ENACTING A REAL PROPERTY TAX CODE

PRESIDENTIAL DECREE NO. 464
ENACTING A REAL PROPERTY TAX CODE.

WHEREAS, this country cannot progress steadily if its local governments are not potent political subdivisions contributing their proportionate shares to national progress;

WHEREAS, the past decade saw the passage of the Local Autonomy Act, the Barrio Charter, the Decentralization Act and other pieces of legislation intended to make local governments financially self-reliant and stable;

WHEREAS, it is very apparent that in spite of all these laws, local governments still find difficulty in providing adequate funds with which to underwrite basic and essential public services within their respective areas of responsibility;

WHEREAS, studies show that one of the main reasons behind this is the failure of local governments to fully tap the income potentialities of the real property tax;

WHEREAS, to remedy the situation, there is an urgent and compelling need to upgrade assessment services by updating assessment techniques, procedures and practices and thereby bring about equitable distribution of the realty tax burden among real property owners throughout the country;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution do hereby adopt, promulgate and decree, as it hereby adopted, promulgated and decreed, as part of the law of the land, this decree entitled "The Real Property Tax Code", the context of which follows:

CHAPTER I
GENERAL PROVISIONS
Section 1. Scope. — This Code shall govern the appraisal and assessment of real property for purposes of taxation by provinces, cities and municipalities, as well as the levy, collection and administration of real property tax.
Sec. 2. Fundamental Principles. — The appraisal and assessment of real property for taxation purposes shall be guided by the following fundamental principles:(1) Real property shall be appraised at its current and fair market value;(2) The appraisal of real property shall be uniform in each local political subdivision;(3) Real property shall be classified for assessment purposes on the basis of its actual use;(4) Real property shall be assessed on the basis of a uniform standard of value within each local political subdivision;(5) In no case shall the appraisal and assessment of real property for taxation purposes and the collection of the real property tax be let to any private person; and(6) The goal of property assessment shall be the equitable distribution of the tax burden.
Sec. 3. Definition of Terms. — When used in this Code (a) Actual use — shall refer to the purpose for which the property is principally or predominantly utilized by the persons in possession of the property.(b) Ad Valorem tax — is a levy on real property determined on the basis of a fixed proportion of the value of the property.(c) Agricultural land — land devoted principally to the raising of crops such as rice, corn, sugar cane, tobacco, coconut, etc., or to pasturing, dairying, inland fishery, salt making, and other agricultural uses, including timberlands and forest lands.(d) Appraisal — is the act or process of determining the value of a property as of a specific date for a specific purpose.(e) Assessment — the act or process of determining the value of a property, or proportion thereof, subject to tax, including the discovery, listing and appraisal of properties.(f) Assessment level — is the percentage applied to the market value to determine the taxable or assessed value of the property.(g) Assessed Value — the value placed on taxable property by the assessor for ad valorem tax purposes. The assessed value when multiplied by the tax rate will produce the amount of tax due. It is synonymous to "taxable value."(h) Commercial land — land devoted principally to commercial purposes, and generally for the object of profit.(i) Depreciated Value — the value remaining after deducting depreciation from either the replacement cost or the reproduction cost.(j) Economic life — the estimated period over which it is anticipated that a machinery may profitably be utilized.(k) Improvements — Is a valuable addition made to property or an amelioration in its condition, amounting to more than more repairs or replacement of waste, costing labor or capital, and intended to enhance its value, beauty or utility or to adapt it for new or further purposes.(l) Industrial land — land developed principally to industry as capital investment.(m) Machinery — shall embrace machines, mechanical contrivances, instruments, appliances and apparatus attached to the real estate. It includes the physical facilities available for production, as well as the installations and appurtenant service facilities, together with all other equipment designed for or essential to its manufacturing, industrial or agricultural purposes.(n) Market value — is defined as "the highest price estimated in terms of money which the property will buy if exposed for sale in the open market allowing a reasonable time to find a purchaser who buys with knowledge of all the uses to which it is adapted and for which it is capable of being used." It is also referred to as `the price which a willing seller would sell and willing buyer would buy, neither being under abnormal pressure."(o) Mineral lands — are those lands in which minerals exist in sufficient quantity or grade to justify the necessary expenditures to be incurred in extracting and utilizing such minerals.(p) Original 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).(q) Reassessment — 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 — the period of time (years) from the date of appraisal to the date when the machinery becomes valueless.(s) Remaining value — the value corresponding to the remaining useful life of the machinery.(t) Replacement or reproduction cost (new) — 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 property on the basis of current prices with the same or closely similar material.(u) Residential land — land principally devoted to habitation.
Sec. 4. Administration of the Real Property Tax. — The Department of Finance shall be primarily responsible for the proper, efficient and effective administration of the real property tax and for this purpose it shall:

