* LOCAL

GOVERNMENT CODE
OF 1991 – AS R E A L P R O P E RT Y
AMENDED BY RA
9 6 4 0 p r e v. R A 7 1 6 0 TA X AT I O N
( L O C A L TA X A T I O N )

April T. Espiritu
GAC 742 – National and Local Taxation
OBJECTIVES
 FUNDAMENTAL PRINCIPLES (Sec. 198)
 NATURE AND SOURCE OF TAXING POWER
 IMPOSITION (Chapter IV)
 Power to levy (Sec. 232)
 Exemption from RPT (Sec. 234)
 APPRAISAL AND ASSESSMENT (Chapter II)
 Classes of RP (Sec 215)
 Assessment based on actual use (Sec 217)
 COLLECTION (Chapter VI)
 Date of accrual (Sec 246)
 Periods to collect (Sec 270)
 Remedies of LGU (Sec 230)
 TAXPAYER’S REMEDIES
5
FUNDAMENTAL PRINCIPLES OF
REAL PROPERTY TAXATION (Sec. 198)
Codal Reference
Real property shall be appraised at its current and fair market Chapter II – Appraisal and assessment
1. value; of RP
Sec. 198, 199, and 217
2. Real property shall be classified for assessment purposes on the
basis of its actual use;
Sec. 130 – Local Business Taxation; and
Real property shall be assessed on the basis of a uniform Sec. 198, 207, 233, 241 – Real Property
3. classification within each local government unit;
Taxation

The appraisal, assessment, levy and collection of real Sec. 130 – Local Business Taxation; and
4. property tax shall not be let to any private person; and Sec. 198 – Real Property Taxation

Sec. 130 – Local Business Taxation; and

5. The appraisal and assessment of real property shall be equitable. Sec. 198 – Real Property Taxation

 Ref. Local Government Code of 1991 as amended by 9640 – Chapter I Sec 198
 Def. Equitable – as far as practicable on the taxpayer’s ability to pay.
SCOPE OF THE CODE/ TITLE (SEC. 197)

ADMINISTRATION APPRAISAL ASSESSMENT

LEVY COLLECTION TAXPAYER’S

REMEDIES**
B. NATURE AND
SOURCE OF
TAXING POWER
PURPOSE OF REAL PROPERTY TAX

 Local Government
- To provide/generate funds or property and finance its necessary
activities; and
 Sovereign
- For government to promote general welfare and the protection of
its citizen.
NATURE OF REAL PROPERTY TAX
 Enforced contribution
 Generally payable in money
 Proportionate in character
 Levied on property
 Levied by the state which has jurisdiction over the property (municipality or city)
 Levied for public purpose/s
 Ad-valorem tax - It is a tax based on the assessed value of the real property
 Regressive tax – It is a tax levied using the same percentage regardless of the buyer’s
income. This is considered as disproportionately difficult on low earners since real
property tax does not intend to correlate an individual’s earnings to the asset the
taxpayer owns.
SOURCE OF TAXING POWER
Local government units shall have the power and authority to establish an organization that shall be
responsible for:
1. the efficient and effective implementation of their development plans, program objectives and priorities;
2. to create their own sources of revenue and to levy taxes, fees, and charges which shall accrue exclusively for
their use and disposition and which shall be retained by them;
3. to have a just share in national taxes which shall be automatically and directly released to them without
need of any further action;
4. to have an equitable share in the proceeds from the utilization and development of the national wealth and
resources within their respective territorial jurisdictions including sharing the same with the inhabitants by
way of direct benefits;
5. to acquire, develop, lease, encumber, alienate, or otherwise dispose of real or personal property held by
them in their proprietary capacity; and
6. to apply their resources and assets for productive, developmental, or welfare purposes, in the exercise or
furtherance of their governmental or proprietary powers and functions and thereby ensure their
development into self-reliant communities and active participants in the attainment of national goals.
The Local Code of the Philippines Book 1 – Title I Chapter II Section 18
SPECIAL ASSESSMENT VS. TAX
Special Assessment - is an enforced proportional contribution from owners of lands for special benefits
resulting from public improvements.
SPECIAL ASSESSMENT
1. Levied on Land only
2. Not a personal liability of the person assessed
3. Based wholly on the special benefits to the
property assessed
4. Exceptional both as to time and place
TAX
1. Levied on persons, property or exercise of
privilege.
2. Personal liability of the person taxed.
3. Based on the necessities of the government
without and special benefit directly accruing to
the taxpayer.
4. Has general application
 C. IMPOSITION OF
REAL PROPERTY TAX
 POWER TO LEVY (Sec. 232)
 Province or city or a municipality
within the Metropolitan Manila Area
may levy an annual ad valorem tax on
real property such as land, building,
machinery, and other improvement
not hereinafter specifically exempted.

Ref. Local Government Code of 1991 as amended by 9640 – Chapter IV Sec 232 to 234
 IMPOSITION OF RPT (Chapter IV)
 RATES OF LEVY (Sec. 233)
 A province/city/municipality within Metro Manila Area (MMA) shall fix a uniform rate
applicable to their respective localities as follows:

Place Ceiling Rate of Tax Base

RPT (%)
Provinces outside MMA 1%
Assessed Value of RP
City/ Municipality within MMA 2%

 Assessment level – is the percentage applied to the FMV to determine the taxable value of the
property. (Sec. 218)

 Assessed value
 is the FMV of the RP multiplied by the assessment level
 synonymous to “taxable value”
 𝐀𝐬𝐬𝐞𝐬𝐬𝐞𝐝 𝐕𝐚𝐥𝐮𝐞 =𝐅𝐌𝐕 𝐨𝐟 𝐭𝐡𝐞 𝐑𝐏 ∗ 𝐀𝐬𝐬𝐞𝐬𝐬𝐦𝐞𝐧𝐭 𝐥𝐞𝐯𝐞𝐥
Ref. Local Government Code of 1991 as amended by 9640 – Chapter II Sec 218 and Chapter IV Sec 232
 EXEMPTIONS FROM REAL PROPERTY TAX (SEC. 234)

