Real Property Valuation and Assessment Reform

Core definitions for implementation

Section 4(a) defines Appraiser (also “valuer”) as a person who conducts valuation and possesses necessary qualifications, license, ability, and experience to execute or direct valuation of real property.
Section 4(b) defines Assessed value (also “taxable value”) as market value multiplied by the corresponding assessment level.
Section 4(c) defines Assessment as determining value of property (or proportion subject to taxation), including discovery, listing, classification, and appraisal of properties.
Section 4(d) defines Assessment level as the percentage applied to market value to determine taxable value based on property classifications under Republic Act No. 7160 (Local Government Code of 1991), as amended.
Section 4(e) defines Assessor as a duly licensed appraiser in an LGU who performs appraisal and assessment for taxation and other purposes, including assistant assessor.
Section 4(f) defines Building as a man-made structure permanently attached to land for residential, commercial, industrial, recreational, or other purposes.
Section 4(g) defines Depreciation as reasonable allowance for exhaustion and wear and tear (including reasonable allowance for obsolescence).
Section 4(h) defines Improvement as a valuable addition or amelioration exceeding mere repair or replacement, involving capital expenditures and labor intended to enhance value, beauty, or utility, or adapt for new or further purposes.
Section 4(i) defines International Valuation Standards as valuation standards using generally recognized concepts and principles that promote transparency and consistency as determined by the International Valuation Standards Council.
Section 4(j) defines Philippine Valuation Standards (PVS) as the latest national standards for use in the Philippines, based on International Valuation Standards duly approved by the Secretary of Finance.
Section 4(k) defines Machinery as machines, equipment, mechanical contrivances, instruments, appliances, or apparatus used for industry/business purposes, including certain mobile or non-permanently attached items that are actually, directly, and exclusively used and designed for or necessary to manufacturing, mining, logging, commercial, industrial, or agricultural purposes.
Section 4(l) defines Market value as the estimated amount for which real property shall exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction after proper marketing, with knowledgeable, prudent, and uncompelled action.
Section 4(m) defines Private appraisal sector as licensed nongovernmental real estate service practitioners.
Section 4(n) defines Real estate as land and attached items, including additions or improvements on, above, or below ground.
Section 4(o) defines Real property as all rights, interests, and benefits related to ownership of real estate.
Section 4(p) defines Schedule of market values (SMV) as a table of base unit market value for all kinds of real property except machinery within an LGU, prepared by assessors under existing laws; properties not specified in the SMV are appraised at current market value and assessed using prescribed assessment level based on actual use.
Section 4(q) defines Special purpose property as property designed and developed for a specific use/purpose, rarely offered for sale except as part of a going concern because conversion is not economically feasible.
Section 4(r) defines Valuation (also “appraisal”) as systematic, analytic, and logical analysis of property facts, circumstances, investments, and relevant data to support an estimate or professional opinion of value as of a specific date and for a specific purpose.

Bureau of Local Government Finance functions

Section 5 establishes the Bureau of Local Government Finance (BLGF) of the Department of Finance (DOF) as the primary agency to lead implementation of the Act.
Section 5 expands BLGF functions beyond Executive Order No. 292 (Administrative Code of 1987) by requiring BLGF to:
- Develop, adopt, maintain, and ensure compliance with the PVS, regulations, and specifications for real property appraisal used for taxation and other purposes.
- Review and ensure SMVs are compliant with PVS and valuation policies/standards, and recommend certification to the Secretary of Finance for local and national taxation and other purposes.
- Interpret and decide matters relating to real property valuation policies/standards and SMV implementation.
- Provide technical assistance to agencies and instrumentalities and coordinate or conduct valuation when requested.
- Lead valuation policy direction for LGUs, regulate valuation activities and related matters, and promote valuation training and seminars.
- Maintain a roster of licensed local government appraisers and assessors in consultation with and coordination with the Professional Regulation Commission (PRC).
- Develop and maintain a comprehensive, up-to-date electronic database of real property transactions and prices of materials for buildings, machinery, and other structures.
- Conduct continuing study and research on valuation and gather information on global and country trends.
- Formulate uniform procedures for transactions in the assessor’s office including transfer, annotation, and issuance of tax declarations.
- Exercise technical supervision over assessors through a system of compliance reporting and capacity building and education/training procedures.
- Determine, fix, and collect reasonable administration fees, fines, and penalties relative to implementation of the Real Property Information System (RPIS), with the rule that no fees or fines shall be imposed on LGUs with respect to use of the RPIS.
- Perform other necessary, proper, and incidental functions to implement the Act.
Section 6 reorganizes BLGF by heading it with an Assistant Secretary and establishing the Real Property Valuation Service (RPVS) within the BLGF, with counterpart personnel in BLGF Regional Offices, subject to DBM evaluation and approval consistent with civil service laws.
Section 7 makes the head of the BLGF responsible for efficient and effective day-to-day performance of responsibilities under the Act and overall internal management and governance of the RPVS.
Section 9 creates a Central Consultative Committee as a forum for setting/adopting international valuation standards and related concerns.

