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Real Property Taxation

Real Property Taxation

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Published by: feloniouslypink on Jul 12, 2010
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11/10/2012

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12/23/20082:26 PM
Assignments in Real Property Tax
 
1. Sec. 197 to 247 of the Local Government Code
 
2. Vitug and Acosta
 
3. Cases:
 i.
Benguet Corp. v. Central Board of Assessment Appeals, GR 106401, Jan 29, 1993, pg. 7 Flores book.. Are tailingsimprovements subject to property tax?
 
 
ii.
Caltex Phils. V. CBAA, 144 SCRA 296 (pg 18, ibit. – Are underground tanks, elevated tanks, water tanks, gasolinepumps, computing pumps, water pumps, car washer, car and truck hoists, air compressors and similar articlesinstalled by Caltex Phils in its gas stations on leased land subject to tax?
 
 
iii.
Sebreno v. CBAA, 270 SCRA 263 – 43 ibit. – RPTC provides that all real property shall be appraised at the currentand fair market value prevailing in the locality where the property is situated. It also held that the area in excess of declared area upon discovery is deemed declared for the first time.
 
 
iv.Testate Estate of Lim v. City of Manila, 182 SCRA 483 – The term actual use for assessment purposes refers to theprincipal and predominant utilization of the property by the person in possession thereof pursuant to Sec 199(b) LGC.
v.
Patalinjug v. Court of Appeals, 229 SCRA 554(104786, Jan 1994)* pg.42, ibit. – Under the RPTC appraisal andassessment are based on actual use irrespective of any previous assessment or taxpayer’s valuation thereon whichis based on the taxpayer’s declaration.
 
 
vi.
Prov of NE v. Imperial Mining Co. GR 59463, Nov 19, 1982 – RPT is based on actual used even if the user is not theowner thereof.
 
 
vii.
Belen v. Court of Appeals 160 SCRA 291 – Basis of valuation for purposes of determining just compensation inexpropriation cases reiterating Export Processing Zone case which reversed the 1983 National Housing case thatused owner’s TD as basis.
 
 
viii.Allied Bank v The Quezon City Government GR 154126 Oct 11, 2005 – Is deed of sale proper basis of RPT?
ix.
Reyes v. Almanzor , 196 SCRA 322 “Income Approach” was held by the SC as basis instead of Comparable SalesApproach since the Rental Law prohibited owners from increasing rents and thus income could not even pay for taxes. The power to tax is the strongest of the powers of the government.
 
 
x.
MIAA v CA, GR 145650, Jul 20, 2006 – Is MIAA subject to RPT? Compare with Mactan International Air v. FerdinandMarcos, RTC judge Cebu, Osmena, Cesa, GR 120082, Sept 11, 1996
 
 
xi.
City of Davao v RTC – GR 127383 Aug 18, 2005 – Exemption of GSIS from RPT
 xii.
Roman Catholic v.Hastings 5 Phil 701 – Tax exemption is construed against the taxpayer. But according to Cooley, if it the government, it is construed liberally. Lands, buildings and improvements actually, directly and exclusively usedfor religious, charitable or educational purposes exempt under the Constitution, if they were so, exemption will applyirrespective of its ownership.
 
 
xiii.
Lung Center of the Philippines v Quezon City, 433 SCRA 119 (2004). The test whether an enterprise is charitable or not is whether it exists to carry out a purpose recognized in law as charitable or whether it is maintained for gain,profit, or private advantage. .
 
 
xiv.Philippine Ports Authority v City of Iloilo, 442 SCRA 175 (2004). The bare fact that the port and its facilities andappurtenances are accessible to the general public does not exempt it from the payment of real property taxes- thesaid facilities and appurtenances are PPA’s corporate patrimonial properties, not for public use, and that theoperation of the port and its facilities and the administration of its buildings are in the nature of ordinary business
xv.
RCPI v Prov Assessor of So. Cotabato 144486 Apr 13, 2005 – Radio franchise holder is subject to RPT despite “inlieu of all taxes” provision in the franchise law because the law itself says it is subject thereto and the LGC haswithdrawn all exemptions.
 
