RPT Case Digests

Real Property Taxation Cases
G.R. No. 144104.June 29, 2004
LUNG CENTERT OF THE PHILIPPINES, petitioner, vs. QUEZON

CITY and CONSTANTINO P. ROSAS, in his capacity as City
Assessor of Quezon City, respondents.
FACTS:
Petitioner Lung Center of the Philippines is a non-stock and non-

profit entity created by virtue of PD No. 1823. It owns a parcel of lot
with an area of 121,463 square meters, erected in the middle of which
is the hospital building. A big space at the ground floor is being
leased to private parties for private parties, for canteen and small
store spaces, and to medical or professional practitioners who use the
same as their private clinics for their patients whom they charge for
their professional services. Almost half of the entire area on the left
side of the building is vacant and idle while a big portion on the right
side, is being leased for commercial purposes to a private enterprise
known as the Elliptical Orchids and Garden Center.
In 1993, both the land and building of the petitioner were

assessed for real property taxes in the amount of P4,554,860 by the
City Assessor of Quezon City. Petitioners request for exemption was
denied; the petition it filed before the Local Board of Assessment
Appeals of Quezon City (LBAA) for the reversal of the resolution of the
City Assessor was dismissed. The same was the ruling when it
elevated the matter to the Central Board of Assessment Appeals of
Quezon City (CBAA). The CA likewise affirmed CBAAs decision.
Hence, this petition.
ISSUE (s):
Whether or not Lung Center is a charitable institution?
Whether or not the real properties of Lung Center are exempt

from real property tax?
Contentions of the Parties
Lung Center (LC) Ruling Body/Court
LCs claim for exemption is CBAA affirmed LBAAs ruling

predicated on its being a that LC was not a charitable
charitable institution under institution and that its real
Section 28 (3) of the 1987 properties were not actually,
constitution; it averred that 60% directly and exclusively used for
of its hospital beds are charitable purposes; hence, it
exclusively used for charity was not entitled to real
patients and that the major trust property tax exemption under
of its hospital operation is to its own charter, the constitution

serve charity patients. and the law.
Petitioner contends that even if it Respondents reiterated its

is not declared as real property position that LC failed to prove
tax exempt under its charter (PD that it is a charitable institution
1823), said exemption may and that the said property is
nevertheless be extended upon actually, directly and exclusively
proper application; it further used for charitable purposes. It
asserts that its character as a noted that in a newspaper
charitable institution is not report, it appeared that graft
altered by the fact that it admits charges were filed with the
paying patients and renders Sandiganbayan against the
medical services to them, leases director, administrator of LC
portion of the land to private and the proprietress of
parties, and rents out portion of Elliptical Orchids over a lease
the hospital to private medical contract; further asserted that
practitioners from which it LC uses subsidies granted by
derives income to be used for the government for charity
operational expenses; and that patients and used the rest of its
the exclusivity required in the income from the property for
constitution does not necessarily the benefit of its paying
mean solely. patients, among other purposes
and that it failed to adduce
substantial evidence that 100%
of its out-patients and 170 beds
in the hospital are reserved for
indigent patients.
HELD:
YES, as held by the Supreme Court, petitioner Lung Center is a

charitable institution within the context of the 1937 and 1987
Constitutions.
To determine whether an enterprise is a charitable

institution/entity or not, the elements which should be considered
include the statute creating the enterprise, its corporate purposes, its
constitutions and by-laws, the methods of administration, the nature
of the actual work performed, the character of the services rendered,
the indefiniteness of the beneficiaries, and the use and occupation of
the properties. Under PD No. 1823, the law which created Lung
Center, it is a non-profit and non-stock corporation, organized for the
welfare and benefit of the Filipino people principally to help combat
the high incidence of lung and pulmonary diseases in the Philippines.
As a general principle, a charitable institution does not lose its

character as such and its exemption from taxes simply because it
derives income from paying patients, whether out-patient, or confined

in the hospital, or subsidies from the government, so long as the
money received is devoted or used altogether to the charitable object
which it is intended to achieve; and no money inures to the private
benefit of the persons managing of operating the institution.
Even as the Supreme 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 exempt from real property taxes
as these are not actually, directly and exclusively used for charitable
purposes.
Under the 1937 and 1987 Constitutions and Rep. Act No 7160,
in order to be entitled to the exemption, petitioner LC is burdened to
prove, by clear and unequivocal proof, that it is a charitable institution
and its real properties are ACTUALLY, DIRECTLY and EXCLUSIVELY
used for charitable purposes. Exclusive is defined as possessed and
enjoyed to the exclusion of others; debarred from participation or
enjoyment; and exclusively is defined, in a manner to exclude; as
enjoying a privilege exclusively.
If real property is used for one or more commercial purposes, it

is not exclusively used for the exempted purposes but is subject to
taxation. What is meant by actual, direct and exclusive use of the
property for charitable purposes is the direct and immediate and
actual application of the property itself to the purposes for which the
charitable institution is organized. It is not the use of the income
from the real property that is determinative of whether the property is
used for tax-exempt purposes.
As such, the SC held that portions of the land leased to private

entities as well as those parts of the hospital leased to private
individuals are not exempt from such taxes. Only portions of the land
occupied by the hospital and portions of the hospital used for its
patients, whether paying or non-paying, are exempt from real
property taxes.
City Assessor of Cebu v. Association of Benevola de

Cebu,
G.R. No. 152904, June 8, 2007
Facts
Association of Benevola de Cebu, Inc. (Benevola) is a non-stock,

non-profit organization organized under the laws of the Republic of
the Philippines and is the owner of Chong Hua Hospital (CHH) in
Cebu City.
In the late 1990s, Benevola constructed the CHH Medical Arts

Center (CHHMAC), and was issued Certificate of Occupancy in April
17, 1998 classified as Commercial [Clinic] by City Assessor of Cebu
City (City Assessor) with a market value of PhP 28,060,520 and an
assessed value of PhP 9,821,180 at the assessment level of 35% for
commercial buildings, and not at the 10% special assessment
currently imposed for CHH and its other separate buildings the CHHs
Dietary and Records Departments.
Benevola filed its September 15, 1998 letter-petition with the

Cebu City LBAA for reconsideration, asserting that CHHMAC is part
of CHH and ought to be imposed the same special assessment level of
10% with that of CHH.
On September 25, 1998, Benevola formally filed its appeal with

the Local Board of Assessment Appeals (LBAA).
City Assessor argued that: Benevola contended that:
--CHHMAC was a newly --CHHMAC building is actually,

constructed five-storey building directly, and exclusively part of CHH
situated about 100 meters away and should have a special
from CHH and, was not a part of assessment level of 10% as provided
the CHH building but a separate under City Tax Ordinance LXX
building which was actually used
as commercial clinic/room spaces -- CHHMAC building is similarly
for renting out to physicians and, situated as the buildings of CHH,
thus, classified as commercial; housing its Dietary and Records
Departments, are completely
--medical specialists in CHHMAC separate from the main CHH
charge consultation fees for building and are imposed the 10%
patients who consult for special assessment level.
diagnosis and relief of bodily
ailment together with the --CHHMAC, though not actually
ancillary (or support) services indispensable, is nonetheless
which include the areas of incidental and reasonably necessary
anesthesia, radiology, pathology, to CHHs operations.
and more.
On February 10, 1999, the LBAA rendered a Decision, declaring

that the building is entitled to a ten (10) percent assessment level and
held that it is inconsequential that a separate building was
constructed for that purpose pointing out that departments or
services of other institutions and establishments are also not always
housed in the same building.
On January 24, 2000, the Central Board of Assessment Appeals

(CBAA) rendered a Decision affirming in toto the LBAA Decision and
resolved the issue of whether the subject building of CHHMAC is part
and parcel of CHH.
On October 31, 2001, the Court of Appeals rendered the

assailed Decision which affirmed the January 24, 2000 Decision of the
CBAA, it held that the facilities and utilities of CHHMAC are
undoubtedly necessary and indispensable for the CHH to achieve its
ultimate purpose.
Issues:
WHETHER OR NOT THE NEW BUILDING CHHMAC IS AN

ESSENTIAL PART OF CHONG HUA HOSPITAL AND THUS NOT
SUBJETC TO 35% ASSESSMENT LEVEL?
Ruling:
CHHMAC is an integral part of CHH.
It is undisputed that the doctors and medical specialists holding

clinics in CHHMAC are those duly accredited by CHH, that is, they
are consultants of the hospital and the ones who can treat CHHs
patients confined in it. This fact alone takes away CHHMAC from
being categorized as commercial since a tertiary hospital like CHH is
required by law to have a pool of physicians who comprises the
required medical departments in various medical fields.
Moreover, the CHHMAC, being hundred meters away from the

CHH main building, does not denigrate from its being an integral part
of the latter.
Moreover, the exemption in favor of property used exclusively

for charitable or educational purposes is not limited to property
actually indispensable therefore (Cooley on Taxation, Vol. 2, p. 1430),
but extends to facilities which are incidental to and reasonably
necessary for the accomplishment of said purposes, such as, in the
case of hospitals, a school for training nurses, a nurses home,
property use to provide housing facilities for interns, resident doctors,
superintendents, and other members of the hospital staff, and
recreational facilities for student nurses, interns and residents (84
C.J.S., 621), such as athletic fields, including a farm used for the
inmates of the institution (Cooley on Taxation, Vol. 2, p. 1430).
Verily, being an integral part of CHH, CHHMAC should be under

the same special assessment level of as that of the former.
Charging rentals for the offices used by its accredited

physicians cannot be equated to a commercial venture
Finally, Benevolas charge of rentals for the offices and clinics its
accredited physicians occupy cannot be equated to a commercial
venture, which is mainly for profit.
The CHHMAC, with operations being devoted for the benefit of

the CHHs patients, should be accorded the 10% special assessment.
SEC. 215. Classes of Real Property for Assessment Purposes.For

purposes of assessment, real property shall be classified as
residential, agricultural, commercial, industrial, mineral, timberland
or special. x x x x
SEC. 216. Special Classes of Real Property.All lands, buildings,

and other improvements thereon actually, directly and exclusively
used for hospitals, cultural or scientific purposes, and those owned
and used by local water districts, and government-owned or
controlled corporations rendering essential public services in the
supply and distribution of water and/or generation and transmission
of electric power shall be classified as special.
Mactan Airport Authority vs. Marcos

G. R. No. 120082, September 11, 1996
Facts:
Petitioner Mactan Cebu International Airport Authority (MCIAA)

was created by virtue of Republic Act No. 6958. Since the time of its
creation, petitioner MCIAA enjoyed the privilege of exemption from
payment of realty taxes in accordance with Section 14 of its Charter.
However on October 11, 1994, Mr. Eustaquio B. Cesa, Officer-in-

Charge, Office of the Treasurer of the City of Cebu, demanded
payment for realty taxes on several parcels of land belonging to the
petitioner by virtue of Sections 193 and 234 of the Local Government
Code that took effect on January 1, 1992.
PETITIONERS CONTENTION RESPONDENTS CONTENTION

The taxing powers of local MCIAA is not an
government units do not instrumentality of the
extend to the levy of taxes government but merely a
or fees of any kind on an GOCC performing
instrumentality of the proprietary functions, and
national government. That hence, the exemptions
while it is indeed a GOCC, granted to it were deemed
it nonetheless stands on withdrawn by virtue of
the same footing as an Secs. 193 and 234 of the
agency or instrumentality LGC.
of the national government
by the very nature of its Sec. 193 provides that
powers and functions tax exemptions or
Sec. 133, LGC incentives granted to or
provides that the presently enjoyed by all
exercise of the persons, whether
taxing powers of natural or juridical,
provinces, cities, including GOCCs
municipalities and except local water
barangays shall not districts, cooperatives
extend to the levy duly registered under

of... taxes, fees or RA 6938, non-stock and
charges of any kind non-profit hospitals and
on the National educational institutions
government, its are hereby withdrawn
agencies and upon the effectivity of
instrumentalities this Code.
and local Section 234 meanwhile
government units. provides that
exemption from
payment of real
property tax previously
granted to or presently
enjoyed by all persons,
whether natural or
juridical, including
GOCCs are hereby
withdrawn upon the
effectivity of the LGC.
Issue: Whether or not petitioner is exempt from payment of real

property tax?
Ruling:
No. Taxation is the rule and exemption is the exception. Thus,

the exemption may be withdrawn at the pleasure of the taxing
authority. The only exception to this rule is where the exemption was
granted to private parties based on material consideration of a mutual
nature, which then becomes contractual and is thus covered by the
non-impairment clause of the Constitution.
The general rule, as laid down in Section 133 of the LGC is that
the taxing powers of LGUs cannot extend to the levy of, inter alia,
taxes, fees and charges of any kind on the National Government, its
agencies, and instrumentalities, and LGUs. However, pursuant to
Section 232, provinces, cities and municipalities in the Metro Manila
Area may impose real property taxes except on inter alia, real
property owned by the Republic of the Philippines or any of its
political subdivisions except when the beneficial use thereof has been
granted for consideration or otherwise, to a taxable person (Sec.
234a).
As to tax exemptions/incentives granted to or presently enjoyed by

natural or juridical persons, including GOCCs,
GENERAL RULE: Tax exemptions or incentives are withdrawn

upon the effectivity of the LGC
EXCEPTION: Those granted to local water districts,
cooperatives duly registered under RA 6938, non-stock and
non-profit hospitals and educ institutions, and unless otherwise
provided in the LGC. This latter proviso could refer to Section
234 enumerating the properties exempt from real property tax.
The last paragraph of Section 234 further qualifies the retention

of the exemption insofar as real property taxes are concerned
by limiting the retention only to those enumerated therein; all
others not included in the enumeration therefore lost the
privilege upon the effectivity of the LGC. Even as to real
property owned by the Rep. Of the Philippines or any of its
political subdivisions covered by item (a) of the first paragraph
of Section 234, the exemption is withdrawn if the beneficial use
of such property has been granted to a taxable person for
consideration or otherwise.
Since the last paragraph of Section 234 unequivocally withdrew, upon

the effectivity of the LGC, exemptions from payment of real property
taxes granted to natural or juridical persons, including government-
owned or controlled corporations, except as provided in the said
section, and the petitioner is, undoubtedly, a government-owned
corporation, it necessarily follows that its exemption from such tax
granted it by its charter has been withdrawn.
The Court ruled that the land in question is no longer owned by

the government. Section 15 of its Charter involves a transfer of the
lands, among other things, to the petitioner and not just the transfer
of the beneficial use thereof, with the ownership being retained by the
Republic of the Philippines.
This transfer is actually an absolute conveyance of the ownership

thereof because the petitioners authorized capital stock consists
of, inter alia, the value of such real estate owned and/or administered
by the airports. Hence, the petitioner is now the owner of the land in
question and the exception in Section 234(c) of the LGC is
inapplicable.
Manila International Airport Authority v. Court of

Appeals,
G.R. 155650, July 20, 2006
Facts:
The Manila International Airport Authority (MIAA) operates the
Ninoy Aquino International Airport (NAIA) Complex in Paraaque City
under Executive Order No. 903 (MIAA Charter), as amended. As such
operator, it administers the land, improvements and equipment within
the NAIA Complex. In March 1997, the Office of the Government
Corporate Counsel (OGCC) issued Opinion No. 061 to the effect that
the Local Government Code of 1991 (LGC) withdrew the exemption
from real estate tax granted to MIAA under Section 21 of its Charter.
Thus, MIAA paid some of the real estate tax already due. In June
2001, it received Final Notices of Real Estate Tax Delinquency from
the City of Paraaque for the taxable years 1992 to 2001. The City
Treasurer subsequently issued notices of levy and warrants of levy on
the airport lands and buildings.
At the instance of MIAA, the OGCC issued Opinion No. 147

clarifying Opinion No. 061, pointing out that Sec. 206 of the LGC
requires persons exempt from real estate tax to show proof of
exemption. According to the OGCC, Sec. 21 of the MIAA Charter is
the proof that MIAA is exempt from real estate tax. MIAA, thus, filed a
petition with the Court of Appeals seeking to restrain the City of
Paraaque from imposing real estate tax on, levying against, and
auctioning for public sale the airport lands and buildings, but this was
dismissed for having been filed out of time.
MIAA argued that: City of Paraaque contended

that:
-- MIAA is exempt from real -- Sec. 193 of the LGC, which
estate tax under Sec. 21 of its expressly withdrew the tax
charter and Sec. 234 of the LGC. exemption privileges of
government-owned and
--that the government cannot tax controlled corporations (GOCC)
itself as a justification for upon the effectivity of the LGC
exemption, since the airport
lands and buildings, being -- international airport is not
devoted to public use and public among the exceptions mentioned
service, are owned by the in the said law
Republic of the Philippines.
Meanwhile, the City of Paraaque posted and published notices

announcing the public auction sale of the airport lands and buildings.
In the afternoon before the scheduled public auction, MIAA applied
with the Court for the issuance of a TRO to restrain the auction sale.
The Court issued a TRO on the day of the auction sale, however, the
same was received only by the City of Paraaque three hours after the
sale.
Issue:
WHETHER OR NOT THE AIRPORT LANDS AND BUILDINGS
OF MIAA ARE EXEMPT FROM REAL ESTATE TAX?
Held:
The airport lands and buildings of MIAA are exempt from real
estate tax imposed by local governments. Sec. 243(a) of the LGC
exempts from real estate tax any real property owned by the Republic
of the Philippines. This exemption should be read in relation with Sec.
133(o) of the LGC, which provides that the exercise of the taxing
powers of local governments shall not extend to the levy of taxes, fees
or charges of any kind on the National Government, its agencies and
instrumentalities.
These provisions recognize the basic principle that local

governments cannot tax the national government, which historically
merely delegated to local governments the power to tax.
The rule is that a tax is never presumed and there must be clear
language in the law imposing the tax. This rule applies with greater
force when local governments seek to tax national government
instrumentalities. Moreover, a tax exemption is construed liberally in

favor of national government instrumentalities.
MIAA is not a GOCC, but an instrumentality of the government.
The Republic remains the beneficial owner of the properties.

