id within six (6) years from the payment th f

· d b' · (A
o in e iti rt.1145, Civil Code ofth Ph T
ereo as a case of
. .
,'ls v. City of.Manila, 7 SCRA 970). e i ippines; Puyat

CHAPTER XXXIII
REAL PROPERTY TAX

Nature of Real Property Tax

The real property tax is a tax on property. It has been considered
as a national, not a local, tax. The realty tax is enforced throughout
the Philippines and not merely in a particular municipality or city,
but the proceeds of the tax accrue to the province, city, municipality
and barrio where the realty taxed is situated (Sec. 86, P.D. 464). In
contrast, a local tax is imposed by municipal or city council by virtue
of the Local Tax Code, P.D. 231 which took effect on July 1, 1973
(69 O.G. 6197) (Meralco Securities Industrial Corporation v.
Central Board of Assessment Appeals, G.R . No. L-46245, May
31, 1982). It has always been imposefh¥ the national lawmaking
body. It is enforced through the Philippines and not in a particular
· political subdivision, although the· bulk of the tax proceeds accrue
•to the various local government units where the property is located
(Secs. 233 and 271, LGC).

Accrual and Payment of Tax

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
encumbrances of any kind whatsoever, shall be enforceable against the
property, by administrative or judicial action, whether in the possession
of the delinquent or any subsequent owner or possessor, and shall be
removable only by the payment of the delinquent taxes and the related
interest and expenses (Sec: 246, relation to S ec. 257, LGC).
Real property taxes may, in the discretion of the taxpayer, be
paid without penalty in four ~qua) installments, the first installmen t
to be due and payable on or before March 31; the second installment,
on or before June 30; the third installment, on or before September

777
 780 REvlEwER ON TAXATION
ordinance ir:"p~sing _a_special levy, it shall conduct.f!.J}ublic hearing
thereon; notify,..!n wnting the owners of the real property to be affected
or the persons having legal interest therein as to the date and place
there~{ a:"d afford_the latter the!!!J.portunity to exeess their positions
or ob1ectwns relative-to the proposed ordinance (Sec. 242, LGC).
Bar Question (1991)
In view of the street widening and cementing of roads and the
improvement of drainage and sewers in the district of Ermita, the
City Council of the City of Manila pa~sed an ordinance imposing
and collecting a special lelcy on lands in the district. Jose Reyes, a
landowner and resident of Ermita, submitted a protest against the
special levy fifteen (15) days after the last publication of the ordinance
alleging that the special levy was exorbitant since the rate thereof
was more than the maximum rate of two pe~ceilt (2%) of the assessed
value of the real properties allowed by Section 39 of Presidential
Decree No. 464, as amended:
Assuming that Jose Reyes is able to prove that the rate of the
special levy is more than the aforesaid percentage limitation of 2%,
will his protest prosper?
Suggested answer:
The special levy under the Real Property Tax Code on lands,
specially benefited by the proposed infrastructure, may not exceed 60%
ofthe cost ofsaid improvement. All lands comprised within the district
benefited are subject to the special levy except lands exempt from the
real property tax (Sec. 47, Real Property Tax). The protest shall be
filed not later than 30 days aftrr: the publication of the ordinance and
may be s~',nitted to the City_Sanggunian signed by a majority of the
landowners affected by the proposed work; If no such protest is filed
in the manner above specified, the city or<Jinance shall become final
and effective. The levy imposed under the ordinance should Q£.J£.ithin
-
the limit of 60% of the total cost of the proposed.improvement.
The rate of two percent (2%) of the assessed value under Section
39 of P.D. 464 refers to the real property tax and not to special _levies.
· supply, generation and transmission of electric power. In 2005, In
Bar Question (1991)
May local governments impose an annual realty tax in addition to
the basic real property tax on idle or vacant lots located in residential .
s ubdivisions within their respective territorial jurisdictions?
b..
LocAL GoVERNMENT CODE
781
Real Property Tax
Suggested answer:
Not all local government u,nits may do so. Only provinces, cities,
and municipalities withJ!} the Metro Manila area (Sec . 232, LGC)
may impose an.ad valorem tax not exceeding five percent (5%) of the
assessed value (Sec. -2 36, LGC) of iale or vacant residential lots in a
subdivision, duty approved by proper authorities regardless of area
(Sec. 237, LGC).
Real Property Subject to Tax
The real property tax is imposed on real property such as
land, buildings, machinery ·a nd other improvements not otherwise
specifically exempted under the Code (Sec. 232, LGC) .
The term "machinery" embraces machines , equipment,
mechanical contrivances, instruments, appliances or apparatus
which may or may not be attached, permanently or temporarily to
the real property. It includes the physical facilities , for production,
the installations and appurtenant service facilities; those which are
mobile, self-powered or self-propelled and not pennanently attached
to the real property but are actually, directly and essentially used to
meet the needs of the particular industry, business or activity, and
which by their very nature and purpose are designed for, or necessary
to its manufacturing, mining, commercial, industrial or agricultural
purposes (Sec. 199[o], LGC).
The term "improvements" refers to 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 the value, beauty or utility
or to adopt it for new or further purpose (Sec . 199[m], LGC) .
Bar Question (2009)
Republic Power Corporation (RPC) is a GOCC engaged in the
order to provide electricity to Southern Tagalog provinces, RPC
entered into an agreement with Jethro Energy Corporation (JEC), for
the lease of JEC's power barges which shall be berth~d at the port of
Batangas City. The contract provides that JEC shall own the power
barges and the fixtures, fittings, machinery, and equipment therein ,
all of which JEC shall supply at its own cost, and that JEC shall
operate, manage and maintain the power barges for the purpose of
converting the fuel ofRPC into electricity. The contract also stipulates
 782 REVIEWER ON TAXATION
that all real estate _truces and assessments, rates and other charges,
in respect of the power barges, shall be for the account ofRPC.
( In 2007, JEC received an assessment of real property truces on
the po~er b~rges from the Assessor of Batangas City. JEC sought
reconsideration of the assess~ t on the ground that the povx,er barges
are exempt from real estate ( \es under Section 234(c) ofR.A. 7160,
as they are actually, directly and exclusively used by RPC, a GOCC . .
Furthermore, even assuming that the power barges are subject to real
property tax, RPC should be held liable therefor, in accordance with
the terms of the lease agreement. Is the contention of JEC correct?
Suggested answer:
· Power barges, which are floatiTJ,JJ and lILOvable, are real property
subject to real propertx tax. Article 415(a) or the New Civil Code
provides that "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" are considered immovable property ... The _mere
understanding of petitioner NPC under the Agreement that it shall
be responsible for the payment of real estate taxes and assessments
does not justify its exception. The privilege granted to NPC cannot be
extended to FELS. The COVW:._ant_d,oas :r:iot bind third persons not privy
thereto (FELS Energy, inc.-;_ The Prov. of Batangas, G.R.No.
16855'!, February 16, 2007).
Bar Question (2003)
Under Article 415 of the Civil Code, in order fo.vnachinery and
equipment to be considered real property, the pieces must be placed by
the owner oAae land and, in addition, must tend to directly meet the
need~ of the industry or works carried on by the owner. Oil companies
install underground tanks in the gasoline stations Jocated on land
leased by the oil companies from the owners of the land where the
gasoline stations are located. Are those underground tanks , which
were not_.1>laced th~re by the owner of the land but which w~e inste.ad
pla~d there b~be lessee of the land, considered real property for
purposes ofreal property taxation under the Local Government Code?
Explain .
Suggested answer:
It is a fa miliar phenomenon to see things classed as real
property for purposes of taxation which on general principles might
be considered personal property . For similar reasons, machinery and
I
LocAL GoVERNMENT C ODE 783
Real Property Tax
equipment, consisting of underground tanks, elevated tanks, water
tanks, gasoline pumps, computing pumps, water.pumps, car washer,
car and truck hoists, air compressors and similar articles, installed
by Calte:.c, in its gasoline stati9ns, located on leased land, have been
held ~real property subject to the tax (Caltex Phils . v . Central
Board of Assessment Appeals, 114 SCRA 296).
