d. Collection

Date of Accrual

The RPT for any year shall accrue on the 1st day of January. It shall constitute a lien from such date and shall only be extinguished upon payment of the delinquent tax. (LGC, Sec. 246)¹

The basic real property tax and any other tax levied under this Title shall be collected within five years from the date they become due. In case of fraud or intent to evade payment, a collection action may be instituted within 10 years from discovery of the fraud or intent to evade payment. (LGC, Sec. 270)²

• Owner or the person having legal interest is out of the country or cannot be located. (LGC, Sec. 270)
• City or municipal treasurer;
• Barangay treasurer, if deputized by the treasurer and upon filing a bond; (LGC, Sec. 247)³ and

Other Duties of the Local Treasurer

A local treasurer or deputy shall be dismissed from the service, without prejudice to criminal prosecution, if the officer:

• Fails to issue the warrant of levy within 1 year from the time the tax becomes delinquent;
• Fails to execute the warrant within 30 days from the date of its issuance; or
• Found guilty of abusing the exercise thereof in an administrative or judicial proceeding (LGC, Sec. 259)⁵

Notice of Time for Collection of Tax

• The basic RPT and additional SEF tax may be paid without interest in four equal installments on or before March 31, June 30, September 30, and December 31. (LGC, Secs. 235, 249 and 250)
• The notice of delinquency must warn that, unless the tax, surcharges and penalties are paid before the expiration of the year for which the tax is due, the property will be levied upon and sold at public auction, except when the notice of assessment or special levy is contested as provided by law. (LGC, Sec. 254)
• However, the sale is subject to right of redemption within 1 year from the date of such sale. (LGC, Sec. 254)⁶

Local Governments Lien

The RPT constitutes a lien on the property subject to tax, superior to all liens, charges or encumbrances in favor of any person, irrespective of the owner or possessor, and may only be extinguished upon payment of the tax and the related interests and expenses. (LGC, Sec. 257)⁷

• After the expiration of the time required to pay the RPT, the real property subject to such tax may be levied upon through the issuance of a warrant on or before, or simultaneously with, the institution of the civil action for the collection of the delinquent tax.
• The treasurer shall prepare a duly authenticated certificate showing the following:
• Name of the delinquent owner of the property or person having legal interest;
• Description of the property;
• Amount of the tax due and the interest.
• The levying officer shall submit a report on the levy to the sanggunian within 10 days after receipt of the warrant by the owner of the property or person having legal interest. (LGC, Sec. 258)⁸

Sale of Real Property at Public Auction

Advertisement: Within 30 days after service of the warrant of levy, the local treasurer shall proceed to publicly advertise for sale or auction the property to satisfy the tax delinquency and expenses of sale. The advertisement shall be effected by posting a notice at the main entrance of the provincial, city or municipal building, and in a publicly accessible and conspicuous place in the barangay where the real property is located, and by publication once a week for 2 weeks in a newspaper of general circulation in the province, city or municipality where the property is located. The advertisement shall specify the following:

• Date and Place of sale,
• Name of the Owner of the real property or person having legal interest therein, and
• Description of the property to be sold.

Sale: It shall be held either at the main entrance of the provincial, city or municipal building, or on the property to be sold, or at any other place as specified in the notice of the sale.

Documentation: Within 30 days after the sale, the local treasurer shall make a report of the sale to the sanggunian, and which shall form part of his records. The local treasurer shall likewise prepare and deliver to the purchaser a certificate of sale which shall contain the name of the purchaser, a description of the property sold, the amount of the delinquent tax, the interest due, the expenses of sale and a brief description of the proceedings.

Note: The proceeds of the sale in excess of the tax liability, interest and expenses shall be remitted to the owner of the real property.

By ordinance, the local treasurer may advance an amount sufficient to defray the costs of collection. (LGC, Sec. 260)⁹

• interest of not more than 2% per month on the purchase price from the date of sale to the date of redemption. (LGC, Sec. 261)¹⁰

Under LGC, Sec. 261, the one-year redemption period runs from the date of sale or auction, not from registration of the certificate of sale, including when the local government acquires the property for want of a bidder (City of Davao v. Intestate Estate of Amado S. Dalisay, G.R. No. 207791, 7 March 2016)¹¹

The earlier City Mayor v. Rizal Commercial Banking Corporation ruling applied the Quezon City Revenue Code of 1993 and reckoned the redemption period from the annotation of sale at the proper registry rather than the date of sale. Its continued applicability after Dalisay requires verification; it should not be treated as an exception to the LGC rule without resolving the apparent conflict. (G.R. No. 171033, 3 August 2010)¹²

