Tan vs. Bantegui GR No.

154027 October 24, 2005 FACTS: Gorgonia Bantegui acquired the property subject matter of the controversy sometime in 1954 and rented the same with the spouses Caedo. Her taxes on the subject property were paid but only until 1977. The real property taxes from the year 1978 to 1983 were however not paid. For failure to pay said taxes, the city treasurer of Quezon City sold said property at public auction held on November 21, 1984, to the spouses Capistrano. The Certificate of Sale of Delinquent Property was subsequently issued in their favor. Since the property was not redeemed within the redemption period, title to the same property was consolidated to the Capistranos. It was then later sold to spouses Pereyra who mortgaged the same to the Rural Bank of Imus, Cavite. The property was again sold to spouses Tan who paid for the release of the mortgage. The Capistranos, the Pereyras, and the Tan did not take immediate possession of the property or inform the occupants of their title to the land. In 1990, the Tans, through their lawyer, informed the Caedos of their ownership of the property and ordered them to vacate the property. They were later ejected from the property after an ejectment suit. ISSUE: Was the auction sale valid? HELD: NO. No notice of delinquency or of sale was given either to Bantegui or to her representatives. Sec. 65 of PD 464 requires a notice of the fact to be posted at the main entrance of the city hall and in a public and conspicuous place in each barrio of the city as the case may be. The notice of delinquency shall also be published once a week for three consecutive weeks, in a newspaper of general circulation in the city, if any there be, and announced by a crier at the market place for at least three market days. Sec. 73 of PD 464 requires an advertisement of sale of real property at public auction which shall be made by posting a notice for three consecutive weeks at the main entrance of the city hall in the case of cities and in a public and conspicuous place in barrio or district wherein the property is situated and by announcement at least three market days at the market by crier, and in the discretion of the city treasurer, by publication once a week for three consecutive weeks in a newspaper of general circulation published in the city. A copy of the notice shall be sent either by registered mail or by messenger, or through the barrio captain, to the delinquent taxpayer. In the present case, notices either of delinquency or of sale were not given to the delinquent taxpayer. Those notices are mandatory and failure to issue them invalidates a sale. Because it was clearly in contravention of the requirements under the law and jurisprudence, the subsequent sale of the real property did not make its purchaser the new owner.

LUNG CENTER VS QUEZON CITY Lung Center of the Philippines is a non-stock and non-profit entity. It accepts paying and non-paying patients. It also renders medical services to out-patients, both paying and non-paying. Aside from its income from paying patients, the petitioner receives annual subsidies from the government. Almost one-half of the entire area on the left side of the building along Quezon Avenue is vacant and idle, while a big portion on the right side, at the corner of Quezon Avenue and Elliptical Road, is being leased for commercial purposes to a private enterprise known as the Elliptical Orchids and Garden Center. The Quezon City assessed by the City Assessor of Quezon for real property tax. The petitioner lung center filed a claim for exemption predicated on its claim that it is a charitable institution. But their petition were denied by the Local Board of Assessment Appeals of Quezon City. The QC-LBAAs decision was, likewise, affirmed on appeal by the Central Board of Assessment Appeals of Quezon City. The lower courts contended that they were not a charitable institution and that its real properties were not actually, directly and exclusively used for charitable purposes; hence, it was not entitled to real property tax exemption under the constitution and the law. the respondents contended that the lung center were not able to prove that 100% of its hospital beds were used for indigents and some of the lots were used for commercial. Issue: Is the petitioner a charitable institution? Are the properties of the petitioner exempt from real property taxes? Ruling: The petitioner is a charitable institution. A charitable institution does not lose its character as such and its exemption from taxes simply because it derives income from paying patients. The fact of receiving money from some of the patients does not at all impair the character of the charity, so long as the money thus received is devoted altogether to the charitable object which the institution is intended to further. Hence they are partly exempted. The space leased for commercial purposes on the other hand are not exempted as it was not used actually, directly and exclusively for charitable purposes. 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. The 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 On the other hand, the 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.

