Computing Market Value from a Tax Declaration in the Philippines: A Comprehensive Legal Guide (2025 edition)

I. Introduction

A Philippine tax declaration is a sworn statement filed with, and later issued by, the local assessor that contains the fair market value (FMV) of real property and serves as the assessor’s official record for real-property-tax (RPT) purposes. While it is not a muniment of title, the tax declaration’s stated market value influences multiple legal, fiscal, and commercial transactions—from RPT computation to capital-gains-tax (CGT) assessments and even bank-loan appraisals.

This guide consolidates every major rule, formula, and practical nuance involved in deriving that market value.

II. Legal Framework

Source	Key Provisions
1987 Constitution	Art. X, §5 grants LGUs the power to create their own sources of revenue.
Local Government Code (LGC) of 1991, R.A. 7160	• §199—statutory definitions (FMV, assessed value, etc.) • §§201–204—preparation & revision of the Schedule of Fair Market Values (SFMV) • §§219–221—assessment, appraisal, and listing procedures • §§226–231—appeal to LBAA → CBAA → CTA
DOF–BLGF Assessor’s Manual & DOF Depart. Order 37-09	Detailed appraisal methods and depreciation tables.
BIR Revenue Regulations No. 6-2013 (as amended)	For CGT/DST, the taxable base is the higher of (a) BIR zonal value or (b) LGU FMV in the current tax declaration.

III. Key Terms and Distinctions

Term	Essence	Statutory Basis
Fair Market Value (FMV)	The price a willing buyer will pay a willing seller in an arm’s-length deal, per LGU schedule.	LGC §199(l)
Assessed Value	FMV × assessment level (a percentage set by sanggunian). This is the RPT base.	LGC §199(d)
Assessment Level	A classification-based percentage (e.g., 20 % for residential land in many cities).	LGC §218
Zonal Value	Separate FMV fixed by BIR for national taxes; updated by revenue district offices.
Tax Declaration (TD)	Official assessor’s record showing FMV & assessed value.

IV. The Schedule of Fair Market Values (SFMV)

Preparation & Adoption
- Provincial/City/Municipal Assessor drafts; Sanggunian passes ordinance (LGC §201).
Frequency
- General revision at least once every three (3) years.
Transparency
- Public hearings are mandatory; SFMV must be posted in bulletin boards and websites (if any).
Granularity
- Separate unit values for each barangay, broken down by:
  - Land use (residential, agricultural, commercial, industrial, special, timber, mineral).
  - Building type (concrete, semi-concrete, wood, etc.) and actual floor area.
  - Machinery class and horsepower/tonnage.

V. How to Compute FMV per Property Class

A. Land

Formula

FMV (Land) = Area (sq m) × Unit Land Value (ULV)

Unit Land Value is taken straight from the SFMV table for the property’s classification and location.

Example • Barangay Sta. Ana, Residential ULV = ₱8,000/sq m • Lot area = 180 sq m FMV = 180 × 8,000 = ₱1,440,000

B. Buildings and Other Structures

Standard Approach – Replacement Cost New Less Depreciation (RCNLD)

Replacement Cost New (RCN)
- RCN = Total Floor Area × Unit Construction Cost (per assessor’s building cost tables, derived from DPWH data).
Less Depreciation (Straight-Line)
- Depreciation Rate (%) = (actual age ÷ economic life) × 100
FMV = RCN × (1 – Depreciation Rate)

Example • Two-storey reinforced-concrete residence • Floor area = 240 sq m; Unit Cost = ₱20,000/sq m • RCN = 240 × 20,000 = ₱4,800,000 • Age = 10 yrs; Economic life = 50 yrs → Depreciation = 10/50 = 20 % FMV = ₱4,800,000 × 0.80 = ₱3,840,000

C. Machineries

Under LGC §199(o), machineries “directly used” in business are valued at acquisition cost or current replacement cost, whichever is higher, minus depreciation but not below 20 %.

Formula (BLGF Table III-B):

FMV (Machinery) = (RCN or Acquisition Cost) × [1 – (Depreciation Rate)]

Depreciation rate normally 5 % per year for heavy industrial equipment, capped at 80 %.

