Bureau of Local Government Finance Opinion

August 6, 2002 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Hon . Feliciano R . Belmonte, Jr . City Mayor Quezon City Dear Mayor Belmonte : This refers to your letter dated June 11, 2002, requesting this Bureau's assistance relative to the alleged underassessment of selected real properties located in Quezon City covering the period from 1996 to 2001, per audit conducted by the Quezon City Auditor, as embodied under the attached "Matrix for the Evaluation of Selected Real Property Assessment with reduction in the Assessed Values" allegedly committed by the officials and employees of the Quezon City Assessor's Office, which allegedly defrauded the city government amounting to P36,468,278.45, excluding penalties. Under the attached Audit observation Memorandum to the Hon. City Mayor dated March 6, 2002, the City Auditor of Quezon City, submitted the following: 1. COA based their audits on documents secured from the City Assessor's Office, such as Field Appraisal and Assessment Sheets (FAASs) and Tax Declarations (TDs) with the corresponding revisions indicating the reduction in the Assessed Values. 2. The revision of the original TDs based on the original FAASs reflected the reduced assessed values, based on the changes made on the assessment level (AL), effectivity dates (ED), changes in actual use; alleged correction in building type, and other changes which affected the Assessed Value of the properties. 3. No assessment document such as petition/request from the taxpayers nor decision of the Local Board of Assessment Appeals (LBAA) supported the subject revision on these properties. 4. That the City Assessor concerned did not comply with the provisions of Sections 226 and 229 of the Local Government Code of 1991 (R.A. No. 7160). Meanwhile, the OIC-City Assessor of Quezon City, in her reply dated March 15, 2001, to the above COA observations, submitted the following comments: 1. That the subject underassessment/reduction was made during the incumbency of the retired City Assessor, Atty. Emmanuel M. Carbonell, and that her only participation was the preparation of tax declarations; which is ministerial in view of the final approval of the revised/corrected assessment by the then City Assessor; 2. That pursuant to the provisions of the Local Government Code of 1991, the City Assessor should ensure that all laws and policies governing the assessment and appraisal of real properties for taxation purposes are properly executed; 3. That the City Assessor, as an incident of his power, duties and functions, "may cancel, raise or lower, as the case may require, the valuation and assessment of any parcel or item of real property whenever it appears that the existing assessment, whether originally proper or not, does not conform to the requirements of the law such as that real property shall be appraised at its current fair market value, shall be classified for assessment purposes on the basis of its actual use (predominant use) and the appraisal and assessment of real property shall be equitable among others"; 4. That the City Assessor, in the exercise of his power, duties and functions, may initiate an investigation on a complaint/request or on its own "motu proprio", as may be deemed necessary; and 5. The former City Mayor of Quezon City, Ismael A. Mathay, Jr., under his Memorandum dated April 11, 1997, allegedly in response to the complaint of real property owners, directed the City Assessor to make a further study and review of the assessment. IEaCDH Based on the information above and without going into the details of the Audit made by the COA, or on whether sufficient assessment documentary evidence such as petition/request from the taxpayers nor LBAA decision indeed supported the herein revision, we believe that the City Assessor cannot on his own, cancel, raise or lower as the case may require, the valuation and assessment of any real property. Please be informed that although Article III, Title V of the Local Government Code of 1991 (R.A. No. 7160) specifically enumerates the qualifications, powers and duties of the Assessor, which among others provide that the Assessor shall ensure that all laws and policies governing the appraisal and assessment of real properties for taxation purposes are properly executed, the Code nevertheless does not provide that the assessor may cancel, raise or lower the valuation and assessment of property whenever it does not conform with the law nor can he initiate an investigation on the basis of a complaint/request or on his own "motu proprio" to determine whether the appraisal and assessment is incorrect or not. The right of the real property owners or anyone having legal interest in the property, who is not satisfied with the action of the Provincial, City or Municipal Assessor is clearly provided under Sec. 226 of the Local Government Code of 1991, which is reproduced hereunder: "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." (emphasis supplied) Obviously, the City Assessor of Quezon City should have advised the real property owners concerned that they should have availed of the abovequoted provision of law, within the prescribed period of sixty (60) days from the date of receipt of the Notice of Assessment. In G.R. No. 115253-74 dated January 30, 1998, in the case of Antonio P . Callanta, et al . vs . Office of the Ombudsman and the City Government of Cebu , the Supreme Court ruled as follows: " 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 readjustment . 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. " The assessment is deemed made when the notice to this effect is released, mailed or sent to the taxpayer for the purpose of giving effect to said assessment . In the same vein, we have said that 'the assessment is deemed made when the notice to this effect is released, mailed or sent to the taxpayer for the purpose of giving effect to said assessment. ASIETa " 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 . 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 local 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." As regards the contention of the City Assessor that a directive for the reassessment of these selected Quezon City properties has been issued by the then City Mayor of Quezon City, please be informed of the pertinent portion of the same Supreme Court Decision which opined as follows: " Public officials and employees are required to follow only the lawful orders of their superiors which are issued within the scope of their authority . The defense of the other petitioners that they were merely following the orders of their superiors does not totally exculpate them from liability. They should likewise be aware of the limits of the functions of their office. Public officials and employees are required to follow only the lawful orders of their superiors which are issued within the scope of their authority. In our jurisdiction, the rule of law, and not of men, governs. Nowhere in our statutes is blind obedience required of junior personnel to the commands and directives of their superiors." Relatedly, Section 220 of the same Code which was substantially reproduced under Section 22 of PD 464 as amended, the law then prevailing prior to Local Government Code of 1991, provides the following: "SEC. 220. Valuation of Real Property . In cases where (a) real property is declared and listed for taxation purposes for the first time; (b) there is ongoing general revision of property classification and assessment; (c) a request is made by the person in whose name the property is declared, the provincial, city or municipal assessor or his duly authorized deputy shall, in accordance with the provisions of this Chapter, make classification, appraisal and assessment of the real property listed and described in the declaration irrespective of any previous assessment or taxpayer's valuation thereon: Provided, however, That the assessment of real property shall not be increased oftener once every three (3) years except in case of new improvements substantially increasing the value of said property or of any change in its actual use." Corollarily thereto, the Supreme Court further ruled as follows: ". . . Sec. 22 clearly 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 requests 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 excised from our system." Based on the foregoing, this Bureau finds sufficient evidence of irregularities and believes that the City Assessor of Quezon City cannot, on his own "motu proprio" cancel, raise or lower, as the case may be, the valuation and assessment of real property. Very truly yours, (SGD.) JUANITA D. AMATONG Undersecretary and Officer-in-Charge, BLGF