Q: What is the nature and source of local
taxing power?
 Mactan Cebu case:
The power to tax is primarily vested in
Congress.
However, in our jurisdiction, it may be
exercised by local legislative bodies
pursuant to direct authority conferred by
Sec 5, Art 10 of the Constitution.
Under the said provision, the exercise of the
power may be subject to such guidelines
and limitations as the Congress may
provide which, however, must be consistent
with the basic policy of local autonomy.
Currently, Titles I (Local Taxation) and II
(RPT) of Book II, Local Government Code
prescribe the guidelines and limitations of
local taxing power.
Q: May the Congress repeal Titles 1 and 2
of the LGC effectively withdrawing the
power to tax of the LGUs?
No. The Congress cannot. The remedy of
the LGUs is to file a petition for certiorari
because there is grave abuse of
discretion on the part of the Congress.
The Congress cannot deny the LGUs the
power to tax. They can only set limitations
but not deny them that power altogether.
Q: What are the fundamental principles that
govern the exercise of taxing and other
revenue-raising powers of LGUs?
1. Uniformity in Taxation
2. Local exactions shall be
 Equitable and based on taxpayer’s
ability to pay
 For Public Purposes
 Not unjust, excessive, oppressive
and confiscatory
 Not contrary to law, public policy,
national economic policy, or in the
restraint of trade
3. Collection shall not be left to private
persons. (It has to be the Treasurer of the
LGU)
4. Revenue collections shall accrue
exclusively to LGUs
5. System of taxation must be progressive
Q; What are the common limitations of
the taxing power of the LGUs?
DIET8-C2-BV:
 DST
 Income Tax except on banks and
other financial institutions
 Excise Tax & TFC on petroleum
products
 Transfer Taxes (Estate and Donor’s
Tax)
 Taxes on Reinsurance Premiums
 TFC on:
1. Goods “passing through” the
territorial jurisdiction of the LGU
2. Agricultural & Aquatic Products
when sold by marginal farmers
or fishermen
3. Registration of Motor Vehicles,
except tricycles
4. Export Products
5. Countryside and Brgy. Business
Enterprises or Cooperatives duly
registered w/ CDA
6. National Govt. or LGUs
 Custom Fees and other charges
 Common Carriers Tax
 Business Tax on BOI-, PEZA-,
SBMA-registered entities & those
granted by special laws
 VAT or any percentage tax
These common limitations are basically the
taxes that the LGUs cannot impose. They
were thought of by Congress as by the
Constitution to limit LGUs power to tax.
JURISPRUDENCE:
 Pepsi Cola Case → An increase in the
tax alone would not support the claim that
the tax is oppressive, unjust and
confiscatory.
Municipal corporations are allowed
much discretion in determining the rates
of imposable taxes.
Unless the amount is so excessive as to
be prohibitive, courts will go slow in
writing off an ordinance as
unreasonable.
 Province of Bulacan vs. CA → provinces
may not levy excise taxes on articles
already taxed by the NIRC.
 Phil. Petroleum Corp. v. Municipality of
Pililla → a tax on business is distinct from a
tax on the article itself.
Here, the Supreme Court upheld the
imposition of a local tax on the business of
manufacturing petroleum products, despite
the fact that the NIRC imposes excise taxes
on manufactured petroleum products.
Note, however, that under the IRR of Sec.
133(h), the prohibition extends to the
imposition of a tax on the business of
manufacturing petroleum products.
See, however, Petron Corp. v. Tiango
(2008), holding that LGU may not impose
business taxes on entities engaged in sale
of petroleum products.
Therefore in Phil. Jurisdiction, LGU may
not impose taxes on the business of
manufacturing petroleum products and
on entities engaged on the sale of
petroleum products.
 SAN MIGUEL CORP. V. MUNICIPAL
COUNCIL OF MANDAUE → a graduated
quarterly fixed tax based on the gross value
of money or actual market value at the time
of removal of the manufactured articles from
their factories is essentially a percentage
tax based on sales, therefore, beyond the
authority of the LGU to enact.
A percentage tax is imposed when there
is a set of ratio between the amount of
tax and volume of sales.
