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A house is not an improvement of a land but represents a 1. Direct tax on the ownership of RP
separate property. Only those that enhance the value,
beauty or utility constitute improvement. However, such is no longer an accurate definition of
RPT because regardless of who the owner is, so long
Requisites: as its actually used for a specific purpose by a certain
The tax is calculated on the basis of a certain - LGUs having the power to impose RPT, through the
percentage of the value assessed sanggunian, may also prescribe penalties for RPT violations
similar to the penalties for violations of local taxes.
4. Indivisible single obligation
PENALTY:
5. Local tax
FINE - not less than 1k nor more than 5k or
Sta. Lucia Realty & Devt Inc. vs. City of Pasig, GR No. 166838 A. SECTION 234, LGC
(2011)
SEC. 234. Exemptions from Real Property Tax. - The
The authority to collect real property taxes is vested in the locality where following are exempted from payment of the real property
the property is situated. tax:
While a local government unit is authorized under several laws to collect (a) Real property owned by the Republic of the
real estate tax on properties falling under its territorial jurisdiction, it is Philippines or any of its political subdivisions
imperative to first show that these properties are unquestionably within
its geographical boundaries. EXCEPT: when the beneficial use thereof has been granted,
for consideration or otherwise, to a taxable person;
Clearly therefore, the local government unit must undoubtedly show
that the subject properties are situated within its territorial jurisdiction;
- RPs held by the government in its proprietary
otherwise, it would be acting beyond the powers vested to it by law.
While we fully agree that a certificate of title is conclusive as to its capacity, such as those acquired by the government
ownership and location, this does not preclude the filing of an action for in execution sales, tax delinquency sales, escheat
the very purpose of attacking the statements therein. proceedings, falls within the exemption since any RP
owned by the Republic of the Phils., its political
Mere reliance therefore on the face of the TCTs will not suffice as they subdivision, or its instrumentalities is exempt.
can only be conclusive evidence of the subject properties locations if
both the stated and described locations point to the same area. What - REASON: Exemption is the rule for RPT and taxation is
will prevail is the true location of the property. the exemption insofar as the government is
concerned.
A pending boundary dispute is a prejudicial question to where the RPT
will be paid. In the meantime, to avoid further animosity, Sta. Lucia is
directed to deposit the succeeding real property taxes due on the - Only EXCEPTION is:
subject properties, in an escrow account with the Land Bank of the
Philippines Beneficial use is granted to a taxable person, whether
its for a consideration or for no consideration
(gratuitous or onerous)
V. LOCAL TAXING AUTHORITY
Beneficial use means actual use, which refers to the
SEC. 275. General Assessment Revision; Expenses purpose for which the property is principally or
Incident Thereto. - The sanggunian of provinces, cities and predominantly utilized by the person in possession
municipalities within the Metropolitan Manila Area shall thereof, as to the taxable person.
provide the necessary appropriations to defray the
expenses incident to the general revision of real property
assessment. All expenses incident to a general revision of
2 TAXATION 2 FINALS| maru.mhealler | 404
If the government leases out a RP to a taxable entity, 3. GOCCs engaged in the generation AND
the LESSEE (the taxable entity) is obligated to pay the transmission of electric power
RPT
- NOTE: Exempt only on machineries and
(b) Charitable institutions, churches, parsonages or equipments that are ADE used. It does not include the
convents appurtenant thereto, mosques, nonprofit or land, buildings and improvements.
religious cemeteries and all lands, buildings, and
improvements actually, directly, and exclusively (ADE) (d) All real property owned by duly registered
used for religious, charitable or educational purposes; cooperatives as provided for under R. A. No. 6938
- Only lands, buildings and improvements. Buildings - NOTE: The exemption extends to all RPs land,
not exempt even if ADE used. buildings, improvements, and machineries, so long as
theyre duly registered under RA 6938.
NOTE: The basis for the exemption is the use
and not the ownership. So regardless of who owns (e) Machinery and equipment used for pollution control
the property so long as its used by either of these and environmental protection.
institutions for religious, charitable, or educational
purposes, its exempt. - does not include land, building and other
improvements
- EXAMPLE: If the government or even a taxable person
leases out land, buildings and improvements to such - NOTE: Theyre exempt from RPT as well as VAT.
institutions, its exempt, so long as its actually,
directly and exclusively (ADE) used. Except as provided herein, any exemption from payment of
real property tax previously granted to, or presently
- EXAMPLE: If the Province of Cebu leases out its land enjoyed by, all persons, whether natural or juridical,
in favor of a religious institution for a fee, is this including all government-owned or -controlled
subject to RPT? corporations are hereby withdrawn upon the effectivity of
this Code.
