Real Property Taxation Cases G.R. No. 144104.June 29, 2004 LUNG CENTERT OF THE PHILIPPINES, petitioner, !. "UE#ON CIT$ CIT$ %n& CONS CONST T'NTI 'NTINO NO P. ROS' ROS'S S, in (i! (i! )% )%p% p%)i )it* t* %! Cit* Cit* '!!e!!or o+ "ueon Cit*, Cit*, re!pon&ent!. F'CTS-
Petitioner Petitioner Lung Center of the Philippines is a non-stock and nonprot entity created created by virtue of PD No. No. 18!. "t o#ns a parcel of of lot #ith an area of 11$%&! s'uare (eters$ erected erected in the (iddle of #hich is the hospit hospital al building building.. ) big space space at the groun ground d *oor is being being leased to private parties for private parties$ for canteen and s(all store spaces$ and to (edical or professional practitioners #ho use the sa(e as their private clinics for their patients #ho( they charge for their professional professional services. services. )l(ost half of the entire area on the left side of the building is vacant and idle #hile a big portion on the right side$ is being leased for co((ercial purposes to a private enterprise kno#n as the +lliptical ,rchids and arden Center. "n 1! 1!$$ both both the the land land and and buil buildi ding ng of the the peti petiti tion oner er #ere #ere assessed for real property ta/es in the a(ount of P%$00%$8& by the City )ssessor of 2ue3on 2ue3on City. City. Petitioner4s Petitioner4s re'uest for for e/e(ption #as denied denied55 the petiti petition on it led led befor before e the Local Local 6oard 6oard of )sses )ssess(e s(ent nt )ppeals of 2ue3on City 7L6)) for the the reversal of the resolution resolution of the City City )sse )ssess ssor or #as #as dis( dis(is isse sed. d. 9he 9he sa(e sa(e #as #as the the ruli ruling ng #hen #hen it elevated the (atter to the Central 6oard of )ssess(ent )ppeals of 2ue3on City 7C6)). 9he C) like#ise a:ir(ed C6))4s decision. ;ence$ this petition. ISSUE !/-
Lun Center LC/ •
LC4s clai( for e/e(ption is predicated on its being a char charit itab able le inst instit itut utio ion n unde underr >ection 8 7! of the 18? constitution5 it averred that &@ of its hospital beds are e/c e/clusi lusive vely ly use used for for char harity ity patients and that the (aAor trust
Ruin o&*3Court •
C6)) C6)) a:ir a:ir(e (ed d L6 L6)) ))4s 4s ruli ruling ng that that LC #as #as not not a char charit itab able le inst instit itut utio ion n and that hat its its real prop proper erti ties es #ere #ere not not actu actual ally ly$$ directly and e/clusively used for charit charitabl able e purpos purposes5 es5 hence hence$$ it #as not entitled to real prope property rty ta/ e/e(p e/e(ptio tion n under under
Real Property Taxation Cases of its its hosp hospit ital al oper operat atio ion n is to serve charity patients. •
Petitioner contends that even if it is not declared as real property ta/ e/e(pt under its charter 7PD 18!$ said e/e(ption (ay neverthele nevertheless ss be e/tended e/tended upon prop proper er appl applic icat atio ion5 n5 it furt furthe herr asse assert rts s that that its its char charac acte terr as a char charit itab able le ins institu tituti tio on is not altered by the fact that it ad(its payi paying ng pati patien ents ts and and rend render ers s (edical services to the($ leases port portio ion n of the the land land to priv privat ate e parties$ and rents out portion of the hospit hospital al to priva private te (edic (edical al practitioners fro( #hich it deri derive ves s inco( inco(e e to be used used for for operat operation ional al e/pens e/penses5 es5 and that that the e/clus e/clusivi ivity ty re'ui re'uire red d in the constitution does not necessarily (ean solely. solely.
its o#n charter$ the constitution and the la#. •
Bespo sponde ndents nts reite iterated ated its its position that LC failed to prove that it is a charitable institution and and that that the the said said prop proper erty ty is actually$ directly and e/clusively used for charitable purposes. "t noted that in a ne#spaper repor report$ t$ it appear appeared ed that that graft graft char harges #ere ere led led #ith #ith the the >and andigan iganba baya yan n again gains st the dire direct ctor or$$ ad(i ad(ini nist stra rato torr of LC and the proprietress of +llipt +lliptica icall ,rchi ,rchids ds over over a lease lease contract contract55 further further asserted asserted that LC uses uses subs subsid idie ies s gran grante ted d by the gove goverrn(e n(ent for char harity ity patients and used the rest of its inco inco(e (e fro( fro( the the prop proper erty ty for for the benet of its paying patients$ a(ong other purposes and and that that it fail faile ed to addu adduce ce substantial evidence that 1@ of its out-patients and 1? beds in the hospital are reserved for indigent patients.
HEL-
+>$ as held by the >upre(e Court$ petitioner Lung Center is a char charit itab able le inst instit itut utio ion n #ith #ithin in the the cont conte/ e/tt of the the 1!? 1!? and and 18? 18? Constitutions. 9o deter(ine #hether an enterpri prise is a charitable instit instituti ution onent entity ity or not$ not$ the ele(en ele(ents ts #hich #hich should should be consid consider ered ed include the statute creating the enterprise$ its corporate purposes$ its constitutions and by-la#s$ the (ethods of ad(inistration$ the nature of the actual #ork perfor(ed$ the character of the services rendered$ the indeniteness of the beneciaries$ and the use and occupation of the proper propertie ties. s. Ender Ender PD No. 18!$ 18!$ the la# #hich #hich create created d Lung Lung Center$ it is a non-prot and non-stock corporation$ organi3ed for the #elfare and benet of the Filipino people principally to help co(bat the high incidence of lung and pul(onary diseases in the Philippines. )s a general principle$ a charitable institution does not lose its character as such and its e/e(ption fro( ta/es si(ply because it
Real Property Taxation Cases of its its hosp hospit ital al oper operat atio ion n is to serve charity patients. •
Petitioner contends that even if it is not declared as real property ta/ e/e(pt under its charter 7PD 18!$ said e/e(ption (ay neverthele nevertheless ss be e/tended e/tended upon prop proper er appl applic icat atio ion5 n5 it furt furthe herr asse assert rts s that that its its char charac acte terr as a char charit itab able le ins institu tituti tio on is not altered by the fact that it ad(its payi paying ng pati patien ents ts and and rend render ers s (edical services to the($ leases port portio ion n of the the land land to priv privat ate e parties$ and rents out portion of the hospit hospital al to priva private te (edic (edical al practitioners fro( #hich it deri derive ves s inco( inco(e e to be used used for for operat operation ional al e/pens e/penses5 es5 and that that the e/clus e/clusivi ivity ty re'ui re'uire red d in the constitution does not necessarily (ean solely. solely.
its o#n charter$ the constitution and the la#. •
Bespo sponde ndents nts reite iterated ated its its position that LC failed to prove that it is a charitable institution and and that that the the said said prop proper erty ty is actually$ directly and e/clusively used for charitable purposes. "t noted that in a ne#spaper repor report$ t$ it appear appeared ed that that graft graft char harges #ere ere led led #ith #ith the the >and andigan iganba baya yan n again gains st the dire direct ctor or$$ ad(i ad(ini nist stra rato torr of LC and the proprietress of +llipt +lliptica icall ,rchi ,rchids ds over over a lease lease contract contract55 further further asserted asserted that LC uses uses subs subsid idie ies s gran grante ted d by the gove goverrn(e n(ent for char harity ity patients and used the rest of its inco inco(e (e fro( fro( the the prop proper erty ty for for the benet of its paying patients$ a(ong other purposes and and that that it fail faile ed to addu adduce ce substantial evidence that 1@ of its out-patients and 1? beds in the hospital are reserved for indigent patients.
HEL-
+>$ as held by the >upre(e Court$ petitioner Lung Center is a char charit itab able le inst instit itut utio ion n #ith #ithin in the the cont conte/ e/tt of the the 1!? 1!? and and 18? 18? Constitutions. 9o deter(ine #hether an enterpri prise is a charitable instit instituti ution onent entity ity or not$ not$ the ele(en ele(ents ts #hich #hich should should be consid consider ered ed include the statute creating the enterprise$ its corporate purposes$ its constitutions and by-la#s$ the (ethods of ad(inistration$ the nature of the actual #ork perfor(ed$ the character of the services rendered$ the indeniteness of the beneciaries$ and the use and occupation of the proper propertie ties. s. Ender Ender PD No. 18!$ 18!$ the la# #hich #hich create created d Lung Lung Center$ it is a non-prot and non-stock corporation$ organi3ed for the #elfare and benet of the Filipino people principally to help co(bat the high incidence of lung and pul(onary diseases in the Philippines. )s a general principle$ a charitable institution does not lose its character as such and its e/e(ption fro( ta/es si(ply because it
Real Property Taxation Cases derives inco(e fro( paying patients$ #hether out-patient$ or conned in the hospital$ or subsidies fro( the govern(ent$ so long as the (oney received is devoted or used altogether to the charitable obAect #hich it is intended to achieve5 and no (oney inures to the private benet of the persons (anaging of operating the institution. +ven as the >upre(e Court found that petitioner is$ indeed$ a charitable institution$ it ruled that portions of its real property that are leased to private entities are not e/e(pt fro( real property ta/es as these are not actually$ directly and e/clusively used for charitable purposes. Ender the 1!? and 18? Constitutions and Bep. )ct No ?1&$ in order to be entitled to the e/e(ption$ petitioner LC is burdened to prove$ by clear and une'uivocal proof$ that it is a charitable institution and its real properties are )C9E)LL$ D"B+C9L and +GCLE>"H+L used for charitabl charitable e purposes. purposes. +/clusive +/clusive is dened as possesse possessed d and enAoye enAoyed d to the e/clus e/clusion ion of other others5 s5 debar debarre red d fro( fro( partic participa ipatio tion n or enAoy( enAoy(ent ent55 and e/clusiv e/clusively ely is dened dened$$ in a (anner (anner to e/clud e/clude5 e5 as enAoying a privilege e/clusively. "f real property is used for one or (ore co((ercial purposes$ it is not e/clusively used for the e/e(pted purposes but is subAect to ta/ati ta/ation. on. C held that portions of the land leased to private enti entiti ties es as #ell #ell as thos those e part parts s of the the hosp hospit ital al leas leased ed to priv privat ate e individuals are not e/e(pt e/e(pt fro( such ta/es. ,nly portions of of the land occupi occupied ed by the hospital hospital and porti portions ons of the hospital hospital used used for for its pati patien ents ts$$ #het #hethe herr payi paying ng or nonnon-pa payi ying ng$$ are are e/e( e/e(pt pt fro( fro( real real property ta/es.
Cit* '!!e!!or o+ Ce5u . '!!o)i%tion o+ eneo% &e Ce5u, G.R. No. 162904, June 7, 2008 Facts )ssociation of 6enevola de Cebu$ "nc. 76enevola is a non-stock$ non-prot organi3ation organi3ed under the la#s of the Bepublic of the Philippines and is the o#ner of Chong ;ua ;ospital 7C;; in Cebu City. City.
Real Property Taxation Cases "n the late 1s$ 6enevola constructed the C;; Iedical )rts Center 7C;;I)C$ and #as issued Certicate of ,ccupancy in )pril 1?$ 18 classied as Co((ercial JClinicK by City )ssessor of Cebu City 7City )ssessor #ith a (arket value of PhP 8$&$0 and an assessed value of PhP $81$18 at the assess(ent level of !0@ for co((ercial buildings$ and not at the 1@ special assess(ent currently i(posed for C;; and its other separate buildings the C;;s Dietary and Becords Depart(ents. 6enevola led its >epte(ber 10$ 18 letter-petition #ith the Cebu City L6)) for reconsideration$ asserting that C;;I)C is part of C;; and ought to be i(posed the sa(e special assess(ent level of 1@ #ith that of C;;. ,n >epte(ber 0$ 18$ 6enevola for(ally led its appeal #ith the Local 6oard of )ssess(ent )ppeals 7L6)). City )ssessor argued that
6enevola contended that
--C;;I)C #as a ne#ly constructed ve-storey building situated about 1 (eters a#ay fro( C;; and$ #as not a part of the C;; building but a separate building #hich #as actually used as co((ercial clinicroo( spaces for renting out to physicians and$ thus$ classied as co((ercial5
--C;;I)C building is actually$ directly$ and e/clusively part of C;; and should have a special assess(ent level of 1@ as provided under City 9a/ ,rdinance LGG
--(edical specialists in C;;I)C charge consultation fees for patients #ho consult for diagnosis and relief of bodily ail(ent together #ith the ancillary 7or support services #hich include the areas of anesthesia$ radiology$ pathology$ and (ore.
-- C;;I)C building is si(ilarly situated as the buildings of C;;$ housing its Dietary and Becords Depart(ents$ are co(pletely separate fro( the (ain C;; building and are i(posed the 1@ special assess(ent level. --C;;I)C$ though not actually indispensable$ is nonetheless incidental and reasonably necessary to C;;s operations.
,n February 1$ 1$ the L6)) rendered a Decision$ declaring that the building is entitled to a ten 71 percent assess(ent level and held that it is inconse'uential that a separate building #as constructed for that purpose pointing out that depart(ents or services of other institutions and establish(ents are also not al#ays housed in the sa(e building. ,n Manuary %$ $ the Central 6oard of )ssess(ent )ppeals 7C6)) rendered a Decision a:ir(ing in toto the L6)) Decision and resolved the issue of #hether the subAect building of C;;I)C is part and parcel of C;;.
Real Property Taxation Cases ,n ,ctober !1$ 1$ the Court of )ppeals rendered the assailed Decision #hich a:ir(ed the Manuary %$ Decision of the C6))$ it held that the facilities and utilities of C;;I)C are undoubtedly necessary and indispensable for the C;; to achieve its ulti(ate purpose. "ssues <;+9;+B ,B N,9 9;+ N+< 6E"LD"N C;;I)C "> )N +>>+N9")L P)B9 ,F C;,N ;E) ;,>P"9)L )ND 9;E> N,9 >E6M+9C 9, !0@ )>>+>>I+N9 L+H+L= Buling C;;I)C is an integral part of C;;. "t is undisputed that the doctors and (edical specialists holding clinics in C;;I)C are those duly accredited by C;;$ that is$ they are consultants of the hospital and the ones #ho can treat C;;s patients conned in it. 9his fact alone takes a#ay C;;I)C fro( being categori3ed as co((ercial since a tertiary hospital like C;; is re'uired by la# to have a pool of physicians #ho co(prises the re'uired (edical depart(ents in various (edical elds. Ioreover$ the C;;I)C$ being hundred (eters a#ay fro( the C;; (ain building$ does not denigrate fro( its being an integral part of the latter. Ioreover$ the e/e(ption in favor of property used e/clusively for charitable or educational purposes is not li(ited to property actually indispensable therefore 7Cooley on 9a/ation$ Hol. $ p. 1%!$ but e/tends to facilities #hich are incidental to and reasonably necessary for the acco(plish(ent of said purposes$ such as$ in the case of hospitals$ a school for training nurses$ a nurses ho(e$ property use to provide housing facilities for interns$ resident doctors$ superintendents$ and other (e(bers of the hospital sta:$ and recreational facilities for student nurses$ interns and residents 78% C.M.>.$ &1$ such as athletic elds$ including a far( used for the in(ates of the institution 7Cooley on 9a/ation$ Hol. $ p. 1%!. Herily$ being an integral part of C;;$ C;;I)C should be under the sa(e special assess(ent level of as that of the for(er. Charging rentals for the o:ices used by its accredited physicians cannot be e'uated to a co((ercial venture Finally$ 6enevolas charge of rentals for the o:ices and clinics its accredited physicians occupy cannot be e'uated to a co((ercial venture$ #hich is (ainly for prot. 9he C;;I)C$ #ith operations being devoted for the benet of the C;;s patients$ should be accorded the 1@ special assess(ent.
Real Property Taxation Cases >+C. 10. Classes of Beal Property for )ssess(ent Purposes.For purposes of assess(ent$ real property shall be classied as residential$ agricultural$ co((ercial$ industrial$ (ineral$ ti(berland or special. / / / / >+C. 1&. >pecial Classes of Beal Property.)ll lands$ buildings$ and other i(prove(ents thereon actually$ directly and e/clusively used for hospitals$ cultural or scientic purposes$ and those o#ned and used by local #ater districts$ and govern(ent-o#ned or controlled corporations rendering essential public services in the supply and distribution of #ater andor generation and trans(ission of electric po#er shall be classied as special.
Mactan Airport Authority vs. Marcos G. R. No. 120072, Septe5er 11, 199: F%)t!-
Petitioner Iactan Cebu "nternational )irport )uthority 7IC")) #as created by virtue of Bepublic )ct No. &08. >ince the ti(e of its creation$ petitioner IC")) enAoyed the privilege of e/e(ption fro( pay(ent of realty ta/es in accordance #ith >ection 1% of its Charter. ;o#ever on ,ctober 11$ 1%$ Ir. +usta'uio 6. Cesa$ ,:icer-inCharge$ ,:ice of the 9reasurer of the City of Cebu$ de(anded pay(ent for realty ta/es on several parcels of land belonging to the petitioner by virtue of >ections 1! and !% of the Local overn(ent Code that took e:ect on Manuary 1$ 1.
PETITIONER;S CONTENTION •
9he ta/ing po#ers of local govern(ent units do not e/tend to the levy of ta/es or fees of any kind on an instru(entality of the national govern(ent. 9hat #hile it is indeed a ,CC$ it nonetheless stands on the sa(e footing as an agency or instru(entality of the national govern(ent by the very nature of its po#ers and functions >ec. 1!!$ LC provides that the e/ercise of the ta/ing po#ers of provinces$ cities$ (unicipalities and barangays shall not •
RESPONENT;S CONTENTION •
IC")) is not an instru(entality of the govern(ent but (erely a ,CC perfor(ing proprietary functions$ and hence$ the e/e(ptions granted to it #ere dee(ed #ithdra#n by virtue of >ecs. 1! and !% of the LC. •
>ec. 1! provides that ta/ e/e(ptions or incentives granted to or presently enAoyed by all persons$ #hether natural or Auridical$ including ,CCs e/cept local #ater districts$ cooperatives
Real Property Taxation Cases e/tend to the levy of... ta/es$ fees or charges of any kind on the National govern(ent$ its agencies and instru(entalities and local govern(ent units.
•
duly registered under B) &!8$ non-stock and non-prot hospitals and educational institutions are hereby #ithdra#n upon the e:ectivity of this Code. >ection !% (ean#hile provides that e/e(ption fro( pay(ent of real property ta/ previously granted to or presently enAoyed by all persons$ #hether natural or Auridical$ including ,CCs are hereby #ithdra#n upon the e:ectivity of the LC.
I!!ue-
No. 9a/ation is the rule and e/e(ption is the e/ception. 9hus$ the e/e(ption (ay be #ithdra#n at the pleasure of the ta/ing authority. 9he only e/ception to this rule is #here the e/e(ption #as granted to private parties based on (aterial consideration of a (utual nature$ #hich then beco(es contractual and is thus covered by the non-i(pair(ent clause of the Constitution. 9he general rule$ as laid do#n in >ection 1!! of the LC is that the ta/ing po#ers of LEs cannot e/tend to the levy of$ inter alia$ ta/es$ fees and charges of any kind on the National overn(ent$ its agencies$ and instru(entalities$ and LEs.O ;o#ever$ pursuant to >ection !$ provinces$ cities and (unicipalities in the Ietro Ianila )rea (ay i(pose real property ta/es e/cept on inter alia$ real property o#ned by the Bepublic of the Philippines or any of its political subdivisions e/cept #hen the benecial use thereof has been granted for consideration or other#ise$ to a ta/able person 7>ec. !%a. )s to ta/ e/e(ptionsincentives granted to or presently enAoyed by natural or Auridical persons$ including ,CCs$ GENER'L RULE 9a/ e/e(ptions or incentives are #ithdra#n upon the e:ectivity of the LC Eection !% enu(erating the properties e/e(pt fro( real property ta/.
