Real Tax Cases - CAPPAL

REAL PROPERTY TAXATION I.
Preliminary Matters (g) (iv) to (ix) Cases

Atty. Bobby Lock
Page
THIRD DIVISION
[G.R. No. 90639. February 21, 1990.]
TESTATE ESTATE OF CONCORDIA T. LIM, Plaintiff-Appellant, v. CITY OF MANILA, JESUS I. CALLEJA, in
his capacity as City Treasurer of Manila, NICOLAS CATIIL, in his capacity as City Assessor of Manila,
and/or GOVERNMENT SERVICE INSURANCE SYSTEM, Defendants-Appellees.
Melquiades P . De Leon, for Plaintiff-Appellant.
SYLLABUS
1. TAXATION; REAL ESTATE TAXATION; UNPAID TAX ATTACHES TO PROPERTY CHARGEABLE AGAINST PERSON
WHO HAD ACTUAL OR BENEFICIAL USE AND POSSESSION. In real estate taxation, the unpaid tax attaches to
the property and is chargeable against the taxable person who had actual or beneficial use and possession of it
regardless of whether or not he is the owner. (Sections 3(a) and 19 of P.D. No. 464; Province of Nueva Ecija v.
Imperial Mining Co., Inc., 118 SCRA 632 [1982]).
2. REMEDIAL LAW; COURTS; JURISDICTION; COURTS HAVE JURISDICTION TO TRY CASES INVOLVING RIGHT TO
RECOVER SUMS OF MONEY. The Court rules that the plaintiff-appellant correctly filed the action for
refund/reimbursement with the lower court as it is the courts which have jurisdiction to try cases involving the
right to recover sums of money.
3. TAXATION; REAL PROPERTY TAX CODE; SECTION 30; PERTAINS TO ADMINISTRATIVE ACT OF LISTING AND
VALUATION OF PROPERTY FOR PURPOSES OF REAL ESTATE TAXATION. Section 30 of the Real Property Tax Code
is not applicable because what is questioned is the imposition of the tax assessed and who should shoulder the
burden of the tax. There is no dispute over the amount assessed on the properties for tax purposes. Section 30
pertains to the administrative act of listing and valuation of the property for purposes of real estate taxation.
4. ID.; ID.; COURT SHALL ENTERTAIN SUIT ASSAILING VALIDITY OF TAX ASSESSED AFTER TAXPAYER SHALL HAVE
PAID UNDER PROTEST. In further support of the conclusion that the lower court has jurisdiction to try the instant
case, we note Section 64 of the Real Property Tax Code which provides that a "court shall entertain a suit assailing
the validity of a tax assessed" after the taxpayer shall have paid under protest.
5. ID.; TAX IMPOSITION; NO RIGHT TO RECOVER TAX PAID IF VALID. The issue on the existence or nonexistence of the appellants right to recover the amounts paid hinges on the basic question of the validity of the tax
imposition. If the imposition is valid and in accordance with law, then there is no right to recover. Otherwise, the
amounts paid must be refunded by the respondent City Treasurer of Manila acting in his official capacity. (Sec. 62
[c], PD 464)
6. CIVIL LAW; SPECIAL CONTRACTS; SALES; CONTRACT IN INSTANT CASE, A CONTRACT OF SALE WHILE
CONTRACT IN BUSUEGO CASE, A CONTRACT TO SELL; CASE AT BAR. The instant case does not present a
similar contractual stipulation. The contract here which is alleged to include the condition that the buyer shall
shoulder the taxes is a Contract of Sale. In City of Baguio v. Busuego, there was merely a Contract to Sell for the
duration of which the party who shall be liable for the taxes about to be due is the buyer as per agreement. In the
case at bar, what was assumed by the vendee was the liability for taxes and other expenses "relative to the
execution and/or implementation" of the Deed of Absolute Sale "including among others, documentation,
documentary and science stamps, expenses for registration and transfer of titles . . ." This clause was stipulated for
the purpose of clarifying which of the parties should bear the costs of execution and implementation of the sale and
to comply with Article 1487 of the Civil Code.
7. TAXATION; REAL ESTATE TAXATION; ASSUMPTION OF PARTIES IN BUSUEGO CASE AND INSTANT CASE OF
LIABILITY FOR REAL ESTATE TAXES, DISTINGUISHED. In the Busuego case, the assumption by the vendee of
the liability for real estate taxes prospectively due was in harmony with the tax policy that the user of the property
bears the tax. In the instant case, the interpretation that the plaintiff-appellant assumed a liability for overdue real
estate taxes for the periods prior to the contract of sale is incongruent with the said policy because there was no
immediate transfer of possession of the properties previous to full payment of the repurchase price.
8. ID.; REAL PROPERTY TAX CODE; GSIS EXEMPT FROM REAL PROPERTY TAX; GSIS NOT LIABLE TO PAY REAL
PROPERTY TAX ON PUBLIC LAND LEASED TO OTHER PERSONS. The Court rules, however, that the plaintiffappellant is not entitled to a reimbursement from the respondent GSIS because: (1) the GSIS is exempt from
payment of the real property tax under Sec. 33 of the Revised Charter of the GSIS; and (2) the tax should be
REAL PROPERTY TAXATION I. Preliminary Matters (g) (iv) to (ix) Cases

Atty. Bobby Lock
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based on "actual use" of the property. Section 40 of the Real Property Tax Code supports the view that not even
the GSIS is liable to pay real property tax on public land leased to other persons.
DECISION
GUTIERREZ, JR., J.:
This is an appeal from the decision of the Regional Trial Court of Manila, Branch 29 dismissing a complaint for a
"sum of money and/or recovery of real estate taxes paid under protest" which was certified and elevated to this
Court by the Court of Appeals as a case involving pure questions of law.
On February 13, 1969, the late Concordia Lim obtained a real estate loan from the defendant-appellee Government
Service Insurance System (GSIS) in the amount of P875,488.54, secured by a mortgage constituted on two (2)
parcels of land formerly covered by Transfer Certificates of Title Nos. 64075 and 63076 (later changed to TCT Nos.
125718 and 125719) registered in Manila with a three-story building thereon and located on No. 810 Nicanor Reyes
St. (formerly Morayta), Sampaloc, Manila. When Lim failed to pay the loan, the mortgage was extrajudicially
foreclosed and the subject properties sold at public auction. The GSIS, being the highest bidder, bought the
properties. Upon Lims failure to exercise her right of redemption, the titles to the properties were consolidated in
favor of the GSIS in 1977.
However, pursuant to Resolution No. 188 of the Board of Trustees of the GSIS dated March 29, 1979, the estate of
Lim, through Ernestina Crisologo Jose (the administratrix) was allowed to repurchase the foreclosed properties. On
April 11, 1979, a Deed of Absolute Sale was executed. (Exhibit B, Table of Exhibits, pp. 3-5)
The defendant City Treasurer of Manila required the plaintiff-appellant to pay the real estate taxes due on the
properties for the years 1977, 1978 and the first quarter of 1979 in the amount of P67,960.39, before the titles
could be transferred to the plaintiff-appellant. The latter paid the amount under protest.
On July 11, 1979, the plaintiff-appellants counsel sent a demand letter requesting the GSIS to reimburse the taxes
paid under protest. The GSIS refused.chanrobles virtual lawlibrary
On September 5, 1979, a demand letter was sent to the City Treasurer of Manila to refund the amount but the
latter also refused.
On March 14, 1980, the plaintiff filed an action before the trial court for a sum of money for the refund or
reimbursement of the real estate taxes paid under protest.
During the pendency of the case, the plaintiff-appellant admitted that the foreclosed properties had been sold,
through the administratrix, to another person. (2nd par. of Plaintiffs Manifestation dated December 21, 1981,
Records, p. 105; TSN, March 4, 1982, p. 37)
After trial, the lower court dismissed the complaint for lack of jurisdiction. It ruled that the case involves a
protested action of the City Assessor which should have been filed before the Local Board of Assessment Appeals of
Manila (citing Section 30 of the Real Property Tax Code [P.D. No. 464]) in line with the principle that all
administrative remedies must first be exhausted. The lower court also cited by way of obiter dictum, the case of
City of Baguio v. Busuego, 100 SCRA 116 (1980) wherein this Court ruled that while the GSIS may be exempt from
the payment of real estate tax, the exemption does not cover properties the beneficial use of which was granted to
other taxable persons. This ruling supports the lower courts view that the tax had attached to the subject
properties for the years 1977, 1978 and first quarter of 1979. The lower court further stated that the plaintiffappellant had assumed liability for the real estate taxes because of the provision in the Deed of Sale with the GSIS
that: "any and all the taxes, . . . relative to the execution and/or implementation of this Deed, . . . shall be for the
account of and paid by the VENDEE" (Exhibit B, Table of Exhibits, p. 5)
Hence, this appeal raising several issues that can be summed up into the following: (1) whether or not the trial
court has jurisdiction over the action for refund of real estate taxes paid under protest; (2) whether or not plaintiffappellant has the right to recover; and (3) whether or not the plaintiff-appellant has personality to sue.
The plaintiff-appellant argues that the lower court has jurisdiction over a complaint for refund as well as for
reimbursement of the real estate taxes erroneously collected by the City of Manila from it and paid under protest.
The records show that the subject properties were leased to other persons during the time when GSIS held their
titles, as was the case during the ownership of the late Concordia Lim.