G.R. No. 144486. April 13, 2005 RADIO COMMUNICATIONS OF THE PHILIPPINES, INC vs. PROVINCIAL ASSESOR OF SOUTH COTABATO

Facts: R.A. No. 2036 of 1957, as amended by R.A. No. 4054, granted RCPI a 50-year franchise. Thus, Sec. 14 of the amended law, in gist, provides that the grantee shall pay the same taxes as may be required by law. Said tax shall be in lieu of any and all taxes of any kind, nature or description levied, established or collected by any authority whatsoever, municipal, provincial or national, from which taxes the grantee is hereby expressly exempted. On 10 June 1985, the municipal treasurer of Tupi, South Cotabato assessed RCPI real property taxes from 1981 to 1985. The municipal treasurer demanded that RCPI pay P166,810 as real property tax on its radio station building in Barangay Kablon, as well as on its machinery shed, radio relay station tower and its accessories, and generating sets, based on the following tax declarations. RCPI protested the assessment before the Local Board of Assessment Appeals (LBAA') and claimed that all its assessed properties are personal properties and thus exempt from the real property tax. It also pointed out that its franchise exempts RCPI from 'paying any and all taxes of any kind, nature or description in exchange for its payment of tax equal to one and one-half per cent on all gross receipts from the business conducted under its franchise. It further claimed that any deviation from its franchise would violate the nonimpairment of contract clause of the Constitution. Finally, RCPI stated that the value of the properties assessed has depreciated since their acquisition in the 1960s. The Provincial Assessor of South Cotabato opposed RCPI's claims on all points. The Local Board of Assessment Appeals ruled that appellant is ordered to pay the real property taxes, inclusive of all penalties, surcharges and interest accruing as of the date of actual payment, on the properties covered; in which the Central Board of Assessment Appeals affirmed. The Appelate Court ruled that decision of the Central Board of Assessment Appeals is hereby MODIFIED. Petitioner is declared exempt from paying the real property taxes assessed upon its machinery and radio equipment mounted as accessories to its relay tower. The decision assessing taxes upon petitioner's radio station building, machinery shed, and relay station tower is, however, affirmed. Issues: 1. Whether the appellate court erred when it excluded RCPI's tower, relay station building, and machinery shed from tax exemption; 2. Whether the appellate court erred when it did not resolve the issue of nullity of the tax declarations and assessments due to noninclusion of depreciation allowance. Held: Exemption from Real Property Tax First, Congress passed the Local Government Code that withdrew all the tax exemptions existing at the time of its passage including that of RCPI's. Second, Congress enacted the franchise of telecommunications companies, such as Islacom, Bell, Island Country, IslaTel, TeleTech, Major Telecoms, and Smart, with the 'in lieu of all taxes' proviso. Third, Congress passed RA 7925 entitled 'An Act to Promote and Govern the Development of Philippine Telecommunications and the Delivery of Public Telecommunications Services' which, through Section 23, mandated the equality of treatment of service providers in the telecommunications industry. The existing legislative policy is clearly against the revival of the 'in lieu of all taxes' clause in franchises of telecommunications companies. After the VAT on telecommunications companies took effect on January 1, 1996, Congress never again included the 'in lieu of all taxes' clause in any telecommunications franchise it subsequently approved. RCPI cannot also invoke the equality of treatment clause under Section 23 of Republic Act No. 7925. The franchises of the petitioners all expressly declare that the franchisee shall pay the real estate tax, using words similar to Section 14 of RA 2036, as amended. It is an elementary rule in taxation that exemptions are strictly construed against the taxpayer and liberally in favor of the taxing authority. It is the taxpayer's duty to justify the exemption by words too plain to be mistaken and too categorical to be misinterpreted. Exclusion of Depreciation Allowance RCPI contends that the tax declarations and assessments covering its radio relay station tower, radio station building, and machinery shed are void because the assessors did not consider depreciation allowance in their assessments. The Court have examined the

records of this case and found that RCPI raised before the LBAA and the CBAA the nullity of the assessments due to the non-inclusion of depreciation allowance. Therefore, RCPI did not raise this issue for the first time. However, even if the court considers this issue, under the Real Property Tax Code depreciation allowance applies only to machinery and not to real property. The petition is denied and affirmed the decision of the Court of Appeals.