Valuation standards, SMVs, and update rules

Section 13 requires BLGF to develop, adopt, maintain, and implement uniform valuation standards for all appraisers and assessors in LGUs and other persons/entities/agencies conducting valuation for taxation and other purposes, conforming with international valuation standards and principles.
Section 13 directs the RPVS to revise the PVS every three (3) years or as often as necessary to align with globally accepted principles and definitions, with due consideration of prevailing economic conditions.
Section 14 requires all real properties, whether taxable or exempt, to be valued/appraised based on prevailing market values in the locality where situated, conforming with the adopted PVS, and requires that depreciation be taken into consideration for depreciable assets.
Section 15 requires provincial assessors, municipal assessors, and city assessors (including the lone municipal assessor in Metropolitan Manila Area and the assessor of PHIVIDEC Industrial Authority) to prepare SMVs for classes of real property within their respective LGUs pursuant to PVS and DOF rules/regulations/specifications.
Section 15 mandates SMV preparation completion within twelve (12) months after BLGF’s notice to local assessors to submit proposed SMVs.
Section 15 requires two (2) mandatory public consultations conducted within sixty (60) days before submission by the local assessor of the SMV.
Section 15 requires local assessors to publish proposed SMVs for at least two (2) weeks prior to public consultation and hearing on the LGU official website and post in two (2) conspicuous places in the provincial capitol, city hall, or municipal hall.
Section 15 requires submission after completion of proposed SMV to the BLGF Regional Office; the BLGF Regional Office must review and endorse within forty-five (45) days from receipt.
Section 15 requires cities and the lone municipality in Metropolitan Manila Area to submit proposed SMVs to the BLGF Central Office for review, and requires the head of the BLGF to review and endorse within thirty (30) days from receipt.
Section 16 requires the Secretary of Finance to certify SMV compliance with the latest PVS within thirty (30) days from receipt.
Section 16 provides that if the Secretary of Finance takes no action within the thirty (30) days, the existing SMV remains effective.
Section 16 allows the Secretary of Finance to order remand if an endorsed SMV of a particular LGU was not prepared in accordance with the latest PVS, requiring written explanation of non-complied standards; the Secretary of Finance must not exercise control over the content of the SMV.
Section 16 allows the assessor, upon receipt of written explanation, to conduct at least one (1) public consultation before submission of the SMV to the concerned BLGF Regional Office.
Section 16 requires the revised SMV to be resubmitted within thirty (30) days from receipt of the disapproval letter.
Section 16 requires the Secretary of Finance to decide on the resubmitted SMV within ten (10) days from resubmission; if no decision is made within ten (10) days, the existing SMV remains in effect.
Section 16 requires approved SMVs to take effect fifteen (15) days after publication by the DOF in the Official Gazette or in its official website, and on the official website of the LGU concerned, with posting in two (2) other conspicuous public places.
Section 17 requires the approved SMV transmission to the local chief executive and Sanggunian, and requires the assessor (in coordination with the local treasurer) to prepare a revenue and tax impact report including three (3) different proposed options for adjusting existing assessment levels and tax rates for Sanggunian consideration, then submit the report within thirty (30) days from receipt of the approved SMV.
Section 18 requires the approved SMV to be used for:
- Determining real property-related taxes:
  - As basis for general revision of assessment and property classification by the local assessor, and for adjusting assessment levels and tax rates by the Sanggunian.
  - As basis for other property-related taxes such as local transfer tax, sand and gravel tax, community tax, and other fees and charges.
  - For internal revenue computation, requiring the Commissioner of Internal Revenue to use the SMV or the actual gross selling price in consideration as stated in real property transaction documents, whichever is higher.
- Real property appraisals and other related purposes of all government agencies, instrumentalities, and government-owned or -controlled corporations.
Section 19 requires provincial, municipal, and city assessors (including the lone municipal assessor in Metro Manila Area and the assessor of PHIVIDEC Industrial Authority) to update SMVs within two (2) years from effectivity of the Act.
Section 19 requires LGUs to update SMVs and conduct general revision of property assessments and classifications every three (3) years thereafter.
Section 19 requires the BLGF to prepare schedules for updating SMVs in all provinces and cities, including Metro Manila Area municipality and PHIVIDEC Industrial Authority areas.
Section 19 requires revisions recommendation when significant market value changes occur after SMV approval and before the next revision, including specified triggers such as road right of way/infrastructure, calamities/disasters (man-made or natural), pandemic or declared public health emergency, other analogous adverse circumstances, or corrections of errors and inequalities in the SMV.
Section 19 requires city assessors, the lone municipal assessor in Metro Manila Area, and the PHIVIDEC Industrial Authority assessor to recommend revisions to the BLGF Central Office.
Section 19 permits suspension of general revision during national emergency declared by the local chief executive; in a national state of emergency, suspension continues until lifted by the President; in a local state of calamity, suspension lasts thirty (30) days from declaration.
Section 19 permits BLGF to recommend further extension of suspension for another thirty (30) days or during continued existence of calamity, whichever is shorter, if local state of calamity continues after the initial thirty (30) days.
Section 19 requires revisions to undergo BLGF Regional Office review and require the submission of recommendations to the head of the BLGF consistent with Sections 41 and 15 of the Act.

