Title
Cagayan Robina Sugar Milling Co. vs. Court of Appeals
Case
G.R. No. 122451
Decision Date
Oct 12, 2000
Cagayan Robina Sugar Milling Co. contested excessive machinery tax assessment; Supreme Court upheld valuation based on APT floor bid price and dismissed appeal as time-barred.
excessive assessment
sugar mill machineries
dismissal of case
A

Case Summary (G.R. No. 122451)

Factual Background: Purchase, Initial Assessment, and Local Board Valuation

The petitioner acquired CASUCO assets in a privatization sale conducted by APT in 1990. The sugar mill machineries located at the CASUCO millsite in Sto. Domingo, Piat, Cagayan were covered by tax identification under Tax Declaration No. 5355. The market value of the machineries was pegged at P391,623,520.00, while the assessed value was set at P313,298,820.00.

On October 18, 1990, the Provincial Assessor of Cagayan issued a Notice of Assessment of Real Property to the petitioner covering the machineries installed at the millsite (Lots 89-F-1 and 89-F-2 of Psd-2-01-005548). The provincial assessor’s notice used the market value of P391,623,520.00 and the assessed value of P313,298,820.00.

On February 8, 1991, the petitioner appealed the assessment to the LBAA, arguing that the assessment was excessive, erroneous, and unjust. On September 10, 1991, it also requested reconsideration from the provincial assessor, insisting that valuation should not rest solely on the APT selling price, but should instead consider the property’s operating conditions and valuation factors such as goodwill and future business potential.

On April 1, 1992, the LBAA resolved that the basis of market value for assessment should be the APT floor bid price of P355,000,000.00. The LBAA then deducted the value of the land (P4,721,130.00) and the total market value of the buildings (P17,605,340.00) to derive a market value of the machineries at P332,673,530.00. It further deducted the value of machineries not subject to real property tax, resulting in a market value of P260,327,060.00 for assessment purposes. Following the order to amend the assessment, Declaration No. 5514 was issued, putting the assessed value of the petitioner’s machineries at P208,261,650.00.

Procedural History: Appeals, Dismissal for Lateness, and Certiorari

After the LBAA resolution, the petitioner prepared an “Appeal of Assessment” dated April 18, 1992, addressed to the LBAA, but it did not file the appeal with the CBAA at that time. The petitioner later filed an identical appeal with the CBAA only on November 25, 1992.

On January 2, 1994, the LBAA and the provincial assessor moved to dismiss the petitioner’s appeal dated November 25, 1992, on the ground that it was filed beyond the thirty-day reglementary period. On May 17, 1994, the CBAA dismissed the appeal as time-barred. The petitioner’s motion for reconsideration was denied by the CBAA on June 30, 1994.

On October 3, 1994, the petitioner filed with this Court a special civil action for certiorari in G.R. No. 116795, alleging grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the CBAA. On July 3, 1995, the Court referred the case to the Court of Appeals under Revised Administrative Circular No. 1-95. On September 26, 1995, the Court of Appeals denied the petition, dismissed it with costs against the petitioner, and affirmed the ruling that the CBAA dismissal stood.

Issues and the Parties’ Contentions

The petitioner assigned errors to the Court of Appeals, principally asserting two points: first, that the LBAA and CBAA fixed the market value and assessed value of the machineries in a manner inconsistent with Sections 5 and 28 of the Real Property Tax Code (P.D. No. 464); and second, that the CBAA acted unlawfully when it dismissed the petitioner’s appeal to the CBAA for having been filed outside the reglementary period.

On the valuation issue, the petitioner contended that the LBAA deviated from the appraisal rules for machineries under P.D. No. 464. It argued that the LBAA erred when it derived market value merely by deducting the value of land, buildings, and non-taxable machineries from the APT floor bid price of P355,000,000.00. It further claimed that APT’s reliance on the Sales Analysis or Market Data Approach was flawed in this case because the method involved comparison to similar properties sold in similar markets, while, according to the petitioner, no such comparison to similar property had occurred and the comparison had instead been made to a bid price. Petitioner insisted that other circumstances of value—including goodwill and future business potential—were not considered. It invoked Section 28 of P.D. No. 464, particularly the formula for computing current market value of machineries: Remaining Economic Life x Replacement Cost = Current Market Value.

