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SECTION 1. – Guiding Principles A. Classification of Real Property for Assessment Purposes
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1. For purposes of assessment, real property shall be classified as residential, agricultural, commercial, industrial, mineral, timberland and special.
2.
Real property shall be classified, valued and assessed on the basis of its actual use regardless of where located, whoever owns it, and whoever uses it. Actual use refers to the purpose for which the property is principally or predominantly utilized by the person in possession of the property.
3. Actual use is the determining factor in applying the appropriate percentage or level of assessment to the market value of the property computed on the basis of the Schedule of Base Market Values for land or the Schedule of Base Unit Construction costs for buildings and improvements and should not be construed as a criterion for the classification and valuation of real property.
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B. Assessment Levels
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The assessment levels to be applied to the market value of real property to determine its assessed value shall be fixed by ordinance of the Sangguniang Panlalawigan, Sangguninag Panlungsod or Sangguniang Bayan of a municipality within Metropolitan Manila Area (MMA), at the rates not exceeding the following:
On Lands: Mod II
CLASS
ASSESSMENT LEVELS
Residential Agricultural Commercial Industrial Mineral Timberland
20% 40% 50% 50% 50% 20%
2. On Buildings and Other Structures: a. Residential FAIR MARKET VALUE
Over P 175,000.00 175,000.00 300,000.00 500,000.00 750,000.00 1,000,000.00 2,000,000.00 5,000,000.00 10,000,000.00
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ASSESSMENT LEVELS
Not Over
P 300,000.00 500,000.00 750,000.00 1,000,000.00 2,000.000.00 5,000,000.00 10,000.000.00
0% 10% 20% 25% 30% 35% 40% 50% 60%
b. Agricultural FAIR MARKET VALUE
Over
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ASSESSMENT LEVELS
Not Over P 300,000.00 25% P 300,000.00 500,000.00 30% 500,000.00 750,000.00 35% 750,000.00 1,000,000.00 40% 1,000,000.00 2,000,000.00 45% 2,000,000.00 50%
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c. Commercial or Industrial FAIR MARKET VALUE Over P300,000.00 500,000.00 750,000.00 1,000,000.00 2,000,000.00 5,000,000.00 10,000,000.00
ASSESSMENT LEVELS Not Over P 300,000.00 30% 500,000.00 35% 750,000.00 40% 1,000,000.00 50% 2,000,000.00 60% 5,000,000.00 70% 10,000,000.00 75% 80%
d. Timberland •
• • • • • • • •
FAIR MARKET VALUE
Over P300,000.00 500,000.00 750,000.00 1,000,000.00 2,000,000.00
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ASSESSMENT LEVELS
Not Over P300,000.00 500,000.00 750,000.00 1,000,000.00 2,000,000.00
45% 50% 55% 60% 70%
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3. On Machineries • • • • • • •
CLASS Agricultural Residential Commercial Industrial
ASSESSMENT LEVELS 40% 50% 80% 80%
4. Special Classes: Mod II
Assessment levels for all lands, buildings, machineries and other improvements: Actual Use Assessment Levels 15% • Cultural • Scientific 15% • Hospital 15% • Local Water District 10% • Government-owner or controlled corporations engaged in the supply and/or generation and transmission of electric power 10%
5. Maximum Assessment Levels
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The Local Government Code provides for the maximum assessment levels for all types of property, hence, there is a need for the Sangguniang Panlalawigan, Sangguniang Panlungsod or the Sangguniang Bayan of a municipality within MMA to enact an ordinance fixing the assessment levels for the local government. Two major considerations in this policy decision are the amount of revenue the local government needs to generate from real property taxes for its operations and delivery of public service and the level of tax burden sharing that the LGU would like to impose on its constituents.
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The assessment levels for the different classes of real property may be increased or decreased at rates to be fixed by ordinance of the sangguniang panlalawigan, sangguniang panlungsod, or sangguniang bayan of a municipality within the MMA, provided, however, that in no case shall such increase or decrease of the assessment levels be made effective in between general revision of assessment periods.
