REA-REB Reviewer 2021

The PMJ for RE Appraiser’s Examination
TABLE OF CONTENTS
Subject/Topic Page
Fundamentals of Real Estate Appraisal
 Fundamentals of Real Estate Principles and Practice,
Theories and Principles in Appraisal 1
 Standards and Ethics 25
 Human and Physical Geography 41
 Real Estate Finance and Economics 61
 Land Management System and Real Property Laws
 Land management Systems and Registration 81
 PD#957, BP#220,RA#7279, RA#4726, and RA#9646 95
 RA#9646 and its IRR 126
 Fundamentals on Contracts, Sales, Mortgage, Leases
Property and its Ownership 149
 Property Relations between Husband and Wife 190
 Agri Law and CARPER 220
 Real Estate Investment Trust 237
 Omnibus Investment Code 245
Professional Appraisal Practice
 Methodology of Appraisal Approaches and Case Studies
On Specialized Valuation 246
Matrix of Formulas 286
 Valuation Procedure and Research 289
 Practical Appraisal Mathematics 296
 Appraisal Reporting Writing 303
 Appraisal of Machinery and Equipment 311
 Government Assessment Principle, Local and Real Estate Taxation 314
 Geographic Information System 349
 Urban and Land Use, Planning, Development and Zoning 357
 Glossary of Real Estate Terminologies 363
 Appraisal/Valuation Process Chart
 Acknowledgement
Fundamental of Real Estate Principles, Theories and Practice in
Appraisal
1. Appraisal or Valuation refers to the-
 Process or act of making an estimate of the value of any assets/property in
accordance with generally accepted valuation standards (GAVS) on a given or
specified date and for a specific or particular purpose.
 Appraisal/Valuation of property by the estimate of an authorized person
 Rendering of professional and sound estimate of real estate value and/or any
interest therein as of a given time and for a specific or particular purpose and
for a fee
 Estimate or process through which conclusions of property value are obtained.
 Result of valuing a property , making a cost estimate, forecasting earnings or
any combination of two or more stated result
 Person’s estimate or opinion of value, where an estimate is not a statement,
determination and fixing of value
 Process of estimating market value or other defined values of an identified
interest in a specific parcel or parcels of real estate at a particular date
 Estimation of the monetary values of the property rights encompass in an
ownership for a specific purpose and for a particular period
2. In real estate practice, appraisal- refers to an estimate or opinion of

 Real property/ real estate value arrived by licensed real estate appraiser
based on define standards with reference to the acts of estimating and
rendering an expert opinion pertaining to real estate values
 Value arrived at by a licensed real estate appraiser who has the necessary
competence, skill, integrity, sound judgment, experience and in-depth study
(Co-SI-SED) on analysis and interpretation of patient data bearing on values
as well as the skillful application of generally accepted methods and
approaches to appraiser/valuation.
3. When a person performs any of the following actions or services it constitutes the
practice of real estate appraisal with an expectation of professional fee,
compensation or other valuable consideration:
 Estimating the value as real estate
 Rendering of opinion as to real estate values
 Acting as an expert on values of real estate
 Performing appraisal and assessment of real properties including plants,
equipment and machineries, essentially for taxation purposes
 Performance of work that requires the expertise of a licensed real estate
appraiser
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Appraisal
4. Appraisal significantly relies on the professional appraiser’s judgment and
experience to render opinion of real estate or real property value after the application
of an orderly process or logical procedures to ensure a reliable result based on
education, knowledge and higher level of competency.
5. Appraisal associated with accounting

a. Accounting is the art of recording, classifying, summarizing in a
significant manner in terms of money transactions and event which are
in part of at least of a financial character and interpreting the results
thereof
b. Appraisal –
 Is an art and science because it has scientific character or basis
where theories and procedures are applied and judgment is use
after considering the forces or factor affecting value to be able to
develop a meaningful conclusion of value
 Includes consulting and review
 In consulting it provides services to clients that deals with
marketability and development analysis, land-use and
investment analysis which does not require judgment
 Similarly, in review it is a process or act of critically studying
a report prepared by another appraiser which is not the
same as appraisal
 In the review process, the appraiser-review analyzes an
appraisal report prepared by another appraiser and forms
opinion regarding the adequacy and relevance of the data,
analysis and opinion contained in the appraisal report
 In review an opinion of value is not part of an appraisal
evaluation it should be based on the conditions at the time
the appraisal was conducted and not based on subsequent
event and conditions
6. Similarities of professional appraiser and professional accountant

 The two professions are more of an art or skill than science
 It involves data or facts gathering/collecting and recording
 It involves estimation of depreciation, bad debts allowances. Effective or
actual age.
 It analysis/investigates and interprets data in conformity of generally
accepted standards or code of conducts
7. Independent Appraisal – is an estimation of property value performed by an

independent licensed Real Estate Appraiser as disinterest or neutral person/ party.
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Appraisal
8. Appraiser or Valuer ( Professional Property Valuer) – refers to a person
 Who possesses the necessary qualification, ability, license and
experience ( QuALE ) to estimate property value or diversified purpose
such as;
 Partition and distribution of estate to effect an equitable distribution
of properties among heirs or co-owners
 Transactions involving transfer of property ownership
 Financing to secure a loan or mortgages using the property as the
collateral, which is based on the appraised value of the property
 Property subject to litigation in partition or foreclosures
 Indemnification to determine just compensation for property being
expropriated by the government or public utilities, or coverage
against losses, due to fire floods, and other natural calamities or in
condemnation proceedings
 Taxation used as basis of fair assessment or for contesting
government assessment of estate and donors taxes or in matters of
pending settlement of taxes and establishment on the basis taxes
 Property treated as fixed assets in financial reporting
 Fixed assets valuation in business for purposes of contributions in a
corporation or partnership, refinancing merger or liquidation of
assets, giving options on decisions either to purchase or lease or
remodeling or business consolidation and/or merger
 Maximize utilization of property by considering maximum returns
 Land utilization in determining the highest and best use
 Establishment of rental rates
 Guide in pricing for purposes of sales, purchases, exchange, for
leases of real property
 Insurance coverage, etc.
 Who possesses the specific expertise to perform valuations of real estate or
other categories of property like: personal, business and financing interest
9. As defined under RA#9646, Real Estate Appraisal (REA) – refers to a duly

registered and licensed natural person who for a professional fee, compensation or
other valuable consideration performs/renders or offer to perform services;
 On estimating and arriving an opinion of values of real estate values
 Acts as an expert in arriving opinion of values of real estate which shall be
finally rendered by the preparation of an acceptable written form
 Works in the local government units (LGU) and performs appraisal and
assessment of real properties including plants, equipment, and
machineries, essentially for taxation purposes as for as assessors and
assistant assessors and appraisal for the Local Assessment Operation
Officer (LAOO) in the national government positions
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Appraisal
10. Independent Valuer/Appraiser – refers to an Appraiser/ Valuer who

 Meets the specific requirements of independence or impartiality which
may attach to many assignment and are applied by regulation or law with
some clients
 Together with any association has no material/substantial link with the
client or the subject of the assignment
11. Mass Appraisal – the practice of appraising multiple properties by a

systematic and uniform application of appraisal method and techniques that
allows for statistical review and analysis of result at a particular date.
12. Estate –
 The totality of the assets owned by a person which includes real and
personal properties and the interest thereof
 Signifies the quantity of interest, share, right, equity of which a fortune
or riches may consist in real estate
 The degree, quantity, amount and extent of interest which a person
has in real property
 All the property either real or personal, owned by natural or juridical
person
13. Real Estate – refers to

 Land and all the permanent improvements thereon
 Real property and its improvement
14. Fair Market Value or Market Value -

 The highest monetary price a property has at a reasonable period of
time, which the seller is willing to sell and the buyer is willing to buy
 The highest price estimated in terms of money that the property will get
if exposed for sale in the open market, allowing a reasonable time find
a purchaser who buys with knowledge of all the uses which the
property is capable of being used
 The price at which property may be sold by a Seller who is not
compelled to sell and bought by a buyer who is not compelled to buy
 The amount for which a property would sell if put on the open market
and sold in a manner that it is usually sold, allowing a reasonable time
to find and familiarize a purchaser with property’s uses and potential
 The price at which a willing and informed seller would sell, and a willing
and buyer would buy, neither being under any pressure to act
 Estimate reflecting prices actually paid for various types of property
 Used as a basis of determining property taxes.
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Appraisal
15. Guide for Valuation/Appraisal

a. Generally Accepted Valuation Standards (International Valuation
Standards and/or Philippine Valuation Standards)
b. Generally Accepted Valuation Principles which are based on
established practices
16. Objectives of adopting the International valuation standards under the

Philippines setting as part of government land reform program
a. To alleviate poverty by improving the land tenure security and by
fostering efficient land markets
b. To sustain economic growth which can be attained thru:
 Land reform program (LRP) that promotes a clear, coherent and
consistent set of land administration policies and laws
 An efficient land administration system supported by a sustainable
financing mechanism and
 An effective and transparent land valuation system that is in line
with internationally accepted standards
17. Government associates that spearheaded the Land Valuation Reform

Program or the Land Administration and Management Project (LAMP)
a. Australian Government which provided the technical assistance
b. World Bank which provided the financial assistance
18. Agencies of the government under the department of finance (DOF) tasked
to implement the Property Valuation and Taxation Reform
a. Bureau of Local Government Finance (BLGF)
b. National Tax Research Center (NTRC)
19. Property Valuation and Taxation Reform Agenda or Plan

a. Implement a valuation system that will assess property values at their
market levels thru the Valuation Reform Act
b. Establish an independent National Valuation Authority that will set and
enforce valuation standards
c. Raise the level and professionalize the property valuation practice and
d. Develop valuation standards known as ‘’Philippine Valuation
Standards’’ for the use by government and private sectors
appraisal/valuation professional practice
20. Intention of the Valuation Standards

a. To raise the quality of public and private sector valuation and the
reporting
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Appraisal
b. To promote transparency and reliability of valuations for the disposal
of government assets, financial reporting, secured lending , transfers
of ownership, litigation and taxation and
c. To provide consistency and understanding between valuer/appraiser
and the user of valuation/appraisal at national and international levels
d. To reduce financial risk for users of valuation/appraisal reports
21. International Valuation Standards Committee(IVSC) –

 A non-government organization (NGO) member of the unites nation
which has national associations from 52 countries as members with the
following objectives:
a. To formulate and publish for public interest, valuation standards
for property valuation and to promote their worldwide acceptance
b. To harmonize standards among the world’s countries, to identify
and make disclosure of differences in statements and/or
transactions of standards as they arise
 Recognizes the diversity of purposes for which property
valuations/appraisals required including use in financial statements
decision on loan and are mortgages secured by property, transactions
involving transfers of ownership, and litigation and tax settlement
22. Purposes for development of the international Valuation Standards (IVS)

a. To facilitates cross-border transactions and contribute to the viability
of international property markets by promoting transparency in
financial reporting, as well as the reliability of valuations/appraisals
performed to secure loans and mortgages for transactions involving
transfers of ownership and settlements for litigation or tax ,matters
and others purposes
b. To serve as a professional standard or inspiration for
valuers/appraisers around the world, aiding them to respond to the
meet the financial reporting requirements of the global business
community
c. To provide standards or principles for valuation and financial
reporting that meets the needs of emerging and newly-industrialized
countries
23. Department of Finance (DOF) Order No.37-09 which was issued last October
19, 2009-
a. To prescribe the adoption of the IVSC Valuation Standards under
Philippine Setting or otherwise known as Philippines Valuation Standards
(PVS)- 1st Edition
b. The PVS shall be implemented by all local government assessors and
other DOF agencies undertaking property valuations
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Appraisal
24. Real Estate, Property and Asset concept –

 Real Estate- refers to the physical land those human-made items which
attach to the land whether found in or above the ground/land
 Real Property- includes all the rights, interest and benefits related to the
ownership of real estate
 Current Assets- refers to asset not intended for use on a continuing
basis in the activities of an entity
 Non-current assets (fixed to long-term) – refers to tangible and intangible
assets, such as property, Plant, Machinery and Equipment and Other
Non-current assets
25. Land and Property concepts –

 Land is essential to our lives and our existence
 Valuation of land as if vacant or land and improvement or on land is
an economic concept
 Property is a legal concept, encompassing all the rights, interest and
benefits (ribs) related to ownership which entitles the property owner
to a specific interest on what is owned
26. As defined under RA#9646, Real Estate Appraisal (REA) – refers to a duly
registered and licensed natural person who for a professional fee,
compensation or other valuable consideration performs/renders or offers to
perform services;
 On estimating and arriving an opinion of real estate values or
 Acts as an expert in arriving opinion of the values of real estate which
shall be finally rendered by the preparation of an acceptable written
form or
 Works in the local government units (LGU) and performs appraisal
and assessment of real properties including plants, equipment, and
machineries, essentially for taxation purposes as far as assessors
and assistant assessor and appraisal for the Local Assessment
Operation Officer (LAOO) in the national government positions.
27. Independent Valuer/Appraiser – refers to an appraiser/valuer who

 Meets the specific requirements of independence or impartiality
which may attach to many assignments and are applied by regulation
or law with some clients
 Together with any association has no material/substantial links with
the client or the subject of the assignment
28. Value is created by the real estate’s utility or capacity to satisfy needs and
wants of human societies.
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Appraisal
29. Asset Valuation – valuation of the land, building, plant, equipment, machinery
generally for incorporation into business accounts.
30. Land and/or building improvements, including rights and interest therein
refers to Real Estate Property
31. The date of appraisal is significant because economic, physical and

governmental condition changes constantly and such changes may cause a
decrease or increase in the value of real or personal properties.
32. Real Estate Dealer – refers to

 Any person directly engaged as a principal in the business of buying,
selling or exchanging real estate property whether on a full or part time
basis
 Either a natural or juridical person who performs any of the acts
comprised in real estate brokerage with references to his own property
 The owner/developer of the land, subdivision, condominium , resort,
country, club, memorial park, owner/lessor of an apartment, commercial
building or other income-generating properties, sells, mortgages and
exchange real properties
33. International Valuation Standards (IVS) is truly a global Valuation standards
34. Generally Accepted Valuation Principles (GAVP) – refers the best practices in
the valuation industry
35. Development/Evolution of Value Theories

a. Theories of Austrian School states that value is –
 The relation of the market price and value
 The normal value under conditions of balanced supply and
demand
 The subjectivity, scarcity and utility
b. Cost theory of Adams Smith states that value refers to –
 Objectivity , value in use
 Value in use, value in exchange
c. Scarcity theory of Malthus states that value –
 Is only with human labor power expended
 Emphasized the supply and demand factor
 Refers to supply and demand
d. Labor theory of Karl Marx states that value is –
 A mere congelation of homogeneous human factor
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Appraisal
e. Theories of the Mercantilists refers to the –
 Subjective desires of the factor in value
 Subjectivity
f. Social theory of John Stuart Mill states that –
 Unearned increment of the land abolished thru taxation
 Land value increase indefinitely
 Of socialism
g. Theories of the Physiocrats one that
 Laid the foundation of today’s concept of economic rent
h. Rent theory of Ricardo states that value –
 Determined by scarcity
 Refers to scarcity
36. The accuracy and usefulness of the value estimate depends on the
appraiser’s skill, experience and sound judgment
37. Factors/Forces that effects Appraisal (key: PEPSo)

a. Political – which are governmental based like :
 The degree of efficiency in the maintenance of peace and order
and the efforts of providing the essential services such as:
utilities, zoning and land use ordinances
 Anti- squatting law
 Rental control law and etc.
b. Economic – which includes the nature of basic industry and business
activity in the neighborhood, trend of employment, and expansion of
housing programs and the rental estate industry
c. Physical – refers to the location and age of the neighborhood ( size area,
shape and land topography), types improvements and architectural trends,
street pattern, sidewalks and underground drainage or any tangible
features
d. Social – related to population growth, birth control measures and
migration or demographics
38. Characteristics/Determinants of Value in Appraisal (key: DUST)

a. Effective Demand or the purchasing Value – refers to the desire couple
with the financial capacity of the buyer to acquire a piece of real property
b. Utility – refers to the ability of the property to satisfy human needs
c. Scarcity or the supply and demand – refers to the intended use
d. Transferability – refers to the quality of the property to be transferred or
covered
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Appraisal
39. There are factors or forces that contribute to property values. The expertise or
understanding of what are particularly those factors/forces and how they
weight or can probably influence property value is an element that lends to
the authority or ability of appraiser’s opinion of market value.
40. The basic principles in appraisal/valuation are interconnected and their

relative significance will vary depending on particular local or limited
condition.
41. Principles/ Basic Economic Concepts in property appraisal/valuation

a. Principle of Anticipation- states that value is
 the present worth of all rights and future benefits accruing to
ownership and use of real property
 created or affected by the expectation of the future benefits which
possibly depends to some extent on the property type
 found out on the present value of the future income stream as
basis in using the income approach of valuing/appraisal the
property
 based primarily on the this economic principle in income approach
b. Principle of Balance- refers to the
 Value of a property will reach to its maximum level when the
factors (land, labor, capital, coordination/entrepreneurship) of
productions are in balance
 Principle which holds that value is educated to the amount and
utility of real estate
 Term used to describe a combine of the land uses which
maximizes land uses
c. Principle of Change- state that

 Value of the all property is inclined by change
 No material or economic condition remains stable
 The inevitable and constant factor affecting the possible increase
in the value of the property, like: cities, neighborhoods, natural
phenomenon, changes in market place and etc.
d. Principle of competition- refers to the industry competition which arises
from profits
e. Principle of Conformity- states that the

 Result of a reasonable degree of architectural homogeneity and
compatible land uses brought about by market attitudes, societal
trends, economic condition and public policy
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Appraisal
 Value of a property trends to be enhanced where there is
reasonable homogeneity used
f. Principle of Consistent Use- refers to factor//force where the property is

cannot be valued on the basis of one use for land and another use of
improvements
g. Principle of Contribution- refers to the principle

 Of increasing and decreasing returns applied to a portion or the
whole of an improvement
 The measures the value of a component on how much it
contributes to the value of the property
h. Principle of Externalities- provides exterior influence of a property that

may have a positive or negative effect on its value
i. Principle of Heterogeneity- states that

 No two lots have although they may be adjacent to each other
 Two recently sold properties were selected for their similarities
that maybe compared to determine the value of dissimilarities
j. Principle of Highest and Best Use- refers to the

 Most profitable and likely use of the property at the time of
appraisal that will likely produce that land’s highest present
value
 Most profitable and likely use of the property at the time of
appraisal
 All profitability will yield the maximum return at a given time
 First necessary consideration in studying a tract of the land to
estimate its value
 Most profitable, legally and physically permitted use that will at
present provide highest property value
 The primary consideration of all the factors that influence market
value
 Use of a property which brings the optimum/highest returns or
advantage over in all probability the property will yield the
maximum return at a given time or at the time of appraisal
 Most profitable use of real property over specific period of time
considering its utility and current element of risk
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Appraisal
k. Principle of Opportunity Cost- a principle in the appraisal
 Of income-producing property which refers to the disparity or
gap between alternative with conflicting rates of return
 By which the appraiser considers the alternatives in selecting a
rate of return for the property being appraised that effects the
final value estimate for the property
 That states the value of investments chosen can be measured
in terms of the value investment options or opportunities
foregone
l. Principle of Progression- states that
 The association of a property with inferior properties will tend to
lower the value of the former
 Between dissimilar properties, the value of the lesser-quality
property is favorably affected by the presence of the better-
quality property
m. Principle of Regression – states
 That a tremor alluding to the decrease in value of certain
houses in a particular neighborhood caused by the expected
construction or condition of interior dwelling in the area
 The value of a property tends to be adversely affected/enhance
by association with inferior/ superior properties
 Connotes diminish value through disadvantages anticipated in
the future such as: planned low cost housing development in an
area of expensive
n. Principle of Substitution- states that
 The value of a replaceable property tends to be indicated by the
value of an equally desirable substitute property
 When two or more commodities with considerably of the same
utility is available, the one with the lowest price receives the
greatest demand and widest distribution
 The direct sales comparison approach is primarily based/relies
on-
o. Principle of Supply and Demand- refers to the factor/forces where the
value is increased if supply is reduced by effective demand, resulting in
scarcity.
p. Principle of Surplus Productivity – refer to the
 Net income remaining after the cost of labor, capital and
coordination have been paid
 Income attribute to land rent that remains after labor, capital and
coordination have been charged
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Appraisal
q. Principle of Utility- refers to
 The meeting the desires and requirements of human being snot only
the capacity to give satisfaction in use but also the power to excite
desire for continued possession
42. The Appraiser/Valuer’s job is to consider the subject property In light of all the
forces/factors appropriate to the property’s kind and location as well as the
appraisal/valuation purpose.
43. Types of Appraisals

a. Formal Appraisal
i. Performed by structure of judgment
ii. An estimate of value that is reached by the collection and analysis of
relevant data
iii. Commonly reported in writing thru a narrative report
iv. Performed by a licensed Real Estate Appraiser specifically trained
for assignment/work
b. Informal Appraisal
i. An estimated of value based on untrained knowledge of value,
which conclusion was reached using intuition or suspicion, past
experience and broad-spectrum knowledge
44. Value – refers to the

 Ability to serve useful purposes or to command goods including money
in exchange, utility and desirability
 Desirability of a property on account of its absolute or relative use
 Power of goods in exchange for the present worth of future rights to its
income or amenities
 Present worth to typical users and investors of future benefits arising
out ownership of a property
 Money deemed to be the equivalent in worth of the subject property
 Worth of a thing in money or goods at a certain time
 Formula: (V=I/R or NOI/R)
45. Value may be sought for any number of reasons like setting a sales price for
properties to be sold, for partition, for taxation, for litigation, for financing, for
insurance coverage and others.
46. Other uses of real estate that required Appraisal

a. Sale and purchase, it help the seller set the asking price and buyer
determine the fairness of the asking price
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Appraisal
b. Set value on property involved in corporate mergers, acquisitions,
liquidations or bankruptcies
c. Determines the amount of mortgage loan
d. Sets rental rates on lease or even options to renew lease or options to buy
the leased premises
e. Sets value for real property of the an estate or even partitioning of estate
f. Estimates the relative value of properties being traded
g. Determines building insurance value
h. Assessing property for taxation purposes (real property or zonal valuation
i. Valuing property as part of marital dissolution
j. Valuing property in litigation in foreclosure proceeding
k. Determining development costs on land utilization
l. Ascertaining whether the present use of a property is its most profitable
use
m. Establishing a value for
n. Property in a condemnation/expropriation proceeding and etc.
47. Users of the appraisal/valuation report under the Philippine Valuation

Standards (PVS) or the International Valuation Standards (IVS) should be
able to rely on such appraisal/valuation report being undertaken by
knowledgeable or proficient professional who subscribed to high
standards/values of ethical conduct of the assignment or job.
48. Appraising has always been a unique component of real estate profession.
The Appraiser’s estimate of property value has an important effect on many
aspects of a real estate business or transactions. Appraiser’s occupation
provides opinion of real property value such as for land, building, machinery
and equipment’s, plants, trees and any improvements introduced to the land
which can be considered also as real estate or immovable property. In
rendering opinion of values, such should be in accordance with the
generally accepted valuation standards/principle and not just a mere guess.
49. The scope of work established by the client and the appraiser is necessary in
the appraisal assignment which will determine the extent of the research and
analysis that the appraiser will have to perform to complete the appraisal
assignment/engagement.
50. The Real Estate Service Act of the Philippines (RA#9646) is the law that
governs the real estate appraisal practice In the Philippine jurisdiction. It
provides that Real Estate Appraiser/Valuer is a duly registered and licensed
natural person who for a professional fee, compensation or other valuable
consideration performs or renders or offers to perform services in:
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Appraisal
 Estimating and arriving at opinion of real estate values or
 Acts as an expert on real values which services shall be finally
rendered by preparation of the acceptable written report
51. The following are the Appraiser’s Client::

a. Sellers/Property Owners/Development
b. Buyers
c. Lenders, bank and financing institutions
d. Lawyers/Attorneys
e. Estate Administrators
f. Court
g. REITs
h. Receiver
i. Attorney-in-Fact
j. Government (national or local government units)
k. Real Estate Brokers and Real Estate Consultants
l. Accountants
m. Any person who needs the service of the licensed Real Estate Appraiser
52. An Appraiser’s opinion of property value will be submitted in either a

letter/certification form or standard form or in narrative form.
53. The appraiser should acts as a disinterested 3rd party. For this reason, the
Appraiser’s/Valuer’s professional fee/compensation should not be based on
the estimated value of the property being appraised, with no vested interest in
the estimation of value and should be able to objectively evaluate the
property’s virtual merits, appeal and value.
54. Appraiser’s fees are based on the time required to complete the appraisal
process and the report/appraisal assignment – the more complex the subject
of the engagement or the appraisal report required, the higher the fee will be.
However, there are also subject to negotiation between the Appraiser and the
client or the party (ies) for whom the appraisal is to be prepared. Hence,
appraisal fees are subject to a balance between the appraiser’s overhead and
expenses on one hand and market competition on the other hand.
55. There is no way that the appraiser’s fee is dependent on the final opinion of
value or the stipulated or subsequent event to avoid the appearance of
possible conflict of interest.
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Appraisal
56. The appraiser should remain independent or objective in considering all of
the factors relevant to the appraisal assignment. Any personal interest in the
outcome of appraisal should be revealed to the client. As a practical matters,
it is in the Appraiser’s best interest to avoid any assignment that could create
the appearance of impropriety or immodesty.
57. A competent Appraiser/Valuer will always maintain a high level of

professional practice by keeping updated on the updated on the latest
developments within the professional field by reading appraisal and related
publications and attending seminars and courses. Also, appraiser/valuer
should maintain to possess the competence, skill, integrity, sound judgment,
experience and depth study/education (key: CoSISED) on the application of
the generally accepted methods and approaches of estimating the value.
58. The types of appraisal assignment provides some indication of appraiser’s

employment opportunities whether as:
 Self-employed
 Sole practitioner
 Employee of the bank, financing institution or company
 Employee of the government (national level or local government units)
 Officers or staff of an appraisal company
59. An appraisal/valuation take into account the may market factors that influence
property’s value, hence, an experience appraiser can make an important part
to any real estate transaction.
60. There are proper steps to be undertaken to arrive at the conclusion of value
regardless of the methods/technique by which it is reported. The licensed
Appraiser/Valuer should –
a. Conduct a thorough study of the subject, its geographical location/area,
historical values and economic trends
b. Be able to read the legal description and recognize the exact boundaries
of the subject property ( subject of the assignment/ engagement)
c. Know market conditions on desirability of the property (ies) that others
d. Have some knowledge of building construction to recognize the quality
and condition of the subject of the engagement
e. Known how to analyze income and expense statement in order to make a
determination of property’s potential earnings
61. In short, the appraiser needs some of the expertise of the Surveyor, Builder,
Real Broker, Account, the economist and the Mortgage Lender.
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Appraisal
62. Value was created by real estate’s usefulness or ability to satisfy the desires
and requirements of human being societies. Contributing to such value are
real estate’s general uniqueness, durability, fixity of location, relatively limited
supply and the specific utility of a given location at the time of appraisal.
63. Basic concepts in the Generally Accepted Valuation Standards/Principle

(GAVS/P):
a. Real Property –
 Is a legal concept encompassing all the interests, rights and benefits
related to real estate ownership
 Consists of rights of ownership, which entitle the owners to a specific
interest(s) in what was owned
 Ownership of an interest on items other than real estate is known as
personal property
 As used without further condition or classification may refer to real
property, personal property or other types of the property such as
businesses and financial interest or combination thereof
 Is an interest(s) in real property is normally demonstrated by some
evidence of ownership (e.g., a title deed) separated from the physical
real estate
 Is an non-physical concept
b. Property Valuers, Assets Valuer and Appraisers – are those who deal with
the special disciple of economic associated with preparing and reporting
valuation in accordance with certain standards. As professionals,
Appraisers/Valuers should meets rigorous tests of education, training,
competence, demonstrated skill and also exhibit and maintain a code of
conduct (Ethics and Competency) and Standards of Professional practice
and follow the Generally Accepted Valuation Standards/Principle
(GAVS/P).
c. Prize changes overtime which resulted from specific and general effects of
economic and social forces. General forces may cause changes in price
levels and in the relative purchasing power of money. Specific forces like:
technological change may generate shifts in supply and demand and can
create significant price changes.
d. Many recognized principles are applied in valuing real estate such as: the
principle of supply and demand: competition; substitution; anticipation or
expectation; change and others. Common to all these principles is the
direct or indirect effect on the degree of utility and productivity of a
property. As results, it may be stated that the utility of real estate reflects
the combined influence of all market force that come to bear upon the
value of property.
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Appraisal
e. Appraisal/Valuation is an act or process of estimating value or developing

an opinion of value. It also refers to both the process by which the
appraiser reaches certain conclusion based on well-researched and
carefully documented work and written report in which those conclusions
are communicated to aide all the parties involved in making-decision. It
includes a description of the property under valuation, the appraiser’s
opinion of the subject property’s condition, its utility for a given purpose
and/or its probable monetary value in the open market.
f. Appraising is basically a process, related to purpose and relying on
observations and economic theory, which produces an estimate. It does
not create value but merely observes the forces which create value.
Likewise, it does not recommend action but merely provides a basis on
which action for decision may be made.
g. The definition of Real Estate includes the following:
 Land
 Fixtures or attachment to the land
 Anything incidental or appurtenant to land that benefits the land-
owner like an easement right of way
 Anything else that is considered immovable (part of the real
estate) by law, except for cultivated crops (referred to as
emblements) and other severable (removable) things that are sold
by a contract of sale that complies with the laws regulating the sale
of goods
h. The earth’s surface including everything under or on it is considered land.
Mineral right to solid substances (like coal and iron ore) as well as those
that should be removed from beneath the surface to be reduced to
possession (such as oil and gas) may be transferred independently of the
rest of the land.
i. When land is improved by the addition of streets, utility (water, gas and
electricity), sewers and other services it becomes a site and may be
considered suitable for building purposes. And within the limitations, air
right above the earth’s surface are also considered the landowner’s
property. Transferable development right of airspace has facilitated
construction of high rise buildings.
j. Personal Property includes interest in tangible and intangible item which
are not real estate. Item of tangible personal property are not permanently
affixed to real estate and generally characterized by their movability.
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Appraisal
k. Fixture is anything permanently attached to the land. It included natural
things that are attached by roots (trees and bushes) and man-made things
(fences and building)
l. Under the PVS, economic value and market value are the two types of
values
m. In an appraisal, the rights being appraised should be stated because any

limitation on rights of ownership may affect property value.
n. Trade Fixtures are items owned and attached to a rented premises/space

or building by the tenant and used for business purposes. A tenant usually
may remove a trade fixture before the end of the lease term if the fixture
was installed for purposes of trade, manufacturing, ornament or domestic
use and if it can be removed without damages to the premises. Trade
fixtures that are not removed became the property of the property owner
or the landlord.
o. The owner of real estate has the power to do certain things with the
property. These ownership rights is called as the bundle of the right which
is an inherent rights in real estate ownership on what may be bought
p. There are four government restrictions that limit real property ownership,
namely, taxation, Eminent Domain, Escheat and Police Power.
q. In appraisal, the right being appraised must be stated because any

limitation on the rights of ownership may affect property value. There are
property rights that are reserved by law for public exercise and thus limit
an owner’s full enjoyment of ownership right. There are also private
restriction on the use of real property.
64. In accounting terminology, assets are resources controlled by an entity as a

result of past even and from which some future economic benefits are
expected to flow to the entity. Ownership of an assets is itself an intangible.
The future economic benefits embodied in an asset may flow to the entity in a
number of ways; an asset is recognized in the balance sheet when it is
probable that the future economic benefits will flow to the entity and the asset
has a cost or value that can be measured reliably.
65. Tangible distinguished from intangible assets in accordance with the

International Financial Reporting Standards (IFRS)
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Appraisal
a. Current Assets are properties not intended for use in an entity’s continuing
activities like: stock, obligations, short-term investments, real estate
inventories for developers, cash in bank and cash on hand
b. Non-current Assets (Fixed or long term assets) are tangible and intangible
assets which fall into the following broad categories:
 Property, Plant, Machinery and Equipment are assets intended
for use in the entity’s continuing activities including land and
buildings, plants and equipment and others categories of assets
suitably identified less accumulated depreciation. It is tangible or
physical assets.
 Other non-current assets are properties not intended for use in an
entity’s continuing activities but expected to be held in lasting
ownership like: long-term investments, long-term receivables, good
will, expenditures carried forward and patents, trademarks and
similar assets. It include both tangible/physical assets and
intangible/non-physical assets. Intangible assets are considered
item of intangible personal property and may include management
skill, credit rating, goodwill and various legal rights like: patents
trademarks, copyrights franchisees and contracts
c. Operational assets are considered essential to the operations of the going
concern or corporation. Investment assets owned by a corporation are
considered irrelevant to the operational requirements of the corporate
owner.
66. Accounting terminologies differs from term more common to

Appraiser/Valuers. Real estate/property Appraisers/Valuers are principally
involved with fixed assets. Technically it is the assets or right of ownership
that was valued rather that the tangible or intangible assets itself.
67. In appraisal/valuation, depreciation is use in diverse situation compared with

financial reporting. In asset appraisal/valuation, depreciation refers to the
adjustments made to the cost of reproducing or replacing the assets to reflect
its physical and functional (technical) deterioration and external (economic)
obsolescence in order to estimate the assets/property value in a theoretical
exchange in the market when there is no direct sale evidence available. In
financial reporting, depreciation refers to the charge made against income to
reflect the systematic allocation of the depreciable amount of an asset over its
useful life to the entity.
68. Value is an economic concept referring to the price most likely to be

conducted by the parties’ in a market’s view. Value is not a fact but an
estimate of the likely price to be paid for the property at a specific time in
accordance with a particular definition of value and standards.
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Appraisal
69. Market Value of real estate is a representation of its market-recognized utility

rather than its mere physical status.
70. Market is the environment in which the goods or properties are traded
between buyers and sellers thru a price mechanism. The concept of a market
implies that goods or properties may be traded among buyers and sellers
without undue restriction on their activities. Each party will respond to the
supply-demand relationships and others price-setting factors as well as the
party’s own capacities and knowledge, understanding of the relative utility of
the goods and individual needs and desires. A market can be local, regional,
national or International. It is simply a place for selling and buying.
71. Market in its most efficiency is said to be a perfect market. Unfortunately, real
estate market is far-off from perfect. We define real estate market by
understanding the special that influence real estate as a commodity. Market
place analysis of real estate must include demographic data on the area’s
residence. Land is unique because no two parcels can occupy the same
space on the face of the earth
72. Demography- refers to the scientific study of population statistics-births, death

and marriages. While segmentation- refers to the overall market area.
73. Every parcel of land is considered unique and is not similar with any others
parcel or site. Real Estate is intensely regulated-as to its uses and to the
manner in which its ownership can be transferred. Every parcel of real estate
is unique and immovable which factor affects supply and demand. Land
cannot be delivered to a location which is the most single factor in
determining real estate value.
74. The owner or seller of real estate can make improvements of the property by
constructing building/any structures or making any improvements. The
property owner/seller cannot change the property’s location.
75. When the appraiser learned about the political, economic, social environment
conditions of the area where the property is located. The appraiser can start
to assimilate the information needed to make an informed judgment based on
indicators of market value.
76. When all four elements (DUST) of value are present, the property has a value
that may be estimated by the appraiser. To appraise real property it means to
estimate the peso amount that represents the property value. There may be
locally occurring transactions (within the city, region or state) however; all are
affected to some extent by the wider market forces within the state, region
and nation.
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Appraisal
77. Valuation Standards are statement of recognized principles and concepts.

Philippines Valuation Standards (PVS) are standards that conform to the
Generally Accepted Valuation Principles (GAVP) and Internationally Accepted
Standards and Practices (IASaP).
78. Price – refers to

 is a term used for the amount asked, offered or paid for a
good/property or service
 Amount paid may or may not have a relation to the value which might
be ascribed to the goods/property or services by others
 Indication of a relative value placed upon the service by the particular
buyer and/or seller under particular circumstances
79. Cost – is the price paid for goods/services or the amount required to
create/produce the goods or services. When that goods or services has been
completed, its cost is an historical facts. The price paid for a goods or
services becomes its cost to the buyer.
80. Value in Exchange indicates the value of the property traded in the market,
which is referred. While value is use refers to the value of property to the
holder that includes its amenities, benefits and income derived from the
ownership thereof, all are estimated in terms of money.
81. External Appraiser/Valuer – is one who, together with any associates has no
material links with the:
a. Client
b. Assignment
c. Agents acting on behalf of the client
82. A legally non-conforming use is a use that was legally established and
maintained but no longer conforms to the existing zoning. The value of real
estate is determined in the market mainly by its productivity. The principle of
Substitution implies that the value of a property tends to be indicated by value
of an equally desirable property.
83. The principle of substitution holds that a purchaser will pay no more for a
property than the cost of acquiring an equally desirable substitution.
84. Stockholder’s Equity- refers to the sum of the asset accounts less provision of
depreciation, depletion and amortization minus the liability accounts shown on
the balance sheet.
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Appraisal
85. Department of Finance Order No. 37-09 (DOF order no. 37-09) dated October
19, 2009 prescribes the adoption of the international valuation standards
(IVS) under the Philippine setting known as the “Philippine Valuation
Standards (PVS)- 1st Edition represents accepted or best practice in the
Valuation profession as the Generally Accepted Valuation
Principles/Standards (GAVP/S). Appraisal/valuers in compliance with the PVS
are required as mandated by the said regulation adopt and comply thereof.
86. The Philippines Valuation Standards (PVS) was considered to be the basis of
the property valuation procedure and is applicable to the aspect of land
reform program and legislative reforms as well as the appraisers/valuers
professional services or engagement and the their continuing professional
development. Detailed examination of the methodologies and its application
to specific property types or markets are areas of specialize education or
learning’s. For this reason, all professional Appraiser’s/Valuers are
encouraged to continuously enhance themselves by pursuing the continuing
professional development course/programs throughout their careers.
87. The PVS recognize that every application of the methodologies of

appraisal/valuation is coupled in specific appraisal problem, the solution of
which depends on the Appraiser/Valuer’s ability/skill to select relevant
techniques and exercise appropriate judgment there to under the
circumstance.
88. Different appraisal/valuation principles and techniques are understood within

the real estate appraisal profession and are well established all over the
global business community. Where the standards/principles of other
profession, like accounting may apply to appraisal/valuations, the appraiser
should try to understand the accounting use to which their
appraisals/valuation are place or set.
89. The PVS also recognizes the difficulty of appraisal procedures, the variety of
property situations and the complexity of other professional disciplines in
interpreting valuation activities as well as the vital need of the public or the
users for well-founded professional appraisal/valuations requirements in
harmony with generally accepted standards.
90. Issues relative to the application of the standards/principle often arise in

appraisal/valuation practice and from those who use appraisal/valuation
services. The PVS Guidance Notes provides guidance on specific
appraisal/valuation issues and how standards/principles are to be applied in
more specific trade and service-providing situations. The PVS Guidance
Notes complement and expand on the Standards/Principles and Application
which they have the same importance.
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Appraisal
91. Conformity or Compliance with the PVS Guidance Notes as well as the
Standards/Principles and Applications are mandatory to all Appraiser/Valuers
preparing appraisal assignments under the Philippine Valuation Standards (PVS)
in relation to the international Valuation Standards (IVS). Hence, all
appraisals/valuations prepared in observance/compliance with the PVS/IVS must
conform to the principles and procedures enunciated or pronounce thereat.
24
Fundamental of Real Estate Principles, Theories and Practice
in Appraisal
Standards and Ethics
1. Appraiser/Valuers demonstrate and uphold a Code of Ethics and

Standards/Conducts (herein after referred as Code) and the Generally
Accepted Valuation Principles/Standards (herein after referred as Valuation
Standards).
2. The Philippine Valuation Standards (PVS)provides the following fundamentals:

 Appraisal/valuation
o performance should be in observance with the Code
o should be performed by honest and competent Professional
Appraise/Valuers
 Professional Appraiser/Valuer should-
o be free from bias/partiality or self-interest whose repots are clear and
not misleading
o be a member of a professional Appraiser's group that implements
standards of qualification, competence, experience and ethics
o disclose of all matters necessary to the proper understanding in
appraisal/valuation
3. The Code of Ethics should address the ethical and competency requirements of
Appraisers in the professional practice. Ethical conduct serves the public
interest, Sustain the trust in the financial institutions necessarily rest in the
Appraiser/Valuers professional services and works to the benefit of the
appraisal profession. It also ensures reliance of the appraisal results in
accordance with the generally accepted valuation standards its consistency and
unbiased conduct.
4. The Code of Ethics and Standards shall govern the rules of conduct of all
private and public government Appraisers/valuers. Public/government
Appraisers should also promote and preserve public trust inherent in their
appraisal and assessment functions, maintain a high standard of honesty and
integrity, conduct their functions in a manner not detrimental or
disadvantageous to the government, the public and the profession and ensure
that all their staff or subordinates adheres to the Code of Ethics/Conduct. All
Appraisers/valuers should abide the Code either by choice or by requirement
as provided by law or regulations at the instruction of the clients/intended users
and/or the professional association.
5. Appraisal/Valuation prepared under the Code of Standards are normally

acceptable to the clients/end Users if prepared by qualitied professional
Appraiser/Valuer who is a member of a professional association that enforces
the standards of qualification, competence, experience, ethnics and disclosure
in appraisal assignment.
in Appraisal
6. The spirit of unity, harmony, camaraderie, cooperation and professional
relationship amongst the professionals is essential or necessary and shall be
promoted under the principle of solidarity.
7. The Golden Rule: “Do unto others as you would have them do unto you” shall
be observed in all dealings or transactions of the professional Appraisers
relationship with clients, colleagues, public, government and with PhilRES- the
AIPO.
8. Real Estate Service Practice-
 Is an honorable profession or a calling or a vocation to strive for
excellence which is essential for:
 Social or
 Community
 Political, economic or trade and industry development and progress
O
 Growth of the country by promoting the real estate industry and
 Stimulating economic activity
 Is a nob/e or dignified profession, calling or occupation and those

engaged therein Should abide, commit and comply or obey all the
laws, standards, decrees, orders and policies enacted/promulgated
by duly constituted government authorities. Hence, it is not only
limited to RA#9646, its IRR resolutions issued by PRC but shall also
include-
 All laws
 Government rules and regulations issued by Other government
agencies related to real estate service practice and real estate
industry
 it shall embrace and comprise all natural persons who are performing
any or the real estate appraisal acts or practice perform by a licensed
Real Estate Appraisers, Government Appraisers and Assessors. In
other words, all Real Estate Appraisers and Assessors as defined in
Section 3(g) of RA#9646 are also covered by the Code of Ethics and
Responsibilities as well as the provisions of RA#6713-the Code of
Conduct of Government Officials and Employees.
9. A person, whether individual or member of a firm or officer or employee of a
juridical person (e.g. corporation, partnership, Cooperatives and association
shall be considered engaged in the practice of real estate profession if he/she-
a. Advertises or convey to the public in any manner/way the impression
that he/she is:
 skilled in the knowledge, science and practice of the real estate
appraisal profession
 qualified to render professional service as registered and licensed
Real Estate Appraiser for a fee, Compensation or other form of
remuneration
26
in Appraisal
 renders opinion of property value with or without a professional fee
or compensation
b. Maintains a regular office for the professional appraisal practice-
 whether as a registered and licensed Real Estate Appraiser or not
 where the performance of the professional service Is undertaken
individually or for a collegial effort or
 renders professional service in the office of the client or employer
c. Prepares and signs any

 professionals appraisal reports that renders opinion of property
values
 consultancy reports on appraisal values and
 review reports as peer reviewer
 Other reports, bids or documents/records of a clients or employer
intended to be used in connection with professional expertise like:
Commissioner's report, Tax Declaration, immigration appraisal
report, bank appraisal report, lending/financing appraisal report,
financial reports, etc.
10. Duties and Responsibilities of the Real Estate Professionals/Appraisers

a. Adhere to the Code of Ethics/Conduct, morals and values in the
engagement or performance of their professional services to
 the Government
 the Public
 the Clients
 the Colleagues or Fellow Professionals and
 PhilRES the AIPO including its Chapters
b. Perform professional service with: (Key: FAR-SUC
 Fidelity
 Accountability
 Respect
 Sincerity
 Utmost integrity and
 Courtesy with colleagues with a proper professional behavior
c. Strictly adhere to the Code of Ethics with (Key: Hon-ProGS)
 Honesty
 Professionalism
 Good moral conduct and
 Strong sense of value
d. Observe at all times objective moral standards in the real estate practice
with good governance in relation to:
27
in Appraisal
 his/her client
 the community
 in service to the country and
 to the Filipino people
e. Should have
 adequate education
 value formation
 Knowledge
 competence and
 expertise in the practice of the real estate profession
f. Maintain a professional character and personality by upholding the
generally accepted standards of the real estate practice
g. Should promote-
 the spirit of unity
 harmony
 camaraderie
 cooperation and
 professional relationship under the principle of solidarity among
the professionals/practitioners
11. Professional Rules of Conduct and Responsibilities
a. As to Government relationship
 Secure all the necessary licenses, permits and authority from the
PRC and other government agencies as required by law, ordinance
or rules and comply all the requirements for the practice of the
profession like: renewal of the professional identification card,
CPDs, surety bond and Certificate of Membership in Good standing
(CMiGS) from PhilRES
 Pay any and/or all professional fees and taxes like: professional tax
receipts, BIR annual registration fee, income tax etc.
 Support PRC and/or PRBRES With its mandate to implement the
provisions of RA# 9646, the lRR and its functions to completely
eradicate the pernicious/insidious or illegal practices of unlicensed
Real Estate Appraisers or unauthorized persons (natural or
juridical) Not to encourage or support, tolerate or participate in the
evasion of taxes, fees or charges due to the government
b. As to Public relationship
 Imbue or instill with a social or societal responsibility and
conscience being part of a society or civilization with duties and
responsibilities for the promotion of the general welfare
 Cooperate with the government in protecting the public against –
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in Appraisal
 Deceit
 Misrepresentation
 unfair and other related unethical and immoral practices and
 malpractices of
 unlicensed or unauthorized persons and
 licensed Real Estate Appraisers
 Endeavor or make an effort to present full disclosure of relevant
and material information pertaining to appraisal assignment
c. As to Client's relationship
 Oblige or necessitate with
 carefulness or cautiousness
 integrity
 Loyalty and
 Good faith in protecting and promoting the interest of the client
without sacrificing the legitimate interest of the other party in
the transaction which shall not be contrary to:
 law
 good morals
 customs and
 public interest
 Not to accept any professional fee or remuneration from any
party of the engagement except from the client, unless there is
full knowledge and consent of all the parties
 Charge and collect the standard professional fees which are fair
and reasonable based on:
 the time spent/required to complete the assignment
 professional competence and
 in accordance with the professional industry practice but not
lower than the Tariff of Professional Fees approved by
PhilRES-the AIPO and/or the association of licensed Real
Estate Appraisers
d. As to Colleagues/Fellow Professional's relationship
 Not to use any vital documents relative to the professional conduct of
the colleagues without written consent
 Not too use or solicit the services of the employee/staff of another
Professional Appraiser without the latter's written consent
 Not to engage in slander or maligning, oral defamation and gossip or
rumors or criticize/pass judgment publicly a colleague or even
volunteer a negative and damaging opinion in any or whatever
means (either thru SMS, electronics mails or letters, etc of similar
nature)
 Not to seek unjust and inequitable advantage over a colleague by –
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in Appraisal
 organizing or sowing discord
 spreading and bad mouthing against
 Other professionals particularly the National Officers and
Directorate of PhilRES-the AIPO and/or
 PhilRES Chapter Officers and Trustees and/or
 other associations
 willingly share, contribute, write and publish articles for the benefit of
colleagues and for the good of the real estate profession by imparting
 knowledge
 technical trainings
 experiences
 Studies or research without prejudice to classified or
confidential information from the client
 Conduct ethical and professional practice with honor, dignity and
integrity to avoid any controversies with fellow professionals
 If opinion is required for the common good, to render with –
 Prudence
 truth with professional integrity
 Courtesy and respect to a colleagues cautious in safeguarding
the Latter’s human rights, good reputation and credibility
e. As to PhilRES the Accredited and Integrated Professional Organization
(AIPO) relationship
 Abide PhilRES by-laws including that of the Chapter of Choice
 To support PhilRES and the Chapter of Choice financially and
morally, and should actively participate in all the programs/activities
for the benefit and welfare of the general membership and the real
estate profession
 Strictly observe and comply the Code of Ethics
 In case of controversy(ies) among colleagues, should submit it for
arbitration to PhilRES Mediation and Conciliation body which
decision shall be binding, if acceptable to both parties
 To exhaust all possible administrative remedies available at PhilRES
in compliance with due process before taking any judicial or quasi-
judicial or administrative action outside the PhilRES jurisdiction
 Should carry out the elections Or officers/trustees with commitments
to
 moral integrity
 obligation to serve With sense of responsibility, honor,
unselfishness, diligent and efficiency and
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in Appraisal
 should not be subject to self-interest, undue use of force,
authority and/or abuse of power and discretion and
 to harmonious, peaceful, credible and orderly
Any form of electioneering should not be allowed or tolerated, anyone
doing Such should be automatically disqualified as candidate or
nominee for any position.
12. Real Estate Appraisers are required:
a. To indicate the
 license number
 Professional Identification Card (Prof. I.D.) number and its validity
 PTR number and its validity
 PhilRES Permanent AIPO Number (PAN) and the Official receipt
number (ARN) and its validity or until December 31 on the year that
payment of annual dues was made in the appraisal report or any
documents he/she sign or issue, in the calling cards and letterhead. In
case of signboard, billboard, dry seal only the license number shall be
indicated
b. Not to discriminate against any human being on the basis of-

 Race
 Color
 Religion
 Sex
 Disability
 familial status or
 national origin
c. To cooperate in extending the efficiency of the real estate appraiser

profession and shall endeavor to update himself/herself on the latest
developments of the -
 profession
 laws
 rules and regulations
 The real estate appraisal profession by –
 attending the continuing professional development (CPD) courses
 sharing or exchanging information and experiences with other
professionals and
 to participate in PhilRES and other society activities
d. To live and cooperate at all times in upholding the integrity and honor of
the profession-
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in Appraisal
 By avoiding all unethical and unprofessional conduct practices that
will discrete and injure the real estate appraisal profession
 Practice self-respect, selflessness and respect he dignity of human
being for the good of the humanity or the people
e. Not to offer or agree to pay or split/share any professional fee or even to
offer any real estate fees either directly or indirectly just to solicit clients
f. Not to cooperate, assist or endorse any real estate appraisal transaction
or professional engagement in violation of any existing laws, rules and
regulations
g. To be dignified or noble -
 In explaining and discussing the work/assignment and
 Shall refrain from self-laudatory advertisements or publicity or
propaganda or misinformation
h. To recognize Almighty God or the Supreme Being as our Creator and
Guide-
 for his/her destiny and reason for living good moral life
 For exemplary conduct or behavior in the appraisal professional
practice and in dealing with others
i. Not to advertise or publicize nor cause to allow being advertise on
professional achievements or services except:
 In stating qualifications in employment applications or appraisal
assignments
 in publication on-
 Book Authorship
 Technical reports and studies
 Lectures or papers delivered in conferences, seminars, reviews
and similar activities which are beneficial to the real estate
appraisal profession as a whole
However, development and maintenance of Website in the Internet is not
considered advertising
j. Not to seek clients or assignments by solicitation or by advertisement
k. To give testimonies in the most equitable, honest, sincere and
professional manner in case called to act as Witness in court or
administrative proceedings
13. The following are considered unethical or unprofessional acts-

a. Encouraging parties to lower the professional fees than the approved
Tariff
b. To offer/share of professional fees, rebate or give referral fee or finder’s
fee for referring/finding clients
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c. Engaging the services of the employee/staff of another licensed Real
Estate Appraiser without the latter's consent
d. Disclosing client's confidential information
e. Lowering professional fees just to get a client or assignment
f. Concealment of material and relevant information
g. Criticizing negatively a colleague in the manner of handling the appraisal
assignment
h. Making misrepresentation about the professional appraisal practice
i. Using the licensed Appraiser long years' experience as advantage
over/against a new licensed Real Estate Appraiser
j. To Keep Silent when asked for guidance by a new licensed Appraiser
k. To put-down the new licensed Appraiser
l. Claiming an expertise in any of the real estate discipline although have
not been licensed for it and indicate the said claimed expertise in the
calling card
m. Engaging the professional practice without first securing the necessary
licenses and payment of fees as well as renewal of professional I.D.
n. Evading payment of income taxes on income earned and other taxes
o. Preparing and signing appraisal report without observance of the
generally accepted appraisal valuation standards or principles and
compliance of the Appraisal methodologies and approaches
p. Accepting and/or performing appraisal assignment beyond professional
expertise and competency
q. Doing table appraisal valuation
r. Engaging in electioneering during PhilRES-the AlPO elections
14. Real Estate Practitioners governed by the Code of Ethics and Responsibilities
(Key:RE BACAS):
a. Real Estate Brokers
b. Real Estate Appraisers
c. Real Estate Consultants
d. Real Estate Assessors
e. Real Estate Salespersons
15. Adequate, competent knowledge and expertise in real estate developments

and management as well as improvements on the practice standards for social
and economic progress of the country should be maintained at all times by all
real estate service practitioners or by the Real Estate Appraiser.
16. Ethical practices, suggest that real estate appraisers shall not encourage, abet,
tolerate or participate in the evasion of taxes because it is unethical.
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17. Publication of announcement is permitted-
 For opening of new office
 Change of office location or telephone numbers
 Reorganization of firm or office practice provided it-
 Contains basic information essential to the announcement and
 Is of reasonable sized
 When made to clients and other individuals with whom professional
contacts are maintained
 Listing of firm name in the lobby directory of an office building and
entrance door solely for the purpose of enabling interested parties to
locate an office and should be in good taste and modest in size
18. Real Estate Appraiser is liable on the misrepresentation made in the appraisal
report or even & accountable for non-compliance of the appraisal/valuation
standards.
19. PRBRES has the power to adopt the Code of Ethics and Responsibilities
prepared, prescribed or suggested and issued by the Philippine Institute of Real
Estate Service Practitioners (PhilRES) - the AIPO.
20. Real Estate Practice is a noble or honorable calling, profession, occupation and
vocation and not a business undertaking/endeavor with an expectation of a
profit when engage into.
21. Licensed Real Estate Appraiser/Valuer is required to undertake the following

before engaging the professional practice:
 Secure PRC Certificate of Registration or license
 Secure a valid Professional ID which should be renewed every 3 years
on the birthdate of the professional
 Get an annual Professional Tax Receipt (PTR) from the LGU per
profession being practice
 Secure a BIR Registration and pay the annual registration fee
 Register the books of accounts
 Issue Official Receipts on the engagement of professional services
 Should have and maintain an office where to practice the profession
22. Attendance to the continuing professionals development (CPD) should be

undertaken to have an adequate knowledge, Competence and expertise in the
real estate development and management as well as the professional practice.
23. The following are considered professional or ethical acts:
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a. Non-disclosure of client's confidential information with others unless prior
written consent was granted by the client
b. Not to split or share professional fees nor to give referral fees just to get
assignments
c. Not to conceal material and relevant information pertaining to the
assignment
d. To employ the appropriate appraisal/valuation methodologies in every
assignment in accordance with the generally accepted valuation
standards/principles
e. Be honest or straightforward, loyal and sincere to clients in accepting
engagements
f. Not to appraise properties you are brokering or listing
g. Not to perform other professional work if not license or competent to
perform such expertise or professional discipline
h. Not to criticize colleagues in a manner of handling the appraisal
assignment
i. Not to use the long years’ experience as advantage over or against a
new Appraiser and to share the lesson of experience to others
j. Discuss first (1°) the scope of assignment with the client as well as the
agreement of the professional fees for the appraisal assignment prior to
the start of the actual performance thereto
k. Strictly observe the candor of professional assignment as well as the
appraisal valuation procedures/process and methodologies
l. Not to engage the real estate appraisal practice without securing first the
necessary licenses and permits and payment of fees
m. Not to evade payment of income taxes and to file annual income tax
returns
n. Issue Official Receipts on any professional engagements
o. Issue registered official receipts in all payments receive
p. Not to engage in electioneering during PhilRES elections
q. Display the Certificate of Registration (COR) and Prof. IDs in the
professional's office including the COR and Prof. ID of those
professionals employed/engaged
r. To indicate the license number, Prof. ID number, PTR and AIPO Receipt
Number including the date of issuance and validity thereof in all
reports/documents signed as well as indicating the same in calling cards,
billboards, signboards, letterheads and in all advertisements
s. Not to discriminate others
t. To testify in truthful manner in court or administrative body when called or
Summon as Witness
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24. A Real Estate Appraiser is aware that a non-licensed individual is doing
appraisal work/practice but he/she did not bother to do something about it. The
Appraiser had Violated the:
 Code of Ethics for inaction or omission in the performance of his/her duty
of protecting a fellow practitioners
 provisions of RA# 9646 by tolerating and consenting unlicensed
individuals to illegally practice the real estate appraisal profession
25. The licensed Real Estate Appraiser in accepting the assignment did not
perform the appraisal fieldwork as well as complied the appraisal standards.
The appraisal report was used tor decision-making purposes that resulted to
damages. The Appraisers may suffer the following consequences:
 Penalties as provided under RA#9646 and the IRR or
 Administrative sanction that would result to suspension of license for at
least two (2) years or revocation thereof or
 Destroy or impairment of professional credibility/integrity or
 Pay civil damages or
 Subject himself/herself to criminal liability or
 All of the above
26. The Real Estate Appraiser does not live by himself/herself alone. He/she is
instilled or imbued with social morality/integrity or conscience and
responsibilities (No man is an island, no man stands alone).
27. Disputes and controversies involving Real Estate Appraisers/Professionals

should first be submitted to PhilRES-AIPO Conciliation and Mediation body to
exhaust the administrative remedies available in the association. PhilRES
arbitration body cannot settle the controversy, PRC through the PRBRES shall
assume jurisdiction over the said controversy in accordance with Section5
paragraph (C)& (9) of RA#9646 and its implementing rules and regulations
(IRR). And all forms of complaint shall be substantiated with pertinent facts and
documents as required by law in compliance with due process.
28. Sanctions maybe imposed by PhilRES-the AlPo for violations on any provisions
of RA#9646, its IRR, the Code of Ethics without prejudice to any disciplinary
action that the Professional Regulation Commission (PRC) may impose upon
the recommendation of the Professional Regulatory Board of Real Estate
Service (PRBRES) believe to be proper under the circumstances when the
proper complaint against the erring Real Estate Appraiser/Professional will be
filed with the PRC for the alleged misconduct.
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29. Effects On the suspension/revocation license or professional identification card:
 Cannot engage in real estate appraisal practice
 Does not relieve the erring practitioner from any civil and criminal liability
30. Real estate appraisal practice is an honorable and noble profession, an

occupation or a calling to strive for excellence. It has a vital role in the social,
political, economic development and progress of our country by promoting the
real estate industry and stimulating economic activity thereof. Those engage in
the real estate profession shall abide, commit and comply with all the laws,
standards, decrees, orders rules and regulations enacted or promulgated by
duly constituted government authorities.
31. In recognizing responsibilities to the client and other users of the appraisal
report, the professional Appraiser should arrive at the opinion of value of the
subject within the generally accepted standards of ethics and practice to elicit
credibility and objectivity or impartiality of the report.
32. Code of Conduct distinguished from the Ethical Conduct:

 The Code of Conduct deals with the ethical and competency
requirements or the Appraisers/Valuers in the real estate appraisal
practice, while,
 The Ethical conduct serves the public interest, sustains the trust of
financial institutions essentially rest in the Appraisers/Valuers services
and works to the benefits of the appraisal professional. And it insures that
the results of appraisal/valuations are reliable, consistent and unbiased.
33. Basic in Philippine Valuation Standards (PVS) vis-à-vis the International

Valuation Standards (VS) that appraisal services performed by the licensed
Real Estate Appraisers/Valuers in conformity with the Code of Conduct should
be rendered with honesty, competency and free of biases or self-interest whose
appraisal report are clear, is not misleading and will disclose all matters vital to
the proper understanding of the appraisal assignment. Likewise,
Appraisers/valuers should always uphold and safeguard public trust in the
appraisal profession.
34. Integrity requires that the Appraiser/Valuer should-

 Not act in a manner that is misleading or deceitful
 Not develop and communicate appraisal report that contains false,
erroneous
 or biased opinions and analysis
 Not participate in appraisal service that other Appraisers Would not
regard to be convincingly warranted
 Act lawfully and comply with the existing laws and regulations in which
the Appraisers practices or the assignment is undertaken
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 Not undertake any assignment beyond time capacity and expertise on the
professionals qualifications
 Not use false misleading or exaggerated statements or advertising effort
to secure assignments
 Ensure that any staff/person or subordinate assisting win the assignment
adheres to the Code of Conduct
35. Appraiser/Valuer is considered a person of good standing/character it he/she -

 Follows all the requirements of the PVS//VS Code or conduct
 Is a member of recognized national and local professional
appraisal/valuation associating organization
 Pursue & continuing professional development throughout his/her
profession
 Has obtained an appropriate bachelor's degree (BS Real Estate
Management) from a recognized school, colleges or universities or
learning institution or has an equivalent academic qualifications
 Has appropriate experience and competent in appraising the market and
category of the property/assets
 Is aware, understands and can correctly employ the recognized methods
and techniques necessary to produce a credible appraisal/valuation on
values of real property(ies)
36. Appraiser/Valuer should at all times maintain a high standards of

 Honesty
 Integrity and
 Carry out activities in a way not damaging to
 the Clients
 the Public
 the Appraisal Profession and
 to the national professional Appraisal body/association
37. As to Conflict of Interest, the Appraiser/Valuer should -

 Not act for two or more parties in the same matter except with the written
consent of the parties
 Take all reasonable protection to make sure that no conflict of
undertaking arise between the interests of his/her client and those of
other clients, the Appraiser, his/her firm, relatives, friends or associates
 Disclosed in writing potential conflicts before accepting instructions and
 Immediately disclose any conflict which the Appraiser subsequently
become aware or disclose within reasonable time it it comes after
completion of assignment
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38. The Appraiser/valuer in matters of Confidentiality should-
 At all times preserve the confidentially of the assignment information
 Not to disclose sensitive factual data obtained from a client or the result
of an assignment prepared for a client to anyone other than those
specifically authorized by the client in writing. Except when legally
required in administrative or criminal proceedings.
39. As to impartiality, the Appraiser/Valuer should-

 Perform an assignment with the strictest independence or impartiality and
without accommodation of personal interests
 Not accept assignment that includes the reporting of prearranged
opinions and conclusions
 Not rely on significant information provided by client or any other party
without suitable qualification or substantiation from an independent basis
unless the nature and degree of such reliance is specified in the limiting
condition
 Not accept an assignment to report on assumed theoretical situation that
are doubtful to be realized in any reasonable time unless accompanied
by Several discussions on the prospects of realizing the assumption and
deliberation of value that reflects the true prevailing situation
 Not depend on the prearranged outcome of any appraisal valuation or
other independent, objective advice contained in the appraisal report
 Disclose the professional fee which is not contingent in any aspect of the
appraisal report
 Not utilize or rely on unconfirmed conclusions based on unfairness of any
reported conclusions reflecting an estimation that prejudice or is
necessary to maintain or maximize value
 display independent judgment and justify his/her reasons for agreeing or
disagreeing with the conclusions of value in the appraisal report
40. The Appraiser/Valuer in matters of Competence should -

 Have knowledge, skill and experience to complete the assignment
professionally in relation to an acceptable appraisal standards
 Properly identify the problem to be addressed and be sure that he/she
has the skill and knowledge of the market forces and law to complete the
assignment competently as well as to associate with co-professionals in a
foreign country assignment(s)
 First establish the required skills and ethical values in engaging the
services of outside assistance to complement his/her assignment and to
obtain the client's consent, identity the assistant(s) and the extent of their
role to be disclosed in the Appraiser's report
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41. As to Efficiency and Diligence, the Appraiser/Valuer should-
 Act promptly and efficiently in carrying out the clients directions and keep
the client updated of the appraisal s progress
 Make through inquiries and investigations to make certain that the
analysis of appraisal are correct and can be relied up
 Decline engagement where conditions prevent adequate diligent
investigation, quality of work and completion or assignment within a
reasonable time
 Received written engagement from the client and/or conformed in writing
by the Appraiser in adequate details to prevent from any misconception
before the appraisal assignments starts and the report is made
 Prepare and maintain a work file for each completed assignment that
contains a true copy of all written reports, communications and
memoranda which has substantiated/validated the Appraiser's opinion or
value by way of inquiry, Objective comparison, computations and
analysis as well as to retain the same for at least five (5) years after
assignment completion
42. As to Disclosure, the Appraiser/Valuer should-
 Develop and converse their investigation, opinions and conclusions to the
client(s) of their professional services through appraisal reports that are
significant and not misleading that disclose everything taken that might
affect impartiality
 Provide appraisal report that contains adequate information to described
the work employed, the conclusions attained and the conditions in which
they were formed
 Prepare an appraisal report that is clear and provides accurate
description of the scope of work, the purpose, disclose assumptions or
limiting conditions that directly affects the appraisal valuation and the
effects thereto on the value of the subject
 Disclose any direct or indirect personal or corporate correlation with the
property or company that is the subject of any assignment and that might
lead to a possible conflict of interest
 Disclose the relationship with entity Controlling the assets in the appraisal
report as internal Appraiser/valuer
 Disclose relationship in Case a party having to rely on the appraisal
estimate where the Appraiser s impartiality 1S Compromised as External
Appraiser who worked in a tee-earning capacity for the client
Human and physical Geography

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1. Man is the designer of the earth's surface. He style and change it according to
his needs, which may include the different types of settlements like: the barrios,
to citties and provinces as well as the transportation and production railways,
irrigation systems, factories and the like collectively called cultural environment.
The physical environment and its cultural features comprise geographic
environment.
2. Elements of Geography
a. Physical or Natural Geography and
b. Human or Cultural Geography
3. Geography- is
 the Science of space and place
 the study of the earth's surface including people's responses to
topography climate, soil, plants and the distribution and interaction of the
different phenomena on earth
 derived from the Greek word "geographia" which means earth description
 a broad division of human knowledge which is concerned with the study
of the surface of the earth and its relation to the activities of man
 the science of the earth and its life, especially the description of land,
sea, air and the distribution of plants and animals including man and its
industries with reference to the mutual relations of these diverse
elements
 basically concerned with the study of two interconnected branches of
inquiry- the Physical Geography and Human or Cultural Geography
4. Physical Geography-is the systematic study of the origin, distribution, and

significance of the major physical features of the earth such as land-forms,
climates, topography, oceans, geographic arrangement of people and natural
resources and numerous other factors that illustrates the role of the physical
elements as the backdrop of human behavior or their relationship to one
another. Things man uses to change the physical environment, to serve his/her
needs, make up what are called cultural elements or the elements that result
from his presence
5. Subdivision/Kinds of Physical Geography:

a. Geomorphology- refers to the study of land and water forms as well as
the development of irregularities in the surface of the earth like:
glaciations, river floodplains, underground caves, shorelines, coral reefs,
sand dunes, volcanic features and the erosion cycle.
b. Climatology analyzes differences and similarities in climate from place to
place. It considers wind movements, cloud formation, temperature
changes and precipitation of all kinds.
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c. Mathematical Geography- refers to the accurate measurements of the
earth and the calculation of the exact location of point on the earths
surface such as the exact location of a city in latitude and longitude.
d. Biogeography- refers to the study of the geographical distribution of
plants known as plant geography and as phyto geography and of animal
known as zoo geography. t is related to ecology-studies the relationship
between plants and animals and their habitat or natural environment.
e. Oceanography- the study of the ocean and is phenomena, current wave
activity, temperature differences and tides.
f. Medical Geography- the study of the relationship between disease-
causing organism and their physical environment.
g. Pedogenesis- deals with the process of soil formation. It is related to
Pedology that studies the so
h. Pedon-is a basic soil sampling unit that is often viewed as a soil profile
that goes from the surface to a depth where soil meets bedrock.
i. Hydrology-deals with the study of hydrosphere
j. Hydrosphere - describe the waters of the earth
k. Meteorology Scientific study of the atmosphere and its associated
phenomena. The atmosphere is the vast gaseous envelope of air that
surrounds the earth.
6. Human or Cultural Geography or Anthropology refers to the study of man's
imprints upon the earth, such as the distribution of population, various
settlement patterns and the features resulting from man's productive activities
in earning and living fall within this division. Its primary concern is man and his
works so that it is closely allied with the other social sciences such as
economics, political science, history, Sociology and anthropology.
7. Kinds of Human Geography:
a. Cultural Geography-the study of the distribution of cultural traits such as
customs, traditions, taboos, religions, dialects and dwellings.
b. Population Geography-the study of the numbers and distribution of
people. It is related to demography, the statistical study of population.
Population geographer deals with regional differences in numbers, ethnic
groupings, religious compositions and rate of population growth.
c. Historical geography-the study of the manner by which geographic
patterns of man and his works Change through or it may place emphasis
only on the complete geography of a small region at a certain time.
d. Behavioral Ge0grapny -the branch of geography that inductively explores
behavior and the rationale behind the decision-making process and the
production or models replicating such behavior.
e. Economic Geography- the study of the widely varying economic
conditions across the earth. The economics of a geographical area can
be influenced by climate, geology and socio-political factors. Geology can
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affect resource availability, cost of transportation and land use decisions.
Climate can influence natural resource availability-particularly agriculture
and forestry product and working conditions and productivity. The social
and political that are unique to a region also have an impact on economic
decisions.
f. Political Geography- the study of the relationship between political as
provinces or states nations, or union of nations. Political Geographers
studies how boundaries are drawn, how well these are observed and the
probable problems or disputes they may create
g. Urban Geography- the study of cities with the important roles cities play
in the life of a nation. Is one of the latest growing kinds of human
geography and usually concerned with the study of the site of a city and
how it has influenced the type and directions if there are any as well as
the suburbs of its so-called support area with which the city has strong
commercial ties.
8. The field of economic geography provides information on how the various forms
of human economic activity contribute to the emission of greenhouse gases
through fossil fuel burning and land-use change.
9. Environmental Science covers all the sciences including ecology, geology and
climatory or phenology that deals with the environment. Hence, ecology is a
branch or part of environmental science.
10. Ecology - refers to

 the study of the inter-relationship of animals and plants to its inorganic
environment
 a study of the relationship between human beings relative to their
physical environment and cultural behaviors
 scientific study of the distribution and abundance of life and the
interactions between organism and their environment
 a branch or part of environmental science
 comes from the Geek work OKOS meaning house, thus literally ecology
is the study of houses or more broadly environments"
 a branch of the biological sciences and environmental biology
 the study of structure and function nature
 the science that deals with the interactions between living organism with
respect to each other and their natural environment
11. Ecosystem- refers to

 an interacting system of community plus its habitat
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 a single interacting unit composed of groups of individuals within a
physical setting or habitat, Surroundings or environment
 a biological environment consisting of all the organisms living in a
particular area including the nonliving, physical components of the
environment
 the basic unit of organic entity environment interaction resulting from the
complex interplay of living and non-living elements in a specified temporal
and spatial dimension
 complex adaptive systems where the interactions of life processes form
self- organizing patterns across different scales of time and space
12. Organisms interact with each other and with the chemical and physical
components of the abiotic environment. Ecologists are concerned with
organisms, population systems, communities, ecosystems, biomes and the
biosphere. Each level of biological organization involves abiotic and biotic
interaction through matter and energy exchange. Each level is a system. Each
system can be thought of as an energy transformer and a matte processor. A
System is a collection of pars or events that can be seen as a single whole
thing because of interdependence and interaction of the components
13. Types of System

a. Open systems- system that depends upon outside environment to
provide inputs and accepts Outputs
b. Cybernetic systems- system that use some sort of feedback mechanism
to regulate themselves
c. Ecological system .are both open and cybernetic
14. Ecology of Population - refers is a group of individuals of the same species that
Occupy a given area and interbreed with each other.
15. Biomes- refer to the major regional groupings of plants and animals discernible
at a global scale composed not only of the climax vegetation but also of
associated successional communities, persistent sub-climax communities,
fauna and soils.
16. Abiotic - refers to the non-living elements and physical components of the
environment.
17. Organism- refers to any contiguous living system.1.e. animal, plant, fungus, Or
micro-organisms.
18. Habitat- describes the environment over which species is known to occur and
the type of community that it forms as a result.
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19. Anaerobic Organism- an organism that does not require oxygen for growth.
20. Enzymes- are substances that act as catalysts, starts or speed up reactions,
necessary to the working of any creature.
21. Biodiversity - is the variety of life and its processes.
22. Certificate of Non-Coverage - the certificate issued by the EMB certifying that
based on the submitted project description, the project is not covered by the
EIS system and is not required to secure an Environmental Compliance
Certificate (ECC)
23. Physiology- refers to the study of the function of fiving systems.
24. Food chains and food webs- are representations of the predator-prey
relationships between species within an ecosystem or habitat.
25. Population - group of individuals belonging to one species living in an area.
26. A community is any assemblage of different populations living in an area with a

certain degree of integration, similar communities and ecosystems that cover a
specified area are referred to as biomes. The largest major community is the
biosphere, all biomes taken together containing all living creatures.
27. Ecological succession processes of changes over time which involves-

 colonization
 Site modification
 species replacement
28. Succession that begins in a sterile area devoid of precious biological influence
is called primary succession.
29. Niche - species able to persist and maintain stable population sizes.
30. Autotrophic succession begins with predominantly inorganic environment and is

characterized by early and continued dominance of producers.
31. Heterotrophic succession is characterized by early dominance of heterotrophs

(i.e. sewage or a fallen log) energy s maximum at the beginning but declines
and unless autotrophic takes place, the whole community dies out or migrates
32. Ecological succession is characterized by
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a. Orderly process that involves species structure and community changes
with time
b. Directional and predictable
c. Results from modification of environment that sets the limit to the rate and
state of development but the changes are biotically Controlled which the
stochastic factors have shown to be increasing importance
d. Culminates in a quasi-steady state with maximum biomass maintained by
a unit of energy flow.
33. Types of interactions in ecosystems or between and among organisms of the

community and its environment
a. Action- where the environment acts upon the organism in many ways, like:
the effects of temperature, wind, light, humidity and soil mo1sture
b. Interaction - where the organism in turn reacts upon the environment such
as pollution and
c. Co-action - the effect of an organism for another, such as: predation,
disease, competition, parasitism, commensalisms, and mutualism
34. Aquatic ecosystem - refers to ecosystem that is in the body of water
35. Lotic ecosystem-refer ecosystem of a river, stream or spring.
36. Pollution - is the unfavorable modification of environment as a bi-product of

man’s activities.
37. Man's concept of pollution

 It is harmful to humans and the natural system on which humans depend
on
 It is for the most part preventable and
 The prevention of pollution should be a cost of doing business, like:
paying salaries and buying raw materials
38. Three Natural Categories or Kinds of pollution in the environment

a. Water pollution-it degrades the use of water human consumption
recreational purposes, wildlife, agriculture and industry. It also causes
eutrophication resulting in the aging and clogging of lakes. Eutrophication
refers to the exce8SIVe plant growth that can kill animal lite by depriving
it or Oxygen. It consists of-
 Sewage and other organic waste such as: wood fibers from paper
mills
 Pathogens mostly bacteria and viruses from human waste
 Toxic materials such as: mercury, pesticides, and petroleum
 Waste heat or thermal pollution
b. Air or Atmospheric pollution
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 Sources burning of fossil fuels in homes, factories, power plants
and automobiles, Irradiation of the primary pollutants by sunlight,
formation of sulfuric acid in the atmosphere from sulfur containing
pollutants, build-up of carbon dioxide in the atmosphere due to
industrialization.
 Pollutants- smoke, ash, carbon monoxide, carbon dioxide,
oxides of sulfur and nitrogen, sulfuric acid, unburned
hydrocarbons, formaldehyde, arolein, perxycetyl nitrates, leas
and bromide, photochemical smog or smoke, acid Rain
c. Land Pollution where structures that supports human activities like
housing settlements and industrial complexes are built. Also the medium
of agricultural productivity and may contain mineral resources needed by
industries.
39. Two general sources of land pollution

a. Solid waste from domestic, commercial and industrial activities ike:
Residential waste from domestic, commercial and industrial activities
areas Followed by street garbage and market waste.
b. Industrial waste constitutes the least source in volume of generated
wastes however; the industrial sector is a major contributor of hazardous
substances and metals to the environments.
40. Leaching or discharge of toxic chemicals which is an accumulation of heavy

metals can contaminate the land and make it unsuitable for other land uses.
Agricultural Pollution is from Pesticides and Fertilizers. Pesticides are applied to
planting areas to eliminate pests that destroy crops. It creates and reinforces
dependence and resistance cycles in farms and their surrounding ecosystems.
41. Ecological solid waste management - the systematic administration of activities

which provide for segregation at source, segregated transportation, storage,
transfer, processing, treatment and disposal of solid waste.
42. Leachate - is the liquid produced when waste undergoes decomposition and
when water percolates or drips thru solid waste undergoing decomposition.
43. Herbivores - are primary consumers organisms that consume plants or algae
but usually in small in size.
44. Ethology-the scientific study of animal behavior.
45. Phytoplankton - are the autotrophic components of the plankton community.
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46. Heterotroph- is an organism that cannot fix carbon and uses organic carbon for
growth.
47. Genetics-Is the science of genes, heredity and variations of living organisms.
48. Terrestrial ecosystem- refers to the ecosystem that is found only land.
49. The Field of climatology and meteorology refers to the study understand the
physical erects of adding greenhouse gases to the atmospheres radiation
balance.
50. Branches of Geography

a. Regional Geography- deals with all or many or the geographic elements
of a place or region. It investigates and analyzed the distribution and
association of elements which give the region its distinctive character
b. Topical Geography- concentrates on the study of one earth features or
human activity as it occurs throughout the world like: world-wide pattern
of soil quality and railroad transportation.
51. Eco-profile - refers to the geographic based instrument to makers which
present an evaluation of the environment quality and carrying capacity of an
area.
52. Three (3) population sizes that are important to humans. (a) Whole earth, (6)
individual nation and (c) local community. For local communities the optimal
size is-
 One that is large enough to provide things as consumer base for
specialized shops and businesses and social life and clientele for cultural
events and
 One small enough to avoid the higher crime rates, excessive highway
building. Destruction of farmlands and open space, congestion, and other
disadvantages of urban lite.
53. Behavioral geography refers
 an approach to human geography that examines human behavior using a
disaggregate approach
 the branch of human science, which deals with the study of cognitive
processes with its response to its environment through behaviorism
 an ideology/approach in human geography that makes use of the
methods and assumptions of behaviorism to determine the cognitive
processes involved in an individual's perception of, and/or response and
reaction to their environment
 focused of behavioral geographers on the cognitive processes underlying
spatial reasoning, decision making, and behavior
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54. The field of climatology and meteorology - refers to the study to understand the
physical effects of adding greenhouse gases to the atmosphere's radiation
balance.
55. Greenhouse gases- gases that can potentially or can reasonably be expected
to induce global warming which include carbon dioxide, oxides of nitrogen,
chlorofluorocarbons' and the like.
56. Environment- refers to the surroundings of an organism including the physical

and chemical environment and other organisms with which it comes to contact
and often referred as factor affecting our quality of life.
57. Environmental Critical Project (ECP) refers to projects belonging to project

types declared thru Proclamation No.2146 and Proclamation No. 803 which
may pose significant negative environmental impact at certain threshold of
operation regardless of location.
58. Department of Environment and Natural Resources (DENR) is the government

agency tasked to protect the environment and natural resources of the country.
59. Environmental Impact Assessment (EIA)- is the process that involves predicting
and evaluating the likely impacts of a project.
60. Environmental Compliance Certificate (ECC) a certificate issued to with the