Real Property Taxation Cases 9he last paragraph of >ection !% further 'ualies the retention of the e/e(ption insofar as real property ta/es are concerned by li(iting the retention only to those enu(erated therein5 all others not included in the enu(eration therefore lost the privilege upon the e:ectivity of the LC. +ven as to real property o#ned by the Bep. ,f the Philippines or any of its political subdivisions covered by ite( 7a of the rst paragraph of >ection !%$ the e/e(ption is #ithdra#n if the benecial use of such property has been granted to a ta/able person for consideration or other#ise. >ince the last paragraph of >ection !% une'uivocally #ithdre#$ upon the e:ectivity of the LC$ e/e(ptions fro( pay(ent of real property ta/es granted to natural or Auridical persons$ including govern(ento#ned or controlled corporations$ e/cept as provided in the said section$ and the petitioner is$ undoubtedly$ a govern(ent-o#ned corporation$ it necessarily follo#s that its e/e(ption fro( such ta/ granted it by its charter has been #ithdra#n. 9he Court ruled that the land in 'uestion is no longer o#ned by the govern(ent. >ection 10 of its Charter involves a transfer of the lands$ a(ong other things$ to the petitioner and not Aust the transfer of the benecial use thereof$ #ith the o#nership being retained by the Bepublic of the Philippines. 9his transfer is actually an absolute conveyance of the o#nership thereof because the petitioners authori3ed capital stock consists of$ inter alia$ the value of such real estate o#ned andor ad(inistered by the airports. ;ence$ the petitioner is no# the o#ner of the land in 'uestion and the e/ception in >ection !%7c of the LC is inapplicable.
=%ni% Intern%tion% 'irport 'ut(orit* . Court o+ 'ppe%!, G.R. 166:60, Ju* 20, 200: F%)t!9he Ianila "nternational )irport )uthority 7I")) operates the Ninoy )'uino "nternational )irport 7N)") Co(ple/ in Paraa'ue City under +/ecutive ,rder No. ! 7I")) Charter$ as a(ended. )s such operator$ it ad(inisters the land$ i(prove(ents and e'uip(ent #ithin the N)") Co(ple/. "n Iarch 1?$ the ,:ice of the overn(ent Corporate Counsel 7,CC issued ,pinion No. &1 to the e:ect that the Local overn(ent Code of 11 7LC #ithdre# the e/e(ption fro( real estate ta/ granted to I")) under >ection 1 of its Charter.
9hus$ I")) paid so(e of the real estate ta/ already due. "n Mune 1$ it received Final Notices of Beal +state 9a/ Delin'uency fro( the City of Paraa'ue for the ta/able years 1 to 1. 9he City 9reasurer subse'uently issued notices of levy and #arrants of levy on the airport lands and buildings.
Real Property Taxation Cases )t the instance of I"))$ the ,CC issued ,pinion No. 1%? clarifying ,pinion No. &1$ pointing out that >ec. & of the LC re'uires persons e/e(pt fro( real estate ta/ to sho# proof of e/e(ption. )ccording to the ,CC$ >ec. 1 of the I")) Charter is the proof that I")) is e/e(pt fro( real estate ta/. I"))$ thus$ led a petition #ith the Court of )ppeals seeking to restrain the City of Paraa'ue fro( i(posing real estate ta/ on$ levying against$ and auctioning for public sale the airport lands and buildings$ but this #as dis(issed for having been led out of ti(e. I")) argued that -- I")) is e/e(pt fro( real estate ta/ under >ec. 1 of its charter and >ec. !% of the LC. --that the govern(ent cannot ta/ itself as a Austication for e/e(ption$ since the airport lands and buildings$ being devoted to public use and public service$ are o#ned by the Bepublic of the Philippines.
City of Paraa'ue contended that -- >ec. 1! of the LC$ #hich e/pressly #ithdre# the ta/ e/e(ption privileges of govern(ent-o#ned and controlled corporations 7,CC upon the e:ectivity of the LC -- international airport is not a(ong the e/ceptions (entioned in the said la#
Iean#hile$ the City of Paraa'ue posted and published notices announcing the public auction sale of the airport lands and buildings. "n the afternoon before the scheduled public auction$ I")) applied #ith the Court for the issuance of a 9B, to restrain the auction sale. 9he Court issued a 9B, on the day of the auction sale$ ho#ever$ the sa(e #as received only by the City of Paraa'ue three hours after the sale. I!!ue<;+9;+B ,B N,9 9;+ )"BP,B9 L)ND> )ND 6E"LD"N> ,F I")) )B+ +G+IP9 FB,I B+)L +>9)9+ 9)G= He&9he airport lands and buildings of I")) are e/e(pt fro( real estate ta/ i(posed by local govern(ents. >ec. %!7a of the LC e/e(pts fro( real estate ta/ any real property o#ned by the Bepublic of the Philippines. 9his e/e(ption should be read in relation #ith >ec. 1!!7o of the LC$ #hich provides that the e/ercise of the ta/ing po#ers of local govern(ents shall not e/tend to the levy of ta/es$ fees or charges of any kind on the National overn(ent$ its agencies and instru(entalities.
9hese provisions recogni3e the basic principle that local govern(ents cannot ta/ the national govern(ent$ #hich historically (erely delegated to local govern(ents the po#er to ta/. 9he rule is that a ta/ is never presu(ed and there (ust be clear language in the la# i(posing the ta/. 9his rule applies #ith greater force #hen local govern(ents seek to ta/ national govern(ent
Real Property Taxation Cases instru(entalities. Ioreover$ a ta/ e/e(ption is construed liberally in favor of national govern(ent instru(entalities. I")) is not a ,CC$ but an instru(entality of the govern(ent. 9he Bepublic re(ains the benecial o#ner of the properties. I")) itself is o#ned solely by the Bepublic. )t any ti(e$ the President can transfer back to the Bepublic title to the airport lands and buildings #ithout the Bepublic paying I")) any consideration. )s long as the airport lands and buildings are reserved for public use$ their o#nership re(ains #ith the >tate. Enless the President issues a procla(ation #ithdra#ing these properties fro( public use$ they re(ain properties of public do(inion. )s such$ they are inalienable$ hence$ they are not subAect to levy on e/ecution or foreclosure sale$ and they are e/e(pt fro( real estate ta/. ;o#ever$ portions of the airport lands and buildings that I")) leases to private entities are not e/e(pt fro( real estate ta/. "n such a case$ I")) has granted the benecial use of such portions for a consideration to a ta/able person.
"ueon Cit* . %*%nTe Corp., G.R. No. 1:2016, =%r)( :, 200: F'CTSBespondent 6ayan 9eleco((unications$ "nc. 76ayantel is a legislative franchise holder under Bepublic )ct 7B.). No. !0 71&1 to establish and operate radio stations for do(estic teleco((unications$ radiophone$ broadcasting and telecasting. >ection 1% 7a of B.). No. !0 states 9he grantee shall be liable to pay the sa(e ta/es on its real estate$ buildings and personal property$ e/clusive of the franchise$ as other persons or corporations are no# or hereafter (ay be re'uired by la# to pay.O "n 1$ B.). No. ?1&$ other#ise kno#n as the Local overn(ent Code of 11O 7LC took e:ect. >ection ! of the Code grants local govern(ent units #ithin the Ietro Ianila )rea the po#er to levy ta/ on real properties. 6arely fe# (onths after the LC took e:ect$ Congress enacted B.). No. ?&!!$ a(ending 6ayantel4s original franchise. 9he >ection 11 of the a(endatory contained the follo#ing ta/ provision 9he grantee$ its successors or assigns shall be liable to pay the sa(e ta/es on their real estate$ buildings and personal property$ e/clusive of this franchise$ ///. "n 1!$ the govern(ent of 2ue3on City enacted an ordinance other#ise kno#n as the 2ue3on City Bevenue Code #ithdra#ing ta/ e/e(ption privileges.
Real Property Taxation Cases CONTENTIONS OF THE P'RTIES "ueon Cit* Goernent T%>p%*er %*%nTe, In)./ •
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>ent notices of delin'uency 6ayantel #rote a letter the to 6ayan9el for the total o:ice of the City )ssessor a(ount of P%!$8?8$8.18$ seeking the e/clusion of its follo#ed by the issuance of real properties in the city several #arrants of levy fro( the roll of ta/able real against 6ayantels properties.
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ISSUE- ?(et(er %*%nte;! re% propertie! in "ueon Cit* %re e>ept +ro re% propert* t%>e! un&er it! ei!%tie +r%n)(i!e HEL es$ real properties of 6ayan9el$ "nc. in 2ue3on City are e/e(pt fro( real property ta/es under its legislative franchise.
9he po#er to ta/ is pri(arily vested in the Congress5 ho#ever$ in our Aurisdiction$ it (ay be e/ercised by local legislative bodies$ no longer (erely by virtue of a valid delegation as before$ but pursuant to direct authority conferred by >ection 0$ )rticle G of the Constitution. Ender the latter$ the e/ercise of the po#er (ay be subAect to such guidelines and li(itations as the Congress (ay
Real Property Taxation Cases provide #hich$ ho#ever$ (ust be consistent #ith the basic policy of local autono(y. "ndeed$ the grant of ta/ing po#ers to local govern(ent units under the Constitution and the LC does not a:ect the po#er of Congress to grant e/e(ptions to certain persons$ pursuant to a declared national policy. 9he legal e:ect of the constitutional grant to local govern(ents si(ply (eans that in interpreting statutory provisions on (unicipal ta/ing po#ers$ doubts (ust be resolved in favor of (unicipal corporations. )d(ittedly$ Bep. )ct No. ?&!! #as enacted subse'uent to the LC. Perfectly a#are that the LC has already #ithdra#n 6ayantel4s for(er e/e(ption fro( realty ta/es$ Congress opted to pass Bep. )ct No. ?&!! using$ under >ection 11 thereof$ e/actly the sa(e dening phrase e/clusive of this franchiseO #hich #as the basis for 6ayantel4s e/e(ption fro( realty ta/es prior to the LC. "n plain language$ >ection 11 of Bep. )ct No. ?&!! states that the grantee$ its successors or assigns shall be liable to pay the sa(e ta/es on their real estate$ buildings and personal property$ e/clusive of this franchise$ as other persons or corporations are no# or hereafter (ay be re'uired by la# to pay.O 9he Court vie#s this subse'uent piece of legislation as an e/press and real intention on the part of Congress to once again re(ove fro( the LC4s delegated ta/ing po#er$ all of the franchisee4s 76ayantel4s properties that are actually$ directly and e/clusively used in the pursuit of its franchise. G.R. No. 1::7@7. June 16, 2011 ST'. LUCI' RE'LT$ A EBELOP=ENT, INC., petitioner !. CIT$ OF P'SIG, re!pon&ent, =UNICIP'LIT$ OF C'INT', PROBINCE OF RI#'L, Interenor. F'CTS-
Petitioner is the registered o#ner of several parcels of lands #ith 9C9 Nos. !11$ !11 and !8%0?$ all of #hich indicated that the lots #ere located in 6arrio 9atlong Qa#ayan$ Iunicipality of Pasig. 9he parcel of land covered by 9C9 No. !11 #as consolidated #ith that covered by 9C9 No. 018%!$ #hich #as situated in 6arrio 9atlong Qa#ayan$ Iunicipality of Cainta$ Province of Bi3al 7Cainta. 9he t#o co(bined lots #ere subse'uently partitioned into three$ for #hich 9C9 Nos. 0!0$ 08%%$ and 01!1$ no# all bearing the Cainta address$ #ere issued. 9C9 No. !11 #as also divided into t#o lots$ beco(ing 9C9 Nos. 8& and 8?. 9he lot covered by 9C9 No. !8%0? #as not
Real Property Taxation Cases segregated$ but a co((ercial building o#ned by >ta. Lucia +ast Co((ercial Center$ "nc.$ a separate corporation$ #as built on it. Epon Pasig4s petition to correct the location stated in 9C9 Nos. 0!0$ 08%%$ and 01!1$ the Land Begistration Court$ on Mune $ 10$ ordered the a(end(ent of the 9C9s to read that the lots #ith respect to 9C9 No. !11 #ere located in 6arrio 9atlong Qa#ayan$ Pasig City. ,n Manuary !1$ 1%$ Cainta led a petition for the settle(ent of its land boundary dispute #ith Pasig before the B9C$ 6ranch ?% of )ntipolo City 7)ntipolo B9C. 9his case$ docketed as Civil Case No. %!&$ is still pending up to this date. ,n Nove(ber 8$ 10$ Pasig led a Co(plaint$ docketed as Civil Case No. &0%$ against >ta. Lucia for the collection of real estate ta/es$ including penalties and interests$ on the lots covered by 9C9 Nos. 0!0$ 08%%$ 01!1$ 8&$ 8? and !8%0?$ including the i(prove(ents thereon 7the subAect properties. 9he B9C ruled in favor of Pasig. 9he C) rendered decision #herein it agreed #ith the B9C4s Audg(ent. ;ence$ this petition.
Real Property Taxation Cases ISSUE-
ta. Lucia should continue paying its real property ta/es to Cainta$ as it alleged to have al#ays done$ or to Pasig$ as the location stated in >ta. Lucia4s 9C9s=
Contention o+ t(e P%rtie! Cit* o+ P%!i
St%. Lu)i% Re%t* %n& eeopent In). it( C%int% %! Interenor
Pasig led a co(plaint for the collection of real estate ta/es$ including penalties and interests on the 'uestioned lots including i(prove(ents thereon •
Pasig$ countering each error$ clai(s that the lo#er courts correctly decided the case considering that the 9C9s are clear on their faces that the subAect properties are situated in its territorial Aurisdiction. Pasig contends that the principles of litis pendentia$ foru( shopping$ and res Audicata are all inapplicable$ due to the absence of their re'uisite ele(ents. Pasig (aintains that the boundary dispute case before the )ntipolo B9C is independent of the co(plaint for collection of realty ta/es #hich #as led before the Pasig B9C. "t avers that the doctrine of RpreAudicial 'uestion$R #hich has a denite (eaning in la#$ cannot be invoked #here the t#o cases involved are both civil. 9hus$ Pasig argues$ since there is no legal ground to preclude the si(ultaneous hearing of both cases$ the suspension of the proceedings in the Pasig B9C is baseless.
"n its )ns#er$ alleged that it had been religiously paying its real estate ta/es to Cainta$ Aust like #hat its predecessors-ininterest did$ by virtue of the de(ands and assess(ents (ade and the 9a/ Declarations issued by Cainta on the clai( that the subAect properties #ere #ithin its territorial Aurisdiction. >ta. Lucia further argued that since 11!$ the real estate ta/es for the lots covered by the above 9C9s had been paid to Cainta. •
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Cainta #as allo#ed to le its o#n )ns#er-in-"ntervention #hen it (oved to intervene on the ground that its interest #ould be greatly a:ected by the outco(e of the case. "t averred that it had been collecting the real property ta/es on the subAect properties even before >ta. Lucia ac'uired the(. Cainta further asseverated that the establish(ent of the boundary (onu(ents #ould sho# that the subAect properties are #ithin its (etes and bounds. Cainta also led its o#n co((ent reiterating its legal authority over the subAect properties$ #hich fall #ithin its
Real Property Taxation Cases territorial Aurisdiction. Cainta clai(s that #hile it has been collecting the realty ta/es over the subAect properties since #ay back 11!$ Pasig only covered the sa(e for real property ta/ purposes in 1$ 1$ and 1!. Cainta also insists that there is a discrepancy bet#een the locational entries and the technical descriptions in the 9C9s$ #hich further supports the need to a#ait the settle(ent of the boundary dispute case it initiated.
HEL-
Ender Presidential Decree No. %&%$ or the Beal Property 9a/ Code$O the authority to collect real property ta/es is vested in the locality #here the property is situated. 9his re'uisite #as reiterated in Bepublic )ct No. ?1&$ or the Local overn(ent Code. 9hus$ #hile a local govern(ent unit is authori3ed under several la#s to collect real estate ta/ on properties falling under its territorial Aurisdiction$ it is i(perative to rst sho# that these properties are un'uestionably #ithin its geographical boundaries. 9he Court cited the case of Iariano$ Mr. v Co((ission on +lections #hich stated that the i(portance of dra#ing #ith precise strokes the territorial boundaries of a local unit of govern(ent cannot be overe(phasi3ed. 9he boundaries (ust be clear for they dene the li(its of the territorial Aurisdiction of a local govern(ent unit. "t can legiti(ately e/ercise po#ers of govern(ent only #ithin the li(its of its territorial Aurisdiction. 6eyond these li(its$ its acts are ultra vires.O Clearly therefore$ the local govern(ent unit entitled to collect real property ta/es fro( >ta. Lucia (ust undoubtedly sho# that the subAect properties are situated #ithin its territorial Aurisdiction5 other#ise$ it #ould be acting beyond the po#ers vested to it by la#. 9he >upre(e Court directed both the City of Pasig and Iunicipality Cainta to a#ait the Audg(ent in their boundary dispute case in order to deter(ine #hich local govern(ent unit is entitled to e/ercise its po#ers$ including the collection of real property ta/es$ on the properties subAect of dispute.
Real Property Taxation Cases 'ie& %nDin Corpor%tion %! Tru!tee +or t(e Tru!t Fun& o+ Coee '!!ur%n)e P%n P(iippine!, In). C'P/ versus T(e "ueon Cit* Goernent, T(e "ueon Cit* Tre!urer, T(e "ueon Cit* '!!e!!or %n& T(e Cit* =%*or o+ "ueon Cit*
.B. No. 10%1&$ ,ctober 11$ 0
F'CTS-
9he 2ue3on City govern(ent enacted City ,rdinance No. !0?$ >eries of 10 #hich provided that that parcels of land sold$ ceded$ transferred and conveyed for re(uneratory consideration after the e:ectivity of this revision shall be subAect to re% e!t%te t%> based on the %)tu% %ount ree)te& in t(e &ee& o+ )one*%n)e or the )urrent %pproe& on% %u%tion o+ t(e ure%u o+ Intern% Reenue pre%iin %t t(e tie o+ !%e, )e!!ion, tr%n!+er %n& )one*%n)e$ #hichever is higher$ as evidenced by the certicate of pay(ent of the capital gains ta/ issued therefor.
)LL"+D 6)NQ"N C,BP,B)9",N$ as trustee for College )ssurance Plan of the Philippines$ "nc.$ purchased fro( Li#anag C. Natividad et al. a parcel of land. Prior to the sale$ Natividad et al. had been paying an annual real property ta/ based on the property4s fair (arket value and assessed value.
)fter its ac'uisition of the property$ petitioner #as$ in accordance #ith >ection ! of the ordinance$ re'uired to pay 'uarterly real estate ta/ under protest. Petitioner assailed >ection ! of the ordinance as null and void and seek a refund of the real estate ta/es erroneously collected fro( it. Bespondents (oved to dis(iss the petition. 6y Besolution$ the trial court granted respondents (otion to dis(iss. "ts Iotion for Beconsideration having been denied$ petitioner co(es before this Court on appeal by certiorari under Bule %0. Petitioner’s Contention:
9hat the re-assess(ent under the third sentence of >ection ! of the ordinance for purposes of real estate ta/ation of a property4s fair (arket value #here it is sold$
Government’s Contention:
9hat the ordinance is presu(ed valid and legal unless other#ise declared by a court of co(petent Aurisdiction.
