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

]

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

SYNOPSIS
In 1968, appellee, a mining company, leased from the Government
placer mining claims (192 hectares) with the right to explore,
develop, mine, extract and dispose of mineral products. The
contract provided that the lessee shall pay real estate tax on all
buildings and improvements built on the leased property but was
silent on the obligation of the lessee to pay realty tax on the
mineral land itself. In 1974, when Presidential Decree 464 (Real
Property Tax Code of 1974) was issued, the provincial Assessor of
Nueva Ecija where the property is located declared and assessed
the leased property in the name of appellee. In September, 1976,
the Province of Nueva Ecija instituted an action for collection of
real property tax on the mineral land in question covering 1970-
1976 in the amount of P38,836.22. Appellee resisted, maintaining
that the mineral land subject of the assessment is owned by the
Government and therefore exempt from real estate tax. After trial,
the lower court dismissed the complaint holding that under the
terms of the lease contract and the provisions of Section 87 of
Commonwealth Act 137, the leased mineral lands were not subject
to the payment of the real estate tax and that Presidential Decree
464 did not change the rule. Hence, this appeal.

The Supreme Court held that under the former Assessment Law,
the basis of realty taxation was ownership or interest tantamount
to ownership so that in the Mining Act then in force leased
mineral land was not subject to real estate tax; but Presidential
Decree 464 changed the basis of real property taxation from
ownership to use and, consequently, from the date of its issuance
in 1974, lessees of mineral lands are liable for payment of real
estate tax.

Appealed decision is modified as regards the tax liability of
defendant-appellee under Presidential Decree 464. The records of
the case are ordered remanded to the trial court for further
proceedings.

SYLLABUS

1. TAXATION; REAL PROPERTY TAX; BASIS OF
TAXABILITY UNDER COMMONWEALTH ACT 470,
OWNERSHIP; CASE AT BAR. When IMC in 1968 obtained
a lease on the mineral land in question, the law governing real
property taxation was the former Assessment Law,
Commonwealth Act 470, and the basis of realty taxation
thereunder was ownership or interest tantamount to ownership. A
mere lessee of mineral land was therefore not liable for the
payment of realty tax thereon. This was recognized in the Mining
Act then in force, Commonwealth Act 137, under which leased
mineral land was not subject to real estate tax (Sec. 87). The lease
contract of IMC was executed in accordance with these laws. The
absence of a stipulation therein making the lessee liable for realty
tax on the leased mineral land was just a recognition of the real
property tax principle then prevailing; it was not a contractual
commitment or guarantee by the Department of Agriculture and
Natural Resources that with respect to the leased mineral land,
IMC would permanently be exempt from real property taxation.
That agency could not have made that commitment because it was
not authorized to do so; and it could not bind the lawmaking body
by stipulating in effect against amendment of the law on real
property taxation.

2. ID.; ID.; BASIS OF TAXABILITY IN PRESIDENTIAL
DECREE 464 CHANGED FROM OWNERSHIP TO ACTUAL
USE; LESSEE SUBJECT TO REAL ESTATE TAX IN CASE
AT BAR. In 1974, a new Real Property Tax Code came into
being when Presidential Decree 464 was issued. It changed the
basis of real property taxation. It adopted the policy of taxing real
property on the basis of actual use, even if the user is not the
owner (Sections 3 (a) and 19 of PD 464). It is true that Presidential
Decree 464 recognizes and respects real property tax exemption
"under other laws" and one such law, with respect to mineral land,
is Presidential Decree 463 (Section 53), the Mineral Resources
Development Decree of 1974. It does not appear however that
IMC was entitled to tax exemption, including exemption from real
property tax, under Section 53 of Presidential Decree 463 during
the period here in question.

D E C I S I O N

PLANA, J.:

This is an appeal from the decision of the Court of First Instance
of Nueva Ecija, Branch VIII, in Civil Case No. C-4 for collection
of real property tax, which has been certified to this Court by the
Court of Appeals as a case involving purely a question of law. The
legal issue is whether defendant-appellee Imperial Mining
Company, Inc. (IMC), lessee of some parcels of mineral land
(placer mining claims) in Carranglan, Nueva Ecija, is liable for real
property tax thereon, although the said mineral land forms part of
the public domain.

The antecedent facts are simple. In 1968, IMC leased from the
Government thru the Department of Agriculture and Natural
Resources placers mining claims (192 hectares) with the right to
explore, develop, mine, extract and dispose of mineral products. In
the lease contract, it was stipulated that "the Lessee shall pay real
estate tax on all buildings and other improvements built on the
land leased." The contract however was silent on the obligation of
the lessee to pay realty tax on the mineral land itself, as
distinguished from the improvements thereon.

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

In September, 1976, the Province of Nueva Ecija instituted the
instant suit for the collection of real property tax on the mineral
land in question covering 1970-1976 in the amount of P38,836.22.
The defendant resisted, maintaining that the mineral land subject
of the assessment was owned by the Government and therefore
exempt from real estate tax. After trial, the Court of First Instance
dismissed the complaint in reliance upon the terms of the lease
contract and the provisions of Section 87 of the old Mining Act
(Commonwealth Act 137) which did not subject leased mineral
lands to the payment of real estate tax. The trial court observed
that the Real Property Tax Code of 1974 (Presidential Decree 464)
which took effect on June 1, 1974 did not change the
rule.cralawnad

Hence, this appeal.

When IMC in 1968 obtained a lease on the mineral land in
question, the law governing real property taxation was the former
Assessment Law, Commonwealth Act 470, and the basis of realty
taxation thereunder was ownership or interest tantamount to
ownership. A mere lessee of mineral land was therefore not liable
for the payment of realty tax thereon. This was recognized in the
Mining Act then in force, Commonwealth Act 137, under which
leased mineral land was not subject to real estate tax. (Sec. 87.).
The lease contract of IMC was executed in accordance with these
laws. The absence of a stipulation therein making the lessee liable
for realty tax on the leased mineral land was just a recognition of
the real property tax principle then prevailing; it was not a
contractual commitment or guarantee by the Department of
Agriculture and Natural Resources that with respect to the leased
mineral land, IMC would permanently be exempt from real
property taxation. That agency could not have made that
commitment because it was not authorized to do so; and it could
not bind the lawmaking body by stipulating in effect against
amendment of the law on real property taxation.

In 1974, a new Real Property Tax Code came into being when
Presidential Decree 464 was issued. It changed the basis of real
property taxation. It adopted the policy of taxing real property on
the basis of actual use, even if the user is not the owner.

"Actual use shall refer to the purpose for which the property is
principally or predominantly utilized by the person in possession
of the property." [Sec. 3(a).]

"Actual Use of Real Property as Basis for Assessment. Real
property shall be assessed on the basis of its actual use regardless
of where located and whoever uses it." (Section 19. Emphasis
supplied.)

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

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

"a) Real property owned by the Republic of the Philippines or any
of its political subdivisions and any government-owned
corporation so exempt by its charter: Provided, however, That this
exemption shall not apply to real property of the abovenamed
entities the beneficial use of which has been granted, for
consideration or otherwise, to a taxable person.
x x x


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

Incidentally, Presidential Decree 939 was subsequently enacted
exempting from real property tax "pasture and/or grazing lands
acquired by grant, purchase or lease from the public domain,
actually used for livestock production, for a period of five years. . .
."cralaw virtua1aw library

The foregoing exemptions make it very clear that leased lands of
the public domain would otherwise be subject to real property tax;
if that were not so, there would have been no need to specifically
exempt some of them from real property tax.chanrobles lawlibrary
:
Presidential Decree 464 also prescribes the classification of real
property for assessment purposes, specifically including mineral
land: "For purposes of assessment, real property shall be classified
as residential, agricultural, commercial or industrial and also as
mineral in the case of lands." (Section 18.) And for purposes of
real property taxation, the assessment levels to be applied as
regards mineral lands are laid down:jgc:chanrobles.com.ph

"Mineral Lands For purposes of taxation, mineral lands not
covered by lease shall be appraised at fifty per cent of their market
value to be determined by the Secretary of Finance upon
consultation with the Director of Mines; Provided, however, that
mineral lands covered by leases shall be declared for taxation
purposes either by the owner of the land or lessee and the
assessment level thereof shall be maintained at the current level of
fifty per cent." [Sec. 20 (b). Emphasis supplied.]

It is true that Presidential Decree 464 recognizes and respects real
property tax exemption "under other laws", and one such law, with
respect to mineral land, is Presidential Decree 463, the Mineral
Resources Development Decree of 1974, which
provides:jgc:chanrobles.com.ph

"SEC. 53. Tax Exemptions. Machineries, equipment, tools for
production, plants to convert mineral ores into saleable form,
spare parts, supplies, materials, accessories, explosives, chemicals
and transportation and communication facilities imported by and
for the use of new mines and old mines which resume operation,
when certified as such by the Secretary (of Natural Resources)
upon recommendation of the Director (of Mines), are exempt
from the payment of customs duties and all taxes except income
tax for a period starting from the first date of actual commercial
production of saleable mineral products."cralaw virtua1aw library
x x x


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

It does not appear however that IMC was entitled to tax
exemption, including exemption from real property tax, under
Section 53 of Presidential Decree 463 during the period here in
question.

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

"Date of Effectivity of Assessment or Reassessment. All
assessment or reassessment made after the first day of January of
any year shall take effect on the first day of January of the
succeeding year."cralaw virtua1aw library

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

SO ORDERED.


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

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

ALEJANDRO B. TY AND MVR PICTURE TUBE INC.,
Petitioners, v. THE HON. AURELIO C. TRAMPE, in his
capacity as Judge of the Regional Trial Court of Pasig, Metro
Manila. THE HON. SECRETARY OF FINANCE, THE
MUNICIPAL ASSESSOR OF PASIG AND THE
MUNICIPAL TREASURER OF PASIG, Respondents.

D E C I S I O N

PANGANIBAN, J.:

ARE THE INCREASED REAL ESTATE TAXES imposed by
and being collected in the Municipality (now City) of Pasig.
effective from the year 1994, valid and legal? This is the question
brought before this Court for resolution.

The Parties

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. 1

Respondent Aurelio C. Trampe is being sued in his capacity as
presiding judge of Branch 163, Regional Trial Court of the
National Capital Judicial Region. sitting in Pasig, whose Decision
dated 14 July 1994 and Order dated 30 September 1994 in Special
Civil Action No. 629 (entitled "Alejandro B. Ty and MVR Picture
Tube. Inc. v. The Hon. Secretary of Finance, Et. Al.") are sought
to be set aside. 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. 2

The Antecedent Facts

On 06 January 1994, respondent Assessor sent a notice of
assessment respecting certain real properties of petitioners located
in Pasig. Metro Manila in a letter dated 18 March 1994, petitioners
through counsel "request(ed) the Municipal Assessor to reconsider
the subject assessments." 3

Not satisfied, petitioners on 29 March 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. In a
Decision 4 dated 14 July 1994, respondent Judge denied the
petition "for lack of merit" in the following
disposition:jgc:chanrobles.com.ph

"WHEREFORE, foregoing premises considered, petitioners
prayer to declare unconstitutional the schedule of market values as
prepared by the Municipal Assessor of Pasig, Metro Manila, and to
enjoin permanently the Municipal Treasurer of Pasig, Metro
Manila. from collecting the real property taxes based thereof (sic)
is hereby DENIED for lack of merit. Cost (sic) de oficio."cralaw
virtua1aw library

Subsequently, petitioners Motion for Reconsideration was also
denied by respondent Judge in an Order 5 dated 30 September
1994.

Rebuffed by said Decision and Order, petitioners filed this present
Petition for Review directly before this Court, raising pure
questions of law and assigning the following
errors:jgc:chanrobles.com.ph

"The Court a quo gravely erred in holding that Presidential Decree
No. 921 was expressly repealed by R.A. 7160 and that said
presidential decree including its Implementing Rules (P.D. 464)
went down to the statutes graveyard together with the other
decision(s) of the Supreme Court affecting the same.

"The Court a quo while holding that the new tax assessments have
tremendously increased ranging from 418.8% to 570%, gravely
erred in blaming petitioners for their failure to exhaust
administrative remedies provided for by law.

