TAX CASES OUTLINE 5 Gasoline station equipments and machineries are permanent fixtures for purposes of

realty taxation.—Here, the question is whether the gas station equipment and
1. . Mindanao Bus Co. vs. City Assessor and Treasurer machinery permanently affixed by Caltex to its gas station and pavement (which are
indubitably taxable realty) should be subject to the realty tax. This question is different
Property; Immovable Property by Destination; Two requisites before movables may
from the issue raised in the Davao Saw Mill case. Improvements on land are
be deemed to have immobilized; Tools and equipments merely incidental to business
commonly taxed as realty even though for some purposes they might be considered
not subject to real estate tax.—Movable equipments, to be immobilized in
personalty (84 C.J.S. 181-2, Notes 40 and 41). “It is a familiar phenomenon to see
contemplation of Article 415 of the Civil Code, must be the essential and principal
things classed as real property for purposes of taxation which on general principle
elements of an industry or works which are carried on in a building or on a piece of
might be considered personal property” (Standard Oil Co. of New York vs. Jaramillo,
land. Thus, where the business is one of transportation, which is carried on without a
44 Phil. 630, 633)
repair or service shop, and its rolling equipment is repaired or serviced in a shop
belonging to another, the tools and equipments in its repair shop which appear 3. Testate Estate of Concordia T. Lim vs. City of Manila,
movable are merely incidentals and may not be considered immovables, and, hence,
not subject to assessment as real estate for purposes of the real estate tax Taxation; Real Estate Taxes; Unpaid real estate taxes attaches to the property and is
chargeable against the taxable person who had actual or beneficial use and
2. Caltex (Phil.) Inc. vs. Central Board of Assessment Appeals, possession of it, regardless of whether or not he is the owner.—The records show
that the subject properties were leased to other persons during the time when GSIS
Taxation; Property; Courts; Jurisdiction; The Central Board of Assessment Appeals,
held their titles, as was the case during the ownership of the late Concordia Lim.
and not the Court of Tax Appeals has appellate jurisdiction over decisions of the
However, the real estate taxes later assessed on the said properties for the years
provincial or city boards of assessment appeals.—The Solicitor General’s contention
1977, 1978 and the first quarter of 1979 were charged against the plaintiff-appellant
that the Court of Tax Appeals has exclusive appellate jurisdiction over this case is not
even if the latter was not the beneficial user of the parcels of land. In real estate
correct. When Republic Act No. 1125 created the Tax Court in 1954, there was as yet
taxation, the unpaid tax attaches to the property and is chargeable against the taxable
no Central Board of Assessment Appeals Section 7(3) of that law in providing that the
person who had actual or beneficial use and possession of it regardless of whether or
Tax Court had jurisdiction to review by appeal decisions of provincial or city boards of
not he is the owner. (Sections 3(a) and 19 of P.D. No. 464; Province of Nueva Ecija v.
assessment appeals had in mind the local boards of assessment appeals but not the
Imperial Mining Co., Inc., 118 SCRA 632 [1982]).
Central Board of Assessment Appeals which under the Real Property Tax Code has
appellate jurisdiction over decisions of the said local boards of assessment appeals Courts; Jurisdiction; The Regional Trial Court has jurisdiction over actions for refund
and is. therefore, in the same category as the Tax Court. or reimbursement of taxes paid under protest.—The Court rules that the plaintiff-
appellant correctly filed the action for refund/reimbursement with the lower court as it
Supreme Court; Certiorari; The Heal Property Tax Code does not provide for
is the courts which have jurisdiction to try cases involving the right to recover sums of
Supreme Court review of decisions of the Central Board of Assessment Appeals. The
money. Section 30 of the Real Property Tax Code is not applicable because what is
only remedy for Supreme Court review of the Central Board’s decision is by Special
questioned is the imposition of the tax assessed and who should shoulder the burden
Civil Action of Certiorari.—Section 36 of the Real Property Tax Code provides that the
of the tax. There is no dispute over the amount assessed on the properties for tax
decision of the Central Board of Assessment Appeals shall become final and
purposes. Section 30 pertains to the administrative act of listing and valuation of the
executory after the lapse of fifteen days from the receipt of its decision by the
property for purposes of real estate taxation. It provides: “Sec-tion 30. Local Board of
appellant. Within that fifteen-day period, a petition for reconsideration may be filed.
Assessment Appeals—Any owner who is not satisfied with the action of the provincial
The Code does not provide for the review of the Board’s decision by this Court.
or city assessor in the assessment of his property may, within sixty days from the date
Consequently, the only remedy available for seeking a review by this Court of the
of receipt by him of the written notice of assessment as provided in this Code, appeal
decision of the Central Board of Assessment Appeals is the special civil action of
to the Board of Assessment Appeals of the province or city, by filing with it a petition
certiorari, the recourse resorted to herein by Caltex (Philippines), Inc.
under oath using the form prescribed for the purpose, together with copies of the tax
Gasoline station equipments and machineries are subject to the real property tax.— declarations and such affidavit or documents submitted in support of the appeal.” In
We hold that the said equipment and machinery, as appurtenances to the gas station further support of the conclusion that the lower court has jurisdiction to try the instant
building or shed owned by Caltex (as to which it is subject to realty tax) and which case, we note Section 64 of the Real Property Tax Code which provides that a “court
fixtures are necessary to the operation of the gas station, for without them the gas shall entertain a suit assailing the validity of a tax assessed” after the taxpayer shall
station would be useless, and which have been attached or affixed permanently to the have paid under protest.
gas station site or embedded therein, are taxable improvements and machinery within
The real estate taxes assessed and collected from appellants for the periods prior to
the meaning of the Assessment Law and the Real Property Tax Code.
the date of repurchase, not valid and a refund by the City Government is in order;
Appellant, however, is not entitled to reimbursement from the GSIS.—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 contract should have
specifically stated “real estate taxes” due for the years 1977, 1978 and first quarter of
1979. The payments made by the plaintiff-appellant 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
Court rules, however, that the plaintiff-appellant is not entitled to a reimbursement
from the respondent GSIS because: (1) the GSIS is exempt from payment of the real
property tax under Sec. 33 of the Revised Charter of the GSIS; and (2) the tax should
be based on “actual use” of the property. Section 40 of the Real Property Tax Code
supports the view that not even the GSIS is liable to pay real property tax on public
land leased to other persons.
4. City of Baguio vs. Busuego
Taxation; Real Estate Tax; An installment purchaser of land and building within a
housing project of the GSIS is liable to pay real estate taxes from the time possession
of such property was transferred to him, although pending full payment of the
purchase price, the seller GSIS retains ownership and title over the property;
Reasons.—What is determinative was its rulings on the merits (not on the
nomenclature or classification of the contract), wherein it correctly held that
purchaser-appellant agreed to the contractual stipulation “to pay and shoulder all
taxes and assessments on the lot and building or improvements thereon and
insurance during the term of the contract. In view of his acceptance of this condition,
he is now estopped to deny his liability to pay the taxes. And, on the other hand, when
the GSIS sold the property and imposed said condition, the agency altho exempt from
the payment of taxes clearly indicated that the property became taxable upon its
delivery to the purchaser” and that “the sole determinative factor for exemption from
realty taxes is the ‘use’ to which the property is devoted. And where ‘use’ is the test,
the ownership is immaterial. (Martin on the Rev. Adm. Code, 1961, Vol. II, p. 487,
citing Apostolic Prefect of Mt. Province vs. Treasurer of Baguio City, 71 Phil. 547). In
the instant case, altho the property was still in the name of the GSIS pending the
payment of the full price its use and possession was already transferred to the
defendant.” Such contractual stipulation that the purchaser on installments pay the
real estate taxes pending completion of payments, although the seller who retained
title is exempt from such taxes, is valid and binding, absent any law to the contrary
and none has been cited by appellant. Thus, the delivery of possession by the seller
GSIS to the purchaser was clearly with the intention of passing to the latter the
possession, use of and control over said property, and all the other attributes of
ownership, short of the naked ownership, such that it included in said transfer the
incidental obligation to pay the taxes thereon, for nothing more was left to the GSIS
except its right to receive full payment of the purchase price.,
Interpretation; Interpretative regulation by the GSIS of Commonwealth Act 186
exempting the GSIS from payment of taxes carries great weight.—The fact that in the
contract to sell, the GSIS, although aware of its own exemption from taxation
stipulated and exacted from the purchaser the payment of taxes amounts to an
interpretation on its part that such an immunity was not to be transmitted to a private
person who becomes the beneficial owner and user of the property. Verily, this
interpretative regulation by the administrative agency officially charged with the duty
of administering and enforcing Commonwealth Act 186 which contains tax-exempting
provision at issue carries great weight in determining the operation of said provision.
Exemption of the GSIS from payment of taxes does not cover its property the
beneficial use of which is granted to a taxable person; PD 464, although inexistent at
the time taxes were assessed against purchaser, aids in determining legislative intent
in the enactment of Commonwealth Act 186; Case at bar.—Thus under this provision,
while the GSIS may be exempt from real estate tax the exemption does not cover
property belonging to it “where the beneficial use thereof has been granted for
consideration or otherwise to a taxable person.” There can be no doubt that under the
provisions of the contract in question, the purchaser to whose possession the
property had been transferred was granted beneficial use thereof. It follows on the
strength of the provision Sec. 40(a) of PD 464 that the said property is not exempt
from the real property tax. While this decree just cited was still inexistent at the time
the taxes at issue were assessed on the herein appellant, indeed its above quoted
provision sheds light upon the legislative intent behind the provision of
Commonwealth Act 186, pertaining to exemption of the GSIS from taxes.