MIAA itself is owned solely by the Republic. At any time, the President
can transfer back to the Republic title to the airport lands and
buildings without the Republic paying MIAA any consideration. As
long as the airport lands and buildings are reserved for public use,
their ownership remains with the State. Unless the President issues a
proclamation withdrawing these properties from public use, they
remain properties of public dominion. As such, they are inalienable,
hence, they are not subject to levy on execution or foreclosure sale,
and they are exempt from real estate tax.
However, portions of the airport lands and buildings that MIAA

leases to private entities are not exempt from real estate tax. In such
a case, MIAA has granted the beneficial use of such portions for a
consideration to a taxable person.
Quezon City v. BayanTel Corp., G.R. No. 162015,

March 6, 2006
FACTS:
Respondent Bayan Telecommunications, Inc. (Bayantel) is a
legislative franchise holder under Republic Act (R.A.) No. 3259 (1961)
to establish and operate radio stations for domestic
telecommunications, radiophone, broadcasting and telecasting.
Section 14 (a) of R.A. No. 3259 states: The grantee shall be liable to
pay the same taxes on its real estate, buildings and personal property,
exclusive of the franchise, as other persons or corporations are now or
hereafter may be required by law to pay.
In 1992, R.A. No. 7160, otherwise known as the Local
Government Code of 1991 (LGC) took effect. Section 232 of the Code
grants local government units within the Metro Manila Area the
power to levy tax on real properties. Barely few months after the LGC
took effect, Congress enacted R.A. No. 7633, amending Bayantels
original franchise. The Section 11 of the amendatory contained the
following tax provision: The grantee, its successors or assigns shall
be liable to pay the same taxes on their real estate, buildings and
personal property, exclusive of this franchise, xxx. In 1993, the
government of Quezon City enacted an ordinance otherwise known as
the Quezon City Revenue Code withdrawing tax exemption privileges.
CONTENTIONS OF THE PARTIES

Quezon City Government Taxpayer (BayanTel, Inc.)
Sent notices of delinquency Bayantel wrote a letter the

to BayanTel for the total office of the City Assessor
amount of P43,878,208.18, seeking the exclusion of its
followed by the issuance of real properties in the city
several warrants of levy from the roll of taxable real
against Bayantels properties. With its request
properties preparatory to having been denied, Bayantel
their sale at a public interposed an appeal with the
auction set on July 30, 2002, Local Board of Assessment
due to non-payment of Appeals (LBAA). And,
realty taxes evidently on its firm belief of
its exempt status, Bayantel
This assessment by the City did not pay the real property
Treasurer is pursuant to the taxes assessed against it by
withdrawal of the the Quezon City government.
exemption enjoyed by
BayanTel, by virtue of the The grant of taxing powers to
enactment of the City local government units under
Revenue code, a local the Constitution and the LGC
ordinance, and anchored on does not affect the power of
the constitutional grant to Congress to grant exemptions
municipal corporations of a to certain persons. And by
general power to levy taxes virtue of a subsequent
and create sources of enacted law of the legislature,
revenue. BayanTel, Inc., with a firm
belief that indeed they are
exempt, filed with the RTC of
Quezon City a petition for
prohibition with an urgent
application for a temporary
restraining order against
Quezon City
ISSUE: Whether Bayantels real properties in Quezon City are

exempt from real property taxes under its legislative franchise
HELD:
Yes, real properties of BayanTel, Inc. in Quezon City are exempt
from real property taxes under its legislative franchise.
The power to tax is primarily vested in the Congress; however,

in our jurisdiction, it may be exercised by local legislative bodies, no
longer merely by virtue of a valid delegation as before, but pursuant
to direct authority conferred by Section 5, Article X of the
Constitution. Under the latter, the exercise of the power may be
subject to such guidelines and limitations as the Congress may
provide which, however, must be consistent with the basic policy of

local autonomy.
Indeed, the grant of taxing powers to local government units

under the Constitution and the LGC does not affect the power of
Congress to grant exemptions to certain persons, pursuant to a
declared national policy. The legal effect of the constitutional grant to
local governments simply means that in interpreting statutory
provisions on municipal taxing powers, doubts must be resolved in
favor of municipal corporations.
Admittedly, Rep. Act No. 7633 was enacted subsequent to the

LGC. Perfectly aware that the LGC has already withdrawn Bayantels
former exemption from realty taxes, Congress opted to pass Rep. Act
No. 7633 using, under Section 11 thereof, exactly the same defining
phrase exclusive of this franchise which was the basis for Bayantels
exemption from realty taxes prior to the LGC. In plain language,
Section 11 of Rep. Act No. 7633 states that the grantee, its
successors or assigns shall be liable to pay the same taxes on their
real estate, buildings and personal property, exclusive of this
franchise, as other persons or corporations are now or hereafter may
be required by law to pay.
The Court views this subsequent piece of legislation as an

express and real intention on the part of Congress to once again
remove from the LGCs delegated taxing power, all of the franchisees
(Bayantels) properties that are actually, directly and exclusively used
in the pursuit of its franchise.
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.
FACTS:
Petitioner is the registered owner of several parcels of lands

with TCT Nos. 39112, 39110 and 38457, all of which indicated that
the lots were located in Barrio Tatlong Kawayan, Municipality of
Pasig.
The parcel of land covered by TCT No. 39112 was consolidated

with that covered by TCT No. 518403, which was situated in Barrio
Tatlong Kawayan, Municipality of Cainta, Province of Rizal (Cainta).
The two combined lots were subsequently partitioned into three, for
which TCT Nos. 532250, 598424, and 599131, now all bearing the
Cainta address, were issued.
TCT No. 39110 was also divided into two lots, becoming TCT
Nos. 92869 and 92870. The lot covered by TCT No. 38457 was not
segregated, but a commercial building owned by Sta. Lucia East

Commercial Center, Inc., a separate corporation, was built on it.
Upon Pasigs petition to correct the location stated in TCT Nos.

532250, 598424, and 599131, the Land Registration Court, on June 9,
1995, ordered the amendment of the TCTs to read that the lots with
respect to TCT No. 39112 were located in Barrio Tatlong Kawayan,
Pasig City.
On January 31, 1994, Cainta filed a petition for the settlement of

its land boundary dispute with Pasig before the RTC, Branch 74 of
Antipolo City (Antipolo RTC). This case, docketed as Civil Case No. 94-
3006, is still pending up to this date.
On November 28, 1995, Pasig filed a Complaint, docketed as

Civil Case No. 65420, against Sta. Lucia for the collection of real
estate taxes, including penalties and interests, on the lots covered by
TCT Nos. 532250, 598424, 599131, 92869, 92870 and 38457,
including the improvements thereon (the subject properties).
The RTC ruled in favor of Pasig. The CA rendered decision

wherein it agreed with the RTCs judgment. Hence, this petition.
ISSUE:
Whether Sta. Lucia should continue paying its real property

taxes to Cainta, as it alleged to have always done, or to Pasig, as the
location stated in Sta. Lucias TCTs?
Contention of the Parties
City of Pasig Sta. Lucia Realty and

Development Inc. with Cainta
as Intervenor
Pasig filed a complaint for the In its Answer, alleged that it

collection of real estate taxes, had been religiously paying its
including penalties and interests real estate taxes to Cainta, just
on the questioned lots including like what its predecessors-in-
improvements thereon interest did, by virtue of the
demands and assessments
Pasig, countering each error, made and the Tax Declarations
claims that the lower courts issued by Cainta on the claim
correctly decided the case that the subject properties were
considering that the TCTs are within its territorial jurisdiction.
clear on their faces that the Sta. Lucia further argued that
subject properties are situated since 1913, the real estate taxes
in its territorial jurisdiction. for the lots covered by the
Pasig contends that the above TCTs had been paid to
principles of litis pendentia, Cainta.
forum shopping, and res
judicata are all inapplicable, due Cainta was allowed to file its
to the absence of their requisite own Answer-in-Intervention
elements. Pasig maintains that when it moved to intervene on
the boundary dispute case the ground that its interest
before the Antipolo RTC is would be greatly affected by the
independent of the complaint for outcome of the case. It averred
collection of realty taxes which that it had been collecting the
was filed before the Pasig RTC. real property taxes on the
It avers that the doctrine of subject properties even before
"prejudicial question," which has Sta. Lucia acquired them.
a definite meaning in law, Cainta further asseverated that
cannot be invoked where the the establishment of the
two cases involved are both boundary monuments would
civil. Thus, Pasig argues, since show that the subject properties
there is no legal ground to are within its metes and
preclude the simultaneous bounds.
hearing of both cases, the
suspension of the proceedings in Cainta also filed its own
the Pasig RTC is baseless. comment reiterating its legal
authority over the subject
properties, which fall within its
territorial jurisdiction. Cainta

claims that while it has been
collecting the realty taxes over
the subject properties since way
back 1913, Pasig only covered
the same for real property tax
purposes in 1990, 1992, and
1993. Cainta also insists that
there is a discrepancy between
the locational entries and the
technical descriptions in the
TCTs, which further supports
the need to await the
settlement of the boundary
dispute case it initiated.
HELD:
Under Presidential Decree No. 464, or the Real

Property Tax Code, the authority to collect real property taxes is
vested in the locality where the property is situated. This requisite
was reiterated in Republic Act No. 7160, or the Local Government
Code. Thus, while a local government unit is authorized under several
laws to collect real estate tax on properties falling under its territorial
jurisdiction, it is imperative to first show that these properties are
unquestionably within its geographical boundaries.
The Court cited the case of Mariano, Jr. v Commission on

Elections which stated that the importance of drawing with precise
strokes the territorial boundaries of a local unit of government cannot
be overemphasized. The boundaries must be clear for they define the
limits of the territorial jurisdiction of a local government unit. It can
legitimately exercise powers of government only within the limits of
its territorial jurisdiction. Beyond these limits, its acts are ultra
vires. Clearly therefore, the local government unit entitled
to collect real property taxes from Sta. Lucia must undoubtedly show
that the subject properties are situated within its territorial
jurisdiction; otherwise, it would be acting beyond the powers vested
to it by law.
The Supreme Court directed both the City of Pasig and

Municipality Cainta to await the judgment in their boundary dispute
case in order to determine which local government unit is entitled to
exercise its powers, including the collection of real property taxes, on
the properties subject of dispute.
Allied Banking Corporation as Trustee for the Trust Fund

of College Assurance Plan Philippines, Inc. (CAP) versus
The Quezon City Government, The Quezon City Tresurer, The
Quezon City Assessor and The City Mayor of Quezon City
G.R. No. 154126, October 11, 2005
FACTS:
The Quezon City government enacted City Ordinance No. 357,

Series of 1995 which provided that that parcels of land sold, ceded,
transferred and conveyed for remuneratory consideration after the
effectivity of this revision shall be subject to real estate tax based on
the actual amount reflected in the deed of conveyance or the
current approved zonal valuation of the Bureau of Internal
Revenue prevailing at the time of sale, cession, transfer and
conveyance, whichever is higher, as evidenced by the certificate of
payment of the capital gains tax issued therefor.
ALLIED BANKING CORPORATION, as trustee for College

Assurance Plan of the Philippines, Inc., purchased from Liwanag C.
Natividad et al. a parcel of land. Prior to the sale, Natividad et al. had
been paying an annual real property tax based on the propertys fair
market value and assessed value.
After its acquisition of the property, petitioner was, in accordance

with Section 3 of the ordinance, required to pay quarterly real estate
tax under protest.
Petitioner assailed Section 3 of the ordinance as null and void and

seek a refund of the real estate taxes erroneously collected from it.
Respondents moved to dismiss the petition.
By Resolution, the trial court granted respondents motion to

dismiss. Its Motion for Reconsideration having been denied, petitioner
comes before this Court on appeal by certiorari under Rule 45.
Petitioners Contention: Governments Contention:
That the re-assessment That the ordinance is

under the third sentence of presumed valid and legal
Section 3 of the ordinance unless otherwise declared by
for purposes of real estate a court of competent
taxation of a propertys fair jurisdiction.
market value where it is sold,
ceded, transferred or
conveyed for remuneratory
consideration is null and
void as it is an invalid
classification of real
properties which are
transferred, ceded or
conveyed and those which
are not, the latter remaining
to be valued and assessed in
accordance with the general
revisions of assessments of
real properties under the
first sentence of Section 3.
ISSUE:
WHETHER OR NOT the proviso fixing the appraised value of property
at the stated
consideration at which the property was last sold is valid?
HELD:
NO. The proviso in question is invalid as it adopts a method of

assessment or appraisal of real property contrary to the Local
Government Code, its Implementing Rules and Regulations and the
Local Assessment Regulations No. 1-92 issued by the Department of
Finance. Under these immediately stated authorities, real properties
shall be appraised at the current and fair market value prevailing in
the locality where the property is situated and classified for
assessment purposes on the basis of its actual use.
Fair market value is the price at which a property may be sold

by a seller who is not compelled to sell and bought by a buyer who is
not compelled to buy, taking into consideration all uses to which the
property is adapted and might in reason be applied. The criterion
established by the statute contemplates a hypothetical sale. Hence,
the buyers need not be actual and existing purchasers.
The proviso directing that the real property tax be based on the
actual amount reflected in the deed of conveyance or the prevailing
BIR zonal value is invalid not only because it mandates an exclusive
rule in determining the fair market value but more so because it
departs from the established procedures stated in the Local
Assessment Regulations No. 1-92 and unduly interferes with the
duties statutorily placed upon the local assessor by completely
dispensing with his analysis and discretion which the Code and the
regulations require to be exercised.
Using the consideration appearing in the deed of conveyance to

assess or appraise real properties is not only illegal since the
appraisal, assessment, levy and collection of real property tax shall
not be let to any private person, but it will completely destroy the
fundamental principle in real property taxation that real property
shall be classified, valued and assessed on the basis of its
actual use regardless of where located, whoever owns it, and
whoever uses it.
In the case at bar, there is nothing in the Local Government

Code, the implementing rules and regulations, the local assessment
regulations, the Quezon City Charter, the Quezon City Revenue Code
of 1993 and the Whereas clauses of the 1995 Ordinance from which
this Court can draw, at the very least, an intimation of this state
interest. As such, the proviso must be stricken down for being
contrary to public policy and for restraining trade.
Petition GRANTED. The assailed portion of the provisions of

Section 3 of Quezon City Ordinance No. 357, Series of 1995 is
hereby declared invalid.
[G.R. No. 144103. August 31, 2005]
AGUEDA DE VERA-CRUZ, MARIO, EVANGELINE, EDRONEL,

ANGELITO, TEODORO JR. and FERNANDO, all surnamed DELA
CRUZ, petitioners, vs. SABINA MIGUEL, respondent.
FACTS:
Petitioners Agueda de Vera-Cruz, Mario, Evangeline, Edronel, Angelito,

Teodoro, Jr., and Fernando, all surnamed Dela Cruz, are the registered
owners of a parcel of land situated at the Municipality of San Mateo, Isabela,
described as Lot 7035-A-8-B-5 containing an area of 17,796 square meters
covered by Transfer Certificate of Title (TCT) No. T-70778 of the Registry of
Deeds of Isabela which was issued on 17 January 1974.
On 30 June 1987, petitioners filed a complaint before the RTC of

Cauayay, Isabela, for Recovery of Possession with Damages against
respondent for allegedly occupying two hundred (200) square meters, more
or less, of Lot 7035-A-8-B-5 without any legal right to do so, much less their
consent or permission, and has failed and refused to vacate the premises
despite repeated demands. They prayed that respondent be ordered to
vacate the land, and to pay them P10, 000.00 as attorneys fees, P500.00 a
month as rental, and moral and exemplary damages as the court may find
just and reasonable. The case was raffled to Branch 20 and was docketed as
Civil Case No. 20-235.
On 04 August 1987, respondent filed her answer with counterclaim

alleging that the land being claimed by petitioners is different from the land
where her house is standing and that the land was given or awarded to her
by the Municipal Government of San Mateo, Isabela. She added that she has
been occupying the land since February 1946 and no one molested her in
her actual possession and use thereof except the claims of petitioners which
she came to know only on 04 July 1987 when she received the summons.
In their answer to counterclaim dated 14 August 1987, petitioners

denied the allegations in the counterclaim and asserted that respondents
claim is an utter and gross falsity because the land is part of a registered
land duly titled in their names and, previously, in their predecessors-in-
interest.
RTC rendered a summary judgment declaring petitioners the owners of

the land in question and ordered respondent to vacate the same and to
remove whatever improvement she has introduced on the lot.
On 12 May 1988, respondent filed a notice of appeal from the summary

judgment, the CA reversed and set aside the decision of the RTC.
Petitioners Contentions Respondent Contentions