"The Court a quo blatantly erred in not declaring the confiscatory
and oppressive nature of the assessments as illegal, void ab initio
and unconstitutional constituting a deprivation of property without
due process of law." 6

In a resolution dated 21 November 1994, this Court, without
giving due course to the petition, required respondents to
comment thereon. Respondents Municipal Treasurer and
Municipal Assessor, through counsel, filed their Comment on 19
December 1994, and respondent Secretary of Finance, through the
Solicitor General, submitted his on 11 May 1995. Petitioners filed
their Reply to the Comment of respondent Assessor and Treasurer
06 January 1995, and their Reply to that of the respondent
Secretary on 18 May 1995. After careful deliberation on the above
pleadings, the Court resolved to give due course to the petition,
and, inasmuch as the issues are relatively simple, the Court
dispensed with requiring the parties to submit further memoranda
and instead decided to consider the respondents respective
comments as their answers and memoranda. Thus the case is now
considered submitted for resolution.
The Issues


The issues brought by the parties for decision by this Court
are:chanrob1es virtual 1aw library

1. Whether Republic Act No. 7160, otherwise known as the Local
Government Code of 1991, repealed the provisions of Presidential
Decree No. 921;

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

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

In disposing of the above issues against petitioners, the court a
quo ruled that the schedule of market values and the assessments
based thereon prepared solely by respondent assessor are valid and
legal, they having been prepared in accordance with the provisions
of the Local Government Code of 1991 (R.A. 7160). It held also
that said Code had effectively repealed the previous law on the
matter, P.D. 921, which required, in the preparation of said
schedule, joint action by all the city and municipal assessors in the
Metropolitan Manila area. The lower court also faulted petitioners
with failure to exhaust administrative remedies provided under
Sections 226 and 252 of R.A. 7160. Finally, it found the questioned
assessments consistent with the tremendously increased . . . price
of real estate anywhere in the country." 7

Stated the court:chanrob1es virtual 1aw library

This Court is inclined to agree with the view of defendants that
R.A. 7160 in its repealing clause provide (sic) that Presidential
Decree Nos. . . . 464 . . . are hereby repealed and rendered of no
force and effect. Hence said presidential decrees including their
implementing rules went down to the statutes graveyard together
with the decisions of the Supreme Court on cases effecting (sic)
the same.

"This Court is also in accord with respondents (sic) view that
petitioners failed to avail of either Section 226 of R.A. 7160, that is
by appealing the assessment of their properties to the Board of
Assessment Appeal within sixty (60) days from the date of receipt
of the written Notice of Assessment, and if it is true that petitioner
(sic) as alleged in their pleadings was not afforded the opportunity
to appeal to the board of assessment appeal, then they could have
availed of the provisions of Section 252, of the same R.A. 7160 by
paying the real estate tax under protest. Because of petitioners (sic)
failure to avail of either Sections 226 or 252 of R.A. 7160, they
failed to exhaust administratives (sic) remedies provided for by law
before bringing the case to Court. (Buayan Cattle Co., Inc. v.
Quintillan 128 SCRA 276) Therefore the filing of this case before
this Court is premature, the same not falling under the exception
because the issue involved is not a question of law but of fact.
(Valmonte v. Belmonte. Jr., 170 SCRA 256)

"Petitioners also alleged that the New Tax Assessments are not
only oppressive and confiscatory but also destructive in view of
the tremendous increase in its valuation, from P855,360.00 to
P4,121, 280.00 a marked increase of 418.8% of one of its
properties, while the other, from P857,600.00 to P4,374,410.00, an
increased (sic) of 510%. This Court agree (sic) with petitioners (sic)
observation, but the reality (sic) the price of real property
anywhere in the country tremendously increased. This is shown in
the Real Estate Monitor of Econotic Incorporated (copy attached
with the memorandum of respondents). For example real
properties in Pasig in 1991 located at the Ortigas Commercial
Complex command (sic) a price of P42,000.00 per square meter
which price is supported by a case filed before this Court (civil
case no. 64506, Jesus Fajardo, Et. Al. v. Ortigas and Co.) for
Recovery (sic) of agents (sic) commission. The property subject of
the sale which was also located at the Ortigas Commercial
Complex at Pasig, Metro Manila was sold to a Taiwanese at
P42,000.00 per square meter. It is therefore not surprising that the
assessment of real properties in Pasig increased tremendously. Had
petitioners first exhausted administrative remedies they would have
realized the fact that prices of real estate has (sic) tremendously
increased and would have known the reason/reasons why." 8

In its Order dated 30 September 1994 denying the Motion for
Reconsideration, the court a quo ruled:chanrob1es virtual 1aw
library

This Court despite petitioners exhaustive and thorough research
and discussion of the point in issue, is still inclined to sustain the
view that P.D. 921 was impliedly repealed by R.A. 7160. P.D. 921
to the mind of this Court is an implementing law of P.D. 464,
Sections 3, 6, 9, 12 and 13 of said P.D. provide how certain
provisions of PD. 464 shall be implemented. Since P.D. 464 was
expressly repealed by R.A. 7160, P.D. 921 must necessarily be
considered repealed, otherwise, what should Sections 3, 6, 9, 12
and 13 of P.D. 921 implement? And, had the law makers intended
to have said P.D. 921 remain valid and enforceable they would
have provided so in R.A. 7160. Since there is none, P.D. 921 must
be considered repealed." 9

Re: The First Issue Repeal of P.D. 921?

To resolve the first issue, it is necessary to revisit the following
provisions of law:chanrob1es virtual 1aw library

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

"SECTION 15. Preparation of Schedule of Values. Before any
general revision of property assessments is made, as provided in
this Code, there shall be prepared for the province or city a
Schedule of Market Value for the different classes of real property
therein situated in such form and detail as shall be prescribed by
the Secretary of Finance.

"Said schedule, together with an abstract of the data (on) which it
is based, shall be submitted to the Secretary of Finance for review
not later than the thirty-first day of December immediately
preceding the calendar year the general revision of assessments
shall be undertaken. The Secretary of Finance shall have ninety
days from the date of receipt within which to review said schedule
to determine whether it conforms with the provisions of this
Code."cralaw virtua1aw library

2. Subsequently, on 12 April 1976, P.D. 921 was promulgated,
which in Section 9 thereof, states:jgc:chanrobles.com.ph

"SECTION 9. Preparation of Schedule of Values for Real
Property within the Metropolitan Area. The Schedule of Values
that will serve as the basis for the appraisal and assessment for
taxation purposes of real properties located within the
Metropolitan Area shall be prepared jointly by the City Assessors
of the Districts created under Section one hereof, with the City
Assessor of Manila acting as Chairman, in accordance with the
pertinent provisions of Presidential Decree No. 464, as amended,
otherwise known as the Real Property Tax Code, and the
implementing rules and regulations thereof issued by the Secretary
of Finance."cralaw virtua1aw library

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

"SECTION 1. Division of Metropolitan Manila into Local
Treasury and Assessment Districts. For purposes of effective
fiscal management, Metropolitan Manila is hereby divided into the
following Local Treasury and Assessment Districts:chanrob1es
virtual 1aw library

First District Manila

Second District Quezon City, Pasig, Marikina,

Mandaluyong and San Juan

Third District Caloocan City, Malabon, Navotas

and Valenzuela

Fourth District Pasay City, Makati, Paranaque,

Muntinlupa, Las Pinas, Pateros and

Taguig

"Manila, Quezon City, Caloocan City and Pasay City shall be the
respective Centers of the aforesaid Treasury and Assessment
Districts."cralaw virtua1aw library

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

"SECTION 212. Preparation of Schedule of Fair Market Values.
Before any general revision of property assessment is made
pursuant to the provisions of this Title, there shall be prepared a
schedule of fair market values by the provincial. city and the
municipal assessors of the municipalities within the Metropolitan
Manila Area for the different classes of real property situated in
their respective local government units for enactment by ordinance
of the sanggunian concerned. The schedule of fair market values
shall be published in a newspaper of general circulation in the
province, city or municipality concerned, or in the absence thereof,
shall be posted in the provincial capitol city or municipal hall and
in two other conspicuous public place therein." cralawnad

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

"SECTION 534. Repealing Clause.

(a) . . .

(b) . . .

(c) . . .; and Presidential Decree Nos. 381, 436, 464, 477, 626,
632,752, and 1136 are hereby repealed and rendered of no force
and effect.
x x x


(f) All general and special laws, acts, city charter, decrees, executive
orders, proclamations and administrative regulations, or part or
parts thereof which are inconsistent with any of the provisions of
this Code are hereby repealed or modified accordingly." (Emphasis
supplied)

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

Petitioners contend that, contrary to the aforequoted Decision of
the lower court. "whether the assessment is made before or after
the effectivity of R.A. 7160, the observance of, and compliance
with, the explicit requirement of P.D. 921 is strict and mandatory
either" because P.D. 921 was not impliedly repealed by R.A. 7160
and is therefore still the applicable statute, or because the Supreme
Court, in three related cases 10 promulgated on 16 December 1993
after the Local Government Code of 1991 already took effect
ruled that a schedule of market values and the corresponding as
assessments based thereon "prepared solely by the city assessor
. . . failed to comply with the explicit requirement (of collegial and
joint action by all the assessors in the Metropolitan Manila area
under P.D. 921) . . . and are on that account illegal and
void."cralaw virtua1aw library

On the other hand, respondents aver that Section 9 of P.D. 921
and Section 212 of R.A. 7160 are clearly and unequivocally
incompatible because they dwell on the same subject matter,
namely, the preparation of a schedule of values for real property
within the Metropolitan Manila Area. Under P.D. 921, the
schedule shall be prepared jointly by the city assessors of the
District, while, under R.A. 7160, such schedule shall be prepared
"by the provincial, city and municipal assessors of the
municipalities within the Metropolitan Manila area . . .."
Furthermore, they claim that "Section 9 (of P.D. 921) merely
supplement(ed) Section 15 of P.D. 464 in so far as the preparation
of the schedule of values in Metro Manila (is concerned)." Thus,
"with the express repeal of P.D. 464 . . . P.D. 921 . . . can not
therefore exist independently on its own." They also argue that
although the aforecited Supreme Court decision was promulgated
after R.A. 7160 took effect, "the assessment of the Municipal
Assessors in those three (3) cited cases were assessed in 1990 prior
to the effectivity of the Code." Hence, the doctrine in said cases
cannot be applied to those prepared in 1994 under R.A. 7160.

We rule, for Petitioners.

R.A. 7160 has a repealing provision (Section 534) and, if the
intention of the legislature was to abrogate P.D. 921, it would have
included it in such repealing clause, as it did in expressly rendering
of no force and effect several other presidential decrees. Hence,
any repeal or modification of P.D. 921 can only be possible under
par. (f) of said Section 534, as follows:jgc:chanrobles.com.ph

"(f) All general and special laws, acts, city charter, decrees,
executive orders, proclamations and administrative regulations,
part or parts thereof which are inconsistent with any of the
provisions of the Code are hereby repealed or modified
accordingly."cralaw virtua1aw library

The foregoing partakes of the nature of a general repealing
provision. It is a basic rule of statutory construction that repeals by
implication are not favored. An implied repeal will not be allowed
unless it is convincingly and unambiguously demonstrated that the
two laws are so clearly repugnant and patently inconsistent that
they cannot co-exist. 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.

