3.

Villanueva v City of Iloilo (privilege tax) Relying on the passage of RA 2264 or the Local AutonomyAct, Iloilo enacted Ordinance 11 Series of 1960, imposing amunicipal license tax on tenement houses in accordance withthe schedule of payment provided by therein.Villanueva and the other appellees are apartment owners fromwhom, the city collected license taxes by virtue of Ordinance11. Appellees aver that the said ordinance is unconstitutionalfor RA 2264 does not empower cities to impose apartmenttaxes; that the same is oppressive and unreasonable for itpenalizes those who fail to pay the apartment taxes; that itconstitutes not only double taxation but treble taxation; and,that it violates uniformity of taxation. Issues: 1. Does the ordinance impose double taxation?2. Is Iloilo city empowered by RA 2264 to impose tenement taxes? Held: 1. While it is true that appellees are taxable under the NIRCas real estate dealers, and taxable under Ordinance 11,double taxation may not be invoked. This is because thesame tax may be imposed by the national government aswell as by the local government. The contention thatappellees are doubly taxed because they are paying realestate taxes and the tenement tax is also devoid of merit.A license tax may be levied upon a business or occupationalthough the land or property used in connection therewithis subject to property tax. In order to constitute doubletaxation, both taxes must be the same kind or character.Real estate taxes and tenement taxes are not of the samecharacter.2. RA 2264 confers local governments broad taxing powers.The imposition of the tenement taxes does not fall withinthe exceptions mentioned by the same law. It is arguedhowever that the said taxes are real estate taxes and thus,the imposition of more the 1 per centum real estate taxwhich is the limit provided by CA 158, makes the saidordinance ultra vires. The court ruled that the tax inquestion is not a real estate tax. It does not have theattributes of a real estate tax. By the title and the terms of the ordinance, the tax is a municipal tax which means animposition or exaction on the right to use or dispose of property, to pursue a business, occupation or calling, or toexercise a privilege. Tenement houses being offered for rent or lease constitute a distinct form of business or calling and as such, the imposition of municipal tax findssupport in Section 2 of RA 2264. It is not a tax on the land on which the tenement houses are erected, although both land andtenement houses may belong to the same owner. Te tax is not a fixed proportion of theassessed value of the tenement houses, and does not require the intervention of theassessors or appraisers. It is not payable at a designated time or date, and is not enforceableagainst the tenement houses either by sale or distraint.

9. REPUBLIC vs. CA, and NIELSON & CO.,INC. 149 SCRA 351 GR No. L-38540 April 30, 1987 FACTS: The petitioner sought the review on certiorari of the decision of the respondent Court of Appeals reversing the decision of the then Court of First Instance of Manila which ordered private respondent Nielson & Co., Inc. to pay the Government the amount of P11,496.00 as ad valorem tax, occupation fees, additional residence tax and 25% surcharge for late payment, for the years 1949 to 1952. Petitioner claims that the demand letter of 16 July 1955 showed an imprint indicating that the original thereof was released and mailed on 4 August 1955 by the Chief, Records Section of the Bureau of Internal Revenue, and that the original letter was not returned to said Bureau; thus, said demand letter must be considered to have been received by the private respondent. According to petitioner, if service is made by ordinary mail, unless the actual date of receipt is shown, service is deemed complete and effective upon the expiration of five (5) days after mailing. As the letter of demand dated 16 July 1955 was actually mailed to private respondent, there arises the presumption that the letter was received by private respondent in the