Petitioners contend that when Plaintiffs-appellees are
the Court of Appeals ruled that guilty of laches for their
they were guilty of laches unexplained and
because they supposedly did unreasonable delay in
not protest respondents long asserting their right to the
and continuous occupancy of subject land and instituting
the lot in question, it was in action to recover the same
effect saying that the land from defendant-appellant
subject of the present who has been in possession
controversy has been acquired thereof for more than forty
by acquisitive prescription years (40).
which is contrary to law and The records show that the
jurisprudence that the owner of complaint for recovery of
a land registered under the possession was filed only on
Torrens system cannot lose it June 30, 1987 despite the
by prescription. fact that defendant-
They argue that they and their appellant has occupied the
predecessor-in-interest, subject land since February
Teodoro Dela Cruz, were never 14, 1946 up to the present.
remiss, and have not delayed, There is no doubt that the
in asserting their ownership plaintiffs-appellees long
over the property subject of the inaction in asserting their
present case because they have right to the subject land bar
been litigating this issue as far them from recovering the
back as 1956 and lasting over same from defendant-
ten years, and successfully appellant under the
warding off the respective equitable principle of
claims of the illegal occupants, laches. The law serves those
the Republic of the Philippines who are vigilant and
and the Municipality of San diligent and not those who
Mateo, Isabela. sleep when the law requires
Tax Declarations held by them to act.
respondent are not proofs of Respondent argues that
ownership. A tax declaration petitioners, despite all the
does not prove ownership. It is opportunity they had to
merely an indicium of a claim implead respondent in the
of ownership. Payment of taxes cases they filed in 1956
is not proof of ownership, it is, against those occupying Lot
at best, an indicium of 7035-A, deliberately ignored

possession in the concept of and failed to do so. In doing
ownership. Neither tax receipts so, petitioners slept on their
nor declaration of ownership rights and practically
for taxation purposes are allowed laches to set in.
evidence of ownership or of the
right to possess realty when
not supported by other
effective proofs.
ISSUE:
Whether or not laches be applied in the case?
RULING:
No.
Respondent is not the registered owner of the lot she is
occupying and she has failed to adduce evidence showing that the
property has been conveyed to her by the petitioners or by the
original owner thereof. Respondent has no evidence of her ownership
over the lot where her house is erected. Her allegation that the lot
was awarded or given through a resolution by the Municipal
Government of San Mateo, Isabela, cannot be given credence.
An examination of the tax declarations reveals that the property

covered is not even specified and described with particularity the
exact location and borders were not mentioned. Respondent utterly
failed to show her ownership of the land in question. In fact, the RTC
and the Court of Appeals have declared that the land being occupied
by respondent is within the land registered in the names of
petitioners.
The Court has ruled that unless there are intervening rights of
third persons which may be affected or prejudiced by a decision
directing the return of the lot to petitioners, the equitable defense of
laches will not apply as against the registered owners. [57] In the case
at bar, there being no intervening third persons whose rights will be
affected or prejudiced if possession of the subject lot is restored to the
petitioners, the return of the same is in order.
Under the circumstances obtaining in this case, the equitable doctrine

of laches shall not apply.
G.R. No. 151440 June 17, 2003
Heirs of Simplicio Santiago, represented by Angelita S.

Castro, petitioners, vs. Heirs of Mariano E. Santiago, respondents.
FACTS:
Spouses Vicente Santiago and Magdalena Sanchez are the original

owners of the parcel of land in dispute (Lot No. 2344). Simplicio
Santiago purchased the land from his father, Pablo (one of Spouses
Santiago's sons) and brother, Guillermo. After acquiring the same, he
then applied for a free patent over it on May 6, 1983, which free
patent was granted, thus, an Original Certificate of Title No. P-10878
covering Lot 2344 was issued in his name.
Sometime in 1983, through stealth and evident bad faith, Mariano

constructed a house on a portion of Lot 2344 and refused to vacate
the premises despite written and oral demands. Thus, Simplicio
Santiago instituted an action for Accion Publiciana with Damages
against Mariano Santiago.
On the other hand, Mariano Santiago contended that Lot No. 2344
was subdivided into three portions: Lot 2344-A, Lot 2344-B, and Lot
2344-C. Simplicio and his heirs owned only Lot 2344-B, and Lots
2344-A and 2344-C were fraudulently included in the free patent and
certificate of title issued to Simplicio Santiago. Mariano testified that
he and his sister bought Lot 2344-A from Simplicio Santiago for the
price of Php 5,000.00, as evidenced by a deed of sale dated Sept. 15,
1972. Immediately after sale, they constructed a house on the lot.
The trial court ruled in favor of Simplicio's heirs and held that
Mariano's claim over the controverted lot lacks basis and that his
defense constitutes a collateral attack on the validity of a Torrens title
which was barred by prescription for having been raised more than
one year after the entry of the decree of registration.
Meanwhile, Mariano died and was substituted by his heirs.
On appeal, the Court of Appeals reversed the trial court's decision and
ruled that the Free Patent and the Original Certificate of Title issued
in favor of Simplicio Santiago are void, because Lot 2344 is a private
land which cannot be the subject of a Free Patent.
Hence, the instant petition.
ISSUES:
Whether or not tax declarations or tax realty payments are

conclusive evidence of ownership?
CONTENTIONS:
PETITIONERS RESPONDENTS
1. Lot 2344 is a private 1. Lot 2344 was subdivided

property of the Santiago into three portions: Lot
clan since time immemorial 2344-A, Lot 2344-B, and Lot
and that they have 2344-C. He and his sister,
declared the same for Belen S. Marcelo, bought
taxation. from Simplicio Lot 2344-A
while Lot 2344-C was

inherited from their
grandmother Marta
Santiago.
RULING:
NO.
Although tax declarations or realty tax payment of property are not

conclusive evidence of ownership, nevertheless, they are good indicia
of possession in the concept of owner, for no one in his right mind
would be paying taxes for a property that is not in his actual or
constructive possession. They constitute at least proof that the holder
has a claim of title over the property. The voluntary declaration of a
piece of property for taxation purposes manifests not only ones
sincere and honest desire to obtain title to the property and
announces his adverse claim against the State and all other interested
parties, but also the intention to contribute needed revenues to the
Government. Such an act strengthens ones bona fide claim of
acquisition of ownership.
However, it is worthy to note that although Lot 2344-C was within the
property declared for taxation by the late Simplicio Santiago, he did
not disturb the possession of Marta and Mariano. Also, considering
the open, continuous, exclusive, and notorious possession and
occupation of the land by respondents and their predecessors in
interests, they are deemed to have acquired, by operation of law, a
right to a government grant without the necessity of a certificate of
title being issued. Hence, the free patent covering Lot 2344, a private
land, and the certificate of title issued pursuant thereto, are void.
Respondents' claim of ownership over Lot 2344-C and Lot 2344-A is

fully substantiated. Their open, contnuous, exclusive, and notorious
possession of Lot 2344-C in the concept of owners for more than
seventy years supports their contention that the lot was inherited by
Mariano from his grandmother Marta. This was corroborated by
respondents' witnesses. Lot 2344-C was sold by Simplicio Santiago to
Mariano Santiago and Belen Sanchez. The document of sale
evidencing the transaction is duly notarized and, as such, is
considered a public document and enjoys the presumption of validity
as to its authenticity and due execution. This legal presumption was
not overcome by petitioners.
RENATO CENIDO (deceased), represented by VICTORIA

CENIDOSA vs
SPOUSES AMADEO APACIONADO and HERMINIA STA. ANA
FACTS:
On May 22, 1989, respondent spouses Amadeo Apacionado and
Herminia Sta. Ana filed a complaint against petitioner Renato Cenido
for Declaration of Ownership, Nullity, with Damages, alleging that
they are the owners of a parcel of unregistered land and the

residential house standing thereon, which they purchased from its
previous owner, Bonifacio Aparato, now deceased, who lived under
the spouses' care and protection for some twenty years prior to his
death. They claimed that while Bonifacio Aparato was alive, he
mortgaged the said property twice, one to the Rural Bank of
Binangonan and the other to Linda C. Ynares, as security for loans
obtained by him, and that the loans were paid off by the spouses
thereby securing the release and cancellation of said mortgages. The
spouses also claimed to have paid and continued to pay the real estate
taxes on the property and have been in open, public, continuous and
uninterrupted possession of the property in the concept of owners
from the time of sale
On January 7, 1987, petitioner Renato Cenido, claiming to be the

owner of the subject house and lot, filed a complaint for ejectment
against them. The spouses averred that Cenido was able to cause the
issuance of a tax delaration over the subject property in his name
through fraudulent and unauthorized means, which fact they learned
only upon the filing of the ejectment case. Although the ejectment
case was dismissed by the Municipal Trial Court, the tax declaration
in Cenido's name was not cancelled and still subsisted. The spouses
referred the matter to the barangay for conciliation but Cenido
unjustifiably refused to appear.
Petitioner Cenido answered claiming that he is the illegitimate son of
Bonifacio Aparato, the deceased owner of the subject property, and as
Aparato's sole surviving heir, he became the owner of the property as
evidenced by the cancellation of tax declaration in Bonifacio's name
and the issuance of a new one in his name. He also claimed that the
real estate taxes were paid for by his father, the principal, and the
spouses were merely his agents.
On March 30, 1993, the trial court upheld petitioner Cenido's

ownership over the property by virtue of the recognition made by
Bonifacio's then surviving brother, Gavino, in the compromise
judgment of the MTC. Concomitantly, the court also did not sustain
the deed of sale between Bonifacio and the spouses because it was
neither notarized nor signed by Bonifacio and was intrinsically
defective. The court believes that preponderance of evidence is on the
side of defendant and so the complaint could not be given due course.
Respondent spouses appealed to the Court of Appeals, which found

the appeal meritorious and reversed the decision of the trial court. It
held that the recognition of Cenido's filiation by Gavino, Bonifacio's
brother, did not comply with the requirements of the Civil Code and
the Family Code; that the deed between Bonifacio and respondent
spouses was a valid contract of sale over the property; and Cenido's
failure to object to the presentation of the deed before the trial court
was a waiver of the defense of the Statute of Frauds, declaring
plaintiffs-Appellants Spouses Amadeo Apacionado and Herminia Sta.
Ana as owners of the subject house and lot.
ISSUE: W/N The issue of petitioner's paternity is essential to

determine whether tax declaration in the name of petitioner Cenido
should be nullified, as prayed for by respondent spouses in their
complaint.
HELD: NO. The tax declaration in Cenido's name was issued

pursuant to the compromise judgment of the MTC where Gavino
Aparato, Bonifacio's brother, expressly recognized petitioner Cenido
as Bonifacio's sole illegitimate son. The compromise judgment was
rendered in 1985, three years after Bonifacio's demise.
Under the Civil Code, natural children and illegitimate children other
than natural are entitled to support and successional rights only when
recognized or acknowledged by the putative parent. Unless
recognized, they have no rights whatsoever against their alleged
parent or his estate. The filiation of illegitimate children may be
proved by any of the forms of recognition of natural children. This
recognition may be made (1) voluntarily, which must be express such
as that in a record of birth, a will, a statement before a court of
record, or in any authentic writing; (2) legally, i.e., when a natural
child is recognized, such recognition extends to his or her brothers
and sisters of the full blood; and (3) judicially or compulsorily, which
may be demanded by the illegitimate child of his parents. The action
for compulsory recognition of the illegitimate child must be brought
during the lifetime of the presumed parents.
In the case at bar, petitioner Cenido did not present any record of
birth, will or any authentic writing to show he was voluntarily
recognized by Bonifacio as his illegitimate son. In fact, petitioner
admitted on the witness stand that he had no document to prove
Bonifacio's recognition, much less his filiation. The voluntary
recognition of petitioner's filiation by Bonifacio's brother before the
MTC does not qualify as a "statement in a court of record." Under the
law, this statement must be made personally by the parent himself or
herself, not by any brother, sister or relative; after all, the concept of
recognition speaks of a voluntary declaration by the parent, or if the
parent refuses, by judicial authority, to establish the paternity or
maternity of children born outside wedlock.
The compromise judgment of the MTC does not qualify as a

compulsory recognition of petitioner. In the first place, when he filed
this case against Gavino Aparato, petitioner was no longer a minor. He
was already pushing fifty years old. Secondly, there is no allegation
that after Bonifacio's death, a document was discovered where
Bonifacio recognized petitioner Cenido as his son. Thirdly, there is
nothing in the compromise judgment that indicates that the action
before the MTC was a settlement of Bonifacio's estate with a gross
value not exceeding P20,000.00. Definitely, the action could not have
been for compulsory recognition because the MTC had no jurisdiction

over the subject matter.
The Real Property Tax Code provides that real property tax be
assessed in the name of the person "owning or administering" the
property on which the tax is levied. Since petitioner Cenido has not
proven any successional or administrative rights to Bonifacio's estate,
the tax declaration in Cenido's name must be declared null and void.
CONSOLIDATED RURAL BANK (CAGAYAN VALLEY), INC.

vs. THE HONORABLE COURT OF APPEALS and HEIRS OF
TEODORO DELA CRUZ
[G.R. No. 132161. January 17, 2005]
FACTS
The Madrid brothers were the registered owners of Lot No.
7036-A situated in Isabela. Said lot was subdivided into several lots.
On 15 August 1957, Rizal Madrid sold part of his share identified as
Lot No. 7036-A-7, to Aleja Gamiao (hereafter Gamiao) and Felisa
Dayag (hereafter, Dayag) by virtue of a Deed of Sale, to which his
brothers offered no objection as evidenced by their Joint Affidavit. The
deed of sale was not registered with the Office of the Register of
Deeds of Isabela. However, Gamiao and Dayag declared the property
for taxation purposes in their names on March 1964 under Tax
Declaration.
Gamiao and Dayag sold the southern half of Lot No. 7036-A-7 to
Teodoro dela Cruz, and the northern half to Restituto Hernandez.
Thereupon, Teodoro dela Cruz and Restituto Hernandez took
possession of and cultivated the portions of the property respectively
sold to them. Later, Restituto Hernandez donated the northern half to
his daughter, Evangeline Hernandez-del Rosario. The children of
Teodoro dela Cruz continued possession of the southern half after
their fathers death.
In a Deed of Sale dated 15 June 1976, the Madrid brothers
conveyed all their rights and interests over Lot No. 7036-A-7 to
Pacifico Marquez, which the former confirmed. The deed of sale was
registered with the Office of the Register of Deeds of Isabela on 2
March 1982. Subsequently, Marquez subdivided Lot No. 7036-A-7 into
eight (8) lots. On the same date, Marquez and his spouse, Mercedita
Mariana, mortgaged Lots Nos. 7036-A-7-A to 7036-A-7-D to the
Consolidated Rural Bank, Inc. of Cagayan Valley to secure a loan of
One Hundred Thousand Pesos (P100,000.00). These deeds of real
estate mortgage were registered with the Office of the Register of
Deeds. Marquez mortgaged Lot No. 7036-A-7-E likewise to the Rural
Bank of Cauayan (RBC) to secure a loan.
As Marquez defaulted in the payment of his loan, CRB caused
the foreclosure of the mortgages in its favor and the lots were sold to
it as the highest bidder.
Claiming to be null and void the issuance of TCT Nos. T-149375
to T-149382; the foreclosure sale of Lot Nos. 7036-A-7-A to 7036-A-7-
D; the mortgage to RBC; and the sale to Calixto, the Heirs-now
respondents herein-represented by Edronel dela Cruz, filed a case for
reconveyance and damages the southern portion of Lot No. 7036-A
(hereafter, the subject property) against Marquez, Calixto, RBC and
CRB.
Heirs ascribed the following Marquez alleged that apart from

errors to the RTC: being the first registrant, he was
(1) it erred in finding that a buyer in good faith and for
Marquez was a buyer in good value. He also argued that the
faith sale executed by Rizal Madrid to
(2) it erred in validating the Gamiao and Dayag was not
mortgage of the properties to binding upon him, it being
RBC and CRB unregistered. For his part, Calixto
(3) it erred in not reconveying Lot manifested that he had no
No. 7036-A-7-B to them interest in the subject property as
he ceased to be the owner
thereof, the same having been
reacquired by defendant
Marquez.
CRB and co-defendant RBC

insisted that they were
mortgagees in good faith and that
they had the right to rely on the
titles of Marquez which were free
from any lien or encumbrance.
RTC RULING: handed down a decision in favor of Marquez, CRB and