In Villegas v. Subido 11 the issue raised before the Court was
whether the Decentralization Act had the effect of repealing what
was specifically ordained in the Charter of the City of Manila.
Under the Charter, it was provided in its Section 22 that "The
President of the Philippines with the consent of the Commission
on Appointments shall appoint . . . the City Treasurer and his
Assistant." Under the Decentralization Act, it was provided that
"All other employees, except teachers paid out of provincial, city
or municipal general funds and other local funds shall . . . be
appointed by the provincial governor, city or municipal mayor
upon recommendation of the head of office concerned."cralaw
virtua1aw library

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

. . . It has been the constant holding of this Court that repeals by
implication are not favored and will not be so declared unless it be
manifest that the legislature so intended. Such a doctrine goes as
far back as United States v. Reyes, a 1908 decision (10 Phil. 423.
Cf. U.S. v. Academia, 10 Phil. 431 [1908]). It is necessary then
before such a repeal is deemed to exist that it be shown that the
statutes or statutory provisions deal with the same subject matter
and that the latter be inconsistent with the former. (Cf. Calderon
V. Provincia del Santisimo Rosano, 28 Phil. 164 [1914]). There
must be a showing of repugnancy clear and convincing in
character. The language used in the latter statute must be such as
to render it irreconcilable with what has been formerly enacted. An
inconsistency that falls short of that standard does not suffice.
What is needed is a manifest indication of the legislative purpose
to repeal. [Citing numerous cases]

"More specifically, a subsequent statute, general in character as to
its terms and application, is not to be construed as repealing a
special or specific enactment. unless the legislative purpose to do
so is manifest. This is so even if the provisions of the latter are
sufficiently comprehensive to include what was set forth in the
special act. This principle has likewise been consistently applied in
decisions of this Court from Manila Railroad Co. v. Rafferty (40
Phil. 224), decided as far back as 1919. A citation from an opinion
of Justice Tuason is illuminating. Thus: From another angle the
presumption against repeal is stronger. A special law is not
regarded as having been amended or repealed by a general law
unless the intent to repeal or alter is manifest. Generalia specialibus
non derogant. And this is true although the terms of the general
act are broad enough to include the matter in the special statute. . .
. At any rate, in the event harmony between provisions of this type
in the same law or in two laws is impossible, the specific provision
controls unless the statute, considered in its entirety, indicates a
contrary intention upon the part of the legislature. . . . A general
law is one which embraces a class of subjects or places and does
not omit any subject or place naturally belonging to such class,
while a special act is one which relates to particular persons or
things of a class. (Citing Valera v. Tuason, 80 Phil. 823, 827-828
[1948])"

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

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

"There are two categories of repeal by implication. The first is
where provisions in the two acts on the same subject matter are in
an irreconcilable conflict, the later act to the extent of the conflict
constitutes an implied repeal of the earlier one. The second is if the
later act covers the whole subject of the earlier one and is clearly
intended as a substitute, it will operate to repeal the earlier law.

"Implied repeal by irreconcilable inconsistency take place when the
two statutes cover the same subject matter; they are so clearly
inconsistent and incompatible with each other that they cannot be
reconciled or harmonized; and both cannot be given effect, that is
that one law cannot be enforced without nullifying the
other."cralaw virtua1aw library

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

"Courts of justice, when confronted with apparently conflicting
statutes, should endeavor to reconcile the same instead of
declaring outright the invalidity of one as against the other. Such
alacrity should be avoided. The wise policy is for the judge to
harmonize them if this is possible, bearing in mind that they are
equally the handiwork of the same legislature, and so give effect to
both while at the same time also according due respect to a
coordinate department of the government. It is this policy the
Court will apply in arriving at the interpretation of the laws above-
cited and the conclusions that should follow therefrom."cralaw
virtua1aw library

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

Presidential Decree No. 921 was promulgated on 12 April 1976,
with the aim of, inter alia, evolving "a progressive revenue raising
program that will not unduly burden the tax payers. . ." 15 in
Metropolitan Manila. Hence, it provided for the "administration of
local financial services in Metropolitan Manila" only, and for this
purpose, divided the area into four Local Treasury and Assessment
Districts, regulated the duties and functions of the treasurers and
assessors in the cities and municipalities in said area and spelled
out the process of assessing, imposing and distributing the
proceeds of real estate taxes therein.

Upon the other hand, Republic Act No. 7160, otherwise "known
and cited as the Local Government Code of 1991" 16 took effect
on 01 January 1992. 17 It declared "genuine and meaningful local
autonomy" as a policy of the state. Such policy was meant to
decentralize government" powers, authority, responsibilities and
resources" from the national government to the local government
units "to enable them to attain their fullest development as self-
reliant communities and make them more effective partners in the
attainment of national goals." 18 In the formulation and
implementation of policies and measures on local autonomy,"
(l)ocal government units may group themselves, consolidate or
coordinate their efforts, services, and resources for purposes
commonly beneficial to them." 19

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

Coming down to specifics, Sec. 9 of P.D. 921 requires that the
schedule of values of real properties in the Metropolitan Manila
area shall be prepared jointly by the city assessors in the districts
created therein; while Sec. 212 of R.A. 7160 states that the
schedule shall be prepared "by the provincial, city and municipal
assessors of the municipalities within the Metropolitan Manila
Area for the different classes of real property situated in their
respective local government units for enactment by ordinance of
the sanggunian concerned. . . ."cralaw virtua1aw library

It is obvious that harmony in these provisions is not only possible,
but in fact desirable, necessary and consistent with the legislative
intent and policy. By reading together and harmonizing these two
provisions, we arrive at the following steps in the preparation of
the said schedule, as follows:chanrob1es virtual 1aw library

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

2. Then, the Local Treasury and Assessment District shall meet,
per Sec. 9, P.D. 921. In the instant case, that district shall be
composed of the assessors in Quezon City, Pasig, Marikina,
Mandaluyong and San Juan, pursuant to Sec. 1 of said P.D. In this
meeting, the different assessors shall compare their individual
assessments, discuss and thereafter jointly agree and produce a
schedule of values for their district, taking into account the
preamble of said P.D. that they should evolve "a progressive
revenue raising program that will not unduly burden the taxpayers"
.

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

By this harmonization, both the preamble of P.D. 921 decreeing
that the real estate taxes shall "not unduly burden the taxpayer"
and the "operative principle of decentralization" provided under
Sec. 3, R.A. 7160 encouraging local government units to
"consolidate or coordinate their efforts, services and resources"
shall be fulfilled. Indeed, the essence of joint local action for
common good so cherished in the Local Government Code finds
concrete expression in this harmonization.chanrobles law library

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

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

Re: The Second Issue Exhaustion of Administrative Remedies

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

"SECTION 226. Local Board of Assessment Appeals. Any
owner or person having legal interest in the property who is not
satisfied with the action of the provincial, city or municipal
assessor in the assessment of his property may, within sixty (60)
days from the date of receipt of the written notice of assessment,
appeal to the Board of Assessment Appeals of the province or city
by filing a petition under oath in the form prescribed for the
purpose, together with copies of the tax declarations and such
affidavits or documents submitted in support of the appeal.

"SECTION 252. Payment under Protest. (a) No protest shall
be entertained unless the taxpayer first pays the tax. There shall be
annotated on the tax receipts the words "paid under protest." The
protest in writing must be filed within thirty (30) days from
payment of the tax to the provincial, city treasurer or municipal
treasurer, in the case of a municipality within Metropolitan Manila
Area, who shall decide the protest within sixty (60) days from
receipt.

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

(c) In the event that the protest is finally decided in favor of the
taxpayer, the amount or portion of the tax protested shall be
refunded to the protestant, or applied as tax credit against his
existing or future tax liability.

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

Respondents argue that this case is premature because petitioners
neither appealed the questioned assessments on their properties to
the Board of Assessment Appeal, pursuant to Sec. 226 nor paid
the taxes under protest, per Sec. 252.

We do not agree. Although as a rule, administrative remedies must
first be exhausted before resort to judicial action can prosper, there
is a well-settled exception in cases where the controversy does not
involve questions of fact but only of law. 20 In the present case,
the parties, even during the proceedings in the lower court on 11
April 1994, already agreed "that the issues in the petition are legal"
21 , and thus, no evidence was presented in said court.

In laying down the powers of the Local Board of Assessment
Appeals, R.A. 7160 provides in Sec. 229 (b) that" (t)he proceedings
of the Board shall be conducted solely for the purpose of
ascertaining the facts . . .." It follows that appeals to this Board
may be fruitful only where questions of fact are involved. Again,
the protest contemplated under Sec. 252 of R.A. 7160 is needed
where there is a question as to the reasonableness of the amount
assessed. Hence, if a taxpayer disputes the reasonableness of an
increase in a real estate tax assessment, he is required to "first pay
the tax" under protest. Otherwise, the city or municipal treasurer
will not act on his protest. In the case at bench however, the
petitioners are questioning the very authority and power of the
assessor, acting solely and independently, to impose the assessment
and of the treasurer to collect the tax. These are not questions
merely of amounts of the increase in the tax but attacks on the
very validity of any increase.

Finally, it will be noted that in the consolidated cases of
Mathay/Javier/Puyat-Reyes cited earlier, the Supreme Court
referred the petitions (which similarly questioned the schedules of
market values prepared solely by the respective assessors in the
local government units concerned) to the Board of Assessment
Appeal, not for the latter to exercise its appellate jurisdiction, but
rather to act only as a fact-finding commission. Said the Court 22
thru Chief Justice Andres R. Narvasa:jgc:chanrobles.com.ph

"On November 5, 1991, the Court issued a Resolution clarifying
its earlier one of May 16, 1991. It pointed out that the authority of
the Central Board of Assessment Appeals to take cognizance of
the factual issues raised in these two cases by virtue of the referral
by this Court in the exercise of its extraordinary or certiorari
jurisdiction should not be confused with its appellate jurisdiction
over appealed assessment cases under Section 36 of P.D. 464
otherwise known as the Real Property Tax Code. The Board is not
acting in its appellate jurisdiction in the instant cases, but rather, it
is acting as a Court-appointed fact-finding commission to assist the
Court in resolving the factual issues raised in G.R. Nos. 97618 and
97760."

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

Re: The Third Issue Constitutionality of the Assessments

Having already definitively disposed of the case through the
resolution of the foregoing two issues, we find no more need to
pass upon the third. It is axiomatic that the constitutionality of a
law, regulation, ordinance or act will not be resolved by courts if
the controversy can be, as in this case it has been, settled on other
grounds. In the recent case of Macasiano v. National Housing
Authority, 23 this Court declared:jgc:chanrobles.com.ph

"It is a rule firmly entrenched in our jurisprudence that the
constitutionality of an act of the legislature will not be determined
by the courts unless that question is properly raised and presented
in appropriate cases and is necessary to a determination of the
case, i.e., the issue of constitutionality must be the very lis mota
presented. To reiterate, the essential requisites for a successful
judicial inquiry into the constitutionality of a law are: (a) the
existence of an actual case or controversy involving a conflict of
legal rights susceptible of judicial determination, (b) the
constitutional question must be raised by a proper party, (c) the
constitutional question must be raised at the earliest opportunity,
and (d) the resolution of the constitutional question must be
necessary to the decision of the case." (Emphasis supplied)

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

"The Court does not ordinarily pass upon constitutional questions
unless these questions are properly raised in appropriate cases and
their resolution is necessary for the determination of the case
(People V. Vera. 65 Phil. 56 [1937]). The Court will not pass upon
a constitutional question although properly presented by the
record if the case can be disposed of on some other found such as
the application of a statute or general law (Siler v. Louisville and
Nashville R. Co., 213 U.S. 175, [1909], Railroad Commission v.
Pullman Co., 312 U.S. 496 [1941])." 25 (Emphasis supplied)

In view of the foregoing ruling, the question may be asked: what
happens to real estate tax payments already made prior to its
promulgation and finality? Under the law, 26 "the taxpayer may file
a written claim for refund or credit for taxes and interests . .
.."cralaw virtua1aw library

Finally, this Tribunal would be remiss in its duty as guardian of the
judicial branch if we let pass unnoticed the ease by which the
respondent Judge consigned "to the statutes graveyard" a
legislative enactment "together with the (three) decisions of the
Supreme Court" promulgated jointly and unanimously en banc. An
elementary regard for the sacredness of laws and the stability of
judicial doctrines laid down by superior authority should have
constrained him to be more circumspect in rendering his decision
and to spell out carefully and precisely the reasons for his decision
to invalidate such acts, instead of imperiously decreeing an implied
repeal. He knows or should have known the legal precedents
against implied repeals. Respondent Judge, in his decision, did not
even make an attempt to try to reconcile or harmonize the laws
involved. Instead, he just unceremoniously swept them and this
Courts decisions into the dustbin of "judicial history." In his
future acts and decisions, he is admonished to be more judicious in
setting aside established laws, doctrines and precedents.

WHEREFORE, judgment is hereby rendered REVERSING and
SETTING ASIDE the questioned Decision and Order of
respondent Judge, DECLARING as null and void the questioned
Schedule of Market Values for properties in Pasig City prepared by
respondent Assessor, as well as the corresponding assessments and
real estate tax increases based thereon; and ENJOINING the
respondent Treasurer from collecting the real estate tax increases
made on the basis of said Schedule and assessments. No costs.

SO ORDERED.

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

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

ESTATE OF THE LATE MERCEDES JACOB represented
by MERCEDITA JACOB, DONATO JACOB JR., ERENEO
JACOB and LILIAN JACOB QUINTO, Petitioners, v.
COURT OF APPEALS, SPOUSES RAMON R. TUGBANG
and VIRGINIA S. TUGBANG, REGISTER OF DEEDS OF
QUEZON CITY and CITY TREASURER OF QUEZON
CITY, Respondents.

