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Assignments in Real Property Tax

1. Sec. 197 to 247 of the Local Government Code

2. Vitug and Acosta

3. Cases:

i. Benguet Corp. v. Central Board of Assessment Appeals, GR 106401, Jan 29, 1993, pg. 7 Flores book.. Are tailings
improvements subject to property tax?
ii. Caltex Phils. V. CBAA, 144 SCRA 296 (pg 18, ibit. – Are 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 Caltex Phils in its gas stations on leased land subject to tax?
iii. Sebreno v. CBAA, 270 SCRA 263 – 43 ibit. – RPTC provides that all real property shall be appraised at the current
and fair market value prevailing in the locality where the property is situated. It also held that the area in excess of
declared area upon discovery is deemed declared for the first time.
iv. Testate Estate of Lim v. City of Manila, 182 SCRA 483 – The term actual use for assessment purposes refers to the
principal and predominant utilization of the property by the person in possession thereof pursuant to Sec 199(b) LGC.
v. Patalinjug v. Court of Appeals, 229 SCRA 554(104786, Jan 1994)* pg.42, ibit. – Under the RPTC appraisal and
assessment are based on actual use irrespective of any previous assessment or taxpayer’s valuation thereon which
is based on the taxpayer’s declaration.
vi. Prov of NE v. Imperial Mining Co. GR 59463, Nov 19, 1982 – RPT is based on actual used even if the user is not the
owner thereof.
vii. Belen v. Court of Appeals 160 SCRA 291 – Basis of valuation for purposes of determining just compensation in
expropriation cases reiterating Export Processing Zone case which reversed the 1983 National Housing case that
used owner’s TD as basis.
viii. Allied Bank v The Quezon City Government GR 154126 Oct 11, 2005 – Is deed of sale proper basis of RPT?
ix. Reyes v. Almanzor , 196 SCRA 322 “Income Approach” was held by the SC as basis instead of Comparable Sales
Approach since the Rental Law prohibited owners from increasing rents and thus income could not even pay for
taxes. The power to tax is the strongest of the powers of the government.
x. MIAA v CA, GR 145650, Jul 20, 2006 – Is MIAA subject to RPT? Compare with Mactan International Air v. Ferdinand
Marcos, RTC judge Cebu, Osmena, Cesa, GR 120082, Sept 11, 1996
xi. City of Davao v RTC – GR 127383 Aug 18, 2005 – Exemption of GSIS from RPT
xii. Roman Catholic v.Hastings 5 Phil 701 – Tax exemption is construed against the taxpayer. But according to Cooley, if
it the government, it is construed liberally. Lands, buildings and improvements actually, directly and exclusively used
for religious, charitable or educational purposes exempt under the Constitution, if they were so, exemption will apply
irrespective of its ownership.
xiii. Lung Center of the Philippines v Quezon City, 433 SCRA 119 (2004). The test whether an enterprise is charitable or
not is whether it exists to carry out a purpose recognized in law as charitable or whether it is maintained for gain,
profit, or private advantage. .
xiv. Philippine Ports Authority v City of Iloilo, 442 SCRA 175 (2004). The bare fact that the port and its facilities and
appurtenances are accessible to the general public does not exempt it from the payment of real property taxes- the
said facilities and appurtenances are PPA’s corporate patrimonial properties, not for public use, and that the
operation of the port and its facilities and the administration of its buildings are in the nature of ordinary business
xv. RCPI v Prov Assessor of So. Cotabato 144486 Apr 13, 2005 – Radio franchise holder is subject to RPT despite “in
lieu of all taxes” provision in the franchise law because the law itself says it is subject thereto and the LGC has
withdrawn all exemptions.
xvi. Puzon v. Abellera, 169 SCRA 789 (1989) – Auction sale although preceded by advertisement and publication but
without an actual notice to the delinquent taxpayer is void.
xvii. Ramie Textile Inc. v. Mathay 89 SCRA 586 – Appeal from decision of assessor to LBAA within 60 days. Payment
under protest is not required if there was mistaken belief that the payment when made was correct. In the case bar,
petitioner had no prior knowledge that it was exempt. It however ruled that 6 years prescription in Civil Code Art. 1145
apply for claim for refund, there being no similar provision as in the current LGC. In Quimpo v. Mendoza, 107 SCRA
73, the payment under protest requirement applies only to basic tax but not to penalties.
xviii. Olivarez v Marquez 438 SCRA 679 (2004) – Payment under protest
xix. RCPI v Prov of South Cotabato, GR 144486 Apr 13, 2005 – procedure in appealing assessment & whether certain
pieces of equipment are subject to RPT
xx. Manila Electric Co. v. Barlis, 433 SCRA 11 (2004) An assessment fixes and determines the tax liability of a taxpayer.
It is a notice to the effect that the amount therein stated is due as tax and demand for payment thereof. Assessor
mandated under Sec 27 of PD 464 to give written notice within 30 days of such assessment, to the person in whose
name the property is declared. If the taxpayer is not satisfied with the action of the local assessor in the assessment
of the his property, he has the right under Sec 30 of PD 464 to appeal to the Local Board of Assessment Appeals by
filing a verified petition within 60 days from service of said notice of assessment. For to do so the right of the local
government to collect the taxes due becomes absolute upon the expiration of such period, with respect to the
taxpayer’s property.
xxi. City Gov of Q.C. v Bayantel GR 162015 Mar 6, 2006 – Is Bayantel subject to Franchise Tax?
xxii. The Supreme Court recently stopped the Iloilo City government from auctioning off the Iloilo Fishing Port Complex
(IFPC) in satisfaction of the Philippine Fisheries Development Authority (PFDA)’s alleged property tax delinquency
amounting to Php5.07 Million. PFDA leases portions of the IFPC to private firms and individuals.

