MRPAAO chapter 1 and def of terms

Abstraction Method

Abstraction Method

method of land valuation in the absence of vacant land sales, whereby improvement values obtained from cost model are subtracted from sales prices of improved parcels to yield residual land value estimates;

Acquisition Cost

for newly-acquired machinery not yet depreciated and appraised within the year of its purchase, refers to the actual cost of the machinery to its present owner, plus the cost of transportation, handling, and installation at the present site. The cost may also include freight and insurance charges, brokerage, customs duties and taxes;

Actually, Directly and Exclusively Used

(Blank) used is defined as an act or fact in reality; “(Blank) is something real or actually existing as opposed to something merely possible, or to something which is presumptive or constructive. (Blank) is defined as that use without anything intervening proximately or without an intervening agency or person. (Blank) means the primary or inherent use and does not preclude such incidental uses as are directly connected with, essential to, and in furtherance of the primary use. To illustrate, the primary use of a building may be for charitable or religious or educational purpose. The exemption is not wholly or partly lost because on occasion, the building or part of it is used for social purposes or let out to others for entertainment;

Actual Used

refers to the purpose for which the property is principally or predominantly utilized by the person in possession thereof;

Ad Valorem Tax

is a levy on real property determined on the basis of a fixed proportion of the value of the property;

Agricultural Land

is land devoted principally to planting of trees, raising of crops, livestock and poultry, dairying, salt making, inland fishing and similar aqua cultural activities, and other agricultural activities, and is not classified as mineral, timberland, residential, commercial or industrial land;

Appraisal

is the act or process of determining the value of a property as of a specific date for a specific purpose. It may also be defined as the act of estimating the value of a property. It is an estimate or opinion of value, usually market value or value as defined by the appraiser. It is made as of a specific date and is a conclusion which results from a logical and orderly analysis of facts.

Appraiser/Assessor

one who conducts appraisals; specifically, one who possesses the necessary qualifications, ability and experience to execute or direct the appraisal of real or personal property;

Arm‟s Length Transaction

a transaction freely arrived at in the open market, unaffected by abnormal pressure or by the absence of normal competitive negotiation as might be true in the case of a transaction between related parties;

Assessment

is the act or process of determining the value of a property or proportion thereof subject to tax, including the discovery, listing, classification and appraisal of properties;

Assessment Level

is the percentage applied to the market value to determine the taxable value of the property;

Assessment Operations

is a means of assigning on every parcel of land and upon all taxable improvements on such lands, a current and fair market value, an assessment level to be able to arrive at an assessed value for each land and each improvement;

Assessed Value

is the market value of the property multiplied by the assessment level. It is synonymous to taxable value;

Benchmark

is a reference point from which the value of other similar properties is measured. To be consistent in determining the quality level of construction, quality class benchmarks for class, age and type of structure shall be established.

Buildings

are permanent structures adhered to the land usually used for habitation , commercial and industrial purposes and for other various uses and not mere superimpositions on the land like a “barong barong” or quonset fixtures;

Bundle of Rights

is the combination of rights associated with the ownership of real property, e.g., the right to use, to sell, to lease, to give away, or to exercise all of these rights;

Capitalization

is the process of converting into present value (or obtaining the present worth of) a series of anticipated future periodic installment of net income;

Carport

an open-sided roofed automobile shelter that is usually formed by an extension of the roof from the side of a building;

Cemetery

an “area or place where the dead are buried, a place of burial set apart either by municipal authority or private enterprise for the internment of the dead, etc., and this includes whatever property is necessary for use of the cemetery such as paths, ornamentation and the land within the cemetery limits acquired for but not yet actually used for the burial of the dead;

Charitable Institutions

refer to any body of persons or trust established for charitable purposes such as (1) relief of poverty; (2) advancement of education; (3) advancement of religion; and (4) other purposes of a charitable nature beneficial to the community. The word charitable in a legal sense includes every gift for a general public use, to be applied consistent with existing laws, for benefit of an indefinite number of persons, and designed to benefit them from an educational, religious, moral, physical or social standpoint;

Church

is a building set apart for public worship; a place of worship of any religion;

Commercial Property

is property devoted principally for the object of profit and is not classified as agricultural, industrial, mineral, timberland, or residential property;

Comprehensive Land Use Plan

refers to a document accompanied by maps and all the taxable improvements on such lands, a current and fair market value, and assessment level to be able to arrive at an assessed value for each land and each improvement.

