New PBBM Law seen to hike LGU revenues, speed up projects

June 14, 2024 Ryan Ponce Pacpaco 78 views

CAMARINES Sur Rep. and former Gov. LRay Villafuerte has said that the enactment of Republic At (RA) 12001 aims “to upgrade the tax collection efficiency of local government units (LGUs) while hauling-in more investments from the private sector, invigorating the real estate market and speeding up the implementation of the President’s infrastructure buildup program ‘Build Better More (BBM).’”

Villafuerte, a co-author of the newly signed RA 12001, said this new law shall reorganize the Bureau of Local Government Finance (BLGF) into the sole state agency in charge of streamlining and boosting real property valuation in the country by coming up with a single Schedule of Market Values (SMVs) for all LGUs “to correct the current absence of a unified national standard that has only bred red tape, ROW (right-of-way) conflicts and lengthy court disputes—and barred Government from harnessing the full potentials of the land sector as a rich asset for national growth and development.”

An attached agency of the Department of Finance (DOF), the BLGF is in charge of empowering LGUs to attain fiscal sustainability through the formulation and implementation of sound policies on LGU taxation and collection enforcement, revenue administration, credit financing, public finance management and real property assessment.

“The weak collection efficiency of LGUs hurts their collective capability to raise bigger revenues from real properties, hence hampering their ability to bankroll sufficiently the necessary public services for the good of their respective constituents,” Villafuerte said.

RA 12001, or the Real Property Valuation and Assessment Reform Act (RPVARA), was signed by President Marcos at Malacañan Palace last June 13.

The President signed RA 12001 on Thursday along with RA 12001—which Villafuerte had likewise co-authored—that established the Negros Island Region from Negros Occidental, Negros Oriental, Bacolod City and Siquijor.

Villafuerte, who is president of the National Unity Party (NUP), explained that this new law shall reorganize and strengthen the BLGF to provide stronger institutional support to LGUs with regard to all matters relating to real property valuation in the country.”

“The BLGF shall be the lead agency tasked to review and approve the SMVs for all LGUs in the hope of separating the technical function of real property valuation from the political function of taxation practiced by our local elective officials,” said the former governor.

He added, though, that RA 12001 does not in any way curtail the power of LGUs to lower and adjust assessment levels and tax rates in accordance with the provisions of RA 7160, as amended, for residential property owners as deemed necessary.

RA 7160 is the Local Government Code (LGC) of 1991 that defined the functions and devolved the powers of provincial, city and municipal governments in the country.

Villafuerte said the RPVARA law will help accelerate the implementation of the President’s BBM infrastructure program because the use of a new and uniform schedule of SMVs on real property will address ROW issues that have delayed the government’s acquisition of certain private lands intended for public infrastructure projects.

He noted that the real property valuation system in the Philippines has become “so inefficient and riddled with layers of bureaucracy” to the point that the World Bank, in a report, has said that although 50% to 75% of our national wealth is contained inland, land market contribution to GNP (Gross National Product) is a mere 6%, thereby hindering the growth and huge potential of the land sector.”

“With more than 23 national government agencies and 1,700 LGUs using different systems and methodologies, inefficiencies are sure to arise from the lack of a unified national standard. This has caused discrepancies in the system and has cost the government, with conflicts resulting to ROW compensation problems, lengthy court disputes, delays and derails,” Villafuerte had observed in House Bill (HB) No. 1276, one of the bills that had been consolidated into the House-approved HB 6558.

HB 6558 and the Senate-approved Senate Bill (SB) No. 2386 were combined into one enrolled bill by a bicameral conference (bicam) committee and then ratified by both chambers before the March 22-April 28 congressional break. This final bill was then submitted to Malacañan Palace for President Marcos’ signature into law.

Villafuerte had introduced HB 1276 with CamSur Reps. Miguel Luis Villafuerte and Tsuyoshi Anthony Horibata and the Bicol Saro partylist.

