FACTS:

Petitioner, registered owners of real properties in Marikina City, with consent of his wife, conveyed by deed of assignment, the properties to the Saints and Angels Realty Corp. (SARC), by virtue of incorporations, in exchange for shares  of stock therein with a par value of P2,000,000.0, placed in San Juan’s name and the remaining par value in the name of his wife. Respondents’ representatives went to the City Treasurer’s Office of Marikina to pay the transfer tax based on the consideration stated in the deed of assignment. City Treasurer Castro informed him however that the tax due is based on the fair market value of the property.

Petitioner protested the basis of the tax due. To which, the respondent replied stating that in cases of transfer or real property not involving monetary consideration, it is certain that the fair market value or the zonal value of the property is the basis of the  tax rate.

Petitioner filed before the RTC of Marikina a petition for mandamus and damages against respondent in his capacity as City Treasurer, among others, praying that respondent be compelled to “perform a ministerial duty to accept payment of transfer tax based on the actual consideration” of the transfer and assignment”, citing Section  135 of the LGC.

ISSUE:

When can a protest of assessment be availed of?

RULING:

Under Section 195 of the Local Government Code, a taxpayer who disagrees with a tax assessment made by a local treasurer may file a written protest thereof:

SECTION 195.  Protest of Assessment. – When the local treasurer or his duly authorized representative finds that the correct taxes, fees, or charges have not been paid, he shall issue a notice of assessment stating the nature of the tax, fee, or charge, the amount of deficiency, the surcharges, interests and penalties.  Within sixty (60) days from the receipt of the notice of assessment, the taxpayer may file a written protest with the local treasurer contesting the assessment; otherwise, the assessment shall become final and executory.  The local treasurer shall decide the protest within sixty (60) days from the time of its filing.  If the local treasurer finds the protest to be wholly or partly meritorious, he shall issue a notice cancelling wholly or partially the assessment.  However, if the local treasurer finds the assessment to be wholly or partly correct, he shall deny the protest wholly or partly with notice to the taxpayer.  The taxpayer shall have thirty (30) days from the receipt of the denial of the protest or from the lapse of the sixty-day (60) period prescribed herein within which to appeal with the court of competent jurisdiction, otherwise the assessment becomes conclusive and unappealable.

That petitioner protested in writing against the assessment of tax due and the basis thereof is on record as in fact it was on that account that respondent sent him the above-quoted July 15, 2005 letter which operated as a denial of petitioner’s written protest.

Petitioner should thus have, following the earlier above-quoted Section 195 of the Local Government Code, either appealed the assessment before the court of competent jurisdiction[15] or paid the tax and then sought a refund.

Petitioner did not observe any of these remedies available to him, however.  He instead opted to file a petition for mandamus to compel respondent to accept payment of transfer tax as computed by him.