Atty. Bobby Lock
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However, the real estate taxes later assessed on the said properties for the years 1977, 1978 and the first quarter
of 1979 were charged against the plaintiff-appellant even if the latter was not the beneficial user of the parcels of
land.
In real estate taxation, the unpaid tax attaches to the property and is chargeable against the taxable person who
had actual or beneficial use and possession of it regardless of whether or not he is the owner. (Sections 3(a) and
19 of P.D. No. 464; Province of Nueva Ecija v. Imperial Mining Co., Inc., 118 SCRA 632 [1982]). Raising doubts on
the validity of the imposition and collection of the real property tax for the designated periods before the title to the
properties may be transferred, the plaintiff-appellant paid under protest. This step was taken in accordance with
the provision of Section 62 of P.D. No. 464, which states:jgc:chanrobles.com.ph
"Sec. 62. Payment under protest. (a) When a taxpayer desires for any reason to pay his tax under protest, he
shall indicate the amount or portion thereof he is contesting and such protest shall be annotated on the tax
receipts by writing thereon the words paid under protest. Verbal protest shall be confirmed in writing, with a
statement of the ground, therefor, within thirty days. The tax may be paid under protest, and in such case it shall
be the duty of the Provincial, City or Municipal Treasurers to annotate the ground or grounds therefor on the
receipt.
(b) In case of payments made under protest, the amount or portion of the tax contested shall be held in trust by
the treasurer and the difference shall be treated as revenue.
(c) In the event that the protest is finally decided in favor of the government, the amount or portion of the tax held
in trust by the treasurer shall accrue to the revenue account, but if the protest shall be decided finally in favor of
the protestant, the amount or portion of the tax protested against may either be refunded to the protestant or
applied as tax credit to any other existing or future tax liability of the said protestant." (Emphasis Supplied)
The Court rules that the plaintiff-appellant correctly filed the action for refund/reimbursement with the lower court
as it is the courts which have jurisdiction to try cases involving the right to recover sums of money.
Section 30 of the Real Property Tax Code is not applicable because what is questioned is the imposition of the tax
assessed and who should shoulder the burden of the tax. There is no dispute over the amount assessed on the
properties for tax purposes. Section 30 pertains to the administrative act of listing and valuation of the property for
purposes of real estate taxation. It provides:jgc:chanrobles.com.ph
"Section 30. Local Board of Assessment Appeals Any owner who is not satisfied with the action of the provincial
or city assessor in the assessment of his property may, within sixty days from the date of receipt by him of the
written notice of assessment as provided in this Code, appeal to the Board of Assessment Appeals of the province
or city, by filing with it a petition under oath using the form prescribed for the purpose, together with copies of the
tax declarations and such affidavit or documents submitted in support of the appeal."cralaw virtua1aw library
In further support of the conclusion that the lower court has jurisdiction to try the instant case, we note Section 64
of the Real Property Tax Code which provides that a "court shall entertain a suit assailing the validity of a tax
assessed" after the taxpayer shall have paid under protest.
The issue on the existence or non-existence of the appellants right to recover the amounts paid hinges on the
basic question of the validity of the tax imposition. If the imposition is valid and in accordance with law, then there
is no right to recover. Otherwise, the amounts paid must be refunded by the respondent City Treasurer of Manila
acting in his official capacity. (Sec. 62 [c], PD 464)
The opinion of the lower court that the ruling in City of Baguio v. Busuego, supra justifies the imposition of the tax
on plaintiff-appellant is erroneous. The facts in that case are different from those in the case at bar. It was shown
that Busuego purchased, by way of installment, a parcel of land and building within a housing project of the GSIS.
In a Contract to Sell with the GSIS, he agreed to: (1) the delivery of the possession of the properties to him
pending the full payment of the price although the title remained with the GSIS; and (2) his liability to pay and
shoulder all taxes and assessments on the lot and building or improvements thereon during the term of the
contract to sell.
Despite the tax exemption enjoyed by the GSIS, the realty tax liability imposed on the purchaser was held to be
valid on the basis of the contractual obligation that he entered into and the fact that beneficial use had been given
to him.cralawnad
The instant case does not present a similar contractual stipulation. The contract here which is alleged to include the
condition that the buyer shall shoulder the taxes is a Contract of Sale. In the Busuego case, there was merely a
Contract to Sell for the duration of which the party who shall be liable for the taxes about to be due is the buyer as
per agreement. In the case at bar, what was assumed by the vendee was the liability for taxes and other expenses

Atty. Bobby Lock
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"relative to the execution and/or implementation" of the Deed of Absolute Sale "including among others,
documentation, documentary and science stamps, expenses for registration and transfer of titles . . ." This clause
was stipulated for the purpose of clarifying which of the parties should bear the costs of execution and
implementation of the sale and to comply with Article 1487 of the Civil Code which states:jgc:chanrobles.com.ph
"ART. 1487 The expenses for the execution and registration of the sale shall be borne by the vendor, unless
there is a stipulation to the contrary."cralaw virtua1aw library
Moreover, the taxes mentioned in the clause here refer to those necessary to the completion of the sale and
accruing after the making of such sale on April 11, 1990 such as documentary stamp tax and capital gains tax.
In the Busuego case, the assumption by the vendee of the liability for real estate taxes prospectively due was in
harmony with the tax policy that the user of the property bears the tax. In the instant case, the interpretation that
the plaintiff-appellant assumed a liability for overdue real estate taxes for the periods prior to the contract of sale is
incongruent with the said policy because there was no immediate transfer of possession of the properties previous
to full payment of the repurchase price.
The facts of the case constrain us to rule that the plaintiff-appellant is not liable to pay the real property tax due for
the years 1977, 1978 and first quarter of 1979. The clause in the Deed of Sale cannot be interpreted to include
taxes for the periods prior to April 11, 1979, the date of repurchase.
To impose the real property tax on the estate which was neither the owner nor the beneficial user of the property
during the designated periods would not only be contrary to law but also unjust. If plaintiff-appellant intended to
assume the liability for realty taxes for the prior periods, the contract should have specifically stated "real estate
taxes" due for the years 1977, 1978 and first quarter of 1979. The payments made by the plaintiff-appellant
cannot be construed to be an admission of a tax liability since they were paid under protest and were done only in
compliance with one of the requirements for the consummation of the sale as directed by the City Treasurer of
Manila.
Hence, the tax assessed and collected from the plaintiff-appellants is not valid and a refund by the City government
is in order.
The Court rules, however, that the plaintiff-appellant is not entitled to a reimbursement from the respondent GSIS
because: (1) the GSIS is exempt from payment of the real property tax under Sec. 33 of the Revised Charter of the
GSIS; and (2) the tax should be based on "actual use" of the property. Section 40 of the Real Property Tax Code
supports the view that not even the GSIS is liable to pay real property tax on public land leased to other persons.
Section 40 provides:jgc:chanrobles.com.ph
"Sec. 40. Exemption from Real Property Tax. The exemption shall be as follows:chanrob1es virtual 1aw library
(a) Real property owned by the Republic of the Philippines or any of its political subdivisions and any government
owned corporation so exempt by its charter: Provided, however, That this exemption shall not apply to real
property of the abovenamed entities the beneficial use of which has been granted, for consideration or otherwise,
to a taxable person."cralaw virtua1aw library
In fact, if there is anyone liable the law and applicable jurisprudence point to the lessees of land owned by the
government-owned and controlled corporations. (Province of Nueva Ecija v. Imperial Mining Co., Inc., supra) In this
case, the Court can only declare the non-liability of a right to a refund. We cannot rule on the liability of the lessees
whose identities are not even clear because they were never impleaded.
The contention of the plaintiff-appellant that the respondent GSIS is liable to reimburse the tax because the latter
allegedly failed to exercise its claim to the tax-exemption privilege is without merit. The exemption is explicitly
granted by law and need not be applied for.
Regarding the issue on the existence of the personality to sue, the plaintiff-appellant asserts that since it was the
one which paid under protest the amount of P67,960.39 as real property tax, then it is the real party in interest to
sue for refund.chanrobles lawlibrary : rednad
The lower court, noting the transfer of the title to the properties to a third person, ruled that assuming arguendo
that there is a right to seek recovery, the subsequent sale "must have included the tax" and "as such all the credits
including the taxes that were paid was (sic) transferred already to the buyer." It ruled that plaintiff-appellant had
no personality to sue and the right of action must be between the subsequent buyer and the plaintiff-appellant. The
Court finds that the above ruling and the facts on which it is based are not sufficiently supported by the records of
the case. The evidence merely shows an admission of a subsequent sale of the properties by the plaintiff-appellant,
nothing more.

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WHEREFORE, IN VIEW OF THE FOREGOING, the judgment appealed from is hereby REVERSED and SET ASIDE. The
defendants appellees City of Manila, the City Treasurer and City Assessor of Manila are hereby ordered to refund to
the TESTATE ESTATE OF CONCORDIA LIM, through administratrix ERNESTINA CRISOLOGO-JOSE, the amount of
P67,960.39 as real estate taxes paid under protest.
SO ORDERED.
Page

Atty. Bobby Lock
THIRD DIVISION
[G.R. No. 104786. January 27, 1994.]
ALFREDO PATALINGHUG, Petitioner, v. HON. COURT OF APPEALS, RICARDO CRIBILLO, MARTIN
ARAPOL, CORAZON ALCASID, PRIMITIVA SEDO, Respondents.
Gonzales, Batiller, Bilog & Associates for Petitioner.
Garcilaso F . Vega for Private Respondents.
DECISION
ROMERO, J.:
In the case before us, we are called upon to decide whether or not petitioners operation of a funeral home
constitutes permissible use within a particular district or zone in Davao City.chanroblesvirtuallawlibrary
On November 17, 1982, the Sangguniang Panlungsod of Davao City enacted Ordinance No. 363, series of 1982
otherwise known as the "Expanded Zoning Ordinance of Davao City," Section 8 of which
states:jgc:chanrobles.com.ph
"Section 8. USE REGULATIONS IN C-2 DISTRICTS (Shaded light red in the Expanded Zoning Map) AC 2
District shall be dominantly for commercial and compatible industrial uses as provided hereunder:chanrob1es
virtual 1aw library
1. . . .
2. . . .
3.1 Funeral Parlors/Memorial Homes with adequate off street parking space (see parking standards of P.D. 1096)
and provided that they shall be established not less than 50 meters from any residential structures, churches and
other institutional buildings." (Emphasis provided)
Upon prior approval and certification of zoning compliance by Zoning Administrator Hector Esguerra, Building
Official Demetrio Alindad issued on February 10, 1987 Building Permit No. 870254 in favor of petitioner for the
construction of a funeral parlor in the name and style of Metropolitan Funeral Parlor at Cabaguio Avenue, Agdao,
Davao City.chanroblesvirtuallawlibrary
Thereafter, petitioner commenced the construction of his funeral parlor.
Acting on the complaint of several residents of Barangay Agdao, Davao City that the construction of petitioners
funeral parlor violated Ordinance No. 363, since it was allegedly situated within a 50-meter radius from the Iglesia
ni Kristo Chapel and several residential structures, the Sangguniang Panlungsod conducted an investigation and
found that "the nearest residential structure, owned by Wilfred G. Tepoot is only 8 inches to the south. . . ." 1
Notwithstanding the findings of the Sangguniang Panlungsod, petitioner continued to construct his funeral parlor
which was finished on November 3, 1987.
Consequently, private respondents filed on September 6, 1988 a case for the declaration of nullity of a building
permit with preliminary prohibitory and mandatory injunction and/or restraining order with the trial court. 2
After conducting its own ocular inspection on March 30, 1989, the lower court, in its order dated July 6, 1989,
dismissed the complaint based on the following findings: 3
"1. That the residential building owned by Cribillo and Iglesia ni Kristo chapel are 63.25 meters and 55.95 meters
away, respectively from the funeral parlor.chanroblesvirtuallawlibrary
2. Although the residential building owned by certain Mr. Tepoot is adjacent to the funeral parlor, and is only
separated therefrom by a concrete fence, said residential building is being rented by a certain Mr. Asiaten who

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actually devotes it to his laundry business with machinery thereon.

