G.R. Nos. L-49839-46 April 26, 1991
JOSE B. L. REYES and EDMUNDO A. REYES, petitioners, vs. PEDRO ALMANZOR, VICENTE ABAD SANTOS, JOSE ROÑO, in their capacities as appointed and Acting Members of the CENTRAL BOARD OF ASSESSMENT APPEALS; TERESITA H. NOBLEJAS, ROMULO M. DEL ROSARIO, RAUL C. FLORES, in their capacities as appointed and Acting Members of the BOARD OF ASSESSMENT APPEALS of Manila; and NICOLAS CATIIL in his capacity as City Assessor of Manila,
FACTS:
Jose Reyes, Edmundo and Milagros
Reyes are owners of parcels of land situated in Tondo and Sta. Cruz Districts,
City of Manila, which are leased and entirely occupied as dwelling sites by
tenants. The tenants were paying monthly rentals not exceeding three hundred
pesos (P300.00) in July, 1971. The National Legislature enacted Republic Act
No. 6359 prohibiting for one year from its effectivity, an increase in monthly
rentals of dwelling units or of lands on which another's dwelling is located,
where such rentals do not exceed three hundred pesos (P300.00) a month but
allowing an increase in rent by not more than 10% thereafter. The said Act also
suspended paragraph (1) of Article 1673 of the Civil Code for two years from
its effectivity thereby disallowing the ejectment of lessees upon the
expiration of the usual legal period of lease.
Presidential Decree No. 20 amended R.A. No. 6359 by making absolute the
prohibition to increase monthly rentals below P300.00 and by indefinitely
suspending the aforementioned provision of the Civil Code, excepting leases
with a definite period. The Reyeses, were precluded from raising the rentals
and from ejecting the tenants. The City
Assessor of Manila re-classified and reassessed the value of the subject
properties based on the schedule of market values duly reviewed by the
Secretary of Finance. The revision, as expected, entailed an increase in
the corresponding tax rates prompting petitioners to file a Memorandum of
Disagreement with the Board of Tax Assessment Appeals. The Reyeses appealed to
the Central Board of Assessment Appeals. They submitted, among
others, the summary of the yearly rentals to show the income derived from the
properties. To better appreciate the locational and physical features of the
land, the Board of Hearing Commissioners conducted an ocular inspection with
the presence of two representatives of the City Assessor prior to the healing
of the case. Neither the owners nor their authorized representatives were
present during the said ocular inspection despite proper notices served them.
ISSUE:
Whether the “Comparable Sales Approach”
method in fixing in assessed value of appellants properties.
RULING:
The petition is impressed with merit.
The "Income Approach" method
would have been more realistic for in disregarding the effect of the
restrictions imposed by P.D. 20 on the market value of the properties affected,
respondent Assessor of the City of Manila unlawfully and unjustifiably set
increased new assessed values at levels so high and successive that the
resulting annual real estate taxes would admittedly exceed the sum total of the
yearly rentals paid or payable by the dweller tenants under P.D. 20.
The Reyesses against the levels of the
values assigned to their properties as revised and increased on the ground that
they were arbitrarily excessive, unwarranted, inequitable, confiscatory and
unconstitutional. The respondents opted instead for the "Comparable Sales
Approach" on the ground that the value estimate of the properties
predicated upon prices paid in actual, market transactions would be a uniform
and a more credible standards to use especially in case of mass appraisal of properties. The Court ignore the effects of the
restrictions of P.D. No. 20 on the market value of properties within its
coverage. It is unquestionable that both the "Comparable Sales
Approach" and the "Income Approach" are generally acceptable
methods of appraisal for taxation purposes. It is conceded that the
propriety of one as against the other would of course depend on several factors.
Under
Art. VIII, Sec. 17 (1) of the 1973 Constitution, then enforced, the rule of
taxation must not only be uniform, but must also be equitable and progressive.
Taxation is said to be equitable when its burden falls on those better able to
pay. Taxation is progressive when its rate goes up depending on the resources
of the person affected. The power to tax "is an attribute of
sovereignty". In fact, it is the strongest of all the powers of
government. But for all its plenitude the power to tax is not unconfined as
there are restrictions. The due process clause may be invoked where a
taxing statute is so arbitrary that it finds no support in the Constitution.
The taxing power has the authority to make a reasonable and natural
classification for purposes of taxation but the government's act must not be
prompted by a spirit of hostility, or at the very least discrimination that
finds no support in reason. Under the Real Property Tax Code (P.D. 464
as amended), it is declared that the first Fundamental Principle to guide the
appraisal and assessment of real property for taxation purposes is that the
property must be "appraised at its current and fair market value."
Under the "comparable sales
approach" were presented by the public respondents, namely: (1) that the
sale must represent a bonafide arm's length transaction between a willing seller and a
willing buyer and (2) the property must be comparable property. Nothingness can
justify or support their view as it is of judicial notice that for properties
covered by P.D. 20 especially during the time in question, there were hardly
any willing buyers. The taxes are the lifeblood of the government and so
should be collected without unnecessary hindrance. The reason that
petitioners who are burdened by the government by its Rental Freezing Laws
(then R.A. No. 6359 and P.D. 20) under the principle of social justice should
not now be penalized by the same government by the imposition of excessive
taxes petitioners can ill afford and eventually result in the forfeiture of
their properties. By the public respondents' own computation the
assessment by income approach would amount to only P10.00 per sq. meter at the
time in question.
(a) The petition is GRANTED; (b)
the assailed decisions of public respondents are REVERSED and SET
ASIDE;
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