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REAL PROPERTY TAXATION

(Case digests)
_____________________________
In partial fulfillment
Of the requirements
For the subject on Taxation Law
Saint Louis University
School of Law
_____________________________
Submitted to:
ATTY. CHRISTINE ELVEA-CARANTES
_____________________________
Submitted by:
AMEDA, KENJIE C.
BASCOS, GIDEON LUKE
NABOYE, LASKER JESUS FERDINAND III
_____________________________
Submitted on:
14 March 2014

TABLE OF CONTENTS
1. Allied Banking vs. the Quezon City Government,
G. R. NO. 154126 September 15, 2006
.......4
2. Caltex v. Central Board of Assessment

31 May 1982
..8

3. Sta. Lucia Realty & Development, Inc. vs. City of Pasig


G.R. No. 166838 June 15, 2011 ..
10
4. Manila International Airport Authority vs. Paranaque
G.R. No. 155650 July 20, 2006
....13
5. Manila International Airport Authority vs. City of Pasay
April 2, 2009
GR NO. 163072
15
6. Lung Center of the Philippines vs. Quezon City
GR No. 144104
June 29, 2004
..17
7. Light Rail Transit Authority vs. Central Board of Assessment
GR NO. 127316 October 12, 2000
.19
8. National Power Corporation vs. Province of Quezon
G.R. No. 171586 January 25, 2010
.21
9. National Power Corporation vs. Central Board of Assessment
GR NO 171470
January 30, 2009 ...
..24
10.
Philippine Fisheries Development vs. Central Board of
Assessment
G.R. No. 178030
December 15, 2010
.....26
11.

City of Pasig vs. Republic of the Philippines


G.R. No. 185023
August 24, 2011
28

Testate estate of Lim vs. City of Manila


G.R. No. 90639
February 21, 1990 ...
30

12.

13.

Government Insurance System vs. City Treasurer of Manila


G.R. No. 186242
December 23, 2009
.....32

Jaime Lopez vs. City of Manila


G.R. No. 127139 February 19, 1999 ....
34

Antonio Callanta, et. al. vs. Office of the Ombudsman


G.R. Nos. 115253-74
January 30, 1998
.37

Manila Electric Company vs. NeliaBarlis


G.R. No. 114231 February 1, 2002
..39

Antonio Talusanvs. HerminigildoTayag


G.R. No. 133698
April 4, 2001 ....
41

Hon. Franklin Drilonvs. Mayor Alfredo Lim


G.R. No. 112497 August 4, 1994 ......
43

Antonio Reyes vs. Court of Appeals


G.R. No. 118233 December 10, 1999 ..
45

Hagonoy Market Vendor Association vs. Municipality of Hagonoy


GR no. 137621
February 6, 2002 ...
..47

Alejandro Ty vs. Honorable Aurelio Trampe


G.R. No. 117577 December 1, 1995 ..
.49

Systems Plus Computer of Caloocan City vs. LGU of Caloocan


GR. No. 146382 August 7, 2003 .
51

Dr. Pablo Olivares vs. Mayor Joey Marquez


G.R. No. 155591 September 22, 2004 .
53

14.

15.

16.

17.

18.

19.

20.

21.

22.

23.

24.

Cagayan Robina Sugar Milling Corporation vs. Court of Appeals


G.R. No. 122451 12 October 2000 .
.55

Manila Electric Cooperative vs. NeliaBarlis


G.R. No. 114231 May 18, 2001 ..
57

Manila Electric Company vs. NeliaBarlis


G.R. No. 114231 February 1, 2002 .
.59

Manila Electric Company vs. NeliaBarlis


G.R. No. 114231 June 29, 2004 ....
61

National Power Corporation vs. Province of Quezon


G.R. No. 171586 January 25, 2010 .
63

Denis Habawelvs. Court of Tax Appeals


G.R. No. 174759
September 7, 2011 .
.66

City Mayor of Quezon City vs. RCBC


GR no 171033
20 August 2008 ....
69

25.

26.

27.

28.

29.

30.

31.Aquino vs. Quezon City


G.R. No. 137534
71
32.

March 3, 2006 ....

National Housing Authority vs. Iloilo City


GR No. 172267 20 August 2008 ..
..73

RE: APPRAISAL AT CURRENT FAIR MARKET VALUE AND BASED ON


ACTUAL USE.

ALLIED BANKING CORPORATION AS TRUSTEE FOR THE TRUST


FUND OF COLLEGE ASSURANCE PLAN PHILIPPINES, INC. (CAP)
vs.
THE QUEZON CITY GOVERNMENT, THE QUEZON CITY TREASURER,
THE QUEZON CITY ASSESSOR AND THE CITY MAYOR OF QUEZON
CITY
G.R. No. 154126October 11, 2005
CARPIO MORALES, J.:
FACTS:
On December 19, 1995, the Quezon City government enacted City
Ordinance No. 357, Series of 1995 which provided that that parcels of land
sold, ceded, transferred and conveyed for remuneratory consideration after
the effectivity of this revision shall be subject to real estate tax based on the
actual amount reflected in the deed of conveyance or the current approved
zonal valuation of the Bureau of Internal Revenue prevailing at the time of
sale, cession, transfer and conveyance, whichever is higher, as evidenced by
the certificate of payment of the capital gains tax issued therefor.
On July 1, 1998, petitioner, as trustee for College Assurance Plan of the
Philippines, Inc., purchased from Liwanag C. Natividad et al. a 1,000 square
meter parcel of land located along Aurora Boulevard, Quezon City in the
amount of P38, 000,000.Prior to the sale, Natividad et al. had been paying
the total amount of P85, 050 as annual real property tax based on the
propertys fair market value of P4, 500,000.00 and assessed value of P1,
800,000.00.
After its acquisition of the property, petitioner wasrequired to pay
P102, 600.00 as quarterly real estate tax (or P410, 400.00 annually) which
pegged the market value of the property at P38, 000,000.00 the
consideration appearing in the Deed of Absolute Sale, and its assessed value
at P15, 200,000. Petitioner paid the quarterly real estate tax for the property
from the 1st quarter of 1999 up to the 3 rd quarter of 2000. Its tax payments
for the 2nd, 3rd, and 4th quarter of 1999, and 1st and 2nd quarter of 2000 were,
however, made under protest.
In its written protest with the City Treasurer, petitioner assailed Section
3 of the ordinance as null and void, it contending that the proviso is unjust,
excessive, oppressive, unreasonable, confiscatory and contrary to Section
130 of the Local Government Code. Petitioner later sent a March 24, 2000
demand letter to the Quezon City Treasurers Office seeking a refund of the
real estate taxes it erroneously collected from it. The letter was referred for
appropriate action to the City Assessor who, by letter dated May 7, 2000,
denied the demand for refund on the ground that the ordinance is presumed
valid and legal unless otherwise declared by a court of competent
jurisdiction.
ISSUE:
4

WHETHER OR NOT the proviso fixing the appraised value of property at


the stated consideration at which the property was last sold is valid
RULING:
This Court holds that the proviso in question is invalid as it adopts a
method of assessment or appraisal of real property contrary to the Local
Government Code, its Implementing Rules and Regulations and the Local
Assessment Regulations No. 1-92 issued by the Department of Finance.
Under these immediately stated authorities, real properties shall be
appraised at the current and fair market value prevailing in the locality
where the property is situated and classified for assessment purposes on the
basis of its actual use.
Fair market value is the price at which a property may be sold by a
seller who is not compelled to sell and bought by a buyer who is not
compelled to buy, taking into consideration all uses to which the property is
adapted and might in reason be applied. The criterion established by the
statute contemplates a hypothetical sale. Hence, the buyers need not be
actual and existing purchasers.
As this Court stressed in Reyes v. Almanzor, assessors, in fixing the
value of real property, have to consider all the circumstances and elements
of value, and must exercise prudent discretion in reaching conclusions. In
this regard, Local Assessment Regulations No. 1-92 establishes the
guidelines to assist assessors in classifying, appraising and assessing real
property.
Local Assessment Regulations No. 1-92 suggests three approaches in
estimating the fair market value, namely: (1) the sales analysis or market
data approach; (2) the income capitalization approach; and (3) the
replacement or reproduction cost approach.
Under the sales analysis approach, the price paid in actual market
transactions is considered by taking into account valid sales data
accumulated from among the various sources stated in Sections 202, 203,
208, 209, 210, 211 and 213 of the Code.
In the income capitalization approach, the value of an incomeproducing property is no more than the return derived from it. An analysis of
the income produced is necessary in order to estimate the sum which might
be invested in the purchase of the property.
The reproduction cost approach, on the other hand, is a factual
approach used exclusively in appraising man-made improvements such as
buildings and other structures, based on such data as materials and labor
costs to reproduce a new replica of the improvement.
Accordingly, this Court holds that the proviso directing that the real
property tax be based on the actual amount reflected in the deed of
conveyance or the prevailing BIR zonal value is invalid not only because it
mandates an exclusive rule in determining the fair market value but more so
because it departs from the established procedures stated in the Local
5

Assessment Regulations No. 1-92 and unduly interferes with the duties
statutorily placed upon the local assessor by completely dispensing with his
analysis and discretion which the Code and the regulations require to be
exercised. An ordinance that contravenes any statute is ultra vires and void.
Further, it is noted that there is nothing in the Charter of Quezon City
and the Quezon City Revenue Code of 1993 that authorize public
respondents to appraise property at the consideration stated in the deed of
conveyance.Using the consideration appearing in the deed of conveyance to
assess or appraise real properties is not only illegal since the appraisal,
assessment, levy and collection of real property tax shall not be let to any
private person, but it will completely destroy the fundamental principle in
real property taxation that real property shall be classified, valued and
assessed on the basis of its actual use regardless of where located, whoever
owns it, and whoever uses it. Necessarily, allowing the parties to a private
sale to dictate the fair market value of the property will dispense with the
distinctions of actual use stated in the Code and in the regulations.
The invalidity of the assessment or appraisal system adopted by the
proviso is not cured even if the proviso mandates the comparison of the
stated consideration as against the prevailing BIR zonal value, whichever is
higher, because an integral part of that system still permits valuing real
property in disregard of its actual use.
In the same vein, there is also nothing in the Code or the regulations
showing the congressional intent to require an immediate adjustment of
taxes on the basis of the latest market developments as, in fact, real
property assessments may be revised and/or increased only once every
three (3) years. Consequently, the real property tax burden should not be
interpreted to include those beyond what the Code or the regulations
expressly and clearly state.
While the Local Government Code provides that the assessment of
real property shall not be increased oftener than once every three (3) years,
the questioned part of the proviso subjects the real property to a tax based
on the actual amount appearing on the deed of conveyance or the current
approved zonal valuation of the Bureau of Internal Revenue prevailing at the
time of sale, cession, transfer and conveyance, whichever is higher. As such,
any subsequent sale during the three-year period will result in a real property
tax higher than the tax assessed at the last prior conveyance within the
same period. To save on taxes, real property owners or administrators are
forced to hold on to the property until after the said three-year period has
lapsed. Should they nonetheless decide to sell within the said three-year
period, they are compelled to dispose the property at a price not exceeding
that obtained from the last prior conveyance in order to avoid a higher tax
assessment. In these two scenarios, real property owners are effectively
prevented from obtaining the best price possible for their properties and
unduly hampers the equitable distribution of wealth.
In fine, public respondent Quezon City Government exceeded its
statutory authority when it enacted the proviso in question. The provision is
6

thus null and void ab initio for being ultra vires and for contravening the
provisions of the Local Government Code, its implementing regulations and
the Local Assessment Regulations No. 1-92. As such, it acquired no legal
effect and conferred no rights from its inception.

RE: PROPERTIES COVERED.


