Republic of the Philippines

CENTRAL BOARD OF ASSESSMENT APPEALS Manila

CENTRAL AZUCARERA DE BAIS, INC., Petitioner-Appellant,

– versus –

CBAA CASE NO. V-09 LOCAL BOARD OF ASSESSMENT
APPEALS OF BAIS CITY, Appellee,

– and –

CITY ASSESSOR OF BAIS CITY, Respondent-Appellee.
x – – – – – – – – – – – – – – – – – – – – – – – – – – – x

DECISION

This is an appeal by Petitioner-Appellant Central Azucarera de Bais, Inc.,

CAB for brevity, from the decision rendered on February 24, 1995 by the Local

Board of Assessment Appeals of Bais City in LBAA Case No. 94-B-1. CAB

avers that the Local Board erred in rendering the following rulings, to wit:

1. Ruling No. 2 (Page 16 of LBAA Decision) on Lot Nos. 399 under

Tax Declaration No. 386;

2. Ruling No. 7 (Page 17-18 of LBAA Decision) on Lot Nos. 788-B-1-

A and 788-B-1-B under Tax Declaration Nos. 6-323 and 6-320, respectively;`

3. Ruling No. 8 (Page 18 of LBAA Decision) on Lot No. 740-Part, Tax

Declaration Nos. 11-059, 11-092 and 11-095; Lot No. C Block G-part, Tax

Declaration No. 11-094; and Lot No. B Block G-part, Tax Declaration No. 11-

096;

4. Ruling No. 10 (Page 18 of LBAA Decision) on the building under

Tax Declaration No. 11-102;

5. Ruling No. 12 (Page 19 of LBAA Decision) on machineries under

Tax Declaration Nos. 3-163, 3-172, 4-053, 6-331, 10-157, 10-109, 11-099, 11-

100, 11-098, 13-016, 15-030, 16-028, 17-026, 27-998, 27-019, 29-010, 31-288,

32-043, 32-114, 32-321, 33-045, 34-029 and 35-009; and

Reference: Book IX, pp. 119-143

6. Ruling No. 13 (Page 19 of LBAA Decision) on the effectivity of the

assessments.

On Ruling No. 2 (Page 16 of LBAA Decision)

on Lot No. 399 under Tax Declaration No. 6-386

It appears on Tax Declaration No. 6-386, Lot No. 399 was re-assessed

on October 21, 1993 effective January 1, 1994, as follows:

Area Kind (SqM)
—— ————-

Unit Value ——-

Market Value ———

Ass Lvl
——-

Assessed Value
————-

Road 9,270 P160 P1,483,200 20% P296,640 (Gravel-Surfaced)

Pursuant to an order dated September 22, 1994 by the Local Board,

some personnel of the City Assessor of Bais City, led by Engr. Wenceslao

Rebosura, conducted an ocular inspection of the subject lot on September 28-

29, 1994. In a letter to the Local Board dated October 3, 1994, the group found

Lot No. 399 to be as follows:

Drainage Canal Leaching Chamber Steel Pipe Lines

Sub-total

Gravel Road Swamp

Total Area

2,391 sq.m. 96 sq.m. 120 sq.m.
—————2,607 sq.m.

2,484 sq.m. 4,179 sq.m. —————9,270 sq.m. =========

While accepting the above-findings, the Local Board, supposedly basing

its ruling on the “predominant use” theory under Sec. 11(B) of Local

Assessments Regulations No. 1-92 dated October 6, 1992, confirmed the

Assessor’s classification of the land as “gravel-surfaced” road. However,

“applying the assessment procedure embodied under Ordinance No. 15, s.

1992 of Bais City,” the Local Board reduced the market value of the land to

thirty percent (30%), or from P1,483,200.00 to P444,960.00. Accordingly, the

total assessed value was reduced from P296,640.00 to P88,920.00 (should be

P88,990.00), thus:

Reference: Book IX, pp. 119-143

Area Kind (SqM)
—— ————-

Unit Value ——-

Adj.

——–

Market Value
———-

Ass Assessed Lvl Value
—– ————–

Road 9,270 sq.m. P160 -70% P44,960 20% P88,990.00

Petitioner-Appellant insists that, based on its actual use, the land is

predominantly used as swampland; that, at best, the land should have been

classified, valued and assessed on the basis of its actual use in accordance

with Sec. 217 of R.A. 7160, in relation to Sec. 10 of Local Assessments

Regulations No. 1-92; an that, since 2,607 square meters of the land is devoted

to “pollution and environmental protection”, the same should have been

exempted from the payment of the realty tax, pursuant to provisions of Section

234(e) of the Local Government Code of 1991 and Sec. 13.03(e) of Ordinance

No. 23, enacted December 2, 1992, of Bais City. Based on these allegations,

Petitioner-Appellant suggests the following computation of assessment of Lot

No. 399, thus:

Gravel Road : 2,484 sq.m. x P160 x 30% x 20% = P23,850.00 Swamp : 4,179 sq.m. x 60 x 15% x 50% = P18,805.00

Drainage Canal : Leaching Chamber:

2,391 sq.m. x 96 sq.m. x

= Exempt = Exempt

Steel Pipe Lines :

Totals

120 sq.m. x ————–9,270 sq.m. =========

= Exempt
—————P42,655.00 =========

This Board, through its Hearing Officer for Visayas, had the opportunity to

see physically for itself the property in question. From the looks of it, the road

portion of the property has not been used by motorized vehicles for a long

period of time. The road was too narrow and grass was creeping unto it. It was

used by pedestrians, mostly residents in the area. As to the importance of the

uses of the property, we believe that the drainage canal was more important

than the road.