3. Private respondents suit is premature as they failed to exhaust the administrative remedies provided by
Ordinance No. 363."cralaw virtua1aw library
Hence, private respondents appealed to the Court of Appeals. (CA G.R. No. 23243).
In its decision dated November 29, 1991, the Court of Appeals reversed the lower court by annulling building
permit No. 870254 issued in favor of petitioner. 4 It ruled that although the buildings owned by Cribillo and Iglesia
Ni Kristo were beyond the 50-meter residential radius prohibited by Ordinance 363, the construction of the funeral
parlor was within the 50-meter radius measured from the Tepoots building. The Appellate Court disagreed with the
lower courts determination that Tepoots building was commercial and ruled that although it was used by Mr.
Tepoots lessee for laundry business, it was a residential lot as reflected in the tax declaration, thus paving the way
for the application of Ordinance No. 363.chanroblesvirtuallawlibrary
Hence, this appeal based on the following grounds:jgc:chanrobles.com.ph
"The Respondent Court of Appeals erred in concluding that the Tepoot building adjacent to petitioners funeral
parlor is residential simply because it was allegedly declared as such for taxation purposes, in complete disregard
of Ordinance No. 363 (The Expanded Zoning Ordinance of Davao City) declaring the subject area as dominantly for
commercial and compatible industrial uses."cralaw virtua1aw library
We reverse the Appellate Court and reinstate the ruling of the lower court that petitioner did not violate Section 8
of Davao City Ordinance No. 363. It must be emphasized that the question of whether Mr. Tepoots building is
residential or not is a factual determination which we should not disturb. As we have repeatedly enunciated, the
resolution of factual issues is the function of the lower courts where findings on these matters are received with
respect and are in fact binding on this court, except only where the case is shown as coming under the accepted
exceptions. 5
Although the general rule is that factual findings of the Court of Appeals are conclusive on us, 6 this admits of
exceptions as when the findings or conclusions of the Court of Appeals and the trial court are contrary to each
other. 7 While the trial court ruled that Tepoots building was commercial, the Appellate Court ruled otherwise. Thus
we see the necessity of reading and examining the pleadings and transcripts submitted before the trial
court.chanroblesvirtuallawlibrary
In the case at bar, the testimony of City Councilor Vergara shows that Mr. Tepoots building was used for a dual
purpose both as a dwelling and as a place where a laundry business was conducted. 8 But while its commercial
aspect has been established by the presence of machineries and laundry paraphernalia, its use as a residence,
other than being declared for taxation purposes as such, was not fully substantiated.
The reversal by the Court of Appeals of the trial courts decision was based on Tepoots building being declared for
taxation purposes as residential. It is our considered view, however, that a tax declaration is not conclusive of the
nature of the property for zoning purposes. A property may have been declared by its owner as residential for real
estate taxation purposes but it may well be within a commercial zone. A discrepancy may thus exist in the
determination of the nature of property for real estate taxation purposes vis-a-vis the determination of a property
for zoning purposes.
Needless to say, even if we are to examine the evidentiary value of a tax declaration under the Real Property Tax
Code, a tax declaration only enables the assessor to identify the same for assessment levels. In fact, a tax
declaration does not bind a provincial/city assessor, for under Sec. 22 of the Real Estate Tax Code, 9 appraisal and
assessment are based on the actual use irrespective of "any previous assessment or taxpayers valuation thereon,"
which is based on a taxpayers declaration. In fact, a piece of land declared by a taxpayer as residential may be
assessed by the provincial or city assessor as commercial because its actual use is
commercial.chanroblesvirtuallawlibrary
The trial courts determination that Mr. Tepoots building is commercial and, therefore, Sec. 8 is inapplicable, is
strengthened by the fact that the Sangguniang Panlungsod has declared the questioned area as commercial or C-2.
Consequently, even if Tepoots building was declared for taxation purposes as residential, once a local government
has reclassified an area as commercial, that determination for zoning purposes must prevail. While the commercial
character of the questioned vicinity has been declared thru the ordinance, private respondents have failed to
present convincing arguments to substantiate their claim that Cabaguio Avenue, where the funeral parlor was
constructed, was still a residential zone. Unquestionably, the operation of a funeral parlor constitutes a "commercial
purpose," as gleaned from Ordinance No. 363.
The declaration of the said area as a commercial zone thru a municipal ordinance is an exercise of police power to
promote the good order and general welfare of the people in the locality. Corollary thereto, the state, in order to

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promote the general welfare, may interfere with personal liberty, with property, and with business and occupations.
10 Thus, persons may be subjected to certain kinds of restraints and burdens in order to secure the general
welfare of the state and to this fundamental aim of government, the rights of the individual may be subordinated.
The ordinance which regulates the location of funeral homes has been adopted as part of comprehensive zoning
plans for the orderly development of the area covered thereunder.chanroblesvirtuallawlibrary
WHEREFORE, the decision of the Court of Appeals dated November 29, 1991 is hereby REVERSED and the order
dated July 6, 1989 of the Regional Trial Court of Davao City is REINSTATED.
SO ORDERED.
Page

Atty. Bobby Lock
THIRD DIVISION
[G.R. No. 127316. October 12, 2000.]
LIGHT RAIL TRANSIT AUTHORITY, Petitioner, v. CENTRAL BOARD OF ASSESSMENT APPEALS, BOARD OF
ASSESSMENT APPEALS OF MANILA and the CITY ASSESSOR OF MANILA, Respondents.
DECISION
PANGANIBAN, J.:
The Light Rail Transit Authority and the Metro Transit Organization function as service-oriented business entities,
which provide valuable transportation facilities to the paying public. In the absence, however, of any express grant
of exemption in their favor, they are subject to the payment of real property taxes.chanrob1es virtua1 1aw 1ibrary
The Case
In the Petition for Review before us, the Light Rail Transit Authority (LRTA) challenges the November 15, 1996
Decision 1 of the Court of Appeals (CA) in CA-GR SP No. 38137, which disposed as follows:chanrob1es virtual 1aw
library
WHEREFORE, premises considered, the appealed decision (dated October 15, 1994) of the Central Board of
Assessment Appeals is hereby AFFIRMED, with costs against the petitioner." 2
The affirmed ruling of the Central Board of Assessment Appeals (CBAA) upheld the June 26, 1992 Resolution of the
Board of Assessment Appeals of Manila, which had declared petitioners carriageways and passenger terminals as
improvements subject to real property taxes.
The Facts
The undisputed facts are quoted by the Court of Appeals (CA) from the CBAA ruling, as follows: 3
1. The LRTA is a government-owned and controlled corporation created and organized under Executive Order No.
603, dated July 12, 1980 . . . primarily responsible for the construction, operation, maintenance and/or lease of
light rail transit system in the Philippines, giving due regard to the [reasonable requirements] of the public
transportation of the country (LRTA v. The Hon. Commission on Audit, G.R. No. 88365);
"2. . . . [B]y reason of . . . Executive Order 603, LRTA acquired real properties . . . constructed structural
improvements, such as buildings, carriageways, passenger terminal stations, and installed various kinds of
machinery and equipment and facilities for the purpose of its operations;chanrob1es virtua1 1aw 1ibrary
"3. . . . [F]or . . . an effective maintenance, operation and management, it entered into a Contract of Management
with the Meralco Transit Organization (METRO) in which the latter undertook to manage, operate and maintain the
Light Rail Transit System owned by the LRTA subject to the specific stipulations contained in said agreement,
including payments of a management fee and real property taxes (Addl Exhibit "I", Records)
"4. That it commenced its operations in 1984, and that sometime that year, Respondent-Appellee City Assessor of
Manila assessed the real properties of [petitioner], consisting of lands, buildings, carriageways and passenger
terminal stations, machinery and equipment which he considered real propert[y] under the Real Property Tax Code,
to commence with the year 1985;
"5. That [petitioner] paid its real property taxes on all its real property holdings, except the carriageways and
passenger terminal stations including the land where it is constructed on the ground that the same are not real
properties under the Real Property Tax Code, and if the same are real propert[y], these . . . are for public
use/purpose, therefore, exempt from realty taxation, which claim was denied by the Respondent-Appellee City
Assessor of Manila; and
"6. . . . [Petitioner], aggrieved by the action of the Respondent-Appellee City Assessor, filed an appeal with the
Local Board of Assessment Appeals of Manila . . .. Appellee, herein, after due hearing, in its resolution dated June

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Page
10
26, 1992, denied [petitioners] appeal, and declared that carriageways and passenger terminal stations are
improvements, therefore, are real propert[y] under the Code, and not exempt from the payment of real property
tax.chanrob1es virtua1 1aw 1ibrary
"A motion for reconsideration filed by [petitioner] was likewise denied."cralaw virtua1aw library
The CA Ruling
The Court of Appeals held that petitioners carriageways and passenger terminal stations constituted real property
or improvements thereon and, as such, were taxable under the Real Property Tax Code. The appellate court
emphasized that such pieces of property did not fall under any of the exemptions listed in Section 40 of the
aforementioned law. The reason was that they were not owned by the government or any government-owned
corporation which, as such, was exempt from the payment of real property taxes. True, the government owned the
real property upon which the carriageways and terminal stations were built. However, they were still taxable
because beneficial use had been transferred to petitioner, a taxable entity.chanrob1es virtua1 1aw 1ibrary
The CA debunked the argument of petitioner that carriageways and terminals were intended for public use. The
former agreed, instead, with the CBAA. The CBAA had concluded that since petitioner was not engaged in purely
governmental or public service, the latters endeavors were proprietary. Indeed, petitioner was deemed as a profitoriented endeavor, serving as it did, only the paying public.
Hence, this Petition. 4
The Issues
In its Memorandum, 5 petitioner urges the Court to resolve the following matters:chanrob1es virtual 1aw library
"I
The Honorable Court of Appeals erred in not holding that the carriageways and terminal stations of petitioner are
not improvements for purposes of the Real Property Tax Code.
"II
The Honorable Court of Appeals erred in not holding that being attached to national roads owned by the national
government, subject carriageways and terminal stations should be considered property of the national
government.chanrob1es virtua1 1aw 1ibrary
"III
The Honorable Court of Appeals erred in not holding that payment of charges or fares in the operation of the light
rail transit system does not alter the nature of the subject carriageways and terminal stations as devoted for public
use.
"IV
The Honorable Court of Appeals erred in failing to consider the view advanced by the Department of Finance, which
takes charge of the overall collection of taxes, that subject carriageways and terminal stations are not subject to
realty taxes.chanrob1es virtua1 1aw 1ibrary
"V
The Honorable Court of Appeals erred in failing to consider that payment of the realty taxes assessed is not
warranted and should the legality of the questioned assessment be upheld, the amount of the realty taxes assessed
would far exceed the annual earnings of petitioner, a government corporation."cralaw virtua1aw library
The foregoing all point to one main issue: whether petitioners carriageways and passenger terminal stations are
subject to real property taxes.chanrob1es virtua1 1aw 1ibrary

Atty. Bobby Lock
11
The Courts Ruling
Page
The Petition has no merit.

