Local and Real Property Tax

A.
Local Autonomy
1. What is the nature and source of local taxing power?
Mactan Cebu Intl Airport Authority v. Marcos, G.R. No.

120082, Sept. 11, 1996 the power to tax is primarily
vested in Congress; however, in our jurisdiction, it may be
exercised by local legislative bodies, no longer by virtue of
a valid delegation as before, but pursuant to direct
authority conferred by 5, art. X of the Constitution.
Under the latter, the exercise of the power may be
subject to such guidelines and limitations as the Congress
may provide which, however, must be consistent with the
basic policy of local autonomy
Currently, Titles I (Local Taxation) and II (RPT) of
Book II, LGC prescribe the guidelines and limitations
of local taxing power
Local Taxation
I. General Principles
Atty. Terence Conrad H. Bello
Slide No. 2
B. Fundamental Principles
1. What are the fundamental principles that govern the exercise

of taxing and other revenue-raising powers of LGUs?
a) Uniformity in taxation
b) Local exactions shall (i) be equitable and based on TPs
ability to pay, (ii) be for public purposes, (iii) not be unjust,
excessive, oppressive or confiscatory, (iv) not be contrary
to law, public policy, national economic policy, or in the
restraint of trade
c) Collection shall not be let to private persons*
d) Revenue collections shall accrue exclusively to LGUs**
e) System of taxation must be progressive
2. Cases:
Pepsi Cola Bottling Co. of the Phils., Inc. v. Mun. of Tanauan,

L-31156, Feb. 27, 1976 - where the SC held that a tax of one
centavo (P0.01) on each gallon of volume capacity on all soft
drinks, produced or manufactured, or an equivalent of 1-1/2
centavos per case, cannot be considered unjust and unfair.
An increase in the tax alone would not support the claim that
the tax is oppressive, unjust and confiscatory. Municipal
corporations are allowed much discretion in determining the
rates of imposable taxes.
This is in line with the constitutional policy of according the

widest possible autonomy to local governments in matters of
local taxation, an aspect that is given expression in the Local
Tax Code (PD No. 231, July 1, 1973).
Unless the amount is so excessive as to be prohibitive, courts

will go slow in writing off an ordinance as unreasonable
Slide No. 3
Slide No. 4
C. Common Limitations on Taxing Power
2. Cases:
Matalin Coconut Co. v. Mun. Council of Malabang, 143 SCRA

404 where the SC struck down a municipal ordinance
imposing a police inspection fee of P0.30 per sack of
cassava starch flour shipped out of the municipality for
the ff. reasons:
Imposition is unjust and unreasonable - the only service
rendered by the LGU, by way of inspection, is for the
policeman to verify from the driver of the trucks of
the TP passing by at the police checkpoint the number
of bags loaded per trip which are to be shipped out of
the municipality based on the trip tickets for the
purpose of computing the total amount of tax to be
collected
The imposition is excessive and confiscatory the TPs
marginal average profit/bag of cassava starch flour is
only P0.40 (the police inspection fee is P0.30/bag)
1. What are the common limitations on the taxing power of

LGUs? Exercise of taxing powers of LGUs (provinces,
cities, municipalities, barangays) shall not extend to the
following (Sec. 133):
a) Income tax, except on banks and other financial
institutions
b) DST
c) Transfer taxes (estate and donors tax)
d) Customs fees and other charges
e) Taxes, fees and charges (TFC) on goods passing
through territorial jurisdiction of LGU
f) TFC on agricultural or aquatic products when sold by
marginal farmers or fishermen
Slide No. 5
Slide No. 6

following:
g) Business tax on BOI-, PEZA-, SBMA-registered
entities, etc.
h) Excise tax and TFC on petroleum products
i) VAT or any percentage tax
j) Common carriers tax
k) Taxes on reinsurance premiums
l) TFC on registration of motor vehicles, except
tricycles
m) TFC on export products

following:
n) TFC on Countryside and Bgy. Business Enterprises or
Cooperatives duly registered with CDA
o) TFC on the national government or LGUs
Slide No. 7
Slide No. 8
2. Cases:
Prov. of Bulacan v. CA, G.R. No. 126232, Nov. 27, 1998
where SC held that provinces may not levy excise
taxes on articles already taxed by the NIRC (the LGU
assessed TP P2.5M for extracting limestone, shale
and silica from several parcels of private land in the
province; said minerals are quarry resources already
subject to excise tax under the NIRC)
2. Cases:
Phil. Petroleum Corp. v. Mun. of Pililla, G.R. No. 90776 June 3,

