Real Property Tax on Condominium Common Areas and Renters’ Liability in the Philippines

(A doctrinal, jurisprudential & practical guide)

1 | Key Statutes, Rules & Constitutional Context

Source	Core provisions on RPT & Condominiums
1987 Constitution, Art. X, secs. 5–6	LGUs may create their own sources of revenue; RPT is the single most important one.
Local Government Code of 1991 (RA 7160)	Title II, Book II (secs. 197-283): assessment, collection, remedies, exemptions, liens, levy & sale.
Condominium Act (RA 4726, 1966)	Sec. 4 (common areas ownership), Sec. 13 (tax treatment of units & proportional interests).
BLGF & BIR issuances	BLGF Assessment Manual; BLGF Opinion 27-2009 (condominium land vs. common areas); BIR Ruling DA-489-10 (passing RPT to lessees).
Civil Code (Arts. 1654, 1622, 1306)	Owner’s duty to deliver & maintain thing leased; parties may stipulate on taxes; right of reimbursement.
National Building Code (PD 1096) & HLURB/DHSUD Rules	Subdivision open-space donations, relevance to possible RPT exemptions.

2 | Conceptual Building Blocks

Real Property Tax (RPT). An ad valorem tax on land, buildings, and other improvements, imposed by provinces, cities, and certain highly urbanized municipalities.
Condominium unit. Under RA 4726, a single “real property” comprised of (a) the air-space unit and (b) an undivided, pro-indiviso share in the common areas.
Common areas. The land, structural parts, lobbies, elevators, amenities, utility rooms, and other portions not individually held. Title may be in the names of the unit owners pro rata or in the condominium corporation as trustee.
Taxable entity. LGUs assess “each condominium unit and its proportional interest in the common areas as one parcel” (RA 4726, sec. 13). Common areas themselves are not assessed separately, unless the developer retained parcels (e.g., a commercial podium) outside the master deed’s common area definition.

3 | Assessment Mechanics

Step	What happens	Legal anchor
3.1 Tax Declaration	Developer files initial declarations for land & building; upon turnover, assessor issues one TD per unit reflecting floor area plus percentage share in land & common areas.	LGC sec. 202; RA 4726 sec. 13
3.2 Fair Market Value	Based on schedule of values (updated every 3 yrs); assessor allocates FMV of land pro rata to units.	LGC sec. 212-214
3.3 Assessment Level	Residential 20 %; commercial 50 % (or local ordinance). Applied to the FMV of each unit (land + improvement).	LGC sec. 218
3.4 Tax Due	Assessed value × Tax rate (not exceeding 1 % for provinces; 2 % for cities/HUCs). Special Education Fund (1 % uniform) is added.	LGC sec. 233, 235
3.5 Lien	“Superior to all liens” on the unit alone (not on personal property of the owner) (RA 4726 sec. 13; LGC sec. 257).

Effect: The condominium corporation is not billed for the land or hallways; each owner shoulders a sliver of those values through his own RPT bill.

4 | Collection, Penalties & Remedies

When payable: Whole amount on or before 31 March, or quarterly installments (before 31 March / 30 June / 30 Sept / 31 Dec).
Interest for delinquencies: 2 % per month up to 36 months (LGC sec. 255).
Distraint/Levy & Sale: Warrant may be served on any person with interest or possession of the property—including a tenant—if the owner is delinquent (LGC secs. 256-260, 247).
Administrative protest: Within 60 days of receipt of assessment; decided by provincial/city assessor; appeal to Local Board of Assessment Appeals (LBAA) within 60 days, then Central Board (CBAA), Court of Tax Appeals, and ultimately Supreme Court.
Judicial relief from unlawful collection: Rule 65 certiorari; refund action under LGC sec. 253 (must “pay under protest”).

