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G.R. Nos.

L-49839-46 April 26, 1991
JOSE B. L. REYES and E!"NO A. REYES, petitioners,
#ERO AL!AN$OR, %&'EN(E ABA SAN(OS, JOSE RO)O, in *+,ir -apa-i*i,s as appoin*,d and A-*in. !,/0,rs o1 *+, 'EN(RAL
BOAR O2 ASSESS!EN( A##EALS3 (ERES&(A 4. NOBLEJAS, RO!"LO !. EL ROSAR&O, RA"L '. 2LORES, in *+,ir -apa-i*i,s
as appoin*,d and A-*in. !,/0,rs o1 *+, BOAR O2 ASSESS!EN( A##EALS o1 !anila3 and N&'OLAS 'A(&&L in +is -apa-i*5 as
'i*5 Ass,ssor o1 !anila, respondents.
This is a petition for review on certiorari to reverse the June 10, 1977 decision of the Central Board of Assessment Appeals
Cases Nos. 7!79 entitled "J.B.#. $e%es, &dmundo $e%es, et al. v. Board of Assessment Appeals of
'anila and Cit% Assessor of 'anila" which affirmed the 'arch 9, 197( decision of the Board of Ta)
Assessment Appeals
in BTAA Cases Nos. (1*, (1*!A!J, (1+, (1+!A, B, &, "Jose $e%es, et al. v. Cit%
Assessor of 'anila" and "&dmundo $e%es and 'ila,ros $e%es v. Cit% Assessor of 'anila" upholdin, the
classification and assessments made -% the Cit% Assessor of 'anila.
The facts of the case are as follows.
/etitioners J.B.#. $e%es, &dmundo and 'ila,ros $e%es are owners of parcels of land situated in Tondo
and 0ta. Cru1 2istricts, Cit% of 'anila, which are leased and entirel% occupied as dwellin, sites -%
tenants. 0aid tenants were pa%in, monthl% rentals not e)ceedin, three hundred pesos 3/400.005 in Jul%,
1971. 6n Jul% 1*, 1971, the National #e,islature enacted $epu-lic Act No. (4+9 prohi-itin, for one %ear
from its effectivit%, an increase in monthl% rentals of dwellin, units or of lands on which another7s dwellin,
is located, where such rentals do not e)ceed three hundred pesos 3/400.005 a month -ut allowin, an
increase in rent -% not more than 108 thereafter. The said Act also suspended para,raph 315 of Article
1(74 of the Civil Code for two %ears from its effectivit% there-% disallowin, the e9ectment of lessees upon
the e)piration of the usual le,al period of lease. 6n 6cto-er 1, 197, /residential 2ecree No. 0
amended $.A. No. (4+9 -% ma:in, a-solute the prohi-ition to increase monthl% rentals -elow /400.00
and -% indefinitel% suspendin, the aforementioned provision of the Civil Code, e)ceptin, leases with a
definite period. Conse;uentl%, the $e%eses, petitioners herein, were precluded from raisin, the rentals
and from e9ectin, the tenants. <n 1974, respondent Cit% Assessor of 'anila re!classified and reassessed
the value of the su-9ect properties -ased on the schedule of mar:et values dul% reviewed -% the
0ecretar% of =inance. The revision, as e)pected, entailed an increase in the correspondin, ta) rates
promptin, petitioners to file a 'emorandum of 2isa,reement with the Board of Ta) Assessment Appeals.
The% averred that the reassessments made were "e)cessive, unwarranted, ine;uita-le, confiscator% and
unconstitutional" considerin, that the ta)es imposed upon them ,reatl% e)ceeded the annual income
derived from their properties. The% ar,ued that the income approach should have -een used in
determinin, the land values instead of the compara-le sales approach which the Cit% Assessor adopted
3Rollo, pp. 9!10!A5. The Board of Ta) Assessment Appeals, however, considered the assessments valid,
holdin, thus.
>?&$&=6$&, and considerin, that the appellants have failed to su-mit concrete
evidence which could overcome the presumptive re,ularit% of the classification and
assessments appear to -e in accordance with the -ase schedule of mar:et values and of
the -ase schedule of -uildin, unit values, as approved -% the 0ecretar% of =inance, the
cases should -e, as the% are here-%, upheld.
06 6$2&$&2. 32ecision of the Board of Ta) Assessment Appeals, Rollo, p. 5.
The $e%eses appealed to the Central Board of Assessment Appeals. The% su-mitted, amon, others, the
summar% of the %earl% rentals to show the income derived from the properties. $espondent Cit% Assessor,
on the other hand, su-mitted three 345 deeds of sale showin, the different mar:et values of the real
propert% situated in the same vicinit% where the su-9ect properties of petitioners are located. To -etter
appreciate the locational and ph%sical features of the land, the Board of ?earin, Commissioners
conducted an ocular inspection with the presence of two representatives of the Cit% Assessor prior to the
healin, of the case. Neither the owners nor their authori1ed representatives were present durin, the said
ocular inspection despite proper notices served them. <t was found that certain parcels of land were -elow
street level and were affected -% the tides 3Rollo, pp. *!+5.