Proponent or Project conforms to by Signing the sworn undertaking of full
responsibility over implementation of stated measurers which are necessary to
comply with existing environmental regulations.
61. Certificate of Conformity - the certificate issued by DENR to vehicle

manufacturer certifying that a new vehicle meets the requirement under the
law.
62. Ozone depleting substance - refers to the substance that significantly depletes
or otherwise modifies the ozone layer in a manner that is likely to result in
adverse effects of human health and the environment.
63. Incineration - is defined as the burning of municipal, biomedical and hazardous

waste which process emits poisonous and toxic fumes.
64. Siga - refer to the traditional small-scale method or Community or

neighborhood sanitation.
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65. Agricultural wastes - material waste generated from planting or /vesting of
crops trimming or pruning of plants and wastes.
66. Composting- refers to the controlled decomposition of organic matter by micro-

organisms, mainly bacteria and fungi into a humus-like product.
67. Bulky wastes- the waste materials which cannot be appropriately placed in
separate containers because of its size, shape or other physical attributes.
68. Controlled dump - a disposal site at which solid waste is deposited in

accordance with the minimum prescribed standards of site operation.
69. Philippine Environmental Laws.

a. PD 1586 (Philippine Environmental impact Statement system of 1978)-
sets a systematic Environmental Impact System to ensure ne Filipinos to
enjoy a "balanced and healthy ecology” in the midst of intensive
economic development. It is DENR policy through the Environmental
Management Bureau (EMB) to implement a systems-oriented and
integrated approach to the EIS system to ensure a rational balance
between socio-economic development and environmental protection for
the benefit of the present and future generations. DENR has consistently
endeavored to strengthen it by continuously introducing new features
and requirements to tighten the system in response to changing
economic realities and growing environmental consciousness of the
Philippines population, the latest or this effort IS the revision of DAO 21,
series of 1992, streamlining the EIS while strengthening the processes
for its implementation.
b. RA#8749 refers to the Philippine Clear Air Act of 1999 - law that governs
the protection of the environment, particularly covering the pollution
control or the atmosphere in the country.
c. PD 984 (Pollution Control Law of 1976)- law that prohibits the disposal
any organic or inorganic mater or any substance in gaseous or liquid
form into any of the water, air and/or land resources of the Philippines
that will cause pollution.
d. PD#1151 of 1977-statutory framework requiring Environmental Impact
Assessment (ElA) or all projects that will affect environmental quality.
e. RA#6969 (Toxic Substances and Hazardous and Nuclear Waste Control
of 1990)- law that prohibits the entry or toxic Substance or hazardous
and nuclear wastes and their disposal into the country.
f. RA# 7586 (National integrated Protected Areas System Act of 1992) –
law providing for the establishment and management of National
Integrate Protected Areas system (NIPAS).
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g. RA# 8550- refers to the Fisheries Code of 1998
h. RA# 9275 (Philippine Clean Water Act of 2004)-law that
 advanced the prevention, control and abatement of pollution in
water resources
 encouraged that water quality management issues should not be
separated from concerns on water sources and ecological
protection, water supply, public health and quality of life
 provides for water quality management and for other purposes
 provides policy of economic growth consistent with the protection
preservation and revival of the quality of fur fresh, brackish and
marine waters
 refers to the procedure in the prevention control and abatement or
pollution of the country's water resources
 Is use as economic instrument for protection of water resources
i. RA#9003 (Ecological Solid Waste Management Act of 2000)- law that
 maximized the utilization of valuable resources and encouraged
resource conservation and recovery
 promoted solid waste avoidance and volume reduction
 place the primary enforcement and responsibility of solid waste
management with LGUs and encouraged cooperation and self-
regulation among waste generators
j. PD#1067 (Water Code of the Philippines) - decree instituting the water
code and revising and consolidating where laws governing ownership,
appropriation, utilization and exploitation, development, conservation
and protection of water resources. Its objectives are:
 Establish principles and frameworks relating to appropriation
 control and conservation of water resources to achieve the
optimum
 Development rational utilization of this resources including
protection and regulation of rights
k. Republic Act. 6969 (Hazardous and Nuclear Control Act of 1998)- a law
that control toxic substances, hazardous and nuclear wastes providing
penalties for violations as toxic substances
 It regulates, restricts or prohibits the importation, manufacturing
processing scale, distribution use and disposal of chemical
substances and mixture that present unreasonable risk or injury to
health and environment to prohibit entry then intransient of
hazardous or nuclear waste and their disposal into the Philippine
 It covers the imputation, manufactures processing handling
storage transportation sale distribution use and disposal of
underwater cheval substances and mixtures in the Philippines
including and in cresol
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l. LPD#1151 (Philippine Environment Policy)-law that
 provides policies on the pursuit of a better life for present and future
generations and mandates the undertaking environment impact
assessment for all projects, which maybe significances affect the
environment
 provides objectives and strategies for the barrios aspects
environmental management such as air and water quality
management, natural source development land management and
waste management
 Lunches a comprehensive national program of environmental
protection and management, with reference to policies, standard of
noise, air quality, water quality, classification or water and waste
management
m. PD # 389 (The Forestry Reform Code) - law that Codifies, updates and
raises forestry laws in the country, it emphasizes the sustainable
utilization of forest resources
n. PD # 979 (Marine Pollution Decree of 1976)- national policy that
prevents and control the pollution of seas by the dumping of waste and
other matter which create hazards to human health, harm living
resources and marine life, damage amenities Is interfering with the
legitimates uses of the sea within the territorial jurisdiction of the
Philippines
o. RA#1942 (The Philippine Mining of 1995)- an act insisting a new system
of mineral resources expectations, development utilization and
cooperation
p. RA#7O76 (People's small scale mining act of 1991) - an act that
develop, protect and rationalize viable small scale mining activities and
generate more implement opportunities and provide equitable shale the
nations wildish and natural resources. Small scale- any Single unit
mining operations with an annual productions of not more than P50,000.
70. Level One Inspection refers to an inspection of real estate and improvements
using only the senses (Sight, smell feel) for evidence of environmental hazards.
71. Herodotus was not only the Father of History but also of geography because he
always placed historic events In their geographic setting.
72. Abiotic Components-

 The non-living component, the physical environment
 Includes soil, water, light, inorganic nutrients and weather condition
73. Symbiotic Relationships refers to interactions in which there is a close

relationship between members of two populations.
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74. Biotic Components the living components composed of a habitat and a niche.
They are:
 Autotrophic-generate own fuel source
 Heterotrophic- derived energy from another organism. Heterotrophic
organisms that eat available food are classified into 3 groups or
classification of consumers.
 herbivores (primary consumers)- those that feed directly on green
plants or those that eat plants
 Carnivores (secondary or tertiary consumers)-those that feed on
other animals or those that eat flesh or flesh eaters
 Omnivores - those feed on both plants and animals
75. Decomposer- the heterotrophic organisms that break down detritus non-living
organic matter, to inorganic matter, to be used again by the producers
76. Parasitism- is one specie (parasite) benefits in terms of growth and

reproduction to the harm of other species (host).
77. Tapeworm (parasite and cow or pig hosts, mites and dog, even lichens fungi
and green algae)
78. Commensalisms - is one specie is benefited and the other is neither harmed
nor benefited like: sucker fish and shark, crane and carabao
79. Mutualism- refers to both species benefit in terms of growth and reproduction
like termites and gut protest, acacia tree and ants
80. Predation- is one species (predator) uses the other (prey) as food source like:
lioness (predator) and zebra (prey), eagle and chicken
81. Biodiversity- refers to variety of living things, includes genetic diversity, species
diversity and ecosystem diversity.
82. Genetic diversity- refers to local population lost and the number of individuals in
species that declines.
83. Ecosystem diversity- refers to local extinction of one species that can have a
negative effect on the entire ecosystem
84. Agriculture waste- are waste generated from planetary or harvesting of crops,
trimming in pruning of plants and waste in run of materials from forms in fields.
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85. bulky waste -are waste materials which cannot appropriately containers
because of size shapes and physical attributes
86. Buy back center- refers to recycling center that purchases materials from the
public
87. Collection-refers to the act of removing sola waste from the source
88. Composting- refers to controlled decomposition of organic matter organisms

into humus like product.
89. Consumer electronics- are special waste that includes worn out broker items
such as radios stereos and TV sets.
90. Disposal site - is a site where solid waste in finally discharge and deposited
91. Ecological solid waste management- refers to the systematic administration

activities which provides for segregation at source, segregated transportation
storage and all other waste management activities which as not harm to the
environment.
92. Leachate- refers to the liquid produced when waste undergo decomposition
and when water percolate through solid waste undergoing decomposition. Also
refers to the contaminated liquid that contains dissolved and suspended
materials.
93. Municipal waste- is a waste produced from activities whines a local government
unit which is a combination of domestic, commercial institutional, industrial and
street waste.
94. Open dump is a disposal area where in the solid waste are indiscriminately
thrown or disposal of without consideration for environmental and health
standards.
95. Post-consumer material-are materials or products generated by business or

consumer which have served their intended end use.
96. Recovered material- a material and by products that have been recovered
diverted from solid waste to be collected and used as ran material in the
manufacture of recycled product.
97. Re-use- a process recovering materials indented for the shine in a different
purpose.
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98. Recycled-materials - refers to any waste material retrieved from the waste
stream and free from contamination that can be converted to suitable beneficial
use or for other purpose.
99. Environmentally Critical Projects (ECPs)

 Heavy Industries
 Non-ferrous metal industries
 Iron and steel mills
 Petroleum and petro-chemical
 Industries including oil and gas
 Smelting plants
100. Resource Extractive Industries which are identified in ECP

 Major mining and quarrying projects
 Forestry projects
 Logging
 Major wood processing projects
 Introduction of fauna (exotic-animals) in public/private forests
 Forest Occupancy
 Extraction of mangrove product
 razing
 Fishery projects like: dikes for fish pond development projects
 Infrastructure Projects
 major dams
 major power plants (fossil-fueled, nuclear fueled, hydroelectric or
 geothermal)
 major reclamation projects
 major roads and bridges
101. Environmentally Critically Areas (ECAs) those-

 declared by law as national parks, watershed reserves, wildlife
preserves and sanctuaries
 set aside as aesthetic potential tourist spots
 constitute the habitat for any endangered or threatened species of
indigenous Philippine wildlife (flora and fauna)
 unique historic, archeological, or scientific interest
 which are traditionally occupied by Cultural communities or tribes;
 frequently visited and/or hard-nit by natural calamities geologic
hazards, floods, typhoons, volcanic activity, etc.
 critical slopes
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 classified as prime agricultural land
 Recharged areas of aquifers
 Water bodies characterized by one or any or the following conditions:
 with primary pristine and dense young growth
 adjoining mouth of major river systems
 or adjacent to traditional productive fry or fishing grounds
 Which act as natural buffers against shore erosion, strong winds
and storm floods
 On which people dependent for their livelihood
 Coral Reef characterized by one or any combination of the following
conditions:
 With 50% and above live coralline cover
 Spawning and nursery grounds for fish
 Which act as natural breakwater of coastlines
102. Urban Planning-

 A technical and political process concerned with the Control of the use
of land and design of the urban environment, including transportation
networks, to guide and ensure the orderly development of settlements
and communities
 It concerns itself with research and analysis, strategic thinking, urban
design, public Consultation, policy recommendations, Implementations
and management.
103. Land Use - it

 Refers to the human use of land
 involves the management and modification of natural environment or
wilderness into built environment such as fields, pastures, and
settlements
 is defined as the arrangements, activities and inputs people undertake
in a certain land cover type to produce, change or maintain it.
104. Environment Justice (EJ) - is

 The fair treatment and meaningful involvement of all people regardless
race, color, sex, national origin, or income with respect to the
development implementation and enforcement of environmental laws,
regulations, policies.
105. Green infrastructure- it is an alternative approach to the conservation o at

natural resources, highlighting its importance by making it a cornerstone or
primary consideration in land use planning, which can be manifested in different
can simply mean the incorporation of trees in development planning.
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106. Solid waste management-refers to the discipline associated with the control
of generations, storage, collection learner and transport, processing and
disposal a manner that is in accord with the best principles of public health
economics, engineering. conversation, aesthetic and other environmental
considerations.
107. Special wastes- refer to household hazardous waste as pints, thinners,

household batteries, lead-acid batteries, spray canisters. These includes waste
from residential and commercial sources that comprise o bulky wastes,
consumer electronics white goods, yard wastes that are collected separately,
batteries, all and tires
108. Sewage refers to water carried human or animal wastes from residences
buildings, industrial establishments, together with water infiltration and surface
water
109. Sewage system-refers to pipe lines or conducts pumping stations, force

mains contracted drainage ditches other construction, devices and
appurtenances use or concluding wastes to point of ultimate disposal.
110. Industrial wastes- refers to any liquid gaseous or solid matter or other wastes
substances or combination resulting from any process of industry,
manufacturing trade from the development processing or recovery of any
natural resources.
111. Outlet- refers to luminous of a sewage works or point of emergency into the
water.
112. Stream standards-refers to measure of purity or quality of water.
113. Treatment works refers to the methods, devices, and appliances appurtenant
there installed for the purpose of treating neutralizing establishing. disinfecting.
Or disposing of sewage, industrial waste tor the recovery of by product from
such sewage
114. Other waste means garbage refuse wood residues sand line, cinders, ashes
affair, might oil, tar dye stuff acids chemicals and other substances not sewage
or industrial waste that may cause pollution.
115. Geographers identify the location in four ways:

a. Toponym- nominal location or place name given to a portion of the
earth's surface
b. Site- physical character of the location. The important site
characteristic includes climate, water sources, topography, soil and
vegetation
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c. Situation- relative location or a place compared with other place i.e.
identification of important buildings, Streets, and other landmarks to
direct people to a desired location
d. Mathematical location absolute location on the earth's surface
describe according to a unique set of numbers known as latitudes and
longitudes. Two imaginary lines or arcs, known as parallels and
meridians. “Prime Meridian” – 0 degrees longitude at Greenwich,
England. Numbers between 0-180 degrees either East or West of the
prime meridian.
116. Township-a square, 6 miles long and o 6 miles wide. A township is divided
into 36 sections, each of which is 1 mile by mile.
117. Projections- the system used to transfer 1ocations on the earth's surface to
locations on a map
118. Concentration-extend of the spread on something over a given study area. If

the objects in a given area are close together, they are considered clustered. If
they are relatively apart, they are considered dispersed
119. Pattern- the geometric arrangement of objects. Geographers observed that

many objects from a liner distribution, Such as the arrangement or houses
along a street or stations along a subway line.
120. Demography- is a scientific study of population characteristics.
121. Ecumene- the portion of the earth's occupied by permanent human

settlement
122. Density frequency that something occurs within a given unit of area, i.e
Arithmetic density. It helps geographers measure the relationship between
population and the available resources which can be computed in a number of
ways, like:
 Arithmetic density (Population density)- total number of people divided
by a total land area
 Physiological density number of people per unit area of arable land is
land suitable for agriculture. The higher the physiological density greater
the potential pressure people may place on the land to produce enough
food
 Agriculture density-the ratio of the number of farmers to the total amount
land suitable for agriculture, which would help to account for the
economic differences
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123. Census - the most important source of knowledge about the growth and
composition or a country s population.
124. Components of Population Change:

a. Fertility-
 Natural increase the percentage by which a population grows in a
year and is computed by subtracting the crude death rate from the
crude birth rate (excluding migration)
 Crude birth rate total number of live births in a year for 1,000 people
alive in a society
b. Mortality Crude death rate- annual number of deaths per 1,000
populations
c. Migration-is defined as a permanent move to a new location
d. Emigration-is migration or mass departure from a location.
e. Immigration is migration to a location
125. Net migration- is the difference between the number of immigrants and the
number of emigrants.
126. Factors affecting migration

 Entrance of Refugees
 Economic push factors
 Environmental push factors
127. Pull factors are attractive features of new location that may lure migrants
namely:
 Political pull factors example: lure of freedom
 Economic pull factors - example: higher income generation
 Environmental pull factors- example: for health reasons
128. Worker productivity value of a particular product compared with the amount
of labor needed to make it.
129. Measurement of economic development thru indicators:

a. Per capita income
b. Economic structure by sector
 Primary sector concern with the direct extraction of materials from
the earth's surface, generally through agriculture, though sometimes
by mining, fishing and forestry
 Secondary sector- includes manufactures that process, transform,
and assemble raw materials into useful products
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 Tertiary sector-that includes the provision of goods people in
exchange for payment, i.e., Offices, shops, physicians, attorneys,
entertainment facilities and universities
 Quarterly sector involves the processing or information through
computer technology.
130. Two (2) kinds of geographical costs

a. Situation factors those related to the transportation of materials into a
from a factory. A firm seeks a location that minimizes the costs
transporting inputs to the factory and finished goods to the consumers.
 Bulk- reducing industry-an industry that produces a product that has
a lower volume or a lighter weight after pro0uction than before. In
which case, location of factory should be near the inputs
 Bulk-gaining industry- one which produces a product that has a
higher volume or a heavier weight after production than before.
Location of factory should be near market
 Break- of- bulk point- a location where transfer among transportation
modes is possible. An important break-of-bulk point includes
seaports and airports
b. Site factors those related to the costs of production inside the plant
resulting from unique characteristics of a particular product.
131. Settlements - is a permanent collection of buildings and inhabitants.
Geographic information about the goods or services will be provided by
establishing a new:
 Range - maximum distance people are willing to travel to obtain a goods
or use a service
 Threshold - minimum number of people needs to support the goods or
services
132. Three Models of Urban Structure
a. The Concentric Zone Model. A city grows outward from a central area in
a series of concentric rings
b. The Sector Model. A city grows in a series of sectors, wedges, or
corridors, which extend out from the central business district. Certain
areas of the city are more attractive for various activities, originally
because of an environmental factor or even by mere chance.
c. The Multiple Nuclei Model. A city is a complex structure that includes a
collection of nodes or centers, around which activities resolve, like: port,
neighborhood business center, university, airport and park.
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REAL ESTATE FINANCE AND ECONOMICS
1. A market refers to a place for selling and buying. It exists when purchasers and
sellers of a single commodity come together in such freedom of intercourse that
they establish a single price of a commodity.
2. The most efficient market is said to be a perfect market. Real estate market is
far from perfect because real estate as a product has special factors that
influence it. Such as:
 Every parcel of real estate is considered unique because it is not
exchangeable with any other parcel
 It uses is extremely regulated as well as the manner of its ownership
transfer
 Parties of real estate are often primitive and lack of knowledge of the
factors that make one parcel of real estate more valuable than the other
 Since every parcel is unique and immovable, it also affects supply and
demand
3. Real Estate refers to land and all permanent improvements whether found
above or below the ground thereof.
4. Features of Real Estate

 It is immovable or has fixed location
 It is a substantial investment and for long term
 It is a commodity that is control of space or location
 It is heterogeneous because no two lots have the same value
5. Economics refers to the proper allocation and efficient use of available

resources for the maximum satisfaction of human wants.
6. Economic Significance of Real Estate

 Primary of all industries
 There is a worldwide need of it
 One of the basic needs of man
 It is a hedge or border against inflation
 It is the most preferred collateral of mortgage
 It is the major source of capital formation
 It generally appreciates in value
7. Real Estate Economics – refers to the application of economic techniques to

real estate market and tries to describe, explain and predict patterns of property
values, prices, financing and supply and demand.
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8. Housing Economics-refers to the study of focusing on residential real estate
market doing research of real estate trends concentrating On the business and
market changes affecting the industry.
9. Multiplier effect - means the effect that is made by one aspect of the economic
with other economic activities of the country.
10. Multiplier effect of real estate - refers to the effect or real estate housing on the
other economic activities of the country.
11. Interest - refers to the compensation paid for the use of the capital.
12. Market price or Price - is the price of any Commodity in the market at a
particular time. It is the
 result of the interaction or relationship between supply and demand in a
particular market
 value of an object expressed in money
13. Real Estate Market - refers to the intangible circle within which the price
influencing factors tend to operate and whereby the payment of the
consideration is accompanied by transfer of rights rather than by movement of
the property.
14. Kinds of Real Estate Market

a. Seller's Market -a condition prevailing in a particular area wherein
demand is great but very few properties or sale
b. Buyer's Market -a condition prevailing in a particular area when demand
is low while properties for sale tend to suppress the price
15. Characteristics of Real Estate Market

 Residential acquisitions are for the buyer's own Use or rental purposes
rather than speculation
 Each transaction involves individual bargaining and negotiation except in
project selling where price and terms are fixed
 Low down payment and loan amortization terms creates competition
between sale and rental of properties
16. Economic Utility - refers to the capacity to satisfy wants, production by labor
and their exchangeability.
17. Utility - refers to the ability of the property to satisfy human needs.
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18. Economic value- defined as thee
 desirability of the economic utility of the property
 most probable price which a property should bring in a competitive and
Open market under all conditions necessary to a fair sale, the buyer and
seller each acting prudently, knowledgeably, and assuming the price is not
affected by undue stimulus
19. In real estate, the laws of price variations refers to the law on: normality of
prices increase of prices and falling of prices
20. Capitalism – refers to economic system based on private property in which the
main elements are individuals who decides the how, what and for whom to
produce
21. Market Segmentation - process of identifying and analyzing sub-markets of a

larger market.
22. Value - refers to the desirability of a property on account of its absolute or

relative use.
23. Value in Use - refers to the use of the property to put it in the service it has to
render and the want it has to satisfy.
24. The most significant factor in estimating real estate value is location. Land
cannot be delivered to a location. The property owner Can improve the value
thereof by improving the property such as: preparing tor it tor Subdivision
development, building construction or renovating its existing improvements,
analyzing the needs and desires of potential buyers and improving the property
with the market's requirement, advertising/promoting the property to make it
known to great number of potential buyers.
25. Seasonal fluctuations - short-term changes in business and economic activity

that occur within the year resulting from either weather or customs.
26. The law on normality of prices-refers to when real estate demand or needs is
equal to available listing inventories.
27. Law on increase of prices- refers to when real estate demand is greater than
the available listing inventories.
28. Law on falling of prices- refers to when realty listing inventories is greater than
its needs.
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29. An investigation of the real estate the marketplace should include demographic
data on the area’s residents. By knowing such, it is possible to predict the
probable demand for various types and price levels or real estate requirements
necessary required product and services.
30. Capitalist - is a market economy where prices or goods and services are
determined by the interaction between supply and demand or goods and
services.
31. Law of Supply and demand-law that determines ne prices or goods and
service: in a free market economy.
32. Four factors of production are land, labor, capital and entrepreneur.
33. Efficiency - means productivity are measured in terms of unit cost for average
cost acquired by applying appropriate technology, machine, material and
management.
34. Demand contributes to income, population, taste and preference, prices &
petitions and prices of related goods which are factors that determines the
schedule of various quantities of commodities which buyers are willing and able
to purchase at a given price, time and place.
35. Monopoly Price- is the price of a commodity taken from the field of competition
and controlled by a person having exclusive right or ability to produce the said
commodity.
36. Pure Monopoly - refers to a market where only one seller or producer supplying
unique goods and services.
37. Marginal Utility - refers to the additional satisfaction of a consumer whenever ne

consumes one more unit of the same good.
38. Law of diminishing return - refers to a situation when successive units of

variable input work with a fixed input beyond a certain point the additional
product or output produced by each additional unit of a variable the output
decreases.
39. Thomas Robert Malthus popularized that population growth will always tend to
outrun the food supply and the improvement of human kind is not possible
without stringent limits of production.
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40. Adam Smith believes that free competition and others natural laws of
economics would promote the welfare of the individuals and the society
41. Karl Marx states that social reform in a capitalist market the labor force is the
proletariat and the owners of land and technology is the capitalist or the
courageous.
42. David Ricardo, the economist who

 opens the labor theory of values
 demonstrates that prices do not correspond to value
 retains the theory of approximation
 states that the relative price of two goods is determined by the ratio of the
quantities of labor requires in their production
43. John Maynard Keynes, the economist who

 Spearheaded a revolution in economic thinking
 Argued that a9gregate demand determined the overall level of economic
activity
 Said that inadequate aggregate demand could lead to prolonged periods
of high unemployment
44. Investing - a mode of production for real estate development either in

subdivision, memorial parks or condominiums.
45. Return of Capital-refers to return of the initial amount invested.
46. Return on Capital- refers to the profit generated from the investment.
47. Compounding occurs when invested money gains value.
48. A 20% change in price creates a 60% change in quantity demand. This shows
buyers are sensitive to price change refers to Elastic demand.
49. Gross Domestic product refers to the total value of all final goods and services
produced within the territories of a country in one year
50. National income - refers to the total final output of citizens and businesses of an
economy in one (1) year period.
51. Economic Rent- the revenue derived from the use of land, building and the
factors thereon
52. Four elements of investments are Yield, Safety, Leverage and Control.
53. Three basic sources of investment risk

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 Loss of capital
 Loss of return on capital and
 Opportunity cost
54. Leverage - involves using borrowed money to make investments with the hope
that return on the investment will exceed the cost of borrowing.
55. Demography (Demographics) - refers to the scientific study or population

statistics Such as birth, death and marriages. An important and main
determinant in the demand for housing
56. Prosperity- refers to the peak of the business cycle where there is l employment
and national output is at full capacity.
57. Macroeconomics refers to the study of the economy as a whole which

encompasses problem of growth, business cycles, unemployment and inflation.
58. Mortgage creates a lien in favor of the mortgagee on the property being
mortgage.
59. Discounting occurs when there is converting future values to present value.
60. Variable Cost - refers to a kind of cost which changes in proportion to volume of
production. If there is no production, there is no cost and more production more
cost
61. Inflation - refers to the continual increase in the price level where the price level
is an index showing the current level of all prices in the economy.
62. Fixed rates allow the repayment of loan as fixed equal installment over a
certain period.
63. Demands pull inflation- type of inflation which occurs when demand for goods
and services exceeds supply based on the law of supply and demand.
64. The introduction of modern machineries in agriculture or the use of modem

computers in offices reduced the member of worker is an example of structural
unemployment.
65. In the computation of simple interest where= Prt, r means Rate of interest.
66. Discount - is a deduction from the maturity value of obligation when the
obligation is paid-before its date of maturity.
67. Foreign Exchange - is the price of foreign money relative to the local money.
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68. Short-term financing instruments are part of the Money Market
69. Main participants in real estate market

 Property Owner and user - those who purchase property as an
investment and also use the same for their purpose/need
 Property Owner - those who purely investors of real estate
 Renter/Tenants -those who are customers
 Developers -those develop lands tor business or profit purposes
 Renovators - those who refurbished buildings and improvements in the
market
70. Causes of value

 Proximate cause - refers to the desire of men to have for a thing/property
 Remote cause-refers to the utility to satisfy wants, its scarcity and its
difficulty of production
71. Division of Economics

 Microeconomics - deals with the economic behavior of individual units
like: Consumers, firms and owners of production
 Macroeconomics -deals with the economic behavior of the whole
economy or it’s aggregate such as the government. business and
household
72. Economic System Models

a. Communism or Command or Classless Economy-factors of
production and distribution are owned and managed by the State.
b. Capitalism or Market Economy or Free Enterprise or Laissez Faire
Economy - factors of production and distribution are Owned and
managed by private individuals or corporations.
c. Feudalism-an economic system of which tradition rule
d. Mercantilism- economic system in which government determines
what, how and for who decisions by distributing the rights to do certain
economic activities.
e. Socialism-a combination of capitalism and communism whereby
major and strategic industries are owned and_ managed by the State
while minor industries belongs to private sector.
f. Industrial revolution- in 18 and 19 century when technology and
machines adapted the modem ways if industrial production and mass
produced goods takes place of hand made products
73. Oligopoly of properties for sale is homogeneous or uniform So that it market is
limited, only few sellers can be accommodated
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74. Real Estate Finance refers

 to a division of finance which deals with investing money or wealth in real
estate
 deals with allocation, generation and use or monetary resources over time
which is invested in the real estate business
 deals also of the allocation and investment or assets Which will maintain
or increase the value thereof overtime
75. For real property/estate to have value, the four (4) elements that create value
should be present that may be estimated by the licensed Real Estate Appraiser
and they are DUST:
a. Demand which is present when somebody wants the property and has
the financial ability/capacity to buy it
b. Utility which submit that the property can serve a useful purpose
c. Scarcity 1s present when the property Is in short supply relative to
demand
d. Transferability means that title to the property can be moved readily from
one person to another
76. Commercial Bank - refers to a financial institution which is primarily concerned

with. the safe keeping of funds through the acceptance of deposits of money
provision of credit through lending money or sometimes referred to as
mortgagor of which real property will be used as collateral for a loan.
77. Money Supply - refers to the money Circulation which is used in purchasing
good/properties and services.
78. Turn Key Loan-a type of loan wherein the lender has some or complete control
over the project in part or all and the income thereof over a certain period of
which it is assigned to amortize the project.
79. Amortization-refers to
 a process of making installment payments consisting of principal and
interest that reduces the loan balance
 a payment made monthly by a buyer of a real property on installment
80. Formula used in computing the monthly amortization on a diminishing balance

method. Balanced x the amortization factor. In computing the amortization
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factor on the financing of real estate sales it shall be based on the interest rare
no the term of payment.
81. To appraise something means to estimate the peso amount that represents its
value Real Estate Appraisers of banks, financing institutions or other lenders
either private or government sector will most likely look for the market value of
the properties they inspect for mortgage loan purposes.
82. Under the General Banking Act, Ioans that may be granted by banking
institutions against real estate security should not exceed 80% (Used to be
70%) of the appraisal value of the real estate security.
83. Mortgage redemption insurance refers to an additional requirement in obtaining

loan which is to pay off the loan or outstanding loan balance upon the death or
the borrower.
84. Deferred cash payment - refers to a payment scheme where the buyer of a real
estate project pays the total contract price Within a short period of time without
interest.
85. RA#6846refers to the Abot-Kaya Pabahay Fund as amended by RA#7835, law

that provides for Comprehensive and integrated Shelter and Urban
Development Financing program.
86. National Home Mortgage Finance Corporation (NHMFC)

 popularly known as Pag-IBIG(Pagtutulungan sa kinabukasan, Ikaw,
Bangko, Industriya at Gobyerno)
 created by PD#1267 last December 21, 1977
 primarily created for the purpose of developing and. providing for a
secondary market for home mortgages granted by public and/or private
home financing institutions
 No longer involved with direct lending but buying and selling of mortgages
provide by government and private institutions
 Purchase government backed and conventional mortgages from lenders
and securitize them
 Aims to increase the affordability of home mortgage funds for low-
moderate and middle-income home buyers
 Designated as the major home mortgage institution by EO#90 last

December 17, 1986 which major functions.is to operate a viable home
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mortgage market through purchase of mortgages originated by both
private and public
 Tasked with the development of a system that will attract private institution
at funds into long-term housing mortgages
 Designated as the administrator of the Community Mortgage Program
(CMP) through RA#7279
87. Programs/Projects of NHMFC

 Community Mortgage Program (CMP)
 Aims to ensure the effective delivery of housing finance under the
National Shelter Program and increase the access or home ownership
of the lowest section or our country/society
 A financing scheme to assist and enable informal settlers, slum
dwellers or residents of blighted or devastated areas, in purchasing
the land they occupied or the land they were relocated through their
duly registered community associations
 Unified Lending Program (ULP)
 refers to the government program that implements the affordable
payment plan (APP) of which a temporary payment scheme offered to
delinquent borrowers who cannot presently meet their monthly
amortization
 program which the borrower was given the opportunity to start paying
at a reduced monthly rate of equivalent to less than 50% of the
borrower's original monthly payments starting at the 1 year of loan
restructuring under the APP
 the monthly amortization rates will increase gradually in time with the
expected increase in the borrowers payment capacity
 borrower to execute a memorandum of agreement with Dacion in
Pago provision on the mortgaged property
 the APP is 0pen to delinquent borrowers who has not availed of an
updating or restructuring program under RA#8501-Housing Loan
Condonation Act of 1998
88. Loans granted under the Community Mortgage Program (CMP)

a. Land purchase
b. Land/site development and
c. House construction/improvement
89. Community Mortgage program allows a maximum loan of PB0.000 per

individual beneficiary payable for a maximum period of 25 years at 5o interest
per annum wherein the tenants/beneficiaries shall form and register a
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community association, Cooperative or condominium corporation which entity
shall borrow and initially Own and mortgage the land of which the individual
beneficiary's right over the land and eventual ownership thereof is achieve by a
Lease Purchase Agreement (LPA) With the Community Association.
90. RA#8501 Scheme Program

 Offers in-house loan restructuring for accounts considered past due and
for those who are not qualified to apply under RA#8601
 Offers special repayment program as revised loan restructuring program
to accounts considered past due and/or who are eligible to avail of the
benefits of RA#8501
91. The Unified Lending Program (ULP) is administered by HUDCC thru the
National Home Mortgage Finance Corporation (NHMFC). Under the ULP, the
collateral value of a house and lot package is determined by applying Loan to
Value ratio.
92. Multi-Window Lending Program a modified system under the ULP whereby
housing loans may be extended through other conduits like banks. Under the
Multi- Window Lending Program System of HUDCC, the amortization of a
housing loan borrower should not exceed 40% of net disposable income. In the
sale of a house and lot thru the Unified Lending Program, the amount
representing the difference between selling price and loanable amount is
known as Equity.
93. Purposes allowable under the ULP

 Construction of a new house or dwelling unit
 Purchase of lot and construction of a new house or dwelling unit
 Purchase of a newly-constructed residential unit (first occupancy)
 Purchase of lot only and
 Purchase of an existing residential unit previously foreclosed by the SSS,
GSIS, HDMF or NHMFC
94. Pag-IBIG Fund offered to its individual members

 Saving
 Short-term loan
 Housing Loan
95. Maximum loanable amount of Pag-1BIG loan program is P3.OM.)

96. Purposes of Pag-IBIG Housing Loan Program as assistance
a. Purchase of a fully developed 1O not exceeding 1,000 sqms with
residential area
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b. Purchase of a lot and construction of a residential unit thereon
c. Purchase of a residential house and lot, town house or Condominium unit
inclusive of a parking slot, which may be either
 old or brand new
 property mortgaged with HDMF or
 an acquired asset which is disposed of through sealed public
bidding negotiated sale within
d. Construction or completion of a residential unit on a lot owned by the

member
e. Home improvement like any alteration in an existing residential unit
intended by a homeowner to be a permanent integral part thereof
enhance of durability and material value
f. Refinancing of an existing mortgage loan with an acceptable to the
HDME: provided,
 the loan to be refinanced is current and updated at the time of loan
application and
 the account reflects a perfect repayment history Tor at least two
years supported by the borrower s official receipts
g. Combination of loan purposes, limited to the following:
 purchase of a fully-developed lot not exceeding 1,000 Sqms and
construction of a residential unit thereon
 purchase of a residential unit, whether old or new, with home
improvement
 refinancing of an existing mortgage with home improvements or
 re-financing of an existing mortgage, specifically a lot loan, with
construction of a residential unit thereon
97. Pag-ibig Rent-to-Own Program - a scheme whereby the housing units acquired
by HDMF shall be leased to qualied Pag-lBIG members who shall enter into a
Contract of Lease with Option to Purchase Tor a period of not more than five
(5) years.
98. Purchase of Pag-lBIG bonds is a mode of compliance with the 20% socialized
housing component for subdivision projects.
99. Loan Value- refers to the amount of loan for the property used as a basis for
the maximum amount loan to be granted.
100. Eligibility requirements for Pag-1BIG Members

a. At least had paid 24 months
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b. nor more than o years old at the time of loan application and must
insurable
c. has passed satisfactory background/credit and employment/business
checks of the developer and Pag-lBlG Fund
d. as no outstanding Pag-IBIG housing loan, either as principal borrower
or CO-borrower
e. has no outstanding Pag-IBIG multi-purpose loan in arrears at the time
of loan application.
101. Alice pays monthy amortization of P42,500 for a parcel of land. The
amortization factor for 10 years at 21 %is 0.03985. alice paid a downpayment
of 25% of the contract price, compute the following: (Round-off answers to the
nearest figure)
a. Principal obligation which the monthly amortization was based
Loan Balance = Monthly Amortization = P42,500 = P1,066,499
Amortization Factor 0.03985
b. Contract Price: Balance = P1,066,499 = P1,421,999a
100%-25% 75%
c. Amount of Downpayment : 25% of P1,421,999 = P355,500
102. Argie borrowed P2.0M from PTB Bank to buy a property at 15% interest per
annum payable in 2 years. Compute the monthly interest. (Round-off answer to
the nearest figure)
P2.0M x 15%/12months = P25,000
103. Princess Dionah paid a monthy amortization of P25,000at 18% per annum
with the amortization factor of 0.03705. Compute the principal obligation.
(Round-off answer to the nearest figure)
P25,000/0.03705 = P674,764
104. In financing scheme based on diminishing balance, the interest in the
payments decreases while the principal payment increases. A bank or financing
institution will determine the loanable amount of the borrower based on the
value of the property and the capacity or the borrower to pay the loan.
105. GUB Corporation bought a property for P.OM and paid P300,000 reservation
20% equity of the contract price Is required to be paid in b0 days. Compute
amount GUB Corporation should pay in 60 days. (Round-off answer to the
nearest figure)
P5.OM x 20% less (-) P300,000 = P700,000
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106. Balloon payment- refers to a lump Sum payment made by a debtor after
making installment payments over a period of time.
107. In house financing - refers to a financing scheme provided by developers of

projects for its buyers in lieu or direct bank financing.
108. Bridge Financing- refers to a type of financing momentarily availed by the

borrower in the case his/her long-term loan IS not yet approved for the
acquisition of house to be able to secure the purchase.
109. Adjustment for Financing points-refers to the adjustments made by the

Appraiser based on the market's reaction. But not based on a straight peso for
peso adjustment.
110. Annuity-series of payments made or receipts at intervals either for life or for
fixed number of period.
111. Earning Forecast - is an estimate or forecast of the future net monetary

returns, derivable from something owned or considered as being owned.
112. Effective Monthly rate - is the sum of the number of month's rent actually
paid multiplied by the price per square foot, divided by the number of month's
rent due under the lease.
113. Equity Dividend rate - the sum of the Net Operating Income minus the
annual debt services, divided by the equity/down payment.
114. Financial Interest - is the interest created by mortgage pledges where the
property is used as collateral to secure financing or a charge is taken over the
property. AIso refers to an owner's equity position in a business undertaking.
115. Income to Expense ratio- refers to the percentage of income after the
expenses is divided by gross income.
116. Indices- a way of reducing a relatively large body of information into a

smaller Numbers of factors.
117. Cash- remaining cash in a business after all operating expenses and debt
services have been paid out before income taxes and depreciation deduction.
118. Cash flow analysis- a study of the anticipated movement of cash inflows and
Outflows Or an investment.
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119. Cost Estimation-is an estimate of the amount of money that would be
required to construct, produce, replace or reproduce some tangible and/or
intangible things/property(ies) regardless of its ownership at a particular time or
at a given date.
120. Internal level measurement assures an equal distance between scale points
representing order. It is where the distance between points is equal.
121. Investment Analysis - a study

 that reflects the relationship between acquisition price and anticipated
future benefits of a real estate investment
 undertaken for the purpose of development and investment
 for evaluation of investment performance or the analysis of a transaction
involving investment properties
 also known as Feasibility Studies, Market or Marketability Analysis or
Financial Projection Studies
122. Interest or Discount Rate - is the pure rate of return on Capital or a return on
Equity/Capital which is also known as Yield rate.
123. Loan to Value Ratio (LTV)-is the

 property a percentage (%) of propertys market value at appraisal that a
Lender
 relationship between the amount borrowed and the appraised value of
the willing to loan using the property as security/collateral
124. Market Analysis a study of real estate market conditions for a specific
property.
125. Base rate means -the minimum rent stipulated in a lease agreement/contract
126. Cost Value- an estimate derived from costs actually paid to bring properties
into its existence or use.
127. Market Price or Price or Sales Price-Is the price

 actually paid or the amount received by the Seller Tor his property of
outside pressures/influences
 of any commodity in is market at a specified time
 the amount asked, offered or paid Tor a property usually expressed in
money
128. Risk Rate - is the rate of return that will attract capital.
129. Insurance or lnsured value - is the
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 insurance coverage of the building/improvement to recover its cost due
to certain calamities or insurance accident like: fire, flood or typhoon
 estimate reflecting amounts agreed upon for the indemnification of a
particular type of losses for a property covered
130. Value in Use or Subjective Value-refers

 To the use of a property to put it in service it has to render and the want
it has satisfy
 mainly the concern of the forces/factors within the property itself
 to the property s value to Its owner/user
131. Value in Exchange or Objective Value - refers

 to the worth of an object relative to other objects of which it can be
compared and for which it can be exchange
 to forces/factors outside the property
 the property's value to others or the general market
132. Rent or Rental- is a compensation for the use of real estate. It is also the
amount paid by the lessee of a house, a flat fee of a business building.
133. Reversion Value - is the asset/property value in peso remaining to an

Investor or Lessor at the end of the income projection or lease period.
134. Finance Lease - a lease that transfers substantially all the risks and rewards
incident to ownership of an asset/property.
135. Flat Rental - fixed rental amount for the entire lease duration such as:
monthly, quarterly or annually.
136. Anchor Tenant - a major tenant in a retail/commercial property who serves

as a magnet in attracting customers.
137. Open-Ended Loan- a secured loan that promises the borrower to obtain
additional sums or money at any time; hence, allowing a continuous source of
credit. A type or mortgage which permits borrowing additional funds at a later
date against the same collateral. It also refers to a mortgage containing a
clause which permits the mortgagor to borrower additional money after the loan
has been reduced, without rewriting the mortgage.
138. Index Lease - Is a recognized national index like: cost of living index which is
use by which rental is adjusted in accordance with the index.
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139. In the sale of a house and lot thru the Unified Lending Program, the amount
presenting the difference between selling price and loanable amount is known
as Equity.
140. Control Premium-is the amount by which the value of controlling interest
exceeds the value of a non-controlling interest in a business enterprise.
141. In a high demand market, the cost of a new building/property will increase
substantially until it becomes impossible for prices to go higher.
142. Economic base analysis - refers to an analysis of the economic activity of a

community that allowed it to attract income from outside its boundaries.
143. What Is the present value of a 40 year property with a net income of P10,000
per year if payments are in advance and the net income is discounted at a rate
of 12 percent? (Present Value Factor = 8.233030) Solution : P822,330 (P10,000 x
8.233030)
144. If houses in your area have increased in value at 12% during the past years
and the average price of houses sold last year was P225,000. What is the
average price of houses sold today? Solution : P252,000 (P225,000 x 112%)
145. A tenant has a lease that provides the base rent of P10,000 per month plus
5% of the sales above P50,000 in gross sales per month. The tenant’s sales
last year was P950,000. How much rental was paid last year?
Solution:
Basic Rental (P10,000 x 12) P120,000
Add additional rental – 3% of over P50,000:
P950,000/12mos.=P79,167 – P50,000 = P29,167 @3%x12) 17,500
Total rental paid P 137,500
146. Ms. Adelfa sold 2,500 sqm. Lot to Mr. Christopher at P5,000 per sqm. The
downpayment is 25% of the contract price and the balance is payable in 5
years at 20% per annum. Amortization factor is 0.02375. Compute the
following:
a. Downpayment : P3.125M(2,500sqm @ P5,000 = P 12.50M x 25%)
b. Principal balance : P9.375M(P12.50M – P3.125M)
c. Monthly Amortization: P222,656 (P9.375M x 0.02375)
d. Total amortization paid by Mr. Christopher for 5 years
P13,359,360 (P222,656 x 60 mos.)
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e. Total interest paid by Mr. Christopher for 5 years
Total amortization paid P13,359,360
Less Principal loan 9,375,000
Interest paid P3,984,360
147. On January 1, 2006, Gilbans signed an agreement to operate a franchise of

Star Perfect Combination with an initial franchise fee of P500,000. Of this
amount P200,000 was paid as downpayment when the agreement was signed
and the balance is payable in six years at P50,000 per year starting January
1,2007. The agreement provides that the downpayment is not refundable and
no future services are required of the Franchiser. Gilbans credit standing
indicates that he can borrow money at 12% for a loan. The following
information on present and future value factors indicates as follows:
Present value of P 1.00 at 12% for 6 years 0.456
Future amount of P1.00 at 12% for 6 years 1.764
Present Value of an ordinary annuity of P1.00 at 12% for 6 years 3.605
a. what is the total franchise cost on January 1, 2007?
Downpayment P200,000
Present Value : {P50,000 x 0.456)} 72,800
Franchise Cost P272,800
b. what is the present Value of the franchise at the end of the 6 years?
Downpayment P200,000
Payment Value: {P200,000 + (P50,000 x 3.605)} 380,250
Franchise Value P580,250
148. The forces of nature and human generated effects of Political/government
economics and social systems affect the value of real property. (key: PEPSo)
149. Economic indicators

a. Measuring Economic Activity
 Output, expenditure and income
 Prices
b. Growth: Trends and Cycles

 Gross Domestic product
 Productivity
c. Population, Employment and Unemployment

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 Population
 Work Force
 Payrolls and hours worked
 Unemployment and vacancies
d. Fiscal Indicators
 Public Expenditures
 Government Revenues
 Budget balance, deficit, surplus
 National debt, government or public debt
e. Consumers
 Personal income, disposable income
 Consumer and personal expenditure, private consumption
 Personal and household savings, savings ratio
 Consumer confidence
f. Investment and Savings

 FIxed investment
 Investment intentions
 Stock (inventories)
 National savings, savings ratio
g. Industry and Commerce

 Business conditions, indices and surveys
 Industrial and manufacturing production
 Capacity use and utilization
 Manufacturing order
 Motor vehicles
 Construction orders and output
 Housing starts, completion and stocks
 Wholesale sales or turnover, orders and stocks
 Retail sales or turnover, orders and stocks
h. Exchange Rates
 Real exchange rates, competitiveness
 Term of trade
i. Balance of Payments
 Accounting conventions
 Import/Export of goods and services
 Trade balance, merchandise trade balance
 Current - account balance
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 Capital- account flows
 Official reserves
 External debt, net foreign assets
j. Money and Financial Markets

 Money supply, money stock MO... M 5 liquidity
 Bank lending, advances, credit, consumer credit
 Central Bank discount, Lombard, invention rates
 Interest rates, short-term and money market rates
 Bonds yields
 Yields Curves, gaps and ratios
 Real interest rates and yields
 Share prices and yields
k. Prices and Wages

 Price indicators
 Gold and Oil Prices
 Commodity/price indices
 Export and Import prices: unit values
 Producers and wholesale prices
 Surveys
 ices expectations
 Wages, earnings and labor costs
 Unit labor costs
 Consumer or retail prices
 Consumer or private expenditure deflators
 GDP deflators
Land Management System and Registration
1. Land registration- is
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 defined as the inscription/recording or annotation of acts and contracts
relating to the ownership of land and other rights thereof
 done in the office of the Register of Deeds of the city or province where
the property Is located/situated
2. Registration is a mere ministerial act by which an instrument is sought to be

inscribed in the records of the office of the Register of Deeds and annotated at
the back of the instrument.
3. Systems of Land registration in the Philippines

a. Spanish Mortgage Law - which use was disallowed by PD 982 effective
after August 16, 1976
b. system of Recording for unregistered lands and
c. Torrens system
4. In 1857 Sir Robert Torrens, a British Customs Officer introduced the Torrens
System in the Philippines
5. Present Registration Systems used in the Philippines

a. Land registration under by Act 496 (The Land Registration Act) effective
on February 1, 1903 which covers both original and subsequent
registration a system of registration named after Sir Robert Torrens who
developed it based on his experience as a Register of Deeds and as
member of the South Australian Parliament
b. PD1529 (Property Registration Decree) effective on June 11, 1978
which amended and codified the laws related to registration of property.
6. Purposes of Land Registration:
a. To give notice of the accurate status of real property and real rights
thereof
b. b. To record acts or contract is like. acquisition of ownership and other
real rights Over real property
c. To prevent the commissions or frauds protecting real rights over real
property
d. To prejudice 3 persons
7. Regional Trial Courts (RIC) shall have the exclusive jurisdiction over all
application for original registration of lands including improvements and interest
therein.
8. Torrens System-Is
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 a system of land registration by which the recorded title becomes
absolute, indefeasible and imprescriptible
 the best evidence binding against the whole word and has priority against
tax declaration.
9. Torrens Title-refers to
 the evidence or certificate or ownership issued under the Torrens System
registration by the government through the Register of Deeds, free from all
liens and encumbrances except those expressly noted thereat or reserved
bylaw
 the transfer Certificate of Title which is considered as the best evidence of
Ownership the evidence of the person 's right over a real property or rights
of ownership by which the owner can assert and maintain possession
10. Advantages of the Torrens System

a. The issued title is absolute, indefeasible and imprescriptible
b. The title is a conclusive proof of ownership
c. lt relieves the land of unknown claims or liens
d. It is a simple method of dealing lands and making any transaction
easier
e. it quiets title or possession of the land
f. It gives assurance against fraudulent land registration
g. It is cheaper conveyance cost and
h. It will increase land valuation
11. Kinds of Land Registration

a. Original- it is the registration of land whereby an Original Certificate of
Title (OCT) is entered in the Registry of Property and a duplicate
owners copy issued to the owner by the Register of Deeds
 Judicial or through the Court either
 Voluntary act- by the applicant under Act 496 or PD1529
 Compulsory under Act 2259 of the Cadastral Act with the
appropriate provisions of Act 496 and PD1529
 Administrative acquisition of land patents to public agricultural land and
registering thereon under Section 107 of CA#141
b. Subsequent - a process where the Original Certificate off Title is
cancelled and subsequently registered under a Transfer Certificate of
Title (TCI) favor of the new owner in cases where land is conveyed
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either through sale donation, assignment or other means of
transfer/conveyance
12. Persons that may apply for Original Registration of Title

a. Those who themselves or through their predecessors-in-interest have
been open, continuous, exclusive and notorious possession and
occupation of alienable and disposable lands of public domain under a
bonafide claim of ownership since June 12, 1945 or prior years/earlier
b. Those who have acquired ownership of private lands or abandoned
riverbeds by right of accession or accretion under the existing laws
c. Those who have acquired ownership of private lands by prescription under
the provisions of existing laws
d. Those who have acquired ownership of land in any other manner provided
by law
13. Where the land is owned in common, all the co-owners shall tile the applicant to
original registration of title jointly.
14. The Court shall determine all conflicting claims of land ownership and merest
subject to original application based of the evidence and reports submitted oy
the commissioner of the National Land Transfer and Deeds Registration
Administration (NLTDRA) and the Director of Land Management Bureau and
finds the applicant oppositor has sufficient title appropriate for registration shall
render Judgment confirming the title of the land or portion thereof to the
applicant or oppositor which shall become final and executory after 30 days from
date of receipt of notice or the judgment.
15. The Court within 15 days from entry of judgment shall issue an order to the
commissioner for the issuance of the decree of registration and the certificate of
title which shall bear the date, hours and minute of the entry signed by the
Presiding Judge which shall state the information as to the status (married with
the name of the spouse or unmarried) of the owner and shall contain the
description of the land as finally determined by the Court.
16. The Register of Deeds upon receipt of the of the Original Certificate of Title
(OCT) shall enter the same at the record book and it shall numbered, date
Signed and sealed with the Register of Deeds office seal which Certificate of
Title shall take effect upon the date of entry thereof.
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17. Transfer Certificate of Title (TCT)- refers to the subsequent certificate of title
issued by the Register of Deeds in accordance to any voluntary or involuntary
instrument relating to the same land which shall Show the number of the
previous certificates covering the same including all the facts that it was
registered, giving the record number, the number of the original certificate of title
and the volume and page of the registration book which it could be found.
18. The decision in land registration proceeding becomes final after the expiration
thirty (3O) days from the date of service or 1s notice. The Decree of registration
entry, becomes final after the lapse of one () year room the dale of is issuance
and entry.
19. An application for land registration under the Torrens system which is desired to
be amended for the sole purpose of excluding a portion of the land covered in
the original application does not require a new publication.
20. When a public land is alienated, granted or conveyed to any person by the
Government it shall be the duty or the official issuing the instrument of
alienation, grant, patent or conveyance to effect the instrument to be filed win
the Register of Deeds of the province or city where the land is located and to de
registered whereby the certificate of registration shall be entered and the owner
s duplicate copy shall be Issued to the grantee.
21. No deeds, conveyance, mortgage, lease or other voluntary instrument affecting

land not registered under the 1orens System (unregistered lands) shall be valid
except between the parties involved unless the instrument has been recorded in
the office of the Register of Deeds for the city or province where the land is
located/situated.
22. Functions of the Register of Deeds

 It is the public repository of records of instruments affecting registered or
unregistered land and chattel mortgages in the province or city where
such office is situated
 To register immediately an instrument presented for registration dealing
with real or personal property which complied with all the requisites for
registration
 To see to it that instruments presented tor registration bears the proper
documentary stamps which shall be properly cancelled
 To deny registration if the documents is not registrable and to inform
presentor of such decision in accordance with Section 117 of PD1529 and
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 To keep a Primary Entry Bo0k and a Registration Book
23. Primary Entry Book - refers to a book in the Register of Deeds which shall
contain among others the:
 entry number
 names of the parties
 nature of the document
 date, hour and minute the document was presented and received
24. The recording of the deed and other instruments relating to unregistered lands
shall be affected by way of annotation on the space provided in the Registration
Book after the same shall have been entered in the Primary Entry Book.
25. Abstract of Title-is a condensed history of the title, showing the various links in
the chain or title including liens, encumbrances and other conditions affecting
the title.
26. Fee Simple-refers

 to the absolute estate whereby the owner has all the rights over the
property owned
 to the bundle of rights inherent to ownership without any limitations other
than those imposed by law or by contract
 to the rights or attributes which are inherent in or appurtenant to
ownership and includes the right to possess, to use, to the fruits, to
dispose and to recover
27. Homestead Estate - refers to the real properties used for family homes such as
the house and lot where the family resides.
28. Modes of acquiring land title (KEY: PIPI-RAP)

a. Private Grant -voluntary conveyance or alienation such as: sale, Donation
b. Involuntary Grant - acquisition of land title without owners consent like:
execution of foreclosure sale, Escheat or eminent domain
c. Public Grant-acquisition of alienable public land by homestead patent, free
patent, sales patent or other government awards
d. Inheritance- acquisition of land through hereditary succession either by
testate (With a will) or intestate succession (without a will)
e. Reclamation- process of filing up of submerged land by deliberate act and
reclaiming title thereto subject to existing laws and government regulations
f. Accretion (riparian rights)-acquisition of lands whereby the land owners of
the adjoining river bank becomes the owner of the accretion and
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g. Prescription- acquisition of title by adverse possession due to actual,
open, continuous and uninterrupted possession tor a certain period of time
in the concept of an owner
29. Documents involving real estate registration
 Deed of Sale
 Deed of Donation
 Extrajudicial Settlement
 Deed of Partition
 Real Estate Mortgage on REM
 Subdivision or Consolation Plans
 Adverse Claim
 Lis Pendens
 Affidavit of Loss
 Sheriff's Certificate or Sale
 Sheriff’s Final Deed of Sale, etc.
30. Quieting of Title - an action tiled in court to remove a cloud from the title of a real
property or & any interest therein.
31. Conditions tor Quieting of Title

a. Plaintiff must have a legal or equitable tile or interest Over the real
property which is the subject or the action
b. There must be a cloud on such title
c. Such cloud must be due to some instrument, record, claim, encumbrance
or proceeding which is apparently valid or effective but in truth and in fact
invalid, ineffective, voidable or unenforceable and IS prejudicial to the
plaintiff's title and
d. Plaintiff must return to the defendant all benefits he/she may have
received from the later or reimburse him/her for the expenses incurred
which redound to the benefit of the plaintiff
32. Conditions for cloud to exist in the title

a. here is an instrument record or claim/encumbrance or proceeding
b. Which is apparently valid or effective
c. But in truth and intact invalid, effective, voidable or unenforceable or
extinguished or barred by extinctive prescription and
d. May be prejudicial to the title
33. Prescriptive period of quieting a title

 Plaintiff is in possession of the property-action does not prescribe
 Plaintiff is not in possession of the property action may prescribe in ten
(10) years
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34. Quit Claim - an instrument relinquishing any interest in a property which the
grantor may nave.
35. Petition to Quiet Title- a court action to remove cloud on the title.
36. Writ of Preliminary Attachment- an annotation on a title which serves as notice

that the property is being held in reserve for whatever judgment maybe rendered
against the owner to satisfy future judgment in favor of the plaintiff.
37. Kinds of Attachment

a. Preliminary attachment - issued during the progress of a legal action
which can be cancelled anytime
b. Garnishment- issued usually for personal property
c. Levy on Execution-issued after final judgment
38. Lis Pendens -

 means pending litigation
 refers to the control of the court during the pendency of an action over the
property involved
 refers to a notice that a property is subject to a pending Iitigation
 notice/documents when registered serves a warning to 3 parties that a
particular real property is in litigation involving either:
 to recover of possession of real property
 to quiet title thereto
 to remove clouds upon the title thereof
 to partition
 other proceedings in court directly affecting the title of the land or
the user's occupation thereof or its improvement (building)
39. Grounds for cancellation of Notice of Lis Pendens

a. The notice is tor the purpose of molesting the adverse party or
b. it is not necessary to protect the right party who caused it to be registered
c. Upon verified petition of the party who cause the registration thereof
40. Liens that can be found at the back of the title

 Real Estate taxes liens
 Judgment liens
 Mortgage lens and
 Statutory Liens except Mechanic's liens
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41. The Register of Deeds cannot refuse registration of a contract of sale on the
ground that it is void because its duty IS merely ministerial and mandatory in
character.
42. The authority to classify lands of the public domain into agricultural, forest or
timber is vested with the courts.
43. If the TCT has an annotation that says subject to Rule 74, Section 4 of the Rules
of Court"- it means that the property IS an inherited property and any heir unduly
deprived of his lawful participation in the estate has two (2) years to assert
his/her rights over the subject property.
44. Common annotations on the title.

 Notice of lis pendens
 Wit of preliminary attachment
 Writ of Execution
 Section 4, Rule 74 -liability of the distributed estate in a Summary
settlement
 Deed of Restrictions
 Easement of Right of Way and
 Real Estate Mortgage
45. Inclusion in a certificate of title of the coastal area adjacent to an exclusive

beach resort does not confer title.
46. The law prohibits the sale of land covered by homestead patent within five (5)
years from the issuance of the patent. If a parcel of land covered by a
homestead patent was sold, its redemption period shall be one (1) year to be
added to the Five (5) years from the date of conveyance.
47. Gillar was granted a homestead patent for parcel of land in May 12, 2006. In
September 1, 2013, he sold the land to Larrie the sale is valid because It 1s
beyond the prohibitive period of five (5) years.
48. Gil, Kit and Jess are co-owners of 15 hectares of land; they may file application
for the registration thereof as provided under PD 1529 which requires that all co-
Owners should file the application for registration.
49. In Spanish titles, the unit of measure of one (1) is equivalent to one hundred
(100) square meters.
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50. Only lands which are already titled under the Torrens System may be developed
into a subdivision.
51. Salient features of RA#67/32 concerning administrative reconstitution of the title

 can be availed only when the original certificates of the titles at the
Registry of Deeds were lost or destroyed by fire, flood, or force majeure
 when the Original Certificates of Title lost or destroyed consist of at least
ten percent (10%) of all the titles in the Registry of Deeds and
 shall be made Without prejudice to parties whose rights or interest may
have been annotated on the lost or destroyed original certificates of title
52. Republic Act No. 10023- refers to an act authorizing the issuance of Free
Patents to Residential Lands.
53. Coverage of RA#10023

 only applications for free patents pertaining to untitled public alienable
 disposable lands which have been zoned as residential and
 Zoned residential areas in proclaimed townsite reservations
54. Definition of Terms under RA#10023

a. Filipino Citizen-in accordance to the 1987 Constitution
 those who are citizens of the Philippines at the time or the adoption
of the 1987 Constitution
 those whose fathers or mothers are citizens of the Philippines
 Those born before January 17, 1973 of Filipino mothers and who
elec Philippine citizenship upon reaching the age or majority
 Those who are naturalized in accordance with law and
 Person with dual citizenship as provided in Republic Act No. 9225and
its IRR
b. Actual occupant- any person, who either by herself or himself or through

her or his predecessor-in-interest is occupying, living in, inhabiting or
staying in a Structure, the primary purpose of which is to serve as the
residence of such person situated on the parcel of residential land subject
of the free patent application.
c. Residential lands all lands that have been identified and zoned as
appropriate through the appropriate ordinance by the LGU having
jurisdiction over the area including residential lands within areas zoned as
mixed residential and commercial or mixed residential and industrial
d. Alienable and Disposable lands of the public domain classified as

agricultural that may be acquired through grant or confirmation of title.
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e. Townsite reservations proclaimed areas specifically reserved for the
establishment of a new town as provided in CA#141-Public Land Act as
amended.
f. Highly Urbanized Cities (HUC)- as defined in RA#7610-Local

Government Code, cities with a minimum population of 200,000
inhabitants, as certified by NSO and with the latest annual income of at
least P50.OM based on 1991 constant prices, as certified by the City
Treasurer.
g. 1st class municipalities municipalities with an average annual income of

P55.OM, as provided for in DOF DO No. 23-08 dated July 29, 2008
h. 2nd class municipalities with an average annual income equal to or more

than P45.0M but not exceeding P55.0M as provided in DOF DO#23-08
dated July 29,2008
i. Use for Public service- utilization of parcels of land exclusively by

government or any of instruments in providing basic services to general
public, such as market places, Town, City provincial or Barangay halls,
hospitals, clinics and health centers, police stations, Outpost jails, etc.
j. Disinterested person –
 Any person who has no claim over the parcel of land subject of the
free patent application and who does not stand to benefit from titling
and registration or any other transaction over such parcel of land
 When her/his relation to the clause or to the parties is such that
she/he has no incentive for exaggerating or giving false color to her
or his statements or for suppressing or perverting the truth or for
stating what is false
k. Predecessor-in-interest - person who before having lawfully transferred

the parcel applied has held and possessed the same in her/his Own right
and under a color of title acquired through any of the modes or
acquisition recognized by law and have formerly occupied the land in a
concept of an owner under a bona fide claim of ownership but
relinquishes her/his right over the same in favor of the applicant.
l. Actual residence- utilization of and presence in residential structure on

the parcel subject of the application with the intention to reside, coupled
with conduct indicative of such intention either continuous or interrupted
or intermittent as long as the applicant possesses such structure and the
parcel on which It stands in the concept of an owner.
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m. Public use - utilization of parcels of land for structures which are open to
the general public including public plazas, parks, resorts, roadways,
recreational facilities, libraries, meeting places, playgrounds, public
parking lots etc.
n. Continuous possession and occupation use either by the applicant

herself/himself or through her/his predecessor-in-interest or the parcel
subject of the application in the concept of an owner which possession
and occupation whether actual or constructive, must be without
interruption except when prevented by force majeure or circumstances
beyond human control or not of intermittent character while it continues.
o. Bona fide claim of acquisition of ownership refers-

 claim for the parcel subject of the application that is legally adequate
as proof possession and as acceptable to the community to separate
particular parcel as being owned by the applicant to the excIusion of
others
 that the applicant holds the properly by virtue of or through any or the
modes of acquisition recognized by the Civil Code
 to a state of mind which is manifested by the acts of the applicant,
done with honest intention to abstain from taking an unconscionable
or unscrupulous advantage or another
 to the opposite of fraud and its absence should he/she established by
convincing evidence
55. Qualifications of Applicants for the issuance of a residential Free Patent

 Filipino citizenship
 Actual occupation, actual residence and continuous possession and
Occupation of the parcel subject of the application either by
herself/himself or through his/her predecessor-in-interest, a bona fide
claim of acquisition or ownership for at least 10 years prior to the filing of
the application
 no age requirement for applicants, minor applicants aged below 18 years
old are duly represented by their legal guardians
 heirs of a deceased applicant may substitute the applicant provided that
they themselves possess the required qualifications
56. There is no limit as to the number of applications which may be filed under
RA#10023 provided that the limitations as to the size of the parcel shall not be
exceeded. No application shall be approved for any individual, whose total
landholding would exceed a total of an accumulated 12 hectares including
agricultural lands.
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57. Coverage of all residential lands that have been identified and zoned by the
concerned LGU provided that the land applied for is not needed for public
service and/or public use
 highly urbanized cities-area shall not exceed 200 sqms
 other cities area shall not exceed 500 sqms
 first class and second class municipalities-area shall not exceed 750
sqms
 all other municipalities -area shall not exceed 1,000 sqms
58. No erasure, alteration or amendment shall De made upon the registration book
after the entry of a Certificate of title except by order of the court.
59. No alienation, transfer or conveyance or any homestead after five (5) years
before twenty-five (26) years after issuance or tie Shall be valid without the
approval of the Secretary of Agriculture and commerce which approval shall not
be denied except on constitutional and legal grounds years and approval denied
except on constitutional and legal grounds.
60. Every conveyance of land acquired under the free patent or homestead
provisions shall be subject to repurchase by the applicant, his widow or legal
heirs within a period of five (5) years from the date of the conveyance.
61. The lien annotated on the title by virtue of the registration of a deed of
extrajudicial settlement may be cancelled after a period of 2 years from date of
registration. To cancel the lien based on Rule 74 of the Rules or Court, any O
the heirs may file a Verified Petition for cancellation. No deed of extra judicial
settlement shall be registered unless the fact of extrajudicial settlement of
adjudication is published once a week for three (3) consecutive weeks.
62. Under PD1529 deeds, conveyances and other voluntary instruments affecting
registered land executed in accordance with law in the form of public
instruments shall be registrable; provided, that the documents shall be signed by
the parties executing thereof and in the presence of two (2) witnesses. Under
PD1529, an adverse claim is effective for 30 days.
63. Under LRA Circular No. 13-90, the administrative reconstitution of original titles
lost or damaged requires that the number of titles lost or damaged should not be
less than 500 titles.
64. Land Titling Computerization Project- refers to the program of LRA's state-of-
the-art information technology to preserve the stability and integrity of land
ownership and maintain the trust and confidence of the public in the Torrens
System and to enable the quick and secure registration of land titles in the
country.
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65. The land owner who was able to redeem a foreclosed property should present
the Certificate of Redemption for the cancellation of the Certificate of Sale
annotated on the title thereof.
66. Life estate - is one whereby the estate has a limited duration based on the life of
the property Owner or the lives of designated persons. It may be created by a
will or by operation of law.
67. Principles on lands of Public Domain:

a. Lands of the public domain are classified as (a) mineral lands, (b)
agricultural lands, (c) forest/timber lands and (d) national parks (MAFT-
NP)
b. Alienable lands of the public domain shall be limited to agricultural lands
c. Private corporations and associations may hold alienable lands or public
domain by lease, for a period of not more than twenty-five (25) years,
renewable for another twenty-five (25) years or a maximum period years
and the lease land shall not exceed 1,000 hectares and
d. Filipino citizens may lease not more than twelve (12) hectares either by
purchase or homestead or grant.
68. Fee Simple determinable - one whereby the happening of certain event or
purpose automatically terminates the entitlement of the estate and it reverts
back to ne previous owner or the grantor.
69. Fee Simple subject to a subsequent condition- one whereby the napped stated
event terminates the right over the estate, like: succession or property
possession on a condition of non-remarry of a widow spouse
70. Fee Simple Subject to an executory interest- one whereby an occurrence or an

event passes title to a third person, like: trusteeship.
71. Types of estates

a. Fee Simple (Absolute)
b. Defeasible fee (Conditional)
c. Life estate
d. Leasehold estate and
e. Homestead estate
72. General rule: Only Filipino citizens and juridical persons (corporations or
partnership) with at least sixty percent (60%) Filipino ownership shall be entitled
to acquire lands in the Philippines. Exceptions
a. When acquired prior to the 1935 Constitution
b. When acquired through hereditary Succession being the legal heir
c. When a Filipina marries an alien but retains her Philippine citizenship
unless by her act of omission have renounced her Philippine citizenship
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d. Former Filipino Citizen may retain ownership of the land previously
acquired being a Filipino, however, after loss thereof can no longer
subsequently acquire another by hereditary succession. They may own
houses but the land shall only be leased
e. Those Filipinos who contracted to buy real estate on installment basis
subsequently lost their Philippine citizenship before the full payment
thereof, cannot acquire title for its Ownership;
f. Real properties acquired by couple (Filipino spouse and Foreigner
spouse) which is considered conjugal property and each spouse has
only an inchoate right and mere expectancy rights during the existence
of the partnership and it is only upon conjugal partnership dissolution
that rights becomes actual and vested with respect to the indivisible half
of the property
g. Foreigners may own not more than 40% of the total number of units in a
condominium corporation
73. Characteristics of public domain properties

 It is beyond the commerce of man
 It cannot be acquired by prescription
 It cannot be registered under the Land Registration Law and be subjected
of a Torrens title and
 It cannot be levied or attached upon by execution
74. Requisites for Quieting of Title

a. The plaintiff should have a legal equitable title or interest Over the real
property which is the subject of the action
b. here should be a cloud on such title
c. Such cloud should be due to some instrument, record, claim,
encumbrance or proceeding which is apparently valid or effective but in
truth and in fact is invalid, ineffective, voidable or unenforceable and IS
prejudicial to the plaintiffs title and
d. The plaintiff should return to the defendant all benefits he/she may have
received from the later or reimburse him/her for the expenses incurred
which redounded to the benefit of the plaintiff
75. Quieting of Title - refers to an action filed in court to remove a cloud from the title
of a real property or any interest therein.
76. Requisites for cloud to exist in the title

a. There is an instrument/record or claim/encumbrance or proceeding
b. Which is apparently valid or effective
c. But in truth and in fact invalid, ineffective, voidable or unenforceable or
Extinguished or bared by extinctive prescription and
d. May be prejudicial to title
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77. Prescriptive period of quieting a title: (1) If plaintiff is in possession of the
property. action does not prescribe; and If plaintiff is not in possession of the
property, the action may prescribe in ten (10) years.
78. The technical description of the TCT of real property can readily be plotted on a
sheet by using the data of distance and bearing from lot points.
79. A Registry of Property is a list of all real property located within the territorials Of
the local government unit concerned, prepared and maintained by the
Provincial/City/Municipal Assessor.
80. Reformation of instrument - means that there being a meeting of the minds of
the parties to a contract, however, their true intention thereof was not expressed
in the instruments purporting to embody the agreement by reason of fraud,
accident, mistake, and inequitable conduct.
81. A former natural born Filipino citizen may acquire a property for residential
purposes for a maximum area of 1,000 square meters of urban land or one (1)
hectare or rural land.
82. Acquisition Cost - the amount or cost of money or other valuable consideration
needed to obtain title to a property, it includes registration fees, transfer
expenses documentary stamps, insurance, attorney's fees, broker's fees,
surveying tees and other cost relative to the direct procurement of a property in
addition to the purchase price.
83. When the Register of Deeds is in doubt as to what proper action to take
regarding adeed of absolute sale presented for registration, the matter in
question may be brought to the Land Registration Authority (LRA) by means of
Consultant.
84. A deceased died intestate without any debt or obligation, the document to be
executed to transfer title to the sole heir is Affidavit of self-adjudication.
PD# 957, BP#220, RA#7279, RA#4726, RA#6552
85. Presidential Decree (PD) No. 957 -

 refers to the Subdivision and Condominium Buyer's Protective Decree
 it governs the subdivision and condominium development
 it provides that no owner or dealer shall sell any Subdivision lots or
condominium units without first to secure the License to Sell from the
HLURB
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 it provides that any subdivision selling affecting the public should first with
the HLURB and Should be covered by a License to Sell and is best to wait
for the issuance or the individual titles of the subdivider lots project before
commencing the sales
 it requires that subdivision developer who desires to sell lots in his/her
project shall register as a Real Estate Dealer with HLURB
 it provides the minimum right of way or major road is 70 meters and
8meters
 it provides that only lands which are already titled under the Torrens
System may be developed into a subdivision for minor road
86. Transactions exempted from registration and securing the License to Sell from
HLURB
a. Sale of subdivided lots resulting from the partition of land among co-
owners and co-heirs
b. Sale or transfer of subdivision lots by the original purchaser and any
Subsequent sale of the same lot and
c. Sale of sub division lots by or for the account of a mortgage obligation
87. Kinds of subdivision
a. Simple Subdivisions refers to the development of a parcel of land
subdivided into two (2) or more lots without need of a road and open space
or playground
b. Complex Subdivisions refers to a piece of land subdivided into several
parcels with varied or similar sizes of lots, With roads and open spaces
provision
c. Rural Subdivision- refers to those subdivisions of provincial lands where
the major portions are utilized in agricultural purpose and only small
portions are devoted for residential uses
d. Urban Subdivisions- refers to those develop areas with community
facilities, utilities, services and amenities concentrated in a contiguous
population or neighborhood
e. Sub-Urban Subdivisions are developed vicinities at the immediate
perimeter of the existing cities or municipalities of highly developed urban
neighborhood
f. Agricultural Subdivisions-are areas totally devoted for cultivation purposes
either for vegetables or for planting of primary and secondary crops
g. Reclaimed Subdivisions are tracts of land converted for habitation a utilized
for more productive purposes from its original water-submerged condition,
like the reclamation projects along Manila Bay, Cebu City and Cagayan de
Oro City
h. Aquaculture Subdivisions- refer to those fish pens or scientific breeding
farms for raising and/or gathering of marine products and other
aquacultures
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88. Partition- is the legal process of dividing property and giving separate titles to
respective owners whose title is in common.
89. Subdivision Project-

 Refers to a tract or parcel of land partitioned primarily into individual lots
residential purposes either with or without improvements and offered to
pud for sale
 it includes residential, commercial, industrial and recreational areas as
we as open spaces and other community and public areas in the project
90. Subdivision Plan- is a survey plan indicating the division of the property.
91. Master Plan- is

 a basic comprehensive plan for dealing with the effects on a community
or social and economic changes
 an incorporated plan of ways and means of adjusting to the changing
Situation based on the phase
 a comprehensive plan to guide the long-term physical development of a
particular area or of a particular real estate project
92. Deed of Restrictions -refers

 lawful limitation which run with the land and may affect the use,
development and conveyance of ownership
 to the limitation on the use of the lot such as allowable use, building/lot
ratio, prohibition against subdividing, etc.
 to a private deed restrictions often are enforced through a Homeowner's
association
93. Site- refers to
 a parcel of land suitable for building that fronts on a road and has access
to utilities
 land ready for development or with improvements
94. Classification of Subdivisions according to Uses

a. Residential intended for residential use
b. Farm or agricultural intended for weekend farmers
c. Resort or recreational intended for family relaxation and outing
d. Commercial intended for business establishments
e. Industrial intended for manufacturing or for industrial purposes and
f. Institutional intended for societies or corporations that are charitable in
nature and institutions of similar character
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95. Subdivision Lot - refers to any of the lots in a subdivision project, residential,
commercial, industrial, or recreational
96. Under PD 1216 which amended portion of PD#957, for open market and
medium cost subdivision projects with an area of one (1) hectare or more, the
percentage of land allocation are:
 Saleable area -maximum of 70% of the gross area and
 Non- saleable area minimum of 30% of the gross area for the utilization
of (a) Parks/Playgrounds; (b) Community Facilities and (c) Circulation
System
97. Developer - is the person who develops or improves the Subdivision project or
condominium project for an in behalf of the owner
98. Low Density - means that the land is subdivided into big parcels within tower
lots.
99. Amenities, in real estate development - is

 anything that adds to one's comfort and convenience
 a tangible and intangible features that enhance or adds value to a real
estate
100. Amenity- benefits or other attractions of property such as view, pride of

Ownership, fireplace and others.
101. Improved Land- refers to land

 which construction or development work has been initiated or completed
 improved by roads, sewage and water lines, shell cabins, houses,
outbuildings, etc.
102. Improvements- refers to

 a change or addition to land or real property to make it more valuable,
example sewer, fence, roads, etc.
 buildings, structures and other things permanently attached to the land
 a valuable addition made to a property or an amelioration to its condition,
amounting to more than a mere repair or replacement of parts which
involves capital expenditures and labor to enhance its value, beauty or
utility or adapt t for new or further purposes
103. Buffer Strip-refers

 to a strip of land located between two types of land use areas, i.e.
separated between residential and industrial
 to a parcel is unimproved except for landscaping and its primary function
is lessen friction resulting from two incompatible or inharmonious land
uses
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104. Corner Lots-refers to the lot with two streets in front of it. It is more valuable
than interior lots.
105. Covered Parking refers to the garages, carports, or underground parking

facilities.
106. Perimeter- is the outer boundary of an area.
107. The approved subdivision development permit shall be valid only for three ()
years from the date of its issuance. (HUDCC Resolution No. 725, Series of
2002)
108. Party Wall - a wall erected on the line between two adjoining lots owned by
both parties and used by each for his own benefit.
109. Plans and Specifications- Plans includes all the drawings pertaining to
development under consideration like: the building. the mechanical and the
electrical drawings and the like. Specifications includes the written instructions
workmanship, style, fabrication, colors and finishes which supplement the
details appearing on the working drawings.
110. Raw Land- refers to unimproved or undeveloped lands.
111. Row House - refers to a series of individual homes having architectural unity
and a common wall between each unit.
112. Maximum number of row houses per block or cluster shall not exceed twenty
(20) units but shall not go beyond 100 meters in length.
113. Planned Unit Development (PUD) - refers on how the individual unit or
cluster or condo or townhouse units are arranged or situated on the planning
development of the site. It can determine the optimum number of units that will
give the best return on investment aside from aesthetic geologic safety and
other considerations.
114. Setback- the distance from the curb or other established line which no
building can be erected.
115. Urbanized Land - refers to land located in the fringes of built-up communities
which has the provincial characteristics but is favored with metropolis utilities,
facilities and amenities.
116. Key Lot - refers to a lot with direct access to any street or highway
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117. Zoning normally establishes land- use districts and provided for different
restriction within each districts. Local Zoning Ordinance can establish heights
restrictions on buildings, it prevents decline in property values within a certain
zoning district and it often used to separate incompatible land uses.
118. Linkage- refers to the proximity of a parcel of land to a supporting land use.
119. Registration of mortgage involving subdivision projects can only be effected

when the deed is accompanied by a permit to mortgage issued by Housing and
Land Use Regulatory Board (HLURB).
120. License to Sell - is a document granting authority to any registered

Owner/developer to sell lots or units within an approved subdivision or
condominium project and providing the duties and obligations of said
owner/developer. Likewise, it is the document to be checked before Buying
subdivision lot.
121. The powers and functions of the Housing and Land Use Regulatory Board in
regulating subdivision and condominium projects are partially devolved to the
Local Government Units (LGUs).
122. The Housing and Urban Development Coordinating Council (HUDCC) -

 is the body which formulates the policies and objectives as well as the
over-all strategies of the country 's national shelter program
 It also sets the valuation guidelines for socialized housing
123. Townhouses- refer to series of individual homes having architectural unity

and common wall between each unit.
124. Dwelling Unit- refers to a structure designed for use as residence.
125. Maximum length of block is 400 meters. Blocks exceeding 250 meters shall
be provided with a two (2) meter alley approximately at mid length.
126. Rights/Remedies of Buyers, Developer/owner failed to develop the project

according to the approved plans and within the period of completion
a. Obtain 100% refund of the total amount paid including the amortization
legal interest but excluding delinquency interest or penalty
b. Non-forfeiture of its installment payments and
c. Suspend the amortization payments
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127. Utilities – Refers to the basic service system required by developed area,
such: telephone, electricity, water, gas, and the like.
128. Utility easements - are usually gross easements running over or under the
property.
129. Major Road – is a street or road linking the site and serves as the main traffic
artery within the project site and traverse the longer axis of the property. Minor
Road – refers to a road which main function is to provide direct access to lots
and other activity centers.
130. Collector Road – is a street or road that services pedestrian/vehicular traffic

from minor roads leading to major roads, Service Roads – are roads that
provides for the distribution of traffic among individual lots and activity centers.
131. Alley – is a three (3) meter wide is a three (3) meter wide walkway which
shall be used to break a block and to serve pedestrians and for emergency
purposes it shall not be used as access to property.
132. Block – is a parcel land bounded on the sides by streets or alleys or

pathways or other natural or man-made features and occupied by or buildings.
133. The approved preliminary subdivision development plan shall be valid only
for 180 days from the date of its approval.
134. Minimum lot area requirement for subdivision development

