Real Property Tax Code of the Philippines

Policy and guiding principles

Appraisal and assessment must be guided by the following fundamental principles: current and fair market value, uniformity within each local political subdivision, classification based on actual use, uniform standards of value within each local political subdivision, no private person handling of appraisal/assessment/collection, and equitable distribution of the tax burden. Section 2
The goal of real property assessment is the equitable distribution of the tax burden. Section 2
The Code is designed to upgrade real property assessment practices and achieve an equitable tax burden distribution among real property owners nationwide (as reflected in the decree’s policy recitals).

Core definitions for implementation

“Actual use” means the purpose for which the property is principally or predominantly utilized by the person in possession of the property. Section 3
“Ad valorem tax” is a levy on real property determined on the basis of a fixed proportion of the value of the property. Section 3
“Appraisal” is the act or process of determining the value of a property as of a specific date for a specific purpose. Section 3
“Assessment” includes the discovery, listing, and appraisal of properties and determining the value of a property (or proportion) subject to tax. Section 3
“Market value” means the highest price estimated in money that the property will buy if exposed for sale in the open market with a reasonable time to find a purchaser who buys with knowledge of all uses and capabilities; it is also the price where a willing seller and willing buyer transact without abnormal pressure. Section 3
“Assessed Value” is the value placed on taxable property by the assessor for ad valorem tax purposes, synonymous with “taxable value”. Section 3
“Assessment level” is the percentage applied to market value to determine taxable or assessed value. Section 3
“Improvements” are valuable additions or ameliorations costing labor or capital, intended to enhance value, beauty, or utility, or adapt property for new or further purposes, beyond mere repairs or replacement of waste. Section 3
“Reassessment” is the assigning of new assessed values as the result of general, partial, or individual reappraisal. Section 3

Coverage and persons affected

The Code governs appraisal and assessment for taxation by provinces, cities, and municipalities and governs levy, collection, and administration of real property tax. Section 1
All real property, whether taxable or exempt, must be appraised at current and fair market value in the locality where the property is situated. Section 5
The duty to declare true value applies to persons (natural or juridical) owning or administering real property, including improvements, within a city or municipality, or their duly authorized representatives, by filing with the appropriate provincial or city assessor. Section 6
The assessment roll must list all real property, whether taxable or exempt, located within the province or city, and must be maintained by the provincial or city assessor. Section 8
Transfers of real property require notification to the assessor within the prescribed period. Section 11
Real property of the Republic, its political subdivisions, and government-owned corporations exempt by charter is addressed through the listing rules where beneficial use is granted to taxable persons. Section 8

Appraisal, assessment, and property listing

Provincial or city assessors must prepare and maintain an assessment roll listing all real property, whether taxable or exempt, located within the province or city. Section 8
Real property must be listed and valued in the name of the owner or administrator, or anyone having legal interest in the property. Section 8
Undivided real property of a deceased person may be listed in the name of the estate or heirs and devisees without individually designating them. Section 8
Co-ownership listing is allowed for undivided property other than that owned by a deceased person, but heirs, devisees, or co-owners remain severally liable for obligations and real property tax on undivided property. Section 8
The real property of a corporation, partnership, or association is entered and assessed in the same manner as an individual. Section 8
When beneficial use of exempt government-owned real property is granted to a taxable person, the property is listed for taxation in the name of the grantee (or the public entity where acquired for resale or lease). Section 8
The Code requires uniform real property declarations kept under a uniform identification system established by provincial or city assessors in accordance with rules prescribed by the Secretary of Finance. Section 10
For property declarations, owners must file a sworn statement of true value with the provincial or city assessor containing a description sufficient for identification. Section 6
The sworn declaration must be filed once every five years during January 1 to June 30, starting commencing with the calendar year 1977, unless required earlier by the Secretary of Finance. Section 6
If the owner fails or refuses to declare within the time prescribed, the provincial or city assessor must declare the property in the name of the defaulting owner (if known) or against an unknown owner, and must assess for taxation; no oath is required for such assessor-made declaration. Section 7
The assessor may summon witnesses, administer oaths, and take depositions to obtain information for determining market value. Section 16
When real property is discovered, during general revision, or when requested by the person in whose name the property is declared, the provincial or city assessor must appraise and assess it under the Code’s valuation rules, irrespective of prior assessments or valuations. Section 22
In absence of new improvements or a change in use, assessment increases or decreases may not be made more often than once every five years. Section 22
All assessments and reassessments under the Code are valid and binding on all persons having legal interest on the property. Section 26
The provincial or city assessor must give written notice within thirty days of any first assessment or any increase or decrease of an existing assessment, delivered personally, to an occupant (if any), by mail to last known address, or through assistance of the barrio captain. Section 27
The assessor must certify completion of a general revision to the Secretary of Finance; assessments become effective and taxes accrue and are payable under the Code provisions. Section 23
Assessments or reassessments made after January 1 take effect on January 1 of the succeeding year; reassessment due to destruction, major change in actual use, major inflation/deflation, gross illegality, or other abnormal causes must be made within ninety days from occurrence and take effect at the beginning of the quarter next following reassessment. Section 24

