Post Evaluation Report on the Roll-Out of the Assessors' Manual

November 22, 2006 BLGF MEMORANDUM FOR : Executive Director M. P. R. Montesa THRU : Channel SUBJECT : Post Evaluation Report on the Roll-Out of the Assessors' Manual The Manual on Real Property Appraisal and Assessment Operations implemented under Local Assessment Regulations No. 1-04 was approved by the then Secretary of Finance Juanita D. Amatong in October, 2004 after almost 15 years of waiting. The last time that the Bureau had its Manual was in 1975. The Trainors Training was conducted in August, 2005 at Baguio City with selected Central/Regional Officials and Staff, Provincial/City Assessors, as participants (Annex A). The initial roll-out/orientation of the said manual started in October, 2005 for the NCR participated in by the City/Municipal Assessors and their assistants in the 13 cities and 4 municipalities. Thereafter, the succeeding orientations for the Provincial/City Assessors were conducted by the respective Regional Offices nationwide as scheduled, except for Region IV-B (MIMAROPA). Most of the Regional Offices have already conducted the 2nd and 3rd schools for the Municipal Assessors and their staff (Annex B). For Region V however, only the provinces of Catanduanes and Masbate have conducted the roll-out. The average number of participants who attended the trainings ranges from 60-70 assessors per school. The local assessors were so interested in the roll-out of the new Manual that at times the number of participants had reached 150 attendees. Willing Participants are required to pay P1,200/day as registration fee for the duration of a 3-day training for Provincial/City level and 4-5 days for the Municipal level. A standard syllabus (Annex C) and a Training Design (Annex D) were formulated by the BLGF for compliance and adoption by the Regional Offices for conformity, which also included topics on Valuation Reforms/Standards. Resource Persons are selected based on their expertise in Tax Mapping, Appraisal and Assessment and Records Management, etc. SADECI NCR Roll-out/Orientation : The following issues/concerns were raised at the training conducted in Metro Manila: The proper appraisal of Cell Sites (Globe, Smart, Digitel, etc.) The appraisal of Electrical Posts, Transformers, Electrical Installation, etc. Taxability of Equipment used in Fast Food Chains (Jollibee, McDonalds, Tokyo-Tokyo, 7-Eleven, etc.) The private appraisers composed of Mr. Hernando Caluag, Valuation Standard Adviser, Land Administration and Management Project (LAMP) Ding Garcia of the Cuervo Appraisers promised that the Bureau will be provided with an appraisal of real properties of SMART Telecommunications but, to date, no data had been received from them. On the issue on the taxability of Electrical Posts (MERALCO) on the basis of PHILRECA case of the Supreme Court, the Assessor of Caloocan City gave inputs on how to appraise these real properties, based on the cost approach. On the issue of taxability of "Machinery" found in Fast Food chains in Metro Manila such as Jollibee, McDonalds, Tokyo-Tokyo, 7-Eleven etc., the Bureau made a stand that the provision of Section 415 of the Civil Code, would apply. The following are the common issues/concerns raised by LGUs nationwide during the roll-out: Requirements should be issued by the BLGF relative to the transfer of a delinquent portion of land. The buyer of subject portion is willing to pay the delinquent real property tax but only on the said portion bought provided that an approved subdivision plan segregating that portion is submitted. DHATcE PIN in the new Manual prescribes a two (2) digit assessor's lot no. is inapplicable, because it creates many sections. The group suggested of using the three (3) digit lot no. previously provided under Assessment Regulations No. 1-78 dated March 16, 1978; Despite the issuance of BLGF Circular on the taxability of Electric Cooperatives (ECs) based on the Supreme Court Decision in the PHILRECA case, ECs are not paying real property taxes; The inclusion of the word "Cultural" under the definition of terms of the Manual. The Source of Trending Factor under Section 7 "Rules in the Appraisal of Machinery and Equipment". aSITDC Forms should be expanded i.e. , FAAS for Lands, to include other improvements such as plants & trees; The issue where the owner of agricultural improvements (plants & trees) are not the owner of the land (where these agricultural improvements are planted) usually, a cooperative has not been paying the real property tax; The issue on the non-payment of GOCCs despite the withdrawal of their exemption from real property tax provided under the last paragraph of Section 234 of the Local Government Code (LGC) and the recently promulgated Supreme Court Decision on MIAA vs. Paraaque City government . The issue on the non-payment of real property tax on telecommunication companies despite the Supreme Court Decision in the case of RCPI vs. the Provincial Assessor of South Cotabato (G.R. No. 144486) dated April 13, 2005 because of the recently issued Supreme Court Decision on BAYANTEL case; If some barangays have already been tax mapped under Assessment Regulation No. 1-78, will the numbering of the remaining barangays that will undergo tax mapping follows A.R. 1-78 or the new Manual; Can a TD be issued on transferred property based solely on the title issued by the Registry of Deeds without proof of BIR payment; How split assessments (taxable & exempt) can be accommodated in the assessment records. What are the requirements for the declaration of real properties based on pre-patent application? Can tax declarations be issued for untitled properties declared for the first time if the adjoining owners refuse to issue certification or execute affidavits; The CALLANTA case promulgated by the Supreme Court was so sweeping that when the Notice of Assessments have already been sent and received by the property owner, the assessor has no more jurisdiction to either raise or lower the assessment of his property. What are the exceptions to this Decision; Can just anybody requests a copy of tax declaration owned by another person owner without his consent; Can the assessor reclassify agricultural land into non-agricultural uses without the prior approval from the Dept. of Agrarian Reform (DAR). ITAaCc LAMP CONCERNS: A 2-hour period is allotted to Valuation Reform/Standards and other LAMP concerns in addition to the common topics agreed upon at the Trainors Training. The BLGF is the lead agency under Component 4 of the LAMP. This has been the standard SYLLABUS in almost all of the roll-out of the Assessors' Manual being conducted by the BLGF in anticipation of the approval of the National Appraisal Authority (NAA). It is important to mention that three (3) of the internationally accepted Valuation Standards have already been integrated in the said Manual, as follows. 