Local and Real Property Tax

A.
Local Autonomy
1. What is the nature and source of local taxing power?
! Mactan Cebu Int’l Airport Authority v. Marcos, G.R. No.
120082, Sept. 11, 1996 – the power to tax is primarily
Local Taxation vested in Congress; however, in our jurisdiction, it may be

exercised by local legislative bodies, no longer by virtue of
a valid delegation as before, but pursuant to direct
authority conferred by § 5, art. X of the Constitution.
Under the latter, the exercise of the power may be
I. General Principles
subject to such guidelines and limitations as the Congress
may provide which, however, must be consistent with the
basic policy of local autonomy
" Currently, Titles I (Local Taxation) and II (RPT) of
Book II, LGC prescribe the “guidelines and limitations”
of local taxing power
1 Atty. Terence Conrad H. Bello Slide No. 2
B. Fundamental Principles B. Fundamental Principles

1. What are the fundamental principles that govern the exercise 2. Cases:
of taxing and other revenue-raising powers of LGUs? ! Pepsi Cola Bottling Co. of the Phils., Inc. v. Mun. of Tanauan,
L-31156, Feb. 27, 1976 - where the SC held that a tax of one
a) Uniformity in taxation centavo (P0.01) on each gallon of volume capacity on all soft
b) Local exactions shall (i) be equitable and based on TP’s drinks, produced or manufactured, or an equivalent of 1-1/2
centavos per case, cannot be considered unjust and unfair.
ability to pay, (ii) be for public purposes, (iii) not be unjust, ! An increase in the tax alone would not support the claim that
excessive, oppressive or confiscatory, (iv) not be contrary the tax is oppressive, unjust and confiscatory. Municipal
to law, public policy, national economic policy, or in the corporations are allowed much discretion in determining the
restraint of trade rates of imposable taxes.
! This is in line with the constitutional policy of according the
c) Collection shall not be let to private persons* widest possible autonomy to local governments in matters of
d) Revenue collections shall accrue exclusively to LGUs** local taxation, an aspect that is given expression in the Local
Tax Code (PD No. 231, July 1, 1973).
e) System of taxation must be progressive ! Unless the amount is so excessive as to be prohibitive, courts
will go slow in writing off an ordinance as unreasonable
Atty. Terence Conrad H. Bello Slide No. 3 Atty. Terence Conrad H. Bello Slide No. 4
B. Fundamental Principles C. Common Limitations on Taxing Power
2. Cases: 1. What are the common limitations on the taxing power of
! Matalin Coconut Co. v. Mun. Council of Malabang, 143 SCRA LGUs? Exercise of taxing powers of LGUs (provinces,
404 – where the SC struck down a municipal ordinance cities, municipalities, barangays) shall not extend to the
imposing a police inspection fee of P0.30 per sack of
cassava starch flour shipped out of the municipality for following (Sec. 133):
the ff. reasons: a) Income tax, except on banks and other financial
" Imposition is unjust and unreasonable - the only service institutions
rendered by the LGU, by way of inspection, is for the
policeman to verify from the driver of the trucks of b) DST
the TP passing by at the police checkpoint the number c) Transfer taxes (estate and donor’s tax)
of bags loaded per trip which are to be shipped out of
the municipality based on the trip tickets for the d) Customs fees and other charges
purpose of computing the total amount of tax to be e) Taxes, fees and charges (TFC) on goods “passing
collected through” territorial jurisdiction of LGU
" The imposition is excessive and confiscatory – the TP’s
marginal average profit/bag of cassava starch flour is f) TFC on agricultural or aquatic products when sold by
only P0.40 (the police inspection fee is P0.30/bag) marginal farmers or fishermen
C. Common Limitations on Taxing Power C. Common Limitations on Taxing Power
1. What are the common limitations on the taxing power of 1. What are the common limitations on the taxing power of
LGUs? Exercise of taxing powers of LGUs (provinces, LGUs? Exercise of taxing powers of LGUs (provinces,
cities, municipalities, barangays) shall not extend to the cities, municipalities, barangays) shall not extend to the
following: following:
g) Business tax on BOI-, PEZA-, SBMA-registered n) TFC on Countryside and Bgy. Business Enterprises or
entities, etc. Cooperatives duly registered with CDA
h) Excise tax and TFC on petroleum products o) TFC on the national government or LGUs
i) VAT or any percentage tax
j) Common carriers tax
k) Taxes on reinsurance premiums
l) TFC on registration of motor vehicles, except
tricycles
m) TFC on export products
C. Common Limitations on Taxing Power C. Common Limitations on Taxing Power
2. Cases: 2. Cases:
! Phil. Petroleum Corp. v. Mun. of Pililla, G.R. No. 90776 June 3,
! Prov. of Bulacan v. CA, G.R. No. 126232, Nov. 27, 1998 1991 – which upheld the imposition of a local tax on the
– where SC held that provinces may not levy excise business of manufacturing petroleum products, despite the
fact that the NIRC imposes excise taxes on manufactured
taxes on articles already taxed by the NIRC (the LGU petroleum products. In so holding, the SC ruled that a tax on
assessed TP P2.5M for extracting limestone, shale business is distinct from a tax on the article itself
" Note that under § 133(h), LGUs are prohibited from
and silica from several parcels of private land in the imposing excise taxes on articles enumerated under the
province; said minerals are quarry resources already NIRC and taxes, fees or charges on petroleum products.
It would seem that under Pililla, the § 133(h) limitation
subject to excise tax under the NIRC) applies only when what is being taxed is the article itself,
and not the business in which said article is manufactured
" Note, however, that under the IRR of § 133(h), the
prohibition extends to the imposition of a tax on the
business of manufacturing petroleum products
" See, however, Petron Corp. v. Tiangco, GR 158881, April 16,
2008, holding that LGU may not impose business taxes on
entities engaged in sale of petroleum products
C. Common Limitations on Taxing Power
2. Cases:
! San Miguel Corp. v. Mun. Council of Mandaue, L-30761,
July 11, 1973 – holding that a graduated quarterly
fixed tax based on the gross value of money or actual
market value at the time of removal of the
Local Taxation
manufactured articles from their factories is
essentially a percentage tax based on sales,
therefore, beyond the authority of the LGU to enact II. Scope of Taxing Powers of LGUs
" A percentage tax is imposed when there is a set
ratio between the amount of the tax and the
volume of sales
" See § 133(i) limitation
Atty. Terence Conrad H. Bello Slide No. 11 12