RBC. Further, in the absence of proof that Marquez has actual or
constructive knowledge of plaintiffs and intervenors claim, the Court
has to rule that as the vendee who first registered his sale, Marquez
ownership over Lot 7036-A-7 must be upheld.
Court of Appeals Ruling: REVERSED and SET ASIDE the decision

of RTC.
In upholding the claim of the Heirs, the Court of Appeals held
that Marquez failed to prove that he was a purchaser in good faith
and for value. It noted that while Marquez was the first registrant,
there was no showing that the registration of the deed of sale in his
favor was coupled with good faith. Marquez admitted having
knowledge that the subject property was being taken by the Heirs at
the time of the sale.The Heirs were also in possession of the land at
the time.
Anent the mortgagees RBC and CRB, the Court of Appeals found
that they merely relied on the certificates of title of the mortgaged
properties. They did not ascertain the status and condition thereof
according to standard banking practice. For failure to observe the
ordinary banking procedure, the Court of Appeals considered them to
have acted in bad faith and on that basis declared null and void the
mortgages made by Marquez in their favor.
ISSUE:
Whether or not Art. 1544 of the Civil Code (double sale) applicable in
this case?
RULING:
NO. The provision is not applicable in the present case. It

contemplates a case of double or multiple sales by a single vendor. In
the case at bar, the subject property was not transferred to several
purchasers by a single vendor. In the first deed of sale, the vendors
were Gamiao and Dayag whose right to the subject property
originated from their acquisition thereof from Rizal Madrid with the
conformity of all the other Madrid brothers in 1957, followed by their
declaration of the property in its entirety for taxation purposes in
their names. On the other hand, the vendors in the other or later deed
were the Madrid brothers but at that time they were no longer the
owners since they had long before disposed of the property in favor of
Gamiao and Dayag.
In a situation where not all the requisites are present which
would warrant the application of Art. 1544, the principle of prior
tempore, potior jure or simply he who is first in time is preferred in
right, should apply. The only essential requisite of this rule is priority
in time; in other words, the only one who can invoke this is the first
vendee. Undisputedly, he is a purchaser in good faith because at the
time he bought the real property, there was still no sale to a second
vendee. In the instant case, the sale to the Heirs by Gamiao and
Dayag, who first bought it from Rizal Madrid, was anterior to the sale
by the Madrid brothers to Marquez. The Heirs also had possessed the
subject property first in time. Thus, applying the principle, the Heirs,
without a scintilla of doubt, have a superior right to the subject
property.
Moreover, it is an established principle that no one can give

what one does not havenemo dat quod non habet. Accordingly, one
can sell only what one owns or is authorized to sell, and the buyer can
acquire no more than what the seller can transfer legally. In this case,
since the Madrid brothers were no longer the owners of the subject
property at the time of the sale to Marquez, the latter did not acquire
any right to it.
In any event, assuming arguendo that Article 1544 applies to the

present case, the claim of Marquez still cannot prevail over the right
of the Heirs since according to the evidence he was not a purchaser
and registrant in good faith.
Prior registration of the subject property does not by itself confer

ownership or a better right over the property. Article 1544 requires
that before the second buyer can obtain priority over the first, he
must show that he acted in good faith throughout from the time of
acquisition until the title is transferred to him by registration or
failing registration, by delivery of possession.
In the instant case, the actions of Marquez have not satisfied the
requirement of good faith from the time of the purchase of the subject
property to the time of registration. Found by the Court of Appeals,
Marquez knew at the time of the sale that the subject property was
being claimed or taken by the Heirs.
One who purchases real property which is in actual possession of

others should, at least, make some inquiry concerning the rights of
those in possession. The actual possession by people other than the
vendor should, at least, put the purchaser upon inquiry. He can
scarcely, in the absence of such inquiry, be regarded as a bona
fide purchaser as against such possessions. The rule of caveat
emptorrequires the purchaser to be aware of the supposed title of the
vendor and one who buys without checking the vendors title takes all
the risks and losses consequent to such failure.
Banks, their business being impressed with public interest, are

expected to exercise more care and prudence than private individuals
in their dealings, even those involving registered lands. Hence, for
merely relying on the certificates of title and for its failure to
ascertain the status of the mortgaged properties as is the standard
procedure in its operations, we agree with the Court of Appeals that
CRB is a mortgagee in bad faith.
In this connection, Marquezs obstention of title to the property

and the subsequent transfer thereof to CRB cannot help the latters
cause. In a situation where a party has actual knowledge of the
claimants actual, open and notorious possession of the disputed
property at the time of registration, as in this case, the actual notice
and knowledge are equivalent to registration, because to hold
otherwise would be to tolerate fraud and the Torrens system cannot
be used to shield fraud.
Lastly, he requirement of good faith in the possession of the

property finds no application in cases where there is no second sale.
In the case at bar, Teodoro dela Cruz took possession of the property
in 1964 long before the sale to Marquez transpired in 1976 and a
considerable length of timeeighteen (18) years in factbefore the Heirs
had knowledge of the registration of said sale in 1982. As Article 526
of the Civil Code aptly provides, (H)e is deemed a possessor in good
faith who is not aware that there exists in his title or mode of
acquisition any flaw which invalidates it. Thus, there was no need for
the appellate court to consider the issue of good faith or bad faith
with regard to Teodoro dela Cruzs possession of the subject property.
Heirs of Tajonera v CA
G.R. No. L-26677 March 27, 1981
FACTS: Fermin Paz was the registered owner of two parcels of

land in Tondo, Manila. Both lots were declared for taxation purposes
under one tax declaration with an assessed value of P1,516.00.
1931 Fermin Paz died, Manuel Paz administered the property

and paid the taxes thereon.
On November 24, 1941, the City Treasurer of Manila sold the

said property in favor of Dr. Aurelio Reyes for delinquent taxes from
1939 to 1941. After the lapse of one year, or on January 16, 1943,
during the Japanese occupation of the country, to be exact, the said
City Treasurer executed a final deed of sale thereof for P93.43 in
favor of the said Dr. Aurelio Reyes as the purchaser.
The new certificate of title was issued in favor of Dr. Reyes.
Dr. Aurelio Reyes, sold the said lots for P4,250-00 to Juanita
David . Juanita David sold the same lots to Mariano Tajonera Tajonera
eventually sold a small portion of the lot to the City of Manila for the
widening of a street. Consequently Transfer Certificate of Title No.
72862 was cancelled and replaced by Transfer Certificate of Title No.
43845.
Amanda Trigal and her co-heirs to the deceased owner Fermin

Paz filed suit against the estate of Aurelio Reyes and Tajonera and the
city treasurer (to the exclusion of Juanita David) with the Court of
First Instance of Manila to annul the public auction sale of the lots in
question in favor of Dr. Reyes and all subsequent transfers thereof,
the last being in favor of Mariano Tajonera, on the ground that the
public auction sale conducted by the Chief of the Department of
Finance and City Treasurer of Manila was done without notice to
Fermin Paz, the registered owner of the said property, or to any of his
heirs upon his death.
RTC affirmed.
CA reversed the decision.
ISSUE: Whether or not the holder or owner of the delinquent

property should be personally notified of the sale?
RULING: No. In a sale to satisfy delinquent taxes, it is not

necessary that the delinquent taxpayer or any one holding or owning
delinquent property be personally notified of the sale; it is sufficient
that the notice of sale be advertised by publishing the same in a
newspaper and by posting the same in conspicuous places of Manila
and in the City Hall of said city. This requirement has been
accomplished,
While respondents' plight may merit some sympathy at the pain

of losing their property for tax delinquency, it must be borne in mind
that it was due primarily to their neglect and default in paying their
just tax obligation and sleeping on their rights and long delay of five
years before filing their action for recovery during which the right-Is
of innocent purchasers for value intervened.
"Yet it was her gross negligence which brought about the

appellee's predicament. Knowing her property to be subject to tax,
she neglected to pay her obligation. Vigorous in her protest that she
was not given opportunity to protect her rights, she at least neglected
to put the Government in a position to allow her that opportunity. And
this, notwithstanding the categorical mandate of section 2482 of the
Revised Administrative Code, which she was presumed to know, and
which makes it 'the duty of each person' acquiring real estate in the
city to make a new declaration thereof, with the advertence that
failure to do so shall make the assessment in the name of the previous
owner 'valid and binding on all persons interested, and for all
purposes, as though the same had been assessed in the name of its
actual owner.
HEIRS OF MARIANO V. TAJONERA vs. COURT OF APPEALS,

G.R. No. L-26677 March 27, 1981
Facts:
This case arose after the Court of Appeals reversed the decision
of the trial court and declared null and void the public auction sale in
1941 conducted by the City Treasurer of Manila of the two subject
parcels of land as well as the subsequent sales of the same of Juanita
David and Mariano Tajonera, successively (in 1943 and 1944), and
ordered the latter to execute a deed of conveyance of said properties
in favor of herein private respondent.
Private respondents Trial Courts Court of Appeals

contention contention/ruling Contention/ruling
Fermin Paz was a Although there is That the City
registered owner no evidence Treasurer of
of two parcels of showing that the Manila lacked the
land. When Paz notice of said sale authority to sell
and his wife died was published in the property
they were newspapers of based on the
survived by their general ruling of Velayo
children and circulation in the vs. Ordonez, et
grandchildren. It City of Manila or al., the "city
was Manuel Paz the posting assessor and
who administered thereof in collector" (not the
the property and conspicuous city treasure of
paid taxes places of the said Manila) is the
thereon and all city and in the official
concerns City Hall because empowered to sell
regarding the all the records at public auction
said property be were either lost or tax-delinquent
addressed to him. destroyed during real estate and
the battle for the "accordingly, (the)
And he and the liberation of the notice, sale,
said co-heirs City of Manila, yet certificate and
claimed that they there appears in deed [executed in
did not receive the final deed of 1049 by the city
any notice of sale sale a statement treasurer] are
of property due to of notice of sale to insufficient to

delinquent taxes. be published in divest [the
the 'HERALD', 'EL owners] of their
DEBATE' and title to the
'MABUHAY' property," it is
newspapers of well settled in this
wide circulation in jurisdiction upon
the City of Manila, authority of
Philippine. doctrinal
jurisprudence
In a sale to satisfy applying sections
delinquent taxes, 38 and 39 of ACT
it is not necessary No. 496, as
that the amended, 2 that
delinquent where a person
taxpayer or any acquires property
one holding or by purchase
owning delinquent without
property be knowledge of any
personally notified defect in the title
of the sale; it is appearing on its
sufficient that the face, he is
notice of sale be presumed to be a
advertised by purchaser in good
publishing the faith and as such
same in a he and the title
newspaper and by acquired by him
posting the same are entitled to
in conspicuous protection under
places of Manila the law.
and in the City
Hall of said city.
This requirement
has been
accomplished,
Issue:
Whether or not the sale of the subject property made by
the City Treasurer due to delinquent taxes was null and void?
Held:
NO. The fact that the power to sell at public auction real estate
delinquent in, the payment of taxes devolved upon the City Assessor
and not upon the Treasurer of the City of Manila according to the
ruling in Velayo vs. Ordoveza, et al., 102 Phil. 395, may no longer be
invoked to recover the property from petitioners. To grant the relief
prayed for that is the annulment of the sale and reconveyance of
the property to re respondents would be to impair public
confidence in the certificate of title, for everyone dealing with
property would have to inquire in every instance as to whether the
title has been regularly or irregularly issued by the court and this is
contrary to the evident purpose of the law. This is particularly true
where the treasurer's deed of sale was accorded full credit and
validity by the land registration court and the Register of Deeds who
on the strength thereof ordered the cancellation of the title in the

name of Fermin Paz and the issuance of a new Torrens Title in the
name of Reyes as the buyer at the tax sale and in the names of the
subsequent buyers of the property in question.
It is worth noting that the private respondents came to know of the

sale at public auction of the properties in question in the year 1943;
yet, they were first heard to complain about it only on December 21,
1948 7 (five years after they had admittedly learned of the tax sale
and seven years after the actual sale) when the property had already
reached the hands of innocent purchasers like Juanita David
Tajonera's predecessor-in-interest) and her vendee, Tajonera
It is on this score that the cited case of Velasco vs. Ordonez, et al., 8
cited by the Court of Appeals, differs from, and losses its applicability
to, the case at bar insofar as it would cancel petitioners' title. In said
case, the annulment of the auction sale conducted by the City
Treasurer of Manila and the confirmation of the rights of the original
registered owner therein came at a time when the property sold at
public auction for tax delinquency had not yet passed to the hands of
an innocent purchaser for value, unlike in the case at bar.
While respondents' plight may merit some sympathy at the pain of

losing their property for tax delinquency, it must be borne in mind
that it was due primarily to their neglect and default in paying their
just tax obligation and sleeping on their rights and long delay of five
years before filing their action for recovery during which the right-Is
of innocent purchasers for value intervened.
Spouses Hu v. Spouses Unico, G.R. No. 146534, September 18,
2009
FACTS:
Spouses Renato and Maria Aurora J. Unico purchased an 800-
square meter residential property cover by TCT No. 263361 from
spouses Manuel and Adoracion de los Santos in 1978. Despite
payment of the full purchase price, they did not register the sale in
the Registry of Deeds nor declared the property for taxation purposes
much less paid the real property tax.
Due to tax delinquency, the property was sold at public auction
on March 5, 1984 to spouses Hu Chuan and Leoncia Lim Hu. After a
year, they filed a petition for consolidation of ownership and issuance
of new title. Subsequently, TCT No. 236631 was issued to them.
Only in December, 1986, did Renato and Maria decide to pay
their realty tax on the property but they were informed that the
property was already registered in the names of the spouses Hu.
Thus, Renato and Maria filed a complaint for annulment of sale
and damages before the RTC of Quezon City. According to them, the
City Treasurer and the Registry of Deeds sent notices to the spouses
De los Santos. Because they were never informed of the tax sale, they
were deprived of their property without due process, hence the tax
sale was void. For the same reason, the RTC voided the tax sale,
which was affirmed by the Court of Appeals, thus the spouses Hu
elevated their case to the Supreme Court. According to them, they
could not be prejudiced by the spouses failure to receive the notice of

tax sale and advertisement.
CONTENTIONS OF THE PARTIES

City Treasurer of Quezon Spouses Renato and Maria
City Unico
Due to the owners tax The City Treasurer of Quezon
delinquency, the City City and the Registrar of
Treasurer sent the notice of Deeds of Quezon City never
tax sale and advertisement to informed them of the tax
the registered owners delinquency sale, hence they
Spouses de los Santos, since were deprived of their
the Spouses Unico property without due process
negligently failed to register of the law and the sale
the property they purchased should be void.
from the latter to their The RTC found that the
names. Spouses Unico were the
The City was able to sell said actual occupants of the
property at a public auction property, thus, the City
to the Spouses Hu who were Treasurer erred when it sent
able to have a new title the notice of tax sale to
issued under their names. Spouses de los Santos, thus
The local treasurer cannot it nullified the tax sale.
rely solely on the tax
declaration but must verify
with the Register of Deeds
who the registered owner of
the particular property is.
Since it was the de los
Santos who are still the
registered owners, the
notices were sent to them.
ISSUE: Whether or not the tax sale was void since the spouses
Unico did not receive the notice of tax sale and advertisement.
HELD:
The Supreme Court held that the sale to the Spouses Hu was
valid.
With regard to determining to whom the notice of sale should
have been sent, settled is the rule that, for purposes of real property
taxation, the registered owner of the property is deemed the taxpayer.
Thus, in identifying the real delinquent taxpayer, a local treasurer
cannot rely solely on the tax declaration but must verify with the
Register of Deeds who the registered owner of the particular property
is.
Respondents not only neglected to register the transfer of the
property but also failed to declare the property in their names as
required by Section 6 of PD 464. TCT No. 236631 issued to the
spouses de los Santos was never cancelled and respondents never
paid realty tax on the property since they acquired it. Thus, the
spouses de los Santos remained the registered owners of the property
in the Torrens title and tax declaration. Since the transfer of the
property to respondents was never registered, the City Treasurer
correctly sent notice of the tax sale and advertisement to the spouses
de los Santos and the tax sale conducted in connection therewith was
valid.
De Knecht v CA
G.R. No. 108015. May 20, 1998
FACTS:
This involves a parcel of land located at EDSA. The land was

owned by petitioners Cristina de Knecht and her son, Rene Knecht,
issued in their names. The Knechts constructed eight (8) houses,
leased out the seven and occupied one of them as their residence.
The Republic of the Philippines initiated expropriation against the
Knechts property. The government sought to utilize the land for the
completion of the Manila Flood Control and Drainage Project. The CFI
issued a writ of possession. On petition of the Knechts, however, claim
that the choice of area for the extension of EDSA was arbitrary,
seeking to annul the writ of possession.
The City Treasurer discovered that the Knechts failed to pay real
estate taxes on the property. As a consequence of this deficiency, the
City Treasurer sold the property at public auction for the sum amount
of the deficiency taxes. The highest bidders were respondent Spouses
Anastacio and Felisa Babiera (the Babieras) and respondent Spouses
Alejandro and Flor Sangalang (the Sangalangs).
Petitioners failed to redeem the property within one year from the
date of sale. Spouses Babiera and Sangalang filed petition for
registration of their name as co-owner pro-indiviso of the subject
land. But it was filed allegedly without notice to the Knechts. The trial
court ordered the ROD to register Babieras and Sangalangs name.
Pursuant to said orders, the Register of Deeds issued said lots in
the names of Sangalang and Babiera. The Knechts, who were in
possession of the property, allegedly learned of the auction sale only
by the time they received the orders of the land registration courts.
Further, the Sangalang and Babiera sold the land to respondent
Salem Investment Corporation (Salem). The new TCT was issued in
the name of Salem.
Meanwhile, on February 17, 1983, B.P. Blg. 340 was passed
authorizing the national government to expropriate properties in said
land of which the property of the Knechts was part of those
expropriated.
The Knechts filed a Case before the RTC praying for reconveyance,
annulment of the tax sale and the titles of the Babieras and
Sangalangs. The Knechts based their action on lack of the required
notices to the tax sale.
The Civil Case proceeded. The Knechts presented their evidence.
They, however, repeatedly requested for postponements. At the
hearing in 1988, they and their counsel failed to appear. Accordingly,
the trial court dismissed the case for "apparent lack of interest of
plaintiffsconsidering that the case had been pending for an
unreasonable length of time.
The Knechts moved to set aside the order of dismissal. The motion
was denied for late filing and failure to furnish a copy to the other
parties. The Knechts questioned the order of dismissal before the
Court of Appeals. The appellate court sustained the trial court. The
petition was denied for late payment of filing fees and for failure to
sufficiently show any reversible error. The petition was denied with
finality and entry of judgment was made.
Three (3) months later, through the order of the court, seven of the
eight houses of the Knechts were demolished and the government
took possession of the portion of land on which the houses stood.
Meanwhile, Salem conveyed some of the subject property to
respondent spouses Mariano and Anacoreta Nocom and was issued in
their names. Salem remained the owner of 2,490.69 square meters of
which the Knechts had their residence.
Since the Knechts refused to vacate their one remaining house,
Salem instituted against them Civil Case for unlawful detainer before
the MTC. As defense, the Knechts claimed ownership of the land and
building. The Municipal Trial Court, however, granted the complaint
and ordered the Knechts' ejectment. Pursuant to a writ of execution,
the last house of the Knechts was demolished.
The Knechts instituted a case for recovery of ownership and
possession of the property. The trial court on the ground of res
judicata dismissed the case. The Knechts challenged the order of
dismissal in CA. The Knechts' "Motion for Extension of Time to File
Petition for Certiorari" was denied also and the entry of judgment was
made.
Meanwhile, the trial court issued an order fixing the compensation
of all the lands sought to be expropriated by the government of which
the Knecht challenged but was denied. And appealed to CA. The Court
of Appeals dismissed the petition and denied the Knechts' intervention
after finding that the Knechts had no legal interest on the subject
property.
The Knechts instituted also before the Court of Appeals an original
action for annulment of judgment of the trial courts. Therein, the
Knechts challenged the validity of the orders of the land registration
courts in the two petitions of the Sangalangs and Babieras for
registration of their names, the reconveyance caseand the just
compensation proceedings. The Knechts questioned the validity of the
titles of the Babieras and Sangalangs, and those of Salem and the
Nocoms, and prayed for the issuance of new titles in their
names. They also sought to restrain further releases of payment of
just compensation to Salem and the Nocoms.
The Court of Appeals dismissed the petition for lack of merit.

