DEPARTMENT OF FINANCE ORDER NO.

37-09
19 October 2009

SUBJECT: Prescribing the PVS (1st Edition) – Adoption of

the IVSC Valuation standards under Philippine Setting

TO: All Regional Directors of the Bureau of local

Government Finance, provincial, City and Municipal
Assessor and other concerned DOF agencies
DEPARTMENT OF FINANCE ORDER NO. 37-09
19 October 2009

Department Order (extracts):

1. The IVS are hereby adopted and prescribed as the
reference standards for local government assessors
and other concerned DOF agencies and shall hereby
be called the “PVS (1st Edition) – Adoption of the
IVSC Valuation Standards under Philippine
Setting” (PVS).
DEPARTMENT OF FINANCE ORDER NO. 37-09
19 October 2009

Department Order (extracts):

2. The PVS shall be implemented by all local
government assessors and other DOF agencies
undertaking property valuations.
3. The PVS shall serve as a complement to the Local
Assessment Regulations No. 1-04…
DEPARTMENT OF FINANCE ORDER NO. 37-09
19 October 2009

Department Order (extracts):

4. For purposes of valuations for real property taxation
the section entitled Mass Appraisal for Property
Taxation (GN 13) shall specifically be complied with.
For all other valuations for non-taxation purposes,
the PVS as a whole shall be complied with.
CONSIDERATIONS
DOF ORDER NO. 37-09
 Sections 33 (1) and (2) of Executive Order No. 292,
series of 1987, otherwise known as the “Administrative
Code of 1987” provide that the Bureau of Local
Government Finance (BLGF) shall “Assist in the
formulation and implementation of policies on local
government revenue administration and fund
management; Exercise administrative and technical
supervision and coordination over treasury and
assessment operation of local governments”
CONSIDERATIONS
DOF ORDER NO. 37-09
 Section 201 of the Local Government Code of 1991 and Art.
291 of its IRR provide that the DOF shall promulgate the
necessary rules and regulations for the classification,
appraisal and assessment of real property.
 The Philippine Government has committed to pursue
economic growth by improving among others, procedures
for valuing real property through the Land Administration
and Management Project (LAMP), an inter-Agency
undertaking of which the DOF is one of the departments
tasked to promote reform in property valuation.
CONSIDERATIONS
DOF ORDER NO. 37-09
 DOF through BLGF and the National Tax Research Center
(NTRC), is implementing real property valuation and
taxation reforms under Component 4 of the second phase
of the Land Administration and Management Project
(LAMP 2), which aims to:
“Improve the quality of government and private sector
appraisal performance through the adoption of Uniform
Valuation Standards and a single valuation base for
taxation; Pursue property taxation reforms; and Lay the
foundation through education and training for the future
expansion of property valuation and appraisal activities”
CONSIDERATIONS
DOF ORDER NO. 37-09

 DOF through the BLGF and in conjunction with a

broad-based group of stakeholders, through a series of
Technical Working Groups and Exposure Workshops,
concluded that the International Valuation Standards
(IVS) is the most appropriate valuation standards for
valuation under Philippine setting.
CONSIDERATIONS
DOF ORDER NO. 37-09

 Adaptation to Philippine setting had been

incorporated to the IVS to reflect national laws,
policies and Philippine conditions; nonetheless, in
case any conflict arises in the implementation of the
PVS, domestic laws shall take precedence over the
standards and principles advocated therein.
PVS

Adoption of the IVSC Valuation

Standards under Philippine Setting

1st Edition, 2009

BACKGROUND AND CONTEXT
 Publication is part of a wider on-going program of
land reform in the Philippines. A land reform program
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
 an effective and transparent land valuation system that
is in line with internationally accepted standards.
BACKGROUND AND CONTEXT

 The Land Administration and Management Project

(LAMP) was established in 2001.
 It is spearheading Government’s land valuation reform
program,
 Partnership with the Australian Government for
technical assistance,
 Partnership with the World Bank for financial support.
BACKGROUND AND CONTEXT
Tasks of DOF through BLGF and NTRC:
 Implement a valuation system that will assess property
values at their true market levels;
 Establish an independent national authority that will
set and enforce valuation standards;
 Develop valuation standards for use by government
and private sectors; and
 Raise the level of and professionalize the property
valuation industry.
BACKGROUND AND CONTEXT
 Among other provisions, the Real Estate Service Act
(RESA) of 2009 transferred the regulatory function of
real estate service practice from DTI to PRC.
 Professional Regulatory Board of Real Estate Services
(PRBRES) has direct supervision and regulatory
control
 Adherence to a professional code of ethics
 Public and private sectors will be unified under a single
integrated association.
BACKGROUND AND CONTEXT
 NATIONAL VALUATION REFORM ACT
 Establish consistent valuation system
 Once passed, the Act will require that the uniform valuation
standards will be used by all appraisers and assessors of
national and local government units, and the private sector,
in the valuation of land, buildings and machinery for taxation
and other purposes.
 Create a National Valuation Authority (NVA), primary agency
of Government on matters concerning valuation of property
 NVA’s mandate will be to provide policy direction to local
and national government units, and leadership to private
sector institutions and practitioners.
OBJECTIVES AND PURPOSE
 DOF created the Property Valuation Staff (PVS) in 2007 as
technical arm for pursuing the valuation reform agenda.
 Main objectives for the valuation standards:
 To raise the quality of public and private sector valuations and
reporting of valuations;
 To provide consistency and understanding between providers
and users of valuations at national and international levels;
 To promote transparency and reliability of valuations for
disposal of government assets, financial reporting, secured
lending, transfers of ownership, litigation and taxation; and
 To reduce financial risk for users of valuations.
DEVELOPMENT
 Development of the valuation standards was through a
transparent and interactive process from the input of
key stakeholders.
 Three-stage process:
 PVS core team
 Technical Working Groups comprised of representatives
from public and private sector valuers and accountants
association, banks, academic institutions and NGAs
 Roadshows in Metro Manila and the regions
DEVELOPMENT

