Clarification on the Authority of the Assessors to Reconsider the Assessment/Reassessment of Real Properties Previously Made in Relation to the Decision of the Supreme Court in the Callanta Case

January 7, 2008 BLGF MEMORANDUM CIRCULAR NO. 004-08 TO : All Regional Directors for Local Government Finance; Provincial, City and Municipal Assessors and Others Concerned SUBJECT : Clarification on the Authority of the Assessors to Reconsider the Assessment/Reassessment of Real Properties Previously Made in Relation to the Decision of the Supreme Court in the CallantaCase In view of the En Banc Decision of the Supreme Court in G.R. No. 115253-74 promulgated on January 30, 1998, entitled Antonio P. Callanta, et al. vs. Office of the Ombudsman and the City Government of Cebu, the Bureau of Local Government Finance (BLGF) has received numerous observations and complaints from local assessors alleging that, erroneous assessments/reassessments arising from typographical errors ( i.e., area, actual use, correct classification, market/assessed values, assessment levels etc.) resulting to an increased/decreased market/assessed value can no longer be corrected/rectified, to the detriment of the government. Hence, the said decision may unduly restrict the duty of the assessor to reassess or reconsider the assessments already made. In this connection, and for the information and guidance of all concerned, hereunder is the clarification pertaining to reassessment of real properties in line with: (a) The Callanta Case; and (b) Section 221 of R.A. No. 7160 of the Local Government Code of 1991, viz.: (A) THE CALLANTA CASE: Excerpts of the Decision in the aforesaid case, read as follows: "In this case, based on a list of properties submitted by petitioners comparing their (1) previous assessed values ('old values'), (2) assessed values under the general revision ('revised values'), and (3) the unauthorized adjusted values ('revised values'), the Court observes that the old values of some properties were increased by more than 1,000% (or 10 times) in the general revision, but were reduced to only about half under the unauthorized adjustments. The large discrepancies seem to indicate a tendency to overvalue initially and thereafter to reduce the increases upon 'request' of the property owner affected. To avoid this dubious suspicious, bribable and compromising situation, the law itself specifically provided an appellate body the LBAA before which property owners may seek relief. Neither habit nor good faith can amend this appellate procedure provided under the law. IEcaHS "Indeed, the long standing practice adverted to by petitioners does not justify a continuance of their acts. We cannot sanction such compromising situations. Henceforth, whenever the local assessor sends a notice to the owner or lawful possessor of real property of its revised assessed value, the former shall thereafter no longer have any jurisdiction to entertain any request for a review or readjustments. The appropriate forum where the aggrieved party may bring his appeal is the LBAA, as provided by law." (Emphasis ours). "xxx xxx xxx. "In the same vein, we have said "the assessment is deemed made when the notice to this effect is released, mailed or sent to the taxpayer for the purpose of giving effects to said assessment." "With respect to real property taxes, the obligation to pay arises on the first day of January of the year following the assessment. Corollarily on the same date the right of the government to collect said taxes also arises. And where the taxpayer fails to question such assessment within the reglementary period provided by law, the local government's right becomes absolute upon the expiration of such period with respect to that taxpayer's property." Corollary thereto, the Supreme Court further held as follows: ". . . Sec. 22 (Now Sec. 220 of the LGC), 1 provides three (3) occasions when assessments of real properties may be made by the local assessor. In the case at bar, the second instance gave rise to the revised assessed values for which the property owners subsequently sought reconsideration. Sec. 30 of the same Code is equally clear that the aggrieved owners should have brought their appeals before the LBAA. Unfortunately, despite the advice to this effect contained in their respective notices of assessment, the owners chose to bring their request for a review/readjustment before the city assessor, a remedy not sanctioned by the law. To allow this procedure would indeed invite corruption in the system of appraisal and assessment. It conveniently courts a graft-prone situation where values of real property may be initially set unreasonably high, and then subsequently reduced upon the request of a property owner. In the latter instance, allusions of a possible covert, illicit trade-off cannot be avoided, and in fact can conveniently take place. Such occasion for mischief must be prevented and exercised from our system." (Emphasis supplied) aCTADI From the foregoing, noteworthy are the following instances observed by the Court: 1. Despite of the valid assessment/reassessment made as a result of the general revision conducted, unauthorized reduction of the real property values (market and assessed values) was made. 2. Notices of assessment were sent and duly received by the property owners. Thus, it is clear in the Callanta Case that once a Notice of Assessment has already been issued and sent to a property owner, assessment/reassessment is already beyond the authority of the local assessor to correct or rectify, the same being within the jurisdiction of the LBAA. As soon as the notice of assessment