Type of Housing Economic socialized
a. Single Detached 72 sqm 64 sqm
b. Duplex/Single Attached 54 sqm 48 sqm
c. Rowhouse 36 sqm 32 sqm
135. Minimum floor area for open market housing and medium cost housing
a. Open Market Housing – 42 square meters
b. Medium Cost Housing – 30 square meters
136. Dwelling types:

a. Single Detached – a dwelling unit completely surrounded by yards
b. Single Attached – a dwelling unit with one side attached to a firewall
c. Duplex – dwelling units containing two (2) separate living units each
which is separated from another by a firewall and provided with
independent access
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d. Row house – dwelling units containing 3 or more living units designed in
such a way that they about each other and are separated from each
other by a firewall each other and are separated from each other by a
firewall each unit provided with independent access
137. The subdivision or condominium project development shall be completed

within one (1) year from the issuance of the License to sell. A request for
extension can only be granted under the following cases – when its non-
completion was caused by:
 Fortuitous event
 Legal order or
 Such other reasons that HLURB may deem fit/proper
138. Minimum right of way (ROW) for Roads
Type of Road Under PD 957 Under BP 220 and RA 7279
Major Road 10 meters 10 meters
Minor Road 8 meters 6.5 meters
Motor Courts 6 meters -
139. Minimum lot area for subdivision development
Type of Housing Open Market Medium Cost

1. Single Detached 120 sqm 100 sqm
2.Duplex/Single Attached 96 sqm 80 sqm
3. Rowhouse 60 sqm -
140.
Minimum lot frontage of open and medium cost housing projects
Types of Housing/Lots Frontage size
1. Single Detached
a. Corner Lot 12 meters
b. Regular Lot 10 meters
c. Irregular Lot 6 meters
d. Interior Lot 3 meters
2. Duplex/Single Attached 8 meters
3. Rowhouse 4 meters
141. Minimum selling price for single-detached unit shall not exceed forty percent
(40%) of the maximum selling price of house and lot package.
142. Open Market- refers to the housing project where house and lot package has
a minimum selling price of above P2.0 Million.
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143. Maximum Selling Price of house and lot packages
Socialized Housing (RA 7279)

 Low Cost level 1A P450,000 and below
Economic Housing (BP 220)
 Low Cost Level 1B P451,000 to P750,000
 Low Cost Level 2 P751,000 to P1.250M
 Low Cost Level 3 P1.251M to P4.0M
Medium Cost Housing (PD 957) Over P3.0M to P4.0M
Open Market Over P4.0M
144. Executive Order No. 90 of President Aquino – created the Housing and
Urban Development Coordination Council (HUDCC). Executive Order No. 71 of
President Ramos - define the role of HLURB pertaining to the devolution of
approval of subdivisions plans to the local government units. Jurisdiction for
adjudication of Buyers’ complaints against subdivision developers is with the
Housing and Land Use Regulatory Board.
145. Any alternation in the approved plan relating to roads, open spaces, facilities
and other forms of development requires prior approval form the LGU (before
HLURB) and written consent from Homeowner’s association. The realty tax on a
subdivision lot shall be paid by the Developer without recourse to the Buyer for
as long as the title has not been transferred, the realty tax shall be paid by the
buyer starting the year following the actual possession of the property.
146. In a joint venture, the stipulated percentage of sharing between the

landowner and the Developer is implemented by sharing of sales proceeds or by
allocation of lots.
147. The areas reserved for parks, playgrounds and recreational areas of a
subdivisions projects are non-alienable public lands.
148. Urbanized area – refer to sites and lands which considering present
characteristics and prevailing condition display marked and great potential of
becoming urban areas within the period of five (5) years.
149. Under DILG Memorandum Order No. 15-2002, the time for processing and
action on application for approval of subdivision plan is 30 days.
150. PD 953 is the law requires every owner of an existing Subdivision to plant
trees in the designated areas.
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151. The Developer/Owner shall only be relieve from compliance of PD 953 upon
issuance of a Certificate of Completion by the HLURB and upon receipt by the
local Government unit concerned of the Deed of Donation for the Road Lots and
open spaces duly executed in favor of the Homeowners Association.
152. Mr. Dionisio upon due notice, stopped payment of his regular monthly
amortization because of the subdivision owner’s failure to develop the
subdivision. His payments already amounted to P780,000, P20,000 of which are
payment of penalty and P30,000 as interest, how much will he receive as
provided by PD owner will agree with 8% interest, how much will he receive as
provided by PD 957?
Total Payments made P780,000
Add: Interest Paid 30,000
Legal interest of 8% P780,000 62,000
Less: Penalty interest ( 20,000)
Total Amount to be received P852,400
153. When the subdivision project is without access to any existing public road,
the developer should secure a right of way (ROW) which should be developed
and maintained in conformity with the existing laws like : Water Code, NPC for
transmission lines, PhilVOLCS, LGUs, etc.
154. The roads, alleys, sidewalks and playground shall be donated by the
developer to the LGU wherein the project is located and it shall be mandatory or
obligatory for the LGU to accept it. Though, may be donated to the
Homeowner’s Association with the consent of the LGU. And no portion of the
area donated shall be converted to any other purpose unless approved by
HLURB.
155. Dealer owner/developer shall be required to file an adequate performance

bond approved by HLURB to guarantee the construction and maintenance of
the roads, gutters, drainage, sewerage, water systems, lighting system and full
development of the project.
156. Owner or developer of a subdivision project or condominium project shall

initiate the organization of a homeowner’s association among the buyers and
residents of – the project for the purpose of promoting and protecting the mutual
interest and assist in their community development.
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157. Subdivision owner/developer shall not change or alter the roads, open
spaces, infrastructures, facilities for public use and/or other forms of subdivision
development as contained in the approved subdivision plan and/or represented
in its advertisements without written permission from HLURB and the written
conformity or consent of the duty organized homeowner’s association or the
majority of the lot buyers in the subdivision, if there is no organized
homeowner’s association.
158. Subdivision developers are required at least 30% of the gross area of the
projects, inclusive of road, alleys and other service areas, for part and recreation
in accordance with PD 1216. The following are the minimum percentage of
gross area for the park:
Type of subdivision Development Density (Lots/has.) % of Park Development
20 & below 3.5%
21-25 4.0%
26-35 5.0%
a. Open Market 36-50 6.0%
51-65 7.0%
Above 65 9.0%
150 & below 3.5%
151-160 4.0%
161-175 5.0%
b. Economic and 176-200 6.0%
Socialized 201-225 7.0%
Above 225 9.0%
159. General Steps in the development of a subdivision project

a. Verification of the land classification in the Tax Declaration
b. Secure DAR Clearance that such land is “not tenanted”, if classified as
agriculture land
c. Apply conversion of land use from agricultural to residential
d. Once conversation clearance is secured, Surveyor or Geodetic
Engineer for the relocation and topographic survey and to subdivide
the land or preparation of the survey plan.
e. Owner or Surveyor submits the Survey Plan to the Planning Board or
municipal Board or HLURB for approval
f. Submit approved Survey Plan to the Bureau of Lands for approval as
to the correctness of the technical descriptions of the subdivided lots
g. Secure Certificate of Registration and License to sell from HLURB
h. Submit Approved Survey Plan and certificate of Registration and
license to sell to the Office of the Register of Deeds where the land is
located for Segregation of Title
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i. Subdivision Development and
j. Marketing and Sales
160. A Developer/owner who as Dealer violated the provisions of PD#957 and its
implementing rules and regulations and who failed to register their project shall
be liable for: a) Administrative Fine of not more than P10,000 and b) Penalties of
a fine or not more than P20,000 and or imprisonment of not more than 10 years
upon conviction. In case of corporations, partnerships, cooperatives, or
associations the President, Manager or Administrator or the person who is in
violations of PD#957 and the related laws, rules and regulations being
implemented and enforced by HLURB.
161. In memorial parks, the proof of ownership is the Certificate of Ownership

which covers the right to a perpetual use of the burial plots and its perpetual
care. Before operating a memorial park a Certificate of Registration and License
to sell should first be secured from HLURB. Once the Memorial Park project is
registered and a license to sell is issued, the developer can start to operate a
Memorial Park.
162. The approved preliminary memorial park/cemetery plan shall be valid only
for 180 days. The final approval/development permit shall be valid for a period of
Three (3) years (previously 2 years) the same with subdivision and
condominium. The Owner/Developer can lease or sell the disposable memorial
plots onlu upon securing a license to lease/sell from HLURB.
163. Memorial Park – means a privately-owned cemetery with a systematic

supervision and maintenance and where park-like atmosphere is of outstanding
quality.
164. Cemetery - means a public or private land used for the burial of the dead and
other uses indicated for cemetery purposes.
165. Perpetual Lease - means lease of land with no limitation as to time. Burial
Rights – means the privilege given to an individual by the owner of a piece of
land to utilize the same, under certain terms and conditions as agreed upon by
the parties for burial purposes.
166. Memorial – means a monument, market, tablet, headstone, tombstone,

private mausoleum or tomb for family or individual use. Monument – means a
tombstone, or memorial of concrete, granite, marble or other durable stone
extending above the surface of the ground, usually with decorative urns or
symbolic sanctuary.
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167. Documentary requirements for memorial park development
 DAR Conversion Clearance
 DAR Certification that the land is not tenanted
 Barangay Clearance were the property is situated
 City or Municipal Clearance were the property is located
 Locational Clearance from the HLURB
 ECC Clearance from the Department and
 Prior approval from the Department of Health
168. Administrative and criminal Penalties for violating Executive Order No. 648
or the Memorial Park/Cemetery Development laws, rules and regulations
a. For Owner or Dealer who Lease/sells any memorial park/cemetery plot
without valid license to lease/sell from HLRB shall be penalized by a fine
of not more than P10,000
b. For Broker or Dealer who engages in business or leasing/selling memorial
park/cemetery plots without valid certificate of registration from HLURB
shall be penalized by a fine of not more than P10,000 and
c. Criminal Penalties shall suffer the penalties as provided by law
169. Each subdivision shall have at least an operation deep well and pump sets
with sufficient capacity to provide average daily demand (ADD) of 150 liter per
capital per day to all homeowners.
170. Magna Carta for Homeowners and Homeowners Association –

 The law that governs the rights of homeowners
 The articles of incorporation of homeowners association should be
registered with Housing and Land Use Regulatory Board
 It provides that simple majority of the homeowner’s association member
means 50% plus one (50% + 1)
 It provides the member’s Duties of the homeowner’s association
 Pay membership fees, dues and special assessments
 To attend meetings of the association
 To support the projects and activities of the association
 It provides that a Director of the homeowner’s association may be
removed for caused provided in the association’s by laws and by a
petition signed by simple majority of the homeowners in goodstanding
 That the board of homeowners association may be dissolved by a petition
signed by at least 2/3 of the association members
 A person who intentionally or by gross negligence violates any provision
of the Magna Carta of the homeowners shall be fine of not less than
P5,000 but not more than P50,000
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171. Land Use planning – is the national approach of allocating available land
resources as equitably as possible among competing user group.
172. BP#220 –
 Is the law governing the Economic and Socialized Housing Projects
 It provides that no subdivision or condominium. Intended for economic
and socialized housing shall be sold unless it has been registered and
issued a License to Sell by HLURB
 Economic Housing is a type of housing project provided to average
income families
 It provides the minimum right of way for a major road is 8 meters and
the minor road is 6.5 meters.
173. Area allocation of common facilities of Economic and Socialized housing

Density (No. of Lots/Dwelling Unit)per has Allocation % Gross Area
150 and below 1.0%
151-225 1.5%
Above 225 2.0%
174. Area allocation of parks and playgrounds for Economic and Socialized
Housing
Density (No. of Lots/Dwelling Unit)per has Allocation % of Gross Area
150 and below 3.5%
151-160 4%
161-175 5%
176-200 6%
201-225 7%
Above 225 95
175. The minimum floor area requirement for single family dwelling shall be: 1) 22
square meters for economic housing and 2) 18 square meters for socialized
housing either Single Detached or Duplex/Single Attached or Rowhouse.
176. A multi-Family Dwelling is a dwelling on one (1) lot containing separate living
units for 3 or more families with common access, services and use of land.
177. BP 220-
 Law governing the economic and socialized housing projects
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 Provides that no subdivision or condominium intended for economic and
socialized housing shall be sold unless it has registered and issued a
License to Sell by HLURB
178. Economic Housing – a type of housing project provided to average income

families.
179. Shell House – a habitable dwelling unit which meets the minimum
requirement for a housing core with the additional components such as exterior
walls, plumbing, floor and electrical wiring for the unit.
180. For economic and socialized housing project, the maximum block length is
400 meters. However, block exceeding 250 meters shall provide a 2 meters
alley approximately at mid-length
181. Subdivision projects under BP 220 with selling price of P451, 000 to P3.0M
are required to avail the income Tax Holiday. (Omnibus Investment Act)
182. A Multi-Family Dwelling – a dwelling one (1) lot containing separate living
units for three (3) or more families with common access, services and use of
land.
183. Complete House – a habitable unit which meets the minimum requirements
for a shell house which includes as part thereof windows, doors and partition
walls for separating functional area.
184. Firewall – a wall which subdivides a building to resist or repel the spread of
fire by starting at the foundation and extending continuously through all storey or
above the roof.
185. Republic Act 7279 –

 Refers to the Urban Development and Housing Act (UDHA) of 1992
 It provides that developers of subdivision projects are required to
develop at least 20 % of the project for socialized housing or land
equivalent to 20% of existing subdivision projects at the option of the
developer
 it covers all lands in urban and urbanized areas including areas for
 priority development
 zonal improvement site
 slum improvement
 resettlement sites
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 it purpose is to uplift conditions of underprivileged and homeless citizens
areas and in resettlement area by making available to them decent
housing and affordable cost where the house and lot package is not
more than P450,000 basic services and employment opportunities.
186. Qualifications of Beneficiaries of the Socialized Housing Program

 must be a Filipino Citizen
 must be underprivileged and homeless
 must not own any real property whether in urban or rural area and
 must not be a professional squatter or a member squatting syndicate
187. Modes acquiring of land for purposes of UDHA

 community mortgage
 negotiated purchase
 land assembly or consolidation
 land banking
 donation to the government
 joint venture agreement
 land swapping and
 expropriation except foreclosure and accretion
188. Socialized Housing – refers to housing programs/projects covering houses

and lots and home lots only undertaken by the government or the private sector
for the under privileged and homeless citizens which includes sites and
services.
189. The 20% for socialized housing applies only to subdivision projects and
proposed expansion of existing subdivision projects excluding condominium
projects.
190. Modes of compliance for projects selling house and lot package
a. land equivalent to 20% of the total area of the main projects and housing
units equivalent to 20% of the aggregate of all housing units of the
subdivision projects or
b. a socialized housing project equivalent to 20% of the total project cost
191. Priorities in the acquisition of lands for socialized housing

a. Those owned by the government or any of its political subdivision,
instrumentalities or agencies including GOCCs and their subsidiaries
b. Alienable lands of public domain
c. Unregistered or abandoned and idle lands
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d. Those with declared Areas of Priority Development (APD), Zonal
Improvements Program (ZIP) sites and Slum Improvement and
resettlement Program(SIRP) sites and Bagong Lipunan Improvement of
Sites and Services (BLISS) sites which have not yet been acquired and
e. Privately – owned lands
192. Urbanized Land – refers to land located in the borders of built-up

communities which has the provincial characteristics but favored with metropolis
utilities, facilities and amenities. Also refers to sites and land areas which
present characteristics and present conditions display a marked and high
probability of becoming urban lands within the period of five (5) to ten (10)
years.
193. For the purpose of socialized housing, GOCC and foreclosed properties shall
be acquired by the LGUs or by the National Housing Authority primarily through
negotiated purchase, provided; the qualified beneficiaries who are actual
occupants of the land shall be given the “right of first refusal”.
194. Right to First Refusal – refers to a contractual right granted to the tenant by
the property owner which gives the holder the right (tenant) an option to buy the
property from the owner within specific time and specified conditions before the
property owner shall sell it to third parties.
195. Elements for tenant’s right-of-first refusal under Urban Land Reform Law (PD
1517)
 Land is located in the Urban Land Reform area
 Tenants are legitimated tenants for at least ten (10) years and
 The property owner is selling the property
196. The owner of an apartment located in an Urban Land Reform area sold the
property to an Investor who intended to convert it into townhouse project. The
tenants who have been renting their units for the last 15 years brought a suit to
annul the sale because the previous owner did not give them the “right of first
refusal” Will the tenants complaint prosper?
 No, the tenant’s complaint will not prosper because the “right of first
refusal” applies only to tenants of land on which they constructed their
houses and not to tenants of apartment/townhouses properties.
197. Land Assembly – acquisition of lots or varying ownership either through

negotiated purchase or expropriation and other modes for the purpose of
planning and development unrestricted by individual property boundaries.
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198. Land Banking – acquisition of land in advance of actual need for the purpose
of acquiring lands and existing use value and disposing them in a manner which
would influence land price formation and promote planned development.
199. Land Exchange – process of bartering land for another piece of land and/or
share of stocks of equal value in a government or quasi-government
corporation.
200. Tenant – refers to the rightful occupant of land and its structures but does
not include those whose presence on the land is merely tolerated and without
the benefit of a contract, those who enter the land by force or deceit or those
possession under litigation.
201. Development of New Use Right – refers to the right to use and/or develop
land and improvements thereon including putting them to a more intensive use,
conversion to a more profitable use, increasing density and the like.
202. An uninhabited and underdeveloped parcel of land, owned and earmarked

by the LGU as future site of a new government building is exempted from the
coverage of Urban Development and Housing Program (UDHP).
203. Eviction or demolition of information settlers (squatter) is allowed under

RA#7279 when –
 Persons or entities occupy danger areas such as: esteros, railroad tracks,
garbage dumps, riverbanks, shorelines, waterways, and other public
places like, sidewalks, roads, parks, and playgrounds
 Government infrastructure projects with available funding are about to be
implemented or
 There is a court order for eviction and demolition
204. Government approval on the development of agricultural land into
subdivision projects
 Conversion permit to DAR
 Environmental Compliance Certificate from DENR
 Certificate from Department of Agriculture that land is no longer suitable
for Agriculture
 Subdivision Plan approval and development permit from Local
Government Unit concern where the land is located
 License to Sell from Housing and Land Use Regulatory Board
 Approval of Subdivision plan and field survey returns by the Land
Registration Authority or Land Managements Bureau
 Segregation of titles from the Register of Deeds
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205. RA 4726 – refers to the Condominium Act.
206. Condominium – refers to

 A building or group of buildings in which units are owned individually and
the structure, common areas and facilities are owned by the owners in a
proportionate undivided basis.
 An arrangement of ownership where tenant in a complex of multiple
dwelling units holds full right and ownership to his/her unit and a joint
ownership in the common grounds or areas
 An interest in real property consisting of absolute ownership of a unit in
residential, commercial or industrial building and joint or common
ownership in the land on which the building was erected and in other
common areas of the condominium project or complex
 To a building which each individual unit was held in separate private
ownership and all floor space, facilities and outdoor areas used in
common by all tenants are owned, administered and maintained by a
corporation or condominium corporation created by law
 A vertical subdivision
 Individually owned parcel that includes a share of common areas
207. RA# 4726 provides that no owner/developer can sell any subdivision lots
(housing, Memorial Park, farm lot and other subdivision projects) or
condominium units without first registering and securing the License to Sell from
the HLURB.
208. Condominium Project – refers to the entire parcel of real property divided in
condominium including all structure thereon.
209. Forms of condominium projects

a. Residential – refers to a high-rise or medium-rise building use for
dwelling or habitation purposes
b. Industrial – refers to a single-detached, apartment type, medium-rise and
high-rise factories or warehouse
c. Commercial – refers to offices, stores, shops, restaurants, theaters,
concessionaries, marts and malls, etc and
d. Resorts – refers to a project that has its own recreational facilities like:
beaches, golf course, club house, etc.
210. Condominium Unit – refers to a part of the condominium project intended for
any type of independent use or ownership including one or more floors in a
building or buildings and such accessories as may be appended thereto.
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211. Common Facilities – refers to Facilities or structures intended to serve
common needs and for the benefit of the community, such as: schools, places of
worship, hospital, health centers, Barangay centers and other similar facilities or
amenities.
212. Condominium Areas – refers to the entire project consisting of land, building
structures, weight bearing walls, columns and beams, stairways, halls,
elevators, amenities in a condominium project and electrical, water and
plumbing systems except all the units separately granted, held or reserved. The
walls between two condominium units are normally considered to be common
elements. Common areas in condominium project shall remain undivided and
there shall be no judicial partition thereof.
213. Dwelling Unit –

 Is a structure with one or more habitable rooms designed or intended
for use by one or more individuals as an independent and separate
housekeeping establishment for kitchen and sanitary facilities
provided for the exclusive use of individual(s) with a private entrance
either from the outside or from a common hallway or stairway inside
the building
 Refers to a structure designed for use as residence
 It has one or more rooms that may be used as a residence, each unit
having sleeping, cooking and toilet facilities
214. Condominium Certificate of Title (CCT) – proof of ownership issued to

condominium unit owner(s).
215. Master Deed with Restriction – a statement defining the limitations of

ownership of condominium unit which binds all unit owners and it is being
registered at Registry of Deeds.
216. 60% Filipino, 40% Foreigner – the sharing percentage between foreigners to
Filipino investments pursuant to the Condominium Act. Aliens can purchase
condominium units not exceeding 40% of the total condominium units available
for sale in a condominium project.
217. Seller of subdivision packaged and condominium units should register the
sales or conveyances at the Register of Deeds of the Province or City or
Municipalities in Metro Manila where the property or the project is situated within
180 days from execution thereof.
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218. The approved preliminary subdivision development plan of condominium
project shall be valid only for 180 days from the date of its approval.
219. The approved condominium development permit shall only for three (3)
years from the date of its issuance.(HUDCC Resolution No. 725, Series of 2002)
220. The condominium project shall be completed within one (1) year from the
issuance of the License to Sell. There are grounds/reasons to grant extension to
complete condominium project development.
 Fortuitous event
 Legal order or
 Other reasons that HLURB may deem fit/proper
221. Minimum floor area for condominium projects

a. Single Occupancy Units
 18 square meters or
 12 square meters under the following conditions:
 Units are intended for students/employee/workers
 Project is within highly urbanized areas
 There are provision for common basic facilities and
 Facilities or support facilities shall be indicated in the master
deed or contracts to sell
b. Family Dwelling Units
 Family condominium units – 36 square meters and
 Open market and medium cost condominium projects – 22 square
meters
222. Distinguish Traditional Ownership from Condominium Unit Ownership

Nature Traditional Ownership Condominium Unit
a. Evidence of Ownership Transfer Certificate Condominium Certificate of
(Fee Simple) Of Title Title
b. Right to Buy Foreigners are Foreigners can buy not more
Generally than 40% interest in the
Disqualified to buy Condominium Project
c. Extent of Ownership Owner is the absolute Unit owner is the absolute
owner of the exterior owner of the interior but only
and interior surface of a co-owner of the exterior
the house/building surface
223. Any transfer or conveyance or a unit or an apartment, office or store or other

space shall include the transfer or conveyance of the undivided interest in the
common areas or the membership or shareholdings in the condominium
corporation.
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224. Rights of the Condominium Unit Owner
a. Absolute ownership of his/her unit
b. Co-ownership of the land and common areas in proportion to the
unit(s) owned
c. Exclusive easement of the air space within his/her unit
d. Non-exclusive easement to common areas for the purpose of ingress
and egress
e. Right to repair, paint or redecorate the interior surfaces of his/her unit
f. Right to sell, lease or mortgage his/her unit and
g. To vote and be voted upon during meetings of the Condominium
Corporation
225. Obligations of the Condominium Unit Owner
a. Pay the realty tax of his/her unit
b. Share the realty on common areas
c. Pay for the insurance of his/her unit
d. Share the insurance in the common areas
e. Comply with use restrictions
f. Pay condominium dues and assessment and
g. Give “Right of first refusal” to Condominium Corporation or other unit
Owners in case of sale or lease of his/her unit, if required in the Master
Deed
226. Extent of Unit Owners interest in the common areas
a. Equal share, in the absence of any provision in the Master Deed or
b. Any of the following alternatives subject to the provisions of the Master
Deed:
 Equal sharing
 Sharing based on value or
 Sharing based on area
227. No conveyance of Condominium or part thereof, subsequent to the original
conveyance thereof from the owner of the project shall be registered unless
accompanied by a certificate of the management body of the project that the
conveyance is in accordance with the provisions of the declarations of restrictions.
(Section 18, RA#7899)
228. In cases of condominium projects registered under the provisions of the

Spanish Mortgage Law or Act 3344 as amended, the registration of the deed of
conveyance of a condominium shall be sufficient if the Register of Deed shall keep
the original or signed copy thereof, together with the certificate of the management
body of the project and return a copy of the deed of conveyance to the
condominium owner duly acknowledge and stamped by the Register of Deeds in
the same manner as registration of conveyance of real property. (Section 18, RA#7899)
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229. Advantage in owning condominium unit
a. It enhances affordability by fractionalizing the land and building cost
b. Economical in land space, like families holding title to contiguous land
say 40, 50 and 60 sqm may obtain adequate housing by consolidating
their land and constructing a condominium thereat
c. Facilities and services cost will be less to build and maintain
d. Retention of the psychological and economic concepts of family house
by exclusive ownership of a unit while holding co-ownership rights in the
undivided common areas and facilities
e. Closer neighborhood ties
f. Maximum land efficiency
g. Better security
h. Accessibility to the amenities of the city
i. Condominium unit owner lives near the place of his/her work whereby
saving time and money
j. Enhances affordability
k. Easy to maintain and
l. Wider market for it can be sold to foreigner subject to limitation
230. Contents of the Master Deed or Enabling deed
a. Description of the land (attaching a survey plan)
b. Description of the building(s) as to:
 Number of storey and basement
 Number of units and
 The accessories (attaching the technical plans)
c. Description of common areas and facilities
d. Description of interest to be acquired by the units buyers and the
common areas
e. Deed of Restrictions
f. Certification of the registered property owner that he/she consents to the
registration of the Deed if he/she is not the one executing the Master of
Deed
g. Purpose for the building and units are to be used and
h. Annexes like and surveys plan and diagrammatic floor plan of the
building or each unit, its location and appropriate dimensions
231. Contents of the Deed of Restrictions in condominium projects
a. Formation of the condominium corporation which serve as the project
management body
b. Procedures and guidelines on maintenance of units and common areas
c. Rules and restrictions on the occupancy and usage of units and common
areas
d. Provisions for insurance coverage
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e. Provisions for assessments and fees
f. Realty taxes and assessments on units and common areas
g. Rights of assignees, mortgage, tenants and occupants of units
h. Penalty provision and
i. Procedures in amending restrictions
232. Conditions for amendments of revocation of Enabling or Master Deed of
condominium projects
a. Can be made upon registration of an instrument executed by simple
majority of the registered owner of the property
b. If condominium project is exclusively for residential or commercial use,
simple majority shall be based on per unit of ownership
c. In case of mixed use, simple majority shall be based on floor area of
ownership
d. Prior notifications to all registered owners should be done and
e. Any amendment or revocation already decided by simple majority of all
registered owners shall be submitted to HLURB and the City/Municipal
Engineer for approval before it can be registered
233. DOJ Opinion No. 175, Series of 1973-
 Pertains to Foreign Investment of Condominium in the Philippines
 Opined that where the condominium corporation is a Filipino corporation
which owns the land in which the condominium project is situated, the
Condominium Act (RA 4726) allows transfer to an Alien of “interest in a
unit” of the said condominium and the “undivided interest” in the
common areas of the condominium project
 Provides that a corporation which is 100% owned by a foreign firm of
multinational corporation can establish a condominium corporation and
put up a condominium project on leased land for not more than 10 years
 Foreigner or Multinational Corporation may own buildings which were
constructed on a rented lands and the lease does not exceed 10 years
234. When common areas in the condominium project are held by the owners of
separate units as co-owners, no condominium unit therein shall be conveyed or
transferred to persons other than Filipino Citizens or corporation of at least 60% of
the capital stock which belong to Filipino citizens except in cases of hereditary
succession. However, when the common areas are held by a corporation, no
transfer or conveyance of a unit shall be valid if the concomitant transfer of the
appurtenant membership or stockholding in the corporation will cause the alien
interest in such corporation to exceed the limits imposed by existing laws.
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235. Instances on partition of condominium project
a. Damage or destruction rendered a material part thereof unfit for use and
three (3) years after the damage or destruction it has been rebuilt or
repaired substantially to its state prior to the damage or destruction
b. Damage or destruction rendered ½ or more of the units untenantable
and condominium owners holding an aggregate of more than 30%
interest in the common areas opposed to repair or restoring of the
project
c. Projects has been in existence in excess of 50years , it is obsolete and
uneconomic and condominium owners holding an aggregate of more
than or remodeling or modernizing of the project
d. Projects or material part thereof has been condemned or expropriated
and no longer viable or the condominium owners holding an aggregate
of more than 70% interest in the common areas opposed to continuation
of the condominium regime after expropriation or condemnation of a
materials proportion thereof
e. Conditions for partition by sale set forth in the declaration of restriction
was duly registered in accordance with the terms or the provisions of
RA#7899 have been met or complied
236. When the enabling or materials deed provides that the land included within a
condominium projects are to be owned in common by the condominium owners, the
Register of Deeds may cancel the certificates of title of the property and issue a
new one in the name of said condominium owners as pro-indiviso co-owners
thereof at the request of all the condominium owners and upon-surrender of all their
condominium owner’s copies. (Section 18, RA#7899)
237. Factors to consider in pricing structure of condominium projects development
which shall depend on the ultimate cash flow projections and budgetary
requirements which includes:
 Acquisition cost of rawland
 Development Cost
 Administrative expenses
 Taxes, license and insurances
 Interests and other costs of money
 Contingencies and miscellaneous expenses
 Percentage of marginal profit
 Current and appraisal fair market value prevailing in the vicinity
 Type of development and location factor, not only of the project but
including the neighboring projects and improvements and
 Marketing strategies
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238. In an action for partition of a condominium corporation on the ground that the
project of a material part thereof, has been condemned or expropriated and if the
courts find that the conditions under RA#7899 of in the declaration have not been
met, the latter (court) may decree or order a reorganization of the project declaring
which portion(s) of the project shall continue as a condominium project, the owners
thereof and the respective rights of the remaining owners and the just
compensation. If any that a condominium owner may be entitled to due deprivation
of his/her property. Upon receipt of the decree or order, the Register of Deeds shall
enter and annotate the same on the pertinent or related certificate of title. (Section 18,
RA#7899)
239. Condominium unit owner can claim as deduction in his/her Income Tax Return
the interest payment made on the loan to finance the acquisition of the
condominium unit and real property taxes payment
240. In case of conflict between the provisions of the Articles of Incorporation of the
Condominium Corporation and the Master Deed, the latter (Master Deed) prevails
on the reasons that:
 The Master Deed gives birth to the condominium project and
 Condominium Corporation should prove that its Articles of Incorporation is
not in conflict with the Master Deed
241. Condominium Corporation –
 Is a non-stock, non-profit corporation consisting of condominium unit
owners
 The management body of the condominium project it use and owned
 A juridical person organized for the purpose of
 Acting as the management body of the condominium projects and
 Holding the title of the land
 A juridical person which life is co-terminus to the existence of the
condominium project
 It should be registered with the Securities and Exchange Commission
(SEC) including its Articles in Incorporation that contains the primary and
secondary purposes of thereof
242. General Rule: Condominium Corporation during its existence shall not sell,
exchange, lease or dispose the common areas. However, it may sell, exchange,
lease or dispose the common areas owned or held by it with the approval of simply
majority (50% plus 1) votes of all the registered unit owners.
243. Membership in a condominium corporation regardless of whether it is stock or
Non-stock Corporation shall not be transferable separately from the condominium
unit of which it is an appurtenance. (Section 18, RA#7899)
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244. When a member or a stockholder ceases to own a unit in the project in which
the condominium corporation owns or holds the common area. He/she shall
automatically cease to be a member or stockholder thereof. (Section 18, RA#7899)
245. Condominium Corporation may be dissolved either voluntarily or involuntarily.
246. Effects of voluntarily and involuntarily dissolution of Condominium corporation
a. Voluntarily dissolution (Section 18, RA#7899)
 The corporation shall be deemed to hold a power of attorney from
all the members or stockholders to sell and dispose of their
separate interest in the project and
 Liquidation of the corporation shall be effected by the sale of the
entire project if the corporation owned the whole thereof, subject
to the rights of the corporation and of individual condominium
creditors
b. Involuntary dissolution (Section 18, RA#7899)
 The common areas held by the corporation shall be transferred
pro-indiviso and in proportion to their interest in the corporation to
the members or stockholders thereof subject to the superior rights
of the corporation creditors by way of liquidation and
 The transfer or conveyance shall be deemed full liquidation of the
interest of the members or stockholders in the corporation
247. Steps in condomizing a property
a. Preparation of a Master Deed with Declaration of Registration and
registration with the Register of Deeds for annotation on the title or
finalization of building plan
b. Organization of a condominium corporation with the project owners as
incorporators
c. Causing the issuance of individual tax declaration and condominium
titles for the units and common areas from the Assessor's Office and the
Register of Deeds.
d. Executive of Deed of Conveyance on the common areas in favor of the
condominium Corporation and
e. Application for registration with the HLURB or procurement of License to
Sell
248. Clapboard – is a type of wood siding in Condominium project of License to sell
projects.
249. RA# 6552 (Realty installment Buyer’s Protection Act: Maceda Law) –
 The law that provides protection to buyers of real estate on installment
payment
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250. Coverage of the Maceda Law Protection
a. All transactions or contracts involving the sale or financing of real estate
on installment basis including residential condominium apartments
b. Where the buyer has paid at least two (2) years or 2 months installments
c. Protection of buyer against onerous and oppressive conditions of the
installment basis
251. Kinds of sale not covered by Maceda Law
a. Sale of Commercial buildings
b. Sale of Industrial lots
c. Sale to tenants under RA#3844 and
d. Installment sales covered by Sale with mortgage and not by Contract to
Sell
e. Sale to Tenants under RA# 3844
252. Rights of buyers in case of default on installment payments
a. To pay without additional interest on the unpaid installment due within the
grace period (one month for every year of installment)
b. To sell or assign the rights to another person
c. To reinstate the contract by updating the accounts during the grace
period and before the actual cancellation of the contract
d. To pay in advance any installment
e. To pay anytime the full the balance of the purchase price without any
interest
f. To have the full payment annotated in the Certificate of Title at the
Registry of Deeds
g. To exercise that right once every five years in the life of the contract and
h. In case of contract cancellation
 To be entitled with a refunded of at least 50% of the installment
payments made
 Plus additional 5% per year beyond the 5 years period but not
exceeding 90% of the total payments made
253. Basis in computing the Cash Surrender Value (CSV)
 Down payments/equity or deposits plus (+)
 Installment payments
 Less (-) paid penalties
254. Allowable grace period is one (1) month for every year of installment
payment.
255. Conditions that should be complied by the subdivision developer to effect
cancellation of contract to sell in case buyer had defaulted
a. 30-day notarial notice of cancellation
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b. Refund of cash surrender value of at least 50% of the total payments
made exclusively of penalty interest
256. Fionah has been paying on installment a subdivision lot since May 1, 2007 up
to December 31, 2013 at P10,500 a month after paying the down payment of
P250,000 to Gillar Reality Development Corporation – a developer. Because of
financial reverses she failed to pay her January 1, 2014 to May 31, 2014
installments and received a legal/notarial notice on the cancellation of her contract.
a. How many months is the grace period of Fionah? - 6 months (May 1,
2007 to December 31, 2013)
b. How much would be the refund or the cash surrender value (CSV) of
Fionah?
Total monthly amortization (P10, 500 x 80 months) P840, 000

Add: Down payments made 250, 000
Total Payments made P964, 000
Less: Penalty -0-
Net payments made P964, 000
CSV Factor refund 55%
Total amount of Refund/Cash Surrender Value (CSV) P462, 000
c. Assuming Fionah had paid monthly installments for 10 years inclusive of

penalties on late payments in the amount of P15,000 aside from the
down payments she made, how much would be the cash surrender
value?
Total monthly amortization (P10, 500 x 120 months) P1,260, 000

Add: Down payments made 250, 000
Total Payments made P1,510, 000
Less: Penalty 15,000
Net payments made P1,495, 000
CSV Factor refund 75%
Total amount of Refund/Cash Surrender Value (CSV) P1,121,250
Note: The down payments, deposits or options of the contract shall be included in computing
the total number of installments made less the penalties on late payments. The law also
provides the minimum refund of 50% of the total payments made where the buyer had paid
at least 2 years of the installments and an additional of 5% per year in excess of 5 year
installment payments. {Section 3 (b) of RA#6552)
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Joint Venture
257. Joint Venture – refers to
 A partnership of the landowner and the developer wherein the former
(landowner) contributes the rawland while the latter (developer)
undertakes and finances all the costs to convert the land into a finished
home site or into a subdivision or condominium project
 It is resorted by the landowner when he/she does not have the funds or
cannot secure financing for the development of the project for his/her
land
 It is an option resorted by the developer to avoid the cost of the site
acquisition
258. in joint-ownership venture foreign investors does not own majority of the lands
and buildings, the scheme of 60%-40% shall be legally feasible as long as the 60%
of the capital stock is owned by Filipino citizens.
259. Obligations of landowner in joint venture
a. Make the title, tax declaration and other documents available to the
developer to enable the latter (developer) to prepare the plans, procure
government approvals and implement the development
b. Not to sell, encumber or dispose the land without the knowledge and
consent of the developer
c. Assign to the developer the lots or units pertaining to the latter in case the
sharing is by allocation of lots or units.
260. Developer have the obligations to undertake at its expense in joint venture
agreement the following:
a. Feasibility study preparation
b. Preparation of plans
c. Relocation, topographic and subdivision surveys
d. Procurement of government approvals
e. Completion of development, utilities prior to the project turn-over
f. Progress report to the landowner
g. Marketing and collection and
h. Remittance of owner’s share, if sharing is from sales proceeds
261. Non-liability clause – a provision in a joint venture agreement which holds the
owner free from any responsibility for any failure of the development.
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262. Sharing Schemes of landowner and developer
 Either pro-rated of the sales proceeds or allocation of developed
lots/units
 % of sharing depends on the value of the rawland and the cost to make
a complete project like: 50-50 sharing if rawland value and the project
cost are the same
263. Safeguards in joint-venture projects or agreements.
a. Developer
 Title verification
 Sound feasibility study
 Annotation of joint venture agreement in the land title
 Phasing of development of big areas/hectarage
b. Landowner
 Verification of developer’s capability and credibility as to
 The audited financial statement
 SEC Registration
 Past and on-going projects (date started and completed)
 Inventory of machinery, equipment and tools
 Pending cases with HLURB, if any
 Credit Check
 Engagement of consultant to
 Ascertain FMV of the land
 Evaluation cost estimate of developer
 Review joint venture agreement
 Monitor and evaluation developer’s compliance with its
undertaking
 Not to allow mortgage of land title to secure financing for
development
 Assignment of lots/units pertaining to the developer should be
based on accomplishment if sharing is by allocation of lots/units
 Inclusion of “ non-liability clause” in contracts with buyers
 Some protective measures in joint venture contract
 Itemization of developer’s undertakings and specifications of
development design standards, materials and workmanship
 Period for finalization of plans and specification, procurement
or approvals and completion of different phase of
development
 Submission of progress reports by developer on the status of
applications for approvals, development, sales and collection
 Percentage and manner of sharing either based on sales
proceeds as to owner’s shares remittance or allocation of
lot/units or assignment of lots/unit based on accomplishment
 Initial selling price and conditions for price increases
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 Penalties of failure of developer to comply with his/her
undertaking within schedule which may include termination of
joint venture contract, improvements already completed shall
accrue to the benefit of landowner without reimbursement to
the developer; receivables from buyers shall accrue to the
benefit of landowner.
 Non-liability clause on developer’s undertaking to be solely
liable for any civil, administrative or criminal liability for
complaints of buyers, death or injury of any person in the
course of development, claims of professional and technical
men, material suppliers, equipment lessors, workers and
laborers and/or violation of pertinent laws.
RESA (RA#9646 and its Implementing Rules and Regulations and PRC
rules
264. Republic Act No. 9646 (RA#9646) or Real Estate Service Act of the
Philippines – the law that
 Regulates the practice of real estate service in the Philippines and
 Created the Professionals Regulatory Board of Real Estate Service
(PRBRES)
265. The Philippine government recognized the vital role of real estate
professionals in social, economic development and progress of the country.
 By promoting the real estate market
 Stimulating the economic activity and
 Enhancing government income from real property based transactions
266. The government had declared the policy:
 To develop and nurture technically competent, responsible and respected
professional real estate service practitioners
 Through proper and effective regulation and supervision
 Whose standards of practice and service shall be globally competitive
and
 Will promote the growth of the real estate industry of the country
267. The implementing rules and regulations (IRR) of RA#9646 shall be interpreted,
construed and carried out in accordance with the policies of the Philippine
government that embodies the legislative intent enacting the said law.
268. Appraiser or Valuer – person who conducts valuation or appraisal and
possesses the necessary qualification, ability, license and experience (QuALE) to
execute or direct the valuation of appraisal of real property.
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269. Assessor or Assistant Assessor – official of the local government unit who
performs appraisal and assessment of real properties including plants, eqipments
and machineries basically for taxation purposes.
270. Real estate developer – refers to
 Any natural or juridical person engaged in the business of developing real
estate development project for his/her or its own account and offering it
for sale or lease
 A person who should be registered and regulated under PD#957 as
amended and BP#220 governed by HLURB
 A person engaged in the development of memorial park, Farmlot
development, housing subdivision and condominium projects
271. Real Estate – refers to the land and all those attached to the land together with
all the additions or improvements above or below the ground either physical or
tangible entity.
272. Real estate development project – refers to the development of land for
commercial, agricultural, residential, industrial, recreational, or institutional
(CARIRI) purposes or any combination thereof but not limited to : tourist resorts,
reclamation projects, building or housing projects whether for individual or
condominium ownership, memorial parks and others of similar nature.
273. Real property – defined to include all the rights, interest and benefits (ribs)
related to the ownership of real estate (land and all those attached to the land
together with all the additions or improvements above or below the ground).
274. The Professional Regulation Commission (PRC) and the duly constituted
government authorities/agencies of the Philippine shall assist in enforcing the
provisions of RA#9646, its IRR and other policies enacted by the PRBRES, PRC
lawyers shall act as prosecutors against illegal practitioners and other violators of
RA No. 9646 and its IRR.
275. The real estate service practitioners are (Key: RE BACAS):
a. Real Estate Broker (REB)
b. Real Estate Appraiser (REA)
c. Real Estate Consultants (REC)
d. Real Estates Assessor (REAs)
e. Real Estate Salesperson(RES)
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276. Real Estate Consultant (REC) – duly registered and licensed natural person
who for a professional fee, compensation or other valuable consideration offers of
renders professional advice and judgment on:
 acquisition, preservation, utilization, enhancement or disposition
(apuedi) of lands or its improvements and
 conception, planning, management and development (co-plan-man-
dev) of real estate projects
277. Real Estate Appraiser (REA) – duly registered and licensed natural person
who for a Professional fee, comprehension or other valuable consideration
performs of renders of offer to perform services on
 estimating and arriving an opinion of real estate values or
 Sets as an expert in arriving opinion of values of real state which shall be
finally rendered by the preparation of an acceptable written form.
278. Real Estate Assessor (REAs) – duly registered and licensed natural person
who –
 Works in the local government unit (LGU) and
 Performs appraisal and assessment of real properties including plants,
equipment, and machineries, essentially for taxation purposes
279. Real Estate Broker (REB) – duly registered and licensed natural person who
for a professional fee, commission, compensation or other valuable consideration
 Acts as an agent of a party in a real estate transaction (SPLEMJO)
 List, advertise, mediate, promote, solicit, offer, negotiate or effects the
meeting of the minds (LAMPSONE) on sale, purchase, lease, exchange,
mortgage or joint venture or other similar transactions (SPLEMJO) on real
estate or any interest therein
280. Real Estate Salesperson (RES) – duly accredited natural persons who-
 Performs service for and in behalf of a Real Estate Broker – who is
registered and licensed by the Professional Regulation Commission (PRC)
 With expectation of a share in the commission, professional fee,
compensation or other valuable consideration
281. Registered and licensed Real Estate Professionals at the PRC under
RA#9646:
 Real Estate Consultant (REC)
 Real Estate Appraiser (REA)
 Real Estate Broker (REB)
282. Every applicant seeking to be registered and licensed real estate service
practitioner shall undergo an examination to be given by the PRBRES.
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283. The licensed Real Estate Broker and the accredited Real Estate Salesperson
who sells housing subdivision, memorial parks, farmlots, condominium projects and
other subdivision development projects should first be registered with Housing and
Land Use Regulatory Board (HLURB) in compliance with section 14 of PD#957 IRR
and Section 21 of BP#220 IRR prior to its engagement in selling subdivision or
condominium projects as well as Real Estate Dealer which includes the developers
and owners of subdivision or condominium projects.
284. Acts constituting the practice or Real Estate Service in the Philippines
a. For real estate brokerage – any of the following acts or service when
perform by any person who is acting in behalf of another person or a client
of in behalf of a Real Estate Broker with an expectation of a professional
fee, commission, compensation or any valuable consideration: (Key:
LAPMSONE)
 Listing
 Advertising
 Mediating
 Promoting
 Soliciting
 Offering
 Negotiating
 Effecting the meeting of the minds of the parties in real estate
transactions-SPLEMJO (Sale, Purchase, Lease, Exchange,
Mortgage, Joint venture and Other similar transactions) on real estate
or any interest therein
b. For real estate appraisal or valuation – any of the following acts or services
when perform by any person with an expectation of a professional fee,
compensation or other valuable consideration:
 Estimate real estate value or
 Render opinion on real estate values or
 Acts as expert on values of real estate
It also refers to the performance of appraisal and assessment of real

properties, including plants, equipment and machineries essentially for
taxation purposes made by an Assessor or Assistant Assessor or its
authorized representative who should be a licensed Real Estate Appraiser.
c. For real estate consultancy – any of the following acts or services when
perform by any person with an expectation of a professional fee,
compensation or other valuable consideration who offers or renders
professional advice and judgment on:
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 Acquisition, preservation, utilization, enhancement or disposition
(apuedi) of land or improvements thereon or
 Conception, planning, management and development (co-plan-man-
dev) of real estate projects.
285. Persons and transactions exempted from securing a license as RE Broker

from PRC (Key: TRAOPAC)
a. Any Trustee Receiver or Assignee in Bankruptcy or insolvency proceedings
b. Property Owners who –
 Directly performs by himself/herself of its own any of the real estate
brokerage services
 With regards to his/her or its own property
 Except real estate developers who are being
 Regulated and registered with HLURB pursuant to PD#957,
BP#220, its IRR and other resolutions/regulations
c. Public Officers relative to –
 Their official duties and functions
 Except government assessors and appraisers
d. Any person constituted as Attorney-in-fact
 For purpose of sales, purchase, lease, exchange, mortgage, joint
venture and other similar contracts of real estate (SPLEMJO)
 Without receiving any form of compensation or remuneration
e. Any person acting pursuant to Court order
286. Composition of PRBRES who shall be appointed by the President of the
Philippines, namely: (a) Chairperson and (2) Four members. Two of the members
shall represent the government assessors and appraisers who are in active
government service.
287. Selection and appointment of PRBRES:
 1st step: Nominated by the AIPO-PhilRES with five (5) nominees per
position
 2nd step: Selected and recommended by PRC with three (3)
recommendees per position from the nominees of the AIPO-PhilRES
 3rd step: Appointed by the President of the Philippines from the list of
recommendees of the PRC
288. Qualifications of the Chairman and Members of the PRBRES
a. Citizen and resident of the Philippines
b. Holder of a bachelor’s degree related to real estate or the degree of
Bachelor of Science of Real Estate Management (BSREM) once it will be
considered as a mandatory requirement in taking the license examination
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c. An active licensed real estate service practitioner for at least ten (10) years
prior to his/her appointment
d. A bonafide member in good standing (MIGS)of the AIPO-PhilRES but not an
officer or trustee at the time of his/her appointment
e. Neither a member of the faculty of an institute, school, college or university,
nor having any pecuniary interest whether direct or indirect, in any institution
or association where review classes or lectures in preparation for the
licensure examination are being offered or conducted and
f. Of good moral character and must not have been convicted by final
judgment of a competent court of a criminal offense involving moral
turpitude
289. Term of Office of the PRBRES
 Chairperson and the members- three (3) years from the date of their
appointment and until their successors/swill be appointed
 The members of the first Board-PRBRES has as follows:
 Chairperson – three (3) years
 Two (2) members – two (2) years and
 Two (2) members – one (1) year
290. The Chairperson and the Members of the PRBRES may be reappointed for a
second term however, it shall not serve continuously for more than six (6) years
291. If any member of the PRBRES resigns or removed from the position, the
vacancy shall be filled-up by the appointment of the President of the Republic of the
Philippines for the unexpired portion of the team of the member who vacated the
position.
292. The first Board-PRBRES shall be atomically registered and issued Certificates
of Registration and Professional Identification Cards based of their availment of the
Grandfather Clauses (Registration without Examination) pertaining to their
respective license granted by the (Department of Trade and Industry (DTI) per
MO#39 Series of 1985 except those appointed from government Appraisers and
Assessors and also they shall take the proper prior to the assumption of duty.
293. Powers and Functions of the PRBRES
a. Provide comprehensive policy guidelines for the promotion and development
of the real estate industry pertaining to the regulation of the practice of the
real estate service profession
b. Conduct licensure examination for the practice of the real estate service
profession and prescribe the appropriate syllabi or the Table of
Specifications on the subjects for the examination
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c. Issue, suspend, revoke or reinstate certificates of registration or professional;
identification cards for the practice of real estate service professional after
due notice and hearing or due process
d. Maintain a comprehensive and updated register of licensed real estate
service professionals
e. Monitor the conditions affecting the real estate service practice and adopt
measures for the enhancement of the profession and/or the maintenance of
high professional, ethical and technical standards
f. Adopt a National code of Ethics and Responsibilities issued by the AIPO-
PhilRES for strict observance of all licensed real estate service practitioners
g. Hear or investigate any violations committed by the license real estate
service practitioners regarding the provisions of RA#9646, its IRR and the
code of Ethics and Responsibilities and issue subpoena duces tecum to
secure the appearance of witnesses and the production of documents in
connection in violation
h. Safeguard and protect legitimate and licensed real estate service
practitioners in coordination with the AIPO-PhilRES, monitor all forms of
advertisement, announcements, signboards, billboards, pamphlets,
brochures and others of similar nature concerning real estate and when
necessary exercise its quasi-judicial and administrative powers to finally and
completely eradicate the pernicious of unauthorized or unlicensed individuals
i. Prescribe the essential requirements as to the BS Real Estate Management
(BS REM) curricula and the facilities of schools, colleges or universities
seeking permission to open or already offering the BS REM in cooperation
with the Commission on Higher Education (CHED) or the concerned state
university or college and to see to it that these requirement including the
employment of qualified faculty members are properly complied
j. Promulgate, administer and enforce rules and regulations necessary in
carrying out the provisions of the Real Estate Service Act(RESA)
k. Supervise and regulate the registration, licensure and practice of real estate
service in the Philippines
l. Assess and fix the rate reasonable regulatory fees
m. Administer oaths and affirmations
n. Adopt an official seal (PRBRES seal) with the Interpretation of its symbols
o. Evaluate periodically the status of real estate service education and
profession and recommend and/or adopt measures to upgrade and maintain
its high standard
p. Prescribe guidelines and criteria for the Continuing Professional Education
(CPE) program for real estate service practitioners in consultation with the
AIPO-PhilREs
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q. Screen, issue and monitor permits to organizations of real estate
professionals in the conduct of seminars and accredit the said seminars
pursuant to the CPE program, as well as the instructors or lectures therein
for the purpose of upgrading the quality and knowledge of the profession
r. Monitor and supervise the activities of the AIPO and other associations of
real estate service practitioners and
s. Discharge such other powers, duties and functions as the Professional
Regulation Commission (PRC) may deem necessary to carry out the RESA
provisions
294. PRBRES shall be under the general supervision and administrative control of
PRC. The Chairperson or any Member of the PRBRES may be suspended or
removed by the President of the Philippines upon the recommendation of PRC after
due notice and hearing (due process) in a proper administrative investigation
conducted by PRC.
295. Grounds for Suspension or Removal of PRBRES Chairman or any of its
Member (Key:INA-CoOP-ICU)
a. Incompetence
b. Neglect of duty
c. Abuse of power
d. Final judgment or Conviction of any criminal offense involving moral
turpitude
e. Oppression
f. Immoral or dishonorable conduct
g. Commission or tolerance of irregularities in the conduct of examination or
tampering of the grades or
h. Unprofessional or unethical conduct
296. Any offence or crime committed by the PRBRES Chairman or Members other
than the grounds of suspension/removal may not be the basis of their removal or
suspension like: conviction of the crime involving reckless imprudence resulting to
slight physical injuries, traffic violations.
297. The PRBRES, in coordination with the AIPO-PhilRES shall prepare, update
and maintain a roster of licensed RESPs which shall be made available to the
public upon request and shall contain the following information:
 Names of all registered real estate service practitioners (RESPs)
 Their respective residence and office addresses
 License numbers
 Dates of registration or issuance of certificate and
 Other data which the PRBRES may deem pertinent
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298. The License Examination for REB, REA and REC shall be conducted at least
once a year in designated places and dates as approved by the PRC as started in
the Master Schedule of Board Licensure Examination for Professionals
299. Coverage/Scope of the Real Estate Appraiser’s examination
a. Fundamental or Real Estate Appraisal/Valuation
 Fundamentals of Real Estate Principles and Practice
 Standards and Ethics
 Philippine Valuation Standard
 National Code of Ethics and Responsibilities
 Theories and Principles in Appraisal
 Human and Physical Geography
 Real Estate Finance and Economics
 Land Management System and Real Property Laws
 PD#957, BP#220, RA#7279
 Condominium Act (RA#4746) and Maceda law (RA#6562)
 Family Code
 RA#9646 and its IRR
 Agri Law and CARPER
 REIT Act (RA#9869)and its IRR
 Other Laws Affecting Real Estate
b. Professional Appraisal Practice

 Methodology of Appraisal Approaches
 Valuation Procedures and Research
 Practical Appraisal Mathematics (Statistics and Basic Mathematics)
 Appraisal Report Writing
 Appraisal of Machinery and Equipment
 Case Studies: Specialized Valuation
 Government Assessment Principles and Taxation
 RA#7160
 Manual on Real Property Appraisal and Assessment Operations
(RPAO)
 Guide Book on Mass Appraisals
 Geographical Information Systems (GIS) and Map Reading/Plotting
 Current Events
300. The examinee must obtain an average rating of at least seventy-five percent
(75%) in all subjects, with no rating below fifty percent (50%) in any of the subject in
order to successfully pass the examination. Rating results will be released by the
PRBRES within ten (10) days from the last day of the examination which shall be
published in a newspaper of general circulation and of PRC website.
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301. Qualifications of the examinees before admission to the licensure examination
a. Citizen of the Philippine or a Filipino
b. Holder of a relevant bachelor’s degree from a state university or college,
or other educational institution duly recognized by the CHED. However, as
soon as the BS Real Estate Management (BS REM) is implemented by
CHED, the said course shall be requirement for taking the license
examination.
c. Has completed at least one hundred twenty (120) credit units of real
estate subjects and training from accredited service providers whose
Lecturers-Reviewers are also accredited by PRCin accordance with PRC-
PRBRES Resolution No. 11 Series 2012 dated May 25, 2012 as published
in Manila Standards Today last May 28,2012
d. Good moral character and must not have been convicted of any crime
involving moral turpitude
e. For Real Estate Consultant’s licensure examination, must have at least:
 Ten (10) years’ experience as licensed Real Estate Broker or as
Assessor or as a bank/institutional Appraiser or as employee
performing real property valuation or
 Five (5) years/ experience as licensed Real Estate Appraiser
302. You are holder of a bachelor’s degree BS Accountancy and you want to
practice real estate brokerage, you should-
 Attend a seminar-review for 120 Credit Units which shall be taken from the
PRC Accredited Service Provider with PRC accredited Lecturers-Reviewers
as required under PRC-PRBRES Resolution No. 11, Series 2012
 Apply, take and passed the licensure examination
 Take the Oaths as real estate professionals
 Secure a PRC license as Real Estate Broker
 Be member of the AIPO-PhilREs
303. In order to be admitted to the Real Estate Broker’s licensure examination, the
candidate shall satisfy the qualifications at the time of filing his/her application.
304. The Certificate of Registration (COR) and the Professional Identification Card
(Prof. ID) will be issued to the successful examinees for Real Estate Broker’s
examination upon payment of the prescribed fees.
305. Grounds for refusal to register a successful examinee (Key: CIPs)
a. Conviction of any criminal offense involving moral turpitude by a court of
competent jurisdiction or
b. Found guilty of Immoral or dishonorable conduct after investigation by the
PRBRES in compliance with due process or
c. Found to be Psychological unfit
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306. The certificate of registration (COR) shall remain in full force and valid until
revoked or suspended with the following data:
a. Licensee’s name
b. Benefits and privileges as Real Estate Service Profession
c. Signature of PRC Chairperson
d. Signature of PRBRES Chairperson and Members and
e. Stamped with the PRC Official seal
307. The Professional Identification Card (Prof. ID) shall be valid for three (3) years
up to the Licensee’s ______ and shall be renewable after three (3) years upon
___of the renewal requirement like OPEs, Certificate of Membership in
Goodstanding (CMIGs), renewal of _____, etc. The Prof ID will have the following
information:
a. Licensee’s name
b. Profession
c. Registration or license number
d. Date of issuance and expiry date and
e. Signature of the PRC Chairperson
308. Grounds for revocation or suspension or cancelation the Certificate of
Registration (COR) and /or the Professional Identification (Prof ID) or the
Special/Temporary Permit (SP) (Key: Un-FAME-VIo)
a. Unprofessional or unethical conduct
b. Fraudulent or deceitful procurement of COR, Prof. ID or SP
c. Allowing an unqualified person to advertise or to practice the real estate
profession by using his/her COR, Prof ID or SP
d. Malpractice
e. Engaging into real estate service practice during suspension period and
f. Violating any provisions of RESA, its IRR and the Code of Ethics and
Responsibilities
309. Prior to the effectivity of RA #9646 (RESA), Commonwealth Act (CA) No.
2728as amended by Commonwealth Acts #3715 and 3969 as implemented by DTI
Ministry Order No. 39, Series of 1985 governs the real estate brokerage business
and practices in the Philippines.
310. Licensed Real Estate Brokers and accredited Real Estate Salespersons are
also required to register with HLURB in compliance with Section 14 of PD#957 and
Section 21 of BP#220 IRRs if they are engage into the practice of selling
subdivision lots or condominium units or subdivision projects.
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311. RA#9646 provides that no juridical person (either partnership, corporation,
association or cooperatives) shall engage in the business of real estate service
unless it is duly registered with the Securities and Exchange Commission (SEC) or
at the Cooperative Development Authority (CDA) and the persons authorized to act
for and in behalf thereof are all duly registered and licensed Real Estate
Professionals either as Real Estate Brokers, Real Estate Broker Appraisers or Real
Estate Consultants.
312. RA#9646 (RESA) prohibits any person to practice or offer to practice real
estate service in the Philippines, unless he/she had complied the following
requirements:
a. Possessor of valid Certificate of Registration (COR)
b. Possessor of valid Professional Identification Card (Prof. ID) or
c. Holder of valid Special/Temporary Permit issued by PRBRES and PRC
and
d. If a Real Estate Broker or private Real Estate Appraiser, have paid the
required professional indemnity bond of P20,000
Further, it also prohibits any person to:
 Offer himself/herself as real state service practitioner or professional or
 Use title, word, letter, figure or any sign tending to convey the impression
that he/she is a real estate service practitioner or professional or
 Advertise or indicate in any manner that he/she is qualified to practice the
real estate profession or
 Be appointed as real property appraiser or assessor in any national
government entity or local government unit unless:
 He/she has satisfactorily passed the license examination and
 A holder of a valid GOR and Prof. ID or Special/Temporary permit
313. All licensed Real Estate Broker and private Real Estate Appraisers shall be
required to post a professional indemnity insurance/cash or surety bond in an
amount of at least P20,000 valid for three (3) years and renewable every three (3)
years upon the renewal of the Prof. ID without prejudice to the additional
requirement of the client
314. The purpose of the bond is to protect the public and to guarantee for any
damages suffered by the client in the performance of the professional services of
the licensed Real Estate Appraiser or the licensed Real Estate Broker and the Real
Estate Salespersons under him/her.
315. Juridical person engaging the service of any RESPs (either RE Brokers,
Appraisers, Consultants) are required to submit list of its employed real estate
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practitioners to PRC and Securities and Exchange Commission (SEC) as part of its
regular annual reportorial requirements.
316. Divisions or departments or units of any juridical person doing marketing or
selling of any real estate development projects (either housing, condominium,
memorial park, farm lot subdivision or the like) in the regular or ordinary course of
its business should be headed by either a full-time or part-time registered and
licensed Real Estate Broker.
317. Termination of the service or resignation of the RESPs should be reported by
employer to the PRBRES within fifteen (15) days from the date of its resignation or
termination.
318. The Real Estate Broker shall be guilty of violating the provisions of RA#9646
and the IRR for employing or utilizing the services of a RES when the latter has not
secured the required accreditation from the PRBRES prior to such employment.
Real Estate Broker is liable and can even cause the revocation or suspension of
his/her license prior to the latter’s accreditation unless the REB:
 Has no actual knowledge of the violation or
 Has no retain or receive any benefits, profits or proceeds of the real estate
transaction wrongfully negotiated by the RES
319. RA#9646 or the RESA took effect on July 30, 2009 which was fifteen (15) days
after it full and complete publication at the Philippine Daily Inquirer (PDI) last July
15, 2009.
320. The implementing rules and regulations (IRR) of RA#9646 became effective
on August 9, 2010 after fifteen (15) days of its full and complete publication at
Philippine Star and PDI last July 24, 2010.
321. Real Estate Professionals are required to indicate the license number
(accreditation number in case of Salesperson), Prof. ID number, PTR number,
PhilRES membership and/or receipt number and the date of issuance in connection
with the practice of real estate profession including the writing of such information in
the letterhead, dry seal, signboards, advertisements and other public
announcements made by real estate service practitioners.
322. The original and/or certified true copy of the COR, Prof. ID including those
employed real estate professionals shall be visibly displayed in the principal office
and/or in the branch offices of the RESPs.
323. Every registered and licensed Real Estate Professionals are required to
establish and maintain a principal office and other branch offices as maybe
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necessary. The branch of the Real Estate Professionals should be manned by
licensed real estate practitioner at least by a licensed Real Estate Broker if
brokerage office or by licensed Real Estate Appraiser if appraisal office or by
licensed Real Estate Consultant if realty consultancy office.
324. Government positions requiring the service of registered and licensed Real
Estate Appraisers shall have the following effects after the effectivity of RA#9646:
 All incumbent Assessors and government Appraisers holding permanent
appointments who are not registered and licensed real estate appraiser
cannot be promoted to a higher position
 They shall continue to perform their respective functions without being re-
appointed and demoted of his/her status, rank and salary grade
 Shall enjoy the security of tenure in the government service and
 The appointing authority shall exercise the power to appoint the licensed
Real Estate Appraisers in accordance with RA#9646 and its IRR only
when the vacancy of the position occurs
325. RA#9646 provides that until July 30, 2012 (within 3 years from the effectivity of
RA#9646) all existing and new positions in the national and local governments
requiring the service of any real estate service practitioner (either Real Estate
Broker, Real Estate Appraiser, Real Estate Consultant) whether career, permanent,
temporary or contractual shall only be filled-up by registered and licensed Real
Estate Service Professionals (RESPs).
326. No foreigner shall be allowed to practice real estate service in the Philippines
unless he/she is issued with Special or Temporary permit to engage the same.
327. The principle of reciprocity provides that no foreigner real estate practitioner
shall be:
 Admitted to the licensure examination
 Given a certificate of registration of professional identification card
 Issued a Special/Temporary Permit or
 Entitled to any of the Privileges under RA No. 9646 and its IRr
Unless the country which the foreigner RESP is a citizen allows a Filipino
RESP to practice within its territorial limits on the same basis and privileges
as the citizens of such foreign country.
328. Instances when a Special/Temporary Permit may be issued to a foreigner
RESPs
 The services of foreigner RESPs are urgently needed
 In the absence or unavailability of the local RESP
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 The purpose of issuance is to promote or enhance the practice of the real
estate profession in the Philippines
 Upon application
 Payment of the required of fees and
 Approval of the PRC
329. No foreigner shall be given a Special or Temporary permit to engage the real
estate profession in the Philippine under the RESA and its IRR unless there is a
foreign reciprocity agreement or a treaty between the Philippines and the foreign
country where such foreigner is a citizen.
330. The following are required to take an oath before any member of the PRBRES
or any PRC Officer duly authorized by the PRC thru the PRC Chairperson of his/her
authorized representative to administer oaths prior to the engagement or entering of
the real estate service practice in the Philippines.
 All successful examinees for Brokers, Appraisers and Consultants licensure
examinations qualified for registration
 All qualified applicants for registration without examination or under the
Grand Father Clause and
 Accredited Real Estate Salespersons
331. The PRBRES may or can initiate and supervise the holding of the mass
Oathtaking in coordination with PhilRES the accredited and integrated professional
organization (AIPO).
332. The following shall be registered without taking the licensure examination
under Section 20 of RA#9646 (or under the Grand Father clause) upon application
and payment of the required fees:
a. DTI licensed Real Estate Brokers, Real Estate Appraisers or Real Estate
Consultants on July 30, 2009 by virtue of Ministry Order No. 39, Series of
1985 as amended:
 in active practice as real estate brokers, real estate appraisers and
real estate consultants
 have taken or earned relevant Continuing Professional Education
(CPE) or Continuing Education Program (CEP)as follows:
 holder of a valid DTI license- fifteen (15) CPE/CEP credit
units/hours
 failed to renew the DTI license prior to July 30, 2009 –twenty
four (24) CEP/CPE credit units/hours from accredited service
providers per M.O. 39 or from CPE Council Accredited
Provider from 2007 to July 30, 2011
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 passed the following DTI licensure examination DTI but failed
to obtain their license on July 30, 2009:
 in 2009 & 2008 –fifteen (15) CEP/CPE credit units/hours
 in 2007-eighteen (18) CEP/CPE credit units/hours
 in 2006 and prior years – one hundred twenty (120)
CEP/CPE credit units/hours
b. Assessors and appraisers on July 30, 2009:

 Holds a permanent appointment
 Performing actual appraisal and assessment functions for the last
five (5) years
 Passed the Real Property Assessing Officer (RPAO) examination
conducted and administered by the Civil Service Commission
(CSC) in coordination with the Department of Finance (DOF) and
 Completed twenty four (24) CPE credit units/hours
c. Assessors and appraisers on July 30, 2009:

 Holds a permanent appointment
 Have at least ten (10) years actual experience in real property
appraisal or assessment
 Completed at least one hundred twenty (120) hours of accredited
training on real property appraisal conducted by national or
international appraisal organizations or institutions/entities duly
certified by the Department of Finance (DOF) or any other pertinent
national government agencies or Government Owned and
Controlled Corporation (GOCC) recognized by the PRBRES and
 Completed twenty four (24) CPE credit units/hours
333. The Grand Father Clause under Section 20 of RA#9646 can only availed until
July 30, 2011 which is within two(2) years from the effectively thereof. Those who
failed to avail the Grand Father clause shall be required to take the licensure
examination to be able to practice the real estate service profession.
334. The suspension or revocation of the Certificate of Registration (COR) and
Professional Identification Card (Prof. ID) or the cancellation of the
Special/Temporary Permit of the professional respondent in the administrative
investigation shall not prejudice or pre-empt the prosecution for criminal liabilities
and the imposition of penalties under RA No. 8981, RA No. 9646 and the Revised
Penal Code (RPC) or any other special law being violated as a consequence of the
professional action.
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335. The revoked COR and suspended Prof. ID can only be reinstated and re-
issued after the lapse of a minimum period of two (2) years from the date of the
revocation and suspension.
336. The reinstatement and the re-issuance of the COR and the Professional ID is
not automatic. It can be made upon application and compliance with the required
CPE/D units and for reasons deemed proper and sufficient based on the sound
judgment the PRBRES who at its discretion may exempt the application from taking
another examination. The approval for the reinstatement to practice the real estate
profession shall be covered by a resolution granting the petition for reinstatement to
the practice of real estate service profession be issued by the PRBRES subject to
PRC approval.
337. The PRBRES may issue a new COR, prof. ID or special/temporary permit to
replace lost, destroyed or mutilated ones subject to PRBRES and PRC approved
rules and upon payment of the required fees.
338. Accredited and Integrated Professional Organization (AIPO) – is the national
integrated organization of natural persons who are duly registered and licensed
Real Estate Service Practitioners. The Philippine institute of Real Estate Service
Practitioners (PhilRES) was recognized, accredited and approved by the
Professional Regulation Commission (PRC) as the only AIPO pursuant to Section
34 of Article IV of RA No. 9646 and of PRC Resolution No. 2004-178 ro: Guidelines
for the Accreditation of the AIPO as recommended by the Professional Regulatory
Board of Real Service (PRBRES).
339. Membership in PhilRES as the AIPO is mandatory. All real estate service
practitioners who are duly registered and licensed with the PRC shall be
automatically become a member of PhilRES-the AIPO of real estate service
practitioners and the membership thereof shall be entitled to the benefits and
privileges provided by the association. The membership of PhilRES as the AIPO
shall not prohibit the membership of any other associations of real estate service
practitioners.
340. PhilRES was registered with the Securities and Exchange Commission (SEC)
as non-stock, non-profit professional organization with SEC Registration No. CN
201007483 dated May 19, 2010. Its article of incorporation as amended as well as
its new by-laws was registered and approved by SEC last August 3, 2011upon the
recommendation of PRC-PRBRES last July 15. 2011.
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341. PhilRES accreditation as the AIPO shall be valid only for three (3) years and
renewable every three (3) years after the date of the granting for the petition and
the issuance of the Certificate of Accreditation.
342. Interim Accredited Professional Organization (IAPO) – the professional
organization accredited by PRC only to operate and perform activities or acts prior
to and until the recognition or birth of PhilRES- the AIPO.
343. The PRBRES after giving proper notice and hearing to the concerned party
may revoke the certificate of registration and the professional identification card or
cancel the special/temporary permit of a real estate professional or suspend
him/her from the practice of the profession based on the violations committed and
on the grounds for revocation and/or suspension.
344. The rules on administrative investigation issued by PRC shall govern the
hearing or investigation of the administrative case, subject to the applicable
provisions of RA No. 8981, RA No. 9646 and the Rules of Court. In case of any
violation of RA#9646 and its IRR the minimum penalties if committed by licensed
real estate practitioners (RESPs) shall be:
 Fine of at least P100,000 or
 Imprisonment of at least two (2) years or
 Both(fine and imprisonment) at the discretion of the court
345. If the violation of RA#9646 and its IRR was committed by unlicensed individual
or juridical person, the minimum penalties shall be:
 Fine of atleast P200,000 or
 Both (fine and imprisonment) at the discretion of the court
346. If the violation was committed by unlicensed individuals representing a juridical
person either partnership, corporation, association, cooperatives or by any juridical
persons, the following shall be held directly liable and responsible for the acts as
principal or as a co-principal with the other participants:
a. Partner
b. President
c. Director or
d. Manager who has
 Committed or
 Consisted or
 Knowingly tolerated the violation
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347. The symbols in the PRBRES Official Seal are interpreted as follows:
 Land – represents real estate
 Structures – represents improvements on the land like residential,
industrial, commercial and institutional buildings
 Trees and the fruits – represents agricultural produce
 Green lines – represents the real estate service practitioners (Real
Estate Consultants, Real Estate Appraisers, Real Estate Assessors
and Real Estate Brokers and Salespersons)
 Red, White, Blue and Yellow – represents the color of the Philippine
flag
 Blue – color of service
 Green – represents environment and ecology
 Sun and Rays – life and light
 Rising Sun – represents the vital role of the real estate service
practitioners in the social, political, economic development and
progress of the Philippines
 Gold – represents ethical standards and prosperity
 Map of the Philippines – represents the Philippine archipelago
348. Continuing Professional Education Development (CPE/D) –refers to the
inculcation, absorption and achievement of knowledge, skills, expertise/proficiency
and ethical and decent values that elevates and improve the professional’s
technical skill and competence after the initial registration as a professional.
349. RA#9646 mandates the creation of a CPE/D Council which shall comprise of:
a. A Chairperson coming from PRBRES and
b. Two (2) members are from PhilRES-AIPO and the academe
 The 1st member shall be the President or any Officer to be chosen by
the Board of Directors of PhilRES-AIPO and
 The 2nd member shall be the President or any Officer of the
organization of deans or department heads of schools, colleges,
universities offering the course of BS Real Estate Management that
requires the licensure examination
All members of the CPE/D Council shall be appointed by the PRC and shall
take their oath of office before any or all PRC Commissioners.
350. Power and functions of the CPE/D Council in assisting the PRBRES in
implementing the CPE/D programs/courses:
a. Accept, evaluate and approve applications for accreditation of CPE/D
providers and programs/courses, activities or sources as to their relevance
to the profession
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b. Accept, evaluate and approve applications for exemptions from the CPE/D
requirements
c. Determine the number of CPE/D credit units to be earned on the basis of
the contents of the program/course, activity or source as submitted by the
CPE/D providers
d. Monitor periodically the implementation of activities
e. Assess periodically and upgrade the criteria for accreditation of CPE/D
providers and CPE programs/courses, activities or sources and
f. Perform such other functions incidental to the implementation of the CPE/D
programs or policies
351. Purposes of the CPE/D Programs/Course
 To provide and ensure the continuous education of all registered and
licensed RESPs on the most recent trends of the profession brought about
by modernization, scientific and technological advancements
 To raise and maintain the professional’s capability for delivering
professional services
 To attain and maintain the highest standards and quality in real estate
practice
 To comply with the real estate service professional continuing ethical
standard requirements
 To make the real estate services professional globally competitive and
 To promote the general welfare of the public
352. CPE/D program/activity – refers to the system or arrangement of CPE/D which
shall enhance the competence of the real estate professionals by upgrading and
updating their knowledge and skills for the profession brought about by
modernization, scientific and technical advancements in the profession.
353. Request for the CPE/D program accreditation shall be filed to the CPE/D
Council at least thirty (30) days prior to the conduct of the CPE/D program/activity.
354. The registered real estate service practitioner shall not earn any CPE/D units on
program/courses, activities and sources attended or participated without approval or
accreditation by the CPE/D Council.
355. The CPE/D requirements for the renewal of the Prof. ID shall be forty-five (45)
credit units/hours (previously 60) for three (3) years which shall be earned by the
Real Estate Professionals at least fifteen (previously 20) credit units/hours annually.
Any excess credit units earned shall not be carried over to the next three-year period
except credit units for doctoral and Masteral degrees or for other special training.
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356. The CPE/D Council is empowered to monitor periodically the implementation of
the CPE/D activities/programs which may be done either in coordination with the
accredited CPE/D Provider or on-the-spot monitoring.
357. Self-accreditation CPE/D program/activity- is a process by which the real estate
professionals request recognition for appropriate credit units of the CPE/D
program/activity which she/he attended like: seminars or conventions, conferences,
academic preparation, self-directed learning package, authorship, post-graduate
training, study/observation tour but the accreditation was not applied by the
sponsoring organization from the CPE/D Council.
358. The purpose of monitoring the CPE/D activities is to determine whether the
accredited CPE/D activity/program adheres to what has been approved by the CPE/D
Council such as schedule, coverage, speakers, manner on the conduct of the
seminar, conduciveness of the venue as to learning, credit units’ assessment of the
participants, attendance per topic/subject, etc.
359. The PRBRES CPE/D Council and its deputized accredited CPE/D Monitor will
conduct the monitoring of the CPE/D activities/programs. The accredited CPE/D
monitors – are real estate professionals who are trained and accredited to participate
in the evaluation of the CPE/D activities. Their training should also be accredited by
the PRBRES CPE/D Council. The PRC CPR/D Council in the conduct of monitoring.
360. Definition of Terminologies:
a. Authorship – the ownership of intellectual property of books, instructional
materials, reference materials, technical or professional books and the
like
b. Conventions – are gathering of registered and licensed RESPs like:
conferences, symposia or assemblies for round table discussions
c. Doctoral Degree – a post-graduate degree from a recognized school,
college or university
d. Fellowship – the completion of a post-doctoral training program in a
specific field pre-approved by a duly recognized institution, scientific
faculty meeting and the like
e. Masteral Degree – a graduate degree from a recognized school, college
or university
f. Post-Graduate/In Service Training – a training or specification at the post-
graduate level from a minimum period of one (1) week
g. Peer Reviewer – a professional who acts as an evaluator of a research
paper, conference paper or journal article or books, or work of an expert
before it is presented or published or submitted
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h. Resource Speaker – refers to the professional who acts as a discussion
leader or lecturer in a convention, seminar or similar gathering
i. Registered Professional (RP) – a professional (natural person) who
possesses a valid registration certificate but is without a current and valid
PRC identification card which represents the renewable license to
practice a profession
j. Registered and Licensed Professional (RLP) – a professional (natural
person) who possesses both a valid registration certificate and a current
and valid PRC identification card, which represents the renewable license
to practice a profession. Under the RA#9646 and its implementing rules,
a real estate professional is required to take a CPE/D programs/courses
prior to the renewal of the professional identification card.
k. Self-Directed Learning Package – a learning which uses course manuals
or accredited learning modules
l. Seminars – the gathering of registered and licensed real estate
professionals which shall include workshops, technical lectures or subject
matter meetings, non-degree training courses and scientific meetings.
361. The accredited learning modules includes self-instructional materials or
programs which may be in the form of printed manuals, audio and video cassette
tapes, films, computer-assisted learning (CAL), study kits, learning aids and modules
or the use of the information highway. It includes clearly defined objectives, adequate
content and an evaluation component for each module.
362. The accreditation of CPE/D Provider is valid for the three (3) years from the
approval of its accreditation.
363. Criteria for the accreditation of CPE/D program/activity
a. The scope should be beyond the basic preparation for admission to the
practice of the real estate profession
b. The content should be relevant but not limited to the practice of the real estate
profession
c. The activities should enhance the competence of the registered and licensed
real estate professional by upgrading and updating his/her knowledge and
modernization and scientific and technical advancements in the profession
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364. Matrix for CPE/D Program/activities
Activities Credit Unit(s) Supporting Documents
1. Seminars/Convention
Certificate of Attendance with
1. 1 Participant 1 CU per Hour number of hours,
Seminars/conventions
program & Certified List of
Participants
Photocopy of Plaque,
1.2 Resource Speakers 5 CU per Hour Certification & copy of program
And invitation
Certification from sponsoring
1.3 Panelist /Reactor 3 CU per Hour organization & copy of the
program
1.4 Facilitator/Moderator 2 CU per Hour -do-
2. Post-Graduate Studies
2.1 Master’s Degree 1 CU per Academic unit University Certification or
plus 30 CU upon Diploma & Transcript of
completion of the degree Records
2.2 Doctoral Degree 2 CU per Academic unit
plus 45 CU upon -do-
completion of the degree
3. Self-Directed Learning Package
3.1 Distance Learning 10 CU per Complete set Copy of duly-accomplished
Module of Module module and evaluation
3.2 Technical paper of 1 CU per professional or Copy of duly-accomplished
professional journal article technical article article and evaluation
4. Authorship
4.1 Research/Innovate Maximum of 20 CUs Duly certified or published
Programs or creative (Referred); Maximum of technical report/paper
projects 15 CUs (Unreferred)
4.2 Book or monograph Maximum of 40 CUs Published Book with Proof of
copyright; Certification by co-
authors, if any
4.3 Editor ½ of the CUs of the Published Book with Proof of
Authorship category Editorship
4.4 Article Maximum of 10 CUs Proof of Publication of the
Article
4.5 Professional Journal 5 CUs per issue Copy of the published journal
Editor
4.6 Peer Reviewer 2 CUs per article Duly certified copy of
published book or article
5. Inventions 10-30 CUs per invention Certified copy of Patent
Certificate
6. Post Graduate Training 0.25 CU per Hour Certificate of training and
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(Maximum of 40 CUs Training and Training
per training) Description
7. Study/Observation Tour 2 CUs per day Certification from Sponsoring
(Maximum of 30 CUs Institutions
per Tour)
8.Professional Chair 10 CUs per Chair Certification of Grant or
Appointment Paper
9. Such other activities to be recommended by the CPE Council and approved by the
PRC
365. Sanctions for violating the CEP/P compliance Resolution NO. 744, dated
August 10, 2013
 For accredited CPE/D Providers – their accreditation shall be withdrawn
 For the real estate professionals – they are considered practicing the
professional without a valid professionals license and shall be charged
and be held liable for illegal practice in accordance with RA#9646, its IRR,
Code of Ethics and Responsibility and shall be meted the penalties
provided in the law.
 For PRC Employee who causes, abets or help in the renewal of the prof.
I.D card of a real estate professionals without complying the mandatory
CPE/D requirement – shall be considered to have violated the PRC and/or
Civil Service rules and regulations and shall be proceeded against
administratively and if found guilty shall be meted with the penalties
provided by the PRC and/or Civil Service law and its rules and regulations.
Fundamentals on Contracts, Sales, Mortgage, Leases, Property

