REAL PROPERTY TAXATION

REAL PROPERTY TAXATION
Real Property Tax
Real Property Tax is the tax due on real properties in the
Philippines. This is assessed by the LGU such as a province, city
or municipality. RA No. 7160 or the Local Government Code of
the Philippines, specifically Sections 197 to 283, governs the
power of LGUs to impose Real Property Tax.
Section 232 of the Local Government Code enunciates that a
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.
Ad valorem Tax
A levy on real property determined based on a fixed proportion of
the value of the property.
Characteristics of Real Property Tax
(1) Direct tax on the Ownership of real property
(2) Ad valorem tax. The value is based on the tax base.
(3) Proportionate – the tax is calculated on the basis of a
certain percentage of the value assessed.
(4) Indivisible single obligation
(5) Local tax
(6) Animal houses, pigeon-houses, beehives, fish ponds or
breeding places of similar nature, in case their owner has
placed them or preserves them with the intention to have
them permanently attached to the land, and forming a
permanent part of it; the animals in these places are
included;
(7) Fertilizer actually used on a piece of land;
(8) Mines, quarries, and slag dumps, while the matter thereof
forms part of the bed, and waters either running or
stagnant;
(9) Docks and structures which, though floating, are intended
by their nature and object to remain at a fixed place on a
river, lake, or coast;
(10) Contracts for public works, and servitudes and other real
rights over immovable property.
In Benguet Corporation vs. Central Board of Assessment
Appeals, 218 SCRA 271, the Supreme Court ruled that for purposes
of taxation, the term “real property” may include things which
should generally be regarded as personal property. It is a familiar
phenomenon to see things classed as real property for purposes of
taxation which on general principles might be considered personal
property.

Real Property NOTE: Certain improvements can be classified as real property

The LGC did not specifically define the meaning of real property subject to real property tax.
for purposes of taxation. In the absence of such definition, Article
415 of the Civil Code applies. Hence, the following are considered The LGC has defined an improvement as a valuable addition
as real property: made to a property or an amelioration in its condition,
amounting to more than a mere repair or replacement of parts
(1) Land, buildings, roads and constructions of all kinds involving capital expenditures and labor, which is intended to
adhered to the soil; enhance its value, beauty or utility or to adapt it for new or
further purposes.
(2) Trees, plants, and growing fruits, while they are attached
to the land or form an integral part of an immovable; Personal Property under Civil Law that may be
considered as Real Property for purposes of taxes
(3) Everything attached to an immovable in a fixed manner,
Personal property under the civil law may be considered as real
in such a way that it cannot be separated therefrom
property for purposes of taxes where the property is essential to
without breaking the material or deterioration of the
the conduct of the business.
object;
(a) Underground tanks are essential to the conduct of the
(4) Statues, reliefs, paintings or other objects for use or
business of a gasoline station without which it would not
ornamentation, placed in buildings or on lands by the
be operational. (Caltex Phils., Inc. v. Central Board of
owner of the immovable in such a manner that it reveals
Assessment Appeals, et al., 114 SCRA 296)
the intention to attach them permanently to the
tenements;
(b) Light Rail Transit (LRT) improvements such as
buildings, carriageways, passenger terminals stations,
(5) Machinery, receptacles, instruments or implements
and similar structures do not form part of the public roads
intended by the owner of the tenement for an industry or
since the former are constructed over the latter in such a
works which may be carried on in a building or on a piece
way that the flow of vehicular traffic would not be
of land, and which tend directly to meet the needs of the
impaired.
said industry or works;