CALTEX (PHILIPPINES) INC., petitioner,
vs.
CENTRAL BOARD OF ASSESSMENT APPEALS and CITY ASSESSOR OF
PASAY, respondents.
G.R. No. L-50466 May 31, 1982
AQUINO, J.:
Facts:
This case is about the realty tax on machinery and equipment installed
by Caltex (Philippines) Inc. in its gas stations located on leased land.
The machines and equipment consists of underground tanks, elevated
tank, elevated water tanks, water tanks, gasoline pumps, computing pumps,
water pumps, car washer, car hoists, truck hoists, air compressors and
tireflators. The city assessor described the said equipment and machinery in
this manner:
The said machines and equipment are loaned by Caltex to gas station
operators under an appropriate lease agreement or receipt. It is stipulated in
the lease contract that the operators, upon demand, shall return to Caltex
7

the machines and equipment in good condition as when received, ordinary


wear and tear excepted.
The lessor of the land, where the gas station is located, does not
become the owner of the machines and equipment installed therein. Caltex
retains the ownership thereof during the term of the lease.
The city assessor of Pasay City characterized the said items of gas
station equipment and machinery as taxable realty. The city board of tax
appeals ruled that they are personalty. The assessor appealed to the Central
Board of Assessment Appeals.
Issue:
Whether or not the pieces of gas station equipment and machinery are
subject to realty tax.
Held:
Yes.
We hold that the said equipment and machinery, as appurtenances to
the gas station building or shed owned by Caltex and which fixtures are
necessary to the operation of the gas station, for without them the gas
station would be useless, and which have been attached or affixed
permanently to the gas station site or embedded therein, are taxable
improvements and machinery subject to Real Property Tax.
Improvements on land are commonly taxed as realty even though for
some purposes they might be considered personalty. It is a familiar
phenomenon to see things classed as real property for purposes of taxation
which on general principle might be considered personal property.
This case is easily distinguishable from Board of Assessment Appeals
vs. Manila Electric Co., 119 Phil. 328, where Meralco's steel towers were
considered poles within the meaning of paragraph 9 of its franchise which
exempts its poles from taxation. The steel towers were considered personalty
because they were attached to square metal frames by means of bolts and
could be moved from place to place when unscrewed and dismantled.
Nor are Caltex's gas station equipment and machinery the same as
tools and equipment in the repair shop of a bus company which were held to
be personal property not subject to realty tax (Mindanao Bus Co. vs. City
Assessor, 116 Phil. 501).
The Central Board of Assessment Appeals did not commit a grave
abuse of discretion in upholding the city assessor's is imposition of the realty
tax on Caltex's gas station and equipment.

RE: PROPERTIES COVERED.


STA. LUCIA REALTY & DEVELOPMENT, INC.
vs.
City of Pasig
G.R. No. 166838, June 15, 2011
LEONARDO-DE CASTRO, J.
FACTS:
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. The parcel of land
covered by TCT No. 39112 was consolidated with that covered by TCT No.
518403, which was situated in Barrio TatlongKawayan, Municipality of Cainta,
Province of Rizal. The two combined lots were subsequently partitioned into
three, for which TCT Nos. 532250, 598424, and 599131, now all bearing the
Cainta address, were issued.
TCT No. 39110 was also divided into two lots, becoming TCT Nos.
92869 and 92870.
The lot covered by TCT No. 38457 was not segregated, but a
commercial building owned by Sta. Lucia East Commercial Center, Inc., a
separate corporation, was built on it.
Upon Pasigs petition to correct the location stated in TCT Nos. 532250,
598424, and 599131, the Land Registration Court, on June 9, 1995, ordered
the amendment of the TCTs to read that the lots with respect to TCT No.
39112 were located in Barrio TatlongKawayan, Pasig City.
On January 31, 1994, Cainta filed a petitionfor the settlement of its
land boundary dispute with Pasig before the RTC, Branch 74 of Antipolo City.
This case, docketed as Civil Case No. 94-3006, is still pending up to this date.
9

On November 28, 1995, Pasig filed a Complaint, docketed as Civil Case


No. 65420, against Sta. Lucia for the collection of real estate taxes, including
penalties and interests, on the lots covered by TCT Nos. 532250, 598424,
599131, 92869, 92870 and 38457, including the improvements thereon (the
subject properties).
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.
The RTC ruled in favor of Pasig. Upon Pasig's motion for execution
pending appeal, the same was granted by the RTC. The CA ruled in favor of
Sta. Lucia. Hence, this petition.
ISSUE:
Whether Sta. Lucia should continue paying its real property taxes to
Cainta, as it alleged to have always done, or to Pasig, as the location stated
in Sta. Lucias TCTs.
HELD:
Under Presidential Decree No. 464, or the Real Property Tax
Code, the authority to collect real property taxes is vested in the locality
where the property is situated. This requisite was reiterated in Republic Act
No. 7160, or the Local Government Code. Thus, while a local government
unit is authorized under several laws to collect real estate tax on properties
falling under its territorial jurisdiction, it is imperative to first show that these
properties are unquestionably within its geographical boundaries. The Court
cited the case of Mariano, Jr. v Commission on Elections which stated that
the importance of drawing with precise strokes the territorial boundaries of
a local unit of government cannot be overemphasized. The boundaries must
be clear for they define the limits of the territorial jurisdiction of a local
government unit. It can legitimately exercise powers of government only
within the limits of its territorial jurisdiction. Beyond these limits, its acts are
ultra vires. Clearly therefore, the local government unit entitled to
collect real property taxes from Sta. Lucia must undoubtedly show that the
subject properties are situated within its territorial jurisdiction; otherwise, it
would be acting beyond the powers vested to it by law.
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 Pasigs and Caintas 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
10

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 CAG.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.

RE: PROPERTIES EXEMPT.


11

Manila International Airport Authority


Vs.
Paranaque
G.R. No. 155650, July 20, 2006
FACTS:
The Manila International Airport Authority (MIAA) operates the Ninoy
Aquino International Airport (NAIA) Complex in Paraaque City under
Executive Order No. 903 (MIAA Charter), as amended. As such operator, it
administers the land, improvements and equipment within the NAIA
Complex. In March 1997, the Office of the Government Corporate Counsel
(OGCC) issued Opinion No. 061 to the effect that the Local Government Code
of 1991 (LGC) withdrew the exemption from real estate tax granted to MIAA
under Section 21 of its Charter.
Thus, MIAA paid some of the real estate tax already due. In June 2001,
it received Final Notices of Real Estate Tax Delinquency from the City of
Paraaque for the taxable years 1992 to 2001. The City Treasurer
subsequently issued notices of levy and warrants of levy on the airport lands
and buildings.
At the instance of MIAA, the OGCC issued Opinion No. 147 clarifying
Opinion No. 061, pointing out that Sec. 206 of the LGC requires persons
exempt from real estate tax to show proof of exemption. According to the
OGCC, Sec. 21 of the MIAA Charter is the proof that MIAA is exempt from real
estate tax. MIAA, thus, filed a petition with the Court of Appeals seeking to
restrain the City of Paraaque from imposing real estate tax on, levying
against, and auctioning for public sale the airport lands and buildings, but
this was dismissed for having been filed out of time.
ISSUE:
Whether or not the airport lands and buildings of MIAA are exempt
from
real
estate
tax?
HELD:
The airport lands and buildings of MIAA are exempt from real estate tax
imposed by local governments. Sec. 243(a) of the LGC exempts from real
estate tax any real property owned by the Republic of the Philippines. This
exemption should be read in relation with Sec. 133 (o) of the LGC, which
provides that the exercise of the taxing powers of local governments shall
not extend to the levy of taxes, fees or charges of any kind on the National
Government, its agencies and instrumentalities.
These provisions recognize the basic principle that local governments
cannot tax the national government, which historically merely delegated to
local governments the power to tax.
The rule is that a tax is never presumed and there must be clear
language in the law imposing the tax. This rule applies with greater force
12

when local governments seek to tax national government instrumentalities.


Moreover, a tax exemption is construed liberally in favor of national
government instrumentalities.
MIAA is not a GOCC, but an instrumentality of the government.
The Republic remains the beneficial owner of the properties. MIAA itself
is owned solely by the Republic. At any time, the President can transfer back
to the Republic title to the airport lands and buildings without the Republic
paying MIAA any consideration. As long as the airport lands and buildings are
reserved for public use, their ownership remains with the State. Unless the
President issues a proclamation withdrawing these properties from public
use, they remain properties of public dominion. As such, they are inalienable,
hence, they are not subject to levy on execution or foreclosure sale, and they
are exempt from real estate tax.
However, portions of the airport lands and buildings that MIAA leases
to private entities are not exempt from real estate tax. In such a case, MIAA
has granted the beneficial use of such portions for a consideration to a
taxable person.

RE: PROPERTIES EXEMPT.


Manila International Airport Authority
vs.
City of Pasay
April 2, 2009
GR NO. 163072
FACTS:
Petitioner Manila International Airport Authority (MIAA) operates and
administers the Ninoy Aquino International Airport (NAIA) Complex under
Executive Order No. 903 (EO 903), otherwise known as the Revised Charter
of the Manila International Airport Authority. Under Sections 3 and 22 of EO
903, approximately 600 hectares of land, including the runways, the airport
tower, and other airport buildings, were transferred to MIAA. The NAIA
Complex is located along the border between Pasay City and Paraaque City.
13

MIAA received Final Notices of Real Property Tax Delinquency from the
City of Pasay for the taxable years 1992 to 2001. The City of Pasay, through
its City Treasurer, issued notices of levy and warrants of levy for the NAIA
Pasay properties. Thereafter, the City Mayor of Pasay threatened to sell at
public auction the NAIA Pasay properties if the delinquent real property taxes
remain unpaid.
MIAA filed with the Court of Appeals a petition for prohibition and
injunction with prayer for preliminary injunction or temporary restraining
order. The petition sought to enjoin the City of Pasay from imposing real
property taxes on, levying against, and auctioning for public sale the NAIA
Pasay properties.
Court of Appeals: Upheld the power of the City of Pasay to impose and
collect realty taxes on the NAIA Pasay properties. Sections 193 and 234 of
Republic Act No. 7160 or the Local Government Code withdrew the
exemption from payment of real property taxes granted to natural or juridical
persons, including government owned or controlled corporations. Since MIAA
is a government-owned corporation, it follows that its tax exemption under
Section 21 of EO 903 has been withdrawn upon the effectivity of the Local
Government Code.
ISSUE:
Whether or not the NAIA Pasay properties of MIAA are exempt from real
property tax
HELD:
1. MIAA is a government "instrumentality" that does not qualify as a
"government-owned or controlled corporation. Under Section 133(o) of the
Local Government Code, local government units have no power to tax
instrumentalities of the national government. Therefore, MIAA is exempt from
any kind of tax from the local governments.
A government "instrumentality" may or may not be a "governmentowned or controlled corporation" (Section 2(10) of the Introductory Provisions
of the Administrative Code of 1987). A government-owned or controlled
corporation must be "organized as a stock or non-stock corporation." MIAA is
not organized as a stock or non-stock corporation. It is not a stock
corporation because it has no capital stock divided into shares. It is also not
a non-stock corporation because it has no members. The Government cannot
be considered as the sole member of MIAA because nonstick corporations
cannot distribute any part of their income to their members. Section 11 of
the MIAA Charter mandates MIAA to remit 20% of its annual gross operating
income to the National Treasury.
MIAA is like any other government instrumentality, but is vested with
corporate powers to perform efficiently its governmental functions. When the
law vests in a government instrumentality corporate powers, the
instrumentality does not become a corporation.
14

2. The airport lands and buildings of MIAA are properties of public


dominion intended for public use, and as such are exempt from real property
tax under Section 234(a) of the Local Government Code.

RE: PROPERTIES EXEMPT.


Lung Center of the Philippines vs. Quezon City
GR No. 144104 June 29, 2004
Facts:
Lung Center of the Philippines is a non-stock and non-profit entity
established by virtue of PD No. 1823. It is the registered owner of the land on
which the Lung Center of the Philippines Hospital is erected. A big space in
the ground floor of the hospital is being leased to private parties, for canteen
and small store spaces, and to medical or professional practitioners who use
the same as their private clinics. Also, a big portion on the right side of the
hospital is being leased for commercial purposes to a private enterprise
known as the Elliptical Orchids and Garden Center.
When the City Assessor of Quezon City assessed both its land and
hospital building for real property taxes, the Lung Center of the Philippines
filed a claim for exemption on its averment that it is a charitable institution
with a minimum of 60% of its hospital beds exclusively used for charity
patients and that the major thrust of its hospital operation is to serve charity
patients. The claim for exemption was denied, prompting a petition for the
reversal of the resolution of the City Assessor with the Local Board of
Assessment Appeals of Quezon City, which denied the same. On appeal, the
Central Board of Assessment Appeals of Quezon City affirmed the local
boards decision, finding that Lung Center of the Philippines is not a
charitable institution and that its properties were not actually, directly and
15

exclusively used for charitable purposes. Hence, the present petition for
review with averments that the Lung Center of the Philippines is a charitable
institution under Section 28(3), Article VI of the Constitution, notwithstanding
that it accepts paying patients and rents out portions of the hospital building
to private individuals and enterprises.
Issue:
Is the Lung Center of the Philippines a charitable institution within the
context of the Constitution, and therefore, exempt from real property tax?
Held:
The Lung Center of the Philippines is a charitable institution. To
determine whether an enterprise is a charitable institution or not, the
elements which should be considered include the statute creating the
enterprise, its corporate purposes, its constitution and by-laws, the methods
of administration, the nature of the actual work performed, that character of
the services rendered, the indefiniteness of the beneficiaries and the use and
occupation of the properties.
However, under the Constitution, in order to be entitled to exemption
from real property tax, there must be clear and unequivocal proof that (1) it
is a charitable institution and (2)its real properties are ACTUALLY, DIRECTLY
and EXCLUSIVELY used for charitable purposes. While portions of the hospital
are used for 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 and enterprises.
Exclusive is defined as possessed and enjoyed to the exclusion of
others, debarred from participation or enjoyment. If real property is used for
one or more commercial purposes, it is not exclusively used for the
exempted purposes but is subject to taxation.