a) Evolve a comprehensive system of real property appraisal that will ensure fair and realistic property valuations for taxation purposes;(b) Establish uniform assessment methods and procedures that will equalize property values in each local political subdivision:(c) Ensure that the ad valorem tax on real property shall be just, uniform and equitable;(d) Adopt the necessary measures that will promote maximum tax collection efficiency at the local levels;(e) Provide for the optimum utilization by the local governments of the proceeds from the real property tax; and (f) Formulate and adopt policies and procedures that will improve technical skills and develop reasonable standards of performance in the local assessment and treasury services.In order to attain the foregoing objectives, the Secretary of Finance shall exercise direct executive supervision over all assessment and treasury officials and personnel in the local governments.

CHAPTER IIAPPRAISAL AND ASSESSMENT OF REAL PROPERTY
Sec. 5. 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.
Sec. 6. Declarations of Real Property by 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 or city 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 five years during the period from January first to June thirtieth, commencing with the calendar year 1977, unless required earlier by the Secretary of Finance.
Sec. 7. Declaration of Real Property by the Assessor. — When any person, natural or juridical, by whom real property is required to be declared under Section six hereof refuses or fails for any reason to make such declaration within the time prescribed, the provincial or city 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 provisions of this Code. No oath shall be required of a declaration thus made by the provincial or city assessor.
Sec. 8. Listing of Real Property in the Assessment Rolls. — In every province and city, there shall be prepared and maintained by the provincial or city assessor an assessment roll wherein shall be listed all real property, whether taxable or exempt, located within the province or city. Real property shall be listed and valued in the name of the owner or administrator, or anyone having legal interest in the property.The undivided real property of a deceased person may be listed and valued in the name of the estate, or of the heirs and devisee without designating them individually; and undivided real property other than owned by a deceased may be listed and valued in the name of one or more co-owners; Provided; however, That such heir, devisee or co-owner shall be liable severally for all obligations imposed by this Code and for the payment of the real property tax with respect to the undivided property.The real property of a corporation, partnership or association shall be entered and assessed in the same manner as that of an individual.Real property owned by the Republic of the Philippines, its political subdivisions and any government-owned corporation so exempt by its charter, the beneficial use of which has been granted, for consideration or otherwise, to a taxable person, shall be listed for purposes of taxation in the name of the grantee, or of the public entity if such property has been acquired for resale or lease.The assessment roll shall be prepared in accordance with rules and regulations prescribed by the Secretary of Finance.
Sec. 9. Proof of Exemption of Real Property from Taxation. — Every person by or for whom real property is declared, who shall claim tax exemption for such property under this Code shall file with the provincial or city assessor within thirty days from the date of the declaration of real property sufficient documentary evidence in support of such claim, including corporate charters, titles or ownerships, articles of incorporation, by-laws, contracts, affidavits and certifications and mortgage deeds, and similar documents.If the required evidence is not submitted within the period herein prescribed, the property shall be listed as taxable in the assessment roll. However, it shall be proven to be tax exempt the same shall be dropped from the roll of taxable properties.
Sec. 10. Real property Identification System. — All declarations of real property made under the provisions of this Code shall be kept and filed under a uniform identification system to be established by the provincial of city assessors in accordance with the rules and regulations to be prescribed by the Secretary of Finance.
Sec. 11. Notification of Transfer of Real Property Ownership. — Any person who shall transfer real property ownership to another shall notify the assessor of the province or city wherein the property is situated within sixty days from the date of such transfer. The notification shall include the particulars of the transfer, description of the property alienated, and the name and address of the transferee.