Real Property Information System and transaction data

Section 22 requires the BLGF to develop and maintain an up-to-date electronic database of:
- Sale, exchange, lease, mortgage, donation, transfer, and all other real property transactions and declarations in the country.
- Cost of construction or renovation of buildings and other structures.
- Prices of plant, machinery, and equipment.
Section 22 requires BLGF to require mandatory submission of necessary documents from concerned officials/employees of national government offices or instrumentalities and LGUs, subject to the prohibition on disclosure and security of certain information under RA No. 10173, particularly Sections 20 and 21, and other existing laws.
Section 22 requires the updated database to be made available at no cost to all LGUs and other national government agencies without need for prior approval, including the Commissioner of Internal Revenue or duly authorized representative, subject to Section 270 of RA No. 8424 and Sections 12 and 13 of RA No. 10173.
Section 22 permits private sector access subject to BLGF guidelines.
Section 22 requires administrative penalties under Section 26 for non-submission of required documents by the concerned official or employee.
Section 22 requires BLGF to establish mechanisms for electronic submission of required documents consistent with Chapter 2, Article III of the Act.
Section 22 requires all provinces, cities, and municipalities to automate real property tax administration operations (including tax mapping technology, software-enabled valuation systems, regular data cleansing, and computerized records management) with BLGF guidance in coordination with DICT.
Section 22 requires DICT to provide free of charge appropriate equipment, connectivity, interoperable ICT platform, corresponding maintenance, and appropriate training and capability-building programs to all LGUs, and requires DICT to prioritize third and lower income class LGUs without an existing ICT platform for compliance.
Section 22 requires full automation by all LGUs within two (2) years from the effectivity of the Act, ensured by BLGF together with DICT.
Section 23 imposes on the Register of Deeds a duty to prepare and submit to provincial/city/municipal assessors (including the lone Metro Manila municipal assessor and the PHIVIDEC Industrial Authority assessor) an abstract of the entire registry every three (3) months and copies of all contracts selling, transferring or otherwise converting, leasing, or mortgaging real property registered every end of the month, free of fees and charges; the abstract must include brief but sufficient property descriptions, present owners, and dates of the most recent transfer/alienation, with copies of corresponding deeds or other forms of alienation.
Section 24 requires that upon operationalization of the real property transactions database, it becomes the duty of registers of deeds, BIR, notaries public, officials issuing building permits, and geodetic engineers conducting surveys within a locality to electronically transmit to BLGF relevant real property transactions data, free of charge, every quarter, in accordance with rules and regulations promulgated by the Secretary of Finance.

