Nature of Real Property Tax (RPT)

A. It is a direct tax on the use of real property.

Note: 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]

B. It is an ad valorem tax where the tax base is a fixed proportion

of the value of the property. [Sec. 199(c), LGC]

C. It is proportionate because the tax is calculated on the basis of

a certain percentage of the value assessed.

D. It creates a single, indivisible obligation.

E. It attaches on the property (i.e., a lien) and is enforceable

against it.

4 kinds of RPT under the LGC:

1. RPT Proper

2. Special Levy on Educ fund

3. SL on idle lands

4. SL on public welfare

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) Statues, reliefs, paintings or other objects for use or
ornamentation, placed in buildings or on lands by the owner of
the immovable in such a manner that it reveals the intention to
attach them permanently to the tenements;

(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. (334a)

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 based on a uniform

classification within each LGU.

d. The appraisal, assessment, levy and collection of real

property tax shall not be left to any private person.

e. The appraisal and assessment of real property shall be

equitable. [Sec. 198, LGC]
Appraisal and Assessment of Real Property

Appraisal is the act or process of determining the value of

property as of a specified date for a specific purpose. [Sec.
199(e), LGC]

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]

Classes of Real Property

For purposes of assessment, real property shall be classified as

residential, agricultural, commercial, industrial, mineral,
timberland or special. [Sec. 215, LGC]

1. Residential land – land principally devoted to habitation

[Sec. 199(u), LGC]

2. Agricultural land – 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 [Sec.
199(d), LGC]

3. Commercial land – land devoted principally for the object

of profit and is not classified as agricultural, industrial,
mineral, timber or residential land [Sec. 199(i), LGC]

4. Industrial land – land devoted principally to industrial

activity as capital investment and is not classified as
agricultural, commercial, timber, mineral or residential land
[Sec. 199(n), LGC]

5. Mineral land – land in which minerals exist in sufficient

quantity or grade to justify the necessary expenditures to
extract and utilize such minerals [Sec. 199(p), LGC]
 6. Timberland – land identified as forest or reserved area by
the government, which may or may not be granted to a
concessionaire, licensee, lessee or permitee [BLGF Manual
on Real Property Appraisal and Assessment Operations]

7. Special

a. all lands, buildings and other improvements actually, directly

and exclusively used for hospitals, cultural, or scientific
purposes, and

b. those owned and used by local water districts, and GOCCs

rendering essential public services in the supply and
distribution of water and/or generation and transmission of
electric power [Sec. 216, LGC] 


Assessment of Real Property Based on Actual Use

Basis of assessment

Real property shall be classified, valued and assessed on the
basis of actual use regardless of where located, whoever owns it,
and whoever uses it. [Sec. 217, LGC]

“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]

Note: 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.
[Estate of Lim v. City of Manila, G.R. No. 90639 (1990)]

Assessment levels

It is the percentage applied to the FMV to determine the taxable

value of the property. [Sec. 199(g), LGC]
Note: Assessment levels shall be fixed by ordinances of the
Sanggunian at rates not exceeding those prescribed under Sec.
218 of the LGC.

Assessed or Taxable Value

It is the FMV of the real property multiplied by the assessment

level. [Sec. 199(h), LGC]

• Assessed Value = FMV × Assessment Level

• RPT = Assessed Value × Tax Rate



General revisions of assessments and property
classification

The local assessor shall undertake a general revision of real
property assessments every 3 years. [Sec. 219, LGC]

. Valuation of real property by assessor 


The local assessor shall make a classification, appraisal and
assessment of the real property irrespective of any previous
assessment or taxpayer’s valuation thereon in the following
cases:

1. real property is declared and listed for taxation

purposes for the first time;

2. there is an ongoing general revision of property

classification and assessment; or

3. a request is made by the person in whose name the

property is declared. [Sec. 220, LGC]

. Note: The assessment shall not be increased more often

than once every 3 years except in case of new
improvements substantially increasing the value of said
property or of any change in its actual use. [Sec. 220, LGC]
Date of effectivity of assessment or reassessment


