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Real Property Taxation


REAL PROPERTY TAXES
They are direct taxes imposed on the privilege to use real property such as land, building,
machinery and other improvements, unless specifically exempted.
NOTE: Real property tax is a fixed proportion of the assessed value of the property being
taxed and requires, therefore, the intervention of assessors.

It was held in the case of Province of Nueva Ecija vs. Imperial Mining Co., Inc. GR No. 59643,
November 19, 1982 that P.D. 464, the Real Property Tax Code, changed the basis of real
property taxation adopting the policy of taxing real property on the basis of actual use, even
if the user is not the owner.

The present law on real property taxation (RA 7160, Local Government Code) adopts actual
use of real property as basis of assessment. (Sec. 199 (b), LGC)

Local Government Units responsible for the administration of real property tax

1. Provinces
2. Cities
3. Municipalities

Definition of Real Property

Subject to the definition given by the Article 415 of the Civil Code:

Art. 415. The following are immovable property


1. Land, buildings, roads, and constructions of all kinds adhered to the soil;

2. Trees, plants, and growing fruits, while they are attached to the land or form an
integral part of an immovable;

3. Everything attached to an immovable in a fixed manner, in such a way that it cannot


be separated therefrom without breaking the material or deterioration of the object;

4. Statutes, reliefs, paintings, or other objects for use or ornamentation, placed in


buildings or on lands by the owner of the immovable in a such manner that it reveals
the intention to attach them permanently to the tenement;

5. Machinery, receptacles, instruments or implements intended by the owner of the


tenement for an industry or works which may be carried on in a building or on a
piece of land, and which tend directly to meet the needs of the said industry or
works;

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.

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NOTE: An object used indirectly for the general purpose of the business shall not be
treated as real property.

In Mindanao Bus Co. vs. City Assessor of Cagayan de Oro (1997), Board of Assessment Appeals vs.
Meralco, Meralco vs. Board of Assessment Appeals. The SC has generally held in these cases that
Art. 415 of the Civil Code provide an exclusive enumeration of what constitutes real
property. For tax purposes, however, it is common for otherwise personal properties under
the Civil Code to be classified as real property.

NOTE: The NIRC and the LGC prevail in classifying property for tax purposes.

Definition of Improvement

Improvement is a valuable addition made to a property or an amelioration in its condition,


amounting to more than a mere repair or replacement of parts involving capital expenditures
and labor, which is intended to enhance its value, beauty or utility or to adapt it for new or
further purposes. (Sec 199(m), LGC).

Requisites for taxability of an improvement

1. Must enhance the value of the property


2. Must be separately assessable
3. Can be treated independently from the main property

NOTE: Whenever real property has been divided into condominium, each condominium
owned shall be separately assessed, for purposes of real property taxation and other tax
purposes to the owner thereof and tax on each such condominium shall constitute a lien
solely thereof. (Sec 25, RA No. 776, Condominium Act)

Personal properties defined under the Civil Code are considered as real property for
purposes of RPT

Properties considered as personal under the Civil Code may nonetheless be considered as
real property for tax purposes where said property is essential to the conduct of business.
The property to be considered as immobilized for RPT must be essential and principal
element of an industry without which such industry would be unable to carry on the
principal industrial purpose for which it was established. (DOCTRINE OF
ESSENTIALITY)

Theory of Real Property Taxes


While most taxes fall into the ability to pay category and certain taxes result from
expediency, real property taxes combine both the ability to pay theory and the benefit theory
of taxation.
1. Ability to pay theory: The mere possession of wealth and control of that wealth
indicate a general ability to make tax contribution.

2. Benefit theory: Tax revenue is used to finance local government services, and the
property owner is a direct beneficiary of the services rendered.

I. INTRODUCTION
NATURE OF REAL PROPERTY TAX
1. Direct tax whose burden could not be shifted by the one who pays to other persons;
2. Indivisible single obligation;
3. Ad valorem tax based on the assessed value of the property;

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4. Local tax;
5. Imposed on the use and not on the ownership;
6. Progressive/proportionate in character depending, to a certain extent on the used
and value of the property.
The real property tax is a tax on property. It has been considered as a national, not local,
tax. It is enforces throughout the Philippines and not merely in a particular municipality or
city, but the proceeds accrue to the province, city, municipality and barrio where the realty
taxed is situated (Sec. 86, PD 464).
The real property tax for any year shall attach and become due and payable on the first day
of January and the said basic and any other tax levied under the title on real property
taxation shall, from the date of accrual, constitute a lien upon the property subject to such
tax. Said lien shall be superior to all other liens, mortgages, or property, by administrative or
judicial action, whether in possession of the delinquent or any subsequent owner or
possessor, and shall be removable only by the payment of delinquent taxes and the related
interest and expenses (Sec. 246, LGC).
Real property taxes may, in the discretion of the taxpayer, be paid without penalty in four
equal installments, the first installment due and payable on or before March 31; the second
installment, on or before June 30; the third installment, on or before September 30; and the
fourth installment, on or before December 31, except the special levies which shall be
governed by the local ordinance imposing the levy. Payments of real property taxes shall
first be applied to prior year delinquencies, interests, and penalties, if any, and only after said
delinquencies are settled may tax payments be credited to the current period (Sec. 250,
LGC).
TYPES OF REAL PROPERTY TAX
1. Annual ad valorem tax that is levied by a province, city or municipality within Metro
Manila on real property not specifically exempted, at the following uniform rates:
a. Provinces not exceeding one percent (1%) of the assessed value;
b. Cities and municipalities in Metro Manila not more than 2% of the assessed
value (Sec. 235, LGC)

2. In addition to the basic real property tax, special levies may be imposed by the same
local government units on said real property, such as:
a. Additional one percent (1%) tax for the Special Education Fund;
b. Additional five percent (5%) tax on idle lands (Regardless of land area, this
section shall apply to residential lots in subdivisions duly approved by proper
authorities, ownership of which has been transferred to individual owners,
who shall be liable for additional tax; and
c. Special levy or assessment that may be imposed by provinces, cities or
municipalities, including those outside Metro Manila, on property benefitted
by certain infrastructure developments by the government, not exceeding
60% of the actual cost. The special levy shall not apply to lands exempt from
basic real property tax and the remainder of the land portions donated to the
local government unit concerned for the construction of such projects.
(Secs. 232, 233, 235-237, LGC)

REAL PROPERTY SUBJECT TO TAX


The real property tax is imposed on real property such as land, buildings, machinery and
other improvements not specifically exempted under the Code (Sec. 232, LGC)

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Summary of Rules on Machinery
1. If permanently attached subject to RPT
2. If not permanently attached:
a. Essential and principal element of an industry without which such industry,
work or activity cannot function subject to RPT
b. Not an essential and principal element of an industry, work or activity not
subject to RPT
FUNDAMENTAL PRINCIPLES
SECTION 198. Fundamental Principles. - The appraisal, assessment, levy and collection of real
property tax shall be guided by the following fundamental principles:

(a) Real property shall be appraised at its current and fair market value;
(b) Real property shall be classified for assessment purposes on the basis of its actual use;
(c) Real property shall be assessed on the basis of a uniform classification within each local
government unit;
(d) The appraisal, assessment, levy and collection of real property tax shall not be let to any
private person; and
(e) The appraisal and assessment of real property shall be equitable.

ARTICLE 289. Fundamental Principles. The appraisal, assessment, levy, and collection of
real property tax shall be governed by the following fundamental principles: (a) Real property shall
be appraised at its current and fair market value; (b) Real property shall be classified for assessment
purposes on the basis of its actual use; (c) Real property shall be assessed on the basis of a uniform
classification within each LGU;
(d) The appraisal, assessment, levy, and collection of real property tax shall not be let to any private
person; and (e) The appraisal and assessment of real property shall be equitable.

The appraisal, assessment, levy and collection of real property for taxation purposes shall be
guided by the following fundamental principles:
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
local political subdivision;
4. The appraisal, assessment and levy of real property for taxation purposes and the
collection of the real property tax shall not be let to any private persons; and
5. The appraisal and assessment of real property shall be equitable.
(Sec. 198, LGC)
*Fair market value is the amount which a purchaser willing but not compelled to
buy would pay an owner of the property, and the latter willing but not compelled to sell
would accept as the consideration or price therefor (Sec. 199, LGC).
The basis of real property taxation under the Assessment Law was ownership or interest
tantamount to ownership. The Real property Tax Code changed the basis of real property
taxation and adopted the policy of taxing real property on the basis of actual use, even if the
user is not the owner. This policy is still followed in the Local Government Code.
*Actual use refers to the principal and predominant utilization of the property by
the person in possession thereof pursuant to Section 199 (b) of the Code.
In appraising the current and fair market value of the property, the criterion is that which is
prevailing in the locality where the property is situated (Sec. 201, LGC). However, in
preparing a general schedule of value for a province or city and in determining the classes of
property for assessment levels, real property shall be classified, valued and assessed on the

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basis of its actual use, regardless of where located, whoever owns it, and whoever uses it
(Secs. 217 and 212, LGC)
II. IMPOSITION OF REAL PROPERTY TAX
POWER TO LEVY REAL PROPERTY TAX
SECTION 232. Power to Levy Real Property Tax. - 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.

ARTICLE 323. Power to Levy Real Property Tax. Provinces and cities, and municipalities
within MMA, through their respective sanggunians, may levy the annual ad valorem tax on real
property such as land, buildings, machinery, and other improvements not specifically exempted
under this Rule.

Extent of Taxing Powers: They do not only have the power to levy real estate taxes but
they may also fix real estate tax rates. (LGC, Sec. 232)
No public hearing shall be required before the enactment of local tax ordinance levying the
basic real property tax (IRR of LGC, Art. 324) in comparison with local business tax
ordinance which requires public hearing (LGC, Sec. 187)
While Local Government unit 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. (Sta Lucia Realty and
Development Inc. v City of Pasig, GR No. 166838, June 15, 2011)
Local government unit may refrain from imposing the real property tax
The use of the words may levy and collect gives the impression that a province, city or
municipality within MMA, may or may not, at its discretion impose real property tax. The
word may in the law generally interpreted as only permissive or discretionary and operates
to confer discretion, in contrast to the word shall which is imperative and operates to
impose a duty which may be enforced. This is also being consistent as well with local
autonomy which is the hallmark of the LGC itself.
NOTE: Recourse may be taken to Sec. 5 of the Code itself which provides for the rules of
its interpretation, and in part read as follows:
Any provision on a power of a local government unit shall be liberally construed in its
favor, and in case of doubt, any question thereon shall be resolved in favor of devolution of
powers and of the local government unit. Any fair and reasonable doubt as to the existence
of the power shall be interpreted in favor of the local government unit concerned.
Real properties subject to tax
1. For Basic Real Property Tax and Special Levy on Education Fund:
a. Land
b. Building
c. Machinery d. Other improvements (Sec. 232, GC)
2 For Special Levy on Idle Lands and Special Levy on Public Works (Special
Assessments):
a. Land only Rates of levy
b. In the case of a province- at the rate not exceeding 1% of the assessed
value of
c. real property; and

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d. In the case of a city or a municipality within the Metro Manila area- at the
rate not exceeding 2% of the assessed value of real property. (Sec. 233,
LGC)

Ordinance imposing special levy for public works must contain the following

1. The ordinance shall

a. Describe the nature, extent, and location of the project


b. State estimated cost;
c. Specify metes and bounds by monuments and lines

2. It must state the number of annual installments, not less than 5 years nor more
than 10 years.

NOTE: In the apportionment of special levy, Sanggunian may fix different rates
depending whether such land is more or less benefited by the proposed work

3. Notice to the owners and public hearing (Sec. 242, LGC)

4. Owner can appeal to the LBAA and CBAA

Special levy or special assessment by LGUs

A province, city or municipality may impose a special levy on the lands within its territorial
jurisdiction specially benefited by public works projects or improvements by the LGU
concerned.

EXCEPTION: It shall not apply to lands exempt from basic real property tax and the
remainder of the land, portions of which have been donated to the LGU concerned for the
construction of such projects or improvements. (Sec. 240, LGC)

NOTE: The special levy shall not exceed 60% of the actual cost of such projects and
improvements, including the costs of acquiring land and such other real property in
connection therewith.

Additional levy on real property for the Special Education Fund

A province, city or a municipality within the Metro Manila area may levy and collect an
annual tax of one percent (1%) on the assessed value of real property which shall be in
addition to the basic real property tax. The proceeds thereof shall exclusively accrue to the
Special Education Fund created under R.A. 5447. (Sec. 235, LGC)

Additional ad valorem tax on idle lands

A province or city or a municipality within the Metro Manila area may levy an annual tax on
idle lands at the rate not exceeding five percent (5%) of the assessed value of the property
which shall be in addition to the basic real property tax (Sec. 236, LGC) The following are
considered idle lands

1. Agricultural lands:
a. more than one (1) hectare in area
b. suitable for cultivation, dairying, inland fishery, and other agricultural uses
c. one-half (1/2) of which remain uncultivated or unimproved by the owner or
person having legal interest

NOTE: Agricultural lands planted to permanent or perennial crops with at least fifty (50)
trees to a hectare shall not be considered idle lands. Lands actually used for grazing purposes
shall likewise not be considered idle lands.

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2. Lands other than agricultural:

a. Located in a city or municipality


b. More than one thousand (1,000) square meters in area
c. One-half (1/2) of which remain unutilized or unimproved by the owner or
person having legal interest.

Regardless of land area, this Section shall apply to residential lots in subdivisions duly
approved by proper authorities, the ownership of which has been transferred to individual
owners, who shall be liable for the additional tax: Provided, however, That individual lots of
such subdivisions, ownership of which has not been transferred to the buyer shall be
considered as part of the subdivision, and shall be subject to the additional tax payable by
subdivision owner or operator. (Sec. 237, LGC)

Causes for exemption from idle lands tax

1. Force majeure
2. Civil disturbance
3. Natural calamity
4. Any cause or circumstance which physically or legally prevents the owner or person
having legal interest from improving, utilizing or cultivating the same.

Purpose of imposing ad valorem taxes on idle land

To penalize property owners who do not use their property productively. It is also designed
to encourage utilization of land resources in order to contribute to national development.

Not all local government units may impose an annual realty tax in addition to the basic real
property tax on idle or vacant lots located in residential subdivisions within their respective
territorial jurisdictions. Only provinces, cities, and municipalities within the Metro Manila
area (Sec. 232, Local Government Code) may impose an ad valorem tax not exceeding five
percent (5%) of the assessed value (Sec. 236, Ibid.) of idle or vacant residential lots in a
subdivision, duly approved by proper authorities regardless of area. (Sec.237, Ibid.)

EXEMPTION FROM REAL PROPERTY TAXES

SECTION 234. Exemptions from Real Property Tax. - The following are exempted from
payment of the real property tax:
(a) Real property 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;
(b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques,
nonprofit or religious cemeteries and all lands, buildings, and improvements actually,
directly, and exclusively used for religious, charitable or educational purposes;
(c) All machineries and equipment that are 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;
(d) All real property owned by duly registered cooperatives as provided for under R. A. No.
6938; and
(e) Machinery and equipment used for pollution control and environmental protection. Except
as provided herein, any exemption from payment of real property tax previously granted
to, or presently enjoyed by, all persons, whether natural or juridical, including all
government-owned or -controlled corporations are hereby withdrawn upon the effectivity
of this Code.

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ARTICLE 325. Exemption from Payment of Real Property Tax. The following are
exempted from payment of the real property tax: (a) All real property 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; (b) Charitable institutions, churches,
parsonages, or convents appurtenant thereto, mosques, nonprofit or religious cemeteries and all
lands, buildings, and improvements actually, directly, and exclusively used for religious, charitable or
educational purposes; (c) All machineries and equipment that are actually, directly and exclusively
used by local water districts and GOCCs engaged in the supply and distribution of water and/or
generation and transmission of electric power; (d) All real property owned by duly registered
cooperatives as provided in RA 6938; and (e) Machinery and equipment exclusively used for
pollution control and environmental protection. Except as provided in this Rule, any exemption
from payment of real property tax previously granted to, or presently enjoyed by, all persons,
whether natural or juridical, including all GOCCs are withdrawn upon the effectivity of the Code.

Under Section 234 of the Local Government Code of the Philippines, the following five real
property tax exemptions are provided:

1. RPT exemption on government real properties


Real property 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

Under this, a government owned property used in furtherance of its governmental functions.
However, if the use of such government owned property is granted to a taxable person, the
exemption does not apply and the property shall be subject to real property tax in the
Philippines.

Pursuant to Sec. 33 of P.D. 1146, GSIS enjoyed tax exemption from real estate taxes, among
other tax burdens, until January 1, 1992 when the LGC took effect and withdrew
exemptions from payment of real estate taxes privileges granted under PD 1146. R.A. 8291
restored in 1997 the tax exempt status of GSIS by reenacting under its Sec. 39 what was
once Sec. 33 of P.D. 1146. If any real estate tax is due, it is only for the interim period, or
from 1992 to 1996, to be precise. (GSIS v. City Treasurer and City Assessor of the City
of Manila, G.R. No. 186242, Dec. 23, 2009)

While it is true that carriageways and terminal stations are anchored, at certain points, on
public roads, said improvements do not form part of the public roads since the former are
constructed over the latter in such a way that the flow of vehicular traffic would not be
impaired. The carriageways and terminals serve a function different from the public roads.
The former are part and parcel of the light rail transit (LRT) system which, unlike the latter,
are not open to use by the general public. The carriageways are accessible only to the LRT
trains, while the terminal stations have been built for the convenience of LRTA itself and its
customers who pay the required fare. 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 which is a taxable entity. (LRTA v. CBAA, G.R. No. 127316,
Oct. 12, 2000)

2. RPT exemptions on religious, charitable and educational institutions


Charitatable 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.

In here, the exemption is strictly applicable to properties actually, directly, and exclusively
used for religious operations, or charitable operations, or educational purposes. Ownership
in itself does not count, but rather, the fact of actual, direct, and exclusive use of such owned
property.

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NOTE: The tax exemption herein rest on the premise that they are actually, directly and
exclusively used by said entities or institutions for their stated purposes and not necessarily
because they are owned by religious, charitable or educational institutions.

3. RPT exemptions on Local water utilities machinery and equipment


All machineries and equipment that are 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. RPT Exemptions of cooperatives


All real property owned by duly registered cooperatives as provided under Republic Act
No. 6938. Under the concept of cooperatives, involvement of the ground level members of
society is being encouraged for forge an alliance towards mutual benefits. The Cooperative
Code of the Philippines provides a number of tax exemptions on such cooperatives and
included among which is that of real property taxes in the Philippines.

5. RPT exemptions for pollution and environmental protection


Machinery and equipment used for for pollution control and environmental protection.

Under Section 206 of the Local Government Code of the Philippines, a taxpayer who claims
exemption from real property taxation in the Philippines shall file with the local government
sufficient documentary evidence in support and as proof of such exemption within thirty
(30) days from date of declaration of such property.

