[This item has two questions.] Fides filed a case before the Regional Trial Court (RTC) questioning the authority of the local government unit (LGU) to assess real property taxes (RPT) on a certain property she owns. She also prayed for a writ of preliminary injunction (WPI) to restrain the LGU from collecting the RPT. The LGU moved to dismiss Fides’ case arguing that since the matter involves RPT, her remedy was to file an appeal to the Local Board of Assessment Appeals.
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No, the LGU is not correct. Under jurisprudence, an appeal to the Local Board of Assessment Appeals is required only when the taxpayer questions the reasonableness or correctness of an assessment. Where the taxpayer directly questions the
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Quick check
When is prior recourse to the Local Board of Assessment Appeals required before filing a judicial action?
Appeal to the Local Board of Assessment Appeals is required only when the taxpayer challenges the factual correctness or reasonableness of the assessment.
Which court has jurisdiction over an ordinary civil action directly challenging an LGU's legal authority to levy real property taxes?
The Regional Trial Court has original jurisdiction over civil actions questioning the legal authority of a local government unit to levy taxes.
Does the prohibition against issuing injunctions to restrain tax collection apply to local real property taxes under the Local Government Code?
The statutory prohibition against issuing injunctions to restrain tax collection applies to national internal revenue taxes, not local real property taxes.
What type of question is raised when a taxpayer asserts that an LGU has no statutory power to assess real property tax on a specific property?
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What is the legal effect if a taxpayer prematurely files a court action challenging the correctness of an assessment without appealing to the LBAA?
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1. Exhaustion of Remedies
Under the Local Government Code, the general rule requires taxpayers to exhaust administrative remedies by appealing real property tax assessments to the Local Board of Assessment Appeals before resorting to judicial action. However, this administrative doctrine applies exclusively when the taxpayer challenges the factual reasonableness, correctness, or amount of the assessment. When a taxpayer directly attacks the legal authority and jurisdiction of the local government unit to impose and collect the tax, exhaustion of administrative remedies is not required, and direct judicial recourse to the Regional Trial Court is legally proper.
2. Authority to Tax
A direct challenge to the authority and power of a local government unit to levy real property taxes raises a purely legal question. In such instances, administrative bodies like the Local Board of Assessment Appeals lack competence and jurisdiction to pass upon the legality or constitutionality of tax ordinances or municipal taxing powers. Consequently, requiring a taxpayer to undergo administrative proceedings before appealing to the courts would be useless and inefficient, justifying immediate judicial intervention through a complaint for injunction or nullification filed with the trial court.
3. Injunction Against Taxes
While Section 218 of the National Internal Revenue Code prohibits courts from issuing injunctions to restrain the collection of national internal revenue taxes, no similar statutory prohibition exists under the Local Government Code regarding local real property taxes. Regional Trial Courts possess judicial authority to issue writs of preliminary injunction to restrain local government units from collecting real property taxes, provided the applicant satisfies the essential legal requisites under Rule 58 of the Rules of Court, particularly demonstrating a clear legal right and urgent necessity to prevent irreparable damage.