LOCAL

GOVERNMENT TAX
(Atty. Raegan Capuno Lecture) Q: Is notice to affected tax payers/ persons required
before a tax ordinance may be passed?
A:
General Principles GR: Only ordinance and public hearing is mandatory.
XPN: Levy on Special Assessment which is a for of real
The Local Government Code took effect on Jan. 1, 1992. estate tax. (Sec.242)
nd
Father of LCG- Nene Pimentel 2
Q: Why is an ordinance important in the imposition of
Power of LGU to impose tax is a direct grant of the local taxes when the rates are already provided?
Constitution if it is outside ARMM; if within ARMM, the A: Because what was provided are only ceiling of rates, the
power to tax is delegated. purpose of the ordinance is in order to fix the rate.

PUBLICATION REQUIREMENT
Publication of the tax ordinance within 10 days after their
Local government taxation: approval, for 3 consecutive days in a newspaper of local
1. Local government taxation circulation provided that in provinces, cities, and
2. Real property taxation municipalities where there are no newspapers of local
circulation, the same may be posted in at least two (2)
Q: Is a real estate tax a local tax? conspicuous and publicly accessible places.
A: NO, it belongs to a different title under the LGC. Only
those in title 1 are local taxes. Note: If the tax ordinance or revenue measure contains
penal provisions as authorized in Article 280 of this Rule, the
Q: Is a real estate tax a tax imposed by the local gist of such tax ordinance or revenue measure shall be
government? published in a newspaper of general circulation within the
A: Yes province where the Sanggunian concerned belongs. (Art.
276, IRR of LGC)
Q: Can the national government impose real estate tax?
A: NO, under Sec.21, real estate tax is not one of the
national internal revenue taxes. Id it is not a national Q: If you want to challenge the legality or validity of the
internal revenue tax, the BIR does not collect that tax. ordinance, how and where will you go?
- If you want to pay your local taxes or real estate A: You cannot challenge an ordinance at anytime, you can
taxes, you don’t go to the BIR, you go to the only challenge it within 30 days from the effectivity of the
respective LGU. ordinance.
Go to the Secretary of Justice to initiate an action (this is
Q: What if si Mayor Estrada, sabi nya napapansin nya na the only action where the initiatory action is already an
ang daming panget dito sa Manila. Sabi ng Treasurer, appeal). However, the filing of an appeal to the Sec. of
magpasa daw sila ng ordinance na lahat ng panget Justice will not bar the effectivity of the tax ordinance.
papatawan ng 1% ng kanilang gross income tax. Nagpasa
sila ngayon ng Executive Order, pinirmahan ni Mayor, ng Upon receipt of the Secretary, he has 60 days to decide. In
kanyang chief of staff, pinublish sa newspaper of general case od adverse decision, you have a period of 30 days to
circulation. Is the EO a valid act of imposing tax? appeal to the court of competent jurisdiction (RTC), or if
after the lapse of 60 days and there is no decision issued,
A: NO, because the power to impose tax is vested with the you treat it as a denial and appeal to the court of competent
Sanggunian of the Province, Municipality, or Barangay. jurisdiction which is the RTC. RTC since the issue is the
(Sec.129 of LGC) The mayor may only lobby, but it is the constitutionality of an ordinance which is incapable of
Sanggunian who will pass an ordinace. pecuniary estimation.

Mandatory requirements (Sec.186): In case of adverse decision by the RTC, you go to the Court
1. There has to be an ordinance, not a mere of Tax Appeals in En Banc.
resolution; Read the case of Te vs Trampe
2. Public hearing which is mandatory.
Q: What are the two instances when you can go directly to
Q: Is public hearing required to impose tax? the CTA En Banc?
A: It depends. If the one imposing tax is Congress, public A:
hearing is not mandatory, they may or they may not. 1. In case of a decision of RTC involving local taxes;
However, in case of LGU, public hearing is required, it is and
mandatory. 2. In case of a decision of Central Board of
Assessment Appeals involving real estate taxes.