5 | Exemptions and Preferential Rates Affecting Condominiums

Exemption / privilege	Can common areas qualify?	Caveats
Public use (Sec. 234(a))	Roads/parks donated to LGU; fire command center or barangay health station in condo may qualify.	Must be actually used for public purpose and ownership may need to be in the government.
Government-owned socialized housing	Not typical for private condos.	n/a
Machinery for pollution control	Centralized wastewater plant in condo may get 50 % assessment.	Must secure EMB/BLGF certification.

6 | Liability Matrix: Developer • Condo Corp • Unit Owner • Renter

Scenario	Who the LGU can collect from	Practical allocation
Developer still holds unsold units	Developer, but warrant may reach building manager or occupant.	Many pre-selling contracts state developer pays until turnover date.
Turned-over condo (no tenants)	Unit owner. Condo corp often pays in bulk then charges through annual dues.
Unit is leased (ordinary lease)	Primary: owner. Secondary: occupant/lessee (LGC sec. 247) if owner is delinquent.	Leases usually provide that owner remains liable; rent may include RPT as pass-through.
Build-Operate-Transfer / BOT (lessee has “beneficial use”)	Lessee/operator becomes liable under the “beneficial use doctrine.”	FELS Energy v. Batangas (G.R. 144364, Sept 28 2005); Manila Intl. Airport Authority v. CA (G.R. 155650, July 20 2006).
Commercial podium retained by Condo Corp as income-generating asset	Condo Corp (as separate real property) receives a separate assessment.	Liability shared according to by-laws; often passed to commercial condo shareholders.

7 | Detailed Focus: Renters’ Exposure

Statutory back-up liability. LGC sec. 247 allows the treasurer to levy real property in the possession of the delinquent taxpayer or any person having legal interest thereon. In practice the warrant is posted on the door; the tenant’s occupancy is disturbed until tax is settled.
Contractual shifting.
- Typical residential lease: “Taxes of any kind on the property shall be for the lessor’s account.” RPT is baked into rent; tenant pays nothing extra.
- Commercial lease in malls: Pass-through clause—tenant pays proportionate share of RPT on the mall land/buildings based on leased floor area.
- Freedom to stipulate (Civil Code art. 1306): Binding between parties but not upon the LGU; the latter may still levy on the property where the tenant is the physical possessor.
Withholding tax v. Real property tax. Sometimes confused: tenant withholds 5 % expanded withholding tax (EWT) on rent under the NIRC; that is income tax and is distinct from RPT.
Risk-mitigation toolkit for tenants.
- Ask for latest RPT official receipt (OR) before signing or renewing lease.
- Insert “quiet possession” clause—landlord warrants payment of RPT and indemnifies tenant for business interruption.
- Reserve right to set-off unpaid RPT against rent if tenant advances payment to lift levy.
- For long-term industrial leases, register contract with Registry of Deeds and annotate priority over subsequent RPT liens (Civil Code arts. 1622-1623).

8 | Jurisprudence Round-up

Case	Gist applicable to condominiums
FELS Energy v. Province of Batangas (G.R. 144364, Sept 28 2005)	Lessee with beneficial use over government-owned plant was held liable for RPT despite not holding legal title.
Manila Int’l Airport Authority v. CA (G.R. 155650, July 20 2006)	“Beneficial use” of government property by a non-exempt entity triggers RPT; instructive for mixed-use condo on government land.
SM Investments v. City Treasurer of Manila (G.R. 178523, Aug 22 2008)	Distinguished local business tax from RPT; condo developers operating leasable space may face both.
City Treasurer of Makati v. Philippine Realty & Holdings (2019, obiter)	Reiterated that RPT attaches even if property is up for de-condominiumization; liens follow the unit.
First E-Bank Center Condo Corp v. City Assessor of Makati (BLGF CBAA Case 2013-RR-001)	Held that common areas per se are not separately taxable; assessment must be apportioned to units.