absence of evidence to the contrary. More so, where private respondent did not offer any evidence, except the self-serving testimony of its witness, that it had not received the original copy of the demand letter dated 16 July 1955. ISSUE: Was notice of assessment or demand properly served to the respondent? Should the receipt by the respondent of the succeeding follow-up demand notices be construed as receipt of the original demand? HELD: As to the first issue, no. As correctly observed by the respondent court in its appealed decision, while the contention of petitioner is correct that a mailed letter is deemed received by the addressee in the ordinary course of mail, still this is merely a disputable presumption, subject to controversion, and a direct denial of the receipt thereof shifts the burden upon the party favored by the presumption to prove that the mailed letter was indeed received by the addressee. Since petitioner has not adduced proof that private respondent had in fact received the demand letter of 16 July 1955, it can not be assumed that private respondent received said letter. As to the second issue, Yes. Records show that petitioner wrote private respondent a follow-up letter dated 19 September 1956, reiterating its demand for the payment of taxes as originally demanded in petitioner's letter dated 16 July 1955. This follow-up letter is considered a notice of assessment in itself which was duly received by private respondent in accordance with its own admission. And consequently, under Section 7 of Republic Act No. 1125, the assessment is appealable to the Court of Tax Appeals within thirty (30) days from receipt of the letter. The taxpayer's failure to appeal in due time, as in the case at bar, makes the assessment in question final, executory and demandable. Thus, private respondent is now barred from disputing the correctness of the assessment or from invoking any defense that would reopen the question of its liability on the merits. 11. CABRERA vs. THE PROVINCIAL TREASURER OF TAYABAS GR No. 502, January 29, 1946 "The taxpayer should at least be apprised of the exact date of the proceeding by which she is to lose her property. Failure of the taxpayer to accordingly correct or change name in the assessment record cannot supplant such absence of notice." FACTS: The Provincial Treasurer of Tayabas issued a notice for the sale at public auction of the real properties of Nemesio Cabrera forfeited for tax delinquency on December 15, 1940. The letter sent to Nemesio Cabrera was returned marked Unclaimed for the latter was already dead in 1935. The land was actually sold in a rescheduled public auction sale on May 1941 to Catigbac and was finalized in May 1942. Basilia Cabrera, the registered owner of the land subject to attachment, filed a complaint with the CFI-Tayabas against the Provincial Treasurer and Catigbac attacking the validity of the sale on the grounds that she was not notified, even though the property had remained in the assessment book in the name of Nemesio Cabrera, because she became the registered owner thereof since 1934 when a Torrens Title was issued to her by the Register of Deeds of Tayabas. ISSUE: Is there a need for new notices if the land was not sold on the date specified in the previous notice? HELD: Yes. Under the law, even if the notice state that the sale would take place on a specified date and every day thereafter, it is a general and indefinite notice. In order to protect the taxpayers rights, the taxpayer should at least be apprised of the exact date of the proceeding by which she is to lose her property. Besides, the appellee admittedly being not notified also vitiates the proceeding. She is the registered owner of the land and had become liable for taxes thereon. For all purposes, she is the delinquent taxpayer "against whom the taxes were assessed." It cannot be Nemesio for the latter's obligation to pay ended where Basilia's liability began.

Basilia may be criticized for failure to have changed the name in the assessment record. However, such circumstance, nevertheless, cannot supplant the absence of notice. 13. MARCOS II vs. CA 273 SCRA 47 GR No. 120880, June 5, 1997 "The approval of the court sitting in probate is not a mandatory requirement in the collection of estate taxes." "In case of failure to file a return, the tax may be assessed at anytime within 10 years after the omission." FACTS: Bongbong Marcos sought for the reversal of the ruling of the Court of Appeals to grant CIR's petition to levy the properties of the late Pres. Marcos to cover the payment of his tax delinquencies during the period of his exile in the US. The Marcos family was assessed by the BIR after it failed to file estate tax returns. However the assessment were not protested administratively by Mrs. Marcos and the heirs of the late president so that they became final and unappealable after the period for filing of opposition has prescribed. Marcos contends that the properties could not be levied to cover the tax dues because they are still pending probate with the court, and settlement of tax deficiencies could not be had, unless there is an order by the probate court or until the probate proceedings are terminated. Petitioner also pointed out that applying Memorandum Circular No. 38-68, the BIR's Notices of Levy on the Marcos properties were issued beyond the allowed period, and are therefore null and void. ISSUE: Are the contentions of Bongbong Marcos correct?