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 (c) Taxes on estates, inheritance, gifts, legacies and other
In case of adverse decision, go to the Supreme Court via acquisitions mortis causa, except as otherwise
Rule 45 within 30 days. provided herein;
-wala ng inheritance tax, abolished by PD 69.
*Payment under protest is only applicable in real estate tax, (d) Customs duties, registration fees of vessel and wharfage
walang payment under protest sa local tax. Payment under on wharves, tonnage dues, and all other kinds of
protest is specifically mentioned in Title 2, Sec. 252. Sec. customs fees, charges and dues except wharfage on
252 and there is no similar provision in Title 1. Therefore, wharves constructed and maintained by the local
your protest can go up tp the SC even w/o paying it. government unit concerned;
(e) Taxes, fees, and charges and other impositions upon
goods carried into or out of, or passing through, the
Fundamental Principles territorial jurisdictions of local government units in
the guise of charges for wharfage, tolls for bridges or
a) Taxation shall be uniform in each local government otherwise, or other taxes, fees, or charges in any form
unit; whatsoever upon such goods or merchandise;
-Palma Dev’t Corp vs Municipality of Mangas,
b) Taxes, fees, charges and other impositions shall be
Zamboanga: Nagpasa ng ordinance etong
equitable and based as far as practicable on the
municipality na lahat ng dadaan na goods ay
taxpayer’s ability to pay; be levied and collected only
magbabayad ng police surveillance fee. Sabi ng SC
for public purpose; not be unjust, excessive,
wag ng buwisan dahil dagdag pa yon sa cost of
oppressive, or confiscatory; not be contrary to law,
goods. Sec. 133 (e) prohibits the imposition, in the
public policy, national economic policy, or restraint of
guise of wharfage fees as well as other tax or
trade;
charges in any form whatsoever on goods and
c) The collection of local taxes, fees, charges and other merchandise. It is irrelevant if the fee imposed
impositions shall in no case be left to any private are actually for police surveillance, because any
person other form of imposition on goods passing
-A private individual is not allowed to collect a local tax, through the territorial jurisdiction of municipality
sa Treasurer dapat magbayad. However, a private is clearly prohibited.
individual may collect national internal revenue taxes
since there is no prohibition. Payment can be made in (f) Taxes, fees or charges on agricultural and aquatic
an authorized payment bank. products when sold by marginal farmers or fishermen;
- All local taxes, fees, and charges shall be collected by Q: Who are marginal farmers and fishermen?
the provincial, city, municipal, or barangay treasurer, A: Marginal Farmer or Fisherman refers to an
or their duly authorized deputies. (Sec.170) individual engaged in subsistence farming or fishing
d) The revenue collected shall inure solely to the benefit which shall be limited to the sale, barter or exchange
of and be subject to disposition by, the local of agricultural or marine products produced by himself
government unit, unless specifically provided therein; and his immediate family.
e) Each local government, as far as practicable, evolves a
progressive system of taxation. (Sec. 130, R.A. 7160). (g) Taxes on business enterprises certified to by the Board
of Investments as pioneer or non-pioneer for a period
of six (6) and four (4) years, respectively from the date
Common Limitations of registration;

Section 133. Common Limitations on the Taxing Powers of Note: However, the grant of the Income Tax Holiday
Local Government Units. - Unless otherwise provided for registered enterprises under EO 226 is subject to
herein, the exercise of the taxing powers of provinces, the following rules:
cities, municipalities, and barangays shall not extend to
the levy of the following: a. For six (6) years from COMMERCIAL OPERATION for
pioneer firms and for four (4) years for non-pioneer
(a) Income tax, except when levied on banks and other firms – fully exempt; and
financial institutions;
-Congress dapat. Pwede lang ang LGU pag banks and b. For a period of three (3) years from COMMERCIAL
financial institution. Pa gang bank chinallenge ang OPERATION, registered expanding firms shall be
ordinace dahil binubuwisan na sya ng national tax, entitled to exemption from income tax levied by the
walang double taxation don kasi different taxing National Government proportionate to their
authority. expansion under such terms and conditions as the
Board may determine. (EO 226, Title III, Article 39)
(b) Documentary stamp tax;