 SCOPE OF TAXING POWERS OF
LGUS:
Q: What are the TFCs that provinces may
levy and collect?
A: Look at your summary..hehe
Continuation on Municipalities:
FEES AND CHARGES ON:
1. Municipalities authorized also to
impose and collect such reasonable
fees and charges on business and
occupation and on the practice of
any profession or calling (other than
professional tax, which only
provinces or cities may impose)
before any person may engage in
such business, occupation or
practice of such profession (i.e.
mayor’s permit). The fees and
charges, however, should be
commensurate with the cost of
regulation, inspection and licensing
(i.e. must not be revenue-
generating)
2. Service Fees and Charges
3. Public Utility Charges
4. Toll Fees & Charges
CITIES:
Q: What are the taxes, fees and charges
that cities may levy and collect?
Taxes, fees, charges which provinces or
municipalities may levy and collect.
The rates of taxes that cities may levy may Who are authorized to levy and collect
exceed the maximum rates allowed for community taxes?
provinces or municipalities by not more than Cities or municipalities
50%, except the rates of professional and Who are liable?
amusement taxes. 1. Individuals
Thus, if the rate provided by the LGC is 18 years or over (i) regularly employed on a
50% of 1% for province, the city can collect wage or salary
75% of 1%. basis for at least 30 consecutive working
days during any
Again, municipalities within Metro Manila calendar year; or (ii) engaged in business or
may levy taxes at rates which shall not occupation; or
exceed by 50% the maximum rates in (a) to (iii) own real property with FMV of P1k or
(h) of those that municipalities may impose. more; or (iv)
Now, only Pateros is the municipality within required to file ITR
Metro Manila. Rate and Base: annual tax of P5, plus P1
per P1k income
BARANGAYS:
2. Juridical Persons
WHAT ARE THE TAXES, FEES AND Every corporation engaged in or doing
CHARGES THAT BARANGAYS MAY business in
LEVY AND COLLECT? the Philippines
1. Taxes on stores or retailers with fixed Rate and Base: annual tax of P500 and an
business establishments with gross sales or annual
receipts for the preceding calendar year of additional tax based on FMV of real
P50k or less (for barangay in cities) and property and
P30k or less (for barangays in gross receipts (the additional tax, however,
municipalities) at a rate not exceeding 1% of shall
such not exceed P10k)
gross sales or receipts
2. Service fees or charges for services Who are exempt from community tax?
rendered in connection with the regulation 1. Diplomatic and consular representatives
or 2. Transient visitors
the use of barangay-owned properties or
service facilities such as palay, copra or PLACE AND TIME OF
tobacco dryers PAYMENT OF TAX
3. Barangay clearance for purposes of
mayor’s or business permit application or Where shall the community tax be paid?
renewal Resident of individual
4. Other fees and charges on (a) Place where principal office of juridical entity
Commercial breeding of fighting cocks, is
cockfights located
and cockpits; (b) on places of recreation When shall community tax be paid?
charging admission fees; and (c) on On or before last day of February
billboards, etc. Special rules for individuals and
corporations who
COMMUNITY TAX became liable for community tax during the
CERTIFICATE year

WHO ARE LIABLE? TIME, MANNER AND PLACE

OF PAYMENT OF LOCAL
BUSINESS TAX
 WHERE SHOULD LOCAL
TIME AND MANNER BUSINESS TAXES BE PAID?
Principal Office Rule
Tax period is generally on a calendar year In case where there is no such branch, sale
basis. Manner office or
of payment may be made quarterly. warehouse in the locality where the sale is
Accrual of tax is generally on January 1; in made, the sale
case of new shall be recorded in the principal office
ordinance levying new tax or increasing tax along with the sales
rates, on the made by said principal office and the tax
1st day of quarter next following effectivity shall accrue to the
of ordinance. city or municipality where said principal
Time of payment is generally on the first 20 office is located.
days of Principal Office is the head or main office
January or the quarter, as the case may be. appearing in the
In case of AOI or DTI registration.
retirement from business, if the tax paid
during the year ALLOCATION RULE
be less than the tax due on said gross sales Important: Allocation rule applies only to
or receipts of manufacturers, assemblers, contractors,
the current year, the difference shall be paid producers
before the and exporters with factories, project offices,
business is considered officially retired. plants
and plantations in the pursuit of business.