16

RE: PROPERTIES EXEMPT.


LIGHT RAIL TRANSIT AUTHORITY, petitioner,
vs.
CENTRAL BOARD OF ASSESSMENT APPEALS, BOARD OF ASSESSMENT
APPEALS OF MANILA and the CITY ASSESSOR OF MANILA,
respondents.
G.R. No. 127316. October 12, 2000]
PANGANIBAN, J.:
FACTS:
The Light Rail Transit Authority (LRTA), a government-owned and controlled
corporation, acquired real properties upon which it constructed structural
improvements, such as buildings, carriageways, passenger terminal stations,
and installed various kinds of machinery and equipment and facilities. After
commencement of its operations, the respondent City Assessor of Manila
assessed the real properties the LRTA, consisting of lands, buildings,
carriageways and passenger terminal stations, machinery and equipment
which he considered real property under the Real Property Tax Code. The
LRTA paid its real property taxes on all its real property holdings, except the
carriageways and passenger terminal stations including the land where it
was constructed on the ground that the same were not real properties under
the Real Property Tax Code, and if the same are real property, these were for
public use, therefore, exempt from realty taxation.
ISSUE:
Whether or not the subject carriageways and stations are taxable as
improvements under the Real Property Tax Code
RULING:
YES. Though the creation of the LRTA was impelled by public service, its
operation undeniably partakes of an ordinary business. The LRTA is clothed
with corporate status and corporate powers in the furtherance of its
proprietary objectives. Given that it is engaged in a service-oriented
commercial endeavor, its carriageways and terminal stations are patrimonial
17

property subject to tax, notwithstanding its claim of being a governmentowned or controlled corporation. And although the LRTA's carriageways and
terminal stations are anchored, at certain points, on public roads, it must be
emphasized that these structures do not form part of such roads, since the
former have been constructed over the latter in such a way that the flow of
vehicular traffic would not be impeded. Carriageways or passenger terminals
are elevated structures which are not freely accessible to the public, viz-a-viz
roads which are public improvements openly utilized by the public. These
carriageways and terminal stations are part and parcel of the light rail transit
(LRT) system which, unlike public roads, are not open to use by the general
public. The carriageways are accessible only to the LRT trains, while the
terminal stations have been built for the convenience of LRTA itself and its
customers who pay the required fare. Furthermore, even granting that the
national government indeed owns the carriageways and terminal stations,
the exemption would not apply because their beneficial use has been
granted to the LRTA, which is a taxable entity.

RE: PROPERTIES EXEMPT.


National Power Corporation
Vs.
Province of Quezon
G.R. No. 171586
January 25, 2010
FACTS:
18

The Province of Quezon assessed Mirant Pagbilao Corporation for


unpaid real property taxes in the amount of P1.5 Billion for the machineries
located in its power plant in Pagbilao, Quezon. Napocor, which entered into a
Build-Operate-Transfer (BOT) Agreement (entitled Energy Conversion
Agreement) with Mirant, was furnished a copy of the tax assessment.
Napocor (not Mirant) protested the assessment before the Local Board of
Assessment Appeals (LBAA), claiming entitlement to the tax exemptions
provided under Section 234 of the Local Government Code (LGC), which
states:
Section 234.Exemptions from Real Property Tax. The following are
exempted from
payment of the real property tax:
(c) All machineries and equipment that are actually, directly, and
exclusively used by
local water districts and government-owned or controlled
corporations engaged in the supply and distribution of water
and/or generation and transmission of electric power;
(e) Machinery and equipment used for pollution control and
environmental protection.
Assuming that it cannot claim the above tax exemptions, Napocor
argued that it is entitled to certain tax privileges, 1. The lower assessment
level of 10% under Section 218(d) of the LGC for government-owned and
controlled corporations engaged in the generation and transmission of
electric power, instead of the 80% assessment level for commercial
properties imposed in the assessment letter; and 2. An allowance for
depreciation of the subject machineries under Section 225 of the LGC.
ISSUES:
1. Whether or not NAPOCOR is entitled to claimed tax exemptions and
privileges.
2. Whether or not the stipulation in the BOT Agreement that authorized
the transfer of ownership to Napocor after 25 years giving them sufficient
legal interest to protest the tax assessment..
3. Whether or not its authority to control and supervise the
construction and operation of the power plant gives them sufficient legal
interest to protest the tax assessment.
4. Whether or not its obligation to pay for all taxes that may be
incurred, as provided in the BOT Agreement gives them sufficient legal
interest to protest the tax assessment.
HELD
1. Napocor is not entitled to any of these claimed tax exemptions and
privileges on the basis primarily of the defective protest filed by the Napocor.
We found that Napocor did not file a valid protest against the realty tax
assessment because it did not possess the requisite legal standing. When a
taxpayer fails to question the assessment before the LBAA, the assessment
19

becomes final, executory, and demandable, precluding the taxpayer from


questioning the correctness of the assessment or from invoking any defense
that would reopen the question of its liability on the merits.
Under Section 226 of the LGC, any owner or person having legal
interest in the property may appeal an assessment for real property taxes to
the LBAA. Since Section 250 adopts the same language in enumerating who
may pay the tax, we equated those who are liable to pay the tax to the same
entities who may protest the tax assessment. A person legally burdened with
the obligation to pay for the tax imposed on the property has the legal
interest in the property and the personality to protest the tax assessment.
2. The legal interest should be one that is actual and material, direct
and immediate, not simply contingent or expectant.
3. We disproved Napocors claim of control and supervision under the
second argument after reading the full terms of the BOT Agreement, which,
contrary to Napocors claims, granted Mirant substantial power in the control
and supervision of the power plants construction and operation.
4. We relied on the Courts rulings in Baguio v. Busuegoand Lim v.
Manila. In these cases, the Court essentially declared that contractual
assumption of tax liability alone is insufficient to make one liable for taxes.
The contractual assumption of tax liability must be supplemented by an
interest that the party assuming the liability had on the property; the person
from whom payment is sought must have also acquired the beneficial use of
the property taxed. In other words, he must have the use and possession of
the property an element that was missing in Napocors case.
We further stated that the tax liability must be a liability that arises
from law, which the local government unit can rightfully and successfully
enforce, not the contractual liability that is enforceable only between the
parties to the contract. In the present case, the Province of Quezon is a third
party to the BOT Agreement and could thus not exact payment from Napocor
without violating the principle of relativity of contracts. Corollarily, for
reasons of fairness, the local government units cannot be compelled to
recognize the protest of a tax assessment from Napocor, an entity against
whom it cannot enforce the tax liability.

20

RE: PROPERTIES EXEMPT.


National Power Corporation
Vs.
Central Board of Assessment
GR NO 171470 January 30, 2009
FACTS:
First Private Power Corporation (BPPC) entered into BOT agreement
with NPC for the construction of the 215 Megawatt Bauang Diesel Power
Plant in Payocpoc, Bauang, La Union. The Municipal Assessor of Bauang then
issued a Notice of Assessment and Tax Bill to FPPC assessing/taxing the
machineries. NPC filed a petition asking that the machineries covered by the
tax declarations be exempt from real property tax under Section 234(c) of
LGC (i.e. All machineries and equipment that are actually, directly and
exclusively used by local water districts and government-owned or controlled
corporations engaged in the supply and distribution of water and/or
generation and transmission of electric power).
The LBAA denied NPC s petition for exemption because the exemption
applies only when a GOCC like NPC owns and/or actually uses machineries
and equipment for the generation and transmission of electric power. In this
case, NPC does not own and does not even actually and directly use the
machineries.
On appeal, CBAA dismissed the same based on its finding that the
BPPC, and not NPC, is the actual, direct and exclusive user of the equipment
and machineries; thus, the exemption under Section 234(c) does not apply.
The CTA rendered a decision dismissing the NPC s petitions. Hence, the
Supreme Court case.
ISSUE:
21

Whether or not the GOCC may be deemed the actual, direct, and
exclusive user of machineries and equipment for tax exemption purposes.
HELD:
No. NPCs basis for its claimed exemption Section 234(c) of the LGC is
clear and not at all ambiguous in its terms. Exempt from real property
taxation are: all machineries and equipment that are actually, directly and
exclusively used by local water districts and GOCCs engaged in the supply
and distribution of water and/or generation and transmission of electric
power.
The mere undertaking of petitioner NPC that it shall be responsible for
the payment of all real estate taxes and assessments, does not justify the
exemption. The records show that NPC, no less, admits BPPC s ownership of
the machineries and equipment in the power plant. Likewise, the provisions
of the BOT agreement clearly show BPPC s ownership. Thus, ownership is not
a disputed issue.
Rather than ownership, NPC s use of the machineries and equipment is
the critical issue, since its claim under Sec. 234 (c) of the LGC is premised on
actual, direct and exclusive use. To support this claim, NPC characterizes the
BOT Agreement as a mere financing agreement where BPPC is the financier,
while it (NPC) is the actual user of the properties.
Under the BOT concept, it is the project proponent who constructs the
project at its own cost and subsequently operates and manages it. The
proponent secures the return on its investments from those using the project
s facilities through appropriate tolls, fees, rentals, and charges not exceeding
those proposed in its bid or as negotiated. At the end of the fixed term
agreed upon, the project proponent transfers the ownership of the facility to
the government agency. By its express terms, BPPC has complete ownership
of the project, including the machineries and equipment used, subject only to
the transfer of these properties without cost to NPC after the lapse of the
period agreed upon.
Consistent with the BOT concept and as implemented, BPPC the ownermanager-operator of the project is the actual user of its machineries and
equipment. BPPC s ownership and use of the machineries and equipment are
actual, direct, and immediate, while NPC s is contingent and, at this stage of
the BOT Agreement, not sufficient to support its claim for tax exemption.
Lastly, the real concern for NPC in this case is its assumption under the
BOT agreement of BPPC is real property tax liability (which in itself is a
recognition that BPPC s real properties are not really tax exempt). NPC could
therefore not pass the tax exemption.

22

RE: PROPERTIES EXEMPT.


Philippine Fisheries Development
Vs.
Central Board of Assessment
G.R. No. 178030
December 15, 2010
FACTS:
The records show that the Lucena Fishing Port Complex (LFPC) is one of
the fishery infrastructure projects undertaken by the National Government
under the Nationwide Fish Port-Package. The Philippine Fisheries
Development Authority (PFDA) was created by virtue of P.D. 977 as amended
by E.O. 772, with functions and powers to (m)anage, operate, and develop
the Navotas Fishing Port Complex and such other fishing port complexes that
may be established by the Authority. Pursuant thereto, Petitioner-Appellant
PFDA took over the management and operation of LFPC in February 1992.
On October 26, 1999, in a letter addressed to PFDA, the City
Government of Lucena demanded payment of realty taxes on the LFPC
property for the period from 1993 to 1999 in the total amount of P39,
397,880.00. Petitioner appealed to the LBAA of Lucena City which denied
the same.
ISSUE:
The sole issue raised in this petition is whether PFDA is liable for the
real property tax assessed on the Lucena Fishing Port Complex.
HELD:
The Supreme Court held 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, 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.
The exercise of the taxing power of local government units is subject to
the limitations enumerated in Section 133 of the Local Government
Code. Under Section 133(o) of the Local Government Code, local government
units have no power to tax instrumentalities of the national government like
the PFDA. Thus, PFDA is not liable to pay real property tax assessed by the
Office of the City Treasurer of Lucena City on the Lucena Fishing Port
Complex, except those portions which are leased to private persons or
entities.
23

Besides, the Lucena Fishing Port Complex is a property of public


dominion intended for public use, and is therefore exempt from real property
tax under Section 234(a) of the Local Government Code. Properties of public
dominion are owned by the State or the Republic of the Philippines.

RE: PROPERTIES EXEMPT.


City of Pasig
Vs.
Republic of the Philippines
G.R. No. 185023
August 24, 2011
FACTS:
Mid-Pasig Land Development Corporation (MPLDC) owned two parcels
of land, with a total area of 18.4891 hectares, situated in Pasig City.
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.
24

On 30 September 2002, the Pasig City Assessors 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. On 20 October
2005, the Pasig City Assessors 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.
ISSUE:
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.
HELD:
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. 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.

25

RE: WHO ARE LIABLE FOR THE REAL PROPERTY TAXES.