Schedule of market values and revisions

Before any general revision of property assessments, a Schedule of Market Values for classes of real property in the province or city must be prepared in the form and detail prescribed by the Secretary of Finance. Section 15
The schedule and an abstract of data must be submitted to the Secretary of Finance for review not later than December 31 immediately preceding the calendar year of the general revision. Section 15
The Secretary of Finance has ninety days from receipt to review to determine conformity with the Code. Section 15
The assessor may prepare amendments to correct errors or inequalities in any schedule of market values, either on initiative or on direction of the Secretary of Finance; amendments are reviewed by the Secretary of Finance within ninety days from date of receipt. Section 17
General revision of assessments begins with the calendar year 1978, takes effect January 1, 1979, and recurs once every five years thereafter. Section 21
If property values in a province/city (or any municipality) have greatly changed since the last general revision, the assessor may, with approval of the Secretary of Finance or upon his direction, undertake a general revision before the fifth year from effectivity of the last general revision. Section 21

Classification, assessment levels, and special classes

For assessment purposes, real property must be classified as residential, agricultural, commercial, or industrial, and also as mineral in the case of lands. Section 18
Mineral lands must be further classified into metallic mineral lands and non-metallic mineral lands, with sub-classifications for patented/unpatented and producing/non-producing lode and placer claims. Section 18
Mineral land “patented” means lands covered by a mineral patent signed by the President of the Philippines. Section 18
Mineral land “unpatented” means lands located as mining claims under the Philippine Bill of 1902 but not yet covered by a mineral patent. Section 18
“Producing patented mineral claims” are claims producing minerals for commercial purposes; “non-producing patented mineral claims” are in exploration/development and have not produced minerals for commercial production. Section 18
A lode mineral claim is a parcel containing a vein, lode, ledge, lens, or mass of ore in place located in accordance with law; a placer claim is one not falling under the lode definition. Section 18
“Placer deposits” are loose/fragmentary/broken rocks, boulders, floats, beds, or deposits; “metallic” deposits contain metallic elements/minerals or combinations such as gold, silver, platinum, and others; “non-metallic” deposits are all other deposits not covered by metallic deposits. Section 18
If conflict arises between these definitions and those appearing in the Mining Act as amended, the Mining Act definitions prevail. Section 18
Special class classification applies to lands, buildings, and other improvements actually, directly, and exclusively used for educational, cultural, recreational or scientific purposes, and to hospitals not owned and operated by the government or any of its instrumentalities. Section 18
Real property is assessed based on actual use, regardless of where located and whoever uses it. Section 19
Assessment levels applied to current market values must be maintained at the following levels for lands: 30% for residential lands, 40% for agricultural lands, and 50% for commercial or industrial lands. Section 20
Mineral lands not covered by lease must be appraised at 50% of market value determined by the Secretary of Finance upon consultation with the Director of Mines; mineral lands covered by leases must be declared for taxation by the owner or lessee, with assessment level maintained at 50%. Section 20
Assessment levels for buildings, machineries, and other improvements must be maintained at prevailing levels but cannot be lower than land assessment levels prescribed above and cannot exceed 80% of market value; buildings used exclusively for residential purposes must have assessment levels as set by the Code’s table (with ranges starting at 15% for values More than P30,000.00 but less than or less than P50,000.00, and rising to 80% for values More than P500,000.00; the full table governs the applicable percentage). Section 20
Special class assessment level for lands, buildings, and improvements exclusively used for educational, cultural or scientific purposes, and hospitals not owned and operated by government or instrumentalities is 15% of market value; those exclusively used for recreational purposes are assessed at 30% of market value. Section 20
For the first general revision after approval of the Code and every five years thereafter, assessment levels may be increased at rates fixed by the Secretary of Finance, but no increase may exceed 10% of the assessment levels prescribed for each class. Section 20

