DOF Rules on General Revision of Real Property Assessments

Policy, purpose, and completion concepts

A general revision of real property assessments serves to equalize and update valuation and also to rediscover properties lost from the tax roll.
A general revision of real property assessments allows the assessor to purge double assessments accumulated through the years due to properties destroyed.
A general revision is considered finished or completed only when all field work for the municipality, province, or city is completed, all corresponding field sheets (FAAS) are prepared and duly approved, and recorded in the record of assessments.
After completion, written notices of revised assessments must be sent to real property owners.

General revision schedule and cadence

Provincial, city, or municipal assessors must undertake a general revision of real property assessments within two (2) years after the effectivity of Republic Act No. 7160.
Provincial, city, and municipal assessors must undertake a general revision once every three (3) years thereafter.
Provincial, city, and municipal assessors of Metropolitan Manila Area must prepare the schedule of fair market values within one (1) year from the effectivity of the Code in accordance with the Regulations.
General revision must commence upon the enactment of the schedule of fair market values and in any event not later than two (2) years from the effectivity of the Code.
If there is insufficient time or resources to finish simultaneously all real property units (RPUs) for a local government unit (LGU), a partial revision may be undertaken by kind or class of real property.

Assessment calendar and implementation deadlines

The general revision and its component activities must follow the prescribed assessment calendar, with these deadlines and responsible offices:
- Acceptance of sworn statements declaring true values filed by real property owners/administrators: by Provincial/City/Municipal Assessors, Jan. 1 to June 30 of the first year.
- Gathering and analysis of data and preparation of preliminary Schedule of Market Values: by Provincial/City/Municipal Assessors, July 1 to September 30 of the first year.
- Preparation of final schedules of Market Values: by Provincial and City Assessors and Municipal Assessors of municipalities within Metropolitan Manila Area, not later than October 15 of the first year.
- Submittal of schedules to the Sanggunian for enactment by ordinance: by Provincial/City/Municipal Assessors, not later than October 31 of the first year.
- Enactment of ordinance adopting schedules: by the Sangguniang Panlalawigan/Panlungsod/Sangguniang Bayan (as applicable), not later than January 31 of the second year.
- Publication/posting of schedules: by the Sanggunian concerned, not later than February 29 of the second year.
- Preparation of Field Sheets, Tax Declarations and Notices, and mailing/delivery of notices: by Provincial/City/Municipal Assessors, not later than September 31 of the second year.
- Preparation of Assessment Rolls and Real Property Tax Orders of Payment (RPTOP) (Part A) by Provincial and City Assessors and Municipal Assessors, with copies sent to Provincial/City/Municipal Treasurers: not later than November 30 of the second year.
- Accomplishment of Part B of RPTOPs and delivery to property owners: by Provincial/City/Municipal Treasurers, not later than December 31 of the second year.
- Effectivity of revised assessments: not later than January 1st of the third year.
The Regulations require that schedules be published in a newspaper of general circulation in the locality or posted in the Provincial Capitol, City or Municipal Hall, and in two other conspicuous public places.
Notices must be delivered or mailed after preparation of field sheets and tax declarations, and their service timing must align with the calendar deadlines above.

Assessment expenses, valuation rules, and back taxes

The Sanggunian of provinces, cities, and municipalities within Metropolitan Manila Area must provide necessary appropriations to defray expenses incident to the general revision.
Expenses incident to a general revision must be apportioned equally between the province and the municipality by ordinance of the Sangguniang Panlalawigan.
Each municipality’s share must be based on taxable area of the municipality in proportion to the entire area of the province.

Classification and appraisal triggers

The Provincial/City/Municipal Assessor (or duly authorized deputy) must classify, appraise, and assess real property in these situations:
- when real property is declared for the first time;
- when a general revision of property classification and assessment is ongoing;
- when a request is made by the person in whose name the property is declared.
The assessor must assess the real property regardless of any previous assessment or taxpayer’s valuation.
The assessment of real property must not be increased more often than once every three (3) years, except for a new improvement substantially increasing the property’s value or a change in actual use.

Undeclared real property and back taxes

Undeclared real property found at any time or during a general revision must be listed, classified, and valued like similar property in the locality based on the schedule of base market values or the schedule of base unit construction cost in force.
Undeclared property is subject to back taxes not exceeding ten (10) years from the initial assessment.
Where real property is declared for the first time, back taxes must be assessed for the period it would have been liable if assessed from the first in proper course, but in no case for more than ten (10) years prior to the year of initial assessments.
Back taxes must be computed using the applicable schedule of values in force during the corresponding period.
Back taxes must be based on the year-counting rule that the year of assessment is included when counting back taxes for not exceeding ten (10) years.