C.
Assessment of Property Subject to Back Taxes Real property declared for the first time shall be assessed for the period during which it would have been liable but in no case for more than ten (10) years prior to the date of initial assessment: Provided, however, that such taxes shall be computed on the basis of the applicable schedule of values in force during the corresponding period. Provided further that the total tax liability shall include the current year in addition to the ten (10) years back taxes. If such taxes are paid on or before the end of the quarter next following the date the notice of assessment was received by the owner or his representative, no interest for delinquency shall be imposed thereon; otherwise, such taxes shall be subject to an interest at the rate of two percent (2%) per month or a fraction thereof until such taxes are fully paid.
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The local assessor is in the best position to help or guide the Sanggunian in fixing the assessment levels since he is most knowledgeable on the effects of setting the assessment at a certain level. Thus, in the preparation of a new Schedule of Fair Market Values for purposes of a general revision of real property assessments, the assessor may also conduct studies that would show the revenue impact and tax burden of various assessment levels to enable the members of the Sanggunian to arrive at a more informed decision.
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D. Notice of New or Revised Assessments 1. When real property is assessed for the first time or when an existing assessment is increased or decreased, the provincial, city or municipal assessor shall within thirty (30) 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 or by registered mail or through the assistance of the punong barangay in the last known address of the person to be served.
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2. Although the real property tax is levied against real property, it is the owner who pays the tax. Before the tax liability is fixed, the property owner is entitled to a hearing on the assessment of the property; notice and hearing constitute part of the due process (not strictly judicial) in taxation. If the owner is not satisfied with the action of the assessor in the assessment of the property, the said owner can resort to the appeals process provided in this manual. If he does not appeal within the said period, he will be deprived of his right to be heard by the Board of Assessment Appeals.
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a. The written notice together with the owner’s copy of the tax declaration shall be addressed to the person in whose name the property is declared. b. If personally delivered to the owner or person in possession of the property, the person serving the notice shall secure the signature of the owner or occupant on the duplicate copy of the notice, with a notation of the date when notice was served and whether recipient is the owner or occupant of the property.
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c. If the notice of assessment is sent through the mail, the notice of assessment and owner’s copy of the tax declaration shall be registered with a return card. d. The notice of assessment and owner’s copy of the tax declaration shall be delivered or mailed to property owners within thirty days from the entry of the tax declarations covering the assessment of property in the records of assessment. e. The sending of the notice of assessment to the taxpayers is mandatory to include the validity of the assessment made.
E. Effect of Appeals on the Payment of Real Property Tax
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Appeal on assessments of real property made under the provisions of the Local Government Code shall in no case suspend the collection of the corresponding realty taxes on the property involved as assessed by the provincial or city assessor, without prejudice to subsequent adjustment depending upon the final outcome of the appeal.
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E. Effect of Appeals on the Payment of Real Property Tax • Appeal on assessments of real property made under the provisions of the Local Government Code shall in no case suspend the collection of the corresponding realty taxes on the property involved as assessed by the provincial or city assessor, without prejudice to subsequent adjustment depending upon the final outcome of the appeal.
SECTION 2.–
Rules in the Assessment of Real Property
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A. All real properties, whether taxable or exempt, shall be appraised at the current and fair market value prevailing in the locality where the property is situated
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B. The appraisal of real property shall be based on the latest Schedule of Fair Market Values (SFMV) prepared by the Provincial Assessor, the City Assessor, or Municipal Assessor of Municipality within the MMA, as embodied in an Ordinance passed by the Sangguniang Panlalawigan, Sangguniang Panlungsod or Sangguniang Bayan of MMA municipalities.
C.