Petitioner-Appellant seeks exemption from real property taxation that

portion of the land, containing an area of 2,607 square meters, which is

occupied by the drainange canal, leaching chamber and steel pipe lines. Its

basis is Section 234(e) of Rep. Act 7160, otherwise known as the Local

Reference: Book IX, pp. 119-143

Government Code of 1991 and Section 13.03(e) of Ordinance No. 23 of the

City of Bais, otherwise known as the Revenue Code of 1992 of the City of Bais.

Section 234(e) of R.A. 7160, which is copied in Section 13.03(e) of Ordinance

No. 23 of the City of Bais, reads as follows:

“SEC. 234. Exemption fro Real Property Tax. – The following are exempted from payment of real property tax.

x x x

“(e) Machinery and equipment used for pollution control and environmental protection.” (Underscoring supplied)

Section 199(o) of R.A. 7160 defines “machinery” as follows:

“SEC. 199. Definitions. – When used in this Title:

x x x

“(o) ‘Machinery’ embraces machines, equipment, mechanical contrivances, instruments, appliances and apparatus, which may or may not be attached, permanently or temporarily, to the real property. It includes the physical facilities for the production, the installations and appurtenant service facilities, those which are mobile, self-powered or self-propelled, and those not permanently attached to the real property which are actually, directly, and exclusively used to meet the needs of a particular industry, business or activity and which by their very nature and purposes are designed for, or necessary to its manufacturing, mining, logging, commercial, industrial, or agricultural purposes.”

While there may not be any question that the drainage canal, leaching

chamber and steel pipe lines are ‘machinery and equipment’ employed or used

for pollution control and environmental protection as contemplated under

Section 234(e), they are not subjects of the assessment embodied in Tax

Declaration No. 6-368. The subject of the said tax declaration is the land itself

and not the improvements. The land is not converted into “machinery and

equipment” by the putting up of the drainage system.

We believe, therefore, and so hold, that Lot 399 should be assessed as

follows:

Area Kind (SqM) —— ————-
Gravel Road 2,484 sq.m. Swamp 4,179 sq.m. Drainage Canal 2,607 sq.m.
——-
Totals 9,270 sq.m. ====

Unit Value ——-P160
60 110

Adj.

———70% -85% -85%

Market Ass Value Lvl ———- —–
P119,232 20% 37,611 50% 43,016 50%
————P199,859 =======

Assessed Value
————–P23,850
18,810 21,510
————–P64,170 ========

On Ruling No. 7 (Page 17-18 of LBAA Decision) on Lot No. 788-B-1-A under Tax Declaration No. 6-323 &

Reference: Book IX, pp. 119-143

Lot No. 788-B-1-B under Tax Declaration No. 6-320

It appears from the records that the assessments for Lot No. 788-B-1-A

(under Tax Declaration No. 6-323) and Lot No. 788-B-1-B (under Tax Declaration

No. 6-320) were revised on October 29, 1993, as follows:

Lot No. 788-B-1-A, TD #6-323

Class Area Classification (Sq.M.)
———————— ———- ———-Industrial 3-C 7,155 Industrial 3-G 18,413 Ind-Residential 3-E 13,295 Ind-Recreational 3-F 1,071 Ind-Agricultural 3-G 121,888 Ind-Medical 3-G 3,487 Asphalt Road 7,432 Gravel-Surfaced Road 3,150
————-Totals 175,891
=======

Unit
Value Adj. ——— ——–
P110 -40% 110 -85% 110 -70% 110 -80% 110 -85% 110 -85%
260 160

Market Ass. Assessed Value Lvl Value
———– ——– ————-
P 472,230 50% P236,115 303,815 50% 151,907 438,735 20% 87,747
23,562 15% 3,534 2,011,152 40% 804,460
57,536 15% 8,630 1,932,320 50% 966,160 504,000 50% 252,000
—————- ————–P 5,743,349 P2,510,550 ========= ========

Lot No. 788-B-1-B, TD #6-320

Class Area Classification (Sq.M.)
———————— ———- ———-Industrial 3-A 22,225 Industrial 3-C 30,585 Ind-Agricultural 3-G 25,283 Ind-Residential 3-E 501 Ind-Recreational 3-F 791 Asphalt Road 1,052 Gravel-Surfaced Road 1,410 Railroad Tracks 826
————-Totals 82,673
=======

Unit
Value Adj. ——— ——–
P110
110 -40% 110 -85% 110 -70% 110 -80%
260 160 160

Market Ass. Assessed Value Lvl Value
———– ——– —————P2,444,750 50% P1,222,375
2,018,610 50% 1,009,305 417,170 50% 208,585 16,533 20% 3,306
17,402 15% 1,610 273,520 50% 136,760 225,600 50% 112,800 132,160 50% 66,080
—————- —————–P 5,545,745 P 2,761,820 ========= =========

Petitioner-Appellant alleges that the portions of the above lots which were

assessed as “asphalt” roads had been confirmed to be “grave-surfaced” roads

during an ocular inspection conducted by the Local Board as stated in

Petitioner-Appellant’s “Position Papers”, which fact was not denied by the

Respondent-Appellee and/or by the Local Board.

While the Local Board resolved “to direct the City Assessor to make a re-

assessment of these two parcels of land based on the correct unit value

considering that these lands do not adjoin the national highway,” it also ruled

that “with respect to the claim of the petitioner that portions of these lands which

used to (be) asphalt road and the same has already deteriorated, the Board

Reference: Book IX, pp. 119-143

rules that the petitioner should not be given a premium for not maintaining its

road, so we see no cogent reason to consider this asphalt road as gravel

surfaced road.”

There is no dispute that the portions of Lot Nos. 788-B-1-A and 788-B-1-

B which were once declared as “asphalt” roads were actually gravel-surfaced

roads when assessed in October, 1993. This Board, during an ocular inspection

on September 06, 1995, also found the same roads as grave-surfaced roads.

