DAO 98-20 Sales & leases of Public Lands (Appraisal).ppt

DAO 98-20Revised Rules & Regulations on the Conduct of APPRAISAL OF PUBLIC LANDS & Other Patrimonial Properties, as amended

OUTLINE OF PRESENTATION1. Legal Basis 2. Implementing Rules and Regulations pursuant to Sec. 116 of the Public Land Act 3.Properties Covered by DENR DAO 98-20 4.Guide Formulas 5.Appraisal Committee Composition 6.Approval of Appraisal Report 7. Format of an Appraisal Report

LEGAL BASIS

1. Section 4, C.A. 141 (Public Land Act) The Director of Lands shall have direct executive control of the survey, classification, LEASE, SALE or any other form of concession or disposition and management of the lands of the public domain, and his decisions as to questions of fact shall be conclusive when approved by the Secretary of Agriculture and Natural Resources.

1. Royal Cedula of October 15,1754 issued by the King of Spain which authorized the direct or private sale of public lands. 2. Section 13 of Act 926 dated October 7,1903It shall also be the duty of the Chief of the Bureau of Public Lands to appraise the land applied for under this chapter, which appraisement shall not be less than ten pesos, Philippine Currency, per hectare, and in making this appraisal he may call to his assistance any provincial or municipal official of the province in which the land lies.HISTORICAL BACKGROUND

3. Section 116 of the Public Land Act The appraisal or reappraisal of the lands or improvements subject to concession disposition under this Act shall be made by the Director of Lands, with the approval of the Secretary of Agriculture and Natural Resources. The Director of Lands may request the assistance of the provincial treasurer of the province in which the land lies or may appoint a committee for such purpose in the province or in the municipality in which the land lies. In no case shall the appraisal or reappraisal be less than the expense incurred or which may be incurred by the Government in connection with the application or concession, nor shall any reappraisal be made with an increase of more than one hundred per centum upon the appraisal or reappraisal next preceding.

Implementing Rules and Regulations Pursuant to Section 116 of the Public Land Act

1. General Administrative Order No. 2, issued on November 9, 1948. This was later followed by a series of amendments, to wit: GAP no. 2-A, 2-B and 2-C.2. General Administrative Order No. 2 was later substantially amended by General Administrative Order No. 2-D and 2-E dated June 18,1954 and August 9, 1956 respectively, by abolishing the appraisal committee and doing away with the tripartite body.

3. Side by side with the issuance of General Administrative Orders No.2 to 2-E was the issuance of Lands Circular No. R-14 on September 5,1959, which provides for a schedule of fixed and specific minimum appraised values depending on their actual uses and locations of the land. Lands Circular No. R-14 was later amended to update this minimum fixed appraised values thru the issuance of Lands General Circular No. 52.4. Lands General Circular No. 52 and Lands Circular No. R-14 were in turn amended with the issuance of Lands General Circular No. 52-1 dated August 15, 1986.

5. DENR Administrative Order No. 98-20 dated May 20,1998 consolidated into one issuance the rules and regulations on the appraisal of all alienable and disposable lands administered by the DENR, and subject them into one appraisal system. This DAO, likewise repealed LGC 52 and 52-1, and all rules and regulations inconsistent therewith. It also institutionalized in the DENR appraisal system, and the conduct of this activity by a three-man committee.

PROPERTIES COVERED BY DENR DAO 98-20Alienable & disposable lands of the public Domain, disposed of under Chapters 5,6 and 9 of CA 141 and Act 730 Lands of the private domain under Act 3038 as amended; Properties under R.A 477 & all other properties placed under DENR by virtue of EO 285, series of 1987; Properties within the purview of Republic Act No. 1361, as amended by Republic Act No. 5941; and Friar Lands disposed of under Act 1120 and C.A. 32

GUIDE FORMULAS, as amendedBy DAO 2010-26

FOR RESIDENTIAL/AGRI LANDS AP VALUE = not less than ZONAL + ASSESSED VALUE 2 FOR COMMERCIAL/INDUSTRIAL LANDS AP VALUE = not less than the zonal value or market value, whichever is higher

APPRAISED VALUEFOR SALEAP VALUE = PURCHASE PRICE FOR LEASE AP = 3% LAND + 1% BUILDING / IMPROVEMENTS

EXISTING and/or PROPOSED IMPROVEMENTS MUST BE included in the appraisal (LAO 47 dated December 13, 1984)

FOR RE-APRAISAL RECOMMENDED VALUE SHOULD NOT BE MORE THAN 100% OF PREVIOUS APPRAISED VALUE BUT INDICATE THE COMPUTED DERIVED VALUE IN THE REPORT IF IT IS MORE THAN 100%.

