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