machineries and equipment used for pollution control and environmental protection is based on usage, i.e., direct, immediate and actual application of the property itself to the exempting purpose. Here, the Supreme Court found that the subject property was not a machinery used for pollution control, but a structure adhering to the soil and intended for pollution control.
Note: It must be noted that, by virtue of Section 234 of the LGC, any exemption from RPT previously granted or presently enjoyed by all persons, whether natural or juridical, including all GOCCs were withdrawn upon the effectivity of the LGC. We have to note that Congress has the power to exempt an entity again from RPT notwithstanding the withdrawal made by the LGC.
Q: ABC Telecom was granted a 25-year franchise to install, operate and maintain telecommunications system throughout the Philippines under a law which states that
“The grantee shall be liable to pay the same taxes on its real estate, building, and personal property exclusive of this franchise.” As they were not being issued a Mayor’s permit, ABC Telecom paid RPT under protest. ABC argued that the phrase
“exclusive of this franchise” means that only the real properties not used in furtherance of its franchise are subject to RPT. Is ABC’s contention correct?
No, the properties of ABC whether or not used in its telecommunications business is subject to RPT. In DIGITAL TELECOMMUNICATIONS PHILIPPINES INC. V. CITY GOVERNMENT OF BATANGAS [DECEMBER 11, 2008], the Supreme Court held that the phrase
“exclusive of this franchise” qualifies the term
“personal property.” This means that the legislative franchise, which is an intangible personal property, shall not be subject to taxes. This is to put franchise grantees in parity with non-franchisees as the latter obviously do not have franchises which may potentially be subject to RPT. There is nothing in the law which expressly or even impliedly exempts the company from RPTC. Finally, the company cannot rely on the BGLF opinion as they have no authority to rule on claims for RPT exemption.
1991 LGC. All references to RA No. 7942, which came into effect only on 14 April 1995, were all out of place.
Q: Prior to the LGC, XYZ telecom was exempted from paying RPT under its original franchise. Years after the effectivity of the LGC, Congress passed a law amending XYZ’s franchise and contained a reenactment of the tax provision in XYZ’s original franchise granting it RPT exemption. Is XYZ liable for RPT?
No. As held in CITY GOVERNMENT OF QUEZON CITY V. BAYAN TELECOMMUNICATIONS [MARCH 6, 2006], the Supreme Court held that the RPT exemption enjoyed by Bayantel under its original franchise, but subsequently withdrawn by force of Section 234 of the LGC, has been restored by the new law which amended its original franchise.
--- 4. Appraisal and assessment of real property tax
a) Rule on appraisal of real property at fair market value
b) Declaration of real property
c) Listing of real property in assessment rolls
d) Preparation of schedules of fair market value
(i) Authority of assessor to take evidence (ii) Amendment of schedule of fair market value
e) Classes of real property
f) Actual use of property as basis of assessment
g) Assessment of real property (i) Assessment levels
(ii) General Revisions of assessments and property classification
(iii) Date of effectivity of assessment or reassessment
(iv) Assessment of property subject to back taxes
(v) Notification of new or revised assessment
h) Appraisal and assessment of machinery ---
Note: In most of these items, I will simply provide the codal provisions as they are self-explanatory. I will focus on the important matters.
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a) Rule on appraisal of real property at fair market value
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Read Section 201, LGCQ: How is real property appraised?
All real property, whether taxable or exempt, shall be appraised at the current and FMV prevailing in the locality where the property is situated (see Section 201, LGC).
Note: FMV is the price at which a property may be sold by a seller who is not compelled to sell and bought by a buyer not compelled to buy.
--- b) Declaration of real property
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Read 202-204, LGCQ: What is the purpose of a tax declaration?
A tax declaration only enables the assessor to identify the property for purposes of determining the assessment levels. It does not bind the assessor when he makes the assessment.
Q: Are tax declarations conclusive evidence of ownership?