NO, because the beneficial use of the land is granted
to a non-taxable person the religious institution and - WITHDRAWAL of RPT exemption
a religious institution actually, directly, and
exclusively using land for religious purposes is tax B. CONDONATION OR REDUCTION OF REAL PROPERTY TAX
exempt. AND INTEREST; CONDONATION OR REDUCTION OF TAX
BY THE PRESIDENT OF THE PHILIPPINES
- SAMPLE: If the Province of Cebu leases out its
machinery to the religious institution, subject to RPT? SEC. 276. Condonation or Reduction of Real Property Tax
and Interest. - In case of a general failure of crops or
YES, the exemption only applies to lands, buildings substantial decrease in the price of agricultural or
and improvements. Machineries are taxable. agribased products, or calamity in any province, city, or
municipality, the sanggunian concerned, by ordinance
- In short, the exemption of the beneficial user extends passed prior to the first (1st) day of January of any year
only to land, buildings and improvements. and upon recommendation of the Local Disaster
Coordinating Council, may condone or reduce, wholly or
(c) All machineries and equipment that are actually, partially, the taxes and interest thereon for the succeeding
directly and exclusively used by: year or years in the city or municipality affected by the
calamity.
c.1 local water districts and
SEC. 277. Condonation or Reduction of Tax by the
c.2 government-owned or -controlled corporations President of the Philippines. - The President of the
engaged in the supply and distribution of water and/or Philippines may, when public interest so requires, condone
generation and transmission of electric power; or reduce the real property tax and interest for any year in
any province or city or a municipality within the
- only machineries and equipments Metropolitan Manila Area.
- General rule: GOCCs are now taxable unless they fall - General rule: The LGC does not expressly empower
under the exemptions in letter (c) and if provided in the LGUs to exempt RPs from taxation. Although, as
their special charters (provided after LGC became an exception, the LGC itself provides for a list of what
effective). RPs are not covered by RPT.
- The entities involved are: - The LGUs can grant condonation, which is not exactly
exemption but has the same effect as giving the TP a
1. Local water districts reprieve from the payment of RPT for a certain year.
3. Upon recommendation of the Local Disaster Article 420 of the Civil Code classifies as properties of public
Coordinating Council (LDCC) dominion those that are intended for public use, such as roads,
canals, rivers, torrents, ports and bridges constructed by the State,
- In exemption, youre not really liable for tax, while in banks, shores, roadsteads and those that are intended for some
condonation, you are liable but youre condoned or public service or for the development of the national wealth.
forgiven or reprieved of payment for that particular Properties of public dominion are not only exempt from real estate
year or not really condonation of taxes but only tax, they are exempt from sale at public auction. MPLDC leases
portions of the properties to different business establishments.
reduction of taxes.
Thus, the portions of the properties leased to taxable entities are not
only subject to real estate tax, they can also be sold at public auction
- The President may also condone or reduce the RPT to satisfy the tax delinquency.
liability when public interest so requires.
C. PROOF OF EXEMPTIONS
Philippine Fisheries Devt Auth. vs. CBAA, GR No. 178030
SEC. 206. Proof of Exemption of Real Property from (2010)
Taxation. - Every person by or for whom real property is
declared, who shall claim tax exemption for such property The Court rules that the Authority [PFDA] is not a GOCC but an
under this Title shall: instrumentality of the national government which is generally
exempt from payment of real property tax. However, said exemption
A. File with the provincial, city or municipal assessor does not apply to the portions of the IFPC which the Authority
leased to private entities. With respect to these properties, the
B. Within thirty (30) days from the date of the declaration Authority is liable to pay property tax. Nonetheless, the IFPC, being a
of real property property of public dominion cannot be sold at public auction to
satisfy the tax delinquency.
C. Sufficient documentary evidence in support of such claim
(including corporate charters, title of ownership, articles of Indeed, the Authority is not a GOCC but an instrumentality of the
incorporation, bylaws, contracts, affidavits, certifications government. The Authority has a capital stock but it is not divided
and mortgage deeds, and similar documents) into shares of stocks. Also, it has no stockholders or voting shares.
Hence it is not a stock corporation. Neither is it a non-stock
- if GOCC present charter corporation because it has no members.
