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Atty. Rodel C. Unciano discusses the legality on imposing real property tax on trees.

Real Property Tax on Trees

By Atty. Rodel C. Unciano

With the accrual of annual real-property tax drawing near, I take this opportunity to tackle the question on the imposition of RPT on trees. Is this sanctioned under our laws?

As it stands now, some local government units (LGUs) have adopted their own schedules on how to tax trees in their respective jurisdictions. In one City Tax Ordinance, it contains a provision on the imposition of RPT on land, building, machinery, including plants and trees. In another local tax ordinance, fruit-bearing trees numbering over 10 are being made subject to the imposition of RPT. The same ordinance exempts trees from the imposition of RPT, only if there are no more than 10 trees planted within the premises of a residential house which does not exceed half a hectare.

In 1974, Presidential Decree 464 was issued expressly exempting perennial trees and plants of economic value from real-property tax. However, in 1991, PD 464 was expressly repealed by the Local Government Code. Nevertheless, the provisions of the LGC on real-property taxation, under Title II, are silent as to the taxability of trees.

Under Section 218 of the LGC, among the real properties mentioned as subject to real-property tax are lands, buildings and other structures, and machineries and other improvements. Trees are not specifically mentioned under that provision.

Taking into consideration the definition of “improvement” under Section 199 of the LGC, we can say that trees are not covered. As defined therein, improvement is a valuable addition made to a property or an amelioration in its condition, amounting to more than a mere repair or replacement of parts involving capital expenditures and labor, which is intended to enhance its value, beauty or utility, or to adapt it for new or further purposes. Certainly, trees could not have been covered in that definition.

Section 415 of the Civil Code classifies trees as real properties or immovable properties, among others. However, for the purpose of imposition of real-property tax, the Supreme Court, in one case, has ruled that this provision shall not apply since the LGC of 1991 expressly defined what shall be considered as subject to real-property tax. The Court said that as between the Civil Code, a general law governing property and property relations, and the Local Government Code, a special law granting LGUs the power to impose real-property tax, the latter shall prevail.

In another case (CTA EB 377), the Court of Tax Appeals has ruled that for RPT purposes, there is no need to resort to Section 415 of the Civil Code, since Section 199 of the Local Government Code already defined what are subject to the imposition of real-property tax. In these cases, however, the issue is on the taxability of machineries, not trees.

Following the above considerations, the imposition of real-property tax should not be made in reference to the definition of real property, under Section 415 of the Civil Code. The LGC does not expressly enumerate trees as among the properties subject to the imposition of real-property tax. As what the latin maxim provides, what the law expressly excluded should not be included (Expressio Unius Est Exclusio Alterius). Since trees are not one of those expressly mentioned under the provisions of the LGC, the same shall not be subject to RPT.

If we subject trees to RPT, I fear that one day, we will no longer see trees in this country.