Iloilo Business Park, City Proper Log Highest Market Price for Land

By Rjay Zuriaga Castor

The Iloilo Business Park in the Mandurriao district and the City Proper area have emerged as the most expensive commercial and business hubs in Iloilo City, with land values exceeding PHP55,000 per square meter.

A Daily Guardian review of Tax Ordinance No. 2023-226 revealed that in 2024, the Iloilo Business Park recorded the highest market value at PHP54,500 per square meter.

The Iloilo Business Park, a 92-hectare mixed-use development by Megaworld Corporation, features office buildings, a lifestyle mall, hotels, and a convention center. It was developed in 2007 on the site of the former Mandurriao Airport.

Other areas such as Mandurriao (PHP37,000/sq.m.), Donato Pison Ave. (PHP37,000/sq.m.), and Jaro (PHP35,000/sq.m.) have also seen significant increases, reflecting the strong demand for business spaces and mixed-use developments.

HEAVY RELIANCE ON DISCOUNTS

The city government of Iloilo has relied heavily on tax discounts to cushion the impact of a sharp increase in real property tax (RPT) in 2024, which rose by over 300% due to the long-overdue updating of fair market values (FMV) for properties.

The connection between FMV and RPT is straightforward: the assessed value of a property, which is used to calculate the RPT, is derived from its FMV. A higher FMV results in a higher assessed value, which in turn increases the amount of property tax.

For nearly two decades, property values in Iloilo City remained unchanged since 2006, leading to a significant tax adjustment when the city government finally implemented the increase in 2024.

Many taxpayers, caught off guard by the abrupt hike, voiced concerns about its financial burden.

In response, the city government has introduced a series of discounts and incentives to alleviate the impact on residents and businesses.

Here’s a rundown:

• 40% Tax Discount from 2024-2025: In January 2024, the City Council approved a 40% reduction in RPT for two years, allowing taxpayers to pay only 60% of the assessed amount. Full payment (100%) will take effect in 2026.
• Extension Until 2026: In December 2024, the council extended the 40% RPT discount until 2026, following a directive from Mayor Jerry Treñas.
• Additional 10% Discount: Taxpayers were encouraged to settle their 2025 RPT before December 31, 2024, to avail of an extra 10% discount.

There are also initiatives to give RPT incentives:

• Heritage Property Incentives: In May 2024, Mayor Jerry Treñas proposed RPT incentives for heritage houses and building owners to encourage preservation.
• Cultural Design Incentives: A city councilor proposed an ordinance granting up to 20% RPT incentives for new buildings incorporating Ilonggo cultural elements.

‘FORCED’ BY COA

In a press conference on Monday, February 3, Treñas claimed the Commission on Audit (COA) had flagged the city for failing to update its FMV for 18 years.

The connection between FMV and RPT is straightforward: the assessed value of a property, which is used to calculate the RPT, is derived from its FMV. A higher FMV results in a higher assessed value, which in turn increases the amount of property tax.

“The COA forced us. They said 18 years have passed since we issued an increase in the schedule of market values,” he said.

“We tried to but when Frank hit us, we halted the increase. When El Nino hit us, we stopped it. The same with COVID-19. In the end, we were forced by COA because of the Mandanas ruling,” he added.

The Mandanas ruling, stemming from a Supreme Court decision in 2018, allows for a substantial increase in the Internal Revenue Allotment for local government units (LGUs).

With the increase in financial resources, LGUs are expected to assume more responsibilities for delivering basic services previously managed by the national government. This includes health services, social welfare, and infrastructure development, as outlined in the Local Government Code.

COA’s 2022 Audit Findings 

In its 2022 audit observations and recommendations, COA noted that the City Assessor’s Office acknowledged that the outdated assessments are lower than current fair market values compared to other government valuations.

It also acknowledged that from 2009 to 2021, the City Assessor proposed general revisions to real property assessments, but none were approved due to economic impacts from calamities like Super Typhoon Frank and COVID-19.

COA said regular updates to the schedule of FMV are crucial not only for RPT and Special Education Tax (SET) calculations but also for asset valuation in sales and financial statements.

“We recognize the efforts of the (Iloilo City government) to efficiently generate local revenues but this should be periodically reviewed and consistent with the provisions of the Local Government Code,” it said.

It stressed that although the amount of RPT and SET collected is substantial, the regular revision of the real property assessment should still be carried out in order to maximize the local revenue generation activities.

“The increase in the local taxes will not only finance additional programs, projects or activities but could also be used to supplement any gaps or decrease from the National Tax Allocation (NTA),” it said.

In 2022, Iloilo City’s NTA constituted 40.03% of its total revenue. RPT accounts for 17.46%, and Tax Revenue from Goods and Services makes up 17.09%. Locally generated revenues cumulatively surpass the NTA, totaling PhP 2.365 billion or 58.87% of total revenue.

These revenue sources, according to COA, highlight the city’s efficient local tax collection.