Real property tax cases

8/11/2019 Real property tax cases

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[G.R. No. L-59463. November 19, 1982.]

PROVINCE OF NUEVA ECIJA, Plaintiff-Appellant, v.IMPERIAL MINING COMPANY, INC.,

Defendant-Appellee.

SYNOPSIS

In 1968, appellee, a mining company, leased from the Governmentplacer mining claims (192 hectares) with the right to explore,develop, mine, extract and dispose of mineral products. The

contract provided that the lessee shall pay real estate tax on allbuildings and improvements built on the leased property but wassilent on the obligation of the lessee to pay realty tax on themineral land itself. In 1974, when Presidential Decree 464 (RealProperty Tax Code of 1974) was issued, the provincial Assessor ofNueva Ecija where the property is located declared and assessedthe leased property in the name of appellee. In September, 1976,the Province of Nueva Ecija instituted an action for collection of

real property tax on the mineral land in question covering 1970-1976 in the amount of P38,836.22. Appellee resisted, maintainingthat the mineral land subject of the assessment is owned by theGovernment and therefore exempt from real estate tax. After trial,the lower court dismissed the complaint holding that under theterms of the lease contract and the provisions of Section 87 ofCommonwealth Act 137, the leased mineral lands were not subjectto the payment of the real estate tax and that Presidential Decree464 did not change the rule. Hence, this appeal.

The Supreme Court held that under the former Assessment Law,the basis of realty taxation was ownership or interest tantamountto ownership so that in the Mining Act then in force leased


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mineral land was not subject to real estate tax; but PresidentialDecree 464 changed the basis of real property taxation fromownership to use and, consequently, from the date of its issuance

in 1974, lessees of mineral lands are liable for payment of realestate tax.

Appealed decision is modified as regards the tax liability ofdefendant-appellee under Presidential Decree 464. The records ofthe case are ordered remanded to the trial court for furtherproceedings.

SYLLABUS

1. TAXATION; REAL PROPERTY TAX; BASIS OFTAXABILITY UNDER COMMONWEALTH ACT 470,OWNERSHIP; CASE AT BAR. When IMC in 1968 obtaineda lease on the mineral land in question, the law governing real

property taxation was the former Assessment Law,Commonwealth Act 470, and the basis of realty taxationthereunder was ownership or interest tantamount to ownership. Amere lessee of mineral land was therefore not liable for thepayment of realty tax thereon. This was recognized in the MiningAct then in force, Commonwealth Act 137, under which leasedmineral land was not subject to real estate tax (Sec. 87). The leasecontract of IMC was executed in accordance with these laws. The

absence of a stipulation therein making the lessee liable for realtytax on the leased mineral land was just a recognition of the realproperty tax principle then prevailing; it was not a contractualcommitment or guarantee by the Department of Agriculture andNatural Resources that with respect to the leased mineral land,


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IMC would permanently be exempt from real property taxation.That agency could not have made that commitment because it wasnot authorized to do so; and it could not bind the lawmaking body

by stipulating in effect against amendment of the law on realproperty taxation.

2. ID.; ID.; BASIS OF TAXABILITY IN PRESIDENTIALDECREE 464 CHANGED FROM OWNERSHIP TO ACTUALUSE; LESSEE SUBJECT TO REAL ESTATE TAX IN CASEAT BAR. In 1974, a new Real Property Tax Code came intobeing when Presidential Decree 464 was issued. It changed the

basis of real property taxation. It adopted the policy of taxing realproperty on the basis of actual use, even if the user is not theowner (Sections 3 (a) and 19 of PD 464). It is true that PresidentialDecree 464 recognizes and respects real property tax exemption"under other laws" and one such law, with respect to mineral land,is Presidential Decree 463 (Section 53), the Mineral ResourcesDevelopment Decree of 1974. It does not appear however thatIMC was entitled to tax exemption, including exemption from realproperty tax, under Section 53 of Presidential Decree 463 duringthe period here in question.

D E C I S I O N

PLANA,J.:

This is an appeal from the decision of the Court of First Instanceof Nueva Ecija, Branch VIII, in Civil Case No. C-4 for collectionof real property tax, which has been certified to this Court by theCourt of Appeals as a case involving purely a question of law. The


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legal issue is whether defendant-appellee Imperial MiningCompany, Inc. (IMC), lessee of some parcels of mineral land(placer mining claims) in Carranglan, Nueva Ecija, is liable for real

property tax thereon, although the said mineral land forms part ofthe public domain.

The antecedent facts are simple. In 1968, IMC leased from theGovernment thru the Department of Agriculture and NaturalResources placers mining claims (192 hectares) with the right toexplore, develop, mine, extract and dispose of mineral products. Inthe lease contract, it was stipulated that "the Lessee shall pay real

estate tax on all buildings and other improvements built on theland leased." The contract however was silent on the obligation ofthe lessee to pay realty tax on the mineral land itself, asdistinguished from the improvements thereon.

In 1974, the Provincial Assessor of Nueva Ecija declared theleased property in the name of IMC; and subsequently, IMC wasassessed for real property tax.

In September, 1976, the Province of Nueva Ecija instituted theinstant suit for the collection of real property tax on the mineralland in question covering 1970-1976 in the amount of P38,836.22.The defendant resisted, maintaining that the mineral land subjectof the assessment was owned by the Government and thereforeexempt from real estate tax. After trial, the Court of First Instance

dismissed the complaint in reliance upon the terms of the leasecontract and the provisions of Section 87 of the old Mining Act(Commonwealth Act 137) which did not subject leased minerallands to the payment of real estate tax. The trial court observedthat the Real Property Tax Code of 1974 (Presidential Decree 464)which took effect on June 1, 1974 did not change the


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rule.cralawnad

Hence, this appeal.

When IMC in 1968 obtained a lease on the mineral land inquestion, the law governing real property taxation was the formerAssessment Law, Commonwealth Act 470, and the basis of realtytaxation thereunder was ownership or interest tantamount toownership. A mere lessee of mineral land was therefore not liablefor the payment of realty tax thereon. This was recognized in the

Mining Act then in force, Commonwealth Act 137, under whichleased mineral land was not subject to real estate tax. (Sec. 87.).The lease contract of IMC was executed in accordance with theselaws. The absence of a stipulation therein making the lessee liablefor realty tax on the leased mineral land was just a recognition ofthe real property tax principle then prevailing; it was not acontractual commitment or guarantee by the Department of

Agriculture and Natural Resources that with respect to the leasedmineral land, IMC would permanently be exempt from realproperty taxation. That agency could not have made thatcommitment because it was not authorized to do so; and it couldnot bind the lawmaking body by stipulating in effect againstamendment of the law on real property taxation.

In 1974, a new Real Property Tax Code came into being when

Presidential Decree 464 was issued. It changed the basis of realproperty taxation. It adopted the policy of taxing real property onthe basis of actual use, even if the user is not the owner.

"Actual useshall refer to the purpose for which the property is


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principally or predominantly utilized by the person in possessionof the property." [Sec. 3(a).]

"Actual Use of Real Property as Basis for Assessment.

Realproperty shall be assessed on the basis of its actual use regardlessof where located and whoever uses it." (Section 19. Emphasissupplied.)

The above policy declaration is given substance in variousprovisions of the new law. Thus, Section 40 of Presidential Decree464 specifies the exemptions from real property tax.

"SEC. 40. Exemption from Real Property Tax. The exemptionshall be as follows:jgc:chanrobles.com.ph

"a) Real property owned by the Republic of the Philippines or anyof its political subdivisions and any government-ownedcorporation so exempt by its charter: Provided, however, That thisexemption shall not apply to real property of the abovenamedentities the beneficial use of which has been granted, forconsideration or otherwise, to a taxable person.

x x x

"e) Land acquired by grant, purchase or lease from the publicdomain for conversion into dairy farms for a period of five yearsfrom the time of such conversion. . . ."cralaw virtua1aw library

Incidentally, Presidential Decree 939 was subsequently enactedexempting from real property tax "pasture and/or grazing landsacquired by grant, purchase or lease from the public domain,


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actually used for livestock production, for a period of five years. . .."cralaw virtua1aw library

The foregoing exemptions make it very clear that leased lands ofthe public domain would otherwise be subject to real property tax;if that were not so, there would have been no need to specificallyexempt some of them from real property tax.chanrobles lawlibrary:Presidential Decree 464 also prescribes the classification of realproperty for assessment purposes, specifically including mineralland: "For purposes of assessment, real property shall be classified

as residential, agricultural, commercial or industrial and also asmineral in the case of lands." (Section 18.) And for purposes ofreal property taxation, the assessment levels to be applied asregards mineral lands are laid down:jgc:chanrobles.com.ph

"Mineral Lands For purposes of taxation, mineral lands notcovered by lease shall be appraised at fifty per cent of their marketvalue to be determined by the Secretary of Finance uponconsultation with the Director of Mines; Provided, however, thatmineral lands covered by leases shall be declared for taxationpurposes either by the owner of the land or lessee and theassessment level thereof shall be maintained at the current level offifty per cent." [Sec. 20 (b). Emphasis supplied.]

