Republic of the Philippines

CENTRAL BOARD OF ASSESSMENT APPEALS Manila

SPOUSES EDUARDO MONTINOLA and ANGELES A. MONTINOLA and JUAN

JAMORA, JR. INCORPORATED,

– versus –

ENTERPRISES,

Petitioners,

CBAA CASE NO. V-02

THE SECRETARY OF FINANCE, acting thru Regional Director CIPRIANO CABALUNA, Jr. Region VI, THE CITY ASSESSOR OF ILOILO CITY AND THE CITY TREASURER OF ILOILO CITY,
Respondents. x – – – – – – – – – – – – – – – – – – – – – – – – – – – x

DECISION

ACTING upon the Special Civil Action for prohibition with Preliminary

Injunction and/or Restraining Order, dated February 29, 1992, filed by the

Petitioners Spouses Eduardo Montinola and Angeles A. Montinola, and Juan

Jamora, Jr. Enterprises, Incorporated, versus the Secretary of Finance acting

thru Regional Director Cipriano P. Cabaluna, Jr., Bureua of Local Government

Finance, Region VI, Department of Finance, the City Assessor of Iloilo City and

the City Treasurer of Iloilo City, Respondents, which petition sought to prohibit

and nullify the real estate assessments of petitioners’ respective real properties

situated in Iloilo City, on the ground that:

“Such revised real property assessments based on a void schedule of market values, were prepared, approved and implemented by the respondents without or in excess of their jurisdiction, or with grave abuse of discretion, the same being confiscatory, oppressive and in violation of the Constitution and the law on the matter. This petition likewise seeks to declare null and void the revised increased assessments of real properties in Iloilo City prepared by the respondent City Assessor based on a Schedule of Market Values, and the increased real property taxes being implemented and collected thereunder by the respondent City Treasurer, for being violative of the Constitution and other Philippine laws and regulations,”

the Supreme Court of the Philippines, in the above entitled case docketed as

G.R. No. 104233, dated March 31, 1992, en banc, resolved that:

“G.R. No. 104233 (Spouses Eduardo Montinola, Angeles A. Montinola and Juan Jamora, Jr., Enterprises, Incorporated versus The Secretary of Finance, Acting thru Regional Director, Region VI, Cipriano Cabaluna, Jr.,

Reference: Book VII, pp. 169-190

The City Assessor of Iloilo and the City Treasurer of Iloilo). – Acting on the special civil action for prohibition with preliminary injunction and/or restraining order, the Court Resolved, without giving due course to the petition, to require the respondents to COMMENT thereon, within ten (10) days from notice.

The Court also Resolved to ISSUE a TEMPORARY RESTRAINING ORDER, effective immediately and continuing until further orders from this Court, ordering the respondents to CEASE and DESIST from continuing to collect taxes based on the increased assessments of 1989 of real properties to pay under the old assessments.

The Court further Resolved to (1) REFER this case to the Central Board of Assessment Appeals: (2) DIRECT (a) the respondents to file said comment before the said Board for hearing and determination upon the issues therein raised and such evidence as the parties may present, and (b) the Board to SUBMIT to the Court a copy of its final judgment forthwith upon its rendition.”

The Central Board of Assessment Appeals in compliance with the

aforestated Resolution of the Supreme Court, {by reason of its special and

extraordinary jurisdiction} took cognizance of the petition and proceeded to hear

and determine upon the issues therein raised and such evidence as the parties

may present.

Before this Board, in support of their petition, Petitioners raised the

following issues, viz:

I. That the Schedule of Market Values upon which is the Revision or Revaluation was based is null and void for being in violation of Section 15 of P.D. 464;

II. That the assessment is excessive and confiscatory;

III. That the new assessment should have been made effective January 1, 1991, and gradually implemented.

It appearing that the issues raised are interrelated with each other, WE,

then, shall resolve and/or discuss them together. The crux of the issues as

alleged by Petitioner, is that the Schedule of Market Values, which was adopted

by Respondent City Assessor of Iloilo City, is null and void for want of authority,

because in the preparation thereof, the pertinent provisions of the Real Property

Tax Code was not duly complied with, thus the increases in real property tax

assessments on subject properties, based on a null and void schedule of

market values are not enforceable, or even if valid and enforceable, they are

excessive and confiscatory and should have been made effective January 1,

1991 and implemented on a gradual basis.