Exemption rule for undeclared improvements (buildings, structures, machinery)

Back-tax collection using schedules during the relevant period applies to lands only, not to buildings and other structures, and not to machinery.
Undeclared and unassessed buildings and other structures or machinery subject to back taxes must be classified and valued using the schedule of base unit construction cost in use or the replacement/reproduction cost of machinery at the time of appraisal.
Undeclared buildings/structures/machinery must be assessed like similar buildings/structures/machinery in the locality to derive taxable assessed values, which serve as the basis for collecting back taxes not exceeding ten (10) years.

Interest on back taxes

If back taxes are paid on or before the end of the quarter following receipt of the assessment notice by the owner or representative, no delinquency interest is imposed.
Otherwise, delinquency interest accrues at two percent (2%) per month or a fraction thereof from the date of receipt of the assessment until taxes are fully paid.

Assessment effective dates

All assessments made after the first day of January of any year take effect on the first day of the succeeding year.
Re-assessment due to partial or total destruction, or major change in actual use, or great and sudden inflation or deflation of real property values, or gross illegality of the assessment, or other abnormal causes must be made within ninety (90) days from the date the cause occurred.
Re-assessment under those abnormal causes must take effect at the beginning of the quarter next following the re-assessment.
A revision made in 1992 takes effect in 1993, and in 1993 takes effect in 1994.
Total or partial destruction requires cancellation or reduction effective at the first day of the quarter following the quarter in which destruction occurred.
When property is totally destroyed, assessment must be cancelled by Notice of Cancellation of Assessments.
When property is partly destroyed, a revised tax declaration must be prepared to cancel the tax declaration covering the original assessment.
On the reverse side of the revised tax declaration, the quarter and year must be stated as effectivity (not only year).

Notice, due process timing, and form

When real property is assessed for the first time or when an existing assessment is increased or decreased, the Provincial/City/Municipal Assessor must give written notice within thirty (30) days to the person in whose name the property is declared.
The written notice must be delivered personally to the person named or to the occupant in possession (if any), or sent by mail to the last known address, or with the assistance of the punong barangay.
Notices must be served with due process purposes: after tax fixing, the owner must have a right to hearing on assessment; if dissatisfied, the owner may appeal to the Board of Assessment Appeals within sixty (60) days from receipt of the written notice.
If personally delivered, the notice server must secure the signature of the owner or occupant on the duplicate copy and note the date served and identification of recipient.
If the punong barangay assists, the punong barangay must sign the duplicate copy.
If coursed through mail, the notice and the owner’s copy of the tax declaration must be registered with return card.
Duplicate signed notices and return cards must be filed in the office of the Provincial/City/Municipal Assessor to document timely appeals.
Notices and owner’s copies must be delivered or mailed within thirty (30) days from entry of tax declarations covering the assessments in the record of assessments.
Real property assessment notices and owner’s copies sent through the mails must be exempt from the payment of postal charges or fees.
The Form of Notice of Assessment of Real Property, RPA Form No. 2 (marked as Annex “H”) must be used, and it may be mimeographed for assessor use.

Actual use rule and land/building assessment classifications

Real property must be classified, valued, and assessed based on actual use, regardless of location, ownership, or who uses it.
Actual use means the principal or predominant purpose for which the property is utilized by the person in possession.
Assessment is the act/process of determining value subject to tax, including discovery, listing, and appraisal of properties.
Land classifications and valuation rules must follow these standards:
- Lands actually and principally used for residential, agricultural, commercial, industrial, or mineral purposes must be classified and valued under the schedule of unit base market values and assessed at levels fixed by ordinance.
- In mixed land use areas, the predominant use governs: if predominantly residential, lands are classified as residential; if predominantly commercial or industrial, lands are classified accordingly.
- For commercial or industrial lots occupied by buildings used both for residential and commercial/industrial purposes, assessment depends on the predominant use of the building.
- Vacant lands must be classified, valued, and assessed like similar lands in the locality.
- Agricultural land convertible into urban subdivision must remain classified and valued as agricultural until converted and developed; once portions are finally divided, converted, and developed into lots, those portions must be valued and assessed like similar lots.
- Roads or streets in urban subdivisions (unless donated/turned over to barangay, municipality, or city) must be listed in the subdivision owner’s name and valued based on cementing, asphalting, or paving with gravel and sand per square meter, and assessed at a rate not exceeding the assessment level applicable to lands in subdivisions.
Special lands must be valued using these rules:
- Cultural or scientific lands used exclusively in residential/commercial/industrial areas must be classified and valued as residential/commercial/industrial under base market values.
- Lands owned by local water districts and government-owned or controlled corporations rendering essential public services in water and/or electric power supply/distribution/generation/transmission must be assessed at ten percent (10%) of market values while located in residential/commercial/industrial areas.
- If special classes are in mixed land use areas, the predominant use governs classification and valuation, with corresponding assessment levels.
Lands used exclusively for religious, charitable, or educational purposes must be classified and valued as residential/commercial/industrial, with the predominant-use rule applying in mixed land use areas.
Lands owned by the Republic of the Philippines or any political subdivisions must be classified, valued, and assessed like similar lands in the locality.

