G.R. No. L-7451; May 26, 1958
HACIENDA LUISITA, property of Compania General de Tabacos de Filipinas, petitioner, vs. BOARD OF TAX APPEALS, respondent.

FACTS

In early 1953, the Provincial Assessor of Tarlac notified the manager of Hacienda Luisita, owned by Compañia General de Tabacos de Filipinas, that the assessed values of certain portions of the hacienda (covered by specific Tax Declarations in the municipalities of La Paz and Concepcion) would be increased by an average of 40%, pursuant to a new schedule of values approved by the Secretary of Finance. The hacienda administrator appealed to the Provincial Board of Assessment Appeals, which sustained the Assessor. Upon application to the Department Secretary, the matter was referred to the Board of Tax Appeals, which, after hearing, also ruled unfavorably against the appellant hacienda. The hacienda then appealed to the Supreme Court.
The appellant contended that in assessing the value of the hacienda lands, the Assessor failed to consider: (1) losses amounting to P2,400,168.00 suffered during the Japanese occupation; (2) a postwar rehabilitation investment of P591,905.69; (3) losses of P26,685.70 during the first years of postwar operation; and (4) that the hacienda was mortgaged for almost three million pesos and had to pay substantial amortizations on its mortgages and bonded indebtedness.

ISSUE

Whether the Board of Tax Appeals erred in upholding the 40% increase in the assessed values of portions of Hacienda Luisita, despite the appellant’s claims regarding wartime losses, rehabilitation costs, operational losses, and indebtedness.

RULING

The Supreme Court affirmed the decision of the Board of Tax Appeals. The appellant’s complaints were without merit. The Court held that the items of losses, investments, and indebtedness cited by the appellant do not affect the intrinsic value of the land upon which the assessment is based. These factors concern the profit or loss from the exploitation of the land and the business operations of the entity, not the land’s value itself. There was an absence of proof that the claimed losses were due to a deterioration of the lands’ intrinsic quality.
Under Commonwealth Act No. 470 (Assessment Law), taxable real property must be assessed at its true and full value. The appellant failed to show that the Assessor disregarded any factors relating to such value, such as quality, income, productivity, location, accessibility, improvements, or use. The Court noted that some claimed factors, like the rehabilitation investment, actually increased the land’s value. Furthermore, it was a well-known fact that property values tended to increase after liberation.
The Court also ruled that the fact the Provincial Assessor acted upon reports from his assistants and did not personally inspect the property did not invalidate the assessment, as it was made under his official authority and responsibility.
The decision appealed from was affirmed, with costs against the appellant.