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 ---Kapag nag expire na yong 4 or 6 years, pwede ka ng ownership): not more than 50% of 1% of the total
buwisan ng LGU. consideration involved in the acquisition of the
---Under the Special Economic Zone Act, there are property (Sec. 135 R.A. 7160)
different tax incentive granted. Income tax holiday -one of the transfer taxes
(walang babayaran na income tax, sa ibang business
tax liable pa din) or Preferential Tax Rate of 5% on b. Tax on business of printing and publication: not
your Gross Income (in lieu of all other national and exceeding 50% of 1% of the gross annual receipt (Sec.
local taxes). 136 R.A. 7160)
- eto lang yong pwedeng subject ng business tax na
pwedeng i-impose ng provice
(h) Excise taxes on articles enumerated under the national
Internal Revenue Code, as amended, and taxes, fees or c. Franchise tax: not exceeding 50% of 1% of the gross
charges on petroleum products; annual receipt (Sec. 137 R.A. 7160)
-Pag nag impose na ang national, di na pwede ang -Smart was granted franchise by the government on
local. 1985, it states on its charter that exempt sya sa
franchise tax. Nung 1995, Globe naman, nabigyan din
(i) Percentage or value-added tax (VAT) on sales, barters or ng exemption. In 1994, the province of Davao passed
exchanges or similar transactions on goods or services an ordinance stating that all telecommunication
except as otherwise provided herein; companies that operates in Davao will be liable for
- Sec.143 (h) Pwede mag impose ng excise or VAT basta franchise tax. Both Smart and Globe operates in
wag mag exceed ng 2%. Sino ang pwede mag impose Davao, they are both claiming exemptions. Sino ang
ng business tax? Municipality and Cities by reference. exempted? Can Davao impose franchise tax to Smart
-Petron vs Malabon City- Di pwede mag impose ng and Globe?
excise tax ang municipalities or cities sa petroleum ---Globe lang ang exempted. Sec. 193 provides that
products. Sa ibang products pwede. exemptions granted before the effectivity of the LGC is
withdrawn. Therefore, since the exemption to Smart
(j) Taxes on the gross receipts of transportation contractors was given in 1985, it was lifted by LGC.
and persons engaged in the transportation of
passengers or freight by hire and common carriers by --Section 193. Withdrawal of Tax Exemption
air, land or water, except as provided in this Code; Privileges. - Unless otherwise provided in this Code,
-Pipelines are common carriers so not taxable. (FPIB vs tax exemptions or incentives granted to, or presently
City of Batangas) enjoyed by all persons, whether natural or juridical,
including government-owned or controlled
(k) Taxes on premiums paid by way or reinsurance or corporations are hereby withdrawn upon the
retrocession; effectivity of this Code.
(l) Taxes, fees or charges for the registration of motor
vehicles and for the issuance of all kinds of licenses or XPN:
permits for the driving thereof, except tricycles; 1. local water districts;
(m) Taxes, fees, or other charges on Philippine products 2. cooperatives duly registered under R.A. No.
actually exported, except as otherwise provided in the 6938;
LGC;(i.e. Sec. 143(c), LGC- municipalities may impose 3. non-stock and non-profit hospitals; and
taxes on exporters); 4. educational institutions.