1991 which upheld the imposition of a local tax on the
business of manufacturing petroleum products, despite the
fact that the NIRC imposes excise taxes on manufactured
petroleum products. In so holding, the SC ruled that a tax on
business is distinct from a tax on the article itself
Note that under 133(h), LGUs are prohibited from
imposing excise taxes on articles enumerated under the
NIRC and taxes, fees or charges on petroleum products.
It would seem that under Pililla, the 133(h) limitation
applies only when what is being taxed is the article itself,
and not the business in which said article is manufactured
Note, however, that under the IRR of 133(h), the
prohibition extends to the imposition of a tax on the
business of manufacturing petroleum products
See, however, Petron Corp. v. Tiangco, GR 158881, April 16,
2008, holding that LGU may not impose business taxes on
entities engaged in sale of petroleum products
Slide No. 9
Slide No. 10

2. Cases:
San Miguel Corp. v. Mun. Council of Mandaue, L-30761,
July 11, 1973 holding that a graduated quarterly
fixed tax based on the gross value of money or actual
market value at the time of removal of the
manufactured articles from their factories is
essentially a percentage tax based on sales,
therefore, beyond the authority of the LGU to enact
A percentage tax is imposed when there is a set
ratio between the amount of the tax and the
volume of sales
See 133(i) limitation
Slide No. 11
Local Taxation
II. Scope of Taxing Powers of LGUs
12
A. Provinces
A. Provinces
1. What are the taxes, fees and charges that provinces may levy and
collect?
a) Tax on transfer of real property ownership ( 135)
Coverage: sale, donation, barter, or any other mode of
transferring ownership or title of real property
Rate and base: not more than 50% of 1% of total
consideration or FMV (if monetary consideration is not
substantial), whichever is higher
When payable: within 60 days from execution of deed or
death of decedent
b) Printers or publishers tax ( 136)
Coverage: persons engaged in the printing and/or
publication of books, cards, posters, leaflets, handbills,
etc.
Rate and base: not more than 50% of 1% of gross annual
receipts for preceding calendar year
Slide No. 13
A. Provinces
Franchise tax ( 137)

Coverage: businesses enjoying a franchise
Rate and base: not exceeding 50% of 1% of the gross
annual receipts for the preceding calendar year based
on the incoming receipts, or realized within its
territorial jurisdiction (1/20 of 1% of capital
investment if newly started business)
d) Tax on sand, gravel and other quarry resources ( 138)
Coverage - ordinary stones, sand, gravel, earth, and
other quarry resources extracted from public lands or
from the beds of seas, lakes, rivers, streams, creeks
and other public waters within the provinces territorial
jurisdiction
Rate and base: not more than 10% of FMV/cubic meter
Slide No. 14
A. Provinces
e)
Professional tax ( 139)

Coverage: persons engaged in the exercise or practice
of a profession requiring government examination
(professionals exclusively employed by govt are
exempt)
Rate and base: not to exceed P300 annually
When payable: Jan. 31
f) Amusement tax ( 140)
Coverage: proprietors, lessees, or operators of
theaters, cinemas, concert halls, circuses, boxing stadia
and other places of amusement (exempt: holding of
operas, concerts, dramas, recitals, painting and art
exhibitions, flower shows, musical programs, literary
and oratorical presentations, except pop, rock or similar
concerts
Rate and base: not more than 30% of gross receipts
from admission fees
c)
Slide No. 15
g) Fixed tax on delivery trucks and vans ( 141)