A. Provinces A. Provinces
1. What are the taxes, fees and charges that provinces may levy and c) Franchise tax (§ 137) –
collect?
! Coverage: businesses enjoying a franchise
a) Tax on transfer of real property ownership (§ 135) –
! Coverage: sale, donation, barter, or any other mode of ! Rate and base: not exceeding 50% of 1% of the gross
transferring ownership or title of real property annual receipts for the preceding calendar year based
! Rate and base: not more than 50% of 1% of total on the incoming receipts, or realized within its
consideration or FMV (if monetary consideration is not territorial jurisdiction (1/20 of 1% of capital
substantial), whichever is higher investment if newly started business)
! When payable: within 60 days from execution of deed or d) Tax on sand, gravel and other quarry resources (§ 138) –
death of decedent
b) Printer’s or publisher’s tax (§ 136) –
! Coverage - ordinary stones, sand, gravel, earth, and
other quarry resources extracted from public lands or
! Coverage: persons engaged in the printing and/or
publication of books, cards, posters, leaflets, handbills, from the beds of seas, lakes, rivers, streams, creeks
etc. and other public waters within the province’s territorial
! Rate and base: not more than 50% of 1% of gross annual jurisdiction
receipts for preceding calendar year ! Rate and base: not more than 10% of FMV/cubic meter
A. Provinces A. Provinces
e) Professional tax (§ 139) – g) Fixed tax on delivery trucks and vans (§ 141) –
! Coverage: persons engaged in the exercise or practice ! Coverage: annual tax on every truck, van or vehicle
of a profession requiring government examination
(professionals exclusively employed by gov’t are used in the delivery or distribution of merchandise
exempt) ! Rate and base: not exceeding P500
! Rate and base: not to exceed P300 annually h) Service fees and charges – for services rendered (§
! When payable: Jan. 31 153)
f) Amusement tax (§ 140) –
! Coverage: proprietors, lessees, or operators of i) Public utility charges (§ 154) - for the operation of
theaters, cinemas, concert halls, circuses, boxing stadia public utilities owned, operated and maintained by
and other places of amusement (exempt: holding of provinces within their jurisdiction
operas, concerts, dramas, recitals, painting and art j) Toll fees or charges (§ 155) - for the use of any
exhibitions, flower shows, musical programs, literary
and oratorical presentations, except pop, rock or similar public road, pier, or wharf, waterway, bridge, ferry or
concerts telecommunication system funded and constructed by
! Rate and base: not more than 30% of gross receipts the province
from admission fees
B. Municipalities B. Municipalities
1. What is the scope of taxing powers of municipalities? b) Wholesalers, distributors or dealers in any article of
! Generally, municipalities may levy taxes, fees, and charges not commerce of whatever kind and nature (§ 143(b))
otherwise levied by provinces (§ 142)
! Rate and base: graduated annual fixed tax based on TP’s
2. What are the taxes, fees and charges that municipalities may levy gross sales or receipts for preceding year
and collect?
A. Business taxes on -- ! However, when gross sales or receipts amount to P2M or
more, tax ceases to be a fixed tax; instead, a percentage
a) Manufacturers, assemblers, re-packers, processors,
brewers, distillers, rectifiers, and compounders of liquors, tax of 50% of 1% is imposed
distilled spirits and wines or manufacturers of any article c) Exporters and manufacturers, millers, producers,
of commerce of whatever kind and nature (§ 143(a)) wholesalers, distributors, dealers or retailers of
! Rate and base: graduated annual fixed tax based on TP’s gross essential commodities like rice, corn, wheat or
sales or receipts for preceding year
! However, when gross sales or receipts amount to P6.5M or cassava flour, cooking oil, laundry soap, etc. (§
more, tax ceases to be a fixed tax; instead, a percentage tax of 143(c)) – at a rate not exceeding ½ of the rates for
37.5% of 1% is imposed sales of articles mentioned in (a) and (b) above
B. Municipalities B. Municipalities
