Real Property Tax Notes
by Joshua Cedric I. Carmen & Kenneth Jules Garol
I. History
In the encomienda system during the
Spanish era, there was no real property tax
in the Philippines in the same sense in
which the term is used today. Taxes on land
were levied primarily on male tenant
farmers of military age (16-60) and as such
were personal taxes on tributes rather than
true land taxes. These taxes, generally in
the form of agricultural products, were paid
for the privilege of working the land of the
encomienderos.
The true beginnings of real property
taxation in the Philippines came with the
advent of American Rule. Acts No. 82 and
83 of the Philippine Commission, organizing
the municipal and provincial governments,
respectively, were enacted. These laws
authorized municipal and provincial
treasurers to levy taxes on real properties.
These taxes became the primary source of
locally-generated revenues.
American Rule (Acts No. 82/83)
1916 Jones Law
1932 Act No. 3995
1939 Assessment Law
1968 Special Education Law
1974 The Real Property Tax Code
1991 The Local Government Code
II. Nature
Taxes on property are taxes assessed on all
property, or all property of a certain class,
located within a certain territory on a
specified date in proportion to its value or
in accordance with some other reasonable
method of apportionment.
A property tax is ordinarily assessed at
stated periods determined in advance,
and collected at appointed times and its
payment is usually enforced by sale of
the property taxed.
In the Philippines, the real property tax
is an annual ad valorem tax imposed by
local government units on real property
within their jurisdiction, determined on
the basis of a fixed proportion of the
value of the property.
III. Purpose
The function of a property tax is to raise
revenue. Such tax does not impose any
condition, nor does it place any restriction
upon the use of the property taxed.
The real property tax is the main source of
revenue for local governments in the
Philippines.
 IV. Fundamental Principles Governing
Appraisal and Assessment of Real
Property
1.) Real property shall be
appraised at its current and fair
market value.
2.) Real property shall be classified
for assessment purposes on the
basis of its actual use.
3.) Real property shall be assessed
on the basis of a uniform
standard of value within each
LGU.
4.) The appraisal, assessment, levy
and collection of real property
tax shall not be let to any
private person; and
5.) The appraisal and assessment
of real property shall be
equitable.
V. Definition of Terms
Actual Use - the purpose for which the
property is principally or predominantly utilized
by the person in possession thereof
Assessment - the act or process of
determining the value of a property or a
proportion thereof subject to tax, including the
discovery, listing, classification, and appraisal of
properties
Assessment Level - the percentage applied
to the fair market value to determine the
taxation value of the property
Assessed Value - the fair market value of
the real property multiplied by the assessment
level; synonymous to the taxable value
Agricultural Land - land devoted principally
to the planting of trees, raising of crops,
livestock and poultry, dairying, salt-making,
inland fishing and similar aqua-cultural
activities, and other agricultural activities
Commercial Land - land devoted
principally for the object of profit and is not
classified as agricultural, industrial, mineral,
timber or residential land
Industrial Land - land devoted principally
to industrial activity as capital investment and is
not classified as agricultural, commercial,
timber, mineral or residential land
Mineral Land - lands in which minerals,
metallic or non-metallic, exist in sufficient
quantity or grade to justify the necessary
expenditures to extract and utilize such
materials
Residential Land - land principally
devoted to habitation
VI. Steps in Assessment of Real
Property
1.) Levy
2.) Assessment
3.) Collection
Preparation of a roll or list of all the
property subject to tax
Valuation of such property
The property tax roll or schedule is
prepared by the sworn declaration of the
owner or by a declaration by the assessor
himself.
 VII. Appraisal of Real Property IX. Effects of Declaration
1.) It is binding upon the owner.
All real property, whether taxable
or exempt, shall be appraised at a. A taxpayer is bound by
a description which he
the current and fair market value
prevailing in the locality where the himself has furnished.
property is situated. b. A taxpayer who, after
six years of silence and
The schedule of base market values negligence, has not
is used as a basis for appraisal of called the attention of
land, while the schedule of base the taxing authorities as
unit construction cost is used for to the error regarding
buildings and other structures the size of his lot, is not
entitled to a refund of
the tax due to the
VIII. Declaration of Real Property by difference arising from
Owner or Administrator excess in the
It shall be the duty of all owners or declaration of the area
administrators of real property or their duly of the lot.
authorized representative to prepare and file 2.) It does not create title.
with the provincial, city or municipal assessor, a
sworn statement declaring the true value of a. He who neglects to
their property, whether previously declared or declare his realty for
undeclared, taxable or exempt, which shall be taxation allowing
the current fair market value of the property, as opportunity for another
declared by the declarant. to declare and inscribe
Such declaration shall contain a it in his own name,
description of the property sufficient in does not lose his
detail to enable the assessor or his ownership, nor is he
deputy to identify the same for estopped from claiming
assessment purposes. the same.

