A complete legal–practical guide

I. Why this matters

Real property tax (RPT) liabilities start with the assessor’s fair market value (FMV) of your land, building, or machinery. That FMV—multiplied by the assessment level set by ordinance—produces your assessed value, which the treasurer then uses to compute the basic RPT, SEF levy, and any special levies. If the FMV or classification is wrong, everything downstream is wrong.

This article explains, in Philippine context, how FMV is set, every path to challenge it, timelines, forums, evidence you need, and how to avoid penalties while you fight.

II. How FMV is legally set

Schedule of Fair Market Values (SMV). Each province/city/municipality prepares an SMV for land and improvements. The assessor drafts, the sanggunian enacts by ordinance after public hearing. The SMV lists base unit values by location, class, and grade.
General revision / roll updates. LGUs must periodically conduct a general revision of real property assessments and update the assessment roll. In between revisions, assessors may issue new or revised assessments when properties are newly discovered, improved, reclassified by actual use, erroneously assessed, or subject to correction.
Actual-use rule & classification. “Actual use” (how the property is presently used on the ground) controls classification—residential, agricultural, commercial, industrial, special—not zoning labels or intended future use.
Assessment levels. The sanggunian sets percentages (assessment levels) by property class and value bracket. Assessed value = FMV × assessment level. Cities and Metro Manila LGUs may impose a higher basic RPT rate ceiling than provinces; all LGUs also levy SEF (commonly +1% on assessed value), plus possible idle land or special benefit levies.

III. Typical grounds to contest an FMV/assessment

Wrong base schedule applied. Assessor used the wrong zone/grade or an outdated SMV table.
Misclassification by actual use. Property taxed as commercial though actually residential, or agricultural land taxed as industrial, etc.
Erroneous physical characteristics. Wrong area, frontage, lot shape factor, topography, flood risk, right-of-way encumbrances, easements ignored.
Improvements misvalued. Building age, depreciation, materials, obsolescence (functional/economic) not reflected; machinery capacity, age, remaining useful life overstated.
Double counting / duplication. Same improvement assessed twice (e.g., both as building and as machinery).
Exemption or preferential treatment ignored. Properties actually, directly, and exclusively used for religious, charitable, educational purposes; certain government or special economic zone properties; common areas in condominiums.
Due process defects. No or defective written notice of new/revised assessment; lack of public hearing for an SMV ordinance; abrupt mid-year implementation without the required effectivity.
Disparate treatment / uniformity issues. Similarly situated parcels assessed at glaringly different FMVs without rational basis.
Post-disaster or market shock adjustments. FMV not reflective of permanent diminution in utility/value after calamity, road re-routing, permanent easements, or zoning downgrades of actual use.

Evidence rule of thumb: Every ground must be anchored on documents, measurements, or sworn expert findings—not just an owner’s assertion.

IV. Know your remedies (assessment vs. collection)

There are two distinct tracks—and you can use both when appropriate:

A) Assessment appeals (valuation/classification disputes)

Forum: Local Board of Assessment Appeals (LBAA) in the province/city where the property lies.
Trigger: Receipt of the assessor’s written notice of new or revised assessment (or discovery of the error in the tax declaration).
Deadline: Within 60 days from receipt of the written notice of assessment.
Next levels: Adverse LBAA ruling → Central Board of Assessment Appeals (CBAA) (typically 30 days from receipt). From CBAA → Court of Tax Appeals (CTA); further review on pure questions of law may reach the Supreme Court.

Key point: An assessment appeal contests valuation, classification, and FMV schedule application. It is not about the treasurer’s collection acts.

B) Payment under protest (collection disputes)

Forum: Local treasurer (administrative protest) → appeal to LBAA if denied.
Trigger: You paid the RPT as billed but dispute legality or correctness of the amount collected (e.g., applied an unlawful surcharge, collected before effectivity, billed on a void ordinance).
Deadline: File written protest within 30 days from payment (attach Official Receipt).
Decision: Treasurer usually decides within 60 days. If denied or not acted upon, elevate to LBAA within the prescribed period.

Strategic note: If your core issue is FMV or classification, go straight to an assessment appeal. Use payment under protest for billing/collection defects or to preserve rights while avoiding penalties.

V. Does an assessment appeal stop collection?

Generally, no. The appeal does not suspend the accrual of tax and interest/surcharges. To avoid penalties while the case is pending, many taxpayers:

Pay based on the undisputed amount (e.g., the prior year’s assessed value) and specify in writing that the excess is under appeal; or
Pay in full under protest (when the dispute is intertwined with collection issues).

Coordinate with the treasurer and get written acknowledgment of how payments will be applied while the appeal is pending.

VI. Procedure before the LBAA (assessment appeal)

File a verified petition/appeal within 60 days from receipt of the assessment notice. State the property index number, tax declaration numbers, date of notice, grounds, and reliefs sought (reclassification, reduced FMV, cancellation of erroneous improvement, etc.).
Attach evidence:
- Title/Deed and latest tax declarations;
- Location plan and vicinity map;
- Survey/relocation plan;
- Photos (site, topography, encumbrances, flooding);
- Building plans/permits, as-built data;
- Engineering estimates of depreciation and obsolescence;
- Independent appraisal report (sales comparison/income/cost approach) tied to SMV parameters;
- Leases/income (if income approach is relevant);
- Affidavits of knowledgeable persons (engineers, appraisers);
- Ordinance copies (SMV and assessment levels) and proof of their effectivity;
- Notices from the assessor (with proof of service).
Service and hearing. Serve copies on the assessor and treasurer. The LBAA may conduct ocular inspections and technical conferences.
Decision. The LBAA should decide within a set period; if delayed, you may move to resolve on the record.