Section 217 of R.A. 7160 dictates that “real property shall be classified, valued

and assessed on the basis of its actual use regardless of where located,

whoever owns it, and whoever uses it.” To continue to classify the road as

“asphalt” when in reality it is now reduced to “grave-surfaced” would be to

punish the taxpayer for its failure to maintain its road. There is no basis in law

or in fact for this ruling. After all, it would be highly improbable for Petitioner-

Appellant to deliberately let the asphalt road deteriorate into a gravel-surfaced

road just so it could save on real property taxes.

Therefore, we believe, and so hold, that portions of Lot Nos. 788-B-1-A

and 788-B-1-B classified as “asphalt” roads under Tax Declaration Nos. 6-323

and 6-320, respectively, should be classified as “gravel-surfaced” roads.

Accordingly, said tax declarations should be revised as follows:

Lot No. 788-B-1-A, TD #6-323

Class Area Classification (Sq.M.)
———————— ———- ———-Industrial 3-C 7,155 Industrial 3-G 18,413 Ind-Residential 3-E 13,295 Ind-Recreational 3-F 1,071 Ind-Agricultural 3-G 121,888 Ind-Medical 3-G 3,487 Gravel-Surfaced Road 10,582
————-Totals 175,891
=======

Unit
Value Adj. ——— ——–
P110 -40% 110 -85% 110 -70% 110 -80% 110 -85% 110 -85%
160

Market Ass. Assessed Value Lvl Value
———– ——– ————-
P 472,230 50% P236,115 303,815 50% 151,907 438,735 20% 87,747
23,562 15% 3,534 2,011,152 40% 804,460
57,536 15% 8,630 1,693,120 50% 846,560
—————- ————–P 5,000,149 P2,138,950 ========= ========

Lot No. 788-B-1-B, TD #6-320

Classification
————————Industrial

Class

———-3-A

Area (Sq.M.)
———-22,225

Unit
Value Adj. ——— ——–
P110

Market Ass. Assessed Value Lvl Value
———– ——– —————P2,444,750 50% P1,222,375

Reference: Book IX, pp. 119-143

Industrial 3-C Ind-Agricultural 3-G Ind-Residential 3-E Ind-Recreational 3-F Gravel-Surfaced Road Railroad Tracks

Totals

30,585 25,283 501 791 2,462 826
————-82,673
=======

110 -40% 110 -85% 110 -70% 110 -80%
160 160

2,018,610 417,170 16,533 17,402
193,402 132,160
—————-P 5,440,545 =========

50% 1,009,305 50% 208,585 20% 3,306 15% 1,610 50% 196,960 50% 66,080
—————–P 2,709,220
=========

On Ruling No. 8 (Page 18 of LBAA Decision) on lots covered by Tax Declaration Nos.
11-092, 11-094, 11-095, 11-096, and 11-059

On Ruling No. 8 concerns five lots (Lot No. 740-part, TD #11-059,

150,000 sq. m.; Lot No. 740-part, TD #11-092, 164,793 sq. m.; Lot No. C Blk.

G-part, TD #11-094, 24,630 sq. m.; Lot No. 740-part, TD #11-095, 81,635 sq.

m.; Lot No. B Blk G-part, TD #11-096, 17,451 sq. m.) over which are Waste

Water Treatment Facilities consisting of nine (9) units Stabilization Lagoons.

These facilities were covered by a Permit to Operate No. TPOW-93-J-074023-

001 issued by the Department of Energy and Natural Resources (DENR) on

October 19, 1993 (Exh. “3”). Petitioner-Appellant sought exemption of the

abovementioned properties, along with the portion of the lot occupied by the

Canal System (Drainage Canal, Leaching Chamber and Steel Pipe Line) which

conducts the affluents from Petitioner-Appellant’s factory through the Waste

Water Treatment Facilities from the payment of real property taxes. The Local

Board, however, ruled:

“It is the observation of the Board, however, and it so holds that these nine (9) units of water treatment plant together with the canal system which carries factory waste may result in pollution control and primarily it is intended for industrial purposes. It is incumbent upon a factory owner, CAB in this case to provide equipment/machinery to properly dispose its waste and to place/deposit the same at its proper place. True, in the process, the same may result in pollution control. But, this will not in any way convert such machinery and equipment into pollution control devices. In short, the predominant use of this water tank and canal is industrial purposes, although it may result in pollution control.”

The records show that the questioned tax declarations appear as follows:

Lot No. ———–740-part 740-part 740-part C Blk G B Blk G

TD No. ———11-059 11-092 11-095 11-094 11-096

Area Kind Class (Sq.M) —– ——- ———Ind. 4-G 150,000
Ind. 4-G 164,793 Ind. 4-G 81,635 Ind. 4-G 24,630 Ind. 4-G 17,451
———-

Unit
Value Adj. ——- ——
P80 -85% 80 -85% 80 -85% 80 -85% 80 -85%

Market Ass Value Lvl
————– —–P1,800,000 50%
1,977,516 50% 979,620 50% 295,560 50% 209,412 50%
—————

Assessed Value
—————P 900,000
988,760 489,810 147,780 104,710
—————

Reference: Book IX, pp. 119-143

Totals 438,509 ======

P5,262,108 ========

P2,631,060 ========

As in Ruling No. 2 regarding the affluents canal, Petitioner-Appellant

based its arguments on the provisions of Section 234(e) of Rep. Act 7160,

otherwise known as the Local Government Code of 1991 and Section 13.03(e)

of Ordinance No. 23 of the City of Bais, otherwise known as the Revenue Code

of 1992 of the City of Bais.

