Property and Land Law
The law in terms of Property and Law has been constantly evolving. One of the most valuable assets a person can own is real property, and improvements have been driven by social factors such as economic growth, social justice concerns, and environmental sustainability. Given that, the Philippines has implemented various reforms aimed at improving property rights and efficient property transactions. One of these improvements is the establishment of the Republic Act No. 12001, otherwise known as the Real Property Valuation and Assessment Reform Act (RPVARA).
The RPVARA was enacted on June 20, 2024. According to Sec. 2 of the Act, the state’s policy is to promote sustainable development and maintain a just, equitable, impartial, and nationally consistent real property valuation based on international valuation standards, concepts, principles, and practices. The reform will broaden the tax base for local and national property and property-related taxes. The Act adopted the Schedule of Market Values (SMVs) as the single real property valuation base for the assessment of real property-related taxes in the country.
The RA No. 12001 has three (3) important components, which are as follows:
- Reorganization of the Bureau of Local Government Finance (BLGF)
- Valuation and Assessment of Real Properties
- Tax Amnesty on real property taxes and special levies on real property
As stated in Sec. 5 of Article II of the said act, the BLGF shall be the primary agency to lead the implementation of the provisions of this Act. Under this law, the Bureau of Local Government Finance (BLGF) is specifically tasked to develop, maintain, and adopt the latest national standards designed and used in the Philippines based upon the International Valuation Standards. According to Sec. 9 of Article II of the same act, the Creation of a Central Consultative Committee shall serve as the forum on matters pertaining to the settling and adoption of international valuation and other related concerns on real property valuation.
The establishment of a Single Valuation Base, as outlined in RPVARA, seeks to reform the methods used to determine real property values. This current system confuses the terms of determining the tax base of a property. With that, the RPVARA mandates the Bureau of Local Government Finance (BLGF) to implement the Philippine Valuation Standards (PVS), this is to govern the valuation of real property in the country.
As stated in Sec. 13 of Article III of the Act, “The Bureau of Local Government Finance (BLGF) shall revise the Philippine Valuation Standards (PVS) every three (3) years or as often as may be necessary to ensure that the same is aligned with globally accepted principles and definitions in real property valuation with due consideration of the prevailing economic conditions.”
In addition, the Philippine Valuation Standards (PVS) should be the basis of the assessors for the Schedule of Market Values (SMVs). It is explained in the Act that the SMVs shall be within twelve (12) months from the BLGF notice, with two (2) mandatory public consultations within sixty (60) days before the submission. With that, the proposed SMVs must be published two (2) weeks before the mandatory public consultations. The use of SMVs is for the determination of real-property-related taxes. The basis for the computation of internal revenue taxes, such as the Income Tax/Capital gains tax, for real property transactions.
Prior to the effectivity of the RPVARA, Tax Amnesty is also stated in the provisions of this Act. This includes a two-year (2) amnesty for unpaid real property tax penalties, surcharges, and interest accrued on all outstanding balances.
Therefore, the RPVARA aimed to develop property valuation and taxation in the Philippines. Its successful implementation could lead to a more equitable and efficient real estate market, benefiting all stakeholders involved.
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Author/s: Leilah Capua | Corporate Department