mass appraisal process

394 Pages·2012·37.87 MB·English

[Online Edition]

MASS APPRAISAL GUIDEBOOK
A Supplement to the Manual on Real Property
Appraisal and Assessment Operations
With Expanded Discussions
on Special Purpose Properties,
and Plant, Machinery & Equipment
[Online Edition]
April 2010
Bureau of Local Government Finance
DEPARTMENT OF FINANCE
MASS APPRAISAL GUIDEBOOK (Online Edition)
A Supplement to the Manual on Real Property Appraisal
and Assessment Operations
With Expanded Discussions on Special Purpose Properties,
and Plant, Machinery & Equipment
Copyright © Bureau of Local Government Finance, 2010
8F EDPC Bldg., BSP Complex, Roxas Blvd.
1004 Manila, Philippines
Telefax: + 632 524-6324
Web: www.blgf.gov.ph
Email: [email protected]
First Printing, November 2011.
All rights reserved.
No part of this book shall be reproduced in any form or by any means without
written permission of the copyright owners and the publisher.
ISBN 978-971-94098-3-0
Printed in the Philippines
Published by the Bureau of Local Government Finance
Photographs by John Leigh, Paul Carr and Edmond Yee
Cover design and layout by Hanzel Gapayao
Republic of the Philippines
DEPARTMENT OF FINANCE
Roxas Boulevard Corner Pablo Ocampo, Sr. Street
Manila 1004
DEPARTMENT ORDER No. 10-2010
28 April 2010
SUBJECT: Prescribing the “Mass Appraisal Guidebook: A Supplement to the Manual
on Real Property Appraisal and Assessment Operations (with Expanded
Discussions on Valuation of Special Purpose Properties and Plant,
Machinery & Equipment)”
TO: All Regional Directors of the Bureau of Local Government Finance,
Provincial, City and Municipal Assessors and other concerned DOF agencies.
_________________________________________________________________________________
WHEREAS, Section 201 of the Local Government Code of 1991 and Article 291 of its Imple-
menting Rules and Regulations (IRR) provide that the Department of Finance (DOF) shall pro-
mulgate the necessary rules and regulations for the classification, appraisal and assessment of real
property;
WHEREAS, Sections 33 (1) and (2) under Title II of Executive Order No. 292, series of 1987,
otherwise known as the “Administrative Code of 1987” provide that the Bureau of Local Gov-
ernment Finance (BLGF) shall “assist in the formulation and implementation of policies on local
government revenue administration and fund management”, and “exercise administrative and
technical supervision and coordination over treasury and assessment operation of local govern-
ments”;
WHEREAS, pursuant to the abovementioned mandate, the DOF issued Department Order No.
1-04 (October 2004) prescribing the “Manual on Real Property Appraisal and Assessment Opera-
tions”, hereinafter referred to as the “Manual”, for appraisal and assessment of real property by
local government assessors;

WHEREAS, the Philippine Government, through the DOF, the BLGF and the National Tax Re-
search Center (NTRC), is implementing reforms in real property valuation and taxation under
Component 4 of the Second Land Administration and Management Project (LAMP2), which
aims to “improve the quality of government and private sector appraisal performance through
the adoption of uniform valuation standards and a single valuation base for taxation”, “pursue
property taxation reforms”, and “lay the foundation through education and training for the future
expansion of property valuation and appraisal activities”;

WHEREAS, the DOF issued Department Order No. 37-09 (September 2009) prescribing the
“Philippine Valuation Standards (1st Edition) - Adoption of the IVSC Valuation Standards under
Philippine Setting” to raise the quality of public and private sector valuation at par with international
standards and best practices, and promote transparency and reliability of valuations for various uses,
e.g., taxation, disposal of government assets, financial reporting, secured lending, transfers of owner-
ship, litigation, etc., among others;
WHEREAS, as a result of the comprehensive simulation studies in pilot local government units
(LGUs), and the extensive research and in-depth workshops with LGU appraisal experts on the
subject matter, additional and new instructional materials for local appraisal are required to adapt,
operationalize and comply with the PVS, and incorporate the use of modern information systems and
resources to reflect national laws, policies, rules, and regulations under Philippine conditions;
WHEREAS, provision of replacement material for Chapters III and IV of said Manual, by expand-
ing the technical discussions and contents of said chapters in the form of a guidebook, is deemed
necessary to advance the real property appraisal/valuation processes, particularly in the development
of the Schedule of Market Values (SMV) by the local governments for local taxation purposes, and
therefore achieve the objectives of the LAMP2 project.
NOW THEREFORE, the following are hereby issued:
Section 1. Chapters III and IV of the Manual are replaced with the “Mass Appraisal Guide-
book: A Supplement to the Manual on Real Property Appraisal and Assessment Operations
(with Expanded Discussions on Valuation of Special Purpose Properties, and Plant, Machin-
ery & Equipment)”, hereinafter referred to as the “Guidebook”.
Section 2. The Guidebook shall be adopted by all local government assessors and other DOF
agencies undertaking mass appraisal of real property for taxation purposes;
Section 3. The Guidebook shall be adopted as an enhancement and replacement of Chapters
III and IV, thus effectively becoming integral part of Local Assessment Regulations No.
1-04, the Manual, and other relevant issuances by the Department;
Section 5. This Department Order supersedes all other Orders issued which are inconsistent
herewith, and shall be effective immediately;
Section 6. Accordingly, Regional Directors, Provincial, City and Municipal Assessors, and
other concerned DOF agencies, are hereby enjoined to properly, efficiently, and strictly im-
plement the provisions of the Guidebook.
MARGARITO B. TEVES
Secretary
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M
essage
Revenue generation is one of the core thrusts of the DOF in line with the implementing
objectives and core commitment of the Philippine government in alleviating poverty through
sustainable reforms in land administration and management. The demand for efficient revenue
mobilization mechanisms requires sound policies and strategies in augmenting the capacities of local
government units to increase income from local sources. One notable undertaking of the DOF is the
equitable raising of real property-based revenue by government through efficient and effective and
transparent valuation and taxation systems. LGUs require a solid revenue base for which the local
fiscal governance is anchored, and real property offers the biggest source of local income on having a
reliable and transparent valuation system.
This “Mass Appraisal Guidebook: A Supplement to the Manual on Real Property Appraisal
and Assessment Operations with Expanded Discussion on Special Purpose Properties, and Plant,
Machinery and Equipment” is a product of the Second Land Administration and Management Project
(LAMP2), by which the Government has made long-term commitments to broad programs of reform in
the appraisal industry, with particular focus on mass appraisal for local government taxation purposes.
This Guidebook supports the Manual on Real Property Appraisal and Assessment Operations (1996)
as produced by the Department of Finance in 1991, and updates the technical appraisal material in the
Manual.