Sec. 12. Duty of Register of Deeds to Apprise Assessor of Real Property Listed in Registry. — To ascertain whether or not any real property entered in the Registry of Property has escaped discovery and listing for the purpose of taxation, the Register of Deeds shall prepare and submit to the provincial or city assessor, within two years from the date of approval of this Code an abstract of his registry, which shall include brief but sufficient description of the real properties entered therein, their present owners and the dates of their most recent transfer or alienation's accompanied by copies of corresponding deeds of sale, donation or partition or other form of alienation.It shall also be the duty of the Register of Deeds to require every person who shall present for registration a document of transfer, alienation or encumbrance of real property to accompany the same with a certificate to the effect that the real property subject of the transfer, alienation or encumbrance, as the case may be, has been fully paid of all real property taxes due thereon. Failure to provide such certificate shall be a valid cause for the Register of Deeds to refuse the registration of the document.
Sec. 13. Duty of Official Issuing Building Permit or Certificates of Registration of Machinery to Transmit Copy to Assessor. — Any public official or employee who may now or hereafter be required by law or regulation to issue to any person a permit for the construction, addition, repair or renovation of a building or permanent improvement, on land, or a certificate or registration for any machinery, including machines, mechanical contrivances, and apparatus, attached or affixed on land, or to another real property shall transmit a copy of such permit or certificate, within thirty days of its issuance, to the assessor of the province or city wherein the property is situated.
Sec. 14. Duty of Surveyors to Furnish Copy of Plans to Assessors. — It shall be the duty of all surveyors, public or private, to furnish free of charge to the assessor of the province or city where the land is located with a white or blue print copy of each of all approved original or subdivision plans or maps of surveys executed by them within thirty days from receipt of such plans from the Bureau of Land or Land Registration Commission or the National Urban Planning Commission, as the case may be.
Sec. 15. Preparation of Schedule of Values. — Before any general revision of property assessments is made, as provided in this Code, there shall be prepared for the province or city a Schedule of Market Values for the different classes of real property therein situated in such form and detail as shall be prescribed by the Secretary of Finance.
Said schedule, together with an abstract of the data on which it is based, shall be submitted to the Secretary of Finance for review not later than the thirty-first day of December immediately preceding the calendar year the general revision of assessments shall be undertaken. The Secretary of Finance shall have ninety days from the date or receipt within which to review said schedule to determine whether it conforms with the provisions of this Code.
Sec. 16. Authority of Assessor to Take Evidence. — For the purpose of obtaining information on which to base the market value of any real property, the provincial or city assessor, or his deputy, may summon witnesses, administer oaths and take deposition, concerning the property, its ownership, amount, nature and value.
Sec. 17. Amendment of Schedules of Market Values. — For the correction of errors or inequalities in any schedule of market values, the provincial or city assessor shall, on his own initiative or upon the direction of the Secretary of Finance, prepare an amendment designed to remedy such errors or inequalities. Such amendments shall likewise be subject to review by the Secretary of Finance within ninety days from the date of receipt thereof.
Sec. 18. Classes of Real Property for Assessment Purposes. — For purposes of assessment, real property shall be classified as residential, agricultural, commercial or industrial and also as mineral in the case of lands.Mineral lands shall be further classified as follows:(a) Metallic mineral lands, which shall include:(1) Patented lode mining claims, producing or non-producing;(2) Unpatented producing lode mining claims which may be patented;(3) Unpatented non-producing the lode mining claims which may be patented;(4) Patented placer mining claims, producing or non-producing;(5) Unpatented producing placer mining claims which may be patented; and(6) Unpatented non-producing placer mining claims which may be patented.