of Idle Lands by the Local Assessor. — The provincial, city, or municipal assessor shall make and keep an updated record of all idle lands located within his area of jurisdiction. For purposes of collection, the provincial, city, or municipal assessor shall furnish a copy thereof to the provincial or city treasurer who shall notify, on the basis of such record, the owner of the property or person having legal interest therein of the imposition of the additional tax.

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