General rule: All assessments or reassessments made after

January 1 of any year shall take effect on January 1 of the
succeeding year [Sec. 221, LGC]

Exceptions: Reassessments due to the following causes shall be

made within 90 days from the date of any cause and shall take
effect at the beginning of the quarter subsequent to the
reassessment:

1. partial or total destruction


2. major change in actual use;

3. any great and sudden inflation or deflation of real property
values;

4. gross illegality of the assessment when made; or

5. any other abnormal cause. [Sec. 221, LGC]

Assessment of property subject to back taxes 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 10
years prior to the date of initial assessment [Sec. 222, LGC]

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 local assessor shall within 30 days
give written notice of the new or revised assessment to the
person in whose name the property is being declared.

Notice may be given personally or by registered mail or through

the assistance of the Punong Barangay to the last known address
of the person to be served.
Contesting the Valuation of Real Property

i. Appeal to the Local Board of Assessment Appeals (LBAA)

Who may appeal

Any owner or person having legal interest in the property who is

not satisfied with the action of the local assessor in the
assessment of his property may appeal to the LBAA by filing a
petition under oath, together with copies of the tax declarations
and such affidavits or documents submitted in support of the
appeal. [Sec. 226, LGC]

When to appeal

The appeal must be filed within 60 days from the date of receipt
of the written notice of assessment. [Sec. 226, LGC]

Period to decide on the appeal

The LBAA shall decide the appeal within 120 days from the date
of receipt of such appeal. [Sec. 229(a), LGC]

Note: The LBAA shall have the power to summon witnesses,

administer oaths, conduct ocular inspection, take depositions, and
issue subpoena and subpoena duces tecum. [Sec. 229(b), LGC]

Motion for reconsideration with local assessor not allowed


The procedure likewise does not permit the property owner the
remedy of filing a motion for reconsideration before the local
assessor. [Fels Energy Inc. v. Province of Batangas, G.R. No.
168557 (2007)]

When appeal to LBAA not required

An exception to the rule on exhaustion of administrative remedies

is where the

controversy does not involve questions of fact but only of law.

Under Sec. 229(b) of the LGC "the proceedings of the Board shall
be conducted solely for the purpose of ascertaining the facts." It
follows that appeals to the LBAA may be fruitful only where
questions of fact are involved. [Ty v. Trampe, G.R. No. 117577
(1995)]

ii. Appeal to the Central Board of Assessment Appeals

(CBAA)

Who may and when to appeal

The owner of the property or the person having legal interest

therein or the assessor who is not satisfied with the decision of
the LBAA, may, within 30 days after receipt of the decision of said
LBAA, appeal to the CBAA. [Sec. 229, LGC]

Period to decide and finality of decision

The CBAA shall decide cases on appeal within 12 months from the
date of receipt thereof, which shall become final and executory 15
days after receipt thereof by the appellant or appellee, as the
case may be. [Sec. 9, Rule 3, Chapter VII, Manual of Real
Property Appraisal and Assessment Operations]

Imposition

a. Power to Levy

Extent of taxing power

A province or city or a municipality within Metro Manila may:

1. levy an annual ad valorem tax on real 


property such as land, building, machinery, and other
improvement not hereinafter specifically exempted; and
[Sec. 232, LGC]

2. fix a uniform rate of basic real property tax applicable to

their respective localities. [Sec. 233, LGC]

The following may levy real property tax:

1. Province
 2. City

3. Municipality within Metro Manila [Sec. 


232, LGC]

Note: A special levy on lands benefited by public works may be

imposed by municipalities outside Metro Manila.

PROPERTIES SUBJECT TO RPT

1. Land

2. Building

3. Machinery

4. Other improvements not specifically exempted [Sec. 232, LGC]

Note: The LGC contains no definition of the term “real property”.

Therefore, reference should be made to the enumeration of
immovable property under Art. 415 of the Civil Code.