In a decision penned by Justice Consuelo Ynares-Santiago, the Court’s Third Division granted the petition of the state-run PDFA, which assailed
the scheduled sale of the IFPC and its tax delinquency, asserting that it is tax-exempt. The Court thus set aside the June 21, 2005 decision of the
Court of Appeals (CA) allowing the sale of the IFPC, which is part of a 21-hectare reclaimed lot in Iloilo City. The PFDA appealed to the CA after
the Iloilo City Assessor’s Office, Department of Finance, and the Office of the President dismissed its petitions for tax exemption.

The Court held that the PFDA, as an instrumentality of the national government, is generally tax-exempt. Thus, it ruled that the PFDA is liable to
pay real property taxes assessed by the City of Iloilo on the IFPC only with respect to those portions which are leased to private entities. Moreover,
the Court held that the IFPC, being a reclaimed property and thus part of public domain, cannot be the subject of a sale and be sold at a public
auction. As such, the tax delinquency has to be settled through means other than the sale of the complex.

The Court also declared the real property tax assessments issued by the City of Iloilo on the land and buildings of the IFPC as void except on those
portions leased to the private parties. It also directed the City of Iloilo to refrain from levying on the IFPC to satisfy the payment of the real property
tax delinquency. (GR No. 169836, Philippine Fisheries Development Authority vs. CA, July 31, 2007)

i.
ii. Digitel Telecommunications Phis. v Prov of Pangasinan GR 152534 Feb 23, 2007 – Issues affecting exemption from
franchise tax and real property tax under the LGC.
iii. Digitel Telecom v City Government of Batangas, GR 156040 Dec 11, 2008 - The issue in this case involves the
interpretation of the phrase “exclusive of this franchise” in the first sentence of Section 5 of RA 7678.

Section 5 of RA 7678 states:

Sec. 5. Tax Provisions. - The grantee shall be liable to pay the same taxes on its real estate, buildings, and
personal property exclusive of this franchise as other persons or corporations are now or hereafter may be required by
law to pay. In addition thereto, the grantee shall pay to the Bureau of Internal Revenue each year, within thirty (30) days after
the audit and approval of the accounts, a franchise tax as may be prescribed by law of all gross receipts of the telephone or
other telecommunications businesses transacted under this franchise by the grantee; Provided, That the grantee shall continue
to be liable for income taxes payable under Title II of the National Internal Revenue Code pursuant to Section 2 of Executive
Order No. 72 unless the latter enactment is amended or repealed, in which case the amendment or repeal shall be applicable
thereto.

The grantee shall file the return with and pay the tax due thereon to the Commissioner of Internal Revenue or his duly
authorized representative in accordance with the National Internal Revenue Code and the return shall be subject to audit by the
Bureau of Internal Revenue. (Boldfacing and underscoring supplied)

i. Lourdes Masikip v People GR 165265 Feb 6, 2006 – Meaning of public purpose for expropriation
ii. Power barges owned by NPC contractors are subject to RPT; appeal from the decision of local assessor
should be made to the Local Board of AssessmentAppeals within 60 days from receipt of the assessment.
The Motion for Recon with the Assessor’s office does not toll the period as it is not sanctioned by the law.
Exemption of NPC does not extend to contractor. (Fels Energy, Inc. v. The Province of Batangas and the
Office of the Provincial Assessor of Batangas, G.R. No. 168557; and National Power Corporation v. Local Board of
Assessment Appeals of Batangas and the Province of Batangas, G.R. No. 170628, February 16, 2007)
Power barges owned by a contractor supplying electricity to the National Power Corporation (NPC) are real properties subject to the real property tax
(RPT) imposed by local governments.