It is true that Presidential Decree 464 recognizes and respects real

property tax exemption "under other laws", and one such law, withrespect to mineral land, is Presidential Decree 463, the MineralResources Development Decree of 1974, whichprovides:jgc:chanrobles.com.ph

"SEC. 53. Tax Exemptions. Machineries, equipment, tools for


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production, plants to convert mineral ores into saleable form,spare parts, supplies, materials, accessories, explosives, chemicalsand transportation and communication facilities imported by and

for the use of new mines and old mines which resume operation,when certified as such by the Secretary (of Natural Resources)upon recommendation of the Director (of Mines), are exemptfrom the payment of customs duties and all taxes except incometax for a period starting from the first date of actual commercialproduction of saleable mineral products."cralaw virtua1aw library

x x x

"All mining claims, improvements thereon and mineral productsderived therefrom shall likewise be exempt from the payment of alltaxes, except income tax, for the same period provided for in thefirst paragraph of this section."cralaw virtua1aw library

It does not appear however that IMC was entitled to tax

exemption, including exemption from real property tax, underSection 53 of Presidential Decree 463 during the period here inquestion.

We therefore conclude that under the provisions of PresidentialDecree 464, IMC is subject to the payment of real property tax onthe mineral land leased by it. Since the said law took effect on June1, 1974, and assessment in pursuance thereof was made afterJanuary 1, 1974, the liability of IMC for real property tax on themineral land leased by it should start on January 1, 1975 pursuantto Section 24 of P.D. 464:chanroblesvirtualawlibrary

"Date of Effectivity of Assessment or Reassessment. All


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assessment or reassessment made after the first day of January ofany year shall take effect on the first day of January of thesucceeding year."cralaw virtua1aw library

Wherefore, the decision of the lower court dismissing thecomplaint in Civil Case No. C-4 is hereby modified as regards thereal property tax liability of defendant-appellee under P.D. 464.The records of the case are ordered remanded to the trial court forfurther proceedings to determine the amount of real property taxdue from IMC in accordance with this decision. Costs againstDefendant-Appellee.

SO ORDERED.

Teehankee, Melencio-Herrera, Vasquez, Relova and Gutierrez, Jr.,JJ., concur.

[G.R. No. 117577. December 1, 1995.]

ALEJANDRO B. TY AND MVR PICTURE TUBE INC.,Petitioners, v. THE HON. AURELIO C. TRAMPE, in his

capacity as Judge of the Regional Trial Court of Pasig, MetroManila. THE HON. SECRETARY OF FINANCE, THE

MUNICIPAL ASSESSOR OF PASIG AND THEMUNICIPAL TREASURER OF PASIG,

Respondents.

D E C I S I O N

PANGANIBAN,J.:


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ARE THE INCREASED REAL ESTATE TAXES imposed byand being collected in the Municipality (now City) of Pasig.

effective from the year 1994, valid and legal? This is the questionbrought before this Court for resolution.

The Parties

Petitioner Alejandro B. Ty is a resident of and registered owner oflands and buildings in the Municipality (now City) of Pasig, while

petitioner MVR Picture Tube Inc. is a corporation duly organizedand existing under Philippine laws and is likewise a registeredowner of lands and buildings in said Municipality. 1

Respondent Aurelio C. Trampe is being sued in his capacity aspresiding judge of Branch 163, Regional Trial Court of theNational Capital Judicial Region. sitting in Pasig, whose Decisiondated 14 July 1994 and Order dated 30 September 1994 in Special

Civil Action No. 629 (entitled "Alejandro B. Ty and MVR PictureTube. Inc. v. The Hon. Secretary of Finance, Et. Al.") are soughtto be set aside. Respondent Secretary of Finance is impleaded asthe government officer who approved the Schedule of MarketValues used as basis for the new tax assessments being enforced byrespondents Municipal Assessor and Municipal Treasurer of Pasigand the legality of which is being questioned in this petition. 2

The Antecedent Facts

On 06 January 1994, respondent Assessor sent a notice ofassessment respecting certain real properties of petitioners locatedin Pasig. Metro Manila in a letter dated 18 March 1994, petitioners


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through counsel "request(ed) the Municipal Assessor to reconsiderthe subject assessments." 3

Not satisfied, petitioners on 29 March 1994 filed with the RegionalTrial Court of the National Capital Judicial Region, Branch 163,presided over by respondent Judge, a Petition for Prohibition withprayer for a restraining order and/or writ of preliminary injunctionto declare null and void the new tax assessments and to enjoin thecollection of real estate taxes based on said assessments. In aDecision 4 dated 14 July 1994, respondent Judge denied thepetition "for lack of merit" in the following

disposition:jgc:chanrobles.com.ph

"WHEREFORE, foregoing premises considered, petitionersprayer to declare unconstitutional the schedule of market values asprepared by the Municipal Assessor of Pasig, Metro Manila, and toenjoin permanently the Municipal Treasurer of Pasig, MetroManila. from collecting the real property taxes based thereof (sic)is hereby DENIED for lack of merit. Cost (sic) de oficio."cralawvirtua1aw library

Subsequently, petitioners Motion for Reconsideration was alsodenied by respondent Judge in an Order 5 dated 30 September1994.

Rebuffed by said Decision and Order, petitioners filed this present

Petition for Review directly before this Court, raising purequestions of law and assigning the followingerrors:jgc:chanrobles.com.ph

"The Court a quo gravely erred in holding that Presidential DecreeNo. 921 was expressly repealed by R.A. 7160 and that said


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presidential decree including its Implementing Rules (P.D. 464)went down to the statutes graveyard together with the otherdecision(s) of the Supreme Court affecting the same.

"The Court a quo while holding that the new tax assessments havetremendously increased ranging from 418.8% to 570%, gravelyerred in blaming petitioners for their failure to exhaustadministrative remedies provided for by law.

"The Court a quo blatantly erred in not declaring the confiscatoryand oppressive nature of the assessments as illegal, void ab initio

and unconstitutional constituting a deprivation of property withoutdue process of law." 6

In a resolution dated 21 November 1994, this Court, withoutgiving due course to the petition, required respondents tocomment thereon. Respondents Municipal Treasurer andMunicipal Assessor, through counsel, filed their Comment on 19December 1994, and respondent Secretary of Finance, through theSolicitor General, submitted his on 11 May 1995. Petitioners filedtheir Reply to the Comment of respondent Assessor and Treasurer06 January 1995, and their Reply to that of the respondentSecretary on 18 May 1995. After careful deliberation on the abovepleadings, the Court resolved to give due course to the petition,and, inasmuch as the issues are relatively simple, the Courtdispensed with requiring the parties to submit further memoranda

and instead decided to consider the respondents respectivecomments as their answers and memoranda. Thus the case is nowconsidered submitted for resolution.

The Issues


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The issues brought by the parties for decision by this Court

are:chanrob1es virtual 1aw library

1. Whether Republic Act No. 7160, otherwise known as the LocalGovernment Code of 1991, repealed the provisions of PresidentialDecree No. 921;

2. Whether petitioners are required to exhaust administrativeremedies prior to seeking judicial relief; and

3. Whether the new tax assessments are oppressive andconfiscatory, and therefore unconstitutional.

In disposing of the above issues against petitioners, the court aquo ruled that the schedule of market values and the assessmentsbased thereon prepared solely by respondent assessor are valid andlegal, they having been prepared in accordance with the provisionsof the Local Government Code of 1991 (R.A. 7160). It held alsothat said Code had effectively repealed the previous law on thematter, P.D. 921, which required, in the preparation of saidschedule, joint action by all the city and municipal assessors in theMetropolitan Manila area. The lower court also faulted petitionerswith failure to exhaust administrative remedies provided underSections 226 and 252 of R.A. 7160. Finally, it found the questioned

assessments consistent with the tremendously increased . . . priceof real estate anywhere in the country." 7

Stated the court:chanrob1es virtual 1aw library

This Court is inclined to agree with the view of defendants that


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R.A. 7160 in its repealing clause provide (sic) that PresidentialDecree Nos. . . . 464 . . . are hereby repealed and rendered of noforce and effect. Hence said presidential decrees including theirimplementing rules went down to the statutes graveyard togetherwith the decisions of the Supreme Court on cases effecting (sic)the same.

"This Court is also in accord with respondents (sic) view thatpetitioners failed to avail of either Section 226 of R.A. 7160, that isby appealing the assessment of their properties to the Board ofAssessment Appeal within sixty (60) days from the date of receipt

of the written Notice of Assessment, and if it is true that petitioner(sic) as alleged in their pleadings was not afforded the opportunityto appeal to the board of assessment appeal, then they could haveavailed of the provisions of Section 252, of the same R.A. 7160 bypaying the real estate tax under protest. Because of petitioners (sic)failure to avail of either Sections 226 or 252 of R.A. 7160, theyfailed to exhaust administratives (sic) remedies provided for by lawbefore bringing the case to Court. (Buayan Cattle Co., Inc. v.Quintillan 128 SCRA 276) Therefore the filing of this case beforethis Court is premature, the same not falling under the exceptionbecause the issue involved is not a question of law but of fact.(Valmonte v. Belmonte. Jr., 170 SCRA 256)

"Petitioners also alleged that the New Tax Assessments are notonly oppressive and confiscatory but also destructive in view of

the tremendous increase in its valuation, from P855,360.00 toP4,121, 280.00 a marked increase of 418.8% of one of itsproperties, while the other, from P857,600.00 to P4,374,410.00, anincreased (sic) of 510%. This Court agree (sic) with petitioners (sic)observation, but the reality (sic) the price of real propertyanywhere in the country tremendously increased. This is shown in