(n) Taxes, fees, or charges, on Countryside and Barangay Before Jan.1, 1992- Exemptions/ incentives granted
Business Enterprises and cooperatives duly registered are LIFTED/ WITHDRAWN.
under R.A. No. 6810 and Republic Act Numbered Sixty- After Jan 1, 1992- It remains.
nine hundred thirty-eight (R.A. No. 6938) otherwise
known as the "Cooperative Code of the Philippines" ü Read the case of PLDT vs City of Davao
respectively; and
d. Tax on sand, gravel and other quarry resources: not more
(o) Taxes, fees or charges of any kind on the National than 10% of the fair market value per cubic meter.
Government, its agencies and instrumentalities, and Proceeds will be distributed as follows:
local government units. (Sec. 133, LGC)
-pero ang national pwede buwisan ng local i. Province- 30%
Taxing Power of Provinces ii Component city or municipality where it was
extracted- 30%
a. Tax on transfer of real property ownership (sale, iii. Barangay where it was extracted- 40% (Sec. 138
donation, barter, or any other mode of transferring R.A. 7160)

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 may deem proper to tax: Provided, That on any business
ü Read Province of Bulacan vs Pagdaganan subject to the excise, value-added or percentage tax under
the National Internal Revenue Code, as amended, the rate
e. Professional tax: not exceeding P300.00. (Sec. 139 R.A. of tax shall not exceed two percent (2%) of gross sales or
7160) receipts of the preceding calendar year.
- Can a municipality impose professional tax? Yes.
- Section 142. Scope of Taxing Powers. - Except as b. Fees and charges on business and occupation except
otherwise provided in this Code, municipalities may those reserved for the province. (Sec. 147 R.A. 7160);
levy taxes, fees, and charges not otherwise levied by c. Fees for sealing and licensing of weights and measures.
provinces. (Sec. 148 R.A. 7160)
- Section 147. Fees and Charges. - The municipality d. Fishery rentals, fees and charges. (Sec. 149 R.A. 7160)
may impose and collect such reasonable fees and
charges on business and occupation and, except as
reserved to the province in Section 139 of this Code, Taxing Power of Cities
on the practice of any profession or calling,
commensurate with the cost of regulation, inspection For cities – May levy taxes, fees and charges which the
and licensing before any person may engage in such province and municipality may impose provided:
business or occupation, or practice such profession or
calling. a. That the taxes, fees and charges levied and collected
of highly urbanized and independent component cities
Differentiate professional tax imposed by the shall accrue to them, and
province and that of municipality. Sec.139 vs
Sec.147. b. That the rate that the city may levy may exceed the
maximum rates allowed for the province or
1. Sec. 139 is a professional tax impose by a province municipality by not more than 50% except the rates of
while in Sec.147 it is imposed by a municipality; professional and amusement taxes. (Sec. 151 R.A.
2. The professional tax imposed by the province 7160)
only pertains to professions with examination
while in Sec.147 it pertains to all professions with
or without examination; Taxing Power of Barangays
3. In Sec.139, the professional tax that may be
imposed must not exceed P300, while in Sec.147, 1. Taxes on stores and retails with fixed business
there is no limit as long as it is reasonable enough establishment with gross sales of the preceding
for regulation. calendar year of P50,000 or less, in the case of cities
and P30,000 or less, in the case of municipalities, at a
f. Amusement tax: not more than 30% of the gross receipts. rate not exceeding 1% on such gross sales or receipts;
(Sec. 140 R.A. 7160) 2. services rendered;
- Read PBA vs Quezon City: PBA is not liable for 3. barangay clearances;
amusement tax, even though they are not in the list as 4. commercial breeding of fighting cocks, cockfights
amusement in NIRC. Since matagal na ang Tax Code, di and cockpits;
na nasama ang basketball dun kasi wala pa namang 5. places of recreation which charge admission fees;
PBA noon at di na din naisama sa amendment dahil na
carry over nlang ng nacarry over yong list. 6. Billboards, signboards, neon signs and outdoor
advertisements. (Sec. 152 R.A. 7160)
g. Annual fixed tax for every delivery truck or van of
manufacturers or producers, wholesalers of, dealers,
or retailers in certain products: not exceeding P500.00 *Of this 4, it is the city that is the most powerful when it
(Sec. 141 R.A. 7160) comes to tax since it can impose taxes that may be imposed
by provinces and municipalities, they may also increase the
rate to not more than 50%.
Taxing Power of Municipalities *Of all this 4, only municipalities may impose business tax,
the province cannot. Except Sec. 136, Tax on the business
May levy taxes, fees, and charges not otherwise levied by of printing and publication. All other taxes municipality lang
provinces, except as provided for in the LGC. ang pwedeng mag impose.
*Can a city impose business tax? Yes, because Sec. 151
a. Tax on business. (Sec. 143 R.A. 7160); states that cities may impose charges which municipalities
-(h) On any business, not otherwise specified in and provinces may impose. Since municipality may impose
the preceding paragraphs, which the sanggunian concerned business taxes, then cities by virtue of Sec.151 may also
impose business taxes.