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REAL PROPERTY TAXATION
The carriageways and terminals serve a function
different from the public roads. Furthermore, they are not
open to use by the general public hence not exempt from
real property taxes.
NOTE: Even granting that the national government owns
the carriageways and terminal stations, the property is not
exempt because their beneficial use has been granted to
LRTA a taxable entity. (Light Rail Transit Authority v.
Central Board of Assessment Appeals, et al., G. R. No.
127316, October 12, 2000)
(c) Barges on which were mounted gas turbine power plants
designated to generate electrical power, the fuel oil
barges which supplied fuel oil to the power plant barges,
and the accessory equipment mounted on the barges were
subject to real property taxes.
(d) Moreover, Article 415(9) of the Civil Code provides that
“[d]ocks and structures which, though floating, are
intended by their nature and object to remain at a fixed
place on a river, lake or coast” are considered immovable
property by destination being intended by the owner for
an industry or work which may be carried on in a
building or on a piece of land and which tend directly to
meet the needs of said industry or work. (FELS Energy,
Inc., v. Province of Batangas, G. R. No. 168557,
February 16, 2007 and companion case)
Exemptions from real property tax based on specific
provision of law
As a rule, one who claims exemption from tax must show proof
that indeed, exemptions apply by express mandate of the law.
Section 234 of the LGC enumerated the following exemptions
from real property taxes:
(1) Government owned real property, except when beneficial
use is granted for consideration to a taxable person
(2) Lands, buildings, and improvements exclusively used for
religious, charitable, or educational purposes
(3) Machineries and equipments actually, directly and
exclusively used by local water districts and government
owned or controlled corporations engaged in the supply
and distribution of water and/or generation and
transmission of electric power
(4) All real property of registered cooperatives under
Republic Act No. 6938
(5) Machinery and equipment used for pollution control and
environment protection.
NOTE: As a piece of advice, it is always a better approach to
secure confirmation of exemption from the local government unit
concerned.
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NOTE: The constitutional tax exemptions refer only to real
property that are actually, directly and exclusively used for
religious, charitable or educational purposes, and that the only
constitutionally recognized exemption from taxation of revenues
are those earned by non-profit, non-stock educational institutions
which are actually, directly and exclusively used for educational
purposes. (CIR v. CA, et al., 298 SCRA 83)
NOTE FURTHER: What is exempted is not the institution itself,
those exempted from real estate taxes are lands, buildings and
improvements actually, directly and exclusively used for religious,
charitable or educational purposes. (Lung Center of the Philippines
v. Quezon City, et al., etc., G. R. No. 144104, June 29, 2004)
Portions of the land of a charitable institution, such as a hospital,
leased to private entities as well as those parts of the hospital
leased to private individuals are not exempt from real
property taxes.
On the other hand, the portion of the land occupied by the
hospital and portions of the hospital used for its patients,
whether paying or non-paying, are exempt from real property
taxes.
(Lung Center of the Philippines v. Quezon City, et al., etc.,
G. R. No. 144104, June 29, 2004)
Fundamental Principles of Real Property Taxation
The following are the fundamental principles of real property
taxation:
(a) Appraisal at current and fair market value;
(b) Classification for assessment on the basis of actual use;
(c) Assessment on the basis of uniform classification;
(d) Appraisal, assessment, levy and collection shall not be let
to a private person;
(e) Appraisal and assessment shall be equitable
Appraisal and classification for assessment
Real properties shall be appraised at the current and fair market
value prevailing in the locality where the property is situated and
classified for assessment purposes on the basis of its actual use.
(Allied Banking Corporation, etc., v. Quezon City Government, et
al., G. R. No. 154126, October 11, 2005)
Actual use as basis for assessment (Section 217, LGC)
Real property shall be classified, valued and assessed on the basis
of actual use regardless of where located, whoever owns it, and
whoever uses it.
NOTE: Unpaid realty taxes attach to the property and is
chargeable against the person who had actual or beneficial use and
possession of it regardless of whether or not he is the owner.
(Estate of Lim vs. City of Manila, GR No. 90639, February 21,
1990)
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REAL PROPERTY TAXATION