Tax Exemptions; Tax exemptions are strictly constituted against the taxpayer and
liberally in favor of the taxing authority.—The end result is but in consonance with the
established rule in taxation that exemption are held strictly against the taxpayer and
liberally in favor of the taxing authority.
5. City of Pasig vs RP
Taxation; Local Taxation; Real Estate Tax; 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”—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.—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.
Public Auctions; Properties of public dominion are not only exempt from real estate
tax, they are exempt from sale at public auction—property of public dominion, which
generally includes property belonging to the State, cannot be subject of the
commerce of man.—Article 420 of the Civil Code classifies as properties of public
dominion those that are “intended for public use, such as roads, canals, rivers,
torrents, ports and bridges constructed by the State, banks, shores, roadsteads” and
those that “are intended for some public service or for the development of the national
wealth.” Properties of public dominion are not only exempt from real estate tax, they
are exempt from sale at public auction. In Heirs of Mario Malabanan v. Republic, 587
SCRA 172 (2009), the Court held that, “It is clear that property of public dominion,
which generally includes property belonging to the State, cannot be x x x subject of
the commerce of man.”
Where the parcels of land owned by the Republic are not properties of public
dominion, portions of the properties leased to taxable entities are not only subject to
real estate tax, they can also be sold at public auction to satisfy the tax
delinquency.—In the present case, the parcels of land are not properties of public
dominion because they are not “intended for public use, such as roads, canals, rivers,
torrents, ports and bridges constructed by the State, banks, shores, roadsteads.”
Neither are they “intended for some public service or for the development of the
national wealth.” MPLDC leases portions of the properties to different business
establishments. Thus, the portions of the properties leased to taxable entities are not
only subject to real estate tax, they can also be sold at public auction to satisfy the tax
delinquency. In sum, only those portions of the properties leased to taxable entities
are subject to real estate tax for the period of such leases. Pasig City must, therefore,
issue to respondent new real property tax assessments covering the portions of the
properties leased to taxable entities. If the Republic of the Philippines fails to pay the
real property tax on the portions of the properties leased to taxable entities, then such
portions may be sold at public auction to satisfy the tax delinquency
6. Republic vs. City of Parañaque
Government-Owned and Controlled Corporations (GOCC); Many government
instrumentalities are vested with corporate powers but they do not become stock or
non-stock corporations, which is a necessary condition before an agency or
instrumentality is deemed a Government-Owned and Controlled Corporations
(GOCC); These government instrumentalities are sometimes loosely called
government corporate entities.—Many government instrumentalities are vested with
corporate powers but they do not become stock or non-stock corporations, which is a
necessary condition before an agency or instrumentality is deemed a GOCC.
Examples are the Mactan International Airport Authority, the Philippine Ports
Authority, the University of the Philippines, and Bangko Sentral ng Pilipinas. All these
government instrumentalities exercise corporate powers but they are not organized as
stock or non-stock corporations as required by Section 2(13) of the Introductory
Provisions of the Administrative Code. These government instrumentalities are
sometimes loosely called government corporate entities. They are not, however,
GOCCs in the strict sense as understood under the Administrative Code, which is the
governing law defining the legal relationship and status of government entities.
Corporation Law; Stock Corporations, Defined; Non-Stock Corporations, Defined;
Words and Phrases; Section 3 of the Corporation Code defines a stock corporation as
one whose “capital stock is divided into shares and x x x authorized to distribute to the
holders of such shares dividends x x x.” Section 87 thereof defines a non-stock
corporation as “one where no part of its income is distributable as dividends to its
members, trustees or officers.”—Section 3 of the Corporation Code defines a stock
corporation as one whose “capital stock is divided into shares and x x x authorized to
distribute to the holders of such shares dividends x x x.” Section 87 thereof defines a
non-stock corporation as “one where no part of its income is distributable as dividends
to its members, trustees or officers.” Further, Section 88 provides that non-stock
corporations are “organized for charitable, religious, educational, professional,
cultural, recreational, fraternal, literary, scientific, social, civil service, or similar
purposes, like trade, industry, agriculture and like chambers.”
Two Requisites for a Corporation to be Classified as a Stock Corporation.—Two
requisites must concur before one may be classified as a stock corporation, namely:
(1) that it has capital stock divided into shares; and (2) that it is authorized to
distribute dividends and allotments of surplus and profits to its stockholders. If only
one requisite is present, it cannot be properly classified as a stock corporation. As for
non-stock corporations, they must have members and must not distribute any part of
their income to said members.
Government-Owned and Controlled Corporations (GOCC); Philippine Reclamation
Authority (PRA); The Philippine Reclamation Authority is not a Government-Owned
and Controlled Corporations (GOCC) because it is neither a stock nor a non-stock
corporation.—In the case at bench, PRA is not a GOCC because it is neither a stock
nor a non-stock corporation. It cannot be considered as a stock corporation because
although it has a capital stock divided into no par value shares as provided in Section
7 of P.D. No. 1084, it is not authorized to distribute dividends, surplus allotments or
profits to stockholders. There is no provision whatsoever in P.D. No. 1084 or in any of
the subsequent executive issuances pertaining to PRA, particularly, E.O. No. 525,
E.O. No. 654 and EO No. 798 that authorizes PRA to distribute dividends, surplus
allotments or profits to its stockholders. PRA cannot be considered a non-stock
corporation either because it does not have members. A non-stock corporation must
have members. Moreover, it was not organized for any of the purposes mentioned in
Section 88 of the Corporation Code. Specifically, it was created to manage all
government reclamation projects.
Philippine Reclamation Authority (PRA); Taxation; Real Property Taxes; Tax
Exemptions; Philippine Reclamation Authority (PRA) is a government instrumentality
vested with corporate powers and performing an essential public service pursuant to
Section 2(10) of the Introductory Provisions of the Administrative Code. Being an
incorporated government instrumentality, it is exempt from payment of real property
tax.—This Court is convinced that PRA is not a GOCC either under Section 2(3) of
the Introductory Provisions of the Administrative Code or under Section 16, Article XII
of the 1987 Constitution. The facts, the evidence on record and jurisprudence on the
issue support the position that PRA was not organized either as a stock or a non-
stock corporation. Neither was it created by Congress to operate commercially and
compete in the private market. Instead, PRA is a government instrumentality vested
with corporate powers and performing an essential public service pursuant to Section
2(10) of the Introductory Provisions of the Administrative Code. Being an incorporated
government instrumentality, it is exempt from payment of real property tax.
Local Government Code; It is clear from Section 234 of the Local Government Code
that real property owned by the Republic of the Philippines (the Republic) is exempt
from real property tax unless the beneficial use thereof has been granted to a taxable
person.—It is clear from Section 234 that real property owned by the Republic of the
Philippines (the Republic) is exempt from real property tax unless the beneficial use
thereof has been granted to a taxable person. In this case, there is no proof that PRA
granted the beneficial use of the subject reclaimed lands to a taxable entity. There is
no showing on record either that PRA leased the subject reclaimed properties to a
private taxable entity. This exemption should be read in relation to Section 133(o) of
the same Code, which prohibits local governments from imposing “[t]axes, fees or
charges of any kind on the National Government, its agencies and instrumentalities
x x x.” The Administrative Code allows real property owned by the Republic to be
titled in the name of agencies or instrumentalities of the national government. Such
real properties remain owned by the Republic and continue to be exempt from real
estate tax.
Foreshore Lands; Public Domain; Foreshore and submerged areas irrefutably
belonged to the public domain and were inalienable unless reclaimed, classified as
alienable lands open to disposition and further declared no longer needed for public
service. The fact that alienable lands of the public domain were transferred to the
Public Estates Authority (PEA) (now Philippine Reclamation Authority [PRA]) and
issued land patents or certificates of title in PEA’s name did not automatically make
such lands private.—The subject lands are reclaimed lands, specifically portions of
the foreshore and offshore areas of Manila Bay. As such, these lands remain public
lands and form part of the public domain. In the case of Chavez v. Public Estates
Authority and AMARI Coastal Development Corporation, 403 SCRA 1 (2002), the
Court held that foreshore and submerged areas irrefutably belonged to the public
domain and were inalienable unless reclaimed, classified as alienable lands open to
disposition and further declared no longer needed for public service. The fact that
alienable lands of the public domain were transferred to the PEA (now PRA) and
issued land patents or certificates of title in PEA’s name did not automatically make
such lands private. This Court also held therein that reclaimed lands retained their
inherent potential as areas for public use or public service.
