Property Valuation & Tax Reform

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PACKAGE 3

Property Valuation & Tax Reform

REVIEW OF SB 44 & HB 68

& PROPOSED ENHANCEMENTS

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Minor 1. Title of the Bill Adopt SB No. 44 and HB No. 68 Minor 2. Declaration of State Policy and Objectives (adoption of

the international valuation standards for purposes of property valuation process, single valuation base for the assessment of real property related taxes and for valuing or appraising real property for various transactions by all government agencies, support for development and professionalization of the

valuation and appraisal practice, development of an information database, among others)

Adopt SB No. 44 and HB No. 68

Minor 3. Definition of Terms (1) Enhance SB No. 44 and HB No.

68, to add definitions of

“assessment”, “international valuation standards”, and “real property.”

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Major 4. Roles of the BLGF and Establishment of the Real Property Valuation Service (set the organization responsibilities for standards setting, review of SMVs, endorsement to the SOF of the updated SMV, provide training and technical support to LGUs, etc.)

(2) Enhance SB No. 44 and HB No.

68; to provide the specific roles and responsibilities of the BLGF;

add a provision for BLGF Regional Office counterparts

Minor 5. Responsibilities of the BLGF ED (lead and manage the implementation of the provisions of this Act, and provide

leadership in ensuring rationalized valuation of real properties transcending political boundaries)

Minor 6. Creation of Consultative Committee (the committee is envisioned to be composed of highly technical people on property valuations to be able to effectively perform its function)

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Minor 7. Functions of the Central Consultative Committee

(consultative forum on matters pertaining to the setting, adoption and maintenance of the valuation standards and other related concerns on real property valuation)

Major 8. Role of the BLGF Regional Offices (responsible for all

matters relating to valuation and appraisal and the SMVs in the region)

Minor 9. The Regional Consultative Committee (chaired by BLGF Regional Director and composed of a representative from the BIR, DENR, regional organization of government assessors, regional organization of national government appraisers, private appraisal sector within the region, and bankers association within the region to perform valuation and appraisal-related functions)

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Minor 10. Functions of Regional Consultative Committee

(discussion on developments in the local real property market, concerns of taxpayers, civil society, and other stakeholders, outcome of compliance reporting in the region, level of complaints and appeals)

Major 11. Development of Valuation Standards (develop, adopt, maintain and implement a uniform and generally accepted international valuation standards which shall be used by all appraisers and assessors in the LGUs and other concerned parties)

Minor 12. Valuation and Appraisal of Real Property (provide the SOF the authority to promulgate the rules and regulations for the valuation and appraisal of real property)

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Minor 13. Regional Technical Committee on Real Property Valuation (RTCRPV)

(3) Remove this level to streamline SMV review

Major 14. Preparation of Schedule of Market Values (the local assessors shall prepare the SMV for different classes of real property within their respective LGUs and for review of the BLGF and BIR)

(4) Proposed SMV shall be submitted to the BLGF Regional Office, jointly with BIR Regional Office, for review

and compliance with other requirements.

Add a new Section on the approval and publication of the SMV by the

Secretary of Finance

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Major 15. Setting Assessment Levels and Tax Rates (the concerned assessor shall confer and submit to the local chief executive the approved SMV and the tax impact report of the new SMV as against the existing assessment levels and tax rates and shall be transmitted to concerned sanggunian for enactment of an ordinance setting the appropriate assessment levels and tax rate)

Adopt SB No. 44 and HB No. 68 (Usec. Agabin: include limitation of assessment levels on power plants in

relation to EO on IPPs)

Major 16. Publication Requirement for LGUs: Assessment Levels and Tax Rates (publication of the approved ordinance for the assessment levels and tax rates in a newspaper of local

circulation once a week for two (2) consecutive week; or

posting same in the provincial capitol, including all concerned municipal halls, and city halls and in two (2) other conspicuous public places therein if there are no newspapers of local circulation)

(5) Publication of ordinance setting the assessment levels and tax rates

(SMV not included) shall be performed by the LGUs

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Major 17. Use of Schedule of Market Values (approved SMV shall be used as basis for the determination of real property-related taxes of national and local

governments)

(6) Delineate the different uses of the SMV and modified the previous ‘sunset’ clause.

