Republic of the Philippines

CENTRAL BOARD OF ASSESSMENT APPEALS 7th Floor, EDPC Building, BSP Complex Roxas Boulevard, Manila

PUERTO AZUL OCEAN VILLAS CONDOMINIUM CORPORATION,
Petitioner-Appellant,

– versus –
CBAA CASE NO. L-48 THE LOCAL BOARD OF
ASSESSMENT APPEALS OF TRECE MARTIREZ CITY,

Appellee,

– and –

THE MUNICIPAL ASSESSOR OF TERNATIVE, CAVITE,
Respondent-Appellee.
x – – – – – – – – – – – – – – – – – – – – – – – – – – – x

R E S O L U T I O N

On December 17, 2003, this Board received the Appeal of Puerto Azul

Ocean Villas Condominium Corporation or simply Ocean Villas Condominium

Corporation (OVCC), Petitioner-Appellant, dated December 15, 2003, from the

Decision of the Local Board of Assessment Appeals (LBAA) of the Province of

Cavite, Appellee, dated October 13, 2003. Said Local Board of Assessment

Appeals of Cavite “dismissed for lack of merit”, Petitioner-Appellant’s (then

Petitioner) Petition (Appeal) thereto, against the classification by the Municipal

Assessor of the Municipality of Ternate, Province of Cavite, Respondent-

Appellee (then Respondent), of the Petitioner-Appellant’s “land as ‘commercial’

for real property tax purposes and the annual tax accruing to the Special

Education Fund”, contained in Tax Declaration No. 1621 thereof.

Petitioner-Appellant assigned the following errors:

“I

THE CLASSIFICATION OF THE 25, 124 SQUARE METERS OF LAND PURSUANT TO TAX DECLARATION NO. 1621 AS COMMERCIAL LAND HAS NO LEGAL BASIS, THEREFORE, THE ACT OF RESPONDENT IN ISSUING THE TAX DECLARATION NO 1621 IS VOID AND CANNOT BE THE BASIS OF LEVY OF REAL ESTATE TAXES OR ANY TAX ACCRUING TO THE SPECIAL EDUCATION FUND.

Reference: Book XII, pp. 174-186

II

SINCE THE LAND COVERED UNDER TAX DECLARATION NO. 1621 IS NOT DEVOTED TO COMMERCIAL USES, THERE IS NO BASIS FOR CLASSIFYING THE SAME AS ‘COMMERCIAL’ FOR PURPOSES OF LEVYING REAL PROPERTY TAX AND THE ANNUAL TAX ACCRUING THE SPECIAL EDUCATION FUND. THEREFORE, TAX DECLARATION NO. 1621 SHOULD BE CANCELLED AND A CORRECTED TAX DECLARATION BE ISSUED TO REFLECT THE TRUE CLASSIFICATION OF THE LAND AS ‘RESIDENTIAL’.”

Petitioner-Appellant submits that “(t)he sole issue in this Appeal is

whether the Land in Question covered under Tax Declaration No. 1621 should

be classified for Residential use or for Commercial Use, for real property tax

purposes.”

The Order/Decision of the LBAA of Cavite states the fact as follows:

“Ocean Villas Condominium Corporation (OVCC) is a condominium corporation duly organized and existing in accordance with the Philippines laws and is responsible to operate, manage and maintain the common areas of the Puerto Azul Ocean Villas Condominium Project which was constructed by Ternate Development Corporation (TDC). OVCC holds title to the common areas of the said residential condominium project which is and has always been a residential condominium since construction started way back in 1980.

Pursuant to a Deed of Transfer dated 09 September 1996 acknowledged before Notary Public Bonifacio A. Tavera, Jr., of Manila and entered in his Notarial Register as doc. No. 25; Page No. 6; Book IV; Series of 1995, TDC transferred in favor of OVCC all of its rights and interests in the common area of the said residential condominium project. New sites were thus issued in favor of OVCC covering the common areas of the residential condominium projects, to wit: (1) Transfer Certificate of Title No. 599261 issued by the Registry of Deeds for the Province of Cavite; and (2) Transfer Certificate of Title No. 599260 issued by the Register of Deeds for the Province of Cavite.

