Delayed rollout looming for property valuation reform

By Juliana Chloe A. Gonzales, Reporter

UNRELIABLE property market data and stalled local government automation efforts have prompted financial regulators to support extending the compliance timelines for the Real Property Valuation and Reform Act (RPVARA), according to the findings of a Congressional hearing.

At a Nov. 10 hearing convened by the House Committee on Government Reorganization, the Department of Finance (DoF) and Bureau of Local Government Finance (BLGF) cited the need for extended transition periods to ensure the technical integrity of market valuations and shield property owners from unvalidated tax adjustments.

“At the Department of Finance, we acknowledge and appreciate the positions and recommendations that were presented to us from the public sector as well as from the representatives of the private sector,” Undersecretary Krystal Lyn T. Uy said.

“We support the proposed extension of the implementation timelines under the RPVARA. We recognize that RPVARA is an important reform. At the same time, the success of any reform must be measured not merely by the timeliness of its implementation but by the quality and sustainability of its outcome,” Ms. Uy added.

All 233 local government units (LGUs) have submitted their proposed Schedules of Market Values (SMVs), though none has been approved to date.

Ms. Uy said a review turned up incomplete land value maps, unverifiable sales data, and reliance on secondary sources such as sworn statements and opinion values rather than actual transaction records. Evaluators also identified income computation errors in agricultural land valuation, missing capitalization rates, and outdated sales transactions that extended far beyond the prescribed three-year valuation window.

Valuation testing failed to meet statutory standards, with errors exceeding the 10% allowable margin of error and coefficients of dispersion surpassing the 20% standard threshold.

“The proposed deferment is, therefore, not a retreat from the reforms sought by RPVARA, but a tactical move towards ensuring that the reform achieves its intended objectives,” Ms. Uy stressed, adding that the DoF and  will continue working directly with local governments to refine data accuracy and institute taxpayer safeguards.

BLGF Executive Director Wryan Martin C. Te warned legislators that prematurely enforcing unvalidated SMVs poses substantial risks for property owners, businesses, and local governments alike.

Section 18 of Republic Act No. 12001 makes certified SMVs the mandatory valuation baseline not only for local real property taxes, but also for national property-related assessments, including capital gains tax, documentary stamp tax, estate tax, donor’s tax, and local transfer tax.

“Furthermore, considering the prevailing economic conditions, elevated inflation, and the impact of recent calamities, a time-bound extension will provide a more gradual and manageable transition for property owners, taxpayers, and businesses,” Mr. Te said.

He added that a carefully calibrated implementation timeline will help mitigate the risk of abrupt increases in property related tax liabilities while allowing stakeholders time to prepare.

The legislators were also briefed on the slow progress of LGU digital transformation.

Neil A. Lamban, BLGF Local Assessment Operations Divisions chief, estimated the LGU digitalization rate at around 50%.

The BLGF is currently testing prototype software for the Real Property Information System and Computer-Aided Mass Appraisal in 22 pilot LGUs in a program supported by the Asian Development Bank (ADB). 

“In the automation of the assessment operation, given the right manpower, (technology) skills in the LGU plus the equipment provided by the LGU or any National Government agency… I think it would take the suggested two years, more or less, for the full implementation of digitalization because every LGU’s capacity is unique.”

Philippine Tax Academy Chancellor Ma. Pamela P. Quizon advised the transition period to match the duration of comprehensive multi-agency training.

“Whatever transition period Congress ultimately adopts, PTA submits that it must not become our waiting time. Let us use this for our active readiness,” Ms. Quizon said, adding that training efforts must extend beyond assessors and treasurers to include private appraisers, real estate developers, banking institutions, and assessment appeals boards.