DAO 98-20

Revised Rules & Regulations

on the Conduct of APPRAISAL
OF PUBLIC LANDS & Other
Patrimonial Properties, as
amended

OUTLINE OF PRESENTATION
1. 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.

HISTORICAL
BACKGROUND
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 7,1903
It 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.

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.

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.
3.

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 98-20
Alienable & 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 amended

By 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 VALUE
FOR SALE
AP 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 9820. 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
98-20
If 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 Appraisal
When 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 COMMITTEE
Chairman: CENR Officer
Members:
(1) Local Assessor or
representative
(2) Local Planning Officer or
representative

Advantages of appraisal process under

DAO 2009-05 compared to DAO 98-20

Mass Appraisal
One-time approval of appraisal
by RED

BUILDING APPRAISAL
AND VALUATION

 NEWLY CONSTRUCTED
BUILDINGS
APPRAISED VALUE=
CONSTRUCTION COST
NEWLY 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 AVAILABLE

DETERMINE 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

DEPRECIATION
1.

TOTAL 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.

2. 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%).

3. 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 DEPRECIATED
4. 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 A
TOTAL 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

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

APPRAISAL REPORT
WRITTEN 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)
1. PURPOSE OF THE APPRAISAL
2. PROPERTY
IDENTIFICATION,LOCATION,OWNERSHIP
3. LAND CLASS,USE,IMPROVEMENTS &
GENERAL CONDITION
4. STATISTICAL DATA REFERENCE
ZONAL VALUE
ASSESSED VALUE
SALES LISTINGS
5. HIGHEST AND BEST USE
6. APPRAISAL OF LAND (MARKET DATA)

RECOMMENDED FORMAT (APPRAISAL

REPORT)
7. APPRAISAL OF IMPROVEMENTS
(REPRODUCTION COST APPROACH)
8. APPRAISED VALUE OF PROPERTY
9. RECOMMENDED RENTAL RATE/PURCHASE
PRICE
1O.SIGNATORIES
11.ATTACHMENTS
11.1 ZONAL VALUE CERTIFICATONS FROM BIR
11.2 ASSESSORS VALUE CERTIFICATIONS FROM LOCAL
ASSESSOR
11.3 SALES LISTINGS OF SIMILAR PROPERTIES
11.4 PLANS
11.5 COPY OF SPECIAL ORDER CONSTITUTING THE
COMMITTEE

Thank you