On May 5, 1998, OVCC received from the Municipal Assessor of the Municipality of Ternate a copy of Tax Declaration No. 1621, which classified the land covered by Transfer Certificate of Title T-599261 as ‘commercial’ land. On the other hand, OVCC also received on the same date a copy of Tax Declaration No. 97-03334, which classified the land covered by Transfer Certificate of Title No. T-599260 as ‘residential’ land. In effect, two (2) adjacent parcels of land both of which are used for the same complex, were inexplicably and inconsistently classified – one as ‘commercial’ and the other as ‘residential’.

Thus, On 01 July 1998, OVCC filed a Petition, appealing to the Local Board of Assessment Appeals of Cavite the classification of the land covered by Tax Declaration Nos. 1621 for real property tax purposes.”

Appellee Local Board’s findings that subject property “forms part of a Golf

Course which is a predominantly commercial area and has been classified

valued and assessed as commercial since 1985”, caused the dismissal of

Petitioner-Appellant’s Petition, thereto, hence this Appeal.

Reference: Book XII, pp. 174-186

There was a Motion to Dismiss on February 5, 2004, dated January 26,

2004, filed by Respondent-Appellee, Lamberto C. Parra, Provincial Assessor of

Cavite, “on the ground that the payment of realty tax is a condition precedent

before an appeal on assessment can be entertained pursuant to Section 231 of

R.A. 7160 otherwise known as the 1991 Local Government Code.”

This Board denied said Motion to Dismiss on May 14, 2004 declaring:

“Non-payment of real property tax does not warrant dismissal of the appeal but behooves upon the pertinent Board to require such payment before proceeding with the case. Appellee Local Board did not act on such non-payment. Neither was the same raised therein by Respondent-Appellee, who, having acquiesced thereto, would now want this Board to dismiss the appeal. Judicially, dismissal thereof is out of the question.”

The first hearing on this case was held on June 7, 2004. This Board

explored the possibility of a Compromise Agreement and as agreed by the

parties another hearing was scheduled on August 20, 2004 to give the parties

time to act on the Compromise Agreement.

The August 20, 2004 hearing mainly discussed tidbits on a Compromise

Agreement to work on it so that by September 24, 2004 a Compromise

Agreement would have been reached and submitted before this Board. In the

event that there is no Compromise Agreement by September 24, 2004, this

Board, as agreed is to conduct an Ocular Inspection of the property in question

on October 1, 2004 and hear the case anew therein.

The parties could not come up with a Compromise Agreement on the

designated September 24, 2004 date; an Ocular Inspection was therefore

conducted thereto followed by a hearing thereof on October 1, 2004, at Puerto

Azul Club House, Ternate, Cavite.

The hearing discussed nothing more than the possibility still of a

Compromise Agreement. Hence this Order:

“Let the hearing of this case be reset to November 10 at 10:00 in the morning. In order to give the parties a chance to submit their Compromise Agreement. It is understood that failure on the part of the parties to submit the same, this Board will proceed with the hearing of this case and thereafter, consider the case submitted for Resolution.”

Reference: Book XII, pp. 174-186

The initial hearings of June 7, 2004, August 20, 2004, September 24,

2004 and October 1, 2004, which was conducted after an Ocular Inspection of

the property, apparently indicated a trend: a Compromise Agreement is in the

offing, but an allowance as to time is direly needed as negotiation is a long and

tedious process that consumes a considerable length of time. There were also

lapses in the negotiation and proceedings on the merit were consequently

conducted.

The November 10, 2004 and January 20, 2005 hearings were postponed

pursuant thereto but April 4, 2005 was a hearing on the merit and proceeded

with Respondent-Appellee’s allegation that Petitioner-Appellant made no

invitations to set meetings for a possible settlement. Petitioner-Appellant

however countered that they wrote a letter to the Provincial Assessor. “And

after we sent a communication to the Provincial Assessor, a copy furnished the

Governor, the Provincial Treasurer, the Mayor of Ternate, the Municipal

Assessor and the Municipal Treasurer, we attempted the provincial offices

mentioned. But unfortunately, we weren’t able to get hold of any of those

individuals who occupied those positions.”