(b) Non-metallic mineral lands, which shall include:(1) Patented, producing or non-producing;(2) Unpatented, producing which may be patented; and(3) Unpatented, non-producing, which may be patented.Definition of Terms. — "Patented" mineral lands are those lands covered by a duly issue mineral patent signed by the President of the Philippines."Unpatented" mineral lands are those lands which were located as mining claims under the provisions of the Philippine Bill of 1902 but are not yet covered by a mineral patent."Producing patented mineral claims" are those claims producing minerals for commercial purposes."Non-producing patented mineral claims" are those claims which are only in the stage of exploration and development and has not produced minerals for commercial production.A "lode mineral claim" is a parcel of mineral lands containing a vein, lode, ledge, lens, or mass of ore in place which has been located in accordance with law.A "placer claim" is that which does not come under the definition of "lode mineral claim.""Placer deposits" are in loose, fragmentary or broken rocks, boulders, floats, beds or deposits."Metallic" deposits are those which contain any of the metallic elements or minerals, or their combination, such as gold, silver, platinum, tin, chromium, iron, manganese, copper, nickel, lead, zinc cinnabar, tungsten and the like."Non-metallic" deposits are all other deposits not covered by the above "metallic" deposits.In case of conflict between the above definitions and those appearing in the Mining Act as amended, the latter shall prevail.Special Classes of Real Property. -All lands, buildings and other improvements thereon, actually, directly and exclusively used for educational, cultural, recreational or scientific purposes, as well as hospitals not owned and operated by the government or by any of its instrumentalities, shall be classified as special.
Sec. 19. Actual Use of Real Property as Basis for Assessment. — Real property shall be assessed on the basis of its actual use regardless of where located and whoever uses it.The Secretary of Finance shall issue guidelines for the proper implementation of the provisions of this Section.
Sec. 20. Assessment Levels. — The assessment levels to be applied to the current market values of real property for taxation purposes shall be as follows:(a) On Lands. — The assessment levels in the province or city shall be maintained at the current levels of thirty per cent for residential lands; forty per cent for agricultural lands; and fifty per cent for commercial or industrial lands.(b) Mineral Lands. — For purposes of taxation, mineral lands not covered by lease shall be appraised at fifty per cent of their market value to be determined by the Secretary of Finance upon consultation with the Director of Mines: Provided, however, that mineral lands covered by leases shall be declared for taxation purposes either by the owner of the land or lessee and the assessment level thereof shall be maintained at the current level of fifty per cent.(c) On Buildings, Machineries and other Improvements. — The assessment levels now prevailing in the province or city shall be maintained but which shall in no case be lower than the assessment levels for lands hereinabove prescribed nor more than eighty per cent of the market value, except buildings used exclusively for residential purpose.(d) Special Classes. — The assessment level for all lands, buildings and other improvement thereon, actually, directly and exclusively used for educational, cultural or scientific purposes, as well as hospitals not owned and operated by the government or by any of its instrumentalities shall be fifteen per cent of the market value of such property and for those exclusively used for recreational purposes, thirty per cent of their market value.For the First general revision of assessments to be undertaken after the approval of this Code and every five years thereafter, the assessment levels hereinabove prescribed for the different classes of real property may be increased at rates to be fixed by the Secretary of Finance but in no case shall such increase in rates exceed ten per cent of the assessment levels herein prescribed for each class of real property.
Sec. 21. General Revision of Assessments. — Beginning with the calendar year 1978, the provincial or city assessor shall make a general revision of real property assessments in the province or city to take effect January 1, 1979, and once every five years thereafter: Provided, however, That if property values in a province or city, or in any municipality, have greatly changed since the last general revision, the provincial or city assessor may, with the approval of the Secretary of Finance or upon his direction, undertake a general revision of assessments in the province or city, or in any municipality before the fifth year from the effectively of the last general revision.

