FORMULAS FOR WORDS AND PHRASES USED IN GOVERNMENT APPRAISAL AND ASSESSMENTS

a) Schedule of Market Value Usually this Schedule is being prepared by the Assessor. Before the devolution of the powers under the Local government Code of 1991, it is the Department of Finance who approves the Schedule of Market Value. Under the RA 7160, it is now the local Sanggunian who will approve the Schedule of market Value. With this Schedule, the Assessor is guided on what values are to be used in arriving at the Fair Market Value of the property he is going to asssess. Samples of the Schedule of market Values are: From the R.Magsaysay junction of Villafuerte street both side to Davao Bukidnon Highway the following are to be used: Commercial lots along the street Php 2,000,000 per sqm , all other interior lots 1,000 per sm Residential Php 1,500 per sqm Agricultural lot Php 50,000 per ha. Residential Assume the following, to be owned by Mr. Candido Yutan Kaayo: 1,200 sqm of commercial lot located at Villafuerte Street 1,000 residential lot 10 hectare agricultural lot Formula to arrive at Fair Market Value Definiton of Faair Market Value Refer to Section 199 Letter I A)Along the road, Commercial lot 1,200 x 2,000 =2,400,000 B)Residential 1,000 sqm x 1,500/sqm= Php 1,500,000 C) 10 ha x 50,000= 500,000 How to arrive at Assessed Value Definition-Please refer to Section 199 of RA 7160 Letter H Definition of Assessment Level-Please refer to RA 7160 Letter G Formula= Market Value x Assessment Level Assuming that the following are A)the assessment levels of: B) Tax rate is 2.5% Tax rate and assessments levels are provided for by the local Sanggunian of the place where the properties are located. Commercial 50% Residential 20% Agricultural 40% To arrive at assessed value: Commercial= 2,400,000 x 50% or 1,200,000 Residential 1,500,000 x 20% or 300,000 Agricultural 500,000 x 40% or 200,000 Formula for Annual Tax dues: Assessed Value x Tax Rate Commercial 1,200,000 x 2.5% or Php 30,000 per annum Residential 300,000 x 2.5% or Php 7,500 per annum Agricultural 200,000 x 2.5% or Php 5,000 per annum Total annual tax due Php 42,500.00

Section 220 of RA 7160

SEC. 220. Valuation of Real Property. - In cases where (a) real property is declared and listed for taxation purposes for the first time; (b) there is an ongoing general revision of property classification and assessment; or (c) a request is made by the person in whose name the property is declared, the provincial, city or municipal assessor or his duly authorized deputy shall, in accordance with the provisions of this Chapter, make a classification, appraisal and assessment of the real property listed and described in the declaration irrespective of any previous assessment or taxpayer's valuation thereon: Provided, however, That the assessment of real property shall not be increased oftener than once every three (3) years except in case of new improvements substantially increasing the value of said property or of any change in its actual use.

Section 219 of RA 7160

SEC. 219. General Revision of assessments and Property Classification. - The provincial, city or municipal assessor shall undertake a general revision of real property assessments within two (2) years after the effectivity of this Code and every three (3) years thereafter.

Section 218 of RA 7160

SEC. 218. Assessment Levels. - The assessment levels to be applied to the fair market value of real property to determine its assessed value shall be fixed by ordinances of the sangguniang panlalawigan, sangguniang panlungsod or sangguniang bayan of a municipality within the Metropolitan Manila Area, at the rates not exceeding the following: (a) On Lands: CLASS ASSESSMENT LEVELS Residential 20% Agricultural 40% Commercial 50% Industrial 50% Mineral 50% Timberland 20% (b) On Buildings and Other Structures: (1)Residential Fair Market Value Over Not Over Assessment Levels P 175,000.00 0% P 175,000.00 300,000.00 10% 300,000.00 500,000.00 20% 500,000.00 750,000.00 25% 750,000.00 1,000,000.00 30% 1,000,000.00 2,000,000.00 35% 2,000,000.00 5,000,000.00 40% 5,000,000.00 10,000.000.00 50% 10,000,000.00 60% (2) Agricultural Fair Market Value Over Not Over Assessment Levels P 300,000.00 25% 300,000.00 500,000.00 30% 500,000.00 750,000.00 35% 750,000.00 1,000,000.00 40% 1,000,000.00 2,000,000.00 45% 2,000,000.00 50% (3) Commercial / Industrial Fair Market Value Over Not Over Assessment Levels P 300,000.00 30% P 300,000.00 500,000.00 35% 500,000.00 750,000.00 40% 750,000.00 1,000,000.00 50% 1,000,000.00 2,000,000.00 60% 2,000,000.00 5,000,000.00 70% 5,000,000.00 10,000,000.00 75% 10,000,000.00 80% (4)Timber land Fair Market Value Over Not Over Assessment Levels P 300,000.00 45% P 300,000.00 500,000.00 50% 500,000.00 750,000.00 55% 750,000.00 1,000,000.00 60% 1,000,000.00 2,000,000.00 65% 2,000,000.0 70% (c) On Machineries Class Assessment Levels Agricultural 40% Residential 50% Commercial 80% Industrial 80% (d) On Special Classes: The assessment levels for all lands, buildings, machineries and other improvements; Actual Use Assessment Level Cultural 15% Scientific 15% Hospital 15% local water districts 10% Government-owned or controlled corporations engaged in the supply and distribution of water and/or generation and transmission of electric power 10%

