Case Summary (G.R. No. L-49839-46)
Petitioner and Respondent Contentions
• Petitioners argued that by disregarding the rental restrictions imposed by PD 20, the City Assessor’s “Comparable Sales Approach” produced confiscatory assessments exceeding annual rental income, violating due process and equal protection. They urged use of the “Income Approach” to reflect true market value under rent control.
• Respondents maintained that sales data yielded uniform, credible mass‐appraisal standards, and that controlled incomes distort open‐market values, rendering the Income Approach unreliable for properties under price control.
Key Dates
• July 14, 1971: RA 6359 enacted, freezing rents ≤ ₱300 for one year and suspending forcible ejectment for two years.
• October 12, 1972: PD 20 made the rent freeze indefinite and suspended eviction rights, except for fixed‐term leases.
• 1973: Reclassification and reassessment by City Assessor based on approved market‐value schedules.
• March 29, 1976: BTAA decision upholding assessments.
• June 10, 1977: Central Board decision affirming most values, granting limited reductions.
• April 26, 1991: Supreme Court en banc judgment under the 1987 Constitution.
Applicable Law
• 1987 Constitution, Art. 6, Sec. 28 (taxation uniformity, equity, progressivity); Art. III, Secs. 1 and 11 (due process, equal protection).
• Real Property Tax Code (PD 464, as amended): property must be appraised at “current and fair market value.”
• Rent‐control statutes: RA 6359; PD 20.
Procedural History
- City Assessor reclassified and assessed properties using Comparable Sales.
- BTAA affirmed the assessments for lack of contrary evidence.
- Central Board partly affirmed and partly reduced values by 20%.
- Petition for certiorari filed before the Supreme Court to challenge methodology and alleged confiscation.
Issue
Whether the Comparable Sales Approach, applied without regard to rent‐control restrictions, violated constitutional mandates of due process, equal protection, equity, and the Real Property Tax Code’s requirement to appraise property at its true market value.
Legal Analysis
• Both Income and Comparable Sales Approaches are valid appraisal methods; choice depends on factual context.
• Under the 1987 Constitution, taxation must be uniform, equitable (burden‐ability), and progressive (rate scales aligned with resources).
• Due process prohibits arbitrary or confiscatory taxation; equal protection bars discriminatory assessments lacking reasonable justification.
• Properties subject to indefinite rent control possess intrinsically lower market values; comparable‐sales drawn from non‐controlled transactions fail to reflect true value.
• The City Assessor did not establish that the selected sales were bona fide, arm’s-length trans
Case Syllabus (G.R. No. L-49839-46)
Facts
- Petitioners J.B.L. Reyes, Edmundo Reyes, and Milagros Reyes owned parcels of land in the Tondo and Sta. Cruz districts of Manila, leased and occupied as dwelling sites by tenants.
- Tenants paid monthly rentals not exceeding ₱300.00 as of July 1971.
- Republic Act No. 6359 (July 14, 1971) prohibited increases in rentals for one year where monthly rent did not exceed ₱300.00 and suspended ejectment rights under Civil Code Art. 1673 for two years.
- Presidential Decree No. 20 (October 12, 1972) made the rent‐freeze prohibition absolute and indefinitely suspended ejectment rights, except for definite‐period leases.
- In 1973, the City Assessor of Manila reclassified and reassessed petitioners’ properties using a market‐value schedule approved by the Secretary of Finance, resulting in increased tax liabilities.
Procedural History
- Petitioners filed Memoranda of Disagreement with the Board of Tax Assessment Appeals (BTAA), arguing the assessments were excessive, inequitable, and confiscatory, and that the income approach should have been used instead of comparable sales.
- On March 29, 1976, the BTAA upheld the City Assessor’s classification and assessments, citing the presumptive regularity of the approved market‐value schedules.
- Petitioners appealed to the Central Board of Assessment Appeals (CBAA). An ocular inspection revealed certain parcels were below street level and affected by tides.
- On June 10, 1977, the CBAA affirmed part of the assessments and granted a 20% reduction on several lots, applying a 30% assessment level.
- Petitioners’ motion for reconsideration was denied, prompting their petition for certiorari before the Supreme Court.
Issue
- Wh