Coverage: annual tax on every truck, van or vehicle
used in the delivery or distribution of merchandise
Rate and base: not exceeding P500
h) Service fees and charges for services rendered (
153)
i) Public utility charges ( 154) - for the operation of
public utilities owned, operated and maintained by
provinces within their jurisdiction
j) Toll fees or charges ( 155) - for the use of any
public road, pier, or wharf, waterway, bridge, ferry or
telecommunication system funded and constructed by
the province
Slide No. 16
B. Municipalities
B. Municipalities
1. What is the scope of taxing powers of municipalities?
Generally, municipalities may levy taxes, fees, and charges not

otherwise levied by provinces ( 142)
2. What are the taxes, fees and charges that municipalities may levy
and collect?
A. Business taxes on -a) Manufacturers, assemblers, re-packers, processors,
brewers, distillers, rectifiers, and compounders of liquors,
distilled spirits and wines or manufacturers of any article
of commerce of whatever kind and nature ( 143(a))
Rate and base: graduated annual fixed tax based on TPs gross
sales or receipts for preceding year
However, when gross sales or receipts amount to P6.5M or
more, tax ceases to be a fixed tax; instead, a percentage tax of
37.5% of 1% is imposed
b) Wholesalers, distributors or dealers in any article of

commerce of whatever kind and nature ( 143(b))
c) Exporters and manufacturers, millers, producers,

wholesalers, distributors, dealers or retailers of
essential commodities like rice, corn, wheat or
cassava flour, cooking oil, laundry soap, etc. (
143(c)) at a rate not exceeding of the rates for
sales of articles mentioned in (a) and (b) above
Slide No. 17
B. Municipalities
Note: barangays have exclusive power to tax retailers

whose gross sales or receipts for the preceding calendar
year do not exceed P50,000 (for barangays in cities) or
P30,000 (for barangays in municipalities)
e) Contractors and other independent contractors (

143(e)) graduated annual fixed tax based on gross
receipts for preceding calendar year. However, if
gross receipts amount to P2M or more, contractors
tax becomes a percentage tax at the rate of 50% of
1%
Slide No. 18
B. Municipalities
d) Retailers tax is not a graduated annual fixed tax

but an annual percentage tax based on gross sales or
receipts for the preceding calendar year ( 143(d))
Rate and base: graduated annual fixed tax based on TPs

gross sales or receipts for preceding year
However, when gross sales or receipts amount to P2M or
more, tax ceases to be a fixed tax; instead, a percentage
tax of 50% of 1% is imposed
Slide No. 19
f) Banks and other financial institutions ( 143(f)) tax is

50% of 1% of gross receipts of preceding calendar year
derived from interests, commissions and discounts from
lending activities, income from financial leasing, dividends,
rentals on property and profit from exchange or sale of
property, insurance premium
g) Peddlers engaged in sale of mdse or article of commerce (
143(g)) rate not to exceed P50 per peddler annually
h) On any business not otherwise specified above, SB
concerned may impose tax it deems proper ( 143(g))
In the case, however, of businesses subject to excise, valueadded or pct. tax, the rate shall not exceed 2% of gross sales or
receipts for the preceding calendar year
v Note: municipalities within Metro Manila may levy taxes at

rates which shall not exceed by 50% the maximum rates in
(a) to (h) above ( 144)
Slide No. 20
B. Municipalities
C. Cities
B. Fees and charges

a) Municipalities authorized also to impose and collect
such reasonable fees and charges on business and
occupation and on the practice of any profession or
calling (other than professional tax, which only
provinces or cities may impose) before any person
may engage in such business, occupation or practice
of such profession (e.g., mayors permit) ( 147)
The fees and charges, however, should be commensurate

with the cost of regulation, inspection and licensing (i.e.,
must not be revenue-generating)
1. What are the taxes, fees and charges that cities may
levy and collect?
Taxes, fees and charges which provinces or
municipalities may levy and collect (151)
The rates of taxes that cities may levy may exceed
the maximum rates allowed for provinces or
municipalities by not more than 50%, except the
rates of professional and amusement taxes
b) Service fees and charges ( 153)

c) Public utility charges ( 154)
d) Toll fees or charges ( 155)
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Slide No. 22
D. Barangays
1. What are the taxes, fees and charges that barangays may levy
and collect?
a) Taxes on stores or retailers with fixed business
establishments with gross sales or receipts for the
preceding calendar year of P50,000 or less (for barangays
in cities) and P30,000 or less (for barangays in
municipalities) at a rate not exceeding 1% of such gross
sales or receipts
b) Service fees or charges for services rendered in
connection with the regulation or the use of barangayowned properties or service facilities such as palay, copra
or tobacco dryers
c) Barangay clearance for purposes of mayors/business
permit application/renewal
d) Other fees and charges on commercial breeding of
fighting cocks, cockfights and cockpits; on places of
recreation charging admission fees; on billboards, etc.
Slide No. 23
Local Taxation
III.Community Tax Certificate
24
A. Who are Liable
A. Who are Liable
1. Who are authorized to levy and collect community taxes?