1) Market value, as basis for Valuation; 2) Code of Ethics; 3) Mass Appraisal Concerns were raised on the future of local assessors as well as the BLGF once the National Appraisal Authority (NAA) is approved and becomes operational. It was stressed that there are no clear guidance yet but assurance was made that ranking local assessors will be considered in the selection process. There will be a roster of qualified personnel and that there will be a process of nomination. The BLGF will play a crucial role during the transition phase because it assumes the functional responsibilities of the NAA. Two divisions (Real Property Assessment and Examination Division and the Local Assessment Operations Division) will comprise the Valuation Unit to perform NAA functions, and later on may spin off to the new NAA. PROPOSED DATABASE SYSTEM: It was explained that the concept is for the BLGF (thru the Information and Database Sub-component unit) to start compiling on standard templates of property transactions from the assessors, banks, realtors, private appraiser and other sectors. BIR TRAINING: As an initial activity of the Valuation Standards under Component IV (Annex E), and as requested by the Assistant Commissioner for Assessment Service during the Management Committee (MANCOM), where the BIR is one of the agencies involved under LAM Project, selected BIR personnel (Annex F) had undergone appraisal training using the Assessors' Manual on September 18-21, 2006 at the BIR Main Office Bldg. Quezon City. Participants (numbering 52) were Revenue District Officers (RDOs), Asst. Revenue District Officers (ARDOs) and some personnel from the Asset Valuation Division of the BIR main office. Among the Resource Persons, were the Chairman of the Central Board of Assessment Appeals (CBAA), the Regional Director for Region IV-A and the City Assessor of Naga. The occasion was honored by the presence of the BIR Commissioner who thanked the BLGF in coordination with LAM Project, in conducting the "Free" training. Hamish McDonald and Paul Carr, both international TAs, attended the training and found it to be very successful. The said training was one of the activities listed in sub-component 4.3 which is the Valuation Standards under Component 4 of the Land Administration and Management Project (LAMP2). Participants were very interested in all the topics discussed especially the appraisal and assessment processes and its relevance to the zonal valuation, where the BIR is the focal agency in charge in the preparation of the Schedule of Zonal Values, as the basis for the computation of the Capital Gains Tax (CGT), Documentary stamps Tax (DST), Donors Tax and Estate Tax. They even considered crafting a similar manual for BIR as their basis for transaction, such as transfers of real property. Likewise, BIR is supportive of the creation of the NAA, for the adoption of a single valuation base. Participants became aware why the Assessor's Values are much lower than the Zonal Value of the BIR because of political intervention. AcHCED BIR's ISSUES AND CONCERNS: A participant from Batangas City raised the issue that the reason why the Zonal Values in Batangas Province are higher than those in Batangas City was because the City Assessor of Batangas City is allegedly uncooperative; and only wanted a 10% increase in the existing zonal value. The BIR informed the speaker that agricultural lots which areas are lower than 1 hectare are classified, not as agricultural but as residential. Assessors' values are seldom considered by the Sub-Technical Committee on Real Property Values (STCRPV), where the assessor is a member; On the issue of determination of Market Value based on sales, the Resource Person emphasized that only homogenous sales are considered. Why do assessors use several sub-classifications such as R1, R2, R3, etc. for Residential Lots; and C1, C2, C3, etc. for Commercial Lots and BIR does not. BIR does not use the different approaches to value unlike the Assessors; Local Assessors are requested to furnish the BIR with the different forms being used by the Assessors' Offices at the expense of the BIR; Is 1 hectare of Agricultural land when subdivided into several parcels would still be considered agricultural land. In the absence of an approved conversion/subdivision of agricultural land from the DAR; or a zoning ordinance enacted by the local sanggunian but the area has already been developed into non-agricultural uses, can assessors automatically reclassify the area based on the actual use; The difference between actual use, predominant use and beneficial use; Is peace and order situation a major factor in tax mapping. RECOMMENDATIONS: The undersigned is recommending that the BLGF should come up with a supplemental guidelines or an Assessment Regulations to properly address all issues/concerns not provided and adequately discussed in the Manual. These can be incorporated in the supplemental Regulations thru the initiatives being undertaken under LAMP II together with other Valuation concerns of the Valuation Unit, a core unit within the BLGF. ROLL-OUT UPDATE: So far, only Region IV-B (MIMAROPA) has not as yet conducted the Orientation, and the Bureau has not been informed of the date when the training will be conducted. For your information and further instructions, please. (SGD.) M. N. SANTOS