(COMMUNITY TAX, REAL ESTATE AND OTHER PROPERTY TAX)

Community Tax
Origin
• Local Government Code of 1991 or R.A. 7160

Imposing Entity
• Local government of Cities and municipalities

Nature
• Is a poll or a capitation tax.
• Imposition is discretionary. Imposition is only allowed if it will be used to enact an
ordinance.
Individuals liable to Community Tax
Every individual inhabitant of Philippines eighteen (18) years of age / over who:
• Has been regularly employed on a wage/salary basis for at least thirty (30) consecutive
working days/ during any calendar year;
• Is engaged in business or occupation;
• Owns real property with an aggregate assessed value of one thousand pesos (P 1,000) or
more;
• Required by law to file an income tax return.

Basic Community Tax Additional Tax

• Five Pesos (P 5) • One Peso for every thousand pesos

• Maximum: Five Thousand Pesos (P 5,000)

Married Couple
Every individual inhabitant of Philippines eighteen (18) years of age / over who:
• Has been regularly employed on a wage/salary basis for at least thirty (30) consecutive
working days/ during any calendar year;
• Is engaged in business or occupation;
• Owns real property with an aggregate assessed value of one thousand pesos (P 1,000) or
more;
• Required by law to file an income tax return.

Basic Community Tax Additional Tax

• Five Pesos (P 5) Each • One Peso for every thousand pesos on

total income earned through properties
owned by them or gross receipts earned

• Maximum: Five Thousand Pesos (P 5,000)

Juridical Persons
Domestic and resident foreign corporations engaged in doing business in the Philippines

Basic Community Tax Additional Tax

• Five Hundred Pesos (P 500) • Maximum: Ten Thousand Pesos (P10,000)

• Two Pesos (P 2) for every Five Thousand

Pesos (P 5,000) worth of real property in
the Philippines it owned during the
preceding year based on the valuation
used for the payment of real property tax

• Two Pesos (P 2) for every Five Thousand

Pesos (P 5,000) of gross receipts in the
Philippines during the preceding year
Exemptions From Community Tax
Exempt from Community tax:
• Diplomatic and Consular representatives
• Transient visitors when their stay in the Philippines does not exceed three (3) months

The following are exempt only for the current taxable year:
• Corporations established and organized on or after July 1
• Transient visitors whose stay in the Philippines is not more than three (3) months

• Persons who, on or after July 1:

• Come to reside in the Philippines
• Become eighteen (18) years of age
Time and Place of Payment

First day of January Last day of February Last day of March 20th of April

If a person loses legibility to be exempted on or before the last day of march, the person shall have until the
20th of April to pay the community tax without becoming delinquent.

The Place of payment is shall be paid where the person resides or where the principal office of the
corporation is situated
Penalty for Delinquency
If the Tax is not paid within the time prescribed:

• A twenty-four percent (24%) interest per annum on unpaid amount is added to the
amount due until it is paid.

• The total interest on the unpaid portion shall not exceed thirty-six months (36) months

• Prescriptive period for the collection of Local taxes is five (5) years from the date of
assessment by administrative or judicial action.
Presentation of Community Tax Certificate
A community tax certificate shall be issued to every person or corporation upon payment of the
community tax.
A person or corporation is required to present the community tax certificate when:
Person Corporation

• Acknowledgement of documents before a notary public
• Taking an oath of office for government service
• Receipt of license, certificate, or permit from any public
authority
• Payment of taxes or fees
• Receipt of money from public fund
• Transact other official business
• Receipt of any salary or wage
• Receipt of license, certificate, or permit from any public
authority
• Payment of taxes or fees
• Receipt of money from public fund
• Transact other official business

The community tax certificate required to be presented shall be the one issued for the current year, except for the
period fro January until 15th of April, in which case, the previous years certificate will suffice.
 Real Estate and Other Property Taxes
Introduction:
Assessment Law - 1939
( Commonwealth Act 470)
Regulated the assessment and
taxation of real property in
provinces and municipalities. As to
the chartered cities, it is their
respective city charters and
determined the same.
Real Property Tax Code - 1975
(P.D. 464)
It was the governing law on real
property assessment and taxation
of provinces, cities , and
municipalities.
Local Government Code – 1991
(R.A. 7160)
It currently governs the appraisal
and assessment of real property,
and the levy, collection and
administration of the real property
tax in the Philippines.
• Real Property:
Article 415 of the Civil Code of the Philippines:

(1) Land, buildings, roads and constructions of all kinds adhered to the soil;

(2) Trees, plants, and growing fruits, while they are attached to the land or form an integral part
of an immovable;