Burden of proof: The taxpayer bears the burden to overthrow the presumption of correctness of the assessor’s valuation. Clear, technical documentation wins cases.

VII. Appeal to the CBAA and beyond

CBAA review is generally on questions of fact and law based on the LBAA record (with limited reception of additional evidence). File within 30 days from receipt of the LBAA decision; observe docket fees and bond requirements if any.
From CBAA, elevate to the CTA within the period and mode prescribed by law and the CTA Rules; thereafter, questions of law may be taken to the Supreme Court by petition for review.

VIII. Challenging the SMV ordinance itself

Sometimes the problem is not the assessor’s math but the SMV ordinance (e.g., adopted without proper hearing, internally inconsistent, or confiscatory):

Paths:

Quasi-judicial route: Still bring an assessment appeal arguing the SMV’s misapplication or invalid effectivity, while preserving broader objections.
Judicial route: File a petition (e.g., declaratory relief or certiorari/prohibition) before the proper court to question validity/procedural defects of the ordinance (notice/publication/hearing/equal protection/uniformity). Consider injunctive relief standards and bonding.

Practical tip: Courts are cautious in striking revenue measures; succeed with procedural due process lapses, textual contradictions, or proof of arbitrariness. Pair the challenge with property-specific evidence of overvaluation.

IX. Special property types

Machinery (industrial, commercial, agricultural). Valued using replacement or reproduction cost new less depreciation and remaining economic life. Documentation: nameplate data, capacity, year installed, maintenance logs, manufacturer specs.
Condominiums. Common areas are typically exempt from separate taxation; individual units taxed based on floor area, grade, view, floor level (if the SMV provides differentials).
Agricultural lands. Watch for actual tillage, irrigation, soil class, road access, tenurial arrangements; avoid misclassification as resort/commercial based on speculative use.
Idle lands and special levies. Idle land taxes require specific findings (e.g., threshold area and non-use). Special benefit assessments for public works require specific ordinance and a showing of peculiar benefit to the property.
Mixed-use parcels. You may apportion floor areas/land portions by actual use; support with as-built plans and tenant mix.

X. Evidence that persuades

Appraisal report using all three approaches (Sales Comparison, Cost, Income) but tied back to the SMV matrix; cite comparable sales and rental comps with adjustments.
Engineering depreciation study for buildings/machinery (physical, functional, and external obsolescence).
Hazard and encumbrance proofs: DPWH setbacks, easements, right-of-way, flood depths, geotechnical limitations.
Time-on-market and failed sale evidence supporting reduced marketability.
Consistency exhibits: side-by-side of neighboring parcels showing disparate treatment.

XI. Compliance, timing, and cash-flow strategy

Calendar the 60-day LBAA deadline from receipt of the assessment notice. Missing it is usually fatal.
Engage early with the assessor; many valuation issues resolve at the desk review stage if you present measurement errors or actual-use proof.
Avoid penalties: While appealing, pay the undisputed portion or pay under protest—get this in writing with the treasurer.
Quarterly installments: Use the law’s quarterly payment feature to manage cash while pursuing relief.
Interest & surcharges: These keep running unless you pay; factor this into your decision to pay now vs. wait.

XII. Templates & checklists (condensed)

A) LBAA Petition (core contents)

Parties & property identification (PIN/ARP/TD Nos.; location)
Statement of timeliness (date of notice, date received)
Material facts (classification, FMV, assessment levels applied)
Errors alleged (misclassification, wrong zone/grade, overvaluation, depreciation, due process)
Reliefs (cancel/modify assessment; reclassify; set FMV at ___; issue corrected tax declaration)
Verification & certification against forum shopping
Annexes (see below)

B) Evidence bundle

Titles/Deeds; past TDs; notices; official receipts
Survey plans; location/vicinity maps; photos
Building permits; as-built plans; occupancy permits
Appraisal & engineering reports; comp tables; leases
Ordinances (SMV and assessment levels); publication/hearing proofs
Affidavits of appraiser/engineer and property administrator

XIII. Frequently asked questions

Q1: Can I just use BIR zonal values to force the assessor to reduce FMV? No. Zonal values are for national internal revenue taxes (transfers), not for local assessment. They are persuasive, not binding. Use them as one datapoint in an appraisal that also addresses the SMV matrix.

Q2: My lot is flood-prone; can I get a reduction? Yes—if you prove permanent physical constraints (flood depth/frequency, geotechnical risks) that affect market value and were ignored in the applied SMV/grade.

Q3: The assessor reclassified me as commercial due to nearby stores. Classification follows your property’s actual use, not your neighbor’s. Document your actual residential use (photos, utility bills, occupancy permits, barangay certification).

Q4: I missed the 60-day LBAA deadline. Options narrow to collection protests (if billing errors exist) or prospective correction in the next revision. Some owners pursue equitable remedies, but success is rare. Calendar deadlines strictly.

Q5: Will I get a refund if I win? Generally, yes, via credit or refund for excess taxes paid, subject to prescriptive periods and local refund procedures. Keep all ORs and decisions.

XIV. Bottom line

Know the target: You are contesting the application of the SMV and the classification by actual use, not just the tax bill.
Move fast: File with the LBAA within 60 days of the assessment notice.
Bring proof: Technical, appraiser-grade evidence beats anecdotes.
Mind cash flow: Appeals don’t suspend collection; pay what you must to avoid punitive interest, while preserving your rights.
Escalate if needed: LBAA → CBAA → CTA → SC. Pair property-specific arguments with any procedural defects in the SMV or notice.

This guide is for general information only and not legal advice. For a particular parcel or portfolio, work with counsel, an accredited appraiser, and (for machinery) an engineer to build a detailed valuation case.