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 etc. has two or office. or municipality
more where the factory
Situs of Taxation (Sec.150) factories, is.
project offices, 2. 40% to the city
ü Sec. 42 NIRC- whether the income is within plants or or municipality
or without the Philippines plantations where the
ü Sec. 84- Estate tax located in plantation is
ü Sec.98- Donor’s tax different located.
ü Sec.104- Estate and Donor’s localities.
The 70% shall be
ü Sec.150- LGC pro-rated among
SITUATION RECOGNITION PAYMENT OF TAX the localities
OF SALE where such
With branch or All sales made The tax shall be factories, project
sales office or in the locality payable to the city offices, plants and
warehouse where the or municipality plantations are
branch or where the same is located based on
office or located. their respective
warehouse is volumes of
located production.

Where there is The The tax shall
no branch or municipality accrue to the city Example:
sales office or where the sale or municipality o Principal office- Manila
warehouse or transaction where said Factory- Laguna
is made. principal office is - 30% recorded sa Manila then 70% is recorded sa
The sale shall located. Laguna.
be recorded in -If 1M ang income:
the principal Manila: P300,000
office along Laguna: P700,000
with the sales
made by said o Principal office- Manila
principal office Factory- Laguna
Branch Office- a fixed place in a locality which conducts Plantation: Batangas
operations of the business as an extension of the -30% recorded sa Manila, then ung 70 distributed
principal office. sa place ng factory at plantation. Yung 70% i-pro-
Principal Office- head or main office of the business rate mo, 60% sa place ng factory, 40% sa
appearing in pertinent documents submitted to the SEC plantation.
and specifically mentioned in the Articles of If 1M ang income:
Incorporation. Manila: P300,000
Where there is All sales shall Of all sales Laguna: 700,000 x .60= P420,000
a factory, be recorded in recorded in the Batangas: 700,000 x .40= P280,000
project office, the principal principal office:
plant or office. 1. 30% taxable to Factory: where you convert your raw materials to finish
plantation in the city or product
pursuit of municipality where Plantation: Plant then harvest, harvest, harvest. i.e fruit
business the principal office bearing trees
is located. Farm: Plant then harvest. i.e upo, kalabasa, labanos,
If plantation is All sales shall 2. 70% taxable to mustasa, sibuyas, kamatis
at a place be recorded in the city or
other than the principal municipality where
where the office. the factory, plant, Community Tax
factory is etc. is located.
located *di na to considered as evidence of competent identity for
The 70% (above) notarial practice
If All sales shall shall be divided as
manufacturer, be recorded in follows: Q: What is the nature of community tax?
contractor, the principal 1. 60% to the city A: The community is a poll or capitation tax imposed upon

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residents of a city or municipality. It replaced the former 160, LGC)
residence tax.
Q: Who are exempted from paying community tax?
Q: Who levies community tax? A:
A: It may be levied by a city or municipality but not a 1. Diplomatic and consular representatives;
province nor barangay. Yong binabayad sa barangay 2. Transient visitors when their stay in the Philippines does
nireremit din sa municipality or city. not exceed three (3) months. (Sec. 159, LGC)