TESTATE ESTATE OF CONCORDIA T. LIM, plaintiff-appellant,
vs.
CITY OF MANILA, JESUS I. CALLEJA, in his capacity as City Treasurer
of Manila, NICOLAS CATIIL, in his capacity as City Assessor of
Manila, and/or GOVERNMENT SERVICE INSURANCE SYSTEM,
defendants-appellees.
G.R. No. 90639 February 21, 1990
FACTS:
On February 13, 1969, the late Concordia Lim obtained a real estate
loan from the defendant-appellee Government Service Insurance System
(GSIS) in the amount of P875,488.54, secured by a mortgage constituted on
two (2) parcels of land formerly covered by Transfer Certificates of Title Nos.
64075 and 63076 (later changed to TCT Nos. 125718 and 125719) registered
in Manila with a three-story building thereon and located on No. 810 Nicanor
Reyes St. (formerly Morayta), Sampaloc, Manila. When Lim failed to pay the
loan, the mortgage was extrajudicially foreclosed and the subject properties
sold at public auction. The GSIS, being the highest bidder, bought the
properties. Upon Lim's failure to exercise her right of redemption, the titles to
the properties were consolidated in favor of the GSIS in 1977. However,
pursuant to Resolution No. 188 of the Board of Trustees of the GSIS dated
March 29, 1979, the estate of Lim, through Ernestina Crisologo Jose (the
administratrix) was allowed to repurchase the foreclosed properties. On April
11, 1979, a Deed of Absolute Sale was executed.
26

The defendant City Treasurer of Manila required the plaintiff-appellant


to pay the real estate taxes due on the properties for the years 1977, 1978
and the first quarter of 1979 in the amount of P67,960.39, before the titles
could be transferred to the plaintiff-appellant. The latter paid the amount
under protest.
On July 11, 1979, the plaintiff-appellants counsel sent a demand letter
requesting the GSIS to reimburse the taxes paid under protest. The GSIS
refused. On September 6, 1979, a demand letter was sent to the City
Treasurer of Manila to refund the amount but the latter also refused. On
March 14, 1980, the plaintiff filed an action before the trial court for a sum of
money for the refund or reimbursement of the real estate taxes paid under
protest.
During the pendency of the case, the plaintiff-appellant admitted that
the foreclosed properties had been sold, through the administratrix, to
another person.
ISSUES:
(1) Whether or not the trial court has jurisdiction over the action for refund
of real estate taxes paid under protest;
(2) Whether or not plaintiff-appellant has the right to recover.
RULING:
(1)The Court rules that the plaintiff-appellant correctly filed the action
for refund/reimbursement with the lower court as it is the courts which have
jurisdiction to try cases involving the right to recover sums of money.
Section 30 of the Real Property Tax Code is not applicable because
what is questioned is the imposition of the tax assessed and who should
shoulder the burden of the tax. There is no dispute over the amount
assessed on the properties for tax purposes. Section 30 pertains to the
administrative act of listing and valuation of the property for purposes of real
estate taxation.
In further support of the conclusion that the lower court has jurisdiction to try
the instant case, we note Section 64 of the Real Property Tax Code which
provides that a "court shall entertain a suit assailing the validity of a tax
assessed" after the taxpayer shall have paid under protest.
(2) The facts of the case constrain us to rule that the plaintiff-appellant
is not liable to pay the real property tax due for the years 1977, 1978 and
first quarter of 1979. The clause in the Deed of Sale cannot be interpreted to
include taxes for the periods prior to April 11, 1979, the date of repurchase.
To impose the real property tax on the estate which was neither the
owner nor the beneficial user of the property during the designated periods
would not only be contrary to law but also unjust. If plaintiff-appellant
intended to assume the liability for realty taxes for the prior periods, the
27

contract should have specifically stated "real estate taxes" due for the years
1977,1978 and first quarter of 1979. The payments made by the plaintiffappellant cannot be construed to be an admission of a tax liability since they
were paid under protest and were done only in compliance with one of the
requirements for the consummation of the sale as directed by the City
Treasurer of Manila.
Hence, the tax assessed and collected from the plaintiff-appellants is
not valid and a refund by the City government is in order.
The contention of the plaintiff-appellant that the respondent GSIS is
liable to reimburse the tax because the latter allegedly failed to exercise its
claim to the tax exemption privilege is without merit. The exemption is
explicitly granted by law and need not be applied for.
RE: WHO ARE LIABLE FOR THE REAL PROPERTY TAXES.
Government Insurance System
Vs.
City Treasurer of Manila
G.R. No. 186242
December 23, 2009
FACTS:
Petitioner GSIS owns or used to own two (2) parcels of land, one
located at Katigbak 25th St., Bonifacio Drive, Manila (Katigbak property), and
the other, at Concepcion cor. ArrocerosSts., also in Manila (ConcepcionArroceros property). The controversy started when the City Treasurer of
Manila addressed a letter dated September 13, 2002 to GSIS President and
General Manager Winston F. Garcia informing him of the unpaid real property
taxes due on the aforementioned properties for years 1992 to 2002 The
letter warned of the inclusion of the subject properties in the scheduled
October 30, 2002 public auction of all delinquent properties in Manila should
the unpaid taxes remain unsettled before that date.
In it, GSIS prayed for the nullification of the assessments thus made
and that Respondents City of Manila officials be permanently enjoined from
proceedings against GSIS property. GSIS would later amend its petition to
include the fact that: (a) the Katigbak property, covered by TCT Nos. 117685
and 119465 in the name of GSIS, has, since November 1991, been leased to
and occupied by the Manila Hotel Corporation (MHC), which has contractually
bound itself to pay any realty taxes that may be imposed on the subject
property; and (b) the Concepcion-Arroceros property is partly occupied by
GSIS and partly occupied by the MeTC of Manila.
ISSUE:
Whether petitioner is exempt from the payment of real property taxes
on the property it leased to a taxable entity.
28

HELD:
The Supreme Court finds that GSIS enjoys under its charter full tax
exemption. Moreover, as an instrumentality of the national government, it is
itself not liable to pay real estate taxes assessed by the City of Manila
against its Katigbak and Concepcion-Arroceros properties. Following the
"beneficial use" rule, however, accrued real property taxes are due from the
Katigbak property, leased as it is to a taxable entity. But the corresponding
liability for the payment thereof devolves on the taxable beneficial user. The
Katigbak property cannot in any event be subject of a public auction sale,
notwithstanding its realty tax delinquency. This means that the City of Manila
has to satisfy its tax claim by serving the accrued realty tax assessment on
MHC, as the taxable beneficial user of the Katigbak property and, in case of
nonpayment, through means other than the sale at public auction of the
leased property.

RE: PROCEDURE IN REAL PROPERTY TAXATION.


29

Jaime Lopez
Vs.
City of Manila
G.R. No. 127139
February 19, 1999
FACTS:
The Local Government Code of 1991 requires the conduct of the
general revision of real property that the provincial, city or municipal
assessor shall undertake a general revision of real property assessments
within two (2) years after the effectivity of the Code and every three (3)
years thereafter.
Although R.A. 7160 took effect on January 1, 1992, the revision of real
property assessments prescribed therein was not yet enforced in the City of
Manila. However, the process of real property valuation had already been
started and done by the former city assessor.
On December 12, 1995, the City Council enacted Manila Ordinance No.
7894, entitled: "An Ordinance prescribed as the Revised Schedule of Fair
Market Values of Real Properties the City of Manila." With the implementation
of Manila Ordinance No. 7894, the tax on the land owned by the petitioner
was increased by five hundred eighty percent (580%). With respect to the
improvement on petitioner's property, the tax increased by two hundred fifty
percent (250%).
As a consequence of these increases, petitioner Jaime C. Lopez, filed
on March 18, 1996, a special proceeding for the declaration of nullity of the
City of Manila Ordinance No. 7894 with preliminary injunction and prayer for
temporary restraining order (TRO). The petition alleged that Manila
Ordinance No. 7894 appears to be "unjust, excessive, oppressive or
confiscatory."
ISSUE:
Whether or not the petitioner failed to exhaust all administrative
remedies available and thus contrary to established procedural rules.
HELD:
As a general rule, where the law provides for the remedies against the
action of an administrative board, body, or officer, relief to courts can be
sought only after exhausting all remedies provided. The reason rests upon
the presumption that the administrative body, if given the chance to correct
its mistake or error, may amend its decision on a given matter and decide it
properly. Therefore, where a remedy is available within the administrative
machinery, this should be resorted to before resort can be made to the
courts, not only to give the administrative agency the opportunity to decide
the matter by itself correctly, but also to prevent unnecessary and premature
resort to courts. This rule, however, admits certain exceptions.
30

Applying the same on the case, on the second exception on the rule of
exhaustion of administrative remedies, there is no showing that
administrative bodies, viz., The Secretary of Justice, the City Treasurer, Board
of Assessment Appeals, and the Central Board of Assessment Appeals are in
estoppel. On the third exception, it does not appear that Ordinance No. 7894
or the amendatory Ordinance No. 7905 are patently illegal. Re the fourth
exception, in the light of circumstances as pointed elsewhere herein, the
matter does not need a compelling judicial intervention. On the fifth
exception, the claim of the petitioner is not small. Re the sixth exception, the
court does not see any irreparable damage that the petitioner will suffer if he
had paid or will pay under protest as per the ordinance. He could always ask
for a refund of the excess amount he paid under protest or be credited
thereof if the administrative bodies mentioned in the law (R.A. 7180 15) will
find that his position is meritorious. Re the seventh exception, the court is of
the opinion that administrative relief provided for in the law are plain, speedy
and adequate. On the eight exception, while the controversy involves public
interest, judicial intervention as the petitioner would like this court to do
should be avoided as demonstrated herein below in the discussion of the
third issue. The ninth and tenth exception obviously are not applicable in the
instant case. The petition does not fall under any of the exceptions to excuse
compliance with the rule on exhaustion of administrative remedies.
With regard to question on the legality of a tax ordinance, the remedies
available to the taxpayers are provided under R.A. 7160 where it provides,
that the taxpayer may question the constitutionality or legality of tax
ordinance on appeal within thirty (30) days from effectivity thereof, to the
Secretary of Justice. The petitioner after finding that his assessment is
unjust, confiscatory, or excessive, must have brought the case before the
Secretary of Justice for question of legality or constitutionality of the city
ordinance.
Under Section 226 of R.A. 7160, an owner of real property who in not
satisfied with the assessment of his property may, within sixty (60) days
from notice of assessment, appeal to the Board of Assessment
Appeals. Should the taxpayers question the excessiveness of the amount of
tax, he must first pay the amount due, in accordance with Section 252 of R.A.
7160. Then, he must request the annotation of the phrase "paid under
protest" and accordingly appeal to the Board of Assessment Appeals by filing
a petition under oath together with copies of the tax declarations and
affidavits or documents to support his appeal.
The rule is well-settled that courts will not interfere in matters which
addressed to the sound discretion of government agencies entrusted with
the regulations of activities coming under the special technical knowledge
and training of such agencies.

31

RE: VIOLATION BY ASSESSORS.


Antonio Callanta, et. al.
Vs.
Office of the Ombudsman
G.R. Nos. 115253-74
January 30, 1998
FACTS:
It is alleged that a-general revision of assessment was conducted by
the Office of the City Assessor in 1988 and sometime thereafter. Notices of
assessment together with the new tax declarations were subsequently sent
to the property owners. Thereafter, respondents, without the authority of the
Local Board of Assessment Appeals, reassessed the values of certain
properties, in contravention of Sec. 30 of P.D. 464. The said assessment
resulted in the reduction of assessed values of the properties.
In several similarly worded letter-complaints dated December 19,
1991, the City of Cebu simultaneously filed criminal and administrative
charges against the above-enumerated officers and staff of the City
Assessor's Office for "violations of Section 106 of the Real Property Tax
Code[,] for gross negligence or willful under-assessment of real properties
32

within the city's taxing jurisdiction and for violation of Sec. 3 (e) of R.A. 3019,
otherwise known as the Anti-Graft and Corrupt Practices Act[,] for the act of
causing undue injury to the City Government by giving private persons
unwarranted benefits, advantages or preferences in the discharge of their
official and administrative functions through manifest partiality, evident bad
faith or gross inexcusable negligence by reassessing the real properties of
taxpayers without any authority whatsoever, thereby resulting in the
reduction of tax assessments to the prejudice of the city government .
ISSUE:
Whether or not petitioners violated the law by their acts of
accommodating requests for reconsideration of the revised assessments.
HELD:
Under the rules, the Supreme Court stated that the issuance of a
notice of assessment by the local assessor shall be his last action on a
particular assessment. On the side of the property owner, it is this last action
which gives him [the] right to appeal to the Local Board of Assessment
Appeals. The above procedure also, does not grant the property owner the
remedy of filing a motion for reconsideration before the local assessor.
The act of herein petitioners in providing the corresponding notices of
assessment the chance for the property owners concerned to file a motion
for reconsideration and for acting on the motions filed is not in accordance
with law and in excess of their authority and therefore constitutes ultra vires
acts. Indeed, the long-standing practice adverted to by petitioners does not
justify a continuance of their acts. We cannot sanction such compromising
situations. Henceforth, whenever the local assessor sends a notice to the
owner or lawful possessor of real property of its revised assessed value, the
former shall thereafter no longer have any jurisdiction to entertain any
request for a review or readjustment. The appropriate forum where the
aggrieved party may bring his appeal is the LBAA, as provided by law.

