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REPORT

Republic of the Philippines


SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-30232 July 29, 1988

LUZON STEVEDORING CORPORATION, petitioner-appellant,


vs.
COURT OF TAX APPEALS and the HONORABLE COMMISSIONER OF INTERNAL REVENUE, respondents-appellees.

H. San Luis & V.L. Simbulan for petitioner-appellant.

PARAS, J.:

This is a petition for review of the October 21, 1968 Decision * of the Court of Tax Appeals in CTA Case No. 1484, "Luzon
Stevedoring Corporation v. Hon. Ramon Oben, Commissioner, Bureau of Internal Revenue", denying the various claims for tax
refund; and the February 20, 1969 Resolution of the same court denying the motion for reconsideration.

Herein petitioner-appellant, in 1961 and 1962, for the repair and maintenance of its tugboats, imported various engine parts
and other equipment for which it paid, under protest, the assessed compensating tax. Unable to secure a tax refund from the
Commissioner of Internal Revenue, on January 2, 1964, it filed a Petition for Review (Rollo, pp. 14-18) with the Court of Tax
Appeals, docketed therein as CTA Case No. 1484, praying among others, that it be granted the refund of the amount of
P33,442.13. The Court of Tax Appeals, however, in a Decision dated October 21, 1969 (Ibid., pp. 22-27), denied the various
claims for tax refund. The decretal portion of the said decision reads:

WHEREFORE, finding petitioner's various claims for refund amounting to P33,442.13 without sufficient legal
justification, the said claims have to be, as they are hereby, denied. With costs against petitioner.

On January 24, 1969, petitioner-appellant filed a Motion for Reconsideration (Ibid., pp. 28-34), but the same was denied in a
Resolution dated February 20, 1969 (Ibid., p. 35). Hence, the instant petition.

This Court, in a Resolution dated March 13, 1969, gave due course to the petition (Ibid., p. 40). Petitioner-appellant raised
three (3) assignments of error, to wit:

The lower court erred in holding that the petitioner-appellant is engaged in business as stevedore, the work
of unloading and loading of a vessel in port, contrary to the evidence on record.

II

The lower court erred in not holding that the business in which petitioner-appellant is engaged, is part and
parcel of the shipping industry.

III

The lower court erred in not allowing the refund sought by petitioner-appellant.

The instant petition is without merit.

The pivotal issue in this case is whether or not petitioner's tugboats" can be interpreted to be included in the term "cargo
vessels" for purposes of the tax exemption provided for in Section 190 of the National Internal Revenue Code, as amended by
Republic Act No. 3176.

Said law provides:

Sec. 190. Compensating tax. ... And Provided further, That the tax imposed in this section shall not apply to
articles to be used by the importer himself in the manufacture or preparation of articles subject to specific tax
or those for consignment abroad and are to form part thereof or to articles to be used by the importer himself
as passenger and/or cargo vessel, whether coastwise or oceangoing, including engines and spare parts of said
vessel. ....
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 1
Petitioner contends that tugboats are embraced and included in the term cargo vessel under the tax exemption provisions of
Section 190 of the Revenue Code, as amended by Republic Act. No. 3176. He argues that in legal contemplation, the tugboat
and a barge loaded with cargoes with the former towing the latter for loading and unloading of a vessel in part, constitute a
single vessel. Accordingly, it concludes that the engines, spare parts and equipment imported by it and used in the repair and
maintenance of its tugboats are exempt from compensating tax (Rollo, p. 23).

On the other hand, respondents-appellees counter that petitioner-appellant's "tugboats" are not "Cargo vessel" because they
are neither designed nor used for carrying and/or transporting persons or goods by themselves but are mainly employed for
towing and pulling purposes. As such, it cannot be claimed that the tugboats in question are used in carrying and transporting
passengers or cargoes as a common carrier by water, either coastwise or oceangoing and, therefore, not within the purview of
Section 190 of the Tax Code, as amended by Republic Act No. 3176 (Brief for Respondents-Appellees, pp. 45).

This Court has laid down the rule that "as the power of taxation is a high prerogative of sovereignty, the relinquishment is
never presumed and any reduction or dimunition thereof with respect to its mode or its rate, must be strictly construed, and
the same must be coached in clear and unmistakable terms in order that it may be applied." (84 C.J.S. pp. 659-800), More
specifically stated, the general rule is that any claim for exemption from the tax statute should be strictly construed against the
taxpayer (Acting Commissioner of Customs v. Manila Electric Co. et al., 69 SCRA 469 [1977] and Commissioner of Internal
Revenue v. P.J. Kiener Co. Ltd., et al., 65 SCRA 142 [1975]).

As correctly analyzed by the Court of Tax Appeals, in order that the importations in question may be declared exempt from the
compensating tax, it is indispensable that the requirements of the amendatory law be complied with, namely: (1) the engines
and spare parts must be used by the importer himself as a passenger and/or cargo, vessel; and (2) the said passenger and/or
cargo vessel must be used in coastwise or oceangoing navigation (Decision, CTA Case No. 1484; Rollo, p. 24).

As pointed out by the Court of Tax Appeals, the amendatory provisions of Republic Act No. 3176 limit tax exemption from the
compensating tax to imported items to be used by the importer himself as operator of passenger and/or cargo vessel (Ibid., p.
25).

As quoted in the decision of the Court of Tax Appeals, a tugboat is defined as follows:

A tugboat is a strongly built, powerful steam or power vessel, used for towing and, now, also used for
attendance on vessel. (Webster New International Dictionary, 2nd Ed.)

A tugboat is a diesel or steam power vessel designed primarily for moving large ships to and from piers for
towing barges and lighters in harbors, rivers and canals. (Encyclopedia International Grolier, Vol. 18, p. 256).

A tug is a steam vessel built for towing, synonymous with tugboat. (Bouvier's Law Dictionary.) (Rollo, p. 24).

Under the foregoing definitions, petitioner's tugboats clearly do not fall under the categories of passenger and/or cargo
vessels. Thus, it is a cardinal principle of statutory construction that where a provision of law speaks categorically, the need for
interpretation is obviated, no plausible pretense being entertained to justify non-compliance. All that has to be done is to apply
it in every case that falls within its terms (Allied Brokerage Corp. v. Commissioner of Customs, L-27641, 40 SCRA 555 [1971];
Quijano, etc. v. DBP, L-26419, 35 SCRA 270 [1970]).

And, even if construction and interpretation of the law is insisted upon, following another fundamental rule that statutes are to
be construed in the light of purposes to be achieved and the evils sought to be remedied (People v. Purisima etc., et al., L-
42050-66, 86 SCRA 544 [1978], it will be noted that the legislature in amending Section 190 of the Tax Code by Republic Act
3176, as appearing in the records, intended to provide incentives and inducements to bolster the shipping industry and not
the business of stevedoring, as manifested in the sponsorship speech of Senator Gil Puyat (Rollo, p. 26).

On analysis of petitioner-appellant's transactions, the Court of Tax Appeals found that no evidence was adduced by petitioner-
appellant that tugboats are passenger and/or cargo vessels used in the shipping industry as an independent business. On the
contrary, petitioner-appellant's own evidence supports the view that it is engaged as a stevedore, that is, the work of
unloading and loading of a vessel in port; and towing of barges containing cargoes is a part of petitioner's undertaking as a
stevedore. In fact, even its trade name is indicative that its sole and principal business is stevedoring and lighterage, taxed
under Section 191 of the National Internal Revenue Code as a contractor, and not an entity which transports passengers or
freight for hire which is taxed under Section 192 of the same Code as a common carrier by water (Decision, CTA Case No.
1484; Rollo, p. 25).

Under the circumstances, there appears to be no plausible reason to disturb the findings and conclusion of the Court of Tax
Appeals.

As a matter of principle, this Court will not set aside the conclusion reached by an agency such as the Court of Tax Appeals,
which is, by the very nature of its function, dedicated exclusively to the study and consideration of tax problems and has
necessarily developed an expertise on the subject unless there has been an abuse or improvident exercise of authority (Reyes
v. Commissioner of Internal Revenue, 24 SCRA 199 [1981]), which is not present in the instant case.

PREMISES CONSIDERED, the instant petition is DISMISSED and the decision of the Court of Tax Appeals is AFFIRMED.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 2
SO ORDERED.

REPORT

Republic of the Philippines


SUPREME COURT
Manila

EN BANC

G.R. No. L-22819 April 27, 1967

PROCTER & GAMBLE PHILIPPINE MANUFACTURING CORPORATION, petitioner,


vs.
COMMISSIONER OF CUSTOMS, respondent.

Ross, Selph & Carrascoso for petitioner.


Office of the Solicitor General for respondent.

BENGZON, J.P., J.:

In 1958 two shipments of caustic soda were consigned to Procter & Gamble Philippine Manufacturing Corporation from San
Francisco, California, U.S.A., on board the vessels Bronxville and Banggai. From said vessels, which were then anchored outside
the breakwater in Manila Bay, the caustic soda was unloaded onto lighters of the Atlantic Gulf & Pacific Co. The lighters were
towed by tugboats also of the Atlantic Gulf & Pacific Co. to Procter & Gamble's private wharf at Estero Vitas, Tondo, Manila
from where the caustic soda was finally transferred to warehouses belonging to Procter & Gamble.1wph1.t

On those two shipments, the Collector of Customs of Manila levied and collected a total sum of P720.00 as wharfage dues
imposed under Section 2802 of the Tariff and Customs Code.1 Procter & Gamble formally protested said collection on the
ground that it did not use a Government wharf or facility to unload the merchandise in question. The Collector of Customs of
Manila denied the protests. Whereupon Procter & Gamble appealed to the Commissioner of Customs who sustained the
Collector's decision. It then appealed to the Court of Tax Appeals and said court also upheld the decision of the Commissioner
of Customs. A motion for reconsideration having been denied, Procter & Gamble petitioned this Court to review the Tax
Court's decision.

At issue is whether or not Procter & Gamble is liable for the payment of wharfage dues imposed in Section 2802 of the Tariff
and Customs Code on the two shipments of caustic soda which were not unloaded on a Government wharf.

Section 2802 of the Tariff and Customs Code has for its origin Section 14 of the Philippine Tariff Act of 1909 which we quote
hereunder:

SEC. 14. That there shall be levied and collected upon all articles, goods, wares and merchandise except coal, lumber,
creosoted, and other pressure treated materials as well as other minor forest products, cement, guano, natural rock
asphalt, the minerals and ores of copper, lead, zinc, iron, and steel metals, refractory gold ores, and sugar molasses,
the products of the Philippines, exported through ports of entry of the Philippines, or shipped therefrom to the United
States or any of its possessions, a duty of one dollar per gross ton of one thousand kilos as a charge for wharfage,
irrespective of the port of destination or nationality of the exporting vessel. In the case of logs, or flitches twelve
inches square or equivalent cross-sectional area, or over, a charge of thirty cents per cubic meter shall be collected.

All articles, goods, wares, or merchandise imported, exported, or shipped in transit for the use of the Government of
United States, or of that of the Philippines, shall be exempt from the charge prescribed in this section.

Section 14 imposed wharfage dues only on exports2 and were held to be payable although the subject merchandise
were loaded from a private wharf.3 In 1909 our legislators knew that there was no Government wharf existing and it
was found safe to assume that the Government intended to collect wharfage fees, even without the use of Government
owned wharves, in order to raise funds for the acquisition and construction of wharves throughout the islands.

In 1955 Congress enacted Republic Act 1371, imposing in Section 3 thereof wharfage dues on imports and exports. We quote
Section 3 hereunder:

SEC. 3. There shall be levied, collected and paid on all articles imported or brought into the Philippines, and on
products of the Philippines, except coal, lumber, creosoted and other pressure treated materials as well as other
minor forest products, cement, guano, natural rock asphalt, the minerals and ores of base metals (e.g., copper, lead,
zinc, iron, chromite, manganese, magnesite and steel), and sugar molasses, exported from the Philippines a charge of
two pesos per gross metric ton as a fee for wharfage: Provided, That in the case of logs, or flitches twelve inches square
or equivalent cross-sectional area, or over, a charge of sixty centavos per cubic meter shall be collected: Provided,
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 3
further, That such wharfage fee shall not be levied on articles imported or brought into the Philippines which are
unloaded on private wharves.

Interpreting Section 3, this Court stated in Commissioner of Customs vs. Superior Gas & Equipment Co.4that the
intention of Congress was not to levy wharfage fee on merchandise unloaded at places other than Government
wharves or without making use of pier facilities and the proviso exempting from the wharfage fee all such imported
merchandise makes this intention all the more evident.

Later, however, in 1957 Congress passed Republic Act 1937, otherwise known as the Tariff and Customs Code which in Section
2802 thereof provides for the payment of wharfage dues on imports and exports. Section 2802 states:

SEC. 2802. Schedule of Dues. There shall be levied, collected and paid on all articles imported or brought into the
Philippines, and on products of the Philippines except coal, lumber, creosoted and other pressure treated materials as
well as other minor forest products, cement, guano, natural rock asphalt, the minerals and ores of base metals (e.g.
copper, lead, zinc, iron, chromite, manganese, magnesite and steel), and sugar molasses, exported from the
Philippines, a charge of two pesos per gross metric ton as a fee for wharfage; Provided, That in the case of logs, or
flitches twelve inches square or equivalent cross-sectional area, or over, a charge of sixty centavos per cubic meter
shall be collected.

Section 2802 is an almost verbatim copy of Section 3 of Republic Act 1371 minus the proviso

... That such wharfage fee shall not be levied on articles imported or brought into the Philippines which are unloaded
on private wharves.

Procter & Gamble maintains that the interpretation of wharfage dues in Commissioner of Customs vs. Superior Gas & Equipment
Co., supra, that wharfage dues are compensation or rental for the use of a wharf, and no wharfage dues shall be collected where
no Government wharf is used, shall be applied in this case because Section 2802 of the Tariff and Customs Code, the law
applicable herein, was derived from Section 3 of Republic Act 1371. As a matter of fact, it adds, Section 2802 of the Tariff and
Customs Code adopted the definition of "wharfage dues" provided for in Section 1(b) of Republic Act 1371.

On the other hand, the Commissioner of Customs and the Court of Tax Appeals are of the opinion that Section 2802 should be
given an interpretation different from that enunciated in Commissioner of Customs vs. Superior Gas & Equipment Co., supra, on
Section 3 of Republic Act 1371 for the reason that Section 2802, unlike Section 3, does not provide for an exemption from
wharfage dues on goods unloaded on private wharves. Counter to this argument, Procter & Gamble contends that the afore-
stated exemption clause is merely a surplusage and therefore its presence in or absence from the law will not alter the
meaning of "wharfage dues". It moreover avers that the Tariff and Customs Code, a codification of existing tariff and customs
laws, is presumed to have incorporated pertinent laws without change and any modification introduced therein was merely to
simplify the language of the law but not to change its meaning.

It should be noted that the Tariff and Customs Code levies charges on the different activities of a vessel engaged in foreign
trade. For coming to the Philippines from a foreign port or for going to a foreign port from the Philippines, one pays tonnage
dues.5 For entrance into or departure from a port of entity, harbor fees are collected. 6 Wharfage dues are assessed against the
cargo discharged by a vessel engaged in foreign trade.7Berthing charges are levied on a vessel coming or mooring within
specified places or waters of a port.8

A vessel ordinary enters a harbor and lays anchor or moors in a port to load, to unload or both. In doing so, the vessel derives
benefit from port facilities provided and maintained by the Government. For this reason, they are in fairness made to
contribute a share in said Government undertaking by payment of berthing charges and harbor fees. 9 Similarly, cargoes
discharged to a Philippine port from a vessel engaged in foreign trade derive benefit from port facilities provided and
maintained by the Government; said cargoes should also share the cost of providing and keeping a safe port, in the form of
wharfage dues. Accordingly, a vessel that anchors at Manila Bay to seek protection from a storm is not charged wharfage dues
by Bureau of Customs, although it may have to pay harbor fees and berthing charges. But when a vessel anchors at the Bay and
discharges or unloads its cargo, wharfage dues are forthwith collected. For, as stated, said dues are assessed against the cargo
discharged. This is clear from the provision of the law under which the assessment is based on the quantity, weight or measure
of the cargo received by the importer and/or discharged by such vessel. And wharfage dues on the cargo are distinct from
harbor fees or berthing charges on the vessel, so much so that different sections of the law cover them.

Since in the present case, the vessels involved called on port to unload, as they in fact did, some cargo, said cargo, having been
unloaded amidst the safety afforded by the port, is chargeable with wharfage dues. Finally, wharfage dues partake of the
nature of a tax which is collected by the Government to support its operation in relation to customs affairs.

In view of the above conclusion, We deem it unnecessary to discuss the other points raised by Procter & Gamble.

Wherefore, the decision appealed from is affirmed. With cost against petitioner. So ordered.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 4
Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-26521 December 28, 1968

EUSEBIO VILLANUEVA, ET AL., plaintiff-appellee,


vs.
CITY OF ILOILO, defendants-appellants.

Pelaez, Jalandoni and Jamir for plaintiff-appellees.


Assistant City Fiscal Vicente P. Gengos for defendant-appellant.

CASTRO, J.:

Appeal by the defendant City of Iloilo from the decision of the Court of First Instance of Iloilo declaring illegal Ordinance 11,
series of 1960, entitled, "An Ordinance Imposing Municipal License Tax On Persons Engaged In The Business Of Operating
Tenement Houses," and ordering the City to refund to the plaintiffs-appellees the sums of collected from them under the said
ordinance.

On September 30, 1946 the municipal board of Iloilo City enacted Ordinance 86, imposing license tax fees as follows: (1)
tenement house (casa de vecindad), P25.00 annually; (2) tenement house, partly or wholly engaged in or dedicated to business
in the streets of J.M. Basa, Iznart and Aldeguer, P24.00 per apartment; (3) tenement house, partly or wholly engaged in
business in any other streets, P12.00 per apartment. The validity and constitutionality of this ordinance were challenged by
the spouses Eusebio Villanueva and Remedies Sian Villanueva, owners of four tenement houses containing 34 apartments.
This Court, in City of Iloilo vs. Remedios Sian Villanueva and Eusebio Villanueva, L-12695, March 23, 1959, declared the
ordinance ultra vires, "it not appearing that the power to tax owners of tenement houses is one among those clearly and
expressly granted to the City of Iloilo by its Charter."

On January 15, 1960 the municipal board of Iloilo City, believing, obviously, that with the passage of Republic Act 2264,
otherwise known as the Local Autonomy Act, it had acquired the authority or power to enact an ordinance similar to that
previously declared by this Court as ultra vires, enacted Ordinance 11, series of 1960, hereunder quoted in full:

AN ORDINANCE IMPOSING MUNICIPAL LICENSE TAX ON PERSONS ENGAGED IN THE BUSINESS OF OPERATING
TENEMENT HOUSES

Be it ordained by the Municipal Board of the City of Iloilo, pursuant to the provisions of Republic Act No. 2264,
otherwise known as the Autonomy Law of Local Government, that:

Section 1. A municipal license tax is hereby imposed on tenement houses in accordance with the schedule of
payment herein provided.

Section 2. Tenement house as contemplated in this ordinance shall mean any building or dwelling for renting space
divided into separate apartments or accessorias.

Section 3. The municipal license tax provided in Section 1 hereof shall be as follows:

I. Tenement houses:

(a) Apartment house made of strong materials P20.00 per door p.a.

(b) Apartment house made of mixed materials P10.00 per door p.a.

II Rooming house of strong materials P10.00 per door p.a.

Rooming house of mixed materials P5.00 per door p.a.

III. Tenement house partly or wholly engaged in or dedicated to


business in the following streets: J.M. Basa, Iznart, Aldeguer, Guanco and
Ledesma from Plazoleto Gay to Valeria. St. P30.00 per door p.a.

IV. Tenement house partly or wholly engaged in or dedicated to


business in any other street P12.00 per door p.a.

V. Tenement houses at the streets surrounding the super market as soon


as said place is declared commercial P24.00 per door p.a.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 5
Section 4. All ordinances or parts thereof inconsistent herewith are hereby amended.

Section 5. Any person found violating this ordinance shall be punished with a fine note exceeding Two Hundred
Pesos (P200.00) or an imprisonment of not more than six (6) months or both at the discretion of the Court.

Section 6 This ordinance shall take effect upon approval.


ENACTED, January 15, 1960.

In Iloilo City, the appellees Eusebio Villanueva and Remedios S. Villanueva are owners of five tenement houses, aggregately
containing 43 apartments, while the other appellees and the same Remedios S. Villanueva are owners of ten apartments. Each
of the appellees' apartments has a door leading to a street and is rented by either a Filipino or Chinese merchant. The first
floor is utilized as a store, while the second floor is used as a dwelling of the owner of the store. Eusebio Villanueva owns,
likewise, apartment buildings for rent in Bacolod, Dumaguete City, Baguio City and Quezon City, which cities, according to him,
do not impose tenement or apartment taxes.

By virtue of the ordinance in question, the appellant City collected from spouses Eusebio Villanueva and Remedios S.
Villanueva, for the years 1960-1964, the sum of P5,824.30, and from the appellees Pio Sian Melliza, Teresita S. Topacio, and
Remedios S. Villanueva, for the years 1960-1964, the sum of P1,317.00. Eusebio Villanueva has likewise been paying real
estate taxes on his property.

On July 11, 1962 and April 24, 1964, the plaintiffs-appellees filed a complaint, and an amended complaint, respectively, against
the City of Iloilo, in the aforementioned court, praying that Ordinance 11, series of 1960, be declared "invalid for being beyond
the powers of the Municipal Council of the City of Iloilo to enact, and unconstitutional for being violative of the rule as to
uniformity of taxation and for depriving said plaintiffs of the equal protection clause of the Constitution," and that the City be
ordered to refund the amounts collected from them under the said ordinance.

On March 30, 1966,1 the lower court rendered judgment declaring the ordinance illegal on the grounds that (a) "Republic Act
2264 does not empower cities to impose apartment taxes," (b) the same is "oppressive and unreasonable," for the reason that
it penalizes owners of tenement houses who fail to pay the tax, (c) it constitutes not only double taxation, but treble at that and
(d) it violates the rule of uniformity of taxation.

The issues posed in this appeal are:

1. Is Ordinance 11, series of 1960, of the City of Iloilo, illegal because it imposes double taxation?

2. Is the City of Iloilo empowered by the Local Autonomy Act to impose tenement taxes?

3. Is Ordinance 11, series of 1960, oppressive and unreasonable because it carries a penal clause?

4. Does Ordinance 11, series of 1960, violate the rule of uniformity of taxation?

1. The pertinent provisions of the Local Autonomy Act are hereunder quoted:

SEC. 2. Any provision of law to the contrary notwithstanding, all chartered cities, municipalities and municipal
districts shall have authority to impose municipal license taxes or fees upon persons engaged in any occupation or
business, or exercising privileges in chartered cities, municipalities or municipal districts by requiring them to secure
licences at rates fixed by the municipal board or city council of the city, the municipal council of the municipality, or
the municipal district council of the municipal district; to collect fees and charges for services rendered by the city,
municipality or municipal district; to regulate and impose reasonable fees for services rendered in connection with
any business, profession or occupation being conducted within the city, municipality or municipal district and
otherwise to levy for public purposes, just and uniform taxes, licenses or fees; Provided, That municipalities and
municipal districts shall, in no case, impose any percentage tax on sales or other taxes in any form based thereon nor
impose taxes on articles subject to specific tax, except gasoline, under the provisions of the National Internal Revenue
Code;Provided, however, That no city, municipality or municipal district may levy or impose any of the following:

(a) Residence tax;

(b) Documentary stamp tax;

(c) Taxes on the business of persons engaged in the printing and publication of any newspaper, magazine, review or
bulletin appearing at regular intervals and having fixed prices for for subscription and sale, and which is not published
primarily for the purpose of publishing advertisements;

(d) Taxes on persons operating waterworks, irrigation and other public utilities except electric light, heat and power;

(e) Taxes on forest products and forest concessions;

(f) Taxes on estates, inheritance, gifts, legacies, and other acquisitions mortis causa;
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 6
(g) Taxes on income of any kind whatsoever;

(h) Taxes or fees for the registration of motor vehicles and for the issuance of all kinds of licenses or permits for the
driving thereof;

(i) Customs duties registration, wharfage dues on wharves owned by the national government, tonnage, and all other
kinds of customs fees, charges and duties;

(j) Taxes of any kind on banks, insurance companies, and persons paying franchise tax; and

(k) Taxes on premiums paid by owners of property who obtain insurance directly with foreign insurance companies.

A tax ordinance shall go into effect on the fifteenth day after its passage, unless the ordinance shall provide
otherwise: Provided, however, That the Secretary of Finance shall have authority to suspend the effectivity of any
ordinance within one hundred and twenty days after its passage, if, in his opinion, the tax or fee therein levied or
imposed is unjust, excessive, oppressive, or confiscatory, and when the said Secretary exercises this authority the
effectivity of such ordinance shall be suspended.

In such event, the municipal board or city council in the case of cities and the municipal council or municipal district
council in the case of municipalities or municipal districts may appeal the decision of the Secretary of Finance to the
court during the pendency of which case the tax levied shall be considered as paid under protest.

It is now settled that the aforequoted provisions of Republic Act 2264 confer on local governments broad taxing authority
which extends to almost "everything, excepting those which are mentioned therein," provided that the tax so levied is "for
public purposes, just and uniform," and does not transgress any constitutional provision or is not repugnant to a controlling
statute.2 Thus, when a tax, levied under the authority of a city or municipal ordinance, is not within the exceptions and
limitations aforementioned, the same comes within the ambit of the general rule, pursuant to the rules of expressio unius est
exclusio alterius, and exceptio firmat regulum in casibus non excepti.

Does the tax imposed by the ordinance in question fall within any of the exceptions provided for in section 2 of the Local
Autonomy Act? For this purpose, it is necessary to determine the true nature of the tax. The appellees strongly maintain that it
is a "property tax" or "real estate tax,"3 and not a "tax on persons engaged in any occupation or business or exercising
privileges," or a license tax, or a privilege tax, or an excise tax.4 Indeed, the title of the ordinance designates it as a
"municipal license tax on persons engaged in the business of operating tenement houses," while section 1 thereof states that a
"municipal license tax is hereby imposed on tenement houses." It is the phraseology of section 1 on which the appellees base
their contention that the tax involved is a real estate tax which, according to them, makes the ordinance ultra vires as it
imposes a levy "in excess of the one per centum real estate tax allowable under Sec. 38 of the Iloilo City Charter, Com. Act
158."5.

It is our view, contrary to the appellees' contention, that the tax in question is not a real estate tax. Obviously, the appellees
confuse the tax with the real estate tax within the meaning of the Assessment Law,6 which, although not applicable to the City
of Iloilo, has counterpart provisions in the Iloilo City Charter.7 A real estate tax is a direct tax on the ownership of lands and
buildings or other improvements thereon, not specially exempted,8 and is payable regardless of whether the property is used
or not, although the value may vary in accordance with such factor.9 The tax is usually single or indivisible, although the land
and building or improvements erected thereon are assessed separately, except when the land and building or improvements
belong to separate owners.10 It is a fixed proportion11 of the assessed value of the property taxed, and requires, therefore, the
intervention of assessors.12 It is collected or payable at appointed times,13 and it constitutes a superior lien on and is
enforceable against the property14 subject to such taxation, and not by imprisonment of the owner.

The tax imposed by the ordinance in question does not possess the aforestated attributes. It is not a tax on the land on which
the tenement houses are erected, although both land and tenement houses may belong to the same owner. The tax is not a
fixed proportion of the assessed value of the tenement houses, and does not require the intervention of assessors or
appraisers. It is not payable at a designated time or date, and is not enforceable against the tenement houses either by sale or
distraint. Clearly, therefore, the tax in question is not a real estate tax.

"The spirit, rather than the letter, or an ordinance determines the construction thereof, and the court looks less to its words
and more to the context, subject-matter, consequence and effect. Accordingly, what is within the spirit is within the ordinance
although it is not within the letter thereof, while that which is in the letter, although not within the spirit, is not within the
ordinance."15 It is within neither the letter nor the spirit of the ordinance that an additional real estate tax is being imposed,
otherwise the subject-matter would have been not merely tenement houses. On the contrary, it is plain from the context of the
ordinance that the intention is to impose a license tax on the operation of tenement houses, which is a form of business or
calling. The ordinance, in both its title and body, particularly sections 1 and 3 thereof, designates the tax imposed as a
"municipal license tax" which, by itself, means an "imposition or exaction on the right to use or dispose of property, to pursue a
business, occupation, or calling, or to exercise a privilege."16.

"The character of a tax is not to be fixed by any isolated words that may beemployed in the statute creating it, but such
words must be taken in the connection in which they are used and the true character is to be deduced from the nature
and essence of the subject."17 The subject-matter of the ordinance is tenement houses whose nature and essence are
expressly set forth in section 2 which defines a tenement house as "any building or dwelling for renting space divided
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 7
into separate apartments or accessorias." The Supreme Court, in City of Iloilo vs. Remedios Sian Villanueva, et al., L-
12695, March 23, 1959, adopted the definition of a tenement house18 as "any house or building, or portion thereof,
which is rented, leased, or hired out to be occupied, or is occupied, as the home or residence of three families or more
living independently of each other and doing their cooking in the premises or by more than two families upon any
floor, so living and cooking, but having a common right in the halls, stairways, yards, water-closets, or privies, or some
of them." Tenement houses, being necessarily offered for rent or lease by their very nature and essence, therefore
constitute a distinct form of business or calling, similar to the hotel or motel business, or the operation of lodging
houses or boarding houses. This is precisely one of the reasons why this Court, in the said case of City of Iloilo vs.
Remedios Sian Villanueva, et al., supra, declared Ordinance 86 ultra vires, because, although the municipal board of
Iloilo City is empowered, under sec. 21, par. j of its Charter, "to tax, fix the license fee for, and regulate hotels,
restaurants, refreshment parlors, cafes, lodging houses, boarding houses, livery garages, public warehouses,
pawnshops, theaters, cinematographs," tenement houses, which constitute a different business enterprise,19 are not
mentioned in the aforestated section of the City Charter of Iloilo. Thus, in the aforesaid case, this Court explicitly said:.

"And it not appearing that the power to tax owners of tenement houses is one among those clearly and expressly
granted to the City of Iloilo by its Charter, the exercise of such power cannot be assumed and hence the ordinance in
question is ultra vires insofar as it taxes a tenement house such as those belonging to defendants." .

The lower court has interchangeably denominated the tax in question as a tenement tax or an apartment tax. Called by either
name, it is not among the exceptions listed in section 2 of the Local Autonomy Act. On the other hand, the imposition by the
ordinance of a license tax on persons engaged in the business of operating tenement houses finds authority in section 2 of the
Local Autonomy Act which provides that chartered cities have the authority to impose municipal license taxes or fees upon
persons engaged in any occupation or business, or exercising privileges within their respective territories, and "otherwise to
levy for public purposes, just and uniform taxes, licenses, or fees." .

2. The trial court condemned the ordinance as constituting "not only double taxation but treble at that," because "buildings pay
real estate taxes and also income taxes as provided for in Sec. 182 (A) (3) (s) of the National Internal Revenue Code, besides
the tenement tax under the said ordinance." Obviously, what the trial court refers to as "income taxes" are the fixed taxes on
business and occupation provided for in section 182, Title V, of the National Internal Revenue Code, by virtue of which persons
engaged in "leasing or renting property, whether on their account as principals or as owners of rental property or properties,"
are considered "real estate dealers" and are taxed according to the amount of their annual income. 20.

While it is true that the plaintiffs-appellees are taxable under the aforesaid provisions of the National Internal Revenue Code
as real estate dealers, and still taxable under the ordinance in question, the argument against double taxation may not be
invoked. The same tax may be imposed by the national government as well as by the local government. There is nothing
inherently obnoxious in the exaction of license fees or taxes with respect to the same occupation, calling or activity by both the
State and a political subdivision thereof.21.

The contention that the plaintiffs-appellees are doubly taxed because they are paying the real estate taxes and the tenement
tax imposed by the ordinance in question, is also devoid of merit. It is a well-settled rule that a license tax may be levied upon a
business or occupation although the land or property used in connection therewith is subject to property tax. The State may
collect an ad valorem tax on property used in a calling, and at the same time impose a license tax on that calling, the imposition
of the latter kind of tax being in no sensea double tax.22.

"In order to constitute double taxation in the objectionable or prohibited sense the same property must be taxed twice
when it should be taxed but once; both taxes must be imposed on the same property or subject-matter, for the same
purpose, by the same State, Government, or taxing authority, within the same jurisdiction or taxing district, during the
same taxing period, and they must be the same kind or character of tax." 23 It has been shown that a real estate tax and
the tenement tax imposed by the ordinance, although imposed by the sametaxing authority, are not of the same kind
or character.

At all events, there is no constitutional prohibition against double taxation in the Philippines. 24 It is something not favored, but
is permissible, provided some other constitutional requirement is not thereby violated, such as the requirement that taxes
must be uniform."25.

3. The appellant City takes exception to the conclusion of the lower court that the ordinance is not only oppressive because it
"carries a penal clause of a fine of P200.00 or imprisonment of 6 months or both, if the owner or owners of the tenement
buildings divided into apartments do not pay the tenement or apartment tax fixed in said ordinance," but also unconstitutional
as it subjects the owners of tenement houses to criminal prosecution for non-payment of an obligation which is purely sum of
money." The lower court apparently had in mind, when it made the above ruling, the provision of the Constitution that "no
person shall be imprisoned for a debt or non-payment of a poll tax."26 It is elementary, however, that "a tax is not a debt in the
sense of an obligation incurred by contract, express or implied, and therefore is not within the meaning of constitutional or
statutory provisions abolishing or prohibiting imprisonment for debt, and a statute or ordinance which punishes the non-
payment thereof by fine or imprisonment is not, in conflict with that prohibition." 27 Nor is the tax in question a poll tax, for the
latter is a tax of a fixed amount upon all persons, or upon all persons of a certain class, resident within a specified territory,
without regard to their property or the occupations in which they may be engaged. 28 Therefore, the tax in question is not
oppressive in the manner the lower court puts it. On the other hand, the charter of Iloilo City 29 empowers its municipal board
to "fix penalties for violations of ordinances, which shall not exceed a fine of two hundred pesos or six months' imprisonment,
or both such fine and imprisonment for each offense." In Punsalan, et al. vs. Mun. Board of Manila, supra, this Court overruled

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 8
the pronouncement of the lower court declaring illegal and void an ordinance imposing an occupation tax on persons
exercising various professions in the City of Manilabecause it imposed a penalty of fine and imprisonment for its violation. 30.

4. The trial court brands the ordinance as violative of the rule of uniformity of taxation.

"... because while the owners of the other buildings only pay real estate tax and income taxes the ordinance imposes
aside from these two taxes an apartment or tenement tax. It should be noted that in the assessment of real estate tax
all parts of the building or buildings are included so that the corresponding real estate tax could be properly imposed.
If aside from the real estate tax the owner or owners of the tenement buildings should pay apartment taxes as
required in the ordinance then it will violate the rule of uniformity of taxation.".

Complementing the above ruling of the lower court, the appellees argue that there is "lack of uniformity" and "relative
inequality," because "only the taxpayers of the City of Iloilo are singled out to pay taxes on their tenement houses, while
citizens of other cities, where their councils do not enact a similar tax ordinance, are permitted to escape such imposition." .

It is our view that both assertions are undeserving of extended attention. This Court has already ruled that tenement houses
constitute a distinct class of property. It has likewise ruled that "taxes are uniform and equal when imposed upon all property
of the same class or character within the taxing authority." 31 The fact, therefore, that the owners of other classes of buildings in
the City of Iloilo do not pay the taxes imposed by the ordinance in question is no argument at all against uniformity and
equality of the tax imposition. Neither is the rule of equality and uniformity violated by the fact that tenement taxesare not
imposed in other cities, for the same rule does not require that taxes for the same purpose should be imposed in different
territorial subdivisions at the same time.32So long as the burden of the tax falls equally and impartially on all owners or
operators of tenement houses similarly classified or situated, equality and uniformity of taxation is accomplished.33 The
plaintiffs-appellees, as owners of tenement houses in the City of Iloilo, have not shown that the tax burden is not equally or
uniformly distributed among them, to overthrow the presumption that tax statutes are intended to operate uniformly and
equally.34.

5. The last important issue posed by the appellees is that since the ordinance in the case at bar is a mere reproduction of
Ordinance 86 of the City of Iloilo which was declared by this Court in L-12695, supra, as ultra vires, the decision in that case
should be accorded the effect of res judicata in the present case or should constitute estoppel by judgment. To dispose of this
contention, it suffices to say that there is no identity of subject-matter in that case andthis case because the subject-matter in
L-12695 was an ordinance which dealt not only with tenement houses but also warehouses, and the said ordinance was
enacted pursuant to the provisions of the City charter, while the ordinance in the case at bar was enacted pursuant to the
provisions of the Local Autonomy Act. There is likewise no identity of cause of action in the two cases because the main issue
in L-12695 was whether the City of Iloilo had the power under its charter to impose the tax levied by Ordinance 11, series of
1960, under the Local Autonomy Act which took effect on June 19, 1959, and therefore was not available for consideration in
the decision in L-12695 which was promulgated on March 23, 1959. Moreover, under the provisions of section 2 of the Local
Autonomy Act, local governments may now tax any taxable subject-matter or object not included in the enumeration of
matters removed from the taxing power of local governments.Prior to the enactment of the Local Autonomy Act the taxes that
could be legally levied by local governments were only those specifically authorized by law, and their power to tax was
construed in strictissimi juris. 35.

ACCORDINGLY, the judgment a quo is reversed, and, the ordinance in questionbeing valid, the complaint is hereby dismissed.
No pronouncement as to costs..

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

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


PROVINCE OF NUEVA ECIJA, plaintiff-appellant,
vs.
IMPERIAL MINING COMPANY, INC., defendant-appellee.

Isabelo Tadianan counsel for appellant.

Romeo Derez counsel for respondent.

PLANA, J.:

This is an appeal from the decision of the Court of First Instance of Nueva Ecija, Branch VIII, in Civil Case No. C-4 for collection
of real property tax, which has been certified to this Court by the Court of Appeals as a case involving purely a question of law.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 9
The legal issue is whether defendant-appellee Imperial Mining Company, Inc. (IMC), lessee of some parcels of mineral land
(placer mining claims) in Carranglan, Nueva Ecija, is liable for real property tax thereon, although the said mineral land forms
part of the public domain.

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

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

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

Hence, this appeal.

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

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

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

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

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

SEC. 40. Exemption from Real Property Tax. The exemption shall be as follows:

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

xxx xxx xxx

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

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

The foregoing exemptions make it very clear that leased lands of the public domain would otherwise be subject to real
property tax; if that were not so, there would have been no need to specifically exempt some of them from real property tax.

Presidential Decree 464 also prescribes the classification of real property for assessment purposes, specifically including
mineral land: "For purposes of assessment, real property shall be classified as residential, agricultural, commercial or

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 10
industrial and also as mineral in the case of lands." (Section 18.) And for purposes of real property taxation, the assessment
levels to be applied as regards mineral lands are laid down:

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

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

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

xxx xxx xxx

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

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

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

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

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

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-35726 July 21, 1982

SOCIAL SECURITY SYSTEM, petitioner,


vs.
CITY OF BACOLOD and MIGUEL REYNALDO as City Treasurer of Bacolod City, respondents.

Filemon Q. Almazan and Perlita C. Triatirona for petitioner.

Catalino A. Dayon (City Legal Officer) for respondents.

ESCOLIN, J.:

We set aside the decision of the Court of First instance of Negros Occidental in Civil Case No. 5980, entitled "Social Security
System versus City of Bacolod and Miguel Reynaldo, as City Treasurer of Bacolod City," which sustained the forfeiture of
certain real properties of the Social Security System in favor of the City of Bacolod for delinquency in payment of real estate
taxes.
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 11
Petitioner Social Security System is a government agency created under Republic Act No. 1161, whose primary function is to
"develop, establish gradually and perfect a social security system which shall be suitable to the needs of the people throughout
the Philippines, and shall provide protection against the hazards of disability, sickness, old age, and death." 1

In pursuance of its operations, petitioner, maintains a number of regional offices, one of which is the five-storey building,
known as SSS Building in Bacolod City, occupying four parcels of land. In 1970, said lands and building were assessed for
taxation at P1,744,840.00.

For petitioner's failure to pay the realty taxes for the years 1968, 1969 and 1970 which, including penalties, amounted to
P104,956.06, respondent city sometime in early 1970 levied upon said lands and building; and on April 3, 1970, it declared
said properties forfeited in its favor.

In protest thereto, petitioner addressed a letter dated July 27, 1970 to the City Mayor of Bacolod, through respondent city
treasurer, seeking reconsideration of the forfeiture proceedings on the ground that petitioner, being a government-owned and
controlled corporation, is exempt from payment of real estate taxes.

When no action thereon was taken by respondent city treasurer, petitioner filed an action in the Court of First Instance of
Negros Occidental for nullification of the forfeiture proceedings. In the same complaint it sought the issuance of a writ of
preliminary injunction to restrain respondent city from consolidating its ownership over the forfeited properties, and this writ
was issued by the court upon petitioner's posting of a cash bond in the amount of P105,000.00.

After due hearing, the lower court rendered a decision declaring

... the properties of the Social Security System not exempt from the payment of real property tax inasmuch as
the SSS does not fall under the provisions of Section 29 of the Charter of the City of Bacolod, and considering
further that there is no law which exempts said entity from taxes, the same should therefore be subject to
taxation like any other corporation in accordance with Section 27 of the City Charter of Bacolod City. The
complaint is hereby dismissed with costs against the plaintiff.

Hence, this petition.

We find the petition meritorious. Section 29 of the Commonwealth Act No. 326, otherwise known as the Charter of the City of
Bacolod, provides as follows:

|plain SECTION 29. Exemption from taxation. Lands and buildings owned by the United States of America,
the Commonwealth of the Philippines, the City of Bacolod, the Province of Occidental Negros, and cemeteries,
churches and their adjacent parsonages and convents, and lands, buildings and improvements used
exclusively for religious, charitable, scientific or educational purposes, and not for profit, shall be exempt
from taxation; but such exemptions shall not extend to lands or buildings held for investment, though the
income therefrom be devoted to religious, charitable, scientific or educational purposes.

The court a quo restricted the scope of the exemption contemplated by the above section exclusively to those government
agencies, entities and instrumentalities exercising governmental or sovereign functions. It relied on the ruling laid down in
"NACOCO versus Bacani, et al." 2 to the effect that the National Coconut Corporation, a government agency performing mere
ministrant functions, is not included in the term "Government of the Republic of the Philippines" for purposes of exemption
from the legal fees provided for in Rule 130 of the Rules of Court. 3 Invoking the case of "SSS versus Hon. Soriano, et
al." 4 where this Court definitively categorized the SSS as a government agency performing proprietary functions, the trial
court concluded that petitioner SSS does not fall within the coverage of Section 29 of the Charter of Bacolod City.

There can be no question that a government owned or controlled corporation is subject to payment of the legal fees provided
for in Rule 130 of the Rules of Court. Such liability is plainly written in Section 1 of Republic Act No. 104, which reads:

... All corporations, agencies, or instrumentalities owned or controlled by the government shall pay such
duties, taxes, fees and other charges upon their transaction, business, industry, sale, or income as are imposed
by law upon individuals, associations or corporations engaged in any taxable business, industry, or activity
except on goods or commodities imported or purchased and sold or distributed for relief purposes as may be
determined by President of the Philippines.

However, the subject of inquiry in the case at bar is not whether a government corporation exercising ministrant or
proprietary function, such as petitioner SSS, is exempt from the payment of legal fees, but whether the properties in question,
which are concededly owned by the government, are exempt from realty taxes. We hold that under Section 29 of the Charter of
the City of Bacolod they are so exempt.

It bears emphasis that the said section does not contain any qualification whatsoever in providing for the exemption from real
estate taxes of "lands and buildings owned by the Commonwealth or Republic of Philippines." Hence, when the legislature
exempted lands and buildings owned by the government from payment of said taxes, what it intended was a broad and
comprehensive application of such mandate, regardless of whether such property is devoted to governmental or proprietary
purpose.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 12
This conclusion is ineluctable from an examination of Commonwealth Act No. 470, a statute which deals specifically with the
incidence of real estate taxes and the exemption thereto. It is to be noted that Section 3(a) of said statute contains a similarly
worded exemption from the payment of realty taxes of "properties owned by ... the Republic of the Philippines, any province,
city, municipality or municipal district ..." And in "Board of Assessment Appeals vs. Court of Tax Appeals" 5, this Court
interpreted this provision in this wise:

... in exempting from taxation 'property owned by the Republic of the Philippines, any province, city,
municipality or municipal district ... said section 3(a) of Republic Act No. 470 makes no distinction between
property held in a sovereign, governmental or political capacity and those possessed in a private propriety or
patrimonial character. And where the law does not distinguish neither may we, unless there are facts and
circumstances clearly showing that the lawmaker intended the contrary, but no such facts and circumstances
have been brought to our attention. Indeed, the noun 'property' and the verb 'owned' used in said section, 3
(a) strongly suggest that the object of exemption is considered more from the view point of dominion, than
from that of domain. Moreover, taxes are financial burdens imposed for the purpose of raising revenues with
which to defray the cost of the operation of the Government, and a tax on property of the Government,
whether national or local, would merely have the effect of taking money from one pocket to put it in another
pocket (Cooley on Taxation, Sec. 621, 4th Edition). Hence, it would not serve, in the final analysis, the main
purpose of taxation. What is more, it would tend to defeat it, on account of the paper work, time and
consequently, expenses it would entail. (The Law on Local Taxation, by Justiniano Y. Castillo, p. 13).

The distinction laid down in "NACOCO vs. Bacani" 6 between government agencies exercising constituent functions, on the one
hand, and those performing ministrant functions, on the other, has therefore no relevance to the issue before Us. What is
decisive is that the properties possessed by the SSS, albeit devoted to private or proprietary purpose, are in fact owned by the
government of the Philippines. As such they are exempt from realty taxes. It is axiomatic that when public property is
involved, exemption is the rule and taxation, the exception.

In connection with the issue at hand, it would not be amiss to state that Presidential Decree No. 24, which amended the Social
Security Act of 1954, has already removed all doubts as to the exemption of the SSS from taxation. Thus

SEC. 16. Exemption from tax, legal process, and lien. All laws to the contrary notwithstanding, the SSS and
all its assets, all contributions collected and all accruals thereto and income therefrom as well as all benefit
payments and all papers or documents which may be required in connection with the operation or execution
of this Act shall be exempt from any tax, assessment, fee, charge or customs or import duty; and all benefit
payments made by the SSS shall likewise be exempt from all kinds of taxes, fees or charges, and shall not be
liable to attachment, garnishments, levy or seizure by or under any legal or equitable process whatsoever,
either before or after receipt by the person or persons entitled thereto, except to pay any debt of the covered
employee to the SSS.

WHEREFORE, the decision under review is hereby set aside, and the surety bond filed by petitioner cancelled.

SO ORDERED.

EN BANC

MANILA ELECTRIC G.R. No. 114231


COMPANY,
Petitioner, Present:
DAVIDE, JR., C.J.,
- versus - PUNO,
VITUG,*
PANGANIBAN,
QUISUMBING,
NELIA A. BARLIS, in her SANTIAGO,**
capacity as Officer-in-Charge/ GUTIERREZ,
Acting Municipal Treasurer CARPIO,
of Muntinlupa, substituting MARTINEZ,**
EDUARDO A. ALON, former CORONA,
Municipal Treasurer of MORALES,
Muntinlupa, Metro Manila, CALLEJO, SR.,
Respondent. AZCUNA, and
TINGA, JJ.

Promulgated:

June 29, 2004


x---------------------------------------------------x
RESOLUTION

CALLEJO, SR., J.:


Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 13
For the Courts Resolution is petitioner Manila Electric Companys (MERALCO) Motion for Leave to File Motion for

Reconsideration, filed on June 2, 2002 and the attached Motion for Reconsideration of the

________________
* On official leave.
** On leave.

Resolution of this Court dated April 15, 2002, denying its second motion forreconsideration and ordering that entry of

judgment be made in due course,[1] as well as its motion for reconsideration dated March 19, 2002.

To preface, the above-entitled petition was an off-shoot of the following antecedents:

From 1968 to 1972, petitioner MERALCO, a duly-organized corporation in the Philippines engaged in the distribution

of electricity, erected four (4) power generating plants in Sucat, Muntinlupa, namely, the Gardner I, Gardner II, Snyder I and

Snyder II stations. To equip the power plants, various machineries and equipment were purchased both locally and abroad.

When the Real Property Tax Code took effect on June 1, 1974, MERALCO filed its tax declarations covering the Sucat power

plants, including the buildings thereon as well as the machineries and equipment. [2]In 1976, the Provincial Assessor found that

the market value of the machineries amounted to P41,660,220.00, and its assessed value at P33,328,380.00. Later, in 1978, the

Municipal Assessor assessed the value of the machineries and equipment atP36,974,610.00. From 1975 to 1978, MERALCO

paid the real property taxes on the said properties on the basis of their assessed value as stated in its tax declarations.

On December 29, 1978, MERALCO sold all the power-generating plants including the landsite to the National Power

Corporation (NAPOCOR), a corporation fully owned and controlled by the Philippine government.

In 1985, the Municipal Assessor of Muntinlupa, while reviewing records pertaining to assessment and collection of

real property taxes, discovered, among others, that MERALCO, for the period beginning January 1, 1976 to December 29,

1978, misdeclared and/or failed to declare for taxation purposes a number of real properties consisting of several equipment

and machineries found in the said power plants. A review of the Deed of Sale which MERALCO executed in favor of NAPOCOR

when it sold the power plants to the latter convinced the municipal government of Muntinlupa that the true value of the

machineries and equipment was misdeclared/undeclared. The Municipal Assessor of Muntinlupa, on his own, then determined

and assessed the value[3] of the subject properties for taxation purposes from 1977 to 1978 under Tax Declarations Nos. T-

009-05486 to T-05506, viz:


TAX DECL. ASSESSED VALUE
B-009-05495 P 68,208,610.00
(1977-1978)
B-009-0496 P 62,524,550.00
(1978)
B-009-05486 P102,088,300.00
(1978)
B-009-05490 P 79,881,420.00
(1977-1978)
B-009-05491 P 74,555,990.00
(1978)
B-009-05494 P 73,892,660.00
(1976-1978)
B-009-05501 P 86,874,490.00
(1976-1978)
B-009-05502 P 81,082,860.00
(1977-1978)
B-009-05503 P 75,291,220.00
(1978)[4]

The matter of collection of the tax due and the enforcement of the remedies provided for in Presidential Decree No.

464 was then referred to the Municipal Treasurer, conformably to Section 57 thereof. [5]
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 14
Thereafter, on September 3, 1986, the Municipal Treasurer of Muntinlupa issued three notices to MERALCO,

requesting it to pay the full amount of the claimed deficiency in the real property taxes covering the machinery and equipment

found in the said power plants.[6] He warned the taxpayer that its properties could be sold at public auction unless the tax due

was paid. Still, MERALCO did not pay the assessed tax, nor take steps to question the tax assessed as contained in the said

notices. The Municipality of Muntinlupa then sought the assistance of the Bureau of Local Government Finance-Department of

Finance (BLGF-DOF) for the collection of the tax due from MERALCO.

On August 14, 1989, the BLGF-DOF issued a Letter-Indorsement[7] declaring that the properties of MERALCO were not

used in a new and preferred industry, hence, taxable from 1976 up to but not beyond December 31, 1978, the year the

properties were acquired by NAPOCOR. The municipal treasurer was directed, in the same letter, to inform the BLGF-DPF of

any recent action taken by MERALCO on the collection letter dated September 3, 1986. On the basis thereof, the Municipal

Treasurer of Muntinlupa, in a Letter[8] dated October 31, 1989, reminded MERALCO of its deficiency tax liability, demanded the

immediate payment of the amount of P36,432,001.97 as unpaid real property taxes inclusive of penalties and accrued interest,

and reiterated its warning that its properties may be sold at public auction if it failed to pay the taxes due. Subsequently, the

Municipality of Muntinlupa, through its Municipal Treasurer, sent MERALCO another Letter [9] dated November 20, 1989,

reiterating its previous demands for tax payment. Attached to the latter was the computation of the taxes due. Still, no

payment was made.

Accordingly, after issuing the requisite certification of non-payment of real property taxes and complying with the

additional requirement of public posting of the notices of delinquency, the Municipal Treasurer issued, on October 4, 1990,

Warrants of Garnishment[10] ordering the attachment of MERALCOs bank deposits with the Philippine Commercial and

Industrial Bank (PCIB), Metropolitan Bank and Trust Company (METROBANK) and the Bank of the Philippine Islands (BPI) to

the extent of its unpaid real property taxes.

On October 10, 1990, MERALCO filed before the Regional Trial Court (RTC) of Makati a Petition for Prohibition with

Prayer for Writ of Preliminary Mandatory Injunction and/or Temporary Restraining Order (TRO) praying, among others, that

a TRO be issued to enjoin the Municipal Treasurer of Muntinlupa from enforcing the warrants of garnishment. The petitioner

therein alleged, inter alia, that it had paid the real property taxes on its properties from 1975 to 1978 in full, based on the

assessed value thereof, as well as the taxes on the machineries and equipment, based on their appraisal value as determined

by the Provincial Assessor. According to the petitioner, the collection letters of the municipal assessor for real property taxes

amounting to P36,432,001.97 was made arbitrarily and without legal authority, for the following reasons: (a) in times of rising

cost, especially of imported machinery and equipment such as those installed at the Sucat Power Plants, the prices of articles

several years after their acquisition would be very much higher; (b) the respondent could not levy additional real estate taxes

without a prior re-appraisal of the property and an amendment of the tax declaration; and, (c) assuming arguendo that there

was such a re-appraisal made, and a new tax declaration issued, such re-appraisal should operate prospectively and not

retroactively as was done in this case.[11] According to the petitioner, the respondent had no authority to distrain its personal

property not found in the real property subject of the delinquent real estate taxes, the authority of respondent being limited to

those found in the real property subject of the delinquent real estate taxes. [12] The petitioner further averred that real estate

tax is a tax on real property; as such, any tax delinquency on property should follow the present owner, in this case, the

National Power Corporation.

The petitioner further claimed that the alleged delinquent real estate taxes claimed by respondent as shown in the

annex to the Notice of Garnishment,[13] were arrived at by taxing the same property twice, and, in one case, even three times;
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 15
by evaluating the property based on the selling price of the machineries and equipment rather than the actual acquisition cost;

by taxing, as undeclared machineries, items that were already declared by the petitioner in 1974; and, by including the value

of the land and other tax-exempt property in the computation of the alleged deficiency tax. Even assuming that it was liable for

the real property tax delinquency, the petitioner asserted that the collection of the said amount had already prescribed.

The petitioner later filed an Amended Petition alleging as follows:

12. To further pursue his unjustified aims, respondent issued three Warrants of Garnishment against
petitioners bank deposits with the Philippine Commercial International Bank, Metropolitan Bank and Trust
Company, and Bank of the Philippine Islands which required the said Banks to turn over to petitioner all the
garnished amount, copies of which are attached hereto as Annexes E, F, and G.[14]

The trial court issued a TRO which, after the hearing on the injunctive aspect of the case, was modified to the effect that the

warrants of garnishment against the bank accounts would be in full force and effect, provided that the Municipal Treasurer

would not, in the meantime, collect, receive or withdraw the frozen bank deposits. MERALCO was also allowed therein to

withdraw from the frozen deposits, provided that it would not leave a balance less than the tax claim of the Municipality of

Muntinlupa.

For its part, the Municipal Treasurer filed a Motion to Dismiss [15] on the following

grounds: (a) lack of jurisdiction, since under Sec. 64 of the Real

Property Tax Code, courts are prohibited from entertaining any suit assailing the validity of a tax assessed thereunder until the

taxpayer shall have paid, under protest, the tax assessed against him; and (b) lack of cause of action, by reason of MERALCOs

failure to question the notice of assessment issued to it by the Municipality of Muntinlupa before the Local Board of

Assessment Appeals. MERALCO opposed the motion, contending that it was the NAPOCOR that was liable for the taxes being

collected by the Municipal Treasurer, and that the right to collect such taxes had already prescribed under Section 25 of P.D.

No. 464.

In its June 17, 1991 Order, the trial court denied the said motion, ratiocinating that since MERALCO was not the

present owner or possessor of the properties in question, it was not the taxpayer contemplated under Section 64 of the Tax

Code:

After careful examination of the grounds and arguments of the motion to dismiss and the opposition
thereto, the Court is of the view that the petitioner in this case, the Manila Electric Company, is not the
taxpayer contemplated under Section 64 of the Tax Code. For as rightly argued by the petitioner, the tax due
on the property constitutes a lien thereto which lien shall be enforceable against the property whether in the
possession of the delinquent or any subsequent owner or possessor. In the case at bar, it is undisputed that
the present owner or the possessor of the property in question is not the petitioner Manila Electric Company
but the National Power Corporation.[16]

The trial court no longer delved into and resolved the issue of whether the petitioners action was premature.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 16
On a Petition for Certiorari filed before the Supreme Court, later endorsed to the Court of Appeals, [17] the Municipal

Treasurer of Muntinlupa assailed the June 17, 1991 Order of the RTC alleging that MERALCO was the taxpayer liable for the

tax due and the penalties thereon; that despite receipt by it of the 1985 notice of assessment from the Municipal Assessor, it

failed to appeal therefrom and, as such, the assessment had become final and enforceable; and, that MERALCO was proscribed

from filing its petition assailing the assessment. In its answer to the petition, MERALCO denied having received a notice of

assessment from the Municipal Treasurer, but admitted to having received collection letters.

On August 11, 1993, the Court of Appeals, in its Decision, granted the petition and declared the assailed order void and

without life in law, having been issued without jurisdiction, on a petition that further does not state a sufficient cause of action,

filed by a party who had not exhausted available administrative remedies. [18]The CA ruled that MERALCO was the taxpayer

liable for the taxes due, and that it was barred under Section 64 of P.D. No. 464 from assailing the 1986 assessment of the

Municipal Assessor for its failure to appeal therefrom. MERALCO moved for a reconsideration of the Decision, which the CA

denied for lack of merit in a Resolution[19] dated February 28, 1994.

On further recourse to this Court via a petition for review on certiorari under Rule 45, the petitioner alleged, inter alia,

that the Court of Appeals erred in applying Section 64 of the Real Property Tax Code for the following reasons: (a) the

petitioner was not the taxpayer for the purpose of an assessment under the Real Property Tax Code; and, (b) no assessment

was made by the respondent, and only collection letters were sent to it; hence, Section 30 of the said Code had no

application. The petitioner also alleged that its petition stated a sufficient cause of action for prohibition against the petitioner.

Thus:

Respondent Alon committed a grave mistake in going after MERALCO. He should have first asked the
registered owner to explain the difference between the original assessment and the purchase price of the
plant. Then he should have asked for a revision of the assessment and thereafter serve the notice of
assessment on the new owner.

Respondent cannot use MERALCO as a scapegoat for his errors.

Moreover, as the PETITION FOR PROHIBITION states, the Municipal Treasurer made an erroneous
conclusion as to the application of the valuation of the properties.

The Real Property Tax Code provides that real property shall be appraised at its current and fair
market value. (Sec. 2, Pres. Decree No. 469).

As a rule, the market value is that highest price estimated in terms of money which the property will
buy if exposed for sale in the open market x x x (Sec. 3 [n], ibid). But in appraising machineries, the following
provision applies:

The current market value of machinery shall be determined on the basis of the original cost
in the case of newly acquired machinery not yet depreciated and is appraised within the year of its
purchase. In the case of all others, the current market value shall be determined by dividing the
remaining economic life of the machinery by its economic life and multiplied by the replacement or
reproduction cost (new) of said machinery.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 17
If the machinery is imported, replacement or reproduction cost shall be the original
acquisition cost which would normally include such costs as flight and insurance charges,
brokerage, arrastre and handling, customs duties and taxes plus cost of inland transportation and
handling, and significant installation charges at the present side. (Sec. 28, ibid).

The land, building and machinery and equipment constituting the three power plants were sold to
NAPOCOR in 1979. Instead of confronting to the above formula, respondent Alon merely assumed that the
1979 purchase price of the land and machinery would be the same value for the years 1976 to 1978. On the
fact alone, he has erred in the appraisal of the machineries. His action is glaringly iniquitous in the light of the
economic reality that immovables constantly appreciate in value.Likewise, he did not take into consideration
the fact that the foreign currency exchange rate on the imported equipment at the time of the sale was very
much higher than the exchange rate at the time of original purchase. It is of judicial notice that when the peso
depreciated in value, the cost of cars rapidly escalated. Thus, a second-hand car fetched a price double that of
its original cost. The same is true in the instant case. The replacement cost of the machineries and equipment
herein was more than their original cost, which replacement cost was made the basis of the purchase price
between NAPOCOR and MERALCO. The tax declaration, meanwhile, reflected the actual cost and value of the
machineries at the time they were originally purchased by MERALCO.

Furthermore, the Real Property Tax Code itself provides for the prospective application of
assessment and reassessments, thus

Sec. 24. Date of effectivity of assessment or reassessments All assessments or


reassessments made after the first day of January or any year shall take effect on the first day of
January of the succeeding year x x x.

Taxes, moreover, levied on real estate for general revenue purposes are not enforceable as a personal
liability of the owner, but a charge upon the real estate assessed, to be enforced and collected by a sale of
property liable for the taxes so levied and assessed (Philadelphia Mortgage & Trust Co. v. City of Omaha, 63
Neb. 280, 88 NW 523; Grant v. Bartholomew, 57 Neb 673, 78 NW 314; Carman v. Harris, 85 NW 848; State of
Montana Ex. Rel. Tillman v. District Court, 103 ALR 376). This principle is currently embodied in our own Real
Property Tax Code, to wit:

The real property tax for any year shall attach and become due and payable on the first day
of January and from the same date said tax and all penalties subsequently accruing thereto shall
constitute a lien upon the property subject to such tax. Said lien shall be x x x enforceable against
the property whether in the possession of the delinquent or any subsequent owner or possessor,
and shall be removable only by the payment of the delinquent taxes and penalties. (Sec. 56, op. Cit.,
underscoring supplied).
If indeed there is any tax due on the realty involved herein, Respondent Alon should therefore go
against the real property involved herein, i.e., the Sucat Power Plant, and the personal property attached
thereto, which have become immobilized by attachment. Even assuming arguendo that MERALCO is the
taxpayer, Respondent Alon has no right or the authority to attach personal property that is not located in the
said realty, most especially the funds of MERALCO presently deposited with local banks.

Regrettably, the respondent Court of Appeals did not even give petitioner MERALCO an opportunity
to be heard on the foregoing. Instead, it ordered the dismissal of the PETITION FOR PROHIBITION.[20]

In his Comment on the Petition, the respondent alleged that the petitioner was furnished with a notice of assessment

on November 19, 1985, and appended a receipt stressing the signature of one Basilio Afuang. [21]

The Court promulgated its Decision[22] on May 18, 2001, denying due course to the petition and affirming the decision

of the appellate court. The dispositive portion of the decision reads:

WHEREFORE, the 11 August 1993 Decision of the Court of Appeals declaring as void the 17 June
1992 Order of the Regional Trial Court is herebyAFFIRMED. The appellate courts 28 February 1994
Resolution denying petitioners motion for reconsideration of its subject Decision is likewise AFFIRMED.

SO ORDERED.[23]

The Court held that the appellate court correctly ruled that the Regional Trial Court of Makati, Branch 66, had no

jurisdiction to entertain the petition for prohibition filed by the petitioner because the latter failed to first pay under protest

the deficiency taxes assessed against it, as required under Section 64 [24] of P.D. No. 464.[25] The Court stated that the Notices
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 18
sent by the respondent to the petitioner dated September 3, 1986 and October 31, 1989 were in the nature of

tax assessments;hence, the petitioner should have paid

under protest the deficiency tax assessed against it. The Court also ruled that contrary to the petitioners contention, the RTC

could not take cognizance of its petition for prohibition, as it was, in truth, assailing the validity of the tax assessment and

collection. The Court ratiocinated that to fully resolve the petition for prohibition, the trial court would not only have to rule

on the validity of the warrants of garnishment, but also on the issues relating to the assessment and collection of the deficiency

taxes.It further declared that the filing of the petition for prohibition would be for no other reason than to forestall the

collection of deficiency taxes on the basis of the tax assessment arguments. It emphasized that the petitioner could not file a

petition for certiorari and prohibition without first resorting to the proper administrative remedies, and by paying under

protest the tax assessed, to allow the court to assume jurisdiction over the petition.[26]

The Court also ruled that the garnishment of the petitioners bank deposits was proper and regular, since the

respondent was not limited to the remedy of selling the delinquent real property. It agreed with the contention of the

respondent that it could, likewise, avail of the remedies of distraint and levy of the petitioners personal property and the

collection of the real property tax through ordinary court action. Hence, the respondents availment of the remedy of distraint

and levy on the petitioners bank deposits was in accord with case law. The Court declared that there was nothing illegal about

exercising this option, since bank deposits are not among those properties exempt from execution under the Revised Rules of

Court or under the Real Property Tax Code.[27]

The petitioner received a copy of this Courts Decision on June 18, 2001 and filed, on July 3, 2001, a motion for

reconsideration thereon. The petitioner argued that the notices issued by the Municipal Treasurer of

Muntinlupa were not notices of assessment envisaged in Section 3 of P.D. No. 464.[28] The petitioner pointed out that the said

notices did not contain the assessors findings regarding the kind of real estate, area, unit value, market value, actual use and

assessment level; and, in the case of the machinery attached to the land, the description of the machinery, date of operation,
original cost, depreciation, market value and assessment level. Hence, the said notices could not be used as bases for filing an

appeal to the Local Board of Assessment Appeals under Section 30[29] of the Real Property Tax Code, which clearly adverts to a

written notice of assessment.Thus, the petitioner contended, it could not be required to avail of the prescribed administrative

remedies in protesting an erroneous tax assessment under the said Code. [30]

On February 1, 2002, the Court issued a Resolution denying with finality the petitioners motion for

reconsideration.[31] The Court, however, reversed its ruling that the notices sent by the respondent to the petitioner were notices

of assessment. It categorically stated that the notices were, in fact, notices of collection.