Article 415 (9) of the New Civil Code, 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. Power barges are categorized as immovable property by destination, being in the nature of
machinery and other implements intended by the owner for an industry or work which may be carried on in a building or on a piece of land and which
tend directly to meet the needs of said industry or work.

Such power barges owned by an NPC contractor cannot avail of the real property tax exemption under Section 234 (c) of R.A. No. 7160 because the
power barges are owned, operated, managed and maintained by the contractor. The contractor is the party liable to the real property tax, not NPC.
The exemption provision applies only to real properties actually, directly and exclusively used by a government-owned and controlled corporation
engaged in the supply, generation, and transmission of electric power.

The mere undertaking of NPC under the agreement with the contractor that it shall be responsible for the payment of all real estate taxes and
assessments, does not justify the exemption. The privilege granted to NPC cannot be extended to its contractor. The agreement is between NPC and
the contractor and does not bind a third person not privy thereto, such as a local government.

i.

QUESTIONAIRES IN REAL PROPERTY TAXATION

1. Describe the nature of real property.

A real estate tax is a direct tax on the ownership of lands and buildings or other improvements thereon, not especially exempted, and is payable
regardless of whether the property is used or not, although the value may vary in accordance with such factor. The tax is usually single or
indivisible, although the land and building or improvements erected thereon are assessed separately, except when the land and building or
improvement belongs to separate owners. It is a fixed proportion of the assessed value of the property taxed, and required, therefore, the
intervention of assessors. It is collected or payable at appointed times, and it constitutes a superior lien on and is enforceable against the
property subject to such taxation, and not by imprisonment of the owner. Eusebio Villanueva v. City of Iloilo, [G.R. No. L-26521. December 28,
1968.]

2. Who may impose real property tax? Province, cities and municipalities in Metro Manila.
3. What the fundamental principles in the appraisal, assessment, levey and collection of real property tax? (Sec. 198)
a. Appraised at current and fmv
b. Classified for assessment purposes based on actual use
c. Assessed on the basis of a uniform classification within each LGU
d. Appraisal, assessment, levy and collection not let to private person
e. Appraisal and assessment equitable
4. Define:
a. Acquisition cost
b. Actual use
c. Ad valorem tax
d. Agricultural land
e. Appraisal
f. Assessment
g. Assessment level
h. Assess value – Reyes v. Almanzor property covered by rental law. DOF ruling that squatter infested land which used to be
declared as Area Priority Development under PD 2016 thus exempted has ceased to be exempted under LGC which has
repealed some exempt statutes.
i. Commercial land
j. Depreciated Value
k. Economic life
l. Fair market value
m. Improvement
n. Industrial land
o. Machinery
i. Computers, airconditioning actually, directly and exclusively used by the bank in its operation were considered realty
by DOF
ii. Barges were not considered like airplane, etc. – DOF
iii. Forlifts, loaders are realty – DOF
iv. If not used, not taxable
p. Mineral lands
q. Reassessment
r. Remaining economic life
s. Remaining value
t. Replacement or Reproduction cost
u. Residential land

5. What is the duty of real property owner or administrator (Sec. 202)


6. What is the duty of person acquiring real property or making improvement, or transferring real property ownership(Sec. 203 & 208)
7. What are duties of the Registrar of Deeds, Official issuing Building Permit or Certificate of Registration of machinery, Geodetic Engineer
and Notary Public to ensure that rpt is paid? (Sec 209, 210, 211)
8. What are the classes of real property for assessment purposes/ (Sec 215)
a. Residential
b. Agricultural
c. Commercial
d. Industrial
e. Mineral
f. Timberland
g. Special
9. How are the above classes of real property grouped for purposes of applying assessment levels? (218)
a. Land
i. Residential
ii. Agrix
iii. Com
iv. Ind
v. Min
vi. Tim
b. Buildings and Other structures
i. Res
ii. Agrix
iii. Com/Ind
iv. Tim
c. Machineries
i. Agrix
ii. Res
iii. Com/Ind
d. Special classes
i. Land, bldg, machineries & other improvements
1. cultural
2. scientific
3. Hospital
4. Local water district
5. govt owned or controlled corp. electric power to correlate with sec 216, land or the realty must be owned
by GOCC, if owned by private party it cannot be classified special.

