Republic of the Philippines

CENTRAL BOARD OF ASSESSMENT APPEALS M a n i l a

MARCOPPER MINING CORPORATION, Petitioner-Appellant,

– versus –

PROVINCIAL BOARD OF ASSESSMENT APPEALS OF MARINDUQUE,
Respondent-Appellee,

CBAA Case No. L-07 Various Tax Declarations Marinduque

– and –

PROVINCIAL ASSESSOR OF MARINDUQUE, Appellee.
x – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – x

D E C I S I O N

THIS is an appeal by the Petitioner-Appellant, MARCOPPER MINING

CORPORATION, assailing the JOINT DECISION of the Appellee Board of

Assessment Appeals of Marinduque, which declared Stipulations Nos. 1, 3 and

6 of the Compromise Agreement, by and between the Petitioner-Appellant and

Respondent-Appellee, the Provincial Assessor of Marinduque, dated May 31,

1993 (page 109, Expediente) as null and void, the dispositive portion of which is

as follows, viz:

WHEREFORE, judgment is hereby rendered:

1. Declaring stipulation Nos. one (1), three (3) and six (6) of the Compromise Agreement as null and void;

2. Declaring as valid the reclassification of Marcopper’s lands from agricultural to industrial.

3. Declaring the subclassification of the land subject of Tax Case No. 92-(1), as null and void ab initio and declaring the assessments immediately preceding the sub-classification, as valid, and ordering the Provincial Assessor of Marinduque to cancel all the Tax Declarations respectively covering the sub-classified industrial lands and ordering him further to revert the valuation of said lands to their market values and assessment levels obtaining immediately preceding the subclassification.

4. Declaring the compromise agreement as accordingly modified by this decision and approving the same as modified.”

The Compromise Agreement is hereby reproduced as follows:

“COMPROMISE AGREEMENT

Reference: Book VII, pp. 85-101

The parties, Marcopper Mining Corporation (hereinafter, “Marcopper) and the Marinduque Provincial Assessor’s Office represented by the Provincial Assessor, respectfully state:

WHEREAS, Tax Case No. 92-(1) is an appeal on assessment involving revised tax declarations for 1991 of properties of Marcopper consisting principally of lands and improvements situated in the province of Marinduque, said revised tax declarations being the result of “consolidation and reclassification with corresponding revaluation” in 1991 of said properties;

WHEREAS, Tax Case No. 92-(2) is an appeal on assessment involving revised tax declarations for 1991 of properties of Marcopper consisting of buildings situated in the province of Marinduque;

WHEREAS, Marcopper assailed the assessments of the aforesaid properties for being erroneous, unjust, oppressive and for having been effected without authority of law;

WHEREAS, the parties have agreed to a re-examination of the subject tax declarations for a fairer and more equitable assessment of the properties;

NOW, THEREFORE, in the light of the foregoing premises, the parties hereby agree to amicably settle their dispute and to submit a compromise agreement to the Honorable Board of Assessment Appeals for consideration and approval, to wit:

1. Marcopper hereby acknowledges as proper the 1991 reclassification of its properties consisting of lands subject of Tax Case No. 91-(1) by the Provincial Assessor’s Office from “agricultural” to “Industrial”. The Provincial Assessor’s Office, however, agree that these lands reclassified as “industrial” be subclassified as “industrial-A”, “industrial-B”, “industrial-C”, or “industrial-D” with diminishing fair market value rates applied, taking into consideration the nature of their use and their location. For this purpose, the Provincial Assessor’s Office shall issue new revised tax declarations for the lands affected.

2. The tax declarations covering improvements that have already been demolished or dismantled, or scrapped or junked, or have been otherwise abandoned by Marcopper, shall be cancelled and the properties covered thereby dropped from the taxable rolls.