ISSUE:
Whether or not the CA committed error in holding that the

petition for annulment of judgment is barred by res judicata?
RULLING:
NO. The Supreme Court Ruled against the petitioners. In its

decision, the CA held that the Knechts had no right to intervene for
lack of any legal right or interest in the property subject of
expropriation. The appellate court declared that it was not an
expropriation proceeding but merely a case for the fixing of just
compensation. The Knechts' right to the land had been foreclosed
after they failed to redeem it one year after the sale at public auction.
Whatever right remained on the property vanished after the
reconveyance case, was dismissed by the trial court. Since the
petitions questioning the order of dismissal were likewise dismissed
by the Court of Appeals and this Court, the order of dismissal became
final and res judicata on the issue of ownership of the land.
Further, the Knechts urge this Court, in the interest of justice, to
take a second look at their case. They claim that they were deprived
of their property without due process of law. They alleged that they
did not receive notice of their tax delinquency and that the ROD did
not order them to surrender their owner's duplicate for annotation of
the tax lien prior to the sale. Neither did they receive notice of the
auction sale. After the sale, the certificate of sale was not annotated in
their title nor in the title with the ROD. In short, they did not know of
the tax delinquency and the subsequent proceedings when they
received the orders of the land registration courts filed by the
Babieras and Sangalangs. This is the reason why they were unable to
redeem the property.
It has been ruled that the notices and publication, as well as the
legal requirements for a tax delinquency sale, are mandatory; and the
failure to comply therewith can invalidate the sale. The prescribed
notices must be sent to comply with the requirements of due process.
The claim of lack of notice, however, is a factual question. This
Court is not a trier of facts. Moreover, this factual question had been
raised repeatedly in all the previous cases filed by the Knechts. These
cases have laid to rest the question of notice and all the other factual
issues they raised regarding the property. Res judicata had already set
in.
Res judicata is a ground for dismissal of an action. It is a rule that
precludes parties from relitigating issues actually litigated and
determined by a prior and final judgment. When a right of fact has
been judicially tried and determined by a court of competent
jurisdiction, or an opportunity for such trial has been given, the

judgment of the court, so long as it remains unreversed, should be
conclusive upon the parties and those in privity with them in law or
estate. To follow a contrary doctrine would subject the public peace
and quiet to the will and neglect of individuals and prefer the
gratification of the litigious disposition of the parties to the
preservation of the public tranquility.
Res judicata applies when: (1) the former judgment or order is final;
(2) the judgment or order is one on the merits; (3) it was rendered by
a court having jurisdiction over the subject matter and the parties; (4)
there is between the first and second actions, identity of parties, of
subject matter and of cause of action.
Petitioners claim that is not res judicata. They contend that there
was no judgment on the merits one rendered after a consideration of
the evidence or stipulations submitted by the parties at the trial of the
case. They stress that Case was dismissed upon petitioners' failure to
appear at several hearings and was based on "lack of interest".
The SC was not impressed by petitioners' contention. "Lack of
interest" is analogous to "failure to prosecute." Section 3 of Rule 17 of
the Revised Rules of Court provides:
"Section 3. Failure to Prosecute.-- If plaintiff fails to appear at the time

of the trial, or to prosecute his action for an unreasonable length of
time, or to comply with these rules or any order of the court, the
action may be dismissed upon motion of the defendant or upon the
court's own motion. This dismissal shall have the effect of an
adjudication upon the merits, unless otherwise provided by court."
An action may be dismissed for failure to prosecute in any of the

following instances: (1) if the plaintiff fails to appear at the time of
trial; or (2) if he fails to prosecute the action for an unreasonable
length of time; or (3) if he fails to comply with the Rules of Court or
any order of the court. Once a case is dismissed for failure to
prosecute, this has the effect of an adjudication on the merits and is
understood to be with prejudice to the filing of another action unless
otherwise provided in the order of dismissal. In other words, unless
there be a qualification in the order of dismissal that it is without
prejudice, the dismissal should be regarded as an adjudication on the
merits and is with prejudice.
Prior to the dismissal of, the Knechts were presenting their
evidence. They, however, repeatedly requested for postponements and
failed to appear at the last scheduled hearing. This prompted Salem to
move for dismissal of the case.
It appears that counsel for the plaintiff has been duly notified but
despite notice failed to appear and considering that this case has been
pending for quite a considerable length of time, on motion of counsel
for the defendant Salem Investment, for apparent lack of interest of

plaintiffs, let their complaint be DISMISSED.
The order of dismissal was based on the following factors: (1)

pendency of the complaint for a considerable length of time; (2)
failure of counsel to appear at the scheduled hearing despite notice;
and (3) lack of interest of the petitioners. Under Section 3, Rule 17, a
dismissal order which does not provide that it is without prejudice to
the filing of another action is understood to be an adjudication on the
merits. Hence, it is one with prejudice to the filing of another action.
The order of dismissal was questioned before the Court of Appeals

and this Court. The petitions were dismissed and the order affirming
dismissal became final. Since the dismissal order is understood to be
an adjudication on the merits, then all the elements of res
judicata have been complied with. Said case is therefore res
judicata on the issue of ownership of the land.
The Knechts contend, however, that the facts of the case do not
call for the application of res judicata because this amounts to "a
sacrifice of justice to technicality." The SC contends that it cannot
sustain said argument. It must be noted that the Knechts were given
the opportunity to assail the tax sale and present their evidence on its
validity in the Case, the reconveyance case. Through their and their
counsel's negligence, however, this case was dismissed. They filed for
reconsideration, but their motion was denied. The Court of Appeals
upheld this dismissal. SC affirmed the dismissal not on the basis of a
mere technicality. SC reviewed the merits of petitioners' case and
found that the Court of Appeals committed no reversible error in its
questioned judgment.
The Knechts cannot be allowed to avoid the effects of res judicata.
Neither can they be allowed to vary the form of their action or adopt a
different method of presenting their case to escape the operation of
the principle. To grant what they seek will encourage endless
litigations and forum-shopping.
In the expropriation case filed, four months earlier, for
reconveyance was dismissed with finality by SC and judgment was
entered. The Knechts lost whatever right or colorable title they had to
the property after affirming the order of the trial court dismissing the
reconveyance case. The fact that the Knechts remained in physical
possession cannot give them another cause of action and resurrect an
already settled case. The Knechts' possession of the land and
buildings was based on their claim of ownership, not on any juridical
title such as a lessee, mortgagee, or vendee. Since the issue of
ownership was put to rest, it follows that their physical possession of
the property after the finality of said case was bereft of any legality
and merely subsisted at the tolerance of the registered owners. This
tolerance ended when Salem filed for unlawful detainer against the
Knechts. As prayed for, the trial court ordered their ejectment and the
demolition of their remaining house.
Indeed, the Knechts had no legal interest in the property by the

time the expropriation proceedings were instituted. They had no right
to intervene and the trial court did not err in denying their "Motion
for Intervention and to Implead Additional Parties."
IN VIEW WHEREOF, the is dismissed and the Motion for
Reconsideration is denied. The decisions of the Court of Appeals are
affirmed. SO ORDERED.
Estate of Jacob v CA
G.R. Nos. 120435.
December 22, 1997
FACTS: 1981 Mercedes Jacob is the registered owner of the land

of the subject matter, left for the United States. Before she did, she
asked her son-in-law Luciano Quinto Jr. to pay the real estate taxes on
her property. However, Luciano Jr. was not allowed to pay by the City
Treasurer's Office as he had no written authorization from her.
In 1984 respondent City Treasurer of Quezon City sent a notice

to Mercedes Jacob through her daughter Lilian Jacob Quinto that her
real estate taxes on the property were delinquent. Lilian was also
informed that the land was already sold at public auction on 24
August 1983 to private respondent Virginia Tugbang for P6,800.00 to
satisfy the tax delinquency of the land.
On 30 September 1985 Virginia filed a petition for the cancellation

of TCT No. 39178 and the issuance of a new certificate of title in her
name alleging in par. 4 of her petition that -
x x x (On) August 27, 1985, the period of redemption

on the sold property having already expired and the registered owner-
delinquent taxpayer, Mercedes Jacob, and any other interested party,
did not, within the said period, take any step to redeem the property
and pursue any lawful remedy to impeach the proceedings or to
enforce any lien or claim thereon, thereby allowing the sale to become
final and absolute,
City Treasurer of Quezon City v CA and B. Tolentino

G.R. No. 120974
December 22, 1997
FACTS: Alberto Sta. Maria owned a parcel of land covered

by TCT No. 68818 which he sold in 1964 to Teresa L. Valencia who, as
a consequence, had the title canceled and TCT No. 79818 issued in
her name. She however failed to have the tax declaration
transferred in her name. Thus she paid the real estate taxes from
1964 to 1978 in the name of its previous owner Alberto Sta. Maria.
In the auction sale on 29 February 1984 the spouses Romeo and

Verna Chua bought the land in question, which was already covered
by TCT No. 79818 in the name of Teresa L. Valencia. On 5 March 1984
a certificate of sale was issued to the Chua spouses but it showed on
its face that the land was still covered by TCT No. 68818 and not TCT
No. 79818. Apparently, the Office of the City Treasurer was unaware
that TCT No. 68818 had already been canceled by TCT No.
79818. However, in the Final Bill of Sale issued to the Chua spouses
on 15 May 1985 TCT No. 79818 still appeared in the name of
Alberto Sta. Maria, the former owner,so that the vendee spouses lost
no time in filing a petition with the Regional Trial Court of Quezon
City for the cancellation of TCT No. 79818 and the issuance of a new
title in their name.
On 4 February 1987 the court granted their petition and TCT No.
357727 was issued in the name of the spouses Romeo and Verna
Chua.
On 20 December 1973 Valencia entered into a contract of sale of

the property on installment with a mortgage in favor of respondent
Bernardita C. Tolentino. However, from 1979 to 1983 Valencia failed
to pay the real estate taxes due on the land. As a result, notices of tax
delinquency and intent to sell the property were sent to Alberto Sta.
Still, Bernardita C. Tolentino paid in full the purchase price of

the property so that Teresa 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 the Register of Deeds of Quezon City, Tolentino filed a
petition for reconstitution of TCT No. 79818.
Sometime in April 1989, as purchasers of the property in the

auction sale, the Chuas demanded delivery of possession from
Bernardita C. Tolentino and Teresa L. Valencia.
Tolentino sued for annulment of the auction sale in the Regional

Trial Court of Quezon
City. Finding the action to be well taken, the trial court granted the
petition.
The Court of Appeals affirmed the court a quo.
ISSUE: Whether or not the auction sale is valid?
RULING: No. Failure of petitioner City Treasurer to notify

effectively the delinquent taxpayer who at the time of the auction sale
was Teresa L. Valencia. Apparently, petitioner proceeded on the wrong
premise that the property was still owned by the former registered
owner, Alberto Sta. Maria, who sold the property to Valencia in

1964. In fact, at the time of the auction sale, the property was already
covered by a conditional sale on installment in favor of respondent
Bernardita C. Tolentino. Plainly, at the time of the auction sale,
Alberto Sta. Maria who appeared to have been notified of the auction
sale was no longer the registered owner, much less the delinquent
taxpayer.
In ascertaining the identity of the delinquent taxpayer, for

purposes of notifying him of his tax delinquency and the prospect of a
distraint and auction of his delinquent property, petitioner City
Treasurer should not have simply relied on the tax declaration. The
property being covered by the Torrens system, it would have been
more prudent for him, which was not difficult to do, to verify from the
Office of the Register of Deeds of Quezon City where the property is
situated and as to who the registered owner was at the time the
auction sale was to take place, to determine who the real delinquent
taxpayer was within the purview of the third paragraph of Sec. 73. For
one who is no longer the lawful owner of the land cannot be
considered the "present registered owner" because, apparently, he
has already lost interest in the property, hence is not expected to
defend the property from the sale at auction. The purpose of PD No.
464 is to collect taxes from the delinquent taxpayer and, logically, one
who is no longer the owner of the property cannot be considered
the delinquent taxpayer.
"'failure to do so shall make the assessment in the name of the

previous owner valid and binding on all persons interested, and for all
purposes, as though the same had been assessed in the name of its
actual owner," found in both RA No. 537 and RA No. 409 was not
incorporated in PD No. 464 implies that the assessment of the subject
property in 1983 in the name of Sta. Maria would not bind, much less
adversely affect, Valencia. This, in spite of the non-declaration by
Valencia of the property in her name as required by the law, for there
is no longer any statutory waiver of the right to contest assessment by
the actual owner due to mere non-declaration. We can infer from the
omission that the assessment in the name of the previous owner is no
longer deemed an assessment in the name of the actual owner.
It is therefore clear that the delinquent taxpayer referred to under

Sec. 72 of PD No. 464 is the actual owner of the property at the time
of the delinquency and mere compliance by the provincial or city
treasurer with Sec. 65 of the decree is no longer enough. [24] The
notification to the right person, i.e., the real owner, is an essential 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
to transfer the tax declaration in her name. Section 7 of PD No. 464
directs the assessor, in case the owner fails to make a return, to list
the real estate for taxation and charge the tax against the true owner
if known, and if unknown, then as against the unknown owner. In this
way, a change of ownership may be ascertained.
Corporate Strategies Development Corp., and Rafael R. Prieto

vs. Norman A. Agojo
G.R. No. 208740, November 19, 2014
Facts:
Corporate Strategies Development Corp., (CSDC) is the

registered owner of a parcel of land in Makati City with an area of
1,000 square meters, It is likewise covered by Tax Declarations Nos.
and F00401455 and F00401456, in the name of CSDC.
From 1994 to 2006, its real property taxes in the amount of

P1,458,199.85, had not been paid. As a result, a warrant was issued
on April 7, 2006, by the City Treasurer of Makati subjecting the
property to levy pursuant to Section 258 of the Local Government
Code (LGC). A public auction sale was conducted on May 24, 2006,
during which the respondent turned out to be the highest bidder with
a bid amount of P2,000,000.00. Consequently, a certificate of sale was
issued in his favor on even date. The said certificate was later
registered in the Registry of Deeds.
After the expiration of the one (1) year redemption period,

respondent filed with the RTC a petition for the issuance of a new
certificate of title for the subject property.
On August 22, 2008, CSDC filed its opposition to the said

petition while Prieto, in his capacity as CSDC President, filed his on
October 20, 2008. As oppositors, CSDC and Prieto alleged that they
did not received a notice of tax delinquency or the warrant subjecting
the property, that the pertinent notice and warrant were apparently
sent to CSDCs old office address, and that the sale violated the
procedural requirements prescribed under the LGC. Specifically, they
questioned the following :
(a) failure of the City Tresurer to exert further steps to send the
warrant at the address where the property was located
(b) the failure to serve the copied of the warrant onj the occupant of
the property as mandated by Section 258 of the LGC
(c) failure to serve the copies of the warrant of levy upon Register of
Deeds and the City Assessor of Makati prior to the auction sale
(d) failure to annotate the notice of the levy on the title of the
property to conduct of the auction sale
(e) gross inadequacy of the bid price considering thart it only

represented 5% of the value of the property in the total amount of
P35,000,000.00 based on zonal evaluation
Because of these alleged defects, petitioner assailed the auction

sale for being defective.
On August 23, 2008, CSDC filed a motion to deposit the amount

of P3,080,000.00 pursuant to Section 267 of the LGC, as guarantee to
repondents should the sale be declared void. The RTC granted the
said moion. Later on RTc rendered a decision which voided the
auction sale.
On appeal CA decided to affirm the findings and conclusion sof

the RTC. It held that there was failure on the part of the City of
Makati to fully comply with the requirments of publication, posting
and service of the notice of delinquency and warrant of levy.
On February 29, 2012 respondent moved for reconsideration,

the CA reconsidered its decision, thus, reversing its earlier
pronouncement. It held valid the auction sale on the basis of the
presumption of regularity in the performance of the City Treasures
duties.
Issues:
1 Whether or not in applying the presumption of regularity of

an official act in a tax delinquency case is proper?
2 Whether or not the legal requirements of tax delinquency

sale was followed?
Ruling:
1.No, the Supreme Court established in some cases, that there

could be no presumption of the regularity of any admibnistrative
action which will result in depriving a taxpayer of his property
through a tax sale. This is an exception to the rule that administrative
proceedings are presumed to be regular. This is premised on the rule
that a sale of land for tax delinquency is in derogation of propertuy
and due process rights of the registered owner.
2.No, the notice of tax delinquency was not proven to have been
posted at the Makati City Hall and in Brgy. Dasmarinas, Makati City,
where the property is located. It was no proven either that the
required advertisements were effected in accodance with law.
Under Section 254 of the LGC, it is required that the notice of

delinquency must be posted at the mainhall and in a publicly
accessible and conspuicuos place in each barangay of the local
government unit concerned, It shall also be published once a week for
two (20) consecutive weeks, in a newspaper of general circulation in
the provincem, city or municipality.
Under Section 258 of the LGC further requires that should a

treasurer issue a warrant of levy, the same shall be mailed to or
served upon the delinquent owner of the real property or person
having legal interest therein, or in case he is out of the country ior
cannot be located, the administrator or occupant of the property. At
the same time, the written notice of the levy with the attached
warrant shall be mailed to or served upon assessor and the Register
of Deeds of the province, city or municipality within the Metro Manila
Area where the property is located, who shall annotate the levy on the
tax declaration and certificate of title of the propertyu respectively.
Under Section 260 od the LGC also mandates that within 30

days aftyer the service of the warrant of levy. The local treasurer shall
proceed to publicly advertise for sale or auction the property or a
usable portion thereof as mnay be necessary to satisfy the tax
delinquency and expenses of sale. Such advertisement shall be
effected by posting a notice at the main entrance iof the provincial,
city or municipal building, and in a publicly accessible and conspicuos
place in the barangay where the real property is located and by
publication once a week for 2 weeks, in a newspaper of general
circulation in the province, city or municipality where the property is
located.
Respondent failed to show compliance with the aforestated

requirements, the non fulfillment of which vitiates the sale.
G.R. No. 117577, December 01, 1995
Alejandro B. Ty and MVR Picture Tube, Inc., petitioners, vs. The

