Real Property Taxation

Section 198. Fundamental Principle

The appraisal, assessment, levy and collection of real property tax shall be guided by the following fundamental principles:
(a) Real property shall be appraised at its current and fair market value;
(b) Real property shall be classified for assessment purposes on the basis of its actual use;
(c) Real property shall be assessed on the basis of a uniform classification within each local government unit;
(d) The appraisal, assessment, levy and collection of real property tax shall not be let to any private person; and
(e) The appraisal and assessment of real property shall be equitable.

Section 199. Definition of Terms:

  • (a) "Acquisition Cost"
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    "Acquisition Cost"

    - for newly-acquired machinery not yet depreciated and appraised within the year of its purchase, refers to the actual cost of the machinery to its present owner, plus the cost of transportation, handling, and installation at the present site;

  • (b) "Actual Use"
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    "Actual Use"

    - refers to the purpose for which the property is principally or predominantly utilized by the person in possession thereof;

  • (c) "Ad Valorem Tax"
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    "Ad Valorem Tax"

    - is a levy on real property determined on the basis of a fixed proportion of the value of the property;

  • (d) "Agricultural Land"
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    "Agricultural Land"

    - is land devoted principally to the planting of trees, raising of crops, livestock and poultry, dairying, salt making, inland fishing and similar aquacultural activities, and other agricultural activities, and is not classified as mineral, timber, residential, commercial or industrial land;

  • (e) "Appraisal"
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    "Appraisal"

    - is the act or process of determining the value of property as of a specified date for a specific purpose;

  • (f) "Assessment"
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    "Assessment"

    - is the act or process of determining the value of a property, or proportion thereof subject to tax, including the discovery, listing, classification, and appraisal of properties;

  • (g) "Assessment Level"
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    "Assessment Level"

    - is the percentage applied to the fair market value to determine the taxable value of the property;

  • (h) "Assessed Value"
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    "Assessed Value"

    - is the fair market value of the real property multiplied by the assessment level. It is synonymous to taxable value;

  • (i) "Commercial Land"
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    "Commercial Land"

    - is land devoted principally for the object of profit and is not classified as agricultural, industrial, mineral, timber, or residential land;

  • (j) "Depreciated Value"
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    "Depreciated Value"

    - is the value remaining after deducting depreciation from the acquisition cost;

  • (k) "Economic Life"
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    "Economic Life"

    - is the estimated period over which it is anticipated that a machinery or equipment may be profitably utilized;

  • (l) "Fair Market Value"
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    "Fair Market Value"

    - is the price at which a property may be sold by a seller who is not compelled to sell and bought by a buyer who is not compelled to buy;

  • (m) "Improvement"
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    s"Improvement"

    - is a valuable addition made to a property or an amelioration in its condition, amounting to more than a mere repair or replacement of parts involving capital expenditures and labor, which is intended to enhance its value, beauty or utility or to adapt it for new or further purposes;

  • (n) "Industrial Land"
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    "Industrial Land"

    - is land devoted principally to industrial activity as capital investment and is not classified as agricultural, commercial, timber, mineral or residential land;

  • (o) "Machinery"
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    "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 those not permanently attached to the real property which are actually, directly, and exclusively 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, logging, commercial, industrial or agricultural purposes;

  • (p) "Mineral Lands"
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    "Mineral Lands"

    - are lands in which minerals, metallic or non-metallic, exist in sufficient quantity or grade to justify the necessary expenditures to extract and utilize such materials;

  • (q) "Reassessment"
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    "Reassessment"

    - is the assigning of new assessed values to property, particularly real estate, as the result of a general, partial, or individual reappraisal of the property;

  • (r) "Remaining Economic Life"
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    "Remaining Economic Life"

    - is the period of time expressed in years from the date of appraisal to the date when the machinery becomes valueless;

  • (s) "Remaining Value"
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    "Remaining Value"

    - is the value corresponding to the remaining useful life of the machinery;

  • (t) "Replacement or Reproduction Cost"
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    "Replacement or Reproduction Cost"

    - is the cost that would be incurred on the basis of current prices, in acquiring an equally desirable substitute property, or the cost of reproducing a new replica of the property on the basis of current prices with the same or closely similar material; and

  • (u) "Residential Land"
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    "Residential Land"

    - is land principally devoted to habitation.

Section 200. Administration of the Real Property Tax

The provinces and cities, including the municipalities within the Metropolitan Manila Area, shall be primarily responsible for the proper, efficient and effective administration of the real property tax.

Section 201. Appraisal of Real Property

All real property, whether taxable or exempt, shall be appraised at the current and fair market value prevailing in the locality where the property is situated. The Department of Finance shall promulgate the necessary rules and regulations for the classification, appraisal, and assessment of real property pursuant to the provisions of this Code.

Section 202. Declaration of Real Property by the Owner or Administrator

It shall be the duty of all persons, natural or juridical, owning or administering real property, including the improvements therein, within a city or municipality, or their duly authorized representative, to prepare, or cause to be prepared, and file with the provincial, city or municipal assessor, a sworn statement declaring the true value of their property, whether previously declared or undeclared, taxable or exempt, which shall be the current and fair market value of the property, as determined by the declarant. Such declaration shall contain a description of the property sufficient in detail to enable the assessor or his deputy to identify the same for assessment purposes. The sworn declaration of real property herein referred to shall be filed with the assessor concerned once every three (3) years during the period from January first (1st) to June thirtieth (30th) commencing with the calendar year 1992.

Section 203. Duty of Person Acquiring Real Property or Making Improvement Thereon

It shall also be the duty of any person, or his authorized representative, acquiring at any time real property in any municipality or city or making any improvement on real property, to prepare, or cause to be prepared, and file with the provincial, city or municipal assessor, a sworn statement declaring the true value of subject property, within sixty (60) days after the acquisition of such property or upon completion or occupancy of the improvement, whichever comes earlier.

Section 204. Declaration of Real Property by the Assessor

Declaration of Real Property by the Assessor. - When any person, natural or juridical, by whom real property is required to be declared under Section 202 hereof, refuses or fails for any reason to make such declaration within the time prescribed, the provincial, city or municipal assessor shall himself declare the property in the name of the defaulting owner, if known, or against an unknown owner, as the case may be, and shall assess the property for taxation in accordance with the provision of this Title. No oath shall be required of a declaration thus made by the provincial, city or municipal assessor.