If the required evidence is not submitted within the period The Authority is actually a national government instrumentality
herein prescribed, the property shall be listed as taxable in which is defined as an agency of the national government, not
the assessment roll. However, if the property shall be integrated within the department framework, vested with special
proven to be tax exempt, the same shall be dropped from functions or jurisdiction by law, endowed with some if not all
the assessment roll. corporate powers, administering special funds, and enjoying
operational autonomy, usually through a charter. When the law
- Hence, RPT Exemption is NOT automatic. You need to
vests in a government instrumentality corporate powers, the
declare your property for purposes of securing a tax
instrumentality does not become a corporation. Unless the
declaration, within 30 days, and you must provide the
government instrumentality is organized as a stock or non-stock
city assessor or provincial assessor a copy of the
corporation, it remains a government instrumentality exercising not
documentary evidence of your exemption. It may be
only governmental but also corporate powers.
the Articles of Incorporation, the Charter, or an
affidavit that you have executed the title to the
The Lucena Fishing Port Complex is a property of public dominion
property. This is for purposes of delisting you or
intended for public use, and is therefore exempt from real property
dropping out your property from the list of
tax under Section 234(a)11 of the Local Government Code.
assessment rolls that are taxable.
Properties of public dominion are owned by the State or the
- Once you failed to submit the documentary evidence Republic of the Philippines.
within 30 days from declaring your property as part of
the RP you own, its automatic that it becomes a
taxable RP.
4 TAXATION 2 FINALS| maru.mhealler | 404
MIAA vs. CA, GR No. 155650 (2006)
c. Airports are part of public dominion and not subject to RPT generally.
d. Beneficial use of property owned by the State may be transferred to govt instrumentality (non-taxable person), hence, still tax exempt
A government-owned or controlled corporation must be organized as a stock or non-stock corporation. MIAA is not organized as a stock or
non-stock corporation. MIAA is not a stock corporation because it has no capital stock divided into shares. MIAA has no stockholders or voting shares.
MIAA is also not a non-stock corporation because it has no members. Section 87 of the Corporation Code defines a non-stock corporation as
one where no part of its income is distributable as dividends to its members, trustees or officers. A non-stock corporation must have members. Even if we
assume that the Government is considered as the sole member of MIAA, this will not make MIAA a non-stock corporation. Non-stock corporations cannot
distribute any part of their income to their members. Section 11 of the MIAA Charter mandates MIAA to remit 20% of its annual gross operating income to
the National Treasury. This prevents MIAA from qualifying as a non-stock corporation.
Since MIAA is neither a stock nor a non-stock corporation, MIAA does not qualify as a government-owned or controlled corporation.
MIAA is a government instrumentality vested with corporate powers to perform efficiently its governmental functions. MIAA is like any other
government instrumentality, the only difference is that MIAA is vested with corporate powers.
Instrumentality refers to any agency of the National Government, not integrated within the department framework, vested with special functions
or jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy, usually through a
charter. x x x
When the law vests in a government instrumentality corporate powers, the instrumentality does not become a corporation. Unless the government
instrumentality is organized as a stock or non-stock corporation, it remains a government instrumentality exercising not only governmental but also
corporate powers.
Airport Lands and Buildings of MIAA are Owned by the Republic. Airport Lands and Buildings are of Public Dominion. They are therefore owned by
the State or the Republic of the Philippines.
Properties of public dominion mentioned in Article 420 of the Civil Code, like roads, canals, rivers, torrents, ports and bridges constructed by the
State, are owned by the State. The term ports includes seaports and airports. The MIAA Airport Lands and Buildings constitute a port constructed by
the State.
The Airport Lands and Buildings are devoted to public use because they are used by the public for international and domestic travel and
transportation.
MIAA is merely holding title to the Airport Lands and Buildings in trust for the Republic.
The real properties owned by the Republic are titled either in the name of the Republic itself or in the name of agencies or instrumentalities of the
National Government. The Administrative Code allows real property owned by the Republic to be titled in the name of agencies or instrumentalities of the
national government. Such real properties remain owned by the Republic and continue to be exempt from real estate tax.
The Republic may grant the beneficial use of its real property to an agency or instrumentality of the national government. This happens when
title of the real property is transferred to an agency or instrumentality even as the Republic remains the owner of the real property. Such arrangement
does not result in the loss of the tax exemption.
Section 234(a) of the Local Government Code states that real property owned by the Republic loses its tax exemption only if the beneficial use
thereof has been granted, for consideration or otherwise, to a taxable person.
MIAA, as a government instrumentality, is not a taxable person under Section 133(o) of the Local Government Code. Thus, even if we assume
that the Republic has granted to MIAA the beneficial use of the Airport Lands and Buildings, such fact does not make these real properties subject to real
estate tax.
However, portions of the Airport Lands and Buildings that MIAA leases to private entities are not exempt from real estate tax. For example, the
land area occupied by hangars that MIAA leases to private corporations is subject to real estate tax. In such a case, MIAA has granted the beneficial use of
such land area for a consideration to a taxable person and therefore such land area is subject to real estate tax.
