Land is a vital resource for any nation and, according to a World Bank study, it represents 50 percent to 75 percent of the national wealth. But to be able to harness the true potential of land, there is a need to develop and adopt a professional, credible and transparent valuation system that will therefore enhance investors’ confidence in the land and real estate market. Instituting one standard of valuation is a vital factor in creating a level playing field for businesses.
Today, there is an inefficient, ineffective, and inequitable system of valuation that complicates the appraisal, assessment, and acquisition of land and real properties. This conundrum is one of the main hurdles being faced by the administration in pursuing flagship Build, Build, Build (BBB) projects. President Rodrigo Duterte even emphasized in his fourth State of the Nation Address (SONA) last July the need to improve the current valuation system as he called on the Congress to immediately pass the
Reforming the real property valuation system
Package 3 (P3) of the Comprehensive Tax Reform Program (CTRP) aims to introduce vital reforms to promote the development of a just, equitable and efficient real property valuation system by rationalizing the valuation process and adopting uniform valuation standards based on globally accepted valuation principles. These reforms will broaden the tax base used for property and property-related taxes of the national and local governments, thereby increasing government revenues without increasing the existing tax rates or devising new tax impositions.
The current real property valuation system is rife with multiple, overlapping property valuations, which complicate matters such as assessment and taxation. In particular, discrepancies in property valuation result in right- of-way compensation problems and lengthy court litigation, both of which hamper the speedy and efficient construction of infrastructure projects. P3 aims to correct this situation by establishing a single real property valuation system. P3 aims to establish a comprehensive and up-to-date database of all real property transactions and prices of materials for buildings, machinery, and other structures. This database will be open to all local government units, national government agencies, and the private sector.
Should this law finally materialize, the following benefits would be realized: a single valuation base for taxation, which will be used to update values as benchmark for other purposes, such as right-of-way acquisition, and the use of uniform standards in valuation; the establishment of a comprehensive database of real property transactions; enhance the local governments’ financial self-sufficiency; increase investor confidence in the land and real estate market; reduce government costs brought about by court litigation, project delays, and cost overruns; and enhance the accuracy of land use projection.
Stakeholders weigh in
Harmonizing the values through Package 3 will help resolve right-of-way acquisition issues and expedite infrastructure development. Improved infrastructure is highly favorable for Filipino families, commuters, businesses, and investors.
Thus, various stakeholders have voiced their support towards the new measure.
“Ang proposed ni government is magbibuild tayo ng electronic database. For example, titingnan na lang ni taxpayer kung ano ýung value ng lupa niya doon. So hindi na siya very subjective kung ano lang ýung gusto niyang presyo o anuman ang say ng community, but mayroon na tayong objective na price. May standard na tayo kung magkano ba talaga ang price ng lupa. As a real estate practitioner, mapaprice na namin yung mga development projects namin in line with the value sa market [with Package 3]. With the electronic database, meron kaming magiging benchmark kung magkano talaga ang value ng mga real properties namin,” shares real estate practitioner Joshua Gripo.
“There are numerous valuations so it makes life difficult for us [developers] to do business. So, we are in support of a unitary, single, transparent property valuation which would make cost of doing business in the Philippines lower. We are asking government especially the Congress to approve as soon as possible the property valuation bill so that it becomes a law. It will help us businessmen especially housing and subdivision developers to do business and provide more houses, build more houses, do our part in lowering the 6.5-million housing backlog in the country,” explains Subdivision and Housing Developers Association, Inc. (SHDA) chairman Jeffrey Ng.
“I am one with the DOF in pushing for Package 3 of the Comprehensive Tax Reform Program or the Real Property Valuation Reform. Package 3 will ensure transparency in all real property transactions, thereby protecting the interests of the public. It will also develop confidence in the work of appraisers and assessors,” says provincial assessor Jessie Doctolero.
“I believe that the reform will promote transparency in real property transactions and develop investor confidence in the valuation system. It will also help reduce expropriation procedures which arise from conflicts in determining the appropriate price offer due to multiple and conflicting valuations used by appraisers and government,” discusses land lawyer Atty. Erwin Tiamson.
“A single benchmark valuation will mean better predictability in investment and therefore reduce risks in business,” says environmental planner Dr. Arturo Corpuz.
“The Rural Bankers Association of the Philippines (RBAP) is committed to developing rural economies and the Valuation Reform Bill will definitely improve real property valuation and benefit RBAP’s members in the appraisal of real property for mortgage, investment, and sale,” according to a statement from the RBAP.
“ ULAP and member leagues support the proposal to reform the land valuation and assessment system,” concludes Unionof Local Authorities of the Philippines (ULAP) executive director Bernardino Sayo.
This article was published in the Philippine Star on December 15, 2019.
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