Real Property Taxation Cases ceded$ transferred or conveyed for re(uneratory consideration is nu %n& oi& as it is an invalid classication of real properties #hich are transferred$ ceded or conveyed and those #hich are not$ the latter re(aining to be valued and assessed in accordance #ith the general revisions of assess(ents of real properties under the rst sentence of >ection !. ISSUE<;+9;+B ,B N,9 the proviso /ing the appraised value of property at the stated
consideration at #hich the property #as last sold is valid=
HELNO. 9he proi!o in ue!tion i! in%i& as it adopts a (ethod of assess(ent or appraisal of real property contrary to the Local overn(ent Code$ its "(ple(enting Bules and Begulations and the Local )ssess(ent Begulations No. 1- issued by the Depart(ent of Finance. Ender these i((ediately stated authorities$ real properties shall be appraised at the current and fair (arket value prevailing in the locality #here the property is situated and classied for assess(ent purposes on the basis of its actual use.
F%ir %rDet %ue is the price at #hich a property (ay be sold by a seller #ho is not co(pelled to sell and bought by a buyer #ho is not co(pelled to buy$ taking into consideration all uses to #hich the property is adapted and (ight in reason be applied. 9he criterion established by the statute conte(plates a hypothetical sale. ;ence$ the buyers need not be actual and e/isting purchasers.
9he proviso directing that the real property ta/ be based on the actual a(ount re*ected in the deed of conveyance or the prevailing 6"B 3onal value is in%i& not only because it (andates an e/clusive rule in deter(ining the fair (arket value but (ore so because it departs fro( the established procedures stated in the Local )ssess(ent Begulations No. 1- and unduly interferes #ith the duties statutorily placed upon the local assessor by co(pletely dispensing #ith his analysis and discretion #hich the Code and the regulations re'uire to be e/ercised.
Real Property Taxation Cases Esing the consideration appearing in the deed of conveyance to assess or appraise real properties is not only illegal since the appraisal$ assess(ent$ levy and collection of real property ta/ shall not be let to any private person$ but it #ill co(pletely destroy the funda(ental principle in real property ta/ation that re% propert* !(% 5e )%!!ie&, %ue& %n& %!!e!!e& on t(e 5%!i! o+ it! %)tu% u!e re%r&e!! o+ (ere o)%te&, (oeer on! it, %n& (oeer u!e! it.
In t(e )%!e %t 5%r $ there is nothing in the Local overn(ent Code$ the i(ple(enting rules and regulations$ the local assess(ent regulations$ the 2ue3on City Charter$ the 2ue3on City Bevenue Code of 1! and the
Petition GR'NTE. 9he assailed portion of the provisions of Se)tion @ o+ "ueon Cit* Or&in%n)e No. @68, Serie! o+ 1996 is hereby declared in%i&. J.B. No. 1%%1!. )ugust !1$ 0K 'GUE' E BER'CRU#, ='RIO, EB'NGELINE, ERONEL, 'NGELITO, TEOORO JR. %n& FERN'NO, % !urn%e& EL' CRU#, petitioners, vs. S'IN' =IGUEL, respondent. F'CTS-
Petitioners )gueda de Hera-Cru3$ Iario$ +vangeline$ +dronel$ )ngelito$ 9eodoro$ Mr.$ and Fernando$ all surna(ed Dela Cru3$ are the registered o#ners of a parcel of land situated at the Iunicipality of >an Iateo$ "sabela$ described as Lot ?!0-)-8-6-0 containing an area of 1?$?& s'uare (eters covered by 9ransfer Certicate of 9itle 79C9 No. 9-???8 of the Begistry of Deeds of "sabela #hich #as issued on 1? Manuary 1?%. ,n ! Mune 18?$ petitioners led a co(plaint before the B9C of Cauayay$ "sabela$ for Becovery of Possession #ith Da(ages against respondent for allegedly occupying t#o hundred 7 s'uare (eters$ (ore or less$ of Lot ?!0-)-8-6-0 #ithout any legal right to do so$ (uch less their consent or per(ission$ and has failed and refused to vacate the pre(ises despite repeated de(ands. 9hey prayed that respondent be ordered to vacate the land$ and to pay the( P1$ . as attorney4s fees$ P0. a (onth as rental$ and (oral and e/e(plary da(ages as the court (ay nd Aust and reasonable. 9he case #as raSed to 6ranch and #as docketed as Civil Case No. -!0. ,n % )ugust 18?$ respondent led her ans#er #ith counterclai( alleging that the land being clai(ed by petitioners is di:erent fro( the land
Real Property Taxation Cases #here her house is standing and that the land #as given or a#arded to her by the Iunicipal overn(ent of >an Iateo$ "sabela. >he added that she has been occupying the land since February 1%& and no one (olested her in her actual possession and use thereof e/cept the clai(s of petitioners #hich she ca(e to kno# only on % Muly 18? #hen she received the su((ons. "n their ans#er to counterclai( dated 1% )ugust 18?$ petitioners denied the allegations in the counterclai( and asserted that respondents clai( is an utter and gross falsity because the land is part of a registered land duly titled in their na(es and$ previously$ in their predecessors-ininterest. B9C rendered a su((ary Audg(ent declaring petitioners the o#ners of the land in 'uestion and ordered respondent to vacate the sa(e and to re(ove #hatever i(prove(ent she has introduced on the lot. ,n 1 Iay 188$ respondent led a notice of appeal fro( the su((ary Audg(ent$ the C) reversed and set aside the decision of the B9C.
Petitioner! Contention! •
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Petitioners contend that #hen the Court of )ppeals ruled that they #ere guilty of laches because they supposedly did not protest respondents long and continuous occupancy of the lot in 'uestion$ it #as in e:ect saying that the land subAect of the present controversy has been ac'uired by ac'uisitive prescription #hich is contrary to la# and Aurisprudence that the o#ner of a land registered under the 9orrens syste( cannot lose it by prescription. 9hey argue that they and their predecessor-in-interest$ 9eodoro Dela Cru3$ #ere never re(iss$ and have not delayed$ in asserting their o#nership over the property subAect of the present case because they have been litigating this issue as far back as 10& and lasting over ten years$ and successfully #arding o: the respective clai(s of the illegal occupants$ the Bepublic of the Philippines and the Iunicipality of >an Iateo$ "sabela. 9a/ Declarations held by respondent are not proofs of o#nership. ) ta/ declaration does not prove o#nership. "t is (erely an indiciu( of a clai( of o#nership. Pay(ent of ta/es is not proof of o#nership$ it is$
Re!pon&ent Contention! •
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Plainti:s-appellees are guilty of laches for their une/plained and unreasonable delay in asserting their right to the subAect land and instituting action to recover the sa(e fro( defendant-appellant #ho has been in possession thereof for (ore than forty years 7%. 9he records sho# that the co(plaint for recovery of possession #as led only on Mune !$ 18? despite the fact that defendantappellant has occupied the subAect land since February 1%$ 1%& up to the present. 9here is no doubt that the plainti:s-appellees long inaction in asserting their right to the subAect land bar the( fro( recovering the sa(e fro( defendantappellant under the e'uitable principle of laches. 9he la# serves those #ho are vigilant and diligent and not those #ho sleep #hen the la# re'uires the( to act. Bespondent argues that petitioners$ despite all the opportunity they had to i(plead respondent in the cases they led in 10& against those occupying Lot
Real Property Taxation Cases at best$ an indiciu( of possession in the concept of o#nership. Neither ta/ receipts nor declaration of o#nership for ta/ation purposes are evidence of o#nership or of the right to possess realty #hen not supported by other e:ective proofs.
?!0-)$ deliberately ignored and failed to do so. "n doing so$ petitioners slept on their rights and practically allo#ed laches to set in.
ISSUE
RULING-
No. Bespondent is not the registered o#ner of the lot she is occupying and she has failed to adduce evidence sho#ing that the property has been conveyed to her by the petitioners or by the original o#ner thereof. Bespondent has no evidence of her o#nership over the lot #here her house is erected. ;er allegation that the lot #as a#arded or given through a resolution by the Iunicipal overn(ent of >an Iateo$ "sabela$ cannot be given credence. )n e/a(ination of the ta/ declarations reveals that the property covered is not even specied and described #ith particularity the e/act location and borders #ere not (entioned. Bespondent utterly failed to sho# her o#nership of the land in 'uestion. "n fact$ the B9C and the Court of )ppeals have declared that the land being occupied by respondent is #ithin the land registered in the na(es of petitioners. 9he Court has ruled that unless there are intervening rights of third persons #hich (ay be a:ected or preAudiced by a decision directing the return of the lot to petitioners$ the e'uitable defense of laches #ill not apply as against the registered o#ners. J0?K "n the case at bar$ there being no intervening third persons #hose rights #ill be a:ected or preAudiced if possession of the subAect lot is restored to the petitioners$ the return of the sa(e is in order. Ender the circu(stances obtaining in this case$ the e'uitable doctrine of laches shall not apply.
G.R. No. 161440
June 18, 200@
Heir! o+ Sipi)io S%nti%o, represented by 'neit% S. C%!tro, petitioners$ vs. Heir! o+ =%ri%no E. S%nti%o, respondents.
F'CTS-
Real Property Taxation Cases >pouses Hicente >antiago and Iagdalena >anche3 are the original o#ners of the parcel of land in dispute 7Lot No. !%%. >i(plicio >antiago purchased the land fro( his father$ Pablo 7one of >pouses >antiagoTs sons and brother$ uiller(o. )fter ac'uiring the sa(e$ he then applied for a free patent over it on Iay &$ 18!$ #hich free patent #as granted$ thus$ an ,riginal Certicate of 9itle No. P-18?8 covering Lot !%% #as issued in his na(e. >o(eti(e in 18!$ through stealth and evident bad faith$ Iariano constructed a house on a portion of Lot !%% and refused to vacate the pre(ises despite #ritten and oral de(ands. 9hus$ >i(plicio >antiago instituted an action for )ccion Publiciana #ith Da(ages against Iariano >antiago. ,n the other hand$ Iariano >antiago contended that Lot No. !%% #as subdivided into three portions Lot !%%-)$ Lot !%%-6$ and Lot !%%-C. >i(plicio and his heirs o#ned only Lot !%%-6$ and Lots !%%-) and !%%-C #ere fraudulently included in the free patent and certicate of title issued to >i(plicio >antiago. Iariano testied that he and his sister bought Lot !%%-) fro( >i(plicio >antiago for the price of Php 0$.$ as evidenced by a deed of sale dated >ept. 10$ 1?. "((ediately after sale$ they constructed a house on the lot. 9he trial court ruled in favor of >i(plicioTs heirs and held that IarianoTs clai( over the controverted lot lacks basis and that his defense constitutes a collateral attack on the validity of a 9orrens title #hich #as barred by prescription for having been raised (ore than one year after the entry of the decree of registration. Iean#hile$ Iariano died and #as substituted by his heirs. ,n appeal$ the Court of )ppeals reversed the trial courtTs decision and ruled that the Free Patent and the ,riginal Certicate of 9itle issued in favor of >i(plicio >antiago are void$ because Lot !%% is a private land #hich cannot be the subAect of a Free Patent. ;ence$ the instant petition. ISSUES-
1. Lot !%% is a private property of the >antiago clan since ti(e i((e(orial and that they have declared the sa(e for ta/ation.
RESPONENTS
1. Lot !%% #as subdivided into three portions Lot !%%-)$ Lot !%%-6$ and Lot !%%-C. ;e and his sister$ 6elen >. Iarcelo$ bought fro( >i(plicio Lot !%%-)
Real Property Taxation Cases #hile Lot !%%-C #as inherited fro( their grand(other Iarta >antiago. RULINGNO.
)lthough ta/ declarations or realty ta/ pay(ent of property are not conclusive evidence of o#nership$ nevertheless$ they are good indicia of possession in the concept of o#ner$ for no one in his right (ind #ould be paying ta/es for a property that is not in his actual or constructive possession. 9hey constitute at least proof that the holder has a clai( of title over the property. 9he voluntary declaration of a piece of property for ta/ation purposes (anifests not only one4s sincere and honest desire to obtain title to the property and announces his adverse clai( against the >tate and all other interested parties$ but also the intention to contribute needed revenues to the overn(ent. >uch an act strengthens one4s bona de clai( of ac'uisition of o#nership. ;o#ever$ it is #orthy to note that although Lot !%%-C #as #ithin the property declared for ta/ation by the late >i(plicio >antiago$ he did not disturb the possession of Iarta and Iariano. )lso$ considering the open$ continuous$ e/clusive$ and notorious possession and occupation of the land by respondents and their predecessors in interests$ they are dee(ed to have ac'uired$ by operation of la#$ a right to a govern(ent grant #ithout the necessity of a certicate of title being issued. ;ence$ the free patent covering Lot !%%$ a private land$ and the certicate of title issued pursuant thereto$ are void. BespondentsT clai( of o#nership over Lot !%%-C and Lot !%%-) is fully substantiated. 9heir open$ contnuous$ e/clusive$ and notorious possession of Lot !%%-C in the concept of o#ners for (ore than seventy years supports their contention that the lot #as inherited by Iariano fro( his grand(other Iarta. 9his #as corroborated by respondentsT #itnesses. Lot !%%-C #as sold by >i(plicio >antiago to Iariano >antiago and 6elen >anche3. 9he docu(ent of sale evidencing the transaction is duly notari3ed and$ as such$ is considered a public docu(ent and enAoys the presu(ption of validity as to its authenticity and due e/ecution. 9his legal presu(ption #as not overco(e by petitioners. REN'TO CENIO &e)e%!e&/, repre!ente& 5* BICTORI' CENIOS' ! SPOUSES '='EO 'P'CION'O %n& HER=INI' ST'. 'N'
F)C9> ,n Iay $ 18$ respondent spouses )(adeo )pacionado and ;er(inia >ta. )na led a co(plaint against petitioner Benato Cenido for Declaration of ,#nership$ Nullity$ #ith Da(agesO$ alleging that
Real Property Taxation Cases they are the o#ners of a parcel of unregistered land and the residential house standing thereon$ #hich they purchased fro( its previous o#ner$ 6onifacio )parato$ no# deceased$ #ho lived under the spousesT care and protection for so(e t#enty years prior to his death. 9hey clai(ed that #hile 6onifacio )parato #as alive$ he (ortgaged the said property t#ice$ one to the Bural 6ank of 6inangonan and the other to Linda C. nares$ as security for loans obtained by hi($ and that the loans #ere paid o: by the spouses thereby securing the release and cancellation of said (ortgages. 9he spouses also clai(ed to have paid and continued to pay the real estate ta/es on the property and have been in open$ public$ continuous and uninterrupted possession of the property in the concept of o#ners fro( the ti(e of sale ,n Manuary ?$ 18?$ petitioner Benato Cenido$ clai(ing to be the o#ner of the subAect house and lot$ led a co(plaint for eAect(ent against the(. 9he spouses averred that Cenido #as able to cause the issuance of a ta/ delaration over the subAect property in his na(e through fraudulent and unauthori3ed (eans$ #hich fact they learned only upon the ling of the eAect(ent case. )lthough the eAect(ent case #as dis(issed by the Iunicipal 9rial Court$ the ta/ declaration in CenidoTs na(e #as not cancelled and still subsisted. 9he spouses referred the (atter to the barangay for conciliation but Cenido unAustiably refused to appear. Petitioner Cenido ans#ered clai(ing that he is the illegiti(ate son of 6onifacio )parato$ the deceased o#ner of the subAect property$ and as )paratoTs sole surviving heir$ he beca(e the o#ner of the property as evidenced by the cancellation of ta/ declaration in 6onifacioTs na(e and the issuance of a ne# one in his na(e. ;e also clai(ed that the real estate ta/es #ere paid for by his father$ the principal$ and the spouses #ere (erely his agents. ,n Iarch !$ 1!$ the trial court upheld petitioner CenidoTs o#nership over the property by virtue of the recognition (ade by 6onifacioTs then surviving brother$ avino$ in the co(pro(ise Audg(ent of the I9C. Conco(itantly$ the court also did not sustain the deed of sale bet#een 6onifacio and the spouses because it #as neither notari3ed nor signed by 6onifacio and #as intrinsically defective. 9he court believes that preponderance of evidence is on the side of defendant and so the co(plaint could not be given due course. Bespondent spouses appealed to the Court of )ppeals$ #hich found the appeal (eritorious and reversed the decision of the trial court. "t held that the recognition of CenidoTs liation by avino$ 6onifacioTs brother$ did not co(ply #ith the re'uire(ents of the Civil Code and the Fa(ily Code5 that the deed bet#een 6onifacio and respondent spouses #as a valid contract of sale over the property5 and CenidoTs failure to obAect to the presentation of the deed before the trial court #as a #aiver of the defense of the >tatute of Frauds$ declaring plainti:s-)ppellants >pouses )(adeo )pacionado and ;er(inia >ta. )na as o#ners of the subAect house and lot.
Real Property Taxation Cases ;ence$ this petition. ">>E+ <N 9he issue of petitionerTs paternity is essential to deter(ine #hether ta/ declaration in the na(e of petitioner Cenido should be nullied$ as prayed for by respondent spouses in their co(plaint. ;+LD N,. 9he ta/ declaration in CenidoTs na(e #as issued pursuant to the co(pro(ise Audg(ent of the I9C #here avino )parato$ 6onifacioTs brother$ e/pressly recogni3ed petitioner Cenido as 6onifacioTs sole illegiti(ate son. 9he co(pro(ise Audg(ent #as rendered in 180$ three years after 6onifacioTs de(ise. Ender the Civil Code$ natural children and illegiti(ate children other than natural are entitled to support and successional rights only #hen recogni3ed or ackno#ledged by the putative parent. Enless recogni3ed$ they have no rights #hatsoever against their alleged parent or his estate. 9he liation of illegiti(ate children (ay be proved by any of the for(s of recognition of natural children. 9his recognition (ay be (ade 71 voluntarily$ #hich (ust be e/press such as that in a record of birth$ a #ill$ a state(ent before a court of record$ or in any authentic #riting5 7 legally$ i.e.$ #hen a natural child is recogni3ed$ such recognition e/tends to his or her brothers and sisters of the full blood5 and 7! Audicially or co(pulsorily$ #hich (ay be de(anded by the illegiti(ate child of his parents. 9he action for co(pulsory recognition of the illegiti(ate child (ust be brought during the lifeti(e of the presu(ed parents. "n the case at bar$ petitioner Cenido did not present any record of birth$ #ill or any authentic #riting to sho# he #as voluntarily recogni3ed by 6onifacio as his illegiti(ate son. "n fact$ petitioner ad(itted on the #itness stand that he had no docu(ent to prove 6onifacioTs recognition$ (uch less his liation. 9he voluntary recognition of petitionerTs liation by 6onifacioTs brother before the I9C does not 'ualify as a Rstate(ent in a court of record.R Ender the la#$ this state(ent (ust be (ade personally by the parent hi(self or herself$ not by any brother$ sister or relative5 after all$ the concept of recognition speaks of a voluntary declaration by the parent$ or if the parent refuses$ by Audicial authority$ to establish the paternity or (aternity of children born outside #edlock. 9he co(pro(ise Audg(ent of the I9C does not 'ualify as a co(pulsory recognition of petitioner. "n the rst place$ #hen he led this case against avino )parato$ petitioner #as no longer a (inor. ;e #as already pushing fty years old. >econdly$ there is no allegation that after 6onifacioTs death$ a docu(ent #as discovered #here 6onifacio recogni3ed petitioner Cenido as his son. 9hirdly$ there is nothing in the co(pro(ise Audg(ent that indicates that the action before the I9C #as a settle(ent of 6onifacioTs estate #ith a gross value not e/ceeding P$.. Denitely$ the action could not have
Real Property Taxation Cases been for co(pulsory recognition because the I9C had no Aurisdiction over the subAect (atter. 9he Beal Property 9a/ Code provides that real property ta/ be assessed in the na(e of the person Ro#ning or ad(inisteringR the property on #hich the ta/ is levied. >ince petitioner Cenido has not proven any successional or ad(inistrative rights to 6onifacioTs estate$ the ta/ declaration in CenidoTs na(e (ust be declared null and void. CONSOLI'TE RUR'L 'NK C'G'$'N B'LLE$/, INC. vs. THE HONOR'LE COURT OF 'PPE'LS %n& HEIRS OF TEOORO EL' CRU# G.R. No. 1@21:1. J%nu%r* 18, 2006M F'CTS 9he Iadrid brothers #ere the registered o#ners of Lot No. ?!&-) situated in "sabela. >aid lot #as subdivided into several lots. ,n 10 )ugust 10?$ Bi3al Iadrid sold part of his share identied as Lot No. ?!&-)-?$ to )leAa a(iao 7hereafter a(iao and Felisa Dayag 7hereafter$ Dayag by virtue of a Deed of Sale$ to #hich his brothers o:ered no obAection as evidenced by their Joint Aidavit. 9he deed of sale #as not registered #ith the ,:ice of the Begister of Deeds of "sabela. ;o#ever$ a(iao and Dayag declared the property for ta/ation purposes in their na(es on Iarch 1&% under 9a/ Declaration. a(iao and Dayag sold the southern half of Lot No. ?!&-)-? to 9eodoro dela Cru3$ and the northern half to Bestituto ;ernande3. 9hereupon$ 9eodoro dela Cru3 and Bestituto ;ernande3 took possession of and cultivated the portions of the property respectively sold to the(. Later$ Bestituto ;ernande3 donated the northern half to his daughter$ +vangeline ;ernande3-del Bosario. 9he children of 9eodoro dela Cru3 continued possession of the southern half after their fathers death. "n a Deed of Sale dated 10 Mune 1?&$ the Iadrid brothers conveyed all their rights and interests over Lot No. ?!&-)-? to Pacico Iar'ue3$ #hich the for(er conr(ed. 9he deed of sale #as registered #ith the ,:ice of the Begister of Deeds of "sabela on Iarch 18. >ubse'uently$ Iar'ue3 subdivided Lot No. ?!&-)-? into eight 78 lots. ,n the sa(e date$ Iar'ue3 and his spouse$ Iercedita Iariana$ (ortgaged Lots Nos. ?!&-)-?-) to ?!&-)-?-D to the Consolidated Bural 6ank$ "nc. of Cagayan Halley to secure a loan of ,ne ;undred 9housand Pesos 7P1$.. 9hese deeds of real estate (ortgage #ere registered #ith the ,:ice of the Begister of Deeds. Iar'ue3 (ortgaged Lot No. ?!&-)-?-+ like#ise to the Bural 6ank of Cauayan 7B6C to secure a loan. )s Iar'ue3 defaulted in the pay(ent of his loan$ CB6 caused the foreclosure of the (ortgages in its favor and the lots #ere sold to it as the highest bidder. Clai(ing to be null and void the issuance of 9C9 Nos. 9-1%!?0 to 9-1%!85 the foreclosure sale of Lot Nos. ?!&-)-?-) to ?!&-)-?D5 the (ortgage to B6C5 and the sale to Cali/to$ the ;eirs-no# respondents herein-represented by +dronel dela Cru3$ led a case for reconveyance and da(ages the southern portion of Lot No. ?!&-) 7hereafter$ the subAect property against Iar'ue3$ Cali/to$ B6C and CB6.