Hon. Aurelio C. Trampe, in his capacity as Judge of the Regional
Trial Court of Pasig, Metro Manila, The Hon. Secretary of Finance,
The Municipal Assessor of Pasig and The Municipal Treasurer
of Pasig, respondents.
FACTS:
Petitioner Alejandro B. Ty is a resident of and registered owner of

lands and buildings in the Municipality (now City) of Pasig, while
petitioner MVR Picture Tube, Inc. is a corporation duly organized and
existing under Philippine laws and is likewise a registered owner of

lands and buildings in said Municipality
Respondent Secretary of Finance is impleaded as the government

officer who approved the Schedule of Market Values used as basis for
the new tax assessments being enforced by respondents Municipal
Assessor and Municipal Treasurer of Pasig and the legality of which is
being questioned in this petition.
On January 6, 1994, respondent Assessor sent a notice of assessment

respecting certain real properties of petitioners located in Pasig,
Metro Manila. In a letter dated March 18, 1994, petitioners through
counsel requested the Municipal Assessor to reconsider the subject
assessments.
Not satisfied, petitioners on March 29, 1994 filed with the Regional
Trial Court of the National Capital Judicial Region, Branch 163,
presided over by respondent Judge, a Petition for Prohibition with
prayer for a restraining order and/or writ of preliminary injunction to
declare null and void the new tax assessments and to enjoin the
collection of real estate taxes based on said assessments.
The petition was denied for lack of merit. Subsequently, petitioners

Motion for Reconsideration was also denied.
Hence, this Petition for Review.
ISSUE:
Whether or not P.D. 921 was impliedly repealed by R.A. No.

7160?
CONTENTIONS:
PETITIONERS RESPONDENTS
1. The schedule of market 1. Tax assessments are valid.

values and the assessments
prepared solely by the
municipal assessor, in 2. Section 9 of P.D. 921 and
accordance with LGC of Section 212 of R.A. 7160 are
1991 (RA7160) are invalid clearly and unequivocally
and illegal because the said incompatible because they
Code did not effectively dwell on the same subject
repeal the previous law on matter, namely, the
the matter (PD 921). preparation of a schedule of
values for real property
within the Metropolitan
2. PD 921 was not expressly Manila Area. Under P.D. 921,
repealed nor impliedly the schedule shall be
repealed by LGC of prepared jointly by the city
1991(RA 7160) and is assessors of the District,
therefore the applicable while, under R.A. 7160, such

statute. PD921 is strict and schedule shall be prepared
mandatory. "by the provincial, city and
municipal assessors of the
municipalities within the
Metropolitan Manila area.
Due to this, PD 921 was not
expressly repealed in the
Codes repealing clause, but
it was impliedly repealed.
Therefore, LGC of 1991(RA
7160) is the prevailing
statute.
RULING:
NO.
The foregoing partakes of the nature of a general repealing provision.

It is a basic rule of statutory construction that repeals by implication
is not favored. This is based on the rationale that the will of the
legislature cannot be overturned by the judicial function of
construction and interpretation. Courts cannot take the place of
Congress in repealing statutes. Their function is to try to harmonize
as much as possible, seeming conflicts in the laws and resolve doubts
in favor of their validity and co-existence.
PD 921 is still a good law and the schedule of values prepared solely
by the municipal assessor is illegal & void. It was held that if the
intention of the legislature was to abrogate PD 921, it would have
included it in such repealing clause. An implied repeal will not be
allowed unless it is convincingly and unambiguously demonstrated
that the two laws are clearly repugnant & inconsistent that they
cannot co-exist. While RA 7160 covers almost governmental functions
delegated to local governments units, PD 921 embraces only the
Metropolitan Manila Area and is limited especially to the assessment
and collection of real estate (& some other taxes). Therefore, it is
obvious that harmony in these provisions is not only possible, but in
fact desirable, necessary and consistent with the legislative intent &
policy. By this harmonization, the preamble of both statutes shall be
fulfilled.
Manila Electric Company vs Barlis
G.R. No. 114231, May 18, 2001
Facts:
From 1968 to 1972 the Manila Electric Company (MERALCO),

erected four (4) power generating plants in Sucat, Muntinlupa. To
equip the power plants, various machineries and equipment were
purchased both locally and abroad. When the Real Property Tax Code
took effect on 1 June 1974, MERALCO filed its tax declarations
covering the Sucat power plants, the buildings thereon and the
machineries and equipment therein. From 1975 to 1978 MERALCO
paid the real property taxes on the said properties on the basis of
their assessed value as stated in the tax declarations.
On 29 December 1978 MERALCO sold all the power-generating

plants including the landsite to the National Power Corporation
(NAPOCOR), a corporation fully owned and controlled by the
Philippine government.
In 1985, the Offices of the Municipal Assessor and Municipal

Treasurer of Muntinlupa, while reviewing records pertaining to
assessments and collection of real property taxes, discovered, among
others, that MERALCO, for the period beginning 1 January 1976 to 29
December 1978, misdeclared and/or failed to declare for taxation
purposes a number of real properties, consisting of several equipment
and machineries, found in the said power plants. The Municipal
Assessor of Muntinlupa then declared and assessed the subject real
properties for taxation purposes and on 19 November 1985 furnished
MERALCO their corresponding tax declarations.
On the basis thereof the endorsement letter issued by BLGF-DOF,

Municipal Treasurer Eduardo A. Alon forwarded a supplemental
collection notice to MERALCO, dated 31 October 1989, and a formal
letter, dated 20 November 1989, reiterating his demand for tax
paymen
Due to MERALCOs inaction Municipal Treasurer Eduardo A. Alon

issued warrants of garnishment, ordering the attachment of the bank
deposits of MERALCO with certain banks to the extent of its unpaid
real property taxes.
Immediately, MERALCO filed before the Regional Trial Court a

Petition for Prohibition with Prayer for Writ of Preliminary Mandatory
Injunction and/or Temporary Restraining Order (TRO) praying, among
others, that a TRO be issued to enjoin the Municipal Treasurer of
Muntinlupa from enforcing the warrants of garnishment.
MUNICIPAL TREASURERS MERALCOS CONTENTIONS

CONTENTION
Lack of jurisdiction under
Sec. 64 of the Real Trial court has jurisdiction
Property Tax Code, courts since it is not the taxpayer,
are prohibited from referred to in Sec. 64 of
entertaining any suit
the RPTC. The term
assailing the validity of a
tax assessed thereunder taxpayer alludes to the
until the taxpayer shall property owner, a person
have paid, under protest, in whose name the
the tax assessed against property is declared, or the
him. owner or administrator,
but not a previous owner
which petitioner was at the
time the notice of
collection was sent to
it. Hence, it argues that its
protest payment of the tax
assessed is not a condition
precedent to the courts
acquiring jurisdiction over
its petition.
Lack of cause of action by It need not exhaust any

reason of MERALCOs administrative remedies,
failure to question the i.e., to appeal the tax
notice of assessment issued assessment before the
to it by the Municipality of Local Board of Assessment
Muntinlupa before the Appeals since,the petition
Local Board of Assessment merely seeks to assail the
Appeals. validity of the issuance of
the warrants of
garnishment over its bank
deposits, and not the tax
assessment; and, even if it
were to follow the
prescribed remedies on
protesting a tax
assessment it had nothing
to appeal since the
respondent municipal
treasurer issued notices of
collection and not notices
of assessment.
Assuming arguendo that

what was issued was a

notice of assessment,
issuance of such notice
was irregular since
pursuant to Secs. 7 and 90
of the RPTC, it is only the
provincial or city assessor,
and the municipal deputy
assessor, who has the
authority to conduct and
issue tax assessments, and
not respondent municipal
treasurer
Issue:
Whether or not the RTC has jurisdiction?
Ruling:
No. Under the Real Property Tax Code, the duty to declare the
true value of real property for taxation purposes is imposed upon the
owner, or administrator, or their duly authorized representatives. They
are thus the taxpayers. When these persons fail or refuse to make a
declaration of the true value of their real property within the
prescribed period, the provincial or city assessor shall declare the
property in the name of the defaulting owner and assess the property
for taxation. In this wise, the taxpayer assumes the character of a
defaulting owner, or defaulting administrator, or defaulting authorized
representative, liable to pay back taxes.
The respondent maintains that MERALCO misdeclared and/or

failed to declare the true value of the Sucat power plant machineries
and equipment during the taxable years 1976-1978 when it was still
the owner thereof, and that it is the deficiency in the realty tax on the
real propertys reassessed value which it seeks to collect. Based on
the foregoing, the notice of assessment and collection was directed to
petitioner, not because it is still the present owner of the subject real
property including the machineries and equipment thereon , but
because it is the defaulting owner thereof who has failed to make
proper tax declaration and the proper tax payment thereon. Thus,
petitioner is the taxpayer contemplated under Sec. 64 of the RPTC,
and payment under protest of the tax assessed is necessary for the
trial court to acquire jurisdiction over its petition.
The fact that NAPOCOR is the present owner of the Sucat power
plant machineries and equipment does not constitute a legal barrier
to the collection of delinquent taxes from the previous owner,
MERALCO, who has defaulted in its payment.
Only the letter dated 20 November 1989 sent by Municipal

Treasurer Eduardo A. Alon to petitioner MERALCO could qualify as
the actual notice of collection since it is an unmistakable demand for
payment of back taxes. Be that as it may, petitioner was correct when
it pointed out that the Municipal Treasurer, contrary to that required
by law, issued the notices of assessment. However, the trial court is
without authority to address the alleged irregularity in the issuance of
the notices of assessment without prior tax payment, under protest,
by petitioner. Section 64 of the RPTC, prohibits courts from declaring
any tax invalid by reason of irregularities or informalities in the
proceedings of the officers charged with the assessment or collection
of taxes except upon the condition that the taxpayer pays the just
amount of the tax, as determined by the court in the pending
proceeding. As petitioner failed to make a protest payment of the tax
assessed, any argument regarding the procedure that should have
been observed in the preparation of the notice of assessment and
collection is futile as the trial court in such a scenario cannot assume
jurisdiction over the matter.
National Power Corporation vs Province of Quezon and

Municipality of Pagbilao
GR No. 171586 July 15, 2009
Facts:
The National Power Corporation (NPC) is a government-owned and

controlled corporation mandated by law to undertake, among others,
the production of electricity from nuclear, geothermal, and other
sources, and the transmission of electric power on a nationwide basis.
The NPC entered into an Energy Conversion Agreement (ECA) with
Mirant on November 9, 1991. The ECA provided for a build-operate-
transfer (BOT) arrangement between Mirant and the NPC. Mirant will
build and finance a coal-fired thermal power plant on the lots owned
by the NPC in Pagbilao, Quezon for the purpose of converting fuel into
electricity, and thereafter, operate and maintain the power plant for a
period of 25 years. The NPC, in turn, will supply the necessary fuel to
be converted by Mirant into electric power, take the power generated,
and use it to supply the electric power needs of the country. At the
end of the 25-year term, Mirant will transfer the power plant to the
NPC without compensation.
Among the obligations undertaken by the NPC under the ECA was the
payment of all taxes that the government may impose on Mirant. In a
letter dated March 2, 2000, the Municipality of Pagbilao assessed

Mirants real property taxes on the power plant and its machineries in
the total amount of P1,538,076,000.00 for the period of 1997 to 2000.
The Municipality of Pagbilao furnished the NPC a copy of the
assessment letter.
The NPC filed a petition before the Local Board of Assessment

Appeals (LBAA) claiming that it is exempt from tax under Section
234{c} of the Local Government Code.
(c) All machineries and equipment that are actually,

directly, and exclusively used by local water districts and
government-owned or controlled corporations engaged in
the supply and distribution of water and/or generation
and transmission of electric power
The LBAA dismissed the NPCs petition on the Municipality of

Pagbilaos motion, through a one-page Order dated November 13,
2000. The NPC appealed the denial of its petition with the Central
Board of Assessment Appeals (CBAA). Although it noted the
incompleteness of the LBAA decision for failing to state the factual
basis of its ruling, the CBAA nevertheless affirmed, in its decision of
August 18, 2003, the denial of the NPCs claim for exemption. The
CBAA likewise denied the NPCs subsequent motion for
reconsideration, prompting the NPC to institute an appeal before the
Court of Tax Appeals (CTA).
CTA en Banc NPC
NPC was not the proper party to Claims that it has legal interest
protest the real property tax because of its beneficial ownership
assessment, as it does not have the of the power plant and its
requisite legal interest.
Machineries, and Mirant holds is
merely a naked title.
Issue:
a. Whether or not NPC is the proper party to file the protest

against the real property assessment?
b. Whether or not NPC can claim exemption from the Real

Property Tax?
Ruling:
a. No. Section 226 of the LGC lists down the two entities vested
with the personality to contest an assessment: the owner and
the person with legal interest in the property. The liability for
taxes generally rests on the owner of the real property at the
time the tax accrues. This is a necessary consequence that
proceeds from the fact of ownership. However, personal liability
for realty taxes may also expressly rest on the entity with the
beneficial use of the real property, such as the tax on property
owned by the government but leased to private persons or
entities, or when the tax assessment is made on the basis of the
actual use of the property.
In the present case, the NPC, contrary to its claims, is neither

the owner nor the possessor/user of the subject machineries.
The ECAs terms regarding the power plants machineries clearly
vest their ownership with Mirant. Article 2.12 of the ECA states:
2.12 OWNERSHIP OF POWER STATION. From the Effective

Date until the Transfer Date [that is, the day following the last
day of the 25-year period], [Mirant] shall, directly or indirectly,
own the Power Station and all the fixtures, fittings, machinery
and equipment on the Site or used in connection with the Power
Station which have been supplied by it or at its cost. [Mirant]
shall operate, manage, and maintain the Power Station for the
purpose of converting fuel of [NPC] into electricity. [Emphasis
supplied.]
With regards to its contention that it should nevertheless be

regarded as the beneficial owner of the plant, since it will
acquire ownership thereof at the end of 25 years, is not
sufficient to vest the NPC the personality to protest the
assessment. The court declared that legal interest should be an
interest that is actual, direct and immediate, not simply
contingent or expectant.
b. No. the NPCs claim of tax exemptions is completely without

merit. To successfully claim exemption under Section 234(c) of
the LGC, the claimant must prove two elements:
a) The machineries and equipment are actually, directly, and

exclusively used by local water districts and government-owned or
controlled corporations and
b) The local water districts and government-owned and
controlled corporations claiming exemption must be engaged in the
supply and distribution of water and/or the generation and
transmission of electric power.
As applied to the present case, the government-owned or

controlled corporation claiming exemption must be the entity
actually, directly, and exclusively using the real properties and the
use must be devoted to the generation and transmission of electric

power. Neither the NPC nor Mirant satisfies both requirements.
Although the plants machineries are devoted to the generation of
electric power, by the NPCs own admission and as previously
pointed out, Mirant a private corporation uses and operates them.
That Mirant operates the machineries solely in compliance with the
will of the NPC only underscores the fact that NPC does not
actually, directly, and exclusively use them. The machineries must
be actually, directly, and exclusively used by the government-owned
or controlled corporation for the exemption under Section
234(c)
Nor will NPC find solace in its claim that it utilizes all the power
plants generated electricity in supplying the power needs of its
customers. Based on the clear wording of the law, it is the
machineries that are exempted from the payment of real property
tax, not the water or electricity that these machineries generate
and distribute.
GOVERNMENT SERVICE INSURANCE SYSTEM vs CITY