This sworn declaration of real property b. Neither tax receipts nor

shall be filed with the assessor once declaration of
every three years during the period ownership for taxation
from January 1 to June 30 commencing purposes are evidence
with the calendar year 1992. of ownership or of the
right to possess realty
when not supported by
other effective proofs.
X. Real Property Acquired or Improved If not submitted within the period
prescribed, the property shall be
It shall also be the duty of any person, listed as taxable in the assessment
or his authorized representative, roll. However, if the property shall
acquiring at any time real property in be proven to be tax exempt, the
any municipality or city making any same shall be dropped from the
improvement on real property, to roll.
prepare a sworn statement declaring
the true value of subject property, XIII. Classes of Real Property for
within 60 days after the acquisition of assessment Purposes
such property or upon completion or 1.) Residential
2.) Agricultural
occupancy of the improvement,
whichever comes earlier. 3.) Commercial
4.) Industrial
XI. Declaration of Real Property by 5.) Mineral
Assessor 6.) Timberland
7.) Special ( Others, etc )
When any person by whom real XIV. Actual use of real Property as Basis
property is required to be declared for Assessment
refuses or fails for any reason to Real property shall be classified,
make such declaration within the valued and assessed on the basis of
time prescribed, the assessor shall its actual use regardless of where
himself declare the property in the located, whoever owns it, and
name of the defaulting owner, if whoever uses it.
known, or against an unknown XV. Assessment Levels
owner, as the case may be, and Fixed by ordinances of the
Sangguniang Panlalawigan,
shall assess the property for
taxation in accordance with the Sangguniang Panlungsod, or
provision of the Code. Sangguniang Bayan.
a. On Lands
XII. Proof of Exemption of Real b. On Buildings and Other
Property from Taxation Structures
c. On Machineries
d. On Special Classes
Every person by or for whom real
property is declared, who shall XVI. Computation of Real Property TAX
claim tax exemption for such
property under the Code shall file Market Value xx
with the provincial, city or Multiply: Assessment Level %
municipal assessor within 30 days Assessed Value xx
from the date of declaration of real Multiply: Tax Rate %
property sufficient documentary Real Property Tax Due xx
evidence in support of such claim.
XVII. Assessment Appeals
Appeal to Local Board of Assessment
Appeals
- Any owner/person who is not satisfied
with the action of the provincial, city or
municipal assesor..
- may appeal within 60 days from the
date of receipt of the written notice of
assessment
- By filing a petition under oath in the
form prescribed for the purpose,
together with copies of the tax
declarations and such affidavits or
documents submitted in support of the
appeal.
Appeal to the Central Board of
Assessment Appeals
- The owner/person who is not satisfied
with the action of the provincial, city or
municipal assesor..
- * may appeal within 30 days from the
date of receipt of the decision of the
board
#The decision of the Central Board shall
be final and executory.
Appeal on the assessments of real
property made under the provisions of
the Code,
It will not suspend the collection of the
realty taxes on the property involved
without prejudice to subsequent
adjustment depending upon the final
outcome of the appeal.
XVIII. Imposition of Real Property Tax
The Power to levy tax is vested in the
Province or city or a municipality within
Metropolitan Manila Area(MMA).
Levy an annual ad valorem tax on real
property: Land, Building, Machinery, and other
improvements not specifically exempted.
See The Civil Code (Art. 415 thereof) For
enumeration of the immovable/real
property.
XIX. Rates of Levy
The province, city or municipality within
MMA shall fix a UNIFORM rate of basic real
property tax:
(1) Province: not exceeding 1% of the
assessed value of real property.
(2) City or Municipality: not exceeding
2% of the assessed value of real
property.
XX. Exemptions from Real Property Tax
(1) Owned by the Republic of the
Philippines or any of its political
subdivisions. EXCEPT: when the beneficial
use thereof has been granted, for
consideration or otherwise, to a taxable
person in which case, the latter shall be
liable
(2) Charitable Institutions, Churches,
Parsonages, or Convents appurtenant
thereto, Mosques, Non-profit or religious
cemeteries and all lands, buildings, and
improvements actually, directly, and
exclusively used for religious, charitable, or
educational purposes.