Section 217 of RA 7160

SEC. 217. Actual Use of Real Property as Basis for Assessment. - Real property shall be classified, valued and assessed on the basis of its actual use regardless of where located, whoever owns it, and whoever uses it.

Section 216 of RA 7160

SEC. 216. 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.

Section 215 of RA 7160

SEC. 215. Classes of Real Property for Assessment Purposes. - For purposes of assessment, real property shall be classified as residential, agricultural, commercial, industrial, mineral, timberland or special. The city or municipality within the Metropolitan Manila Area, through their respective sanggunian, shall have the power to classify lands as residential, agricultural, commercial, industrial, mineral, timberland, or special in accordance with their zoning ordinances.

Section 214 of RA 7160

SEC. 214. Amendment of Schedule of Fair Market Values. - The provincial, city or municipal assessor may recommend to the sanggunian concerned amendments to correct errors in valuation in the schedule of fair market values. The sanggunian concerned shall, by ordinance, act upon the recommendation within ninety (90) days from receipt thereof.

Section 213 of RA 7160

SEC. 213. Authority of Assessor to Take Evidence. - For the purpose of obtaining information on which to base the market value of any real property, the assessor of the province, city or municipality or his deputy may summon the owners of the properties to be affected or persons having legal interest therein and witnesses, administer oaths, and take deposition concerning the property, its ownership, amount, nature, and value.

Section 212 of RA 7160

SEC. 212. Preparation of Schedule of Fair Market Values. - Before any general revision of property assessment is made pursuant to the provisions of this Title, there shall be prepared a schedule of fair market values by the provincial, city and the municipal assessors of the municipalities within the Metropolitan Manila Area for the different classes of real property situated in their respective local government units for enactment by ordinance of 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 public places therein.

Section 211 of RA 7160

SEC. 211. Duty of Geodetic Engineers to Furnish Copy of Plans to Assessor. - It shall be the duty of all geodetic engineers, public or private, to furnish free of charge to the assessor of the province, city or municipality where the land is located with a white or blue print copy of each of all approved original or subdivision plans or maps of surveys executed by them within thirty (30) days from receipt of such plans from the Lands Management Bureau, the Land Registration Authority, or the Housing and Land Use Regulatory Board, as the case may be.

Section 210 of RA 7160

SEC. 210. Duty of Official Issuing Building Permit or Certificate of Registration of Machinery to Transmit Copy to Assessor. - Any public official or employee who may now or hereafter be required by law or regulation to issue to any person a permit for the construction, addition, repair, or renovation of a building, or permanent improvement on land, or a certificate of registration for any machinery, including machines, mechanical contrivances, and apparatus attached or affixed on land or to another real property, shall transmit a copy of such permit or certificate within thirty (30) days of its issuance, to the assessor of the province, city or municipality where the property is situated.

Section 209 of RA 7160

SEC. 209. Duty of Registrar of Deeds to Apprise Assessor of Real Property Listed in Registry. - (a) To ascertain whether or not any real property entered in the Registry of Property has escaped discovery and listing for the purpose of taxation, the Registrar of Deeds shall prepare and submit to the provincial, city or municipal assessor, within six (6) months from the date of effectivity of this Code and every year thereafter, an abstract of his registry, which shall include brief but sufficient description of the real properties entered therein, their present owners, and the dates of their most recent transfer or alienation accompanied by copies of corresponding deeds of sale, donation, or partition or other forms of alienation. (b) It shall also be the duty of the Registrar of Deeds to require every person who shall present for registration a document of transfer, alienation, or encumbrance of real property to accompany the same with a certificate to the effect that the real property subject of the transfer, alienation, or encumbrance, as the case may be, has been fully paid of all real property taxes due thereon. Failure to provide such certificate shall be a valid cause for the Registrar of Deeds to refuse the registration of the document.