Classification of Lands for Purposes of Assessment If property is declared for the first time (Section 222)
(Section 218 (A)) If Declared for the first time, real property shall be assessed for
(a) Commercial back taxes:
(b) Agricultural → For not more than 10 years prior to date of initial
(c) Residential assessment
(d) Mineral → Taxes shall be computed on the basis of applicable
(e) Industrial schedule of values in force during the corresponding
(f) Timberland period.
(g) Special
Step 2: Listing of Real Property in the Assessment Rolls
Special Classes of Real Property (Section 216, LGC) (Sections 205, 207)
(1) Hospitals All declarations shall be kept and filed under a uniform
(2) Cultural and Scientific purposes classification system to be established by the provincial, city or
(3) Owned and used by Local water districts municipal assessor.
(4) GOCCs rendering essential public services in the supply
and distribution of water and/or generation or Step 3: Appraisal and valuation of Real Property (Sections
transmission of electric power. 212-214, 224-225)
Determination of Fair Market Value
Procedure → Assessor of the province/city or municipality may
Step 1: Declaration of Real Property summon the owners of the properties to be affected and
Declaration by Owner or Administrator (Sections 202-203) may take depositions concerning the property, its
→ File a sworn declaration with the assessor – once every 3 ownership, amount, nature and value (Sec. 213, LGC)
years during the period from January 1 to June 30.
→ Assessor prepares a schedule of FMV for different
→ For newly acquired property – classes of properties.

Must file with the assessor within 60 days from → Sanggunian enacts an ordinance
WHEN
date of transfer
Sworn statement containing the fair market value NOTE: The schedule of FMV is published in a newspaper of
WHAT
and description of the property general circulation in the province, city or municipality concerned
or in the absence thereof, shall be posted in the provincial capitol,
→ For improvement on property city or municipal hall and in two other conspicuous public places
therein (Sec. 212, LGC)
Must file within 60 days upon completion or
WHEN For machinery
occupation (whichever comes earlier)
Sworn statement containing the fair market value (1) For Brand new machinery:
WHAT • FMV is the acquisition cost
and description of the property.

Declaration by Provincial/ City/ Municipality Assessor (Section
204)
Only when the person under Sec. 202 refuses or
WHEN fails to make a declaration within the prescribed
time.
within 30 days from the date of declaration of
WHEN
property
By any person or for whom real property is
WHO
declared.
NOTE: No oath by the assessor is required.
NOTE: Claim for exemption must be filed with the assessor
together with sufficient documentary evidence to support claim
(2) In all other cases:
FMV = Remaining eco. life / Estimated eco. life x
Replacement cost
Step 4: Determine Assessed Value (Section 218)
Determine Assessed Value Procedure
(1) Take the schedule of FMV
(2) Assessed Value = FMV x Assessment level
(3) Tax = Assessed value x Tax rate
Step 5: Time and Manner of Payment (Section 250)
Accrual of Tax
January of every year and such will constitute as a superior lien.
(Sec. 246)
Interest for Late Payment (Section 255)
2% for each month on unpaid amount until the delinquent amount
is paid provided in no case shall the total interest exceed 36 months.

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REAL PROPERTY TAXATION

Taxable Idle Lands (Section 237, LGC)

For advance and prompt payment
(1) Advance payment – discount not exceeding 20% of
annual tax (Sec. 251, LCG)
(2) Prompt payment – discount not exceeding 10% of annual
tax due (Art 342, IRR)
Collection of Taxes
It 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, the barangay treasurer is properly bonded.
Period to collect (Section 270)
(a) Within five (5) years from the date they become due
(b) Within ten (10) years from discovery of fraud, in case
there is fraud or intent to evade
(1) Agricultural lands more than one hectare in area one-
half of which remain uncultivated or unimproved by
the owner of the property or person having legal interest
therein.
NOTE: Agricultural lands planted to permanent or perennial crops
with at least 50 trees to a hectare shall not be considered idle lands.
NOTE: Lands actually used for grazing purposes shall likewise not
be considered idle lands;
(2) Lands other than agricultural located in a city or
municipality more than one thousand square meters in
area one-half of which remain unutilized or
unimproved by the owner of the property or person
having legal interest therein.