 
xvi.
Puzon v. Abellera, 169 SCRA 789 (1989) – Auction sale although preceded by advertisement and publication butwithout an actual notice to the delinquent taxpayer is void.
 
 
xvii.
Ramie Textile Inc. v. Mathay 89 SCRA 586 – Appeal from decision of assessor to LBAA within 60 days. Paymentunder protest is not required if there was mistaken belief that the payment when made was correct. In the case bar,petitioner had no prior knowledge that it was exempt. It however ruled that 6 years prescription in Civil Code Art. 1145apply for claim for refund, there being no similar provision as in the current LGC. In Quimpo v. Mendoza, 107 SCRA73, the payment under protest requirement applies only to basic tax but not to penalties.
 
 
xviii.
Olivarez v Marquez 438 SCRA 679 (2004) – Payment under protest
 xix.
RCPI v Prov of South Cotabato, GR 144486 Apr 13, 2005 – procedure in appealing assessment & whether certainpieces of equipment are subject to RPT
 
 
xx.Manila Electric Co. v. Barlis, 433 SCRA 11 (2004) An assessment fixes and determines the tax liability of a taxpayer.It is a notice to the effect that the amount therein stated is due as tax and demand for payment thereof. Assessor mandated under Sec 27 of PD 464 to give written notice within 30 days of such assessment, to the person in whosename the property is declared. If the taxpayer is not satisfied with the action of the local assessor in the assessmentof the his property, he has the right under Sec 30 of PD 464 to appeal to the Local Board of Assessment Appeals byfiling a verified petition within 60 days from service of said notice of assessment. For to do so the right of the localgovernment to collect the taxes due becomes absolute upon the expiration of such period, with respect to thetaxpayer’s property.
xxi.
City Gov of Q.C. v Bayantel GR 162015 Mar 6, 2006 – Is Bayantel subject to Franchise Tax?
 xxii.
The Supreme Court recently stopped the Iloilo City government from auctioning off the Iloilo Fishing Port Complex(IFPC) in satisfaction of the Philippine Fisheries Development Authority (PFDA)’s alleged property tax delinquencyamounting to Php5.07 Million. PFDA leases portions of the IFPC to private firms and individuals.
 
 
In a decision penned by Justice Consuelo Ynares-Santiago, the Court’s Third Division granted the petition of the state-run PDFA, which assailedthe scheduled sale of the IFPC and its tax delinquency, asserting that it is tax-exempt. The Court thus set aside the June 21, 2005 decision of theCourt of Appeals (CA) allowing the sale of the IFPC, which is part of a 21-hectare reclaimed lot in Iloilo City. The PFDA appealed to the CA after the Iloilo City Assessor’s Office, Department of Finance, and the Office of the President dismissed its petitions for tax exemption.The Court held that the PFDA, as an instrumentality of the national government, is generally tax-exempt. Thus, it ruled that the PFDA is liable topay real property taxes assessed by the City of Iloilo on the IFPC only with respect to those portions which are leased to private entities. Moreover,the Court held that the IFPC, being a reclaimed property and thus part of public domain, cannot be the subject of a sale and be sold at a publicauction. As such, the tax delinquency has to be settled through means other than the sale of the complex.
 
 
The Court also declared the real property tax assessments issued by the City of Iloilo on the land and buildings of the IFPC as void except on thoseportions leased to the private parties. It also directed the City of Iloilo to refrain from levying on the IFPC to satisfy the payment of the real propertytax delinquency. (GR No. 169836,
Philippine Fisheries Development Authority vs. CA,
July 31, 2007)
 
 
i.
 
ii.
Digitel Telecommunications Phis. v Prov of Pangasinan GR 152534 Feb 23, 2007 – Issues affecting exemption fromfranchise tax and real property tax under the LGC.
 
 
iii.
Digitel Telecom v City Government of Batangas, GR 156040 Dec 11, 2008 - The issue in this case involves theinterpretation of the phrase “
exclusive of this franchise
” in the first sentence of Section 5 of RA 7678.Section 5 of RA 7678 states:Sec. 5.
Tax Provisions
 