Additionally, the Court declared that a question of fact had been raised before it, since the petitioner denied having

received any notice of assessment from the Municipal Assessor and collection letters from the respondent:

As there has been no apparent admission by petitioner that it had received the 1985 tax assessment
notices allegedly sent by respondent Municipal Treasurer, and because we have found that the records are
bereft of evidence showing actual receipt by petitioner of the real property tax declaration allegedly sent by
the Municipal Assessor, We are thus compelled to declare that a question of fact has been raised before this
Court: On the one hand, said respondent claims that, aside from the September 3, 1986 and October 31, 1989
notices, he had transmitted to petitioner tax assessment notices in the form of real property tax declarations
in November of 1985.On the other hand, petitioner denies having received any tax assessment notice from
said respondent prior to receipt of the notices of collection.

Whether or not a tax assessment had been made and sent to the petitioner prior to the collection of
back taxes by respondent Municipal Treasurer is of vital importance in determining the applicability of
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 19
Section 64 of the Real Property Tax Code inasmuch as payment under protest is required only when there has
in fact been a tax assessment, the validity of which is being questioned. Concomitantly, the doctrine of
exhaustion of administrative remedies finds no application where no tax assessment has been made.[32]

The foregoing notwithstanding, the Court ruled against a remand of the case to the trial court, ratiocinating as follows:

The Petition for Review on Certiorari of petitioner before us raises the same grounds which
petitioner relies upon in its Petition for Prohibition before the trial court that the respondent Municipal
Treasurer arbitrarily and despotically issued the writ of garnishment against petitioners funds, to wit: 1) The
petitioner is not the taxpayer contemplated by the Real Property Tax Code for purposes of an assessment; 2)
There was no assessment made prior to the collection of back taxes thereby rendering irregular the collection
of taxes by the respondent; and 3) Respondent cannot garnish petitioners funds for the satisfaction of
delinquent taxes. His remedy is merely to levy upon the real property subject of the tax pursuant to the legal
principle that unpaid real property taxes constitute a lien upon the real property subject to back taxes.

By the parties own doing, all the issues that bear upon the propriety of the issuance of the warrants
of garnishment against petitioners bank deposits for the collection of back taxes have been raised before this
Court in its Petition for Review on Certiorari and properly resolved in favor of respondent Municipal
Treasurer. In resolving all those issues presented before us by petitioner, we have, in effect, resolved
petitioners amended petition for prohibition filed before the trial court. In other words, we have already
decided that said respondent did not act arbitrarily and despotically in garnishing petitioners funds.

Hence, should the trial court find that there has indeed been a prior assessment, petitioners petition
for prohibition would be dismissed for failure to pay under protest and to exhaust administrative
remedies. However, a finding by the trial court that there was no tax assessment made prior to the collection
of taxes would render inapplicable the requirement of paying under protest and exhausting administrative
remedies by first appealing to the LBAA before the trial court takes cognizance of petitioners petition for
prohibition. Unfortunately therefore, even if the trial court can assume jurisdiction over the said petition for
prohibition, there is nothing substantial left for it to do.[33]

The petitioner received, on March 4, 2002, a copy of this Courts Resolution dated February 1, 2002. Entry of judgment

was made of record on March 6, 2002.[34]On March 19, 2002, the petitioner filed a Motion for Reconsideration of the

Resolution Promulgated on February 1, 2002 or Motion to Admit the Second Motion for Reconsideration Herein Incorporated

of the Decision, in view of the Courts pronouncements in its February 1, 2002 Resolution that the petitioner was not furnished

with any notice of assessment; that the notices sent by the respondent to the petitioner were merely collection letters and not

notices of assessment; and, that questions of fact were raised before the Court. The petitioner insisted that conformably with

its new findings, the Court should have reversed the Decision of the Court of Appeals dated August 11, 1993 and its Resolution

dated February 28, 1994, and remanded the case to the trial court for further proceedings. The

petitioner argued that the Courts new findings were inconsistent with its denial of its motion for reconsideration. The

petitioner prayed that:

WHEREFORE, petitioner respectfully prays that the Decision promulgated on May 18, 2001 and the
Resolution promulgated on February 1, 2002 be reconsidered and set aside and a new one issue reversing the
Decision of the Honorable Court of Appeals dated August 11, 1993 and its Resolution dated February 28,
1994 and remanding this case to the trial court for further proceedings.[35]

Instead of resolving the petitioners March 19, 2002 motion for reconsideration on its merits, the Court, in a

Resolution[36] dated April 15, 2002, merely noted without action the said motion, directed that Entry of Judgment be made in

due course and stated that no further pleadings shall be entertained in relation to the case. The Court treated the March 19,

2002 motion for reconsideration of the petitioner as a prohibited pleading.

Undaunted, the petitioner filed, on June 2, 2002, a motion for leave to file a motion for reconsideration of the April 15,
2002 Resolution, appending thereto its motion for reconsideration. It contended that after the Court held in its February 1,

2002 Resolution that the September 3, 1986 and October 31, 1989 notices sent by the respondent to the petitioner were
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 20
notices of collection, thus, justifying its conclusion that Section 614 of P.D. No. 464 was not applicable, the Court should have

ordered the case remanded to the trial court for further proceedings. The petitioner argued that since the Court made findings

in its February 1, 2002 Resolution contrary to those findings in its May 18, 2001 Decision, it should be allowed to seek a

reconsideration of the said resolution.[37]

In the meantime, in view of the entry of judgment made in the case, the Equitable PCI Bank, one of the petitioners

depository banks, was requested by the respondent, on June 20, 2002, to release to the latter the garnished funds of the

petitioner in the amount of P36,432,001.97, pursuant to the October 4,

1990 Warrantof Garnishment served on the bank on October 8, 1990.[38] The petitioner, however, in a Letter dated June 24,

2002,[39] requested the same bank to defer the release of the garnished funds, and forthwith filed before the Court on June 28,

2002 an Urgent Motion For The Recall Of The Entry Of Judgment, [40] in view of the pendency of its motion for reconsideration

before the Court. Hence, on July 2, 2002, Equitable PCI Bank filed a Motion For Clarification, [41] praying that it be given

appropriate guidance relative to the respondents implementation of the warrant of garnishment,vis--vis the petitioners motion

for reconsideration pending before the Court.

On October 1, 2003, the Court resolved to refer the pending incidents to the Court En Banc for resolution.

The Issues

The petitioner presented two issues in its motions dated March 19, 2002 and June 2, 2002, viz: (a) whether the entry

of judgment made of record by the Clerk of Court of this Court on March 6, 2002 should be recalled and the petitioner granted

leave to file its motion for reconsideration; and, (b) whether the Courts May 18, 2001 Decision should be set aside and the case

remanded to the trial court for further proceedings, in view of the factual findings contained in the Courts February 1, 2002

Resolution.

On the first issue, the petitioner asserts that the entry of judgment made of record by this Court on March 6, 2002 was

premature. It argues that it had the right to file a motion for the reconsideration of the February 1, 2002 Resolution of this

Court, considering that while the material findings in the instant case were reversed, the petitioners motion for

reconsideration was altogether denied. The petitioner avers that it should not be prevented from moving for a rectification of

this Courts inconsistent stance, and submits that the Courts Resolution of February 1, 2002 denying with finality its July 3,

2001 motion for reconsideration was premature, hence, inefficacious.

The Ruling of the Court

The contention of the petitioner is meritorious.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 21
Section 1, Rule 52 of the Rules of Court, provides that a motion for reconsideration of a decision may be filed within fifteen

days from notice thereof. Under Section 10, Rule 51, if no appeal or motion for new trial or reconsideration is filed within the

time provided in the Rules, the judgment shall forthwith be entered by the clerk in the book of entries of judgments. Section 2,

Rule 52 further provides that no second motion for reconsideration of a judgment or final resolution by the same party shall be

entertained.

Indeed, in Ortigas and Company Limited Partnership vs. Velasco,[42] we held that a second motion for reconsideration of a

decision or a final order is prohibited, except for extraordinarily persuasive reasons and only upon express leave first

obtained. We explained, thus:

The propriety or acceptability of such a second motion for reconsideration is not contingent upon the
averment of new grounds to assail the judgment, i.e., grounds other than those theretofore presented and
rejected. Otherwise, attainment of finality of a judgment might be staved off indefinitely, depending on the
partys ingeniousness or cleverness in conceiving and formulating additional flaws or newly discovered errors
therein, or thinking up some injury or prejudice to the rights of the movant for reconsideration. Piece-meal
impugnation of a judgment by successive motions for reconsideration is anathema, being precluded by the
salutary axiom that a party seeking the setting aside of a judgment, act or proceeding must set out in his
motion all the grounds therefor, and those not so included are deemed waived and cease to be available for
subsequent motions.

For all litigation must come to an end at some point, in accordance with established rules of
procedure and jurisprudence. As a matter of practice and policy, courts must dispose of every case as
promptly as possible; and in fulfillment of their role in the administration of justice, they should brook no
delay in the termination of cases by stratagems or maneuverings of parties or their lawyers... [43]

The foregoing rule has no application in this case. It bears stressing that this Court, in its May 18, 2001 Decision,

affirmed the ruling of the Court of Appeals that the petitioner had no cause of action against the respondent. Thus, the

appellate courts finding, that the petitioner received a notice of assessment from the respondent notwithstanding which it

failed to appeal in due course from the same, was upheld; hence, the petitioner was barred from filing a petition for

prohibition in the trial court under Section 64 of P.D. No. 464. This Court also ruled that the respondents Letters dated

September 3, 1986 and October 31, 1989 received by the petitioner were notices of assessment and not mere collection

letters. The Court concluded that the bank deposits of the petitioner may, thus, be garnished by the respondent under P.D. No.

464.

However, in its February 1, 2002 Resolution, the Court reversed its findings and ruled that the petitioner was not

served with any notice of assessment as required by law, and that the respondents Letters of September 6, 1985 and October

31, 1983 were collection letters, receipt of which was denied by the petitioner. The Court, thus, held that there was a need to

remand the case to the lower court in order to resolve the factual issue of whether or not the respondent, indeed, served a

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 22
notice of assessment on the petitioner. The Court, however, also ruled that there was no longer a need to remand the case to

the trial court.

In light of the supervening findings of this Court in its February 1, 2002 Resolution which are inconsistent with its

ruling in its May 18, 2001 Decision, and the disposition of the petition on its merits, the Court now rules that the petitioner had

the right to file a motion for reconsideration thereon. Consequently, the entry of judgment made of record on March 6, 2002

was premature and inefficacious, and should be recalled.

Anent the second issue, this Court, upon a meticulous review of the records of the case, finds that the Court of Appeals

erred in granting the respondents petition for a writ of certiorari.

In People vs. Court of Appeals, et al.,[44] this Court ruled that the public respondent acts without jurisdiction if it does

not have the legal power to determine the case; there is excess of jurisdiction where the respondent, being clothed with the

power to determine the case, oversteps its authority as determined by law. There is grave abuse of discretion where the public

respondent acts in a capricious, whimsical, arbitrary or despotic manner in the exercise of its judgment as to be said to be

equivalent to lack of jurisdiction.[45] Mere abuse of discretion is not enough.

In a petition for certiorari, the jurisdiction of the court is narrow in scope. It is limited to resolving only errors of

jurisdiction. Errors of judgment of the trial court are to be resolved by the appellate court in the appeal by writ of error,

or via a petition for review on certiorari in this Court under Rule 45 of the Rules of Court. Certiorari will issue only to correct

errors of jurisdiction. It is not a remedy to correct errors of judgment.[46] An error of judgment is one in which the court may

commit in the exercise of its jurisdiction, and which error is reversible only by an appeal. Error of jurisdiction is one where the

act complained of was issued by the court without or in excess of jurisdiction, and which error is correctible only by the

extraordinary writ of certiorari.[47] As long as the court acts within its jurisdiction, any alleged errors committed in the exercise of

its discretion will amount to nothing more than mere errors of judgment, correctible by an appeal or a petition for review

under Rule 45 of the Rules of Court.[48]

This Court finds and so rules that the RTC committed grave abuse of discretion amounting to excess or lack of

jurisdiction in declaring that the petitioner is not the taxpayer liable for the taxes due claimed by the private respondent.

Indeed, in its May 18, 2001 Decision,[49] this Court ruled:

The fact that NAPOCOR is the present owner of the Sucat power plant machineries and equipment
does not constitute a legal barrier to the collection of delinquent taxes from the previous owner, MERALCO,
who has defaulted in its payment. In Testate Estate of Concordia T. Lim vs. City of Manila, the Court held that
the unpaid tax attaches to the property and is chargeable against the person who had actual or beneficial use
and possession of it regardless of whether or not he is the owner. In that case, the Court declared that to

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 23
impose the real property tax on the subsequent owner 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. [50]

However, the Court holds that the RTC did not commit any grave abuse of discretion when it denied the respondents

motion to dismiss on the claim that for the petitioners failure to appeal from the 1986 notice of assessment of the Municipal

Assessor, the assessment had become final and enforceable under Section 64 of P.D. No. 464.

Section 22 of P.D. No. 464 states that, upon discovery of real property,

theprovincial, city or municipal assessor shall make an appraisal and

assessment of such real property in accordance with Section 5 of the law,

irrespective of any previous assessment or taxpayers valuation thereon. The provincial, city or municipal assessor is tasked to

determine the assessed value of the property, meaning the value placed on taxable property for ad valorem tax purposes.The

assessed value multiplied by the tax rate will produce the amount of tax due. It is synonymous to taxable value.

An assessment fixes and determines the tax liability of a taxpayer.[51] It is a notice to the effect that the amount therein

stated is due as tax and a demand for payment thereof.[52] The assessor is mandated under Section 27 of the law to give written

notice within thirty days of such assessment, to the person in whose name the property is declared.[53] The notice should

indicate the kind of property being assessed, its actual use and market value, the assessment level and the assessed value. The

notice may be delivered either personally to such person or to the occupant in possession, if any, or by mail, to the last known

address of the person to be served, or through the assistance of the barrio captain. The issuance of a notice of assessment by

the local assessor shall be his last action on a particular assessment. [54] For purposes of giving effect to such assessment, it is

deemed made when the notice is released, mailed or sent to the taxpayer.[55] As soon as the notice is duly served, an obligation

arises on the part of the taxpayer to pay the amount assessed and demanded.[56]

If the taxpayer is not satisfied with the action of the local assessor in the assessment of his property, he has the right,

under Section 30 of P.D. No. 464, to appeal to the Local Board of Assessment Appeals by filing a verified petition within sixty

(60) days from service of said notice of assessment. If the taxpayer fails to appeal in due course, the right of the local

government to collect the taxes due becomes absolute upon the expiration of such period, with respect to the taxpayers

property.[57] The action to collect the taxes due is akin to an action to enforce a judgment.[58] It bears stressing, however,

that Section 30 of P.D. No. 464 pertains to the assessment and valuation of the property for purposes of real estate

taxation. Such provision does not apply where what is questioned is the imposition of the tax assessed and who should shoulder

the burden of the tax.[59]

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 24
Conformably to Section 57 of P.D. No. 464, it is the local treasurer who is tasked with collecting taxes due from the taxpayer.

The said provision reads:


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

The duty of the local treasurer to collect the taxes commences from the time the taxpayer fails or refuses to pay the taxes due,

following the latters failure to question the assessment in the Local Board of Assessment Appeals and/or to the Central Board

of Assessment Appeals. This, in turn, renders the assessment of the local assessor final, executory and demandable, thus,

precluding the taxpayer from disputing the correctness of the assessment or from invoking any defense that would reopen the

question of its liability on the merits.[60]

In this case, the petitioner denied receiving copies of Tax Declarations Nos. B-009-5501 to B-009-5494 prepared by the

respondent Municipal Assessor in 1985. In the face of the petitioners denial, the respondent was burdened to prove the

service of the tax declarations on the petitioner.[61] While the respondent alleged in his Comment on the Petition at bar that the

Municipal Assessor furnished the petitioner with copies of the said tax declarations on November 29, 1985, the only proof

proferred by the respondent to prove such claim was the receipt signed by a certain Basilio Afuang dated November 29,

1985.[62] The records failed to show the connection of Basilio Afuang to the petitioner, or that he was authorized by the

petitioner to receive the owners copy of the said tax declaration from the Office of the Municipal Assessor. We note that the

respondent even failed to append a copy of the said receipt in its motion to dismiss in the trial court. Conformably, this Court,

in its May 18, 2001 Decision,[63] declared as follows:


The records, however, are bereft of any evidence showing actual receipt by petitioner of the real property tax
declaration sent by the Municipal Assessor. However, the respondent in a Petition for Certiorari (G.R. No.
100763) filed with this Court which later referred the same to the Court of Appeals for resolution, narrated
that the municipal assessor assessed and declared the afore-listed properties for taxation purposes as of 28
November 1985. Significantly, in the same petition, respondent referred to former Municipal Treasurer
Norberto A. San Mateos notices to MERALCO, all dated 3 September 1986, as notices of assessment and not
notices of collection as it claims in this present petition. Respondent cannot maintain diverse positions.[64]

The question that now comes to fore is, whether the respondents Letters to the petitioner dated September 3, 1986 and

October 31, 1989, respectively, are mere collection letters as contended by the petitioner and as held by this Court in its

February 1, 2002 Resolution; or, as claimed by the respondent and as ruled by this Court in its May 18, 2001 Decision, are

notices of assessment envisaged in Section 27 of P.D. No. 464.

The September 3, 1986 notice/letter[65] of the respondent to the petitioner reads:

G/Gng. MANILA ELECTRIC CO.


Ortigas Avenue, Pasig
Metro Manila

Mahal na G./Gng.

Ipinababatid po namin sa inyo na ayon sa talaan ng aming tanggapan, ang buwis sa mga ari-arian na
nakatala sa inyong pangalan ay hindi pa nakakabayad tulad ng nasasaad sa ibaba:

Tax. Decl. Location Assessment Year Tax Due Penalty Total


No.
B-009- Sucat P86,874,490 1976 ... - 2,171,862.25
05501
-05502 - do - 81,082,860 1977 - 2,027,071.50
-05503 - do - 75,291,220 1978 - 1,882,280.50

-05504 - do - 80,978,500. 1979 - 2,024,462.50


Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 25
1980 - 2,024,462.50
1981 2,024,462.50
TOTAL - - - - - P ___________CONT. BELOW__________
Inaasahan po namin na di ninyo ipagwawalang bahala ang patalastas na ito at ang pagbabayad ng
nabanggit na buwis sa lalong madaling panahon. Ipinaaala-ala po lamang ang sino mang magpabaya o
magkautang ng buwis ng maluwat ay isusubasta (Auction Sale) ng Pamahalaan ang inyong ari-arian ng
naaayon sa batas.

Subalit kung kayo po naman ay bayad na, ipakita po lamang ang katibayan sa pagbabayad (Official Receipt) at
ipagwalang bahala ang patalastas na ito.

Lubos na gumagalang,
(Sgd.) NORBERTO A. SAN MATEO
Ingat-Yaman Pambayan [66]

The October 31, 1989 notice/letter of the respondent to the petitioner, on the other hand, reads:
Gng. MANILA ELECTRIC COMPANY
Sucat

Mahal na G./Gng.

Ipinababatid po namin sa inyo na ayon sa talaan ng aming tanggapan, ang buwis sa mga ari-arian na nakatala
sa inyong pangalan ay hindi nakabayad tulad ng nasasaad sa ibaba:

TAX LOCA- ASSESSED YEAR TAX DUE PENALTY TOTAL


DECLNO. TION VALUE
05495- Sucat 68,208,610.00 1977- 3,410,430.50 818,503.32 4,228,933
Mach. 78
05496- - do - 62,524,550.00 1978 1,563,113.75 375,147.30 1,938,261
Mach.
05486- - do - 102,088,300.00 1978 2,552,200.50 612,529.80 1,164,737
Mach.
05490- - do - 78,881,420.00 1977- 1,997,035.50 479,288.52 2,476,324
Mach. 78
05491- - do - 74,555,990.00 1978 1,863,899.75 447,335.94 2,311,235
Mach.
05494- - do - 73,892,660.00 1976- 5,541,949.50 1,330,067.88 6,872,017
Mach. 78
GRAND TOTAL 20,991.509

Inaasahan po namin na di ninyo ipagwawalang bahala ang patalastas ng ito at ang pagbabayad sa buwis ng sa
lalong madaling panahon. Ipinaala-ala po lamang na sino ang magpabaya sa buwis ng maluwat ay
isusubasta (AUCTION SALE) ng pamahalaan ang inyong ari-arian ayon sa batas.

Subalit kung kayo ay bayad na, ipakita po lamang ang katibayan sa pagbabayad(OFFICIAL RECEIPT) at
ipagwalang bahala ag patalastas na ito.

Lubos na gumagalang,
(Sgd.) EDUARDO A. ALON
Asst. Municipal Treasurer
Officer-in-Charge[67]

The Court, in its February 1, 2002 Resolution,[68] upheld the petitioners contention and ruled that the aforequoted

letters/notices are not the notices of assessment envisaged in Section 27 of P.D. No. 464. Thus:
It is apparent why the foregoing cannot qualify as a notice of tax assessment. A notice of assessment
as provided for in the Real Property Tax Code should effectively inform the taxpayer of the value of a specific
property, or proportion thereof subject to tax, including the discovery, listing, classification, and appraisal of
properties. The September 3, 1986 and October 31, 1989 notices do not contain the essential information that
a notice of assessment must specify, namely, the value of a specific property or proportion thereof which is
being taxed, nor does it state the discovery, listing, classification and appraisal of the property subject to
taxation. In fact, the tenor of the notices bespeaks an intention to collect unpaid taxes, thus the reminder to
the taxpayer that the failure to pay the taxes shall authorize the government to auction off the properties
subject to taxes or, in the words of the notice, Ipinaala-ala po lamang, ang sino mang magpabaya o
magkautang ng buwis ng maluwat ay isusubasta (Auction Sale) ng pamahalaan ang inyong ari-arian ng
naaayon sa batas.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 26
The petitioner is also correct in pointing out that the last paragraph of the said notices that inform the
taxpayer that in case payment has already been made, the notices may be disregarded is an indication that it
is in fact a notice of collection.

Furthermore, even the Bureau of Local Government Finance (BLGF), upon whose recommendation former
Municipal Treasurer Alon relied in the collection of back taxes against petitioner, deemed the September 3,
1986 notice as a collection letter. Hence;

The Bureau should be informed of any recent action taken by MERALCO on the collection letter
dated September 3, 1986 of that Office and whether NAPOCOR was also advised thereof and its
reaction thereon, if any, for our record and reference.[69]

Such ruling is, in effect, a reversal of the May 18, 2001 Decision of the Court, where it was ruled that the said letters/notices

were, in fact, notices of assessment:


Be that as it may, petitioner was correct when it pointed out that the Municipal Treasurer, contrary
to that required by law, issued the notices of assessment. However, the trial court is without authority to
address the alleged irregularity in the issuance of the notices of assessment without prior tax payment, under
protest, by petitioner. Section 64 of the RPTC, prohibits courts from declaring any tax invalid by reason of
irregularities or informalities in the proceedings of the officers charged with the assessment
or collection of taxes except upon the condition that the taxpayer pays the just amount of the tax, as
determined by the court in the pending proceeding. As petitioner failed to make a protest payment of the tax
assessed, any argument regarding the procedure observed in the preparation of the notice of assessment and
collection is futile as the trial court in such a scenario cannot assume jurisdiction over the matter.

It cannot be gainsaid that petitioner should have addressed its arguments to respondent at the first
opportunity upon receipt of the 3 September 1986 notices of assessment signed by Municipal Treasurer
Norberto A. San Mateo. Thereafter, it should have availed of the proper administrative remedies in protesting
an erroneous tax assessment, i.e., to question the correctness of the assessments before the Local Board of
Assessment Appeals (LBAA), and later, invoke the appellate jurisdiction of the Central Board of Assessment
Appeals (CBAA). 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. The failure to appeal within the statutory period shall render
the assessment final and unappealable[70]

We note that the petitioner, in its Answer to the Petition of the respondent in the Court of Appeals, admitted to receiving copies
of the said letters/notices.[71]

Upon a careful review of the records of this case and the applicable jurisprudence, we find that it is the contention of the

petitioner and the ruling of this Court in its February 1, 2002 Resolution which is correct. Indeed, even the respondent

admitted in his comment on the petition that:

Indeed, respondent did not issue any notice of assessment because statutorily, he is not the proper
officer obliged to do so. Under Chapter VIII, Sections 90 and 90-A of the Real Property Tax Code, the
functions related to the appraisal and assessment for tax purposes of real properties situated within a
municipality pertains to the Municipal Deputy Assessor and for the municipalities within Metropolitan
Manila, the same is lodged, pursuant to P.D. No. 921, on the Municipal Assessor. [72]

Consequently then, Sections 30 and 64 of P.D. No. 464 had no application in the case before the trial court. The petitioners

action for prohibition was not premature. Hence, the Court of Appeals erred in rendering judgment granting the petition for

certiorari of the respondent.

Moreover, the petitioner, in its petition for prohibition before the court a quo, denied liability for the taxes claimed by the

respondent, asserting that if at all, it is the NAPOCOR, as the present owner of the machineries/equipment, that should be held

liable for such taxes. The petitioner had further alleged that the assessment and collection of the said taxes had already

prescribed. Conformably to the ruling of this Court in Testate Estate of Lim vs. City of Manila,[73] Section 30 of P.D. No. 464 will
not apply.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 27
The Court further rules that there is a need to remand the case for further proceedings, in order for the trial court to resolve

the factual issue of whether or not the Municipal Assessor served copies of Tax Declarations Nos. B-009-05499 to B-009-

05502 on the petitioner, and, if in the affirmative, when the petitioner received the same; and to resolve the other issues raised

by the parties in their pleadings. It bears stressing that the Court is not a trier of facts.

IN VIEW OF THE FOREGOING, the May 18, 2001 Decision of this Court dismissing the petition is SET ASIDE. The petition at

bar is GIVEN DUE COURSE and GRANTED. The assailed decision of the Court of

Appeals is REVERSED and SET ASIDE. The case is REMANDED to the trial court for further proceedings. The trial court

is DIRECTED to terminate the proceedings within six (6) months from notice hereof.

No costs.

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

EN BANC

G.R. No. L-43361 August 21, 1937

THE PROVINCE OF CAMARINES SUR, applicant,


vs.
THE DIRECTOR OF LANDS, oppositor-appellee.
CIRIACO CHUNACO and JOSE ARAMBURO, oppositors and appellants.

Vera and Vera and J. E. Blanco for appellants.


Office of the Solicitor-General Hilado for appellee.

LAUREL, J.:

On February 12, 1930, the Province of Camarines Sur, thru its provincial fiscal, filed with the Court of First Instance of said
province an application for the registration of several parcels of land comprised in the agricultural school site of the province.
The Director of Lands opposed the registration on the ground that these parcels are public lands. An opposition was also filed
on January 19, 1931, by Ciriaco Chunaco but only with respect to lot No. 3 of Plan II-12638, Amd., Exhibit A. Jose Aramburo,
who had sold this lot to Ciriaco Chunaco, joined the latter on account of his warranty in case of eviction.

The present controversy relates only to lot No. 3 as the other parcels of land had already been adjudicated by the Court of First
Instance of Camarines Sur to the applicant and the Insular Government. The parties appear to have agreed upon the identity of
the controverted lot (t. s. n., pp. 15, 147).

After hearing, His Honor, Judge Eulalio Garcia, on October 29, 1934, denied the application of the Province of Camarines Sur,
overruled the opposition of Ciriaco Chunaco and Jose Aramburo, and declared lot No. 3 public land which had been reserved
by the Governor-General on October 19, 1933 for use as site of the Camarines Sur Agricultural School. The oppositors, Ciriaco
Chunaco and Jose Aramburo, moved for reconsideration and new trial which motion was denied. Exception was taken and the
case finally elevated to this court by bill of exceptions.

Oppositors by their counsel assign ten errors all of which, however, with the exception of the last one with reference to the
alleged error in refusing a new trial may be reduced to one single propositions, namely: Whether or not upon the evidence
presented, the court below erred in declaring lot No. 3 public land subject to reservation by the Chief Executive for the stated
public purpose, instead of adjudicating the same and ordering its registration in the name of the oppositor-claimant Ciriaco
Chumaco.

Appellants claim that they and their predecessor in interest have been since time immemorial in the continuous, open,
peaceful and adverse possession of lot No. 3 under a bona fide claim of ownership and that, therefore, they are entitled to the
registration of the same under the provisions of Act No. 496, or, in the alternative, under the beneficial provisions of Act No.
926, section 54, paragraph 6, and Act No. 2874, Chapter VIII, section 45, paragraph (b), respectively.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 28
The appellants called to the witness-stand eight witnesses to substantiate their claim. Documentary evidence was also
presented and admitted (Exhibits 1 to 23). No claim is made that the lot had been acquired either by purchase from or
composition title with the Government (Royal Decree of June 25, 1880). No step was even taken towards securing possessory
information title under the Royal Decree of February 13, 1984 and the provisions of the Spanish Mortgage Law of July 14,
1983. The appellants, therefore, cannot invoke the provisions of section 19, paragraph 3, of Act No. 496, as amended by section
1 of Act No. 2164, which require that an applicant for registration of title must claim "to own or hold any land under a
possessory information title, acquired under the provisions of the Mortgage Law of the Philippine Islands and the general
regulations for the execution of same." (Fernandez Hermanos vs. Directors of Lands, 57 Phil., 929, 933.) The failure of the
appellants' predecessors in interest to legalize their possession of the land in question by the institution of possessory
information proceedings for the gratuitous grant to file from the Spanish Government, thereby perfecting and covering their
possessory right into one of ownership, caused the land to revert to the Government. (Fuster vs.Director of Lands, G. R. No.
40129, 61 Phil., 687; Heirs of Datu Pendatun vs. Director of Lands, 59 Phil., 600.) In the first cited case, this court said:

No existe en autos prueba alguna que demuestre que Severino Tamayo y Juan de la Cruz, ni sus compaeros, hayan solicitado
la composicion de los terrenos en controversia de acuerdo con el mencionado Reglamento, cuyo objetivo era precisamente el
legitimar la posesion de los que posein ilegitimamente terrenos del Estado, ni de que sehayan acogido a los beneficios del Real
Estado, ni de que se hayan acogido a los beneficious del Real Decreto de 13 de febrero de 1894 que tenia por especial fin dar
una vez mas oportunidad a dichos posedores a que pudiesen obtener titulo gratuito previos los tramites de informacion
posesories, ni tampoco a los del Real Decreto de 21 de febrero de 1895. Si fuera cierto, como la solicitante apelada Antonia C.
Fuster ha tratado de probar, que Severino Tamayo y Juan de la Cruz y compaeros hubieran estado en posesion continua del
referido terreno y lo hubieran estado cultivando por media de inquilinos hasta que traspasaron sus derechos sobre el mismo a
Matias Fuster el 15 de mayo de 1895 (Exh. I), no se comprende como no se habian acogido ni los beneficios del Real Decreto de
25 de junio de 1880, para lo cual tenian tiempo hasta el 17 de abril de 1894, ni a los del Real Decreto de 21 de febrero de 1895,
para legitimar su posesion y adquirir titulo gratuito de propiedad sobre dicho terreno. Si hubiesen estado tan empeados e
interesados en cultivar el citado terreno, hasta el extremo de poner encargados en el, por que no pusieron el mismo empeo e
interes en legitimar su posesion, y adquirir titulo gratuito de propiedad sobre el mismo, aprovechandose de la oportunidad y
de los medios que las leyes les brindaban para ello y asegurando de este modo el fruto de sus desvelos, trabajo y privaciones?
No se pretende que no habian tenido conocimiento de dichos reales decretos; por consiguiente, es de presumir que sa
cumplido con lo ordenado en el articulo 17 de Reglamento tantas veces citado de que se diese la mayor publicidad al mismo en
las Islas a fin de que se conocieran las facilidades que por sus disposiciones se daban para legitimar la posesion ilegal de
terrenos del Estado y adquirir la propiedad de los mismos. (Fuster vs. Director of Lands,supra.)

The appellants, however, also invoke the benefits of paragraph 6 of section 54 of Act No. 926, as amended by paragraph (b) of
section 45 of Act No. 2874 and contend that they and their predecessors in interest had possessed the land not only "for a
period of ten years next preceding the 26th day of July 1904" as said Act No. 926 provides, but from the year 1874. They claim
that the repeal of Act No. 926 by Act No. 2874 cannot adversely affect their vested right of ownership under the former Public
Land Law because of the constitutional inhibition against the enactment of ex post facto law or bill of attainder. In the first
place, it should be observed that the constitutional provision that no ex post facto law or bill of attainder shall be enacted
cannot be invoked to protect allegedly vested civil rights, because it is only applicable to criminal proceedings, and into to civil
proceedings which affect private rights retrospectively (See Mekin vs. Wolfe, 2 Phil., 74; Paynaga vs. Wolfe, 2 Phil., 146; U. S. vs.
Ang Kan Ko, 6 Phil., 376; Concepcion vs. Garcia, 54 Phil., 81; and U. S. vs. Heinszen, 206 U. S., 370; 51 Law. ed., 1098; 27 Sup. Ct.
Rep., 742; 11 Ann. Cas., 688). In the second place, section 54 of Act No. 926 provides that ". . . persons or their legal successors
in right, occupying public lands in the Philippine Islands, or claiming to own any such lands or an interest therein, but whose
titles to such lands have not been perfected, may apply to the Court of Land Registration of the Philippine Islands
for confirmation of their claims and the issuance of a certificate of title therefor . . . ." No application was filed under Act No. 926
by the appellants or their predecessors in interest, and it is clear that without such application no confirmation of their claims
could be had and much less the issuance of a certificate of title in their favor. Under these circumstances, no vested right could
have accrued to them.

The claim that the appellants should, in the alternative, be the recipients of the beneficial provisions of Act No. 2874 (par. [b],
sec. 45) is also without merit. Paragraph (b), section 45 of Act No. 2874 substantially incorporates paragraph 6 of section 54 of
Act No. 926. The possession and occupation under both laws must not only be under a bona fide claim of ownership but must
also be open, continuous, exclusive and notorious to give rise to a presumptive grant from the State.

It has been uniformly held by his court that to justify judicial confirmation of title to a public agricultural land, the claimant
must prove actual and physical occupation of said land, and that the possession must be continuous, open, exclusive,
notorious, adverse and under a bona fide claim of ownership from July 26, 1894 (Tiglao vs. Insular Government, 7 Phil., 80
aff'd in 215 U. S., 410; 54 Law. ed., 257; 30 Sup. Ct. Rep., 129; 40 Phil., 1029; Vao vs. Insular Government, 41 Phil., 161;
Government of the Philippines Islands vs. Abadejos, G. R. No. 21184, March 12, 1924; Gallado vs. Director of Lands, G. R. No.
23109; Fernandez Hermanos vs. Director Lands, supra; Heirs of Datu Pendatun vs. Director of Lands, supra; Director of Lands
vs. Abarca and Enage, G. R. No. 38277, 58 Phil., 950; Director of Lands vs. Abdul, G. R. No. 36867, 58 Phil., 932; Government of
the Philippine Islands vs. Agta, G. R. No. 36479, 57 Phil., 979) up to the date of the filing of the application or at least up to July
1, 1919 when Act No. 2874 was enacted (Ongsiaco vs. Magsilang, 50 Phil., 380; Government of Philippine Islands vs. Adelantar,
55 Phil,. 703; Government of the Philippine Island vs. Abadejos, supra; Government of Philippine Island vs. Abad, 56 Phil., 75).
If the possessory right has been enjoyed in the manner set forth in the foregoing cases, it ripens into one of presumptive
ownership. The appellants, to be sure, attempted to prove the element of the required possession. We find, however, the
evidence on his point unsatisfactory. Their witness Timoteo Velasco, Jose Bantugay, Mariano Berba and Felix Bolayon testified
that the original owner of the land in question was one Juan Garay who, according to the first witness, had possessed the land
since 1874; that during the period of the possession of Garay the land had been dedicated to the planting and cultivation of
abaca, coconuts, rice, corn, camotes and other plants, as well as to the pasture of cattle and carabaos, and that Garay

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 29
employedencargados and day-laborers ( jornaleros) for the purpose. But their own testimony shows that the possession of
Juan Garay did not last long enough as he left the Philippines before the revolution against Spain and died while away. And
while the possession of Garay might have passed to Ceferino Aramburo, father of the appellant, Aramburo, who died in 1899,
began to occupy the land in question or any portion of it. The record is notably deficient of proof both of the exact
commencement of possession and its continuity. As a matter of fact, the appellant Jose Aramburo himself admit this lack of
continuity of possession when, upon cross-examination by counsel for the Government, he testified that when his father died
in 1899, the time when he was supposed to have inherited the land in question he was then in Spain and came to the
Philippines only in 1911 or 1912 (t. s. n., p. 162) and actually saw and took possession of the land only in 1913 (t. s. n., p. 158).
Upon the testimonial evidence presented we cannot give weight to their alleged possession through their encargados. While
Timoteo Velasco testified that Ceferino Aramburo had as encargados Petronilo Guevara, Mariano de las Llagas and Manuel
Pelayo (t. s. n., pp. 5, 6), Mariano Berba who also testified for the appellants declared that Petronilo Guevara was
Garay's encargado (t. s. n., p. 166). Another of the appellants' witnesses, Felix Bolayon, contradicted this assertion of Mariano
Berba that Petronilo Guevara served under Garay by stating that Garay'sencargado was his uncle, Estanislao Gonos (t. s. n., p.
173). Furthermore, the appellant Jose Aramburo who took possession of the land only in 1913 declared that after the death of
Petronilo Guevara, he named Manuel Pelayo as encargado (t. s. n., p. 152), thus discounting the statement of Timoteo Velasco
who, as stated, expressly included one Mariano de las Llagas among the encargados of Jose Aramburo. Again, the witness
Timoteo Velasco admitted that he lived near the land in question only up to 1902 (t. s. n., p. 4) and we are at a loss to
understand how he could affirm that he knew Petronilo Guevara and Manuel Pelayo to be encargados of Jose Aramburo when
by the testimony of the latter, Petronilo Guevara and Manuel Pelayo only became his encargadosin 1913. Manuel Pelayo who
also took the witness stand for the appellants positively declared that he only knew the land in question in 1922 and remained
therein for only two years up to 1924
(t. s. n., p. 130).

The appellants' claim of ownership, therefore, fails for lack of sufficient proof of continuity of possession on their part or on
the part of their predecessors in interest during the time required by section 45, paragraph (b), of Act No. 2874. (Heirs of
Luno vs. Marguez, 48 Phil., 855; Government of the Philippine Island vs. Heirs of Abella, 49 Phil., 374, 380; Fernandez
Hermanos vs. Director of Lands, supra.)

No competent or satisfactory evidence was presented by the appellants to establish the privity of title or possession between
Garay, the alleged successor in interest. Antonio Gaya and Leopoldo Terran testified that in the year 1900, upon the arrival of
the American in the Philippines, the house of Ceferino Aramburo, deceased father of the appellant Jose Aramburo, together
with several other houses in the town of Daraga, Albay, were set on fire by other of one General Pawa, a revolutionary leader,
thus reducing to ashes the said house of Ceferino Aramburo and the safe therein kept by the latter to shelter the papers and
documents relating to his property. With respect to the testimony of those two witnesses, however, the trial court observed:

. . . Estos testigos Antonio Gaya y Leopoldo Terran, tampoco han afirmado que habian visto y leido el documento o
titulo a nobre de Ceferino Aramburo del terreno en cuestion; si fuera verdad haberse quemado el documento del
terreno en cuestion, la existencia del supuesto titulo que se alega haberse quemado en un incendio que tuvo lugar el
ao 1900 en el Municipio de Daraga, Albay, era muy facil comprobarlo por los medios siguientes: 1. Por una copia
de la escritura que indudablemente se podria hallar en el protocolo del notario publico que intervino en la redaccion y
otorgamiento de dicho documento; 2. La naturaleza y relacion de los documentos de Ceferino Aramburo que se
alegan haber sido destrozados por el incendio; y 3. Por los testigos que intervinieron en la cesion en pago de una
deuda de Juan Garay a favor de Ceferino Aramburo. (B. E., pp. 16, 17.)

After rendition of judgment by the lower court, appellants filed a motion for a new trial on the ground of newly discovered
evidence, the evidence consisting of documents said to have been found in the archives of the National Library. The nature and
character of these documents were not even mentioned to apprise the court of their importance and value and the lower court
denied the motion. On appeal to this court, announcement is made by the appellants in their brief that a motion for a new trial
would be filed because of the discovery of documentary evidence, but up to this time no such motion has been received.

The trial court, in declining to accept the explanation of witnesses for the oppositor regarding the alleged destruction of
papers and documents pertaining to the property in controversy, contrary to the contention of counsel for the oppositors-
appellants, did not apply the statute of frauds (sec. 335, Code of Civil Procedure) but followed the ruling of this court in the
cases of Director of Lands vs. Abarca and Enage, supra, and Director of Lands vs. Abdul, supra. In the first case, this court said:

The claimant did not testify, but his attorney presented two witnesses, Estanislao de la Cruz and Higino Enage, aged
50 and 56, respectively, to show that the lot in question formerly belonged to Eleno de la Cruz, and that it was
purchased from him by Enage, the father of the claimant, but it is clear from their testimony that this land, or rather a
part of it, was in the possession of Emeterio Enage when they first knew it. No competent evidence was offered to
show that Emeterio Enage acquired this lot from Eleno de la Cruz, nor does the evidence show with any certainly
when Emeterio Enage, who died in 1910, began to occupy a portion of the land in question. And in the second case,
this court held:

There is absolutely no documentary evidence that Gigling himself ever obtained title to the property, and there is no
proof that he had had possession for a time sufficiently long to justify the court in awarding ownership to him. There
is no document crediting that the interest of Gigling was ever conveyed to Conway. It result that the action of the trial
court in awarding the lots mentioned to James Conway was erroneous. The mere fact, relied upon by the appellee, that
the Province of Lanao, through its division superintendent of education, offered to buy the claim of Conway to these
lots from his administrator is of no value as proof of title.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 30
Even the evidence respecting the alleged possessory acts exercised by the appellants' predecessors in interest and their agent
is conflicting. Whereas some of their witness testified that the controverted parcel had been dedicated by the original owner
thereof and his alleged immediate successor in interest to the cultivation of abaca, coconuts, rice, corn, camotes and other
plants, other, more particularly the appellant Jose Aramburo himself, declared that the land had never been dedicated to
anything else except cattle grazing (t. s. n., p. 152), and that the earth dike ( pilapiles) and irrigation canal did not really exist
until after 1918 when the Government Agricultural School of Camarines Sur actually took the physical and material occupation
and possession of the Land, and began to improve the same (t. s. n., pp. 10, 99, 106, 110, 111, 113-117, 142), "While grazing
live stock over land is of course to be considered with other acts of dominion to show a possession, the mere occupancy of land
by grazing live stock upon it, without substantial inclosures or other permanent improvements, is not sufficient to support a
plea of limitations, and this is especially true where the claimant used no means to restrain the live stock to any particular
land, or where the live stock of other was not excluded from the land. Such a use, it has been said is to be deemed merely
permissive, whether the lands are public or private, and may be terminated at any time." (2 C. J., pp. 67, 68.) And in the case of
Director of Lands vs. Absolo (46 Phil., 282), it was held:

The more fact that during the Spanish regime one had made on public land some inclosures for his cattle and cottages
for his shepherds and said cattle had been pasturing thereon for a number of years, and said shepherds cultivated a
small portion thereof for a like period, is not a possession under claim of title, when it appears that he did not break
up any ground, or bring the land to a state of cultivation and the cattle of other people grazed thereon, just as his cattle
did, and the cultivation of the land by his shepherds was not permanent but casual, and stopped as soon as said
shepherds ceased to live on the land on account of all the cattle having perished. (Syllabus. See also Roman Catholic
Bishop of Lipa vs. Municipality of Taal, 38 Phil., 367, 372.)

Counsel for the appellant vigorously assert in their brief that the Province of Camarines Sur and the Insular Government had
recognized the ownership of the appellants of the land in question by the assessment thereof three times by the provincial
assessor of Camarines Sur in the name of Jose Aramburo. Assessment alone, however, is of little value as proof of title. Mere tax
declaration does not vest ownership of the property in the declarant (Evangelista vs. Tabayuyong, 7 Phil., 607; Casimiro vs.
Fernandez 9 Phil., 562; Elumbaring vs. Elumbaring, 12 Phil., 384). Neither is the alleged offer (Exhibit 7, p. 37, rec.) made by
the provincial governor to buy the claims of the appellant Jose Aramburo any concession or evidence of ownership (Director of
Lands vs. Abdul, supra); nor does the issuance of a certificate of repurchase by the provincial treasurer of Camarines Sur in
favor of Jose Aramburo upon the redemption payment of the accused taxes on the land up to 1929 vest in him any title or
operate as an estoppel against the Government. The repurchase certificate was "issued with the understanding that it does not
acknowledge a better right to the properties being redeemed but said Jose Aramburo than that had by their former owners
prior to the forfeiture thereof and without prejudice to the right of the Government to contest the title thereto, if deemed
necessary, in proper proceedings." (Exhibit 6, p 36, rec.) Furthermore, the purchaser of land acquires the interest held by the
delinquent owner and the Government is not deemed to have included in the conveyance the title which it holds over the land.
(Government of the Philippine Island vs. Adriano, 41 Phil., 112.).

The decision of the trial court, being on the whole supported by the evidence on record, is hereby affirmed, with costs against
the appellants. So ordered.

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-26677 March 27, 1981

HEIRS OF MARIANO V. TAJONERA, petitioners,


vs.
COURT OF APPEALS * and AMANDA TRIGAL MANUEL T. PAZ, ROSARIO SANTOS VIRAY, MANUEL VIRAY, GLORIA
SANTOS CARLOS, GIL CARLOS, FELICITACION SANTOS, JOHN DOE, ALEJANDRA PAZ GARCIA, CEFERINO GARCIA and
VICTORIA NAVARRO, respondents.

TEEHANKEE, J.:

The Court reverses the decision of the Court of appeals which declared as null and void the public auction sale in 1941
conducted by the City Treasurer of Manila of the two subject parcels of land as well as the subsequent sales of the same of
Juanita David and Mariano Tajonera, successively (in 1943 and 1944), and ordered the latter to execute a deed of conveyance
of said properties in favor of herein private respondent. While under the ruling ofVelayo vs. Ordonez, et al., 1 (on which the
appellate court wholly relied) the "city assessor and collector" (not the city treasure of Manila) is the official empowered to
sell at public auction tax-delinquent real estate and "accordingly, (the) notice, sale, certificate and deed [executed in 1049 by
the city treasurer] are insufficient to divest [the owners] of their title to the property," it is well settled in this jurisdiction upon
authority of doctrinal jurisprudence applying sections 38 and 39 of ACT No. 496, as amended, 2 that where a person acquires
property by purchase without knowledge of any defect in the title appearing on its face, he is presumed to be a purchaser in
good faith and as such he and the title acquired by him are entitled to protection under the law.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 31
The following facts are not in dispute:

In his lifetime, Fermin Paz was the registered owner of two parcels of land in Tondo, Manila with a total area of 541.27 square
meters covered by Transfer Certificate of Title No. 23783 of the Register of Deeds of Manila. Both lots were declared for
taxation purposes under one tax declaration with an assessed value of P1,516.00.

Fermin Paz died on April 23, 1931, and his wife, Amanda Trigal, died on January 11, 1957. Surviving them are their children
and grandchildren who are the private respondents in this petition. Since the death of the couple, Manuel Paz administered the
property and paid the taxes thereon such that all communications concerning the same were supposed to be addressed to him.
It is claimed, however, that neither he nor his co-heirs ever received any notice of sale of the property or notice to surrender
the owner's duplicate certificate covering it, but this was not established to the trial court's satisfaction.

On November 24, 1941, the City Treasurer of Manila sold the said property in favor of Dr. Aurelio Reyes for delinquent taxes
from 1939 to 1941. After the lapse of one year, or on January 16, 1943, during the Japanese occupation of the country, to be
exact, the said City Treasurer executed a final deed of sale thereof for P93.43 in favor of the said Dr. Aurelio Reyes as the
purchaser. Upon petition of the latter which was ordered published in a newspaper of general circulation once a week for
three consecutive weeks 3 and thereafter there being no opposition filed, the land registration court issued an order cancelling
the owner's certificate of title in the name of Fermin Paz, the registration of the final deed of sale, and the issuance of a new
certificate of title in his (Reyes') favor.

Subsequently, on September 3, 1943, the said purchaser, Dr. Aurelio Reyes, sold the said lots for P4,250-00 to Juanita David for
which Transfer Certificate of Title No. 67979 was issued in her name. Still later, or on January 25, 1944, Juanita David sold the
same lots to Mariano Tajonera for the amount of P15,000.00 for which Transfer Certificate of Title No. 72862 was issued in his
name. Tajonera eventually sold a small portion of the lot to the City of Manila for the widening of a street. Consequently
Transfer Certificate of Title No. 72862 was cancelled and replaced by Transfer Certificate of Title No. 43845.

On December 21, 1948, Amanda Trigal and her co-heirs to the deceased owner Fermin Paz filed suit against the estate of
Aurelio Reyes and Tajonera and the city treasurer (to the exclusion of Juanita David) with the Court of First Instance of Manila
to annul the public auction sale of the lots in question in favor of Dr. Reyes and all subsequent transfers thereof, the last being
in favor of Mariano Tajonera, on the ground that the public auction sale conducted by the Chief of the Department of Finance
and City Treasurer of Manila was done without notice to Fermin Paz, the registered owner of the said property, or to any of his
heirs upon his death.

After hearing, the court a quo dismissed the complaint, supporting its conclusion, to wit.

Although there is no evidence showing that the notice of said sale was published in newspapers of general
circulation in the City of Manila or the posting thereof in conspicuous places of the said city and in the City
Hall because all the records were either lost or destroyed during the battle for the liberation of the City of
Manila, yet there appears in the final deed of sale, exhibit J executed by the Manila City Treasurer, the
following statement

AND WHEREAS, the City Treasurer of Manila did, upon warrant of a certified copy of the
record of such delinquency, advertise for sale said real estate, or so much thereof, as might
be necessary to satisfy all public taxes upon real estate, penalties, and costs of sale, for a
period of thirty days prior to the date of sale by keeping a notice posted at the main entrance
of the City Hall and other conspicuous places in the City of Manila, and by publication for said
notice of said sale once a week for three weeks in the 'HERALD', 'EL DEBATE' and
'MABUHAY' newspapers of wide circulation in the City of Manila, Philippine.

The above statement made in a public document by a public officer cannot be considered as whimsical or
capricious for the purpose of deceiving or prejudicing any person or persons such as the plaintiffs in the
instant case; rather it contains all the facts that transpired when the parcels of land in question were sold at a
public auction on November 24, 1941. Stated in other words, the regularity of an official act is presumed,
there being no evidence to the contrary.

In a sale to satisfy delinquent taxes, it is not necessary that the delinquent taxpayer or any one holding or
owning delinquent property be personally notified of the sale; it is sufficient that the notice of sale be
advertised by publishing the same in a newspaper and by posting the same in conspicuous places of Manila
and in the City Hall of said city. This requirement has been accomplished,

We notice, on the other hand, that Juanito David, who bought the same properties from Aurelio Reyes, was
not included in the action, so that if a decision be rendered in favor of the plaintiffs, granting the reliefs
prayed for in their amended complaint, the said Juanita David would be deprived of her property without due
process of law. Moreover, Juanita David and Mariano V. Tajonera, being purchasers in good faith and for
value, their title to the disputed properties could not be disturbed any longer.

Upon appeal of the decision to the Court of Appeals, the said court reversed the same by declaring null and void the sale of the
property to Dr. Reyes as well as the subsequent sales to Juanita David and Mariano Tajonera. Respondent appellate court
further ordered Tajonera as the present registered owner to execute a deed of conveyance of the said property in question in
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 32
favor of herein private respondents. All these for the reason that the City Treasurer of Manila lacked the authority to sell the
property on the authority of Velayo vs. Ordoveza, as already stated in the first paragraph hereof.

The petitioner, in seeking a review of the decision, assigns the following errors of the Court of Appeals:

1. ... in holding that because the sale by the City Treasurer to the Vendee Aurelio Reyes at public auction was
nun and void the subsequent sales by Aurelio Reyes to Juanita David and by Juanita David to Mariano
Tajonera were similarly void;

2. ... in not holding that the title of Mariano Tajonera, an innocent purchaser for value, is indefeasible even if
the sale by the City Treasurer to Aurelio Reyes was null and void.

The appeal is well taken.

The presumption is that Mariano Tajonera (now deceased), the predecessor-in-interest of herein petitioners, his heirs, and in
whose name the land in question is now titled under the Torrens system was not aware of any defect in the title when he
purchased the property. No allegation to the contrary was made in the complaint below; much less was evidence submitted to
that effect. Thus, it is conclusive that Tajonera derived his title clear of any encumbrances and recorded rights of third parties,
from Juanita David, who in turn had bought it from Aurelio Reyes, the direct purchaser of the property in the tax delinquency
sale way back in 1941 from the City Treasurer of Manila.

The fact that the power to sell at public auction real estate delinquent in, the payment of taxes devolved upon the City Assessor
and not upon the Treasurer of the City of Manila according to the ruling in Velayo vs. Ordoveza, et al., 102 Phil. 395, may no
longer be invoked to recover the property from petitioners. To grant the relief prayed for that is the annulment of the sale
and reconveyance of the property to re respondents would be to impair public confidence in the certificate of title, for
everyone dealing with property would have to inquire in every instance as to whether the title has been regularly or
irregularly issued by the court and this is contrary to the evident purpose of the law. 4 This is particularly true where the
treasurer's deed of sale was accorded full credit and validity by the land registration court and the Register of Deeds who on
the strength thereof ordered the cancellation of the title in the name of Fermin Paz and the issuance of a new Torrens Title in
the name of Reyes as the buyer at the tax sale and in the names of the subsequent buyers of the property in question. (Whether
the said ruling of Velayo may be considered to be still in force, considering that all such tax sales of delinquent real estate have
generally now been effected by the city treasurer, as in Paguio vs. Ruiz, cited hereinbelow, is an open question, which however
is not necessary to discuss or resolve now in the light of the ratio decidendi of this case upholding the rights of intervening
purchasers in good faith, aside from its not having been put in issue.

Section 39 of the Land Registration Act, as amended, is explicit that "every person receiving a certificate of title in pursuance of
a decree of registration, and every subsequent purchaser of registered land who takes certificate of title for value in good faith
shall hold the same free of all encumbrance except those noted on said certificate ...

It has been held:

Every person dealing with registered land may safely rely on the correctness of the certificate of title issue
therefor and the law will in no way oblige him to go behind the certificate to determine the condition of the
property.

Thus, in order that a purchaser may be considered a purchaser in good faith, it is enough that he examine the latest certificate
of title. 5

In line with this principle, all that Tajonera had to do was to examine his transferor's title which was then in the name of
Juanita David. He did not have to go behind this title and scrutinize each and every title that preceded it.

Not being required under the law to check on the validity of the sale to the original buyer and being without knowledge of any
defect in the title appearing on its face, Tajonera falls under the definition of a purchaser in good faith and entitled to
protection under the Land Registration Act.

It is worth noting that the private respondents came to know of the sale at public auction of the properties in question in the
year 1943; 6 yet, they were first heard to complain about it only on December 21, 1948 7 (five years after they had admittedly
learned of the tax sale and seven years after the actual sale) when the property had already reached the hands of innocent
purchasers like Juanita David Tajonera's predecessor-in-interest) and her vendee, Tajonera

It is on this score that the cited case of Velasco vs. Ordonez, et al., 8 cited by the Court of Appeals, differs from, and losses its
applicability to, the case at bar insofar as it would cancel petitioners' title. In said case, the annulment of the auction sale
conducted by the City Treasurer of Manila and the confirmation of the rights of the original registered owner therein cam at a
time when the property sold at public auction for tax delinquency had not yet passed to the hands of an innocent purchaser for
value, unlike in the case at bar.

While respondents' plight may merit some sympathy at the pain of losing their property for tax delinquency, it must be borne
in mind that it was due primarily to their neglect and default in paying their just tax obligation and sleeping on their rights and

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 33
long delay of five years before filing their action for recovery during which the right-Is of innocent purchasers for value
intervened.

As the late Justice Pedro Tuason stressed for the Court in Paguio vs. Ruiz, 9 in upholding the city treasurer's 1947 tax sale of the
delinquent property (although the treasurer's notices of sale which were sent to the registered owner who was already
deceased and at her recorded address in Intramuros where her home had been destroyed during the war were admittedly
undelivered and returned to the treasurer), "Much as we may sympathize with the appellee, this is one case where the courts
have no option but to apply the law and give the petitioner the remedy she seeks. 'The law is positive and leaves us no choice.
It is harsh and drastic, but it is a necessary mean of insuring the prompt collection of taxes so essential to the life of the
Government.

"Yet it was her gross negligence which brought about the appellee's predicament. Knowing her property to be subject to tax,
she neglected to pay her obligation. Vigorous in her protest that she was not given opportunity to protect her rights, she at
least neglected to put the Government in a position to allow her that opportunity. And this, notwithstanding the categorical
mandate of section 2482 of the Revised Administrative Code, which she was presumed to know, and which makes it 'the duty
of each person' acquiring real estate in the city to make a new declaration thereof, with the advertence that failure to do so
shall make the assessment in the name of the previous owner 'valid and binding on all persons interested, and for all purposes,
as though the same had been assessed in the name of its actual owner.

ACCORDINGLY, the decision under review is reversed and the complaint is hereby dismissed, without costs.

Makasiar, Fernandez, Guerrero and Melencio-Herrera, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-29772 September 18, 1980

CITY OF BAGUIO, plaintiff-appellee,


vs.
FERNANDO S. BUSUEGO, defendant-appellant.

TEEHANKEE, J.:

In line with the fundamental rule that tax-exempting provisions of law are to be construed in strictissimi juris, the Court hereby
affirms the decisions of the Baguio City Court and Court of First Instance adjudging the defendant-appellant, an installment
purchaser of a parcel of land and its building and improvements within a housing project belonging to the Government Service
Insurance System (GSIS) liable to pay realty taxes thereon from the time possession of such property was transferred to him,
although pending full payment of the purchase price the seller GSIS as a government corporation exempt from the payment of
taxes retains ownership and title over the property.

This tax collection suit instituted by the City of Baguio, against appellant Fernando S. Busuego, originated in the City Court and
was subsequently elevated to the Court of First Instance. In both courts, the case was submitted for consideration on the
following stipulation of facts:

1. That on August 11, 1959 defendant and the Government Service Insurance System, a government
corporation, executed, by and between themselves, a "Contract to Sell" over the property described in the
complaint; a copy of the same is attached as Annex "A" to defendant's Memorandum in support of Motion to
Dismiss and is hereby reproduced by reference and made an integral part hereof; 1

2. That the agreed purchase price for the property has not yet been fully paid and the GSIS has up to the
present time, title of the property in question (per T.C.T. #T-3978 Reg. of Deeds of Baguio City), although the
defendant is using the same;

3. That under Commonwealth Act No. 186, the GSIS as well as its property are exempt from payment of all
types and kinds of taxes;

4. That the property involved in this case has been consistently assessed by the City of Baguio in the name of
the GSIS;

5. That the unpaid z taxes, per records of the City Treasurer's Office, on the property for the period from 1962
to 1966 amounts to 1,656.00;

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 34
6. That demands were made on the defendant for payment of the aforesaid taxes but said defendant refused
and failed to pay the same;

7. That under the Contract to Sell (Annex "A"), the title remains the GSIS until full payment of purchase price
although actually the possession has already been transferred to the herein defendant (vendee);

8. That defendant has paid the amount of P287.80 for realty taxes due for the year 1963; that demands for
refund were made by defendant on plaintiff, and

9. That defendant contracted to pay his counsel the amount of P1,500.00 as attorney's fees in this case.

On the basis of the above stipulation of facts, the city court rendered judgment in favor of plaintiff sentencing defendant to pay
the sum of P1,656.00.00 with legal interest from the filing of complaint on August 18, 1966 the same is fully paid. Upon appeal,
the court of first instance, concluding that the contract entered into by the parties was a perfected contract of sale, likewise
held that defendant as owner was liable for the realty taxes on the property, and, therefore, likewise ordered defendant to pay
the same amount as adjudged by the city court representing taxes for the period from 1962 to 1966, with legal interest from
August 18, 1966, deducting therefrom the amount of P287.00 realty taxes for the year 1963 which he had already paid.

Paragraph 2 of the contract entered into by the GSIS and the defendant-appellant manifests the latter's willingness at the
signing thereof to pay and shoulder all taxes and assessments on the subject property and insurance thereon during the term
of the said contract. However, appellants purchaser after having voluntarily paid taxes due on the property in the amount of
P287.00 for the year 1963 backed out of his undertaking upon discovering that section 28(c) of Commonwealth Act
186 2 exempts the GSIS from the payment of taxes. His theory is that while title to the property has not passed to him, per
paragraph 4 of the contract, and ownership remains with the seller, there could not be any obligation to pay taxes on the
property that should be assumed by him as purchaser, since the owner-seller, in whom title remains, is exempt from taxes.

We affirm. The court of first instance may have erred in pronouncing the "Contract to Sell" as a perfected contract of sale,
contrary to its very terms that title remained with the seller who undertook to execute a final deed of absolute sale and deliver
to the purchaser title to the property only after completion of the stipulated payments, 3but this is not decisive of the issue.

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 although 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,
although 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. 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. 4 Verily, this interpretative regulation by the administrative agency officially charged with the duty of administering
and enforcing Commonwealth Act 186 which contains the tax-exempting provision at issue carries great weight in
determining the operation of said provision.

The position taken by the GSIS is but in conformity with Section 40(a) of Presidential Decree No. 464 entitled The Real
Property Tax Code promulgated on May 20, 1974 which reads as follows:

Sec. 40., Exemptions from Real Property Tax. The exemptions shall be as follows:

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

Thus under this provision, while the GSIS may be exempt from real estate tax 5 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

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 35
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.

The end result is but in consonance with the established rule in taxation that exemptions are held strictly against the taxpayer
and liberally in favor of the taxing authority. 6

ACCORDINGLY, the appealed judgment is hereby affirmed, without pronouncement as to costs.

Makasiar, Fernandez, Guerrero and Melencio-Herrera, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-51223 November 25, 1983

NATIONAL DEVELOPMENT COMPANY, defendant-appellant,


vs.
PROVINCE OF NUEVA ECIJA and HON. EUFROCINIO S. DELA MERCED, Presiding Judge, Court of First Instance of Nueva
Ecija, plaintiff-appellee/s.

Manuel M. Lazaro, Pilipinas Arenas Laborte and Antonio M. Brillantes for defendant-appellant NDC.

Antero P. Tomas for plaintiff-appellee Prov. of Nueva Ecija.

RELOVA, J.:+.wph!1

On October 16, 1972, the Province of Nueva Ecija a filed with the then Court of First Instance of Nueva Ecija complaint against
the National Development Company (NDC, for short) for the collection of real estate taxes.

On April 17, 1975, the trial court rendered judgment in favor of the plaintiff and against the defendant ordering the latter "to
pay the sum of P32,402.94, representing the unpaid real estate taxes and penalties from the fourth quarter of 1970 up to the
year 1972, and to continue paying up to the present, and to pay the costs. " (p. 35, Record on Appeal)

The NDC, not satisfied with the aforementioned judgment, appealed on the following assignment of errors: t.hqw

1. The trial court erred in holding that the defendant-appellant National Development Company is liable for
real estate taxes on the land subject of the case.

2. The trial court erred in not ruling that plaintiff-appellee, Province of Nueva Ecija should refund to
defendant-appellant National Development Company the amount paid as real estate taxes for the land subject
matter of this case from 1962 to 1970.

Defendant-appellant NDC submits that it is a government-owned and controlled corporation duly organized and existing by
virtue of Commonwealth Act No. 182, as amended, and Executive Order No. 399, otherwise known as the Uniform Charter for
Government Corporations; that under Section 2 of said Act, fifty-one per centum of the capital stock shall be subscribed by the
government of the Commonwealth of the Philippines and the remainder thereof may be offered to the provincial, municipal
and city governments; and, that the NDC being owned by the Republic of the Philippines, it follows that its real properties,
particularly those situated at Gabaldon, Nueva Ecija, are exempt from payment of real estate taxes. In support of this
contention, defendant-appellant cited the case of Board of Assessment Appeals of Laguna vs. Court of Tax Appeals and
NAWASA, 8 SCRA 225, where the Court ruled that "Section 3(a) of Commonwealth Act No. 470 makes no distinction between
property held in a sovereign, government or political capacity and those possessed in a private, proprietary or patrimonial
character. ... Section 1 of Republic Act No. 104 only refers to the payment by corporations, agencies, or instrumentalities
owned or controlled by the government, of duties, taxes, fees and other charges upon "transactions, business industry, sale, or
income," but does not include taxes on property like real estate taxes.

We find no merit in the appeal.