APPRAISAL COMMITTEE COMPOSITION

FOR PUBLIC LANDS & PATRIMONIAL PROPERTIES COVERED BY ACT 3038 DISPOSED THRU SALE, LEASE, PERMITS:CENR OFFICER - CHAIRPERSON ONE LAND INVESTIGATOR ONE LAND MANAGEMENT OFFICER

CREATED BY THE REGIONAL EXECUTIVE DIRECTOR

APPROVAL OF APPRAISAL REPORT FOR SALES APPLICATION RED - 1,000 SQ METERS & BELOW SECRETARY - ABOVE 1,000 SQ M. DAO 2003-20 DATED JUNE 17, 2003

RA 730 allowable max. area is 1,000 sq m., hence, within the jurisdiction of the RED

APPROVAL OF APPRAISAL REPORT FORESHORE (DAO 2004-24)PENRO - 1 HECTARE AND BELOW RED - MORE THAN 1 HAS. UP TO 5 HAS. SECREATRY - MORE THAN 5 HAS.

(this however, was superceded by the Memoranda of then Secretary Angelo T. Reyes)

SIGNING AUTHORITY FOR APPRAISAL, CONDUCT OF PUBLIC BIDDING ANDFORESHORE LEASE AGREEMENTS

Per Memoranda of then Secretary Angelo T. Reyes dated May 4, 2006 and April 24, 2007, the approval of appraisal, clearance to proceed with the publication and bidding, issuance of lease, approval of the contract and/or permit and transfers of leasehold rights of foreshore land, irrespective of area and of the lease or permit, and are within environmentally critical areas, shall be submitted to the SECRETARY for consideration and approval.

PUBLIC BIDDING shall be conducted in accordance with Sections 34, 35, 36 and 37 of CA 141.APPRAISAL/REAPPRAISAL shall be in accordance with the manner prescribed in DAO 98-20. The area used and improvements thereon shall be re-appraised every ten (10) years from the date of approval. In the event that new improvements/developments have been introduced prior to the 10th year, immediate appraisal/re-appraisal shall be effected.

SECTION 3, DAO 98-20If the property has not been declared for taxation purposes or its assessed value is not available, the assessed value of another property located in the area which is of similar character with that of the property being appraised shall be used.

If the zonal value is not available, the fair market value or the current selling price of properties of similar character in the area as determined by the Assessors Office concerned shall be utilized.

Mass AppraisalWhen conducting the appraisal or re-appraisal, the Committee, whenever feasible, shall adopt the carpet approach or simultaneous appraisal of lots comprising a residential subdivision, or of adjacent lots located in the same municipality or city, which are proposed to be sold or leased to qualified applicants.

SALIENT POINTS OF DAO 2009-05(April 21, 2009)Prescribing Guidelines for the Systematic Disposition of Alienable and Disposable Residential Lands Through MSA under RA 730

APPRAISAL COMMITTEEChairman: CENR OfficerMembers: (1) Local Assessor orrepresentative(2) Local Planning Officer orrepresentative

Advantages of appraisal process under DAO 2009-05 compared to DAO 98-20Mass AppraisalOne-time approval of appraisal by RED

BUILDING APPRAISAL AND VALUATION

NEWLY CONSTRUCTED BUILDINGS APPRAISED VALUE= CONSTRUCTION COSTNEWLY CONSTRUCTED BUT RECORD OF COST OF CONSTRUCTION NOT AVAILABLE APPRAISED VALUE = FLOOR AREA X UNIT CONSTRUCTION COST DENR DPWH DBM JOINT CIRCULAR NO 1

FOR OLD BUILDINGS WITH ITS RECORDS OF CONSTRUCTION NOT AVAILABLEDETERMINE THE AGE AND TYPE OF THE BUILDING AND USE THE FORMULA:REPLACEMENT COST MINUS DEPRECIATION