NOTE: Pollution control and infrastructure devices refers to infrastructure, machinery,


equipment and/or improvements used for impounding, treating or neutralizing,
precipitating, filtering, conveying and cleansing mine industrial waste and tailings as well as
eliminating or reducing hazardous effects of solid particles, chemicals, liquids or other
harmful by products and gases emitted from any facility utilized in mining operations for
their disposal (R.A.No. 7942, Sec. 3,am) Except as herein provided, any exemption from
payment of real property tax previously granted to, or presently enjoyed by all persons,
whether natural or juridical, including all government owned or controlled corporations, are
hereby withdrawn upon the effectivity of the LGC.

NOTE: A taxpayer claiming exemption must submit sufficient documentary evidence to the
local assessor within thirty (30) days from the date of the declaration of real property;
otherwise, it shall be listed as taxable in the Assessment Roll (Sec. 206, LGC).

Under Sec. 234(c) of the LGC of 1991, machineries and equipment actually, directly and
exclusively used by a government-owned or controlled corporation are exempt from real
property tax. BPPC, not being a GOCC, is not entitled to the Sec. 234(c) exemption.
Napocor, not being the actual, direct and exclusive user of the machineries and equipment,
cannot invoke the Sec. 234(c) exemption either (National Power Corp. v. CBAA, G.R.
No. 171470, January 30, 2009).

RCPIs radio relay station tower, radio station building, and machinery shed are real
properties and are thus subject to real property tax. The in lieu of all taxes clause in
Section 14 of R.A. 2036, as amended by R.A. 4054, cannot exempt RCPI from the real estate
tax because the same Section 14 expressly states that RCPI shall pay the same taxes on real
estate, buildings. Subsequent legislations have radically amended the in lieu of all taxes
clause in franchises of public utilities. The Local Government Code of 1991 withdrew all
the tax exemptions existing at the time of its passage including that of RCPIs with
respect to local taxes like the real property tax. Also, R.A. 7716 abolished the franchise tax
on telecommunications companies effective 1 January 1996. To replace the franchise tax,
R.A. 7716 imposed a 10 percent value-added-tax on telecommunications companies under
Sec.102, NIRC. Lastly, it is an elementary rule in taxation that exemptions are strictly
construed against the taxpayer and liberally in favor of the taxing authority. It is the

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taxpayers duty to justify the exemption by words too plain to be mistaken and too
categorical to be misinterpreted.(Radio Communications of the Philippines, Inc. v.
Provincial Assessor of South Cotabato, A.C. No. 5637,April 13, 2005)

RATES OF LEVY

SECTION 233. Rates of Levy. - A province or city or a municipality within the Metropolitan
Manila Area shall fix a uniform rate of basic real property tax applicable to their respective localities
as follows:
(a) In the case of a province, at the rate not exceeding one percent (1%) of the assessed value
of real property; and
(b) In the case of a city or a municipality within the Metropolitan Manila Area, at the rate not
exceeding two percent (2%) of the assessed value of real property.

ARTICLE 324. Rates of Levy. A province or a city, or a municipality within MMA shall fix a
uniform rate of basic real property tax applicable in their respective jurisdictions as follows: (a) For
provinces: not exceeding one per cent (1%) of the assessed value; (b) For cities or for
municipalities within MMA: not exceeding two percent (2%) of the assessed value. No public
hearing shall be required before the enactment of a local tax ordinance levying the basic real
property tax.

A province or city or a municipality within the Metropolitan Manila Area shall fix a uniform
rate of basic real property tax applicable to their respective localities as follows:
a. In the case of a province, at the rate not exceeding one percent (1%) of the assessed
value of real property; and
b. In the case of a city or a municipality within the Metropolitan Manila Area, at the
rate not exceeding two percent (2%) of the assessed value of real property.

No public hearing shall be required before the enactment of a local tax ordinance levying the
basic real property tax.
III. APPRAISAL AND ASSESSMENT OF REAL PROPERTY TAX
Fundamental principles of appraisal, assessment, levy and collection of real property
taxes
The appraisal, assessment, levy and collection of real property tax shall be guided by
the following fundamental principles: (CAULE)
Real property shall be appraised at its Current and fair market value;
Real property shall be classified for assessment purposes on the basis of its Act
ual use;
Real property shall be assessed on the basis of a Uniform classification with
in each local government unit;
The appraisal, assessment, levy and collection of real property tax shall not be
Let to any private person; and
The appraisal and assessment of real property shall be Equitable. (Sec. 198, LGC)
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. (Sec. 247, LGC)
Steps in the assessment and collection of real property tax
1. Declaration of real property.
2. Listing of real property in the assessment rolls.
3. Appraisal and valuation of real property.
4. Determination of assessed value and RPT.

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5. Payment and collection of tax.
Limitations of local government to administer, appraise, levy and collect real
property taxes
1. Authorization Limitation - the Local Government Code authorizes only certain
LGUs to administer real property taxation. (Sec. 200, LGC)

2. Fundamental principles of appraisal, assessment, levy and collection of real property


taxes. (Sec. 198, LGC)

3. The real property taxes collected shall accrue solely to the benefit of the local
government unit concerned. (Sec. 5, Art. X, 1987 Constitution)

RULE ON APPRAISAL OF REAL PROPERT AT FAIR MARKET VALUE

SECTION 201. Appraisal of Real Property. - All real property, whether taxable or exempt, shall
be appraised at the current and fair market value prevailing in the locality where the property is
situated. The Department of Finance shall promulgate the necessary rules and regulations for the
classification, appraisal, and assessment of real property pursuant to the provisions of this Code.
ARTICLE 292. Appraisal of Real Property. Within sixty (60) days from the effectivity of
these Rules, DOF shall promulgate rules and regulations and such procedural guidelines as may be
necessary for the proper classification, appraisal, and assessment of real property in accordance
with the provisions of this Rule.

All real property, whether taxable or exempt, shall be appraised at the CURRENT AND
FAIR MARKET VALUE prevailing in the locality where the property is situated. (Sec. 201,
LGC)
Definition of fair market value of properties
Fair market value (FMV) 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. (Sec.
199(I), LGC)
Definition of assessed value
Assessed value is the fair market value of the real property multiplied by the assessment
level. It is synonymous to taxable value (Sec.199(h), LGC)
Fair market value v. Assessed value
FAIR MARKET VALUE ASSESSED VALUE
Determined by the application of
Declared by the owner subject to
the assessment level to the FMV.
As to determination final determination by the
It is synonymous to the taxable
assessor.
value.
Supposed to be the actual value Merely a percentage of the FMV
As to basis of the real property in the open depending on the assessment
market. level of the property in question.

Approaches in estimating the fair market value of real property for RPT purposes
1. Sales analysis approach The sales price paid in actual market transactions is
considered by taking into account valid sales data accumulated from among

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the Register of Deeds, notaries public, appraisers, brokers, dealers, bank officials,
and various sources stated under the Local Government Code;

2. Income capitalization approach The value of an incomeproducing


property is no more than the income 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.

3. Reproduction cost approach a formal approach used exclusively in


appraising manmade improvements such as buildings and other structures, based
on such data as materials and labor costs to reproduce a new replica of the
improvement. (Allied Banking Corporation, et. al., vs. Quezon City Government,
G.R. No. 154126, Oct. 11, 2005)
Steps in determination of Fair market value (FMV)
a. Assessor of the province/city or municipality may summon the owners of the
properties to be affected and may take depositions concerning the property, its
ownership, amount, nature and value (Sec. 213, LGC)

b. Assessor prepares a schedule of FMV for different classes of properties.

c. The schedule of FMV is published in a newspaper of general circulation in the


province, city or municipality concerned or in the absence thereof, shall be posted in
the provincial Capitol, city or municipal hall and in two other conspicuous public
places therein (Sec. 212, LGC)

d. General revision of property assessment is made (Sec. 219, LGC)

e. Sanggunian enacts a real property tax ordinance.


Step 1. DECLARATION OF REAL PROPERTY
Section 202. Declaration of real Property by the Owner or Administrator. - It shall be the
duty of all persons, natural or juridical, owning or administering real property, including the
improvements therein, within a city or municipality, or their duly authorized representative, to
prepare, or cause to be prepared, and file with the provincial, city or municipal assessor, a sworn
statement declaring the true value of their property, whether previously declared or undeclared,
taxable or exempt, which shall be the current and fair market value of the property, as determined
by the declarant. Such declaration shall contain a description of the property sufficient in detail to
enable the assessor or his deputy to identify the same for assessment purposes. The sworn
declaration of real property herein referred to shall be filed with the assessor concerned once every
three (3) years during the period from January first (1st) to June thirtieth (30th) commencing with
the calendar year 1992.
ARTICLE 293. Declaration of Real Property by the Owner or Administrator.
(a) All persons, natural or judicial, or their duly authorized representatives, owning or administering
real property, including improvements thereon, within a city or a municipality, shall prepare or
cause to be prepared, and file with the provincial, city, or municipal assessor, a sworn statement
declaring the true value of their property or properties, whether previously declared or undeclared,
taxable or exempt, which shall be the current and fair market value of the property as determined
by the declarant. (b) Such declaration shall contain a description of the property sufficient in detail
to enable the local assessor or his deputy to identify the same for assessment purposes. (c) All
property owners or administrators or their duly authorized representatives shall file the sworn
declaration of real property values once every three (3) years during the period from January 1 to
June 30 of the year commencing with Calendar Year 1992. (d) The DOF shall prescribe a standard
form to be known as Sworn Declaration of Property Values for the use of all local assessors'
offices, as well as the procedures to be observed in the filing and safekeeping thereof.

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Declaration by Owner or Administrator: All persons, natural or juridical, owning or
administering real property, including the improvements therein, are required to prepare and
file:
Form Sworn Statement
Once every three (3) years during the period from
Period
January 1 to June 30
Agency Provincial/City/Municipal Assessor

Contents of the sworn declaration:


a. True value (current/fair market value) of their property whether previously declared
or not , taxable or exempt; and

b. Description of the property sufficient in detail for assessment purpose.

Section 203. Duty of Person Acquiring Real Property or Making Improvement Thereon. - It
shall also be the duty of any person, or his authorized representative, acquiring at any time real
property in any municipality or city or making any improvement on real property, to prepare, or
cause to be prepared, and file with the provincial, city or municipal assessor, a sworn statement
declaring the true value of subject property, within sixty (60) days after the acquisition of such
property or upon completion or occupancy of the improvement, whichever comes earlier.

ARTICLE 294. Duty of Persons Acquiring Real Property or Making Improvement


Thereon. (a) All persons, natural or juridical, or their duly authorized representatives, who
acquire at any time a parcel or parcels of land in any city or municipality, shall file with the
provincial, city, or municipal assessor of the locality where the property is located, a sworn
statement declaring the true value of subject property within sixty (60) days after the acquisition of
such property as evidenced by a duly notarized or final deed of conveyance executed between the
contracting parties bearing proof of registration from the registrar of deeds concerned. The sixty-
day period shall commence on the date of execution of the deed of conveyance. (b) In the case of
houses, buildings, or other improvements acquired or newly constructed which will require
building permits, property owners or their authorized representatives shall likewise file a sworn
declaration of the true value of the subject house, building, or other improvement within sixty (60)
days after: (1) The date of a duly notarized final deed of sale, contract, or other deed of conveyance
covering the subject property executed between the contracting parties; (2) The date of completion
or occupancy of the newly constructed building, house, or improvement whichever comes earlier;
and (3) The date of completion or occupancy of any expansion, renovation, or additional structures
or improvements made upon any existing building, house, or other real property, whichever comes
earlier. (c) In the case of machinery, the sixty-day period for filing the required sworn declaration
of property values shall commence on the date of installation thereof as determined by the city or
municipal assessor and, for this purpose, said local assessor may secure certification of the building
official or engineer or other appropriate official stationed in the province, city, or municipality
concerned. (d) The sangguniang panlalawigan, sangguniang panlungsod, and sangguniang bayan
shall enact their respective local ordinances providing for the imposition of penalties or pecuniary
fines on property owners or administrators who fail to comply with this Article.

For newly acquired property or improvement on real property, sworn statement must be
filed within 60 days after acquisition or upon completion or occupancy of the improvement,
whichever comes earlier.

Purpose of declaration: A tax declaration only enables the assessor to identify the property
for purposes of determining the assessment levels. It does not bind the assessor when he
makes his assessment. (DOMONDON, Vol. V, page 327)

A tax declaration does not prove ownership. It is merely an indicium of a claim of ownership
Read: De Vera-Cruz vs. Miguel, GR No. 144103, August 31, 2005. However, real
property tax declarations are good indicia of possession in the concept of an owner for no
one in his right mind would be paying taxes for a property that is not in his actual or

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constructive possession. Read: Consolidated Rural Bank (Cagayan Valley) Inc. vs. CA,
GR No. 132161, January 17, 2005.
But a tax declaration in the name of a person who has no successional or administrative
rights to a decedents estate is null and void because real property tax shall be assessed in the
name of the person owning or administering the property in which the tax is levied. Read:
Cenido vs. Apacionado, GR No. 132474, November 19, 1999).
Rule on the declaration of real property by the owner or administrator
For Newly Acquired For Improvement on
Property Property
Sworn statement containing the fair market value and
What to file
description of the property
File with the assessor within File within 60 days upon
When to file 60 days from date of transfer completion or occupation
(whichever comes earlier)
SECTION 222. Assessment of Property Subject to Back Taxes. - Real property declared for the
first time shall be assessed for taxes for the period during which it would have been liable but in no
case for more than ten (10) years prior to the date of initial assessment: Provided, however, That
such taxes shall be computed on the basis of the applicable schedule of values in force during the
corresponding period. If such taxes are paid on or before the end of the quarter following the date
the notice of assessment was received by the owner or his representative, no interest for delinquency
shall be imposed thereon; otherwise, such taxes shall be subject to an interest at the rate of two
percent (2%) per month or a fraction thereof from the date of the receipt of the assessment until
such taxes are fully paid.

For properties declared for the first time: Real property shall be assessed for back taxes
for not more than 10 years prior to the date of initial assessment.
Taxes shall be computed on the basis of applicable schedule of values in force during the
corresponding period.
If such taxes are paid on or before the end of the quarter following the date the notice of
assessment was received by the owner, no interest for delinquency shall be imposed thereon;
otherwise, taxes shall be subject to interest at the rate of 2% per month or a fraction thereof
from the date of the receipt of the assessment until such taxes are fully paid.

SECTION 208. Notification of Transfer of Real Property Ownership. - Any person who shall
transfer real property ownership to another shall notify the provincial, city or municipal assessor
concerned within sixty (60) days from the date of such transfer. The notification shall include the
mode of transfer, the description of the property alienated, the name and address of the transferee.

ARTICLE 299. Notification of Transfer of Real Property Ownership. (a) Any person,
natural or juridical, who transfers real property ownership to another shall accordingly notify the
provincial, city, or municipal assessor concerned within sixty (60) days from the date of such
transfer, which shall be determined on the basis of documents required in Article 294 and 295 of this
Rule. (b) The notice of transfer shall include the mode of conveyance, description of property
alienated, and the name and address of the transferee. (c) In addition to the notice of transfer, the
previous property owner shall likewise surrender to the provincial, city or municipal assessor
concerned, the tax declaration covering the subject property in order that the same may be cancelled
from the assessment records of the LGU. If, however, said previous owner still owns property other
than the property alienated, he shall, within the prescribed sixty-day period, file with the provincial,
city, or municipal assessor concerned, as amended sworn declaration of the true value of the
property or properties he retains in accordance with the provisions of Article 294 or 295 of this
Rule.

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Notice of Transfer of Real Property Ownership: Any person who transfers real property
ownership to another is required to notify the assessor concerned within 60 days from the
date of the transfer. The notification shall include:
1. Description of the property
2. Name and address of the transferee
Every buyer of real property must make a new declaration thereof. Failure to do so shall
make the assessment in the name of the previous owner binding. A landowner is supposed
to know that he has land taxes to pay. Read: Tajonera vs. CA, GR No. L-26677, March
27, 1981).
SECTION 209. Duty of Registrar of Deeds to Apprise Assessor of Real Property Listed in
Registry. (a) To ascertain whether or not any real property entered in the Registry of Property has
escaped discovery and listing for the purpose of taxation, the Registrar of Deeds shall prepare and
submit to the provincial, city or municipal assessor, within six (6) months from the date of effectivity
of this Code and every year thereafter, an abstract of his registry, which shall include brief but
sufficient description of the real properties entered therein, present owners, and the dates of their
most recent transfer or alienation accompanied by copies of corresponding deeds of sale, donation,
or partition or other forms of alienation. (b) It shall also be the duty of the Registrar of Deeds to
require every person who shall present for registration a document of transfer, alienation, or
encumbrance of real property to accompany the same with a certificate to the effect that the real
property subject of the transfer, alienation, or encumbrance, as the case may be, has been fully paid
of all real property taxes due thereon. Failure to provide such certificate shall be a valid cause for the
Registrar of Deeds to refuse the registration of the document.

ARTICLE 300. Duty of Registrar of Deeds to Apprise Local Assessor of Real Property
Listed in Registry. (a) Within six (6) months from the date of effectivity of the Code, and on or
before June 30th of every year thereafter, the registrar of deeds shall prepare and submit to the
provincial, city, or municipal assessor concerned the abstract of his Registry of Property which
include a brief but sufficient description of the real property entered therein, their present owners,
and the date of their most recent transfer or alienation accompanied by copies of corresponding
deeds of sale, donation, or partition or other forms of alienation. (b) Before any document of
transfer, alienation, or encumbrance of real property may be registered, the registrar of deeds shall
require the presentation of a certificate or clearance issued by the local treasurer concerned to the
effect that all current year and past year basic and additional special education fund, real property
taxes, and the tax on transfer of real property ownership in Rule XXX of these Rules, due on the
subject property, have been paid in full including interests or penalties due thereon. Failure to
provide such certificate shall be a valid cause for the registrar of deeds to refuse the registration of
the document. In the absence of such certification or tax clearance, the registration is null and void.
(c) The registrar of deeds and notaries public shall furnish the provincial, city, or municipal assessor
with copies of all contracts, selling, transferring, or otherwise conveying, leasing, or mortgaging real
property registered by, or acknowledged before them, within thirty (30) days from the date of
registration or acknowledgment.

Duty of the Register of Deeds before entering the real property in the registry: It is to
require every person who shall present for registration a document of transfer, alienation, or
encumbrance of real property to accompany the same with a certificate to the effect that the
real property subject of the transfer, alienation, or encumbrance, as the case may be, has
been fully paid of all real property taxes due thereon.
Failure to provide such certificate shall be a valid cause for the Registrar of Deeds to refuse
the registration of the document.
Section 204. Declaration of Real Property by the Assessor. - When any person, natural or
juridical, by whom real property is required to be declared under Section 202 hereof, refuses or fails
for any reason to make such declaration within the time prescribed, the provincial, city or municipal
assessor shall himself declare the property in the name of the defaulting owner, if known, or against
an unknown owner, as the case may be, and shall assess the property for taxation in accordance with
the provision of this Title. No oath shall be required of a declaration thus made by the provincial,
city or municipal assessor.