d) Retailers – tax is not a graduated annual fixed tax f) Banks and other financial institutions (§ 143(f)) – tax is
50% of 1% of gross receipts of preceding calendar year
but an annual percentage tax based on gross sales or derived from interests, commissions and discounts from
receipts for the preceding calendar year (§ 143(d)) lending activities, income from financial leasing, dividends,
rentals on property and profit from exchange or sale of
! Note: barangays have exclusive power to tax retailers property, insurance premium
whose gross sales or receipts for the preceding calendar g) Peddlers engaged in sale of mdse or article of commerce (§
year do not exceed P50,000 (for barangays in cities) or 143(g)) – rate not to exceed P50 per peddler annually
P30,000 (for barangays in municipalities) h) On any business not otherwise specified above, SB
e) Contractors and other independent contractors (§ concerned may impose tax it deems proper (§ 143(g))
! In the case, however, of businesses subject to excise, value-
143(e)) – graduated annual fixed tax based on gross added or pct. tax, the rate shall not exceed 2% of gross sales or
receipts for preceding calendar year. However, if receipts for the preceding calendar year
gross receipts amount to P2M or more, contractor’s # Note: municipalities within Metro Manila may levy taxes at
rates which shall not exceed by 50% the maximum rates in
tax becomes a percentage tax at the rate of 50% of (a) to (h) above (§ 144)
1%
B. Municipalities C. Cities
B. Fees and charges – 1. What are the taxes, fees and charges that cities may
a) Municipalities authorized also to impose and collect levy and collect?
such reasonable fees and charges on business and
occupation and on the practice of any profession or ! Taxes, fees and charges which provinces or
calling (other than professional tax, which only municipalities may levy and collect (§151)
provinces or cities may impose) before any person ! The rates of taxes that cities may levy may exceed
may engage in such business, occupation or practice the maximum rates allowed for provinces or
of such profession (e.g., mayor’s permit) (§ 147)
municipalities by not more than 50%, except the
! The fees and charges, however, should be commensurate
with the cost of regulation, inspection and licensing (i.e., rates of professional and amusement taxes
must not be revenue-generating)
b) Service fees and charges (§ 153)
c) Public utility charges (§ 154)
d) Toll fees or charges (§ 155)
D. Barangays
1. What are the taxes, fees and charges that barangays may levy
and collect?
a) Taxes – on stores or retailers with fixed business
establishments with gross sales or receipts for the
preceding calendar year of P50,000 or less (for barangays
in cities) and P30,000 or less (for barangays in Local Taxation
municipalities) at a rate not exceeding 1% of such gross
sales or receipts
b) Service fees or charges – for services rendered in
connection with the regulation or the use of barangay- III. Community Tax Certificate
owned properties or service facilities such as palay, copra
or tobacco dryers
c) Barangay clearance – for purposes of mayor’s/business
permit application/renewal
d) Other fees and charges – on commercial breeding of
fighting cocks, cockfights and cockpits; on places of
recreation charging admission fees; on billboards, etc.
A. Who are Liable A. Who are Liable
1. Who are authorized to levy and collect community taxes? b) Juridical persons (§ 158):
! Cities or municipalities (§ 156) ! Every corporation engaged in or doing business in
2. Who are liable? the Philippines
a) Individuals (§ 157): ! Rate and base: annual tax of P500 and an annual
! 18 years or over (i) regularly employed on a wage additional tax based on FMV of real property and
gross receipts (the additional tax, however, shall
or salary basis for at least 30 consecutive working
not exceed P10,000)
days during any calendar year; or (ii) engaged in
business or occupation; or (iii) own real property
with FMV of P1,000 or more; or (iv) required to
file ITR
! Rate and base: annual tax of P5, plus P1/P1,000
income
B. Exemptions from Community Tax C. Place and Time of Pay’t of Tax