7. Olivares vs. Marquez
Taxation; Protest; Taxpayer should first pay the tax before his protest can be
entertained.—Thus, should the taxpayer/real property owner question the
excessiveness or reasonableness of the assessment, Section 252 directs that the
taxpayer should first pay the tax due before his protest can be entertained. There
shall be annotated on the tax receipts the words “paid under protest.” It is only after
the taxpayer has paid the tax due that he may file a protest in writing within thirty days
from payment of the tax to the Provincial, City or Municipal Treasurer, who shall
decide the protest within sixty days from receipt. In no case is the local treasurer
obliged to entertain the protest unless the tax due has been paid.
Appeals; An appeal shall not suspend the collection of the tax assessed without
prejudice to a later adjustment pending the outcome of the appeal.—Under the
doctrine of primacy of administrative remedies, an error in the assessment must be
administratively pursued to the exclusion of ordinary courts whose decisions would be
void for lack of jurisdiction. But an appeal shall not suspend the collection of the tax
assessed without prejudice to a later adjustment pending the outcome of the appeal.
8. Camp John Hay Development Corporation vs. Central Board of Assessment
Appeals,
Taxation; Local Taxation; Local Government Code of 1991 (R.A. No. 7160); Section
252 of the Local Government Code emphatically directs that the taxpayer/real
property owner questioning the assessment should first pay the tax due before his
protest can be entertained.—Section 252 of the Local Government Code emphatically
directs that the taxpayer/real property owner questioning the assessment should first
pay the tax due before his protest can be entertained. As a matter of fact, the words
“paid under protest” shall be annotated on the tax receipts. Consequently, only after
such payment has been made by the taxpayer may he file a protest in writing (within
thirty [30] days from said payment of tax) to the provincial, city, or municipal treasurer,
who shall decide the protest within sixty (60) days from its receipt. In no case is the
local treasurer obliged to entertain the protest unless the tax due has been paid.
Payment Under Protest; The requirement of “payment under protest” is a condition
sine qua non before a protest or an appeal questioning the correctness of an
assessment of real property tax may be entertained.—It is clear that the requirement
of “payment under protest” is a condition sine qua non before a protest or an appeal
questioning the correctness of an assessment of real property tax may be
entertained. Moreover, a claim for exemption from payment of real property taxes
does not actually question the assessor’s authority to assess and collect such taxes,
but pertains to the reasonableness or correctness of the assessment by the local
assessor, a question of fact which should be resolved, at the very first instance, by
the LBAA.
The burden of proving exemption from local taxation is upon whom the subject real
property is declared; thus, said person shall be considered by law as the taxpayer
thereof.—Section 206 of RA No. 7160 or the LGC of 1991, categorically provides that
every person by or for whom real property is declared, who shall claim exemption
from payment of real property taxes imposed against said property, shall file with the
provincial, city or municipal assessor sufficient documentary evidence in support of
such claim. Clearly, the burden of proving exemption from local taxation is upon
whom the subject real property is declared; thus, said person shall be considered by
law as the taxpayer thereof. Failure to do so, said property shall be listed as taxable in
the assessment roll.
The duty to declare the true value of real property for taxation purposes is imposed
upon the owner, or administrator, or their duly authorized representatives.—It is an
accepted principle in taxation that taxes are paid by the person obliged to declare the
same for taxation purposes. As discussed above, the duty to declare the true value of
real property for taxation purposes is imposed upon the owner, or administrator, or
their duly authorized representatives. They are thus considered the taxpayers. Hence,
when these persons fail or refuse to make a declaration of the true value of their real
property within the prescribed period, the provincial or city assessor shall declare the
property in the name of the defaulting owner and assess the property for taxation. In
this wise, the taxpayer assumes the character of a defaulting owner, or defaulting
administrator, or defaulting authorized representative, liable to pay back taxes. For
that reason, since petitioner herein is the declared owner of the subject buildings
being assessed for real property tax, it is therefore presumed to be the person with
the obligation to shoulder the burden of paying the subject tax in the present case;
and accordingly, in questioning the reasonableness or correctness of the assessment
of real property tax, petitioner is mandated by law to comply with the requirement of
payment under protest of the tax assessed, particularly Section 252 of RA No. 7160
or the LGC of 1991.
Time and again, the Supreme Court has stated that taxation is the rule and exemption
is the exception.—Time and again, the Supreme Court has stated that taxation is the
rule and exemption is the exception. The law does not look with favor on tax
exemptions and the entity that would seek to be thus privileged must justify it by
words too plain to be mistaken and too categorical to be misinterpreted. Thus
applying the rule of strict construction of laws granting tax exemptions, and the rule
that doubts should be resolved in favor of provincial corporations, this Court holds that
petitioner is considered a taxable entity in this case.
The right of local government units to collect taxes due must always be upheld to
avoid severe erosion.—The restriction upon the power of courts to impeach tax
assessment without a prior payment, under protest, of the taxes assessed is
consistent with the doctrine that taxes are the lifeblood of the nation and as such their
collection cannot be curtailed by injunction or any like action; otherwise, the state or,
in this case, the local government unit, shall be crippled in dispensing the needed
services to the people, and its machinery gravely disabled. The right of local
government units to collect taxes due must always be upheld to avoid severe erosion.
This consideration is consistent with the State policy to guarantee the autonomy of
local governments and the objective of RA No. 7160 or the LGC of 1991 that they
enjoy genuine and meaningful local autonomy to empower them to achieve their
fullest development as self-reliant communities and make them effective partners in
the attainment of national goals.
Carpio, Jr., J., Concurring Opinion:
Taxation; Local Taxation; View that there is no showing that Camp John Hay
Development Corporation ever complied with the requirements of Section 206 of the
Local Government Code in claiming tax exemption; hence, the City Assessor of
Baguio acted well within her power to assess the subject properties.—There is no
showing that CJHDC ever complied with the requirements of Section 206 of the Local
Government Code in claiming tax exemption; hence, the City Assessor of Baguio
acted well within her power to assess the subject properties. There was no need for
CJHDC to wait for an assessment before submission of its proofs of tax exemption.
Had CJHDC submitted proofs of its tax exemption to the City Assessor, there would
have been no need for CJHDC to pay under protest. CJHDC could question in court
any adverse decision of the City Assessor, the Local Board of Assessment Appeals,
and the Central Board of Assessment Appeals denying its tax exemption, without
paying any tax assessment under protest, due to its claim of tax exemption under
Proclamation No. 420.
View that once the non-tax-exempt status of the taxpayer is settled with finality, or if
the same is not in issue, any dispute on the realty assessment only raises questions
on the correctness of the amount of the assessment, thus necessitating prior payment
of the assessment under protest.—Once the non-tax-exempt status of the taxpayer is
settled with finality, or if the same is not in issue, any dispute on the realty
assessment only raises questions on the correctness of the amount of the
assessment, thus necessitating prior payment of the assessment under protest. To
repeat, any protest that CJHDC files or pursues after 17 November 2005 necessarily
refers only to the correctness of the amount of the assessment, in which case CJHDC
must pay the assessed tax under protest. The present petition should be denied
because JHSEZ can no longer claim tax exemption, with the finality of this Court’s
ruling in John Hay. CJHDC’s doctrine of operative fact argument is a defense it may
raise before the Local Board of Assessment Appeals, to where this case is being
remanded.
9. Lopez vs. City of Manila
Taxation; Courts will not interfere in matters which are 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; The
determination of whether a tax is excessive, oppressive or confiscatory is essentially
a question of fact.—The rule is well-settled that courts will not interfere in matters
which are 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. Furthermore, the crux of petitioner’s cause of action is the
determination of whether or not the tax is excessive, oppressive or confiscatory. This
issue is essentially a question of fact and thereby precludes this Court from reviewing
the same.
Separation of Powers; One of the reasons for the doctrine of exhaustion is the
separation of powers which enjoins upon the judiciary a becoming policy of non-
interference with matters coming primarily within the competence of other
department.—We have carefully scrutinized the record of this case and we found no
cogent reason to depart from the findings made by the trial court on this point. As
correctly found by the trial court, the petition does not fall under any of the exceptions
to excuse compliance with the rule on exhaustion of administrative remedies, to wit:
“One of the reasons for the doctrine of exhaustion is the separation of powers which
enjoins upon the judiciary a becoming policy of non-interference with matters coming
primarily within the competence of other department. x x x There are however a
number of instances when the doctrine may be dispensed with and judicial action
validly resorted to immediately. Among these exceptional cases are: (1) when the
question raised is purely legal, (2) when the administrative body is in estoppel; (3)
when the act complained of is patently illegal; (4) when there is urgent need for
judicial intervention; (5) when the claim involved is small; (6) when irreparable
damage will be suffered; (7) when there is no other plain, speedy and adequate
remedy; (8) when strong public interest is involved; (9) when the subject of
controversy is private land; and (10) in quo-warranto proceeding (citation omitted).
Taxation; Real Property Tax; Assessments; Local Government Units; Steps to be
Followed for the Mandatory Conduct of General Revision of Real Property
Assessments.—Based on the evidence presented by the parties, the steps to be
followed for the mandatory conduct of General Revision of Real Property
assessments, pursuant to the provision of Sec. 219 of R.A. No. 7160 are as follows:
“1. The preparation of Schedule of Fair Market Values. 2. The enactment of
Ordinances: a) levying an annual “ad valorem” tax on real property and an additional
tax accruing to the SEF; b) fixing the assessment levels to be applied to the market
values of real properties; c) providing necessary appropriation to defray expenses
incident to general revision of real property assessments; and d) adopting the
Schedule of Fair Market Values prepared by the assessors.”