Effects of Redemption

• It shall invalidate the certificate of sale issued to the purchaser. The local treasurer shall return to the purchaser the entire amount paid by him plus interest of not more than 2% per month;
• The owner of the delinquent real property or person having legal interest therein shall be entitled to a certificate of redemption which shall be issued by the local treasurer; and
• The property shall be free from lien of such delinquent tax, interest due thereon and expenses of sale. (LGC, Sec. 261)

From the date of sale until the expiration of the period of redemption, the delinquent real property shall remain in possession of the owner or person having legal interest therein who shall be entitled to the income and other fruits thereof. (LGC, Sec. 261)

Final Deed to Purchaser

In case the owner or person having legal interest fails to redeem the delinquent property, the local treasurer shall execute a deed conveying to the purchaser said property, free from lien of the delinquent tax, interest due and expenses of sale. The deed shall briefly state the proceedings upon which the validity of the sale rests. (LGC, Sec. 262)¹⁵

Purchase of Property by the LGU for Want of Bidder

In case there is no bidder, the local treasurer shall:

• Purchase the real property advertised for sale in behalf of the LGU to satisfy the claim, if there is no bidder.
• Make a report of his proceedings within 2 days.

Note: The sale is still subject to 1 year right of redemption. If the property is not redeemed, the ownership shall be vested on the LGU. (LGC, Sec. 263)¹⁶

Further Distraint or Levy

Levy may be repeated if necessary until the full amount due, including all expenses, is collected. (LGC, Sec. 265)¹⁷

Take note that distraint is expressly allowed by Sec. 254(b)¹⁸, which reads:

Such notice shall specify the date upon which the tax became delinquent and shall state that personal property may be distrained to effect payment.

Summary of Administrative Actions

• Levy on real property – real property subject to such tax may be levied upon through the issuance of a warrant. Levy may be repeated if necessary until the full amount due, including all expenses, is collected. (LGC, Secs. 258 & 265)¹⁹
• Distraint – personal property may be distrained to effect payment. (LGC, Sec. 254)²⁰
• Sale of real property at public auction (LGC, Sec. 260)²¹
• Purchase of real property for want of bidder (LGC, Sec. 263)²²

Judicial Remedies

The judicial remedy is availed of in the court of appropriate jurisdiction. These remedies are cumulative, simultaneous and unconditional, that is, any or all of the remedies or combination thereof may be resorted to and the use or non-use of one remedy shall not be a bar against the institution of the others. Formal demand for the payment of the delinquent taxes and penalties due is not a pre-requisite to such remedies. The notice of delinquency shall be sufficient. (IRR of LGC, Art. 347)²³

Civil Action

The LGU may enforce the collection of the RPT by civil action in any court of competent jurisdiction. It shall be filed by the local treasurer within the period required. (LGC, Sec. 266)²⁴

Who shall file

Provincial attorney or city or municipal legal officer shall file, within 15 days after the receipt of the documents provided by the local treasurer, the civil action in the name of the province, city, or municipality in the proper court of competent jurisdiction. (IRR of LGC, Art. 357)²⁵

Duty of the local treasurer

• a certified statement of delinquency; and
• exact address of the defendant where he may be served with summons. (IRR of LGC, Art. 357)²⁶

Extinguishment of Lien on Real Property

The RPT constitutes a lien on the property subject to tax, superior to all liens, charges or encumbrances in favor of any person, irrespective of the owner or possessor, and may only be extinguished upon payment of the tax and the related interests and expenses. (LGC, Sec. 257)²⁷

Payments of RPT shall first be applied to prior years’ delinquencies, interests, and penalties, and only after said delinquencies are settled may tax payments be credited for the current period. (LGC, Sec. 250)²⁸

Payment under Protest (LGC, Sec. 252)²⁹

No protest shall be entertained unless the taxpayer pays the tax first. There shall be annotated on the tax receipts the words "paid under protest". The tax paid under protest shall be held in trust by the treasurer.

If the protest is granted, 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

If the protest is denied or upon the lapse of the 60-day period to decide, the taxpayer may appeal.

Sale of Real Property at Public Auction

If the owner of the real property pays the delinquent tax, the interest due and the expenses before the intended sale, the sale at public auction shall be stayed. (LGC, Sec. 260)³⁰

Effect of Redemption

• It shall invalidate the certificate of sale issued to the purchaser. The local treasurer shall return to the purchaser the entire amount paid by him plus interest of not more than 2% per month;
• The owner of the delinquent real property or person having legal interest therein shall be entitled to a certificate of redemption which shall be issued by the local treasurer; and
• The property shall be free from the lien for the delinquent tax, interest due thereon, and expenses of sale. (LGC, Sec. 261)³¹

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 local treasurer, 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. (LGC, Sec. 268)³²