1. Who are exempt from community tax (§ 159)? 1. Where shall the community tax be paid?
a) Diplomatic and consular representatives ! Residence of individual
b) Transient visitors ! Place where principal office of juridical entity is
located
2. When shall community tax be paid?
! On or before last day of Feb.
! Special rules for individuals and corporations who
become liable for community tax during the year
A. Time of Pay’t
1. Tax period – generally calendar year basis (§ 165)
2. Manner of payment – may be made quarterly (§ 165)
3. Accrual of tax – generally Jan. 1; in case of new ordinance
Local Taxation levying new tax or increasing rates – 1st day of quarter
next following effectivity of ordinance (§ 166)
4. Time of payment – generally first 20 days of Jan. or
IV. Time, Manner and Place of Payment of quarter, as the case may be (§ 167);
Local Business Tax ! In case of retirement from business – if the tax paid
during the year be less than the tax due on said gross
sales or receipts of the current year, the difference
shall be paid before the business is considered
officially retired (§ 145)
B. Place of Pay’t (Situs Rules) B. Place of Pay’t (Situs Rules)

1. Where should local business taxes be paid? Branch or Sales Office Rule
Branch or Sales Office Rule
a) LGU where branch or sales office is located – all sales
b) In case where there is no such branch, sales office or
made in a locality where there is a branch or sales office warehouse in the locality where the sale is made, the
or warehouse shall be recorded in said branch or sales sale shall be recorded in the principal office along
office or warehouse and the tax shall be payable to the
city or municipality where the same is located with the sales made by said principal office and the
" Branch or sales office – a fixed place in a locality which tax shall accrue to the city or municipality where said
conducts operations of the business as an extension of principal office is located
the principal office; offices used only as display areas
of the products where no stocks or items are stored " Principal office – head of main office appearing in
for sale, although orders for the products may be the AOI or DTI registration
received thereat, are not branch or sales office. A
warehouse which accepts orders and/or issues sales
invoices independent of a branch with sales office shall
be considered as a sales office
B. Place of Pay’t (Situs Rules) B. Place of Pay’t (Situs Rules)
Allocation Rule: Allocation Rule:
b) In case of a plantation located at a place other the place
# Impt.: allocation rule applies only manufacturers, where the factory is located, said 70% in (a) shall be divided
assemblers, contractors, producers and exporters as follows:
with factories, project offices, plants and plantations i. 60% (of the 70%) to the city or municipality where the
factory is located; and
in the pursuit of business ii. 40% (of the 70%) to the city or municipality where the
a) 30% of all sales recorded in the principal office shall plantation is located
c) In case where a manufacturer, assembler, producer, exporter
be taxable by the city or municipality where the or contractor has 2 or more factories, project offices, plants
principal office is located, and 70% of all sales or plantations located in different localities, the 70% sales
allocation shall be pro-rated among the localities where the
recorded in the principal office shall be taxable by factories, project offices, plants or plantations are located in
the city or municipality where the factory, project proportion to their respective volumes of production during
office, plant or plantation is located the period for which the tax is due. In the case of project
offices of service or other independent contractors,
“production” = cost of projects undertaken during the tax
period
B. Place of Pay’t (Situs Rules)