3. Tax declarations covering intangible costs that were merely capitalized and subsequently amortized shall be cancelled. These tax declarations are as follows:

[table “” not found /]

4. The following tax declarations covering low-cost housing for employees of Marcopper shall be revised and/or amended to reflect the true and correct assessment levels of the said properties as now provided for under Section 218 or Republic Act No. 7160, otherwise known as the Local Government Code of 1991:

[table “” not found /]

5. Marcopper hereby agrees to pay its real property taxes for 1992 promptly upon receipt of the new revised tax declarations and notice of assessment.

Reference: Book VII, pp. 85-101

6. It is agreed that this compromise agreement constitute the total and final settlement of the parties’ claims concerning the 1991 assessments of Marcopper’s real properties.

WHEREFORE, the parties respectfully pray that the foregoing Compromise Agreement be approved and that the above-entitled cases be accordingly dismissed.

Respectfully submitted. September 28, 1992.

MARCOPPER MINING CORPORATION

By:

(Sgd.) P. P. Paulino
VP-Finance & Administration

MARINDUQUE PROVINCIAL ASSESSOR’S OFFICE

By:

(Sgd.) ANGEL P. PALOMARES Provincial Assessor

ASSISTED BY:

GOZON DEFENSOR & PAREL 15th Floor, Sagittarius Cond. H.V. dela Costa St., Salcedo Vill. Makati, Metro Manila

By:

(Sgd.) DICK B. PEREZ
PTR No. 6690021/1-16-92/Makati PTR No. 322941/1-15-92/Q.C.”

The Provincial Assessor of Marinduque, the Respondent-Appellee,

herein, is not a party to this appeal, but inasmuch as he is a necessary party to

the case at bar and a co-party to the Compromise Agreement in dispute, the

Board by virtue of its special appellate jurisdiction, motu propio, impleaded the

Provincial Assessor of Marinduque as Respondent-Appellee. He filed his

comment and answer pursuant to the Order of this Board, dated July 19, 1993.

(page 104, Expediente)

Petitioner-Appellant, in its appeal, assigned the following errors, viz:

1. The Provincial Board of Assessment Appeals of Marinduque, erred in holding that Stipulations 1, 3 and 6, of subject Compromise Agreement are null and void; and

2. The Provincial Board of Assessment Appeals erred in holding that the subject lands have been correctly reclassified from agricultural to industrial.

As it appears from the records of the appeal as well as the manifestations

of the parties, the Board finds that the main issue involved is whether or not

Stipulations Nos. 1, 3 and 6 of subject Compromise Agreement are null and

void, and alternatively, in the event that aforesaid Stipulations be nullified, the

Reference: Book VII, pp. 85-101

issues are shifted to whether or not the reclassification of Petitioner-Appellant’s

lands from agricultural to industrial is valid. In like manner, in case the aforesaid

stipulations herein, be declared valid by this Board, then, Petitioner-Appellant

stands to be bound by the provisions thereof.

In declaring Stipulations Nos. 1, 3 and 6 of the Compromise Agreement,

which provides as follows, viz:

1. Marcopper hereby acknowledges as proper the 1991 reclassification of its properties consisting of lands subject of Tax Case No. 92(1) by the Provincial Assessor’s Office from “agricultural” to “industrial”. The Provincial Assessor’s Office, however, agrees that these lands reclassified as “industrial” be sub-classified as “industrial-A”, “industrial-B”, “industrial-C”, or “industrial-D” with diminishing fair market value rates applied, taking into consideration the nature of their use and their location. For this purpose, the Provincial Assessor’s Office shall issue new revised tax declarations for the lands affected.