* Political subdivision are the provinces, cities, municipalities, and barangays. (Article X Subsection 1 of 1987 Constitution of the Republic of the Philippines.)
** Beneficial use is the person’s right to enjoy the benefits of specific property. (https://legal-dictionary.thefreedictionary.com/Beneficial+Use)
*** R.A. No. 6938 - An Act to ordain a Cooperative Code of the Philippines. (https://www.officialgazette.gov.ph/1990/03/10/republic-act-no-6938/)
 EXCEPTION FROM EXEMPTED RPT
Except as provided herein:
any exemption from payment of real property tax previously granted to;
or presently enjoyed by, all persons, whether natural or juridical, including all government-owned
or controlled corporations are hereby withdrawn upon the effectivity of this Code.

Sample:

 PEZA Registered Entities – Business Permits, Real Property Taxation, Business Taxes, and WTaxes
R Provided that the Company still enjoys its ITH
 W/ RPT on land; and
 W/o RPT on machineries/equipment (1st 3 years; 4th year with RPT).

R ITH expires, 5% special tax rate in lieu of all taxes – Without RPT
 W/ RPT on land but on the developer only;
 W/o RPT on machineries/equipment.

Memorandum Circular No. 2004-024 (dated Sept. 24, 2004); Republic Act No. 7916 – The Special Economic Zone of 1995
PROOF OF EXEMPTION FROM RPT
Every person by or for whom real property is declared, who shall claim tax exemption for such property
under this Title shall file with the provincial, city or municipal assessor within thirty (30) days
from the date of the declaration of real property sufficient documentary evidence in support of such
claim including:
1. Corporate charters;
2. Title of ownership;
3. Articles of incorporation;
4. By-laws, contracts;
5. Affidavits;
6. Certifications and mortgage deeds; and
7. Similar documents.
If the required evidence is not submitted within the period herein prescribed, the property shall be
listed as taxable in the assessment roll. However, if the property shall be proven to be tax exempt, the
same shall be dropped from the assessment roll.
SPECIAL LEVIES ON REAL PROPERTY

Additional Levy on Real Property for the Special Education Fund (Sec. 235)
A province or city, or a municipality within the Metropolitan Manila Area, may levy and collect an
annual tax of one percent (1%) on the assessed value of real property which shall be in addition
to the basic real property tax.
The proceeds thereof shall exclusively accrue to the Special Education Fund (SEF).

Additional Ad-Valorem Tax on Idle Lands (Sec. 236)

A province or city, or a municipality within the Metropolitan Manila Area, may levy an annual tax on
idle lands at the rate not exceeding five percent (5%) of the assessed value of the property which
shall be in addition to the basic real property tax.

Ref. Local Government Code of 1991 as amended by 9640 – Chapter V Sec 235 – Special Education Fund; Sec 236 – Idle Lands
CLASSIFICATION OF IDLE LANDS
For purposes of real property taxation, idle lands shall include the following:

CLASS OF
LAND MEASUREMENT PURPOSE

1 Hectare Cultivation, dairying, inland fishery, and other agricultural

uses
A G R I C U LT U R E
Remain uncultivated or unimproved by the owner of the
1/2 property or person having legal interest therein

Agricultural lands planted to permanent or perennial crops with at least fifty (50) trees to a
hectare shall not be considered idle lands.

Lands actually used for grazing purposes shall likewise not be considered idle lands.

Ref. Local Government Code of 1991 as amended by 9640 – Chapter V Sec 327 – Idle Lands, Coverage
CLASSIFICATION OF IDLE LANDS

Lands, other than agricultural, located in a city or municipality, more than one thousand (1,000)
square meters in area one-half (1/2) of which remain unutilized or unimproved by the owner of
the property or person having legal interest therein.
Regardless of land area, this Section shall likewise apply to residential lots in subdivisions duly
approved by proper authorities, the ownership of which has been transferred to individual owners,
who shall be liable for the additional tax
Provided, however, that individual lots of such subdivisions, the ownership of which has not been
transferred to the buyer shall be considered as part of the subdivision, and shall be subject to the
additional tax payable by subdivision owner or operator.

Ref. Local Government Code of 1991 as amended by 9640 – Chapter V Sec 327 – Idle Lands, Coverage
IDLE LANDS EXEMPT FROM TAX

A province or city or a municipality within the Metropolitan Manila Area may exempt idle lands
from the additional levy by reason of:
(1) force majeure;
(2) civil disturbance;
(3) natural calamity;
(4) any cause or circumstance which physically or legally prevents the owner of the property or
person having legal interest therein from improving, utilizing or cultivating the same.

Ref. Local Government Code of 1991 as amended by 9640 – Chapter V Sec 328 – Idle Lands Exempt from Tax
SPECIAL LEVY BY LOCAL GOVERNMENT UNITS (Sec. 240)

A province, city or municipality may impose a special levy on the lands comprised within its
territorial jurisdiction specially benefited by public works projects or improvements funded by
the local government unit concerned:
Provided, however, That the special levy shall not exceed sixty percent (60%) of the actual cost
of such projects and improvements, including the costs of acquiring land and such other real
property in connection therewith: Provided, further, That the special levy shall not apply to lands
exempt from basic real property tax and the remainder of the land portions of which have been
donated to the local government unit concerned for the construction of such projects or
improvements.
Fixing the amount of special levy is to be set by the assessor based on records of the assessed
valuation of land. (Sec. 243)

Ref. Local Government Code of 1991 as amended by 9640 – Chapter V Sec 240 – Special Levy by Local Government Units ; Sec 243 – Fixing the Amount of Special Levy
TAXPAYER’S REMEDIES AGAINST SPECIAL LEVY

Taxpayer’s Remedies Against Special Levy (Sec. 244)

Any owner of real property affected by a special levy or any person having a legal interest therein may,
upon receipt of the written notice of assessment of the special levy, avail of the remedies provided for
in Chapter 3, Title Two, Book II of this Code.

