Republic of the Philippines

CENTRAL BOARD OF ASSESSMENT APPEALS Manila

CITY ASSESSOR OF CEBU, Respondent-Appellant,

– versus –

CBAA CASE NO. V-05 THE LOCAL BOARD OF
ASSESSMENT APPEALS OF CEBU CITY,
Appellee,

– and –

ALEXANDER S. GAISANO and STEPHEN S. GAISANO, JR., doing business under the name “GAISANO BROS., MERCHANDISING, INC.”,
Petitioner-Appellee. x – – – – – – – – – – – – – – – – – – – – – – – – – – – x

RESOLUTION

On the 22nd of September, 1995, Atty. Ricarte B. Maderazo, then counsel

on record for Petitioner-Appellee, filed with this Board a Motion to Withdraw as

Counsel. On the same day, the law firm “De La Serna and Associates”, as new

counsel for Petitioner-Appellee, simultaneously filed with this Board the

following pleadings, to wit:

1. Notice of Appearance as Counsel;

2. Petition for Relief from Resolution and for Admission of Amended

Motion for Reconsideration; and

3. Amended Motion for Reconsideration.

On January 11, 1996, De La Serna and Associates furnished this Board

with a copy of a “Notice of Filing of Petition for Relief from Resolution and for

Admission of Amended Motion for Reconsideration with Proof of Service” dated

December 26, 1995 and addressed to the City Legal Officer of Cebu. This

“notice” appears to have been received by the Office of the City Attorney on

January 11, 1996.

Reference: Book IX, pp. 46-59

On January 23, 2996, Respondent-Appellant filed with this Board its

“Comment/Opposition” to Petitioner-Appellee’s Petition for Relief from

Resolution.

In one of the hearings in this case, this Board requested counsel for

Petitioner-Appellee to submit to this Board a certified true copy of that

“Memorandum of Agreement (Project Agreement)” made and executed on June

29, 1978 by and between the Public Estates Authority and the Bancom Realty

Corporation, together with the Deed of Assignment, Deed of Restrictions and

Special Conditions of Sale as referred to in the (Contracts to Sell) (pp. 143-

146 and 148-151, Records). In requiring the submission of said document

which would or could provide the answer to the question of who or which entity,

if any, was liable for the real property taxes due during the effectivity of the

Contracts to Sell (supra), is critical to resolve the issue at hand.

Petitioner-Appellee, until lately, failed to present the documents

mentioned in the next preceding paragraph, prompting this Board to assume

and believe that Petitioner-Appellee had something to hide from this Board.

Whereupon, this Board, giving much weight, in the absence of the said

Memorandum of Agreement and other related documents, and leaning heavily

on the fact that the purchase prices of the subject properties were to be paid on

installment basis, thus qualifying the transactions as sales on installments,

decided this case on November 15, 1994 in favor of the Respondent-Appellant

and against the Petitioner-Appellee. A motion for reconsideration by Petitioner-

Appellee dated April 21, 1995 was denied by this Board on August 20, 1995.

Now comes this Petition for Relief from Resolution and for Admission of

Amended Motion for Reconsideration. Section 2, Rule III, of the Rules of

Procedure Before the Central Board of Assessment Appeals (CBAA) states as

follows:

“Sec. 2. Petitions for Reconsideration. – The Central Board shall, with like jurisdiction, resolve petitions for reconsideration of its decisions. Petitions for reconsideration shall be filed within fifteen (15) days after

Reference: Book IX, pp. 46-59

receipt of the decision on the appeal, provided that only one petition for reconsideration shall be entertained. (Underscoring for emphasis)

Is an “Amended Motion for Reconsideration”, as in this case, considered

another motion separate and distinct from the one which it seeks to amend?

We think not, for the reason that the amended motion, when admitted into the

records, takes the place of the original one.

Considering that the original motion, dated April 21, 1995, was denied by

the Board in a Resolution dated August 20, 1995, is there any ground or basis

for this Board to entertain the amended motion? The Rules of Procedure Before

the CBAA do not provide for this matter. However, Section (3) Rule I the Rules

of Court shall apply in a suppletory manner thus:

(“Sec. 3. Rules of Court Suppletory. – The Rules of Court shall suppletorily apply in all proceedings before the Central Board without strictly adhering to the technical rules of evidence.”)