Sales Made by Route Trucks, Vans or Vehicles:
a) For route sales made in locality where a manufacturer,
producer, wholesaler, retailer or dealer has a branch or
sales office or warehouse, the sale shall be recorded in the
branch or sales office or warehouse and the tax due Local Taxation
thereon shall be paid to the city or municipality where such
branch or sales office or warehouse is located
b) For route sales made in locality where a manufacturer, V. Enactment of Tax Ordinances and Other
producer, wholesaler, retailer or dealer has no branch or Revenue Measures
sales office or warehouse, the sale shall be recorded in the
branch or sales office or warehouse from where the route
trucks withdraw their products for sale, and the tax due
thereon shall be paid to the city or municipality where such
branch or sales office or warehouse is located
A. Public Hearing and Publication A. Public Hearing and Publication of
of Tax Ordinances Tax Ordinances
1. What are the procedural requirements for the enactment 3. What is the procedure for the publication of tax
of tax ordinances ordinances?
! Public hearing and publication ! Within 10 days from approval, certified true copies
2. §§ 186 and 187 state that no ordinance levying taxes, of the ordinance shall be published for 3 consecutive
fees and charges shall be enacted without public hearing; days in a newspaper of local circulation
this is a mandatory requirement
! In LGUs where there are no newspapers of local
! Figuerres v. CA, G.R. No. 119172, March 25, 1999 – SC
circulation, the tax ordinance may be posted in at
confirmed that the holding of a public hearing is a
mandatory requirement for the enactment of a tax least 2 conspicuous and publicly accessible places
ordinance; the SC however upheld the validity of the
assailed ordinance for failure of the TP to adduce
evidence that the requisite public hearings were not
conducted by the LGU (presumption of validity of
ordinances)
B. Appeal of Tax Ordinances B. Appeal of Tax Ordinances

1. What is the procedure for the appeal of tax ordinances? ! Drilon v. Lim, G.R. No. 112497, Aug. 4, 1994 – Secretary
of Justice declared a Manila tax ordinance illegal
a) Secretary of Justice – because of certain ultra vires provisions and non-
compliance with the prescribed procedure for
! Any question on the constitutionality or legality of enactment thereof; RTC declared § 187
tax ordinances or revenue measures may be raised unconstitutional because said provision violates
on appeal within 30 days from the effectivity constitutional provision on local autonomy; SC held that
no constitutional rule on local autonomy was violated
thereof to the Secretary of Justice because no control, but only supervision was exercised
! Secretary of Justice must render a decision on by the Sec. of Justice in declaring as illegal the assailed
ordinance
the appeal within 60 days from receipt of appeal ! Hagonoy Market Vendor Assoc. v. Mun. of Hagonoy,
! Pendency of the appeal does not suspend the Bulacan, 376 SCRA 376 – where an appeal to the
effectivity of ordinance or accrual and payment of Secretary of Justice more than 1 year after the
effectivity of the ordinance in question was held to be
taxes, fees and charges levied thereon time-barred on the ground that the periods stated in §
187 are mandatory
B. Appeal of Tax Ordinances
b) Court of competent jurisdiction (RTC) – within 30 days
from receipt of adverse decision or from the lapse of the
60 day period without the Sec. of Justice acting on the
appeal, aggrieved party may file appropriate proceedings
with a court of competent jurisdiction Local Taxation
VI. Remedies of Local Government and

Taxpayer
Remedies of the LGU and TP Remedies of the LGU and TP

1. What are the remedies of LGUs in the collection of taxes 2. What are the remedies of taxpayers?
and revenues? a) Protest the assessment (§ 195):
a) Examination of taxpayer’s books of accounts (§ 171) i. File protest with local treasurer within 60 days
b) Issuance of deficiency assessment (§§ 194 - 195) from receipt of assessment, otherwise
assessment becomes final and executory (CMC,
c) Imposition of surcharge and interest (§§ 168 - 169) Inc. v. City of Las Piñas, CTA AC No. 4, Sept. 28,
d) Summary remedies for the collection of taxes: 2005); local treasurer has 60 days to decide on
i. Distraint of personal property (§ 175) the protest
ii. Appeal to court of competent jurisdiction (RTC)
ii. Levy on real property (§§ 176, 178-182) within 30 days from receipt of denial of protest or
iii. Further distraint and levy (§ 184) from lapse of the 60-day period without the local
e) Judicial action for collection of taxes (§ 183) treasurer acting on the protest
b) Claim for refund or tax credit (§ 196)
General Principles
1. What are the fundamental principles governing the
appraisal, assessment, levy and collection of real property
tax (“RPT”)?
Real Property Taxation 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;
I. General Principles and Definitions c) Real property shall be assessed on the basis of a
uniform classification within each LGU;
d) The appraisal, assessment, levy and collection of RPT
shall not be let to any private person; and
e) The appraisal and assessment of real property shall
be equitable.
General Principles
Cases:
! Province of Nueva Ecija v. Imperial Mining Co., Inc., 118 SCRA
632 (1982) – where it was held that the policy of taxing real
property is on the basis of actual use even if the user is not the
owner. Hence, gov’t property leased to a private person becomes
taxable Real Property Taxation
! Ty v. Trampe, 250 SCRA 500 (1995) – where the SC declared
illegal the 400% to 570% increase in real estate taxes imposed
on landowners in Pasig
! Lopez v. City of Manila, 303 SCRA 448 (1999) – where the SC II. Real Property Tax and
enumerated the procedural steps in computing real property
tax, as follows: (1) ascertain assessment level; (2) multiply the Additional or Special Levies
FMV by the applicable assessment level; and (3) find the tax
rate corresponding to the class (use) of the property and
multiply the assessed value by that rate; where the SC also
enumerated the steps for the mandatory conduct of general
revision of real property assessments