Owner declarations, exemptions, and data sharing duties

Owners or administrators must file the sworn declaration of true value; failure to declare results in assessor declaration and assessment without requiring an oath for the assessor’s declaration. Sections 6 and 7
Tax exemption claims require proof: the claimant must file with the provincial or city assessor within thirty days from the date of the real property declaration sufficient documentary evidence, including corporate charters/titles, articles of incorporation, by-laws, contracts, affidavits/certifications, and mortgage deeds, and similar documents. Section 9
If the required evidence is not submitted within the thirty days period, the property must be listed as taxable in the assessment roll; if later proven tax exempt, it must be dropped from the roll of taxable properties. Section 9
Any person transferring real property ownership must notify the assessor within sixty days from the date of transfer, stating transfer particulars, property description, and name/address of transferee. Section 11
The Register of Deeds must submit to the provincial or city assessor within two years from the date of approval of this Code an abstract of the registry including brief but sufficient property descriptions, present owners, and dates of most recent transfer/alienation, with copies of relevant deeds. Section 12
The Register of Deeds must refuse registration of a transfer/alienation/encumbrance document if the presented document lacks a certificate that the real property has been fully paid of all real property taxes due; absence of such certificate is a valid cause for refusal. Section 12
Public officials issuing building permits or certificates/registrations for machinery must transmit a copy to the assessor within thirty days of issuance. Section 13
Surveyors must furnish free of charge to the assessor within thirty days from receipt of plans from the Bureau of Land or Land Registration Commission or the National Urban Planning Commission, as the case may be, a white or blue print copy of each approved original or subdivision plan or map executed by them. Section 14

Machinery valuation and depreciation

The current market value of newly acquired machinery not yet depreciated and appraised within the year of purchase is based on original cost. Section 28
For other machinery, current market value is computed by dividing remaining economic life by economic life, then multiplying by replacement or reproduction cost (new). Section 28
For imported machinery, replacement or reproduction cost (new) is based on original acquisition cost normally including freight and insurance charges, brokerage, arrastre and handling, customs duties and taxes, inland transportation and handling, and significant installation charges at the present site. Section 28
Cost in foreign currency of imported machinery must be converted to peso cost using foreign currency exchange rates fixed by the Central Bank of the Philippines. Section 28
A depreciation allowance for machinery must be made at a rate not exceeding 10% of its original cost or replacement/reproduction cost (new) for each year of use. Section 29
Remaining value for all kinds of machinery must be fixed at not less than 20% of original or replacement cost for so long as the machinery is useful and in operation. Section 29