Suspension of Prescriptive Period (Section 270) Idle Lands Exempt from Tax (Section 238, LGC)
(1) local treasurer is legally prevented to collect tax. By reason of:
(2) the owner or property requests for reinvestigation and (1) force majeure
writes a waiver before expiration of period to collect. (2) civil disturbance
(3) the owner of property is out of the country or cannot be (3) natural calamity
located. (4) or any cause which physically or legally prevents the
owner of the property or person having legal interest
Responsible for payment of Real Property Tax therein from improving, utilizing or cultivating the same.
Residential properties homeowner
Commercial properties Property administrator Computation of Real Property Tax
Real Property Tax = Real Property Tax Rate x Assessed
Rate of Real Property Tax Property Value
Cities and assess a real property tax rate not
municipalities exceeding 2 percent (2%) The annual real property tax is the assessed value of the
should not assess more than one property multiplied by the tax rate.
provinces percent (1%) of the assessed value of
the real property Real property tax rate for most cities and municipalities in Metro
Manila is 2% and 1% for the provinces.
NOTE: The assessed value is based on the fair market value of
the property multiplied by the assessment level. This assessment The assessed property value, or the taxable value of the property,
level varies as the determination thereof is left to the local is the fair market value multiplied by the assessment level.
government unit.
Assessed Property Values = Fair Market Value x Assessment
Other taxes that may be imposed on Real Property Level
Special education 1% of the assessed value of real
fund (SEF) property Maximum assessment level
Ad valorem tax on 5% of the assessed value of real Residential Property 20%
idle lands property tax Commercial and Industrial Property 50%
Special assessment at least 60% of public improvement
to recover benefiting the real property NOTE: Some cities have different tax rates. To verify your city’s
tax rate, contact the city treasurer office.
NOTE: This would mean that real property taxation in the
Philippines could cover the four impositions and not merely Illustration:
limited to the basic real property tax. Let us compute for homeowner Angel’s recently acquired
Makati condominium unit worth Php 3,500,000.

