CC (2) PDF - Appraisal of Properties

TOPIC TITLE Subject (Lecture/Lab) (Course) (Block) | PROF. (Name) | SEM 1 2022 LESSON 3 - Based on the replacement cost of the chattel, less NATURE AND PURPOSE OF...

TOPIC TITLE Subject (Lecture/Lab) (Course) (Block) | PROF. (Name) | SEM 1 2022 LESSON 3 - Based on the replacement cost of the chattel, less NATURE AND PURPOSE OF depreciation. INSPECTION AND APPRAISAL - Example: Appraising a Nature 3-year-old sedan for - Appraisal involves achattel mortgage loan. determining the fair market 2. Market Comparison Method value of properties or - Comparing the chattel’s chattels. Essential in value with recent sales of securing loans and similar items. assessing credit risk. - Example: Appraising industrial machinery based Purpose on recent auction results. - Determine the collateral value for credit THREE GENERAL APPROACHES IN transactions.Aid in making VALUATION PROCEDURE informed decisions in lending and investment. 1. Sales Comparison Approach - Compares the property to recently sold similar TYPES OF PROPERTIES properties. 1. Real Properties - Example: Appraising land - Land, Buildings, and in Naga City based on improvements nearby sales. 2. Personal Properties (Chattels) 2. Cost Approach - Movable assets like vehicles, - Calculates the replacement machinery, and equipment or reproduction cost, less 3. Intangible Properties depreciation. - Shares of stocks, intellectual - Example: Valuing a property, and royalties 5-year-old warehouse. 3. Income Approach - Focuses on the income-generating potential GUIDELINES IN CONDUCTING of the asset. ACTUAL APPRAISAL - Example: Appraising a Conduct a physical inspection of commercial building in the property or chattel. Legazpi City. Obtain necessary documentation (e.g., proof of ownership, tax declarations). APPRAISAL OF CHATTELS Research market trends and recent sales of similar assets. Chattels are personal properties used Verify the condition, age, and as collateral in credit transactions. usability of the chattel. Follow professional standards such Steps in Appraisal: as the PhilippineValuation 1. Inspection of the asset’s condition Standards (PVS) and usability. 2. Review of ownership documents (e.g., OR/CR for vehicles). 3. Application of the appropriate TWO METHODS IN APPRAISING appraisal method. CHATTELS 1. Cost Method 1 TOPIC TITLE Subject (Lecture/Lab) (Course) (Block) | PROF. (Name) | SEM 1 2022 - Purpose of Loan: To purchase additional stock and expand SHARES OF STOCKS AS delivery operations COLLATERAL 2. Loan Details: Shares of publicly listed companies - Lending Institution: Land Bank of can serve as collateral for loans. the Philippines - Loan Amount Requested: PHP Appraisal Methods: 1,000,000 1. Market Value - Based on stock - Collateral Offered: A Toyota HiAce prices from thePhilippine Stock Van (2019 model) Exchange (PSE). 2. Intrinsic Value - Assessed using VEHICLE INSPECTION financial statements and company 1. Physical Inspection: performance - Condition: The van is in good condition with no major dents or A small business owner applies for a loan scratches. with Security Bank. To secure the loan, - Mileage: 40,000 km. they pledge their shares of Jollibee Foods - Accessories: Includes a roof rack Corporation (JFC) as collateral. and GPS tracker. 2. Documentation Check: Loan Details: - Official Receipt (OR) and - Loan Purpose: Business Certificate of Registration (CR) are expansion verified. - Collateral: 10,000 shares of JFC - The vehicle is free from stocks encumbrances and has no record Appraisal Process: of prior loans or liens. - Market Value Appraisal: The pledged shares are valued based MARKET COMPARISON METHOD on the latest trading price from the 1. Market Research: Philippine Stock Exchange (PSE). - Similar models (Toyota HiAce - Example: If JFC shares are trading 2019) are selling for an average of at PHP 250/share, the total market PHP 1,200,000 in the used vehicle value is PHP 2.5 million. market. - Loan-to-Value Ratio (LTV): The - Adjustments for mileage and bank applies an LTV ratio of 50%, condition: -5% depreciation. meaning the borrower can avail of 2. Appraised Value: up to PHP 1.25 million. - Final appraised value = PHP Outcome: 1,140,000. - The shares are placed in escrow or a restricted account to secure the LOAN APPROVAL loan. 1. Loan-to-Value Ratio (LTV): - The borrower maintains ownership - Land Bank applies an LTV ratio of of the shares but cannot sell them 70%. while the loan is active. - Maximum loan amount against the vehicle - PHP 1,140,000 × 70% = PHP VEHICLE APPRAISAL FOR A 798,000. BUSINESS LOAN 2. Outcome: - Loan approved for PHP 798,000 1. Borrower Profile: with the Toyota HiAce as collateral. - Name: Mr. Juan Dela Cruz - Business: Rice Trading LESSON 4 2 TOPIC TITLE Subject (Lecture/Lab) (Course) (Block) | PROF. (Name) | SEM 1 2022 Agency - Department of Environment and Natural LAND AS COLLATERAL Resources (DENR). Land Value Examples: Homestead The worth of a parcel of land patents, free patents for based on factors suchas location, agricultural lands. use, and market demand. 