Real Property Taxation Cases
Heir! ascribed the follo#ing errors to the B9C 71 it erred in nding that Iar'ue3 #as a buyer in good faith 7 it erred in validating the (ortgage of the properties to B6C and CB6 7! it erred in not reconveying Lot No. ?!&-)-?-6 to the(
=%rue alleged that apart fro( being the rst registrant$ he #as a buyer in good faith and for value. ;e also argued that the sale e/ecuted by Bi3al Iadrid to a(iao and Dayag #as not binding upon hi($ it being unregistered. For his part$ Cali/to (anifested that he had no interest in the subAect property as he ceased to be the o#ner thereof$ the sa(e having been reac'uired by defendant Iar'ue3. CR and co-defendant RC insisted that they #ere (ortgagees in good faith and that they had the right to rely on the titles of Iar'ue3 #hich #ere free fro( any lien or encu(brance.
RTC RULING- handed do#n a decision in favor of Iar'ue3$ CB6 and B6C. Further$ in the absence of proof that Iar'ue3 has actual or constructive kno#ledge of plainti:s and intervenors clai($ the Court has to rule that as the vendee #ho rst registered his sale$ Iar'ue3 o#nership over Lot ?!&-)-? (ust be upheld. Court o+ 'ppe%! Ruin B+H+B>+D and >+9 )>"D+ the decision of B9C. "n upholding the clai( of the ;eirs$ the Court of )ppeals held that Iar'ue3 failed to prove that he #as a purchaser in good faith and for value. "t noted that #hile Iar'ue3 #as the rst registrant$ there #as no sho#ing that the registration of the deed of sale in his favor #as coupled #ith good faith. Iar'ue3 ad(itted having kno#ledge that the subAect property #as being taken by the ;eirs at the ti(e of the sale.9he ;eirs #ere also in possession of the land at the ti(e. )nent the (ortgagees B6C and CB6$ the Court of )ppeals found that they (erely relied on the certicates of title of the (ortgaged properties. 9hey did not ascertain the status and condition thereof according to standard banking practice. For failure to observe the ordinary banking procedure$ the Court of )ppeals considered the( to have acted in bad faith and on that basis declared null and void the (ortgages (ade by Iar'ue3 in their favor.
;ence$ this petition. ISSUE-
Real Property Taxation Cases
N,. 9he provision is not applicable in the present case. "t conte(plates a case of double or (ultiple sales by a single vendor. "n the case at bar$ the subAect property #as not transferred to several purchasers by a single vendor. "n the rst deed of sale$ the vendors #ere a(iao and Dayag #hose right to the subAect property originated fro( their ac'uisition thereof fro( Bi3al Iadrid #ith the confor(ity of all the other Iadrid brothers in 10?$ follo#ed by their declaration of the property in its entirety for ta/ation purposes in their na(es. ,n the other hand$ the vendors in the other or later deed #ere the Iadrid brothers but at that ti(e they #ere no longer the o#ners since they had long before disposed of the property in favor of a(iao and Dayag. "n a situation #here not all the re'uisites are present #hich #ould #arrant the application of )rt. 10%%$ the principle of prior tempore, potior jure or si(ply he #ho is rst in ti(e is preferred in right$ should apply. 9he only essential re'uisite of this rule is priority in ti(e5 in other #ords$ the only one #ho can invoke this is the rst vendee. Endisputedly$ he is a purchaser in good faith because at the ti(e he bought the real property$ there #as still no sale to a second vendee. "n the instant case$ the sale to the ;eirs by a(iao and Dayag$ #ho rst bought it fro( Bi3al Iadrid$ #as anterior to the sale by the Iadrid brothers to Iar'ue3. 9he ;eirs also had possessed the subAect property rst in ti(e. 9hus$ applying the principle$ the ;eirs$ #ithout a scintilla of doubt$ have a superior right to the subAect property. Ioreover$ it is an established principle that no one can give #hat one does not havenemo dat quod non habet . )ccordingly$ one can sell only #hat one o#ns or is authori3ed to sell$ and the buyer can ac'uire no (ore than #hat the seller can transfer legally. "n this case$ since the Iadrid brothers #ere no longer the o#ners of the subAect property at the ti(e of the sale to Iar'ue3$ the latter did not ac'uire any right to it. "n any event$ assu(ing arguendo that )rticle 10%% applies to the present case$ the clai( of Iar'ue3 still cannot prevail over the right of the ;eirs since according to the evidence he #as not a purchaser and registrant in good faith. Prior registration of the subAect property does not by itself confer o#nership or a better right over the property. )rticle 10%% re'uires that before the second buyer can obtain priority over the rst$ he (ust sho# that he acted in good faith throughout fro( the ti(e of ac'uisition until the title is transferred to hi( by registration or failing registration$ by delivery of possession. "n the instant case$ the actions of Iar'ue3 have not satised the re'uire(ent of good faith fro( the ti(e of the purchase of the subAect property to the ti(e of registration. Found by the Court of )ppeals$ Iar'ue3 kne# at the ti(e of the sale that the subAect property #as being clai(ed or taken by the ;eirs.
Real Property Taxation Cases ,ne #ho purchases real property #hich is in actual possession of others should$ at least$ (ake so(e in'uiry concerning the rights of those in possession. 9he actual possession by people other than the vendor should$ at least$ put the purchaser upon in'uiry. ;e can scarcely$ in the absence of such in'uiry$ be regarded as a bona de purchaser as against such possessions. 9he rule of caveat emptor re'uires the purchaser to be a#are of the supposed title of the vendor and one #ho buys #ithout checking the vendors title takes all the risks and losses conse'uent to such failure. 6anks$ their business being i(pressed #ith public interest$ are e/pected to e/ercise (ore care and prudence than private individuals in their dealings$ even those involving registered lands. ;ence$ for (erely relying on the certicates of title and for its failure to ascertain the status of the (ortgaged properties as is the standard procedure in its operations$ #e agree #ith the Court of )ppeals that CB6 is a (ortgagee in bad faith. "n this connection$ Iar'ue3s obstention of title to the property and the subse'uent transfer thereof to CB6 cannot help the latters cause. "n a situation #here a party has actual kno#ledge of the clai(ants actual$ open and notorious possession of the disputed property at the ti(e of registration$ as in this case$ the actual notice and kno#ledge are e'uivalent to registration$ because to hold other#ise #ould be to tolerate fraud and the 9orrens syste( cannot be used to shield fraud. Lastly$ he re'uire(ent of good faith in the possession of the property nds no application in cases #here there is no second sale. "n the case at bar$ 9eodoro dela Cru3 took possession of the property in 1&% long before the sale to Iar'ue3 transpired in 1?& and a considerable length of ti(eeighteen 718 years in factbefore the ;eirs had kno#ledge of the registration of said sale in 18. )s )rticle 0& of the Civil Code aptly provides$ 7;e is dee(ed a possessor in good faith #ho is not a#are that there e/ists in his title or (ode of ac'uisition any *a# #hich invalidates it. 9hus$ there #as no need for the appellate court to consider the issue of good faith or bad faith #ith regard to 9eodoro dela Cru3s possession of the subAect property. Heir! o+ T%oner% C' G.R. No. L2::88 =%r)( 28, 1971 F'CTS- Fer(in Pa3 #as the registered o#ner of t#o parcels of land in 9ondo$ Ianila. 6oth lots #ere declared for ta/ation purposes under one ta/ declaration #ith an assessed value of P1$01&..
1!1 Fer(in Pa3 died$ Ianuel Pa3 ad(inistered the property and paid the ta/es thereon.
Real Property Taxation Cases ,n Nove(ber %$ 1%1$ the City 9reasurer of Ianila sold the said property in favor of Dr. )urelio Beyes for delin'uent ta/es fro( 1! to 1%1. )fter the lapse of one year$ or on Manuary 1&$ 1%!$ during the Mapanese occupation of the country$ to be e/act$ the said City 9reasurer e/ecuted a nal deed of sale thereof for P!.%! in favor of the said Dr. )urelio Beyes as the purchaser. 9he ne# certicate of title #as issued in favor of Dr. Beyes. Dr. )urelio Beyes$ sold the said lots for P%$0- to Muanita David . Muanita David sold the sa(e lots to Iariano 9aAonera 9aAonera eventually sold a s(all portion of the lot to the City of Ianila for the #idening of a street. Conse'uently 9ransfer Certicate of 9itle No. ?8& #as cancelled and replaced by 9ransfer Certicate of 9itle No. %!8%0. )(anda 9rigal and her co-heirs to the deceased o#ner Fer(in Pa3 led suit against the estate of )urelio Beyes and 9aAonera and the city treasurer 7to the e/clusion of Muanita David #ith the Court of First "nstance of Ianila to annul the public auction sale of the lots in 'uestion in favor of Dr. Beyes and all subse'uent transfers thereof$ the last being in favor of Iariano 9aAonera$ on the ground that the public auction sale conducted by the Chief of the Depart(ent of Finance and City 9reasurer of Ianila #as done #ithout notice to Fer(in Pa3$ the registered o#ner of the said property$ or to any of his heirs upon his death. B9C a:ir(ed. C) reversed the decision.
">>E+
Real Property Taxation Cases Ret it #as her gross negligence #hich brought about the appelleeTs predica(ent. Qno#ing her property to be subAect to ta/$ she neglected to pay her obligation. Higorous in her protest that she #as not given opportunity to protect her rights$ she at least neglected to put the overn(ent in a position to allo# her that opportunity. )nd this$ not#ithstanding the categorical (andate of section %8 of the Bevised )d(inistrative Code$ #hich she #as presu(ed to kno#$ and #hich (akes it Tthe duty of each personT ac'uiring real estate in the city to (ake a ne# declaration thereof$ #ith the advertence that failure to do so shall (ake the assess(ent in the na(e of the previous o#ner Tvalid and binding on all persons interested$ and for all purposes$ as though the sa(e had been assessed in the na(e of its actual o#ner. HEIRS OF ='RI'NO B. T'JONER' !. COURT OF 'PPE'LS, G.R. No. L2::88 =%r)( 28, 1971 F%)t!-
9his case arose after the Court of )ppeals reversed the decision of the trial court and declared null and void the public auction sale in 1%1 conducted by the City 9reasurer of Ianila of the t#o subAect parcels of land as #ell as the subse'uent sales of the sa(e of Muanita David and Iariano 9aAonera$ successively 7in 1%! and 1%%$ and ordered the latter to e/ecute a deed of conveyance of said properties in favor of herein private respondent. Pri%te re!pon&ent;! Tri% Court;! Court o+ 'ppe%!; )ontention )ontention3ruin Contention3ruin Fer(in Pa3 #as a )lthough there is 9hat the City registered o#ner no evidence 9reasurer of of t#o parcels of sho#ing that the Ianila lacked the land.
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Real Property Taxation Cases of property due to delin'uent ta/es.
of notice of sale to be published in the T;+B)LDT$ T+L D+6)9+T and TI)6E;)T ne#spapers of #ide circulation in the City of Ianila$ Philippine. •
"n a sale to satisfy delin'uent ta/es$ it is not necessary that the delin'uent ta/payer or any one holding or o#ning delin'uent property be personally notied of the sale5 it is su:icient that the notice of sale be advertised by publishing the sa(e in a ne#spaper and by posting the sa(e in conspicuous places of Ianila and in the City ;all of said city. 9his re'uire(ent has been acco(plished$
insu:icient to divest Jthe o#nersK of their title to the property$R it is #ell settled in this Aurisdiction upon authority of doctrinal Aurisprudence applying sections !8 and ! of )C9 No. %&$ as a(ended$ that #here a person ac'uires property by purchase #ithout kno#ledge of any defect in the title appearing on its face$ he is presu(ed to be a purchaser in good faith and as such he and the title ac'uired by hi( are entitled to protection under the la#.
I!!ue ?(et(er or not t(e !%e o+ t(e !u5e)t propert* %&e 5* t(e Cit* Tre%!urer &ue to &einuent t%>e! %! nu %n& oi& He&-
N,. 9he fact that the po#er to sell at public auction real estate delin'uent in$ the pay(ent of ta/es devolved upon the City )ssessor and not upon the 9reasurer of the City of Ianila according to the ruling in Helayo vs. ,rdove3a$ et al.$ 1 Phil. !0$ (ay no longer be invoked to recover the property fro( petitioners. 9o grant the relief prayed for U that is the annul(ent of the sale and reconveyance of the property to re respondents U #ould be to i(pair public condence in the certicate of title$ for everyone dealing #ith property #ould have to in'uire in every instance as to #hether the title has been regularly or irregularly issued by the court and this is contrary to the evident purpose of the la#. 9his is particularly true #here the treasurerTs deed of sale #as accorded full credit and validity by the land registration court and the Begister of Deeds #ho
Real Property Taxation Cases on the strength thereof ordered the cancellation of the title in the na(e of Fer(in Pa3 and the issuance of a ne# 9orrens 9itle in the na(e of Beyes as the buyer at the ta/ sale and in the na(es of the subse'uent buyers of the property in 'uestion. "t is #orth noting that the private respondents ca(e to kno# of the sale at public auction of the properties in 'uestion in the year 1%!5 yet$ they #ere rst heard to co(plain about it only on Dece(ber 1$ 1%8 ? 7ve years after they had ad(ittedly learned of the ta/ sale and seven years after the actual sale #hen the property had already reached the hands of innocent purchasers like Muanita David 9aAoneraTs predecessor-in-interest and her vendee$ 9aAonera "t is on this score that the cited case of Helasco vs. ,rdone3$ et al.$ 8 cited by the Court of )ppeals$ di:ers fro($ and losses its applicability to$ the case at bar insofar as it #ould cancel petitionersT title. "n said case$ the annul(ent of the auction sale conducted by the City 9reasurer of Ianila and the conr(ation of the rights of the original registered o#ner therein ca(e at a ti(e #hen the property sold at public auction for ta/ delin'uency had not yet passed to the hands of an innocent purchaser for value$ unlike in the case at bar. pouses Benato and Iaria )urora M. Enico purchased an 8s'uare (eter residential property cover by 9C9 No. &!!&1 fro( spouses Ianuel and )doracion de los >antos in 1?8. Despite pay(ent of the full purchase price$ they did not register the sale in the Begistry of Deeds nor declared the property for ta/ation purposes (uch less paid the real property ta/. Due to ta/ delin'uency$ the property #as sold at public auction on Iarch 0$ 18% to spouses ;u Chuan and Leoncia Li( ;u. )fter a year$ they led a petition for consolidation of o#nership and issuance of ne# title. >ubse'uently$ 9C9 No. !&&!1 #as issued to the(. ,nly in Dece(ber$ 18&$ did Benato and Iaria decide to pay their realty ta/ on the property but they #ere infor(ed that the property #as already registered in the na(es of the spouses ;u. 9hus$ Benato and Iaria led a co(plaint for annul(ent of sale and da(ages before the B9C of 2ue3on City. )ccording to the($ the City 9reasurer and the Begistry of Deeds sent notices to the spouses De los >antos. 6ecause they #ere never infor(ed of the ta/ sale$ they #ere deprived of their property #ithout due process$ hence the ta/ sale #as void. For the sa(e reason$ the B9C voided the ta/ sale$ #hich #as a:ir(ed by the Court of )ppeals$ thus the spouses ;u elevated their case to the >upre(e Court. )ccording to the($ they
Real Property Taxation Cases could not be preAudiced by the spouses4 failure to receive the notice of ta/ sale and advertise(ent.
Real Property Taxation Cases
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CONTENTIONS OF THE P'RTIES Cit* Tre%!urer o+ "ueon Spou!e! Ren%to %n& =%ri% Cit* Uni)o Due to the o#ner4s ta/ 9he City 9reasurer of 2ue3on delin'uency$ the City City and the Begistrar of 9reasurer sent the notice of Deeds of 2ue3on City never ta/ sale and advertise(ent to infor(ed the( of the ta/ the registered o#ners delin'uency sale$ hence they >pouses de los >antos$ since #ere deprived of their the >pouses Enico property #ithout due process negligently failed to register of the la# and the sale the property they purchased should be void. fro( the latter to their 9he B9C found that the na(es. >pouses Enico #ere the 9he City #as able to sell said actual occupants of the property at a public auction property$ thus$ the City to the >pouses ;u #ho #ere 9reasurer erred #hen it sent able to have a ne# title the notice of ta/ sale to issued under their na(es. >pouses de los >antos$ thus it nullied the ta/ sale. 9he local treasurer cannot rely solely on the ta/ declaration but (ust verify #ith the Begister of Deeds #ho the registered o#ner of the particular property is. >ince it #as the de los >antos #ho are still the registered o#ners$ the notices #ere sent to the(. •
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ISSUE- ?(et(er or not t(e t%> !%e %! oi& !in)e t(e !pou!e! Uni)o &i& not re)eie t(e noti)e o+ t%> !%e %n& %&erti!eent.
