3.2 Schedule of Market Values and Statutory Assessment Levels

Schedule of Market Values and Statutory Assessment Levels

The current SMV process

Republic Act No. 12001 uses the term Schedule of Market Values (SMV): a table of base-unit market values for kinds of real property within an LGU, except machinery. Property not specified in the SMV is appraised at current market value and assessed under its actual use. The SMV provides the valuation base; it is not itself the tax rate.

Provincial assessors together with municipal assessors, city assessors, the lone Metro Manila municipal assessor, and the PHIVIDEC assessor prepare their respective proposed SMVs under the Philippine Valuation Standards and DOF rules. Preparation follows a BLGF notice and must include two mandatory public consultations within sixty days before submission. The proposed SMV must be published on the LGU website for at least two weeks before consultation and posted in two conspicuous places.

The assessor submits the proposal to the BLGF Regional Office, except the specified direct-central submissions. The regional office reviews and endorses; the head of BLGF reviews and endorses to the Secretary of Finance. The Secretary certifies whether the proposal complies with the latest PVS. Certification is technical review, not authority to rewrite local market evidence at will.

An approved SMV takes effect fifteen days after publication by DOF in the Official Gazette or on its official website, publication on the LGU website, and posting in two conspicuous local places. The assessor and treasurer then prepare a revenue-and-tax-impact report with three options for adjusting assessment levels and tax rates for sanggunian consideration.

Market value, assessment level, and assessed value

Use three distinct concepts:

• Market value: the valuation base determined under the PVS and approved SMV.
• Assessment level: the percentage applied according to property classification and actual use.
• Assessed value: market value × assessment level.

RA 12001 did not repeal RA 7160 Section 218. Its maximum assessment levels therefore remain relevant during implementation. For land, the ceilings are residential 20%, agricultural 40%, commercial 50%, industrial 50%, mineral 50%, and timberland 20%. For commercial and industrial machinery, the Section 218 ceiling is 80%. Special classes identified by the Code have a maximum of 10%.

These are statutory maximums, not an instruction to assume that every LGU has selected each maximum. In a problem, use the assessment level validly fixed by the applicable ordinance, provided it does not exceed the statutory ceiling. If a question expressly asks for the maximum under Section 218, use the ceiling.

RA 12001 transition protection

Section 19 requires the initial SMV update within two years from the Act's effectivity and updating every three years thereafter. Section 29 supplies an important taxpayer transition rule: in the first year an approved SMV takes effect, any increase in real property taxes is capped at six percent of the RPT assessed before effectivity. The cap applies separately to basic RPT, SEF, idle-land tax, and other special levies. An LGU may enact a cap for succeeding years.

This six-percent rule caps the first-year increase in tax liability; it does not mean the SMV itself may show only a six-percent change in market value. First calculate under the new valuation and lawful rates, then apply the statutory transition cap to each affected RPT type when required.

Worked illustrations

If commercial land has a market value of ₱8,000,000 and the valid assessment level is the 50% ceiling, assessed value is ₱4,000,000. If industrial machinery has a market value of ₱15,000,000 and an 80% level applies, assessed value is ₱12,000,000. The applicable basic tax rate and other levies are then applied to assessed value—not directly to market value.

Calculation controls and transition checks

Write every real-property-tax problem as a chain: market value multiplied by the lawful assessment level equals assessed value; assessed value multiplied by the applicable basic tax rate gives the basic real-property tax; separately compute any authorized additional levy, then apply lawful discounts, interest, or remedies only when the facts trigger them. Label the unit and period at each step. A rate of two percent is 0.02, while fifty percent is 0.50; treating either as a whole number is a common examination error.

Before calculating, verify the property's actual-use class, taxing jurisdiction, valuation date, approved schedule of market values, and any statutory exemption. Exemption of one interest or use should not be generalized to unrelated property. If a problem gives both market value and assessed value, test whether the stated assessment level reconciles them rather than assuming all three inputs are consistent.

RA 12001 also makes timing material. The initial schedule of market values is to be prepared and approved within the statutory implementation period and thereafter updated on the cycle fixed by law. Section 29 limits the increase in real-property tax due in the first year of effectivity of the first approved schedule under the Act to six percent of the amount assessed on the property before effectivity. Treat that cap as a transition rule for the specified first implementation, not as a permanent six-percent limit on every later valuation change.