Taxation Law II - Rather, within each province, within each
Transcribed Notes city, within each municipality, the rule on
Local Taxation
Part I - Taxation on Business
What is the basis of the LGU to impose tax?
Article X, Section 5:
Each local government unit shall have the power to
create its own sources of revenues and to levy taxes,
fees and charges subject to such guidelines and
limitations as the Congress may provide, consistent with
the basic policy of local autonomy. Such taxes, fees and
charges shall accrue exclusively to the local
governments.
 This constitutional provision directly vest in
local government the authority to tax and gives
the Congress only the power give guidelines
and limitations. Even the power to give
guidelines and limitations is subject and need to
be consistent with the basic policy in the
constitution of local autonomy
 Whatever is collected by way of taxes by the
local governments shall accrue exclusively to
them.
How does the present Constitution compare with
the old Constitution with respect of local taxing
power?
Under the 1935 Constitution, local governments had
taxing power only on account of legislative delegation.
Hence, it was ruled that Congress could revoke all the
taxing powers of local governments.
Under the current Constitution, taxing power is directly
vested on local governments. Thus, Congress can only
put limits, but not take away local taking power entirely.
 This does not mean that taxing power becomes
inherent in local governments. Still, the principle
is taxing power is not inherent in local
government but inherent only in a sovereign
government.
 However, the impact of this provision in the
Constitution is that the Congress cannot take
away the power of taxation from local
governments, instead Congress may only put
limits and provide guidelines
 Congress under the current Constitution cannot
take away taxing power completely.
What are the fundamental principles of Local
Taxation under the present Constitution?
 Taxation shall be uniform in each local
government unit.
- This does not mean that taxation shall be
the same in all provinces, cities and
municipalities.
taxation must be uniform. So two provinces
may have different tax rates, but with
respect to each of the territory on which the
tax is imposed, the rule must be that the
taxes must be uniform.
- The impact of this provision is that while
taxation is uniform in each LG, each LG
may decide in level of taxes that it wants to
collect. Therefore, one city may compete
with another with respect to taxing authority
that they will exercise.
- In a particular city, the authorization is to
impose taxes at a certain rate, that City if it
wants to attract business in its territory, may
decide to impose only a border, or only one
half of that rate, and that is permitted under
the Constitution.
 Taxes, fees and charges and other impositions
shall:
- Be equitable and based as far as
practicable on the taxpayer’s ability to pay.
- You will recall that this is also a principle
under the national government.
- The rule of taxation must be uniform and
equitable. Equitable means is based on the
capacity or ability to pay
- Taxes and local taxes must be levied and
collected only for public purposes. This is
an inherent requirement in the nature of
taxation. Regardless if national or local, it is
important that whatever is collected by way
of tax is used only for public purpose. As in
the case of National Government, taxes
collected not for public purpose are not
taxes but are called exactions which are not
in the exercise of sovereign power to tax.
They are extortions as a matter of fact.
- Taxes shall not be unjust, excessive,
oppressive or confiscatory. You will recall
that these are the same characteristics that
are inherently affecting national taxation.
These are ideas that are embedded in the
due process clause of the Constitution
- Taxes can not be contrary to law, public
policy, national economic policy or in
restraint of trade. This is because what we
want to have in our country is a country with
harmonious principles and therefore it is
important that our national law are
consistent with local law and vice versa.
 The collection of taxes, fees, charges and other
impositions shall not be let to any private
person.
“letting to a private person”
It means that the old form to lease out or to be
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outsourced to a private person. For instance, if you are
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a city you cannot hire a collection agent to do the
imposition and collection of taxes. It must be made by
the city itself by its own employees and not contractual