HEL9he >upre(e Court held that the sale to the >pouses ;u #as valid. ection & of PD %&%. 9C9 No. !&&!1 issued to the spouses de los >antos #as never cancelled and respondents never
Real Property Taxation Cases paid realty ta/ on the property since they ac'uired it. 9hus$ the spouses de los >antos re(ained the registered o#ners of the property in the 9orrens title and ta/ declaration. >ince the transfer of the property to respondents #as never registered$ the City 9reasurer correctly sent notice of the ta/ sale and advertise(ent to the spouses de los >antos and the ta/ sale conducted in connection there#ith #as valid.
Real Property Taxation Cases e Kne)(t C' G.R. No. 107016. =%* 20, 1997 F'CTS-
9his involves a parcel of land located at +D>). 9he land #as o#ned by petitioners Cristina de Qnecht and her son$ Bene Qnecht$ issued in their na(es. 9he Qnechts constructed eight 78 houses$ leased out the seven and occupied one of the( as their residence. 9he Bepublic of the Philippines initiated e/propriation against the Qnecht4s property. 9he govern(ent sought to utili3e the land for the co(pletion of the Ianila Flood Control and Drainage ProAect. 9he CF" issued a #rit of possession. ,n petition of the Qnechts$ ho#ever$ clai( that the choice of area for the e/tension of +D>) #as arbitrary$ seeking to annul the #rit of possession. 9he City 9reasurer discovered that the Qnechts failed to pay real estate ta/es on the property. )s a conse'uence of this deciency$ the City 9reasurer sold the property at public auction for the su( a(ount of the deciency ta/es. 9he highest bidders #ere respondent >pouses )nastacio and Felisa 6abiera 7the 6abieras and respondent >pouses )leAandro and Flor >angalang 7the >angalangs. Petitioners failed to redee( the property #ithin one year fro( the date of sale. >pouses 6abiera and >angalang led petition for registration of their na(e as co-o#ner pro-indiviso of the subAect land. 6ut it #as led allegedly #ithout notice to the Qnechts. 9he trial court ordered the B,D to register 6abiera4s and >angalang4s na(e. Pursuant to said orders$ the Begister of Deeds issued said lots in the na(es of >angalang and 6abiera. 9he Qnechts$ #ho #ere in possession of the property$ allegedly learned of the auction sale only by the ti(e they received the orders of the land registration courts. Further$ the >angalang and 6abiera sold the land to respondent >ale( "nvest(ent Corporation 7>ale(. 9he ne# 9C9 #as issued in the na(e of >ale(. Iean#hile$ on February 1?$ 18!$ 6.P. 6lg. !% #as passed authori3ing the national govern(ent to e/propriate properties in said land of #hich the property of the Qnechts #as part of those e/propriated. 9he Qnechts led a Case before the B9C praying for reconveyance$ annul(ent of the ta/ sale and the titles of the 6abieras and >angalangs. 9he Qnechts based their action on lack of the re'uired notices to the ta/ sale. 9he Civil Case proceeded. 9he Qnechts presented their evidence. 9hey$ ho#ever$ repeatedly re'uested for postpone(ents. )t the hearing in 188$ they and their counsel failed to appear. )ccordingly$
Real Property Taxation Cases the trial court dis(issed the case for Rapparent lack of interest of plainti:sconsidering that the case had been pending for an unreasonable length of ti(e. 9he Qnechts (oved to set aside the order of dis(issal. 9he (otion #as denied for late ling and failure to furnish a copy to the other parties. 9he Qnechts 'uestioned the order of dis(issal before the Court of )ppeals. 9he appellate court sustained the trial court. 9he petition #as denied for late pay(ent of ling fees and for failure to su:iciently sho# any reversible error. 9he petition #as denied #ith nality and entry of Audg(ent #as (ade. 9hree 7! (onths later$ through the order of the court$ seven of the eight houses of the Qnechts #ere de(olished and the govern(ent took possession of the portion of land on #hich the houses stood. Iean#hile$ >ale( conveyed so(e of the subAect property to respondent spouses Iariano and )nacoreta Noco( and #as issued in their na(es. >ale( re(ained the o#ner of $%.& s'uare (eters of #hich the Qnechts had their residence. >ince the Qnechts refused to vacate their one re(aining house$ >ale( instituted against the( Civil Case for unla#ful detainer before the I9C. )s defense$ the Qnechts clai(ed o#nership of the land and building. 9he Iunicipal 9rial Court$ ho#ever$ granted the co(plaint and ordered the QnechtsT eAect(ent. Pursuant to a #rit of e/ecution$ the last house of the Qnechts #as de(olished. 9he Qnechts instituted a case for recovery of o#nership and possession of the property. 9he trial court on the ground of res judicata dis(issed the case. 9he Qnechts challenged the order of dis(issal in C). 9he QnechtsT RIotion for +/tension of 9i(e to File Petition for ertiorariR #as denied also and the entry of Audg(ent #as (ade. Iean#hile$ the trial court issued an order /ing the co(pensation of all the lands sought to be e/propriated by the govern(ent of #hich the Qnecht challenged but #as denied. )nd appealed to C). 9he Court of )ppeals dis(issed the petition and denied the QnechtsT intervention after nding that the Qnechts had no legal interest on the subAect property. 9he Qnechts instituted also before the Court of )ppeals an original action for annul(ent of Audg(ent of the trial courts. 9herein$ the Qnechts challenged the validity of the orders of the land registration courts in the t#o petitions of the >angalangs and 6abieras for registration of their na(es$ the reconveyance caseand the Aust co(pensation proceedings. 9he Qnechts 'uestioned the validity of the titles of the 6abieras and >angalangs$ and those of >ale( and the Noco(s$ and prayed for the issuance of ne# titles in their na(es. 9hey also sought to restrain further releases of pay(ent of Aust co(pensation to >ale( and the Noco(s.
Real Property Taxation Cases 9he Court of )ppeals dis(issed the petition for lack of (erit. ISSUE-
N,. 9he >upre(e Court Buled against the petitioners. "n its decision$ the C) held that the Qnechts had no right to intervene for lack of any legal right or interest in the property subAect of e/propriation. 9he appellate court declared that it #as not an e/propriation proceeding but (erely a case for the /ing of Aust co(pensation. 9he QnechtsT right to the land had been foreclosed after they failed to redee( it one year after the sale at public auction. ince the petitions 'uestioning the order of dis(issal #ere like#ise dis(issed by the Court of )ppeals and this Court$ the order of dis(issal beca(e nal and res judicata on the issue of o#nership of the land. Further$ the Qnechts urge this Court$ in the interest of Austice$ to take a second look at their case. 9hey clai( that they #ere deprived of their property #ithout due process of la#. 9hey alleged that they did not receive notice of their ta/ delin'uency and that the B,D did not order the( to surrender their o#nerTs duplicate for annotation of the ta/ lien prior to the sale. Neither did they receive notice of the auction sale. )fter the sale$ the certicate of sale #as not annotated in their title nor in the title #ith the B,D. "n short$ they did not kno# of the ta/ delin'uency and the subse'uent proceedings #hen they received the orders of the land registration courts led by the 6abieras and >angalangs. 9his is the reason #hy they #ere unable to redee( the property. "t has been ruled that the notices and publication$ as #ell as the legal re'uire(ents for a ta/ delin'uency sale$ are (andatory5 and the failure to co(ply there#ith can invalidate the sale. 9he prescribed notices (ust be sent to co(ply #ith the re'uire(ents of due process. 9he clai( of lack of notice$ ho#ever$ is a factual 'uestion. 9his Court is not a trier of facts. Ioreover$ this factual 'uestion had been raised repeatedly in all the previous cases led by the Qnechts. 9hese cases have laid to rest the 'uestion of notice and all the other factual issues they raised regarding the property. !es judicata had already set in. !es judicata is a ground for dis(issal of an action. "t is a rule that precludes parties fro( relitigating issues actually litigated and deter(ined by a prior and nal Audg(ent.
Real Property Taxation Cases Aurisdiction$ or an opportunity for such trial has been given$ the Audg(ent of the court$ so long as it re(ains unreversed$ should be conclusive upon the parties and those in privity #ith the( in la# or estate. 9o follo# a contrary doctrine #ould subAect the public peace and 'uiet to the #ill and neglect of individuals and prefer the gratication of the litigious disposition of the parties to the preservation of the public tran'uility. !es judicata applies #hen 71 the for(er Audg(ent or order is nal5 7 the Audg(ent or order is one on the (erits5 7! it #as rendered by a court having Aurisdiction over the subAect (atter and the parties5 7% there is bet#een the rst and second actions$ identity of parties$ of subAect (atter and of cause of action.
Petitioners clai( that is not res judicata. 9hey contend that there #as no Audg(ent on the (erits one rendered after a consideration of the evidence or stipulations sub(itted by the parties at the trial of the case. 9hey stress that Case #as dis(issed upon petitionersT failure to appear at several hearings and #as based on Rlack of interestR. 9he >C #as not i(pressed by petitionersT contention. RLack of interestR is analogous to Rfailure to prosecute.R >ection ! of Bule 1? of the Bevised Bules of Court provides R>ection !. "ailure to #rosecute .-- "f plainti: fails to appear at the ti(e of the trial$ or to prosecute his action for an unreasonable length of ti(e$ or to co(ply #ith these rules or any order of the court$ the action (ay be dis(issed upon (otion of the defendant or upon the courtTs o#n (otion. 9his dis(issal shall have the e:ect of an adAudication upon the (erits$ unless other#ise provided by court.R
)n action (ay be dis(issed for failure to prosecute in any of the follo#ing instances 71 if the plainti: fails to appear at the ti(e of trial5 or 7 if he fails to prosecute the action for an unreasonable length of ti(e5 or 7! if he fails to co(ply #ith the Bules of Court or any order of the court. ,nce a case is dis(issed for failure to prosecute$ this has the e:ect of an adAudication on the (erits and is understood to be #ith preAudice to the ling of another action unless other#ise provided in the order of dis(issal. "n other #ords$ unless there be a 'ualication in the order of dis(issal that it is #ithout preAudice$ the dis(issal should be regarded as an adAudication on the (erits and is #ith preAudice. Prior to the dis(issal of$ the Qnechts #ere presenting their evidence. 9hey$ ho#ever$ repeatedly re'uested for postpone(ents and failed to appear at the last scheduled hearing. 9his pro(pted >ale( to (ove for dis(issal of the case. "t appears that counsel for the plainti: has been duly notied but despite notice failed to appear and considering that this case has been pending for 'uite a considerable length of ti(e$ on (otion of counsel
Real Property Taxation Cases for the defendant >ale( "nvest(ent$ for apparent lack of interest of plainti:s$ let their co(plaint be D">I">>+D. 9he order of dis(issal #as based on the follo#ing factors 71 pendency of the co(plaint for a considerable length of ti(e5 7 failure of counsel to appear at the scheduled hearing despite notice5 and 7! lack of interest of the petitioners. Ender >ection !$ Bule 1?$ a dis(issal order #hich does not provide that it is #ithout preAudice to the ling of another action is understood to be an adAudication on the (erits. ;ence$ it is one #ith preAudice to the ling of another action.
9he order of dis(issal #as 'uestioned before the Court of )ppeals and this Court. 9he petitions #ere dis(issed and the order a:ir(ing dis(issal beca(e nal. >ince the dis(issal order is understood to be an adAudication on the (erits$ then all the ele(ents of res judicata have been co(plied #ith. >aid case is therefore res judicata on the issue of o#nership of the land. 9he Qnechts contend$ ho#ever$ that the facts of the case do not call for the application of res judicata because this a(ounts to Ra sacrice of Austice to technicality.R 9he >C contends that it cannot sustain said argu(ent. "t (ust be noted that the Qnechts #ere given the opportunity to assail the ta/ sale and present their evidence on its validity in the Case$ the reconveyance case. 9hrough their and their counselTs negligence$ ho#ever$ this case #as dis(issed. 9hey led for reconsideration$ but their (otion #as denied. 9he Court of )ppeals upheld this dis(issal. >C a:ir(ed the dis(issal not on the basis of a (ere technicality. >C revie#ed the (erits of petitionersT case and found that the Court of )ppeals co((itted no reversible error in its 'uestioned Audg(ent. 9he Qnechts cannot be allo#ed to avoid the e:ects of res judicata. Neither can they be allo#ed to vary the for( of their action or adopt a di:erent (ethod of presenting their case to escape the operation of the principle. 9o grant #hat they seek #ill encourage endless litigations and foru(-shopping. "n the e/propriation case led$ four (onths earlier$ for reconveyance #as dis(issed #ith nality by >C and Audg(ent #as entered. 9he Qnechts lost #hatever right or colorable title they had to the property after a:ir(ing the order of the trial court dis(issing the reconveyance case. 9he fact that the Qnechts re(ained in physical possession cannot give the( another cause of action and resurrect an already settled case. 9he QnechtsT possession of the land and buildings #as based on their clai( of o#nership$ not on any Auridical title such as a lessee$ (ortgagee$ or vendee. >ince the issue of o#nership #as put to rest$ it follo#s that their physical possession of the property after the nality of said case #as bereft of any legality and (erely subsisted at the tolerance of the registered o#ners. 9his tolerance ended #hen >ale( led for unla#ful detainer against the Qnechts. )s prayed for$ the trial court ordered their eAect(ent and the de(olition of their re(aining house.
Real Property Taxation Cases "ndeed$ the Qnechts had no legal interest in the property by the ti(e the e/propriation proceedings #ere instituted. 9hey had no right to intervene and the trial court did not err in denying their RIotion for "ntervention and to "(plead )dditional Parties.R "N H"+< <;+B+,F$ the is dis(issed and the Iotion for Beconsideration is denied. 9he decisions of the Court of )ppeals are a:ir(ed. >, ,BD+B+D. E!t%te o+ J%)o5 C' G.R. No!. 1204@6. e)e5er 22, 1998
F)C9> 181 Iercedes Macob is the registered o#ner of the land of the subAect (atter$ left for the Enited >tates. 6efore she did$ she asked her son-in-la# Luciano 2uinto Mr. to pay the real estate ta/es on her property. ;o#ever$ Luciano Mr. #as not allo#ed to pay by the City 9reasurerTs ,:ice as he had no #ritten authori3ation fro( her. "n 18% respondent City 9reasurer of 2ue3on City sent a notice to Iercedes Macob through her daughter Lilian Macob 2uinto that her real estate ta/es on the property #ere delin'uent. Lilian #as also infor(ed that the land #as already sold at public auction on % )ugust 18! to private respondent Hirginia 9ugbang for P&$8. to satisfy the ta/ delin'uency of the land. ,n ! >epte(ber 180 Hirginia led a petition for the cancellation of 9C9 No. !1?8 and the issuance of a ne# certicate of title in her na(e alleging in par. % of her petition that / / / 7,n )ugust ?$ 180$ the period of rede(ption on the sold property having already e/pired and the registered o#nerdelin'uent ta/payer$ Iercedes Macob$ and any other interested party$ did not$ #ithin the said period$ take any step to redee( the property and pursue any la#ful re(edy to i(peach the proceedings or to enforce any lien or clai( thereon$ thereby allo#ing the sale to beco(e nal and absolute$ Cit* Tre%!urer o+ "ueon Cit* C' %n& . Toentino G.R. No. 120984 e)e5er 22, 1998
F)C9> )lberto >ta. Iaria o#ned a parcel of land covered by 9C9 No. &8818 #hich he sold in 1&% to 9eresa L. Halencia #ho$ as a conse'uence$ had the title canceled and 9C9 No. ?818 issued in her na(e. >he ho#ever failed to have the ta/ declaration
Real Property Taxation Cases transferred in her na(e. 9hus she paid the real estate ta/es fro( 1&% to 1?8 in the na(e of its previous o#ner )lberto >ta. Iaria. "n the auction sale on February 18% the spouses Bo(eo and Herna Chua bought the land in 'uestion$ #hich #as already covered by 9C9 No. ?818 in the na(e of 9eresa L. Halencia. ,n 0 Iarch 18% a certicate of sale #as issued to the Chua spouses but it sho#ed on its face that the land #as still covered by 9C9 No. &8818 and not 9C9 No. ?818. )pparently$ the ,:ice of the City 9reasurer #as una#are that 9C9 No. &8818 had already been canceled by 9C9 No. ?818. ;o#ever$ in the Final 6ill of >ale issued to the Chua spouses on 10 Iay 180 9C9 No. ?818 still appeared in the na(e of )lberto >ta. Iaria$ the for(er o#ner$so that the vendee spouses lost no ti(e in ling a petition #ith the Begional 9rial Court of 2ue3on City for the cancellation of 9C9 No. ?818 and the issuance of a ne# title in their na(e. ,n % February 18? the court granted their petition and 9C9 No. !0??? #as issued in the na(e of the spouses Bo(eo and Herna Chua. ,n Dece(ber 1?! Halencia entered into a contract of sale of the property on install(ent #ith a (ortgage in favor of respondent 6ernardita C. 9olentino. ;o#ever$ fro( 1? to 18! Halencia failed to pay the real estate ta/es due on the land. )s a result$ notices of ta/ delin'uency and intent to sell the property #ere sent to )lberto >ta. >till$ 6ernardita C. 9olentino paid in full the purchase price of the property so that 9eresa L. Halencia e/ecuted a deed of absolute sale in her favor. ,n )ugust 188$ in vie# of the re that gutted the ,:ice of the Begister of Deeds of 2ue3on City$ 9olentino led a petition for reconstitution of 9C9 No. ?818. >o(eti(e in )pril 18$ as purchasers of the property in the auction sale$ the Chuas de(anded delivery of possession fro( 6ernardita C. 9olentino and 9eresa L. Halencia. 9olentino sued for annul(ent of the auction sale in the Begional 9rial Court of 2ue3on City. Finding the action to be #ell taken$ the trial court granted the petition. 9he Court of )ppeals a:ir(ed the court a quo.
">>E+
Real Property Taxation Cases o#ner$ )lberto >ta. Iaria$ #ho sold the property to Halencia in 1&%. "n fact$ at the ti(e of the auction sale$ the property #as already covered by a conditional sale on install(ent in favor of respondent 6ernardita C. 9olentino. Plainly$ at the ti(e of the auction sale$ )lberto >ta. Iaria #ho appeared to have been notied of the auction sale #as no longer the registered o#ner$ (uch less the delin'uent ta/payer. "n ascertaining the identity of the delin'uent ta/payer$ for purposes of notifying hi( of his ta/ delin'uency and the prospect of a distraint and auction of his delin'uent property$ petitioner City 9reasurer should not have si(ply relied on the ta/ declaration. 9he property being covered by the 9orrens syste($ it #ould have been (ore prudent for hi($ #hich #as not di:icult to do$ to verify fro( the ,:ice of the Begister of Deeds of 2ue3on City #here the property is situated and as to #ho the registered o#ner #as at the ti(e the auction sale #as to take place$ to deter(ine #ho the real delin'uent ta/payer #as #ithin the purvie# of the third paragraph of >ec. ?!. For one #ho is no longer the la#ful o#ner of the land cannot be considered the Rpresent registered o#nerR because$ apparently$ he has already lost interest in the property$ hence is not e/pected to defend the property fro( the sale at auction. 9he purpose of PD No. %&% is to collect ta/es fro( the delinquent ta$pa%er and$ logically$ one #ho is no longer the o#ner of the property cannot be considered the delinquent ta$pa%er . RT failure to do so shall ma&e the assessment in the name of the previous o'ner valid and binding on all persons interested, and for all purposes, as though the same had been assessed in the name of its actual o'ner,R found in both B) No. 0!? and B) No. % #as not incorporated in PD No. %&% i(plies that the assess(ent of the subAect property in 18! in the na(e of >ta. Iaria #ould not bind$ (uch less adversely a:ect$ Halencia. 9his$ in spite of the non-declaration by Halencia of the property in her na(e as re'uired by the la#$ for there is no longer any statutory #aiver of the right to contest assess(ent by the actual o#ner due to (ere non-declaration. ec. ? of PD No. %&% is the actual o#ner of the property at the ti(e of the delin'uency and (ere co(pliance by the provincial or city treasurer #ith >ec. &0 of the decree is no longer enough. J%K 9he notication to the right person$ i.e.$ the real o#ner$ is an essential and indispensable re'uire(ent of the la#$ non-co(pliance #ith #hich renders the auction sale void. 9he registered o#ner need not be entirely bla(ed for her failure to transfer the ta/ declaration in her na(e. >ection ? of PD No. %&%
Real Property Taxation Cases directs the assessor$ in case the o#ner fails to (ake a return$ to list the real estate for ta/ation and charge the ta/ against the true o#ner if kno#n$ and if unkno#n$ then as against the unkno#n o#ner. "n this #ay$ a change of o#nership (ay be ascertained.