Q: Who are liable to pay community tax?
A: Remedies
1. Individuals –Every inhabitant of the Philippines eighteen
(18) years of age or over: -Yong collection in case of ordinary circumstance expressly
a. who has been regularly employed on a wage or stated na 5yrs.
salary basis for at least thirty (30) consecutive
working days during any calendar year; or Q: What if nakatanggap ka ng assessment based doon sa
b. who is engaged in business or occupation; ordinance na 1% tax para sa mga panget sa Manila?
c. or who owns real property with an aggregate A:
assessed value of P1,000.00 or more; or -If you will challenge the legality or constitutionality of a tax
d. who is required by law to file an income tax return. ordinance, appeal to the Sec. of Justice. Kung yong protest
(Sec. 157, LGC) mo e dahil invalid or unconstitutional yong ordinance or
may violation ng due process, double taxation, equal
2. Juridical Persons –Every corporation no matter how protection.
created or organized, whether domestic or resident foreign, - If you are challenging the assessment itself, you go to the
engaged in or doing business in the Philippines (Sec. 158, Treasurer kung sino nag issue nung assessment. Kung yong
LGC) protest mo is mali na computation, di ka liable.

Q: How much are they liable to pay? -After receiving a notice of assessment, within the period of
A: 30 days from the receipt of notice, you protest it to the
1. Individuals – Treasurer.
a. Basic: Five pesos (P5.00) -The Treasurer has a period of 60 days within which to
b. Additional: Additional tax of One peso (P1.00) for decide. In case of adverse decision, go to a court of
every One thousand pesos (P1,000.00) of income competent jurisdiction, the RTC, within the period of 30
regardless of whether from business, exercise of days. (Sec.195)
profession or from property which in no case shall - In case of adverse decision of the RTC, go to the CTA En
exceed Five thousand pesos (P5,000.00). Banc within 15 days under Rule 43.
- Then SC via Rule 45.
Note: In case of husband and wife, the additional tax shall
be based on the total property, gross receipts or earnings
owned or derived by them.

2. Juridical persons – additional tax, which, in no case, shall
exceed Ten thousand pesos (P10,000.00) in accordance
with the following schedule:
a. For every Five thousand pesos (P5,000.00) worth of
real property in the Philippines owned by it during
the preceding year based on the valuation used for
the payment of real property tax under existing
laws, found in the assessment rolls of the city or
municipality where the real property is situated -
Two pesos (P2.00); and
b. For every Five thousand pesos (P5,000.00) of gross
receipts or earnings derived by it from its business
in the Philippines during the preceding year - Two
pesos (P2.00). (Sec. 157 & 158, LGC)

Q: Where is community tax paid?
A: Residence of the individual, or in the place where the
principal office of the juridical entity is located (Sec.

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 specially benefited by public works projects or
Notice of Assessment was received. improvements funded by the local government unit
concerned: Provided, however, That the special levy shall
not exceed sixty percent (60%) of the actual cost of such
If you will challenge the validity or constitutionality of the projects and improvements, including the costs of acquiring
ordinance, appeal to the Secretary of Justice. If the assessment
land and such other real property in connection therewith:
itself, to the Treasurer who issued the assessment.
Provided, further, That the special levy shall not apply to
lands exempt from basic real property tax and the
remainder of the land portions of which have been donated
60 days for the Secretary or Treasurer to decide.
to the local government unit concerned for the
construction of such projects or improvements.

Upon receipt of adverse decision, you have 30 days to appeal Ø Real property tax and special levy for special
to court of competent jurisdiction, RTC. educational fund refers to all types of real property
whether it is a machinery or equipment classified as
real property.
If talo, you have 15 days to appeal to CTA En Banc via Rule 43.
Ø If idle land or special assessment, it only pertains to a
land and not to any other types of real properties.

