DO you own real property in the Philippines? Do you have an employee-representative entrusted to remit tax payments to the local government unit? What if I told you that your real property could be auctioned off and sold, without your knowledge, because your trusted employee failed to remit the tax payments to the LGU and appeared to have absconded with the money instead?
That is the factual backdrop of the case decided by the Supreme Court in GR 210894, promulgated on September 12, 2018.
In the said case, a married couple were registered owners of a condominium unit, which was assessed by a local government unit for nonpayment of real property taxes thereon after their designated employee-representative failed to remit the entrusted tax payments to the city and appeared to have absconded with the money instead. The property was eventually auctioned off and sold to a realty corporation.
The spouses wanted the auction sale to be declared void. A point of contention they raised was the fact that the notice of billing statements for real property were mistakenly sent to the wrong address. It was erroneously addressed to Unit 1407 instead of Unit 407.
The Supreme Court nullified the auction sale because of the apparently irregular conduct of proceedings by the LGU relative to the levy and sale of their property. The Supreme Court held that the spouses were in danger of losing their property without the benefit of due process. It further stated that there is no presumption of regularity that exists in any administrative action, which results in depriving a taxpayer of his property; due process of law must be followed in tax proceedings, because a sale of land for tax delinquency is in derogation of private property and the registered owner’s constitutional rights.
Interestingly, the Supreme Court did not stop at declaring the auction sale void. What is curious is the fact that it further stressed on the modus operandi lurking in the collection of real property taxes.
The Supreme Court emphasized that the power of the LGU to levy and auction properties for nonpayment of real property tax is prone to great abuse. It did not discount the possibility of irregularities committed by local government units or officials, done intentionally with the collusion of third parties and with the deliberate corrupt intent to appropriate valuable properties for themselves and profit therefrom.
While the act of sending “billing statements” and “notices of delinquency and levy” to the wrong address would seem to be simple and irrelevant technicality, it could be deliberate, under the guise of typographical lapses. And before the owners realize it, their properties have already been confiscated and sold by the LGUs or officials to so-called “innocent third parties” who are in fact their cohort in that MO.
This is the “barefaced robbery” that the Supreme Court warns us about. It goes without saying that not all LGUs or local government officials are involved in this dodgy scheme.
The author is a junior associate of Du-Baladad and Associates Law Offices (BDB Law), a member-firm of WTS Global.
The article is for general information only and is not intended, nor should be construed as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported therefore by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at firstname.lastname@example.org or call 403-2001 local 150.