(First of two parts)

Local government units (LGU) shall enjoy local autonomy—that is, according to the Supreme Court, to perform certain functions and exercise certain powers in order not for them to be overly dependent on the National Government, subject to the limitations that the 1987 Constitution or Congress may impose.

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Thus, LGUs are empowered to create its own sources of revenues, and to levy taxes, fees, and charges, one of which is real property tax (RPT).

For RPT purposes, LGUs shall appraise all real properties, whether taxable or exempt, at their current and fair market value (FMV) prevailing in the localities where they are situated.

Moreover, real property shall be classified, valued, and assessed based on its actual use, regardless of where located, whoever owns it, and whoever uses it. The assessment shall likewise extend to equipment, instruments, and machineries found on the real property, whether they are attached, permanently or temporarily.

For purposes of assessment, real property shall be classified as residential, agricultural, commercial, industrial, mineral, timberland, or special.

In this regard, special classes of real property shall refer to lands, buildings, and other improvements thereon actually, directly, and exclusively used for hospitals, cultural, or scientific purposes, and those owned and used 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.

All persons owning or administrating real property, including improvements, shall prepare and file with the provincial, city, or municipal assessor their tax declarations, which state: (a) the true value of their property, whether previously declared or undeclared, taxable or exempt, which shall be the current and FMV thereof; (b) description of the property sufficient in detail to enable the assessor or his deputy to identify the same for assessment purposes. Tax declarations shall be filed with the assessor concerned once every three years during the period from January 1 to June 30.

If the owner or administrator failed or refused to file the tax declaration, the proper assessor shall himself declare the property in the former’s name, if known, or against an unknown owner, as the case may be, and shall assess the property for taxation in accordance with the Local Government Code.

Meanwhile, all persons acquiring real property or making improvements therein shall prepare and file with said assessors their tax declarations within 60 days after the acquisition of such property or upon completion or occupancy of the improvement, whichever comes earlier.

A person who shall claim tax exemption for his property shall file with the proper assessor within 30 days from filing his tax declaration sufficient documentary evidence in support of such claim, including corporate charters, title of ownership, articles of incorporation, by-laws, contracts, affidavits, certifications, mortgage deeds, and similar documents.

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If the required evidence was not submitted within the 30-day period, the property shall be listed as taxable in the assessment roll. But, if the property was proved to be tax-exempt, the same shall be dropped from the assessment roll.

In this regard, the following are exempt from the payment of RPT: (a) real property owned by the Republic of the Philippines or any of its political subdivisions, except when the beneficial use thereof has been granted to a taxable person, with or without consideration thereof; (b) charitable institutions, churches, parsonages, mosques, covenants, and all lands, buildings, and improvements actually, directly, and exclusively used for religious, charitable, or educational purposes; (c) machineries and equipment directly and exclusively used for supply and distribution of water and/or generation and transmission of electric power; (d) real property owned by duly registered cooperatives; and (e) machinery and equipment used for pollution control and environmental protection.

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