who has no idea of what the taxes are all about.
 The revenue collected pursuant to the
provisions of the LGC shall inure to the
benefit of, and be subject to the disposition
by, the local government unit levying the
tax, fee, charge or other imposition unless
otherwise specifically provided herein.
This is a very important principle because what
the law is trying to do is to make LG responsible
to their own citizens. Whatever they collect from
their own citizens must get back by way of
public service. Whatever is collected by way of
local taxes must be spent for the benefit of the
people in that government and not for other
person and not even for the national
government.
 Each local government shall as far as
practicable evolve a progressive system of
taxation.
As in the case of national taxation, each and
every tax must have a progressive rate
structure. What must be progressive in national
government and local government is that the
system of taxation be progressive. The over all
impact and effect of the collection machinery on
the society is that those who have more in the
society are expected and made to pay more
and shoulder a greater share in the burden of
the state of the LG than others who have less.
What are the common limitations on local taxing
power?
“Common limitations” are limitations that apply to all
kinds of LGU. (province, city, municipality). Any kind
of LGU must conform and not violate this limitations.
Local taxing power, as a general rule, cannot extend to:
1. Income tax, except on banks and other
financial institutions;
Why? Because Income Tax is a national tax and is a
general tax. Imposing an income tax may be an
unreasonable burden on the citizens. In other
jurisdictions, the income tax may be imposed for
instance the US, by the federal government, state
government and city government. The people feel very
oppressed by the imposition of taxes by different
authorities on the same income that hey earn. In the
Philippines, local government cannot impose local tax
on the income.
2. Documentary stamp tax
Why? Because it is a facility on doing business. The
imposition of DST might hinder the flow of commerce
within the country and not for the good of the economy.
What is important is that the free flow of commerce be
made unhampered and unhindered by unnecessary
exactions. Imposition of DST by the national
government is enough.
3. Taxes on estate, inheritance, gifts and
legacies and other acquisitions mortis
cause
In other words, the law on inheritance, the privilege of
imposing a tax on property that passes upon the death
of the owner is a privilege that the national government
has allocated to itself. The LGU cannot therefor cannot
impose a double or another tax on top of the national
tax on inheritance or estate.
4. Customs duties, registration fees of vessel
and wharfage on wharves, tonnage dues
and all other kinds of customs fees,
charges, and dues, except wharfage on
wharves constructed and maintained by the
local government
Why? Because the imposition of custom duties has with
it an aspect of foreign affairs. It is something better to
be exercised by the national government. However,
where what is being collected is for the use of a wharf
that is constructed and maintained by the LGU, dues
and fees for the use of that wharf can be subjected to
taxes. The reason for that is what is being collected is
not so much of tax but a toll which is a justification not
on the sovereign taxing power but the ownership of the
person or entity who constructed the wharf.
5. Taxes, fees and charges and other
impositions upon goods carried into or out
of or passing through the territorial
jurisdictions of LGUs in the guise of charges
for wharfage, tolls for bridges or otherwise,
or other taxes, fees or charges in any form
whatsoever upon goods or merchandise
Why? Because the Local tax code wants a free flow of
products from one region to another. The free flow of
goods where there are supply to those areas in the
country which has no supply and there is demand.
Therefore, this free flow cannot hindered by the
imposition by the LG to which they pass. The greater
good is to maintain the free flow of merchandise and
goods in any part of the country that needs and any part
of the country which supplies it.
6. Taxes, fees or charges on agricultural and
aquatic products when sold by marginal
farmers or fishermen
It cannot be subjected when they are sold y marginal
farmers and fishermen.
“marginal farmers or fishermen” means that the
farmers or fishermen being described by the word
marginal are not commercial producers of agricultural
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and aquatic products. They are the homesteaders, the