G.R. No. 166651

REPUBLIC vs. CITY OF KIDAPAWAN

FACTS: President Corazon C. Aquino issued Proclamation No. 853 which excluded certain portions of the land embraced in the Mt. Apo National Park and declared the same as geothermal reservation under the administration of the PNOC, now referred to as the MAGRA. Thereafter, PNOC-EDC built a 104-megawatt power plant within the MAGRA which produces electricity through turbines using steam extracted from the MAGRA as fuel. Subsequently, the City Treasurer of Kidapawan, Cotabato notified PNOC-EDC of its tax delinquency after which, he issued a warrant of levy on the 701-hectare MAGRA for failure to pay real property taxes, covering the tax period from 1993-2002. He sent a notice of sale of delinquent real property to PNOC-EDC declaring that delinquent real property will be sold through public auction. PNOC-EDC thus filed a petition for prohibition with prayer for the issuance of a writ of preliminary injunction and/or temporary restraining order which sought to enjoin the respondents from issuing assessments or notice of delinquency and from proceeding with the public auction of the Geothermal Reservation Area. The trial court found that PNOC-EDC is not exempt from paying the real property taxes and that the MAGRA is part of the Mt. Apo National Park which has not been re-classified as alienable agricultural land. Thus, it could not be sold at public auction. However, the trial court ordered that the improvements on the subject land, not being in the nature of public dominion, may be validly levied and sold at public auction to satisfy the payment of realty tax delinquencies. Issue: Is PNOC liable to pay real property taxes? Held: PNOC-EDC is a government owned or controlled corporation conferred by law with corporate powers. Under its charter, no tax exemptions were granted. Even if PNOC-EDC was awarded exemptions in its charter, the same were withdrawn by the LGC. Thus, there is no need to deliberate on whether PNOC-EDC is a taxable entity but on whether it is an entity exempt from paying real property tax. The exemption claimed by PNOC-EDC hinges on Section 234, paragraph (a) of the LGC. The provision exempts from real property taxation properties of the government, provided the beneficial use of the property was not transferred to a taxable person. Conversely, if the beneficial use has been transferred to a taxable entity, such as PNOC-EDC, then the real property owned by the government, which in this case is the MAGRA, is subject to real property tax. In real estate taxation, the unpaid tax attaches to the property and is chargeable against the taxable person who had actual or beneficial use and possession of it regardless of whether or not he is the owner.

It is clear from the provisions of the service contract that PNOC-EDC is the beneficial user of the MAGRA and is liable to pay the real property tax assessments. PNOC-EDC exclusively conducts geothermal operations in the area for commercial utilization. The provisions of the service contract also show that it is the PNOC-EDC which actually utilizes the MAGRA. Actual use refers to the purpose for which the property is principally or predominantly utilized by the person in possession thereof. Anent the second issue, PNOC-EDC avers that the LGC which took effect on January 1, 1992 did not withdraw the exemption provided under Section 6.2, paragraph (a) of the service contract which was executed on March 24, 1992. Thus, the withdrawal of the exemption was only for those previously or presently enjoying the privilege as of January 1, 1992. We hold otherwise. The power to tax and to grant tax exemptions is vested in the Congress and, to a certain extent, in the local legislative bodies. Thus the exemption provided in the service contract cannot be given effect because the DOE, representing the government in the execution of the contract, has no authority to grant the same. The machineries, equipment, buildings and other infrastructures found in MAGRA cannot be levied upon and sold at public auction to satisfy the alleged tax delinquency because the warrant of levy shows that MAGRA is the only delinquent real property subject to tax. However, the land being levied is classified as inalienable. It is owned by the government and thus, cannot be sold at public auction. Likewise, the machineries, equipment and other infrastructures in the MAGRA cannot be levied and sold at public auction because it is not the property that is subject to the tax. The personal liability for the tax delinquency, is generally on whoever is the owner of the real property at the time the tax accrues; where, however, the tax liability is imposed on the beneficial use of the real property such as those owned but leased to private persons or entities by the government, or when the assessment is made on the basis of the actual use thereof, the personal liability is on any person who has such beneficial or actual use at the time of the accrual of the tax. In the case at bar, PNOC-EDC is the beneficial user, however, since respondents cannot avail of the administrative remedy through levy, they can only enforce the collection of real property tax through civil action. If PNOC-EDC was not satisfied with the assessment of its property, it should have appealed to the Local Board of Assessment Appeals within 60 days from receipt of the written notice of assessment. Instead, it waited until the issuance of a warrant of levy before it filed a petition for injunction in the regional trial court, which was not in accordance with the remedies provided in the LGC.

