CHAPTER 1: Real Property Taxation In General

Constitutional underpinnings
• Article X, Section 5 of the 1987 Philippine Constitution
• Consistent with State policy to guarantee autonomy of local governments
Fundamentals principles of real property taxation LGC SEC. 198
• Real property shall be appraised at its current & fair market value
• Real property shall be classified for assessment purposes on the basis of its actualuse
• Real property shall be assessed on the basis of uniform classification within each LGU
• Appraisal, assessment, levy & collection of real property tax shall not be let to any private person
• Appraisal & assessment of real property shall be equitable
Multiple Choice
The appraisal, assessment, levy and collection of real property tax shall be guided by the following
principles. Which statement does not belong here?
a. Real property shall be appraised at its current and fair market value
b. Real property shall be classified for assessment purposes on the basis of its actual use
c. Real property shall be assessed on the basis of a uniform classification within each local
political subdivision
d. The appraisal and assessment of real property shall be based on audited financial
statements of the owner
Q&A
The real property of Mr. and Mrs. Angeles, situated in a commercial area in front of the public
market, was declared in their Tax Declaration as residential because it had been used by them as their
family residence from the time of its construction in 2000. However, since January 2010, when the
spouses left for the United States to stay there permanently with their children, the property has been
rented to a single proprietor engaged in the sale of appliances and agri-products. The Provincial
Assessor reclassified the property as commercial for tax purposes starting January 2012. Mr. & Mrs.
Angeles appealed to the Local Board of Assessment Appeals contending that the Tax Declaration
previously classifying their property as residential is binding. Do you think this appeal will be decided
in favor of the spouses? - NO
Basis of real property taxation LGC SEC. 217
• Real property shall be classified, valued and assessed on the basis of ACTUAL USE regardless of
where located, whoever owns it and whoever uses it
Basis for exemption of real property
• ACTUAL USE and not ownership
• Property actually used for religious, charitable or educational purposes shall be exempt even if
owned by a NON EXEMPT person

Nature of Real Property Tax

• Direct tax
• Ad valorem tax
• Local tax
• Imposed on the USE and not ownership
• Progressive in character
LGC does not define real property
•LGC merely states that an annual ad valorem tax may be levied on real property such as land,
building, machinery and other improvement LGC SEC. 232
Real property defined for real property tax purposes
• Those defined as immovables in Article 415 of the Civil Code
• Personal property which are essential & principal elements of business conducted and is attached to
an immovable (land or building) by one who is not the owner of the land or building
• Machinery, including mobile equipment, which are essential to an industry
Immovables in Article 415 of the Civil Code
• Land, buildings, roads and constructions of all kinds adhered to the soil
• Trees, plants & growing fruits while they are attached to the land
• Everything attached to an immovable in a fixed manner
• Statutes, reliefs, paintings or other objects placed in buildings or land
• Machinery, receptacles, instruments or implements in buildings or land
• Animal houses, pigeon houses, beehives, fish ponds or breeding places
• Fertilizer actually used on a piece of land
• Mines, quarries and slag dumps
• Docks and structures
• Contracts for public works, servitudes & other real rights over immovable property
Improvement
• Valuable addition made to a property or an amelioration in its condition, amounting to more than a
mere repair or replacement of parts
• Intended to enhance value, beauty or utility or to adapt it for new or further purposes
Machinery
• Embracing machines, equipment, mechanical contrivances, instruments, appliances or apparatus
which may or may not be attached, permanently or temporarily to a real property

MERALCO pipeline is real property

• The pipeline is installed by MERALCO from Batangas to Manila for conveying petroleum and is
considered real property tax purposes
Gasoline station equipment & machineries
• Subject to real property tax
• Includes underground tanks, elevated water tanks, gasoline pumps, computing pumps, car washers,
car lifts, air compressors, tire inflators & the like
Incidentals are not real property
• Used only for expediency to facilitate or improve services such as:
a. Cash registers, typewriters used by hotels
b. Forklifts, jeep-wagons, IBM machines used by airline companies
c. Delivery trucks, adding machines used by liquor & soft drink manufacturers
d. Tools & equipment used by a transport company in its service shop
True or False
Power barges are considered real property for real property taxation purposes. - TRUE
Q&A
Ilocos Bus Company, a transportation company with a garage for its buses, maintains in said garage
built on a land owned by it, a repair shop, blacksmith and carpentry shop and machineries and
equipment sitting on cement or wooden platforms, which can be moved around and about in the repair
shop. Are the machineries and equipment assessable for real property tax purposes? - YES
Q&A
A gasoline station company installed gasoline stations located at a leased land. The stations consisted
of machines and equipment, attached or affixed to the said station. Under the lease contracts, the
lessors of the land do not become the owners of the machines & equipment. The city assessor of
Pasay City considered the equipment & machines taxable realty & imposes realty taxes on the
assessed value thereof. Is the City Assessor correct in declaring the machines & equipment taxable
realty? – YES

CHAPTER 2: Imposition of Real Property Tax

Laws governing real property taxation
• Article X, Section 5 of the 1987 Philippine Constitution
• RA 7160 or the Local Government Code which sets guidelines & limitations & as mandated in
Article X, Section 3 of Constitution
• Presidential Decree No. 921 dividing Manila into 4 treasury & assessment districts
Real Property Taxation in RA 7160
• Found in Title 2 Book II of RA 7160
• Spans Section 197 to 283 of the code
• Repealed Presidential Decree 464 which is the former Real Property Tax Code
Real Property Taxes
• Direct Taxes
• Imposed on the privilege to use real property such as land, building, machinery and other
improvements
Kinds of Impositions on real property
a. Real Property Taxes
1.Basic real property tax (2% dli pa sure)
2.Special Education Fund –additional 1% on assessed value LGC SEC. 235
3.Ad valorem tax on idle lands –not exceeding 5% on assessed value LGC SEC. 236
b. Special levy by Local Government Units LGC SEC. 240
True or False
Special levy is not a tax. - TRUE
Local legislative bodies that could exercise the power of real property taxation LGC
SEC. 232
• Sangguniang Panlalawigan
• Sangguniang Panglungsod
• Sangguniang Bayan of a municipality within the Metropolitan Manila Area
Multiple Choice
One of the local government units below does NOT have the power to impose real property tax.
Which among them?
a. Compostela, Cebu
b. Davao City
c. Tarlac Province
d. Malabon, Metro Manila