Ownership and Family Code
366. Land is necessary to our survival and existence. Its importance brings land
into focus for consideration of Appraisers, Lawyers, Surveyors, Geographers,
Sociologist, Economist and our Society.
367. Property –
 Is a legal concept covering all the interests, rights and benefits related to
ownership
 It consists of the rights of ownership which permits the property owner to
explicit interest(s) in what is being owned
 Defined as anything which is or maybe the object of appropriation and
which is already possessed and found in the possession of man
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 Is also an economic concept, which means a physical entity or objects
useful to human activity and which are necessary to life and for the use
of man.
368. Real estate is a physical entity and its ownership is a legal concept. Ownership
of real estate is called as real property. Real Estate – refers to land and those man-
made items which are attached to the land, it is the physical, tangible thing which
can be seen and touched, together with all additions on, above or below the
ground. Real Property – includes all the rights, interests and benefits related to the
ownership of real estate which interest in real property is normally demonstrated by
some evidence of ownership (e.g. title) separate from physical real estate. Hence,
real property is a non-physical concept.
369. Personal Property – refers
 To ownership of an interest in items other than real estate
 It includes interest in tangible and intangible items which are not real
estate. It is not permanently affixed to real estate and is generally
characterized by its movability
370. Things – includes both appropriate and non-appropriate objects. Trade
Fixtures – refers to articles place in or attached by the tenant to a leased property to
facilitate the trade or business or promote convenience and efficiency in the
conduct thereof. Fixtures – an article in the nature of personal property which has
been so annexed to the real property that it is regarded as part thereof. Muebles or
furniture – generally has for its principal object the furnishing or ornamenting or a
building.
371. Right to a property – refers to the juridical tie by virtue of which a person has
the exclusive power to receive or obtain all the benefits from a property/things,
except those prohibited/restricted by law or by the rights of others.
372. Things are classified as:
a. Res Nullius – it does not belong to anyone (not yet appropriated)
b. Res Communes – it belongs to everyone (nobody owns it-common
property)
c. Res Alicujus – it belong to someone (privately owned property)
373. Characteristics of a property (Key: USI)
a. Utility for satisfaction of moral or economic wants
b. Susceptibility of appropriation and
c. Individually or substantivity
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374. Property are classified into: (Key: MOA-DEM-Ca-Na-Num-Custody):
a. Mobility or non-mobility
 Immovables or Real Property – are properties that has the
characteristics of immobility
 Movables or Personal Property – are properties that has the
characteristics of mobility
b. Ownership (either public domain or private dominion)
c. Alienability
 Within the commerce of man – property that can be subject to legal
transactions
 Outside the commerce of man – cannot be subject to legal
transactions
d. Dependence or importance
 Principal – property to which other thing was considered dependent
or subordinated (like: land on which a building was built)
 Accessory – property which is dependent upon or subordinate to
the principal building erected to the land
e. Existence
 Present property – those which enjoyment is vested at the present
time
 Future property – those which enjoyment is postponed to a future
time
f. Materiality or immateriality
 Tangible/corporeal – those that has physical form and substance
 Intangible/incorporeal – those which has no physical form and
substance (like: Stocks certificate, bonds, promissory notes,
franchise, goodwill and copyrights)
g. Capability of Substitution
 Fungible – replaceable by an equal quality and quantity (either by
nature of the thing or agreement)
 Non-Fungible – irreplaceable because the identical object should
be returned
h. Nature or Definiteness
 Consumable – cannot be used according to its nature without being
consumed
 Non-Consumable – any other kind of movable property
i. Number
 Generic – properties which belongs to group or class that indicates
its homogenous nature
 Specific – those referred to or indicates a specie or nature and the
individual
j. Custody or Free
 In court custody “custodia legis”
 Free property – property which is in clean title
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375. Classes/Categories of immovable or real property (Key: NIDA)
a. Immovables or real property by Nature – cannot be carried/transferred
from one place to another place
b. Immovables or real property by Incorporation – attached to an immovable
in a fixed manner to be an integral part thereof
c. Immovables or real property by Destination – placed in an immovable for
the utility it gives to the activity being carried upon and
d. Immovablesor real property by Analogy – classified by express provision
of law
376. Types of Immovable properties under the Civil Code (Key: LETS-FAMME-
Dock-Public)
a. Land, buildings, roads and construction of all kinds adhered to the soil
b. Everything attached to an immovable in a fixed manner in a way that it
cannot be separated therefrom without breaking the material/deterioration
of the object
 The attachment need not be done by the owner
 The breakage/injury should be substantial in case of separation
c. Trees, plants and growing fruits while they are attached to the land of
form an integral part thereof
d. Statutes, reliefs, paintings or other objects for use or ornamentation
placed in buildings or on lands
 By the owner or by a tenant as agent of the owner
 With the manifestation of the intention of attaching It permanently
to the tenements
e. Fertilizer actually used on a piece of land
f. Animal houses, pigeon-houses, beehives, fish ponds or breeding places
of similar nature
 Placed by the owner or by a tenant as agent of the owner or
 Preserves them with the intention of attaching them permanently
or making it permanent to the land
 And the animals in these places are also included
g. Machinery, receptacles, instruments or implements intended by the
owner of the tenements for an industry or works which may be carried on
in a building or on a piece of land and the tend directly to meet the needs
of the said industry or works
h. Mines, quarries and slag dumps while the matter thereof forms part of the
bed and water, either running or stagnant
i. Docks and structures though floating are intended by their nature and
object to remain at a fixed place on a river, lake or coast
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 Vessels are considered personal property under the common law,
although seldom referred to as a unusual kind of personal property
and
j. Contracts for public works and servitudes and other real rights over
immovable property
377. Conditions in order the machineries, receptacles or equipment’s may be
considered an immovable or real property:
a. Should be placed by the owner or his agent to the real property
b. There should be an industry/work carried on in the building or land where
the machinery, receptacles or equipment’s was placed or installed
c. It tend to directly meet the needs of an industry or works and
d. It Is essential and principal to the fulfillment of the business of the owner
and not just an incidental one
378. Instances that a building became a personal property and not a real property
when:
a. There is stipulation in a contract that is used as security in payment of an
obligation where a chattel mortgage was executed over it or
b. The building was bought purposely for demolition
379. Real properties that are considered immovable by Nature (Key: Land-Mines)
a. Land, Buildings, roads and construction of all kinds adhered to the soil
and
b. Mines, quarries and slag dumps while the matter thereof forms part of
the bed and water, either running or stagnant
380. Real properties that are considered immovable by Incorporation (Key: SET)
a. Statutes, reliefs, paintings or other objects for use or ornamentation
placed in buildings or on lands by the owner of the immovable in such a
manner that it manifest the intention of attaching it permanently to the
tenements
b. Everything attached to an immovable in a fixed manner in such a way
that it can be separated therefrom without breaking the material or
deterioration of the object and
c. Trees, plants and growing fruits while they are attached to the land or
form an integral part thereof
381. Real properties which are considered immovable by Destination (Key: MAF-
Dock)
a. Machinery, receptacles, instruments or implements intended by the
owner of the tenements for an industry or works which may be carried on
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in a building or on a piece of land and which tend directly to meet the
needs of the said industry or works
b. Animal houses, pigeon-houses, beehives, fish ponds or breeding places
of similar nature, in case their own has placed them or preserves them
with the intention to have them permanently attached to the land, and
forming a permanent part of it; the animals in these places are included
c. Fertilizer actually used on a piece of land
d. Docks and structures though floating are intended by their nature and
object to remain at a fixed place on a river, lake or coast
382. Real properties which are immovable by Analogy – are those contracts for
public works and servitudes and other real rights over immovable property.
383. Deemed to be Personal or movable properties:
a. By exclusion – movables are everything which are not included in the
immovable (like: vessels or interest in the business)
b. By description – an object is movable:
 If it is capable of being carried from one place to another
 It cannot incur substantial damage to the immovable properly
where it is attached
c. Real property can be considered personal property by special provision
of a law
384. Test to Determine Movable/Personal Property
a. By exclusion – movables are everything which are not included in the
immovable (like: vessels or interest in the business)
b. By description – an object is movable:
 If it is capable of being carried from one place to another
 It cannot incur substantial damage to the immovable properly
where it is attached
c. Real property can be considered personal property by special provision
of a law
385. Principles on Real and Personal properties
 Building is immovable even if not erected by the land owner, what is
important is its union/incorporation with the soil
 Building is real property, hence, its sale alone without the land shall be
annotated in the Chattel Mortgage Registry and cannot be given any
legal effect of registration in the Registry of Deeds(Real Property)
 For purpose of attachment and execution and Chattel Mortgage Law,
ungathered products have the nature of personal property
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 Parties to contract may treat as personal properties by nature real
properties and its familiar to see things classed as real property for
taxation purposes which by general principles can be considered as
personal property
 The fact that machineries were bolted or cemented on the real property
mortgaged does not make them ipso facto immovable under Article 415
(3) and (5) of the Civil Code since the parties intent has to be looked
into. Even if the property appeared to be immovable by nature, nothing
take away from the parties from treating it as chattels to secure an
obligation under the principle of estoppels
 The human body (alive or dead) is neither real nor personal property
because it is not even a property at all, hence it cannot be appropriated.
However, under certain conditions the body of a person or any parts
thereof can be a subject matter of a transaction.
386. Ownership – is defined as the independent and general right of the person to
control a property/thing particularly in his possession, enjoyment, disposition and
recovery subject to no restriction; except, those imposed by the State or private
person or by the law.
387. Right of Ownership – refers to the rights which are inherent or appurtenant to
ownership and it includes the right to possess, to use, to dispose, to recover and to
collect the fruits.
388. Stewardship Principle – under the Constitution it provides that the property
owners are bound to use or utilize their lands in manner that will promote welfare
and benefits not only for themselves but also for the State. It is a principle of
ownership which mandates the property owners to use their properties in a manner
that will promote public interest for the general welfare. It is concept of real estate
ownership that bound the property owners to use or utilize his/her or its property in
a manner that will promote not only for his/her welfare but also those of the State.
389. Property of private ownership – refers to where a person has proved his right
of ownership over a piece of land and does not show that the State has a greater
right on it. It consists of all property belonging to private person, either individually
or collectively.
390. Extent on the right of ownership
a. to enjoy includes
 Possessions, Use, the fruits and accessing and to abuse
b. to dispose of the thing owned or jus disponendi
 Destroy, alienate, transform and to encumber
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c. to receive from the thing what it produce or jus utendi
d. to consume the thing by its use or jus abutendi
e. to vindicate or jus abutendi
 pursuit and recovery
f. to exclude from the possession of any other person the thing owned
 fence, enclose, delimit and to repel intrusions even with force
391. Kinds of Ownership (Key: Full-Naked-Sole-Co)
a. Full ownership – refers to all rights of the owner
b. Naked ownership – refers to ownership where the right to use and the
fruits has been denied
c. Sole ownership – refers to ownership which is vested to only one person
and
d. Co-ownership – refers to ownership rights to own a whole property
together with the others and at the same time owner of an aliquot part
thereof
392. Forms of property ownership
a. By subject
 Public domination – those which are under the jurisdiction and
administration of the state for the collective enjoyment of the
people, its ownership is in the social group (whether national,
provincial or city or municipal). Its purpose is to service the citizens
and not the State as a juridical person
 Private either individually or collectively
b. By the Object over
 Movables and
 Immovable
c. By the Juridical relation
 Full and
 Less than full (divided co-ownership, usufruct, etc.; encumbered;
materially-affecting its enjoyment, easement; formally-affecting
disposition, mortgage
393. Extent of the land owner’s right over a parcel of land is his/her ownership of its
surface and everything under it. He/she can construct any works or make any
plantations and excavations without detriment to servitudes and subjected to
special laws and ordinance except for set limitations.
394. Regalian Doctrine – a doctrine which reserves to the State the full ownership
of all natural wealth that may be found in the bowels of the earth.
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395. Roponngi property in Japan cannot be sold because the said property of the
state is intended for public use or public service.
396. Public Domain – refers to those lands own by the State and It has control and
administration over it. It also include those lands owned by the general public and
cannot be made subject of commerce even by the State.
397. Properties of public dominion
a. Those intended for public use – such as roads, canals, rivers, torrents, or
fast moving water, ports and bridges constructed by the states, banks,
shores, roadsteads and others of similar character
b. Those which belong to the State without being for public use and are
intended for some public service or
c. For the development of the national wealth
398. Characteristics or Principles in dealing with property of public dominion
a. It cannot be alienated or leased or otherwise be the subject manner of
contracts or it is considered beyond the commerce of man
b. It cannot be acquired by prescription against the State. Even municipalities
cannot acquire them for use as communal lands as against the State
c. It cannot be registered under the Land Registration Law and be subjected of
a Torrens title
d. It cannot be levied upon by execution nor can be subject to attachment and
execution and
e. It cannot be burdened by any voluntary easement
399. Principles on Lands of Public Domain:
a. Lands of the public domain are classified as (Key: MAF/T-NP):
 Mineral Lands
 Agricultural lands
 Forest or Timber lands and
 National Parks
b. Alienable lands of the public domain shall be limited to agricultural lands
c. Private corporations and associations may hold alienable lands of public
domain by lease
 For a period of not more than twenty-five (25) years renewable for
another twenty-five (25) years or a maximum period of fifty (50) years
and
 The subject lease land shall not exceed 1,000 hectares and
d. Filipino citizens may lease not more than twelve (12) hectare either by
purchase or homestead or grant
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400. A portion of the municipal plaza was leased to Larriegil Realty Development
Corporation. Is the contract valid? No, because the municipal plaza forms part of
the properties for public use and it is considered outside the commerce of men.
Hence, cannot be a subject of a contract.
401. The 1987 Philippine Constitution may convey land to Filipinos by homestead
provided it does not exceed twelve (12) hectares.
402. Larriegil Corporation engaged in pineapple production business wanted to
expand its plantation and lease land of public domain from the government for a
maximum area of 1,000 hectares for a period of 25 years renewable for another 25
years.
403. A natural born foreigner may own a house in the Philippines provided he/she
leases the lands and builds a house thereat.
404. Onie a Filipino went to Italy and became a foreign citizen, he may still own
land in the Philippines through hereditary succession when his parents die.
405. All other property of the State which is not public dominion character or when
no longer intended for public use or public service is considered patrimonial
property of the state.
406. Patrimonial Property – refers to those property owned by the State in its
private or propriety capacity of which it has the same rights of ownership as a
private person in relation to the property owned. It is not devoted to public use or
public service or development of national wealth but it exist for the attainment of the
State’s economic or monetary ends as a means for its subsistence or survival and
the preservation of its natural organism/being.
407. Scope of limitations on ownership – The owner of a thing cannot make use
thereof in such manner that it will injure the rights of a third person. The property
owner has the right to enjoy and dispose a thing without limitations other than those
established by law and the grantor thereof.
408. Limitations on property ownership:
a. The general limitations for the benefit of the State
 Power of eminent domain
 No person shall be deprived of his property except by competent
authority and for public use and always upon payment of just
compensation and if not complied, the courts shall protect the
property owner and in a proper proceeding to restore the owner in
his/her possession.
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b. Limitations imposed by the owner
 Voluntary servitude
 Mortgages
 Pledges
 Lease rights
c. Inherent limitations arising from conflicts with other similar rights
409. The grantor can restrict property ownership by means of:
a. A will or testament or
b. Donation
410. Contractual or voluntary limitations of property ownership:
a. Lease
b. Right of Way Easement
c. Usufruct and
d. Restriction in Subdivision contracts
411. Legal of Government restrictions on property ownership or exercise of rights
on ownership (Key: BEZ-STEP)
1. Building Code – those regulations pertaining to building heights, material,
specifications, set-back, etc.
2. Eminent Domain – refers to the power of the State to take private
property for public use upon payment of just compensation
3. Zoning – refers to use restrictions of a particular areas or delineation of
allowable areas for use or classification of land use
4. Subdivision regulations – refers to the requirement compliance for a
subdivision projects like: the open space development, specifications and
completions, minimum road requirements, etc. (PD#957 and BP#220)
5. Taxation – is an inherent power of the State to impose and collect taxes
and other charges and fees on real estate
6. Escheat- the reversion of privately owned properties in favor of the State
upon the death of the property owner who is not survived or does not
have any surviving heir and
7. Police Power – refers to the right of the State to enact laws and to
enforce them for the safety, order, health, morals and for the general
welfare of the public
412. If a person’s land holding exceeds the essential requirement of his necessities
or utilization, the State may exercise its authority to control or regulate the person’s
ownership because it is no longer conductive to the general welfare and in
observance of the principle of equitable distribution of wealth.
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413. Condemnation Value – is the estimated value of a property which is the object
of expropriation proceedings for public use.
414. Just Compensation – refers to the fair and reasonable compensation paid by
the State or any of its political subdivision to the property owner for expropriating its
property for government’s public use. In eminent domain cases or expropriation
proceedings, just compensation will be computed based on Fair Market Value plus
(+) Consequential Loss/Injury less (-) Consequential Benefits. Formula: JC =
(MV+CL-CB)
415. Rights or Attributes of Ownership under the Roman Laws/Percepts
a. Jus Utendi – the right to use the property owned
b. Jus Fruendi – the right to enjoy the fruits of the property
c. Jus Abutendi – the right to consume the thing by its use
d. Jus Possendendi – the right to possess the things
e. Jus Disponendi – the right to dispose, encumber, transform and to destroy
the property owned
f. Jus Vindicandi – the right to vindicate or right of action to recover the
property or to exclude any person from the property enjoyment and
disposal
416. Bundle of Rights of property ownership includes: (Key: FREDA-CUPER-
CHEF)
a. to the Fruits
b. to Recover or vindicate
c. to Enjoy
d. to Dispose
e. to have ownership of all Accessions
f. to Consume or destroy or abuse
g. to Use
h. to Possess
i. to Encumber or alienate
j. to Receive just compensation
k. to Construct any work or make plantation or excavation
l. to have ownership of the Hidden treasures found in the property owned
m. to Exclude others and
n. to Fence the property owned
417. Solutio Indebiti – means that no person shall enrich himself at the expense of
another.
418. Modes or Means of acquiring ownership (Key: Olc-DonTra-LaSuPres)
a. Original Means – independent of any pre-existing or preceding title or right
of another
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 Occupation
 Intellectual creation
b. Derivative Means or as an offshoot – somebody was the owner before
 Donation
 Tradition
 Law
 Succession (Testate or Intestate)and
 Prescription
419. Other land ownership governed by Philippine Laws
a. Public – those owned by the State for general use such as: piers, rivers, roads,
creeks, etc and for indirect use, like: mines, fortresses, etc.
b. Corporate Body – those owned by collective entity and enjoyed by its
members like: properties of municipal corporations, urban and cities that can
be categorized as:
 Patrimonial – those used by government in its proprietary or private
capacity
 Communal – those used by the general public in the community like:
roads, plaza, kiosk, etc.
c. Common – those which does not belong to anybody but are created by nature
such as: the air, the seam fluvial domain, the galaxy and etc.
d. Nullius - those not being enjoyed and not owned by anyone like: hidden
treasures or abandoned properties and
e. Private – those which are privately owned and enjoyed by individual person or
by several persons
420. General rule: Only Filipinos citizens and juridical persons (either corporations,
partnership, associations, cooperatives, et.al.) with at least sixty percent (60%)
Filipino ownership shall be entitled to acquire lands in the Philippines.
421. Foreigners or Aliens cannot acquire lands in the Philippines, except:
 When acquired prior to the 1935 Constitution
 When acquired through hereditary succession being the legal heir
 A former Filipino citizen may retain ownership of the land previously
acquired being a Filipino; however after loss thereof can no longer
subsequently acquire another by hereditary succession. They may own
houses but the land shall only be leased subject to the provisions of
BP#185, RA#9225 and Foreign Investment Act of 1991
 When a Filipina marries an alien but retains her Philippine citizenship
unless by her act of omission have renounced her Philippine citizenship
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 Those Filipinos who contracted to buy real estate on installment basis and
subsequently lost their Philippine citizenship before the full payment
thereof, cannot acquire title for its ownership subject to the provisions of
BP#185,RA#9225 and Foreign Investment Act of 1911
 Real properties acquired by couple (Filipino spouse and Foreigner spouse)
which is considered conjugal property and each spouse has only one
inchoate right and a mere expectancy rights during the existence of the
conjugal partnership and it is only upon conjugal partnership dissolution
that their rights becomes actual and is vested with respect to the indivisible
half of the property
 Foreigners may not own more than 40% of the total number of units in a
condominium corporation or condominium project
422. BP#185 – laws that give rights to a “balikbayan” or a former natural-born Filipino
citizen
 To acquire land for residential use with a maximum of 1,000m2 in urban area
and 10,000m2 or one (1) hectare in rural area
 If the transferee already owned urban or rural land for residential purposes,
he/she can still be entitled to acquire additional urban or rural land for the
same purpose provided it will not exceed the maximum authorized area (1,000
sqm. in urban area and 1 hectare in rural area
 In case of married couple, anyone of them may avail the privilege; provided,
the total area acquired shall not exceed the maximum area fixed by law if
availed by both spouses
423. Angie got married to a Canadian citizen being Filipino she can still acquire land
in the Philippines as long as she has not renounced her citizenship. Likewise, if Angie
worked in Canada and became a Canadian Citizen, she can buy land in the
Philippines for business purposes being a former natural-born Filipino citizen.
424. Adelfa a former natural born Filipina became an Autrian citizen and she wants to
buy lot for residential purposes in Cebu City and in the Municipality of Tagoloan,
Misamis Oriental- a rural area, under BP#185 she can do so provided it does not
exceed 1,000m2 in Cebu City and one (1) hectare in Tagoloan.
425. Paterno a Filipino being born of Filipino parents migrated to Canada and work
there. He came back to the Philippines as “balikbayan retiree” wanted to buy a house
and lot in one of the subdivision in Manila, he should execute an Affidavit as
Balikbayan under BP#185
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426. Land to be considered urban area under BP#185 – refers to a municipality with
a population density of 1,000 persons per square kilometer (sqkm2).
427. RA#9225- DUAL CITIZEN LAW

 Refers to the Citizenship Retention and Re-acquisition Act of 2003 or the Dual
citizen Law
 To be dual Filipino, the person must have a natural born Filipino and should
file a petition with the Bureau of Immigration
 Natural-born Filipino who became foreigner after the effectivity of the Dual
Citizenship Law can retain his/her Filipino Citizen upon taking the oath of
allegiance to the Philippines and may own land in the Philippines for
residential or business purposes.
428. Principle of Jus Sanguinis – refers to the principle of citizenship observe in the
Philippine based on the parents’ nationally (citizenship). Principle of Jus Soli- refers
to the principle that state that the citizenship of a person shall be based on the place
of birth of a person.
429. RA#8179 – refers to a law that further Liberalize Foreign Investment or known
as Foreign Investment Act of 1991 grants:
 Any natural-born citizen who lost/his/her Philippine citizenship and who has
legal capacity to enter into a contract under the Philippine law
 To buy or a transferee of a private land for maximum area of 5,000 m2 in
urban land or three (3) hectares in rural land to be used for business or
other purposes
 Transferee may acquire not more than two (2) lots which should be
situated in different cities or municipalities anywhere in the Philippines
 Provided, the total area shall not exceed 5,000 m2 in urban land or three (3)
hectares in rural land for business or other purposes
 Transferee who has already owned urban or rural land for business
purposes, he/she can still be entitled to acquire additional urban or rural
land for the same purpose or other purpose provided it will not exceed the
maximum authorized area (5,000 sqm. in urban area and 3 hectares in
rural area)
 In case of married couple, anyone of them may avail the privilege;
provided, the total area acquired shall not exceed the maximum area fixed
by law if availed by both spouses
430. Under BP 185 and RA 8179, former natural born Filipino citizens who have
bought urban for residential purpose may still purchase another urban land for
business purposes subject to the limitations of the law.
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431. Angle, a natural born Filipina Married a French citizen last May 2010 and would
like to buy a parcel of land at Quezon City. Under RA#8179, she may acquire land for
business purposes with an area not to exceed 5,000 sqms.
432. Under the Foreign Investment Act of 1991, a former natural born Filipino who
became an Australian citizen may acquire land for business or agricultural or
manufacturing or leasing of land purposes.
433. A foreigner may also become a Filipino citizen through the act of the legislature
in addition to naturalization.
434. RA#7652 – refers to the Foreign Investors’ lease Act provides:
 a foreigner (individual and/or corporation) may lease land in the Philippines or
enter into a lease agreement with Filipino landowner for an initial period of up
to 50 years renewable for another 25 years or
 Lease the property in the foreigner domestic (Philippine) corporation name for
unlimited period of time
 Leased area shall be used solely for the purpose of the investment upon the
mutual agreement of the parties
 Leased area shall comprise an area which is reasonably required for the
purpose of the investment subject to the Comprehensive Agrarian Reform Law
(RA#6657 as amended by RA#9700) and the Local Government Code
(RA#7160)
435. Surface Right – the owner of a parcel of land is the owner of its surface and
everything under it and he/she can construct any works thereat or make any
plantations and excavations which he/she may deem proper without detriment to
servitudes, subject to special laws and ordinances. The right of the landowner
extends to the space and subsoil as far as necessary for his/her practical interests or
to the point where it is possible to assert his/her dominion; however, beyond these
limits he/she has no legal interest and cannot even complain of the reasonable
requirement of aerial navigation.
436. Types of Estates
a. Fee simple (Absolute)
b. Defeasible fee (Conditional)
c. Life estate
d. Leasehold estate and
e. Homestead estate
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437. Fee simple determinable – one whereby the happening of certain event or
purpose automatically terminates the entitlement of the estate and it reverts back to
the previous owner of the grantor.
438. Fee simple subject to a subsequent condition – one whereby the happening of
a stated event terminates the right over the estate like: succession of a property
conditioned on not to remarry for a widow spouse
439. Fee simple subject to an executory interest – one whereby an occurrence of an
event passes title to a third person, like: trusteeship
440. Life estate – one whereby the estate has a limited duration based on the life of
the property owner or the lives of designated persons. it may be created by a will or
by operation law.
441. Kinds of Leasehold Tenancy
a. Tenancy for years – one where the tenants has the right to occupy or to
use the real property for a specified period upon payment of rentals
periodically
b. Tenancy for period to period – one which is continued from one period to
another and can be cancelled or renewed at the end of each period
c. Tenancy at sufferance – one whereby a tenancy started by legal means
but ended the tenancy without any legal justification but merely on the
owner’s implied consent and
d. Tenancy at will – one which is subject to the will of the parties (either by
the owner or the tenant)
442. Kinds of Fruits, under the civil law (Key:NIC)
a. Natural Fruits – refers to the spontaneous products of soil, young of the
animal and other animal products
b. Industrial Fruits - refers to the product of the lands through cultivation/labor
c. Civil Fruits – refers to rentals of buildings, the lease price of lands and
other properties and the amount of life annuities income
443. Possession – is the holding of a thing or enjoyment of a right with the intention to
possess in one’s own right.
444. Effects of Possession
 Possessor is protected regardless of the manner of acquiring it
 Every possessor is entitled to be respected in his/her possession and if
disturbed thereat, he/she should be protected or restored by means in
accordance with law
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445. Classes of Possession
a. In one’s own name – where possessor claims the thing for himself/herself
b. In concept of a holder – possessor holds it merely to keep or enjoy it
because it is own by another person like: as a tenant on leases premises
c. In the concept of an Owner – possessor of a thing/right by his/her action
or is considered/believed by other person as the owner regardless of the
good or bad faith of the possessor
d. In the name of another – for whom the thing is held by the possessor like:
by an Agent
e. In good faith – possessor is not aware of any defects of his/her title of the
property or the acquisition thereof
f. In bad faith – possessor is aware of any defects of the title of the property
he/she own
446. Acts in state of necessity – means than the owner of the property/thing has no
right to prohibit the interference of another, if necessary to avoid an
imminent/impending danger/imperiled damage and the damage caused by the
interference is much greater or bigger. Hence, the property owner may demand from
the person benefited to indemnity the damage incurred by him.
447. Doctrine of Self-Help – a doctrine whereby the owner or lawful possessor of the
property/thing has the right to exclude any person from the enjoyment and disposal
thereof. For this purpose may use reasonable necessary force to prevent actual or
threatened unlawful physical invasion or usurpation of his/her property.
448. Kinds of Property acquired by Occupation
a. Those without an owner like: animals that are the object for hunting or
fishing
b. Abandoned properties (movable) when the expectation to recover was
gone and the intension to return it has been given up by the owner and
c. Hidden Treasure provided the founder is not a trespasser
449. Actions to recover properties where the owner was unlawfully deprived of:
a. Recovery of Personal Property – are those actions filed for the recovery of
possession of personal property
 Replevin – an action or a provisional remedy filed for the recovery of
possession of personal property
b. Recovery of Real property - those action filed for the recovery of real
properties
 Accion Interdictal – a summary action to recover physical/materials
possession and should be filed within one (1) year from the time the
basis of the action arises
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 Forcible Entry – action for recovery of material possession of real
property when a person originally in possession was deprived
thereof by (Key: FISTS):
 Force
 Intimidation
 Strategy
 Threat or
 Stealth
The issue involved is a mere physical possession (possession de
facto) and not juridical possession (possession de jure) nor
ownership. In forcible entry, the possession is unlawful from the very
beginning.
 Unlawful Detainer – action for recovery of possession of any land or
building by a landlord, vendor, vendee or other person against
whom the possession of the same as unlawfully withheld after the
expiration or termination of the right to hold possession by virtue of
any contract. The action must be brought in court within one (1)
year from the time possession became unlawful. In unlawful
detainer, it was lawful at the beginning but subsequently became
unlawful.
 Accion Publiciana – an ordinary civil proceeding to recover the better
right of possession, except in cases of forcible entry and unlawful
detainer. The issue or dispute involved is who has the better right of
possession (possession de jure) of the real property and not possession
thereof. It should be filed within the prescriptive period of 10 years from
dispossession.
 Accion Reinvindicatoria – an action to recover ownership of a real
property, which shall be filed in the proper court (RTC) within ten (10)
years if acquired property through ordinary prescription or within thirty
(30) years if extraordinary prescription. The issue involved is ownership
of the real property and not mere possession thereof.
450. Hidden Treasure- refers to any and unknown deposit of money, jewelry or
other precious objects the lawful ownership thereof is unknown does not appear.
451. Finder by chance- means that there is no purpose or intention to look for it, the
finding of the treasure was purely based on good luck or fortune.
452. General Rule: Hidden Treasure belongs to the owner of the land building or
other property on which it was found. The finder is entitled to ½ thereof if:
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a. The discovery was made on the property of another or of the State or any
of its political subdivision
b. It was found by chance
c. The finder is not a co-owner of the property where it was found
d. The finder is not a trespasser
e. The finder is not an agent of the landowner
f. The finder is not married under the absolute community of the conjugal
partnership system; otherwise, his share belongs to the community
453. Appraiser Argie found a hidden treasure inside the land of Larrie. How is the
treasure divided if Appraiser Argie is a usufructuary of the lessee or the farmer of
the land?
 Appraiser Argie is entitled to one-half ( ½ ) of the hidden treasure because
she is considered a stranger to the land.
 However, of Appraiser Argie is a worker who was hired to look for the
hidden treasure, she is not entitled being a hired worker.
 And if instead Appraiser Argie used an instrument to look for the hidden
treasure, she is not considered a finder by chance because she
deliberately search and look for the treasure; hence, she is considered a
trespasser and shall not be entitled to any share of the treasure.
454. Conditions for the entitlement of the hidden treasure
a. The treasure must consist of money, jewelry or other precious objects
b. It must be hidden and unknown
c. Its lawful ownership does not appear
d. The discovery must be by chance and
e. The discover must be a stranger and not a trespasser
455. Accession – refers to the right of a property owner to the product of the said
property/thing including whatever is inseparably attached thereto as accessory.
Also refers to an increase or addition of land by deposit of land and soil washed
naturally from rivers, lake or sea. Accession is not a mode of acquiring ownership; it
is merely a consequence or result on the right of ownership.
456. Right of Accession – the ownership of property gives the right by accession to
everything which is produced thereto or which is incorporated/attached thereto
either naturally or artificially.
457. Accretion – the process by which a riparian land gradually and imperceptibly
receives addition made by the water which the land is contiguous.
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458. Kinds of Accession
a. Accession Discreta – to the fruits (Key: nic )
 Natural fruits – spontaneous product of the soil and the young and
other products of the animals
 Industrial fruits – those produced by lands of any kind through
cultivation or labor and
 Civil fruits – refers to rental of buildings, price of leases of lands and
the amount of perpetual o life annuities or other similar income
b. Accession Continua – (attachment or incorporation)
 With respect to real property
 Accession industrial/artificial – in accordance with the
principle “The accessory follows the principal like: building,
planting or sowing and
 Accession natural: (a) Alluvium, (b) Avulsion, (c) change
of course of rivers and (d) formation of islands
 With respect to personal property
 Adjunction or conjunction: (a) engraftment (b)
attachment, (c) weaving, (d) painting and (e) writing
 Mixture and
 Specification
459. Basic Principles of Accession Continua (attachment or incorporation)
a. The accessory follows the principal
b. He who is in good faith maybe held responsible but not penalized
c. He who is in bad faith may be penalized
d. No one should unjustify enrich himself at the expense of another
e. The incorporation or union must be generally effected in a manner that to
separate the principal from the accessory would result in substantial
injury or damage to either and
f. That bad faith of one party neutralizes bad faith of the other so they
should be considered in good faith
460. General Rule: Ownership of the accretion which the land gradually receives
belongs to the riparian owner i.e owners of the land adjoining the bank of the river.
Reasons for the rule:
 To compensate the owner for the losses they may suffer by erosion or
the destructive force of the water
 To compensate the owner for the burden of legal easement which is
imposed upon him/her
 For the interest of agriculture it requires that the soil be given to the
person who is in the best position to cultivate it
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461. Alluviun or Alluvium (Alluvio) – defined as the accretion which the lands
adjoining the river banks, creeks, torrents or lakes gradually receive or increase
from the effects of the current of the waters.
462. Avulsion – defined as the accretion which takes place whenever the current of
a river, creek, torrent or lake segregates from an estate on its bank, a known
portion of land and transfers it to another estate. It also refers to the removal of land
from one owner to another when a stream suddenly changes its courses.
463. Rules with regards to alluvion or alluvium
a. The accretion which was gradually received from the effects of the
current of the waters, the ownership thereof belongs to the riparian
owners (owners of lands) adjoining the river banks, creeks or lakes
b. The riparian owner does not have to perform an act of possession to
become the owner of the alluvial deposit because the law automatically
vests the ownership of the alluvial deposits on the riparian owner,
however title thereof must be applied or secured
c. The owners of the estates adjoining the ponds or lagoons do not acquire
the lands which were left dry by the natural decrease of the water.
464. Riparian Owner – the owner of the property adjoining or abutting the river
banks, creeks or lakes.
465. If the riparian owner has a title to the land where there is an alluvial deposit,
does the title include or cover the alluvial deposit?
 The land abutting the river banks, creeks or lakes has a specific
description in the title and it does not include the alluvial deposit
 hence, there should be an independent application for registration of the
alluvial deposit or the new land before the Riparian owner acquires title
thereof
466. Whenever the current of a river, creek or torrent segregates from an estate on
its bank a known portion of land and transfers it to another estate, the owner of the
land to which the segregated portion belonged retain the ownership thereof,
provided, he/she removes the same within two (2) years.
467. Preferential ownership of alluvial deposits may be lost by prescription in favor
of another person after thirty (30) years because it is not covered by a Torrens title.
468. Conditions for the riparian owner to become the owner on the accretion of the
land
a. the deposit should be gradual or unnoticeable or imperceptible or not
influenced (impervious)
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b. it should be caused by the current of a river or creek or lake
c. the current should be that of a river, creek or lake
d. the river or creek or lake must continue to exist and
e. the increase must be moderately or comparatively little
469. Trees uprooted and carried away by the current of the water belong to the
owner of the land upon which they may transferred/transmitted, if the owner does
not claim the trees within six (6) months and upon payment of the expenses
incurred in gathering or putting them in a safe place.
470. Title of reclaimed land can only be claimed by the government of the Republic
of the Philippines which can assert title thereof unless the government had
authorized private individuals to reclaim the land.
471. Failure to register the acquired alluvial deposit by accretion for a period of fifty
(50) years, the said accretion can be subjected to acquisition by prescription of a
third (3rd) person, (Reynante vs. CA, GR#95907, April 8, 1992)
472. Co-Ownership – refers to the right of a common dominion which two ormore
persons have a spiritual part of the property or thing which is not physically divided.
 There is co-ownership whenever the ownership of an undivided property
or right belongs to different persons
 There is no co-ownership when the different portions owned by different
persons are already concretely determined and identifiable even if not yet
technically described
 By nature of co-ownership, a co-owner cannot point to any specific portion
of the property owned in common as his/her own because his/her share
remains to be intangible and ideal. (Avail et.alvs. Sps. Barabat, May 17, 2006)
473. Conditions of Co-Ownership
 Plurality or more than one subject
 Unity of object (materials in division) and
 Recognition of the ideal or intellectual shares of the co-owners which
determine their rights and obligations
474. Features or Characteristics of Co-Ownership
a. There must be more than one subject or owner
b. There is one physical whole to be divided into ideal share
c. Each ideal share is definite in amount but it is not physically segregated
from the rest
d. Relative to the ideal share, each co-owner holds almost absolute control
over the same
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e. Relative to the physical whole, each co-owner must respect each other in
the common use, enjoyment or preservation of the physical whole
f. The co-ownership does not have juridical personality and
g. A co-owner is in a sense a Trustee for the co-owner(s)
475. Rules on Co-Ownership
 Co-ownership is not a juridical person nor it is granted any form of
juridical personality
 It cannot sue in court
 Co-owners may litigate in their individual capacities
 Any one of the co-owner may bring an action for ejection on the
presumption that the case was instituted by one in behalf of all or the
others
 Each co-owner shall have the full ownership of his part and the fruits and
benefits thereto and may alienate, assign or mortgage it and even
substitute another person in its enjoyment except when personal rights
are involved
 The effects of the alienation or mortgage with respect to the co-owner
shall be limited to the portion which may be allotted to a co-owner in the
division upon termination of the co-ownership
476. Sources of Co-Ownership (Key: Law-SuCon-Chan-DonI)
a. By Law (like: party wall, man & woman in void marriage)
b. By Succession (with Will or intestate heirs before partition)
c. By Contract (purchase of land by cousins)
d. By Chance (hidden treasure)
e. By Donation Intervivos
477. Rights of the co-owners
a. Full of ownership of his part and to share the fruits and the benefits
thereof
b. The right to alienate, assign or mortgage his share
c. The right to substitute another in his enjoyment except when personal
rights are involved and
d. The right to exempt himself from necessary expenses or taxes by
renouncing part of his interest in the co-ownership
478. Limitations on the rights of a co-owner to use the property in common
a. In accordance with the purpose for which it is intended
b. In such a way that it shall not injure or adversely affect the interest of the
co-ownership and
c. In such a way that it shall not prevent the other co-owner from suing the
property according to their respective rights
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479. Acts of preservation – means that repairs for preservation may be made at the
will of one of the co-owners but the one who is making the repairs and maintenance
must first notify the other co-owners of the necessity for such repairs.
480. Acts of administration – refers to the undertaking for the administration of the
property subjected to co-ownership and the act of administration can only be
performed with the concurrence of the other co-owners.
481. Acts of alternation - is the performance of an act of altering the object of the
co-ownership and it can only be performed with the concurrence of the other co-
owners.
482. General rule: Co-owners cannot acquire exclusive ownership over the property
owned in common by prescription, except when:
 The co-owner repudiates (not to succeed) the rights of the other co-
owners
 Such act of repudiation is brought to the knowledge of the co-owners
 The evidence thereon is clear and conclusive and
 Lapse of the period fixed by law
483. Partition of the common property of the co-ownership is not allowed when:
a. The co-owners have agreed to keep the property undivided for a certain
period but exceeding ten (10) years
b. It is prohibited by law, like the case of party walls and the family home
c. It is prohibited by the donor or testator for a certain period but shall not
exceed twenty (20) years, if acquired either by donation or succession and
d. To do so would render the property unserviceable for the use it is intended
484. Effects of partition on common property subject to co-ownership
a. Mutual accounting for the benefits received
b. Mutual reimbursement of expenses
c. Indemnity for damages in case of negligence or fraud
d. Reciprocal warranty for defects of title and quality
e. Each former co-owner is deemed to have had exclusive possession of
part allotted to him/her for the entire period during which co-possession
lasted and
f. Partition confers upon each the exclusive title over his/her respective
share
485. Co-ownership can be extinguished by: (Key: JEPaPS-MELEx)
a. Judicial partition
b. Extrajudicial partition
c. Prescription, when on-owner has acquired the whole property by
adverse possession
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d. Prescription, when the stranger acquires the property owned in a
common
e. Merger of ownership thereof in one co-owner
f. Expropriation of the subject property and
g. Loss or destruction of the subject property
h. Expropriation of the subject property
486. Usufruct – is a real right of a temporary nature that authorized its holder to
enjoy all the benefits of the property of another with the obligation or preserving its
form and substance at a designated time.
487. Conditions of a usufruct
a. Essential – the right to enjoy the property of another and
b. Accidental – the obligation of preserving the form and substance of such
property
488. Usufruct is constituted by (Key: LaWai-Wil-Testa-Pres):
a. Law
b. Will of private person expressed in Act Intervivos
c. Will of private person expressed in a lat Will and Testament and
d. Prescription
489. Abnormal usufruct – refers to where the usufructuary does not have only
obligation to preserve the form and substance of the property which is the object of
the usufruct.
490. Causion Juratoria – refers to the usufructuary which files a verified petition in
court asking for the delivery of the house and furniture necessary for himself and
his family without filing any bond or security.
491. Basic rights of a usufructuary
a. To receive and benefit from the fruits
b. To enjoy any increase through accessories and servitudes
c. To the half of the hidden treasure which was accidentally found
d. To lease the thing/property to another for the same period or shorter
period as the usufruct
e. To improve the thing/property without altering its from and substance
f. To retain the thing until he is reimbursed for advances for extraordinary
expenses and taxes
g. Right to set-off the improvements he/she may have made on the
property against any damage to the same
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h. To collect reimbursement from the owner for indispensable extraordinary
repairs, taxes on the capital he/she advanced and damages caused to
him/her
i. To remove improvements made by him/her as long as it will not injure
the property
492. Obligations of a Usufructuary
a. Upon commencement of the usufruct
 To make an inventory of the product and
 To give the necessary security
b. During pendency of the usufruct
 To take care of the property as good father of a family
 To make ordinary repairs on the property
 To notify the owner in case the need for extraordinary repairs on
the property is urgent
 To pay the annual charges and taxes and those considered as
lien on the fruits
 To notify the owner of any act of a 3 rd person that maybe
prejudicial to the right of ownership and
 To pay the expenses, costs and liabilities in suits with regard to
the usufruct
c. Upon termination of the usufruct
 To deliver the property/thing to the owner
493. The usufruct will be extinguished by: (Key: DERM-LTP)
 Death of the usufructuary unless a contrary intention appears
 Expiration of the period or by the fulfillment of any resolutory condition
 Renunciation of the usufructuary
 Merger of the usufruct and ownership in the same person
 Total Loss of the property/thing in usufruct
 Termination of the right of the person constituting the usufruct and
 Prescription
494. The degree of diligence required from the usufructuary to take care of the
property or thing is usufruct is like a good father of a family.
495. The bas use of the property by the usufructuary does not is extinguished the
usufruct. Likewise, it is not a mode of extinguishing the usufruct.
496. Succession – a mode of acquisition by virtue of which the property, rights and
obligations to the extent of the value of the inheritance of a person are transmitted
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to another through death either by will or by operation of law. The rights of
succession are transmitted from the moment of the Decedent’s death.
497. Kinds of Succession (Key: Test-Leg-Mix):
a. Testamentary or Testacy - made by a will
 Notarial or ordinary – act of the Testator and his/her instrument
witnesses of affixing their signature to the instrument.
Purpose: to identify the Testator and to authenticate the document
 Holographic – a will that is entirely written by the hand of the Testator;
completely dated by the hand of the Testator, entirely signed by the
hand of the Testator and executed in a language/dialect known to the
Testator.
Purpose: to authentically of the will and to prevent or deter any
possible insertion or interpolation (interruption) by others or any
possible forgery.
b. Legal or intestacy – by operation of law, based on the decent’s presumed
will and
c. Mixed (partly testamentary and legal will) - an act whereby a person is
permitted with the formalities prescribed by law to control to a certain
degree the disposition of his/her estate to take effect after death,
498. A Will – an act whereby a person is permitted to control certain degree of the
disposition of his/her estate which shall effect after the decedent’s death, under the
certain formalities prescribed by law.
499. Adel, married executed a Will giving some properties to Angie without the
consent of Chris-her husband. Is it allowed?
 Under the New Civil Code, Adel can make a Will without her
husband’s consent
 Art. 802 of the New Civil Code provides that a married woman may
make a will without the consent of her husband and without authority
from the court
 Adel can even dispose all her separate properties by Will
 Art. 803 of the New Civil Code provides that a married woman may
dispose by Will all her separate property as well as her share of the
conjugal partnership or absolute community property
500. Testamentary Capacity – refers to the ability and power to make a Will which
should be present or existing at the time of the execution thereof. The Testator
should have the essential capacity:
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 Of age (at least 18 years old) and
 Of sound mind – he/she knows the nature of the estate to be disposed of,
the proper object of his/her bounty and the character of the testamentary
act.
501. Codicil – a supplement or addition to a Will made after the execution thereof
and annexed to be taken as part thereto, by any disposition made in the original
Will is explained, added to or altered.
502. Inheritance – refers the property, rights and obligations of a person which are
not extinguished by his death and which are available for distribution among his
heirs after settlement or liquidation of the decedent’s estate. It includes:
 All property
 All transmissible rights
 All obligations at the time of the decedent’s death and
 Those which have accrued since the opening of the succession
503. Disinheritance – act to the Testator in depriving a compulsory heir of his/her
legitime for causes expressly provided law.
504. Collation – the addition of the value of all donations made intervivos by the
decedent to the nest estate value.
505. Reconciliation – refers to the resumption of genuine cordial relationship
between the Testator learned of the cause for disinherited heir approximating that
which prevailed before the Testator learned of the cause for disinheritance,
reciprocally manifested by their actions subsequent to the act of disinheritance.
506. Preterition or pretermission – the omission in the Testator’s Will of one, some
or all of the compulsory heirs in the direct line whether living at the time of the
execution of the Will or born after death of the Testator.
507. Institution of heir – an act by virtue of which a testator designates in his/her
Will the person(s) who are to succeed his/her property and transmissible rights and
obligations.
508. Heirs – those who are called to succession for the whole or an aliquot portion
of the inheritance either by Will or by operation law.
509. Compulsory/Forced Heirs – those for whom the legitime is reserved by law
and who succeed whether the Testator like it or not. They cannot be deprived by
the Testator of their legitime except by disinheritance properly effected.
510. Voluntary Heirs – those instituted by the Testator in his/her Will to succeed to
the inheritance or the portion thereof which the Testator can freely dispose.
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511. Legitime – refers to the compulsory successional rights granted by law and it
cannot be taken by anybody except when alienated during the lifetime of the
Testator with consideration.
512. Legal/Intested Heirs – those who succeed to the estate of the decedent who
dies without a valid Will or a portion thereof not disposed of by will.
513. Devisee or Legatees – persons to whom gifts or real or personal property area
respectively given by virtue of a Will who should:
 Survive the decedent
 Willing to accept the inheritance
 Capacitated to inherit
514. Probate – a special proceeding mandatorily required for the purpose of
establishing the validity of a will.
515. Kinds of compulsory heirs
a. Primary – those who have precedence over and exclude other
compulsory heirs (e.g legitimate children and descendents)
b. Secondary – those who succeed only in the absence of the primary
compulsory heirs (e.g legitimate parents and ascendants)
c. Concurring – those who succeed together with the primary or secondary
compulsory heirs (e.g illegitimate children and descendants and surviving
spouse
516. Rules to consider in succession
 Preference between lines - those in the direct descending or downward
line shall exclude those in the direct ascending or upward line and
collateral lines and those in the direct ascending line shall in turn exclude
those in the collateral line
 Of proximity – the relative nearest in degree exclude the more distant
ones saving the right of representation when it properly takes place
 Right of representation (ad infinitum in case of predecease, incapacity or
disinheritance) – by virtue of which the representative is raised or elevated
to the place and degree of the person represented and acquires the rights
which the latter would have if he/she were living or if he/she could have
inherited
 Barrier between the legitimate and the illegitimate family – the illegitimate
family cannot inherit by intestate succession from the legitimate family and
vice-versa
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 Double Share for full blood collateral – when full and half-blood brothers or
sisters, nephews or nieces survive the full blood they shall take a portion
in the inheritance double that of the half-blood.
 Right of Accretion – when two or more persons are called to the same
inheritance, devise or legacy, the part assigned to one who renounce or
cannot receive his/her share or who died before the Testator is
added/incorporation to that of his/her co-heirs, co-devisees or co-legatees.
 Equal Division – relatives in the same degree shall inherit in equal shares.
 The legitime shall be divided between the legitimate parents and
ascendants equally
 If one of the legitimate parents and ascendants dies, the whole
shall be pass the survivor
 If both legitimate parents and ascendants dies before the Testator
but:
 Survived by ascendants of equal degree, legitime shall divided
equally between the paternal and maternal lines
 Survived by ascendants of different degrees, legitime shall
pertain entirely to the nearest degree
Exceptions:
 Division in the ascending line between paternal and maternal
grandparents
 Division among brothers and sisters, some of whom are of the full
and others of half-blood and
 Division in cases where the right of representation take place
517. Causes of Intestacy
a. If a person dies without or with a void Will or which has subsequently lost
its validity
b. Absence of an institution of heir
c. Partial institution of heir (Intestacy takes place on the undisposed
portion on mixed succession)
d. Non-fulfillment of suspensive condition attached to the institution of heir
e. Predecease of the instituted heir
f. Repudiation by the instituted heir
g. Incapacity of instituted heir
h. Preterition where instestacy may be total or partial depending on
whether or not there are legacies/devises
518. Order of intestate succession to the estate of a legitimate child
a. Legitimate children and their legitimate descendant
b. Legitimate parents and other legitimate ascendant
c. Illegitimate children and their descendants, whether legitimate or
illegitimate
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d. Surviving spouse, without prejudice to the rights of the brothers and
sisters, nephews and nieces, if any
e. Collateral relatives up to the 5th degree relationship
519. Partition and distribution of estate – refers to the separation, division and
assignment of property/thing held in common among those to whom it may belong.
It includes every act which is intended to put an end to indivision among co-heirs
and legatees or devisees although it should purport to be a sale, exchange,
compromise or any other transaction not subject to any form.
520. Persons that may effect partition –
 Decedent himself/herself during his/her lifetime by an act intervivos or by
will
 3rd person designated by the decedent
 Heirs themselves
 Competent Court
521. Persons that can demand partition:
 Compulsory heir
 Voluntary heir
 Legatee or devisee
 Any person who has acquired interest of the estate
522. Partition cannot be demanded in the following instances:
 When expressly prohibited by the testator himself/herself for a period not
exceeding 20 years
 When the co-heirs agreed that the estate shall not be divided for a period
not exceeding 10 years renewable for another 10 years
 When prohibited by law
 When to partition the estate would render it unserviceable for the use for
which it is intended
523. The foreign may own lands in the Philippines through hereditary succession
and he/she should be a legal heir.
524. Donation - an act of liberality whereby a person disposes gratuitously or
without consideration a property or right in favor of another, who accept it.
525. Conditions of Donation
a. Donor should have capacity to make donation
b. Donor should have donative intent (animus domandi)
c. There should be delivery
d. Done should accept or consent to the donation
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526. Classification of Donation
a. as to effecttivity
 donation intervivos – takes effect during the lifetime of the donor
and acceptance by the done should be made during the lifetime
of the donor
 simple – act of pure liberality or gratuitous
 remuneratory or compensatory – on account of services
rendered
 conditional – donor impose burden charged less than
the value of property given
 modal – imposes upon the donee a burden which is less
than the value of the thing donated and
 propter nuptias – in consideration of marriage
 donation mortis causa – takes effect after the death of the donor
b. as to perfection or extinguishment
 pure – immediately demandable
 with condition and
 with term
527. There is donation inter vivos when –
a. the donor intends that the donation shall take effect during his lifetime
though the property shall not be delivered until after his death and
b. a person donates something subject to the resolutory condition of the
donor’s survival
528. Donation inter vivos is perfected from the moment the donor knows of the
donee’s acceptance. Hence, there is a need for the done to accept the donation.
529. All persons who have the legal capacity and can dispose their property and
may make donations.
530. In order that a person can make donations the following requisites must be
present, he/she must:
a. have capacity to enter into contracts
b. be able to dispose of his/her property and
c. not be prohibited or disqualified by law from making donations
531. In order that a person can accept donations it is necessary that he/she is not
prohibited or disqualified by law from accepting the donations.
532. Persons disqualified or prohibited by law to make donations:
a. Those guilty of adultery and concubinage at the time of the donation
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b. Those found guilty of some crime/offense in consideration thereof
c. Those made to a public officer of his/her spouse, descendants or
ascendants, by reason of his/her office
d. Those made to the priest who heard the confession of the donor during
the latter’s last illness or the minister of the gospel who extended
spiritual aid during the same period
e. Those made to relatives of such priest or minister of the gospel within
the 4th degree, the church, order, chapter, community, organization or
institution to which such priest or minister may belong
f. Those made by the spouses to each other during the marriage or to
the persons of whom the other spouse is a presumptive heir
g. Those made by a ward to the guardian before final accounting of the
guardianship have been approved unless the guardian is an
ascendant, descendant, brother or sister
h. Those made to the attesting witness of the execution of the donation, if
there is any or to the spouse, parents of children or anyone claiming
under such witness, spouse, parents or children
i. Those made to the physician, surgeon, nurse, health officer or druggist
who took care of the donor during his last illness and
j. Those made by the individuals, associations and corporations not
permitted by law to make donations
533. In order for a donation of a real property to be valid it must be made in a
public document specifying therein the property donated and the value of the
charges which the done must satisfy. The acceptance may be made in the same
deed of donation or in a separate public document but it shall not take effect unless
it is done during the lifetime of the donor.
534. Easement or Servitude – an encumbrance imposed upon an immovable or
real property for the benefit of another real property belonging to a different owner.
535. Concept of Easement/Servitude –
 It is a real right
 Constituted on the corporeal immovable property of another
 By virtue of which the owner of the latter has to refrain from doing or
should allow something to be done on his/her property
 For the benefit of another person or tenement
536. Characteristics of an easement, it is:
 A real right, it will only affect 3rd persons when duly registered
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 Enjoyed over another immovable and never on one’s own property (jus in
resaliena)
 Involves two neighboring estates in case of real easements
 Indivisible being not affected by the division of the estate between 2 or
more persons
 Right limited by the needs of the dominant owner or estate without
possession
 Inseparable from the estate to which it is attached therefore cannot be
alienated independently of the estate
 Cannot consist in the doing of an act unless the act is accessory in
relation to a real easement and
 It is a limitation on the Servient owner’s right of ownership for the benefit
of the dominant owner and thus it is not presumed
537. Parties to the Easement
a. Dominant Estate – immovable or real property in favor the easement
establishment
b. Servant Estate – immovable or real property subjected to the easement
establishment
538. Servient Estate – land that abuts or adjoins a public road or highway which is
blocking the land behind (Dominant Estate). It also refers to a parcel of land through
which a right of way is granted in favor of an adjoining land.
539. Dominant Estate – land trapped behind another land owned by another
person, which property is adjoining a public road or highway and which only exist or
opening to reach the public road or highway is by passing through the Servient
Estate.
540. Right of Way (ROW) – an encumbrance imposes upon an immovable for the
benefit of another immovable belonging to another real estate. It also refers to the
right given to the owner of an adjoining land to use or to have access through
another land.
541. Classification of Easement
a. As to Recipient of Benefit
 Real – those in favor of another real property or immovable
 Personal – those in favor of community or of one more persons to
who encumbered estate does not belong
b. As to Source
 Legal – those established by law
 Voluntary – those established by will of the owners
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c. As to Exercise
 Continuous – those the use of which is incessant or non-stop
without man’s intervention
 Discontinuous – those use at intervals and depend upon the acts
of man
 Apparent – those made known and are continually kept in view by
external signs that reveal the use and enjoyment of the same
 Non-apparent – those showed no external indication of their
existence
d. As to purpose or nature of the Limitation
 Positive – the Servient owner should allow something to be done
on his/her property or to do it himself/herself – called Servitudes of
intrusion and/or service
 Negative – the Servient owner should refrain from doing
something which he/she could lawfully do if the easement did not
exist
542. Modes of acquiring Easements: (Key: Pres10-reco-judge-appa-tit)
a. By Prescriptions of 10 years which should be continuous and apparent
easements
 Positive Servitude – counted from the day their exercise
commences
 Negative Servitude – counted from the formal prohibition to the
servient owner to do any act opposed to the Servitude.
b. By deed of recognition
c. By final judgment
d. By apparent sign established by the owner of two adjoining estates
unless:
 There are contrary stipulations or
 The sign is effaced
e. By title which is necessary to continuous non-apparent and
discontinuous servitude
543. Easement can be acquired by continuous and apparent easements are
acquired either by virtue of a title or by prescription after ten (10) years; while,
continuous non-apparent easements and discontinuous easements, whether
apparent or non-apparent can only be acquired by virtue of a title.
544. Determination on the payment of indemnity of the easement:
a. If the passage is permanent, the indemnity shall be the value of the land
occupied or the amount of damage cause
b. If the passage is temporary, the indemnity is based on the damage
caused
545. The easement of light and view is positive when the window or opening is
made through a party wall or a wall belonging to the owner of the adjoining
tenement.
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546. The easement of light and view is negative when the window or opening is
made through a wall of the dominant state.
547. Easements for right of way and of aqueduct are not acquirable by prescription
because it is discontinuous in character, although it may be apparent.
548. The use of foot-path or road maybe apparent but is not a continuous easement
because its use is at intervals and depends upon the acts of man which is exercise
only if a man passes or puts his feet over somebody’s land.
549. The sale of the dominant estate with respect to the easement does not
extinguish the easement. Thereof, the use of the Servient estate is continued by
operation of law.
550. In the absence of ordinances or customers of the place:
 For tall trees, the distance to observe is two (2) meters from the boundary
line of the two (2) properties and
 For shrubs or small trees, the distance is fifty (50) centimeters
551. A legal easement of a right of way maybe established of the owner of the
Dominant estate has established the existence of the following conditions:
a. The property is surrounded by other estates
b. There should be no adequate outlet to a public highway or public road
c. There should be payment of property indemnity or just compensation
d. The isolation was not due to the act of the dominant estate
e. The right of way claimed is at point least prejudicial to the Servient estate
and consistent with the rule that the distance from the Dominant estate
toa a public highway maybe the shortest and
f. It is demandable by the owner or one with a real right
552. Types of Legal Easements:
a. Easement relating to waters – lower estates should receive waters which
are naturally and without intervention of man descend from higher estates
including earth or stones carried with them.
 Limitations:
 Dominant owner should not increase the burden may put up
works to avoid erosion
 Servient owner should not impede the drop of water
b. Easement on Riparian property – the bank of rivers and streams are
subject throughout their entire length and within a zone of 3 meters along
their margins to the easement of public use in general interest of
navigation, floatage, fishing and salvage. Easement adjoining the bank of
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navigable or floatable rivers is subject to the easement of towpath for the
exclusive service of river navigation and floatage.
c. Easement on dam or wier – a person who is construct a dam not an owner
of the banks or lands which should support it may establish the easement
or abutment of a dam after payment of the proper indemnity.
d. Easement for watering cattle – this is combined easement for drawing
water and right of way, which:
 Should be imposed for reasons of public use
 Should be in favor of a town or village
 Indemnity should be paid
e. Easement of aqueduct – any person who may wish to use upon his/her
own estate any water of which he/she can dispose shall have the right to
make it flow through the intervening estates with the obligation to
indemnity their owners as well as the owners of the lower estates upon
which the waters may filter or go down
f. Easement of Right of Way – the right to the owner of an estate which is
surrounded by other estates belonging to other persons and without an
adequate outlet to a public highway to demand that he be allowed a
passageway throughout such neighboring estates after payment of proper
indemnity. It is the needs of the dominant property that will determine the
width of the passage and these needs may vary from time to time
g. Easement of party wall – a common wall which separates 2 estates built
by common agreement at the dividing line such that it occupies a portion
estates on equal parts. It is govern by local ordinances and customs and
by rules of co-ownership.
h. Ease of lateral and subjacent support – no owner shall make excavations
upon his/her land/building of sufficient lateral or subjacent support
i. Easement of light – right to admit light form the neighboring estate by
virtue of the opening of a window or the making of certain openings.
 Requisites:
 Opening must not be greater than 30 centimeters (cm) squared
made on the ceiling or on the wall
 There should be an iron grating imbedded in the wall
j. Easement of view – the right to make openings or window to enjoy the
view through the estate of another and the power to prevent all
constructions or work which would obstruct such view or make the same
difficult which necessarily includes easement of light.
 Limitations:
 Direct views – the distance of 2 meters between the wall and
the boundary should be observed
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 Oblique views – walls perpendicular or at an angle to the
boundary line should be less than 60cm from the boundary line
to the nearest edge of the window
k. Easement of drainage of buildings – the owner of a building shall be
obliged to construct its roof or covering in a manner that the rain water
shall fall on his/her own land or on a street or public place and not on the
land of his/her neighbor even the adjacent land may belong to two or more
persons, one of whom is the owner of the roof. Even if it fall on the
owner’s land, he/she shall be obliged to collect the water in a way that it
will not cause damage to the adjacent land or tenement
l. Easement against nuisance – any act, omission, establishment, business
or condition of property or anything which:
 Injuries/endangers the health or safety of others
 Shocks, defies or disregards decency or morality
 Annoys of offends the senses
 Hinders or impairs the use of property
 Obstruct or interferes with the free passage to any public highway
or street or body of water
553. Modes of extinguishing easements (Key: NCR-REM-Waiver):
a. Non-use for ten )10) years with respect to discontinuous easements
computed from the day on which they ceased to be used and with
respect to continuous easements from the day which the act contrary to
the same took place
b. When either or both estates fall into the condition that the easement
Cannot be used
c. Renunciation of the owner of the dominant estate
d. Redemption agreed upon between the owners of the Dominant and
Servient estates
e. Expiration of the term or fulfillment of the condition, if easement is
temporary or conditional and
f. Merger in the same person of the ownership of the dominant and
Servient estates
g. Waiver by the dominant estate
554. Tradition – is a mode of acquiring ownership as a consequence of certain
contracts by virtue of which the object is place in the control and possession of the
transferee, actually or constructively.
555. Kinds of Tradition
a. Real – actual delivery
b. Constructive
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 Tradition symbolica - parties make use of a token or symbol to
represent the thing delivered
 Tradition longa manu – by mere consent of the parties if the thing
sold cannot be transferred to the possession of the vendee at the
time of sale
 Tradition brevimanu – when the vendee already has possession
of the thing sold by virtue of another title
 Traditio constitutum possessorium – when the vendor continues in
possession of the thing sold not as owner but in some other
capacity
556. Prescription – one that acquired ownership of land by adverse possession for
the period of time required under the law provided the necessary legal conditions
are there.
557. Kinds of prescription
a. Acquisitive prescription – one which acquires ownership and other
real rights through the lapse of time in manner and under the
conditions laid down by law:
 Ordinary – requires possessions of things in good faith and
with just title for the time fixed by law
 Extraordinary – acquisition of ownership and other real rights
without need of the title or good faith or any other condition
 Requisites:
 Capacity to acquire by prescription
 A thing capable of acquisition by prescription
 Possession of thing under certain conditions
 Lapse of time provided the law
b. Extinctive prescription – rights and actions are lost through the lapse
of time in the manner and under the conditions laid down by law.
558. Prescriptive periods:
a. For good faith – 10 years and
b. For bad faith – 30 years
559. Principles under the Water Code of the Philippines
a. All waters belongs to the State
b. All water that belong to the State shall not be subject to acquisitive
prescription
c. The state may allow the use or development of waters by administrative
concession
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d. The utilization, exploitation, development, conservation and protection
of water resources shall be subject to the control and regulation of the
government through the National Water Resources Council and
e. Preference in the use and development of waters shall consider current
usages and be responsive to the changing needs of the country
560. Waters found on private lands that belongs to the State
a. Continuous or intermittent (constant) waters rising on such lands
b. Lakes and lagoons naturally occurring on such lands
c. Rain water falling on such lands
d. Subterranean or ground waters and
e. Waters in swamps and marshes
561. Water right – privilege granted by the government to appropriate and use
water.
562. Rules on changes of river course under the Water Code of the Philippines (PD
No. 1067)
a. When a river or stream suddenly changes its course to traverse private
lands, the owners of the affected lands may not compel the
government to restore the river to its former bed nor can they restrain
in the government from taking steps to revert the river or stream to its
former course.
b. The owners of the lands affected are not entitled to any compensation
for any damaged sustained thereby. However, the former owners of
the new bed shall be the owners of the abandoned bed in proportion to
the area lost by each
c. The owners of the affected lands may undertake to return the river or
stream to its old bed at their own expenses; provided, a permit is
secured from DPWH and the work pertaining thereto are commenced
within two (2) years from the change in the course of the river or
stream
563. Water permit – the document evidencing the water right.
564. Rule: No person’s hall appropriate water without a water right, which shall be
evidenced by a water permit including government instrumentalities or GOCC,
except:
 Appropriation of water by means of hand carried receptacles
 Bathing or washing
 Watering or dipping of domestic or farm animals and
 Navigation of watercrafts or transportation of logs and other objects by
floatation
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565. Rules on formation of islands
a. If formed on the sea
 Within Philippine territorial waters – the State owns the island
 Outside Philippine territory – the first country to occupy the island
b. If formed on lakes or rivers

 Navigable or floatable - own by the State
 Non-navigable or non-floatable
 If nearer to one margin or bank – to the riparian owner
nearest to the bank each
 If the equidistant from both banks – to the riparian
owners by halves divided longitudinally and
c. If a single island was formed to be more distant from one margin than
from the other – the owner of the nearer margin shall be the sole owner
thereto
d. There is no accession when islands are form by the branching of a river –

the owner retains ownership of the isolated piece of land
566. Whenever a river changing its course by natural courses and opens a new bed
through a private estate, this bed shall become a public dominion.
Property Relations between Husband and Wife
567. General Rule: Property relations shall be governed by Philippine laws,

regardless of the place of the celebration of the marriage or the parties’ residence,
exceptions:
a. If both spouses are aliens even if married in the Philippines
b. As to extrinsic validity of contracts:
 Not situated and executed in the Philippines
 Situated in the foreign country but executed in the Philippines
 Contrary stipulation
568. Rule: Both husband and wife can engage in any lawful enterprise or profession
without the consent of the other. Exception: the other spouse may object only on
valid, serious and moral grounds.
569. Rights and obligation between husband and wife:
a. Live together
b. Observe mutual love, respect and fidelity
c. Render mutual help and support
d. Fix the family domicile
e. Joint responsibility for the support of the family
f. Joint management of the household
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570. The property relations between husband and wife shall be governed by:
a. Marriage settlements or ante-nuptial agreements executed before the
marriage celebration
b. The provisions of the law as amended by the Family Code
c. The local customs and
d. In the absence of local customs, rules on co-ownership will apply
571. Marriage Settlement – a contract entered into by persons about to be married
for the purpose of fixing the matrimonial property regime that should govern during
the existence of their marriage.
572. Conditions of marriage settlement
a. Made before celebration of marriage, except in case of judicial
separation of property during the marriage
b. In writing
c. Signed by the parties
d. Will not prejudice 3rd persons unless registered in the civil registry
e. Shall fix terms and conditions of their property relations
f. Signature of parents is required if couple is between 15-21 years of age
or by the guardian if any of the couple is civil interdictees and disabled
573. Future spouses may agree their marriage settlement, either:
a. The regime of absolute community or
b. The conjugal partnership of gains or
c. Complete separation of property or
d. Any other regime
574. Spouses who were married after the effectively of the Family Code without any
pre-nuptial agreement or when the agreed regime is void shall be governed by the
absolute community of property which shall commence at the precise moment on
the marriage celebration. (Note: The Family Code took effect on Augusts 3, 1988)
575. Rule: Community property shall consist of all property owned by the spouses
at the time of the marriage or acquired thereafter, except those:
 Property acquired before marriage by either spouse who has legitimate
descendants by a former marriage
 Property for personal and exclusive use except jewelries
 Property acquired during the marriage by gratuitous title except when the
donor, testator or grantor expressly provides otherwise
576. Property acquired during the marriage is presumed to belong to the community
of the spouses unless proven not.
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577. Properties considered exclusive properties of each spouse
a. By direct acquisition
 Those brought to the marriage as his/her own
 Those each spouse has acquired during the marriage by
gratuitous title
b. By substitution
 Those acquired by right or redemption, barter or exchange with
property belonging to only one of the spouses and
 Those purchased with the exclusive money/funds or property of
the husband or wife
578. Capital property – refers to any exclusive property brought by the husband to
the marriage
 As his own or
 He acquired during the marriage by lucrative title or
 Acquired by right of redemption, barter or exchange with other property
belonging exclusive to him or
 Purchased from his exclusive money/funds or property
579. Paraphernal property – refers to any exclusive property brought by the wife to
the marriage
 As her own or
 She acquires during the marriage by lucrative title or
 Acquired by right of redemption, barter or exchange with other property
belonging exclusively to her or
 Purchased from her exclusive money/funds or property
580. Donation by reason of marriage or donation propter nuptias – those donations
made before the marriage celebration thereof and in favor of one or both of the
future spouses.
581. Distinction between donation by reason of marriage and ordinary donation:
Nature Donation by reason of marriage Ordinary donation
a. As to  Acceptance is not necessary  Acceptance is
acceptance necessary
b. As to EXtent  Present and future properties  Only present properties
maybe donated maybe donated
c. As to Revocation  Grounds of revocation are  Grounds of
found in the family code revocation are found in
the Civil Code
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582. Requirements for donation propter nuptias to be valid:
a. Made before the celebration of the marriage
b. Made in consideration of the marriage and
c. Made in favor of one or both of the future spouses
583. Donations propter nuptias on property subject to encumbrances shall be valid.
In case of foreclosure of the encumbrance and the property was sold for less than
the total amount of the obligation secured, the done shall not be liable for the
deficiency. If sold more than the total amount of the obligation, the done shall be
entitled to the excess.
584. Rule: Donation between spouses during marriage shall be void either directly
or indirectly except on:
 Moderate gifts on occasion of family rejoicing
 Donation mortis causa
585. Neither spouse may donate any community property without the consent of the
other except in making moderate donations:
 For charity or
 On family rejoicing occasions or
 Family distress
586. Rationale why donation between spouses during marriage shall be void:
 To protect unsecured creditors from being defrauded
 To prevent indirect modification of the marriage settlement and
 To prevent stronger spouse from imposing upon the weaker one the
transfer of the latter’s property to the former
587. Husband and Wife can sell property to each other when:
 A separation of property was agreed upon in the prenuptial agreement
 There has been a judicial separation of property and
 There has been a legal separation except when spouses have been
separated-in-fact for more than 10 years
588. Either spouse may dispose by Will his/her interest in the community property.
589. Clara is married to Claro, the information of her marital status and the name of
her husband was reflected in the Absolute Deed of Sale as a requirement under PD
1529.
590. Kirk and Sha got married last October 20, 1988 with a prenuptial agreement of
conjugal partnership of gains but after several years obtained a judicial separation
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of property from the Regional Trial Court. The property relation governing between
Kirk and Sha is complete separation of property.
591. In conjugal partnership, a house intended for family use acquired by the use of
exclusive funds remains an exclusive property. In case of sale thereof, consent of
all beneficiaries is required even though acquired with the exclusive funds.
592. Separation-in-fact or separation-de-facto – the cessation of the cohabitation or
common life of the husband and wife under the same roof but they are still
providing their mutual duty of support and maintenance for the children.
593. The separation-in-fact between husband and wife shall not affect the regime of
absolute community or conjugal partnership, if without judicial or court’s approval.
594. In the sale or disposition of conjugal property, the wife’s consent must be
secured. If not secured, the wife may question the sale or disposition from the date
of sale within five (5) years.
595. Rules on properties bought on installment paid partly from exclusive funds of
the spouses and from conjugal funds if ownership was vested:
 Before the marriage – it shall belong to the buyer spouse
 After the marriage – it shall belong to the conjugal partnership
596. Wife’s consent to the husband’s disposition of conjugal property does not
always have to be explicit or set forth in any particular document as long as it is
shown by her acts of consent was indeed given.
597. Sale of conjugal property requires the consent of both spouses; otherwise, the
sale shall be void including the portion of the conjugal property pertaining to the
husband/wife who contracted the sale
598. Payment of personal debts contracted by either spouse before or during the
marriage shall not be charged to the conjugal partnership except if it has redound to
the benefit of the family.
599. Any alienation or encumbrance is void without the written consent of the other
spouse; however, it shall be interpreted as a continuing offer on the part of the
consenting spouse and the 3rd person until acceptance by the other spouse or
authorization by the court before the offer is withdrawn by either or both offerors.
600. Conjugal partnership of gains – that formed by husband and wife where they
place in a common fund the fruits of their separate property and the income form
their work or industry, the same to be divided between them equally upon the
dissolution of the marriage or the partnership.
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601. Properties under conjugal partnership
 Obtained from labor, industry, work or profession
 Acquired by chance
 Acquired during the marriage by onerous title with conjugal funds
 Acquired through occupation
 Fruits of the conjugal property
 Share of either spouse in hidden treasure
 Net fruits of their exclusive property
602. Rule: Administration of the community property shall belong to both spouses
jointly, except:
 In case of disagreement, husband’s decision shall prevail subject to the
recourse to the court by the wife for a proper remedy within 5 years
from date of contract
 In case one spouse is incapacitated or unable to participate in the
administration of the common properties, the other spouse may assume
sole powers of administration which does not include disposition and
encumbrance.
603. Dowry system may govern the property relations between spouses provided
that the legal requirements are complied with.
604. Rules on Game of Chance
 Loss – shall be borne by the lose-spouse sand shall not be charged to
the community property
 Winnings – shall form part of the community property
605. The absolute community and conjugal partnership terminates or can be
dissolved:
a. Upon the death of either spouse
b. When there is a decree of legal separation
c. When the marriage is annulled or declared void or
d. Judicial separation of properties during the marriage
606. The Philippine Constitution (presently the 1987 Constitution) – is the foremost
or main law governing the right to own real estate in the Philippine jurisdiction.
607. In co-ownership, a co-owner can dispose his/her share without the consent of
his/her co-owners.
608. Corporation cannot acquire agricultural lands of public domain by patents.
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609. The title to an inherited property may be transferred to the sole heir upon
payment of the estate tax and the execution, publication and registration of an
Affidavit of Self-Adjudication.
610. Property escheated to the government is considered as public dominion.
611. Escheat – the reversion of private property to the State due to the intestate
death of the owner who is not survived by any legal heir or there is no qualified
heirs are surviving. It is also the automatic conveyance of real property to the State
upon the owner’s death due to the essence of will, heirs or failure to pay taxes.
612. Just Compensation – refers
 The money paid by the State when a public agency takes private
property and converts it for public use
 To a fair and full equivalent for the loss sustained which is the
measure of the indemnity not whatever gain would accrue to the
expropriating entity (JM Tuason & Co,Inc. vs. land Tenure Administration, 31
SCRA 431, 1976)
 To the equivalent for the value of the property at the time of its taking
 The full and fair equivalent of the property sought to be expropriated
 The sum of a money which a person, desirous but not compelled to
buy and an owner is willing but not compelled to sell, will agree upon
as to the price to be given and receive for it (B.H Berkenkotter and
Company vs CA 216 SCRA 1992; Manila Railroad Co. vs Velasquez, 32 Phi 286;
Association of Small Landowners in the Phils., Inc. vs Secretary of Agrarian Reform,
175 SCRA 378)
613. Real Property held by the owner and/or developer of buy and sells business or
used in connection with trade, business or source of income and is also considered
inventory or stock in trade is referred to as Ordinary Assets.
614. Family Code of the Philippines – the law that governs the property relations of
couples who plans to get married at present times.
615. Regalian Doctrine – means all lands of public domain belongs to the State.
616. Res ALicujus – refers to property/things owned by a particular/specific person
or group of persons.
617. Res Alienae – refers to property/things belonging to another.
618. Res Communes – refers to property/things owned by nobody subject to use of
everybody.
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619. Instances where escrow in real estate is proper – when
 Title to the property has certain annotations which the seller assume
cancellation
 Seller is given time to vacate the property and escrow is provided to
ensure delivery within the stipulated period and
 The property is with informal settlers (squatters) and Seller assumes
responsibility to eject them
620. Future marriage which do not intend to enter a prenuptial agreement shall be
governed by the Family Code of the Philippines and their property relations shall be
absolute community of property.
621. Basically, two types of limitations on the right of ownership over land area:
government or legal and contractual.
622. Andrew, a foreigner married Juana, a Filipino acquired a house and lot in cash
and registered it at the Register of Deeds who acquired Andrew to execute an
affidavit of waiver of his rights over the property, the waiver is considered void.
623. In a sale of land where the price stated is in per sqm but the actual area is
smaller than what was stated in the contract of sale, the buyer has the right to
rescind the contract, if the lacking area is not less than 10% as provided in the
contract.
624. Mrs. Mara Clara, a Mexican housewife is contemplating of entering into a
lease agreement with a group of Filipino landowners for real estate properties in the
Philippines. The allowable period of such lease shall be an initial period of up to 50
years, renewable for another 25 years.
625. John and Mary, of legal ages cohabitated (live-in) as husband and live, their
property relations shall be co-ownership.
626. Ms. Angie will get married soon and will enter into a prenuptial agreement that
provides on complete separation of property regime. The property relations after
her marriage would be separation of property.
627. Reclamation – refers to a mode of acquiring title that needs government
approval in filling submerged.
628. When there is no stipulation of the period which the buyer can redeem the
property in a Pacto de retro contract, the vendor shall have right to redeem the
property within four (4) years.
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629. Atty. GUB donated to his daughter-Argie a house and lot as wedding gift
before the actual celebration of the marriage in September 26, 2009, the property
will be considered community property.
630. Argie inherited lands before she got married in September 26, 2009 without
any prenuptial agreement; the property is considered paraphernal property.
631. Table of Legitimes
Survivor Legitime Notes