Lung Center of the Phils. vs. Quezon City, GR No. 144104 (2004) Napocor is a GOCC but the machineries and equipments were not ADE
used by Napocor instead they were ADE used by the private
As a general principle, a charitable institution does not lose its character corporation under the BOTC (Build-Operate-Transfer Contract).
as such and its exemption from taxes simply because it derives income
from paying patients, whether out-patient, or confined in the hospital, Napocor would not fall under the exemption because the user of the
or receives subsidies from the government, so long as the money machineries and equipments is the private corporation and moreover,
received is devoted or used altogether to the charitable object which it such machineries and equipments were used in the generation alone of
is intended to achieve; and no money inures to the private benefit of the electric power, not in the generation AND transmission of electric
persons managing or operating the institution. power.
The tax exemption for charitable institutions under the constitution Tax exemption cannot be subject to a contract between the parties. Tax
property taxes only. What is exempted is not the institution itself. Those exemption is personal. Even if Napocor assumed the liability of the
exempted from real estate taxes are lands, buildings and improvements payment of the RPT under the BOTC, the private corporation is still
actually, directly and exclusively used for religious, charitable or required to pay. Napocor cannot extend its tax exemption status to
educational purposes. private corporation through entering into contracts with them. Such
agreement is invalid as against the LGU because it would amount to
In order to be entitled to the exemption, the petitioner is burdened to circumvention of the law by depriving the LGUs right to collect RPT.
prove, by clear and unequivocal proof, that:
(b) its real properties are ACTUALLY, DIRECTLY and EXCLUSIVELY used for
charitable purposes.
Exclusive is defined as possessed and enjoyed to the exclusion of NPC vs. Province of Quezon & Mun. of Pagbilao, GR No.
others; debarred from participation or enjoyment; and exclusively is 171586 (2009)
defined, in a manner to exclude; as enjoying a privilege exclusively.
NPC cannot use its tax exemption to benefit taxable enitites
If real property is used for one or more commercial purposes, it is not
exclusively used for the exempted purposes but is subject to taxation. The test of exemption is the nature of the use, not ownership, of the
The words dominant use or principal use cannot be substituted for subject machineries (the user is the owner)
the words used exclusively without doing violence to the Constitutions
and the law. Solely is synonymous with exclusively. As applied to the present case, the government-owned or controlled
corporation claiming exemption must be the entity actually, directly,
ADE Explained and exclusively using the real properties, and the use must be devoted
to the generation and transmission of electric power. Neither the NPC
What is meant by actual, direct and exclusive use of the property for nor Mirant satisfies both requirements.
charitable purposes is the direct and immediate and actual application
of the property itself to the purposes for which the charitable institution Although the plants machineries are devoted to the generation of
is organized. It is not the use of the income from the real property that electric power, by the NPCs own admission and as previously pointed
is determinative of whether the property is used for tax-exempt out, Mirant a private corporation uses and operates them. That
purposes. Mirant operates the machineries solely in compliance with the will of
the NPC only underscores the fact that NPC does not actually, directly,
The petitioner failed to discharge its burden to prove that the entirety of and exclusively use them. The machineries must be actually, directly,
its real property is actually, directly and exclusively used for charitable and exclusively used by the government-owned or controlled
purposes. While portions of the hospital are used for the treatment of corporation for the exemption under Section 234(c) to apply.
patients and the dispensation of medical services to them, whether
paying or non-paying, other portions thereof are being leased to private Nor will NPC find solace in its claim that it utilizes all the power plants
individuals for their clinics and a canteen. Further, a portion of the land generated electricity in supplying the power needs of its customers.
is being leased to a private individual for her business enterprise under Based on the clear wording of the law, it is the machineries that are
the business name Elliptical Orchids and Garden Center. exempted from the payment of real property tax, not the water or
electricity that these machineries generate and distribute.
The portions of the land leased to private entities as well as those parts
of the hospital leased to private individuals are not exempt from such Even the NPCs claim of beneficial ownership is unavailing. The test of
taxes. On the other hand, the portions of the land occupied by the exemption is the use, not the ownership of the machineries devoted to
hospital and portions of the hospital used for its patients, whether generation and transmission of electric power. The nature of the NPCs
paying or non-paying, are exempt from real property taxes. ownership of these machineries only finds materiality in resolving the
NPCs claim of legal interest in protesting the tax assessment on Mirant.
(Note that only land, buildings and improvements are exempt under this As we discussed above, this claim is inexistent for tax protest purposes.
provision, machineries are not exempt)
- NOTE: Absolute rule is that all RPs declared to the LGU and (a) In the case of a province, at the rate not exceeding one
those found out by the LGU to be undeclared shall be percent (1%) of the assessed value of real property; and
appraised at its current and FMV, regardless of whether it (b) In the case of a city or a municipality within the
has a status of being taxable or exempt RP. Metropolitan Manila Area, at the rate not exceeding two
percent (2%) of the assessed value of real property.
