Republic of the Philippines
CENTRAL BOARD OF ASSESSMENT APPEALS Manila
CITY ASSESSOR OF CEBU, Respondent-Appellant,
– versus –
CBAA CASE NO. V-05 – V-27 THE LOCAL BOARD OF
ASSESSMENT APPEALS OF CEBU CITY,
Appellee,
– and –
Re:
Tax Dec. Nos. G.R. No. 06-038-01450 to G.R. 06-
ALEXANDER S. GAISANO and STEPHEN S. GAISANO, JR., doing business
under the name “GAISANO BROS., MERCHANDISING, INC.”,
Petitioner-Appellee. x – – – – – – – – – – – – – – – – – – – – – – – – – – – x
038-01472 (24 Lots) Cebu City
D E C I S I O N
BEFORE this Board is an appeal filed by Respondent-Appellant, CITY
ASSESSOR OF CEBU CITY, assailing the decision of the Board of
Assessment Appeals of Cebu City, dated December 17, 1992, the dispositive
portion of which reads as follows:
“WHEREFORE, in view of the foregoing, judgment is hereby rendered declaring the non-applicability of the beneficial use provisions under Section 40, P.D. 464 of the properties of the herein appellant, then owned by the Public Estates Authority, a tax-exempt entity, from the time of the execution of the Contract to Sell to the date of the execution of the Deed of Absolute Sale, and taxes collected in pursuance to the same shall be considered tax credit to be applied for the payment of future taxes.”
As culled from the records and the findings of this Board the following
facts of the case are as follows:
1.0 That sometime in February, 1990, Respondent-Appellant, issued
and approved twenty-four (24) tax declarations, in the name of Public Estate
Authority, with Alex S. Gaisano, as Beneficial User, on the following parcels of
land, as follows:
[table “” not found /]pursuant to Sections 5, 21, 25 and 40(a) of P.D. 464, as amended, real
property taxes to take effect with the year 1981.
2.0 That on May 18, 1990, Petitioner-Appellee, together with the
representative of Public Estate Authority, went to the office of the City
Assessor of Cebu City, the Respondent-Appellant, herein, and on the basis of
the Transfer Certificates of Title in the name of Gaisano Merchandising
Incorporated, declared for taxation purposes and requested for the issuance of
the corresponding tax declarations on the parcels of land described under the
said Transfer Certificates of Title. However, their request was denied by
Respondent-Appellant, on the ground that the said parcels of land were
delinquent in the payment of real property taxes for the years 1981 to 1992.
On verification, it turned out that the parcels of land which were assessed by
Respondent-Appellant under the aforementioned tax declarations in 1990,
were the same parcels of land, which were the subject of Petitioner-Appellee’s
declaration and request for issuance of tax declarations in its name.
3.0 Petitioner-Appellee, refused to pay the tax delinquencies, as
assessed by Respondent-Appellant for the years 1981 to 1992 and presented
Reference: Book VII, pp. 224-247
before Respondent-Appellant, two copies of the Contracts to Sell showing that
the said lots were subject of the aforementioned contracts. For the first
contract to sell six (6) lots were covered dated April 6, 1987 (pages 143-146,
Records) while the second contract dated February 15, 1988 covers eighteen
(18) lots. (pages 148-151, Records).
4.0 Accordingly, on the basis of the Contracts to Sell, (supra)
presented by Petitioners-Appellees, Respondent-Appellant rectified his
erroneous assessments, issued in 1990, cancelled and corrected the
aforementioned tax declarations, issued and approved new ones for the said
twenty-four (24) lots, real property taxes to commence 1988 and 1989,
respectively still in the name of Public Estate Authority, with Alex S. Gaisano
as Beneficial User, pursuant to Sections 5, 21, and 40(a) of P.D. 464 and
Contracts to Sell of the following lots described as follows:
PUBLIC ESTATE AUTHORITY (Alex S. Gaisano, Beneficial User) (Declared Owner)
As per Contract to Sell, dated April 6, 1987:
Lot. No./ Blk. No.
9 (R) Blk. 24-A 8 (R) Blk. 24-A 7 (R) Blk. 24-A 5 (R) Blk. 24-A 4 (R) Blk. 24-A 3 (R) Blk. 24-A
Tax. Dec. No.
06-038-01473 06-038-01451 06-038-01453 06-038-01454 06-038-01452 06-038-01450
Area (Sq. M.)