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ARTICLE 295. Declaration of Real Property by the Local Assessor. (a) The local assessor
shall declare only real property previously undeclared from taxation purposes. (b) In the case of real
property discovered whose owner or owners are unknown, the provincial, city, or municipal
assessor shall likewise declare the same in the name of the Unknown Owner, copy furnished the
provincial assessor in the case of declarations made by a component city or municipal assessor,
until such time that a person, natural or juridical, comes forth and files the sworn declaration of
property values required under either Article 294 or 295 of this Rule, as the case may be. (c) No
oath shall be required of any declaration made by the provincial, city, or municipal assessor.

Declaration by Provincial/City/Municipal Assessor: When a person required under


Section 202 of the LGSC refuses or fails to make a declaration within the time prescribed,
the provincial, city or municipal assessor shall himself declare the property in the name of
the defaulting owner, if known or against the unknown owner.
NOTE: No oath by the assessor is required. This is because all real property, whether
taxable or exempt, shall be appraised at its current fair market value.
Step 2. LISTING OF REAL PROPERTY IN THE ASSESSMENT ROLLS

SECTION 205. Listing of Real Property in the Assessment Rolls. - (a) In every province and
city, including the municipalities within the Metropolitan Manila Area, there shall be prepared and
maintained by the provincial, city or municipal assessor an assessment roll wherein shall be listed
all real property, whether taxable or exempt, located within the territorial jurisdiction of the local
government unit concerned. Real property shall be listed, valued and assessed in the name of the
owner or administrator, or anyone having legal interest in the property. (b) The undivided real
property of a deceased person may be listed, valued and assessed in the name of the estate or of
the heirs and devisees without designating them individually; and undivided real property other
than that owned by a deceased may be listed, valued and assessed in the name of one or more co-
owners: Provided, however, That such heir, devisee, or co-owner shall be liable severally and
proportionately for all obligations imposed by this Title and the payment of the real property tax
with respect to the undivided property. (c) The real property of a corporation, partnership, or
association shall be listed, valued and in the same manner as that of an individual. (d) Real
property owned by the Republic of the Philippines, instrumentalities and political subdivisions,
the beneficial use of which has been granted, for consideration or otherwise, to a taxable person,
shall be listed, valued and assessed in the name of the possessor, grantee or of the public entity if
such property has been acquired or held for resale or lease.

ARTICLE 296. Listing of Real Property in the Assessment Rolls. (a) In every province and
city, including the municipalities within MMA, there shall be prepared and maintained by the
provincial, city, or municipal assessor an assessment roll wherein all real property, whether taxable
or exempt, located within the territorial jurisdiction of the LGU concerned shall be listed. Real
property shall be listed, valued, and assessed in the name of the owner or administrator, or anyone
having legal interest in the property. (b) The undivided real property of a deceased person may be
listed, valued, and assessed in the name of the estate or of the heirs and devisees without
designating them individually; and undivided real property other than that owned by a deceased may
be listed, valued, and assessed in the name of one or more co-owners provided, however, that such
heir, devisee, or co-owner shall be liable severally and proportionately for all obligations imposed by
this Rule and the payment of the real property tax with respect to the undivided property. (c) The
real property of a corporation, partnership, or association shall be listed, valued, and assessed in the
same manner as that of an individual. (d) Real property owned by the Republic of the Philippines,
its instrumentalities and political subdivisions, the beneficial use of which has been granted, for
consideration or otherwise, to a taxable person, shall be listed, valued, and assessed in the name of
the possessor, grantee, or of the public entity if such property has been acquired or held for resale
or lease.

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Definition of Assessment Roll
It is a listing of all real property, whether taxable or exempt, located within the territorial
jurisdiction of the local government unit concerned prepared and maintained by the
provincial, city or municipal assessor.
The local assessor must maintain an assessment roll wherein all real property, whether
taxable or exempt, located within the territorial jurisdiction of the local government unit, is
listed.
General Rule: Real property shall be listed, valued and assessed in the name of the owner or
administrator, or anyone having legal interest in the property.
Exceptions:
1. Undivided real property: may be in the name of the estate or of the heirs and
devisees (in case property of a deceased person) without designating them
individually;
2. Undivided real property other than that owned by a deceased: in the name of
one or more co-owners;
3. Real property owned by the Republic of the Philippines, its instrumentalities
and political subdivisions, if the beneficial use has been granted to a taxable
person: in the name of the possessor, grantee or of the public entity if such property
has been acquired or held for resale or lease; and
4. Corporation, partnerships and association same as individuals

A. Proof of Exemption of Real Property to be excluded from Assessment Rolls


Section 206. Proof of Exemption of Real Property from Taxation. - Every person by or for
whom real property is declared, who shall claim tax exemption for such property under this Title
shall file with the provincial, city or municipal assessor within thirty (30) days from the date of the
declaration of real property sufficient documentary evidence in support of such claim including
corporate charters, title of ownership, articles of incorporation, by-laws, contracts, affidavits,
certifications and mortgage deeds, and similar documents.
If the required evidence is not submitted within the period herein prescribed, the property shall
be listed as taxable in the assessment roll. However, if the property shall be proven to be tax
exempt, the same shall be dropped from the assessment roll.
ARTICLE 297. Proof of Exemption of Real Property from Taxation. Every person by or
for whom real property is declared, who shall claim tax exemption for such property under this
Rule shall file with the provincial, city, or municipal assessor within thirty (30) days from the date
of the declaration of real property sufficient documentary evidence in support of such claim
including corporate charters, title of ownership, articles of incorporation, by laws, contracts,
affidavits, certifications and mortgage deeds, and similar documents.
If the required evidence is not submitted within the period herein prescribed, the property shall
be listed as taxable in the assessment roll. If the property shall be proven to be tax exempt, the
same shall be dropped from the assessment roll.

B. Real Property Identification System


SECTION 207. Real Property Identification System. - All declarations of real property made
under the provisions of this Title shall be kept and filed under a uniform classification system to
be established by the provincial, city or municipal assessor.
ARTICLE 298. Real Property Identification System. All declarations of real property
made under the provisions of this Rule shall be kept and filed under a uniform classification
system to be established by the provincial, city, or municipal assessor pursuant to such guidelines
as may be issued by DOF for the purpose.

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PREPARATION OF SCHEDULE IN ASSESSMENT ROLLS

Procedure on listing of real property in the assessment roll

1. Listing of all real property whether taxable or exempt within the jurisdiction of LGU;
2. All declarations shall be kept and filed under a uniform classification system to be
established by the provincial, city or municipal assessor.
Step 3. APPRAISAL AND VALUATION OF REAL PROPERTY

SECTION 212. Preparation of Schedule of Fair Market Values. - Before any general revision
of property assessment is made pursuant to the provisions of this Title, there shall be prepared a
schedule of fair market values by the provincial, city and the municipal assessors of the
municipalities within the Metropolitan Manila Area for the different classes of real property
situated in their respective local government units for enactment by ordinance of the Sanggunian
concerned. The schedule of fair market values shall be published in a newspaper of general
circulation in the province, city or municipality concerned, or in the absence thereof, shall be
posted in the provincial capitol, city or municipal hall and in two other conspicuous public places
therein.

SECTION 213. Authority of Assessor to Take Evidence. - For the purpose of obtaining
information on which to base the market value of any real property, the assessor of the province,
city or municipality or his deputy may summon the owners of the properties to be affected or
persons having legal interest therein and witnesses, administer oaths, and take deposition
concerning the property, its ownership, amount, nature, and value.

SECTION 214. Amendment of Schedule of Fair Market Values. - The provincial, city or
municipal assessor may recommend to the Sanggunian concerned amendments to correct errors
in valuation in the schedule of fair market values. The Sanggunian concerned shall, by ordinance,
act upon the within ninety (90) days from receipt thereof.

ARTICLE 303. Preparation of Schedule of Fair Market Values. (a) Before any general
revision of property assessment is made pursuant to the provisions of this Rule, there shall be
prepared a schedule of fair market values by the provincial and city assessors, and the municipal
assessors of the municipalities within MMA for the different classes of real property situated in
their respective LGUs for enactment by ordinance of the sanggunian concerned. The schedule of
fair market values shall be published in a newspaper of general circulation in the province, city, or
municipality concerned, or in the absence thereof, shall be posted in the provincial capitol, city or
municipal hall and in two (2) other conspicuous public places therein. (b) In the preparation of
schedules of fair market values, the provincial and city assessors and the municipal assessors of
the municipalities within MMA shall be guided by the rules and regulations issued by DOF.

ARTICLE 304. Authority of Local Assessors to Take Evidence. For the purpose of
obtaining information on which to base the market value of any real property, the assessor of the
province, city, or municipality or his deputy may summon the owners of the properties to be
affected or persons having legal interest therein and witnesses, administer oaths, and take
deposition concerning the property, its ownership, amount, nature, and value.
Appraisal
ARTICLE 305. Amendment of Schedule of Fair Market Values. (a) The provincial, city
The act or process
or municipal of may
assessor determining the to
recommend value
the of property concerned
sanggunian as of a specific date fortoa correct
amendments specific
errors in(Sec
purpose. valuation in LGC)
199 (e), the schedule of fair market values. The sanggunian concerned shall, by
ordinance, act upon the recommendation within ninety (90) days from receipt thereof. (b) The
provincial, city, or municipal assessor may recommend to the sanggunian concerned amendments
to the prevailing schedule of fair market values of the locality to correct errors arising from, or
involving, omissions in the subject schedule of any kind or type of real property, or any city,
district or barangay, or any road or street and/or the classification or sub-classification of real
property.

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Determination of Fair Market Value (FMV)
1. For Land
a. Assessor of the province/city or municipality may summon the owners of the
properties to be affected and may take depositions concerning the property, its
ownership, amount, nature and value (Sec 213, LGC)
b. Assessor prepares a schedule of FMV for different classes of real properties (Sec
212, LGC)
c. The schedule of FMV is published in a newspaper of general circulation in the
province, city or municipality concerned or in the absence thereof, shall be
posted in the provincial capitol, city or municipal hall and in two other
conspicuous public places therein (Sec 212, LGC)
d. The provincial, city or municipal assessor may recommend to the Sanggunian
concerned amendments to correct errors in valuation in the schedule of FMV.
The Sanggunian shall act by ordinance within 90 days from receipt thereof (Sec
214, LGC)

2. For Machinery
a. For brand new machinery: FMV is the acquisition cost.

If the machinery is imported, the acquisition cost includes freight, insurance,


bank and other charges, brokerage, arrastre and handling, duties and taxes, plus
charges at the present site (Sec 224, LGC)

b. In all other cases:

Formula:

Remaining economic life x Replacement/Reproduction Cost = FMV


Estimated economic life

Definitions (Sec 199, LGC)

Economic Life: estimated period over which it is anticipated that a machinery or


equipment may be profitably utilized.

Remaining Economic Life: period of time expressed in years from the date of
appraisal to the date when the machinery becomes valueless.

Replacement or Reproduction Cost: cost that would be incurred on the basis of


current prices, in acquiring an equally desirable substitute property, or the cost of
reproducing a new replica of the property on the basis of current prices with the same
or closely similar material.

c. Depreciation Allowance: For purposes of assessment, a depreciation allowance shall be


made for machinery at:
i. Rate not exceeding 5% of original cost OR replacement or reproduction cost for
each year of use; and
ii. Remaining value shall be fixed at not less than 20% of the replacement or
reproduction cost for so long as the machinery remains useful and in operation.
Schedule of fair market value, when made
Before any general revision of property assessment is made pursuant to the provisions of
this Title, there shall be prepared a schedule of fair market values by the provincial, city and

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the municipal assessors of the municipalities within the Metropolitan Manila Area for the
different classes of real property situated in their respective local government units for
enactment by ordinance of the Sanggunian concerned. The schedule of fair market values
shall be published in a newspaper of general circulation in the province, city or municipality
concerned, or in the absence thereof, shall be posted in the provincial capitol, city or
municipal hall and in two other conspicuous public places therein.
In the preparation of schedules of fair market values, the provincial and city assessors and
the municipal assessors of the municipalities within MMA shall be guided by the rules and
regulations issued by DOF.
FMV, where published or posted
The schedule of fair market value shall be published in a newspaper of general circulation in
the province, city or municipality concerned, or in the absence thereof, shall be posted in the
provincial capitol, city or municipal hall and in two other conspicuous public places therein.

A. AUTHORITY OF ASSESSOR TO TAKE EVIDENCE.

For the purpose of obtaining information on which to base the market value of any real
property, the assessor of the province, city or municipality or his deputy may summon the
owners of the properties to be affected or persons having legal interest therein and
witnesses, administer oaths, and take deposition concerning the property, its ownership,
amount, nature, and value.

B. AMENDMENT OF SCHEDULE OF FAIR MARKET VALUES.

1. The provincial, city or municipal assessor may recommend to the sanggunian


concerned amendments to correct errors in valuation in the schedule of fair market values.
The sanggunian concerned shall, by ordinance, act upon the recommendation within ninety
(90) days from receipt thereof.

2. The provincial, city, or municipal assessor may recommend to the sanggunian


concerned amendments to the prevailing schedule of fair market values of the locality to
correct errors arising from, or involving, omissions in the subject schedule of any kind or
type of real property, or any city, district or barangay, or any road or street and/or the
classification or sub-classification of real property.
CLASSES OF REAL PROPERTY

SECTION 215. Classes of Real Property for Assessment Purposes. - For purposes of
assessment, real property shall be classified as residential, agricultural, commercial, industrial,
mineral, or special. The city or municipality within the Metropolitan Manila Area, through their
respective Sanggunian, have the power to classify lands as residential, agricultural, commercial,
industrial, mineral, timberland, or special in accordance with their zoning ordinances.
SECTION 216. Special Classes of Real Property. - All lands, buildings, and other
improvements actually, directly and exclusively used for hospitals, cultural, or scientific purposes,
and those owned and used by local water districts, and government-owned or -controlled
corporations rendering essential public services in the supply and distribution of water and/or
generation and transmission of electric power shall be classified as special.

The classes of real property for assessment purposes

1. Residential
2. Agricultural
3. Commercial

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4. Industrial
5. Mineral
6. Timberland
7. Special

Residential Land A land principally devoted to habitation

Agricultural Land A land devoted principally to the planting of trees, raising of crops,
livestock and poultry, dairying, salt making, inland fishing and similar
aquaculture activities and other agricultural activities and is not
classified as mineral, timber, residential, commercial or industrial land

Commercial Land A land devoted principally for the object of profit and is not classified
as agricultural, industrial, mineral, timber or residential land

Industrial Land A land devoted principally to industrial activity as capital investment


and is not classified as agricultural, commercial, timber, mineral or
residential land

Mineral Lands Are lands in which minerals exist in sufficient quantity or grade to
justify the necessary expenditures to extract and utilize such minerals

Special classes of real property under the LGC

1. Actually, directly and exclusively used for hospitals, cultural, or scientific purposes;
2. Owned and used by local water districts;
3. Owned and used by Government-owned or controlled corporations rendering essential
public services in the (1) supply and distribution of water and/or (2) generation and
transmission of electric power. (Sec. 216, LGC)
NOTE: Special classes of real property have lower assessment level compared with other
classes of real property.
ACTUAL USE OF PROPERTY AS BASIS OF ASSESSMENT

SECTION 217. Actual Use of Real Property as Basis for Assessment. - 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.
ARTICLE 308. Actual Use of Real Property as Basis for Assessment. 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.

Step 4. DETERMINE THE ASSESSED VALUE AND THE TAX DUE


Assessment
The act or process of determining the value of a property or proportion thereof subject to
tax, including the discovery, listing classification, and appraisal of properties (Sec 199 (f),
LGC)
Basis of Assessment of Real Property
General Rule: 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 (Sec 217, LGC)

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Actual Use
Refers to the purpose for which the property is principally or predominantly utilized by the
person in possession thereof (Sec 199 (b), LGC)
Unpaid realty taxes attach to the property and are chargeable against the
person who had actual or beneficial use and possession of it regardless of
whether or not he is the owner. To impose the real property tax on the
subsequent owner which was neither the owner nor the beneficial user of the
property during the designated periods would not only be contrary to law but
also unjust (Estate of Lim vs. City of Manila, G.R. No. 90639, February 21,
1990).
Exception: In case where there are mixed land uses, the predominance rule is applied (Sec
217 in relation to Sec 199 (b), LGC)
For mixed land uses: For lands located in areas of mixed land uses, such as residential with
commercial or industrial, the predominant use of the lands in that area shall govern the
classification, valuation and assessment thereof. If the predominant use is residential, all
lands in that area shall be assessed as residential; if the predominant use is commercial or
industrial, all lands in that area shall be assessed as such ( Manual on Real Property Appraisal
and Assessment Operations by the DOF Bureau of Local Government Finance, January
2006, p.138)
For buildings used for a purpose different from that which the land is classified: A
lot or parcel of land classified and appraised as commercial or industrial occupied by the
building used for both residential and commercial or industrial purposes shall be assessed on
the basis of the predominant use of building or buildings.
Procedure in Determining the Assessed Value
To determine the assessed value, the fair market value of the property is multiplied by the
assessed level as determined from an ordinance promulgated by the Sanggunian concerned.
Procedure in Determining the Real Property Tax
Real property tax is computed by multiplying the with the applicable RPT rate.
Basis of real property taxation
The basis of taxing real property is actual use, even if the user is not the owner. 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. (Sec. 217, LGC)
ASSESSMENT OF REAL PROPERTY
Assessment Levels for Land

Land Use Assessment Level Not to Exceed


Residential 20%
Agricultural 40%
Commercial, Industrial and Mineral 50%
Timberland 20%

Assessment Levels for Buildings and Other Structures

Land Use Graduated Rates of


Residential 0-60%
Agricultural 25-50%
Commercial / Industrial 30-80%

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Timberland 45-70%

Whenever real property has been divided into condominium, each condominium owned
shall be separately assessed, for purposes of real property taxation and other tax purposes to
the owner thereof and tax on each such condominium shall constitute a lien solely thereof
(Sec. 25 ,RA 776 Condominium Act)

Assessment Levels for Machineries

Class Assessment Level Not to Exceed


Residential 50%
Agricultural 40%
Commercial / Industrial 80%

Assessment Levels for Special Classes of Real Property

Lands, buildings and improvements, actually, directly and exclusively use for the following
purposes:

Purpose Assessment Level Not to Exceed


Cultural 15%
Scientific 15%
Hospital 15%
Owned and used by local water districts 10%
Owned and used by GOCCs rendering
essential public services in the supply and
10%
distribution of water and/or generation or
transmission of electric power

Assessment, Reassessment and Assessment Levels

Assessment is the act or process of determining the value of a property, or proportion


thereof subject to tax, including the discovery, listing, classification, and appraisal of
properties. (Sec. 199(f), LGC)

Reassessment is the assigning of new assessed values to property, particularly real estate,
as the result of a general, partial, or individual reappraisal of the property.