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the Real Estate Monitor of Econotic Incorporated (copy attachedwith the memorandum of respondents). For example realproperties in Pasig in 1991 located at the Ortigas Commercial

Complex command (sic) a price of P42,000.00 per square meterwhich price is supported by a case filed before this Court (civilcase no. 64506, Jesus Fajardo, Et. Al. v. Ortigas and Co.) forRecovery (sic) of agents (sic) commission. The property subject ofthe sale which was also located at the Ortigas CommercialComplex at Pasig, Metro Manila was sold to a Taiwanese atP42,000.00 per square meter. It is therefore not surprising that theassessment of real properties in Pasig increased tremendously. Had

petitioners first exhausted administrative remedies they would haverealized the fact that prices of real estate has (sic) tremendouslyincreased and would have known the reason/reasons why." 8

In its Order dated 30 September 1994 denying the Motion forReconsideration, the court a quo ruled:chanrob1es virtual 1awlibrary

This Court despite petitioners exhaustive and thorough researchand discussion of the point in issue, is still inclined to sustain theview that P.D. 921 was impliedly repealed by R.A. 7160. P.D. 921to the mind of this Court is an implementing law of P.D. 464,Sections 3, 6, 9, 12 and 13 of said P.D. provide how certainprovisions of PD. 464 shall be implemented. Since P.D. 464 wasexpressly repealed by R.A. 7160, P.D. 921 must necessarily be

considered repealed, otherwise, what should Sections 3, 6, 9, 12and 13 of P.D. 921 implement? And, had the law makers intendedto have said P.D. 921 remain valid and enforceable they wouldhave provided so in R.A. 7160. Since there is none, P.D. 921 mustbe considered repealed." 9


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Re: The First IssueRepeal of P.D. 921?

To resolve the first issue, it is necessary to revisit the following

provisions of law:chanrob1es virtual 1aw library

1. Section 15 of P.D. No. 464, promulgated on 20 May 1974,otherwise known as the Real Property TaxCode:jgc:chanrobles.com.ph

"SECTION 15. Preparation of Schedule of Values.Before anygeneral revision of property assessments is made, as provided in

this Code, there shall be prepared for the province or city aSchedule of Market Value for the different classes of real propertytherein situated in such form and detail as shall be prescribed bythe Secretary of Finance.

"Said schedule, together with an abstract of the data (on) which itis based, shall be submitted to the Secretary of Finance for reviewnot later than the thirty-first day of December immediatelypreceding the calendar year the general revision of assessmentsshall be undertaken. The Secretary of Finance shall have ninetydays from the date of receipt within which to review said scheduleto determine whether it conforms with the provisions of thisCode."cralaw virtua1aw library

2. Subsequently, on 12 April 1976, P.D. 921 was promulgated,

which in Section 9 thereof, states:jgc:chanrobles.com.ph

"SECTION 9. Preparation of Schedule of Values for RealProperty within the Metropolitan Area.The Schedule of Valuesthat will serve as the basis for the appraisal and assessment fortaxation purposes of real properties located within the


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Metropolitan Area shall be prepared jointly by the City Assessorsof the Districts created under Section one hereof, with the CityAssessor of Manila acting as Chairman, in accordance with the

pertinent provisions of Presidential Decree No. 464, as amended,otherwise known as the Real Property Tax Code, and theimplementing rules and regulations thereof issued by the Secretaryof Finance."cralaw virtua1aw library

3. Section One of P.D. 921, referred to above,provides:jgc:chanrobles.com.ph

"SECTION 1. Division of Metropolitan Manila into LocalTreasury and Assessment Districts.For purposes of effectivefiscal management, Metropolitan Manila is hereby divided into thefollowing Local Treasury and Assessment Districts:chanrob1esvirtual 1aw library

First DistrictManila

Second DistrictQuezon City, Pasig, Marikina,

Mandaluyong and San Juan

Third DistrictCaloocan City, Malabon, Navotas

and Valenzuela

Fourth DistrictPasay City, Makati, Paranaque,

Muntinlupa, Las Pinas, Pateros and

Taguig


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"Manila, Quezon City, Caloocan City and Pasay City shall be therespective Centers of the aforesaid Treasury and Assessment

Districts."cralaw virtua1aw library

4. On 01 January 1992, Republic Act No. 7160. otherwise knownas the Local Government Code of 1991, took effect, Section 212of said law is quoted as follows:jgc:chanrobles.com.ph

"SECTION 212. Preparation of Schedule of Fair Market Values.Before any general revision of property assessment is made

pursuant to the provisions of this Title, there shall be prepared aschedule of fair market values by the provincial. city and themunicipal assessors of the municipalities within the MetropolitanManila Area for the different classes of real property situated intheir respective local government units for enactment by ordinanceof the sanggunian concerned. The schedule of fair market valuesshall be published in a newspaper of general circulation in theprovince, city or municipality concerned, or in the absence thereof,shall be posted in the provincial capitol city or municipal hall andin two other conspicuous public place therein." cralawnad

5. The repealing clause of R.A. 7160 found in Section 534 thereofis hereby reproduced as follows:jgc:chanrobles.com.ph

"SECTION 534. Repealing Clause.

(a) . . .

(b) . . .

(c) . . .; and Presidential Decree Nos. 381, 436, 464, 477, 626,


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632,752, and 1136 are hereby repealed and rendered of no forceand effect.

x x x

(f) All general and special laws, acts, city charter, decrees, executiveorders, proclamations and administrative regulations, or part orparts thereof which are inconsistent with any of the provisions ofthis Code are hereby repealed or modified accordingly." (Emphasissupplied)

It is obvious from the above provisions of R.A. 7160, specificallySec. 534, that P.D. 921 was NOT EXPRESSLY repealed by saidstatute. Thus, the question is: Was P.D. 921 IMPLIEDLY repealedby R.A. 7160?

Petitioners contend that, contrary to the aforequoted Decision ofthe lower court. "whether the assessment is made before or after

the effectivity of R.A. 7160, the observance of, and compliancewith, the explicit requirement of P.D. 921 is strict and mandatoryeither" because P.D. 921 was not impliedly repealed by R.A. 7160and is therefore still the applicable statute, or because the SupremeCourt, in three related cases 10 promulgated on 16 December 1993after the Local Government Code of 1991 already took effectruled that a schedule of market values and the corresponding asassessments based thereon "prepared solely by the city assessor. . . failed to comply with the explicit requirement (of collegial andjoint action by all the assessors in the Metropolitan Manila areaunder P.D. 921) . . . and are on that account illegal andvoid."cralaw virtua1aw library


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On the other hand, respondents aver that Section 9 of P.D. 921and Section 212 of R.A. 7160 are clearly and unequivocallyincompatible because they dwell on the same subject matter,

namely, the preparation of a schedule of values for real propertywithin the Metropolitan Manila Area. Under P.D. 921, theschedule shall be prepared jointly by the city assessors of theDistrict, while, under R.A. 7160, such schedule shall be prepared"by the provincial, city and municipal assessors of themunicipalities within the Metropolitan Manila area . . .."Furthermore, they claim that "Section 9 (of P.D. 921) merelysupplement(ed) Section 15 of P.D. 464 in so far as the preparation

of the schedule of values in Metro Manila (is concerned)." Thus,"with the express repeal of P.D. 464 . . . P.D. 921 . . . can nottherefore exist independently on its own." They also argue thatalthough the aforecited Supreme Court decision was promulgatedafter R.A. 7160 took effect, "the assessment of the MunicipalAssessors in those three (3) cited cases were assessed in 1990 priorto the effectivity of the Code." Hence, the doctrine in said casescannot be applied to those prepared in 1994 under R.A. 7160.

We rule, for Petitioners.

R.A. 7160 has a repealing provision (Section 534) and, if theintention of the legislature was to abrogate P.D. 921, it would haveincluded it in such repealing clause, as it did in expressly renderingof no force and effect several other presidential decrees. Hence,

any repeal or modification of P.D. 921 can only be possible underpar. (f) of said Section 534, as follows:jgc:chanrobles.com.ph

"(f) All general and special laws, acts, city charter, decrees,executive orders, proclamations and administrative regulations,part or parts thereof which are inconsistent with any of the


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provisions of the Code are hereby repealed or modifiedaccordingly."cralaw virtua1aw library

The foregoing partakes of the nature of a general repealingprovision. It is a basic rule of statutory construction that repeals byimplication are not favored. An implied repeal will not be allowedunless it is convincingly and unambiguously demonstrated that thetwo laws are so clearly repugnant and patently inconsistent thatthey cannot co-exist. This is based on the rationale that the will ofthe legislature cannot be overturned by the judicial function ofconstruction and interpretation. Courts cannot take the place of

Congress in repealing statutes. Their function is to try toharmonize, as much as possible, seeming conflicts in the laws andresolve doubts in favor of their validity and co-existence.

In Villegas v. Subido 11 the issue raised before the Court waswhether the Decentralization Act had the effect of repealing whatwas specifically ordained in the Charter of the City of Manila.Under the Charter, it was provided in its Section 22 that "ThePresident of the Philippines with the consent of the Commissionon Appointments shall appoint . . . the City Treasurer and hisAssistant." Under the Decentralization Act, it was provided that"All other employees, except teachers paid out of provincial, cityor municipal general funds and other local funds shall . . . beappointed by the provincial governor, city or municipal mayorupon recommendation of the head of office concerned."cralaw

virtua1aw library

The Court, in holding that there was no implied repeal in this case,12 said:chanrob1es virtual 1aw library

. . . It has been the constant holding of this Court that repeals by


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implication are not favored and will not be so declared unless it bemanifest that the legislature so intended. Such a doctrine goes asfar back as United States v. Reyes, a 1908 decision (10 Phil. 423.