(b) Real property shall be classified for assessment purposes on
the basis of its actual use;
- G.R.: Every RP, when not exempt, is subject to the
- "Actual Use" refers to the purpose for which the property basic RPT at the following rate:
is principally or predominantly utilized by the person in Province not exceeding 1% of the assessed
possession thereof. (But not necessarily that it should be value of the RP
directly and exclusively used)
City or municipality within the MM area not
(c) Real property shall be assessed on the basis of a uniform exceeding 2% of the assessed value of the RP
classification within each local government unit;
Special Levies
- Per LGU basis These are the additional taxes imposed in addition to the
basic RPT.
- Meaning it does not have to be comparative to what the
other LGUs are basing on the assessment so long as it is in
compliance with the provisions of the LGC and uniformly B. SPECIAL EDUCATION FUND
applied within the same LGU.
1% additional RPT to finance the SEF
(d) The appraisal, assessment, levy and collection of real
property tax shall not be let to any private person; and SEC. 235. Additional Levy on Real Property for the Special
Education Fund. - A province or city, or a municipality
(e) The appraisal and assessment of real property shall be within the Metropolitan Manila Area, may levy and collect
equitable. an annual tax of one percent (1%) on the assessed value of
real property which shall be in addition to the basic real
- RPT is equitable in a sense that the assessment levels of property tax. The proceeds thereof shall exclusively accrue
RPs are differently classified to differ from one type to the to the Special Education Fund (SEF).
other based on use.
- NOTE: The additional levy for the SEF would be
- EXAMPLE: Residential properties are given a lower indiscriminately applied to all properties so long as
assessment level than those that are used for commercial that RP is subject to the basic RPT.
purposes, which are profitable activities.
- So, if the collecting LGU is a province, automatically
- Hence, it is not really on the tax rate insofar as equity is RPT is not only the 1% basic RPT but plus 1% for SEF,
concerned but rather on how it is assessed. so you get to pay 2% total RPT, regardless of what
kind or what classification of property is being subject
to RPT.
VIII. BASIS FOR ASSESSMENT OF REAL PROPERTY - If the collecting LGU is a city or a municipality within
TAX the MM area, automatically what you will pay as RPT
is not only the 2% basic RPT but plus 1% for SEC, so
The basis for assessment of RPT is based on the actual use of you get to pay 3% total RPT, regardless of what kind
the property. of property is subjected to RPT.
SEC. 236. Additional Ad Valorem Tax on Idle Lands. - A b. Lands actually used for grazing purposes
province or city, or a municipality within the Metropolitan
Manila Area, may levy an annual tax on idle lands at the 2. For lands of whatever classification, other than
rate not exceeding five percent (5%) of the assessed value agricultural, located in a city or municipality more
of the property which shall be in addition to the basic real than 1k square meters in area, for which at least
property tax. of it remains unutilized or unimproved
- "Ad Valorem Tax" is a levy on real property 3. Residential lots in subdivisions, regardless of land
determined on the basis of a fixed proportion of the area, duly approved by proper authorities, the
value of the property. ownership of which has been transferred to
individual owners
- It is based on the value of the RP that is not utilized or
becomes idle However, individual lots of
subdivisions, regardless of land area, the
- So if the property is classified as agricultural, and if ownership of which has not been transferred to
you dont utilize it for agricultural purposes, you may the buyer shall be considered as part of the
be added-on with an additional RPT called the Ad subdivision, and shall be subject to additional tax
Valorem Tax on Idle Lands (AVTIL). payable by the subdivision owner or operator.
rd
- RATE: Not exceeding 5% of the assessed value of the NOTE: To be covered by this 3
property category of idle lands, the land must be a
residential lot IN SUBDIVISIONS, not outside
- NOTE: Tax on idle LANDS, not idle buildings. subdivisions. If residential lots outside
subdivisions, to be considered idle lands, it must
Idle lands, coverage nd
comply with the requisites of the 2 category of
idle lands, which are that the land is more than
SEC. 237. Idle Lands, Coverage. - For purposes of real 1k square meters in area, for which at least of
property taxation, idle lands shall include the it remains unutilized or unimproved.
following:
Exempt idle lands
(a) "Agricultural lands, more than one (1) hectare in
area, suitable for cultivation, dairying, inland fishery, SEC. 238. Idle Lands Exempt from Tax. - A province or
and other agricultural uses, one-half (1/2) of which city or a municipality within the Metropolitan Manila
remain uncultivated or unimproved by the owner of Area may exempt idle lands from the additional levy
the property or person having legal interest therein." by reason of force majeure, civil disturbance, natural
Agricultural lands planted to permanent or perennial calamity or any cause or circumstance which
crops with at least fifty (50) trees to a hectare shall physically or legally prevents the owner of the
not be considered idle lands. Lands actually used for property or person having legal interest therein from
grazing purposes shall likewise not be considered idle improving, utilizing or cultivating the same.
lands.
