I. Overview: What Real Property Tax Is (and What a Tax Declaration Is Not)

Real Property Tax (RPT) is an annual ad valorem tax imposed by local government units (LGUs) on real property—land, buildings, machinery, and other improvements—based on the property’s assessed value. In the Philippines, RPT is primarily governed by the Local Government Code of 1991 (Republic Act No. 7160) and implemented through local ordinances, assessor practices, and treasurer collection procedures.

A Tax Declaration (TD) is the assessor’s record describing the property (classification, area, improvements, owner/administrator, assessed value, etc.) and reflecting the assessed value used as a basis for computing RPT and other local impositions. It is crucial evidence for taxation and assessment, but it is not, by itself, conclusive proof of ownership. Ownership for land registration and civil law purposes is established by title, deeds, and other evidence; the TD primarily supports assessment and taxation.

In practice:

The Assessor determines classification and assesses property (computes market value and assessed value).
The Treasurer computes and collects RPT based on the assessed value and applicable rates (basic tax, SEF, and other levies).

II. Governing Framework and Key Principles

A. Local Government Code (LGC) Structure

The LGC sets:

What is taxable (real property subject to tax unless exempt).
How property is valued (through schedules of fair market values and assessment levels).
Who pays (generally the owner/administrator, and persons with beneficial use).
Rates and limits (ceilings for the basic tax and additional levies).
Payment periods, discounts, penalties, and remedies.

LGUs issue ordinances within LGC limits, particularly for:

Adoption/updates of the Schedule of Fair Market Values (SFMV) (basis of market value).
Grant of discounts for advance payment.
Administration of local collection procedures.

B. Constitutional and statutory context

RPT is a local tax grounded on:

Local fiscal autonomy and revenue powers, subject to uniformity/equity principles and statutory limitations.
Due process in assessment and collection (notice of assessment, appeal remedies, and requirements for sale/levy).

III. The Objects of Taxation: What Real Property Is Covered

Real property for RPT includes:

Land
Buildings and other structures
Machinery
Other improvements (e.g., fences, drainage, pavements, landscaping structures if treated as improvements; local assessor practice varies)

Taxability generally attaches to real property located within the LGU, with certain exemptions.

A. Exemptions (General Categories)

While specifics can be nuanced, common exemption categories include property:

Owned by the Republic or its political subdivisions, except when beneficial use is granted to a taxable person (beneficial use rule).
Charitable, religious, educational institutions and property actually, directly, and exclusively used for exempt purposes (use-based).
Machinery and equipment used for certain public utilities or government functions, subject to statutory rules.
Other exemptions under the LGC and special laws, usually still requiring declaration and assessor confirmation.

Exemption is not assumed: it is typically asserted, evaluated by the assessor/treasurer, and may require documentation.

IV. The Anatomy of RPT Computation: From Market Value to Tax Due

The computation hinges on a chain of concepts:

Schedule of Fair Market Values (SFMV) Adopted by ordinance and used by the assessor to determine market value.
Market Value The estimated price the property would command under normal conditions, as determined under the SFMV, considering classification, location, use, and improvements.
Assessment Level A statutory percentage applied to market value depending on classification (residential, agricultural, commercial, industrial, etc.) to arrive at assessed value.
Assessed Value The tax base for RPT computations: Assessed Value = Market Value × Assessment Level
Tax Rate(s) applied to assessed value:
- Basic RPT (LGC-capped)
- Special Education Fund (SEF) levy (statutory)
- Possible additional levies (e.g., idle land tax where applicable, and special levies for public improvements in limited circumstances)
Discounts / Penalties / Interest applied depending on payment timing and delinquency.

V. Real Property Tax Rates: Basic, SEF, and Other Levies

A. Basic Real Property Tax (Basic RPT)

The basic RPT rate is imposed by the province/city/municipality within statutory ceilings. As a rule of thumb under the LGC:

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

Municipalities outside Metro Manila generally rely on the province rate framework; actual collecting entity depends on jurisdiction and local setup, but the ceiling is classically presented as province (1%) vs city/MM municipality (2%).