Procedure in Computing the Real Property Tax.—Coming down to specifics, we find it
desirable to lay down the procedure in computing the real property tax. With the
introduction of assessment levels, tax rates could be maintained, although tax
payments can be made either higher or lower depending on their percentage
(assessment level) applied to the fair market value of property to derive its assessed
value which is subject to tax. Moreover, classes and values of real properties can be
given proper consideration, like assigning lower assessment levels to residential
properties and higher levels to properties used in business. The procedural steps in
computing the real property tax are as follows: “1) Ascertain the assessment level of
the property; 2) Multiply the market value by the applicable assessment level of the
property; 3) Find the tax rate which corresponds to the class (use) of the property and
multiply the assessed value by the applicable tax rates.”
Due Process; Manila Ordinance No. 7905 is favorable to the taxpayers when it
specifically states that the reduced assessment levels shall be applied retroactively; In
enacting Ordinance No. 7905, the due process of law was considered by the City of
Manila so that the increase in realty tax will not amount to the confiscation of
property.—Although, we are in full accord with the ruling of the trial court, it is likewise
necessary to stress that Manila Ordinance No. 7905 is favorable to the taxpayers
when it specifically states that the reduced assessment levels shall be applied
retroactively to January 1, 1996. The reduced assessment levels multiplied by the
schedule of fair market values of real properties, provided by Manila Ordinance No.
7894, resulted to decrease in taxes. To that extent, the ordinance is likewise, a social
legislation intended to soften the impact of the tremendous increase in the value of
the real properties subject to tax. The lower taxes will ease, in part, the economic
predicament of the low and middle-income groups of taxpayers. In enacting this
ordinance, the due process of law was considered by the City of Manila so that the
increase in realty tax will not amount to the confiscation of the property.,
10.Estate of the Late Mercedes Jacob vs. Court of Appeals
Land Titles; Taxation; Real Estate Taxes; Words and Phrases; Auction Sales;
“Delinquent Taxpayer,” Explained; In ascertaining the identity of the delinquent
taxpayer, for purposes of notifying him of his tax delinquency and the prospect of a
distraint and auction of his delinquent property, the City or Provincial Treasurer should
not have simply rely on the tax declaration—he should verify from the Office of the
Register of Deeds as to who the registered owner is to determine the real delinquent
taxpayer; One who is no longer the owner of the property cannot be considered the
delinquent taxpayer.—In ascertaining the identity of the delinquent taxpayer, for
purposes of notifying him of his tax delinquency and the prospect of a distraint and
auction of his delinquent property, petitioner City Treasurer should not have simply
relied on the tax declaration. The property being covered by the Torrens system, it
would have been more prudent for him, which was not difficult to do, to verify from the
Office of the Register of Deeds of Quezon City where the property is situated and as
to who the registered owner was at the time the auction sale was to take place, to
determine who the real delinquent taxpayer was within the purview of the third
paragraph of Sec. 73. For one who is no longer the lawful owner of the land cannot be
considered the “present registered owner” because, apparently, he has already lost
interest in the property, hence is not expected to defend the property from the sale at
auction. The purpose of PD No. 464 is to collect taxes from the delinquent taxpayer
and, logically, one who is no longer the owner of the property cannot be considered
the delinquent taxpayer.
Due Process; While the Court understands the earnestness and initiative of local
governments to collect taxes, the same must be collected from the rightful debtors
and not from those who may only appear to be the registered owners in the official
files—to deprive the present owners of their properties by notifying only the previous
owners who no longer have any interest in them will amount not only to inequity and
injustice but even to a violation of their constitutional rights to property and due
process.—While we understand the earnestness and initiative of local governments to
collect taxes, the same must be collected from the rightful debtors and not from those
who may only appear to be the registered owners in the official files. Certainly,
properties change hands as fast as their owners can, and to deprive the present
owners of their properties by notifying only the previous owners who no longer have
any interest in them will amount not only to inequity and injustice but even to a
violation of their constitutional rights to property and due process. This interpretation
as well as its ratiocination was explained as early as 1946 in Cabrera v. The
Provincial Treasurer of Tayabas where the parties therein seemed to be in the same
predicament as the parties herein.
Words and Phrases; The delinquent taxpayer referred to under Sec. 72 of PD No. 464
is the actual owner of the property at the time of the delinquency and mere
compliance by the provincial or city treasurer with Sec. 65 of the decree is no longer
enough—the notification to the right person, i.e., the real owner, is an essential and
indispensable requirement of the law, non-compliance with which renders the auction
sale void.—The fact that the pertinent phrase, “failure to do so shall make the
assessment in the name of the previous owner valid and binding on all persons
interested, and for all purposes, as though the same had been assessed in the name
of its actual owner,” found in both RA No. 537 and RA No. 409 was not incorporated
in PD No. 464 implies that the assessment of the subject property in 1983 in the
name of Sta. Maria would not bind, much less adversely affect, Valencia. This, in
spite of the non- declaration by Valencia of the property in her name as required by
the law, for there is no longer any statutory waiver of the right to contest assessment
by the actual owner due to mere non-declaration. We can infer from the omission that
the assessment in the name of the previous owner is no longer deemed an
assessment in the name of the actual owner. It is therefore clear that the delinquent
taxpayer referred to under Sec. 72 of PD No. 464 is the actual owner of the property
at the time of the delinquency and mere compliance by the provincial or city treasurer
with Sec. 65 of the decree is no longer enough. The notification to the right person,
i.e., the real owner, is an essential and indispensable requirement of the law,
noncompliance with which renders the auction sale void.
11. Patalinghug vs. Court of Appeals,
Taxation; Zoning; Tax declaration is not conclusive of the nature of the property for
zoning purposes.—The reversal by the Court of Appeals of the trial court’s decision
was based on Tepoot’s building being declared for taxation purposes as residential. It
is our considered view, however, that a tax declaration is not conclusive of the nature
of the property for zoning purposes. A property may have been declared by its owner
as residential for real estate taxation purposes but it may well be within a commercial
zone. A discrepancy may thus exist in the determination of the nature of property for
real estate taxation purposes vis-a-vis the determination of a property for zoning
purposes.
Real Estate Tax Code; Under Section 22 of Real Estate Tax Code, appraisal and
assessment are based on the actual use irrespective of any previous assessment or
taxpayer’s valuation.—Needless to say, even if we are to examine the evidentiary
value of a tax declaration under the Real Property Tax Code, a tax declaration only
enables the assessor to identify the same for assessment levels. In fact, a tax
declaration does not bind a provincial/city assessor, for under Sec. 22 of the Real
Estate Tax Code, appraisal and assessment are based on the actual use irrespective
of “any previous assessment or taxpayer’s valuation thereon,” which is based on a
taxpayer’s declaration. In fact, a piece of land declared by a taxpayer as residential
may be assessed by the provincial or city assessor as commercial because its actual
use is commercial.
Even if a building declared for taxation purposes as residential, once a local
government has reclassified an area as commercial, that determination for zoning
purposes must prevail.—The trial court’s determination that Mr. Tepoot’s building is
commercial and, therefore, Sec. 8 is inapplicable, is strengthened by the fact that the
Sangguniang Panlungsod has declared the questioned area as commercial or C-2.
Consequently, even if Tepoot’s building was declared for taxation purposes as
residential, once a local government has reclassified an area as commercial, that
determination for zoning purposes must prevail. While the commercial character of
the questioned vicinity has been declared thru the ordinance, private respondents
have failed to present convincing arguments to substantiate their claim that Cabaguio
Avenue, where the funeral parlor was constructed, was still a residential zone.
Unquestionably, the operation of a funeral parlor constitutes a “commercial purpose,”
as gleaned from Ordinance No. 363.
Constitutional Law; Police Power; Declaration of an area as a commercial zone thru a
municipal ordinance is an exercise of police power.—The declaration of the said area
as a commercial zone thru a municipal ordinance is an exercise of police power to
promote the good order and general welfare of the people in the locality. Corollary
thereto, the state, in order to promote the general welfare, may interfere with personal
liberty, with property, and with business and occupations. Thus, persons may be
subjected to certain kinds of restraints and burdens in order to secure the general
welfare of the state and to this fundamental aim of government, the rights of the
individual may be subordinated. The ordinance which regulates the location of funeral
homes has been adopted as part of comprehensive zoning plans for the orderly
development of the area covered thereunder.
12. Sesbreño vs. Central Board of Assessment Appeals,
Remedial Law; Certiorari; Taxation; Central Board of Assessment Appeals; A petition
for certiorari under Rule 65 of the Rules of Court on the ground of grave abuse of
discretion is the correct remedy in questioning the decisions and resolutions of the
Central Board of Assessment Appeals.—At the outset, it should be emphasized that
“appeal by certiorari” or a petition for review under Rule 45 of the Rules of Court is not
the correct remedy in questioning the decisions and resolutions of the Central Board
of Assessment Appeals. Rather, a petition for certiorari under Rule 65 of the Rules of
Court on the ground of grave abuse of discretion should be filed.