First Step
Real Property Tax =

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REAL PROPERTY TAXATION
Real Property Tax Rate x Assessed Property Value
Second Step
Real Property Tax =
Real Property Tax Rate x
(Fair Market Value x Assessment Level)
Third Step
Real Property Tax =
2% x (Php 3,500,000 x 20%)
Fourth Step
Real Property Tax =
Php 14,000
Current and Fair Market Value
Determination of the reasonable market value
The reasonable market value is determined by the assessor in the
form of a schedule of fair market values.
NOTE: The schedule is then enacted by the local sanggunian.
Definition of fair market value
Fair market value is the price at which a property may be sold by
a seller who is not compelled to sell and bought by a buyer who is
not compelled to buy, taking into consideration all uses to which
the property is adopted and might in reason be applied. The
criterion established by the statute contemplates a hypothetical
sale. Hence, the buyers need not be actual and existing purchasers.
(Allied Banking Corporation, etc., v. Quezon City Government, et
al.)
Fixing the value of the real property
In fixing the value of real property, assessors have to consider all
the circumstances and elements of value and must exercise prudent
discretion in reaching conclusions. (Allied Banking Corporation,
etc., v. Quezon City Government, et al.)
Preparation of fair market values
(a) The city or municipal assessor shall prepare a schedule
of fair market values for the different classes of real
property situated in their respective LGUs for the
enactment of an ordinance by the sanggunian concerned;
and
(b) The schedule of fair market values shall be published in
a newspaper of general circulation in the province, city
or municipality concerned or the posting in the provincial
capitol or other places as required by law. (Lopez v. City
of Manila, et al., G.R. No. 127139, February 19, 1999)
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Publication of the proposal and ordinance
Proposed fair market values of real property in a LGU as well as
the ordinance containing the schedule must be (Figuerres v. Court
of Appeals, et al,. G.R. No. 119172, March 25, 1999):
(a) published in full for
• three (3) consecutive days in a newspaper of
local circulation, where available,
• within ten (10) days of its approval, and
(b) posted in
• at least two (2) prominent places in the
provincial capitol, city, municipal or barangay
hall for a minimum of three (3) consecutive
weeks.
Approaches in estimating the fair market value of real
property for real property tax purposes
Sales Analysis Approach
The sales price paid in actual market transactions is considered by
taking into account valid sales data accumulated from among the
Registrar of Deeds, notaries public, appraisers, brokers, dealers,
bank officials, and various sources stated under the LGC.
Income Capitalization Approach
The value of an income-producing property is no more than the
return derived from it. An analysis of the income produced is
necessary in order to estimate the sum which might be invested in
the purchase of the property.
Reproduction Cost Approach
Formal approach used exclusively in appraising man-made
improvements such as buildings and other structures, based on
such data as materials and labor costs to reproduce a new replica of
the improvement.
NOTE: The assessor uses any or all of these approaches in
analyzing the data gathered to arrive at the estimated fair market
value to be included in the ordinance containing the schedule of
fair market values. (Allied Banking Corporation, etc., v. Quezon
City Government, et al, citing Local Assessment Regulations No.
1-92)
PROBLEM: An ordinance states that: the “parcels of land sold,
ceded, transferred and conveyed for remuneratory consideration
after the effectivity of this revision shall be subject to real estate
tax based on the actual amount reflected in the deed of
conveyance or the current approved zonal valuation of the
BIR prevailing at the time of sale, cession, transfer and
conveyance, whichever is higher, as evidenced by the certificate
of payment of the capital gains tax issued therefore.”
QUESTION: Is the ordinance valid?
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REAL PROPERTY TAXATION
ANSWER: It is INVALID being contrary to public policy
and for restraining trade for the following reasons:
(a) It mandates an exclusive rule in determining the fair
market value and departs from the established procedures such
as the sales analysis approach, the income capitalization
approach and the reproduction approach provided under the
rules implementing the statute. It unduly interferes with the
duties statutorily placed upon the local assessor by completely
dispensing with his analysis and discretion which the LGC and
the regulations require to be exercised. An ordinance that
contravenes any statute is ultra vires and void.
(b) The “consideration approach” in the ordinance is illegal
since “the appraisal, assessment, levy and collection of real
property tax shall not be let to any private person”, it will also
completely destroy the fundamental principle in real property
taxation – that 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.
(c) The invalidity is not cured by the phrase “whichever is
higher” because an integral part of that system still permits
valuing real property in disregard of its “actual use.”
(d) The ordinance would result to real property assessments
more than once every three (3) years and that is not the
congressional intent as shown in the provisions of the LGC and
the regulations. Consequently, the real property tax burden
should not be interpreted to include those beyond what the Code
or the regulations expressly clearly state.
(e) The proviso would provide a chilling effect on real property
owners or administrators to enter freely into contracts
reflecting the increasing value of real properties in accordance
with prevailing market conditions.
When should Real Property Tax be paid
The real property tax for any year shall accrue on the first day of
January and from that date it shall constitute a lien on the