Real Levy on Additio Special
If talo, go to SC via Rule 45. Proper Special nal Levy Levy for
ty Tax Educati on Idle Special
on Fund Lands Assessm
ent
Province 1% 1% 5% 60%
Real Property Taxation City 2% 2% 5% 60%
Municipal 2% 2% 5% 60%
Subject matter: Real property ity w/in
Kinds: Metro
1. Real estate tax Manila
2. Special levy for special educational fund Municipal x x x 60%
3. Additional levy for idle lands ity
4. Special levy for special assessment outside
Metro
Section 232. Power to Levy Real Property Tax. - A province Manila
or city or a municipality within the Metropolitan Manila
Area my levy an annual ad valorem tax on real property *Municipality within Metro Manila, isa nalang, Pateros.
such as land, building, machinery, and other improvement
not hereinafter specifically exempted. - From city to province- Income is required and a choice -
between population OR land area
Section 235. Additional Levy on Real Property for the Special - From municipality to city- Income is required and a choice
Education Fund. - A province or city, or a municipality within between population OR land area
the Metropolitan Manila Area, may levy and collect an - Creation of municipality- Income + Population + Land Area
annual tax of one percent (1%) on the assessed value of real
property which shall be in addition to the basic real
property tax. The proceeds thereof shall exclusively accrue Fundamental Principles (Sec. 198)
to the Special Education Fund (SEF).
a) Real property shall be appraised at its current and fair
Section 236. Additional Ad Valorem Tax on Idle Lands. - A market value.
province or city, or a municipality within the Metropolitan - Relate to Section 201. Appraisal of Real Property.
Manila Area, may levy an annual tax on idle lands at the rate - All real property, whether taxable or exempt,
not exceeding five percent (5%) of the assessed value of the shall be appraised at the current and fair market
property which shall be in addition to the basic real value prevailing in the locality where the property
property tax. is situated. The Department of Finance shall
promulgate the necessary rules and regulations
Section 240. Special Levy by Local Government Units. - A for the classification, appraisal, and assessment of
province, city or municipality may impose a special levy on real property pursuant to the provisions of this
the lands comprised within its territorial jurisdiction Code.

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 and a land.
b) Real property shall be classified for assessment July 1: Pinarentahan nila kay ABC Corp. and used it for
purposes on the basis of its actual use. commercial purpose.
- Section 217. Actual Use of Real Property as Basis
for Assessment. - Real property shall be classified, Inassess ng LGU si ABC Corp for real property tax. Sabi ni
valued and assessed on the basis of its actual use ABC exempt ang property sa real property tax because
regardless of where located, whoever owns it, ginagamit for religious purposes.
and whoever uses it.
Is ABC Corp liable to pay tax?
c) Real property shall be assessed on the basis of a
Uniform classification within each local government A: NO. The basis for the determination is the the actual use
unit. of the real property on Jan. 1. The actual use of the property
d) The appraisal, assessment, levy and collection of real on Jan. 1 is religious purpose, once it accrued on Jan. 1 as a
property tax shall not be let to any private person. real property for religious purpose, it covers the whole year
e) The appraisal and assessment of real property shall be already. Since exempt ang real property used for religious
Equitable. (Sec. 197, LGC) purpose sa real property tax, buong year ay exempt ka. So
hindi liable ang ABC Corp.
Note: Real Property shall be classified, valued and assessed
on the basis of its actual use regardless of where located,
whoever owns it and whoever uses it. (Sec. 217, LGC) Q: Jan. 1: XYZ Corp owns and uses building and land.
July 1: Indian monks leased the property.
Are the Indian monks liable to real property tax?
Properties Exempt from Real Property Taxation (Sec 234)
A: YES. The basis for the determination is the actual use of
(a) Real property owned by the Republic of the Philippines the real property on Jan. 1. The actual use of the property
or any of its political subdivisions except when the on Jan. 1 is commercial purpose. Since di naman exempt
beneficial use thereof has been granted, for consideration ang real property used for commercial purpose sa real
or otherwise, to a taxable person; property tax, buong year ay di sya exempt, so liable ang
- Doctrine of Beneficial User Rule Indian monks kahit pa later on ginamit na sya for religious
- Case of Ninoy Aquino International Airport: purpose kasi Jan. 1 ang basis ng determination.
Kung may nag le-lease at taxable person, sya ang
mabubuwisan. *So the important question is “Ano ang actual use at the
time the real property tax accrued (Jan. 1)”?
(b) Charitable institutions, churches, parsonages or Rationale: Otherwise, every time mapapalitan ang nagle
convents appurtenant thereto, mosques, non-profit or lease or owner, panibagong kwenta nanaman ng buwis
religious cemeteries and all lands, buildings, and
improvements actually, directly, and exclusively used for Basis: (for the purpose of answering the exam, use only
religious, charitable or educational purposes; Sec.246)