33

RE: CONTENTS OF ASSESSMENT.


Manila Electric Company
Vs.
NeliaBarlis
G.R. No. 114231
February 1, 2002
FACTS:
Two letters were sent to MERALCO on September 3, 1986 and October
31, 1989. Both are in a form that may be familiar to most of us. The heading
says "Patalastas", or "Notice" and the opening paragraph after the usual
"Dear ____" informs the addressee that, according to the records of the office,
the tax on the properties indicated thereunder had not yet been paid." There
is then a listing, for each property referred to, of the tax declaration number,
the location, the assessed value, the year of the delinquency, the tax due,
the penalty, and the total of the last two. Politely, the hope is expressed that
the notice will not be disregarded since the dire consequence of longstanding delinquency is an auction sale of the property, as mandated by law.
Finally, the letter recognizes that the addressee may, after all, have actually
paid, contrary to what the office records indicate, and thus requests the
taxpayer to present proof of payment and ignore the notice.
Petitioner moves for reconsideration and questions the finding that
what was sent to it by former Municipal Treasurers Norberto A. San Mateo
and Eduardo A. Alon were the tax assessment notices contemplated by law
and not mere collection notices. Movant-petitioner stated that having
received mere collection notices, how could petitioner avail of the proper
administrative remedies in protesting an erroneous tax assessment before
the LBAA?
ISSUE:
Whether or not the earlier decision of the Supreme Court correctly held
that indeed an assessment was made.
HELD:
No. A notice of assessment as provided for in the Real Property Tax
Code should effectively inform the taxpayer of the value of a specific
property, or proportion thereof subject to tax, including the discovery, listing,
34

classification,
and
appraisal
of
properties. The September
3,
1986 and October 31, 1989 notices do not contain the essential information
that a notice of assessment must specify, namely, the value of a specific
property or proportion thereof which is being taxed, nor does it state the
discovery, listing, classification and appraisal of the property subject to
taxation. In fact, the tenor of the notices bespeaks an intention to collect
unpaid taxes, thus the reminder to the taxpayer that the failure to pay the
taxes shall authorize the government to auction off the properties subject to
taxes
or,
in
the
words
of
the
notice,Ipinaaalaala po lamang, ang sino mang magpabaya omagkautang ng
buwis ng maluwat ay isusubasta (Auction
Sale) ng pamahalaan ang inyong ari-arian ng naaayon sa batas.
The petitioner is also correct in pointing out that the last paragraph of
the said notices that inform the taxpayer that in case payment has already
been made, the notices may be disregarded is an indication that it is in fact a
notice of collection.

RE: WHO IS ENTITLED TO THE NOTICE OF ASSESSMENT?


Antonio Talusan
Vs.
HerminigildoTayag
35

G.R. No. 133698

April 4, 2001

FACTS:
Petitioners alleged that on December 7, 1981, they had acquired the
condominium from Elias Imperial, the original registered owner,
for P100,000. The sale was purportedly evidenced by a Deed of Sale which,
however, had not and thenceforth never been registered with the Register of
Deeds.
Petitioners also averred that on December 9, 1985, Baguio City
Treasurer Juan Hernandez sold the property at a public auction due to
nonpayment of delinquent real estate taxes thereon. The property was sold
to Respondent HerminigildoTayag for P4, 400 which represented the unpaid
taxes.
Thus, petitioners filed a Complaint seeking the annulment of the
auction sale. They cited irregularities in the proceedings and noncompliance
with statutory requirements.
ISSUES:
Who should be notified with respect to the assessment of the real
property in question?
HELD:
The Supreme Court said in this regard unlike land registration
proceedings which are in rem, cases involving an auction sale of land for the
collection of delinquent taxes are in personam. Thus, notice by publication,
though sufficient in proceedings in rem, does not as a rule satisfy the
requirement of proceedings in personam. As such, mere publication of the
notice of delinquency would not suffice, considering that the procedure in tax
sales is in personam. It was, therefore, still incumbent upon the city treasurer
to send the notice of tax delinquency directly to the taxpayer in order to
protect the interests of the latter.
In the present case, the notice of delinquency was sent by registered
mail to the permanent address of the registered owner in Manila. In that
notice, the city treasurer of Baguio City directed him to settle the charges
immediately and to protect his interest in the property. Under the
circumstances, we hold that the notice sent by registered mail adequately
protected the rights of the taxpayer, who was the registered owner of the
condominium unit.
For purposes of the real property tax, the registered owner of the
property is deemed the taxpayer. Hence, only the registered owner is
entitled to a notice of tax delinquency and other proceedings relative to the
tax sale. Not being registered owners of the property, petitioners cannot
claim to have been deprived of such notice. In fact, they were not entitled to
it. For purposes of real property taxation, the registered owner of a property
is deemed the taxpayer and, hence, the only one entitled to a notice of tax
delinquency and the resultant proceedings relative to an auction sale.
36

Petitioners, who allegedly acquired the property through an unregistered


deed of sale, are not entitled to such notice, because they are not the
registered owners.

RE: APPEAL TO THE SECRETARY OF JUSTICE, RE NEWLY ENACTED TAX


ORDINANCE.
Hon. Franklin Drilon
Vs.
Mayor Alfredo Lim
G.R. No. 112497
August 4, 1994
FACTS:
The Secretary of Justice had, on appeal to him of four oil companies
and a taxpayer, declared Ordinance No. 7794, otherwise known as the Manila
Revenue Code, null and void for non-compliance with the prescribed
procedure in the enactment of tax ordinances and for containing certain
provisions contrary to law and public policy. In a petition for certiorari filed by
the City of Manila, the Regional Trial Court of Manila revoked the Secretary's
resolution and sustained the ordinance, holding inter alia that the procedural
requirements had been observed. More importantly, it declared Section 187
of the Local Government Code as unconstitutional because of its vesture in
37

the Secretary of Justice of the power of control over local governments in


violation of the policy of local autonomy mandated in the Constitution and of
the specific provision therein conferring on the President of the Philippines
only the power of supervision over local governments.
ISSUE:
On appeal to the Secretary of Justice on matters of real property tax,
what rules should be observed?
HELD:
The procedure for approval of local tax ordinances and revenue
measures shall be in accordance with the provisions of the Local Government
Code: Provided, That public hearings shall be conducted for the purpose prior
to the enactment thereof; Provided, further, That any question on the
constitutionality or legality of tax ordinances or revenue measures may be
raised on appeal within thirty (30) days from the effectivity thereof to the
Secretary of Justice who shall render a decision within sixty (60) days from
the date of receipt of the appeal: Provided, however, That such appeal shall
not have the effect of suspending the effectivity of the ordinance and the
accrual and payment of the tax, fee, or charge levied therein: Provided,
finally, That within thirty (30) days after receipt of the decision or the lapse
of the sixty-day period without the Secretary of Justice acting upon the
appeal, the aggrieved party may file appropriate proceedings with a court of
competent jurisdiction.
Section 187 of the Local Government Code authorizes the Secretary of
Justice to review only the constitutionality or legality of the tax ordinance
and, if warranted, to revoke it on either or both of these grounds. When he
alters or modifies or sets aside a tax ordinance, he is not also permitted to
substitute his own judgment for the judgment of the local government that
enacted the measure. Secretary Drilon did set aside the Manila Revenue
Code, but he did not replace it with his own version of what the Code should
be. He did not pronounce the ordinance unwise or unreasonable as a basis
for its annulment. He did not say that in his judgment it was a bad law. What
he found only was that it was illegal. All he did in reviewing the said measure
was determine if the petitioners were performing their functions in
accordance with law, that is, with the prescribed procedure for the
enactment of tax ordinances and the grant of powers to the city government
under the Local Government Code. As the Supreme Court sees it that was an
act not of control but of mere supervision.

38

RE: APPEAL TO THE SECRETARY OF JUSTICE, RE NEWLY ENACTED TAX


ORDINANCE.
Antonio Reyes
Vs.
Court of Appeals
G.R. No. 118233
December 10, 1999
FACTS:
The petition herein arose when the Sangguniang Bayan of San Juan,
Metro Manila implemented several tax ordinances. On May 21, 1993,
petitioners filed an appeal with the Department of Justice (DOJ) assailing the
constitutionality of these tax ordinances allegedly because they were
promulgated without previous public hearings thereby constituting
deprivation of property without due process of law, however such appeal was
nevertheless dismissed for having been filed out of time. The DOJ citing
Section 187, R.A. No. 7160, stating that:It appears that the tax ordinances in
question took effect on September 24, 1992, in the case of Tax Ordinance
No. 87, until October 22, 1992, in the case of Tax Ordinance Nos. 91 and 95,
and until October 29, 1992, in the case of Tax Ordinance Nos. 100 and 101,
or more than thirty (30) days from the effectivity thereof when the appeal
was filed and received by this Department on May 21, 1993 and therefore
not in accordance with the requirements provided for under Section 187 of
the Local Government Code of 1991.
ISSUE:
Whether or not the Appeal to the DOJ assailing the tax ordinance was
timely filed.
HELD:
39

Clearly, under Section 187 of the Local Government Code, the law
requires that the dissatisfied taxpayer who questions the validity or legality
of a tax ordinance must file his appeal to the Secretary of Justice, within 30
days from effectivity thereof. In case the Secretary decides the appeal, a
period also of 30 days is allowed for an aggrieved party to go to court but if
the Secretary does not act thereon, after the lapse of 60 days, a party could
already proceed to seek relief in court. These three separate periods are
clearly given for compliance as a prerequisite before seeking redress in a
competent court. Such statutory periods are set to prevent delays as well as
enhance the orderly and speedy discharge of judicial functions. For this
reason the courts construe these provisions of statutes as mandatory.
A municipal tax ordinance empowers a local government unit to
impose taxes. The power to tax is the most effective instrument to raise
needed revenues to finance and support the myriad activities of local
government units for the delivery of basic services essential to the promotion
of the general welfare and enhancement of peace, progress, and prosperity
of the people. Consequently, any delay in implementing tax measures would
be to the detriment of the public. It is for this reason that protests over tax
ordinances are required to be done within certain time frames. In the instant
case, it is our view that the failure of petitioners to appeal to the Secretary of
Justice within 30 days as required by Sec. 187 of R.A. 7160 is fatal to their
cause.

40

RE: APPEAL TO THE SECRETARY OF JUSTICE, RE NEWLY ENACTED TAX


ORDINANCE.
Hagonoy Market Vendor Association
Vs.
Municipality of Hagonoy
GR no. 137621 February 6, 2002
FACTS:
On October 1, 1996, the Sangguniang Bayan of Hagonoy, Bulacan
enacted Ordinance KautusanBlg. 28 which increased the stall rentals of the
Market vendors in Hagonoy.Posting of the said ordinance was made on
November 4-25 1996.Subsequently, On December 8, 1997, the petitioners
President filed an appeal with the Secretary of Justice assailing the
constitutionality of the tax ordinance being unaware of its posting.
Respondent on the other hand, opposed the appeal contending that the
ordinance took effect on October 6, 1996 and that the ordinance, as
approved, was posted as required by law. Hence, it was pointed out that
petitioners appeal, made over a year later, was already time-barred.
The Secretary of Justice ruled on the matter dismissing the appeal on
the ground that it was filed out of time, having been filed beyond thirty (30)
days from the effectivity of the Ordinance on October 1, 1996, as prescribed
under Section 187 of the 1991 Local Government Code
ISSUE:
Whether or not the Appeal to the Secretary of Justice was time barred?
HELD:
Yes. The Supreme Court held that under Section 187 of the Local
Government Code, it requires that an appeal of a tax ordinance or revenue
measure should be made to the Secretary of Justice within thirty (30) days
from effectivity of the ordinance and even during its pendency; the
effectivity of the assailed ordinance shall not be suspended. In the case at
bar, Municipal Ordinance No. 28 took effect in October 1996. Petitioner filed
its appeal only in December 1997, more than a year after the effectivity of
the ordinance in 1996. Clearly, the Secretary of Justice correctly dismissed it
for being time-barred. At this point, it is apropos to state that the timeframe
fixed by law for parties to avail of their legal remedies before competent
courts are not a mere technicality that can be easily brushed aside. The
periods stated in Section 187 of the Local Government Code are mandatory.
Ordinance No. 28 is a revenue measure adopted by the municipality of
Hagonoy to fix and collect public market stall rentals. Being its lifeblood,
collection of revenues by the government is of paramount importance. The
funds for the operation of its agencies and provision of basic services to its
41

inhabitants are largely derived from its revenues and collections. Thus, it is
essential that the validity of revenue measures is not left uncertain for a
considerable length of time. Hence, the law provided a time limit for an
aggrieved party to assail the legality of revenue measures and tax
ordinances.