The properties which, in accordance with the above-stated laws, are

exempted from the payment of the real property tax are “machinery and

equipment” used for pollution control and environmental protection – not the

land on which the machinery and equipment are built or installed. Section

199(o) of R.A. 7160 defines “machinery” as “machines, equipment, x x x which

may or may not be attached, permanently or temporarily, to the real property x

x x”. Obviously, the phrase ‘real property’ means land and/or building. The land

does not become “machinery and equipment” under the purview of Sec. 234(e)

of R.A. 7160 simply because some machinery and equipment are placed or

developed on, or attached to, the land.

While there may not be any question that the stabilization lagoons are

“machinery and equipment” employed or used for pollution control and

environmental protection, they are not subjects of the assessments embodied

in the above-enumerated tax declarations. The subjects of the said tax

declarations are the parcels of land on which the stabilization lagoons are

situated as improvements thereon. There is no cogent reason, to disturb the

above assessments.

On Ruling No. 10 (Page 18 of LBAA Decision)

on the building under Tax Declaration No. 11-102

The subject of Ruling No. 10 is a building constructed of light materials in

the middle of the “experimental fishpond” beside the Petitoner-Appellant’s

Waste Water Treatment Facilities (subject of the Local Board’s Ruling No. 8).

Reference: Book IX, pp. 119-143

Said building is covered by Tax Declaration No. 11-102 and is assessed as

follows:

Kind
———-Building

Actual Use
—————Rest House

Area Construction (Sq.M.) Materials
——- ———————33.45 111-3 Nipa Roof

Market Value
————–P36,930.72

Ass Assessed Lvl Value
—– ————-25% P9,230

Petitioner-Appellant requested that the structure be reclassified from

“industrial” or “residential” since the said building is merely used as a shed

where an employee of Petitioner-Appellant takes shelter, receives fish fry, etc.

The Local Board held that the subject structure “is an industrial building

because this is primarily used for industrial purposes and there is no reason to

disturb its assessment.”

During the ocular inspection of the premises on September 06, 1995 this

Board found the structure as constructed of wood and bamboo, with nipa roof,

and situated on the “experimental fishpond” operated by Petitioner-Appellant.

The building was used as a shed or rest house of an employee of Petitioner-

Appellant who is charged with guarding the fishpond. There was no sign of any

industrial activity in the building. The “experimental fishpond” Lot No. 740-part,

Cad. 115), which is used to monitor the water conditions of the South Bais Bay

in connection with the Waste Water Treatment Facilities, is itself classified as

“agricultural” under Tax Declaration No. 11-058.

This Board in inclined to believe, and so holds, that the subject building is

actually and exclusively used for residential purposes. As such, it should be

classified as “residential” in accordance with the provisions of Section 217 of

R.A. 7160 and applied the assessment level provided for in Section 218 of R.A.

7160, in relation to Section 15(A) of Assessment Regulations No. 1-92 and

Section 11.20(b) of Ordinance No. 23 of the City of Bais, thus:

Kind
———-Building

Actual Use
—————Rest House

Area Construction (Sq.M.) Materials
——- ———————33.45 111-3 Nipa Roof

Market Ass Value Lvl
————– —–P36,930.72 0%

Assessed Value
————-0

On Ruling No. 12 (Page 19 of LBAA Decision)

Reference: Book IX, pp. 119-143

Petitioner-Appellant objects to Ruling No. 12 as far as it affects Tax

Declaration Nos. 3-163, 3-172, 4-053, 6-331, 10-157, 10-109, 11-099, 11-100,

11-098, 13-016, 15-030, 16-028, 17-026, 27-008, 27-019, 29-010, 31-288, 32-

043, 32-114, 32-321, 33-045, 34-029 and 35-009, all covering machinery-

railroad, and Tax Declaration No. 6335 covering machinery-steel tank.

Petitioner-Appellant alleges that the computations by Respondent-Appellee City

Assessor did not follow the procedure set up by law.

The questioned assessments show the following:

TAX DECL. NO. REPLACEMENT New Old COST
——– ——– —————–Railroad:
3-163 3-172 P 241,672 3-172 3-173 69,213 4-053 4-029 439,996 6-331 6-391 12,083,577 10-157 10-133 296,627 10-109 10-134 1,087,631 11-099 11-092 1,463,358 11-100 11-093 1,809,422 11-098 11-099 1,050,552 13-016 13-016 973,924 15-030 15-023 432,580 16-028 16-025 1,290,326 17-026 17-021 508,020 27-008 27-021 548,752 27-019 27-022 1,117,674 29-010 29-010 210,108 31-288 31-233 613,028 32-043 32-280 158,201 32-114 32-281 212,582 32-321 32-282 1,067,856 33-045 33-037 88,988 34-029 34-020 432,578 35-009 35-009 3,084,916
—————–P29,281,781 =========

ACCUM. RATE
————

80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80%

DEP’N. AMOUNT
—————–

P 193,337 55,370 351,997 9,666,862 237,301 870,105 1,170,686 1,447,538
840,442 779,139 346,064 1,032,261 406,576 439,002 894,139 168,086 490,423 126,561 170,066 854,284 71,190 346,063
2,467,933 —————–P23,425,425 =========

MARKET VALUE
—————-

P 48,334 13,843 87,999
2,416,715 59,325
217,526 292,672 361,884 210,110 194,785 86,516 369,065 101,644 109,750 223,535 42,022 122,606 31,640 42,516 213,571 17,798 86,516
616,983
——————P 5,856,356 =========

ASS LVL
——–

80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80%

ASSESSED VALUE
——————

P 38,670 11,070 70,400
1,933,370 47,460 174,020 234,140 289,510 168,090 155,830 69,210 206,450 81,320 87,800 178,830 33,620 98,080 25,310 34,010
170,860 14,240 69,210 493,590
——————P 4,685,090 ==========

STEEL TANK:

6-335 3-390 P 1,529,577 45% P 688,310 P 841,267 80% P 673,010

Saying that all presumptions are in favor of the correctness of the

assessment, the Local Board ruled that “the Board does not find any valid

reason to modify or revise the existing assessment covered by said tax

declarations. However, it directs the Assessor to conduct a thorough ocular

inspection of these machinery so that if there is any valid reason to revise its

Reference: Book IX, pp. 119-143

assessment based on the latest guidelines promulgated by the Department of

Finance on the matter, it should so revise the same.”

