REAL PROPERTY TAX NOTES

Prepared by: Brenda Shane H. Esteves

TAXATION has been defined as the power of the sovereign to impose burdens or charges
upon persons, property or property rights for the use and support of the government to be
able to discharge its functions.

SECTION 198. Fundamental Principles. - The appraisal, assessment, levy and

collection of real property tax shall be guided by the following fundamental
principles:

(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 government unit;

(d) The appraisal, assessment, levy and collection of real property tax shall not be
let to any private person; and

(e) The appraisal and assessment of real property shall be equitable.

Real Property Tax (RPT)

Definition from PPT:

A. Is a local tax imposed on real property such that if the property is transferred to
another person, the liability will also be transferred to another person, the liability will
also be transferred. The tax is not attached to the owner, it is attached to the property

B. Imposed by the Local Government

C. Tax liability can be imposed on the beneficial use of the real property, such as those
owned but leased to private persons or entities by the government or when the
assessment is based on the actual use.

 Direct tax on ownership of; lands, buildings, machineries and other improvements.
 Payable regardless if property is used or not.
 An annual ad valorem tax levied by LGUs within their jurisdiction.

Nature: Provisions of LGC are applied nationwide but rates imposed are different per
LGU ordinance.

Characteristics:
 a. Direct Tax on the ownership of real property
b. Ad valorem tax: The value is based on the tax base
c. Proportion Tax is calculated on the basis of a certain percentage of the value
assessed
d. Indivisible
e. Local Tax

As to the determination of amount:

1.     Specific – based on a certain or a manner of measurement; on the basis of
weight.  This type of tax is peculiar to those products which are produced or manufactured
like gasoline, alcohol products, cigars and cigarettes. 
2.     Ad valorem – amount is determined on the value; means “based on the value of the
article”. 

 As to purpose:
1.     General – also known as fiscal or revenue.  The purpose is principally to raise revenue.
2.     Special – also known as regulatory.  While the purpose is to raise revenue, it carries an
incidental or special or regulatory purpose like for regulatory power or as basis for just
compensation.

 As to scope or authority imposing the tax:

1.     National – taxes legislated by Congress which are found under the tax code (NIRC) as
well as the Tariff and Customs Code
2.     Municipal or Local – taxes authorized to local government units and found under the
Local Government Code; either by the province, city or municipality

Special Education Fund (SEF)

The Special Education Fund comes from the extra one percent tax on real property, and is
allotted by Local Government Code to the local school boards. For the operation and
maintenance of public schools, the building and repair of school buildings, facilities, and
equipment, educational research, the purchase of books and periodicals, and the
improvement of sports in amounts decided by the local school boards.