HELD: No. The deficiency income tax assessments and estate tax assessment are already final and unappealable -and-the subsequent levy of real properties is a tax remedy resorted to by the government, sanctioned by Section 213 and 218 of the National Internal Revenue Code. This summary tax remedy is distinct and separate from the other tax remedies (such as Judicial Civil actions and Criminal actions), and is not affected or precluded by the pendency of any other tax remedies instituted by the government. The approval of the court, sitting in probate, or as a settlement tribunal over the deceased's estate is not a mandatory requirement in the collection of estate taxes. On the contrary, under Section 87 of the NIRC, it is the probate or settlement court which is bidden not to authorize the executor or judicial administrator of the decedent's estate to deliver any distributive share to any party interested in the estate, unless it is shown a Certification by the Commissioner of Internal Revenue that the estate taxes have been paid. This provision disproves the petitioner's contention that it is the probate court which approves the assessment and collection of the estate tax. On the issue of prescription, the omission to file an estate tax return, and the subsequent failure to contest or appeal the assessment made by the BIR is fatal to the petitioner's cause, as under Sec.223 of the NIRC, in case of failure to file a return, the tax may be assessed at anytime within 10 years after the omission, and any tax so assessed may be collected by levy upon real property within 3 years (now 5 years) following the assessment of the tax. Since the estate tax assessment had become final and unappealable by the petitioner's default as regards protesting the validity of the said assessment, there is no reason why the BIR cannot continue with the collection of the said tax. 14, MAMBULAO LUMBER CO. vs. REPUBLIC 132 SCRA 1 GR No. L-37061, September 5, 1984

"Forest charges are internal revenue taxes and the BIR has the sole power and duty to collect them. Thus, an assessment made by the Bureau of Forestry cannot be considered an assessment made by the BIR." FACTS: The Bureau of Forestry sent a demand letter dated January 15, 1949 to Mambulao Lumber Co. demanding for the payment of forest charges and surcharges. Mambulao protested the assessment. On August 29,1958, the BIR likewise wrote a letter to the company demanding payment, which subsequently requested reinvestigation. The BIR gave the company twenty (20) days from receipt within which to submit the results of its verification of payments. For failure to comply and failure to pay its tax liability despite demands, CIR filed a complaint for collection with CFI-Manila on August 25, 1961. The CFIManila and Court of Appeals decided against Mambulao ordering it to pay the tax liability. Petitioner argued that the collection is barred by the statute of limitations under Sections 332 of the NIRC. As stated, the collection should be made within the five (5) year period. From 1949 (date when the Bureau of Forestry assessed and demand payment as forestry charges and surcharges) up to 1961 (date of filing of complaint), it is already more than five years. ISSUE: Has the period of filing of collection complaint prescribed?

HELD: No. The action for collection is not barred by prescription. The basis of the complaint filed on August 1961 was the demand letter made by the CIR on August 29, 1958 and not the demand letter of the Bureau of Forestry on January 1949. So that the reckoning date of the 5-year period should be from the date of the BIR letter and not that of the Bureau of Forestry. This must be so because forest charges are internal revenue taxes and the BIR has the sole power and duty to collect them. 15. FERNANDOS HERMANOS, INC. vs. COMMISSIONER 29 SCRA 552 GR No. No. L-21551, September 30, 1969 "The filing of an answer to taxpayer's petition for review is considered as institution of judicial action." FACTS: The Commissioner of Internal Revenue assessed the petitioner investment corporation of deficiency income taxes for the years 1950 to 1954 and for 1957. There were two conflicting dates of assessment, which are vital to the compliance with the statute of limitations, based on each claim of the petitioner and the respondent; the Commisioner's record of date of assesment is February 27, 1956 while the petitioner believes the demand was made on December 27, 1955 so that, as the petitioner corporation claims, the Commissioner's action to recover its tax liability should be deemed to have prescribed for failure on the part of the Commissioner to file a complaint for collection against it in an appropriate civil action. ISSUE: Has the action for collection prescribed? HELD: No. It has been held that "a judicial action for the collection of a tax is begun by the filing of a complaint with the proper court of first instance, or where the assessment is appealed to the Court of Tax Appeals, by filing an answer to the taxpayer's petition for review wherein payment of the tax is prayed for." This is but logical for where the taxpayer avails of the right to appeal the tax assessment to the Court of Tax Appeals, the said Court is vested with the authority to pronounce judgment as to the taxpayer's liability to the exclusion of any other court. In the present case, regardless of whether the assessments were made on February 24 and 27, 1956, as claimed by the Commissioner, or on December 27, 1955 as claimed by the taxpayer, the government's right to collect the taxes due has clearly not prescribed, as the taxpayer's appeal or petition for review was filed with the Tax Court on May 4, 1960, with the