As a rule, tax declarations are not conclusive evidence of ownership. However, as held in TABUENA V.CA[MAY 6,1991], the rule admits of an exception: tax receipts and tax declarations become strong evidence of ownership acquired by prescription when accompanied by proof of actual possession of the property.
--- c) Listing of real property in assessment rolls
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Read Section 205, LGC--- d) Preparation of schedules of fair market value
(i) Authority of assessor to take evidence (ii) Amendment of schedule of fair market value
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Read Section 212, LGCQ: When is the schedule of FMVs prepared?
The schedule of FMVs shall be prepared before any general revision of property assessment is made
Q: Who prepares the schedule of FMVs?
The provincial, city and the municipal assessors of the municipalities within Metro Manila prepares the schedule of FMV for the different classes of real property situated in their respective LGUs for enactment by ordinance of the Sanggunian concerned.
Note: (1) The schedule of FMV shall be published in a newspaper of general circulation in the province, city or municipality concerned or the posting in the provincial capitol or other places as required by the law.
(2) The proposed FMVs of real property in a LGU as well as the ordinance containing the schedule must be published in full for 3 consecutive days in a newspaper of local circulation where available, within 10 days of its approval and posted in at least 2 prominent places in the provincial capitol, city, municipal, or barangay hall for a minimum of 3 consecutive weeks (Figuerres v. CA [March 25 ,1999])
Q: What are the different approaches in estimating the FMV of real property for RPT purposes?
1. Sales Analysis Approach – the sales price paid in actual market transactions is considered by taking into account valid sales data accumulated from among the Register of Deeds, notaries public, appraisers, brokers, dealers, bank officials, and various sources stated under the LGC
2. Income Capitalization Approach – the value of an income-producing property is no more than the return derived from it. An analysis of the income produced is necessary in order to estimate the sum which might be invested in the purchase of the property
3. Reproduction cost approach – the formal approach used exclusively in appraising man-made improvements such as buildings and other structures, based on such data as materials and labor costs to reproduce a new replica of the improvement (Allied Banking Corp v. Quezon City Government [October 11, 2005] citing Local Assessment Regulations No. 1-92)
Note: An ordinance whereby the “parcels of land sold, ceded, transferred and conveyed for remuneratory consideration after the effectivity of this revision shall be subject to real estate tax based on the actual amount reflected in the deed of conveyance or the current approved zonal valuation of the BIR prevailing at the time of sale, cession, transfer and conveyance, whichever is higher, as evidenced by the certificate of payment of the CGT issued therefore” is invalid being contrary to public policy and for restraining trade (see Allied Banking Corp v. Quezon City Government [October 11, 2005])
--- (i) Authority of assessor to take evidence ---
Read Section 213, LGC--- (ii) Amendment of schedule of fair market value
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Read Section 214, LGC--- e) Classes of real property
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Read Section 215 to 216, LGCQ: What are the classes of real property for assessment purposes?
4. Residential 5. Agricultural 6. Commercial 7. Industrial 8. Mineral 9. Special Residential Land
Is land principally devoted to habitation
Agricultural Land
Is land devoted principally to the planting of trees, raising of crops, livestock and poultry, dairying, salt making, inland fishing and similar aquaculture activities and other agricultural activities and is not classified as mineral, timber, residential, commercial or industrial land
Commercial Land
Is land devoted principally for the object of profit and is not classified as agricultural, industrial, mineral, timber or residential land
Industrial Land Is land devoted principally to industrial activity as capital investment and is not classified as agricultural, commercial, timber, mineral or residential land
Mineral Lands Are lands in which minerals exist in sufficient quantity or grade to justify the necessary expenditures to extract and utilize such minerals
Q: What are the special classes of real property under the LGC?
All lands, buildings, and other improvements actually, directly and exclusively:
1. Used for hospitals, cultural or scientific purposes
2. Owned and used by local water districts 3. Owned and used by GOCCs rendering
essential public services in
a. Supply and distribution of water;
b. Generation and transmission of electric power