BOT Agreement is not merely a Financing Sche_me
, Under the IJ_O'I,.'_~gi::l:l!ilment, can the GOQC (NPC) be deemed
the acfa.ial,.direct and exclusive user of ma.c hinery and eql!-~ ~ent
for tax exemption? If not, can it pass on its tax-exempt status to its
BOT partner, a private corporation, thru the BOT agreement?
GOCC is exempt from RPT when it owns and/or actually uses the
machinery and equipment for generation and transmission of electric
power. In this case, it is BPPC, a non-government entity, which owns,
maintains and operates the machinery and equipment. Using these ,
it generates electricity, which it then sells to NPC. NPC is not the
registered owner of machinery and equipment. This is confirmed by
BOT Agreement. Thus, Section 234(c) does not apply.
Liability for payment of R:eT is determined ~aw and not by
agreement offfie parties. Ifmust be expressly granted by law.CTax
exemption is also not transferable. And it is strictly construed)
SC cited FELS Energy v. Prov ofBatangas , where it was provided
that NPC shall pay all of FELS' real estate taxes and assessments.
Exemption of NPC was not r~ognized since it was not the actual,
di~ and exclusive ]lsef of the barge. -
That BOT Agreement is merely a financing scheme, where BPPC
is the financier and NPC is the actual user of properties is belied by
the BOT Agret:ment itself. The proponent will construct the project
at its own cost and suqsequently operates and manages it. At the end
of 15 years, the proponent transfers the ownership of the facility to
NPC. Thus, BPPChas complete ownership- both leg_al and beneficial
-of the project (NPC v. CBAA, LBAA-La Union, G.R. No.171470,
January 30, 2009). ·
For purposes of taxation , the term "real property" may include
things which generally should be regarded as personal property (84
C.J.S. 171, Note). It is a familiar phenomenon to see things classed
as real property for purposes of taxation which on general principle
might be considered personal property (Standard Oil Co. of.New
York v. Jaramillo, 44 Phil. 630). Thus, .while the t w ~ s are not
/ 84 REvlEWER ON TAXATION
embedded in the land, they may, nevertheless, be considered as
taxBg).e improvements on the land, enhancing its utility and rendering
it useful to the oil industry as de~ned under Section 3(k) of the Real
Property Tax Code. It is undeniable that the two tanks have been
installed with som~degree of permanence at receptacles for the
considerable quantities of oil needed by Meralco for its operations. The
case ofBoard o{Assessment Appeals v. Manila Electric Company (119
Phil. 328), wherein Meralco's steel towers were held not to be subject
fo realty tax, is not in point because in that case the steel towers
were regarded as oles and under its franchise Meralco's poles re
exempt from taxation. Moreover, t e steel towers were not attac ed
to any land or buifc1ing. They were removable froni their metal frames
(Manila Electric Co. v. Central Board ofAssessment Appeals,
G.R. No. L-47943, May 31, 1982).
The ~peline of Meralco Securities does not faB within any
of the classes of exempt real property)mumerated in Section 3 of
the Assessment Law and Section 40 ofl'the Real Property Tax Code
(Meralco Securities Industrial Corporation v. CBAA, supra).
The appeliee constructed a road on a public land under lease
contract. Appellant assessed real properly tax thereon, which was
protested by tlle appellee, claim,µig that the road is exempt from tax
-
because (a) the ~~ad belongs to the nationargovernment by right of
· ·-- · · · · - -·
~
accession; (b) the road cannot be removed or separated from the land
on which it is constructed and so it is part and parcel of th~ublic .
land; and (c) according to the evidence, the road was built not only for
the use and benefit of the appellee but also of the public in general.
The comt ruled that the gevernment has practicallyreserved the
rights to use the road to promote its varied activities·. Since the road
in question cannot be considered as a11 improvement which belongs to
t~e appellee, although in part is for its benefit, it is clear that the same
cannot be the subject of assessment witlun the meaning of Section 2 of
Commonwealth Act No. 470. It is well settlegJhat a realty tax, being
a burden upon the capital, should be. paid by the owner of the ·land
and not by a Ufil}fructuary (Mercado v. Rizal, '67 Phil. 608; Art. 597,
New Civil Code). Appellee is but a partial usufructuary of the road in
question (Board of Assessment Appeals of Zamboanga del Sur
v. Samar Mining Co., G.R. No. L-28034, February 27, 1971).
Bar Question (2001)
. Under Article 415 of the Civil Code, in order fo;
machinery and
equipment to be considered real prope~y, they must be placed by the
LocAL GoVERNMENT CODE
Real Property Tax
785
owner of the land and, in addition, must tend to directly me~t the
neeuthe industry or works carried OIJ. by the owner. Oil companies,
such as Caltex and Shell, .install underground tanks in the gasoline
stations located on land leased by the oil companies from others. Are
those underground tanks which were..!!,_ot placed there by the owner
of the land but which were instead placed there by the lessee of the
land, considered izea1 property for purposes of real property taxation
under the Local Government Code? Explain your answer.
Suggested answer: ·
Yes, the underground tanks although installeci by. the .lessee,
Shell and Caltex, are considered as reg,l property for purposes of the
imposition of real property taxes. It is only for purposes of exec;..1!'.ting
a final judgment that these machinery and equipment, installed by
the lessee on a leased land, would not be considered as real property.
But in the imposition of the r;eal f!!Operty tax, the underground tanks
are taxable as nec~tures of the gasoline station without which
. the gasoline station would not be operational (Ccdtex Phils., Inc . v.
CBAA, 114 SCRA 296).
Fundamental Principles
Bar Question (2000, 1997)
The appr~l, assess~t, levy and collection of real property
for taxation purposes shall be guided bytfie following fundamental
principles:
1. Real property shall be appraised at its current and fair
market value;
~-
2. Real property shall be c~ssified for assessment purposes
on the basis of its actual use;
3. Real property shall be assessed on the basis a£ a Jmiform
classificatiau 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 pro~shall be
equ@ble (Sec ..198, LGC). ,.,
''Fair market value" is the amount which a purchaser willing
but ~ot compelled to buy would pay an owner of the property, and
 786 REviEwER ON TAXATION
the latter
. •willing .but not compelled to sell wou · Id accept
· as· the
cons1derat10n or pnce therefor (Sec. 199 LGC· Arm nd 11.r C R.A. 7160 and is therefore still the applicable statute, or because the
. "d d 44Ph " 38 . ' ' ya navy lub
v. Trin~ a ' . tl. 3). The schedule.o£fair market values shall
f . .ma1ia newspaper of general circul a t·10n m
be. published · th e province,
· 1993; after the Local Government Code of 1991 already took effect,
city or 1~umc1p ty cqn~ern~J:l or the posting in the provincial capital
or othei places as reqmred by law (Lopez v. City 0 fM · ·z 303
I SCRA 448 (19991). · · ani a,
~asis of real property tax. _.:. The basis of real p~operty
taxation under the Assessment Law was ownership or i11 terest
tantaw~unt to ownership. The Real Property Tax Code changed
the basis of real property taxati~n and adopted the policy of taxing
real property on the basis ~ l use, even if the 11,Ser is nnt ~
Ow;!!fil" (Prov. ofNueva Edja v. Imperial Mining Co., 11~ SC
632 (19821). This policy is still followed in the Local Government
Code.
For assessment purposes, the--terii'r"actual-·use" refers to the
principal and pr~minant utilization of the property by the person
in possession thereof pursuant to Section 199(b) of the Code (Testate
Estate of Lim v. City of Manila, 182 SCRA 483). In 1974, a new
Real Property Tax Code came into being when P.D. 464 was issued.
It changed the basis of real property taxation. It adopted the policy
of taxing real property on the basis of actual use, even if.the user is
not the owner. Thus, even if the user is not the owner of the property,
govern~t property. covered by mining leases is subject to real
property tax (Nueva Ecija v. Imperial Mining Corporation, G.R.