Section 208 of RA 7160

SEC. 208. Notification of Transfer of Real Property Ownership. - Any person who shall transfer real property ownership to another shall notify the provincial, city or municipal assessor concerned within sixty (60) days from the date of such transfer. The notification shall include the mode of transfer, the description of the property alienated, the name and address of the transferee.

Section 207 of RA 7160

SEC. 207. Real Property Identification System. - All declarations of real property made under the provisions of this Title shall be kept and filed under a uniform classification system to be established by the provincial, city or municipal assessor.

Section 206 of RA 7160

SEC. 206. Proof of Exemption of Real Property from Taxation. - Every person by or for whom real property is declared, who shall claim tax exemption for such property under this Title shall file with the provincial, city or municipal assessor within thirty (30) days from the date of the declaration of real property sufficient documentary evidence in support of such claim including corporate charters, title of ownership, articles of incorporation, bylaws, contracts, affidavits, certifications and mortgage deeds, and similar documents. If the required evidence is not submitted within the period herein prescribed, the property shall be listed as taxable in the assessment roll. However, if the property shall be proven to be tax exempt, the same shall be dropped from the assessment roll.

Section 205 of RA 7160

SEC. 205. Listing of Real Property in the Assessment Rolls. - (a) In every province and city, including the municipalities within the Metropolitan Manila Area, there shall be prepared and maintained by the provincial, city or municipal assessor an assessment roll wherein shall be listed all real property, whether taxable or exempt, located within the territorial jurisdiction of the local government unit concerned. Real property shall be listed, valued and assessed in the name of the owner or administrator, or anyone having legal interest in the property. (b) The undivided real property of a deceased person may be listed, valued and assessed in the name of the estate or of the heirs and devisees without designating them individually; and undivided real property other than that owned by a deceased may be listed, valued and assessed in the name of one or more co-owners: Provided, however, That such heir, devisee, or co-owner shall be liable severally and proportionately for all obligations imposed by this Title and the payment of the real property tax with respect to the undivided property. (c) The real property of a corporation, partnership, or association shall be listed, valued and assessed in the same manner as that of an individual. (d) Real property owned by the Republic of the Philippines, its instrumentalities and political subdivisions, the beneficial use of which has been granted, for consideration or otherwise, to a taxable person, shall be listed, valued and assessed in the name of the possessor, grantee or of the public entity if such property has been acquired or held for resale or lease.

Section 204 of RA 7160

SEC. 204. Declaration of Real Property by the Assessor. - When any person, natural or juridical, by whom real property is required to be declared under Section 202 hereof, refuses or fails for any reason to make such declaration within the time prescribed, the provincial, city or municipal assessor shall himself declare the property in the name of the defaulting owner, if known, or against an unknown owner, as the case may be, and shall assess the property for taxation in accordance with the provision of this Title. No oath shall be required of a declaration thus made by the provincial, city or municipal assessor.

Section 203 of RA 7160

SEC. 203. Duty of Person Acquiring Real Property or Making Improvement Thereon. - It shall also be the duty of any person, or his authorized representative, acquiring at any time real property in any municipality or city or making any improvement on real property, to prepare, or cause to be prepared, and file with the provincial, city or municipal assessor, a sworn statement declaring the true value of subject property, within sixty (60) days after the acquisition of such property or upon completion or occupancy of the improvement, whichever comes earlier.

Section 202 of RA 7160

SEC. 202. Declaration of Real Property by the Owner or Administrator. - It shall be the duty of all persons, natural or juridical, owning or administering real property, including the improvements therein, within a city or municipality, or their duly authorized representative, to prepare, or cause to be prepared, and file with the provincial, city or municipal assessor, a sworn statement declaring the true value of their property, whether previously declared or undeclared, taxable or exempt, which shall be the current and fair market value of the property, as determined by the declarant. Such declaration shall contain a description of the property sufficient in detail to enable the assessor or his deputy to identify the same for assessment purposes. The sworn declaration of real property herein referred to shall be filed with the assessor concerned once every three (3) years during the period from January first (1st) to June thirtieth (30th) commencing with the calendar year 1992.

Section 201 of RA 7160

PROPERTY SEC. 201. Appraisal of Real Property. - All real property, whether taxable or exempt, shall be appraised at the current and fair market value prevailing in the locality where the property is situated. The Department of Finance shall promulgate the necessary rules and regulations for the classification, appraisal, and assessment of real property pursuant to the provisions of this Code.