Section 64 of Presidential Decree No. 464 requires that, before a court may entertain
any suit assailing the validity of tax assessment, the taxpayer must first pay under
protest the tax assessed against him.—Moreover, the CBAA decision dated
September 30, 1991 and the assailed Resolution dated July 28, 1992 show that
petitioner failed to pay under protest the tax assessed against his property. This is a
violation of Section 64 of Presidential Decree No. 464 which requires that, before a
court may entertain any suit assailing the validity of a tax assessment, the taxpayer
must first pay under protest the tax assessed against him.
As a rule, no issue may be raised on appeal unless it has been brought before the
lower tribunal for its consideration.—As a rule, no issue may be raised on appeal
unless it has been brought before the lower tribunal for its consideration. The Court
has held in several cases, however, that an appellate court has an inherent authority
to review unassigned errors (1) which are closely related to an error properly raised,
or (2) upon which the determination of the error properly assigned is dependent, or (3)
where the Court finds that consideration of them is necessary in arriving at a just
decision of the case.
The court held that the area in excess of that declared by the taxpayer was deemed
declared for the first time upon its discovery.—Petitioner’s argument is not novel. In
Lopez vs. Crow which involved the interpretation of Section 12 of Act 2238, a
provision similar to Section 25 of PD 464, the Court rejected a parallel argument that
the said provision “refers solely to real estate declared for the first time and does not
apply to the area which, upon revision, has been shown to be in excess of that which
was formerly declared.” The Court held that the area in excess of that declared by the
taxpayer was deemed declared for the first time upon its discovery.
Section 24 merely lays down the general rule that assessments under PD 464 are to
be given prospective application.—Section 24 merely lays down the general rule that
assessments under PD 464 are to be given prospective application. It cannot be
construed in such a manner as to eliminate the imposition of back taxes. If Section
24, instead of Section 25, were made to apply as suggested by petitioner, he would in
effect be excused from the payment of back taxes on the undeclared excess area of
his property. The Court, clearly, cannot allow a taxpayer to evade his obligation to the
government by letting him pay taxes on a property based on its gross undervaluation
at P60,000.00, when the same had then a current market value of P449,860.00.
Statutory Construction; Legal provision being susceptible of two interpretations, we
adopt the one in consonance with the presumed intention of the legislature to give its
enactments the most reasonable and beneficial construction, the one that will render
them operative and effective and harmonious with other provisions of law.—
Furthermore, if Section 24 is the only applicable provision in cases where a taxpayer
has eluded the payment of the correct amount of taxes for more than nine (9) years,
as in this case, Section 25 of PD 464 which requires the payment of back taxes will
be rendered superfluous and nugatory. Such interpretation could not have been
intended by the law. It is a familiar rule in statutory construction that “(t)he legal
provision being therefore susceptible of two interpretations, we adopt the one in
consonance with the presumed intention of the legislature to give its enactments the
most reasonable and beneficial construction, the one that will render them operative
and effective and harmonious with other provisions of law.”
Taxation; Tax Assessment; Section 5 of PD 464 provides that all real property, shall
be appraised at the current and fair market value prevailing in the locality where the
property is situated.—We cannot sustain petitioner’s contention. The cited provision
merely defines “market value.” It does not in any way direct that the market value as
defined therein should be used as basis in determining the value of a property for
purposes of real property taxation. On the other hand, Section 5 of PD 464 provides
unequivocally that “(a)ll real property, whether taxable or exempt, shall be appraised
at the current and fair market value prevailing in the locality where the property is
situated.”
A general revision of real property assessment is required by law every five (5) years
to ensure that real properties are assessed at their current and fair market values.—
Other circumstances militate against the acceptance of petitioner’s argument.
Unscrupulous sellers of real estate often understate the selling price in the deed of
sale to minimize their tax liability. Moreover, the value of real property does not
remain stagnant; it is unrealistic to expect that the current market value of a property
is the same as its cost of acquisition ten years ago. In this light, a general revision of
real property assessment is required by law every five (5) years to ensure that real
properties are assessed at their current and fair market values.
It is a matter of plain common sense that a building with more floors, has a higher
market value than one with fewer floors, provided that both are of the same
materials.—It is a matter of plain common sense that a building with more floors has a
higher market value than one with fewer floors, provided that both are of the same
materials. Hence, the tax declaration of the building in question should have
accurately reflected its actual area and number of floors, these being necessary for
the accurate valuation thereof.
13. Gamilla vs. Burgundy Realty Corporation
Tax Sales; Local Government Code of 1991; Public Auction; Section 267 of Republic Act
(RA) No. 7160 explicitly provides that a court shall not entertain any action assailing the
validity or sale at public auction of real property unless the taxpayer deposits 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.—On the first issue, the
CA erred in taking cognizance of the case. Section 267 of R.A. No. 7160 explicitly provides
that a court shall not entertain any action assailing the validity or sale at public auction of real
property unless the taxpayer deposits 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. This condition is a jurisdictional requirement, the
nonpayment of which warrants the dismissal of the action. Considering that BRC did not make
such deposit, the RTC should not have acted on the opposition of BRC. Section 267 reads:
Section 267. Action Assailing Validity of Tax Sale.—No court shall entertain any action
assailing the validity or 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 or 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.
Tax Delinquency; It is incumbent upon the City Treasurer to convey the notice of delinquency
to the taxpayer.—Evidently, it is incumbent upon the City Treasurer to convey the notice of
delinquency to the taxpayer. The strict adherence to the notice requirement in tax sales is
imperative not only for the protection of the taxpayers, but also to allay any possible suspicion
of collusion between the buyer and the public officials called upon to enforce such laws.
14. Figuerres vs. Court of Appeals
Local Governments; Municipal Corporation; Republic Act No. 7160; R.A. 7160, §186
provides that an ordinance levying taxes, fees, or charges “shall not be enacted without any
prior public hearing conducted for the purpose.”—Petitioner is right in contending that public
hearings are required to be conducted prior to the enactment of an ordinance imposing real
property taxes. R.A. No. 7160, §186 provides that an ordinance levying taxes, fees, or charges
“shall not be enacted without any prior public hearing conducted for the purpose.” Same;
Same; Same; The lack of a public hearing is a negative allegation to which the party asserting
has the burden of proof.—The lack of a public hearing is a negative allegation essential to
petitioner’s cause of action in the present case. Hence, as petitioner is the party asserting it, she
has the burden of proof. Since petitioner failed to rebut the presumption of validity in favor of
the subject ordinances and to discharge the burden of proving that no public hearings were
conducted prior to the enactment thereof, we are constrained to uphold their constitutionality
or legality. Same; Same; Same; An ordinance imposing real property taxes must be posted or
published as required by R.A. No. 7160, §188.—An ordinance imposing real property taxes
(such as Ordinance Nos. 119 and 135) must be posted or published as required by R.A. No.
7160, §188 which provides: Section 188. Publication of Tax Ordinances and Revenue
Measures.— Within ten (10) days after their approval, certified true copies of all provincial,
city, and municipal tax ordinances or revenue measures shall be published in full for three (3)
consecutive days in a newspaper of local circulation: Provided, however, That in provinces,
cities and municipalities where there are no newspapers of local circulation, the same may be
posted in at least two (2) conspicuous and publicly accessible places.
Ordinances which fix the assessment levels, being in the nature of a tax ordinance, §188
likewise applies.—With respect to ordinances which fix the assessment levels (such as
Ordinance No. 125), being in the nature of a tax ordinance, §188 likewise applies. Moreover,
as Ordinance No. 125, §7 provides for a penal sanction for violations thereof by means of a
fine of not less than P1,000.00 nor more than P5,000.00, or imprisonment of not less than one
(1) month nor more than six (6) months, or both, in the discretion of the court, not only §188
but §511(a) also must be observed: Ordinances with penal sanctions shall be posted at
prominent places in the provincial capitol, city, municipal or barangay hall, as the case may
be, for a minimum period of three (3) consecutive weeks. Such ordinances shall also be
published in a newspaper of general circulation, where available, within the territorial
jurisdiction of the local government unit concerned, except in the case of barangay ordinances.
Unless otherwise provided therein, said ordinances shall take effect on the day following its
publication, or at the end of the period of posting, whichever occurs later.
Ordinance which fixes the assessment levels applicable to the different classes of real property
in a local government unit and imposing penal sanctions for violations thereof should be
published in full.—In view of §§188 and 511(a) of R.A. No. 7160, an ordinance fixing the
assessment levels applicable to the different classes of real property in a local government unit
and imposing penal sanctions for violations thereof (such as Ordinance No. 125) should be
published in full for three (3) consecutive days in a newspaper of local circulation, where
available, within ten (10) days of its approval, and posted in at least two (2) prominent places
in the provincial capitol, city, municipal, or barangay hall for a minimum of three (3)
consecutive weeks.