On the timeliness issue, the petitioner argued that the provincial assessor’s assessment was void ab initio for non-compliance with Section 28, and therefore the prescriptive period for appeal should not apply. It relied on an earlier CBAA ruling in Basey Wood Industries, Inc. v. Board of Assessment Appeals (CBAA Case No. 100) for the proposition that when an assessment is not in accordance with law, the prescriptive period is suspended.

The Court’s Treatment of the Governing Law on Valuation

The Court noted that the assessed and collected taxes were for the year 1990, so P.D. No. 464 governed. Accordingly, the petitioner’s references to the Local Government Code of 1991 (R.A. No. 7160) did not control.

On the core valuation dispute, the Court acknowledged that Section 28 provides a formula for appraising machinery. However, it held that Section 28 must be read together with Section 3(n) of P.D. No. 464, which defines “market value.” The Court concluded that the law did not preclude administrative bodies from adopting different approaches to value determination, including approaches that could use the APT floor bid price as market data.

The Court further recognized that valuation based on a floor bid price could fall within the Sales Analysis Approach or Market Data Approach, where market data may be sourced from offers of sales or bids of real property. It therefore rejected the petitioner’s position that using the APT floor bid price was legally bereft of basis.

Presumptions in Tax Assessments and the Burden of Proof

The Court emphasized the presumption that tax assessments by tax examiners are made in good faith and are presumed correct. It held that the petitioner failed to demonstrate that the LBAA and CBAA’s use of the APT floor bid price—pursuant to the statutory concept of market value—was incorrect and done in bad faith.

The Court also stressed the practical limits of judicial correction in valuation matters. It declared that there was no rigid rule for valuation, given that property values depend on multiple circumstances that are not susceptible to complete prediction in a single formula. It further held that petitioner failed to show that its proposed method would have produced a significantly lower current market value.

In addition, the Court applied the principle that a party challenging an appraiser’s finding of value must not only prove that the appraised value was erroneous but must also present what the proper value should be. Finding that the petitioner did not satisfy these evidentiary burdens, the Court sustained the administrative findings.

Deference to Administrative Fact-Finding and Finality When Affirmed on Appeal

The Court held that factual findings of administrative agencies possessing expertise are generally binding and conclusive on the Court. It reiterated that the Court would not interfere with the intelligent exercise of judgment by persons trained in property appraisal. It also invoked the rule that when the judicial mind remains in doubt, the assessment should remain undisturbed.

Applying these principles, the Court found no sufficient reason to depart from the local and administrative valuation determinations that the CBAA had upheld and that the Court of Appeals had affirmed.

Petitioner’s Reliance on a Later Bureau of Local Government Finance Indorsement

The Court considered the petitioner’s reliance on a 1st Indorsement Letter from the Deputy Executive Director of the Bureau of Local Government Finance dated May 17, 1996, which directed recomputation. The Court held that the letter referred only to the protested assessment made by the provincial assessor and did not address the LBAA’s re-assessment of the machineries. The letter did not find the LBAA’s reassessment erroneous, and that re-assessment was later upheld by the CBAA and the Court of Appeals. The Court therefore declined to treat the letter as undermining the administrative conclusions already affirmed through the proper appellate processes.

Timeliness of the Appeal to the CBAA: Mandatory and Jurisdictional Period

On the timeliness issue, the Court rejected the petitioner’s reliance on the alleged voidness of the provincial assessor’s assessment. It clarified that the time-bar being evaluated was not the petitioner’s appeal from the provincial assessor to the LBAA, but the petitioner’s appeal from the LBAA resolution to the CBAA.

The Court of Appeals had found that petitioner received, on April 18, 1992, the LBAA resolution dated April 1, 1992, denying petitioner’s appeal. Thus, petitioner had until May 18, 1992 to perfect the appeal to the CBAA. The petitioner, however, filed the appeal with the CBAA only on November 25, 1992, which was far beyond the reglementary period.

The Court held that the applicable provision on the period to appeal to the CBAA was Section 34 of P.D. No. 464, not Section 30. Under Section 34, where the owner or assessor was not satisfied with the decision of the LBAA, the owner or administrator had thirty days after receipt of the LBAA decision to appeal to the CBAA by filing an oath-based appeal with the secretary of the proper provincial or city board, using the prescribed form and stating grounds, reason

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