Cities or municipalities ( 156)
2. Who are liable?
a) Individuals ( 157):
18 years or over (i) regularly employed on a wage
or salary basis for at least 30 consecutive working
days during any calendar year; or (ii) engaged in
business or occupation; or (iii) own real property
with FMV of P1,000 or more; or (iv) required to
file ITR
Rate and base: annual tax of P5, plus P1/P1,000
income
Slide No. 25
b) Juridical persons ( 158):

Every corporation engaged in or doing business in
the Philippines
Rate and base: annual tax of P500 and an annual
additional tax based on FMV of real property and
gross receipts (the additional tax, however, shall
not exceed P10,000)
Slide No. 26
B. Exemptions from Community Tax
C. Place and Time of Payt of Tax
1. Who are exempt from community tax ( 159)?

a) Diplomatic and consular representatives
b) Transient visitors
1. Where shall the community tax be paid?

Residence of individual
Place where principal office of juridical entity is
located
2. When shall community tax be paid?
On or before last day of Feb.
Special rules for individuals and corporations who
become liable for community tax during the year
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Slide No. 28
A. Time of Payt
1. Tax period generally calendar year basis ( 165)
2. Manner of payment may be made quarterly ( 165)
3. Accrual of tax generally Jan. 1; in case of new ordinance
levying new tax or increasing rates 1st day of quarter
next following effectivity of ordinance ( 166)
4. Time of payment generally first 20 days of Jan. or
quarter, as the case may be ( 167);
In case of retirement from business if the tax paid
during the year be less than the tax due on said gross
sales or receipts of the current year, the difference
shall be paid before the business is considered
officially retired ( 145)
Local Taxation
IV. Time, Manner and Place of Payment of
Local Business Tax
29
B. Place of Payt (Situs Rules)

1. Where should local business taxes be paid?
Branch or Sales Office Rule
a) LGU where branch or sales office is located all sales
made in a locality where there is a branch or sales office
or warehouse shall be recorded in said branch or sales
office or warehouse and the tax shall be payable to the
city or municipality where the same is located
Branch or sales office a fixed place in a locality which
conducts operations of the business as an extension of
the principal office; offices used only as display areas
of the products where no stocks or items are stored
for sale, although orders for the products may be
received thereat, are not branch or sales office. A
warehouse which accepts orders and/or issues sales
invoices independent of a branch with sales office shall
be considered as a sales office
Slide No. 31
Slide No. 30

Branch or Sales Office Rule
b) In case where there is no such branch, sales office or
warehouse in the locality where the sale is made, the
sale shall be recorded in the principal office along
with the sales made by said principal office and the
tax shall accrue to the city or municipality where said
principal office is located
Principal office head of main office appearing in
the AOI or DTI registration
Slide No. 32

Allocation Rule:
v Impt.: allocation rule applies only manufacturers,
assemblers, contractors, producers and exporters
with factories, project offices, plants and plantations
in the pursuit of business
a) 30% of all sales recorded in the principal office shall
be taxable by the city or municipality where the
principal office is located, and 70% of all sales
recorded in the principal office shall be taxable by
the city or municipality where the factory, project
office, plant or plantation is located
Slide No. 33

Allocation Rule:
b) In case of a plantation located at a place other the place
where the factory is located, said 70% in (a) shall be divided
as follows:
i. 60% (of the 70%) to the city or municipality where the
factory is located; and
ii. 40% (of the 70%) to the city or municipality where the
plantation is located
c) In case where a manufacturer, assembler, producer, exporter
or contractor has 2 or more factories, project offices, plants
or plantations located in different localities, the 70% sales
allocation shall be pro-rated among the localities where the
factories, project offices, plants or plantations are located in
proportion to their respective volumes of production during
the period for which the tax is due. In the case of project
offices of service or other independent contractors,
production = cost of projects undertaken during the tax
period
Slide No. 34