Assessment appeals and boards

A taxpayer dissatisfied with the provincial or city assessor’s action may appeal to the Board of Assessment Appeals within sixty days from receipt of the written notice of assessment by filing with the Board a petition under oath using the prescribed form and attaching copies of tax declarations and supporting affidavits/documents. Section 30
The Local Board of Assessment Appeals is composed of three members: the Register of Deeds as Chairman, and the Provincial or City Auditor and Provincial or City Engineer as Members, serving ex-officio without additional compensation; where there is no Provincial or City Engineer, the Highway District Engineer serves as Member ex-officio without additional compensation. Section 31
In the absence of a regular appointee, the officer performing the duties (whether acting or duly designated officer-in-charge) automatically becomes Chairman or member. Section 31
The Chairman may designate any government employee of the province or city to serve as Secretary without additional compensation. Section 31
Board members must take an oath that includes supporting/defending the Constitution and obeying laws and that they will well and truly hear and determine matters between taxpayers and the assessor. Section 31
The Local Board holds sessions at least once a month and as necessary; members receive no per diems or traveling expenses for attendance, except when conducting an ocular inspection. Section 32
Expenses of the Local Board are charged to the province’s or city’s general fund, and local boards/councils must appropriate needed funds to operate effectively. Section 33
The Local Board must decide the appeal within one hundred and twenty days from receipt; decisions must be based on substantial evidence and disclosed to the parties or contained in the record. Section 34
The Local Board has powers to summon witnesses, administer oaths, conduct ocular inspection, take depositions, and issue subpoenas and subpoena duces tecum; proceedings are conducted to ascertain truth and need not adhere to technical judicial rules. Section 34
The Secretary furnishes the property owner and the Provincial/City Assessor copies of the decision; if the assessor concurs, the assessor must notify the owner using the prescribed form. Section 34
If either the owner/administrator or the assessor is not satisfied, they may appeal to the Central Board of Assessment Appeals within thirty days after receipt of the Local Board decision by filing an appeal under oath with the Secretary of the proper Local Board using the prescribed form stating grounds and reasons and attaching evidence; a copy must also be furnished to the Central Board through its Chairman. Section 34
Within ten (10) days from receipt, the Secretary of the Local Board must forward the appeal and all papers to the Central Board through its Chairman. Section 34
The Central Board of Assessment Appeals consists of the Secretary of Finance as Chairman and the Secretary of Justice and Secretary of Local Government and Community Development as Members, without additional compensation. Section 35
The Central Board is assisted by a Board of Hearing Commissioners and staff; positions and minimum annual salaries are established (including Central Board Chief Hearing Commissioner: P17,400.00, Central Board Hearing Commissioners: P16,200.00 each, Central Board Secretary: P9,600.00, Central Board Stenographers: P6,600.00 each, Docket and Filing Clerks: P4,800.00 each). Section 35
The Central Board staff salaries and operational appropriations are included in the Department of Finance annual budgets in the General Appropriations Decree or laws. Section 35
Appointment to positions of Central Board Chief Hearing Commissioner, Central Board Hearing Commissioners, and Central Board Secretary is exempt from Civil Service Law restrictions and related position-item classifications and salary standardization rules; government retirees may be appointed without reimbursing/refunding gratuity and without suspending/reducing pension/annuity due to employment. Section 35
A member of the Board of Hearing Commissioners serves until age seventy, unless they retire earlier or are removed for cause as provided by law; Board of Hearing Commissioners must be members of the bar, civil or mechanical engineers, or certified public accountants with at least five years supervisory and/or field experience in real property assessment work. Section 35
The Chairman appoints the Board of Hearing Commissioners and staff; an initial appropriation of PHP 125,000 is provided to finance Central Board operations, and subsequent yearly sums are included in Department of Finance appropriations. Section 35
The Central Board decides appealed cases within twelve (12) months from receipt; its decision becomes final and executory after fifteen (15) days from receipt of a copy of the decision by the appellant. Section 36
The Central Board (or Hearing Commissioners under express authority) may summon witnesses, administer oaths, take depositions, and issue subpoenas and subpoena duces tecum, and the Central Board must adopt rules of procedure. Section 36
Appeals on assessments do not suspend collection of the corresponding realty taxes assessed by the provincial or city assessor; subsequent adjustment may be made depending on the final outcome. Section 37