Consequential Benefits

the increase in the value of the other interests of the property owner that can be attributed to the new use to which his former property will be put by the expropriating authority.

Consequential Damages

damages to other interests of the owner that can be attributed to the expropriation;

Convent

a building including the land it actually occupies and the adjacent ground or vegetable garden for the use of the parish priest in the ordinary life. It is also defined as a “monastery or nunnery.

Cooperative

is a duly registered association of persons with a common bond of interest, who have voluntarily joined together to achieve a lawful common or social economic end, making equitable contributions to the capital required and accepting a fair share of the risks and benefits of the undertaking in accordance with universally accepted cooperative principles;

Cost

is the amount of money necessary to produce, create or manufacture an item of property;

Cost Approach

is also known as replacement or reproduction cost less depreciation. Under this approach to value, the land is appraised as vacant. The land value is then added to the depreciated cost of the improvements to arrive at an indication of value. It is based on the “Theory of Substitution”.

Data Computerization

encompasses all activities leading to the establishment and operationalization of a computer-assisted data base for Real Property Tax Administration (RPTA) among which includes the familiarization/training of key personnel, encoding and validation of data acquisition and installation of standard RPTA system, generation of reports and preparation of complementary manual of procedures.

Depreciation

is a loss in value brought about by physical deterioration and/or obsolescence;

Depreciated Value

is the value remaining after deducting depreciation from the acquisition cost;

Economic Life

is the estimated period over which it is anticipated that a machinery may be profitably utilized;

Fair Market Value/Market Value

is the price at which a property may be sold by a seller who is not compelled to sell and bought by a buyer who is not compelled to buy; Market Value is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in arm‟s length transaction (a transaction between independent, unrelated parties involving no irregularity) after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion;

Foreshore Land

a strip of land along the seashore, the use of which may or may not be granted by the government to private persons or corporations;

Garage

a building or compartment of a building used for housing an automotive vehicle;

Going Concern Value

value in use;

Highest and Best Use

the most probable use of a property which is physically possible, appropriately justified, legally permissible, financially feasible and which results in the highest value of the property being valued;

Horticultural Land

is land devoted to or cultivated for planting of vegetables, flowers and other ornamental plants;

Improvement

is a valuable addition made on the property or an amelioration in its condition, which is more than a mere repair or replacement of parts involving capital expenditures and labor, intended to enhance its value, beauty or utility or to adapt it for new or further purposes;

Income Approach

an appraisal technique used to estimate the market value of a property on the basis of the income it produces or is capable of producing. The value is estimated by capitalizing the estimated future income, either gross or net. This approach is based on the theory that a property is worth what it will earn. Value is the present worth of future benefits arising from the ownership;

Industrial Land

is land devoted principally to industrial activity as capital investment and is not classified as agricultural, commercial, timber, mineral or residential land;

Information and Education Campaign (IEC)

is the RPTA Information kit for the use of LGU officials, assessors and treasurers in the RPTA Project;

Just Compensation

described as the just and complete equivalent of the loss which the owner of the thing expropriated has to suffer by reason of the expropriation;

Land Use

refers to the manner of utilization of land, including its allocation, development and management;

Land Use Conversion

refers to the act or process of changing the current use of a piece of agricultural land into some other uses as approved by the Department of Agrarian Reform (DAR);

Machinery

embraces machines, equipment, mechanical contrivances, instruments, appliances or apparatus which may or may not be attached, permanently or temporarily to the real property. It includes the physical facilities for production, the installations and appurtenant service facilities, those which are mobile, self-powered or selfpropelled, and those not permanently attached to the real property which are actually, directly and exclusively used to meet the needs of the particular industry, business or activity and which by their very nature and purpose are designed for, or necessary to its manufacturing, mining, logging, commercial, industrial or agricultural purposes, without which such industry or facility cannot function;