Local legislative ordinances involving real property taxation

• Fixing uniform rate of basic real property tax (RPT) LGC SEC. 233
• Imposing additional levy for Special Education Fund (SEF) LGC SEC. 235
• Levying additional ad valorem tax on idle lands LGC SEC. 236
• Imposing special levy on lands benefitted by public works LGC SEC. 240
• Granting discount for advance payments of RPT & SEF LGC. SEC. 251 (discount not exceeding
20%)
• Stating fair market values of different classes of real property LGC SEC. 212
• Amendment to fair market values of real property LGC. SEC. 214
• Classifying real property as residential. Commercial, industrial, mineral, timberland or special LGC
SEC. 215
Rates of Levy LGC SEC. 233
• Province –not exceeding 1% of the assessed value of real property
• City or municipality within Metropolitan Manila Area –not exceeding 2%of assessed value of real
property
Distribution of Proceeds LGC SEC. 271
• Covers proceeds from:
a. Basic real property tax including interest thereon
b. Proceeds from use, lease or disposition, sale or redemption of property acquired at public
auction
• In case of provinces:
(1) Province –35% shall accrue to general fund
(2) Municipality –40% ”
(3) Barangay –25% ”
• In case of cities:
(1) City –70% shall accrue to general fund
(2) 30% shall be distributed among component barangays:
(a) 50% to the barangay where property is located
(b) 50% shall accrue equally to all component barangays of the city

• In case of municipality within Metropolitan Manila Area:

(1) Metropolitan Manila Authority –35% shall accrue to general fund
(2) Municipality –35% shall accrue to general fund
 (3) 30% shall be distributed to component barangays:
(a) 50% to the barangay where property is located
(b) 50% shall accrue equally to all component barangays of the city

• The share of each barangay shall be released to its treasurer without need of any further action
within 5 days after end of every quarter
• Not subject to lien or holdback for whatever purpose
Disposition of Special Education Fund (SEF)
• The 1% SEF shall be automatically released to the local school boards
• In case of provinces, proceeds shall be divided equally between provincial and municipal school
boards
Uses of Special Education Fund (SEF)
School boards shall only use SEF for the following:
• Operation and maintenance of public schools
• Construction and repair of school buildings, facilities and equipment
• Educational research
• Purchase of books and periodicals
• Sports development
Additional ad valorem tax on idle land
• 5% of assessed value in addition to basic real property tax
• Purposes:
• To penalize owners who do not use their property productively
• To encourage utilization of land resources in order to contribute to national development
What are considered as idle lands LGC SEC. 237
• Agricultural lands, more than 1 hectare in area, ½ of which remained uncultivated or unimproved,
except:
a) Those planted w/ at least 50 permanent or perennial trees
b) Those actually used for grazing
• Lands, other than agricultural, located in city or municipality
a) More than 1,000 square meters in area
b) ½ of which remained unutilized or unimproved

• Residential lots in subdivision, regardless of area:

a) If ownership has been transferred, individual owners shall be liable
b) If ownership is not yet transferred to buyer, subdivision developer shall be liable
Disposition of proceeds from tax on idle lands LGC SEC. 237
• It shall accrue to the general fund of the province or city where the land is located
• For municipality within Metro Manila area, proceeds shall accrue equally to Metropolitan Manila
Authority and municipality where land is located
Idle lands exempt from tax LGC SEC. 238
• Owner is not able to improve, utilize or cultivate them due to:
a) Force majeure
b) Civil disturbance
c) Natural calamity
d) Any cause or circumstance
Listing of idle lands LGC SEC. 239
• Provincial, city or municipal assessor shall make and keep an updated record of all idle lands located
within his jurisdiction
• Copy of listing shall be furnished to treasurer for him to notify owners about idle tax imposition
Multiple Choice
Which among the following real property may be subject to the ad valorem tax on idle land?
a. A vacant 120 square meter residential lot located in an approved subdivision
b. 2 hectares agricultural land w/ nothing planted except 100 fruit trees
c. 3 hectares uncultivated land which for the time being is used for grazing cattle
d. 1,200 square meter residential lot on which a house with 120 square meter floor area is constructed
and the rest is used by the owner as garden
Special levy by LGUs
• Imposed on lands benefitted by public works, projects or improvements funded by LGU
• Does not exceed 60% of actual cost of project
• Exemption:
a. Lands exempt from basic real property tax
b. Remainder of land donated to local government unit for the construction of the project
Ordinance imposing special levy LGC SEC. 241
• Shall describe nature, extent & location of project
• State estimated cost
• Specify metes and bounds by monuments and lines
• Annual installments shall not be less than 5 nor more than 10 years

Imposition of special levy requires public hearing

• Sanggunian shall conduct public hearing before enactment of ordinance imposing special levy
• LGC SEC. 242