No. L-59463, November 19, 1982).
In appraising the current and fair market value ofthe·property,
the crfterion is ·that which is p r e ~ in the locality where the
propertyj§.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 basis of its actual use, regardless of where
located, whoever owns it, and whoever uses -it (Secs. 217 and 212,
LGC).
The Municipality of Pasig increased the real estate taxes
effective for t he year 1994, which asse~sment was protested by the
taxpayer. The court ruled that whether the assessment is made •
before or after the effectivity of R.A. 7160, the observance of, and
compliance with, the explicit requirement of P .D: 921 is strict and
mandatory, either becau se P.D. 921 was not impliedly repealed by
LocAL GoVERNMENT CODE 787
Real Property Tax
Supreme Court, in three.related cases promulgated on 16 December
ruled that a schedule of values and the corresponding assessments
based thereon "pre·pared solely by the city assessor ... failed fo comply
with the explicit requirement (of collegial and joint action by all
the assessors in the Metropolitan Manila Area under P .D. 921) ...
and are on that account illegal and void:" R.A. 7160 has a repealing
provision (Section 534) and, if the intention of the legislature was
to abrogate P.D. 921 , it would have included it in such repealing
clause, as it did in expressly rendering ofno force and effect several
other presidential decrees. The repeal in R.A. 7160 partakes of the
nature of a general repealing provision. It is basic rule of statutory
construction that repeals by implication are not favored (Ty and
MVR Picture Tube v. Trampe and Mun. Assessor of Pasig , G.R.
No.117577, December 1, 1995; Figuerres v . Court of Appealsy
. 305 SCRA 206 [19991).
The decision of the CBAA shall become.final and executory after
the lapse of fifteen days from the date of receipt of the decision ... To
continue 'collecting real property taxes based on valuations arrived
a ~ l years ago, in disregard of the increases in the valu~l
properties that have occurred since then, isc:llQt m ~ with a
sound tax syste¥"iscal adequacy, which is one of the characteristics
of a sound tax system, requires that sources of revenues must be
adequate to meet government expenditures and their vari ations
(Chavez v. Ongpin, supra) .
Bar Question (2002)
The real property of Mr. and Mrs . Angeles , situated in a
commercial area in front of the public market, was declared in their
Tax Declaration as residential because it had been used by them
as their famwesidence from the time of its construction in 1990.
However, since January 1_9 97, when the spouses left for the United
States to stay there permanently with their children, the property has
b~ rented to a single proprietor engaged in the sale of appliances
and agricultural products. The Provincial Assessor reclassified the
property as commercial for tax purpcrses·starti:rrg·Jamiary 1998. Mr.
and Mrs. Angeles appeale~ the Local B(rard of Assessment Appeals
contending, that ·the Tax Declarl\tion previously classifying their
pro~!.o/ as resfd~iiti.al is binding. . ( : .::.
How should the. appeal be decided?
 788 REVIEWER ON TAXATION
Suggested answer:
The appeal should be decided against M d M
The law focuses on the actz,al ue:e of the pro,n rrt. a: lrs. :<4finge_les.
· d z--e Y ,or c assi cation
va l uatiw an assessme!_Lt purposes regardloc,c, ,,j",. ..:._ h · s · '
217 {th Lo l G . ~wners ip. ection ·
o_ e ca overnment Code provides that "real property shall be
classified, valued and assessed on the. bas•"
..., of•ts ,.,.t·u a l use regardl ess
• . ..,,..,
of w h ere located, whoever owns it, and whoever uses it."
The P:~vincial, city or municipal assessor shall undertake a
general 7::.v_iswn of_real property assessments within two (2) years after
the efectwity of this Code and every three (3) years thereafter (Sec. 219,
LGC). The assessment of real property shall not be increased oftener
than once every three (3) years, except in case,.of new improvements
~u~stantially increasing the value of said property or of any change
in its actual use (Sec. 220, LGC). ·
Classes of real property
For purposes ~sment, real property shall be classified as
residential, agricultural, commercial, industrial, mineral, timberland,
or special. The city or municipality within the Metropolitan Manila
Area·, throu h their res ective sanggun an, shall have the power t9
classify lands as residentia , agricultural, commercial, industrial,
mineral, timberl~nd, or ~pec::ial in accordance with their zoning
ordinances (Sec. 215, LGC). · ·
All 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
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 (Sec. 216, LGCJ.
Chong Hua Hospital Medical Arts Center (CHHMAC) is an
integral part of CHH. The doctors and medical specialists holding
clin ics are those duly accredited by CHH, i.e. , they are consultants
of the h ospital who can treat CHH's patients ..confined-init. ·~ c t
that the ~tors are holding offi~n .a separate building, like at
CHHMAC, d~ not take away the essence and nature of their services
uis-a-vis the overall operation, of the liospital and e
benefi·t s to the
h ~ients. The exemption from this i ot limite property
< l r u l ~ for charitable or educational purposes, hu;exteods tQ
facilities which are jncjdental to and rea~anably necessary for the
LOCAL GoVERNMENT CODE
Real Property Tax 789
accomplishme_nt of said purposes. Thus, CHHMAC should be under
the same special assessment level as that of CHH (City Assessor of
Cebu v. Assoc. of Benevola de Cebu G.R. No . 152904 ru 8
2007). . ' ' u, ne ,
Exemptions from real property tax
Bar Question (2006, 2002)
What properties are exempt from real property tax?
Suggested answer:
The following are exempted from payment of the real property
tax:
1. 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;
2. Charitable institutions, churches, parsonages or convents
appurtenant thereto, mosques , non-profit or religious
cemeteries, and ·au lands, buildings and improvements
actually, directly and exclusively used for religious ,
charitable, or educational purposes;
3. 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 I or generation and transmission
of electric power;
4. All real .propertyowned ·by duly registered cooperatives as
provided for under RA. 6938; and ·
5. 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 (Sec. 234, LGC). ·
The exemption of government-owned or controlled corporations .
from national and local taxes was withdrawn by P.O. Nos. 1177 and
 } 90 REVIEWER ON TAXATION
/ ~~31 (National Power Corporation v. Court of Appeals, G.R . .
No.L-73477, O~tober 16, 1990). Commonwealth Act No, 182, which
created_the_Nabonal Development Company, contains no provision
exeinptmg it from ·the payment of real estate tax on properties it
may acquire. Bes~des, these properties are not devoted to public
use but were acquired for resale to qualified persons. Also, Natfonal
Development Company does not come under the classification of
municipal or public corporations in the sense that it may sue and be
sued in the same manner as may other private corporations. Unlike
the government, National Development Company may be sued without
its consent, and is subject to taxation (National Development Co.
v. Prov. of Nueua Ecija, G.R. No. L-41223, November 25, 1983) .
A national government instrumentality is exempt from real property
tax (Phil. Fisheries Development Authority v. CA, et al., G.R.
No. 169836, July 31, 2007).
Bar Question (2013)
•Mr.Arnaldo leased a piece ofland owned by the Municipality of
Pinagsabitan and built a warehouse on the property for his business
operations: The Municipal Assessor assessed Mr. Arnaldo for real
property taxes on the land and the warehouse. Mr. Arnaldo objected to
the assessment, contending that he should not be asked to pay realty
taxes on the land since it is municipal property. Was the assessment
proper?
Suggested answer:
Yes , the assessment is proper. The land, although owned by
t h e Municipality, is ~ t from real property tax because the
beneficiaf u~e bas been granted to a taxable per_son (Sec. 234[a],
I
LGC).
Bar Question (20t0)
"A" inherited a two-storey building in Makati from his father, a
real estate broker in the '60s. A group of'l'ibetian mo_nks approached
"A" a d ·offered t o lease the building in order to use it as a venue for
their~uddhist rit]Jals and ceremonies. "A"accep~d the rent~ of Pl
million for the whole year. The following year, the City Assessor issued
. st"A" for non-payment ofreal property truces. Is
an assessmen t agam · . rt t ? gove~ent, not integrated within the department framework,
the assessor j ustified in assessing A's deficiency rea1 prope Y ruces.