We must, therefore, consult the pertinent provisions of the Revised Rules

of Court, Section I, Rule 37 of said Rules provides as follows:

“SECTION 1. Grounds of and period for filing motion for new trial. – Within the period for perfecting an appeal, the aggrieved party may move the trial court to set aside the judgment and grant a new trial for one or more of the following causes materially affecting the substantial rights of said party:

“(a) Fraud, accident, mistake or excusable negligence which ordinary prudence could not have guarded against and by reason of which such aggrieved party has probably been impaired in his rights;

“(b) Newly discovered evidence which he could not, with reasonable diligence, have discovered and produced at the trial, and which if presented would probably alter the result;

“(c) Award of excessive damages, or insufficiency of evidence to justify the decision, or that the decision is against the law.”

Section 1, Rule 32 if the same Revised Rules of Court states:

“SECTION 1. Motion for re-hearing. – A motion for a re-hearing or reconsideration shall be made ex parte and filed within fifteen (15) days from notice of the final order or judgment. No more than one motion for re-hearing or reconsideration shall be filed without express leave of court. A second motion for reconsideration may be presented within fifteen (15) days from notice of the order or judgment deducting the time in which the first motion has been pending.”

Soon after the filing of the Petition for Relief from Resolution and for

Admission of Amended Motion for Reconsideration and the Amended Motion

itself, Petitioner-Appellee presented to this Board a copy of the Memorandum of

Reference: Book IX, pp. 46-59

Agreement mentioned above, together with a copy of each of the Deed of

Assignment dated April 2, 1979, the Deed of Restrictions and Special

Conditions of Sale which were also referred to in the Contracts to Sell (supra).

Petitioner-Appellee explained verbally that it took Petitioner-Appellee a long

time to produce the said documents owing to the fact that the documents were

executed a long time ago and had to be secured from the Public Estates

Authority’s office in Manila.

As mentioned earlier, the absence of the Memorandum of Agreement

and other documents mentioned in the next preceding paragraph, placed great

weight on the Decision of this Board dated November 15, 1994 and the

subsequent resolution dated August 20, 1995. With the submission, finally, of

said documents, and without adhering to technical rules of procedure, this

Board thinks and feels that justice and equity would be better served if the

Amended Motion for Reconsideration were admitted into the records.

Therefore, this Board hereby admits into the records the said Amended

Motion for Reconsideration and, there being no objection or opposition to the

motion by Atty. Ricarte R. Maderazo to withdraw as counsel for Petitioner-

Appellee, the same is hereby granted, and the notice of appearance by De La

Serna and Associates, as new counsel for Petitioner-Appellee, is also hereby

admitted.

The only issue which remains to be resolved in this case is whether or

not “beneficial use”, as contemplated under Section 40(a) of PD 464, now Sec.

234(a), RA 7160, was granted to Petitioner-Appellee under the Contracts to Sell

between the Public Estates Authority (PEA) and Petitioner-Appellee.

The gist of Petitioner-Appellee’s arguments is that this Board, in

rendering its decision on November 15, 1994, erred in holding that the

Contracts to Sell between the PEA and Petitioner-Appellee were “contracts of

sale by installments” and not “contracts to sell”; that this Board was misled by

the ambiguity of Section 4 of the Contracts to Sell as to assume that there was

Reference: Book IX, pp. 46-59

a silent or indirect grant of beneficial use to Petitioner-Appellee over the

properties in question.

Petitioner-Appellee argues that the questioned decision is contrary to law

for being violative of the provisions of the New Civil Code on interpretation of

contracts, particularly Article 1370, 1371, 1373 and 1374 thereof; and that the

decision is arbitrary as it held that the contracts between the parties are

contracts of sale and that Petitioner-Appellee enjoyed beneficial use of subject

property despite the absence of evidence to that effect.

In opposition, Respondent-Appellant states that the Amended Motion for

Reconsideration is a mere reiteration of the grounds set forth in the original

motion dated April 21, 1995; that the properties in question were actually sold to

Petitioner-Appellee in installment terms and that beneficial use thereof was

granted to Petitioner-Appellee, as can be gleaned from the contracts to sell.

The petition for relief from resolution and the amended motion for

reconsideration are impressed with merit.