Cf. U.S. v. Academia, 10 Phil. 431 [1908]). It is necessary thenbefore such a repeal is deemed to exist that it be shown that thestatutes or statutory provisions deal with the same subject matterand that the latter be inconsistent with the former. (Cf. CalderonV. Provincia del Santisimo Rosano, 28 Phil. 164 [1914]). Theremust be a showing of repugnancy clear and convincing incharacter. The language used in the latter statute must be such asto render it irreconcilable with what has been formerly enacted. An

inconsistency that falls short of that standard does not suffice.What is needed is a manifest indication of the legislative purposeto repeal. [Citing numerous cases]

"More specifically, a subsequent statute, general in character as toits terms and application, is not to be construed as repealing aspecial or specific enactment. unless the legislative purpose to doso is manifest. This is so even if the provisions of the latter aresufficiently comprehensive to include what was set forth in thespecial act. This principle has likewise been consistently applied indecisions of this Court from Manila Railroad Co. v. Rafferty (40Phil. 224), decided as far back as 1919. A citation from an opinionof Justice Tuason is illuminating. Thus: From another angle thepresumption against repeal is stronger. A special law is notregarded as having been amended or repealed by a general law

unless the intent to repeal or alter is manifest. Generalia specialibusnon derogant. And this is true although the terms of the generalact are broad enough to include the matter in the special statute. . .. At any rate, in the event harmony between provisions of this typein the same law or in two laws is impossible, the specific provisioncontrols unless the statute, considered in its entirety, indicates a


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contrary intention upon the part of the legislature. . . . A generallaw is one which embraces a class of subjects or places and doesnot omit any subject or place naturally belonging to such class,

while a special act is one which relates to particular persons orthings of a class. (Citing Valera v. Tuason, 80 Phil. 823, 827-828[1948])"

In the relatively recent case of Mecano v. Commission on Audit,13 the Court en banc had occasion to reiterate and to reinforce therule against implied repeals, as follows:jgc:chanrobles.com.ph

"Repeal by implication proceeds on the premise that where astatute of later date clearly reveals an intention on the part of thelegislature to abrogate a prior act on the subject, that intentionmust be given effect. Hence, before there can be a repeal, theremust be a clear showing on the part of the law maker that theintent in enacting the new law was to abrogate the old one. Theintention to repeal must be clear and manifest; otherwise, at least,as a general rule, the later act is to be construed as a continuationof, and not a substitute for, the first act and will continue so far asthe two acts are the same from the time of the first enactment.

"There are two categories of repeal by implication. The first iswhere provisions in the two acts on the same subject matter are inan irreconcilable conflict, the later act to the extent of the conflictconstitutes an implied repeal of the earlier one. The second is if the

later act covers the whole subject of the earlier one and is clearlyintended as a substitute, it will operate to repeal the earlier law.

"Implied repeal by irreconcilable inconsistency take place when thetwo statutes cover the same subject matter; they are so clearlyinconsistent and incompatible with each other that they cannot be


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reconciled or harmonized; and both cannot be given effect, that isthat one law cannot be enforced without nullifying theother."cralaw virtua1aw library

In the same vein, but in different words, this Court ruled inGordon v. Veridiano: 14

"Courts of justice, when confronted with apparently conflictingstatutes, should endeavor to reconcile the same instead ofdeclaring outright the invalidity of one as against the other. Suchalacrity should be avoided. The wise policy is for the judge to

harmonize them if this is possible, bearing in mind that they areequally the handiwork of the same legislature, and so give effect toboth while at the same time also according due respect to acoordinate department of the government. It is this policy theCourt will apply in arriving at the interpretation of the laws above-cited and the conclusions that should follow therefrom."cralawvirtua1aw library

In the instant case, and using the Courts standard for impliedrepeal in Mecano, we compared the two laws.

Presidential Decree No. 921 was promulgated on 12 April 1976,with the aim of, inter alia, evolving "a progressive revenue raisingprogram that will not unduly burden the tax payers. . ." 15 inMetropolitan Manila. Hence, it provided for the "administration of

local financial services in Metropolitan Manila" only, and for thispurpose, divided the area into four Local Treasury and AssessmentDistricts, regulated the duties and functions of the treasurers andassessors in the cities and municipalities in said area and spelledout the process of assessing, imposing and distributing theproceeds of real estate taxes therein.


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Upon the other hand, Republic Act No. 7160, otherwise "knownand cited as the Local Government Code of 1991" 16 took effect

on 01 January 1992. 17 It declared "genuine and meaningful localautonomy" as a policy of the state. Such policy was meant todecentralize government" powers, authority, responsibilities andresources" from the national government to the local governmentunits "to enable them to attain their fullest development as self-reliant communities and make them more effective partners in theattainment of national goals." 18 In the formulation andimplementation of policies and measures on local autonomy,"

(l)ocal government units may group themselves, consolidate orcoordinate their efforts, services, and resources for purposescommonly beneficial to them." 19

From the above, it is clear that the two laws are not co-extensiveand mutually inclusive in their scope and purpose. While R.A. 7160covers almost all governmental functions delegated to localgovernment units all over the country, P.D. 921 embraces only theMetropolitan Manila area and is limited to the administration offinancial services therein, especially the assessment and collectionof real estate (and some other local) taxes.

Coming down to specifics, Sec. 9 of P.D. 921 requires that theschedule of values of real properties in the Metropolitan Manilaarea shall be prepared jointly by the city assessors in the districts

created therein; while Sec. 212 of R.A. 7160 states that theschedule shall be prepared "by the provincial, city and municipalassessors of the municipalities within the Metropolitan ManilaArea for the different classes of real property situated in theirrespective local government units for enactment by ordinance ofthe sanggunian concerned. . . ."cralaw virtua1aw library


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It is obvious that harmony in these provisions is not only possible,but in fact desirable, necessary and consistent with the legislative

intent and policy. By reading together and harmonizing these twoprovisions, we arrive at the following steps in the preparation ofthe said schedule, as follows:chanrob1es virtual 1aw library

1. The assessor in each municipality or city in the MetropolitanManila area shall prepare his/her proposed schedule of values, inaccordance with Sec. 212, R.A. 7160.

2. Then, the Local Treasury and Assessment District shall meet,per Sec. 9, P.D. 921. In the instant case, that district shall becomposed of the assessors in Quezon City, Pasig, Marikina,Mandaluyong and San Juan, pursuant to Sec. 1 of said P.D. In thismeeting, the different assessors shall compare their individualassessments, discuss and thereafter jointly agree and produce aschedule of values for their district, taking into account thepreamble of said P.D. that they should evolve "a progressiverevenue raising program that will not unduly burden the taxpayers".

3. The schedule jointly agreed upon by the assessors shall then bepublished in a newspaper of general circulation and submitted tothe sanggunian concerned for enactment by ordinance, per Sec.212, R.A. 7160.

By this harmonization, both the preamble of P.D. 921 decreeingthat the real estate taxes shall "not unduly burden the taxpayer"and the "operative principle of decentralization" provided underSec. 3, R.A. 7160 encouraging local government units to"consolidate or coordinate their efforts, services and resources"


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shall be fulfilled. Indeed, the essence of joint local action forcommon good so cherished in the Local Government Code findsconcrete expression in this harmonization.chanrobles law library

How about respondents claim that. with the express repeal ofP.D. 464, P.D. 921being merely a "supplement" of said P.D.cannot "exist independently on its own" ? Quite the contrary istrue. By harmonizing P.D. 921 with R.A. 7160, we have justdemonstrated that it can exist outside of P.D. 464, as a support,supplement and extension of R.A. 7160, which for this purpose,has replaced P.D. 464.

Since it is now clear that P.D. 921 is still good law, it is equallyclear that this Courts ruling in the Mathay/Javier/Puyat-Reyescases (supra) is still the prevailing and applicable doctrine. And,applying the said ruling in the present case, it is likewise clear thatthe schedule of values prepared solely by the respondent municipalassessor is illegal and void.

Re: The Second IssueExhaustion of Administrative Remedies

We now come to the second issue. The provisions of Sections 226and 252 of R.A. 7160, being material to this issue, are set forthbelow:jgc:chanrobles.com.ph

"SECTION 226. Local Board of Assessment Appeals.Any

owner or person having legal interest in the property who is notsatisfied with the action of the provincial, city or municipalassessor in the assessment of his property may, within sixty (60)days from the date of receipt of the written notice of assessment,appeal to the Board of Assessment Appeals of the province or cityby filing a petition under oath in the form prescribed for the


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purpose, together with copies of the tax declarations and suchaffidavits or documents submitted in support of the appeal.

"SECTION 252. Payment under Protest.

(a) No protest shallbe entertained unless the taxpayer first pays the tax. There shall beannotated on the tax receipts the words "paid under protest." Theprotest in writing must be filed within thirty (30) days frompayment of the tax to the provincial, city treasurer or municipaltreasurer, in the case of a municipality within Metropolitan ManilaArea, who shall decide the protest within sixty (60) days fromreceipt.