1. Commonwealth Act No. 182 which created the NDC contains no provision exempting it from the payment of real estate tax
on properties it may acquire. Subject properties are situated in the town of Gabaldon, Nueva Ecija, and are more particularly
described as follows: t.hqw

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 36
Lot No. Survey AREA KIND LOCATION

Psu-3607 9181.6113 riceland Sabani Estate


pasture Sabani Estate
residential Sabani Estate
commercial Sabani Estate
school site Sabani Estate
etc. Sabani Estate

Psu-36074 9271.6113 riceland Sabani Estate


pasture Sabani Estate
residential Sabani Estate
commercial Sabani Estate
school site Sabani Estate
etc. Sabani Estate

Psu-33074 9269.1580 riceland Sabani Estate


pasture Sabani Estate
residential Sabani Estate
commercial Sabani Estate
school site Sabani Estate
etc. Sabani Estate

(p. 33, Record on Appeal)

These properties are not devoted to public use but were acquired for resale to qualified persons. They were developed for the
purpose of reselling the same for consideration to qualified tenants, Thus, defendant-appellant is not exempt from payment of
real estate tax over said properties. There is justification in the contention of plaintiff-appellee that t.hqw

... the 11,500 hectares of real properties of the National Development Company in the town of Gabaldon,
Nueva Ecija must perforce, owing to its big area, constitute a very substantial territory of the said town
should be considered. It is undeniable that to any municipality the principal source of revenue with which it
would defray its operation will come from real property taxes. if the National Development Company would
be exempt from paying real property taxes over these properties, the town of Gabaldon will be deprived of
much needed revenues with which it will maintain itself and finance the compelling needs of its inhabitants.
(p. 6, Brief of Plaintiff-Appellee)

2. Defendant-appellant NDC does not come under the classification of municipal or public corporation in the sense that it may
sue and be sued in the same manner as any other private corporations, and in this sense, it is an entity different from the
government. Unlike the government, defendant corporation may be sued without its consent, and is subject to taxation. In the
case of NDC vs. Jose Yulo Tobias, 7 SCRA 692, it was held that "... plaintiff is neither the Government of the Republic nor a
branch or subdivision thereof, but a government owned and controlled corporation which cannot be said to exercise a
sovereign function (Associacion Cooperative de Credito Agricola de Miagao vs. Monteclaro, 74 Phil. 281), it is a business
corporation, and as such, its causes of action are subject to the statute of stations. ... That plaintiff herein does not exercise
sovereign powers and, hence, can not invoke the exemptions thereof but is an agency for the performance of purely corporate,
proprietary or business functions, is apparent from its Organic Act (Commonwealth Act 182, as amended by Commonwealth
Act 311) pursuant t to Section 3 of which it "shall be subject to the provisions of the Corporation Law in so far as they are not
inconsistent" with the provisions of the Commonwealth Act, "and shall have the general powers mentioned in said"
Corporation Law and, hence, "may engage in commercial, industrial, mining, agricultural, and other enterprises which may be
necessary or contributory to the economic development of the country, or important in the public interest," as well as
"acquire, hold, mortgage, and alienate personal and real property in the Philippines or elsewhere; ... make contracts of any
kind and description," and "perform any and all acts which a corporation or natural persons is authorized to perform under
the laws now existing or which may be enacted hereafter."

WHEREFORE, the appeal of defendant-appellant National Development Company is dismissed and the decision, dated April
17,1975, of the lower court is hereby AFFIRMED.

SO ORDERED.1wph1.t

THIRD DIVISION

[G.R. No. 126232. November 27, 1998]

THE PROVINCE OF BULACAN, ROBERTO M. PAGDANGANAN, FLORENCE CHAVEZ, and MANUEL DJ SIAYNGCO in their
capacity as PROVINCIAL GOVERNOR, PROVINCIAL TREASURER, PROVINCIAL LEGAL ADVISE,
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 37
respectively, petitioners, vs. THE HONORABLE COURT OF APPEALS (FORMER SPECIAL 12TH DIVISION),
PUBLIC CEMENT CORPORATION, respondents.

DECISION
ROMERO, J.:

Before us is a petition for certiorari seeking the reversal of the decision of the Court of Appeals dated September 27, 1995
declaring petitioner without authority to levy taxes on stones, sand, gravel, earth and other quarry resources extracted from
private lands, as well as the August 26, 1996 resolution of the appellate court denying its motion for reconsideration.
The facts are as follows:
On June 26, 1992, the Sangguniang Panlalawigan of Bulacan passed Provincial Ordinance No. 3, known as "An ordinance
Enacting the Revenue Code of the Bulacan Province," which was to take effect on July 1, 1992, section 21 of the ordinance
provides as follows:

Section 21. Imposition of Tax. There is hereby levied and collected a tax of 10% of the fair market value in the locality per cubic
meter of ordinary stones, sand, gravel, earth and other quarry resources, such, but not limited to marble, granite, volcanic
cinders, basalt, tuff and rock phosphate, extracted from public lands or from beds of seas, lakes, rivers, streams, creeks and
other public waters within its territorial jurisdiction. (Italics ours)

Pursuant thereto, the Provincial Treasurer of Bulacan, in a letter dated November 11, 1993, assessed private respondent
Republic Cement Corporation (hereafter Republic Cement)P2,524,692.13 for extracting limestone, shale and silica from
several parcels of private land in the province during the third quarter of 1992 until the second quarter of 1993. Believing that
the province, on the basis of above-said ordinance, had no authority to impose taxes on quarry resources extracted from
private lands, Republic Cement formally contested the same on December 23, 1993.The same was, however, denied by the
Provincial Treasurer on January 17, 1994. Republic Cement, consequently filed a petition for declaratory relief with the
Regional Trial Court of Bulacan on February 14, 1994. The province filed a motion to dismiss Republic Cement's petition,
which was granted by the trial court on May 13, 1993, which ruled that declaratory relief was improper, allegedly because a
breach of the ordinance had been committed by Republic Cement.
On July 11, 1994, Republic Cement filed a petition for certiorari with the Supreme Court seeking to reverse the trial
court's dismissal of their petition. The Court, in a resolution dated July 27, 1994, referred the same to the Court of Appeals,
where it was docketed as CA G.R. SP No. 34915. The appellate court required petitioners to file a comment, which they did on
September 7, 1994.
In the interim, the Province of Bulacan issued a warrant of levy against Republic Cement, allegedly because of its unpaid
tax liabilities. Negotiations between Republic Cement and petitioners resulted in an agreement and modus vivendi on
December 12, 1994, whereby Republic Cement agreed to pay under protest P1,262,346.00, 50% of the tax assessed by
petitioner, in exchange for the lifting of the warrant of levy. Furthermore, Republic Cement and petitioners agreed to limit the
issue for resolution by the Court of Appeals to the question as to whether or not the provincial government could impose
and/or assess taxes on quarry resources extracted by Republic Cement from private lands pursuant to Section 21 of the
Provincial Ordinance No. 3. This agreement andmodus vivendi were embodied in a joint manifestation and motion signed by
Governor Roberto Pagdanganan, on behalf of the Province of Bulacan, by Provincial Treasurer Florence Chavez, and by
Provincial Legal Officer Manuel Siayngco, as petitioner's counsel and filed with the Court of Appeals on December 13, 1994. In
a resolution dated December 29, 1994, the appellate court approved the same and limited the issue to be resolved to the
question whether or not the provincial government could impose taxes on stones, sand, gravel, earth and other quarry
resources extracted from private lands.
After due trial, the Court of Appeals, on September 27, 1995, rendered the following judgment:
WHEREFORE, judgment is hereby rendered declaring the Province of Bulacan under its Provincial Ordinance No. 3
entitled "An Ordinance Enacting the Revenue Code of Bulacan Province" to be without legal authority to impose and
assess taxes on quarry resources extracted by RCC from private lands, hence the interpretation of Respondent
Treasurer of Chapter II, Article D, Section 21 of the Ordinance, and the assessment made by the Province of Bulacan
against RCC is null and void.
Petitioner's motion for reconsideration, as well as their supplemental motion for reconsideration, was denied by the
appellate court on august 26, 1996, hence this appeal.
Petitioner's claim that the Court of Appeals erred in:
1. NOT HAVING OUTRIGHTLY DISMISSED THE SUBJECT PETITION ON THE GROUND THAT THE SAME IS NOT
THE APPROPRIATE REMEDY FROM THE TRIAL COURT'S GRANT OF THE PRIVATE RESPONDENTS'
(HEREIN PETITIONER) MOTION TO DISMISS;
2. NOT DISMISSING THE SUBJECT PETITION FOR BEING VIOLATIVE OF CIRCULAR 2-90 ISSUED BY THE
SUPREME COURT;
3. NOT DISMISSING THE PETITION FOR REVIEW ON THE GROUND THAT THE TRIAL COURT'S ORDER OF
MAY 13, 1994 HAD LONG BECOME FINAL AND EXECUTORY;
4. GOING BEYOND THE PARAMETERS OF ITS APPELLATE JURISDICTION IN RENDERING THE SEPTEMBER 27,
1995 DECISION;

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 38
5. HOLDING THAT PRIVATE RESPONDENT (HEREIN PETITIONER) ARE ESTOPPED FROM RAISING THE
PROCEDURAL ISSUE IN THE MOTION FOR RECONSIDERATION;
6. THE INTERPRETATION OF SECTION 134 OF THE LOCAL GOVERNMENT CODE AS STATED IN THE SECOND
TO THE LAST PARAGRAPH OF PAGE 5 OF ITS SEPTEMBER 27, 1995 DECISION;
7. SUSTAINING THE ALLEGATIONS OF HEREIN RESPONDENT WHICH UNJUSTLY DEPRIVED PETITIONER THE
POWER TO CREATE ITS OWN SOURCES OF REVENUE;
8. DECLARING THAT THE ASSESSMENT MADE BY THE PROVINCE OF BULACAN AGAINST RCC AS NULL AND
VOID WHICH IN EFFECT IS A COLLATERAL ATTACK ON PROVINCIAL ORDINANCE NO. 3; AND
9. FAILING TO CONSIDER THE REGALIAN DOCTRINE IN FAVOR OF THE LOCAL GOVERNMENT.
The issues raised by petitioners are devoid of merit. The number and diversity of errors raised by appellants impel us,
however, to discuss the points raised seriatim.
In their first assignment of error, petitioners contend that instead of filing a petition for certiorari with the Supreme
Court, Republic Cement should have appealed from the order of the trial court dismissing their petition. Citing Martinez vs.
CA,[1] they allege that a motion to dismiss is a final order, the remedy against which is not a petition for certiorari, but an
appeal, regardless of the questions sought to be raised on appeal, whether of fact or of law, whether involving jurisdiction or
grave abuse of discretion of the trial court.
Petitioners' argument is misleading. While it is true that the remedy against a final order is an appeal, and not a petition
for certiorari, the petition referred to is a petition for certiorari under Rule 65. As stated in Martinez, the party aggrieved does
not have the option to substitute the special civil action for certiorari under Rule 65 for the remedy of appeal. The existence
and availability of the right of appeal are antithetical to the availment of the special civil action for certiorari.
Republic Cement did not, however, file a petition for certiorari under Rule 65, but an appeal bycertiorari under Rule
45. Even law students know that certiorari under Rule 45 is a mode of appeal, an appeal from the Regional Trial Court being
taken in either of two ways (a) by writ of error (involving questions of fact and law) and (b) by certiorari (limited only to
issues of law), with an appeal by certiorari being brought to the Supreme Court, there being no provision of law for taking
appeals by certiorari to the Court of Appeals.[2] It is thus clearly apparent that Republic Cement correctly contested the trial
court's order of dismissal by filing an appeal by certiorari under Rule 45. In fact, petitioners, in their second assignment of
error, admit that a petition for review oncertiorari under Rule 45 is available to a party aggrieved by an order granting a
motion to dismiss.[3] They claim, however, that Republic Cement could not avail of the same allegedly because the latter raised
issues of fact, which is prohibited, Rule 45 providing that "(t)he petition shall raise only questions of law which must be
distinctly set forth."[4] In this respect, petitioners claim that Republic Cement's petition should have been dismissed by the
appellate court, Circular 2-90 providing:
4. Erroneous Appeals. - An appeal taken to either the Supreme Court or the Court of Appeals by the wrong or
inappropriate mode shall be dismissed.
xxxxxxxxx
d) No transfer of appeals erroneously taken. -- No transfers of appeals erroneously taken to the Supreme Court or to
the Court of Appeals to whichever of these Tribunals has appropriate appellate jurisdiction will be allowed;
continued ignorance or wilful disregard of the law on appeals will not be tolerated.
Petitioners even fault the Court for referring Republic Cement's petition to the Court of Appeals, claiming that the same
should have been dismissed pursuant to Circular 2-90. Petitioners conveniently overlook the other provisions of Circular 2-90,
specifically 4b) thereof, which provides:
b) Raising factual issues in appeal by certiorari. - Although submission of issues of fact in an appeal by certiorari
taken to the Supreme Court from the regional trial court is ordinarily proscribed, the Supreme Court nonetheless
retains the option, in the exercise of its sound discretion and considering the attendant circumstances, either itself
to take cognizance of and decide such issues or to refer them to the Court of Appeals for determination.
As can be clearly adduced from the foregoing, when an appeal by certiorari under Rule 45 erroneously raises factual
issues, the Court has the option to refer the petition to the Court of Appeals. The exercise by the Court of this option may not
now be questioned by petitioners.
As the trial court's order was properly appealed by Republic Cement, the trial court's May 13, 1994 order never became
final and executory, rendering petitioner's third assignment of error moot and academic.
Petitioners' fourth and fifth assignment of errors are likewise without merit. Petitioners assert that the Court of Appeals
could only rule on the propriety of the trial court's dismissal of Republic Cement's petition for declaratory relief, allegedly
because that was the sole relief sought by the latter in its petition for certiorari. Petitioners claim that the appellate court
overstepped its jurisdiction when it declared null and void the assessment made by the Province of Bulacan against Republic
Cement.
Petitioners gloss over the fact that, during the proceedings before the Court of Appeals, they entered into an agreement
and modus vivendi whereby they limited the issue for resolution to the question as to whether or not the provincial
government could impose and/or assess taxes on stones, sand, gravel, earth and other quarry resources extracted by Republic
Cement from private lands.This agreement and modus vivendi were approved by the appellate court on December 29, 1994. All
throughout the proceedings, petitioners never questioned the authority of the Court of Appeals to decide this issue, an issue
which it brought itself within the purview of the appellate court. Only when an adverse decision was rendered by the Court of
Appeals did petitioners question the jurisdiction of the former.
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 39
Petitioners are barred by the doctrine of estoppel from contesting the authority of the Court of Appeals to decide the
instant case, as this Court has consistently held that "(a) party cannot invoke the jurisdiction of a court to secure affirmative
relief against his opponent and after obtaining or failing to obtain such relief, repudiate or question that same
jurisdiction."[5] The Supreme Court frowns upon the undesirable practice of a party submitting his case for decision and then
accepting the judgment, only if favorable, and attacking it for lack of jurisdiction when adverse. [6]
In a desperate attempt to ward off defeat, petitioners now repudiate the above-mentioned agreement and modus vivendi,
claiming that the same was not binding in the Province of Bulacan, not having been authorized by the Sangguniang
Panlalawigan of Bulacan. While it is true that the Provincial Governor can enter into contract and obligate the province only
upon authority of thesangguniang panlalawigan,[7] the same is inapplicable to the case at bar. The agreement and modus
vivendi may have been signed by petitioner Roberto Pagdanganan, as Governor of the Province of Bulacan, without
authorization from the sangguniang panlalawigan, but it was also signed by Manuel Siayngco, the Provincial Legal Officer, in
his capacity as such, and as counsel of petitioners.
It is a well-settled rule that all proceedings in court to enforce a remedy, to bring a claim, demand, cause of action or
subject matter of a suit to hearing, trial, determination, judgment and execution are within the exclusive control of the
attorney.[8] With respect to such matters of ordinary judicial procedure, the attorney needs no special authority to bind his
client.[9] Such questions as what action or pleading to file, where and when to file it, what are its formal requirements, what
should be the theory of the case, what defenses to raise, how may the claim or defense be proved, when to rest the case, as well
as those affecting the competency of a witness, the sufficiency, relevancy, materiality or immateriality of certain evidence and
the burden of proof are within the authority of the attorney to decide. [10] Whatever decision an attorney makes on any of these
procedural questions, even if it adversely affects a client's case, will generally bind a client. The agreement and modus
vivendi signed by petitioner's counsel is binding upon petitioners, even if theSanggunian had not authorized the same,
limitation of issues being a procedural question falling within the exclusive authority of the attorney to decide.
In any case, the remaining issues raised by petitioner are likewise devoid of merit, a province having no authority to
impose taxes on stones, sand, gravel, earth and other quarry resources extracted from private lands. The pertinent provisions
of the Local Government Code are as follows:
Sec. 134. Scope of Taxing Powers. - Except as otherwise provided in this Code, the province may levy only the taxes,
fees, and charges as provided in this Article.
Sec. 138. Tax on Sand, Gravel and Other Quarry Resources. - The province may levy and collect not more than ten
percent (10%) of fair market value in the locality per cubic meter of ordinary stones, sand, gravel, earth, and other
quarry resources, as defined under the National Internal Revenue Code, as amended, extracted from public lands or
from the beds of seas, lakes, rivers, streams, creeks, and other public waters within its territorial jurisdiction.
x x x x x x x x x (Italics supplied)
The appellate court, on the basis of Section 134, ruled that a province was empowered to impose taxes only on sand,
gravel, and other quarry resources extracted from public lands, its authority to tax being limited by said provision only to
those taxes, fees and charges provided in Article One, Chapter 2, Title One of Book II of the Local Government Code. [11] On the
other hand, petitioners claim that Sections 129[12] and 186[13] of the Local Government Code authorizes the province to impose
taxes other than those specifically enumerated under the Local Government Code.
The Court of Appeals erred in ruling that a province can impose only the taxes specifically mentioned under the Local
Government Code. As correctly pointed out by petitioners, Section 186 allows a province to levy taxes other than those
specifically enumerated under the Code, subject to the conditions specified therein.
This finding, nevertheless, affords cold comfort to petitioners as they are still prohibited from imposing taxes on stones,
sand, gravel, earth and other quarry resources extracted from private lands. The tax imposed by the Province of Bulacan is an
excise tax, being a tax upon the performance, carrying on, or exercise of an activity.[14] The Local Government Code provides:
Section 133. - Common Limitations on the Taxing Powers of Local Government Units. - Unless otherwise provided
herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the
levy of the following:
xxxxxxxxx
(h) Excise taxes on articles enumerated under the National Internal Revenue Code, as amended, and taxes, fees or
charges on petroleum products;
xxxxxxxxx
A province may not, therefore, levy excise taxes on articles already taxed by the National Internal Revenue
Code. Unfortunately for petitioners, the National Internal Revenue Code provides:

Section 151. - Mineral Products. -

(A) Rates of Tax. - There shall be levied, assessed and collected on minerals, mineral products and quarry resources,
excise tax as follows:
xxxxxxxxx
(2) On all nonmetallic minerals and quarry resources, a tax of two percent (2%) based on the actual
market value of the gross output thereof at the time of removal, in case of those locally extracted or

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 40
produced; or the values used by the Bureau of Customs in determining tariff and customs duties, net of
excise tax and value-added tax, in the case of importation.
xxxxxxxxx

(B) [Definition of Terms]. - For purposes of this Section, the term-

xxxxxxxxx
(4) Quarry resources shall mean any common stone or other common mineral substances as the Director
of the Bureau of Mines and Geo-Sciences may declare to be quarry resources such as, but not restricted to,
marl, marble, granite, volcanic cinders, basalt, tuff and rock phosphate; Provided, That they contain no
metal or metals or other valuable minerals in economically workable quantities.
It is clearly apparent from the above provision that the National Internal Revenue Code levies a tax on all quarry
resources, regardless of origin, whether extracted from public or private land. Thus, a province may not ordinarily impose
taxes on stones, sand, gravel, earth and other quarry resources, as the same are already taxed under the National Internal
Revenue Code. The province can, however, impose a tax on stones, sand, gravel, earth and other quarry resources extracted
from public land because it is expressly empowered to do so under the Local Government Code. As to stones, sand, gravel,
earth and other quarry resources extracted from private land, however, it may not do so, because of the limitation provided by
Section 133 of the Code in relation to Section 151 of the National Internal Revenue Code.
Given the above disquisition, petitioners cannot claim that the appellate court unjustly deprived them of the power to
create their sources of revenue, their assessment of taxes against Republic Cement being ultra vires, traversing as it does the
limitations set by the Local Government Code.
Petitioners likewise aver that the appellate court's declaration of nullity of its assessment against Republic Cement is a
collateral attack on Provincial Ordinance No. 3, which is prohibited by public policy. [15] Contrary to petitioners' claim, the
legality of the ordinance was never questioned by the Court of Appeals. Rather, what the appellate court questioned was
petitioners' assessment of taxes on Republic Cement on the basis of Provincial Ordinance No. 3, not the ordinance itself.
Furthermore, Section 21 of Provincial Ordinance No. 3 is practically only a reproduction of Section 138 of the Local
Government Code. A cursory reading of both would show that both refer to ordinary sand, stone, gravel, earth and other
quarry resources extracted from public lands. Even if we disregard the limitation set by Section 133 of the Local Government
Code, petitioners may not impose taxes on stones, sand, gravel, earth and other quarry resources extracted from private lands
on the basis of Section 21 of Provincial Ordinance No. 3 as the latter clearly applies only to quarry resources extracted from
public lands. Petitioners may not invoke the Regalian doctrine to extend the coverage of their ordinance to quarry resources
extracted from private lands, for taxes, being burdens, are not to be presumed beyond what the applicable statute expressly
and clearly declares, tax statutes being construed strictissimi juris against the government.[16]
WHEREFORE, premises considered, the instant petition is DISMISSED for lack of merit and the decision of the Court of
Appeals is hereby AFFIRMED in toto. Costs against petitioner.
SO ORDERED.
SECOND DIVISION

WINIFREDA URSAL, G.R. No. 142411

Petitioner,

Present:

PUNO, Chairman,

- versus - AUSTRIA-MARTINEZ,

CALLEJO, SR.,

TINGA, and

CHICO-NAZARIO, JJ.

COURT OF APPEALS, THE RURAL BANK OF LARENA


(SIQUIJOR), INC. and SPOUSES JESUS MONESET and
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 41
CRISTITA MONESET,

Promulgated:

Respondents. October 14, 2005

x-----------------------------------------------------------x

DECISION

AUSTRIA-MARTINEZ, J.:

Before us is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the reversal of the Decision [1] of the
Court of Appeals (CA) dated June 28, 1999 and the Resolution dated January 31, 2000 denying petitioners motion for
reconsideration.[2]

These are the facts:

The spouses Jesus and Cristita Moneset (Monesets) are the registered owners of a 333-square meter land together with a
house thereon situated at Sitio Laguna, Basak, Cebu City covered by Transfer Certificate of Title No. 78374. [3] On January 9,
1985, they executed a Contract to Sell Lot & House in favor of petitioner Winifreda Ursal (Ursal), with the following terms and
conditions:

That the VENDOR (Cristita R. Moneset) offers to SELL and the VENDEE accepts to BUY at the agreed lump sum
price of P130,000.00 payable on the installment basis as follows:

1. That on the date of the signing of this agreement, the VENDEE will tender an earnest money or
downpayment of P50,000.00 to the VENDOR, and by these presents, the latter hereby acknowledges receipt of
said amount from the former;

2. That the balance of the selling price of P80,000.00 shall be paid by the VENDEE to the VENDOR in equal
monthly installments of P3,000.00 starting the month of February, 1985, until said balance of the selling price
shall be fully paid;

3. That if the VENDEE shall fail or in default to pay six (6) monthly installments to the VENDOR the herein
agreement is deemed cancelled, terminated and/or rescinded and in such event, the VENDEE (sic) binds to refund

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 42
to the VENDOR (sic) the deposit ofP50,000.00 and with the latters (sic) obligation to pay the former (sic) as a
corresponding refund for cost of improvements made in the premises by VENDEE;

4. That on the date of receipt of the downpayment of P50,000.00 by the VENDOR, it is mutually agreed for
VENDEE to occupy and take physical possession of the premises as well as for the latter (VENDEE) to keep and
hold in possession the corresponding transfer certificate of title No. ______ of the land in question which is the
subject of this agreement;

5. That on the date of final payment by the VENDEE to the VENDOR, the latter shall execute at her expense the
corresponding document of DEED OF ABSOLUTE SALE for the former as well as the payment of realty clearances,
BIR Capital Gain Tax, sales tax or transfer fees and attorneys fees; that, for the issuance of title in VENDEEs name
shall be the exclusive account of said VENDEE.[4]

Petitioner paid the down payment and took possession of the property. She immediately built a concrete perimeter fence and
an artesian well, and planted fruit bearing trees and flowering plants thereon which all amounted to P50,000.00. After paying
six monthly installments, petitioner stopped paying due to the Monesets failure to deliver to her the transfer certificate of title
of the property as per their agreement; and because of the failure of the Monesets to turn over said title, petitioner failed to
have the contract of sale annotated thereon.[5]

Unknown to petitioner, the Monesets executed on November 5, 1985 an absolute deed of sale in favor of Dr. Rafael Canora, Jr.
over the said property for P14,000.00.[6] On September 15, 1986, the Monesets executed another sale, this time with pacto de
retrowith Restituto Bundalo.[7] On the same day, Bundalo, as attorney-in-fact of the Monesets, executed a real estate mortgage
over said property with Rural Bank of Larena (hereafter Bank) located in Siquijor for the amount of P100,000.00.[8] The special
power of attorney made by the Monesets in favor of Bundalo as well as the real estate mortgage was then annotated on the
title on September 16, 1986.[9] For the failure of the Monesets to pay the loan, the Bank served a notice of extrajudicial
foreclosure dated January 27, 1988 on Bundalo.[10]

On September 30, 1989, Ursal filed an action for declaration of non-effectivity of mortgage and damages against the Monesets,
Bundalo and the Bank. She claimed that the defendants committed fraud and/or bad faith in mortgaging the property she
earlier bought from the Monesets with a bank located in another island, Siquijor; and the Bank acted in bad faith since it
granted the real estate mortgage in spite of its knowledge that the property was in the possession of petitioner. [11]

The Monesets answered that it was Ursal who stopped paying the agreed monthly installments in breach of their
agreement.[12] The Bank, on the other hand, averred that the title of the property was in the name of Cristita Radaza Moneset
married to Jesus Moneset and did not show any legal infirmity.[13]

Bundalo, meanwhile, was not served summons because he could no longer be found at his given address.[14]

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 43
Trial on the merits proceeded. Thereafter, the Regional Trial Court of Cebu City, Branch 24, rendered its decision finding that
Ursal is more credible than the Monesets and that the Monesets are liable for damages for fraud and breach of the contract to
sell:

The evidence of [Ursal] show that she was the first to acquire a substantial interest over the lot and
house by virtue of the execution of the Contract to Sell (Exh. A). After the execution of Exh. A plaintiff took
possession of the questioned lot and houseafter she made a downpayment of P50,000.00. [S]he paid the
installments for six (6) months without fail. [However] plaintiff (stopped) paying the installment because
defendant spouses failed to give her the Transfer Certificate of Title over the lot and house despite repeated
demands. It is evident then that the first to violate the conditions of Exh. A were the defendants Spouses
Moneset. This is the reason why plaintiff was not able to annotate Exh. A on the TCT. The evidence of plaintiff
show that there was no intention on her part to discontinue paying the installments. In a reciprocal
obligation, one cannot be compelled to do if the other party fails to do his part (Art. 1169, New Civil Code).

The acts of defendant Spouses Moneset in selling again the lot and house in question to Dr. Canora by
executing a Deed of Absolute Sale; in selling the same on pacto de retro to defendant Bundalo; and in
mortgaging the same to defendant Rural Bank of Larena are plainly and clearly fraudulent because they were
done while Exh. A was still existing and the transaction was done without notice to the plaintiff. As provided
in Art. 1170 of the New Civil Code, those who are guilty of fraud in the performance of their obligation --- and
those who in any manner contravene the tenor thereof, are liable for damages.

Another ground for liability under this article is when there is fraud/deceit. In the instant case, there was
fraud/deceit on the part of the defendant spouses Moneset when they executed the Deed of Sale to Dr.
Canora; the Deed of Sale with Pacto de Retro to Bundalo and the Special Power of Attorney for Bundalo to
execute for and in their behalf the Real Estate Mortgage with the Rural Bank of Larena knowing fully well that
the Contract to Sell house and lot, Exh. A was still existing notwithstanding their violation to the provisions
thereto. It is therefore crystal clear that defendant spouses Moneset are liable for damages. [15]

As to the real estate mortgage, the trial court held that the same was valid and the Bank was not under any obligation
to look beyond the title, although the present controversy could have been avoided had the Bank been more astute in
ascertaining the nature of petitioners possession of the property, thus:

The Real Estate Mortgage and the Foreclosure Proceedings cannot be considered null and void in the sense
that per se the formalities required by law were complied with except for the fact that behind their execution
there was fraud, deceit and bad faith on the part of defendant spouses Moneset and Bundalo.

The defendant Rural Bank of Larena for its part could have avoided this situation if the bank appraiser who
made the ocular inspection of the subject house and lot went deeper and investigated further when he
learned that the owner is not the actual occupant. He was however told by Moneset that the actual occupant
was only a lessee. Banking on this information that the actual occupant was only a lessee with no other right
over and above such, the bank approved a loan of P100,000.00 in favor of Moneset through Bundalo their
attorney-in-fact.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 44
Likewise the Rural Bank of Larena had the right to rely on what appeared on the certificate of title of the
Monesets and it was under no obligation to look beyond the certificate and investigate the title of the
mortgagor appearing on the face of the certificate.

The approval of the P100,000.00 loan from the Rural Bank of Larena was made possible through the
deception and bad faith of defendant spouses Moneset and Bundalo but the pertinent documents were per se
in order. The court is of the honest belief that the case against the defendant bank be dismissed for lack of
merit. The court however believes that for reasons of equity the bank should give the plaintiff Ursal the
preferential right to redeem the subject house and lot.[16]

The trial court then disposed of the case as follows:

Wherefore premises considered, judgment is hereby rendered in favor of the defendant Rural Bank of Larena
dismissing the complaint against it for lack of merit and against the defendant spouses Moneset ordering
them to:

1. reimburse to plaintiff Ursal the following:

a.) downpayment of P50,000.00

b.) monthly installments for six months at P3,000.00 per month ---P18,000.00

c.) expenses improvements P61, 676.52

2. pay to plaintiff the following:

a.) moral damages ----------------- P30,000.00

b.) exemplary damages ----------- P20,000.00

c.) litigation expenses------------- P 5,000.00

d.) attorneys fees ----------------- P10,000.00

e.) costs

3. order the defendant Rural Bank of Larena to give the plaintiff the preferential right to redeem
the subject house and lot.

SO ORDERED.[17]

Both Ursal and the Monesets appealed the decision to the CA. Ursal alleged that the Bank was guilty of bad faith for not
investigating the
presence of Ursal on the property in question, while the Monesets claimed that the trial court erred in giving preferential right
to Ursal to redeem the property and in ordering them to pay damages. [18]

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 45
The CA affirmed in toto the decision of the trial court. It held that the Bank did not have prior knowledge of the contract to sell
the house and lot and the Monesets acted fraudulently thus they cannot be given preferential right to redeem the property and
were therefore correctly ordered to pay damages.[19]

The Monesets filed a motion for reconsideration which was denied outright for having been filed out of time.[20] Ursals motion
for reconsideration was denied by the CA on January 31, 2000 for lack of merit. [21]

Hence, the present petition raising the sole error:

That with grave abuse of discretion amounting to excess of jurisdiction, the Honorable Court of
Appeals erred in rendering a decision and Resolution NOT in accordance with law and the applicable
rulings of the Supreme Court.[22]

Petitioner claims that: the Bank was duly informed through its appraiser that the house and lot to be mortgaged by
Monesets were in the possession of a lessee; the Bank should have taken this as a cue to investigate further the Monesets right
over the same; the case of Embrado vs. Court of Appeals (233 SCRA 335) held that where a purchaser neglects to make the
necessary inquiry and closes his eyes to facts which should put a reasonable man on his guard to the possibility of the
existence of a defect in his vendors title, he cannot claim that he is a purchaser in good faith; Sec. 50 of Act 496 provides that
where a party has knowledge of a prior existing interest which is unregistered at the time he acquired the land, his knowledge
of that prior unregistered interest has the effect of registration as to him and the Torrens system cannot be used as a shield
against fraud; following Art. 2176 of the Civil Code, respondent Bank is obliged to pay for the damage done. [23]

Petitioner then prayed that the Deed of Real Estate Mortgage be declared as non-effective and non-enforceable as far as
petitioner is concerned; that she be declared as the absolute owner of the house and lot in question; that the Monesets be
ordered to execute a deed of absolute sale covering the subject property; and that the Bank be ordered to direct the collection
or payment of the loan of P100,000.00 plus interest from the Monesets for they were the ones who received and enjoyed the
said loan.[24]

On the other hand, respondent Bank in its Comment argues that: its interest in the property was only that of mortgagee and
not a purchaser thus its interest is limited only to ascertaining that the mortgagor is the registered owner; the case cited is
inapplicable at bar since it involves the purchase of real property; Ursal was purportedly only a lessee of the property, thus as
mortgagor who is not entitled to possess the mortgaged property, they no longer considered the lease in the processing and
approval of the loan; Sec. 50 of Act No. 496 is also inapplicable since the alleged prior existing interest was only that of a
lessee; in any case, it was the Monesets who lied to the Bank anent the real nature of the encumbrance, thus, it is the Monesets
who are guilty of fraud and not the Bank.[25]

In her Rejoinder,[26] petitioner argued that: under the law on mortgage, the mortgagor must be the owner of the property he
offers as security of his loan; the mortgagee like herein Bank which neglects to verify the ownership of the property offered as
security of the loan runs the risk of his folly; the Banks negligence is not excusable because an adverse claim and notice of lis

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 46
pendens were already annotated on the certificate of title when the mortgage was constituted or when the deed of real estate
mortgage was annotated; it would be unfair to put the blame on petitioner who was innocent of the transaction; the trial court
found that the Bank even provided its appraiser the amount of P15,000.00 to redeem the pacto de retro sale allegedly executed
in favor of Dr. Canora; this should have aroused the Banks suspicion and prompted it to investigate further the property; the
trial court recognized the bad faith committed by the Monesets and ordered them to pay the sum of P126,676.52 in damages
but exonerated the Bank who is equally guilty of bad faith; the Monesets cannot pay the damages as they have no money and
property thus if the decision of the trial court as affirmed by the CA is to be enforced, they will only be holding an empty bag
while the Bank which is equally guilty will go free; what would be fair is to let the

two respondents bear jointly and severally the consequences of their transaction and let the innocent petitioner ultimately
own the house and lot in question.[27]

The petitioner, in her Memorandum dated July 31, 2005, raised the issues of: (1) Whether or not the document
captioned: Contract to Sell Lot and House (Exh. A) is valid and binding so much so that the herein Petitioner who is the Vendee
is the lawful and true owner of the lot and house in question; (2) Whether or not the herein respondents spouses Jesus
Moneset and Cristita Moneset who were the vendors and/or mortgagors together with respondent Restituto Bundalo were
conniving and acting in bad faith; and (3) Whether or not respondent Rural Bank of Larena measured up to the strict
requirement of making a thorough investigation of the property offered as collateral before granting a loan and be considered
as innocent mortgagee and entitled to the protection of the law. [28] Petitioner reiterated her arguments in support of the first
and third issues raised in the Memorandum while she merely adopted the CA findings in support of the second issue, i.e., when
the Monesets encumbered the Transfer Certificate of Title (TCT) to Dr. Canora and thereafter to Bundalo, they committed bad
faith or fraud since the contract to sell with Ursal was still valid and subsisting. [29]

Respondent Bank, in its Memorandum dated July 20, 2005, reiterated the arguments it made in its Comment that: the
case cited by petitioner requiring extra ordinary diligence is inapplicable in this case since what is involved here is mortgage
and not sale; as mortgagee, its interest is limited only to determining whether the mortgagor is the registered owner of the
property whose certificate of title showed that there were no existing encumbrances thereon; and even with unregistered
encumbrances, the Bank has priority by the registration of the loan documents.[30]

No memorandum is filed by respondent Monesets.

The crux of petitioners contention is that the Bank failed to look beyond the transfer certificate of title of the property for
which it must be held liable.

We agree. Banks cannot merely rely on certificates of title in ascertaining the status of mortgaged properties; as their business
is impressed with public interest, they are expected to exercise more care and prudence in their dealings than private
individuals.[31] Indeed, the rule that persons dealing with registered lands can rely solely on the certificate of title does not
apply to banks.[32]

As enunciated in Cruz vs. Bancom:[33]

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 47
Respondent is not an ordinary mortgagee; it is a mortgagee-bank. As such, unlike private individuals, it is
expected to exercise greater care and prudence in its dealings, including those involving registered lands. A
banking institution is expected to exercise due diligence before entering into a mortgage contract. The
ascertainment of the status or condition of a property offered to it as security for a loan must be a standard and
indispensable part of its operations.[34]

Our agreement with petitioner on this point of law, notwithstanding, we are constrained to refrain from granting the
prayers of her petition, to wit: that the Deed of Real Estate Mortgage be declared as non-effective and non-enforceable as far as
petitioner is concerned; that she be declared as the absolute owner of the house and lot in question; that the Monesets be
ordered to execute a deed of absolute sale covering the subject property; and that the Bank be ordered to direct the collection
or payment of the loan of P100,000.00 plus interest from the Monesets for they were the ones who received and enjoyed the
said loan.[35]

The reason is that, the contract between petitioner and the Monesets being one of Contract to Sell Lot and House, petitioner,
under the circumstances, never acquired ownership over the property and her rights were limited to demand for specific
performance from the Monesets, which at this juncture however is no longer feasible as the property had already been sold to
other persons.

A contract to sell is a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the
subject property despite delivery thereof to the prospective buyer, binds himself to sell the said property exclusively to the
prospective buyer upon fulfillment of the condition agreed upon, that is, full payment of the purchase price.[36]

In such contract, the prospective seller expressly reserves the transfer of title to the prospective buyer, until the
happening of an event, which in this case is the full payment of the purchase price. What the seller agrees or obligates himself
to do is to fulfill his promise to sell the subject property when the entire amount of the purchase price is delivered to him.
Stated differently, the full payment of the purchase price partakes of a suspensive condition, the non-fulfillment of which
prevents the obligation to sell from arising and thus, ownership is retained by the prospective seller without further remedies
by the prospective buyer.[37]

It is different from contracts of sale, since ownership in contracts to sell is reserved by the vendor and is not to pass to
the vendee until full payment of the purchase price, while in contracts of sale, title to the property passess to the vendee upon
the delivery of the thing sold. In contracts of sale the vendor loses ownership over the property and cannot recover it unless
and until the contract is resolved or rescinded, while in contracts to sell, title is retained by the vendor until full payment of the
price.[38] In contracts to sell, full payment is a positive suspensive condition while in contracts of sale, non-payment is a
negative resolutory condition.[39]

A contract to sell may further be distinguished from a conditional contract of sale, in that, the fulfillment of the
suspensive condition, which is the full payment of the purchase price, will not automatically transfer ownership to the buyer
although the property may have been previously delivered to him. The prospective vendor still has to convey title to the

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 48
prospective buyer by entering into a contract of absolute sale. While in a conditional contract of sale, the fulfillment of the
suspensive condition renders the sale absolute and affects the sellers title thereto such that if there was previous delivery of
the property, the sellers ownership or title to the property is automatically transferred to the buyer. [40]

Indeed, in contracts to sell the obligation of the seller to sell becomes demandable only upon the happening of the
suspensive condition, that is, the full payment of the purchase price by the buyer. It is only upon the existence of thecontract of
sale that the seller becomes obligated to transfer the ownership of the thing sold to the buyer. Prior to the existence of
the contract of sale, the seller is not obligated to transfer the ownership to the buyer, even if there is a contract to sellbetween
them. [41]

In this case, the parties not only titled their contract as Contract to Sell Lot and House but specified in their agreement that the
vendor shall only execute a deed of absolute sale on the date of the final payment by vendee. [42] Such provision signifies that
the parties truly intended their contract to be that of contract to sell.[43]

Since the contract in this case is a contract to sell, the ownership of the property remained with the Monesets even
after petitioner has paid the down payment and took possession of the property. In Flancia vs. Court of Appeals,[44] where the
vendee in the contract to sell also took possession of the property, this Court held that the subsequent mortgage constituted by
the owner over said property in favor of another person was valid since the vendee retained absolute ownership over the
property.[45]At most, the vendee in the contract to sell was entitled only to damages.[46]

Petitioner attributes her decision to stop paying installments to the failure of the Monesets to comply with their
agreement to deliver the transfer certificate of title after the down payment of P50,000.00. On this point, the trial court was
correct in holding that for such failure, the Monesets are liable to pay damages pursuant to Art. 1169 of the Civil Code on
reciprocal obligations.[47]

The vendors breach of the contract, notwithstanding, ownership still remained with the Monesets and petitioner
cannot justify her failure to complete the payment.

In Pangilinan vs. Court of Appeals,[48] the vendees contended that their failure to pay the balance of the total contract
price was because the vendor reneged on its obligation to improve the subdivision and its facilities. In said case, the Court held
that the vendees were barred by laches from asking for specific performance eight years from the date of last installment. The
Court held that:

(the vendees) instead of being vigilant and diligent in asserting their rights over the subject property
had failed to assert their rights when the law requires them to act. Laches or stale demands is based upon
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 49
grounds of public policy which requires, for the peace of society, the discouragement of stale claims and
unlike the statute of limitations, is not a mere question of time but is principally a question of the inequity or
unfairness of permitting a right or claim to be enforced or asserted.

The legal adage finds application in the case at bar. Tempus enim modus tollendi obligations et
actiones, quia tempus currit contra desides et sui juris contemptoresFor time is a means of dissipating
obligations and actions, because time runs against the slothful and careless of their own rights. [49]

In this case, petitioner instituted an action for Declaration of Non-Effectivity of Mortgage with Damages four
years from the date of her last installment and only as a reaction to the foreclosure proceedings instituted by respondent Bank.
After the Monesets failed to deliver the TCT, petitioner merely stopped paying installments and did not institute an action for
specific performance, neither did she consign payment of the remaining balance as proof of her willingness and readiness to
comply with her part of the obligation. As we held in San Lorenzo Development Corp. vs. Court of Appeals,[50] the perfected
contract to sell imposed on the vendee the obligation to pay the balance of the purchase price. There being an obligation to pay
the price, the vendee should have made the proper tender of payment and consignation of the price in court as required by
law. Consignation of the amounts due in court is essential in order to extinguish the vendees obligation to pay the balance of
the purchase price.[51] Since there is no indication in the records that petitioner even attempted to make the proper
consignation of the amounts due, the obligation on the part of the Monesets to transfer ownership never acquired obligatory
force.

In other words, petitioner did not acquire ownership over the subject property as she did not pay in full the equal
price of the contract to sell. Further, the Monesets breach did not entitle petitioner to any preferential treatment over the
property especially when such property has been sold to other persons.

As explained in Coronel vs. Court of Appeals:[52]

In a contract to sell, there being no previous sale of the property, a third person buying such
property despite the fulfillment of the suspensive condition such as the full payment of the purchase
price, for instance, cannot be deemed a buyer in bad faith and the prospective buyer cannot seek the
relief of reconveyance of the property. There is no double sale in such case. Title to the property will
transfer to the buyer after registration because there is no defect in the owner-sellers title per se, but the
latter, of course, may be sued for damages by the intending buyer.[53] (Emphasis supplied)

In this case, the lower courts found that the property was sold to Dr. Canora and then to Bundalo who in turn acted as
attorney-in-fact for the Monesets in mortgaging the property to respondent Bank. The trial court and the CA erred in giving
petitioner the preferential right to redeem the property as such would prejudice the rights of the subsequent buyers who were
not parties in the proceedings below. While the matter of giving petitioner preferential right to redeem the property was not
put in issue before us, in the exercise of our discretionary power to correct manifest and palpable error, we deem it proper to
delete said portion of the decision for being erroneous.[54]

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 50
Petitioners rights were limited to asking for specific performance and damages from the Monesets. Specific
performance, however, is no longer feasible at this point as explained above. This being the case, it follows that petitioner
never had any cause of action against respondent Bank. Having no cause of action against the bank and not being an owner of
the subject property, petitioner is not entitled to redeem the subject property.

Petitioner had lost her right to demand specific performance when the Monesets executed a Deed of Absolute Sale in
favor of Dr. Canora. Contrary to what she claims, petitioner had no vested right over the property.

Indeed, it is the Monesets who first breached their obligation towards petitioner and are guilty of fraud against her. It
cannot be denied however that petitioner is also not without fault. She sat on her rights and never consigned the full amount of
the property. She therefore cannot ask to be declared the owner of the property, this late, especially since the same has already
passed hands several times, neither can she question the mortgage constituted on the property years after title has already
passed to another person by virtue of a deed of absolute sale.

At this point, let it be stated that the courts below and even this Court have no jurisdiction to resolve the issue
whether there was bad faith among the Monesets, Canora and Bundalo. Canora was never impleaded. Bundalo has not been
served with summons.

WHEREFORE, the petition is DENIED. The decision of the Regional Trial Court of Cebu City, Branch 24, promulgated
on February 5, 1993 and the decision of the Court of Appeals dated June 28, 1999 are hereby AFFIRMED. However, in the
higher interest of substantial justice, the Court MODIFIES the same to the effect thatthe portion ordering the Rural Bank of
Larena (Siquijor), Inc. to give petitioner the preferential right to redeem the house and lot covered by Transfer Certificate of
Title No. 78374 is DELETED for lack of legal basis.

No costs.

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

EN BANC

G.R. No. L-11343 January 29, 1958

CARLOS LEDESMA, JULIETA LEDESMA, VICENTE GUSTILO, JR. and AMPARO LEDESMA DE GUSTILO,petitioners,
vs.
COURT OF TAX APPEALS and SILVERIO BLAQUERA, Collector of Internal Revenue, respondents.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 51
Angel S. Gamboa for petitioners.
Office of the Solicitor General Ambrosio Padilla, Assistant Solicitor General Jose P. Alejandro and Special Attorney Librada del
Rosario-Natividad for respondents.

MONTEMAYOR, J.:

This is a petition for mandamus filed by Carlos Ledesma et al., petitioners, to compel the Court of Tax Appeals to proceed with
the determination of the petition for review (Court of Tax Appeals Case No. 226) filed with it by the same petitioners herein
and annul the resolution of said Tax Court of July 31, 1956, dismissing said petition for review.

Petitioners are owners of Haciendas Fortuna, composed of 36 parcels of land situated in San Carlos Negros Occidental,
originally belonging to the spouses Julio Ledesma and Florentina Ledesma, with they purchased on July 9, 1948. On March 22,
1950, the collector of Internal Revenue, later on referred to as the Collector, assessed on Hacienda Fortuna an income tax
alleged to be due for the year 1949, in the amount of P23,704.22, including surcharges and penalties, claiming the Hacienda to
be an unregistered general copartnership, with the petitioner as the unregistered copartners. Petitioners equally claim that
they were mere co-owners pro indiviso of the property, and so were not liable for the amount included in the assessment. By a
ruling dated March 12, 1955, the Collector overruled petitioner's contention, as well as a subsequent motion for
reconsideration, in a letter dated December 20, 1955. On January petitioner filed the petition aforementioned in the Court of
Tax Appeals, docketed as Case No. 226.

However, on March 22, 1955, before the filing of the petition for review of this ruling with the Tax Court, the collector filed a
civil action against the petitioners in the Court of First Instance of Negros Occidental, for the collection of the same assessment
for the year 1949, which action was docketed as Civil Case No. 3373. On January 14, 1956, the Collector filed a motion with the
Tax Court to dismiss the petition for review alleging the pendency of Civil Case No. 3373 before the Negros Occidental court,
and claiming the same to constitute a bar to the petition for review on the ground that the two actions involved the same
parties, the same subject matter, and the same cause of action.

On July 31, 1956, the Tax Court issued the resolution dismissing the petition for review. We quote a certain portion of the
resolution:

The, said Court of First Instance having acquited jurisdiction over the assessment in controversy prior to the
institution of this case, we therefore believe that such fact has deprived this Court of the right to entertain the present
petition for review covering the same cause of action, for a judgment in Civil Case No. 3373 would constitute res
adjudicata between parties. (Annex "E").

Later, the Tax Court denied a motion for reconsideration of its resolution. Petitioners also filed a motion in the Negros
Occidental court to remand Civil Case No. 3373 to the Tax Court, pursuant to Section 22 of Republic Act No. 1125, which reads
as follows:

SEC. 22. Pending case to be remanded to Court. All case involving disputed assessment of Internal Revenue taxes or
customs duties pending determination before the Court of First Instance shall be remanded by the respective clerk
court to Court of Tax Appeals for disposition thereof,

which motion is still pending action in said Negros Occidental court.

For purposes of reference, we are reproducing Sections 7 and 11 of Republic Act No. 1125, creating the Court of Tax Appeals:

SEC. 7. Jurisdiction.The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by appeal, as
herein provided

(1) Decisions of the Collector of Internal Revenue in cases involving disputed assessments, refunds of internal revenue
taxes, fees or other charges, penalties imposed in other matters arising under the National Internal Revenue Code or
other law or part of law administered by the Bureau of Internal Revenue;

SEC. 11. Who may appeal; effect of appeal. Any person, association or corporation adversely affected by a decision
or ruling of the Collector of Internal Revenue, the Collector of Customs or any provincial or city Board of Assessment
Appeals may be file an appeal in the Court of Tax Appeals within thirty days after the receipt of such decision or
ruling.

From the above legal provisions, there is no question that petitioners had the right to appeal from the ruling or decision of the
Collector assessing the income tax against them, to the Court of Tax Appeals and that the latter had exclusive appellate
jurisdiction over said appeal. If the petitioner were not allowed to appeal from said ruling, the latter would become final. It
was therefore, to their interest to keep alive said appeal and if possible, to have the appealed ruling or decision of the Collector
reviewed. lt is true that an action involving the same parties, the same subject matter and the same cause of action is pending
in the Negros Occidental court; but we understand that the main purpose of the enactment of Republic Act No. 1125, creating
the Court of Tax Appeals, was not only give said court exclusive appellate jurisdiction over disputed tax assessments, but also
to transfer to its jurisdiction all cases involving said assessments previously cognizable by Courts of First Instance and even

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 52
those already pending in said courts, as may be seen from the provisions of Republic Act 1125 which we have already
reproduced.

From what we recall of the explanatory note as well as the Iegislative discussion of the bill which resulted in Republic Act No.
1125, one of the reasons for transferring jurisdiction over disputed tax assessment cases from the Courts of First Instance to
the Court of Tax Appeals was that, considering the many cases on different subject matter which the Courts of First Instance
had to hear and determine, oftentimes disputed tax assessment cases took a long time, even years, to decide, and so for
purposes of explediency and the prompt collection of taxes, the Tax Court was created, and was given a limited time within
which to determine said cases before it (30 days after their submission for decision).

After the creation of the Court of Tax Appeals, we see no reason or occasion for the Collector to enforce his assessments by
means of civil action before the Courts of First Instance. In the first place as already stated said actions take a relatively long
time to determine. In the second place, there is no need for enforcing his tax assessment in that manner because his ruling or
decision is enforceable against the taxpayer, unless the latter appeals therefrom, and even when appealed, there is an
assurance that the Tax Court without loss of time, would decide the appeal. Besides, the Government and the Collector will
suffer no loss or prejudice by the appeal, for the reason that said appeal will not "suspend the payment, levy, distraint, andl"or
sale of any property of the taxpayer for the satisfaction of his tax liability as provided by existing law". (Par. 2, Sec. 11, Republic
Act 1125), Moreover, we must bear in mind that the taxpayer and businessman is as much interested as the Collector in the
early and final determination of his tax assessment, so that he would know as soon as possible how much he is liable to pay as
taxes, which information is necessary for the proper operation of his business. To allow the filing of ordinary civil cases in the
ordinary courts to enforce rulings of the Collector on assessments, would rob Republic Act No. 1125, creating the Court of Tax
Appeals, of its principal objectives, namely, of the expeditious determination of disputed tax assessments, and also deprive the
taxpayer of the remedy of appeal from the Collector's rulings and decisions to the Tax Court which is in a position to determine
and finally decide said tax assessments in the shortest time possible.

As to question of procedure, petitioners should have appealed to us the resolution of dismissal of the Tax Court. That was a
plain, speedy and adequate remedy; although petitioners may bave been impressed and obsessed by the consideration that the
Tax Court through error, neglected and even refused the performance of an act specifically enjoined as duty as such appellate
court, and excluded petitioners from the use of their right of appeal. However, because of the great imporatnce of his case,
calling as it does for interpretation for the first time of the law on court jurisdiction over disputed tax assessments, we are
willing to consider as we do consider the present petition as one for review.

In view of the foregoing, we believe and hold that the Court of Tax Appeals was in duty bound to give due course to the appeal
or petition for review filed with it by the petitioners. Setting aside its resolution dismissing the appeal, the Tax Court is hereby
directed to proceed with the determination of said petition for review. No Costs.

Bengzon, Paras, C.J., Padilla, Reyes, A., Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Endencia, and Felix, JJ., concur.

FIRST DIVISION

[G.R. No. 96262. March 22, 1999]

COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. EMBROIDERY AND GARMENTS INDUSTRIES (PHIL.),
INC., respondent.

DECISION
PARDO, J.:

The case is an appeal via certiorari from a decision of the Court of Appeals[1] affirming that of the Court of Tax
Appeals[2] absolving respondent from liability for deficiency income tax and advance sales tax in the amounts
of P2,756,241.68, and P3,500,798.47, respectively, for the years 1959 to 1961.
The facts may be related as follows:
On September 22, 1964, on the basis of a sworn report of an informer, the Courts of First Instance of Manila and Bulacan
issued search warrants for the seizure of certain documents from the offices of respondent Embroidery and Garments
Industries (Phil.), Inc. in Manila and Valenzuela, Bulacan. Armed with the warrants, agents of the Anti-Technical Smuggling
Unit, Bureau of Internal Revenue, seized various business records and documents from respondents offices.
On January 4, 1966, petitioner assessed respondent the sum of P436,846.44, inclusive of 75% surcharge and penalty as
advance sales tax for the years 1959 to 1961 and, on March 23, 1966, assessed deficiency income tax in the sum
of P4,799.641.95, inclusive of 50% surcharge and % monthly interest for the years 1960 and 1961.
Respondent protested the assessments, and on December 9, 1970, petitioner issued to respondent a revised assessment
requiring the latter to pay the amount of P2,756,241.68, inclusive of 50% surcharge and % monthly interest as deficiency

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 53
income tax for the years 1959 to 1961. On December 22, 1970, petitioner required respondent to pay P3,500,798.47, as
advance sales tax and 75% surcharge corresponding to the same years.
On January 7, 1971, respondent filed with the Bureau of Internal Revenue a protest disputing the revised assessments
and requesting further investigation. On the same date, petitioner denied the protest.
On January 20, 1971, respondent requested petitioner to reconsider the denial of its protest. On January 29, 1971,
petitioner granted the request upon respondents execution of a waiver of the statute of limitations.
On September 14, 1971, petitioner denied respondents protest on the disputed assessments.
On October 14, 1971, respondent filed with the Court of Tax Appeals a petition for review of the disputed tax
assessments.
On March 29, 1972, respondent filed its answer to the petition praying for its dismissal.
On January 15, 1990, the Court of Tax Appeals rendered decision finding respondent not liable for deficiency income tax
and advance sales tax assessed against it, accordingly, reversed the BIR decision. In its decision, the Court of Tax Appeals held
that the assessments were of doubtful validity as they were based on incompetent evidence consisting of an informants report
and the sworn statement of a disgruntled former general manager of respondent that in the years in question respondent sold
all its dollar quotas to local Chinese textile traders at an overprice or premium on the dollar value of textile importation of
80% for suiting materials and 70% for womens clothing materials and faked its invoices to reduce its costs of importation. On
the other hand, respondent adduced evidence consisting of official records of the Bureau of Customs that its tax-free
importations had been re-exported to their suppliers in accordance with the Embroidery Law and cleared by the Bureau of
Customs. The tax court ruled that the assessments must be based on actual facts and proved by competent evidence, not
imposed based on unverified information supplied by an informant, or disputed presumptions.
On June 13, 1990, petitioner filed with the Court of Appeals a petition for review of the decision of the Court of Tax
Appeals.[3]
On November 9, 1990, the Court of Appeals promulgated its decision affirming the appealed decision of the tax court.[4]
On December 4, 1990, petitioner filed a motion for reconsideration of the Court of Appeals decision.
On February 7, 1991, the Court of Appeals denied the motion.[5]
On March 18, 1991, within the extended time granted, petitioner filed with the Supreme Court a petition for review
on certiorari of the decision of the Court of Appeals.[6]
In the petition, the Commissioner of Internal Revenue submits that the Court of Appeals erred:
(1) in not holding that respondent is liable for deficiency income tax and advance sales tax in view of its failure to declare
its income realized for the years 1959 to 1961 from the sales of its dollar quota to local Chinese textile dealers at a premium of
70% to 80% of the dollar value, which dollar quota rights were allocated by the Central Bank of the Philippines to enable
respondent to import tax-free textile raw materials to be manufactured into finished products for re-export pursuant to the
provisions of the Embroidery Law (R.A. No. 3137), and
(2) in not holding that the imposition of 50% surcharge for fraud was legal and justified. [7]
The issues raised are clearly factual and must be resolved on the basis of the evidence adduced before the tax court. The
case tarried too long in the tax court. In the meantime, the star witness had died, and the needed originals of documentary
evidence could no longer be located.
What is more, it is a fundamental rule that an appeal via certiorari from a decision of the Court of Appeals to the Supreme
Court may raise only questions of law, which must be distinctly set forth. [8] Findings of fact of the Court of Appeals and even of
the tax court are final, binding or conclusive on the parties [9] and upon this Court,[10] which will not be reviewed[11] or
disturbed on appeal unless these findings are not supported by evidence, [12] with certain well recognized exceptions, such as
(1) when the conclusion is grounded entirely on speculations[13], surmises or conjectures; (2) when the inference made is
manifestly mistaken, absurd or impossible; (3) where there is grave abuse of discretion; (4) when the judgment is based on a
misapprehension of facts; (5) when the findings of fact are conflicting; (6) when the Court of Appeals, in making its findings,
went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee; (7) when the
findings of the Court of Appeals are contrary to those of the trial courts; [14] (8) when the findings of fact are conclusions
without citation of specific evidence on which they are based; (9) when the Court of Appeals overlooked certain relevant facts
not disputed by the parties, which, if properly considered, would justify a different conclusion; and (10) when the findings of
fact of the Court of Appeals are premised on the absence of evidence and are contradicted by the evidence on record. [15] This
case does not come within any of the exceptions.
WHEREFORE, the Court hereby AFFIRMS the appealed decision of the Court of Appeals in CA-G.R. SP No. 20813.
No costs.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 54
G.R. No. L-68385 May 12, 1989

ILDEFONSO O. ELEGADO, as Ancillary Administrator of the Testate Estate of the late WARREN TAYLOR
GRAHAM, petitioner
vs.
HON. COURT OF TAX APPEALS and COMMISSIONER OF INTERNAL REVENUE respondents.

Agrava, Lucero & Gineta for petitioners.

The Office of the Solictor General for public respondents.

CRUZ, J.:

What the petitioner presents as a rather complicated problem is in reality a very simple question from the viewpoint of the
Solicitor General. We agree with the latter. There is actually only one issue to be resolved in this action. That issue is whether
or not the respondent Court of Tax Appeals erred in dismissing the petitioner's appeal on grounds of jurisdiction and lack of a
cause of action.

Appeal from what? That indeed is the question.

But first the facts.

On March 14, 1976, Warren Taylor Graham, an American national formerly resident in the Philippines, died in Oregon,
U.S.A. 1 As he left certain shares of stock in the Philippines, his son, Ward Graham, filed an estate tax return on September 16,
1976, with the Philippine Revenue Representative in San Francisco, U.S.A. 2

On the basis of this return, the respondent Commissioner of Internal Revenue assessed the decedent's estate an estate tax in
the amount of P96,509.35 on February 9, 1978. 3 This assessment was protested on March 7, 1978, by the law firm of Bump,
Young and Walker on behalf of the estate . 4 The protest was denied by the Commissioner on July 7, 1978. 5 No further action
was taken by the estate in pursuit of that protest.

Meanwhile, on January 18, 1977, the decedent's will had been admitted to probate in the Circuit Court of Oregon 6 Ward
Graham, the designated executor, then appointed Ildefonso Elegado, the herein petitioner, as his attorney-in-fact for the
allowance of the will in the Philippines. 7

Pursuant to such authority, the petitioner commenced probate proceedings in the Court of First Instance of Rizal. 8 The will
was allowed on December 18, 1978, with the petitioner as ancillary administrator. 9 As such, he filed a second estate tax return
with the Bureau of Internal Revenue on June 4, 1980. 10

On the basis of this second return, the Commissioner imposed an assessment on the estate in the amount of P72,948.87. 11 This
was protested on behalf of the estate by the Agrava, Lucero and Gineta Law Office on August 13, 1980. 12

While this protest was pending, the Commissioner filed in the probate proceedings a motion for the allowance of the basic
estate tax of P96,509.35 as assessed on February 9, 1978. 13 He said that this liability had not yet been paid although the
assessment had long become final and executory.

The petitioner regarded this motion as an implied denial of the protest filed on August 13, 1980, against the second
assessment of P72,948.87. 14 On this understanding, he filed on September 15, 1981, a petition for review with the Court of Tax
Appeals challenging the said assessment. 15

The Commissioner did not immediately answer (in fact, as the petitioner stressed, no answer was filed during a delay of 195
days) and in the end instead cancelled the protested assessment in a letter to the decedent's estate dated March 31,
1982. 16 This cancellation was notified to the Court of Tax Appeals in a motion to dismiss on the ground that the protest had
become moot and academic. 17

The motion was granted and the petition dismissed on April 25, 1984. 18 The petitioner then came to this Court
oncertiorari under Rule 45 of the Rules of Court.

The petitioner raises three basic questions, to wit, (1) whether the shares of stocks left by the decedent should be treated as
his exclusive, and not conjugal, property; (2) whether the said stocks should be assessed as of the time of the owner's death or
six months thereafter; and (3) whether the appeal filed with the respondent court should be considered moot and academic.

We deal first with the third issue as it is decisive of this case.

In the letter to the decedent's estate dated March 31, 1982, the Commissioner of Internal Revenue wrote as follows:

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 55
Estate of WARREN T. GRAHAM c/o Mr. ILDEFENSO O. ELEGADO Ancillary Administrator Philex Building cor. Brixton &
Fairlane Sts. Pasig, Metro Manila

Sir:

This is with regard to the estate of the late WARREN TAYLOR GRAHAM, who died a resident of Oregon, U.S.A.
on March 14, 1976. It appears that two (2) letters of demand were issued by this Bureau. One is for the
amount of P96,509.35 based on the first return filed, and the other in the amount of P72,948.87, based on the
second return filed.

It appears that the first assessment of P96,509.35 was issued on February 9, 1978 on the basis of the estate
tax return filed on September 16, 1976. The said assessment was, however, protested in a letter dated March
7, 1978 but was denied on July 7, 1978. Since no appeal was made within the regulatory period, the same has
become final.

In view thereof, it is requested that you settle the aforesaid assessment for P96,509.35 within fifteen (15)
days upon receipt hereof to the Receivable Accounts Division, this Bureau, BIR National Office Building,
Diliman, Quezon City. The assessment for P72,949.57 dated July 3, 1980, referred to above is hereby
cancelled.

Very truly yours,

(SGD.) RUBEN B. ANCHETA Acting Commissioner 19

It is obvious from the express cancellation of the second assessment for P72,948.87 that the petitioner had been deprived of a
cause of action as it was precisely from this assessment that he was appealing.

In its decision, the Court of Tax Appeals said that the petition questioning the assessment of July 3, 1980, was "premature"
since the protest to the assessment had not yet been resolved. 20 As a matter of fact it had: the said assessment had been
cancelled by virtue of the above-quoted letter. The respondent court was on surer ground, however, when it followed with the
finding that the said cancellation had rendered the petition moot and academic. There was really no more assessment to
review.

The petitioner argues that the issuance of the second assessment on July 3, 1980, had the effect of canceling the first
assessment of February 9, 1978, and that the subsequent cancellation of the second assessment did not have the effect of
automatically reviving the first. Moreover, the first assessment is not binding on him because it was based on a return filed by
foreign lawyers who had no knowledge of our tax laws or access to the Court of Tax Appeals.

The petitioner is clutching at straws.

It is noted that in the letter of July 3, 1980, imposing the second assessment of P72,948.87, the Commissioner made it clear
that "the aforesaid amount is considered provisional only based on the estate tax return filed subject to investigation by this
Office for final determination of the correct estate tax due from the estate. Any amount that may be found due after said
investigation will be assessed and collected later." 21 It is illogical to suggest that aprovisional assessment can supersede an
earlier assessment which had clearly become final and executory.

The second contention is no less flimsy. The petitioner cannot be serious when he argues that the first assessment was invalid
because the foreign lawyers who filed the return on which it was based were not familiar with our tax laws and procedure. Is
the petitioner suggesting that they are excused from compliance therewith because of their ignorance?

If our own lawyers and taxpayers cannot claim a similar preference because they are not allowed to claim a like ignorance, it
stands to reason that foreigners cannot be any less bound by our own laws in our own country. A more obvious and shallow
discrimination than that suggested by the petitioner is indeed difficult to find.