The terms and conditions embodied in the said Memorandum of

Agreement, the Deed of Assignment, Deed of Restrictions and Special

Conditions of Sale mentioned earlier reveal nothing concerning the title to

and/or possession of the subject, properties during the existence of the

Contracts to Sell. We must, therefore, re-evaluate the terms and conditions of

the Contracts to Sell and other evidence attendant in this case, as sole basis, to

resolve the issue of “beneficial use”.

The properties in question were covered by two (2) Contracts to Sell

between the PEA, as “Owner”, represented by the Port Center Development

Corporation, as “Developer”, and Petitioner-Appellee, as “Vendee”. The first

contract (pp. 143-146, Record), executed in Mandaluyong, Metro Manila, on

April 06, 1987, embraced six (6) parcels of land (Lot Nos. 3, 4, 5, 7, 8 and 9

Block 24-A) and the second (pp. 148-151, Record), executed in Makati, Metro

Reference: Book IX, pp. 46-59

Manila, on February 15, 1988, covered eighteen (18) lots (Lot Nos. 1 to 18,

inclusive, Block 24).

Lot Nos. 3, 4, 5, 7, 8 and 9, Block 24-A, were covered by a “Deed of

Absolute Sale” executed on March 11, 1992; and Lot Nos. 1 to 18, inclusive, by

another “Deed of Absolute Sale” dated March 16, 1992. The real property taxes

in question, therefore, were those supposedly due on Lot Nos. 3, 4, 5, 7, 8 and

9, Block 24-A, from 1988 to 1992 and on Lot Nos. 1 to 18, Block 24, from 1989

to 1992.

Both contracts to sell have the same terms and conditions Nos. 4, 5 and

6, which we quote:

“4. Default in Payment of Purchase Price. – In case the VENDEE fails to fully pay on due date the balance of the purchase price, the Contract to Sell shall automatically become null and void and the payment already made by the VENDEE on the purchase price shall be forfeited in favor of the OWNER. In such event, The VENDEE shall peacefully vacate the Subject Property and deliver the same to the DEVELOPER devoid of any and all improvements or obstructions thereon which the VENDEE shall remove within thirty (30) days from notice to vacate. If the improvements or obstructions are not removed by the VENDEED within such period, the OWNER/DEVELOPER may cause the removal thereof at the expense of the VENDEE. The OWNER/DEVELOPER, however, may elect to retain the improvements in which case the same shall become the property of the OWNER.

“5. Title and Possession of Subject Property – Pending full payment of the purchase price of the Subject Property, the title and possession over the Subject Property shall be retained by the OWNER.

“6. Deed of Absolute Sale – Upon full payment of the purchase price on the Subject Property and all the amounts due from the VENDEE under this Contract, the DEVELOPER shall, on behalf of the OWNER, execute in favor of the VENDEE or his assigns, the corresponding Deed of Absolute Sale of the Subject Property, and deliver the same to the VENDEE or his assigns together with the certificates of title covering the Subject Property.”

The theory of Respondent-Appellant is that the “Contracts to Sell” were

actually “Deeds of Sale by Installment” and that the proviso in Condition No. 4

(re notice to vacate and remove improvements, etc.) of said contracts impliedly

granted Petitioner-Appellee possession of subject properties and beneficial use

thereof during the period in question.

Petitioner-Appellee, however, pointed out that, as expressly provided in

Condition No. 5 of the same contracts, the title to and possession of the subject

Reference: Book IX, pp. 46-59

properties were retained by the PEA pending full payment of the purchase

price.

Respondent-Appellant anchored his arguments solely on the proviso

contained in Condition No. 4 of the contracts to sell, without even attempting to

present evidence to prove possession, actual or constructive, and/or beneficial

use of the subject properties by Petitioner-Appellee during the period in

question. The burden of proof to show that Petitioner-Appellee had possession

or enjoyed beneficial use over the subject property during the period in question

lies with Respondent-Appellant. Nevertheless, Petitioner-Appellee presented,

as Annex “C” to its Amended Motion for Reconsideration, an affidavit, executed

by Mr. Alexander S. Gaisano on September 14, 1995, showing that Petitioner-

Appellee neither took possession of, nor enjoyed beneficial use over, the

subject property at anytime before the final and full payment of their purchase

prices.

In a “contract to sell”, the prospective buyer is granted, an option to buy

at a future date the thing subject of the contract, subject to certain terms and

conditions. The option may be granted solely on the basis of goodwill.