5. PrescriptionRequirements Continuous, adverse - Urban Areas - High land possession for a prescribed values due to commercial period. and residential demand Example: Occupying (e.g., Makati, Bonifacio unregistered land in remote Global City). provinces - Rural Areas - Lower values, often based on agricultural potential. TITLE OF OWNERSHIP Factors Influencing Land Values 1. Certificate of Title 1. Location - Proximity to commercial Document proving legal hubs, transportation, and essential ownership of land. services. Example: Transfer 2. Infrastructure Development - Certificate of Title (TCT) Projects like expressways or issued by the Registry Of railways enhance accessibility. Deeds. 3. Zoning Regulations - Government 2. Land Registration Authority policies that define allowable land (LRA) use. Maintains the integrity of 4. Economic Activities - Commercial land titles. centers versus agricultural zones Services: Verification of authenticity and resolution of disputes. 3. Common Issues: MODES OF ACQUIRING TITLE Double Titling: Multiple 1. Purchase Process titles for the same parcel. Buyer and seller enter a Encroachments: sale agreement, notarized Overlapping boundaries by a legal officer. with neighboring properties. Example: Purchasing a Fake Titles: Fraudulent residential lot in Quezon documents requiring due City. diligence. 2. Inheritance Legal Basis Philippine laws on succession (Civil Code). IMPORTANT FACTORS Example: Heirs receiving ancestral land in Ilocos.3. 1. Legal Documentation 3. Donation Procedure Importance: Ensures clear, Deed of donation notarized undisputed ownership. and registered with the Checklist: TCT, tax Registry of Deeds. declarations, and notarized Example: Parents donating documents. land to their children 2. Land Survey 4. Government Grant 3 TOPIC TITLE Subject (Lecture/Lab) (Course) (Block) | PROF. (Name) | SEM 1 2022 Purpose: Establishes precise boundaries and EXAMPLES ON PH CONTEXT avoid disputes. Certification: Secured from 1. Urban Property a licensed geodetic Land in Bonifacio Global engineer. City used as collateral for a 3. Environmental Considerations PHP15M loan. Risks: Geohazard areas High market demand and (e.g., landslides, flooding). commercial zoning Example: Coastal increase its value. properties prone to 2. Rural Property typhoons. Agricultural land in 4. Market Demand Pampanga valued for its Trends: Rapid urbanization productivity. increasing value in cities. Lower zonal value but Example: High demand for significant use as collateral mixed-use developments in for farm related loans Cebu. 3. Bicol Context Urban Land in Legazpi City - A commercial lot ZONAL VALUATION nearAyala Malls Legazpi The assigned value of real used as collateral for a property by the Bureau ofInternal PHP 5Mloan. Revenue (BIR) for tax purposes. Agricultural Land in Camarines Sur - A rice field Purpose: in Pili With a zonal value of Taxation Basis - Estate PHP 10,000/sqm. taxes, capital gains tax, and Coastal Property in documentary stamp tax. Sorsogon - A beachfront Loan Evaluation - Basis property in Gubat assessed for financial institutions for its potential as a tourism appraisal. site 4. Zonal Value Reference Philippine Zonal Valuation System: Property in Quezon City - - Availability: Updated lists Zonal value at accessible through the PHP50,000/sqm, market BIRwebsite. value at PHP 80,000/sqm. - Examples: Zonal value of Disparity highlights PHP 100,000/sqm in importance in appraisal Makati versus PHP accuracy 5,000/sqm in rural Mindanao. LESSON 5 Application in Credit and Collection - Financial Use: Determines COLLECTION POLICIES AND the maximum loanable PROCEDURE amount. - Example: Rural Bank valuing collateral at PHP 1.5M based on zonal value COLLECTION POLICIES 4 TOPIC TITLE Subject (Lecture/Lab) (Course) (Block) | PROF. (Name) | SEM 1 2022 A structured set of guidelines on reimbursement of a sum of money how businesses collectpayments not exceeding P1,000,000.00 (as from their customers amended by Supreme Court Administrative Matter No. Key Points 08-8-7-SC). - Establish clear payment terms (e.g., net 30 days). - Ensure compliance with SEVEN ELEMENTS OF A laws like the Philippine COLLECTION POLICY Lending Company Regulation Act (RA 9474). - Maintain fairness and 1. Credit Terms – Clearly state transparency to preserve repayment schedules. customer relationships. 2. Due Dates – Provide specific dates for payment. 