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backyard producers or people who produce agricultural
or aquatic products a little bit for their own sustenance
with only a little extra for purposes for being sold in the
market. They are marginal because their commercial
activity is not mainstream but the margin or edges of
Philippine economy.
7. Taxes on business enterprise certified by
the BOI as pioneer or pioneer for a period of
six (6) and four (4) years respectively from
the date of registration
Local tax cannot be imposed where there is certification
by the BOI that the business enterprise is either a
pioneer or non-pioneer enterprise. Pioneer enterprise
is one that is established for the first time or is new or
initial in the Philippines. Non-pioneer enterprise is one
which has already been established. If the enterprise is
PE, it cannot be subjected to tax within six years, if non-
pioneer, it cannot be subjected to tax within four years,
both from the date of registration. The reason is that the
enterprises are given enough leeway and enough
financial support by way of waiver of taxes in their initial
stages. Starting up a business is difficult and expensive
and recovers money much later.
8. Excise taxes on articles enumerated under
the NIRC, as amended, and taxes, fees, or
charges on petroleum products
9. Percentage of VAT on sales, barters or
exchanges or similar transactions on goods
or services
You may notice that the VAT is a tax that used to be
imposed only on goods and services. When the local tax
code was passed, that was the state of the VAT. Later
they amended the VAT to be taxed on goods, services,
and properties to include real properties. But in
amending the VAT the legislators failed to make the
corresponding amendment to the LTC
10. Taxes on gross receipts of transportation
contractors and persons engaged in the
transportation of passengers or freight by
hire and common carriers by law, land or
water
11. Taxes in premiums paid by way of insurance
or retrocessions
Why? Because the principle which is the basis of all
insurances is that insurance risk must be shared and
distributed. Therefore, what you should do is you should
have a free flow or free access by the insurers to
reinsurance without too much additional cost.
12. Taxes, fees or charges for the registration of
motor vehicles and for the issuance of all
kinds of licenses or permits for the driving
thereof, except tricycles.
The idea is motor vehicles now form part of commercial
tools of trade. They are therefore encouraged and is so
the local government are discouraged to impose taxes
on them because taxes imposed on top of the national
registration fees would unduly impair the free flow of
trade.
13. Taxes, fees, or other charges on Philippine
products actually exported
Why? Because they want to encourage exports of
Philippine products so that they cannot be unduly
expensive when they reach the foreign market.
14. Taxes, fees or charges on Countryside and
Barangay Business Enterprise and
Cooperatives duly registered under R.A No
6810 and R.A No 6398, otherwise known as
the Cooperatives Code of the Philippines
The reason for this prohibition is precisely the law
encourages these small scale business enterprise to
enhance the economic capacity of the small people in
these places.
15. Taxes, fees or charges of any kind on the
National Government, its agencies and
instrumentalities and LGUs.
The national government is superior to the local
government.
What taxes may a province impose?
A province may impose ONLY:
1. Tax on real property ownership
2. Tax on business of printing and publication
3. Franchise tax
4. Tax on sand, gravel and other quarry resources
5. Professional tax
6. Amusement tax
7. Annual fixed tax for delivery of trucks and van
The most important tax here is the tax on real property
ownership. The Philippines is an economy based on
transactions over land and because transactions over
land constitute a major part of our commerce, local
governments are allowed to tap into that activity of
transferring real property by being permitted to impose
tax on each of transfer of real property. But it was being
transferred of ownership, the tax rate is ½ of 1% and
the rate is applied to a base that is either the
transaction price or fair market value, whichever is
higher. This tax is so important that the Registry of
Deeds, which is the Office where you submit a transfer
of real property from one owner to the other for
registration. The ROD will not register the transfer
unless you prove that the taxes were paid.
The transfer of real property is subject to a final tax of
6%. In addition to that 6% which is national tax. Another
that which is 50% of the 1% is added by way of a local