Sales Made by Route Trucks, Vans or Vehicles:
a) For route sales made in locality where a manufacturer,
producer, wholesaler, retailer or dealer has a branch or
sales office or warehouse, the sale shall be recorded in the
branch or sales office or warehouse and the tax due
thereon shall be paid to the city or municipality where such
branch or sales office or warehouse is located
b) For route sales made in locality where a manufacturer,
producer, wholesaler, retailer or dealer has no branch or
sales office or warehouse, the sale shall be recorded in the
branch or sales office or warehouse from where the route
trucks withdraw their products for sale, and the tax due
thereon shall be paid to the city or municipality where such
branch or sales office or warehouse is located
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Local Taxation
V. Enactment of Tax Ordinances and Other
Revenue Measures
36
A. Public Hearing and Publication

of Tax Ordinances
A. Public Hearing and Publication of

Tax Ordinances
1. What are the procedural requirements for the enactment

of tax ordinances
Public hearing and publication
2. 186 and 187 state that no ordinance levying taxes,
fees and charges shall be enacted without public hearing;
this is a mandatory requirement
Figuerres v. CA, G.R. No. 119172, March 25, 1999 SC
confirmed that the holding of a public hearing is a
mandatory requirement for the enactment of a tax
ordinance; the SC however upheld the validity of the
assailed ordinance for failure of the TP to adduce
evidence that the requisite public hearings were not
conducted by the LGU (presumption of validity of
ordinances)
3. What is the procedure for the publication of tax

ordinances?
Within 10 days from approval, certified true copies
of the ordinance shall be published for 3 consecutive
days in a newspaper of local circulation
In LGUs where there are no newspapers of local
circulation, the tax ordinance may be posted in at
least 2 conspicuous and publicly accessible places
Slide No. 37
B. Appeal of Tax Ordinances

1. What is the procedure for the appeal of tax ordinances?
a) Secretary of Justice
Any question on the constitutionality or legality of
tax ordinances or revenue measures may be raised
on appeal within 30 days from the effectivity
thereof to the Secretary of Justice
Secretary of Justice must render a decision on
the appeal within 60 days from receipt of appeal
Pendency of the appeal does not suspend the
effectivity of ordinance or accrual and payment of
taxes, fees and charges levied thereon
Slide No. 39
Slide No. 38
Drilon v. Lim, G.R. No. 112497, Aug. 4, 1994 Secretary

of Justice declared a Manila tax ordinance illegal
because of certain ultra vires provisions and noncompliance with the prescribed procedure for
enactment thereof; RTC declared 187
unconstitutional because said provision violates
constitutional provision on local autonomy; SC held that
no constitutional rule on local autonomy was violated
because no control, but only supervision was exercised
by the Sec. of Justice in declaring as illegal the assailed
ordinance
Hagonoy Market Vendor Assoc. v. Mun. of Hagonoy,
Bulacan, 376 SCRA 376 where an appeal to the
Secretary of Justice more than 1 year after the
effectivity of the ordinance in question was held to be
time-barred on the ground that the periods stated in
187 are mandatory
Slide No. 40

b)
Court of competent jurisdiction (RTC) within 30 days

from receipt of adverse decision or from the lapse of the
60 day period without the Sec. of Justice acting on the
appeal, aggrieved party may file appropriate proceedings
with a court of competent jurisdiction
Local Taxation
VI. Remedies of Local Government and
Taxpayer
Slide No. 41
42
Remedies of the LGU and TP
Remedies of the LGU and TP
1. What are the remedies of LGUs in the collection of taxes

and revenues?
a) Examination of taxpayers books of accounts ( 171)
b) Issuance of deficiency assessment ( 194 - 195)
c) Imposition of surcharge and interest ( 168 - 169)
d) Summary remedies for the collection of taxes:
i. Distraint of personal property ( 175)
ii. Levy on real property ( 176, 178-182)
iii. Further distraint and levy ( 184)
e) Judicial action for collection of taxes ( 183)
2. What are the remedies of taxpayers?

a) Protest the assessment ( 195):
i. File protest with local treasurer within 60 days
from receipt of assessment, otherwise
assessment becomes final and executory (CMC,
Inc. v. City of Las Pias, CTA AC No. 4, Sept. 28,
2005); local treasurer has 60 days to decide on
the protest
ii. Appeal to court of competent jurisdiction (RTC)
within 30 days from receipt of denial of protest or
from lapse of the 60-day period without the local
treasurer acting on the protest
b) Claim for refund or tax credit ( 196)
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Slide No. 44
General Principles
1. What are the fundamental principles governing the
appraisal, assessment, levy and collection of real property
tax (RPT)?
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 RPT
shall not be let to any private person; and
e) The appraisal and assessment of real property shall
be equitable.
Real Property Taxation