Assessment Level is the percentage applied to the fair market value to determine the
taxable value of the property (Sec. 199(g), LGC)

Who sets the assessment levels? The assessment levels to be applied to the fair market
value of real property to determine its assessed value shall be fixed by ordinances of the
sangguniang panlalawigan, sangguniang panlungsod or sangguniang bayan of a municipality
within the Metropolitan Manila Area, at the rates not exceeding those enumerated under Sec.
218 of the LGC.

Effect of assessment: An assessment fixes and determines the tax liability if the taxpayer.
It is a notice to the effect that the amount therein stated is due as tax and a demand for
payment thereof.

Revision of Real Property Assessments

SECTION 219. General Revision of assessments and Property Classification. - The


provincial, city or municipal assessor shall undertake a general revision of real property
assessments within two (2) years after the effectivity of this Code and every three (3) years
thereafter.

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ARTICLE 310. General Revision of Assessments and Property Classification. (a) The
provincial, city, or municipal assessor shall undertake a general revision of real property assessment
within two (2) years after the effectivity of the Code and every three (3) years thereafter. (b) For this
purpose, the provincial assessors, the city assessors, and the municipal assessors of MMA shall
prepare the schedule of fair market values for the different kinds and classes of real property located
within their respective territorial jurisdictions within one (1) year from the effectivity of the Code in
accordance
When shall with suchrevision
general rules and
ofregulations
assessmentissued by DOF. (c) The
and classification takegeneral
place?revision of assessments
and property classification shall commence upon the enactment of an ordinance by the sanggunian
concerned adopting the schedule of fair market values but not later than two (2) years from the
effectivity of the Code. Thereafter, the provincial, city, or municipal assessor shall undertake the
general revision of real property assessment and property classification once every three (3) years.

The provincial, city or municipal assessor shall undertake a general revision of real property
assessments within two (2) years after the effectivity of this Code and every three (3) years
thereafter. (Sec. 219, LGC)

Purposes of the General Revision


1. Equalizing and updating valuations;
2. Brings to light or rediscover many properties that have been lost from the tax roll;
and
3. Enables the assessor to purge from his assessment roll the double assessment and
assessment properties that had been destroyed and that has accumulated through the
years

Valuation of Real Property: The provincial, municipal or city assessor or his duly
authorized representative shall make a classification, appraisal and assessment of real
property irrespective of any previous assessment or taxpayers valuation thereon when:

1. Real property is declared and listed for taxation for the first time;
2. There is an on-going general revision of property classification and assessment; or
3. A request is made by the person in whose name the property is declared

The 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, or
any change in its actual use. (Sec 220, LGC)

When real property is assessed for the first time or when an existing assessment is increased
or decreased, the provincial, city or, municipal assessor shall within 30 days to give written
notice of such new or revised assessment to the person in whose name the property is
declared. (Sec 223, LGC)

Date of Effectivity of Assessment or Reassessment

SECTION 221. Date of Effectivity of Assessment or Reassessment. - All assessments or


reassessments made after the first (1st) day of January of any year shall take effect on the first (1st)
day of January of the succeeding year: Provided, however, That the reassessment of real property
due to its partial or total destruction, or to a major change in its actual use, or to any great and
sudden inflation or deflation of real property values, or to the gross illegality of the assessment
when made or to any other abnormal cause, shall be made within ninety (90) days from the date
any such cause or causes occurred, and shall take effect at the beginning of the quarter next
following the reassessment.

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ARTICLE 312. Date of Effectivity of Assessment or Reassessment. All assessments or


reassessment made after the first (1st) day of January of any year shall take effect on the first (1st)
day of January of the succeeding year provided, however, that the reassessment of real property
due to its partial or total destruction, or to a major change in its actual use, or to any great and
sudden inflation or deflation of real property values, or to the gross illegality of the assessment
when made, or to any other abnormal cause, shall be made within ninety (90) days from the date
any such cause or causes occurred, and shall take effect at the beginning of the quarter next
following the reassessment.

Rule: All assessments or reassessments made after January 1 of any year shall take effect on
January1 of the succeeding year.

Exception: Reassessments shall take effect at the beginning of the quarter next following
the reassessment IF made due to:

1. Its partial or total destruction;


2. Major change in its actual use;
3. Great and sudden inflation or deflation of real property values;
4. Gross illegality of the assessment; and
5. Any other abnormal cause (Sec 221, LGC)

Assessment of Property Subject to Back Taxes

SECTION 222. Assessment of Property Subject to Back Taxes. - Real property declared for the
first time shall be assessed for taxes for the period during which it would have been liable but in no
case for more than ten (10) years prior to the date of initial assessment: Provided, however, That
such taxes shall be computed on the basis of the applicable schedule of values in force during the
corresponding period.
If such taxes are paid on or before the end of the quarter following the date the notice of assessment
was received by the owner or his representative, no interest for delinquency shall be imposed
thereon; otherwise, such taxes shall be subject to an interest at the rate of two percent (2%) per
month or a fraction thereof from the date of the receipt of the assessment until such taxes are fully
paid.
ARTICLE 313. Assessment of Property Subject to Back Taxes. Real property declared for
the first time shall be assessed for the taxes for the period during which it would have been liable but
in no case for more than ten (10) years prior to the date of initial assessment provided, however, that
such taxes shall be computed on the basis of the applicable schedule of values in force during the
corresponding period. If such taxes are paid on or before the end of the quarter following the date
the notice of assessment was received by the owner or his representative, no interest for delinquency
shall be imposed thereon; otherwise, such taxes shall be subject to an interest at the rate of two
percent (2%) per month or a fraction thereof from the date of receipt of the assessment until such
taxes are fully paid.

Property declared for the first time: Assessed for taxes for the period during which it
would have been liable but in no case for more than ten (10) years prior to the date of initial
assessment.
Tax Basis: Applicable schedule of values in force during the corresponding period.
If paid on or before the end of the quarter following the date of receipt of assessment:
No interest for delinquency.
If paid after the end of the quarter following the date of receipt of assessment: taxes
shall be subject to an interest at the rate of two percent (2%) per month or a fraction thereof
from the date of the receipt of the assessment until such taxes are fully paid.

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Notification of New or Revised Assessment
SECTION 223. Notification of New or Revised Assessment. - When real property is assessed
for the first time or when an existing assessment is increased or decreased, the provincial, city or
municipal assessor shall within thirty (30) days give written notice of such new or revised assessment
to the person in whose name the property is declared. The notice may be delivered personally or by
registered mail or through the assistance of the punong barangay to the last known address of the
person to be served.
ARTICLE 314. Notification of New or Revised Assessment. When real property is assessed
for the first time or when an existing assessment is increased or decreased, the provincial, city, or
municipal assessor shall, within thirty (30) days, give written notice of such new or revised
assessment to the person in whose name the property is declared. The notice may be delivered
personally or by registered mail or through the assistance of the punong barangay to the last known
address of the person to be served.

Applies when:
1. Real property is assessed for the first time
2. An existing assessment is increased or decreased
Notices may be given through:
1. Personal Notice
2. Registered Mail
3. Assistance of punong barangay
Appraisal and Assessment of Machinery
SECTION 224. Appraisal and Assessment of Machinery. -
(A) The fair market value of a brand-new machinery shall be the acquisition cost. In all other cases,
the fair market value shall be determined by dividing the remaining economic life of the machinery
by its estimated economic life and multiplied by the replacement or reproduction cost.
(B) If the machinery is imported, the acquisition cost includes freight, insurance, bank and other
charges, brokerage, arrastre and handling, duties and taxes, plus cost of inland transportation,
handling and installation charges at the present site. The cost in foreign currency of imported
machinery shall be converted to peso cost on the basis of foreign currency exchange rates as fixed by
the Central Bank
ARTICLE 315. Appraisal and Assessment of Machinery. (a) The fair market value of a brand
new machinery shall be the acquisition cost. In all other cases, the fair market value shall be
determined by dividing the remaining economic life of the machinery by its estimated economic life
and multiplied by the replacement or reproduction cost. (b) If the machinery is imported, the
acquisition cost includes freight, insurance, bank and other charges, brokerage, arrastre and handling,
duties and taxes, plus cost of inland transportation, handling, and installation charges at the present
site. The cost in foreign currency of imported machinery shall be converted to peso cost on the basis
of foreign currency exchange rates as fixed by the Central Bank.

Classification of Machineries:
a. Realty by Destination- Machinery essential to the business.
Note: Movable equipment to be immobilized in contemplation of the law must first be
essential and principal elements of an industry or works without which such industry or
works would be unable to carry or function on the industrial purpose for which it was
established. (Mindanao Bus Co. vs City Assessor, G.R. No. L-17870, September 29,
1962)

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b. Realty by Incorporation Machinery permanently attached.
For machinery:
A. For brand new machinery: FMV is the acquisition cost
If the machinery is imported, the acquisition cost includes freight, insurance, bank
and other charges, brokerage, arrastre and handling, duties and taxes, plus charges at the
present site.
B. In all other cases:
Formula:

Economic Life = Estimated period over which it is anticipated that a machinery or


equipment may be profitably utilized.
Remaining Economic Life = Period of time expressed in years from the date of
appraisal to the date when the machinery becomes valueless.
Replacement or Reproduction Cost = Cost that would be incurred on the basis of
current prices, in acquiring an equally desirable substitute property, or the cost of
reproducing a new replica of the property on the basis of current prices with the
same or closely similar material.
C. Depreciation Allowance
For purposes of assessment, a depreciation allowance shall be made for machinery
at:

Rate not exceeding five percent (5%) of original cost or replacement or reproduction
cost for each year of use: and remaining value life shall be fixed at not less than
twenty percent (20%) of the replacement or reproduction cost for so long as the
machinery remains useful and in operation.
IV. COLLECTION OF REAL PROPERTY TAX
Step 5. PAYMENT AND COLLECTION OF REAL PROPERTY TAX
The RPT rate for the cities and municipalities in Metro Manila is two percent (2%) while for
provinces it is one percent (1%). To compute for RPT, the RPT rate is multiplied by the
assessed value of the property. Assessed value is the fair market value of the real
property multiplied by the assessment level.
Procedure for Determination of Real Property Tax Due:
1. Take the schedule of FMV;
2. Take the assessment level by determining the classification of property;
3. Multiply the FMV by the assessment level to get the assessed value;
4. Real property tax is computed by multiplying the assessed value by the RPT rate.

Date of Accrual of real property tax and special levies and Collection of Tax
SECTION 246. Date of Accrual of Tax.- 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 which shall be
superior to any other lien, mortgage, or encumbrance of any kind whatsoever, and shall be
extinguished only upon the payment of the delinquent tax.

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SECTION 247. Collection of Tax. - The collection of the real property tax with interest thereon
and related expenses, and the enforcement of the remedies provided for in this Title or any
applicable laws, 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, That the Barangay treasurer is properly bonded for the purpose: Provided,
further, That the premium on the bond shall be paid by the city or municipal government concerned.
ARTICLE 337. Date of Accrual of Tax. - The real property tax for any year shall accrue on the
first day of January and from the date it shall constitute a lien on the property which shall be superior
to any other lien, mortgage, or encumbrance of any kind whatsoever, and shall be extinguished only
upon the payment of the delinquent tax.
ARTICLE 338. Collection of Tax. The collection of the real property tax with interest thereon
and related expenses, and the enforcement of the remedies provided in this Rule or any applicable
laws, shall be the responsibility of the city or municipal treasurer concerned. Property owners,
however, at their option or convenience, may pay their real property taxes to the provincial treasurer
of the province to which the municipality where the subject property is located, belongs. The city or
municipal treasurer may deputize the barangay treasurer to collect all taxes on real property located in
the barangay provided that the barangay treasurer is properly bonded for the purpose and provided
further that the premium on the bond shall be paid by the city or municipality concerned.

January 1st of every year and such will


Accrual of Tax constitute as a lien superior to any other lien,
mortgage or encumbrance of any kind
1. Basic Real Property Tax and
Additional Tax for SEF in 4 equal
installments (on or before March
Time and Manner of Payment 31/June 30/ September
30/December 31)
2. Other special levies governed by
ordinance
The collection of RPT shall be the
responsibility of the city or municipal
treasurer concerned. The city or municipal
Collecting Officer treasurer may deputize the barangay
treasurer to collect all taxes on real property
located in the barangay; Provided the
barangay treasurer is properly bonded.
2% for each month on unpaid amount until
Interest for Late Payment the delinquent amount is paid provided in no
case shall the total interest exceed 36 months
For Advance Payment Discount not exceeding 20% of annual tax
Discount not exceeding 10% of annual tax
For Prompt Payment
due
1. To be posted by the city or municipal
treasurer in conspicuous and publicly
accessible place at the city or
municipal hall;
a. For Basic RPT and Additional
tax for SEF on or before
Notice of Time for Collection of Tax
January 31 of each year;
b. For any other tax- any other date
provided in the ordinance
2. Publication in a newspaper of general
circulation in the locality once a week
for 2 consecutive weeks

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Payments of real property taxes shall first be applied to prior years delinquencies, interests
and penalties, if any, and only after said delinquencies are settled may tax payments be
credited for current period (Sec 250, LGC)
Under Sec 247 of the LGC, provincial treasurer are obviously relieved of the authority to
collect real property tax, however, it appears that such omission is only typographical error:
1. Sec. 170 of the LGC provides that all local taxes, fees and charges shall be collected
by the provincial, city, municipal or barangay treasurer.
2. Sec 470 (d)(6) of the LGC provides that the provincial treasurer shall exercise
technical supervision over all treasury officials of component cities and
municipalities.
3. Real property tax is a shared tax where the proceeds thereof are distributed:
a. 35% to the province which shall accrue to the general fund;
b. 40% to the general fund of the municipality where the property is located;
and
c. 25% to the barangay where the property is located. (Cabaluna, p. 245-246)
4. Property owners, however, at their option or convenience, may pay their real
property taxes to the provincial treasurer of the province to which the municipality
where the subject property is located belongs(Sec 338, IRR of LGC)
Duty of Assessor to furnish local treasurer with Assessment Rolls

SECTION 248. Assessor to Furnish Local Treasurer with Assessment Roll. - The provincial,
city or municipal assessor shall prepare and submit to the treasurer of the local government unit,
on or before the thirty-first (31st) day of December each year, an assessment roll containing a list
of all persons whose real properties have been newly assessed or reassessed and the values of such
properties.
ARTICLE 339. Local Assessor to Furnish Local Treasurer with Assessment Roll. The
provincial, city, or municipal assessor shall prepare and submit to the local treasurer concerned, on
or before the thirty-first (31st) day of December each year, an assessment roll containing a list of
all persons whose real properties have been newly assessed or reassessed and the values of such
properties.

Notice of Time for Collection of Tax


SECTION 249. Notice of Time for Collection of Tax. - The city or municipal treasurer shall,
on or before the thirty-first (31st) day of January each year, in the case of the basic real property
tax and the additional tax for the Special Education Fund (SEF) or on any other date to be
prescribed by the Sanggunian concerned in the case of any other tax levied under this Title, post
the notice of the dates when the tax may be paid without interest at a conspicuous and publicly
accessible place at the city or municipal hall. Said notice shall likewise be published in a newspaper
of general circulation in the locality once a week for two (2) consecutive weeks.
ARTICLE 340. Notice of Time for Collection of Tax. The city or municipal treasurer shall,
on or before the thirty-first (31st) day of January each year, in the case of the basic real property
tax and the additional tax for special education fund or on any other date to be prescribed by the
sanggunian concerned in the case of any other tax levied in this Rule, post the notice of the dates
when the tax may be paid without interest at a conspicuous and publicly accessible place at the city
or municipal hall. Said notice shall likewise be published in a newspaper of general circulation in
the locality once a week for two (2) consecutive weeks.

1. To be posted by the city or municipal treasurer in conspicuous and publicly


accessible place at the city or municipal hall;
a. For Basic RPT and Additional tax for SEF on or before January 31 of each year;
b. For any other tax- any other date provided in the ordinance

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2. Publication in a newspaper of general circulation in the locality once a week for 2
consecutive weeks
Periods within which to collect real property tax

SECTION 270. Periods Within Which To Collect Real Property Taxes. - The basic real
property tax and any other tax levied under this Title shall be collected within five (5) years from
the date they become due. No action for the collection of the tax, whether administrative or
judicial, shall be instituted after the expiration of such period. In case of fraud or intent to evade
payment of the tax, such action may be instituted for the collection of the same within ten (10)
years from the discovery of such fraud or intent to evade payment. The period of prescription
within which to collect shall be suspended for the time during which:
(1) The local treasurer is legally prevented from collecting the tax;
(2) The owner of the property or the person having legal interest therein requests for
reinvestigation and executes a waiver in writing before the expiration of the period within
which to collect; and
(3) The owner of the property or the person having legal interest therein is out of the
country or otherwise cannot be located.

ARTICLE 361. Periods Within Which To Collect Real Property Taxes. The basic real
property tax and any other tax levied under this Rule shall be collected within five (5) years from
the date they become due. No action for collection of the tax, whether administrative or judicial,
shall be instituted after the expiration of such period. In case of fraud or intent to evade payment
of the tax, such action may be instituted for the collection thereof within ten (10) years from the
discovery of such fraud or intent to evade payment. The period of prescription within which to
collect shall be suspended for the time during which: (a) The local treasurer is legally prevented
from collecting the tax; (b) The owner of the property or the person having legal interest therein
requests for reinvestigation and executes a waiver in writing before the expiration of the period
within which to collect; and (c) The owner of the property or the person having legal interest
therein is out of the country or otherwise cannot be located.

Prescription of Collection of Taxes


1. Basic Real Property tax and any other tax 5 years from the date they became due.
2. When there is fraud or intent to evade the payment of taxes 10 years from
discovery of the fraud or intent to evade payment.
Grounds for the Suspension of the Running of the Prescriptive Periods
1. The local treasurer is legally prevented from collecting the tax;
2. The owner of the property or the person having legal interest therein requests for
reinvestigation and executes a waiver in writing before the expiration of the period
within which to collect; and
3. The owner of the property or the person having legal interest therein is out of the
country or otherwise cannot be located.

Note: These are the same grounds for suspending assessment and collection of local taxes.

Persons liable to pay real property tax: Unpaid realty taxes attach to the property are
chargeable against the person who has actual or beneficial use and possession of it regardless
of whether or not he is the owner. Read: Manila Electric Company vs. Barlis, GR No.
114231, May 18, 2001

To impose unpaid realty tax on the subsequent owner which was neither the owner nor the
beneficial user the property during the designated periods would not only be contrary to law
but also unjust.