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

CITY TREASURER OF QUEZON CITY, Petitioner, v.
COURT OF APPEALS and BERNARDITA C.
TOLENTINO, Respondents.

D E C I S I O N

BELLOSILLO, J.:

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

G.R. No. 120435

Petitioners allege that in 1981 Mercedes Jacob, registered owner of
the land subject matter hereof and covered by Transfer Certificate
of Title No. 39178, 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 Treasurers Office as he had no written authorization
from her. Luciano Jr. and his wife Lilian Jacob Quinto attempted
several times to pay but they were as many times refused.

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.

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

On 30 September 1985 Virginia filed a petition for the cancellation
of TCT No. 39178 and the issuance of a new certificate of title in
her name alleging in par. 4 of her petition that

. . . (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, 1

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

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

. . . in reality a petition to annul and set aside the Decision
rendered on March 13, 1994 by the Regional Trial Court, Quezon
City, Branch 106, canceling petitioner Mercedes Jacobs TCT No.
39178 . . . consolidating title to the property covered thereby in
herein private respondent Virginia S. Tugbang, and ordering the
issuance of a new title in her favor. 2

On 12 October 1994 petitioners filed with us a petition for review
on certiorari under Rule 45 of the Rules of Court which we certified
on 9 November 1994 to the Court of Appeals. The appellate court
however dismissed the petition for lack of merit. Thus this petition
for reversal of the decision of the Court of Appeals and for
judgment directing the RTC Br. 82, Quezon City, to proceed
with the trial of Civil Case No. Q-93-15976.

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

A cursory examination of the petition readily shows that it is an
action for reconveyance. The petition states that "petitioners are
not after the annulment of the judgment of the Regional Trial
Court, Quezon City, Branch 106. The remedy of petitioners under
the law is an action for reconveyance the jurisdiction of which is
vested in the Regional Trial Court." 4 In Sevilla v. De los Angeles
5 reconveyance was allowed where the procurement of a transfer
certificate of title was made under circumstances of constructive
trust based on fraudulent representations. In the instant case the
complaint alleges that respondent Virginia Tugbang procured a
transfer certificate of title upon her fraudulent representation in
her petition for cancellation of title. This way of acquiring title
creates what is called "constructive trust" in favor of the defrauded
party and grants to the latter a right to the reconveyance of the
property. Thus it has been held that if a person obtains legal title to
property by fraud or concealment courts will impress upon the title
a so-called "constructive trust" in favor of the defrauded party.
The use of the word "trust" in this sense is not technically accurate
but as courts are agreed in administering the same remedy in a
certain class of frauds as are administered in fraudulent breaches of
trusts, and as courts and the profession have concurred in calling
such frauds constructive trusts, there can be no misapprehension
in continuing the same phraseology, while a change might lead to
confusion and misunderstanding. 6

In Alzua v. Johnson 7 we declared that under our system of
pleading it is the duty of the courts to grant the relief to which the
parties are shown to be entitled by the allegations in their pleadings
and the facts proved at the trial, and the mere fact that they
themselves misconstrued the legal effect of the facts thus alleged
and proved will not prevent the court from placing the just
construction thereon and adjudicating the issue accordingly.

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

Sec. 19. Jurisdiction in civil cases. Regional Trial Courts shall
exercise exclusive original jurisdiction: . . . (2) In all civil actions
which involve the title to, or possession of real property, or any
interest therein, except actions for forcible entry into and unlawful
detainer of lands or buildings, original jurisdiction over which is
conferred upon Metropolitan Trial Courts, Municipal Trial Courts,
and Municipal Circuit Trial Courts . . .

Moreover, the Regional Trial Court has jurisdiction over the
petition as it may be considered only as a continuation of the
original proceeding for cancellation of title which in view of its
non-litigious character is summary in nature. Furthermore, under
Sec. 2 of PD 1529 otherwise known as the Property Registration
Decree, the jurisdiction of the Regional Trial Court sitting as a land
registration court is no longer as circumscribed as it was under the
former Land Registration Act (Act 496), so that now a Regional
Trial Court, like the RTC of Quezon City which issued a new title
to respondent Virginia Tugbang in lieu of the old one, has the
authority to act not only on applications for original registration
but also over all petitions filed after original registration of title,
with power to hear and determine all questions arising from such
applications or petitions. 8

As to whether such an action should be granted requires further
evidence culled from a full-blown trial; hence, Civil Case No. Q-
93-15976 previously dismissed by the trial court should be
reinstated so that the parties may be able to present their evidence.

G.R. No. 120974

Alberto Sta. Maria owned a parcel of land covered by TCT No.
68818 which he sold in 1964 to Teresa L. Valencia who, as 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.

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 9
were sent to Alberto Sta. Marias address which was simply stated
as "Olongapo, Zambales." The notices were then returned to
petitioner City Treasurer of Quezon City for a "better complete
address." 10

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, 11
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.

In the meantime, on 2 February 1987, respondent 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. As a consequence,
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. Hence. this petition for review on certiorari by the
City Treasurer of Quezon City under Rule 45 of the Rules of
Court.

Petitioner City Treasurer cites Galutira v. Ramones, 12 a decision
of the Court of Appeals, in support of his position that the trial
court has no jurisdiction over the case as it is one for annulment
and cancellation of TCT No. 357727 which is vested in the Court
of Appeals pursuant to par. (2), Sec. 9, BP Blg. 129. 13 In Galutira
it was held that "in the law of pleading, courts are called upon to
pierce the form and go into the substance, not to be misled by a
false or wrong name given to a pleading because the title thereof is
not controlling and the court should be guided by its averments. . .
." Apparently the ruling is contrary to petitioners very own
position. While the complaint of Bernardita C. Tolentino is
captioned as one for annulment of auction sale with damages, it is
not an action for annulment of judgment which should be filed
with the Court of Appeals. In fact, from the allegations in the
complaint it can be gathered that a reconveyance was intended by
Tolentino, in which case, jurisdiction is vested in the trial court.

Under Sec. 55 of the Land Registration Act, as amended by Sec. 53
of PD No. 1529, 14 an original owner of registered land may seek
the annulment of the transfer thereof on the ground of fraud and
the proper remedy is reconveyance. However, such remedy is
without prejudice to the rights of an innocent purchaser for value
holding a certificate of title.

As regards the propriety of the nullification of the auction sale in
the instant case, which still remains unresolved, petitioner submits
that he had done everything incumbent upon him to do in
proceeding with the auction sale. Besides, not only was original
vendee Valencia remiss in her obligation to secure a new tax
declaration in her name but she likewise failed to pay the real
property taxes for 1979 to 1983. Therefore, petitioner City
Treasurer of Quezon City reiterates, the validity of the auction sale
should instead be sustained conformably with Estella v. Court of
Appeals. 15

Section 73 of PD No. 464 provides

Sec. 73. Advertisement of sale of real property at public auction.
After the expiration of the year for which the tax is due, 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 (the) barrio or district wherein the
property is situated, in English, Spanish and the local dialect
commonly used, and by announcement for at least three market
days at the market by the 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 area, 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 (Emphasis supplied).

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 (Emphasis supplied).

There is no dispute that the requirements of law as regards posting
of the notice, publication and announcement by crier have been
complied with. 16 The controversy lies in the 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.chanroblesvirtuallawlibrary:red

While we understand the earnestness and initiative of local
governments to collect taxes, the same must be collected from the
rightful debtors and not from those who may only appear to be
the registered owners in the official files. Certainly, properties
change hands as fast as their owners can, and to deprive the
present owners of their properties by notifying only the previous
owners who no longer have any interest in them will amount not
only to inequity and injustice but even to a violation of their
constitutional rights to property and due process. This
interpretation as well as its ratiocination was explained as early as
1946 in Cabrera v. The Provincial Treasurer of Tayabas 17 where
the parties therein seemed to be in the same predicament as the
parties herein.

In Cabrera the notice of auction sale was sent to the declared
owner but was returned "unclaimed." Nevertheless, the auction
sale proceeded and the property was sold to the highest bidder. It
turned out that the property had been previously conveyed by the
declared owner to another who, upon learning of the sale, filed a
complaint attacking the validity of the auction sale for lack of
notice to the registered owner, and that although the land
remained in the assessment books in the name of her transferor,
she had become its registered owner several years prior to the
auction sale. We resolved the controversy in this manner

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

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

The appellee may be criticized for her failure to have the land
transferred to her name in the assessment record. The
circumstance, nevertheless, cannot supplant the absence of notice.
Of course, it is the duty of any person acquiring at the time real
property to prepare and submit a tax declaration within sixty days
(Commonwealth Act No. 470, section 12), but it is no less true
that when the owner refuses or fails to make the required
declaration, the provincial assessor should himself declare the
property in the name of the defaulting owner (Commonwealth Act
No. 470, Sec. 14). In this case, there is absolutely no showing that
the appellee had deliberately failed to make the declaration to
defraud the tax officials; and it may be remarked that there can be
no reason why her Torrens title, which binds the whole world,
cannot at least charge the Government which had issued it, with
notice thereof . . .

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

. . . the prescribed procedure in auction sales of property for tax
delinquency being in derogation of property rights should be
followed punctiliously. Strict adherence to the statutes governing
tax sales is imperative not only for the protection of the taxpayers,
but also to allay any possible suspicion of collusion between the
buyer and the public officials called upon to enforce such laws.
Notice of sale to the delinquent landowners and to the public in
general is an essential and indispensable requirement of law, the
non-fulfillment of which vitiates the sale . . . A purchaser of real
estate at the tax sale obtains only such title as that held by the
taxpayer, the principle of caveat emptor applies. Where land is sold
for delinquency taxes under the provisions of the Provincial
Assessment Law, rights of registered but undeclared owners of the
land are not affected by the proceedings and the sale conveys only
such interest as the person who has declared the property for
taxation has therein.

The principle in Cabrera, reiterated in Serfino, should be, as it still
is, considered valid doctrine today, despite Estella which petitioner
invokes as the latest rule on the matter. Quite significantly, Estella
did not make any reference to the Cabrera and Serfino cases, much
less did it pass upon, reverse or modify them; instead, the Court
simply declared

Under the particular circumstances of the case, we hold that the
City Treasurer had done everything that was legally incumbent
upon him. Not only did he send the pertinent notices to the
declared owner, he also caused the mandatory publication of the
notice of public auction in two (2) newspapers of general
circulation pursuant to Section 65 of PD No. 464. The notices
were understandably mailed to Concepcion because as far as the
City Treasurer was concerned, she was still the declared owner
since the assessment of the property in question was still in her
name. It should be recalled that while petitioners had promptly
secured a new transfer certificate of title in their name after the
1970 acquisition, they neglected to effect the necessary change in
the tax declaration as then required by (Sec. 12 of Commonwealth
Act No. 470 Assessment Law) and later by P.D. No. 464 . . .
(Emphasis supplied).

All told, if it were really true that petitioners were never given the
opportunity to protect their rights, they had only themselves to
blame for the catastrophe that befell them. Not having been
apprised by petitioners of a change in ownership of the subject
property, the government was never placed in a position to give
them that opportunity (Emphasis supplied).

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

. . . the duty of each person acquiring real estate in the city to make
a new declaration thereof with the advertence that failure to do 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
(Emphasis supplied).

When the property was sold by Sta. Maria to Valencia in 1964 the
law applicable was RA No. 537 21 which provided for the same
requirement under its Sec. 48. 22 However, the law in force at the
time of the auction sale on 29 February 1984 was already PD No.
464 23 which did not contain the aforecited phrase. The new law,
Sec. 11 of PD No. 464, merely states

Any person who shall transfer real property to another shall notify
the assessor of the province or city wherein the property is situated
within sixty (60) days from the date of such transfer. The
notification shall include the particulars of the transfer, the
description of the property alienated and the name and address of
the transferee.

The fact that the pertinent phrase," 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.chanrobles.com:cralaw:red

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.
Along the same line did we rule in Cabrera.

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

The petition in G.R. No. 120974, on the other hand, is DENIED.
The decision and resolution of respondent Court of Appeals
affirming with modification that of the trial court are AFFIRMED.
The public auction sale conducted on 29 February 1984 is declared
VOID for lack of notice to the registered owner Teresa L.
Valencia. Transfer Certificate Title No. 357727 and Tax
Declaration No. B-091-01469 in the name of the spouses Romeo
and Verna Chua are ANNULLED. The Register of Deeds of
Quezon City is ordered to cancel TCT No. 357727 and issue in
lieu thereof a new one in the name of respondent Bernardita C.
Tolentino. Petitioner City Treasurer of Quezon City is ordered to
cancel likewise Tax Declaration No. B-091-01469 and issue in lieu
thereof a new tax declaration in the name of respondent
Bernardita C. Tolentino. The award of attorneys fees is deleted.

