SUBJECT: Real Property Tax and Assessment
Our client, a registered owner of a parcel of land with improvements located in [City/Municipality], received a Notice of Assessment from the Local Assessor’s Office reflecting a significant increase in the property’s assessed value for the current tax year. The client disputes the new valuation, believing it exceeds the fair market value of the property. The client has also expressed concerns about potential penalties for delinquent payment should they withhold payment during the protest process.
What are the legal grounds and procedures for protesting a real property tax assessment before the Local Board of Assessment Appeals (LBAA)?
What are the practical remedies available to a taxpayer upon receipt of a disputed real property tax assessment, particularly regarding the obligation to pay under protest?
A taxpayer may protest an assessment on the grounds of overvaluation, irregularity in the assessment process, or illegality, by filing a sworn petition for review with the LBAA within sixty (60) days from receipt of the Notice of Assessment, pursuant to Sections 226 and 229 of Republic Act No. 7160, the Local Government Code (LGC).
The primary practical remedy is to pay the tax under protest and simultaneously file an appeal with the LBAA. Payment under protest is a jurisdictional requirement for appealing to the LBAA. Failure to pay the tax due, even while appealing, will result in delinquency and the imposition of penalties.
Republic Act No. 7160, The Local Government Code of 1991, particularly:
Title Two, Book II: Local Taxation and Fiscal Matters
Chapter 3: Real Property Taxation (Sections 197-283)
Sections 226-231: Procedures for Assessment, Appeal, and Payment.
Department of Finance (DOF) Local Assessment Regulations No. 1-92: Prescribes the rules and regulations for the assessment of real property.
Local Tax Ordinance: The specific revenue code enacted by the Sanggunian of the concerned city or municipality.
A. Grounds and Procedure for Protest (LBAA Appeal)
Under Section 226 of the LGC, any owner or person having legal interest in the property who is not satisfied with the action of the local assessor may appeal to the LBAA. The appeal must be filed within sixty (60) days from the date of receipt of the written notice of assessment; otherwise, the assessment becomes final and conclusive.
The petition must be in writing, under oath, and must state the grounds relied upon. Pertinent grounds include: (a) the assessment is excessive, unreasonable, or confiscatory (overvaluation); (b) the property is exempt from taxation; (c) the property has been assessed more than once; or (d) the rules and regulations for assessment were not complied with. Our client’s claim of overvaluation is a valid statutory ground.
B. The Imperative of Payment Under Protest
Section 252 of the LGC is unequivocal: “No protest shall be entertained unless the taxpayer first pays the tax.” The second paragraph clarifies that the appeal to the LBAA shall be filed within thirty (30) days from payment of the tax. Jurisprudence (Francia v. Intermediate Appellate Court, G.R. No. L-67649, June 28, 1988) consistently holds that payment under protest is a condition precedent for an appeal to the LBAA. This means our client must pay the tax as assessed, while clearly indicating that the payment is made “under protest.” This action preserves their right to appeal and to claim a refund should the appeal be successful. Withholding payment will lead to accrual of interest (2% per month) and penalties (up to 72% of the basic tax), and may bar the appeal entirely.
The Local Assessor may argue that the new valuation is based on a recent general revision of property values (conducted every 3 years under Section 219 of the LGC) and reflects current fair market values as determined by approved schedules. They may also contend that the client failed to present sufficient evidence, such as an independent appraisal or recent sales data of comparable properties, to substantiate the claim of overvaluation during the initial assessment process.
Immediate Payment Under Protest: Advise the client to pay the real property tax as stated in the Notice of Assessment immediately. The official receipt must be annotated or accompanied by a letter stating the payment is made “under protest” due to disputed assessment.
File a Formal Appeal with the LBAA: Within thirty (30) days from the date of payment under protest, prepare and file a verified Petition for Review with the Local Board of Assessment Appeals (LBAA). The petition should detail the grounds for protest and attach supporting evidence (e.g., sworn independent appraisal, photos, tax declarations of comparable properties, sales documents).
Gather Evidence: Assist the client in securing a certified true copy of the tax declaration and the assessment from the Assessor’s Office. Commission a credible independent appraisal report to serve as primary evidence of fair market value.
Monitor Deadlines: Strictly adhere to the 60-day (from notice) and 30-day (from payment) deadlines. Any lapse will forfeit the right to appeal at the LBAA level.
The client has a meritorious recourse to challenge the assessment through the statutory appeal process. However, this appeal is conditioned upon prior payment of the tax under protest. The client must act promptly to comply with these mandatory procedural requirements to avoid finality of the assessment and the accrual of substantial penalties.
Pre-Appeal Negotiation: Before formal appeal, consider a written request for a conference with the Local Assessor to present preliminary evidence. This informal step may resolve the issue without litigation.
Payment Under Protest: This is the critical, non-negotiable first step. Ensure the payment is properly documented as “under protest.”
LBAA Appeal: The first formal administrative remedy. Prepare a comprehensive petition with all supporting documents. The LBAA is composed of the Registrar of Deeds, the City/Municipal Prosecutor, and a private sector representative.
Appeal to the Central Board of Assessment Appeals (CBAA): If the LBAA decision is adverse, an appeal can be made to the CBAA within thirty (30) days from receipt of the LBAA decision.
Judicial Appeal: An adverse CBAA decision may be appealed to the Court of Tax Appeals (CTA) via a petition for review within thirty (30) days.
Claim for Refund: If successful at any appellate level, file a formal claim for refund of the overpaid taxes with the local treasurer.
Injunction Against Sale of Property: If the dispute is pending and the locality threatens to sell the property at public auction for delinquency, the taxpayer may seek a court injunction, provided they can demonstrate a clear legal right and that the tax sale is premised on a disputed assessment.
