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Republic of the Philippines



CAGAYAN ROBINA SUGAR MILLING CO., Petitioner-Appellant, - versus BOARD OF ASSESSMENT APPEALS OF CAGAYAN PROVINCE, Appellee, - and THE PROVINCIAL ASSESSOR OF CAGAYAN PROVINCE, Respondent-Appellee. x---------------------------x CBAA CASE NO. L-03 Tax Dec. No. 5514

Before this Board is a Motion for Reconsideration filed by PetitionerAppellant Cayagan Robina Sugar Milling Co. on its Decision dated April 30, 1994, the dispositive portion of which reads:
WHEREFORE, the appeal is hereby dismissed. Accordingly, the Resolution of the Local Board becomes final and executory.

praying that it be set aside in view of the following issues, viz:

1. Was the appeal filed beyond the reglamentary period of thirty (30) days? 2. Was the valuation of the appellants machineries unjust and confiscatory and therefore void? 3. Granting that the appeal was filed late, was the dismissal proper and legal?

Our answer to the first issue is YES. This Board had already adequately dealt with this issue in its Decision under consideration. The allegation of Petitioner-Appellant that the appeal dated April 18, 1992 was entirely different from the appeal dated November 25, 1992 is not correct. Records show that the two (2) appeals are identical, the latter copied from the former. Besides, in both appeals the Resolution of the Local Board dated April 1, 1992 was attached as shown below:
The following documents are herewith attached in support of this appeal:

Reference: Book VII, pp. 33-40

1. Three (3) copies each of the Cagayan Local Board of Assessment Appeals resolution dated April 1, 1992. (Underscoring supplied).

It shows clearly that as early as April 18, 1992 or earlier, Petitioner-Appellant had already a copy of the Resolution of the Local Board dated April 1, 1992. To repeat, the appeal dated April 18, 1992 was filed on December 15, 1992 while the second appeal was dated and filed on November 25, 1992. Thus both appeals were filed way beyond the reglementary period of thirty (30) days (See Sec. 34, P.D. 464). Anent the second and third issues, Petitioner-Appellant raises for the first time in this Motion for Reconsideration the illegality of the assessment. In its appeal before the appellee Local Board and in the appeal before this Board, Petitioner-Appellant questioned the assessment as excessive, erroneous and/or unjust. The Supreme Court distinguished an illegal assessment from an erroneous assessment, thusAn assessment is illegal when the assessor has no power to act at all; while an erroneous assessment is when the assessor has the power but errs in the exercise of such power. (See Victorias Milling Co., Inc. vs. Court of Tax Appeals, 22 SCRA 1008, March 13, 1968, cited in CBAA Case No. 71, PA of Camarines Sur vs. Bicolandia Sugar Development Corp., dated January 27, 1977).

In the case of Basey Wood Industries, Inc. (CBAA Case No. 100 cited and relied upon by Petitioner-Appellant as a case involving an illegal assessment, this Board would like to emphasize that in the Basey Case the assessment was really illegal because the assessor had no authority or power to assess the property concerned but such authority or power was vested by law on a Joint Appraisal Committee. (See P.D. 853 and Rule III AR No. 3-76). Hence, this Board so held in that particular case that prescriptive period is inapplicable. The case at bar is different from the Basey case. Petitioner-Appellant quoted the following provisions of P.D. 464 as the law on how to determine market value of the machineries, viz:

Reference: Book VII, pp. 33-40

All 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. (Sec. 5, P.D. 464) Appraising machinery The current market value of machinery shall be determined on the basis of the original cost in case of newly acquired machinery not yet depreciated and is appraised within the year of purchase. In the case of all others, the current market value shall be determined by dividing the remaining economic life by its economic life multiplied by the replacement or reproduction cost (new) of said machinery. (Sec. 28, P.D. 464)

In other words, the basis of the current market value of a new machinery is the original cost as distinguished from an old machinery which is the current prices of the machineries (new) at the time of appraisal (replacement cost new). It appears that Respondent-Appellee appraised the subject machineries upon the provisions of Section 5 of P.D. 464, supra (See Answer of Respondent-Appellee dated December 22, 1992), based on current prices of the machineries (New) per catalogue of machineries and we quote:
Machineries Fabrication Dept., Refinery Dept., Water Treatment Dept., Power and Electrical Dept., Machineries, Cane Holding Dept., Milling Dept., Boiler Dept., Specific Catalogue for Machineries attached. (See Tax Declaration No. 5355)