Even as Respondent-Appellee manifested openness for an amicable

settlement she deplored the lack of actual communications to that effect “during

the past months”. Petitioner-Appellant likewise manifested that “there was an

informal agreement or ruling from the parties concerned that there is no more

dispute as to the proper classification of the land as residential property. And

afterwards, the only thing to be computed was the proper amount or deficiency

taxes to be assessed. Petitioner-Appellant, based on the residential

classification.”

Respondent-Appellee also queried about having raised the question of

prescription before the LBAA of Cavite and that it has yet to be resolved:

whether or not the same should be remanded to the Board below. This Board

Reference: Book XII, pp. 174-186

declared that it has already taken cognizance and thereby jurisdiction of the

case: it would therefore make findings thereof and rule on the matter.

Petitioner-Appellant thereafter presented its first witness, described as

“competent to testify on the actual use of the properties registered in the name

of Ocean Villas.”

In the June 20, 2005 hearing, Petitioner-Appellant manifested that “they

would like to simultaneously proceed with any negotiation outside yet, continue

with the proceedings in the event that negotiations may fail: so that we will no

longer stall any possible resolution of this dispute.” This was not objected to by

Respondent-Appellee.

The several hearings yet that followed provided like-scenarios on

continued negotiations for a Compromise Agreement and hearings on the merit,

until October 18, 2006 (the last hearing) thereof: When Petitioner-Appellant

reported that a draft to a Compromise Agreement has already been submitted.

“It appears that the only details to be fixed are the terms of payment particularly

the dated when the installments will be paid.” And considering that the parties

to the Compromise Agreement “are located in different provinces”, said

Compromise Agreement, “as decided by the parties will be executed in

counterparts such that the Municipality of Ternate will execute a separate

signature page and have that notarized separately as well as the representative

of the appellant OVCC will execute a separate signature page and have that

notarized separately”. However, the same will be treated “as one document”.

Provided however, that the Provincial Assessor is to affix his signature as a

party thereto in a Conforme, as a constituent part of the Compromise

Agreement.

The Compromise Agreement was entered into on November 29, 2006

and submitted to this board for Judgment/Approval on December 8, 2006. This

Board has gone over the Compromise Agreement and finds no impediment for

Reference: Book XII, pp. 174-186

its approval: it is not contrary to law, morals, good customs, public order or

public policy, fair and equitable. The same is hereby reproduced as follows:

COMPROMISE AGREEMENT

KNOW ALL MEN BY THESE PRESENTS:

This Compromise Agreement entered into this Nov. 29, 2006 (sic) day of November 2006, by and between:

The Municipality of Ternate, Province of Cavite, Philippines, a public corporation duly organized and existing under the laws of the Republic of the Philippines, duly represented in this act by the Honorable CONRADO C. LINDO, in his capacity as Municipal Mayor of Ternate, Cavite, Philippines, (hereinafter referred to as the “MUNICIPALITY”):

– and –

Ocean Villas Condominium Corporation, a corporation duly organized and existing under the laws of the Republic of the Philippines and with business address at Unit 2602 Cityland 10 Tower, H.V. de la Costa Street, Salcedo Village, Makati City, duly represented herein by its President, Mr. Reynaldo A. Go (hereinafter referred to as the “TAXPAYER”).

WHEREAS, the Taxpayer is the owner of a real property located at Sapang, Municipality of Ternate, Province of Cavite (“the Property”) which property is described as follows:

Title No.

T-119064

T.D. No.

20-004-1465

LOT No.