Explain.
LocAL GoVERNMENT CODE 791
Rea.I Property Tax
Suggested answer:
&. The assessor made an error in assessing the deficiency real
property tax on the land owned by "A" but being leased and used by
the Tibetian monks for their religious rituals and ceremonies. Section
198 ofthe Local Government Code provides that real property shall be
classified for assessment purposes on the basis ofactual use. Moreover,
charitable institutions, churches, parsonages or convents appurtenant
thereto, mosques, non-profit or religious cemeteries, and all lands,
buildings and improvements actually, directly ana exclusively used
for religious, charitable, or educational purposes, are exempt from the
payment of real property tax (Sec . 234, LGC).
Supreme Court decisions on real property taxes
1. Manila International Airport Authori ty (MIAA)
v. Paranaque City (2006) . - The Manila International Airport
Authority (MIAA) owns airport lands and buildings located in
Paranagy.e City. MIAA is not a GOCC under Section 2( 13) of the
Introductory Pi:ovisions of the Administrative Code because it is not
organized as a stock or non-stock corporation. Neither is MIAA a
GOCC under Section 16, Article XII of the 1987 Constitution because
MIAA is not .reqttired to meet the text of economic viability. MIAA
is a govern~ent instrumentality vested ~th corporate powers and
performing essential public~spu~~uant to Section 2(10) of the
Administrative Code.
As a governme~trumentality, MIAA is not subject to any
kind of tax by local governments under Section 133(0) of LGC . The
exception to the exemption in Section 234(a) does not apply to MIAA
because MIAA is not a taxable entity under the LGC . Such exception
applies only if the beneficial_1,1~~ ~freal property ow_ned by the Republic
is given to a taxable entity. The airport lands and buildings ofMIAA
are p:i:opel'ties 8ellhted to public use and thus are properties of public
opini~owned-l;g, tbP. State ur the Republic (MIAA v. CA~nd Pasay
City, 2006).
2. MIAA v. Pasay City (2009). - MIAA owns airport lands
and buildings located in Pasay City.
"Instrumentality" refers to any age11c;y of the national
vested with special functions or jurisdiction by law, endowed with
792 REvrEWER ON TAXATION
some if not all corporate powers, . administering speci 1 ~ d d
· · t· l a 1un s, an
enJoying opera 1ona autonomy, usually through a chart Th·
· 1 d l er. 1s
term me u es regu atory agencies, chartered institutions a d GOCC
"Instrum~ntality" includes ... GOCC (Sec. 2[10], Admi~istrativ~
Code). This means t~at a government instrumentality may or may
not be a GOCC: ObV1ously, the term government instrumentality is
broader than the term GOCC.
"Government-Owned or fJontrolled Corporation" (GOCC)
refers to any agency organized as a stock or non-stock corporation,
vested with functions relating to public needs whether governmental
or proprietary in nature, and owned by the Government directly or
through its instrumentalities either wholly, or, where applicable as
in the case of stock corporations to the extent of at least 51 % of its
capital stock.
. Since MIAA is a government instrumentality vested with
corporate powers to perform efficiently its governmental functions,
MIAA is like any other government instrumentality, _the only
difference is that MIAA is vested with corporate powers. When
the law vests in a government instrumentality co7porate powers,
the instrumentality does not becon;ie a corporation. Unless the
government instrumentality is organized as a st?ck or n~~-stock
corporation, it remains a gov·e rnment instrumentality exerc1smg_not
only governmental but also corporate power~. Thu~, MIAAe~erc1ses
the governmental powers of eminent domam, _p ohce authority ~nd
the levying of fees -and charges. At the same time, _MIAA ex~rc1ses
"all the powers of a corporation under ~he _Corpor~ti_o n Law, ~nsofar ·
as these powers are not inconsistent with the provisions ofth1s ~.O.
Hence, MIAA is not liable to pay RPT (G.R . No. 163072, Apnl 2,
2009).
3. Philippine Fisheries Development Au~h?_r_i!.~ (PFD~)
v. CA & Jloilo City~- PFD_;'\ is not~ GOCGbut--an l~strunrentality
of t he national government which 1s generally ex~mpt fro~--RPT.
. . sai·d exemption does not aDDly to the portions ~the IFPC,
H ow ever, ~- fri · b 'Id'
consisting of breakwater, a landing quay'. a re . gebra~1lodi:1 m mtg,
m ark et hall, municipal shed, an administration m ~~g: wa er
f l ·1
and _u e _0 1 .:~r~ ly system and other port-related fac1hties and
the land and buildings of the IFPC remained with
m achinene~, 1 : ich PFDA leased to private entities. Nonetheless,
the Republic_, w rty of public dominion, cannot be sold _a t public
the IFPC, bemg prope . .
. to satis fy t he t ax delinquency.
a uct:ion
LocAL GoVERNMENT CODE 793
Real Property Tax
For an entity to be considered as GOCC, it must either be
organized as a,.stock or non-stock corporation. Two (2) requirements
are need to create a stock corporation: (1 ) it has capital stock
divided into shares; and (2) it is authorized to distribute ~ n d s
and allotments of surplus and profits to ifs stockholders. If only
one requisite is present, it cannot be properly-classified as a stock
corporation. As for nonstock corporations, they must have members
and must not distribute any part of their income to said members.
PFDA is not a GOCC. It has capital stack but it is not divided
into shares of stocks. It has no stockholders or voting shares; hence,
it is not a stock corporation. Neither is it a non-stock corporation
because it has no members (PFDA v. CA & Iloilo City, G.R. No .
169836, July 31, 2007). .
4. Light Rail" Transportation Authority (LRTA)
v. Central Board of Asse~;,ment Appeals (CBAA) . - Real
property is dass1'1ed f6r as~ssment.inirpos.e s on the basis of actual
.use , which is defined as "the purpose for which the property is
principally or predominantly utilized by the pers6n in possession
of the property."
Unlike public roads which are open for use by everyone , the
LRT is accessible only to those who pay the required fare . It is thu s
apparent that petitioner does not exist solely for public service ,
and that the LRT carriageways and term inal st a t ions a re not
exclusively for public use. Although petitioner is a pph)ic 11.tility. it
is nonethe,lws profit-earning. It actually uses those carriageways
and terminal stations in its public utility business and earns money
therefrom.
Real property o~~d by the go,y~rnment or any of its political
subdivisions and any GOC_C so exempt_by its charter is exempt from
RPT, but this,exemption shall not applY where the beneficial use has
been granted,1'or consideration or otherwise to a taxable person,
Records of the Constitutional Commission reveal that what is
exempted is ;w)i the institution itself; those ex~mpted from real estate
taxes are lands, buildings and improvements actually, directly and
exclusively used for religious, charitable or educational purposes. ·
What is meant by actual, direct and e'Kciwuv~of the
property for charitable institutions is the cU:re~t and inun~te and
p-roperty
actual appli:cationof'tlie· itileifi~ pn~=s for which the
. charitable institution is organized. It is(fu>t th; of the incginb
794 REVIEWER ON TAXATION
from the real property that is determinative of whether the property
is used for tax-exempt purposes.
-· In sum, SC ruled the portions of the land leased to private
:!::ffl~!!!'~i~ ,:jb~n~:~•;;,~. ~~n~
QC Assessor, .R. o. 144104, June 29, 2004).
0
5. Government Service Insurance System (GSIS) v.
Assesspr of M~nila .(2009). = The GSIS was created under P.D.
1146, which granted tax exemption to it. In 1992, R.A. 7160 removed
all tax exemptions from real property, except those specifically
mentioned -in the law. In June, 1997, R.A. 8291 was enacted and it
restated the exemption of GSIS; among other provisions. In this case, _
GSIS leased some of its properties to private persons. Considering that
GSIS leased some of its real properties, the property must be subject
to the real property tax, such tax to be paid by the lessee thereof.
r .