Idle lands exempt from tax by reason of:
(b) Lands, other than agricultural, located in a city or
a. Force majeure
municipality, more than one thousand (1,000) square
meters in area, one-half (1/2) of which remain b. Civil disturbance
unutilized or unimproved by the owner of the
c. Natural calamity
property or person having legal interest therein.
Regardless of land area, this Section shall likewise d. Any cause or circumstance which physically or
apply to residential lots in subdivisions duly approved legally prevents the owner of the property or
by proper authorities, the ownership of which has person having legal interest therein from
been transferred to individual owners, who shall be improving, utilizing, or cultivating the same
liable for the additional tax: Provided, however, That
individual lots of such subdivisions, the ownership of D. SPECIAL LEVY
which has not been transferred to the buyer shall be
- not exceed sixty percent (60%) of the actual cost of
considered as part of the subdivision, and shall be
such projects and improvements
subject to the additional tax payable by subdivision
owner or operator.
SEC. 240. Special Levy by Local Government Units. - A
province, city or municipality may impose a special levy
1. For agricultural lands more than 1 hectare in
on the lands comprised within its territorial jurisdiction
area, for which at least of it remains uncultivated
specially benefited by public works projects or
or unimproved for agricultural purposes, EXCEPT:
improvements funded by the local government unit
- Procedure in validly imposing a special levy for public - So if total cost is 1B, then, the Municipality
works or improvements: of Liloan can collect up to 600m (60%) as
special levy distributed among all the
Through a tax ordinance and its publication owners affected by the improvements or
public works.
Ordinance & its publication
- If the public works or improvements do not
SEC. 241. Ordinance Imposing a Special Levy. - A tax increase the valuation of the land, then
ordinance imposing a special levy shall describe with theres no sense of imposing the special
reasonable accuracy the nature, extent, and location levy.
of the public works projects or improvements to be
undertaken, state the estimated cost thereof, specify - EXAMPLE: If the TUNNEL project resulted to
the metes and bounds by monuments and lines and benefits to 4 owners surrounding it (a)
the number of annual installments for the payment of school, (b) shopping mall, (c) religious
the special levy which in no case shall be less than five institution, and (d) subdivision. Will these 4
(5) nor more than ten (10) years. The sanggunian owners affected by the government project
concerned shall not be obliged, in the apportionment share to the cost of 60% special levy?
and computation of the special levy, to establish a
uniform percentage of all lands subject to the - NO. Only the subdivision and the shopping
payment of the tax for the entire district, but it may mall share to the cost of 60% special levy
fix different rates for different parts or sections since the school and the religious institution
thereof, depending on whether such land is more or are exempt from the basic RPT, provided or
less benefited by the proposed work. on a condition that the land is ADE used for
educational or religious purposes.
SEC. 242. Publication of Proposed Ordinance
Imposing a Special Levy. - Before the enactment of an Exemption
ordinance imposing a special levy, the sanggunian
concerned shall conduct a public hearing thereon; - Special levies cannot be imposed on lands
notify in writing the owners of the real property to be exempt from the basic RPT.
affected or the persons having legal interest therein
as to the date and place thereof and afford the latter - So, if it turns out that although the land is owned
the opportunity to express their positions or by the school but it is:
objections relative to the proposed ordinance.
a. leased out to another taxable person, who is
- NOTE: Public hearing is required. A public the one currently using it, or
hearing shall be conducted to afford the affected
owners the opportunity to object or to raise b. the school used it for another purpose other
their positions. than for an educational purpose,
- No public hearing, no special levy can be validly Then, the land will not be exempt from the basic
imposed through an ordinance. This is the RPT and will not be exempt as well from the
exception to the rule that RPT ordinances would special levy.
not require a public hearing.
- NOTE: The subdivision can be exempt from the
- EXAMPLE: If a project work or improvement such special levy if portions of the land owned by the
as a TUNNEL is undertaken in Liloan and it will subdivision are donated to the LGU concerned
Residential, Agricultural, Commercial, Industrial, Mineral, E.1 the supply and distribution of water and/or
Timberland or Special (MR-SICAT or CARMITS)
E.2 generation and transmission of electric
The city or municipality within the Metropolitan Manila Area, power
through their respective sanggunian, shall have the power to
classify lands as residential, agricultural, commercial, industrial, NOTE: Machineries and equipments used by the local
mineral, timberland, or special in accordance with their zoning water districts, GOCCs engaged in the supply and
ordinances. distribution of water and/or generation and transmission
of electric power are exempt from RPT.