In the absence of proof that the ordinances were not enacted in accordance with such
regulations, said ordinances must be presumed to have been enacted in accordance with such
regulations.—Also without merit is the contention of petitioner that Ordinance No. 119 and
Ordinance No. 135 are void for not having been enacted in accordance with Local Assessment
Regulation No. 1-92, dated October 6, 1992, of the Department of Finance, which provides
guidelines for the preparation of proposed schedules of fair market values of the different
classes of real property in a local government unit, such as time tables for obtaining
information from owners of affected lands and buildings regarding the value thereof. As in the
case of the procedural requirements for the enactment of tax ordinances and revenue measures,
however, petitioner has not shown that the ordinances in this case were not enacted in
accordance with the applicable regulations of the Department of Finance. The Municipality of
Mandaluyong claims that, although the regulations are merely directory, it has complied with
them. Hence, in the absence of proof that the ordinances were not enacted in accordance with
such regulations, said ordinances must be presumed to have been enacted in accordance with
such regulations.
15. Tan vs. Bantegui
Taxation; Auction Sale; Although preceded by proper advertisement and publication, an
auction sale is void absent an actual notice to a delinquent taxpayer.—The auction sale of real
property for the collection of delinquent taxes is in personam, not in rem. Although sufficient
in proceedings in rem like land registration, mere notice by publication will not satisfy the
requirements of proceedings in personam. “[P]ublication of the notice of delinquency [will]
not suffice, considering that the procedure in tax sales is in personam.” It is still incumbent
upon the city treasurer to send the notice directly to the taxpayer—the registered owner of the
property—in order to protect the latter’s interests. Although preceded by proper advertisement
and publication, an auction sale is void absent an actual notice to a delinquent taxpayer.
Civil Law; Property; Ownership; Torrens System; A certificate of title under the Torrens
system serves as evidence of an indefeasible title to the property in favor of the person whose
name appears on it.—A certificate of title under the Torrens system serves as evidence of an
indefeasible title to the property in favor of the person whose name appears on it. While it is
true that Transfer Certificates of Title have already been issued in the names of the subsequent
purchasers, they should nonetheless be invalidated. Considering the failure to abide by the
mandatory requirements of a proceeding in personam, no better title than that of the original
owner can be assumed by the transferees.
Taxation; Auction Sale; Notice of sale to the delinquent landowners and to the public, in
general, is an essential and indispensable requirement of law, the non-fulfillment of which
vitiates the sale.—With greater significance is the categorical and unrefuted statement in it that
the “[s]ealed envelope containing a copy of the petition addressed to Gorgonia Bantegui x x x
was returned to sender unclaimed x x x.” That statement definitely confirms the lack of
notices, without which the subsequent proceeding to sell the property produces no legal effect.
“Notice of sale to the delinquent landowners and to the public[,] in general[,] is an essential
and indispensable requirement of law, the non-fulfillment of which vitiates the sale.” Same; \
Statutes; Section 80 of PD 464 provides that “any balance of the proceeds of the sale left after
deducting the amount of the taxes and penalties due and the costs of sale, shall be returned to
the owner or his representative.”—Section 80 of PD 464 provides that “any balance of the
proceeds of the sale left after deducting the amount of the taxes and penalties due and the costs
of sale, shall be returned to the owner or his representative.” Again contrary to the mandate of
the law, the balance of the proceeds from the tax sale was not even returned to Respondent
Bantegui or her representative after the issuance of the final bill of sale. The failure to return
the proceeds reinforced the apparent irregularity not only in the conduct of the tax sale, but
also in its subsequent disposition.
A purchaser of real estate at the tax sale obtains only such title as that held by the taxpayer; the
principle of caveat emptor applies. The defense of indefeasibility of a Torrens title does not
extend to a transferee who takes the title despite a notice of the flaw in it.—“A purchaser of
real estate at the tax sale obtains only such title as that held by the taxpayer[;] the principle of
caveat emptor applies.” Purchasers cannot close their eyes to facts that should have put any
reasonable person upon guard, and then claim that they “acted in good faith under the belief
that there was no defect in the title.” If petitioners do not investigate or take precaution despite
knowing certain facts, they cannot be considered in good faith. The defense of indefeasibility
of a Torrens title does not extend to a transferee who takes the title despite a notice of the flaw
in it. From a vendor who does not have any title to begin with, no right is passed to a
transferee.
Civil Law; Damages; Compensatory Damages; One is entitled to adequate compensation only
for pecuniary loss that has been duly proved. —As the trial and the appellate courts held,
respondents indeed failed to offer proof to justify the award of actual or compensatory
damages. The actual value of the house on the property at the time of the demolition of the
structure was not established. One is entitled to adequate compensation only for pecuniary loss
that has been duly proved. Same; Same; Nominal Damages; Nominal damages are
adjudicated, not for the purpose of indemnifying respondents for any loss suffered, but for
vindicating or recognizing their right to a property that has been violated or invaded.—
Nominal damages as granted by the lower courts in the amount of P50,000 may be a plausible
remedy, however. These damages are justified especially when common sense dictates that a
pecuniary loss has indeed been suffered, but is incapable of precise computation. They are
adjudicated, not for the purpose of indemnifying respondents for any loss suffered, but for
vindicating or recognizing their right to a property that has been violated or invaded. Lastly,
the award by the appellate court of P50,000 in attorney’s fees also appears reasonable because,
by petitioners’ act, respondents were compelled to incur expenses to protect their interest.
16. Manila International Airport Authority vs. City of Pasay
Administrative Agencies; Manila International Airport Authority; Manila International Airport
Authority (MIAA) is a government “instrumentality” that does not qualify as a “government-
owned or controlled corporation.”—A close scrutiny of the definition of “government-owned
or controlled corporation” in Section 2(13) will show that MIAA would not fall under such
definition. MIAA is a government “instrumentality” that does not qualify as a “government-
owned or controlled corporation.” As explained in the 2006 MIAA case: “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. MIAA is not a stock corporation
because it has no capital stock divided into shares. MIAA has no stockholders or voting
shares. x x x”
Taxation; Tax Exemptions; Local Government Code; Manila International Airport Authority
(MIAA) is not a government-owned or controlled corporation but a government
instrumentality which is exempt from any kind of tax from the local governments.—MIAA is
not a government-owned or controlled corporation but a government instrumentality which is
exempt from any kind of tax from the local governments. Indeed, 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
MIAA. Hence, MIAA is not liable to pay real property tax for the NAIA Pasay properties.
Property; The airport lands and buildings of Manila International Airport Authority (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 (LGC); Only those portions
of the Ninoy Aquino International Airport (NAIA) Pasay properties which are leased to
taxable persons like private parties are subject to real property tax by the City of Pasay.—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. However, under the same provision, if MIAA leases its real property to a taxable
person, the specific property leased becomes subject to real property tax. In this case, only
those portions of the NAIA Pasay properties which are leased to taxable persons like private
parties are subject to real property tax by the City of Pasay
17. Province of Nueva Ecija vs. Imperial Mining Co., Inc.
Taxation; Real Estate Tax; Actual use as basis of real property taxation.—In 1974, a new Real
Property Tax Code came into being when Presidential Decree 464 was issued. It changed the
basis of real property taxation. It adopted the policy of taxing real property on the basis of
actual use, even if the user is not the owner.
Same; Same; Liability of a mining company, a lessee of a mineral land, for real property tax
although the mineral land forms part of the public domain.—It does not appear however that
IMC was entitled to tax exemption, including exemption from real property tax, under Section
53 of Presidential Decree 463 during the period here in question. We therefore conclude that
under the provisions of Presidential Decree 464, IMC is subject to the payment of real
property tax on the mineral land leased by it.
18. National Power Corporation vs. Municipal Government of Navotas
Remedial Law; Civil Procedure; Courts; Court of Tax Appeals; Jurisdiction; Local Taxation;
The Court of Tax Appeals (CTA), sitting as Division, has jurisdiction to review by appeal the
decisions, rulings and resolutions of the Regional Trial Court (RTC) over local tax cases,
which includes real property taxes.—Indeed, the CTA, sitting as Division, has jurisdiction to
review by appeal the decisions, rulings and resolutions of the RTC over local tax cases, which
includes real property taxes. This is evident from a perusal of the Local Government Code
(LGC) which includes the matter of Real Property Taxation under one of its main chapters.
Indubitably, the power to impose real property tax is in line with the power vested in the local
governments to create their own revenue sources, within the limitations set forth by law. As
such, the collection of real property taxes is conferred with the local treasurer rather than the
Bureau of Internal Revenue.
Judicial Review; In the event that the taxpayer questions the authority and power of the
assessor to impose the assessment, and of the treasurer to collect the real property tax, resort to
judicial action may prosper.—In the event that the taxpayer questions the authority and power
of the assessor to impose the assessment, and of the treasurer to collect the real property tax,
resort to judicial action may prosper. This is in consonance with the ruling in Ty v. Trampe,
250 SCRA 500 (1995). Here, a petition for prohibition with prayer for a restraining order
and/or writ of preliminary injunction was filed to declare null and void the new tax
assessments and enjoin the collection of real estate taxes based on said assessments. Despite
the alleged nonexhaustion of administrative remedies and nonpayment of the real property tax,
the Court gave due course to the case on the ground that the controversy did not involve
questions of fact but only of law.
Remedial Law; Civil Procedure; Jurisdiction; The well-estab lished rule is that the allegations
in the complaint and the character of the relief sought determine the nature of an action.—The
well-established rule is that the allegations in the complaint and the character of the relief
sought determine the nature of an action. Here, it is not disputed that the machineries and
equipment are being used for power generation. The primordial issue, however, is whether
these machineries and equipment are actually, directly and exclusively used by petitioner
within the purview of Section 234 of the LGC, which exempts it from payment of real
property taxes.