SO ORDERED.

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



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

STA. LUCIA REALTY & DEVELOPMENT, INC.,
PETITIONER, VS. CITY OF PASIG, RESPONDENT,
MUNICIPALITY OF CAINTA, PROVINCE OF RIZAL,
INTERVENOR.

D E C I S I O N

LEONARDO-DE CASTRO, J.:

For review is the June 30, 2004 Decision
[1]
and the January 27,
2005 Resolution
[2]
of the Court of Appeals in CA-G.R. CV No.
69603, which affirmed with modification the August 10, 1998
Decision
[3]
and October 9, 1998 Order
[4]
of the Regional Trial
Court (RTC) of Pasig City, Branch 157, in Civil Case No. 65420.

Petitioner Sta. Lucia Realty & Development, Inc. (Sta. Lucia) is the
registered owner of several parcels of land with Transfer
Certificates of Title (TCT) Nos. 39112, 39110 and 38457, all of
which indicated that the lots were located in Barrio Tatlong Kawayan,
Municipality of Pasig
[5]
(Pasig).

The parcel of land covered by TCT No. 39112 was consolidated
with that covered by TCT No. 518403, which was situated 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.
[6]


Upon Pasig's 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.
[7]


On January 31, 1994, Cainta filed a petition
[8]
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,
[9]
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).

Sta. Lucia, in its Answer, alleged that it had been religiously paying
its real estate taxes to Cainta, just like what its predecessors-in-
interest did, by virtue of the demands and assessments made and
the Tax Declarations issued by Cainta on the claim that the subject
properties were within its territorial jurisdiction. Sta. Lucia further
argued that since 1913, the real estate taxes for the lots covered by
the above TCTs had been paid to Cainta.
[10]


Cainta was allowed to file its own Answer-in-Intervention when it
moved to intervene on the ground that its interest would be greatly
affected by the outcome of the case. It averred that it had been
collecting the real property taxes on the subject properties even
before Sta. Lucia acquired them. Cainta further asseverated that
the establishment of the boundary monuments would show that
the subject properties are within its metes and bounds.
[11]


Sta. Lucia and Cainta thereafter moved for the suspension of the
proceedings, and claimed that the pending petition in the Antipolo
RTC, for the settlement of boundary dispute between Cainta and
Pasig, presented a "prejudicial question" to the resolution of the
case.
[12]


The RTC denied this in an Order dated December 4, 1996 for lack
of merit. Holding that the TCTs were conclusive evidence as to its
ownership and location,
[13]
the RTC, on August 10, 1998, rendered
a Decision in favor of Pasig:
WHEREFORE, in view of the foregoing, judgment is hereby
rendered in favor of [Pasig], ordering Sta. Lucia Realty and
Development, Inc. to pay [Pasig]:

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

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

3) The costs of suit.

Judgment is likewise rendered against the intervenor Municipality
of Cainta, Rizal, ordering it to refund to Sta. Lucia Realty and
Development, Inc. the realty tax payments improperly collected
and received by the former from the latter in the aggregate amount
of P358, 403.68.
[14]


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

The RTC, on October 9, 1998, granted Pasig's motion in an Order
[15]
and modified its earlier decision to include the realty taxes due
on the improvements on the subject lots:
WHEREFORE, premises considered, the plaintiff's motion for
reconsideration is hereby granted. Accordingly, the Decision,
dated August 10, 1998 is hereby modified in that the defendant is
hereby ordered to pay plaintiff the amount of P5,627,757.07
representing the unpaid taxes and penalties on the improvements
on the subject parcels of land whereon real estate taxes are
adjudged as due for the year 1996.
[16]


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

On October 16, 1998, Pasig filed a Motion for Execution Pending
Appeal, to which both Sta. Lucia and Cainta filed several
oppositions, on the assertion that there were no good reasons to
warrant the execution pending appeal.
[17]


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

On May 21, 1999, Sta. Lucia filed a Petition for Certiorari under
Rule 65 of the Rules of Court with the Court of Appeals to assail
the RTC's order granting the execution. Docketed as CA-G.R. SP
No. 52874, the petition was raffled to the First Division of the
Court of Appeals, which on September 22, 2000, ruled in favor of
Sta. Lucia, to wit:
WHEREFORE, in view of the foregoing, the instant petition is
hereby GIVEN DUE COURSE and GRANTED by this
Court. The assailed Order dated April 15, 1999 in Civil Case No.
65420 granting the motion for execution pending appeal and
ordering the issuance of a writ of execution pending appeal is
hereby SET ASIDE and declared NULL and VOID.
[18]


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


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


Meanwhile, the appeal filed by Sta. Lucia and Cainta was raffled to
the (former) Seventh Division of the Court of Appeals and
docketed as CA-G.R. CV No. 69603. On June 30, 2004, the
Court of Appeals rendered its Decision, wherein it agreed with the
RTC's judgment:
WHEREFORE, the appealed Decision is hereby AFFIRMED
with the MODIFICATION that the award of P50,000.00
attorney's fees is DELETED.
[21]


In affirming the RTC, the Court of Appeals declared that there
was no proper legal basis to suspend the proceedings.
[22]
Elucidating on the legal meaning of a "prejudicial question," it
held that "there can be no prejudicial question when the cases
involved are both civil."
[23]
The Court of Appeals further held
that the elements of litis pendentia and forum shopping, as alleged
by Cainta to be present, were not met.

Sta. Lucia and Cainta filed separate Motions for Reconsideration,
which the Court of Appeals denied in a Resolution dated January
27, 2005.

Undaunted, Sta. Lucia and Cainta filed separate Petitions for
Certiorari with this Court. Cainta's petition, docketed as G.R. No.
166856 was denied on April 13, 2005 for Cainta's failure to show
any reversible error. Sta. Lucia's own petition is the one
subject of this decision.
[24]


In praying for the reversal of the June 30, 2004 judgment of the
Court of Appeals, Sta. Lucia assigned the following errors:
ASSIGNMENT OF ERRORS

I

THE HONORABLE COURT OF APPEALS ERRED IN
AFFIRMING [WITH MODIFICATION] THE DECISION OF
THE REGIONAL TRIAL COURT IN PASIG CITY
II.

THE HONORABLE COURT OF APPEALS ERRED IN NOT
SUSPENDING THE CASE IN VIEW OF THE PENDENCY
OF THE BOUNDARY DISPUTE WHICH WILL FINALLY
DETERMINE THE SITUS OF THE SUBJECT PROPERTIES
III.

THE HONORABLE COURT OF APPEALS ERRED IN NOT
HOLDING THAT THE PAYMENT OF REALTY TAXES
THROUGH THE MUNICIPALITY OF CAINTA WAS VALID
PAYMENT OF REALTY TAXES
IV.

THE HONORABLE COURT OF APPEALS ERRED IN NOT
HOLDING THAT IN THE MEANTIME THAT THE
BOUNDARY DISPUTE CASE IN ANTIPOLO CITY
REGIONAL TRIAL COURT IS BEING FINALLY
RESOLVED, THE PETITIONER STA. LUCIA SHOULD BE
PAYING THE REALTY TAXES ON THE SUBJECT
PROPERTIES THROUGH THE INTERVENOR CAINTA TO
PRESERVE THE STATUS QUO.
[25]


Pasig, countering each error, claims that the lower courts correctly
decided the case considering that the TCTs are clear on their faces
that the subject properties are situated in its territorial jurisdiction.
Pasig contends that the principles of litis pendentia, forum shopping,
and res judicata are all inapplicable, due to the absence of their
requisite elements. Pasig maintains that the boundary dispute case
before the Antipolo RTC is independent of the complaint for
collection of realty taxes which was filed before the Pasig RTC. It
avers that the doctrine of "prejudicial question," which has a
definite meaning in law, cannot be invoked where the two cases
involved are both civil. Thus, Pasig argues, since there is no legal
ground to preclude the simultaneous hearing of both cases, the
suspension of the proceedings in the Pasig RTC is baseless.

Cainta also filed its own 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.

The errors presented before this Court can be narrowed down into
two basic issues:
1) Whether the RTC and the CA were correct in deciding Pasig's
Complaint without waiting for the resolution of the boundary
dispute case between Pasig and Cainta; and

2) 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. Lucia's TCTs.

We agree with the First Division of the Court of Appeals in CA-
G.R. SP No. 52874 that the resolution of the boundary dispute
between Pasig and Cainta would determine which local
government unit is entitled to collect realty taxes from Sta. Lucia.
[26]


The Local Government Unit entitled
To Collect Real Property Taxes

The Former Seventh Division of the Court of Appeals held that
the resolution of the complaint lodged before the Pasig RTC did
not necessitate the assessment of the parties' evidence on the
metes and bounds of their respective territories. It cited our ruling
in Odsigue v. Court of Appeals
[27]
wherein we said that a certificate of
title is conclusive evidence of both its ownership and location.
[28]
The Court of Appeals even referred to specific provisions of
the 1991 Local Government Code and Act. No. 496 to support its
ruling that Pasig had the right to collect the realty taxes on the
subject properties as the titles of the subject properties show on
their faces that they are situated in Pasig.
[29]


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:
Sec. 5. Appraisal of Real Property. -- All real property, whether
taxable or exempt, shall be appraised at the current and fair market
value prevailing in the locality where the property is situated.

x x x x

Sec. 57. Collection of tax to be the responsibility of treasurers. -- The
collection of the real property tax and all penalties accruing
thereto, and the enforcement of the remedies provided for in this
Code or any applicable laws, shall be the responsibility of the
treasurer of the province, city or municipality where the property
is situated. (Emphases ours.)

This requisite was reiterated in Republic Act No. 7160, also known
as the 1991 the Local Government Code, to wit:
Section 201. Appraisal of Real Property. - All real property,
whether taxable or exempt, shall be appraised at the current and
fair market value prevailing in the locality where the property is
situated. The Department of Finance shall promulgate the
necessary rules and regulations for the classification, appraisal, and
assessment of real property pursuant to the provisions of this
Code.

Section 233. Rates of Levy. - A province or city or a
municipality within the Metropolitan Manila Area shall fix a
uniform rate of basic real property tax applicable to their
respective localities as follows: x x x. (Emphases ours.)

The only import of these provisions is that, 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.

Accentuating on the importance of delineating territorial
boundaries, this Court, in Mariano, Jr. v. Commission on Elections
[30]

said:
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. Needless to state, any uncertainty
in the boundaries of local government units will sow costly
conflicts in the exercise of governmental powers which ultimately
will prejudice the people's welfare. This is the evil sought to be
avoided by the Local Government Code in requiring that the land
area of a local government unit must be spelled out in metes and
bounds, with technical descriptions.
[31]
(Emphasis ours.)

The significance of accurately defining a local government unit's
boundaries was stressed in City of Pasig v. Commission on Elections,
[32]

which involved the consolidated petitions filed by the parties
herein, Pasig and Cainta, against two decisions of the Commission
on Elections (COMELEC) with respect to the plebiscites
scheduled by Pasig for the ratification of its creation of two new
Barangays. Ruling on the contradictory reliefs sought by Pasig and
Cainta, this Court affirmed the COMELEC decision to hold in
abeyance the plebiscite to ratify the creation of Barangay Karangalan;
but set aside the COMELEC's other decision, and nullified the
plebiscite that ratified the creation of Barangay Napico in Pasig, until
the boundary dispute before the Antipolo RTC had been
resolved. The aforementioned case held as follows:
1. The Petition of the City of Pasig in G.R. No. 125646 is
DISMISSED for lack of merit; while
2. The Petition of the Municipality of Cainta in G.R. No.
128663 is GRANTED. The COMELEC Order in UND No.
97-002, dated March 21, 1997, is SET ASIDE and the
plebiscite held on March 15, 1997 to ratify the creation of
Barangay Napico in the City of Pasig is declared null and
void. Plebiscite on the same is ordered held in abeyance until
after the courts settle with finality the boundary dispute
between the City of Pasig and the Municipality of Cainta, in
Civil Case No. 94-3006.
[33]


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.