Realty tax imposition, rates, and exemptions

An annual ad valorem tax on real property (land, buildings, machinery, and other improvements affixed or attached to real property) is levied, assessed, and collected in all provinces, cities, and municipalities, except for exemptions. Section 38
Local legislative bodies must fix a uniform rate applicable to their respective localities as follows:
- Province: not less than one fourth of one percent but not more than one-half of one percent of assessed value. Section 39
- City: not less than one-half of one percent but not more than two percent of assessed value. Section 39
The local tax-rate ordinance must be enacted not later than September 15 of the year next preceding when the tax begins to accrue, and must be forwarded within five days after enactment to the local chief executive for approval/signature. Section 39
The local chief executive may veto within the statutory period by written disapproval as provided, and a two-thirds (2/3) vote of all members within fifteen days from receipt of veto copy permits repassage over veto (approval deemed without executive approval/signature). Section 39
If the local chief executive neither approves nor vetoes within ten days from receipt, the ordinance is deemed approved. Section 39
The rate ordinance remains effective unless amended on or before September 15 of the year next preceding the year the amendment takes effect. Section 39
Any ordinance reducing existing rates is subject to review by the Secretary of Finance; if not acted upon within sixty days upon receipt of the copy, reduced rates become effective on January 1 of the succeeding year. Section 39
Real property exemptions include:
- Real property owned by the Republic of the Philippines or its political subdivisions and any government-owned corporation exempt by charter, except when beneficial use is granted to a taxable person. Section 40
- Non-profit cemeteries or burial grounds. Section 40
- Charitable institutions, churches, personages or convents appurtenant thereto, mosques, and all land/buildings/improvements actually, directly, and exclusively used for religious or charitable purposes. Section 40
- Real property in any one city or municipality belonging to a single owner where the entire assessed valuation does not exceed five hundred pesos, with the property being assessed and recorded as in other cases. Section 40
- Land acquired by grant, purchase, or lease from the public domain for conversion into dairy farms for a period of five years from the time of such conversion; and machinery of a new and preferred industry as certified by the Board of Investments used or operated for industrial, agricultural, manufacturing, or mining purposes during the first three years of operation. Section 40
- Perennial trees and plants of economic value, except where the land on which they grow is planted principally to such growth. Section 40
- Real property exempt under other laws. Section 40

Special levies on real property

A special education fund tax is imposed: an annual one percent (1%) tax on real property to accrue to the Special Education Fund created under Republic Act No. 5447, in addition to the regular real property tax authorized under this Code. Section 41
If the entire total assessed valuation of real property situated in a province or city assessable to any one person does not exceed three thousand pesos (3,000), the additional one percent tax is not collected. Section 41
The President, at discretion or upon recommendation of the Secretary of Finance, may authorize provinces, cities, and municipalities to levy, assess, and collect an additional real property tax on idle private lands at a rate not exceeding two percent (2%) per annum based on the prevailing assessed value. Section 42
Idle lands for this Code include:
- Agricultural lands more than five hectares suitable for cultivation/dairying/inland fishery and other agricultural uses where three-fourths remain uncultivated or unimproved as certified by the provincial agriculturist; agricultural lands planted a permanent or perennial crop with at least one hundred trees to a hectare are not considered idle land; lands actually used for grazing are not considered idle land. Section 43
- Urban lands in chartered cities/municipalities exceeding five thousand square meters where two-thirds remain unutilized or unimproved as certified by the provincial or city assessor; applies also to residential lots or subdivisions duly approved, ownership transferred to individual owners; individual lots whose ownership has not been transferred remain part of the subdivision for purposes of the idle-land levy. Section 43
The idle-land special levy does not apply to landowners unable to improve/utilize/cultivate their lands due to any of the following:
- Adverse peace and order conditions certified by the provincial commander, subject to restoration certification and failure to improve within one year from restoration. Section 44
- Financial loss of the landowner due to fire, flood, typhoon, earthquake, and similar causes attested by owner affidavit, subject to failure to improve within two years from occurrence. Section 44
- Existing court litigations involving the land certified by the Court, subject to failure to improve within one year after final adjudication. Section 44
- Necessity to leave land in a follow state certified by provincial agriculturist subject to failure to improve within one year after termination of the period. Section 44
- Unfavorable physical factors rendering agricultural land unsuitable for cultivation certified by provincial agriculturist. Section 44
The landowner must be notified by the provincial or city assessor of the imposition of the idle lands tax. Section 44
A landowner may apply for idle-land exemption within two years from the approval of this Code, filing with the assessor of the province or city where the land is situated, stating the grounds claimed; the Secretary of Finance must promulgate rules for implementation. Section 45
The provincial or city assessor must make and keep an updated record of idle lands within one year after approval of this Code and every year thereafter, and furnish copies to the treasurer for notification-based collection. Section 46
Local governments may impose a special levy on lands especially benefited by specified public works/infrastructure projects, limited to a part not exceeding sixty percent of the costs of the improvements (including cost of acquiring land and connected real property), and excluding lands exempt from real property tax under Section 40. Section 47
A special levy ordinance must describe with reasonable accuracy the nature, extent, location of the work, probable cost and its limits by monuments/lines, and the number of annual installments of payment—**not less than five nor more than