I.
General Principles and Definitions
45
Slide No. 46
General Principles
Cases:
Province of Nueva Ecija v. Imperial Mining Co., Inc., 118 SCRA
632 (1982) where it was held that the policy of taxing real
property is on the basis of actual use even if the user is not the
owner. Hence, govt property leased to a private person becomes
taxable
Ty v. Trampe, 250 SCRA 500 (1995) where the SC declared
illegal the 400% to 570% increase in real estate taxes imposed
on landowners in Pasig
Lopez v. City of Manila, 303 SCRA 448 (1999) where the SC
enumerated the procedural steps in computing real property
tax, as follows: (1) ascertain assessment level; (2) multiply the
FMV by the applicable assessment level; and (3) find the tax
rate corresponding to the class (use) of the property and
multiply the assessed value by that rate; where the SC also
enumerated the steps for the mandatory conduct of general
revision of real property assessments
Slide No. 47

II. Real Property Tax and
Additional or Special Levies
48
Real Property Tax and Additional

or Special Levies
1. What are the taxes that LGUs may levy on real property?
a) Basic RPT ( 233)
1% for provinces
2% for cities and municipalities within MMA
b) 1% special education fund (SEF) ( 235)
c) 5% tax on idle lands ( 236 - 237)
Agricultural lands more than 1 hectare in area
Lands other than agricultural more than 1,000 sqm.
Residential lots in subdivisions regardless of land area
d) Special levy due to improvements ( 240 - 243)
Lands specially benefited by public works projects or
improvements funded by the LGU concerned
Special levy shall not exceed 60% of the cost of the
project or improvement
III.Exemptions from RPT
Slide No. 49
Exemptions from RPT
50
Exemptions from RPT
1. What is the procedure for claiming exemption from RPT?
File documentary evidence in support of claimed exemption

with the local assessor within 30 days from date of
declaration of real property ( 206)
2. What types of real property are exempt from RPT ( 234)?
a) Property owned by Govt or any of its political subdivisions
LRTA v. CBAA, 342 SCRA 692 (2000) where the SC
held that the LRT carriageways and terminal stations
are not exclusively for public use but rather patrimonial
property, and therefore are subject to RPT
notwithstanding that LRTA is a GOCC
Slide No. 51
b) Those actually, directly and exclusively used for

religious, charitable or educational purposes, and nonprofit or religious cemeteries
BLGF Opinion dated Nov. 20, 1992 addressed to
the Mun. Assessor of Tuguegarao, Cagayan where
only real properties owned by the Phil. Union
College which are a/d/e/ used for educational
purposes are exempt, including the student
dormitories, cafeterias, and the food services
building. The guardhouses garages, perimeter
fences, water tanks and pumps, generator houses,
stockrooms and faculty/personnel residential
quarters are not exempt
Slide No. 52
Exemptions from RPT
Exemptions from RPT
BLGF Opinion dated March 15, 1993 addressed to Mr.

Elmer Lee of QC where the real properties of the
Chinese General Hospital were held exempt because the
only purpose for which it was formed was for
charitable, benevolent, civic, and educational purposes
BLGF Opinion dated April 22, 1999 where the Andres
Soriano Training Center, owned and operated by SMC,
was held subject to RPT although it was used for
educational purposes because (a) it also caters to other
private offices who wish to avail of their training
courses, (b) its courses are not the regular subjects
offered in schools or universities, and (c) it is not
accredited by DECS
Slide No. 53
c) Machineries and equipment a/d/e used by local water

districts and GOCCs in the supply and distribution of
water and electricity
Machineries and equipment used by a private
power plant not exempt
d) Real properties owned by cooperatives duly
registered with the CDA and in accordance with the
provisions of RA 6938
e) Machinery and equipment used for pollution control
and environmental protection
Slide No. 54
Payment of RPT and Special

Levies
1. When does RPT accrue?
January 1 ( 246)
2. When does a special levy accrue?
On the first day of the quarter next following the

effectivity of the ordinance imposing such levy ( 245)
3. For TPs electing to pay RPT and SEF in installments, what are
the due dates for payment of the installments?
4 equal installments payable on March 31, June 30, Sept.