Buildings, assessment levels, and schedules

Buildings and improvements must be assessed under these classification/valuation rules:
- Residential buildings used exclusively for residential purposes must be valued using the schedule of base unit construction cost and assessed at ordinance-fixed assessment levels.
- Buildings used for both residential and commercial/industrial purposes must be assessed based on the predominant use.
- Hospitals, cultural or scientific buildings used exclusively must be assessed at 15% of depreciated market values, using the schedule of base unit construction cost.
- Local water districts and government corporations supplying water or electric power must be assessed at 10% of depreciated value.
- Churches, parsonages, convents, mosques, and religious/charitable/educational-purpose buildings must be valued using schedule of base unit construction cost (if applicable), otherwise using replacement cost as of the year of appraisal, and assessed as residential on the basis of depreciated values.
- Buildings/improvements owned by the Republic or political subdivisions are assessed like similar buildings/improvements in the locality; if a kind is not covered by the schedule of base unit construction cost, fair market value at time of appraisal governs for valuation, assessed like similar buildings/improvements.
Assessment level is the percentage applied to fair market value to determine taxable or assessed value.
Statutory assessment levels must be applied to fair market values derived from the schedule of base market values or base unit construction cost to compute taxable or assessed values.
Assessment levels must be fixed by ordinances of the Sangguniang Panlalawigan, Sangguniang Panlungsod, or Sangguniang Bayan for municipalities within Metropolitan Manila Area, but must not exceed the following:
- On lands: Residential 20%; Agricultural 40%; Commercial 50%; Industrial 50%; Mineral 50%; Timberland 20%.
- On buildings and other structures (assessment levels depend on fair market value brackets):
  - Residential: 0% (over to not over P175,000); 10% (P300,000 bracket); 20% (P500,000 bracket); 25% (P750,000 bracket); 30% (P1,000,000 bracket); 35% (P2,000,000 bracket); 40% (P5,000,000 bracket); 50% (P10,000,000 to P100,000,000 bracket).
  - Agricultural buildings: 25% (up to P300,000); 30% (P500,000); 35% (P750,000); 40% (P1,000,000); 45% (P2,000,000); 50% (over P2,000,000).
  - Commercial/Industrial buildings: 30% (up to P300,00); 35% (P500,000); 40% (P750,000); 50% (P1,000,000); 60% (P2,000,000); 70% (P5,000,000); 75% (P10,000,000); 80% (over P10,000,000).
  - Timberland buildings: 45% (up to P300,00); 50% (P500,000); 55% (P750,000); 60% (P1,000,000); 65% (over P1,000,000 up to P2,000,00); 70% (over P2,000,00).
- On machineries: Agricultural 40%; Residential 50%; Commercial 80%; Industrial 80%.
- Special classes (all lands, buildings, machineries and other improvements) based on actual use:
  - Cultural 15%; Scientific 15%; Hospital 15%; Local Water District 10%; Government-owned or controlled corporation engaged in supply/distribution of water and/or generation/transmission of electric power: 10%.
Assessment level increases/decreases are allowed only by ordinance and must not be made effective between general revision periods.
Assessment levels above the listed limits are applied initially during the first general revision under Section 219; assessment levels used in the 1981-84 general revision that took effect on July 1987 must be maintained until after the first general revision under Section 219 takes effect.

Schedule of market values and valuation approaches

Before any general revision, each municipality or city must have a schedule of market values for different classes of real property in its territory in prescribed form and detail.
The schedule of market values and an abstract of data must be submitted to the Sanggunian for ordinance enactment not later than October 31 preceding the period for the general revision in the assessment calendar.
The Sanggunian has ninety (90) days from date of receipt to review the schedule for conformity with the Regulations.
The schedule of market values must reflect fair market values of real properties irrespective of actual use.
Three approaches to estimate value must be recognized for building the schedule:
- Sales Analysis Approach (Market Data Approach), using valid sales data.
- Income Capitalization Approach, using income net of operating expenses and fixed charges capitalized at a rate investors can expect as reasonable return/interest prevailing locally.
- Replacement or Reproduction Cost Approach, using reproduction/replacement cost of improvements and deducting depreciation to arrive at depreciated cost.
Sales analysis must use transactions near the general assessment date; it must exclude quitclaims, transfers between relatives, inter-related corporations, and similar non-normal conveyances.
Where valid sales data is unavailable, price indices compiled by the National Statistics Office and the Economic Research Division of the Central Bank of the Philippines may be used as primary basis for fair market value computation in the schedule.
Under the reproduction cost approach, unit base construction cost must be developed on a per square meter or per cubic meter basis for typical buildings, multiplied by the structure’s ground area or volume, then adjusted for depreciation.

