Real Property Tax Code

Section 38

Incidence of Real Property Tax. There shall be levied, assessed and collected in all provinces, cities and municipalities an annual ad valorem tax on real property, such as land, buildings, machinery and other improvements affixed or attached to real property not hereinafter specifically exempted.

Section 39

Rates of Levy. The provincial, city or municipal board or council shall fix a uniform rate of real property tax applicable to their respective localities as follows: (1) In the case of a province, the tax shall be fixed by ordinance of the provincial board at the rate of not less than one fourth of one percent but not more than one-half of one percent of the assessed value of real property. (2) In the case of a city, the tax shall be fixed by ordinance of the municipal board or city council at the rate of not less than one-half of one percent but not more than two percent of the assessed value of real property. The ordinance fixing the rate of real property tax shall be enacted by the local board or council not later than fifteenth day of September of the year next preceding the year the tax shall begin to accrue. Within five days after enactment, the board or council secretary shall forward the ordinance to the local chief executive for his approval and signature. If he considers any such ordinance prejudicial to the public welfare, he may veto it by signifying to the local board or council concerned his disapproval thereof in writing. The local board or council may, by a two-thirds (2/3) vote of all its members and within fifteen days from the date of receipt of a copy of the vetoed ordinance, repass the same over the veto, in which case it shall be deemed approved without the local chief executive's approval or signature. If the local chief executive fails to approve or veto the ordinance within ten days after receipt of a copy thereof, it shall likewise be deemed approved. The ordinance fixing the rate of real property tax shall remain in full force and effect unless amended on or before September fifteenth of the year next preceding the one in which the amendment is to take effect. Any ordinance reducing the existing rates of real property tax shall be subject to review by the Secretary of Finance who shall act thereon within sixty days upon receipt of a copy thereof; otherwise, the reduced rates shall be deemed effective on the first day of January of the succeeding year.

Section 40

Exemptions from Real Property Tax. The exemption shall be as follows: (a) Real property owned by the Republic of the Philippines or any of its political subdivisions and any government-owned corporation so exempt by its charter: Provided; however, That this exemption shall not apply to real property of the abovenamed entities the beneficial use of which has been granted, for consideration or otherwise, to a taxable person. (b) Non-profit cemeteries or burial grounds. (c) Charitable institutions, churches, personages or convents appurtenant thereto, mosques, and all land, buildings, and improvements actually, directly and exclusively used for religious or charitable purposes. (d) Real property in any one city or municipality belonging to a single owner, the entire assessed valuation of which is not in excess of one thousand pesos; Provided, however, That the property so exempt shall be assessed and records thereof kept as in other cases. (Amendments to Certain Sections of P.D. No. 464 As Amended (Real Property Tax Code), Presidential Decree No. 1621, [April 19, 1979]) (e) Land acquired by grant, purchase of lease from the public domain for conversion into dairy farms for a period of five years from the time of such conversion; and machinery of a pioneer and preferred industry as certified by the Board of Investments used or operated for industrial, agricultural, manufacturing or mining purposes, during the first three years of the operation of the machinery. (as amended by PD 1383) (f) Perennial trees and plants of economic value, except where the land upon which they grow is planted principally to such growth. (g) Real property exempt under other laws. (h) pasture and/or grazing lands acquired by grant, purchase, or lease from the public domain, actually used for livestock production, for a period of five years beginning with calendar year 1977, and for acquisitions made thereafter, the exemption shall begin with the year of such acquisition (Amending Section 40 of P.D. No. 464 (Real Property Tax Code), Presidential Decree No. 939, [May 29, 1976])