Machinery

It embraces machines, equipment, mechanical contrivances,

instruments, appliances or apparatus which may or may not be
attached, permanently or temporarily, to the real property.

Summary of rules on machinery

1. Machinery that is permanently attached to land and

buildings is subject to RPT.

2. Machinery that is not permanently attached:

a. Subject to the RPT if it is an essential and principal

element of an industry, work or activity without which
such industry, work or activity cannot function; and

b. Not subject to RPT if it is not an essential and principal

element of an industry, work or activity. [DOF Local
Finance Circular No. 001- 2002] 

Improvement

It 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]

TYPES OF REAL PROPERTY TAX

Basic RPT

Province: not exceeding 1% of the assessed value of real

property; and

City or municipality within Metro Manila: not exceeding 2% of the
assessed value of real property. [Sec. 233, LGC]

Exemptions from RPT

1. Real property owned by the Republic of the Philippines or any

of its political subdivisions

Exception: when beneficial use is granted for a consideration or

to a taxable person.

2. Charitable 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

3. Machinery and equipment 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

4. Real property owned by duly registered cooperatives as

provided for under RA 6938 [Cooperative Code of the
Philippines] 

 5. Machinery and equipment used for pollution control and
environmental protection [Sec. 234, LGC]

A claim for exemption under Sec. 234(e) of the LGC should be

supported by evidence that the property sought to be exempted
is actually, directly and exclusively used for pollution control and
environmental protection.

Beneficial Use Doctrine

A non-tax exempt owner cannot escape its responsibility

under the beneficial use doctrine. That can be invoked only
if the registered owner is tax exempt. As with tax-exempt
property owner whose property is used by a taxable person, the
owner or the actual/beneficial user can be made liable for the
payment of the tax.”

Exemption of Charitable Institutions

To be entitled to the exemption, claimant must prove, that (a) it

is a charitable institution; and (b) its real properties are actually,
directly and exclusively used for charitable purposes.

What is meant by actual, direct and exclusive use of the property

for charitable purposes is the direct and immediate and actual
application of the property itself to the purposes for which the
charitable institution is organized.

Special levies on real property

Idle lands covered

1. Agricultural lands more than 1 hectare in area, suitable for

cultivation, dairying, inland fishery, and other agricultural uses,
1/2 of which remain uncultivated or unimproved

2. Non-agricultural lands more than 1,000 square meters in area

1/2 of which remain unutilized or unimproved
3. Residential lots in subdivisions regardless of land area [Sec.
237, LGC]

Lands not considered idle

1. Agricultural lands planted to permanent or perennial crops with

at least 50 trees to a hectare

2. Lands actually used for grazing purposes [Sec. 237(a), LGC]

Idle lands may be exempted by reason of:

1. Force majeure,

2. Civil disturbance,

3. Natural calamity, or

4. Any cause or circumstance which physically or legally

prevents the owner from improving, utilizing or cultivating
the same. [Sec. 238, LGC]

c. Special Levy for Public Works – a special levy on lands

specially benefited by public works projects or improvements
funded by the LGU concerned, but which 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 [Sec. 240, LGC]

Exception: The special levy shall not apply to:

1. lands exempt from basic RPT; and

2. the remainder of the land, portions of 


which were donated to the LGU for the construction of such
projects or improvements. [Sec. 240, LGC]

Note: Municipalities outside Metro Manila may impose a special

levy on lands benefited by public works.


Special levy or special assessments (may be imposed even by
municipalities outside Metro Manila) on lands comprised within its
territorial jurisdiction specially benefited by public works, projects
or improvements funded by the local government unit concerned.

Provided:

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

not apply to lands exempt from basic real property tax and the
remainder of the land have been donated to the local
government unit concerned for the construction of said projects.
(Sec. 240, LGC).

