Patricia A. O. Bunye | Jennifer Marie G. Castro | Samantha Joie G. Tamayo
Republic Act No. 12001, otherwise known as the Real Property Valuation and Assessment Reform Act (“RPVARA”), was signed into law on 13 June 2024. The RPVARA was enacted to promote the sustainable development and maintenance of a just, equitable, impartial, and nationally consistent real property valuation based on international valuation standards, concepts, principles, and practices.
The salient features of the RPVARA include the following:
Grant of Tax Amnesty
Section 30 of the RPVARA provides for real property tax amnesty, which shall cover penalties, surcharges, and interest from all unpaid real property taxes, including Special Education Fund, idle land tax, and other special levy taxes prior to the effectivity of the Act. The tax amnesty can be availed of within a period of two (2) years from the effectivity of the RPVARA.
The tax amnesty, however, shall not extend to the following:
- Delinquent real properties which have been disposed of at public auction to satisfy the real property tax delinquencies;
- Real properties with tax delinquencies which are being paid pursuant to a compromise agreement; and
- Real properties subject of pending cases in court for real property tax delinquencies.
Adoption of a Schedule of Market Values
Section 13 of the RPVARA provides that the Bureau of Local Government Finance (“BLGF”) shall develop, adopt, maintain and implement uniform valuation standards which shall be used by all appraisers and assessors in the local government units (“LGUs”) and other concerned parties or agencies that conduct valuation in the appraisal or valuation of lands, buildings, machinery, and other real properties for taxation and other purposes.
For valuation purposes, all real properties, whether taxable or exempt, shall be valued or appraised based on prevailing market values in the locality where the property is situated, in conformity with the standards adopted pursuant to the RPVARA.
The approved Schedule of Market Values (“SMV”) shall be used for the following purposes:
(a) For taxation purposes:
(1) As basis for the general revision of the assessment and property classification by the local assessor, and in the adjustment of assessment level and tax rates of LGUs by the Sanggunian;
(2) As basis in determining the market value for other property-related taxes such as local transfer tax, sand and gravel tax, community tax, and other fees and charges; and
(3) The Commissioner of Internal Revenue shall use the SMV or the actual gross selling price in consideration, as stated in real property transaction documents, whichever is higher, in computing any internal revenue tax.
(b) As basis for real property appraisals and other related purposes of all government agencies, instrumentalities, and government-owned or -controlled corporations.
Development of a Real Property Information System
Section 22 of the RPVARA provides that the BLGF shall maintain an up-to-date electronic database of the sale, exchange, lease, mortgage, donation, transfer, and all other real property transactions and declarations in the country and on the cost of construction or renovation of buildings and other structures, and on prices of plant, machinery, and equipment.
For this purpose, the offices of the Register of Deeds, Bureau of Internal Revenue, notaries public, officials issuing building permits, and geodetic engineers conducting surveys within a locality shall be required to electronically submit relevant transactions data quarterly.
All provinces, cities and municipalities shall automate their real property tax administration operations. The BLGF, together with the Department of Information and Communications Technology, shall ensure the full automation of all LGUs of their real property systems within two (2) years from the effectivity of the Act.
Impact on Stakeholders
With the introduction of the RPVARA, property owners and other persons dealing in real property can benefit from availing of the two (2) year tax amnesty, which may enable delinquent taxpayers to settle tax liabilities and facilitate future compliance.
The adoption of the SMV and automation of real property tax systems may also lead to enhanced bureaucratic efficiency in real property transactions with the government.
Finally, subject to the guidelines of the BLGF, the RPVARA will allow the private sector access to the RPIS, which may provide greater transparency and insight into the real estate market.