Urban and agricultural market-value coverage methods

The schedule of market values for urban lands (principally residential, commercial, industrial) must cover the full extent of areas in the city or municipality as much as possible.
The schedule must be in the form shown in Annex “A”.
Residential, commercial, and industrial urban lands may be sub-classified into first, second, third, or more classes based on value factors and guided by Annex “E”, with the number of sub-classes left to assessors’ discretion, depending on local conditions.
Lots in barangay areas separate from contiguous urban areas must not be sub-classified under urban criteria and must use a separate barangay street unit land value schedule, supported by sales value and declared value opinions, with a separate urban unit value map prepared for every barangay.
Highly or fully developed residential subdivisions may have a separate schedule based on exclusive sales analysis; those lots may not be sub-classified under the general criteria.
Unit base values must incorporate modifications for parcel variations such as depth, corner, alley, irregular shape, and topography to the extent reflected in the local market.
Standard lot depth must be adopted based on careful study of prevailing lot depths (e.g., 20 meters as a representative example for residential), and commercial standard depth must be similarly established.

Corner influence, mapping, and unit-value computations

Lot values from sales transactions must be translated into value per square meter attributed to the frontage strip within standard depth using an effective area method when lot shapes are non-rectangular.
For urban sales analysis, corner and interior lot treatment must follow corner influence principles:
- corner lots must be assigned a percentage value over one-street frontage lots; corner influence percentage must be determined using at least two sub-classes of residential land, and then adopted for residential lands in the schedule.
- corner influence applies for residential and commercial lands, while corner influence is not considered on industrial lands.
Unit land value map preparation must include an outline map covering continuous urban areas, drawn to scale, showing road systems, waterways, railroad lines, principal landmarks, and other features; it must leave space for recording unit values.
Unit base market values for each sub-class must be established and reflected in the schedule of market values.
Only certain sales must be included in segregated sales records for urban unit value formation: sales for establishing unit market values must involve non-corner lots located along streets/roads with more or less common elevation, and corner and interior lots must be excluded from the sales analysis.
Unit base market values must be computed as the average of the Average and Median of the relevant unit sales involved:
- Average = sum of unit sales values divided by number of sales.
- Median = middlemost sales value among unit sales arranged numerically.
Unit base market values may also be computed by income capitalization approach using net land income attributable to land divided by an appropriate capitalization rate, producing capitalized value and converting to per square meter.

Agricultural schedules: classification, productivity, and adjustments

The schedule of market values for agricultural lands must cover predominantly rural agricultural lands beyond potential urban limits and generally at a great distance from the poblacion.
Agricultural land classification must be based on the principal crop used (e.g., rice land, corn land, coconut land), then sub-classified into first, second, third, or more classes based on productivity.
Productivity classification must be based on annual yield per hectare and information obtained from the Department of Agriculture.
The assessor must determine productivity classification using applicable unit measures (e.g., cavans of palay, picul for sugar, kilos for fishponds); for fruit-bearing trees, number of fruits serves as the basis of measure.
Ranges of annual yield per class must be set so they remain reasonable.
The schedule of unit base market values for agricultural lands must be established as much as possible by the sales analysis approach; if market data is lacking, the income capitalization approach may be used.
In sales analysis for agricultural lands, unit sale values for one class of crop must be entered separately in a prescribed form and adjusted with location factors using Annex materials for location adjustment.

Buildings: structural classification and adjustment factors

Buildings must generally be classified according to structural designs intended (residential, commercial, industrial, or farm house) regardless of actual use.
Building classification systems must include:
- Residential buildings: one-family dwelling, two-family dwelling, multi-family dwelling.
- Commercial buildings: store, office, bank, theater, hotel, motel, service station, public garage, etc.
- Industrial buildings: factory, sawmill, warehouses, etc.
- Farm houses: barn, poultry, stable, hog house, green houses, etc.
For schedules of base unit construction cost, each building type must be grouped further by kind and quality of materials used in construction, producing building types such as Type I-A to B, Type II-A to D, Type III-A to D, and Type IV.
Standard base specifications must be prepared defining and describing each building type in the prescribed schedule format.
Addition and deduction factors must be prepared to compensate for non-replica differences from the standard base unit construction cost; these factors apply as percentages of base unit construction cost for common deviations.
The Regulations provide examples of addition factor treatments such as carport (30% of base unit value), mezzanine (60%), porch (40%), and balcony (45%), and other specified percentage or unit-price treatments for typical extra items.