Fixing the amount of special levy

• Special levy shall be apportioned, computed and assessed according to assessed valuation of lands
affected as shown in books of assessor
• LGC SEC. 243
Disposition of proceeds from special levy
• Shall accrue to the general fund of the LGU which financed the public works, projects or
improvements
Taxpayers’ Remedies against special levy
• The landowner can appeal to Local Board of Assessment Appeals and to Central Board of
Assessment Appeals as provided in Sections 226 to 231 of Local Government Code
CHAPTER 3: Exemption from Real Property
Taxes Basis of exemptions from payment of real
property taxes a) The 1987 Philippine Constitution
b) Provisions of RA 7160
c) Provisions of special laws
d) Principle of comity in international law
e) Local tax exemption ordinances
Constitutional Tax Exemptions Article VI, Section 28(3) of
Constitution Exempt from real property tax:
A) Charitable institutions
b) Churches & appurtenant parsonages or convents, mosques
c) Non-profit cemeteries
d)All lands, buildings & improvements actually, directly & exclusively used for religious, charitable
or educational purposes
Charity
• A gift, to be applied consistently w/ existing laws, for the benefit of an indefinite number of persons,
either by bringing their minds & hearts under the influence of education or religion, by assisting them
to establish themselves in life or otherwise lessening the burden of government
Determinants of whether an enterprise is a charitable institution
• Statute creating the enterprise
• Corporate purposes
• Constitution & bylaws
• Methods of administration
• Nature of actual work performed
• Character of services rendered
• Indefiniteness of the beneficiaries
• Use & occupation of properties
True or False
As a general principle, a charitable institution does NOT lose its character as such and its exemption
from taxes simply because it derives income from paying patients, whether out-patient or confined in
the hospital, or receives subsidies from government. - TRUE
Church, parsonages, convent
• Church -place where persons regularly assemble for worship
• Parsonages –house of a religious minister usually of certain protestant sects • Convents –place
where priests or nuns live
Mosques
• The place where the Muslims perform their prayers
Non-profit cemeteries
• Non-stock cemetery not devoted to earning income to be distributed to their members
“actually, directly & exclusively used for religious, charitable or educational purposes”
• It is the direct, immediate & actual application of property

• “Exclusively” is synonymous with “solely”

• To be exempt, property is “solely” used to these activities Scope of property tax exemption

• “Not limited to property actually indispensable” but extends to facilities which are “incidental to &
reasonably necessary for” the accomplishment of charitable or educational purposes

• Example: For a charitable hospital, exemption extends to school for training nurses, nurses’ home,
property used to provide housing facilities for interns & resident doctors
Taxable properties of charitable institution
• Land owned by charitable institution and leased to private entities
• Parts of a charitable hospital leased to private individuals
Basis of real property taxation or exemption is USE, not ownership
• Even if owner of property is a taxable entity, property is exempt from property tax if it is used
exclusively for religious, charitable or educational purposes
• If the government which is exempt from tax grants beneficial use of its property to a taxable
person, then that property is subject to property tax
Extent of exemption of non-profit cemeteries
• Not limited to property actually devoted to burial of the dead
• Also includes path, ornamentation, land within cemetery limits acquired for but not yet actually used
for burial & barns occupied by cemetery superintendent
Q&A
Mr. A, a private individual leased his place of land to a school, which is being operated by profit. A
building was caused to be constructed by the school on the leased property to be used as its library. Is
the school subject to real property tax? – NO

Proof of real property tax exemption

• Persons claiming real property tax exemption shall submit to the provincial, city or municipal
assessor within 30 days from date of declaration of real property documentary evidence including:
• Corporate charters
• Title of ownership
• Articles of incorporation
• By laws
• Contracts
• Affidavits
• Certifications and mortgage deeds • Similar documents
Real property tax exemptions
• Real properties owned by the Republic, except when beneficial use is granted to a taxable person
• Charitable institutions, churches & appurtenant parsonages or convent, mosques, non-profit
cemeteries, & all lands, buildings & improvements actually, directly & exclusively used for
religious, charitable & educational purposes
• Machineries & equipment actually, directly & exclusively used by local water districts & GOCCs
engaged in supply & distribution of water & generation & transmission of electric power
• Real property owned by duly registered cooperatives
• Machinery & equipment used for pollution control & environmental protection
All existing exemption not mentioned in this list, including those enjoyed by GOCCs (GSIS exemption
is restored through RA8291 on June 24, 1997), are withdrawn upon effectivity of the Local
Government Code in January 1, 1992
LGC SEC. 234
Rationale for withdrawal of exemptions
• To broaden the tax base of local government units to assure them of substantial sources of revenue
• To support myriad activities of the LGUs for the delivery of basic services essential to the promotion
of the general welfare & enhancement of pace, progress & prosperity of the people
Implications of the explicit provision on exemptions
• Congressional intent of imposing VAT on telecommunications is to exempt it from specific tax but
NOT from real property taxes
• The grant of exemption from real property taxes must be explicit & clear
• MIAA is still exempt from realty tax as it is not a GOCC
• NPC is now subject to real property tax, except on machineries & equipment directly used for
generation & transmission of electric power
• SSS is subject to real property tax being a GOCC
• Philippine Fisheries Development Authority (PFDA) is exempt from real property taxes as a
government “instrumentality”
• Light Rail Transit Authority (LRTA) is subject to realty tax being a taxable GOCC
• Philippine Ports Authority (PPA) is subject to realty tax being a taxable GOCC
• Bureau of Local Government Finance (BGLF) under the DOF has no authority to rule on claims for
exemption from realty tax
Functions of BGLF
• Assist in formulation & implementation of policies on local government revenue administration
• Exercise administrative & technical supervision & coordination on treasury & assessment operations
of LGUs
• Develop & promote programs for the improvement of resource management systems at local levels
• Provide consultative services & technical assistance to LGUs
• Line supervision over its regional offices
Multiple Choice
The Manila International Airport Authority (MIAA) is exempt from real property tax. Which
statement below is NOT correct?
a. MIAA is not a GOCC because it is not organized as a stock or nonstock corporation
b. MIAA is a government instrumentality vested with corporate powers & performing essential public
services
c. MIAA is not a taxable entity because the real property is owned by the Republic & the beneficial
use of such property has not been granted to a private entity
d. MIAA is a GOCC because it is required to meet the test of economic viability True or False
Tax exemption of government property does not extend to beneficial user. – TRUE
Example on beneficial use of government property
• An installment purchaser of land & building within a housing project of GSIS is liable to pay real
estate taxes from the time possession of said property was transferred to him, although pending full
payment of the purchase price of the buyer, GSIS retains ownership & title over the property.
Supreme Court Decisions on Real Property Tax Exemption
• A mining company which is a lessee of mineral land is liable for real property tax although
mineral lands are part of public domain
• Public land reserved by the President of the Philippines for warehousing purposes in favor of a
GOCC is EXEMPT from real property tax
Q&A
Are lands leased by the government to private parties exempt from realty tax? – NO
Q&A
S Mining Co. constructed a road which traversed public lands leased to it by the government. The
Provincial
Assessor assessed the road for real property tax. The company appealed to the Local Board of
Assessment
Appeals which affirmed the validity of the assessment which decision was likewise affirmed by the
Central Board of Assessment Appeals. The same was elevated to the CTA. Is S Mining Company
subject to the realty tax on the assessed value of the road as an improvement? – YES
Multiple Choice
Real property owned by the national government is exempt from real property taxation unless the
national government
a. Transfers it for the use of a local government unit
b. Leases it to a business establishment
c. Gratuitously allows its use for educational purposes by a school established for profit
d. Sells the property to a government-owned non-profit corporation