10. What are special classes of real property? (Sec 216)


11. What is meant by beneficial use theory? Board of Assessment Appeals of Tacloban v. CBAA GR111955, Oct 27, 1993. Only patrimonial
properties of the state which are not intended for public use or public service or for development of national wealth may be subject to the
beneficial use theory. Sec 205 of LGC
12. What shall be the basis for assessment of real property? (217)
13. What are considered immovable properties under Art. 415 of the Civil Code?
14. Art 415 was applied in Mindanao Bus Co. v. City Assessor of Cagayan de Oro, 6 SCRA 197.
15. Who may levy real property tax? (232)
a. Provinces
b. Cities
c. Municipalities in Metro Manila. Other mun outside MM cannot, except special assessment due to public works.
16. What are the real properties on which rpt may be levied? (232)
a. Land, building, machinery and other improvements
17. What are instances for the assessor to make a classification, appraisal and assessment of the real property listed and described in the
declaration irrespective of any previous assessment or taxpayer’s valuation thereof, and how often? (220)
a. Declared for the first time
b. General revision
c. A request is made by registered owner
18. When does the assessment or re-assessment take effect? (Sec 221)
19. What is the rule on the assessment of property subject to back taxes (Sec 222)
20. How are machineries assessed/ depreciation?(224/225)
21. What are remedies of taxpayer who does not agree to the assessment? (226)
a. Local Board of Assessment Appeals – 60 days from receipt of notice of assessment from assessor
b. Central Board of Assessment Appeals – 30 days from receipt of decision of LBAA who should make decision in 120 days
c. Court of Tax Appeals En Banc – 30 days from CBAA decision
d. Supreme Court
22. May appeal stop the payment of tax?
23. What taxes, levies or assessments may LGU levy on real properties?
a. 1% or 2% Ad Valorem Tax for provinces and cities/MM mun
b. 1% Special Educational Fund
c. 5% Ad valorem tax on idle land
d. Special Levy on the lands benefited by public works (60% of cost)
24. What are exempt from real property tax? (234)
a. Owned by RP, or any of its political subdivisions, except when the beneficial use thereof has been granted, for consideration or
otherwise, to a taxable person. Per NDC v. Cebu City 215 S 382 to be exempted the government agencies should not have
separate and distinct personalities, meaning unincorporated agencies. Thus NDC is taxable as is Mactan International Airport
Authority MIAA v. Marcos 261 SCRA 667. But SSS & GSIS are exempt per DOJ No. 165, 1994. Installment buyers from GSIS
housing though title has not been transferred are liable to tax cause use and possession have been transferred. GOCC exempt
under their charters exemption under RPTC has been removed from LGC. EPZA registered companies are no longer exempt.
Duty Free Phils is exempt from local and real property taxes per DOJ. ECOZONE exempt per 1998 letter of dof but NFA taxable.
b. Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, nonprofit or religious cemeteries and
all lands, buildings and improvements actually, directly, and exclusively used for religious, charitable or educational purposes.
Herrera v. QC Board of Assessment Appeals (3 SCRA 186 (1961); CIR v. Bishop Missionary District 14 SCRA 191 (1965)
c. All machineries and equipment actually, directly and exclusively used by local water district and gov owned or controlled corp
engaged in the supply and distribution of water and/or generation and transmission of electric power.
d. All real property owned by registered cooperatives RA6938
e. Machinery and equipment used for pollution control and environmental protection
f. Educational institutions actually, directly and exclusive used for such purpose.
25. What exemptions were withdrawn?
a. GOCC LRT, Mactan Airport SC cases. But Phil Racing per DOF is exempt because the “in lieu” phrase could not be voided by
the general provision of LGC.
26. When does the tax accrue or accrue?
27. Who are responsible for the collection of real property tax?
28. When and how shall the tax be paid?
29. What are the remedies of the taxpayers?
30. What is the rule on payment under protest? 252
a. No protest entertained without payment first
b. OR indicate paid under protest
c. Filed within 30 days from payment in writing to treasure, who shall decide in 60 days
d. Payment held in trust
e. If won, refund or credit vs. next payment
f. If denied, or upon lapse of 60 days, appeal to LBAA, CBAA, CTA, SC
31. What are the remedies of the treasurer in case of tax delinquencies? 254
a. Distraint of personal property
b. Auction sale of real property
c. Administrative action through levy of real property
d. Judicial civil action under 270 of LGC
32. Within what period may taxes be collected? 270
a. 5 years from becoming due, or 10 years from discovery of fraud or intent to evade payment
33. When is the period of prescription suspended?
a. Local treasurer legal prevented from collecting
b. Owner or one with interest request for reinvestigation and executes a waiver in writing before expiration of period to collect
c. Owner or with interest is out of the country or cannot be located
34. When may taxes, interest and penalties be condoned or reduced and by whom? 276/277
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