Reference: Book VII, pp. 169-190

The records show that sometime in the months of September and

October, 1989, Petitioners received Notices of Assessments revising and

increasing the assessments of their real properties, as listed and itemized in

their petition (page 3, Petition dated February 28, 1992). Said increase was

based on the approved Schedule of Market Values, which was adopted by

Respondent City Assessor in undertaking the general revision of assessments

of all lands in Iloilo City, preparatory to the said general revision of assessments

undertaken by Respondent City Assessor, for the years 1988-1989.

Respondent City Assessor prepared and submitted to Respondent Regional

Director, Region VI, Bureau of Local Government, Department of Finance, a

Schedule of Market Values, for his approval in accordance with Section 15 of

P.D. 464, which provides as follows, viz:

“Section 15. – Preparation of Schedule of Values. – Before any general revision of property assessment is made, as provided in this Code, there shall be prepared for the province or city a Schedule of Market Values for the different classes of real property therein situated in such form and detail as shall be prescribed by the Secretary of Finance.

Said schedule, together with an abstract of the date on which it is based, shall be submitted to the Secretary of Finance for review not later than the thirty-first day of December immediately preceding the calendar year the general revision of assessment shall be undertaken. The Secretary of Finance shall have ninety days from the date of receipt within which to review said schedule to determine whether it conforms with the provisions of this Code.”

And, the said Schedule of Market Values was approved by Respondent

Regional Director, (in his letter dated January 3, 1989, to Respondent City

Assessor, under the authority of the Secretary of Finance) as follows, viz:

“The City Assessor Iloilo City

Sir:

Pursuant to Ministry Order No. 4-85 of the Ministry of Finance (now Department of Finance) dated February 11, 1985, after review of your proposed Schedule of Base Market Values for lands, this Office has noted substantial compliance of the procedures and guidelines in the preparation of Schedule of Values as prescribed under Section 15 of P.D. 464 as amended, and its implementing assessment regulations No. 7-77, dated July 25, 1977. Accordingly, the said schedule of values for lands shall be adopted as basis for 1988-1989 general revision of real properties (lands) for that City, and the result of this revision of assessment, shall take effect in 1990.

BY Authority of the Secretary of Finance

Reference: Book VII, pp. 169-190

(Sgd.) CIPRIANO P. CABALUNA, Jr. Regional Director”

Among those affected by the said general revision are the real properties

owned by the Petitioners, hence this case.

During the pendency of the Petition, Petitioners Spouses Eduardo L.

Montinola and Angeles A. Montinola and Respondents City Assessor of Iloilo

and the City Treasurer of Iloilo entered into an amicable settlement to terminate

their controversy. Thus, on March 4, 1994, the parties jointly and formally

submitted to this Board for its consideration and approval the following

Amicable Settlement:

“AMICABLE SETTLEMENT”

“COME NOW Petitioners Spouses Eduardo L. Montinola and Angeles A. Montinola and the City Assessor of Iloilo and the City Treasurer of Iloilo, assisted by their respective undersigned counsel and to this Honorable Office most respectfully submit this Amicable Settlement for approval:

1. That the parties agree to the following valuation and assessment of properties of petitioners spouses Montinola from 1990 until it is revised in the general revision of the City of Iloilo:

[table “” not found /]

with an annual real property taxes to be computed by the City Treasurer in accordance with the existing rates of levy and the rules and regulations duly promulgated by competent authority.

2. That the City Assessor shall accordingly amend the above tax declarations to reflect the above assessed value:

3. That this Amicable Settlement is without prejudice to the decision of the Supreme Court in G.R. No. 104233 in case the same should be favorable to the petitioners-spouses Eduardo L. Montinola and Angeles A. Montinola.

Reference: Book VII, pp. 169-190

WHEREFORE, it is most respectfully prayed of this Honorable Office that the foregoing Amicable Settlement favorably recommended for approval by the Honorable Supreme Court.

RESPECTFULLY SUBMITTED.

Iloilo City for Manila, March _______, 1993.