tax as cost of that sale or transfer. Real property is the
source of wealth.
When you become a lawyer, you will pay what is known
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as the PTR or the Professional Tax Receipt. The SC
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insisted that in the pleadings you file, you put a number
of the PTR below your name. This is the assistance that
the SC is giving to the collection of taxes by the national
and local government to ensure that the taxes are paid.
What taxes, fees, charges may a municipality
impose?
Municipality may levy taxes, fees and charges not
otherwise levied by provinces such as:
1. Tax on business
This is tax graduated based on the volume of gross
receipts.
2. Tax for sealing and licensing of weights
3. Fishery rentals, fees and charges
In municipality, what is not prohibited will be permitted.
Any taxes, fees or charges not otherwise levied by the
province the municipality may impose.
The most important tax is the tax on business.
What is the scope of taxing power of cities?
 The city may levy the taxes, fees and
charges which the province or municipality
may impose.
 In HUC and ICC shall accrue to them and
distributed according to the LGC
 The rates of city taxes may exceed the
maximum rates allowed for provinces or
municipalities by not more than 50%,
except the rates of professional and
amusement taxes
The reference point is what the province or
municipality may impose. However, the city
may exceed the maximum rates permitted
for P/M. The excess however must not be
more than 50%, except the rates of
professional and amusement taxes.
Professional tax is a tax you pay once a
year to a LG but having paid the
Professional tax in one LG, you can
exercise your profession elsewhere in the
same degree as if you pay the PTR in the
other jurisdictions. What is paid to the LG
has national effect in permitting your
practice of profession wherever it is
permitted in the Philippines.
Cities have the greatest power to impose tax. Whatever
the province and municipality may impose, the city may
impose.
What taxes, fees and charges may be imposed by
the barangays?
Barangays are also taking authorities but their authority
are limited.
Barangays may impose:
 Taxes on stores and retailers with fixed
business establishments with low gross sales
 Service fees or charges
 Barangay clearance fees
 Other fees and charges
What are the common revenue raising powers of
local governments?
All local governments may impose:
 Service fees and charges for services rendered
 Public utility charges
 Toll fees or charges
What are the rules relating to the collection of local
taxes?
Local taxes are yearly taxes. Unlike national income tax
where the taxpayer is permitted to have a taxable year
that is a fiscal taxable years, all local taxes are reckoned
on the basis of a calendar. All taxes that are imposed
locally are yearly taxes based on the calendar.
 The tax period, unless otherwise fixed, is the
calendar
 The obligation accrues on the first (1st day of
January of each year
 But the tax may be pain in quarterly
installments, within the first twenty (20) days of
January or subsequent quarters.
What is important is the distinction between the accrual
of the obligation and payment of the tax. One becomes
obligated to pay the tax when the tax accrues. However,
the date of payment is not necessarily the date when
the tax accrues. For instance, in the estate tax, where
the estate tax accrues upon the death of the taxpayer,
but paid 6 months thereafter because of the need to
settle the estate. In like manner, the tax accrues on the
first day of January of each year, because local tax is
based on calendar year. Since we celebrate the new
year, we are given twenty days within January to pay
the first of the four quarterly installments of the tax.
What are the penalties that may be imposed form
non-payment of local taxes?
The local government are authorized to tax:
 Surcharge of not more than 25%
Surcharge is a penalty of not more than 25% of the
amount due
 Interest of not more than 2% per month (but not
more than 36 months)
The difference is a surcharge is a penalty. Interest is not
a penalty, but is a charge that is used or forbearance of
money that should have been in the hands of the
government. If the taxpayer does not pay on time. The
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government is prevented from using that money and
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therefore is entitled to interest thereon. The interest is
due to the government in addition to the surcharge
which is a penalty for not paying in time.
What period govern the collection of local taxes?
