G.R. No. L-49839-46 - Reyes vs. Almanzor

Petitioners Jose B.L. Reyes, Edmundo and Milagros Reyes own parcels of land in the Tondo and Sta. Cruz districts of Manila, leased as dwelling sites to tenants paying monthly rents not exceeding ₱300 as of July 1971.
Due to Republic Act No. 6359 (July 14, 1971) and its amendment by Presidential Decree No. 20 (October 12, 1972), petitioners were barred from raising rents and from ejecting lessees, indefinitely suspending Civil Code provisions on lease termination.

In 1973 the Manila City Assessor reclassified and reassessed petitioners’ lands using the comparable‐sales approach based on a market‐value schedule approved by the Secretary of Finance, resulting in substantially increased tax liabilities.
Petitioners filed Memoranda of Disagreement with the Board of Tax Assessment Appeals (BTAA), contending that the income approach—reflecting actual rental income—should govern valuation; the BTAA upheld the Assessor’s classification and assessments for lack of contrary evidence.

On appeal to the Central Board of Assessment Appeals (CBAA), petitioners submitted rental‐income summaries, while the Assessor presented deeds of sale of nearby properties. An ocular inspection disclosed certain lots were below street level and tide-affected; petitioners’ representatives did not attend despite notice.
On June 10, 1977, the CBAA affirmed the assessments on most lots and granted a 20% value reduction on others, applying a 30% assessment level; a motion for reconsideration was denied.

Petitioners invoked Rule 45, arguing that the CBAA and BTAA erred in using the comparable‐sales approach and ignored the rent-control restrictions that depressed marketability and rental income.
They maintained the assessments were excessive, inequitable, confiscatory and violative of due process and equal protection, as the resulting taxes exceeded their actual income from the properties.

Whether the comparable-sales approach, disregarding rent-control restrictions, correctly determines the fair market value of properties burdened by Presidential Decree No. 20.
Whether the income approach is the appropriate method for real property tax assessment when statutory rent controls significantly depress rental income and marketability.