CHAPTER 4: Appraisal & Assessment of Real Property Tax

Limitations on the power of LGU to administer, appraise, levy & collect real property taxes
• Inherent limitations
• Constitutional limitations
• Authorization limitation under RA7160
• Fundamental principles of appraisal, assessment, levy & collection
• Common limitations
• Collection shall accrue solely to the benefit of LGU
LGUs authorized to administer real property tax
• Provinces
• Cities
• Municipalities within Metropolitan Manila Area (MMA)
Municipalities outside MMA shall not levy real property tax but they may impose special levy or
assessment.
Assessment
• The act or process of determining the value of property or portion thereof subject to tax, including
discovery, listing, classification & appraisal of properties
Appraisal
• The act or process of determining the value of property as of a specific date for a specific purpose
Procedures for declaration, appraisal & assessment of real property for tax purposes
• General Revision of Assessments and preparation of the Fair Market Value Schedules
• Assistance rendered by various persons & officials in the listing, appraisal & assessment of real
property taxes
• Filing by the taxpayer of a tax declaration showing the description, classification & value of his
property
• Appraisal of the real property
• Assessment of the real property for tax purposes
Duties of Registrars of Deeds
• Prepare & submit abstract of his registry to the provincial, city & municipal assessor
• Submission is within 6 months from RA7160 effectivity & every year thereafter
• Abstract details:
a. Brief but sufficient description of real properties entered therein
b. Present owners
c. Date of their most recent transfer or alienation
Duties of building officials
• Furnish provincial, city & municipal assessor where property is situated within 30 days
• Copy of permit for construction, addition, repair or renovation of a building or permanent
improvement on land or certificate of registration for any machinery attached to land or building
Duties of Geodetic Engineers
• Submit free of charge to provincial, city & municipal assessor
• White or blue print copy of each of all approved original or subdivision plans or maps of surveys
executed by them
• Within 30 days from receipt of such plans Land Management Bureau
Duties of Notaries Public
• Furnish provincial, city and municipal assessor
• Copies of all contracts –selling, transferring, conveying, leasing or mortgaging real property
acknowledged by them
Duties of Insurance Companies
• Furnish the provincial, city or municipal assessor
• Copies of any contract or insurance policy on buildings, structure or improvements insured by them
Rule on appraisal of real property
• All real property whether taxable or exempt shall be appraised at CURRENT & FAIR MARKET
VALUE prevailing in the locality where property is situated LGC SEC. 201
Fair market value
• The price at which a property may be sold by a seller who is not compelled to sell and bought by a
buyer who is not compelled to buy LGC. SEC. 199
Fair market value (FMV) vs. assessed value (AV)
FMV
• Declared by the owner subject to final determination by the assessor
• The actual value of the real property in the open market
AV
• Determined by the application of the assessment level to the FMV
• Merely a percentage of the FMV depending on the applicable assessment level
Approaches in estimating fair market value
• Sales analysis approach
• Income capitalization approach
• Reproduction cost approach
Sales analysis approach
• Sales price paid in actual market transactions is considered by taking into account valid sales data
accumulated from various sources
Income Capitalization approach
• The value of an income-producing property is no more than the return derived from it
• Net Operating Income (I) / Capitalization Rate (R) = Property Market Value (V
Reproduction cost approach
• Formal approach used exclusively in appraising man-made improvements such as buildings and
other structures, based on such data as materials and labor costs to reproduce their new replica
Q&A
A proviso in an ordinance states that “parcels of land sold, ceded, transferred and conveyed for
remuneratory consideration after the effectivity of this revision shall be subject to real estate tax based
on the actual amount reflected in the deed of conveyance or the current approved zonal valuation
prevailing at the time of sale, cession, transfer or conveyance, whichever is higher, as evidenced by
certificate of payment of capital gains tax (CGT) issued therefore”. Is this valid? – NO
Real property owners burdened by rental freezing laws NOT subject to higher assessments
Reasons:
a. It has much lower value than those not subject to rental restrictions
b. Based on principle of social justice
c. The purpose of taxation is the promotion of common good
Acquisition cost cannot be & is not sole basis of current & FMV of a property
• The current value of like properties and their actual or potential users are also considered
• This is unrealistic as the value of real property does not remain stagnant
Dams of Mining companies
• Tailings dams, being immovable in nature is subject to real property tax
• Siltation dam and decant system which are intended for pollution control:
• Exempt if assessment is after April 14, 1995 (passage of Mining Act RA7942)
• Subject to realty tax if assessment is before April 14, 1995
Listing of Real Property in Assessment Rolls
• As a general rule, real property shall be listed, valued and assessed in the name of the owner or
administrator, or anyone having legal interest in the property
• Undivided real property of deceased person:
 1. Name of estate, or
2. Heirs and devisees without designating them individually

• Undivided real property other than that owned by a deceased person:

 In the name of one or more co-owners
 Each heir, devisee or co-owner shall be liable severally and proportionately for the payment
of all real property taxes and other obligation with respect to the undivided property

• Real property of a corporation, partnership or association:

