Real Property Taxation

Contents
• 1. Fundamental Prnciples

• 2. Speci c Kinds of RPT

• 3. Imposition

• 4. Exemptions

• 5. Appraisal and Assessement (in another material)

• 6. Remedies of the Government

• 7. Remedies of the Taxpayer

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 1. Fundamental Principles
• A. RPT is a local tax imposed on real property such that if the property is
transferred to another person, the liability will also be transferred. The tax
is not attached to the owner, it is attached to the property.

• B. RPT is a local tax imposed by the local government.

• C. Tax liability can be imposed on the bene cial use of the real property,
such as those owned but leased to private persons or entities by the
government or when the assessment is based on the actual use.

• (Student assignment: Read Section 198 of the Local Government Code

(LGC) of the Philippines.)
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 2. Speci c Kinds of RPT
• A. Basic RPT (BRPT) can be categorized according to the location of the property.

• (Student assignment: Read Section 233 of the LGC. Di erentiate the rate of RPT based on location of property)

• B. Additional Levy on RPT for Special Education Fund (SEF)

• (Student assignement: Read Section 235 and Section 272 of LGC. Is this an additional burden to the real property
owners? What is the rate of SEF? Di erentiate SEF and BRPT. Read the case of Damaala vs. COA GR No. 199752)

• C. Ad Valorem Tax - a levy on real property determined on the basis of a xed proportion of the value fo the property.

• Ad valorem tax on idle lands

• Student assignment: For purposes of taxation, what are considered as idle lands? What is the tax rate? Read:
Section 236-237 of LGC). Why is there a need for additional taxes on idle lands?

• D. Special Levy - tax imposition on property bene ted directly or indirectly from public works funded by the local
government unit.

• Student assignment: Read Section 240 of LGC. Can the local government immediately impose this tax?
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 3. Imposition of RPT
• A. Who can impose RPT? (Read slide 3 Fundamental Principle).

• Can the taxing authority automatically collects RPT? What is the prior requirement before imposing RPT?

• B. Subject of RPT?

• Land, buildings, and machineries. Properties falling under the Civil Code de nition of real property are generally subject to RPT.

• Buildings must be of permanent nature.

• Special case for macheneries, student assignement: Read Sec 199(o) amf Sec 232 of LGC. Read the case of MERALCO vs. The
City Assessor and City Treasurer of Lucena City, GR No. 166102).

• - Doctrine of Essentiality. Student assignment: Caltex Philippines Inc. Vs. CBAA, GR No. L-50466).

• - Undersea communication cables read the case of Capitol Wireless Inc vs. Provincial Treasurer of Batangas, GR No.
180110).

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 4. Exemption from RPT
• Exemption can be categorized according to ownership, character, or usage.

• A. Ownership Exemption. Applicable to property owned by the Republic of the Philippines, provinces, cities, municipalities, and registered cooperatives fall under this
classi cation.

• - unless the bene cial use of the property is transferred to a taxable person.

• Student assigment: Read Sec 234 of LGC and the case of Mactan Cebu International Airport vs. Hon. Marcos GR No. 120082 and City of Lapu-Lapu v. PEZA,
GR No. 184203, and LRTA vs. Quezon City,GR No. 2221626). Name government entities exempted from RPT)

• - for cooperativesA, the exemption from RPT bene ts the cooperative’s lessee. (Read RA No. 6938).

• B. Character Exemption. Applicable to charitable institutions, houses and temples of prayer like churches, personages, or convents appurtenant thereto, mosque, and
non-pro t religious cemeteries.

• Student assignement: Read Section 28 (3) Article VI of the Philippine Constitution). What is your personal opinion on exemption of religious instutition?

• Case: Roman Catholic Apostolic Church in the Philippines vs. AW Hastings, GR No. L-1974)

• C. Usage Exemptions.

• C.1. Lands and buildings actually, directly, and exclusively used for religious, charitable or educations purpose.

• C.2. Machineries and equipment actually, directly, and exclusively used by local water districts or by government-owned or controlled corporations engaged in the
supply and distribution of water and/or generation and transmission of electric power.

• C.3. Machineries and equipment used for pollution control and environment protection.
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 Assessment
• Student Assigments:

• De ne the following: (1) Acquisition Cost; (2) Actual Use; (3) Appraisal; (4) Assessment; (5) Assessment Level; (6) Assessed Value; (7) Commercial Land; (8) Depreciated Value;
(9) Economic Life; (10) Fair Market Value; and (11) Improvement. (Section 199 of LGC).

• Important LGC Provisions:

• Mandatory appraisal: All real properties shall be appraised at the current and fair market value prevailing in the locality where the property is situated.

• Mandatory declaration: All persons, natural or juridical, owning or administering real property, including the improvements therein shall le with the provincial, city, or
municipal assessor, a sworn statement declaring the true value of their property.

• - description of the property

• - once every 3 years

• Mandatory ling: It shall be the duty of any person, or his authorized representative acquiring at anytime real property in any municipality or city or making any
improvement on real property, to prepare, or caused to be prepared, and le with the provincial, city or municipal assessor, a sworn statement declaring the true value of
thesubject property, within 60 calendar days after the acquisition of such property or upon completion or occupancy of the improvement, which ever comes earlier.

• Student assignment: What will happen in case the owner fail to comply with the Mandatory Declaration and Mandatory Filing. (Sec. 204 of LGC).

• Mandatory Noti cation: Any person who shall transfer real property ownership to another shall notify the provincial, city, or municipal assessor concerned within 60
calendar days from the date of such transaction including the mode of transfer. (Section 208 of LGC)

• How will the local government units discover any misrepresentation to the declaration/noti cation? How can the local government units detect non- ling? (Sec. 209
- Section 211 of LGC.)

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Real Property Schedule of Values
• Student Assignment: What do you call the list of all real property located within territorial jurisdiction? (Section 205 of LGC).

• Preparation of Schedule of Fair Market Values mandatory requirements:

• - provincial, city, and municipal assessors shall prepare schedule of fair market values for di erent classes of real
property situated in their respective local government units

• - the fair market values must be enacted by ordinance of the sanggunian concerned

• - the schedule of fair market valued 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 capital, or city or municipal hall and
in 2 conspicuous public places.

• Important Note: schedule of values of real properties must be prepared jointly by assessors in the district.(Metro Manila) (Ty
vs. Trampe, December 1, 1995

• - What are districts in Manila? Identify the compositions.

• Case: Figuerres vs. CA, March 25, 1999

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 Classes of Real Property for Assessment
• 1. Residential

• 2. Agricultural

• 3. Commercial

• 4. Industrial

• 5. Mineral

• 6. Timberland

• 7. Special

• Student assignment:

• 1. De ne each class (Reference: Section 215)

• 2. What is the assessment levels of each class (Sec. 218).

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