Title
Army and Navy Club, Manila vs. Trinidad
Case
G.R. No. 19297
Decision Date
Jan 26, 1923
Land sold in 1908 at P4.04/sq.m., tax-exempt for 10 years. By 1920, assessed at P20/sq.m. Supreme Court upheld higher valuation, emphasizing fair market value for taxation.
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Case Digest (G.R. No. 19297)

Facts:

The case revolves around the assessment of land owned by the Army and Navy Club of Manila. The City of Manila sold the land to the club at P4.04 per square meter in 1908, with a clause exempting the property from taxation for ten years. By 1920, the city assessor and collector valued the land at P20 per square meter for taxation purposes. The club paid the tax under protest and subsequently filed a complaint challenging the assessment. The trial court dismissed the complaint, leading to this appeal.

Issue:

The central issue is whether the land should be assessed at P4.04 per square meter (the purchase price) or P20 per square meter (the assessor's valuation). The case is considered a test case for determining the fair market value of real estate for taxation purposes. The appellant argues that the land has no sales value other than P4.04 per square meter due to the repurchase clause and restrictions on its use. The appellee contends that the value of the land cannot remain stationary over fifty years.

Ruling:

The Supreme Court affirmed the judgment of the trial court. It agreed with the trial judge's decision that the land should be assessed at P20 per square meter. The court found that the appellee's position was more reasonable, considering that surrounding properties paid much more in taxes. The court also noted that the City of Manila likely intended the ten-year tax exemption as the limit of municipal consideration and that assessors must exercise prudent discretion in property valuation.

Ratio:

The court held that the fair market value of real estate for taxation purposes should be based on its cash value, considering all uses to which the property is adapted. The court rejected the appellant's argument that the land's value should remain at the purchase price throughout fifty years. It emphasized that assessors must consider all circumstances and elements of value and exercise prudent discretion. The court also noted that judicial intervention in assessments is not advisable where the judicial mind is left in doubt.


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