(Sgd). EDUARDO L. MONTINOLA Petitioner

(Sgd.) ANGELES A. MONTINOLA Petitioner

ASSISTED BY:

(Sgd.) EFRAIN B. TRENAS Counsel for Petitioner Golden Commercial Center Iznart St., Iloilo City

(Sgd.) FRANKLIN CORDERO Respondent

(Sgd.) ROMEO MANIKAN Respondent

ASSISTED BY:

(Sgd.) REYNALDO SONALAN Counsel for Respondents
City Legal Officer III City Hall, Iloilo City

APPROVED:

(Sgd.) MANSUETO MALABOR City Mayor”

The merits of this Amicable Settlement, we shall discuss later.

We find that Respondent City Assessor acted within his discretion in

undertaking the general revision under consideration pursuant to the provisions

of Section 21, PD 464, as follows:

“Section 21. – General Revision of Assessments Once in Every Three Years. – Beginning July 1, 1981 to June 30, 1982, the provincial or city assessor shall make a general revision of real property assessments in the province of city to take effect on January 1, 1983, and once every three years thereafter: Provided, however, That if property values in a province or city, or in any municipality, have greatly changed since the last general revision, the provincial or city assessor may, with the approval of the Minister of Finance (now Secretary of Finance) or upon his discretion, undertake a general revision of assessments in the province or city, or in any municipality before the third year from the effectivity of the last general revision.” (underlining supplied).

Thus, the City or Provincial Assessor, even without the approval of the

Secretary of Finance, has the discretion to undertake a general revision as

aforeprovided, when property values have greatly changed before the third year

from the effectivity of the last general revision. In this case, the general revision

undertaken by Respondent City Assessor, met the requirements of Section 21,

supra.

It may be of note that only proposed Schedules of Market Values for

general revisions need the approval of the Secretary of Finance. Said authority

to approve the Schedule of Market Values had been delegated to Regional

Reference: Book VII, pp. 169-190

Directors of the Bureau of Local Government Finance, Department of Finance,

under Ministry Order No. 4-85, dated February 11, 1985.

The authority to approve schedule of values by the Regional Director of

the Bureau of Local Government Finance, Department of Finance, is justified

under Section 9(j) of P.D. 1266, in conjunction with Ministry Order 4-85, viz:

“Sec. 9. Functions of Regional Offices. – Under the general supervision of the Secretary of Finance, the Regional Offices of the Department shall, in addition to those prescribed or authorized under existing law, perform the following functions:

X x x .

(j) Perform such other functions as may be prescribed by law or as may be delegated or authorized by the Secretary of Finance”.

Ministry Order No. 4-85

X x x .

In addition to the functions already delegated x x x, the Regional Directors for Local Government Finance of this Ministry are hereby authorized to discharge the following functions and responsibilities effective April 1, 1985.

X x x .

2. Schedule of Market Values. – The Regional Directors for Local Government Finance shall approve the Schedule of Market Values to be submitted by Provincial and City Assessors within the reglementary period required for the purpose.

X x x .”

Clearly what was delegated by the Secretary of Finance, to BLGF

Regional Directors, is merely an act of administration (not an act of legislation),

in fact, only a ministerial act, in view of the last sentence, par. 2, Section 15 of

PD 464, to wit:

“X x x to review said schedule to determine whether it conforms with the provisions of this Code.”

Undue delegation, still, will not lie in the approval of Schedules of Market

Values by Regional Directors. In “Calalang vs. Williams, et al.”, (70 Phil. 731),

the Honorable Supreme Court, through Justice Jose P. Laurel, laid down the

following principles which we find applicable in this case:

“The delegated power, if at all, x x x is not the determination of what the law shall be, but merely the ascertainment of the facts and circumstances upon which the application of said law is to be predicated.”

Reference: Book VII, pp. 169-190

Furthermore, the said Court, through Justice Roberto Concepcion, in

“Pelaez vs. Auditor General”, (15 SCRA 576-577), proceeded as follows:

“Although Congress may delegate to another branch of the Government the power to fill in the details in the execution, enforcement or administration of a law, it is essential, to forestall a violation of the principle of separation of powers, that said law: (a) be complete in itself – it must set forth therein the policy to be executed, carried out or implemented by the delegate-and (b) fix a standard – the limits of which are sufficiently determinate or determinable – to which the delegate must conform in the performance of his functions.”

