Sesbreño v. Central Board of Assessment Appeals
REITERATIONFacts
The Antecedents: Petitioner Raul H. Sesbreño purchased two parcels of land with a residential house of strong materials in Cebu City on April 3, 1980. He declared the property as a residential house with a floor area of 60 square meters, assessed at P36,900.00. During a tax-mapping operation in February 1989, the City Assessor discovered the property was a four-storey building with a fifth-storey roof deck, totaling 500.20 square meters of Type II-A materials. A new tax declaration was issued effective 1989, assessing the building at P374,900.00, applying the 1981-1984 Schedule of Market Value. Procedural History: Petitioner protested the new assessment as excessive and unconscionable before the Local Board of Assessment Appeals (LBAA) of Cebu City, which dismissed his appeal. He elevated the case to the Central Board of Assessment Appeals (CBAA). The CBAA modified its decision, directing the City Assessor to issue new tax declarations for back taxes from 1981 to 1989 based on different schedules of values and assessments. Petitioner filed a motion for reconsideration, leading to a joint manifestation and compromise agreement. The CBAA issued a Resolution modifying its earlier decision based on the agreement, particularly regarding the revised valuation and classification of the property. The Petition: Petitioner filed a petition for certiorari with the Supreme Court, assailing the CBAA Resolution, arguing that the CBAA erred in resolving the issue of back taxes, disregarding jurisprudence, misinterpreting PD 464, and failing to apply Section 23 of PD 464.
Issue(s)
Whether the Central Board of Assessment Appeals (CBAA) gravely erred in resolving the matter of back taxes which was never raised in issue before the Local Board of Assessment Appeals (LBAA) or the CBAA. Whether the CBAA gravely erred in disregarding the jurisprudence in Reyes vs. Almanzor. Whether the CBAA gravely erred in mis-interpreting or mis-applying Section 25 of Presidential Decree No. 464 (PD 464). Whether the CBAA gravely erred in disregarding or failing or refusing to apply Section 23 of PD 464. Whether the CBAA erred in not strictly applying par. n, Section 3, PD 464 defining "market value" as basis for computing the "assessed value". Whether the CBAA's assessment is discriminatory, unjust, confiscatory and unconstitutional. Whether PD 20, as invoked in Reyes vs. Almanzor, may be applied to the case at bar in relation with par. n, Sec. 3, PD 464.
Ruling
The petition is dismissed, and the assailed Resolution of the Central Board of Assessment Appeals is affirmed. Costs against the petitioner.
Ratio Decidendi
On the propriety of raising the issue of back taxes: The Supreme Court held that an appellate court, including appellate administrative agencies, has the inherent authority to review unassigned errors if they are closely related to an error properly raised or necessary for a just decision. The petitioner assailed the assessment as "excessive and unconscionable," which necessitated the review of factual antecedents and the application of pertinent laws, including Section 25 of PD 464 authorizing back taxes. Therefore, the CBAA did not err in considering the issue of back taxes as it was essential for a just resolution of the case. On the application of Reyes vs. Almanzor and PD 20: The petitioner's claim that the assessed building was covered by PD 20 and should have been valued using the "income approach" as per Reyes vs. Almanzor was dismissed. The documents submitted to support this claim were not presented before the lower tribunals, and the Supreme Court, not being a trier of facts, could not consider evidence submitted for the first time on appeal. On the applicability of Section 25 of PD 464: The Court ruled that Section 25 of PD 464, concerning the assessment of property subject to back taxes, applies even to undeclared excess areas of a property. Citing Lopez vs. Crow, the Court held that such excess areas are deemed declared for the first time upon discovery. To allow the petitioner to pay taxes based on a gross undervaluation would prejudice public interest and subvert the purpose of taxation. Section 24, which provides for prospective application of assessments, does not negate the imposition of back taxes under Section 25. On the application of Section 23 of PD 464: The petitioner's argument that Section 23 of PD 464, requiring certification of a general revision to the Secretary of Finance, should prevent the assessment of back taxes was rejected. The Court affirmed the CBAA's finding that the assessment was not imposed pursuant to a general revision that had not yet taken effect. The schedules of values used were approved and became effective according to established procedures, and the petitioner failed to prove any grave abuse of discretion by the CBAA. On the application of paragraph n, Section 3 of PD 464: The Court found no merit in the petitioner's contention that the assessed value should be based solely on the acquisition cost as defined by "market value" in paragraph n, Section 3 of PD 464. The Court clarified that this provision merely defines market value and does not preclude the use of other factors. Section 5 of PD 464 mandates appraisal at "current and fair market value." The acquisition cost is not the sole basis, and factors like current value of similar properties and their uses are considered. The number of floors and floor area are relevant for accurate valuation. On the constitutionality of the assessment: The imposition of back taxes did not violate the prohibition against ex post facto laws under Article III, Section 22 of the Constitution. The respondents applied PD 464, which was already in effect, and Section 25 of PD 464 is not penal in character. Therefore, it cannot be considered an ex post facto law. Combined Ratio: No specific ratio provided for this issue in the text.
Main Doctrine
The Central Board of Assessment Appeals may consider issues not raised before the Local Board of Assessment Appeals if they are closely related to an assigned error or necessary for a just decision. Back taxes can be assessed on undeclared excess areas of a property, as these are deemed declared for the first time upon discovery, and the acquisition cost is not the sole determinant of market value.