I. Overview: Real Property Tax as a Local, In Rem Tax

Real Property Tax (RPT) is a local tax imposed annually on real property—land, buildings/other structures, and machinery—located within a local government unit (LGU). It is fundamentally an in rem imposition: the tax attaches to the property itself, and the property may be proceeded against to satisfy delinquent taxes.

In practice, the computation you see on a Tax Declaration (TD) flows from a statutory framework under the Local Government Code of 1991 (Republic Act No. 7160) and the LGU’s local ordinances (especially the Schedule of Market Values and the tax rate ordinance). A property’s lack of a Torrens title does not remove it from RPT coverage; what matters for RPT is the existence, location, classification, use, and assessed valuation of the real property.

II. What “Tax Declaration Property” Means (and What It Does Not Mean)

A. What a Tax Declaration is

A Tax Declaration is the assessor’s official record identifying a parcel of land and/or an improvement (building, structure, machinery) for appraisal and assessment. It typically states, among others:

Owner/Declared owner (or administrator/possessor)
Location (barangay, street, boundaries), classification, and actual use
Area (for land), description/specifications
Fair Market Value (FMV) as determined under the LGU’s valuation schedule
Assessment level applied
Assessed value
Effectivity/revision history (often with TD numbers across revisions)

Many LGUs issue separate TDs for:

Land, and
Improvements (buildings/structures), and
Machinery

RPT is computed per component and then totaled.

B. What a Tax Declaration is not

A Tax Declaration is not a Torrens title and is not conclusive proof of ownership. It is primarily a tax record. However, it is strong evidence that the property is recognized for taxation and that the declared person is treated as the taxpayer for collection and administrative purposes.

C. Who is liable to pay

RPT is generally payable by the owner. Where ownership is unclear or disputed, LGUs commonly assess in the name of the administrator, beneficial user, or actual possessor for collection, without finally adjudicating ownership. This is consistent with the in rem character of the tax.

III. Governing Law and the Role of Local Ordinances

A. Local Government Code (RA 7160), Book II, Title II

RA 7160 sets:

Fundamental principles (uniformity, equity, appraisal and assessment standards)
Definitions and classifications of real property and “actual use”
Rules on appraisal, assessment, reassessment, and general revision
Maximum assessment levels
Maximum tax rates
Payment schedule, discounts, penalties (interest)
Remedies (appeals/protests) and enforcement mechanisms (levy and sale)

B. Local ordinances that directly affect computation

Even with fixed statutory ceilings, the exact numbers on a TD depend on local enactments, including:

Schedule of Market Values (SMV) / valuation ordinance
Assessment level ordinance (if LGU adopts levels below statutory ceilings)
Tax rate ordinance (basic rate; idle land tax rate if imposed)
Ordinances granting discounts for advance/prompt payment
Ordinances on special levies (special assessments) where applicable

IV. The Core Computation: From FMV to Tax Due

At its simplest, RPT computation is:

1) Determine Fair Market Value (FMV)

FMV is set by appraisal rules using the LGU’s SMV and valuation factors.

2) Compute Assessed Value

Assessed Value = FMV × Assessment Level

3) Apply Tax Rates

Most properties pay at least:

Basic RPT (local general fund), plus
Special Education Fund (SEF) tax (additional 1%)

So:

Basic RPT = Assessed Value × Basic Rate SEF Tax = Assessed Value × 1% Total Annual RPT (typical) = Basic RPT + SEF Tax

If applicable, add:

Idle land tax (additional, if imposed), and/or
Special levy/special assessment (separate charge tied to public works benefits)

4) Apply discounts (if any) or add interest for delinquency

V. Step 1 — Appraisal: How FMV Is Determined (What Drives the Numbers on the TD)

FMV is the assessor’s estimate of market value for taxation purposes, anchored on the SMV and technical appraisal standards.

A. Land (common approach)

FMV for land is usually based on:

Classification and actual use (residential, agricultural, commercial, industrial, etc.)
Location (zone/street/area), accessibility, frontage, topography
Area (sqm/hectares) × unit value from the SMV
Adjustments (corner lots, road type, elevation, shape, hazards, easements)

Illustrative formula (varies by LGU): FMV = Area × Base Unit Value × (Adjustment factors)

B. Buildings/Structures

FMV is typically derived from:

Floor area × unit construction cost (per type/material/finish)
Less depreciation based on age and condition
Plus/minus additions (mezzanine, special finishes, improvements)

C. Machinery

Machinery FMV is often based on:

Acquisition or replacement cost, less depreciation/obsolescence
Remaining useful life and operational condition
For some industries, specialized valuation rules are used

Important practical point: The FMV on a TD is not a taxpayer-declared value in the ordinary sense; it is an assessor-determined value derived from LGU schedules and appraisal rules.