It is of common knowledge that catalogues contain prices of items carried. The Tax Declaration also indicates that the increase in assessment was due to the increase in market value. This is justifiable. In view of the fluctuation of the purchasing power of money, costs easily vary over time. This is of judicial notice. Thus in replacement cost (New) the high percentage of increase in assessment is not indicative of confiscatory/excessive/unjust assessment when current prices had in fact increased. For example: A certain brand new electric generator was bought in 1972 at P300,000.00. The same brand of generator is now sold (1984) at P1,500,000.00. The replacement cost of said generator is therefore P1,500,000.00, less accumulated allowable depreciation to determine the current market value of the generator. (See Real Property Taxation by Baugbog, p. 135). Records also show that Petitioner-Appellant bought the machineries in an auction sale. Respondent-Appellee valued said machinery at P391,623,530.00

Reference: Book VII, pp. 33-40

based on the current prices. Respondent-Appellee however failed to apply depreciation thereon. This is an error in the exercise of his authority to assess the machineries, rather than a lack of authority or power to assess them; hence erroneous but not illegal. (See case of Victorias Milling Co., Inc., supra). Where, therefore, the assessment is defective for reason of mistake or omission of an officer (Slaughter vs. City of Louisville, 89 Ky. 112, 8 S.W. 917), the defects are considered mere irregularity and may be cured (See also Cochran vs. Baker, 60 Miss. 282), and correctible on appeal (Roxas vs. Rafferty 37 Phil. 957). On appeal, that error has already been cured and corrected by Appellee Local Board in its Resolution dated April 1, 1992, which is the subject of the appeal before this Board:
This Board is convinced that the depreciation of the machineries were taken into account when APT set the floor bid price. And, so the Board holds that depreciation should not as yet be made in this assessment.

Where the issues are factual, the findings of the local board should be respected, it being in a much better position to appreciate and evaluate the facts by reason of its proximity to the property involved. (See CBAA No. 18). To recapitulate, Respondent-Appellee valued the machineries at P391,623,530.00 current prices of new machineries, whereas Appellee Local Board valued them at the auctions floor bid price of P260,327,060.00 or a staggering difference of P131,296,470.00. Evidently, the valuation by Appellee Local Board is much more favorable to Petitioner-Appellant. Notably, Respondent-Appellee did not object to the decrease in valuation when he moved for the dismissal of this appeal. Moreover, no amount of allowable depreciation would equal the difference. The floor bid price of the subject machineries represents the current price for old machineries as distinguished from the current price of new machineries. Depreciation should be deducted only from the replacement cost NEW (Sec. 28, P.D. 464) but not from a replacement cost (Old), because the latter cost is already depreciated, which is the case of the floor bid price of the machineries.

Reference: Book VII, pp. 33-40

Valuation on the basis of a floor bid price is not bereft of any basis in law. One of the approaches to value is the Sales Analysis Approach or the Market Date Approach where the source of market data for valuation is from offer of sales or bids of real property. Valuation based on the floor bid price of the subject machineries belongs to this approach, pursuant to Section 3(n) which reads:
Market value is defined as the highest price estimate 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 the knowledge of all the uses to which it is adopted and for which it is capable of being used. (P.D. 464)

Finally, there exists no rigid rule for the valuation of property, which is affected by a multitude of circumstances which no rule could foresee or provide for. (New Orleans Cotton Exchange vs. Board of Assessors, 37 La. An., 423, cited in Army and Navy Club vs. Trinidad, 44 Phil. 383, 385). IN VIEW of all the foregoing, this Board finds no reasonable ground to reconsider its Decision dated April 30, 1994. WHEREFORE, the herein Motion for Reconsideration is hereby DENIED. SO ORDERED. June 30, 1994, Manila, Philippines.

(Signed) MARGARITA G. MAGISTRADO Chairman (Signed) ELEANOR A. SANTOS Member (Signed) ALFONSO M. MEDADO Member

Reference: Book VII, pp. 33-40