968 1,107 1,107 1,303 1,125 2,097
Assessed Value
P287,980.00 329,330.00 329,330.00 445,790.00 334,690.00 623,860.00
Effective Year
1988 1988 1988 1988 1988 1988
As per Contract to Sell, dated February 15, 1988
1 (R) Blk. 24-A 2 (R) Blk. 24-A 3 (R) Blk. 24-A 4 (R) Blk. 24-A 5 (R) Blk. 24-A 6 (R) Blk. 24-A 7 (R) Blk. 24-A 8 (R) Blk. 24-A 9 (R) Blk. 24-A 10 (R) Blk. 24-A 11 (R) Blk. 24-A 12 (R) Blk. 24-A 13 (R) Blk. 24-A 14 (R) Blk. 24-A 15 (R) Blk. 24-A 16 (R) Blk. 24-A 17 (R) Blk. 24-A 18 (R) Blk. 24-A
06-038-01472 06-038-01471 06-038-01458 06-038-01456 06-038-01457 06-038-01458 06-038-01459 06-038-01460 06-038-01461 06-038-01462 06-038-01463 06-038-01464 06-038-01465 06-038-01466 06-038-01467 06-038-01468 06-038-01468 06-038-01468
974 333,230.00 1989 952 283,220.00 1989 974 313,630.00 1989 792 221,760.00 1989 792 221,760.00 1989 792 221,760.00 1989 792 221,760.00 1989 792 221,760.00 1989 792 221,760.00 1989 974 313,630.00 1989 952 266,560.00 1989 974 313,630.00 1989 792 255,030.00 1989 792 255,030.00 1989 792 221,760.00 1989 792 221,760.00 1989 792 221,760.00 1989 792 221,760.00 1989
Reference: Book VII, pp. 224-247
real property taxes to commence for the first six (6) lots in 1988 and the next
eighteen (18) lots in 1989, respectively.
5.0 That on May 29, 1992, Petitioner-Appellant in consonance to the
aforementioned newly issued tax declarations paid under protest the real
property taxes due thereon for the years 1988-1992, in accordance with the
assessment of Respondent-Appellant in the total amount of P538,202.40, under
official Receipts Nos. 2384674-U to 2384078-U, dated May 29, 1993. (See
pages 176, 177 and 178, Records).
6.0 On July 6, 1992, Petitioner-Appellant aggrieved by the action of
Respondent-Appellee, in declaring the 24 lots as taxable in its name as
“beneficial user” under Section 40(a) P.D. 464, filed an appeal with the Appellee
Board of Assessment Appeals of Cebu City, on the said lots (page 71 to 142
Records). The Appellee Board declared in its decision dated December 17,
1992 the non-applicability of the “Beneficial Use Theory” and ordered that taxes
paid thereon be tax credited to the payments of future taxes of the said
properties (pages 184 to 193, Records).
A motion for reconsideration dated January 18, 1993, was filed by
Respondent-Appellant on the ground that Appellee Local Board has no
authority in deciding the appeal. The same was denied by Appellee Local Board
in its Order dated July 15, 1993 (page 216 to 226, Records)
Hence this appeal.
In his appeal, Respondent-Appellant City Assessor of Cebu assigned the
following errors:
I. The Honorable Local Board of Assessment Appeals erred in
finding that the Gaisano Bros. Merchandising Inc. is not a beneficial user of the
subject lots.
II. The Honorable Local Board of Assessment Appeals erred in not
holding that Condition Nos. 4 and 5 of the Contract to Sell grants the beneficial
use of the subject lots to Gaisano Bros. Merchandising Inc.
Reference: Book VII, pp. 224-247
III. The Honorable Local Board of Assessment Appeals erred in
entertaining and deciding the appeal.
The third assigned error, being a jurisdictional issue, shall be discussed
first.
Respondent-Appellant states that the Local Board did not have the
authority to entertain and decide the appeal because the “gravemen of the
appeal to the Local Board of Assessment Appeals is the legality of the realty tax
assessments on the subject lots against the private appellees, the alleged
beneficial users, the validity of the tax assessments against the alleged
beneficial users is the crux in issue and the Local Board of Assessment
Appeals should not have entertained the appeal considering that the issue
involved is purely a legal one; and the claim of the petitioners-appellees for the
refund of the amount of P538,202.40 paid under protest partakes of the nature
of an action to recover sum of money.”
On the other hand, Petitioners-Appellees contended that Appellee Local
Board had sufficient jurisdiction to entertain and decide the case on the ground
that this case was basically an appeal to the Local Board from the action of the
City Assessor of Cebu, the Respondent-Appellant, herein erroneously issuing in
1992 his assessments on subject real properties; that the fact that there was a
prayer for the refund of the real property tax paid by the Petitioners-Appellees
under protest, did not change the nature of the case as it was merely an
incidental matter depending upon the final outcome of the appeal; and that the
assessments that were issued by the Respondent-Appellant on May 18, 1992
or after the effectivity of Local Government Code of 1991 (RA 7160). The
applicable provisions of RA 7160 and not those of P.D. 464, as amended, shall
govern.