 Legitimate ½ Divided by the number of legitimate
Children children whether they survive alone or
with concurring compulsory heirs
 1 Legitimate Child ½
 Surviving Spouse ¼
 2 or more ½
Legitimate
Children Equal to 1
 Surviving Spouse legitimate
child
 Legitimate ½
Children ½ of 1
 Illegitimate legitimate
Children child
 Legitimate ½ All the concurring Children get from the

Children ¼ half tree portion, the share of the
 Surviving Spouse ½ of 1 Surviving Spouse having preference
 Illegitimate Legitimate over the illegitimate Children whose
Child share may suffer reduction pro-rata
Children
because there is no preference among
themselves
 Legitimate ½ Whether they survive alone or with
Parents- concurring Children
Ascendants
 Legitimate ½ Illegitimate Children succeed in the ¼ in
Parents- equal shares
Ascendants ¼
 Illegitimate
Children
 Legitimate ½
Parents-
Ascendants ¼
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 Surviving Spouse
 Legitimate ½
Parents-
Ascendants 1/8
 Illegitimate
Children
 Illegitimate ½ Divided equally among the Illegitimate
Children Children
 Surviving Spouse 1/3
 Illegitimate 1/3
Children
 Surviving Spouse ½ 1/3 if marriage is in articulo mortis and
deceased spouse dies within 3 months
after the marriage
 Illegitimate ½
Parents
632. Table of Intestate Shares
Survivor Intestate Share

 Legitimate Children ½
 Surviving Spouse ½
 2 or more Legitimate Children Consider Surviving Spouse as 1
 Surviving Spouse Legitimate Child, then divide the
estate by total number
 Legitimate Parents- ½
Ascendants ½
 Surviving Spouse
 Legitimate Parents- ½
Ascendants ¼
 Illegitimate Children
 Illegitimate Children ½
 Brothers and Sisters ½
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633. Per Administrative Order No. 50-99 in matters of expropriation proceeding, if
there is conflict as to payment of just compensation the concerned government
agency expropriation a private property is required to initially pay an amount
equivalent to fifteen percent (15%) of the amount offered to the owner and to
deposit the amount in court.
634. Republic Act No. 8974 (Expropriation Law) –
 Approved on November 7, 2000
 Private property shall not be take for public use without just
compensation (Art III, Sec. 9, 1987 Constitution)
 The State shall ensure that owners of real property acquired for national
government infrastructure projects are promptly paid just compensation
(Sec. 1, RA#8974)
 Provides guidelines for payment or just compensation as follows:
 Implementing agency to immediately pay the property owner the
amount equivalent to the sum of (a) 100% of the Value of the
property based on the current relevant zonal value and (b) value
of the improvements
 If there is no zonal value, BIR within 60 days from the date of
expropriation case to come up with zonal value of the subject
 In case of project with utmost urgency and importance and there
is no existing valuation of the area concerned, the implementing
agency shall immediately pat the property owner its proffered
value or offered Value/FMV taking into consideration the
following (Sec. 5, RA #8974)
 Classification and use for which the property is suited
(legal and highest use)
 Developmental costs for improving the land
 Value declared by the owner at the assessor’s office
 Current selling price of similar lands in the vicinity
 Reasonable disturbance compensation for the removal
and/or demolition of certain improvement on the land
and for the value of improvements thereon
 Size, shape or location, tax declaration and zone
valuation of the land
 Price of the land as manifested in the ocular findings,
oral as well as documentary evidence presented and
 Such facts and events as to enable the effected
property owner(s) to have sufficient funds to acquire
similarity situated lands of approximate area as those
required from the government and thereby rehabilitates
themselves as early as possible
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635. Jurisprudence on Expropriation Cases
 Just compensation means the FMV of the property being taken by the
government plus (+) consequential damage less (-) consequential
benefits, if any (JM Tuazon and Co., Inc. vs Land Tenure Administration 11, SCRA 431,
1976)
 To a fair and full equivalent for the loss sustained which is the measure
of the indemnity not whatever gain would accrue to the expropriating
entity (JM Tuazon and Co., Inc. vs Land Tenure Administration 11, SCRA 431, 1976)
 The sum of money which is a person, desirous but not compelled to buy
and an owner is willing but not compelled to sell, will agree upon as to
the price to be given and received for it (B.H. Berkenkotter and Company vs CA
216 SCRA 1992; Manila Railroad Co. vs Velasquez, 32 Phi 286; Association of Small
Landowners in the Phils., Inc. vs Secretary of Agrarian Reform, 175 SCRA 378)
 The measure of just compensation is not the taker’s gain but the
owner’s loss. The compensation to be just, must be fair not only to the
owners but also the taker. Even as undervaluation would over valuation
unduly favor him to the prejudice of the government. (Province of Tayabas vs.
Perez, 66 Phil. 467; Municipality of Daet vs CA 93, SCRA 506; Manotok vs NHA 150 SCRA 89)
 In determining the FMV, a bonafide sale made in the ordinary course of
business of properties of the same character in the immediate vicinity
made sufficiently near in point of time of the expropriation to exclude
general increase/decrease in the value of properties due to changed
commercial conditions (Manila Railroad Co. vs Fabie, 17 Phil. 206,208)
 Much less can the assessed value of the property be used as the basis
for pegging the just compensation. It is a matter of judicial notice and
public knowledge that the assessed value (AV) is lower than the FMV
(Alano, 36 Phil 506)
 The size, shape and location of the land should be considered
(Berkenkotter, 216 SCRA 587). Thus, even if a parcel of land is
agricultural, if there are several commercial establishments nearby, it
should not merely be appraised as agricultural (Republic vs CA 154 SCRA 428)
 The valuation made by the owner of the property sought to be
expropriated should set the ceiling of just compensation to be
accredited to him, because it is an admission against interest (Republic vs
Narciso GR#L-6594)
 Just compensation is not only correct determination of the amount to be
paid to the owner of the and expropriated but also prompt payment
thereof (Municipality of Makati vs CA, 190 SCRA 206, 1990)
 Consequential damages refer to damages to or destruction of property
not actually taken and they arise when the property actually taken or
entered but an injury to its occurs as the result of an act lawfully done
by another. Thus, even if only a portion of a parcel of land was taken, if
the remainder is worthless to the owner because of the smallness of its
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size or the irregularity of its shape, the owner should be paid for the
entire property (Tenorio vs Manila Railroad Co., 22 Phil 411)
 Various factors can come into play in the valuation of specific property
singled out for expropriation. The values given by Provincial Assessors
are usually uniform for very wide areas covering barrios or even as
entire town with the exception of the Poblacion. Individual differences
are never taken into account. The value of the land was based on such
generalities as its possible cultivation for rice, com coconuts or other
crops. Very often land described “cogonal” has been cultivated for
generations. Buildings are described in terms of only two or three
classes of building materials and estimates of areas are more often
inaccurate than correct. Tax values can serve as guides but cannot be
absolute for just compensation (EPZA vs Dulay, G.R.#59503, April 29, 1987)
Fundamentals on Contracts, Sales, Mortgages, Leases, Property

Ownership and Family Code
636. Contract – is a meeting of minds between two persons whereby one binds
himself with respect to the other to give something or render some service return.
637. Elements of a valid contract (Key: COC)
 Consent
 Object and
 Cause or Consideration)
638. Reformation of instrument – means that there having a meeting of the minds of
the parties to a contract; however, their true intention thereof was not expressed in
the instruments purporting to embody the agreement by reason of fraud, accident,
mistake and inequitable conduct.
639. Unenforceable contracts – those contracts which cannot be sued or enforced
unless they are ratified.
640. Unenforceable contracts
a. Those entered into in the name of another person by one who has no
authority or legal representation or who has acted beyond his power
b. Those that do not comply with the Statue of Frauds and
c. Those where both parties are incapable of giving consent
641. For a contract to be valid, it is essential that there is a meeting of minds
between the parties involved in the contract.
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642. Escrow – an agreement where the consideration of a contract is deposited
with a 3rd party who is authorized to release said consideration or payment to the
seller after the compliance of certain conditions.
643. Persons holding properties in fiduciary relation which cannot directly or
indirectly acquire by purchase the properties even at public/judicial auction: (Key:
AGEA-PO-Justices-Others)
a. Agents – as to the property whose administration or sale may have been
entrusted to him/her unless consent of the principal has been given
b. Guardian – as to the property of the person(s) who may be under his/her
guardianship
c. Executors and Administrators – as to the property of the state under
administration
d. Public Officers and employees – as to the properties of the government,
its political subdivision or any GOCC or institution which administration
has been entrusted to them
e. Justices, Judges, Prosecutors, Lawyers, Clerks of Courts Officers and
Employees – as to the property and rights in litigation or levied upon on
execution before the court and
f. Any other persons specially disqualified by law
644. Instances when Special Power of Attorney is necessary to secure for the
Agent to bind the Principal
a. To make payments which are not usually considered as acts of
administration
b. To enter into any contract by which the ownership of an immovable or
real property is transmitted or acquired either gratuitously or for a
valuable consideration
c. To waive any obligation gratuitously
d. To create and convey real rights over immovable/ real property
e. To effect novation which put an end to obligations already in existence at
the time the agency was constituted
f. To compromise, to submit questions to arbitration, to renounce the right
to appeal from a judgment, to waive objections to the venue of an action
or to abandon a prescription already acquired
g. To obligate the principal as guarantor or surety
h. To make gifts except customary ones for charity or those made to
employees in the business managed by the agent
i. To loan or borrow money unless the latter act is urgent and indispensable
for the preservation of the things which are under administration
j. To lease any real property to another for more than one (1)year
k. To bind the principal to render some service without compensation
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l. To bind the principal in partnership contract
m. To accept or repudiate an inheritance
n. To ratify or recognize obligations contracted before the agency and
o. To perform other act of strict dominion
645. Policitation – an unaccepted promise to buy or sell and even if accepted by the
other party it is not binding upon the promissor and maybe withdrawn anytime.
646. Right of first refusal – an innovative juridical relation and if included in the
contract it is enforceable by specific or definite performance. (Equal Really, Inc. vs.
Carmelo, et.al)
647. Pactum Reservati Domini – a stipulation where parties in a contract agree that
despite delivery of the thing/property the ownership thereof shall remain with the
seller until such time that the Buyer had fully paid the price.
648. Contract of Sale – refers
 A contract whereby one of the contracting parties obligates himself to
transfer the ownership of a property and for the other to pay a price
certain in money or its equivalent
 Title passes to the buyer upon the delivery of the property being sold
 Toa document which will transfer, conveys and assigns real estate
from the owner to the buyer
649. Contract to Sell –a
 Is a kind of sale whereby payment of the contract price is made at
some future date and that ownership of the property shall be retained
by the owner until full payment is made
 Contract whereby ownership is reserved in the vendor and is to be
passed until full payment of the price
650. Oral contract of sale over a parcel of land is valid and binding between the
parties but with respect to innocent third (3) persons it is not binding upon them.
651. Absolute Deed Sale – refers
 An agreement to be complied by either the Seller or Buyer without any
stipulated conditions
 A document which transfers, conveys, and assigns a real estate
property from the owner to the buyer
652. Distinctions between Contract of Sale and Contract to Sell
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Contract of Sale Contract of Sell
a. failure to pay is a resolutory a. failure to pay is a positive
condition which puts an end to the suspensive condition which does not
transaction end the transaction
b. after delivery, ownership is lost b. Delivery does not affect loss of
unless it is rescinded ownership
c. title to the property passes to the c. Ownership of the property is
buyer after compliance of his/her retained by the Seller until compliance
obligation of the Buyer on the condition
653. Condition Sale – one whereby an agreement contained terms and conditions
to be undertaken by either the parties.
654. A Seller need not be the owner at the time of the perfection of the contract but
should be the owner at the time of delivery because it is only when the object is
delivered that the Buyer acquires ownership.
655. Characteristics of a Contract of Sale
 Consensual – perfected by mere consent without any further act
 Bilateral – both parties bound to fulfill obligations towards each other
 Onerous – thing sold is with a consideration
 Commutative – the thing sold is considered the equivalent of the price
paid and vice-versa
 Nominate – a name is given
 Principal – does not depend for its existence/validity upon another
contract
656. Statute of Fraud – a legal provision which requires agreement for the sale of
real estate to be in writing and subscribed by the parties in order to be enforceable.
657. Gross inadequacy of price does not affect a contract of sale except if it may
indicate a defect in the consent or that the parties really intended a donation or
some other act or contract.
658. An important element in a contract of sale is that the Seller transfers
ownership of the property/thing to the Buyer.
659. Pacto De Retro Sale – refers to the sale wherein the Seller has the right to
repurchase the subject matter or the property being sold.
660. Period when the Vendor a retro can repurchase the property
a. In the absence of an agreement
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 It should be made within four (4) years from the date of the signing
of the contract
b. If there is an agreement
 The period should not exceed ten (10) years
661. Dacion en Pago or Dation in Payment – refers
 To property alienation or sale to the creditor to satisfy a debt in money
or in payment of the loan
 The conveyance of real property in payment of a financial obligation
 To that short of foreclosure, the mortgage agrees to transfer ownership
of the mortgage property to the mortgagor
662. In the sale of a property with right to repurchase or in pacto de retro, the
redemption period shall be
 Four (4) years from the date of contract in the absence of any
agreement
 Should not exceed ten (10) years if there be an agreement
 However, the vendor may still exercise the right to repurchase
 Within thirty (30) days from final judgment in a civil case that
the contract is a true sale with a right to repurchase
663. Chrisela entered into a pacto de retro sale; however, what was actually
entered as a mortgage using the property she is presently occupying as collateral.
Hence, it may be considered as an equitable mortgage.
664. Rule: Spouses cannot sell property to each other except when there is judicial
separation of property. Either spouse may dispose by will his/her interest in the
community property without the consent of the other spouse.
665. Rule: When a person sells a lot, such person is bound to transfer the
ownership thereof.
666. Deed of Sale with mortgage – refers to that sale where portion of purchase
price is paid in cash and the balance is converted into a loan in favor of the Seller
which is the object of the sale or the property is mortgage to secure payment of the
loan to the Seller.
667. Sale with Assumption of Mortgage – refers to the sale where portion of the
purchase price is paid in cash and balance is paid by the buyer through an
assumption of an existing mortgage of the subject property.
668. Obligations of the Seller/Vendor
a. To transfer the ownership of the determinate thing
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b. To deliver the thing/property
c. To warrant against eviction and hidden defects
d. To take care of the thing/property pending delivery with proper diligence
e. To pay for the expenses for the execution and registration of the deed
of sale unless there is a stipulation to the contrary
669. Obligations of the Buyer/Vendee
a. To accept delivery and
b. To pay the price of the thing sold
670. Rules on Double Sale or Order of preference in case a property is sold to two
or more buyers
 The buyer in good faith who first register the sale at the Registry of
Property or Register of Deeds has the better right to ownership of the
property being sold or the Vendee who first register the sale in good faith
 If the sale is not registered nor there is no inscription, the buyer in good
faith who first took possession has the preferential right or the Vendee
who first took possession in good faith, in case none of the Vendees
registered the sale and
 If there is no registration nor inscription nor possession, the buyer in
good faith who can present the oldest title has the better right or the
Vendee who presents the oldest title in good faith, in the absence or
registration and possession by both Vendees.
671. Purchaser in good faith – one who buys the property of another without notice
that some other person has a right or interest in such property and pays a full and
fair price thereof at the time or purchase or before he/she has notice of the claim or
interest of some other person in the property.
672. The Rule of Double Sale giving better right to the buyer in good faith who
registered the sale does not apply to unregistered land.
673. The Rule of Caveat Emptor is applicable to execution sales. The Buyer has to
exercise due diligence. The sheriff does not warrant the title to the property sold by
him/her and it is not incumbent upon the Sheriff to place the buyer in possession of
the property being sold.
674. The Statute of Fraud is not applicable when by virtue of an contract of sale, the
Seller delivered to the Buyer a parcel of land which was only partially paid because
it does not apply to partial performance.
675. Instances when contract is presume to be an equitable mortgage
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 When the price of a sale with right to repurchase is unusually
inadequate
 When the Vendor remains in possession as lessee or otherwise
 When upon or after the expiration of the right to repurchase another
instrument extending the period of redemption or granting a new period
was executed
 When the purchaser retains by himself/herself a part of the purchase
price
 When the Vendor binds himself to pay the taxes in the thing/property
sold
 In any other case where it may be fairly concluded that the real intention
of the parties is that the transaction shall secure the payment of a debt
of the performance of any other obligation
676. The right to purchase should be reserved in the same Deed of Sale. If
reserved in a separate instrument, then the document is not a sale with right to
repurchase but a mere promise to sell which is at the discretion of the Vendee a
retro.
677. The essence of a sale with right to purchase is that the title and ownership of
the property sold is immediately conferred in the Vendee a retro subject to the
resolutory condition of purchaser by the vendor a retro within a stipulated period
and failure to perform the said resolutory condition confers upon the vendee the
absolute title or ownership over the property sold. The execution of a contract
extending a contract of sale with right to repurchase can be interpreted as indicative
of an equitable mortgage.
678. In case of failure to redeem there shall be consolidation of ownership in the
Vendee a retro which failure shall result in the loss of the right to repurchase.
Registration of the consolidated ownership requires a judicial order after the vendor
shall have been notified in order to comply the due process clause.
679. Vendor cannot avail the right to repurchase without returning to the Vendee
the price of the sale and in addition the expenses of the contract and any other
legitimate payments made by reason of the sale as well as the necessary and
useful expenses made on the property sold.
680. Accion redhibitoria – an action instituted by the vendee against the vendor to
avoid a sale on account of some vice or defect in the thing/property sold which
render it unfit for the use intended or which will diminish its fitness for use to such
extent that had the vendee been aware of it he/she would not have acquired it.
681. Accion quantiminoris – an action to procure the return of a part of the purchase
price paid by the vendee to the vendor by reason of defect of the thing/property
sold.
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682. Mary married Roy in 1999. On 2011, Mary’s surviving parent died and she
inherited a two (2) hectare lot in Makati. After the settlement of the estate, Mary
sold the property without the consent and over the objection of Roy. The sale is
valid over the objection of Roy because the property being sold is a paraphernal or
exclusive property of Mary.
683. Not in all cases that a deed sale titled in the name of “Gil married to Larrie’ has
to be signed by both spouses because there are properties such as: the exclusive
property which title was only acquired during the marriage but the payment thereof
was taken from the exclusive funds of either spouse.
684. Real Estate Mortgage – refers
 To an accessory contract whereby the debtor guarantees the
performance of the principal obligation by subjecting the real property or
rights thereto as security in case if non-payment of the obligation within
the agreed period
 To a contract where a real property is given as collateral to secure the
performance or fulfillment of a principal obligation
685. Mortgage is taken from the French words “mort” and “gage”. “Mort” means to
“dead” and “gage” means pledge – which means unproductive pledge or dead
pledge.
686. Essential conditions of Real Estate Mortgage
a. It must be constituted to secure the performance of the principal
obligation
b. The subject matter of the contract must be immovable property or
alienable real rights upon immovable
c. The mortgage must be absolute owner of the property being mortgage
d. The mortgage should have the free disposal of the mortgaged and in the
absence thereof should be legally authorized for the purpose
e. When the principal obligation becomes due, the property mortgage may
be alienated for the payment of such obligation
687. Registration in the Registry of Property is not necessary for the validity of the
REM contract. It is necessary for the purpose of binding 3 rd persons. Whether the
REM is registered or not, it is binding upon the properties.
688. Pacta Non Alienado – a stipulation in a real estate mortgage contact
prohibiting the mortgagor from alienating the mortgage property during the
mortgage period.
689. Defeasance Clause – is provision in a mortgage contract that ends the
mortgage when all payments are made transferring title to the property back to the
mortgagor or terminating the lender’s interest in the property.
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690. Antichresis –refers to
 A contract whereby person borrowing money of another hands over
his/her property to the creditor allowing the use and occupation thereof
for the interest of the money lent
 A contract by virtue of which the creditor acquires the right to receive the
fruits of an immovable of his debtor with the obligation to apply them to
the payment of the interest if owing and thereafter to the principal of his
credit (Art .2132, New Civil Code)
 A contract wherein the mortgage receives the fruits of the property with
the obligation to apply them in payment of the interest and the principal
obligation
 A contract where a property is hypothecated to secure an obligation
where the creditor is given the right to possess the property and collect
the fruits thereof and to hypothecate means a property with transfer of
possession
691. Types of Real Estate Mortgage (REM)
a. Blanket Mortgage – refers
 A mortgage which covers two or more properties being the
subject thereto
 To a loan to be secured by numerous or several properties of the
property owner because one property as a collateral is insufficient
of inadequate
b. Open-Ended Mortgage – a type of mortgage which permits borrowing
additional funds at a later date against the same collateral
c. Voluntary or conventional mortgage – those agreed to between the
parties or constituted by the will of the property owner in which they are
created
d. Legal mortgage – those constituted by operation of law or by express
provision of the law
e. Equitable mortgage – refers
 one in the form of contract of sale but is actually a mortgage
 to a contract which lack one or some of the formalities prescribed
by law but show the intention of the parties to charge real estate
or real rights as security for the payment of a debt and contains
nothing which is impossible or contrary to law
692. Automatic Redemption Clause – is a
 provision in a blanket mortgage which states that a property which loan
value has been fully paid shall be released from the mortgage
 provision in a mortgage contract which release the property from the
encumbrance when the obligation is fully paid
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693. Pactum Commissorium - refers
 to the stipulation of a mortgage contract with authorizes the mortgage to
appropriate automatically the mortgaged property as his/her own upon
failure of the debtor/mortgagor to pay the principal obligation
 to the automatic appropriation of the property or object of the mortgage
upon the maturity of the loan
 to a provision in a mortgage contract which allows the creditor to
immediately appropriate the property mortgaged upon non-payment of
the amortizations
 a void stipulation of a mortgage contract and no legal effect
694. ABC Bank foreclosed a lot of Gillar Corporation. Gillar Corporation can redeem
the lot within 3 months from the foreclosure sale.
695. Mortgage in Possession – refers to one who has lawfully acquired actual or
constructive possession of the properties mortgaged to stand upon his/her rights as
mortgagee and not to claim under another title for the purpose of enforcing his/her
security on such property and making the property’s income help to pay the debts.
696. Pending Fruits (Fruits not yet harvested) of the property when the obligation
become due or matured are covered by the contract of real estate mortgage but it
does not include those fruits which are already harvested.
697. Up Set Price or Tipo – a stipulation in a mortgage or real property fixing a
minimum price at which the property shall be sold to become operative in the event
of a foreclosure sale at public auction, which stipulation is considered void because
the property should be sold to the highest bidder.
698. Foreclosure proceeding – is
 one by which the mortgage property shall be sold at public auction and
the proceeds of the sale shall be applied for the satisfaction of the
obligation or the debt
 a procedure or process wherein a property used as collateral for a debt
is sold to pay the loan in case of debtor or borrower’s default
699. An unregistered mortgage is binding only to the mortgagor and mortgagee.
700. Deficiency Judgment – a judgment for the mortgagor to pay the balance of an
obligation if the proceeds of the foreclosure sale are not sufficient to cover the
mortgage obligation.
701. Kinds of Foreclosure proceedings
a. Extra-judicial foreclosure –
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 one whereby the mortgagee as attorney-in-fact of the mortgagor
applies for foreclosure with the Sheriff where the property is
located
 the Sheriff makes the required publication of sale and undertakes
the sale in public auction
 Sheriff issued certificate of sale to the winning bidder and cause
the certificate of sale to be annotated at the back of the certificate
of title
b. Judicial foreclosure – one where the mortgage filed complaint with the
proper court which orders the payment of obligations within 90 days or
sale the property at a public auction arises if mortgagor failed to pay
and confirms sale at public auction.
702. The right to foreclose a mortgage prescribes in ten (10) years, in a judicial
foreclosure of mortgage; the mortgage has an equity of redemption.
703. Redemption of foreclosed property – refers to a operation by which the
mortgagor reacquires or buys back the property which has passed under the
mortgage or diverts the property of the lien which the mortgage have been created.
704. Rights of Redemption – right of the mortgagor to redeem the mortgaged
property within certain period after it was sold for the satisfaction of the debt and to
be exercised within one (1) year from the registration of the sale.
705. Equity of Redemption – right to the mortgagor to redeem the mortgaged
property after death in the performance of the conditions of the mortgage but before
the sale of the mortgaged property or confirmation of the sale.
706. Property which was judicially foreclosed can no longer be redeemed by the
owner after the auction sale has been confirmed by the court except, when the
mortgagee is a bank whereby the redemption can still be made within one (1) year
from auction sale.
707. Legal Redemption – the right to be subrogated on the same terms and
conditions stipulated in the contract in the place of one who acquires a property or
thing by purchase or dation in payment or by any other transaction whereby
ownership is transmitted by onerous title.
708. Conventional Redemption takes place when the vendor reserves the right to
repurchase the property/thing sold with the obligation to return the price delivered
as well as the necessary and useful expenses made on the property/thing.
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709. Distinction between the Real Estate Mortgage and Pacto de Retro Sale
Real Estate Mortgage Pacto De Retro Sale or Sale with right to
Repurchase
 An accessory contract  A principal and independent contract
 There is no transfer of title and  There is a conditional transfer of title and
possession of the property possession
 Creditor has no right to the fruits of  Vendee a retro is entitled to the fruits even
the property during the pendency of during the period of redemption
the mortgage
 If debtor failed to pay the debt, the  As soon as there is a consideration of title in
creditor cannot appropriate the the vendee a retro, he/she may dispose it as
property mortgaged nor dispose it absolute owner
 If the debtor failed to pay within the  If the vendor a retro does not redeem the
time agreed upon the mortgagee property within the time agreed upon, the
does not acquire the property vendee a retro irrevocably acquire absolute
mortgaged ownership thereof
710. In case of involuntary conveyance such as foreclosure sale, title to real estate
can be transferred to another person even without the consent of the registered
owner.
711. In extrajudicial foreclosure of mortgage or real estate acquired through
homestead, the redemption period is five (5) years from auction sale.
712. Relationship or Similarity of Real Estate Mortgage and Pledge
 Both guarantees the performance of a principal obligation
 Both subjects the property for the fulfillment of the obligation as security
 In both cases, the creditor cannot appropriate the property to
himself/herself
 The property should be sold and the proceeds shall be applied in
payment, if the obligation is not paid
713. Distinction between Real Estate Mortgage and Antichresis
Real Estate Mortgage Antichresis
 Mortgagor retains possession of the  Mortgagor/Debtor surrenders possession
property including the fruits of the property including the fruits to the
Creditor
 Creditor does not receive the fruits  Creditor generally receives the fruits
 Mortgagor/Debtor pays the property  Mortgagee/Creditor is obliged to pay the
taxes property taxes
714. Acceleration Clause – a provision included or inserted in the mortgage which

will allow the mortgage to foreclose the collateral property because of non-payment
of monthly amortizations that makes the principal obligation due and demandable.
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715. The mortgagor may redeem the property which has been foreclosed
extrajudicially within a period of one (1) year from date of foreclosure sale.
716. Conditions for Valid Redemption
a. Redemption should be made within 12 months from the time the
registration of the sale
b. Payment of the purchase price plus the legal interest together with the
related taxes paid thereat by the purchaser computed from the date of
registration of the sale
c. Written notice of the redemption should be served to the officers who
made the same and the duplicate filed with the proper Register of Deeds
Office.
717. Lease – refers to
 A contract between the property owner and a tenant setting forth the
conditions of the use of the property subject to the lease
 An agreement where one of the parties binds himself to give to another
the enjoyment or use of a thing/property for a price and for a certain
period
 A consensual, bilateral, onerous and commutative contract by virtue of
which one person binds himself to grant temporarily the use of a
thing/property or to render some services to another who undertakes to
pay some rent/price or compensation
718. RA#9653 (Rent Control Act of 2009) – refers
 an act establishing reforms in the regulation of rent of certain residential
units which was approved last July 14, 2009 and took effect on
September 30, 2009
 Coverage
 All residential units in the National Capital Region (NCR) and
other highly urbanized cities the total monthly rent for each unit
ranges from P1.00 to P10,000 and
 All residential units in all other areas the total monthly rent for
each unit ranges from P1.00 to P5,000 without prejudice to
existing contracts
 Limitations on Increases in Rent under RA#9653
 Increase in rentals shall not be imposed on any residential unit for
a period of one (1) year from effectivity of the law (September 30,
2009)
 After one year from September 30, 2009 until December 31, 2013
rent of any residential unit shall be increased by more than seven
(7%) per annum as long it is occupied by the same lessee
 Lessor may set the initial rent for the next lessee when the
residential unit become vacant only
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 Rental increases shall not be more than once a year for boarding
houses, dormitories, rooms and bedspaces offered for rent to
students as defined under RA#9653
 Housing and Urban Development Coordinating Council (HUDCC) is
granted with the authority to:
 Continue the regulation of rental for certain residential units
 Determine the period of regulation and its subsequent extensions
 Determine the residential units covered and
 Adjust the allowable limit on rental increases per annum taking
into consideration among others:
 NSO census on rental units
 Prevailing rental rates
 The monthly inflation rate on rentals of the immediately
preceding year and
 Rental price index
 Rent shall be paid in advance within the first five (5) days of every
current month or the beginning of the lease agreement unless the
contract of lease provides for a later date of payment
 The lessor cannot demand more than one (1) month advance rent and
more than two (2) months deposit which shall be kept in a bank under
the lessor’s account name during the entire duration of the lease
agreement
 Any and all interest that shall accrue on the bank deposit shall be
returned to the lessee at the expiration of the lease contract
 In case the lessee failed to settle rent, electric, telephone, water or such
other utility bills or destroys any house components and accessories of
the leased residential unit, the deposits and interests of the rental
deposited in the bank shall be fortified in favor of the lessor in the
amount commensurate to the pecuniary damage done by the lease.
719. Rent – means the amount paid for the use or occupancy of a residential unit
whether payments is made on a monthly or other basis.
720. Lessee – means the person renting a residential unit.
721. Owner/Lessor – shall include the owner/agent or administrator of the owner of
the residential unit.
722. Sublessor – refers to the person who leases or rents out a residential unit
leased to him by an owner.
723. Sublessee – means the person who leases or rents out a residential unit from
a Sublessor.
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724. Residential unit – refers to
 an apartment
 house and/or land on which another’s dwelling is located and used for
residential purposes
 building parts or units thereof solely used for
 dwelling places
 boarding houses
 dormitories
 rooms and
 bedspaces offered for rent by their owners except:
 motels
 motel rooms
 hotels
 hotel rooms
 those used for home industries, retail stores or other business
purposes if the owner thereof and his/her family actually live
therein and use it principally for dwelling purposes
725. For purposes of possessing the leased premises, the immediate members of
the family of the lessee or lessors shall be limited to:
 his/her spouse
 direct descendants or ascendants by consanguinity or affinity
726. Assignment of Lease or subleasing of the whole or any portion of the
residential unit including the acceptance of boarders or bedspacers without the
written consent of the owner/lessor is prohibited.
727. Lessee of real property cannot assign the lease to a third person without the
lessor’s written consent unless there is a stipulation in the contract.
728. No lessor or his successor-in-interest shall eject the lessee on the ground that
the leased premises have been sold or mortgaged to a 3 rd person whether the lease
or mortgage is registered or not.
729. Grounds for Judicial Ejectment or termination of lease agreement
a. Assignment of lease or subleasing of residential units in whole or in part
without the written consent of the owner/lessor including the acceptance
of boarders or bedspacers
b. Expiration of the lease period in the contract
c. Legitimate need of the owner/lessor to repossess the property for
his/her own use or for the use of any immediate member of his/her
family as a residential unit; provided,
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 The lease for a definite period has expired
 The lessor has given the lessee the formal notice three (3)
months in advance of the lessor’s intention to repossess the
property
 The owner/lessor shall not lease one (1) year from the time of
repossession
d. Lessor’s need to make necessary repairs of the leased premises which
is the subject of an existing order of condemnation by appropriate
authorities in order to make the said premises safe habitable; provided,
 after the said repair the ejected lessee shall have the first
preference to lease the same premises
 the new rent shall be reasonably commensurate with the
expenses incurred for the repair of the said residential unit
 if the residential unit is condemned or completely demolished,
the lease of the new building will no longer be subject to the first
preference rule
e. Arrears in rental payments for a total of three (3) months; provided,
 In case of refusal by the lessor to accept payment of the agreed
rent, the lessee may deposit by way of consignation the amount
in
 court or with the city or municipal treasurer or
 Barangay Chairman or
 in a bank in the name of and with notice to the lessor
 within one (1) month after the lessor’s refusal to accept
payment
 lessee shall thereafter deposit the rent within ten (10) days of
every current month
 failure to deposit the rent for three (3) months shall constitute a
ground for ejectment
 lessor upon authority of the court in case of consignation upon
joint affidavit by him and the lessee to be submitted to the city or
municipal treasurer or Barangay Chairman and to the bank
where deposit was made shall be allowed to withdraw the
deposits
f. Ownership of the Lessee with another residential unit which the lessee
may use as residence
730. Penalties for violating the New Rent Act (RA#9653)
 Fine of at least P25,000 up to P50,000 or
 Imprisonment of not less than one (1) month and one (1) day up to six
(6) months or
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 Both shall be imposed on any person, natural or juridical, found guilty
of violating any provision of law
731. A subdivision developer which have a rent to own package scheme for its
condominium projects in reference to the unit thereof, the monthly rental increases
shall not be subject to the New Rent Act (RA#9653), thereof has not limit on its
rental increases.
732. To have a valid contract of lease there should be meeting of minds between
the owner and the lessee whether there is an execution of written agreement or not.
733. In case of ejectment, the lessor/owner may file a case for unlawful detainer at
the Metropolitan or Municipal Trial Court.
734. If the lessor of a residential house shall enter into a new lease agreement with
the lessee; the lessor/owner is obligated to make sure that this is suitable for the
intended purpose of the lease.
735. Economic Rent – is the revenue derived from the use of land including the
forces inherent in the land.
736. Lease with Option to Buy - one whereby the owner leases the property to the
lessee-buyer with the privilege to exercise the right to buy thereof at a specific date
at an agreed price and the agreed rental maybe considered as part of the purchase
price when the lessee-buyer exercise the option.
737. Argie bought the house of PJ a retro. There was an unrecorded lease between
PJ and Larrie. Argie the buyer of the house cannot immediately terminate the lease
because the buyer a retro is not yet the owner while the period to repurchase the
house has not yet expired.
738. By tacit renewal of a contract of lease (tacita reconduccion) - refers to a legal
principle which implied that a new lease contract was created or established when
the lessee continues to occupy the leased premises for a least fifteen (15) days
after the expiration of the lease with the consent of the lessor and without any
notice to vacate from the premises given by either party.
739. Value in Exchange – refers to the worth of an object relative to other object
which can be compared and for which it can be exchange.
740. The lessee may sublease the premises to a 3 rd person without the consent of
the lessor, unless there is an express prohibition in the contract of lease without
prejudice to the responsibilities for the performance of the contract.
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741. If the lessee sublease the property to a 3rd person or to a sub-lease, the latter
may be held liable to the lessor for the rent due from the lessee being a subsidiary
thereto up to the amount due from the sub-lessee according to the terms of the
sublease.
742. Lease of Property – is one whereby one of the parties binds to give to another
the enjoyment or use property for a specified price/consideration and for a definite
or indefinite time/period but not more than for 99 years.
743. Lease of work/service – one of the parties binds himself execute a piece of
work or to render to the other some services for a price certain without the
existence of the principal and agent relationship.
744. On lease to aliens/foreigners, the period of lease on private lands shall be 25
years renewable for another 25 years, (PD#471 on fixing the maximum period for the
duration of Lease of Private lands to Aliens)
745. In a sale retro where it is stipulated that the vendor has the right to repurchase
the property “when he has the means”; it means that the vendor has ten (10) years
to redeem it.
746. Lease Fee Estate – refers to the right of the owner-lessor to receive the
contract rent and the reversion of the property at the end of the lease contract.
747. Rules of duration of Lease is not fixed
a. Urban property, if rent agreed is:
 Annual – from year to year
 Monthly – from month to month
 Weekly – from week to week
 Daily – from day to day
 Court may fix or determine a longer term/period
 for the lease after lessee has occupied the premises for more
than a year although monthly rental was paid and no period
for the lease has been set
 after lessee has been in possession for more than 6 months
in case of weekly rent
 after the lessee has stayed in place for more than a month in
case if daily rent
b. Rural Land, it is understood to have been made for the time necessary
for the gathering of the fruits which the whole estate may yield in one
year or which it may yield once, although two (2) or more years may
have elapsed for the purpose
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748. The law requires the lessor to maintain the lessee in the peaceful and
adequate enjoyment of the lease for the entire duration of the contract and see to it
that the enjoyment thereof is not interrupted or disturbed either by other’s acts or by
his/her own.
749. Grounds for judicial ejectment or termination of lease agreement other than
residential unit
a. Expiration of the lease period
b. Need of the Lessor to make the necessary repairs; provided, the
ejected lessee shall have the right of first refusal to lease the same
premises
c. Arrears in rental payment for 3 months or non-payment or rentals
d. Violation of any of the terms and conditions of the lease contract
e. Improper use or misuse of the leased premises/property
f. Legitimate need of the lessor to repossess to leased property for his
personal use
g. Subleasing or assignment of the lease without the written consent from
the Lessor and
h. Other violations under the law (Article 1673 & Art. 1683-NCC)
750. Conditions for judicial ejectment of Tenant ( BP Big#25, BP Big#877 as amended by

RA#6643 and 8437)
a. Need of the lessor for his/her own use for the use of any immediate
member of the family
b. Owner/immediate member of the family is not the owner of any
available residential unit
c. Period of lease had expired and
d. Lessor has given the lessee notice 3 months in advance of lessor’s
intention to repossess the leased property for his personal use
Agri Law and CARPER
751. Land Reform concept of conventional and revolutionary measures intended to

correct certain defects in the relationship between landowner and tiller concerning
their rights and obligations in the cultivation and management of landholding.
752. Agrarian Reform – refers the redistribution of lands to the farmers and regular
farmworkers:
 who are landless irrespective of tenurial arrangement
 regardless of the crops or fruits produced
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 to include the totality of factors and support services designed to lift the
economic status of the beneficiaries and
 all other arrangement alternatives to the physical redistribution of lands
such as:
 production or
 profit-sharing
 labor administration and
 the distribution of shares of stock
 that will allow beneficiaries to receive a just share of the fruits of the land
they work on
753. In 1987 Constitution provision on Agrarian Reform Program
 Section 21, Art II – The State shall promote comprehensive rural
development and agrarian reform
 Section 1, Art XII – The State shall promote industrialization and full
employment based on sound agricultural development and agrarian
reform
 Section 4, Art XIII – The State shall undertake an agrarian reform
program founded on the right of farmers and regular farmworkers who
are landless
 Section 5, Art XIII – The State shall recognize the right of farmers,
farmworkers and landowners
 Section 6, Art XIII – The State shall apply the principle of agrarian
reform or stewardship in the disposition and utilization of other natural
resources including lands
 Section 6, Art XIII – The State shall resettle landless farmers and
farmworkers in its own agricultural estate
754. Executive Order No. 228 aims to complete the operation of transferring land of
tenanted rice and corn lands under P.D No 27 and to accelerate the payments to
the landowner of those lands transferred to farmer beneficiaries. The farmer-
beneficiary can sell the land awarded under EO#228 pertaining to rice and corn
lands acquired under PD No. 27 only after full payment of amortizations.
755. Executive Order No. 299 provides the mechanism for the implementation of
the CARP involving other agricultural lands.
756. Land tenure structure – refers to the concept that connotes one or more types
of land tenure system regulating.
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757. Agricultural land – refers to
 alienable and disposable land under Public Land Act (CA#141) and only
agricultural lands can be transferred or alienable to private persons
(natural or judicial)
 those lands that are devoted to agricultural activities and not classified
as mineral, forest, residential, commercial or industrial lands.
758. Agrarian Structure – refers to the complete set or relationship within the
Agricultural sector between tenure structure, production structure and structure of
supporting services.
759. Agricultural tenancy – refers to the manner of holding agricultural lands
involving the question of whether share or leasehold tenancy should be adopted.
760. Non-agricultural lands (Key: FIRM-C)
a. Forest or Timberlands
b. Industrial lands
c. Residential lands
d. Mineral lands
e. Commercial lands
761. Classification of lands of Public Domain (Sec.3, Art. XII, 1987 Philippine Constitution)
a. Primary – refers to land classification for the first time (Key: MAF/T-NP)
 Mineral lands
 Agricultural Lands
 Forest or Timber lands
 National Parks
b. Secondary – refers to further or reclassification of lands to other uses (Key:
RIC)
 Residential lands
 Industrial lands
 Commercial lands
762. Instances on agricultural land reclassification

 When its ceases to be economically feasible and sound for agricultural
purposes as determined by the Department of Agriculture (DA) or
 When it can have substantially greater economic value for residential,
commercial or industrial (ric) purposes as determined by the local
Sanggunian(Art.38,RA#7160)
763. Share tenancy – system of landholding, tillers work the land as sharecroppers
entitled to share in the produce of the land.
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764. Lands of public domain become private lands when it is acquired by private
individuals either by purchase, homestead or grant.
765. Foreigners are not allowed to own lands in the Philippines. (Section 3 Article XII of
1987 Philippine Constitution)
766. Persons authorized to classify and reclassify lands

a. President of the Philippines – for primary classification of lands of the
public domain as recommended by DENR (CA#141&Sec.6,EO 192)
b. Cities and municipalities – to reclassify agricultural lands through an
ordinance enacted by the Sanggunian after public hearings
(Art.38RA#7160)
767. Limitations of LGUs to reclassify agricultural lands {Section 1 (c & d) MalacaÑang

Memorandum Circular No. 54, Series of 1993)
a. To further reclassify –
 highly-urbanized and independent component cities – 15%
 component cities and 1st to 3rd class municipalities – 10%
 4th to 6th class municipalities – 5%
b. Not to further reclassify –
 Lands distributed to agrarian reform beneficiaries
 Lands already issued a notice of coverage or voluntary offered for
CARP coverage
 Lands identified as non-negotiable for conversion
768. Public lands – refers to lands of public domain subject to alienation and
disposed by the State (Republic of the Philippines) in accordance with CA#141-Public
Land Act as:
 Unappropriated lands – not acquired by private persons, corporations or
judicial entities by grantor purchase
 Not held back or reserved for any special government or public purpose
and
 Open to entry and settlement
769. Private corporations or associations may not be allowed to hold alienable
lands of the public domain, except: (Sec. 3, Art.XI, 1987 Philippine Constitution)
 By lease for a period nor exceeding 25 years renewable fro not more
than 25 years with an area not to exceed 1,000 hectares
 Filipinos or citizens of the Philippines may lease not more than 500
hectares
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770. Filipino Citizens are –
a. Those who are citizen of the Philippine at the time of the adoption of the
1987 Constitution
b. Those whose fathers and mothers are citizens of the Philippines
c. Those born before January 17, 1973 of Filipino mothers and who elect
Philippine citizenship upon reaching the age of majority and
d. Those who are naturalized in accordance with law
771. RA#6657 – an
 act instituting a Comprehensive Agrarian Reform Program (CARP) to
promote social justice and industrialization
 is the Agrarian Reform Program of the government
 for the welfare of the landless farmers and farmworkers
 who are landless to own directly or collectively the lands they till
or
 for the farmworkers to receive a just share of the fruits the land
they are tilling
 Conceive as redistribution of all public and private agricultural lands,
regardless of crop or tenurial arrangement
 to landless farmers and regular farmworkers’
 to include all the necessary support services designed to improve
their economic status
 Effective on June 15, 1988
772. Principles of Policies of RA#6657
a. Promote social justice and to move the nation toward sound rural
development and industrialization and the establishment of owner-
cultivartorship of economic-size farms as the basis of Philippine agriculture
b. Have more equitable distribution and ownership of land of land with due
regard to the rights of landowners to just compensation and to the
ecological needs of the nation
c. Greater productivity of agricultural lands to provide farmers and farm
workers with the opportunity to enhance their dignity and improve the
quality of their lives
d. Agrarian Reform program is founded on the right of farmers and regular
farm workers who are landless to own directly or collectively the lands they
are tilling or in the case of other farmworkers, to receive a just share of the
fruits of the farm they are working
e. Recognize participation of farmers, farm workers and landowners, as well
as cooperative and other independent farmers’ organization in the
planning, organization, and management of the program
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f. Provide support to agriculture through appropriate technology and
research, and adequate financial, production, marketing and other support
services
g. Apply the principles of agrarian reform, or stewardship, whenever
applicable, in accordance with law in the disposition or utilization of other
natural resources, including lands of the public domain, under lease of
concession, suitable to agriculture subject
h. Provide support to agriculture through appropriate technology and
research, and adequate financial, production, marketing and other support
services
i. Resettle farmers and farm workers in its own agricultural estates which
shall be distributed to them in a manner provided by law
j. Apply the principles of agrarian reform or stewardship, whenever
applicable, in accordance with law in the disposition or utilization of other
natural resources including lands of the public domain under lease of
concession suitable to agriculture subject to prior rights, homestead right of
small setters and the right of indigenous communities to their ancestral
lands
k. Encourage the formation and maintenance of economic-size family farms
to be constituted by individual beneficiaries and small landowners
l. Guided by the principles the land has a social function and landownership
has a social responsibility. Owners of agricultural and have the obligation to
cultivate directly or through labor administration the lands they own and
make lands productive
m. Provide incentives to landowners to invest the proceeds of the agrarian
reform program to promote industrialization, employment and privatization
of public sector enterprises
n. May lease undeveloped lands of the public domain to qualified entities for
the development of capital-intensive farms and tradition a land pioneering
crops especially those foe exports subject to the prior rights of the
beneficiaries under RA6657
773. Components of CARP (Key: LAP)
a. Land Tenure Improvement – geared towards making the actual tiller an
owner of the land he/she is tilling and providing support to make the land
productive and profitable
b. Agrarian Justice Delivery – to pursue speedy and fair settlement of
agrarian disputes and delivery of agrarian reform justice
c. Program Beneficiaries Development – approach by DAR to reinforce the
complementation of support services delivery and contribute to increasing
productivity and improving the lives and well-being of the beneficiaries
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774. Coverage of CARP – it covers all public and private agricultural lands,
regardless of tenurial arrangement and commodity or agricultural product
specifically as follows:
a. As provided in Proclamation No. 131 and EO No. 229
b. Alienable lands of the public domain devoted or suitable for agriculture
c. Public domain in excess of the limits set by law or determined by
Congress
d. Owned by the Government devoted to or suitable for agriculture and
e. Devoted to or suitable for agriculture
775. Untenanted agricultural lands are covered by CARP because the program
covers all public and private agricultural lands regardless of whether they are
tenanted or not.
776. Agricultural lands reclassified by LGU as forest conservation zones can still be
covered by CARP because it is only the can only the President of the Philippines
who has the power to reclassify agricultural lands to forest land being a primary
classification.
777. Agricultural lands reclassified by the LGUs into residential, industrial or
commercial (ric) may still be covered by CARP when –
 There classification was done after
June15,1988(DARAdministrativeOrderNo.6,s1994), of which the
landowner has to apply for exemption and land conversion (Sec.65,
RA#6657; DAR Adm. Order No. 1, S1999)
However, when the reclassification was done before June 15, 1988 and was
approved by HLURB, the land is not covered. Further, exemption clearance from
DAR is still necessary to confirm or declare its exemption status (DAR Admin. Order
No.1,S1999)
778. Agricultural lands covered by Development Permit before the effectivity or

enactment of RA6657 is exempted from the coverage of CARP.
779. Lands foreclosed and owned by government financial institutions (GFI) and
other instrumentalities of the government is covered by CARP if these lands are
suitable for agriculture. (Sec.1,EO#407)
780. Private Lands – refers to lands which are: (Key: AGOS)
 Acquired through various mode of land acquisition
 Granted by the State
 Owned by natural or juridical persons and
 Segregated from the lands of the public domain
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781. Agricultural activity – means (Key: CROP)
 Cultivation of soil
 Reaping or harvesting of farm projects
 Other operations or activities or practices performed by farmers in
conjunction with the farming operations
 Planting of crops, growing of fruit trees
782. Exempted from CARP – means an immunity or privilege or not included from
the coverage. Excluded from CARP – means the land was not placed under or has
been removed from CARP coverage
783. Lands exempted from the coverage of CARP (Section 10, RA#6657; DAR
AO#13,S1990)(Key: Pade-home-lives-leasehold)
a. Private lands actually, directly and exclusively (ade) used for prawn farm
and fishpond provided have not yet been distributed and issued with
Certificate of Land Ownership Award (CLOA) to CARP beneficiaries
(Section 10 (c), RA#6657 as amended by RA#7881)
b. All homesteads cultivated by original homestead and grantees or their
direct compulsory heirs
c. Lands devoted to raising for livestock, poultry and swine (Luz Farms vs.
DAR, Sec.192 SCRA 51, 1990)
d. Lands retained area of landowners not covered under leasehold
784. Lands excluded from the coverage of CARP (Section 10, RA#6657; DAR AO#13,
S1990) (Key: defense-reclass-18% slope-protected)
a. Lands for national defense, schools sites and campuses including
experimental farm stations operated by public or private schools for
educational purposes, seeds and seedling research and pilot production
centers, church sites, mosque sites and Islamic center, communal burial
grounds and cemeteries, penal colonies and penal farms actually worked
by the inmates, government and private research quarantine centers
b. Agricultural lands reclassified as residential, commercial or industrial thru
a zoning ordinance and have been approved by HLURB before June 15,
1988
c. All lands with 18% slope and more except those that are already
developed as of June 15, 1988 (as amended by RA#7881,1995)
d. Protected areas for ecological purposes such as – (Section 10, RA#6657) as
amended by RA#7811, 1995 and PD705, 1975)
 Parks
 Wildlife
 Forest reserves
 Reforestation
 Fish sanctuaries and breeding grounds
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 Watersheds and mangroves
785. Protected Area – refers to identified portion of land and water set by reason of
their unique physical and biological significance managed to enhance biological
diversity and protected against destructive human exploitation being not arable and
not classified as agricultural lands like:
 Habitat of all life forms and primary source of food web to ensure
biodiversity
 Part of cultural heritage – national parks and national monuments
 Needs areas to maintain ecological balance – fish, birds and animal
sanctuaries, rainforests and the like
786. Conditions when protected areas can be covered by CARP
a. Land or a portion thereof are no longer actually, directly or exclusively
used as designated
b. Are suitable for agriculture and
c. Declared/reclassified as alienable and disposable
All these lands or a portion thereof shall be segregated from reservation and
transferred to DAR for distribution to qualified CARP beneficiaries
(Section1,Executive Order No.44)
787. Retention limit – refers to the size of land an individual owner will be allowed to
keep or retain whether he/she is a cultivator or not.
788. Retention limit under CARP:
a. For landowner (natural or juridical person) – land area of not more than 5
hectares; however:
 Under PD#27, a landowner may retain not more than 7 hectares if
it is cultivating the area or will cultivate it
 Original homestead grantees or their direct compulsory heirs who
still own the original homestead may retain 24 hectares as long as
they continue to cultivate the homestead
b. For individual land owner children – land area of not more than three (3)
hectares per child
c. For corporation on lease, management grower or service contract - land
area of not more than 1,000 hectares and
d. For foreign individuals on lease, management grower or service contract
– land area of not more than 500 hectares.
789. PD #27(1972) – decree Proclaiming the entire country as Land Reform area
and Decreeing the Emancipation of the tenants from the bondage of the soil,
transferring them the ownership of the land they till.
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790. Qualifications of the landowner children:
a. At least 15 years old
b. Actually tilling the land or directly managing the farm at the time of the
effectivity of the CARL and
c. Have not acquired any land ownership
791. Beneficiaries who were awarded with lands under CARP may not sell, transfer
or convey lands awarded for a period of ten (10) year, except:
 through hereditary succession
 to the government or to LBP
 other qualified beneficiaries
792. The retention limits for marriage couple
a. Under the Civil Code, in the absence of an agreement for the judicial
separation of property
 Spouses who owns conjugal properties may retain a maximum of
5 hectares
 If either or both of them have more than 5 hectares from their
respective landholdings it must not exceed August 3, 1988
b. Under the Family Code, effective August 3, 1988
 A husband owning capital property and/or a wife owning
paraphernal property may retain not more than 5 hectares each
provided, they executed a judicial separation of properties prior to
the marriage
 In the absence of thereto, all properties whether capital or
paraphernal and conjugal shall be considered to be held in
absolute community and shall only retain a total of 5 hectares
793. The landowner has the right to choose the area to be retained which land shall
be compact and contiguous.
794. Options of tenant on land selected for retention
a. to remain as leaseholder and forfeit the right to become beneficiary under
CARP or
b. to be a beneficiary in the same land or another agricultural land
795. Tenant has to exercise the option to select within one year from the time the
landowner makes his choice of the area to be retained.
796. Commercial Farms – private agricultural lands devoted to commercial
livestock, poultry and swims raising, aquaculture, fruit farms, vegetable and cut
flower farms, cacao, coffee and rubber plantation. Commercial farms are subject to
CARP coverage after 10 years of the effectivity of RA#6657.
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797. Expropriation – refers the right of the government to take the land, mineral
rights or other property from private owner’s possession for public use with payment
of just compensation. Just Compensation – refers to the full and fair equivalent of
the property value taken from its owner by the expropriator.
798. Idle or Abandoned lands – are agricultural lands not cultivated, tilled or
developed to produce any crop nor devoted to any specific economic purpose
continuously for a period of three (3) years immediately prior to the receipt of notice
of acquisition by the government as provided in RA#6657 but does not include land
that has become permanently or regularly devoted to agricultural purposes. It does
not include land which has become unproductive by reason of force majeure or any
other fortuitous event, provided that prior to such event, such land was previously
used for agricultural or other economic purpose. (Sec. 3 (e), RA 6657)
799. Effects of RA#6657 to the ancestral lands
a. protects the rights of indigenous cultural communities on their ancestral
lands to ensure their economic, social and cultural well-being
b. in autonomous regions, the systems of land ownership, land use and the
modes of setting disputes shall be recognized and respected
800. Methods adopted by the government to acquire landholdings for distribution
under CARP (Key: CODER)
a. Compulsory acquisition
b. Voluntary Offer to Sell
c. Direct Payment Scheme or Voluntary Land Transfer
d. Through ExecutiveOrder407(1990) as amended by EO#448 and EO#506
e. Rice and Corn lands (Operation Land Transfer) under PD#27 and EO#228
801. Compulsory acquisition – a mandatory land acquisition by the State of all
private agricultural lands in accordance with the procedure as described in
Section16 of RA#6657. It is undertaken if the landowner failed to comply with the
VOS or DPS/VLT requirements.
802. Voluntary Offer to Sell (VOS) – a mode of acquiring land where the
landowners come forward and voluntarily offer their agricultural lands for CARP
coverage. These transactions are exempt from payment of capital gains tax and
other taxes and fees.
803. Direct Payment Scheme (DPS) or Voluntary Land Transfer (VLT) – refers to a
direct transaction between the landowner of an agricultural land covered by CARP
and the qualified beneficiaries. Transactions under this mode are not exempted
from payment of capital gains tax and other fees (Sec. 20 &21,RA#6657)
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804. Rice and Corn lands (Operation Land Transfer) under PD#27 and EO#228 –
are modes of which the ownership of tenanted rice and corn lands are transferred
to tenant beneficiaries.
805. Executive Order#407 as amended by EO#448 and EO#506, directs all
government instrumentalities including government financial institutions and
government-owned and controlled corporations to immediately transfer to DAR all
their landholdings suitable for agriculture for immediate distribution to qualified
beneficiaries under CARP.
806. Factors to consider in determining just compensation (Key: CONSIDER
Payment Value)
 Cost of acquiring the land
 Official assessment by LGU Assessors
 Nature of land
 Sworn valuation by the landowner
 Income of the land
 Declaration of taxes
 Economic and social benefits contributed by the farmers/farmworkers
and the government
 Real/actual use of land
 Non-payment of taxes and/or loans secured from government financing
institutions
 Current value of like properties
807. Formula for the valuation of lands covered by VOS or CA or under EO#407
LV =(CNI x 0.60)+(CS x 0.30)+(MV x 0.10)
Where: LV=Land Value
CNI=Capitalized Net Income (based on land use and productivity)
CS=Comparable Sales (based on fair market value equivalent to 70% of
BIR Zonal Value)
MV=Market Value per Tax Declaration (based on Government assessment)
808. Land Owner voluntarily offers the land for sale under CARP shall be entitled
to 5% additional cash payment.
809. Land Bank of the Philippines (LBP) –

 shall be primarily responsible for the determination of land valuation and
compensation for all private land under Voluntary Offer to Sell (VOS)
and Compulsory Acquisition (CA) as governed by EO#405
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 can foreclose the mortgage of the redistributed property if the past due
accounts reaches an amount equivalent to at least three (3) annual
amortization
 is mandated to compensate the landowner on the amount that may be
agreed upon the Landowner and the Department of Agrarian Reform
(DAR) under the CARP Law
 payments to landowner can be made partly in cash and partly in kind or
bonds depending upon the total land area of which the larger
landholding, the smaller the cash portion would be based on the
principle that the small land-owners are presumed to have greater need
for cash to aid them in their bid to shift their capital from agriculture to
industry
810. Land owners may be paid in kind through:
 Shares of stocks in GOCCs, LBP preferred shares, assets or qualified
investment
 Tax credits
 Land Bank bonds
811. Modes of compensation to landowners
a. Compulsory Acquisition (CA):
 Cash payment according to land size
 Above50hectares – 25%
 24 hectares to 50 hectares – 30%
 Below 24 hectares – 35%
 Shares of stocks in GOCCs
 LBP bonds
 Tax credits
b. Voluntary Offer to Sell (VOS) – landowner will be paid under the same
mode as Compulsory Acquisition except the cash portion which is higher
by 5%
c. Voluntary Land Transfer (VLT) – landowner is to be paid directly in cash
or in kind by the farmer beneficiary under the terms they mutually agreed
subject to DAR approval
d. Landholdings Acquired under PD#27 – payments to landowner are 10%
in cash and 90% in LBP bonds
812. Transfer of ownership transactions under RA#6657 are exempted from capital
gains tax, registration fees and all other taxes and fees for the transfer.
813. CARP beneficiaries are – landless residents belonging to one Barangay or
municipality based on the following order of priority: (Sec. 22, RA#6657)
a. Agricultural lessees or share tenants
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b. Regular farmworkers
c. Seasonal farmworkers
d. Other farmworkers
e. Actual tillers or occupants of Public lands
f. Collectives or cooperatives of the above beneficiaries
g. Others directly working on the land
814. A Landless person is one who owns less than three (3) hectares of agricultural
land (Sec. 25, RA#6657)
815. Qualifications of CARP beneficiary (Key: FLAW)
a. Filipino citizen
b. Landless
c. At least 15 years of Age or head of family at the time the property was
transferred in the name of the Republic of the Philippines and
d. Willingness, ability and aptitude to cultivate the land make it as productive
as possible
816. Actual occupancy is the basis of DAR in awarding land provided the
beneficiary landholding does not exceed three (3) hectares.
817. Landowner has no right to select the beneficiaries. The latter should qualify
under the law as screened by the Municipal Agrarian Reform Officer (MARO) or the
Agrarian Reform Program Technologist (ARPT) with the participation of Barangay
Agrarian Reform Com (BARC).
818. Ownership of Agrarian Reform Beneficiary (ARB) shall be evidenced by either
Emancipation Patent (EP) under PD#27 or Certificate of Land Ownership Award
(CLOA) under CARP (DAR AO#2,1994)
819. Conditions for the Agrarian Reform Beneficiary (ARB) ownership to be
transferred to another beneficiary
a. After full payment of amortizations (Section 6, EO#228)
b. After the period often (10) years (Section 27, RA#6657)
c. Through hereditary succession by an heir – not subject to ten year period
prohibition (DAR AO#8, S1995)
820. CARP Awardee who disposed his/her landholdings shall not longer be
qualified to become beneficiary under CARP. (DAR AO#8, S1995) However, the
children or spouse of the beneficiary has the right to repurchase the acquired land
transferred to DAR within two (2) years from the transfer. (DAR AO#1,S1989)
821. In case of death of an ARB, the farm holding acquired by him/her under land
transfer program shall be transferred to his/her heirs in accordance with the New
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Civil Code provisions which farm holdings should not be fragmented or split and the
ownership should be placed under one heir who possesses all the qualifications of
a beneficiary.
822. Rules on qualified heirs to be sole owner-cultivator
a. Surviving spouse shall be given first preference
b. In absence or due to then permanent in capacity of the surviving spouse
priority shall be determined among the heirs according to age
c. In case there are several heirs and in the absence of extra-judicial
settlement or waiver of rights in favor of one heir who shall be the sole
owner-cultivator of the land based on the required qualification of an ARB
within the period of a month
d. In case of disagreement or failure of the heirs to determine who among
them shall be the sole owner-cultivator, the farm holding shall be
transferred collectively in the names of all the heirs of the deceased
beneficiary. (DAR AO#14, S1988)
823. If the surviving heirs are minors and not qualified, he/she shall be represented
by the guardian in cultivating the land until he/she qualifies.
824. Obligations of the ARB
a. Exercise the diligence of a good father/mother/heir of a family in the
use, cultivation and preservation of the land and the improvement
thereon
b. Keep the land awarded to him/her intact and should not subdivide the
land in favor of his/her children/heirs. Even upon death of beneficiary,
his/her heirs are not allowed to divide the land into smaller units
c. Pay the required amount of land amortization
d. Not to neglect, abandon, misuse or sell the land
825. Beneficiaries shall pay to Land Bank 30 equal annual payments at six percent
(6%) interest per annum with two percent (2%) interest deduction if payment will be
made on time.(Section26,RA#6657)
826. Grounds for cancellation of awarded CLOA

a. Materials misrepresentation of the beneficiary’s basic qualifications
b. Sale, transfer, lease or other forms of conveyance
c. Misuse of the land causing substantial and unreasonable damage
d. Continuous neglect or abandonment for a period or two (2) calendar
years
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e. Failure to pay three (3) consecutive amortizations to LBP or to the
landowner except in cases of fortuitous events
f. Conversion of the awarded land to non-agricultural use
g. Waiver of rights to awarded lands
h. Surrender of awarded land to landowner or other non-beneficiary or
i. Misuse or diversion of financial and support services extended to the
beneficiary
827. Department of Agrarian Reform (DAR)
 Has the exclusive authority to approve or disapprove applications for
conversion of agricultural lands to residential, commercial, industrial
and other uses
 Is vested with primary jurisdiction to determine and adjudicate agrarian
reform matters and shall have exclusive original jurisdiction overall
matters involving the implementation of agrarian reform except those
falling under the exclusive jurisdiction of the Department of Agriculture
(DA) and DENR. (Section50,RA#6657)
828. DAR Officials authorized/disapprove applications for Conversion
a. Regional Director for lands not exceeding five (5) hectares
b. DAR Undersecretary for Legal Affairs for lands exceeding five (5)
hectares up to fifty (50) hectares and
c. DAR Secretary for lands exceeding fifty (50) hectares
829. DOJ Opinion No. 44, Series of 1990 provides that all agricultural lands which
has been classified as commercial, industrial or residential before June 15, 1988
does not need any conversion clearance even if still devoted to agricultural activity.
830. Lands in Metro Manila or National Capital Region shall be covered by the
Urban Land Reform Law when they are located within 244 Areas for Priority
Development (APD) sites.
831. Documentary requirements for DAR Clearance
a. Applications for DAR Clearance
b. Copy of Title, lot and vicinity plan
c. Seller’s affidavit of non-tenancy or tenant’s affidavit of voluntary
surrender
d. Seller’s affidavit that the hectare he is selling is his retention area
e. Buyer’s affidavit that the hectarage he is buying, together with his
present agricultural landholding does not exceed five-hectares
f. Provincial or Municipal assessor’s certification of seller’s and buyer’s
extent of landholding in the province or municipality and
g. Clearance from National Irrigation Authority
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832. RA#9700 – refers to the Act strengthening the CARP and extending the
acquisition and distribution of all agricultural lands, etc.
833. Usufruct – refers to a real right conferred on the beneficiary/usufructuary to
enjoy the fruits of the property of another with the obligation of preserving its form,
substance and productivity.
834. Seasonal Farmworker – refers to a natural person who is employed on a
recurrent, periodic or intermittent basis by an agricultural enterprises of farm,
whether as a permanent or a non-permanent laborer, such as dumaan, sacada and
the like.
835. Landless Beneficiary – is any farmer/tiller who owns less than 3 hectares of
agricultural land.
836. Share Tenant – who is not beneficiary but cultivates land belonging to others
and pays a price to the landholder under the leasehold tenancy system.
837. Regular Farmworker - refers to a natural person who is considered employed
on a permanent basis by a landowner engaged in an agricultural enterprise or farm.
838. Basis on the computation of Just Compensation under RA#9700
a. Cost of land Acquisition
b. Value of the standing crop
c. Current value of similar properties
d. Its nature, actual use and income
e. Sworn valuation by the owner
f. Tax declaration and
g. Assessment made by the Assessors
h. 70% of BIR Zonal Value
i. The social and economic benefits contributed by the farmers and
farmworkers and the government to the property as well as non-payment
of taxes or secured loans on the lands shall be considered as additional
factors to determine the land value
839. Omnibus Investment Code (EO#226) –provides an Investor’ package either
into Development of Mass Housing, Fabrication of Mass Housing Components or
Development of Business Parks for Micro and SME’s like: Fiscal and non-fiscal tax
incentives.
840. Under the Urban Land Reform Law (PD 1517) an area is considered urban
when it has population density of at least 2,000 residents per square kilometer and
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where at least 50% of economically active resident are engage in non-agricultural
activities.
841. Elements for tenant’s right refusal under Urban Land Reform Law (PD1517)
a. The land is located in the Urban Land Reform area
b. The tenants are legitimate tenants for at least ten (10) years and
c. The property owner is selling the property
Real Estate Investment Trust (REIT)
842. Republic Act No. 9856 –

 the Real Estate Investment Trust Act (REITA) of 2009
 the Act Providing the Legal Framework for Real Estate Investment Trust
843. Declared State policies
a. to promote the development of the capital market
b. democratize wealth by broadening the participation of Filipinos in the
ownership of real estate in the Philippines
c. use the capital market as an instrument to help finance and develop
infrastructure projects, and protect the investing public
844. Adviser – refers to a lawyer, accountant, auditor, financial or business
consultant, and other persons rendering professional advisory services to the REIT.
845. Associate and associate of a person – refers to any relative of the person
within the 4th degree of consanguinity or affinity and any company in which he/she
and his/her relative within the 4th degree of consanguinity or affinity directly or
indirectly have an interest of 25% or more.
846. Affiliate of the REIT – refers to a corporation that directly or indirectly through
one or more intermediaries is controlled by or is under the common control of
another corporation which thereby becomes its parent corporation.
847. Deposited Property – refers to the total value of the REIT’s assets reflecting
the fair market value of total assets held by the REIT.
848. Exchange – any entity registered with the SEC as a stock exchange pursuant
to the Securities Regulation Code.
849. Fund Manager – the person engaged by the REIT to perform certain functions.
850. Cash Equivalent Items – means instruments or investments that are highly
liquid and marketable and are considered good as cash that has passed the
accreditation process of the Fund Manager.
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851. Income Generating Real Estate – refers to real property which is held for the
purpose of generating a regular stream of income like: rentals, toll fees, user’s fees,
ticket sales, parking fees and storage fees.
852. Independent Director – a director who has the qualifications and none of the
disqualifications of an independent director.
853. Investible Funds – funds of the REIT that can be placed in investment vehicles
other than income-generating real estate.
854. Investor – the owner of investor securities.
855. Investor Securities – shares of stock issued by a REIT or derivatives thereof.
856. Managed Fund – any arrangement where funds are solicited from the
investing public and pooled purposely for investing in securities duly registered
and/or approved by the appropriate government regulatory agency for investment
and/or reinvestment by the REIT.
857. Constitutive Documents – means the Articles of Incorporation and By-Laws of
a REIT.
858. Overseas Filipino Investor – an individual citizen of the Philippines who is
working abroad including one who retained or re-acquired his/her Philippine
citizenship under RA#9225 – Citizenship Retention and Re-acquisition Act of 2003.
859. Material Contract – agreement or arrangement
 where the amount involved is at least five percent (5%) of the Deposited
Property of the REIT or
 which is not entered into the ordinary course of business of the REIT
 the following shall be deemed a Material Contract regardless of the
amount:
 related party transactions like:
 agreements between the REIT and Fund Manager
 agreements between the REIT and Property Manager
 agreements between and among shareholders relating to the
transferability of the shares of stock of the REIT, control of the REIT
and voting rights over shares of stock of the REIT such as: voting trust
agreements, pooling agreements, joint venture agreements, option
agreements and agreements granting rights of first refusal or
conversion rights
 Any acquisition or disposition of real estate by the REIT
 Contracts relating to investments of the REIT
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 Any contract creating mortgages, encumbrances, liens or rights
on the real estate of the REIT
 Contract of any nature that limits the declaration or distribution of
dividends by the REIT
 Any contract relating to joint venture, spin off, consolidation or
merger, take-over or change in Control involving the REIT
 Any contract that may be expected to materially affect the market
activity and/or the price of the Investor Securities
860. Net Asset Value (NAV) – the adjusted net asset value reflecting the FMV of
total assets and investible funds held by the REIT less (-) total liabilities. NAV per
share shall be computed by dividing NAV by the total outstanding shares of the
REIT.
861. Parent – a corporation which has control over another corporation either
directly or indirectly through one or more intermediaries.
862. Principal Officer – refers to the Chairman of the board of directors, President,
Chief Executive Officer (CEO), Chief Operating Officer (COO), Treasurer, Chief
Financial Officer (CFO), Corporate Secretary, Vice President (VP), Executive Vice
President (EVP), Senior Vice President (SVP), Compliance Officer, Chief
Accounting Officer, Chief Investment Officer and other with their equivalent
positions including Consultants with similar rank or position.
863. Control
 exist or occur in favor of a parent corporation when it has the power to
direct or govern the financial and operating policies of an enterprise to
obtain benefits from its activities
 is presumed to exist when the parent owns either directly or indirectly
through subsidiaries more than ½ of the voting power of an enterprise
unless it can clearly be demonstrated that such ownership does not
constitute control
 also exist even when the parent owns ½ or less of the voting power of
an enterprise when there is power:
 over more than ½ of the voting rights by virtue of an agreement
with investors
 to direct or govern the financial and operating policies of the
enterprises under a statute or an agreement
 to appoint or remove the majority of the members of the board of
directors or equivalent governing body
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864. Net Income – refers to the net income as determined under the Philippine
Financial Reporting Standards (PFRS).
865. Property Valuer – an independent entity engaged by a REIT to value its real
estate.
866. Property Manager – a professional administrator of real properties engaged by
the REIT to provide the property management services
867. Principal Stockholder – a stockholder who is the beneficial owner of more than
10% of any class of investor securities of the REIT directly or indirectly.
868. Public Shareholder – a shareholder of a REIT other than the non-public
shareholders.
869. Sponsor/Promoter – any person who contributes cash or property in
establishing a REIT, either acting alone or in conjunction with one or more other
persons directly or indirectly. Sponsor/Promoter of the REIT is –
 a director, Principal Officer or Principal Stockholder of the
Sponsor/Promoter of the REIT
 a director, Principal Officer or Principal Stockholder of the REIT
 an associate of a director, Principal Officer or Principal Stockholder of
the REIT or its Sponsor/Promoter
 a related Corporation to the REIT or its Sponsor/Promoter and
 any person who holds legal title to the shares of stock of the REIT for
the benefit of another for the purpose of circumventing the provisions of
the REIT
870. REIT Plan – refers to the plan of the REIT including amendments of the REIT
registered and approved by the SEC.
871. Real Estate Investment Trust (REIT) –
 Stock Corporation established in accordance with the Corporation
Code and its rule and regulations principally for the purpose of owing
income-generating real estate assets
 Shall have a minimum paid-up capital of P300.0Mat the time of
incorporation either in cash and/or property
 It minimum public ownership
 at least 1,000 public shareholders
 shares of stocks should be publicly listed
 each public shareholders should own at least 50 hectares of
any class
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 public shareholders should have with aggregate ownership of
at least 1/3 of the outstanding capital stock
 its investment maybe in
 shares of stocks
 Different classes of stocks
 The offering of shares of stock should be pursuant to its plan as
registered and approved by the SEC as well as the amendments
thereof and should be registered with the SEC in accordance with the
Securities Regulation Code and listed in accordance with the rules of
the Philippines Stock Exchange (PSE)
 At least one-third (1/3) or at least two (2) of its board of directors shall
be independent directors whichever is higher
 It may invest in income generating real estate located outside of the
Philippines; provided
 That such investment does not exceed forty percent (40%) of
its Deposited Property and
 Only upon special authority from the SEC
 It shall distribute the dividend
 Annually
 At least 90% of its Distributable Income
 To its shareholders
 Not be later than the last working day of the 5 th month
following the close of the fiscal year of the REIT
 It shall engage the services of a Fund Manager and a Property
Manager in accordance with the REIT rules which shall be receiving a
fee of not more than one percent (1%) of the Net Asset Value of the
assets under their respective management
 It shall not undertake property development activities whether on its
own, in a joint venture with others or by investing in unlisted property
development companies, unless
 It intends to hold in fee simple the developed property for at
least three (3) years from date of completion
 The purchase agreement of the said property is made subject
to the completion of the building with proper cover for
construction risks
 The development/construction of real estate shall be carried
out on terms which are the best available for the REIT and
which are no less favorable to the REIT than an arm’s length
transaction between independent parties and
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 The prospects for the real estate upon completion can be
reasonably expected to be favorable
 Shall pay a total executive compensation of all its directors and
principal officers which shall not exceed 10% of the Net Income before
the regular corporate income tax
 The total contract value of its property development activities
undertaken and investments in uncompleted property developments
should not exceed ten percent (10%) of its Deposited Property
 The total borrowings and deferred payments should not exceed thirty-
five percent (10%) of its Deposited Property (total assets of the REIT
reflective o its FMV); provided
 The total borrowings and deferred payments of a REIT has a
publicity disclosed investment grade credit rating by a duly
accredited or internationally recognized rating agency may
exceed 35% but not more than 70% of its Deposited Property
 That in no case shall a Fund Manager borrow for the REIT
from any of the funds under its management
 It shall pay taxes as foll0ws:
 Income Tax but not on the Minimum Corporate Income Tax
(MCIT)
 Creditable Withholding Tax of 1%
 Tax on Transfer of 50% of the applicable Doc. Stamp Tax
 Dividends Paid by the REIT
 VAT on Gross Sales or Gross Receipts of REITs
872. For purposes of clarity, a REIT although designated as a “Trust”, does not
have the same technical meaning as “Trust” under existing laws and regulations but
is used for the sole purpose of adopting the internationally accepted description of
the company in accordance with global best practices.
873. Subsidiary – a corporation more than 50% of the voting stock is owned or
controlled by another corporation (its parent corporation either directly or indirectly
through one or more intermediaries.
874. Synthetic Investment Products – derivatives and other securities created
exclusively from one or more financial instruments to stimulate the returns of the
underlying assets or indices of asset values including warrants, options, interest
rate derivatives, currently derivatives, equity derivatives and credit derivatives such
as credit-linked notes, collateralized debt obligations, total return swaps, credit
spread options and credit default options.
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875. Taxable Net Income-pertinent items of gross income specified in Section 32,
RA#8424 (the National Internal Revenue Code) less(-) all allowable deductions
enumerated in Section 34, RA#8424less(-) dividends distributed by a REIT out of its
Distributable Income as of the common share and
 dividends to owners of the common shares and

 dividends to owners of the preferred shares pursuant to their rights and
limitations specified in the Articles in Incorporation of the REIT
876. Distribution Income – refers to the net income as adjusted for unrealized gains
and losses/expenses and impairment losses and other items in accordance with
sale of the REIT’s assets that are re-invested in the REIT within one (1) year from
the date of the sale. (Formula: Gross Income less (-) Operating Expenses less (-)
Extraordinary Loss (+) Extraordinary Gain=Distribution Income)
877. Fund Manager –

 shall be appointed by the REIT
 independent of the REIT and its promoters or sponsors
 registered corporation engage in the business of fund management
 at least 3 year track record in fund management
 minimum paid-up capital of P1.00M which is unimpaired
 with sufficient human, organizational and technical resources
 must have office in the Philippines
 its CEO or Trust Officer shall be resident of the Philippines and
 its 2 full-time and qualified professional employees shall have track
record and experience in financial management as well as experience
in the real estate industry for at least 5 years
878. Par Value – refers to the market value or nominal value which is stated as unit
value of the capital stock.
879. Property Manager –
 independent of the REIT, its promoters or sponsors
 considered independent if will comply the Fit and Proper Rule
 possess sufficient human, organizational and technical resources
 maintain satisfactory internal control and written compliance
procedures
 sufficient financial resources at its disposal for the conduct of its
business effectively and to meet its liabilities
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880. Fit and Proper Rule – means one had passed the prescribed rule determined
by SEC or other regulatory agency on: (Key: Qu-In-ETEC)
 Qualifications
 Integrity
 Experience
 Training
 Education and
 Competence
881. Property Valuer –
 duly accredited independence Property Valuer
 prepares a full valuation of the REIT’s assets at least once a year
 shall ensure independence of opinion and valuation
 comply the Fit and Proper Rule
882. Qualifications of Property Valuer
 registered with SEC
 Certifying Officer shall be a licensed Real Estate Appraiser with PRC
 Good standing Officer/Member of any registered association of
appraisal companies
 Appraisal company has minimum experience of 5years in appraisal
business
 Rendered profession services for at least one (1) commercial bank
and two (2) public companies
 Appraisal company or any of its director/officers shall have no adverse
judgment on any administrative, civil or criminal involving appraisal
business and
 Shall have solvent and sound financial condition
883. Obligations of Property Valuer – shall value all the real estate of the REIT
 on the basis of full valuation
 with physical inspection – site
 inspection of the buildings and facilities once a year
 in any event for the purpose of issuance of new Investor Securities
and
 produce valuation report on real estate to be acquired or sold by the
REIT or
 where new shares are offered by the REIT or
 as required by SEC
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884. Services of the Property Valuer can be terminated after conduct of valuation of
REIT real estate for 3 consecutive years subject to a curing period of 3 years its
services may be re-engage.
885. Services of the REIT can be terminated by notice in writing in case:
 it goes into liquidation
 bankrupt
 has a receiver appointed over its assets
 good sufficient reason
 violates REIT rules and other relevant laws, rules and regulations
 terminated in all other cases as provided in the Constitutive
Documents
886. Upon termination/dismissal of the Property Valuer services, the REIT shall
point another Property Valuer immediately.
887. To organize a REIT, the group of investor should have a minimum authorized
capital stock of P4.80B(P300.0M minimum paid-up capital divided by 25% and the result
is divided by 25%).
888. The minimum authorized capital stock of a Fund Manager of the REIT is
P1.60B(P100.0Mminimum paid-up capital divided by 25% and the result is divided
by 25%)
Omnibus Investment Code (EO#226)
889. Investor’ package either into Development of Mass Housing, Fabrication of

Mass Housing Components or Development of Business Parks for Micro and
SME’s like: Fiscal and non-fiscal tax incentives.
Methodology of Appraisal Approaches and Case Studies on