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SPECIAL RULES ON PAYMENT


A. Payment of Real Property Tax in Installments

Section 250. Payment of Real Property Taxes in Installments. - The owner of the real
property or the person having legal interest therein may pay the basic real property tax and the
additional tax for Special Education Fund (SEF) due thereon without interest in four (4) equal
installments; the first installment to be due and payable on or before March Thirty-first (31st); the
second installment, on or before June Thirty (30); the third installment, on or before September
Thirty (30); and the last installment on or before December Thirty-first (31st), except the special
levy the payment of which shall be governed by ordinance of the sanggunian concerned.

The date for the payment of any other tax imposed under this Title without interest shall be
prescribed by the sanggunian concerned.

Payments of real property taxes shall first be applied to prior years delinquencies, interests, and
penalties, if any, and only after said delinquencies are settled may tax payments be credited for the
current period.

The owner or the person having legal interest may pay the basic real property tax and the
additional tax for Special Education Fund (SEF) due without interest in four (4) equal
installments on or before:

a. March 31
b. June 30
c. September 30
d. December 31

This shall not apply to special levies which shall be governed by ordinance of the sanggunian
concerned.

B. Interests on Unpaid Real Property Tax

Section 255. Interests on Unpaid Real Property Tax. - In case of failure to pay the basic real property
tax or any other tax levied under this Title upon the expiration of the periods as provided in
Section 250, or when due, as the case may be, shall subject the taxpayer to the payment of interest
at the rate of two percent (2%) per month on the unpaid amount or a fraction thereof, until the
delinquent tax shall have been fully paid: Provided, however, That in no case shall the total interest
on the unpaid tax or portion thereof exceed thirty-six (36) months.

The rate is (2%) per month on the unpaid amount until the delinquent tax shall have been
fully paid. Provided, in no case shall the total interest on the unpaid tax or portion thereof
exceeded thirty-six (36) months.

C. Condonation of Real Property Tax

Section 276. Condonation or Reduction of Real Property Tax and Interest. - In case of a general failure of
crops or substantial decrease in the price of agricultural or agribased products, or calamity in any
province, city or municipality, the sanggunian concerned, by ordinance passed prior to the first
(1st) day of January of any year and upon recommendation of the Local Disaster Coordinating
Council, may condone or reduce, wholly or partially, the taxes and interest thereon for the
succeeding year or years in the city or municipality affected by the calamity.

Section 277. Condonation or Reduction of Tax by the President of the Philippines. - The President of the

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Philippines may, when public interest so requires, condone or reduce the real property tax and
interest for any year in any province or city or a municipality within the Metropolitan Manila Area.

Instances which the Sanggunian may Condone or Reduce Real Property Tax

The Sanggunian by ordinance passed prior to the first (1st) day of January of any year and
upon recommendation of the Local Disaster Coordinating Council, may condone or reduce,
wholly or partially, the taxes and interest thereon for the succeeding year or years in the city
or municipality affacted by the calamity in cases of :

1. General failure of Crops


2. Substantial decrease in the price of agricultural or agri-based products
3. Calamity in any province, city or municipality

Presidents Power to Condone or Reduce Real Property Tax

The president may, when public interest so requires, condone or reduce the real property tax
and interest for any year in any province or city or a municipality within the Metro.

REMEDIES OF LGUs FOR COLLECTION OF REAL PROPERTY TAX


A. ADMINISTRATIVE

i. Lien
ii. Levy
iii. Distraint

B. JUDICIAL

I. ADMINISTRATIVE

LIEN: A legal claim on the property subject to RPT as security for the payment of the tax
obligation.

It is superior to all liens, charges or encumbrances irrespective of the owner or possessor


thereof, and is enforceable by administrative or judicial action. It is extinguished only upon
payment of tax and other expenses (Sec 257, LGC).

It is constituted on the property subject to the tax from the date the real property tax
accrued which is on the first day of January (Sec 246, LGC).

It may be extinguished only upon payment of the tax and related interests and expenses (Sec
246-247, LGC)

LEVY: after the expiration of the time required to pay the tax levied, the real property
subject to the tax may be levied upon (Sec 258-262, LGC)

Procedure for Levy for Purposes of Satisfying Real Property Taxes

1. Tax constitutes a lien on the property superior to all liens and may only be
extinguished upon payment of the tax and charges.

2. Time for payment of real property tax expires

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3. Warrant of Levy issued by Local Treasurer which has the force of legal execution in
the LGU concerned

4. Warrant mailed to or served upon the delinquent owner. Written notice of levy and
warrant is mailed/served upon the assessor and the Register of Deeds of the LGU

5. 30 days from service of warrant, Local Treasurer shall advertise sale of property by
Posting notice at the main entrance of the LGU hall/building and in a conspicuous place in
the barangay where the property is located; and Publication once a week for 2 weeks

6. Before the date of sale the owner may stay the proceeding by paying the delinquent
tax, interest and expenses of sale

7. Sale is held at the main entrance of the LGU bldg.., or on the property to be sold, or
any other place specified in the notice

8. If there is a bidder and highest bid is sufficient to pay real property tax and related
interests and costs, bidder pays and treasurer reports sale to Sanggunian 30 days after the
sale. The Local Treasurer will deliver to purchaser the certificate of sale, proceeds of sale in
excess of the delinquent tax, interest, expenses of sale remitted to owner.

Within 1 year from sale, owner may redeem upon payment of the delinquent tax,
interest due, expenses of sale (from date of delinquency to date of sale), and additional
interest of 2% per month on the purchase price from the date of sale to date of redemption.
Delinquent owner retains possession and right to the fruits. Price paid plus interest of 2%
per month shall be returned to the buyer.

9. If there is no bidder or highest bid is insufficient to pay real property tax and related
interests and costs, the Local Treasurer shall purchase the property in behalf of the LGU.
Register of Deeds shall transfer the title of forfeited property to LGU without need of court
order.

Within 1 year from forfeiture, owner may redeem property by paying to Treasurer full
amount of tax, interest, costs of sale, otherwise ownership shall vest to LGU.

Sanggunian concern may, by ordinance duly approved and with notice of not less than 20
days, sell/dispose by public auction of property acquired by forfeiture.

10. Levy may be repeated until full amount due, including all expenses, is collected.
DISTRAINT OF PERSONAL PROPERTY

SECTION 254. Notice of Delinquency in the Payment of the Real Property Tax.
(a) When the real property tax or any other tax imposed under this Title becomes delinquent, the
provincial, 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 Barangay of the local government unit concerned. The
notice of delinquency shall also be published once a week for two (2) consecutive weeks, in a
newspaper of general circulation in the province, city, or municipality.
(b) Such notice shall specify the date upon which the tax became delinquent and shall state that
personal property may be distrained to effect payment. It shall likewise state that at any time before
the distraint of personal property, payment of the tax with surcharges, interests and penalties may
be made in accordance with the next following Section, and unless the tax, surcharges and penalties

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are paid before the expiration of the year for which the tax is due except when the notice of
assessment or special levy is contested administratively or judicially pursuant to the provisions of
Chapter 3, Title II, Book II of this Code, the delinquent real property will be sold at public auction,
and the title to the property will be vested in the purchaser, subject, however, to the right of the
delinquent owner of the property or any person having legal interest therein to redeem the property
within one (1) year from the date of sale.

Posting and Publication of Notice of Deliquency As soon as the real property tax or
any other tax imposed under Title II, Book II of the LGC becomes delinquent, local
treasurer concerned shall forthwith post and publish a notice of delinquency of real property
in compliance with Section 254 above.
The notice shall be posted (a) at the main entrance of the provincial capitol, or city or
municipal hall and (b) in a publicly accessible and easily visible place in each barangay of the
local government unit concerned.
The notice should also be published once a week for 2 consecutive weeks in a newspaper of
general circulation in the province, city or municipality.
Statements on Date of Deliquency and Payment of Tax; Effect of Non Payment. It
should be emphasized that only (1) the statements of the delinquency and payment of the
tax (2)the effect of non-payment as well as (3) the right of redemption of the property owner
are material in paragraph (b) of Section 254. The provisions on distraint of personal property
is immaterial on this section.
Thus, paragraph (b) of Section 254 mandates that the notice of delinquency shall specify the
date upon which the tax which became delinquent and state that payment therefor, with
surcharges, interests and penalties maybe pursuant to Section 255. Furthermore, paragraph
(b) of Section 254 provides that unless the tax, surcharges, interests and penalties are paid
before the expiration of the year for which the tax is due, except when the notice of
assessment or special levy is contested administratively or judicially, the delinquent real
property will be sold at public auction, and the title to the property will be vested in the
purchaser, subject, however, to the right of the delinquent owner of the property or any
person having legal interest therein to redeem the property within one year from the date of
sale.
NOTES:

In determining to whom the notice of sale should have been sent, settled is the rule that, for
purposes of real property taxation, the registered owner of the property is deemed the
taxpayer. Thus, in identifying the real delinquent taxpayer, a local treasurer cannot rely solely
on the tax declaration but must verify with the Register of Deeds who the registered owner
of the particular property is. (Sps. Hu Chuan and Leoncia Lim Hu vs. Sps. Unico, GR No.
146534 September 18, 2009)
The proceeds of the sale in excess of the delinquent tax, the interest due thereon and the
expenses of sale shall be remitted to the owner of real property or person having legal
interest.
The owner shall not be deprived of possession and to rentals/income thereof until the
expiration of the time allowed for its redemption.
Notice and publication for sales, 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. Read: De Knetch
vs. CA; De Knetch vs. Sayo, GR No. 108015 May 20, 1998

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LOCAL GOVERNMENTS LIEN

SECTION 257. Local Governments Lien. - The basic real property tax and any other tax levied
under this Title constitutes a lien on the property subject to tax, superior to all liens, charges or
encumbrances in favor of any person, irrespective of the owner or possessor thereof, enforceable by
administrative or judicial action, and may only be extinguished upon payment of the tax and the
related interests and expenses.
ARTICLE 348. Local Government Lien. The basic real property tax and any other tax levied
under this Rule constitute a lien on the property subject to tax, superior to all liens, charges or
encumbrances in favor of any person, irrespective of the owner or possessor thereof, enforceable by
administrative or judicial action, and may only be extinguished upon payment of the tax and the
related interests and expenses.

Generally, a lien is a claim, encumbrance, or charge on property for payment of some debt,
obligation or duty.
In its specific sense, a tax lien is a statutory lien existing in favor of the state or municipality,
upon the lands of a person charged with taxes, binding the same either for the taxes assessed
upon the specific tract of land or (in some jurisdiction) for all the taxes due from the
individual, and which maybe foreclosed for non-payment, by judgment of a court or sale of
land.
A lien in its modern acceptation is understood to denote a legal claim or charge on property,
either real or personal, as a security for the payment of debt or obligation. Its meaning is
more extensive than the jus retentionis (right of retention) of the civil law.
The lien, once created on the subject property, may only be extinguished upon payment of
the tax and related interests and expenses.
Section 257 reinforces the principle enunciated in Section 175 of the LGC which states that
the local taxes, fees, charges and other revenues constitute a lien, superior to all liens,
charges or encumbrances in favor of any person. Section 257 further clarifies, however, that
real property taxes establish or create a lien on the properties subject to tax regardless of the
owner or possessor of such properties.
Thus, a tax lien is distinguished from distraint in that the latter, the property must be that of
the taxpayer, although it need not be the property in which the tax is assessed; a tax lien,
however, is generally directed to the property subject to tax regardless of its owner. (Vitug
and Acosta, Tax Law and Jurisprudence, 2nd ed., p.447 citing 51 Am. Jur. 857)
REMEDIES IN GENERAL

SECTION 256. Remedies For The Collection Of Real Property Tax. - For the collection of the
basic real property tax and any other tax levied under this Title, the local government unit concerned
may avail of the remedies by administrative action thru levy on real property or by judicial action.

ARTICLE 347. Remedies for the Collection of Real Property Tax. For the collection of the
basic real property tax and any other tax levied under this Rule, LGU may avail of remedies by
administrative or judicial action. The administrative remedies which are summary in nature are:
(a) Levy on real property, and
(b) Sale of real property at public auction.

The judicial remedy is availed of in the court of appropriate jurisdiction. These remedies are
cumulative, simultaneous and unconditional, that is, any or all of the remedies or combination
thereof may be resorted to and the use or non-use of one remedy shall not be a bar against the
institution of the others. Formal demand for the payment of the delinquent taxes and penalties due
is not a pre-requisite to such remedies. The notice of delinquency required in Article 346 of this Rule
shall be sufficient for the purpose.

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The administrative remedies which are summary in nature are (a) levy on real property and
(b) sale of real property at public auction. The judicial remedy is availed of in the court of
appropriate jurisdiction. These remedies are cumulative, simultaneously and unconditional,
that is, any or all of the remedies or combinations thereof may be resorted to and the use
and non-use of one remedy shall not be a bar against the institution of others. Formal
demand for the payment of the delinquent taxes and penalties due is not a pre-requisite to
such remedies. The notice of delinquency required in Article 346 of this Rule, (Section 254
in the LGC) shall be sufficient for the purpose (Article 348, Implementing Rules and
Regulations of the LGC)
As previously discussed, local government units may collect real property taxes by
administrative action thru the remedy of levy on real property and not thru distraint of
personal property. The rules pertaining to collection of real property taxes by judicial action
is provided for further in Section 266, 267 and 268 of the LGC.

SECTION 258. Levy on Real Property. - After the expiration of the time required to pay the
basic real property tax or any other tax levied under this Title, real property subject to such tax may
be levied upon through the issuance of a warrant on or before, or simultaneously with, the
institution of the civil action for the collection of the delinquent tax. The provincial or city treasurer,
or a treasurer of a municipality within the Metropolitan Manila Area, as the case may be, when
issuing a warrant of levy shall prepare a duly authenticated certificate showing the name of the
delinquent owner of the property or person having legal interest therein, the description of the
property, the amount of the tax due and the interest thereon. The warrant shall operate with the
force of a legal execution throughout the province, city or a municipality within the Metropolitan
Manila Area. The warrant shall be mailed to or served upon the delinquent owner of the real
property or person having legal interest therein, or in case he is out of the country or cannot be
located, to the administrator or occupant of the property. At the same time, written notice of the
levy with the attached warrant shall be mailed to or served upon the assessor and the Registrar of
Deeds of the province, city or a municipality within the Metropolitan Manila Area where the
property is located, who shall annotate the levy on the tax declaration and certificate of title of the
property, respectively.
The levying officer shall submit a report on the levy to the Sanggunian concerned within ten (10)
days after receipt of the warrant by the owner of the property or person having legal interest therein.
ARTICLE 349. Levy on Real Property. After the expiration of the time required to pay the
basic real property tax or any other tax levied under this Rule, real property subject to such tax may
be levied upon through the issuance of a warrant on or before, or simultaneously with the institution
of the civic action for the collection of the delinquent tax. Levy on real property shall be made in the
manner herein set forth. (a) The provincial or city treasurer, or municipal treasurer of a municipality
within MMA when issuing a warrant of levy shall prepare the duly authenticated certificate showing
the name of the delinquent property owner or person having legal interest therein, the description of the
property, the amount of the tax due and the interest thereon. (b) The warrant shall be mailed to or served
upon the delinquent real property owner or person having legal interest therein. In case he is out or can not be
located, to the occupant or administrator of the subject property. (c) Written notice of levy with the attached
warrant shall be mailed to or served upon the assessor and the registrar of deeds of the province, city, or
municipality within MMA where the property is located. (d) The assessor and registrar of deeds shall annotate
the levy on the tax declaration and the certificate of title, respectively. (e) The levying officer shall submit a
written report on the levy to the sanggunian concerned within ten (10) days after receipt of the warrant by the
property owner or person having legal interest in the property.

Procedure for Levy on Real Property When the period required to pay for the realty tax
expires, properties subject thereto maybe levied upon through the issuance of a warrant of
levy on or before, or simultaneously with, the institution of the civil action for the collection
of the delinquent taxes.
The issuance of the warrant of levy must conform to the following statutory procedure:

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(1) The provincial, city or municipal treasurer must prepare a duly authenticated
certificate showing (a) the name of the delinquent owner of the property or
person having legal interest therein (b) the description of the property and (c) the
amount of tax due and the interest thereon.

(2) The warrant shall be mailed to or served upon the delinquent owner of the real
property or person having legal interest therein, or in case he is out of the
country or cannot be located, the administrator or occupant of the property.

(3) At the same time, written notice of the levy with the attached warrant shall be
mailed to or served upon the assessor and the Registrar of Deeds of the
province, city or municipality within the Metropolitan Manila Area where the
property is located.

(4) The Assessor and Registrar of Deeds shall annotate the levy or the tax
declaration and certificate of title of the property respectively.

(5) The levying officer shall submit a report on the levy to the Sanggunian
concerned within 10 days after receipt of the warrant by the owner of the
property or person having legal interest therein.

Service of Warrant of Levy The requirements in Section 258 that the warrant of
levy should be mailed to or served upon the delinquent owner of the real property or person
having legal interest therein or administrator or occupant, as the case may be, is significant
because the service of warrant of levy stipulates the period within which the property
subject of delinquency may be properly advertised and sold to effect satisfaction of the real
property tax.
Consequently, Section 260 of the LGC provides that within the 30 days after the
service of the warrant of levy, the local treasurer shall proceed to publicly advertise for sale
or auction the property or a usable portion thereof as maybe necessary to satisfy the tax
delinquency and expense of the sale.
Concurrent with the time the warrant of levy is mailed to or served upon the
delinquent owner of the real property or person intervened therein, written notice of the
levy, with the attached warrant, shall likewise be mailed to or served upon the assessor and
the Registrar of Deeds of the province, city or municipality within the Metropolitan Manila
Area where the real property is located.
Receipt of Warrant of Levy The entire procedure for levying upon real property
ends with the reportorial duty of the local treasurer, hence, the provision in the last
paragraph of Section 258 stating that the local treasurer shall submit a report on the levy to
the sanggunian concerned within 10 days after receipt of the warrant by the owner of the
property or person having legal interest therein.
Note, therefore, that the warrant of levy should not only be mailed to or served upon
the delinquent owner of the real property or person having legal interest therein, it must also
be received by such delinquent owner or legally interested person, the date of receipt of the
warrant of levy being material to the statutory period within which the levying officer must
render his report to the sanggunian concerned.
Force of Legal Execution The warrant of levy issued pursuant to the provisions
of Section 258 above shall operate with the force of a legal execution throughout the
province, city or a municipality within the Metropolitan Area.