TREASURER and CITY ASSESSOR of the CITY OF MANILA
[G.R. No. 186242. December 23, 2009]
FACTS:
Petitioner GSIS owns or used to own two (2) parcels of land,
located at Katigbak and Concepcion cor. Arroceros, Manila. Title to
the Concepcion-Arroceros property was transferred to this Court in
2005 pursuant to Proclamation No. 835. Both the GSIS and the
Metropolitan Trial Court (MeTC) of Manila occupy the Concepcion-
Arroceros property, while the Katigbak property was under lease.
The City Treasurer of Manila addressed a letter dated
September 13, 2002 to GSIS President and General Manager Winston
F. Garcia informing him of the unpaid real property taxes due on the
aforementioned properties for years 1992 to 2002. The letter warned
of the inclusion of the subject properties in the scheduled October 30,
2002 public auction of all delinquent properties in Manila should the
unpaid taxes remain unsettled before that date. Then, the City
Treasurer of Manila issued separate Notices of Realty Tax
Delinquency[ for the subject properties, with the usual warning of
seizure and/or sale. GSIS, wrote back emphasizing the GSIS
exemption from all kinds of taxes, including realty taxes, under
Republic Act No. (RA) 8291.
Two days after, GSIS filed a petition for certiorari and
prohibition with prayer for a restraining and injunctive relief before
the Manila RTC. In it, GSIS prayed for the nullification of the
assessments thus made and that respondents City of Manila officials
be permanently enjoined from proceedings against GSIS property.
RTC RULING: dismissed the petition of GSIS.
GSIS posture that both its old Respondents counter that GSIS
charter, Presidential Decree No. may not successfully resist

(PD) 1146, and present charter, the citys notices and warrants of
RA 8291 or the GSIS Act of 1997, levy on the basis of its exemption
exempt the agency and its under RA 8291, real property
properties from all forms of taxes taxation being governed by RA
and assessments, inclusive of 7160 or the Local Government
realty tax. Code of 1991
ISSUES:
1 Whether GSIS under its charter is exempt from real property

taxation?
2 Whether GSIS is liable for real property taxes for its properties
leased to a taxable entity, assuming that it is so exempt?
3 Whether the properties of GSIS are exempt from levy?
RULING:
1 YES. Court finds that GSIS enjoys under its charter full tax
exemption.
RA 7160 lifted GSIS tax exemption, however, full tax

exemption reenacted through RA 8291. While recognizing the
exempt status of GSIS owing to the reenactment of the full tax
exemption clause under Sec. 39 of RA 8291 in 1997,
the ponencia in City of Davao appeared to have failed to take
stock of and fully appreciate the all-embracing condoning
proviso in the very same Sec. 39 which, for all intents and
purposes, considered as paid any assessment against the GSIS
as of the approval of this Act.
First, while created under CA 186 as a non-stock
corporation, a status that has remained unchanged even when it
operated under PD 1146 and RA 8291, GSIS is not, in the
context of the afore quoted Sec. 193 of the LGC. econd, the
subject properties under GSISs name are likewise owned by the
Republic. The GSIS is but a mere trustee of the subject
properties which have either been ceded to it by the
Government or acquired for the enhancement of the system.
Moreover, as an instrumentality of the national government, it is
itself not liable to pay real estate taxes assessed by the City
of Manila against its Katigbak and Concepcion-Arroceros
properties.
2 Following the beneficial use rule, however, accrued real

property taxes are due from the Katigbak property, leased as it
is to a taxable entity. But the corresponding liability for the
payment thereof devolves on the taxable beneficial user. The
Katigbak property cannot in any event be subject of a public
auction sale, notwithstanding its realty tax delinquency. This
means that the City of Manila has to satisfy its tax claim by
serving the accrued realty tax assessment on MHC, as the
taxable beneficial user of the Katigbak property and, in case of
nonpayment, through means other than the sale at public
auction of the leased property. The leased of Katigbak property
shall be taxable pursuant to the beneficial use principle under

Sec. 234(a) of the LGC. It is true that said Sec. 234(a), exempts
from real estate taxes real property owned by the Republic,
unless the beneficial use of the property is, for consideration,
transferred to a taxable person. This exemption, however, must
be read in relation with Sec. 133(o) of the LGC, which prohibits
LGUs from imposing taxes or fees of any kind on the national
government, its agencies, and instrumentalities.
Thus read together, the provisions allow the Republic to
grant the beneficial use of its property to an agency or
instrumentality of the national government. Such grant does not
necessarily result in the loss of the tax exemption. The tax
exemption the property of the Republic or its instrumentality
carries ceases only if, as stated in Sec. 234(a) of the LGC of
1991, beneficial use thereof has been granted, for a
consideration or otherwise, to a taxable person. GSIS, as a
government instrumentality, is not a taxable juridical
person under Sec. 133(o) of the LGC. GSIS, however, lost
in a sense that status with respect to the Katigbak
property when it contracted its beneficial use to MHC,
doubtless a taxable person. Thus, the real estate tax
assessment covering 1992 to 2002 over the subject Katigbak
property is valid insofar as said tax delinquency is concerned as
assessed over said property.
The next query as to which between GSIS, as the owner of
the Katigbak property, or MHC, as the lessee thereof, is liable to
pay the accrued real estate tax, need not detain us long. MHC
ought to pay. Being in possession and having actual use of the
Katigbak property since November 1991, MHC is liable for the
realty taxes assessed over the Katigbak property from 1992 to
2002. MHC has obligated itself under the GSIS-MHC
Contract of Lease to shoulder such assessment. As a matter
of law and contract, therefore, MHC stands liable to pay the
realty taxes due on the Katigbak property. Considering,
however, that MHC has not been impleaded in the instant case,
the remedy of the City of Manila is to serve the realty tax
assessment covering the subject Katigbak property to MHC and
to pursue other available remedies in case of nonpayment, for
said property cannot be levied upon.
3 YES. A valid tax levy presupposes a corresponding tax

liability. Nonetheless, it will not be remiss to note that it is
without doubt that the subject GSIS properties are exempt from
any attachment, garnishment, execution, levy, or other legal
processes. This is the clear import of the third paragraph of Sec.
39, RA 8291. Thus, even granting arguendo that GSIS liability
for realty taxes attached from 1992, when RA 7160 effectively
lifted its tax exemption under PD 1146, to 1996, when RA 8291
restored the tax incentive, the levy on the subject properties to
answer for the assessed realty tax delinquencies cannot still be
sustained. The simple reason: The governing law, RA 8291, in
force at the time of the levy prohibits it. And in the final
analysis, the proscription against the levy extends to the leased
Katigbak property, the beneficial use doctrine, notwithstanding.
PFDA versus CBAA, GR NO. 178030, December 15, 2010
Facts:
Lucena Fishing Port Complex is a fishery infrastructure project
of the National Government financed through a loan from the
Overseas Economic Cooperation Fund of Japan.
Later on, pursuant to the enactment of PD 977, the PFDA took
over the management and operation of the LFPC in February 1992.
On October 26, 1999, the City Government of Lucena sent to
PFDA a demand letter for payment of realty taxes of LFPC property
for the taxable years 1993-1999.
A year after, another demand letter was sent by the City
Government covering the period from 1993 to 2000. This prompted to
file an appeal before the Local Board of Assessment Appeals of
Lucena but was dismissed for lack of merit. Petitioner moves for its
reconsideration but this was denied by LBAA. PFDA then appealed to
CBA but the latter likewise dismissed the appeal for lack of merit.
Issue: Whether or not PFDA is liable for the Real Property

Taxes assessed on the LFPC?
CBAAs contention CTAs contention SCs Ruling:

Ownership of PFDA is a PFDA is not liable
LFPC had been GOCC and is for the real
handed over to therefore property taxes
the PFDA by subject to the assessed on the
virtue of PD Real Property LFPC.
1977. Thus, the Tax imposed PFDA is not a
allegations that by LGUs GOCC but an
PFDA is not the having instrumentality of
beneficial user jurisdiction the national
of LFPC and not over its real government which
a taxable person properties is generally
are rendered pursuant to exempt from
moot and Section 193, payment of real
academic by 232 and 234 property tax.
such ownership of LGC. Under the Local
of PFDA over PFDA failed Government Code,
LFPC. to prove its LGUs have no
PD 1977 did not exemption power to tax
mention PFDAs from real instrumentalities
exemption from property of the national
payment of real taxes. government like
property tax. the PFDA. Thus,
Therefore, PFDA the PFDA is not
had no claim for liable to pay RPT
realty tax assessed by the
exemption on its office of the City
Fishing Port Treasurer of
Complex. Lucena on the
It denied PFDAs LFPC.
MR. Besides, LFPC is a
property of public
dominion intended
for public use and
falls within the
term ports.
Hence, as
property of public
dominion, LFPC is
owned by the
Republic of the
Philippines and
thus exempt from
real estate tax,
except those
which are leased
to private persons
or entities.
Davao Oriental Electric Cooperative Inc., vs The Province of

Davao Oriental
G.R. No. 170901, January 20,2009
FACTS:
Petitioner Davao Oriental Cooperative, Inc. was organized

under Presidential Decree (PD) No. 269 which granted a number of
tax and duty exemption priveleges to electric cooperatives. In 1984,
PD No. 1955 was enacted by then President Marcos. It withdrew all
exemptions from or any preferential treatment in the payment of
duties, taxes, fees, imposts and other charges granted to private
business enterprises and /or persons engaged in any economic
activity.
Due to the failure of petitioner to declare the value of its

properties, the Office of the Provincial Assessor assesed its properties.
On October 8, 1985, the Provincial Assessor sent the Notice of
Assessment to petitioner which duly received it.
During the same year of 1985, the Fiscal Incentive Review

Board (FIRB) issued FIRB Resolution No. 13-85, the Ministry of
Finance issued Local Tax Regulation No. 3-85, and the Office of the
Local Government Finance, Region XI, Davao City issued Regional
Office Memorandum Circular No. 42-85, all of which reiterated the
withdrawal of tax exemptions previously granted to business entities
including electric cooperatives.
On January 8, 1986, the Pres. Marcos issued PD No. 2008,

requiring the Minister of Finance to immediately restore the tax
exemption of all electric cooperatives. However, in December 1986,
then Pres. Aquino issued Executive Order (EO) No. 93 which withdrew
all tax and duty exemptions granted to private entities effective March
10, 1987. But Memorandum Order No. 65, dated January 23, 1987,
suspended the implementation of the said EO until June 30, 1987 for
cooperatives. Effective July 1, 1987, FIRB No. 24-87 restored the tax
and duty exemption oriveleges of electric cooperatives under PD No.
269.
In May 1990, respondent filed a complaint for collection of

delinquent real property taxes against petitioner for the years 1984
until 1989, amounting to P1,825,928.12.
Petitioner contends that it was exempt from the payment of real

estate taxes from 1984 to 1989 because the restoration of the tax
exemptions under FIRB Resolution No. 24-87 retroacts to the date of
withdrawal of said exemptions. Further, petitioner questions that the
classification made by respondent of some of its properies when it
believes them to ber personal properties, hence not subject to realty
tax. Also claims that respondent classified its poles, towers and
fixtures, overhead conductors and devices, station equipment, line
transformers, etc. as real properties when ny their nature, use,
purpose and destination any by sustantive law and jurisprudence, they
are personal properties.
RTC rendered its decision in favor of petitioner, it ruled that

petitioner was exempt from the payment of real estate taxes from
1984 to 1989.
On appeal the CA set aside the ruling of the RTC, it held that
Davao Oriental Cooperative is liable to pay property taxes plus
penalties and surcharges.
Issue:
Whether or not Davao Oriental Cooperative, Inc. is liable for

real property taxes?
Ruling:
Yes, FIRB Resolution No. 24-87 is clear in stating that the tax
and duty exemption privileges of electric cooperatives granted under
the terms and conditions of PD NO. 269 are restored effective July 1,
1987.
Petitioner admits that it did not file a PROTEST BEFORE THE

Board of Assessment Appeals to question the assessment. Section 30
of PD No. 464, otherwise known as the The Real Property Tax Code,
provides:
Sec. 30. Local Board of Assessment Appeals. Any owner who is

not satisfied with the action of the provincial or city assessor in the
assessment of his property may, within sixty days from the date of
receipot by him of the written notice of assessment as provided in this
Code, appeal to the Biard of Assessment Appeals of the province or
city, by filing with it a petition under oath using the form prescribed
for the prupose, together with copies of the tax declarations and such
affidavit or documents submitted in support of the appeal.
Having failed to appeal the assessment of its properties rio the

Board of Assessment Appeals, petitioner cannot now assail the validity
of the tax assessment against it before the courts. Petitioner failed to
exhaust its administrative remedies, and the consequence of such
failure is clear the tax assessment, as computed and issued by the
Office of the Provincial Assessor, became final. Petitioner is deemed to
have admitted the correctness of the assessment os its properties. PD
No. 464 requires that the taxpayer must first pay under protest the
tax assessed against him before he could seek recourse from the
courts to assail its validity.
SPOUSES FRANCISCO & BETTY WONG AND SPOUSES

JOAQUIN & LOLITA WONG vs CITY OF ILOILO, CITY
TREASURER ROMEO MANIKAN, MELANIE UY AND ESTATE OF
FELIPE UY
FACTS:
A 184-square meter property owned by Charles Newton & Jane Linnie

Hodges was sold to Vicente Chan in 1966, who failed to register the
property in his name. When Chan died, his estate sold the same
property to petitioners Francisco and Joaquin Wong, who were only
allowed to annotate a notice of adverse claim on the TCT because the
state of Chan failed to produce the estate tax clearance and the
owner;s duplicate of title.
In 1991, respondent city treasurer issued a notic of delinquency in the

payment of real estate taxes, and said property was sold at a public
auction when no one contested the notice nor settled the delinquency.
A final bill and a new TCT was issued to the highest bidder,
respondent Melanie Uy.
In 1993, petitioners Francisco and Betty Wong filed a complaint for

the annulment of the auction sale and TCT, asserting that the tax sale
was void since the City Treasurer failed to inform them of the tax sale
as required by Section 73 of PD 464 which provided:
Section 73. Advertisement of sale of real property at public auction.

After the expiration of the year for which the tax is due, the provincial
or city treasurer shall advertise the sale at public auction of the entire
delinquent real property, except real property mentioned in
subsection (a) of Section forty hereof, to satisfy all the taxes and
penalties due and the costs of sale. Such advertisement shall be made
by posting a notice for three consecutive weeks at the main entrance
of the provincial building and of all municipal buildings in the
province, or at the main entrance of the city or municipal hall in the
case of cities, and in a public and conspicuous place in barrio or

district wherein the property is situated, in English, Spanish and the
local dialect commonly used, and by announcement at least three
market days at the market by crier, and, in the discretion of the
provincial or city treasurer, by publication once a week for three
consecutive weeks in a newspaper of general circulation published in
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, and
place of sale, the name of the taxpayer against whom the tax was
assessed; and the kind or nature of property and, if land, its
approximate areas, lot number, and location stating the street and
block number, district or barrio, municipality and the province or city
where the property to be sold is situated. Copy of the notice shall
forthwith be sent either by registered mail or by messenger, or
through the barrio captain, to the delinquent taxpayer, at his
address as shown in the tax rolls or property tax record cards of
the municipality or city where the property is located, or at his
residence, if known to said treasurer or barrio captain:
Provided, however, That a return of the proof of service under
oath shall be filed by the person making the service with the
provincial or city treasurer concerned.
In 1994, petitioners Joaquin and Lolita Wong filed a similar complaint

with the RTC of Iloilo City, Branch 31.
The RTC upheld the validity of the tax sale and dismissed the
complaints. It reasoned that because petitioners were not the
registered owners of the property, they were not real parties-in-
interest who could assail the validity of the said sale. Petitioners
moved for reconsideration, which was granted, noting that no notice
of sale was sent to petitioners who were the legitimate owners of the
property.
Respondents City Government of Iloilo and City Treasurer Manikan

moved for reconsideration and was denied. Respondents appealed,
arguing that the RTC erred in taking cognizance of the complaints
since petitioners failed to observe the requirements of Section 83 of
PD 464 which provided:
Section 83. Suits assailing validity of tax sale. No court shall

entertain any suit assailing the validity of a tax sale of real
estate under this Chapter until the taxpayer shall have paid
into court the amount for which the real property was sold,
together with interests of twenty per centum per annum upon
that sum from the date of sale to the time of instituting suit.
The money so paid into court shall belong to the purchaser at the tax
sale if the deed is declared invalid, but shall be returned to the
depositor if the action fails.
Neither shall any court declare a sale invalid by reason of

irregularities or informalities in the proceedings committed by the
officer charged with the duty of making sale, or by reason of failure by
him to perform his duties within the time herein specified for their
performance, unless it shall have been proven that such irregularities,
informalities or failure have impaired the substantial rights of the
taxpayer.
The CA reversed and set aside the assailed resolutions of the RTC. It
reasoned that Section 83 of PD 464 was inapplicable since the
complaints did not protest the assessment made by the local
government unit. Thus, such failure did not deprive the RTC of
jurisdiction. However, the CA upheld the validity of the tax sale.
Under the law, only registered owners are entitled to a notice of tax
sale. Inasmuch as the property remained registered in the names of
the Hodges spouses in TCT No. T-7373, said spouses were the only
ones entitled to such notice.
Petitioners moved for reconsideration but it was denied. 16 Hence, this

recourse,17 petitioners insisting that the CA erred in upholding the
validity of the tax sale.
ISSUE: W/N the auction sale was valid