Accrual of Special Levy (Sec. 245)

The special levy shall accrue on the first day of the quarter next following the effectivity of the
ordinance imposing such levy.

Ref. Local Government Code of 1991 as amended by 9640 – Chapter V Sec 244 –Taxpayer’s Remedies Against Special Levy; Sec 245 – Accrual of Special Levy
 D. APPRAISAL AND
ASSESSMENT
All real property, whether taxable or
exempt, shall be appraised at the current
and fair market value prevailing in the
locality where the property is situated.

The department of finance shall promulgate

the necessary rules and regulations for the
classification, appraisal, and assessment of
real property pursuant to the provisions of
this code. (Sec. 201)

Ref. Local Government Code of 1991 as amended by 9640 – Chapter II Sec 201 – Appraisal of Real Property
APPRAISAL AND ASSESSMENT

Assessment based on actual use (Sec. 198 and 217)

 Real property shall be classified, valued, and assessed on the basis of its actual use regardless of
where located, whoever owns it, and whoever uses it.

 Assessment (Sec 199)  Actual use (Sec 199)

is the act or process of determining the value of refers to the purpose for which the property is
a property, or proportion thereof subject to tax, principally or predominantly utilized by the
including the discovery, listing, classification, person in possession thereof;
and appraisal of properties;

Sec. 198 – Fundamental principles; Sec. 199 – Definitions; Sec. 217 - Actual Use of Real Property as Basis for Assessment.
CLASSES OF REAL PROPERTY
Classes of Real Property (Sec. 215)
** All lands, buildings, and other improvements
For purposes of assessment, real property shall
thereon actually, directly and exclusively
be classified:
used for hospitals, cultural, or scientific
1. Residential; purposes, and those owned and used by
2. Agricultural; local water districts, and government-owned
or controlled corporations rendering
3. Commercial; essential public services in the supply and
4. Industrial; distribution of water and/or generation and
transmission of electric power shall be
5. Mineral; classified as special.
6. Timberland; or
7. Special **

Chapter II – Appraisal and Assessment of Real Property: Sec. 215 – Classes of Real Property; Sec. 216 – Special Classes of Real Property
SPECIAL CLASSES OF REAL PROPERTY

The city or municipality within the Metropolitan Manila Area, through their
respective sanggunian, shall have the power to classify lands as residential,
agricultural, commercial, industrial, mineral, timberland, or special in accordance
with their zoning ordinances.

Chapter II – Appraisal and Assessment of Real Property: Sec. 215 – Classes of Real Property; Sec. 216 – Special Classes of Real Property
APPRAISAL AND ASSESSMENT
ASSESSMENT LEVEL (Sec. 218)
 The assessment levels, to be applied to the FMV of the real property to determine its assessed value, shall
be fixed by ordinances of the Sangguniang panlalawigan/panglungsod/bayan of a municipality within
MMA, at the rates not exceeding to the following tables:
LAND MACHINERIES

Ref. Local Government Code of 1991 as amended by 9640 – Chapter II Sec 201 to 225
APPRAISAL AND ASSESSMENT
ASSESSMENT LEVEL (Sec. 218)
BUILDINGS AND OTHER STRUCTURES

1. RESIDENTIAL 2. COMMERCIAL/ INDUSTRIAL

Ref. Local Government Code of 1991 as amended by 9640 – Chapter II Sec 201 to 225
APPRAISAL AND ASSESSMENT
ASSESSMENT LEVEL (Sec. 218)
BUILDINGS AND OTHER STRUCTURES

3. AGRICULTURAL 4. TIMBERLAND

Ref. Local Government Code of 1991 as amended by 9640 – Chapter II Sec 201 to 225
APPRAISAL AND ASSESSMENT
ASSESSMENT LEVEL (Sec. 218)
SPECIAL CASES
The assessment levels for all lands, buildings, machineries, and other improvements;

* Government-owned controlled corporations engaged in the supply and distribution of water and/or
generation and transmission of electric power.
Note that RPT for stand-alone houses and condominium units may differ depending on their assessed value.

Ref. Local Government Code of 1991 as amended by 9640 – Chapter II Sec 201 to 225
DUTY TO DECLARE PROPERTY

Declaration of Real Property by the Owner or Administrator (Sec. 202)

 It shall be the duty of all persons, natural or juridical, owning or administering real property,
including the improvements therein.
 Sworn statement – shall be prepared and submitted to the city or municipal assessor
declaring the true value of the property.
 Property – whether previously declared or undeclared, taxable or exempt.
 Due date – Once every 3 years
Input:
 Incorporation of a Sole Proprietorship
R All property to be incorporated under the name of the Corporation shall be subject for
appraisal and assessment.

Sec. 202 – Declaration of Real Property by the Owner or Administrator

DUTY TO DECLARE PROPERTY

Duty of Person Acquiring RP or Making Improvement Thereon (Sec. 203)

 It shall also be the duty of any person, or his authorized representative, acquiring at any time
real property in any municipality or city or making any improvement on real property.
 Sworn statement – shall be prepared and submitted to the city or municipal assessor
declaring the true value of subject property.
 Due date – Within 60 days after the acquisition or completion or occupancy of the
improvement, whichever comes earlier.