The applicable law on the matter is P.D. 464, it appearing that the
assessments in question refers to the assessments made by the Respondent-
Appellant in 1990.
Reference: Book VII, pp. 224-247
Section 30 P.D. 464 which provides as follows:
“Section 30. Local Board of Assessment Appeals. – Any owner who is not satisfied with the action of the provincial or city assessor in the assessment of his property may, within sixty (60) days from the date of receipt by him of the written notice of assessment as provided for in this Code, appeal to the Board of Assessment Appeals of the province or city, by filing with it a petition under oath using the form prescribed for the purpose, together with copies of the tax declaration and such affidavits or documents submitted in support of the appeal,”
does not qualify or distinguish the action of the provincial or city assessor which
may be the subject of an appeal by a dissatisfied property owner (or any person
having legal interest in such property) to the proper Local Board of Assessment
Appeals. It is a well known maxim in statutory construction that where the law
does not distinguish, we should not distinguish (Robles vs. Zambales Chromite
Mining Co., G.R. No. L-12560, September 30, 1958, cited in Martin, Handbook
on Statutory Construction, Revised Edition, p. 8).
In the case of Manila Medical Services vs. BAA of Manila & City
Assessor of Manila (CBAA Case No. 86), this Board ruled:
“Sec. 30 directs every Local Board of Assessment Appeals to entertain and pass upon the application for review of any owner who is not satisfied with the action of the provincial or city assessor in the assessment of his property. In other words, the Local Board may review any action taken by the provincial or city assessor in the assessment under appeal. Since the law does not distinguish and use the all-embracing words “the action”, this should be interpreted to include all the acts of the assessor leading to the questioned assessment, such as those which give rise to questions of law, as in the present case.”
And that:
“When a board or officer is directed by statute to entertain and pass on application for review, it is the absolute duty of such board or officer to act in their situation falling within the statutory discretion (III. People v. Board of Review of Cook County, 87 A.L.R. 520 {1933}, 84 CJS page 981). And the grounds on which a review of an assessment may be had depend on the terms of the statute providing for, and defining the functions of, the reviewing board or officer, and may include incorrect valuation, illegality and erroneous or irregular acts of the assessors (Conn. – Torrington Co. vs. Hacket, 200 A. 338/1938/, 24 C.S.R. p. 983).”
Thus, from the foregoing, Section 30, P.D. 464, (supra) the jurisdiction of
the Board below, or any other Local Boards of Assessment Appeals in this
jurisdiction for that matter, does not hinge or depend on whether the action of
the provincial or city assessor in making the realty assessment, or on whether
the assessment itself, is alleged to be illegal or merely erroneous, as long as
such action of the provincial or city assessor, or such assessment itself, is the
Reference: Book VII, pp. 224-247
subject matter of an appeal by the owner of the property (or the person having
legal interest therein) before the appropriate Local Board of Assessment
Appeals.
Respondent-Appellant, citing the case of Victoria’s Milling Co., Inc., Inc.,
vs. Court of Tax Appeals (22 SCRA 1008), further argues that, since the
Petitioners-Appellees prayed that the assessments in question be declared null
and void ab initio and the amount of P538,202.40 paid under protest refunded
them, the issue becomes purely a legal one and partakes of the nature of an
action to recover a sum of money, and the remedy of Petitioners-Appellees is to
sue for refund in the competent Court of First Instance. Contrary to
Respondent-Appellant’s view, the doctrine in Victorias no longer applies. Thus,
in the case of Spouses Ramon A. Gonzales and Lilia Yusay vs. Province of
Iloilo (38 SCRA 209-227 [March 31, 1971]), the Supreme Court said:
“. . . The tentative test for determining the proper court of jurisdiction essayed in Victorias must be accordingly modified. The test therein stated was that ‘where an assessment is illegal and void, the remedy of a taxpayer, who has already paid the realty tax under protest, is to sue for refund in the competent court of first instance. On the other hand, where the assessment is merely erroneous, his recourse is to file an appeal in the Provincial Board of Assessment Appeals within 60 days from receipt of the assessment, adding the distinction that ‘an assessment is illegal and void when the assessor has no power to act at all. It is erroneous when the assessor has the power but errs in the exercise of that power.