(b) The tax or a portion thereof paid under protest shall be held intrust by the treasurer concerned.

(c) In the event that the protest is finally decided in favor of thetaxpayer, the amount or portion of the tax protested shall berefunded to the protestant, or applied as tax credit against hisexisting or future tax liability.

(d) In the event that the protest is denied or upon the lapse of thesixty-day period pre-scribed in subparagraph (a), the taxpayer mayavail of the remedies as provided for in Chapter 3, Title Two,Book II of this Code."cralaw virtua1aw library

Respondents argue that this case is premature because petitioners

neither appealed the questioned assessments on their properties tothe Board of Assessment Appeal, pursuant to Sec. 226 nor paidthe taxes under protest, per Sec. 252.

We do not agree. Although as a rule, administrative remedies mustfirst be exhausted before resort to judicial action can prosper, there


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is a well-settled exception in cases where the controversy does notinvolve questions of fact but only of law. 20 In the present case,the parties, even during the proceedings in the lower court on 11

April 1994, already agreed "that the issues in the petition are legal"21 , and thus, no evidence was presented in said court.

In laying down the powers of the Local Board of AssessmentAppeals, R.A. 7160 provides in Sec. 229 (b) that" (t)he proceedingsof the Board shall be conducted solely for the purpose ofascertaining the facts . . .." It follows that appeals to this Boardmay be fruitful only where questions of fact are involved. Again,

the protest contemplated under Sec. 252 of R.A. 7160 is neededwhere there is a question as to the reasonableness of the amountassessed. Hence, if a taxpayer disputes the reasonableness of anincrease in a real estate tax assessment, he is required to "first paythe tax" under protest. Otherwise, the city or municipal treasurerwill not act on his protest. In the case at bench however, thepetitioners are questioning the very authority and power of theassessor, acting solely and independently, to impose the assessmentand of the treasurer to collect the tax. These are not questionsmerely of amounts of the increase in the tax but attacks on thevery validity of any increase.

Finally, it will be noted that in the consolidated cases ofMathay/Javier/Puyat-Reyes cited earlier, the Supreme Courtreferred the petitions (which similarly questioned the schedules of

market values prepared solely by the respective assessors in thelocal government units concerned) to the Board of AssessmentAppeal, not for the latter to exercise its appellate jurisdiction, butrather to act only as a fact-finding commission. Said the Court 22thru Chief Justice Andres R. Narvasa:jgc:chanrobles.com.ph


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"On November 5, 1991, the Court issued a Resolution clarifyingits earlier one of May 16, 1991. It pointed out that the authority ofthe Central Board of Assessment Appeals to take cognizance of

the factual issues raised in these two cases by virtue of the referralby this Court in the exercise of its extraordinary or certiorarijurisdiction should not be confused with its appellate jurisdictionover appealed assessment cases under Section 36 of P.D. 464otherwise known as the Real Property Tax Code. The Board is notacting in its appellate jurisdiction in the instant cases, but rather, itis acting as a Court-appointed fact-finding commission to assist theCourt in resolving the factual issues raised in G.R. Nos. 97618 and

97760."

In other words. the Court gave due course to the petitions thereinin spite of the fact that the petitioners had not a priori, exhaustedadministrative remedies by filing an appeal before said Board.Because there were factual issues raised in the Mathay, Et. Al.cases, the Supreme Court constituted the Central Board ofAssessment Appeals as a fact finding body to assist the Court inresolving said factual issues. But in the instant proceedings, thereare no such factual issues. Therefore, there is no reason to requirepetitioners to exhaust the administrative remedies provided in R.A.7160. nor to mandate a referral by this Court to said Board.

Re: The Third IssueConstitutionality of the Assessments

Having already definitively disposed of the case through theresolution of the foregoing two issues, we find no more need topass upon the third. It is axiomatic that the constitutionality of alaw, regulation, ordinance or act will not be resolved by courts ifthe controversy can be, as in this case it has been, settled on othergrounds. In the recent case of Macasiano v. National Housing


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Authority, 23 this Court declared:jgc:chanrobles.com.ph

"It is a rule firmly entrenched in our jurisprudence that the

constitutionality of an act of the legislature will not be determinedby the courts unless that question is properly raised and presentedin appropriate cases and is necessary to a determination of thecase, i.e., the issue of constitutionality must be the very lis motapresented. To reiterate, the essential requisites for a successfuljudicial inquiry into the constitutionality of a law are: (a) theexistence of an actual case or controversy involving a conflict oflegal rights susceptible of judicial determination, (b) the

constitutional question must be raised by a proper party, (c) theconstitutional question must be raised at the earliest opportunity,and (d) the resolution of the constitutional question must benecessary to the decision of the case." (Emphasis supplied)

The aforequoted decision in Macasiano merely reiterated the rulingin Laurel v. Garcia, 24 where this Courtheld:jgc:chanrobles.com.ph

"The Court does not ordinarily pass upon constitutional questionsunless these questions are properly raised in appropriate cases andtheir resolution is necessary for the determination of the case(People V. Vera. 65 Phil. 56 [1937]). The Court will not pass upona constitutional question although properly presented by therecord if the case can be disposed of on some other found such as

the application of a statute or general law (Siler v. Louisville andNashville R. Co., 213 U.S. 175, [1909], Railroad Commission v.Pullman Co., 312 U.S. 496 [1941])." 25 (Emphasis supplied)

In view of the foregoing ruling, the question may be asked: whathappens to real estate tax payments already made prior to its


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promulgation and finality? Under the law, 26 "the taxpayer may filea written claim for refund or credit for taxes and interests . ..."cralaw virtua1aw library

Finally, this Tribunal would be remiss in its duty as guardian of thejudicial branch if we let pass unnoticed the ease by which therespondent Judge consigned "to the statutes graveyard" alegislative enactment "together with the (three) decisions of theSupreme Court" promulgated jointly and unanimously en banc. Anelementary regard for the sacredness of laws and the stability ofjudicial doctrines laid down by superior authority should have

constrained him to be more circumspect in rendering his decisionand to spell out carefully and precisely the reasons for his decisionto invalidate such acts, instead of imperiously decreeing an impliedrepeal. He knows or should have known the legal precedentsagainst implied repeals. Respondent Judge, in his decision, did noteven make an attempt to try to reconcile or harmonize the lawsinvolved. Instead, he just unceremoniously swept them and thisCourtsdecisions into the dustbin of "judicial history." In hisfuture acts and decisions, he is admonished to be more judicious insetting aside established laws, doctrines and precedents.

WHEREFORE, judgment is hereby rendered REVERSING andSETTING ASIDE the questioned Decision and Order ofrespondent Judge, DECLARING as null and void the questionedSchedule of Market Values for properties in Pasig City prepared by

respondent Assessor, as well as the corresponding assessments andreal estate tax increases based thereon; and ENJOINING therespondent Treasurer from collecting the real estate tax increasesmade on the basis of said Schedule and assessments. No costs.

SO ORDERED.


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Narvasa, C.J., Feliciano, Padilla, Regalado, Davide, Jr., Romero,Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Francisco and

Hermosisima, Jr.,JJ.

, concur.

[G.R. No. 120435. December 22, 1997.]

ESTATE OF THE LATE MERCEDES JACOB representedby MERCEDITA JACOB, DONATO JACOB JR., ERENEO

JACOB and LILIAN JACOB QUINTO, Petitioners, v.

COURT OF APPEALS, SPOUSES RAMON R. TUGBANGand VIRGINIA S. TUGBANG, REGISTER OF DEEDS OFQUEZON CITY and CITY TREASURER OF QUEZON

CITY, Respondents.

[G.R. No. 120974. December 22, 1997.]

CITY TREASURER OF QUEZON CITY, Petitioner, v.

COURT OF APPEALS and BERNARDITA C.TOLENTINO, Respondents.

D E C I S I O N

BELLOSILLO,J.:

These two (2) petitions are heard jointly by the Court for thereason that they involve a common issue of jurisdiction over thenature of the action.


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G.R. No. 120435

Petitioners allege that in 1981 Mercedes Jacob, registered owner of

the land subject matter hereof and covered by Transfer Certificateof Title No. 39178, left for the United States. Before she did, sheasked her son-in-law Luciano Quinto Jr. to pay the real estate taxeson her property. However, Luciano Jr. was not allowed to pay bythe City Treasurers Office as he had no written authorizationfrom her. Luciano Jr. and his wife Lilian Jacob Quinto attemptedseveral times to pay but they were as many times refused.

In 1984 respondent City Treasurer of Quezon City sent a notice toMercedes Jacob through her daughter Lilian Jacob Quinto that herreal estate taxes on the property were delinquent. Lilian was alsoinformed that the land was already sold at public auction on 24August 1983 to private respondent Virginia Tugbang for P6,800.00to satisfy the tax delinquency of the land.

Mercedes Jacob came to know of the sale on 6 September 1983when she received from respondent City Treasurer a Notice ofSale of Real Property addressed to her husband. Members ofMercedes family tried to redeem the property from VirginiaTugbang but she evaded them until the Final Bill of Sale wasissued to her.chanrobles law library : red

On 30 September 1985 Virginia filed a petition for the cancellation

of TCT No. 39178 and the issuance of a new certificate of title inher name alleging in par. 4 of her petition that

. . . (On) August 27, 1985, the period of redemption on the soldproperty having already expired and the registered owner-delinquent taxpayer, Mercedes Jacob, and any other interested


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party, did not, within the said period, take any step to redeem theproperty and pursue any lawful remedy to impeach theproceedings or to enforce any lien or claim thereon, thereby

allowing the sale to become final and absolute, 1

thereby disregarding and frustrating the efforts of the Jacobs toredeem the property after depositing P2,000.00 with the CityTreasurer as redemption price. On 3 March 1989 TCT No. 39178was canceled and TCT No. 81860 was issued in the name ofVirginia Tugbang.

