337 Phil. 89
PANGANIBAN, J.:
"A parcel of land (Lot 308 of the Cadastral Survey of Cebu), with the improvements thereon, situated in the City of Cebu (formerly Municipality of Cebu), containing an area of Forty Nine (49) square meters, more or less x x x.The conveyance included "a residential house of strong materials constructed on the lots above-mentioned"[5] located in Cebu City.
A parcel of land (Lot 309 of the Cadastral Survey of Cebu), with the improvements thereon, situated in the City of Cebu, containing an area of Forty Eight (48) square meters, more or less x x x."
"WHEREFORE, premises considered, the appealed Resolution is hereby modified, viz.:
For the purpose of determining the back taxes due on the excess area of subject building for the years 1981 to June 30, 1987, Respondent-Appellee (Respondent City Assessor of Cebu) is hereby directed to issue a new tax declaration effective 1981 based on the following assessments:
Type II-A Building (Residential) at P380.00/sq. m. (Minimum Rate)
Undeclared Excess Area | Unit Value Per Sq. M. | Market Value | |
S1 — (95-60) | 35 Sq. m. | P 380.00 | P13,300.00 |
S2 — | 95 Sq. m. | 380.00 | 36,100.00 |
S3 — | 95 Sq. m. | 380.00 | 36,100.00 |
S4 — | 95 Sq. m. | 380.00 | 36,100.00 |
S5 — Roof deck | 95 Sq. m. 30% of | 380.00 | 10,830.00 |
Total | 415 Sq. m | P132,430.00 | |
Assessment Level | x 45% | ||
Assessed Value | P59,593.50 |
Type II-A Building (Residential) at P1,400.00/sq. m. (Minimum Rate)
Undeclared Excess Area | Unit Value Per Sq. M. | Market Value | |
S1 – (95-4) | 35 Sq. m. | P1,400.00 | P 49,000.00 |
S2 — | 95 Sq. m | 1,400.00 | 133,000.00 |
S3 — | 95 Sq. m. | 1,400.00 | 133,000.00 |
S4 — | 95 Sq. m. | 1,400.00 | 133,000.00 |
S5— Roof deck | 95 Sq. m. 30% of | 1,400.00 | 39,900.00 |
Total | 415 Sq. m. | P 487,900.00 | |
Less : 30 % Depreciation allowance | 146,370.00 | ||
Net Market Value | 341,530.00 | ||
Assessment Level | x 65% | ||
Assessed Value | P221,994.50” |
"1. That the revised valuation of the property is P78,330.00 as ASSESSED VALUE, classifying the property as class II-B at P1,110 per sq. m., the building having been completed and occupied in 1950 or forty-two (42) years ago;Thereafter, Respondent CBAA issued the assailed Resolution accepting the joint manifestation "for whatever purpose it may be worth to the case," raising "no objection to Manifestation No. 1 for being not contrary to law or public policy" but finding that "Manifestation No. 2 has no bearing on the instant case because Section 25 and not Section 23 of P.D. 464 is the law applicable x x x."[14] The dispositive portion of the now assailed Resolution reads:[15]
2. That Section 23 of Presidential Decree No. 464 APPLIES to this case considering that the appellee has NOT YET SUBMITTED the required CERTIFICATION to the Secretary of Finance to the effect that the GENERAL REVISION OF PROPERTY ASSESSMENTS FOR CEBU CITY HAS BEEN FINISHED. Sec. 23 of P.D. 464 uses the CONJUNCTIVE WORD 'AND' between the phrases: 'ASSESSMENTS SHALL BECOME EFFECTIVE and 'TAXES SHALL ACCRUE AND BE PAYABLE.'"
"WHEREFORE, our Decision on (sic) this case is hereby MODIFIED. For purposes of determining the back taxes due on the excess area of subject building from 1981 to 1989, Respondent-Appellee Assessor of Cebu City is hereby ordered to issue —
1. Tax Declaration effective 1981 to June 30, 1987, based on the minimum rate per sq. m. for a Type II-B building, in accordance with the 1978-79 Schedule of Values;
2. Tax Declaration to supersede Tax Declaration No. 1 to be effective from July 1, 1987 to the year 1988, based on the minimum rate per sq. m. for a Type II-B building, in accordance with the 1981-1984 Schedule of Values; and
3. Tax Declaration to supersede Tax Declaration No. 2 to take effect in 1989, based on the revised valuation provided under No. 1 of the Joint Manifestation of the parties hereof."
"1. Respondent CBAA gravely erred in resolving the matter of back taxes which was never raised in issue in the Local Board of Assessment Appeals of Cebu City or in the appeal by the petitioner before the Central Board of Assessment Appeals (CBAA).In his Memorandum dated July 23, 1993, petitioner refined the issues as follows:[18]
2. Respondent CBAA gravely erred in disregarding the jurisprudence in Reyes vs. Almanzor,[17] 196 SCRA 328 (should be 322).