Sec. 203 – Duty of Person Acquiring Real Property or Making Improvement Thereon
APPRAISAL AND ASSESSMENT OF MACHINERY

How are machineries appraised and assessed? (Sec. 224)

(a) Brand-new machinery – FMV is acquisition cost;
If not,
(b) If the machinery is imported, the acquisition cost includes freight, insurance, bank and other
   charges, brokerage, arrastre and handling, duties and taxes, plus charges at the present site.
The cost in foreign currency of imported machinery shall be converted to peso cost on the basis
of foreign currency exchange rates as fixed by the Central Bank.

* Replacement/Reproduction – current prices, acquiring an equally desirable property, or cost of

producing a new replica.

Sec. 224 – Appraisal and Assessment of Machinery

APPRAISAL AND ASSESSMENT OF MACHINERY

Maximum allowed depreciation for machineries? (Sec. 225)

 Not exceeding 5% per year- Depreciation allowance for deduction
 Basis – Originally cost, or replacement cost, or reproduction cost.

Provided, however, the remaining value for all kinds of machinery shall be fixed at not less than
twenty percent (20%) of such original, replacement, or reproduction cost for so long as the
machinery is useful and in operation.

Sec. 225 – Depreciation Allowance for Machinery

 E. COLLECTION (Sec. 247)
 The collection of the real property tax with
interest thereon and related expenses, and
the enforcement of the remedies provided
for in this Title or any applicable laws, shall
be the responsibility of the city or municipal
treasurer concerned.
 The city or municipal treasurer may deputize
the barangay treasurer to collect all taxes on
real property located in the barangay:
 Provided, That the barangay treasurer is
properly bonded for the purpose:
 Provided, further, That the premium on the
bond shall be paid by the city or municipal
government concerned.

Chapter VI – Collection of Real Property Tax; Sec. 247 – Collection of Tax

COLLECTION
A. Date of accrual of tax (Sec. 166 and Sec. 246)
 shall accrue on the first (1st) day of January of each year
 for new taxes, fees or charges, or changes in the rates thereof, shall accrue on the first (1st) day
of the quarter next following the effectivity of the ordinance imposing such new levies or rates

 shall constitute a lien on the property which shall be superior to any other lien, mortgage, or
encumbrance of any kind whatsoever,
 shall be extinguished only upon the payment of the delinquent tax. (Sec. 246)

Chapter III – Collection of Taxes; Chapter VI – Collection of Real Property Tax

PAYMENT OPTIONS OF THE TAXPAYERS
1. Installment (Sec. 250)
INSTALLMENT BASIS
Basic RPT and additional tax for Special Education Fund (SEF) without interest

 Except the special levy the payment of which shall be governed by ordinance of the sanggunian concerned.
 The date for the payment of any other tax imposed under this Title without interest shall be prescribed by the
sanggunian concerned.

Chapter III – Collection of Taxes; Chapter VI – Collection of Real Property Tax

PAYMENT OPTIONS OF THE TAXPAYERS
2. Annual – LGUs offer certain discounts if RPT is settled before a specific date.
 The due date for annual RPT payment is on or before January 31.

SAMPLE DISCOUNT RATE

Discount rate will depend on their respective LGUs.

** Provided, however that the above discount shall only be granted to properties without any delinquency as of
January 1st of the year that the discount is claimed.

Chapter III – Collection of Taxes; Chapter VI – Collection of Real Property Tax

TAX DISCOUNT – ADVANCED PROMPT PAYMENT (Sec. 251)

If the basic real property tax and the additional tax accruing to the Special Education
Fund (SEF) are paid in advance in accordance with the prescribed schedule of
payment as provided under Section 250, the sanggunian concerned may grant a
discount not exceeding twenty percent (20%) of the annual tax due

Chapter III – Collection of Taxes; Chapter VI – Collection of Real Property Tax

 COLLECTION
B. Periods within which to collect RPT (Sec. 270)
 Basic and additional RPT shall be collected within 5 years from the date they become due.
 No action for the collection of the tax, whether administrative or judicial, shall be instituted
after the expiration of such period.
 In case of fraud or intent to evade payment of the tax, such action may be instituted for the
collection of the same within 10 years from the discovery of such fraud or intent to evade
payment.

Suspension of prescription period applies from the time:

1) The local treasurer is legally prevented from collecting the tax;
2) The owner of the property or the person with legal interest therein requests for reinvestigation
and executes a waiver in writing before the expiration having of the period within which to
collect; and
3) The owner of the property or the person having legal interest therein is out of the country or
otherwise cannot be located.
COLLECTION

C. Remedies of local government units (Sec. 174 and 256)

 For the collection of the basic real property tax and any other tax levied under this Title, the
local government unit concerned may avail of the remedies by administrative action thru levy
on real property or by judicial action. (Sec. 256)
 The civil remedies for the collection of local taxes, fees, or charges, and related surcharges and
interest resulting from delinquency shall be: (Sec. 174)
(a) By administrative action
(b) By judicial action.
 Either of these remedies or all may be pursued concurrently or simultaneously at the discretion
of the local government unit concerned.

Chapter III – Collection of Taxes; Chapter VI – Collection of Real Property Tax

COLLECTION

 Administrative action (Sec. 174)  Judicial action (Sec. 183)

 Thru distraint of goods, chattels, or effects,
and other personal property of whatever
E.character,
COLLECTION including stocks and other
securities, debts, credits, bank accounts,
and interest in and rights to personal
property, and by levy upon real property
and interest in or rights to real property;
 The local government unit concerned
may enforce the collection of delinquent
taxes, fees, charges or other revenues by
civil action in any court of competent
jurisdiction. The civil action shall be filed
by the local treasurer within the period
prescribed in Section 194 of this Code.

Chapter III – Collection of Taxes; Chapter VI – Collection of Real Property Tax

 F. TAXPAYER’S
REMEDIES

Ref. Local Government Code of 1991 as amended by 9640 – Chapter IV Sec 232 to 234
 Are there options?
How will you be
able to file a protest?