1-B-1, Psd-04-02334

Location

Sapang

Assessed Value
P12,562,000.00

WHEREAS, the Property has been assessed real property taxes for the taxable years 1996-2005 (“the Delinquent Taxes”) based on a commercial assessment level by the Assessor of the Municipality of Ternate;

WHEREAS, the Taxpayer has contested its liability for the Delinquent Taxes with the Local Board of Assessment Appeals, on the principal argument that the Property should be assessed for realty taxes based on its actual use as a residential property, and such dispute is currently pending with the Central Board of Assessment Appeals (“CBAA”), in the CBAA Case No. L-48 entitled “Puerto Azul Ocean Villas Condominium Corporation versus The Local Board of Assessment Appeals of Trece Martirez City, and The Municipal Assessor of the Municipality of Ternate”;

WHEREAS, from the inception of the legal proceedings surrounding the instant dispute, the parties have endeavored to settle the same amicably, and have been in constant negotiations in order to avoid a prolonged and costly litigation;

WHEREAS, the parties have agreed that the Property is actually used for residential purposes;

WHEREAS, as a result of such negotiations, and in the spirit of the amicable settlement of the instant dispute, the parties have agreed to an amount of P1,628,916.25 (“the Compromise Amount”), as full settlement of the liability of the Taxpayer for the Delinquent Taxes, inclusive of all penalties, interest, and other various charges appurtenant to such Delinquent Taxes.

WHEREAS, as a sign of good faith and preparatory to a settlement of the instant dispute, the Taxpayer has voluntarily paid the amount of

Reference: Book XII, pp. 174-186

P301,500.00, representing full payment of the Basic and SEF components of realty taxes due on the property for the taxable year 2006, based on a residential assessment level of twenty percent (20%) of the fair market value of the Property (copy of the official receipts evidencing such payment is hereto attached as Annex “A”);

NOW THEREFORE, AND IN CONSIDERATION OF THE FOREGOING,

WITNESSETH:

1. In order to settle the instant dispute and as full satisfaction of its outstanding real property tax liabilities to the Municipality of Ternate, Cavite, the Taxpayer hereby agrees to pay the Compromise Amount over a period of one and one-half (1 ½) years, according to the following schedules:

i. Within five (5) days from the signing and approval by the CBAA of this Agreement, the amount of P500,000.00, representing initial installment payment on the Compromise Amount, will be paid by the Taxpayer to the Municipality;

ii. Commencing on or before 15 December 2006, the remaining balance of the Compromise Amount totaling P1,128,916.25, will be paid by the Taxpayer in eight (8) equal installments over a period of twenty-four (24) months, in accordance with the following schedule:

TERMS
1st Installment 2nd Installment 3rd Installment 4th Installment 5th Installment 6th Installment 7th Installment 8th Installment

MONTH AMOUNT 27 December 2006 P141,114.53 27 February 2007 P141,114.53 27 April 2007 P141,114.53 27 June 2007 P141,114.53 27 August 2007 P141,114.53 27 October 2007 P141,114.53 27 December 2007 P141,114.53 27 February 2008 P141,114.53
TOTAL P1,128,916.25

2. The Municipality hereby represents and warrants that it has duly authorized the Municipal Mayor to enter into this Compromise Agreement on behalf of the Municipality of Ternate, as evidenced by a Sanggunian Board Resolution, copy of which is attached hereto as Annex “B”;

3. As a result of the signing of this Compromise Agreement, and conditioned upon the timely payment of all amounts due under the same, the Municipality of Ternate agrees and covenants not to initiate any legal and/or administrative proceeding, or take any action against the Taxpayer for the collection of any amount representing any component, including penalties, interest and other charges, of real property tax on the Property for the taxable years 1996-2006;

4. That in effect, the Municipality acknowledges that the signing of this agreement constitutes a full and final settlement of the delinquent real property tax liability of the Taxpayer for the taxable years 1996-2006; furthermore, the Municipality covenants that upon full settlement of the Compromise Amount. The Taxpayer shall be issued forthwith a Certificate of Non-Delinquency of Real Property Taxes;

5. Upon signing of this Compromise Agreement, the parties shall jointly submit the same to the Central Board of Assessment Appeals (“CBAA”) for its approval, and the subsequent dismissal of CBAA Case No. L-48 currently pending before the CBAA involving the parties;

Reference: Book XII, pp. 174-186

6. Upon the signing of this Compromise Agreement and its approval by the CBAA, the Assessor of the Municipality of Ternate will cancel Tax Declaration No. 20-004-01465 covering the Property and issue a new Tax Declaration in the name of Ocean Villas Condominium Corporation, and indicating therein that the Property is of residential use;

7. This Compromise Agreement shall be binding upon the parties thereto, their administrators/executors, assigns, successors in interest or successors in office.