But the most compelling consideration in this case is the fact that the first assessment is already final and executory and can no
longer be questioned at this late hour. The assessment was made on February 9, 1978. It was protested on March 7, 1978. The
protest was denied on July 7, 1978. As no further action was taken thereon by the decedent's estate, there is no question that
the assessment has become final and executory.

In fact, the law firm that had lodged the protest appears to have accepted its denial. In his motion with the probate court, the
respondent Commissioner stressed that "in a letter dated January 29, 1980, the Estate of Warren Taylor Graham thru the
aforesaid foreign law firm informed claimant that they have paid said tax liability thru the Agrava, Velarde, Lucero and Puno,
Philippine law firm of 313 Buendia Avenue Ext., Makati, Metro Manila that initiated the instant ancillary proceedings" although
he added that such payment had not yet been received. 22This letter was an acknowledgment by the estate of the validity and
finality of the first assessment. Significantly, it has not been denied by the petitioner.

In view of the finality of the first assessment, the petitioner cannot now raise the question of its validity before this Court any
more than he could have done so before the Court of Tax Appeals. What the estate of the decedent should have done earlier,
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 56
following the denial of its protest on July 7, 1978, was to appeal to the Court of Tax Appeals within the reglementary period of
30 days after it received notice of said denial. It was in such appeal that the petitioner could then have raised the first two
issues he now raises without basis in the present petition.

The question of whether or not the shares of stock left by the decedent should be considered conjugal property or belonging to
him alone is immaterial in these proceedings. So too is the time at which the assessment of these shares of stock should have
been made by the BIR. These questions were not resolved by the Court of Tax Appeals because it had no jurisdiction to act on
the petitioner's appeal from an assessment that had already been cancelled. The assessment being no longer controversial or
reviewable, there was no justification for the respondent court to rule on the petition except to dismiss it.

If indeed the Commissioner of Internal Revenue committed an error in the computation of the estate tax, as the petitioner
insists, that error can no longer be rectified because the original assessment has long become final and executory. If that
assessment was not challenged on time and in accordance with the prescribed procedure, that error for error it was was
committed not by the respondents but by the decedent's estate itself which the petitioner represents. So how can he now
complain.

WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so ordered,

Republic of the Philippines


SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-66160 May 21, 1990

COMMISSIONER OF INTERNAL REVENUE, petitioner,


vs.
UNION SHIPPING CORPORATION and THE COURT OF TAX APPEALS, respondents.

Artemio M. Lobrin for private respondent.

PARAS, J.:

This is a petition for review on certiorari of the December 9, 1983 decision * of the Court of Tax Appeals in CTA Case No. 2989
reversing the Commissioner of Internal Revenue.

In a letter dated December 27, 1974 (Exhibit "A") herein petitioner Commissioner of Internal Revenue assessed against Yee
Fong Hong, Ltd. and/or herein private respondent Union Shipping Corporation, the total sum of P583,155.22 as deficiency
income taxes due for the years 1971 and 1972. Said letter was received on January 4, 1975, and in a letter dated January 10,
1975 (Exhibit "B"), received by petitioner on January 13, 1975, private respondent protested the assessment.

Petitioner, without ruling on the protest, issued a Warrant of Distraint and Levy (Exhibit "C"), which was served on private
respondent's counsel, Clemente Celso, on November 25, 1976.

In a letter dated November 27, 1976 (Exhibit "D"), received by petitioner on November 29, 1976 (Exhibit "D-1") private
respondent reiterated its request for reinvestigation of the assessment and for the reconsideration of the summary collection
thru the Warrant of Distraint and Levy.

Petitioner, again, without acting on the request for reinvestigation and reconsideration of the Warrant of Distraint and Levy,
filed a collection suit before Branch XXI of the then Court of First Instance of Manila and docketed as Civil Case No. 120459
against private respondent. Summons (Exhibit "E") in the said collection case was issued to private respondent on December
28, 1978.

On January 10, 1979, private respondent filed with respondent court its Petition for Review of the petitioner's assessment of
its deficiency income taxes in a letter dated December 27, 1974, docketed therein as CTA Case No. 2989 (Rollo, pp. 44-49),
wherein it prays that after hearing, judgment be rendered holding that it is not liable for the payment of the income tax herein
involved, or which may be due from foreign shipowner Yee Fong Hong, Ltd.; to which petitioner filed his answer on March 29,
1979 (Rollo, pp. 50-53).

Respondent Tax Court, in a decision dated December 9, 1983, ruled in favor of private respondent

WHEREFORE, the decision of the Commissioner of Internal Revenue appealed from, assessing against and
demanding from petitioner the payment of deficiency income tax, inclusive of 50% surcharge, interest and
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 57
compromise penalties, in the amounts of P73,958.76 and P583,155.22 for the years 1971 and 1972,
respectively, is reversed.

Hence, the instant petition.

The Second Division of this Court, after the filing of the required pleadings, in a resolution dated January 28, 1985, resolved to
give due course to the petition, and directed petitioner therein, to file his brief (Rollo, p. 145). In compliance, petitioner filed
his brief on May 10, 1985 (Rollo, p. 151). Respondents, on the other hand, filed their brief on June 6, 1985 (Rollo, p. 156).

The main issues in this case are: (a) on the procedural aspect, whether or not the Court of Tax Appeals has jurisdiction over
this case and (b) on the merits, whether or not Union Shipping Corporation acting as a mere "husbanding agent" of Yee Fong
Hong Ltd. is liable for payment of taxes on the gross receipts or earnings of the latter.

The main thrust of this petition is that the issuance of a warrant of distraint and levy is proof of the finality of an assessment
because it is the most drastic action of all media of enforcing the collection of tax, and is tantamount to an outright denial of a
motion for reconsideration of an assessment. Among others, petitioner contends that the warrant of distraint and levy was
issued after respondent corporation filed a request for reconsideration of subject assessment, thus constituting petitioner's
final decision in the disputed assessments (Brief for petitioner, pp. 9 and 12).

Petitioner argues therefore that the period to appeal to the Court of Tax Appeals commenced to run from receipt of said
warrant on November 25, 1976, so that on January 10, 1979 when respondent corporation sought redress from the Tax Court,
petitioner's decision has long become final and executory.

On this issue, this Court had already laid down the dictum that the Commissioner should always indicate to the taxpayer in
clear and unequivocal language what constitutes his final determination of the disputed assessment.

Specifically, this Court ruled:

. . . we deem it appropriate to state that the Commissioner of Internal Revenue should always indicate to the
taxpayer in clear and unequivocal language whenever his action on an assessment questioned by a taxpayer
constitutes his final determination on the disputed assessment, as contemplated by sections 7 and 11 of
Republic Act 1125, as amended. On the basis of this statement indubitably showing that the Commissioner's
communicated action is his final decision on the contested assessment, the aggrieved taxpayer would then be
able to take recourse to the tax court at the opportune time. Without needless difficulty, the taxpayer would
be able to determine when his right to appeal to the tax court accrues. This rule of conduct would also obviate
all desire and opportunity on the part of the taxpayer to continually delay the finality of the assessment
and, consequently, the collection of the amount demanded as taxes by repeated requests for
recomputation and reconsideration. On the part of the Commissioner, this would encourage his office to
conduct a careful and thorough study of every questioned assessment and render a correct and definite
decision thereon in the first instance. This would also deter the Commissioner from unfairly making the
taxpayer grope in the dark and speculate as to which action constitutes the decision appealable to the tax
court. Of greater import, this rule of conduct would meet a pressing need for fair play, regularity, and
orderliness in administrative action. (Surigao Electric Co., Inc. v. C.T.A., 57 SCRA 523, 528, [1974]).

There appears to be no dispute that petitioner did not rule on private respondent's motion for reconsideration but contrary to
the above ruling of this Court, left private respondent in the dark as to which action of the Commissioner is the decision
appealable to the Court of Tax Appeals. Had he categorically stated that he denies private respondent's motion for
reconsideration and that his action constitutes his final determination on the disputed assessment, private respondent
without needless difficulty would have been able to determine when his right to appeal accrues and the resulting confusion
would have been avoided.

Much later, this Court reiterated the above-mentioned dictum in a ruling applicable on all fours to the issue in the case at bar,
that the reviewable decision of the Bureau of Internal Revenue is that contained in the letter of its Commissioner, that such
constitutes the final decision on the matter which may be appealed to the Court of Tax Appeals and not the warrants of
distraint (Advertising Associates, Inc. v. Court of Appeals, 133 SCRA 769 [1984] emphasis supplied). It was likewise stressed
that the procedure enunciated is demanded by the pressing need for fair play, regularity and orderliness in administrative
action.

Under the circumstances, the Commissioner of Internal Revenue, not having clearly signified his final action on the disputed
assessment, legally the period to appeal has not commenced to run. Thus, it was only when private respondent received the
summons on the civil suit for collection of deficiency income on December 28, 1978 that the period to appeal commenced to
run.

The request for reinvestigation and reconsideration was in effect considered denied by petitioner when the latter filed a civil
suit for collection of deficiency income. So. that on January 10, 1979 when private respondent filed the appeal with the Court
of Tax Appeals, it consumed a total of only thirteen (13) days well within the thirty day period to appeal pursuant to Section
11 of R.A. 1125.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 58
On the merits, it was found fully substantiated by the Court of Tax Appeals that, respondent corporation is the husbanding
agent of the vessel Yee Fong Hong, Ltd. as follows:

Coming to the second issue, petitioner contended and was substantiated by satisfactory uncontradicted
testimonies of Clemente Celso, Certified Public Accountant, and Rodolfo C. Cabalquinto, President and General
Manager, of petitioner that it is actually and legally the husbanding agent of the vessel of Yee Fong Hong, Ltd.
as (1) it neither performed nor transacted any shipping business, for and in representation, of Yee Fong Hong,
Ltd. or its vessels or otherwise negotiated or procured cargo to be loaded in the vessels of Yee Fong Hong, Ltd.
(p. 21, t.s.n., July 16, 1980); (2) it never solicited or procured cargo or freight in the Philippines or elsewhere
for loading in said vessels of Yee Fong Hong, Ltd. (pp. 21 & 38, ibid.); (3) it had not collected any freight
income or receipts for the said Yee Fong Hong, Ltd. (pp. 22 & 38, ibid; pp. 46 & 48, t.s.n., Nov. 14, 1980.); (4) it
never had possession or control, actual or constructive, over the funds representing payment by Philippine
shippers for cargo loaded on said vessels (pp. 21 & 38, ibid; p. 48, ibid); petitioner never remitted to Yee Fong
Hong, Ltd. any sum of money representing freight incomes of Yee Fong Hong, Ltd. (p. 21, ibid.; p. 48, ibid); and
(5) that the freight payments made for cargo loaded in the Philippines for foreign destination were actually
paid directly by the shippers to the said Yee Fong Hong, Ltd. upon arrival of the goods in the foreign ports.
(Rollo, pp. 58-59).

On the same issue, the Commissioner of Internal Revenue Misael P. Vera, on query of respondent's counsel, opined that
respondent corporation being merely a husbanding agent is not liable for the payment of the income taxes due from the
foreign ship owners loading cargoes in the Philippines (Rollo, p. 63; Exhibit "I", Rollo, pp. 64-66).

Neither can private respondent be liable for withholding tax under Section 53 of the Internal Revenue Code since it is not in
possession, custody or control of the funds received by and remitted to Yee Fong Hong, Ltd., a non-resident taxpayer. As
correctly ruled by the Court of Tax Appeals, "if an individual or corporation like the petitioner in this case, is not in the actual
possession, custody, or control of the funds, it can neither be physically nor legally liable or obligated to pay the so-called
withholding tax on income claimed by Yee Fong Hong, Ltd." (Rollo, p. 67).

Finally, it must be stated that factual findings of the Court of Tax Appeals are binding on this Court (Industrial Textiles
Manufacturing Company of the Phil., Inc. (ITEMCOP) v. Commissioner of Internal Revenue, et al. (136 SCRA 549 [1985]). It is
well-settled that in passing upon petitions for review of the decisions of the Court of Tax Appeals, this Court is generally
confined to questions of law. The findings of fact of said Court are not to be disturbed unless clearly shown to be unsupported
by substantial evidence (Commissioner of Internal Revenue v. Manila Machinery & Supply Company, 135 SCRA 8 [1985]).

A careful scrutiny of the records reveals no cogent reason to disturb the findings of the Court of Tax Appeals.

PREMISES CONSIDERED, the instant petition is hereby DISMISSED and the assailed decision of the Court of Tax Appeals is
hereby AFFIRMED.

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-29218 October 29, 1976

JOSE T. VIDUYA, as collector of Customs of the Port of Manila, petitioner,


vs.
EDUARDO BERDIAGO alias EDUARDO BERTIAGO; and HON. ANDRES REYES, as Presiding Judge of Branch VI, Court of
First Instance of Rizal, respondents.

Solicitor, General Antonio P. Barredo and Solicitor Augusto M. Amores for petitioner.

Amelito R. Mutuc for respondents.

FERNANDO, J.:p

An order of the lower court quashing a search warrant issued at the instance of petitioner Jose T. Viduya, then Collector of
Customs of Manila, to gain custody of a seized vehicle pursuant to a warrant of seizure and detention against private
respondent Eduardo Berdiago 1 was assailed in this certiorari and mandamus proceeding with a prayer for mandatory
preliminary injunction. 2 The invocation by the then Solicitor General, now Associate Justice of this Court, Antonio P. Barredo,
of the controlling force of Papa v. Mago 3 and the persuasive character attached to the ruling of an American leading
decision, Carroll v. United States, 4 clearly indicative of the tenuous nature of the claim of private respondent that there was a
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 59
violation of his constitutional right to be free from unreasonable search and seizure, 5 led to a resolution by the Court of July
12, 1968, requiring that respondents answer the petition and issuing the preliminary mandatory injunction sought requiring
respondent Berdiago "to deliver the custody and possession of said car to respondent court; and furthermore requiring
respondent court to take possession and custody of the said Rolls Royce car from respondent Berdiago or from whomsoever
has possession and custody thereof and let petitioner to take delivery and custody thereof; ... ." 6 The stress, and quite
understandably, in the extensively-researched answer filed on behalf of respondents by their able counsel, former
Ambassador Amelito R. Mutuc, was on the primacy of the immunity the Constitution guarantees against an unreasonable
search and seizure. More specifically, it was contended with vigor and plausibility that respondent Judge quashed the search
warrant on showing of lack of probable cause, a requirement not only of the Constitution but of the Rules of Court 7 and the
Tariff and Customs Code. 8 While no objection could validly be raised against such a proposition, it cannot apply to this
controversy. It is undoubted that prior to the issuance of a search warrant, there was a previous discovery of the failure to pay
the correct amount of customs duties. That was probable cause enough. It let to the institution of a seizure and forefeiture
proceeding. Moreover, the law has always looked with disfavor on attempts at nonpayment or underpayment of customs
duties. It is essential that no undue obstacle be placed on intensive efforts to assure the collection of what is properly due the
government. The Mago decision was thus merely a reflection of what has long been the settled doctrine on the matter in the
Philippines. It is futile to assert then, considering the circumstances to be more specifically referred to, that the requirement of
lack of probable cause was not met. We find for petitioner.

The petition includes as one of its Annexes the warrant of seizure and detention. 9 It was issued on the basis of reliable
intelligence that fraudulent documents were used by respondent Berdiago in securing the release from the Bureau of Customs
of a Rolls Royce car, Model 1966, 2 door, Hardtop with Motor No. CRX 1379, which arrived in the Port of Manila on January 8,
1968 on board the vessel, Jose Abad Santos, it being made to appear that such car was a 1961 model instead of a 1966 one,
thus enabling respondent to pay a much lower customs duty in the amount of P3,255.00, when the correct amount due was
P219,783.00. 10 There was, accordingly, a formal demand for the payment of the sum to cover the deficiency, respondent
manifesting his willingness to do so but failing to live up to his promise contained in a letter of April 24, 1968, leading to
Seizure Identification Case No. 10941 against the car. 11 As it was kept in a dwelling house at the Yabut Compound, Wakas,
Barrio San Dionisio, Paraaque, Rizal, two officials of the Customs Police Service as duly authorized agents of petitioner,
applied to respondent Judge for a warrant to search said dwelling house and to seize the Rolls Royce car found therein,
pursuant to Section 2209 of the Tariff and Customs Code; he issued the search warrant on May 30, 1968.12 Thereafter, on
June 3, 1968, there was an urgent motion to quash the same by respondent Berdiago. 13Then, on June 6, 1968, an opposition
to said motion to quash was filed by petitioner, based on the allegation of a violation of Section 2209 of the Tariff and Customs
Code. 14 It was moreover pointed out that respondent Berdiago could not rely on the constitutional right against
unreasonable search and seizure because it was not shown that he owned the dwelling house which was
searched. 15 Nonetheless, respondent Judge in the challenged order quashed such search warrant. 16 Hence this petition.

To repeat, the plea of petitioner must be heeded. A case of a grave abuse of discretion on the part of respondent Judge when he
quashed the search warrant had been shown. What lessens the gravity of such lapse from controlling doctrines was the
commendable attitude displayed in stressing the worth of a constitutional right. Where attempts at evasion of payment of
customs duties are concerned, however, this Court has not been indisposed to he as receptive to claims of its violation,
especially where they rest on no substantial basis.

1. In the leading case of Papa v. Mago, 17 with Justice Zaldivar as ponente, there is this pronouncement, which he aptly noted
by the then Solicitor-General Barredo, calls for application: "The Bureau of Customs has the duties, powers and jurisdiction,
among others, (1) to assess and collect all lawful revenues from imported articles, and all other dues, fees, charges, fines and
penalties, accruing under the tariff and customs laws; (2) to prevent and suppress smuggling and other frauds upon the
customs; and (3) to enforce tariff and customs laws. The goods in question were imported from Hongkong, as shown in the
"Statement and Receipts of Duties Collected on Informal Entry." As long as the importation has not been terminated the
imported goods remain under the jurisdiction of the Bureau of Customs. Importation is deemed terminated only upon
payment of the duties, taxes and other charges upon the articles, or secured to be paid, at the port of entry and the legal permit
for withdrawal shall have been granted. The payment of the duties, taxes, fees and other charges must be in full. The record
shows, ... that the duties, taxes and other charges had not been paid in full. Furthermore, a comparison of the goods on which
duties had been assessed, as shown in the "Statement and Receipts of Duties Collected on Informal Entry" and the
"compliance" itemizing the articles found in the bales upon examination and inventory, shows that the quantity of the goods
was underdeclared, presumably to avoid the payment of duties thereon. ... The articles contained in the nine bales in question,
were, therefore, subject to forfeiture .... And this Court has held that merchandise, the importation of which is effected contrary
to law, is subject to forfeiture, and that goods released contrary to law are subject to seizure and forfeiture." 18

2. Nor did Mago announce a novel doctrine. It is merely a recognition of the state power to assure that fraudulent schemes
resorted to by importers would be doomed to failure. That same year in 1968, in Asaali v. Commissioner of Customs, 19 the
opinion stressed in rather emphatic language why it must be thus: "The policy relentlessly adhered to and unhesitatingly
pursued to minimize, if not to do away entirely, with the evil and corruption that smuggling brings in its wake would be
frustrated and set at naught if the action taken by respondent Commissioner of Customs in this case, as affirmed by the Court
of Tax Appeals, were to be set aside and this appeal from the decision of the latter were to succeed. Fortunately, the controlling
principles of law do not call for a contrary conclusion. It cannot be otherwise if the legitimate authority vested in the
government were not to be reduced to futility and impotence in the face of an admittedly serious malady, that at times has
assumed epidemic proportions." 20 Moreover, as far back as 1920, in Uy Kheytin v. Villareal, 21 there was the explicit
affirmation of the principle that "dutiable articles on which the duties have not been paid" belong to a different category from
the search and seizure "of a man's private papers" as they "rightfully belong to the custody of the law." 22

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 60
3. There is this clarification of the matter in the opinion of Justice Zaldivar in Mago "Petitioner Martin Alagao and his
companion policemen had authority to effect the seizure without any search warrant issued by a competent court. The Tariff
and Customs Code does not require said warrant in the instant case. The Code authorizes persons having police authority
under Section 2203 of the Tariff and Customs Code to enter, pass through or search any land, inclosure, warehouse, store or
building, not being a dwelling house; and also to inspect, search and examine any vessel or aircraft and any trunk, package, box
or envelope or any person on board, or stop and search and examine any vehicle, beast or person suspected of holding or
conveying any dutiable or prohibited article introduced into the Philippines contrary to law, without mentioning the need of a
search warrant in said cases. But in the search of a dwelling house, the Code provides that said 'dwelling house may be entered
and searched only upon warrant issued by a judge or justice of the peace ... .' It is our considered view, therefore, that except in
the case of the search of a dwelling house, persons exercising police authority under the customs law may effect search and
seizure without a search warrant in the enforcement of customs laws. " 23 There is justification then for the insistence on the
part of private respondent that probable cause be shown. 24 So respondent Judge found in issuing the search warrant.
Apparently he was persuaded to quash it when he noted that the warrant for seizure and detention came later than its
issuance. In thus acting, respondent Judge apparently overlooked that long before the search warrant was applied for, to be
specific on April 15, 1968, the misdeclaration and underpayment was already noted and that thereafter on April 24, 1968,
private respondent himself agreed to make good the further amount due but not in the sum demanded. 25 As the car was kept
in a dwelling house in Wakas, Barrio San Dionisio, Paraaque, Rizal, petitioner through two of his officers in the Customs
Police Service 26 applied for and was able to obtain the search warrant. Had there been no such move on the part of
petitioner, the duties expressly enjoined on him by law noted in the Mago opinion namely to assess and collect all lawful
revenues, to prevent and suppress smuggling and other frauds, and to enforce tariff and customs law would not have been
performed. While therefore, it is to be admitted that his warrant of seizure and detention came later, on July 5, 1968 to be
exact, than the search warrant, which was issued on May 30, 1968, there were indubitable facts in existence at that time to call
for its issuance. Certainly there was probable cause as defined in United States v. Addison, 27 Identifying it with "such reasons,
supported by facts and circumstances, as will warrant a cautious man in the belief that his action, and the means taken in
prosecuting it, are legally just and proper." 28 There was evidently need for the issuance of a search warrant. It ought not to
have been thereafter quashed.

4. That is about all, except for a reference in the petition to an excerpt from Carroll v. United States, 29 tracing such an
approach to the landmark Boyd decision cited in Uy Kheytin. It was emphasized therein in the opinion of Chief Justice Taft that
what was said by Justice Bradley in Boyd stated the doctrine that had gained approval and acceptance. It was summarized
thus: "The seizure of stolen goods is authorized by the common law; and the seizure of goods forfeited for a breach of the
revenue laws or concealed to avoid the duties payable on them, has been authorized by English statutes for at least two
centuries past; and the like seizures have been authorized by our own revenue acts from the commencement of the
government." 30 It is not for this Court to do less than it can to implement and enforce the mandates of the customs and
revenues laws. The evils associated with tax evasion must be stamped out without any disregard, it is to be affirmed, of any
constitutional right. The facts, appreciated in their true light, fail to show that the issuance of the search warrant contravened
the immunity against unreasonable search and seizure. Its being quashed then amounted to a grave abuse of discretion.

WHEREFORE, the writ of certiorari is granted and the order of June 20, 1968 of respondent Judge denying the petition for
custody of the car by petitioner and quashing the search warrant nullified and set aside. The writ of preliminary mandatory
injuction issued by this Court is maintained in full force and effect, the custody and possession of the Rolls Royce car, model
1966, 2 door Hardtop with Motor No. CRX 1379 to remain in the custody of the Customs authorities until the termination
according to law of the seizure and forfeiture proceeding. Costs against private respondent.

Antonio, Aquino, Concepcion, Jr., and Martin, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-43810 September 26, 1989

TOMAS CHIA, Owner-Manager of the Sony Merchandising (Phil.) of No. 691 Calle Raon, Quiapo, Manila, and TOM'S
ELECTRONICS of No. 690 Calle Raon, Quiapo, Manila, petitioner,
vs.
THE ACTING COLLECTOR OF CUSTOMS, HON ALFREDO T. FRANCISCO, Port Area, Manila, and, GENER SULA ASAC, Camp
Emilio Aguinaldo, Quezon City, respondents.

Eliseo P. Legaspi for petitioner.

GRIO-AQUINO, J.:

This petition for certiorari, prohibition, mandamus and injunction seeks: (1) to nullify the warrants of seizure and detention
issued and signed by the Collector of Customs; and (2) to recover the confiscated goods seized under these general warrants,
as well as damages.
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 61
Acting on a verified report of a confidential informant that assorted electronic and electrical equipment and other articles
illegally imported into the Philippines by a syndicate engaged in unlawful "shipside" activities (foreign goods are unloaded
from foreign ships in transit through Philippine waters into motorized bancas and landed on Philippine soil without passing
through the Bureau of Customs, thereby evading payment of the corresponding customs duties and taxes thereon) were found
inside "Tom's Electronics" and "Sony Merchandising (Philippines)" stores located at 690 and 691 Gonzalo Puyat corner
Evangelista Street, Quiapo, Manila, a letter- request dated April 23, 1976 was addressed to the Collector of Customs by the
Deputy Director of the Regional Anti-Smuggling Action Center, Manila Bay Area (RASAC-MBA) for the issuance of warrants of
seizure and detention. After evaluation, the Collector of Customs issued Warrants of Seizure and Detention Nos: 14925 and
14925-A, directing the Anti-Smuggling Action Center to seize the goods mentioned therein, which read as follows:

Republic of the Philippines,

_ versus -

Various electronic equipments like cassette tape recorders,

car stereos, phonograph needles (diamond),

portable TV sets, imported long playing records,

spare parts of TVs and radios and other electrical appliances.

TOM'S ELECTRONICS

Claimant Seizure Identification No. 14925-A

SONY MERCHANDISING (PHIL.)

Claimant Seizure Identification No. 14925

To: The Director or his duly-authorized representative ASAC Camp Aguinaldo, Quezon City

GREETINGS:

WHEREAS, the above-described articles are liable for forfeiture for having been imported in violation of
Section 2536 of the Tariff and Customs Code as amended in relation to Section 2530 (m)-l of the same Code;

WHEREAS, the said articles are at present in the custody of Tom's Electronics/Sony Merchandising (Phil.);

WHEREFORE, by virtue of the authority vested in me by law and in compliance with Finance Department
Order No. 96-67 as published in Customs Memorandum Circular No. 133-67 dated July 25, 1967, you are
hereby ordered to forthwith seize the aforementioned articles and turn them over to the custody of the
Auction and Cargo Disposal Division of this Bureau. (Annexes A & A-1, pp. 10-11, Rollo.)

A RASAC team was formed and given a mission order to enforce the warrants, which it implemented with the assistance of: (1)
the National Customs Police (augmenting the team with two members), (2) the Detective Bureau of the Manila Western Police
District Headquarters (with three detectives), as well as, (3) Precinct 3 of the Manila Western Police District which exercised
jurisdictional control over the place to be raided. The intended raid was entered in the respective police blotters of the police
detective bureaus.

On the strength of the warrants of seizure and detention, the raid was conducted in the afternoon of April 25,1976 at the two
stores of the petitioner. ASAC team leader Gener Sula, together with his agents Badron Dobli, Arturo Manuel, Rodolfo Molina
and Servillano Florentin of Camp Aguinaldo, Quezon City, assisted by two customs policemen, Val Martinez and Renato Sorima,
and Manila policemen Rogelio Vinas and John Peralta, recovered from the stores, assorted electronic equipment and other
articles, listed in Annex B of the petition, the customs duties on which allegedly had not been paid (p. 12, Rollo). They were
turned over to the Customs Auction ana Cargo Disposal Unit of the Bureau of Customs.

On May 17, 1976, in the afternoon, the hearing officer of Acting Collector of Customs Alfredo Francisco conducted a hearing on
the confiscation of the goods taken by Gener Sula and his agents.

Two days later, petitioner Tomas Chia filed this petition for certiorari, prohibition and mandamus to enjoin the Collector of
Customs and/or his agents from further proceeding with the forfeiture healing and prayed that the search warrants be
declared null and void, that the respondents be ordered to return the confiscated articles to the petitioner, and to pay
damages. Upon filing a Pl,000-bond, the Court issued a writ of preliminary injunction to stop the forfeiture proceedings.

The pivotal issue raised in the petition is whether the warrants of seizure and detention (or Seizure Identifications Nos.14925
and 14925-A) are general warrants issued in violation of Rule 126, Section 3, of the Rules of Court which provides that:

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 62
A search warrant shall not issue but upon probable cause in connection with one specific offense to be
determined by the judge or justice of the peace after examination under oath or affirmation of the
complainant and the witnesses he may produce, and particularly describing the place to be searched and the
persons or things to be seized. No search warrant shall issue for more than one specific offense.

and under Section 3 of the Bill of Rights of the 1973 Constitution which provided that:

The right of the people to be secured in their persons, houses, papers and effects against unreasonable
searches and seizures of whatever nature and for any purpose shall not be violated, and no search warrant or
warrant of arrest shall issue except upon probable cause to be determined by the judge or such other
responsible officer as may be authorized by law after examination under oath or affirmation of the complainant
and the witnesses he may produce, and particularly describing the place to be searched, and the persons or
things to be seized (Emphasis supplied.)

On the other hand, the respondents contend that the goods seized from petitioner's stores by the RASAC-MBA team were only
those subject to customs duties and taxes but which were not supported by any evidence of payment of those duties and taxes.
Those goods are subject to forfeiture for having been imported in violation of Section 2536 of the Tariff and Customs Code, as
amended, in relation to Section 2530 (m)-l, which provides:

SEC. 2536. SEIZURES OF OTHER ARTICLES-The Commissioner of Customs and Collector of Customs and/or
any other customs officer, with the prior authorization in writing by the Commissioner, may demand
evidence of payment of duties and taxes on foreign articles openly offered for sale or kept in storage, and if no
such evidence can be produced, such articles may be seized and subjected to forfeiture proceedings:
Provided, however, that during such proceedings the person or entity from whom such articles have been
seized shall be given the opportunity to prove or show the source of such articles and the payment of duties
and taxes thereon.

The petition is devoid of merit.

Not only may goods be seized without a search and seizure warrant under Section 2536 of the Customs and Tariff Code, when
they (the goods) are openly offered for sale or kept in storage in a store as in this case, but the fact is that petitioner's stores
Tom's Electronics" and "Sony Merchandising (Phil.)" were searched upon warrants of search and detention issued by the
Collector of Customs, who, under the 1973 Constitution, was "a responsible officer authorized by law" to issue them. Sections
2208 and 2209 of the Tariff and Customs Code provide when a search may be made without a warrant and when a warrant is
necessary:

SEC. 2208. RIGHT OF POLICE OFFICER TO ENTER INCLOSURE For the more effective discharge of his
official duties, any person exercising the powers herein conferred, may at any time enter, pass through or
search any land or inclosure or any warehouse, store or other building, not being a dwelling house.

A warehouse, store or other building or inclosure used for the keeping or storage of articles does not become
a dwelling house within the meaning hereof merely by reason of the fact that a person employed as
watchman lives in the place, nor will the fact that his family stays there with him alter the case.

SEC. 2209.- SEARCH OF A DWELLING HOUSE. A dwelling house may be entered and searched only upon
warrant issued by a Judge of the court or such other responsible officers as may be authorized by law, upon
sworn application showing probable cause and particularly describing the place to be searched and the
person or thing to be seized.

The warrants issued by the Collector of Customs in this case were not general warrants, as erroneously alleged by the
petitioner for they identified the stores to be searched, described the articles to be seized and specified the provision of the
Tariff and Customs Code violated.

Upon effecting the seizure of the goods, the Bureau of Customs acquired exclusive jurisdiction not only over the case but also
over the goods seized for the purpose of enforcing the tariff and customs laws.

A party dissatisfied with the decision of the Collector may appeal to the Commissioner of Customs, whose decision is
appealable to the Court of Tax Appeals in the manner and within the period prescribed by law and regulations. The decision of
the Court of Tax Appeals may be elevated to the Supreme Court for review (Secs. 2309-2316; 2401 & 2402 of the Tariff and
Customs Code; Collector of Customs vs. Torres, et al., 45 SCRA 272).

Since petitioner did not exhaust his administrative remedies, his recourse to this Court is premature (Acting Collector of
Customs of the Port of Manila vs. Caluag, 20 SCRA 204; Laganapan vs. Asedillo, 154 SCRA 377; National Development Co. vs.
Hervilla, 151 SCRA 520). If for no other reason, the petition is dismissible on that score.

WHEREFORE, the petition is dismissed. The writ of preliminary injunction which we issued on May 28, 1976 is hereby lifted
and set aside. Costs against petitioner.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 63
SO ORDERED.

PEOPLE V HOPE

Mr. JUSTICE VAN DEUSEN delivered the opinion of the court:


Defendant, William E. Hope, was charged by indictment with deviate sexual assault, attempt deviate sexual assault and
intimidation. The offenses were alleged to have been committed upon a fellow inmate of the Du Page County jail. After a bench
trial, the defendant was found guilty. On the deviate sexual assault charge, he was sentenced to the Department of Corrections
for seven years.
At the trial, the complaining witness, Matthew Ehrenberg, gave the following testimony. On September 16, 1978, while he was
an inmate of the Du Page County jail, the defendant, also an inmate of the jail, approached Ehrenberg's bunk bed. The
defendant then made a number of statements to Ehrenberg. The defendant stated that he wanted to rape Ehrenberg and have
oral sex with him, that Ehrenberg was bisexual and that people often must do things in life which they do not wish to do.
According to Ehrenberg, the defendant also offered to stay with Ehrenberg to insure that Ehrenberg received all his meals and
to prevent other inmates from bothering him. Ehrenberg replied that he was not bisexual, and he refused to have any relations
with defendant. Defendant then stated that some of the other inmates might hurt Ehrenberg if the latter refused to cooperate.
Ehrenberg testified that when this conversation occurred, the other inmates were watching television.
Ehrenberg further testified that defendant awoke him the following morning. The defendant then walked to the day room,
while Ehrenberg walked toward the shower. Shortly thereafter, the defendant joined Ehrenberg and guided him into the stall.
At the defendant's request, Ehrenberg removed his own uniform. Ehrenberg, who was 5 feet 9 inches tall and weighed 130
pounds, stated that out of fear he made no attempt to resist the defendant. Ehrenberg described certain sexual acts which
defendant had compelled Ehrenberg to perform. At that time, a guard approached and ordered whoever was in the shower
stall to come out. The defendant told Ehrenberg to remain quiet, but Ehrenberg then walked out of the stall and told the guard
that someone was trying to rape him. The guard ordered the other person in the stall to come out. When the defendant
emerged, he was fastening his uniform.
Ehrenberg admitted that he had made no effort to awaken the other inmates while these events were in progress. He also
acknowledged having been schooled for learning disabilities and having been under psychiatric care for most of his life.
Ehrenberg stated that at the time of these events, he was being held on a charge of public indecency, to which he subsequently
pleaded guilty. He also acknowledged having previously been convicted of disorderly conduct for having falsely reported to
police that he had been the victim of an armed robbery.
Deputy George Wick, Jr., of the Du Page County sheriff's office, testified that on September 16, 1978, during his morning
rounds of the county jail, he observed the shower curtain moving in a shower stall. He ordered whoever was there to come out.
Ehrenberg emerged "in a bentover position coming to an upright position." Ehrenberg had his overalls in one arm and was
stepping into them as he came out of the stall. Wick testified that Ehrenberg, who appeared "a little upset," reported that
someone in the stall was trying to rape him. When no one else emerged from the stall, Wick ordered Ehrenberg to pull back
the shower curtain. This maneuver revealed the defendant, clad in his underwear and sitting in a crouched position. Defendant
stood up and walked quickly to the day room. When Wick asked the defendant what he was doing in there, the defendant
pointed to Ehrenberg and said, "Why don't you ask him?"
Approximately 45 minutes later, the defendant told Wick that Ehrenberg had been attempting to hang himself in the shower
stall, and that defendant had prevented him. Wick then re-examined the shower stall and found a 12-inch strip of torn pillow
case hanging from the water temperature handle. The cloth was approximately 1 inch wide. Wick had not seen this strip of
cloth in the shower previously.
The State also called another inmate of the jail, Scott Archibald. Archibald testified that on the morning of September 16, 1978,
he observed Matthew Ehrenberg talking to a guard. At that time, Ehrenberg was trembling, pale, crying and "real scared".
The defendant testified that when he arrived at the jail at approximately 11 a.m. on September 15, 1978, he was assigned to
the tier where this incident occurred. The defendant stated that he went to sleep that evening without speaking to Ehrenberg.
The next morning he was awakened by a trustee and was reading in the day room when he observed Ehrenberg tearing up a
terry cloth towel. Ehrenberg fastened the pieces of toweling together, went into the shower, and closed the curtain after him.
After a minute, defendant became curious and looked in the stall. He observed Ehrenberg sitting on the floor. One end of the
toweling was tied to the water temperature handle; the other was tied around Ehrenberg's neck. Ehrenberg told defendant
that he was tired of doing favors for the other inmates. The defendant then told Ehrenberg that he was going about things the
wrong way and he should speak to one of the guards. Defendant had begun taking the toweling off Ehrenberg's neck when
Deputy Wick arrived and asked who was in the shower. Ehrenberg stepped out, but defendant stayed in the stall
"contemplating whether I should come out right behind him or what." When he heard Ehrenberg complain of an attempt rape,
the defendant came out of the shower laughing. The defendant stated that he was laughing because he knew about
Ehrenberg's mental situation. The defendant was 6 feet 2 inches tall and weighed approximately 210 pounds.
George Cuteo, also an inmate of the jail, testified that on the evening of September 15, 1978, when Ehrenberg claimed to have
had his initial conversation with the defendant, the defendant had been watching television with other inmates. Cuteo stated
that on the morning of September 15, he saw the defendant at breakfast, and during lunch on that day he observed the
defendant lying on his bunk.
The trial court subsequently found the defendant guilty as charged and entered the sentence. This appeal followed.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 64
On appeal, the defendant contends that his attorney at trial, Ms. Therese Rapchak of the Du Page County public defender's
office, also represented the State's witness, Scott Archibald, when Archibald appeared before the grand jury which inquired
into this incident. The grand jury minutes indicate that Archibald testified, but he was not a suspect in the investigation.
Nonetheless, the defendant contends that this situation constituted a per se conflict of interest which denied the defendant
effective assistance of counsel and thus violated his rights under the sixth and fourteenth amendments to the United States
Constitution and article 1, section 8 of the Illinois Constitution.
While the defendant's attorney raised this same objection in the defendant's post-trial motion, prior to and during the trial,
neither she nor the defendant made objections to her continued representation of the defendant. The record does disclose that
just prior to the commencement of the trial in this case, the trial court stated that a possible conflict of interest may have
arisen. Prior to this statement on the record, the fact that Ms. Rapchak had advised Archibald had apparently been discussed
off the record. On the morning of the trial, the trial court stated on the record:
"[THE COURT:] And I hope the record is sufficiently clear that Miss Rapchak did not represent a State's witness on any matter
concerning this case.

MS. RAPCHAK: * * * I did advise him when he went before the Grand Jury in this case.

THE COURT: To tell the truth.


MS. RAPCHAK: Yeah.
THE COURT: Okay."
1 Courts have long recognized that the attorney representing the concerned parties is in the best possible professional and
ethical position to determine when a conflict of interest exists (Holloway v. Arkansas (1978), 435 U.S. 475, 485, 55 L.Ed.2d 426,
435, 98 S.Ct. 1173, 1179), and they have an obligation to advise the court of the extent of any possible conflict ( Cuyler v.
Sullivan(1980), 446 U.S. 335, 346, 64 L.Ed.2d 333, 345, 100 S.Ct. 1708, 1717).
When the court inquired into the possibility of a conflict of interest, defense counsel had an opportunity to add any additional
details which would be relevant in determining whether a conflict of interest existed; she confined herself to only one detail
that she told the witness, Archibald, to tell the truth. At that time, defense counsel did not even suggest to the court that she
felt the conflict was sufficient to prevent her from adequately representing the defendant. She did not request leave to
withdraw as counsel, nor did she voice any objection on behalf of the defendant. Furthermore, the defendant, who was present
during this discussion, failed to voice any objection to Ms. Rapchak's continued representation of his interests.
2 In order to establish a violation of a defendant's right to effective assistance of counsel, "a defendant who raises no
objection at trial must demonstrate that an actual conflict of interest adversely affected his lawyer's performance." ( Cuyler v.
Sullivan (1980), 446 U.S. 335, 348, 64 L.Ed.2d 333, 346-47, 100 S.Ct. 1708, 1718.) Thus, the threshold question is whether this
court finds an actual conflict of interest manifested by the trial court record ( People v. Canales (1980),86 Ill. App.3d 738, 742;
see People v. Vriner (1978), 74 Ill.2d 329, 340), for it is clear that a judgment will not be disturbed on the basis of a
hypothetical conflict ( People v. Berland (1978), 74 Ill.2d 286; People v. Gray (1980), 87 Ill. App.3d 142, 151).

1
3 Generally stated, an actual conflict of interest exists when counsel, without the knowledge and consent of the defendant, "is
in a duplicitous position where his full talents as a vigorous advocate having the single aim of acquittal by all means fair and
honorable are hobbled or fettered or restrained by commitments to others." People v. Stoval (1968), 40 Ill.2d 109, 112;
see Glasser v. United States (1942), 315 U.S. 60, 86 L.Ed. 680, 62 S.Ct. 457.
The defendant asks this court to assume that when Ms. Rapchak advised Archibald to tell the truth to the grand jury, Archibald
related to Ms. Rapchak incidents which were inconsistent with his in-court testimony, and, thus, the attorney-client privilege
fettered Ms. Rapchak in her cross-examination of Archibald.
We note that the only communication between Ms. Rapchak and Archibald which can be found in the record was her
admonition to Archibald to tell the truth to the grand jury. Furthermore, when the post-trial motion was denied, the trial court
noted that there was no indication of any confidential statement which would create a conflict of interest. When the trial court
made this comment, both Ms. Rapchak and the defendant were present. Neither one of them objected to or corrected the trial
judge's statement.

1
As was noted in People v. Vriner (1978), 74 Ill.2d 329, 342, "a positive basis must be found for concluding that an actual conflict
of interest existed"; the fact that a defendant "through hindsight, conceived notions that the representation adversely affected"
his interest is insufficient. This defendant's assertion that there may have been inconsistent confidential statements made by
Archibald to Rapchak is mere speculation and is not supported by the record. In fact, the record strongly indicates that no such
statements were made. The record is devoid of any actual conflict. There being no proof of an actual conflict, this court is not
required to speculate as to how Ms. Rapchak's advice to Archibald may have affected her subsequent representation of the
defendant. People v. Berland (1978), 74 Ill.2d 286, 301; People v. Gray (1980), 87 Ill. App.3d 142, 152.
Moreover, Archibald's testimony at trial was essentially limited to a description of Ehrenberg's appearance and demeanor
after the incident in the shower stall. No antagonism existed between the defendant's testimony and Archibald's testimony.
The victim's condition, as described by Archibald, could have been either the result of an aborted suicide attempt as claimed
by the defendant, or the result of an alleged sexual assault as charged by the State. Archibald's statements did not warrant
impeachment by the defense.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 65
4 Because the record has revealed no actual conflict, it is unnecessary to apply the per se rule. (People v. Berland (1978), 74
Ill.2d 286, 304.) Furthermore, an examination of the record in this case shows that Ms. Rapchak ably represented the
defendant. The defendant's claim that he lacked effective assistance of counsel is without merit.
The defendant also contends that the prosecution violated the provisions of Rule 412 and the principles of due process
embodied in Brady v. Maryland (1963), 373 U.S. 83, 10 L.Ed.2d 215, 83 S.Ct. 1194, and People v. Nichols (1976), 63 Ill.2d 443,
by failing to introduce into evidence the 12-inch strip of cloth recovered from the shower stall or by failing to explain its
absence. The defendant, therefore, argues that the State improperly suppressed this evidence.
5 Having raised these issues for the first time on appeal, defendant has waived them. People v. Jackson (1981), 84 Ill.2d
350; People v. Tannenbaum (1980), 82 Ill.2d 177.
Moreover, we find no merit, whatsoever, in these contentions. Prior to trial, the court entered a standard discovery order
directing the prosecution to comply with Supreme Court Rule 412 (Ill. Rev. Stat. 1979, ch. 110A, par. 412). In its answer to the
discovery order, the prosecution stated that it intended to introduce at trial "an approximately 12" length of sheet-like
material" and advised defense counsel that this sheeting could be inspected. Thus, the State properly complied with the
requirements of Rule 412. Because Rule 412 speaks only in terms of discovery, and not in terms of production of evidence, the
State's failure to introduce the evidence or explain its absence does not violate Rule 412.
6 Both Brady v. Maryland (1963), 373 U.S. 83, 87, 10 L.Ed.2d 215, 218, 83 S.Ct. 1194, 1196-97, andPeople v. Nichols (1976), 63
Ill.2d 443, 446, hold that a violation of due process occurs when a prosecutor, regardless of motive, suppresses material
evidence after a request for production. It has been established, however, that no improper suppression of evidence has
occurred where, prior to trial, defense counsel is made aware of the existence of the evidence and makes no effort to have it
produced. ( People v. Smith (1970), 46 Ill.2d 430; People v. Hudson (1968), 38 Ill.2d 616.) In this matter, defense counsel did
not seek an order of court for the production of the sheeting, nor did she request the State to produce it at trial. While
defendant's counsel, during her closing argument, stated: "As to the whereabouts of the towel, * * * we have not been able to
locate it. * * * We can't account for what happened to it, and that's why the evidence is not here today," this remark, made after
proofs were closed and the parties had rested, cannot be construed as a request for the production of the evidence, or as a
complaint that the State had not made the evidence available. Absent any request whatsoever to produce the sheeting, the
defendant cannot seriously contend that the State violated his due process rights by suppressing evidence material to his
defense.
7 Finally, the defendant contends that because Ehrenberg's testimony should not have been believed, the evidence was
insufficient to establish the defendant's guilt beyond a reasonable doubt. Specifically, he focuses upon Ehrenberg's record of
psychiatric disorders. There was, however, no indication that Ehrenberg's ability to perceive and relate events was impaired.
Therefore, the fact that Ehrenberg had been schooled for a learning disability and had received psychiatric care for most of his
life did not necessarily discredit his testimony. Similarly, while Ehrenberg's conviction for disorderly conduct for falsifying a
police complaint requires that his testimony be carefully scrutinized, it does not necessarily render it unworthy of belief.
Finally, defendant notes inconsistencies in Ehrenberg's testimony. These inconsistencies relate to whether the defendant was
wearing his jail uniform while inside the shower stall. Ehrenberg's testimony as to the actual events in question, however, was
not materially impeached. Rather, it tended to be supported by the testimony of Deputy Wick.
8 In a bench trial, the judge, who is best able to observe the demeanor of the witnesses, must determine whether to believe
the testimony wholly, partially or not at all. In this case the trial judge specifically stated that she did not believe the
defendant's testimony, and unless the judge's determinations are shown to have been manifestly erroneous, they will not be
disturbed on review. ( People v. Deming (1980), 87 Ill. App.3d 953.) Accordingly, we determine that there was sufficient
evidence to establish defendant's guilt beyond a reasonable doubt.
The judgment of the circuit court of Du Page County is affirmed.
Affirmed.

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 88017 January 21, 1991

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,


vs.
LO HO WING alias PETER LO, LIM CHENG HUAT alias ANTONIO LIM and REYNALDO TIA y SANTIAGO, defendants. LO
HO WING alias PETER LO, defendant-appellant.

The Solicitor General for plaintiff-appellee.


Segundo M. Gloria, Jr. for defendant-appellant.

GANCAYCO, J.:

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 66
This case involves the unlawful transport of metamphetamine, a regulated drug under Republic Act No. 6425, as amended. One
of its derivatives is metamphetamine hydrochloride, notoriously known in street parlance as "shabu" or "poor man's cocaine."

Appellant Peter Lo, together with co-accused Lim Cheng Huat alias Antonio Lim and Reynaldo Tia, were charged with a
violation of Section 15, Article III of the aforementioned statute otherwise known as the Dangerous Drugs Act of 1972, before
Branch 114 of the Regional Trial Court of Pasay City. Only appellant and co-accused Lim Cheng Huat were convicted. They
were sentenced to suffer life imprisonment, to pay a fine of P25,000.00 each, and to pay the costs. Their co-accused Reynaldo
Tia was discharged as a state witness. The pertinent portion of the information reads as follows:

That on or about the 6th day of October, 1987, in Pasay City, Metro Manila, and within the jurisdiction of this
Honorable Court, the above-named accused, conspiring and confederating together and mutually helping one another,
without authority of law, did then and there willfully, unlawfully and feloniously deliver, dispatch or transport 56
teabags of Metamphetamine, a regulated drug.

Contrary to law. 1

The antecedent facts of the case as found by the trial court are as follows:

In July 1987, the Special Operations Group, a unit of the Criminal Investigation Service (CIS) of the Philippine Constabulary
(PC), received a tip from one of its informers about an organized group engaged in the importation of illegal drugs, smuggling
of contraband goods, and gunrunning. After an evaluation of the information thus received, a project codenamed "OPLAN
SHARON 887" was created in order to bust the suspected syndicate.

As part of the operations, the recruitment of confidential men and "deep penetration agents' was carried out to infiltrate the
crime syndicate. One of those recruited was the discharged accused, Reynaldo Tia (hereinafter referred to as Tia).

Tia was introduced to his co-accused Lim Cheng Huat (hereinafter referred to as Lim) by another confidential agent named
George on August 3, 1987. Lim expressed a desire to hire a male travelling companion for his business nips abroad. Tia offered
his services and was hired.

Lim and Tia met anew on several occasions to make arrangements for a trip to China. In the course of those meetings, Tia was
introduced to Peter Lo (hereinafter referred to as appellant), whom Tia found out to be the person he was to accompany to
China in lieu of Lim.

As a "deep penetration agent," Tia regularly submitted reports of his undercover activities on the suspected criminal
syndicate. Meanwhile, the officer-in-charge of OPLAN SHARON 887, Captain Luisito Palmera, filed with his superiors the
reports submitted to him, and officially informed the Dangerous Drugs Board of Tia's activities.

On October 4, 1987, appellant and Tia left for Hongkong on board a Philippine Airlines flight. Before they departed, Tia was
able to telephone Captain Palmera to inform him of their expected date of return to the Philippines as declared in his round-
trip plane ticket-October 6, 1987 at two o'clock in the afternoon.

The day after they arrived in Hongkong, Tia and appellant boarded a train bound for Guangzhou, in the People's Republic of
China. Upon arriving there, they checked in at a hotel, and rested for a few hours. The pair thereafter went to a local store
where appellant purchased six (6) tin cans of tea. Tia saw the paper tea bags when the cans were opened for examination
during the purchase. Afterwards, they returned to the hotel. Appellant kept the cans of tea in his hotel room. That evening, Tia
went to appellant's room to talk to him. Upon entering, he saw two other men with appellant. One was fixing the tea bags,
while the other was burning substance on a piece of aluminum foil using a cigarette lighter. Appellant joined the second man
and sniffed the smoke emitted by the burning substance. Tia asked the latter what they would be bringing back to the
Philippines. He was informed that their cargo consisted of Chinese drugs. Tia stayed in the room for about twenty minutes
before going back to his room to sleep.

The next day, October 6,1987, the two returned to Manila via a China Airlines flight. Appellant had with him his red traveling
bag with wheels. Before departing from Guangzhou however, customs examiners inspected their luggage. The tin cans of tea
were brought out from the traveling bag of appellant. The contents of the cans were not closely examined, and appellant was
cleared along with Tia.

The plane landed at the Ninoy Aquino International Airport (NAIA), then named Manila International Airport, on schedule. Lim
met the newly-arrived pair at the arrival area. Lim talked to appellant, while Tia, upon being instructed, looked after their
luggage. After Lim and appellant finished their conversation, the latter hailed a taxicab. Appellant and Tia boarded the taxicab
after putting their luggage inside the back compartment of the vehicle. Lim followed in another taxi cab.

Meanwhile, a team composed of six operatives headed by Captain Palmera was formed to act on the tip given by Tia. On the
expected date of arrival, the team proceeded to the NAIA. Captain Palmera notified the Narcotics Command (NARCOM)
Detachment at the airport for coordination. After a briefing, the operatives were ordered to take strategic positions around the
arrival area. Two operatives stationed just outside the arrival area were the first ones to spot the suspects emerging
therefrom. Word was passed on to the other members of the team that the suspects were in sight. Appellant was pulling along
his red traveling bag while Tia was carrying a shoulder bag. The operatives also spotted Lim meeting their quarry.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 67
Upon seeing appellant and Tia leave the airport, the operatives who first spotted them followed them. Along Imelda Avenue,
the car of the operatives overtook the taxicab ridden by appellant and Tia and cut into its path forcing the taxi driver to stop
his vehicle. Meanwhile, the other taxicab carrying Lim sped away in an attempt to escape. The operatives disembarked from
their car, approached the taxicab, and asked the driver to open the baggage compartment. Three pieces of luggage were
retrieved from the back compartment of the vehicle. The operatives requested from the suspects permission to search their
luggage. A tin can of tea was taken out of the red traveling bag owned by appellant. Sgt. Roberto Cayabyab, one of the
operatives, pried the lid open, pulled out a paper tea bag from the can and pressed it in the middle to feel its contents. Some
crystalline white powder resembling crushed alum came out of the bag. The sergeant then opened the tea bag and examined
its contents more closely. Suspecting the crystalline powder to be a dangerous drug, he had the three traveling bags opened for
inspection. From the red traveling bag, a total of six (6) tin cans were found, including the one previously opened. Nothing else
of consequence was recovered from the other bags. Tia and appellant were taken to the CIS Headquarters in Quezon City for
questioning.

Meanwhile, the second taxicab was eventually overtaken by two other operatives on Retiro Street, Quezon City. Lim was
likewise apprehended and brought to the CIS Headquarters for interrogation.

During the investigation of the case, the six tin cans recovered from the traveling bag of appellant were opened and examined.
They contained a total of fifty-six (56) paper tea bags with white crystalline powder inside instead of tea leaves.

The tea bag opened by Sgt. Cayabyab during the search and seizure was sent to the PC-INP Crime Laboratory for preliminary
examination. Tests conducted on a sample of the crystalline powder inside the tea bag yielded a positive result that the
specimen submitted was metamphetamine. Samples from each of the fifty-six (56) tea bags were similarly tested. The tests
were also positive for metamphetamine. Hence, the three suspects were indicted.

In rendering a judgment of conviction, the trial court gave full credence to the testimonies of the government anti-narcotics
operatives, to whom the said court applied the well-settled presumption of regularity in the performance of official duties.

Appellant now assigns three errors alleged to have been committed by the trial court, namely:

I.

THE TRIAL COURT ERRED IN NOT DECLARING THE SEARCH AND SEIZURE ON THE ACCUSED AS ILLEGAL.

II.

THE TRIAL COURT ERRED IN FINDING THE ACCUSED GUILTY OF DELIVERING, DISPATCHING OR TRANSPORTING
METAMPHETAMINE, A REGULATED DRUG.

III.

THE TRIAL COURT ERRED IN DISCHARGING REYNALDO TIA TO TESTIFY FOR THE PROSECUTION. 2

We affirm.

Anent the first assignment of error, appellant contends that the warrantless search and seizure made against the accused is
illegal for being violative of Section 2, Article III of the Constitution. He reasons that the PC-CIS officers concerned could very
well have procured a search warrant since they had been informed of the date and time of a arrival of the accused at the NAIA
well ahead of time, specifically two (2) days in advance. The fact that the search and seizure in question were made on a
moving vehicle, appellant argues, does not automatically make the warrantless search herein fall within the coverage of the
well-known exception to the rule of the necessity of a valid warrant to effect a search because, as aforementioned, the anti-
narcotics agents had both time and opportunity to secure a search warrant.

The contentions are without merit. As correctly averred by appellee, that search and seizure must be supported by a valid
warrant is not an absolute rule. There are at least three (3) well-recognized exceptions thereto. As set forth in the case
of Manipon, Jr. vs. Sandiganbayan, 3 these are: [1] a search incidental to an arrest, [2] a search of a moving vehicle, and [3]
seizure of evidence in plain view (emphasis supplied). The circumstances of the case clearly show that the search in question
was made as regards a moving vehicle. Therefore, a valid warrant was not necessary to effect the search on appellant and his
co-accused.

In this connection, We cite with approval the averment of the Solicitor General, as contained in the appellee's brief, that the
rules governing search and seizure have over the years been steadily liberalized whenever a moving vehicle is the object of the
search on the basis of practicality. This is so considering that before a warrant could be obtained, the place, things and persons
to be searched must be described to the satisfaction of the issuing judgea requirement which borders on the impossible in
the case of smuggling effected by the use of a moving vehicle that can transport contraband from one place to another with
impunity. 4

We might add that a warrantless search of a moving vehicle is justified on the ground that "it is not practicable to secure a
warrant because the vehicle can be quickly moved out of the locality or jurisdiction in which the warrant must be sought." 5
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 68
In the instant case, it was firmly established from the factual findings of the trial court that the authorities had reasonable
ground to believe that appellant would attempt to bring in contraband and transport it within the country. The belief was
based on intelligence reports gathered from surveillance activities on the suspected syndicate, of which appellant was touted
to be a member. Aside from this, they were also certain as to the expected date and time of arrival of the accused from China.
But such knowledge was clearly insufficient to enable them to fulfill the requirements for the issuance of a search warrant. Still
and all, the important thing is that there was probable cause to conduct the warrantless search, which must still be present in
such a case.

The second assignment of error is likewise lacking in merit. Appellant was charged and convicted under Section 15, Article III
of Republic Act No. 6425, as amended, which reads:

The penalty of life imprisonment to death and a fine ranging from twenty thousand to thirty thousand pesos shall be
imposed upon any person who, unless authorized by law, shall sell, dispose, deliver, transport or distribute any
regulated drug (emphasis supplied).

The information charged the accused of delivering, transporting or dispatching fifty-six (56) tea bags containing
metamphetamine, a regulated drug. The conjunction "or' was used, thereby implying that the accused were being charged of
the three specified acts in the alternative. Appellant argues that he cannot be convicted of "delivery" because the term
connotes a source and a recipient, the latter being absent under the facts of the case. It is also argued that "dispatching' cannot
apply either since appellant never sent off or disposed of drugs. As for "transporting," appellant contends that he cannot also
be held liable therefor because the act of transporting necessarily requires a point of destination, which again is non- existent
under the given facts.

The contentions are futile attempts to strain the meaning of the operative acts of which appellant and his co-accused were
charged in relation to the facts of the case. There is no doubt that law enforcers caught appellant and his co-accused in
flagrante delicto of transporting a prohibited drug. The term "transport" is defined as "to carry or convey from one place to
another." 6 The operative words in the definition are "to carry or convey." The fact that there is actual conveyance suffices to
support a finding that the act of transporting was committed. It is immaterial whether or not the place of destination is
reached. Furthermore, the argument of appellant gives rise to the illogical conclusion that he and his co- accused did not
intend to bring the metamphetamine anywhere, i.e.they had no place of destination.

The situation in the instant case is one where the transport of a prohibited drug was interrupted by the search and arrest of
the accused. Interruption necessarily infers that an act had already been commenced. Otherwise, there would be nothing to
interrupt.

Therefore, considering the foregoing, since the information included the acts of delivery, dispatch or transport, proof beyond
reasonable doubt of the commission of any of the acts so included is sufficient for conviction under Section 15, Article III of
Republic Act No. 6425, as amended.

Moreover, the act of transporting a prohibited drug is a malum prohibitum because it is punished as an offense under a special
law. It is a wrong because it is prohibited by law. Without the law punishing the act, it cannot be considered a wrong. As such,
the mere commission of said act is what constitutes the offense punished and suffices to validly charge and convict an
individual caught committing the act so punished, regardless of criminal intent. 7

As to the third assigned error, appellant contests the discharge of accused Reynaldo Tia to testify for the prosecution on the
ground that there was no necessity for the same. Appellant argues that deep penetration agents such as Tia "have to take risks
and accept the consequences of their actions." 8 The argument is devoid of merit. The discharge of accused Tia was based on
Section 9, Rule 119 of the Rules of Court, which reads in part:

Sec. 9. Discharge of the accused to be state witness. When two or more persons are jointly charged with the
commission of any offense, upon motion of the prosecution before resting its case, the court may directone or more of
the accused to be discharged with their consent so that they may be witnesses for the state . . . (emphasis supplied).

As correctly pointed out by the Solicitor General, the discharge of an accused is left to the sound discretion of the lower
court.1wphi1 The trial court has the exclusive responsibility to see that the conditions prescribed by the rule exist. 9 In the
instant case, appellant does not allege that any of the conditions for the discharge had not been met by the prosecution.
Therefore, the discharge, as ordered by the trial court, stands.

Finally, appellant alleges that the testimony of Sgt. Roberto Cayabyab regarding the facts surrounding the commission of the
offense proves that the discharge of accused Tia is unnecessary. The allegation is baseless. Appellant himself admits that the
sergeant's testimony corroborates the testimony of the discharged accused. The fact of corroboration of the testimonies
bolsters the validity of the questioned discharge precisely because paragraph (a) of the aforequoted rule on discharge requires
that the testimony be substantially corroborated in its material points. The corroborative testimony of the PC-CIS operative
does not debunk the claim of the prosecution that there is absolute necessity for the testimony of accused Tia.

WHEREFORE, the decision appealed from is hereby AFFIRMED in toto and the appeal is thereby DISMISSED. No costs.

SO ORDERED.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 69
Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-20266 January 31, 1967

THE COMMISSIONER OF CUSTOMS, petitioner,


vs.
THE HONORABLE JUDGE GAUDENCIO CLORIBEL, Judge of the Court of First Instance of Manila, Branch VI,
and HERMINIO G. TEVES, respondents.

Office of the Solicitor General Arturo A. Alafriz, Assistant Solicitor General F. R. Rosete and Solicitor E. M. Salva for petitioner.
Protacio Caalita for respondent.

SANCHEZ, J.:

On June 30, 1960, respondent Herminio G. Teves entered into an agreement with the National Rice and Corn Corporation. By
virtue thereof, Teves was authorized "to act as Agent" of the Naric "in exporting" rice "as well as in importing the collateral
goods" that will be brought in "thru barter under the NARIC Chapter and the arrangements with other government agencies,
as presently authorized and to buy the aforementioned collateral goods."

The foregoing notwithstanding, the same contract contains, amongst others, the following stipulations:

III. CONSIDERATIONS:

(1) The price of the rice subject matter of this contract, shall be FOUR HUNDRED THIRTY ONE FIFTY (P431.50)
PESOS, Philippine Currency, per metric ton, FOB Manila, stowed and timmed or a total of ONE MILLION SEVEN
HUNDRED TWENTY SIX THOUSAND (P1,726,000.00) PESOS, for 4,000 metric tons;

(2) The C & F price in Manila, or other Philippine ports of the imported commodities shall be equal to the total peso
price offered for the rice. The BUYER will import commodities under the aforementioned ratio of 40%- 20%-40%
mentioned in paragraph 1 above not exceeding ONE MILLION SEVEN HUNDRED TWENTY SIX (P1,726,000.00) PESOS,
equivalent to the peso price, offered for the rice on the basis of Philippine P2.00 to U.S. $1.00.

IV. PAYMENT:

Within fifteen (15) days after due notice to BUYER by SELLER of the effectivity of this contract pursuant to paragraph
XII hereunder and of the availability of the rice for delivery, BUYER shall immediately pay FOUR HUNDRED THIRTY
ONE THOUSAND FIVE HUNDRED (P431,500.00) PESOS to SELLER corresponding to the price of the first lot
amounting to P431,500.00 thereafter, payment of each succeeding lot amounting to P431,500.00 shall be made by
BUYER to SELLER within fifteen (15) days from notice of availability of rice corresponding to each lot.

V. DELIVERY:

(1) Under this contract SELLER agrees to make delivery of the first lot of 1,000 metric tons after due payment of the
price corresponding to same within fifteen (15) days also from notice of effectivity of the contract and availability of
the rice; thereafter of each succeeding lot of 1,000 metric tons shall be made by SELLER within fifteen (15) days from
due notice to BUYER of the availability of said lot.

Shortly after the execution of the contract, allegedly because of the acute shortage of staple products that cropped up in the
country, the President of the Philippines suspended all projected rice exportations including that of Teves.

But Teves, representing that he already had contractual commitments here to supply third parties with the goods he intended
to import, and likewise abroad for the barter of local rice with foreign products, sought authority from the President and his
cabinet to import ahead of the exportation the collateral commodities supposed to have been bartered under his
agreement with the NARIC namely, 40% essentials, 20% semi-essentials and 40% non-essentials.

On October 26, 1960, the President and his cabinet granted the authority requested. The license of Teves to import was
revalidated "for a period of one hundred twenty (120) days" from October 26, 1960, "Provided the importation of such
collateral commodities shall be limited only to the extent of [his] contractual commitments with foreign suppliers as of
September 14, 1960" and that "the existence of such contractual commitments shall be verified by the Administrator of
Economic Coordination."

In accordance therewith, Teves imported within the period from April 17, 1961 to January 12, 1962, twenty two (22)
shipments or more of merchandise consisting largely of 84 cases (70) units of Toyopet cars, several bags of synthetic rubber

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 70
and resin, medicinal preparations, and radio and electronic parts and motors, and other items. Customs duties and taxes
therefor were paid.

On January 12, 1962, the Economic Coordinator wrote Commissioner of Customs 2 [both positions were then concurrently held
by Cesar C. Climaco] stating "[a]s per agreement with the Chairman-General Manager of the NARIC we are requesting that you
hold goods coming in as importations, using the name of NARIC and same should only be released after clearance by the
NARIC, through the Office of Economic Coordination.