(c) All machineries and equipment that are actually, directly Section 198. Fundamental Principles. - The appraisal,
and exclusively used by local water districts and assessment, levy and collection of real property tax shall be
government owned or controlled corporations engaged in guided by the following fundamental principles:
the supply and distribution of water and/or generation and
transmission of electric power; (a) Real property shall be appraised at its current and fair
market value;
(d) All real property owned by duly registered cooperatives (b) Real property shall be classified for assessment purposes
as provided for under R.A. No. 6938; and on the basis of its actual use;

(e) Machinery and equipment used for pollution control Section 201. Appraisal of Real Property. - All real property,
and environmental protection. Except as provided herein, whether taxable or exempt, shall be appraised at the
any exemption from payment of real property tax current and fair market value prevailing in the locality
previously granted to, or presently enjoyed by, all persons, where the property is situated. The Department of Finance
whether natural or juridical, including all government- shall promulgate the necessary rules and regulations for the
owned or controlled corporations are hereby withdrawn classification, appraisal, and assessment of real property
upon the effectivity of this Code. pursuant to the provisions of this Code.

Section 217. Actual Use of Real Property as Basis for
Q: Jan. 1: Order of Pink Sisters owns and uses a building Assessment. - Real property shall be classified, valued and

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assessed on the basis of its actual use regardless of where Remedies
located, whoever owns it, and whoever uses it.
If you want to challenge the assessment of real property
Section 234. Exemptions from Real Property Tax. - The tax:
following are exempted from payment of the real property
tax: Pay the real property tax first. (Payment under Protest under
(a) Real property owned by the Republic of the Philippines Sec.252)
or any of its political subdivisions except when the
beneficial use thereof has been granted, for consideration
or otherwise, to a taxable person; File a protest to the Treasurer within 30 days from payment
(b) Charitable institutions, churches, parsonages or
convents appurtenant thereto, mosques, non-profit or
religious cemeteries and all lands, buildings, and Treasurer has 60 days to decide
improvements actually, directly, and exclusively used for
religious, charitable or educational purposes;
(c) All machineries and equipment that are actually, directly You can file an appeal within the period of 60 days from the
and exclusively used by local water districts and receipt of notice to the LBAA
government owned or controlled corporations engaged in
the supply and distribution of water and/or generation and
transmission of electric power; LBAA has 120 days to decide
(d) All real property owned by duly registered cooperatives
as provided for under R.A. No. 6938; and
(e) Machinery and equipment used for pollution control Appeal to the CBAA within the period of 30 days
and environmental protection.

Section 246. Date of Accrual of Tax. - The real property tax
for any year shall accrue on the first day of January and from CTA En Banc within the period of 15 days
that date it shall constitute a lien on the property which
shall be superior to any other lien, mortgage, or
encumbrance of any kind whatsoever, and shall be SC within a period of 15 days.
extinguished only upon the payment of the delinquent tax.




If you want to challenge a revenue regulation you go to
the Secretary of Finance. (Sec.4, NIRC)

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