Main Issue:chanrob1es virtual 1aw library
May Real Property Taxes be Assessed and Collected?
The Real Property Tax Code, 6 the law in force at the time of the assailed assessment in 1984, mandated that
"there shall be levied, assessed and collected in all provinces, cities and municipalities an annual ad valorem tax on
real property such as lands, buildings, machinery and other improvements affixed or attached to real property not
hereinafter specifically exempted." 7
Petitioner does not dispute that its subject carriageways and stations may be considered real property under Article
415 of the Civil Code. However, it resolutely argues that the same are improvements, not of its properties, but of
the government-owned national roads to which they are immovably attached. They are thus not taxable as
improvements under the Real Property Tax Code. In essence, it contends that to impose a tax on the carriageways
and terminal stations would be to impose taxes on public roads.
The argument does not persuade. We quote with approval the solicitor generals astute comment on this
matter:jgc:chanrobles.com.ph
"There is no point in clarifying the concept of industrial accession to determine the nature of the property when
what is fundamentally important for purposes of tax classification is to determine the character of the property
subject [to] tax. The character of tax as a property tax must be determined by its incidents, and from the natural
and legal effect thereof. It is irrelevant to associate the carriageways and/or the passenger terminals as accessory
improvements when the view of taxability is focused on the character of the property. The latter situation is not a
novel issue as it has already been resolved by this Honorable Court in the case of City of Manila v. IAC (GR No.
71159, November 15, 1989) wherein it was held:chanrob1es virtual 1aw library
The New Civil Code divides the properties into property for public and patrimonial property (Art. 423), and further
enumerates the property for public use as provincial road, city streets, municipal streets, squares, fountains, public
waters, public works for public service paid for by said [provinces], cities or municipalities; all other property is
patrimonial without prejudice to provisions of special laws. (Art. 424, Province of Zamboanga v. City of Zamboanga,
22 SCRA 1334 [1968])chanrob1es virtua1 1aw 1ibrary
x
. . .while the following are corporate or proprietary property in character, viz: municipal water works, slaughter
houses, markets, stables, bathing establishments, wharves, ferries and fisheries. Maintenance of parks, golf
courses, cemeteries and airports, among others, are also recognized as municipal or city activities of a proprietary
character (Dept. of Treasury v. City of Evansville; 60 NE 2nd 952)"
"The foregoing enumeration in law does not specify or include carriageway or passenger terminals as inclusive of
properties strictly for public use to exempt petitioners properties from taxes. Precisely, the properties of petitioner
are not exclusively considered as public roads being improvements placed upon the public road, and this
separability nature of the structure in itself physically distinguishes it from a public road. Considering further that
carriageways or passenger terminals are elevated structures which are not freely accessible to the public, vis-a-vis
roads which are public improvements openly utilized by the public, the former are entirely different from the
latter.chanrob1es virtua1 1aw 1ibrary
"The character of petitioners property, be it an improvements as otherwise distinguished by petitioner, needs no
further classification when the law already classified it as patrimonial property that can be subject to tax. This is in
line with the old ruling that if the public works is not for such free public service, it is not within the purview of the
first paragraph of Art. 424 if the New Civil Code." 8
Though the creation of the LRTA was impelled by public service to provide mass transportation to alleviate the
traffic and transportation situation in Metro Manila its operation undeniably partakes of ordinary business.
Petitioner is clothed with corporate status and corporate powers in the furtherance of its proprietary objectives. 9
Indeed, it operates much like any private corporation engaged in the mass transport industry. Given that it is
engaged in a service-oriented commercial endeavor, its carriageways and terminal stations are patrimonial property
subject to tax, notwithstanding its claim of being a government-owned or controlled corporation.
True, petitioners carriageways and terminal stations are anchored, at certain points, on public roads. However, it

Atty. Bobby Lock
Page
12
must be emphasized that these structures do not form part of such roads, since the former have been constructed
over the latter in such a way that the flow of vehicular traffic would not be impeded. These carriageways and
terminal stations serve a function different from that of the public roads. The former are part and parcel of the light
rail transit (LRT) system which, unlike the latter, are not open to use by the general public. The carriageways are
accessible only to the LRT trains, while the terminal stations have been built for the convenience of LRTA itself and
its customers who pay the required fare.chanrob1es virtua1 1aw 1ibrary
Basis of Assessment
Is Actual Use of
Real Property
Under the Real Property Tax Code, real property is classified for assessment purposes on the basis of actual use, 10
which is defined as "the purpose for which the property is principally or predominantly utilized by the person in
possession of the property." 11
Petitioner argues that it merely operates and maintains the LRT system, and that the actual users of the
carriageways and terminal stations are the commuting public. It adds that the public use character of the LRT is
not negated by the fact that revenue is obtained from the latters operations.
We do not agree. Unlike public roads which are open for use by everyone, the LRT is accessible only to those who
pay the required fare. It is thus apparent that petitioner does not exist solely for public service, and that the LRT
carriageways and terminal stations are not exclusively for public use. Although petitioner is a public utility, it is
nonetheless profit-earning. It actually uses those carriageways and terminal stations in its public utility business
and earns money therefrom.chanrob1es virtua1 1aw 1ibrary
Petitioner Not Exempt from
Payment of Real Property Taxes
In any event, there is another legal justification for upholding the assailed CA Decision. Under the Real Property Tax
Code, real property owned by the Republic of the Philippines or any of its political subdivisions and any
government-owned or controlled corporation so exempt by its charter, provided, however, that this exemption shall
not apply to real property of the abovenamed entities the beneficial use of which has been granted, for
consideration or otherwise, to a taxable person." 12
Executive Order No. 603, the charter of petitioner, does not provide for any real estate tax exemption in its favor.
Its exemption is limited to direct and indirect taxes, duties or fees in connection with the importation of equipment
not locally available, as the following provision shows:jgc:chanrobles.com.ph
"ARTICLE 4
TAX AND DUTY EXEMPTIONS
Sec. 8. Equipment, Machineries, Spare Parts and Other Accessories and Materials. The importation of equipment,
machineries, spare parts, accessories and other materials, including supplies and services, used directly in the
operations of the Light Rails Transit System, not obtainable locally on favorable terms, out of any funds of the
authority including, as stated in Section 7 above, proceeds from foreign loans credits or indebtedness, shall
likewise be exempted from all direct and indirect taxes, customs duties, fees, imposts, tariff duties, compensating
taxes, wharfage fees and other charges and restrictions, the provisions of existing laws to the contrary
notwithstanding." chanrob1es virtua1 1aw 1ibrary
Even granting that the national government indeed owns the carriageways and terminal stations, the exemption
would not apply because their beneficial use has been granted to petitioner, a taxable entity.
Taxation is the rule and exemption is the exception. Any claim for tax exemption is strictly construed against the
claimant. 13 LRTA has not shown its eligibility for exemption; hence, it is subject to the tax.chanrob1es virtua1 1aw
1ibrary
WHEREFORE, the Petition is hereby DENIED and the assailed Decision of the Court of Appeals AFFIRMED. Costs
against the petitioner.
SO ORDERED.
Melo, Vitug and Purisima, JJ., concur.
Page
Gonzaga-Reyes, J., took no part.
13

Atty. Bobby Lock
EN BANC
[G.R. NO. 154126 October 11, 2005]
Allied Banking Corporation as Trustee for the Trust Fund of College Assurance Plan Philippines, Inc.
(CAP), Petitioner, v. The Quezon City Government, the Quezon City Treasurer, the Quezon City Assessor
and the City Mayor of Quezon City, Respondents.
DECISION
CARPIO MORALES, J.:
From the Resolution1 of April 10, 2002 issued by Branch 225 of the Regional Trial Court (RTC) of Quezon City
dismissing the petition for prohibition and declaratory relief 2 of Allied Banking Corporation (petitioner), the present
appeal by certiorari was lodged.
On December 19, 1995, the Quezon City government enacted City Ordinance No. 357, Series of 1995 (the
ordinance),3 Section 3 of which reads:
Section 3. The City Assessor shall undertake a general revision of real property assessments using as basis the
newly approved schedule specified in Sections 1 and 2 hereof. He shall apply the new assessment level of 15% for
residential and 40% for commercial and industrial classification, respectively as prescribed in Section 8 (a) of the
1993 Quezon City Revenue Code to determine the assessed value of the land. Provided; however, that parcels of
land sold, ceded, transferred and conveyed for remuneratory consideration after the effectivity of this
revision shall be subject to real estate tax based on the actual amount reflected in the deed of
conveyance or the current approved zonal valuation of the Bureau of Internal Revenue prevailing at the
time of sale, cession, transfer and conveyance, whichever is higher, as evidenced by the certificate of
payment of the capital gains tax issued therefor. 4(Emphasis and underscoring supplied)rllbrr
On July 1, 1998, petitioner, as trustee for College Assurance Plan of the Philippines, Inc., purchased from Liwanag
C. Natividad et al. a 1,000 square meter parcel of land located along Aurora Boulevard, Quezon City in the amount
of P38,000,000.00.5
Prior to the sale, Natividad et al. had been paying the total amount of P85,050.006 as annual real property tax
based on the property's fair market value of P4,500,000.00 and assessed value ofP1,800,000.00 under Tax
Declaration No. D-102-03778.7
After its acquisition of the property, petitioner was, in accordance with Section 3 of the ordinance, required to
pay P102,600.00 as quarterly real estate tax (or P410,400.00 annually) under Tax Declaration No. D-102-03780
which pegged the market value of the property at P38,000,000.00 - the consideration appearing in the Deed of
Absolute Sale, and its assessed value at P15,200,000.00.8
Petitioner paid the quarterly real estate tax for the property from the 1st quarter of 1999 up to the 3rd quarter of
2000. Its tax payments for the 2nd, 3rd, and 4th quarter of 1999, and 1st and 2nd quarter of 2000 were, however,
made under protest.9
In its written protest10 with the City Treasurer, petitioner assailed Section 3 of the ordinance as null and void, it
contending that it is violative of the equal protection and uniformity of taxation clauses of the
Constitution.11 Petitioner, moreover, contended that the proviso is unjust, excessive, oppressive, unreasonable,
confiscatory and contrary to Section 130 of the Local Government Code which provides:

