Partner Institution’s nature of business

The Land Tax Section of the Municipal Treasurer’s Office is responsible for safekeeping of real property
records and computation of taxes due on real properties located within this municipality.It is also the
responsibility of this office to issue tax clearances on real property owners provided the taxes thereon
are paid.

Working with the Municipal Assesor’s Office,the Land Tax Office uses the data base of Real Property Tax
System (RPTS) being maintained by the Assesor’s Office for the computation of taxes due on real
properties and feed the said data to the Municipal Treasurer’s Office consolidation of the collection data

Description of the product/ services

A real property tax is a local tax on the value of real estate. The property may be assessed at full value,
which ispresumably the price that the owner could sell it for in the current market, or using some other
valuation method.

The taxing agency, such as a county, city, town, or village, sets a tax rate, which is multiplied by the
assessed value ofeach property to determine the tax due on that property.

You may be able to deduct real property taxes on your federal income tax return, but large deductions
for real estate taxesare one of the factors that may result in your owing the alternative minimum tax
(AMT).

When the Local Government Code was enacted in 1991, the government vested power to local
government units (provinces and the cities within Metro Manila) to create their own revenue sources.
One of these revenue sources is the Real Property Tax (RPT)—the tax imposed on all forms of real
property (land, building, improvements, and machinery).

Such power, however, is exercised within the limitations set by the Code, such as setting a ceiling and
limits on tax rates, and the tax base and valuation.

In addition, exemption is given to real properties owned by the government, charitable institutions,
churches, cooperatives, those that are used in the supply of water and electric power, and equipment
for pollution control and environmental protection.

The base of the tax—or the assessment level (the value from which the tax rate will be computed)—is
only a fraction of the actual market value of the land; hence, there is an under-taxation built into the tax
structure. However, this is compounded by the different assessment levels depending on land use. For
example, a residential property has an assessment level of 20 percent, while that for a commercial
property is 50 percent.

To compute for RPT, the RPT rate for the property is multiplied by the property’s assessed value. The
RPT rate is 2 percent for the cities and municipality in Metro Manila and 1 percent for provinces.

In addition to the basic RPT rate, the LGU may levy and collect an annual tax of 1 percent, which shall be
accrued to the Special Education Fund of the LGU. Furthermore, the LGU may impose a 5 percent ad
valorem tax on idle lands, which is based on the assessed value of the property.

To get the assessed value, on the other hand, the property’s fair market value is multiplied by the
assessment level, which is fixed through ordinances imposed by the provincial government or the
city/municipal government if the property is in Metro Manila. The assessment level can be as high as 20
percent residential land to a high of 50 percent for commercial properties (show in detail in the
following slideshow).

The RPT 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
whatever, and shall be extinguished only upon payment of the delinquent tax.

If you have prior years’ delinquencies, interests, and penalties, your RPT payment shall first be applied
to them. Once they are settled, your tax payment may be credited for the current period.

Target Clientele

Sec. 86. Distribution of proceeds. — (a) The proceeds of the real property tax, except as otherwise
provided in this Code, shall accrue to the province, city or municipality where the property subject to
the tax is situated and shall be applied by the respective local government unit for its own use and
benefit.

(b) Barrio shares in real property tax collection. — The annual shares of the barrios in real property tax
collection shall be as follows:chanroblesvirtuallawlibrary

(1) Five percent of the real property tax collection of the province and another five per cent of the
collections of the municipality shall accrue to the barrio where the property is situated.

(2) In the case of the city, ten per cent of the collections of the tax shall likewise accrue to the barrio
where the property is situated.

Thirty per cent of the barrio shares herein referred to may be spent for salaries or per diems of the
barrio officials and other administrative expenses, while the remaining seventy per cent shall be utilized
for development projects approved by the Secretary of Local Government and Community Development
or by such committee created, or representatives designated, by him.
Sec. 87. Application of proceeds. — (a) The proceeds of the real property tax pertaining to the city and
to the municipality shall accrue entirely to their respective general funds. In the case of the province,
one-fourth thereof shall accrue to its road and bridge fund and the remaining three-fourths, to its
general fund.

(b) The entire proceeds of the additional one per cent real property tax levied for the Special Education
Fund created under R.A. No. 5447 collected in the province or city on real property situated in their
respective territorial jurisdictions shall be distributed as follows:chanroblesvirtuallawlibrary

(1) Collections in the provinces: Fifty per cent shall accrue to the municipality where the property
subject to the tax is situated; twenty per cent shall be remitted to the province; and thirty per cent shall
be remitted to the Treasurer of the Philippines to be expended exclusively for stabilizing the Special
Education Fund in municipalities, cities and provinces in accordance with the provisions of Section seven
of R.A. No. 5447.

(2) Collections in the cities: Sixty per cent shall be retained by the city; and forty per cent shall be
remitted to the Treasure of the Philippines to be expended exclusively for stabilizing the Special
Education Fund in municipalities, cities and provinces as provided under Section 7 of R.A. No. 5447. .
chanrobles virtual law library

However, any increase in the shares of provinces, cities and municipalities from said additional tax
accruing to their respective local school boards commencing with fiscal year 1973-74 over what has
been actually realized during the fiscal year 1971-72 which, for purposes of this Code, shall remain as
the base year, shall be divided equally between the general fund and the special education fund of the
local government units concerned. The Secretary of Finance may, however, at his discretion, increase to
not more than seventy-five per cent the amount that shall accrue annually to the local general fund.

(c) The proceeds of all delinquent taxes and penalties, as well as the income realized from the use, lease
or other disposition of the real property acquired by the province or city at a public auction in
accordance with the provisions of this Code, and the proceeds of the sale of the delinquent real
property or of the redemption thereof, shall accrue to the province, city or municipality in the same
manner and proportions as if the tax or taxes had been paid in regular course.

(d) The proceeds of the additional real property tax on idle private lands shall accrue to the respective
general funds of the province, city and municipality where the land subject to the tax is situated.

Rules and regulation

SEC. 5. Rules of Interpretation. - In the interpretation of the provisions of this Code, the following rules
shall apply:chanrobles virtual law library

(a)Any provision on a power of a local government unit shall be liberally interpreted in its favor, and in
case of doubt, any question thereon shall be resolved in favor of devolution of powers and of the lower
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;

(b) In case of doubt, any tax ordinance or revenue measure shall be construed strictly against the local
government unit enacting it, and liberally in favor of the taxpayer. Any tax exemption, incentive or relief
granted by any local government unit pursuant to the provisions of this Code shall be construed strictly
against the person claiming it.cralaw

(c) The general welfare provisions in this Code shall be liberally interpreted to give more powers to local
government units in accelerating economic development and upgrading the quality of life for the people
in the community;

(d) Rights and obligations existing on the date of effectivity of this Code and arising out of contracts or
any other source of prestation involving a local government unit shall be governed by the original terms
and conditions of said contracts or the law in force at the time such rights were vested; and cralaw

(e)In the resolution of controversies arising under this Code where no legal provision or jurisprudence
applies, resort may be had to the customs and traditions in the place where the controversies take
place.