Appraisal &

Assessment in
the Government
Sector
General Revision of
Assessments and
Property
Classification
• The Provincial, City or Municipal Assessor shall undertake a general
revision of real property assessments once every three (3) years,
which shall commence upon the enactment of the Schedule of Fair
Market Values (SFMV) into an ordinance by the sanggunian
concerned.
• The Provincial Assessors, the City Assessors and the Municipal
Assessors of the Metropolitan Manila Area shall prepare the
Schedule of Fair Market Values for the different kinds and classes of
real property within the territorial jurisdiction of the province, city or
municipality .
• In the case of the Metro-Manila Area, the assessor of each
assessment district shall meet, discuss and harmonize their
respective Schedules of Fair Market Values.
• However, if there is no sufficient time or resources to complete the
general revision work for all real property units (RPUs) within the
territorial jurisdiction of a particular local government unit, a partial
revision may be undertaken by kind or class of real property.
• For example:
• a. By Kind:
– 1st year - All Lands
– 2nd year - All other real properties
• b. By Class:
– 1st year - All Commercial and Industrial
Properties
– 2nd year - All Other Classes of Properties
Purposes of the General Revision of Real
Property Assessments
• A general revision of real property assessments
serves two important purposes in addition to its
primary purpose of equalizing and updating
valuation as follows:
– The real properties that have been “lost” from the tax
rolls are rediscovered and
– It enables the assessor to purge the rolls of the
double assessments of properties that have
accumulated through the years. It has the same
purpose as the periodic physical inventory conducted
by a business establishment.
• A general revision of real property assessments shall be
considered completed after all the field work in the
municipality, province or city have been completed and
corresponding Field Appraisal and Assessment Sheets
(FAAS‟s) of all properties have been prepared and duly
approved; and the data recorded in the records of
assessments. Subsequently, written notices of revised
assessments shall be sent to real property owners.
Appraisal/Assessment Calendar
Facility and Equipment Support
 The Role of Mass Appraisal in the
Preparation of the Schedule of Fair Market
Values for Lands and Buildings

Government does not have the time, money and men to

conduct appraisals with the expected detail and
preciseness as in the appraisal of individual property
for private purposes; thus assessors employ the
process of mass appraisal in their revaluation work for
taxation purposes.
 Mass Appraisal of Land

• The market value of the land shall be

listed separately from all buildings,
structures and improvements for real
property taxation purposes. This requires
a separate land valuation.
 Mass Appraisal of Land

1. Determining Land Sub-Classifications (Market Area

Analysis)
2. Collection, Confirmation, and Organization of Sales Data
3. Land Values in Areas of Limited Sales
1. Expand the sample of sales by extending it historically.
2. Expanding the sample of sales by extending geographically
3. Review of land sales that were rejected as not “Open Market”
4. Consultation with property experts who are familiar with
the area.
5. Developing Adjustments
6. Using land value maps to plot the land sales and facts
affecting value
7. Analyzing land leases
 Mass Appraisal of Residential
Buildings and Other Structures
1. Inspecting the Property
1. Preliminary.
2. Interior inspection and inventory
3. Exterior inspection and inventory.
4. Measure Residential improvement and plotting diagram.
2. Establishing the Market Area (Building Sub-Classifications)
3. Estimating Cost Approach New
4. Depreciation Benchmarks
5. Present Condition
6. Depreciation Schedules
7. Adjustments
8. Land Value Maps
9. Re-appraisal of properties that need to be physically inspected
10. Inspection Levels
11. Quality Control Measures
Mass Appraisal of Commercial
Properties
• 1. Whether valuing commercial, industrial or residential property, similar
information and methods can be used for collecting and analyzing data to
establish base benchmarks and units of comparison. However, because
commercial property includes a variety of building designs and construction
materials as well as differences in quality, the program used must
encompass these variations.

• 2. Information is needed to measure the income-producing potential of

commercial properties that are primarily bought and sold for that purpose.
Data gathered relating to rentals, typical income and expense items for each
class and supportable capitalization rates for each kind of property being
appraised is desirable.