Commissioner filing on May 20, 1960 his Answer with a prayer for payment of the taxes due, long before the expiration of the five-year period to effect collection by judicial action counted from the date of assessment. 16. REPUBLIC vs. ARANETA 2 SCRA 144 GR No. L-14142, May 30, 1961 "Where the tax obligation is secured by a bond, the prescriptive period for the action for the forfeiture of the bond is governed by the Civil Code." FACTS: The Solicitor General, in behalf of the Republic of the Philippines, filed before CFI of Manila an action against the defendant Araneta, as principals, and Manila Surety, as surety, to recover the internal revenue taxes including surcharges, the payment of which was guaranteed by a bond executed when the first extrajudicial demand for payment was made. The appellant-taxpayers contend that the appellee's cause of action has prescribed, because the action for recovery of internal revenue taxes and surcharge due brought on 22 February 1957, was not commenced within the period of five years after the assessment dated 15 May 1948 had been made, as provided for in Section 331 of the Tax Code. ISSUE: Has the action to recover the taxes due from the taxpayer and the surety already prescribed? HELD: No. The appellant-taxpayers cannot invoke prescription under the provisions of Section 331 of the NIRC because the government is suing on the bond executed and filed by them to guarantee payment in 6 monthly installments of the tax liability due from 1946 to 1948, which is a separate and distinct obligation of the parties thereto. The action to enforce the obligation on the bond executed on March 18, 1949, having been filed in court on February 22, 1957, was within the 10-year prescriptive period to enforce a written contractual obligation, as set by the Civil Code. 12. ANTONIA VALENCIA Y ORUS, plaintiff-appellee, vs. JUAN JIMENEZ Y MIJARES and GABRIEL FUSTER Y FUSTER, defendants-appellants. G.R. No. L-4406 October 23, 1908 MEMORANDUM ON MOTION TO DISCONTINUE. After this case had been finally submitted to this court, and was awaiting decision, a petition was presented in behalf of the plaintiff, not through her attorneys of record but through a new attorney, in the following words: The plaintiff, Doa Antonia Valencia y Orus, through her advocate, appears and respectfully shows: For weighty reasons now known to the plaintiff, but whereof she was ignorant when this action was begun, she can not continue claiming either ownership or possession of the lands in question in this suit. Wherefore this plaintiff asks this honorable court to revoke the judgment appealed from in all its parts, absolving the defendants fully from the demands in this suit, without making any award of costs. By the judgment of the court below the plaintiff had been awarded the real property in suit, together with damages for its detention. This motion must be denied, for several reasons. First. The plaintiff is a resident of Barcelona, Spain, ad she originally authorized the bringing of this action in correspondence direct between herself and her attorneys, Coudert Brothers of Manila, at whose request she gave a power of management thereof to one of the assistants in their office, Jose Moreno Lacalle. As a foundation for the present motion there was filed a later power of attorney from her to