property. It may be paid in full, in which case, some LGUs give
discounts, or quarterly. It is paid to the city or municipal treasurer’s
office.
Quarterly payment
1st installment March 31
2nd installment June 30
3rd installment September 30
4th installment December 31
NOTE: In normal practice, those who pay in full within January
each year are normally given real property tax discounts of up to
20% depending on the allowed rate for the LGU of location.
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Overpayment or Erroneous/Illegal Payment
Should you overpay or erroneously or illegally paid real property
taxes in the Philippines, a refund or credit for taxes is allowed
within two (2) years from date of reduction or adjustment. Said
application has to be decided upon by the provincial or city
treasurer within sixty (60) days.
Where can taxpayers pay the Real Property Tax
The Treasurer’s Office of the municipality collects the payment
of real property tax. Aside from the chosen mode of payment,
taxpayers have to bring the latest tax declaration and official
receipts.
NOTE: For first-time homeowners, tax declaration and official
receipts are part of the attachments given by the developer upon
unit turnover or from the bank after loan approval.
Effect of non-payment of Real Property Tax
If the real property tax is not paid, the LGU concerned may avail
of the remedies by
(a) administrative action thru levy on real property or
(b) by judicial action.
Hence, if you have been delinquent, the city or municipality may
auction off your property.
NOTE HOWEVER: However, all is not lost. Within one (1) year
from the date of sale, the owner of the delinquent real property or
person having legal interest therein, or his representative, shall
have the right to redeem the property upon payment to the local
treasurer of
• the amount of the delinquent tax,
• including the interest due thereon, and
• the expenses of sale from the date of delinquency to the date
of sale,
• plus interest of not more than two percent (2%) per month on
the purchase price from the date of sale to the date of
redemption.
NOTE: The one year period shall start to run from the date of the
registration of the Certificate of Sale issued in favor of the
purchaser.
Duty of the Secretary of Justice
Secretary of Justice can take cognizance of a case involving the
constitutionality or legality of tax ordinances where there are
factual issues involved. (Figuerres v. Court of Appeals, et al., G.R.
No. 119172, March 25, 1999)
Procedure
(1) Taxpayer files appeal to the Secretary of Justice, within
30 days from effectivity thereof.
(2) In case the Secretary decides the appeal, a period of 30
days is allowed for an aggrieved party to go to court.
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REAL PROPERTY TAXATION
(3) But if the Secretary does not act thereon, after the lapse
of 60 days, a party could already seek relief in court
within 30 days from the lapse of the 60 day period.
NOTE: These three separate periods are clearly given for
compliance as a prerequisite before seeking redress in a competent
court.
Purpose: Such statutory periods are set to prevent delays as well
as enhance the orderly and speedy discharge of judicial functions.
For this reason the courts construe these provisions of statutes as
mandatory. (Reyes, et al., v. Court of Appeals, et al., G.R. No.
118233, December 10, 1999)
Mandatory hearing for the approval of tax ordinance
Public hearings are mandatory prior to approval of tax ordinance,
but this still requires the taxpayer to adduce evidence to show that
no public hearings ever took place. (Reyes, et al., v. Court of
Appeals, et al., G.R. No. 118233, December 10, 1999)
NOTE: Public hearings are required to be conducted prior to the
enactment of an ordinance imposing real property taxes.
(Figuerres v. Court of Appeals, et al.)
Concurrent and simultaneous remedies afforded to LGUs
in enforcing collection real property taxes
(a) Distraint of personal property;
(b) Sale of delinquent real property, and
(c) Collection of real property tax through ordinary court
action
Notice and publication for tax delinquency sale
Notice and publication, as well as the legal requirements for a tax
delinquency sale, are mandatory, and the failure to comply
therewith can invalidate the sale. The prescribed notices must be
sent to comply with the requirements of due process. (De Knecht,
et al,. v. Court of Appeals; De Knecht, et al., v. Honorable Sayo,
290 SCRA 223,236)
Rationale: Tax sales are administrative proceedings which are in
personam in nature.
PROBLEM: FELS Energy, Inc., had a contract to supply NPC
with the electricity generated by FELS’ power barges. The
contract also stated that NPC shall be responsible for all real
estate taxes and assessments.
FELS then received an assessment of real property taxes on its
power barges from the Provincial Assessor of Batangas. If filed
a motion for reconsideration with the Provincial Assessor.
ISSUES:
(a) Upon denial, FELS elevated the matter to the Local Board
of Assessment Appeals (LBAA), where it raised the following
issues:
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(1) Since NPC is tax-exempt then FEL’s should also be
tax-exempt because of its contract with NPC.
(2) The power barges are not real property subject to real
property taxes.
(b) Upon the other hand the Local Treasurer insists that the
assessment has attained a state of finality hence the appeal to the
LBAA should be dismissed.
Rule on the conflicting contentions.
SUGGESTED ANSWER
(a) All the contentions of FELS are without merit:
(1) NPC is not the owner of the power barges nor the
operator of the power barges. The tax exemption
privilege granted to NPC cannot be extended to
FELS. The covenant is between NPC and FELs and
does not bind a third person not privy to the contract
such as the Province of Batangas.
(2) The Supreme Court of New York Decision cited in
FELS Energy, Inc., v. Province of Batangas, G. R.
No. 168557, February 16, 2007 and companion case,
held that barges on which were mounted gas turbine
power plants designated to generate electrical power,
the fuel oil barges which supplied fuel oil to the power