Specialized Valuation
1. Generally, Appraisal or Valuation – is the

 Process of making an estimate of the value of any assets/property in
accordance with generally accepted standards on a particular date
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 Act of estimating the property value for a specific purpose and at a
specific date
 Valuation of property by the estimate of an authorized person
 An estimation or process through which conclusions of property value
are obtained
 Result of appraising/valuing a property, making a cost estimate,
forecasting earnings or any combination of two or more declared
results
 Person’s estimate or opinion of value where an estimate is not a
statement of value, determination of value and fixing of value
 Determination of the monetary value(s) of the property rights
encompass in an ownership at some specific purpose for a particular
period of time
2. In real estate practice, Appraisal – refers to an estimate or opinion of value
arrived by a licensed Real Estate Appraisal who has the – (Key: QuALE and
Co-SI-Sod)
 Qualification
 Ability
 License
 Experience
 Competence
 Skills
 Integrity
 Sound judgment and
 Depth study
And interpretation of pertinent data/facts bearing on values and the skillfull

application of generally accepted methods and approaches (Key: MDA/SCA,
CA or ICA) of estimating the property value
3. Appraiser or Value (Professional Property Valuer) –

 is a person who possesses the necessary qualifications, ability,
license and experience (Key: QuALE) to estimate property value for
diversified purpose such as:
 transactions involving transfer of property ownership
 property considered as collateral to secure loans and
mortgages
 property subject to litigation on partition or payment of just
compensation or foreclosures
 pending settlement of taxes and establishment on the basis of
taxes
 property treated as fixed assets in financial reporting
 land utilization (i.e. raw land HABU)
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 giving options on decisions either to purchase or lease or
remodeling or business consolidation and/or merge
 establish payment of just compensation in condemnation
proceedings
 establishment of rental rates
 insurance coverage
 a person who possesses the specific expertise to perform valuations of
other categories of property (i.e personal, business and financing interest)
 as defined under RA#9646, is a duly registered and licensed natural
person who for a professional fee, compensation or other valuable
consideration performs or renders or offer to perform services –
 on estimating and arriving an opinion of real estate/property values
or
 acts as an expert in arriving opinion of real estate which shall be
finally rendered by the preparation of an acceptable written from:
(Letter or Certification or Standard or Narrative Report)
 a person who works in the local government unit (LGU) and performs
appraisal and assessment of real properties including plants, equipment,
and machineries, essentially for taxation purposes as far as the Assessors
and
Assistant Assessors is concern
4. Evaluation - refers to a study of the nature, quality or utility of a parcel of real

estate/property and the interest thereto as well as the rights of the clients over it.
5. There are various characteristics/elements or determinants of value in Appraisal

(Key: DUST)
 Effective Demand or the Purchasing Value - refers to the desire couple
with the financial capacity of the buyer to acquire a piece of real property
which the property should be needed or wanted by someone who has the
purchasing power to obtain it.
 Utility – refers to the ability of the property to satisfy human needs
 Scarcity or the Supply and Demand – refers to the intended use of the
property of which it has some degree or rareness
 Transferability – refers to the quality of the property to be transferred as
well as the ability to transfer title to someone else
6. Value is created by the real estate’s utility or capacity to satisfy needs and wants of
human societies.
7. An Appraisal includes –
 Description of the property which is the subject of the assignment
 Appraiser’s opinion of the property’s condition, its utility for a specific
purpose and probable monetary value in an open market where sellers
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and buyers are both acting in their own self-interest in arm’s-length
transaction
8. Real Estate, Property and Asset concepts –

 Real Estate – refers to the physical land and those human-made items
which attach to the land whether found in or above the ground/land
 Real Property – includes all the rights, interests and benefits related to the
ownership of real estate
 Current Assets – refers to assets not intended for use on a continuing basis
in the activities of an entity
 Non-current Assets (fixed or long-term) – refers to tangible and intangible
assets, such as Property, Plant, Machinery and Equipment and Other Non-
current Assets
9. Land and Property concepts –

 Land is essential to our lives and our existence
 Appraisal/valuation of land is as if it is vacant or improved
 It is an economic concept
 Property is a legal concept, encompassing all the rights, interests and
benefits(ribs) related to ownership which entitles the property owner to a
specific interest on what is owned
10. Value – is
 an economic concept, referring to the price most likely to be concluded by
the buyers and sellers of a property that is available for purchase
 is not a fact, but an estimate of the likely price to be paid for the property or
service for a particular date/time in accordance with a specific definition of
value
 Formula: V=I/R, where
 I represents the Net Operating income computed as follows:
 Gross Potential Income/Receipts
Less (-) Vacancy allowance or Bad Debts
Equals (=) Effective Gross Income
Less (-) Operating Expenses
Equals (=) Net Operating Income (NOI)
 R represents the Rates either:
 Interest(i)or capitalization rate (CR) which is determined as follows:
 CR(i+vi) where vi is the dermined by 1/N {EEL (Actual+REL)}
11. Appraisal is an opinion of value. It relies significantly on the Appraiser’s professional
judgment and experience. Only professional Appraiser’s render opinion of value of
real property. It utilizes an orderly process or logical procedures undertaken to
ensure a reliable result. It requires education, knowledge and higher level of
competency of the professional Appraiser.
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12. Market Value of real estate is a representation of its market-recognized utility rather
than its purely physical status. Value in Exchange indicates the value of the
property traded in the market, which is referred as the market value.
13. Market Value of Fair Market Value – refers to

 the highest price estimated in terms of money that a real property is acquired
by a buyer/purchaser who is willing to buy and a seller who is willing to sell
but is not obliged or anxious to sell, both of whom have adequate knowledge
of the actual and potential use of the property which has been offered for a
reasonable time in the open and competitive market
 the usual selling price of real estate/real property
 the highest peso amount which the property should bring a competitive
market in a reasonable time
 the price at which the willing Seller will sell and a willing Buyer will buy
neither of the parties under abnormal pressure or in an arms-length
transaction
14. Appraisal is used to refer both the process by which the professional Appraiser
reaches certain conclusions of value and the written report in which the conclusions
are communicated. It is important to realize that appraisal is the professional
Appraiser’s/Valuer’s opinion of the property’s worth and the appraisal process
required for the objective judgment of the Appraiser. In effect, appraisal is not an
exact science and it is usual for more than one Appraiser to produce different
values for the same subject.
15. Appraisal Process – is the

 Systematic, orderly procedure employed to provide the answer to a client’s
question or problem about real property values
 Orderly program by which the problem is defined, the work necessary to
solve the problem is planned and the data involved is acquired, classified,
analyzed and interpreted into an estimate of value
16. There are factors/forces that affects the value of the property in appraisal (Key:
PEPSo)
 Political – which are governmental based like:
 The degree of efficiency in the maintenance of peace and order
and the effort of providing the essential services such as: utilities,
zoning and land use ordinances
 Anti-squatting law
 Rental control law and etc
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 Economic – which includes the nature of basic and business activity in the
neighborhood, trend of employment and expansion of housing programs
and the real estate industry
 Physical – refers to the location and age of the neighborhood (size, area,
shape and land topography), type of improvements and architectural
trends, street pattern, sidewalks and underground drainage or any
tangible features
 Social – related to population growth birth control measures and migration
or the demographics
17. Property Valuation Approaches/Methodologies

 Market Data Approach (MDA) or sales Comparison Approach (SCA)
 Cost Approach (CA)
 Income Capitalization Approach or Income Capitalization (ICA)
18. Other Methods of Property Valuation

 Legislation Approach-fixed as determined by law like: CARP/CARPER,
Pag-IBIG housing loans and
 Stripping Approach-comparative levels from a known value in ratio and
proportion (4-3-2-1 Depth rule)
19. There are various principles related to value that we have to consider, to recall:
 Principle of Anticipation –
 Affirms that the value of the property is the present worth of all
present and future benefits arising from to ownership and use of real
property
 That value may increase or decrease based on potential
purchaser’s certainly that some future even will benefit or detract
from the value of the property
 To find out on then present value of the future income stream as
basis in using the income approach of valuing/appraising the property
 That value of the property is not established by what is sold for the
past nor the cost to create
 That recent sales prices of comparable properties are indications of
the present worth(P.W) of what informed buyers and investors in the
market anticipated that the benefit of ownership would yield them
 Principle of Balance –
 value of a property will reach to its maximum level when the factors
(land, labor, capital, coordination/entrepreneurship) of productions
are in balance and is use to describe a combine of land uses which
maximizes land uses.
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 Principle of Change –
 value of all property is inclined by chance which is ever present
 it is fundamentally the law of cause and effect and no material or
economic condition remains stable
 the inevitable and constant factor affecting the possible increase in
the value of the property, such cities, neighborhoods, natural
phenomenon, changes in market place
 today is the change of the past and is the reflection of the future
 Principle of Competition –
 refers to the industry competition which arises from profits
 derived profits raise harmful competition
 excess profits raise harmful competition
 profit in the appraisal sense denotes an excess or surplus over and
above satisfactory returns to labor, coordination, capital and land
 the major portion of the profit is temporary so as not capitalized in
the estimate of land value, it is treated as a short-term annuity as far
as its duration
 competition tends to dissipate any major portion of an excess profit
although some part may remain and contribute to an increase land
value
 Principle of Conformity -
 Conformity comprises a reasonable degree of social and economic
homogeneity
 HaBU will usually conform to essential and permissible land used
 Misplaced improvement is direct violation of the principle of
conformity
 Zoning regulations and private restrictions affirm the value of
conformity
 Over-improvement or under-improvement reflects lack of conformity
between one property and its environment
 Value of an under-improvement sometimes declines/regress
 Principle of Consistent Use –
 Factor/forces where the property is cannot be valued on the basis
of one use for land and another use of improvements
 Principle of Contribution –
 Increasing and decreasing return as it applies to some portion of
improvements
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 Its application is basic in any study of the feasibility of a proposed
remodeling or modernization program and in appraisal of lots of
varying complexities
 A effect of the principle of surplus productivity as it relates to the
fractioning of the agents in productions
 Principle of Externalities –
 Influence outside a property may have a positive or negative on its
value
 Low interest rate encourage house production due to enhanced
demand
 Low crime rates, population density and income level may
influenced values of properties
 Principle of Heterogeneity –
 No two lots have the same value although they may be adjacent to
each other
 Two recently sold properties were selected for their similarities that
maybe compared to determine the value of dissimilarities
 Principle of Highest and Best Use – refers to the
 Maximum value of land is created and maintained in proportion to
the equilibrium in the amount (contribution) of the four agents of
production
 most profitable and likely use of the property at the time of
appraisal that will likely produce the lands highest present value
 value is created and maintained on proportion to the equilibrium
(balance) attained in the contribution and location of essential uses of
land
 first necessary consideration in studying a tract of land to estimate
its market value
 most profitable legally and physically permitted use that will at
present provide the highest property value
 greatest net return is the surplus productivity resulting from the
property proportioning or balance of the agents in production
 use of a property which brings the optimum/highest returns or
advantage over in all probability the property will yield the maximum
return at a given time or at time of appraisal
 most profitable use of a real property over specific period of time
considering its utility and current element of risk
 it is the use which at the time of appraisal is most likely to produce
the greatest net return
 concise statement
 Principle Opportunity Cost –
 income-producing which refers to the value disparity or gap
between alternative investments with conflicting rates of return
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 Appraiser considers the alternatives in selecting a rate of return for
the property being appraised that affects the final value estimate for
the property
 that states the value of investments chosen can be measured in
terms of the value of investment options or opportunities foregone
 Principle of Progression –
 the association of a property with inferior properties will tend to
lower the value of the former
 between dissimilar properties, the value of the lesser-quality
property is favorably affected by the presence of the better-quality
property
 Principle of Regression –
 earthquake indicates decrease in property value caused by the
expected condition of inferior dwellings in the area
 the value of a property tends to be adversely affected by
association with inferior properties
 brings diminish value through disadvantages anticipated in the
future
 Principle of Substitution –
 The value of a replaceable property tends to be indicated by the
value of an equally desirable substitute property
 The cost of producing a new production of an equally desirable
substitute property usually sets the upper limit to value
 Value of a property tends to coincide with value indicated by the
actions of informed buyers in the market for comparable properties
 Principle of Supply and Demand –
 Value increases, if supply decreases and demand increases
(seller’s market because there are few sellers and plenty of buyers);
Value decreases, if supply increases and demand decreases
(buyer’s market because there are few buyers and plenty of sellers)
 Scarcity influences supply, desire influences demand and for desire
to be effective it should be supported by purchasing power
 Principle of Surplus Productivity –
 Land has the last claim on the surplus productivity of the agents in
production (labor, coordination, capital and land)
 Excess usually results in over-improvements, deficiency, under-
improvements
 Income attributes to land rent that remain after labor, capital and
coordination have been charged
 disadvantage attend any excess or deficiency in the supply of the
agents in production, relatively one to another
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 contribution is a corollary of surplus productivity since it holds that
value of any individual agent in production depends upon how much
it adds to the net income because of its presence or detracts from it
by reason of its absence
 Principle of Utility –
 Meeting the desires and requirements of human beings not only
the capacity to give satisfaction in use but also the power to excite
desire for continued possession
 Increasing and decreasing returns –

 law of decreasing returns arises from law of supply and demand
and affirms that the greater the amount of any commodity offered for
sale in the market the lower will be the price paid for it
 any further increase in amount of agents will decrease margin
between cost of agents and the gross income they will produce,
resulting in decreasing net income returns
 the application of larger amounts of the agents in production will
produce greater and greater net income (increasing returns) up to a
point (surplus productivity)
 the point of maximum contribution of agents in production (point of
decreasing returns) attests to proper proportioning of agents resulting
from highest and best use (HaBU)
 net income of real estate tends to increase by application of more
factors of production up to a certain point, beyond which more
application will tend to decrease net income
20. Basis of Appraisal/Valuation

 Current selling price of the subject as we found it fair
 Zoning classification of lands in the area/vicinity of the subject (HaBU)
 Uses of the properties in the surroundings/neigboorhood
 Future development of the subject
 Economic characters of the subject (location, utility, potential use, soil
fertility, highest and best legal use)
 Principle in appraisal that lands should be valued as if vacant and based
on its Highest and Best Use (HaBU)
Market Data Approach or Sales Comparison Approach.
21. Market Approach or Sales Comparison Approach – refers to

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 a single universal approach to value real estate
 a method of estimating a property value based on comparison of the subject
property with similar properties within the vicinity
 a technique in which comparative estimates are made between prices paid in
actual transactions and the current prices of the property
 a process of carefully comparing and relating the similar comparable
properties to the subject property being appraised and employing the
weighted adjustments to compensate for differences
 basis of comparison is premised on size/area, shape, location, utility and
time element factors
 an approach which is considered to be the most reliable approach because it
is the most direct of the three (3) approaches especially in single residential
appraisals where comparable sales are usually the best evidence of value
22. Advantages of Market Data Approach or Sales Comparison Approach

 It is essential in almost every appraisal of real estate
 It is sound because it represents the considered judgment of many buyers
in completed transactions as evidenced by market data
 In concept, it is widely accepted approach by weight of authority in
Economics, Law and Business
 Market data or market prices are good evidence of value because they
truly represent the reaction of typical users and investors to a particular
type of property and
 It has a great deal of appeal, easily understood and the method is
commonly used by licensed Appraisers and the public
23. The Market Data Approach in estimating the value of land is an application of the
Principle of Substitution. It holds that when two or more commodities with
substantially the same utility are available, the one with the lowest price receives
the greatest demands and widest distribution.
24. Steps in Market Data Approach or Sales Comparison Approach

 1st – Investigate current sales of comparable properties as far as condition of
sale, date, prices and terms of sale or compilation of data on recently sold
comparable properties
 2nd – Compare with the subject property the selection of the best comparable
properties as to time and conditions of sale, location and other physical
features
 3rd – Make adjustments to selling prices to recognize differences between the
subject property and the Comparables or make the necessary reduction to
common denominators of each unit of comparisons
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 4th – Adjust of the differences between the subject and each comparable
property and
 5th – Arrive at the estimated adjusted value for the subject property based on
the most comparable sold properties
25. Methods of making adjustments between subject property and comparable

properties
 Sum of Peso
 Sum of Percentages
 Product or Percentages and
 Composite of the three (3) types of adjustments
26. Appreciation or Increment – refers

 to a temporary or permanent increase in the property value to economic
causes or inflation
 the opposite of depreciation
27. In Site Appraisal, the following terms means-

 Land to the Appraiser means unimproved earth with no drainage or utility
lines available for hook-up at the land boundaries
 Lot implies improved land
 Site means land improved for development, cleared and contoured for good
drainage, with utility lines laid for future development
 Residential Site refers to the land which is improved with utility lines, streets,
curbs, gutters, drainage titles and is ready for construction of an
improvement such as house or apartment building
28. Suggested adjustments or percentage (%) assignments

 Corner Influence -10% to 15%
 Time (Price Trending) -10% (subject to study)
 Shape -at least 10%
 Plottings (Dimensions) -10% to 15%
 Topography -5% to 10%
 Area -Bigger lot (-) adjustment
Smaller lot (+) adjustment
Compared to the ideal size of the land in the
Vicinity
29. What the licensed Real Estate Appraiser should do?

 Add (+) to the Sales price (SP) of the Comparable the value of the feature
present in the subject but nit in the Comparable
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 Subtract (-) from the Sales Price (SP) of the Comparable the value of the
feature present in the Comparable but not found in the subject
30. Remember the number of sales required for a right appraisal of value cannot be
precise easily. Most Appraisers believes that three (3) to five (5) Comparables are
representative of the samples particularly if sales are very similar, recently sold or
closely located. Likewise, remember the fewer the sales, the more careful they
should be investigated and if the collected data are questionable, a larger number
of sales should be considered. The purpose of the appraisal assignment can also
influence the number of sales comparable being chosen. After the Appraiser
assigns a value of the adjustments that is adjusted Sales Price of the Comparable
most probable to the subject
31. Major adjustments includes –

 Physical (on-site) features like size, area, shape, utility
 Location (off-site) influences
 Conditions of sale (buyer-seller motivation and financing terms
 Time of Sale
32. Capitalization Rate – refers to the composite interest rate that represents the
anticipated income of the investments made and the bring back rate which
represents the return or recovery of the investments.
33. Recent sales of Comparable sites which are competitive with the Subject site are
the most reliable guide to the probable current market behavior and reactions of
informed buyers. When choosing a Comparable sale for the Sales Comparison
Approach, property characteristics that should be identical or very similar to those
of the subject property includes: (a) size of lot and building; (b) age of building and
type of construction and (c) number and type of rooms. To be considered
Comparable to the Subject property, a Comparable should have been sold in arm’s
length transaction or there is no pressure on the sale.
34. An appraisal of a property using the three (3) approaches to value, each approach
resulted in a different value indication. The indicated value by the cost approach
was P1.0M, the indicated value by the sales comparison approach was P955, 000
and the indicated value by the income capitalization approach was P950, 000. Are
you required to choose one of these value indications? – Yes, it is only rational that
you use the value estimates that you have developed.
35. In appraising a single-family residence, you as an Appraiser located 6 Comparable
properties. After verifying the data and adjusting the Comparables to the subject,
the indicated values are as follows:
Comp # 1 P919, 000.00 Comp # 4 P962, 000.00
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Comp # 2 P936, 000.00 Comp # 5 P948, 000.00
Comp # 3 P927, 000.00 Comp # 6 P927, 000.00
If comparable nos. 1, 3 and 6 were given 10% weight; nos. 2 and 5 were given 20%
weight and no. 4 was given 30% weight, what is the indicated value of the subject
property?
Comp # 1, 3 & 6 = 10% (P919,000+P927,000+P927,000) P277,300

Comp # 2,& 5 = 20% x (P936,000+P948,000) 376,800
Comp # 4 = 30% x P962,000 288,600
Indicated Value of the Subject Property P942,700
36. Commercial stall A is being appraised. It is very similar to stall Z, but shall Z has an
the ground electrical conduct valued at P25,000. Stall Z was sold 3 months ago for
P158, 000. What is the market value of stall A using the formula for the Sales
Comparison Approach:
V= Sales Price less (-) Adjustments = P158, 000-P25,000 = P133,000
37. Frontage –refers to the length of a property, abutting a street with few numbers of
feet that fronts the street. Frontage differs from width which sometimes decreases
or increases as the lot sets back from the street.
38. A structure with an obsolete floor plan was being appraised. A comparable structure
with the same floor plan was recently sold for P150,000. A comparable structure
with a more desirable floor plan was recently sold for P175,000. What is the loss in
value attribute to the floor plan?
Solution:
Selling Price of Comparable A P150,000
Selling Price of Comparable B 175,000
Loss in Value P 25,000
39. Land is generally valued by the Appraisers – assessors using the comparative
sales approach based on the information on recent sales of similar properties with
adjustments to compensate for difference on location or its topography although
often valued for its current use.
40. Ms. Anjenina engaged your professional expertise as licensed Appraiser to

estimate the fair market value (FMV) of a property she intends to sell. It is a vacant
commercial lot with an area of 500 sqm. Based on the investigations a Comparable
adjacent lot was recently sold for P15, 000 per sqm. However, your client’s property
which is higher than the road is almost perfect in shape but is near a squatter
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cluster. You estimated that the subject has a topographic influence of 10%because
of elevation, a plottage influence of 5%becuase of shape and a location influence of
20% because of squatter’s cluster. Estimated the FMV of the property.
Solution:500m2@P15,000/m2x95% P7,125,000 or
Property value before adjustment (500m2@P15,000/m2) P7.50M

Add (+)Less (-) Adjustment:
Topographic influence +10%
Plottage influence +5%
Locational influence -20%
Net adjustment -5% x P7.50M ( .375M)
Estimated FMV of the property P7.125M
41. Method of appraising an unimproved real property

 Direct Sales Comparison Approach
 Cost of Development Method
 Abstraction
 Depreciation Method
42. The principle that prevents an Appraiser from appraising a lot for its commercial
potential and the improvements thereon for residential value is the Principle of
anticipation.
43. A house and lot was sold at P8.50M. The lot alone was valued at P2.50M. What
percentage of the sales price is attributed to the value of the lot?
29.41% (P2.50M/P8.50M)
44. The principle of increasing or decreasing returns can best be applied when there is
an improvement on a parcel of land. The most important variable of the Market
Data Approach to land valuation is Sufficient Number of Recent Sales.
45. The basic accepted formula expressing the relationship between value, rate and
income is V=I/R.
46. Abstractive Method – a land valuation method that considers the depreciated value
of the improvement. Site valuation techniques also include Sales comparison
method, allocation method or abstraction method. An indirect measure where the
Appraiser depends on market data in estimating depreciation by observing the
market prices paid by buyers/purchasers where the three (3) kinds of depreciation
are represent in the properties.
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47. Land prices are analyzed and adjusted as part of the comparative process. These
adjustments could have adding and subtracting percentages.
48. A house which cost P800,000 was surrounded by houses priced substantially
higher. The principle of regression would be applicable to the P800,000 house
under present appraisal.
49. Approaches are most applicable to the appraisal of a new house – Direct sales
comparison approach, cost approach. The direct sales comparison method is
based primarily on the principle of substitution.
50. A less expensive house tends to gain value because of more expensive
neighborhood houses because of Progression Principle.
51. Zonal Value – refers to the fair market value (FMV) of the land in a specific zone or
area as established by the BIR.
52. Assessed Value – a special kind of value which us the percentage of the market
value of land or the improvements subject to taxes levied by the local government
unit based on RA#7160.
53. Plottage Value is –

 The total value which a large parcel enjoys over and above the sum of the
values of the lots, if standing individually
 An added value inherent in the combined common ownership of two or
more contiguous lots
 Considered a bonus which may be obtained from the consolidation of lots
54. Corner Influence – the added desirability or utility of a property due to its frontage to
two streets which provides better ventilation for residential purposes, easier
accessibility and more commercial displays for commercial and industrial utilization.
55. Forced Sale (Liquidation) Value – amount that mighty be realized from disposition
of property used in market assuming a relatively short period of time. It also refers
to the property is offered for sale to a desired use of equipment to an alternate user,
usually made in six (6) months.it is the value where a property is sold lower than its
market value.
56. Blighted Area – refers to a declining area which a real property value is seriously
affected by destruction of economic forces, such as: encroachment in harmonious
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usage, inflation of lower social and economic classes of inhabitants, rapidly
depreciating buildings, etc.
57. The market data approach in estimating the value is an application of the Principle
of Substitution. It holds that when two or more commodities with substantially the
same utility are available, the one with the lowest price receives the greatest
demands and widest distribution.
58. You are about to appraise a 3-bedroom house. A comparable with two-bedrooms
was sold for P4.0M. You made an adjustment of P500,000 to account for the
difference in the number of bedrooms. The adjusted sales price of the comparable
is:
Solution: P4.50M {P4.0M + P.50M}
Cost Approach
59. Cost Approach – refers to

 a method of estimating reproduction and replacement cost
 an estimate of the investment requirement to duplicate the property in
its present condition
 the approach used in determining the cost of reproducing or replacing a
property loss after deducting is value from deterioration and functional
or economic obsolescence
 a method of estimating value by adding the cost of replacement cost of
improvements to the land value less accrued depreciation
 an approach to valuation in which either the reproduction or
replacement cost of improvements are estimated
 method of estimating the value of any improvements to the land in
terms of reproduction and replacement cost as though NEW
 the approach used in determining the cost of reproducing or replacing a
property loss after deducting depreciation
60. In this approach, the Appraiser will – (steps in the Cost approach)
 1st – Estimate land value by Market Data Approach
 2nd – Estimate the cost to produce or replace the existing structure
 3rd – Deduct (-) the estimate accrued depreciation from the reproduction
cost to arrive at the improvement value and
 4th – Add (+) the estimate value of the improvement to the land/site to
arrive with the total estimate property value
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61. Formula: Replacement or Reproduction cost
Less (-) Accrued Depreciation
Plus (+) Land/Site Value
Equals (=) Property Value (PV)
62. Reproduction Cost – refers to the

 present cost of reproducing the improvements with one of an exact or
highly similar material
 cost of exact duplication/replica with the same related materials in the
present market
 cost to create a virtual replica of a property using identical or similar
materials of the existing structure/property, employing the same design
and similar materials
 current cost of creating a facsimile of the original or identical new item
 cost of investment of producing the exact replica, having the same quality
of workmanship, design and layout
 cost to duplicate an asset or a property
 cost of improvements identical in design and material to those of the
subject property
 approach used to estimate the value of public library, museum, schools
and the like
63. Methods of estimating reproduction cost

 Quantity Survey Method or Construction Breakdown – it compromises the
detailed inventory of all materials, labor and other costs that will be
needed for the reproduction; commonly used by Architects, Engineers,
Builders and Contractors
 Unit Cost in Place Method – this is based on the use of installed price for
the various building materials, employing units convenient to use such as:
square meter and
 Cost per Square Meter, Per Square Foot Method or Comparative Method
– this is the product of the Quantity Survey and Unit-In-Place Methods
which establish a cost per square meter for the subject building and
multiple that cost by the square meter of the subject building to the arrive
at the reproductive cost
64. Replacement Cost – is the

 present cost of replacing of replacing or constructing a new improvement
which will represent an exact replica of the existing one
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 estimate envisions a modern equivalent of comparable utility, employing
the design, technology and materials that are currently used in the market
 cost of replacing an assets/property with an equally satisfactory substitute
asset/property normally derived from the current acquisition cost of similar
assets, new or used or of an equivalent productive capacity or service
potential
 current cost of a similar new item having the nearest equivalent utility of
the property being appraised
 cost of construction a building that would have similar utility to the subject
property
65. depreciation –
 refers to loss in value of any property or improvements up to appraisal
date due to functional obsolescence, economic obsolescence and
physical deterioration or wear and tear
 in Appraisal/valuation, it refers to the adjustments made to the cost of
reproducing or replacing the asset to reflect the physical deterioration and
functional (technical) and external (economic) obsolescence in order to
estimate the value of the asset in order to estimate the value of the asset
in a hypothetical exchange in the market when there is no direct sales
evidence available
 in financial reporting, it refers to the charge made against income to reflect
the systematic allocation of the depreciable amount of an asset over the
useful life to the entity
66. Causes of depreciation

 Physical Deterioration – reflects loss in property value
 brought about by wear and tear, disintegration, use in service and the
action of the elements due to internal causes
 due to impairment of physical condition
 Functional Obsolescence – reflects the loss in property value
 due to functional inadequacy or over adequacy due to size, style or age
brought by chances in art, poor planning due to internal causes
 because of the buyer’s desires or the presence of fixtures which are not
desirable
 because of changes in market standard and outmoded characteristics
of the property
 Economic Obsolescence – reflects the loss in property value
 brought about by external economic forces such as: changes in
property rights, infiltration of inharmonious people
 due to external causes outside of the property
 because of external influence
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 or loss in the property use arising from external factors, surroundings
land uses or environmental force
67. Sound Value – refers to appraisal for the price that a property would sale based on
quick sales.
68. Obsolescence – is the

 Impairment of desirability and usefulness of a real property brought by
physical, economic, fashion and other changes
 Is a loss in value due to reduced desirability and usefulness of a structure
because of obsolete design and construction or of becoming old-fashioned
and not keeping with modern needs with the consequent loss of income
69. Salvage Value – is the amount that maybe recovered when the property will be
retired or disposed at a future time.
70. Scrap Value – is the

 Value of a depreciated building or the materials being recovered from it
 Amount realized from the sale of property which is not productive used
71. Two Phases of Depreciation

 Accrued or Past Depreciation – the loss in value that has already
taken in place up to the date of the appraisal or capital recovery and
 Future or Reminder Depreciation – this is the loss in value that will
occur in the future to be estimated on the basis of provision for the
return of capital which would be charged against annual net income
in order to return invested capital in the depreciating item over its
remaining useful life
72. Methods of estimating depreciation (Key: SLOCA)

 Straight Line or Effective Age Method (SLEAM)
 Observed Condition-Costs-to-Cure Method (ObCo-Cost-Cure)
 Capitalization of Rent Loss Method and (Cap-Rent-Loss)
 Abstraction Method
73. Straight Line or Effective Age Method – a method used in computing depreciation
based on the following premises:
 That a property has a certain useful life expectancy and that estimated life
to its delivery of service units
 It is assumed that depreciation will be proportionate to the estimated life of
the structure
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 The appraiser should be guided by effective age rather than the actual or
chronological age
 The method that is widely used by real estate appraiser practitioners
 Based on the ratio of the effective age as to the projected economic life of
the structural or improvement
 Formula: Depreciation = Estimated Reproduction Cost x Deprn. Rate (%)
Depreciation (D) = 1/N or
Depreciation = Actual Age divided by Estimate Economic life
 Way of calculating a replacement cost or determining the depreciation
cost of an asset/property
 There is theory that all structures have a total useful life that can be
predicted
74. Unearned Increment – increase in value of real estate without the efforts or
expense from the owner.
75. In using the cost approach to appraising, the estimated construction cost of
improvements is usually based on the cost of new improvements at current prices.
The principle that prevents an appraiser from appraising a lot for its commercial
potential and the improvements thereon for residential value is the principle of
Anticipation
76. Effective/Actual Age – refers to the

 Age that appears to be as compared to a new item or structure ,
regardless of its actual age which is either shortened or lengthened
because of its characteristics, condition or efficiency
 Number of years of age indicated by the condition of the
building/improvement
 Number of years that elapsed since the structure/building construction
 Age of an asset as indicated by its physical condition and utility compared
to its useful like which is in contrast to its chronological age
77. Economic Life – is the

 Period over which a property will yield returns on investments on over and
above the ground rent to land
 Period which an asset is expected to be economically use by one or more
user
78. Remaining Economic Life (REL) – refers to

 The remaining period during which a property can be profitability used
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 The period during which a building is expected to generate more income
than operating expenses
79. Recapture Rate – is the

 Return of the capital over the economic life of the property
 Rate of return earned by an investor which does not include the allowance
of capital recovery
80. The recapture rate of a building with remaining economic life of 30 years is 3.333
(1/30)
81. Adequate Profitability – test applied to ensure that an asset/property was valued by
reference to a depreciated replacement cost and to support the depreciated
replacement cost conclusion.
82. Split Rate – refers to the application of different rates to land and building.
83. Under improvement – refers to an improvement by reason of its small size or low
cost failed to bring the property to its highest and best use.
84. Curable Depreciation – is a depreciation that may be corrected at a cost less than
its contributory value.
85. Deferred Maintenance – means a postponement of a repair or rehabilitation.
86. Extraction – refers to a process where all improvements cost less (-) depreciation is
subtracted from sales price to derive land value.
87. A single-family neighborhood was located adjacent to an airport. Excessive noise

caused by airplanes flying overhead and the potential danger they created had
adversely affected the value of homes in the immediate area. This illustrated the
external obsolescence.
88. PTB Corporation constructed a 5-storeybuilding 8 years ago at P15.0M. The

building was depreciated on a straight-line method with an estimated economic life
o 30 years. The corporation desires to update the financial report and hired your
professional expertise as a licensed Real Estate Appraiser to know the true fair
market value (FMV) of the building. As the Appraiser you estimated that the
reproduction cost of a new building will be P15.0M. Compute: (Round-off answer to
the nearest figure)
 The Fair Market Value (FMV) of the building
Building cost P15,000,000
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Less: Depreciation (P15.0M x 8/30) ( 4,00,000)
FMV of the building P11,000,000
 The unearned increment
Reproduction Cost, New (RCN) P15,000,000
Less: Building FMV, net of Depreciation (11,000,000)
Unearned Increment P 4,000,000
89. The reproduction cot of a commercial building was estimated to be P10.0M. The
building was estimated to have an economic life of 45 years and its effective age is
15 years. Land Value is P15.0M. What is the value of the improvement by cost
approach? Round-off answer to the nearest peso.
Solution: P6.667M{10.0M-(P10.0Mx15/45)}
90. Method that can be used in Finding Replacement Cost

a. Index Method – factor (%) representing change in construction costs from
date of construction up to effective date of appraisal that is being applied
to the original cost
b. Square-Meter Method –
 Cost per square of recently built structure is comparable to the Subject
multiplied by the area of the Subject
 Method commonly used in appraising residential property as a check of
Sales Comparison Approach
c. Unit-in-Place Method – cost of various components of the Subject
estimated separately then totaled/sum-up to find-out the current construction
d. Quantity Survey Method – is determined by complete itemization of all the

costs (Direct and Indirect Cost) which is expected in building construction
91. If a commercial building is rectangular in shape with sides of 65 meters and 35

meters and the current construction cost is P4,500 per square meter. What is the
estimated building cost using the square foot method?
65 meters x 35 meters @P4,500/sqm. = P10,237,500
92. In using the cost approach, the estimated construction cost of the improvements is
usually based on the cost of new improvement at current prices.
93. GUB’s received cost P7.50M in 2009. The cost index published at that time was
175.4. The current cost index of the same is 537.8. What is the current reproduction
cost of GUB’s residence by index method?
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94. A 7-storey building was constructed 10 years ago with an area of 200 sqm per floor
in a 500 square meter site. Current reproduction cost (RC) of the building is P4,500/
m 2. Land was purchased at P7,500/m 2 5 years prior to the building construction.
Assuming the building depreciation rate is 6.5% and the land appreciation rate is
5% per year. Compute: (Round-off answers to the nearest figure)
 The Land Value:
Land Cost (500m 2 @P7,500/m 2 P3,750,000
Add: Appreciation Value (5% x P3.750 x 15 years) 2,812,500
Total Land Value P6,562,500
 The Fair Market Value of the property:

Land Value P6,562,500
Add Building Value:
Current RC (200m 2 x 7 storey @P4,500)- 6,300,000
Less: Depreciation (6.5%of P6.30M x 10 years) (4,095,000)
Building Value P2,205,000
FMV of the property P8,867,500
95. Remember, Basic Principle of Substitution is involved here. The cost of a new
structure is substituted for the existing one with some adjustments to compensate
for depreciation of the existing structure due to general deterioration.
96. Disadvantages of the Cost Approach

 That the value of the new structure was presumed to be equal to its
cost which may not be true if the structure does not represent the
HaBU of the site/lot
 In appraising single-family residences, the builder’s costs may vary
significantly depending on the quantity of the units produced and the
builder’s profit
97. Hence, in Cost Approach Appraiser should make market comparison of the
builder’s costs in the same manner the Sales Price (SP) are compared.
Nonetheless, Cost Approach should be used when opinion of value by the use of
either Market Data/Sales Comparison Approach or Income Capitalization Approach
is not possible such as appraisal of special purposes like churches, schools,
museums, libraries, mosques, etc. and the like; for insurance purposes on cost
restoration; Condemnation proceedings and real estate tax assessments.
98. Remember, Site Value is a critical part of Cost Approach because it is not build up
by costing process but computed by Market Data/Sales Comparison Approach.
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Income Capitalization Approach or Income Approach
99. Income Approach – is the method

 Of estimating the property value based on net operating income (NOI)
 Used in estimating value based on the principles of Anticipation and
Substitution of which the Principle of Anticipation applies because the
value of a property is in theory of the present value of the expected future
cash flow and the Principle of Substitution also applies because the rental
rates for the subject property must be in line with those of competitive
substitute
 That considers income and expense data relating to the subject property
and estimates value thru capitalization process
 Applicable to income-producing properties
 Related to the income the property can produce
 That requires an accurate estimation of income and expenses and choice
of capitalization rates and Capitalization technique by which the NOI is
processed into Value
 That converts income into Value with an expectation of benefits to be
derived in the future
 That appraiser reduces or discounts the property’s future income to its
present worth to recognize an anticipated future Peso is worthless than a
Peso on hand
 The most widely used on commercial and investment properties
100. Remember the usefulness of the income approach depends on the property type
under appraisal and the available data.
101. What are the steps in capitalization process?

 1st – Estimates the annual future cash net flow (outflows and inflows)
 2nd – Estimates remaining economic life of the building/improvement
 3rd – Find the capitalization rate (CR) which is the sum of the interest ( i )
and recapture or recovery rates ( vi)based on the formula: V = I/R
Where V= capitalized value of the property
I = net operating income or net cash flow from operations
before depreciation and taxes
R = appropriate capitalization rate
or V = I x F where, F is the capitalization factor which is equals to I/R
 4th – Select the type of Residual Technique (RT) to be used that fits the
situation:
 Building Residual Technique – is used
 If land value is accurately estimated or
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 Land value is known by market data approach
 Land Residual Technique – is used

 If the property generates income and if land value cannot be
accurately estimated by market data approach
 For new, building with little depreciation where building value is
known
 Property Residual Technique – is used

 For properties with long term lease or
 When overall rate can be estimated by market analysis or
when economic life of the building is short
 Where land and building values are not segregated when the
structure is old or
 When it is not possible to estimate either value
 5th – Select the capitalization method to use:

 Direct capitalization – a method
 Used to convert an estimate of a single year’s income into
an indicate of value
 Straight-line capitalization – a method
 Which makes no provisions for reinvestment of net income
and is useful when future income is not fixed/not certain
 To assume a steady decline in income to satisfy the steady
return of capital plus interest (i) which id also declining over
the expected remaining economic life of the investment
 Annuity capitalization – a method
 Which assumes a certain and regular level of net income
trend over a stretch of years with reinvestment at the current
risk rate
 That assumes that real estate has a finite life and is a
wasting asset which the total capital investment is
recaptured
 Sinking Fund capitalization – a method
 Which assumes the same amount of net income every
period, being the safe rate for low-risk long term government
bonds for savings account rate at the thrift institutions and
banks and reinvestment of net income
 Which is believed to be of little value in evaluating real estate
 That assumes real estate has a finite life and is a wasting
asset
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
Of calculating replacement reserves by multiplying the total
cost by a factor
th
 6 – Estimates the value of the property
102. Residual Technique – is

 Used to estimate the value of the property when one of the components of
the total property value is known and the other component is estimated
 Method of estimating property values which is based on the Principle of
substitution
103. How to estimate property values using Residual Capitalization Techniques?

a. Land Residual Technique
 1st – Estimate building value (BV) based on Cost Approach
 2nd – Determine income due to building (BI) by
 Straight-Line Capitalization
Formula: Estimated BV x capitalization rate (CR)
 Annuity Capitalization
Formula: Estimated BV divided by (/) present value factor for
interest rate only without the recapture rate ( vi) (Note: if no
PV factor given use the interest rate)
rd
 3 – Compute income due to land (LI)
Formula: LI = NOI less (-) BI
th
 4 – Determine the land value (LV)
Formula: LV = LI divided by (/) interest rate (i) and
th
 5 – Estimate Total Property Value
Formula: BV plus (+) LV
b. Building Residual Technique
 1st – Estimate the land value (LV) by Market Data Approach
 2nd – Determine income due to land (LI)
Formula: LI = LV x interest rate (i)
rd
 3 – Compute income due to building (BI)
Formula: BI = NOI less (-) LI
 4th – Compute building value by :
Formula: BV = BI divided by (/) capitalization rate (CR)
Formula = BI divided by (/) interest rate (i ) only without
adding the recapture rate ( vi)
th
 5 – Estimate the Total Property Value
 Formula: PV = LV plus (+) BV
c. Property Residual Technique
 1st – Estimate the remaining economic life of the building
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 2nd – Compute the property value by:
Formula: PV = NOI divided by (/) capitalization rate (CR)
 Formula: PV = NOI divided by (/) interest rate (i) only without
adding the recapture rate (vi)
 3rd – Estimate land value at the end of the economic life of the building
 4th – Compute the present value of the land by reversion which is the
discounted value at a given interest rate for the same number of years
as the remaining economic life of the building and
 5th – Estimate the Total Proper Value
Formula: PV = Discounted LV plus (+) BV
104. The 3 approaches to appraisal requires different kinds of data which may include
information on nearby property sales for Market Data/Sales Comparison Approach,
building cost for Cost Approach and investment return for Income Capitalization
Approach. The available data will help to conclude which appraisal methods will be
most sound in the Appraiser’s opinion of the MV of the subject.
105. As a Rule: Market Data/Sales Comparison Approach is most reliable in single

family residences appraisal/valuation; Cost Approach is most reliable with non-
income producing property having a limited market or with special purpose
properties and Income Capitalization Approach for those income-based properties.
106. Most Appraisals will require the use of more than once (1) approach especially
when Land Value (LV) should be distinguished from Building Value (BV)
107. Gross Rent Multiplier (GRM) or Gross Income Multiplier (GIM) – refers to a
 Factor derived from comparable properties and applied to the expected
rental income in order to estimate a value
 Technique that may be used in finding the value of a property
 Ratio that expresses the relation between gross income and sales prices
of a property
108. A building has a rental income of P500/month. Using a monthly gross rent
multiplier of 125, what is the value of the building?
Solution: V=MRI x GRM = P500 x 125 = P62,500
109. A commercial property producing an annual gross income of P50,000 was sold
two months ago for P450,000. The property’s gross income multiplier is:
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Solution: GIM = Selling Price = P450,000 = 9.00
Gross Income P50,000
110. Overall Rate of Return – refers to the

 Ratio between the annual net operating income and the sales price
 Capital recapture rate on the building
111. Yield Capitalization or discounted Cash Flows Analysis – a method

 Used to convert income into an estimate of value by projecting the
income or cash flow expected for each year of a typical investment
holding period, including any cash flow at reversion
 To estimate value by discounting the estimated income or cash flow,
using a discount rate that represents the rate of return a typical
investor will require if he/she is to invest in the property.
 Formula: Value = Present Value (PV) of NOIs plus (+) Present Value
of the net resale proceeds
112. Replacement Reserves used in Income Approach, as a reduction from the

effective gross income. It is for a capital replacement and not expenses.
113. Ordinary Assets – are properties held by owners as inventory or stock in

trade of buy and sell business or used in connection with trade, business or
source of income.
114. A vacant lot was rented for a car display at P35,000 per monthly. The
interest rate applicable to this type of property is 7%. Estimate the property
value by income approach.
Solution: V = NOI = P35,000 x 12 months = P6.0M
R 7%
115. Appraisal under the Unified Housing Loan Program (UHLP) shall be
undertaken by Home Insurance Guaranty Corporation.
116. Using the monthly gross rent multiplier of 115, estimate the property value
that was rented for P15,000 per month and the attribute monthly expenses
thereof is P5,500.
Solution: P15,000 less (-) P5,500 x 115 = P1,092,500
117. Rent saving or rental benefit – is the difference between what a lessee is
currently paying (as provided in the lease contract and what the true market
rent is at the time of appraisal.
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118. The licensed Real Estate Appraiser calculates the present value (PV) of
income based on the contract rent and adds the present value (PV) of the
reversion at the end of the lease. The legal interest being estimated for value is
leased fee.
119. In appraisal, for purpose of estimating vacancy rates used to estimate the
value of a fee simple estate, it should reflect the typical vacancy rate for
comparable properties.
120. Using the building residual technique, estimate the property value that
produced a NOI before recapture of P45,000 per year. Land Value is P500,000
interest rate on land and building is at 11% and the present tenant has
remaining 30 years on the lease period. Round-off answer to the nearest figure.
Solution:
NOI P 45,000
Less: Income due to land (P500,000 x 7.67%) 38,350
Income due to Building (BI) P 6,650
Building Value = BI/CR = (P6,650/11%) P 60,455

Add: Land Value 500,000
Property Value P560,455
121. An apartment has 24 units; 15 units of 2 bedrooms with a rental rate of P7,500 per
month each and 10 units of 1-bedroom rented at P4,500 per month each. There are
about 14 units of 2 bedrooms occupied and 9 units of 1-bedroom occupied. How
much is the yearly potential gross income?
15 units @ P7,5000/unit P112,500

10 units @ P4,500/unit 45,000
Total monthly Income P157,500
P157,500 x 12 months P1,849,000
122. Estimate the value of a 3,500 square meter vacant lot in commercial area by
land residual technique/process.it was being offered for sale at P28,000 per
sqm. Your client, PTB Corporation wanted to construct a 7-storey commercial
building occupying 1,500 sqm. of the land. The existing rental rate of the area is
P300 per sqm. Rentable floor area of the building is 80% of the total area.
Building cost is P6,000 per sqm with an estimated economic life of 35 years;
net operating income is 45% of the total annual income, interest rate is 12%.
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Solution:
 Determine the Capitalization Rate and recapture rate:
CR = i+vi (1/N) = 12% (1/35) = 14%

 Compute the Net Operating Income:
1,500 m 2 x 7-storey @ P300/sqm. per month x 12 months x 80% rentable
area = P30.240M x 45% = P13.608M
 Determine the Building Cost:
1,500m 2 x 7-storey @ P6,000 = P63.0M
 Compute income Due to Land P13,608,000

NOI
Less: Income Due to Land
 P63.0M x 14% 8,820,000
income Due to Land P4,788,000
 Estimate Land Value (LV = LI/Interest rate)

P4,788,000/12% = P39.90M
123. The value of a building with a NOI of P200,000 and with an over-all
capitalization rate of 8.32% is – P2,403,846 (P200,000/8.32%)
124. Income Capitalization Approach to estimate Value has two (2) method,
namely:
a. Direct Capitalization Method –
 Estimating property value based on one-year income stream
 Used to convert an estimate of single year’s income into an
indication of value by dividing the estimated income and multiplying
the income estimate
 Gross Income Multiplier –
 Ratio computed by dividing SP by the Annual Gross Income
 Formula: GIM=SP/AGI
 Gross Monthly Rent Multiplier
 Residual Techniques/Methods (Straight-line and Annuity) –

 The result of dividing the SP by the monthly gross rent
 Formula: GRM=SP/MGR
b. Yield capitalization Method or Discounted Flow Analysis (Discounted

Cash Flow) – is a method
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 Used to convert income into an estimate of value by projecting the
income or cash flow expected for each year by a typical investment
holding period, including any cash flow at reversion
 To estimate value by discounting the estimated income or cash
flow, using a discount rate that represents the rate of return a
typical investor will require if he/she is to invest in the property
 Formula: Value = Present value of NOIs + Present Value net resale
proceeds
125. Caprice/Capricious Value – refers to an estimate derived from observing

completed transactions involving a large degree of amenities or other personal
and unpredictable factors.
126. Assemblage/Marriage Value – value increment resulting from the merger of

two or more interest in a property.
127. Asset-Based Valuation – means of estimating the value of business and/or

equity interest using methods based on the Market Value of individual business
assets less liabilities.
128. Building Efficiency – refers to the ratio of rentable space to gross building
area.
129. Vacancy Allowance – the amount deducted from potential annual gross
income to reflect the probable vacancies and non-payment of rent.
130. Economic Rent – refers to

 Estimated amount for which a property or space within a property
should lease on the date of valuation between the willing lessor and
the willing Lessee on appropriate terms in arm’s-length transaction
 The revenue derived from the use of land and of the forces inherent in
the land
 Ground Rent or Contract Rent or Market Rent
131. Effective Gross Income (EGI) –

 Is the potential gross income/receipts less (-) allowance for vacancies
and Bad debts
 Formula: EGI = GR less (-) Vacancy Rate/Bad Debts
132. A new office building valued at P1.20M generate a NOI of P250,000. A

mortgage of 70% can be obtained from a bank at 11%. Equity for this type of
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property requires 12% return and the building’s remaining economic life (REL)
is 20 years. Estimate the total property value by the land residual technique.
Solution:
Interest (i): Mortgage Rate: 11% x 70% 7.7%
Equity: (12% x 30%) 3.6%
i =11.3%
CR: 11.3% + 5% (1/20)=16.3%
NOI P250,000
Less: Income due to building (1.2M x 16.3%) 195,600
i
Land Value: LI/ = P54,400/11.3% P 481,416
Add: Building Value 1,200,000
Estimated Total Property Value P1,681,416
133. Neighborhood social influences includes all of the following:

 Occupant age levels
 Occupant skill levels
 Population density
 Occupants income
134. Economic influences include all of the following

 Property Value levels
 Occupant income levels
 Property Rent levels
 Vacancy Rate
135. Gillar Realty and Consultancy decided to go into a small-scale housing

development and sales business.it brought a 1,500 sqm. Residential lot at
P3,500 per sqm and constructed twelve (12) townhouses. Each has a 100 sqm
in area with a cost P4,575 per sqm to construct. Other expenses: P 600,000 for
a common driveway, P300,000 for a drainage system, P250,000 for water,
P250,000 for water supply system, P400,000 for fencing and a gate with
guardhouse and P150,000 for landscaping. The townhouses were later sold at
P2,500,000 each. Compute.
a. The gross profit from this project

Solution:
Gross Sales (2.5M x 6 units) P15,000,000
Less Cost of the Units Sold:
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Land (1,500m 2 @P3,500/sqm.) P5,250,000
Townhouses Construction Cost
(12 units x 100 @P4,575/m 2) 5,490,000
Common Driveway 600,000
Drainage System 300,000
Water Supply System 250,000
Fencing and Gate with Guardhouse 400,000
Landscaping 150,000
Total Deductions P12,440,000
Gross Profit P 2,560,000
b. The rate or Return on the Investment
Rate of Return = Gross Profit

Total Cost of the Units Sold
= P2,560,000 = 20.58%
P12,440,000
136. A dormitory has 50 rooms with an occupancy rate of 94% 20 rooms for one
bed renting for P10,000 per month each and 30 rooms for two beds renting for
P6,000 a month on a per head count.
a. The effective gross income of the property monthly is:

Solution:
Income for 20 rooms @P10,000 P200,000
Add: Income for 30 rooms @P6,000x 2 360,000
Gross Monthly Income P560,000
Occupancy factor x 94%
Effective Gross Income monthly (EGI) P526,400
b. The potential gross income yearly is:

Solution: (EGI: P526,400 x 12 months = P6,316,800
137. An apartment complex you are appraising has the following information:
 Apartment building #1 – 15 units: gross income P5.0M; building area
1,750 sqm; sales price is P20.0M
 Apartment Building #2 – 30 units; gross annual income P8.50M;
building area 3,000 sqm; sales price is P38.0M
building area 4.350 sqm; sales price is P47.0M
building area 2,000 sqm; sales price is P27.50M
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 Apartment Building #5 – 45 units; gross income P17.5M; building area
4,850 sqm; sales price is P52.0M
a. What is the range of the ingredient sales price per square meter?
Solution: (SP/Area): P13,750-P10,722 = P3,028
Apartment Building #1 = P20.0M/1,750 sqm. =P11,428

Apartment Building #5 = P52.00M/4,850sqm. =P10,722
b. What is the mean sale price per unit?

Solution:
Apartment Building #1 = P20.0M/15 units =P1,333,333

Apartment Building #4 = P27.50M/25units =P1,100,000
=P6,030,556/5
=P1,206,111
c. What is the mean gross income multiplier? (Formula: GIM = SP/NOI)

Solution:
Apartment Building #1 = P20.0M/P5.0M = 4.00
19.13/5 = 3.82
d. If the property being appraised is most comparable to Apartment Building #2

what is the indicated value by the GIM of the subject property with a gross
income of P10.0M per year?
Solution: P44,700,000 (P10.0M x 4.47)
138. The term reconciliation as used in appraisal means – the process of bringing
together the values indicated by each approach so that the appraiser can form an
opinion about the value of the subject property. Conclusion as to the highest and
best use is part of making the final estimate of value.
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139. Types of Appraisal Report

a. Oral – report which is made orally which includes statement of facts,
assumptions, conditions and reasoning
b. Certificate or Letter – it is a letter form with the Appraiser’s opinion of value,
supporting data, analysis and interpretation preserved in files.
c. Standard Form Report – type of report used by some institutions or
government agencies which design certain forms for their appraisal reports to
suit their requirements. This is quite rigid and provides no flexibility
d. Narrative Report – a comprehensive report, providing Appraiser’s the
opportunity to support, explain opinions and conclusions and to convince
reader of the soundless of the estimates.
140. An 8 years old residence is currently valued at P4.50M. What was its original
value if it has appreciated by 75% since it was built? (Round-off your answer to the
nearest figure)
Solution: P2,571,429 {4.50M/175%)
141. A house and lot is price at P7.50M. The lot alone is valued at P3.0M. What
percentage of the total asking price is attributed to the house?
Solution: 60% {(P3.0M/P7.50M)-100%}
142. Use the following sales adjustments grid to answer the problem below:
COMPARABLES
characterisric Subject 1 2 3 4
s
Sales price P56,000 P60,000 P62,000 P63,000
Financing Conv Conv Conv Conv Conv

Sale Date 1/2006 1/2006 1/2006 1/2006 1/2006
Square Meter 17 16 18 18 18
Exterior Alum Brick Alum Alum Brick
Aircon 1 1 1 1 1
Basement Full Full Full Full Full
Age 16 20 20 18 20
Lot Size 187 187 187 187 187
Garage 2 2 2 2 2
Compute for the following:
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a. The adjustment for size per square meter
Solution:
Size/Sqm. = SPC4-SPC1 = P63, 000-P56, 000 = P7,000 = P3,500/sqm
Size differences 18-16 2
b. The adjustment for a brick exterior

Solution:
Brick Exterior = SPC4-SPC2 = P63,000-P60,000 = P3,000
c. The adjustment for the age per year

Solution:
Age = SPC3-SPC2 = P62,000-P60,000 = P2,000 = P1,000/year
Age diferrence 20-18 2
d. The estimated sales price for the subject property

Solution:
Use data of C3 being the highest date of the comparable with almost the same
features
SPC3 = P62,000 = P3,444.44/sq.m x 17sqm. (size of the subject)

area 18
= P58,555.48 + P2,000 (Depreciation for 2 years) = P60,555.48
143. A property has a potential Gross income of P250,000. Vacancy and income loss
is estimated at 5%. Management fees are 2% of rent collection. Insurance is
P20,000. Property taxes are P35,000 and other operating expenses is P12,000.
Compute the (a) Effective Gross income; (b) Total Operating Expenses and (c) Net
Operating Income
Solution:
Gross income (GI) P250,000
Less: Vacancy loss (5%) P250T) 12,500
Effective Gross Income (EGI) P237,500 (a)
Less: Operating Expenses:
Management Fee (P2% of P237,500) P 4,750
Insurance 20,000
Property Taxes 35,000
Other Operating expenses 12,000
Total Operating Expenses 71,750 (b)
Net operating Income P165,750 (c)
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144. An appraiser was asked to estimate the Market Value of 500 sqm vacant
commercial lot using the following assumptions: Market Value is P15,000 per sqm
with zonal value of P16,000 per sqm; Interest Rate is 12% per annum. Compute the
net income of the property.
Solution: P900,000 {500sqm x P15,000 x 12%}
145. Commercial stall A is being appraised. It is very similar B, but shall B has the
ground electrical conduit valued at P50,000. Stall B sold two months ago for
P350,000. What is the market of stall A using the formula for the sales?
 P250,000 d. P300,000
 P275,000 e. P325,000
 P285,000
Solution: MV = SP less Adjustments = P350,000-P50,000 = P300,000
146. A land and building worth P2.50M is under a long term lease contract was sold
recently. The rental income of P500,000 is above economic rent and the remaining
lease period is 16 years from its original lease of 30years. The contract price was
P15.0M. The over-all rate for economic rent is 11% (Round-off to the nearest figure)
a. At what over-all rate did the property sell?

Solution:
Property Over-all rate = Property Value = P2.50M = 16.67%
Selling Price P15.0M
b. By income approach, what is the indicated value of the property if not
covered by lease?
Solution:
Property Value = Effective Gross Annual Rent Income
Overall Rate for Economic Rent
= P2,000,000 (P2.5M-P500T) = P18,181,818
11%
c. What is the excess rent based on the sale?
Solution: Excess on Rent: P500,000 x 14 years (30-16) = P7,000,000
d. What capitalization rate is applicable to the excess rental value?
Solution:
Capitalization Rate (Cap rate) = i + Recap rate (1/N)
= 11% + 7.14 % (1/14) = 18.14%
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147. Based on the following information:

Building value P50.0M
Net operating income P8.50M
Building capitalization rate 12 percent
Land capitalization rate 8 percent
a. What is the income to the land?

NOI P8,500,000
Income due to building {P50.0M x 12%} 6,000,000
Income due to land P2,500,000
b. What is the value of the land
Land Value (P2.50M/8%) P31,250,000
c. What is the total property value? PV = P3.250M + P50.0M = P81.250M
148. A property with a NOI of P400,000 was recently sold for P4.50M. The remaining
economic life of the building was estimated to be 25 years. Land value is P2.0M.
compute the following:
 Overall Rate of the property: (Formula: NOI/SP) = P400,000 =
8.89%
P4.50M
 Building Value:
NOI P400,000
Less: Income due to land (P2.0M x 8.89%) 177,800
Income due to Building P222,200
Building Value: P222,200/8.89% = P2,499,438
 Recapture Rate: (Formula: 1/N) = 1/25 = 4%

 Building Ratio to total property value: (Formula: BV/PV)
P2,499,438 =55.55%
P4,499,438 (P2,499,438+P2,000,000)
149. You are appraising a one-storey building with a NOI of P175,000 per annum. If
you determine that a 15% return is justified on this investment, estimate the
property value? (Round-off to the nearest figure)
Solution:
Value = Income = P175,000 = P1,166,667
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Rate 15%
150. The Provincial Assessor’s office is constructing the unit value of a residential
land. A standard depth was established in the “the Poblacion” at 25 meters and the
succeeding depths not exceeding 4th strips at 80%, 60% and 40 % for the 2 nd, 3rd,
and the 4th strip, respectively. A property with an area of 1,300 m 2 was sold at
P1.040M at P800 per sqm was used as one of the reference data. Compute the
following by stripping method:
a. Effective area for each strip

Given: Residential Land depth = 25m for the 1st strip
80% of 25% =20m for the 2nd strip
60% of 25% =15m for the 3rd strip
40% of 25% =10m for the 4th strip
Total 70m for the 4 strips
Formula: Area = Length x Width; W = A/L 1,300 sq.m/70 = 18.57 width/strip

Solution to compute the area per strip:
1st strip (25 x 18.57) = 464.25 sq.m
2nd strip (20 x 18.57) = 371.40 sq.m
3rd strip (15 x 18.57) = 278.55 sq.m
4th strip (10 x 18.57) = 185.70 sq.m
b. Value for each trip

Solution:
1st strip (464.25 sqm. @ P800) =P371,400
2nd strip (371.40 sqm. @P800) =P297,120
3rd strip (278.55 sqm. @P800) =P222,840
4th strip (185.70 sqm. @P800) =P148,500
151. Market value and its characteristics:

 Most probable price in terms of money (not necessarily the highest price)
that a property will bring in a competitive and open market under all
conditions required to a fair sale wherein both parties (buyer & seller)
acting prudently and knowledgeably and assuming the price is not
affected by undue stimulus (According to AIA-Appraisal Institute in
America)
 Estimated amount for which the property should exchange at appraisal

date between willing parties (seller & buyer) in an arm’s length
transactions after proper marketing whereby parties acted knowledgeable
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and prudently and without compulsion (According to PVS-Philippine
Valuation Standard)
152. Market Value estimate is an obligate appraisal/valuation of identified ownership

right to a specific property as of a given date/time and for a specific purpose. It is a
market supported estimate developed in accordance with the generally accepted
valuation standards.
153. The Appraisal report conveys the necessary information for the client to arrive at
the same conclusion as the Appraiser. It should be written for a clearer
understanding of the average client. All Appraisers who cooperated in the analysis
leading to the estimation of value must sign the Appraisal Report. The signing
Appraiser shall take full responsibility for the property valuation.
154. Always consider that appraisal is an estimate or opinion of value, transmitted in

written form of an adequately described property as of specific date supported by a
presentation and analysis of relevant factual data. Appraisal Work is not a mere
guess because values are determined only after thorough observation,
investigation, analysis and reasoning.
155. Remembering that value of a property today may not be the same tomorrow,
accuracy of quantification of the Appraisal Report depends on the Appraiser’s ability
to rationalize his/her technical experience with the factors affecting appraisal
values; collected or gathered relevant facts and opinions constitute the basis for the
final analysis of the Appraiser’s report
MATRIX OF FORMULAS
1. Gross Income Multiplier: Sales Price

Income/Gross Income/Effective Gross/Income (EGI)
2. Net Income Rate: Net Operating Expenses (OE)

EGI
3. Operating Expense Rate (%): Operating Expense (OE)
EGI
Gross Income Pxxxx
4. effective Gross Less: Vacancy and Bad Debts xxxx
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Income Effective Gross Income (EGI) Pxxxx
(EGI) and the NET: Less: Operating Expenses (OE) xxxx
Operating Income Net Operating Income (NOI) Pxxxx
(NOI)
5. Rate of Return of Investment (ROI) (%):
Net Operating Income (NOI)
Selling Price (SP)
6. Income due to NOI Pxxxx
Land (LI) Less: Income due to bldg. xxxx or (LV x i
)
Income due to Land Pxxxx
7. Income due to NOI Pxxxx
Building (BI) Less: Income due to Land xxxx or (BV x
CR)
Income due to Building Pxxxx
8. Total Property Value (TPV) = Land Value (LV) + Building Value (BV)
9. Building Value (BV): Income due to Building (BI)

Capitalization Rate (CR)
10. Land Value (LV) : Income due to Land (LI)
Interest Rate ( i )
11. Ratio to the Building (%) : Building Value (BV)
Total Property Value (TPV)
12. Ratio to the land (%) : Land Value (LV)
Total Property Value (TPV)
8. Formula
13. Property Overall Rate (%) : Property Value (PV)
Selling Price (SP)
14. Overall Rate : Net Operating Income (NOI) or NOI
Selling Price (SP) Value (V)/GIM
15. Market Value (MV) = Area (A) x Unit Value (UV)
16. Assessed Value (AV) = Market Value (MV) x Assessment Level (AL)
17. Capitalization Rate (CR) = interest (i ) + recapitalization rate ( vi) {1/N})
18. Recapitalization Rate ( vi) = 1
Or Depreciation Rate (%) N
19. Area of Triangle = ½ (hxb)
20. Value (V) = NOI (I) or R = NOI (I) or NOI = Value x
Rate
Rate (R) Value (V)
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Where R could be (i ) or CR
21. Mortgage Equity – Elwood Method:
Overall Rate (OR) = Y less (-) MC plus (+) DEP 1/SN less (-) APP
1/SN
Where:
 Y = Equity Yield composite annual rate comprising equity cash
flow dividend plus (+) equity growth
 M = Ratio of mortgage to total investment, say 50% - 50%; 60% -
40%; 70% - 30%, etc.
 C = Mortgage coefficient and multiplier developed by Elwood
 DEP = total property value loss expressed as %
 1/SN = Sinking fund factor at the equity yield rate (Y) for the
projection period of term
22. Format of the Computation of Value using the Land Residual

Technique
Potential Annual Gross Income Pxxxx
Less: Allowance for Vacancy and Bad Debts xxxx
Effective Gross Income (EGI) Pxxxx
Less: Operating Expenses/Fixed Charges xxxx
Net: Operating Income Pxxxx
Less: Net Income Attributable to the Bldg.
Or Land xxxx
NOI attributed to the land or Bldg Pxxxx
Note:
 If looking for income due to Buiding (BV x Cap. Rate)
 If looking for income due to Land (LV) x Interest (i ) or ROC
 Land Value (LV) = Income due to Land
Investment (i)
 Building Value = Income due to Building (BI) x CR or BV/ Interest (i
)
 Total Proper Value = LV + BV
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Valuation Procedure and Research
1. International Valuation Standards Committee’s (IVSC) vis-à-vis the Philippines

Setting (PVS) lay down terms and concepts that are fundamental to all
appraisal/valuations. Real property, in the legal sense may be defined as
ownership rather than the physical entity of land, buildings and tangible personal
items. In this context, the IVSC identifies four (4) general property types:
 Real Property
 Personal Property
 Businesses
 Financial interest
2. It is significant to the Appraiser/Value and the Users of Appraisal/valuation services

that appropriate methods be carefully understood, competently applied and
adequately explained. By meeting this objective, Appraisers/Valuers contributes to
the soundness and reliability of Market Value estimates and the well-being of the
markets in which they practice
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3. Promotion of understanding and avoidance of abuses in the market requires that
the Appraiser/Valuer and the User of appraisal/valuation services should carefully
distinguish between the types of property. Failure to do so can result in improper or
ill-advised market decisions and misrepresentations of reported values. Over or
under-reporting of value is a common result where property types are confused or
mixed. Real Estate Appraisers/Valuers recognized the complexities of markets and
the real estate bought and sold therein.
4. Differences in real estate market and between individual properties are reflected
accurately and reliably where generally accepted valuation principles (GAVP are
followed.it is recognized that the appraisal/valuation of real property requires
special education, training and experience. Real Property is valued as a distinct
“entity”, i.e as physical assets to which particular ownership right s apply.
5. Market Value of real property is always valued in accordance with international

Valuation Standard 1 (IVS 1). When a real property value estimate is incorporated
as an element of a business valuation, it is a Market Value estimate of the real
property.
6. It is important to stress, that Appraisers/Valuers are trained in such procedures and

that the procedures are included in the generally accepted practices. In application,
Appraisers/Valuers commonly apply several procedures in each valuation and then
reconcile the results into a final indication of Market Value (MV) or otherspecified
value.
7. An Appraisal work presents the licensed Real Estate Appraiser’s opinion of the
property’s credible monetary value in the open and competitive market. In
developing a final opinion of value the Appraiser used several approaches to
appraisal/valuation (market data/sales comparison approach, cost approach and
income capitalization approach). The method in which the Appraiser applies a
particular approach may be determined by the type of property being appraised
and the factors/forces which may affect the property value and its significant.
8. The appraisal beings with a specific assignment of the Appraiser. From the aspect,
every appraisal requires.
 The organized collection and analysis of data
 Specific data pertaining to the Subject
 General data about the surroundings area/vicinity and
 Data applicable to the appraisal approached being used should be
researched
9. There are Steps in Appraisal/Valuation Process that we have observe/follow-

 1st – Definition or Identification of the Problem
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 2nd – Determination of the Scope of Work
 Property Identification of Real Estate
 Complete legal description of the Subject
 Plotting of the property title to determine the shape and orientation
to the cardinal directions (north, east, west and south)
 May use the tax map of the Assessor’s Office, subdivision plan if
property is within a subdivision
 Due diligence should be done if property to be appraised will be
used as mortgage or to be brought by a prospective purchaser
 Verification of adjoining lot owners, if applicable
 Have proper identification of the property like: math the lot plan and
the actual location of the property although there are assumptions
and limiting conditions
 Identification of Property rights to be appraised
 Fee-simple – absolute ownership (bundles of rights)
 Leased fee or leasehold interest
 Interest in right-of-way/easement
 Registered rights/title in partnership/corporation or joint with others
 Definition of the Value to be estimated/appraised
 Understanding as to kind of value being appraised like: special
Value, Just Compensation, Typical Market Value (Exchange
Value), Market or Economic Rent, Investment Value, Owner’s
Value and the like
 Purpose and intended Use of the Appraisal/Valuation
 It should be agreed by the Appraiser and the Client on what the
assignment should accomplish
 Scope of work on the assignment which should be agreed by the
Appraiser and the Client as to the purpose intended use such as:
payment of just compensation, selling or buying, market rent, etc.
 Effective Date of Value Estimate or Opinion of Value
 Because of constant movements/changes of real estate values an
opinion of values is suitable only on the date it is specified
 The effective date is usually time of inspection or the date of the
past in the case of expropriation assignment, date when the
appraisal report was created, or may be some future date
 Assumptions and limiting Conditions of the Appraiser/Valuer
 The purpose thereto is to protect the Appraiser and to inform and
protect also the client and other users of the appraisal report
rd
 3 – Preliminary Analysis, Data Selection and Collection
 Once the Appraiser knows which appraisal methodology/approach(es)
will be used the information/data needed can be listed/itemized such as:
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 Appraisal/Valuation of vacant lot or House and Lot (residential
Property)
o Market Data Comparable lots through Data from the Client,
Residents within the vicinity of the Subject, Fellow licensed
Real Estate Brokers and Appraisers
o Advertised properties (newspapers, internet, etc.)
o Acquired assets listed by banks and other financing
institutions
o Government Offices like BIR, ROD, Assessor’s Office, etc.
 Valuation of income generating property
o Determination of the Potential income, allowance for
vacancy and bad debts based on actual experience
o Interest rates and recapture rate to be used
o Capitalization Method to be used (Direct, Residual or
Annuity)
o Determine the Land and Building Value to find out if the
property is in its higher and best use(HaBU)
 Appraiser should
 Be familiar enough with the sources of information to state exactly
what sources
 Know the types of data needed and should be collected and
recorded for future use and data’s correctness should be verified
 Complies general data on the geographic and economic features
of the country, region, city and neighborhood
 Verify property location as influence by both natural and economic
factors
 Specific data on the Subject – physical description
 Gather comparable sales data, cost data or income and expenses
if appropriate
 Double-checked against other sources
(This is the most critical in the appraisal assignment because it will form
the basis for the Appraiser’s opinion of the property value)
th
 4 – Highest and Best Use (HaBU) Analysis or Determination of HaBU
 Understanding or interpretation of relevant data
 Performing the HaBU analysis that reflects on the market
forces/factors which influence the Subject to be able to establish the
property’s most profitable use on which to base the final opinion of
value
 Evaluating the physical, legal and locational features present in the
Subject and reflect on the extent to which those attributes/features
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performs the requirements of the marketplace (the Subject HaBU
satisfy the human need that as revealed by the economic indicators as
supply, demand and absorption)
 Appraiser may conclude that the HaBU of the land is not its present
use
 5th – Form opinion of Land Value
 Physical features and facilities of the Subject Site are compared with
those of similar properties within the vicinity having the same HaBU
 Adjustments are made for any significant differences and the adjusted
prices of the properties most like the Subject Site are used to form an
opinion of the Subject’s value
th
 6 – Application or Form opinion of Value by each of the 3 Approaches to
Value (MDA, CA, ICA)
 7th – Recognition of Value for Final Value Estimate or Opinion of Value
 Appraiser should
 Connect the information and decide what conclusions can be
drawn from the volume of collected factual data
 Never just averages differing/conflicting value determinations
 Find out the figure that most truly reflects the value wanted
based on the most relevant approach, analysis and judgment
th
 8 – Reporting of Defined or Final Opinion of Value
 Appraiser/Valuer can report the final opinion of Value to the client in a
written standard Appraisal Report (Letter/Certification, Short Form or
Narrative Appraisal Report)
10. Comparable data – related t properties that have characteristics similar to those of
the property being valued (the subject property). Data are generally used in
valuation analysis to develop value estimates. Elements of Comparison are
specific characteristics of properties and transactions that cause the prices paid for
real estate to vary. Elements of Comparison like: property rights conveyed,
financing terms, conditions of sale, market conditions, location, and physical and
economic characteristics.
11. Highest and Best Use (HaBU) – is the most probable of the property which is
physical possible, appropriate justified, legally permissible, financially feasible and
which results in the highest value of the property being valued.
12. Units of Comparison – a factor produced by two components which reflects precise
differences between properties and facilities analysis in the three approaches to
value, e.g price per sqm./sq.ft ratio of property sales price to its net income.
13. Value in its broadest sense – is defined as the relationship between something
owned and an individual or individuals who wish to own it. Market Value has
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evolved in concept and definition under the influence of market forces and in
response to various principles of real estate economics. In Market Value situations
it is also common for the independence or external status of the Appraiser/Valuer
to be established in an affirmative statement.
14. The Valuation Process reflects the generally Accepted Valuation Principles. Market
Value applications require the development of valuations solely on the basis of
market data. Appraisal/Valuation includes all the research, data, reasoning,
analysis and conclusions necessary to arrive at the value estimate it is a necessary
under the GAVP that adequate records be kept to demonstrate that a Valuation
Process was followed and the conclusions are credible and reliable.
15. It is appropriate and customary that the client’s instruction shall be in writing in a
letter or contract of services. The agreement or contract of services sets the
business relationship between the Valuer and the Client, the fess, the payment
terms, special directives and limitations and identifications of the Standards to be
applied and other pertinent matters. The Appraiser/Valuer and Client should agree
on the context and the scope of the valuation (Definition of the Assignment or
Problem)
16. Identification of
 Real Estate involved in the valuation
 Property rights to be value
 Intended use of the valuation
 Date of which the value estimate will apply and the intended report
 Scope/Extent of valuation and the report
 Contingent and limiting conditions which the valuation is based
17. In performing the Preliminary Analysis, data Selection and collection, the
Appraiser/Vlauer becomes familiar with the general market and subject property,
thereby proceeding to a position from which more specific analysis can be made.
General: Economic Data are collected at the neighborhood, city, regional and even
national and international levels, depending on the property involved.
18. Social, economic, governmental and environmental factors that may be have
bearing on MV are examined to better understand the particular property. Any
other specific forces that must be considered are investigated in detail. Property;
Specific data or more directly relevant to the property being valued and to
comparable properties are also gathered and examined. Supply and demand data
on the most probable market – market are analyzed the market trends, relationship
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between supply and demand, absorption rates and other market-specific
information.
19. Basic Determinants of HaBU includes the answers to the following questions:
 Is the suggested use a reasonable and likely one?
 Is the use legal or is there a reasonable likelihood that a legal entitlement for
the use can be obtained?
 Is the property physically suited to the use or can it be adapted to the use?
 Is the suggested use financially feasible? And
 Of those uses the meet of the 1 st four tests, is the selected HABUthemost
productive use of the land?
20. Methods used for land valuation – their applicability differ according to the type of
value estimated and availability of data. It is reasonable for the Appraiser/Valuer to
consider each Approach, unless there are restrictions or other compelling reasons
for a particular omission such as: lack of supporting data. Each approach is based
in part, on the Principle of Substitution, which holds that when several similar or
commensurate commodities, goods or services are available, the one with the
lowest price attracts the greatest demand and widest distribution.
21. Simply, the price of a property established by a given market is limited by the
prices commonly paid for properties that complete with it for the market share, the
financial alternatives or investing money and cost of building a new property or
adopting old property to a use similar to the subject property.
22. In the appraisal process, reconciliation of the values indicated by each of the three
(3) approaches to value is significant.
 In Market Data or Sales Comparison Approach (MD/SCA), the utilities of the
Comparable properties were compared with the Subject and Sales Prices
were adjusted to derive an estimate of Value
 Formula: Value of Comparable add (+) or deduct (-) Adjustments =MV
 In Cost Approach (CA), the Cost of Producing/replacing the
structure/improvement net of depreciation is added (+) to the land value LV
 Formula: RCN less (-) Depreciation Add (+) land value = Market Value
 In income approach, Value was based on income the property should be
capable of earning
 Formula: NOI/CR = Building and Land Value
23. The value reached by the different techniques will almost never be the same, yet
the Appraiser should make a final determination of the single best supportable
estimate of value. In practice, it Appraiser reached the same value indication for all
3 approaches. The credibility of the Appraisal Report could be seriously
questioned.
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24. Absorption Rate – a rate at which the units or lots are sold in the market. It
measures on how fast the subdivision lots are sold or absorbed by the market.
Also refers to the amount or number a particular development can effectively and
reasonably accommodate in the market.
Practical Appraisal Mathematics
1. Arithmetic Mean – the mean of the distribution. It is defined as the sum of the
scores or value of the individual observations.
2. Bimodal – refers when the distribution has two categories containing the same
number of observation.
3. Interest – refers to
a. Cost of using somebody else money
b. Return on capital
c. Two types: simple and compound
4. Simple Interest – refers

a. To interest earned only one original principal and not on the accrued interest +
P.
b. Formula: Interest (i) = Principle (P) x Rate (%) x Time
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5. Compound Interest – refers to the interest which is periodically added to principal

and in effect a new balance draws additional interest.
6. Many mathematical computations arise all over the appraisal process. The
Appraiser should know how to calculate them, like knowing the area in square
meter of a building, area of a triangle or a square or rectangle, etc. the Appraiser
should also know how to compute the volume of any shape, property boundaries
(metes and bounds as well as distances).
7. Let us try to refresh our memories on measurements and shapes –

a. Area – is the space inside a two-dimensional shape. Formula: Area (A) =
Length (L) x Width (W)
b. Right Angle – is the angle formed by ¼ of a circle. Full circle is 360 degress
and ¼ is 90 degrees. Hence, It is a 90-degree angle
c. Rectangle – is a closed figure with 4-sides that are at right angles to each other
d. Square – is a rectangle with 4-sides of equal length. If it is with sides each 1-
foot long it is square foot (sq.ft), if one-inch long it is square inch, if in meter it is
square meter and if kilometer it is square kilometer (sqkm). Square feet are
expressed by using the exponent 2 like ft 2 which is 5 feet-squared, meaning 5’
(ft) x 5’ (ft) or 25 square feet. The exponent indicates how many times the
number or unit of measurement is multiplied by itself which is called as the
power of the number or unit is measure. So 53 will be 5 x 5 x 5
e. Triangle – is a closed figure with 3-straight sides and 3-angles. Area of Triangle
(A) = ½ Base (B) x Height (H)
f. Volume – defined as the space a 3-dimensions object occupies. When a shape
has more than one side and encloses a space it has a volume.
g. Flat Shapes – squares, rectangles, triangles have no volume, it has 2-
dimension (length, width or height) while shapes with volume have 3-
dimensions (length, width and height). Formula: V = Length (L) x Width (W) x
Height (H)
h. Trapezoid – is computed with the formula: ½ sum of parallel side x altitude
8. Statistics – is
a. The science of collecting, classifying and interpreting information based on the
number of things/objects
b. A tool to show a more general fashion how quantified real estate information
can assists in the evaluation of both the internal and market forces affecting the
real estate value
c. Used by Appraisers to support the assumptions that allow an estimate of value
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9. A Variate – is a single item in a group, one single-family home is a variate and all
variates in a group can make a population
10. Basic concept of measurement used in statistics includes measures of central

tendency which describes the typical variate in a population like: sales price for
single-family residence, rent for square meter for offices spaces, etc.
11. Three common statistical measures which are used to identify the typical item or
variate in a sample/population
a. Mean Deviation (MD) –
 Average of the absolute differences of the individual scores from the
mean
 The sum of the variates divided by the number of variates
b. Median –
 The midpoint of an ordered distribution or that point above which and
below which exactly one-half of the scores lies
 Measure of control tendency which locates the exact center of distribution
 Found by dividing the number of variates/sample into two equal groups
c. Mode – the most frequently appearing score or variate in a distribution
12. Measures of dispersion may be computed to estimate the spread of the data to
establish whether variates are grouped closely about the mean or median or are
widely dispersed or it simple describes the variance in a data set.
13. Three common measures of dispersions

a. Range – measures of the difference between the highest and the lowest scores
in a distribution
b. Average Deviation – measures how far the average variate differs for the mean.
Deviation – measure of how widely the individual variates in a population vary
c. Standard Deviation –
 Measures the differences between individual variates and the entire
population by taking the square root of the sum of the squared
differences between each variate and the mean of all the variates in the
population divided by the number of variates in the population
 Measures of how much the actual of a population or sample deviate from
the mean
14. Multi-model – refers to when the distribution has two categories containing the
same number of observation.
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15. Nominal Level of Measurement – refers to assignment of names or numbers to
categories where the names or numbers to categories have no mathematics
meanings.
16. Ratio Level Measurement – refers to the measures that incorporates both of the
mathematical properties already mentioned (order and equal intervals) and one
additional property.
17. Ordinal Level Measurement is characterized with the most basic of mathematical
properties or order or scale points. It incorporates a rising order of inequality
between categories or scale points.
18. Rhombus – refers to a parallelogram whose angles are oblique and whose sides
are equal.
19. Skewness – is a measure of symmetry in a distribution or lack of symmetry.