In October 2009, the DOF issued Department Order No. 37-09 prescribing the Philippine
Valuation Standards (1st Edition) with the objective of raising the quality of public and private sector
valuations in line with international standards and best practices. This Guidebook is a progression
from these Standards and provides for the operationalization and practical application of the Philippine
Valuation Standards in the interest of LGU mass appraisal for taxation purposes.
The Mass Appraisal Guidebook is a living document -- open to adopt relevant technologies
based on developments in the discipline and professional practice of valuation. This Guidebook will
be a vital instrument for local governments in their quest for sustainable revenue generation, especially
for the professionalized corps of assessors and local government appraisers who now assume a broader
role in achieving local fiscal governance.
MARGARITO B. TEVES
Secretary

REPUBLIC OF THE PHILIPPINES
BUREAU OF LOCAL GOVERNMENT FINANCE
DEPARTMENT OF FINANCE
8th Floor EDPC Building, Bangko Sentral ng Pilipinas Complex
Roxas Boulevard, Manila 1004. Telefax Nos. 527-2780 / 527-2790
Email: [email protected]
M
essage
I am pleased to introduce this “Mass Appraisal Guidebook: A Supplement to the Manual on
Real Property Appraisal and Assessment Operations with Expanded Discussion on Special Purpose
Properties”. This Guidebook has come about as result of the need to provide more technical information
and discussions on mass appraisal process for local governments, thereby expanding the Manual on Real
Property Appraisal and Assessment Operations, also known as the “Assessor’s Mnual” produced by the
Bureau of Local Government Finance (BLGF) in 2004. This is a timely and essential reference guide
especially as we pursue the professionalization of the assessment service in the LGUs pursuant to Republic
Act No. 9646, otherwise known as the Real Estate Service Act.
This Guidebook is part of a program of the Department of Finance (DOF) under the Second
Land Administration and Management Project (LAMP2) to provide more support to valuations in local
governments and assist them in arriving at a better market-based valuation on which to base real property
tax. This program has also resulted in the development of the Philippine Valuation Standards, the design
and production of the Valuation Database and Information System (VDIS), the provision for valuation
education program and trainings, among others. These developments have drawn on the research and
outcomes of substantial simulation and pilot activities undertaken within LAMP2.
For various reasons, many LGUs have struggled to provide current and/or market-based valuation.
The materials in this Guidebook, including many examples, will greatly assist local assessors with a step
forward. All readers and participants are encouraged to absorb the knowledge and embrace the changes
that are put forward in the reforms for a more thorough and correct valuation in the LGUs. It is important
that assessors translate this knowledge into a market-based SMV that is current and correct to help their
LGUs in their revenue generation. A reliable and well-substantiated local government valuation base will
allow other organizations to have greater trust in the LGU valuations, and it will also contribute to a better
and more transparent property market – itself being a major contributor to the Philippines economy.
In endorsing this Guidebook, I acknowledge all the organizations and individuals involved in
this important undertaking. In particular, I thank the Australian Agency for International Development
(AusAID) for the technical assistance and the World Bank for the funding support. The management and
staff of the BLGF, the National Tax Research Centre (NTRC), the assessor-members and advisers of the
Technical Working Group, and the project staff of LAMP2 Component 4 are also commended for their
enthusiasm and effort, and most importantly for the valuable contribution of expertise and time in the
production of this Guidebook.
MA. PRESENTACION R. MONTESA, CESO III
Executive Director