Buenaventura Guamis, revoking the earlier power to Jose Moreno Lacalle, which it fully recited, and empowering Guamis to revoke in her name the aforesaid antecedent power, and secondly, "himself or through his substitutes, whom he may name, to appear in legal from before the Supreme Court of the city of Manila, or any other tribunal which may have cognizance of the case, and present a fitting instrument in writing discontinuing the action brought nullify the sale of the lands aforesaid of Manila against Don Juan Jimenez y Mijares and Don Gabriel Fuster y Fuster, with the power of ratification in the said petition making manifest his wishes to renounce the continuance of the said suit." The affidavit of Buenaventura Guamis says: (4) As appears from the aforesaid document "A," at the foot of the sixth page (the power of attorney to him), it is the intention and desire of the said Doa Antonia Valencia y Orus to discontinue this action and renounce the continuation of the same. . . . (6) By virtue of the powers conferred by the said document "A," this dependent hereby confers power on Mr. C. W. Ney, practicing lawyer in this capital city, to make in the name and representation of the said Doa Antonia Valencia y Orus proceedings necessary to procure the final discontinuance of this action. It is obvious that the motion does not comply with the power granted by the plaintiff nor fall within its terms. The notice of motion does not ask for the discontinuance or cessation or abandonment of the suit, but on the contrary prays for a judgment absolving the defendants of the claim set up in the complaint, without any costs. Such a judgment would be one upon the merits and would preclude the plaintiff from any claim which she might hereafter, on fuller devices, see fit to make against these defendants. Such action, possibly so prejudicial to her interests, her power attorney has not authorized any person to take in her behalf. The two things, a discontinuance and a judgment of absolution on the merits, are not only different in degree but in kind, and in the opinion of the majority of this court the one does not include the other. Second. If, however, it might be that the motion for a judgment upon the merits could be considered as including the other kind of relief, that is, a mere discontinuance, on the principle that the greater includes the less, then the relief asked for can not be granted, because it is tied up with the condition that there shall be no award of costs. The award of costs is at the disposal of the court, not of the parties, especially to the prejudice of the defendants, who are third persons, not before us on this motion and whom we can not presume to accept terms to unfavorable to them in their character as innocent purchasers. Third. By the affidavit of Charles C. Cohn, one of the plaintiffs' original attorneys, it appears that, after the entry of judgment in this action, the said attorneys caused to be entered upon the records of the Court of First Instance in which the judgment was rendered a statement of their claim to a lien thereon, with lawful fees and disbursements in this action, and caused written notice thereof to be delivered to the adverse party. Under section 37 of the Code of Civil Procedure this sufficed to give them a lien upon the judgment, inasmuch as the decree was one, in part, for the payment of money. Their further claim thereon is expressed in that section in the following words:

. . . and shall have the same right and power over such judgments, decrees, and executions to enforce his client as his client had or may have to the extent that may be necessary for the payment of his just fees and disbursements.

Under the American practice this clause gives the attorneys an interest in the judgment and power over it and to enforce it to that of their clients. It must therefore entitle them to carry on the action for the purpose of securing their proper compensation. Without passing on the particular steps required to enable the attorneys to carry their lien into effect or on the reasonableness of the fees claimed by them, or of the contract providing thereof, we only hold that their lien is alleged to have been properly created so as to give them a right and standing in the action which prevents its discontinuance against their protest and without a suitable provision for their protection. Fourth. The motion is not made by one of the attorneys of record. Certain motions, of their very nature, maybe made by an attorney who has not appeared in the case, where the interest of the client is adverse to that of the attorney of record. Of that character is a motion for substitution of attorneys, but not such a motion as the present one, which go to the merits and final disposition of the cause and which no one is entitled to make other than the attorney who duly appears of record in this court. By section 32 of the Code of Civil Procedure the rights is secured to a party to change attorneys. The method of such change is not indicated. The proper practice in this case on the part of the plaintiff would have been a motion for a substitution of attorneys, on which the question of their compensation would naturally have risen and on the determination of which the attorney finally appearing on record could have moved a discontinuance. The justice sitting in this case do not all agree on each of the aforesaid grounds, but they are not unanimously of the opinion that the motion must be denied. DECISION. This action was brought in the Court of First Instance of the city of Manila to set aside a sale of real estate valued at P95,697.10 for unpaid taxes amounting to P2,934.76 to the defendant Jimenez, and also the transfer of a one-half interest therein by him to the defendant Fuster, on two grounds, first, that the defendants had secured title under the tax sale by conspiracy with one Vicente Ablaza, plaintiff's agent, who allowed the property to go to sale while having in his hands ample funds for the payment of taxes; and, second, that the tax sale was invalid by reason of defects in the proceedings to impose the tax. The first cause of action was opened up, but was not persisted in at the trial and the case comes before us on the questions only of the irregularity of the proceedings for the sale. The most serious of these are the following:

(1) The statement of the owner, filed by Ablaza, as her agent, gave her name as "Doa Antonia Valencia y Orus." In the assessment roll for the year 1901 the name given was "Valencia, Antonio." In the roll of 1902 it was "Valencia, Antonia," while the tax deed had it "Antonia Valencia." (2) The correct description given in the owner's filed statement read:

Bounded in front, on entering, 280.55 meters, by Calle de Lemery; on the right, on entering, 142.40 meters, by the property of Don Nicolas del Rosario; on the left on entering, 65.10 meters, by Calle Corcuera, and at the rear, 288.70 meters, by the estuary and canal de le Reina. In the roll of 1901 it is stated as