Because of this, the shipments of Teves just mentioned were withheld by the Commissioner, pending compliance by Teves of
said directive of January 12, 1962. On March 7, 1962, the Executive Secretary wrote the Commissioner saying that "the
President, at the Cabinet meeting today, decided that action on this matter be taken upon consultation and/or collaboration
with the Secretary of Justice."

The matter of the legality of the shipments was, therefore, referred to the Secretary of Justice. Teves asked the justice secretary
and the Commissioner to have the imported goods delivered to him, because of the deteriorating nature of some of them, upon
the filing of surety bonds.

To this request of Teves, the Secretary of Justice acceded. In the latter's 3rd indorsement dated April 25, 1962, addressed to
the Commissioner, he wrote that " [s]ince the question concerning the legality of the importations of Mr. Herminio G. Teves has
been brought to court in Civil Case No. 49977 of the Court of First Instance of Manila, entitled 'Herminio G. Teves, Petitioner, vs.
Teotimo A. Roja ... and Cesar C. Climaco, Respondents,' [this case was not heard and was subsequently withdrawn on motion of
Teves after the shipments were released under bond3and is now sub judice, this Department cannot with propriety give its
views on the matter, as requested." The Secretary added that "[h]owever, in line with our 1st indorsement of April 2, 1962,
regarding the release of perishable food products, this Office will interpose no objection to the release to the recorded
consignee or his duly authorized representative of the seventy units of Toyopet cars and other shipments which are not
banned, subject to the conditions stated in the within 1st indorsement dated March 15, 1962 i.e., 'upon filing of special time
deposit required by Central Bank Circular 137 and/or filing of sufficient bond to protect the interests of the government'
pending judicial determination of the legality of the importations of Mr. Teves under the 'NARIC Rice Barter'".

Teves then posted surety bonds, accepted by the Commissioner, in the total amount of P294,620.25: some issued by Meridian
Assurance Corporation amounting to P169,784.64, the rest by Fieldmen's Insurance Company for P124,835.61.

The Meridian bonds contain the following risk: "... in the event that it should be finally decided that the merchandise herein
mentioned were imported in violation of some laws and regulations, the entire amount of this bond will be forfeited in favor of
the Government and/or in a fine or surcharge should be imposed, as the case may be, the principal and/or the Surety will pay
to the Bureau of Customs in CASH the amount adjudged to be paid: PROVIDED, HOWEVER, that if within thirty (30) days from
demand for payment of the liability to be mentioned thereby, and said liability is not paid, and if it should be found necessary
to file an action in court to effect collection thereof, a penalty of One Thousand Pesos (P1,000.00) in addition shall be imposed,
otherwise, this obligation shall be void and of no effect." The risk defined in Fieldmen's bonds is identically worded except that
liability principally attaches "in the event that it should be finally decided that the NARIC-Rice Barter Agreement is held
illegal."

The importations were thus released under these bonds.

Teves subsequently sued for prohibition and mandamus in the Court of First Instance of Manila upon a complaint dated
August 18, 1962, amended on August 24, 1962.4 Therein, he prayed for a restraining order against the (a) Administrator of
Economic Coordination, from enforcing his directive of January 12, 1962, requiring him to secure NARIC clearance on his
shipments aforesaid (b) General Manager, Rice and Corn Administration, from acting on said NARIC clearances, and (c)
Commissioner of Customs, from referring the shipments which arrived prior to January 12, 1962 to any office for ruling. Also,
Teves moved the court to issue a writ of preliminary mandatory injunction, ordering the Commissioner to cancel and/or cause
to be cancelled the bonds heretofore recited covering the 22 shipments or more, which arrived prior to January 12, 1962.
Then, Teves asked that, after hearing, all injunctions be declared permanent.

On August 27, 1962, the Commissioner registered written opposition against the issuance of a writ of preliminary mandatory
injunction. His reasons are: (a) the lower court lacks jurisdiction over the subject-matter; (b) all administrative remedies have
not been exhausted; (c) mandamus lies only to compel performance of a purely ministerial act; and (d) Teves' right herein to
import is not well-defined, clear and certain.

Likewise opposing was the RCA, which, through its pleading of August 27, 1962, stated that Teves would not suffer great or
irreparable injury because (a) the goods have been released under bond; and (b) the NARIC or its successor, the RCA, has the
right to know whether the importations are in accordance with, and not in violation of, the contract provisions.

Oppositions notwithstanding respondent Judge Gaudencio Cloribel made out an order dated August 29, 1962 granting the
injunctions prayed for, including a preliminary mandatory injunction ordering the Commissioner "to cancel and/or cause to be
cancelled the corresponding bonds of the twenty-two (22) shipments and/or more of them consigned to NARIC-HERMINIO G.
TEVES which arrived at the port of Manila prior to January 12, 1962 and which bonds were filed by the Fieldmen's Insurance
Company and the Meridian Insurance Company, until further orders from his Court." The next day, August 30, 1962, the writ
was issued, upon the posting of a P5,000.00 bond by Teves.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 71
On August 31, 1962, the Commissioner and also the RCA filed with the court below their respective answers to Teves' petition.

On September 5, 1962, Judge Cloribel issued another order [upon Teves' urgent ex-parte manifestation filed on the same date
that the Commissioner had not yet obeyed the mandatory injunction] commanding said Commissioner and those under him to
comply with the writ.

On the same date, September 5, 1962, the Commissioner moved to reconsider the orders of August 29 and September 5, and to
quash the writ issued thereunder. This motion was followed by another of September 10, of the same tenor, this time with
arguments.

On September 10, 1962, respondent judge denied both motions.

Hence, the present original petition for certiorari and prohibition. The prayer of the herein petition reads:

WHEREFORE, it is respectfully prayed that this Honorable Court:

a) Find this petition to be sufficient in form and substance and give due course to the same;

b) That upon giving due course to this petition, issue a writ of preliminary injunction against respondents restraining
them in enforcing the order dated August 29, 1962 (Annex L) and the writ of preliminary injunction dated August 30,
1992 (Annex M) during the pendency of this petition.

And after hearing, this Honorable Court render judgment:

c) Declaring that respondent judge does not have jurisdiction over the cause of action in Civil Case No. 51296 entitled
"Teves vs. Administrator, Economic Coordination, etc., et al." abovementioned;

d) That granting respondent has jurisdiction, he nevertheless acted with grave abuse of discretion or in excess of his
jurisdiction in issuing his Orders dated August 29, 1962, September 5, 1962 and September 10, 1962 and the writ of
injunction dated August 30, 1962, which are therefore null and void; and

e) Making the preliminary injunction issued by this Honorable Court against respondents to be permanent.

On September 20, 1962, this Court granted, without bond, the preliminary injunction prayed for, restraining respondents from
proceeding or enforcing the lower court's order of August 29, 1962 and the writ of preliminary injunction thereupon issued on
August 30, 1962.

1. Challenged by the Commissioner is the jurisdiction of the respondent judge to hear and determine Civil Case 51296
aforesaid.

A condition of the bonds subject of that action is that should it be finally decided that the merchandise were imported in
violation of some laws and regulations, the entire amount thereof will be forfeited in favor of the government.

The articles were imported by Teves upon the authority of the agreement between him and Naric. While this contract
professes that Teves was agent of the Naric "in exporting" a given quantity and kind of rice valued P1,726,000.00 "as well as in
importing the collateral goods" which had to be brought in "thru barter under the NARIC Charter", the subsequent stipulations
thereof purport to show that Teves buys the rice from the Naric for exportation, and by way of barter is authorized to import
the collateral goods, not as agent, but on his own personal account. Thus, the contract stipulates: "The collateral commodities
imported by virtue of this AGREEMENT shall belong and accrue solely to the BUYER (Teves) free from any SELLERS (Naric's)
equity, lien or claim of whatever kind of nature provided BUYER complies faithfully with his obligations herein." Whether or
not under the Naric charter a transaction of the nature herein involved is allowable, poses a serious problem.

Did Teves export the rice he purchased from the Naric? Or did he sell it in the local market? This is not yet clear in the record.

The contract specifies the nature of the goods he could import: 40% essential goods, 20% semi-essential goods and 40% non-
essential goods. This, too, needs to be chinked to ascertain adherence thereto. And, were banned goods imported?

Another condition of that importation is that it is limited to the extent of contractual commitments with foreign suppliers as of
September 14, 1960, a fact to be verified by the Office of Economic Coordination. Again, compliance therewith is yet to be
determined.

The duty of the Commissioner to first cause an inquire into the facts before he releases the bonds is quite apparent. He must
look into the legality of the importation. This duty is implicit in Section 1207 of the Tariff and Customs Code which provides:

Section 1207. Jurisdiction of Collector over articles of prohibited importation. Where articles are of prohibited
importation or subject to importation only upon conditions prescribed by law, it shall be the duty of the Collector [of

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 72
Customs] to exercise such jurisdiction in respect thereto as will prevent importation or otherwise secure compliance
with all legal requirements.

Nothing extant in the record would show that the Commissioner, by a formal decision, had ruled on the legality of the
importation. It is only after a decision adverse to him is rendered that Teves may summon the aid of the corresponding court.

But, the disposition the Commissioner will take concerning the Teves importations, will not come under the Court of First
Instance on appeal. Such appeal should be addressed to the Court of Tax Appeals. Because, at bottom, the problem is: Was the
importation authorized by law?

And Section 7 (2) of Republic Act 1125 creating the Court of Tax Appeals, recites:

SEC. 7. Jurisdiction. The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by appeal, as
herein provided

xxx xxx xxx

(2) Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees or other money
charges; seizure, detention or release of property affected; fines, forfeitures or other penalties imposed in relation
thereto; or other matters arising under the Customs Law or other law or part of law administered by the Bureau of
Customs.

Jurisprudence is not wanting which would show that Section 7 of Republic Act No. 1125 has taken away the power of courts of
first instance to review the actuations of the customs authorities in a case involving seizure, detentionor release of property, or
other matters arising under the Customs Law or other law administered by the Bureau of Customs. And this, notwithstanding
the fact that complaints may be styled " mandamus", "prohibition" or "certiorari". For, in reality, these are but expressions in
varying forms of a petition to review the actuations of the customs authorities.6 Expressive of the rule is our opinion in
the Millarez case (97 Phil. 282, 284-285), viz:

Republic Act No. 1125, section 7, effective June 16, 1954 gave the Court of Tax Appeals exclusive appellate jurisdiction
to review on appeal, decisions of the Commissioner of Customs, involving "seizure, detention or release of property
affected ... or other matters arising under the Customs Law or other law administered by the Bureau of Customs". In
our opinion this provision necessarily has taken away the power of the Manila court of first instance to "review"
decisions of the Customs authorities, "in any case of seizure" as in this case under section 1383 et seq. of the
Revised Administrative Code.

It matters not that no seizure proceedings were had. Section 7 of the charter of the Court of Tax Appeals does not limit the
appellate jurisdiction of said court to seizure proceedings. The law employs the term "seizure, detention or release."

It is true that, in the petition filed by Teves in the court of first instance, he there asks the court to enforce his NARIC Barter
Agreement and to declare the NARIC clearances no longer necessary, the previous detention of his shipments by the Bureau of
Customs illegal, and the bond requirement for the release of the importations superfluous. He grounds his petition below upon
the averments that, prior to January 12, 1962, only the release certificates of the Export Control Committee were needed to
take the shipments off the piers; that since NARIC has been abolished, no agency exists that can give the clearances; that his
barter agreement has already been approved by the then Economic Coordinator, and that the intrinsic validity of contracts
may only be determined by the courts.

We do say, however, that these present questions which cannot be divorced from the main issue: Is the importation illegal?
Resolution of this question necessarily determines the merits of the propositions just adverted to advanced by Teves in his
petition below aforesaid. The authority to rule on the legality of the importation still rests with the Customs authorities; appeal
from the decision of the Commissioner is to the Court of Tax Appeals.

We, accordingly, hold that the Court of First Instance of Manila had no jurisdiction to entertain the case (Civil Case No. 51296)
therein filed by Teves.

2. But even assuming that the court below had jurisdiction, did the respondent judge abuse his discretion in issuing the writ of
preliminary mandatory injunction?

By Section 1, Rule 58, 1964 Rules of Court, it is now expressly provided though already long generally recognized that a
court, at any stage of an action prior to final judgment, may "require the performance of a particular act, in which case it shall
be known as a preliminary mandatory injunction." But, stock must be taken of the truism that, like preventive injunctions, it is
but a provisional remedy to which parties may resort "for the preservation or protection of their rights or interests, and for no
other purpose, during the pendency of the principal action." 7 More than this, as a mandatory injunction "usually tends to do
more than to maintain the status quo, it is generally improper to issue such an injunction prior to the final
hearing."8 Per contra, it may issue "in cases of extreme urgency, where the right is very clear; where considerations of relative
inconvenience bear strongly in complainant's favor; where there is a willful and unlawful invasion of plaintiff's right against
his protest and remonstrance, the injury being a continuing one; and where the effect of the mandatory injunction is rather to
reestablish and maintain a preexisting continuing relation between the parties, recently and arbitrarily interrupted by the

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 73
defendant, than to establish a new relation.9 Indeed, "the writ should not be denied the complainant when he makes out
a clear case, free from doubt and dispute." 10

With these postulates, let us turn to the dispute in this case.

The Commissioner (petitioner here) believes that respondent judge abused his discretion in issuing the writ of preliminary
mandatory injunction. Because, so he decries if the surety bonds posted by Teves are already cancelled before trial has ever
begun, "there would be no more subject matter of Civil Case No. 51296, as the respondent Judge would have in effect granted
complete relief to respondent Teves, and the government would be completely without any protection for whatever claims
and interest it might have in the importations which were released, except to go after the bond of petitioner in the small sum
of P5,000.00 as compared to the amount of the bonds sought to be cancelled in the total sum of P264,620.25."

Petitioner's view deserves assent. For, Teves has not made out "a clear case, free from doubt and dispute". True, there is no
question as to the legal authority of NARIC to engage in barter transactions. The law Section 3 (b) of Republic Act No. 663
so articulates. But, as heretofore adverted to, doubts there are, still unresolved, as to the legality of how such barter authority
was here exercised. On this score alone, Teves' right to import purportedly as an agent of the NARIC and ahead of rice
exportation is not so clear that he can ask for the cancellation of the bonds he posted to secure the release of his
importations even before a hearing on the merits.

Important to the issue here is the fact that the writ issued by the judge does not maintain the status quo. Had the bonds not
been posted by Teves, the goods he imported would not have been released. The purpose of injunctions i.e., to restore the
original situation of the parties, is here absent. Not being present, the writ itself can hardly be sustained as equitable.

The most convincing argument, of course, is that to enforce the writ is to practically decide the case in favor of Teves. To
proceed with the case below on the merits would then be a useless ceremony. Because, Teves would have gotten what he
precisely wanted in that suit cancellation of the bonds. And, the government shall have lost its last hold on the shipments of
Teves and literally shall have been left "holding the bag". By all notions of equity, this cannot be sanctioned.

We concede that the issuance of preliminary injunctions rests upon the sound discretion of the court. Nevertheless, as the
Court pointed out in a recent case, 11 " [s]ound judicial discretion, however, is no license to undo the law by defeating its
objectives." A clear case of abuse of discretion is here present.

For the reasons given

1. The Orders dated August 29, 1962, September 5, 1962 and September 10, 1962, and the writ of preliminary
injunction dated August 30, 1962, all in Civil Case 51296 of the Court of First Instance of Manila, entitled "Herminio G.
Teves, petitioner, vs. Administrator, Economic Coordination, Commissioner of Customs, and General Manager, Rice
and Corn Administration, respondents," are hereby declared null and void;

2. The writs of certiorari and prohibition shall accordingly issue;

3. The preliminary injunction We issued herein on September 20, 1962 is hereby made permanent; and

4. The respondent Judge is hereby directed to dismiss said Civil Case No. 51296 of the Court of First Instance of
Manila.

Costs against respondent Herminio G. Teves. So ordered.

Republic of the Philippines


SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-23996 March 15, 1974

PEDRO PACIS, as Acting Collector of Customs for the Port of Manila, petitioner,
vs.
MANUEL R. PAMARAN, as Assistant City Fiscal of Manila, and RICARDO SANTOS, respondents.

Office of the Solicitor General, Dept. of Justice for petitioner.

Juan T. David for respondents.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 74
FERNANDO, J.:p

For the petitioner Pedro Pacis, then Acting Collector of Customs for the Port of Manila, it was vital that this prohibition
proceeding against the then Assistant City Fiscal of Manila, Manuel R. Pamaran, should be instituted. For unless restrained, the
prosecutor was bent on continuing with the investigation of a charge of usurpation of judicial
functions 1 allegedly committed by him, when in the course of his official functions and pursuant thereto, he issued a warrant
of seizure and detention for an automobile owned by respondent Ricardo Santos, who, according to the records in his office,
had not paid the customs duty collectible thereon. To counter such a move, and invoking what he alleged was a violation of the
constitutional provision that only a judge, under the 1935 Constitution could issue a search warrant, 2respondent Santos filed
the aforesaid complaint for usurpation. Based on such an assumption and with petitioner clearly not being a member of the
judiciary, there was plausibility in the claim that he ran afoul of the penal law. While the matter was pressed with vigor by
Attorney Juan T. David, counsel for respondent, the applicable legal doctrine is on the side of petitioner. It is a well-settled
principle that for violations of customs laws, the power to issue such a warrant is conceded. Thus there is justification for this
prohibition suit against respondent Assistant City Fiscal. On the undisputed facts and in accordance with the controlling legal
doctrine, no such offense as usurpation of judicial function could have been committed. Clearly then, respondent Assistant City
Fiscal should be restrained. So we rule and grant the writ prayed for.

The relevant facts are not in dispute. Respondent Ricardo Santos is the owner of a Mercury automobile, model 1957. It was
brought into this country without the payment of customs duty and taxes, its owner Donald James Hatch being tax-exempt. It
was from him that respondent Santos acquired said car. 3 On June 25, 1964, he paid P311.00 for customs duty and taxes.
Petitioner on July 22, 1964 received from the Administrator, General Affairs Administration of the Department of National
Defense, a letter to the effect that the Land Transportation Commission reported that such automobile was a "hot car." By
virtue thereof, petitioner, through his subordinates, looked into the records of his office. Thus he did ascertain that although
the amount of P311.00 was already paid for customs duty, the amount collectible on said car should be P2,500.00, more or
less. Based on such discrepancy, on July 22, 1964, he instituted seizure proceedings and issued a warrant of seizure and
detention. On the strength thereof, the automobile was taken while it was parked on Economia Street, Manila, by Department
of National Defense agents who were authorized to do so by virtue of the said warrant. It was then brought to the General
Affairs Administration compound. Then on August 26, 1964, respondent Ricardo Santos, through counsel, wrote to the
petitioner asking that such warrant of seizure and detention issued against his car be withdrawn or dissolved and the car
released on his contention that the issuance of the warrant was unauthorized. He likewise threatened to proceed against the
petitioner for violation of Article 241 of the Revised Penal Code and for damages. Petitioner on August 31, 1964 answered
counsel of respondent Ricardo Santos, denying the request for the release of the car and adverting that the petitioner had,
under the law, authority to issue such warrant of seizure and detention. What followed was the filing by respondent Ricardo
Santos on September 15, 1964 of a criminal complaint for usurpation of judicial functions with the City Fiscal of Manila. It was
assigned to then respondent Fiscal Manuel R. Pamaran for preliminary investigation. As the latter respondent was bent on
proceeding with the charge against petitioner, this action was instituted. 4

Thus the significance attached to the jurisdictional question posed was evident. There was moreover the necessity for a
definite ruling as to whether petitioner in the discharge of his official function did lay himself open to a criminal prosecution
for usurpation of judicial functions, the drive against "hot cars" being then at its height. Not much reflection was needed to
show the chilling effect of a criminal prosecution of this nature on the vigorous enforcement of customs laws. This Court
therefore required respondent to answer so that the matter could be fully ventilated. It was duly forthcoming, stress being laid
on the alleged infraction of the constitutional mandate that a warrant of search and seizure, to be valid, must be the product of
a judicial determination. The question before this Tribunal is thus clear-cut and well-defined.

As set forth at the outset, the law on the matter is clear. It is undeniable that petitioner, as Acting Collector of Customs for the
Port of Manila, had the requisite authority for the issuance of the contested warrant of seizure and detention for the
automobile owned by respondent Ricardo Santos. What was done by him certainly could not be the basis of a prosecution for
the usurpation of judicial functions. Prohibition is therefore the proper remedy.

1. It is to be admitted that the constitutional right to be free from unreasonable search and seizure must not be eroded or
emasculated. The right to privacy so highly valued in civilized society must not be diluted. Only upon compliance then with the
proper requisites mandated by law should one's possessions be subject to seizure. That much is clear. Under the 1935
Constitution the intervention of a judge was well-nigh indispensable. So it was under the Philippine Bill of 1902 and the
Philippine Autonomy Act of 1916. Even then, however, as shown by the leading case of Uy Kheytin v. Villareal, 5 a 1920
decision, it was the accepted principle following the landmark case ofBoyd v. United States 6 that the seizure of goods concealed
to avoid the duties on them is not embraced within the prohibition of this constitutional guarantee. 7 More to the point. In a
recent decision of this Court, Papa v. Mago, 8 where the seizure of alleged smuggled goods was effected by a police officer
without a search warrant, this Court, through Justice Zaldivar, stated: "Petitioner Martin Alagao and his companion policemen
had authority to effect the seizure without any search warrant issued by a component court. The Tariff and Customs Code does
not require said warrant in the instant case. The Code authorizes persons having police authority under Section 2203 of the
Tariff and Customs Code to enter, pass through or search any land, inclosure, warehouse, store or building, not being a
dwelling house and also to inspect, search and examine any vessel or aircraft and any trunk, package, box or envelope or any
person on board, or stop and search and examine any vehicle, beast or person suspected of holding or conveing any dutiable
or prohibited article introduced into the Philippines contrary to law, without mentioning the need of a search warrant in said
cases. But in the search of a dwelling house, the Code provides that said "dwelling house may be entered and searched only
upon warrantissued by a judge or justice of the
peace ... ." It is our considered view, therefore, that except in the case of the search of a dwelling house, persons exercising
police authority under the customs law may effect search and seizure without a search warrant in the enforcement of customs
laws." 9

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 75
The plenitude of the competence vested in customs officials is thus undeniable. No such constitutional question then can
possibly arise. So much is implicit from the very language of Section 2205 of the Tariff and Customs Code. 10 It speaks for itself.
It is not susceptible of any misinterpretation. 11 The power of petitioner is thus manifest. It being undeniable then that the sole
basis for an alleged criminal act performed by him was the performance of a duty according to law, there is not the slightest
justification for respondent Assistant City Fiscal to continue with the preliminary investigation after his attention was duly
called to the plain and explicit legal provision that did not suffer at all from any constitutional infirmity. The remedy of
prohibition lies.

2. The depth of the concern expressed by the Solicitor-General as counsel for petitioner is easily understandable. No revenue
official can be expected to display the proper zeal in plugging all the loopholes of tax or tariff statutes if the risk of a criminal
prosecution is ever present. At the same time, in fairness to respondent Santos, his insistence on procedural regularity,
especially so where there is an alleged invasion of a constitutional right, was in keeping with the soundest legal tradition. The
rule of law would be meaningless if what is ordained by the fundamental law could be ignored or disregarded. From the
foregoing, there was no such infringement. What was done by petitioner was strictly in accordance with settled principles of
law. No doubt need be entertained then as to the validity of the issuance of the warrant of seizure and detention. His liability
for any alleged usurpation of judicial function is non-existent. Such imputation was definitely unfounded. Even if however the
matter were less clear, the claim that the search and seizure clause was in effect nullified is hardly impressed with merit.
Considering that what is involved is an alleged evasion of the payment of customs duties, what was said by Circuit Judge
Hutcheson in the Ginsburg decision 12 possesses relevance. Thus: "Based on the Fourth and Fifth Amendments, this is another
of those cases in which appellant and appellee, concerning themselves little with the Constitutional words, seize upon
particular words in particular cases to roll them as sweet morsels under their tongues. It may not be doubted that, in respect
of searches and seizures, the decisional gloss which constitutes the common law of the Constitution has created in the federal
courts a climate of opinion favorable to the citizen, less favorable to his oppressors. Neither may it be doubted that particular
decisions have not only struck down particular oppressors but in their vigor and clarity have set up streams of tendency in
accord with which later decisions have run. It remains true, however, that each case of this kind is a fact case. The correct
decision of each depends not so much upon a higher critical examination of the accumulated decisional gloss as upon a
common sense determination of whether, within the meaning of the word the Constitution uses, the particular search and
seizure has been "unreasonable," that is, whether what was done and found bears a reasonable relation to the authority then
possessed and exercised or transcends it to become oppression." 13

WHEREFORE, the writ of prohibition prayed for is granted and the successor of respondent Manuel R. Pamaran, now a
criminal circuit court judge, or any one in the City Fiscal's Office of the City of Manila to whom the complaint against petitioner
for usurpation of judicial functions arising out of the issuance of the warrant of seizure and detention, subject-matter of this
litigation, has been assigned, is perpetually restrained from acting thereon except to dismiss the same. No costs.

Zaldivar, (Chairman), Antonio, Fernandez and Aquino, JJ., concur.

Barredo, J., took no part.

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-56705 January 31, 1989

THE COMMISSIONER OF CUSTOMS, petitioner,


vs.
PROCTER AND GAMBLE PHILIPPINE MANUFACTURING CORPORATION and HONORABLE COURT OF TAX
APPEALS, respondents.

Angara, Concepcion, Regala & Cruz for private respondent.

GANCAYCO, J.:

The main issue in this appeal, by way of petition for review, is whether or not the home consumption value of a shipment
subject to customs duty and taxes should be based on the value shown by the consular invoice or the value established by the
Bureau of Customs based on the reports of the Revenue Attache or Commercial Attache (Bureau of Custom's RVIC No. 4438
dated April 14, 1975 in this case) and from the such other information that may be available to the Bureau of Customs.

The facts are not disputed. In April 1975, private respondent Proper and Gamble Philippine Manufacturing Corporation
imported from Japan 5,000 bags of soda ash dense weighing about 200 metric tons. Said importation arrived in the port of
Manila and was declared under Entry No. 33511, Series of 1975.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 76
Private respondents' importation, per the supplier's invoice and the Consular Invoice of Merchandise covering the same, had a
valuation of US$37,606.16 or US$ 188.0308 per metric ton (FOB Japan). Accordingly, private respondent paid to the Bureau of
Customs the total sum of P59,753.00 in customs duty and taxes. Said payment was covered by O.R. No. 62797 dated April 10,
1975.

Before final liquidation, the Bureau of Customs re-appraised private respondent's shipment and applying the Bureau of
Custom's RVIC (Request for Value Importation Classification) No. 4-438 dated April 14, 1975, assessed private respondents
shipment at US$307.00 per metric ton or a total of US$61,400.00 for the entire shipment. Private respondent was thereafter
required to pay additional duty and taxes. It paid under protest the additional customs duty and taxes in the amount of
P34,680.00.

On June 20, 1975, the Collector of Customs rendered decision dismissing the protest of private respondent for lack of merit. On
appeal by said respondent, the petitioner Commissioner of Customs rendered a decision on March 9, 1975, affirming the
decision of the Collector of Customs of Manila.

On April 12, 1976, private respondent filed with public respondent Court of Tax Appeals a petition for review praying for the
reversal of the decision of the petitioner, and that a new one be rendered ordering the refund of the sum of P34,630.00
representing the additional customs duty and taxes paid by private respondent, plus interest thereon from the date of
payment on April 21, 1975 until the date of refund.

In due course, a decision was rendered by the Court of Tax Appeals on February 27, 1981 modifying the appealed decision of
petitioner and ordering petitioner to refund to private respondent the amount of P18,453.00, without pronouncement as to
costs. Hence, this petition for review where the sole assigned error is that:

The Court of Tax Appeals erred in holding that the home consumption value (HCV) of the subject importation
shall be the value declared in the consular, commercial or trade invoice instead of under the RVIC No. 4380 of
the Bureau of Customs. 1

The petition is impressed with merit.

The applicable law is Section 201 of the Tariff and Customs Code which provides:

Sec. 201. Basis of Dutiable Value. The dutiable value of an imported article subject to an ad valorem rate of
duty shall be based on the home consumption value or price (excluding internal excise taxes) of same, like or
similar articles, as bought and sold or offered for sale freely in the usual wholesale quantities in the ordinary
course of trade, in the principal markets on the date of exportation to the Philippines, or where there is none
on such date, then on the home consumption value or price nearest to the date of exportation including the
value of all containers, coverings and/or packings of any kind and all other costs, charges and expenses
incident to placing the article in a condition ready for shipment to the Philippines, plus ten (10) per cent of
such home consumption value or price.

The home consumption value or price under this section shall be the value or price declared in the consular,
commercial, trade or sales invoice. Where there exists a reasonable doubt as to the value or price of the
imported article declared in the entry, the correct dutiable value of the article shall be ascertained from the
reports of the Revenue Attache of Commercial Attache (Foreign Trade Promotion Attache), pursuant to
Republic Act Numbered fifty-four hundred and sixty-six or other Philippine diplomatic officers and from such
other information that may be available to the Bureau of Customs.

From the data thus gathered, the Commissioner of Customs shall ascertain and establish the home
consumption values of articles exported to the Philippines and shall publish such lists of values from time to
time.

When the dutiable value provided for in the preceding paragraphs cannot be ascertained for failure of the
importer to reduce the documents mentioned in the second paragraph, or where there exists a reasonable
doubt as to dutiable value of the imported article declared in the entry, it shall be the domestic wholesale
selling price of such or similar article in Manila or other principal markets in the Philippines on the date the
duty becomes payable on the article under appraisement, in the usual wholesale quantities and in the
ordinary course of trade, minus-

(a) Twenty (20) per cent thereof for expenses and profits; and

(b) Duties and taxes paid thereon.

From the foregoing provisions of the statute, there can be no question that as a general rule the home consumption value or
price of an imported article subject to an ad valorem rate of duty shall be the value or price declared in the consular,
commercial, trade or sales invoice.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 77
However, where there exists a reasonable doubt as to the value or price of the imported article declared in the entry, the
correct dutiable value of the article shall be ascertained from the reports of the Revenue Attache or Commercial Attache
(Foreign Trade Promotion Attache), pursuant to Republic Act Numbered Fifty-four hundred and sixty-six or other diplomatic
officers and from such other information that may be available to the Bureau of Customs.

Thus, the consular and commercial invoice can in no way be conclusive on the government. Otherwise, the government would
be rendered helpless to a considerable extent in the collection of the correct amount of customs revenues. Customs officials
would be left at the mercy of foreign merchants and importers who may avail of various devices, schemes and other
arrangements, short of outright fraud, to lower and reduce the face value of the articles covered by such invoices and
certifications issued by consular officials who may not have the facilities to verify the correctness of the stated invoice prices
as against the true and actual value of the importation. 2

Private respondent contends that there could not have been any "reasonable doubt" about the accuracy of the value of
US$188.0308 per metric ton indicated in the consular invoice covering its shipment. It cites the April 3, 1975 issue of the Japan
Chemical Week which stated therein that the price of the same article (soda ash dense) in the principal markets of the country
from where exported (Japan), on or about the date of exportation of private respondents' shipment, was US$ 137.40 per
metric ton a price which is even lower than the value declared in private respondents' consular invoice 3 which shows private
respondent had no intention of lowering the value of its shipment to less than its actual consumption value to avoid the
payment of the proper customs duty and taxes thereon.

Petitioner, however, argues there is reasonable doubt as to the accuracy of the value indicated in the consular invoice as (a)
the April 3, 1975 issue of Japan Chemical Week is hearsay evidence; (b) That assuming the price stated therein to be correct, it
is strange why private respondent failed to buy its soda ash dence at that lower price; and that (c) the great disparity between
the alleged prevailing market value of soda ash dense in the principal markets as published in the April 3, 1975 issue of Japan
Chemical Week and that indicated in the consular invoice clearly demonstrates the existence of reasonable doubt as to the
correctness of the valuation in the consular entry.

In disputing these arguments and to establish that said issue of Japan Chemical Week is not hearsay evidence, private
respondent cites sections 31 to 41 of Rule 130 of the Revised Rules of Court setting forth the exceptions to the hearsay rule,
particularly Section 39 thereof which states-

SEC. 39. Commercial lists and the like. Evidence of statements of matters of interest to persons engaged in
an occupation contained in a list, register, periodical, or other published compilation is admissible as tending
to prove the truth of any relevant matter so stated if that compilation is published for use by persons engaged
in that occupation and is generally used and relied upon by them.

Since the Japan Chemical Week is of worldwide circulation, utilized and relied upon by people in the chemical industry, private
respondent avers that the said publication is an exception to the hearsay rule. It asserts that petitioner failed to raise the
objection that it is hearsay in the proceedings before the public respondent.

Private respondent justifies the discrepancy in the values between the Japan Chemical Week price and that reflected in the
consular invoice of private respondent by stating that the Japan Chemical Week price is an average price, and that the small
discrepancy of $50.00 was because the Japan Chemical Week soda ash dence was delivered in a tank car while that of private
respondent was contained in 5,000 bags.

The Court finds that such discrepancy of about $50.00 in the price certainly buttresses the finding of petitioner that there is
reasonable doubt as to the accuracy of the price stated by private respondent in its consular invoice that warrants the use of
other available and more reliable sources of information to determine the home consumption value of said shipment to insure
a correct assessment. It is immaterial that the amount in the consular invoice is higher than the price stated in the Japan
Chemical Week issue. What the law requires is the declaration of the appropriate value of imported goods not only as the basis
for imposing the correct amount of taxes but also as a means to regulate, among others, the price, of commodities and to
promote fair trade competition.

Moreover, Section 1405 of the Tariff and Customs Code also provides-

Section 1405. Proceedings and Reports of Appraisers. Appraisers shall by all reasonable ways and means,
ascertain, estimate and determine the value or price of the articles as required by law, any invoice or affidavit
thereto or statement of cost, or of cost of production to the contrary notwithstanding... (Emphasis supplied.)

On the assumption that petitioner has the discretion in this case to disregard the value indicated in the consular invoice and to
ascertain the correct dutiable value thereof from other sources, private respondents' thesis is that petitioner's valuation of
private respondents' shipment was erroneous as it was based upon a wrong principle and was contrary to law. The attention
of the Court is invited to the fact that the valuation made by petitioner was based on the so-called "established" or
"information" value and not on the "published" value thereof as required by Section 201 of the Tariff and Customs Code.
Invoking the quotation of public respondent of a similar case in its questioned decision which reads

Nonetheless, assuming arguendo that there exists a reasonable doubt as to the value or price of the imported
trichlorocarbanilide declared in the consular, commercial and sales invoices, as well as in the entry, and the
correct dutiable value of the article should be ascertained from the reports of the Revenue Attache,
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 78
Commercial Attache (Foreign Trade Promotion Attache), or other Philippine diplomatic officers and from
such other information that may be available to the Bureau of Customs, pursuant to Section 201 of the Tariff
and Customs Code, as amended by Presidential Decree No. 34, as alleged by respondent, it is to be stressed
that the Commissioner of Custom is required by law to publish such list of values from time to time. He does not
only have to ascertain and establish the home consumption value, but must also publish such lists of values from
time to time. Public policy would seem to require that importers be informed in advance of the home
consumption values, or information values, of articles exported to the Philippines. This would prevent
uncertainty, let alone the exercise of purely personal discretion, specially on the part of customs appraisers, in
the matter of the ascertainment and determination of the price or value of imported articles. Furthermore, if
importers are informed in advance of the home consumption values or information values of articles
exported to the Philippines, they can properly declare the dutiable values of their shipments and thus avoid
the heavy penalties imposed for misdeclaration, if not delays in the release of goods from customs custody
which entail loss of time, money and energy. [Bell Hobart Manufacturing Incorporated vs. Commissioner of
Customs, CTA Case No. 2750, 2751, 2752 and 2753, March 10, 1978." (Procter & Gamble PMC vs.
Commissioner, CTA Case No. 2357, "Decision", pp. 9-11, Emphasis supplied) 4

private respondent argues that since Mrs. Noemi Rebaya, Supervising Valuation and Classification Officer of the Bureau of
Customs admitted that this "established" or "information" value indicated in RVIC 4-438 dated April 14, 1975 was approved
by the Bureau of Customs only on June 20, 1975, there was no "published" value of the e article when it was imported by
private respondent in April 1975 so that petitioner should not have disregarded the value of US$188.0308 declared. in the
consular invoice.

The posture taken by private respondent is untenable. A reading of Section 201 of the Tariff and Customs Code aforecited
shows that where "there exists reasonable doubt as to the value or price of the imported article declared in the entry, the
correct dutiable value of the article shall be ascertained from the reports of the Revenue Attache or Commercial Attache
(Foreign Trade Promotion Attache)... or other Philippine diplomatic officers and from such other information that may be
available to the Bureau of Customs." This is what is caned the "established' or "information" value. Such value shall be the
home consumption value of the imported article which shall be the subject of customs duty and taxes.

The same article then provides:

From the data thus gathered, the commissioner of Customs shall ascertain and establish the home
consumption values of articles exported to the Philippines and shall publish such lists of values from time to
time.' (Emphasis supplied.)

The law does not provide that it is only after the "established" or "information" value is "published" that such home
consumption value may be the basis of assessment of the customs duty and taxes. On the contrary, it is explicitly provided that
upon reasonable doubt as to the accuracy of the declared value of the article in the consular or commercial invoice, the
Commissioner of Customs may determine its home consumption value from other available and more reliable sources which
"established" or "information" value shall then be the basis of the imposition of the customs duty and taxes. The publication of
said "established" or "information" value is not a prerequisite before it may be the basis of the imposition of customs duty and
taxes. Conversely, its non-publication is no obstacle to the assessment of customs duty and taxes based on such "established"
or "information" value. The publication is intended as a guide in the assessment of future shipment of similar articles. While
such published value of an imported article is reliable, nevertheless, in the absence of the same, the Commissioner of Customs
may establish said value from other sources as above provided by law.

In the present case, RVIC 4-438, 5 fixed the home consumption value of soda ash dense at US$307.00 per metric ton as a result
of a careful and thorough compilation and comparison of invoices for articles of the same nature and kind exported at a
particular time and place. 6 The Supervising Valuation and Classification Officer of the Bureau of Customs who passed upon
said RVIC was presented and testified to this effect.

The appraisal made by the Bureau of Customs must be correct based on the presumption that office duty has been regularly
performed. 7 Private respondent has not successfully discharged its burden to overturn this presumption.

WHEREFORE, the decision of public respondent Court of Tax Appeals dated February 27, 1981 is hereby REVERSED and SET
ASIDE and another judgment is hereby rendered affirming in toto the decision of petitioner Commissioner of Customs dated
March 9, 1976 upholding the decision of the Collector of Customs of Manila of June 20, 1975 requiring private respondent to
pay the sum of P34,680.00 representing additional customs duty and taxes due for the subject importation. No
pronouncement as to costs.

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 72069 May 21, 1988


Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 79
COMMISSIONER OF CUSTOMS, petitioner,
vs.
COURT OF TAX APPEALS and LOVSTED & COMPANY, INC., respondents.

G.R. No. 72070 May 21, 1988

COMMISSIONER OF CUSTOMS, petitioner,


vs.
COURT OF TAX APPEALS and LOVSTED & COMPANY, INC., respondents.

The Solicitor General for petitioner.

Castro, Nardo, Quintanilla, Gonzales & Macatangay Law Office for respondents.

MELENCIO-HERRERA, J.:

This is an appeal from the joint decision of the Court of Tax Appeals in CTA Cases Nos. 3177 and 3178, 1 which were appeals
from the consolidated Decision of the Commissioner of Customs of Manila in Manila Protest Cases Nos. 9741 and 9742,
involving the same parties and raising the same issues.

The parties had submitted an agreed Statement of Facts in each case as follows:

CTA Case No. 3177

Lovsted & Co., Inc. vs. Commissioner of Customs

STIPULATION OF FACTS

PETITIONER and RESPONDENT, by their undersigned attorneys herein respectfully stipulate on the following
facts:

xxx xxx xxx

2. That sometime in July, 1975, the S/S Marchen Maersk, 'Reg. No. 1059, arrived at the Port of Manila and
discharged a shipment consisting of 17 packages of refrigerating machinery parts, consigned to herein
petitioner covered by Bill of Lading No. CFS-39 and declared under Entry No. 054871, consisting of fifteen
(15) Model HGC 1000 compressors valued at $ 62.35 each as appearing in the Consular Invoice.

3. That upon appraisal of the aforementioned imported spare parts, the Collector of Customs by reason of an
alleged 'alert notice,' increased the value of the same from $ 62.35 to $ 70.24 each resulting to an additional
payment by petitioner of duties and taxes in the amount of P 459.00 as per O.R. No. 447463, dated July
18,1975;

4. That in a letter dated July 22, 1975, xerox copy of which is Annex 'A' of the Petition for Review and
docketed as Manila Protest No. 9741, petitioner protested the additional assessment and collection of
customs duties and taxes, stating, among others, that inasmuch as the questioned articles do not have yet an
established and published home consumption value determined by the Commissioner of Customs, the same
should have been assessed the customs duties and taxes based on the value appearing in the consular invoice
of merchandise in accordance with paragraph 2, Section 201 of the Tariff and Customs Code as amended by
Presidential Decree No. 34;

5. That on April 14, 1978, the Collector of Customs, relying solely on the values mentioned in the alleged"
alert notice, "rendered a decision dismissing Manila Protest No. 9741 (and 9742), notice and copy received on
May 3, 1978, by petitioner which is Annex 'B' of the Petition;

6. On May 17, 1978, petitioner appealed the aforementioned decision of respondent pursuant to Section 2313
of the Tariff and Customs Code, as amended, which appeal was docketed as Customs Code No. 79-13;

7. That on November 20, 1980, petitioner received the decision of respondent in the aforementioned Case No.
79-13, dated October 1, 1980, affirming the decision of the Collector of Customs in Manila, which is Annex 'C'
of the Petition;

8. That the only issue to be litigated, in the case at bar, is whether or not respondent is correct in determining
the home consumption value of the goods imported based on an "alert notice" instead of that appearing in the
consular invoice of merchandise.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 80
CTA CASE NO. 3178

Lovsted & Co., Inc. vs. Commissioner of Customs

STIPULATION OF FACTS

PETITIONER and RESPONDENT, by their undersigned attorneys, herein respectfully stipulate on the
following facts:

xxx xxx xxx

2. That a shipment of 11 cartons of Tecumseh Compressor and spare parts arrived at the Port of Manila
aboard the SS 'Traviata' with Registry No. 905, covered by Bill of Lading No. 29, and declared under Entry No.
047434 and broken down as follows:

a) Ten (10) units of Model VFTL open type compressor with flywheel and valves valued at
US$ 198.83 each;

b) Five (5) BNK 585-10 valve assy at US$ 15.34 each; and

c) Five (5) BNK 512-8 shaft seal kit assy at US$ 14.92each;

3. That in the appraisal to determine the Home Consumption value for duties and/or taxes purposes, the
Collector of Customs by reason of an alleged' alert notice 'increased the values of the aforementioned
imported articles, as follows:

a) The VFTL compressors were valued at US$ 223.81 each instead of the duly authenticated
value of US$ 198.83;

b) The valve assy BNK 505-10 to US$ 20.17 each instead of the invoiced value of US$ 15.35;

c) The seal kits (5) to US$ 19.21 each, instead of the US$ 14.92 invoiced value;

4. That due to the aforementioned increased appraisal, the Collector of Customs of Manila, assessed, levied
and collected from petitioner additional duties and taxes, including a fine in the total amount of P 3,570.00, as
per Official Receipt No. 6956, dated July 11, 1975;

5. That in a letter, dated July 22,1975, which is Annex, 'A' of the Petition for Review and docketed as Manila
Protest No. 9742, herein petitioner protested the additional assessment and collection of customs duties,
taxes and fine, stating, among others, that inasmuch as the questioned articles do not have yet an established
and published home consumption value determined by the Commissioner of Customs, the same should have
been assessed the customs duties and taxes based on the value appearing in the consular invoice of
merchandise in accordance with paragraph 2, Section 201 of the Tariff and Customs Code as amended by
Presidential Decree No. 34. Likewise, it was further stressed that the invoiced values declared were lower by
30% of the list price which regular discount is allowed by herein respondent under Customs Tariff Decision
Circular No. 5-73, dated May 4,1973;

6. That on April 14, 1978, the Collector of Customs, relying solely on the values mentioned in the alleged 'alert
notice,' rendered a decision dismissing Manila Protest No. 9742 (and 9741), notice and copy receipt on May
3,1978 which is Annex 'B' of the Petition;

7. On May 17,1978, petitioner appealed the aforementioned decision of respondent pursuant to Section 2313
of the Tariff and Customs Code, at amended, which appeal was docketed as Customs Case No. 79-13;

8. That on November 20, 1980, petitioner received the decision of respondent in the aforementioned Case No.
79-13, dated October 1, 1980, affirming the decision of the Collector of Customs of Manila, copy of which is
Annex 'C' of the Petition;

9. That the only issue to be litigated, in the case at bar, is whether or not respondent is correct in determining
the home consumption value of the goods imported based on an "alert notice" instead of that appearing in the
consular invoice of merchandise. (pp. 10-14, Rollo).

As stipulated upon by the parties in CTA Case No. 3177, the Collector of Customs had increased the dutiable value of the
refrigerating machinery spare parts imported by private respondent based on an alleged "alert notice." Similarly, in CTA Case
No. 3177, the same official determined the home consumption value for duties and/or taxes on various imported articles
based on an "alert notice" rather than on the values declared in consular invoices, resulting in the payment by private
respondent of additional duties and taxes.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 81
The issue for determination is the propriety of the appraisal of the importations made by private respondent based on "alert
notices" rather than on the values declared in consular invoices.

The applicable legal provision is Section 201 of the Tariff and Customs Code, as amended by Presidential Decree No. 34, now
Section 201 of Presidential Decree No. 1464, known as the "Tariff and Customs Code of 1978." It reads:

SEC. 201. Basis of Dutiable Value. The dutiable value of an imported article subject to an ad valorem rate of
duty shall be based on the home consumption value or price (excluding internal excise taxes) of same, like or
similar articles, as bought and sold or offered for sale freely in the usual wholesale quantities in the ordinary
course of trade, in the principal markets of the country from where exported on the date of the exportation to
the Philippines, or where there is none on such date, then on the home consumption value or price nearest to
the date of exportation including the value of are containers, coverings and expenses incident to placing the
article in a condition ready for shipment to the Philippines, plus (10) per cent of such home consumption
value or price.

The home consumption value or price under this section shall be the value or price declared in the consular,
commercial, trade or sales invoice. Where there exists a reasonable doubt as to the value or price of the
imported article declared in the entry, the correct dutiable value of the article shall be ascertained from the
reports of the Revenue Attache or Commercial Attache (Foreign Trade Promotion Attache), pursuant to
Republic Act Numbered Fifty-four hundred and sixty-six or other Philippine diplomatic officers and from such
other information that may be available to the Bureau of Customs.

From the data thus gathered, the Commissioner of Customs shall ascertain and establish the home
consumption values of articles exported to the Philippines and shall publish such lists of value from time to
time.

xxx xxx xxx

The law is clear and mandatory. The dutiable value of an imported article subject to an ad valorem rate of duty is based on its
home consumption value or price as freely offered for sale in wholesale quantities in the ordinary course of trade in the
principal markets of the country from where exported on the date of exportation to the Philippines. That home consumption
value or price is the value or price declared in the consular, commercial, trade or sales invoice.

But where there is a reasonable doubt as to the value of the imported article declared in the entry, the correct dutiable value is
to be ascertained from the reports of the Revenue Attach or Commercial Attach and from such other information that may be
available to the Bureau of Customs. The Commissioner of Customs is required, however, to publish from time to time the lists
of the home consumption values.

In these cases Respondent Company quoted the prices of the imported merchandise in the corresponding Import Entries as
declared in the consular invoices. Reasonable doubt regarding the declarations was not established to have existed such that
recourse to reports from commercial attaches or other information became necessary. The requirement of publication of the
lists of dutiable values of imported articles from time to time was neither complied with. The Bureau of Customs made re-
appraisals based on "Alert Notices" received from Foreign Trade Promotion Attaches abroad, which, however, were not
disclosed to Respondent Company nor exhibited to respondent Court. Thus, respondent Court was prompted to conclude:

... As a matter of fact, the records of the cases do not show, as required by law, from what data the alleged
'alert notice' was gathered, how the Commissioner of Customs ascertained and established the home
consumption values of the imported articles, and where and when was such alleged "alert notice" published.
Even more, no such "alert notice" or value, or evidence thereof, was presented or offered by respondent. The
bare averment that the basis of the appraisal of subject shipments is an alleged "alert notice," unaccompanied
by adequate evidence as to the existence of such notice, the basis of the values or prices stated therein, as well
as the publication thereof, would seem to suggest that there were no established and published home
consumption values determined by the Commissioner of Customs of the subject shipments as required by the
law. ...

It is thus apparent that the appraisal made by the Bureau of Customs of the dutiable values of Respondent Company's
imported shipments was not in accordance with the provisions of Section 201 of the Tariff and Customs Code, but was made
arbitrarily without the requisite publications.

We reproduce hereunder what we had stated in Commissioner of Customs vs. Court of Tax Appeals, G.R. No. 70648, July 31,
1987, involving a similar set of facts and findings and identical "Alert Notices:"

While it is true that appraisers of the Bureau of Customs are given ample leeway in determining the correct
customs duties under Section 1405 of the Tariff and Customs Code, 2 Section 201 of the same Code, which
prescribes the criteria for the determination of the dutiable values of imported articles, has not been
complied with. What is more, administrative proceedings are not exempt from the operation of due process
requirement one of which is that a finding by an administrative tribunal should be supported by substantial
evidence presented at the hearing or at least contained in the records or disclosed to the parties affected. 3 In
this case the 'Alert Notices' on which petitioner based its re-appraisal were not disclosed during the
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 82
proceedings before the Bureau of Customs nor presented in evidence before respondent Court. The re-
appraisal made by petitioner, therefore, can be faulted with arbitrariness in disregard of the standard of due
process to which all governmental action should conform to impress upon it the stamp of validity.

WHEREFORE, we affirm the judgment appealed from and deny the Petition for Review on Certiorari. No costs.

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-23950 December 29, 1980

COMMISSIONER OF INTERNAL REVENUE, petitioner,


vs.
PILAR TANJUATCO and COURT OF TAX APPEALS, respondent.

G.R. No. L-23970 December 29, 1980

PILAR TANJUATCO, petitioner,


vs.
COURT OF TAX APPEALS and COMMISSIONER OF INTERNAL REVENUE, respondents.

MELENCIO-HERRERA, J.:

Separate Petitions for Review were filed by taxpayer Pilar Tanjuatco and the Commissioner of Internal Revenue from the
Decision of the Court of Tax Appeals dated October 31, 1964, in CTA Case No. 1246, entitled "Pilar Tanjuatco vs. Commissioner
of Internal Revenue", ordering the Commissioner to refund to said taxpayer the sum of P579.90 as excess compensating tax
paid on the car, with accessories, imported by her.

On June 26, 1960, Pilar Tanjuatco, hereinafter referred to as Taxpayer, imported into the Philippines from the United States A
Chevrolet "Impala" car, with accessories, consisting of an air conditioning unit, radio and turboglide transmission, for which
she paid, under protest, a compensating tax of P12,699.81 as computed by an appraiser of the Bureau of Customs. On March 3,
1961, she made a formal demand for the refund of the sum of P5,118.28 from the Commissioner (Internal Revenue, allegedly
representing the excess of the actual payment over the correct amount due. However, in the absence of seasonable action by
the Commissioner, the Taxpayer initiated in the Court of Tax Appeals, shortly before the expiration of the two-year period of
limitation, a petition for the review of the assessment and for refund of the excess allegedly paid.

In its Decision dated October 31, 1964, the Court of Tax Appeals ordered the refund to the Taxpayer of the sum of P579.90
computed as follows:

Invoice value of car and accessories,


plus freight $3,448.51
Value in Phil. currency at the rate
of P 3.20 to $ 1.00 P11,035.23
Special Import tax 988.25
Surcharge 25.00
Wharfage 3.00
Stamps 3.00
Arrastre and brokerage 65.42

Total value P12,119.91

Compensating tax paid


under protest P12,699.81
Compensating tax due 12,119.91

Overpayment P579.90

Both parties appealed separately.

The Taxpayer maintains that the basis of the computation of the compensating tax should be the actual purchase price
appearing in the invoices less the discounts given, and that, for purposes of determining the landed cost, the same should be
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 83
converted at par value, or, at $1 to P2.00. On the other hand, the Commissioner takes the position that the basis should be the
value in the "blue book", or the compilation of the retail factory price of cars published by various car manufacturers in the
United States, and that the conversation rate from dollars to pesos should be at the rate of exchange of $1 to P3.20 as fixed by
the Monetary Board at the time of importation.

The difference in the computation may be graphically shown in the following comparative table:

BIR TAXPAYER

Car $ 2,769.00 $ 2,618.00


Air Conditioning Unit 300.00 300.00
Radio 76.36 58.00
Turboglide Transmission 199.00 167.00

Total $ 3,344.36 $3,143.00

90% 90%

(90% thereon) 3,009.92 2,828.70


Add: Freight 619.81 619.81

Retail value of car & accessories $3,629.73 $3,448.51


Times conversion rate P3.20 P2.00

Retail Value in pesos P11,615.13 P6,897.02


Special Import Tax 988.25 588.09
Surcharge 25.00 25.00
Wharfage 3.00 3.00
Stamps 3.00 3.00
Arrastre and Brokerage 65.42 65.42

Landed Cost 12,699.81 7,581.53


Times 100% (rate of
compensating tax) 1.00 1.00

Compensating Tax due P12,699.81 P7,581.53

Difference P5,118.28

It is to be noted that the Taxpayer and the Court of Tax Appeals adopted the same figure of $3,448.51 as the actual purchase
price of the car and accessories, based on its discounted value. In converting into its equivalent value in Philippine currency,
however, the Court of Tax Appeals applied the exchange rate of P3.20 to $1.00, while the Taxpayer, the par value of P2.00 to
$1.00.

In her appeal from the judgment of the Tax Court, the Taxpayer has raised these errors:

1. The Court of Tax Appeals erred in holding that the dollar to peso conversion rate of the value of the car, for
the purpose of determining the compensating tax due, should be $1 to P3.20, instead of $1 to P2.00.

2. The Court of Tax Appeals erred in not holding that the rate of compensating tax due on the car subject of
this case is only 75% of the landed cost thereof, and not 100%.

3. The Court of Tax Appeals erred in not holding that the compensating tax due is only P 5,686.14 instead of
P12,119.91, and that therefore the refund due to the petitioner is P7,013.67 instead of only P579.90.

In its own appeal, the Commissioner of Internal Revenue maintained:

1. The Court of Tax Appeals erred in considering the discounted value of the car and its accessories appearing
in the invoices as the retail value thereof in computing the compensating tax due thereon.

In short, the main issues for consideration are: (1) whether in the determination of the taxable landed cost of subject
importation, it is the invoice value or the published retail factory price (blue book value) which should be taken into account;
and (2) whether the conversion rate for purposes of determining the compensating tax is the par value of US$1.00 to P2.00, or
the exchange rate of US$1.00 to P3.20.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 84
Section 190 of the Revenue Code then in force (Commonwealth Act No. 466, as amended) provided that the compensating tax
on imported articles payable by importers shall be based on "the total value thereof at the time they are received by such
persons, including freight, postage, insurance, commission and all similar charges."

While Finance Department Order No. 289-A, dated November 19, 1957, directs that:

1. All cars imported for personal use, irrespective of the country of origin, shall be evaluated by the
appraiser, either on the actual purchase price of the car when bought directly from the manufacturer or
franchised dealer abroad or if not known or questionable, the published retail factory price for the year
manufactured.

2. The actual purchase price of the car when bought directly from the manufacturer or franchised dealer
abroad or the published retail factory price, whichever is accepted by the appraiser, shall be entitled to a
depreciation allowance for the applicable model year of all makes of cars, regardless of the country where
manufactured in accordance with the following table.

xxx xxx xxx

6. The compensating tax shall be based on the current retail value, as determined in par. 2 above, plus import
duty, special import tax, freight, insurance and all other expenses incident to importation. (Emphasis
supplied)

Section 1405 of the Tariff and Customs Code, upon which Finance Department Order No. 289-A is predicated, reads:

... Proceedings and report of appraisers. Appraisers shall, by all reasonable ways and means, ascertain,
estimate and determine the value or price of the articles as required by law, any invoice, or affidavit thereto
or statement of cost, or of cost of production to the contrary notwithstanding, and after revising and
correcting reports of the examiners as they may judge proper, shall report in writing on the face of the
entry the value so determined irrespective of whether such value is equal, higher or lower than the invoice
and/or entered value of the articles.

Appraisers shall describe all articles on the face of the entry in tariff and such terms as will enable the
Collector to pass upon the appraisal and classification of the same, which appraisal and classification shall be
subject to his approval or modification, and shall note thereon the measurements and quantities, and any
disagreement with the declaration. 1

It is clear from Finance Department Order No. 289-A that evaluation by the appraiser shall be based either on the actual
purchase price of the car (from the manufacturer or a dealer), or if not known or questionable, the published retail factory price
for the year manufactured. In the case at bar, the actual purchase price of the car is known and is supported by invoices issued
by the dealer in Oakland, California. The appraiser did not state that said invoices were questionable or were unreliable for
lack of certification as to its correctness by the Philippine Consul at the port of origin, such that the published retail factory
price or the "blue book" value should applied. Nor does the record show any "report in writing on the face of the entry", as
required in section 1405 of the Tariff and Customs Code, that the value of the car has been determined by an appraiser to be
higher than its invoice price. Neither is there evidence to indicate that the invoice price of the car is not its actual purchase
price. Consequently, as held by the Court of Tax Appeals, the actual purchase price of the car and its accessories, as discounted,
is the value which should be taken into account in determining the taxable landed costs of the car. This conclusion is
buttressed by the ruling in Commissioner of Customs vs. Cedran (22 SCRA 742 [1968]) to the effect that the tax for an
imported car is to be based on the invoice value.

... there is absolutely no evidence that the invoice price of the car is not its actual purchase price, so as to
justify a disregard thereof and a resort to the published retail factory price. ...

This is not to say that customs authorities are bound by the invoice value of an importation. As held in Lim Quim vs. Collector
Of Customs 2 relied upon by the Commissioner, if the invoice values do not reflect the true value of the goods, appraisers may
disregard the same and ascertain the value of the merchandise by all reasonable ways and means. But, certainly, the
requirements in the pertinent law and regulations should be complied with.

II

As regards the second issue, the Taxpayer's submission that the application of the conversion rate of P3.20 per $1.00
constitutes an alteration of the par value of the peso, which is one-half () of a US dollar, is without merit. For "par value" and
"rate of exchange" are not necessarily synonymous. There is a difference between them. The "par value" is defined by law, and
(as in the case of the peso) is based upon its gold content. The "rate of exchange", on the other hand, is "the price or the
indication of the price, at which one can sell or buy with one's own domestic currency a foreign currency unit. Normally, the
rate is determined by the law of supply and demand for a particular currency. 3

In respect of the rate of exchange, Section 204 of the Tariff and Customs Code, specifically states:

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 85
SEC. 204. Rate of Exchange. For the assessment and collection of import duty upon imported articles
and for other purposes, the value and prices thereof quoted in foreign currency shall be converted into the
currency of the Philippines at the current rate of exchange or value specified or published, from time to time,
by the Central Bank of the Philippines. (Emphasis supplied)

Although this provision, as emphasized by the Taxpayer, refers only to assessment and collection of "import duty", it should be
noted that the current rate of exchange is applicable not only for import duties but also "for other purposes." And considering
that compensating taxes and customs duties are, in essence, akin to each other since both have the same purpose, which is to
provide revenue, both are imposed on importations, both are based on the value of imported articles, and both are computed
and collected by the same authority, there is no reason why the compensating tax cannot be included within the scope of the
phrase "for other purposes."

Central Bank Circular No. 105 which took effect on April 25, 1960, specifically enumerates the transactions to which the
official exchange rate of P2.00 per $1 can be applied as well as transactions to be governed by the free market rate:

2. Sales of exchange by the Central Bank at the official rate of P2.00 to $1.00, plus the margin levy, shall be
limited to the following transactions, and shall be subject to licensing by the Central Bank:

(a) Controlled imports EC, DC, EP, and SEP categories under the Central Bank Commodity
Classification).

(b) Government expenditures.

(c) Existing contractual obligations previously approved by the Monetary Board.

(d) Reinsurance premia.

3. Sales of foreign exchange for transactions other than the above and those in excess of exchange licenses
granted by the Central Bank, will be at the free market (refer to Circular No. 106); Provided, That blocked
fiduciary funds and investment earning prior to 1960 shall continue to be governed by existing regulations;
and Provided Finally, That no foreign exchange shall be sold for the importation of UI items except upon
specific authorization of the Central Bank.

Since, obviously, the transaction at bar is not within the first group enumerated, it is the free market rate which is applicable.
The Table of Philippine Exchange Rate Structure of the Central Bank indicates that from April 25 to September 11, 1960, the
free market rate was P3.20 per $1. Since the importation in question took place on June 29, 1960, it is used rate of exchange
which is the conversion rate applicable.

As to the rate of compensating tax, suffice it to say that since the selling price in pesos of the car in question, as computed by
the Court of Tax Appeals, and which we are upholding, is P12,119.91, it is evidently more than P10,000.00 and should be taxed
at the rate of 100% of the selling price pursuant to Section 184 (A) of the Tax Code.

... where the selling price of an automobile exceeds ten thousand pesos the same shall be taxed at the rate of
one hundred per centum of such selling price. ...

WHEREFORE, the decision appealed from should be, as it is hereby affirmed, without special pronouncement as to costs.

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-38271 October 28, 1974

RAMON RAMOS, JR., petitioner,


vs.
HON. MANUEL R. PAMARAN, Presiding Judge, Circuit Criminal Court of Manila, PEOPLE OF THE PHILIPPINES and JOSE
GAMBOA, respondents.

Felimon Flores for petitioner.

Leonardo L. Arguelles and The Office of the Solicitor General for respondents.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 86
AQUINO, J.:p

Ramon Ramos, Jr. filed these special civil actions of certiorari and prohibition against the Circuit Criminal Court of Manila, the
People of the Philippines and the City Fiscal of Manila in order to set aside Judge Manuel R. Pamaran's order dated December
21, 1973, denying Ramos' motion to quash the information for smuggling in Criminal Case No. CCC-VI-1386, People of the
Philippines vs. Fortunato P. Encinas and Ramon G. Ramos, Jr.

That motion was based on the grounds that the charge against Ramos of unlawful importation of fertilizer had already
prescribed, that the information charges two offenses and that the facts alleged do not constitute an offense.

The information against Ramos and Encinas, which cites section 3601 of the Tariff and Customs Code on unlawful importation
as the penal provision involved, reads as follows:

That in, about, and during the period comprised between July 29, 1966 and September 12, 1966, both dates
inclusive, in the City of Manila, Philippines, the said accused, conspiring and confederating together and
mutually helping each other; and with the evident intent to defraud the government of the Republic of the
Philippines of the legitimate duties accruing to it from merchandise imported into this country, did then and
there willfully, unlawfully and knowingly fraudulently import or bring into the Philippines, or assist in so
doing contrary to law, the following merchandise, to wit: 2,500 metric tons of Ammonium Sulphate contained
in 55,000 bags with an estimated value of more than P150,000.00, Philippine currency, which were found to
have no import entry as required by customs laws, rules and regulations, and which were unloaded,
transported, and released to the said accused without the same having been properly declared, and that the
duties and taxes due thereon have not been paid to the proper authorities.

After studying the arguments in Ramos' memorandum, the City Fiscal's comment and the Solicitor General's answer and reply,
we are of the opinion that no grave abuse of discretion, amounting to lack of jurisdiction, was committed by Judge Pamaran in
denying Ramos' motion to quash.

Generally, neither certiorari nor prohibition lies against an order denying a motion to quash. If the court has jurisdiction to
take cognizance of the criminal case and to decide the motion to quash, appeal in due time is the obvious and only remedy.
Section 1, Rule 117 of the Rules of Court provides that if the motion to quash is denied, the accused "shall immediately plead".
That means that the trial should go on. (Cabrera de Chuatoco vs. Aragon, L-20316, January 30, 1968, 22 SCRA 346, 351; Mill vs.
Hon. Nicasio Yatco, 101 Phil. 599, 606; Arches vs. Justice of the Peace of Panay, 83 Phil. 970, Arcaya vs. Teleron, L-37446, May
31, 1974, 57 SCRA 363).

1. Ramos contends that the charge of fraudulent importation or smuggling set out in the information "is in essence" an
indictment for nonpayment of customs duties and internal revenue taxes due on the ammonium sulphate or fertilizer. He
argues that the prescriptive period for a violation of any provision of the Tax Code is five years (Sec. 354).

With respect to the violation of the Tariff and Customs Code, he avers that, as that law does not provide any prescriptive
period for the violation of its provisions, the applicable statute of limitations is article 1149 of the Civil Code which provides
that all other actions whose periods are not fixed in the Civil Code must be brought within five years from the time the right of
action accrues. Hence, he concludes that the offense of fraudulent importation, which was allegedly committed in 1966, had
already prescribed when the information was filed on December 14, 1972.