Sec. 22. Valuation of Real Property. — Upon the discovery of real property or during the general revision of property assessments as provided in Section twenty-one of this Code or at any time when requested by the person in whose name the property is declared, the provincial or city assessor or his authorized deputy shall make an appraisal and assessment in accordance with Section five hereof of the real property listed and described in the declaration irrespective of any previous assessment or taxpayer's valuation thereon: Provided; however, That the assessment of real property shall not be increased oftener than once every five years in the absence of new improvements increasing the value of said property or of any change in its use, except as otherwise provided in this Code.
Sec. 23. Certification of Revised Values to the Secretary of Finance. — When the provincial or city assessor shall have finished a general revision of property assessments for any province, municipality or city, he shall so certify to the Secretary of Finance and the assessments shall become effective and taxes shall accrue and be payable thereunder in accordance with the provisions of this Code.
Sec. 24. Date of Effectivity of Assessment or Reassessment. — All assessments or reassessments made after the first day of January of any year shall take effect on the first day of January of the succeeding year: Provided, however, That the reassessment of real property due to its partial or total destruction, or to a major change in its actual use, or to any great and sudden inflation or deflation of real property values, or to the gross illegality of the assessment when made or to any other abnormal cause, shall be made within ninety days from the date any such cause or causes occurred, the same to take effect at the beginning of the quarter next following the reassessment.
Sec. 25. Assessment of Property Subject to Back Taxes. — Real property declared for the first time shall have back taxes assessed against it for the period during which it would have been liable if assessed from the first in proper course but in no case for more than ten years prior to the year of initial assessment; Provided, however, that the back taxes shall be computed on the basis of the applicable schedule of values in force during the corresponding period.If said taxes are paid before the expiration of the tax collection period next ensuing, no penalty for delinquency shall be imposed, otherwise the taxes shall be subject to all the penalties to which they would have been liable and had they originally become delinquent after assessment of the property in the usual course.
Sec. 26. Binding effect of Assessment or Reassessment. — All assessments and reassessments made under the provisions of this Code shall be valid and binding on all persons having legal interest on the property.
Sec. 27. Notification of New or Revised Assessments. — When real property is assessed for the first time or when an exercising assessment is increased or decreased, the province or city shall within thirty days give written notice of such new or revised assessment to the person in whose name the property is declared. The notice may be delivered personally to such person or to the occupant in possession, if any, or by mail to the last known address of the person to be served, or through the assistance of the barrio captain.
Sec. 28. Appraising Machinery. — The current market value of the machinery shall be determined on the basis of the original cost in the case of newly acquired machinery not yet depreciated and is appraised within the year of its purchase. In the case of all others, the current market value shall be determined by dividing the remaining economic life of the machinery by its economic life and multiplied by the replacement or reproduction cost (new) of said machinery.If the machinery is imported, replacement or reproduction cost (new) shall be the original acquisition cost which would normally include such costs as freight and insurance charges, brokerage, arrastre and handling, customs duties and taxes plus cost of inland transportation and handling, and significant installation charges at the present site. The cost in foreign currency of imported machinery shall be converted to peso cost on the basis of foreign currency exchange rates as fixed by the Central Bank of the Philippines.
Sec. 29. Depreciation Allowance for Machinery. — For purposes of assessment, a depreciation allowance shall be made for machinery at a rate not exceeding ten per cent of its original cost or its replacement or reproduction cost (new), as the case may be, for each year of use: Provided, That the remaining value for all kinds of machinery shall be fixed at not less than twenty per cent of such original or replacement cost for so long as the machinery is useful and in operation.CHAPTER IIIASSESSMENT APPEALS
Sec. 30. Local Board of Assessment Appeals. — Any owner who is not satisfied with the action of the provincial or city assessor in the assessment of his property may, within sixty days from the date of receipt by him of the written notice of assessment as provided in this Code, appeal to the Board of Assessment appeals of the province or city, by filing with it a petition under oath using the form prescribed for the purpose, together with copies of the tax declarations and such affidavit or documents submitted in support of the appeal.
Sec. 31. Organization, Powers and Functions of the local Board of Assessment Appeals. — The Local Board of Assessment Appeals shall be composed of three members: the Register of Deeds, as Chairman, the Provincial of City Auditor and the Provincial or City Engineer, as Members, who shall serve as such in an ex-officio capacity without additional compensation. In provinces or cities without Provincial or City Engineers, the Highway District Engineer shall serve as member of the Board, likewise in an ex-officio capacity without additional compensation. In the absence of a regular appointee, the officer performing the duties of the Register of Deeds, or the Provincial or City Auditor, or the Provincial, City or Highway District Engineer whether in an acting capacity or as a duly-designated officer-in-charge shall automatically become the Chairman or member of the said Board, as the case may be.The Chairman of the Board shall have the power to designate any government employee of the province or city to serve as Secretary of the Board also without additional compensation.The Chairman and members of the Local Board shall enter into the duties of their respective positions without need of further appointment or special designation immediately upon approval of this Code. The members of the Board shall each take the following oath, copy of which shall be furnished the Secretary of Finance:"I ____________, having been appointed to the position of __________, hereby solemnly swear that I will well and faithfully discharge to the best of my ability and duties of my present position and of all others I may hereafter hold under the Republic of the Philippines, and that I will support and defend the Constitution of the Philippines; and that I will obey the laws, legal orders, and decrees promulgated by the duly constituted authorities of the Republic of the Philippines; and that I will well and truly hear and determine all matters and issues between taxpayers and the provincial or city assessor submitted for my decision, and that I impose this obligation upon myself voluntarily, without mental reservation or purpose of evasion.So help me God._________________SignatureSUBSCRIBED AND SWORN to before as this ______ day of __________ A.D. _________ at ____________ Philippines.__________________________Signature of Officer administering oath"
Sec. 32. Meetings. — The local Board shall hold sessions at least once a month, and as often as may be necessary for the prompt disposition of the appealed cases pending before it. No member of the Board shall be entitled to per diems or traveling expenses for his attendance in Board sessions, except when conducting an ocular inspection in connection with a case under appeal.