Corpor%te Str%teie! eeopent Corp., %n& R%+%e R. Prieto !. Nor%n '. 'oo G.R. No. 207840, Noe5er 19, 2014 F%)t!-
Corporate >trategies Develop(ent Corp.$ 7C>DC is the registered o#ner of a parcel of land in Iakati City #ith an area of 1$ s'uare (eters$ "t is like#ise covered by 9a/ Declarations Nos. and F%1%00 and F%1%0&$ in the na(e of C>DC. Fro( 1% to &$ its real property ta/es in the a(ount of P1$%08$1.80$ had not been paid. )s a result$ a #arrant #as issued on )pril ?$ &$ by the City 9reasurer of Iakati subAecting the property to levy pursuant to >ection 08 of the Local overn(ent Code 7LC. ) public auction sale #as conducted on Iay %$ &$ during #hich the respondent turned out to be the highest bidder #ith a bid a(ount of P$$.. Conse'uently$ a certicate of sale #as issued in his favor on even date. 9he said certicate #as later registered in the Begistry of Deeds. )fter the e/piration of the one 71 year rede(ption period$ respondent led #ith the B9C a petition for the issuance of a ne# certicate of title for the subAect property. ,n )ugust $ 8$ C>DC led its opposition to the said petition #hile Prieto$ in his capacity as C>DC President$ led his on ,ctober $ 8. )s oppositors$ C>DC and Prieto alleged that they did not received a notice of ta/ delin'uency or the #arrant subAecting the property$ that the pertinent notice and #arrant #ere apparently sent to C>DC4s old o:ice address$ and that the sale violated the procedural re'uire(ents prescribed under the LC. >pecically$ they 'uestioned the follo#ing 7a failure of the City 9resurer to e/ert further steps to send the #arrant at the address #here the property #as located 7b the failure to serve the copied of the #arrant onA the occupant of the property as (andated by >ection 08 of the LC 7c failure to serve the copies of the #arrant of levy upon Begister of Deeds and the City )ssessor of Iakati prior to the auction sale
Real Property Taxation Cases 7d failure to annotate the notice of the levy on the title of the property to conduct of the auction sale 7e gross inade'uacy of the bid price considering thart it only represented 0@ of the value of the property in the total a(ount of P!0$$. based on 3onal evaluation 6ecause of these alleged defects$ petitioner assailed the auction sale for being defective. ,n )ugust !$ 8$ C>DC led a (otion to deposit the a(ount of P!$8$. pursuant to >ection &? of the LC$ as guarantee to repondents should the sale be declared void. 9he B9C granted the said (oion. Later on B9c rendered a decision #hich voided the auction sale. ,n appeal C) decided to a:ir( the ndings and conclusion sof the B9C. "t held that there #as failure on the part of the City of Iakati to fully co(ply #ith the re'uir(ents of publication$ posting and service of the notice of delin'uency and #arrant of levy. ,n February $ 1 respondent (oved for reconsideration$ the C) reconsidered its decision$ thus$ reversing its earlier pronounce(ent. "t held valid the auction sale on the basis of the presu(ption of regularity in the perfor(ance of the City 9reasure4s duties. I!!ue!-
1
re'uire(ents of ta/ delin'uency
Ruin-
1.No$ the >upre(e Court established in so(e cases$ that there could be no presu(ption of the regularity of any ad(ibnistrative action #hich #ill result in depriving a ta/payer of his property through a ta/ sale. 9his is an e/ception to the rule that ad(inistrative proceedings are presu(ed to be regular. 9his is pre(ised on the rule that a sale of land for ta/ delin'uency is in derogation of propertuy and due process rights of the registered o#ner. .No$ the notice of ta/ delin'uency #as not proven to have been posted at the Iakati City ;all and in 6rgy. Das(arinas$ Iakati City$ #here the property is located. "t #as no proven either that the re'uired advertise(ents #ere e:ected in accodance #ith la#.
Real Property Taxation Cases Ender >ection 0% of the LC$ it is re'uired that the notice of delin'uency (ust be posted at the (ainhall and in a publicly accessible and conspuicuos place in each barangay of the local govern(ent unit concerned$ "t shall also be published once a #eek for t#o 7 consecutive #eeks$ in a ne#spaper of general circulation in the province($ city or (unicipality. Ender >ection 08 of the LC further re'uires that should a treasurer issue a #arrant of levy$ the sa(e shall be (ailed to or served upon the delin'uent o#ner of the real property or person having legal interest therein$ or in case he is out of the country ior cannot be located$ the ad(inistrator or occupant of the property. )t the sa(e ti(e$ the #ritten notice of the levy #ith the attached #arrant shall be (ailed to or served upon assessor and the Begister of Deeds of the province$ city or (unicipality #ithin the Ietro Ianila )rea #here the property is located$ #ho shall annotate the levy on the ta/ declaration and certicate of title of the propertyu respectively. Ender >ection & od the LC also (andates that #ithin ! days aftyer the service of the #arrant of levy. 9he local treasurer shall proceed to publicly advertise for sale or auction the property or a usable portion thereof as (nay be necessary to satisfy the ta/ delin'uency and e/penses of sale. >uch advertise(ent shall be e:ected by posting a notice at the (ain entrance iof the provincial$ city or (unicipal building$ and in a publicly accessible and conspicuos place in the barangay #here the real property is located and by publication once a #eek for #eeks$ in a ne#spaper of general circulation in the province$ city or (unicipality #here the property is located. Bespondent failed to sho# co(pliance #ith the aforestated re'uire(ents$ the non fulll(ent of #hich vitiates the sale.
G.R. No. 118688, e)e5er 01, 1996 'e%n&ro . T* %n& =BR Pi)ture Tu5e, In). $ petitioners$ vs. T(e Hon. 'ureio C. Tr%pe $ in his capacity as Mudge of the Begional 9rial Court of Pasig$ Ietro Ianila$ T(e Hon. Se)ret%r* o+ Fin%n)e, T(e =uni)ip% '!!e!!or o+ P%!i and T(e =uni)ip% Tre%!urer o+ P%!i$ respondents.
F'CTS-
Petitioner )leAandro 6. 9y is a resident of and registered o#ner of lands and buildings in the Iunicipality 7no# City of Pasig$ #hile petitioner IHB Picture 9ube$ "nc. is a corporation duly organi3ed and
Real Property Taxation Cases e/isting under Philippine la#s and is like#ise a registered o#ner of lands and buildings in said Iunicipality Bespondent >ecretary of Finance is i(pleaded as the govern(ent o:icer #ho approved the >chedule of Iarket Halues used as basis for the ne# ta/ assess(ents being enforced by respondents Iunicipal )ssessor and Iunicipal 9reasurer of Pasig and the legality of #hich is being 'uestioned in this petition. ,n Manuary &$ 1%$ respondent )ssessor sent a notice of assess(ent respecting certain real properties of petitioners located in Pasig$ Ietro Ianila. "n a letter dated Iarch 18$ 1%$ petitioners through counsel re'uested the Iunicipal )ssessor to reconsider the subAect assess(ents. Not satised$ petitioners on Iarch $ 1% led #ith the Begional 9rial Court of the National Capital Mudicial Begion$ 6ranch 1&!$ presided over by respondent Mudge$ a Petition for Prohibition #ith prayer for a restraining order andor #rit of preli(inary inAunction to declare null and void the ne# ta/ assess(ents and to enAoin the collection of real estate ta/es based on said assess(ents. 9he petition #as denied for lack of (erit. >ubse'uently$ petitioners4 Iotion for Beconsideration #as also denied. ;ence$ this Petition for Bevie#. ISSUE-
CONTENTIONSPETITIONERS
1. 9he schedule of (arket values and the assess(ents prepared solely by the (unicipal assessor$ in accordance #ith LC of 11 7B)?1& are invalid and illegal because the said Code did not e:ectively repeal the previous la# on the (atter 7PD 1. . PD 1 #as not e/pressly repealed nor i(pliedly repealed by LC of 117B) ?1& and is
RESPONENTS
1. 9a/ assess(ents are valid. . >ection of P.D. 1 and >ection 1 of B.). ?1& are clearly and une'uivocally inco(patible because they d#ell on the sa(e subAect (atter$ na(ely$ the preparation of a schedule of values for real property #ithin the Ietropolitan Ianila )rea. Ender P.D. 1$ the schedule shall be prepared jointl% by the city assessors of the District$
Real Property Taxation Cases therefore the applicable statute. PD1 is strict and (andatory.
#hile$ under B.). ?1&$ such schedule shall be prepared Rby the provincial$ city and (unicipal assessors of the (unicipalities #ithin the Ietropolitan Ianila area. Due to this$ PD 1 #as not e/pressly repealed in the Code4s repealing clause$ but it #as i(pliedly repealed. 9herefore$ LC of 117B) ?1& is the prevailing statute.
RULING NO.
9he foregoing partakes of the nature of a general repealing provision. "t is a basic rule of statutory construction that repeals by i(plication is not favored. 9his is based on the rationale that the #ill of the legislature cannot be overturned by the Audicial function of construction and interpretation. Courts cannot take the place of Congress in repealing statutes. 9heir function is to try to har(oni3e as (uch as possible$ see(ing con*icts in the la#s and resolve doubts in favor of their validity and co-e/istence. PD 1 is still a good la# and the schedule of values prepared solely by the (unicipal assessor is illegal V void. "t #as held that if the intention of the legislature #as to abrogate PD 1$ it #ould have included it in such repealing clause. )n i(plied repeal #ill not be allo#ed unless it is convincingly and una(biguously de(onstrated that the t#o la#s are clearly repugnant V inconsistent that they cannot co-e/ist.
Real Property Taxation Cases =%ni% Ee)tri) Cop%n* ! %ri! G.R. No. 1142@1, =%* 17, 2001 F%)t!-
Fro( Fro( 1&8 1&8 to 1? 1? the Ianila Ianila +lectr +lectric ic Co(pa Co(pany ny 7I+B)L 7I+B)LC, C,$$ erected four 7% po#er generating plants in >ucat$ Iuntinlupa. 9o e'uip e'uip the po#er po#er plants plants$$ variou various s (achin (achineri eries es and e'uip( e'uip(ent ent #ere #ere purchased both locally and abroad. uca >ucatt po#e po#err plan plants ts$$ the the buil buildi ding ngs s ther thereo eon n and and the the (achineries and e'uip(ent therein. Fro( 1?0 to 1?8 I+B)LC, paid the real property ta/es on the said properties on the basis of their assessed value as stated in the ta/ declarations. ,n Dece(ber 1?8 I+B)LC, sold all the po#er-generating plan plants ts incl includ udin ing g the the land landsi site te to the the Nati Nation onal al Po#er o#er Corp Corpor orat atio ion n 7N)P 7N)P,C ,C,B ,B$ $ a corp corpor orat atio ion n full fully y o#ne o#ned d and and cont contro roll lled ed by the the Philippine govern(ent. "n 180$ 180$ the ,:ice ,:ices s of the Iunici Iunicipal pal )sses )ssesso sorr and Iunici Iunicipal pal 9rea 9reasu sure rerr of Iunt Iuntin inlu lupa pa$$ #hile #hile revi revie# e#in ing g reco record rds s pert pertai aini ning ng to assess(ents and collection of real property ta/es$ discovered$ a(ong others$ that I+B)LC,$ for the period beginning 1 Manuary 1?& to Dece(b Dece(ber er 1?8 1?8$$ (isdec (isdeclar lared ed ando andorr failed failed to declar declare e for for ta/at ta/ation ion purposes a nu(ber of real properties$ properties$ consisting of several e'uip(ent and and (ach (achin iner erie ies$ s$ foun found d in the the said said po#e po#err plan plants ts.. 9he 9he Iuni Iunici cipa pall )ssessor of Iuntinlupa then declared and assessed the subAect real properties for ta/ation purposes and on 1 Nove(ber 180 furnished I+B)LC, their corresponding ta/ declarations. ,n the basis thereof the endorse(ent letter issued by 6LF-D,F$ Iunici Iunicipal pal 9reasu 9reasurer rer +duard +duardo o ). )lon )lon for#ar for#arded ded a supple supple(en (ental tal collection notice to I+B)LC,$ dated !1 ,ctober 18$ and a for(al lett letter er$$ date dated d Nove Nove(b (ber er 18 18$$ reit reiter erat atin ing g his his de(a de(and nd for for ta/ ta/ pay(en Due to I+B)LC,4s inaction Iunicipal 9reasurer +duardo ). )lon issued #arrants of garnish(ent$ ordering the attach(ent of the bank deposits of I+B)LC, #ith certain banks to the e/tent of its unpaid real property ta/es. "((ediate "((ediately ly$$ I+B)LC, I+B)LC, led before the Begional 9rial Court a Petition for Prohibition #ith Prayer for
Real Property Taxation Cases =UNICIP'L TRE'SURER;S CONTENTION Lack Lack of Aurisd Aurisdict iction ion under under >ec. &% of the Beal Property Property 9a/ Code$ Code$ courts courts are prohibited fro( entertaining any suit assa assail ilin ing g the the vali validi dity ty of a ta/ ta/ asse assess ssed ed ther thereu eund nder er unt until the ta/p a/paye ayer shall hall have have paid$ paid$ under under protes protest$ t$ the the ta/ ta/ asse assess ssed ed agai agains nstt hi(.
=ER'LCO;S CONTENTIONS
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Lack of cause of action by reason of I+B)LC,s failur lure to 'uestion the notice of assess(ent issued to it by the Iunicipality of Iuntinlup lupa before the Local 6oard of )ssess(ent )ppeals.
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9rial court has Aurisdiction since it is not the ta/payer$ refe referr rred ed to in >ec. >ec. &% of the BP9C. 9he ter( ta/p a/paye ayer allu allude des s to the proper property ty o#ner o#ner$$ a person person in #hose na(e the property is declared$ or the o#ne o#nerr or ad(i ad(ini nist stra rato torr$ but but not not a prev previo ious us o#ne o#nerr #hich petitioner #as at the ti(e the notice of collection #as sent to it. ;ence$ it argues that its protest pay(ent of the ta/ assessed is not a condition prec preced eden entt to the the cour courts ts ac'uiring ac'uiring Aurisdict Aurisdiction ion over its petition.
"t need need not not e/hau /haus st any any ad(ini ad(inistr strati ative ve re(ed re(edies ies$$ i.e.$ to appeal the ta/ assess(ent before the Local 6oard of )ssess(ent )ppeals since$the petition (erely seeks to assail the validity of the issuance of the #arrants of garnish(ent over its bank depo deposi sits ts$$ and and not not the the ta/ ta/ assess(ent5 and$ even if it #ere to follo# the pres prescr crib ibed ed re(e re(edi dies es on protesting a ta/ assess(ent it had nothing to appeal since the respondent (unicipal treasurer issued notices of collec collectio tion n and not notice notices s of assess(ent. )ssu(ing
arguendo
that
Real Property Taxation Cases
#hat #as issued #as a notice of assess(ent$ iss issuanc uance e of such such noti notic ce #as irregular since pursuant to >ecs. ? and of the BP9C$ it is only the provincial or city assessor$ and the (unici (unicipal pal deput deputy y assessor$ #ho has the auth author orit ity y to cond conduc uctt and and issue ta/ assess(ents$ and not respo responde ndent nt (unici (unicipal pal treasurer
I!!ue-
No. Ender the Beal Property 9a/ Code$ the duty to declare the true value of real property for ta/ation purposes is i(posed upon the o#ner$ or ad(inistrator$ or their duly authori3ed representatives. 9hey are thus the ta/payers. ucat po#er plant (achineries and e'uip(ent during the ta/able years 1?&-1?8 #hen it #as still the o#ner thereof$ and that it is the deciency in the realty ta/ on the real property4s reassessed value #hich it seeks to collect. 6ased on the foregoing$ the notice of assess(ent and collection #as directed to petitioner$ not because it is still the present o#ner of the subAect real proper property ty includ including ing the (achin (achiner eries ies and e'uip e'uip(en (entt there thereon on $ but because it is the defaulting o#ner thereof #ho has failed to (ake proper proper ta/ ta/ declar declarati ation on and the proper proper ta/ pay(en pay(entt thereo thereon. n. 9hus$ 9hus$ petitioner is the ta/payer conte(plated under >ec. &% of the BP9C$ and pay(ent under protest of the ta/ assessed is necessary for the trial court to ac'uire Aurisdiction over its i ts petition.
Real Property Taxation Cases 9he fact that N)P,C,B is the present o#ner of the >ucat po#er plant (achineries and e'uip(ent does not constitute a legal barrier to the collection of delin'uent ta/es fro( the previous o#ner$ I+B)LC,$ #ho has defaulted in its pay(ent. ,nly the letter dated Nove(ber 18 sent by Iunicipal 9reasurer +duardo ). )lon to petitioner I+B)LC, could 'ualify as the actual notice of collection since it is an un(istakable de(and for pay(ent of back ta/es. 6e that as it (ay$ petitioner #as correct #hen it pointed out that the Iunicipal 9reasurer$ contrary to that re'uired by la#$ issued the notices of assess(ent. ;o#ever$ the trial court is #ithout authority to address the alleged irregularity in the issuance of the notices of assess(ent #ithout prior ta/ pay(ent$ under protest$ by petitioner. >ection &% of the BP9C$ prohibits courts fro( declaring any ta/ invalid by reason of irregularities or infor(alities in the proceedings of the o:icers charged #ith the assess(ent or collection of ta/es e/cept upon the condition that the ta/payer pays the Aust a(ount of the ta/$ as deter(ined by the court in the pending proceeding. )s petitioner failed to (ake a protest pay(ent of the ta/ assessed$ any argu(ent regarding the procedure that should have been observed in the preparation of the notice of assess(ent and collection is futile as the trial court in such a scenario cannot assu(e Aurisdiction over the (atter.