Real Property Tax and Additional
or Special Levies
1. What are the taxes that LGUs may levy on real property?
a) Basic RPT (§ 233)
! 1% for provinces
Real Property Taxation

! 2% for cities and municipalities within MMA
b) 1% special education fund (SEF) (§ 235)
c) 5% tax on idle lands (§§ 236 - 237)
! Agricultural lands more than 1 hectare in area
! Lands other than agricultural more than 1,000 sqm.
! Residential lots in subdivisions regardless of land area III. Exemptions from RPT
d) Special levy due to improvements (§§ 240 - 243)
! Lands specially benefited by public works projects or
improvements funded by the LGU concerned
! Special levy shall not exceed 60% of the cost of the
project or improvement
Exemptions from RPT Exemptions from RPT

1. What is the procedure for claiming exemption from RPT? b) Those actually, directly and exclusively used for
! File documentary evidence in support of claimed exemption religious, charitable or educational purposes, and non-
with the local assessor within 30 days from date of profit or religious cemeteries
declaration of real property (§ 206)
! BLGF Opinion dated Nov. 20, 1992 addressed to
2. What types of real property are exempt from RPT (§ 234)? the Mun. Assessor of Tuguegarao, Cagayan – where
a) Property owned by Gov’t or any of its political subdivisions only real properties owned by the Phil. Union
! LRTA v. CBAA, 342 SCRA 692 (2000) – where the SC College which are a/d/e/ used for educational
held that the LRT carriageways and terminal stations purposes are exempt, including the student
are not exclusively for public use but rather patrimonial dormitories, cafeterias, and the food services
property, and therefore are subject to RPT building. The guardhouses garages, perimeter
notwithstanding that LRTA is a GOCC
fences, water tanks and pumps, generator houses,
stockrooms and faculty/personnel residential
quarters are not exempt
Patrimonial property is private proper1y of

the government. The person acquires
ownership of patrimonial property by
prescription under the Civil Code is
entitled to secure registration thereof under
Section 14(2) of the Property Registration
Decree.
Exemptions from RPT Exemptions from RPT
! BLGF Opinion dated March 15, 1993 addressed to Mr. c) Machineries and equipment a/d/e used by local water
Elmer Lee of QC – where the real properties of the districts and GOCCs in the supply and distribution of
Chinese General Hospital were held exempt because the water and electricity
only purpose for which it was formed was for
charitable, benevolent, civic, and educational purposes ! Machineries and equipment used by a private
power plant not exempt
! BLGF Opinion dated April 22, 1999 – where the Andres
Soriano Training Center, owned and operated by SMC, d) Real properties owned by cooperatives duly
was held subject to RPT although it was used for registered with the CDA and in accordance with the
educational purposes because (a) it also caters to other provisions of RA 6938
private offices who wish to avail of their training e) Machinery and equipment used for pollution control
courses, (b) its courses are not the regular subjects
and environmental protection
offered in schools or universities, and (c) it is not
accredited by DECS
Payment of RPT and Special

