Article 136p. 136

NATIONAL INTERNAL REVENUE CODE TAXATION, TARIFF and CUSTOMS LAWS

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 devoted principally to the raising of

crops such as rice, corn, sugarcane, 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 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 developed principally to industry as

capital investment.

m)

Machinery

shall

embrace

machines,

equipment,

mechanical contrivances, instruments, appliances and

apparatus attached to the real estate. It shall include the

physical facilities available for production, as well as the

installations and appurtenant service facilities, together

with all those not permanently attached to the real estate

but are actually, directly and essentially used to meet the

needs of the particular industry, business, or works, which

by their very nature and purpose are designed for, or

essential

to

manufacturing,

commercial,

mining,

industrial

or

agricultural

purposes.

(as amended by

Presidential Decree No. 1383, [May 25, 1978])

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 principally devoted to habitation.

Section 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:

a)

Evolve

a

comprehensive

system

of

real property

appraisal

that

will ensure fair and realistic property

valuations for taxation purposes;

b)

Establish

uniform

assessment

methods

and

procedures that will equalize property values in each local

political subdivision:

c) Ensure that the ad valorem tax on real property shall be

just, uniform and equitable;

d) Adopt the necessary measures that will promote

maximum tax collection efficiency at the local levels;

e)

Provide

for the optimum utilization by the local

governments of the proceeds from the real property tax;

and

f) Formulate and adopt policies and procedures that will

improve

technical

skills

and

develop

reasonable

standards of performance in the local assessment and

treasury services.

In order to attain the foregoing objectives, the Secretary

of Finance shall exercise direct executive supervision over

all assessment and treasury officials and personnel in the

local governments.

Section 4-A. Grant of Special Powers to the President. In

the interest of local economy and the general welfare and

subject

to

the

conditions

and

limitations

herein

prescribed, the president, upon recommendation of the

Minister

of

Finance,

is hereby empowered to make

adjustments in the Real Property Tax System, as regards:

(a)

The

classification

of

real

properties

for

taxation

purposes;

(b)

The

frequency

of

general

revisions

of

property

valuations;

(c) The assessment levels or assessed values of real

properties, and

(d) The extent of exemption from real property tax and

rates of levy.

The above powers may be exercised by the President if

any of the following conditions exists:

1. Where, in the light of economic, social and other

relevant changes, it becomes necessary to modify or

adjust

the

classification

of

real

properties,

their

assessment levels and/or taxable values on the basis of

new concepts of essentiality and modern approaches to

real property valuation;

2. Whenever, by reason of fluctuation of currency value,

inflation or deflation, and changing development needs

of the country, the existing assessment levels and/or tax

rates are no longer realistic; or

3. Where in view of new social and economic conditions,

it

becomes

imperative

to

change

real

property

assessment patterns for taxation purposes.

The

special

powers

hereinabove

provided

for

shall,

however be subject to the following specific limitations:

1. The maximum rates of levy fixed in this code may be

increased by not more than two per cent of the assessed

© Compiled by RGL

136 of 201