plant barges, and the accessory equipment mounted on
the barges were subject to real property taxes.
Moreover, Article 415(9) of the Civil Code provides
that “[d]ocks and structures which, though floating,
are intended by their nature and object to remain at a
fixed place on a river, lake or coast” are considered
immovable property by destination being intended by
the owner for an industry or work which may be
carried on in a building or on a piece of land and which
tend directly to meet the needs of said industry or
work.
(b) The Treasurer is correct. The procedure does not allow a
motion for reconsideration to be filed with the Provincial
Assessor. To allow the procedure would indeed invite
corruption in the system of appraisal and assessment. It
conveniently courts a graft-prone situation where values of real
property ay be initially set unreasonably high, and then
subsequently reduced upon the request of a property owner. In
the latter instance, allusions of possible cover, illicit trade-off
cannot be avoided, and in fact can conveniently take place.
Such occasion for mischief must be prevented and excised from
our system.
(FELS Energy, Inc., v. Province of Batangas,
G. R. No. 168557, February 16, 2007 and companion case)
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When the ground for protest is the validity of the real
property tax ordinance
If the ground for the protest is validity of the real property tax
ordinance and not the unreasonableness of the amount collected the
tax must be paid under protest, and the issue of legality may be
raised to the proper courts on certiorari without need of exhausting
administrative remedies.
Procedure for refund of real property taxes based on
unreasonableness or excessiveness of amount collected
(1) Payment under protest at the time of payment or within
thirty (30) days thereafter, protest being lodged to the
provincial, city or in the case of a municipality within the
Metro Manila Area the municipal treasurer.
(2) The treasurer has a period of sixty (60) days from receipt
of the protest within to decide.
(3) The taxpayer should file an appeal with the Local Board
of Assessment Appeals:
(a) Within thirty (30) days from receipt of
treasurer’s decision; OR
(b) If the treasurer does not decide, within thirty
(30) days from the expiration of the sixty (60)
period for the treasurer to decide
(4) The Local Board of Assessment Appeals has 120 days
from receipt of the appeal within which to decide.
(5) The adverse decision of the Local Board of Assessment
Appeals should be appealed within thirty (30) days from
receipt to the Central Board of Assessment Appeals.
(6) The adverse decision of the Central Board of Assessment
Appeals shall be appealed to the CTA en banc by means
of a petition for review within thirty (30) days from
receipt of the adverse decision.
(7) The decision of the CTA may be the subject of a motion
for reconsideration or new trial after which an appeal
may be interposed by means of a petition for review on
certiorari directed to the Supreme Court on pure
questions of law within a period of fifteen (15) days from
receipt extendible for a period of thirty (30) days.
NOTE: The entitlement to a tax refund DOES NOT necessarily
call for the automatic payment of the sum claimed. The amount of
the claim being a factual matter, it must still be proven in the
normal course and in accordance with the administrative procedure
for obtaining a refund of real property taxes, as provided under the
LGC. (Allied Banking Corporation, etc., v. Quezon City
Government, et al.)
JB SUAREZ © 2018
jbsdeyoung.professional@gmail.com | @therainsantiago
U.I.O.G.D.
Procedure for refund of real property taxes based on
validity of the tax measure or solution indebiti
(1) Payment under protest not required, claim must be
directed to the local treasurer, within two (2) years from
the date the taxpayer is entitled to such reduction or
readjustment, who must decide within sixty (60) days
from receipt.
(2) The denial by the local treasurer of the protest would fall
within the RTC’s original jurisdiction, the review being
the initial judicial cognizance of the matter.
NOTE: Despite the language of Section 195 of the LGC which
states that the remedy of the taxpayer whose protest is denied by
the local treasurer is “to appeal with the court of competent
jurisdiction,” labeling the said review as an exercise of appellate
jurisdiction is inappropriate since the denial of the protest is not the
judgment or order of a lower court, but of a LGU. (Yamane , etc.
v. BA Lepanto Condominium Corporation, G. R. No. 154993,
October 25, 2005)
(3) The decision of the RTC should be appealed by means of
a petition for review directed to the CTA (Division).
(4) The decision of the CTA (Division) may be the subject of
a review by the CTA (en banc).
(5) The decision of the CTA (en banc) may be the subject of
a petition for review on certiorari on pure questions of
law directed to the Supreme Court.
Effect of TRAIN (Tax Reform for Acceleration and
Inclusion Act) of the Department of Finance on Property
Taxes
As of the moment, it has none. Package 1 of the TRAIN focuses on
personal income tax. The part with effect on property is Package 3
and details are still being finalized.
The closest effect it has on property is rentals.
House rentals of Php 10,000 and below remain
rented out by smaller property owners with exempted
annual revenues not exceeding the from value-
proposed VAT threshold of Php 3 million added tax
a year (VAT)
Other Doctrines
Sta. Lucia Realty & Development, Inc. v. City of Pasig
G.R. No. 166838, June 15, 2011
Under PD No. 464, or the “Real Property Tax Code,” the authority
to collect real property taxes is vested in the locality where the
property is situated. This requisite was reiterated in RA No. 7160,
or the LGC. Thus, while a LGU is authorized under several laws to
collect real estate tax on properties falling under its territorial
jurisdiction, it is imperative to first show that these properties are
unquestionably within its geographical boundaries.
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REAL PROPERTY TAXATION