 Same as individual
• Real property owned by the Republic
1. In the name of the possessor or grantee, if beneficial use is granted to him
2. Public Entity, if property is held for resale or lease
Assessment
• The act or process of determining value of property or portion thereof subject to tax, including
discovery, listing, classification & appraisal of properties
Effect of assessment
• It fixes and determines the tax liability of the taxpayer
• Assessor is mandated under Section 223 of LGC to give notice to the person in whose name the
property is declared within 30 days from assessment
When the classification, appraisal & assessment made by assessor
• Declaration and listing of property for the first time
• Ongoing general revision of property classification or assessment
• Request made by declarant of property
Declaration of real property
• Purpose of tax declaration:
 to determine the assessment levels
• Real property shall be classified, valued & assessed on the basis of actual use regardless of:
• Where located
• Whoever owns it
• Whoever uses it
Nature of tax declaration
• It is not title to the property and does not prove ownership
• The only instance when court allowed tax declaration as proof of ownership is in the absence of a
certificate of title
• Real property tax receipts are good indicia of possession in the concept of an owner
• Delayed tax declaration negates claim of possession in concept of owner
• Tax declaration in the name of a person who has no successional or administrative rights to a
decedent’s estate is null and void
• Non-declaration of a property for tax purposes does not necessarily negate ownership
• Tax declarations enjoy presumption of regularity
Declaration of property by owner or administrator
• Owner or administrator shall file with provincial, city or municipal assessor, a sworn statement
declaring the true value of their property
• Filing shall be made once every 3 years during the period, January 1 to June 30 commencing with
calendar year 1992
• LGC SEC. 202
Duty of person acquiring or improving property
• He shall file with provincial, city or municipal assessor, a sworn statement declaring the true value
of property within 60 days from acquisition or upon completion or occupancy of improvement,
whichever comes earlier
• Failure to do so will make the assessment in the name of the previous owner binding
• LGC SEC. 203
Notification of transfer of real property ownership
• Persons transferring real property ownership shall notify provincial, city or municipal assessor
within 60 days from transfer
• Notification shall include mode of transfer, description of property alienated, as well as name &
address of transferee
Declaration of real property by assessor
• If the person fails to declare a real property within prescribed period, the provincial, city or
municipal assessor shall himself declare such property and assess it for taxation
• No oath shall be required of this declaration made by assessor
• LGC SEC. 204
Real property identification system
• All real property declaration shall be kept and filed under a uniform classification system
• LEC SEC. 207
Q&A
A lot in Caloocan is leased to a “Hospicio” to be used exclusively for purely charitable purposes and
is so used. The owner, an individual, did not declare the lot for real property tax purposes on the
belief that it is exempt, being exclusively devoted to purely charitable purposes. The assessor
believed otherwise and issued a tax declaration and assessment notice on the individual owner on the
theory that the owner is no himself exempt for he is not a charitable institution. Is the assessor right in
what he does? - Yes
Q&A
The real property of Mr. & Mrs. Angeles, situated in a commercial area in front of the public market,
was declared in their Tax Declaration as residential because it had been used by them as their family
residence from the time of its construction in 2000. However, in January 2010, when the spouses left
for the USA to stay there permanently with their children, the property has been rented to a single
proprietor engaged in the sale of appliances and agri-products. The Provincial Assessor reclassified
the property as commercial for tax purposes starting January 2013. Mr. & Mrs. appealed to the Local
Board of Assessment Appeals contending that the Tax Declaration previously classifying their
property as residential is binding. Do you think their appeal will succeed? - NO
Preparation of schedules of fair market values
• To be done by assessor before any revision of property assessment
• Once complete, it must be published in a newspaper of general circulation or posted in provincial
capitol, city or municipal hall and in 2 other conspicuous places within the LGU concerned
• LGC SEC. 212
Authority of assessor to take evidence
• Assessor may summon owners or persons having legal interest therein for the purpose of obtaining
information on which to base the market value of any real property
• LGC SEC. 213
Amendment of schedule of fair market values
• Provincial, city or municipal assessor may recommend to the sanggunian amendments to correct
errors in valuation in the schedule of fair market values
• Sanggunian shall, by ordinance, act upon such recommendation within 90 days from receipt
• LGC SEC. 214
Classes of Real Property
• Residential –for habitation
• Agricultural –for planting, livestock raising, salt-making, etc.
• Commercial –devoted principally for the object of profit
• Industrial –for industrial activity
• Mineral –lands metallic & non-metallic minerals in sufficient quantity
• Timberland –land covered with forest suitable or managed for timber
• Special
• LGC SEC.215
Special Classes of Real Property
• All lands, building and other improvements thereon, actually, directly and exclusively used for
hospitals, cultural or scientific purposes
• Those owned and used by local water districts and GOCCs engaged in the supply & distribution of
water and/or generation & transmission of electric power
• These properties have lower assessment levels
• LGC SEC. 216
Basis of power to enact zoning ordinances
• Zoning classification is an exercise by the local government of police power, NOTthe power of
eminent domain
• Official zoning map is an integral part of zoning ordinance
Actual Use of Property
• The purpose for which the property is principally or predominantly utilized by the person in
possession thereof
• It is the basis for assessment regardless of where located, whoever own it and whoever uses it
Assessment levels
• The percentage applied to the fair market value to determine the taxable value of the property
• To be fixed by ordinances of sangguaniang panlalawigan, panlungsod or bayan
Multiple Choice
For purposes of real property taxes, the tax rates are applied on:
a. Zonal values
b. Fair market values
c. Assessed values
d. Reproduction values

Maximum Assessment Level for Lands

Class: Assessment Levels
Residential 20%
Agricultural 40%
Commercial 50%
Industrial 50%
Mineral 50%
Timberland 20%
Maximum Assessment levels
for Building & other
structures:
Fair market value over Value not over Assessment le
Residential:
P175,000 0
P 175,000 300,000 10%
300,000 500,000 20%
500,000 750,000 25%
750,000 1,000,000 30%
1,000,000 2,000,000 35%
2,000,000 5,000,000 40%
5,000,000 10,000,000 50%
10,000,000 Over 60%
Assessed value or taxable value
• The fair market value of the real property multiplied by the assessment level
• Synonymous to taxable value