 Period of collection: within 5 years from the date
the taxes become due.
 In case of fraud or intent to avoid payment,
taxes may be collected within 10 years from
DISCOVERY (not the forgetfulness or
negligence)
 Period of prescription suspended when there is
a court case where:
- The treasures is legally prevented
- Taxpayer requests in writing for a
reinvestigation
- Taxpayer abroad or cannot be located
Local Taxation
Part II - Taxation of Real Property
What are the fundamental principles that govern
real property taxation?
1. Real property shall be appraised at its
current and fair market value
This gives you the idea that RPT is tax on real property.
Hence, there is a need for appraisal.
2. Real property shall be classified for
assessment on the basis of its actual use.
It is not the ownership that determines the amount of tax
which needed to be paid but the actual use that the real
property is devoted.
3. Real property shall be assessed on the
basis on a uniform classification within
each government unit
This is the same as the general principle that the rule on
taxation shall be equitable and uniform.
4. The appraisal, assessment, levy and
collection of real property tax shall not be let
to any private person, and
It is important that the collection of local taxes be not
outsources or given to a private person by way of a
subcontract or sublease. It is important that the
appraisal, assessment or levy of real property shall be
done by the local government itself.
5. The appraisal and assessment of real
property shall be equitable
What are the steps in determining the amount of real
property tax due?
Step 1: Appraisal: determination of the current and fair
market value of the real property where it is located.
As the real estate industry tells you, the value of the
property depends on the location. In other words, the
value of a certain piece of the property does not depend
so much on its size but where it is located. If it is near
shopping centers or business areas, that piece of real
property, although small, may be very expensive in
terms of fair market value.
Step 2: Assessment: determination of the tax base in
accordance with the classification of property and
imposition of the appropriate assessment level.
Step 3: Imposition of tax by the local government and
the collection thereof.
How is current and fair market value of real property
determined?
As in many case in tax law, the system depends on what
the taxpayer declares. You will recall in the income tax
that for purpose in determining the tax due by way of
income tax, the taxpayer makes a return which is a
statement to the government of what he thinks the
amount due under ITR. Under the Donor’s and estate
tax, the persons liable also make a return which is
basically a statement of what the person thinks is his
liability.
 The owner makes a sworn statement and files
it with the assessor within 60 days from
acquisition and once every 3 years from
January to June 30 starting 1992.
The purpose of the sworn statement is for the assessor
to have in his possession what the owner thinks is the
property and FMV of the property is.
The government cannot depend on the declaration of
the owner only. The income tax after you file the return
and you pay the tax, there is a process by which your
return may be randomly selected and be examined by
the Commissioner. In the real property tax, the assessor
himself in addition to the owner must make an appraisal.
This appraisal he makes according to an assessment
roll. An Assessment Roll is a listing. He must have in
his possession some sort of a book or roll.
 The local assessor himself make an appraisal
according to an assessment roll which contains
a Schedule of Fair Market Values of all real
property within his jurisdiction.
You will recall that we talked about NIR taxes, there is a
thing called zonal valuation. This is not the same as the
zonal valuation under the NIRC. The zonal valuation is
arrived at by the Commissioner himself. The local
assessor has his own schedule of FMV and sometimes
you see that while in many cases, the zonal value is the
same as the schedule of FMW in the hands of the local
assessor. Every now and then you will see a difference,
and the difference is due to the fact that the local
assessor makes his own assessment, while the
Commissioner of internal revenue makes his own
assessment for the purposes of two different set of
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taxes. The Zonal Value is for the purposes of the
national internal revenue taxes, the schedule of FMV of
the local assessor is for purposes of the real property What are the classes of lands according to
tax. assessment levels?