Time of payment coincides with the time for
renewal of business permits. PROJECT OFFICE, PLANT OR
PLANTATION
PLACE (SITUS RULES) 30% of all sales recorded in the principal
office shall
BUSINESS TAXES BE PAID? be taxable by the city or municipality where
Branch or Sales Office Rule the
LGU where branch or sales office is located. principal office is located, and 70% of all
All sales made in a locality sales
where there is branch or sales office or recorded in the principal office shall be
warehouse shall be recorded in said taxable by the
branch or sales office or warehouse and the city or municipality where the factory,
tax shall be payable to the city or project office,
municipality where the same is located. plant or plantation is located.
Branch or Sales Office is a fixed place in a
locality which conducts operations PRINCIPAL OFFICE &
of the business as an extension of the FACTORY & PLANTATION
principal office; offices used only as In case a plantation located at a place other
display areas of products where no stocks than the
or items are stored for sale, place where the factory is located, said 70%
although orders for the products may be shall be
received thereat, are not branch or divided as follows:
sales office. A warehouse which accepts 60% of the 70% to the city or municipality
orders and/or issues sales invoices where
independent of a branch with sales office the factory is located, and
shall be considered as a sales office.
40% of the 70% to the city or municipality
where
the plantation is located.
PRINCIPAL OFFICE WITH 2 OR
MORE FACTORIES, PROJECT
OFFICES, PLANTS OR PLANTATIONS
In case where a manufacturer, assembler,
producer, exporter
or contractor has 2 or more factories,
project offices, plants
or plantations located in different localities,
the 70% sales
allocation shall be pro-rated among the
localities where the
factories, project offices, plants, or
plantations are located in
proportion to their respective volumes of
production during
the period for which the tax is due.
In the case of project officers of service or
other independent
contractors, production is cost of projects
undertaken during
the tax period.
SALES MADE BY ROUTE
TRUCKS, VANS OR VEHICLES
Sec. 243(d), LGC
For route sales made in a locality where a
manufacturer, producer, wholesaler,
retailer or dealer has a branch or sales
office or warehouse, the sale shall be
recorded in the branch or sales office or
warehouse and the tax due thereon
shall be paid to the city or municipality
where such branch or sales office or
warehouse is located.
For route sales made in a locality where a
manufacturer, producer, wholesaler,
retailer or dealer has no branch or sales
office or warehouse, the sale shall be
recorded in the branch or sales office or
warehouse from where the route
trucks withdraw their products for sale, and
the tax due thereon shall be paid
to the city or municipality where such
branch or sales office or warehouse is
located.
ENACTMENT OF TAX
ORDINANCE AND OTHER
REVENUE MEASURES
PUBLIC HEARING AND
PUBLICATION
If the tax ordinance is contrary to the
common limitations or scope of taxing
powers stated in the LGC, then it will be
void for substantive reasons.
However, there are also procedural grounds
to nullify a tax ordinance - failure to comply
with the public hearing and publication
requirements.
What are the procedural requirement for the
enactment of tax ordinances?
Public hearing and publication.
Secs. 186 & 187 state that no ordinance
levying
taxes, fees and charges shall be enacted
without
public hearing.
This is a mandatory requirement.
If the procedural requirement is violated, the
remedy to cure the nullity is to publish again
or to conduct a public hearing. If the ground
is substantial, there is no
remedy to cure the nullity but to change the
substance of the ordinance.
Example:
In Rizal, the taxpayers were shocked that a
tourism tax is collected from fast food
chains. There were no public hearing, that’s
why they do not know. Taxpayers
filed a case to declare the ordinance null
and void.
How do you prove they did not do a public
hearing, which is a negative fact? By
availing of the modes of discovery —
produce the minutes of the hearing, under
the Rules of Court. If what is requested is
not produced, it will establish that fact. The
court invalidated the tax ordinance.
FIGUERRES V. CA
The Supreme Court confirmed that the
holding of a
public hearing is a mandatory requirement
for the
enactment of a tax ordinance.