RE: APPEAL TO THE SECRETARY OF JUSTICE, RE NEWLY ENACTED TAX


ORDINANCE.
Alejandro Ty
Vs.
Honorable Aurelio Trampe
G.R. No. 117577
December 1, 1995
FACTS:
Petitioners herein Alejandro B. Ty is and MVR Picture Tube, Inc., a
corporation duly organized and existing under Philippine laws are registered
owners of lands and buildings in said Municipality (now City) of Pasig. The
case herein arose when a notice of assessment was sent to the petitioner
42

increasing their real estate taxes. The petitioners contended that such
assessment made by the municipality of Pasig was in violation of PD921
which states 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 and thus is the basis of the real estate tax, thus, a collegial
action of all assessors in the district are needed as opposed to that under the
local government Code which does not necessarily require such joint action.
Not satisfied of the assessment, petitioners on 29 March 1994 filed with the
Regional Trial Court Petition for to declare null and void the new tax
assessments and to enjoin the collection of real estate taxes based on said
assessments which denied the same. The case was elevated to the Court of
appeals and ruled 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 160) days from the date of receipt of the
written Notice of Assessment or by paying the real estate tax under protest,
thus they failed to exhaust administrative remedies resulting to a premature
filing of the case.
ISSUE:
Whether or not the case is premature because petitioners did not
exhaust all administrative remedies (not appealing with the CBAA and for
having not paid under protest made).
HELD:
No. The Supreme Court held that 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. 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, 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 the 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.
43

Finally, it will be noted that in the consolidated cases of


Mathay/Javier/Puyat-Reyes, 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. 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: APPEAL TO THE BOARD OF ASSESSMENT APPEALS.


Systems Plus Computer of Caloocan City
Vs.
LGU of Caloocan
GR. No. 146382
August 7, 2003
FACTS:
Petitioner herein Systems Plus is a non-stock and non-profit
educational institution enjoying property tax exemption from the local
government on its buildings but not on the parcels of land which petitioner is
renting from its sister companies, Consolidated Assembly and Pair
Management and Development Corporation. On January 8, 1998, petitioner
requested respondent city government of Caloocan to as well include to its
tax exemption such parcel of land leased out to it by its sister companies for
being used actually, directly and exclusively for educational purposes.
However, this petition was denied. In light of such denial, the petitioner and
the Consolidated Assembly and Pair Management, entered into separate
agreements which in effect novated their existing contracts of lease to
donation and subsequently submitted a duly notarized certification jointly
issued by Consolidated Assembly and Pair Management to the effect that
they no longer received income by way of rentals from the subject
properties. Such information was submitted to the City Assessor who
44

nevertheless, denied the same exemption again stating among others that
while the beneficial use of the properties being sought to be exempt from
Real Property Taxes were donated to SYSTEMS PLUS COMPUTER COLLEGE,
there is no showing that the same are "actually, directly and exclusively"
used either for religious, charitable, or educational purposes. Twice
debunked, petitioner filed a petition for mandamus with the respondent
Regional Trial Court.
ISSUE:
(1)
Whether or not mandamus does not lie against the public
respondents:
(2) Whether or not petitioner failed to exhaust available
administrative remedies for filing its case directly to the RTC instead of the
Local Assessment Board first.
HELD:
1. No. Mandamus does not lie against the respondent City Assessor in
the exercise of his function of assessing properties for taxation purposes.
While its duty to conduct assessments is a ministerial function, the actual
exercise thereof is necessarily discretionary. Well-settled is the rule that
mandamus may not be availed of to direct the exercise of judgment or
discretion in a particular way, or to retract or reverse an action already taken
in the exercise of either
2. Yes. The Supreme Court held that Under Section 226 of RA 7160,
the remedy of appeal to the Local Board of Assessment Appeals is available
from an adverse ruling or action of the provincial, city or municipal assessor
in the assessment of property, thus:
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.
It is then well settled that the determination made by the respondent
City Assessor with regard to the taxability of the subject real properties
squarely falls within its power to assess properties for taxation purposes is
subject to appeal before the Local Board of Assessment Appeals.
The petitioner cannot bypass the authority of the concerned
administrative agencies and directly seek redress from the courts even on
the pretext of raising a supposedly pure question of law without violating the
doctrine of exhaustion of administrative remedies. Hence, when the law
provides for remedies against the action of an administrative board, body, or
officer, as in the case at bar, relief to the courts can be made only after
45

exhausting all remedies provided therein. Otherwise stated, before seeking


the intervention of the courts, it is a precondition that petitioner should first
avail of all the means afforded by the administrative processes.

RE: APPEAL TO THE BOARD OF ASSESSMENT APPEALS.


Dr. Pablo Olivares
Vs.
Mayor Joey Marquez
G.R. No. 155591
September 22, 2004
FACTS:
The petition arose when petitioners Olivarez filed a petition for
certiorari, prohibition and mandamus with the RTC on August 18, 1998,
questioning the assessment and levy made by the Office of the City
Treasurer of Paraaque City on petitioners properties. According to them,
they have protested said notice of assessment , and sought reinvestigation
on the grounds that: (1) some of the taxes being collected have already
prescribed and may no longer be collected as provided in Section 194 of the
Local Government Code of 1991; (2) some properties have been doubly
taxed/assessed; (3) some properties being taxed are no longer existent; (4)
some properties are exempt from taxation as they are being used exclusively
for educational purposes; and (5) some errors are made in the assessment
and collection of taxes due on petitioners properties. Respondents on the
other hand filed a motion to dismiss Civil Case on the ground among others
that the trial court has no jurisdiction over tax assessment matters and that
petitioners failed to comply with the requirements of a tax protest.
Petitioners opposed the motion, arguing that the trial court has jurisdiction
over the case as the issue raised pertains to the authority of respondents to
assess and collect the real estate taxes.
ISSUE:
Whether or not the civil case filed by the petitioners be dismissed on
the ground that the Regional Trial Court in this case has jurisdiction on tax
assessment matters.
HELD:
46

Yes. The Court is not convinced with petitioners argument that their
recourse of filing a petition before the trial court is proper as they are
questioning the very authority of respondents to assess and collect the real
estate taxes due on their properties, and not merely the correctness of said
amount. The well-established rule is that the allegations in the complaint and
the character of the relief sought determine the nature of an action. A
perusal of the petition before the RTC plainly shows that what is actually
being assailed is the correctness of the assessments made by the local
assessor of Paraaque on petitioners properties. The allegations in the said
petition purportedly questioning the assessors authority to assess and
collect the taxes were obviously made in order to justify the filing of the
petition with the RTC. In fact, there is nothing in the said petition that
supports their claim regarding the assessors alleged lack of authority. In the
case of Ty vs. Trampe,cited by petitioners, the Court held that jurisdiction
over the case was properly vested with the trial court because what was
being questioned is the very authority and power of the assessor, acting
solely and independently, to impose the assessment and of the treasurer to
collect the tax, and not merely of amounts of the increase in the tax.
As such, The Court held that, should the taxpayer/real property owner
question the excessiveness or reasonableness of the assessment,
Section252directs 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 CBAA, the
dispute may then be taken to the Court of Appeals by filing a verified petition
for review under Rule 43 of the Rules of Court.

47

RE: PROTEST OF THE ASSESSMENT.


Cagayan Robina Sugar Milling Corporation
Vs.
Court of Appeals
G.R. No. 122451
12 October 2000
FACTS:
In 1990, the Assets Privatization Trust (APT) offered for sale all the
assets and properties of the Cagayan Sugar Corporation (CASUCO), which
had been foreclosed and transferred to APT by the Development Bank of the
Philippines. By virtue of which, an auction sale was conducted and the
petitioner was the highest bidder. Among the properties bought by petitioner
were sugar mill machineries located at the CASUCO millsite in Piat, Cagayan.
On October 18, 1990, the Provincial Assessor of Cagayan issued a "Notice of
Assessment of Real Property" to petitioner covering the machineries installed
at the CASUCO millsite. Subsequently, on February 8, 1991, petitioner
appealed the assessment to the LBAA, on the ground that it was excessive,
erroneous, and unjust.
On April 18, 1992, petitioner prepared an Appeal of Assessment
addressed to the LBAA but did not file the same with the CBAA. It was only
on November 25, 1992, that petitioner filed with the CBAA an Appeal of
Assessment identical with its earlier appeal dated April 18, 1992. On May 17,
1994, the CBAA dismissed petitioner's appeal on the ground that it was timebarred.
ISSUE:
Whether or not the protest of petitioner has merit.
Whether or not the appellate court err in upholding the dismissal of
petitioner's appeal to the CBAA for being time-barred.
HELD:
1. No. Petitioner insists that its protest has merit; in view of a 1st
Endorsement Letter of the Deputy Executive Director of the Bureau of Local
Government Finance dated May 17, 1996, directing the Provincial Assessor of
Cagayan to recompute the market value of petitioner's machineries.
However, said letter referred to the protested assessment done by the
Provincial Assessor. There was no reference at all to the assessment of
petitioner's machineries, which was done by the LBAA, which revised and
corrected the protested appraisal by the Provincial Assessor. Said letter did
not find erroneous the re-assessment done by the LBAA, which was
subsequently upheld by both the CBAA and the Court of Appeals. Findings of
fact of administrative agencies and quasi-judicial bodies, which have
48

acquired expertise because their jurisdiction is confined to specific matters,


are generally accorded not only respect, but finality when affirmed by the
Court of Appeals.
2. Yes. The appeal found to be time-barred is not petitioner's appeal of
the Provincial Assessor's assessment to the LBAA, but the resolution of the
LBAA sought to be appealed to the CBAA. As found by the Court of Appeals:
Records show that the Petitioner had already received, as of April 18, 1992,
the Resolution of the Respondent LBAA dated April 1, 1992, denying
Petitioner's appeal. The Petitioner, thus, had only until May 18, 1992, to
appeal the questioned Resolution of Respondent LBAA. However, it was only
on November 25, 1992 when the Petitioner lodged its appeal with the
Respondent CBAABy then, the thirty (30) day reglementary period to
perfect Petitioner's appeal had long elapsed
Based on the records, we hold that the respondent court did not err in
finding petitioner's appeal to the CBAA time-barred. The applicable provision
is Section 34of P.D. No. 464, and not Section 30. Where the owner or
administrator of a property or an assessor is not satisfied with the decision of
the Local Board of Assessment Appeals, he may, within thirty days from the
receipt of the decision, appeal to the Central Board of Assessment Appeals.
Petitioner does not dispute respondent court's findings that petitioner
received on April 18, 1992, the LBAA resolution denying its appeal and that it
had only until May 18, 1992, to appeal the local board's resolution to the
CBAA. Petitioner, however, only filed its appeal with the CBAA on November
25, 1992 or way beyond the period to perfect an appeal. No error was thus
committed by the CBAA when it dismissed petitioner's appeal for having
been filed out of time and the appellate court was correct in affirming the
dismissal. Well-entrenched is the rule that the perfection of an appeal within
the period therefor is both mandatory and jurisdictional, and that failing in
this regard renders the decision final and executory.

RE: PROTEST OF THE ASSESSMENT.