Certificates of Title as
Conclusive Evidence of Location

While we fully agree that a certificate of title is conclusive as to its
ownership and location, this does not preclude the filing of an
action for the very purpose of attacking the statements therein. In
De Pedro v. Romasan Development Corporation,
[34]
we proclaimed that:
We agree with the petitioners that, generally, a certificate of title
shall be conclusive as to all matters contained therein and
conclusive evidence of the ownership of the land referred to
therein. However, it bears stressing that while certificates of title
are indefeasible, unassailable and binding against the whole world,
including the government itself, they do not create or vest
title. They merely confirm or record title already existing and vested. They
cannot be used to protect a usurper from the true owner, nor can they be used as
a shield for the commission of fraud; neither do they permit one to enrich
himself at the expense of other.
[35]


In Pioneer Insurance and Surety Corporation v. Heirs of Vicente Coronado,
[36]
we set aside the lower courts' ruling that the property subject of
the case was not situated in the location stated and described in the
TCT, for lack of adequate basis. Our decision was in line with the
doctrine that the TCT is conclusive evidence of ownership and
location. However, we refused to simply uphold the veracity of
the disputed TCT, and instead, we remanded the case back to the
trial court for the determination of the exact location of the
property seeing that it was the issue in the complaint filed before
it.
[37]


In City Government of Tagaytay v. Guerrero,
[38]
this Court reprimanded
the City of Tagaytay for levying taxes on a property that was
outside its territorial jurisdiction, viz:
In this case, it is basic that before the City of Tagaytay may levy a
certain property for sale due to tax delinquency, the subject
property should be under its territorial jurisdiction. The city
officials are expected to know such basic principle of law. The
failure of the city officials of Tagaytay to verify if the property
is within its jurisdiction before levying taxes on the same
constitutes gross negligence.
[39]
(Emphasis ours.)

Although it is true that "Pasig" is the locality stated in the TCTs of
the subject properties, both Sta. Lucia and Cainta aver that the
metes and bounds of the subject properties, as they are described
in the TCTs, reveal that they are within Cainta's boundaries.
[40]
This only means that there may be a conflict between the
location as stated and the location as technically described in the
TCTs. Mere reliance therefore on the face of the TCTs will not
suffice as they can only be conclusive evidence of the subject
properties' locations if both the stated and described locations
point to the same area.

The Antipolo RTC, wherein the boundary dispute case between
Pasig and Cainta is pending, would be able to best determine once
and for all the precise metes and bounds of both Pasig's and
Cainta's respective territorial jurisdictions. The resolution of this
dispute would necessarily ascertain the extent and reach of each
local government's authority, a prerequisite in the proper exercise
of their powers, one of which is the power of taxation. This was
the conclusion reached by this Court in City of Pasig v. Commission on
Elections,
[41]
and by the First Division of the Court of Appeals in
CA-G.R. SP No. 52874. We do not see any reason why we cannot
adhere to the same logic and reasoning in this case.

The "Prejudicial Question" Debate

It would be unfair to hold Sta. Lucia liable again for real property
taxes it already paid simply because Pasig cannot wait for its
boundary dispute with Cainta to be decided. Pasig has consistently
argued that the boundary dispute case is not a prejudicial question
that would entail the suspension of its collection case against Sta.
Lucia. This was also its argument in City of Pasig v. Commission on
Elections,
[42]
when it sought to nullify the COMELEC's ruling to
hold in abeyance (until the settlement of the boundary dispute
case), the plebiscite that will ratify its creation of Barangay
Karangalan. We agreed with the COMELEC therein that the
boundary dispute case presented a prejudicial question and explained
our statement in this wise:
To begin with, we agree with the position of the COMELEC that
Civil Case No. 94-3006 involving the boundary dispute between
the Municipality of Cainta and the City of Pasig presents a
prejudicial question which must first be decided before
plebiscites for the creation of the proposed barangays may be held.

The City of Pasig argues that there is no prejudicial question since
the same contemplates a civil and criminal action and does not
come into play where both cases are civil, as in the instant
case. While this may be the general rule, this Court has held
in Vidad v. RTC of Negros Oriental, Br. 42,

that, in the
interest of good order, we can very well suspend action on
one case pending the final outcome of another case closely
interrelated or linked to the first.

In the case at bar, while the City of Pasig vigorously claims that the
areas covered by the proposed Barangays Karangalan and Napico
are within its territory, it can not deny that portions of the same
area are included in the boundary dispute case pending before the
Regional Trial Court of Antipolo. Surely, whether the areas in
controversy shall be decided as within the territorial jurisdiction of
the Municipality of Cainta or the City of Pasig has material bearing
to the creation of the proposed Barangays Karangalan and Napico.
Indeed, a requisite for the creation of a barangay is for its territorial
jurisdiction to be properly identified by metes and bounds or by
more or less permanent natural boundaries.

Precisely because
territorial jurisdiction is an issue raised in the pending civil case,
until and unless such issue is resolved with finality, to define the
territorial jurisdiction of the proposed barangays would only be an
exercise in futility. Not only that, we would be paving the way for
potentially ultra vires acts of such barangays. x x x.
[43]
(Emphases
ours.)

It is obvious from the foregoing, that the term "prejudicial
question," as appearing in the cases involving the parties herein,
had been used loosely. Its usage had been more in reference to its
ordinary meaning, than to its strict legal meaning under the Rules
of Court.
[44]
Nevertheless, even without the impact of the
connotation derived from the term, our own Rules of Court state
that a trial court may control its own proceedings according to its
sound discretion:
POWERS AND DUTIES OF COURTS AND JUDICIAL
OFFICERS
Rule 135

SEC. 5. Inherent powers of courts. - Every court shall have
power:

x x x x

(g) To amend and control its process and orders so as to make
them comformable to law and justice.

Furthermore, we have acknowledged and affirmed this inherent
power in our own decisions, to wit:
The court in which an action is pending may, in the exercise of a
sound discretion, upon proper application for a stay of that action,
hold the action in abeyance to abide the outcome of another
pending in another court, especially where the parties and the
issues are the same, for there is power inherent in every court to
control the disposition of causes (sic) on its dockets with economy
of time and effort for itself, for counsel, and for litigants. Where
the rights of parties to the second action cannot be properly
determined until the questions raised in the first action are settled
the second action should be stayed.

The power to stay proceedings is incidental to the power inherent
in every court to control the disposition of the cases on its
dockets, considering its time and effort, that of counsel and the
litigants. But if proceedings must be stayed, it must be done in
order to avoid multiplicity of suits and prevent vexatious
litigations, conflicting judgments, confusion between litigants and
courts. It bears stressing that whether or not the RTC would
suspend the proceedings in the SECOND CASE is submitted to
its sound discretion.
[45]


In light of the foregoing, we hold that the Pasig RTC should have
held in abeyance the proceedings in Civil Case No. 65420, in view
of the fact that the outcome of the boundary dispute case before
the Antipolo RTC will undeniably affect both Pasig's and Cainta's
rights. In fact, the only reason Pasig had to file a tax collection
case against Sta. Lucia was not that Sta. Lucia refused to pay, but
that Sta. Lucia had already paid, albeit to another local government
unit. Evidently, had the territorial boundaries of the contending
local government units herein been delineated with accuracy, then
there would be no controversy at all.

In the meantime, to avoid further animosity, Sta. Lucia is directed
to deposit the succeeding real property taxes due on the subject
properties, in an escrow account with the Land Bank of the
Philippines.

WHEREFORE, the instant petition is GRANTED. The June
30, 2004 Decision and the January 27, 2005 Resolution of the
Court of Appeals in CA-G.R. CV No. 69603 are SET
ASIDE. The City of Pasig and the Municipality of Cainta are both
directed to await the judgment in their boundary dispute case (Civil
Case No. 94-3006), pending before Branch 74 of the Regional
Trial Court in Antipolo City, to determine which local government
unit is entitled to exercise its powers, including the collection of
real property taxes, on the properties subject of the dispute. In the
meantime, Sta. Lucia Realty and Development, Inc. is directed to
deposit the succeeding real property taxes due on the lots and
improvements covered by TCT Nos. 532250, 598424, 599131,
92869, 92870 and 38457 in an escrow account with the Land Bank
of the Philippines.

SO ORDERED.


Velasco, Jr.,
*
(Acting Chairperson), Bersamin,
**
Del Castillo,
and Perez, JJ., concur.



[G.R. No. 185023 : August 24, 2011]

CITY OF PASIG, REPRESENTED BY THE CITY
TREASURER AND THE CITY ASSESSOR, VS.
PETITIONER, REPUBLIC OF THE PHILIPPINES,
REPRESENTED BY THE PRESIDENTIAL
COMMISSION ON GOOD GOVERNMENT,
RESPONDENT.

D E C I S I O N

CARPIO, J.:

The Case

This is a petition
[1]
for review on certiorari under Rule 45 of the
Rules of Court. The petition challenges the 17 October 2008
Decision
[2]
of the Court of Appeals in CA-G.R. SP No. 97498,
affirming the 6 November 2006 Decision
[3]
of the Regional Trial
Court (RTC), National Capital Judicial Region, Pasig City, Branch
155, in SCA No. 2901.
The Facts

Mid-Pasig Land Development Corporation (MPLDC) owned two
parcels of land, with a total area of 18.4891 hectares, situated in
Pasig City. The properties are covered by Transfer Certificate of
Title (TCT) Nos. 337158 and 469702 and Tax Declaration Nos. E-
030-01185 and E-030-01186 under the name of MPLDC.
Portions of the properties are leased to different business
establishments.

In 1986, the registered owner of MPLDC, Jose Y. Campos
(Campos), voluntarily surrendered MPLDC to the Republic of the
Philippines.
On 30 September 2002, the Pasig City Assessor's Office sent
MPLDC two notices of tax delinquency for its failure to pay real
property tax on the properties for the period 1979 to 2001 totaling
P256,858,555.86. In a letter dated 29 October 2002, Independent
Realty Corporation (IRC) President Ernesto R. Jalandoni
(Jalandoni) and Treasurer Rosario Razon informed the Pasig City
Treasurer that the tax for the period 1979 to 1986 had been paid,
and that the properties were exempt from tax beginning 1987.
In letters dated 10 July 2003 and 8 January 2004, the Pasig City
Treasurer informed MPLDC and IRC that the properties were not
exempt from tax. In a letter dated 16 February 2004, MPLDC
General Manager Antonio Merelos (Merelos) and Jalandoni again
informed the Pasig City Treasurer that the properties were exempt
from tax. In a letter dated 11 March 2004, the Pasig City Treasurer
again informed Merelos that the properties were not exempt from
tax.
On 20 October 2005, the Pasig City Assessor's Office sent
MPLDC a notice of final demand for payment of tax for the
period 1987 to 2005 totaling P389,027,814.48. On the same day,
MPLDC paid P2,000,000 partial payment under protest.
On 9 November 2005, MPLDC received two warrants of levy on
the properties. On 1 December 2005, respondent Republic of the
Philippines, through the Presidential Commission on Good
Government (PCGG), filed with the RTC a petition for
prohibition with prayer for issuance of a temporary restraining
order or writ of preliminary injunction to enjoin petitioner Pasig
City from auctioning the properties and from collecting real
property tax.

On 2 December 2005, the Pasig City Treasurer offered the
properties for sale at public auction. Since there was no other
bidder, Pasig City bought the properties and was issued the
corresponding certificates of sale.

On 19 December 2005, PCGG filed with the RTC an amended
petition for certiorari, prohibition and mandamus against Pasig
City. PCGG prayed that: (1) the assessments for the payment of
real property tax and penalty be declared void; (2) the warrants of
levy on the properties be declared void; (3) the public auction be
declared void; (4) the issuance of certificates of sale be declared
void; (5) Pasig City be prohibited from assessing MPLDC real
property tax and penalty; (6) Pasig City be prohibited from
collecting real property tax and penalty from MPLDC; (7) Pasig
City be ordered to assess the actual occupants of the properties
real property tax and penalty; and (8) Pasig City be ordered to
collect real property tax and penalty from the actual occupants of
the properties.
The RTC's Ruling

In its 6 November 2006 Decision, the RTC granted the petition
for certiorari, prohibition and mandamus. The RTC held:
The primordial issue to be resolved in the present case is whether
or not respondent City of Pasig, through the City Treasurer and
the City Assessor, acted with grave abuse of discretion amounting
to lack or excess of jurisdiction when it assessed, levied and sold in
public auction the "payanig" properties for non-payment of real
property taxes.