Mangrove Land

is a term applied to the type of forest occurring on tidal flat along the seacoast, extending along stream where the water is brackish;

Marsh Land

a tract of low-lying land usually under water;

Market Data Approach

is also known as the Comparative Approach. Traditionally, an appraisal procedure in which the market value estimate is predicated upon prices paid in actual market transactions and current listings. It is a process of analyzing sales of similar recently sold properties in order to derive an indication of the most probable sale prices of the property being appraised. The reliability of this technique is dependent upon: a) the availability of comparable sales data; b) the verification of the sales data; c) the degree of comparability or extent of adjustment necessary for time differences; and d) the absence of non-typical conditions affecting the sales price;

Market Value

is the price agreed upon by the buyer and seller in the open market in the usual and ordinary course of legal trade and competition; the price and value of the article established or shown by sale, public or private, in the ordinary way of business; the fair value of property is between one who desires to purchase and one who desires to sell; the current price; the general or ordinary price for which property may be sold in that locality.

Mass Appraisal

is the process of valuing a group of properties as of a given date using standard methodology, employing common data, and allowing for statistical testing;

Memorial Parks

are lands exclusively used as burial ground and developed for profit;

Mineral Lands

are lands in which minerals, metallic or non-metallic, exist in sufficient quantity or grade to justify the necessary expenditures to extract and utilize such materials;

Mosque

is an Islamic place of public religious worship;

National Integrated Protected Areas Systems (NIPAS)

is the classification and administration of all designated protected areas to maintain essential ecological processes and life-support system, to preserve genetic diversity, to ensure sustainable use of resources of forest therein, and to maintain their natural condition to the extent possible;

Non-Profit Cemetery

is a cemetery owned and operated by the government, by religious corporations, by associations and societies exclusively for its members and not for profit; In the case of a cemetery or a memorial park which is privately owned, developed and operated for profit put, such shall be classified as commercial. However, lots/plots already in the name of the buyer and/or already actually used as burial grounds shall likewise be assessed and classified as commercial but considered exempt;

Orchard

is land specifically devoted to various fruit trees and plants;

Parsonage

is ministerial residence used in connection with any place of worship of any denomination. It shall include the house appurtenant to a cathedral, to a synagogue, or to a country-meeting house;\

Public Use

means public usefulness, utility, or advantage, or what is productive of general benefit, so that any appropriating of private property by the State under its right of eminent domain, for purposes of great advantage to the community, is a taking for public use.

Real Estate

the physical land and all those items, which are attached to the land. It is the physical, tangible entity which can be seen and touched, together with all the additions on, above, or below the ground;

Real Property

includes all the rights, interests, and benefits related to the ownership of real estate. Ownership of real estate is evidenced by a Certificate of Title, Free Patent or Tax Declaration in the absence of Certificate of Title;

Real Property Tax Collection Operations

involves collection of all real property taxes and penalties due and payable to the local government unit (LGU) through the positive and total enforcement of tax laws and their penal provisions.

Reassessment

is the assigning of new assessed values to property, particularly real estate, as the result of a general, partial, or individual reappraisal of the property;

Records Conversion and Management

is the establishment and maintenance of permanent official records and files in the office of the Provincial, City or Municipal Assessor so that an updated and regular listing of all properties is readily available. It also serves as a basis for a more accurate collection of real property tax and establishes the important link between assessment and tax collection operations.

Reclassification of Agricultural Lands

refers to the act of specifying how agricultural lands shall be utilized for non-agricultural uses such as residential, commercial or industrial, as embodied in the land use plan, subject to the requirements and procedures for land use conversion. It also includes the reversion of nonagricultural lands to agricultural use.

Religious Purpose

means a use of such property by a religious society or body of persons as a stated place for public worship, Sunday schools and religious instructions;

Remaining Value

is the value corresponding to the remaining useful life of the machinery;

Replacement Cost

is the cost of constructing a similar property which is equally desirable and has the same utility as the one under appraisal;

Reproduction Cost

is the cost of constructing an exact replica of the building being appraised based on current prices of labor and materials and contractor‟s practices;

Residential Land

is land principally devoted to habitation;

Residential Machinery

are those machines, equipment, appliances or apparatus permanently attached to residential land and/or buildings;

Seminary Building

used by religious organization as a place for public worship and the education for men for priesthood which mainly involves religious instructions, is deemed considered used for religious purposes. Moreover, a seminary is defined as a place or school where persons are instructed in theology, such as the study for priesthood.