 (3) All machineries and equipment that are
actually, directly, and exclusively used by local
water districts and GOOCC engaged in the
supply and distribution of water and/or
generation and transmission of electric power.
(4) ALL real properties Owned by duly
registered Cooperatives as provided for under
R.A. No. 6938
(5) Machinery and equipment used for
pollution control and environmental protection.
Any Exemption from payment of real
property tax previously granted to or
presently enjoyed by, all persons
including Government Owned or
Controlled Corporation (GOOCC) has
been withdrawn upon the effectivity of
the Code.
The law makes no distinction between
Property held in govt capacity and
those possessed in a proprietary
character
XXI. Persons liable to the TAX
Generally,
Owner of the property with
respect to which the tax is levied.
A tax on real estate ordinarily should be
assessed to the person appearing of
record to be the owner or holder of the
LEGAL TITLE.
Specific Cases,
1.) Transfer of Ownership
(a) after Accrual of the tax from a non-
exempt person to an exempt person. IT
MUST STILL BE PAID.
(b) After Accrual of the tax, from an
exempt person to a non-exempt
person, No liability to pay the tax
because the exemption is vested.
(c) The purchaser is not liable for taxes
due BEFORE his acquisition of the
property
2.) Property is held in Antichresis
The creditor is obliged to pay the taxes
and charges upon the estate.
BY the contract of antichresis, the
creditor acquires the right to
receive the fruits of an immovable
of his debtor, with the obligation to
apply them to the payment of
interest, if owing, and thereafter to
the principal of the credit.
3 .) Property is subject to Usufruct
The taxes w/c during the
usufruct may be imposed
directly on the property to be
paid by the owner of the naked
title.
The realty tax being a burden upon
capital should be paid by the owner
of the land and not by the
usufructuary.
USUFRUCT - Gives one ( usufructuary )
a right to enjoy the property of another
with the obligation of preserving its
form and substance, unless the title
constituting it or the law otherwise
provides.
4. ) If the Owner is Unknown
The provincial or city assessor shall
assess the property for taxation as
against the unknown owner.
5. ) If the Tax is Unpaid
It attaches to the property and is
chargeable against the taxable person
who had actual or beneficial use and
possession of it regardless of whether
or not he is the owner.
XXII. Special Levies on Real Property
Special Assessment
A particular kind of levy
Imposed on Land owners to meet the
cost and/or maintenance of public
improvements financed by a province,
city or municipality or by the Natl Govt
Levied for a specific purpose and in an
amount proportioned to the direct
benefit of the property assessed.
Principle underlying special assessment
The property upon which they are
imposed is peculiarly benefited and
therefore, the owners do not in fact,
pay anything in excess of what they
receive by reason of such improvement.
Unless a corresponding benefit can be
found, no special assessment may be
sustained as it would be manifestly
unfair and palpably arbitrary and
plain abuse.
This assessment is violative of the due
process guarantee of the Constitution.
XXIII. Special Levies that are Authorized
In addition to basic realty tax,
the code authorizes the imposition and
collection of the following:
(1) Additional levy on real property for the
Special Education Fund (SEF)
May levy an annual tax of 1% on the
assessed value of real property which
shall be in addition to the basic real
property tax.
Proceeds shall accrue exclusively to the
SEF. Created under R.A. No. 5447
(2) Additional Ad valorem tax on idle lands
May levy an annual tax on idle lands at
the rate not exceeding 5% of the
assessed value of the property which
shall be in addition to the basic real
property tax.
(3) Special levy by local government units.
May be imposed on the lands
comprised within its territorial
jurisdiction specially benefited by public
works projects or improvements by the
LGU concerned.
Shall not exceed 60% of the actual costs
of acquiring land and/ such real
property connected therewith.
*Shall not apply to Lands exempted, Or any
remainder of the land, or portions of which
have been donated to the LGU concerned for
construction of such properties or
improvements.
Taxpayers Remedies against special levy:
Any owner of real property affected by
a special levy,
Avail remedies provided for as in the
case of the basic real property tax
Upon receipt of written notice of
assessment of the special levy.
XXIV. Collection of the TAX
Responsibility of the city or
municipal treasurer concerned.
Tax with interest and related
expenses.
And the enforcement of the
remedies provided in this Code or
any applicable laws
The city or municipal treasurer may
deputize the brgy. Treasurer to
collect all taxes on real property
located in the brgy.
Shall be properly bonded for the
purpose
The premium on the bond shall be
paid by the city or municipal govt.