On 17 May 1993 petitioners Mercedita Jacob, Donato Jacob, Jr.,Ereneo Jacob and Lilian Jacob-Quinto, heirs of the late MercedesJacob, filed a complaint with the Regional Trial Court of QuezonCity against respondent spouses Ramon R. Tugbang and VirginiaS. Tugbang, docketed as Civil Case No. Q-93-15976, forannulment or cancellation of the auction sale, the final bill of sale,TCT No. 81860, and for redemption of the property plus damages.However, the trial court dismissed the petition purportedly for lackof jurisdiction as the petition was deemed to be

. . . in reality a petition to annul and set aside the Decisionrendered on March 13, 1994 by the Regional Trial Court, QuezonCity, Branch 106, canceling petitioner Mercedes Jacobs TCT No.39178 . . . consolidating title to the property covered thereby inherein private respondent Virginia S. Tugbang, and ordering the

issuance of a new title in her favor. 2

On 12 October 1994 petitioners filed with us a petition for reviewon certiorariunder Rule 45 of the Rules of Court which we certifiedon 9 November 1994 to the Court of Appeals. The appellate courthowever dismissed the petition for lack of merit. Thus this petition


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for reversal of the decision of the Court of Appeals and forjudgment directing the RTCBr. 82, Quezon City, to proceedwith the trial of Civil Case No. Q-93-15976.

The petition must be granted. It is axiomatic that the averments ofthe complaint determine the nature of the action, hence, thejurisdiction of the courts. This is because the complaint mustcontain a concise statement of the ultimate facts constituting theplaintiffs cause of action and specify the relief sought. 3

A cursory examination of the petition readily shows that it is an

action for reconveyance. The petition states that "petitioners arenot after the annulment of the judgment of the Regional TrialCourt, Quezon City, Branch 106. The remedy of petitioners underthe law is an action for reconveyance the jurisdiction of which isvested in the Regional Trial Court." 4 In Sevilla v. De los Angeles5 reconveyance was allowed where the procurement of a transfercertificate of title was made under circumstances of constructivetrust based on fraudulent representations. In the instant case thecomplaint alleges that respondent Virginia Tugbang procured atransfer certificate of title upon her fraudulent representation inher petition for cancellation of title. This way of acquiring titlecreates what is called "constructive trust" in favor of the defraudedparty and grants to the latter a right to the reconveyance of theproperty. Thus it has been held that if a person obtains legal title toproperty by fraud or concealment courts will impress upon the title

a so-called "constructive trust" in favor of the defrauded party.The use of the word "trust" in this sense is not technically accuratebut as courts are agreed in administering the same remedy in acertain class of frauds as are administered in fraudulent breaches oftrusts, and as courts and the profession have concurred in callingsuch frauds constructive trusts, there can be no misapprehension


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in continuing the same phraseology, while a change might lead toconfusion and misunderstanding. 6

In Alzua v. Johnson 7 we declared that under our system ofpleading it is the duty of the courts to grant the relief to which theparties are shown to be entitled by the allegations in their pleadingsand the facts proved at the trial, and the mere fact that theythemselves misconstrued the legal effect of the facts thus allegedand proved will not prevent the court from placing the justconstruction thereon and adjudicating the issue accordingly.

As the petition makes out a case for reconveyance and not a mereannulment of an RTC judgment as viewed under par. (2), Sec. 9,BP Blg. 129, jurisdiction over the case is clearly vested in theRegional Trial Court of Quezon City as provided in par. (2), Sec.19, BP Blg. 129

Sec. 19. Jurisdiction in civil cases.Regional Trial Courts shallexercise exclusive original jurisdiction: . . . (2) In all civil actionswhich involve the title to, or possession of real property, or anyinterest therein, except actions for forcible entry into and unlawfuldetainer of lands or buildings, original jurisdiction over which isconferred upon Metropolitan Trial Courts, Municipal Trial Courts,and Municipal Circuit Trial Courts . . .

Moreover, the Regional Trial Court has jurisdiction over the

petition as it may be considered only as a continuation of theoriginal proceeding for cancellation of title which in view of itsnon-litigious character is summary in nature. Furthermore, underSec. 2 of PD 1529 otherwise known as the Property RegistrationDecree, the jurisdiction of the Regional Trial Court sitting as a landregistration court is no longer as circumscribed as it was under the


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former Land Registration Act (Act 496), so that now a RegionalTrial Court, like the RTC of Quezon City which issued a new titleto respondent Virginia Tugbang in lieu of the old one, has the

authority to act not only on applications for original registrationbut also over all petitions filed after original registration of title,with power to hear and determine all questions arising from suchapplications or petitions. 8

As to whether such an action should be granted requires furtherevidence culled from a full-blown trial; hence, Civil Case No. Q-93-15976 previously dismissed by the trial court should be

reinstated so that the parties may be able to present their evidence.

G.R. No. 120974

Alberto Sta. Maria owned a parcel of land covered by TCT No.68818 which he sold in 1964 to Teresa L. Valencia who, as aconsequence, had the title canceled and TCT No. 79818 issued inher name. She however failed to have the tax declarationtransferred in her name. Thus she paid the real estate taxes from1964 to 1978 in the name of its previous owner Alberto Sta. Maria.

On 20 December 1973 Valencia entered into a contract of sale ofthe property on installment with a mortgage in favor ofrespondent Bernardita C. Tolentino. However, from 1979 to 1983Valencia failed to pay the real estate taxes due on the land. As a

result, notices of tax delinquency and intent to sell the property 9were sent to Alberto Sta. Marias address which was simply statedas "Olongapo, Zambales." The notices were then returned topetitioner City Treasurer of Quezon City for a "better completeaddress." 10


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In the auction sale on 29 February 1984 the spouses Romeo andVerna Chua bought the land in question, which was alreadycovered by TCT No. 79818 in the name of Teresa L. Valencia. On

5 March 1984 a certificate of sale was issued to the Chua spousesbut it showed on its face that the land was still covered by TCTNo. 68818 and not TCT No. 79818. Apparently, the Office of theCity Treasurer was unaware that TCT No. 68818 had already beencanceled by TCT No. 79818. However, in the Final Bill of Saleissued to the Chua spouses on 15 May 1985 TCT No. 79818 stillappeared in the name of Alberto Sta. Maria, the former owner, 11so that the vendee spouses lost no time in filing a petition with the

Regional Trial Court of Quezon City for the cancellation of TCTNo. 79818 and the issuance of a new title in their name. On 4February 1987 the court granted their petition and TCT No.357727 was issued in the name of the spouses Romeo and VernaChua.

In the meantime, on 2 February 1987, respondent Bernardita C.Tolentino paid in full the purchase price of the property so thatTeresa L. Valencia executed a deed of absolute sale in her favor.On 2 August 1988, in view of the fire that gutted the Office of theRegister of Deeds of Quezon City, Tolentino filed a petition forreconstitution of TCT No. 79818.

Sometime in April 1989, as purchasers of the property in theauction sale, the Chuas demanded delivery of possession from

Bernardita C. Tolentino and Teresa L. Valencia. As a consequence,Tolentino sued for annulment of the auction sale in the RegionalTrial Court of Quezon City. Finding the action to be well taken,the trial court granted the petition. The Court of Appeals affirmedthe court a quo. Hence. this petition for review on certiorariby theCity Treasurer of Quezon City under Rule 45 of the Rules of


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Court.

Petitioner City Treasurer cites Galutira v. Ramones, 12 a decision

of the Court of Appeals, in support of his position that the trialcourt has no jurisdiction over the case as it is one for annulmentand cancellation of TCT No. 357727 which is vested in the Courtof Appeals pursuant to par. (2), Sec. 9, BP Blg. 129. 13 In Galutirait was held that "in the law of pleading, courts are called upon topierce the form and go into the substance, not to be misled by afalse or wrong name given to a pleading because the title thereof isnot controlling and the court should be guided by its averments. . .

." Apparently the ruling is contrary to petitioners very ownposition. While the complaint of Bernardita C. Tolentino iscaptioned as one for annulment of auction sale with damages, it isnot an action for annulment of judgment which should be filedwith the Court of Appeals. In fact, from the allegations in thecomplaint it can be gathered that a reconveyance was intended byTolentino, in which case, jurisdiction is vested in the trial court.

Under Sec. 55 of the Land Registration Act, as amended by Sec. 53of PD No. 1529, 14 an original owner of registered land may seekthe annulment of the transfer thereof on the ground of fraud andthe proper remedy is reconveyance. However, such remedy iswithout prejudice to the rights of an innocent purchaser for valueholding a certificate of title.