HB 1276 contained provisions that were adopted in the final bill ratified by the Congress, including:

· The State policy to promote the fiscal autonomy of LGUs to provide basic services to their constituency by enhancing their capacity to generate local revenues from real property;

· BLGF’s formulation of SMVs, referring to the table of base unit market values for all kinds of real property, except machinery, in every LGU as prepared by the provincial, city or municipal assessors pursuant to existing laws, rules and regulations; and

· Creation of a Real Property Information System, containing an up-to-date electronic database of the sale, exchange, mortgage, lease, donation, transfer, and all other real property transactions; and

· Creation of the Real Property Valuation Service under the BLGF to develop and implement uniform valuation standards for use by all LGU appraisers and assessors and other concerned parties in appraising or valuing lands, buildings, machinery and other real properties for purposes of taxation.

Real property taxes include the Special Education Fund (SEF), idle land tax, and other special taxes that LGUs are authorized to impose under the LGC of 1991.

Villafuerte pointed out that among the tasks of the would-be reorganized BLGF, as listed in RA 12001, are to:

· Develop and adopt land valuation standards consistent with internationally-accepted valuation standards and specifications for real property appraisal used for taxation and other purposes, and ensure compliance therewith by LGUs and other concerned parties;

· Provide leadership and policy direction to LGUs on real property valuation for taxation and other purposes, including the regulation of valuation activities and other related matters, and the promotion of valuation training and seminars;

· Put up BLGF regional offices to be responsible for all matters relating to valuation and the supervision of the SMVs in their respective regions;

· Adopt and maintain a comprehensive and up-to-date electronic database of all regional real property-related transactions, and have custody of all transaction records for submission by LGU assessors; and

· Set assessment levels and tax rates, based on the approved SMVs to be transmitted to the concerned local chief executive, through the respective provincial, city, and municipal assessors.

Villafuerte said that every LGU assessor concerned, in coordination with the local treasurer, shall estimate the revenue and tax impact of the new SMV—based on existing assessment levels and tax rates—in his or her province, city or municipality, and then recommend amendments.

Then, he said, upon the enactment by every Sangguniang Panlalawigan, Sangguniang Lungsod or Sangguniang Bayan of an ordinance for the assessment levels and tax rates, the local chief executive concerned shall act within ten (10) days, in the case of cities, or within fifteen (15) days, in the case of provinces, to approve the same.

Failure of any local chief executive to act on the ordinance within the prescribed period shall render the same approved, he said.

The congressional passage of RPVARA was endorsed by President Marcos in his State of the Nation Address (SONA) in 2023.

This law actually forms part of the Comprehensive Tax Reform Program (CTRP) that was first endorsed by the Duterte administration.

Villafuerte had co-authored, too, two more CTRP measures that were signed into law by then-President Duterte, namely, RA 10963 or the Tax Reform for Acceleration and Inclusion Act (TRAIN) Law and RA 11534 or the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE).

RA 12001 will benefit LGUs that neither have the database nor capacity to update the property market values in their respective localities, he said.

Right now, Villafuerte said that LGUs are the ones doing their respective SMVs, which lead to conflicting or outdated values that only erode the real property tax base of certain local governments.

He said that the law requires all provincial assessors, municipal assessors and city assessors to update their respective SMVs within two (2) years from the effectivity of this Act.

Thereafter, they shall update the SMVs and conduct general revision of property assessments and classifications once every three (3) years from the date of last revision.

In coordination with the DOF-attached Tax Academy of the Philippines (AP), the BLGF is mandated by the law to develop and conduct the necessary training of all local assessors, local officials and staff, and other concerned BIR personnel on the preparation of the SMVs in accordance with internationally-accepted valuation standards, conduct of impact studies, and preparation of compliance reports.

An assessor’s failure to prepare the SMVs within the period set under RA 12001 shall be punished by a fine equivalent to one (1) month to six (6) months basic salary, or suspension from the service for not more than one (1) year, or both, at the discretion of the competent authority.

It shall also be a ground for administrative and criminal liability in accordance with the provisions of RA9646 or the “Real Estate Service Act of the Philippines”.

Government agents found to be delaying the review, approval and/or implementation of SMVs shall be punished under the law by a fine equivalent to one (1) month to 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.