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SECTION 260. Advertisement and Sale. - Within thirty (30) days after service of the warrant of
levy, the local treasurer shall proceed to publicly advertise for sale or auction the property or a
usable portion thereof as may be necessary to satisfy the tax delinquency and expenses of sale. The
advertisement shall be effected by posting a notice at the main entrance of the provincial, city or
municipal building, and in a publicly accessible and conspicuous place in the Barangay where the
real property is located, and by publication once a week for two (2) weeks in a newspaper of
general circulation in the province, city or municipality where the property is located. The
advertisement shall specify the amount of the delinquent tax, the interest due thereon and expenses
of sale, the date and place of sale, the name of the owner of the real property or person having
legal interest therein, and a description of the property to be sold. At any time before the date fixed
for the sale, the owner of the real property or person having legal interest therein may stay the
proceedings by paying the delinquent tax, the interest due thereon and the expenses of sale. The
sale shall be held either at the main entrance of the provincial, city or municipal building, or on the
property to be sold, or at any other place as specified in the notice of the sale.
Within thirty (30) days after the sale, the local treasurer or his deputy shall make a report of
the sale to the Sanggunian concerned, and which shall form part of his records.The local treasurer
shall likewise prepare and deliver to the purchaser a certificate of sale which shall contain the name
of the purchaser, a description of the property sold, the amount of the delinquent tax, the interest
due thereon, the expenses of sale and a brief description of the proceedings: Provided, however,
That proceeds of the sale in excess of the delinquent tax, the interest due thereon, and the expenses
of sale shall be remitted to the owner of the real property or person having legal interest therein.
The local treasurer may, by ordinance duly approved, advance an amount sufficient to defray the
costs of collection thru the remedies provided for in this Title, including the expenses of
advertisement and sale.

Procedure for Advertisement Prior to Sale Before the sale of real property subject to
tax may be validly effected, prior advertisement therefor is required pursuant to Section 260.
Thus, the procedure for advertisement prior to sale or auction of real property is as follows:
(1) Within 30 days after the service of warrant of levy, the local treasurer shall
publicly advertise the property or usable portion thereof for sale or auction.

(2) The advertisement shall be effected by (a) posting a notice at the main entrance
of the provincial, city or municipal building, and in a publicly accessible and
conspicuous place in the barangay where the real property is located; and (b)
publication once a week for 2 weeks in newspaper of general circulation in the
province, city or municipality where the property is located.

(3) The advertisement shall specify (a) the amount of the delinquent tax, the interest
due thereon and expenses of the sale (b) the date and place of the sale (c) the
name of the owner of the real property or person having legal interest therein;
and (d) description of the property sold.

Deferment of Proceedings The owner of the property or person having legal interest
therein may stay the proceedings by paying the delinquent tax, the interest due thereon and
the expenses of the sale, at any time before the date fixed for the sale.

Place of Sale The procedure for advertisement having been complied with and the owner
of the property or the person having legal interest therein not having stayed the proceedings
by paying the delinquent tax and related expenses, the sale may proceed and may be held
either (a) at the main entrance of the provincial, city or municipal building, (b) on the
property to be sold or (c) at any other place as specified in the notice of sale.

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Procedure After Sale - After the real property has been sold, the local treasurer is required
to accomplish the following:

(1) Within 30 days after sale, the local treasurer or his deputy shall make a report
of the sale to the sanggunian concerned, and which shall form part of his
records,

(2) The local treasurer shall likewise prepare and deliver to the purchaser a
certificate of sale which shall contain (a) the name of the purchaser; (b) a
description of the property sold; (c) the amount of the delinquent tax and
related expenses; and (d) a brief description of the proceedings.

(3) The local treasurer shall remit to the owner of the real property or person
having legal interest therein the proceeds of the sale in excess of the
delinquent tax.

(4) The local treasurer , may, by ordinance duly approved, advance an amount
sufficient to defray costs of collection including the expenses of
advertisement and sale.

Notice Requirements under the Real Property Tax Code Prior to the enactment of
the LGC in 1992, Section 65 and Section 73 of the Real Property Tax Code defined the
Rules on Notice of Tax Delinquency as well as the Procedure for Advertisement of Sale of
Real Property at Public Auction, respectively.
With respect to the first notice under Section 65, the owner of the real property subject to
tax is supposed to be given a Notice of Delinquency stating that if the property tax is not
paid, the local government would sell the real property to satisfy the tax in arrears. This
consists of four separate measures: 1) posting of the notice of tax delinquency at the main
entrance of the city hall (2) posting of the notice of tax delinquency in a public and
conspicuous place in each barangay of the city; (3) publication of the notice of tax
delinquency once a week for three consecutive weeks in a newspaper of general circulation
in the city, and (4) Verbal announcement of the existence of the notice of tax delinquency by
a crier at the market place for at least three market days. (Aquino v. Quezon City, G.R. No.
137534, August 3, 2006, 497 SCRA 497, p.505)
Under Section 73, copy of the Notice (of sale of real property at public auction) shall
forthwith be sent either by (1) registered mail or (2) by messenger, or (3) through the barrio
captain, to the delinquent tax payer, at his address as shown in the tax rolls or property tax
record cards of the municipality or city where the property is located, or at his residence, if
known to the said treasurer or barrio captain: Provided, however, That the return of the proof
of service under oath shall be filed by the person making the service with the provincial or
city treasurer concerned.
The following decision of the Supreme Court, however, defined the jurisprudential rules on
Notice requirements under the Real Property Tax Code:
(1) The prescribed procedure in auction sales of property for tax delinquency being
in derogation of property rights should be followed punctiliously. Strict
adherence to the Statutes governing tax sales is imperative not only for the
protection of the taxpayers, but also to allay any possible suspicion on collusion
between the buyer and the public officials called upon to enforce such laws.
Notice of Sale to the delinquent landowners and the public in general is

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an essential and indispensable requirement of the law the non-fulfillment
of which vitiates the sale. (Serfino v, Court of Appeals, G.R. No. L-40858,
September 15, 1987, 154 SCRA 19)

(2) There is no dispute that the requirements of the law as regards posting of notice,
publication and announcement of crier have been complied with. The
controversy lies in the failure of the City Treasurer to notify effectively the
delinquent taxpayer who at the time of auction sale was Teresa L. Valencia.
Apparently, petitioner proceeded on the wrong premise that the property was
still owned by the former registered owner, Alberto Sta. Maria, who sold the
property to Valencia in 1964. Hence, the public auction sale conducted on 29
February 1984 is declared void for lack of notice to the registered owner Teresa
L. Valencia. Read: Estate of the Late Mercedes Jacob v. Court of Appeals,
G.R. Nos. 120435 and 120974, December 22, 1997, 283 SCRA 474

(3) Unlike land registration proceedings which are in rem, cases involving an auction
sale of land for the collection of delinquent taxes are in personam. Thus, notice
by publication, though sufficient in proceedings in rem, does not as a rule satisfy
the requirement proceedings in personam. As such, mere publication of the
notice of delinquency would not suffice, considering that the procedures
in tax sales are in personam. It was, therefore, still incumbent upon the
city treasurer to send notice of tax delinquency directly to the taxpayer in
order to protect the interests of the latter.

For the purposes of the real property tax, the registered owner of the property is
deemed the tax payer. Hence, only the registered owner is entitled to a notice of
tax delinquency and other proceedings relative to the tax sale. Not being the
registered owners of the property, petitioners cannot claim to have been
deprived of such notice. In fact, they were not entitled to it. (Talusan v. Tayag,
G.R. No. 133698. April 4, 2001, 346 SCRA 263)

SECTION 263. Purchase of Property By the Local Government Units for Want of Bidder. -
In case there is no bidder for the real property advertised for sale as provided herein, or if the highest
bid is for an amount insufficient to pay the real property tax and the related interest and costs of sale
the local treasurer conducting the sale shall purchase the property in behalf of the local government
unit concerned to satisfy the claim and within two (2) days thereafter shall make a report of his
proceedings which shall be reflected upon the records of his office. It shall be the duty of the
Registrar of Deeds concerned upon registration with his office of any such declaration of forfeiture
to transfer the title of the forfeited property to the local government unit concerned without the
necessity of an order from a competent court.

Within one (1) year from the date of such forfeiture, the taxpayer or any of his representative, may
redeem the property by paying to the local treasurer the full amount of the real property tax and the
related interest and the costs of sale. If the property is not redeemed as provided herein, the
ownership thereof shall be fully vested on the local government unit concerned.

ARTICLE 354. Purchase of Property By the Local Government Units for Want of Bidder.
In case there is no bidder for the real property advertised for sale as provided herein, or if the highest
bid is for an amount insufficient to pay the real property tax and the related interest and costs of the
sale, the local treasurer conducting the sale shall purchase the property in behalf of the LGU
concerned to satisfy the claim and within two (2) days thereafter shall make a report of his
proceedings which shall be reflected upon the records of his office. It shall be the duty of the

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registrar of deeds concerned, upon registration with his office of any such declaration of forfeiture,
to transfer the title of the forfeited property to the LGU concerned without the necessity of an
order from a competent court. Within one (1) year from the date of such forfeiture, the taxpayer or
his representative, may redeem the property by paying to the local treasurer the full amount of the
real property tax and the related interest and costs of sale. If the property is not redeemed as
provided herein, the ownership thereof shall be fully vested on the LGU concerned.

There are two instances under which the local government unit may purchase the property
under Section 263:
(1) If there is no bidder for the real property advertised for sale and,

(2) If there are bidders but the highest bids is insufficient to pay the real
property tax and the related interest and costs of sale.

Under these circumstances, the local treasurer is authorized to purchase the property in
behalf of the local government unit concerned to satisfy the claim. The Register of Deeds,
upon registration of forfeiture, is mandated to effect the transfer of the title of the forfeited
property to the local government unit without need of an order from a competent court.
The transfer having been effected, the taxpayer or any of his representative may redeem the
property within 1 year from the date of the forfeiture by paying to the local treasurer the full
amount of the real property tax and the related interest and costs of sale.
Note that the ownership of the real property shall be fully vested on the local government
unit if such property is not redeemed in accordance with rules as provided in this Section.

SECTION 261. Redemption of Property Sold. - 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. Such payment shall invalidate the
certificate of sale issued to the purchaser and the owner of the delinquent real property or person
having legal interest therein shall be entitled to a certificate of redemption which shall be issued by
the local treasurer or his deputy. 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 or person
having legal interest therein who shall be entitled to the income and other fruits thereof. 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 two percent (2%)
per month. Thereafter, the property shall be free from the lien of such delinquent tax, interest due
thereon and expenses of sale.
ARTICLE 352. Redemption of Property Sold. 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. Such payment
shall invalidate the certificate of sale issued to the purchaser and the owner of the delinquent real
property or person having legal interest therein shall be entitled to a certificate of redemption
which shall be issued by the local treasurer or his deputy. 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 or person having legal interest therein who shall be entitled to the income and other
fruits thereof. 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 two percent (2%) per month. Thereafter, the property shall be free from the lien of such
delinquent tax, interest due thereon and expenses of sale.

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Effect of Payment Full payment of the items enumerated in this Section invalidates the
certificate of sale issued to the purchaser and entitles the owner of the delinquent real
property or person having legal interest therein to a certificate of redemption which shall be
issued by the local treasurer or his deputy.
Upon receipt of the certificate of sale from the purchaser, the local treasurer or his deputy
shall immediately return to such purchaser the entire amount paid by him plus interest of not
more than 2% per month. Consequently, the property shall be free from lien of such
delinquent tax, interest due thereon and expenses of sale.
Right to Possession and Income within the Period of Redemption From the date of
sale until the expiration of the period of redemption, the delinquent real property shall be in
possession of the owner or person having legal interest therein who shall be entitled to the
income and other fruits thereof.

SECTION 262. Final Deed to Purchaser. - In case the owner or person having legal interest
fails to redeem the delinquent property as provided herein, the local treasurer shall execute a deed
conveying to the purchaser said property, free from lien of the delinquent tax, interest due
thereon and expenses of sale. The deed shall briefly state the proceedings upon which the validity
of the sale rests.
ARTICLE 353. Final Deed to Purchaser. In case the owner or person having legal interest
therein fails to redeem the delinquent property as provided herein, the local treasurer shall execute
a deed conveying to the purchaser said property, free from lien of the delinquent tax, interest due
thereon and expenses of sale. The deed shall briefly state the proceedings upon which the validity
of the sale rests.

Failure of the owner or person having legal interest therein to redeem the delinquent
property within 1 year from the time such property is sold at public auction entitles the
purchaser the full ownership thereof and authorizes the local treasurer concerned to execute
the final deed in favor of the purchaser. The final deed shall briefly state the proceedings
upon which the validity of the sale rests.
II. JUDICIAL ACTION

SECTION 266. Collection of Real Property Tax Through the Courts. - The local
government unit concerned may enforce the collection of the basic real property tax or any other
tax levied under this Title by civil action in any court of competent jurisdiction. The civil action
shall be filed by the local treasurer within the period prescribed in Section 270 of this Code.
(Local Government Code)
SECTION 270. Periods Within Which To Collect Real Property Taxes. - The basic real
property tax and any other tax levied under this Title shall be collected within five (5) years from
the date they become due. No action for the collection of the tax, whether administrative or
judicial, shall be instituted after the expiration of such period. In case of fraud or intent to evade
payment of the tax, such action may be instituted for the collection of the same within ten (10)
years from the discovery of such fraud or intent to evade payment. The period of prescription
within which to collect shall be suspended for the time during which:
(1) The local treasurer is legally prevented from collecting the tax;
(2) The owner of the property or the person having legal interest therein requests for
reinvestigation and executes a waiver in writing before the expiration of the period within which
to collect; and
(3) The owner of the property or the person having legal interest therein is out of the country or
otherwise cannot be located.

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ARTICLE 357. Collection of Real Property Tax Through the Courts. The delinquent basic
real property tax or any other tax levied under this Rule shall constitute a lawful indebtedness of the
taxpayer to the LGU. Collection of such indebtedness can be enforced thru civil action in any court
of competent jurisdiction, as follows:
(a) The provincial or city treasurer, or municipal treasurer of a municipality of MMA shall furnish
the provincial attorney or city or municipal legal officer a certified statement of delinquency who,
within fifteen (15) days after receipt, shall file the civil action in the name of the province, city, or
municipality in the proper court of competent jurisdiction. The jurisdiction of the court is
determined by the amount sought to be recovered exclusive of interests and costs. Thus, where the
delinquent tax due does not exceed Ten Thousand Pesos (P10,000.00), the competent court is the
municipal or city trial court, and where the amount due is in excess of Ten Thousand Pesos
(P10,000.00), the proper court is the regional trial court. (b) Where cognizable in an inferior court,
the action must be filed in the municipality or city where the delinquent property is located. Where
the regional trial court has jurisdiction, the plaintiff LGU shall file the complaint in the city or
province where the property is situated. (c) In both cases, that is, where the claim is either
cognizable by an inferior court or by the regional trial court, the provincial or city treasurer shall
furnish the provincial attorney or the city or municipal legal officer concerned the exact address of
the defendant where he may be served with summons. (IRR of the Local Government Code)

Civil Remedies for the Collection of Tax


a. Extra-Judicial remedy of levy
b. Judicial Action

The local government unit concerned may enforce the collection of the basic real property
tax or any other tax levied under this Title by civil action in any court of competent
jurisdiction. The civil action shall be filed by the local treasurer within five (5) years from
the date they become due or ten (10) years from the discovery of such fraud or intent to
evade payment, in case of fraud.
Grounds for the Suspension of the Running of the Prescriptive Periods:
1. The local treasurer is legally prevented from collecting the tax;

2. The owner of the property or the person having legal interest therein requests for
reinvestigation and executes a waiver in writing before the expiration of the period
within which to collect; and

3. The owner of the property or the person having legal interest therein is out of the
country or otherwise cannot be located.

Jurisdiction
The jurisdiction of the court is determined by the amount sought to be recovered exclusive
of interests and costs. Thus, where the delinquent tax due:
a. does not exceed Ten Thousand Pesos (P10,000.00) Municipal Trial Court

b. amount is in excess of Ten Thousand Pesos (P10,000.00) Regional Trial Court

Venue
a. Where cognizable in an inferior court - the municipality or city where the delinquent
property is located;

b. Where RTC has jurisdiction the city or province where the delinquent property is
situated.
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Regional Trial Courts have jurisdiction over cases involving enforcement and collection of
real property taxes. The conflict in the provisions on jurisdiction between P.D. 242
(Prescribing the procedure for administrative settlement or adjudication of disputes, claims and controversies
between or among government offices, agencies and instrumentalities, including government owned and
controlled corporations) and P.D. 464 (Real Property Tax Code) should be resolved in favor of the
latter law, since it is a special law and of later enactment. 1
Notes:
1. The Court of Tax Appeals (CTA) has no jurisdiction over civil actions for collection
of taxes. (BP 129, RA 1125 as amended, Sec. 7 in relation to Sec. 19).

2. The provincial, city or municipal treasurer shall furnish the provincial attorney or city
or municipal legal officer a certified statement of delinquency and the exact address
of the defendants, where they may be served with summons, who, within fifteen (15)
days after receipt, shall file the civil action in the proper court of competent
jurisdiction.

RESALE OF REAL ESTATE TAKEN FOR TAXES, FEES OR CHARGES


SECTION 264. Resale of Real Estate Taken for Taxes, Fees, or Charges. - The Sanggunian
concerned may, by ordinance duly approved, and upon notice of not less than twenty (20) days,
sell and dispose of the real property acquired under the preceding section at public auction. The
proceeds of the sale shall accrue to the general fund of the local government unit concerned.
(Local Government Code)
ARTICLE 355. Resale of Real Estate Taken for Taxes, Fees, or Charges. The
sanggunian concerned may, by a duly approved ordinance, and upon notice of not less than
twenty (20) days, sell and dispose of the real property acquired under the preceding Article at
public auction. The proceeds of the sale shall accrue to the general fund of the LGU concerned.
(IRR of the Local Government Code)

Sanggunian concerned may dispose of the real property acquired, by ordinance duly
approved, and upon notice of not less than twenty (20) days at public auction.

The proceeds of the sale shall accrue to the general fund of the local government
unit concerned.