Appraisal of real property declared for the first time shall be listed, classified and valued on the basis of the SFMV (either for land or building), and shall be subject to back taxes (if applicable) of not exceeding ten (10) years from the year of initial assessment. Thus, the property shall be liable to tax payment for a maximum of eleven (11) years including the current year. The schedule of values applicable for the corresponding periods shall be controlling.
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ILLUSTRATION: – Land - Declared in 2003. Assume all supporting documents are submitted.
Basic Data: Area -10,000 square meters Condition- Planted to fruit bearing trees Php SFMV 1993 P20.00 per ha. 1994 P50.00 per ha. 2000P110.00 per ha
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COMPUTATION OF VALUE Mod II
DESCRIPTION AREA MARKETVALUE
SFMV
Orchard
20. 00 50.00 110.00
10,000 sq.m. 10,000 10,000
ASSESSMENT LEVEL
40% 40% 2000-2003
ASSESSED VALUE
Php 200,000.00 500,000.00 1,100,000.00 EFFECTIVITY
P 80,000.00 1993 P200,000.00 1994-1999 40% P440,000.00
D. Rules for the Assessment of Lands 1. Lands actually and principally used for residential, agricultural, commercial, industrial or mineral purposes shall be classified and valued according to the schedule of unit base market values and assessed at their corresponding levels of assessment, which shall be fixed through an ordinance by the Sanggunian concerned.
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2. Lands located in areas of mixed land uses such as residential with commercial or industrial, the predominant use of the lands in that area shall govern the classification, valuation and assessment thereof. If the predominant use is residential, all lands in that area shall be assessed as residential; if the predominant use is commercial or industrial, all lands in that area shall be assessed as such.
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3. A lot or parcel of land classified and appraised as commercial or industrial occupied by a building used both for residential and commercial or industrial purposes shall be assessed on the basis of the predominant use of the building or buildings.
If the predominant use of the building is residential, the assessment level fixed thereon for residential land shall be applied on the market value of the lot or parcel determined on the basis of the schedule of base market values; if industrial or commercial, the assessment level for industrial or commercial shall be applied on the basis of the schedule of base market values.
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4. Vacant lands shall be assessed like similar lands in the locality. level applied to the market value.
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5. Lands owned by local water districts and government-owned or controlled corporations rendering essential public services in the supply and distribution of water and/or generation and transmission of electric power, located in residential, commercial or industrial area shall be assessed as special property at ten percent (10%) assessment
If those special classes of lands are, however, located in areas of mixed land uses, such as residential with commercial or industrial, the predominant use of the lands in that area of those special classes of land shall be assessed at the corresponding levels of assessment.
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6. Lands actually, directly and exclusively used for religious, charitable or educational purposes located in residential, commercial or industrial areas shall be assessed as residential, commercial or industrial, as the case may be. If those lands actually, directly and exclusively used for religious, charitable or educational purposes are, however, located in an area of mixed land uses, such as residential with commercial or industrial, the predominant use of the lands in that area shall govern the assessment of those lands used for religious, charitable or education purposes.
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E. Reclassifying Land to Other Uses Mod II
1. The following are the procedures in reclassifying land to other uses:
a. Land converted into other uses, e.g. agricultural to residential, residential to commercial, made known to the assessor in writing by the owner shall be inspected for confirmation of the actual condition/use of the property;
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b. A report of the actual condition of the property and the recommendation thereof shall be rendered by the responsible personnel of the Provincial or City Assessor’s Office or, in the case of a province, by the Municipal Assessor. Such report shall be submitted within fifteen (15) working days after inspection in accordance with the policy as may be prescribed by the Provincial or City Assessor;
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c. Among others, the report may contain information regarding tangible land improvement, e.g. land leveling and compaction, construction of road networks, drainage and other relevant land amenities; d. In all other cases, Local Finance Circular No. 3-92 dated September 11, 1992 shall be controlling in reclassifying agricultural lands to non-agricultural uses; and e. A duly approved Zoning Ordinance also serves as basis in the reclassification of lands.