Generally, however, payment of earnest money, is required which may or may

not be considered as part of the purchase price. The actual sale or purchase is

consummated only after the happening of the events or the fulfillment of the

terms and conditions stipulated in the contract. Meanwhile, no rights over the

subject property, are transferred from the prospective seller to the prospective

buyer except the option to buy it within a specified period of time.

A “deed of sale by installment”, on the other hand, is actually a deed of

conditional sale. The naked ownership of the thing subject of the contract is

retained by the seller pending full payment of the agreed selling or purchase

price, but the thing itself is delivered, either actually or constructively, by the

seller to the buyer.

Reference: Book IX, pp. 46-59

The Contracts to Sell between the PEA and Petitioner-Appellee provide

that a downpayment was to be paid upon contract-signing, and the balance of

the purchase price was to be paid in equal quarterly installments spread over a

period of five (5) years. The Contracts to Sell would have been considered as

“deeds of sale by installments” or “deeds of conditional sale”, except for the

specific provisions in Nos. 4, 5 and 6 of the terms and conditions of the

contracts.

Condition No. 4 of the contracts specifically provides that “in case the

VENDEE fails to fully pay on due date the balance of the purchase price, the

Contract to Sell shall automatically become null and void and the payments

already made by the VENDEE on the purchase price shall be forfeited in favor

of the OWNER . . . “Condition No. 5 expressly provides that “pending full

payment of the purchase price of the Subject Property, the title and possession

over the Subject Property shall be retained by the OWNER.” And Condition No.

6 states that “upon full payment of the purchase price on the Subject Property

and all amounts due from the VENDEE under this Contract, the DEVELOPER

shall, on behalf of the OWNER, execute in favor of the VENDEE or his assigns,

the corresponding Deed of Absolute Sale of the Subject Property, and deliver

the same to the VENDEE or his assigns together with the certificates of title

covering the Subject Property.”

Under these terms and conditions (Condition Nos. 4, 5 and 6 of the

Contracts to Sell), the downpayments and the “installment” payments, except

the last, are considered “earnest monies” for the option to buy the subject

properties.

Respondent-Appellant’s position centers on the proviso contained in

Condition No. 4 which states that, in the event that the VENDEE defaults in the

full payment on due date of the purchase price and the contract automatically

becomes null and void, “the VENDEE shall peacefully vacate the Subject

Property and deliver the same to the DEVELOPER devoid of any and all

Reference: Book IX, pp. 46-59

improvements or obstructions thereon which the VENDEE shall remove within

thirty (30) days from notice to vacate . . .”. Read independently of the other

terms and conditions of the contracts to sell, the above-quoted proviso implies

that deliveries of subject properties to Petitioner-Appellee were to be made

upon execution of the contracts to sell. And yet, Condition No. 5 explicitly

provides for the retention by the PEA of the title to and possession of subject

properties pending full payment of the purchase price.

This Board, therefore, believes, and so holds, that the aforequoted

proviso in Condition No. 4 of the Contract to Sell is nothing but a “safety

precaution” or an added protection in favor of the Public Estates Authority, in

anticipation of a possible occupation of the subject properties by Petitioner-

Appellee in violation of the provisions of Condition No. 5 of the same contract.

To interpret the said proviso otherwise would render the express provisions in

Condition Nos. 5 and 6 of the same Contracts nugatory.

In view of the foregoing, we believe, and so hold, that “beneficial use”, as

contemplated under Section 40(a) of PD 464, now Section 234(a) of RA 7160,

over the subject properties was not granted to Petitioner-Appellee, nor did

Petitioner-Appellee enjoy such “beneficial use” of said properties, during the

existence of the said Contracts to Sell. (See Annex “C” to Amended Motion for

Reconsideration, Supra).

WHEREFORE, the Decision dated November 15, 1994 and the

Resolution dated August 20, 1995, both rendered by this Board, are hereby

VACATED. The instant appeal is hereby DENIED and the Decision of the Local

Board of Assessment Appeals of Cebu City dated December 17, 1992 is

hereby AFFIRMED en toto.

SO ORDERED.

Manila, Philippines, December 18, 1997.

Reference: Book IX, pp. 46-59

(Signed) MARGARITA G. MAGISTRADO
Chairman

(Signed)
ANGEL P. PALOMARES Member

(Signed) BENJAMIN M. KASALA
Member

Reference: Book IX, pp. 46-59