In the Philippines, Real Property Tax (RPT)—popularly known as amilyar—is a local tax levied on real properties such as land, buildings, machinery, and other improvements. Governed primarily by Republic Act No. 7160, otherwise known as the Local Government Code (LGC) of 1991, the timely payment of RPT is crucial for maintaining the fiscal health of Local Government Units (LGUs).

Failure to settle these obligations on time triggers a mandatory penalty system designed to incentivize compliance and compensate the LGU for the delay.

The Accrual of Real Property Tax

RPT accrues on the first day of January each year. From that moment, the tax constitutes a lien on the property, which is superior to any other lien, mortgage, or encumbrance, and is enforceable by administrative or judicial action.

Payment Options: Annual vs. Quarterly

While the tax may be paid in a single lump sum at the beginning of the year, the LGC allows taxpayers to pay in four equal installments:

First Quarter: On or before March 31
Second Quarter: On or before June 30
Third Quarter: On or before September 30
Fourth Quarter: On or before December 31

The Legal Basis for Penalties

Under Section 255 of the Local Government Code, the failure to pay the tax upon the expiration of the periods mentioned above subjects the taxpayer to the payment of interest.

1. The Penalty Rate

The interest rate for late payments is two percent (2%) per month on the unpaid amount. It is important to note that this is not simple annual interest, but rather a monthly accrual.

2. Maximum Cap

The law provides a ceiling for these penalties. The total interest on the unpaid tax (or any installment thereof) shall not exceed thirty-six (36) months, or a maximum cap of seventy-two percent (72%). Once the 36-month period is reached, the interest stops accruing, but the base tax and the accumulated 72% interest remain due.

Computing the Penalty

The penalty is applied specifically to the amount that is overdue. If you are paying quarterly and miss a deadline, the interest is computed based on that specific installment, not the total annual tax.

The Formula:

Illustrative Example:

Annual RPT: ₱4,000.00
Quarterly Installment: ₱1,000.00
Scenario: The taxpayer fails to pay the 1st Quarter installment (due March 31) and instead pays it on August 15.

Identify Months Late: April, May, June, July, and August (any fraction of a month is generally counted as a full month). Total = 5 months.
Apply Rate: ₱1,000.00 × 0.02 × 5 = ₱100.00.
Total Due for 1st Quarter: ₱1,100.00.

Key Legal Nuances

Fraction of a Month: For purposes of computing interest, a fraction of a month is treated as one full month. If you are even one day late into the next month, you are charged the full 2% for that month.
Application of Payment: Under accounting rules for local taxation, payments are typically applied first to the accrued interests and then to the principal tax due.
The "Tax Amnesty" Exception: LGUs, through their respective Sanggunian (local councils), have the power to grant tax amnesties or relief. This can involve the condonation of interests and penalties, usually passed through a local ordinance during times of calamity or for general fiscal restructuring.

Consequences of Non-Payment Beyond Penalties

If the penalties and the base tax remain unpaid for an extended period, the LGU can initiate administrative remedies to collect the tax:

Distraint of Personal Property: The local treasurer may seize personal property of the taxpayer to satisfy the delinquency.
Levy on Real Property: The LGU may issue a certificate of levy on the real property itself.
Public Auction: If the tax is still not settled after the levy, the property may be advertised and sold at a public auction to the highest bidder to cover the taxes, penalties, and costs of the sale.

Note on Redemption: In the event of a public auction, the owner has the right to redeem the property within one (1) year from the date of registration of the sale by paying the amount of taxes, penalties, and interest, plus the costs of the sale and interest on the purchase price.