The Court cited the case of Mariano, Jr. v COMELEC which

stated that “the importance of drawing with precise strokes the
territorial boundaries of a LGU cannot be overemphasized. The
boundaries must be clear for they define the limits of the territorial
jurisdiction of a LGU. It can legitimately exercise powers of
government only within the limits of its territorial jurisdiction.
Beyond these limits, its acts are ultra vires.”

Republic of the Philippines v. City of Mandaluyong

G.R. No. 184879, February 23, 2011
A writ of possession is mere incident in the transfer of title. In this
case, it stemmed from the exercise of alleged ownership by
respondent city over EDSA MRT III properties by virtue of a tax
delinquency sale. The issue of whether the auction sale should be
enjoined is still pending before the Court of Appeals.

Pending determination, it is premature for the respondent city to

have conducted the auction sale and caused the transfer of title over
the real properties to its name. The denial by the RTC to issue an
injunction or a temporary restraining order does not automatically
give the respondent city the liberty to proceed with the actions
sought to be enjoined, especially so in this case where a certiorari
petition assailing the denial is still being deliberated in the CA.

All the more it is premature for the RTC to issue a writ of

possession where the ownership of the subject properties is derived
from an auction sale, the validity of which is still being threshed
out in the CA. The RTC should have held in abeyance the issuance
of a writ of possession. At this juncture, the writ issued is premature
and has no force and effect.

REFERENCES
• Taxation by Professor Abelardo T. Domondon (2010)
• Ownership of Land Can Be Taxing! A Guide to Real
Property Tax in the Philippines by Nicolas & De Vega
Law Offices (2017)
• Features of Real Property Taxation in the Philippines by
Tax and Accounting Center Philippines (2018)
• Fun Facts: What You Should Know About Real Property
Tax by Federal Land (2018)
• The Latest Property Tax Updates in the Philippines by
DMCI Homes Leasing (2017)
• Taxation Law Survival Kit by 4C under Attorney Anthony
Dy (2012)
• Memory Aid by San Beda College of Law Central Bar
Operations

JB SUAREZ © 2018
jbsdeyoung.professional@gmail.com | @therainsantiago
U.I.O.G.D.
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