However, before dwelling on the merits of the main issue, certain
matters need to be addressed by the Court, to wit:
1. Does the Court have jurisdiction over the instant petition?
2. Who owns the so-called "payanig" properties that were
subjected to payment of real property taxes by respondent?
The Court maintains that it is not precluded from assuming
jurisdiction over the instant amended petition which involves the
legality of the assailed actions by respondent in assessing and
collecting real property tax on the properties owned by the
Republic of the Philippines. It is a jurisprudential doctrine that the
issue is purely legal when the authority of the respondent to assess
and collect real property taxes on the subject properties is being
questioned (Ty vs. Trampe, 250 SCRA 500).

x x x x

In the instant proceeding, there is no dispute that the properties
are surrendered ill-gotten wealth of former President Marcos. As
such, the same assumes [sic] a public character and thus belongs
[sic] to the Republic of the Philippines. x x x
x x x x

Hence, upon the voluntary surrender by Jose Y. Campos, the
controlling owner of Mid-Pasig and Independent Realty
Corporation, of the "payanig" properties to PCGG, a clear
admission that these properties were part of the ill-gotten wealth
of former President Marcos was already evident. As such, there
was already constructive reconveyance to the State, which
immediately placed these reconveyed properties under the control
and stewardship of the PCGG as representative of the Republic of
the Philippines. Under such special circumstance, these voluntary
surrendered properties had already belonged to the State.
x x x x

Premised on the foregoing, the "payanig" properties, being part of
the recovered ill-gotten wealth of President Marcos, and therefore
are owned by the State itself, are exempt from payment of real
property taxes. It is only when the beneficial use of said properties
has been granted to a taxable person that the same may be subject
to imposition of real property tax.

Furthermore, 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 (Testate Estate of Concordia T. Lim vs.
City of Manila, 182 SCRA 482).

In the instant case, the taxable persons being referred to are the
lessees occupying and/or doing business therein and have
beneficial use over portions within the "payanig" properties.
x x x x

Consequently, there can be no iota of doubt that respondent City
of Pasig abused its discretion by committing the acts sought to be
annulled herein despite knowledge of the fact that ownership over
the subject properties belong to petitioner. But what is more
appalling in the instant action is that such abuse was capriciously
committed by respondent City of Pasig against the sovereign State
itself from where that atxing local government unit derives its very
existence. The spring cannot rise higher than its source.
x x x x

In sum, the acts of respondent in assessing real property taxes on
properties owned and controlled by the Republic of the
Philippines, in collecting taxes from Mid-Pasig in lieu of the actual
occupants or beneficial users of certain portions thereof, and in
auctioning said properties in favor of respondent, followed by the
corresponding certificate of sale, are all unequivocally tainted with
grave abuse of discretion amounting to lack or excess of
jurisdiction.

WHEREFORE, in the light of the foregoing, the instant Amended
Petition is hereby GRANTED.

Accordingly, the following acts of respondent are hereby
ANNULLED and SET ASIDE.
1. the assessment dated September 30, 2002 for the payment of
real property taxes and penalties made by the City of Pasig on
two (2) parcels of land covered by TCT No. 337158 and TCT
No. 469702 registered under the name of Mid-Pasig;
2. the warrants of levy dated November 8, 2005 issued thereon
by the City of Pasig;
3. the subsequent public auction sale of subject properties held
on December 2, 2005 followed by the issuance of the
corresponding Certificate of Sale;

FURTHER, the City of Pasig is hereby PROHIBITED from
further:
1. Assessing real property taxes and penalties charges [sic] on
the said properties;
2. Collecting said taxes and penalty charges from the State;
3. Disposing or encumbering the subject properties or any
portion thereof;
FURTHER, the City of Pasig is hereby COMMANDED:
1. To return or effect the refund of the amount of Two Million
Pesos (Php 2,000,000.00) paid under protest by Mid-Pasig
Land Development Corporation on October 20, 2005, or
credit the same amount to any outstanding tax liability that
said corporation may have with the City of Pasig; and
2. To assess and collect from the actual occupants or beneficial
users of the subject properties, and not from the State,
whatever real property taxes and penalties that may be due on
the respective areas occupied by them.
SO ORDERED.
[4]


Pasig City appealed to the Court of Appeals.
The Court of Appeals' Ruling

In its 31 March 2008 Decision,
[5]
the Court of Appeals set aside the
RTC's 6 November 2006 Decision. The Court of Appeals held:
We find nothing in PCGG's petition that supports its claim
regarding Pasig City's alleged grave abuse of discretion. It is
undisputed that the subject parcels of land are registered in the
name of Mid-Pasig, a private entity. Although the government,
through the PCGG have [sic] sequestered Mid-Pasig and all its
assets including the subject parcels of land, the sequestration per se,
did not operate to convert Mid-Pasig and its properties to public
property. "The power of the PCGG to sequester property claimed to be `ill-
gotten' means to place or cause to be placed under its possession or control said
property, or any building or office wherein any such property and any records
pertaining thereto may be found, including `business enterprises and entities' --
for the purpose of preventing the destruction, concealment or dissipation of, and
otherwise conserving and preserving the same -- until it can be determined,
through appropriate judicial proceedings, whether the property was in truth `ill-
gotten,' i.e., acquired through or as a result of improper or illegal use of or the
conversion of funds belonging to the Government or any of its branches,
instrumentalities, enterprises, banks or financial institutions, or by taking
undue advantage of official position, authority, relationship, connection or
influence, resulting in unjust enrichment of the ostensible owner and great
damage and prejudice to the State." x x x As such, prior to a valid court
declaration the "PCGG cannot perform acts of strict ownership of [sic]
sequestered property. It is a mere conservator." In view thereof and the
fact that Mid-Pasig and its properties have not been validly
declared by the Sandiganbayan as "ill-gotten" wealth, the same are
not yet public properties. The PCGG even admitted that the
transfer certificates of title covering the subject parcels of land in
the name of Mid-Pasig have not been cancelled due to an order of
the Sandiganbayan. The trial court also found that the subject
parcels of land are the subject of litigation between Ortigas and
Company Limited Partnership and the PCGG in Civil Case No.
0093 pending before the Sandiganbayan. These facts clearly show
that the Sandiganbayan has not validly declared yet that the subject
parcels of land are "ill-gotten" wealth. If so, they cannot be
claimed yet as properties of the State: they remain properties of a
private entity. Thus, Pasig City through its City Assessor and City
Treasurer did not act with grave abuse of discretion when it issued
real property tax assessment on the subject parcels of land.
Even admitting that the subject parcels of land are already owned
by the State, we still see no grave abuse of discretion on the part of
Pasig City when it issued the challenged tax assessment, for it is
well settled that the test of exemptions from taxation is the use of
the property for purposes mentioned in the Constitution. The
owner of the property does not matter. Even if he is not a tax-
exempt entity, as long as the property is being used for religious,
charitable or educational purposes, the property is exempt from
tax. Conversely, even if the government owns the property, if the
beneficial use thereof has been granted, for consideration or
otherwise, to a taxable person, the property is subject to tax. Here,
the PCGG admitted that portions of the subject properties were
leased to private entities engaged in commercial dealings. As well,
the trial court found that lessees occupy different areas of the
subject parcels of land beginning 1992 until 2005. Therefore,
considering that portions of the subject parcels of land are used for
commercial purposes, the duty imposed by law to owners and
administrators of real property to declare the same for tax
purposes and the fact that the tax declarations over the subject
parcels of land are in the name of Mid-Pasig, again, Pasig City did
not act with grave abuse of discretion when it issued the
challenged tax assessment.

The foregoing snowball to one conclusion -- the allegations in
PCGG's petition imputing grave abuse of discretion on the part of
Pasig City, acting through the City Assessor and City Treasurer, in
the assessment and collection of the taxes were made in order to
justify the filing of the petition for certiorari, prohibition and
mandamus with the trial court.
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 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. The
Supreme Court outlined said remedies, to wit:
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, as provided in
Section 226 of R.A. No. 7160[.]

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 Central Board Assessment Appeals, the dispute may
then be taken to the Court of Tax Appeals by filing a verified
petition for review under Rule 42 of the Revised Rules of Court; to
the Court of tax Appeals en banc; and finally to the Supreme
Court via a petition for review on certiorari pursuant to Rule 45 of
the Revised Rules of Court.

We are not convinced with PCGG's stance that their recourse of
filing the petition for certiorari, prohibition and mandamus before
the trial court is proper as they are questioning not merely the
correctness of the tax assessment but the actions of Pasig City,
through its City Assessor and City Treasurer, which were done in
grave abuse of discretion amounting to lack or excess of
jurisdiction.

The well-established rule is that allegations in the complaint and
the character of the relief sought determine the nature of an action.
A perusal of the petition before the trial court plainly shows that
what is actually being assailed is the correctness of the assessments
made by the City Assessor of Pasig City on the subject parcels of
land. PCGG claims, among others, that: 1) the subject parcels of
land are exempt from real property taxation as they are public
property; 2) even if the subject parcels of land are subject to tax, as
the beneficial use thereof was granted to private persons and
entities, only the portion thereof used for commerce is subject to
tax and the users thereof are the ones liable to pay the tax; and 3)
the right of Pasig City to collect the real property taxes pertaining
to 1987 to 1998 has already prescribed. These claims essentially
involve questions of fact, which are improper in a petition for
certiorari, prohibition and mandamus; hence, the petition should
have been brought, at the very first instance, to the Local Board
Assessment Appeals, which has authority to rule on the objections
of any interested party who is not satisfied with the action of the
assessor. 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.

Granting that the assessor's authority and the legality of the
assessment are indeed an issue, the proper remedy is a suit for the
refund of the real property tax after paying the same under protest.
It must be pointed out that in order for the trial court to resolve
the instant petition, the issues of the correctness of the tax
assessment and collection must also necessarily be dealt with;
hence, a petition for certiorari, prohibition and mandamus is not
the proper remedy. x x x [T]he resolution of the issues raised in the
instant case involve examination and determination of relevant and
material facts, i.e. facts relating to the ownership of the subject
parcels of land, the portion of the subject parcel of land used for
commercial purposes and the identities of the lessees and the users
thereof. Since resolution of factual issues is not allowed in a
petition for certiorari, prohibition and mandamus, the trial court is
precluded from entertaining the petition.

Finally, Section 252 of the R.A. No. 7160 requires payment under
protest in assailing real property tax assessment. Even an appeal
shall not suspend the collection of the atx assessed without
prejudice to a later adjustment pending the outcome of the appeal.
This principle is consistent with the time-honored principle that
taxes are the lifeblood of the nation. But the PCGG failed to pay
the tax assessment prior to questioning it before the trial court;
hence, the trial court should have dismissed PCGG's petition in
line with the Supreme Court pronouncement that a trial court has
no jurisdiction to entertain a similar petition absent payment under
protest.

In conclusion and taking all the foregoing into account, we hold
that the trial court had no jurisdiction to take cognizance and
decide PCGG petition for certiorari, prohibition and mandamus;
the trial court should have dismissed the petition.
[6]


PCGG filed a motion for reconsideration. In its 17 October 2008
Decision, the Court of Appeals reversed itself. The Court of
Appeals held:
At the outset, although as a rule, administrative remedies must first
be exhausted before ersort to judicial action can prosper, there is a
well-settled exception in cases where the controversy does not
involve questions of fact but only of law. We find that the
Republic has shown a cause for the application of the foregoing
exception. Essentially, the Republic has raised a pure question of
law -- whether or not the City of Pasig has the power to impose
real property tax on the subject properties, which are owned by the
State. It bears stressing that the Republic did not raise any question
concerning the amount of the real property tax or the
determination thereof. Thus, having no plain, speedy, and
adequate remedy in law, the Republic correctly resorted to judicial
action via the petition for certiorari, prohibition, and mandamus,
to seek redress.

We are convinced that the subject properties were not sequestered
by the government so as to amount to a deprivation of property
without due process of law; instead, they were voluntarily
surrendered to the State by Campos, a self-admitted crony of the
then President Marcos. The relinquishment of the subject
properties to the State as ill-gotten wealth of Marcos, as recognized
by the Supreme Court, makes a judicial declaration that the same
were ill-gotten unnecessary. By virtue of said relinquishment, the
State correctly exercised dominion over the subject properties.
Indubitably, the subject properties, being ill-gotten wealth, belong
to the State. x x x By its nature, ill-gotten wealth is owned by the
State. As a matter of fact, the Republic continues to exercise
dominion over the subject properties.
[7]


Hence, the present petition.
Issues

Pasig City raises as issues that the lower courts erred in granting
PCGG's petition for certiorari, prohibition and mandamus and in
ordering Pasig City to assess and collect real property tax from the
lessees of the properties.
The Court's Ruling

The petition is partly meritorious.