Sections 224 and 225 of R.A. 7160 provide on the appraisal and

assessment of machinery, thus:

“SEC. 224. Appraisal and Assessment of Machinery. – (a) The market value of a brand-new machinery shall be the acquisition cost. In all other cases, the fair market value shall be determined by dividing the remaining economic life of the machinery by its estimated economic life and multiplied by the replacement or reproduction cost.

“(b) If the machinery is imported, the acquisition cost includes freight, insurance, bank and other charges, brokerage, arrastre and handling, and installation charges at the present site. The cost in foreign currency of imported machinery shall be converted to peso cost on the basis of foreign currency exchange rates as fixed by the Central Bank.”

“SEC. 225. Depreciation Allowance for Machinery. – For purposes of assessment, a depreciation allowance shall be made for machinery at a rate not exceeding five percent (5%) of its original cost or its replacement or reproduction cost, as the case may be, for each year of use; Provided, however, That the remaining value for all kinds of machinery shall be fixed at not less than twenty percent (20%) of such original, replacement, or reproduction cost for so long as the machinery is useful and in operation.”

Articles 315 and 316 of the Implementing Rules and Regulations of the

Local Government Code of 1991 merely reproduced, respectively, the above-

quoted sections. Local Assessment Regulations No. 1-92 dated October 6,

1992, on the other hand, does not provide the specific procedure for the

assessment and appraisal of machinery, except to mention and discuss, under

Section 21(c) thereof, “Reproduction Cost (New) Approach” as “a factual

approach used exclusively in appraising man-made improvements such as

buildings and other structures.”

The procedure in the assessment of machinery is outlined in Department

Order No. 22-73 of the Department of Finance dated June 18, 1973 which, we

might add, has not been modified to the present, thus:

The dollar cost of the machinery shall be converted to peso cost by using the following formula:

Step 1. Current Dollar Exchange Rate
—————————— = Conversion Factor Dollar Exchange Rate
at a Time of Acquisition

Step. 2. Acquisiton Cost x Conversion Factor =

Reference: Book IX, pp. 119-143

Replacement or Reproduction Cost (New)

The current and fair market value of a machinery is arrived at as follows:

Remaining
Economic Life Replacement

Current & Fair

—————— x or Reproduction = Market Economic Life Cost (New) Value

Respondent-Appellee did not present his computations as bases of his

assessments. Nor did he dispute the allegations of Petitioner-Appellant on the

exchange rates in 1959, 1975, 1984 and 1992 which were P2.00, P19.76 and

P25.605, respectively, to US$1.00.

The 1994 tax declarations show that the same properties covered

thereby were last assessed in 1984 and had the following respective assessed

values, to wit:

TAX DECL. NO. NEW OLD

ASSESSED VALUE

TAX DECL. NO. NEW OLD

ASSESSED VALUE

——–3-163 3-172 4-053 6-331

——–3-172 3-173 4-029 6-391

—————-P 8,470
2,160 13,710 602,270

———17-026 27-008 27-019 29-010

———17-021 27-021 27-022 29-010

—————-P 17,410
18,800 41,770 6,550

10-157 10-133 9,240 10-109 10-134 40,660 11-099 11-092 59,260 11-100 11-093 73,280 11-098 11-099 39,270 13-016 13-016 36,410 15-030 15-023 13,480 16-028 16-025 52,250

31-288 31-233 32-043 32-280 32-114 32-281 32-321 32-282 33-045 33-037 34-029 34-020 35-009 35-009 6-335 3-390

21,010 4,930 6,620
39,920 2,770 13,480
144,150 296,040

Working back, therefore, and using the formulae outlined in Department

Order No. 22-73 of the Department of Finance, in relation to Sections 224 and

225 of R.A. 7160, we find that the same group of properties were installed in

1959 with original costs, replacement costs, accumulated depreciations, and

market values as of 1984 as follows:

Rairoad:

ORIG. CONVER- REPLACEMENT

TAX DEL. NO. DATE COST SION COST ACCUM DEPR’N. MARKET ASS ASSESSED New Old INSTLLD ($1=2) FACTOR ($1=P19.76) RATE AMOUNT VALUE LVL VALUE
——– ——– ———– ———– ———– —————– ———- ————- ———— ——– ————–

3-163 3-172 1959 P 8,573 9.880 P 84,703 80.00% P 67,762 P 16,941 50% P 8,470 3-172 3-173 1959 2,182 9.880 21,561 80.00% 17,249 4,312 50% 2,160 4-053 4-029 1959 13,873 9.880 137,065 80.00% 109,652 27,413 50% 13,710 6-331 6-391 1959 380,993 9.880 3,764,206 80.00% 3,011,365 752,841 80% 602,270

Reference: Book IX, pp. 119-143

10-157 10-133 10-109 10-134 11-099 11-092 11-100 11-093 11-098 11-099 13-016 13-016 15-030 15-023 16-028 16-025 17-026 17-021 27-008 27-021 27-019 27-022 29-010 29-010 31-288 31-233 32-043 32-280 32-114 32-281 32-321 32-282 33-045 33-037 34-029 34-020 35-009 35-009