FURTHER LEVY UNTIL FULL PAYMENT OF AMOUNT DUE

SECTION 265. Further Distraint or Levy. - Levy may be repeated if necessary until the full
due, including all expenses, is collected. (Local Government Code)
ARTICLE 356. Further Distraint or Levy. Levy may be repeated if necessary on the same
property subject to tax until the full amount due, including all expenses, is collected. (IRR of the
Local Government Code)

1
National Power Corporation vs. CA, GR No. L-73477 October 16, 1990.

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SPECIAL RULES ON ACTIONS INVOLVING REAL PROPERTY
Deposit required for actions assailing validity of tax sale

SECTION 267. Action Assailing Validity of Tax Sale. - No court shall entertain any action
assailing the validity of any sale at public auction of real property or rights therein under this Title
until the taxpayer shall have deposited with the court the amount for which the real property was
sold, together with interest of two percent (2%) per month from the date of sale to the time of
the institution of the action. The amount so deposited shall be paid to the purchaser at the
auction sale if the deed is declared invalid but it shall be returned to the depositor if the action
fails. Neither shall any court declare a sale at public auction invalid by reason of irregularities or
informalities in the proceedings unless the substantive rights of the delinquent owner of the real
property or the person having legal interest therein have been impaired. (Local Government
Code)

ARTICLE 358. Action Assailing Validity of Tax Sale. (a) No court shall entertain any
action assailing the validity of any sale at public auction of real property or rights therein under
this Rule until the taxpayer shall have deposited with the court the amount for which the real
property was sold, together with interest of two percent (2%) per month from the date of sale to
the time of the institution of the action. The amount so deposited shall be paid to the purchaser
at the auction sale if the deed is declared invalid but it shall be returned to the depositor if the
action fails. (b) No court shall declare a sale at public auction invalid by reason of irregularities or
informalities in the proceedings unless the substantive rights of the delinquent owner of the real
property or the person having legal interest therein have been impaired. (IRR of the Local
Government Code)

The Court shall entertain any action assailing the validity of any sale at public auction of real
property or rights therein until the taxpayer shall have deposited with the court the amount
for which the real property was sold together with interest of two percent (2%) per month
from date of sale to the time of institution of action.
The deposit of the amount for which the property was sold plus interest equivalent to two
percent (2%) per month required under Section 267 of the LGC is a jurisdictional
requirement, the non-payment of which warrants the dismissal of the action.2
Sec. 83 of P.D. 464 (now Sec 267 of the LGC) may only be used in a voidable tax sale. When
the sale is void because the property subjected to real estate is not situated within the
jurisdiction of the taxing authority, the provision cannot be invoked.3
Payment of Deliquent Taxes on Property subject of Controversy

SECTION 268. Payment of Delinquent Taxes on Property Subject of Controversy. - In any


action involving the ownership or possession of, or succession to, real property, the court may,
motu propio or upon representation of the provincial, city, or municipal treasurer or his deputy,
award such ownership, possession, or succession to any party to the action upon payment to the
court of the taxes with interest due on the property and all other costs that may have accrued,
subject to the final outcome of the action. (Local Government Code)

ARTICLE 359. Payment of Delinquent Taxes on Property Subject of Controversy. In


any action involving the ownership or possession of, or succession to, real property the court
may, motu proprio or upon representation of the provincial, city, or municipal treasurer or their
respective deputies, award such ownership, possession, or succession to any party to the action
upon payment to the court of the taxes with interests due to the property and all other costs that
may have accrued, subject to the final outcome of the action. (IRR of the Local Government
Code)

2
Sps. Wong vs City of Iloilo, GR No. 161748, July 3, 2009
3
City Govt of Tagaytay vs Hon Guerrero, GR Nos. 140743,140745, 141451-52, September
17, 2009
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V. REFUND OR CREDIT OF REAL PROPERTY TAX
1. Payment of Real Properties under Protest

Requisites in payment of real properties under protest:

The taxpayer must indicate the amount or portion he is protesting;


Indicate that the said amount was paid under protest
File protest with the local treasurer
Must be filed in writing within 30 days from payment

Section 252. Payment Under Protest. -


(a) No protest shall be entertained unless the taxpayer first pays the tax. There shall be annotated on
the tax receipts the words "paid under protest". The protest in writing must be filed within thirty (30)
days from payment of the tax to the provincial, city treasurer or municipal treasurer, in the case of a
municipality within Metropolitan Manila Area, who shall decide the protest within sixty (60) days from
receipt.
(b) The tax or a portion thereof paid under protest, shall be held in trust by the treasurer concerned.
(c) In the event that the 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.
(d) In the event that the protest is denied or upon the lapse of the sixty day period prescribed in
subparagraph (a), the taxpayer may avail of the remedies as provided for in Chapter 3, Title II, Book II
of this Code.

No protest shall be entertained unless the tax is first paid.

The Trial Court has no jurisdiction to issue a writ of prohibition which seeks to set aside
the warrant of garnishment over petitioners bank deposit in satisfaction of real property taxes
without paying first under protest the tax assessed and without exhausting available administrative
remedies.
The local treasurer shall decide the protest within 60 days from receipt. (MERALCO
VERSUS NELIA BARIS, GR NO. 114231, MAY 18, 2001)

NOTE:
Section 64 of the RPTC, prohibits any courts from declaring any tax invalid by
reason of irregularities in the proceedings of the officers charged with the assessment or
collection of taxes except upon the condition that the taxpayer pays the just amount of the
tax, as determined by the court in the pending proceeding.

If the taxpayer failed to make a protest payment of the tax assessed, any argument
regarding the procedure that should have been observed in the preparation of the notice of
assessment and collection is futile as the trial court in such a scenario cannot assume
jurisdiction over the matter.

N.B. This ruling was cited prior to the effectivity of RA 7160.

Thus, should the taxpayer/real property owner question the excessiveness or reasonableness of the
assessment, Section 252 directs that the taxpayer should first pay the tax due before his protest can
be entertained. There shall be annotated on the tax receipts the words "paid under protest." It is
only after the taxpayer has paid the tax due that he may file a protest in writing within thirty days

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from payment of the tax to the Provincial, City or Municipal Treasurer, who shall decide the protest
within sixty days from receipt. In no case is the local treasurer obliged to entertain the protest unless
the tax due has been paid.

If the local treasurer denies the protest or fails to act upon it within the 60-day period provided for in
Section 252, the taxpayer/real property owner may then appeal or directly file a verified petition
with the LBAA within sixty days from denial of the protest or receipt of the notice of assessment, as
provided in Section 226 of R.A. No. 7160. (OLIVARES VS MARQUEZ, GR NO.
155591, SEPTEMBER 22, 2004)

2. Repayment of excessive collections

SEC. 253. Repayment of Excessive Collections. When an assessment of basic real property tax,
or any other tax levied under this Title, is found to be illegal or erroneous and the tax is accordingly
reduced or adjusted, the taxpayer may file a written claim for refund or credit for taxes and
interests with the provincial or city treasurer within two (2) years from the date the taxpayer is
entitled to such reduction or adjustment.
The provincial or city treasurer shall decide the claim for tax refund or credit within sixty (60)
days from receipt thereof. In case the claim for tax refund or credit is denied, the taxpayer may avail
of the remedies provided in Chapter 3, Title Two, Book II of this Code.

Under Section 253 of the Local Government Code, the claim for refund or credit for taxes
must be filed before the city treasurer who shall decide the claim based on the tax
declarations, affidavits, documents and other documentary evidence to be presented by
petitioner.
VI. TAXPAYERS REMEDIES
I. ADMINISTRATIVE
A. PROTEST by:
1. Any owner or person having legal interest in the property who is not satisfied
with the action of the assessor in the assessment of his property; or

2. Any owner of real property affected by a special levy or any person having legal
interest therein may protest the assessment by filing an appeal to the Local
Board of Assessment Appeals within 60 days from receipt of notice of the
assessment. (Sec 226 and 244, LGC)
1. Contesting an assessment of value of real property

Section 195. Protest of Assessment. - When the local treasurer or his duly authorized
representative finds that correct taxes, fees, or charges have not been paid, he shall issue a notice of
assessment stating the nature of the tax, fee, or charge, the amount of deficiency, the surcharges,
interests and penalties. Within sixty (60) days from the receipt of the notice of assessment, the
taxpayer may file a written protest with the local treasurer contesting the assessment; otherwise, the
assessment shall become final and executory. The local treasurer shall decide the protest within sixty
(60) days from the time of its filing. If the local treasurer finds the protest to be wholly or partly
meritorious, he shall issue a notice cancelling wholly or partially the assessment. However, if the
local treasurer finds the assessment to be wholly or partly correct, he shall deny the protest wholly
or partly with notice to the taxpayer. The taxpayer shall have thirty (30) days from the receipt of the
denial of the protest or from the lapse of the sixty (60) day period prescribed herein within which to
appeal with the court of competent jurisdiction otherwise the assessment becomes conclusive and
unappealable.

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Who may contest:
Any owner or person having legal interest in the property who is not satisfied with
the assessment of his property may file a written protest with the local treasurer contesting
the assessment.
When to file the protest:
Within sixty (60) days from the receipt of the notice of assessment.
-The treasurer shall decide the protest within sixty (60) days from the time of its filing and
can wholly or partially cancel the assessment.
Prescriptive period to file appeal :
Thirty (30) days from the receipt of the denial of the protest OR
Sixty (60) days from the filing of the protest in case there is inaction on the part of
the local treasurer.
a. Appeal to the Local Board of Assessment Appeals

Section 226. Local Board of Assessment Appeals. - Any owner or person having legal
interest in the property who is not satisfied with the action of the provincial, city or municipal
assessor in the assessment of his property may, within sixty (60) days from the date of receipt of
the written notice of assessment, appeal to the Board of Assessment Appeals of the provincial
or city 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

Composition of the Local Board of Assessment Appeals (LGC IRR Art.318)


1. Registrar of Deeds
2. Provincial or City Prosecutor
3. Provincial or City Engineer

i. Action by Local Board of Assessment Appeals


Section 229. Action by the Local Board of Assessment Appeals. -
(a) The Board shall decide the appeal within one hundred twenty (120) days from the date of
receipt of such appeal. The Board, after hearing, shall render its decision based on substantial
evidence or such relevant evidence on record as a reasonable mind might accept as adequate to
support the conclusion.
(b) In the exercise of its appellate jurisdiction, the Board shall have the power to summon
witnesses, administer oaths, conduct ocular inspection, take depositions, and issue subpoena and
subpoena duces tecum. The proceedings of the Board shall be conducted solely for the purpose
of ascertaining the facts without necessarily adhering to technical rules applicable in judicial
proceedings.
(c) The secretary of the Board shall furnish the owner of the property or the person having legal
interest therein and the provincial or city assessor with a copy of the decision of the Board. In
case the provincial or city assessor concurs in the revision or the assessment, it shall be his duty
to notify the owner of the property or the person having legal interest therein of such fact using
the form prescribed for the purpose. The owner of the property or the person having legal
interest therein or the assessor who is not satisfied with the decision of the Board, may,
within thirty (30) days after receipt of the decision of said Board, appeal to the Central
Board of Assessment Appeals, as herein provided. The decision of the Central Board
shall be final and executory.

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b. Appeal to the Central Board of Assessment Appeals
Section 230. Central Board of Assessment Appeals. - The Central Board of Assessment
Appeals shall be composed of a chairman, and two (2) members to be appointed by the President,
who shall serve for a term of seven (7) years, without reappointment. Of those first appointed,
the chairman shall hold office for seven (7) years, one member for five (5) years, and the other
member for three (3) years. Appointment to any vacancy shall be only for the unexpired portion
of the term of the predecessor. In no case shall any member be appointed or designated in a
temporary or acting capacity. The chairman and the members of the Board shall be Filipino
citizens, at least forty (40) years old at the time of their appointment, and members of the Bar or
Certified Public Accountants for at least ten (10) years immediately preceding their appointment.
... The Board shall have appellate jurisdiction over all assessment cases decided by the Local
Board of Assessment Appeals.
There shall be Hearing Officers to be appointed by the Central Board of Assessment Appeals
pursuant to civil service laws, rules and regulations, one each for Luzon, Visayas and Mindanao,
who shall hold office in Manila, Cebu City and Cagayan de Oro City, respectively, and who shall
serve for a term of six (6) years, without reappointment until their successors have been
appointed and qualified. The Hearing Officers shall have the same qualifications as that of the
Judges of the Municipal Trial Courts.
The Central Board Assessment Appeals, in the performance of its powers and duties, may
establish and organize staffs, offices, units, prescribe the titles, functions and duties of their
members and adopt its own rules and regulations.
Unless otherwise provided by law, the annual appropriations for the Central Board of Assessment
Appeals shall be included in the budget of the Department of Finance in the corresponding
General Appropriations Act.

c. Effect of Appeal on the Payment of Real Property Tax


Section 231. Effect of Appeal on the Payment of Real Property Tax. - Appeal on assessments
of real property made under the provisions of this Code shall, in no case, suspend the collection of
the corresponding realty taxes on the property

During the pendency of appeal on assessments of real property, collection of the


corresponding realty taxes will not be suspended without prejudice to the subsequent
adjustment depending upon the final outcome of the appeal. However, where the taxpayer
has shown a clear and unmistakable right to refuse or to hold in abeyance of taxes, an
injunction can be granted.
Discussion:

Republic Act No. 7160 or the Local Government Code of 1991, clearly sets forth the
administrative remedies available to a taxpayer or real property owner who is not satisfied
with the assessment or reasonableness of the real property tax sought to be collected. The
Supreme Court outlined said remedies, to wit:

Should the taxpayer/real property owner question the excessiveness


or reasonableness of the assessment, Section 252 directs that the taxpayer
should first pay the tax due before his protest can be entertained. There shall
be annotated on the tax receipts the words paid under protest. It is only after
the taxpayer has paid the tax due that he may file a protest in writing within
thirty days from payment of the tax to the Provincial, City or Municipal
Treasurer, who shall decide the protest within sixty days from receipt. In no
case is the local treasurer obliged to entertain the protest unless the tax due
has been paid.

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If the local treasurer denies the protest or fails to act upon it within
the 60-day period provided for in Section 252, the taxpayer/real property
owner may then appeal or directly file a verified petition with the Local
Board of Assessment Appeals (LBAA) within sixty days from denial of the
protest or receipt of the notice of assessment, as provided in Section 226 of
R.A. No. 7160[.]

And, if the taxpayer is not satisfied with the decision of the LBAA,
he may elevate the same to the Central Board of Assessment Appeals
(CBAA), which exercises exclusive jurisdiction to hear and decide all appeals
from the decisions, orders and resolutions of the Local Boards involving
contested assessments of real properties, claims for tax refund and/or tax
credits or overpayments of taxes. An appeal may be taken to the CBAA by
filing a notice of appeal within thirty days from receipt thereof.

From the Central Board Assessment Appeals, the dispute may then be taken to the
Court of Tax Appeals by filing a verified petition for review under Rule 42 of the Revised
Rules of Court; to the Court of tax Appeals en banc; and finally to the Supreme Court via a
petition for review on certiorari pursuant to Rule 45 of the Revised Rules of Court. (City of
Pasig vs. Republic of the Philippines, G.R. 185023)

2. Payment of real property tax under protest


a. File protest with local treasurer.

SEC. 252. Payment Under Protest. - (a) No protest shall be entertained unless the taxpayer first
pays the tax. There shall be annotated on the tax receipts the words "paid under protest". The
protest in writing must be filed within thirty (30) days from payment of the tax to the provincial, city
treasurer or municipal treasurer, in the case of a municipality within Metropolitan Manila Area, who
shall decide the protest within sixty (60) days from receipt.
(b) The tax or a portion thereof paid under protest, shall be held in trust by the treasurer concerned.
(c) In the event that the 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.
(d) In the event that the protest is denied or upon the lapse of the sixty day period prescribed in
subparagraph (a), the taxpayer may avail of the remedies as provided for in Chapter 3, Title II, Book
II of this Code.

ARTICLE 343. Payment Under Protest. (a) No protest shall be entertained unless the taxpayer
first pays the tax. There shall be annotated on the tax receipts the words paid under protest. The
protest in writing must be filed within thirty (30) days from payment of the tax to the provincial or
city treasurer, or municipal treasurer, in the case of a municipality within MMA, who shall decide the
protest within sixty (60) days from receipt.
(b) The tax or a portion thereof paid under protest shall be held in trust by the local treasurer
concerned. Fifty percent (50%) of the tax paid under protest shall, however, be distributed in
accordance with the provisions of this Rule on the distribution of proceeds.
(c) In the event that the 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.
(d) In the event that the protest is denied or upon the lapse of the sixty-day period prescribed in
paragraph (a) hereof, the taxpayer may avail of the remedies provided in Articles 317 and 320 of this
Rule.
Payment under protest refers to the requirement by Section 252 of the Local
Government Code that the taxpayer first pays the tax. The protest may only be filed within

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thirty (30 days) from the payment of the tax. Thereafter, the words paid under protest
shall be annotated on the tax receipt. The tax or a portion thereof paid under protest shall be
held in trust by the treasurer concerned.
The protest contemplated in Sec. 252 of the LGC is needed when where there is a question
as to the reasonableness of the amount assessed, not where the question raised is on the very
authority and power of the assessor to impose the assessment and of the treasurer to collect
the tax.
Note: In the event that the 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.
b. Appeal to the Local Board of Assessment Appeals

SEC. 226. Local Board of Assessment Appeals. - Any owner or person having legal interest in the
property who is not satisfied with the action of the provincial, city or municipal assessor in the
assessment of his property may, within sixty (60) days from the date of receipt of the written notice
of assessment, appeal to the Board of Assessment appeals of the province or city 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.
ARTICLE 317. Local Board of Assessment Appeals. (a) Any property owner or person
having legal interest or claim in the property who is not satisfied with the assessment of his property
made by the provincial, city, or municipal assessor pursuant to the provisions of this Rule may,
within sixty (60) days from the date of receipt of the written notice of assessment, appeal to local
board of assessment appeals of the province or city where the subject property is situated by filing a
petition under oath in the standard form prescribed therefore, together with copies of the tax
declaration and such affidavits or documents in support of the appeal. (b) In the case of
municipalities within MMA, the appeals may be filed with the municipal board of assessment appeals
of each municipality as provided in Article 318 of this Rule.

