Frequently Asked Questions

What other property tax reforms can be considered to support the Valuation Reform Act? Subject to further study and consultation, the following may be considered to supplement land valuation reform:
  1. A national betterment levy with the establishment of an infrastructure fund: Imposition of a national betterment levy to capture increased values of properties benefited by NG projects, such as the Build, Build, Build Program of the Government. The unearned value (increases in land value which otherwise profit private landowners cost-free) may be captured directly by converting them into government revenue.
  2. Adjustment of the zero-rate assessment level: Adjust the zero (0 percent) assessment level on building and other structures based on inflation rates and current prices.
  3. Encourage ROW acquisition: Pass a land trust law that allows private landowners on which infrastructure is built to continue owning their property in exchange for an annual income stream equivalent to rent for the landowner.
  4. Improve enforcement of Idle Land Tax: Regulate land banking and speculation, encourage development, and promote responsible property ownership and management.
What are the possible impact of this valuation reform on the Socialized Housing (SH) Program and Comprehensive Agrarian Reform Program (CARP)?

For Socialized Housing Program, the possible increase in the valuation will help the local government units in acquiring more funds for socialized housing projects. In effect, more housing projects will be provided to the beneficiaries and in result better welfare to its constituents. On the other hand, the possible increase in valuation may mean that the beneficiary of the socialized housing may need to pay or have a higher real property tax since the valuation of their property may exceed the threshold, however, the LGU may calibrate its assessment levels and tax rate to lessen the impact or possibly offset the increase in valuation.

For CARP, the impact is very minimal in the land value for the CARP covered properties. (It should be noted that the land valuation for CARP properties is included in the departure of Philippine Valuation Standards). The increase in the SMV has a little impact since only 10% of SMV is being contributed in the computation (i.e. Land Value = Capitalized Net Income x 0.6 + Comparable Sales x 0.3 + SMV x 0.10). Moreover, the increase in the land value will benefit the landowners since the value of their properties will be higher, especially during the just compensation which will paid by the government.

What are the government agencies doing or requiring property valuations that could benefit from the Valuation Reform Act?

At present, there are various agencies doing or requiring property valuation. Each agency uses their own systems and methodologies for valuation. The VRA, through a regularly updated SMV approved by the Secretary of Finance, could support the valuation-related functions of the following agencies:


Land Management Bureau Acquisition, disposal, and rentals of public lands DENR committee
Land Management Service Market, cost, income approaches
Forest Management Bureau Actual FOB market price
Department of Agrarian Reform Acquisition and distribution of land for agrarian reform Just compensation procedures
Bureau of Land Acquisition and Distribution Land conversion Market approach
Department of Agriculture
Department of Public Works and Highways Expropriation/acquisition of land for right-of-way and expansion or condemnation proceedings RA 8974
Market value
Replacement cost method


Board of Investments Project feasibility studies for Industrial estates and export processing zones Market, cost, reproduction cost
Income cap approaches
Bureau of Trade Regulation and Consumer Protection Regulation and licensing of private appraisers Prescribes USPAP/IVS for use by private appraiser
Land Registration Authority Real property litigation and garnishment proceedings, registration and extraction of fees
Registry of Deeds
Commission on Audit Government real property transactions Similar to private appraisers; land rating grid method
National Power Corporation Expropriation/right-of- way acquisition/rentals RA 8974, just compensation, market value, replacement cost
Land Bank of the Philippines Mortgage lending/ securitization EO 405, DAR AO No. 5, deeds of sale, sales offering, private appraisers
Development Bank of the Philippines
National Housing Authority Acquisition, disposition, and mortgage lending Market data, economic rent
National Home Mortgage Finance Corporation Cost and market approaches on:
(1)     Raw land
(2)     House
Home Guaranty Corporation (3)     Preliminary appraisals
Home Development Mutual Fund Mortgage lending Market data or sales comparison, unit-in-place, cost approaches
Social Security System Market date approach with value adjustments
Government Service Insurance System Collateral valuation, sales, reproduction cost, income capitalization, private appraisers
Philippine Reclamation Authority Property development or disposal Valuation contracted out to private appraisers
What is the revenue impact of the Valuation Reform Act?

By stimulating the land market, the expected direct long-term positive financial impacts of the reform are: (i) increased land-related-related transactions, capital inflow and investments in the economy at the national level thus resulting in increased revenues for the national government through capital gains and other taxes involving transfer of properties, and (ii) improved collection efficiency on real property taxes, as well as other taxes that involves real property, at the local level.


The national government is expected to benefit from the reform a potential increment of Php18.49 billion. For the LGUs, based on actual 2017 RPT (basic and SEF) collection data of the BLGF, the minimum and maximum actual increase would be Php12.57 billion and Php30.46 billion, respectively.