HELD:
YES. Section 83 of PD 464 states that the RTC shall not entertain any
complaint assailing the validity of a tax sale of real property unless
the complainant deposits with the court the amount for which the said
property was sold plus interest equivalent to 20% per annum from the
date of sale until the institution of the complaint. This provision was
adopted in Section 267 of the Local Government Code, albeit the
increase in the prescribed rate of interest to 2% per month. In this
regard, National Housing Authority v. Iloilo City holds that the deposit
required under Section 267 of the Local Government Code is a
jurisdictional requirement, the nonpayment of which warrants the
dismissal of the action. Because petitioners in this case did not make
such deposit, the RTC never acquired jurisdiction over the complaints.
Consequently, inasmuch as the tax sale was never validly challenged,
it remains legally binding.
CITY GOVERNMENT OF TAGAYTAY

VS. HON.GUERRERO, Presiding Judge of RTC-CAVITE
FACTS: Tagaytay-Taal Tourist Development Corporation (TTDC) is the

registered owner of two (2) parcels of land covered by TCT Nos. T-
9816 and TCT T-9817 of the Registry of Deeds of Tagaytay City. Said
properties were located in the Barrio of Birinayan. Under CA No. 338,
Barrio Birinayan was annexed to the City of Tagaytay as of its
incorporation on June 1938. However, upon the passage of RA 1418, it
was taken away from the City of Tagaytay and was transferred to the
province of Batangas.
TTDC incurred real estate tax liabilities on the said properties for the
tax years 1976 to 1983.
For failure of the corporation to settle its delinquent real estate tax
obligations, the City of Tagaytay offered the properties for sale at
public auction. Being the only bidder, a certificate of sale was
executed in favour of the City of Tagaytay and was correspondingly
inscribed on the titles of the properties. The City of Tagaytay filed an
unnumbered petition for entry of new certificates of title in its favour
before RTC Cavite. RTC granted the petition. TTDC appealed to the
CA. The subject properties were later purchased by Ameurfina
Melencio-Herrera and Emiliana Melencio-Fernando for the amount
equivalent to the taxes and penalties due to the same. Meanwhile,
during the pendency of the case before the CA, TTDC filed a petition
for nullification of the public auction involving the disputed
properties.
ISSUE: Whether or not the City of Tagaytay is liable for damages

when it levied real estate taxes on the subject properties?
CITY
GOVERMENT OF TTDCS SC RULING
TAGAYTAYS CONTENTION
CONTENTION
-YES.
The properties, The properties
based on its involved were not -It is very basic that
charter, were within the before the City of
within its jurisdiction of the Tagaytay may levy a
territorial City of Tagaytay certain property for sale
jurisdiction. and, therefore, due to tax delinquency,
beyond its taxing the subject property
authority. should be under its
jurisdiction. Nonetheless,
the failure of the city
officials in this case to
verify if the property is
within its jurisdiction
before levying taxes on
the same constitutes
gross negligence.
It is liable for the

tortuous acts committed
by its agents who sold the
properties to the
Melencios despite the
clear mandate of RA
1418, separating Barrio
Birinayan from its
jurisdiction and
transferring the same to
the Province of Batangas.
FELS Energy, Inc. Vs.

The Province of Batangas and
The Office of the Provincial Assessor of Batangas
GR No. 168557
National Power Corporation Vs.

LBAA of Batangas
GR No. 170628
February 16, 2007
Facts:
On January 18, 1993, NPC entered into a lease contract with Polar
Energy, Inc. over 3x30 MW diesel engine power barges moored at
Balayan Bay in Calaca, Batangas. The contract, denominated as an
Energy Conversion Agreement (Agreement), was for a period of five
years wherein, NPC shall be responsible for the payment of:
(a) All taxes, import duties, fees, charges and other levies imposed by
the National Government.
(b) All real estate taxes and assessments, rates and other charges in
respect of the Power Barges.
Subsequently, Polar Energy, Inc. assigned its rights under the

Agreement to FELS. Thereafter, FELS received an assessment of real
property taxes on the power barges. The assessed tax, which likewise
covered those due for 1994, amounted to P56,184,088.40 per annum.
FELS referred the matter to NPC, reminding it of its obligation under
the Agreement to pay all real estate taxes. It then gave NPC the full
power and authority to represent it in any conference regarding the
real property assessment of the Provincial Assessor.
NPC sought reconsideration of the Provincial Assessors decision to

assess real property taxes on the power barges. However, the motion
was denied. The Local Board of Assessment Appeals (LBAA) ruled that
the power plant facilities, while they may be classified as movable or
personal property, are nevertheless considered real property for
taxation purposes because they are installed at a specific location with
a character of permanency.
FELS appealed the LBAAs ruling to the Central Board of Assessment

Appeals (CBAA). The CBAA rendered a Decision finding the power
barges exempt from real property tax.
It was later reversed by the CBAA upon reconsideration and affirmed

by the CA, on the ground that the right to question the assessment of
the Provincial Assessor had already prescribed upon the failure of
FELS to appeal the disputed assessment to the LBAA within the
period prescribed by law. Since FELS had lost the right to question
the assessment, the right of the Provincial Government to collect the
tax was already absolute.
FELS Provincial Assessor
It is not a party to the petition of The right to question the

NPC and therefore not barred from assessment of the Provincial
questioning the assessment. Assessor had already prescribed
upon the failure of FELS to appeal
the disputed assessment to the
LBAA within the period prescribed
by law.
NPC
Power Barges are non-taxable Power Barges are real property for
items. the purposes of taxation and
therefore subject to tax.
Issue:
a. Whether or not the right of the petitioner to question the

patently null and void real property tax assessment on the
petitioners personal properties is imprescriptible?
b. Whether or not power barges, which are floating and movable,

are personal properties and therefore, not subject to real
property tax?
c. Assuming arguendo that the subject power barges are subject to

real estate tax, whether or not they are exempt from real estate
tax under Section 234 (c) of R.A. No. 7160?
Ruling:
a. No. the notice of assessment which the Provincial Assessor sent

to FELS on August 7, 1995, contained the following statement:
If you are not satisfied with this assessment, you may,

within sixty (60) days from the date of receipt hereof,
appeal to the Board of Assessment Appeals of the province
by filing a petition under oath on the form prescribed for
the purpose, together with copies of ARP/Tax Declaration
and such affidavits or documents submitted in support of
the appeal.
Instead of appealing to the Board of Assessment Appeals (as

stated in the notice), NPC opted to file a motion for
reconsideration of the Provincial Assessors decision, a remedy
not sanctioned by law.
If the taxpayer fails to appeal in due course, the right of the

local government to collect the taxes due with respect to the
taxpayers property becomes absolute upon the expiration of the
period to appeal. It also bears stressing that the taxpayers
failure to question the assessment in the LBAA renders the
assessment of the local assessor final, executory and
demandable, thus, precluding the taxpayer from questioning the
correctness of the assessment, or from invoking any defense
that would reopen the question of its liability on the merits.
b. No. Article 415 (9) of the New Civil Code provides that "docks
and structures which, though floating, are intended by their
nature and object to remain at a fixed place on a river, lake, or
coast" are considered immovable property. Thus, power barges
are categorized as immovable property by destination, being in

the nature of machinery and other implements intended by the
owner for an industry or work which may be carried on in a
building or on a piece of land and which tend directly to meet
the needs of said industry or work.
c. No. The court affirms the findings of the LBAA and CBAA that
the owner of the taxable properties is petitioner FELS, which in
fine, is the entity being taxed by the local government. As
stipulated under Section 2.11, Article 2 of the Agreement:
OWNERSHIP OF POWER BARGES. POLAR shall own the

Power Barges and all the fixtures, fittings, machinery and
equipment on the Site used in connection with the Power
Barges which have been supplied by it at its own cost.
POLAR shall operate, manage and maintain the Power
Barges for the purpose of converting Fuel of NAPOCOR
into electricity.
It follows then that FELS cannot escape liability from the

payment of realty taxes by invoking its exemption in Section 234
(c) of R.A. No. 7160, which reads:
x x x (c) All machineries and equipment that are actually,

directly and exclusively used by local water districts and
government-owned or controlled corporations engaged in the
supply and distribution of water and/or generation and
transmission of electric power x x x
Time and again, the Supreme Court has stated that taxation is
the rule and exemption is the exception. The law does not look
with favor on tax exemptions and the entity that would seek to
be thus privileged must justify it by words too plain to be
mistaken and too categorical to be misinterpreted. Thus,
applying the rule of strict construction of laws granting tax
exemptions, and the rule that doubts should be resolved in favor
of provincial corporations, we hold that FELS is considered a
taxable entity.
The mere undertaking of petitioner NPC under Section 10.1 of

the Agreement, that it shall be responsible for the payment of all
real estate taxes and assessments, does not justify the
exemption. The privilege granted to petitioner NPC cannot be
extended to FELS. The covenant is between FELS and NPC and
does not bind a third person not privy thereto, in this case, the
Province of Batangas.
CAPITOL WIRELESS, INC. versus THE PROVINCIAL TREASURER OF

BATANGAS, THE PROVINCIAL ASSESSOR OF BATANGAS, THE
MUNICIPAL TREASURER AND ASSESSOR OF NASUGBU, BATANGAS
G.R. No. 180110. May 30, 2016
FACTS:
Capitol Wireless Inc. (Capwire) is a Philippine corporation in the

business of providing international telecommunications services. As such
provider, Capwire has signed agreements with other local and foreign
telecommunications companies covering an international network of
submarine cable systems.
Capwire claims that it is co-owner only of the so-called "Wet Segment"

of the APCN, while the landing stations or terminals and Segment E of APCN
located in Nasugbu, Batangas are allegedly owned by the Philippine Long
Distance Telephone Corporation (PLDT). Moreover, it alleges that the Wet
Segment is laid in international, and not Philippine, waters.
Capwire claims that as co-owner, it does not own any particular

physical part of the cable system but, consistent with its financial
contributions, it owns the right to use a certain capacity of the said system.
This property right is allegedly reported in its financial books as
"Indefeasible Rights in Cable Systems."
However, for loan restructuring purposes, Capwire claims that "it was
required to register the value of its right," hence, it engaged an appraiser to
"assess the market value of the international submarine cable system and
the cost to Capwire."
Capwire submitted a Sworn Statement of True Value of Real Properties

at the Provincial Treasurer's Office, Batangas City, Batangas Province, for
the Wet Segment of the system.
Capwire claims that it also reported that the system "interconnects at

the PLDT Landing Station in Nasugbu, Batangas," which is covered by a
transfer certificate of title and tax declarations in the name of PLDT. As a
result, the respondent Provincial Assessor of Batangas (Provincial Assessor)
issued the Assessments of Real Property (ARP) against Capwire.
In essence, the Provincial Assessor had determined that the

submarine cable systems described in Capwire's Sworn Statement of True
Value of Real Properties are taxable real property, a determination that was
contested by Capwire in an exchange of letters between the company and
the public respondent. The reason cited by Capwire is that the cable system
lies outside of Philippine territory, i.e., on international waters.
Capwires Contention: Governments Contention:
Petitioner Capwire asserts that Respondents assessors and

recourse to the Local Board of treasurers of the Province of
Assessment Appeals, or payment of Batangas and Municipality of
the tax under protest, is Nasugbu, Batangas disagree with

inapplicable to the case at bar since Capwire and insist that the case
there is no question of fact presents questions of fact such as
involved, or that the question the extent and portion of the
involved is not the reasonableness submarine cable system that lies
of the amount assessed but, rather, within the jurisdiction of the said
the authority and power of the local governments, as well as the
assessor to impose the tax and of nature of the so-called indefeasible
the treasurer to collect it. It rights as property of Capwire. Such
contends that there is only a pure questions are allegedly resolvable
question of law since the issue is only before administrative agencies
whether its submarine cable like the Local Board of Assessment
system, which it claims lies in Appeals.
international waters, is taxable.
Capwire holds the position that the
cable system is not subject to tax.
ISSUE:
WHETHER OR NOT submarine wires or cables used for communications

may be taxed like other real estate?
HELD:
YES. Submarine wires or cables used for communications may be

taxed like other real estate.
Submarine or undersea communications cables are akin to electric

transmission lines which this Court has recently declared in Manila Electric
Company v. City Assessor and City Treasurer of Lucena City, as "no longer
exempted from real property tax" and may qualify as "machinery"
subject to real property tax under the Local Government Code. To the
extent that the equipment's location is determinable to be within the taxing
authority's jurisdiction, the Court sees no reason to distinguish between
submarine cables used for communications and aerial or underground wires
or lines used for electric transmission, so that both pieces of property do not
merit a different treatment in the aspect of real property taxation. Both
electric lines and communications cables, in the strictest sense, are not
directly adhered to the soil but pass through posts, relays or landing
stations, but both may be classified under the term "machinery" as real
property under Article 415(5) of the Civil Code for the simple reason that
such pieces of equipment serve the owner's business or tend to meet the
needs of his industry or works that are on real estate. Even objects in or on a
body of water may be classified as such, as "waters" is classified as an
immovable under Article 415(8) of the Code. A classic example is a
boathouse which, 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
floats on waters which is immovable, is considered real property. Besides,
the Court has already held that "it is a familiar phenomenon to see things
classed as real property for purposes of taxation which on general principle
might be considered personal property."
Thus, absent any showing from Capwire of any express grant of

an exemption for its lines and cables from real property taxation,
then this interpretation applies and Capwire's submarine cable may
be held subject to real property tax. The jurisdiction or authority over
such part of the subject submarine cable system lying within
Philippine jurisdiction includes the authority to tax the same, for
taxation is one of the three basic and necessary attributes of sovereignty,
and such authority has been delegated by the national legislature to the
local governments with respect to real property taxation.
Capwire fails to allege or provide any other privilege or exemption

that were granted to it by the legislature after the enactment of the Local
Government Code. Therefore, the presumption stays that it enjoys no such
privilege or exemption. Tax exemptions are strictly construed against the
taxpayer because taxes are considered the lifeblood of the nation.
Petition DENIED.

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Real Property Taxation Cases

G.R. No. 144104.June 29, 2004

LUNG CENTERT OF THE PHILIPPINES, petitioner, vs. QUEZON

Petitioner Lung Center of the Philippines is a non-stock and non-

In 1993, both the land and building of the petitioner were

Hence, this petition.

Whether or not Lung Center is a charitable institution?

Whether or not the real properties of Lung Center are exempt

Contentions of the Parties

Lung Center (LC) Ruling Body/Court

LCs claim for exemption is CBAA affirmed LBAAs ruling

of its hospital operation is to its own charter, the constitution

Petitioner contends that even if it Respondents reiterated its

YES, as held by the Supreme Court, petitioner Lung Center is a

To determine whether an enterprise is a charitable

As a general principle, a charitable institution does not lose its

derives income from paying patients, whether out-patient, or confined

Even as the Supreme Court found that petitioner is, indeed, a

If real property is used for one or more commercial purposes, it

As such, the SC held that portions of the land leased to private

City Assessor of Cebu v. Association of Benevola de

Association of Benevola de Cebu, Inc. (Benevola) is a non-stock,

In the late 1990s, Benevola constructed the CHH Medical Arts

Benevola filed its September 15, 1998 letter-petition with the

On September 25, 1998, Benevola formally filed its appeal with

City Assessor argued that: Benevola contended that:

--CHHMAC was a newly --CHHMAC building is actually,

On February 10, 1999, the LBAA rendered a Decision, declaring

On January 24, 2000, the Central Board of Assessment Appeals

On October 31, 2001, the Court of Appeals rendered the

WHETHER OR NOT THE NEW BUILDING CHHMAC IS AN

CHHMAC is an integral part of CHH.

It is undisputed that the doctors and medical specialists holding

Moreover, the CHHMAC, being hundred meters away from the

Moreover, the exemption in favor of property used exclusively

Verily, being an integral part of CHH, CHHMAC should be under

Charging rentals for the offices used by its accredited

The CHHMAC, with operations being devoted for the benefit of

SEC. 215. Classes of Real Property for Assessment Purposes.For

SEC. 216. Special Classes of Real Property.All lands, buildings,

Mactan Airport Authority vs. Marcos

Petitioner Mactan Cebu International Airport Authority (MCIAA)

However on October 11, 1994, Mr. Eustaquio B. Cesa, Officer-in-

PETITIONERS CONTENTION RESPONDENTS CONTENTION

extend to the levy duly registered under

Issue: Whether or not petitioner is exempt from payment of real

No. Taxation is the rule and exemption is the exception. Thus,

As to tax exemptions/incentives granted to or presently enjoyed by

GENERAL RULE: Tax exemptions or incentives are withdrawn

The last paragraph of Section 234 further qualifies the retention

Since the last paragraph of Section 234 unequivocally withdrew, upon

The Court ruled that the land in question is no longer owned by

This transfer is actually an absolute conveyance of the ownership

Manila International Airport Authority v. Court of

At the instance of MIAA, the OGCC issued Opinion No. 147

MIAA argued that: City of Paraaque contended

Meanwhile, the City of Paraaque posted and published notices

These provisions recognize the basic principle that local

instrumentalities. Moreover, a tax exemption is construed liberally in

MIAA is not a GOCC, but an instrumentality of the government.

The Republic remains the beneficial owner of the properties.

However, portions of the airport lands and buildings that MIAA

Quezon City v. BayanTel Corp., G.R. No. 162015,

CONTENTIONS OF THE PARTIES