Manila Electric Cooperative
Vs.
NeliaBarlis
G.R. No. 114231
May 18, 2001
FACTS:
49

The petitioner herein, Manila Electric Company (MERALCO), a dulyorganized corporation in the Philippines from 1968 to 1972 is engaged in the
distribution of electricity, erected four (4) power generating plants in Sucat,
Muntinlupa. From 1975 to 1978 MERALCO paid the real property taxes on the
said properties on the basis of their assessed value as stated in the tax
declarations. In 1985, the Offices of the Municipal Assessor and Municipal
Treasurer of Muntinlupa, upon review of the records pertaining to
assessments and collection of real property taxes, discovered, among others,
that MERALCO, for the period beginning 1976 to 1978, misdeclared and/or
failed to declare for taxation purposes a number of real properties, consisting
of several equipment and machineries, found in the said power plants as
observed on its sale to NAPOCOR of its powerplant. The Municipal Assessor
of Muntinlupa then declared and assessed the subject real properties for
taxation purposes. By virtue of such, Municipal Treasurer Eduardo A. Alon
forwarded a supplemental collection notice to MERALCO, dated 31 October
1989 and a formal notice, demanding the immediate payment of their
unpaid real property taxes inclusive of penalties and accrued interest.
Immediately, MERALCO filed before the Regional Trial Court (RTC) a Petition
for Prohibition with Prayer for Writ of Preliminary Mandatory Injunction and/or
Temporary Restraining Order (TRO) praying, among others, that a TRO be
issued to enjoin the Municipal Treasurer of Muntinlupa from enforcing the
warrants of garnishment against their accounts in several banks.
ISSUE:
Whether or not the trial court is without authority to address the
alleged irregularity in the issuance of the notices of assessment without prior
tax payment, under protest, by petitioner.
HELD:
Yes. A notice of assessment should effectively inform the taxpayer of
the value of a specific property, or proportion thereof subject to tax,
including the discovery, listing, classification, and appraisal of properties.
From the tone and content of the notices, the 3 September 1986 notices sent
by former Municipal Treasurer Norberto A. San Mateo to petitioner MERALCO
are the notices of assessment required by the law as it merely informed the
petitioner that it has yet to pay the taxes in accordance with the reassessed
values of the real property mentioned therein. The 31 October 1989 notices
sent by Municipal Treasurer Eduardo A. Alon to MERALCO is likewise of the
same character. Only the letter dated 20 November 1989 sent by Municipal
Treasurer Eduardo A. Alon to petitioner MERALCO could qualify as the actual
notice of collection since it is an unmistakable demand for payment of back
taxes.
Be that as it may, petitioner was correct when it pointed out that the
Municipal Treasurer, contrary to that required by law, issued the notices of
assessment. However, the trial court is without authority to address the
alleged irregularity in the issuance of the notices of assessment without prior
50

tax payment, under protest, by petitioner. Section 64 of the RPTC, prohibits


courts from declaring any tax invalid by reason of irregularities or
informalities in the proceedings of the officers charged with the assessment
or collection of taxes except upon the condition that the taxpayer pays the
just amount of the tax, as determined by the court in the pending
proceeding. As petitioner failed to make a protest payment of the tax
assessed, any argument regarding the procedure that should have been
observed in the preparation of the notice of assessment and collection is
futile as the trial court in such a scenario cannot assume jurisdiction over the
matter.

RE: PROTEST OF THE ASSESSMENT.


Manila Electric Company
Vs.
NeliaBarlis
G.R. No. 114231
February 1, 2002
FACTS:
Petitioner herein alleges that the September 3, 1986 and October 31,
1989 notices were actually tax collection notices and not tax assessment
notices, thus, petitioner was not able to avail of the proper administrative
remedies in protesting an erroneous tax assessment before the LBAA. The
petition herein is then brought to assail the decision of the Court that RTC
had no jurisdiction to entertain petitioners Petition for Prohibition to enjoin
respondent Municipal Treasurer of Muntinlupa from garnishing petitioners
bank deposits to the extent of its unpaid real estate taxes inasmuch as
petitioner did not comply with the legal requirement of paying under protest
the taxes assessed against it as provided for in Real Property Tax Code.
ISSUE:
1. Whether or not the Notices are notices o assessment.
51

2.Whether or not the notice sent to petitioners are mere notices of


collection and not notices of assessment thus depriving petitioner
administrative remedies such as protest.
HELD:
1. No, The September 3, 1986 and October 31, 1989 notices do not
contain the essential information that a notice of assessment must specify,
namely, the value of a specific property or proportion thereof which is being
taxed, nor does it state the discovery, listing, classification and appraisal of
the property subject to taxation. In fact, the tenor of the notices bespeaks an
intention to collect unpaid taxes, thus the reminder to the taxpayer that the
failure to pay the taxes shall authorize the government to auction off the
properties subject to taxes or, in the words of the notice, Ipinaaalaalapolamang, angsinomangmagpabaya o magkautangngbuwisngmaluwat ay
isusubasta
(Auction
Sale)
ngpamahalaananginyongariarianngnaaayonsabatas. The petitioner is also correct in pointing out that
the last paragraph of the said notices that inform the taxpayer that in case
payment has already been made, the notices may be disregarded is an
indication that it is in fact a notice of collection.
Whether or not a tax assessment had been made and sent to the
petitioner prior to the collection of back taxes by respondent Municipal
Treasurer is of vital importance in determining the applicability of Section 64
of the Real Property Tax Code inasmuch as payment under protest is required
only when there has in fact been a tax assessment, the validity of which is
being questioned. Concomitantly, the doctrine of exhaustion of
administrative remedies finds no application where no tax assessment has
been made.
2. Ordinarily, in the light of the foregoing facts, we would remand this
case to the trial court pursuant to the basic tenet that this Court is not a trier
of facts. Under the present circumstances, however, a remand of this case to
the trial court would be a superfluity. Hence, should the trial court find that
there has indeed been a prior assessment, petitioners petition for prohibition
would be dismissed for failure to pay under protest and to exhaust
administrative remedies. However, a finding by the trial court that there was
no tax assessment made prior to the collection of taxes would render
inapplicable the requirement of paying under protest and exhausting
administrative remedies by first appealing to the LBAA before the trial court
takes cognizance of petitioners petition for prohibition. Unfortunately
therefore, even if the trial court can assume jurisdiction over the said petition
for prohibition, there is nothing substantial left for it to do.

52

RE: PROTEST OF THE ASSESSMENT.


Manila Electric Company
Vs.
NeliaBarlis
G.R. No. 114231
June 29, 2004
FACTS:
In 1985, the Municipal Assessor of Muntinlupa, while reviewing
records pertaining to assessment and collection of real property taxes,
discovered, among others, that MERALCO, for the period, 1976 to 1978,
misdeclared and/or failed to declare for taxation purposes a number of real
properties consisting of several equipment and machineries found in the said
power plants.
Thereafter, on September 3, 1986, the Municipal Treasurer of
Muntinlupa issued three notices to MERALCO, requesting it to pay the full
amount of the claimed deficiency in the real property taxes covering the
machinery and equipment found in the said power plants. He warned the
taxpayer that its properties could be sold at public auction unless the tax due
was paid. Still, MERALCO did not pay the assessed tax, nor take steps to
question the tax assessed as contained in the said notices. In such regard
judicial actions were brought by Meralco. In a resolution dated May 18, 2001,
the Court held that the appellate court correctly ruled that the Regional Trial
Court of Makati, Branch 66, had no jurisdiction to entertain the petition for
prohibition filed by the petitioner because the latter failed to first pay under
protest the deficiency taxes assessed against it, as required. Moreover, the
Court stated that the Notices sent by the respondent to the petitioner dated
September 3, 1986 and October 31, 1989 were in the nature of tax
assessments; hence, the petitioner should have paid under protest the
deficiency tax assessed against it. Petitioner received a copy of this Courts
Decision on June 18, 2001 and filed, on July 3, 2001, a motion for
reconsideration thereon. The Court, however, reversed its ruling that the
notices sent by the respondent to the petitioner were notices of assessment.
It categorically stated that the notices were, in fact, notices of collection.
53

ISSUE:
Whether the Courts May 18, 2001 Decision should be set aside and
factual findings contained in the Courts February 1, 2002 Resolution
regarding the same case be upheld.
HELD:
Upon a careful review of the records of this case and the applicable
jurisprudence, we find that it is the contention of the petitioner and the ruling
of this Court in its February 1, 2002 Resolution that upheld the petitioners
contention and ruled that the aforequoted letters/notices are not the notices
of assessment envisaged in Section 27 of P.D. No. 464 which is correct.
Indeed, even the respondent admitted in his comment on the petition that:
Indeed, respondent did not issue any notice of assessment because
statutorily, he is not the proper officer obliged to do so. Under Chapter VIII,
Sections 90 and 90-A of the Real Property Tax Code, the functions related to
the appraisal and assessment for tax purposes of real properties situated
within a municipality pertains to the Municipal Deputy Assessor and for the
municipalities within Metropolitan Manila, the same is lodged, pursuant to
P.D. No. 921, on the Municipal Assessor.
The petitioners action for prohibition was not premature. Hence, the
Court of Appeals erred in rendering judgment granting the petition for
certiorari of the respondent

RE: PROTEST OF THE ASSESSMENT.


54

National Power Corporation


Vs.
Province of Quezon
G.R. No. 171586
January 25, 2010
FACTS:
Respondent herein, the Province of Quezon assessed Mirant Pagbilao
Corporation (Mirant) for unpaid real property taxes for the machineries
located in its power plant in Pagbilao, Quezon. Napocor,petitioner on the
other hand entered into a Build-Operate-Transfer (BOT) Agreement (entitled
Energy Conversion Agreement) with Mirant, and as such was furnished a
copy of the tax assessment. Napocor, not Mirant protested the assessment
before the Local Board of Assessment Appeals (LBAA), claiming entitlement
to the tax exemptions provided under Section 234 of the Local Government
Code (LGC) and if not entitled therein to some other privileges. In the Courts
Decision of July 15, 2009, it ruled that Napocor is not entitled to any of these
claimed tax exemptions and privileges on the basis primarily of the defective
protest filed by the Napocor and found Napocor to have not filed a valid
protest against the realty tax assessment because it did not possess the
requisite legal standing. Napocor on the other hand posited that Mirant only
possessed naked title to the machineries and they are the ones who actually
has legal interest therein.
ISSUE:
1. Whether or not NAPOCOR was the proper party to protest the real
property tax assessment issued over its power plant in Pagbilao, Quezon.
2. Whether or not payment under protest is required before an appeal
to the LBAA can be made
HELD:
1. No. The Supreme Court held that the legal interest should be one
that is actual and material, direct and immediate, not simply contingent or
expectant given the special nature of a BOT agreement as discussed in the
cited case, we find Article 1503 inapplicable to define the contract between
Napocor and Mirant, as it refers only to ordinary contracts of sale. We thus
declared in Tatad v. Garcia that under BOT agreements, the private
corporations/investors are the owners of the facility or machinery concerned.
Apparently, even Napocor and Mirant recognize this principle; Article 2.12 of
their BOT Agreement provides that "until the Transfer Date, Mirant shall,
directly or indirectly, own the Power Station and all the fixtures, fitting,
machinery and equipment on the Site. Mirant shall operate, manage, and
maintain the Power Station for the purpose of converting fuel of Napocor into
electricity."
Moreover, if Napocor truly believed that it was the owner of the subject
machineries, it should have complied with Sections 202 and 206 of the LGC
which obligates owners of real property to:
55

a. file a sworn statement declaring the true value of the real property,
whether taxable or exempt; and
b. file sufficient documentary evidence supporting its claim for tax
exemption.
While a real property owners failure to comply with Sections 202 and
206 does not necessarily negate its tax obligation nor invalidate its
legitimate claim for tax exemption, Napocors omission to do so in this case
can be construed as contradictory to its claim of ownership of the subject
machineries. That it assumed liability for the taxes that may be imposed on
the subject machineries similarly does not clothe it with legal title over the
same. We do not believe that the phrase "person having legal interest in the
property" in Section 226 of the LGC can include an entity that assumes
another persons tax liability by contract.
2. Yes. The Supreme Court held that by providing that real property not
declared and proved as tax-exempt shall be included in the assessment roll,
the above-quoted provision implies that the local assessor has the authority
to assess the property for realty taxes, and any subsequent claim for
exemption shall be allowed only when sufficient proof has been adduced
supporting the claim. Since Napocor was simply questioning the correctness
of the assessment, it should have first complied with Section 252,
particularly the requirement of payment under protest. Napocors failure to
prove that this requirement has been complied with thus renders its
administrative protest under Section 226 of the LGC without any effect. No
protest shall be entertained unless the taxpayer first pays the tax.
It was an ill-advised move for Napocor to directly file an appeal with
the LBAA under Section 226 without first paying the tax as required under
Section 252. Sections 252 and 226 provide successive administrative
remedies to a taxpayer who questions the correctness of an assessment.
Section 226, in declaring that "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 x xx appeal to the
Board of Assessment Appeals x xx," should be read in conjunction with
Section 252 (d), which states that "in the event that the protest is denied x
xx, the taxpayer may avail of the remedies as provided for in Chapter 3, Title
II, Book II of the LGC [Chapter 3 refers to Assessment Appeals, which
includes Sections 226 to 231]. The "action" referred to in Section 226 (in
relation to a protest of real property tax assessment) thus refers to the local
assessors act of denying the protest filed pursuant to Section 252. Without
the action of the local assessor, the appellate authority of the LBAA cannot
be invoked. Napocors action before the LBAA was thus prematurely filed.