Scenario Cities Provinces Total
1 Impact of SMV Reform Only 61,076 24,610 85,685.94
Potential Increment 8,868 3,698 12,566.02
2 Impact of SMV Reform on Optimized

RPT Contribution

61,659 25,017 86,675.87
Potential Increment 9,452 4,104 13,555.95
3 Impact of SMV Reform with Optimized

RPT Collection Efficiency

75,284 28,292 103,575.85
Potential Increment 23,077 7,379 30,455.94
What are the benefits of the reform?
  1. Single valuation base: Eliminates wide disparities and therefore achieve consistency in real property valuation. The predictability of valuation will have a positive impact for planners.
  2. Uniform standards: Lead to the harmonization of the real property valuation among the different government agencies. Improve the integrity of real property appraisal in accordance with the generally accepted valuation standards. Ensure transparency is available at all levels of appraisal and valuation. It will give national and local government, businesses, financial institutions, lenders, and investors greater confidence in valuation reports.
  3. Comprehensive database: Greater transparency in land transactions translates to confidence in the real estate market. Ready access to a database facilitates property-related policies as it improves decision-making (Sanggunian) and planning by policymakers.
  4. Increased revenues: The adoption of true market-based values for taxation purposes will increase government revenues without adopting new tax measures. It will lead to an increase in the revenue generating capacity of real property through the RPT, NG Real Property Transfer Taxes*, and other related taxes. The increase in RPT collection could improve the RPT to GDP ratio from 0.36 percent to 0.43 percent. Likewise, its share to local income will grow to 23 percent.
  5. Improve local autonomy: Enhanced LGU financial self-sufficiency to achieve genuine and meaningful local autonomy as guaranteed by the Constitution and the LGC.
  6. Higher investor confidence: The adoption of globally benchmarked valuation standards and higher degree of professionalism in real property valuation will inspire greater confidence from investors.
  7. Guaranteed benefit of education sector: Strengthening the collection of RPT could ensure higher special education fund (SEF) collections and will result in more funds to be available for public education. Currently, there is an average of Php760 allotted per public school student from the SEF and the VRA is expected to increase this by Php280 per student.
  8. Reduced government costs: Reduce unnecessary expenses due to conflicting appraisals which lead to court litigations, project delays, and cost overruns. The SMVs used as the authoritative benchmark for other valuation purposes by all national government units (NGUs) will also minimize cost.
What happens when there is a delay in the review, approval and implementation of the SMV?

Any government official who delays, without justifiable cause, the review, approval and implementation of the SMV, the conduct of general revisions, or cause the improper use thereof 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.

Will the BIR continue to set the BIR zonal values?

No. The BIR will no longer prepare the zonal values and will simply adopt the SMV approved by the Secretary of Finance. However, the BIR, together with the BLGF, will still review the proposed SMV of the local assessor.

Will the actual valuation be done by the DOF or BLGF?

No. The actual valuation will still be prepared by the local assessors since they know the ground developments, have access to information on the local real property market, and conduct ground work in relation to their regular function of appraisal and assessment of real properties. The DOF will only review and approve the proposed SMV of the LGU, and exercise technical oversight over them. Only the processes and procedures will be rationalized and improved.

Which agency shall be responsible for the administration of real property valuations in the country?

The DOF, through the BLGF, shall be the lead agency responsible for the implementation of the reforms. The BLGF shall have the following powers and functions:

    1. Develop, adopt, and maintain valuation standards consistent with generally accepted international valuation standards, regulations, and specifications for real property appraisal used for tax and other purposes, and ensure compliance therewith by LGUs and other concerned parties.
    2. In coordination with the BIR, review for compliance with the real property valuation policies and standards and recommend for approval of the Secretary of Finance the SMVs as prepared by the provincial assessors together with municipal assessors, and city assessors, including the municipal assessor in Metropolitan Manila area, for tax, both local and national, and for other purposes.
    3. Provide technical assistance on real property appraisal matters to government agencies and instrumentalities, and coordinate or conduct the valuation and appraisal of special purpose properties, when requested.
    4. Provide leadership and policy direction to LGUs on real property valuation and appraisal for taxation and other purposes, including the development and maintenance of valuation standards, the regulation of valuation and appraisal activities and other related matters, and the promotion of valuation and appraisal training and seminars.
    5. Maintain a roster of licensed local government appraisers and assessors.
    6. Develop and maintain a comprehensive and up-to-date electronic database of real property transactions and prices of materials for buildings, machinery, and other structures.
    7. Determine, fix, and collect reasonable amounts to be charged an administration fee, fines, and penalties relative to the implementation of this Act.
    8. Conduct continuing study and research on valuation and maintain a database of information on global and country trends and developments in real property valuation and appraisal.
    9. Perform such other functions as are necessary, proper, and incidental to implement the provisions of this Act.
When should SMVs be updated?

The updating of SMVs and conduct of general revision of property assessments shall not be earlier than three (3) years from the date of last revision, and not later than five (5) years. The range was set since three (3) years may be too soon for LGUs with slow moving property values, such as rural areas outside Metro Manila, and five (5) years may be too long for active markets. Failure to update the SMV shall render an LGU ineligible for any conditional or performance-based grants or to contract any form of credit financing from the national government.