VI. Step 2 — Assessment: Classification, Actual Use, and Assessment Levels

A. “Actual use” controls

In RPT, actual use generally means the property’s principal and predominant use, not merely its zoning classification or intended use. This matters because actual use determines:

The classification for assessment, and
The assessment level applied

B. Assessed Value formula

Assessed Value = Fair Market Value × Assessment Level

C. Common assessment levels (especially for land)

Under the LGC, LGUs apply assessment levels not exceeding statutory ceilings. For land, the commonly used maximum levels are widely treated as:

Residential: 20%
Agricultural: 40%
Commercial: 50%
Industrial: 50%
Mineral: 50%
Timberland: 20%

(Some LGUs adopt lower levels by ordinance; the TD shows what was applied.)

D. Special classes of real property (preferential assessment)

The LGC recognizes special classes (e.g., properties actually, directly, and exclusively used for religious, charitable, educational, cultural, scientific purposes; and certain government-related uses as defined by law). These may be subject to a preferential assessment level (commonly 15% ceiling in the statutory scheme), but this is different from a full tax exemption. Preferential assessment reduces assessed value; exemption removes tax liability.

E. Buildings and machinery: bracketed assessment levels

For buildings/structures and machinery, assessment levels are typically bracketed by FMV and depend on actual use (residential, agricultural, commercial, industrial, etc.), subject to statutory maximums. In many LGUs, the higher the FMV bracket and the more commercial/industrial the use, the higher the assessment level.

Because LGUs may enact assessment level ordinances within statutory ceilings, the controlling figure for computation is what appears on the TD (or the assessor’s records for that TD).

VII. Step 3 — Tax Rates: Basic RPT, SEF, and Other Possible Add-ons

A. Basic RPT (General Fund)

The LGC sets maximum basic rates commonly summarized as:

Provinces: up to 1% of assessed value
Cities and municipalities within Metro Manila: up to 2% of assessed value

The exact rate depends on the LGU’s ordinance.

B. SEF Tax (additional 1%)

An additional 1% of assessed value is levied for the Special Education Fund (SEF).

C. Idle land tax (if imposed)

LGUs may impose an additional tax on idle lands, subject to statutory parameters and local ordinance. The rate is commonly described as up to 5% of assessed value (ceiling), but it only applies if:

The LGU has enacted the idle land tax ordinance, and
The property meets the statutory/ordinance definition of “idle” (which depends on land type, size thresholds, and utilization)

D. Special levy / special assessment (separate from RPT)

For certain public works or improvements that benefit specific lands, an LGU may impose a special levy (sometimes called a special assessment). This is not the annual RPT; it is an additional charge computed under its own rules, typically linked to the cost of the improvement and the measure of benefit.

VIII. Putting It Together: Computation Examples

Example 1: Residential land in a province (basic rate 1%)

FMV (from SMV/appraisal): ₱1,000,000
Assessment level (residential land): 20%
Assessed value: ₱1,000,000 × 0.20 = ₱200,000

Taxes:

Basic RPT: ₱200,000 × 1% = ₱2,000
SEF: ₱200,000 × 1% = ₱2,000
Total annual RPT: ₱4,000

Example 2: Same property in a city (basic rate 2%)

Assessed value: ₱200,000

Taxes:

Basic RPT: ₱200,000 × 2% = ₱4,000
SEF: ₱200,000 × 1% = ₱2,000
Total annual RPT: ₱6,000

Example 3: Land + building (separate TDs, totaled)

Land TD

FMV: ₱1,000,000; assessment level 20% → assessed value ₱200,000

Building TD

FMV: ₱2,500,000; assume assessment level applied per the LGU’s ordinance/ceiling → assessed value shown on TD (e.g., ₱1,000,000 for illustration)

Total assessed value (for billing): ₱200,000 + ₱1,000,000 = ₱1,200,000

If city basic rate 2%:

Basic: ₱1,200,000 × 2% = ₱24,000
SEF: ₱1,200,000 × 1% = ₱12,000
Total annual: ₱36,000

(Actual outcome depends on the building’s assessed value as determined by the assessor and shown on the building TD.)