How is the appraisal made sure to be the “current Class Assessment Levels
and fair” market value? Residential 20%
Agricultural 40%
 All declarations are required to be kept in a Commercial 50%
uniform classification system known as the Industrial 50%
“Real Property Identification System” Mineral 50%
Timberland 20%
This is a system which is replicated and applicable
nationwide so that under this system, any fees of real
There are only three percentages. 20% is for residential
property within the Philippines is covered by a
and timberland. 40% for agricultural. Lastly, 50% for
declaration and uniformly kept by different assessors all
Commercial, Industrial and Mineral. There is a
over the country.
difference in the level, because using actual use as the
 All transferors of real property are required determinant, the law thinks that the tax base should be
to notify the local assessor of the mode of determined in accordance with the actual use, and the
transfer within 60 days from disposition. actual use determines basically the ability to pay.

This is important for that listing of values in the hand of
the assessor to be current or in other words, up-to-date.
It is up-to-date if it based on the most recent disposition
of property. That is why those who dispose real property
are obliged to inform the local assessor of the transfer
of their property within 60 days from the transaction
Other than land, what other properties are subject
to the real property tax?
If you recall, land is only one category of real property.
There are other real properties.
Also subject to the Real Property Tax are:

 The ROD is requires to give the assessor an  Buildings and other structures
abstract or summary of his registry within 6  Machineries
months from the effectivity of Real Property
Tax Code and yearly thereafter What are included in the “special classes” of
properties and what are their assessment levels?
There is the idea that table of assessed values in the
hands of the local assessor is current and that is why Actual Use Assessment Levels
information must come from various independent Cultural 15%
sources. From the owner, the local assessor himself, Scientific 15%
and from documents filed with a person who is not Hospital 15%
involved in the collection of taxes but whose duty is to Local Water Districts 10%
be a public registry of transactions which are supposed OGCCs engaged in 10%
water or power
to bind third persons, namely the ROD.