• 3. With proper planning, the necessary information can be obtained to

establish base benchmarks to set up an inventory of properties for the
development of schedules. The data collection is important to the process
and the Assessor‟s staff may need to do this in the course of making
inspections where the data are insufficient.
Preparation of the Schedule of
Fair Market Values
• Before any general revision of real property assessment is made pursuant
to the provision of Title II, Book II of Local Government Code, there shall be
prepared schedule of fair market values by the provincial, city and the
municipal assessors of the municipalities within Metro Manila Area for the
different classes of real property situated in their respective local
government units for enactment of an ordinance by the sanggunian
concerned. The Schedule of Fair Market Values shall be published in a
newspaper of general circulation in the province, city or municipality
concerned, or in the absence thereof, shall be posted in the provincial
capitol, city or municipal hall and in two other conspicuous places therein. In
the case of Metro Manila Area, the assessor of each assessment district
shall meet, discuss, compare and harmonize their respective Schedule of
Fair Market Values.
• The “Miscellaneous Provisions” may contain a provision authorizing the
assessor to classify, value and assess real property independently of the
schedule in cases where such real property is not specifically included in the
approved Schedule of Fair Market Values.
A. Establishing a Base Valuation
Date
• The Schedule of Fair Market Value prepared shall prescribed the base valuation
date as January 1 of the first year of the general revision of assessments.
• The base valuation date provides a predetermined point in time at which all time
adjustments can be aimed. All the sales used in the pre-appraisal set-up should
be adjusted to the base valuation date to reflect either inflationary or recessionary
trends in the market.
• Time adjustments can be made by using either resale properties or a comparable
sales analysis of similar properties. The time adjustment studies should be
conducted as close to the base valuation date as possible. These adjustments are
expressed as a percent increase or decrease for an appropriate period. If re-sales
are not available, the trends can be determined by further analysis. Sales
occurring after the base valuation date must be considered in the final analysis
conducted at the end of the appraisal program. Any changes in value levels as
reflected by those sales are recognized by adjusting the completed appraisals to
base valuation date. Additionally, during the yearly maintenance program when
new construction is picked up, always refer back the base valuation date and use
the same base standards. Compensate for any changes in market value levels
occurring after the original base valuation date by applying subsequent yearly
adjustments.
 B. Approaches to Value and Mass
Appraisal as the Basis of Preparation of
the SFMV:
• Generally, the three (3) approaches to value shall be the
basis in the preparation of the Schedule of Fair Market
Value.
C. The Format of the Schedule of Fair
Market Value

• 1. For purposes of uniformity the Schedule of Fair Market Values shall be

prepared and submitted in the format prescribed in Attachment 12 including the
forms which will be used to support its preparations namely;

a. GR Form 1. Office Order/Schedule of Base Unit Market Values for Residential,

Commercial and Industrial Land (including Land Value Map)
b. GR Form 2. Criteria for Sub-Classification of Urban Lands
c. GR Form 3. Statement of Sales Values of Residential, Commercial and Industrial
Lands
d. GR Form 4. Tabulation of Sales Values for each Class of Residential, Commercial
and Industrial Lands
e. GR Form 5. Computation for the Unit Base Market Value of Urban Land
f. GR Form 6. Schedule of Unit Base Market Value for Agricultural Lands
g. GR Form 7. Statement of Sales Values of Agricultural Lands
h. GR Form 8. Tabulation of Sales Values for each Class of Agricultural Lands
i. GR. Form 9. Computation for the Unit Base Market Value of Agricultural Lands
C. The Format of the Schedule of Fair
Market Value

j. GR Form 10. Schedule of Base Unit Cost for Building (Including Classification of
Buildings/Structures and Type of Construction)
k. GR Form 11. Schedule of Depreciation
l. GR Form 12. Schedule of Unit Cost for Extra Items
m. Computation for Unit Costs of Buildings
n. Miscellaneous Provision
 D. Classification of
Buildings/Structures

• Buildings shall be generally classified in accordance with the structural designs

for which they were intended regardless of their actual use, such as residential,
commercial, industrial, or farmhouse. The classification system shall embrace
only such structure as are commonly found in the local government unit (LGU).