The SC, however, upheld the validity of the because of certain ultra vires provisions and
assailed non-compliance
ordinance for failure of the taxpayer to with the prescribed procedure for enactment
adduce thereof.
evidence that the requisite public hearings RTC declared Sec. 187 unconstitutional
were not because said provision
conducted by the LGU (presumption of violates the constitutional provision on local
validity of autonomy.
ordinances). The Supreme Court held that no
constitutional rule on local
What is the procedure for the publication of autonomy was violated because no control,
tax but only
ordinances? supervision was exercised by the Secretary
Within 10 days from approval, certified true of Justice in
copies of the ordinance shall be published declaring as illegal the assailed ordinance.
for 3
consecutive days in a newspaper of local HAGONOY MARKET VENDORS
circulation. ASSOCIATION V. MUNICIPALITY OF
In LGUs where there are no newspapers of HAGONOY, BULACAN
local Where an appeal to the Secretary of Justice
circulation, the tax ordinance may be posted more
in at than 1 year after the effectivity of the
least 2 conspicuous and publicly accessible ordinance in
places. question was held to be time-barred on the
ground
APPEAL OF TAX ORDINANCE that the periods stated in Sec. 187 are
mandatory.
WHAT IS THE PROCEDURE FOR
THE APPEAL OF TAX COURT OF COMPETENT
ORDINANCES? JURISDICTION
Secretary of Justice Within 30 days from receipt of adverse
Any question on the constitutionality or decision or
legality of tax from the lapse of the 60-day period without
ordinances or revenue measures may be the
raised on appeal Secretary of Justice acting on the appeal,
within 30 days from the effectivity thereof to the
the Secretary of aggrieved party may file appropriate
Justice. proceedings
The Secretary of Justice must render a with a court of competent jurisdiction.
decision on the appeal Direct Attack v. Collateral Attack
within 60 days from receipt of appeal. The remedy for a direct attack is to appeal
Pendency of the appeal the ordinance to the Secretary of Justice
does not suspend the effectivity of within 30 days from the effectivity of the
ordinance or accrual and ordinance. The Secretary of Justice
payment of taxes, fees, and charges levied has 60 days to decide.
thereon. After denial of the appeal, the remedy of
taxpayer is to appeal to the RTC. In case of
DRILON V. LIM inaction, appeal the inaction.
Secretary of Justice declared a Manila tax Failure to so question the ordinance with the
ordinance illegal Secretary of Justice, the taxpayer cannot
challenge the ordinance anymore from
directly attacking its validity.
Is the taxpayer precluded for questioning
the ordinance? No.
The taxpayer can still collaterally attack the
ordinance. The remedy would be to protest
the assessment by the local treasurer and
appeal such denial to the RTC.
- See discussion in remedies of the
taxpayer.
REMEDIES OF LOCAL GOVERNMENT
LGUS IN THE COLLECTION OF
TAXES AND REVENUES?
1. Examination of taxpayer’s book of
accounts
2. Issuance of deficiency assessment
3. Imposition of surcharge and interest
4. Summary remedies for the collection of
taxes
• Distraint of personal property
• Levy on real property
• Further distraint and levy
5. Judicial action for collection of taxes
REMEDIES OF TAXPAYER
WHAT ARE THE REMEDIES
OF TAXPAYERS?
1. Protest the assessment
• File protest with local treasurer within 60
days from receipt
of assessment, otherwise, assessment
becomes final and
executory
• Appeal to court of competent jurisdiction
(RTC) within 30
days from receipt of denial of protest or from
lapse of the 60-
day period without the local treasurer acting
on the protest
2. Claim for refund or tax credit
AUTHORITY OF LGUS TO
GRANT EXEMPTIONS
REAL PROPERTY
TAXATION
GENERAL PRINCIPLES
Sec. 198, LGC
WHAT ARE THE FUNDAMENTAL
PRINCIPLES
GOVERNING THE APPRAISAL,
ASSESSMENT,
LEVY AND COLLECTION OF REAL
PROPERTY
TAX?
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
classification within each LGU
4. The appraisal, assessment, levy, and
collection of RPT shall not let
to any private person; and
5. The appraisal and assessment of real
property shall be equitable.