Special Classes of Real Property

all lands, buildings, and other improvements thereon actually, directly and exclusively used for hospitals, cultural, or scientific purposes, and those owned and used by local water districts, and government owned or controlled corporations rendering essential public services in the supply and distribution of water and/or generation and transmission of electric power shall be classified as special;

Special Economic Zones

refers to selected areas which have the potential to be developed into agro-industrial, industrial, tourist/recreational, commercial, banking, investment and financial centers. An ecozone may contain any or all of the following: industrial estates, export processing zones, free trade zones, and tourist recreational centers;

Special Purpose Properties

are properties, which are designed, constructed and developed for a specific use or purpose. By its very nature, this type of property is rarely offered for sale in the open market except as part of a going concern. Because of the special design and function, conversion of special purpose properties to other types of development or application is generally not economically feasible;

Socialized Housing

refers to housing programs and projects covering houses and lots or home lots only undertaken by the government or the private sector for the underprivileged and homeless citizens which shall include sites and service developments, long-term financing, liberalized terms on interest payments, and such other benefits in accordance with R. A. 7279

Tax Map

is a graphic representation of a portion of the earth‟s surface drawn to scale on standard size drawing material, having property lines and jurisdictional boundaries delineated showing all parcels of real property and identifying each separate real property ownership by a unique number. Also referred to as Property Identification Map;

Tax Mapping

is a highly accurate method of field operations for identifying real property units, defining property boundaries, determining actual use, and discovering undeclared properties for taxation purposes.

Timberland

is land identified as forest or reserved area by the government, which may or may not be granted to a concessionaire, licensee, lessee or permitee;

Tourism Development Areas

refer to specific sites for tourism development located in areas identified as priorities in the national and regional tourism master plans, as well as those designated through legislation and executive issuances as tourist zones which can be developed into tourism estates or integrated resort, leisure and recreation complexes, and other tourism-related facilities;

Useful Life

is the period of time over which the property may reasonably be expected to perform the function for which it was designed or intended;

Utility

in general economic theory, is the capacity of an economic good to satisfy human desires or needs;

Valuation, Date of

the date the conclusion or opinion rendered in an appraisal is applicable and valid. The date of appraisal identifies the market conditions that existed when the appraisal was made;

Value

the relationship between a thing desired and a potential purchaser. It also refers to the present worth of future benefits arising out of ownership of property; a value exists when an item of property has utility, is relatively scarce, arouses the desire of potential buyer to buy and is backed by the purchasing power;

Watershed

refers to a catchments area or drainage basin from which the water of a stream or stream system is drawn;

Zoning

is the delineation/division of a city/municipality into functional zones where only specific land uses are allowed. It directs and regulates the use of all lands in the community in accordance with an approved or adopted land use plan for the city/municipality. It prescribes setback provisions, minimum lot sizes, building heights and bulk;

Zoning Ordinance

Refers to a local legislation approving the development control/zoning plan and providing for the regulations and other conditions on the uses of land.

Manner of Appointment

The Local Assessor shall be appointed by the Local Chief Executive concerned, subject to the Civil Service law, rules and regulations. All incumbent Assessors holding permanent appointment (appointed by the President or the Secretary of Finance) shall continue in Office without need of further appointment. The local chief executive may exercise his power to appoint the Assessor only when permanent a vacancy occurs.

Nature of Position

The appointment of an assessor shall be mandatory for all provincial, city and municipal governments.