Bar Question (2000)
_ Article VI, Section 28(3) of the 1987 Philippine Constitution
provides that charitable institutions, churches and pars?nages or
convents appurtenant thereto, mosques, non-profit cemetenes a~d all .
lands buildings-and·imim>-vements.actually, ~i.r~i;tly and exch1s1vely
used for religious, charitable or educational purposes shall be exempt
from taxation.
· ·- -~)- ,To wh~t ki_nd of tax does this onem-p tionapply?
Suggested answer:
. This exemption applies ly to pro ert_y t~e Wh~t is exempted
is not the Institution itself but the a~ds,J!Eildi7:g_s and imp:ovements
actually; directly__'!~d -~c!_l.1-!.~v_e_!,7, Uf!~_d f'!..1:.._!~l_"C":<!.1!-5..!_chantable and
eaiieii:tionalpurposes (Comm1,11swnerofln_'!'"!!'!''_~V~'!:_ue v. Court
- ·-~._ an<+
·· · ·J -rn-1cA GJl •·No .I24"043' Octooer 14, 1998).
ofAppeau, i Jr.1.' ,
LocAL GoVERNMENT CODE 795
Real Property Tax
property taxation _is based on use and not on ownership; hence, the
same rule must also be applied for real property tax exemptions.
Bar Question (2011)
The head priest of the religious sect - Tres Personas Solo Dios,
as the corporation sole, rented out a 5,000 s~.m. lot r:gistered in its
· name for use as school site of a school orgamzed for profit. The sect
used the rentals for the support and upkeep of its priests. Is the rented
·lot subject to real property tax?
Suggested answer:
No, the lot is exempt from real property taxes, since it is actually,
directly and exclusively used b the school for edu · nal purposes.
The corporation sole is also exempt from, rea property tax under n
234(bJoTthe LGC.
Civil remedies for the collection of tax
Bar Question (1997)
Give the remedies available to local government un its to enforce
the collection of taxes, fees, and charges?
Suggested answer:--
The remedies for colleclion may be categorized info {a) the
extra.judicial remedy oflevy, and (b) judicial action (Sec. !256;-LGC),
Levy may be repeated i . necessary until the full amount due, including
all expenses, is collected (Sec. -265,..L C). T_he_)p_ca_l_gor:>ernTJJ,e.n t. 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 compeferitJrzrisclfc"tion. The civil action shall be filed by the local
treasurer within the period prescribeilin Section 27-0 efthis Code (Sec. ··
266, LGC).

Mor~ove7:, the bas~c real P r : , > P ~ r tax levied

b) Is p r ~ u a l use necessary for tax exemption purposes under this Title constitu~ a lien on. the property subject to tax,
under the Constitution? superior. _tQ. all liens, charges or encumbrances ·in favor of any
person, irrespective of the owner or possessor -thereof, enf9rJ:..eo:ble
Sugges:ted ~we~ . by administrative or judicial action! and may only be extinguished
' --- use.JsJ,:X exemptions are strictly construed against the upon pay_rr,;ent of the tax and the related interests and expenses (Sec .
Yes, beca must be evidence to show that the rarp_ayer has 257, LGC).
taxpayer. There ·. · ents for exemption .. Furthermore, real
complied with the requtrem
 REVIEWER ON TAXATION
sar Question (1999) ·
_ A Co., a-Philippine corpora~ion, is the owner of machinery,
e~mpment and fixtures l?cated at its plant in Mwitinlupa City. The
City Assessor characterized all these properties as real properties
subject to the real property tax. A Co. appealed the matter to the
Muntinlupa Board of Assessment Appeals. The Board ruled in
favor of the City, in accordance with R.A. 1125 (Ari Act creating the
Court of Tax· Appeals). A Co. brought a petition for review before
the CTA to appeal the decision of the City Board of Assessment
· Appeals.
Is the Petition for Review proper? Explain.
Suggested answer:
No. The CTA is devoid ofjuri!>diction to_en,tertain appeals from
the decision of the Citz Board of Assessment Appeals. Said ~ o n
is instead appealable to the Central Board of Assessment Appeals,
which under the Local Government Code, has appellate jurisdiction
over decisioTJ,S of Loc_g,J,. Board of Assessment Appeals (Caltex Phils.
v. Central Board ofAssessment Appeals, G.R. N<i. L-50466, May
31,1982). . portion. This amount was deposited by the Government in Edna's
The collection of the tax may be enforced through either_or both ·
the above a · e and ·udicial remedies, .alternatively or
simultaneously, and the use or non-use o one re
an avail er (Sec. 258, C). A _o_r-_ _.,
a r t e payment of the delinquent _t,f!:X__:.. _ not re9u_ir:_ ... for t e
..._in-i-ti-.a-t.i on of either remedy. Tf is enou h that a notice o e
is caused to be posted·and-piiblishea (1,$ required .iiiider Section: 254
of the Code.
The remedy of 1:vy can be pursued by pul1i:!!,g up for sale., only
.\· the revroper:ty subject to t5 (i.e., the delinquent property upon
which the tax lienattaches), regardless of the owner or possessor
thereof The personal liability for the tax delinquency, upon the other
hand, is generally on who ~- _·__ er of t~e r~°:l P:OJ:erty at the
time the tax-accrues:··· ·Fe, however, the_ _ta.!:}~ability is imposed on
the beneficial use of the real property, such as those o w ~
to f?_ri vate persons by the governmenf)(Sec. 234, LGC), or when the
~ -assessmen t is · made on the basis of the actual use thereof (Sec. 199
a nd' 217, LGCJ,. the personal liability is on any person who has such
· ,1;,. · z tual use at the time of the accrual of the tw) (Nueva
ber~ 1 ..,ia or ac •-
Ecija v. Imperial Mining Co., 118 SCRA 632).
LocAL GoVERNMENT CODE 797
Real Property Tax
Regional Trial Courts havejurisdictiQTl. over cases i·,wo{ving the
enfO,!:S'f'roeut g1ul sgllestiou of regl property taxg_s. The conflict in the
provisions o,:ijurisdiction 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 or 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 (National Power Corporation v . Court of Appeals,
supra).
Bar Question (1992)
Ms. Edna Dinoso is the registered owner of a residential lot with
a two-storey house situated in Naga City . The lot with an area of 328
sq. meters is described and covered by TCT No. 4 739 of th e Regi stry
of Deeds ofNaga City.
On September 12, 1977, a 115 sq . meter porti on of Edna's
property was~xpropriated by the Republic of the Philippines for the
sum of ~6,700.00 representing the assessed value of the aforesaid
account.
F<n:~o~t ten UO) years;Edna failed to pay her real estate truces
a 1i t be on the same property. Tln1~~ -on_~ovem~~I.5....lJ~'.77 her property was
sold at .ID,Jhlic auction.by the City-Treasurer of Naga City to satisfy
her real estate tax delinquencies amounting to ~5,80o~·oo. The highest
y bidder for the property was Angel Chua .
E~na was not present at the public auction although she later
· admitted having ·received the notice of hearing for the petition for
entry of a new certificate of title by Angel Chua (Both the auction
sale and the final bill of sale were ahliofated at the back of TCT No .
4739 by the Register of Deeds.) · ·· · ·
On March 15, 1979, Edna filed a complaint to annul the auction
sale which was_ denied by the CFI--Judge of-Naga City. In fact, the
CFI Judge ordered the TCT #4739 of Edna be cancelled and that a
new title be issued to Angel Chua. ·
toto.
On appeal, the -Court of Appeals affirmed the CFI decision in
·
_ Edna then elevated the case to the Supreme Court citing several
grave errors oflaw, ~ong which are:.... _ .
 REVIEWER ON TAXATION
. That her ~ax delinquencies (involving ,.5 800 OO) fi ·
, • or non-
paymen o f r~ al
t
. ~st a te- t~es were. offset .by . the sum of
P6,700.00 which the government ofth Ph'l• .
h Sh 1 · e i 1ppmes owed
er;. : c aims that her tax delinquencies have been·
· extmgu1shed by legal compensation;
2)
':That the price of~5,800.00 paid by Angel Chua was grossly
madequate and tha~ because of its inadequacy, the same is
tantamount to depnvation of property without due process
of law; · ·
3) That the public auction made on her property is void.