30 and Dec. 31 ( 250)
4. Is there a tax discount for advanced prompt payment of RPT
and SEF?
Yes, if RPT and SEF are paid in advance of March 31, June
30, Sept. 30 and Dec. 31, SB concerned may grant discount
not exceeding 20% of annual tax due ( 251)

IV. Payment of RPT and Special Levies
55
Slide No. 56
A. Appraisal
1. What is the applicable rule regarding the appraisal of real
property (land, buildings and other improvements)?
Real property, whether taxable or exempt, shall be
appraised at the current and FMV prevailing at the
locality where the property is located (schedule of
fair market values) ( 201)
2. What is the applicable rule regarding the appraisal of
machinery?
If machinery is brand new FMV is acquisition cost
If machinery is imported FMV is total landed cost

V. Appraisal and Assessment of Real Property
57
Slide No. 58
A. Appraisal
A. Appraisal
3. What are the modes by which real property is appraised?

a) Voluntary declaration
b) Involuntary declaration
4. What is the obligation of owners or administrators of real
property as regards the declaration thereof?
File sworn statement with the local assessor
declaring the true value of the property once every 3
years from Jan. 1 to June 30 ( 202)
5. What is the obligation of a person acquiring real
property?
File sworn statement with the local assessor
declaring the true value of the property within 60
days from acquisition
6. What is the remedy of the local assessor in case the

owner or administrator of real property fails to file the
sworn statement under 202?
Declare the real property on behalf of the defaulting
owner ( 204)
For purposes of 204, local assessor is authorized to
take evidence ( 213)
7. What is the obligation of owners or administrators of real
property as regards the declaration thereof?
File sworn statement with the local declaring the true
value of the property once every 3 years from Jan. 1
to June 30 ( 202)
Slide No. 59
Slide No. 60
B. Assessment
B. Assessment
1. What is the fundamental rule regarding the assessment of real

property?
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 ( 217)
2. What are the classes of real property for assessment
purposes?
Residential, agricultural, commercial, industrial, mineral,

timberland or special
3. What are the special classes real property?
lands, buildings, and other improvements thereon actually,

directly and exclusively used for hospitals, cultural, or
scientific purposes, and 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
4. What are the steps in the assessment of real property?

a) Determine FMV
b) Determine classification
c) Apply assessment level to determine assessed value or taxable
value
d) Determine RPT due by multiplying the rate against assessed
value
5. What is an assessment level?
It is the percentage applied to the FMV (depending on the

class of real property) to determine the taxable value of the
property (see 218)
6. What are the classes of real property for assessment purposes?
Residential, agricultural, commercial, industrial, mineral,

timberland or special
Slide No. 61
B. Assessment
Fair Market Value
Assessment Level
(Residential)
Assessed Value
Basic Real Property Tax
(2%)
Special Education Fund
Total
Slide No. 62
B. Assessment
P1,000,000
20%
200,000.00
P4,000
2,000
P6,000
Slide No. 63
7. What are the special classes real property?
lands, buildings, and other improvements thereon actually,

directly and exclusively used for hospitals, cultural, or
scientific purposes, and 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
8. When can the local assessor make an assessment or reassessment
of real property ( 220)?
a) Real property is declared and listed for taxation purposes for
the first time;
b) there is an ongoing general revision of property classification
and assessment; and
c) a request is made by the person in whose name the property is
declared
Slide No. 64
B. Assessment
B. Assessment
9. How often can the assessed value of real property be

made?
Only 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 (
220)
10. When does the assessment or re-assessment take effect

( 220 - 221)?
Gen. rule: Jan. 1 of the following year (prospective
application)
Exception: the reassessment of real property due to its
(i) partial or total destruction, or to a (ii) major change
in its actual use, or to any great (iii) and sudden inflation
or deflation of real property values, or to the (iv) gross
illegality of the assessment when made or to any other
abnormal cause, shall be made within 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
Exception: for previously undeclared real property
(property being declared for the first time), effectivity
of assessment retroacts to the period during which it
would have been liable (max. of 10 years)
Slide No. 65
Slide No. 66
Remedies of LGU
1. What are the remedies of LGUs in the collection of RPT?
a) Posting of notice of delinquency ( 254)
b) Imposition of interest ( 255)
c) Administrative remedies ( 256 - 257)
d) Judicial action for collection ( 256, 266, 270)
e) Unpaid tax constitutes a lien ( 257)