• 1. Under the use design classification, building may be grouped into the
following:

• a. RESIDENTIAL BUILDINGS:
(1) Single Detached
(2) Duplex
(3) Apartments or Row Houses
(4) Town Houses
(5) Condominiums
 D. Classification of
Buildings/Structures
• b. COMMERCIAL BUILDINGS:
(1) Office
(2) Bank
(3) Theater
(4) Hotel/ Motel
(5) Parking Buildings
(6) etc
• c. INDUSTRIAL BUILDINGS:
(1) Factory
(2) Warehouses or Bodega
• d. AGRICULTURAL STRUCTURES
(1) Barn
(2) Poultry House
(3) Stable
(4) Hog house
(5) Greenhouse
• 2. For purposes of establishing the schedule of base unit construction costs,
each type of building shall be further grouped in accordance with the kind
and quality of material, used in the construction, such as Type I-A to C; Type
II-A to D; Type III-A to IV. Standard base specifications shall then be
prepared and defined, at the same time describing each type.
a. Types of Construction

• Type I Buildings shall be of wood construction. The structural

elements may be any of the materials permitted as follows: Nipa
houses and similar structures falling under this type.
• Type II Buildings shall be of wood construction with protective fire-
resistant materials and one-hour fire resistive throughout: Except,
that permanent non-bearing partitions may use fire-retardant treated
wood within the framing assembly.
– Third group wooden structural framings, floorings and sidings, and G.I. roofing
but structural members are substandard.
– Third group wooden structural framings, floorings and sidings, and G.I. roofing
a. Types of Construction

• Type III Buildings shall be of masonry and wood construction.

Structural elements may be any of the materials permitted by the
said National Building Code: Provided, that the building shall be
one-hour fire resistive throughout. Exterior wall shall be of
incombustible fire-resistive construction.
– Third Group wooden structural framings, floorings and sidings, and G.I. roofing,
but structural members are sub-standard.
– Third Group wooden structural framings, floorings and sidings, and G.I. roofing.
– First Group wooden post, girders, girts, windowsills and head, apitong floor joists
and roof framing, tanguile floorings and sidings, and G.I. roofing.
– First Group wooden structural framings, floorings, and walls on the first floor, and
tanguile walls on the second floor, and G.I. roofing.
– First group wooden structural framings, walls and G.I. roofing.
a. Types of Construction
• Type IV Buildings shall be of steel, iron, concrete, or masonry construction.
Walls, ceiling, and permanent partitions shall be of incombustible fire
resistive construction: Except, that permanent non-bearing partitions of one-
hour fire-resistive construction may use fire-retardant treated wood within the
framing assembly.
• a. Concrete columns, beams and walls – but wooden floor joists, flooring and
roof framings and G.I. roofing; even if walls are in CHB, kitchen and T & B
are in reinforced concrete slabs.
• b. Concrete columns and beams – but hollow block walls and G.I. roofings.

• Type V Buildings shall be fire-resistive. The structural elements shall be of

steel, iron, concrete, or masonry construction. Walls, ceiling, and permanent
partitions shall be of incombustible fire-resistive construction.
• a) Structural steel and reinforced concrete columns and beams.
• b) Columns beams, walls, floors and roofs all reinforced concrete.
• c) Walls are hollow blocks reinforced concrete or tile roofing
C. Procedures in the Approval of
the Schedule of Fair Market
Values
• 1. Legal Basis:

• a. Procedure for Approval of Ordinance Prescribing the Schedule of Fair

Market Values and Revenue Measures and their Effectivity – The procedure
for approval of local tax ordinances and revenue measures shall be in
accordance with the provisions of R.A. No. 7160: Provided, That public
hearings shall be conducted for the purpose prior to the enactment thereof:
Provided, further, That any question on the constitutionality or legality of tax
ordinances or revenue measures may be raised on appeal within thirty (30)
days from the effectivity thereof to the Secretary of Justice who shall render
a decision within sixty (60) days from the date of receipt of the appeal:
Provided, however, That such appeal shall not have the effect of suspending
the effectivity of the ordinance and the accrual and payment of tax, fee, or
charge levied therein: Provided, finally, That within thirty (30) days after
receipt of the decision or the lapse of the sixty-day period without the
Secretary of Justice acting upon the appeal, the aggrieved party may file
appropriate proceedings with a court of competent jurisdiction.
C. Procedures in the Approval of
the Schedule of Fair Market
Values
• b. Publication of Tax Ordinance and Revenue Measures. – (a) Within ten
(10) days after their approval, certified true copies of all provincial, city and
municipal tax ordinances or revenue measures shall be published in full for
three (3) consecutive days in a newspaper of local circulation: Provided,
however, That in provinces, cities and municipalities where there are no
newspapers of local circulation, the same shall be posted in at least two (2)
conspicuous and publicly accessible places.
 2. Technical Aspect

