Bureau of Local Government Finance Opinion

April 21, 2006 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION The City Assessor Dapitan City S i r : This has reference to your letter dated March 9, 2006 requesting opinion on the proper application of the following provisions as provided for under Chapters 1 and IV, respectively, of the New Manual on Real Property Appraisal and Assessment Operations: "1. Appraise all real property at current Market Values in accordance with the approved or duly enacted Schedule of Fair Market Values pursuant to R.A. 7160. "2. Real Property shall be appraised at its current and fair market value based on duly approved or enacted Schedule of Fair Market Values." You want to be clarified on whether the above cited provisions shall likewise be controlling in the exercise of power of eminent domain by LGUs in acquiring private properties for public use/purpose: In this connection and in response to query No. 1, please be informed that the same pertains to one of the functions of the local assessors in the performance of his duties, functions and responsibilities, in accordance with Article Three, Chapter 3. Book III of the Local Government Code of 1991 (R.A. 1760). Query No. 2, on the other hand, refers to one of the fundamental principles enunciated under Section 198 (a) of the same Code. Both provisions however, pertain to the appraisal of real property for real property taxation purposes only. EHTIcD However, with respect to the legal basis in the exercise of the power of Eminent Domain by LGUs in acquiring real property for public purpose, Article 32 Rule VI (Eminent Domain) of the IRR implementing the Local Government Code of 1991 as cited under Section 1 (D), Chapter VIII (Miscellaneous Provisions) of the Manual on Real Property Appraisal and Assessment Operations (Local Assessment Regulation No. 01-2004 dated October 1, 2004 of the Department of Finance) shall apply. Pertinent portions of which are quoted below: "Section 1. Provincial/City Appraisal Committee . "xxx xxx xxx "D. Modes of Acquisition of Real Property "1. Acquisition through Negotiated Sale As an initial step, the government implementing agency/instrumentality concerned shall negotiate with the owner of the land that is needed for the project for the purchase of the said land, including improvements thereon. In the determination of the price to be paid, the Department of Finance and the Provincial/City Assessors shall extend full assistance and coordination with the personnel of the concerned government implementing agency in the valuation of current market value declared by the owner or administrator of the land, or such current market value as determined by the assessor, whichever is lower, prior to the negotiation. TDEASC "A.O. No. 50, as amended by R.A. No. 8974, provides that the zonal value shall be the basis of the offer to acquire property for public purpose less the additional 10% increase in the existing zonal value . However, both A.O. No. 50 and R.A. No. 8974 do not provide for the basis and procedure in the acquisition of buildings and improvements as well as the valuation of machinery and equipment to be affected by the project nor do they apply to the acquisition of properties by the local government for public purpose. It is, therefore, necessary that an appraisal committee be created in Local Government Units for the appraisal of properties to be acquired for public purposes. (Emphasis ours) "xxx xxx xxx." "2. Expropriation If a negotiation fails to acquire a private property for public use, purpose, or welfare through purchase, the LGU may expropriate said property through a resolution of the sanggunian authorizing its chief executive to initiate expropriation proceedings. "The local chief executive shall cause the provincial, city or municipal attorney concerned or, in his absence, the provincial or city prosecutor, to file expropriation proceedings in the proper court in accordance with the Rules of Court and other pertinent laws. "The LGU may immediately take possession of the property upon filing of expropriation proceedings and upon making a deposit with the proper court of at least fifteen percent (15%) of the fair market value of the property based on the current tax declaration of the property to be expropriated. "The amount to be paid for the expropriated property shall be determined by the proper court, based on the fair market value at the time of the taking of the property. (Emphasis supplied) "xxx xxx xxx." In addition and as provided further under Chapter VIII of the said Manual, following procedures in the acquisition of private property for public use should be followed: "1. In acquiring private property for public use or purpose, the LGU shall first establish the suitability of the property to be acquired for the use intended, then proceed to obtain from the proper authorities the necessary locational clearance and other requirements imposed under existing laws, rules and regulations; "2. The offer to buy private property for public use or purpose shall be in writing. It shall specify the property sought to be acquired, the reasons for its acquisition, and the price offered; "3. If the owner or owners accept the offer in its entirety, a contract of sale shall be executed and payment forthwith made; "4. If the owner or owners are willing to sell their property but at a price higher than that offered to them, the local chief executive shall call them to a conference for the purpose of reaching an agreement on the selling price. The chairman of the appropriation or finance committee of the sanggunian, or in his absence, any member of the sanggunian duly chosen as its representative, shall participate in the conference. When an agreement is reached by the parties, a contract of sale shall be drawn and executed. EScAID "xxx xxx xxx." Please be guided accordingly. (SGD.) MA. PRESENTACION R. MONTESA Executive Director