- RPs are classified on the basis of its actual use.
But the lands, buildings and other improvements used by
A. COMMERCIAL LAND such entities are subject to RPT. However, the special
classes of RP are given preferential assessment level,
"Commercial Land" is land devoted principally for the meaning, the lands, buildings and improvements of these
object of profit and is not classified as agricultural, entities are still partially exempt because they will be given
industrial, mineral, timber, or residential land. a lower assessment level for the payment of RPT so long as
its ADE for such purpose together with the hospitals,
B. AGRICULTURAL LAND cultural or scientific purposes.
"Agricultural Land" is land devoted principally to the NOTE: Classification of lands is made by the respective
planting of trees, raising of crops, livestock and poultry, sanggunian in accordance with zoning ordinances.
dairying, salt making, inland fishing and similar
aquacultural activities, and other agricultural activities, Reclassification of property from agricultural land to
and is not classified as mineral, timber, residential, commercial land (Fortich v. Corona)
commercial or industrial land.
- LGUs need not obtain the necessary approval of the
C. RESIDENTIAL LAND DAR to convert or reclassify parcels of land from
agricultural to non-agricultural. The power to classify
"Residential Land" is land principally devoted to or reclassify or convert is authorized under Sec. 20 of
habitation. the LGC.
E. INDUSTRIAL LAND (1) when the land ceases to be economically feasible and
sound for agricultural purposes as determined by the
"Industrial Land" is land devoted principally to industrial Department of Agriculture or
activity as capital investment and is not classified as
(2) where the land shall have substantially greater
agricultural, commercial, timber, mineral or residential
economic value for residential, commercial, or industrial
land
purposes, as determined by the sanggunian concerned:
F. TIMBERLAND
Provided, That such reclassification shall be limited to the
G. SPECIAL CLASS (lands, buildings and other improvements) following percentage of the total agricultural land area at
the time of the passage of the ordinance:
SEC. 216. Special Classes of Real Property. - All lands,
buildings, and other improvements thereon actually, (1) For highly urbanized and independent component
directly and exclusively used for: cities, fifteen percent (15%);
(c) The local government units shall, in conformity with The declaration of the said area as a commercial zone thru a municipal
existing laws, continue to prepare their respective ordinance is an exercise of police power to promote the good order
comprehensive land use plans enacted through zoning and general welfare of the people in the locality.
ordinances which shall be the primary and dominant bases
for the future use of land resources:
- It would be converted to commercial, even if its WHEN: Must file within 60 days upon completion or
actual use is residential, because the zoning is an occupation (whichever comes earlier)
exercise of police power, which is superior to
taxation. Even if the building was declared for tax WHAT: Sworn statement containing the fair market value
purposes as residential, once a LGU has reclassified and description of the property.
the total area as commercial, the classification for
Declaration by Provincial / City / Municipal Assessor (Sec. 204)
zoning purposes must prevail as an exercise of police
power.
WHEN: Only when the person under Sec. 202 refuses or
fails to make a declaration within the prescribed time.
Partial reappraisal it depends. 1. Advance payment discount not exceeding 20% of annual
tax (Sec. 251, LCG)
EXAMPLE: If probably, a particular zone of the LGU has
been changed from residential to commercial, it can 2. Prompt payment discount not exceeding 10% of annual
happen that there will be partial reassessment of those tax due (Art 342 IRR)
properties affected.
(e) 0% Assessment Level
Individual reappraisal
- for residential buildings only whose FMV is not over 175k
EXAMPLE: A RP of an individual that was partially or totally (175k or less), meaning, it has 0 liability for RPT.
destroyed and a property that has been affected due to
major change in its actual use or gross illegality of the COLLECTION OF TAX (SEC. 247)
assessment or to any other abnormal cause.
It shall be the responsibility of the city or municipal treasurer
SEC. 221. Date of Effectivity of Assessment or Reassessment. - concerned.