IX. Payment Timing, Discounts, and Interest for Delinquency

A. Accrual and due dates

RPT accrues on January 1 each year. It is typically payable:

In four equal quarterly installments (common statutory schedule: end of March, June, September, December), or
In full in advance (which may qualify for discounts)

B. Discounts

LGUs may grant discounts by ordinance, commonly for:

Advance payment of the annual tax, and/or
Prompt payment within prescribed periods

The availability and percentage depend on the local ordinance (subject to LGC limits).

C. Interest (penalty) for delinquency

Unpaid RPT becomes delinquent and is subject to interest (commonly 2% per month, capped to a maximum period such as 36 months under the LGC framework). The interest is computed on the unpaid amount and accrues monthly.

Illustration (simple): Unpaid annual tax: ₱10,000 Delinquent for 5 months at 2%/month → interest = ₱10,000 × (0.02 × 5) = ₱1,000 Total due = ₱11,000 (Actual LGU computation may consider installment delinquency timing.)

X. What To Check on the Tax Declaration When Computing or Verifying RPT

A TD typically contains the key computational elements. For verification, check:

Property identification (TD number, PIN/ARP, location, boundaries)
Classification and actual use (land use, building use)
FMV basis (unit values, building cost basis, depreciation)
Assessment level applied
Assessed value (this is the tax base)
Effectivity (which revision year applies)
If exempt or preferential: annotations and the legal basis (if any)

Errors commonly arise from misclassification of actual use, outdated FMV schedules, incorrect area, or failure to update TDs after improvements or subdivision/consolidation.

XI. Disputes and Remedies That Affect Computation

Because computation depends on valuation and classification, disputes typically fall into two tracks:

A. Challenging the assessment/assessed value (valuation, classification, assessment level)

This is usually done through the Local Board of Assessment Appeals (LBAA) within the period provided by law after receipt of the assessment/notice, with further appeal to the Central Board of Assessment Appeals (CBAA) and then to the proper court under governing rules.

Typical grounds affecting computation:

Wrong classification/actual use (residential vs commercial, etc.)
Wrong area or property description
Wrong FMV schedule applied / wrong appraisal factors
Improper inclusion/exclusion of improvements
Incorrect application of assessment levels

B. Challenging the tax collection (payment “under protest” framework)

Where the issue is the legality of the tax as collected (not the valuation per se), the usual statutory framework requires payment under protest and filing a protest with the local treasurer within the prescribed period, then pursuing further remedies if denied or unresolved.

XII. Delinquency Enforcement: Why Computation Matters Even Without Title

If RPT remains unpaid, the LGU may enforce collection against the property through administrative remedies, commonly including:

Issuance of a warrant of levy
Advertisement and tax delinquency sale at public auction
Redemption period (typically one year) subject to statutory charges

Because RPT is in rem, enforcement is directed at the property. This is a key reason tax declaration properties—titled or untitled—are treated as taxable and collectible within the LGU’s system.

XIII. Common Philippine Context Issues for Tax Declaration Properties

Untitled land / overlapping claims: The TD may be in a possessor’s name, an ancestor’s name, or multiple names across time. RPT is still computed based on the current assessed value record. Transfers often require updating the TD, but tax liability can still attach to the property.
Heirs and estates: TDs often remain in the deceased’s name. Payment is usually accepted, but updating the TD aligns records and avoids future disputes.
Improvements not declared: Buildings/extensions constructed without updating the building TD can lead to back assessments (subject to statutory rules on assessment/reassessment).
Government property with private beneficial use: Where a private entity has beneficial use of government-owned property, RPT exposure can arise depending on the arrangement and governing law.
Incentives and special regimes: Some properties/entities may claim exemption or preferential treatment based on constitutional provisions, the LGC, or special laws. Computation changes dramatically if a valid exemption applies (tax base becomes zero), or if only preferential assessment applies (assessed value is reduced).

XIV. Conclusion

RPT computation on tax declaration properties in the Philippines follows a consistent structure:

Appraise to determine FMV under the LGU’s valuation schedules,
Assess by applying the proper assessment level based on actual use, producing the assessed value,
Multiply the assessed value by the basic rate (1% or 2%, depending on the LGU) and add the SEF 1%, then
Apply any idle land tax/special levies (if applicable) and adjust for discounts or delinquency interest under local ordinance and statutory limits.

In short: the Tax Declaration supplies the tax base (assessed value) and the classification inputs; the local tax ordinances supply the rates; the annual bill is the product of both.