Creation and roles of valuation units and committees

Section 8 creates a Real Property Valuation Unit (RPVU) under the Office of the Local Assessor in every province and city, and permits municipalities to create an RPVU under their local assessor’s office.
Section 8 requires that the RPVU organizational structure and staffing pattern be included in the annual budget of the Office of the Assessor duly approved by the Sanggunian concerned.
Section 9(b) requires the Central Consultative Committee to be composed of representatives from:
- Bureau of Internal Revenue (BIR)
- Department of Environment and Natural Resources (DENR)
- Bangko Sentral ng Pilipinas (BSP)
- National organization of government assessors
- Union of Local Authorities of the Philippines (ULAP)
- Land Registration Authority (LRA)
- Private appraisal sector
- Real estate sector
Section 9(b) requires per diem for members or representatives pursuant to existing laws, regulations, and issuances.
Section 9(b) requires the representative from the private appraisal sector to have been in active practice as a real estate appraiser for at least five (5) years prior to appointment, certified by the Professional Regulatory Board of Real Estate Service (PRBRES).
Section 9(b) requires the BIR, DENR, and BSP representatives to be performing valuation-related functions.
Section 9(b) requires sector representation to be by heads of organizations or their duly authorized and qualified representatives for the national organization of government assessors, private appraisal sector, and real estate sector.
Section 9(c) requires the Central Consultative Committee to meet upon call of the Chairperson with due notice at least once every semester, and as many times as the Chairperson deems necessary for adoption of valuation standards, with equal opportunity for public/private sector participation as resource persons.
Section 9(d) designates the BLGF as Secretariat of the Central Consultative Committee.
Section 10 assigns BLGF Regional Offices responsibility through the Regional Director for valuation matters and supervision of SMVs within their regions, including implementation of valuation policies/rules, review and endorsement of proposed SMVs, provision of valuation services, coordination with regional agencies, and custody of submitted transaction records, and requiring maintenance of regional transaction databases.
Section 11(a) creates a Regional Consultative Committee chaired by the BLGF Regional Director and composed of specified representatives, including BIR and DENR regional office heads, assessors’ organizations, private appraisal sector, real estate sector licensed by PRC, regional bankers’ association, and regional chapters of the league of cities (with the text listing the league of cities head twice), with per diem rules and valuation-function requirements for BIR and DENR representatives.
Section 11(b) requires regional committees to meet at least once every quarter upon call with due notice and as many times as deemed necessary, with resource persons permitted and equal opportunity for participation.
Section 11(c) designates the BLGF Regional Director as Secretariat of the Regional Consultative Committee.
Section 12 requires Regional Consultative Committees to discuss regional local real property market developments; taxpayer/civil society/stakeholder concerns; compliance reporting outcomes; data on complaints and appeals filed before the Local Board of Assessment Appeals (LBAA) or Central Board of Assessment Appeals (CBAA); training; general appraisal/assessment concerns; and other matters determined by the Committee, and requires submission of committee reports to the Central Consultative Committee electronically or manually.

Appointment rules for assessors

Section 25 directs that the local chief executive shall appoint provincial, city, and municipal assessors and assistant assessors notwithstanding Section 472 of RA No. 7160, following civil service laws and RA No. 9646 (Real Estate Service Act of the Philippines) and its rules and regulations, plus these selection guidelines:
- Provincial and assistant provincial assessors and city and assistant city assessors must be chosen from a list of at least three (3) ranking eligible candidates within the region.
- City and assistant city assessors and municipal and assistant municipal assessors in the Metropolitan Manila Area must be chosen from a list of at least three (3) ranking eligible candidates within the region.
- Municipal and assistant municipal assessors must be chosen from a list of at least three (3) ranking eligible candidates within the province.