Discuss the merits of the appeal.
Suggested answer:
1) The decision of the Court of Appeals affirming the CF!
decision must be affirmed.
On the procedural aspect, it has not been shown as
required under the Real Property Tax Code that plaintiff
has paid the amount for which the real property has been
sold plus interest.
On the claim of extinction of tax liability by legal
compensation, there is jurisprudence to the effert t~at t~e ·
doctrin.f!. of equitable recou,.uroent does not appll_!:!l this
jurisdiction. Assuming it does, the facts of the ·?a~e bear
outthat the Government does not owe the plaintiff any
amount.
2) On the claim that the price for the property was grossly
inadequate, the Real Property Tax Code specifically
mentions that the sale of real property at public auctions is
"to sat· ~and penalties due and cost le"
(Sec. 73, LGC). Thus, the se mg price is based not on the
fair market value of the property sold at public auc#on but
the amount afrealpropeey taxes due thereon. In any case,
the delinquent taxpayer is given one year from the date of
registration of the sale within which to redeem the property
by paying the tax due plus costs and interest.
3) On the claim that the public auction made on the property is
void, the Real Property Tax Code provides (Sec. 83, 2nd par.,
LGC) that a court shall not declared a ~ale invalid due to
irreg ularitir.l$ in lheproeetfliPIJS i,n,kss, such irregularities
LocAL GoVERNMENT CODE 799
Real Property Tax
have °impaired the substantial rights of the taxpayer. In the
case at bar, the plaintiff received a notice of heanngror the
petition for entry of a new certificate of title during which
she could haue questioned any irregularity in the co11,duct
of the sale.
Power to stlb,poena does not jncl~e contempt power
Since the existence of the contempt power in conjunction with the
subpoena power in any government body inevitably poses a potential
derogation of individual rights, the law cannot be liberally construed
to have impliedly granted such powers (Negros Oriental II Electric
Cooperative v. Sangguniang Panglungsod ng Dumaguete, 155
SCRA 421 [19871) .
Prescriptive periods
. The basic real property tax and any other tax levied shall be
colfected within five i§) years fro~ the elate they become due.~ o
action for the collec~ of the tax, whether administrative or judicial ,
sha!} be @ituted al'tel the expg aiion es,uch period. In c~se of fraud
or intent to evade payment oft e ax, such action may be instituted
for the collection thereofwithillc!0 years from the discovery of such
fraud or intent to evade payment.
The period of prescription within which to collect shall be
S'S.Spen~ for the time during which:
1. The local treasurer is legally prevented fraro caUecting the
tax;
2. The owner of the property or the person having legal
interest therein-reqnesfs forreinvestigation and executes a
waiver in writing befor:e the expiration of the period within
which to collect; and .
3. The owner of the property or the person h~ving regal
interesftlierein is out of the conn try o-r otherwise cannot
be located (Sec. 270, L_GQ):_
Bar Question (2011)
Ka Tato owns a parcel of land in Batangas declared for real
property taxati~n as agricultural: In 1990, he -tis~a°the land for a
poultry feed processing plant but continued to declare the property
as agricultural. I;-March 2011, the local tax assessor discovered Ka
800 REVIEWER ON TAXATION
Ta to's_c_h a nge ofu$e of_h,is land_~n_d informed the local treasurer who
demanded payment of deficiency real property taxes from 1990 to
2011 . Has the action prescribed?
Suggested answer:
No. The deficiency real property taxes for the period 1990 up to
20J 1 may still be collected within 1Oyears froir,: March 2011 counting
backward.
Taxpayer's Remedies
Where an assessment is,_ illegal or void, the remedy of the
taxpayer who has ~lready paid the tax under protest is to sue for
. remedies.
ret:Jm.!_in the competent CFv-Where the assessment is merely
~~oneous, his recourse is to file an appe~n the Provi~al Board of
Assessment Appeals within 60 clays from receipt of the assessment.
An assessment is illegal and · whe ower to
act atall. tis erroneous when the·assessor-has the power but errs in
v.
theexercise of that power]Victorias Milling Co. Court of Tax
Appeals, ibid.). . and who should shoulder the burden of the tax (Estate of Concordia
Any owner or person havi,ng ]ega) interest in the property, who
is not satisfied with the action-of-the provincial, city or municipal
assessor may, within sixty days from the date ofreceipt by him of the
written..!!.Otice of assessment, appeal tq the local Board of Assessment
Appeals of the province or city concerned by a petition under .oath,
together with copies of the tax declarations and such affidavits
or cfocument s iri. support·or-the appeal (Sec. 226, LGC; Chavez v.
Ongpin, 186 SCRA 331). The failure...til.i!ppeal within the statutory ·
period renders the assessment final and unappealable (Victorias
Milling .Co. v. Court.of Tax Appeals; 22 SCRA 1008); · . in Section 21 of the RPTC; and (3) at anytime when requested by the
The B<la!:!!.of Assessment Appeais-shatl-~ethe appeal within
~ a y s ji:m;n_receipt of the appeal. The decision oft?e Bo_ard of
Assessment Appeals, which must be based 011_substantial evidence
presented at the hearing or at least contained in the records may be
appealed within 30 days from receipt tbereofby the taxpayer to the
Central Boar d of Assessment Appeals, whose decision shall be final
and executory (S ec. 229, LGC).
ApAe al on assessments of real property made unde_r the
provisions of this Code shall, i~suspend the collection of
the corresponding realty truces on the property iny_o!ved as assessed
by the provincial or city assessor, without prejudice to subsequent
LocAL GoVERNMENT CODE 801
Real Property Tax
adjustment depending upon the final outcome of the appeal (Sec. 231 ,
LGC).
Exhaustio.n...Qf Administrative Remedies
Before seeking the intention of the courts, it is a pre-condition
that petitioner must first avail of all the means afforded by the
administrative processes. Thus, the denial of request for exemption
from real property tax by assessor may .be appealed to the LBAA
as it concerns classification of property. Parties cannot bypass the
authority of the concerned administrative agencies and directly seek
redress from the courts even on the pretext of raising a supposedly
pure question oflaw without violating the doctrine of administrative
However, judic~view may be resorted to via an action for
ref}!!l..d.or reimbursement without exhausting administrative remedies
before the LBAA, where-the plaintiff alleges that he is not.the--owner
or 1.!§!}Uf the property assessed. This is bec~se theTssue is not as
to the amount of tax assessed, but the imposition of the tax assessed·
T. Lim v. City ofManila, 182 SCRA 483 [19901) . As this provision
was adopted from Section 30 of the RPTC, the case is still good law.
No Motion
r for Reconsideration is Allowed Before-the
Assessor's
,,..- _ Office
Under ~on 22 of the Real Property Tax Code (RPTC), there
are only three (3) occasions~hen assessments of real properties may
be ni1;1.w bx the local .11ssessor~l) !!E_On discovery of the real property;
.(2) during th.!:_ general revision of property assessments as provided
person in whose name the property is declared. After an assessment
has been corulucted; the assessor shall within 30 daysjssue a written
notice of such new or revised assessment to the on in whose name
the property is declared. If the owner is ot satisfie with the action
of the assessor in the assessment of his proper y, e fu.y anoeal)w_i1h
~O davs'from receipt.PUhe notice of assessment to the Local Board
~ m e n t Appeals. .
Under Section 226 of R.A. 7160, the last action of the local
assessor on a particular assessment shall be the notice of assessment;
it is t1us1ast action which gives the owner of the property the right
to appeal to the LBAA. The procedure does run permit the property
 802
REvl'EWER ON TAXATION
th
:w::ier e !emedy of filing a motion for reconsideration before the
oc assessor. T? allow this procedure would invite cor~ption in the
system ?f ap!'raisal and assessment. It conveniently courts a graft-
prone situation_ where values of real property may be initially set
unreasonably high, and then subsequently reduced upon the request
of the prope~ o~er (Callanta v. Office ofOmbudsman, January
30, 1998, cited m FELS Energy v. Prov. of Batangas, 2007).