DENR DPWH DBM JOINT CIRCULAR NO 1

REPLACEMENT COST LESS DEPRECIATIONTOTAL REPRODUCTION COST = FLOOR AREA X UNIT CONSTRUCTION COST REPRODUCTION COST - TOTAL COST OF BLDG CONSTRUCTED AND OR REPLACED BASED ON CURRENT PRICE. SOMETIMES CALLED REPLACEMENT COST. FLOOR AREA - TOTAL FLOOR AREA OF BLDG IN SQUARE METER AS PER PLAN OR BASED ON ACTUAL VERIFICATION.UNIT COST - PREVAILING OR CURRENT COST OF CONSTRUCTION PER SQUARE METER.

RESIDUAL VALUE = TOTAL REPRODUCTION COST X 10%

RESIDUAL VALUE - VALUE OR PART TO BE TAKEN AWAY OR DEDUCTED FROM REPRODUCTION OR REPLACEMENT COST (ORDINARILY 10%).

VALUE TO BE DEPRECIATED = TOTAL REPRODUCTION COST RESIDUAL VALUE

DEPRECIATION VALUE OR WORTH TO BE DEDUCTED FROM CONSTRUCTION COST OR REPRODUCTION COST.

VALUE TO BE DEPRECIATED4. TOTAL DEPRECIATION = __________________ X AGE OF BLDG LIFE SPAN OF THE BLDG

LIFE SPAN OF THE BUILDING ESTIMATED LIFE SPAN OF BUILDING IN YEARS

AGE OF BUILDING AGE OF BUILDING IN YEARS FROM TIME IT WAS CONSTRUCTED UP TO PRESENT

5. DEPRECIATION/year TOTAL DEPRECIATION = ---------------------------------- AGE OF BUILDING

6. APPRAISED VALUE = TOTAL REPRODUCTION COST TOTAL DEPRECIATION

APPRAISED VALUE PRESENT ESTIMATED WORTH OR VALUE OF BUILDING.

DENR DPWH DBM JOINT CIRCULAR NO.1

OFFICE BUILDING ATOTAL FLOOR AREA = 800 SQ M UNIT COST = P6,000/SQ M.LIFE SPAN OF BUILDING = 50 YEARS AGE OF BUILDING = 20 YRS

TOTAL REPRODUCTION COST = 800 X P6,000 = P4,800,000RESIDUAL VALUE = P4,800,000 X 10% = P480,000VALUE TO BE DEPRECIATED = P4,800,000 - P480,000 = P4,320,000TOTAL DEPRECIATION = P4320,000/50 X 20 = P1,728,000DEPRECIATION PER YEAR = P1,728,000/ 20 = P86,000APPRAISED VALUE = 4,800,000 1728,000 = P3,072,000

APPRAISAL REPORTWRITTEN DOCUMENT CONTAINING APPRAISERS ESTIMATE OF VALUE OF AN ADEQUATELY DESCRIBED PROPERTY AS OF AN SPECIFIED DATE.INCLUDES ANALYSIS AND INTERPRETATION OF ALL DATA & SUPPORTING DOCUMENTS

RECOMMENDED FORMAT (APPRAISAL REPORT)PURPOSE OF THE APPRAISALPROPERTY IDENTIFICATION,LOCATION,OWNERSHIPLAND CLASS,USE,IMPROVEMENTS & GENERAL CONDITIONSTATISTICAL DATA REFERENCE ZONAL VALUE ASSESSED VALUE SALES LISTINGS5. HIGHEST AND BEST USE6. APPRAISAL OF LAND (MARKET DATA)

RECOMMENDED FORMAT (APPRAISAL REPORT)7. APPRAISAL OF IMPROVEMENTS (REPRODUCTION COST APPROACH)8. APPRAISED VALUE OF PROPERTY9. RECOMMENDED RENTAL RATE/PURCHASE PRICE1O.SIGNATORIESATTACHMENTS11.1 ZONAL VALUE CERTIFICATONS FROM BIR 11.2 ASSESSORS VALUE CERTIFICATIONS FROM LOCAL ASSESSOR11.3 SALES LISTINGS OF SIMILAR PROPERTIES11.4 PLANS 11.5 COPY OF SPECIAL ORDER CONSTITUTING THE COMMITTEE

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