G.R. No. 155591

OLIVARES vs. MARQUEZ

Petitioners alleged that on July 1, 1998, they received a final notice from the Office of the City Treasurer on their real estate tax delinquencies. They protested said notice in a letter dated July 7, 1998, and sought reinvestigation on the grounds that: (1) some of the taxes being collected have already prescribed and may no longer be collected as provided in Section 194 of the Local Government Code of 1991; (2) some properties have been doubly taxed/assessed; (3) some properties being taxed are no longer existent; (4) some properties are exempt from taxation as they are being used exclusively for educational purposes; and (5) some errors are made in the assessment and collection of taxes due on petitioners properties. They wrote another letter onJuly 24, 1998, but respondents failed to act thereon. Thus, petitioners filed an action which sought, among others, the annulment of the assessments and respondents be ordered to act on their protest immediately Respondents filed a motion to dismiss on the grounds that: (1) the trial court has no jurisdiction over tax assessment matters; (2) petitioners failed to comply with the requirements of a tax protest; and (3) the petition states no cause of action. ISSUE: WON the court has jurisdiction over the instant case. HELD: The extraordinary remedies of certiorari, prohibition and mandamus may be resorted to only when there is no other plain, available, speedy and adequate remedy in the course of law. Where administrative remedies are available, petitions for the issuance of these peremptory writs do not lie in order to give the administrative body the opportunity to decide the matter by itself correctly and to prevent unnecessary and premature resort to courts. Republic Act (R.A.) No. 7160, or the Local Government Code of 1991, clearly sets forth the administrative remedies available to a taxpayer or real property owner who is not satisfied with the assessment or reasonableness of the real property tax sought to be collected. Section 252 of R.A. No. 7160 provides for procedure in the protest of real property taxes. Should the taxpayer/real property owner question the excessiveness or reasonableness of the assessment, Section 252 directs that the taxpayer should first pay the tax due before his protest can be entertained. There shall be annotated on the tax receipts the words paid under protest. It is only after the taxpayer has paid the tax due that he may file a protest in writing within thirty days from payment of the tax to the Provincial, City or Municipal Treasurer, who shall decide the protest within sixty days from receipt. In no case is the local treasurer obliged to entertain the protest unless the tax due has been paid. If the local treasurer denies the protest or fails to act upon it within the 60-day period provided for in Section 252, the taxpayer/real property owner may then appeal or directly file a verified petition with the LBAA within sixty days from denial of the protest or receipt of the notice of assessment. And, if the taxpayer is not satisfied with the decision of the LBAA, he may elevate the same to the CBAA, which exercises exclusive jurisdiction to hear and decide all appeals from the decisions, orders and resolutions of the Local Boards involving contested assessments of real properties, claims for tax refund and/or tax credits or overpayments of taxes. An appeal may be taken to the CBAA by filing a notice of appeal within thirty days from receipt thereof. From the CBAA, the dispute may then be taken to the Court of Appeals by filing a verified petition for review under Rule 43 of the Rules of Court. A perusal of the petition before the RTC plainly shows that what is actually being assailed is the correctness of the assessments made by the local assessor of Paraaque on petitioners properties. The allegations in the said petition purportedly questioning the assessors authority to assess and collect the taxes were obviously made in order to justify the filing of the petition with the RTC. In fact, there is nothing in the said petition that supports their claim regarding the assessors alleged lack of authority. Hence, the petition should have been brought, at the very first instance, to the LBAA. Under the doctrine of primacy of administrative remedies, an error in the assessment must be administratively pursued to the exclusion of ordinary courts whose decisions would be void for lack of jurisdiction. But an appeal shall not suspend the collection of the tax assessed without prejudice to a later adjustment pending the outcome of the appeal. Even assuming that the assessors authority is indeed an issue, it must be pointed out that in order for the court a quo to resolve the petition, the issues of the correctness of the tax assessment and collection must also necessarily be dealt with.