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PRESIDENTIAL DECREE NO. 464
ENACTING A REAL PROPERTY TAX CODE.
WHEREAS, this country cannot progress steadily if its local
governments are not potent political subdivisions contributing their
proportionate shares to national progress;
WHEREAS, the past decade saw the passage of the Local Autonomy Act,
the Barrio Charter, the Decentralization Act and other pieces of
legislation intended to make local governments financially
self-reliant and stable;
WHEREAS, it is very apparent that in spite of all these laws, local
governments still find difficulty in providing adequate funds with
which to underwrite basic and essential public services within their
respective areas of responsibility;
WHEREAS, studies show that one of the main reasons behind this is
the failure of local governments to fully tap the income
potentialities of the real property tax;
WHEREAS, to remedy the situation, there is an urgent and compelling
need to upgrade assessment services by updating assessment
techniques, procedures and practices and thereby bring about
equitable distribution of the realty tax burden among real property
owners throughout the country;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers vested in me by the
Constitution do hereby adopt, promulgate and decree, as it hereby
adopted, promulgated and decreed, as part of the law of the land,
this decree entitled "The Real Property Tax Code", the context of
which follows:
CHAPTER I
GENERAL PROVISIONS
Section 1. Scope. — This Code shall govern the appraisal and
assessment of real property for purposes of taxation by provinces,
cities and municipalities, as well as the levy, collection and
administration of real property tax.
Sec. 2. Fundamental Principles. — The appraisal and assessment of
real property for taxation purposes shall be guided by the following
fundamental principles:
(1) Real property shall be appraised at its current and fair market
value;
(2) The appraisal of real property shall be uniform in each local
political subdivision;
(3) Real property shall be classified for assessment purposes on the
basis of its actual use;
(4) Real property shall be assessed on the basis of a uniform
standard of value within each local political subdivision;
(5) In no case shall the appraisal and assessment of real property
for taxation purposes and the collection of the real property tax be
let to any private person; and
(6) The goal of property assessment shall be the equitable
distribution of the tax burden.
Sec. 3. Definition of Terms. — When used in this Code
(a) Actual use — shall refer to the purpose for which the property
is principally or predominantly utilized by the persons in
possession of the property.
(b) Ad Valorem tax — is a levy on real property determined on the
basis of a fixed proportion of the value of the property.
(c) Agricultural land — land devoted principally to the raising of
crops such as rice, corn, sugar cane, tobacco, coconut, etc., or to
pasturing, dairying, inland fishery, salt making, and other
agricultural uses, including timberlands and forest lands.
(d) Appraisal — is the act or process of determining the value of a
property as of a specific date for a specific purpose.
(e) Assessment — the act or process of determining the value of a
property, or proportion thereof, subject to tax, including the
discovery, listing and appraisal of properties.
(f) Assessment level — is the percentage applied to the market value
to determine the taxable or assessed value of the property.
(g) Assessed Value — the value placed on taxable property by the
assessor for ad valorem tax purposes. The assessed value when
multiplied by the tax rate will produce the amount of tax due. It is
synonymous to "taxable value."
(h) Commercial land — land devoted principally to commercial
purposes, and generally for the object of profit.
(i) Depreciated Value — the value remaining after deducting
depreciation from either the replacement cost or the reproduction
cost.
(j) Economic life — the estimated period over which it is
anticipated that a machinery may profitably be utilized.
(k) Improvements — Is a valuable addition made to property or an
amelioration in its condition, amounting to more than more repairs
or replacement of waste, costing labor or capital, and intended to
enhance its value, beauty or utility or to adapt it for new or
further purposes.
(l) Industrial land — land developed principally to industry as
capital investment.
(m) Machinery — shall embrace machines, mechanical contrivances,
instruments, appliances and apparatus attached to the real estate.
It includes the physical facilities available for production, as
well as the installations and appurtenant service facilities,
together with all other equipment designed for or essential to its
manufacturing, industrial or agricultural purposes.
(n) Market value — is defined as "the highest price estimated in
terms of money which the property will buy if exposed for sale in
the open market allowing a reasonable time to find a purchaser who
buys with knowledge of all the uses to which it is adapted and for
which it is capable of being used." It is also referred to as `the
price which a willing seller would sell and willing buyer would buy,
neither being under abnormal pressure."
(o) Mineral lands — are those lands in which minerals exist in
sufficient quantity or grade to justify the necessary expenditures
to be incurred in extracting and utilizing such minerals.
(p) Original cost — for newly acquired machinery not yet depreciated
and appraised within the year of its purchase, refers to the actual
cost of the machinery to its present owner (plus the cost of
transportation, handling and installation at the present site).
(q) Reassessment — the assigning of new assessed values to property,
particularly real estate, as the result of a general, partial or
individual reappraisal of the property.
(r) Remaining economic life — the period of time (years) from the
date of appraisal to the date when the machinery becomes valueless.
(s) Remaining value — the value corresponding to the remaining
useful life of the machinery.
(t) Replacement or reproduction cost (new) — the cost that would be
incurred on the basis of current prices, in acquiring an equally
desirable substitute property, or the cost of reproducing a new
replica property on the basis of current prices with the same or
closely similar material.
(u) Residential land — land principally devoted to habitation.
Sec. 4. Administration of the Real Property Tax. — The Department of
Finance shall be primarily responsible for the proper, efficient and
effective administration of the real property tax and for this
purpose it shall:
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