XXV. Installment Payment of Taxes
The owner may pay in 4 equal installments:
On or before the End of each
Quarter in a Calendar Year.
1st.March 31
2nd June 30
3rd September 30
4th December 31
The sanggunian concerned (
Panlalawigan, Panlungsod, or Bayan)
will govern the special levy payment
Prescribe the date for the payment of
any other real property without
interest.
Payments of taxes shall first be applied
to prior years delinquencies, interests,
and penalties, if any, and only after
settlement may tax be credited for the
current period.
XXVI. Tax Discount on Advance Payment.
If basic and additional is paid in
advance, the sanggunian concerned
may grant a discount not exceeding
20% of the annual tax due.
XXVII. Payment of Tax Under Protest
(1) No protest shall be entertained unless
the taxpayer first pays the tax.
Paid under protest annotated on
the Tax receipts
> Protest must be in writing filed w/n
30 days from the payment of the tax to
the P/c/M treasurer.
*w/n 60 days in the case of a
municipality w/n MMA. Who shall
decide solely.
(2) The tax or a portion thereof paid under
protest shall be held in trust by the treasurer
concerned.
(3) Protest is finally decided in favor of the
taxpayer, the amount or portion of the tax
protested shall be refunded to the protestant ,
or applied as tax credit against his existing or
future tax liability.
(4) If the protest is Denied, or upon lapse of the
60-day period prescribed in No.1.
> The taxpayer may appeal to the Local
Board of Assessment Appeals then, to
the Central Board of Assessment
Appeals.
XXVIII. Notice of delinquency in the
payment of the tax
1.) When the tax becomes
delinquent, the Province, City,
or Municipal treasurer shall
immediately cause a notice of
the delinquency to be posted at
the main entrance of the
provincial capitol, or city or
municipal hall and in a publicly
accessible and conspicuous
place in each brgy. Of the LGU
concerned.
2.) Shall be published: Once a week
for 2 consecutive weeks, in a
newspaper of general
circulation in the P, C or M.
3.) Specify the date upon which
the tax became delinquent and
shall state that personal
property may be distrained to
effect payment.
XXIX. Interest on Unpaid Taxes
Failure to pay the taxes upon the
expiration of the periods which they
are due shall subject the taxpayer
to the payment of interest at the
rate of 2% per month on the unpaid
amount or a fraction thereof, until
the delinquent tax shall be paid in
full.
* Total interest computed shall not
exceed 36 months.
Interest is Based on the Unpaid tax or
a fraction thereof :
First was paid 2nd was not paid.
The taxpayer shall be held liable
for the penalty based on the 2nd
installment Not delinquent as
against the first installment.
XXX. Remedies for the collection of the
Tax
For the collection of the tax and any
other special levy, The LGU
concerned may avail of the
remedies by administrative action
through Levy on real property or by
judicial action.
XXXI. Redemption of Property Sold.
(superior lien)
Within 1 year from the date of sale,
Owner has the right to redeem the
property upon payment to the local
treasurer of the amount of the
delinquent tax, plus interest and the
expenses of sale from the date of
delinquency to the date of sale, plus
 interest of not more than 2% per month
on the Purchase Price from the date of
sale to the date of redemption.
Effect
Payment shall invalidate the certificate
of sale issued to the purchaser and the
owner of the delinquent real property
shall be entitled to a certificate of
redemption w/c shall be issued by the
local treasurer or his deputy.
Right of delinquent cases
From the date of sale until the
expiration of the period of redemption,
the delinquent real property shall
remain in the possession of the owner
who shall be entitled to the income and
other fruits thereof.
Right of Purchaser
The local treasurer or his deputy, upon
receipt from the purchaser of the
certificate of sale, shall forthwith return
to the latter the entire amount paid by
him plus interest of not more than 2%
per month.
Thereafter, the property shall be free
from the lien of such delinquent tax,
interest due, and expenses of sale.
XXXII. Periods within which to collect real
property Taxes
Shall be collected within 5 years
from the date they become due.
No action for the collection of tax
shall be instituted after the
expiration of such period (
administrative or judicial )
In case of fraud or intent to evade
the tax,
*It shall be within 10 years from
the discovery of such fraud or
intent to evade.
If the collection is SUSPENDED:
(1) The local treasurer is legally
prevented from collecting the
tax.
(2) The owner requests for
reinvestigation and executes a
waiver in writing before the
expiration of the period within
which to collect
(3) The owner is out of the country
or cannot be located.