1959 9,353 1959 34,293 1959 46,139 1959 57,051 1959 33,124 1959 30,708 1959 13,639 1959 40,684 1959 16,024 1959 17,302 1959 35,228 1959 6,625 1959 19,329 1959 4,988 1959 6,703 1959 33,669 1959 2,806 1959 13,639 1959 97,267
————P924,190
========

9.880 92,403 9.880 338,812 9.880 455,857 9.880 563,661 9.880 327,262 9.880 303,391 9.880 134,755 9.880 401,955 9.880 158,318 9.880 170,946 9.880 348,053 9.880 65,452 9.880 190,967 9.880 49,282 9.880 66,222 9.880 332,652 9.880 27,721 9.880 134,755 9.880 960,995
————-P9,130,994 =========

80.00% 73,923 18,481 80.00% 271,050 67,762 80.00% 364,685 91,171 80.00% 450,928 112,732 80.00% 261,810 65,452 80.00% 242,713 60,678 80.00% 107,804 26,951 80.00% 321,564 80,391 80.00% 126,654 31,664 80.00% 136,757 34,189 80.00% 278,442 69,611 80.00% 52,362 13,090 80.00% 152,774 38,193 80.00% 39,425 9,856 80.00% 52,978 13,244 80.00% 266,122 66,530 80.00% 22,177 5,544 80.00% 107,804 26,951 80.00% 768,796 192,199
————– ————-P7,304,795 P1,826,199
========== =========

50% 9,240 60% 40,660 65% 59,260 65% 73,280 60% 39,270 60% 36,410 50% 13,480 65% 52,250 55% 17,410 55% 18,800 60% 41,770 50% 6,550 55% 21,010 50% 4,930 50% 6,620 60% 39,920 50% 2,770 50% 13,480 75% 144,150
—————P1,267,870 =========

STEEL TANK:

ORIG. CONVER- REPLACEMENT
TAX DEL. NO. DATE COST SION COST ACCUM DEPR’N. MARKET New Old INSTLLD ($1=P7.50) FACTOR ($1=P19.76) RATE AMOUNT VALUE
——– ——– ———– ———– ———– —————– ———- ————- ———— ——–6-335 3-390 1975 P181,209 2.635 P 477,487 22.50% P 107,435 P 370,052

ASS ASSESSED LVL VALUE
————–
80% P 296,040

Using the above data and the same formulae, we believe, and so hold,

that the assessments of the subject machineries (railroad and steel tank)

effective 1994 should be as follows:

ORIG. CONVER- REPLACEMENT

TAX DEL. NO. DATE COST SION COST ACCUM DEPR’N. MARKET ASS ASSESSED New Old INSTLLD ($1=2) FACTOR ($1=P25.605) RATE AMOUNT VALUE LVL VALUE
——– ——– ———– ———– ———– —————– ———- ————- ———— ——– ————–

3-163 3-172 1959 P 8,573 12.803 P 109,758 80.00% P 87,807 P 21,952 80% P 17,560 3-172 3-173 1959 2,182 12.803 27,939 80.00% 22,351 5,588 80% 4,470 4-053 4-029 1959 13,873 12.803 177,609 80.00% 142,087 35,522 80% 28,420 6-331 6-391 1959 380,993 12.803 4,877,656 80.00% 3,902,125 975,531 80% 780,430 10-157 10-133 1959 9,353 12.803 119,736 80.00% 95,789 23,947 80% 19,160 10-109 10-134 1959 34,293 12.803 439,033 80.00% 351,226 87,807 80% 70,250 11-099 11-092 1959 46,139 12.803 590,699 80.00% 472,559 118,140 80% 94,510 11-100 11-093 1959 57,051 12.803 730,391 80.00% 584,313 146,078 80% 116,860 11-098 11-099 1959 33,124 12.803 424,066 80.00% 339,253 84,813 80% 67,850 13-016 13-016 1959 30,708 12.803 393,134 80.00% 314,507 78,627 80% 62,900 15-030 15-023 1959 13,639 12.803 174,615 80.00% 139,692 34,923 80% 27,940 16-028 16-025 1959 40,684 12.803 520,853 80.00% 416,682 104,171 80% 83,340 17-026 17-021 1959 16,024 12.803 205,148 80.00% 164,119 41,030 80% 32,820 27-008 27-021 1959 17,302 12.803 221,512 80.00% 177,210 44,302 80% 35,440 27-019 27-022 1959 35,228 12.803 451,007 80.00% 360,805 90,201 80% 72,160 29-010 29-010 1959 6,625 12.803 84,813 80.00% 67,851 16,963 80% 13,570 31-288 31-233 1959 19,329 12.803 247,455 80.00% 197,964 49,491 80% 39,590 32-043 32-280 1959 4,988 12.803 63,859 80.00% 51,088 12,772 80% 10,220 32-114 32-281 1959 6,703 12.803 85,811 80.00% 68,649 17,162 80% 13,730 32-321 32-282 1959 33,669 12.803 431,051 80.00% 344,840 86,210 80% 68,970 33-045 33-037 1959 2,806 12.803 35,921 80.00% 28,737 7,184 80% 5,750 34-029 34-020 1959 13,639 12.803 174,615 80.00% 139,692 34,923 80% 27,940 35-009 35-009 1959 97,267 12.803 1,245,257 80.00% 996,206 249,051 80% 199,240
———— ————– ————– ————- —————P924,190 P11,831,939 P9,465,551 P2,366,388 P1,893,120
======== ========== ========== ========= =========

STEEL TANK:

ORIG. CONVER- REPLACEMENT
TAX DEL. NO. DATE COST SION COST ACCUM New Old INSTLLD ($1=P7.50) FACTOR ($1=P25.065) RATE

DEPR’N. AMOUNT

MARKET ASS VALUE LVL

ASSESSED VALUE

Reference: Book IX, pp. 119-143

——– ——– ———–6-335 3-390 1975

———– ———–P181,209 3.415

—————– ———- ————- ———— ——–P 618,814 45% P 278,466 P 340,348

————–
80% P 272,280

On Ruling No. 13 (Page 19 of LBAA Decision) on the effectivity of the assessments.