VI. From Market Value to Assessed Value & RPT

Multiply FMV by the assessment level in the LGU’s revenue code.
Real Property Tax (RPT)
```
RPT = Assessed Value × Basic Tax Rate
```
- Basic rate: 1 % of assessed value for provinces; 2 % for cities/Manila.
- SEF (Special Education Fund) additional 1 % across all LGUs.
- Other optional levies: ad valorem for idle land, etc.

VII. Other Uses of FMV in a Tax Declaration

Transaction	Why FMV Matters
Sale / Donation	BIR will tax CGT (6 %) or donor’s tax (6 %) on higher of (a) selling price, (b) BIR zonal value, or (c) LGU FMV—thus a low tax-declaration FMV can still drive tax cost.
Estate Settlement	Estate-tax return lists FMV per latest TD if higher than zonal value.
Bank Loans	Banks often start with TD FMV, then commission an independent appraiser.
Expropriation	Courts may consider assessor’s FMV as a floor price, though just compensation usually relies on recent comparable sales.

VIII. Common Pitfalls

Using assessed value instead of FMV—only FMV is the market indicator; assessed value already has an assessment-level discount.
Assuming a decades-old TD remains valid—after each general revision, the assessor issues Notice of Assessment with a new FMV.
Failing to file the Sworn Statement of True Value (LGC §202) within 60 days of acquisition, exposing owners to penalties and forced assessor valuation.
Mistaking TD as conclusive evidence of ownership—courts treat it merely as corroborative evidence (see Heirs of Malate v. Gamboa, G.R. 221499, 31 Aug 2016).

IX. Remedies & Appeals

Step	Forum	Deadline
1 ️⃣ Protest/Revision with Provincial/City/Municipal Assessor	Within 60 days from receipt of Notice of Assessment.
2 ️⃣ Appeal to Local Board of Assessment Appeals (LBAA)	Within 60 days from assessor’s action/in-action.
3 ️⃣ Appeal to Central Board of Assessment Appeals (CBAA)	Within 30 days from LBAA decision.
4 ️⃣ Petition for Review to Court of Tax Appeals (CTA)	Within 30 days from CBAA decision.

X. Documentary & Procedural Checklist

For New TD
- Deed of Sale / Inheritance docs
- Transfer Certificate of Title (TCT) or OCT
- Approved subdivision/relocation plan
- Sworn Statement of True Value
For Building Declaration
- Approved building permit & plans
- Certificate of completion/occupancy
Assessor’s Actions
- Ocular inspection & photos
- Record appraisal sheet & index card
- Issue Tax Declaration and Notice of Assessment

XI. Selected Jurisprudence

Case	Gist
Republic v. Ker & Co., G.R. 67995 (15 Dec 1986)	Tax declaration FMV alone cannot fix expropriation value.
Estate of Marcos v. CA, G.R. 93633 (27 Feb 1999)	TD is not conclusive proof of ownership but indicates claim on property.
Laureano v. CA, G.R. 43633 (29 Jan 1990)	Regular payment of RPT via TD strengthens presumption of ownership.

XII. Practical Tips

Secure the latest SFMV from your assessor’s office before any sale or estate filing.
Check both zonal value and TD FMV—budget for taxes using the higher number.
For new constructions, declare the building within 30 days of completion to avoid back taxes and surcharges.
Keep copies of all prior TDs; they trace value adjustments useful for appeals.
When buying property, require seller to produce the most recent TD and official RPT receipts; unpaid taxes become a lien on the land.

XIII. Conclusion

Computing the market value shown in a Philippine tax declaration is a rule-bound, yet location-specific exercise anchored on the LGU’s Schedule of Fair Market Values. By multiplying objective unit values (land) or replacement-cost tables (buildings & machinery) with physical quantities and adjusting for depreciation, assessors establish FMV, which then cascades into RPT, national taxes, and even collateral valuations. Understanding every step—from statutory sources to appeal remedies—equips property owners, buyers, and practitioners to validate assessments, plan tax liabilities, and safeguard property interests.

Disclaimer: This article is for educational purposes only and does not constitute legal advice. For specific concerns, consult the local assessor or a Philippine tax‐law professional.