2. x x x

3. The tax declarations covering intangible costs that were merely capitalized and subsequently amortized shall be cancelled. The tax declarations are as follows:

TD No. 33569 33575 33576 33577

TD No. 33578 33579 33580

4. x x x

5. x x x

6. It is agreed that this compromise agreement constitute the total and final settlement of the parties’ claims concerning the 1991 assessments of Marcopper’s real properties.

x x x”

as null and void being “contrary to law, morals, good customs, public order or

public policy” (Article 1306 New Civil Code), Appellee Local Board anchored its

findings on the fact that there is no law or regulations empowering the provincial

assessor in areas outside Metropolitan Manila to subclassify, lands, but that the

power is vested in the Sanggunian concerned pursuant to Article 305 (b) of the

Rules and Regulations Implementing the New Local Government Code of 1991,

pertinent portion of which provides as follows:

(b) The provincial, city, or municipal assessor may recommend to the sanggunian concerned amendments to the prevailing schedule of fair market values of the locality to correct errors arising from, or involving omissions in the subject schedule of any kind or type of real property, or any city district or barangay, or any road or street and/or the classification or sub-classification of real property. (Emphasis supplied)

Reference: Book VII, pp. 85-101

and that in effect the role of the assessor is more or less recommendatory in

nature. On the other hand, the provincial assessor hinged his authority on the

provisions of Section 23 of the Local Assessment Regulations No. 1-92, dated

October 6, 1992, pertinent portions of which is hereby quoted, viz:

“X x x.

On the basis of these influences on value, residential, commercial and industrial lands located within the contiguous urban areas of the city or municipality, may then be classified into first, second, third or more classes, and schedule of base unit market value per square meter shall be determined and fixed for each sub-class. X x x.”

Both assertions of the parties are erroneous and inapplicable to the case

at bar. Section 305 (b) (supra) as cited by the local board, pertains to

amendments and corrections of the approved Schedule of Market Value for use

in the 1992-1994 general revisions, taxes to take effect with the year 1994, as

mandated by Republic Act No. 7160. It is not applicable to the Schedule of

Market Values approved under the provisions of P.D. 464. Besides, at that

stage, no amendments or corrections can be made, inasmuch as at the time

Petitioner-Appellant’s real property was assessed, the Province of Marinduque

has not yet approved its Schedule of Market Value. Assessments made by the

Respondent-Appellee on said lands were based in the 1981-1983 Schedule of

Market Values. Likewise, the aforecited provisions of law, from which the

provincial assessor derives his authority to reclassify and sub-classify are

guidelines or regulations in the preparation of the 1992-1994 Schedule of

Market Value, mandated under R.A. 7160 by the Department of Finance.

It has been a settled jurisprudence that when the court declares a

Compromise Agreement to be contrary to law, the court must specify in its

declaration or judgment what specific law the Compromise Agreement

transgresses or violates. In the instant case this is wanting. The local board

failed to state what makes it contrary to the assessment law.

The Supreme Court in the case of Philippine Bank of Communication vs.

Echivarri, et al., L-41795, August 27, 1980, held that:

Reference: Book VII, pp. 85-101

“The case of Philippine Bank of Communication vs. Echivarri, et al. L-41795, August 27, 1980, which is the subject of this annotation, brings into focus some problems being encountered when a compromise agreement is sought to be modified. In that case, a compromise agreement previously entered x x x x and presented to the lower court for approval was sought to be modified by the lower court judge in so far as some of the defendants were concerned although approving the compromise agreement in toto with respect to the others, on the ground that the specific portions of the compromise agreement sought to be deleted in so far as some of the defendants were concerned was contrary to law, morals, good customs, public policy and public order. When the issue was elevated to the Supreme Court, the High Tribunal rejected the modification of the compromise agreement which the lower court sought to impose in its decision on the ground that the portions sought to be deleted by the lower court did not transgress the law nor were they contrary to law, morals, good customs, public policy and public order, inasmuch as no such law or authority was cited by respondent judge or respondents to justify or support their erroneous assertion. (Supreme Court’s Report Annotated, page 534-541)

Likewise on the ground that the Compromise Agreement is “contrary to

morals, good customs, public policy and public order” the Appellee Local Board

failed to justify its findings. As to why said Compromise Agreement is contrary

to law, Appellee Local Board cited the inapplicable law, it appearing that its

basis is Section 305 (c) (supra) which is not the law governing the instant case.

