Journal. [1966]

the property is its cost. The fallacy of this view may be indicated by
supposing that if Hilton were to construct a P20 million hotel in
Palawan, it would not have a value of P20 million for the reason that
the hotel would have no earning power. The investment would
have no economic value. In the same way, price is not value. Under
pressure, a pooperty may be sold for a price lower than what it is fairly
worth; or one may buy a piece of land adjacent to his property at a
price higher than the fair market value.
But what is "market value"? If it is not cost or price, what is it?
This apparently elusive term has bothered appraisers time and again
in their continuous effort to interpret value behaviour as indicated
by human actions and reactions arising from the economic, social, and
political forces at work. The widely accepted dfinition of "market
value" is, (1) "the highest price estimated in terms of money which a
property will bring if exposed for sale in the open market, allowing
a reasonable time to find a purchaser who buys with knowledge of all
the ujes to which it is adapted and for which it is capable of being used,"
and freq'aently (2) "the price at which a willing seller would sell and a
willing buyer would buy, neither being under abnormal pressure."
In * i-Lnce, the appraiser's prediction of value behaviour and its dependability hinges upon an objective analysis and understanding of market
phenomena.
Real estate is valuable to people because it provides a flow of services, iatiifactions, and peso returns. If the property is residential,
it has value to the o'Nnr because it protects him from the weather and
he enjoys the s.atisfaction of ownership. If it is income-producingi the
value of the intzstmsnt is essentially predicated on the anticipated
returns, I.e., the quantity, quality, and duration of income. In any
case, the appraisal process involves three basic approaches: Cost
Approach, Market Data Approach, and Income Approach. In applying
thtse bsi3c elements in the appraisal of a given property, different
values may be arrived at in each. It is the function of the appraiser
to analyze and correlate these values in order to arrive at the final
value estimate.

To go a little futher, appraisers use the so-called Residual Techniques to find an unknown quantity from a known quantity. This
process couists simply of a division of the net income to find what
portion of the income is attributable to the improvements and of the
land, as separate units, and estimating the value of each unit by capitalizing the residual income attributable thereto. With this technique,
the appraiser is able to establish the land value where market data is
lacking or insufficient for comparison purposes, providing the improvement component is new. Inversely, if the land value is fairly wellestatlisbed by transaction prices, this technique enables the appraiser
to check the building value.
The appraisal of real estate requires observational skill and a high
level of analytical ability. While experience is accorded considerable
weight, this is not the sole criterion because, as Dr. Ratcliff says, "there
are real estate brokers of vast experience who do not have the capacity,
training, or temperament to apply it effectively. Success in selling
and long experience in brokerage do not necessarily assure competence
in appraising."
Real estate values are never static. They are created, modified,
or destroyed by the interaction of social, economic, and political forces.
The appraiser might te called upon to appraise lease interests (leased
fee and leasehold rights), a subdivision, or any piece of real estate for
sale, loan, or tax purposes, There are complex procedures and mathematical calculations involved in the processing of income, analysis of
market data, and interpretation of the various factors which affect
the rise and fall of real estate values. The appraiser, therefore, must
have competent knowledge of the basic principles which underlie the
valuation of real estate. He mast know how to appreciate the impact
upon real estate values of changing conditions, and must keep abreast
of all new concepts in this observational science. It is his task and,espoasibility, once he has accepted an assignunent, to fully render
the service expected of him.

Status of Philippine Industrial Publications
By the PCIE Ways and Means Committee, J. C. Borja, Chairman

T1HE ipartial results of a survey of what are generally considered
' "house organs", conducted last August by the Philippine Council of
Industrial Editors (PCIE,-the oal affiliate of the International
Council of Industrial Editors, based in Akrop, Ohio) showed that 48
publications trom 40 publishers, represented in the total PCIE membership of 77, jointly account for a combined annual circulation of
9,379,495 copies,-against 8,000,000 for the entire membership as of
a year or more back. The total annual figures are used here as the
frequency of publications ranges frdm weekly to annually.
At the time this is written, the results tabulated represent only
43% of the present PCIE membership.
Reported by their 48 respective editors, these publications are
divided by audience into 9 aimed internally (only at company employees), 4 externally (aimed at general readers), and 35 aimed at both
internal and external readers.
As to format, the magazine-form leads with 27, followed by the
newspaper and newsletter forms, 8 each; news-maga!ine form, 2; book
form, tabloid, and other unspecified, 1 each.
In the matter of frequency, 20 of the publications are monthlies,
12 quarterlies, 7 bi-monthlies, and 5 semi-annuals; 1 each is an annual,
fortnightly, or weekly.
Orcdped by the printing processes used, 37 publications are printed
in offset, 6 in letterpress, 1 in mimeograph, and 3 others unspecified.
Along the pattern of objectives, as set up by the University of the
Philippines Institute of Mass Communications, 27 of the publications
subscribe to the objective of "building better employee-management

understanding"; 31 to "developing better community or group understanding and support for the company"; 24 to "motivating dealers
and salesmen"; 22 to "winning customers and customer loyalty";
and 22 others to 'miscellaneous campaigns".
Each ef 7 among them qualified their replies additionally as aiming
at the promotion of: Philippine manufacturing, general welfare, public
relations (PR) in rural areas, international understanding, better
business understanding, investment and entrepreneurship, more efficient
secretaries, and supplying businessmen with economic information
and interpretive reporting.
It is significant that amnmg the organizations issuing these publicadions, 40 of which have been affiliated with the PCIE for years past,
10 are also represented in the Philippine Chamber ot Industries, 8 in
the Chamber of Commerce of the Philippines, 11 in the American
Chamber of Commerce of the Philippines, and 16 others in such other
civic, professional, and natinal organizations as Nepa, National Press
Club, Bisiuess Writers Association of the Philippines, Public Relations
Society of the Pnilippines, Philippine Association bf National Advertiser, Queson City Chamber of Commerce and Industry, Philippine
Marketing Association, etc.
As to their lines of business, 11 of the firms are in insurance, 8 in
manufacturing, S in the oil industry, S in trade organisations, 4 in
banks and other financial institutions, 2 each in managing firms and
service rganisatio, and I each in civic, machinery dealers, advertising
media, and constructiou enineers up.

T IJOUlRLU O TMS AMRICAN CaIIBI OF COIOuICE
Dgs —mw, 1966

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