Levies
1. When does RPT accrue?
! January 1 (§ 246)
2. When does a special levy accrue?
Real Property Taxation ! On the first day of the quarter next following the
effectivity of the ordinance imposing such levy (§ 245)
3. For TPs electing to pay RPT and SEF in installments, what are
the due dates for payment of the installments?
IV. Payment of RPT and Special Levies ! 4 equal installments payable on March 31, June 30, Sept.
30 and Dec. 31 (§ 250)
4. Is there a tax discount for advanced prompt payment of RPT
and SEF?
! Yes, if RPT and SEF are paid in advance of March 31, June
30, Sept. 30 and Dec. 31, SB concerned may grant discount
not exceeding 20% of annual tax due (§ 251)

A. Appraisal
1. What is the applicable rule regarding the appraisal of real
property (land, buildings and other improvements)?
! Real property, whether taxable or exempt, shall be
Real Property Taxation appraised at the current and FMV prevailing at the
locality where the property is located (schedule of
fair market values) (§ 201)
2. What is the applicable rule regarding the appraisal of
V. Appraisal and Assessment of Real Property
machinery?
! If machinery is brand new – FMV is acquisition cost
! If machinery is imported – FMV is total landed cost
A. Appraisal A. Appraisal
3. What are the modes by which real property is appraised? 6. What is the remedy of the local assessor in case the
a) Voluntary declaration owner or administrator of real property fails to file the
b) Involuntary declaration sworn statement under § 202?
4. What is the obligation of owners or administrators of real ! Declare the real property on behalf of the defaulting
property as regards the declaration thereof? owner (§ 204)
! File sworn statement with the local assessor ! For purposes of § 204, local assessor is authorized to
declaring the true value of the property once every 3 take evidence (§ 213)
years from Jan. 1 to June 30 (§ 202)
7. What is the obligation of owners or administrators of real
5. What is the obligation of a person acquiring real
property? property as regards the declaration thereof?
! File sworn statement with the local assessor ! File sworn statement with the local declaring the true
declaring the true value of the property within 60 value of the property once every 3 years from Jan. 1
days from acquisition to June 30 (§ 202)
B. Assessment B. Assessment
1. What is the fundamental rule regarding the assessment of real 4. What are the steps in the assessment of real property?
property?
a) Determine FMV
! Real property shall be classified, valued and assessed on
the basis of its actual use regardless of where located, b) Determine classification
whoever owns it, and whoever uses it (§ 217) c) Apply assessment level to determine assessed value or taxable
2. What are the classes of real property for assessment value
purposes?
d) Determine RPT due by multiplying the rate against assessed
! Residential, agricultural, commercial, industrial, mineral,
timberland or special value
3. What are the special classes real property? 5. What is an assessment level?
! lands, buildings, and other improvements thereon actually, ! It is the percentage applied to the FMV (depending on the
directly and exclusively used for hospitals, cultural, or class of real property) to determine the taxable value of the
scientific purposes, and those owned and used by local property (see § 218)
water districts, and GOCCs rendering essential public
services in the supply and distribution of water and/or 6. What are the classes of real property for assessment purposes?
generation and transmission of electric power ! Residential, agricultural, commercial, industrial, mineral,
timberland or special
Fair Market Value P1,000,000 7. What are the special classes real property?
! lands, buildings, and other improvements thereon actually,
Assessment Level 20% directly and exclusively used for hospitals, cultural, or
(Residential) scientific purposes, and those owned and used by local water
districts, and GOCCs rendering essential public services in the
Assessed Value 200,000.00 supply and distribution of water and/or generation and
transmission of electric power
Basic Real Property Tax P4,000 8. When can the local assessor make an assessment or reassessment
(2%) of real property (§ 220)?
a) Real property is declared and listed for taxation purposes for
Special Education Fund 2,000 the first time;
b) there is an ongoing general revision of property classification
Total P6,000 and assessment; and
c) a request is made by the person in whose name the property is
declared
9. How often can the assessed value of real property be 10. When does the assessment or re-assessment take effect
(§§ 220 - 221)?
made?
! Gen. rule: Jan. 1 of the following year (prospective
! Only once every 3 years except in case of new application)
improvements substantially increasing the value of ! Exception: the reassessment of real property due to its
said property or of any change in its actual use (§ (i) partial or total destruction, or to a (ii) major change
in its actual use, or to any great (iii) and sudden inflation
220) or deflation of real property values, or to the (iv) gross
illegality of the assessment when made or to any other
abnormal cause, shall be made within 90 days from the
date any such cause or causes occurred, and shall take
effect at the beginning of the quarter next following
the reassessment
! Exception: for previously undeclared real property
(property being declared for the first time), effectivity
of assessment retroacts to the period during which it
would have been liable (max. of 10 years)
Remedies of LGU
1. What are the remedies of LGUs in the collection of RPT?
a) Posting of notice of delinquency (§ 254)
b) Imposition of interest (§ 255)
Real Property Taxation c) Administrative remedies (§§ 256 - 257)
d) Judicial action for collection (§§ 256, 266, 270)
e) Unpaid tax constitutes a lien (§ 257)
VI. Remedies of Local Government