. . . The Court has therefore adopted the simple test that where an assessment is disputed for whatever ground or reason, be it that the assessment is unjust, erroneous or improper, illegal or void or excessive or unreasonable that action challenging the assessment after first exhausting the administrative remedy of appeal to the assessment board, and regardless of whether the corresponding realty tax had been paid and a refund sought, pertains to the exclusive and special jurisdiction of the tax court to the exclusion of the courts of first instance. Thus, in the recently decided case of Board of Assessment Appeals of Zamboanga del Sur vs. Samar Mining Co. and Court of Tax Appeals, L-28034, Feb. 27, 1971 (the dictum in this case citing Cabanatuan’s ruling that the tax court’s jurisdiction is confined to the “reasonableness or legality” of the disputed assessment is of course modified and clarified by the present decision), the Court upheld the jurisdiction of the tax court to rule upon the legality and validity of the disputed real estate assessment, x x x.”
The Supreme Court in Caltex (Philippines) vs. Central Board of
Assessment Appeals and City Assessor of Pasay (G.R. No. 50466 (May 31,
1982), ruled that “the jurisdiction of the Court of Tax Appeals to review by
appeal, decisions of provincial or city boards of assessment appeals was
Reference: Book VII, pp. 224-247
transferred to the Central Board of Assessment Appeals created under
Presidential Decree No. 464, which took effect on June 1, 1974.”
Accordingly, Appellee Local Board of Assessment Appeals of Cebu City,
had the jurisdiction to entertain the appeal at bar.
With respect to taxes paid under protest, which according to the findings
of Appellee Local Board, to be tax credited for the payment of future taxes of
the properties in question, the same shall be treated in a separate cause of
action under Section 253 of R.A. 7160, which provides as follows:
“Section 253. Repayment of Excessive Collection. – When an assessment of basic real property tax, or any other tax levied under this Title, is found to be illegal or erroneous and the tax is accordingly reduced or adjusted, the taxpayer may file a written claim for refund or credit for taxes and interests with the provincial or city treasurer within two (2) years from the date the taxpayer is entitled to such reduction or adjustment.”
It appearing that payment was made in May, 1992, the aforesaid provisions of
law shall govern.
On the first and second issues, which are interrelated, Respondent-
Appellant states that the legal basis of assessment for real property tax
purposes against the private appellees are Section 40(a) of P.D. 464, and the
Contract to Sell. Section 40(a) of P.D. 464, provides as follows:
“Sec. 40. Exemption from Real Property Tax – The exemption shall be as follows:
(a) Real property owned by the Republic of the Philippines or any of its political subdivisions and any government-owned corporation so exempt by its charter: Provided, however, that this exemption shall not apply to real property of the above-named entities the beneficial use of which has been granted for consideration or otherwise, to a taxable person.” (underlining for emphasis)
There is no dispute as to the exemption of the Public Estates Authority
from realty taxes which was granted under Executive Order No. 654 dated
February 26, 1981.
Verily, the question which is here in issue is whether beneficial use of the
subject properties was granted to the Petitioners-Appellees by the execution of
the Contracts to Sell which as appearing in the records is the bone of
contention of the appeal at bar.
Reference: Book VII, pp. 224-247
The term “beneficial use” is the right to use and enjoy property according
to one’s own liking or so as to derive a profit or benefit from it, including all that
makes it desirable or habitable, as light, air and access, x x x.” (Christiansen vs.
Department of Social Security, 15 Wash. 2d.485, 131, p. 191, cited in Black’s
Law Dictionary, 5th Edition). It is the “right to its enjoyment as it exists where the
legal title is in one person and the right to such beneficial use or interest is in
another” (Roman Catholic Missions v. Misoula County, 200 U.S. 118, 127, 26
SCT 197, 200, 50 L. ed. 398, cited in 7 C.J.S. 1047).
Respondent-Appellant argues that the proviso contained in No. 4 of the
terms and conditions of the Contracts to Sell granted possession and beneficial
use of the subject properties to the Petitioners-Appellees during the suspensive
period of the contract. However, Petitioners-Appellees pointed out that, as
expressly provided under Condition No. 5 of the same contracts, the title to and
possession of the subject properties were retained by the PEA pending full
payment of the purchase price.
A sound rule in statutory construction states that in case of conflict
between an express provision or condition on one hand, and an implied one, on
the other, the latter should give way to the former. The proviso in Condition No.
4 (page 144 Records), is definitely a mere implication when compared to the
provisions of Condition No. 5 (page 145 Records). We must, however,
harmonize the two conditions since, as a rule in statutory construction, an
interpretation which gives effect to all the terms and conditions of a contract
should be followed. In doing so, we have reached the conclusion that the
proviso in Condition No. 5 is an anticipation of a possible violation by
Petitioners-Appellees of Condition No. 4 and that both conditions granted unto
Petitioners-Appellees the beneficial use of the property regardless of whether
Petitioners-Appellees implemented the said terms and conditions.