Who can avail the

Liabilities of
protest?
👩👨 protest claims?

Possible available When will you be

claims? able to file a protest?
F. TAXPAYER'S REMEDIES (Chapter VI)
I. Contesting an assessment
• Payment under protest;
exceptions
• File protest with Treasurer
• Refunds or credits of real III. Compromising real
property taxes property tax assessment

II. Contesting a valuation of

real property
• Appeal to the Local Board of
Assessment Appeals (LBAA)
• Appeal to the Central Board of
Assessment Appeals (CBAA)
• Effect of payment of taxes
 F1. CONTESTING AN ASSESSMENT
A. Payment under protest; exceptions (Sec. 252)

No protest shall be entertained unless the taxpayer first pays the tax.
There shall be annotated on the tax receipts the words "paid under protest".
Subsection (a) The protest in writing must be filed within thirty (30) days from payment of the tax to the
provincial, city treasurer or municipal treasurer, in the case of a municipality within
Metropolitan Manila Area, who shall decide the protest within sixty (60) days from receipt.
The tax or a portion thereof paid under protest, shall be held in trust by the treasurer
Subsection (b)
concerned.
In the event that the protest is finally decided in favor of the taxpayer, the amount or portion
Subsection (c) of the tax protested shall be refunded to the protestant, or applied as tax credit against his
existing or future tax liability.
In the event that the protest is denied or upon the lapse of the sixty day period prescribed
Subsection (d) in subparagraph (a), the taxpayer may avail of the remedies as provided for in Chapter 3,
Title II, Book II of this Code.
F1. CONTESTING AN ASSESSMENT (CONT.)
B. File protest with Treasurer (Sec. 253)

When an assessment of basic real property tax, or any other tax levied under this Title, is found to be
illegal or erroneous and the tax is accordingly reduced or adjusted.

The taxpayer may file a written claim for refund or credit for taxes and interests with the provincial or
city treasurer within two (2) years from the date the taxpayer is entitled to such reduction or
adjustment.

The provincial or city treasurer shall decide the claim for tax refund or credit within sixty (60) days
from receipt thereof.

In case the claim for tax refund or credit is denied, the taxpayer may avail of the remedies as provided
in Chapter 3, Title II, Book II of this Code.
F1. CONTESTING AN ASSESSMENT (CONT.)
C. Refunds or credits of real property taxes (Sec. 196)

No case or proceeding shall be maintained in any court for the recovery of

any tax, fee, or charge erroneously or illegally collected until a written claim
for refund or credit has been filed with the local treasurer.

No case or proceeding shall be entertained in any court after the expiration of two
(2) years from the date of the payment of such tax, fee, or charge, or from the date
the taxpayer is entitled to a refund or credit.
F2. CONTESTING A VALUATION OF RP (Chapter III)
Local Board of
Local Board of
Assessment
Assessment
Appeals
Appeals
(LBAA)
(LBAA)

Central Board of
Central Board of
Assessment
Assessment
Appeals (CBAA)
Appeals (CBAA)

Effect of
Effect of
payment of taxes
payment of taxes
 A. APPEAL TO THE LOCAL BOARD OF ASSESSMENT APPEALS
(LBAA) (Chapter III)
APPEALS PROCESS
APPEALS PROCESS
 Treasurer’s level -- After payment and ensuring that the tax receipts were annotated by the treasurer with the words, “paid under
 Treasurer’s level -- After payment and ensuring that the tax receipts were annotated by the treasurer with the words, “paid under
protest”, taxpayer may file a protest to the treasurer in writing within 30 days from payment. Treasurer shall decide on the protest
protest”,
withintaxpayer may file
60 days from a protest to the treasurer in writing within 30 days from payment. Treasurer shall decide on the protest
receipt.
within 60 days from receipt.
 LBAA level -- Upon local treasurer’s denial of protest or failure to act upon it, taxpayer may still file a verified petition with the Local
 LBAA level -- Upon local treasurer’s denial of protest or failure to act upon it, taxpayer may still file a verified petition with the Local
Board of Assessment Appeals within 60 days from such denial or receipt of the “notice of assessment” from the local assessor. The law
Board
doesofnot
Assessment Appeals
warrant filing withinfor
of motion 60reconsideration
days from such before
denial or
thereceipt of the “notice
local assessor of assessment”
(Callanta from
v. Office of the the local assessor.
Ombudsman). The law
The LBAA shall
does not warrant filing of motion for reconsideration
decide the appeal within 120 days from receipt. before the local assessor (Callanta v. Office of the Ombudsman). The LBAA shall
decide the appeal within 120 days from receipt.
 CBAA level -- If taxpayers still feel dissatisfied and aggrieved with the decision of the LBAA, the law provides another remedy -- the
 CBAA level -- If taxpayers still feel dissatisfied and aggrieved with the decision of the LBAA, the law provides another remedy -- the
filing of appeal within 30 days from receipt of the decision to the Central Board of Assessment Appeals (CBAA), which shall decide the
filing
caseofwithin
appeal12within
months30 days
from from receipt
date of of the
receipt. Saiddecision
decisiontoshall
the Central
becomeBoard of Assessment
final and Appeals
executory after (CBAA),
the lapse which
of 15 daysshall
fromdecide thethe
the date
case within
copy 12decision
of the months isfrom date of
received byreceipt. Said decision shall become final and executory after the lapse of 15 days from the date the
the taxpayer.
copy of the decision is received by the taxpayer.
 CTA level -- In case of CBAA’s adverse ruling or action, taxpayer may elevate the matter to the Court of Tax Appeals (CTA).
 CTA level -- In case of CBAA’s adverse ruling or action, taxpayer may elevate the matter to the Court of Tax Appeals (CTA).