Court of Tax Appeals; Appeals; If a taxpayer is not satisfied with the decision of the Central
Board of Assessment Appeals (CBAA) or the Regional Trial Court (RTC), as the case may be,
the taxpayer may file, within thirty (30) days from receipt of the assailed decision, a petition
for review with the Court of Tax Appeals (CTA) pursuant to Section 7(a) of Republic Act
(RA) No. 9282.—In fine, if a taxpayer is not satisfied with the decision of the CBAA or the
RTC, as the case may be, the taxpayer may file, within thirty (30) days from receipt of the
assailed decision, a petition for review with the CTA pursuant to Section 7(a) of R.A. 9282. In
cases where the question involves the amount of the tax or the correctness thereof, the appeal
will be pursuant to Section 7(a)(5) of R.A. 9282. When the appeal comes from a judicial
remedy which questions the authority of the local government to impose the tax, Section
7(a)(3) of R.A. 9282 applies. Thereafter, such decision, ruling or resolution may be further
reviewed by the CTA En Banc pursuant to Section 2, Rule 4 of the Revised Rules of the CTA.
19. Capitol Wireless, Inc. vs. Provincial Treasurer of Batangas
Taxation; Real Property Taxation; In disputes involving real property taxation, the general rule
is to require the taxpayer to first avail of administrative remedies and pay the tax under protest
before allowing any resort to a judicial action, except when the assessment itself is alleged to
be illegal or is made without legal authority.—In disputes involving real property taxation, the
general rule is to require the taxpayer to first avail of administrative remedies and pay the tax
under protest before allowing any resort to a judicial action, except when the assessment itself
is alleged to be illegal or is made without legal authority. For example, prior resort to
administrative action is required when among the issues raised is an allegedly erroneous
assessment, like when the reasonableness of the amount is challenged, while direct court
action is permitted when only the legality, power, validity or authority of the assessment itself
is in question. Stated differently, the general rule of a prerequisite recourse to administrative
remedies applies when questions of fact are raised, but the exception of direct court action is
allowed when purely questions of law are involved.
Remedial Law; Civil Procedure; Questions of Fact; It has been held that “a bare
characterization in a petition of unlawfulness, is merely a legal conclusion and a wish of the
pleader, and such a legal conclusion unsubstantiated by facts which could give it life, has no
standing in any court where issues must be presented and determined by facts in ordinary and
concise language.”—Capwire argues and makes claims on mere assumptions of certain facts
as if they have been already admitted or established, when they have not, since no evidence of
such have yet been Capwire is a mere co-owner, not full owner, of the subject submarine cable
and, if the former, as to what extent; whether all or certain portions of the cable are indeed
submerged in water; and whether the waters wherein the cable/s is/are laid are entirely outside
of Philippine territorial or inland waters, i.e., in international waters. More simply, Capwire
argues based on mere legal conclusions, culminating on its claim of illegality of respondents’
acts, but the conclusions are yet unsupported by facts that should have been threshed out
quasi-judicially before the administrative agencies. It has been held that “a bare
characterization in a petition of unlawfulness, is merely a legal conclusion and a wish of the
pleader, and such a legal conclusion unsubstantiated by facts which could give it life, has no
standing in any court where issues must be presented and determined by facts in ordinary and
concise language.” Therefore, Capwire’s resort to judicial action, premised on its legal
conclusion that its cables (the equipment being taxed) lie entirely on international waters,
without first administratively substantiating such a factual premise, is improper and was
rightly denied. Its proposition that the cables lie entirely beyond Philippine territory, and
therefore, outside of Philippine sovereignty, is a fact that is not subject to judicial notice since,
on the contrary, and as will be explained later, it is in fact certain that portions of the cable
would definitely lie within Philippine waters. Jurisprudence on the Local Government Code is
clear that facts such as these must be threshed out administratively, as the courts in these types
of cases step in at the first instance only when pure questions of law are involved.
Civil Law; Property; Real Properties; Machineries; Both electric lines and communications
cables, in the strictest sense, are not directly adhered to the soil but pass through posts, relays
or landing stations, but both may be classified under the term “machinery” as real property
under Article 415(5) of the Civil Code for the simple reason that such pieces of equipment
serve the owner’s business or tend to meet the needs of his industry or works that are on real
estate.—Submarine or undersea communications cables are akin to electric transmission lines
which this Court has recently declared in Manila Electric Company v. City Assessor and City
Treasurer of Lucena City, 765 SCRA 52 (2015), as “no longer exempted from real property
tax” and may qualify as “machinery” subject to real property tax under the Local Government
Code. To the extent that the equipment’s location is determinable to be within the taxing
author ity’s jurisdiction, the Court sees no reason to distinguish between submarine cables
used for communications and aerial or underground wires or lines used for electric
transmission, so that both pieces of property do not merit a different treatment in the aspect of
real property taxation. Both electric lines and communications cables, in the strictest sense, are
not directly adhered to the soil but pass through posts, relays or landing stations, but both may
be classified under the term “machinery” as real property under Article 415(5) of the Civil
Code for the simple reason that such pieces of equipment serve the owner’s business or tend to
meet the needs of his industry or works that are on real estate. Even objects in or on a body of
water may be classified as such, as “waters” is classified as an immovable under Article
415(8) of the Code. A classic example is a boathouse which, by its nature, is a vessel and,
therefore, a personal property but, if it is tied to the shore and used as a residence, and since it
floats on waters which is immovable, is considered real property. Besides, the Court has
already held that “it is a familiar phenomenon to see things classed as real property for
purposes of taxation which on general principle might be considered personal property.”
Absent any showing from Capwire of any express grant of an exemption for its lines and
cables from real property taxation, then this interpretation applies and Capwire’s submarine
cable may be held subject to real property tax.—Thus, absent any showing from Capwire of
any express grant of an exemption for its lines and cables from real property taxation, then this
interpretation applies and Capwire’s submarine cable may be held subject to real property tax.
Having determined that Capwire is liable, and public respondents have the right to impose a
real property tax on its submarine cable, the issue that is unresolved is how much of such cable
is taxable based on the extent of Capwire’s ownership or co-ownership of it and the length that
is laid within respondents’ taxing jurisdiction. The matter, however, requires a factual
determination that is best performed by the Local and Central Boards of Assessment Appeals,
a remedy which the petitioner did not avail of.
Taxation; Property; Real Properties; Constitutional Law; National Territory; United Nations
Convention on the Law of the Sea; Under Part VI, Article 79 of the United Nations
Convention on the Law of the Sea (UNCLOS), the Philippines clearly has jurisdiction with
respect to cables laid in its territory that are utilized in support of other installations and
structures under its jurisdiction.—As the Court takes judicial notice that Nasugbu is a coastal
town and the surrounding sea falls within what the United Nations Convention on the Law of
the Sea (UNCLOS) would define as the country’s territorial sea (to the extent of 12 nautical
miles outward from the nearest baseline, under Part II, Sections 1 and 2) over which the
country has sovereignty, including the seabed and subsoil, it follows that indeed a portion of
the submarine cable system lies within Philippine territory and thus falls within the jurisdiction
of the said local taxing authorities. It easily belies Capwire’s contention that the cable system
is entirely in international waters. And even if such portion does not lie in the 12-nautical-mile
vicinity of the territorial sea but further inward, in Prof. Magallona v. Hon. Ermita, et al., 655
SCRA 476 (2011), this Court held that “whether referred to as Philippine ‘internal waters’
under Article I of the Constitution or as ‘archipelagic waters’ under UNCLOS Part III, Article
49(1, 2, 4), the Philippines exercises sovereignty over the body of water lying landward of (its)
baselines, including the air space over it and the submarine areas underneath.” Further, under
Part VI, Article 79 of the UNCLOS, the Philippines clearly has jurisdiction with respect to
cables laid in its territory that are utilized in support of other installations and structures under
its jurisdiction.
The jurisdiction or authority over such part of the subject submarine cable system lying within
Philippine jurisdiction includes the authority to tax the same, for taxation is one (1) of the
three (3) basic and necessary attributes of sovereignty, and such authority has been delegated
by the national legislature to the local governments with respect to real property taxation.—As
far as local government units are concerned, the areas described above are to be considered
subsumed under the term “municipal waters” which, under the Local Government Code,
includes “not only streams, lakes, and tidal waters within the municipality, not being the
subject of private ownership and not comprised within the national parks, public forest, timber
lands, forest reserves or fishery reserves, but also marine waters included between two lines
drawn perpendicularly to the general coastline from points where the boundary lines of the
municipality or city touch the sea at low tide and a third line parallel with the general coastline
and fifteen (15) kilometers from it.” Although the term “municipal waters” appears in the
Code in the context of the grant of quarrying and fisheries privileges for a fee by local
governments, its inclusion in the Code’s Book II which covers local taxation means that it may
also apply as guide in determining the territorial extent of the local authorities’ power to levy
real property taxation. Thus, the jurisdiction or authority over such part of the subject
submarine cable system lying within Philippine jurisdiction includes the authority to tax the
same, for taxation is one of the three basic and necessary attributes of sovereignty, and such
authority has been delegated by the national legislature to the local governments with respect
to real property taxation.