N%tion% Poer Corpor%tion =uni)ip%it* o+ P%5i%o GR No. 18167: Ju* 16, 2009
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Proin)e
o+
"ueon
%n&
F%)t!-
9he National Po#er Corporation 7NPC is a govern(ent-o#ned and controlled corporation (andated by la# to undertake$ a(ong others$ the production of electricity fro( nuclear$ geother(al$ and other sources$ and the trans(ission of electric po#er on a nation#ide basis. 9he NPC entered into an +nergy Conversion )gree(ent 7+C) #ith Iirant on Nove(ber $ 11. 9he +C) provided for a build-operatetransfer 76,9 arrange(ent bet#een Iirant and the NPC. Iirant #ill build and nance a coal-red ther(al po#er plant on the lots o#ned by the NPC in Pagbilao$ 2ue3on for the purpose of converting fuel into electricity$ and thereafter$ operate and (aintain the po#er plant for a period of 0 years. 9he NPC$ in turn$ #ill supply the necessary fuel to be converted by Iirant into electric po#er$ take the po#er generated$ and use it to supply the electric po#er needs of the country. )t the end of the 0-year ter($ Iirant #ill transfer the po#er plant to the NPC #ithout co(pensation. )(ong the obligations undertaken by the NPC under the +C) #as the pay(ent of all ta/es that the govern(ent (ay i(pose on Iirant. "n a
Real Property Taxation Cases letter dated Iarch $ $ the Iunicipality of Pagbilao assessed Iirant4s real property ta/es on the po#er plant and its (achineries in the total a(ount of P1$0!8$?&$. for the period of 1? to . 9he Iunicipality of Pagbilao furnished the NPC a copy of the assess(ent letter. 9he NPC led a petition before the Local 6oard of )ssess(ent )ppeals 7L6)) clai(ing that it is e/e(pt fro( ta/ under >ection !%WcX of the Local overn(ent Code. )/ ' %)(inerie! %n& euipent t(%t %re %)tu%*, &ire)t*, %n& e>)u!ie* u!e& 5* o)% %ter &i!tri)t! %n& oernentone& or )ontroe& )orpor%tion! en%e& in t(e !upp* %n& &i!tri5ution o+ %ter %n&3or ener%tion %n& tr%n!i!!ion o+ ee)tri) poer
9he L6)) dis(issed the NPCs petition on the Iunicipality of Pagbilao4s (otion$ through a one-page ,rder dated Nove(ber 1!$ . 9he NPC appealed the denial of its petition #ith the Central 6oard of )ssess(ent )ppeals 7C6)). )lthough it noted the inco(pleteness of the L6)) decision for failing to state the factual basis of its ruling$ the C6)) nevertheless a:ir(ed$ in its decision of )ugust 18$ !$ the denial of the NPCs clai( for e/e(ption. 9he C6)) like#ise denied the NPCs subse'uent (otion for reconsideration$ pro(pting the NPC to institute an appeal before the Court of 9a/ )ppeals 7C9).
C9) en 6anc
NPC
NPC #as not the proper party to Clai(s that it has legal interest protest the real property ta/ because of its benecial o#nership assess(ent$ as it does not have the of the po#er plant and its re'uisite legal interest. Iachineries$ and Iirant holds is (erely a naked title.
I!!ue-
a.
Ruin-
Real Property Taxation Cases a. No. >ection & of the LC lists do#n the t#o entities vested #ith the personality to contest an assess(ent the o#ner and the person #ith legal interest in the property. 9he liability for ta/es generally rests on the o#ner of the real property at the ti(e the ta/ accrues. 9his is a necessary conse'uence that proceeds fro( the fact of o#nership. ;o#ever$ personal liability for realty ta/es (ay also e/pressly rest on the entity #ith the benecial use of the real property$ such as the ta/ on property o#ned by the govern(ent but leased to private persons or entities$ or #hen the ta/ assess(ent is (ade on the basis of the actual use of the property. "n the present case$ the NPC$ contrary to its clai(s$ is neither the o#ner nor the possessoruser of the subAect (achineries. 9he +C)s ter(s regarding the po#er plants (achineries clearly vest their o#nership #ith Iirant. )rticle .1 of the +C) states .1 ,;"P ,F P,<+B >9)9",N. Fro( the +:ective Date until the 9ransfer Date Jthat is$ the day follo#ing the last day of the 0-year periodK$ JIirantK shall$ directly or indirectly$ o#n the Po#er >tation and all the /tures$ ttings$ (achinery and e'uip(ent on the >ite or used in connection #ith the Po#er >tation #hich have been supplied by it or at its cost. JIirantK shall operate$ (anage$ and (aintain the Po#er >tation for the purpose of converting fuel of JNPCK into electricity. J+(phasis supplied.K ection !%7c of the LC$ the clai(ant (ust prove t#o ele(ents a 9he (achineries and e'uip(ent are actually$ directly$ and e/clusively used by local #ater districts and govern(ent-o#ned or controlled corporationsY and b 9he local #ater districts and govern(ent-o#ned and controlled corporations clai(ing e/e(ption (ust be engaged in the supply and distribution of #ater andor the generation and trans(ission of electric po#er. )s applied to the present case$ the govern(ent-o#ned or controlled corporation clai(ing e/e(ption (ust be the entity actually$ directly$ and e/clusively using the real properties and the
Real Property Taxation Cases use (ust be devoted to the generation and trans(ission of electric po#er. Neither the NPC nor Iirant satises both re'uire(ents. )lthough the plants (achineries are devoted to the generation of electric po#er$ by the NPCs o#n ad(ission and as previously pointed out$ Iirant a private corporation uses and operates the(. 9hat Iirant operates the (achineries solely in co(pliance #ith the #ill of the NPC only underscores the fact that NPC does not actually$ directly$ and e/clusively use the(. 9he (achineries (ust be actually$ directly$ and e/clusively used by the govern(ent-o#ned or controlled corporation for the e/e(ption under >ection !%7c Nor #ill NPC nd solace in its clai( that it utili3es all the po#er plants generated electricity in supplying the po#er needs of its custo(ers. 6ased on the clear #ording of the la#$ it is the (achineries that are e/e(pted fro( the pay(ent of real property ta/$ not the #ater or electricity that these (achineries generate and distribute. GOBERN=ENT SERBICE INSUR'NCE S$STE= ! CIT$ TRE'SURER %n& CIT$ 'SSESSOR o+ t(e CIT$ OF ='NIL' G.R. No. 17:242. e)e5er 2@, 2009M
F'CTSPetitioner >"> o#ns or used to o#n t#o 7 parcels of land$ located at Qatigbak and Concepcion cor. )rroceros$ Ianila. 9itle to the Concepcion-)rroceros property #as transferred to this Court in 0 pursuant to Procla(ation No. 8!0. 6oth the >"> and the Ietropolitan 9rial Court 7Ie9C of Ianila occupy the Concepcion )rroceros property$ #hile the Qatigbak property #as under lease. 9he City 9reasurer of Ianila addressed a letter dated >epte(ber 1!$ to >"> President and eneral Ianager ">$ #rote back e(phasi3ing the >"> e/e(ption fro( all kinds of ta/es$ including realty ta/es$ under Bepublic )ct No. 7B) 81. 9#o days after$ >"> led a petition for certiorari and prohibition #ith prayer for a restraining and inAunctive relief before the Ianila B9C. "n it$ >"> prayed for the nullication of the assess(ents thus (ade and that respondents City of Ianila o:icials be per(anently enAoined fro( proceedings against >"> property. RTC RULING- dis(issed the petition of >">. GSIS posture that both its old Re!pon&ent! counter that >">
Real Property Taxation Cases charter$ Presidential Decree No. 7PD 11%&$ and present charter$ B) 81 or the (S)S Act of *++ $ e/e(pt the agency and its properties fro( all for(s of ta/es and assess(ents$ inclusive of realty ta/.
(ay not successfully resist the citys notices and #arrants of levy on the basis of its e/e(ption under B) 81$ real property ta/ation being governed by B) ?1& or the ocal (overnment ode of *++*
ISSUES-
"> under its charter is e/e(pt fro( real property ta/ation= "> is liable for real property ta/es for its properties leased to a ta/able entity$ assu(ing that it is so e/e(pt= ! "> are e/e(pt fro( levy= 1
RULING-
1 $ES. Court nds that >"> enAoys under its charter full ta/ e/e(ption. B) ?1& lifted >"> ta/ e/e(ption$ ho#ever$ full ta/ e/e(ption reenacted through B) 81. "> o#ing to the reenact(ent of the full ta/ e/e(ption clause under >ec. ! of B) 81 in 1?$ the ponencia in it% of Davao appeared to have failed to take stock of and fully appreciate the all-e(bracing condoning proviso in the very sa(e >ec. ! #hich$ for all intents and purposes$ considered as paid any assess(ent against the >"> as of the approval of this )ct. "irst$ #hile created under C) 18& as a non-stock corporation$ a status that has re(ained unchanged even #hen it operated under PD 11%& and B) 81$ >"> is not$ in the conte/t of the afore 'uoted >ec. 1! of the LC. econd$ the subAect properties under >">s na(e are like#ise o#ned by the Bepublic. 9he >"> is but a (ere trustee of the subAect properties #hich have either been ceded to it by the overn(ent or ac'uired for the enhance(ent of the syste(. Ioreover$ as an instru(entality of the national govern(ent$ it is itself not liable to pay real estate ta/es assessed by the City of Ianila against its Qatigbak and Concepcion-)rroceros properties. Follo#ing the 5ene)i% u!e rue$ ho#ever$ accrued real property ta/es are due fro( the Qatigbak property$ leased as it is to a ta/able entity. 6ut the corresponding liability for the pay(ent thereof devolves on the ta/able benecial user. 9he Qatigbak property cannot in any event be subAect of a public auction sale$ not#ithstanding its realty ta/ delin'uency. 9his (eans that the City of Ianila has to satisfy its ta/ clai( by serving the accrued realty ta/ assess(ent on I;C$ as the ta/able benecial user of the Qatigbak property and$ in case of nonpay(ent$ through (eans other than the sale at public auction of the leased property. 9he leased of Qatigbak property
Real Property Taxation Cases shall be ta/able pursuant to the benecial use principle under >ec. !%7a of the LC. "t is true that said >ec. !%7a$ e/e(pts fro( real estate ta/es real property o#ned by the Bepublic$ unless the benecial use of the property is$ for consideration$ transferred to a ta/able person. 9his e/e(ption$ ho#ever$ (ust be read in relation #ith >ec. 1!!7o of the LC$ #hich prohibits LEs fro( i(posing ta/es or fees of any kind on the national govern(ent$ its agencies$ and instru(entalities. 9hus read together$ the provisions allo# the Bepublic to grant the benecial use of its property to an agency or instru(entality of the national govern(ent. >uch grant does not necessarily result in the loss of the ta/ e/e(ption. 9he ta/ e/e(ption the property of the Bepublic or its instru(entality carries ceases only if$ as stated in >ec. !%7a of the LC of 11$ benecial use thereof has been granted$ for a consideration or other#ise$ to a ta/able person. GSIS, %! % oernent in!truent%it*, i! not % t%>%5e uri&i)% per!on un&er Se). 1@@o/ o+ t(e LGC . GSIS, (oeer, o!t in % !en!e t(%t !t%tu! it( re!pe)t to t(e K%ti5%D propert* (en it )ontr%)te& it! 5ene)i% u!e to =HC, &ou5te!! % t%>%5e per!on. 9hus$ the real estate ta/ assess(ent covering 1 to over the subAect Qatigbak property is valid insofar as said ta/ delin'uency is concerned as assessed over said property. 9he ne/t 'uery as to #hich bet#een >">$ as the o#ner of the Qatigbak property$ or I;C$ as the lessee thereof$ is liable to pay the accrued real estate ta/$ need not detain us long. =HC ou(t to p%* . 6eing in possession and having actual use of the Qatigbak property since Nove(ber 11$ I;C is liable for the realty ta/es assessed over the Qatigbak property fro( 1 to . =HC (%! o5i%te& it!e+ un&er t(e GSIS=HC Contr%)t o+ Le%!e to !(ou&er !u)( %!!e!!ent . )s a (atter of la# and contract$ therefore$ =HC !t%n&! i%5e to p%* t(e re%t* t%>e! &ue on t(e K%ti5%D propert*. Considering$ ho#ever$ that I;C has not been i(pleaded in the instant case$ the re(edy of the City of Ianila is to serve the realty ta/ assess(ent covering the subAect Qatigbak property to I;C and to pursue other available re(edies in case of nonpay(ent$ for said property cannot be levied upon. ! +>. ) valid ta/ levy presupposes a corresponding ta/ liability. Nonetheless$ it #ill not be re(iss to note that it is #ithout doubt that the subAect >"> properties are e/e(pt fro( any attach(ent$ garnish(ent$ e/ecution$ levy$ or other legal processes. 9his is the clear i(port of the third paragraph of >ec. !$ B) 81. 9hus$ even granting arguendo that >"> liability for realty ta/es attached fro( 1$ #hen B) ?1& e:ectively lifted its ta/ e/e(ption under PD 11%&$ to 1&$ #hen B) 81 restored the ta/ incentive$ the levy on the subAect properties to ans#er for the assessed realty ta/ delin'uencies cannot still be sustained. 9he si(ple reason 9he governing la#$ B) 81$ in force at the ti(e of the levy prohibits it. )nd in the nal analysis$ the proscription against the levy e/tends to the leased Qatigbak property$ the benecial use doctrine$ not#ithstanding.
Real Property Taxation Cases
PF' er!u! C'', GR NO. 1870@0, e)e5er 16, 2010 F%)t!Lucena Fishing Port Co(ple/ is a shery infrastructure proAect of the National overn(ent nanced through a loan fro( the ,verseas +cono(ic Cooperation Fund of Mapan. Later on$ pursuant to the enact(ent of PD ??$ the PFD) took over the (anage(ent and operation of the LFPC in February 1. ,n ,ctober &$ 1$ the City overn(ent of Lucena sent to PFD) a de(and letter for pay(ent of realty ta/es of LFPC property for the ta/able years 1!-1. ) year after$ another de(and letter #as sent by the City overn(ent covering the period fro( 1! to . 9his pro(pted to le an appeal before the Local 6oard of )ssess(ent )ppeals of Lucena but #as dis(issed for lack of (erit. Petitioner (oves for its reconsideration but this #as denied by L6)). PFD) then appealed to C6) but the latter like#ise dis(issed the appeal for lack of (erit. I!!ue- ?(et(er or not PF' i! i%5e +or t(e Re% Propert* T%>e! %!!e!!e& on t(e LFPC C'';! )ontention CT';! )ontention ,#nership of PFD) is a LFPC had been ,CC and is handed over to therefore the PFD) by subAect to the virtue of PD Beal Property 1??. 9hus$ the 9a/ i(posed allegations that by LEs PFD) is not the having benecial user Aurisdiction of LFPC and not over its real a ta/able person properties are rendered pursuant to (oot and >ection 1!$ acade(ic by ! and !% such o#nership of LC. of PFD) over PFD) failed LFPC. to prove its PD 1?? did not e/e(ption (ention PFD)4s fro( real e/e(ption fro( property pay(ent of real ta/es. property ta/. 9herefore$ PFD) had no clai( for realty ta/ e/e(ption on its Fishing Port Co(ple/. "t denied PFD)4s IB. •
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•
SC;! RuinPFD) is not liable for the real property ta/es assessed on the LFPC. PFD) is not a ,CC but an instru(entality of the national govern(ent #hich is generally e/e(pt fro( pay(ent of real property ta/. Ender the Local overn(ent Code$ LEs have no po#er to ta/ instru(entalities of the national govern(ent like the PFD). 9hus$ the PFD) is not liable to pay BP9 assessed by the o:ice of the City 9reasurer of Lucena on the LFPC. 6esides$ LFPC is a property of public
Real Property Taxation Cases do(inion intended for public use and falls #ithin the ter( ports. ;ence$ as property of public do(inion$ LFPC is o#ned by the Bepublic of the Philippines and thus e/e(pt fro( real estate ta/$ e/cept those #hich are leased to private persons or entities. %%o Orient% Ee)tri) Cooper%tie In)., ! T(e Proin)e o+ %%o Orient% G.R. No. 180901, J%nu%r* 20,2009 F'CTS-
Petitioner Davao ,riental Cooperative$ "nc. #as organi3ed under Presidential Decree 7PD No. & #hich granted a nu(ber of ta/ and duty e/e(ption priveleges to electric cooperatives. "n 18%$ PD No. 100 #as enacted by then President Iarcos. "t #ithdre# all e/e(ptions fro( or any preferential treat(ent in the pay(ent of duties$ ta/es$ fees$ i(posts and other charges granted to private business enterprises and or persons engaged in any econo(ic activity. Due to the failure of petitioner to declare the value of its properties$ the ,:ice of the Provincial )ssessor assesed its properties. ,n ,ctober 8$ 180$ the Provincial )ssessor sent the Notice of )ssess(ent to petitioner #hich duly received it. During the sa(e year of 180$ the Fiscal "ncentive Bevie# 6oard 7F"B6 issued F"B6 Besolution No. 1!-80$ the Iinistry of Finance issued Local 9a/ Begulation No. !-80$ and the ,:ice of the Local overn(ent Finance$ Begion G"$ Davao City issued Begional ,:ice Ie(orandu( Circular No. %-80$ all of #hich reiterated the #ithdra#al of ta/ e/e(ptions previously granted to business entities including electric cooperatives. ,n Manuary 8$ 18&$ the Pres. Iarcos issued PD No. 8$ re'uiring the Iinister of Finance to i((ediately restore the ta/ e/e(ption of all electric cooperatives. ;o#ever$ in Dece(ber 18&$ then Pres. )'uino issued +/ecutive ,rder 7+, No. ! #hich #ithdre# all ta/ and duty e/e(ptions granted to private entities e:ective Iarch 1$ 18?. 6ut Ie(orandu( ,rder No. &0$ dated Manuary !$ 18?$
Real Property Taxation Cases suspended the i(ple(entation of the said +, until Mune !$ 18? for cooperatives. +:ective Muly 1$ 18?$ F"B6 No. %-8? restored the ta/ and duty e/e(ption oriveleges of electric cooperatives under PD No. &. "n Iay 1$ respondent led a co(plaint for collection of delin'uent real property ta/es against petitioner for the years 18% until 18$ a(ounting to P1$80$8.1. Petitioner contends that it #as e/e(pt fro( the pay(ent of real estate ta/es fro( 18% to 18 because the restoration of the ta/ e/e(ptions under F"B6 Besolution No. %-8? retroacts to the date of #ithdra#al of said e/e(ptions. Further$ petitioner 'uestions that the classication (ade by respondent of so(e of its properies #hen it believes the( to ber personal properties$ hence not subAect to realty ta/. )lso clai(s that respondent classied its poles$ to#ers and /tures$ overhead conductors and devices$ station e'uip(ent$ line transfor(ers$ etc. as real properties #hen ny their nature$ use$ purpose and destination any by sustantive la# and Aurisprudence$ they are personal properties. B9C rendered its decision in favor of petitioner$ it ruled that petitioner #as e/e(pt fro( the pay(ent of real estate ta/es fro( 18% to 18. ,n appeal the C) set aside the ruling of the B9C$ it held that Davao ,riental Cooperative is liable to pay property ta/es plus penalties and surcharges. I!!ue-
is liable for
Ruin-
es$ F"B6 Besolution No. %-8? is clear in stating that the ta/ and duty e/e(ption privileges of electric cooperatives granted under the ter(s and conditions of PD N,. & are restored e:ective Muly 1$ 18?. Petitioner ad(its that it did not le a PB,9+>9 6+F,B+ 9;+ 6oard of )ssess(ent )ppeals to 'uestion the assess(ent. >ection ! of PD No. %&%$ other#ise kno#n as the 9he Beal Property 9a/ Code$O provides >ec. !. Local 6oard of )ssess(ent )ppeals. )ny o#ner #ho is not satised #ith the action of the provincial or city assessor in the assess(ent of his property (ay$ #ithin si/ty days fro( the date of receipot by hi( of the #ritten notice of assess(ent as provided in this Code$ appeal to the 6iard of )ssess(ent )ppeals of the province or city$ by ling #ith it a petition under oath using the for( prescribed
Real Property Taxation Cases for the prupose$ together #ith copies of the ta/ declarations and such a:idavit or docu(ents sub(itted in support of the appeal. ;aving failed to appeal the assess(ent of its properties rio the 6oard of )ssess(ent )ppeals$ petitioner cannot no# assail the validity of the ta/ assess(ent against it before the courts. Petitioner failed to e/haust its ad(inistrative re(edies$ and the conse'uence of such failure is clear the ta/ assess(ent$ as co(puted and issued by the ,:ice of the Provincial )ssessor$ beca(e nal. Petitioner is dee(ed to have ad(itted the correctness of the assess(ent os its properties. PD No. %&% re'uires that the ta/payer (ust rst pay under protest the ta/ assessed against hi( before he could seek recourse fro( the courts to assail its validity.