6n June 10, 1977, the Central Board of Assessment Appeals rendered its decision, the dispositive portion
of which reads.
>?&$&=6$&, the appealed decision insofar as the valuation and assessment of the lots
covered -% Ta) 2eclaration Nos. 3+@4+5 /2!+@*7, 3+@495, 3+@415 /2!+@** and /2!4@*
is affirmed.
=or the lots covered -% Ta) 2eclaration Nos. 31*405 /2!1*4, /2!1+09, 1*( and 315 /2!
((, the appealed 2ecision is modified -% allowin, a 08 reduction in their respective
mar:et values and appl%in, therein the assessment level of 408 to arrive at the
correspondin, assessed value.
06 6$2&$&2. 32ecision of the Central Board of Assessment Appeals, Rollo, p. 75
/etitioner7s su-se;uent motion for reconsideration was denied, hence, this petition.
The $e%eses assi,ned the followin, error.
T?& ?6N6$AB#& B6A$2 &$$&2 <N A26/T<NA T?& "C6'/A$AB#& 0A#&0
A//$6AC?" '&T?62 <N =<B<NA T?& A00&00&2 CA#D& 6= A//&##ANT07
The petition is impressed with merit.
The cru) of the controvers% is in the method used in ta) assessment of the properties in ;uestion.
/etitioners maintain that the "<ncome Approach" method would have -een more realistic for in
disre,ardin, the effect of the restrictions imposed -% /.2. 0 on the mar:et value of the properties
affected, respondent Assessor of the Cit% of 'anila unlawfull% and un9ustifia-l% set increased new
assessed values at levels so hi,h and successive that the resultin, annual real estate ta)es would
admittedl% e)ceed the sum total of the %earl% rentals paid or pa%a-le -% the dweller tenants under /.2. 0.
?ence, petitioners protested a,ainst the levels of the values assi,ned to their properties as revised and
increased on the ,round that the% were ar-itraril% e)cessive, unwarranted, ine;uita-le, confiscator% and
unconstitutional 3Rollo, p. 10!A5.
6n the other hand, while respondent Board of Ta) Assessment Appeals admits in its decision that the
income approach is used in determinin, land values in some vicinities, it maintains that when income is
affected -% some sort of price control, the same is re9ected in the consideration and stud% of land values
as in the case of properties affected -% the $ent Control #aw for the% do not pro9ect the true mar:et value
in the open mar:et 3Rollo, p. 15. Thus, respondents opted instead for the "Compara-le 0ales Approach"
on the ,round that the value estimate of the properties predicated upon prices paid in actual, mar:et
transactions would -e a uniform and a more credi-le standards to use especiall% in case of mass
appraisal of properties 3Ibid.5. 6therwise stated, pu-lic respondents would have this Court completel%
i,nore the effects of the restrictions of /.2. No. 0 on the mar:et value of properties within its covera,e. <n
an% event, it is un;uestiona-le that -oth the "Compara-le 0ales Approach" and the "<ncome Approach"
are ,enerall% accepta-le methods of appraisal for ta)ation purposes 3The #aw on Transfer and Business
Ta)ation -% ?ector 0. 2e #eon, 19@@ &dition5. ?owever, it is conceded that the propriet% of one as a,ainst
the other would of course depend on several factors. ?ence, as earl% as 194 in the case of Arm% E Nav%
Clu-, 'anila v. >enceslao Trinidad, A.$. No. 1997 3** /hil. 4@45, it has -een stressed that the
assessors, in findin, the value of the propert%, have to consider all the circumstances and elements of
value and must e)ercise a prudent discretion in reachin, conclusions.
Dnder Art. C<<<, 0ec. 17 315 of the 1974 Constitution, then enforced, the rule of ta)ation must not onl% -e
uniform, -ut must also -e e;uita-le and pro,ressive.
Dniformit% has -een defined as that principle -% which all ta)a-le articles or :inds of propert% of the same
class shall -e ta)ed at the same rate 3Churchill v. Concepcion, 4* /hil. 9(9 F191(G5.
Nota-l% in the 194+ Constitution, there was no mention of the e;uita-le or pro,ressive aspects of ta)ation
re;uired in the 1974 Charter 3=ernando "The Constitution of the /hilippines", p. 1, 0econd &dition5.
Thus, the need to e)amine closel% and determine the specific mandate of the Constitution.
Ta)ation is said to -e e;uita-le when its -urden falls on those -etter a-le to pa%. Ta)ation is pro,ressive
when its rate ,oes up dependin, on the resources of the person affected 3Ibid.5.
