MRPAAO DEF OF TERMS

DEFINITION OF TERMS

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

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

3. Actual Use – refers to the purpose for which the property is principally or
predominantly utilized by the person in possession thereof;

4. Actually, Directly and Exclusively Used –

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

5. Ad Valorem Tax – is a levy on real property determined on the basis of a fixed

proportion of the value of the property;

6. Agricultural Land – is land devoted principally to planting of trees, raising of crops,

livestock and poultry, dairying, salt making, inland fishing and similar aqua cultural
activities, and other agricultural activities, and is not classified as mineral, timberland,
residential, commercial or industrial land;

7. Appraisal – is the act or process of determining the value of a property as of a specific

date for a specific purpose. It may also be defined as the act of estimating the value of a
property. It is an estimate or opinion of value, usually market value or value as defined
by the appraiser. It is made as of a specific date and is a conclusion which results from a
logical and orderly analysis of facts.
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8. Appraiser/Assessor – one who conducts appraisals; specifically, one who possesses the
necessary qualifications, ability and experience to execute or direct the appraisal of real
or personal property;

9. Arm‟s Length Transaction – a transaction freely arrived at in the open market,

unaffected by abnormal pressure or by the absence of normal competitive negotiation as
might be true in the case of a transaction between related parties;

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

11. Assessment Level - is the percentage applied to the market value to determine the
taxable value of the property;

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

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

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

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

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

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

18. Carport – an open-sided roofed automobile shelter that is usually formed by an

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

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

21. Church – is a building set apart for public worship; a place of worship of any religion;

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

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

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

25. Consequential Damages – damages to other interests of the owner that can be
attributed to the expropriation;

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

27. Cooperative - is a duly registered association of persons with a common bond of

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

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

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

30. Data Computerization – encompasses all activities leading to the establishment and
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operationalization of a computer-assisted data base for Real Property Tax

Administration (RPTA) among which includes the familiarization/training of key
personnel, encoding and validation of data acquisition and installation of standard
RPTA system, generation of reports and preparation of complementary manual of
procedures.

31. Depreciation – is a loss in value brought about by physical deterioration and/or

obsolescence;

32. Depreciated Value – is the value remaining after deducting depreciation from the
acquisition cost;

33. Economic Life – is the estimated period over which it is anticipated that a machinery
may be profitably utilized;

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

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

36. Garage – a building or compartment of a building used for housing an automotive

vehicle;

37. Going Concern Value – value in use;

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

39. Horticultural Land – is land devoted to or cultivated for planting of vegetables,

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

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

42. Industrial Land – is land devoted principally to industrial activity as capital

investment and is not classified as agricultural, commercial, timber, mineral or
MRPAAO DEF OF TERMS

residential land;

43. Information and Education Campaign (IEC) – is the RPTA Information kit for the
use of LGU officials, assessors and treasurers in the RPTA Project;

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

45. Land Use – refers to the manner of utilization of land, including its allocation,
development and management;

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

47. Machinery – embraces machines, equipment, mechanical contrivances, instruments,

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

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

49. Marsh Land – a tract of low-lying land usually under water;

MRPAAO DEF OF TERMS

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

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

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

53. Memorial Parks – are lands exclusively used as burial ground and developed for
profit;

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

55. Mosque – is an Islamic place of public religious worship;

56. National Integrated Protected Areas Systems (NIPAS) – is the classification and
administration of all designated protected areas to maintain essential ecological
processes and life-support system, to preserve genetic diversity, to ensure sustainable
use of resources of forest therein, and to maintain their natural condition to the extent
possible;

57. Non-Profit Cemetery – is a cemetery owned and operated by the government, by

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

58. Orchard – is land specifically devoted to various fruit trees and plants;
59. Parsonage – is ministerial residence used in connection with any place of worship of
any denomination. It shall include the house appurtenant to a cathedral, to a synagogue,
or to a country-meeting house;

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

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

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

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

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

65. Records Conversion and Management – is the establishment and maintenance of

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

66. Reclassification of Agricultural Lands – refers to the act of specifying how

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

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

68. Remaining Value – is the value corresponding to the remaining useful life of the
machinery;

69. Replacement Cost – is the cost of constructing a similar property

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

71. Residential Land – is land principally devoted to habitation;

72. Residential Machinery – are those machines, equipment, appliances or apparatus

permanently attached to residential land and/or buildings;

73. Seminary Building – used by religious organization as a place for public worship and
the education for men for priesthood which mainly involves religious instructions, is
deemed considered used for religious purposes.
Moreover, a seminary is defined as a place or school where persons are instructed in
theology, such as the study for priesthood.
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74. Special Classes of Real Property – all lands, buildings, and other improvements
thereon actually, directly and exclusively used for hospitals, cultural, or scientific
purposes, and those owned and used by local water districts, and government owned or
controlled corporations rendering essential public services in the supply and distribution
of water and/or generation and transmission of electric power shall be classified as
special;

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

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

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

78. Tax Map – is a graphic representation of a portion of the earth‟s surface drawn to scale
on standard size drawing material, having property lines and jurisdictional boundaries
delineated showing all parcels of real property and identifying each separate real
property ownership by a unique number. A tax map is also referred to as Property
Identification Map;
79. Tax Mapping – is a highly accurate method of field operations for identifying real
property units, defining property boundaries, determining actual use, and discovering
undeclared properties for taxation purposes.

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

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

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

83. Utility – in general economic theory, is the capacity of an economic good to satisfy
human desires or needs;
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84. Valuation, Date of – the date the conclusion or opinion rendered in an appraisal is
applicable and valid. The date of appraisal identifies the market conditions that existed
when the appraisal was made;

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

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

87. Zoning – is the delineation/division of a city/municipality into functional zones where

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

88. Zoning Ordinance – refers to a local legislation approving the development

control/zoning plan and providing for the regulations and other conditions on the uses
of land.