3. Respondent CBAA gravely erred in mis-interpreting or mis-applying Section 25 of P.D. 464;
4. Respondent CBAA gravely erred in disregarding or failing or refusing to apply Section 23 of P.D. 464."
"B-1. Whether or not Respondent Central Board of Assessment Appeals erred in resolving the issue of back taxes from 1981 to 1988 despite the fact that such issue was not raised in the appeal, under its pretext that it is applying Section 25 of Presidential Decree No. 464.a. Whether or not respondent CBAA's assessment is discriminatory, unjust, confiscatory and unconstitutional.
B-2. Whether or not Respondent Central Board of Assessment Appeals erred in not strictly applying par. n, Section 3, Presidential Decree No. 464 defining 'market value' as basis for computing the 'assessed value';
B-3. Whether or not Respondent Central Board of Assessment Appeals erred in not strictly applying or refusing to apply Section 23 of Presidential Decree No. 464.
Corollary Issues:
"SEC. 64. Restriction upon power of court to impeach tax. — No court shall entertain any suit assailing the validity of tax assessed under this Code until the taxpayer shall have paid, under protest, the tax assessed against him nor shall any court declare any tax invalid by reason of irregularities or informalities in the proceedings of the officers charged with the assessment or collection of taxes, or of failure to perform their duties within this time herein specified for their performance unless such irregularities, informalities or failure shall have impaired the substantial rights of the taxpayer; nor shall any court declare any portion of the tax assessed under the provisions of Code invalid except upon condition that the taxpayer shall pay the just amount of the tax, as determined by the court in the pending proceeding." (Underscoring supplied)For the foregoing lapses, if for no other, this case ought to be dismissed. However, there are other cogent reasons showing that the petition has no merit. These will be shown as we tackle the various issues raised by petitioner in his memorandum.
"x x x. In line with the modern trends of procedure, we are told that, 'while an assignment of error which is required by law or rule of court has been held essential to appellate review, and only those assigned will be considered, there are a number of cases which appear to accord to the appellate court a broad discretionary power to waive the lack of proper assignment of errors and consider errors not assigned. And an unassigned error closely related to the error properly assigned, or upon which the determination of the question raised by the error properly assigned is dependent, will be considered by the appellate court notwithstanding the failure to assign it as error.' (4 C.J.S., 1734; 3 C.J., 1341, footnote 77)."[22]Although the foregoing citations specifically referred to "appellate courts," there appears no reason why these should not apply to appellate administrative agencies, where rules of procedure are liberally construed.
"At any rate, the Court is clothed with ample authority to review matters, even if they are not assigned as errors in their appeal, if it finds that their consideration is necessary in arriving at a just decision of the case x x x”[23]
"Section 24. Date of effectivity of Assessment or Reassessment. — All assessments or reassessments made after the first day of January of any year shall take effect on the first day of January of the succeeding year: Provided, however, That the reassessment of real property due to its (1) partial or total destruction, or to (2) a major change in its actual use, or to any (3) great and sudden inflation or deflation of real property values, (4) or to the gross illegality of the assessment when made or to any other abnormal cause, shall be made within ninety days from the date any such cause or causes occurred, the same to take effect at the beginning of the quarter next following the reassessment.Opposing the application of Section 25 of PD 464, petitioner posits that Respondent CBAA "misread or misinterpreted" the same, specifically the phrases therein referring to "property declared for the first time" and "prior to the year of initial assessment."[24] Without expressly stating so, petitioner purports to argue that Section 25 is inapplicable because the property in question has been declared for assessment as early as 1980 (and even before that, by the prior owner), and not "for the first time" in 1989.
Section 25. Assessment of Property Subject to Back Taxes. — Real property declared for the first time shall have back taxes assessed against it for the period during which it would have been liable if assessed from the first in proper course but in no case for more than ten years prior to the year of initial assessment; Provided, however, that the back taxes shall be computed on the basis of the applicable schedule of values in force during the corresponding period.
If said taxes are paid before the expiration of the tax collection period next ensuing, no penalty for delinquency shall be imposed, otherwise the taxes shall be subject to all the penalties to which they would have been liable had they originally become delinquent after assessment of the property in the usual course."