 VALUER – the term adopted in the PVSs

 Those who deal with the special discipline of preparing
and reporting valuations.
 Meet the generally accepted international criteria with
respect to education, training, competence, and skill.
 Adherence to a professional code of conduct
SCOPE AND APPLICATION
 Comprise a series of recognized concepts and
principles,
 Internationally accepted definitions and guidance
notes,
 Best practice in the procurement, undertaking and
reporting valuations.
 Not intended to describe different valuation
techniques in detail or prescribe specific methods of
valuation for different purposes.
SCOPE AND APPLICATION
 Implementation of these standards is mandatory by all
local government assessors and other concerned DOF
agencies.
 The standards shall apply in their entirety where LGUs
undertake or procure valuations for non-taxation
purposes.
SCOPE AND APPLICATION
 For the purpose of annual real property revisions,
Guidance Note 13, Mass Appraisal for property
Taxation, specifically provides that the mass appraisal
process may be utilized as a methodology for Ad
Valorem property taxation, whereby value is
determined in accordance with requirements
prescribed by statute or legislation.
SCOPE AND APPLICATION

 NGAs are subject to their respective statutory

directives – legislation, IRR, orders, etc.
 Private sector valuers are required to comply when
undertaking valuations for non-taxation purposes on
behalf of LGUs, and where instructed by NGAs or
other public or private sector clients.
THE INTERNATIONAL VALUATION
STANDARDS COMMITTEE
12 Great George Street
London
United Kingdom SWIP 3AD
Telephone: 44 1442 879306
Facsimile: 44 1442 879306
INTRODUCTION
 The International Valuation Standards Committee was
formed to address a need:
 Importance of professional property valuations due to
rapid economic changes in the 1970s
 Quickening pace in the globalization of investment
markets needed internationally accepted standards for
reporting the value of property
 Prevent unintentional misunderstandings due to
differences of viewpoints among professional valuation
bodies
INTRODUCTION

THE INTERNATIONAL
ASSETS VALUATION
ROYAL INSTITUTION OF STANDARDS COMMITTEE
U.S. APPRAISAL
CHARTERED SURVEYORS (TIAVSC, 1981) OR
ORGANIZATIONS
(RICS) INTERNATIONAL
VALUATIONS STANDARDS
COMMITTEE (IVSC,1994)
INTRODUCTION
 Twofold objectives:
1. To formulate and publish, in the public interest,
valuation Standards for property valuation and to
promote their worldwide acceptance; and
2. To harmonies Standards among the world’s States and
to identify and make disclosure of differences in
statements and/or applications of Standards as they
occur.
PUBLICATIONS

 Standards for property valuations

 Applications dealing with valuation for financial
reporting and secured lending purposes
 Guidance Notes regarding specific valuation issues and
the applications of Standards in more specific business
and service-providing situations
MEMBERSHIP AND ORGANIZATION
Associations with member or observer status
representing 52 countries. They
 Subscribe to IVSC objectives concerning valuation and
must have a sufficient number of their members capable
of conducting valuations that comply with Standards.
 Support the Standards and Guidance Notes
 Disclose to the IVSC any significant differences between
domestic and International Standards
MEMBERSHIP AND ORGANIZATION

Associations with member or observer status

representing 52 countries. They (cont’d)
 Work with controlling and regulatory authorities, both
statutory and voluntary and other professional societies
to ensure that valuations comply with the IVSC
Standards and Guidance Notes
 Play an educative and consultative role within their
respective States.
The International Valuation
Standards (IVS)
Objectives and Scope
Principal objectives:
1. To facilitate 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 performed to
secure loans and mortgages, for transactions
involving transfers of ownership, and for settlements
in litigation or tax matters;
Objectives and Scope
Principal objectives (cont’d):
2. To serve as a professional benchmark, or beacon, for
Valuers around the world, thereby enabling them to
respond to the demands of international property
markets for reliable valuations and to meet the
financial reporting requirements of the global
business community; and
3. To provide Standards of valuation and financial
reporting that meet the needs of emerging and
newly industrialized countries.
Objectives and Scope

 Users of valuations under IVS should be able to rely on

such valuations as having been carried out by
competent professionals who subscribe to high
standards of ethical conduct.
 IVS represent accepted, or best, practice in the
Valuation profession, also known as Generally
Accepted Valuation principles (GAVP)
Objectives and Scope

 IVSC has no enforcement power. It looks to national

institutes and financial professionals and authorities
to enforce standards.
 International Valuation Standards and the national
standards of respective Member States shall be
complementary and mutually supportive
Structure of Standards,
Applications, Guidance Notes,
and Commentary
 Organization of the Standards:
 Introduction
 Concepts Fundamental to Generally Accepted Valuation
principles
 Code of Conduct
 Property Types
 Introduction to the Standards
 Standards
 Applications
 Guidance notes
 Glossary
PROFESSIONAL PROPERTY VALUER
 Possesses the necessary qualifications, ability, and
experience to estimate property value for a diversity of
purposes:
 including transactions involving transfers of property
ownership
 property considered as collateral to secure loans and
mortgages
 property subject to litigation or pending settlement of taxes
 property treated as fixed assets in financial reporting.
 May possess the specific expertise to perform valuations of
other categories of property, i.e., personal property,
businesses, and financial interests.