General revisions of assessments & property classification

• The provincial, city or municipal assessor shall undertake a general revision of real property
assessments within two (2) years after the effectivity of RA7160 and every three (3) years
thereafter.
• LGC SEC. 219
Reassessment
• Assigning of new values to property, particularly real estate as the result of general, partial or
individual reappraisal of property
Instances of reassessment
• Real property is declared and listed for taxation for the first time
• There is an ongoing general revision of property classification and assessment
• A request is made by the person in whose name the property is declared
Special Revision
• Within 90 days from partial or total destruction, major change in actual use, any great or
sudden inflation or deflation of property values, gross illegality of assessment or other abnormal
causes
Steps in mandatory general revision of real property assessments
1. Preparation of the Schedule of fair market values
2. The enactment of ordinances:
a. Levying an annual ad valorem tax on real property & additional tax for Special
Education Fund
b. Fixing the assessment levels to be applied to the current & fair market value
c. Providing necessary appropriation to defray expenses incident thereto
d. Adopting the Schedule of Fair Market Values prepared by assessors
Notification of new or revised assessment
• To be made in written form to the person named in the tax declaration by personal delivery,
registered mail or through punong barangay’s assistance
• To be done by assessor within 30 days from a new or revised assessment
• LGC SEC. 223
Valuation of real property
• To be made by assessor in cases where:
a. Real property is declared & listed for taxation for the first time
b. There is an ongoing general revision of property classification & assessment
c. Request is made by the person in whose name the property is declared
• Assessment of real property shall not be increased oftener than once every 3 years, except
when new improvements substantially its value
• LGC SEC. 220
Date of effectivity of assessment or reassessment
• All assessments or reassessments made after the first day of January of any year shall take
effect on the first day of January of the succeeding year
• For reassessments due to special reasons, it shall take effect at the beginning of the quarter
following the reassessment
Assessment of property subject to back taxes
• Applicable to real property declared for the first time
• Back taxes shall be for a period not more than 10 years prior to initial assessment
• No interest if paid on or before end of the quarter following the date the notice of assessment
was received by owner, otherwise 2% interest will be added until fully paid
Appraisal & assessment of machinery
• Brand New: Fair market value shall be the acquisition cost
• All other cases: Computed using this formula:
Remaining economic life
---------------------------------x Replacement or reproduction cost
Estimated economic life
Included in Acquisition Cost of Machinery
For locally acquired machinery:
• Actual cost
• Cost of transportation, handling and installation at the present site
For imported machinery:
• Cost in foreign currency converted to peso using rates fixed by BSP
• Freight, insurance, bank & other charges, arrastre & handling, duties & taxes
• Cost of inland transportation, handling and installation
Replacement or Reproduction Cost
• Cost that would be incurred on the basis of current prices in acquiring equally desirable
substitute property, or
• Cost of reproducing a new replica of the property on the basis of current prices with the same
or closely similar material
Depreciation allowance of machinery
• At a rate not exceeding 5% of original cost, replacement cost or reproduction cost
• 20% of cost, replacement cost or reproduction cost shall be maintained and assigned so long as
it is still useful & in operation
CHAPTER 5: Collection of Real Property Tax
Collection of real property tax
• Tax liability must arise from law, not from contract
• The owner operator of a Build-Operate-Transfer (BOT) and not the ultimate owner is subject to
real property taxes
Date of accrual of real property tax & special levies
• Real property tax: On the first day of January each year
 Such tax shall constitute a lien superior to any other lien
• Special Levy: First day of the quarter next following effectivity of ordinance imposing it
Collecting Authority
• City or municipal treasurer
• Barangay treasurer if deputized by city or municipal treasurer
a. To collect within the barangay
b. Properly bonded
Duty of assessor to furnish treasurer with assessment rolls
• To be done by assessor on or before 31stday of December each year
• Assessment roll contains the list of all persons whose real properties have been newly assessed
or reassessed & the property values
Notice of time for collection of tax
• LGU treasurer shall post on or before January 31 each year (other date for other real property
tax) notice of the dates when basic real property tax & SEF may be paid without interest
• Posting shall be in conspicuous & publicly accessible place
• Publication shall also be made in newspaper of general circulation once a week for 2
consecutive weeks
Periods within which to collect real property tax
• Within 5 years from date taxes become due
• In case of fraud or intent to evade payment, within 10 years from its discovery
Suspension of Prescriptive Period
• Treasurer is legally prevented from collecting
• Owner requests for reinvestigation & executes waiver in writing
• Owner is out of the country
• Owner cannot be located
Multiple Choice
Ka Tato owns a parcel of land in San Jose, Batangas declared for real property taxation, as
agricultural. In 1990, he used the land for poultry feed processing plant but continued to declare
the property as agricultural. In December 2011, the local tax assessor discovered Ka Tato’s
change of use of his land and informed the local treasurer who demanded payment of deficiency
real property taxes from 1990 to 2011. Has the action prescribed?
a. No, the deficiency taxes may be collected within 5 years from when they fell due
b. No, the deficiency taxes for the period 1990 to 2011 may still be collected within 10 years
from December 2011
c. Yes, more than 10 years had lapsed for the period 1990 to 2000, hence the right to collect the
deficiency taxes has prescribed
d. Yes, more than 5 years had lapsed for the collection of the deficiency taxes for the period 1990
to 2005.
Payment of real property tax in installments
• Applicable to basic & SEF only
• Special levy shall be governed by an ordinance
• Quarterly deadlines without interest:
• First quarter –March 31
• Second quarter –June 30
• Third quarter –September 30
• Fourth quarter –December 31
• LGC SEC. 250
Application of payments
1. Prior year delinquencies, interest and penalties (if any)
2. Current period taxes
Tax discount for early payment
• Sanggunian may grant discount not exceeding 20% of the basic and SEF if payment is made
way ahead of deadline
• LGC SEC. 251
Interest on unpaid real property tax
• 2% per month on unpaid amount until fully paid
• Interest to be collected should only be up to 36 months
• LGC SEC. 255
Payment of delinquent tax on property subject to tax
• Municipal treasurer may award ownership to any party to an action involving ownership of real
property upon payment to the court of the taxes, interest & all costs that accrued to the
delinquent tax
• LGC SEC. 268
Treasurer to certify delinquencies remaining uncollected
• Treasurer shall prepare certified list of all real property tax delinquencies which remained
uncollected for at least 1 year & submit it to the sanggunian on or before December 31 of the
year immediately succeeding the year in which delinquencies were incurred
• LGC SEC. 269
Condonation of real property tax
• Sanggunian may condone or reduce, wholly or partially, the taxes & interest because of general
failure of crops or calamity through an ordinance passed prior to January 1 of any year LGC
SEC. 276
• President may condone or reduce real property tax & interest for any year when public interest
so requires LGC SEC. 277
Issuance of notice of delinquency for real property tax
When real property tax or special levy becomes delinquent, LGU treasurer shall immediately
cause notice of delinquency to be:
1. Posted at the main entrance of capitol, city or municipal hall
2. In a publicly accessible & conspicuous place in each barangay of LGU
3. Published once a week for 2 consecutive weeks in newspaper
Local government lien
• A legal claim on the property subject to the real property tax as security for payment of tax
obligation
• Constituted on the property subject to tax from the date real property tax accrued, i.e., January
1
• Superior to any lien of any other kind
• Enforceable by administrative or judicial action
• Extinguished only upon payment of tax