"x x x it is neither just that another landowner should be permitted by an involuntary mistake or through other causes, not to say bad faith, to state an area far less than that actually contained in his land and pay to the State a tax far below that which he should really pay. This was one of the objects of the Legislature in ordering the revision, so that all real estate should pay the taxes that legally must accrue to the State. Wherefore, even taking the Spanish text of the phrase in (S)ection 12 of Act No. 2238 that ‘real property declared for the first time shall have taxes assessed against it, etc.,' it should not be understood to apply only to real estate that have (sic) never been declared; as within the meaning of such phrase, the excess areas resulting from the revision must be understood as never having been declared before; because only that area must be deemed as declared which is stated in the declaration sheet, and the area over and above that cannot be considered as ever having been declared." (Underscoring supplied)Section 24 merely lays down the general rule that assessments under PD 464 are to be given prospective application. It cannot be construed in such a manner as to eliminate the imposition of back taxes. If Section 24, instead of Section 25, were made to apply as suggested by petitioner, he would in effect be excused from the payment of back taxes on the undeclared excess area of his property. The Court, clearly, cannot allow a taxpayer to evade his obligation to the government by letting him pay taxes on a property based on its gross undervaluation at P60,000.00, when the same had then a current market value of P449,860.00.
"x x x it is another well-established rule of statutory construction that where great inconvenience will result from a particular construction, or great public interests would be endangered or sacrificed, or great mischief done, such construction is to be avoided, or the court ought to presume that such construction was not intended by the makers of the law, unless required by clear and unequivocal words. (25 R. C. L., pp. 1025-1027)."Furthermore, if Section 24 is the only applicable provision in cases where a taxpayer has eluded the payment of the correct amount of taxes for more than nine (9) years, as in this case, Section 25 of PD 464 which requires the payment of back taxes will be rendered superfluous and nugatory. Such interpretation could not have been intended by the law. It is a familiar rule in statutory construction that "(t)he legal provision being therefore susceptible of two interpretations, we adopt the one in consonance with the presumed intention of the legislature to give its enactments the most reasonable and beneficial construction, the one that will render them operative and effective and harmonious with other provisions of law."[30]
"n) Market Value — is defined as "the highest price estimated in terms of money which the property will buy if exposed for sale in the open market allowing a reasonable time to find a purchaser who buys with knowledge of all uses to which it is adapted and for which it is capable of being used." It is also referred to as "the price at which a willing seller would sell and a willing buyer would buy, neither being under abnormal pressure."We cannot sustain petitioner's contention. The cited provision merely defines "market value." It does not in any way direct that the market value as defined therein should be used as basis in determining the value of a property for purposes of real property taxation. On the other hand, Section 5 of PD 464 provides unequivocally that "(a)ll real property, whether taxable or exempt, shall be appraised at the current and fair market value prevailing in the locality where the property is situated."[31]
"x x x (A)ssessors, in fixing the value of property, have to consider all the circumstances and elements of value, and must exercise a prudent discretion in reaching conclusions. Courts, therefore, will not presume to interfere with the intelligent exercise of the judgment of men specially trained in appraising property. Where, as the Supreme Court of Louisiana says, (when) the judicial mind is left in doubt, it is a sound rule to leave the assessment undisturbed. (Viuda e Hijos de Pedro P. Roxas vs. Rafferty [1918], 37 Phil., 957; New Orleans Cotton Exchange vs. Board of Assessors, supra.)"[32]Other circumstances militate against the acceptance of petitioner's argument. Unscrupulous sellers of real estate often understate the selling price in the deed of sale to minimize their tax liability. Moreover, the value of real property does not remain stagnant; it is unrealistic to expect that the current market value of a property is the same as its cost of acquisition ten years ago. In this light, a general revision of real property assessment is required by law every five (5) years[33] to ensure that real properties are assessed at their current and fair market values.
Section 23. Certification of Revised Values to the Secretary of Finance. — When the provincial or city assessor shall have finished a general revision of property assessments for any province, municipality or city, he shall so certify to the Secretary of Finance and the assessments shall become effective and taxes shall accrue and be payable thereunder in accordance with the provisions of this Code.Petitioner claims that Respondent City Assessor of Cebu City has not yet completed the general revision of property assessments for years 1981-1984 and has not yet submitted the certification required by Section 23 of PD 464 to the Secretary of Finance; hence, he may not yet be held liable to pay any assessment.[34]
"(F)or purposes of determining the back taxes due for the years 1981 to June 30, 1987, the excess area of subject building should be assessed on the basis of the Schedule of Base Unit Construction Costs for Buildings applicable for the 1978-1979 General Revision. The tax declaration covering the said assessment became effective in 1981. To determine the back taxes due for the years July 1, 1987 to 1989, the same excess area should be assessed using the 1981-1984 Schedule of Base Unit Construction Costs of Buildings. The 1981-1984 Schedule of Values were approved by the Secretary (Minister) of Finance on May 22, 1984 (Exh. "17") and became finally effective on July 1, 1987 (See Memorandum Circular No. 77 dated March 1, 1987). The tax declaration covering the aforesaid assessment became effective on July 1, 1987."[36]Petitioner, for his part, has failed to prove that this finding constitutes a grave abuse of discretion tantamount to lack or excess of jurisdiction.