 It is crucial to comply with the timelines provided for filing the protests or appeal.
 It is crucial to comply with the timelines provided for filing the protests or appeal.
A. APPEAL TO THE LOCAL BOARD OF ASSESSMENT APPEALS
(LBAA) (Chapter III)

 Any owner or person having legal interest in the property who is not satisfied
 Any owner or person having legal interest in the property who is not satisfied
with the action of the provincial, city or municipal assessor in the assessment
with the action of the provincial, city or municipal assessor in the assessment
of his property may, within sixty (60) days from the date of receipt of the
of his property may, within sixty (60) days from the date of receipt of the
written notice of assessment, appeal to the Board of Assessment Appeals of the
written notice of assessment, appeal to the Board of Assessment Appeals of the
provincial or city by filing a petition under oath in the form prescribed for the
provincial or city by filing a petition under oath in the form prescribed for the
purpose, together with copies of the tax declarations and such affidavits or
purpose, together with copies of the tax declarations and such affidavits or
documents submitted in support of the appeal. (Sec. 226)
documents submitted in support of the appeal. (Sec. 226)
ORGANIZATION, POWERS, DUTIES, AND FUNCTIONS OF THE LBAA
(Sec. 227)

(a) The Board of Assessment Appeals of the province or city shall be composed of the Registrar of Deeds, as Chairman, the
provincial or city prosecutor and the provincial, or city engineer as members, who shall serve as such in an ex officio
capacity without additional compensation.

(b) The chairman of the Board shall have the power to designate any employee of the province or city to serve as
secretary to the Board also without additional compensation.

(c) The chairman and members of the Board of Assessment Appeals of the province or city shall assume their
respective positions without need of further appointment or special designations immediately upon effectivity of
this Code. They shall take oath or affirmation of office in the prescribed form.

(d) In provinces and cities without a provincial or city engineer, the district engineer shall serve as member of the Board.
In the absence of the Registrar of Deeds, or the provincial or city prosecutor, or the provincial or city engineer, or the
district engineer, the persons performing their duties, whether in an acting capacity or as a duly designated officer-in-
charge, shall automatically become the chairman or member, respectively, of the said Board, as the case may be.
MEETINGS AND EXPENSES OF THE LOCAL BOARD OF ASSESSMENT
APPEALS (Sec. 228)

Schedule of Monthly Meeting Expenses charged to General Fund

The Board of Assessment Appeals of the province or

city shall meet once a month and as often as may
be necessary for the prompt disposition of
appealed cases.
No member of the Board shall be entitled to per
diems or traveling expenses for his attendance in
Board meetings, except when conducting an ocular
inspection in connection with a case under appeal.
All expenses of the Board shall be charged against the
general fund of the province or city, as the case may be.
The sanggunian concerned shall appropriate the
necessary funds to enable the Board in their respective
localities to operate effectively.
ACTION BY THE LOCAL BOARD OF ASSESSMENT APPEALS (Sec. 229)
(a) The Board shall decide the appeal within one hundred twenty (120) days from the date of receipt of such
appeal. The Board, after hearing, shall render its decision based on substantial evidence or such relevant
evidence on record as a reasonable mind might accept as adequate to support the conclusion.
(b) In the exercise of its appellate jurisdiction, the Board shall have the power to summon witnesses,
administer oaths, conduct ocular inspection, take depositions, and issue subpoena and subpoena duces
tecum. The proceedings of the Board shall be conducted solely for the purpose of ascertaining the facts
without necessarily adhering to technical rules applicable in judicial proceedings.
(c) The secretary of the Board shall furnish the owner of the property or the person having legal interest
therein and the provincial or city assessor with a copy of the decision of the Board.
In case the provincial or city assessor concurs in the revision or the assessment, it shall be his duty to notify
the owner of the property or the person having legal interest therein of such fact using the form prescribed
for the purpose.
The owner of the property or the person having legal interest therein or the assessor who is not satisfied
with the decision of the Board, may, within thirty (30) days after receipt of the decision of said Board,
appeal to the Central Board of Assessment Appeals, as herein provided. The decision of the Central Board
shall be final and executory.
B. APPEAL TO THE CENTRAL BOARD OF ASSESSMENT APPEALS
(CBAA) (Sec. 230)

1) Chairman; and
2) Two (2) members to be appointed by the President, who
shall serve for a term of seven (7) years, without
Member of the reappointment.

Central Board  Of those first appointed, the chairman shall hold office for

of Assessment seven (7) years, one member for five (5) years, and the
other member for three (3) years.

Appeals
Appointment to any vacancy shall be only for the unexpired
portion of the term of the predecessor.
QUALIFICATIONS UNDER CENTRAL BOARD OF ASSESSMENT APPEALS

1) Filipino citizens;
Required
Required 2) At least forty (40) years old at the time of their appointment; and

Qualifications
Qualifications
3) Members of the Bar or Certified Public Accountants for at least
ten (10) years immediately preceding their appointment.

 The chairman ► salary grade equivalent to the rank of Director

III.
 The members ► salary grade equivalent to the rank of Director II.
SalaryGrade
Salary Grade
 Salary grade based on Salary Standardization Law exclusive of
allowances and other emoluments.
B. APPEAL TO THE CENTRAL BOARD OF ASSESSMENT APPEALS
(CBAA) (Sec. 230)
Hearing Officers
- To be appointed by the CBAA pursuant to civil service laws, rules and regulations.