. The special civil action of certiorari would be proper to question
the 'decision of the Central Board of Assessment Appeals. The
recognized rule is that the underlying power in courts to scrutinize
the acts of administrative agencies exercising quasi-judicial power
on qQstions of law and jurisdiction, even where no .review is given
by statute, exists. When R.A. 1125 created the Tax Court in 1954, .
there was as yet no Central Board of Assessment Appeals. Section
7(3) ofR.A. 1125, in providing that the T~Court had jurisdiction to
review by appeal decisions .o f provincial or city boards.0(13,~_e ssment
appeals-ha.din m,ind the.local boards ofassessment appeals, (Q_ut no the
.iC'entral Board ofAssessment Appeals, wJ#cb_w;i,der. the Real Property
'Tax Code has ape._ell~te jurisdiction over decisions of said local boards
of assessment appe s and is, therefore, in the same category as the
Tax Courtycaltex v. Central Board ofAssessment Appeals, 114
SCRA.296).
Cerlior.ari was properly availed of in this case. The rule is that
as to administrative. agen.cies...exer-cising .quasi-judicial power there
is an underlying power in the courts to scrutinize. the aets of_sµch
agencies on questions oflaw and jurisdiction even though no ~g~t-of
review is gjven by the statute (73 CJS ,506). The purpose ofJudICial
review is to keep the administrative -agency witq_i~}~s,jurtsdiction
and protect·substantial-rights· of parties affected by its decisions (73
CJS 507, Sec. 165). 'i'iie'i·eview·is ·i1part'c,fthe·systeiii of checks and
balances which isa·lim:itation on the separation of powers and which
forestalls arbitrary and unjust adjudications (Meralco -Securities
Industrial Corjioration·v. :CBAA; supra).
.
/
'the legislative intent on the Local Government Code appears to
be that any issue relating to real property taxation that a ~axpayer
is minded to raise againsUhe government, whether it be a q.uestion
on the validity of the assessment or of the imposition and collection
of the tax, should be resolved via the administrative route until
it may ultimately reach by way of appeal, the Central ·Board of
Assessment Appeal's. From the latter's decision, judicial'recourse
should still be appropriate following the ruling iri the Meralco and
LocAL GoVERNMENT, Coo&
803
Real Property Tax
Caltex cases. When the issue, ho·w ever, is one that center~ wh~
should bear the burden oftbe tax between two priva~e p_a~ies, th
re.:n;1ar co~rts not the assessment boards, have ~s*ctinp a_ver
0
the case (Testate Estate of Concordia T. L"im v. c·t
~ '
i .Yo fMa nila•
182SCRA 482).
Bar Question (2006)
Quezon City pubHshed on January 30, 2006 a list of delinquent
real property taxpayers in 2_newspapers of general circulation and
posted this in the main lobby of the City Hall. The notice requires all
owners of real properties in the list to pay the real property tax due
within 30 days from the date of publication; otherwise, the properties_
listed shall be sold at public auction.
Joachin is.one of those named in the list. He purchased a real
property in 1996 but failed to~ster the document of sale with the
Register of Deeds and secure a new real property tax declaration in
· his name. He alleged that the auction sale of his property is void for
lack of d~cess considering that the City Treasurer did not send
_him per~al notice. For his part, the City Treasurer maintains that
the publication and posting of notice are sufficient compliance with
the requirements of the law.
1. If you were the judge, how will you resolve this issue?
2. Assuming Joachin is a registered owner; will your answer
be the same?
Suggested answer:
1. I will resolve the issue in favor of tb&._S:ity Treasurer. For
purposes of the real property tax, the regi.§.kred owner of the
property is deemegJh_e taxpayer. H ence, only the registered
.owner is entitled to a notice of tax delinquency and other
a
proceedings relative to tax sale (Talusan v . Tayag
and Hernandez, 8568CRA 268 [20011) . Not being the
registered owner of the property/Joachin cannot claim to
have been deprived ofsuch notice)In fact, he was not en.{itled
JQ.j,t. He brought the misfortune upon himself, because he
did not register the Deed of Sale with the R egister of Deeds
upon its execution or secure a tax d eclaration in his name.
He did not take the necessary steps to protect and legitimize
his interest. The auction sale of his property is, therefore, .
valid.
 REVIEWER ON TAXATION
No, my answer will not be the same The l . . .
of the auction sale ust b . aw reqlJJIU...Q. notice
er A mere m._ . 'L/IDlper--ly -sent.to_th£!::teg,,s@'lJJ;>
· publu:ation of the notice of delinquency
~ ou d not suffice con ·d ·
l . . • si ermg t h at the procedure · in tax •
:~ es is_ m per_sonam. An_au~tion sale, although preceded by
vertise7:1-ent and publication but without an actual notice
to the delinquent taxpayer, is void (Tan v. Bantegui, 473
SCRA. 663 [2005]; Estate ofMercedes Jacob v. CA, 283
SCRA. 474 [1997]).
Bar Question (2002)
A. Aside from the basic real estate tax, give three (3) other
taxes which may be imposed by provincial and city
governmen~ as well as by municipalities in the Metro
Manila Area. - G.R. No. L-119172, March 25, 1999).
B. An Ordin!,!lce was passed by the Provincial Board of a
Province in the North, increasing the rate of basic real
prope~tax from 0.006% to 1% of the assessed-value of the
real property effective January 1, 2000. Residents of the
municipalities of the said province protested the Ordinance
on the ground that no public hearing was conducted and,
therefore, any increase in the rate of real property tax is
void.
Is there merit in the protest? Explain your answer.
Suggested answer:
A. Th~ following real property taxes aside. from the basic
real properly tax may be imposed by provincial and city
governments as well as by municipalities in the Metro
Manila area: · ·
LocAL GoVERNMENT CODE 805
Real Property Tax
B. The protest is devoid ofmerit. No p11,blic hearing is r~quir~d
before the enactment of a local tax ordinance _levying t e
basic real_pro~ tax (Art. 234, LGC Regulations).
Ye: th~re is merit in the protest provided that sufficient
proof cn~ld he in.t~oduced for the n.nn.-observa.n.ce nf public
hearing. By implication, the Supreme Court recognized that
public hearings are . requi,:ed to be conducted rior to the
enactment ofan or inance imposing real pro erty taxes. Alt ,ough
it was cone u e e ig es tri unal that<i!J-e'sumption of
validity ofa tax ordinance can not be overcome by bare assertions
ifprocedural def~cts .on its enactment)it would seem that if the
taxpayer had presented evidence to support the allegation that no
public hearing was conducted, the Court uld have ruled that
the tax ordiTIJ!,nce is invalid (Figuerres v. Court o Appeals,
Bar Question (1991)
l . The Municipality"ofMalolos passed an ordinance imposing a tax
on any sale or transfer of real property located within themunicipality
at a rate of one-fourth (1/4) of one percent (1 %) of the total consider-
ation of such transaction. X sold a parcel ofland in Malolos, which he
inherited from his deceased parents and refused to pay the aforesaid
tax. He instead filed appropriate case asking that the ordinance be
declared null and void since such a tax can only be collected by the
national gov~ment, as in fact he has paid BIRthe required capital
gains tax. The Municipality countered that under the Constitution,
each local government is vested with the power to create its own
sources ofrevenue and to levy taxes, and it imposed the subject t ax in
the exercise of said constitutional authority. Resolve the controversy.
Suggested answer:

1. Additionci,J levy on real property for the Special . The ordinance passed by the Municipality of Malolos imposing
Education ~ 3 5 , LGC); a tax on the sale or trans er l roperty ~ d. The Local Tax
Code only allows rovinces and · · · o impose a tax on the transfer
2. Additio~lorem tax on idle lands (Sec. 236, of ownership of rea property (Secs. 7 and 23, LGCJ. Municipalities
LGCJ;and _ .. are prohibited from imposing said tax that provinces are ~r:ifically
3.