Atty. Bobby Lock
Page
14
section 130. Fundamental Principles. - The following fundamental principles shall govern the exercise of the
taxing and revenue-raising powers of local government units:
(a) Taxation shall be uniform in each local government unit;
(b) Taxes, fees, charges and other impositions shall:
(1) be equitable and based as far as practicable on the taxpayer's ability to pay;
(2) be levied and collected only for public purposes;
(3) not be unjust, excessive, oppressive, or confiscatory;
(4) not be contrary to law, public policy, national economic policy, or in restraint of trade;
xxx
Petitioner, through its counsel, later sent a March 24, 2000 demand letter to the Quezon City Treasurer's Office
seeking a refund of the real estate taxes it erroneously collected from it.12 The letter was referred for appropriate
action13 to the City Assessor who, by letter dated May 7, 2000, denied the demand for refund on the ground that
the ordinance is presumed valid and legal unless otherwise declared by a court of competent jurisdiction. 14
Petitioner thereupon filed on August 11, 2000 a petition for prohibition and declaratory relief before the Quezon
City RTC for the declaration of nullity of Section 3 of the ordinance; the enjoining of respondents - Quezon City
Treasurer, Quezon City Assessor, and City Mayor of Quezon City - from further implementing the ordinance; for the
Quezon City Treasurer to be ordered to refund the amount of P633,150.00 representing the real property tax
erroneously collected and paid under protest; and for respondents to pay attorney's fees in the amount
of P1,000,000.00 and costs of the suit.15
In support of its thesis, petitioner contended that the re-assessment under the third sentence of Section 3 of the
ordinance for purposes of real estate taxation of a property's fair market value where it is sold, ceded, transferred
or conveyed for remuneratory consideration is null and void as it is an invalid classification of real properties which
are transferred, ceded or conveyed and those which are not, the latter remaining to be valued and assessed in
accordance with the general revisions of assessments of real properties under the first sentence of Section 3. 16
Petitioner additionally contended that the proviso of Section 3 of the ordinance which allows re-assessment every
time the property is transferred, ceded or conveyed violates Sections 219 17 and 22018 of the Local Government
Code which provide that the assessment of real property shall not be increased oftener than once every three (3)
years except in case of new improvements substantially increasing the value of said property or of any change in
its actual use.19
Before respondents could file any responsive pleading or on March 6, 2001, respondent Quezon City Government
enacted Ordinance No. SP-1032, S-200120 which repealed the assailed proviso in Section 3 of the 1995 Ordinance.
The repealing ordinance which took effect upon its approval on March 28, 2001 reads in part:
"WHEREAS, the implementation of the second (2nd) sentence of Section 3 of the Ordinance creates a situation
whereby owners of newly acquired land for remuneratory consideration beginning January 1, 1996 and forward will
have to pay higher taxes than its adjoining/adjacent lot or lots in the adjoining blocks, or nearby lots within its
immediate vicinity which have remained undisturbed, not having been sold, ceded, transferred, and/or conveyed;
WHEREAS, the owners of the newly acquired property are complaining/protesting the validity/legality of the second
(2nd) sentence of Section 3 of the ordinance for being either arbitrary, unjust, excessive, oppressive, and/or
contrary to law;

Atty. Bobby Lock
Page
15
WHEREAS, Section 5 Article X of the Philippine Constitution provides that: 'Each local government unit shall have
the power to create its own sources of revenue and to levy taxes, fees and charges subject to such guidelines and
limitations as the Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees and
charges shall accrue exclusively to the local government' (Underscoring supplied);
WHEREAS, the guidelines and limitations imposed on the local government units in the exercise of their taxing
powers have been expressly stipulated by Congress when it enacted Section 130 of Republic Act No. 7160,
otherwise known as the Local Government Code of 1991 xxx;
WHEREAS, these fundamental principles of taxation find support and affirmation in the following applicable cases
decided by the Court of Tax Appeals (sic), on similar cases which held that:
1. An increase in the valuation of land due to sale and transfer of such property was arbitrary.Uniformity in taxation
means that all kinds of property of the same class shall be taxed at the same rate. (Churchhill v. Concepcion, 34
Phi. 969; Eastern Theatrical Co. v. Alfonso, 83 Phil. 852) xxx. crvll
2. The law requires the real property shall be assessed at its true and full value, or cash value, or fair market value.
But in determining or fixing the fair market value of property for tax purposes it is essential that the rules of
uniformity be observed. More important tha[n] the obligation to seek the fair market value of property is the
obligation of the assessor to see to it that the "rule of taxation shall be uniform," for this a (sic) rule which is
guaranteed by the Constitution. A taxpayer should not be made to pay more taxes on his property while owners of
surrounding properties, under the same circumstance pay less.
WHEREAS, it is clear from the foregoing premises that the second (2nd) sentence of the Ordinance, fixing the
realty tax based on the actual amount reflected in the deed of conveyance or the current approved zonal valuation
x x x is violative of, and repugnant to, the uniformity rule of taxation;
WHEREAS, in view of the above considerations there appear to be merit and validity to the complaints/protests of
tax payers, a re-examination and repeal of the entire second sentence of Section 3 of the Ordinance is in order."
Petitioner subsequently moved to declare respondents in default 21 for failure to file a responsive pleading within the
period, as extended. Before the motion could be heard,22 however, respondents moved to dismiss the
petition,23 averring that the passage of the repealing ordinance had rendered the petition moot and academic.
Petitioner opposed the motion, it alleging that while its action for the declaration of nullity of the proviso was
rendered moot and academic by its repeal, its claim for refund and attorney's fees had not been mooted, and the
trial court still had to determine if Section 3 of the ordinance "is null and void ab initio and perforce, may not be
enforced during the intervening period from the time of its enactment until the time of its repeal." 24
Respondents maintained, however, that the assailed proviso remained in full force and effect until the date of its
repeal, based on the rule that a statute is construed prospectively unless the legislative intent was to give it
retrospective application.25 And they called attention to the provision in Section 2 of the repealing ordinance that
"[it] shall take effect upon its approval," hence, clearly showing that the local legislative body was to grant it
prospective application.26
As to the claim for refund, respondents averred that it was premature for the trial court to take cognizance thereof
as petitioner had an administrative remedy.27
By Resolution of April 10, 2002, the trial court granted respondents' motion to dismiss in this wise:
There is no need for this Court to resolve whether the subject Ordinance is null and void as the same was
already declared to be violative of, and repugnant to the "uniformity rule" on taxation by the Quezon City Council
itself thru its pronouncements in Quezon City Ordinance No. 1032, Series of 2001. x x x

Atty. Bobby Lock
16
xxx
Page
As to petitioner's claim for refund, since an administrative remedy is available for refund of taxes illegally and
erroneously collected and petitioner has not yet availed of it, the Court shall not take cognizance of this issue
considering the rule on "Exhaustion of Administrative Remedy."28(Underscoring supplied)rllbrr
Its Motion for Reconsideration29 having been denied,30 petitioner comes before this Court on appeal
by certiorari under Rule 45 on the following issues:
A
Whether or not the trial court erred in dismissing the instant case for failure of the petitioner to exhaust
administrative remedies.
B
Whether or not Section 3, Quezon City Ordinance No. 357, Series of 1995, which was abrogated for being
UNCONSTITUTIONAL can be the basis of collecting real estate taxes prior to its repeal. 31
Although as a rule, administrative remedies must first be exhausted before resort to judicial action can prosper,
there is a well-settled exception in cases where the controversy does not involve questions of fact but only of law. 32
Nevertheless, while cases raising purely legal questions are excepted from the rule requiring exhaustion of
administrative remedies before a party may resort to the courts, petitioner, in the case at bar, does not raise just
pure questions of law. Its cause of action requires the determination of the amount of real property tax paid
under protest and the amount of attorney's fees. These issues are essentially questions of fact which preclude
this Court from reviewing the same.33
Since the procedure for obtaining a refund of real property taxes is provided under Sections
252,34226,35 229,36 23037 and 23138 of the Local Government Code, petitioner's action for prohibition in the RTC was
premature as it had a plain, speedy and adequate remedy of appeal in the ordinary course of law. 39 As such, the
trial court correctly dismissed its action on the ground that it failed to exhaust the administrative remedies stated
above.40
Raising questions of fact is moreover inappropriate in an appeal by certiorari under Rule 45 of the Rules of Court
where only questions of law may be reviewed.41 It is axiomatic that the Supreme Court is not a trier of facts 42 and
the factual findings of the court a quo are conclusive upon it, except: (1) where the conclusion is a finding
grounded entirely on speculation, surmise and conjectures; (2) where the inference made is manifestly mistaken;
(3) where there is grave abuse of discretion; and (4) where the judgment is based on a misapprehension of facts,
and the findings of fact of the trial court are premised on the absence of evidence and are contradicted by evidence
on record.43
From a considered scrutiny of the records of the case, this Court finds that petitioner has shown no cause for this
Court to apply any of the foregoing exceptions.
Petitioner has not put squarely in issue the constitutionality of the proviso in Section 3 of the ordinance. It merely
alleges that the said proviso can not be the basis for collecting real estate taxes at any given time,
the Sangguniang Panlungsod of Quezon City not having intended to impose such taxes in the first place. As such
the repealing ordinance should be given retroactive effect.
As a rule, the courts will not resolve the constitutionality of a law, if the controversy can be settled on other
grounds.44

Atty. Bobby Lock
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17
Where questions of constitutional significance are raised, the Court can exercise its power of judicial review only if
the following requisites are complied: First, there must be before the Court an actual case calling for the exercise of
judicial review. Second, the question before the Court must be ripe for adjudication. Third, the person challenging
the validity of the act must have standing to challenge.Fourth, the question of constitutionality must have been
raised at the earliest opportunity, and lastly, the issue of constitutionality must be the very lis mota of the case.45
Considering that there are factual issues still waiting to be threshed out at the level of the administrative agency,
there is no actual case calling for the exercise of judicial review. In addition, the requisite that the constitutionality
of the assailed proviso in question be the very lis mota of the case is absent. Thus, this Court refrains from passing
on the constitutionality of the proviso in Section 3 of the 1995 Ordinance.
The factual issues which petitioner interjected in its petition aside, the only crucial legal query in this case is the
validity of the proviso fixing the appraised value of property at the stated consideration at which the property was
last sold.
This Court holds that the proviso in question is invalid as it adopts a method of assessment or appraisal of real
property contrary to the Local Government Code, its Implementing Rules and Regulations and the Local
Assessment Regulations No. 1-9246 issued by the Department of Finance.47
Under these immediately stated authorities, real properties shall be appraised at the current and fair market value
prevailing in the locality where the property is situated 48 and classified for assessment purposes on the basis of its
actual use.49
"Fair 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,50 taking into consideration all uses to which the property is adapted and
might in reason be applied. The criterion established by the statute contemplates a hypothetical sale. Hence, the
buyers need not be actual and existing purchasers.51
As this Court stressed in Reyes v. Almanzor,52 assessors, in fixing the value of real property, have to consider all
the circumstances and elements of value, and must exercise prudent discretion in reaching conclusions. 53 In this
regard, Local Assessment Regulations No. 1-9254 establishes the guidelines to assist assessors in classifying,
appraising and assessing real property.
Local Assessment Regulations No. 1-92 suggests three approaches in estimating the fair market value, namely: (1)
the sales analysis or market data approach; (2) the income capitalization approach; and (3) the replacement or
reproduction cost approach.55
Under the sales analysis approach, the price paid in actual market transactions is considered by taking into account
valid sales data accumulated from among the various sources stated in Sections 202, 203, 208, 209, 210, 211 and
213 of the Code.56
In the income capitalization approach, the value of an income-producing property is no more than the return
derived from it. An analysis of the income produced is necessary in order to estimate the sum which might be
invested in the purchase of the property.
The reproduction cost approach, on the other hand, is a factual approach used exclusively in appraising man-made
improvements such as buildings and other structures, based on such data as materials and labor costs to
reproduce a new replica of the improvement.
The assessor uses any or all of these approaches in analyzing the data gathered to arrive at the estimated fair
market value to be included in the ordinance containing the schedule of fair market values.