(3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be
separated therefrom without breaking the material or deterioration of the object;

(4) Statues, reliefs, paintings or other objects for use or ornamentation, placed in buildings or
on lands by the owner of the immovable in such a manner that it reveals the intention to attach
them permanently to the tenements;

(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement
for an industry or works which may be carried on in a building or on a piece of land, and which
tend directly to meet the needs of the said industry or works;
(6) Animal houses, pigeon-houses, beehives, fish ponds or breeding places of similar nature, in case
their owner has placed them or preserves them with the intention to have them permanently
attached to the land, and forming a permanent part of it; the animals in these places are included;

(7) Fertilizer actually used on a piece of land;

(8) Mines, quarries, and slag dumps, while the matter thereof forms part of the bed, and waters
either running or stagnant;

(9) Docks and structures which, though floating, are intended by their nature and object to remain
at a fixed place on a river, lake, or coast;

(10) Contracts for public works, and servitudes and other real rights over immovable property.
(334a)
• Real Estate:
Real estate is simply a piece of land plus any natural or artificial—man-made—improvements
that are attached or have been added. Real estate can be split into two broad categories:

• Residential real estate

is property intended for human habitation by a single family or multiple families. Real
estate may be leased or owner-occupied, most often refers to leased property.

• Commercial real estate

has a business use and focus. This property type includes office buildings, malls,
restaurants, and others. Commercial real estate may be owner-occupied or leased.
Industrial real estate is a subdivision of commercial real estate and includes property
where manufacturing, warehousing, production, and assembly take place.
REAL PROPERTY

REAL ESTATE
• Real Property Tax:

Is an annual ad valorem tax directly levied by local government units (LGU) on ownership of real
property within their jurisdiction.

Ad Valorem (of the levying of tax or customs duties)

proportionate to the estimated value of the goods or transaction concerned.
Overview of the Real Property Tax System
The system encompasses four operations:

Tax Mapping Operation Tax Assessment Operation Tax Records Management Tax Collection System
System

Tax mapping shows This phase includes the Through tax declarations, This is to ensure that
graphically all properties appraisal of all items of increases and decreases the government is able
subject to assessment. real property at the in property tax to collect all taxes or
In this phase, inventory current market value assessments are penalties due through
of real property is done. and the uniform monitored. enforcement of tax laws
application of
assessment levels.
Fundamental Principles
The appraisal, assessment, levy and collection of real property tax shall be guided by the
following fundamental principles:

1) Real property shall be appraised at its current fair market value

2) Real property shall be classified for the assessment purposes on the basis of its actual use

3) Real property shall be assessed on the basis of a uniform classification within each local
government unit

4) The appraisal, assessment, levy and collection of real property tax shall not be left to any
private person

5) The appraisal and assessment of real property shall be equitable

Uniformity and Equity in Taxation
“The rule of taxation shall be uniform and equitable”
Uniform Equitable
All taxable articles or kinds of property or kinds of In taxation, is achieved through the equitable
property of the same class shall be taxed at the same distribution of the tax burden.
rate.

There are two generally accepted principles of distributing tax load:

Ability to pay
A measure of a person’s ability to pay his tax liability
is his income. Properties may not be easily converted
into money or do not currently produce income.
Although there is no income, a person having
economic value is better able to make a tax
contribution than he who has not.
Benefits received
Revenue from real property taxes finance local
government services such as police protection, fire
protection, and flood control, among others. The
property owner is a direct beneficiary of these
services.
Power of Local Government Units to Levy and Administer Real Property Tax

The 1987 Constitution empowers local government units to create their own sources of revenue
and to levy taxes subject to such limitations as may be provided by law. They are also primarily
responsible for the proper, efficient and effective administration of the real property tax.

A province or city or a municipality within the Metropolitan Manila Area my levy an annual ad
valorem tax on real property such as land, building, machinery, and other improvement not
hereinafter specifically exempted.
Metropolitan Manila Area
Powers and Responsibilities of the Local Sanggunian

1) To classify lands in accordance with their zoning ordinances

2) To enact by ordinance the schedule of FMV prepared by assessors for the different classes
of real property situated in their respective LGUs
3) To fix by ordinance the assessment levels to e applied to the FMV of real property to
determine its assessed value
4) To fix a uniform rate of basic real property tax applicable to their respective localities
5) To grant a tax discount for advance and prompt payment
6) To condone or reduce real property taxes and interests affected by a calamity
7) To enact a tax ordinance imposing a special levy
8) To appropriate funds to defray expenses incident to the general revision of real property
assessments
Powers of Local Treasurer to Collect
The collection of RPT with interest and related expenses and the enforcement of remedies
are the responsibilities of the provincial, city, or municipal treasurer concerned. He may deputize
the barangay treasurer to collect all taxes on real property located.
 POWERS AND DUTIES OF LOCAL ASSESORS