The Secretary of Finance, in the delegation of his Authority to approve

schedules of values to Regional Directors is within observance of the above

principles.

The “policy” as set forth is contained in Sec. 21 of P.D. 464, while the

“standard” is in Sec. 15 thereof.

Regarding the second issue, Petitioner Juan Jamora, Jr. Enterprises,

Inc., assails the assessments as being “excessive, arbitrary and confiscatory”

on the grounds that the Schedule of Market Values, the basis of assessments,

should have been approved at the current and fair market value (Sec. 2(1), P.D.

464 and that the classification for assessment purposes should be on the basis

of actual use of the properties involved, (Sec. 2(3), P.D. 464). Petitioner further

argues that Respondents have brought forward no solid and serious justification

for the 536% or so increase in assessment and corresponding taxes therein,

due to:

(a) No document of sale of any lot in Iloilo City has been presented for the period from 1980-1989 to show a progressive increase in the sales price to justify the jump in value.

(b) In the “comparative sales approach” used (to determine the value thereof), values were assigned that were arbitrarily excessive, unwarranted, inequitable and confiscatory. Petitioner further asserts that the “income approach” should have been more equitable and more realistic, considering that, as stipulated and admitted, Petitioner is engaged in the leasing business and not in the sale of real estate.

Petitioner, however, adduced no evidence as to the current and fair

market value of other property/properties similarly situated. Instead, Petitioner

emphasized that: “assuming that the surrounding lots are sold at P1,000,000.00

Reference: Book VII, pp. 169-190

per square meter, it does not follow that rental of petitioner’s lots would follow

that cost or value.”

Petitioner offered as exhibit “J-1” the letter of Secretary Jesus P.

Estanislao of the Department of Finance, in answer to the letter of the Hon.

Hortensia L. Starke, Representative, 6th District of Negros Occidental, dated

March 20, 1990, regarding “alleged overnight increases in real property taxes,

particularly in Quezon City and in the province of Negros Occidental”, to show

that there are persons and places other than those in Iloilo City, opposed to the

increase in real property assessments. The letter, however, also denotes that

Petitioner was made quite aware of the January 1990 effectivity of the instant

assessment and a 2-1/2 year gradual implementation of the “1984 values”,

ending in December 1989, as stated by the Secretary of Finance, therein, as

follows:

“The so-called 1984 values’, therefore, were based on 1980-1981 prices which, obviously, are outdated by this time. Considering that the general revision scheduled for CY 1986 was not undertaken, the local assessors were constrained to conduct revisions in their respective localities in CY 1989 to take effect January, 1990.

“It may be recalled, however, that when the new Administration authorized the application of the ‘1984 values’ as basis for real property taxes starting July 1, 1987, this Department authorized only a gradual implementation over a 2-1/2 year period which ended in December, 1989.”

Respondent Assessor of Iloilo City, on the other hand, testified that

before formulating the Schedule of Market Values, technical people and field

men were assigned to gather data in the field. They conducted interviews and

surveys to arrive at the prevailing sales value of real properties in Iloilo City,

harnessed with the opinions of the people therein. These data were collated,

then compared with the Schedule of Market Values to be adopted for the

purpose.

A similar case was decided by the Central Board of Assessment Appeals

on May 8, 1990 (Emilia A. Biscocho, Petitioner-Appellant, vs. Board of

Assessment Appeals of Quezon City, Appellee and Municipal Assessor of

Mandaluyong, Respondent-Appellee, CBAA CASE No. 129, Re: Tax

Reference: Book VII, pp. 169-190

Declaration No. 00658, Mandaluyong, M.M.). The Board of Assessment

Appeals of Quezon City affirmed the assessment made by the Municipal

Assessor of Mandaluyong on Petitioner-Appellant’s residential lot against

Petitioner-Appellant’s claim that the assessment thereto, based on the unit

market value of P550 per square meter which involves an increase by more

than 300% is contrary to law considering that there were no improvements on

the lot. The Board affirmed the decision of Appellee Board of Assessment

Appeals of Quezon City, finding for Respondent-Appellee, Municipal Assessor

of Mandaluyong, correctness and validity in his assessment thereof on the

following grounds:

(1) the law’s requirement in the assessment thereof, was faithfully observed; and

(2) the increase in the assessment, notwithstanding the absence of improvements, was mainly due to the general increase of the market value of the lots in the area.