Atty. Bobby Lock
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18
Given these different approaches to guide the assessor, it can readily be seen that the Code did not intend to have
a rigid rule for the valuation of property, which is affected by a multitude of circumstances which no rule could
foresee or provide for. Thus, what a thing has cost is no singular and infallible criterion of its market value. 57
Accordingly, this Court holds that the proviso directing that the real property tax be based on the actual amount
reflected in the deed of conveyance or the prevailing BIR zonal value is invalid not only because it mandates an
exclusive rule in determining the fair market value but more so because it departs from the established procedures
stated in the Local Assessment Regulations No. 1-92 and unduly interferes with the duties statutorily placed upon
the local assessor58 by completely dispensing with his analysis and discretion which the Code and the regulations
require to be exercised. An ordinance that contravenes any statute is ultra vires and void.59
Further, it is noted that there is nothing in the Charter of Quezon City 60 and the Quezon City Revenue Code of
199361 that authorize public respondents to appraise property at the consideration stated in the deed of
conveyance.
Using the consideration appearing in the deed of conveyance to assess or appraise real properties is not only illegal
since "the appraisal, assessment, levy and collection of real property tax shall not be let to any private
person,"62 but it will completely destroy the fundamental principle in real property taxation - that real property shall
be classified, valued and assessed on the basis of its actual useregardless of where located, whoever owns it, and
whoever uses it.63 Necessarily, allowing the parties to a private sale to dictate the fair market value of the property
will dispense with the distinctions of actual use stated in the Code and in the regulations.
The invalidity of the assessment or appraisal system adopted by the proviso is not cured even if the proviso
mandates the comparison of the stated consideration as against the prevailing BIR zonal value, whichever is higher,
because an integral part of that system still permits valuing real property in disregard of its "actual use."
In the same vein, there is also nothing in the Code or the regulations showing the congressional intent to require
an immediate adjustment of taxes on the basis of the latest market developments as, in fact, real property
assessments may be revised and/or increased only once every three (3) years. 64 Consequently, the real property
tax burden should not be interpreted to include those beyond what the Code or the regulations expressly and
clearly state.
Still another consequence of the proviso is to provide a chilling effect on real property owners or administrators
to enter freely into contracts reflecting the increasing value of real properties in accordance with prevailing market
conditions. While the Local Government Code provides that the assessment of real property shall not be increased
oftener than once every three (3) years,65 the questioned part of the proviso subjects the real property to a tax
based on the actual amount appearing on the deed of conveyance or the current approved zonal valuation of the
Bureau of Internal Revenue prevailing at the time of sale, cession, transfer and conveyance, whichever is higher. As
such, any subsequent sale during the three-year period will result in a real property tax higher than the tax
assessed at the last prior conveyance within the same period. To save on taxes, real property owners or
administrators are forced to hold on to the property until after the said three-year period has lapsed. Should they
nonetheless decide to sell within the said three-year period, they are compelled to dispose the property at a price
not exceeding that obtained from the last prior conveyance in order to avoid a higher tax assessment. In these two
scenarios, real property owners are effectively prevented from obtaining the best price possible for their properties
and unduly hampers the equitable distribution of wealth.
While the state may legitimately decide to structure its tax system to discourage rapid turnover in ownership of
real properties, such state interest must be expressly stated in the executing statute or it can at least be gleaned
from its provisions.
In the case at bar, there is nothing in the Local Government Code, the implementing rules and regulations, the
local assessment regulations, the Quezon City Charter, the Quezon City Revenue Code of 1993 and the "Whereas"
clauses of the 1995 Ordinance from which this Court can draw, at the very least, an intimation of this state
interest. As such, the proviso must be stricken down for being contrary to public policy and for restraining trade.66

Atty. Bobby Lock
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19
In fine, public respondent Quezon City Government exceeded its statutory authority when it enacted the proviso in
question. The provision is thus null and void ab initio for being ultra vires and for contravening the provisions of the
Local Government Code, its implementing regulations and the Local Assessment Regulations No. 1-92. As such, it
acquired no legal effect and conferred no rights from its inception.
A word on the applicability of the doctrine in this decision. It applies only in the determination of real estate tax
payable by owners or administrators of real property.
In light of the foregoing disquisitions, addressing the issue of retroactivity of the repealing ordinance is rendered
unnecessary.
WHEREFORE, the petition is hereby GRANTED. The assailed portion of the provisions of Section 3 of Quezon City
Ordinance No. 357, Series of 1995 is hereby declared invalid.
Petitioner's claim for refund, however, must be lodged with the Local Board of Assessment Appeals, if it is not
barred by the statute of limitations.
SO ORDERED.
[G.R. No. 106588. March 24, 1997]
RAUL H. SESBREO, petitioner, vs. CENTRAL BOARD OF ASSESSMENT APPEALS and THE CITY ASSESSOR
OF CEBU CITY, respondents.
DECISION
PANGANIBAN, J.:

Atty. Bobby Lock
Page
20
In resolving the validity of retroactive real estate tax assessments, may the Central Board of Assessment
Appeals and thereafter the Supreme Court take up and consider issues not raised before the Local Board of
Assessment Appeals? For the purpose of assessing back taxes on real estate, what is the meaning of the phrase
"declared for the first time?" Specifically, may such back taxes be assessed on a property initially declared as a
"residential house of strong materials" after the City Assessor discovered years later that such property was after
all a residential building consisting of four storeys with a fifth storey used as roof deck?
These are some of the questions raised in this petition to annul and set aside the Resolution [1] dated July 28,
1992 of Respondent Central Board of Assessment Appeals [2] in CBAA Case No. 257.
The Facts
On April 3, 1980, petitioner purchased from Estrella Benedicto Tan two (2) parcels of land covered by Transfer
Certificate of Title No. T-55917 issued by the Register of Deeds of Cebu City [3]and described in the deed of sale as
follows:[4]
"A parcel of land (Lot 308 of the Cadastral Survey of Cebu), with the improvements thereon, situated in the City of
Cebu (formerly Municipality of Cebu), containing an area of Forty Nine (49) square meters, more or less x x x.
A parcel of land (Lot 309 of the Cadastral Survey of Cebu), with the improvements thereon, situated in the City of
Cebu, containing an area of Forty Eight (48) square meters, more or less x x x."
The conveyance included "a residential house of strong materials constructed on the lots abovementioned"[5] located in Cebu City.
Thereafter, petitioner declared the real property constructed on the said lots for purposes of tax assessment
as a residential house of strong materials with a floor area of sixty (60) square meters. Effective in the year 1980,
the declared property was assessed by Respondent City Assessor of Cebu City under Tax Declaration No. 02-20454
at a market value of P60,000.00 and an assessed value of P36,900.00.[6]
During a tax-mapping operation conducted in February 1989, the field inspectors of the Cebu City Assessor
discovered that the real property declared and assessed under Tax Declaration No. 02-20454 was actually a
residential building consisting of four (4) storeys with a fifth storey used as a roof deck. The building had a total
floor area of 500.20 square meters. The area for each floor was 100.04 square meters. The building was found to
have been made of Type II-A materials. On October 17, 1990, these findings were confirmed by the Board of
Commissioners in an ocular inspection conducted on the subject property.
Based on the findings of the field inspectors, Respondent City Assessor of Cebu City issued Tax Declaration
No. GR-06-045-00162 effective in the year 1989, canceling Tax Declaration No. 02-20454 and assessing the
building therein at a net market value of P499,860.00 and an assessed value of P374,900.00. The 1981-1984
Schedule of Market Value was applied in the assessment.[7]
Petitioner protested the new assessment for being "excessive and unconscionable," [8] contending that it was
increased by more than 1,000% as compared to its previous market value ofP60,000.00 or assessed value
of P36,900.00 under Tax Declaration No. 02-20454 and "that he bought the building including the lots for only
P100,000.00 on April 3, 1980, which amount should be the market value of the building for purposes of
determining its assessed value."[9] He questioned the new assessment before the Local Board of Assessment
Appeals of Cebu City, which however dismissed petitioner's appeal on January 11, 1990. [10] Hence, petitioner
elevated his case to Respondent Central Board of Assessment Appeals.
On September 23, 1991, Respondent CBAA rendered a decision, [11] the dispositive portion of which reads as
follows:[12]
"WHEREFORE, premises considered, the appealed Resolution is hereby modified, viz.:
For the purpose of determining the back taxes due on the excess area of subject building for the years 1981 to
June 30, 1987, Respondent-Appellee (Respondent City Assessor of Cebu) is hereby directed to issue a new tax
declaration effective 1981 based on the following assessments:
Type II-A Building (Residential) at P380.00/sq. m. (Minimum Rate)
S1 (95-60)
35 Sq. m.
S2
Page
Undeclared Excess
Area
21

Atty. Bobby Lock
Unit Value
Per Sq. M.
Market Value
P 380.00
P13,300.00
95 Sq. m.
380.00
36,100.00
S3
95 Sq. m.
380.00
36,100.00
S4
95 Sq. m.
380.00
36,100.00
380.00
10,830.00
S5 Roof deck
95 Sq. m. 30% of
Total
415 Sq. m
P132,430.00
Assessment Level
x 45%
Assessed Value
P59,593.50
For the purpose of determining the back taxes due on the excess area of subject building for the years July 1, 1987
to 1989, Respondent-Appellee is hereby ordered to issue another tax declaration effective July 1, 1987, to
supersede the tax declaration (effective 1981) to be issued above based on the following assessments:
Type II-A Building (Residential) at P1,400.00/sq. m. (Minimum Rate)
Undeclared Exces
s Area
Unit Value Per Sq. M.