VI. Remedies of Local Government
67
Slide No. 68
Remedies of Taxpayers
1. What are the remedies of taxpayers?
Dispute the assessment
Pay under protest
Claim for refund or credit

2. What are the procedures for disputing an assessment?
a) Appeal to LBAA ( 226) within 60 days from receipt of
assessment
Callanta v. Office of the Ombudsman - where it was
ruled that filing with the local assessor of a request for
a review or readjustment of an assessment is not a
proper remedy, but instead an appeal should have been
lodged with the LBAA
b) Appeal to CBAA within 30 days, if LBAA denies appeal (
229(c))
c) Appeal to CTA within 30 days, if CBAA denies appeal (
7, RA 1125, as amended by RA 9282)

VII.Remedies of Taxpayer
69
Remedies of Taxpayers
3. What is the effect of an appeal of an assessment?
It does not suspend collection of RPT
4. What is the requirement if TP wishes to protest the
collection of RPT?
TP must pay the disputed RPT under protest
National Power Corp. v. Prov. of Quezon and Mun. of
Pagbilao, CTA E.B. No. 46 (CBAA Case No. L-29)
payment under protest applies only if TP is
questioning the reasonableness of the amount
assessed, and not when the TP is questioning the very
legality of the assessment
Slide No. 71
Slide No. 70

Local and Real Property Tax

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A.

Mactan Cebu Intl Airport Authority v. Marcos, G.R. No.

Atty. Terence Conrad H. Bello

1. What are the fundamental principles that govern the exercise

Pepsi Cola Bottling Co. of the Phils., Inc. v. Mun. of Tanauan,

This is in line with the constitutional policy of according the

Unless the amount is so excessive as to be prohibitive, courts

Atty. Terence Conrad H. Bello

Atty. Terence Conrad H. Bello

C. Common Limitations on Taxing Power

Matalin Coconut Co. v. Mun. Council of Malabang, 143 SCRA

1. What are the common limitations on the taxing power of

Atty. Terence Conrad H. Bello

Atty. Terence Conrad H. Bello

C. Common Limitations on Taxing Power

C. Common Limitations on Taxing Power

1. What are the common limitations on the taxing power of

1. What are the common limitations on the taxing power of

Atty. Terence Conrad H. Bello

Atty. Terence Conrad H. Bello

C. Common Limitations on Taxing Power

C. Common Limitations on Taxing Power

Phil. Petroleum Corp. v. Mun. of Pililla, G.R. No. 90776 June 3,

Atty. Terence Conrad H. Bello

Atty. Terence Conrad H. Bello

C. Common Limitations on Taxing Power

Franchise tax ( 137)

Professional tax ( 139)

g) Fixed tax on delivery trucks and vans ( 141)

1. What is the scope of taxing powers of municipalities?

Generally, municipalities may levy taxes, fees, and charges not

b) Wholesalers, distributors or dealers in any article of

c) Exporters and manufacturers, millers, producers,

Atty. Terence Conrad H. Bello

Note: barangays have exclusive power to tax retailers

e) Contractors and other independent contractors (

d) Retailers tax is not a graduated annual fixed tax

Rate and base: graduated annual fixed tax based on TPs

f) Banks and other financial institutions ( 143(f)) tax is

v Note: municipalities within Metro Manila may levy taxes at

Atty. Terence Conrad H. Bello

B. Fees and charges

The fees and charges, however, should be commensurate

b) Service fees and charges ( 153)

Atty. Terence Conrad H. Bello

A. Who are Liable

A. Who are Liable

1. Who are authorized to levy and collect community taxes?

b) Juridical persons ( 158):

Atty. Terence Conrad H. Bello

B. Exemptions from Community Tax

C. Place and Time of Payt of Tax

1. Who are exempt from community tax ( 159)?

1. Where shall the community tax be paid?

Atty. Terence Conrad H. Bello

Atty. Terence Conrad H. Bello

B. Place of Payt (Situs Rules)

Atty. Terence Conrad H. Bello

B. Place of Payt (Situs Rules)

Atty. Terence Conrad H. Bello

B. Place of Payt (Situs Rules)

Atty. Terence Conrad H. Bello

B. Place of Payt (Situs Rules)

B. Place of Payt (Situs Rules)