Ramos' contentions are manifestly unwarranted and untenable. The charge against him is based on the following provisions of
the Tariff and Customs Code, Republic Act No. 1937, which apply to cases where the unlawfully imported merchandise, as in
this case, is valued at more than P150,000:

SEC. 3601. Unlawful Importation. Any person who shall fraudulently import or bring into the Philippines,
or assist in so doing, any article, contrary to law, or shall receive, conceal, buy, sell, or in any manner facilitate
the transportation, concealment, or sale of such article after importation, knowing the same to have been
imported contrary to law, shall be guilty of smuggling and shall be punished with:

xxx xxx xxx

4. A fine of not less than eight thousand pesos nor more than ten thousand pesos and imprisonment of not
less than eight years and one day nor more than twelve years, if the appraised value, to be determined in the
manner prescribed under the Tariff and Customs Code, including duties and taxes, of the article unlawfully
imported exceeds one hundred fifty thousand pesos.

xxx xxx xxx

When, upon trial for a violation of this section, the defendant is shown to have had possession of the article in question,
possession shall be deemed sufficient evidence to authorize conviction, unless the defendant shall explain the possession to

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 87
the satisfaction of the court: Provided, however, That payment of the tax due after apprehension shall not constitute a valid
defense in any prosecution under this section." (As amended by Republic Act No. 4712 effective June 18, 1966).

The Tariff and Customs Code is a special law which does not provide when the offenses committed thereunder would
prescribe. That deficiency is supplied by Act No. 3326, as amended by Act No. 3763, whose pertinent provisions read as
follows:

SECTION 1. Violations penalized by special acts shall, unless otherwise provided in such acts, prescribe in
accordance with the following rules:

xxx xxx xxx

(d) after twelve years for any other offense punished by imprisonment for six years or more, except the crime
of treason, which shall prescribe after twenty
years: ... .

xxx xxx xxx

SEC. 3. For the purposes of this Act, special acts shall be acts defining and penalizing violations of the law not
included in the Penal Code.

Under Section 1(d), twelve years constitute the prescriptive period for the offense imputed to Ramos and Encinas which is
penalized with imprisonment for eight (8) years and one (1) day to twelve (12) years under the afore-quoted section 3601[4]
of the Tariff and Customs Code, expressly cited in the information.

The reference in the information to the nonpayment of customs duties and taxes is incidental to the gravamen of the offense
which is smuggling or unlawful importation. The amount of duties and taxes would be taken into consideration in ascertaining
the imposable penalty. Quite far-fetched and wide off the mark is the averment of Ramos that the offense of unlawful
importation is equivalent to the offense of nonpayment of duties and taxes.

Article 1149 of the Civil Code has no application to this case. The prescription of actions in the Civil Code contemplates civil
actions and not criminal actions.

2. Ramos contends that the information should be quashed because it is duplicitous. His view is that it charges the two distinct
offenses of nonpayment of customs duties and nonpayment of taxes. That view is erroneous. Both the heading and opening
paragraph of the information explicitly indicate that the offense charged is that penalized in section 3601 of the Tariff and
Customs Code which indubitably refers to the crime of "unlawful importation" or smuggling, not to nonpayment of duties or
taxes. (See People vs. Guiao, 105 Phil. 68; Cf. People vs. Ang Hok Hin, 57 Phil. 567).

It is further alleged in the information that the imported fertilizer had no import entry. That averment implies that the
importation was contrary to sections 1201 and 1301 of the Tariff and Customs Code because the fertilizer was not entered
through a customhouse of a port of entry.

3. Petitioner's last contention is that the facts alleged do not constitute an offense because fertilizer is not a prohibited item
and that it is exempt from duties and taxes. That contention is not meritorious.

Ramos, in invoking the ground that the facts charged do not constitute an offense, made a hypothetical admission of the
allegations of the information. As already pointed out, the indictment clearly alleges the crime of unlawful importation defined
and penalized in section 3601 of the Tariff and Customs Code. Whether the prosecution would be able to prove that charge
during trial is another question.

The foregoing discussion is not intended to prejudge the merits of the criminal case. Nothing said herein should foreclose the
right of the parties to prove during the trial their respective contentions or theories. Possibly, the trial might bring out facets of
the case which have not been threshed out in this incident and which may give a different complexion to the case.

The point adjudicated herein is that considering the pleadings, it does not appear that the lower court, which unquestionably
has jurisdiction over the case, gravely abused its discretion in denying petitioner Ramos' motion to quash.

WHEREFORE, the petition for certiorari and prohibition is dismissed with costs against the petitioner.

SO ORDERED.

Fernando (Chairman), Barredo, Antonio and Fernandez, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 88
EN BANC

G.R. No. L-24348 July 30, 1968

FELIClDAD VIERNEZA, petitioner,


vs.
THE COMMISSIONER OF CUSTOMS, respondent.

Juan T. David for petitioner.


Office of the Solicitor General for respondent.

REYES, J.B.L., J.:

An appeal from the decision of the Court of Tax Appeals (C.T.A. Case No. 762) sustaining a decision of respondent
Commissioner of Customs forfeiting, in favor of the Government, 760 cartons of Chesterfield and Camel cigarettes with blue
seals but without internal revenue strip stamps.

Reproduced below are the undisputed findings of facts in the decision appealed from: 1wph1.t

At about 2:00 a.m. on September 16, 1957 the M/V "Legaspi" a coastwise vessel coming from Jolo docked at the port
of Cebu on her way to Manila. Acting upon a confidential telegraphic report from an informer in Jolo that the said
vessel was carrying a substantial quantity of smuggled foreign cigarettes, the Customs authorities of the port of Cebu
conducted a search of the vessel which eventually led to the discovery of eight cases containing SIX HUNDRED FIFTY
(650) CARTONS of Chesterfield cigarettes and ONE HUNDRED TEN (110) CARTONS of Camel cigarettes without the
required Internal Revenue strip stamps. Upon investigation it was also discovered that the subject merchandise was
covered by Bill of Lading No. 24-A (Exhibit B) with "personal belongings" as its declaration and correspondingly
entered into the manifest of the vessel likewise with "personal belongings" as the noted description, and with Sultan
Pula of Jolo as the consignor and a certain Carlos Valdez as the consignee in Manila. Upon further investigation,
however, it was found that a woman passenger was accompanying the subject merchandise appearing later to be Mrs.
Felicidad Vierneza, the present claimant, who all the while holds the bill of lading. It should be noted that when Mrs.
Vierneza was questioned during the course of the search she disclaimed under oath (Exhibit H) ownership of the
merchandise.

Believing that there is a strong evidence of violations of Customs laws, the Collector of Customs of Cebu seized the
merchandise and instituted the forfeiture proceedings for violation of Section 2530 (f), (g) and (m-4) of the Tariff and
Customs Code of the Philippines and Section 174 of the Internal Revenue Code. After complying with the procedural
requirement, of the law, the Collector of Customs of Cebu conducted a hearing of the case ... (and) on February 5, 1958,
... rendered his decision forfeiting the subject merchandise in favor of the Government ... (pp. 42-43, Customs records.)

The claimant of the merchandise, petitioner herein, appealed in due time from the decision of the Collector of Customs
of Cebu to the Commissioner of Customs who affirmed the decision of the Collector, with the modification that the
forfeiture was sustained, among others, under paragraph (m-1) of Section 2530 of the Tariff and Customs Code
instead of under paragraph (m-4) of the same section. ...

Elevated to the Court of Tax Appeals, the decision of respondent Commissioner of Customs was affirmed, the court "(f)inding
that the Collector of Customs of Cebu had jurisdiction to order the seizure and forfeiture of said cigarettes and that the
forfeiture of the same is in accordance with Section 2530 (f) of the Tariff and Customs Code". Thus, petitioner, who claimed to
have merely purchased the cigarettes in the open market in Jolo, now turns to us for relief, advancing the following assignment
of errors:

1. The Court of Tax Appeals erred in affirming the decision of the respondent finding that the Collector of Customs for
the port of Cebu acted with jurisdiction in instituting seizure proceedings against the merchandise herein involved.

2. The Court of Tax Appeals erred in affirming the decision of the respondent finding that the merchandise involved
are liable to the penalty of forfeiture (under Section 2530 (f) of the Tariff and Customs Code).

3. The Court of Tax Appeals erred in not finding that the merchandise involved which were seized and libeled for
alleged violation of particular provisions of law can not be legally forfeited for violation of any other provision of law.

All three assigned errors are untenable.

1. Petitioner argues that the Collector of Customs of Jolo, who has "jurisdiction over all matters arising from the enforcement
of tariff and customs laws within his collection district", as provided for in Section 703 of the Tariff and Customs Code, is
exclusively authorized to proceed against the cigarettes in question inasmuch as the smuggling was allegedly perpetrated in
his collection district. Hence, petitioner concludes that the seizure and forfeiture thereof by the Collector of Customs of Cebu is
irregular and illegal for lack of jurisdiction.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 89
We do not agree. First, because Section 703, on which petitioner's conclusion is premised, is legally non-existent, the same
having been vetoed by the President.1 Secondly, the Tariff and Customs Code clearly empowers the Bureau of Customs to
prevent and suppress smuggling and other frauds upon the Customs [Sec. 602 (b)] over all seas within the jurisdiction of the
Philippines and over all coasts, ports, airports, harbors, bays, rivers and inland waters navigable from the sea and, in case of
"hot pursuit", even beyond the maritime zone (Sec. 603). For the due enforcement of this function, a Collector, among others, is
authorized to search and seize (Sec. 2203), at any place within the jurisdiction of the said Bureau (Sec. 2204, sec. par.), any
vessel, aircraft, cargo, article, animal or other movable property when the same is subject to forfeiture or liable for any fine
imposed under customs and tariff laws (Sec. 2205). It is of no moment where the introduction of the property subject to
forfeiture took place. For, to our mind, "(i)t is the right of an officer of the customs to seize goods which are suspected to have
been introduced into the country in violation of the revenue laws not only in his own district, but also in any other district than
his own". [Taylor vs. U.S., 44 U.S. (3 How.) 197, 11 L. ed. 559]. Any other construction of the Tariff and Customs Code, such as
the one proposed by petitioner, would virtually place the Collector of Customs in a straitjacket and render inutile his police
power of search and seizure, thereby frustrating effective enforcement of the measures provided in the Code to prevent and
suppress smuggling and other frauds upon the Customs. This we can not sanction by subscribing to petitioner's conclusion.
The Code, as a revenue law, is to be construed to carry out the intention of Congress in enacting it and as would most
effectually accomplish its objects (15 Am. Jur. 304).

Petitioner also attacks the jurisdiction of the Collector of Customs of Cebu on the ground that the forfeiture of the cigarettes is
not in accordance with Section 2531 of the Code, as the same were, at the time of seizure, no longer in the custody and control
of the Bureau of Customs nor in the hands, or subject to control, of the importer, original owner, consignee, agent or person
with knowledge that the same were imported contrary to law.

Again, we disagree. The forfeiture is effected precisely in accordance with Section 2531 afore-cited, which plainly provides
"that forfeiture shall be effected when and while the article is in the custody or within the jurisdiction of the customs authority
... or in the hands or subject to the control of ... some person who shall receive, conceal, buy, sell or transport the same ... with
knowledge that the article was imported ... contrary to law" (Emphasis supplied). There can be no question that the cigarettes
involved were seized and forfeited at the port of Cebu which is within the jurisdiction of the Bureau of Customs and, as will be
shown later, while the cigarettes were subject to the control of petitioner, who bought, concealed, and transported the same
aboard the M/V "Legaspi" with knowledge that they were imported contrary to law. Besides, it is a settled jurisprudence that
forfeiture proceedings are in the nature of proceedings in rem wherein the jurisdiction to proceed against the res is vested in
the court of the district where the same is found or seized (25 C.J.S. 572). Therefore, the Collector of Customs of Cebu, who has
the authority under the Tariff and Customs Code to institute forfeiture proceedings, lawfully assumed jurisdiction to forfeit, in
favor of the Government, the smuggled cigarettes found and seized within his collection district.

2. Petitioner next argues that the cigarettes in question are not merchandise of prohibited importation inasmuch as she had
purchased the same in the open market in Jolo; which goes to show that she is not the importer, original owner, consignee,
agent or person who effected the importation thereof; and that in the absence of evidence that she bought the same with
knowledge that they were imported contrary to law in accordance with Section 2531, as the lack of internal revenue stamps is
not evidence of illegal importation much less her knowledge thereof, the said cigarettes are not subject to forfeiture under
Section 2530 (f) of the Code.

This is not the first time that this question has been posed before us. In the case of Gigare vs. Commissioner of Customs (G.R. No.
L-21376, August 29, 1966, 17 S.C.R.A. 1001), we disposed of the same by holding that "(s)ince, admittedly, the internal revenue
tax on the cigarettes indispute has not been paid, it is clear that said cigarettes fall within the category of "merchandise of
prohibited importation," the importation of which is contrary to law and may justify its forfeiture, as provided in Sections
1363 (f) and 1364 of the Revised Administrative Code," which correspond to Sections 2530 (f) and 2531, respectively, of the
Tariff and Customs Code. "Moreover, the blue seals affixed on said commodities prove satisfactorily that they are foreign
products. Again, the importation thereof into the Philippines is attested by the presence of said products within our
jurisdiction" (Ibid.) And concerning petitioner's knowledge of these facts, the following disquisition by the Court of Tax
Appeals, lengthily quoted in the Gigare case, finds significant application in the case at bar:

Were the cigarettes in question illegally imported into the Philippines? We are of the opinion that, the Commissioner
of Customs should be sustained in his finding that the cigarettes in question were imported illegally. The absence of
Philippine internal revenue strip stamps on cigarettes indicates that they are either manufactured clandestinely
within the Philippines or imported illegally into the country. In the case at bar, concomitant circumstances militate
against the clandestine manufacture within the Philippines of the cigarettes. The affixture of blue seals on the packs of
the cigarettes, the wrappers, the purchase of the cigarettes in the open market of Jolo, a place where American and
other foreign made cigarettes are, of common knowledge, frequently smuggled from Borneo ... and the failure of
petitioner to show that the cigarettes in question were locally manufactured rule out the possibility that the cigarettes
in question were manufactured in the Philippines. Consequently, we are constrained to conclude that these cigarettes
were foreign (American) made. They were merchandise of prohibited importation, the importation of which was
contrary to law, and should be forfeited under Section 1363 (f) of the Revised Administrative Code.

xxx xxx xxx

The fact that petitioner is merely a buyer of the cigarettes in the open market of Jolo does not render the cigarrettes
immune from the penalty of forfeiture. This is so because forfeiture proceedings are instituted against
the res (cigarettes) ... and, by express provision of Section 1364 of the Revised Administrative Code, the forfeiture shall
occur while the merchandise is in the hands or subject to control of some person who shall receive, conceal, buy, sell,
or transport the same with knowledge that the merchandise was imported contrary to law. Petitioner cannot but be
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 90
charged with the knowledge that the cigarettes in question were imported contrary to law, for if it were otherwise,
why were these cigarettes concealed on board the vessel ... ? Why did she deny ownership over said cigarettes? For
what plausible reason was she afraid of detention? What impelled her to believe that she would be detained by the
customs authorities? To uphold the claim of petitioner and forego the forfeiture would be giving a chance to
accessories after the fact of smugglers of foreign cigarettes to ply their trade with impunity and with sanction of the
courts. What the executive department could not curb, that is rampant smuggling of foreign cigarettes, the courts
should not tolerate ...

3. Petitioner finally contends that the decision of the Commissioner of Customs libeling and forfeiting the cigarettes involved in
the present case for violation of Section 2530 (m-1) of the Tariff and Customs Code is unconstitutional, in view of the fact that
she was allegedly not afforded an opportunity to defend the cigarettes against such charge, said section not being one of the
original grounds cited by the Collector of Customs of Cebu in forfeiting the same.

The contention has no merit. Certainly, the appellate power of the Commissioner of Customs to review seizure and protest
cases is not limited to a review of the issues raised on appeal. He may affirm, modify or reverse the decision of the Collector
(Section 2313) on other questions provided that his findings and conclusions are, as in the case at bar, supported by evidence.
It is of no consequence whatsoever what were the original grounds of the seizure and forfeiture if, in point of fact, the goods
are by law subject to forfeiture [Wood vs. U.S., 16 Pet. (U.S.) 342, 10 L. ed. 987]. As there is evidence on record showing that the
cigarettes in question were imported and introduced into the country without passing through a customs house, the same may
be forfeited under said Section 2530 (m-1) of the Code, notwithstanding that it is not one of the original charges. As we held
in Que Po Lay vs. Central Bank, et al. (104 Phil. 853), what counts is not the designation of the particular section of the law that
has been violated but the description of the violation in the seizure report. 2

WHEREFORE, the decision appealed from is hereby affirmed, with costs against petitioner.

Republic of the Philippines


SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-28782 September 12, 1974

AUYONG HIAN (HONG WHUA HANG), petitioner,


vs.
COURT OF TAX APPEALS, COLLECTOR OF CUSTOMS, COMMISSIONER OF CUSTOMS, CONSOLIDATED INDUSTRIES OF
THE PHILIPPINES, INC. (CTIP), and LUZON STEVEDORING CORPORATIONS, respondents.

Pedro C. Geling for petitioner.

Francisco T. Koh for respondent Consolidated Industries of the Philippines.

Pelaez, Jalandoni & Jamir for respondent Luzon Stevedoring Corp.

Office of the Solicitor General for Collector of Customs, etc.

ZALDIVAR, J.:p

This is the fifth time that a case involving the 600 hogsheads of Virginia leaf tobacco is before this Court. The first case was the
case of "Cesar Climaco, et al., vs. Hon. Manuel Barcelona," G.R. No. L-19597, July 31, 1962 1 , hereinafter referred to as the
Barcelona case; the second, the case of Collector of Customs, et al., vs. Hon. Francisco Arca, et al.," G.R. No. L-21839, July 17,
1964 2 , hereinafter referred to as the Arca case; the third, the case of "Auyong Hian vs. Judge Gaudencio Cloribel, et al.," G.R.
No.
L-24704, July 10, 1967 3 hereinafter referred to as the Cloribel case; and the fourth, "Auyong Hian vs. Court of Tax Appeals, et
al.," G.R. No. L-25181, January 11, 1967 4 , which was an appeal from the resolution of the Court of Tax Appeals in CTA Case No.
1560, dismissing Auyong Hian's petition for review of the decision of the Commissioner of Customs that affirmed the decision
of the Collector of Customs upon the ground of lack of jurisdiction, and which will be hereinafter referred to as the "First CTA
Case".

The instant case, the fifth, is a petition for review of the decision of the Court of Tax Appeals in its CTA Case No. 1560, dated
January 31, 1968, finding without merit petitioner's appeal from the decision of the Commissioner of Customs that affirmed
the decision of the Collector of Customs of Manila which ordered the seizure and forfeiture of the 600 hogsheads of Virginia
Leaf tobacco imported by petitioner from the United States. The instant case may well be called the "Second CTA Case".

The antecedent facts, and the proceedings that spawned the instant case, briefly stated, are as follows:

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 91
On June 29, 1953, the import Control Commission approved petitioner Auyong Hian's application for four no dollar remittance
licenses to import Virginia leaf tobacco with an aggregate value of two million dollars, of which approval petitioner was
advised on the following day, June 30, 1953-the day when the effectivity of the Import Control Law (Republic Act No. 650)
expired. In October, 1961, the Office of the President approved the use of the aforesaid licenses, and petitioner paid the license
fees on November 2, 1961. On December 30, 1961 600 hogsheads of Virginia leaf tobacco arrived in the Port of Manila aboard
the "SS Fernstate", consigned to petitioner.

Inasmuch as the Collector of Customs in Manila, apparently doubting the legality of the importation, refused to release the
shipment of said Virginia leaf tobacco, petitioner filed in the Court of First Instance of Manila an action for mandamus (Civil
Case No. 49639), to compel the Collector of Customs and the Commissioner of Customs to release the tobacco to petitioner. On
March 19, 1962 Judge Barcelona issued an order to release the tobacco shipment to petitioner. The Collector of Customs and
the Commissioner of Customs then filed with the Supreme Court a petition for certiorari to annul the order of release. This was
the Barcelona case. On July 31, 1962 this Court, in its decision, ruled that the Court of First Instance of Manila had no
jurisdiction to issue the (questioned) order releasing the tobacco shipment; and this Court incidentally declared that the
importation of the tobacco, notwithstanding the alleged approval of the importation by the President of the Philippines, was
illegal upon the ground that the importation was made long after the expiration of the effectivity of the Import Control Law,
and that the importation contravened the government policy as declared in Republic Acts Nos. 698 and 1194. 5

On November 8, 1962, the Collector of Customs instituted seizure proceedings against the 600 hogsheads of tobacco, and
issued a warrant of seizure and detention, in Seizure Identification Case No. 6669. On April 23, 1960 the Collector of Customs
rendered a decision declaring the tobacco forfeited to the government, and ordering the sale thereof at public auction on June
10, 1963. Petitioner received copy of the decision on May 7, 1963. From this decision petitioner filed, on May 21, 1963, his
notice of appeal to the Commissioner of Customs. On December 7, 1964, the Commissioner of Customs affirmed the decision of
the. Collector of Customs.

On January 8, 1965 petitioner filed in the Court of Tax Appeals, in CTA Case No. 1560, a petition for review by way of appeal
from the decision of the Commissioner of Customs. On June 22, 1965 the Court of Tax Appeals dismissed the petition upon the
ground that it had no jurisdiction to entertain the appeal because the Supreme Court had already decided in the Barcelona and
Area cases that the importation in question was illegal. From this resolution Auyong Hian appealed to the Supreme Court. This
was the "First CTA Case" that We have earlier adverted to, This Court, on January 11, 1967 6 remanded the case to the Court of
Tax Appeals for further proceedings, and for decision, on matters that this Court had refrained from deciding.

After the case has been remanded to the Court of Tax Appeals, petitioner filed in said court an amended petition for review to
include the Consolidated Tobacco Industries of the Philippines (hereinafter referred to as CTIP) and the Luzon Stevedoring
Corporation, as parties-respondents.

After hearing, respondent Court of Tax Appeals, in its decision dated January 31, 1968, found the appeal to be without merit
and dismissed the same, with costs against petitioner. This is the decision that is now sought to be reviewed in the instant
petition for review before this Court.

While this case was pending decision, the Solicitor General, on February 22, 1972, filed a "motion for leave", praying that
pending final determination of the case, respondents Collector of Customs and Commissioner of Customs be authorized to
refund to the CTIP the storage charges of the tobacco in question pursuant to Section 2605-c of the Tariff and Customs Code. In
a resolution dated February 28, 1972 this Court deferred action on the petition of the Solicitor General until the case is
considered on the merits.

In the present appeal, petitioner Auyong Hian assigns twelve (12) errors allegedly committed by the Court of Tax Appeals in
its decision of January 31, 1968 dismissing the appeal from the decision of the Commissioner of Customs. The points raised in
the assignment of errors boil down to the question of whether or not the Court of Tax Appeals had correctly sustained the
decision of the Commissioner of Customs which affirmed the decision of the Collector of Customs in connection with the
seizure, forfeiture and the sale of the 600 hogsheads of Virginia leaf tobacco that were imported into the country at the
instance of petitioner Auyong Hian. It must be recalled that in the Barcelona and Arca cases, supra, this Court had categorically
held that the importation of the 600 hogsheads of Virginia leaf tobacco was illegal. It was for this reason that the Court of Tax
Appeals, in its resolution of June 22, 1965, in CTA Case No. 1560 (First CTA Case), dismissed the appeal of Auyong Hian from
the decision of the Commissioner of Customs. But this Court, in the first CTA Case held that the Court of Tax Appeals, had
jurisdiction to pass upon the appeal of Auyong Hian from the decision of the Commissioner of Customs because the appeal
involved matters related to the administrative proceedings in connection with the seizure, forfeiture and sale of the tobacco in
question. Here is what this Court said:

... It appears to Us that the Court of Tax Appeals had overlooked the fact that the appeal of Auyong Hian from
the decision of the Commissioner of Customs had raised not only the question of the legality of the
importation but also other matters which called for a ruling by the Court of Tax Appeals in the exercise of its
appellate jurisdiction especially the question of whether the tobacco thus imported were goods the
importation of which was relatively prohibited or absolutely prohibited, and also the question regarding the
disposal of the tobacco that was thus seized. The declaration by this Court, in the Barcelona and Arca cases,
supra, that the importation of the tobacco in question was illegal was not intended to stop the course of the
administrative proceedings in relation to the importation of said tobacco. Let it be noted that when the
Barcelona case was decided on July 31, 1962 the seizure proceedings against the 600 hogsheads of tobacco in
question had not yet been instituted by the Collector of Customs. It was not until November 8, 1962 when
Seizure Identification No. 6669 was instituted. ...
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 92
And so this Court, in the First CTA case, declared the Court of Tax Appeals as possessed of jurisdiction to pass upon the
questions raised by Auyong Hian in his appeal from the decision of the Commissioner of Customs regarding administrative
matters relating to the seizure proceedings of the 600 hogsheads of tobacco in question.

(1) Auyong Hian claims that he was not given a chance to be heard in the seizure proceedings. He claims that he filed a motion
for postponement of the hearing scheduled for November 26, 1962 based on some valid reasons, that said motion for
postponement was not acted upon by the hearing officer, or if it was acted upon at all the hearing officer did not notify him of
the action taken on said motion, and that he was not notified about the subsequent hearing because he was declared in default
by the hearing officer. Auyong Hian maintains that there can not be a declaration of default in purely administrative
proceedings. In short, it is the contention of Auyong Hian that in the seizure proceedings of the 600 hogsheads of tobacco in
question he was not afforded the benefits of due process of law.

It is a settled doctrine that due process is applicable to administrative proceedings (Asprec vs. Itchon, et al., L-21685, April 30,
1966, 16 SCRA 921, 925; Cornejo vs. Gabriel, 41 Phil. 188, 193); that the essence of due process is the requirement of notice
and hearing (Algabre vs. Court of Appeals, L-24458-64, July 31, 1969, 26 SCRA 1130, 1140); that the presence of a party at a
trial is not always of the essence of due process, and all that due process requires is an opportunity to be heard (Asprec vs.
Itchon, et al., supra).

In this connection, the Court of Tax Appeals made the following findings:

The records show that petitioner was given a notice of hearing in Seizure Identification No. 6669 (re the 600
hogsheads of Virginia leaf tobacco); that on the date of hearing petitioner filed a motion for indefinite
postponement, which was not acted upon or resolved by the proper Customs officials; that upon failure of
petitioner to appear on the date of hearing, the hearing officer declared petitioner in default; and that the
hearing was conducted thereafter in the absence of petitioner. (Decision CTA Case No. 1560; Record, pp. 32-
33).

Petitioner's having filed a motion for postponement, even if the motion is not entirely groundless, confers on him no right
either to assume that the motion for postponement would be granted or to be absent at, and shy away from, the hearing.
Petitioner was consequently guilty of carelessness and neglect when he failed to appear at the trial. He cannot rightfully claim
that the hearing officer was guilty of abuse of discretion in refusing to grant the postponement (Sarreal vs. Hon. Tan, et al., 92
Phil. 689, 692). And after a party has been declared in default, he is not entitled to notice of the order placing him in default;
neither is he entitled to notice of proceedings subsequent to default (Lim Toco v. Go Fay, 80 Phil. 166, 168). Petitioner,
therefore, has no cause to complain that he was not afforded a chance to be heard or that he was denied his day in court.

The contention of petitioner that in administrative proceedings a party can not be declared in default is untenable. If a
respondent in an administrative proceeding cannot be declared in default when he fails to appear, as required, the
continuance of an administrative proceeding would be dependent on the will and caprice of said party to the proceedings, and
would render helpless the officer or board conducting an administrative proceeding. We hold that if the party duly summoned,
or duly notified, to appear at an administrative investigation, refuses to appear, he may be declared in default, and the
investigation may proceed without his presence.

Petitioner's first assignment of error is not only not sustained by the facts. It is furthermore negated by the pronouncements of
this Court which has already passed directly on the issue of whether or not petitioner Auyong Hian was deprived of due
process of law in the seizure proceedings. In the Arca case, respondent therein claimed that the decision in the seizure
proceedings was arbitrary because the hearing officer and the Collector of Customs declared Auyong Hian in default without
notifying him of the action taken on his motion to postpone the seizure proceedings.

This Court rejected the contention saying:

The record shows that Auyong Hian received on November 21, 1963 notice of hearing on the seizure
proceedings scheduled for November 26, 1962. It is true that he filed a motion to postpone the hearing, but it
was for an indefinite period of time and only in the morning of the date of hearing. He did not bother to find
out what action the Collector of Customs would take on his motion. Continuation of the seizure proceedings
was made on December 6, and December 10, 1962, yet Auyong Hian did not take the trouble to find out about
its status. The facts, therefore, show that Auyong Hian was not deprived of due process of law, but that he is
guilty of abandonment or gross negligence in the protection of his rights, for which he alone is to blame.

This pronouncement, though found only in the opinion, cannot be accurately called, as contended by petitioner, an obiter
dictum just because it was not incorporated in the dispositive portion of the decision. This Court has already remarked that
the dispositive part does not always constitute a judgment and that the judicial pronouncements in the body of the decision
must be considered. (Millare, et al. vs. Millare, et al., 106 Phil. 298-299.) An obiter dictum has been defined as an opinion
expressed by a court upon some question of law which is not necessary to the decision of the case before it (Bouvier's Law
Dictionary, third revision, Vol. I, p. 863). Although the question of whether petitioner Auyong Hian was deprived of due
process in the seizure proceedings was not the precise issue in the Arca case, for this Court itself said that the legal question
posed in that case was:

Who has a better right to the tobacco in question, petitioner Collector of Customs who has ordered the
seizure and declared the forfeiture thereof as a result of Manila Seizure Identification No. 6669, or respondent
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 93
Tomas Cloma in whose favor a writ of attachment was issued by the Court of First Instance of Manila covering
said shipment in Civil Case No. 53874, brought by Cloma against Auyong Hian for services rendered to the
latter? (Collector of Customs v. Area, L-21389, July 17, 1964, 11 SCRA 529, 534-535).

Yet, the pronouncement made by this Court upon said question cannot be said to be totally extraneous, and was not necessary,
to the adjudication of the case before it, for to arrive at the conclusion that the Collector of Customs had a better right, by
virtue of the seizure proceedings, that had already been terminated before Cloma's action was brought, the validity and
legality of the seizure proceedings, and necessarily the issue of the deprivation of due process, had to be passed upon. With
respect to a court of last resort, all that is needed to render its decision authoritative is that there was an application of the
judicial mind to the precise question adjudged, and that the point was investigated with care and considered in its fullest
extent (Alexander v. Worthington, 5 Md. 488, cited in Bouvier's Law Dictionary, third revision, Vol. 1, p. 864). A perusal of the
decision in the Arca case shows that the precise question of deprivation of due process was extensively and explicitly
discussed with a view to settle it, and consequently the pronouncement on said point cannot be considered adictum.

2. Petitioner anchors the alleged invalidity of the seizure proceedings on his having been deprived his day in
court. This basis has been shown to be untenable.

Petitioner, however, tried to emasculate respondents' argument by asserting that the declaration of the illegality of the
tobacco importation was incidentally made; hence it has no binding force.

An analysis of the Barcelona case shows that even if the pronouncement therein made regarding the illegality of the
importation was incidentally made, it did not and could not mean that the pronouncement was extraneous to the subject
matter and that it was, therefore, unauthoritative.

The Barcelona case was a petition for certiorari to set aside a writ of preliminary mandatory injunction. issued by the Hon.
Judge Manuel P. Bareelona in Civil Case No. 49639 of the Court of First Instance of Manila, ordering the respondents therein,
Cesar Climaco and Teotimo Roja, to allow entry of the 600 hogsheads of Virginia leaf tobacco imported under authority of
licenses Nos. 17166, 17169, 17196, and 17199 issued by the defunct Import Control Commission on May 8, 1953 under the
provisions of Republic Act No. 650. Respondents therein opposed the issuance of the writ of preliminary injunction, alleging
among other things that the Court of First Instance had no jurisdiction to order the release of the importation on the ground
that the importer Auyong Hian was not entitled as a matter of right and equity to import the tobacco, for the licenses, under
which the importation was made, were issued under a law that ceased to exist eight years before the importation, and that the
importation was a violation of Rep. Act No. 1194 at the time of importation; and that the imported tobacco, being under
customs custody, could not be ordered released by the Court of First Instance which had no jurisdiction to review the
actuations of customs authorities in any case involving the seizure, detention or release of any property.

One of the reasons given by the respondent court therein for granting the writ of preliminary mandatory injunction was that
the importation was legal on the ground that the President had issued the licenses in accordance with the supposed opinions
of the Secretary of Justice Nos. 32 and 145, series of 1961.

Although the principal question therein was the court's jurisdiction and the primary relief prayed for by petitioners was to set
aside the preliminary mandatory injunction dated March 20, 1962, the resolution thereof hinged on another question, which
was, to quote the Court:

The question that is, therefore squarely presented for the decision of this Court is whether, under the facts
and circumstances above indicated, the petitioner has the clear legal right to make the importation in
question and the respondents the clear legal duty to allow entry and release of said importation.

The above question in turn depended on whether the importation was legally made.

This Court in the dispositive portion of its decision in said case ruled for the reasons therein given that:

... We are constrained to declare, as we hereby declare, that the importation in question has been illegally
made ... And We, therefore, hereby grant the petition and set aside the order of the court below on March 19,
1962 and the writ of preliminary injunction issued in accordance therewith ....

Said ruling regarding the illegality of the importation, contained in the dispositive portion cannot be said, as claimed by
petitioner, unauthoritative and not binding. Said declaration of illegality was reiterated in the Arca case thus:

There is no question that the importation of the tobacco leaf in question was illegal, having been made in
clear violation of the policy contained in Republic Acts Nos. 698 and 1194. (Collector of Customs v. Arca, L-
21389, July 17, 1964, 11 SCRA 529, 535.)

3. Petitioner's insistence that the tobacco importation was valid and legal together with the grounds asserted
to sustain the same is not tenable. This Court already had occasion to examine in the Barcelona case the
import licenses claimed to be valid by petitioner. To the petition in said case were appended copies of the
licenses and the receipt evidencing payment of the fees thereon in November, 1961. The alleged reason that

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 94
said licenses were valid because the President had issued them in accordance with the supposed opinions of
the Secretary of Justice No. 32 and 145, series of 1961 was already passed upon. This Court said that:

An examination of the licenses shows that the same were approved by the Import Control Commission on
June 29, 1953. The following statement is contained in each of the licenses:

This license is valid from date of issue until fully consummated, provided that this license must be presented
to an Authorized Agent (Negotiating Bank) of the Central Bank, and Bank Credit established within thirty (30)
days after date of release. It is not transferable/assignable without authority from the Import Control
Commission and is subject to revocation for cause. Commodities covered by this license must be shipped
from the country of origin before the expiry date of the license, and are subject to Sec. 13 of Republic Act No.
650.

The following provision of Republic Act No. 650 is to be noted:

Sec. 8. Unless extended in accordance with the rules and regulations, import licenses issued under this Act
and which are not used within thirty days after the issue by the opening of a letter of credit or a similar
transaction shall be null and void. Import licenses are non-transferable.

The petitioner has not shown that steps were ever taken to open the corresponding letters of credit
amounting to $500,000 to cover the payment of the Virginia leaf tobacco to he imported, as required by the
above-quoted provision of the law. Neither is it shown that immediately, or within a reasonable time after the
approval of the licenses and their issuance, steps were taken to order the tobacco to be shipped to the
Philippines. Certainly this was not done because the licenses were not fully completed until November 2,
1961, when the corresponding fees chargeable on the licenses were paid to the Office of the President.
(Climaco vs. Barcelona, L-19597, July 31, 1962, 5 SCRA 850-851.)

and after discussing why the decision in Commissioner of Customs v. Auyong Hian, G.R. No. L-11719, April 29, 1959 could not be
applied to the said case, this Court concluded that:

The importation [of the tobacco] in question, therefore, is a gross violation of the policy contained in Republic
Acts Nos. 698 and 1194, limiting the Virginia leaf tobacco importation only to such amounts as could not be
met with by the local production of Virginia leaf tobacco, hence clearly illegal.

The supposed approval of the licenses by the President has been alleged as a ground for the validity of the
importation. The President may not extend the life of licenses issued under Republic Act No. 650; he cannot
make the illegal importation valid; he has no legal authority to do so and his act would be clearly violative of
the express provisions of Republic Act 1194. (Climaco v. Bareelona, L-19597, July 31, 1962, 5 SCRA 846, 848,
850, 853.)

In the Arca case, this Court again said:

There is no question that the importation was illegal having been made in clear violation of the policy
contained in Republic Acts Nos. 698 and 1194. To this effect is the decision of this Court in Climaco vs. Judge
Barcelona, et al., G.R. No. L-19597, July 31, 1962. (Collector of Customs vs. Arca, No. L-21389, July 17, 1964, 11
SCRA 529, 535.)

Petitioner's claim that the Government is estopped to deny the validity of the license cannot be seriously defended. Time and
again, this Court has ruled that the doctrine of estoppel is not applicable against the Government suing in its capacity as
sovereign or asserting governmental rights; the Government is never estopped by mistake or errors on the part of its agents.
(Republic v. Go Bon Lee, L-11499, April 29, 1961, 1 SCRA 1166, 1170; Republic vs. Philippine Rabbit Bus Lines, Inc., L-26862,
March 30, 1970, 32 SCRA 211, 218; Luciano vs. Estrella, L-31622, August 31, 1970, 34 SCRA 769, 776.) Moreover, estoppel
cannot give validity to an act that is prohibited by law or is against public policy. (Republic v. Go Bon Lee, supra.)

The tobacco importation in question was, therefore, subject to seizure and forfeiture in accordance with Section 2530 of the
Tariff and Customs Code and the Collector of Customs had the power to order the seizure in accordance with the provisions of
Section 2205 of the Tariff and Customs Code, as has already been ruled by this Court in the Arca case.

But the Court of Tax Appeals, insists petitioner, should have decided whether the importation was absolutely prohibited or
merely prohibited, on the ground that in this Court's decision in the Court of Tax Appeals case, it was said that "the question of
whether the tobacco thus imported were goods the importation of which was relatively prohibited or absolutely prohibited"
"called for a ruling of the Court of Tax Appeals in the exercise of its appellate jurisdiction." (19 SCRA 10, 22). Petitioner also
claims that the respondent Court of Tax Appeals erred when it did not hold that the importation was at worst, only relatively
prohibited. In the decision of the Court of Tax Appeals sought to be reviewed, it appears that the Tax Court discussed the
classification of articles subject to forfeiture under the Customs Law, and the rights of the importer to the delivery of the
imported article under Sections 2301 and 2307 of the same Code, and it concluded that the failure to declare the tobacco
imported as merely qualifiedly prohibited did not affect the substantive rights of petitioner. Said the Tax Court:

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 95
There is no evidence of record to show that petitioner herein exercised or attempted to exercise any of the
rights afforded an importer under Sections 2301 and 2307 of the Tariff and Customs Code. ... At any rate, even
if he sought the release of said tobacco by filing a bond for its appraised value or by paying the redemption
price, it is evident that the same could not have been granted because the delivery of said tobacco to him
would be contrary to law. ... It is quite plain that the failure of respondents to declare said tobacco as an
article which merely qualifiedly prohibited has not adversely affected the substantive right of petitioner.
(Decision-CTA Case No. 1560, Record, pp. 47-48.)

The Court of Tax Appeals did not commit a reversible error on this point. There is no question, as this Court has declared, that
the importation made in December, 1961, of tobacco leaf in question was illegal. The same was made in clear violation of the
policy enunciated in Republic Act No. 698, approved May 9, 1952 limiting the importation of foreign leaf tobacco, and also of
its amendatory Act, Republic Act No. 1194, approved August 25, 1954. These' statutes not only limit the importation of
Virginia leaf tobacco but also provide that the "Virginia-type leaf tobacco authorized to be imported therein shall be allocated
and distributed by the Monetary Board of the Central Bank among legitimate manufacturers of Virginia-type cigarettes; that
the licenses for such importation shall be issued ... by the Central Bank ... that the leaf-tobacco imported without the necessary
license issued under said Act shall be forfeited to the Government" (Sec. 2). Said importation is also subject to forfeiture under
Sec. 2530 of the Tariff and Customs Code.

The substantive right of petitioner is not affected, as declared by the Tax Court, by the failure to declare whether the
importation was absolutely or qualifiedly prohibited.

Although the illegally imported subject tobacco may not be absolutely prohibited, but only qualifiedly prohibited under Sec.
102 (K) of the Tariff and Customs Code, for it may be imported subject to certain conditions, it is nonetheless prohibited and is
a contraband (Comm. of Customs vs. CTA & Dichoco, L-33471, Jan. 31, 1972), and the legal effects of the importation of
qualifiedly prohibited articles are the same as those of absolutely prohibited articles (Geotina vs. Court of Tax Appeals, No. L-
33500, August 30, 1971, 40 SCRA 362, 379, 383; Comm. of Customs vs. CTA & Dichoco, supra).

Under Sec. 2301 of the Tariff and Customs Code, upon making any seizure, the Collector of Customs shall issue a warrant for
the detention of property; and if the owner or importer desires to secure the release of the property for legitimate use, the
Collector may surrender it upon the filing of a sufficient bond, in an amount to be fixed by him, conditioned for the payment of
the appraised value of the article and/or any fine, expenses and costs which may be adjudged in the case, provided, the articles
the importation of which is prohibited by law shall not be released under bond. Pursuant, thereto, the importer of the subject
tobacco, the importation of which is prohibited by law, has no right that the tobacco be released to him even if he puts up a
bond to be determined by the Collector of Customs.

Sec. 2307 of the Tariff and Customs Code, which authorizes in a seizure case the settlement of the case by payment of fine or
the redemption of forfeited property, also provides that:

Redemption of forfeited property shall not be allowed in any case where the importation is absolutely
prohibited or where the surrender of the property to the persons offering to redeem the same would be contrary
to law. (Emphasis supplied.)

Petitioner Auyong Hian would, accordingly, not even be entitled to redeem, even if he wanted to, the forfeited tobacco, for the
surrender to him of said tobacco would be contrary to law, because petitioner could not really be legally entitled to import it
inasmuch as he was not a legitimate manufacturer of Virginia-type cigarettes, among whom alone shall be allocated and
distributed by the Monetary Board of the Central Bank the Virginia-type leaf tobacco authorized to be imported. (Sec. 2, Rep.
Act No. 1194.)

What has been said above would have applied even if petitioner had attempted to exercise the right of redemption under Sec.
2307 of the Tariff and Customs Code. The fact, however, as found by the Court of Tax Appeals is

There is no evidence or record to show that petitioner herein exercised or attempted to exercise any of the
rights afforded an importer under Section 2307 of the Tariff and Customs Code. All that he sought was the
release of tobacco in question upon payment of the duties and taxes due thereon because of his insistence
that the importation was made in accordance with law.

4. What has been said in the third assignment of error suffices to dispose of the fourth and fifth assignments. Therein it was
shown that pursuant to the provisions of Republic Acts Nos. 650 and 1194, petitioner was disqualified to import the Virginia-
leaf tobacco, he not being a legitimate manufacturer of this type of cigarette, and under the provisions of Secs. 2301 and 2307
of the Tariff and Customs Code, the tobacco could not be delivered to him, even if he had made attempts to put up a bond.
Neither could the tobacco be legally delivered to him even if he had attempted to redeem it. Hence, the alleged error
committed by the Court of Tax Appeals in finding that petitioner did not attempt to exercise any of the rights afforded an
importer under Section 2307 of the Tariff and Customs Code, even if sustained, would not affect the outcome of the instant
petition.

5. Petitioner's contention that the sale to the CTIP was invalid cannot be upheld.

It has been shown in the previous discussion that the decision of the Collector of Customs in ordering the forfeiture and sale of
the subject tobacco was correct and legal. Seized property, other than contraband, pursuant to Sections 2601 and 2602 of the
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 96
Tariff and Customs Code, shall be sold, or otherwise disposed of, upon the order of the Collector of the port where the property
in question is found. The property shall be sold at public auction after ten days notice conspicuously posted at the port and
such other advertisements as may appear to the Collector to be advisable in the particular case (Sec. 2603). If the article
seized, however, is perishable, the Collector may proceed to advertise and sell the same at auction upon notice as he shall
deem to be reasonable (Sec. 2607).

Implementing his decision dated May 9, 1963, to have the seized tobacco sold to buyers who could meet certain qualifications
and conditions, and after having created a Committee to implement the decision, the Collector of Customs issued a notice of
sale (Exhibit 6 Customs), setting the public auction sale "at June 10, 1963 at 9:00 A.M. and every morning thereafter until
terminated." which notice of sale was given the requisite publication at least ten days before the auction sale (before June 10,
1963) in accordance with Section 2603 of the Tariff and Customs Code. The sale, therefore, could not have been invalid, for
lack of public notice.

Two prospective bidders the respondent CTIP and the Philippine Associated Resources registered with the Special
Bidding Committee but only the CTIP was found to be a qualified bidder.

On June 10, 1963, the date set for the public auction sale, the Collector of Customs was served the writ of preliminary
injunction issued by Judge Francisco Arca in Civil Case No. 53824 directing the former to desist from holding the auction sale.
This writ was served upon him at 8:55 A.M. (pp. 270-272, 329, 360 t.s.n., Brief for Respondent CTIP, p. 48), but before the writ
was served, the CTIP had submitted its bid at around 8:00 A.M. (Ibid., p. 48), and these facts were not impugned by petitioner
(See Petitioner's Reply Brief, pp. 26-27). At any rate, even if the bid were submitted after the Collector had been served with
the writ of preliminary injunction, his act would not constitute a violation of the writ for the submission and reception of a bid
could not constitute a consummated sale. But on June 17, 1963 the Supreme Court issued a preliminary injunction in L-21389
(Arca case) prohibiting Judge Arca from executing or enforcing the writ of preliminary injunction issued by him against the
petitioner in Civil Case No. 53874 (11 SCRA 529, 532-533).

On June 26, 1963, the bid of the CTIP was finally approved and the tobacco was awarded to it. This took place before 5:00 p.m.
However, at 5:38 p.m. of the same day another restraining order from the Supreme Court in the Arca case directed the
Collector to desist temporarily from continuing with the public auction of the tobacco until July 3, 1963. Before the Collector
received the restraining order, CTIP had already paid P500,000 on account of its approved and accepted bid of P1,500,000.00
and had filed the required surety bond of P1,000,000 to guarantee the exportation of the locally grown tobacco. It is clear,
therefore, that at the time the bid of the CTIP was approved and at the time payment was made, there was no restraining order
either of the CFI or of the Supreme Court enjoining the sale.

But even assuming arguendo that at the time the sale was made there was already a restraining order enjoining it, the sale
would still not be null and void. A restraining order like injunction operates upon a person as it is granted in exercise of equity
jurisdiction, and an injunction has no in rem effect to invalidate an act done in contempt of an order of the court except where
by statutory authorization the decree is so framed as to act in remon property. (Town of Fond Du Lac v. City of Fond Du Lac, 22
Wis. 2d 525,126 NW 2d 206). In 42 Am. Jur. 2d, pp. 1144-1145, we read:

Where an injunction is granted and the decree operates in personam, an act done in violation of injunction is
not a nullity. On the contrary, the act is ordinarily valid and legally effective, except as to the person who
obtained the injunction and those claiming under him, and as to them, the act is valid unless and until they
attack it in a proper manner. If an injunction prohibits the defendant from transferring property, but he
transfers the property in violation of the injunction, and the transfer is made to an innocent third person, the
transferee obtains good title and the injunction. does not affect his rights.

Neither may petitioner's contention that the continuation of the sale for more than three days, i.e. from June 10 to June 26,
1963 would render the sale void, because it is violative of Section 2607 of the Tariff and Customs Code, be sustained. Said
section in part provides:

Section 2607. Disposition of article liable to deterioration. Perishable articles shall not be deposited in a
bonded warehouse; and, if not immediately entered for export or for transportation from the vessel or
aircraft in which imported or entered for consumption and the duties and taxes paid thereon, such articles
may be sold at auction, after such public notice, not exceeding three days, as the necessities of the case
permit.

The three days mentioned in said section refers to the period of public notice, not to continuation of the sale as contended by
petitioner.

Untenable also is petitioner's contention that the Collector had no right to have the tobacco sold because the Bureau of
Customs was not yet the owner of the tobacco at the time of the sale. This contention loses sight of the fact that the Collector of
Customs when sitting in forfeiture proceedings, constitutes a tribunal upon which the law confers jurisdiction to determine all
questions touching the forfeiture and further disposition of the illegally imported merchandise. (Commissioner of Customs v.
Cloribel, L-20266, Jan. 31, 1967, 19 SCRA 234; Auyong Hian vs. Court of Tax Appeals, L-25181, January 11, 1967, 19 SCRA 10).
The Tariff and Customs Code requires the Collector, upon making any seizure to issue a warrant for the detention of the
property (Section 2301); to make in writing, after hearing, a declaration of forfeiture (Section 2312), and to sell or otherwise
dispose of the property under customs custody (Sec. 2602). The forfeiture constitutes a statutory transfer of the right of
property. Title is vested in the government by administrative forfeiture, although such title may not be absolute, but resoluble

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 97
subject to the right of redemption on the part of the owner of the forfeited merchandise (Sec. 1388 Administrative Code). The
consequence of this forfeiture was already declared by this Court in the Arca case when it said:

It is to be noted that the seizure proceedings had already been terminated and the tobacco shipment declared
forfeited to the Government, thereby ceasing to be the property of Auyong Hian .... The seizure proceedings
were taken by the Collector of Customs in the exercise of its jurisdiction of the customs law (Secs. 2205 and
2530, Tariff and Customs Code) ... (11 SCRA 529, 537).

And this Court continued:

Auyong Hian, therefore, had lost all his rights to the shipment, not only because we declared the licenses void
and the shipment illegal in the case of Climaco vs. Barcelona, G.R. No. L-19597, but also because the seizure
proceedings have been found to be regular and had deprived Auyong Hian of his rights to the shipment as
importer; at least while the order of seizure has not been set aside. (11 SCRA 529, 538.)

Petitioner, however, insists that the Collector could not sell the forfeited tobacco after he lost jurisdiction thereof upon the
perfection of the appeal on May 21, 1963 to the Commissioner of Customs. Petitioner seems to imply that the sale, if any,
should have been made by, or at least with, the approval of the Commissioner of Customs. This is what happened. When the
Collector of Customs approved, on June 26, 1963, the offer of the CTIP, his action was backed by prior approval of the
Commissioner of Customs. To this effect we read in the appealed decision, thus:

Apparently, to preclude any doubt as to the regularity of the sale, the Collector of Customs, on June 11, 1963,
sought the advice of the Secretary of Finance, and the latter referred the matter to the Secretary of Justice,
who, at that time, was the Chairman of the Cabinet Committee on Public Bidding of Tobacco. In an
indorsement (rated June 24, 1963, signed by the Secretary of Justice and all the members of the said Cabinet
Committee, the sale was approved. The indorsement of the Cabinet Committee was transmitted to the
Secretary of Finance and the Commissioner of Customs, who informed the Collector of Customs of such
approval (See Exhs. "E", "F" and "G", CTIP, pp. 205-211, CTA Records), When, therefore, the Collector of
Customs approved on June 26, 1963, the recommendation 'of the Special Bidding Committee to accept the
offer of Consolidated Tobacco Industries of the Philippines, his action had the prior approval of the
Commissioner of Customs, the Secretary of Finance and the Cabinet Committee. (Brief for Petitioner, pp. 140-
141.)

Neither can the inadequate consideration, even if true, invalidate the sale to the CTIP.

The other factor which, according to petitioner, militates against the validity of the sale is the measly sum of P1,500,000 paid
by the CTIP for the tobacco which had a value, according to petitioner, of P7,000,000. What is really the value of the imported
tobacco? According to the Tax Court, the records show that when the tobacco arrived in the Philippines, petitioner filed and
Affidavit and Pro Forma Invoice giving the invoice value of the tobacco as $103,453 and an appraised value, for tax purposes,
of P227,675. Petitioner contends that this declaration was merely its invoice value and does not include the other expenses
incurred in the importation. Because of these different declarations, the Tax Court confessed it was at a loss as to which of
petitioner's declaration was to be believed. When it suits petitioner's purpose he claims that the tobacco was worth
P227,675.00. For other purposes the value was P7,000,000. If the claim of petitioner that the tobacco was really worth
P7,000,000.00, then there will be another cause for forfeiture which would be petitioner's filing a false declaration under
section 2530 (m) of the Tariff and Customs Code.

We cannot say that the appraisal of the value of the tobacco was incorrect. According to the Tax Court, the Collector of Customs
took precautionary measures to insure a correct appraisal of the tobacco. The appraisal was made by a competent appraiser of
the Bureau of Customs, and both the Commissioner of Customs and the Secretary of Finance, who exercise supervisory
authority over the Collector of Customs and who were consulted on the matter, approved the sale, or at least, interposed no
objection to the sale. Anent this matter it has been said that an appraisal made by the Commissioner of Customs under Section
1377 of the Revised Administrative Code is presumed to be correct, unless the contrary is proven by the importer. (Lazaro vs.
Commissioner of Customs, L-22511 and L-22343, May 16, 1966, 17 SCRA 36, 41 and cases cited therein.)

But, assuming arguendo, that the consideration paid for the forfeited tobacco was inadequate, such inadequate consideration
is not a ground for the invalidity of a contract. Anent this matter Article 1355 of the Civil Code provides:

Except in cases specified by law, lesion or inadequacy of cause shall not invalidate a contract, unless there has
been fraud, mistake or undue influence.

Petitioner has not shown that the instant sale is a case exempted by law from the operation of Art. 1355; neither has petitioner
shown that there was fraud, mistake or undue influence in the sale. Hence, this Court cannot but conclude with the Court of
Tax Appeals that "In these circumstances, we find no reason to invalidate the sale of said tobacco to Consolidated Tobacco
Industries of the Philippines."

The Court of Tax Appeals is claimed to have erred also in holding that the subject tobacco was deteriorating. We note, that the
imported tobacco has a very unique nature. According to petitioner, it is highly perishable, but in spite of the lapse of several
years, it has not deteriorated. In Civil Case No. 49639 of the Court of First Instance of Manila, petitioner herein averred that the
Virginia leaf tobacco imported is highly perishable in nature so that delay in the release thereof would cause him irreparable
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 98
injury (Climaco v. Barcelona, L-19597, July 31, 1962, 5 SCRA 846, 848). In his "petition to release tobacco under bond" dated
March 14, 1967, filed with respondent court, he alleged that:

16. That considering the time that has elapsed since the arrival in Manila of the 600 hogsheads of Virginia leaf
tobacco same may be deteriorated unless sooner disposed of ...

Now he claims that the tobacco has not deteriorated.

But let us give petitioner the benefit of the doubt. We do not see, however, how the deterioration or not of the tobacco will
affect the outcome of this petition. Hence, it is unnecessary to deal on it further.

Petitioner's contention that the Court of Tax Appeals erred in holding that he had no legal personality to question the legality
of the sale, should be sustained. Even if petitioner had lost all his rights to the tobacco shipment after the same has been seized
and forfeited, such loss of right was still subject to a contingency that is, "at least while the order of seizure has not been set
aside." It is unwarranted to conclude that the loss of his rights to the tobacco while the seizure has not been set aside carried
with it the loss of his legal personality to question the legality of the sale. The Tariff and Customs Code itself expressly gives to
any person aggrieved by the decision or action of the Collector of Customs in any case of seizure, the right to have the decision
reviewed by the Commissioner of Customs (Section 2313), and from the decision of the latter, he has a right to appeal to the
Court of Tax Appeals (Section 2402), and from the latter's decision to the Supreme Court.

Neither can it be accurately said that petitioner has no right to have the contract of sale to the CTIP annulled, on the ground
that he was not a party bound either principally or subsidiarily by the contract. (Art. 1397 Civil Code.) Petitioner seeks the
declaration of the nullity of the sale not as a party to the sale, but because he had an interest that was affected by the sale. This
Court has held that a person who is not a party obliged principally or subsidiarily in a contract may exercise an action for
nullity of the contract if he is prejudiced in his rights with respect to one of the contracting parties, and can show the detriment
which would positively result to him from the contract in which he had no intervention. (Ibaez v. Hongkong and Shanghai
Bank, 22 Phil. 572, 584-585; Teves vs. People's Homesite and Housing Corporation, et al., L-21498, June 27, 1968, 23 SCRA
1141, 1147-1148). It would be stating the obvious that in the instant case the petitioner will suffer detriment as a consequence
of the sale, in case it is not set aside.

As a matter of fact, this Court has recognized the personality of petitioner to question the legality of the sale when in the Court
of Appeals case, L-25181, this Court remanded the case to the Court of Tax Appeals to decide the validity of the administrative
proceedings and the question regarding the disposal and sale of the tobacco that was seized. It was therein implied that
petitioner had personality to question the sale.

The error assigned regarding the amount of warehousing charges that had accumulated is immaterial to the decision of the
instant case, and whether the Court of Tax Appeals did commit the error or not, will not affect the result of the case. This point,
therefore, need not be commented on.

This Court recognizes that petitioner has the right to take all legal steps to enforce his legal and/or equitable rights to the
tobacco in question. One who makes use of his own legal right does no injury. Qui jure suo utitur mullum damnum facit. If
damage results from a person's exercising his legal rights, it is damnum absque injuria. The consequent delay in the delivery of
the tobacco is an incident to said exercise of his rights. But, again, whatever might be petitioner's motive in this regard will
hardly affect the outcome of this case.

6. The property, subject of litigation is not by that fact a line, in custodia legis. "When property is lawfully taken, by virtue of
legal process, it is in the custody of the law, and not otherwise." (Gilman v. Williams, Wis. 334, 76 Am. Dec. 219.)

In the case of Millare et all, vs. Millare et al., 106 Phil. 203, 299, a motion for contempt was filed in this Court by appellant
charging respondents with having committed contempt by selling or otherwise disposing the land in question pending the
appeal. This Court held that there being no attachment, injunction or receivership issued with respect to the land, and in view
of the conclusion reached on the merits of the case, there was no reason to declare the respondents guilty of contempt. This
ruling is in point in the instant case. At the time the CTIP took possession of the tobacco and disposed it on September 12,
1967, there was no existing order of the Court of Tax Appeals restraining such possession and disposition. By specific order of
the Court of Tax Appeals, it declared that the restraining order previously issued by it was of no further effect on September
12, 1967 due to appellants' failure to post the bond required.

It has been shown above, furthermore, that petitioner herein was not entitled to the tobacco, consequently he had no right to
the proceeds of the sale, and to have the proceeds thereof deposited.

7. Regarding the "Motion for Leave" filed by the Solicitor General's Office praying authority to refund the
storage charges of the subject tobacco to the CTIP, this Court notes that the same is not in issue in the instant
case, and, therefore, abstains from making any resolution regarding the matter. The claim of the CTIP for
refund must be prosecuted administratively.

WHEREFORE, the instant petition for review is dismissed, and the decision of the Court of Tax Appeals, appealed from is
affirmed.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 99
It is so ordered.

Republic of the Philippines


SUPREME COURT
Manila

EN BANC

G.R. No. L-27641 August 31, 1971

ALLIED BROKERAGE CORPORATION, petitioner,


vs.
THE COMMISSIONER OF CUSTOMS and the COURT OF TAX APPEALS, respondents.

Jose Tando for petitioner.

Office of the Solicitor General Antonio P. Barredo, Assistant Solicitor General Isidro C. Borromeo and Solicitor Salvador C. Jacob for
respondents.

FERNANDO, J.:

Petitioner Allied Brokerage Corporation seeks the reversal of a decision of respondent Court of Tax Appeals dismissing its
action for the refund if the amount of P35,227.00 paid to the Customs Arrastre Service allegedly in excess of what was due
under the Tariff and Customs Code. Respondent Commissioner of Customs contended before respondent Court that petitioner
lacked a cause of action as it did not pay under protest the charges collected and it did not exhaust the administrative
remedies. Such an argument was found meritorious by respondent Court. Hence its decision now sought to be reviewed. It
being undisputed that the steps required by law to be fulfilled before respondent Court could act on a claim for refund were
not complied with, no legal ground exists to call for a reversal. We affirm.

The facts were stipulated. After an allegation that petitioner "is duly licensed to engage in the customs brokerage business", its
main function being to obtain the clearance and release from the custody of the Bureau of Customs merchandise or goods
consigned to importers who are its clients, Section 3102 of the Tariff and Customs Code was cited: "At the Port of Manila ... e.
Heavy Cargo. On any single package of import, export transit cargo, weighing more than two (2) tons handled on a pier or
wharf, the charge shall be, per ton or any fraction thereof P13.50, Provided, that this charge shall not apply to automobiles,
motor trucks and transit cargo for coastwise ports." 1 Mention was then made of an unnumbered customs memorandum order
issued by the then Commissioner of Customs, Norberto Romualdez, Jr., on April 30, 1963 which, insofar as pertinent, reads
thus: "The arrastre charge for "Heavy Cargo" as prescribed under Section 3102 (e) of the Customs and Tariff Code, viz.: (e)
Heavy Cargo On any single package of import, export, transit cargo, weighing more than two (2) tons, handled on a pier or
wharf, the charge shall be, per ton or any fraction thereof P13.50, shall be applied to mean that one ton shall be equivalent
to 1,000 kilos or 40 cubic feet volume, whichever is higher." 2

The ensuing paragraphs of such a stipulation of facts follow: "That on May 7, 1963, the President of the Association of Customs
Brokers, Inc. addressed a letter of protest to respondent protesting the enforcement of the said Memorandum Order under
which the arrastre charges are collected based on "1,000 kilos or 40 cubic feet volume" per ton, whichever is higher; That the
petitioner on May 25, 1964 filed with respondent a claim for refund of the amount of P20,658.85 representing the amounts
collected by the Customs Arrastre Service from the petitioner during the period from April 30, 1963 to May 25, 1964; That
petitioner, after several representations in writing to the Commissioner of Customs, received a letter from the latter dated
October 26, 1964, disapproving petitioner's claim; That on February 18, 1965, the Chief of the Law Division in his 3rd
Indorsement addressed to the Commissioner of Customs recommended the immediate repeal or abrogation of the
unnumbered memorandum order under consideration. ... 3

The decision proceeded to set forth the issues as raised by the parties: "Petitioner assails the validity of the unnumbered
Customs Memorandum Order dated August 30, 1963, for the reasons that it is contrary to law; that it contravenes established
international shipping practices; and that it is void ab initio. On the other hand, respondent interposed the defense of
petitioner's lack of cause of action." 4 The defense of a lack of cause of action struck a responsive chord. The decision
proceeded to explain why: "It appears that petitioner did not file any protest with the Collector of Customs at the time of
collection of the charges, but instead filed its claim for refund directly with the Commissioner of Customs." 5 After setting forth
the pertinent provision of the Tariff and Customs Code on the matter of refund, Sections 2308, 6 2309" 7 and 2313 8 and the
decision of this Court in Sampaguita Shoe and Slipper Factory v. Commissioner of Customs 9 and CMS Estate, Inc. v. Commissioner
of Customs, 10 respondent court concluded: "Under the aforequoted provisions of law and the cases cited above, the filing of a
written protest with the proper Collector of Customs within the statutory period is mandatory and a condition precedent for
the recovery of customs duties, fees and other charges allegedly erroneously or illegally collected and non-compliance
therewith bars and is fatal to the action." 11Hence, its decision dismissing the petition for review.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 100
It is thus plain, as mentioned at the outset, that the above decision calls for affirmance. The Tariff and Customs Code has
indicated in a manner definite and certain how a challenged actuation of a collector of customs may be elevated to respondent
Court. The party adversely affected "may protest such ruling or decision by presenting to the Collector at the time when
payment of the amount claimed to be due the government is made, or within thirty days thereafter, a written protest setting
forth his objections to the ruling or decision in question, together with the reasons therefor." 12 It is stressed in the next
section that the interested party who desires such a review of the action taken by the Collector "shall make a protest,
otherwise, the action of the Collector shall be final and conclusive against him, ... ." 13 Then, there is the explicit provision that
such an aggrieved party in any matter presented by protest "may, within fifteen days after notification in writing by the
Collector of his action or decision, give written notice to the Collector of his desire to have the matter reviewed by the
Commissioner." 14 Time and time again this Court has stressed that where a provision of law speaks categorically the need for
interpretation is obviated, no plausible pretense being entertained to justify non-compliance. All that has to be done is to apply
it in every case that falls within its terms. 15 So it must be in this litigation. Respondent Court then had no other choice but to
dismiss the case in view of the fatal omission of petitioner.

It is to be admitted that the cases referred to by respondent Court, the Sampaguita Shoe and Slipper Factory decision, arising
from a seizure and forfeiture proceeding, and the CMS Estate ruling, dealing with the collection of wharfage dues, are not
precisely in point. They are, however, illustrative of a principle which governs this particular situation. To make clearer
however that respondent Court is not in any wise to be faulted for the decision reached, reference may be made to Southwest
Agricultural Marketing Corp. v. Secretary of Finance. 16That was an action to nullify an arrastre contract. One of the defenses
raised was plaintiff's failure to exhaust administrative remedies, not to mention the jurisdictional defect of having filed a case
with the Court of First Instance. In sustaining a lower court order dismissing the complaint, this Court in the opinion by Chief
Justice declared: "It is true that, pursuant to section 7 of Republic Act No. 1125, the Tax Court cannot exercise its jurisdiction
except on appeal from a decision of the Commissioner of Customs, and that no such decision exists. This is, however, due to the
fact that plaintiff has not taken the steps prescribed by law therefor, namely: payment of the charges in question coupled with
a written protest against said charges, and, upon rendition of the decision thereon of the Collector of Customs of Davao, an
appeal therefrom, if adverse to the plaintiff, to the Commissioner of Customs, whose decision in such appeal may, in turn, be
reviewed by the Court of Tax Appeals, to the exclusion of other courts. Indeed, the absence of such decision of the
Commissioner of Customs merely underscores plaintiff's failure to exhaust admistrative remedies and suggests a lack of cause
of action." 17

To the same effect is this pronouncement from an earlier decision, the opinion being penned by Justice J.B.L. Reyes. Thus: "In
the absence of any decision or ruling which may be the subject of an appeal or petition for review to the Court of Tax Appeals,
said court has no case to take cognizance of ... . So that the lower court correctly dismissed the petition for review of petitioner
for being premature or for not stating a cause of action." 18

WHEREFORE, the decision of respondent Court of Tax Appeals of April 29, 1967 is affirmed. With costs against petitioner.