(1) Ensure that all laws and policies governing the appraisal and assessment of real properties for taxation
purposes are properly executed;

(2) Initiate, review, and recommend changes in policies and objectives, plans and programs, techniques,
procedures and practices in the valuation and assessment of real properties for taxation purposes;

(3) Establish a systematic method of real property assessment;

(4) Install and maintain a real property identification and accounting system;

(5) Prepare, install and maintain a system of tax mapping, showing graphically all property subject to
assessment and gather all data concerning the same;
(6) Conduct frequent physical surveys to verify and determine whether all real property within the province are
properly listed in the assessment rolls;

(7) Exercise the functions of appraisal and assessment primarily for taxation purposes of all real properties in the
local government unit concerned;

(8) Prepare a schedule of the fair market value for the different classes of real properties, in accordance with
Title Two under Book II of this Code;

(9) Issue, upon request of any interested party, certified copies of assessment records of real property and all
other records relative to its assessment, upon payment of a service charge or fee to the treasurer;

(10) Submit every semester a report of all assessments, as well as cancellations and modifications of
assessments to the local chief executive and the sanggunian concerned;
(11) In the case of the assessor of a component city or municipality attend, personally or through an authorized
representative, all sessions of the local board of assessment appeals whenever his assessment is the subject of
the appeal, and present or submit any information or record in his possession as may be required by the board;
and

(12) In the case of the provincial assessor, exercise technical supervision and visitorial functions over all
component city and municipal assessor, coordinate with component city or municipal assessors in the conduct
of tax mapping operations and all other assessment activities, and provide all forms of assistance therefor:
Provided, however, That, upon full provision by the component city or municipality concerned to its assessor's
office of the minimum personnel, equipment, and funding requirements as may be prescribed by the Secretary
of Finance, such functions shall be delegated to the said city or municipal assessor;
 Rates of Levy
Annual Basic Real Property Tax Applicable:

Province City/Municipality within MMA

at the rate not exceeding one percent (1%) of the at the rate not exceeding two percent (2%) of the
assessed value of real property assessed value of real property
Special Levies ( in addition to basic real property tax)

Additional Levy on Real Property An annual tax of one percent (1%) on the assessed value of real
for the Special Education Fund property which shall be in addition to the basic real property tax. The
proceeds thereof shall exclusively accrue to the Special Education Fund
(SEF)
Additional Ad Valorem Tax on Idle An annual tax on idle lands at the rate not exceeding five percent (5%)
Lands (within MMA) of the assessed value of the property which shall be in addition to the
basic real property tax.
Special Levy by Local Government Lands within its territorial jurisdiction specially benefited by public
Units works projects or improvements funded by the
LGU: Provided, That the special levy shall not exceed sixty percent
(60%) of the actual cost of such projects and improvements.
Computation Of Real Property Tax
• Real property shall be appraised at its current and fair market value;
• The fair market value of the real property multiplied by the assessment level in order to get the
assessed value of the property.
• The assessed value is multiplied by the applicable rate of levy to get the amount of tax due.

Fair Market Value P xxx

Multiply by: Assessment Level x%
Assessed Value P xxx
Multiply by: Tax Rate x%
Real Property tax P xxx
 Assessment levels
The assessment levels to be applied to the fair market value of real property to determine its
assessed value shall be fixed by ordinances of the sanggunian (LGU) , at the rates not exceeding the
following:
MAXIMUM CLASS ASSESSMENT LEVELS
Residential 20%
Agricultural 40%
Commercial 50%
Industrial 50%
Mineral 50%
Timberland 20%
 Sample Computation
Information
• Actual use of property: Residential
• Location: City within Metro Manila
• FMV per assessor’s officer (based on Tax Declaration):
Land – P350,000
Improvement – P350,000
• Assessment Level for Land: 20%
• Assessment Level for Improvement: 20%
Computation:
Assessed Value of Land (P350,000 x 20%) P70,000
Assessed Value of Improvement(P350,000 x 20%) P70,000
P140,000
x 2%
Basic Real Property Tax for Land and Improvement P2,800
Add:(SEF) for Land and Improvement [(P70,000 + P70,000) x 1%] P1,400
Total Tax Due P4,200
Exemptions from Real Property Tax
(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, for consideration or otherwise, to a taxable
person;

(b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, non-
profit or religious cemeteries and all lands, buildings, and improvements actually, directly, and
exclusively used for religious, charitable or educational purposes;