Branches and
Term of Office Qualification
Offices

3 Branches and offices Shall serve for a term of six (6)

1) Luzon – Manila
2) Visayas – Cebu City
3) Mindanao, Cagayan de Oro
Has same qualifications as that
years, without reappointment
of the Judges of the Municipal
until their successors have
Trial Courts.
been appointed and qualified

The Board shall have appellate jurisdiction over all assessment cases decided by the Local Board of Assessment
Appeals.
B. APPEAL TO THE CENTRAL BOARD OF ASSESSMENT APPEALS
(CBAA) (Sec. 230)
Internal Policy and Regulations
Internal Policy and Regulations
The Central Board Assessment Appeals, in the
performance of its powers and duties, may
establish and organize staffs, offices, units,
prescribe the titles, functions and duties of their
members and adopt its own rules and
regulations.
Appropriated Budget
Appropriated Budget
Unless otherwise provided by law, the annual
appropriations for the Central Board of
Assessment Appeals shall be included in the
budget of the Department of Finance in the
corresponding General Appropriations Act.
C. EFFECT OF APPEAL ON THE PAYMENT OF REAL PROPERTY TAX
(Sec. 231)

Appeal on assessments of real property made under the provisions of this Code shall, in no case, suspend the
collection of the corresponding realty taxes on the property involved as assessed by the provincial or city
assessor, without prejudice to subsequent adjustment depending upon the final outcome of the appeal.

Sample Assessment: CBAA No. V-25 Eduardo T. Rodriquez versus The City Assessor of La Carlota City and
LBAA of La Carlota City (August 22, 2006)

Issues to be resolved: Facts:

1) Re-assessment of the property (poultry
site) set by the City Assessor is illegal; and
2) No payment under protest should be made
a condition precedent for the existence of
the right to question the assessments made
by the City Assessor.
1) LBAA could not discuss the merits of the first issue since
the Board chose not to hear the petition raised and
submitted before it.
2) On the second issue, Petitioner-Appellant argues that
“since the assailed assessments are illegal, the same are
void and cannot attain finality”.

https://cbaa.gov.ph/case-no-v-25/
C. EFFECT OF APPEAL ON THE PAYMENT OF REAL PROPERTY TAX
(Sec. 231)

Basis of denial of hearing in LBAA and CBAA:

1) Sec. 252 of RA 7160 of Local Gov’t Code of 1991 states that payment of the assessment must be paid first
before either the LBAA and CBAA hear the said petition (Payment under protest).
2) Sec. 226 states that any owner or person having the legal interest in the property who is not satisfied with the
assessment may appeal within 60 days from the receipt of such assessment.
3) Related case is CBAA Case No. 10 or MERALCO versus Provincial Assessor of Batangas ruled in a Resolution
dated June 6, 1975 (with the same dilemma under Sec. 252).
4) Petitioner appeal that the provision applicable in the Code is Sec. 226 and not Sec. 252.

Court Decision:
5) The Supreme Court rejected the contention that the property owner should first pay the questionable realty
tax before lodging an appeal.
6) The same Local Board was ORDERED to hear petitioner’s appeal thereat on its merits, without requiring
Mr. Eduardo T. Rodriquez to first pay the taxes on the questioned assessment.
https://cbaa.gov.ph/case-no-v-25/
III. COMPROMISING REAL PROPERTY TAX ASSESSMENT

Presidential Decree Objective is to ensure that

Presidential
No. 464 s. Decree
(1974) - Objective Presidential Decree Proclaiming a one-time real
No.Enacting
464 s. (1974) - adequateisfunds
to ensure that
are generated Presidential Decree
of Real adequate funds are generated No. 42 (1986) property tax amnesty subject
Enacting thru implementation of Real
PropertyofTax
Real
Code thru implementation
Property Tax Code. of Real No. 42 (1986) to certain conditions.
Property Tax Code Property Tax Code.

Amending Section 4-A of

Chapter 1 of Real Property From 1991 – Present, it is
Tax Code. Presidential Decree being implemented. Real Property
Presidential Decree Real Property
Taxation under The
No. 1812 – Amending Taxation under The
Such amendment is to grant No. 1812
PD–No.
Amending
464 It is expected to be bypassed Local Government
PD No. 464 LocalCode
Government
of 1991
special powers to the by the Package 3 of CTRP. Code of 1991
President.
 PRESIDENTIAL DECREE NO. 1812

Sec. 4-A. Grant of Special Powers to the President

In the interest of local economy and the general welfare and subject to the conditions and limitations herein
prescribed, the president, upon recommendation of the Minister of Finance, is hereby empowered to make
adjustments in the Real Property Tax System, as regards:
(a) The classification of real properties for taxation purposes;
(b) The frequency of general revisions of property valuations; 
(c) The assessment levels or assessed values of real properties, and 
(d) The extent of exemption from real property tax and rates of levy. 

https://www.chanrobles.com/presidentialdecreeno1812.htm#.X8dAzmgzZPY
 PRESIDENTIAL DECREE NO. 1812

The enumerated powers may be exercised by the President if any of the following conditions exists: 
(1) Where, in the light of economic, social and other relevant changes, it becomes necessary to modify or
adjust the classification of real properties, their assessment levels and/or taxable values on the basis of new
concepts of essentiality and modern approaches to real property valuation;  
(2) Whenever, by reason of fluctuation of currency value, inflation or deflation, and changing development
needs of the country, the existing assessment levels and/or tax rates are no longer realistic; or
(3) Where in view of new social and economic conditions, it becomes imperative to change real property
assessment patterns for taxation purposes. 

https://www.chanrobles.com/presidentialdecreeno1812.htm#.X8dAzmgzZPY
 SAMPLE ADMINISTRATIVE CASE - DIGEST

Case: Office of the Ombudsman vs. Vilma Dimacuha (Former Mayor of Batangas City)
Facts:
 Kepco Ilijan Power Corp. (Keilco) – Failure to pay RPT
 LGU filed a case; LGU won both in LBAA and CBAA; Appealed to the CTA
 Should be tax due – 9.9 Billion (of which 6.9B in unpaid taxes; 3B in penalty)
 Compromised tax – 900 Million; Paid during case hearing in the CTA
 Taxable Period – 2002 to 2012

Defense:
 Complainant (Ombudsman) – Filed case is not due to questionable compromise; but with the PD No. 1812