. -
The grantee shall be liable to pay the same taxes on its real estate, buildings, andpersonal property exclusive of this franchise as other persons or corporations are now or hereafter may be required bylaw to pay
. In addition thereto, the grantee shall pay to the Bureau of Internal Revenue each year, within thirty (30) days after the audit and approval of the accounts, a franchise tax as may be prescribed by law of all gross receipts of the telephone or other telecommunications businesses transacted under this franchise by the grantee;
Provided 
 
, That the grantee shall continueto be liable for income taxes payable under Title II of the National Internal Revenue Code pursuant to Section 2 of ExecutiveOrder No. 72 unless the latter enactment is amended or repealed, in which case the amendment or repeal shall be applicablethereto.The grantee shall file the return with and pay the tax due thereon to the Commissioner of Internal Revenue or his dulyauthorized representative in accordance with the National Internal Revenue Code and the return shall be subject to audit by theBureau of Internal Revenue. (Boldfacing and underscoring supplied)
 
 
i.
Lourdes Masikip v People GR 165265 Feb 6, 2006 – Meaning of public purpose for expropriation
 ii.
Power barges owned by NPC contractors are subject to RPT; appeal from the decision of local assessor should be made to the Local Board of AssessmentAppeals within 60 days from receipt of the assessment.The Motion for Recon with the Assessor’s office does not toll the period as it is not sanctioned by the law.Exemption of NPC does not extend to contractor. (
Fels Energy, Inc. v. The Province of B
 
atangas and theOffice of the Provincial Assessor of Batangas, G.R. No. 168557; and National Power Corporation v. Local Board of  Assessment Appeals of Batangas and the Province of Batangas, G.R. No. 170628, February 16, 2007)
 
 
Power barges owned by a contractor supplying electricity to the National Power Corporation (NPC) are real properties subject to the real property tax(RPT) imposed by local governments.Article 415 (9) of the New Civil Code, docks and structures which, though floating, are intended by their nature and object to remain at a fixed place ona river, lake, or coast are considered immovable property. Power barges are categorized as immovable property by destination, being in the nature of machinery and other implements intended by the owner for an industry or work which may be carried on in a building or on a piece of land and whichtend directly to meet the needs of said industry or work.
 
 
Such power barges owned by an NPC contractor cannot avail of the real property tax exemption under Section 234 (c) of R.A. No. 7160 because thepower barges are owned, operated, managed and maintained by the contractor. The contractor is the party liable to the real property tax, not NPC.The exemption provision applies only to real properties actually, directly and exclusively used by a government-owned and controlled corporationengaged in the supply, generation, and transmission of electric power.The mere undertaking of NPC under the agreement with the contractor that it shall be responsible for the payment of all real estate taxes andassessments, does not justify the exemption. The privilege granted to NPC cannot be extended to its contractor. The agreement is between NPC andthe contractor and does not bind a third person not privy thereto, such as a local government.
 
 
i.
 QUESTIONAIRES IN REAL PROPERTY TAXATION
 1.
Describe the nature of real property.
 
A real estate tax is a direct tax on the ownership of lands and buildings or other improvements thereon, not especially exempted, and is payableregardless of whether the property is used or not, although the value may vary in accordance with such factor. The tax is usually single or indivisible, although the land and building or improvements erected thereon are assessed separately, except when the land and building or improvement belongs to separate owners. It is a fixed proportion of the assessed value of the property taxed, and required, therefore, theintervention of assessors. It is collected or payable at appointed times, and it constitutes a superior lien on and is enforceable against theproperty subject to such taxation, and not by imprisonment of the owner. Eusebio Villanueva v. City of Iloilo, [G.R. No. L-26521. December 28,1968.]
 
 
2.
Who may impose real property tax? Province, cities and municipalities in Metro Manila.
 3.
What the fundamental principles in the appraisal, assessment, levey and collection of real property tax? (Sec. 198)
 a.
Appraised at current and fmv
  b.
Classified for assessment purposes based on actual use
 c.
Assessed on the basis of a uniform classification within each LGU
 d.
Appraisal, assessment, levy and collection not let to private person
 e.
Appraisal and assessment equitable
 4.
Define:
 a.
Acquisition cost
  b.
Actual use
 c.
Ad valorem tax
 

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