Memorize this list. This, together with the
fundamental principles in local taxation, and
the common limitations of the taxing power
of LGUs always come out in the Bar
Exams.
PROVINCE OF NUEVA ECIJA V.
IMPERIAL MINING CO., INC.
It was held that the policy of taxing real
property is
on the basis of actual use even if the user is
not the
owner.
Hence, government property leased to a
private
person becomes taxable.
TY V. TRAMPE
The Supreme Court declared illegal the
400% to
570% increase in real estate taxes imposed
on
landowners in Pasig.
LOPEZ V. CITY OF
MANILA
The Supreme Court enumerated the
procedural steps in
computing real property tax as follows:
1. Ascertain assessment level
2. Multiply the FMV by the applicable
assessment level, and
3. Find the tax rate corresponding to that
class (use) of the
property and multiply the assessed value by
that rate.
The Supreme Court also enumerated the
steps for the mandatory
conduct of general revision of real property
assessments.
B. APPRAISAL AND
ASSESSMENT OF REAL
PROPERTY
Assessment is the act or process of
determining the
value of a property, or a proportion thereof,
subject
to tax. Includes discovery, listing,
classification, and
appraisal of properties
Appraisal is the act or process of
determining the
value of property as of a specified date for a
specific
purpose.
General Process for Assessment and
Appraisal
1. Preparation of schedule of the FMV
2. Declaration of value
3. Appraisal, valuation and classification,
which will be based on the actual use of the
property; the assessment level which
depends on the classification of the
property,
will be applied to the FMV of the property
4. Listing of property to the assessment roll
5. Notification of the new and revised
assessment
- Assessment is broader than appraisal
because the former covers the latter.
Appraisal is only a component of assessing
the real property value.
- Assessment can also refer to two things,
which entails different remedies:
1. The act of the local assessor of notifying
the taxpayer of the new or revised
assessment, which simply refers to the tax
declaration. This is the function of the local
assessor, and the prescriptive period will
start from the act of notifying (or service of
the notice).
2. The notice of assessment similar to the
one provided in the NIRC, which contains
the demand for the taxpayer to pay its taxes
due on a specified time. This is the
function of the local treasurer.
A. PREPARATION OF
SCHEDULE OF FMV
Sec. 201, LGC
Assessor shall prepare Schedule of FMV for
enactment by ordinance of sanggunian.
Schedule shall be published in newspaper
of general
circulation or posed in the capitol/hall and in
two
other conspicuous places.
Assessor may take evidence.
If there is no schedule, the LGU has no right
to impose RPT. The schedule is the basis of
the LGU in collecting RPT.
The schedule of fair market value by the
local assessor is almost always lower than
the zonal value prescribed by the BIR.
Why? It is a political process.
Zonal value, in turn, is usually lower than
the actual market value or the selling price
in the market. Why? It is difficult to revise
the zonal value. There must be a
study conducted both by private and public
appraisers.
Amendment to Schedule of FMV may be
made to
correct errors in valuation; to be confirmed
by
Sangguniang Bayan in an ordinance
enacted within
90 days from assessor’s recommendation.
Assessor shall prepare a revised Schedule
of FMV in
connection with an ongoing general revision
every
three years.
Amendment is limited only to clerical errors
in putting the value, because revising the
schedule is another thing which has more
stringent requirements.
B. DECLARATION OF VALUE
Secs 202 to 204, LGC
There are only three types of properties
subject to real property tax:
1. Lands
2. Improvements, including buildings
3. Machineries, by destination (the same as
in the Civil Code)
Thus, a house and lot will have two tax
declarations: one pertaining to the house
and one pertaining to the land.
Declaration may be:
Voluntary — by the owner every three years
Involuntary — by the assessor
C. APPRAISAL, VALUATION
AND CLASSIFICATION
Secs. 215 to 218, 224, LGC
What is the applicable rule regarding the
appraisal of
real property (land, buildings, and other
improvements)?
Real property, whether taxable or exempt,
shall
be appraised at the current FMV prevailing
at the
locality where the property is located
(schedule
of fair market values).
Real property shall be classified, valued and
assessed on the basis of actual use
regardless of
location and owner or user of property.