As regards the propriety of the nullification of the auction sale inthe instant case, which still remains unresolved, petitioner submitsthat he had done everything incumbent upon him to do inproceeding with the auction sale. Besides, not only was originalvendee Valencia remiss in her obligation to secure a new taxdeclaration in her name but she likewise failed to pay the real


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property taxes for 1979 to 1983. Therefore, petitioner CityTreasurer of Quezon City reiterates, the validity of the auction saleshould instead be sustained conformably with Estella v. Court of

Appeals. 15

Section 73 of PD No. 464 provides

Sec. 73. Advertisement of sale of real property at public auction.After the expiration of the year for which the tax is due, theprovincial or city treasurer shall advertise the sale at public auctionof the entire delinquent real property, except real property

mentioned in subsection (a) of Section forty hereof, to satisfy allthe taxes and penalties due and the costs of sale. Suchadvertisement shall be made by posting a notice for threeconsecutive weeks at the main entrance of the provincial buildingand of all municipal buildings in the province, or at the mainentrance of the city or municipal hall in the case of cities, and in apublic and conspicuous place in (the) barrio or district wherein theproperty is situated, in English, Spanish and the local dialectcommonly used, and by announcement for at least three marketdays at the market by the crier, and, in the discretion of theprovincial or city treasurer, by publication once a week for threeconsecutive weeks in a newspaper of general circulation publishedin the province or city.

The notice, publication, and announcement by crier shall state the

amount of the taxes, penalties and costs of sale; the date, hour, andplace of sale, the name of the taxpayer against whom the tax wasassessed; and the kind or nature of property and, if land, itsapproximate area, lot number, and location stating the street andblock number, district or barrio, municipality and the province orcity where the property to be sold is situated (Emphasis supplied).


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Copy of the notice shall forthwith be sent either by registered mailor by messenger, or through the barrio captain, to the delinquent

taxpayer, at his address as shown in the tax rolls or property taxrecord cards of the municipality or city where the property islocated, or at his residence, if known to said treasurer or barriocaptain; Provided, however, that a return of the proof of serviceunder oath shall be filed by the person making the service with theprovincial or city treasurer concerned (Emphasis supplied).

There is no dispute that the requirements of law as regards posting

of the notice, publication and announcement by crier have beencomplied with. 16 The controversy lies in the failure of petitionerCity Treasurer to notify effectively the delinquent taxpayer who atthe time of the auction sale was Teresa L. Valencia. Apparently,petitioner proceeded on the wrong premise that the property wasstill owned by the former registered owner, Alberto Sta. Maria,who sold the property to Valencia in 1964. In fact, at the time ofthe auction sale, the property was already covered by a conditionalsale on installment in favor of respondent Bernardita C. Tolentino.Plainly, at the time of the auction sale, Alberto Sta. Maria whoappeared to have been notified of the auction sale was no longerthe registered owner, much less the delinquent taxpayer.

In ascertaining the identity of the delinquent taxpayer, forpurposes of notifying him of his tax delinquency and the prospect

of a distraint and auction of his delinquent property, petitionerCity Treasurer should not have simply relied on the taxdeclaration. The property being covered by the Torrens system, itwould have been more prudent for him, which was not difficult todo, to verify from the Office of the Register of Deeds of QuezonCity where the property is situated and as to who the registered


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owner was at the time the auction sale was to take place, todetermine who the real delinquent taxpayer was within the purviewof the third paragraph of Sec. 73. For one who is no longer the

lawful owner of the land cannot be considered the "presentregistered owner" because, apparently, he has already lost interestin the property, hence is not expected to defend the property fromthe sale at auction. The purpose of PD No. 464 is to collect taxesfrom the delinquent taxpayer and, logically, one who is no longerthe owner of the property cannot be considered the delinquenttaxpayer.chanroblesvirtuallawlibrary:red

While we understand the earnestness and initiative of localgovernments to collect taxes, the same must be collected from therightful debtors and not from those who may only appear to bethe registered owners in the official files. Certainly, propertieschange hands as fast as their owners can, and to deprive thepresent owners of their properties by notifying only the previousowners who no longer have any interest in them will amount notonly to inequity and injustice but even to a violation of theirconstitutional rights to property and due process. Thisinterpretation as well as its ratiocination was explained as early as1946 in Cabrera v. The Provincial Treasurer of Tayabas 17 wherethe parties therein seemed to be in the same predicament as theparties herein.

In Cabrera the notice of auction sale was sent to the declared

owner but was returned "unclaimed." Nevertheless, the auctionsale proceeded and the property was sold to the highest bidder. Itturned out that the property had been previously conveyed by thedeclared owner to another who, upon learning of the sale, filed acomplaint attacking the validity of the auction sale for lack ofnotice to the registered owner, and that although the land


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remained in the assessment books in the name of her transferor,she had become its registered owner several years prior to theauction sale. We resolved the controversy in this manner

. . . The appellee was admittedly not notified of the auction sale,and this also vitiates the proceeding. She is the registered owner ofthe land and, since 1934, has become liable for the taxes thereon.For all purposes, she is the delinquent taxpayer against whom thetaxes were assessed referred to in Section 34 of theCommonwealth Act No. 470. It cannot be Nemesio Cabrera(declared owner) for the latters obligation to pay taxes ended

where the appellees liability began (Emphasis supplied).

. . . The sale in favor of the appellant (purchaser at auction sale)cannot bind the appellee, since the land purportedly conveyed wasowned by Nemesio Cabrera, not by the appellee; and at the time ofsale, Nemesio Cabrera had no interest whatsoever in the land inquestion that could have passed to theAppellant.

The appellee may be criticized for her failure to have the landtransferred to her name in the assessment record. Thecircumstance, nevertheless, cannot supplant the absence of notice.Of course, it is the duty of any person acquiring at the time realproperty to prepare and submit a tax declaration within sixty days(Commonwealth Act No. 470, section 12), but it is no less truethat when the owner refuses or fails to make the required

declaration, the provincial assessor should himself declare theproperty in the name of the defaulting owner (Commonwealth ActNo. 470, Sec. 14). In this case, there is absolutely no showing thatthe appellee had deliberately failed to make the declaration todefraud the tax officials; and it may be remarked that there can beno reason why her Torrens title, which binds the whole world,


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cannot at least charge the Government which had issued it, withnotice thereof . . .

Forty years later, in Serfino v. Court of Appeals, 18 we reiteratedthe Cabrera doctrine and nullified the auction sale because

. . . the prescribed procedure in auction sales of property for taxdelinquency being in derogation of property rights should befollowed punctiliously. Strict adherence to the statutes governingtax sales is imperative not only for the protection of the taxpayers,but also to allay any possible suspicion of collusion between the

buyer and the public officials called upon to enforce such laws.Notice of sale to the delinquent landowners and to the public ingeneral is an essential and indispensable requirement of law, thenon-fulfillment of which vitiates the sale . . . A purchaser of realestate at the tax sale obtains only such title as that held by thetaxpayer, the principle of caveat emptor applies. Where land is soldfor delinquency taxes under the provisions of the ProvincialAssessment Law, rights of registered but undeclared owners of theland are not affected by the proceedings and the sale conveys onlysuch interest as the person who has declared the property fortaxation has therein.

The principle in Cabrera, reiterated in Serfino, should be, as it stillis, considered valid doctrine today, despite Estella which petitionerinvokes as the latest rule on the matter. Quite significantly, Estella

did not make any reference to the Cabrera and Serfino cases, muchless did it pass upon, reverse or modify them; instead, the Courtsimply declared

Under the particular circumstances of the case, we hold that theCity Treasurer had done everything that was legally incumbent


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upon him. Not only did he send the pertinent notices to thedeclared owner, he also caused the mandatory publication of thenotice of public auction in two (2) newspapers of general

circulation pursuant to Section 65 of PD No. 464. The noticeswere understandably mailed to Concepcion because as far as theCity Treasurer was concerned, she was still the declared ownersince the assessment of the property in question was still in hername. It should be recalled that while petitioners had promptlysecured a new transfer certificate of title in their name after the1970 acquisition, they neglected to effect the necessary change inthe tax declaration as then required by (Sec. 12 of Commonwealth

Act No. 470 Assessment Law) and later by P.D. No. 464 . . .(Emphasis supplied).

All told, if it were really true that petitioners were never given theopportunity to protect their rights, they had only themselves toblame for the catastrophe that befell them. Not having beenapprised by petitioners of a change in ownership of the subjectproperty, the government was never placed in a position to givethem that opportunity (Emphasis supplied).

In Estella we relied on our ruling in Paguio v. Ruiz 19 where weemphasized the requirement of declaration by the owner underSec. 2484 of the Revised Administrative Code 20

. . . the duty of each person acquiring real estate in the city to make

a new declaration thereof with the advertence that failure to do soshall make the assessment in the name of the previous owner validand binding on all persons interested, and for all purposes, asthough the same had been assessed in the name of its actual owner(Emphasis supplied).


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When the property was sold by Sta. Maria to Valencia in 1964 thelaw applicable was RA No. 537 21 which provided for the samerequirement under its Sec. 48. 22 However, the law in force at the

time of the auction sale on 29 February 1984 was already PD No.464 23 which did not contain the aforecited phrase. The new law,Sec. 11 of PD No. 464, merely states

Any person who shall transfer real property to another shall notifythe assessor of the province or city wherein the property is situatedwithin sixty (60) days from the date of such transfer. Thenotification shall include the particulars of the transfer, the

description of the property alienated and the name and address ofthe transferee.