In its Ruling No. 13, the Local Board said that “the assessments made by

the Assessor on the property of the petitioner was done on the basis of

Ordinance No. 15, Series of 1992, otherwise known as the Schedule of Market

Value of Real Property in Bais City which was approved by the Honorable

Sanggunian Panglunsod of Bais City on September 30, 1992 under Resolution

No. 233. Thereafter, the Office of the City Assessor re-assessed the property in

Bais City and the re-assessment therefore should took (sic) effect in 1994.”

In questioning said ruling, Petitioner-Appellant contends that since the

City Assessor completed his assessments only in 1994 and copies of the

revised tax declarations were received on request by Petitioner-Appellant only

in March 1994, the taxes due under the revised assessments could only be

effective January 1995, in accordance with Section 221 of the Local

Government Code of 1991. Petitioner-Appellant further states that no Notice of

Assessment or Revision of Assessment was sent to Petitioner-Appellant, an

omission in direct violation of the requirements of Section 223 of the same

Code.

Section 219 of R.A. 7160 directs the provincial, city or municipal assessor

to undertake a general revision of real property assessments within (2) years

after the effectivity of the Code, or within (2) years from January 01, 1992, the

date of effectivity of the Code as stated in Section 535 thereof. In this

connection Section 2(9) of Assessment Regulations No. 1-92 dated October 06,

1992 also provides that the effectivity of the revised New Real Property

Assessments shall not be later than January 1st of the third year or January 01,

1994.

The records show that, out of forty-eight (48) tax declarations issued to

Petitioner-Appellant effective January 01, 1994, forty-five (45) appear to have

Reference: Book IX, pp. 119-143

been prepared during the period from February 26, 1993 and December 01,

1993. The remaining three (TD Nos. 10-157, 3-172 and 11-102) were supposed

to have been prepared on January 04, 1994.

Petitioner-Appellant argues that, since Tax Declaration No. 10-157 was

dated January 04, 1994, Respondent-Appellee completed his general revision

of real property assessments only in 1994 and, in accordance with the

provisions of Section 221 of R.A. 7160, the revised assessments should be

effective only on January 01, 1995.

Section 1(2) of Assessment Regulations No. 1-92 states thus:

“A general revision of real property assessments shall be considered finished or completed when all field work in the municipality, province or city have been completed and corresponding field sheets (FAAS) of all properties within the municipality, province or city have been prepared and duly approved, and recorded in the record of assessments . . .”

Section 221 of R.A. 7160, on the other hand, provides:

“SEC. 221. Date of Effectivity of Assessment or Reassessment. – All assessments or reassessments made after the first (1st) day of January of any year shall take effect on the first (1st) day of January of the succeeding year: Provided, however, That the reassessment of real property due to its partial or total destruction, or to a major change in its actual use, or to any great and sudden inflation or deflation of real property values, or to the gross illegality of the assessment when made or to any other abnormal cause, shall be made within ninety (90) days from the date any such cause or causes occurred, and shall take effect at the beginning of the quarter next following the reassessment.”

Based on the above-quoted provisions of law, does it mean that, because

three (3) out of forty-eight (48) tax declarations were supposed to have been

prepared on January 04, 1994, all the revised assessments should be effective

January 01, 1995 instead of January 01, 1994? We do not believe so.

Notwithstanding the date when Tax Declaration Nos. 10-157, 3-172 and 11-102

were supposed to have been prepared (January 04, 1994), we still believe, and

so hold, that the revision of assessments was completed in 1993. There was

nothing more that the Office of Respondent-Appellee could have done between

January 01 and 04, 1994 but, perhaps, prepare the said tax declarations,

January 01 and 02 being a Saturday and a Sunday, respectively.

WHEREFORE, the Decision rendered by the Local Board of Assessment

Appeals of Bais City, dated February 24, 1995, is hereby MODIFIED as follows:

Reference: Book IX, pp. 119-143

A. Tax Declaration No. 6-386 covering Lot No. 399 (subject of LBAA’s

Ruling No. 2) should be revised as follows:

Kind Area
———- —————Gravel Road 2,484 sq.m. Swamp 4,179 sq.m. Drainage Canal 2,607 sq.m.
————–Totals 9,270 sq.m.
====

Unit Value ——-
P160 60
110

Adj. ——–
-70% -85%
-85%

Market Ass Value Lvl
————– —–P119,232 20%
37,611 50% 43,016 50%
————–P199,859
=======

Assessed Value
————–P23,850
18,810 21,510
————-P64,170
======

Tax Declaration Nos. 6-323 and 6-320 covering Lot Nos. 788-B-1-A and

788-B-1-B, respectively (subjects of LBAA’s Ruling No. 7), should be revised as

follows:

Lot No. 788-B-1-A, TD #6-323

Class Area Classification (Sq.M.)
———————— ———- ———-Industrial 3-C 7,155 Industrial 3-G 18,413 Ind-Residential 3-E 13,295 Ind-Recreational 3-F 1,071 Ind-Agricultural 3-G 121,888 Ind-Medical 3-G 3,487 Gravel-Surfaced Road 10,582
————-Totals 175,891
=======

Unit
Value Adj. ——— ——–
P110 -40% 110 -85% 110 -70% 110 -80% 110 -85% 110 -85%
160