Republic of the Philippines


SUPREME COURT
Manila

EN BANC

G.R. No. L-20805 November 29, 1965

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellant,


vs.
IGNACIO DESIDERIO, defendant-appellee.

Office of the Solicitor General for plaintiff-appellant.


Jose C. Azcarraga for defendant-appellee.

BENGZON, J.P., J.:

As one of the three pillars of our Republic, the Judiciary has a role to play in giving life to the public policy against smuggling. It
has a share in the governmental effort to eradicate such pernicious malady, which imperils the nation's economy, stifling the
incentives of our businessmen and degrading the morality of our citizenry, as it breeds corruption in the officialdom. Such role
is invoked in the present case, within the Judiciary's own sphere of action.

From an order dismissing, upon a motion to quash, an information for violation of Section 3601 of Republic Act 1937, the
Solicitor General has appealed.

The information was originally filed on February 17, 1958, in the Municipal Court, and subsequently on May 3, 1958, in the
Court of First Instance of Zamboanga City. It charged that Ignacio Desiderio, on or about November 28, 1958, in Zamboanga
City, "did then and there willfully, unlawfully and feloniously possess, receive, conceal, buy, sell (after illegal importation)
eleven (11) cases and twenty (20) cartons of Chesterfield cigarettes and eleven (11) cartons of Camel cigarettes of foreign
brand and manufactured in a foreign country, knowing that the same have been imported contrary to law."

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 101
A plea of not guilty was entered by the accused. On June 27, 1961, however, said accused presented a motion to quash on the
ground that his criminal liability had been extinguished by a compromise agreement with the Collector of Customs, on
February 10, 1958, in accordance with Section 2307 of the same Republic Act 1937. After considering the arguments, pro and
con, on said motion, the Court granted the same in its order of October 11, 1062, dismissing the case.

Stated briefly the issue here is whether settlement of the case under Section 2307 extinguishes criminal liability under Section
3601, both of Republic Act 1937, otherwise called the Tariff and Customs Code.

Section 3601, penalizing smuggling, provides:

SEC. 3601. Unlawful Importation. Any person who shall fraudulently import or bring into the Philippines, or assist
in so doing, any article, contrary to law, or shall receive, conceal, buy, sell, or in any manner facilitate the
transportation, concealment, or sale of such article after importation, knowing the same to have been imported
contrary to law, shall be punished by a fine of not less than six hundred pesos nor more than five thousand pesos and
imprisonment for not less than six months nor more than two years and, if the offender is an alien, he shall be
deported after serving the sentence.

When, upon trial for a violation of this section, the defendant is shown to have or to have had possession of the article
in question, such possession shall be deemed sufficient evidence to authorize conviction, unless the defendant shall
explain the possession to the satisfaction of the court.

Section 2307, relied upon by the accused, is as follows:

SEC. 2307. Settlement of Case by Payment of Fine or Redemption of Forfeited Property. If, in any seizure case, the
owner or agent shall, while the case is yet before the Collector of the district of seizure, pay to such Collector the fine
imposed by him or, in case of forfeiture, shall pay the appraised value of the property, or, if after appeal of the case, he
shall pay to the Commissioner the amount of the fine as finally determined by him, or, in case of forfeiture, shall pay
the appraised value of the property, such property shall be forthwith surrendered, and all liability which may or might
attach to the property by virtue of the offense which was the occasion of the seizure and all liability which might have
been incurred under any bond given by the owner or agent in respect to such property shall thereupon be deemed to
be discharged.

Redemption of forfeited property shall not be allowed in any case where the importation is absolutely prohibited or
where the surrender of the property to the person offering to redeem the same would be contrary to law.

It is urged by the accused that settlement under Section 2307, prior to the filing of the criminal action, discharges all liabilities
which may or might attach by virtue of the offense. Such interpretation would stretch the law too far. Section 2307 expressly
states what are deemed discharged thereunder, namely, "all liability which may or might attach to the property by virtue of
the offense which was the occasion of the seizure and all liability which might have been incurred under any bond given by the
owner or agent in respect to such property." It limits the effects of the aforesaid settlement to the liability that attaches to the
property, or to the bond that replaces the property. It does not speak of the liability that falls on the person or offender. Clearly,
therefore, the interpretation of the accused is not supported by the law.

Furthermore, such interpretation, if adopted, would aggravate the problem of smuggling and pave the way to national
economic ruin. For it would encourage unlawful importation, since by the mere expedient of redeeming their seized
importation the smugglers would be freed from personal criminal liability for the offense. Such a course we cannot in the least
sanction.

All the more does the position of the accused become untenable when it is considered that prior to the effectivity of Republic
Act 1937 on July 1, 1957, the applicable law contained a provision allowing the Commissioner of Customs to compromise the
criminal liability of the offender in cases of unlawful importation. We refer to Section 1369 of the Revised Administrative Code.
Its elimination in Republic Act 1937 clearly shows the intent of Congress henceforth not to allow compromises of the
offender's criminal liability in said cases. Significantly, also, Section 2307 of Republic Act 1937 falls under part 2 of Title VI of
said Act, which is entitled "Administrative Proceedings." Settlement of the administrative proceedings does not, in the absence
of express provision to that effect, amount to settlement of the criminal liability.

Appellee cites People v. Magdaluyo, L-16235, April 20, 1961. Said case, however, involved a violation of the National Internal
Revenue Code. Section 309 of said Code allows the Commissioner of Internal Revenue to compromise the civil as well as
criminal cases arising thereunder. No similar provision exists, vis-a-vis the Collector or Commissioner of Customs, in regard to
violations of the Tariff and Customs Code.

WHEREFORE, the order appealed from is reversed and set aside and the case remanded to the Court a quo for further
proceedings. No costs. So ordered.

Republic of the Philippines


SUPREME COURT
Manila

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 102
EN BANC

G.R. No. 104604 October 6, 1995

NARCISO O. JAO and BERNARDO M. EMPEYNADO, petitioners,


vs.
COURT OF APPEALS; COMMISSIONER OF CUSTOMS; COLLECTOR OF CUSTOMS, Port of Manila; Col. SINDULFO R.
SEBASTIAN, Director, Enforcement and Security Services, Bureau of Customs; and Maj. JAIME MAGLIPON, Chief,
Operations and Intelligence Staff, Enforcement and Security Services, Bureau of Customs, respondents.

G.R. No. 111223 October 6, 1995

NARCISO O. JAO and BERNARDO M. EMPEYNADO, petitioners,


vs.
THE HONORABLE OMBUDSMAN CONRADO M. VASQUEZ, and SINDULFO SEBASTIAN, JAIME MAGLIPON; JOSE
YUCHONGCO; RICARDO CORONADO; VICTOR BARROS; DENNIS BANTIGUE; ROY LARA; BENJAMIN SANTOS; RODOLFO
GONDA; ADONIS REJOSO; DANIEL PENAS; NICANOR BONES; ABUNDIO JUMAMOY; ARTEMIO CASTILLO; ANDRESITO
ABAYON; RUBEN TAGUBA; JAIME JAVIER; HERBERT DOLLANO, all with the Bureau of Customs; JOVY GUTIERREZ of the
Makati police, and 'JOHN DOES',respondents.

ROMERO, J.:

G.R. No. 104604 is a petition for certiorari of the decision 1 of the Court of Appeals, the dispositive portion of which states:

WHEREFORE, the petition is hereby GRANTED. The orders issued by the respondent judge dated November
20, 1990, December 10, 1990, January 3, 1991 and all subsequent orders in the Civil Case No. 90-2382 of the
Regional Trial Court of Makati are SET ASIDE. Having no jurisdiction over the case, the respondent judge is
hereby enjoined from proceeding with Civil Case No. 90-2382 and further, Case No. 90-2382 is hereby
DISMISSED.

SO ORDERED.

G.R. No. 111223 is a petition for certiorari of the resolution of the Ombudsman 2 dismissing the case filed before it by herein
petitioner.

The above-docketed cases were consolidated per resolution of the Court on August 26, 1993, as the facts in both cases were
the same.

These facts are the following:

On August 10, 1990, the Office of the Director, Enforcement and Security Services (ESS), Bureau of Customs, received
information regarding the presence of allegedly untaxed vehicles and parts in the premises owned by a certain Pat Hao located
along Quirino Avenue, Paranaque and Honduras St., Makati. After conducting a surveillance of the two places, respondent
Major Jaime Maglipon, Chief of Operations and Intelligence of the ESS, recommended the issuance of warrants of seizure and
detention against the articles stored in the premises.

On August 13, 1990, District Collector of Customs Titus Villanueva issued the warrants of seizure and detention.

On the same date, respondent Maglipon coordinated with the local police substations to assist them in the execution of the
respective warrants of seizure and detention. Thereafter, the team searched the two premises.

In Makati, they were barred from entering the place, but some members of the team were able to force themselves inside. They
were able to inspect the premises and noted that some articles were present which were not included in the list contained in
the warrant.. Hence, on August 15, 1990, amended warrants of seizure and detention were issued by Villanueva.

On August 25, 1990, customs personnel started hauling the articles pursuant to the amended warrants. This prompted
petitioners Narciso Jao and Bernardo Empeynado to file a case for Injunction and Damages, docketed as Civil Case No. 90-2382
with prayer for Restraining Order and Preliminary Injunction before the Regional Trial Court of Makati Branch 56 on August
27, 1990 against respondents. On the same date, the trial court issued a Temporary Restraining Order.

On September 7, 1990, respondents filed a Motion to Dismiss on the ground that the Regional Trial Court has no jurisdiction
over the subject matter of the complaint, claiming that it was the Bureau of Customs that had exclusive jurisdiction over it.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 103
On November 20, 1990, the trial court denied respondents' motion to dismiss.

On November 29, 1990, petitioners' application for preliminary prohibitory and mandatory injunction was granted
conditioned upon the filing of a one million peso bond.

The Court also prohibited respondents from seizing, detaining, transporting and selling at public auction petitioners' vehicles,
spare parts, accessories and other properties located at No. 2663 Honduras St., San Isidro, Makati and at No. 240 Quirino
Avenue, Tambo, Paranaque, Metro Manila. Respondents were further prohibited from disturbing petitioners' constitutional
and proprietary rights over their properties located at the aforesaid premises. Lastly, respondents were ordered to return the
seized items and to render an accounting and inventory thereof.

On December 13, 1990, respondents filed a motion for reconsideration based on the following grounds:

a) the lower court having no jurisdiction over the subject matter of the complaint, it has no recourse but to
dismiss the same; and

(b) the lower court had no legal authority to issue an injunction therein.

On January 3, 1991 the motion for reconsideration was denied. Respondents then went to the Court of Appeals on the ground
that the judge acted with grave abuse of discretion in denying their motion to dismiss and in granting petitioners' application
for preliminary injunction. They argued that the Regional Trial Court had no jurisdiction over seizure and forfeiture
proceedings, such jurisdiction being exclusively vested in the Bureau of Customs.

The Court of Appeals set aside the questioned orders of the trial court and enjoined it from further proceeding with Civil Case
No. 90-2382. The appellate court also dismissed the said civil case.

On May 2, 1992, petitioners filed a petition with this Court to review the decision of the Court of Appeals docketed as G.R. No.
104604.

As regards G.R. No. 111223, petitioners filed criminal charges against respondents, other officers and employees of the Bureau
of Customs and members of the Makati Police before the Office of the Ombudsman for Robbery, Violation of Domicile and
Violation of Republic Act No. 3019, docketed as OMB Case No. 0-90-2027.

Respondent Ombudsman summarized the case before it as follows:

This is an affidavit-complaint filed by the complainants against the respondents, Officers and Employees of
the Bureau of Customs and members of the Makati Police allegedly for violation of Domicile and Robbery
defined and penalized under Articles 128, 293 and 294 of the Revised Penal Code and for violation of R.A.
3019 committed as follows, to wit:

That on August 11, 1990, after receiving intelligence information of the presence of
smuggled goods, some of the respondents headed by Jaime Maglipon posed themselves as
Meralco inspectors and entered complainants' stockyards and residence located at 2663
Honduras Street, Makati, Metro Manila and at 240 Quirino Avenue, Tambo Paranaque for the
purpose of searching smuggled goods found therein without the consent of the owner
thereof;

That after the search, respondents on August 13, 1990 up to August 25, 1990, this time
clothed with a Warrant of Seizure and Detention, with the aid of the Makati Police and
several heavily armed men entered complainants stockyard located at 2663 Honduras St.,
Makati, Metro Manila, and pulled out therefrom several machineries and truck spare parts
without issuing the corresponding receipts to the complainants to cover all the items taken.

Respondents claimed in their consolidated and verified comment that they are not liable for violation of
domicile because the places entered and searched by them appear not to be the residences of the
complainants but only their warehouses. As proof of this allegation, the respondents presented the pictures of
said warehouses, which are attached to their comment as Annexes "6", "6-A" to "6-C" and the Sheriff's return
likewise attached to their verified comments as Annex "7". According to the respondents, a charge for
violation of domicile may apply only if the place entered into against the will of the owner is used exclusively
for dwelling. In the case at bar, the place entered into was used more of a warehouse than a dwelling place.

Further respondents also claimed not liable for robbery (sic) because the complainants appear not to be the
owners of the properties taken. Moreover, the respondents claimed that the taking is lawful because the same
proceeded from a warrant of Seizures and Detention; there was no violence or intimidation of person
committed and that there was no intent to gain on the part of the respondents, the purpose of the seizure of
the subject goods being to collect customs duties and taxes due the government.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 104
Lastly, the respondents disclaimed liability for a violation of R.A. 3019 because they deny having demanded
from the complainants the sum of P100,000.00. Instead according to the respondents, it was the
complainants who offered them P70,000.00 to delay the hauling of the seized goods as attested to in the joint
affidavit of CPSGT, Ricardo Coronado and Dennis Bantequi.

A preliminary investigation was conducted and on May 31, 1991, another hearing was held to give the parties a chance to
submit further evidence to support their respective claims.

On March 15, 1993 respondent Ombudsman issued a Resolution recommending that the case be dismissed for lack of merit.

On May 17, 1993, petitioners moved for the reconsideration of said resolution, but the same was denied on July 8, 1993.

Hence, the petition in G.R. No. 111223, which was filed on August 16, 1993.

In G.R. No. 111223, petitioners claim that respondent Ombudsman gravely abused his discretion in dismissing the case and in
denying petitioners' motion for reconsideration.

They allege that respondent Ombudsman ignored evidence incriminatory to the raiders; that the receipts did not tally with
petitioners' receipts nor with the Commission on Audit's inventory; that the respondents are guilty of robbery and of violating
petitioners' constitutional right against violation of domicile. For these reasons, petitioners pray that the Ombudsman's
resolution be reversed and that the Court direct the Ombudsman to cause the filing of criminal charges as may be warranted
against respondents.

We find the petition in G.R. No. 111223 devoid of merit.

The Court, recognizing the investigatory and prosecutory powers granted by the Constitution to the Office of the Ombudsman
and for reasons of practicality, declared, in an En Banc resolution dated August 30, 1993, issued in G.R. Nos. 103446-47 3 that
the Court will not interfere nor pass upon findings of public respondent Ombudsman to avoid its being hampered by
innumerable petitions assailing the dismissal of investigatory proceedings conducted by the Office of the Ombudsman with
regard to complaints filed before it, and that it will not review the exercise of discretion on the part of the fiscals or
prosecuting attorneys each time they decide to file an information in court or dismiss a complaint by a private complainant.
The dismissal by the Ombudsman of petitioners' complaint, therefore, stands.

We will now discuss G.R. No. 104604.

Petitioners contend: (1) that the Court of Appeals erred in not holding that the Collector of Customs could no longer order the
seizure for the second time of items previously seized and released after amnesty payments of duties and taxes; (2) that the
Bureau of Customs has lost jurisdiction to order the seizure of the items because the importation had ceased; (3) that the
seizure of the items deprived the petitioners of their properties without due process of law; and (4) that there is no need to
exhaust administrative remedies.

We find no merit in petitioners' contentions.

There is no question that Regional Trial Courts are devoid of any competence to pass upon the validity or regularity of seizure
and forfeiture proceedings conducted by the Bureau of Customs and to enjoin or otherwise interfere with these
proceedings 4 The Collector of Customs sitting in seizure and forfeiture proceedings has exclusive jurisdiction to hear and
determine all questions touching on the seizure and forfeiture of dutiable goods. The Regional Trial Courts are precluded from
assuming cognizance over such matters even through petitions of certiorari, prohibition ormandamus. 5

It is likewise well-settled that the provisions of the Tariff and Customs Code and that of Republic Act No. 1125, as amended,
otherwise known as "An Act Creating the Court of Tax Appeals," specify the proper fora and procedure for the ventilation of
any legal objections or issues raised concerning these proceedings. Thus, actions of the Collector of Customs are appealable to
the Commissioner of Customs, whose decision, in turn, is subject to the exclusive appellate jurisdiction of the Court of Tax
Appeals and from there to the Court of Appeals.

The rule that Regional Trial Courts have no review powers over such proceedings is anchored upon the policy of placing no
unnecessary hindrance on the government's drive, not only to prevent smuggling and other frauds upon Customs, but more
importantly, to render effective and efficient the collection of import and export duties due the State, which enables the
government to carry out the functions it has been instituted to perform. 6

Even if the seizure by the Collector of Customs were illegal, which has yet to be proven, we have said that such act does not
deprive the Bureau of Customs of jurisdiction thereon.

Respondents assert that respondent Judge could entertain the replevin suit as the seizure is illegal, allegedly
because the warrant issued is invalid and the seizing officer likewise was devoid of authority. This is to lose
sight of the distinction between the existence of the power and the regularity of the proceeding taken under
it. The governmental agency concerned, the Bureau of Customs, is vested with exclusive authority. Even if it
be assumed that in the exercise of such exclusive competence a taint of illegality may be correctly imputed,
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 105
the most that can be said is that under certain circumstances the grave abuse of discretion conferred may
oust it of such jurisdiction. It does not mean however that correspondingly a court of first instance is vested
with competence when clearly in the light of the decisions the law has not seen fit to do so. 7

The allegations of petitioners regarding the propriety of the seizure should properly be ventilated before the Collector of
Customs. We have had occasion to declare:

The Collector of Customs when sitting in forfeiture proceedings constitutes a tribunal expressly vested by law
with jurisdiction to hear and determine the subject matter of such proceedings without any interference from
the Court of First Instance. (Auyong Hian v. Court of Tax Appeals, et al., 19 SCRA 10). The Collector of Customs
of Sual-Dagupan in Seizure Identification No. 14-F-72 constituted itself as a tribunal to hear and determine
among other things, the question of whether or not the M/V Lucky Star I was seized within the territorial
waters of the Philippines. If the private respondents believe that the seizure was made outside the territorial
jurisdiction of the Philippines, it should raise the same as a defense before the Collector of Customs and if not
satisfied, follow the correct appellate procedures. A separate action before the Court of First Instance is not
the remedy.8

WHEREFORE, the petitions in G.R. No. 104604 and in G.R. No. 111223 are hereby DISMISSED for lack of merit.

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

EN BANC

G.R. No. 84111 December 22, 1989

JIMMY O. YAOKASIN, petitioner,


vs.
THE COMMISSIONER OF CUSTOMS, SALVADOR M. MISON and the DISTRICT COLLECTOR OF THE PORT OF TACLOBAN,
VICENTE D. YUTANGCO, respondents.

GRIO-AQUINO, J.:

This petition questions the power of automatic review of the Commissioner of Customs over the decision of the Collector of
Customs in protest and seizure cases.

On May 27, 1988, the Philippine Coast Guard seized 9000 bags/ sacks of refined sugar, which were being unloaded from the
M/V Tacloban, and turned them over to the custody of the Bureau of Customs.

The petitioner presented a sales invoice from the Jordan Trading of Iloilo (Annex A, Petition) to prove that the sugar was
purchased locally. The District Collector of Customs, however, proceeded with the seizure of the bags of sugar.

On June 3 and 6, 1988, show-cause hearings were conducted. On June 7, 1988, the District Collector of Customs ordered the
release of the sugar as follows:

WHEREFORE, premises considered subject Nine Thousand (9,000) sacks/bags of refined sugar are hereby
ordered released to Mr. Jimmy O. Yaokasin, consignee/claimant and the immediate withdrawal of Customs
Guard within its bodega's premises. (p. 276, Rollo.)

On June 10, 1988, the decision, together with the entire records of the case, were transmitted to, and received by, the
Commissioner of Customs (Annex H, Petition, p. 277, Rollo).

On June 14, 1988, without modifying his decision, the District Collector of Customs ordered the warehouse, wherein the bags
of sugar were stored, to be sealed.

On June 19, 1988, the Economic Intelligence and Investigation Board (EIIB) filed a Motion for Reconsideration (Annex I,
Petition, p. 278, Rollo), for "further hearing on the merits" (p. 279, Rollo), based on evidence that the seized sugar was of
foreign origin. Petitioner opposed the motion for being merely pro forma and/or that the same was, in effect, a motion for new
trial.

Hearing Officer Paula Alcazaren set the Motion for reconsideration for hearing on July 13, 1988.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 106
But before that, or on July 4, 1988, the Commissioner of Customs by "2nd Indorsement" returned to the District Collector of
Customs the:

... folder of Tacloban S.I. No. 06-01 (R.P. vs. 9000 bags/sacks of refined sugar, MR. JIMMY YAOKASIN,
consignee/claimant), together with the proposed decision, for hearing and/or resolution of the government is
motion for reconsideration ... . (p. 437, Rollo, Emphasis Ours.)

On the same date, July 4, 1988, petitioner applied for and secured a writ of replevin from the Regional Trial Court of Leyte (CC
7627, Branch VII), through a Petition/Complaint for certiorari Prohibition with Replevin and Damages with Preliminary
Injunction and/or Restraining Order (Annex L, Petition, p. 288, Rollo).

On July 12, 1988, respondent District Collector of Customs filed an Answer assailing the court's jurisdiction. On the same day,
the District Collector and the Commissioner of Customs filed in the Court of Appeals a Petition for certiorari and Prohibition
with Application for a Writ of Preliminary Injunction and/or Restraining Order to annul the July 4, 1988 "Order Granting
Replevin with Temporary Restraining Order" (CA-G.R. SP NO. 15090; p. 396, Rollo).

On July 15, 1988, the Collector of Customs reconsidered his June 7, 1988 decision, as follows:

WHEREFORE, the undersigned hereby reconsiders his Decision, finds that the 9,000 bags/sacks of refined
sugar in question are of foreign origin, smuggled into the country, and declares them forfeited in favor of the
government.

Considering the provision in the quoted Customs Memorandum Order, especially the latter part thereof
prohibiting the release of the articles in question to the claimant, and considering also that the said sacks of
sugar are presently stored in the bodega of claimant, and considering further that there are no facilities for
storage in Tacloban City, for security reasons, the Honorable Commissioner of Customs is respectfully and
earnestly urged to order the immediate transfer of the sugar from the said bodega to any Customs Warehouse,
preferably in Manila and to this end to order the setting aside of such sum of money in order to effectively
accomplish this purpose." (p. 11, Rollo.)

Also, on the same day, the Court of Appeals: (a) gave due course to respondent's petition; and (b) restrained Judge Pedro S.
Espina, Regional Trial Court, Leyte, from further proceeding in Civil Case No. 7627, and from enforcing his Order of July 4,
1988.

It is petitioner's contention that the June 7, 1988 decision of the District Collector of Customs became final and executory, in
view of the absence of an appeal therefrom by the "aggrieved party" (himself) within the 15-day period provided for in Sec.
2313 of the Tariff and Customs Code. Hence, the release of the 9,000 bags of sugar must be upheld.

On the other hand, the District Collector and the Commissioner of Customs argue that since the June 7, 1988 decision
is adverse to the government, the case should go to the Commissioner of Customs on automatic review, pursuant to
Memorandum Order No. 20-87, dated May 18, 1987, of former Acting Commissioner of Customs Alexander Padilla, which
provides:

CUSTOMS MEMORANDUM ORDER

NO. 20-87

TO: All Collectors of Customs and Others Concerned

Effective immediately, you are hereby directed to implement strictly the following

Decisions of the Collector of Customs in seizure and protest cases are subject to review by
the Commissioner upon appeal as provided under existing laws; provided, however, that
where a decision of the Collector of Customs in such seizure and protest cases is adverse to the
government it shall automatically be reviewed by the Commissioner of Customs. (PD. No. 1,
Annex C.)

In view thereof, no releases in any seizure or like cases may be effected unless and until the decision of the
Collector has been confirmed in writing by the Commissioner of Customs.

For immediate and strict compliance.

(Sgd.) ALEXANDER A.
PADILLA
Acting Commissioner of
Customs

(p. 436, Rollo; Emphasis Ours)


Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 107
The memorandum order implements Section 12 (Art. IV, Part. IV, Vol. I) of the Integrated Reorganization Plan (hereafter,
"PLAN") which provides:

12. The Collector of Customs at each principal port of entry shall be the official head of the customs service in
his port and district responsible to the Commissioner. He shall have the authority to take final action on the
enforcement of tariff and customs laws within his collection district and on administrative matters in
accordance with Chapter III, Part II of this Plan. Decisions of the Collector of Customs in seizure and protest
cases are subject to review by the Commissioner upon appeal as provided under existing laws; provided,
however, that where a decision of a Collector of Customs in such seizure and protest cases is adverse to the
government, it shall automatically be reviewed by the Commissioner of Customs which, if affirmed, shall
automatically be elevated for final review by the Secretary of Finance; provided, further that if within thirty days
from receipt of the records of the case by the Commissioner of Customs or the Secretary of Finance, no decision is
rendered by the Commissioner of Customs or the Secretary of Finance, the decision under review shall become
final and executory. (Emphasis supplied)

In Presidential Decree No. 1, dated September 24, 1972, former President Marcos decreed and ordered that the Plan be (4
adopted, approved, and made as part of the law of the land." Under the 1987 Constitution, "[a]ll existing laws, decrees,
executive orders, proclamations, letters of instruction, and other executive issuances not inconsistent with this Constitution
shall remain operative until amended, repealed, or revoked" (Sec. 3, Art. XVIII). While some provisions of the Plan have ceased
to be operative because of subsequent reorganizations, other provisions, such as Section 12 have not been repealed by
subsequent legislation.

Section 12 of the Plan applies to petitioner's shipment of 9,000 bags of sugar. Taxes being the lifeblood of the Government,
Section 12, which the Commissioner of Customs in his Customs Memorandum Order No. 20-87, enjoined all collectors to
follow strictly, is intended to protect the interest of the Government in the collection of taxes and customs duties in those
seizure and protest cases which, without the automatic review provided therein, neither the Commissioner of Customs nor the
Secretary of Finance would probably ever know about. Without the automatic review by the Commissioner of Customs and the
Secretary of Finance, a collector in any of our country's far-flung ports, would have absolute and unbridled discretion to
determine whether goods seized by him are locally produced, hence, not dutiable or of foreign origin, and therefore subject to
payment of customs duties and taxes. His decision, unless appealed by the aggrieved party (the owner of the goods), would
become final with 'the no one the wiser except himself and the owner of the goods. The owner of the goods cannot be expected
to appeal the collector's decision when it is favorable to him. A decision that is favorable to the taxpayer would
correspondingly be unfavorable to the Government, but who will appeal the collector's decision in that case certainly not the
collector.

Evidently, it was to cure this anomalous situation (which may have already defrauded our government of huge amounts of
uncollected taxes), that the provision for automatic review by the Commissioner of Customs and the Secretary of Finance of
unappealed seizure and protest cases was conceived to protect the government against corrupt and conniving customs
collectors.

Section 12 of the Plan and Section 2313 of the Tariff and Customs Code do not conflict with each other. They may co-exist.
Section 2313 of the Code provides for the procedure for the review of the decision of a collector in seizure and protest cases
upon appeal by the aggrieved party, i.e., the importer or owner of the goods. On the other hand, Section 12 of the Plan refers to
the general procedure in appeals in seizure and protest cases with a special proviso on automatic review when the collector's
decision is adverse to the government. Section 2313 and the proviso in Section 12, although they both relate to the review of
seizure and protest cases, refer to two different situations when the collector's decision is adverse to the importer or owner
of the goods, and when the decision is adverse to the government.

The decision of the Court in the case of Sy Man vs. Jacinto (93 Phil. 1093 [19531]), which the petitioner invokes as precedent, is
riot in point. In the present case the Acting Commissioner, in issuing the memorandum circular, was directing strict
compliance with an existing provision of law, which mandates automatic review of decisions of collectors in seizure and
protest cases which are adverse to the government. On the other hand, in Sy Man, the memorandum order of the Insular
Collector of Customs directed the elevation of records in seizure and forfeiture cases for automatic review even if he had not
been expressly granted such power under the then existing law.

The objection to the enforcement of Section 12 of the Plan and CMO No. 20-87 on the ground that they had not been published
in the Official Gazette, is not well taken. The Plan, as part of P.D. No. 1, was "adopted, approved and made as part of the law of
the land" and published in Volume 68, No. 40, p. 7797 of the Official Gazette issue of October 2, 1972.

Article 2 of the Civil Code, which requires laws to be published in the Official Gazette, does not apply to CMO No. 20-87 which
is only an administrative order of the Commissioner of Customs addressed to his subordinates. the customs collectors.

Commonwealth Act No. 638 (an Act to Provide for the Uniform Publication and Distribution of the Official Gazette) enumerates
what shall be published in the Official Gazette besides legislative acts and resolutions of a public nature of the Congress of the
Philippines. Executive and administrative orders and proclamations, shall also be published in the Official Gazette, except such
as have no general applicability." CMO No. 20-87 requiring collectors of customs to comply strictly with Section 12 of the Plan,
is an issuance which is addressed only toparticular persons or a class of persons (the customs collectors). "It need not be
published, on the assumption that it has been circularized to all concerned" (Tanada vs. Tuvera, 136 SCRA 27).

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 108
WHEREFORE, the petition for review is denied for lack of merit. The temporary restraining order which we issued in this case
is hereby made permanent. Cost against the petitioner.

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 163766 June 22, 2006

REPUBLIC OF THE PHILIPPINES, Petitioner,


vs.
CANDY MAKER, INC., as represented by its President, ONG YEE SEE, * Respondent

DECISION

CALLEJO, SR., J.:

At bar is a Petition for Review under Rule 45 of the Rules of Court seeking to set aside the May 21, 2004 Decision 1 of the Court
of Appeals (CA) in CA-G.R. CV No. 73287, which affirmed in toto the October 12, 2001 Decision 2 of the Municipal Trial Court
(MTC) of Taytay, Rizal in Land Registration Case No. 99-0031 declaring respondent the owner of the parcels of land designated
as Lots 3138-A and 3138-B in Plan CSD. 04-018302, Cainta-Taytay Cadastre.

Sometime in 1998, Candy Maker, Inc. decided to purchase Lot No. 3138 Cad. 688 of the Cainta-Taytay Cadastre, a parcel of land
located below the reglementary lake elevation of 12.50 meters, about 900 meters away from the Laguna de Bay, and bounded
on the southwest by the Manggahan Floodway, and on the southeast by a legal easement.

On April 1, 1998, Geodetic Engineer Potenciano H. Fernandez, prepared and signed a Subdivision Plan of the property for
Apolonio Cruz. The property was subdivided into two lots: Lot No. 3138-A with an area of 10,971 square meters, and Lot No.
3138-B with an area of 239 square meters.3 The technical description of Lot No. 3138 was also prepared by Fernandez, and
was approved by the Regional Technical Director of the Bureau of Lands on April 14, 1998.4

On April 29, 1999, Antonio, Eladia, and Felisa, all surnamed Cruz, executed a Deed of Absolute Sale in favor of Candy Maker,
Inc.5 The buyer declared Lot No. 3138 for taxation purposes in 1999 under Tax Declaration Nos. 004-18929, 004-18930 and
004-18931.6

On June 16, 1999, Candy Maker, Inc., as applicant, filed an application with the MTC of Taytay, Rizal, for the registration of its
alleged title over Lot No. 3138-A and Lot No. 3138-B under Presidential Decree (P.D.) No. 1529.

Acting thereon, the MTC issued an Order7 on June 18, 1999 directing the applicant to cause the publication of the notice of
initial hearing and for the Deputy Sheriff to post the same. The Administrator of the Land Registration Authority (LRA) and the
Directors of the Land Management Bureau (LMB) and Forest Management Bureau (FMB) were also instructed to submit their
respective reports on the status of the parcels of land before the initial hearing scheduled on October 29, 1999.

The Community Environment and Natural Resources Officer (CENRO) of Antipolo City filed on August 18, 1999 his
Report8 declaring that "[t]he land falls within the Alienable and Disposable Zone, under Land Classification Project No. 5-A, per
L.C. Map No. 639 certified released on March 11, 1927" and that the property is the subject of CENRO Case No. 520(97)
entitled Perpetua San Jose v. Almario Cruz. On the other hand, the LRA, in its September 21, 1999 Report, 9 recommended the
exclusion of Lot No. 3138-B on the ground that it is a legal easement and intended for public use, hence, inalienable and
indisposable.

On September 30, 1999, the Laguna Lake Development Authority (LLDA) approved Resolution No. 113, Series of 1993,
providing that untitled shoreland areas may be leased subject to conditions enumerated therein.

The applicant filed its Amended Application10 on December 15, 1999 for the confirmation of its alleged title on Lot No. 3138,
alleging therein that:

1. x x x the applicant is the President of CANDYMAKER[,] INC. and registered owner of a parcel of land located at Panghulo
Brgy. San Juan, Taytay, Rizal with an area of TEN THOUSAND NINE HUNDRED SEVENTY ONE (10,971) square meters and as
fully described and bounded under Lot 3138-A plan CSD-04-018302[,] copy of which and the corresponding technical
descriptions are hereto attached to form parts hereof;

xxxx

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 109
8. That for Lot 3138-A the applicant hereby prays for the benefit granted under the Land Registration Act and/or under the
benefits provided for by P.D. No. 1529, as applicant and their predecessors-in-interest have been in open, public, continuous,
and peaceful occupation and possession of the said land since time immemorial in [the] concept of true owners and [adverse]
to the whole world; x x x11

On March 27, 2000, the MTC issued an Order12 admitting the Amended Application and resetting the initial hearing to June 23,
2000. However, upon the requests of the LRA for the timely publication of the Notice of Initial Hearing in the Official
Gazette,13 the court moved the hearing date to September 22, 2000,14 then on January 26, 200115 and until finally, to June 15,
2001.16

On July 20, 2001, the Republic of the Philippines, the LLDA filed its Opposition 17 to the Amended Application in which it
alleged that the lot subject of the application for registration may not be alienated and disposed since it is considered part of
the Laguna Lake bed, a public land within its jurisdiction pursuant to Republic Act (R.A.) No. 4850, as amended. According to
the LLDA, the projection of Lot No. 3138-A, Cad-688-D Csd-04-018302 in its topographic map based on the Memorandum 18 of
Engineer Christopher Pedrezuela of the Engineering and Construction Division of the LLDA indicated that it is "located below
the reglementary lake elevation of 12.50 meters referred to datum 10.00 meters below mean lower water" and under Section
41(11) of R.A. No. 4850, the property is a public land which forms part of the bed of the Laguna Lake. This Memorandum was
appended to the application.

At the hearing conducted on August 31, 2001, the applicant marked in evidence the complementary copies of the Official
Gazette and the Peoples Tonight as Exhibits "E-1" and "F-1," respectively.19

Except as to the LLDA and the Office of the Solicitor General (OSG), which was represented by the duly deputized provincial
prosecutor,20 the court, upon motion of the applicant, issued an Order of general default. 21

The applicant presented as witnesses its Treasurer, Fernando Co Siy, and Antonio Cruz, one of the vendees.

Cruz testified that his grandparents owned the property,22 and after their demise, his parents, the spouses Apolonio Cruz and
Aquilina Atanacio Cruz, inherited the lot;23 he and his father had cultivated the property since 1937, planting palay during the
rainy season and vegetables during the dry season; his father paid the realty taxes on the property, 24 and he (Cruz) continued
paying the taxes after his fathers death.25 Cruz insisted that he was the rightful claimant and owner of the property.

Sometime in the 1980s, Apolonio Cruz executed an extrajudicial deed of partition in which the property was adjudicated to
Antonio Cruz and his sisters, Felisa and Eladia, to the exclusion of their five (5) other siblings who were given other properties
as their shares.26 He did not know why his ancestors failed to have the property titled under the Torrens system of
registration.27 He left the Philippines and stayed in Saudi Arabia from 1973 to 1983.28 Aside from this, he hired the services of
an "upahan" to cultivate the property.29 The property is about 3 kilometers from the Laguna de Bay, and is usually flooded
when it rains.30

Fernando Co Siy testified that the applicant acquired Lot No. 3138 from siblings Antonio, Eladia and Felisa, 31 who had
possessed it since 1945;32 that after paying the real estate taxes due thereon,33 it caused the survey of the lot;34 that possession
thereof has been peaceful35 and none of the former owners claims any right against it;36neither the applicant nor its
predecessors-in-interest received information from any government agency that the lot is a public land; 37 the subject lot is 3
kms. away from Laguna de Bay,38 above its elevation and that of the nearby road;39 the property is habitable40 and was utilized
as a riceland at the time it was sold by the former owners;41 and that he was aware that a legal easement is affecting the lot and
is willing to annotate it in the land title.42

On cross-examination by the LLDA counsel, Siy admitted that his knowledge as to the distance of the lot with respect to the
Laguna de Bay came from "somebody residing in Taytay" and also from an adjacent owner of the lot; 43 that the lot is
submerged in water since there is no land fill yet;44 and that no improvements had been introduced to the property.45

The LLDA moved for a joint ocular inspection of the parcels of land in order to determine its exact elevation.46 On September
14, 2001, a Survey Team of the Engineering and Construction Division of the LLDA, composed of Ramon D. Magalonga, Virgilio
M. Polanco, and Renato Q. Medenilla, conducted an actual ground survey of the property. The team used a total station and
digital survey instrument to measure the elevation of the ground in reference to the elevation of the lake water. A
representative of the applicant witnessed the survey. The team found that the lot is below the prescribed elevation of 12.50 m.
and thus part of the bed of the lake; as such, it could not be titled to the applicant. The team also reported that the property is
adjacent to the highway from the Manggahan Floodway to Angono, Rizal. The LLDA moved that the application be withdrawn,
appending thereto a copy of the Survey Report.47

The LLDA did not offer any testimonial and documentary evidence and agreed to submit the case for decision based on its
Opposition.

On October 12, 2001, the MTC rendered a Decision granting the application for registration over the lots. The dispositive
portion of the decision reads:

WHEREFORE, premises considered[,] the court hereby rendered judgment confirming title of the applicants over the real
property denominated as Lot 3138-A Csd-04-018302 of Cad-688-D Cainta-Taytay Cadastre; Lot 3138-B Csd-04-018302 of Cad
688-D Cainta-Taytay Cadastre.48
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 110
On appeal to the CA, the petitioner contended that the MTC did not acquire jurisdiction over the application for registration
since the actual copies of the Official Gazette (O.G.) where the notice of hearing was published were not adduced in evidence;
the applicant likewise failed to establish exclusive ownership over the subject property in the manner prescribed by law. The
petitioner argued further that the requirements of Section 23, par. 1 of P.D. No. 1529, 49 as amended, are mandatory and
jurisdictional, and that failure to observe such requirements has a fatal effect on the whole proceedings. Citing Republic of the
Philippines v. Court of Appeals50 and Register of Deeds of Malabon v. RTC, Malabon, MM, Br. 170,51 the Republic averred that a
mere certificate of publication is inadequate proof of the jurisdictional fact of publication because the actual copies of the O.G.
must be presented at the initial hearing of the case. Moreover, witnesses were not presented to prove specific acts to show
that the applicant and his predecessors-in-interest have been in exclusive, open, continuous, and adverse possession of the
subject lots in the concept of the owner since June 12, 1945 or earlier, in accordance with Sec. 14, par. 1 of P.D. No. 1529. 52 It
noted that the testimonies of the applicants witnesses are more of conclusions of law rather than factual evidence of
ownership. Other than the general statement that they planted rice and vegetables on the subject lots, their possession could
properly be characterized as mere casual cultivation since they failed to account for its exclusive utilization since 1945 or
earlier. After stressing that tax declarations are not conclusive proof of ownership, it concluded that the subject lots rightfully
belong to the State under the Regalian doctrine.53

The applicant averred in its Appellees Brief54 that it had marked in evidence the actual copy of the O.G. where the notice of
initial hearing was published; in fact, the MTC Decision stated that the copy of the O.G. containing the notice was referred to as
Exhibit "E-1." Moreover, Sec. 14, par. 1 of P.D. 1529 is inapplicable since it speaks of possession and occupation of alienable
and disposable lands of the public domain. Instead, par. 4 of the same section 55 should govern because the subject parcels of
land are lands of private ownership, having being acquired through purchase from its predecessors-in-interest, who, in turn,
inherited the same from their parents. It pointed out that there were no adverse claims of interest or right by other private
persons and even government agencies like the Province of Rizal. Lastly, while tax declarations and tax receipts do not
constitute evidence of ownership, they are nonetheless prima facie evidence of possession.

On May 21, 2004, the appellate court rendered judgment which dismissed the appeal and affirmed in toto the Decision of the
MTC,56 holding that the copy of the O.G., where the notice was published, was marked as Exhibit "E-1" during the initial
hearing. On the issue of ownership over the subject lots, the CA upheld the applicants claim that the parcels of land were
alienable and not part of the public domain, and that it had adduced preponderant evidence to prove that its predecessors had
been tilling the land since 1937, during which palay and vegetables were planted. In fact, before the lots were purchased, the
applicant verified their ownership with the assessors office, and thereafter caused the property to be surveyed; after the lots
were acquired in 1999 and a survey was caused by the applicant, no adverse claims were filed by third persons. Further, the
CA ruled that tax declarations or tax receipts are good indicia of possession in the concept of the owner, which constitute at
least positive and strong indication that the taxpayer concerned has made a claim either to the title or to the possession of the
property.

The Republic, now petitioner, filed the instant Petition for Review on the following issues:

A.

WHETHER THE LAND IN QUESTION MAYBE THE SUBJECT OF REGISTRATION.

B.

WHETHER THE COURT A QUO ACQUIRED JURISDICTION OVER THE RES CONSIDERING ITS INALIENABLE CHARACTER.

C.

WHETHER THE COURT OF APPEALS ERRED IN AFFIRMING THE TRIAL COURTS FINDING THAT RESPONDENT COMPLIED
WITH THE LEGAL REQUIREMENTS ON POSSESSION AS MANDATED BY SECTION 14 OF P.D. NO. 1529. 57

Petitioner asserts that the Engineers Survey Report58 and the Laguna de Bay Shoreland Survey59 both show that Lot No. 3138-
A is located below the reglementary lake elevation, hence, forms part of the Laguna Lake bed. It insists that the property
belongs to the public domain as classified under Article 502 of the Civil Code.60 Citing the ruling of this Court in Bernardo v.
Tiamson,61 petitioner avers that the subject lot is incapable of private appropriation since it is a public land owned by the State
under the Regalian doctrine. On this premise, petitioner avers that the MTC did not acquire jurisdiction over the subject
matter, and as a consequence, its decision is null and void.

Petitioner maintains that respondent failed to present incontrovertible evidence to warrant the registration of the property in
its name as owner. The testimonies of the two witnesses only proved that the possession of the land may be characterized as
mere casual cultivation; they failed to prove that its predecessors occupied the land openly, continuously, exclusively,
notoriously and adversely in the concept of owner since June 12, 1945 or earlier.

On the other hand, respondent argues that the Engineers Survey Report and the Laguna de Bay Shoreland Survey have no
probative value because they were neither offered nor admitted in evidence by the MTC. It points out that petitioner failed to
invoke these reports in the appellate court.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 111
It was only when the petition was filed with this Court that the respondent learned of its existence. Petitioners reliance on the
reports/survey is merely an afterthought. The case of Bernardo v. Tiamson is irrelevant because the factual issues are
different from those of this case.

On April 28, 2005, respondent filed a Manifestation62 with this Court, appending thereto the report63 conducted by the survey
team of the LLDA Engineering and Construction Division on April 12, 2005. It stated that the 10,971 sq m property subject of
the case is below the 12.5 elevation, and that the profile distance of the property from the actual lake waters is about 900 m. to
1 km.

The issues in this case are the following: (1) whether the MTC had jurisdiction over the amended application; (2) whether the
property subject of the amended application is alienable and disposable property of the State, and, if so, (3) whether
respondent adduced the requisite quantum of evidence to prove its ownership over the property under Section 14 of P.D.
1529.

The petition is meritorious.

On the first issue, we find and so rule that the MTC acquired jurisdiction over respondents application for registration since a
copy of the O.G. containing the notice of hearing was marked and adduced in evidence as Exhibit "E-1." The representative of
the OSG was present during the hearing and interposed his objection thereto.

On the second and third issues, we find and so rule that the property subject of this application was alienable and disposable
public agricultural land until July 18, 1966. However, respondent failed to prove that it possesses registerable title over the
property.

Section 48(b) of Commonwealth Act No. 141, as amended by R.A. No. 1942, reads:

Section 48. The following described citizens of the Philippines, occupying lands of the public domain or claiming to own any
such lands or an interest therein, but whose titles have not been perfected or completed, nay apply to the Court of First
Instance of the province where the land is located for confirmation of their claims and the issuance of a certificate of title
therefor, under the Land Registration Act, to wit:

(b) Those who by themselves or through their predecessors in-interest have been in open, continuous, exclusive, and
notorious possession and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition of
ownership, for at least thirty years immediately preceding the filing of the application for confirmation of title except when
prevented by war or force majeure. These shall be conclusively presumed to have performed all the conditions essential to a
Government grant and shall be entitled to a certificate of title under the provisions of this chapter.

This provision was further amended by P.D. No. 1073 by substituting the phrase "for at least thirty years" with "since June 12,
1945;" thus:

Sec. 4. The provisions of Section 48(b) and Section 48(c), Chapter VIII, of the Public Land Act are hereby amended in the sense
that these provisions shall apply only to alienable and disposable lands of the public domain which have been in open,
continuous, exclusive and notorious possession, and occupation by the applicant himself or through his predecessor-in-
interest, under a bona fide claim of acquisition of ownership, since June 12, 1945.

Section 14(1) of P.D. No. 1529, otherwise known as the Property Registration Decree, provides:

SEC. 14. Who may apply. The following persons may file in the proper Court of First Instance [now Regional Trial Court] an
application for registration of title to land, whether personally or through their duly authorized representatives:

(1) Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive and
notorious possession and occupation of alienable and disposable lands of the public domain under a bona fide claim of
ownership since June 12, 1945, or earlier (emphasis supplied).

Applicants for confirmation of imperfect title must, therefore, prove the following: (a) that the land forms part of the
disposable and alienable agricultural lands of the public domain; and (b) that they have been in open, continuous, exclusive,
and notorious possession and occupation of the same under a bona fide claim of ownership either since time immemorial or
since June 12, 1945.64

Under the Regalian doctrine, all lands not otherwise appearing to be clearly within private ownership are presumed to belong
to the State. The presumption is that lands of whatever classification belong to the State.65Unless public land is shown to have
been reclassified as alienable or disposable to a private person by the State, it remains part of the inalienable public domain.
Property of the public domain is beyond the commerce of man and not susceptible of private appropriation and acquisitive
prescription. Occupation thereof in the concept of owner no matter how long cannot ripen into ownership and be registered as
a title.66 The statute of limitations with regard to public agricultural lands does not operate against the State unless the
occupant proves possession and occupation of the same after a claim of ownership for the required number of years to
constitute a grant from the State.67

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 112
No public land can be acquired by private persons without any grant from the government, whether express or implied. It is
indispensable that there be a showing of a title from the State.68 The rationale for the period "since time immemorial or since
June 12, 1945" lies in the presumption that the land applied for pertains to the State, and that the occupants or possessor claim
an interest thereon only by virtue of their imperfect title as continuous, open and notorious possession.

A possessor of real property may acquire ownership thereof through acquisitive prescription. In Alba Vda. de Raz v. Court of
Appeals,69 the Court declared that:

x x x [W]hile Art. 1134 of the Civil Code provides that (o)wnership and other real rights over immovable property are
acquired by ordinary prescription through possession of ten years, this provision of law must be read in conjunction with Art.
1117 of the same Code. This article states that x x x (o)rdinary acquisitive prescription of things requires possession in good
faith and with just title for the time fixed by law. Hence, a prescriptive title to real estate is not acquired by mere possession
thereof under claim of ownership for a period of ten years unless such possession was acquired con justo titulo y buena fe
(with color of title and good faith). The good faith of the possessor consists in the reasonable belief that the person from whom
he received the thing was the owner thereof, and could transmit his ownership. For purposes of prescription, there is just title
when the adverse claimant came into possession of the property through one of the recognized modes of acquisition of
ownership or other real rights but the grantor was not the owner or could not transmit any right. 70

To prove that the land subject of an application for registration is alienable, an applicant must conclusively establish the
existence of a positive act of the government such as a presidential proclamation or an executive order, or administrative
action, investigation reports of the Bureau of Lands investigator or a legislative act or statute. 71 Until then, the rules on
confirmation of imperfect title do not apply. A certification of the Community Environment and Natural Resources Officer in
the Department of Environment and Natural Resources stating that the land subject of an application is found to be within the
alienable and disposable site per a land classification project map is sufficient evidence to show the real character of the land
subject of the application.72

The applicant is burdened to offer proof of specific acts of ownership to substantiate the claim over the land.73Actual
possession consists in the manifestation of acts of dominion over it of such a nature as a party would actually exercise over his
own property.74 A mere casual cultivation of portions of the land by the claimant does not constitute sufficient basis for a claim
of ownership; such possession is not exclusive and notorious as to give rise to a presumptive grant from the State. 75

In this case, the evidence on record shows that the property is alienable agricultural land. Romeo Cadano of the Community
Environment and Natural Resources Office, Antipolo Rizal, certified that the property "falls within the Alienable and
Disposable zone, under Land Classification Project No. 5-A, per L.C. Map No. 639 certified released on March 11,
1927."76 However, under R.A. No. 4850 which was approved on July 18, 1966, lands located at and below the maximum lake
level of elevation of the Laguna de Bay are public lands which form part of the bed of said lake. Such lands denominated as
lakeshore areas are linear strips of open space designed to separate incompatible element or uses, or to control
pollution/nuisance, and for identifying and defining development areas or zone. Such areas of the lake with an approximate
total area of 14,000 hectares form a strip of the lakebed along its shores alternately submerged or exposed by the annual
rising and lowering of the lake water. They have environmental ecological significance and actual potential economic benefits.

Under Section 1 of the law, the national policy of the State is to promote and accelerate the development and balanced growth
of the Laguna Lake area and the surrounding provinces, cities and towns within the context of the national and regional plans
and policies for social and economic development and to carry out the development of the Laguna Lake region with due regard
and adequate provisions for environmental management and control, preservation of the quality of human life and ecological
systems, and the prevention of undue ecological disturbances, deterioration and pollution.

The rapid expansion of Metropolitan Manila, the suburbs and the lakeshore town of Laguna de Bay, combined with current
and prospective uses of the lake for municipal-industrial water supply, irrigation, fisheries, and the like, created deep concern
on the part of the Government and the general public over the environmental impact of such development, on the water
quality and ecology of the lake and its related river systems. The inflow of polluted water from the Pasig River, industrial,
domestic and agricultural wastes from developed areas around the lake and the increasing urbanization have induced the
deterioration of the lake, and that water quality studies have shown that the lake will deteriorate further if steps are not taken
to check the same. The floods in the Metropolitan Manila area and the lakeshore towns are also influenced by the hydraulic
system of the Laguna de Bay, and any scheme of controlling the floods will necessarily involve the lake and its river systems.

This prompted then President Ferdinand E. Marcos to issue on October 17, 1978 P.D. 813 amending Rep. Act No. 4850. Under
Section 6 of the law, the LLDA is empowered to issue such rules and regulations as may be necessary to effectively carry out
the policies and programs therein provided including the policies and projects of the LLDA, subject to the approval of the
National Economic Development Authority.

In 1996, the Board of Directors of LLDA approved Resolution No. 113, series of 1996 relating to the Environmental Uses Fee
Systems and Approval of the Work and Financial Plan for its operationalization in the Laguna de Bay Basin. Section 5 of the
Resolution provides that the LLDA as a matter of policy is to maintain all shoreland areas lying below elevation 12.50 meters
as buffer zone in consonance with the LLDA policies, plans programs for the improvement of the water quality and pollution
and conservation of the water resources of the Laguna de Bay.

As gleaned from the Survey Report of Magalonga, Polanco and Medenilla of the LLDA based on the ocular inspection dated
September 14, 2001 as well as the Memorandum of Engineer Christopher Pedrezuela, the property is located below the

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 113
reglementary level of 12.50 m.; hence, part of the bed of the Laguna de Bay, and, as such, is public land. Although the Report
and Memorandum were not offered as evidence in the MTC, the respondent admitted in its Manifestation in this Court that the
property is situated below the 12.50 elevation based on the survey of Magalonga, Polanco and Medenilla, the same survey
team who conducted an ocular inspection of the property on April 12, 2005, which thus confirmed the September 14, 2001
survey report. This is a judicial admission in the course of judicial proceedings which is binding on it. 77

Under R.A. No. 4850 and the issuances of LLDA, registerable rights acquired by occupants before the effectivity of the law are
recognized. However, the respondent failed to adduce proof that its predecessors-in-interest had acquired registerable title
over the property before July 18, 1966:

First. Cruz failed to prove how his parents acquired ownership of the property, and even failed to mention the names
of his grandparents. He likewise failed to present his fathers death certificate to support his claim that the latter died
in 1980. There is likewise no evidence when his mother died.

Second. Cruz also failed to adduce in evidence the extrajudicial partition allegedly executed by his parents in 1980
where the property was supposedly deeded to him and his sisters, Felisa and Eladia, to the exclusion of their five
siblings.

Third. Cruz claimed that he and his parents cultivated the property and planted palay and vegetables, and that they
had been paying the realty taxes over the property before his parents died. However, no tax declarations under the
names of the spouses Apolonio Cruz and/or Eladia Cruz and his siblings were presented, or realty tax receipts
evidencing payment of such taxes. Indeed, while tax receipts and tax payment receipts themselves do not convincingly
prove title to the land,78 these are good indicia of possession in the concept of an owner, for no one in his right mind
would pay taxes for a property that is not in his actual or, at least, constructive possession. 79 While tax receipts and
declarations are not incontrovertible evidence of ownership, they constitute, at the least, proof that the holder has a
claim of title over the property, particularly when accompanied by proof of actual possession of property. 80 The
voluntary declaration of a piece of property for taxation purposes not only manifests ones sincere and honest desire
to obtain title to the property, but also announces an adverse claim against the State and all other interested parties
with an intention to contribute needed revenues to the government. Such an act strengthens ones bona fide claim of
acquisition of ownership.81

Fourth. When he testified on October 5, 2001, Antonio Cruz declared that he was "74 years old."82 He must have been
born in 1927, and was thus merely 10 years old in 1937. It is incredible that, at that age, he was already cultivating the
property with his father. Moreover, no evidence was presented to prove how many cavans of palay were planted on
the property, as well as the extent of such cultivation, in order to support the claim of possession with a bona fide
claim of ownership.

Fifth. Cruz testified that he hired a worker "upahan" to help him cultivate the property. He, however, failed to state the
name of the worker or to even present him as witness for the respondent.

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The decision of the Court of Appeals in CA-G.R. CV No. 73278 is
SET ASIDE. The Municipal Trial Court of Taytay, Rizal is DIRECTED to dismiss the application for registration of respondent
Candymaker, Inc. in Land Registration Case No. 99-0031. No costs.

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 156252 June 27, 2006

COCA-COLA BOTTLERS PHILIPPINES, INC., Petitioner,


vs.
CITY OF MANILA, LIBERTY M. TOLEDO City Treasurer and JOSEPH SANTIAGO Chief, Licensing
Division, Respondents.

DECISION

CHICO-NAZARIO, J.:

Before Us is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure, assailing the Order 1 of the
Regional Trial Court (RTC) of Manila, Branch 21, dated 8 May 2002, dismissing petitioners Petition for Injunction, and the
Order2 dated 5 December 2002, denying petitioners Motion for Reconsideration.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 114
Petitioner Coca-Cola Bottlers Philippines, Inc. is a corporation engaged in the business of manufacturing and selling beverages
and maintains a sales office located in the City of Manila.

On 25 February 2000, the City Mayor of Manila approved Tax Ordinance No. 7988, otherwise known as "Revised Revenue
Code of the City of Manila" repealing Tax Ordinance No. 7794 entitled, "Revenue Code of the City of Manila." Tax Ordinance No.
7988 amended certain sections of Tax Ordinance No. 7794 by increasing the tax rates applicable to certain establishments
operating within the territorial jurisdiction of the City of Manila, including herein petitioner.

Aggrieved by said tax ordinance, petitioner filed a Petition 3 before the Department of Justice (DOJ), against the City of Manila
and its Sangguniang Panlungsod, invoking Section 187 4 of the Local Government Code of 1991 (Republic Act No. 7160). Said
Petition questions the constitutionality or legality of Section 21 of Tax Ordinance No. 7988. According to petitioner:

Section 21 of the Old Revenue Code of the City of Manila (Ordinance No. 7794, as amended) was reproduced verbatim as
Section 21 under the new Ordinance except for the last paragraph thereof which reads: "PROVIDED, that all registered
businesses in the City of Manila that are already paying the aforementioned tax shall be exempted from payment thereof",
which was deleted; that said deletion would, in effect, impose additional business tax on businesses, including herein
petitioner, that are already subject to business tax under the other sections, specifically Sec. 14, of the New Revenue Code of
the City of Manila, which imposition, petitioner claims, "is beyond or exceeds the limitation on the taxing power of the City of
Manila under Sec. 143 (h) of the LGC of 1991; and that deletion is a palpable and manifest violation of the Local Government
Code of 1991, and the clear mandate of Article X, Sec. 5 of the 1987 Constitution, hence Section 21 is "illegal and
unconstitutional."

On 17 August 2000, then DOJ Secretary Artemio G. Tuquero issued a Resolution declaring Tax Ordinance No. 7988 null and
void and without legal effect, the pertinent portions of which read:

After a judicious scrutiny of the records of this case, in the light of the pertinent provisions of the Local Government Code of
1991, this Department finds for the petitioner.

The Local Government Code of 1991 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 or local circulations the same may be posted in at least two (2) conspicuous and publicly accessible
places." (R.A. No. 7160) (stress supplied)

Upon the other hand, the Rules and Regulations Implementing the Local Government Code of 1991, insofar as pertinent,
mandates:

"Art. 277. Publication of Tax Ordinances and Revenue Measures. (a) 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 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.

If the tax ordinances or revenue measure contains penal provisions as authorized under Art. 279 of this Rule, the gist of such
tax ordinance or revenue measure shall be published in a newspaper of general circulation within the province, posting of
such ordinance or measure shall be made in accessible and conspicuous public places in all municipalities and cities of the
province to which the sanggunian enacting the ordinance or revenue measure belongs.

xxx xxx xxx."

(emphasis ours)

It is clear from the above-quoted provisions of R.A. No. 7160 and its implementing rules that the requirement of publication is
MANDATORY and leaves no choice. The use of the word "shall" in both provisions is imperative, operating to impose a duty
that may be enforced (Soco v. Militante, 123 SCRA 160, 167; Modern Coach Corp. v. Faver 173 SE 2d 497, 499).

Its essence is simply to inform the people and the entities who may likely be affected, of the existence of the tax measure. It
bears emphasis, that, strict observance of the said procedural requirement is the only safeguard against any unjust and
unreasonable exercise of the taxing powers by ensuring that the taxpayers are notified through publication of the existence of
the measure, and are therefore able to voice out their views or objections to the said measure. For, after all, taxes are
obligatory exactions or enforced contributions corollary to taking of property.

xxxx

In the case at bar, respondents, by its failure to file their comments and present documentary evidence to show that the
mandatory requirement of law on publication, among other things, has been met, may be deemed to have waived its right to
controvert or dispute the documentary evidence submitted by petitioner which indubitably show that subject tax ordinance
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 115
was published only once, i.e., on the May 22, 2000 issue of the Philippine Post. Clearly, therefore, herein respondents failed to
satisfy the requirement that said ordinance shall be published for three (3) consecutive days as required by law.

xxxx

In view of the foregoing, we find it unnecessary to pass upon the other issues raised by the petitioner.

WHEREFORE, premises considered, Tax Ordinance No. 7988 of the City of Manila is hereby declared NULL and VOID and
WITHOUT LEGAL EFFECT for having been enacted in contravention of the provisions of the Local Government Code of 1991
and its implementing rules and regulations.5

The City of Manila failed to file a Motion for Reconsideration nor lodge an appeal of said Resolution, thus, said Resolution of
the DOJ Secretary declaring Tax Ordinance No. 7988 null and void has lapsed into finality.

On 16 November 2000, Atty. Leonardo A. Aurelio wrote the Bureau of Local Government Finance (BLGF) requesting in behalf
of his client, Singer Sewing Machine Company, an opinion on whether the Office of the City Treasurer of Manila has the right to
enforce Tax Ordinance No. 7988 despite the Resolution, dated 17 August 2000, of the DOJ Secretary. Acting on said letter, the
BLGF Executive Director issued an Indorsement on 20 November 2000 ordering the City Treasurer of Manila to "cease and
desist" from enforcing Tax Ordinance No. 7988. According to the BLGF:

In the attached Resolution dated August 17, 2000 of the Department of Justice, it is stated that "x x x Ordinance No. 7988 of the
City of Manila is hereby declared NULL AND VOID AND WITHOUT LEGAL EFFECT for having been enacted in contravention of
the provisions of the Local Government Code of 1991 and its implementing rules and regulations."

xxxx

In view thereof, that Office is hereby instructed to cease and desist from implementing the aforementioned Manila Tax
Ordinance No. 7988, inviting attention to Section 190 of the Local Government Code (LGC) of 1991, quoted hereunder:

"Section 190. Attempt to Enforce Void or Suspended Tax Ordinances and Revenue Measures.- The enforcement of any tax
ordinance or revenue measures after due notice of the disapproval or suspension thereof shall be sufficient ground to
administrative disciplinary action against the local officials and employees responsible therefore."

Be guided accordingly.6

Despite the Resolution of the DOJ declaring Tax Ordinance No. 7988 null and void and the directive of the BLGF that
respondents cease and desist from enforcing said tax ordinance, respondents continued to assess petitioner business tax for
the year 2001 based on the tax rates prescribed under Tax Ordinance No. 7988. Thus, petitioner filed a Complaint with the
RTC of Manila, Branch 21, on 17 January 2001, praying that respondents be enjoined from implementing the aforementioned
tax ordinance.

On 28 November 2001, the RTC of Manila, Branch 21, rendered a Decision in favor of petitioner, the decretal portion of which
states:

The defendants did not follow the procedure in the enactment of Tax Ordinance No. 7988. The Court agrees with plaintiffs
contention that the ordinance should first be published for three (3) consecutive days in a newspaper of local circulation aside
from the posting of the same in at least four (4) conspicuous public places.

xxxx

WHEREFORE, premises considered, judgment is hereby rendered declaring the injunction permanent. Defendants are
enjoined from implementing Tax Ordinance No. 7988. The bond posted by the plaintiff is hereby CANCELLED.7

During the pendency of the said case, the City Mayor of Manila approved on 22 February 2001 Tax Ordinance No. 8011
entitled, "An Ordinance Amending Certain Sections of Ordinance No. 7988." Said tax ordinance was again challenged by
petitioner before the DOJ through a Petition questioning the legality of the aforementioned tax ordinance on the grounds that
(1) said tax ordinance amends a tax ordinance previously declared null and void and without legal effect by the DOJ; and (2)
said tax ordinance was likewise not published upon its approval in accordance with Section 188 of the Local Government Code
of 1991.

On 5 July 2001, then DOJ Secretary Hernando Perez issued a Resolution declaring Tax Ordinance No. 8011 null and void and
legally not existing. According to the DOJ Secretary:

After a careful examination/evaluation of the records of this case and applying the pertinent provisions of the Local
Government Code of 1991, this Department finds the instant petition of Coca-Cola Bottlers, Philippines, Inc. meritorious.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 116
It bears stress, at the outset, that the subject ordinance was passed and approved by the respondents principally to amend
Ordinance No. 7988 which was earlier nullified by this Department in its Resolution Dated August 17, 2000, also at the
instance of the herein petitioner. x x x

xxxx

x x x [T]he only logical conclusion, therefore, is that Ordinance No. 8011, subject herein, is also null and void, it being a mere
amendatory ordinance of Ordinance No. 7988 which, as earlier stated, had been nullified by this Department. An invalid or
unconstitutional law or ordinance does not, in legal contemplation, exist (Manila Motors Co., Inc. vs. Flores, 99 Phil. 738).
Where a statute which has been amended is invalid, nothing, in effect, has been amended. As held in People vs. Lim, 108 Phil.
1091:

"If an order or law sought to be amended is invalid, then it does not legally exist. There would be no occasion or need to amend
it; x x x" (at p. 1097)

Instead of amending Ordinance No. 7988, herein respondent should have enacted another tax measure which strictly complies
with the requirements of law, both procedural and substantive. The passage of the assailed ordinance did not have the effect of
curing the defects of Ordinance No. 7988 which, any way, does not legally exist.

xxxx

WHEREFORE, premises considered, Tax Ordinance No. 8011 is hereby declared NULL and VOID and LEGALLY NOT EXISTING.8

Respondents Motion for Reconsideration of the Resolution of the DOJ was subsequently denied in a Resolution, 9dated 12
March 2002.