Who may protest an assessment and when:


Any owner or person having legal interest in the property who is not satisfied with the action
of the provincial, city or municipal assessor in the assessment of his property may, within
sixty (60) days from the date of receipt of the written notice of assessment appeal t the Local
Board of Assessment appeals of the province or city 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.
Composition of the LBAA:
1. The Registrar of Deeds, as Chairman;
2. The provincial or city prosecutor as member;
3. The provincial or city engineer as member. (Sec. 227, LGC)

Term of Office: Co-terminus with their term as Register of Deeds, Prosecutor or


Provincial/City Engineer
Meetings: The Boaard of LBAA shall meet once a month and as often as necessary.
Jurisdiction of the LBAA
Jurisdiction to hear appeals of owners or persons having legal interest in the property who
are not satisfied with the action of the assessor on an assessment.
The LBAA shall have the power to summon witnesses, administer oaths, conduct ocular
inspection take depositions, and issue subpoena and subpoena duces tecum. The
proceedings of the Boards shall be conducted solely for the purpose of ascertaining the facts

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without necessarily adhering to technical rules applicable in judicial proceedings. (Sec. 229(b),
LGC)
NOTE: No motion for reconsideration of the adverse decision of the local
assessor/treasurer; the remedy is to appeal to the LBAA.
The last action of the local assessor on a particular assessment shall be the notice of
assessment; it is this last action which gives the owner of the property the right to appeal to
the LBAA. The procedure likewise does not permit the property owner the remedy of filing
a motion for reconsideration before he local assessor. Read: FELS Energy Inc. vs. The
Province of Batangas, GR No. 168557 February 16, 2007

Period for the decision of an appeal


The LBAA shall decide the appeal within one hundred twenty (120) days from the date of
receipt of such appeal. The Board, after hearing, shall render its decision based on
substantial evidence or such relevant evidence on record as a reasonable mind might accept
as adequate to support the conclusion. (Sec. 229(a), LGC)
c. Appeal to the Central Board of Assessment Appeals

SEC. 230. Central Board of Assessment appeals.- The Central Board of Assessment appeals
shall be composed of a chairman and two (2) members to be appointed by the President, who shall
serve for a term of seven (7) years, without reappointment. Of those first appointed, the chairman
shall hold office for seven (7) years, one member for five (5) years, and the other member for three
(3) years. Appointment to any vacancy shall be only for the unexpired portion of the term of the
predecessor. In no case shall any member be appointed or designated in a temporary or acting
capacity. The chairman and the members of the Board shall be Filipino citizens, at least forty (40)
years old at the time of their appointment, and members of the Bar or Certified Public Accountants
for at least ten (10) years immediately preceding their appointment. The chairman of the Board of
Assessment appeals shall have the salary grade equivalent to the rank of Director III under the
Salary Standardization Law exclusive of allowances and other emoluments. The members of the
Board shall have the salary grade equivalent to the rank of Director II under the Salary
Standardization Law exclusive of allowances and other emoluments. The Board shall have appellate
jurisdiction over all assessment cases decided by the Local Board of Assessment appeals.
There shall be Hearing Officers to be appointed by the Central Board of Assessment appeals
pursuant to civil service laws, rules and regulations, one each for Luzon, Visayas and Mindanao, who
shall hold office in Manila, Cebu City and Cagayan de Oro City, respectively, and who shall serve for
a term of six (6) years, without reappointment until their successors have been appointed and
qualified. The Hearing Officers shall have the same qualifications as that of the Judges of the
Municipal Trial Courts.
The Hearing Officers shall each have the salary grade equivalent to the rank of Director I under the
Salary Standardization Law exclusive of allowances and other emoluments. The Hearing Officers
shall try and receive evidences on the appealed assessment cases as may be directed by the Board.
The Central Board Assessment appeals, in the performance of its powers and duties, may establish
and organize staffs, offices, units, prescribe the titles, functions and duties of their members and
adopt its own rules and regulations. Unless otherwise provided by law, the annual appropriations for
the Central Board of Assessment appeals shall be included in the annual budget of the Department
of Finance in the corresponding General Appropriations Act.

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ARTICLE 321. Central Board of Assessment Appeals. The Central Board shall be composed
of a chairman and two (2) members to be appointed by the President, who shall serve for a term of
seven (7) years, without reappointment. Of those first appointed, the chairman shall hold office for
seven (7) years, one member for five (5) years, and the other member of three (3) years.
Appointment to any vacancy shall be only for the unexpired portion of the term of the predecessor.
In no case shall any member be appointed or Filipino citizens, at least forty(40) years old at the time
of their appointment, and members of the Bar or Certified Public Accountants for at least ten (10)
years immediately preceding their appointment. The chairman of the Central Board shall have the
salary grade equivalent to the rank of Director III under the Salary Standardization Law exclusive of
allowances and other emoluments. The members of the Central Board shall have the salary grade
equivalent to the rank of Director II under the Salary Standardization Law exclusive of allowances
and other emoluments. The Central Board shall have appellate jurisdiction over all assessment cases
decided by the local board and assessment appeals.
There shall be hearing officers to be appointed by the Central Board pursuant to civil service law,
rules and regulations, one each of Luzon, Visayas, and Mindanao, who shall hold office in the City
of Manila, Cebu City, and Cagayan de Oro City, respectively, and who shall serve for a term of six
(6) years, without reappointment until their successors shall have been appointed and qualified. The
hearing officers shall have the same qualifications as those of the Judges of the Municipal Trial
Courts. The hearing officers shall each have a salary grade equivalent to the rank of Director I under
the Salary Standardization Law exclusive of allowances and other emoluments. The hearing officers
shall try and receive evidences on the appealed assessment cases as may be directed by the Central
Board. The Central Board, in the performance of its powers and duties, may establish and organize
staffs, offices, or units, prescribe the titles, functions and duties of their members, and adopt its own
rules and regulations. Unless otherwise provided by law, the annual appropriations for the Central
Board shall be included in the annual budget of DOF.

Who may appeal and when:


The owner of the property or the person having legal interest therein or the assessor who is
not satisfied with the decision of the Board may, within thirty (30) days after receipt of the
decision of said Board, appeal to the Central Board of Assessment Appeals, as herein
provided. The decision of the Central Board shall be final and executor.
Composition of the CBAA
1. A Chairman; and
2. Two (2) members. (Sec. 230, LGC)

Term of Office: Seven (7) years without reappointment.

Requirements for Chairman and Members:

1. Filipino Citizens;
2. 40 years of age;
3. Members of the Bar or Certified Public Accountants for at least 10 years
immediately preceding their appointment.

Hearing Officers (3): Appointed by CBAA. They will hold office in

1. Luzon Manila
2. Visayas Cebu City
3. Mindanao Cagayan de Oro City

Term of Office: Six (6) years without reappointment

Qualifications: Same qualifications as judges of MTC

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Jurisdiction of the CBAA
Jurisdiction to hear appeals from the decision of Local Board of Assessment Appeals. (Sec.
229(c), LGC)
d. Appeal to the Court of Tax Appeals (RA 1125, as amended)

"Sec. 7. Jurisdiction. - The CTA shall exercise:


"a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
XX
5. Decisions of provincial or city Boards of Assessment Appeals in cases involving the
assessment and taxation of real property or other matters arising under the Assessment Law,
including rules and regulations relative thereto.
XX
(Sec. 7, RA 9282)

With respect to decisions or rulings of the Central Board of Assessment Appeals and the
Regional Trial Court in the exercise of its appellate jurisdiction appeal shall be made by filing
a petition for review under a procedure analogous to that provided for under rule 43 of the
1997 Rules of Civil Procedure with the CTA, which shall hear the case en banc.

Section 4. Period of appeal. The appeal shall be taken within fifteen (15) days from
notice of the award, judgment, final order or resolution, or from the date of its last
publication, if publication is required by law for its effectivity, or of the denial of
petitioner's motion for new trial or reconsideration duly filed in accordance with the
governing law of the court or agency a quo. Only one (1) motion for reconsideration shall
be allowed. Upon proper motion and the payment of the full amount of the docket fee
before the expiration of the reglementary period, the Court of Appeals may grant an
additional period of fifteen (15) days only within which to file the petition for review. No
further extension shall be granted except for the most compelling reason and in no case to
exceed fifteen (15) days. (Sec.4, Rule 43 Rules of Court)

e. Appeal to the Supreme Court


Appeal with the Supreme Court within 15 days.
Guidelines in paying tax under protest
1. No protest shall be entertained unless the taxpayer first pays the tax. There shall be
annotated on the tax receipts the words paid under protest. The protest in writing
must be filed within 30 days from payment of the tax to treasurer who shall decide
the protest within 60 days from receipt.

2. The tax or a portion paid under protest shall be held in trust by the treasurer
concerned.

3. In the event that the 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.

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4. In the event that the protest is denied or upon the lapse of the 60 day-period, the
taxpayer may avail appeal the assessment before the LBAA.

5. In case there is adverse decision by the LBAA, the taxpayer may appeal with the
CBAA within 30 days from receipt of the adverse decision by the LBAA.
PROCEDURE FOR PROTEST OF REAL PROPERTY TAX
1. Assessor submits assessment roll to Local Treasurer.
2. Posting of notice of deadline for payment at a conspicuous place at the LGU hall
OR publish the same in a newspaper of general circulation in the LGU once a week
for 2 consecutive weeks.

3. Local Treasurer collects the tax starting Jan 1 of calendar year.

4. Owner pays the tax. Written protest must be filed within 30 days from payment
before the Local Treasurer.

5. If protest is approved, the amount shall be refunded or applied as tax credit

6. Taxpayer pays under protest. Protest is then filed within 30 days from payment of
tax to Local Treasurer. Local Treasurer shall decide within 60 days from receipt.

7. If protest is denied or upon the lapse of the 60 day-period, the taxpayer may avail
appeal the assessment before the LBAA which shall decide within 120 days from
date of receipt of appeal.

8. If LBAA rejects protest, owner may appeal to CBAA within 30 days from receipt of
notice.

9. If CBAA rejects protest, owner may appeal to CTA en banc within 30 days from
receipt of decision (RA 9282).

10. Appeal to SC within 15 days (Rule 43)

B. CLAIM FOR REFUND OR CREDIT

When an assessment of basic real property tax or any other tax levied is found to be
illegal erroneous and the tax is accordingly reduced or adjusted, the taxpayer may file
a written claim for refund or credit to taxes and interests with the provincial or city
treasurer within 2 years from the date the taxpayer is entitled to such reduction or
adjustment.

The treasurer shall decide the claim within 60 days from receipt thereof. In case of
denial, the taxpayer may appeal to the LBAA (as in protest cases) and to the CBAA if
LBAA gives an adverse decision.

C. REDEMPTION OF REAL PROPERTY


1. Within 1 year from the date of the sale, the owner of the delinquent real
property or person having legal interest or his representative shall have the
right to redeem the property upon payment to the local treasurer of the
following:
a. Amount of the delinquent tax;
b. Interest thereon;

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c. Expense of sale from date of delinquency to date of sale; and
d. Interest of not more that 2% per month on the purchase price from
the date of sale to date of redemption
2. A certificate of redemption shall be issued and the certificate of sale issued
to the purchaser shall be invalidated.

II. JUDICIAL

A. QUESTION OF LEGALITY OF TAX ORDINANCE


The taxpayer may question the constitutionality or legality of a tax ordinance on
appeal within 30 days from effectivity thereof, to the Secretary of Justice, who shall
render a decision within 60 days from the date of receipt of the appeal.
Within 30 days after the receipt of the decision or the lapse of the sixty-day period
without the Secretary of Justice acting upon the appeal, the aggrieved party may file
appropriate proceedings with a court of competent jurisdiction (RTC).
The appeal to the Secretary of Justice shall not have the effect of suspending the
effectivity of the ordinance and the accrual and payment of the tax, fee, or charge
levied therein.
B. COURT ACTION
1. Appeal to the Court of Tax Appeals en banc within 30 days from receipt of
in case of adverse decision by the CBAA (RA 1125, Sec 11 as amended)
2. Appeal by certiorari with the Supreme Court within 15 days from norice in
case of adverse decision by the CTA (Rules of Court, Rule 43, Sec 4)

C. SUIT ASSAILING THE VALIDITY OF THE TAX SALE

No court shall entertain any action assailing the validity of any sale at public auction
of real property or rights therein until the taxpayer shall have deposited with the
court the amount for which the real property was sold together with interest of 2%
per month from date of sale to the time of institution of action.

The deposit of the amount for which the property was sold plus interest equivalent
to 2% per month required under Sec. 267 of the LGC is a jurisdictional requirement,
the non-payment of which warrants the dismissal of the action. (Sps. Wong vs. City
of Iloilo GR No. 161748, July 3, 2009)

Note: Sec. 83 of PD 464 (now Sec 2677 of the LGC) may only be used in a
voidable tax sale. When the sale is void because the property subjected to real estate
tax is not situated within the jurisdiction of the taxing authority, the provision cannot
be invoked (City Govt of Tagaytay vs. Hon. Guerrero GR Nos. 140743, 140745,
141451-52, September 17, 2009)

VII. SPECIAL LEVIES ON REAL PROPERTY


Special Education Fund
Section 235. LCC; Additional Levy on Real Property for the Special Education Fund (SEF)
A province or city, or a municipality within the Metropolitan Manila Area, may levy and collect an
annual tax of one percent (1%) on the assessed value of real property which shall be in addition to
the basic real property tax. The proceeds thereof shall exclusively accrue to the Special Education
Fund (SEF).

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Article 326. IRR; Additional Levy on Real Property for the Special Education Fund
A province or city, or a municipality within MMA, may levy and collect an annual tax of one percent
(1%) on the assessed value of real property which shall be in addition to the basic real property tax.
The proceeds thereof shall exclusively accrue to the special education fund.
All provinces and cities, and the municipalities within MMA shall enact their respective tax
ordinances imposing the additional for the special education fund tax.

1. Additional ad valorem tax on idle property

Section 236. LGC; Remedies for the collection of Real Property Tax
For the collection the the real property tax and any other tax levied under this Title, the local
government unit concerned may avail of the remedies by administrative action through levy on real
property or by judicial action.

Article 327. IRR; Additional ad valorem tax on Idle Lands


A province or city, or a municipality within MMA, may levy an annual tax on idle lands at the rate of
not exceeding five percent (5%) of the assessed value of the property which shall be in addition to
the basic real property tax.

a. Coverage of idle lands

Section 237. LGC; Idle Lands, Coverage.


For purposes of real property taxation, idle lands shall include the following:
(a) Agricultural lands, more than one (1) hectare in area, suitable for cultivation, dairying,
inland fishery, and other agricultural uses, one-half (1/2) oh which remain uncultivated or
unimproved by the owner of the property or person having legal interest therein.
Agricultural lands planted to permanent or perennial crops with at least fifty (50) tress to a
hectare shall not be considered idle lands. Lands actually used for grazing purposes shall
likewise not be considered idle lands.

(b) Lands, other tha agricultural, located ina city or municipality, more than one thousand
(1,000) square meters in area one-half (1/2) of which remain unutilized or unimproved by
the owner of the property or person having legal interest therein.

Regardless of land area, this section shall likewise apply to residential lots in subdivision
duly approved by proper authorities, the ownership of which has been transferred to
individual owners, who shall be liable for the additional tax: Provided, That individual lot os
such subdivisions, the ownership of which has not been transferred to the buyer shall be
considered as part of the subdivision, and shall be subject to the additional tax payable by
subdivision owner or operator.

Article 328. Idle Lands Coverage, IRR (same as Section 237 of LGC)

Purpose of imposing ad valorem taxes on idle land


To penalize property owners who do not use their property productively. It is also
designed to encourage utilization of land resources in order to contribute to national
development.

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a. Exempt idle lands

Section 238. LGC; Idle Lands Exempt from Tax


A province or city, or a municipality within Metropolitan Manila Area may exempt idle lands from
the additional levy by reason of force majeure, civil disturbance, natural calamity or nay cause or
circumstance which physically or legally prevents the owner of the property having legal interest
therein from improving, utilizing or cultivating the same.

a. Listing of idle lands by the assessor

Section 239. LGC; Listing of Idle Lands by the Assessor


The provincial, city, or municipal assessor shall make and keep an updated record of all idle lands
located within his area of jurisdiction. For purposes od collection, the provincial, city or municipal
assessor shall furnish a copy thereof to the provincial or city treasurer who shall notify, on the basis
of such record, the owner of the property or person having legal interest therein of the imposition of
the additional tax.

Article 330. IRR Listing of Idle Lands by the Assessor (same as Section 239 of LGC)

2. Special Levy

A province, city or municipality may impose a special levy on the lands within its
territorial jurisdiction specially benefited by public works projects or improvements by the
LGU concerned.
XPN: It shall not apply to lands exempt from basic real property tax and the remainder of
the land, portions of which have been donated to the LGU concerned for the construction
of such projects or improvements.
Note: The special levy shall not exceed 60% of the actual cost of such projects and
improvements, including the costs of acquiring land and such other real property in
connection therewith.
The proceeds of the special levy on lands benefited by public works, projects and
other improvements shall accrue to the general fund of the local government unit which
financed such public works, projects or other improvements.
Section 240. LGC; Special Levy by Local Government Units
A province, city or municipality may impose a special levy on the lands comoprised within its
territorial jurisdiction specially benefited by public works projects or improvements funded by the
local government unit concerned: Provided, however, That the special levy shell not exceed sixty
percent (60%) of the actual cost of such projects and improvements, including the costs of acquiring
land and such other real property in connection therewith: Provided, further, That the special levy
shall not apply to lands exempt from basic real property tax and the remainder of the land portions
of which have been donated to the local government unit concerned for the construction of such
projects or improvements.

Article 331. IRR; Special Levy by Local Government Units (same as Section 240 of LGC)

a. Ordinary/Publication of ordinance imposing special levy

Section 241. LGC; Ordinance Imposing a Special Levy


A tax ordinance imposing a special levy shall describe with reasonable accuracy the nature, extent and
location of public works projects or improvements to be undertaken, state the estimated cost thereof,
specify the metes and bounds by monuments and lines and the number of annual installments for the
payment of the special levy which in no case shall be less than five (5) nor more than ten (10)years.
The sanggunian concerned shall not be obliged, in the apportionment and computation of the special
levy, to establish a uniform percentage of all lands subject to the payment of the tax for the entire
district, but it may fix different rates for different parts or sections thereof, depending on whether

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such land is more or less benefited by the proposed work.

Section 242. LGC; Publication of Proposed Ordinance Imposing a Special Levy


Before the enactment of an ordinance imposing a special levy, the sanggunian concerned shall
conduct a public hearing thereon; notify in writing the owners of the real property to be affected or
the persons having legal interest therein as to date and place thereof and afford the latter the
opportunity to express their positions or objections relative to the proposed ordinance.

Article 332-333. IRR; (same as Section 241-242 of LGC)

Fixing the amount of special levy and sending out notice; Taxpayers remedies
against special levy

SEC. 243. Fixing the Amount of Special Levy. - The special levy authorized herein shall be
apportioned, computed, and assessed according to the assessed valuation of the lands affected as
shown by the books of the assessor concerned, or its current assessed value as fixed by said
assessor if the property does not appear of record in his books. Upon the effectivity of the
ordinance imposing special levy, the assessor concerned shall forthwith proceed to determine the
annual amount of special levy assessed against each parcel of land comprised within the area
especially benefited and shall send to each landowner a written notice thereof by mail, personal
service or publication in appropriate cases. (Article 334, IRR)
SEC. 244. Taxpayers' Remedies Against Special Levy. - Any owner of real property affected
by a special levy or any person having a legal interest therein may, upon receipt of the written notice
of assessment of the special levy, avail of the remedies provided for in Chapter 3, Title Two, Book
II of this Code. (Chapter 3 refers to Assessment Appeals, which includes Sections 226 to 231]

Note: Under Article 335 of the IRR, the remedies pertained to are those provided in
Article 317 of the IRR.
Article 317. Local Board Assessment Appeals.
(a) Any property owner or person having legal interest or claim in the property who
is not satisfied with the assessment of his property made by the provincial, city or
municipal assessor pursuant to the provisions of this Rule may, within sixty (60)
days from the date of receipt of the written notice of assessment, appeal to local
board of assessment appeals of the province or city where the subject property is
situated by filing a petition under oath in the standard form prescribed therefore,
together with copies of the tax declaration and such affidavits or documents in
support of the appeal.
(b) In the case of municipalities within MMA, the appeals may be filed with the
municipal board of assessment appeals of each municipality as provided in
Article 318 of this Rule.
Accrual of Special Levy

SEC. 245. Accrual of Special Levy. -The special levy shall accrue on the first day of the
quarter next following the effectivity of the ordinance imposing such levy. (Article 336, IRR)

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