Add requirements on the regular updating and cleansing of data for RPT purposes.

Sunset Clause: It will bar the LGU from receiving any grants from the national government until such time

that they update their SMV and conduct general revision of real property assessments.

(SCGD: include loans or any form of credit financing from NG)

Major 18. Revision of Schedule of Market Values (time frames for the updating of SMVs and conduct of general revision of property assessments. If there are revision/s caused by significant change in the market prior the next revision, the proposed revision shall be subject to reviews of BLGF RO, in coordination with the BIR, and submit to BLGF Central Office.

SCGD: NG to collect half of the increase in the valuation (in relation to TIF)

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Major 19. Training/Conduct of Capacity Building Interventions (BLGF to develop and conduct the necessary training for all local assessors and other local officials/staff related on the preparation of the SMV conduct of SMV impact studies, and other subject areas)

68; with additional training provision for the Philippine Tax Academy (Note: This has been mentioned by

SCGD for inclusion in the capacity building interventions)

Major 20. Development of Real Property Database (establish comprehensive database to support valuation function, which shall be developed and maintained through the BLGF. The BLGF is also given the authority to require mandatory

submission of necessary documents from the concerned officials or employees of national government offices or

instrumentalities, LGUs and the private sector. Hence, BLGF is not limited to the data provided by the local assessors in order to establish its electronic database)

68; add a provision to establish the real property market database and

to mandate local governments to automate their operations, adopt tax

mapping technology, maintain software-enabled valuation system,

undertake regular data cleansing and computerize records

management system.

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Major 21. Duty of Register of Deeds to Supply Assessors with

Property Transactions Data (the Register of Deeds shall prepare and submit local assessors 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)

(9) Enhance SB No. 44 and HB No. 68; add provision to make the info sharing free-of-charge Add a new section for the duty

of the Registrar of Deeds and Notaries Public to assist the provincial, city, or municipal assessor by furnishing, free-of-

charge, copies of all contracts selling, transferring, or otherwise

conveying, leasing, or mortgaging real property received by, or acknowledged

before them.

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Minor 22. Duty of Official Issuing Building Permits or Certificates of Registration of Machinery to Transmit Copy of the Assessor (public official or employee issuing to any person a permit for the construction, addition, repair or renovation of a building, or

permanent improvement on land, or a certificate of registration for any machinery, among others shall transmit a copy of such permit or certification within thirty (30) days of its issuance to the assessor of the province, city or municipality where the property is situated)

Adopt SB No. 44 and HB No.

68

Minor 23. Duty of Geodetic Engineers to Furnish Copy of Plans to

Assessor (all geodetic engineers, public or private, to furnish free of charge, the assessor of the LGU where the land is located, a copy of the blue or white print of each of all approved original subdivision plans or maps of surveys executed by them every end of the month from receipt of such approved plans from the LMB, the LRA or

HLURB, as the case may be)

Adopt SB No. 44 and HB No.

68

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Minor 24. Duty of Assessors to Transmit Documents to BLGF (Registrar of Deeds and notaries public to furnish, free of charge, the local assessor with copies of all contracts selling, transferring, or otherwise conveying, leasing, or mortgaging real property received by, or acknowledged before them)

Major 25. Appointment of Assessors (the local chief executive shall appoint the local assessor in accordance with civil service law, rules and regulations, and must be chosen from the list of at least three (3) ranking eligible candidates within the region.

The assessors shall be under the technical supervision of the BLGF, primarily through a system of compliance reporting and of capacity-building programs through education and training)

(10) SOF shall no longer endorse suitable and qualified persons for

appointment of local assessors in view of licensure requirements for appointment under the RESA Law (RA

No. 9646)

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Major 26. Qualification of Local Government Assessors

(qualification of the local government assessors in accordance with Republic Act No. 9646 (RESA Law)

Major 27. Failure to Comply with the Required Submission of Documents (failure to provide or furnish data or information required without justifiable reason shall be punished by a fine equivalent to the official’s or employee’s six (6) months basic salary or suspension from the service for a period not

exceeding one (1) year, or both, at the discretion of the competent authority)