What is the applicable rule regarding the
appraisal of
machinery?
If machinery is brand new — FMV is
acquisition
cost.
If machinery is imported — FMV is total
landed
cost.
Appraisal, valuation, and classification of
real property may
be made in cases
1. Where property is declared and listed for
taxation
purposes for the first time
2. There is an ongoing general revision, and
3. A request is made by the person in
whose name the
property is declared.
Assessment of real property shall not be
increased oftener
than once every 3 years, except in case of
new improvements
substantially increasing the value of said
property.
Revision is typically upwards.
Why would a person ask that the FMV be
revalued?
Example:
Real property involved is a building or
factory a portion thereof is damaged by fire
or natural calamity. In this case, the owner
can ask the local assessor to lower
the FMV. For lands, it rarely applies. There
are also times when there can be significant
deflation in the value of the property —
exception to the rule (example would be
when Marikina was flooded during Ondoy,
the value of real properties in the area
decreased).
- Bullet 2: In which case, a new tax
declaration may be issued. However, it can
be decreased more than once every three
years.
CLASSIFICATION
Real property shall be classified and
assessment level applied on the basis of
actual use.
What are the classes of real property for
assessment purposes?
Residential
Agricultural
Commercial
Industrial
Mineral
Timberland
Special
What are the special classes of real
property?
Lands, buildings and other improvements
thereon
actually, directly, and exclusively used for
hospitals,
cultural or scientific purposes, and those
owned and used
by local water districts, and GOCCs
rendering essential
public services in the supply and distribution
of water
and/or generation and transmission of
electric power.
What is an assessment level?
It is the percentage applied to the FMV
(depending on the
class of real property) to determine the
taxable value of
real property. available in case the taxpayer wants to
What are the steps in determining the challenge the new assessments.
assessed value WHEN DOES THE ASSESSMENT OR
of real property? RE-ASSESSMENT TAKE EFFECT?
1. Determine FMV General Rule: January 1 of the following
2. Determine classification year (prospective application)
3. Apply assessment level to determine Exception: The reassessment of real
assessed property due to its
value or taxable value 1. Partial or total destruction, or
4. Determine RPT due by multiplying the 2. To a major change in its actual use, or
rate 3. To any great and sudden inflation or
against assessed value deflation of real property values, or
Fair Market Value P1,000,000 4. To the gross illegality of the assessment
Assessment Level (Residential) 20% when made or to any other abnormal
Assessed Value 200,000 cause
Basic Real Property Tax (2%) P4,000 Shall be made within 90 days from the date
Special Education Fund 2,000 any such cause or causes occurred, and
Total P6,000 shall take effect at the beginning of the
D. LISTING OF PROPERTY IN quarter next following the reassessment.
ASSESSMENT ROLL WHEN DOES THE ASSESSMENT OR
Sec. 206, LGC RE-ASSESSMENT TAKE EFFECT?
This is merely a list of all the properties Exception: For previously undeclared real
found in a particular LGU with all its FMVs property
and assessed values. This will be (property being declared for the first time),
published. effectivity
If real property is exempt, declarant shall file of assessment retroacts to the period during
with the which it
assessor documentary evidence on would have been liable (maximum of 10
exemption within years).
30 days from declaration. Taxpayer received new assessment, can he
E. NOTICE OF NEW OR file a request for reconsideration?
REVISED ASSESSMENT - No. The remedy of the person is to appeal
Secs. 220, 221 & 223, LGC the tax declaration to LBAA.
Written notice of such new or revised - Rationale: Corruption happens in the
assessment assessor level, where assessor will put high
(through a new Tax Declaration) shall be values on assessment in order to force the
given to the taxpayer to seek reconsideration.
person in whose name the property is The taxpayer will have to pay bribes for the
declared within reconsideration.
30 days. C. REAL PROPERTY TAX AND
This is important for purposes of ADDITIONAL OR SPECIAL
determining when LEVIES
the 60-day period to appeal the new or Secs. 233, 235 to 237, 240 to 243, LGC
revised WHAT ARE THE TAXES THAT LGUS
assessment to the LBAA pursuant to Sec. MAY LEVY ON REAL PROPERTY?