Market Value
S1 (95-4)
35 Sq. m.
P1,400.00
P 49,000.00
S2
95 Sq. m.
1,400.00
133,000.00
S3
95 Sq. m.
1,400.00
133,000.00
S4
95 Sq. m.
1,400.00
133,000.00
S5 Roof deck
95 Sq. m. 30% of
39,
1,400.00
Total
415 Sq. m.
900.00
P 487,900.00
Less : 30 % Depreciation allowance
146,370.00
Net Market Value
341,530.00
Assessment Level
x 65%
Assessed Value
P221,994.50
Not satisfied, petitioner then filed a motion for reconsideration. During the hearing on said motion, the parties
submitted a joint manifestation or compromise agreement which reads: [13]
"1. That the revised valuation of the property is P78,330.00 as ASSESSED VALUE, classifying the property as class
II-B at P1,110 per sq. m., the building having been completed and occupied in 1950 or forty-two (42) years ago;
2. That Section 23 of Presidential Decree No. 464 APPLIES to this case considering that the appellee has NOT YET
SUBMITTED the required CERTIFICATION to the Secretary of Finance to the effect that theGENERAL REVISION OF
PROPERTY ASSESSMENTS FOR CEBU CITY HAS BEEN FINISHED. Sec. 23 of P.D. 464 uses the CONJUNCTIVE WORD

Atty. Bobby Lock
Page
22
'AND' between the phrases: 'ASSESSMENTSSHALL BECOME EFFECTIVE and 'TAXES SHALL ACCRUE AND BE
PAYABLE.'"
Thereafter, Respondent CBAA issued the assailed Resolution accepting the joint manifestation "for whatever
purpose it may be worth to the case," raising "no objection to Manifestation No. 1 for being not contrary to law or
public policy" but finding that "Manifestation No. 2 has no bearing on the instant case because Section 25 and not
Section 23 of P.D. 464 is the law applicable x x x." [14] The dispositive portion of the now assailed Resolution reads:
[15]
"WHEREFORE, our Decision on (sic) this case is hereby MODIFIED. For purposes of determining the back taxes due
on the excess area of subject building from 1981 to 1989, Respondent-Appellee Assessor of Cebu City is hereby
ordered to issue
1. Tax Declaration effective 1981 to June 30, 1987, based on the minimum rate per sq. m.
for a Type II-B building, in accordance with the 1978-79 Schedule of Values;
2. Tax Declaration to supersede Tax Declaration No. 1 to be effective from July 1, 1987 to
the year 1988, based on the minimum rate per sq. m. for a Type II-B building, in
accordance with the 1981-1984 Schedule of Values; and
3. Tax Declaration to supersede Tax Declaration No. 2 to take effect in 1989, based on the
revised valuation provided under No. 1 of the Joint Manifestation of the parties
hereof."
The Issues
Disagreeing with the foregoing, petitioner thus filed this "APPEAL BY CERTIORARI" assigning the following
errors allegedly committed by Respondent CBAA: [16]
"1. Respondent CBAA gravely erred in resolving the matter of back taxes which was never raised in issue in
the Local Board of Assessment Appeals of Cebu City or in the appeal by the petitioner before the Central
Board of Assessment Appeals (CBAA).
2. Respondent CBAA gravely erred in disregarding the jurisprudence in Reyes vs. Almanzor,[17] 196 SCRA 328
(should be 322).
3. Respondent CBAA gravely erred in mis-interpreting or mis-applying Section 25 of P.D. 464;
4. Respondent CBAA gravely erred in disregarding or failing or refusing to apply Section 23 of P.D. 464."
In his Memorandum dated July 23, 1993, petitioner refined the issues as follows: [18]
"B-1. Whether or not Respondent Central Board of Assessment Appeals erred in resolving the issue of back
taxes from 1981 to 1988 despite the fact that such issue was not raised in the appeal, under its
pretext that it is applying Section 25 of Presidential Decree No. 464.
B-2. Whether or not Respondent Central Board of Assessment Appeals erred in not strictly applying par. n,
Section 3, Presidential Decree No. 464 defining 'market value' as basis for computing the 'assessed
value';
B-3. Whether or not Respondent Central Board of Assessment Appeals erred in not strictly applying or
refusing to apply Section 23 of Presidential Decree No. 464.
Corollary Issues:
a. Whether or not respondent CBAA's assessment is discriminatory, unjust, confiscatory and
unconstitutional.

Atty. Bobby Lock
Page
23
b. Whether or not P.D. No. 20, as invoked in the doctrinal jurisprudence of Reyes vs. Almanzor, 196
SCRA 328, may be applied to the case at bar in relation with par. n, Sec. 3, P.D. 464 defining
'market value' which was cited in the Reyes vs. Almanzor case (x x x)."
The Court's Ruling
The petition has no merit.
Preliminary Matters
At the outset, it should be emphasized that "appeal by certiorari" or a petition for review under Rule 45 of the
Rules of Court is not the correct remedy in questioning the decisions and resolutions of the Central Board of
Assessment Appeals. Rather, a petition for certiorari under Rule 65 of the Rules of Court on the ground of grave
abuse of discretion should be filed.[19]
Moreover, the CBAA decision dated September 30, 1991 and the as sailed Resolution dated July 28, 1992
show that petitioner failed to pay under protest the tax assessed against his property. This is a violation of Section
64 of Presidential Decree No. 464[20] which requires that, before a court may entertain any suit assailing the validity
of a tax assessment, the taxpayer must first pay under protest the tax assessed against him. The said section
provides:
"SEC. 64. Restriction upon power of court to impeach tax. No court shall entertain any suit assailing the validity of
tax assessed under this Code until the taxpayer shall have paid, under protest, the tax assessed against him nor
shall any court declare any tax invalid by reason of irregularities or informalities in the proceedings of the officers
charged with the assessment or collection of taxes, or of failure to perform their duties within this time herein
specified for their performance unless such irregularities, informalities or failure shall have impaired the substantial
rights of the taxpayer; nor shall any court declare any portion of the tax assessed under the provisions of Code
invalid except upon condition that the taxpayer shall pay the just amount of the tax, as determined by the court in
the pending proceeding." (Underscoring supplied)
For the foregoing lapses, if for no other, this case ought to be dismissed. However, there are other cogent
reasons showing that the petition has no merit. These will be shown as we tackle the various issues raised by
petitioner in his memorandum.
Petitioner's First Issue: Propriety of Raising the Issue of Back Taxes
Petitioner argues that the issue of back taxes has never been raised before the Local Board of Assessment
Appeals or the Central Board of Assessment Appeals. Hence, respondents are barred by due process and fair play
from alleging them before Respondent CBAA and now before this Court.
As a rule, no issue may be raised on appeal unless it has been brought before the lower tribunal for its
consideration.[21] The Court has held in several cases, however, that an appellate court has an inherent authority to
review unassigned errors (1) which are closely related to an error properly raised, or (2) upon which the
determination of the error properly assigned is dependent, or (3) where the Court finds that consideration of them
is necessary in arriving at a just decision of the case. Thus:
"x x x. In line with the modern trends of procedure, we are told that, 'while an assignment of error which is
required by law or rule of court has been held essential to appellate review, and only those assigned will be
considered, there are a number of cases which appear to accord to the appellate court a broad discretionary power
to waive the lack of proper assignment of errors and consider errors not assigned. And an unassigned error closely
related to the error properly assigned, or upon which the determination of the question raised by the error properly
assigned is dependent, will be considered by the appellate court notwithstanding the failure to assign it as error.' (4
C.J.S., 1734; 3 C.J., 1341, footnote 77)."[22]

Atty. Bobby Lock
Page
24
"At any rate, the Court is clothed with ample authority to review matters, even if they are not assigned as errors in
their appeal, if it finds that their consideration is necessary in arriving at a just decision of the case x x x [23]
Although the foregoing citations specifically referred to "appellate courts," there appears no reason why these
should not apply to appellate administrative agencies, where rules of procedure are liberally construed.
In the present case, we hold that Respondent CBAA did not err in considering the issue of back taxes, the
same being closely related to an error properly raised. Petitioner himself assailed the subject assessment before
the Respondent CBAA for being "excessive and unconscionable." In resolving this issue, Respondent CBAA was
duty-bound to review the factual antecedents of the case and to apply thereon the pertinent provisions of law. In
the process, Respondent CBAA applied Section 25 of PD 464 which had authorized the imposition of back taxes. In
any event, consideration of the question of back taxes is essential to a just decision on the case, as will be shown
below.
Second Issue: Applicability of Section 24, PD 464
Arguing that he should not be liable for back taxes, petitioner states that Respondent CBAA should have
applied Section 24, instead of Section 25, of PD 464. These statutory provisions read:
"Section 24. Date of effectivity of Assessment or Reassessment. All assessments or reassessments made after the
first day of January of any year shall take effect on the first day of January of the succeeding year:Provided,
however, That the reassessment of real property due to its (1) partial or total destruction, or to (2) a major change
in its actual use, or to any (3) great and sudden inflation or deflation of real property values, (4) or to the gross
illegality of the assessment when made or to any other abnormal cause, shall be made within ninety days from the
date any such cause or causes occurred, the same to take effect at the beginning of the quarter next following the
reassessment.
Section 25. Assessment of Property Subject to Back Taxes. Real property declared for the first time shall have back
taxes assessed against it for the period during which it would have been liable if assessed from the first in proper
course but in no case for more than ten years prior to the year of initial assessment; Provided, however, that the
back taxes shall be computed on the basis of the applicable schedule of values in force during the corresponding
period.
If said taxes are paid before the expiration of the tax collection period next ensuing, no penalty for delinquency
shall be imposed, otherwise the taxes shall be subject to all the penalties to which they would have been liable had
they originally become delinquent after assessment of the property in the usual course."
Opposing the application of Section 25 of PD 464, petitioner posits that Respondent CBAA "misread or
misinterpreted" the same, specifically the phrases therein referring to "property declared for the first time" and
"prior to the year of initial assessment." [24] Without expressly stating so, petitioner purports to argue that Section
25 is inapplicable because the property in question has been declared for assessment as early as 1980 (and even
before that, by the prior owner), and not "for the first time" in 1989.
Petitioner's argument is not novel. In Lopez vs. Crow[25] which involved the interpretation of Section 12 [26] of
Act 2238, a provision similar to Section 25 of PD 464, the Court rejected a parallel argument that the said provision
"refers solely to real estate declared for the first time and does not apply to the area which, upon revision, has
been shown to be in excess of that which was formerly declared." [27] The Court held that the area in excess of that
declared by the taxpayer was deemed declared for the first time upon its discovery. It ratiocinated thus: [28]
"x x x it is neither just that another landowner should be permitted by an involuntary mistake or through other
causes, not to say bad faith, to state an area far less than that actually contained in his land and pay to the State a
tax far below that which he should really pay. This was one of the objects of the Legislature in ordering the
revision, so that all real estate should pay the taxes that legally must accrue to the State. Wherefore, even taking
the Spanish text of the phrase in (S)ection 12 of Act No. 2238 that real property declared for the first time shall
have taxes assessed against it, etc.,' it should not be understood to apply only to real estate that have (sic) never
been declared; as within the meaning of such phrase, the excess areas resulting from the revision must be
understood as never having been declared before; because only that area must be deemed as declared which is
stated in the declaration sheet, and the area over and above that cannot be considered as ever having been
declared." (Underscoring supplied)