Positively skewed distribution has no longer tail to the right and the mean is greater
than the median which is greater than the mode. Negatively skewed distribution has
a longer tail to the left and the mode is greater than the median which is greater
than the mean.
20. Multiple regression analysis – is performed with the same basic method as simple
linear regression, but the analysis is expanded to include more than one dependent
variable.
21. Outliers – are extreme values in data set. The mean, median and mode are all
equal if the data are not skewed.
22. A hectare of land contains 10,000 square meters. One (1) square kilometer is
equivalent to 0.386 square mile. One (1) hectare is equivalent to 2.471 acres. A
hectometer is equivalent to 100 meters.
23. The mean of five house sales prices of P100,000, P75,000, P175,000, P200,000
and P150,000 is P140,000 (P100T+P75T+P175T+P200T+P150T/5)
24. The house flooring has an area of 30 square meters. How many vinyl tiles are
needed if the size is 12 inches by 12 inches?
30 x 10.76 ft/sqm. = 323 vinyl tiles
25. The area of a right triangle with a height of 20 ft and a base of 6 ft is (Round-off
your answer to the nearest figure)
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Solution:
Triangle = ½ (b x h) = ½ (6 x 20) = 120 sq. ft./10.76 sq. ft./sqm. = 60sqft
26. The area of rectangle with a base of 10 meters and a length of 20 meters is 200
sqm.
27. A regression fives the following information to estimate monthly rent of apartments.
a. Rent = 250 + (75 x rooms) + (25 x distance)
Where:
Rooms is the percent of students in the apartment building (0=0) percent,
1.00 = 100%)
Distance is the distance from the periphery of the campus
The rent for an apartment with 3 rooms, 100 percent students and 50 meters from
campus would be:
Solution: Rent = 250 + (75 x 3) + (50 x 100%) + (25 x 50)

= 250 + 2250 + 50 + 1250 = 1,775
28. A rectangle lot has an area of 1,000 sqms with 20 meters frontage. A 4-storey
building was constructed on the lot with a 3-meter setback on all sides at a cost of
P28,000 per square meter. Compute:
a. The depth of the lot
 Solution:
Lot Depth = Lot area = 1,000 sqm = 50 meters
Frontage 20 m
b. Floor of the building
Solution:
Building Area = (20M-6M) x (50M-6M) x 4 storey = 2,464 sqm
c. Total Cost of the Building

Solution:
Building Cost = 2,464 sqm. @P28,000 = P68,992,000
29. Mathematics of Investment Formulas
a. Amortization Factor i S xi
−n =
1−(1+i) S−1
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−n
b. Discount Factor or present 1−(1+i) s−1
value (PV of an annuity of P1 per −n =
1−(1+i) s xi
period)
c. Amount of an annuity of P1 per 1 1

−n =
period present value (PV) (1+i) −1 s−1
d. Amount of an annuity of P1 per n

(1+i) −1 s−1
=
period accumulation i i
e. Reversion factor −n 1
(1+i) =
( compounded interest) s
f. Accumulation or future value (1+i )n = S

(FV) factor
g. FV = PV x 5 Where:
1 S = (1 + i ¿¿ n
h. PV = FV x
s
n = number of paying period
s−1
i. FV = PMT x
i i=¿ Interest per period
i FV = Future Value
j. PMT = FV x
s−1
PV = Present Value
s−1
k. PV = PMT x
s xi PMT = Periodic Payment
s xi
l. PMT = PV x
s−1
30. Your desired to have P50,000 five (5) years from now. How much should you
deposit now (PV) to have it with an interest rate at 10% per annum?
Formula: PV = FV x 1/S
PV = FV x 1/(1 + 10 ¿ ¿5 = 1/1.276282 = 0.783526
PV = P50,000 x 0.783526 = P31,046
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Note: Value factor can be used in property residual method, annuity and leased fee
estate
31. What is future value (FV) of P50,000 single deposit for 10 years earning and interest
rate of 10% compounded annually?
Formula: FV = PV x S
FV = P50,000 x (1 + .10 ¿ ¿10 = 2.5937463
FV = P50,000 x 2.593743 = P129,687
Note: Value factor can be used in property residual method, annuity factors
32. If three (3) annual deposits of P50,000 each are placed in an bank account, how
much money has accumulated (FV) after the last deposit at 10% interest annually?
Formula: FV = PMT x S - 1/i

FV = PMT x (1.10 ¿ ¿3 – 1/.10 = (1.331 – 1)/.10 = 3.31
FV = P50,000 x 3.31 = P165,500
33. How much money you are going to deposit annually (PMT) one equal amount in
order to have P50,000 on the 5th annual deposit with 10% interest annually?
Formula: PMT = FV x S - 1/i

PMT = FV x .10/{(1.10 ¿ ¿5 – 1/.10 = (1.61051 – 1)=0.1637975
PMT = P50,000 x 0.1637975 = P8,190
34. How much is the annual amortization (PMT) in 5 equal payment at 10% per annum
in order to repay the P50,000 loan?
Formula: PMT = PV x Si /(s – 1)

PMT = PV x (1.10 ¿ ¿5 x (0.10)/{(1.10 ¿ ¿5 – 1)}
PMT = 1.61051 x {(0.10)/1.61051 – 1)}
PMT = 1.61051 x (0.10)/1.61051
PMT = 1.61051 x 0.163798 = 0.263798
PMT = P50,000 x 0.263798 = P13,190
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Appraisal Report Writing
1. The last step in the appraisal process before the final report is prepared is the
reconciliation or correlation of values as indicated by each of the three appraisal
approaches (MDA, CA and ICA). In reconciliation process the soundness of the
methods and the result of each approached are weighed objectively to arrive at the
single best and most supportable conclusion of value.
2. Reconciliation or correlation –
 Involves careful analysis and judgment for which no mathematical or
mechanical formula can be substituted
 It is not simply a matter of averaging the three indicated value
 It is a final statement of reasoning and weighing of the relative importance
of the facts, results and conclusions of each of the approaches that finish an
entirely justified final opinion of market
 Is the last stage in appraisal process is reconciliation of the values by each
of the three appraisal approaches: Market Data or Sales Comparison
Approach; Cost Approach and Income Capitalization Approach
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3. In the process of reconciliation or correlation, the Appraiser reviews his/her work
and consider factor for the reliability of each methods and the result of each
approach which are to be weighted objectively to arrive at the single best and most
acceptable or adequate conclusion of value, Four factors to be taken:
a. Definition of value sought pursued
b. Amount and reliability of the data collected in each approach
c. Inherent/Essential strengths and weaknesses of each approach
d. Relevance of each approach to the subject property under assignment and
market behavior/performance
4. One the Appraiser is certain of the soundness of the indicated values, he/she then
should decide which is the most reliable in terms of value wanted for the Subject of
the assignment.
5. Appraiser’s report becomes the Appraiser’s representative to the client and the
users thereof. It is something the Appraiser has to showcase as an accurate
opinion property value based on analysis of historical data and facts at hand in
accordance with the generally accepted valuation standards and principles of
value. A readable, well-organized report creates a favorable impression of the
Appraiser’s profession competence and trustworthiness.
6. Appraisal Report is importance because it –

 Communicates the conclusion of an appraisal assignment to the client and/or
users and other party readers
 Confirm the basis of valuation
 Show the purpose of the appraisal/valuation and the assumptions or limiting
conditions underlying the valuation/appraisal and
 Show the analytical process and realistic data used to arrive at the value
conclusion
 It contains information about the Subject of the assignments as well as
relevant facts like:
 The property and property rights subject to the assignment
 Basis of the appraisal and the intended purpose thereof
 All underlying assumptions and limiting conditions
 The extent of the inspection references to the applicability of standards
and any required disclosures
 Specifies the dates of valuation and reporting
 The name of the Appraiser, the date of the appraisal and the
Appraiser’s signature
7. Appraisal Report – is
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 Any written or oral communication of an appraisal or review or analysis of
documents that is transmitted by the Appraiser to the client upon completion
of an assignment
 A statement of material facts or conditions on which another person can rely
because it cannot be denied at a later date
 A document that records the instructions for the assignment, the basis and
purpose of the appraisal and the results of the analysis that led to the
opinion if value
 A document that explains the analytical processes undertaken in carrying out
the appraisal/valuation and present meaningful information used in the
analysis. The type, content and length of a report vary according to the
intended user, legal requirements, the property type and the nature and
complexity of the assignment.
8. Oral Report –
 The results of an appraisal assignment which is verbally communicated to a
client or presented before a court either as expert testimony or by means of
deposition
 A report communicated orally to a client must be supported by a work file
and at a minimum, followed-up by a written summary of the valuation
9. Written Report –
 The results of an appraisal/valuation assignment communicated to a client in
writing, which includes electronic communication
 May be detailed narrative documents containing all pertinent materials
examined and analyses performed to arrive at a value conclusions or
abbreviated narrative documents, including periodic updates of value, forms
used by governmental and other agencies or letters to clients.
10. Cardinal Rules in Appraisal Report Writing

 It should be clear and concise, a presentation of a professional and technical
paper; hence, it should be simple and conventional message to the client
and/or reader
 It should not be futile that it will tend to confuse the client or reader rather
than convincing them on the conclusions reached
 The necessary essentials of good grammar and compositions are rules of
consideration
a. Cardinal Rules in Report Writing on good grammar and composition:
 Use Simple Words
 Do not Use Insincere Words
 Avoid worn-out expressions
 Let important ideas Stand-Out
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 Develop Short Paragraphs
 Use graphic aids and Table
11. Kinds/Types of Appraisal Reports

a. Certificate/Letter Form –
 It is simple Certificate or Letter where the Appraiser’s Opinion of Value
is stated
 In most sense, it is not an Appraisal Report because it does not contain
or state any supporting date or interpretation leading to the Appraiser’s
conclusion of value
 Most often, Professional Practitioners do not encourage it for a lot of
reasons
 A document which the appraiser certifies the amount of the valuation of
the property
 It contains the statement of the
 Appraisal/Valuation date and purpose of the assignment
 Date of the certificate
 Assumptions upon which the appraisal/valuation was based
 Name, address and qualification of the Appraiser/Valuer
 Statement that Appraiser’s fee is not contingent upon any aspect
of the report
 Appraiser’s statement in compliance of the ethical and
professional standards in the conduct of the appraisal
b. Standard Form Report – (Restricted Report)
 The kind of report usually by banks, financial institutions, insurance
companies and some government bodies
 Type of report just a simple filling-up of blanks
 Institutions and government agencies frequently find this report the best
to suit their purposes
 It enables those responsible for reviewing the appraisals to know
exactly where in the report to find any particular category/item of data
and completion of the form reports is to provide timely submissions of
the appraiser’s value conclusion
 Permits the client to readily review and comprehend the body report.
 Narrative Report – (Self-Contained)
 Is comprehensive or somewhat complete type of Appraisal Report
 It affords the Appraiser the opportunity to support his opinions and
conclusions of value which would convince the Reader/Client of the
soundness of his estimate
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 A summary of the appraisal methods and techniques which the
appraiser has applied to factual material within the framework of the
appraisal process to arrive at conclusion of value
 Reflects the Appraiser’s ability to understand the basic economic
appraisal principles, his ability to interpret pertinent data and judgment
in selecting the appropriate appraisal method and technique as well as
his skill in applying them to derive An estimate of a specifically defined
value
 Facts and reasons
12. What is compliance statement or certification of value?

 It refers to an affirmative statement attesting to the fact that the
Appraiser/Valuer has followed the ethical and professional requirements of
the International Valuation Standards (IVS) Code of Conduct in performing
the assignment.
13. In compliance with the mandate (IVS Code of Ethics) each Appraisal Report
should:
 Clearly and accurately set forth the conclusions of the appraisal/valuation in
a manner that is not misleading
 Identify the client, the intended use of the Appraisal/valuation and the
relevant/important dates –
 The dates as of which the value estimate applies/effective
 The date of the report
 The date of the inspection
 Specify the basis of the appraisal including the type and definition of value
(when any component is valued more than one bases a clear distinction
must be made between the bases)
 Identify and describe the
 Property rights or interests to be valued
 Physical and legal characteristics of the property
 Classes of property included in the appraisal other than the primary
property category
 Describe the scope/extent of the work used to develop the valuation
 Specify all assumptions and limiting conditions upon which the value
conclusion is contingent
 Identify special, unusual or extraordinary assumptions and address the
probability that such conditions will occur
 Include a description on the information and data examined, the market
analysis performed, the valuation approaches and procedures followed and
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the reasoning that supports the analyses, opinions and conclusions in the
report
 Contain a clause specifically prohibiting the publication of the report in whole
or in part or any reference thereto or to the valuation figures contained
therein or to the names and professional affiliation of the Appraiser/Valuers
without the written approval of the Appraiser/Valuer
 Name, professional qualifications and signature of the Appraiser
14. In compliance with IVS and Generally Accepted Valuation Principles (GAAP),
Appraiser/Valuers are mandated to adhere to all provisions of the International
Valuation Standards (IVS) vis-à-vis Philippine Valution Standards (PVS) Code of
Conduct pertaining to Ethics, Competence, Disclosure and Reporting
a. Ethics: Appraiser/Valuers should at all times maintain a high standards of
honesty and integrity and conduct their activities in a manner not detrimental to
their clients, the public, their profession, or their respective national
professional valuation body.
b. Competence: Appraisers/Valuers must have the knowledge, skill and
experience to complete the assignment efficiently in relation to an acceptable
professional standard.
c. Disclosure: It is essential that Appraisers/Valuers develop and communicate
their analyses, opinions, and conclusions to users of their services through
Appraisal Reports that are meaningful and not misleading and that disclose
anything that might be taken to affect objectivity such as the Appraisal report
should –
 Provide sufficient information to describe the work performed, the
conclusions reached, and the context in which they were shaped
 Set out a clear and accurate description of the scope of the
assignment and its purpose and intended use, disclosing any
assumptions, hypothetical scenarios, or limiting conditions that directly
affect the valuations and, where appropriate, indicating their effect on
the value
 Disclosure of any direct or indirect personal or corporate relationship
with the entity controlling the asset should be disclosed in the valuation
report
 If valuer is acting as an External Valuer but also has worked in a fee
earning capacity for the client, such relationship must be disclosed lest
a third party, having to rely on the valuation, deem the Valuer’s
objectivity compromised
 Any limitations to quality of the service that a Valuer is able to offer
must be disclosed whether this is due to externally imposed constraints
or peculiar to the Valuer or the assignment. Whether outside
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assistance has been sought the Valuer must disclose the identity of the
assistants, the extent of reliance on, and the nature of, such assistance
 A Valuer must place a restriction against the publication of a valuation
or its conclusion without consent so that the Valuer can keep a
measure of control over the form and context in which his pr her
valuations are publicity disclosed
 A valuer should disclose any departures from the International
Valuation Standards. Provided such departure is reasonable, complies
with the principles of ethics and measures of competence, and a
rationale for such departure is provided in the valuation report.
15. Assumptions are suppositions taken to be true.

 Assumptions involve facts, conditions, or situations affecting the subject of,
or approach to, a valuation but which may not be capable or worthy of
verification
 They are matters that, once declared, are to be accepted in understanding
the valuation
 All assumptions underlying a valuation should be reasonable
16. All valuations are dependent to some degree on the adoption of assumptions. In
particular, the definition of Market Value incorporates assumptions to ensure
consistency of approach and the Valuer may need to make further assumptions in
respect of facts which cannot be known or facts which could be determined.
17. A statement of limiting conditions is necessary in an appraisal because

 It notifies the client of items subject to which the appraisal is made
 It protects the appraiser against conditions which he or she does not have
control and
 It limits the liability of the appraiser
 Limiting Conditions are constraints imposed on valuations
 By clients – (e.g., where the Valuer is not permitted to investigate fully
one or more of the significant factors likely to affect valuation);
 By the Valuer – (e.g., where the client may not publish the wholw or
any part of the Valuation Report or Valuation Certificate without the
Valuer’s prior written approval of the form and context in which it may
appear); or
 By local statutory law.
18. Three Major Division of an Appraisal Report

 Part I – Introduction
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 Title Page (Name of Appraiser/Client, Date of Appraisal, Type of Pro.,
Address)
 Table of Contents
 Letter of Transmittal
 Summary of Salient and important Conclusions (Opinion of Value,
HaBU, RCN, AGE, DEP, Net Income, Reconciled Value.)
 Part II – Description Analysis and Conclusion
 Date and Purpose of the appraisal
 Definition of value
 Identification of the appraised property, its legal description and the
specific underlying assumptions
 Definition of Property rights appraised and the date of valuation
 History description of improvement
 City, data, zoning, utilities and taxes
 HABU Analysis (Physically possible, Legally permissible, Financially
feasible, Max profit)
 Development of an indications and conclusions of value
 Qualifying and Limiting Conditions (includes general underlying
assumptions)
 Notifies subject of items to clients
 Protect appraiser
 Limits liability
 Certification of value if not combined with letter of transmittal
 Qualifications of Appraiser
 Part III – Addenda
 Maps, plats, photographs
 Detailed statistical data
 Compound lay-out and floor plan of improvements, if any
 Other pertinent data/exhibits
19. Guidelines in transmission of Appraisal Reports through electronic means:
 The software should provide for security of transmission
 The origin, date and time of the sending including the destination, date and
time of receipts should be identified
 The Software should allow confirmation that the quantity of the data
transmitted corresponds to that received and should render as “ready-only”
to all except the author
 The appraiser should ensure that the digital signature is/are protected and
fully under the Appraiser’s control by means of passwords (PIN numbers),
hardware devices (secure cards) or other means
 A true electronic and/or paper copy of an electronically transmitted report
must be retained by the Appraiser within 5 years as required by law
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Appraisal of Machinery and Equipment

1. Plant, machinery and equipment –
 Collectively constitute a general class of tangible property assets. Plant,
machinery and equipment assets have particular characteristics that
distinguish them from most types of real property and that influence both the
approach to and reporting their value
 Are normally capable of being moved or relocated and often will depreciate at
a significantly faster rate than real property
 Frequently the value will differ notably depending on whether an item of plant,
machinery or equipment is valued in combination with other assets within an
operational unit or whether it is valued as an individual item for exchange, and
whether it may be considered as either in situ (in place) or for removal
 Non-current assets; Fixed Assets
2. Categories of Plant and Equipment (PME)
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a. Plant – are assets that are combined with others and may include: buildings
machinery and equipment.
b. Machinery –
 a combination of bodies so arranged to compel the forces of nature to
produce works with the determined motion especially for production or
manufacturing
 refers to a device acquired to perform a specific predetermined function
or to individual machineries or collection of machines
 shall embrace machine. Mechanical contrivances and apparatus
attached to real estate
c. equipment –
 ancillary assets that are used to assist the function of an entity
 refers to other assets that are used to assist the operation of the
enterprise
3. Machinery And Equipment – facility available to production including installation and

service facilities appurtenance, together with all other equipment designed for or
necessary to its manufacturing and industrial purposes regardless of method of
installation excluding item of furniture and fixtures necessary for the administration
and proper operation of the enterprise.
4. Machine – is an apparatus used for a specific process in connection with the

operation of the entity
5. Categories of Machinery (IMAT)

a. Industrial Machinery – machinery used to transform/process materials from
one state to another, whether it is movable, permanent or semi-permanent
machinery.
b. Material Handling Equipment – used in handling or transporting raw
materials or finished goods within the plant vicinity.
c. Agricultural Machinery – machinery used for agricultural purpose such
tractors, irrigation pumps, farm implements, etc.
d. Transportation Equipment – includes motor vehicles, aircraft, watercraft
6. Value characteristics of Machinery and Equipment

a. Investment value – it may have investment value since they can be
produced, acquired or held for the sake of monetary income and for profit
b. Market and Owner’s value –
 Market Value since the rights are transferable through sale of the
property
 Owner’s value since the owner can also derive personal pleasure
through the use and/or consumption of the property
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7. Investment Property – one being produced, acquired, or held for the sake of
monetary income/profit
8. Personal Property – one which has the owner’s value, it involves only one person
who has internal knowledge of the future user thereto, which may or may not have
an economic value.
9. Valuation of Plant and Equipment (P & E)can be carried out using any of the
following approaches:
a. Sales Comparison Approach – due to the lack of direct sales evidence the
use of the sales comparison approach is often limited to individual freestanding
machines such as lathes and generators, and motor vehicles
b. Cost Approach – usually carried out using the Depreciated Replacement
Cost approach to reach a valuation conclusion
 Depreciated replacement cost in an application of the cost approach
used in assessing the value of specialized assets for financial reporting
purposes, where direct market evidence is limited
 Used where there is insufficient data to arrive at Market Value by
means of market-based evidence
 International Accounting Standards (IAS) 16 Property, Plant and
Equipment, provides that in the absence of market related evidence and
entity may need to estimate the Fair Value of a specialized asset using
a depreciated replacement cost approach
 In the absence of direct market evidence depreciated replacement cost
is regarded as an acceptable method of determining value and the IVS
depreciated replacement cost is recognized as a market-based
methodology
 Where the depreciated replacement cost method has been used this
should be clearly stated and the valuation conclusion must be reported
in accordance with Appraisal/Valuation Reporting
 Plant, machinery and equipment that is commonly traded in the market
must be distinguished from specialized assets
 In insurance appraisal/Valuations – is recognized that where the cost
approach is adopted for valuations for insurance purposes, the
approach and assumptions used will be different to those adopted when
undertaking valuations for financial reporting. The valuation conclusion
using the cost approach for insurance valuations will therefore not
equate to Market Value
c. Income Capitalization Approach –

 In practice, this approach
 It is recognized that it is rarely possible to identify in income stream and
allocate it to individual assets
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 It is almost impossible to distinguish between goodwill and fixed assets
when adopting a cash flow approach to valuation and as a result some
other valuation approach is usually required in order to identify values
for the various components
 It is either be the market comparison approach of the depreciated
replacement cost approach
10. For many purposes including compliance with IFRSs, the most appropriate basis of
value is Market Value. When undertaking a appraisal/valuation of plant, machinery
and equipment, the Appraiser/Valuer must therefore, establish and state the
additional assumptions that are appropriate, having regard to the nature of the asset
and the purpose of the valuation. This assumption may include the state of the
business in which the plant, machinery and equipment are currently utilized, or the
extent to which individual items are aggregated with other assets.
11. Procedure in Valuation of M & E

 Establish ownership
 Inspect and verify the documents submitted
 Check present price with investors, dealers, suppliers, traders, technical
bulletin and publication
 Estimate the Replacement Cost
 Estimate the accrued depreciation
 Come up with value using the gathered data pertaining to the M & E
Government Assessment Principles, Local and Real Estate Taxation
Real Property Taxation
Fundamental Principles on Taxation
1. Taxationis defined –
 the inherent power of the State to impose and collect taxes for the purpose of
raising revenue to defraying governments necessary expenses for public
needs or public purpose
 a mode of exactions for revenue in order to support government existence
and carry out its legitimate objectives
 the indispensable and inevitable price for civilized society; without taxes the
government would be paralyzed
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 an inherent power which the Sovereign State imposes financial burden upon
persons, properties and interest as a means of raising revenue in order to
defray the necessary expenses of the government for public needs
2. “Taxation” is an inherent power of the State – inherent because it exists without

need of any written legal mandate. To raise revenue in order to satisfy government
needs is the primary purpose of taxation.
3. Basis of Taxation or Two-fold Theories or Symbolic Doctrine of Taxation:

a. Necessity – government cannot exist and function without means or taxes to
pay its necessary expenses
b. Reciprocal duties – of protection and support between the State and its
citizens or inhabitants
4. Two Aspects of Taxation: (Key: Impose Collect Tax)

a. 1st Aspect is levy – refers to the legislative act of imposing the tax
b. 2nd Aspect is collection – refers to the act of collecting the tax
5. Basic Principles in Taxation:

a. Ability to pay principle
b. Benefit-received principle
6. Legislature may levy or impose tax of any amount it sees fit and proper, provided,
the exercise of its taxing power does not violate any constitutional limitation.
7. Inherent limitations on the power of Taxation: (Key: PINTEC)

a. Taxes may be levied or imposed only for Public purpose
b. International comity
c. Non-delegation of the power to tax
d. The power to tax is limited to the Territorial jurisdiction of the State
e. Exemption from taxation of government entities
f. Power to tax being essentially legislative Cannot be delegated
8. Constitution limitations on the power of Taxation:

a. No person shall be deprived of life, liberty or property without due process of
law nor shall any persons be denied the equal protection of laws
b. No law impairing the obligation of contracts shall be passed
c. No persons shall be imprisoned for debt or nonpayment of a poll tax
d. The rule of taxation shall be uniform and equitable. Congress shall evolve a
progressive system of taxation
e. Charitable institutions; churches and parsonages or convents, appurtenant
thereto, mosques, nonprofit cemeteries and all lands, buildings and charitable
or education purposes shall be exempt from taxation
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9. Due process clause – means the taxpayer shall not be deprived of life, liberty or
property without due process of law; hence, notice for failure to pay taxes is
necessary.
10. Uniformity clause – means that taxable articles or kinds of property of the same
class shall be taxed at the same rate. There should be no direct double taxation.
11. Equal protection clause – means the taxpayers shall be treated alike under the same
circumstances and conditions on the privileges granted and liabilities imposed.
12. Direct Double Taxation exists when the same public authority imposes two or more
taxes on the same property for the same purpose during the same taxing period.
13. Basic Principles of sound tax system:

a. Fiscal Adequacy – sources of revenue are sufficient to meet the expanding
expenditures of the government
b. Equality or Theoretical justice – tax imposed should be proportionate to the
taxpayer’s ability to pay
c. Administrative Feasibility – tax should be simple and clear to the taxpayer
and should be capable of effective enforcement by government
14. Tax evasion – the use of illegal means by the taxpayer to avoid payment of taxes.
Tax avoidance – the use of legally permissible method of reducing taxpayer’s tax
liability.
15. Tax exemption – the privilege of not being imposed a financial burden in paying
taxes which is interpreted against the taxpayer and liberally interpreted in favor of
the government.
16. Situs of Taxation – means place of taxation, the country which has the jurisdiction to
impose a specific tax upon persons, property or business transactions and
17. Taxes are enforced proportionate contributions imposed by the legislature upon
persons, property or interest within its jurisdiction for the purpose of supporting
government and all its public needs. Lifeblood of the government and their prompt or
quick and certain availability or accessibility is imperious or superior need.
Real Property taxation
18. Real Property Taxation – refers to a system of levy on real property imposed in the
Philippine jurisdiction and authorizing local government units.
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19. Each local government unit may create its own sources of revenue and levy taxes,
fees and charges, consistent with the basic policy of local government unit
concerned through an appropriate ordinance. (Section 132, RA#7160)
20. Local Taxation – is legislative in nature which the Local Government Code
(RA#7160) had made clear that a tax, fee or charge or to generate revenue shall be
exercised by the Sanggunian of the local government unit concerned through an
appropriate ordinance. (Section 132, RA#7160)
21. Fundamentals principles in levy, appraisal, collection and assessment (laca) of real
property taxes (Key: CAULE)
a. It shall be appraised at its Current and fair market value
b. For assessment purposes, it shall be classified on the basis of its Actual use
c. It shall be assessed on the basis of a Uniform classification within each local
government unit
d. the levy, appraisal, collection and assessment (laca) thereof shall not be Let
to any private person and
e. the appraisal and assessment shall be Equitable
22. Equality and Uniformity in local Taxation – means that all taxable articles or kinds of
property of the same class should be taxed at the same rate within the territorial
23. Real Property Taxation covers the levy, assessment, appraisal and collection of:
a. Annual ad Valorem Tax or Basic Real Property Tax and
b. Special levies:
 Special education Fund (SEF) Tax
 Tax on idle lands (IL Tax)
 Special levy or assessment that may be imposed by the LGU
on property especially benefited by certain infrastructure
developments undertaken by the LGU
24. Real property Tax – an ad valorem tax imposed on real properties. (Formula: RPT =
AV x Applicable Rate depending on the taxing authority)
25. RA#7160 (LGC) defined Real Property – as an asset which includes land, buildings,
machinery, trees and other improvements thereof.
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26. Machinery – embraces machines, equipment, mechanical contrivances, instruments,
appliances or apparatus which may or may not be attached, permanently or
temporarily to the real property. (Section 132, RA#7160)
27. Improvement – valuable addition made to 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 the value, beauty or utility or to
adopt it for new or further purpose. (Section 132, RA#7160)
28. Ad Valorem Tax - a levy on real property determined on the basis of a fixed
proportion on the value of a property.
29. Acquisition cost – actual cost of an asset/property plus other necessary expenses
incurred in acquiring or owing the property.
30. Actual Use – refers to the purpose for which the property is principally or
predominantly utilized by the person in possession thereof.
31. Appraisal – the act or process of determining the value of a property for a specific
purpose and for a specific date.
32. Assessment – the act or process of determining the value of a property or portion
thereof subject to tax, including the discovery, listing, classification and appraisal of
properties.
33. Fair Market Value (FMV) – 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 in
an arms-length-transaction.
34. Assessment Level – the percentage (%) applied to the fair market value to
determine the taxable value of the property.
35. Assessed Value (AV) or Taxable Value (TV) – is the value placed or applied on
taxable property by the Assessor for ad valorem tax purposes. It also refers to the
fair market value of the real property multiplied by the assessment level. (Formula:
AV or TV = FMV x AL)
36. Reassessment – the assigning of new assessed values to real property as the result
of a general or partial or individual reappraisal of the property.
37. The basis of real property taxation is the actual use of the real property and not the
ownership thereof regardless of where it is located, whoever uses it and whether or
not the owner is exempted from taxes.
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38. Classifications of real properties for assessment purposes (Key: CARMITS)

a. Commercial – those principally devoted for the object of profit
b. Agricultural – those principally devoted to agricultural activities and other
aqua cultural activities
c. Residential – those principally devoted for habitation or residential purposes
d. Mineral – those lands in which minerals, metallic or non-metallic exist in
sufficient quantity or grade to justify the necessary expenditures to extract and
utilize such minerals.
e. Industrial – those principally devoted to industrial activity as capital
investment
f. Timberland – those categorize as forest lands and
g. Special
39. Special class of real properties includes lands, buildings, and other improvements
actually, directly and exclusively (ade) use for:
a. Hospital purposes
b. Cultural or scientific purposes
c. Those owned and used by local water districts
d. Government-owned or controlled corporation (GOCCs) tendering essential
public services in the supply and distribution of water and/or generation and
transmission of electric power
40. The following LGUs can impose real property taxes under the Local Government
Code (RA 7160):
a. Province at the rate not exceeding 1% of the assessed value (AV) of the real
property and
b. Cities and Municipalities within Metropolitan Manila Area at the rate not
exceeding 2% of the assessed value (AV) of real property
41. Real properties exempted from real property tax

a. Real properties owned by the Republic of the Philippines or any of its political
subdivision except when the beneficial use thereof has been granted for
consideration or otherwise to a taxable person or entity
b. Charitable institutions, churches, parsonages, or convents appurtenant
thereto, mosques, nonprofit or religious cemeteries and all lands, building and
improvements actually, directly and exclusively (ade) used for religious,
charitable or educational purposes
c. Non-profit cemeteries and burial grounds
d. All machineries and equipment that are actually, directly and exclusively (ade)
used by local water districts and government-owned or controlled corporations
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engaged in the supply and distribution of water and/or generation and
transmission of electric power
e. All real property owned by duly registered cooperatives and
f. Machinery and equipment used for pollution control and environmental
protection
42. Real Property taxation depends on self-declaration or self-assessment of the

landowners who are required to file statements every three years. Property values
are in accordance unit for the different classes of real properties which process
should be guided by the principles of equity and uniformity and enacted by the local
legislative council through an ordinance.
43. Rules in determining the applicable assessment level to arrive at the assessed value
(AV)
a. Landslocated in commercial zones are valued as commercial – the
Commercial Assessment Level (CAL) shall be applied. If the predominant or
principal actual use of the existing building is residential, the land shall still be
valued as commercial but the Residential Assessment Level (RAL) shall be
used or applied.
b. Landslocated in residential zones are valued as residential – the Residential
Assessment Level (RAL) shall be applied. If the predominant or principal
actualuse of the existing building is commercial, the land shall still be valued as
residential but the Commercial Assessment Level (CAL) shall be used or
apllied.
c. Assessment Level (AL) for lands with existing building of mixed uses will be
based on the predominant or principal actual use of the building.
d. Vacant lots shall be valued on the basis of the applicable Scheduled Market
Value (SMV) and the Assessment Level (AL) to be applied thereof is the
Assessment Level (AL) for the land use classified in the zoning ordinance.
44. Properties are classified based with their actual uses. And in case where there are
mixed uses, the predominance rule will be applied.
45. Schedule of Market Value (SMV) – a scheduler scheme that reflects the current and
fair market value of real property in the locality which purpose is to provide basis for
a uniform appraisal on real properties for taxation purposes.
46. Unit market value is establish as follows:

a. For land – based on Market Data approach or Sales Comparison Approach
usually sourced from Register of Deeds, licensed Real Estate Brokers, Notary
Public or classified ads data
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b. For Building construction cost and other structures – based on cost approach
or replacement cost and/or reproduction cost approach or sometime with Sales
Comparison Approach.
47. Coverage of Schedule of Market Value

a. Unit Base Market Value for all Urban land classified into: (Key: RIC)
 Residential
 Industrial and
 Commercial
b. Unit Base Market Value for all Agricultural land classified into:
 Principal crop use of the land (rice land, corn land, coconut land, etc.)
c. Unit Base Construction cost for building classified: (Key: CIRF)
 Commercial
 Industrial
 Residential
 Farm house and etc.
48. Land classification in the Schedule Market Value shall be consistent with the
approved Comprehensive Land Use Plan (CLUP) of the locality as embodied in their
respective zoning ordinance.
49. Market Value (MV) Formula: MV = A x UV

Where: MV is the market Value
A is the Area of the real property
UV is the Unit Value provided in the SMV
50. Assessed Value (AV) Formula: AV = ML x AL

Where: AV is the Assessed Value
MV is the Market Value
AL is the Assessment Level
51. The basis of real property taxation is the actual use and not the ownership thereof
regardless of where located, whoever uses it and whether or not the owner is
exempted from taxes.
52. Municipalities other than those in Metropolitan Manila area and the Barangays do
not enjoy the power to impose real property tax. For the assessment level (AL) to be
applied to the Fair Market Value (FMV) refer to the respective ordinances approved
by the Sangguniang Panlalawigan or Panlungsod or Bayan.
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53. Steps in determining the real property tax due
 1st – the property is appraised by the Local Assessor at its FMV
 2nd – FMV is multiplied by the appropriate assessment level (AL) to get the
assessed value (AV) of the property
 3rd – AV is multiplied by the applicable rate (1% or 2% depending upon the
taxing authority) to get the amount of tax due
54. To determine the assessed value (AV), the AL to be multiplied to the FMV of the real
property shall be fixed by the LGU ordinance at the rate not exceeding the following:
(Sec. 218, RA#7160)
a. On Lands: (Key: CARMIT)

Class Assessment Level (AL)
Residential 20%
Agricultural 40%
Commercial 50%
Industrial 50%
Mineral 50%
Timberland 20%
b. On Building and Other Structures

(a) Residential
FMV Over FMV Not Over Assessment Level
P175,000 0%
P175,000 300,000 10%
300,000 500,000 20%
500,000 750,000 25%
750,000 1,000,000 30%
1,000,000 2,000,000 35%
2,000,000 5,000,000 40%
5,000,000 10,000,000 50%
10,000,000 60%
(b) Agricultural
P300,000 25%
P300,000 500,000 30%
500,000 750,000 35%
750,000 1,000,000 40%
1,000,000 2,000,000 45%
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2,000,000 50%
(c) Commercial/Industrial
300,000 30%
300,000 500,000 35%
500,000 750,000 40%
750,000 1,000,000 50%
1,000,000 2,000,000 60%
2,000,000 5,000,000 70%
5,000,000 10,000,000 75%
10,000,000 80%
(d) Timberland
300,000 45%
300,000 500,000 50%
500,000 750,000 55%
750,000 1,000,000 60%
1,000,000 2,000,000 65%
2,000,000 70%
c. On Machineries: (Key: ARCI)

Class Assessment Level
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 Corporation 10%
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engaged in the supply and distribution of water
and/or generation and transmission of electric power
Special Levies
Special Educational Fund Tax
55. Special Educational Fund (SEF) tax – and annual levy on real estate equivalent to
1% of Assessed Value (AV) which shall be in addition to the basic real property tax
imposed by a province, city or municipalities in Metro Manila. (Formula: SEF = AV x
1%)
56. Purpose of SEF – to provide funding for the educational programs of the local
government unit like: school building, school desk, purchase of books, salary
increase of school teachers and the like.
Idle Lands Tax
57. A province, city or municipalities within Metro Manila Area may impose additional ad
valorem tax of not exceeding five percent (5%) of the Assessed Value (AV) of the
real property for idle lands which shall be added to the basic property. (Formula: ILT
= AV x Applicable Rate of NMT 5% based on the LGU ordinance)
58. Idle land tax shall be imposed on the following:

1. Agricultural lands suitable for cultivation, dairying, inland fishery and other
agricultural uses:
a. With an area of more than (1) hectares
b. Remains uncultivated or unimproved except when:
 Planted with permanent or perennial crops of at least fifty (50)fruit-
bearing trees per hectare and
 Those actually used for grazing purposes
2. Lands other than agricultural lands in the city or municipality with more than
1,000m s2 in area and ½ thereof remains unutilized or unimproved and
3. Residential lots in subdivision regardless of land area
59. Subdivision lot buyer who is in actual possession of the lot shall pay the real
property tax even if title is not yet transferred to him/her. Persons liable for idle land
tax on residential lots in a subdivision:
a. Individual land owner – if ownership is transferred
b. Subdivision owner/developer – if not yet transferred or the property has not yet
been sold being part of a subdivision project.
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60. Grounds or reasons for exempting idle lands from additional levy or tax
 Force majeure
 Civil disturbance
 Natural calamity or
 Adverse peace and order conditions are certified by the Provincial
Commander, however, if within one (1) year upon restoration of the peace
and order in the locality it remains unimproved, the additional tax on idle lands
will be imposed
 Financial losses due to fire, flood, typhoon, earthquake and other causes of
similar nature as declared by the landowner, however, if within two (2) year
upon from the date of the occurrence of the loss its remains unimproved, the
additional tax in idle lands will be imposed
 Existing court litigations involving the land; however, if within one (1) year after
the final adjudication of the case it remains unimproved, the additional tax on
idle lands will be imposed
 Necessity to leave the land in a uncultivated state as certified by the
Provincial, City and Municipal Agriculturist; however, if within one (1) year
after termination of such period of necessity it remains unimproved, the
additional tax on idle lands will imposed
 Acquired subdivision lots which remain idle due to the failure of the subdivision
owner/developer to develop its subdivision plan as determined by the
Assessor, however, if within one(1) year from the time the subdivision is
develop it remains utilized or unimproved, the additional tax on idle lands will
be imposed
 Any other cause or circumstances that physically or legally prevents the
owner from improving, utilizing or cultivating the land
61. Under the Local Government Code, agricultural lands or more than 10,000 m2area
subject to an additional tax of not more than 5% of the assessed value if it is
uncultivated.
Special Assessment on Lands
62. The Sanggunian of the province, city or municipality (Municipalities in Metro Manila)
may by ordinance provide the imposition and collection of special levy on the lands
or portion thereof within their respective jurisdiction that particularly benefited any
public works or improvement such: widening of roads, curbing, construction of
wharves, piers, docks, waterworks and the like funded by the local government unit.
63. The special assessment/levy on lands does not apply to lands exempted from real
property tax and the remaining portion of the land which have been donated to the
LGU for the construction of government projects or improvements. (Sec. 240, RA#7160)
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64. Before enacting an ordinance for the imposition of special levy on lands, the
Saggunian concerned shall conduct public hearing and notify in writing the affected
land owners or those persons with legal interest to provide them opportunity to
express positions or objections thereto. (Sec. 242, RA#7160)
65. Imposition of special levy on lands shall correspond to a portion of the cost of the
improvements or infrastructures including the cost of the acquiring the land financed
by the concerned LGU not exceeding sixty percent (60%) thereof which may be paid
in installment of not less than five (5) years nor more than ten (10) years. (Sec. 241,
RA#7160)
Duty to Declare Real Property and Protest
66. It shall be the responsibility of the property owner or administrator or the

representatives to declare under oath the true value of the real property whether
taxable or exempted within sixty (60) days after the acquisition or upon occupancy of
the improvement.
67. Failure or refusal of the property owner or administrator or the representative to

make the declaration within sixty (60) days after acquisition or upon occupancy of
the improvement, it would authorize the provincial or city or municipal (Municipalities
in Metro Manila). Assessor to make declaration of the property for taxation purposes.
(Sec. 201-204, RA#7160)
68. A property owner who is not satisfied or does not agree with the tax assessment of
the Assessor may file a protest or appeal to the Local Board of Assessment Appeals
(LBAA) within 60 days from receipt of the assessment. The Local Board of
Assessment Appeals (LBAA) shall decide the protest/appeal. (Sec. 229, RA#7160) The
decision of the LBAA may be appealed within thirty (30) days from receipt of the
taxpayer to the Central Board of Assessment Appeals (CBAA) which decision shall
be final and executor. (Sec. 229, RA#7160) Appeals on tax assessment do not suspend
the collection of the tax as assessed without prejudice to later adjustment depending
of the result of the appeal or protest. (Sec. 231, RA#7160)
69. Composition of the Local Board of Assessment Appeals (LBAA)

a. Chairperson – Register of Deeds
b. Members:
 Provincial or City or Municipal Engineer and
 Provincial or City or Municipal Auditor
Payment of Interest, Discounts, Redemption and Collection
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70. A taxpayer who failed to pay the basic real property tax shall interest or 2% per
month on delinquent taxes until it is fully paid but not to exceed 36 months interest or
72%. Basic real property tax and the additional tax accruing to the SEF is paid in
advance; the Sanggunian concerned may grant a discount not exceeding twenty
percent (20%) of the annual tax due. Owner of the delinquent real property or the
person having legal interest therein or his/her representative shall have the right to
redeem the delinquent property upon payment of the delinquent tax, interest due
and expenses relative to the sale within one (1) year from the date of sale.
71. The basic real property tax shall be collected within 5 years from the date it become
due and payable. No action for the collection of the tax whether administrative or
judicial shall be instituted after the expiration of 5 years and in case of fraud or intent
to evade payment of the taxes the action for collection may be instituted within 10
years from the discovery of such fraud or intent to evade payment of taxes.
72. After the sale and before redemption or the expiration of the term of one (1) for the
redemption, the real property shall remain in the possession of the delinquent
taxpayer who shall have the usufructuary right thereof. (Sec. 261, RA#7160) Provincial
Assessors or City Assessors or (Municipal Assessors within Metro Manila) shall
undertake general revision of real property assessments every three (3) years.
Transfer Fee Tax
73. Transfer fee – a tax imposed on the sale, donation, barter or any other mode of
transferring real property ownership or title. Transfer fee tax shall be computed
based on the total contract price (CP) or gross selling price (GSP) of the Fair Market
Value (FMV) per tax declaration whichever is higher multiplied by the appropriate tax
rate based on classification.
74. Transfer fee Tax Formula:

a. TFT = ½ or ¾ of 1% of the FMV or CP/GSP whichever is higher
 ½ of 1% if the property is classified as residential or agricultural
 ¾ of 1% is classified as commercial or industrial
75. Persons obliged to pay the Transfer Fee

a. Seller
b. Donor
c. Transferor
d. Executor or
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e. Administrator
76. Payment of Transfer fee is required by

a. Register of Deeds before registering any transfer and
b. Assessor’s Office before cancellation of the old Tax declaration and issurance
of a new one
77. Documentary requirements for the transfer of a tax declaration

1. Copy of the Deed of Absolute Sale
2. Copy of the Latest Realty Tax payments and Clearance
3. Copy of the Capital Gains Tax Receipt or with holding and documentary
stamps Tax receipt
4. Copy of Transfer Tax Receipt
5. Official receipt for the processing Fee payment
6. Copy of the Segregation Plan for Partition of lots
7. Copy of the New Title in the name of the Transferee and
8. Copy of the Certificate of Authority to Register (CAR)
Other Tax Matters
78. Real Estate or real property owned by educational institutions which is used actually
directly and exclusively for educational purpose is exempted from real property tax
not from real estate tax.
79. All local government units are authorized to impose an additional levy of ½ of 1% of
the assessed value (AV) of all lands in urban areas in excess of P50,000 FMV in
accordance to RA#7279-Urban Development and Housing Act (UDHA) of 1992.
Real Estate Taxation
Capital Gains Tax
80. Capital Gains Tax (CGT) – tax imposed in lieu of the income tax on profits presumed
to have been realized in the sale, exchange or disposition of real property classified
as capital asset by an individual/natural person, estate or trust.
81. Capital Gains Tax (CGT) Formula:

a. CGT = CP/GSP or FMV or ZV whichever is higher x 6%
 Contract Price (CP) or Gross Selling Price (GSP)
 Fair Market Value (FMV)
 Zonal Value (ZV)
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82. Capital Gains – refers to the presumed profit realized for the sale, or exchange or
disposition of lands and/or buildings classified as capital assets nor ordinary assets
or inventories/stocks including foreclosure sales, pacto de rector sales and other
forms of conditional sales located in the Philippines. (Sec. 24 D (1) RA#8424)
83. Capital Assets – means to real properties held by taxpayer (whether or not
connected/used for trade or business) but does not include:
a. Inventories or
b. Stocks in trade or
c. Property primarily held for sale to customers in the ordinary course of trade or
business
d. Property used in the trade or business which is still subject to allowance for
depreciation being treated as ordinary assets
e. Real properties formerly forming part of the stock in trade being treated as
ordinary assets
84. In the exchange of real properties, portions thereof may be treated as capital assets
and the rest as ordinary assets.
85. Primarily held for sale – means with the purpose of sale or actually put on the market
for sale within the category or ordinary assets.
86. During the taxpayer’s lifetime, stocks/inventories in trade would evidently fall under
the category of ordinary assets but if the estate after taxpayer’s death sells the
inventories by way of liquidation, shall be considered as capital assets unless the
administrator or executor of the sale continues the operation of the business
operation for selling the real properties as inventories. (Maley vs. Commissioner, 17 T.C
260; Tuazon vs. Lingad, 58 SCRA 170)
87. Trade acceptance received by the manufacturing companies in payment of goods

sold and disposed at less than the face value or parcel or land which a bank or
financing company has been required to foreclose and offer for sale are considered
ordinary assets. (Hercules Motor, 40 B.T.A.999; vs. Commissioner, 17 T.C 260; Tuazon vs.
Lingad, 58 SCRA 170)
88. Aspects to determine the assets is capital or ordinary

 Nature and character of the taxpayer’s property title
 Reason, purpose and interest of acquiring the property and duration thereof
 Taxpayer’s calling or extend of activities/agent
 Extent and nature of taxpayer’s effort to sell
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89. Real properties considered as Ordinary Assets
a. Properties constituting inventories for sale of taxpayer’s engaged in real estate
business:
 Real Estate Dealer
 Real Estate Developer (whether developed or undeveloped) held:
 at the time of acquisition
 primarily for sale to customers
 included in the inventories at the end of the taxable year
 Real Estate Lessor (whether land and/or improvements) for
 Lease/rent
 Being offered for lease/rent
 Use or being used in trade or business
 Taxpayer’s habitually engaged in real estate business
b. Properties used or being use or have been previously used in trade, business
or source of income
c. Real Properties sold as inventories subject to withholding taxes
d. Sales proceeds of real properties shall be reported as source of income
e. Properties of taxpayers originally registered to be engaged in real estate
business but failed to subsequently operate
f. Property formerly part of the inventories of trade or business which was later on
abandoned and idle real properties and
g. Real properties inventories of taxpayer changing business from real estate
business to non-real estate business
90. Involuntary transfers of properties including expropriation or foreclosure sale, the

involuntariness of the sale have no effect on the classification of the property in the
hands of the involuntary seller; either it is considered as capital or ordinary assets.
The tax shall be based on the selling price shown in the foreclosure sale.
91. Persons subject to Capital Gains Tax

a. Domestic Corporations
b. Estate
c. Trust
d. Individual Taxpayers
92. Instances when sales of real property cannot be subject to capital gains tax
 Sale or disposition of real property made by an individual taxpayer to the
government or to any of its political subdivision or
 Sale of principal residence of the individual taxpayer and the proceeds thereof
shall be used to acquire or construct a new principal residence
 Sale of raw land for socializing housing projects under UDHA (RA#7279)
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 sale to entity exempt from the payment of income tax under the investments
incentives and special laws
 exchange of real properties solely for sharers of stocks resulting corporate
control
 disposition of real properties for gratuitous in nature
 disposition of lands pursuant to CARP law
 donation of lands under CARP and
 partition of estate among heirs
93. In the sale or disposition of real property made by an individual taxpayer to the
government or to any of its political subdivision, the tax liability may be determine
under the normal income tax rate or under the capital gains tax of 6% at the option
of the taxpayer.
94. Conditions for exemption from payment of capital gains tax on the sale of principal
residence:
a. Seller or transfer is a natural person
b. Capital asset sold is the principal residence of the seller or transferor
c. Sworn statement of seller/transferor to be submitted within 30 days from the
date of sale stating that:
 the 100%ofthe proceeds of sale will be used t acquire or construct a new
principal residence within 18 months from the date of sale
d. Barangay certification stating that the property sold is principal residence
e. Exemption can only be availed once every ten (10) years and
f. The unutilized proceeds of the sale shall be subject to capital gains tax, plus
20% interest and 25% surcharge and compromise taxes
95. The capital gains tax shall be payable to the BIR Revenue District Office where the
property is registered within 30 days from date of notarization of the Deed of Sale
and payment after said period shall be subject to 20% interest, 25% penalty and
compromise tax.
96. Ground floor of a condominium project shall be considered a commercial space and
an additional rate of 20% will be added to an established residential zonal value
where the property is located. (BIR Revenue Memorandum Circular No. 2-98)
97. Seller of principal residence or family home who failed to utilize the proceeds to
acquire a new residence within 18months from the sale shall be assessed additional
deficiency capital gains tax inclusive of 25% penalties and 20% interest per annum
plus compromise tax. (BIR Revenue Regulations No. 17-2003)
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98. The Tax Reform Act of 1997 (RA 8424) provides the capital gains tax is 6% shall be
collected on sales of real properties. An exemption from capital gains tax can be
availed if the capital assets sold is the seller’s principal residence and a new
principal residence will be bought or constructed within eighteen (18) months
provided that the BIR Commissioner is duly notified of the intention within thirty (30)
days after the sale and the tax exemption can only availed once every ten (10)
years. After 30 years from the lapse of 18 months, Seller/Transferor shall submit
documentary evidence on the full utilization of the proceeds of the sale of principal
residence; failure to do so shall be treated as deficient in payment of the capital
gains tax (CGT) and shall be assessed for the deficiency inclusive of interest and
penalties starting the 31st day plus compromise tax.
99. Buyer or Transferee of principal residence shall be required to deposit the payment
of capital gains tax (CGT) with the authorized agent bank (AAB) of the BIR in an
interest-bearing account under an Escrow agreement between the BIR Revenue
District Officer, Seller, Buyer and the AAB to effect the deposited amount including
the interest earned shall be release only upon certification by the RDO that the
proceeds of the sale/disposition was utilized within 18 months from the date of the
sale or disposition of the principal residence. Buyer and Seller shall file then the
Final Capital Gains Tax Return indicating the escrow account to satisfy future CGT
liability.
100. Corporation shall be subject to capital gains tax if the real property sold is
classified as capital assets. (BIR Revenue Memorandum Circular No. 2-98)
101. Sale of real property with 25% down payment shall be considered cash sale which
requires full payment of capital gains tax before I can be registered.
102. If there are improvements to the land, the basis of the capital gains tax shall be
whichever is higher between the contract price of FMV or ZV of the land plus the
zonal value of the improvement. If there is no zonal value of the improvement it shall
be based on whichever is higher, computed as follows:
 Contract price less (-) the zonal value of the lot or
 FMV of the improvements per tax declaration (TD)
103. A 1,000m2 lot was sold with a building on it for P5.0M. Zonal Value of the land is
P7,500/m2 and per Tax Declaration the land’s FMV is P1.750M and the building is
P1.2M. Control the capital gains tax:
Zonal Value of the land P7,500,000
Computed Zonal Value of the building whichever is higher:
 CP less (-) of the land (P2,500,000)
 FMV of the improvement P1.200,000 2,500,000
Adjusted Zonal Value of the Property (Land and Building) P10,000,000
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CGT = P10.00M x 6% = P1.0Mr
Documentary Stamp Tax
104. Documentary Stamp Tax (DST) is – an excise tax. It is

a. a tax affixed on documents, instruments, loan agreements and papers
evidencing the acceptance, assignment or sale or transfer of obligation, right or
property incident thereto
b. not imposed upon the business transacted but upon the privilege, opportunity
or facility offered at exchanges for the transaction of the business
c. a tax upon facilities used in transaction of the business separate and apart
from the business itself
d. levied on the documents and not on the property which is described
105.If a party to a taxable document enjoys a tax exemption, the other party who is not
exempted shall be one directly liable for the payment of the documentary stamp tax.
(Section 173 of RA#8424)
106. In Case of sale of real property paid under deferred payment, the documentary
stamp tax shall accrue upon execution of the Deed of Absolute Sale.
107. Documentary Stamps rate

a. For Lease and other Hiring Agreements
 1st P2,000 or fractional part thereof P3.00
 For every P1,000in excess of P2,000 thereof an additional amount of P1.00
b. For Mortgages or pledges of lands and Deeds of Trust
 P5,000 or less P20.00
 For every P5,000 in excess of P5,000 thereof an additional amount of P10.00
c. For Deeds of Sale and Conveyance of Real Property
 Not more than P1,000 P15.00
 For every P1,000 in excess of P1,000 thereof an additional amount of P15.00
 Or simply multiple by 1.5% per P1,000
d. In case of mortgagor exercise right of redemption P15.00
108. Documentary Stamp Tax (CGT) Formula:

DST = CP/GSP or ZV whichever is higher x 1.5%
 Contract Price (CP) or Gross Selling Price (GSP)
 Fair Market Value (FMV)
 Zonal Value (ZV)
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109. Gillar Realty sold 10has. of agricultural lands for P200/m2 with a FMV at P70/m2
and with no zonal value found at the BIR. How much is the capital gains tax and the
documentary stamp tax?
a. Capital gains tax: 10has x 10,000m2 x P200/m2 x 6% = P1,200,000
Note: In case on sale of agricultural land without zonal value, the rate of 150% shall be added to the FMV
of the land per latest tax declaration. (BIR Rulling) The computed zonal value of the land shall be P175
(P70 + 150%) of P70) whichever is higher between the contract price or the FMV or the computed zonal
shall be basis for the CGT.
b. Documentary Stamp Tax: P20.0M x 1.5% = P300,000 r
110. A deed of sale with mortgage was executed for a total contract for a total price of
P3.50M Payment of P2.5M cash was made and the balance shall be secured by
mortgage of the buyer of the subject property. Compute the documentary stamp tax.
Documentary stamp on sale: 1.5% of P2.5M = P37,500
Documentary stamp on mortgage:
1st P5,000 P20
Succeeding payments:
P1,000,000-P5,000/P5,000 x P10 1,990 2,010
Total documentary stamp tax P39,510r
Note: if contract of sale is with mortgage the basis of the documentary stamp on sale shall only be
the cash payment and another documentary stamp tax shall be computed for the mortgage.
111. Argie, a licensed Real Estate Broker got a net listing for a commercial
documentary area for P25,0M with an area of 800 sqm which should be sold
inclusive of 5% broker’s fee, capital gains tax, documentary stamps and 3%
percentage tax. Compute the taxes due. (Round off answer to the nearest peso)
Gross Selling Price : P25.0M/87.5% = P28,571,429
CGT: 6% of P28,571,429 = P1,714,286

DST:1.5% of P28,571,429 = 428,571
%tax: 3% of P1,4218,571(5% of P28,571,429) = 42,857
Total taxes due P2,185,714
112. In case of non-redemption, the corresponding documentary stamp tax shall be

imposed, collected and paid by the person making, signing, issuing, accepting or
transferring the real property wherever the document is made based on the bid price
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of the highest bidder and shall be paid within five (5) days after the close of the
month following the lapse of one (1) year redemption period.
113. The documentary stamp tax return shall be filed and paid within ten (10) days after
the close of the month when the taxable document was made, signed, issued,
accepted or transferred. The documentary stamp tax on sale of real property should
be paid within five (5) days after the close of the month on the date of sale. Section
200 (B) RA#8424)
114. Persons liable for Documentary stamp tax

a. Person issuing and person to whom the document is issued
b. If one party is exempted from payment of the DST, the other party of the
document who is not exempted shall be liable for the payment thereof
115. Documents and papers not subject to documentary stamp tax:

a. Deed of donation is not subject to documentary stamp tax but the document’s
notarial acknowledgement is subject to tax imposed on Certificates under
Section 201 of the Tax Code. (BIR Ruling No. 13-87, January 21, 1987)
b. Loan agreements or promissory notes, the aggregate of which does not
exceed P250,000; provided, the amount was set by Secretary of Finance and it
does not exceed 10% of the current price index and shall remain in force for at
least 3 years
c. Assignment or transfer of any mortgage, lease or renewal or continuance of
any hiring agreement or charter, if there is no change in the maturity date or
remaining period or coverage from the original instrument
d. All contracts, deeds, documents and transaction related to the conduct of
business at the Bangko Sentral ng Pilipinas (BSP) and
e. Transfer of property in exchange of property that no gain or loss shall be
recognized in pursuance of a plan or merger or consolidation (Section 40(c-
2)RA#8424)
Value Added Tax (VAT)
116. Value Added Tax (VAT) – an indirect tax and

 The amount of tax may be shifted or passed to the buyer, transferee or lessee
of the properties or services
 Imposed on any person who in the regular course of trade or business (as a
rule) sells, barters, exchange, leases goods or properties, renders services or
engages in similar transactions and/or import goods
 It also applies to existing contracts of sale or lease of properties or services
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117. “In the course of trade or business” –means the regular conduct of a commercial or
economic activity whether or not (WoN) the person engage thereto is a non-stock,
non-profit private organization or government entity or WoN the entity is profit
oriented
118. Vat shall be imposed, assessed and collected on every sale, barter or exchange of
goods or properties equivalent to 12% effective February 1, 2006 (previously 10%)
of the gross selling price or gross value in money of the goods or properties sold,
bartered or exchange to be paid by the Seller or Transferor.
119. “Gross Selling Price (GSP)” - means the total amount of money or its equivalent
which the purchaser or is obligated to pay to the seller pertaining to the sale, barter
or exchange of goods/properties excluding VAT.
120. “Gross Receipts (GR)” - means the total amount of money or its equivalent
representing the contract price, compensation, service fee, rental or royalty including
the amount charged for materials supplies with the services as well as deposits and
advanced payment actually or constructively received during the taxable period for
the services performed or to be performed for another person excluding VAT
121. “Sale of Services or Exchange of Services” – refers to the performance of all kinds
of services for others for a fee, remuneration or consideration. (Section 108,
RA#8424) VAT is due if there is sale, barter, exchange, transfer or similar
transactions of goods/properties and the sale is consummated.
122. Lease of properties shall be subject to VAT regardless of the place where the
contract of lease or licensing agreement was executed if the property is lease or
used in the Philippines.
123. “Output VAT” – means the VAT due on the sale or lease of taxable goods or
properties or services by any person registered or required to register under Section
236 of RA#8424.
124. “Input VAT” – means the VAT due from or paid by a VAT-registered person in the
course of his trade or business on importation of goods or local purchase of goods
or services, including lease or use of property from a VAT-registered person.
(Section 236, RA#8424)
125. Sales/Leases of Real Properties subject to VAT (BIR RR#16-2011 dated October
27, 2011 and RR#3-2012 dated February 20, 2012)
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a. Sale of real properties:
 primarily held of sale to customer in the ordinary course of trade or
business and its gross sales/receipts exceeds P1,919,500 (previously
P1.50M)
 on installment plan by real estate dealer with initial payment in the year of
sale does not exceed 25% of the GSP
 valued in excess of the threshold amount where the instrument of sale
(either Deed of Absolute Sale or Deed of Condition Sale) was executed on
or after November 1, 2005 subject to 10% output VAT and starting
February 1, 2006 shall be 12%output VAT
 resident lot – P1,919,500, effective January 1, 2012 (previously
P1.50M)
 residential house and lot – P3,199,200, effective January 1, 2012
(previously P2.50M)
 other residential dwellings – P3,199,200 (previously P2.50M)
 pre-selling by real estate dealers in excess of the threshold amount
 property transferred for sale, lease or use in the ordinary course of
trade or business by which it constitutes a completed gift in excess
of the threshold amount
 installment plan on residential house and lot – P3,199,200
(previously P2.50M)
b. Lease of real property in the ordinary course of trade or business where
the gross rental exceeds P1,919,500 (previously P1.50M)
c. Lease of residential units with monthly rental exceeding P12,800
(previously P10,000) per unit and the aggregate rental income for the
year exceeds P1,919,500 (previously P1.50M)
126. Transfer is considered completed gift if the transferor divests himself absolute
control of the property such as: in irrevocable transfer of the property or irrevocable
designation of beneficiary.
127. In real property sales on deferred payments not on the installment plan, the
transaction shall be treated as cash sale which makes the entire selling price taxable
on the month of sale. Deferred payment – means that the initial payments on the
sale of real property in a particular year exceeded twenty-five percent (25%0 of the
GSP.
128. Initial payment – means the payment(s) received by the Seller on or before the
execution of the instrument of sale and payments which the Seller expects to receive
for the sale during the year such as: downpayment, all payments actually and/or
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constructively received. The initial payment does not include the amount of
mortgage on the real property sold, except:
 When the mortgage exceeds the cost or other basis on the property of the
Seller
 The excess shall be considered part of the initial payment and
 The notes or evidence of indebtedness was issued by the Buyer to the Seller
at the time of sale
129. On installment plan, the real to any estate shall be subject to VAT on the
installment payments including interest and penalties actually and/or constructively
received by the seller.
130. Real Estate Dealer – refers to any person engaged in buying, developing, selling,
exchanging real properties as principal and holding himself/herself or itself as full or
part-time dealer in real estate.
131. In case of sale, barter or exchange of real property subject to VAT, the GSP –
means the consideration stated in the sales document or the FMV/MV whichever is
higher.
132. In the absence of zonal value (ZV), the GSP- refers to the FMV found at the latest
Tax Declaration (TD) or the consideration whichever is higher.
133. If the GSP is based on the ZV or FMV is shall be deemed inclusive of VAT and if
VAT is not billed separately, the GSP stated in the sales documents shall be
deemed VAT inclusive.
134. In case of sale, barter or exchange of real property subject to VAT, the FMV –
means whichever is higher of the ZV or the assessed value (AV) shown in the
Schedule of Market Value (SMV) of the Assessor or as reflected in the latest Tax
Declaration (TD)
135. Threshold amount for VAT, effective January 1, 2012 (BIR RR No.3-2012)
 Gross Receipts (GR) or Gross Income (GI) ----- P1,919,500
 Gross Selling Price (GSP) Lot only package ---- P1,919,500
 Gross Selling Price (GSP House & Lot package – P3,199,200
 Gross Rental --- P12,800 per month per unit
136. Sales of real properties exempted from VAT (BIR RR#16-2011 dated October 27, 2011
and RR#3-2012 dated February 20, 2012)
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a. utilized for low cost housing as defined by the Urban Development and
Housing Act of 1992 (RA# 7279) and other related laws (RA No. 7835 and RA
No. 8763) where the price ceiling per unit is P450,000 (previously P400,000)
b. primarily held for sale to customers in the ordinary course of trade or business
of non-VAT registered persons and the gross sales/receipts does not exceed
P1,919,500 (previously P1.50M)
c. primarily held for sale to customers in the ordinary course of trade or business
and its gross sales/receipts does not exceed P1,919,500 (previously P1.50M)
d. sale of Capital Assets subject to Capital Gains tax
e. on installment plan by real estate dealer with initial payment in the year of sale
exceeds 25% of the GSP
f. transactions where the instrument of sale (either Deed of Absolute Sale or
Deed od Condition Sale) was executed on or after November 1, 2005 subject to
10% output VAT and starting February 1, 2006 shall be 12% output VAT
 resident lot – value does not exceed P1,919,500, effective January 1,
2012 (previously P1.50M)
 residential house and lot – value does not exceed P3,199,200, effective
January 1, 2012 (previously P2.50M)
 other residential dwellings – value does not exceed P3,199,200
(previously P2.50M)
 pre-selling by real estate dealers value does not exceed the threshold
amount
 property transferred for sale, lease or use in the ordinary course of
trade or business by which does not constitutes a completed gift which
does not exceed the threshold amount
 installments plan on residential house and lot – value does not exceed
P3,199,200 (previously P2.50M)
g. lease of real property in the ordinary course of trade or business gross rental
income does not exceed P1,919,5000 (previously P1.50M)
h. lease of residential units with monthly rental does not exceed P12,800
(previously P10,000) per unit and the aggregate rental income for the year does
not exceed P1,919,500 (previously P1.50M)
137. Real Estate Lessor – is any person engaged in the business of leasing or
subleasing real properties.
138. Low-cost housing – refers to housing projects intended for the homeless, low-
income family beneficiaries undertaken by the government or private subdivision
developers registered and licensed at HLURB under PD#957 and BP#220 or any
other similar laws with unit or packages selling price ceiling of P750,000.
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139. Socialized housing – refers to housing programs/projects covering house and lot or
home lot, sites and services development long-term financing intended for the
underprivileged and homeless citizens undertaken by the government or private
subdivision developers registered and licensed at HLURB in accordance with
RA#7279-UDHAof 1992 as amended by RA#7835 and RA#8763 with unit or
package selling price ceiling P450,000 (previously P400,000) as well as projects
with lowest interest rates under Unified Home Lending Program (UHLP).
140. If the monthly rental per unit exceeds P12, 800 (previously P10,000)it is not
automatically subject to VAT if the aggregate gross rental does not exceed
P1,919,500 (previously P1.50M); however, it is subject to 3% percentage tax. ( BIR
RR#16-2011 dated October 27,2011)
141. If two or more adjacent residential lots are sold or disposed in favor of one buyer
for the purpose of utilizing the lots as one residential lot, the sale shall be exempt
from VAT if the aggregate value of the two lots does not exceed P1,919,500
(previously P1.50M). (BIR RR#16-2011 dated October 27, 2011)
142. Adjacent residential lots, although covered by separate titles and/or separate tax
declarations when sold or disposed to one and the same buyer whether covered by
one or separate Deed of Conveyance shall be deemed as a sale of one residential
lot. (BIR RR#16-2011 dated October 27,2011)
143. In case where a lessor has several residential units for lease, some are leased for
monthly rental per unit of not exceeding P12,800 (previously P10,000)while the
others are leased for more than P12,800 (previously P10,000) per unit, the tax
liability will be as follows: (BIR RR#16-2011 dated October 27, 2011)
a. The gross receipts from rentals not exceeding P12,800 (previously P10,000)
per month per unit shall be exempt from VAT regardless of the aggregate
annual gross receipts or whether it exceeded P1,919,500 (previously P1.50M)
b. The gross receipts from rentals exceeding P12,800 (previously P10,000) per
month per unit shall be subject to VAT if the aggregate annual gross receipt
from units leased for more than P12,800 (previously P10,000) exceeds
P1,919,500 (previously P1.50M); otherwise, the groups receipts will be subject
to 3% percentage tax under Section 116, RA#8424.
144. “Residential units” – refers apartments, houses and lots used for residential
purposes and buildings or parts/units thereof used solely as dwelling places like:
(BIR RR#16-2011 dated October 27, 2011)
 Dormitories
 Rooms and
 Bed spaces except:
 Motels
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 Motel rooms
 Hotels
 Hotel rooms
 Lodging houses
 Inns and
 Pension houses
145. “Unit” – shall mean an (BIR#16-2011 dated October 27, 2011)

 Apartment unit in the case of apartments
 House in case of residential houses
 Per person in case of dormitories, boarding houses and bed spaces and
 Per rooms in case of rooms for rent
146. For purpose of determining the threshold of P1, 919,500 (previously P1.50M,
husband and wife shall be considered separate taxpayers; however, the aggregation
rule for each taxpayer shall be applied. Hence, if other spouse earned professional
income and also earned revenue form business subject to VAT, the same shall be
combined purposely for determining the threshold. VAT-exempt sales/income shall
not be included in determination of threshold. (BIR RR#16-2011)
147. A Real Estate Professionals (REC, REA, REB, RES) shall be subject to VAT if the
aggregate amount of his/her professional fees exceeds P1,919,500 (previously
P1.50M) during a taxable payer. VAT Formula: VAT = GSP/GI/GR x 12%/112%
148. How much is the sales price of house and lot package sold ate P4.5M inclusive of
VAT? (round-off your answer to the nearest peso)
Sales Price inclusive of VAT P4,500,000
Less: Output VAT (P4.50M x 125/112%) 482,143
Sales Price, VAT exclusive P4,017,857
149. A VAT register real estate dealer sold a residential condominium unit valued at
P2.750M. Compute the VAT due. (round-off your answer to the nearest peso)
VAT (P2.750M x 12%112%) P294,643
Withholding Tax
150. If the property sold is an ordinary asset or other property of a kind included in the
inventory on hand or held primarily for sale to customers or property used in trade or
business of a character which is subject to allowance for depreciation is subject to
withholding tax.
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151. The computation of credible withholding tax on sale, transfer or exchange of real
property other than capital assets is the Gross Selling Price (GSP) or Total Contract
Price or the Fair Market Value (FMV) or Bid Price (for foreclosure sale) or installment
collected (for installment sale excluding interest) of the property of being sold,
transferred or exchange whichever is higher.
152. Registration with HLURB or HUDCC shall be sufficient for a seller/transferor to be

considered as habitually engaged in the real estate business. For tax purposes,
habitually engaged in real estate is proven
 By HLURB or HUDCC registration and certification or
 By offering satisfactory evidence of at least six (6) consummated sales during
the year, if not registered with HLURB and HUDCC.
153. The rate of creditable withholding tax in the sale of real property which is
considered ordinary by an individual, estate, trust of pension fund or real property,
whether held as capital or ordinary asset by a corporation not habitually engaged in
real estate business is 6%.
154. Withholding tax rate on sale, transfer or exchange of real property considered as
ordinary assets.
Transactions Tax
Rate
a. Registered and certified by HLURB or HUDCC as engaged in
socialized housing projects pursuant to RA#7279 (UDHA) and its IRR
and the Selling Price (SP) of the house and lot package does not 0%
exceed P450,000 (previously P400,000)
b. Not registered with HLURB as engaged in socialized housing projects under
RA#7279 (UDHA), Seller/Transferor is habitually engaged in real estate business
 SP of house & lot package is not over P750,000 (previously 1.5%
P500,000)
 SP of house and lot package is over P750,000 (previously 3.0%
P500,000) but not over P2.0M
 SP of house and lot package is over P2.0M 5.0%
c. Seller/Transferor is not habitually engaged in real estate business 6%
155. The withholding Tax Return shall be filed on or before the 10th day following the
end of the month in which the transaction occurred.
156. Rate of expanded withholding tax (EWT) on professionals and rentals
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Nature of Payment tax Rate
a. Based on gross commission or services fees or professional fees
 Real Estate Professionals 10%
 Technical Consultants
 Current year gross income/receipts of P720,000 and 10%
below
 Current year gross income/receipts of exceeds P720,000 15%
 CPA, Lawyers and other PRC Professionals
 Current year gross income/receipts of P720,000 and below 10%
 Current year gross income/receipts of exceeds P720,000 15%
b. Rentals-real/personal properties based on gross rentals 5%
157. A VAT and HLURB registered real estate developer presently sold as house and
lot package at P5.0M inclusive of VAT and paid the withholding tax for the sale.
Compute the VAT and withholding tax due. (round-off answer to the nearest peso)
Output VAT (P5.0M x 12%/112%) P535,714
Withholding Tax (P5.0M – P535, 714 x 3%) 133,929
Total Output and withholding Tax due P669,643
Donor’s Tax
158. Donor’s Tax – tax on the privilege of transmitting one’s property or property rights
to others without adequate and full consideration. Donor’s Tax shall not apply unless
and until there is a completed gift. Purpose of Donor’s Tax: To complement the
Estate Tax (ET) by preventing tax-free depletion of the transferor’s estate during his
lifetime.
159. Taxpayers subject to Donor’s tax

 Juridical Person
 Natural Person
 Residential Citizen (RC)
 Non-Resident Citizen (NRC)
 Resident Alien (RA)
 Non-Resident Alien (NRA)
160. Basis of Donor’s Tax and the Rate:

 Net Gifts (NG) x applicable % rate WON Donee is
 Relative (2% - 15%) or
 Stranger (30%)
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161. Gross Gifts – refers to all:
 Real properties and
 Personal properties (tangible/intangible)
 Given by the donor to the done by way of gift without the benefit of any
deductions
162. Net Gifts – means the net economic benefits from the transfer that accrues to the
donee.
163. If the property transferred as gift is mortgaged and the obligation to pay it is shifted
to the done, the net gift shall be the FMV of the property after deducting the amount
of mortgage assumed.
164. Donee is a stranger – if the done is not a brother, sister, spouse, ancestor and
lineal descendant or a relative by consanguinity within 4th civil degree.
165. Donee is a relative – if the donee is a brother, sister, spouse, ancestor and lineal
descendant or a relative by consanguinity within 4th civil degree.
166. Donor’s Tax Return on Relatives

Over But not Over Tax shall be Plus Of the excess over
P100,000 Exempt
P100,000 200,000 0 2% P100,000
200,000 500,000 2,500 4% 200,000
500,000 1.0M 14,000 6% 500,000
1.0M 3.0M 44,000 8% 1.0M
3.0M 5.0M 204,000 10% 3.0M
5.0M 10.0M 404,000 12% 5.0M
10.0M 1.04M 15% 10.0M
167. Allowable Exemptions from Donor’s tax

a. Gifts or dowries made by reason of marriage
b. Gifts made to the National Government and its political subdivision
c. Gifts to accredited NGO not more than 30% of the gross gift will be used for
administration purposes for:
 Educational
 Charitable
 Religious
 Cultural or social welfare or
 Philanthropic organization
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168. Gifts or dowries by reason of marriage should be:

 Given within 1 year before/after celebration
 Donated by parents(s)
 Donee is a child (legitimate/illegitimate)
 Deductible amount is P10,000 per year)
169. Valuation of Gifts shall be FMV at the time of donation determined based on ZV or
FMV per TD whichever is higher.
170. Donor’s Tax Return shall be filed and Paid:

 Within 30 days after the date the donation was made
 If donors are spouses, each should file separately and the filing and payment
shall be donation made.
Estate Tax
171. Estate Taxis –

 An exercise tax on the right to transmit property at death and on the privilege
that a person in certain extent is in control disposition of his property which
shall take effect upon his death
 Is a graduated tax imposed on the privilege of the decedent to transmit
property at death
 It is based on the net estate, regardless of the number of heirs and relations to
the decedent
 It is a transfer taxes not a property tax
172. Components of Decedent’s Gross Estate

a. For Resident Citizens, Non-Resident Citizens and Resident Aliens from within
and without the Philippines:
 Real property (land, buildings and all improvements permanently
attached to the land)
 Tangible personal property (vehicles, appliances, furniture and jewelries)
 Intangible personal property (bank deposits, receivables, shares of stock,
franchise, patents, copyrights, bonds, trademarks & the like) and
 Extent of decedent’s interest at the time of death
b. For Non-Resident Aliens from within the Philippines:
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 All properties mentioned above in category (a)
173. Gross Estate of decedent’s interest includes –

a. Transfers in contemplation of death, except on bonafide sale
b. Revocable transfers – to the extent of any interest of the decedent at the time
of death
c. Property passing under general power of appointment – includes property over
which the decedent held exercisable in favor of himself, his estate, his creditor
or creditors of his estate
d. Proceeds from life insurance – to the extent of the amount receivable by the
decedent’s estate, his executors or administrators
e. Prior interest – rights, trust, interest, estates, etc.
f. Transfers for insufficient consideration – included in the estate is the excess of
the FMV
174. Allowable deductions from the gross estate (Key: ELIT-VASTE-FH-SSS)

1. Expenses, Losses, Indebtedness and Taxes
2. Vanishing deduction (100% - 20%; transfer is within 5 years)
3. Amount received by heirs from decedent’s employer as a consequence of the
death of the decedent-employee
4. Standard deduction of P1.0M
5. Transfers for public purpose
6. Tax Exempt retirement
7. Family Home of not more than P1.0M and
8. Share of the Surviving Spouse from the conjugal or community property
175. Rule: Tax base shall always be whichever is higher and the deductions shall be
whichever is lower.
176. Expenses, Losses, Indebtedness and Taxes (ELIT):

a. Funeral Expense (FE) – actual or 5% of GE or NMT P200T whichever is lower
b. Medical Expenses (ME) – actual or NMT P500T whichever is lower
c. Judicial Expenses (JE) of the testamentary or intestate proceeding to
determine the Net Estate (NE) value
d. Losses incurred during the settlement of the estate arising from fire, storms,
shipwreck, robbery, theft or embezzlement and other casualties not
compensated by the insurance
e. Claims of the deceased against insolvent persons-value of which was included
in the gross estate
f. Claims against the estate – taxes due from the decedent, indebtedness, etc.
g. Unpaid mortgage
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177. Conditions for allowing the claims against the Estate of the decedent
 Debt instrument was duly notarized
 If loan, it was contracted within 3 years before the decedent’s death
178. Family Home – refers to the actual residence of the decedent and his family at the
time of death including both the house and lot used as the dwelling place. Conditions
of deducting family home from the computation of the estate tax
 Its FMV or ZV the time of death whichever is higher must be included in the
gross estate
 It is certified by the Barangay Captain from the locality where it is situated as
the actual residence of the decedent and his family at the time of death and
 The amount of deductible claim must not exceed P1.0M
179. The Estate shall be appraised at its FMV at the time of death which shall be
determined by the BIR Commissioner or as shown in the schedule of values fixed by
the Provincial or City Assessors whichever is higher.
180. Notice of death should be given to the BIR within two (2) months after the
decedent’s death or within the same period after the Executor or Administrator
qualifies.
181. The Estate Tax Return (ETR) shall be filed by the Executor or Administrator or any
of the legal heirs within six (6) months or 180 days from the decedent’s death.
However, the BIR Commissioner may grant an extension of not exceeding thirty (30)
day in meritorious cases.
182. Instances an Estate Tax Return should be filed

 In all cases or transfers which are subject to estate tax
 Where the gross value of the estate exceeds P200,000 even exempted from
taxes and
 Where the estate consists of registered or registrable property such as: real
property, motor vehicle, shares of stock or other similar property for which a
clearance from the BIR is required as a condition for the transfer of ownership
in the name of the transferee.
183. The Executor or Administrator or Heir shall pay the estate tax upon filing of the
Estate Tax Return. The BIR Commissioner may grant an extension if he finds that
the heirs under the following periods:
 Not exceeding five (5) years – if estate is judicially settled or
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 Not exceeding two (2) years – if estate is extra judicially settled
184. Estate Tax Rates:

If the Net Estate But not Over Tax shall be Plus Of the excess over
is Over
P200,000 Exempt
P200,000 500,000 0 5% P200,000
500,000 2.0M 15,000 8% 500,000
2.0M 5.0M 135,000 11% 2.0M
5.0M 10.0M 465,000 15% 5.0M
10.0M And over 1.215M 20% 10.0M
185. Compute the Estate Tax due of the deceased person based on the following:
 Absolute Community of the spouses excluding the family home P25.0M
 Family Home (ZV of P15.0M and with FMV of P10.0M)
 Condominium in Makati worth P5.0M
 Properties abroad for P15.0M
 Paraphernal property of the spouse of the deceased worth P7.0M
 Actual Funeral Expenses is P200,000 only P150,000 was receipted
 Actual Medical Expenses is P400,000 only P380,000 was receipted
 Capital property worth P3.50M
 Property transferred from prior decedent made 4 years ago valued at P1.0M
 Claims against the estate worth P1.20M
 Awards from courts against the debtor worth P1.0M
 Unpaid mortgage of the family home worth P5.0M
 Judicial Expenses for the settlement of the Estate worth P1.50M
Answer:
Absolute Community P25,000,000
Add: Family Home 15,000,000
Condominium in Makati 5,000,000
Properties abroad 15,000,000
Capital property 15,000,000
Awards from courts against the debtor 1,000,000
Property transferred from prior decedent P65,500,000

Gross Estate
Less Allowable Deductions
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Receipted Funeral Expenses P200,000
Receipted Medical Expenses 380,000
Claims against the estate 1,200,000
Unpaid mortgage of the family home 5,000,000
Judicial Expenses 1,500,000
Standard Deduction 1,000,000
Vanishing Deduction (20% of P1.0M) 200,000
Family Home 1,000,000 10,480,000
Net Estate 55,020,000
Less:
Share of the Surviving Spouse( 50%of NE) (27,510,000)
Net Taxable Estate P27,510,000
Estate Tax Due:

1st P10.0M P1,215,000
Excess: P17.510M x 20% 3,502,000
Total Estate Tax Due and Payable P4,717,000
Geographic Information System and Map Reading and Plotting
General Information System
1. General Information System (GIS) is – a

 Computer mapping program where land characteristics where land
characteristics and/or demographic information are color coded and often
overlaid which primary purpose is to determine locations of certain activity.
 System of hardware, software and procedures designed to support the
capture, management, manipulation, analysis, modeling and display of
spatially referenced data for solving complex planning and management
problems
 Computer system capable of assembling, storing, manipulating and displaying
geographically reference information
 Set of computer based system for managing geographic data and using those
data to solve spatial problems
2. Digitization – refers
 To the most common method of data creation
 Method where a hard copy map or survey plan is transferred into a digital
medium through the use of a computer-aided design (CAD) program and
geo-referencing capabilities
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3. Heads-up Digitizing – involves the tracing of geographic data directly on top of the
aerial imagery instead of by the traditional method of tracing the geographic form on
a separate digitizing table (heads-down digitizing)
4. Raster data type – is any type of digital image represented by reducible and
enlargeable grids.
5. Lines or poly lines – one dimensional line or poly lines are used for linear features
such as rivers, roads, railroads, trails and topographic lines.
6. Topographic Survey – land survey that determines the elevation or undulation of the
terrain at various sections of the property.
7. Topography – refers to
 The nature of the surface of land which may either be level, rolling or
mountainous
 A description of the land surface features such as its elevation or drainage
8. Polygons – refers to
 a two-dimensional polygons are used for geographical features that cover a
particular area of the earth’s surface like: park boundaries, buildings, city
boundaries or land uses
 conveys the most amount of information of the file type
9. Applications of GSIS
 Business
 Professional practice
 Academic
 Industry
 Government
 Military, etc
10. Users of GSIS

a. General Users
 Planners
 Scientists
 Administration
b. Specialist
 Programmers
 Designers
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 Developers
c. Viewers
 Clients
 Real Estate Practitioners
 Anybody
11. Digital geographic data – are numerical representations that describe real-world
features and phenomena and it is dynamic in contrast to the static data displayed on
a conventional map i.e. paper.
12. Geographic Matrix – refers

 to a geographic data described according to location and attributes
 it facilitates areal differentiation, the study of differences among various
locations
13. Data Models of GSIS

a. Object-based (Vector) – a geographic space is populated by discrete and
identifiable objects
 Which has identifiable boundaries or spatial extent
 Is relevant to some intended application
 Is described by one or more attributes
b. Field-based (Raster) – geographic space is populated by one or more spatial
phenomena
14. Exact objects – are generally man-made features with precise boundaries. Inexact
objects – are generally natural features with transitional or in-between boundaries.
15. Spatial phenomena – are real-world features that vary continuously over space with
no obvious or specific extent and are represented as surfaces. Representation of
Spatial relationship
 Geometric - when adjacent features share common boundary
 Proximal – when once feature is close to another one
16. Tessellations- are geometric arrangements (square, triangular or hexagonal) of

figures that completely cover a flat surface.
Surveying and Map Reading and Plotting
17. It is essential for real estate practitioners to know and understand the survey signs
commonly used in real estate transactions as well as the primary purposes of
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surveying to be able determine the relative positions and lines on the surface of the
earth.
18. Survey – refers to inspecting, review, study, examine, investigating, assessing.

