Despite opposition of some 50,000 owners pay real property taxes

by Gregorio G. Deligero

WHILE the leaders of the Davao City Chamber of Commerce and Industry, Inc. (DCCCII) are talking about the possibility of going to court to force the city government to stay the implementation of Ordinance 040-07 pertaining to the general revision of real properties, tens of thousands of property owners have gone ahead in paying taxes, in the process availing themselves of the discounts provided under the law.
As of the middle of March, City Treasurer Rodrigo Riola said  already around 50,000 property owners of varied landholding sizes have fully paid their real property taxes. The taxpayers availed themselves of the 20 percent discount that the law provides for those who make payments within the first quarter.
“Most of them opted to fully pay their taxes instead of paying it quarterly. This is a concrete indication that the increase in the fair market value of real properties for real property tax purposes currently being imposed by the city government is affordable to the people,” he said.
“Only the big landowners are opposing it,” Riola said.
As of December 2008, the city government updated the fair market value of 198,849 parcels of land under the General Revision of Real Properties with a total assed value of P16.8 billion. With a current tax rate of .025, the city government will be able to generate P420 million in total real property tax. 
Last year, the city government’s real property collections totalled P150.95 million, showing an increase of 4 percent from P145 million posted in 2007.
Riola expects that more property owners will avail themselves of the 10 percent discount that the ordinance provides for those who will opt to pay their taxes per quarter.

DCCCI earlier released a position paper describing the increase as very untimely.
“The world is in the midst of an economic recession. We, in Davao City, have begun to feel its effects in the palpable slowdown of consumer spending. Shopping centers such as malls and public markets and retailers such as department stores, appliance stores, as well as restaurants and other establishments, are all experiencing declines in their sales. The burden of higher realty taxes at this time will be counter-productive and will help deepen the recession locally, rather than alleviate it,” the group said.
The group charged that the current increase in the fair market values of real properties of as much as 40 to 1,100 percent is unjustifiably excessive and confiscatory.
This has resulted in the dramatic increase in the assessed market value per square meter by up to 1,100 percent in many subdivisions in the city, the paper said.
“To cite a few examples, the market value of residential lots in Garcia Heights Subdivision has risen from P250/sqm to P2, 500/sqm (or by 900%). The value of residential lots in Ledesma Village has increased from P250/sqm to P3,000 /sqm (or by 1,100%). Newly developed subdivisions and several districts (e.g., Robinson Highlands/Crest, SM Drive, Ecoland Drive, Generoso Bridge, etc.), which had no pre-existing market valuations, have likewise been imposed market values of up to P4,000, which is higher than the values assigned to other existing subdivisions which are more progressive, developed, and with higher actual market values. The low cost housing in Emily Homes, Cabantian Buhangin — having an average of 100 square meters in area — has also increased the assessed market value from P10,000 to P50,000,” DCCCI said in its position paper.

However, City Assessor Cesar Dataya said that the continued opposition coming from the business sector has stemmed from the misleading and wrong interpretation of figures embodied under the ordinance.
While the current increase in the fair market value on the real properties, ranged between 40 percent to 1,100 percent, Dataya argued,   it does not automatically translate to the same increase in assessed value of the properties or  the amount of taxes that the property owners will eventually pay to the city government.
With increased fair market value, he said,  the unit value of every real property is now P1,000 per square meter for the residential lots, way above P50 per hectare in 1994 schedule of value.
“But it does not mean that the increase in our taxation will be the same amount,” the city assessor said.
Under the ordinance, the base unit value of the property will be multiplied by the schedule of fair market value, then the result will be multiplied by the assessment level specifically provided for under the Local Government Code.
Under the Local Government Code, the assessment level for residential is 20 percent, commercial is 50 percent. Assessment level for industrial properties is also 50 percent.

“Almost all LGUs apply the assessment level provided for under the Local Government Code but in our ordinance, both residential and commercial are even reduced by half their assessment levels with 10 and 25 percent respectively. We are among the lowest in the country,” he said.
“In short, if your property is residential, we only assessed 10 percent of your fair market value then multiply it with the current tax rate of .025 percent,” Dataya said.
Dataya cited as an example a commercial property with a fair market value of P3 million. The city government will assess it at ten percent or an equivalent of P300,000 which will be multiplied by the current tax rate of .025.
“The result would be only P7,500 for the whole year. You will even get a 20-percent discount if you had paid it during the first quarter. If you will decide to pay it in four quarters, you will still be entitled to a 10 percent discount,” Dataya said.
“It is not actually excessive if you just give attention in understanding its provisions and details,” he said.

Dataya reiterated the City Hall position that the current increase in the fair market value on the real properties in long overdue.
“The business sector witnessed the fast-paced growth of Davao City during the past decades which naturally resulted to increased value of real properties. This is the reality that we cannot deny or alter. To say that it is untimely is erroneous,” he said.
Dataya said the increased fair market value on the real properties is even beneficial to the business sector because it result in  increased value of their properties.
“The city government cannot gain from the increased value of their properties. We can only generate income from the assed value,” he said.

Dataya said that trying to link the realty tax implementation to the global economic crisis is also misleading as the entire process of coming up with the ordinance began long before the global economic turmoil.
He pointed out that the realty property tax code was submitted to the city council as proposed ordinance on early 2007, when the global crisis has not been heard of, based on the analysis and other processes involved in coming up with the ordinance conducted from 2004 up to 2006.
“To say that it is untimely is wrong and misleading as technically, the global financial crisis came only on the latter part of 2008, while efforts in coming up with the measure started years before,” he said.