LGU Remedies for the collection of real property taxes

a. Administrative Action
1. Distraint of personal property
2. Garnishment
3. Exercise of lien on property subject to tax
4. Levy of real property subject of the tax
b. Judicial Action
Levy of real property subject to tax
• Done after expiration of time required to pay tax
• Treasurer shall prepare duly authenticated certificate of delinquency containing name of
delinquent owner, property description & tax due
• Certificate of delinquency shall be mailed to owner, assessor & registrar of deeds
Advertisement of sale
• Done within 30 days after levy
• Publicly effected by:
a. Posting notice at main entrance of provincial, city or municipal building
b. Publicly accessible & conspicuous place in the barangay of property location
c. Publication once a week for 2 weeks in newspaper
Sale procedure
• Made after completion of advertisements
• Delinquent taxpayer fails to pay within the intervening period
• Held of main entrance of provincial, city or municipal building
• If no sufficient bidder, treasurer shall purchase property for the LGU
Action Assailing Validity of Taxes
• Owner first deposits with court the amount his property was sold together with interest of 2%
per month from sale to the time of institution of action
• The amount so deposited shall be paid to the purchaser at the auction sale if the deed is
declared invalid but it shall be returned to the depositor if the action fails
• Failure to comply w/deposit requirement warrants dismissal of action
• LGC SEC. 267
Redemption of property sold
• Within 1 year from the date of sale
• During this redemption period, owner is entitled to possession of fruits of the property
• Redemption period is counted from the date of annotation of certificate of sale in the Register
of Deeds
• LGC SEC. 261
Final Deed to Purchaser
• To be conveyed by the LGU treasurer upon failure of the owner to redeem the delinquent
property within 1 year
• The deed shall briefly state the proceedings upon which the validity of the sale rests
• LGC SEC. 262
Purchase of property by LGU for want of bidder LGC. SEC. 263
• Local treasurer shall purchase the real property in behalf of the local government if no bidder or
offer of highest bidder is insufficient
• Registrar of deeds shall transfer title of property to the LGU without necessity of an order from
a competent court
• Subject to 1year redemption period by property owner
Resale of real estate taken for taxes, fees or charges LGC SEC.264
• By ordinance duly approved, sanggunian upon notice of not less than 20 days, sell and dispose
real property acquired for want of bidder
• Proceeds shall accrue to the general fund of LGU concerned
Further distraint or levy LGC SEC. 265
• Distraint or levy may be repeated if necessary until the full amount due, including expenses, is
collected
Reason for mandatory notice & publication of sale
• To comply with the requirements of due process
• Failure to comply will invalidate the sale
Real properties owned by Republic of the Philippines
• Exempt from real property tax
• Exempt from sale at public auction
• Subject to real property tax & public auction if leased to taxable entities
Former owner may be held liable for back real property taxes
• To impose the tax on the subsequent owner which was neither the owner nor beneficial user
during the designated periods when the tax accrues would not only be contrary to law but also
unjust
Collection of Real property tax through judicial action
• To be made in any court of competent jurisdiction
• Filed by local treasurer
• Must be made within 5 years from the date the real property taxes and special levies become
due
• LGC SEC. 266
Penalty of treasurer for failure to issue & execute warrant
• Imposed if the treasurer fails to issue or execute the warrant of levy within 1 year from the time
tax becomes delinquent or 30 days from date of issuance thereof
• If found guilty, he shall be dismissed from service
• LGC SEC. 259
Fees and charges
• Court actions instituted by LGU treasurer or assessor shall be exempt from payment of court
and sheriff’s fees
• Registration of papers or documents on sale of delinquent property to province, city or
municipality shall be exempt from documentary stamps tax & registration fees
• Real property assessment notices or owner’s copies of tax declaration sent through mails by
assessor shall be exempt from postal charges or fees
• LGC SEC. 280
Municipal trial courts
• Have exclusive original jurisdiction over tax collection caseswhere amount of demand
(excluding interest, penalties & litigation expenses):
a. Does not exceed P300,000
b. In Metro Manila, amount does not exceed P400,000
Regional trial courts
• Have exclusive original jurisdiction over tax collection cases where amount of demand
(excluding interest, penalties & litigation expenses):
a. Exceeds P300,000
b. In Metro Manila, amount exceeds P400,000 but less than P1,000,000
• If amount involved is P1M or more exclusive jurisdiction is with Court of Tax Appeals (CTA)
Exclusive original jurisdiction of CTA (division) in tax collection cases
• Tax collection cases involving final & executory assessments where principal amount of taxes
& fees, excluding charges & penalties is P1 million or more
Collection of tax not suspended even with an appeal
• An appeal from taxpayer will not suspend collection of realty property taxes
• It will just be adjusted depending on final outcome of appeal
• LGC SEC. 231
CHAPTER 6: Refund or Credit of Real Property Tax
Procedure of payment under protest
• Taxpayer first pays the tax
• “Paid under protest” is annotated on the face of the tax receipts
• If not paid under protest, taxpayer can make the protest within 30 days from payment
• LGC 252
When protest is required
• When there is question of reasonableness of the amount assessed
• Not when question raised is no the very authority & power of assessor to impose assessment &
treasurer to collect the tax
Basis of requiring payment under protest
• Consistent with lifeblood doctrine
• Collection cannot be curtailed by injunction or any like action
Payment under protest condition precedent for court case
• Payment is a condition sine qua non before a trial court could assume jurisdiction over the case
