Updates on the Philippines’ real property valuation and assessment system
Without effective protection of the citizens’ right to property, it will be difficult to attract and accumulate valuable capital,” said Chinese philosopher Mencius.
Consistent with this saying is the enactment of Republic Act (RA) No. 12001, also known as “Real Property Valuation and Assessment Reform Act”, in 2024. It promotes the sustainable development and maintenance of a just, equitable, impartial, and nationally consistent real property valuation (RPV).
Assessing RPT
This policy entails, among others, adopting market value (MV) as the single RPV base for assessing real property-related taxes in the Philippines and valuating relevant transactions by government agencies.
MV here refers to the estimated amount for which a real property shall exchange on the valuation date between a willing buyer and seller in an arm’s length transaction, after proper marketing, after having acted knowledgeably, prudently, and without compulsion.
Also, subject to the provisions of the Data Privacy Act, this law seeks to ensure transparency in real property transactions to protect public interest and develop confidence in the valuation system.
Uniform valuation standards
Under this law, the Bureau of Local Government Finance (BLGF) shall develop and implement uniform valuation standards to be used by appraisers, assessors in the local government units (LGU), and other persons and entities in conducting valuation in the appraisal or valuation of lands, buildings, machinery, and other real properties for taxation and other purposes.
These standards shall be revised every three years or as often as may be necessary to ensure their consistency with globally accepted principles and definitions in real property valuation, within the context of prevailing economic conditions.
Pursuant to the law’s declared policy, all real properties, whether taxable, shall be appraised and valued based on prevailing market values in the locality where they are situated, consistent with the adopted Philippine Valuation Standards. In any case, depreciation, or the reasonable allowance for the exhaustion, wear, and tear of a thing, shall be considered in valuating depreciable assets.
A Schedule of Market Values (SMV), which is a table of base unit MV for all kinds of property, except machinery, shall be prepared by the proper authorities under the law.
It shall be used as basis for, among others, the adjustment of assessment level and tax rates by LGUs, and the MV for local transfer, sand and gravel, and community taxes, and other fees and charges. It may also be used in computing any internal revenue tax when its value is higher than that of the actual gross selling price of the real property in a particular transaction.
SMVs shall be updated within the periods specified by the law. But, they may otherwise be revised should there be any significant change in MV where the property is located, such as introducing a road right of way or similar infrastructure, or occurrence of calamities, or a pandemic of public health emergency.
Updated electronic database
Besides its role in the country’s valuation system, the BLGF shall develop and maintain an updated electronic database on the sale, exchange, lease, mortgage, donation, transfer, and other similar declarations and transactions, of real properties. This database will also include the cost of constructing or renovating buildings and other structures, as well as the prices of plant, machinery, and equipment.
This database may be accessed at no cost by all LGUs and other national government agencies, without need of prior approval. It may also be accessed by the private sector, subject to the rules to be implemented by the BLGF.
LGUs will be able to utilize this database by automating their real property tax administration operations, including, among others, tax mapping technology, maintenance of software-enabled valuation systems, and computerized records management.
Meanwhile, once this database operates, the register of deeds, Bureau of Internal Revenue, notaries public, officials issuing building permits, and geodetic engineers conducting surveys within their localities will electronically transmit to the BLGF, at no additional cost, the relevant real property transactions data within the period to be specified by the Secretary of Finance.
