FACTS:

This case is a petition for review on certiorari to reverse the decision of the Central Board of Assessment Appeals, which affirmed the decision of the Board of Tax Assessment Appeals upholding the classification and assessments made by the City Assessor of Manila. The petitioners are owners of parcels of land in Manila that are leased and occupied by tenants.

In July 1971, a law was enacted prohibiting an increase in monthly rentals of dwelling units not exceeding P300.00 a month. In October 1972, this law was amended to make the prohibition absolute and to suspend the provision in the Civil Code allowing the ejectment of lessees upon the expiration of the usual legal period of lease.

In 1973, the City Assessor re-classified and reassessed the value of the subject properties, resulting in an increase in tax rates. The petitioners disputed the reassessments, arguing that they were excessive, unwarranted, inequitable, confiscatory, and unconstitutional. They claimed that the income approach should have been used in determining the land values instead of the comparable sales approach adopted by the City Assessor.

The Board of Tax Assessment Appeals considered the assessments valid, and the petitioners appealed to the Central Board of Assessment Appeals. The parties submitted evidence regarding the yearly rentals, market values, and physical features of the land. The Central Board of Assessment Appeals affirmed the valuation and assessment of some lots but modified the decision for other lots, allowing a 20% reduction in their respective market values and applying a 30% assessment level. The petitioners filed a motion for reconsideration, which was denied. Thus, they filed this petition.

The main issue in the case revolves around the method used in tax assessment. Petitioners argued that the income approach should have been used instead of the comparable sales approach. They contended that the increased assessed values resulted in real estate taxes that exceeded the total yearly rentals paid by the tenants, making them excessive, unwarranted, inequitable, confiscatory, and unconstitutional.

ISSUES:

1. Whether the Central Board of Assessment Appeals erred in adopting the "comparable sales approach" method in fixing the assessed value of the appellants' properties.

RULING:

1. The petition is impressed with merit.

PRINCIPLES:

• The method used for tax assessment should be realistic and consider the effect of restrictions imposed by laws.

• The assessed values of properties should not be arbitrarily excessive, unwarranted, inequitable, confiscatory, and unconstitutional.