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Major 28. Failure to Comply with Valuation Standards (assessor who, for unjustifiable reasons, fails to comply with the

valuation standards developed and adopted or deliberately conceals any deviations or departures from such standards in the valuation and appraisal of real property, shall be

punished by a fine equivalent to the official’s or employee’s six (6) months basic salary or suspension from the service for a period not exceeding one (1) year, or both, at the discretion of the competent authority)

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Major 29. Failure to Prepare Schedule of Market Values (An assessor who, for unjustifiable reasons, intentionally or

deliberately refuses or fails to prepare the SMVs within the period set forth in this Act shall be meted a fine equivalent to the official’s or employee’s basic salary for a period of one (1) month to six (6) months, or by suspension from the service for not more than one (1) year, or both, at the discretion of the competent authority. This shall also be a ground for

administrative and criminal liability in accordance with the provisions of RA No. 9646)

68; to add a Section to strengthen penal sanctions to address delays in

the review and implementation of SMV, and for improper use thereof

(SCGD: Remove “intentionally and deliberately” on the proposed Section

since the intention of delay is hard to prove)

Major 30. Violations of Other Provisions Adopt SB No. 44 and HB No. 68

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Major 31. Taxpayers’ Remedies in Case of Erroneous

Assessments of Real Properties (The provisions of Sections 226 (LBAA) and 229 (Action by LBAA) of the LGC shall apply in all cases of appeal as remedies for the taxpayers in the assessment of their properties.)

68; to add a provision on mandatory constitution of LBAAs to ensure availability of redress mechanisms

Minor 32. Transitory Guideline (LGUs which are in the process of updating their SMVs shall continue with such revisions in

accordance to this Act, provided that proper notification and coordination with the BLGF shall be undertaken. In case the SMV is not yet available or updated, the BIR Commissioner shall adopt the existing SMV, zonal values or the actual price in consideration as stated in real property transaction

documents, whichever is higher, for purposes of computing any internal revenue tax)

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Minor 33. Saving Clause (the zonal values, as determined by the BIR and approved by the Secretary of Finance for internal revenue tax purposes, and the SMVs prepared by the provincial

assessors, together with the municipal assessors and the city assessors, including the municipal assessor in Metro Manila, that have been approved by their respective Sanggunians for real property taxation purposes shall continue to be in force and effect until repealed, superseded, modified, revised, set aside or replaced by the values provided under the new SMVs as approved)

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Major 34. Budgetary Requirements for the Revision of Schedule of Market Values (each local sanggunian shall appropriate the necessary funds from locally generated revenues, the IRA or such other sources every fiscal year. The accumulated amount so

appropriated shall be known as the Real Property Tax

Administration Fund (RPTAF) which shall be used for the proper implementation of the regular revision of the SMVs and general revision of real property assessments, and the administration of real property taxes in all LGUs)

(13) Enhance SB No. 44 and HB No. 68; with additional provision

on the budget requirements that BLGF shall monitor and annually furnish the DBM with a list of LGUs whose SMVs are due for updating.

The DBM, in their review of the ensuing year budget of provinces,

highly urbanized cities,

independent component cities and municipalities within the

Metropolitan Manila Area, shall ensure that sufficient funds have been budgeted to comply with the

requirements of this Act.

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Minor 35. Appropriations (Included in the annual GAA) Adopt SB No. 44 and HB No. 68 Minor 36. Implementing Rules and Regulations (IRR) (the DOF, in

consultation with concerned parties, shall issue the IRR for the effective implementation of this Act within six (6) months)

Minor 37. Suppletory Application of Existing Laws (provisions of LGC and other laws consistent with this Act shall have

suppletory effect)

Major 38. Repealing Clause (14) Revise/update accordingly; to

include express repeal of PD 538 (PHIVIDEC) to be consistent with

public policy on property tax collection and accrual to LGUs

(SCGD: repeal functions of PHIVIDEC and other agencies that collect RPT) NOTE: Additional minor styling, proofreading and formatting made.

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Property Valuation & Tax Reform

PACKAGE 3