What is meant by “assessment level”?
After having determine the current and FMV of RP, the
next step is to determine what level it belongs to.
Assessment Level means that percentage of the
current and FMV of Real Property that is made the tax
base of the real property tax.
While it is important to determine the FMV, the tax base
is not the FMV. The tax base is only a percentage of that
current and FMV. That percentage is called assessment
level.
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.
This assessment level is the level which determines the
percentage, that percentage of the FMV of property that
turns out to be the tax base must be determined to the
actual use which the real property is devoted.
It is important to consider the actual use so that in
Hospital in commercial area will nevertheless be
subjected only to 15% even if the commercial area is
taxed at a higher assessment level. Local water districts
because of the public service which is derived from
these districts, they are taxed only at 10% assessment
level and the OGCCs engaged in water or power.
When does an assessment take effect?
All assessments or reassessments made after the first
(1st) day of January shall take effect on the first (1st) day
of January of the succeeding year.
Once the local assessor made an assessment, this
assessment will only take effect the following year.
What is the remedy of a taxpayer who is not
satisfied with the assessment of his property by the
local assessor?
 The taxpayer may appeal within 6 days from the
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receipt of written notice of assessment to the

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Local Board of Assessment Appeals

This is not yet the process of taxation but the process of
determining eventually the amount of the tax base.
When the taxpayer get the assessment which is
different from the assessment within the meaning of the
NIRC (demand for payment), assessment within the
RPT Code means simply the determination by the local
assessor of the level of his appraisal as well as the
classification of the property. If the taxpayer does not
agree with that, his remedy is to go to the Local Board
of Assessment Appeals.
If the LBAA disagrees with you and therefore agrees
with the local assessor:
 From an adverse decision of the LBAA, appeal
may be within 30 days from receipt be made to
the Central Board of Assessment Appeals,
whose decision is final and executory.
This is simply an administrative step and is prefatory
only in the determination of the tax due.
What local governments may impose the real
property tax? At what rates?
Local Government Maximum Rate
Province 1% of assessed value of
the property
City 2%
Municipality within 2%
Metropolitan Manila
The province may impose only 1% of the assessed
value of the property. It is 1% of the assessed value
meaning the value after the application of the
assessment value of the CFMV. The formula is FMV x
Assessment Level x 1% = The maximum that a province
may impose.
The city because of its many inhabitants means many
public service to finance is given the leeway to double
that of the province which is 2%.
A municipality with in MM is treated like a city because
in MM the cities are so near each other and people
travel from their residence which may be from one
municipality to their place of work within 1 hour or 30
mins. Since the area in MM is seen as integral whole,
they impose a uniform tax rate so that people will not
determine where they will live on the basis of the real
property tax imposed.
What real properties are exempt from the real
property tax?
The following are exempt from the RPT:
 Real property owned by the Republic of the
Philippines and its political subdivisions,
except when the beneficial use has been
granted to a taxable person.
While it is true that a government taxing itself is simply
transferring the money from the left pocket to the right
pocket. The local subdivisions are not source and
therefore by sheer logic they do not have the authority
to tax their own sovereign which is the national. This
principle is incorporated in the first exemption of the
RPT. The local government cannot tax those which are
owned by the national government. However, the use is
what is the determinable factor to determine whether
the property is subjected to tax as well as the level at
which a piece of property is to be taxed. By way of an
exception, because the quality of being sovereign
applies only to the republic of the Philippines. When the
property is let out to the use by a taxable persons, then
the reasons why the national government cannot be a
tax by the local subdivision. There is a need to raise the
revenue for the LG when that lease of property that’ is
sought to be taxed that is in the hands and is actually
being used and from which benefit is being derived by a
taxable person.
 Charitable institutions, churches, etc.
actually, directly and exclusively used for
religious, charitable or educational
purposes
They are exempt only from real property tax with respect
to that property that they actually, directly and
exclusively used for religious, charitable or educational
purposes. That constitutional provision applies to real
property taxation and that is reflected in this exemption
under the RPT Code.
Crucial is the trio of words, actually, directly and
exclusively used for RCE purposes.
 All machineries and equipment that are
directly and exclusively used by local water
districts and OGCCs engaged in the supply
and distribution of water and/or generation
and transmission of electric power
The reason for this exemption is that water is a prime
commodity and is essential to everyone’s survival from
sanitation to nutrition. Therefore, the law takes a step
backwards and says that with respect to real property
actually used by these entities that are supplying a very
prime commodities, those properties shall not be
subjected to RPT.
 All real property owned by duly registered
cooperatives as provided for under RA No
6398
What is important is that these properties owned by
these cooperatives and actually used by these
cooperatives. There is a bias with cooperatives because
they are supposed to be organizations at the grass roots
which serve the basic households and therefore given
some tax benefits. These cooperatives perform
functions which is supposed to be performed by the
government.
 Machinery and equipment used for pollution
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control and environmental protection
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This exemption motivated not so much because of the The real property tax is a yearly tax based on the
intention of the owner but because the law wants to calendar year.
encourage people to pursue activities in the protection
of the environment.

What are “special levies”

Special levies are taxes allowed to be imposed on real

property in addition to the real property tax. They are:

 Special Education Fund Tax – 1%

It is not a tax on special education. It is a special tax

supposed to be set up as trust fund to be used for
education.

 Tax on Idle Lands – Not more than 5%

It is a tax on land. The lands must be idle and the reason

for it is the owner must devote his land to productive
activities. If the owner does not produce from his land
and has no economic activity on the land, it dies not
contribute to the Philippine economy. It is made to
contribute in a compulsory manner which is tax on idle
lands.

The tax on idle land is tax on land

 Special Assessments (on lands benefited by

public works funded by the local government) –
not to exceed 60% of the cost of project

They are not really taxes. They are demands based on

ownerships. They are general taxes but taxes which are
imposed on specific parcels of land and what makes
them special is that this land benefit from public works
funded by the government. There is an unintended
benefit to the adjacent owner in the form of the increase
in value of the property that is being taxed, the
government says that it is only fair to impose a special
assessment.

How and when is the real property tax collected?

 The real property tax for any year shall accrue

on the first day of January and from that date
shall constitute a lien on the property until paid.

Accrual simply means the obligation has become an

actual obligation. Just because liability already
attaches, does not mean that the liability need to be
discharged right away. It simply means that the
obligation existed. The real property tax code in addition
of the accrual also says that the tax becomes a lien on
the property. It becomes a statutory claim on the specific
property subject to tax. The obligation on the tax payer
accrues becomes a real liability on the first day of
January. The property becomes a security on the
payment of the tax.

 The real property tax, which is collected by the

local treasurer, may be paid in four (4) equal
installments, on March 31, June 30, September
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30, and December 31.

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