(c) All machineries and equipment that are actually, directly and exclusively used by local water
districts and government owned or controlled corporations engaged in the supply and distribution of
water and/or generation and transmission of electric power;

(d) All real property owned by duly registered cooperatives as provided for under R.A. No. 6938; and

(e) Machinery and equipment used for pollution control and environmental protection.
 Date of Accrual

The real property tax for any year shall accrue on the first day of January and from that date it shall
constitute a lien on the property which shall be superior to any other lien, mortgage, or
encumbrance of any kind whatsoever, and shall be extinguished only upon the payment of the
delinquent tax.
 Date of payment
Real Property tax is collected every 31st of January each year. However, taxpayers can also decide to pay in
quarterly installment every:

Installment On Or Before
1st March 31
2nd June 30
3rd September 30
4th December 31
 Tax Discount for Advanced Prompt Payment
If the basic real property tax and the additional tax accruing to the Special Education Fund (SEF) are
paid in advance in accordance with the prescribed schedule of payment as provided under Section
250, the sanggunian concerned may grant a discount not exceeding twenty percent (20%) of the
annual tax due.

Payment must have been made before the date of accrual to qualify as “Advanced Payment”
Sample Computation
Information
• Actual use of property: Residential
• Location: City within Metro Manila
• FMV per assessor’s officer (based on Tax Declaration):
Land – P350,000
Improvement – P350,000
• Assessment Level for Land: 20%
• Assessment Level for Improvement: 20%
• Advance discount rate: 20%
Computation:
Assessed Value of Land (P350,000 x 20%) P 70,000
Assessed Value of Improvement(P350,000 x 20%) P 70,000
P 140,000
x 2%
Basic Real Property Tax for Land and Improvement P 2,800
Add:(SEF) for Land and Improvement [(P70,000 + P70,000) x 1%] P 1,400
Total P 4,200
Less: Discount (P4,200 x 20%) (P 840)

Tax Due P 3,360

Payment Under Protest
No protest shall be entertained unless the taxpayer first pays the tax. The protest in writing must be
filed within thirty (30) days from payment of the tax to the provincial, city treasurer or municipal
treasurer, in the case of a municipality within Metropolitan Manila Area, who shall decide the
protest within sixty (60) days from receipt.
In the event that the protest is finally decided in favor of the taxpayer:
1. the amount or portion of the tax protested shall be refunded to the protestant, or
2. applied as tax credit against his existing or future tax liability.
Interests on Unpaid Real Property Tax
When due, as the case may be, shall subject the taxpayer to the payment of interest at the rate of
two percent (2%) per month on the unpaid amount or a fraction thereof, until the delinquent tax
shall have been fully paid: Provided, however, That in no case shall the total interest on the unpaid
tax or portion thereof exceed thirty-six (36) months.
Sample Computation

Actual use of property Residential

Location City within Metro Manila
Fair market value P 103,700
Assessment Level 20%
Basic Real Property Tax 1.5%
SEF 1%
Prompt Discount Rate 10%
Computation:
DATE BASIC SEF
TAX YEAR QUARTER TAX DUE PENALTY TAX DUE PENALTY SUB-TOTAL
(DISCOUNT) (DISCOUNT)
2006 ALL 311.10 74.66 207.40 49.78 642.94
2007 1ST 77.78 (7.78) 51.85 (5.19) 116.66
388.88 66.88 259.25 44.59
TOTAL TAX DUE 759.60
Periods Within Which To Collect Real Property Taxes

The basic real property tax shall be collected within five (5) years from the date they become due.
In case of fraud or intent to evade payment of the tax, such action may be instituted for the
collection of the same within ten (10) years from the discovery of such fraud or intent to evade
payment.
The period of prescription within which to collect shall be suspended for the time during which:
(1) The local treasurer is legally prevented from collecting the tax;
(2) The owner of the property or the person having legal interest therein requests for
reinvestigation and executes a waiver in writing before the expiration of the period within
which to collect; and
(3) The owner of the property or the person having legal interest therein is out of the country or
otherwise cannot be located.
Remedies For The Collection Of Real Property Tax
For the collection of the basic real property tax and any other tax levied under this Title, the local
government unit concerned may avail of the remedies by administrative action thru levy on real
property or by judicial action.

1. levy on real property

2. Sale of real property at public auction

General Revision of Assessment and Property Classification

The provincial, city or municipal assessor shall undertake a general revision of real property
assessments within two (2) years after the effectivity of this Code and every three (3) years
thereafter.
The provincial, city or municipal assessor shall undertake a general revision of real property
assessments within two (2) years after the effectivity of this Code and every three (3) years
thereafter.