A piece of land improvements, situated blocks 24, 25, 26, and 28 fronting Calle Lemery, solar de Nicolas del Rosario, izquierda Calle Corcuera and espalda Canal de la Reina. In the roll 1902: A piece of land improvements, known as blocks 24, 25, 26, and 28 fronting izquierda Calle Corcuera espalda Calle de la Reina, Calle Lemery, solar de Nicolas del Rosario. In the notice of sale under "Description," "Kind of property land and improvement;" "Street and number," it reads, "Read of Canal de la Reina, left of Corcuera;" "Lots, 24, 25, 26 28;" "Block, ." The description in the final deed is correct, whereas in the tax certificate it was copied from that in the notice of sale, and is defective. The words "Lots" and "Blocks" were proved to refer to a plan made by the assessor and collector and kept in his office for his own use, but to which individuals might have access, on which it was shown as lots 24, 25, 16, and part of 28 in block 1. This plan was made after the filing of the declaration by the property owners but before the assessment. (3) The amount of the taxes in these several document is set down in columns, the cents being divided from the dollars, but without any dollar-mark. (4) That only proof of the fixing of the notices of sale was a recital in the certificate of the city assessor and collector that the notice was posted "at the main entrance of said municipal building and at five other public places in the city of Manila," without specifying the places, and also a recital in the deed that a copy was posted in the proper barrio. (5) The tax certificate did not fully recite the proceedings and give the details required by sections 78 and 80 of Act No. 82, but, on the contrary, showed the defects n the description and notice of sale, whereas the final deed substantially complied with the statute. The American law does not create a presumption of the regularity of any administrative action which results in depriving a citizen or taxpayer of his property, but, on the contrary, the due process of law to be followed in tax proceedings must be established by proof and the general rule is that the purchaser of a tax title is bound to take upon himself the burden of showing the regularity of all proceedings leading up to the sale. The difficulty of supplying such proof has frequently lead to the efforts on the part of legislatures to avoid it by providing by statute that a tax deed shall be deemed either conclusive or presumptive proof of such regularity. Those statutes attributing to it a conclusive effect have been held invalid as operating to deprive the owner of his property without due process of law. But those creating a presumption only have been sustained as affecting a rule of evidence, changing but the burden of proof. (Turpin vs. Lemon, 187 U.S., 51.) The tax law applicable to Manila does not attempt to give any special probative effect to the deed of the assessor and collector, and therefore leaves the purchaser to establish the regularity of all vital steps in the assessment and sale. By section 84 and 86 of Act No. 82 it is enacted that no tax shall be declared invalid for irregularities unless they "shall have impaired the substantial rights of the taxpayer." The first apparent defect in this assessment is the error in the name of the owner.