Imposition of back taxes
• Imposition by Local Board of Assessment Appeals (LBAA) and Central Board of Assessment
Appeals (CBAA) does not violate the constitutional prohibition that no ex post facto law shall be
enacted
When payment under protest is NOT required
• When taxpayer paid under a mistaken belief that it is required by law, he can file a claim for
refund without protest
• This is application of solutio indebiti, where payor can recover what has been made by mistake
Repayment of excessive collections
• Applicable when real property tax is found illegal or erroneous & tax is accordingly reduced or
adjusted
• Taxpayer may file written claim for refund or credit w/LGU treasurer within 2 years from date
taxpayer is entitled to reduction/adjustment
• Treasurer shall decide within 60 days from receipt of written claim
• If denied, taxpayer may avail of remedies available to him
• LGC SEC. 253
Grounds for claim of refund
• Tax was illegally collected
• Tax was excessively collected
• There was a mistaken payment under the concept of solutio indebiti
Prescriptive period for filing claim for refund
• For illegally paid tax, it must be filed with the local treasurer within 2 years from the date of
payment
• For those under solutio indebiti (payment by mistake), claim for refund must be commenced
within 6 years from date of payment
Review of protest denials by treasurer
• Municipal Trial Court or Regional Trial Court (depending on amount) has the original
jurisdiction, the review being the initial judicial cognizance of the matter
Original Jurisdiction vs. appellate jurisdiction
• Original jurisdiction is the power of the court to take judicial cognizance of a case instituted for
judicial action for the first time
• Appellate jurisdiction is the authority of a court higher in rank to re-examine the judgment of a
lower court elevated for judicial review
CHAPTER 7: Taxpayer’s Remedies
Summary of Remedies
Contesting an assessment of value of real property may be made by:
• Appeal through a petition, to the Local Board of Assessment Appeals (LBAA)
• Appeal to the Central Board of Assessment Appeals (CBAA)
• Petition for review to the Court of Tax Appeals, en banc
• Petition for review on certiorari to the Supreme Court
Appeal to the LBAA
• To be made by owner of property within 60 days from the date of receipt of written notice of
assessment, if he contests it LGC SEC. 226
• LBAA needs to decide on the appeal within 120 days from receipt of appeal from the taxpayer
LGC SEC. 229
• Adverse decision by LBAA can be appealed by taxpayer to the CBAA within 30 days from
receipt thereof LGC SEC. 229
Composition of LBAA
• Registrar of Deeds as Chairman
• Provincial or city prosecutor as member
• Provincial or city engineer as member
• LGC SEC. 227
LBAA’s jurisdiction
• To hear appeals of owners or persons having legal interest in a property who are not satisfied
with the action of the assessor on an assessment
Who may appeal an assessment
• The owner (declared owner in TCT or tax declaration)
• Person with legal interest in the property (person legally burdened to pay the tax imposed on
the property)
Notice of assessment is not subject to motion for reconsideration
• Allowing motion for reconsideration would open the gates to graft and corruption as nothing
prevents the assessor from making high assessment & after illegal payment is given would
reduce the same
To whom appeal should be directed
• Local board of assessment appeals (LBAA) of the province or city where the property is
located
Model of Appeal
• Taxpayer has to make a petition under oath in the prescribed form
• Attachments include copies of tax declarations & such affidavits or documents submitted in
support of the appeal
Effect of failure to appeal to LBAA
•Assessment shall become final, executory and demandable
•Precludes the taxpayer from questioning the correctness of the assessment
Meetings & expenses of LBAA
• Once a month and as often as necessary for prompt disposition of appealed cases
• Expenses shall be charged to the general fund of province or city
Central Board of Assessment Appeals (CBAA)
• Composition: 1 chairman and 2 members to be appointed by the President
• Qualifications: at least 40 years old, member of the Bar of CPA for at least 10 years
• Has jurisdiction to hear appeals from the decision of LBAA
Remedy of one not satisfied w/LBAA’s decision
• Appeal to the CBAA within 30 days after receipt of the decision made by LBAA
Who may appeal to CBAA
• Owner of property
• Person having legal interest on property
• Assessor not satisfied with LBAA’s decision
Other roles of CBAA
• It can be appointed by Supreme Court to act as a court-appointed fact finding commission to
assist it resolving factual issues raised in the cases before it
• CBAA has no authority to hear purely legal issues as these are handled by regular courts
• CBAA findings are normally respected by the Supreme Court, except when it committed grave
abuse of discretion
Appeal of CBAA decisions
• Court of Tax Appeals en banc shall exercise exclusive appellate jurisdiction to review by
appeal decisions of CBAA
Effect of appeal on the payment of tax
• Appeal on assessments of real property shall not suspend the collection of the corresponding
realty taxes
• Adjustment shall be made depending on final outcome of appeal
Elevating CTA en banc decision to Supreme Court
• Any aggrieved party may seek reconsideration or new trial of any decision, resolution or order
of the Court
• To be made within 15 days from receipt of CTA’s decision
Grounds of motion for new trial
• Fraud, accident, mistake or excusable negligence which ordinary prudence could not have
guarded against
• Newly discovered evidence, which he could not, with reasonable diligence, have discovered
and produce at the trial and, which, if presented, would alter the result
Requisites for motion of new trial based on newly discovered evidence
• Evidence was discovered after the trial
• Such evidence could not have been discovered & produced at the trial with reasonable
diligence
• It is material, not merely cumulative, corroborative or impeaching
• It is of such weight that, if admitted, will probably change the judgment