Qualification Requirements

No person shall be appointed assessor unless he is a citizen of the Philippines, a resident of the local government unit concerned, of good moral character, a holder of a college degree preferably in civil or mechanical engineering, law, commerce or any other related course from a recognized college or university and a first grade civil service eligible or its equivalent. He must have acquired experience in real property assessment work or in any related field for at least five (5) years in the case of the city or provincial assessor, and three (3) years in the case of the municipal assessor. Experience in related field means actual work experience acquired from the Bureau of Local Government Finance and its Regional Offices. Real property appraisal and assessment in the assessor‟s office, as well as actual experience in the appraisal/valuation of real property acquired in the private practice, shall be considered functional experience in the assessment service.

Duties, Functions and Responsibilities of Local Assessors

Assessors are encouraged to study and adhere to the Philippine Valuation Standards in establishing basis for appraisal and assessment of real estate properties. The standards have been prepared to assist government assessors and appraisers in the valuation of properties for taxation purposes. Assessors and appraisers are responsible for ensuring that property appraisal particularly for a tax purpose is accurate so that the tax burden will be distributed equitably.

Duties and Responsibilities of Assistant Provincial, City and Municipal Assessors

The assistant assessor shall assist in performing the foregoing functions and perform such other duties as may be assigned to him. Assignments or delegations of functions to the Assistant Assessors must be in writing.

Technical Supervision of the Department of Finance (DOF)

The Department of Finance through the Bureau of Local Government Finance (BLGF) shall be responsible for the supervision of the revenue operations of local government units, with the end in view of making them less dependent on funding from the national government. The BLGF shall exercise technical supervision and coordination over the treasury and assessment operations of local governments; provide consultative services and technical assistance to the local governments and the general public on real property assessments, local taxation and other related matters; and exercise line supervision over its Regional Offices and the Local Treasury and Assessment Services nationwide. “Technical Supervision” includes the promulgation of the necessary rules and regulations for the classification, appraisal, and assessment of real property, taxmapping, general revision of real property assessments and records management pursuant to the provisions of the Local Government Code. It includes the submission of the prescribed reports to the DOF thru the BLGF for purposes of monitoring compliance with existing laws, rules and regulations on the foregoing subject matter. The DOF thru the BLGF, shall exercise the authority to examine and enforce compliance with the assessment laws, rules and regulations. For this purpose, the DOF and the BLGF shall, on a continuing basis, issue guidelines, rulings and opinions on matters relating to the classification, appraisal and assessment of real property and other issues relative thereto for the strict compliance of all local assessors.

Technical Supervision of Provincial Assessors over Component City and Municipal Assessors

includes the authority of the Provincial Assessor to review actions taken by a subordinate official to determine compliance with existing pertinent rules and regulations regarding the conduct of the day-to-day operations of officials or offices concerned. The Provincial Assessor, therefore, shall require the component City and Municipal Assessors concerned to submit to him assessment reports and other assessment records or forms for review and approval.

Code of Ethics and Professional Conduct

To promote and preserve the public trust inherent in the assessment service, assessor and all assessment personnel must observe the highest standard of professional conduct ethics. Assessors and their staff should at all times maintain high standard of honesty and integrity and conduct their activities in a manner not detrimental to the government, the public and to their profession.

Delegation of Functions by Provincial Assessors to the Municipal Assessors

Sections 200 and 232 of the Local Government Code, provides that the real property tax is, generally, a provincial imposition, therefore, it is the province that is vested with the power to levy and administer the real property tax and not the municipality.

Organizational Structure

As mandated under Section 472 of the Local Government Code, prescribed hereunder is a minimum/model organizational structure and staffing pattern for the Provincial/City/Municipal Assessor‟s Office.

Coordination and Linkages of the Local Assessor with Officials of Other Local and National Government Agencies

It is incumbent upon the Local Assessor to maintain close coordination and cooperation with the following officials/offices in the performance of his duties and functions. The local assessor whenever necessary may request from these assistance/information/data/documents needed in the performance of their duties.

On the Assessment Roll

The Local Assessor shall furnish the Local Treasurer with a copy of the (blank) as basis for the collection of real property taxes and for updating the Real Property Tax Account Register (RPTAR)/Real Property Tax Index Card (RPTIC), except in cases where the assessor‟s records are computerized and the same are directly and operationally connected to the Office of the Provincial, City, or Municipal Treasurer in the form of LAN, in which case the assessment roll is readily available to the Treasurer concerned.