Penalties and sanctions for violations

Section 26 provides that violations by officials/employees are punishable by either:
- a fine equivalent to one (1) month to six (6) months of the official or employee’s basic salary; or
- suspension from government service for not more than one (1) year; or
- both,
- in addition to criminal and administrative penalties under existing laws.
Section 26(a) makes punishable failure of any BLGF or other concerned government agency official/employee, without justifiable reason, to provide or furnish data or information required under Sections 22, 23, and 24.
Section 26(b) makes punishable failure of an assessor or assistant assessor to comply with valuation standards under the Act, or concealment of deviation from such standards.
Section 26(c) makes punishable failure or refusal, without justifiable reason, of an assessor to prepare, submit, revise, and implement SMVs, or conduct general revisions, within the period set by the Act.
Section 26(d) makes punishable failure or refusal of any government official/employee to review, approve, and implement SMVs and conduct general revisions within the period set by the Act, or cause improper use of SMVs.
Section 27 provides that unauthorized processing, accessing, disposal, disclosure, sharing, publication, or use of RPIS data, including illegal acts defined under RA No. 10173, is punishable under RA No. 10173, its implementing rules and regulations, RA No. 10175 (Cybercrime Prevention Act of 2012), and other relevant laws.
Section 28 provides that any person (natural or juridical) who violates any provision of the Act other than those punishable under Sections 26 and 27 shall, when warranted, be dealt with under applicable existing laws.

Tax amnesty and limiting future tax increases

Section 29 provides transitory guidelines for LGUs updating SMVs upon effectivity:
- LGUs in the process of updating SMVs must continue revisions under Sections 15, 16, 17, and 19, with proper notification and coordination with BLGF.
- If SMVs are not yet available or updated, the Commissioner of Internal Revenue must adopt existing SMVs, zonal values, or actual price in consideration as stated in real property transaction documents, whichever is higher, for computing any internal revenue tax, while observing the maximum assessment levels in Section 218 of RA No. 7160.
- For the first year of effectivity of the approved SMV, any increase in real property taxes must be limited to a maximum of six percent (6%) of real property taxes assessed prior to effectivity of the Act-approved SMV.
- The 6% cap applies to each type of real property tax, including Special Education Fund, idle land tax, and other special levies in real property.
- An LGU may enact an ordinance to impose a cap on increases in succeeding years.
Section 30 grants a real property tax amnesty covering penalties, surcharges, and interests from all unpaid real property taxes, including Special Education Fund, idle land tax, and other special levy taxes, prior to effectivity of the Act.
Section 30 limits availment to within two (2) years after effectivity of the Act.
Section 30 allows a delinquent property owner to avail of the amnesty through either one-time payment or installment payment of delinquent real property taxes within two (2) years from effectivity of the Act.
Section 30 excludes from the amnesty:
- delinquent real properties disposed of at public auction to satisfy real property tax delinquencies;
- real properties with tax delinquencies being paid pursuant to a compromise agreement;
- real properties subject of pending cases in court for real property tax delinquencies.
Section 31 provides that zonal values determined by the BIR and approved by the Secretary of Finance for internal revenue tax purposes, plus prior SMV-related arrangements with municipal/city assessors (including the lone Metro Manila assessor and PHIVIDEC Industrial Authority assessor), remain effective until repealed/superseded/modified/revised/set aside/replaced under Section 16, to occur within two (2) years from effectivity of the Act.
Section 31 requires continued levy, assessment, and collection of real property taxes by the PHIVIDEC Industrial Authority within its jurisdiction pursuant to Section 4(h) of Presidential Decree No. 538.

Funding, appropriations, automation, and reporting

Section 32 requires each local Sanggunian to appropriate needed funds from locally generated revenues, national tax allotment, or other sources every fiscal year to constitute the Real Property Tax Administration Fund (RPTAF) for implementation of updating SMVs, general revision of assessments, and administration of real property taxes in all LGUs.
Section 32 requires the Secretary of Finance, through BLGF, to grant a subsidy to third and lower income class LGUs to augment resources for creating the RPTAF.
Section 33 provides that initial implementation funding shall be charged against available funds of national government agencies and concerned LGUs; thereafter, funding must be included in the annual General Appropriations Act and LGU budgets.
Section 34 requires BLGF to submit a detailed report on implementation to the joint Congressional Oversight Committee on the Comprehensive Tax Reform Program (COCCTRP) during the first quarter of every year.

Implementing rules, separability, and repeal effects

Section 35 provides that RA No. 7160, as amended, and other laws consistent with the Act have suppletory effect.
Section 36 requires DOF to promulgate implementing rules and regulations within three (3) months after effectivity, in consultation with concerned stakeholders, and provides that non-promulgation of the IRR does not prevent implementation of the Act upon effectivity.
Section 37 contains a separability clause requiring that if any section/provision is declared unconstitutional or invalid, other provisions continue in force.
Section 38 repeals:
- **Sections 199(e), (g), and (o),