The fact that the pertinent phrase," failure to do so shall make theassessment in the name of the previous owner valid and bindingon all persons interested, and for all purposes, as though the samehad been assessed in the name of its actual owner," found in bothRA No. 537 and RA No. 409 was not incorporated in PD No. 464implies that the assessment of the subject property in 1983 in thename of Sta. Maria would not bind, much less adversely affect,Valencia. This, in spite of the non-declaration by Valencia of theproperty in her name as required by the law, for there is no longerany statutory waiver of the right to contest assessment by theactual owner due to mere non-declaration. We can infer from theomission that the assessment in the name of the previous owner is

no longer deemed an assessment in the name of the actualowner.chanrobles.com:cralaw:red

It is therefore clear that the delinquent taxpayer referred to underSec. 72 of PD No. 464 is the actual owner of the property at thetime of the delinquency and mere compliance by the provincial or


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city treasurer with Sec. 65 of the decree is no longer enough. 24The notification to the right person, i.e., the real owner, is anessential and indispensable requirement of the law, non-

compliance with which renders the auction sale void.

The registered owner need not be entirely blamed for her failure totransfer the tax declaration in her name. Section 7 of PD No. 464directs the assessor, in case the owner fails to make a return, to listthe real estate for taxation and charge the tax against the trueowner if known, and if unknown, then as against the unknownowner. In this way, a change of ownership may be ascertained.

Along the same line did we rule in Cabrera.

WHEREFORE, the petition in G.R. No. 120435 is GRANTED.The decision and resolution of respondent Court of Appealswhich affirmed the dismissal of the complaint of petitioners by theRTC-Br. 82, Quezon City, are SET ASIDE and Civil Case No. Q-93-15976 is REINSTATED. The trial court is directed to hear anddecide this case with deliberate dispatch.

The petition in G.R. No. 120974, on the other hand, is DENIED.The decision and resolution of respondent Court of Appealsaffirming with modification that of the trial court are AFFIRMED.The public auction sale conducted on 29 February 1984 is declaredVOID for lack of notice to the registered owner Teresa L.Valencia. Transfer Certificate Title No. 357727 and Tax

Declaration No. B-091-01469 in the name of the spouses Romeoand Verna Chua are ANNULLED. The Register of Deeds ofQuezon City is ordered to cancel TCT No. 357727 and issue inlieu thereof a new one in the name of respondent Bernardita C.Tolentino. Petitioner City Treasurer of Quezon City is ordered tocancel likewise Tax Declaration No. B-091-01469 and issue in lieu


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thereof a new tax declaration in the name of respondentBernardita C. Tolentino. The award of attorneys fees is deleted.

SO ORDERED.

Davide, Jr., Vitug and Kapunan,JJ., concur.

[G.R. No. 166838 : June 15, 2011]

STA. LUCIA REALTY & DEVELOPMENT, INC.,PETITIONER, VS. CITY OF PASIG, RESPONDENT,

MUNICIPALITY OF CAINTA, PROVINCE OF RIZAL,INTERVENOR.

D E C I S I O N

LEONARDO-DE CASTRO,J.:

For review is the June 30, 2004 Decision [1]and the January 27,2005 Resolution [2]of the Court of Appeals in CA-G.R. CV No.69603, which affirmed with modification the August 10, 1998Decision [3]and October 9, 1998 Order [4]of the Regional Trial

Court (RTC) of Pasig City, Branch 157, in Civil Case No. 65420.

Petitioner Sta. Lucia Realty & Development, Inc. (Sta. Lucia) is theregistered owner of several parcels of land with TransferCertificates of Title (TCT) Nos. 39112, 39110 and 38457, all ofwhich indicated that the lots were located in Barrio Tatlong Kawayan,


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Municipality of Pasig [5](Pasig).

The parcel of land covered by TCT No. 39112 was consolidated

with that covered by TCT No. 518403, which was situated inBarrio

Tatlong Kawayan, Municipality of Cainta, Province of Rizal(Cainta). The two combined lots were subsequently partitionedinto three, for which TCT Nos. 532250, 598424, and 599131, nowall bearing the Cainta address, were issued.

TCT No. 39110 was also divided into two lots, becoming TCTNos. 92869 and 92870.

The lot covered by TCT No. 38457 was not segregated, but acommercial building owned by Sta. Lucia East Commercial Center,Inc., a separate corporation, was built on it. [6]

Upon Pasig's petition to correct the location stated in TCT Nos.532250, 598424, and 599131, the Land Registration Court, on June9, 1995, ordered the amendment of the TCTs to read that the lotswith respect to TCT No. 39112 were located in Barrio TatlongKawayan, Pasig City. [7]

On January 31, 1994, Cainta filed a petition [8]for the settlement ofits land boundary dispute with Pasig before the RTC, Branch 74 ofAntipolo City (Antipolo RTC). This case, docketed as Civil CaseNo. 94-3006, is still pending up to this date.

On November 28, 1995, Pasig filed a Complaint, [9]docketed asCivil Case No. 65420, against Sta. Lucia for the collection of realestate taxes, including penalties and interests, on the lots coveredby TCT Nos. 532250, 598424, 599131, 92869, 92870 and 38457,including the improvements thereon (the subject properties).


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Sta. Lucia, in its Answer, alleged that it had been religiously payingits real estate taxes to Cainta, just like what its predecessors-in-

interest did, by virtue of the demands and assessments made andthe Tax Declarations issued by Cainta on the claim that the subjectproperties were within its territorial jurisdiction. Sta. Lucia furtherargued that since 1913, the real estate taxes for the lots covered bythe above TCTs had been paid to Cainta. [10]

Cainta was allowed to file its own Answer-in-Intervention when itmoved to intervene on the ground that its interest would be greatly

affected by the outcome of the case. It averred that it had beencollecting the real property taxes on the subject properties evenbefore Sta. Lucia acquired them. Cainta further asseverated thatthe establishment of the boundary monuments would show thatthe subject properties are within its metes and bounds. [11]

Sta. Lucia and Cainta thereafter moved for the suspension of theproceedings, and claimed that the pending petition in the AntipoloRTC, for the settlement of boundary dispute between Cainta andPasig, presented a "prejudicial question" to the resolution of thecase. [12]

The RTC denied this in an Order dated December 4, 1996 for lackof merit. Holding that the TCTs were conclusive evidence as to itsownership and location, [13]the RTC, on August 10, 1998, rendered

a Decision in favor of Pasig:

WHEREFORE, in view of the foregoing, judgment is herebyrendered in favor of [Pasig], ordering Sta. Lucia Realty andDevelopment, Inc. to pay [Pasig]:


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1) P273,349.14 representing unpaid real estate taxes and penaltiesas of 1996, plus interest of 2% per month until fully paid;

2) P50,000.00 as and by way of attorney's fees; and

3) The costs of suit.

Judgment is likewise rendered against the intervenor Municipalityof Cainta, Rizal, ordering it to refund to Sta. Lucia Realty andDevelopment, Inc. the realty tax payments improperly collectedand received by the former from the latter in the aggregate amount

of P358, 403.68. [14]

After Sta. Lucia and Cainta filed their Notices of Appeal, Pasig, onSeptember 11, 1998, filed a Motion for Reconsideration of theRTC's August 10, 1998 Decision.

The RTC, on October 9, 1998, granted Pasig's motion in an Order[15]and modified its earlier decision to include the realty taxes dueon the improvements on the subject lots:

WHEREFORE, premises considered, the plaintiff's motion forreconsideration is hereby granted. Accordingly, the Decision,dated August 10, 1998 is hereby modified in that the defendant ishereby ordered to pay plaintiff the amount of P5,627,757.07representing the unpaid taxes and penalties on the improvementson the subject parcels of land whereon real estate taxes areadjudged as due for the year 1996. [16]

Accordingly, Sta. Lucia filed an Amended Notice of Appeal toinclude the RTC's October 9, 1998 Order in its protest.


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On October 16, 1998, Pasig filed a Motion for Execution PendingAppeal, to which both Sta. Lucia and Cainta filed severaloppositions, on the assertion that there were no good reasons to

warrant the execution pending appeal.

[17]

On April 15, 1999, the RTC ordered the issuance of a Writ ofExecution against Sta. Lucia.

On May 21, 1999, Sta. Lucia filed a Petition for CertiorariunderRule 65 of the Rules of Court with the Court of Appeals to assailthe RTC's order granting the execution. Docketed as CA-G.R. SP

No. 52874, the petition was raffled to the First Division of theCourt of Appeals, which on September 22, 2000, ruled in favor ofSta. Lucia, to wit:

WHEREFORE, in view of the foregoing, the instant petition ishereby GIVEN DUE COURSE and GRANTED by thisCourt. The assailed Order dated April 15, 1999 in Civil Case No.65420 granting the motion for execution pending appeal and

ordering the issuance of a writ of execution pending appeal ishereby SET ASIDE and declaredNULL andVOID.[18]

The Court of Appeals added that the boundary dispute casepresented a "prejudicial question which must be decided before x xx Pasig can collect the realty taxes due over the subject properties."[19]

Pasig sought to have this decision reversed in a Petition forCertiorarifiled before this Court on November 29, 2000, but thiswas denied on June 25, 2001 for being filed out of time. [20]

Meanwhile, the appeal filed by Sta. Lucia and Cainta was raffled to


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the (former) Seventh Division of the Court of Appeals anddocketed as CA-G.R. CV No. 69603. On June 30, 2004, theCourt of Appeals rendered its Decision, wherein it agreed with the

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