3. Grace Periods – Offer leniency for PAYING HABITS valid reasons. Factors Influencing Paying Habits 4. Interest and Penalties – Define Economic Environment - High charges for late payments. inflation or job losses can lead to 5. Documentation Requirements – delayed payments. Ensure contracts are signed and Cultural Practices - "Utang na legally binding. loob" sometimes impacts 6. Dispute Resolution – Establish repayment behavior. protocols for conflicts. Personal Financial Discipline - 7. Follow-Up System – Automate Budgeting skills of customers reminders or calls COLLECTION PROCEDURE TYPE OF COLLECTION LETTERS 1. Friendly Reminder - Call or email before the due date. Reminder Letter - sent before due 2. Follow-Up Reminder - Send a dates reminder if the payment is Past Due Letter - states overdue overdue. amounts and penalties 3. Formal Collection Letter - Clearly Final Notice - sent after multiple outline the overdue amount and reminders consequences of non-payment. Demand Letter - final request 4. Legal Action - As a last resort, file before legal action a case inBarangay Justice or court EFFECTIVE TECHNIQUES SMALL CLAIMS COURTS Build rapport and establish trust What are small claims? with customers. Leverage digital tools like Small claims cases in the automated email reminders. Philippines have been created to Stay persistent but polite in provide a simplified, expeditious, follow-ups. and cost-effective means of Offer flexible solutions tailored to resolving disputes. customer needs These are civil claims which are exclusively for the payment or 5 TOPIC TITLE Subject (Lecture/Lab) (Course) (Block) | PROF. (Name) | SEM 1 2022 1. Filing a petition in court. 2. Debtor’s acknowledgment BAD DEBTS of inability to pay Accounts that cannot be collected obligations. due to customer insolvency or refusal to pay. Preventive Measures: INVOLUNTARY INSOLVENCY - Conduct thorough credit checks (e.g., use of CIC Creditors petition the court to data). declare a debtor bankrupt due to - Require collateral for unpaid debts. high-value loans. - Maintain a diversified Conditions customer portfolio. Debts must exceed Php 500,000. Creditors prove the IN SUMMARY debtor’s inability or refusal Effective collection policies to pay. safeguard cash flow and reduce bad debts. Building strong relationships and PRESENCE OF CREDITORS using strategic techniques ensure higher recovery rates. Creditors are integral to insolvency Proactively addressing delinquent proceedings as they fileclaims and accounts fosters a sustainable negotiate settlements. business model. Types of Creditors: 1. Secured (e.g., banks with LESSON 6 collateralized loans). 2. Unsecured (e.g., suppliers BANKRUPTCY without collateral). Bankruptcy is a legal process that provides relief to individuals or entities unable to meet financial CLASSIFICATION OF CREDITS obligations. - Governed by the Financial 1. Secured Debts: Backed by Rehabilitation collateral (e.g., mortgages, andInsolvency Act of 2010 equipment loans).These debts are (RA 10142). settled first from the sale of - Provide debt relief while secured assets. balancing creditor’s rights. 2. Taxes and Government Claims: - Enable businesses to Includes unpaid taxes, customs rehabilitate and recover duties, and other government when possible. obligations. 3. Salaries and Wages of Employees: Covers unpaid salaries within a specific limit (up to VOLUNTARY INSOLVENCY 3 months' worth).This ensures Initiated by the debtor’s decision to workers' welfare during financial seek legal relief due to financial distress. distress. 4. Unsecured Debts: Not backed by collateral (e.g., trade payables, Process: personal loans).These are settled 6 TOPIC TITLE Subject (Lecture/Lab) (Course) (Block) | PROF. (Name) | SEM 1 2022 only after fulfilling higher-priority claims CHAPTER 11 5. Subordinated Debt: Lower priority claims such as shareholder Chapter 11 is a provision under loans.Repaid only after all U.S. bankruptcy law allowing higher-priority debts have businesses to reorganize and beensettled. continue operations while repaying Legal Context creditors. - Article 2244 of the Civil Code and Relevance to the Philippines: provisions under RA - Some Philippine companies 10142 guide these with international classifications in the operations, like Philippine Philippines. Airlines (PAL), utilizeChapter 11 in Example Scenario: conjunction with local laws A bankrupt manufacturing (RA 10142) for global company undergoes liquidation. restructuring. The proceeds from asset sales are distributed in this order: 1. Secured creditors (e.g., loan backed by warehouse equipment). 2. Unpaid government contributions (e.g., SSS and PAG-IBIG premiums). 3. Unpaid employee wages (up to the limit). 4. Remaining funds go to unsecured creditors (e.g., unpaid supplier invoices) SUSPENSION OF PAYMENTS A temporary halt on debt payments approved by the court. Purpose: Allow businesses to restructure or settle debts DISCHARGE Release of the debtor from specific debts post-bankruptcy proceedings. Implications: - Fresh start for the debtor. - Creditors may write off portions of the debt. 7