It is of common and public knowledge how real estate values fared with

the sudden upsurge of prices in the crisis of the early 1980s resulting in inflation

and its spiraling momentum thereafter. Ironically, however, no parallel steps

were taken to revaluate and reassess real properties for purposes of taxation.

The 1981-1982 General Revision was deferred twice before its was made to

accrue only in 1987.

That “real property owners had a field day”, could be true, hence the

predilection to resist change, invoking “illegal”, “arbitrary”, “unjust”, “excessive”,

“oppressive” and “confiscatory” real property assessments made after the

Schedule of Market Values was updated to conform with the escalation of

prices, not only in the City of Iloilo but elsewhere in the country.

Efforts toward this direction might have led the City Council of Iloilo City

to have passed Resolution No. 331 (“to request Honorable Jesus Estanislao,

Secretary of Finance, Manila, to fix at fifty percent (50%) the increase of the

assessed value of real properties for real property tax purposes in the City of

Iloilo”) and No. 332 (directing respondent City Treasurer of Iloilo, “not to collect

Reference: Book VII, pp. 169-190

real property tax based on the new assessment until the petition for suspension

filed by real property owners with the Secretary of Finance is finally resolved”),

supra. If said Resolutions, however, were not acted upon nor enforced, it is

because they were not binding upon Respondents Secretary of Finance and

Iloilo City Treasurer.

And finally, Petitioner argued that the reassessments made by

Respondent City Assessor and the collection of real estate taxes thereon by

Respondent City Treasurer shall be gradually implemented on January 1, 1991

in accordance with BLGF Memorandum Circular No. 36-90, dated October 22,

1990, which provides for a “Revaluation” of selected real property assessments

and the gradual implementation of the increase in assessment during the three-

year period from CY 1991 to CY 1993, alleging further that the revisions

conducted by Respondent Assessor is that of “Re-Valuation” and not the

General Revision in accordance with the provisions of the Code.

This is erroneous.

BLGF Memorandum Circular No. 36-90, dated October 22, 1990 is

merely recommendatory to be embodied in the proposed Schedule of Market

Value in preparation of a general revision under the Code, and not mandatory

and binding on the Respondents herein. It cannot be used to stop or even delay

the revision to be conducted or the collection of real property taxes. Besides,

said Memorandum Circular refers to its incorporation in the proposed Schedule

of Market Values which is still in the process of preparation and not for those

which have already been approved and being implemented, as in the case of

Iloilo City.

In the cases of Mathay (Ismael A. Mathay, Jr., vs. The Hon.

Undersecretary of Finance, et al., CBAA Case No. 261, G.R. No. 97618), and

Javier (Rufino S. Javier vs. The Hon. Undersecretary of Finance, et al., CBAA

Case No. 262, G.R. No. 102319), this Board and the Supreme Court were one

in declaring null and void the Schedule of Market Values prepared solely by the

Reference: Book VII, pp. 169-190

respective Assessors of Quezon City, Pasig and Makati, as violative of Sec. 9,

P.D. 921.

In the case at bar, this Board finds nothing less than judicious adherence

to the mandate of the law in the preparation of the Schedule of Market Values

for the City of Iloilo and the assessment of the real properties therein.

WHEREFORE, judgment is hereby rendered, declaring the legality and

validity of the Schedule of Market Values for the City of Iloilo and upholding the

assessment on the real properties of Petitioners Spouses Eduardo Montinola

and Angeles A. Montinola and Juan Jamora, Jr. Enterprises, Inc., respectively.

The Amicable Settlement, not being contrary to law, public policy, public

order, good custom or morals, entered into by and between Petitioners

Spouses Eduardo Montinola and Angeles A. Montinola and Respondents City

Assessor and City Treasurer of Iloilo, shall be enforced, in recognition of the

rights of parties to enter into a contract or agreement.

Respondents City Assessor and City Treasurer of Iloilo, are hereby

ordered to act accordingly.

SO ORDERED.

Manila, Philippines, September 21, 1994.

(Signed) MARGARITA G. MAGISTRADO
Chairman

(Signed) ELEANOR A. SANTOS
Member

(Signed) ALFONSO M. MEDADO
Member

Reference: Book VII, pp. 169-190