Collection of Real Property Tax

Collecting authority

The collection of RPT shall be the responsibility of the city or

municipal treasurer concerned. He may deputize the barangay
treasurer to collect all taxes on real property located in the
barangay provided the latter is bonded. [Sec. 247, LGC]

Duty of assessor to furnish local treasurer with

assessment rolls

The provincial, city or municipal assessor shall prepare and
submit to the local treasurer, on or before December 31 of 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. [Sec. 248, LGC]

Notice of time for collection of tax

The local treasurer shall 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:
 1. on or before January 31 of each year in the case of basic
RPT and additional tax for SEF; or

2. on any other date in the case of any other tax.

The notice shall also be published in a newspaper of general

circulation in the locality once a week for 2 consecutive weeks.
[Sec. 249, LGC]

a. Date of Accrual

Real property tax for any year shall accrue on the 1st day of
January. [Sec. 246, LGC]

b. Periods to Collect

General Rule: Within 5 years from the date the taxes become
due

Exception: In case there is fraud or intent to evade payment of

tax, within 10 years from discovery of fraud or intent to evade
payment [Sec. 270, LGC]

Grounds for suspension of prescriptive period

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 to
collect; and

3. The owner of the property or the person having legal

interest therein is out of the country or cannot be located.
[Sec. 270, LGC] 

RULES ON PAYMENT Payment of RPT

1. Payment of RPT and the additional tax for 


SEF, without interest, may be made in 4 equal installments:

• 1st: March 31

• 2nd: June 30

• 3rd: September 30

• 4th: December 31

2. Any special levies shall be governed by ordinance of the

Sanggunian concerned. [Sec. 250, LGC]

Note: Payments of RPT shall first be applied to prior years’

delinquencies, interests and penalties, if any, and only after the
delinquencies are settled may tax payments be credited for the
current period. [Sec. 250, LGC]

Interests on unpaid RPT

Interest at the rate of 2% per month on the unpaid amount or a

fraction thereof until the delinquent tax shall have been fully paid,
but the total interest shall not exceed 36 months [Sec. 255, LGC]

Discount for advance or prompt payment

1. Advance payment – not exceeding 20% of annual tax due

[Sec. 251, LGC]

2. Prompt payment – not exceeding 10% of annual tax due [Art.

342, LGC IRR]
Remedies:

Contesting a Assessment

Deficiency Tax

i. Payment of RPT under Protest; Exceptions

General Rule: 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".

When the taxpayer questions the excessiveness or

reasonableness of the assessment, the taxpayer is required to
first pay the tax due before his protest can be entertained. [NPC
v. Provincial Treasurer of Benguet, G.R. No. 209303 (2016)]

Exception: “Payment under protest” is not a prerequisite when

the issue is the legality or validity of the assessment. Certainly, it
would be unjust to require the realty owner to first pay the tax,
the validity of which he precisely questions, before he can lodge a
complaint to the court. [NPC v. Municipal Government of Navotas,
G.R. 192300 (2014)]

ii. File Protest with Local Treasurer

Period to file protest

The protest in writing must be filed within 30 days from payment

of the tax to the provincial, city or municipal treasurer. [Sec.
252(a), LGC]

Note: The tax or a portion thereof paid under protest, shall be

held in trust by the treasurer. [Sec. 252(b), LGC]

Period to decide

The local treasurer shall decide the protest within 60 days from
receipt. [Sec. 252(a), LGC]

Decision on the protest

 a. If the protest is 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. [Sec. 252(c), LGC]

b. If the protest is denied or the 60-day period expired, the

taxpayer may appeal to the LBAA and subsequently to the
CBAA pursuant to Secs. 226 and 229 as in the case of
assessment appeals. [Sec. 252(d), LGC]

Erroneous assessment Illegal assessment

Definition

An erroneous assessment
presupposes that the taxpayer is
subject to the tax but is disputing
An assessment is illegal if it was
the correctness of the amount
made without the authority under
assessed. The taxpayer claims
the law.
that the local assessor erred in
determining any of the items for
computing the RPT.