56

RE: REMEDIES FROM A DENIAL OF THE PROTEST AND REFUND.


Denis Habawel
Vs.
Court of Tax Appeals
G.R. No. 174759
September 7, 2011
FACTS:
The petitioners were the counsel of Surfield Development Corporation
(Surfield), which sought from the Office of the City Treasurer of Mandaluyong
City the refund of excess realty taxes paid from 1995 until 2000. After the
City Government of Mandaluyong City denied its claim for refund, Surfield
initiated a special civil action for mandamus in the Regional Trial Court (RTC)
in Mandaluyong City, which was docketed as SCA No. MC03-2142 entitled
Surfield Development Corporation v. Hon. City Treasurer of Mandaluyong
City, and Hon. City Assessor of Mandaluyong City, and assigned to Branch
214. Surfield later amended its petition to include its claim for refund of the
excess taxes paid from 2001 until 2003.
On October 15, 2004, the RTC dismissed the petition on the ground
that the period to file the claim had already prescribed and that Surfield had
57

failed to exhaust administrative remedies. The RTC ruled that the grant of a
tax refund was not a ministerial duty compellable by writ of mandamus.
Undeterred, the petitioners sought reconsideration in behalf of
Surfield, insisting that the CTA had jurisdiction pursuant to Section 7(a)(3) of
Republic Act No. 9282; and arguing that the CTA First Division manifested its
"lack of understanding or respect" for the doctrine of stare decisis in not
applying the ruling in Ty v. Trampe (G.R. No. 117577, December 1, 1995, 250
SCRA 500), to the effect that there was no need to file an appeal before the
Local Board of Assessment Appeals pursuant to Section 22 of Republic Act
No. 7160.
On March 15, 2006, the CTA First Division denied Surfields motion for
reconsideration. On the issue of jurisdiction, the CTA First Division explained
that the jurisdiction conferred by Section 7(a) (3) of Republic Act No. 1125, as
amended by Republic Act No. 9282, referred to appeals from the decisions,
orders, or resolutions of the RTCs in local tax cases and did not include the
real property tax, an ad valorem tax, the refund of excess payment of which
Surfield was claiming. Accordingly, the CTA First Division ruled that the
jurisdiction of the CTA concerning real property tax cases fell under a
different section of Republic Act No. 9282 and under a separate book of
Republic Act No. 7160.
ISSUE:
Whether or not mandamus is a proper remedy when there is a denial of
the protest and refund.
HELD:
No. Since the Honorable Court simply quoted Section 7(a) (5), and it
totally ignored Section 7(a) (3), to perfunctorily find that "undoubtedly,
appeals of the decisions or rulings of the Regional Trial Court concerning real
property taxes evidently do not fall within the jurisdiction of the CTA," the
undersigned counsel formed a perception that the Honorable Court was
totally unaware or ignorant of the new provision, Section 7(a) (3). Hence the
statements that it was gross ignorance of the law for the Honorable Court to
have held that it has no jurisdiction, as well as, the grossness of the
Honorable Courts ignorance of the law is matched only by the unequivocal
expression of this Honorable Courts jurisdiction over the instant case were
an honest and frank articulation of undersigned counsels perception that
was influenced by its failure to understand why the Honorable Court totally
ignored Section 7(a)(3) in ruling on its lack of jurisdiction.
We might have been more understanding of the milieu in which the
petitioners made the statements had they convinced us that the CTA First
Division truly erred in holding itself bereft of jurisdiction over the appeal of
their client. But our review of the text of the legal provisions involved reveals
that the error was committed by them, not by the CTA First Division. This
result became immediately evident from a reading of Section 7(a)(3) and
58

Section 7(a)(5) of Republic Act No. 9282, the former being the anchor for
their claim that the CTA really had jurisdiction, to wit:
Section 7.Jurisdiction. The CTA shall exercise:
(a) Exclusive appellate jurisdiction to review by appeal, as herein
provided:
xxx
(3) Decisions, orders or resolutions of the Regional Trial Courts in
local tax cases originally decided or resolved by them in the exercise of
their original or appellate jurisdiction; (emphasis supplied)
xxx
(5) Decisions of the Central Board of Assessment Appeals in the
exercise of its appellate jurisdiction over cases involving the
assessment and taxation of real property originally decided by the
provincial or city board of assessment appeals; (emphasis supplied)
xxx
As can be read and seen, Section 7(a)(3) covers only appeals of the
"decisions, orders or resolutions of the Regional Trial Courts in local tax cases
originally decided or resolved by them in the exercise of their original or
appellate jurisdiction." The provision is clearly limited to local tax disputes
decided by the Regional Trial Courts. In contrast, Section 7(a)(5) grants the
CTA cognizance of appeals of the "decisions of the Central Board of
Assessment Appeals in the exercise of its appellate jurisdiction over cases
involving the assessment and taxation of real property originally decided by
the provincial or city board of assessment appeals." In its resolution of March
15, 2006, therefore, the CTA First Division forthrightly explained why,
contrary to the petitioners urging, Section 7(a)(3) was not applicable by
clarifying that a real property tax, being an ad valorem tax, could not be
treated as a local tax.

59

RE: REDEMPTION OF PROPERTY SOLD.


CITY MAYOR, CITY TREASURER, CITY ASSESSOR, ALL OF QUEZON
CITY, and ALVIN EMERSON S. YU, Petitioners,
vs.
RIZAL COMMERCIAL BANKING CORPORATION, Respondent.
G.R. No. 171033
August 3, 2010
PERALTA, J.:
FACTS:
The spouses Naval obtained a loan from respondent Rizal Commercial
Banking Corporation (RCBC), secured by a real estate mortgage over certain
properties covered by TCT Nos. N-167986, N-167987, and N-167988. These
properties were later foreclosed and the sold at public auction with RCBC as
the highest bidder. Certificates of Sale were issued in favor of RCBC and
registered on February 10, 2004. Meanwhile, an auction sale over the said
properties was conducted by petitioner City Treasurer of Quezon City due to
tax delinquencies over the same. RCBC tendered payment for all of the
assessed tax delinquencies, interest, and charges with the Office of the City
Treasurer and for the subsequent issuance of the certificate of redemption in
its favor but the same were denied on the ground that the tender of payment
was made beyond the redemption period as set forth under Section 261 of
R.A. 7160.
ISSUE:
Whether or not the period of redemption in a realty tax sale in Quezon City
has to be reckoned from the date of annotation of the certificate of sale
pursuant to par. 7, section 14 of Quezon City tax Ordinance No. SP-91-93 or
from the date of sale pursuant to section 261 of R.A. 7160
RULING:
Section 261 of R.A. No. 7160 (Local Government Code) provides for a period
of 1 year from the date of sale within which the right to redeem the property
should be exercised. While City Ordinance No. SP-91, S-93, otherwise known
60

as the Quezon City Revenue Code of 1993, provides that the right to redeem
should be exercised within 1 year from the date of the annotation of the sale
of the property at the proper registry.
To harmonize the provisions of the two laws, Section 14 (a), Paragraph 7 of
City Ordinance No. SP-91, S-93 should be construed as to define the phrase
"1 year from the date of sale" as appearing in Section 261 of R.A. No. 7160,
to mean "1 year from the date of the annotation of the sale of the property
at the proper registry." Consequently, the counting of the 1 year redemption
period of property sold at public auction for its tax delinquency should be
counted from the date of annotation of the certificate of sale in the proper
Register of Deeds. Applying the foregoing to the case at bar, RCBCs tender
of payment was well within the redemption period.

RE: QUESTIONING TAX SALE.


Aquino
Vs.
Quezon City
G.R. No. 137534 March 3, 2006
FACTS:
This case involves two petitions for review on certiorari involving the
decisions declaring valid the auction sales of two real properties by the
Quezon City Local Government for failure to pay real property taxes. The first
61

case deals with a lot formerly owned by petitioners Aquino. Petitioners


withheld payment of the real property taxes as a form of protest for the
government of then President Marcos. As a result of the nonpayment, the
property was sold by the Quezon City local government, through the
Treasurer's Office, at public auction to private respondent Aida Linao, the
highest bidder. Petitioners claimed that they learned of the sale about 2
years later. They fixed as action for annulment of title, reconveyance, and
damages against the respondents. The seconds case deals with a property
located In Cubao, Quezon City in the name of Solomon Torrado. According to
petitioner heirs, Torrado paid taxes on the improvements on Lot 8 but not on
the lot itself because the Treasurer's Office could not locate the index card
for that property. For failure to pay real property taxes from 1976 to 1982,
the City Treasurer sent a Notice of Intent to Sell to Torrado to his address
indicated in the tax register, which simply states as ButuanCity.
The notice was returned by reason of 'Insufficient Address. Next sent
was a Notice of Sale of Delinquent Property. This was sent to the same
address and similarly returned unclaimed.
Thereafter, a public auction was held and the lot was sold to Veronica
Baluyot, who mortgaged the property to Spouses Uy who then sold it to DNX
Corp for failure to pay the mortgage debt. Also, a Notice of Sold Property was
subsequently sent to Torrado which was returned unclaimed.
ISSUE:
Whether or not there was a failure on the part of the Quezon City Local
Government to satisfy the notice requirements before selling the property for
tax delinquency?
HELD:
Definitely, there is no more logical way to construe the whole chapter
on 'Collection of Real Property Tax (Sections 56 to 85) than to stress that
while three methods are provided to enforce collection on real property
taxes, a notice of delinquency is a requirement regardless of the method
or methods chosen. It is incorrect for the respondents to claim that notice of
delinquency has limited application only to distraint of personal property.
They mistakenly lumped Section 65 exclusively with Sections 68 to 72 and, in
so doing, restricted its application from the other tax remedies. Section 65 is
to be construed together with Sections 66 and78 and all three operate in
reference to tax methods in general. Petitioners are correct in insisting that
two notices must be sent to the taxpayer concerned. Nevertheless,
respondents still prevail because the Court is satisfied that the two-notice
requirement has been complied with by the Treasurer's Office.

62

RE: QUESTIONING TAX SALE.


National Housing Authority
Vs.
Iloilo City
GR No. 172267 20 August 2008
FACTS:
For nonpayment of realty taxes, defendants auctioned off plaintiff
NHAs Lot No. 1150-A [of the subdivision plan Psd-29811, being a portion of
Lot No. 1150 of the Cadastral Survey of Iloilo, situated at Barangay Monica,
City of Iloilo] covered by TCT No. T-76179. Such auction sale was allegedly
done without notice to plaintiff NHA as the registered owner thereof, in
addition to the fact that the latter is a tax-exempt agency of the
government. There being no private individual who offered to bid for the
property, the Defendant City of Iloilo bought the same per Certificate of Sale
under its name. After the one-year redemption period expired, such
defendant executed a Final Bill of Sale in its favor. Subsequently, defendant
Rosalina Francisco purchased the land. As a result, plaintiffs TCT was
cancelled, and a new TCT No. T-107295 was issued in the name of defendant
Francisco.
Defendants filed separate Motions to Dismiss based on the same
grounds, particularly: lack of jurisdiction and forum shopping. According to
them, the lower court did not acquire jurisdiction for failure of plaintiff to
comply with the deposit mandated under Section 267, R.A. 7160, to wit:
63

Sec. 267. Acting Assailing Validity of Tax Sale.No court shall


entertain any action assailing the validity of any sale at public auction of real
property or rights therein under this Title until the taxpayer shall have
deposited with the court the amount for which the real property was sold,
together with interest of two (2%) per month from the date of sale to the
time of the institution of the action. The amount so deposited shall be paid
to the purchaser at the auction sale if the deed is declared invalid but it shall
be returned to the depositor if the action fails.
Neither shall any court declare a sale at public auction invalid by
reason of irregularities or informalities in the proceedings unless the
substantive rights of the delinquent owner of the real property or the person
having legal interest therein have been impaired.
ISSUE:
Whether or not NHA is required to make a deposit as required under
Section 267 of RA 7160.
HELD:
The disputed provision on which the spotlight now beams down is
rather unsophisticated:
Sec. 267. Action Assailing Validity of Tax Sale.No court shall entertain
any action assailing the validity of any sale at public auction of real property
or rights therein under this Title until the taxpayer shall have deposited with
the court the amount for which the real property was sold, together with
interest of two percent (2%) per month from the date of sale to the time of
the institution of the action. The amount so deposited shall be paid to the
purchaser at the auction sale if the deed is declared invalid but it shall be
returned to the depositor if the action fails.
Neither shall any court declare a sale at public auction invalid by
reason of irregularities or informalities in the proceedings unless the
substantive rights of the delinquent owner of the real property or the person
having legal interest therein have been impaired.

64