Philippine Association of Realty Appraisers, Inc.

PARA
CREASAT
Comprehensive Real Estate Appraisal Seminar and Training
2013

CODE OF CONDUCT

PROVISIONS UNDER THE PHILIPPINE VALUATION STANDARDS (PVS)

 Valuations should be performed by HONEST AND COMPETENT PROFESSIONAL

VALUERS, free of bias or self interest;
 Reports are clear not misleading and will disclose all matters essential to the proper
understanding of the valuation;
 Valuers/appraisers should always promote and preserve public trust in the valuation
profession;
 Private sector realty service in the Philippines is regulated by the National Code of
Ethics for Real Estate Service Practioners, Inc. (NCERESP);
 Valuers comply by the Standards under PVS, by choice, or by requirement placed
upon them by law or regulation, instructions by client, intended users or
organizations;
 Valuation prepared/based on PVS, binds the valuer/appraiser t o the Code of
Conduct prescribed therein;
 Valuations prepared under PVS would only normally be acceptable to end users when
prepared by TRAINED PROFESSIONAL MEMBERS of a recognized professional body
that itself enforces standards of qualification, competence, experience, ethics and
disclosures in valuation.

DEFINITION OF TERMS

 Assumptions
• Suppositions taken to be true.
• Involve facts, conditions, or situations affecting the subject (property being
appraised), or the approach in the valuation.
• Matters capable or worthy of verification. And once declared are to be accepted
in understanding the valuation.
• The definition of “Market Value” incorporates assumptions to ensure
consistency of approach, and the valuer may need to make further assumptions
in respect of facts which cannot be known or facts which could be determined.

 Limiting Conditions
• Constraints and may be imposed by:
o The clients (e.g., the valuer is not permitted to investigate fully one or more
of the significant factors, likely to affect valuation).
o The valuer (e.g., the client may not publish in whole or in part the valuation
report or certificate without the valuers prior written approval of the form
and context it may appear).
o Local statutory law.

Page 13 CODE OF CONDUCT (PVS)

 Philippine Association of Realty Appraisers, Inc. PARA
CREASAT
Comprehensive Real Estate Appraisal Seminar and Training
2013

 A valuer
o A person who possesses the necessary qualifications, ability, and experience to
execute/perform a valuation. (In the Philippines, licensing is required before a
person can act as a valuer, or an appraiser.)
o A person of good repute who has obtained appropriate degree, or equivalent
academic qualification, and possesses suitable experience and is competent in
valuing in the market and category of the asset;
o Understands, and can correctly employ those RECOGNIZED METHODS and
TECHNIQUES that are necessary to produce a credible valuation.
o Is a member of a recognized national professional valuation body;
o Pursues a programme of professional learning throughout his or her career;
and
o FOLLOWS ALL THE REQUIREMENTS OF THE CODE OF CONDUCT.

 Internal Valuer
o Is a valuer or an appraiser who is in the employ of either the entity that owns
the assets or the accounting firm responsible for preparing the entity’s
financial record and/or reports.
o Meets the requirements of independence and professional objectivity required
under the Code of Conduct, but not acceptable to fill the role of independent
valuer due to public presentation and regulations.

 External Valuer
o Is a valuer or an appraiser, together with any associates, has no material links
with the client, an agent acting on behalf of the client, or the subject of the
assignment.
o All valuers undertaking assignments under Philippine Valuation Standards must
meet the requirements of IMPARTIALITY, PROFESSIONAL OBJECTIVITY, and
DISCLOSURE required under the Code of Conduct.

ETHICS

Valuers or Appraiser should, at all times, maintain a high standard of HONESTY and
INTEGRITY and conduct their activities in a manner not detrimental to their clients, the public,
their profession, or their respective national professional body.

Integrity

A Valuer or an Appraiser must –

 not act in a manner that is misleading or fraudulent.
 not knowingly develop and communicate a report that contains false, inaccurate, or
biased opinions and analysis.
 not contribute to, or participate in, a valuation service that other reasonable valuer
would not regard to be ethical or justified.
 act legally and comply with the law and regulations, local or international, where an
assignment is undertaken.
 not claim, or knowingly let pass, erroneous interpretation of professional
qualifications that he or she does not possess.

Page 14 CODE OF CONDUCT (PVS)

 Philippine Association of Realty Appraisers, Inc. PARA
CREASAT
Comprehensive Real Estate Appraisal Seminar and Training
2013

 not knowingly use false, misleading or exaggerated claims or advertising in an effort

to secure assignments.
 ensure that any staff person or subordinate assisting with the assignment adheres to
the Code of Conduct.

Conflict of Interest

A Valuer or an Appraiser must –

 not act for two or more parties in the same matter, except with the written consent
of those concerned.
 take all reasonable precautions to ensure no conflict arise between the interest of his
or her clients and those of other clients, the valuer, his or her firm, relatives, friends
or associates.
 disclose potential conflict of interest in writing before accepting instructions.
 disclose conflict of interest subsequently ascertained.
 disclose within reasonable time conflict of interest ascertained after the completion of
the assignment.