In Marx vs. Hanthorn (148 U.S., 172), where it does not even appear that under the law of the State of Oregon the tax was a personal one, the tax was held bad because the owner's name had been written in the roll as "Ida F. Hawthorn" instead of "Ida J. Hanthorn." Under the Municipal Law of the Philippines, sections 74 to 78, the tax is primarily a personal one and is enforcible against realty only in the event of a deficiency of personality, whereas in the City of Manila its character is somewhat qualified by the provisions in section 47 of the charter only. Nevertheless, the requirement of the statute in so imperative that the rule of the Hanthorn case is manifestly applicable here. But we deem it unnecessary to take up in detail the several irregularities and to determine the effect of each one upon the validity of the tax sale. The most vital requisite of such an assessment is that the property shall be so described as to be easily identified both by the owner and by the persona desiring to bid therefor. The description prior to those in the deed are all more or less defective, but those in the assessment roll for 1902 and in the final notice of the tax sale are so confused and inadequate as not only to fail to give notice to a stranger of the location of the property, but as to the incapable of verification by a person familiar with it. This is especially true of the description in the notice of sale, which of all the steps in the procedure is the one calling for a most definite and intelligible description. It is settled doctrine that, where one sale embraces two different taxes, a vital defect in either tax invalidates the whole sale, so that, considered apart from the notice of sale, the rather understandable description in the roll of 1901 does not cure the vice in that of 1902. We are satisfied that the failure to adequately describe the property both in the substantials rights of the taxpayer, "within the meaning of sections 84 and 86 of the Municipal Code, and upon this failure we are content to rest our judgment, affirming the part of the judgment of the Court of First Instance of the city of Manila to Juan Jimenez y Mijares, and the deed of the latter to Gabriel Fuster y Fuster, invalid and awarding to the plaintiff the possession of the property described in the complaint. The judgment of the Court of First Instance not only awarded the plaintiff the real estate, but also the rents and profits thereon, both from the time the defendants took possession until the commencement of the action, and those accrued during the pendency of the action which have been collected by the defendant Gabriel Fuster y Fuster as receiver. This part of the judgment should be modified. By article 451 of the Civil Code, the possessor of property in good faith is entitled to the profits thereof until his possession is legally interrupted. By article 448, the possessor under claim of ownership is presumed to have a just title. By article 434, good faith is always presumed, while bad faith must be affirmatively proved. By article 435, possession acquired in good faith does not lose that character until the occurrence of something showing that the possessor is not ignorant of the weakness of his title. That portion of the present action having been abandoned which involved the direct charge of conspiracy on the part of the defendants, they are entitled, as the case stands, to the benefit of these articles of the code unless they can be charged with actual bad faith. Applying the standard of the Spanish law expressed in these articles, there is not sufficient in the case to establish such a charge although it is somewhat indicated in the evidence. It may be urged, however, that the tax deed derives its force from the law under which it is given and must take us an incident its quality and effects from that law, so that the holder thereof acquires no other status in respect of good faith than such as the American law attributes to him in that character. The rule of that law is usually stated to good faith (Cooley on Taxation, pp. 218, 220), qualified, however, in this important particular, that in respect of improvements he who, without actual knowledge of defects, holds a deed regular on its face, is considered in good faith and is entitled to rely upon that deed without an investigation of the proceedings upon which it is founded. But if the deed itself exposes an irregularity, he must take notice of it. (Madland vs. Benland, 24 Min.,

372; O'Mulcahy vs. Florer, 27 Min., 499; Bedell vs. Shaw, 59 N.Y., 46; Lynch vs. Brudie, 63 Pa., 206.) We have to seek the meaning of the term "good faith" in the cases on the subject of improvements because, in the American system, it can not arise in connection with rents and profits, which are recoverable by the successful plaintiff in any event without regard to it. In the present instance, the final deed is regular on its face, and in the opinion of the majority of the court, in the absence of actual notice, sufficed to protect the holders thereof, although the preliminary certificate of sale which they had held and surrendered showed in its recital that the sale was irregular. Therefore, applying either the Spanish or the American criterions as to good faith, the plaintiff may not recover the rents and profits down to the time when it is plain that the defendants were advised of the vice of their title.lawphil.net This limit is fixed at the date on which, after being informed by the beginning of an action, they voluntarily appear therein and assert their claim. (Judgments of the supreme court of Spain of November 23, 1900, and October 12, 1901.)

The defendants' first pleading in this case, the demurrer, was served on the 16th of May, 1906, and the plaintiff is entitled to recover the rents and profits from that date until the termination of the action, and the receiver must account to her therefor. In conclusion, so much of the judgment of the Court of First Instance as awards to the plaintiff the possession of the property in suit, declaring void the deed from the city assessor and collector to Juan Jimenez y Mijares, together with the deed of the latter to the defendant Gabriel Fuster y Fuster, and also so much thereof as directs the payment to the plaintiff of the rents and profits of the property from the 16th of May, 1906, and also awards to the defendants the sum of P2,934.76, with interest from the 17th of December , 1904, to the 26th o f April, 1906, being the amount of the tax with interest deposited under the statute as a condition to maintain the action, but thereafter withdrawn under stipulation, is affirmed; but so much of said judgments as directs payment to the plaintiff of the rents and profits of the real estate prior to the 16th of day of May, 1906, amounting to P4,337.73, is revoked. This action is hereby remanded to the Court of First Instance for the purpose of taking such accounts and conducting such other proceedings herein as may be necessary to carry out the aforesaid judgment, but without costs of this. So ordered.