226. 1. Basic RPT
It is important that for the new or revised • 1% for provinces
assessment, notification or new tax • 2% for cities and municipalities within
declaration be served to the taxpayer. The MMA
notification sets into motion the remedies 2. 1% Special Education Fund (SEF)
3. 5% tax on idle lands
• Agricultural lands more than 1 hectare in ARE EXEMPT FROM RPT?
area 1. Property owned by the Government or
• Lands other than agricultural lands more any of its
than 1k sq.m. political subdivisions
• Residential lots in subdivisions regardless 2. Those actually, directly and exclusively
of land area used for
WHAT ARE THE TAXES THAT LGUS religious, charitable or educational
MAY LEVY ON REAL PROPERTY? purposes, and
4. Special Levy due to Improvements non-profit or religious cemeteries
• Lands specially benefited by public works - Bullet 2: As provided for by the
projects or improvements funded by the Constitution.
LGU BLGF OPINION DATED MARCH 9, 1993
concerned ADDRESSED TO THE MUNICIPAL
• Special levy shall not exceed 60% of the ASSESSOR OF TUGUEGARAO,
cost of CAGAYAN
the project or improvement Where only real properties owned by the
Special levy example: Philippine
A highway was constructed which increased Union College are actually, directly and
the value of the lands nearby. The LGU can exclusively
impose special levy. used for education purposes are exempt,
D. EXEMPTIONS FROM RPT including the
Sec. 234, LGC student dormitories, cafeterias, and the food
WHAT IS THE PROCEDURE FOR services
CLAIMING EXEMPTION FROM RPT? building.
File documentary evidence in support of The guardhouses garages, perimeter
claimed fences, water
exemption with the local assessor within 30 tanks and pumps, generator houses,
days stockrooms and
from date of declaration of real property. faculty/personnel residential quarters are
However, if the owner fails to do this, it will not exempt.
not affect the nature of the property as an BLGF OPINION DATED MARCH 19,
exempt property. The provision is merely 1993 ADDRESSED TO MR. ELMER
procedural, and is a directory LEE OF QUEZON CITY
requirement. The taxpayer is not precluded Where the real properties of the Chinese
from questioning the assessment. General
WHAT TYPES OF REAL PROPERTY Hospital were held exempt because the only
ARE EXEMPT FROM RPT? purpose
1. Property owned by the Government or for which it was formed was for charitable,
any of its benevolent, civic and educational purposes.
political subdivisions BLGF OPINION DATED
LRTA V. CBAA APRIL 22, 1999
The Supreme Court held that the LRT The Andres Soriano Training Center, owned
carriageways and
and terminal stations are not exclusively for operated by SMC, was held subject to RPT
public although it
use but rather patrimonial property, and was used for educational purposes because
therefore, (a) it also
are subject to RPT notwithstanding that caters to other private offices who wish to
LRTA is a avail of
GOCC. their training courses, (b) its courses are not
WHAT TYPES OF REAL PROPERTY the
regular subjects offered in schools or GOVERNMENT
universities, Secs. 254 to 257, LGC
and (c) it is not accredited by DECS. WHAT ARE THE REMEDIES OF
WHAT TYPES OF REAL PROPERTY LGUS IN THE COLLECTION OF RPT?
ARE EXEMPT FROM RPT? 1. Posting of notice of delinquency
1. Property owned by the Government or 2. Imposition of interest
any of its political subdivisions 3. Administrative remedies
2. Those actually, directly and exclusively 4. Judicial action for collection
used for religious, charitable or 5. Unpaid tax constitutes a lien
educational purposes, and non-profit or G. REMEDIES OF TAXPAYER
religious cemeteries Secs. 226, 229, 231, 252, 253, LGC; Sec. 7,
3. Machineries and equipment actually, RA 9282
directly, and exclusively used by local water WHAT ARE THE REMEDIES
districts and GOCCs in the supply and OF TAXPAYERS?
distribution of water and electricity. 1. Dispute the assessment
Machineries and equipment used by a 2. Pay under protest (appeal does not
private power plant not exempt. suspend
4. Real properties owned by cooperatives collection)
registered with the Cooperative 3. Claim for refund or credit
Development Authority and in accordance Take note that payment under protest is not
with the provisions of RA 6938 required in local business taxes.