-
Special levy (Sec. 240, LGC).
[Note: Other taxes may comprise the enumeration
because many other laws have authorized them to be
auth.o!iE}d to levy (Sec. 22, LGC). ·
While it is true that the Constitution has given broad powers of
taxation to local government units, this delegation, however, is subject
imposed by LGUs.] to such limit~ as may be provided by _law (Sec. 5. Art. X, 1987
Constitution).
/-: RIMEWER ON TAXATION
Payment of tax under protest
· No protest shall b t .
Wh en a taxpayer de · e en~ ertamed unless the tax is first paid
sires 1or any ·reason- to pay-his tax under
protest he shall· d . t h
·: m ica e t e amount or portion thereof which he is
contesting
b . . and such prot est sh all
. be annotated on the tax receipts
.
Y wntmg thereon the word "paid under protest." The protest shall
be c o n ~ ;~ ,__,.._,_ .
. - ~ g , with a statement of the ground therefor,
~thin 30 days. The written prcilesf shall be filed with the provincial,
city 0rnnmtcip_~l treasurers within the Metropolitan Manila Area,
who shall decide tlie protest within sixty (60) days from the receipt
_of the protest. . Suggested answer:
In case of payments under protest, the amount or portion of the
tax contes~d shall-b e-held in trns~y the treasurer and the difference
shall be treated as revenue.
In the event that the protest is finally decided in favor of the
protestant, the amount or portion of the tax protested against may
either be refunded to the protestant or app_lied_as tax~ t to any
other t;xisting or future tax liability of tllesaicfprotestant. <It: the V
protest is denied orupon the lapse of 60 days without the protest
being finally decided, the taxpayer may avail of the remedies (i.e.,
appeal may be taken·to the Board of Assessment Appeals))'Sec. 252,
LGC). . annotate the ground or grounds therefor on the receipt.
Protest is not a requirement in order that a taxpayer, who
paid un~a 1~iistake1rbelief that it is required by l~~•- may cla_im
for refund. Section 54 of C.A. 470 does not apply to petitioner which
could conceivably not have been expected to protest a payment it
honestly believed to be due. The same refers only to the case where the
taxpayer, despite his knowledge of the erroneous or ill~gal assessment, _
still pays and fails to make the proper protest, for m such case, he
should manifest an unwillingness to pay, and failing so, the taxpayer ·
. is deemed_~ have waived his right to claim a refun~Ramie Textiles
v. Mathay, 89 .SCRA 586).
Bar Question (1993)
On -F-ebrnary 13, _1~?-~, .lC,S!h.t.?.ined a loan of~800,000.00 from
the GSIS secured by the mortgage of a parcel of land including its
improvements. X failed to pay the loan. The lot was foreclosed and
sold at public auction to the GSIS as the highest bidder. X failed to
redeem the lot and the GSIS consolidated its title to the lot in 1977. ·
In 1979, however, the GSIS allowed X to repurcha.se the .lot.
L oCA.L GoVERNMENT
Real Property Tax
CooF:
. Assessor the City Treasu rer of
807
After assessment by the City
Manila required X to pay the re;i esta:e
years 1977 and 1978. X paid un er pro es . ~
:x;~
t ' due on the lot for the
September 5. 1979, X
fund The deman d
sent a demand letter to the City Treasurer or re .
was refused.
X then filed with the Regional .Trial Court a comp~~int
the Cit of Manila for a "sum of money and/or reco~e~ o . r~a
·
~!:!:::
taxes p~id under protest." The City questione~ t~e Junsdict10n of :he
Court. Decide.
Section 62 of the Real Property Tax Code provides that:
"Sec. 62. Payment under protest. -
When a taxpayer desires for any reason to pay hi~ tax under
"a)
protest, he shall indicate the amo.unt or portion thereof
he is contesting and such protest shall be annotated on
t-he-tax receipts by writing thereon the words 'paid under
protest.' Verba{protests shaU be confirmed in writing, with
a statement of the ground therefor within thirty days . The
tax may be paid under protest, and in such case it shall be
the duty of the Provincial, City or Municipal Treasurers to
"b) In case of payments under protest, t_h e amount or portion
of the-tax-contested shall be heljtin trust by the treasurer
and the difference shall be treated as revenue.
"c) In the event that the protest _is finally decided in favor ofthe
·government the amount or portion of the tax held in trust
by the treasurer shall accrue to the revenue account, but if
the protest shall be decided finally in favor ofthe protestant,
the amount or portion of the tax protested or applied as tax
credit to any other existing or future tax liability of the said
protestant."
If the owner is not satisfied with the action of the
provincial or city assessors in the assessment ofhis property,
he may.file an appeal to the Board ofAssessment Appeals of
the_province on city, within sixty (60) days from the receipt
of the decision (Sec. 30, RPfC).
If the owner. is .not. satis/ie,d_tuith 0... -411ecifton of the
Board of Assessment Appeala, 1'c ,,...,, wsal the ,aid
 REVIEWER ON TAXATION

decision to the Cer:z,tral Board ofAssessment Appeals within

thirty (30) days after the receipt of the decision (Secs. 34
and 36, RPTC).
As enunciated in the case of Victorias Milling Co. v. PART VII
Court of Tax Appeals, 22 SCRA 1008 (1968):.
"It is settled in our jurisdiction that where an TARIFF AND CUSTO
assessment is illegal and void, the remedy of a taxpayer,
who ~ already paid the realty tax under protest, is to ·CHAPTER XXX
sue or refund in the f:Ompetent court of first instazu:e. On
the other hand, 'where the assessment is merely erroneous, FUNDAMENTAL PRI
his recourse is to file an appeal in the Provincial Board
of Assessment Appeals within 60 days from receipt of the
assessment.":> - Customs Duties
In view of the foregoing, the legal recourse of X is to "Customs duties" is the name giver
appeal the decision of the City Treasurer to the Board of and exportation of commodities, the t:
Assess~peal, and not to file an actwn for sum ofmoney merch_andise imported from, or exported 1
and I o r ~ ofreal estate taxes. Hence, the...!l!.Qional Trial Phils .·v . Court of Appeals, supra).
Court has jurisdiction over the complaint filed by X.
_ Cust~s duty attaches when goo
Bar Question (2004) they are 'brought within custoI)J.S.j_uri
unlade, the general principle of law b
RC is a law-abiding citizen who pays his real estate taxes imports immediately on their arrival wi
promptly. Due to a series of typhoons and adverse economic conditions, regardless of any destruction that may c
an ordinance is passed by MM City, granting a 50% discount for MicroElectronics v. Republic of the 1
payment of unpaid real estate taxes for the preceding year and the 2012).
condonation of all penalties or fines resulting from the late payment.
Arguing that the ordinan~e rewards delinquent taxpayers and Imported Articles Subject to Out
discriminates against prompt ones, RC demands that he be refunded All articles, when imported from ~
an amount equivalent to one-half of the real estate taxes he paid. The Philippines, shall be subjectto duty u
municipal attorney rendered an opinion that RC cannot be reimbursed · though previously exported from the Phi
because the ordinance did not provide for such reimbursement. RC specifically provided for in this Code or i
files suit to declare the ordinance void on the ground that it is class
legislation. Will his suit prosper? Explain your answer briefly. Prohibited Importations
Suggested answer: The importation into the Philippin
The suit will not prosper. The remission or condo nation of taxes prohibited:
due and payable to the exclusion of tax~already collected does not a. Dynamite, gunpowder, amrm
constitute unfair discrimination. Each set of taxes isJ!:Sl_ass by itself firearm and weapons of war,
and the law would be open to attack as class legislation only if all except when authorized by h
taxpa rs belonging to one class were not treated aiike (Juna Luna
Subdivision, n . . il. 371 [19521).
809