Analyzing or appraising.
19. Surveying – the art and science of determining angular and linear measurements to
establish form, extent and relative positions, lines and surfaces on or near the earth
and on other extra-terrestrial bodies through applied mathematics and the use of
specialized equipment’s and techniques.
20. Plane Surveying – type of surveying which means the surface of the earth is
considered plane.
21. Geodetic Survey – a kind of survey where the shape of the earth is taken into
account in computing results.
22. Rectangular Survey – refers to a grid of north and south (Meridians) and east and
west (parallels) lines surveyed by the government in identifying Philipines
boundaries.
23. Surveyor or Geodetic Engineer – refers
 Professionals person who determines the shape, contour and the
measurement of the land
 One who conducts the survey
 One who is trained or who studied the skill of surveying
24. Subdivision Plan – a survey plan indicating the division of the property. Subdivision
survey – a survey to determine the boundaries of each lot in a subdivision.
25. Relocation survey – method of identifying the boundaries of a parcel of land by

placing stakes or pins on the ground.
26. Verification survey – a survey of a titled land without or with erroneous technical
description.
27. Gridiron – refers to subdivision scheme where the resulting blocks are rectangular in
shape.
28. A land survey always uses a reference point either.

 Bureau of Lands Location monuments
 Bureau of Lands Barrio Monuments
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 City/Municipal Boundary Monuments or
 Provincial Boundary Monument
29. Plottage value – bonus that sometimes may be obtained from the consolidation of
lots.
30. Kinds/Types of Survey

 Land Survey
 Topographic Survey
 Hydrographic Survey
 Route Survey
 Mine Survey
 City Survey
 Construction Survey
 Industrial Survey
 Photogrammetric Survey
 Cadastral Survey
31. Elements of space in Surveying (Key: DED)

 Distance
 Elevation
 Direction
32. Map – is
 A flat presentation of a portion of the earth’s surface
 Essential for use in identifying location of a particular property on the face of
the earth
33. Real properties (lots/lands) are always described with its technical descriptions and
it is important to know it to ensure proper identification of the property for sale and
the correct conveyance thereto.
34. Relevance of surveying and map reading in real estate practice

 To be able to read the technical descriptions of the lot and/or land and to
understand real estate transactions
 To be able to determine the relative positions, lines and measurements of a
tract of land
35. Cardinal Directions in surveying and map reading (key: NEWS)

 North
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 East
 West
 South
36. Vicinity/Location Map – a map of the segment of a community showing the subject
lot, adjoining parcels, natural features and some major infrastructure as a reference
in the identification or location of the site.
37. Land Survey Maps – refers to cadastral maps, survey maps, locations plans.
38. Pacing – refers to a rough method in determining the distance between two points
by multiplying the number of paces (foot spaces/steps) between two points by a
determined pace factor. Pace Factor –the average measured length of a person’s
natural pace.
39. Metes and Bounds – refers

 To a measurements and boundaries
 Method of legally describing land setting forth all boundary lines together with
their directions, distances, terminal points and angles
 A method for describing property
40. Monuments – refers

 To are landmarks for reference purposes
 Reference structures that identified a property boundary
 It can be natural landmarks like: rivers, rocks, tress, lakes, parks, etc. which
are considered tangible landmarks
 It can also be intangible landmarks or reference points which are manmade
structures such as: fences, streets, bridges, posts, houses, and etc.
 To the fixed object and point established by the surveyors to establish land
location
41. Tie Line – refers

 To the imaginary lines connection point “1” of a lot with a reference point such
as BLLM
 To a reference point with known geographic position established by the
Bureau of Lands
 An imaginary lines connecting from the known geographic position to the point
at the corner
42. Contour Lines – lines in a topographic map which indicate the elevation of the terrain
at various sections of the land.
43. Bearing of a line – refers to
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 The direction of any respective given meridian
 The quadrant of which the line falls and the acute angle which lines makes the
meridian in that quadrant
 One which the acute angle is measured from either North or South toward the
East or West
44. Lot Number –the designated figure which identified a specific land in reference to the
whole area.
45. Elevation of a point –the vertical distance above or below an assumed level surface
or datum.
46. Datum – a reference surface coincidental or parallel with mean sea level.
47. Latitude – the angular distance of the place above or below the equator, north or
south latitude.
48. Scale – the numerical ratio of measurement of a distance/length in a map or

drawing/illustration to the actual measurement of the earth.
49. Level Surface – a surface which is parallel with the mean spheroid surface of the
earth.
50. Meridian – a fixed line of reference for determining direction of lines.
51. True Meridian – a North-South lines passing through the geographic poles of the
generally adopted as reference lines.
52. Magnetic Meridian – lies parallel with the magnetic lines of force of the earth and is
indicated by the directions of the magnetic needle of a compass.
53. Magnetic Declination – the horizontal angle between the meridian and the true or
geographic meridian.
54. Azimuth of a Line – the clockwise angle of a line measured reckoned from the south.
55. Longitude – the angular distance measured along the arc of the equator. Longitudes
are measured either east or west of Greenwich Meridian.
56. Mean Sea Level or Seal Level Datum – the exact midway level between high and
low tide.
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57. Square Planning is a subdivision plan for a flat terrain.
58. Cadastral Map – one prepared out of a cadastral survey of extensive area consisting
of several lots for cadastral registration proceedings, agricultural development and
other purposes.
59. Basic pointers in Map reading

 Type of Map
 Cardinal Directions/Signs (N-E-W-S)
 Bearings and Azimuths
 Scale of Map as to its nature and use
 Natural Boundaries
 Center/Contour lines or topographic map and
 Reference Points
60. Reference Points on difference locations and boundary monuments

 Bureau of Lands Location Monument (BLLM)
 Bureau of Lands Barrio Monuments (BLBM)
 City Boundary Monument (CBM)
 Provincial Boundary Monument (PBM)
 Municipal Boundary Monument (MBM) and
 Barrio Boundary Monument (BBM)
61. To plot a given property, the basis data needed are the bearing (angular degrees)
and distance (linear measures) of the corners indicated in the lot description.
62. In preparing a lot plan or subdivision plan, a scale of 1:20 means one (1) meter is
equal to 200 meters.
63. Types of property descriptions ordinarily used in deeds, contracts, offer to sell and
leases
 Lot number
 Bearings and azimuths
 Monuments and
 Metes and bounds
64. Important Data for Site Location

 Direction
 Lot Plan/Vicinity Map
 Means of Transportation
 Reference Points (landmarks/adjacent properties)
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 Land Use
65. Compass – an instrument use to determine the horizontal direction of a line

reference to the direction of a magnetic needle.
66. Tape – a graduated device used for measurement of lengths.
67. Ways of identifying a property in a site location

 Technical Approach – by relocation survey
 Layman’s Approach – by direction of a knowledgeable person
 Semi-Skilled Approach – by sketching/plotting with the use of :
 Compass and tape
 Angular estimate and pacing
68. Area of triangular plot is computed by the formula ½ x length x width.
69. Erosion – is the wearing a way of lands by the action of the water or wind.
Urban and Land Use, Planning, Development and Zoning
1. Real Estate – refers to the land and all those items which are attached to the land. It
is the physical, tangible entity together with all the additions or improvements above or
below the ground.
2. Real Estate Development Project – refers to the development of land for (Key:
CARIRI)
Commercial
Agricultural
Residential
Industrial
Recreational or
Institutional purposes or any combination thereof but not limited to
Tourist resorts
Reclamation projects
 Building or housing projects whether for individual or condominium
ownership
 Memorial parks and
 Other of similar nature
3. Real Estate Developer – refers to any natural or judicial person engaged in the
business of developing real estate development project for his/her or its own
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account and offering it for sale or lease which is also registered and regulated
under PD957 as amended and BP220 governed by HLURB.
4. Land use – refers to those activities of man on, in, over and under the earth’s
surface that tend to change the nature state of land, embraces both uses that are
placed by nature and those introduced by man.
5. Comprehensive Land Use Plan (CLUP) – refers to a document embodying specific

proposals for guiding, regulating growth and development process like
demography, socio-economics, infrastructure and utilities, land use and local
administration within the territorial jurisdiction.
6. Urban Land/Area – refers to

a. all cities regardless of their population density and municipalities with a
population density of least 500 persons per square km.
b. a built environment, a human settlement with high degree of concentration of
population.
c. Serves as hubs of economic activities
d. Area with city/municipal boundaries that is served by infrastructure
e. An intensively developed area with a relatively large or dense population.
7. Rural Land – areas generally characterized by agricultural, timberland, open space
and very low density residential development.
8. Urban land use classification (Key: RICIPI)

a. Residential/housing or dwelling
b. Industrial (manufacturing, fabrication, chemical processing)
c. Commercial (Warehouse or retail trade)
d. Institutional (educational, religious, health, protective, government services)
e. Parks and Playground and other recreational spaces.
f. Infrastructure/Utilities (transportation, communication, power generating
stations)
9. Land subdivision of titled land may be done under the

a. Property Registration Decree (PD1529) and
b. Subdivision and Condominium Buyers Protective Decree (PD9577)
10. Power to approve subdivision plans was devolved to cities and municipalities by the
RA#7160-LGC. Land Use Allocation of both government held or privately owned
properties shall be undertaken by the LGUs as authorized by the LGC of 1991
(RA7160). Land use allocations are subject to the standard setting, review and
conflict resolution power of the HLURB.
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11. The CLUPs are required to be the primary and dominant bases for the future use of
land resources of which the requirements for food production, human settlements
and industrial expansion shall be of consideration.
12. Urban Development and Housing Act of 1992 (RA 7279) – refers to the law that
provides for a comprehensive urban and housing program in the Philippines.
13. Urban Land Reform Zones – a term used alternatively to refer to area for priority
development.
14. Land conversion from agricultural to other purposes/uses is effected thru the power
of the LGUs to reclassify lands exercised by passing an ordinance. The power to
reclassify lands shall be limited ranging from 5% to 15% of the total agricultural land
area at the time of the passage of the ordinance depending on whether the LGU is
highly urbanized and independent component city-15%, component city or 1 st to 3rd
class municipality-10% or 4th to 6th class municipality-5%.
15. Land Banking – refers to acquisition of land at valued based on existing use in
advance of the actual need to promote planned development and socialized housing
program.
16. Conditions for reclassification of agricultural lands

a. Land has ceased to be economically feasible and sound for agricultural
purpose or
b. Land shall have substantially greater economic value for residential,
commercial or industrial purposes as determined by the Local legislative
concerned.
17. Areas for priority development – refers to the 244 areas in Metro Manila specifically
described and identified in Proclamation 1967 and other sites later identified and
proclaimed.
18. Urban Land Reform zone – term used interchangeably or alternatively to refer to
areas for priority development.
19. Zoning Map – refers to a graphic presentation of the zone classifications, location,
boundaries of the district/zones duly established in the zoning ordinance.
20. Zoning Ordinance – means of exercising police power by the municipality or city in
regulating and controlling the character and use in property.
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21. Housing and Urban Development Coordinating Council (HUDCC) – body whose
main function is to coordinate activities of government housing agencies to ensure
accomplishment of National Shelter Program.
22. Housing and Urban Development Coordinating Council (HUDCC) – body whose
main function is to coordinate activities of government housing agencies to ensure
accomplishment of National Shelter Program.
23. Central Business District (CBD) – refers to areas designated principally for trade,
services and business purposes as used in the zoning ordinance.
24. Classification of R-1ina zoning area means low Density Residential Zone.
25. HLURB’s function in approving subdivision plans has been devolved to the LGUs
pursuant to the Local Government Code.
26. A parcel of land was located in a C-2 classified area which means Medium Density
Commercial Zone.
27. Administrative Code of 1987 (EO 292) empowers the President of the Philippines to
reserve for settlement or public use any of the lands of the lands of the public or
private domain.
28. Land Assembly or Consolidation – refers to the acquisition of lots of varying

ownership for the planned and rational development and socialized housing
programs either thru purchase or expropriation without individual property
restrictions.
29. On site development – refers to the process of upgrading and rehabilitation of

blighted or devastated and slum urban areas with a view of minimizing displacement
of dwellers thereof.
30. Land swapping – the process of land acquisition by exchanging land for another
piece of land or for sharers of stocks in Government Corporation of equal value for
the purpose of planned and rational development and provision of socialized
housing.
31. Professional squatters – referred to as individuals or groups who occupy land

without the express consent of the landowner and who have sufficient income for
legitimate housing.
32. Executive Order No. 72 – issued for the preparation and implementation of the
CLUP by the LGUs and for the review and approval of the CLUPs by HLURB and
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Sangguniang Panlalawigan. The Local Government Code (RA#7160) mandates all
LGUs on local planning, legislation, implementation including monitoring and
budgeting.
33. Land Use planning – refers to the national approach of allocating available land
resources as equitably as possible among competing user’s group.
34. 4 Major Land Use Policy Areas

 Settlements
 Protection
 Production
 Infrastructure
35. Planning Area – defined as cities/municipalities political boundaries including

component Barangays and the city or municipality waters extending three (3)
kilometers from the shorelines for costal LGUs.
36. Small property owner – refers to those whole only real property ownership consists
of residential lands in highly urbanized cities not exceeding three hundred (300)
square meters.
37. Squatting Syndicates – refers to groups of persons engaged in the business of

squatting housing for profit purposes.
38. Under RA7279, an urban area – refers to all cities regardless of their population
density and to municipalities with a population density of at least 500 persons per
square kilometer.
39. SHZ as used to classify land in a locality means Socialized Housing Zone.
40. Police Power is the legal basis for the local government units to zone areas.
41. Built-up area – defined as a contiguous grouping of 10 or more structures.
42. Conforming use – refers to the use of an area in accordance with the zoning.
43. Zoning – is primarily concern with the use of the land and control of density of
population thru imposition of building heights, open space and density provisions in
a given area.
44. Floor Area Ratio – refers to the ratio between the gross floor area of a building and
the area of the lot on which it stands.
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45. Conflicting Uses – refers to uses or land activities with contrasting or distinct
characteristics sited or located adjacent to each other i.e manufacturing plants and
residential.
46. Floor Area Ratio = Gross Floor Area of the building divided by area of the lot (FA% =
GFA of building/A of lot).
47. Compatible use – as defined in CLUP refers to uses or land activities capable of
existing together harmoniously i.e plaza in a residential area.
48. Rezoning – a process of introducing amendments to or a change in the maps or

transcript of a zoning ordinance.
49. A zoning classification of 1-2 meters to Medium Industrial zone.
50. In a high density residential zone, the number of dwelling units allowed would be 66
dwelling units or more per hectare.
51. Application for any exemption or modification of the zoning ordinance shall be filed
with Local Zoning Board and Adjustment Appeals (LZBAA).
52. An area within the city intended for regional shopping centers like large malls and
other commercial activities which are regional in scope is classified as High Density
Commercial Zone.
53. In a low Residential Density Zone, no building or structure for human occupancy
shall be higher than the grade line in the property or sidewalk by more than ten (10)
meters.
54. The Gross Floor Area of the building is defined as total floor space with the
perimeter of the permanent external walls.
55. Special Institutional Zone – refers an area within a city/municipality principally for
institutional establishment like home for the aged, etc.
56. The number of dwelling units in a Low Density Residential Zone which is principally
intended for housing/dwelling purposes should be twenty (20) dwelling units and
below.
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57. Buffer Area – refers to yards or open spaces intended to separate incompatible
uses/elements to control pollution or nuisance where no permanent structures are
allowed.
58. Locational Clearance – a clearance issued to a project in accordance with the

zoning ordinance.
Glossary of Real Estate Terminologies
A
1. Absolute Fee Simple Title – refers to a title that is unqualified it is best proof of real
property ownership free from all conditions, limitations, restrictions, liens and
encumbrances of any kind whatsoever.
2. Abstract of Title – a summary digest of the conveyance, transfer and any other facts
relied as evidence of title, together with any immediately due and payable upon the
happening of a certain event.
3. Acceleration of Clause – refers to a clause in a trust deed or mortgage giving the

lender the right to call all sums owing him to be immediately due and payable upon
the happening of a certain event.
4. Acceleration of Debt - the calling for immediately due of all future installment on a
debt because of a contractual default.
5. Acceptance – it is the whereby the seller or the principal’s agent agrees to the terms
and conditions of sale and approves the negotiations thereof and acknowledged
receipt of the deposit to subscribed the agreement of sale.
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6. Accretion – the act of gradually increasing a land area by a gradual deposit of solid
material through the movement of waters or the river’s current.
7. Accrued Depreciation – in appraisal, it the loss of utility that causes the value of a
property to be less than its acquisition cost or the reproduction cost for a new one.
8. Acknowledgment – a formal declaration before a Notary Public or duly authorized

officer by a person who executed an instrument acknowledging the execution thereof
to be his act and deed.
9. Acquisition – is the act of acquiring or procuring property by a person.
10. Acquisition Cost – the amount or cost of money or other valuable consideration
needed to obtain title to a property, it includes registration fees, transfer expenses,
documentary stamps, insurance, attorney’s fees, surveying fees and other cost
relative to the direct procurement of a property in addition to the purchase price.
11. Actual/Effective Age – refers to the number of years that elapsed since the structure’s
construction or building construction.
12. Actual Price – the contract price stated in the Sales Contract or the actual amount
paid for the sales transactions.
13. Actual Use – refers to the purpose for which the property is principally or
predominantly utilized by the person in possession thereof.
14. Ad Valorem – a form of tax according to valuation.
15. Adjustable Rate Mortgage (Arm) – used to describe any type of mortgage that does
not have a fixed rate for the term.
16. Adjustment for Financing Points – refers to the adjustments made by the Appraiser
based on the markets reactions. But not based on a straight “dollar for – dollar”
adjustment.
17. Administrator – a person appointed by the probate court to manage and settle the
estate of a decrease person who left no valid or a testator who has no executor, it
also refers to a person entrusted to administer the property in favor of another
person.
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18. Adverse Land Use – it means land use having an unfavorable effect on nearby
property, like: a junkyard in the minds of expensive country estates.
19. Adverse Possession – is a mode of acquiring title to land by having an open

notorious and uninterrupted possession thereto. It also refers to the right of an
occupant to obtain title of a land from the real owner without the owner consent,
where possession has been actual, hostile, visible, open and continuous for the
statutory period.
20. Affidavit – a sworn written statement or declaration.
21. Affirm – to confirm, ever ratify or verify
22. Affirm Judgment – it is when an appellate court ratifies and confirms the judgment,
decree or order of a lower court.
23. After Tax Cash Flow – means that net cash flow after deducting the tax payments.
24. Age-Life-Method – a method of computing depreciation based on the ratio of the

effective age as the projected economic life of the structure.
25. Agency – a legal relationship, whereby a person (the agent) acts for on in behalf of
another (the principal) with the latter’s authority.
26. Agent – is one who performs functions or who represents another from whom the
authority was granted.
27. Agreement of Sale or Contract of Sale – is a written agreement between the Seller
and the Buyer on the terms and conditions or the stipulations of the contract.
28. Agriculture – refers to the science and art of farming.
29. Air Rights – is the ownership right to the space, or a portion thereof above the
property. It also refers to the rights of the property owner to use, control or occupy the
air space over the property, subject to the aerial navigation and governmental
regulations.
30. Alienation – is the act of transferring property possessions from one person to
another.
31. Alluvion/Alluvium – refers to the land formed by the process of accretion.
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32. Amenities – in realty development, it is anything that adds to one’s comfort and
convenience. It also refers to tangible and intangible features that enhance or adds
value to a real estate.
33. Amenity – benefits or other attractions of property such a view, pride of ownership,
fireplace and others.
34. Amortization – refers to the liquidation of a financial obligation by installment

payments wherein the principal sum of the debt is reduced over its life. It is also a
systematic reduction of the principal balance of a loan.
35. Amortization Rate – is the ratio or percentage to be applied to loan payment for the
reduction of the principal balance.
36. Amortization Term – is the period of time needed to fully pay the principal amount of
the loan.
37. Anchor Tenant – a major tenant in a retail property, who serves as a magnet in
attracting customers.
38. Annual Debt Service – the total yearly payments on a loan.

39. Annualized Square Foot Rent – the annual rent divided by the total area.
40. Annuity – is a yearly payment of a sum of money chargeable to the land or other
property charge. It is the present value of a series of equal payments made at fixed
intervals over a fixed period of time.
41. Antichresis – is an accessory contract, whereby the right to receive the fruits over the
debtor’s property is given to the creditor with the obligation to apply the proceeds of
sales thereof to the payment of the interest and thereafter to the principal obligation.
42. Anticipation Principle – the principal holding which value is determined by the present
worth of benefits and what one expects to receive in the superior court to review the
case and correct or reverse it.
43. Appeal – the bringing of the case from an inferior court to a higher court alleging
commissions of error or injustice and asking the superior court to review thereof and
correct or reverse it.
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44. Appreciation – refers to the increase in value due to economic causes or inflation. It is
also a temporary or permanent increase in the property value due to the economic
causes. It is the opposite of depreciation.
45. Appurtenance – it is something annexed to another thing which may be transferred

incidental to it. It is also a property right which is attached to the property that will go
with the title thereto such as: easement, barn, garage, orchard, etc. it is also define
as the incidental rights and interest to the land and its improvements.
46. Arms-length transaction a transaction between parties who are knowledgeable =,

capable and not under pressure.
47. Assessed Valuation – a valuation placed upon property by a public officer or board,
as a basis for taxation.
48. Assessed Value – the value placed on taxable property by the Assessor for ad
valorem tax purposes or as a basis for taxation.
49. Assessment – the act or process of determining the value of a property or proportions
thereof, subject to tax including the discovery, listing and appraisal of properties. It is
also the determination by the government on the value of the property for taxation
purposes.
50. Assessment Level – is the percentage to the fair market value (FMV) to determine
the taxable or assessment or assessed value of the property.
51. Assessor – the official who has the responsibility of determining assessed value of
real properties.
52. Asset – property that is owned and has value
53. Asset Valuation – valuation of land, buildings, plant, equipment and machinery
generally for incorporation into business accounts.
54. Assigns or Assignee – one to whom property is assigned or transferred, also a

person empowered to act for another.
55. Assignment – is the transfer of any property or property right to another either real or
personal property.
56. Assignor – one who assigns or transfers property
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57. Assumed Mortgage – is an existing mortgage whereby a property buyer assumes the
obligation of paying the mortgage.
58. Assumption of Mortgage – the taking of title to a property by a grantee, who assumes
liability for payment of an existing note secured by a mortgage or deed of trust overt
the property and becoming a co-guarantor for the payment thereof.
59. Attachment – is the seizure of property by court order to satisfy judgment for the
settlement of debt.
60. Attorney-In-Fact – one who is authorized to perform certain acts in behalf of another
under a power of attorney either limited to specific act(s) or general.
61. Authority to Sell/Authority to Negotiate for Sale – is a listing contract between the
seller and the broker to produce a buyer for the property.
62. Automatic Redemption Clause – is a stipulation in a blanket mortgage which provide

that when a buyer of one or more lots pays in full the purchase price, part of the
payment shall be applied to the mortgage obligations and correspondingly, the
mortgage shall release the said lot(s) from the mortgage.
63. Avulsion – is the sudden loss or removal of land by the action of water flowing over it.
This is the opposite of accretion. It also refers to the abrupt loss of land from the
property owner to that of another.
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64. Backfill – is the replacement of excavated earth in a hole or against a structure.
65. Balance Principle – the principal that holds that value is educated to the amount and
utility of real estate.
66. Balloon Payment – is a term used when the final installment payment of a note is
greater than the preceding installment payments and it pays the note in full.
67. Base and Meridian – is the imaginary lines used by surveyors to find and describe the
location of both private and public lands.
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68. Base Line – a horizontal line measured with special accuracy to provide a base for
survey by triangulation. It is also an imaginary line through the initial point of a
principal meridian used to establish the location of township lines in the government
survey system.
69. Bench Marks – refers to the durable markers used by surveyors to mark boundary
locations.
70. Beneficiary – the person designated to receive the benefit of some transactions, like:
trust, the proceeds of a life or accident insurance policy, etc.
71. Bequeath – to give, to hand down or leave by a will, given by the terms of the will.
72. Betterment – an improvement that adds to the value of real estate, such as
sidewalks, sewerage’s, etc.
73. Bill of Sale – a formal document used to transfer title of a personal property.
74. Binder – an agreement of earnest money deposited for the purchase of real estate as
evidence of good faith on the property of the buyer.
75. Blanket Mortgage – is a single mortgage covering more than one piece of real estate.
76. Blighted Area – is a declining area which a real property value is seriously affected by
destruction of economic forces, such as: encroachment in harmonious usages,
infiltration of lower social and economic classes of inhabitants, rapidly depreciating
buildings, etc.
77. Bonafide – refers to legitimacy in good faith and without fraud.
78. Book Value – is the worth of a property as reflected in the financial report.
79. Breach – is the breaking of a law or failure of duty either by omission or by

commission, such as breach of peace, breach of contract, breach of trust, etc.
80. Buffer Strip – a strip of land located between two types of land use areas, i.e
separation between residential and industrial. Often, this parcel is unimproved except
for landscaping and its primary function is to lessen friction resulting from two
incompatible or inharmonious land uses.
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81. Building Code – is a local rule regulating the construction of buildings. It also refers to
ordinance passed by local government units setting minimum standards for real
estate improvements.
82. Building Efficiency – refers to the ratio of rentable space to gross building area.
83. Building Line – a line established by law at a certain distance from a street line or
from the front and sides of a lot beyond which no building can project. It is also called
as setback lines.
84. Bundle of Permit – a document issued within certain jurisdiction granting permission
to build or construct a structure on a particular location or site.
85. Bundle of Rights – the collection of rights usually found in ownership of real estate,
including rights to possess, use, quiet enjoyment, and sale of the property.
86. Business Valuation – the act or process of arriving at an opinion or estimation of the
value of a business or entity or an interest therein.
87. Business Valuer/Appraiser – a person who by education, training and experience is

qualified to perform a valuation of a business, business ownership interest, security
and/or intangible assets.
88. Cap Rate – a rate used to convert an income stream into value.
89. Capricious Value – value estimate derived by observing completed transactions

involving a large degree or amenities or other personal and unpredictable factors.
90. Capital Gains – is the amount of net proceeds from the sale of capital asset that
exceeds its book value. It is also the profits resulting in the sale of capital investment,
such as: stocks, real estate, etc. which are taxed as income.
91. Capitalization – in appraisal, it is the process of determining the present value of

property by dividing the net income by the capitalization rate to arrive at an estimate
of the present worth of expected future incomes.
92. Capitalization Rate – a reasonable percentage rate or return based on net income.
The capitalization rate is used to determine value.
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93. Cash flow – refers to the cash remaining in a business after all operating expenses
and debt services have been paid out, but no the income taxes and deductions for
depreciation yet.
94. Cash Flow Analysis – a study of the anticipated movement of cash inflows and
outflows of an investment.
95. Caveat – is a notice or warning not proceed and not to do an act.
96. Caveat Emptor – means let the buyer beware, hence, he should examine the
properties as he is buying at his own risk.
97. Cease and Desist Order – an order from a government authority directing a person
violating the law to refrain from performing further act or continuance of an existing
act(s).
98. Certificate Of Title – is the transcript of the decree of registration made by the
Register of Deeds in the Registry in favor of a person signifying ownership of
property.
99. Chain of Title – a history of conveyances, encumbrances and other transactions and
documents affecting a title from the time the original patent was granted or as far
back as records are available.
100. Chattel – refers to the personal property or any item both movable and immovable
which are not real property.
101. Chattel Mortgage – refers to the mortgage of personal property.
102. Clear Height – from the floor to lower surface of roof that supports the beams.
103. Clear, Free and unencumbered – a legal expression which means that a property
is free from any liens or claims against it.
104. Client – refers to any party for whom an appraiser or any professional performs a
service.
105. Closed Mortgage – is a mortgage which cannot be paid until its maturity or unless
the creditor consents to earlier payment.
106. Closed-End Mortgage – refers to a mortgage that no provision of increasing the

balance. It is the opposite of open-end mortgage.
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107. Cloud on the Title – an outstanding claim or encumbrance revealed by a title
search which is actually invalid or inoperative, but affects or impairs the owner’s title
to a property unless removed by a quit-claim or court action.
108. Collateral Security – a separate obligation attached to a contract to guarantee its

performance, such as the transfer of property or other contracts or valuables to insure
the performance of a principal agreement.
109. Collusion – is an agreement between two or more persons to defraud another of

his rights or to obtain an object forbidden by law.
110. Color or Title – is one which appears to be a good title but which is not a title in
fact.
111. Commercial Paper – bills of exchange used in commercial trade.
112. Commission – an agent’s compensation for performing the duties of his agency; in
real estate practice, a percentage of the selling price of property, percentage of
rentals, etc.
113. Commitment – refers to a pledge, promise or firm agreement.
114. Common Areas – is area set aside in a particular development for the enjoyment
and utilization of all the property owners which area is often improved as recreational
facilities.
115. Common law – is the body of law created by the positive declaration of the
legislature, or by custom and decided cases rather than from codified law.
116. Community or Conjugal Property – refers to the properties accumulated through

the joint efforts of a husband and wife living together.
117. Compaction – a process of tamping down loose and soft soil, usually added to fill-
in low places or to raise it level in order to compress or condense it to carry the
weight of any structure that will be built on top.
118. Comparable Interest – refers to comparison of properties that are of similar nature.
119. Component Value – value of those components, created by the separation of

property interest.
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120. Condemnation – is the act of the government of taking private property for public
use in the exercise of eminent domain power.
121. Conditional Sale – refers to the sale where delivery is made to the buyer however
title thereto remains in the seller until the fulfillment of the agreed condition(s).
122. Conditional Sale Contract – is a contract for the sale of the property stipulating that
delivery of the subject property can be made to the buyer, but title thereof shall
remain with seller until the fulfillment of the condition of the contract.
123. Consideration – the material cause which moves or induces the contracting party
to enter into a contract, the price that the buyers pays in buying the property and the
seller is willing to accept.
124. Constructive Notice – is an information or notice given by the public records.
125. Consulting – the act of providing realty information, analysis of realty data,
conclusions and recommendation on diversified realty problems other than estimating
the value.
126. Contract Rent – the rent for the lease of property as stipulated by the lessor and
the lessee.
127. Conversion – is a change from one character to another.
128. Conveyance – is the transfer of a property from one another. It denotes an

instrument by which the transfer is made.
129. Corner Influence – the added desirability or utility of a property due to its frontage
to two streets, which provides better ventilation for residential purposes, easier
accessibility and more commercial and industrial utilization.
130. Corner Lots – refers to the lot with two streets in front of it. It is more valuable than
interior lots.
131. Corporation – is a creature of law, having certain powers and duties of a natural
person. Having been created by law, it may continue for any length of time as the law
prescribed.
132. Corporeal – is a tangible real estate like: land and buildings.
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133. Correlation – refers to the bringing into a mutual relation with another thing and the
showing of their relationship.
134. Covered Parking – refers to the garages, carports, or underground parking

facilities.
135. Cross-Examination – the examination of a witness in a disposition or trial by the

opposing party to the one who produces him/her following the direct examination for
the purpose of testing its truth and for impeachment of the witness.
136. Curable Depreciation – is a depreciation that may be corrected at a cost less than
its contributory value.
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137. Debt Service – is the payment of principal and interest for a loan.
138. Deed – a legal instrument being executed and delivered that conveys an estate or
an interest thereof.
139. Deed of Trust – is a mortgage instrument where a third party called trustee holds
title to the real estate for the benefit of a lender.
140. Default – refers to a failure for the fulfillment of a contractual obligation.
141. Deferred Maintenance – means a postponement of a repair or rehabilitation.
142. Deponent – a person who testifies under oath, which testimony is reduced to a
written record called transcript at a formal hearing called a deposition.
143. Descent – is the transfer of property at death in the absence of a will.
144. Devise – an act of transferring a property at death by means of a will.
145. Diminishing Returns – point at which returns fail to increase in proportion to

increased investments.
146. Direct Capitalization – value income of a property based on one-year income

stream.
147. Direct Examination – the first examination of a witness is court by the party on
whose behalf the witness was called.
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148. Disclaimer – is a denial of any interest or agreement.
149. Discount Points – a fee charged by lenders when the loan is made to increase the
yield. Each one-percent of the loan is termed a “point”.
150. Discounting – a converting future cash flows worth of a future income stream.
151. Discovery – is a legal process and techniques by which one party to a lawsuit
obtains information from the adverse party.
152. Documentation – a written evidence of the facts contain.
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153. Easement – is a right, privilege or interest to a specific purpose that one party has
in the land of another.
154. Economic Rent – the rental of property should receive by the property condition, in
contrast to its calendar age.
155. Effective Gross Income – is the potential gross income/receipts less allowance for
vacancies and collection losses.
156. Effective Monthly Rate – the sum of the number of month’s rent actually paid
multiplied by the price per square foot, divided by the number of months’ rent due
under the lease (nominal rent).
157. Eminent Domain – is a legal act of the government power to acquire private
property for public use after paying just compensation. It is sovereign power of the
State to acquire or appropriate private property for public use with just compensation.
158. Emptio Spei – the sale of hope or expectation.
159. Encroachment – is an unlawful intrusion of another adjacent property. Any

extension over one’s property line which intrudes or invades in a highway or
sidewalk; the building of structure or construction of any improvement partly or wholly
on the property of another; trespass upon property of another.
160. Encumbrance – is a lien, charge, claim or any restriction attached to and binding
upon real property which lessens or limits its value. Liens are money encumbrances
which make the property as a security for the payments of an obligation, such as:
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mortgages, or taxes. Anything which affects or limits the fee simple title to a property,
such in the case of easement, right of way, mortgages or restrictions of any kind. Any
claim, lien, charge, or liability attach to and binding on real property which may lessen
its value, or burden, obstruct, or impair the use of a property but not necessarily
prevent transfer of title, a right or interest in a property held by one who is not the
legal owner of the property.
161. Equity – is the interest or value which an owner has in real estate over and above
the liens against it.
162. Equity (Dividend) Or Equity Cash Flow – it is the Net Operating Income minus the
annual debt services.
163. Equity Dividend Rate - the sum of the Net Operating Income minus the annual debt
services, divided by the equity (down payment).
164. Equity of Redemption – is the right to redeem property during the foreclosure
period. In judicial, the mortgagor’s right to stop the auction sale of his mortgaged
property by paying the mortgage obligation within 90 days from receipt of the Court’s
judgment or even thereafter provided payment is made before the foreclosure sale is
confirmed by the Court.
165. Erosion – is the wearing a way of lands by the action of the water or wind.
166. Escalation/Escalator Clause – a clause in a contract which provides for increase or

decreases in certain items to cover unpredictable changes, like: adjustments in tax
rates or operating costs or to cover specified contingencies. When applied to
interests, it should be coupled with a de-escalation provision. An agreement in a
lease contract allowing for increases in rent based on some event.
167. Escheat – a written agreement which places the property to the care of a third
party (escrow agent) and not be put into effect any agreement until certain conditions
are fulfilled. Is the revision to the estate of a deceased person when there is no valid
will and there is no longer heir.
168. Escrow – money, document or any item delivered to a neutral person to be held by
him, and transferred to the grantees only upon the fulfillment of a specified precedent
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condition. It also refers to the deposit of instrument and funds with instructions to a
third neutral party to carry out the provisions of an agreement or contract.
169. Estimate – is an opinion of a competent person based on analysis of data.
170. Estoppel – a legal prevention whereby a party who by his own intentional or
deliberate declaration, act or omission prompted another to believe a particular thing
to be true and made that person act on the faith of such representation, cannot latter
on be permitted to falsify such declaration, act or omission.
171. Evaluation – is a study of the nature, qualify or utility of a parcel of real estate or
interest in real property.
172. Eviction – is the act of depriving a person of his possession in a real property by a
process of law and in pursuance of a court order.
173. Exclusive Agency Listing – is a written instrument giving one agent the right to sell
property for a specified time.
174. Exclusive Right to Sell Listing – a written agreement an owner and an agent giving
the agent the right to collect a commission even of the property is sold by the owner
himself or by anyone other than broker during the term of the agreement.
175. Execute – to complete, to make, to do, follow up. To execute a deed is to make a
deed, including the signing, selling, and delivering. To execute a contract is to
perform the stipulations thereto, to follow out, to end and to complete.
176. Executor – the person named in a will with authority to carry out its provisions.
177. Expert Witness – a person possessing training, education and experience in a
specialized field or profession who testifies in deposition or at the lawsuit
proceedings.
178. External Obsolescence or Economic Obsolescence – is loss in the use or value of

property arising from external factors, surroundings land uses or environmental force.
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179. Factor – is the reciprocal (one divided by a number) of a given rate.
180. Feasibility Analysis – is a study of a cost-benefit relationship of an economic

endeavor.
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181. Feasibility Study – refers to the study or analysis of a proposed a project property
with emphasis on it attainable revenue, it probable expenses, its advantageous
usage and design. It is often used by developers to entice investors to put money for
a proposed development. Such a study is required by some mortgage investors and
lending institutions prior to granting a loan commitment.
182. Fee simple – in modern estates, the term “FEE” and “FEE SIMPLE” are
substantially synonymous. “Fee Simple Absolute” is an estate in real property by
which the owner has the greatest power over the title which is possible to have, being
an absolute estate. In modern use, it is expressly established as the little of real
property in the owner, without limitations. With Fee Simple, the owner may dispose
the property by sale, trade, or will. It is an absolute ownership of realty free from all
conditions, limitations or end.
183. Fee Simple Estate – is the greatest interest one can have in real property. An
estate that is unqualified, with indefinite duration, freely transferable and inheritable.
184. Fiduciary – is a person in a position of a trust and confidence. In real estate, the
principal and the broker has a fiduciary relationship under the rule of agency.
185. Fixtures – appurtenances attached to the land or improvements which usually

cannot be removed without agreement, since it became part of the real property.
Example: Plumbing fixtures, store built into the property, etc..
186. Foreclosure – is the legal procedure where a property pledge as security for a debt
is sold to at public auction and the proceeds thereof shall be applied as payment of
debt.
187. Forfeiture – is the loss of money or anything of value, due to failure to perform an
agreement of purchase or sale.
188. Fractional Appraisal – is an appraisal of portion of fractional interest in real estate.
189. Fraud – the international and successful employment of cunning, deception or

artifice used to deceive or cheat person who acted in good faith, which resulted to
loss or injury.
190. Freehold Estate – is an estate in land held for life or with the right to pass it on
through inheritance.
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191. Frontage – refers to the length of a property, abutting a street, with few numbers of
feet that fronts the street. Frontage differs from width which sometimes decreases or
increases as the lot extends back from the street.
192. Functional Obsolescence – is the loss of value because of changes in market

standard and outmoded characteristics of the property.
193. General Warranty Deed – a conveyance containing the grantor’s full warranty of
good title promising to warrant and defend forever the title conveyed against the
lawful claims of all persons whatsoever. A deed carrying the seller’s warranty that title
is good in fee, that it is free and clear of all liens and encumbrances, and giving that
grantor’s assurance that he will defend the title against the claims of all persons.
194. Gift Deed – a deed where there is no material cause but the only consideration is
love and affection.
195. Grantee – is the buyer who by means of a deed, receives title or takes title to
property. Is a person receiving title in deed, usually the owner-seller.
196. Grantor – is a person who conveys title of a property to another person (grantee)
by means of a written agreement.
197. Gross Income Multiplier (GIM) – a figure or ratio computed by dividing the annual
gross income of a rental property into the sales price. This figure, when multiplied by
gross income, can be useful in estimating market value of unsold real properties. Is
the result of dividing the sales price by the annual gross income.
198. Gross Rent Multiplier (GRM) – is the result of dividing the sales price by the
monthly gross rent.
199. Ground Floor Building Area – is the first floor square footage or the building
“footprint”.
200. Ground Rent – refers to the net earnings of an improved property after deducted
the direct expenses thereof. This is also called as an economic rent.
H
201. Habendum Clause – is the “to have and to hold” clause of a deed which defines or
limits the estate granted.
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202. Hereditaments – the largest and most inclusive classification of property which
includes any and all real or personal property, or property rights, tangible or
intangible, practically anything and everything capable of being inherited. This term is
now without legal importance.
203. Hold-Over Clause – a provision in a listing agreement which entitles the broker to
receive the commission even if the sale is closed after the period of authority,
provided that he/she has negotiated with said buyer and has given notice to the seller
during the period of his authority.
204. Homestead – is the house and lot that constitute family residence.
205. Homestead Exemption – the law exempting a homestead from seizure or forced
sale to meet debts but excluding valid mortgages and tax liens.
206. Hypothecate – to pledge a property to another as security of the mortgage. To give

something as security without the necessity of giving up its possession.
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207. Impound – funds or payments taken from a mortgagor and held by a lender or
fiduciary for purpose of paying property taxes, assessment and insurance. The
money can be withheld from the mortgage payments to further protect the mortgagee
against adverse claims and increased risk resulting from non-payment of taxes or
insurance.
208. Improved Land – land or which construction or development work has been
initiated or completed. The term can also be applied to land improved by roads,
sewage and water lines, shell cabins, houses, outbuildings, etc.
209. Improvements – is a change or addition to land or real property to make it more

valuable, example: sewer, fence, roads, etc. it also refers to buildings, structures and
other things permanently attached to the land.
210. Inchoate – meaning not yet completed or still imperfect, e.g., contracts are
inchoate until executed by all the parties who should join the execution.
211. Income Approach – an approach to valuation of property based on concept that

value is relative to income. It refers to the reliance of the analysis, which converts
anticipated earnings to derive from the ownership of the property into value estimate.
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212. Income to Expense Ratio – refers to the percentage of income after the expenses
is divided by gross income.
213. Incompetent – not capable, e. g. any insane person or thought not insane, by
reason of old age, disease, weakness of mind or any other cause is unable, if
unassisted to take care of himself or manage and take proper care of his property
and by reason thereof will be likely to be deceived by unscrupulous persons.
214. Incorporeal – is an intangible and opposite of corporeal.
215. Indorsement – is the act of signing one’s name on the back of a check or a note,
with or without further qualification.
216. Inheritance – is a legacy, bequest, or something inherited.
217. Injunction – is a writ or court order that either prohibits a person or groups from
carrying out an action or orders an action to be done.
218. Installment Note – refers to a note that provides an installment payment of a

particular sum of money to be paid on a specified dates.
219. Instrument – a sworn written document created to affect the rights of the parties,
like: contract of sale, lease, deed, will, etc.
220. Interest – is the forbearance of money for its use.

221. Internal Rate of Return (IRR) – the rate at which discounted return equals the cost
of the investment. The discount rate at which a series of cash flows equals the
amount of the original investment or project anticipated, defending on the market.
222. Intestate – is one whereby the decedents have no will or having made a will which
is defective in form.
223. Investment Analysis – is a study that reflects the relationship between acquisition
price and anticipated future benefits of real estate investments.
224. Investment Value – it relates to the individual investor and considers the value of
property, financing terms, and potential future uses and value.
225. Involuntary Lien – is a lien imposed upon a property without the owner’s consent,
like: taxes, special assessment, etc.
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226. Irrevocable – means it is incapable of being recalled or revoked.
227. Joint Note – a note signed by two or more persons who have equal liability for
payment.
228. Joint Tenancy – joint ownership by two or more persons with the right of
survivorship, all joint tenants own equal interest and have equal rights in the property.
229. Judgment – the official and authentic decision of a court, determination the rights
and claims of each party to the lawsuit submitted for its determination.
230. Judgment Lien – Is a lien on property resulting from a court decree in favor of a
creditor or another person.
231. Judgment – the final determination of a court of competent jurisdiction on matters

presented to it, money judgments that provides for the payment of claims as
presented to the court or is award of damages, etc.
232. Junior Mortgage – is a mortgage second in lien to a previous mortgage.
233. Jurisdiction – is territorial area which is controlled by laws or courts. It is the

authority by which judicial officers take cognizance and decide cases. It is right and
power which a judicial officer has to enter upon the inquiry for the determination of a
case.
K
234. Key Lot – is a lot adjoining a corner, at the right angle to it and fronting the
intersecting streets.
L
235. Laches – is the unreasonable delay or negligence in asserting one’s legal rights
which serves to lose those rights.
236. Land – refers to the earth’s surface, the natural growth and timber attached to it
and the mineral beneath it.
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237. Land Contract – a contract ordinarily used in connection with the sale of property in
cases where the seller does not wish to convey title until all or certain part of the
purchase price is paid by the buyer, often used when the property is sold on a small
down payment. It is contract of a real property financed by the seller, without giving
the title thereof until all payments are completely made.
238. Land Developer – refers to the person who develops or improves the subdivision
project or condominium project for and in behalf of the owner or as owner thereof.
239. Land Owner- refers to the registered owner of the land.
240. Lands, Tenements and Hereditaments – is a purchase used in early in English law
to express all sort of property of the immovable class. At present, it refers to the real
estate with all fixed improvements therein.
241. Lease Contract – is a contract between the lessor and the lessee of a property.
242. Leasehold – is the interest or estate which a lessee has over a real estate by virtue
of the lease.
243. Legal Description – is the description by which a property can be definitely be

located by a government and approved recorded maps.
244. Lessee – a tenant or one who contracts to rent a property under a lease contract.
A person to whom a property is leased.
245. Lessor – is the owner who enters into a lease with a tenant. It is landlord. He is the
person who provides the lease property.
246. Level One Inspection – an inspection of real estate and improvements using only
the senses (Sight, smell feel) for a evidence of environmental hazards.
247. Leverage – a means of obtaining a potentially greater rate of return on capital

investment through the use of borrowed funds. When purchasing real property,
greater leverage is obtained when there is a comparatively low down-payment
relative to loan size.
248. Lien – is a claim of a person upon the property of another as security for the
payment of obligation or debt.
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249. Life Estate – an estate or interest in property held during the life of a specified
natural person.
250. Like-Kind Properties – the term is used to describe properties that can be
exchanged or traded to gain exemption from capital gains taxation. It includes all
kinds of real estate except the one owned by a dealer.
251. Liquidation Value – refers to an amount that would be realized from disposition of
the property in the used market assuming for a relative short period of time.
252. Lis Pendens – literally, a pending suit. It is an annotation in the record of property
title that serves as a warning that one who acquires an interest over said property
does so at risk or subject to the eventually of the litigation.
253. Listing – is an agreement between the property owner and the agent for the latter
to negotiate the property sale at stated rate of commission.
254. Litigation – is the act of carrying a lawsuit.
255. Loan to Value Ratio (LTV) – is the relationship between the amount borrowed and
the appraised value of the property.
256. Lock-in Period – is a length of time during which prepayment on a note is not
allowed by the Lender. During the period, a borrower is prohibited from selling or
transferring the property secured by the note.
M
257. Marginal Land – is land which barely pays the cost working on it or using it.
258. Market Analysis – is a study of real estate market conditions for a specific type of
property.
259. Market Price – the price actually paid or the amount received by the seller for his
property regardless of outside pressures or influence.
260. Marketable Title – is a title free and clear of objectionable liens or encumbrances.
261. Mass Appraisal – is the process of valuing an inverse of properties at a given date
and allowing for statistical testing.
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262. Mass Appraisal Model – a mathematical expression of how supply and demand
factors inter-act in a market.
263. Master Plan – is a basic comprehensive plan for dealing with the effects on a
community of social and economic changes. It is an incorporated plan of ways and
means of adjusting to the changing situation based on the phase of time. It is a
comprehensive plan to guide the long-term physical development of a particular area
or of a particular realty project.
264. Matched Fair – two recently sold properties selected for their similarities, which
may be compared to determine the value of dissimilarities.
265. Material Fact – a fact is material if it one which the agent should realize would be
likely to affect the judgment of the principal in giving his consent to the agent to enter
into the particular transaction on the specified terms.
266. Mechanics Liens – a lien created by law which exists in favor of persons who have
performed services or furnished materials in the erection or repair of the building.
267. Metes and Bounds – is the measurements and boundaries. A method of legally
describing land setting forth all boundary lines together with their directions,
distances, terminal points and angles.
268. Monument – is a fixed object and point established by surveyors to establish and
location.
269. Moratorium – is the temporary suspension, usually by statute, of the enforcement
of liability for debt.
270. Mortgage – a contract by which the debtor guarantees to the creditor the fulfillment
of a principal obligation, subject for the faithful compliance with a real property in case
of non-fulfillment of the said obligation at the stipulated time.
271. Mortgage Contract – is the legal documents that pledges the property of borrower
(mortgagor) to a creditor-lender (mortgagee) as security for the payment of a debt or
loan.
272. Mortgagee – is the creditor to whom a property is pledged or encumbered as

security for a loan granted
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273. Mortgagor – is the debtor who owns a property and encumbers it (to the
mortgagee) as security of a granted loan.
274. Multiple Listing – a written agreement (usually an Exclusive Right to Sell) between
a broker and his client being placed in a pool of listings on arrangement among
association members and if sold, the professional fee/commission will be divided
between the listing broker and the selling broker giving a portion of the professional
fee/commission to the association.
275. Negative Cash Flow – it would exist if debt service exceeds the Net Operating
income.
276. Negotiable – is capable of being negotiated, assign or transferred in the ordinary

course of business.
277. Net Lease – is a lease where the tenant pays certain operating and maintenance
expenses in addition to rent.
278. Net Listing – a listing where the owner will dell his property not less than the price
given at which instance the broker will not receive any commission but may retain a
compensation for the services rendered.
279. Net Operating Income (NOI) – net income derived from gross income after
deducting the property operating expenses and reserves or all expenses.
280. Non-Recourse Note – a note signed by the debtor that does not carry any personal
responsibility in case of default. When this note is secured by real estate, the property
becomes the sole security for the debt.
281. Note – a signed written instrument acknowledging a debt and promising payment
thereof. It is a promissory note or a written promise to pay a certain sum of money to
the order of a certain person or to bearer on demand or on a specified date.
282. Notice To Quit – a notice to tenant(s) to vacate the rented property.

O
283. Obsolescence – is a loss in value due to reduced desirability and usefulness of a

structure because of obsolete design and construction or of becoming old-fashioned
and not keeping with modern needs with the consequent loss of income.
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284. Offset Statement – a statement by the property owner or the owner of a lien
against a property, setting forth the present status of liens against said property.
285. Open Listing – is a non-exclusive an authorized given by a property owner to a real

estate agent for the sale of the property. It also refers to a listing given to more than
one broker/agent without liability to compensate anyone; except, the one who was
able to perfect or consummate the sale.
286. Open Mortgage – a mortgage that can be paid any time even before its maturity.
287. Open-End Loan – a secured loan that promise the borrower to obtain additional
sums of money at any time; hence, allowing a continuous source of credit.
288. Open-End Mortgage – is a mortgage containing a clause which permits the

mortgagor to borrow additional money after the loan has been reduced, without
rewriting the mortgage.
289. Option – is a right given for a consideration to purchase or lease a property upon
specified terms within a specified time.
290. Oral Contract – is a verbal agreement or one which is not reduced to writing.
291. Ordinance – is a local government statue or regulation, such as: zoning ordinance.
292. Over Improvement – an improvement which is not suitable to the site where it is
placed due to excessive size or costs.
293. Ownership – refers to the right by which a property belongs at the exclusions of all
other persons.
P
294. Pacto De Retro Sale – is a sale with right to repurchase the property within a fixed
period.
295. Pactum Commission – an agreement of forfeiture. It is also an agreement giving

the creditor the power to appropriate the security without going to the formality of
foreclosure proceedings and public sale because of non-fulfillment of an obligation.
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296. Pactum De Non Aliendo – a stipulation in a mortgage by which the mortgagor
agrees not to alienate or encumber the mortgaged property at the prejudice of the
mortgagee.
297. Par Value – refers to the market value or nominal value.
298. Partition – is the legal process of dividing property and giving separate titles to the
respective owners whose title is in common.
299. Partnership – by the contract of partnership two or more persons bind themselves
to contribute money, property, or industry to a common fund, with the intention of
dividing the profits among themselves.
300. Party Wall – a wall erected on the line between two adjoining lots owned by both
parties and used by each for his own benefit.
301. Patent – refers to a conveyance of title of a government land.
302. Percentage Lease – a lease of property in which the rental is based upon the
volume of sales made of the leased property.
303. Performance Bond – is a kind of insurance required for the performance of an

agreed tasks as provided in the terms of the contract.
304. Perimeter – is the outer boundary of an area.

305. Personal Property – identifiable, portable and tangible objects which are
considered by the general public as being “personal” e.g., furnishing artworks,
antiques, gems and jewelry, collectibles, machinery and equipment or all properties
not classified as real estate.
306. Physical Depreciation – is the loss in value due to impairment of physical condition.
307. Planning Board – a group of people, generally appointed by elected officials who
are responsible for the preparation and adoption of measures dealing with the orderly
development of land within its jurisdiction.
308. Plans and Specification – Plans includes all the drawings pertaining to the
development under consideration like: the building, the mechanical and the electrical
drawings and the like. Specification includes the written instructions, workmanship,
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style, fabrication, colors and finishes which supplement the details appearing on the
working drawings.
309. Plat – a map or plan (usually a survey) of a piece of land showing divisions (into
lots) of property lines, easements, etc. and entered into the public records.
310. Plottage – is the total value which a large parcel of land enjoys over and above the
sum of the value of the lots, if standing individually.
311. Police Power – is the right of the state to enact laws and enforce them for the
order, safety, health, morals, and general welfare of the public.
312. Population Density – refers to a term relating to the average number of permanent
residents within a given area, such as per square mile.
313. Power Of Attorney – is the written instrument by which the authority of another as
his attorney-in-fact is set forth. It may be limited to specific act(s) or may be general.
A written instruments authorizing a person, mentioned as the attorney-in-fact to act
as the agent in behalf of another to the extent indicated in the instrument.
314. Power of Sale – is an authority given to the mortgagee for the right to sell the
mortgaged property upon default by the mortgagor without any subsequent right of
redemption
315. Preliminary Plats – refers to a tentative map of a subdivision submitted by a

developer to local planning officials for study and approval.
316. Prepayments Clause – refers to a provision in a loan contract that allows the
borrower to prepay the debt under certain conditions. If this clause is described as
“prepayment privilege” then there is no penalty for early payments. But if the debts
contract contains a “prepayment penalty” the borrower must pay a fee for the right to
prepay.
317. Prescription – is the mode of acquiring title by actual use which has been open,
notoriously hostile to the legal owner, and continuous for the statutory period of 10 or
30 years.
318. Price Per Square Foot – is the product of dividing the total price by the total area.
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319. Prima Facie Evidence – refers to evidence which is presumptive on its face. It is
one which is sufficient in law and in substance of an established a facts, unless
rebutted.
320. Principal – is the employer of an agent. It refers to the capital amount of a loan or
investment.
321. Privity – a mutual relationship to the same property rights of a contractual

relationship.
322. Probate – is a proceeding of a probate court on the will of the Testator relative to
matters on the registration and certification of a will, the administration of estates and
the guardianship of minors and incompetents, etc.
323. Procuring Cause – is the act of a broker leading to the meetings of minds between
the parties to a transaction for the consummation of a transaction
324. Professional – is an individual that engaged in an occupation with high standards.
325. Progression Principle – is the association of a property with inferior properties that
will tend to lower the value of the former.
326. Property – any project of value that a person may lawfully acquire and hold. It may
either real or personal property.
327. Proration of Taxes – is to divide or share the taxes equally or proportionately.
328. Proximate Cause – that cause which is natural and continuous sequence,
unbroken by any new cause, produced an event, without which such event would not
have happened.
329. Public Instrument – any document notarized by a notary public or by a competent
public official with all the solemnities required by law.
330. Purchase Money Mortgage – a mortgage given as part of all of the purchase
consideration for the property bought. It is a mortgage given by a buyer to the seller
as partial payment of the purchase price of real estate.
331. Purchase Money Or Trust Deed – is a trust deed or mortgage given as part of call
of the purchase consideration for the property
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332. Purchaser In Good Faith – is one who buys property with the belief that the person
from whom he received title of the property is the owner thereof and has the right to
covey the same.
Q
333. Qualification – is a description of the qualities or characteristics of an occupation.
334. Quantity Survey Method – computation of the costs of all the quantity and quality of
all materials used and of all labor costs and other fees for contractors and architects.
335. Quieting of Title – is a court action brought about to establish title or to remove a
cloud on the title
336. Quit Claim Deed – is a conveyance containing no warranties of title, conveying

only the interest of the grantor. It is a deed which conveys the grantor’s right or
interest in realty without guaranteeing or warranting such title.
337. Ranch – a large farm with its building and land used to raise livestock in large
numbers.
338. Raw Land – refers to the lands that has not been improved or develop.
339. Real Estate – is an identified parcel or tract of land, including the improvements
thereon. It also refers to the real property and its improvement.
340. Real Estate Dealer – refers to any person directly engaged as a principal in the
business of buying, selling or exchanging real estate property whether on a full time
or part time basis. It is either a natural or juridical person who performs any of the
acts comprised in real estate brokerage with reference to his own property. It is the
owner/developer of a land, subdivision, condominium, resort, country club, memorial
parks, owner/lessor of an apartment, commercial building or other income-generating
properties, sells, mortgages and exchanges real properties.
341. Real Estate Investment Trusts – a method of holding real estate in trust from
where investors can enjoy limited liability similar to a corporation.
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342. Real Estate or Real Property – refers to land and/or building, improvements,
including rights and interest therein
343. Real Rights – are interest, benefits and rights which are inherent to ownership of
real estate. It is also the power of a person to be exercised over a specific property
against a determined person and the whole world.
344. Realty – a collective term used to designate real estate.
345. Re-Appraisal validates and updates the appraisal values of lot and housing unit.
346. Reconciliation – is the adjustment process between comparable property utilities

equivalent to that of being appraised but constructed with modern materials and
according to the current standards, design and layout.
347. Reconveyance – is the transfer of the title of land from one person to the
immediate preceding owner.
348. Redemption – is the right of an owner to reclaim his property within the statutory
period after losing it at a tax or extra-judicial foreclosure sale of mortgaged property.
349. Reformation – is an action to correct a mistake in a deed or any other document.
350. Regression Principle – in real estate, a tremor principle alluding to the decrease in
value of certain houses in a particular neighborhood caused by the expected
construction or condition of interior dwellings in the area. It connotes diminished value
through disadvantages anticipated in the future, such as planned low-cost housing
development in an area of high-priced homes.
351. Release Clause – a stipulation that upon the payment of a specific sum of money
to the holder of a trust deed or mortgage, the lien of the instrument as specifically
described shall be removed from the blanket lien of the whole area.
352. Remainder – refers to an expectancy of estate which is not in actual possession

thereto, when land is conveyed by the same deed to a person during his lifetime, and
at his death to another and to the heirs.
353. Rent – is a compensation for the use of the real estate.
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354. Replacement Cost – the cost that would be incurred on the basis of current prices
in acquiring and equally desirable substitute property or the cost of reproducing a
new replica property on the basis of current prices with the same or closely similar
material.
355. Replacement Reserves – used in the income approach as reduction from the
effective gross income. It is for a capital replacement and not expenses.
356. Report – is any written or oral communication of an appraisal or a review or

analysis of documents that is transmitted by the Appraiser to the client upon
completion of an assignment.
357. Reproduction Cost – cost of reproducing a particular property at a particular time. It

is the cost of replacing the subject improvement with one that is the exact replica,
having the same quality of workmanship, design and layout or it is the cost to
duplicate and asset.
358. Rescission – refers to the cancellation or annulment of the contract for cause by
court order or by a notarial act.
359. Reservation – is a right retained or reserved by a grantor in conveying property.
360. Residence – is the place where one lives with no intention of removing there from.
361. Restriction – in realty, it means the owner of a real property is restricted or

prohibited from, doing certain things related to the property for certain purposes. It
also refers to a legislative ordinance affecting all properties in a given area, like:
requiring street curb is a restriction by operation of law.
362. Restrictive Covenant – is an agreement written into a contract limiting the use and
occupancy of property, which covenant is binding to the subsequent owner(s) of the
property but may be rendered nugatory by zoning laws or other police power
legislations.
363. Reversionary Interest – is the interest which a person has in his lands or other
property upon the termination of the estate.
364. Review – is the act or process of critically studying a report prepared by another.
365. Revocation – is the act of recalling a power of authority.
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366. Right of Survivorship – is the right to acquire the interest of a deceased joint
owner.
367. Right of Way – a privilege operating as an easement upon a property, whereby the
owner does by grant or by agreement, give another the right to pass over his land. It
also means to construct a roadway over or use as roadway a specific portion of the
land for telephone, telegraph or electric power lines, or the right to place underground
water mains or sewers. The right or privilege acquired through accepted usage or by
contract to pass over a designated portion of another’s property. A right-of-way may
either be used as the highway or street or safe access to public places, like: beaches.
368. Riparian Right – is the right of a land owner adjoining a watercourse to enjoy the
water adjacent or water on or water under one’s land.
369. Row House – refers to a series of individual homes having architectural unity and a
common wall between each unit.
370. Rurban Land – is that land that partake the nature of both rural and urban land. It
is one which has the characteristics and atmosphere of a province while enjoying the
amenities of an urban community.
S
371. Sale – a contract where one party (Seller) obligates himself to transfer the
ownership of a property and to deliver thereof; while the other party (Buyer) obligates
himself to pay the price certain in money or its equivalent.
372. Sale and Leaseback – a contract wherein a property buyer agrees to lease the
subject property to the seller.
373. Sales Contract – is a document or a contract by which a buyer and a seller
manifested their agreement on the terms of the sale.
374. Salvage Value – is the amount that might be realized from sale of property after
the economic life thereof.
375. Sandwich Lessee – a lease created by the lessee by sub-leasing the leased
property.
376. Satisfaction – is the fulfillment of a condition or of an obligation.
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377. Scrap Value – is the amount that could be realized from sale of a dismantled asset
to be removed for used wholly or partially
378. Seal – an impression made to attest the execution of an instrument.
379. Service Income – the type of income collected for the services rendered.
380. Setback – the distance from the curb or other established line which no building
can be erected.
381. Sheriff’s Deed – is a deed given to a purchaser who buys at a judicial or extra-
judicial foreclosure sale to satisfy a judgment or obligation.
382. Simple Subdivision Plan – refers to a subdivision plan of a registered land wherein
streets passage ways or open spaces are delineated on the plan.
383. Sinking Fund – a method of calculating replacement reserves by multiplying the

total cost by a factor.
384. Site – generally, a parcel of land suitable for building that fronts on a road and has
access to utilities. Also refers to and ready for development or with improvements.
385. Sound Value – is an appraisal value for the price that a property would sale based
on quick sales.
386. Special Assessment – an assessment made against a particular property to pay for
public improvements which assessed property has been especially benefited.
387. Specific Performance – is a court remedy ordering the defendant to carry out the
terms of his contract of appointment.
388. Staking – a method of identifying the boundaries of a parcel of land by placing
stakes or pins in the ground or by painting marks on stones walls or rocks.
389. Statute of Limitations – a statute limiting the period within which a specific legal
action may be taken.
390. Stewardship Concept of Ownership – is the constitutional provision that an owner

must use his property in a manner that will benefit not only his own interest but also
the general welfare. And when the property ownership is not conductive to general
welfare, then the State can exercise its power and authority to regulate or control
ownership.
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391. Straight-Line Method – a method of calculating a replacement cost or a method of

determining the depreciation cost of an asset.
392. Sub-Contractor – a builder or contractor who enters into an agreement with a

developer or the prime contractor to perform a special portion of the construction
work, such as electrical, plumbing, or air conditioning installation. The subcontractor
does not deal directly with the landowner; however, if not paid by the prime
contractor, the subcontractor can assert a mechanic’s lien against the property within
a certain time after a notice of completion is published.
393. Subdivision – a tract of land divided into lots for sale suitable for home building
purposes.
394. Subdivision Lot – it mean any of the lots, whether residential, commercial,
industrial, recreational in a subdivision project.
395. Subdivision Project – shall mean a tract or parcel of land partitioned primarily into
individual lots for residential purposes either with or without improvements and
offered to public for sale. It includes residential, commercial, industrial and
recreational areas as well as open spaces and other community and public areas in
the project.
396. Subletting – transfer by the lessee of all or part of his lease interest to another
person who sub-leases the leased property.
397. Subordination Clause – is a clause in a junior or second lien permitting retention of

priority for prior liens. Also used in a first deed of trust permitting it to be subordinated
to a subsequent liens.
398. Subpoena – refers to a court order that obliges a person or a witness to appear in
court and to give testimony. A legal order of the court compelling the person who is
named and upon who it is served to appear and to give testimony at a specific
location and time.
399. Subpoena Duces Tecum – a subpoena ordering the person on whom it is served
to appear at the designated time and location and to bring certain specified location
and time.
400. Subrogation – is the substitution of one creditor by another, along with the transfer
of the claims and rights of the former creditor.
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401. Substitution Principle – the value of a replaceable property tends to be indicated by
the value of an equally desirable substitute property.
402. Surety – refers to one who guarantees the performance of another called
guarantor.
403. Survey – the process by which a parcel of land is measure and its area
ascertained. It is the process of measuring and determining land boundaries, its site
measurement, and existing encroachments.
404. Survivorship – it is a distinguished feature of a joint tenancy which upon the death
of one joint tenant the full title to the estate remains in the surviving tenant. The last
surviving joint tenant automatically takes all the property.
T
405. Tax Rate – percentage applied to assessed value to determine tax due.
406. Tax Sale – is the forced sale of real estate by local taxing authorities to cover
delinquent property taxes.
407. Tenancy in Common – a form of estate held by two or more persons who owns
undivided share without the joint right of survivorship. If one dies, his share goes to
his estate.
408. Tenant – is one who holds or possesses real estate by any kind of title, either in
fee, for life, for years or at will. It is one who temporarily uses the real estate of
another.
409. Tenant at Suferrance – is a person who stays in possession of real estate after his
lease has expired.
410. Tender – an offer of money or payment of an obligation.
411. Tenement – a collective term which means the land plus everything of a
permanent nature attached to it, including the rents.
412. Tenure in Land – is the mode or manner by which a man acquires an estate in
lands.
413. Testate – a property owner called Testator who dies leaving a legal will prescribing
the methods by how and to whom his/her property will be transferred after death. The
condition of a deceased person who has left a valid will.
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414. Tillable – is the condition of land allowing cultivation
415. Time is of the Essence – one of the essential requirements in forming a binding
contract that contemplates punctual performance
416. Title – in real estate, it is an evidence of land ownership that has lawful right and
possession thereof. It is a document of ownership right over a parcel of land. It
encompasses all that bundles of rights an owner to possess and the totality of rights
and property by a person. Title is a common term used to denote the fact, which if
proved would enable a person to recover or retain possession of something.
417. Title Insurance – is insurance written by a title company to protect a property

owner against loss if the title is imperfect
418. Topography – is the nature of the surface of land which may either be level, rolling
or mountains.
419. Torrens System – is the legal system of registering land title by the Register of
Deeds.
420. Torrens Title – certificate of ownership issued under the Torrens System of
registration by the government through the Registry of Deeds, naming and declaring
the owner in fee of the real property described therein, free from all lines and
encumbrances as may be expressly noted there or otherwise reserved by law.
421. Trial de Novo – a new trial or re-trial in an appellate court of the entire case as if no
trial had taken place in the lower court.
422. Transcript – an official typewritten copy made, usually by a court stenographic, of
the testimony of evidence at deposition or trial, which becomes the official record of
the case.
423. Trust Deed – a deed given by a borrower to a trustee to be held pending fulfillment
of an obligation, ordinarily repayment of a loan to a beneficiary.
424. Trustee – is one who holds property in trust for another to secure for the
performance of an obligation.
397
in Appraisal
425. Trustor – is one who holds property to a trustee as security until the performance
of an obligation or terms in a deed of trust.
U
426. Under Improvement – refers to an improvement by reason of its small size or low
cost failed to bring the property to its highest and best use.
427. Unearned increment – increases in value of real property without any effort or cost
to the owner.
428. Unlawful Detainer – refers to the unauthorized possession or holding of a property

due to the termination of the right to hold possession thereof.
429. Urban Property – property located at the city or those closely settled thereat.
430. Usufruct – the right to enjoy the property of another with the obligation of
preserving the property’s from and substance, unless required otherwise by law of
contract.
431. Utilities – refers to the basic service system required by developed areas, such as:
telephone, electricity, water, gas and the like. Utility easements are usually gross
easements running on, over, or under the property.
432. Utilization – is the quality of the property’s usefulness and using the best
advantage of it.
V
433. Valid – having binding force and effect or it is legally sufficient and authorized by
law.
434. Valuation – estimated worth or price estimation; the act of valuating by an

appraisal.
435. Value – is the ability to serve useful purposes or to command goods including
money, in exchange; utility; desirability. The power of goods in exchange for the
present worth of future rights to its income or amenities; the present worth to typical
users and investors of future benefits arising out ownership of a property; the money
deemed to be the equivalent in worth of the subject property. It also refers to the
worth of a thing in money or goods at a certain time. The Net operating income
divided by the cap rate (V = I – R)
398
in Appraisal
436. Vacancy Allowance – that the amount deducted from potential annual gross
income to reflect the probably vacancies and non-payment of rent.
437. Vendee – is one who purchase or buys any kind of property.
438. Vendor – is one who sells any kind of property, in consideration of money.
439. Vendor’s Lien – an equitable lien which the vendor of the land has for the unpaid
balance.
440. Verbatim – means exactly the same words.
441. Verification – is a sworn statement before a notary public manifesting as to the

correctness of contents of an instrument.
442. Vested – means bestowed upon someone or secured by someone.
443. Void – to have no force or effect or that is unenforceable.
444. Voidable – not absolutely void but may be voided, as a voidable contract that is
binding upon the parties unless annulled by a proper action in court.
445. Voluntary Lien – is any lien place in the property with the consent or as a result of
the voluntary act of the owner.
W
446. Waive – to relinquish or abandon; to forego a right to enforce or require anything.
447. Waiver – is the voluntary abandonment or surrender of a claim, right or privilege.

448. Warranty – an implied or express promise or statement concerning the quality
and/or character of the property sold.
449. Warranty Deed – a conveyance of land in which the grantor agrees to protect the
grantee against all adverse claims. He also warrants or guarantees that he is the
legal owner and has all lawful right to sell.
450. Will – a species of conveyance whereby a person is permitted, with the formalities
prescribed by law, to control in a certain degree the disposition of his property after
his death. A written instrument made by the property owner (called the Testator) to
399
in Appraisal
convey title to the property after his/her death. The Testator must be of sound mind
be of legal age, not be acting made duress and have the will witnessed when it was
prepared.
451. Without Resource – words used in endorsing a note or bill to denote that the future
holder is not to look the endorser in case of non-payment.
Y
452. Yield – the return on an investment or the amount of profit which is sometimes
stated as a percentage of the amount invested or the rate of the return. In a real
estate, yield on income of the property is the ratio of the annual net income from the
property divided by the cost of market value of the property.
Z
453. Zone – the area set-off by the proper authority for a specific use, subject to certain
restrictions or restraints.
454. Zoning – refers to the exercise of police power of the local government authorities
in specifying and regulating the use of which real estate maybe put in specific areas.
The Appraisal/Valuation PROCESS
Definition of the Problem
Identification of Scope of the Other Limit

Use of the Date of Value
Real Estate & Assignment and
Valuation Estimate conditions
Property Rights Definition of Value
400
in Appraisal
Preliminary Analysis, Data and Selection and

Collection
General Specific (Subject & Comparable

Physical/Environmental Sites & Improvements
Economic Sales
Political/Government Income & Expenses
Social
Highest and Best Use Analysis
Land as though Vacant Property as Improved

land
Land Value Estimate
Valuation Approaches
Sales Comparison Cost Approach Income Approach
Reconciliation of Value Indications and

Final Value Estimate
Reporting of Defined Value
401

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The PMJ for RE Appraiser’s Examination

2. In real estate practice, appraisal- refers to an estimate or opinion of

5. Appraisal associated with accounting

6. Similarities of professional appraiser and professional accountant

7. Independent Appraisal – is an estimation of property value performed by an

9. As defined under RA#9646, Real Estate Appraisal (REA) – refers to a duly

10. Independent Valuer/Appraiser – refers to an Appraiser/ Valuer who

11. Mass Appraisal – the practice of appraising multiple properties by a

13. Real Estate – refers to

14. Fair Market Value or Market Value -

15. Guide for Valuation/Appraisal

16. Objectives of adopting the International valuation standards under the

17. Government associates that spearheaded the Land Valuation Reform

19. Property Valuation and Taxation Reform Agenda or Plan

20. Intention of the Valuation Standards

21. International Valuation Standards Committee(IVSC) –

22. Purposes for development of the international Valuation Standards (IVS)

24. Real Estate, Property and Asset concept –

25. Land and Property concepts –

27. Independent Valuer/Appraiser – refers to an appraiser/valuer who

31. The date of appraisal is significant because economic, physical and

32. Real Estate Dealer – refers to

33. International Valuation Standards (IVS) is truly a global Valuation standards

35. Development/Evolution of Value Theories

37. Factors/Forces that effects Appraisal (key: PEPSo)

38. Characteristics/Determinants of Value in Appraisal (key: DUST)

40. The basic principles in appraisal/valuation are interconnected and their

41. Principles/ Basic Economic Concepts in property appraisal/valuation

c. Principle of Change- state that

e. Principle of Conformity- states that the

f. Principle of Consistent Use- refers to factor//force where the property is

g. Principle of Contribution- refers to the principle

h. Principle of Externalities- provides exterior influence of a property that

i. Principle of Heterogeneity- states that

j. Principle of Highest and Best Use- refers to the

43. Types of Appraisals

44. Value – refers to the

46. Other uses of real estate that required Appraisal

47. Users of the appraisal/valuation report under the Philippine Valuation

51. The following are the Appraiser’s Client::

52. An Appraiser’s opinion of property value will be submitted in either a

57. A competent Appraiser/Valuer will always maintain a high level of

58. The types of appraisal assignment provides some indication of appraiser’s

63. Basic concepts in the Generally Accepted Valuation Standards/Principle

e. Appraisal/Valuation is an act or process of estimating value or developing

m. In an appraisal, the rights being appraised should be stated because any

n. Trade Fixtures are items owned and attached to a rented premises/space

q. In appraisal, the right being appraised must be stated because any

64. In accounting terminology, assets are resources controlled by an entity as a

65. Tangible distinguished from intangible assets in accordance with the

66. Accounting terminologies differs from term more common to

67. In appraisal/valuation, depreciation is use in diverse situation compared with

68. Value is an economic concept referring to the price most likely to be

69. Market Value of real estate is a representation of its market-recognized utility

72. Demography- refers to the scientific study of population statistics-births, death

77. Valuation Standards are statement of recognized principles and concepts.

78. Price – refers to

87. The PVS recognize that every application of the methodologies of

88. Different appraisal/valuation principles and techniques are understood within

90. Issues relative to the application of the standards/principle often arise in

1. Appraiser/Valuers demonstrate and uphold a Code of Ethics and

2. The Philippine Valuation Standards (PVS)provides the following fundamentals:

5. Appraisal/Valuation prepared under the Code of Standards are normally

 Is a nob/e or dignified profession, calling or occupation and those