Exhaustion of administrative remedies

The taxpayer may directly resort to

Taxpayer must exhaust the judicial action without paying under
administrative remedies provided protest the assessed tax and filing an
under the LGC. appeal with the LBAA and CBAA.

iii. Refunds or Credits of RPT

Repayment of excessive collections


When an assessment of RPT 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 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 60 days from receipt thereof. [Sec. 253,
LGC]

Remedy in case of denial by the local treasurer


In case the claim for tax refund or credit is denied, the taxpayer
may follow the procedure in questioning an assessment (i.e.,
appeal to the LBAA, then to the CBAA, and subsequently to the
CTA En Banc). [Sec. 253, LGC]
Remedies of LGUs

Issuance of notice of delinquency

When the real property tax becomes delinquent, the local

treasurer shall post a notice of delinquency at the main hall and
in a publicly accessible and conspicuous place in each barangay of
the LGU concerned. [Sec. 254, LGC]

1. Local Government’s Lien

The RPT shall 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. [Sec. 257, LGC]

It constitutes a lien on the property from the date of accrual (i.e.,

January 1) [Sec. 246, LGC].

Levy on real property

Levy refers to the seizure of real properties and interest in or

rights to such properties for the satisfaction of taxes due from the
delinquent taxpayer.

When levy may be made

It can be made before, simultaneously or after the distraint of

personal property.

After expiration of the time required to pay the tax when due, the
local treasurer shall issue a warrant of levy on or before, or
simultaneously with, the institution of the civil action for the
collection of the delinquent tax.

The warrant shall include a duly authenticated certificate

showing:
 1. the name of the owner or person having legal interest
therein,

2. description of the property, and

3. amount of the tax due and interest 


thereon.

Warrant must be mailed to or served upon the delinquent owner

or person having legal interest in the property.

Written notice of levy with the attached warrant must be mailed

to or served upon the assessor and the Register of Deeds where
the property is located.

The Register of Deeds must annotate the levy on the tax

declaration and certificate of title.

The levying officer shall submit a report on the levy to the

Sanggunian within 10 days after receipt of warrant by the owner.
[Sec. 258, LGC]

Advertisement of the sale or auction shall be made within 30

days after service of warrant.

Before the date of sale, the proceedings may be stayed by paying

the delinquent tax.

It shall be effected by:

a. posting a notice at the main entrance of 


the municipal building or city hall and in a public and
conspicuous place in the barrio or district in which the real
estate lies; and

b. publication once a week for 3 weeks in a newspaper of

general circulation in the municipality or city where the
property is located.
The advertisement shall contain:

• the amount of taxes and penalties due; the time and place of
sale;

• the name of the taxpayer against whom taxes are levied; and

• a short description of the property to be sold.

Sale of real property

At any time before the day fixed for the sale, the taxpayer may
discontinue all proceedings by paying the taxes, penalties and
interest. Otherwise, the sale shall proceed. [Sec. 213, NIRC]

In case the proceeds of the sale exceed the claim and cost of
sale, the excess shall be turned over to the owner of the property.

Redemption of property sold


Within one (1) year from the date of sale, the taxpayer or anyone
for him, may pay to the Revenue District Officer the following:

a. public taxes

b. penalties

c. interest from the date of delinquency to 


the date of sale

d. interest of 15% per annum on said 


purchase price from the date of sale to the date of
redemption. [Sec. 214, NIRC; RMC 46-2018]

Note: The owner shall not be deprived of possession of the said

property and shall be entitled to rents and other income until the
expiration of the period for redemption [Sec. 214, NIRC]

6. Final deed of sale to the purchaser If the property is not

redeemed within the period of redemption, a final deed of sale
shall be issued in favor of the purchaser.
Purchase of property by local treasurer in case there is no
bidder for the real property or if the highest bid is insufficient to
pay the RPT and other costs; resale of such property may be
made at a public auction [Sec. 263 and 264, LGC]

Further levy until full payment Levy may be repeated if

necessary until the full due, including all expenses, is collected.
[Sec. 265, LGC]

Judicial Action

The LGU concerned may enforce the collection of the basic RPT or
any other related tax by civil action in any court of competent
jurisdiction. The civil action shall be filed by the local treasurer
within the period prescribed for collection.