• The SFMV shall be prepared on the basis of the standard

approaches to value, such as the market or sales, the cost or the
income approach. Consideration is made on the data gathered from
mortgages, insurance, rentals and such other appraisal information
available to the assessors, which are evaluated and tabulated in the
prescribed forms.
• The ordinance of the SFMV for the general revision of real property
assessments shall include the legally approved assessment levels
and the percentages of adjustments applicable to determine the
market values of real properties for purposes of real property
taxation.
D. Procedure for the Approval of Ordinance Prescribing the
Schedule of Fair Market Values, Revenue Measures and
their Effectivity

• 1. The procedure for approval of local tax ordinances and revenue

measures shall be in accordance with the provisions of R.A. No. 7160;
• 2. Provided, That public hearings shall be conducted for the purpose prior to
the enactment thereof;
• 3. Provided further, That any question on the constitutionality or legality of
tax ordinances or revenue measures may be raised on appeal within thirty
(30) days from the effectivity thereof to the Secretary of Justice who shall
render a decision within sixty (60) days from the date of receipt of the
appeal;
• 4. Provided, however, That such appeal shall not have the effect of
suspending the effectivity of the ordinance and the accrual and payment of
tax, fee or charge levied therein;
• 5. Provided, finally, That within thirty (30) days after receipt of the decision,
or the lapse of the sixty-day period without the Secretary of Justice acting
upon the appeal, the aggrieved party may file appropriate proceedings with
a court of competent jurisdiction.
E. Publication of the Schedule of Fair Market
Values
• Upon completion of the SFMV, the same shall be forwarded to the
Sanggunian of the province, city or municipalities in Metro Manila for
deliberation and series of public hearings. Within ten days after approval,
the SFMV shall be published in a newspaper of general circulation for three
(3) consecutive days or in the absence, thereof, in the local newspaper, or
shall be posted in the provincial capitol, city or municipal hall and in two
other conspicuous places therein.
 F. Applicability of the Schedule

• Real property shall be valued for taxation purposes on the basis of the
Schedule of Fair Market Values prepared for the province, city or
municipality. As far as properly applicable, such schedule shall be
controlling, except where the property to be assessed is not of the same
kind as classified in the schedule, or where the value is not fixed. The same
shall be valued at its market value independent of said schedule.
G. Amendment of the Schedule of Fair
Market Values
• The provincial, city or municipal assessor may recommend to the
Sanggunian concerned amendments to correct errors in the Schedule of
Fair Market Values. The Sanggunian concerned shall, by ordinance, act
upon the recommendation within ninety (90) days from receipt thereof.
H. Reassessment Due to General Revision

• Reassessment of real properties covered by general revision shall be strictly

made in accordance with the approved SFMV.

• 1. Individual property adjustments pursuant to the approved SFMV shall be

consistently enforced;
• 2. Stripping method for land, which depth exceeds the established standard
for a particular class of property, shall be consistently adhered to;
• 3. For lands bounded by two parallel streets, the value of the last strip shall
not be lower than the market value per square meter of the abutting street;
• 4. Value adjustments based on factors not specified in the SFMV, such as
but not limited to the shape, topography and blighted status of lands that
adversely affect the value of the property being assessed, shall be applied;
• 5. In case of buildings, machinery and other structures, already covered by
existing assessments, the Reproduction/Replacement Cost New Less
Depreciation (RCNLD) approach shall be applied.
H. Reassessment Due to General Revision

• All assessments or re-assessments made after the first (1st) day of January of
any year shall take effect on the first (1st) day of January of the succeeding
year: Provided, however, That the reassessment of real property due to its
partial or total destruction, or to a major change in its actual use, or to any great
or sudden inflation or deflation of real property values, or to the gross illegality
of the assessment when made or any other abnormal cause, shall be made
within ninety (90) days from the date any such cause or causes occurred, and
shall take effect at the beginning of the quarter next following the
reassessment; Provided further, that real property declared for the first time
shall be assessed for taxes for the period during which it would have been
liable but in no case for more than ten (10) years (plus the current year), prior
to the date of initial assessment: Provided, however, That such taxes shall be
computed on the basis of the applicable schedule of values in force during the
corresponding period. If such taxes are paid on or before the end of the quarter
following the date the notice of assessment was received by the owner or his
representative, no interest for delinquency shall be imposed thereon; otherwise,
such taxes shall be subject to an interest at the rate of two percent (2%) per
month or a fraction thereof from the date of the receipt of the assessment until
such taxes are fully paid.