Atty. Bobby Lock
Page
25
Section 24 merely lays down the general rule that assessments under PD 464 are to be given prospective
application. It cannot be construed in such a manner as to eliminate the imposition of back taxes. If Section 24,
instead of Section 25, were made to apply as suggested by petitioner, he would in effect be excused from the
payment of back taxes on the undeclared excess area of his property. The Court, clearly, cannot allow a taxpayer to
evade his obligation to the government by letting him pay taxes on a property based on its gross undervaluation
at P60,000.00, when the same had then a current market value of P449,860.00.
Accepting the petitioner's position will necessarily prejudice the public interest, for the government is thereby
deprived of back taxes which ought to have been paid in the first place. This will certainly subvert the raison
d'etre of the law which is to raise taxes, the lifeblood of the government. This cannot be allowed, for [29]
"x x x it is another well-established rule of statutory construction that where great inconvenience will result from a
particular construction, or great public interests would be endangered or sacrificed, or great mischief done, such
construction is to be avoided, or the court ought to presume that such construction was not intended by the
makers of the law, unless required by clear and unequivocal words. (25 R. C. L., pp. 1025-1027)."
Furthermore, if Section 24 is the only applicable provision in cases where a taxpayer has eluded the payment
of the correct amount of taxes for more than nine (9) years, as in this case, Section 25 of PD 464 which requires
the payment of back taxes will be rendered superfluous and nugatory. Such interpretation could not have been
intended by the law. It is a familiar rule in statutory construction that "(t)he legal provision being therefore
susceptible of two interpretations, we adopt the one in consonance with the presumed intention of the legislature
to give its enactments the most reasonable and beneficial construction, the one that will render them operative and
effective and harmonious with other provisions of law."[30]
Third Issue: Applicability of Par. N, Section 3, PD 464
Petitioner insists that Respondent CBAA should have computed the assessed value of the property based on
its market value as defined in paragraph n, Section 3 of PD 464, to wit:
"n) Market Value is defined as "the highest price estimated in terms of money which the property will buy if
exposed for sale in the open market allowing a reasonable time to find a purchaser who buys with knowledge of all
uses to which it is adapted and for which it is capable of being used." It is also referred to as "the price at which a
willing seller would sell and a willing buyer would buy, neither being under abnormal pressure."
We cannot sustain petitioner's contention. The cited provision merely defines "market value." It does not in
any way direct that the market value as defined therein should be used as basis in determining the value of a
property for purposes of real property taxation. On the other hand, Section 5 of PD 464 provides unequivocally that
"(a)ll real property, whether taxable or exempt, shall be appraised at the current and fair market value prevailing in
the locality where the property is situated."[31]
Contrary to petitioner's contention, acquisition cost cannot be and is not the sole basis of the current and fair
market value of a property. The current value of like properties and their actual or potential uses, among others,
are also considered. Thus, it has been held:
"x x x (A)ssessors, in fixing the value of property, have to consider all the circumstances and elements of value,
and must exercise a prudent discretion in reaching conclusions. Courts, therefore, will not presume to interfere
with the intelligent exercise of the judgment of men specially trained in appraising property. Where, as the
Supreme Court of Louisiana says, (when) the judicial mind is left in doubt, it is a sound rule to leave the
assessment undisturbed. (Viuda e Hijos de Pedro P. Roxas vs. Rafferty [1918], 37 Phil., 957; New Orleans Cotton
Exchange vs. Board of Assessors, supra.)"[32]
Other circumstances militate against the acceptance of petitioner's argument. Unscrupulous sellers of real
estate often understate the selling price in the deed of sale to minimize their tax liability. Moreover, the value of
real property does not remain stagnant; it is unrealistic to expect that the current market value of a property is the
same as its cost of acquisition ten years ago. In this light, a general revision of real property assessment is
required by law every five (5) years [33] to ensure that real properties are assessed at their current and fair market
values.
Petitioner also argues that "the number of stories that a building has or its floor area are irrelevant,
immaterial or impertinent in the determination of market value as basis for computing the assessed value."

Atty. Bobby Lock
Page
26
This deserves scant consideration. It is a matter of plain common sense that a building with more floors has a
higher market value than one with fewer floors, provided that both are of the same materials. Hence, the tax
declaration of the building in question should have accurately reflected its actual area and number of floors, these
being necessary for the accurate valuation thereof.
Petitioner's Fourth Issue: Application of Section 23 of PD 464
Petitioner argues that the CBAA erred in refusing to apply Section 23 of PD 464 which provides:
Section 23. Certification of Revised Values to the Secretary of Finance. When the provincial or city assessor shall
have finished a general revision of property assessments for any province, municipality or city, he shall so certify to
the Secretary of Finance and the assessments shall become effective and taxes shall accrue and be payable
thereunder in accordance with the provisions of this Code.
Petitioner claims that Respondent City Assessor of Cebu City has not yet completed the general revision of
property assessments for years 1981-1984 and has not yet submitted the certification required by Section 23 of PD
464 to the Secretary of Finance; hence, he may not yet be held liable to pay any assessment. [34]
This claim lacks merit. As found by Respondent CBAA, [35] the questioned assessment had not been imposed
pursuant to a general revision of property assessments that had not yet taken effect. Respondent CBAA held:
"(F)or purposes of determining the back taxes due for the years 1981 to June 30, 1987, the excess area of subject
building should be assessed on the basis of the Schedule of Base Unit Construction Costs for Buildings applicable
for the 1978-1979 General Revision. The tax declaration covering the said assessment became effective in 1981. To
determine the back taxes due for the years July 1, 1987 to 1989, the same excess area should be assessed using
the 1981-1984 Schedule of Base Unit Construction Costs of Buildings. The 1981-1984 Schedule of Values were
approved by the Secretary (Minister) of Finance on May 22, 1984 (Exh. "17") and became finally effective on July
1, 1987 (See Memorandum Circular No. 77 dated March 1, 1987). The tax declaration covering the aforesaid
assessment became effective on July 1, 1987."[36]
Petitioner, for his part, has failed to prove that this finding constitutes a grave abuse of discretion tantamount
to lack or excess of jurisdiction.
Sub-Issue: Is CBAA's Assessment Unconstitutional?
Equally unmeritorious is petitioner's contention that the imposition of back taxes on his property is
unconstitutional for being violative of Section 22,[37] Article III of the 1987 Constitution.
When both Public Respondents CBAA and City Assessor imposed back taxes on petitioner's property, they did
not violate the rule that laws shall have only prospective applicability. Respondents were only applying PD 464
which had been in effect since 1974. Besides, Section 25 of PD 464 is not penal in character; hence, it may not be
considered as an ex post facto law.[38]
Sub Issue: Application of Reyes vs. Almanzor
Petitioner also claims that the assessed building is covered by PD 20; [39] thus the assessor should have used
the "income approach," as enunciated in Reyes vs. Almanzor,[40] in fixing the valuation of the property, instead of
the "comparable sales approach." To prove that his property was covered by PD 20, petitioner submitted as
annexes to his instant petition several documents consisting of official receipts of lease rentals. [41]
The submission of these documents before us cannot establish that his property is covered by PD No. 20. The
documents were never presented as documentary exhibits before the City Assessor of Cebu City, Local Board of
Assessment Appeal or CBAA. This Court, not being a trier of facts, cannot consider these alleged evidence
submitted for the first time in this special civil action.

Atty. Bobby Lock
Page
SO ORDERED.
27
WHEREFORE, premises considered, the petition is DISMISSED and the assailed Resolution is AFFIRMED.
Costs against petitioner.
Narvasa, C.J. (Chairman), Davide, Jr., Melo, and Francisco, JJ., concur.

Real Tax Cases - CAPPAL

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REAL PROPERTY TAXATION I.

Preliminary Matters (g) (iv) to (ix) Cases

REAL PROPERTY TAXATION I. Preliminary Matters (g) (iv) to (ix) Cases

GUTIERREZ, JR., J.:

REAL PROPERTY TAXATION I. Preliminary Matters (g) (iv) to (ix) Cases

REAL PROPERTY TAXATION I. Preliminary Matters (g) (iv) to (ix) Cases

REAL PROPERTY TAXATION I. Preliminary Matters (g) (iv) to (ix) Cases

REAL PROPERTY TAXATION I. Preliminary Matters (g) (iv) to (ix) Cases

REAL PROPERTY TAXATION I. Preliminary Matters (g) (iv) to (ix) Cases

actually devotes it to his laundry business with machinery thereon.

REAL PROPERTY TAXATION I. Preliminary Matters (g) (iv) to (ix) Cases

REAL PROPERTY TAXATION I. Preliminary Matters (g) (iv) to (ix) Cases

REAL PROPERTY TAXATION I. Preliminary Matters (g) (iv) to (ix) Cases

REAL PROPERTY TAXATION I. Preliminary Matters (g) (iv) to (ix) Cases

The Courts Ruling

The Petition has no merit.

REAL PROPERTY TAXATION I. Preliminary Matters (g) (iv) to (ix) Cases

Gonzaga-Reyes, J., took no part.

REAL PROPERTY TAXATION I. Preliminary Matters (g) (iv) to (ix) Cases

REAL PROPERTY TAXATION I. Preliminary Matters (g) (iv) to (ix) Cases

REAL PROPERTY TAXATION I. Preliminary Matters (g) (iv) to (ix) Cases

REAL PROPERTY TAXATION I. Preliminary Matters (g) (iv) to (ix) Cases

REAL PROPERTY TAXATION I. Preliminary Matters (g) (iv) to (ix) Cases

REAL PROPERTY TAXATION I. Preliminary Matters (g) (iv) to (ix) Cases

REAL PROPERTY TAXATION I. Preliminary Matters (g) (iv) to (ix) Cases

[G.R. No. 106588. March 24, 1997]

REAL PROPERTY TAXATION I. Preliminary Matters (g) (iv) to (ix) Cases

REAL PROPERTY TAXATION I. Preliminary Matters (g) (iv) to (ix) Cases

Unit Value Per Sq. M.

Less : 30 % Depreciation allowance

Net Market Value

REAL PROPERTY TAXATION I. Preliminary Matters (g) (iv) to (ix) Cases

REAL PROPERTY TAXATION I. Preliminary Matters (g) (iv) to (ix) Cases

The Court's Ruling

The petition has no merit.

Petitioner's First Issue: Propriety of Raising the Issue of Back Taxes

REAL PROPERTY TAXATION I. Preliminary Matters (g) (iv) to (ix) Cases

Second Issue: Applicability of Section 24, PD 464

REAL PROPERTY TAXATION I. Preliminary Matters (g) (iv) to (ix) Cases

Third Issue: Applicability of Par. N, Section 3, PD 464

REAL PROPERTY TAXATION I. Preliminary Matters (g) (iv) to (ix) Cases

Petitioner's Fourth Issue: Application of Section 23 of PD 464

Sub-Issue: Is CBAA's Assessment Unconstitutional?

Sub Issue: Application of Reyes vs. Almanzor

REAL PROPERTY TAXATION I. Preliminary Matters (g) (iv) to (ix) Cases

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