The power to ta) "is an attri-ute of soverei,nt%". <n fact, it is the stron,est of all the powers of
,overnment. But for all its plenitude the power to ta) is not unconfined as there are restrictions. Adversel%
effectin, as it does propert% ri,hts, -oth the due process and e;ual protection clauses of the Constitution
ma% properl% -e invo:ed to invalidate in appropriate cases a revenue measure. <f it were otherwise, there
would -e truth to the 1904 dictum of Chief Justice 'arshall that "the power to ta) involves the power to
destro%." The we- or unrealit% spun from 'arshall7s famous dictum was -rushed awa% -% one stro:e of
'r. Justice ?olmes pen, thus. "The power to ta) is not the power to destro% while this Court sits. 0o it is in
the /hilippines " 30ison, Jr. v. Ancheta, 140 0C$A (++ F19@*GH 6-illos, Jr. v. Commissioner of <nternal
$evenue, 149 0C$A *49 F19@+G5.
<n the same vein, the due process clause ma% -e invo:ed where a ta)in, statute is so ar-itrar% that it
finds no support in the Constitution. An o-vious e)ample is where it can -e shown to amount to
confiscation of propert%. That would -e a clear a-use of power 30ison v. Ancheta, supra5.
The ta)in, power has the authorit% to ma:e a reasona-le and natural classification for purposes of
ta)ation -ut the ,overnment7s act must not -e prompted -% a spirit of hostilit%, or at the ver% least
discrimination that finds no support in reason. <t suffices then that the laws operate e;uall% and uniforml%
on all persons under similar circumstances or that all persons must -e treated in the same manner, the
conditions not -ein, different -oth in the privile,es conferred and the lia-ilities imposed 3Ibid., p. ((5.
=inall% under the $eal /ropert% Ta) Code 3/.2. *(* as amended5, it is declared that the first =undamental
/rinciple to ,uide the appraisal and assessment of real propert% for ta)ation purposes is that the propert%
must -e "appraised at its current and fair mar:et value."
B% no stren,th of the ima,ination can the mar:et value of properties covered -% /.2. No. 0 -e e;uated
with the mar:et value of properties not so covered. The former has naturall% a much lesser mar:et value
in view of the rental restrictions.
<ronicall%, in the case at -ar, not even the factors determinant of the assessed value of su-9ect properties
under the "compara-le sales approach" were presented -% the pu-lic respondents, namel%. 315 that the
sale must represent a bonafide arm7s len,th transaction -etween a willin, seller and a willin, -u%er and
35 the propert% must -e compara-le propert% 3Rollo, p. 75. Nothin, can 9ustif% or support their view as it
is of 9udicial notice that for properties covered -% /.2. 0 especiall% durin, the time in ;uestion, there
were hardl% an% willin, -u%ers. As a ,eneral rule, there were no ta:ers so that there can -e no reasona-le
-asis for the conclusion that these properties were compara-le with other residential properties not
-urdened -% /.2. 0. Neither can the ,iven circumstances -e nonchalantl% dismissed -% pu-lic
respondents as imposed under distressed conditions clearl% impl%in, that the same were merel%
temporar% in character. At this point in time, the falsit% of such premises cannot -e more convincin,l%
demonstrated -% the fact that the law has e)isted for around twent% 305 %ears with no end to it in si,ht.
Ceril%, ta)es are the life-lood of the ,overnment and so should -e collected without unnecessar%
hindrance. ?owever, such collection should -e made in accordance with law as an% ar-itrariness will
ne,ate the ver% reason for ,overnment itself <t is therefore necessar% to reconcile the apparentl%
conflictin, interests of the authorities and the ta)pa%ers so that the real purpose of ta)ations, which is the
promotion of the common ,ood, ma% -e achieved 3Commissioner of <nternal $evenue v. Al,ue <nc., et al.,
1+@ 0C$A 9 F19@@G5. Conse;uentl%, it stands to reason that petitioners who are -urdened -% the
,overnment -% its $ental =ree1in, #aws 3then $.A. No. (4+9 and /.2. 05 under the principle of social
9ustice should not now -e penali1ed -% the same ,overnment -% the imposition of e)cessive ta)es
petitioners can ill afford and eventuall% result in the forfeiture of their properties.
B% the pu-lic respondents7 own computation the assessment -% income approach would amount to onl%
/10.00 per s;. meter at the time in ;uestion.
/$&'<0&0 C6N0<2&$&2, 3a5 the petition is A$ANT&2H 3-5 the assailed decisions of pu-lic
respondents are $&C&$0&2 and 0&T A0<2&H and 3e5 the respondent Board of Assessment Appeals of
'anila and the Cit% Assessor of 'anila are ordered to ma:e a new assessment -% the income approach
method to ,uarantee a fairer and more realistic -asis of computation 3Rollo, p. 715.
06 6$2&$&2.