Photo from Pexels | Pavel Danilyuk
The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of a lawyer or you may directly contact and consult Alburo Alburo and Associates Law Offices to address your specific legal concerns, if there is any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
Republic Act No. 12001 or the Real Property Valuation and Assessment Reform Act was enacted to establish valuation standards based on the Philippine Valuation Standards (PVS) and adopt market value as the single property valuation base for real property tax assessments and real property for various transactions by all government agencies, among others.
The Real Property Valuation and Assessment Reform Act was enacted on June 13, 2024, to improve the country’s land valuation system.
The law aims to establish valuation standards based on the Philippine Valuation Standards (PVS) and adopt market value as the single property valuation base for real property tax assessments and real property for various transactions by all government agencies.
Aside from this, the new law intends to promote fiscal autonomy of local government units (LGU); separate property valuation from the functions of tax policy formation and administration; create an electronic database of property transactions; support the development of an information database on valuation to meet global standards; ensure transparency in real property transactions while protecting privacy; and promote the use of innovative digital technology in tax administration, real property transactions, and other business processes to improve the LGU’s revenue generation capacity. (Section 3, R.A. No. 12001)
Bureau of Local Government Finance
The Bureau of Local Government Finance (BLGF) of the Department of Finance (DOF) is the primary agency assigned to lead the implementation of R.A. 12001. The BLGF was reorganized and the Real Property Valuation Service (RPVS) was established to support its expanded functions under the law.
In addition to this, a Real Property Valuation Unit (RPVU) under the Office of the Local Assessor in every province and city shall now be created to achieve the policies and objectives of the law. Municipalities may also create an RPVU under the office of their respective local assessors.
The law also created a Central Consultative Committee which shall serve as the forum on matters pertaining to the setting and adoption of international valuation standards and other related concerns on real property valuation.
Valuation of Real Properties
The BLGF shall develop, adopt, maintain, and implement uniform valuation standards in conformity with the international valuation standards and principles, which shall be used by all appraisers and assessors in the LGUs, and other persons, entities, or agencies that conduct valuation in the appraisal or valuation of lands, buildings, machinery, and other real properties for taxation and other purposes.
Section 14 provides that for valuation purposes, all real properties, whether taxable or exempt, shall be valued or appraised based on prevailing market values in the locality where the property is situated, in conformity with the PVS adopted pursuant to R.A. 120001. In all instances, depreciation shall be taken into consideration in the valuation of depreciable assets.
Preparation of the Schedule of Market Values (SMV)
- Assessors’ Responsibility: The provincial, municipal, and city assessors (including those in the Metropolitan Manila Area and PHIVIDEC) are tasked with preparing SMV for the different classes of real property situated within their respective LGUs, pursuant to the PVS and other rules, regulations and specifications set by the Department of Finance (DOF).
- Deadline: The preparation of SMV must be completed within 12 months after following the notice from the BLGF to all local assessors to submit the proposed SMV.
- Public Consultation and Publication: Two mandatory public consultations must be conducted within 60 days before submission of the SMV. The proposed SMV should be published on the LGU’s website and posted in two conspicuous places for at least two weeks prior to the consultations.
- Submission and Review: After the consultations and completion of the proposed SMV, it must be submitted to the BLGF Regional Office. Within 45 days, the regional office reviews and endorses it to the BLGF head. In case of cities and the lone municipality within Metropolitan Manila, the proposed SMV must be submitted to and reviewed by the BLGF Central Office, who in turn endorses it to the Secretary of Finance (SOF).
- Certification: The SOF must certify that the SMV is in accordance with the latest Property Valuation Standards (PVS) within 30 days. In case of inaction within 30 days, the existing SMV remains. If the SMV doesn’t meet these standards, the SOF will remand the SMV to the assessor concerned for revision together with a written explanation specifying the standards not complied with.
- Resubmission Process: If the SMV is returned for revision, the assessor may conduct at least one public consultation prior to submitting the SMV to the concerned BLGF Regional Office. The revised SMV shall be resubmitted within 30 days. The SOF will make a decision on the resubmission within 10 days; otherwise, the existing SMV shall remain in effect.
- Effectivity: The approved SMV shall take effect 15 days after its publication by the DOF in the Official Gazette or in its official website, and in the official website of the LGU concerned, as well as posting in two other conspicuous public places in the provincial capitol, city hall, or municipal hall, as the case may be.
Approved Schedule of Market Values (SMV)
The approved SMV shall be used as basis for the determination of real property-related taxes of national and local governments, as follows:
(a) For taxation purposes:
(1) As basis for the general revision of the assessment and property classification by the local assessor, and in the adjustment of assessment level and tax rates of LGUs by the Sanggunian;
(2) As basis in determining the market value for other property-related taxes such as local transfer tax, sand and gravel tax, community tax, and other fees and charges; and
(3) The Commissioner of Internal Revenue shall use the SMV or the actual gross selling price in consideration, as stated in real property transaction documents, whichever is higher, in computing any internal revenue tax.
(b) As basis for real property appraisals and other related purposes of all government agencies, instrumentalities, and government-owned or-controlled corporations.
RELATED ARTICLES:
Click here to subscribe to our newsletter
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 0917-5772207/ 09778050020.
All rights reserved.