How outdated are government valuations?

In the last three (3) years, 60 percent of Revenue District Offices (RDOs) under BIR have updated their Zonal Values. On the other hand, 36 percent of LGUs (mainly provinces and cities) have updated SMVs.  


SMV Number of LGUs
Provinces Cities
Outdated 48 97
Updated 33 49
TOTAL 81 145

*including the lone municipality in Metro Manila
Source: Bureau of Local Government Finance | March 2019


How will the Proposed Valuation Reform Act impact on taxpayers?

Updating the SMV and conducting the general revision of property assessments are necessary components of effective and efficient real property tax administration in any LGU to arrive at a fair and equitable Real Property Tax (RPT). The RPT, being a recurrent tax, is dependent on three elements: (1) market value, (2) assessment level, and (3) tax rate. An increase in the value of a real property would increase the RPT, and conversely, a decrease in the value will lead to a decrease in RPT.

This result, however, could be addressed by LGUs’ authority to push back the resulting increase in tax since they have the power to lower or increase the tax rate and assessment level, according to their budget goals and priorities. In the case of non-recurrent taxes, usually transfer taxes, there will be a proportionate increase in the tax as a result of the increase in values, since there are no adjustment mechanisms to lower CGT, DST, Estate Tax, Donor’s Tax, local transfer tax, etc.

What will be the uses of approved SMVs?

The approved SMV shall be used as basis for the determination of real property-related taxes of national and local governments such as real property tax, internal revenue tax, local transfer tax, tax on sand and gravel, community tax, fees and charges, or as benchmark for real property appraisal of other government agencies.

What are the objectives of Valuation Reform Act?

The Valuation Reform Act (“VRA”), as proposed under Senate Bill No and House Bill No.8453, aims to introduce vital reforms to promote the development of a just, equitable, and efficient real property valuation system. The reforms will broaden the tax base used for property and propertyrelated taxes of the national and local governments, thereby increasing government revenues without increasing the existing tax rates or devising new tax impositions.  

VRA aims to address the following systemic problems: a. rampant outdated valuations used for governmental purposes, especially for national and local taxation; b. cost overruns and foregone revenues due to low valuations used: overvaluation when government pays, undervaluation when government collects; c. valuation as a political issue; d. multiple, overlapping valuations in different government agencies, and there is no single agency responsible for ensuring that valuations are completed in accordance with international standards; and e. absence of a comprehensive real property electronic database.

By improving the quality of valuation of local governments and making the revisions frequent, efficient, transparent, reliable and attuned to market developments, VRA impacts favorably on revenue generation and resource mobilization of local governments to fund their service delivery requirement. The reforms are also expected to foster private investors’ confidence, and build the public’s trust in the valuations of government.

What are the salient features of the valuation reform?

VRA proposes to: a. Adopt international standards and rationalize the process of valuation; b. Establish a single valuation base for taxation, through the adoption of the Schedule of Market Values (SMV) of the local government units (LGU), and use the updated values as benchmark for other purposes, such as lease, rental, acquisition, ROW, etc.; c. Insulate valuation at the local level from undue politicization. However, LGUs shall continue to set, adjust and regulate tax rates and assessment levels; d. Recentralize the approval of the Schedule of arket Values (SMV) by the local Sanggunian back to the Secretary of Finance (with review functions of the Bureau of Local Government Finance (BLGF), in coordination with the Bureau of Internal Revenue (BIR), and improve oversight on property valuation and assessment by the Department of Finance (DOF), through the BLGF; e. Establish a comprehensive database to support valuation function; and f. Establish the Real Property Valuation Service in the BLGF to oversee and manage valuation related concerns of local governments.  

What is the Schedule of Market Values (SMV)?

It is an approved schedule of unit base market values for different classes of real property in the LGU and used by the provincial, city or municipal assessors as basis for the appraisal and assessment of real properties in their respective assessment territorial jurisdictions for real property taxation purposes. Under the VRA, an updated SMV will be used as the basis for local and national land and property-related taxes.

Why should SMVs be revised/revalued?
  1. It is mandated under the Local Government Code (LGC) of 1991 and builds local accountability in the exercise of the taxing powers of local governments.
  2. It will reflect the current market value of real property and update the values of various recorded lands, buildings, and machinery in the city.
  3. It will properly reclassify properties based on highest and best use (HABU). a. It will promote transparency and equity in the property market. b. It will provide a fair and equitable distribution of the real property tax burden.


What is the difference between the current SMV from the proposal under the Valuation Reform Act?

The current SMV is being approved by the local Sanggunian through an enactment of ordinance, and the approved SMV is being used as basis for local taxes such as real property tax. While in the VRA proposal, the local assessor will still prepare the SMV, however, it shall be reviewed by both BLGF and BIR, and will be endorsed to DOF for the approval of Secretary of Finance. Moreover, the approved SMV in the proposal may be used by other government agencies as basis to other real property-related taxes.