5. Machinery and equipment used for WHAT ARE THE PROCEDURES
pollution control and environmental FOR DISPUTING AN ASSESSMENT?
protection. 1. Appeal to LBAA within 60 days from
E. PAYMENT OF RPT AND receipt of
SPECIAL LEVIES assessment
Secs. 246, 245, 250 to 251, LGC CALLANTA V. OFFICE OF
When does RPT accrue? THE OMBUDSMAN
On January 1. It was ruled that filing with the local
When does a special levy accrue? assessor of a
On the first day of the quarter next following request for a review or readjustment of an
the assessment is not a proper remedy, but
effectivity of the ordinance imposing such instead an
levy. appeal should have been lodged with the
For taxpayers electing to pay RPT and SEF LBAA.
in installments, WHAT ARE THE PROCEDURES
what are the due dates for payment of the FOR DISPUTING AN ASSESSMENT?
installments? 1. Appeal to LBAA within 60 days from
Four equal installments payable on March receipt of
31, June assessment
30, September 30, and December 31. 2. Appeal to CBAA within 30 days, if LBAA
Is there a tax discount for advanced prompt denies
payment appeal
of RPT and SEF? 3. Appeal to CTA within 30 days, if CBAA
Yes. If RPT and SEF are paid in advance of denies
March 31, June 30, September 30 and appeal
December LBT RPT
31, the Sangguniang Bayan may grant a File protest with local treasurer
discount within 60 days from receipt of
not exceeding 20% of the annual tax due. assessment
F. REMEDIES OF LOCAL Appeal to LBAA within 60 days
from receipt of assessment of reassessment
Local treasurer has 60 days to act
on the protest
Appeal to CBAA within 30 days, if
LBAA denies appeal
Appeal to RTC within 30 days from
receipt of denial or protest or from
lapse of 60-day period
Appeal to CTA within 30 days if
CBAA denies appeal
Payment under protest not
required
Payment under protest required
(or post surety bond)
Here it is important to distinguish the
remedies available to the taxpayer in
questioning an assessment which may refer
to the notice of assessment by the local
treasurer,
or the notification of new and revised
assessments by the local assessor.
I. Taxpayer received a notice of new or
revised assessment.
• Appeal to the LBAA, under Sec. 226; no
need to file an MR with the local assessor;
payment under protest but under the rules,
a bond may be allowed in lieu of
payment.
• Appeal the decision of the LBAA to CBAA,
then to the CTA and Supreme Court the
same as in the NIRC.
This will not suspend payment of the RPT,
but subject to refund later on. The prayer
must indicate a prayer to declare the
assessment invalid and a prayer for refund.
II. Taxpayer was assessed by the local
treasurer deficiency real property taxes
• Protest first, under Sec. 252; payment
under protest is required
• When denied, appeal to the LBAA, under
Sec. 226
WHAT IS AN ERRONEOUS
ASSESSMENT?
An erroneous assessment presupposes that
the
taxpayer is subject to the tax but is disputing
the
correctness of the amount assessed.
With an erroneous assessment, the
taxpayer claims
that the local assessor erred in determining
any of the
items for computing the real property tax,
i.e. the
value of the real property or the portion
thereof
subject to tax and the proper assessment
levels.
WHAT IS AN ILLEGAL
ASSESSMENT?
On the other hand, an illegal assessment is
one made
without authority under the law, i.e. taxpayer
is not
subject to RPT in the first place.
What is the remedy of the taxpayer in case
of an
erroneous assessment?
Taxpayer must pay under protest and
exhaust
administrative remedies under Sec. 252:
1. Pay under protest
2. Appeal to LBAA
3. Appeal to CBAA
4. Appeal to CTA
What is the remedy of the taxpayer in case
of an
illegal assessment?
In case of an illegal assessment, the
taxpayer
may directly resort to judicial action without
paying under protest the assessed tax and
filing
an appeal with the LBAA/CBAA:
1. File complaint for injunction with RTC
2. Appeal RTC decision to CTA
This is not found in the Local Government
Code, but is provided by jurisprudence
applying the general provisions on
injunction.