Market Ass. Assessed Value Lvl Value
———– ——– ————-
P 472,230 50% P236,115 303,815 50% 151,907 438,735 20% 87,747
23,562 15% 3,534 2,011,152 40% 804,460
57,536 15% 8,630 1,693,120 50% 846,560
—————- ————–P 5,000,149 P2,138,950 ========= ========

Lot No. 788-B-1-B, TD #6-320

Class Area Classification (Sq.M.)
———————— ———- ———-Industrial 3-A 22,225 Industrial 3-C 30,585 Ind-Agricultural 3-G 25,283 Ind-Residential 3-E 501 Ind-Recreational 3-F 791 Gravel-Surfaced Road 2,462 Railroad Tracks 826
————-Totals 82,673
=======

Unit
Value Adj. ——— ——–
P110
110 -40% 110 -85% 110 -70% 110 -80%
160 160

Market Ass. Assessed Value Lvl Value
———– ——– —————P2,444,750 50% P1,222,375
2,018,610 50% 1,009,305 417,170 50% 208,585 16,533 20% 3,306
17,402 15% 1,610 193,402 50% 196,960 132,160 50% 66,080
—————- —————–P 5,440,545 P 2,709,220 ========= =========

C. There is no cogent reason to disturb the assessments embodied in

Tax Declaration Nos. 11-059, 11-092 and 11-095 covering Lot Nos. 740-Part, C

Block G-Part, and B Block G-Part, respectively (subjects of LBAA’s Ruling No.

8):

D. Tax Declaration No. 11-102 covering the building on Lot No.

(subject of LBAA’s Ruling No. 10) should be revised as follows:

Reference: Book IX, pp. 119-143

Kind
———-Building

Use
—————Rest House

(Sq.M.) Materials
——- ———————33.45 111-3 Nipa Roof

Value Lvl ————– —–P36,930.72 0%

Value
————-0

E. The assessments for machineries (railroad and steel tank),

subjects of LBAA’s Ruling No. 12, should be revised as follows:

ORIG. CONVER- REPLACEMENT

TAX DEL. NO. DATE COST SION COST ACCUM DEPR’N. MARKET ASS ASSESSED New Old INSTLLD ($1=2) FACTOR ($1=P25.605) RATE AMOUNT VALUE LVL VALUE
——– ——– ———– ———– ———– —————– ———- ————- ———— ——– ————–

3-163 3-172 1959 P 8,573 12.803 P 109,758 80.00% P 87,807 P 21,952 80% P 17,560 3-172 3-173 1959 2,182 12.803 27,939 80.00% 22,351 5,588 80% 4,470 4-053 4-029 1959 13,873 12.803 177,609 80.00% 142,087 35,522 80% 28,420 6-331 6-391 1959 380,993 12.803 4,877,656 80.00% 3,902,125 975,531 80% 780,430 10-157 10-133 1959 9,353 12.803 119,736 80.00% 95,789 23,947 80% 19,160 10-109 10-134 1959 34,293 12.803 439,033 80.00% 351,226 87,807 80% 70,250 11-099 11-092 1959 46,139 12.803 590,699 80.00% 472,559 118,140 80% 94,510 11-100 11-093 1959 57,051 12.803 730,391 80.00% 584,313 146,078 80% 116,860 11-098 11-099 1959 33,124 12.803 424,066 80.00% 339,253 84,813 80% 67,850 13-016 13-016 1959 30,708 12.803 393,134 80.00% 314,507 78,627 80% 62,900 15-030 15-023 1959 13,639 12.803 174,615 80.00% 139,692 34,923 80% 27,940 16-028 16-025 1959 40,684 12.803 520,853 80.00% 416,682 104,171 80% 83,340 17-026 17-021 1959 16,024 12.803 205,148 80.00% 164,119 41,030 80% 32,820 27-008 27-021 1959 17,302 12.803 221,512 80.00% 177,210 44,302 80% 35,440 27-019 27-022 1959 35,228 12.803 451,007 80.00% 360,805 90,201 80% 72,160 29-010 29-010 1959 6,625 12.803 84,813 80.00% 67,851 16,963 80% 13,570 31-288 31-233 1959 19,329 12.803 247,455 80.00% 197,964 49,491 80% 39,590 32-043 32-280 1959 4,988 12.803 63,859 80.00% 51,088 12,772 80% 10,220 32-114 32-281 1959 6,703 12.803 85,811 80.00% 68,649 17,162 80% 13,730 32-321 32-282 1959 33,669 12.803 431,051 80.00% 344,840 86,210 80% 68,970 33-045 33-037 1959 2,806 12.803 35,921 80.00% 28,737 7,184 80% 5,750 34-029 34-020 1959 13,639 12.803 174,615 80.00% 139,692 34,923 80% 27,940 35-009 35-009 1959 97,267 12.803 1,245,257 80.00% 996,206 249,051 80% 199,240
———— ————– ————– ————- —————P924,190 P11,831,939 P9,465,551 P2,366,388 P1,893,120
======== ========== ========== ========= =========

STEEL TANK:

ORIG. CONVER- REPLACEMENT

TAX DEL. NO. DATE COST SION COST ACCUM DEPR’N. MARKET ASS ASSESSED New Old INSTLLD ($1=P7.50) FACTOR ($1=P25.065) RATE AMOUNT VALUE LVL VALUE
——– ——– ———– ———– ———– —————– ———- ————- ———— ——– ————–

6-335 3-390 1975 P181,209 3.415 P 618,814 45% P 278,466 P 340,348 80% P 272,280

F. There is no cogent reason to disturb Ruling No. 13 of the Local

Board.

SO ORDERED.

Manila, Philippines, November 07, 1996

(Signed) MARGARITA G. MAGISTRADO
Chairman

(Signed) ELEANOR A. SANTOS
Member

________________________ Vacant

Reference: Book IX, pp. 119-143