Confidentiality

A Valuer or an Appraiser must –

 deal with client’s affairs with proper discretion and confidentiality.
 not disclose sensitive factual data obtained from a client or the results of an
assignment prepared for a client, or anyone other than those specifically authorized
by the client EXCEPT when LEGALLY required where the valuer must comply with
certain quasi-judicial proceedings within the recognized national professional
valuation body of which the valuer is a member.

Impartiality

A Valuer or an Appraiser must –

 perform with strictest independence, objectivity, and impartiality and without
accommodation of personal interests.
 not accept an assignment that includes the reporting of predetermined opinions and
conclusions.
 not rely upon critical information supplied by a client, or any other party , without
appropriate qualification or confirmation from an independent source unless the
nature and extent of such reliance is specified as a limiting condition.
 not accept assignment to report an assumed hypothetical conditions that are unlikely
to be realized in any reasonable timescale.
 not use or rely on unsupported conclusions based on prejudice of any kind or report
conclusions reflecting an opinion that such prejudice is necessary to maintain or
maximize value.
 With regard to reviewing valuations –
o In reviewing another Valuer’s report, a valuer shall exhibit IMPARTIAL
JUDGMENT and justify his or her reasons for agreeing or disagreeing with the
conclusion of the report.

Page 15 CODE OF CONDUCT (PVS)

 Philippine Association of Realty Appraisers, Inc. PARA
CREASAT
Comprehensive Real Estate Appraisal Seminar and Training
2013

 With regard to Fees –

o Fees connected with an assignment must NOT depend on the
PREDETERMINED outcome of any valuation or other independent objective
advice contained in the valuation report.
o WHETHER the valuer’s fees is or is not contingent upon any aspect of the
report must be disclosed.

Competence

A Valuer or an Appraiser must –

 have the KNOWLEDGE, SKILL and EXPERIENCE to complete the assignment
EFFICIENTLY in relation to an acceptable professional standard.
 properly identify the problem and be certain he or she has the experience and
knowledge.
 in overseas assignment, must associate with professional possessing the experience
and knowledge of the market forces, language, and law to complete the assignment
competently.

Efficiency and Diligence

A Valuer or an Appraiser must –

 act promptly and efficiently in carrying out the client’s instructions.
 keep the client informed of the valuer’s progress.
 decline instructions of client, where circumstances preclude sufficient diligent,
enquiry, quality of work, and completion within a reasonable time.
 make diligent inquiries and investigations to ensure that the data are correct and
reliable.
 prepare and maintain a work file to support the valuation report, which should be
kept for at least five years.

DISCLOSURES

 Valuation report must be meaningful and not misleading, and disclose anything that
might affect objectivity.
 Disclose any assumptions, hypothetical scenarios, or limiting conditions that directly
affect the valuations and, where appropriate, indicating the effect on the value.
 Report must provide sufficient information to describe the work performed, the
conclusions reached, and the context in which they were shaped.
 Must disclose any direct or indirect personal or corporate relationship with the
property or company that is the subject of any assignment and that might lead to a
potential conflict of interest.
 When acting as an internal valuer, the relationship with the entity controlling the
asset should be disclosed in the report.
 When acting as an external valuer but also has worked in a fee-earning capacity for
the client, such relationship must be disclosed lest a third party, having to rely on the
valuation, deem the valuer’s objectivity compromised.

Page 16 CODE OF CONDUCT (PVS)

 Philippine Association of Realty Appraisers, Inc. PARA
CREASAT
Comprehensive Real Estate Appraisal Seminar and Training
2013

 Any limitations to the quality of the service must be disclosed whether due to
externally imposed constraints or peculiar to the valuer or the assignment.
 Outside assistance must be disclosed—identity of the assistants, nature and extent of
their assistance.
 Valuer must place restrictions against the publication in whole or in part without the
consent of the valuer (can keep a measure of control over the form and context in
which his or her valuation are publicly disclosed).
 Disclose any departure from the International Valuation Standards.
 Standards are devised for the generality of situations and cannot cater to every
eventuality.
 There will be occasions where DEPARTURE IS INESCAPABLE/NECESSARY. When such
situations arise, departure would be unlikely to constitute a breach of these
standards, provided such departure is reasonable, complies with the principles of
ethics and measures of competence, and a rationale for such departure is stated in
the valuation report.

REPORTING OF VALUES

Valuation assignments may deal with one or more properties. The style of the report must
be tailored to the nature of the assignment and the needs of the client while meeting certain
minimum requirements as to content.

Minimum contents of any report or certificate:

1. The identity of the valuer and the date of the report;
2. The identity of the client;
3. The instructions, date of the value estimate, purpose, and intended use of the
valuation;
4. The basis of the valuation, including type and definition of value;
5. The identity, tenure, and location(s) of the interest(s) to be valued;
6. The date and extent of inspection;
7. The scope and extent of the work used to develop the valuation;
8. Any assumptions and limiting conditions and any special, unusual, or extraordinary
assumptions;
9. A compliance statement that the valuation has been performed in accordance with
these standards and any required disclosures;
10. The professional qualification and signature of the valuer; and
11. As required in some countries, specific certification by the valuer in the
prescribed form.

The use of the valuation and the complexity of the property determine the level of detail
appropriate to the report.

Where a report is being prepared for a portfolio of properties for use in an audit function,
the level of detailed data required for each of the properties within the portfolio may be less
extensive.

Page 17 CODE OF CONDUCT (PVS)