In this Contract to Sell with Public Estate Authority, in favor of Petitioners-
Appellees, herein, it was shown that Petitioners-Appellees purchased by way of
Reference: Book VII, pp. 224-247
installment, the parcels of land in question and that it was agreed therein to
have delivery of the possession of the properties to them pending full payment
of the purchase price, although the title remained with the Public Estate
Authority. In effect the Public Estate Authority, granted unto Petitioners-
Appellees the beneficial use of the real property in question, pursuant to
Section 40(a) P.D. 464 (supra) which is the basis of Respondent-Appellant’s
assessments. A sale by installment, as in the instant case, from a government
corporation, so exempt by its charter, to a taxable person, shall be considered
as a grant, and Article III, par. A, of Assessment Regulations No. 3-75, dated
February 10, 1975, of the Department of Finance, Rules and Regulations for
the Implementation of the Assessment Provisions of the Real Property Tax
Code (P.D. 464) shall apply, pertinent sections of the regulations herein quoted,
provides as follows, viz:
“Article III – Exemption from Real Property Tax.
The following are exempt from real property tax:
1. x x x
2. x x x. (a) Real property owned by the Republic of the Philippines or any of its political subdivisions and any government-owned corporation so exempt by its charter: Provided, however, That the exemption shall not apply to real property of the above-named entities the beneficial use of which has been granted, for consideration or otherwise, to a taxable person. (Section 40(a) P.D. 464)
1. Under the sub-section, real property owned by the Republic of the Philippines or its political subdivisions (provinces, cities, municipalities and barangay) to be taxable in the name of the person who is using it, refers to their patrimonial or private properties under Articles 421 and 423 of the Civil Code. x x x.
However, Real property owned by a government-owned corporation is taxable in the name of the person to whom property is leased or sold by installment” (Underlining for emphasis).
Thus, in accordance to the above quoted assessment regulation, a Sale
by Installment, as in the instant case, from a government owned or controlled
corporation so exempt by its charter, on its private properties, to a taxable
person, shall be considered “a grant for a consideration or otherwise,” hence,
shall be taxable in the name of the person to whom property is sold by
installment.
Reference: Book VII, pp. 224-247
To recapitulate, the Board finds that: Firstly, the Local Board of
Assessment Appeals of Cebu City, Appellee, herein, had the jurisdiction to
entertain the appeal of Petitioner-Appellee, pursuant to Section 30 of P.D. 464,
as amended. Secondly, aside from the provisions contained in Conditions 4 and
5 of the Contract to Sell, which grants unto Petitioners-Appellees, the beneficial
use of said properties, by the nature of the terms and conditions of the contract
itself, which clearly indicated that it is a Sale by Installment and Section 40(a)
P.D. 464, as implemented under Assessment Regulations Nos. 3-75 of the
Department of Finance dated February 10, 1975, pertinent portion of which
provides that “when real property owned by a government owned or controlled
corporation, so exempt by its charter is taxable in the name of the person to
whom property is leased or sold by installment the beneficial use theory under
aforesaid provision is applicable. Finally, the issuance of the tax declarations
aforementioned in 1992, by Respondent-Appellant, City Assessor of Cebu City,
was mere rectification of an existing assessments, in accordance with the
provisions of the Code (P.D. 464) and that of the Contract to Sell, by correcting
the year of effectivity in the tax declarations of the twenty-four (24) lots issued in
1990, for the years 1981 for the first six lots effective 1988 and the next
eighteen (18) lots effective 1989.
WHEREFORE, premises considered, the decision of Appellee Board, is
hereby REVERSED. The assessments of Respondent-Appellant, City Assessor
of Cebu City, on the aforestated lots with Alex S. Gaisano et al as “beneficial
user” to take effect with the year 1988 and 1989, respectively is declared void.
The order of the Appellee, Local Board of Assessment Appeals of Cebu City, as
to the real property taxes paid to be tax credited to the future real property
taxes due on the aforementioned lots is hereby revoked and modified, it
appearing that under the present Section 253 of R.A. No. 7160, the same shall
be treated in a separate cause of action under the jurisdiction of the Appellee
Local Board of Assessment Appeals.
Reference: Book VII, pp. 224-247
SO ORDERED.
Manila, Philippines, November 15, 1994.
(Signed) MARGARITA G. MAGISTRADO
Chairman
(Signed) ELEANOR A. SANTOS
Member
(Signed) ALFONSO M. MEDADO
Member
Reference: Book VII, pp. 224-247