ARMY & NAVY CLUB V.

TRINIDAD
Real estate is to be valued for purposes of taxation at its fair market value or, as it is called in the Charter
of the City of Manila, its "cash value."

Facts
On 1908, the City of Manila sold to Army and Navy Club a land in New Luneta for P4.04/ sqm. The
parties agreed that the land shall be exempt from taxation for a period of 10 years. Taxes on the
property, became payable for the first time in the year 1920. The city assessor and collector thereupon
assessed the land at P20 per square meter. The Army and Navy Club paid the tax under protest.

Issue: Whether the land on which the Army and Navy Club of Manila is situated should be
assessed at P4.04 a square meter, the amount which the club paid the City of Manila for the land,
or whether it should be assessed at P20 a square meter, the amount at which the city assessor
and collector valued the land.

Ruling: The latter.

Real estate is to be valued for purposes of taxation at its fair market value or, as it is called in the Charter
of the City of Manila, its "cash value." By "fair market value" or "cash value" is meant the amount of
money which a purchaser willing but not obliged to but the property would pay to an owner willing but not
obliged to sell it, taking into consideration all uses to which the property is adapted and might in reason be
applied. The criterion established by the statute and by the decisions contemplates a hypothetical sale.
Hence, the buyers need not be actual and existing purchasers.

Assessors, 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 the judicial mind is left in doubt, it is a sound rule to leave the assessment undisturbed.

That the action of the city assessor of Manila in assessing the land on which the Army and Navy Club of
Manila is situated at P20 a square the club paid the city for the land, will not be interfered with.