Issue: Does a local government executive have the power to enter into compromises with respect to unpaid real
property tax obligations?
Decision:
2014 – Case dismissed for lack of both substantial evidence and probable cause

https://www.pressreader.com/philippines/the-philippine-star/20121216/282196533272106
III. COMPROMISING REAL PROPERTY TAX ASSESSMENT

Presidential Decree No. 42 s. 1986 – Proclaiming a One-Time RPT Amnesty Subject to

Certain Conditions

Whereas;
(1) there is a substantial amount of revenue in the form of delinquent real property taxes due and collectible
by the government;
(2) the grant of tax amnesty to certain delinquent real property taxpayers would not only encourage settlement
of the unpaid real property taxes but also accelerate the collection thereof; and
(3) to ensure that henceforth real property tax laws would be complied with strictly, no further real property
tax amnesty shall be granted.
AVAILING THE TAX AMNESTY – PD No. 42

Allowed Taxpayers Exempted TP

(1) Delinquent real properties which have been

(1) Those which are with undeclared and subject to
disposed of at public auction to satisfy the real
back taxes;
property tax delinquencies; and
(2) Those which are with undeclared but the real
(2) Real properties subjects of pending cases in
property taxes thereon have not been paid; and
court for real property tax delinquencies;
(3) Those included in public auctions conducted by
(3) Real properties with tax delinquencies which are
local governments but were not purchased by
being paid pursuant to a compromise
private persons or entities.
agreement.

No public auction of delinquent real properties shall be held during the period of this amnesty.
WAIVED PAYMENTS UNDER CONDONATION
* TP not subject to the RPT Condonation * * TP subject to the RPT Condonation *

Any taxpayer who avails himself of this tax amnesty shall be exempt from any civil, criminal and administrative
liability arising from violation of the Real Property Tax Code but only with respect to real properties declared
under this amnesty.
 SYNOPSIS HB NO. 4664

------------------------------
REAL PROPERTY
VALUATION
AND
ASSESSMENT REFORM
ACT
------------------------------
https://taxreform.dof.gov.ph/presentations-and-references/house-bill-no-4664-real-property-valuation-18th-congress/
 INTRODUCTION: CTRP PACKAGE 3

Comprehensive Tax Reform Program (CTRP)

 It is created to sustain the acceleration poverty reduction and sustainably attain inequality

 The program aims to achieve a simpler, fairer, more efficient and sustainable source of revenue.

4 Packages of CTRP

1. Tax Reform and Acceleration and Inclusion Act or RA 10963 (TRAIN LAW);

2. Corporate Recovery and Tax Incentives for Enterprise Act (CREATE prev. known as CITIRA);

3. Real Property Valuation Program; and

4. Passive Income and Financial Intermediary Taxation Act (PIFITA).

https://taxreform.dof.gov.ph/presentations-and-references/house-bill-no-4664-real-property-valuation-18th-congress/
 OBJECTIVES OF REAL PROPERTY VALUATION

1. To promote the development of real property valuation system

a) Just;

b) Equitable; and

c) Efficient.

2. To broaden the tax base used in national and local governments:

a) Without increasing the existing rates; and

b) Devising new tax impositions.

https://taxreform.dof.gov.ph/presentations-and-references/house-bill-no-4664-real-property-valuation-18th-congress/
 ASPIRATIONS OF THE PROPERTY VALUATION

Real property valuation aims to address the following systematic problems:

 Rampant outdated valuations used for a governmental purposes, especially for national and
local taxation;
 Cost overruns and foregone revenues due to low valuations uses;
Overvaluation when government pays
Undervaluation when government collects
 Multiple and overlapping valuations in different government agencies;
 Absence of a single agency responsible for ensuring that valuations are in accordance with
international standards; and
 Absence of a comprehensive real property electronic database.

https://taxreform.dof.gov.ph/presentations-and-references/house-bill-no-4664-real-property-valuation-18th-congress/
 SALIENT FEATURES

 Adopt international standards and rationalize the process of valuation;

 Establish a single valuation base for taxation as benchmark for other purposes such as lease and

acquisition;

 Insulate valuation from undue politicization, however, LGUs shall continue to regulate tax rates and

assessment levels.

 Recentralize the approval of the SMVs from local Sanggunian back to the Secretary of Finance;

improve and review functions of Bureau of Local Government Finance (BLGF) in coordination with
the BIR; and

 Establish comprehensive database to support valuation function

https://taxreform.dof.gov.ph/presentations-and-references/house-bill-no-4664-real-property-valuation-18th-congress/
 BENEFITS OF THE REFORMS

R Single Valuation Base – Eliminates wide discrepancies to achieve consistency in real property valuation;
R Uniform Standards – Leads to the harmonization of real property valuation among different government
agencies;

R Comprehensive Database – Yields to greater transparency in land transactions and translates to

confidence in the real estate market;

R Enhanced LGU financial self-sufficiency – Results in genuine and meaningful local autonomy, as
guaranteed by the Constitution and Local Government Code;

R Higher Investor Confidence – Adoption of globally benchmarked valuation standards and higher degree
of professionalism in RP valuation; and

R Reduced Costs – Reduces unnecessary expenses due to conflicting appraisals in court litigations, project
delays, and court overruns.
https://taxreform.dof.gov.ph/presentations-and-references/house-bill-no-4664-real-property-valuation-18th-congress/
 SEPARATE VALUATION FROM TAXATION

https://taxreform.dof.gov.ph/presentations-and-references/house-bill-no-4664-real-property-valuation-18th-congress/
* LOCAL
GOVERNMENT CODE
OF 1991 – AS
AMENDED BY RA
9 6 4 0 p r e v. R A 7 1 6 0 T H A N K YO U !

April T. Espiritu
GAC 742 – National and Local Taxation