The same is applicable only to an approved schedule of market value pursuant

to RA 7160, for the 1991-1992 general revision as aforestated. By analogy, it is

safe to state that in order not to pass the tests for approving a Compromise

Agreement, the local board must state categorically, what law, morals, good

customs, public policy and public order does the Compromise Agreement

violate or transgress. Neither is the subject Compromise Agreement prejudicial

to a third party, inasmuch as the Provincial Government stands to benefit from

the income in real property taxes paid by the Petitioner-Appellant, by reason of

the said Compromise Agreement.

As to the authority of the assessor to reclassify or subclassify real

properties for assessment purposes, it is inherent in his power to

assess/reassess real properties in the manner prescribed under P.D. 464, the

law then applicable, and in accordance with its implementing rules and

regulations issued by the Secretary of Finance. Sections 22 and 24 of P.D. 464,

provide as follows:

Reference: Book VII, pp. 85-101

SEC. 22. Valuation of Real Property. – Upon the discovery of real property or during the general revision of property assessments as provided in Section 21 of this Code or at any time when requested by the person in whose name the property is declared the provincial or city assessor or his authorized deputy shall make an appraisal and assessment in accordance with Section 5 hereof of the real property listed and described in the declaration irrespective of any previous assessment or taxpayer’s valuation thereon: Provided, however, That the assessment of real property shall not be increased oftener than once every five (5) years in the absence of new improvements increasing the value of said property or of any change in its use, except as otherwise provided in this Code.

SEC. 24. Date of Effectivity of Assessment or Reassessment. – All assessments or reassessments made after the firs day of January of any year shall take effect on the first day of January of the succedding year: Provided, however, That the reassessment of real property due to its partial or total destruction, or to a major change in its actual use, or to any great and sudden inflation or deflation of real property values, or to the gross illegality of the assessment when made or to any other abnormal cause, shall be made within ninety (90) 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.

An assessor, therefore, may reassess real properties at any time in the

instances specified in the proviso aforestated, provided, the requirements of the

law are duly complied with.

It may be noted, that aside from the declaration of the stipulations

aforecited as null and void, Appellee Local Board proceeded to decide and

modify the stipulations as approved, in accordance to its findings on the merits

of the case, which is contrary to the full context and purpose of the Compromise

Agreement. We find this action of Appellee Local Board as untenable. “It is

settled jurisprudence that neither the courts nor quasi-judicial bodies can

impose upon the parties a judgment different from their compromise agreement

(which as a valid contract is the law between the parties themselves) or against

the very terms and conditions of their agreement” (Phil. Bank of Communication

vs. Echivarri, et al. L-41795, August 29, 1980).

Thus as held in Municipal Board of Cabanatuan City vs. Samahang

Magsasaka, Inc. 62 SCRA, 435, 438-439 (1975) “a judicial or quasi-judicial

body cannot impose upon the parties a judgment different from their real

agreement or against the very terms and conditions of the amicable settlement

entered into by them, without running the risk of contravening the universally

established principle that a contract is the law between the parties.”

Reference: Book VII, pp. 85-101

“This Court, time and again, has ruled that a compromise agreement

entered into by party litigants, when not contrary to law, public order, public

policy, morals, or good custom is a valid contract which is the law between the

parties themselves (Juan-Marcelo, et al., vs. Go Kim Pah, et al., 22 SCRA 309).

It follows, therefore, that a compromise agreement, not tainted with infirmity,

irregularity, fraud or illegality, is the law between the parties who are duty bound

to abide by it and observe strictly its terms and conditions.” (Phil. Bank

Communications, etc) (supra)

WHEREFORE, the Compromise Agreement entered into between

Petitioner-Appellant Marcopper Mining Corporation and Respondent-Appellee

Provincial Assessor is hereby approved in toto. The Decision of Appellee Local

Board is hereby MODIFIED accordingly.

SO ORDERED.

Manila, Philippines, October 28, 1994.

(Signed) MARGARITA G. MAGISTRADO
Chairman

(Signed) ELEANOR A. SANTOS
Member

(Signed) ALFONSO M. MEDADO
Member

Reference: Book VII, pp. 85-101