B. Additional Levy for the Special Education Fund (SEF)

LGUs also impose an additional 1% SEF levy on assessed value, collected with RPT and earmarked for education-related expenditures (school board).

So, in many common scenarios, the combined headline rates often look like:

Province: 1% (basic) + 1% (SEF) = 2% effective total on assessed value
City / Metro Manila municipality: 2% (basic) + 1% (SEF) = 3% effective total on assessed value

C. Idle Land Tax (where applicable)

The LGC allows an additional tax on idle lands—land that meets statutory and ordinance-defined criteria for “idle,” commonly focusing on:

Large tracts of agricultural land left uncultivated/unutilized, or
Urban land left unimproved beyond thresholds, subject to exceptions.

This tax is not automatic; it requires:

An enabling ordinance,
Identification/notice by the assessor,
Compliance with definitions and exemptions (e.g., force majeure, legal impediments, or other recognized reasons).

The idle land tax is computed on assessed value, at a rate within LGC limits, and is separate from basic and SEF.

D. Special Levy for Public Works (Special Assessment)

LGUs may impose a special levy on lands specially benefited by public works projects (e.g., roads, drainage). This is not the same as RPT and is typically computed based on benefit/apportionment rules. It appears in treasurer billing sometimes alongside RPT, but it rests on a different legal basis and requires procedural steps.

VI. Assessment Levels: The Crucial Percentage Behind Assessed Value

Assessment levels are set by the LGC and vary by:

Property component (land, building, machinery),
Classification/use (residential, agricultural, commercial, industrial),
Sometimes by value brackets (particularly for residential land/buildings in many LGU implementations).

Example structure (conceptual):

Residential land/buildings: lower assessment level than commercial/industrial.
Commercial/industrial: higher assessment levels (larger assessed values for same market value).
Machinery: separate treatment based on use, depreciation, and industry category.

Because RPT is charged on assessed value, not market value, assessment levels strongly affect tax.

Illustration: If market value = ₱2,000,000 and assessment level = 20%, assessed value = ₱400,000. If total effective rate = 3%, annual tax = ₱12,000 (before discounts/penalties).

VII. Classification Matters: How Properties Are Classified for RPT

Assessors classify property based on actual use, not merely zoning or owner label. Common classes:

Residential
Agricultural
Commercial
Industrial
Mineral
Timberland
(Plus special categories like machinery and improvements with specific rules)

Misclassification can materially change tax. Remedies typically involve:

Request for reconsideration/reclassification at the assessor level,
Appeal mechanisms (discussed below).

VIII. Tax Declarations: What They Contain and How They Affect Computation

A Tax Declaration typically states:

Property identification (location, lot, boundaries)
Owner/administrator/possessor
Classification/actual use
Area and description of improvements
Market value (by land and improvements)
Assessment level
Assessed value
Effectivity year/quarter
Annotations (e.g., “with improvement,” “revised,” “subdivision,” “consolidation,” “cancelled TD”)

For computation, the critical lines are:

Assessed Value per component (land, building, machinery)
Classification/actual use (drives assessment level and sometimes eligibility for exemptions)
Effectivity date (drives proration or when revisions apply)

Common realities:

Multiple TDs can exist for a single titled property due to partition, improvements, or updates.
“Land” and “building” are often separately declared and assessed, then combined for billing.

