MANILA — The Senate Committee on Ways and Means and Committees on Local Government and Finance began on Thursday the deliberations on bills seeking to reform the country’s real property valuation and assessment system.

Under the proposed measures, the Department of Finance’s Bureau of Local Government and Finance shall “develop, adopt, and maintain valuation standards consistent with internationally accepted valuation standards, regulations and specifications of real property appraisal used for taxation and other purposes.”

It further states that the schedule of market values should comply with all the requirements set by the Finance Secretary, and shall be approved “in accordance with internationally accepted valuation standards.”

The BLGF said 70% of local government units (LGUs) in the country have outdated property valuations, and that they stand to gain a total of nearly P38 billion should the measure be passed into law. It added, 111 cities and 48 provinces are non-compliant with the requirement to revalue properties once every three years.

“The requirement of the (Local Government Code) to regularly conduct general revision of the schedule of market values and property assessment every three years has been hardly realized and fully implemented by the LGUs. In the data of the Bangko Sentral ng Pilipinas, the residential real estate prices rose to 4.9% in 2020, however, the government is not capturing its fair share on the side of taxation, because of severely outdated values,” BLGF Acting Deputy Executive Director Ricardo Bobis Jr. said.

“The BLGF strongly supports the proposal and is committed to lead the reform. It is high time that we pass the proposed valuation reform act this 19th Congress to make property valuation efficient, equitable, transparent and reliable. Further delay in the passage of this reform would hamper the government in address the delays in various infrastructure programs due to the issues on right of way acquisition. It will positively impact land administration,” he added.

The DOF noted that the measures will help speed up the acquisition of the right of way for government projects.

“The reform is also an important step towards the faster resolution of often tedious right of way proceedings. This could expedite the completion of infrastructure projects and help accelerate economic recovery,” Finance Undersecretary Dakila Napao said.

Should local government units want to prevent a spike in real property taxes, the BLGF stressed that there is a mechanism to cushion the bills’ impact.

"Doon kami hihingi ng tulong sa local chief executives…. From the local administration, if they would want, reduce the (assessment) levels or the rates of taxes, while the values are being increased by this bill. We meet halfway,” Bobis explained.

“Ang laki ng impact, kahit babaan namin ang tax rate or assessment level, mararamdaman. Lalo na kung first time natin magre-revise,” Valenzuela City Assessor’s Office Head Atty. Cecilynne Andrade commented.

Sen. Aquilino Koko Pimentel III expressed some reservations, noting the bills may weaken local governments’ autonomy.

“In effect, for this to work, you have to weaken the local government code by repealing some sections, all because the DOF wants to have a hand in the process where the taxes collected in the end are for the exclusive use of the local government units anyway. Pag-isipan natin mabuti. We are really putting into extreme stress test some concepts involving local autonomy,” he said.

Committee Chairperson Sen. Sherwin Gatchalian also questioned whether the bills do not trample on the constitutionally granted local autonomy to LGUs.

Article 10 Section 5 of the 1987 Constitution states that each local government unit shall have the power to create its own sources of revenues and to levy taxes, fees, and charges subject to such guidelines and limitations as Congress may provide, consistent with the basic policy of local autonomy.

“Aren’t we trampling on the power of local government units to enact ordinances based on the local nuances, at the same time also trampling on the constitutional requirement of fulfilling the basic policy of local autonomy?” Gatchalian asked.

“We believe that is not the case, because still, the local assessor is the one determining and proposing the schedule of market values… We are only there to review the proposal,” Bobis replied.

“We’re taking out a power from the local government through the Sanggunian, to enact ordinances on fair market values. And we’re giving it to the DOF secretary… Aren’t we marginalizing the local residence by stripping them off of that power? Wala na silang say ngayon. The local sanggunians will have no say on what value should be attributable to a certain location or property. Wala na silang power,” Gatchalian asserted.

The committee will schedule another hearing on the bills.

“Personally, I will make sure that real estate taxes will not go up. That’s my direction. If that will happen, then I will not endorse the bill. Because the whole point of this measure is to remove the different assessments being conducted by different government agencies. Marami kasi yan eh. There’s no harmony. The BIR has a different market value, the local government. So, the intention is to remove all of that. But I don’t subscribe to increasing the taxes or the tax due of our taxpayers. Because that’s not the goal of this bill,” Gatchalian told ABS-CBN News.

“You will leave the power to increase or to decrease to the local governments. So if you wanna increase, so be it… But that’s up to the local government,” he added.

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