Local Taxation; Real Property Taxation; Tax Exemptions; Under the Local Government Code
(LGC), every person by whom or for whom real property is declared, who shall claim tax
exemption for such property from real property taxation “shall file with the provincial, city or
municipal assessor within thirty (30) days from the date of the declaration of real property
sufficient documentary evidence in support of such claim.”—A way for Capwire to claim that
its cable system is not covered by such authority is by showing a domestic enactment or even
contract, or an international agreement or treaty exempting the same from real property
taxation. It failed to do so, however, despite the fact that the burden of proving exemption
from local taxation is upon whom the subject real property is declared. Under the Local
Government Code, every person by or for whom real property is declared, who shall claim tax
exemption for such property from real property taxation “shall file with the provincial, city or
municipal assessor within thirty (30) days from the date of the declaration of real property
sufficient documentary evidence in support of such claim.” Capwire omitted to do so. And
even under Capwire’s legislative franchise, R.A. No. 4387, which amended R.A. No. 2037,
where it may be derived that there was a grant of real property tax exemption for properties
that are part of its franchise, or directly meet the needs of its business, such had been expressly
withdrawn by the Local Government Code, which took effect on January 1, 1992, Sections
193 and 234.
20. Aala vs. Uy
Exhaustion of Administrative Remedies; Local Government Code; Under Section 187 of the
Local Government Code (LGC) of 1991, aggrieved taxpayers who question the validity or
legality of a tax ordinance are required to file an appeal before the Secretary of Justice before
they seek intervention from the regular courts.—Parties are generally precluded from
immediately seeking the intervention of courts when “the law provides for remedies against
the action of an administrative board, body, or officer.” The practical purpose behind the
principle of exhaustion of administrative remedies is to provide an orderly procedure by giving
the administrative agency an “opportunity to decide the matter by itself correctly [and] to
prevent unnecessary and premature resort to the courts.” Under Section 187 of the Local
Government Code of 1991, aggrieved taxpayers who question the validity or legality of a tax
ordinance are required to file an appeal before the Secretary of Justice before they seek
intervention from the regular courts.
The doctrine of exhaustion of administrative remedies, like the doctrine on hierarchy of courts,
is not an iron-clad rule. It admits of several well-defined exceptions.—The doctrine of
exhaustion of administrative remedies, like the doctrine on hierarchy of courts, is not an iron-
clad rule. It admits of several well-defined exceptions. Province of Zamboanga del Norte v.
Court of Appeals, 342 SCRA 549 (2000), has held that the principle of exhaustion of
administrative remedies may be dispensed in the following instances: (1) [W]hen there is a
violation of due process; (2) when the issue involved is purely a legal question; (3) when the
administrative action is patently illegal and amounts to lack or excess of jurisdiction; (4) when
there is estoppel on the part of the administrative agency concerned; (5) when there is
irreparable injury; (6) when the respondent is a department secretary whose acts, as an alter
ego of the President, bears the implied and assumed approval of the latter; (7) when to require
exhaustion of administrative remedies would be unreasonable; (8) when it would amount to a
nullification of a claim; (9) when the subject matter is a private land in land case proceedings;
(10) when the rule does not provide a plain, speedy and adequate remedy; (11) when there are
circumstances indicating the urgency of judicial intervention; and unreasonable delay would
greatly prejudice the complainant; (12) when no administrative review is provided by law;
(13) where the rule of qualified political agency applies; and (14) when the issue of non-
exhaustion of administrative remedies has been rendered moot.
Local Government Code; Tax Ordinances; To question the validity of the ordinance,
petitioners should have first filed an appeal before the Secretary of Justice; Section 187 of the
Local Government Code (LGC) of 1991 gives the Secretary of Justice sixty (60) days to act on
the appeal. Within thirty (30) days from receipt of an unfavorable decision or upon inaction by
the Secretary of Justice within the time prescribed, aggrieved taxpayers may opt to lodge the
appropriate proceeding before the regular courts.—To question the validity of the ordinance,
petitioners should have first filed an appeal before the Secretary of Justice. However,
petitioners justify direct resort to this Court on the ground that they are entangled in a “catch-
22 situation.” They believe that filing an appeal before the Secretary of Justice would merely
delay the process and give the City Government of Tagum ample time to collect real property
taxes. The questioned ordinance was published in July 2012. Had petitioners immediately filed
an appeal, the Secretary of Justice would have had enough time to render a decision. Section
187 of the Local Government Code of 1991 gives the Secretary of Justice 60 days to act on the
appeal. Within 30 days from receipt of an unfavorable decision or upon inaction by the
Secretary of Justice within the time prescribed, aggrieved taxpayers may opt to lodge the
appropriate proceeding before the regular courts.
Tax Ordinances; Payment Under Protest; In cases where the validity or legality of a tax
ordinance is questioned, the rule that real property taxes must first be paid before a protest is
lodged does not apply.—In cases where the validity or legality of a tax ordinance is
questioned, the rule that real property taxes must first be paid before a protest is lodged does
not apply.
Taxpayers must first receive an assessment before this rule is triggered. In Jardine Davies
Insurance Brokers, Inc. v. Aliposa, 398 SCRA 176 (2003), this Court ruled that prior payment
under protest is not required when the taxpayer is questioning the very authority of the
assessor to impose taxes: 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.
21. Manila Electric Co. vs. Central Board of Assessment Appeals
Taxation; Civil Law; Property; Storage tanks although not embedded on land considered as
improvements and are subject to realty tax.—We hold that while the two storage tanks are not
embedded in the land, they may, nevertheless, be considered as improvements on the land,
enhancing its utility and rendering it useful to the oil industry. It is undeniable that the two
tanks have been installed with some degree of permanence as receptacles for the considerable
quantities of oil needed by Meralco for its operations. Oil storage tanks were held to be taxable
realty in Standard Oil Co. of New Jersey vs. Atlantic City, 15 Atl. 2nd 271.
Real property, for taxation purposes, defined.— For purposes of taxation, the term “real
property” may include things which should generally be regarded as personal property (84
C.J.S. 171, Note 8). 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
22. National Power Corporation vs. Provincial Treasurer of Benguet
Taxation; Local Taxation; Settled is the rule that should the taxpayer/real property owner
question the excessiveness or reasonableness of the assessment, Section 252 of the Local
Government Code (LGC) of 1991 directs that the taxpayer should first pay the tax due before
his protest can be entertained.—At the outset, settled is the rule that should the taxpayer/real
property owner question the excessiveness or reasonableness of the assessment, Section 252 of
the LGC of 1991 directs that the taxpayer should first pay the tax due before his protest can be
entertained. Same; Same; It is only after the taxpayer has paid the tax due that he may file a
protest in writing within thirty (30) days from payment of the tax to the Provincial, City or
Municipal Treasurer, who shall decide the protest within sixty (60) days from receipt.—It is
only after the taxpayer has paid the tax due that he may file a protest in writing within 30 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.
Chapter 3, Title Two, Book II of the Local Government Code (LGC) of 1991, Sections 226 to
231, provides for the administrative remedies available to a taxpayer or real property owner
who does not agree with the assessment of the real property tax sought to be collected.—
Chapter 3, Title Two, Book II of the LGC of 1991, Sections 226 to 231, provides for the
administrative remedies available to a taxpayer or real property owner who does not agree
with the assessment of the real property tax sought to be collected, particularly, the procedural
and substantive aspects of appeal before the LBAA and CBAA, including its effect on the
payment of real property taxes.
Tax Exemptions; A claim for exemption from the payment of real property taxes does not
actually question the assessor’s authority to assess and collect such taxes, but pertains to the
reasonableness or correctness of the assessment by the local assessor, a question of fact which
should be resolved, at the very first instance, by the Local Board of Assessment Appeals
(LBAA).—As settled in jurisprudence, a claim for exemption from the payment of real
property taxes does not actually question the assessor’s authority to assess and collect such
taxes, but pertains to the reasonableness or correctness of the assessment by the local assessor,
a question of fact which should be resolved, at the very first instance, by the LBAA. The same
may be inferred in Section 206 of the LGC of 1991.
Section 206 of the Local Government Code (LGC) categorically provides that every person
by or for whom real property is declared, who shall claim exemption from payment of real
property taxes imposed against said property, shall file with the provincial, city or municipal
assessor sufficient documentary evidence in support of such claim.—Section 206 of the LGC
categorically provides that every person by or for whom real property is declared, who shall
claim exemption from payment of real property taxes imposed against said property, shall file
with the provincial, city or municipal assessor sufficient documentary evidence in support of
such claim. The burden of proving exemption from local taxation is upon whom the subject
real property is declared.
Fresh Period Rule; It is settled that the “fresh period rule” applies only to judicial appeals and
not to administrative appeals.—While it is reconsideration before the LBAA is allowed, this
Court finds that, inevitably, the filing of the appeal before the CBAA through registered mail
on November 16, 2006 was already late. It is settled that the “fresh period rule” in the case of
Domingo Neypes, et al. v. Court of Appeals, et al., 469 SCRA 633 (2005), applies only to
judicial appeals and not to administrative appeals.