IX. Step-by-Step Computation of RPT Using a Tax Declaration

A. Core formula

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

B. If property has multiple components

If the TD (or multiple TDs) separates land and building:

Compute each component then sum, or
Sum assessed values then apply rates:

Total Assessed Value = AV_land + AV_building + AV_machinery Total RPT = Total Assessed Value × applicable rate(s)

C. Worked examples

Example 1: City property (basic 2% + SEF 1% = 3%)

Land assessed value: ₱300,000
Building assessed value: ₱500,000
Total assessed value: ₱800,000

Basic RPT = ₱800,000 × 2% = ₱16,000 SEF = ₱800,000 × 1% = ₱8,000 Total annual = ₱24,000 (before discounts/penalties)

Example 2: Provincial property (basic 1% + SEF 1% = 2%)

Total assessed value: ₱800,000

Basic RPT = ₱800,000 × 1% = ₱8,000 SEF = ₱800,000 × 1% = ₱8,000 Total annual = ₱16,000 (before discounts/penalties)

Example 3: With idle land tax (if applicable by ordinance)

Total assessed value: ₱800,000
Province total basic+SEF = 2%
Idle land tax rate (illustrative): 5% (rate depends on ordinance within statutory limits)

Total base RPT = ₱800,000 × 2% = ₱16,000 Idle land tax = ₱800,000 × 5% = ₱40,000 Total = ₱56,000 (before discounts/penalties)

X. When Taxes Accrue, Due Dates, Installments, Discounts

A. Accrual

RPT typically accrues on January 1 of each year and becomes a lien on the property. The lien is superior to most other liens, subject to legal rules and jurisprudence nuances.

B. Payment schedule

Commonly, RPT may be paid:

Annually (full year), or
Quarterly installments

Standard quarter due dates often follow:

1st quarter: on or before March 31
2nd quarter: on or before June 30
3rd quarter: on or before September 30
4th quarter: on or before December 31

LGU treasurers follow these statutory norms, with local variations mainly on discount schemes.

C. Discounts for advance/full payment

LGUs commonly grant discounts (e.g., paying in January, or paying full year early). The rate and window are typically fixed by ordinance within LGC parameters.

XI. Delinquency: Interest, Penalties, and Collection Remedies

A. Interest on unpaid RPT

Unpaid RPT becomes delinquent after the due date(s). The LGC provides for interest (commonly 2% per month) on the unpaid amount, subject to an overall cap (commonly up to 36 months or 72% total), applied until fully paid, depending on statutory text and implementation.

B. Administrative remedies of LGU

Treasurers can enforce collection via:

Levy on the real property (annotated and served through notices).
Public auction sale after publication/posting requirements.
Forfeiture in some circumstances if no bidder or if statutory conditions are met.
Redemption rights of the taxpayer within the statutory redemption period upon payment of delinquent tax, interest, and costs.

Because RPT is a lien, delinquency risks are serious: the property can be sold at auction even if titled, subject to procedural compliance and judicial remedies for defects.

XII. Reassessment, General Revision, and Effectivity on Tax Bills

A. General revision of assessments

LGUs conduct general revisions periodically as allowed by law, updating:

SFMVs,
Classifications,
Market values,
Assessment levels application (levels themselves are statutory, but their use per classification/value brackets appears in assessor systems).

A general revision can materially increase assessed values. Proper notice, publication, and compliance with revision rules matter for validity.

B. Reassessment due to improvements or changes

New buildings, renovations, additional floors, conversions (residential → commercial), or installation of machinery can trigger:

A new or revised TD,
Higher market value and assessed value,
Changed assessment level (if actual use changes).

C. Effectivity and proration

Assessments may take effect at specific quarters depending on when improvements are completed/declared/inspected, and LGU practice. Proration can occur where allowed/implemented, but many treasurers simply bill based on effective quarter per the TD.

XIII. Special Situations in Computation and Liability

A. Beneficial use by taxable persons

Even if the property is owned by an exempt entity (including government), if beneficial use is granted to a taxable person (e.g., a private lessee), the property may be taxable to the beneficial user, depending on facts and governing rules.

B. Condominium units and common areas

Individual condominium units are separately assessed and taxed (unit TDs).
Common areas are usually held by the condominium corporation or owned in common; taxation depends on structure, declarations, and assessor practice, often integrated into unit assessments.