SPOUSES FR'NCISCO A ETT$ ?ONG 'N SPOUSES JO'"UIN A LOLIT' ?ONG ! CIT$ OF ILOILO, CIT$ TRE'SURER RO=EO ='NIK'N, =EL'NIE U$ 'N EST'TE OF FELIPE U$
F)C9> ) 18%-s'uare (eter property o#ned by Charles Ne#ton V Mane Linnie ;odges #as sold to Hicente Chan in 1&&$ #ho failed to register the property in his na(e. ection ?! of PD %&% #hich provided >ection ?!. Advertisement of sale of real propert% at public auction. U )fter the e/piration of the year for #hich the ta/ is due$ the provincial or city treasurer shall advertise the sale at public auction of the entire delin'uent real property$ e/cept real property (entioned in subsection 7a of >ection forty hereof$ to satisfy all the ta/es and penalties due and the costs of sale. >uch advertise(ent shall be (ade by posting a notice for three consecutive #eeks at the (ain entrance of the provincial building and of all (unicipal buildings in the province$ or at the (ain entrance of the city or (unicipal hall in the
Real Property Taxation Cases case of cities$ and in a public and conspicuous place in barrio or district #herein the property is situated$ in +nglish$ >panish and the local dialect co((only used$ and by announce(ent at least three (arket days at the (arket by crier$ and$ in the discretion of the provincial or city treasurer$ by publication once a #eek for three consecutive #eeks in a ne#spaper of general circulation published in the province or city. 9he notice$ publication$ and announce(ent by crier shall state the a(ount of the ta/es$ penalties and costs of sale5 the date$ hour$ and place of sale$ the na(e of the ta/payer against #ho( the ta/ #as assessed5 and the kind or nature of property and$ if land$ its appro/i(ate areas$ lot nu(ber$ and location stating the street and block nu(ber$ district or barrio$ (unicipality and the province or city #here the property to be sold is situated. Cop* o+ t(e noti)e !(% +ort(it( 5e !ent eit(er 5* rei!tere& %i or 5* e!!ener $ or t(rou( t(e 5%rrio )%pt%in $ to t(e &einuent t%>p%*er $ %t (i! %&&re!! %! !(on in t(e t%> ro! or propert* t%> re)or& )%r&! o+ t(e uni)ip%it* or )it* (ere t(e propert* i! o)%te& $ or %t (i! re!i&en)e$ i+ Dnon to !%i& tre%!urer or 5%rrio )%pt%in Proi&e&$ (oeer $ T(%t % return o+ t(e proo+ o+ !eri)e un&er o%t( !(% 5e e& 5* t(e per!on %Din t(e !eri)e it( t(e proin)i% or )it* tre%!urer )on)erne&. "n 1%$ petitioners Moa'uin and Lolita ection 8! of PD %&% #hich provided >ection 8!. >uits assailing validity of ta/ sale. U No )ourt !(% entert%in %n* !uit %!!%iin t(e %i&it* o+ % t%> !%e o+ re% e!t%te un&er t(i! C(%pter unti t(e t%>p%*er !(% (%e p%i& into )ourt t(e %ount +or (i)( t(e re% propert* %! !o&, toet(er it( intere!t! o+ tent* per )entu per %nnu upon t(%t !u +ro t(e &%te o+ !%e to t(e tie o+ in!titutin !uit. 9he (oney so paid into court shall belong to the purchaser at the ta/ sale if the deed is declared invalid$ but shall be returned to the depositor if the action fails.
Real Property Taxation Cases Neither shall any court declare a sale invalid by reason of irregularities or infor(alities in the proceedings co((itted by the o:icer charged #ith the duty of (aking sale$ or by reason of failure by hi( to perfor( his duties #ithin the ti(e herein specied for their perfor(ance$ unless it shall have been proven that such irregularities$ infor(alities or failure have i(paired the substantial rights of the ta/payer. 9he C) reversed and set aside the assailed resolutions of the B9C. "t reasoned that >ection 8! of PD %&% #as inapplicable since the co(plaints did not protest the assess(ent (ade by the local govern(ent unit. 9hus$ such failure did not deprive the B9C of Aurisdiction. ;o#ever$ the C) upheld the validity of the ta/ sale. Ender the la#$ only registered o#ners are entitled to a notice of ta/ sale. "nas(uch as the property re(ained registered in the na(es of the ;odges spouses in 9C9 No. 9-?!?!$ said spouses #ere the only ones entitled to such notice. Petitioners (oved for reconsideration but it #as denied. 1& ;ence$ this recourse$ 1? petitioners insisting that the C) erred in upholding the validity of the ta/ sale. ">>E+
W/N the auction sale was valid
Real Property Taxation Cases HELD:
+>. >ection 8! of PD %&% states that the B9C shall not entertain any co(plaint assailing the validity of a ta/ sale of real property unless the co(plainant deposits #ith the court the a(ount for #hich the said property #as sold plus interest e'uivalent to @ per annu( fro( the date of sale until the institution of the co(plaint. 9his provision #as adopted in >ection &? of the Local overn(ent Code$ albeit the increase in the prescribed rate of interest to @ per (onth. "n this regard$ National ;ousing )uthority v. "loilo City holds that the deposit re'uired under >ection &? of the Local overn(ent Code is a Aurisdictional re'uire(ent$ the nonpay(ent of #hich #arrants the dis(issal of the action. 6ecause petitioners in this case did not (ake such deposit$ the B9C never ac'uired Aurisdiction over the co(plaints. Conse'uently$ inas(uch as the ta/ sale #as never validly challenged$ it re(ains legally binding. CIT$ GOBERN=ENT OF T'G'$T'$ BS. HON.GUERRERO, Pre!i&in Ju&e o+ RTCC'BITE F'CTS 9agaytay-9aal 9ourist Develop(ent Corporation 799DC is the registered o#ner of t#o 7 parcels of land covered by 9C9 Nos. 981& and 9C9 9-81? of the Begistry of Deeds of 9agaytay City. >aid properties #ere located in the 6arrio of 6irinayan. Ender C) No. !!8$ 6arrio 6irinayan #as anne/ed to the City of 9agaytay as of its incorporation on Mune 1!8. ;o#ever$ upon the passage of B) 1%18$ it #as taken a#ay fro( the City of 9agaytay and #as transferred to the province of 6atangas.
99DC incurred real estate ta/ liabilities on the said properties for the ta/ years 1?& to 18!. For failure of the corporation to settle its delin'uent real estate ta/ obligations$ the City of 9agaytay o:ered the properties for sale at public auction. 6eing the only bidder$ a certicate of sale #as e/ecuted in favour of the City of 9agaytay and #as correspondingly inscribed on the titles of the properties. 9he City of 9agaytay led an unnu(bered petition for entry of ne# certicates of title in its favour before B9C Cavite. B9C granted the petition. 99DC appealed to the C). 9he subAect properties #ere later purchased by )(eurna Ielencio-;errera and +(iliana Ielencio-Fernando for the a(ount e'uivalent to the ta/es and penalties due to the sa(e. Iean#hile$ during the pendency of the case before the C)$ 99DC led a petition for nullication of the public auction involving the disputed properties. ISSUE
Real Property Taxation Cases CIT$ GOBER=ENT OF T'G'$T'$;S CONTENTION
TTC;S CONTENTION
SC RULING
-+>. 9he properties$ based on its charter$ #ere #ithin its territorial Aurisdiction.
9he properties involved #ere not #ithin the Aurisdiction of the City of 9agaytay and$ therefore$ beyond its ta/ing authority.
-"t is very basic that before the City of 9agaytay (ay levy a certain property for sale due to ta/ delin'uency$ the subAect property should be under its Aurisdiction. Nonetheless$ the failure of the city o:icials in this case to verify if the property is #ithin its Aurisdiction before levying ta/es on the sa(e constitutes gross negligence. "t is liable for the tortuous acts co((itted by its agents #ho sold the properties to the Ielencios despite the clear (andate of B) 1%18$ separating 6arrio 6irinayan fro( its Aurisdiction and transferring the sa(e to the Province of 6atangas.
FELS Ener*, In). B!. T(e Proin)e o+ %t%n%! %n& T(e OQi)e o+ t(e Proin)i% '!!e!!or o+ %t%n%! GR No. 1:7668 N%tion% Poer Corpor%tion B!. L'' o+ %t%n%! GR No. 180:27 Fe5ru%r* 1:, 2008 F%)t!-
,n Manuary 18$ 1!$ NPC entered into a lease contract #ith Polar +nergy$ "nc. over !/! I< diesel engine po#er barges (oored at 6alayan 6ay in Calaca$ 6atangas. 9he contract$ deno(inated as an +nergy Conversion )gree(ent 7)gree(ent$ #as for a period of ve years #herein$ NPC shall be responsible for the pay(ent of
Real Property Taxation Cases 7a )ll ta/es$ i(port duties$ fees$ charges and other levies i(posed by the National overn(ent. 7b )ll real estate ta/es and assess(ents$ rates and other charges in respect of the Po#er 6arges. >ubse'uently$ Polar +nergy$ "nc. assigned its rights under the )gree(ent to F+L>. 9hereafter$ F+L> received an assess(ent of real property ta/es on the po#er barges. 9he assessed ta/$ #hich like#ise covered those due for 1%$ a(ounted to P0&$18%$88.% per annu(. F+L> referred the (atter to NPC$ re(inding it of its obligation under the )gree(ent to pay all real estate ta/es. "t then gave NPC the full po#er and authority to represent it in any conference regarding the real property assess(ent of the Provincial )ssessor. NPC sought reconsideration of the Provincial )ssessor4s decision to assess real property ta/es on the po#er barges. ;o#ever$ the (otion #as denied. 9he Local 6oard of )ssess(ent )ppeals 7L6)) ruled that the po#er plant facilities$ #hile they (ay be classied as (ovable or personal property$ are nevertheless considered real property for ta/ation purposes because they are installed at a specic location #ith a character of per(anency. F+L> appealed the L6))4s ruling to the Central 6oard of )ssess(ent )ppeals 7C6)). 9he C6)) rendered a Decision nding the po#er barges e/e(pt fro( real property ta/. "t #as later reversed by the C6)) upon reconsideration and a:ir(ed by the C)$ on the ground that the right to 'uestion the assess(ent of the Provincial )ssessor had already prescribed upon the failure of F+L> to appeal the disputed assess(ent to the L6)) #ithin the period prescribed by la#. >ince F+L> had lost the right to 'uestion the assess(ent$ the right of the Provincial overn(ent to collect the ta/ #as already absolute. F+L>
Provincial )ssessor
"t is not a party to the petition of 9he right to 'uestion the NPC and therefore not barred fro( assess(ent of the Provincial 'uestioning the assess(ent. )ssessor had already prescribed upon the failure of F+L> to appeal the disputed assess(ent to the L6)) #ithin the period prescribed by la#.
NPC
Real Property Taxation Cases
Po#er ite(s.
6arges
are
non-ta/able Po#er 6arges are real property for the purposes of ta/ation and therefore subAect to ta/.
I!!ue-
a. ection !% 7c of B.). No. ?1&= Ruin-
a. No. the notice of assess(ent #hich the Provincial )ssessor sent to F+L> on )ugust ?$ 10$ contained the follo#ing state(ent "f you are not satised #ith this assess(ent$ you (ay$ #ithin si/ty 7& days fro( the date of receipt hereof$ appeal to the 6oard of )ssess(ent )ppeals of the province by ling a petition under oath on the for( prescribed for the purpose$ together #ith copies of )BP9a/ Declaration and such a:idavits or docu(ents sub(itted in support of the appeal. "nstead of appealing to the 6oard of )ssess(ent )ppeals 7as stated in the notice$ NPC opted to le a (otion for reconsideration of the Provincial )ssessor4s decision$ a re(edy not sanctioned by la#. "f the ta/payer fails to appeal in due course$ the right of the local govern(ent to collect the ta/es due #ith respect to the ta/payer4s property beco(es absolute upon the e/piration of the period to appeal. "t also bears stressing that the ta/payer4s failure to 'uestion the assess(ent in the L6)) renders the assess(ent of the local assessor nal$ e/ecutory and de(andable$ thus$ precluding the ta/payer fro( 'uestioning the correctness of the assess(ent$ or fro( invoking any defense that #ould reopen the 'uestion of its liability on the (erits. b. No. )rticle %10 7 of the Ne# Civil Code provides that Rdocks and structures #hich$ though *oating$ are intended by their nature and obAect to re(ain at a /ed place on a river$ lake$ or coastR are considered i((ovable property. 9hus$ po#er barges
Real Property Taxation Cases are categori3ed as i((ovable property by destination$ being in the nature of (achinery and other i(ple(ents intended by the o#ner for an industry or #ork #hich (ay be carried on in a building or on a piece of land and #hich tend directly to (eet the needs of said industry or #ork.
c. No. 9he court a:ir(s the ndings of the L6)) and C6)) that the o#ner of the ta/able properties is petitioner F+L>$ #hich in ne$ is the entity being ta/ed by the local govern(ent. )s stipulated under >ection .11$ )rticle of the )gree(ent ,;"P ,F P,<+B 6)B+>. P,L)B shall o#n the Po#er 6arges and all the /tures$ ttings$ (achinery and e'uip(ent on the >ite used in connection #ith the Po#er 6arges #hich have been supplied by it at its o#n cost. P,L)B shall operate$ (anage and (aintain the Po#er 6arges for the purpose of converting Fuel of N)P,C,B into electricity. "t follo#s then that F+L> cannot escape liability fro( the pay(ent of realty ta/es by invoking its e/e(ption in >ection !% 7c of B.). No. ?1&$ #hich reads / / / 7c )ll (achineries and e'uip(ent that are actually$ directly and e/clusively used by local #ater districts and govern(ent-o#ned or controlled corporations engaged in the supply and distribution of #ater andor generation and trans(ission of electric po#erY / / / 9i(e and again$ the >upre(e Court has stated that ta/ation is the rule and e/e(ption is the e/ception. 9he la# does not look #ith favor on ta/ e/e(ptions and the entity that #ould seek to be thus privileged (ust Austify it by #ords too plain to be (istaken and too categorical to be (isinterpreted. 9hus$ applying the rule of strict construction of la#s granting ta/ e/e(ptions$ and the rule that doubts should be resolved in favor of provincial corporations$ #e hold that F+L> is considered a ta/able entity. 9he (ere undertaking of petitioner NPC under >ection 1.1 of the )gree(ent$ that it shall be responsible for the pay(ent of all real estate ta/es and assess(ents$ does not Austify the e/e(ption. 9he privilege granted to petitioner NPC cannot be e/tended to F+L>. 9he covenant is bet#een F+L> and NPC and does not bind a third person not privy thereto$ in this case$ the Province of 6atangas.
Real Property Taxation Cases C'PITOL ?IRELESS, INC. versus THE PROBINCI'L TRE'SURER OF 'T'NG'S, THE PROBINCI'L 'SSESSOR OF 'T'NG'S, THE =UNICIP'L TRE'SURER 'N 'SSESSOR OF N'SUGU, 'T'NG'S
.B. No. 1811. Iay !$ 1&
F'CTS-
Capitol eg(entR of the )PCN$ #hile the landing stations or ter(inals and >eg(ent + of )PCN located in Nasugbu$ 6atangas are allegedly o#ned by the Philippine Long Distance 9elephone Corporation 7 #D . Ioreover$ it alleges that the eg(ent is laid in international$ and not Philippine$ #aters. Cap#ire clai(s that as co-o#ner$ it does not o#n any particular physical part of the cable syste( but$ consistent #ith its nancial contributions$ it o#ns the right to use a certain capacity of the said syste(. 9his property right is allegedly reported in its nancial books as R"ndefeasible Bights in Cable >yste(s.R ;o#ever$ for loan restructuring purposes$ Cap#ire clai(s that Rit #as re'uired to register the value of its right$R hence$ it engaged an appraiser to Rassess the (arket value of the international sub(arine cable syste( and the cost to Cap#ire.R Cap#ire sub(itted a >#orn >tate(ent of 9rue Halue of Beal Properties at the Provincial 9reasurerTs ,:ice$ 6atangas City$ 6atangas Province$ for the eg(ent of the syste(. Cap#ire clai(s that it also reported that the syste( Rinterconnects at the PLD9 Landing >tation in Nasugbu$ 6atangas$R #hich is covered by a transfer certicate of title and ta/ declarations in the na(e of PLD9. )s a result$ the respondent Provincial )ssessor of 6atangas 7 #rovincial Assessor issued the )ssess(ents of Beal Property 7 A!# against Cap#ire. "n essence$ the Provincial )ssessor had deter(ined that the sub(arine cable syste(s described in Cap#ireTs >#orn >tate(ent of 9rue Halue of Beal Properties are ta/able real property$ a deter(ination that #as contested by Cap#ire in an e/change of letters bet#een the co(pany and the public respondent. 9he reason cited by Cap#ire is that the cable syste( lies outside of Philippine territory$ i.e.$ on international #aters.
C%pire;! Contention-
Goernent;! Contention-
Petitioner Cap#ire asserts that Bespondents assessors and recourse to the Local 6oard of treasurers of the Province of )ssess(ent )ppeals$ or pay(ent of 6atangas and Iunicipality of
Real Property Taxation Cases the ta/ under protest$ is inapplicable to the case at bar since there is no 'uestion of fact involved$ or that the 'uestion involved is not the reasonableness of the a(ount assessed but$ rather$ the authority and po#er of the assessor to i(pose the ta/ and of the treasurer to collect it. "t contends that there is only a pure 'uestion of la# since the issue is #hether its sub(arine cable syste($ #hich it clai(s lies in international #aters$ is ta/able. Cap#ire holds the position that the cable syste( is not subAect to ta/.
Nasugbu$ 6atangas disagree #ith Cap#ire and insist that the case presents 'uestions of fact such as the e/tent and portion of the sub(arine cable syste( that lies #ithin the Aurisdiction of the said local govern(ents$ as #ell as the nature of the so-called indefeasible rights as property of Cap#ire. >uch 'uestions are allegedly resolvable only before ad(inistrative agencies like the Local 6oard of )ssess(ent )ppeals.
ISSUE-
<;+9;+B ,B N,9 sub(arine #ires or cables used for co((unications (ay be ta/ed like other real estate= HEL $ES. >ub(arine #ires or cables used for co((unications (ay be ta/ed like other real estate.
>ub(arine or undersea co((unications cables are akin to electric trans(ission lines #hich this Court has recently declared in /anila 0lectric ompan% v. it% Assessor and it% reasurer of ucena it% $ as Rno oner e>epte& +ro re% propert* t%> R and (ay 'ualify as %)(iner* !u5e)t to re% propert* t%> under the Local overn(ent Code. 9o the e/tent that the e'uip(entTs location is deter(inable to be #ithin the ta/ing authorityTs Aurisdiction$ the Court sees no reason to distinguish bet#een sub(arine cables used for co((unications and aerial or underground #ires or lines used for electric trans(ission$ so that both pieces of property do not (erit a di:erent treat(ent in the aspect of real property ta/ation. 6oth electric lines and co((unications cables$ in the strictest sense$ are not directly adhered to the soil but pass through posts$ relays or landing stations$ but both (ay be classied under the ter( R(achineryR as real property under )rticle %1070 of the Civil Code for the si(ple reason that such pieces of e'uip(ent serve the o#nerTs business or tend to (eet the needs of his industry or #orks that are on real estate. +ven obAects in or on a body of #ater (ay be classied as such$ as R#atersR is classied as an i((ovable under )rticle %1078 of the Code. ) classic e/a(ple is a boathouse #hich$ by its nature$ is a vessel and$ therefore$ a personal property but$ if it is tied to the shore and used as a residence$ and since it *oats on #aters #hich is i((ovable$ is considered real property. 6esides$ the Court has already held that Rit is a fa(iliar pheno(enon to see things classed as real property for purposes of ta/ation #hich on general principle (ight be considered personal property.R