is served and received by the taxpayer, an obligation to pay the amount assessed and demanded arises. (CIR vs. Island Garment Manufacturing Corp. 153 SCRA 665). What the Supreme Court abhors and therefore proscribes is the review/readjustment by the assessor after the latter has already issued a notice of assessment. The required Notice of Assessment prepared by the local assessors to the property owners concerned is embodied under Section 223 of the Local Government Code (LGC) while Section 226 of the said Code provides for the remedies an aggrieved property owner may avail of upon receipt of the notice. Sections 223 and 226 are quoted hereunder: Section 223 of R.A. No. 7160: "SEC. 223. Notification of New or Revised Assessment. When real property is assessed for the first time or when an existing assessment is increased or decreased, the provincial, city or municipal assessor shall within thirty (30) days give written notice of such new or revised assessment to the person in whose name the property is declared. The notice may be delivered personally or by registered mail or through the assistance of the punong barangay to the last known address of the person to be served." Section 226 of R.A. No. 7160: TacSAE "SEC. 226. Local Board of Assessment Appeals. Any owner or person having legal interest in the property who is not satisfied with the action of the provincial, city or municipal assessor in the assessment of his property may, within sixty (60) days from the date of receipt of the written notice of assessment, appeal to the Board of Assessment Appeals of the province or city by filing a petition under oath in the form prescribed for the purpose, together with copies of the tax declarations and such affidavits or documents submitted in support of the appeal." Relatedly, this Bureau under its letter dated July 29, 2003, copy attached, ruled on a similar subject, the dispositive portions of which are quoted below: "Similarly, therefore, this Bureau is of the opinion that considering that Notices of Assessment had already been sent out by that Office and received by the property owners concerned, and considering further the above pronouncements of the Supreme Court, the herein request for rectification of the erroneous assessments on the subject real properties previously made by that Office, during the general revision of real property assessments conducted in CY 2001, would already be considered as illegal notwithstanding the abovequoted provisions of Sections 220 and 221 of the Code." In view hereof, this Bureau rules as follows: 1. If the erroneous assessment/reassessment was discovered by the property owner, the proper venue to correct the same is the LBAA; and 2. If the said erroneous assessment/reassessment was discovered by the assessor's office concerned, the correction thereof should be made during the next general revision. (B) SECTION 221 OF R.A. NO. 7160: On the other hand, the Code (LGC) under Section 221 thereof, likewise specifically provided for instances wherein local assessors are authorized to reassess real properties, viz.: CAaSED "Section 221. Date of Effectivity of Assessment or Reassessment. All assessments or re-assessments made after the first (1st) day of January of any year shall take effect on the first (1st) day of January of the succeeding year: Provided, however, That the reassessment of real property due to its partial or total destruction, or to a major change in its actual use, or to any great sudden inflation or deflation of real property values, or to the gross illegality of the assessment when made or to any other abnormal cause, shall be made within ninety (90) days from the date any such cause or causes occurred, and shall take effect at the beginning of the quarter next following the reassessment." (Emphasis supplied) Evidently, the LGC enumerates the following instances wherein reassessments of real property resulting either in an increase or decrease in market/assessed value is legally allowed or tenable, to wit: 1. Partial or total destruction of the real property. 2. Major change in actual use. 3. Any great sudden inflation or deflation of real property values. 4. Gross illegality of the assessment when made. 5. Any other abnormal cause. Under the foregoing instances, the concerned Assessor, pursuant to Section 472 (b) (1) of the LGC, 2 can administratively correct and adjust the assessment previously made. Hence, this Bureau believes that reassessment of real properties in the above-cited instances are allowed by law, provided that once the notice of reassessment has already been sent to property owners, assessment/reassessment is already beyond the authority of the local assessor to correct or rectify, but is already within the ambit of the LBAA as very well enunciated in the Callanta Case. The Regional Directors and Provincial Assessors are hereby instructed to disseminate the contents of this Circular, including the attachments, to the Municipal Assessors within their respective jurisdictions. caIEAD (SGD.) MA. PRESENTACION R. MONTESA Executive Director Footnotes 1. SEC. 220. Valuation of Real Property. In cases where . . .; (b) there is an on going general revision of property classification and assessment; . . ., the provincial, city or municipal assessor or his duly authorized deputy shall, . . ., make classification, appraisal and assessment of the real property listed and described irrespective of any previous assessment or taxpayer's valuation thereon: . . . . 2. SEC. 472 (b) (1) Ensure that all laws and policies governing the appraisal and assessment of real properties for taxation purposes are properly executed.