C. Estate settlement and transfers

RPT liability attaches to the property. Transfers do not erase delinquency. Buyers typically require:

Latest RPT receipts,
Tax clearance (where issued),
Updated TD transfers to avoid future billing issues.

D. Untitled land / overlapping claims

Even without title, properties can be declared and taxed. Payment of RPT and possession-related TDs are often used as supporting evidence in disputes, but do not create ownership by themselves.

XIV. Appeals and Remedies Related to Assessment and Computation

A. Contesting the assessed value or classification

Disputes commonly arise from:

Wrong classification/actual use,
Excessive market value under SFMV application,
Errors in area, building type, depreciation,
Inclusion/exclusion of improvements,
Duplicate TDs or wrong consolidation.

Remedy structure generally involves:

Administrative protest with the assessor (and/or treasurer for collection issues),
Appeal to the Local Board of Assessment Appeals (LBAA) within statutory periods from receipt of assessment,
Further appeal to the Central Board of Assessment Appeals (CBAA),
Judicial review (typically via appellate routes) for questions of law and grave abuse.

A key practice point: challenges to assessment often require timely filing; missing periods can make assessments final, subject to limited exceptions.

B. Protesting collection (as distinct from assessment)

If the issue is purely on collection (e.g., payment credited wrongly, wrong computation of interest, billing errors), the treasurer is the primary administrative interface. If the issue is the validity/excessiveness of the assessment, the assessor/LBAA route is central.

XV. Practical Computation Guide for Taxpayers (Using the TD and Tax Bill)

Locate the Assessed Value on the TD (or the billing statement if it consolidates).
Identify jurisdiction: province vs city vs Metro Manila municipality.
Apply rates:
- Basic: typically 1% (province) or 2% (city/MM municipality)
- SEF: 1%
- Add idle land tax only if billed and properly declared idle
- Add special levy only if applicable for public works benefit
Check payment period:
- If paying early, verify discount.
- If late, compute interest per month and check cap.
Verify consistency:
- Same property identification across TD, bill, title (where applicable).
- No duplicate billing for the same component (common issue in subdivided/updated TDs).
If there is a recent improvement, ensure it is properly declared; undeclared improvements can lead to back assessments and penalties in some cases.

XVI. Common Issues and How They Affect the Amount Payable

A. Incorrect area or building description

Small errors in area or building type can swing market value significantly.

B. Wrong actual use classification

Residential vs commercial reclassification can increase assessment level and the assessed value substantially.

C. Outdated TD vs updated SFMV

A TD may lag behind changes in SFMV, especially if no general revision recently. Conversely, a new general revision can sharply increase values.

D. Partial payments and allocation

Treasurers usually allocate payments to delinquent years first or apply statutory allocation rules; always confirm posting to avoid lingering delinquency.

XVII. Relationship of Tax Declaration, Title, and Other Taxes/Fees

RPT is separate from capital gains tax, documentary stamp tax, and transfer tax (which arise on transfers).
Many LGUs require RPT clearance as a practical prerequisite for various transactions (building permits, business permits in some contexts, transfer processing), although the legal basis for requirements can depend on ordinances and administrative rules.
Updating TD after transfer is important to avoid billing to the wrong party and to maintain administrative consistency.

XVIII. Summary: The Computation in One Page

Assessed Value = Market Value × Assessment Level
Annual Basic RPT = Assessed Value × Basic Rate
- Province: up to 1%
- City/MM municipality: up to 2%
Annual SEF = Assessed Value × 1%
Total Annual RPT = Assessed Value × (Basic Rate + 1%)
Add if applicable:
- Idle land tax (only if declared idle under ordinance and law)
- Special levy for public works (only if properly imposed)
Apply:
- Discounts for early/full payment (per ordinance)
- Interest/penalties for delinquency (per LGC rules and caps)

This framework is the backbone of how treasurers compute the amounts shown on RPT bills derived from tax declarations across LGUs in the Philippines.