All assessments or reassessments made after the first (1st) day
of January of any year shall take effect on the first (1st) day of The city or municipal treasurer may deputize the barangay
January of the succeeding year: Provided, however, That the treasurer to collect all taxes on real property located in the
reassessment of real property due to its partial or total barangay; provided, the barangay treasurer is properly bonded.
destruction, or to a major change in its actual use, or to any
great and sudden inflation or deflation of real property values, PERIOD TO COLLECT (SEC. 270)
or to the gross illegality of the assessment when made or to any
other abnormal cause, shall be made within ninety (90) days 1. within five (5) years from the date they become due
from the date any such cause or causes occurred, and shall take
effect at the beginning of the quarter next following the 2. within ten (10) years from discovery of fraud, in case there
reassessment. is fraud or intent to evade
3. the owner of property is out of the country or cannot be Real Property tax lien (Secs. 257, LGC) superior to all
located. liens, charges or encumbrances;
B. ASSESSMENT PERIOD
Allied Banking Corp. vs. Quezon City GR No. 154126 (2005)
Within 5 years from the date they become due or within
Accordingly, this Court holds that the proviso directing that the real 10 years, in case of fraud or intent to evade payment,
property tax be based on the actual amount reflected in the deed of from the discovery of the fraud or intent to evade
conveyance or the prevailing BIR zonal value is invalid not only because payment
it mandates an exclusive rule in determining the fair market value but
more so because it departs from the established procedures stated in For back taxes within 10 years from the date they
the Local Assessment Regulations No. 1-92 and unduly interferes with become due even in the absence of fraud
the duties statutorily placed upon the local assessor by completely
dispensing with his analysis and discretion which the Code and the C. COLLECTION PERIOD
regulations require to be exercised. An ordinance that contravenes any
statute is ultra vires and void. SEC. 266. Collection of Real Property Tax Through the
Courts. - The local government unit concerned may enforce
Further, it is noted that there is nothing in the Charter of Quezon City the collection of the basic real property tax or any other
and the Quezon City Revenue Code of 1993 that authorize public tax levied under this Title by civil action in any court of
respondents to appraise property at the consideration stated in the competent jurisdiction. The civil action shall be filed by the
deed of conveyance. local treasurer within the period prescribed in Section 270
of this Code.
Using the consideration appearing in the deed of conveyance to assess
or appraise real properties is not only illegal since the appraisal, SEC. 270. Periods Within Which To Collect Real Property
assessment, levy and collection of real property tax shall not be let to Taxes. - The basic real property tax and any other tax
any private person, but it will completely destroy the fundamental levied under this Title shall be collected within five (5) years
principle in real property taxation that real property shall be from the date they become due. No action for the
classified, valued and assessed on the basis of its actual use regardless collection of the tax, whether administrative or judicial,
of where located, whoever owns it, and whoever uses it. Necessarily, shall be instituted after the expiration of such period. In
allowing the parties to a private sale to dictate the fair market value of case of fraud or intent to evade payment of the tax, such
the property will dispense with the distinctions of actual use stated in action may be instituted for the collection of the same
the Code and in the regulations. within ten (10) years from the discovery of such fraud or
intent to evade payment. The period of prescription within
The invalidity of the assessment or appraisal system adopted by the which to collect shall be suspended for the time during
proviso is not cured even if the proviso mandates the comparison of which:
the stated consideration as against the prevailing BIR zonal value,
(1) The local treasurer is legally prevented from
whichever is higher, because an integral part of that system still permits
collecting the tax;
valuing real property in disregard of its actual use.
(2) The owner of the property or the person having
legal interest therein requests for reinvestigation and
Callanta vs. Office of the Ombudsman, GR No. 1152533-74 executes a waiver in writing before the expiration of
(1998) the period within which to collect; and
[T]he same Code is equally clear that the aggrieved owners should have (3) The owner of the property or the person having
brought their appeals before the LBAA. Unfortunately, despite the legal interest therein is out of the country or
advice to this effect contained in their respective notices of assessment, otherwise cannot be located.
the owners chose to bring their requests for a review/readjustment
before the city assessor, a remedy not sanctioned by the law. To allow D. CIVIL REMEDIES
this procedure would indeed invite corruption in the system of
appraisal and assessment. It conveniently courts a graft-prone situation 1. Administrative Action
where values of real property may be initially set unreasonably high,
and then subsequently reduced upon the request of a property owner.
Distraint
In the latter instance, allusions of a possible covert, illicit trade-off
SEC. 254. Notice of Delinquency in the Payment
cannot be avoided, and in fact can conveniently take place. Such
of the Real Property Tax. - (a) When the real
occasion for mischief must be prevented and excised from our system.
property tax or any other tax imposed under this
Title becomes delinquent, the provincial, city or
APPEAL PROCEDURE
within 60 days
Owner/Person with legal interest
must file:
1) Written Petition under Oath
2) With Supporting Documents
within 30 days
within 30 days
within 15 days
Supreme Court
Written protest to
Local Treasurer Denied Granted
(60 days to decide)
60 days
LBAA
(120 days to
decide)
F U ND
30 days
CBAA
(no req. # of days to
decide)
F U
30 days
CTA en banc
Motion for
Reconsideration or
Motion for New Trial
F U
(within 15 days)
SC
F U
**Payment under protest only required if the correctness or accuracy of the assessment is questioned.