8. In case of default of the Taxpayer to pay any installment within the stipulated period, the full obligation shall become due and demandable and if unpaid the Municipality shall have the right to collect payment through means prescribed by law.

9. This Compromise Agreement may be executed in one or more counterparts, and the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

IN WITNESS WHEREOF, the parties have hereunto set their hands this ______________ day of Nov 29 2006 2006, at MAKATI CITY.

HON. CONRADO C. LINDO Mayor
Municipality of Ternate Province of Cavite

OCEAN VILLAS CONDOMINIUM CORPORATION Taxpayer

By:

(Signed) REYNALDO A. GO
President

Conforme:

RAYMUNDO D. SALAZAR Provincial Assessor Province of Cavite

SIGNED IN THE PRESENCE OF:

(SIGNED) ___________________

(SIGNED) ______________________

ACKNOWLEDGMENT

BEFORE ME, a Notary Public in and for MAKATI CITY this day of Nov 29, 2006 2006 personally appeared:

Name

Reynaldo A. Go

Community Tax Cert. No.

02149036

Date & Place of Issue

05 Jan 2006; Manila

all known to me and to me known to be the same person who executed the foregoing Compromise Agreement and he acknowledged to me that the same is his free and voluntary act and deed.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal on the date and the place first above written.

Reference: Book XII, pp. 174-186

Doc No. 357; Page No. 073; Book No. IV; Series of 2006

(Signed)
ATTY. RAMONCITO E. SANTOS Commission No. M-357
Notary Public for Makati City Until Dec. 31, 2007
30th Floor, Citibank Tower
8741 Paseo de Roxas, Makati City Roll No. 49027
PTR No. 4181394 1-2-06 Makati City IBP No. 662689 1-3-06 Pasig City

IN WITNESS WHEREOF, the parties have hereunto set their hands this _______________ day of Nov 30 2006 2006, at MAKATI CITY.

(Signed)
HON. CONRADO C. LINDO Mayor
Municipality of Ternate Province of Cavite

OCEAN VILLAS CONDOMINIUM CORPORATION Taxpayer

By:

____________________ President

Conforme:

(Signed) RAYMUNDO D. SALAZAR Provincial Assessor Province of Cavite

(Signed) FLORDELIZA C. SOBERANO Municipal Assessor

SIGNED IN THE PRESENCE OF:

(SIGNED) _____________________

(SIGNED) ________________________

ACKNOWLEDGMENT

BEFORE ME, a Notary Public in and for ___________________ this Nov 30 2006 day of _____________ 2006 personally appeared:

Name

Conrado C. Lindo

Community Tax Cert. No Passport No.

07631862

Date & Place of Issue

1/12/06; Ternate, Cavite

all known to me and to me known to be the same person who executed the foregoing Compromise Agreement and he acknowledged to me that the same is his free and voluntary act and deed.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal on the date and at the place first above written.

Doc. No. ______; Page No. ______;

(Signed) WILFREDO A. RUIZ Notary Public

Reference: Book XII, pp. 174-186

Book No. ______; Series of 2006;

WHEREFORE, the same Compromise Agreement is hereby approved.

The Decision under appeal is accordingly set aside and revised to conform to

the provisions of the herein Compromise Agreement. Provided however, that

the Schedule of payment should be adjusted, as the same is contingent upon

this Board’s approval thereof.

SO ORDERED.

Manila, Philippines, March 15, 2007.

(Signed) CESAR S. GUTIERREZ
Chairman

(Signed)
ANGEL P. PALOMARES Member

(Signed) RAFAEL O. CORTES
Member

Reference: Book XII, pp. 174-186