Section 200 of RA 7160

Sec. 200. Administration of the Real Property Tax. - The provinces and cities, including the municipalities within the Metropolitan Manila Area, shall be primarily responsible for the proper, efficient and effective administration of the real property tax.

Section 199 of RA 7160

SEC. 199. Definitions. - When used in this Title: (a) "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; (b) "Actual Use" refers to the purpose for which the property is principally or predominantly utilized by the person in possession thereof; (c) "Ad Valorem Tax" is a levy on real property determined on the basis of a fixed proportion of the value of the property; (d) "Agricultural Land" is land devoted principally to the planting of trees, raising of crops, livestock and poultry, dairying, salt making, inland fishing and similar aquacultural activities, and other agricultural activities, and is not classified as mineral, timber, residential, commercial or industrial land; (e) "Appraisal" is the act or process of determining the value of property as of a specific date for a specific purpose; (f) "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; (g) "Assessment Level" is the percentage applied to the fair market value to determine the taxable value of the property; (h) "Assessed Value" is the fair market value of the real property multiplied by the assessment level. It is synonymous to taxable value; (i) "Commercial Land" is land devoted principally for the object of profit and is not classified as agricultural, industrial, mineral, timber, or residential land; (j) "Depreciated Value" is the value remaining after deducting depreciation from the acquisition cost; (k) "Economic Life" is the estimated period over which it is anticipated that a machinery or equipment may be profitably utilized; (l) "Fair 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; (m) "Improvement" is a valuable addition made to a property or an amelioration in its condition, amounting to more than a mere repair or replacement of parts involving capital expenditures and labor, which is intended to enhance its value, beauty or utility or to adapt it for new or further purposes; (n) "Industrial Land" is land devoted principally to industrial activity as capital investment and is not classified as agricultural, commercial, timber, mineral or residential land; (o) "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 self-propelled, 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; (p) "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; (q) "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; (r) "Remaining Economic Life" is the period of time expressed in years from the date of appraisal to the date when the machinery becomes valueless; (s) "Remaining Value" is the value corresponding to the remaining useful life of the machinery; (t) "Replacement or Reproduction Cost" is the cost that would be incurred on the basis of current prices, in acquiring an equally desirable substitute property, or the cost of reproducing a new replica of the property on the basis of current prices with the same or closely similar material; and (u) "Residential Land" is land principally devoted to habitation

Section 198 of RA 7160

SEC. 198. Fundamental Principles. - The appraisal, assessment, levy and collection of real property tax shall be guided by the following fundamental principles: (a) Real property shall be appraised at its current and fair market value; (b) Real property shall be classified for assessment purposes on the basis of its actual use; (c) Real property shall be assessed on the basis of a uniform classification within each local government unit; (d) The appraisal, assessment, levy and collection of real property tax shall not be let to any private person; and (e) The appraisal and assessment of real property shall be equitable.

Section 197 of RA 7160

BASIC FUNDAMENTALS OF REAL PROPERTY VALUATION AND TAXATIONS This is for everybody who wish to learn the fundamentals of real property valuation and taxation. Readers and visitors of this group are hereby advised to post issues and concerns that are of interest to the reading public about real estate. As we go along, and probably visiting regularly this Webpage we can get something out from it.I can assure you that in my own little way, I will be able to share what I have and give you the desired answer you wish to know. However, for some questions the answer of which is not within my capability to give, I will consult the best and available persons, with some quotes that such answer came from them Chapter 1-General Provision CHAPTER 1 - GENERAL PROVISIONS SEC. 197. Scope. - This Title shall govern the administration, appraisal, assessment, levy and collection of real property tax. This is self-explanatory-contributor SEC. 198. Fundamental Principles. - The appraisal, assessment, levy and collection of real property tax shall be guided by the following fundamental principles: (a) Real property shall be appraised at its current and fair market value; Fair market value-the highest price estimate in terms of money in which the property will bring if exposed for sale in the open market allowing a reasonable time to find a purchaser, who buys with knowledge of all the uses to which it is adapted and for which it is capable of being used. (b) Real property shall be classified for assessment purposes on the basis of its actual use; Meaning, an agricultural land bought for residential purpose should be assessed as agricultural, which is the present and actual use of the property. Under no circumstances will the assessor declare it as residential, for purposes of using said property for a loan, in order to develop the land. If there is no physical development of the agricultural property, the assessment of that property will remain as is. (c) Real property shall be assessed on the basis of a uniform classification within each local government unit; (d) The appraisal, assessment, levy and collection of real property tax shall not be let to any private person; and (e) The appraisal and assessment of real property shall be equitable.