9 | Special Situations

Scenario	Tax nuance	Practice tip
“Condotel” or short-stay condo units	Still a condominium under RA 4726; RPT is residential unless assessor re-classifies as commercial due to hotel-like operations.	Check local ordinance; a re-classification dispute can be appealed to LBAA.
Parking slots titled as separate condo units	Assessed individually; if appurtenant (no separate CCT), their value is folded into parent unit.	Parking‐slot lessors often pass RPT to renters via hourly fees.
Roof deck leased for telecom antennas	Land is common area; antenna operator may be issued a business-tax assessment, but RPT remains with unit owners.	Condo Corp can incorporate RPT increment into lease rate charged to telco.
Donation of open space to LGU	Once accepted by Sangguniang Panlungsod/Panlalawigan, parcel becomes exempt (public use).	Secure acceptance ordinance to avoid future assessment.
REIT conversion of condo office tower	REIT enjoys lowered DTR; RPT regime unchanged—each condo share is part of REIT asset base subject to ordinary RPT.	Prospectus must disclose RPT cost as operating expense.

10 | Compliance Checklist for Property Managers

Master list of CCTs and corresponding TD numbers—update annually.
Quarterly RPT calendar with reminders 10 days before due dates.
Bulk payment arrangement: Pay in one cheque; collect from owners via association dues (back-to-back receipts).
Proof of payment circulation: Post ORs on bulletin board or online portal for transparency.
Monitoring of re-classification ordinances: Attend city council hearings; object in writing within 30 days.
Reserve fund provisioning: Include RPT escalation factor (assume 10 %-15 % every 3 yrs) in budget.
Tenant clearance: Require copy of valid lease and schedule of RPT pass-through to avoid double billing.

11 | Frequently-Misunderstood Points

Myth	Reality
“Common areas are exempt from RPT.”	False. They are taxed—just not assessed separately; liability is embedded in each unit’s tax bill (RA 4726 §13).
“Renters never pay real property tax.”	Partly false. They usually don’t, but may become secondary payors under LGC §247, or by lease stipulation.
“Once the condo corp pays, individual owners have no exposure.”	False. The lien remains on each CCT; failure to reimburse condo corp may lead to foreclosure against the unit.
“If an LGU levies while I’m a tenant, I can’t be evicted.”	False. A levy may culminate in a public auction; winning bidder can eventually take possession, displacing the tenant.

12 | Practical Drafting Clause Samples

Owner-Pays Model (residential):

“LESSOR shall, at its sole expense, timely pay all real property taxes, including those attributable to Lessee’s proportionate share in the common areas. Failure shall constitute a breach entitling Lessee to pay under protest and deduct the amount, plus 12 % interest, from future rents.”
Pass-Through Model (commercial):

“LESSEE shall pay, as additional rent, its Pro-Rata Share of Real Property Taxes (PRSRPT) computed as: PRSRPT = (Total RPT on Land & Building × Leased GFA ÷ Net Leasable GFA). The Share shall be due within fifteen (15) days from presentation of the official tax bill or proof of payment by Lessor.”
Quiet-Possession Guarantee:

“Lessor warrants that the Leased Premises are free from liens and encumbrances, including real property tax delinquencies. Should government authorities disrupt Lessee’s possession by reason of unpaid RPT, Lessee may rescind this Lease and recover liquidated damages.”

13 | Bottom-Line Takeaways

Statutory architecture is clear: the unit—and its embedded slice of common areas—is the indivisible tax base.
Common areas are taxable; they simply ride piggy-back on each unit’s assessment.
Primary liability lies with the unit owner, but LGUs have powerful collection tools that can rope in renters or any possessor.
Renters’ exposure is mostly contractual, yet caution dictates insisting on proof of the owner’s tax compliance.
Condominium corporations function as tax aggregators, not taxpayers, except for assets held solely in their name.
Stay proactive: monitor assessment cycles, appeal unreasonable valuations, and bake RPT allocations transparently into association dues or lease agreements.

Real Property Tax on Condominium Common Areas and Renters Liability