Remedies of Taxpayers
1. What are the remedies of taxpayers?
! Dispute the assessment
! Pay under protest

! Claim for refund or credit
2. What are the procedures for disputing an assessment?
a) Appeal to LBAA (§ 226) – within 60 days from receipt of
assessment
! Callanta v. Office of the Ombudsman - where it was
VII.Remedies of Taxpayer ruled that filing with the local assessor of a request for
a review or readjustment of an assessment is not a
proper remedy, but instead an appeal should have been
lodged with the LBAA
b) Appeal to CBAA – within 30 days, if LBAA denies appeal (§
229(c))
c) Appeal to CTA – within 30 days, if CBAA denies appeal (§
7, RA 1125, as amended by RA 9282)
3. What is the effect of an appeal of an assessment?
! It does not suspend collection of RPT
4. What is the requirement if TP wishes to protest the
collection of RPT?
! TP must pay the disputed RPT under protest
! National Power Corp. v. Prov. of Quezon and Mun. of
Pagbilao, CTA E.B. No. 46 (CBAA Case No. L-29) –
payment under protest applies only if TP is
questioning the reasonableness of the amount
assessed, and not when the TP is questioning the very
legality of the assessment
Atty. Terence Conrad H. Bello Slide No. 71

1. What are the remedies of taxpayers?
! Dispute the assessment
! Pay under protest

! Claim for refund or credit
2. What are the procedures for disputing an assessment?
a) Appeal to LBAA (§ 226) – within 60 days from receipt of
assessment
! Callanta v. Office of the Ombudsman - where it was
VII.Remedies of Taxpayer ruled that filing with the local assessor of a request for
a review or readjustment of an assessment is not a
proper remedy, but instead an appeal should have been
lodged with the LBAA
b) Appeal to CBAA – within 30 days, if LBAA denies appeal (§
229(c))
c) Appeal to CTA – within 30 days, if CBAA denies appeal (§
7, RA 1125, as amended by RA 9282)
3. What is the effect of an appeal of an assessment?
! It does not suspend collection of RPT
4. What is the requirement if TP wishes to protest the
collection of RPT?
! TP must pay the disputed RPT under protest
! National Power Corp. v. Prov. of Quezon and Mun. of
Pagbilao, CTA E.B. No. 46 (CBAA Case No. L-29) –
payment under protest applies only if TP is
questioning the reasonableness of the amount
assessed, and not when the TP is questioning the very
legality of the assessment
Atty. Terence Conrad H. Bello Slide No. 71

Local and Real Property Tax

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A.

Local Taxation vested in Congress; however, in our jurisdiction, it may be

B. Fundamental Principles B. Fundamental Principles

C. Common Limitations on Taxing Power C. Common Limitations on Taxing Power

C. Common Limitations on Taxing Power

Atty. Terence Conrad H. Bello Slide No. 11 12

B. Exemptions from Community Tax C. Place and Time of Pay’t of Tax

29 Atty. Terence Conrad H. Bello Slide No. 30

B. Place of Pay’t (Situs Rules) B. Place of Pay’t (Situs Rules)

B. Place of Pay’t (Situs Rules)

B. Appeal of Tax Ordinances B. Appeal of Tax Ordinances

VI. Remedies of Local Government and

Atty. Terence Conrad H. Bello Slide No. 41 42

Remedies of the LGU and TP Remedies of the LGU and TP

45 Atty. Terence Conrad H. Bello Slide No. 46

Atty. Terence Conrad H. Bello Slide No. 47 48

Real Property Taxation

Atty. Terence Conrad H. Bello Slide No. 49 50

Exemptions from RPT Exemptions from RPT

Patrimonial property is private proper1y of

Payment of RPT and Special

55 Atty. Terence Conrad H. Bello Slide No. 56

57 Atty. Terence Conrad H. Bello Slide No. 58

67 Atty. Terence Conrad H. Bello Slide No. 68

Real Property Taxation

Atty. Terence Conrad H. Bello Slide No. 71

Real Property Taxation

Atty. Terence Conrad H. Bello Slide No. 71

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