As correctly found by the RTC and the Court of Appeals, the
Republic of the Philippines owns the properties. Campos
voluntarily surrendered MPLDC, which owned the properties, to
the Republic of the Philippines. In Republic of the Philippines v.
Sandiganbayan,
[8]
the Court stated:
x x x Jose Y. Campos, "a confessed crony of former President
Ferdinand E. Marcos," voluntarily surrendered or turned over to
the PCGG the properties, assets and corporations he held in trust
for the deposed President. Among the corporations he
surrendered were the Independent Realty Corporation and the
Mid-Pasig Land Development Corporation.
[9]


In Republic of the Philippines v. Sandiganbayan,
[10]
the Court stated:
The antecedent facts are stated by the Solicitor General as follows:

x x x x

"3. Sometime in the later part of August 1987, defendant Jose D.
Campos, Jr., having been served with summons on August 5, 1987,
filed with the respondent Court an undated `Manifestation and
Motion to Dismiss Complaint with Respect to Jose D. Campos'
praying that he be removed as party defendant from the complaint
on the grounds that he had `voluntarily surrendered or turned over
any share in his name on [sic] any of the corporations referred to,
aside from disclaiming any interest, ownership or right thereon to
the Government of the Republic of the Philippines' and that he
was `entitled to the immunity granted by the Presidential
Commission on Good Government pursuant to Executive Order
No. 14, under the Commission's Resolution dated May 28, 1986 to
Mr. Jose Y. Campos and his family' he `being a member of the
immediate family of Jose Y. Campos.'

x x x x

In the instant case, the PCGG issued a resolution dated May 28,
1986, granting immunity from both civil and criminal prosecutions
to Jose Y. Campos and his family. The pertinent provisions of the
resolution read as follows:
"3.0. In consideration of the full cooperation of Mr. Jose Y.
Campos to this Commission, his voluntary surrender of the
properties and assets disclosed and declared by him to belong to
deposed President Ferdinand E. Marcos to the Government of the
Republic of the Philippines, his full, complete and truthful
disclosures, and his commitment to pay a sum of money as
determined by the Philippine Government, this Commission has
decided and agreed:

x x x x

Undoubtedly, this resolution embodies a compromise agreement
between the PCGG on one hand and Jose Y. Campos on the
other. Hence, in exchange for the voluntary surrender of the ill-
gotten properties acquired by the then President Ferdinand E.
Marcos and his family which were in Jose Campos' control, the
latter and his family were given full immunity in both civil and
criminal prosecutions. x x x

x x x x

By virtue of the PCGG's May 28, 1986 resolution, Jose Campos,
Jr. was given full immunity from both civil and criminal
prosecutions in exchange for the "full cooperation of Mr. Jose Y.
Campos to this Commission, his voluntary surrender of the
properties and assets disclosed and declared by him to belong to
deposed President Ferdinand E. Marcos to the Government of the
Republic of the Philippines, his full, complete and truthful
disclosures, and his commitment to pay a sum of money as
determined by the Philippine Government." In addition, Campos,
Jr. had already waived and surrendered to the Republic his
registered equity interest in the Marcos/Romualdez corporations
involved in the civil case.
[11]


Even as the Republic of the Philippines is now the owner of the
properties in view of the voluntary surrender of MPLDC by its
former registered owner, Campos, to the State, such transfer does
not prevent a third party with a better right from claiming such
properties in the proper forum. In the meantime, the Republic of
the Philippines is the presumptive owner of the properties for
taxation purposes.

Section 234(a) of Republic Act No. 7160 states that properties
owned by the Republic of the Philippines are exempt from real
property tax "except when the beneficial use thereof has been
granted, for consideration or otherwise, to a taxable person."
Thus, the portions of the properties not leased to taxable entities
are exempt from real estate tax while the portions of the properties
leased to taxable entities are subject to real estate tax. The law
imposes the liability to pay real estate tax on the Republic of the
Philippines for the portions of the properties leased to taxable
entities. It is, of course, assumed that the Republic of the
Philippines passes on the real estate tax as part of the rent to the
lessees.

In Philippine Fisheries Development Authority v. Central Board of
Assessment Appeals,
[12]
the Court held:
In the 2007 case of Philippine Fisheries Development Authority v. Court
of Appeals,
[ ]
the Court resolved the issue of whether the PFDA is a
government-owned or controlled corporation or an instrumentality
of the national government. In that case, the City of Iloilo
assessed real property taxes on the Iloilo Fishing Port
Complex (IFPC), which was managed and operated by
PFDA. The Court held that PFDA is an instrumentality of
the government and is thus exempt from the payment of real
property tax, thus:
The Court rules that the Authority is not a GOCC but an
instrumentality of the national government which is generally
exempt from payment of real property tax. However, said
exemption does not apply to the portions of the IFPC which
the Authority leased to private entities. With respect to these
properties, the Authority is liable to pay property tax.
Nonetheless, the IFPC, being a property of public dominion
cannot be sold at public auction to satisfy the tax delinquency.

x x x x

This ruling was affirmed by the Court in a subsequent PFDA case
involving the Navotas Fishing Port Complex, which is also
managed and operated by the PFDA. In consonance with the
previous ruling, the Court held in the subsequent PFDA case
that the PFDA is a government instrumentality not subject to
real property tax except those portions of the Navotas
Fishing Port Complex that were leased to taxable or private
persons and entities for their beneficial use.

Similarly, we hold that as a government instrumentality, the
PFDA is exempt from real property tax imposed on the
Lucena Fishing Port Complex, except those portions which
are leased to private persons or entities.
[13]
(Emphasis supplied)

In Government Service Insurance System v. City Treasurer of the City of
Manila,
[14]
the Court held:
x x x The tax exemption the property of the Republic or its
instrumentalities 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 of Php 54,826,599.37 covering 1992 to 2002 over
the subject Katigbak property is valid insofar as said tax
delinquency is concerned as assessed over said property.
[15]

(Emphasis supplied)

In Manila International Airport Authority v. Court of Appeals,
[16]
the
Court held:
x x x Section 234(a) of the Local Government Code states that
real property owned by the Republic loses its tax exemption
only if the "beneficial use thereof has been granted, for
consideration or otherwise, to a taxable person." MIAA, as a
government instrumentality, is not a taxable person under Section
133(o) of the local Government Code. Thus, even if we assume
that the Republic has granted to MIAA the beneficial use of the
Airport Lands and Buildings, such fact does not make these real
properties subject to real estate tax.

However, portions of the Airport Lands and Buildings that
MIAA leases to private entities are not exempt from real
estate tax. For example, the land area occupied by hangars
that MIAA leases to private corporations is subject to real
estate tax. In such a case, MIAA has granted the beneficial
use of such land area for a consideration to a taxable person
and therefore such land area is subject to real estate tax.
[17]

(Emphasis supplied)

In Lung Center of the Philippines v. Quezon City,
[18]
the Court held:
x x x While portions of the hospital are used for the treatment of
patients and the dispensation of medical services to them, whether
paying or non-paying, other portions thereof are being leased to
private individuals for their clinics and a canteen. Further, a
portion of the land is being leased to a private individual for her
business enterprise under the business name "Elliptical Orchids
and Garden Center." Indeed, the petitioner's evidence shows that
it collected P1,136,483.45 as rentals in 1991 and P1,679,999.28 for
1992 from the said lessees.

Accordingly, we hold that 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.
[19]
(Emphasis
supplied)

Article 420 of the Civil Code classifies as properties of public
dominion those that are "intended for public use, such as roads,
canals, rivers, torrents, ports and bridges constructed by the State,
banks, shores, roadsteads" and those that "are intended for some
public service or for the development of the national wealth."
Properties of public dominion are not only exempt from real estate
tax, they are exempt from sale at public auction. In Heirs of Mario
Malabanan v. Republic,
[20]
the Court held that, "It is clear that
property of public dominion, which generally includes property
belonging to the State, cannot be x x x subject of the commerce of
man."
[21]


In Philippine Fisheries Development Authority v. Court of Appeals,
[22]
the
Court held:
x x x [T]he real property tax assessments issued by the City of
Iloilo should be upheld only with respect to the portions leased to
private persons. In case the Authority fails to pay the real
property taxes due thereon, said portions cannot be sold at
public auction to satisfy the tax delinquency. In Chavez v. Public
Estates Authority it was held that reclaimed lands are lands of the
public dominion and cannot, without Congressional fiat, be
subject of a sale, public or private x x x.

In the same vein, the port built by the State in the Iloilo
fishing complex is a property of the public dominion and
cannot therefore be sold at public auction. Article 420 of the
Civil Code, provides:

"Article 420. The following things are property of public
dominion:
1. Those intended for public use, such as roads, canals, rivers,
torrents, ports and bridges constructed by the State, banks,
shores, roadsteads, and others of similar character;
2. Those which belong to the State, without being for public
use, and are intended for some public service or for the
development of the national wealth."

The Iloilo fishing port which was constructed by the State for
public use and/or public service falls within the term "port"
in the aforecited provision. Being a property of public
dominion the same cannot be subject to execution or
foreclosure sale. In like manner, the reclaimed land on which the
IFPC is built cannot be the object of a private or public sale
without Congressional authorization.
[23]
(Emphasis supplied)

In Manila International Airport Authority,
[24]
the Court held:
x x x [T]he Airport Lands and Buildings of MIAA are properties
devoted to public use and thus are properties of public dominion.
Properties of public dominion are owned by the State or the
Republic. Article 420 of the Civil Code provides:
Art. 420. The following things are property of public dominion:

(1) Those intended for public use, such as roads, canals, rivers,
torrents, ports and bridges constructed by the State, banks, shores,
roadsteads, and others of similar character;

(2) Those which belong to the State, without being for public use,
and are intended for some public service or for the development
of the national wealth.


The term "ports x x x constructed by the Sate" includes airports
and seaports. The Airport Lands and Buildings of MIAA are
intended for public use, and at the very least intended for public
service. Whether intended for public use or public service, the
Airport Lands and Buildings are properties of public dominion. As
properties of public dominion, the the Airport lands and Buildings
are owned by the Republic and thus exempt from real estate tax
under Section 234(a) of the Local Government Code.

x x x x

Under Article 420 of the Civil Code, the Airport Lands and
Buildings of MIAA, being devoted to public use, are properties of
public dominion and thus owned by the State or the Republic of
the Philippines. Article 420 specifically mentions "ports x x x
constructed by the State," which includes public airports and
seaports, as properties of public dominion and owned by the
Republic. As properties of public dominion owned by the
Republic, there is no doubt whatsoever that the Airport Lands and
Buildings are expressly exempt from real estate tax under Section
234(a) of the local Government Code. This Court has also
repeatedly ruled that properties of public dominion are not
subject to execution or foreclosure sale.
[25]
(Emphasis supplied)

In the present case, the parcels of land are not properties of public
dominion because they are not "intended for public use, such as
roads, canals, rivers, torrents, ports and bridges constructed by the
State, banks, shores, roadsteads." Neither are they "intended for
some public service or for the development of the national
wealth." MPLDC leases portions of the properties to different
business establishments. Thus, the portions of the properties
leased to taxable entities are not only subject to real estate tax, they
can also be sold at public auction to satisfy the tax delinquency.

In sum, only those portions of the properties leased to taxable
entities are subject to real estate tax for the period of such leases.
Pasig City must, therefore, issue to respondent new real property
tax assessments covering the portions of the properties leased to
taxable entities. If the Republic of the Philippines fails to pay the
real property tax on the portions of the properties leased to taxable
entities, then such portions may be sold at public auction to satisfy
the tax delinquency.

WHEREFORE, the petition is PARTIALLY GRANTED. The
Court SETS ASIDE the 17 October 2008 Decision of the Court
of Appeals in CA-G.R. SP No. 97498 and declares VOID the 30
September 2002 real property tax assessment issued by Pasig City
on the subject properties of Mid-Pasig Land Development
Corporation, the 8 November 2005 warrants of levy on the
properties, and the 2 December 2005 auction sale. Pasig City is
DIRECTED to issue to respondent new real property tax
assessments covering only the portions of the properties actually
leased to taxable entities, and only for the period of such leases.
Interests and penalties on such new real property tax assessment
shall accrue only after receipt of such new assessment by
respondent.

SO ORDERED.

Brion, Peralta,
*
Perez, and Mendoza,
**
JJ., concur