The City of Manila appealed the DOJ Resolution, dated 12 March 2002, denying its Motion for Reconsideration of the
Resolution nullifying Tax Ordinance No. 8011 before the RTC of Manila, Branch 17, but the same was dismissed for lack of
jurisdiction in an Order, dated 2 December 2002. According to the trial court:

From whatever angle the recourse of herein petitioners was viewed, either from the standpoint of Section 1, Rule 43, or
Section 1 and the last sentence of the second paragraph of Section 4, Rule 65 of the 1997 Rules of Civil Procedure, the
conclusion was inevitable that petitioners remedial measure from dispositions of the Secretary of Justice should have been
ventilated before the next judicial plane. x x x

Accordingly, by reason of the foregoing premises, Civil Case No. 02-103372 for "Certiorari" is DISMISSED.

Consequently, respondents appealed the foregoing Order, dated 2 December 2002, via a Petition for Review on Certiorari to
the Supreme Court docketed as G.R. No. 157490. However, said appeal was dismissed in our Resolution, dated 23 June 2003,
the dispositive of which reads:

Pursuant to Rule 45 and other related provisions of the 1997 Rules of Civil Procedure as amended governing appeals by
certiorari to the Supreme Court, only petitions which are accompanied by or which comply strictly with the requirements
specified therein shall be entertained. On the basis thereof, the Court resolves to DENY the instant petition for review on
certiorari of the orders of the Regional Trial Court, Manila, Branch 17 dated December 2, 2002 and March 7, 2003 for the late
filing as the petition was filed beyond the reglementary period of fifteen (15) days fixed in Sec. 2, Rule 45 in relation to Sec.
5(a), Rule 56.

The omnibus motion of petitioners for reconsideration of the resolution of April 23, 2003 which denied the motion for an
extension of time to file a petition is DENIED for lack of merit.

Respondents Motion for Reconsideration was subsequently denied in a Resolution, dated 11 August 2003, in which the Court
resolved as follows:

Acting on the motion of petitioners for reconsideration of the resolution of June 23, 2003 which denied the petition for review
on certiorari and considering that there is no compelling reason to warrant a modification of this Courts resolution, the Court
resolves to DENY reconsideration with FINALITY.

Meanwhile, on the basis of the enactment of Tax Ordinance No. 8011, the City of Manila filed a Motion for Reconsideration
with the RTC of Manila, Branch 21, of its Decision, dated 28 November 2001, which the court a quo granted in the herein
assailed Order dated 8 May 2002, the full text of which reads:

Considering that Ordinance No. 7988 (Amended Revenue Code of the City of Manila) has already been amended by Ordinance
No. 8011 entitled "An Ordinance Amending Certain Sections of Ordinance No. 7988" approved by the City Mayor of Manila on
February 22, 2001, let the above-entitled case be as it is hereby DISMISSED. Without pronouncement as to costs."10

Petitioners Motion for Reconsideration of the abovequoted Order was denied by the trial court in the second challenged
Order, dated 5 December 2002; hence the instant Petition.
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 117
The case at bar revolves around the sole pivotal issue of whether or not Tax Ordinance No. 7988 is null and void and of no
legal effect. However, respondents, in their Comment and Memorandum, raise the procedural issue of whether or not the
instant Petition has complied with the requirements of the 1997 Rules on Civil Procedure; thus, the Court resolves to first pass
upon this issue before tackling the substantial matters involved in this case.

Respondents insist that the instant Petition raises questions of fact that are proscribed under Rule 45 of the 1997 Rules of Civil
Procedure which states that Petitions for Certiorari before the Supreme Court shall raise only questions of law. We do not
agree. There is a question of fact when doubt or controversy arises as to the truth or falsity of the alleged facts, when there is
no dispute as to fact, the question of whether or not the conclusion drawn therefrom is correct is a question of law. 11 A
thorough reading of the Petition will reveal that petitioner does not present an issue in which we are called to rule on the truth
or falsity of any fact alleged in the case. Furthermore, the resolution of whether or not the court a quo erred in dismissing
petitioners case in light of the enactment of Tax Ordinance No. 8011, allegedly amending Tax Ordinance No. 7988, does not
necessitate an incursion into the facts attending the case.

Contrarily, it is respondents who actually raise questions of fact before us. While accusing petitioner of raising questions of
fact, respondents, in the same breath, proceeded to allege that the RTC of Manila, Branch 21, in its Decision, dated 28
November 2001, failed to take into account the evidence presented by respondents allegedly proving that Tax Ordinance No.
7988 was published for four times in a newspaper of general circulation in accordance with the requirements of law. A
determination of whether or not the trial court erred in concluding that Tax Ordinance No. 7988 was indeed published for four
times in a newspaper of general circulation would clearly involve a calibration of the probative value of the evidence
presented by respondents to prove such allegation. Therefore, said issue is a question of fact which this Court, not being a trier
of facts, will decline to pass upon.

Respondents also point out that the Petition was not properly verified and certified because Nelson Empalmado, the Vice
President for Tax and Financial Services of Coca-Cola Bottlers Philippines, Inc. who verified the subject Petition was not duly
authorized to file said Petition. Respondents assert that nowhere in the attached Secretarys Certificate can it be found the
authority of Nelson Empalmado to institute the instant Petition. Thus, there being a lack of proper verification, respondents
contend that the Petition must be treated as a mere scrap of paper, which has no legal effect as declared in Section 4, Rule 7 of
the 1997 Rules of Civil Procedure.

An inspection of the Secretarys Certificate attached to the petition will show that Nelson Empalmado is not among those
designated as representative to prosecute claims in behalf of Coca-Cola Bottlers Philippines, Inc. However, it would seem that
the authority of Mr. Empalmado to file the instant Petition emanated from a Special Power of Attorney signed by Ramon V.
Lapez, Jr., Associate Legal Counsel/Assistant Corporate Secretary of Coca-Cola Bottlers Philippines, Inc. and one of those
named in the Secretarys Certificate as authorized to file a Petition in behalf of the corporation. A careful perusal of said
Secretarys Certificate will further reveal that the persons authorized therein to represent petitioner corporation in any suit
are also empowered to designate and appoint any individual as attorney-in-fact of the corporation for the prosecution of any
suit. Accordingly, by virtue of the Special Power of Attorney executed by Ramon V. Lapez, Jr. authorizing Nelson Emplamado to
file a Petition before the Supreme Court, the instant Petition has been properly verified, in accordance with the 1997 Rules of
Civil Procedure.

Having disposed of the procedural issues raised by respondents, We now come to the pivotal issue in this petition.

It is undisputed from the facts of the case that Tax Ordinance No. 7988 has already been declared by the DOJ Secretary, in its
Order, dated 17 August 2000, as null and void and without legal effect due to respondents failure to satisfy the requirement
that said ordinance be published for three consecutive days as required by law. Neither is there quibbling on the fact that the
said Order of the DOJ was never appealed by the City of Manila, thus, it had attained finality after the lapse of the period to
appeal.

Furthermore, the RTC of Manila, Branch 21, in its Decision dated 28 November 2001, reiterated the findings of the DOJ
Secretary that respondents failed to follow the procedure in the enactment of tax measures as mandated by Section 188 of the
Local Government Code of 1991, in that they failed to publish Tax Ordinance No. 7988 for three consecutive days in a
newspaper of local circulation. From the foregoing, it is evident that Tax Ordinance No. 7988 is null and void as said ordinance
was published only for one day in the 22 May 2000 issue of the Philippine Post in contravention of the unmistakable directive
of the Local Government Code of 1991.

Despite the nullity of Tax Ordinance No. 7988, the court a quo, in the assailed Order, dated 8 May 2002, went on to dismiss
petitioners case on the force of the enactment of Tax Ordinance No. 8011, amending Tax Ordinance No. 7988. Significantly,
said amending ordinance was likewise declared null and void by the DOJ Secretary in a Resolution, dated 5 July 2001,
elucidating that "[I]nstead of amending Ordinance No. 7988, [herein] respondent should have enacted another tax measure
which strictly complies with the requirements of law, both procedural and substantive. The passage of the assailed ordinance
did not have the effect of curing the defects of Ordinance No. 7988 which, any way, does not legally exist." Said Resolution of
the DOJ Secretary had, as well, attained finality by virtue of the dismissal with finality by this Court of respondents Petition for
Review on Certiorari in G.R. No. 157490 assailing the dismissal by the RTC of Manila, Branch 17, of its appeal due to lack of
jurisdiction in its Order, dated 11 August 2003.

Based on the foregoing, this Court must reverse the Order of the RTC of Manila, Branch 21, dismissing petitioners case as
there is no basis in law for such dismissal. The amending law, having been declared as null and void, in legal contemplation,
therefore, does not exist. Furthermore, even if Tax Ordinance No. 8011 was not declared null and void, the trial court should

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 118
not have dismissed the case on the reason that said tax ordinance had already amended Tax Ordinance No. 7988. As held by
this Court in the case of People v. Lim,12 if an order or law sought to be amended is invalid, then it does not legally exist, there
should be no occasion or need to amend it.13

WHEREFORE, premises considered, the instant Petition is hereby GRANTED. The Orders of the RTC of Manila, Branch 21,
dated 8 May 2002 and 5 December 2002, respectively, are hereby REVERSED and SET ASIDE.

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 137534 August 3, 2006

EFREN AQUINO and ANGELICA AQUINO, Petitioners,


vs.
QUEZON CITY, represented by its OIC, BRIGIDO SIMON, ANSELMO O. REGIS, VICENTE N. COLOYAN, as the Acting

Register of Deeds of Quezon City, and AIDA LINAO, accompanied by her husband PETE LINAO,Respondents.

x --------------------------------------------- x

G.R. No. 138624 August 3, 2006

SOLOMON TORRADO, represented herein by his heirs, namely: VICTOR SILVANO TORRADO, MONALISA TORRADO
CARLET, CELIA TORRADO APTER, ROBERTO SILVANO TORRADO, SOLOMON SILVANO TORRADO, TITA SILVANO
TORRADO, HILARIO SILVANO TORRADO, EMMANUEL SILVANO TORRADO, and AUGUSTUS CAESAR SILVANO
TORRADO, Petitioners,
vs.
VERONICA BALUYOT and RUPERTO BALUYOT, CORAZON and MAXIMO UY, DNX DEVELOPMENT CORP., CITY
TREASURER OF QUEZON CITY, REGISTER OF DEEDS OF QUEZON CITY, AND THE HONORABLE COURT OF
APPEALS, Respondents.

DECISION

AZCUNA, J.:

In an order issued by this Court dated October 18, 2000, two petitions for review on certiorari involving the decisions of the
Court of Appeals in CA-G.R. CV Nos. 37487 and 49241, declaring valid the auction sales of two real properties by the Quezon
City local government for failure to pay real property taxes, were consolidated for the Courts consideration.

G.R. No. 137534

The first case, docketed as G.R. No. 137534, deals with a 612-square meter lot in East Avenue Subdivision, Diliman, Quezon
City. The lot was formerly owned by petitioner spouses Efren and Angelica Aquino (Petitioners Aquino) under Transfer
Certificate of Title (TCT) No. 260878. By their own admission, Petitioners Aquino withheld payment of the real property taxes
thereto from 1975 to 1982 as a form of protest against the government of then President Marcos. As a result of the
nonpayment, the property was sold by the Quezon City local government, through the Treasurers Office, at public auction on
February 29, 1984 to private respondent Aida Linao, the highest bidder. Aida Linao eventually consolidated her ownership
under a petition granted by the Regional Trial Court (RTC) of Quezon City on September 25, 1985. 1 Accordingly, TCT No.
260878 was cancelled and a new one was issued under TCT No. 339476 in the name of Aida Linao. 2

Petitioners Aquino claimed that they learned of the sale only in April 1987 after they were informed by people "squatting" on
the property that Aida Linao was taking steps to eject them. They then filed an action for annulment of title, reconveyance and
damages against respondents Quezon City local government, its Treasurer, the Register of Deeds of Quezon City and Aida
Linao 3 before the RTC of Quezon City. 4 They charged that the Quezon City local government sold their property without
informing them of their tax default, in derogation of the notice requirements of the law. They also impute bad faith upon Aida
Linao in buying their property despite knowledge of the infirmities leading to the auction sale.

On February 25, 1995, after the parties presented their case, the RTC of Quezon City rendered a decision dismissing the
complaint. The dismissal was later affirmed by the Court of Appeals on February 3, 1999.

In this petition, Petitioners Aquino raise two issues:

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 119
1. Whether there was failure on the part of the Quezon City local government to satisfy the notice requirements before selling
the property for tax delinquency; and

2. Whether there was failure on the part of the Quezon City local government to give actual notice of the impending sale
despite knowing that the mailed notices were returned unclaimed.

3. Whether or not Petitioners Aquino were estopped to question the absence of notice given their admission that they
deliberately did not pay their taxes.

G.R. No. 138624

The second case, docketed as G.R. No. 138624, deals with a 407-square meter property located at No. 20 North Road, Cubao,
Quezon City under TCT No. 21996 in the name of Solomon Torrado. 5 TCT No. 21996 covers two lots, Lots 7 & 8, but only the
latter is the subject of the controversy. According to the Heirs of Solomon Torrado (Petitioner Heirs), 6 Solomon Torrado paid
taxes on the improvements on Lot 8 for 1976, 1977, 1978, 1979, 1981 and 1982 but not on the lot itself because the
Treasurers Office could not locate the index card for that property. For failure to pay real property taxes on Lot 8 from 1976 to
1982, the City Treasurer sent a Notice of Intent to Sell dated October 6, 1982 to Solomon Torrado to his address indicated in
the tax register, which simply states as "Butuan City." The notice was returned by reason of "Insufficient Address." Next sent
was a Notice of Sale of Delinquent Property dated December 10, 1982. This was sent to the same address and similarly
returned unclaimed. 7 Thereafter, a public auction for Lot 8 was held on February 23, 1983 and the lot was sold to Veronica
Baluyot, the winning bidder. A Notice of Sold Property was subsequently sent to Solomon Torrado to "Butuan City," which was
returned unclaimed.

On May 29, 1985, a Final Bill of Sale was executed by the City Treasurer. On that basis, TCT No. 21996 was cancelled in part
and TCT No. 355133, covering Lot 8, was issued in the name of Veronica Baluyot. Veronica Baluyot later mortgaged the
property to spouses Corazon and Maximino Uy. For failure to pay the mortgage debt, Lot 8 was foreclosed and TCT No. 355133
was cancelled and substituted with TCT No. 45536 in the name of spouses Uy. Spouses Uy then sold the lot to DNX Corporation
and TCT No. 45536 was cancelled and substituted with TCT No. N-162170, in the name of DNX Corporation.

Meanwhile, on January 13, 1989, Solomon Torrado commenced an action with the RTC of Quezon City against the spouses
Baluyot, the Quezon City local government, the City Treasurer and Register of Deeds. 8 On March 12, 1992, the RTC of Quezon
City dismissed the action. Recourse to the Court of Appeals was made but on March 24, 1998, the appeal was dismissed.

Before this Court, Petitioner Heirs raise the following questions:

1. In the auction sale of tax delinquent property, is constructive notice sufficient?

2. Was the City Treasurer negligent in continuing to send notices to an "insufficient address" notwithstanding a tax declaration
in the tax records pertaining to another property bearing Solomon Torrados complete address?

3. Was the auction sale conducted in accordance with P.D. 464?

4. Was the title of Veronica Baluyot, the purchaser of the property, void as well as those of the subsequent transferees?

5. Is DNX Corporation, the subsequent purchaser of the property, a buyer in good faith?

Issues common to both petitions

The Court will first discuss the issues that were raised in common by petitioners.

The first issue in common relates to the interpretation of the notice requirements under Sections 65 and 73 of Presidential
Decree (P.D.) No. 464 (the Real Property Tax Code then in force): 9

xxx

SECTION 65. Notice of delinquency in the payment of the real property tax. Upon the real property tax or any installment
thereof becoming delinquent, the provincial or city treasurer shall immediately cause notice of the fact to be posted at the
main entrance of the provincial building and of all municipal buildings or municipal or city hall and in a public and
conspicuous place in each barrio of the municipality of the province or city as the case may be. The notice of delinquency shall
also be published once a week for three consecutive weeks, in a newspaper of general circulation in the province or city, if any
there be, and announced by a crier at the market place for at least three market days.

Such notice shall specify the date upon which tax became delinquent, and shall state that personal property may be seized to
effect payment. It shall also state that, at any time, before the seizure of personal property, payment may be made with penalty
in accordance with the next following section, and further, that unless the tax and penalties be paid before the expiration of the
year for which the tax is due, or the tax shall have been judicially set aside, the entire delinquent real property will be sold at
public auction, and that thereafter the full title to the property will be and remain with the purchaser, subject only to the right
of delinquent taxpayer or any other person in his behalf to redeem the sold property within one year from the date of sale.
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 120
xxx

SECTION 73. Advertisement of sale of real property at public auction. After the expiration of the year for which the tax is due,
the provincial or city treasurer shall advertise the sale at public auction of the entire delinquent real property, except real
property mentioned in subsection (a) of Section forty hereof, to satisfy all the taxes and penalties due and the costs of sale.
Such advertisement shall be made by posting a notice for three consecutive weeks at the main entrance of the provincial
building and of all municipal buildings in the province, or at the main entrance of the city or municipal hall in the case of cities,
and in a public and conspicuous place in the barrio or district wherein the property is situated, in English, Spanish and the
local dialect commonly used, and by announcement at least three market days at the market by crier, and, in the discretion of
the provincial or city treasurer, by publication once a week for three consecutive weeks in a newspaper of general circulation
published in the province or city.

The notice, publication, and announcement by crier shall state the amount of the taxes, penalties and costs of sale; the date,
hour, and place of sale, the name of the taxpayer against whom the tax was assessed; and

the kind or nature of property and, if land, its approximate areas, lot number, and location stating the street and block number,
district or barrio, municipality and the province or city where the property to be sold is situated. Copy of the notice shall
forthwith be sent either by registered mail or by messenger, or through the barrio captain, to the delinquent taxpayer, at his
address as shown in the tax rolls or property tax record cards of the municipality or city where the property is located, or at
his residence, if known to said treasurer or barrio captain: Provided, however, That a return of the proof of service under oath
shall be filed by the person making the service with the provincial or city treasurer concerned.

Both petitioners construe the above-quoted provisions to mean that two sets of notices, one under Section 65 and the other
under Section 73, are required before a delinquent property could be sold for failure to pay real property taxes. With respect
to the first notice under Section 65, the owner of the real property subject to tax is supposed to be given a Notice of Tax
Delinquency stating that if the property tax is not paid, the local government would sell the real property to satisfy the tax in
arrears. This consists of four separate measures: 1) posting of the notice of tax delinquency at the main entrance of the city
hall; 2) posting of the notice of tax delinquency in a public and conspicuous place in each barangay of the city; 3) publication of
the notice of tax delinquency once a week for three consecutive weeks in a newspaper of general circulation in the city; and 4)
verbal announcement of the existence of the notice of tax delinquency by a crier at the market place for at least three market
days.

The second notice under Section 73 pertains to a Notice of Sale at Public Auction notifying the owner of the real property that
since there was failure to heed the first notice, the local government would now be selling his delinquent property at public
auction on a specified date to satisfy the tax in arrears.

For Petitioners Aquino, while it seems the Quezon City local government complied with the second set of requirements in
selling their lot, it failed to do the same with the first. 10 The only compliance by the Quezon City local government was the
sending of a Notice of Intent to Sell by registered mail to the last known address of Petitioners Aquino. No posting or
publication of any kind was done.

Petitioner Heirs, on the other hand, push for the same construction and claim that there was failure on the part of the City
Treasurer to send Solomon Torrado a Notice of Delinquency at all.

Respondents, on the other hand, counter with their own interpretation of P.D. No. 464. Instead of a two-step notice
requirement, respondents put forward the view that there are three methods of enforcement on tax delinquent real property
provided under P.D. No. 464. The first method is by distraint of personal property under Sections 65, 68, 70, 71 and 72. The
second method is by sale of the delinquent real property itself under Sections 73 to 81. The third method is by filing a case in
court under Section 82. Respondents submit that the real property in issue was sold under the second method. That being the
case, while they admit that there was only partial compliance with the provisions of Section 65 11 this would be relevant had
the local government chosen the method of distraint of personal property. In this case, the Quezon City local government
chose the second method of sale and there was full compliance with the provisions of Section 73. Hence, the auction sale was
valid.

A simple application of the elementary rules of statutory construction provides a straightforward resolution to this conflict.
Section 65 basically provides that upon delinquency of a real property tax, a notice of delinquency shall be given. This is
followed by Section 66, penalty for delinquency, and Section 67, application of the remedies. The latter reads in its entirety as
follows:

SECTION 67. Remedies cumulative, simultaneous and unconditional. Collection of the real property tax may be enforced
through any or all of the remedies provided under this Code, and the use or non-use of one remedy shall not be a bar against
the institution of the others. Formal demand for the payment of the delinquent taxes and penalties due need not be made
before any of such remedies may be resorted to; notice of delinquency as required in Section sixty-five hereof shall be
sufficient for the purpose.

Following Section 67 are provisions on distraint of personal property (Sections 68, 69, 70, 71 and 72), provisions concerning
the sale of real property (Sections 73 to 81) and the provision on collection of real property tax through the courts (Section
82).

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 121
A rule of statutory construction is that a statute must be construed as a whole. The meaning of the law is not to be extracted
from a single part, portion or section or from isolated words and phrases, clauses or sentences, but from a general
consideration or view of the act as a whole. Every part of the statute must be interpreted with reference to the context. 12 In
line with this rule, the Court finds that Section 65s notice of delinquency should be read in line with the Section 67s statement
that the different tax remedies do not require a formal demand for the payment but may be substituted by the notice of
delinquency. Reference to the notice of delinquency in relation to tax remedies, in general, illustrates the formers function as a
prerequisite to all the individual tax remedies subsequently detailed. Also, the phrase "notice of delinquency as required in
Section sixty-five" found on the last part of Section 67 further underscores its mandatory nature and interrelation to the three
remedies.

It is incorrect for the respondents to claim that notice of delinquency has limited application only to distraint of personal
property. They mistakenly lumped Section 65 exclusively with Sections 68 to 72 and, in so doing, restricted its application
from the other tax remedies. Section 65 is to be construed together with Sections 66 and 78 and all three operate in reference
to tax methods in general. Definitely, there is no more logical way to construe the whole chapter on "Collection of Real
Property Tax" (Sections 56 to 85) than to stress that while three methods are provided to enforce collection on real property
taxes, a notice of delinquency is a requirement regardless of the method or methods chosen.

Thus, while the Court agrees with the respondents interpretation that there are three methods by which taxes may be
enforced, petitioners are correct in insisting that two notices must be sent to the taxpayer concerned. Nevertheless,
respondents still prevail because the Court is satisfied that the two-notice requirement has been complied with by the
Treasurers Office.

Contrary to the stand taken by Petitioners Aquino, despite the provisions of Section 65, the local government concerned need
not post and publish the notice of delinquency, it being sufficient that personal service was done. In Talusan v. Tayag, 13 one of
the issues raised was the lack of publication of the notice of delinquency. As to this issue the Court said, speaking through now
Chief Justice Panganiban:

Petitioners assert that the tax sale should be annulled because of noncompliance with the requirement of publication
prescribed in Section 65 of PD 464.

In this regard, we note that unlike land registration proceedings which are in rem, cases involving an auction sale of land for
the collection of delinquent taxes are in personam. Thus, notice by publication, though sufficient in proceedings in rem, does
not as a rule satisfy the requirement of proceedings in personam. As such, mere publication of the notice of delinquency would
not suffice, considering that the procedure in tax sales is in personam. It was, therefore, still incumbent upon the city treasurer
to send the notice of tax delinquency directly to the taxpayer in order to protect the interests of the latter.

In the present case, the notice of delinquency was sent by registered mail to the permanent address of the registered owner in
Manila. In that notice, the city treasurer of Baguio City directed him to settle the charges immediately and to protect his
interest in the property. Under the circumstances, we hold that the notice sent by registered mail adequately protected the
rights of the taxpayer, who was the registered owner of the condominium unit.

Petitioners Aquino admit that notice of delinquency was mailed, hence, they cannot complain that their rights were not
adequately protected. Publication and posting not being indispensable, there was proper compliance with Section 65.

Petitioner Heirs, on the other hand, made no such admission but, on the contrary, argued that no notice of delinquency was
prepared by the City Treasurer much less sent to Solomon Torrado. The Court holds, for one, that this is a question of fact that
will generally not be resolved on a petition for review. 14 Second, records bear out that a Notice of Intent to Sell dated October
6, 1982 was sent by the Treasurers Office to Solomon Torrado. While this was not captioned as a "Notice of Delinquency," its
contents sufficiently inform the recipient of the deficiency in real property taxes, and this notice is apart from the subsequent
Notice of Sale sent immediately prior to the auction sale.

Hence, on the common issue concerning compliance with P.D. No. 464, the Court rules in favor of respondents.

The Court proceeds to the common issue of actual versus constructive notice of sale.

Petitioners Aquino argue that actual notice is required and, therefore, the mailing of the Notice of Sale to their last known
address, which they had abandoned, did not constitute valid notice under the law. Petitioner Heirs likewise argue that
constructive notice to the delinquent owner of the real property by mailing is not sufficient, especially when the local
government concerned is aware that the mailed notices have not reached the owner.

The applicable provision in regard to this issue is found in the last paragraph of Section 73, quoted above. Under said
provision, notices of the sale at public auction may be sent to the delinquent taxpayer, either (i) at the address as shown in the
tax rolls or property tax record cards of the municipality or city where the property is located or (ii) at his residence, if known
to such treasurer or barrio captain. Plainly, Section 73 gives the treasurer the option of where to send the notice of sale. In
giving the treasurer the option, nowhere in the wordings is there an indication of a requirement that notice must actually be
received by the intended recipient. Compliance by the treasurer is limited to strictly following the provisions of the statute: he
may send it at the address of the delinquent taxpayer as shown in the tax rolls or tax records or to the residence if known by
him or the barrio captain.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 122
In both petitions, the City Treasurer opted to comply with the first option. Petitioners Aquino and Petitioner Heirs do not deny
that notices were sent to their or their predecessors address, as shown in the tax records. The named persons in the notices
sent by City Treasurer were the correct delinquent taxpayers and were the registered owners of the property subject to tax,
albeit the mailing addresses were not to their actual residences. Therefore, the prescribed procedure in auction sales of
property for tax delinquency was followed punctiliously. Had the City Treasurer sent the notices to an address other than the
one indicated in the tax records, and such address is not the residence known to the treasurer or barangay captain, or if sent to
a person who is not the registered owner of the property, then the Court would be able to declare non-compliance with the
law. But the fact that petitioners were not able to read their notices is of no consequence to the annulment of the auction sale.

Additionally, Petitioner Heirs maintain that the Treasurers Office was already aware that Solomon Torrados address stated in
the tax records as "Butuan City" was insufficient so that the notices could not possibly be sufficient for the notices to reach the
recipient. There was however a more complete address indicated in the tax records for the improvements to Lot 8, which was
No. 20 North Road, Cubao, Quezon City. Petitioner Heirs argue that the City Treasurer could have used this address instead of
repeatedly sending notice to an insufficient address which for certain would be returned unclaimed.

The fault herein lies with Solomon Torrado and not with the City Treasurer. Solomon Torrados use in his tax declarations for
Lot 8, as well as in TCT No. 21996, the minimal address of "Butuan City," is further compounded by the fact that he can no
longer be found in Butuan City as he had moved to Quezon City since 1959. 15 He, therefore, had more than 25 years, or 25
opportunities, to amend his address and provide the City Treasurer of a more complete and reliable one. By neglecting to do
so, he was aware of the chances he was taking should notices be sent to him by the Treasurers Office. Instead, he maintained
the terse address of "Butuan City."

In contrast, the Treasurers Office cannot be faulted for not sending the notices to Solomon Torrados address at No. 20 North
Road, Cubao, Quezon City, which was indicated in his tax declarations to his other properties. As discussed, the last paragraph
of Section 73 instructs the treasurer on where to send the notice of sale: either at the address as shown in the tax rolls or
property tax record cards of the municipality or city where the property is located or at his residence, if known to such
treasurer or barrio captain. Petitioner Heirs have not shown that the City Treasurer or

barrio captain actually knew that Solomon Torrados residence was No. 20 North Road, Cubao, Quezon City. Therefore, the City
Treasurer could not be blamed for having mailed the notices to the address shown in the tax records, which was in conformity
with Section 73.

In disposing of these two issues, there is no further need to discuss the issues of estoppel and good faith.

WHEREFORE, both petitions are DENIED and the decisions of the Court of Appeals in CA-G.R. CV Nos. 37487 and 49241
are AFFIRMED. No costs.

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 169251 December 20, 2006

DEMIE L. URIARTE, petitioner,


vs.
PEOPLE OF THE PHILIPPINES, respondent.

DECISION

CALLEJO, SR., J.:

This is a Petition for Review on Certiorari of the Decision1 of the Sandiganbayan in A.R. No. 058 and its Resolution2 denying the
motion for partial reconsideration thereof. The assailed decision affirmed with modification the Decision 3 of the Regional Trial
Court (RTC) of Cantilan, Surigao del Sur, Branch 41, convicting petitioner Demie L. Uriarte for violation of Section 3(e),
Republic Act (R.A.) No. 3019.

Petitioner was the Municipal Assessor of the Municipality of Carrascal, Surigao del Sur. In 1948, Joventino Correos declared for
taxation purposes a .9434-hectare parcel of land under Tax Declaration (TD) No. 3352.4The pertinent entries read:
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 123
Location: Batong, Carrascal, Surigao

Area: .9434 hectares

Boundaries:

North: Carrascal River;

South: Maximo Leva and Botong Rill;

East: Botong Creek;

West: Carrascal River

In 1974, TD No. 3352 was cancelled by TD No. 5249.5 In 1980, the previous tax declaration was "revised" by TD No.
116,6 where the entry pertaining to the location of the property was changed from "Batong, Carrascal, Surigao del Sur" to "(S)
Botong, (B) Doyos, Carrascal, Surigao del Sur." In 1985, TD No. 116 was cancelled by TD No. 121, 7 where the boundaries of the
property were also changed, as follows:

Boundaries:

North: Carrascal River

South: Botong Rill

East: Botong Creek

West: Antioco Uriarte

TD No. 121 thus contained significant "revisions." The subsequent tax declarations, however, no longer contained alterations:
TD No. 1328 which canceled T.D. No. 121; ARP No. 93-08-003449 in 1994; and ARP No. 96-08-0034910 in 1997. However, in
ARP No. 96-08-0032811 filed in 2000, the entries in the original tax declarationTD No. 3352were restored.

Meantime, in 1954, Antioco Uriarte, petitioner's father, declared a two-hectare lot for taxation purposes under TD No.
4642.12 The pertinent entries are the following:

Area: 2 hectares

Location: Doot, Poblacion, Carrascal, Surigao

Boundaries:

North: Carrascal River;

South: Maximo Leva;

East: Botong Rill;

West: Maximo Leva and Carrascal River

In 1974, TD No. 4642 was canceled by TD No. 1534,13 and the entries regarding the boundaries of the property were also
altered.14 In 1980, TD No. 1534 was cancelled by TD No. 243,15 where "Embarcadero" was inserted on the entry pertaining to
the location of the property. In 1985 TD No. 243 was canceled by TD No. 247. 16 This time, the area of the property was
changed from two (2) to three (3) hectares, and the boundary in the east became "Joventino Correos." The subsequent tax
declarations, TD No. 27017 which canceled TD No. 247 and ARP No. 96-09-0029018 effective 1997, did not contain any further
alterations. Thus, the "boundaries" of the lot became

North: Carrascal River;

South: Pantaleon Cervantes;

East: Joventino Correos;

West: Maximo Leva

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 124
The above alterations were allegedly committed by petitioner when she was the Municipal Assessor and Deputy Provincial
Assessor of Carrascal, Surigao del Sur. On May 21, 1999, Evelyn Arpilleda, through counsel, sent a letter 19 informing petitioner
of the alterations that had been made on the tax declarations of her predecessor, Joventino Correos. She requested that the
"erroneous and prejudicial entries" be rectified.

Petitioner complied with the request. Thus, in ARP No. 96-08-00328, the original entries were restored.

On July 5, 1999, Arpilleda, through counsel, sent a letter20 to the Office of the Ombudsman (Mindanao) stating the alleged
unlawful acts of petitioner in altering the tax declarations of Joventino Correos and Antioco Uriarte. It was alleged that the
alterations prejudiced her since they became the basis of petitioner's "forceful and unlawful possession" of the subject
property.

The Office of the Ombudsman requested Arpilleda to formalize the charges.21 She later complied by filing a Sworn
Complaint22 dated August 19, 1999. Petitioner filed his Counter-Affidavit,23 to which Arpilleda filed her Reply-Affidavit24 on
October 28, 1999.

The Office of the Ombudsman-Mindanao later filed an Information25 dated November 24, 1999 before the RTC26of Tandag,
Surigao del Sur against petitioner for violation of Section 3(e), R.A. 3019.

On December 15, 1999, the Administrative Officer of the Office of the Provincial Prosecutor of Tandag, Surigao del Sur
forwarded27 the entire case record to the RTC of Cantilan, Surigao del Sur, Branch 41.

On March 13, 2000, private complainant, through counsel, filed a Motion to Suspend Pendente Lite, 28 alleging that the
immediate suspension of petitioner is proper in view of the provisions of R.A. 3019 and existing jurisprudence.29

Petitioner was arraigned on March 14, 2000, and pleaded not guilty. On even date, the trial court ordered 30 his preventive
suspension.

The case was then set for pre-trial and the parties submitted their respective pre-trial briefs. On June 15, 2000, petitioner filed
a Motion to Lift Order of Preventive Suspension,31 pointing out that he had already served three months' suspension. The trial
court granted the motion on June 16, 2000.32

On October 2, 2000, petitioner filed a Motion to Quash the Information. 33 He claimed that the trial court did not acquire
jurisdiction over the case because in the first place, the special prosecution officer of the Office of the Ombudsman-Mindanao
had no authority to file the information. To support his claim, petitioner cited Uy v. Sandiganbayan,34 where it was held that
the authority to file the corresponding information before the RTC rests in the prosecutor, not the Ombudsman, and that the
latter exercises prosecutorial powers only in cases cognizable by the Sandiganbayan. The trial court provisionally
dismissed35 the case and ordered the cancellation of petitioner's bail bond.

On July 12, 2001, the private prosecutor moved to reinstate the case, 36 claiming that the Supreme Court likewise declared in a
Resolution in Uy v. Sandiganbayan37 that the Ombudsman is clothed with authority to conduct preliminary investigation, and
to prosecute all criminal cases involving public employeesnot only those involving public officers within the jurisdiction of
the Sandiganbayan but also those within the jurisdiction of the regular courts.

On November 6, 2001, the trial court ordered the case reinstated. Since the bail bond of petitioner had been cancelled, the trial
court further ordered the issuance of a warrant of arrest. Petitioner posted bail.

Private complainant filed a Reservation to File Civil Action 38 which the trial court granted in an Order39 dated March 15, 2002.
She likewise filed a Manifestation and/or Motion for Inhibition,40 which was however denied in an Order41 dated July 3, 2002.

Trial on the merits ensued, and the prosecution presented the following witnesses: private complainant Arpilleda, who
testified that petitioner, as Municipal Assessor, took advantage of his position and caused changes in the location and
boundaries of various tax declarations of Joventino Correos and Antioco Uriarte, and that these changes were designed to
promote petitioner's own interest, thus causing damage and prejudice to her and her co-heirs;42 Tremy Correos who
corroborated private complainant's testimony, specifically on the damage they sustained when petitioner evicted them from
the land they had been occupying;43 Richard Paniamogan who, as barangay captain of Embarcadero, issued a certification that
Botong is located in that barangay and testified thereon;44 Charmelinda A. Yaez, then the provincial assessor who testified on
the limitations of the powers of the municipal assessor;45 SPO2 Saturnino Cubero, whose testimony was, however, dispensed
with in view of the parties' admission of the copy of the police blotter on the alleged eviction of private complainant and her
co-heirs from the lot;46 and Carlito A. Ladroma who likewise testified that Botong is part of barangay Embarcadero. 47

On the other hand, the defense presented four (4) witnesses, namely: Leovino Constantino, an employee of the Department of
Environment and Natural Resources who testified that the land covered by the subject tax declarations had not been surveyed
and no title had been issued by the City Environment and Natural Resources Office; 48 Florida Coma who was once the
barangay captain of Barangay Embarcadero and testified that Sitio or Purok Doot, Pelong belongs to Barangay Embarcadero,
while Botong belongs to Barangay Doyos;49 and Gaudiosa Tolentino who testified on the creation of barangays Embarcadero
and Doyos as well as the existingsitios.50

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 125
Petitioner, for his part, admitted that he had made changes on the tax declarations. He however justified the changes, stating
that they were the result of the general revision made in 1978. He also claimed that as municipal assessor, he has absolute
authority to determine the barangay to which a particular property belongs. He further asserted that the prosecution failed to
cite any law that prohibits a municipal assessor from making revisions on (a) the location of the property according
to barangay; (b) the names of the adjoining owner; or (c) the boundaries of the property. Petitioner likewise insisted that the
case is civil and not criminal in nature.51

Petitioner filed a Motion for Leave to file Demurrer to Evidence52 dated June 25, 2003. However, the trial court denied the
motion in its Order53 dated August 1, 2003.

After the parties rested their respective cases, the RTC, on April 29, 2004, rendered a decision 54 convicting petitioner of
violating Section 3(e) of R.A. 3019. The fallo reads:

WHEREFORE, premises considered, this Court finds DEMIE URIARTE Y LIMGUANGCO, Municipal Assessor of
Carrascal, Surigao del Sur, GUILTY BEYOND REASONABLE DOUBT as principal for violation of Section 3, paragraph (e)
of Republic Act 3019, as amended, otherwise known as the Anti-Graft and Corrupt Practices Act and applying the
Indeterminate Sentence Law, this Court imposes upon the accused the penalty of imprisonment ranging from SIX (6)
YEARS and ONE (1) MONTH to TEN (10) YEARS and ONE (1) DAY; perpetual disqualification from holding public
office and forfeiture of all retirement benefits or gratuity benefits under any law and in the event that such convicted
officer, who may have already been separated from the service, has already received such benefits shall be liable to
restitute the same to the government.

The bail bond put up by the accused for his temporary liberty is ordered cancelled. Accused shall serve his sentence at
the Davao Prison and Penal Farm, Panabo City, Davao del Norte pursuant to Circular No. 63-97 of the Supreme Court
dated October 6, 1997.

To pay the cost.

SO ORDERED.55

On April 29, 2004, petitioner filed a Notice of Appeal56 to the Court of Appeals (CA), which was later withdrawn.57On May 6,
2004, petitioner filed a Notice of Appeal 58 before the Sandiganbayan on the following grounds:

I.

THE TRIAL COURT ERRED IN CONVICTING DEMIE L. URIARTE FOR VIOLATION OF SEC. 3(E) OF R.A. 3019 UNDER
THE INFORMATION THAT DOES NOT CHARGED (SIC) SUCH AN OFFENSE.

II.

EVEN ASSUMING FOR THE SAKE OF ARGUMENT (THAT) THE INFORMATION CHARGES THE OFFENSE OF
VIOLATION OF SEC. 3 (E) OF R.A. 3019, STILL, THE TRIAL COURT COMMITTED GRAVE AND REVERSIBLE ERROR IN
CONVICTING THE ACCUSED BASED ON FACTS NOT ALLEGED IN THE INFORMATION AND NOT SUPPORTED BY
EVIDENCE.

III.

ASSUMING FURTHER THAT THE INFORMATION CHARGED VIOLATION OF SEC. 3 (E) OF R.A. 3019, AGAIN, THE
TRIAL COURT SERIOUSLY ERRED AND ACTED WITH GRAVE ABUSE OF DISCRETION TANTAMOUNT TO LACK OR IN
EXCESS OF JURISDICTION IN CONVICTING THE ACCUSED NOTWITHSTANDING THE FAILURE OF THE PROSECUTION
TO SPECIFY, QUANTIFY AND PROVE THE ELEMENT OF "UNDUE INJURY" PURSUANT TO THE RULING OF THE
SUPREME COURT IN LLORENTE V. SANDIGANAYAN (SIC) [G.R. NO. 122166. MARCH 11, 1998].

IV.

THE TRIAL COURT ERRED IN NOT ACQUITTING THE ACCUSED FOR FAILURE OF THE PROSECUTION TO PRESENT
CLEAR AND CONVINCING EVIDENCE TO OVERCOME THE LEGAL PRESUMPTION OF REGULARITY IN THE
PERFORMANCE OF HIS OFFICIAL DUTIES AND FUNCTIONS AS MUNICIPAL ASSESSOR. 59

Petitioner averred that the prosecution failed to allege in the information any prohibited act which he had committed in the
performance of his official duties or in relation to his public position. He further averred that no mention was made of the
injury caused to any party, which is essential in a charge under Section 3(e), R.A. 3019; this violated his constitutional right to
be informed of the accusation against him.60 Petitioner also claimed that the RTC erred in concluding that he had intended to
dispossess private complainant of their property, since this was not alleged in the information. 61 He pointed out that private
complainant could not prove, much less impute, any undue injury because the original entries in the tax declarations had
already been restored. He also invoked the presumption of regularity in the performance of his official function as an
additional ground.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 126
On April 15, 2005, the Sandiganbayan affirmed with modification the decision of the RTC. 62 The fallo reads:

WHEREFORE, in the light of all the foregoing, this Court hereby finds no cogent reason to disturb or reverse, and
therefore AFFIRMS, the findings and conclusion of the trial court, with modification of the imposable penalty, such
that the accused is hereby sentenced to suffer the penalty of imprisonment ranging from SIX (6) YEARS and ONE (1)
MONTH to TEN (10) YEARS and ONE (1) DAY and perpetual disqualification from holding public office. The clause
"and forfeiture of all retirement benefits or gratuity benefits under any law and in the event that such convicted
officer, who may have already been separated from the service, has already received such benefits shall be liable to
restitute the same to the government" is hereby ordered deleted.

SO ORDERED.63

The anti-graft court held that all the elements of violation of the offense had been alleged in the information; the allegation that
the appellant willfully changed the location and boundaries of the subject properties was the prohibited act, while the element
of undue injury was alleged in the phrase "to the damage and prejudice of the said heirs." The facts that had not been alleged in
the information were evidentiary matters.

As to the prosecution's alleged failure to specify the element of undue injury, the anti-graft court held that the injury caused by
petitioner was not in terms of money but, on the part of private complainant, the deprivation of three-fourths of her property.
Lastly, the court held that under the General Instructions Governing the Conduct and Procedures in the General Revision of
Real Property Assessment,64 the municipal assessor had no discretion to change the entries in tax declarations. Moreover, the
failure of petitioner to notify Joventino Correos of the changes in the entries defies the provision therein that owners should
participate in the revision. Lastly, the presumption of regularity has been overcome by petitioner's unilateral act of restoring
the original boundaries and location of the property owned by Joventino Correos.

Petitioner comes before this Court on the following issues:

I. CAN AN ACCUSED BE CONVICTED UNDER AN INFORMATION THAT CHARGES AN OFFENSE WHICH THE COURT
ADMITTED THE PROSECUTION FAILED TO PROVE AS A VIOLATION OF ANY LAW?

II. CAN AN ACCUSED BE CONVICTED OF VIOLATION OF SEC. 3 (E) OF R.A. 3019 BASED ON CONCLUSION OF FACTS
MADE BY THE TRIAL COURT THAT HE COMMITTED LANDGRABBING AND/OR DISPOSSESSING THE COMPLAINANT
OF HER PROPERTY, WHICH OFFENSES WERE NOT CHARGED IN THE INFORMATION? 65

The resolution of the issues raised by petitioner hinges on the interpretation of the elements of the crime of violation of
Section 3(e), R.A. 3019, in relation to the facts alleged in the information and those proven during trial. The provision reads:

Section 3. Corrupt practices of public officers. In addition to acts or omissions of public officers already penalized by
existing law, the following shall constitute corrupt practices of any public officer and are hereby declared to be
unlawful.

xxxx

(e) Causing any undue injury to any party, including the Government, or giving any private party any unwarranted
benefits, advantage or preference in the discharge of his official, administrative or judicial functions through manifest
partiality, evident bad faith or gross inexcusable negligence. This provision shall apply to officers and employees of
offices or government corporations charged with the grant of licenses or permits or other concessions.

The essential elements of this crime have been enumerated in several cases66 decided by this Court, as follows:

1. The accused must be a public officer discharging administrative, judicial or official functions;

2. He must have acted with manifest partiality, evident bad faith or inexcusable negligence; and

3. That his action caused any undue injury to any party, including the government, or giving any private party
unwarranted benefits, advantage or preference in the discharge of his functions.

A perusal of the Information filed against petitioner shows that all these elements were sufficiently alleged, as correctly ruled
upon by both the RTC and Sandiganbayan. The accusatory portion of the Information reads:

That in 1993, and sometime prior or subsequent thereto, at the Municipality of Carrascal, Surigao del Sur, Philippines,
and within the jurisdiction of this Honorable Court, the above-named accused DEMIE L. URIARTE, a public officer
being the Municipal Assessor of Carrascal, Surigao del Sur, while in the performance of his official functions,
committing the offense in relation to office, taking advantage of his position, acting with evident bad faith and
manifest partiality, did then and there willfully, unlawfully, and feloniously cause the change of the location and
boundaries of the property of one Joventino Correos as indicated in Tax Declaration (TD) Nos. 121 and 132 despite
knowing fully well that in the previously issued TD Nos. 3352 and 5249, of the same property state different location
and boundaries and also, cause the change of the location and boundaries of the property of his own father, Antioco
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 127
Uriarte, particularly, to make it appear that the property is adjacent to the property of Joventino Correos, in order to
favor his own interest being an heir of Antioco Uriarte and occupant of the land subject of the application of the heirs
of Joventino Correos, to the damage and prejudice of the said heirs.

CONTRARY TO LAW.67

Section 3(e) of R.A. 3019 may be committed either by dolo, as when the accused acted with evident bad faith or manifest
partiality, or by culpa as when the accused committed gross inexcusable negligence. There is "manifest partiality" when there
is a clear, notorious or plain inclination or predilection to favor one side or person rather than another. 68 "Evident bad faith"
connotes not only bad judgment but also palpably and patently fraudulent and dishonest purpose to do moral obliquity or
conscious wrongdoing for some perverse motive or ill will.69 It contemplates a state of mind affirmatively operating with
furtive design or with some motive or self-interest or ill will or for ulterior purposes.70 "Gross inexcusable negligence" refers
to negligence characterized by the want of even the slightest care, acting or omitting to act in a situation where there is a duty
to act, not inadvertently but willfully and intentionally, with conscious indifference to consequences insofar as other persons
may be affected.71

From the evidence adduced by the parties, petitioner indeed acted with evident bad faith in making the alteration on the
entries in the tax declarations of both Joventino Correos and Antioco Uriarte. The fact of alteration is shown not only in the tax
declarations presented in evidence; petitioner also admitted that he made the alterations himself. Petitioner even attempted to
justify his act by stating that such changes were made pursuant to the General Instructions issued in 1978 for the general
revision of tax declarations, and that he was authorized to make the alterations because municipal assessors were mandated
to identify the properties according to the barangay where the property is located. Petitioner likewise justified his act of
changing the boundaries of the property covered by the tax declarations of Joventino and Antioco because of the alleged
instruction that the boundaries should be designated using the name of the landowner.

Paragraph 28 of the General Instructions Governing the Conduct and Procedures in the General Revision of Real Property
Assessments72 provides:

28) The boundaries which will appear in the field sheets shall be the name of persons, streets, rivers or natural
boundaries adjoining the property subject of revision. The technical descriptions of the land to be revised should not
be written down on the field sheets, not only to follow the prescribed form but also to avoid additional or unnecessary
typing costs. Tax declarations are issued for taxation purposes and they are not titles to lands. In case boundary
conflict arises, the parties can refer to the titles. 73

Thus, contrary to petitioner's contention that the boundaries should be designated only according to the names of persons, the
provision clearly allows the streets, rivers, and natural boundaries of the property to be placed on the tax declarations.
Petitioner was aware of the consequences of altering the entries in the tax declarations, particularly in the untitled properties.
Petitioner's bad faith is further strengthened by the fact that he did not inform Joventino Correos or the private complainant of
the alterations, including his act of restoring the original entries in the tax declarations. Assuming for the sake of argument
that he was not motivated by ill will but merely committed a mistake in the interpretation of the wording of the Instructions,
petitioner's act is nevertheless unjustified. We cannot fathom why a municipal assessor would think that the boundaries of a
particular property should only be designated by persons' names. Even one of ordinary intelligence would know that a
property may be bounded by a street, a river, or a mountain. In any event, therefore, petitioner may still be considered guilty
of inexcusable negligence.

Petitioner contends that due to the prosecution's failure to cite any law that prohibits the municipal assessor from altering tax
declarations, the presumption is that he regularly performed his official duties. However, the very Instructions petitioner
relies upon to justify his acts outlines the limitations on the authority of municipal assessors to revise tax declarations.
Paragrah 27 provides:

27) Utmost care should be taken that the full christian and surname appearing in the existing 1978 tax declaration
must exactly be the same christian and surname which has to be carried forward to the field sheets. For obvious
reasons, no transfer or change of ownership of real property be made by assessors or appraisers in the process of general
revision. The primary purpose of general revision is not to transfer or change ownership of property from one person
to another during the period of revision but to update or upgrade property values for real property taxation purposes.
However, real property declared for the first time shall be appraised and assessed for taxation purposes. Lands
declared for the first time shall be accepted provided the declaration is supported by corresponding certification of
the Bureau of Forest Development and the Bureau of Lands that the land so declared is in the alienable or disposable
area (emphasis supplied).

The third element provides for the modalities in which the crime may be committed, namely: (a) by causing undue injury to
any party, including the Government; or (b) by giving any private party any unwarranted benefit, advantage or
preference.74 The use of the disjunctive term "or" connotes that either act qualifies as a violation of Sec. 3, par. (e), or as aptly
held in Santiago v. Garchitorena,75 as two (2) different modes of committing the offense. This does not, however, indicate that
each mode constitutes a distinct offense, rather, that an accused may be charged under either mode or under both.

We affirm the Sandiganbayan's finding that there was substantial compliance with the requirement. The wording of the
information shows that petitioner, in willfully changing the boundaries of the tax declarations of Joventino Correos and
Antioco Uriarte, both caused undue injury to private complainant and gave himself and his father unwarranted benefit. In

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 128
jurisprudence,76 "undue injury" is consistently interpreted as "actual damage." Undue has been defined as more than
necessary, not proper, or illegal; and injury as any wrong or damage done to another, either in his person, rights, reputation or
property, that is, the invasion of any legally protected interest of another. On the other hand, in Gallego v. Sandiganbayan,77 the
Court ruled that unwarranted means lacking adequate or official support; unjustified; unauthorized; or without justification or
adequate reasons. Advantage means a more favorable or improved position or condition; benefit or gain of any kind; benefit
from course of action. Preferencesignifies priority or higher evaluation or desirability; choice or estimation above another. 78

From the foregoing definitions, petitioner's act of altering the boundaries of the property in question as stated in the tax
declaration clearly falls under the very act punishable by Section 3(e), R.A. 3019.

It bears stressing that it is beyond the power of this Court to settle the issue of who, between petitioner and private
complainant, has the better right to own and possess the subject property. This Court has no jurisdiction over the issue, and
the evidence presented is not sufficient to make a definite determination of ownership. Suffice it to state that the alteration of
the entries in the subject tax declarations, especially on the boundaries of the property, caused undue injury to private
complainant as an heir of Joventino Correos. The alteration substantially changed the identity of the property. Considering that
the property in question was not titled and no survey had yet been conducted to settle the actual areas and boundaries of the
properties, the tax declarations constitute important evidence of the declarant's possession and ownership, though not
conclusive.

Indeed, the alterations made by petitioner are too substantial to ignore. It was made to appear that petitioner's property is
between the Carrascal River and that of the private complainant. In the original tax declaration, no such property existed. The
new entries in effect "lessened" the area of private complainant's property, which would have been evident had the lot been
surveyed. Moreover, the deletion of the entry "Maximo Leva" in the south boundary of Joventino Correos' property was also
prejudicial, since this alteration had the effect of deleting the property entirely.

Petitioner in fact admitted that while he declared that the subject property was in the name of Joventino Correos, he was in
possession thereof; he later stated that the property in his possession was declared for taxation in the name of his
father.79 From this testimony, it can be inferred that the identities of the properties in his possession, the lot in his father's
name and that declared under Joventino Correos' name, are not certain.

While tax declarations are indicia of a valid claim of ownership, they do not constitute conclusive evidence thereof. They
are prima facie proofs of ownership or possession of the property for which such taxes have been paid. Coupled with proof of
actual possession of the property, however, they may become the basis of a claim for ownership.80 Moreover, a person who
claims ownership of real property is duty bound to clearly identify the land being claimed in accordance with the document on
which he anchors his right of ownership. Proof of ownership together with identity of the land is the basic rule. 81

It must be stressed that the alterations made by petitioner compromised the identity of the private complainant's property.
The fact that petitioner restored the original entries in the tax declarations is of no moment; restoration of the entries in the
tax declaration is not one of those enumerated under Article 89 of the Revised Penal Code 82as one of the ways by which to
extinguish criminal liability. Article 89 of the Revised Penal Code applies in a suppletory character as provided for under
Article 1083 of the same Code.84

Lastly, petitioner avers that he cannot be convicted on the basis of the court's conclusion of land-grabbing and dispossession
as no such facts have been alleged in the information.

We do not agree. It is evident from the decisions of both the RTC and the Sandiganbayan that petitioner was charged and
convicted of violating Section 3(e), R.A. 3019; he was not civilly held liable for dispossession of property or eviction. The anti-
graft court correctly held that the finding of the RTC"that there was hidden intention on the part of the petitioner to grab and
dispossess private complainant from their property"was merely descriptive of how petitioner acted with evident bad faith.
There was thus no need for this matter to be alleged in the information.

It bears stressing that an information needs only to allege the acts or omissions complained of as constituting the offense. 85 It
must state only the relevant facts, since the reason therefor could be proved during the trial. 86 Thus, an allegation of evident
bad faith on the part of petitioner is sufficient. The trial court correctly found that petitioner's hidden intention to grab the
land of private complainant is a manifestation of evident bad faith, which need not be further alleged in the information.

The penalty for violation of Section 3(e) of R.A. 3019 is provided for in Section 9 of the law:

SECTION 9. Penalties for violations (a) Any public officer or private person committing any of the unlawful acts or omission
enumerated in Sections 3, 4, 5 and 6 of this Act shall be punished with imprisonment for not less than six years and one month
nor more than fifteen years, perpetual disqualification from public office, and confiscation or forfeiture in favor of the
Government of any prohibited interest and unexplained wealth manifestly out of proportion to his salary and other lawful
income.

Under the Indeterminate Sentence Law, if the offense is punished by special law, as in the present case, an indeterminate
penalty shall be imposed on the accused, the maximum term of which shall not exceed the maximum fixed by the law, and the
minimum not less than the minimum prescribed therein.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 129
In view of the circumstances obtaining in the instant case, the Sandiganbayan correctly imposed the indeterminate prison
term of six (6) years and one (1) month, as minimum, to ten (10) years and one (1) day, as maximum, with perpetual
disqualification from public office.

IN LIGHT OF ALL THE FOREGOING, the petition is hereby DENIED for lack of merit. The Decision of the Sandiganbayan dated
March 21, 2005 is AFFIRMED.

SO ORDERED.

FIRST DIVISION

[G.R. NO. 168396 : June 22, 2006]

MARCELINA V. ESPINO, For Herself And In Representation of Her Deceased Mother, EMERENCIANA V. ESPINO, and
Spouses FELIPE DE LOS SANTOS and MARISSA DE LOS SANTOS, Petitioners, v. Spouses RICARDO VICENTE and EMMA M.
VICENTE, Respondents.

DECISION

YNARES-SANTIAGO, J.:

This Petition for Review assails the Decision1 dated October 25, 2004 of the Court of Appeals in CA-G.R. CV No. 67640 which
set aside the October 25, 1999 Decision2 of the Regional Trial Court of Malolos, Bulacan, Branch 19, in Civil Case No. 431-M-97,
as well as the Resolution3 dated May 27, 2005 denying petitioners' motion for reconsideration.

The antecedent facts are as follows:

Emerenciana and Doroteo Espino, the parents of herein petitioner, Marcelina V. Espino, were the owners of two untitled
parcels of land denominated as Lots 1475 and 1476, situated in Bambang, Bulacan and covered by Tax Declaration Nos. 96-
05003-00447 and 96-05003-00449, respectively, with a total area of 134 square meters. On March 31, 1995, Emerenciana
sold to Marissa Delos Santos a 20-square meter undivided portion of Lot 1475 for P20,000.00.4

The crux of the controversy in this case arose from the execution by Emerenciana and Marcelina on January 9, 1997 of a
document, denominated as "Pagkakaloob," 5 purportedly donating Lots 1475 and 1476 to respondent Emma Vicente, the wife
of Ricardo Vicente, nephew of Emerenciana.

It appears that sometime in December 1996, Emma convinced Marcelina and Emerenciana that she could facilitate the
registration and titling in their name of the house and lot where they are staying. Emma allegedly asked Emerenciana and
Marcelina who are both illliterate to sign a document to be used in titling the property in their name.

Subsequently, Emerenciana and Marcelina learned that the document they signed was a Deed of Donation or a "Pagkakaloob,"
of the house and lot in favor of Emma, including the 20 square-meter portion that was earlier sold to Marissa. As a
consequence, when Emma filed an application for free patent with the DENR-PENRO Office of Malolos, Bulacan on January 13,
1997, Marissa filed an opposition with the DENR-PENRO and the Register of Deeds. On the other hand, Emerenciana and
Marcelina executed a Deed of Revocation of Donation or "Kasulatan ng Pagpapawalang Bisa sa Kasulatan ng
Pagkakaloob"6 dated April 14, 1997.

Petitioners then filed a petition7 for annulment of patent/title and reconveyance of real property with damages with the
Regional Trial Court of Malolos, Bulacan which was docketed as Civil Case No. 431-M-97 and raffled to Branch 19.

After due proceedings, the trial court rendered its decision, the dispositive portion of which provides:

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants as follows:

1. The "Pagkakaloob" Exhibit "E" of plaintiffs and Exhibit "1" of defendants is ordered ANNULLED and VOIDED by reason of
fraud;

2. Free Patent No. 031405-97-10063 issued by the DENR-PENRO of Malolos, Bulacan is declared by VOID AB INITIO;

3. Tax Declarations Nos. 96-05003-03502 & 03503 and 96-05003-03506 dated January 15, 1997 and January 21, 1997,
respectively, are declared VOID AB INITIO;

4. Ordering the defendants TO PAY PLAINTIFFS the sum of TEN THOUSAND (P10,000.00) PESOS as and by way of attorney's
fees; andcralawlibrary

5. Costs of suit.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 130
All other claims of plaintiffs and defendants' counterclaim are DENIED for lack of legal and factual basis.

SO ORDERED.8

Respondents appealed to the Court of Appeals which reversed the decision of the trial court and resolved the appeal as
follows:

WHEREFORE, the decision appealed from is SET ASIDE and the complaint is DISMISSED. The Register of Deeds for the
Province of Bulacan is directed to proceed with the registration of the property in the names of Marissa Delos Santos, as to an
undivided 20 square-meter portion of lot 1475, and of the Spouses Emma and Ricardo Vicente, as to the remainder of lots
1475 and 1476.

SO ORDERED.9

Hence the present petition.

The sole issue for resolution is whether the Court of Appeals erred in reversing the lower court's decision and concluding that
the assailed deed of donation enjoys the legal presumption of due execution and validity.

Petitioners contend that the Court of Appeals overlooked or disregarded certain factual findings of the trial court and that it
failed to accord due evidentiary weight upon certain undisputed facts.10

Petitioners would want us to rule on questions of fact in resolving the issue they raised before us, contrary to the settled rule
that only questions of law may be raised in a Petition for Review .

Prefatorily, we restate the time honored principle that in petitions for review under Rule 45 of the Rules of Court, only
questions of law may be raised. It is not our function to analyze or weigh all over again evidence already considered in the
proceedings below, our jurisdiction being limited to reviewing only errors of law that may have been committed by the lower
court. The resolution of factual issues is the function of the lower courts, whose findings on these matters are received with
respect. A question of law which we may pass upon must not involve an examination of the probative value of the evidence
presented by the litigants.11

However, this rule is not iron-clad. We have consistently recognized several exceptional circumstances where we disregarded
the aforesaid tenet and proceeded to review the findings of facts of the lower court such as: (1) when the conclusion is a
finding grounded entirely on speculations, surmises or conjectures; (2) when the inference is manifestly absurd, mistaken or
impossible; (3) when there is grave abuse of discretion in the appreciation of facts; (4) when the judgment is premised on a
misapprehension of facts; (5) when the findings of facts are conflicting; (6) when the Court of Appeals in making its findings,
went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee; (7) when the
Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties and which, if properly considered,
would justify a different conclusion; and (8) when the findings of fact of the Court of Appeals are contrary to those of the trial
court or are mere conclusions without citation of specific evidence, or where the facts set forth by the petitioner are not
disputed by the respondent, or where the findings of fact of the Court of Appeals are premised on absence of evidence but are
contradicted by the evidence on record.12

Considering the conflict in the factual findings of the Regional Trial Court and of the Court of Appeals, we rule on the factual
issues as an exception to the general rule.

The petition is impressed with merit.

A donation is an act of liberality whereby a person disposes gratuitously a thing or right in favor of another, who accepts
it.13 Like any other contract, an agreement of the parties is essential. Consent in contracts presupposes the following
requisites: (1) it should be intelligent or with an exact notion of the matter to which it refers; (2) it should be free, and (3) it
should be spontaneous.14 The parties' intention must be clear and the attendance of a vice of consent, like any contract,
renders the donation voidable.15

For the petitioners, the vice of consent which attended the execution of the Pagkakaloob or the deed of donation came in the
form of the fraud allegedly perpetrated by Emma in securing the signatures of Emerenciana and Marcelina. During her direct
examination, Marcelina categorically testified that her signature and that of her deceased mother, Emerenciana, were
procured by Emma through fraud and misrepresentation, thus:

Atty. Cruz:

Q: Going Back to January, 1997 when you said defendant Emma Vicente came to your house and told you and your mother that
she will assist you in transferring and registering that property in question, do you remember if there was a document or
kasulatan that she requested you to sign?cralawlibrary

Marcelina Espino:

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 131
There is, sir.

Court: What was your agreement with this Emma Vicente when she went to your house on (sic) January, 1997?cralawlibrary

A: According to her, she will help in the transferring of the property under my name, Your Honor.

Q: Why, what is the status of this property? Was is not yet titled?cralawlibrary

A: Not yet, Your Honor.

Atty. Cruz:

When Emma Vicente told you that she will help and you said she requested you to sign, do you know what document that she
requested you to sign?cralawlibrary

A: That sheet sir. She said she is going to transfer that property under my name.

Q: Was the document that you signed, the contents of that document, was it explained to you before you signed?cralawlibrary

A: Yes, sir.

Q: How was it explained to you, if you know?cralawlibrary

Atty. Tansinsin, Jr.:

No, because. . .

Court: Answer.

A: According to her, I should trust her because she will not fool me, Your Honor.

Atty. Cruz:

Do you know how to read?cralawlibrary

A: No, sir.

Atty. Cruz:

What was your educational attainment?cralawlibrary

A: Grade VI, sir.

Court: But surely you must know how to read Tagalog?cralawlibrary

A: No, Your Honor.

Court: Until now?cralawlibrary

A: No, your honor.

Atty. Cruz:

The explanation made to you by Emma Vicente about the document that you were requested to sign is that it will be used to
transfer the property in your name?cralawlibrary

Atty. Tansinsin, Jr.:

There is no document yet, Your Honor.

Atty. Cruz:

That is why I laid the basis, Your Honor.

Court: Answer.
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 132
A: Yes, Your Honor.16

It becomes evident from the foregoing that Marcelina and Emerenciana, contrary to the allegations of the respondents, never
intended to donate the subject property. Thus, the liberality that necessarily attends every gratuitous disposition is absent in
this case. In addition, the act of Marcelina and Emerenciana of executing the Kasulatan ng Pagwawalang Bisa sa Kasulatan ng
Pagkakaloob17 after discovering that the respondents have sought the issuance of a free patent over the subject property
supports the allegation that the intent to donate the subject property was never present as far as Marcelina and Emerenciana
are concerned.

It is also evident that fraud attended the act of respondent Emma when she procured the signatures of Marcelina and
Emerenciana. There is fraud when, through insidious words or machinations of one of the contracting parties, the other is
induced to enter into a contract which, without them, he would not have agreed to. 18 Moreover, when one of the parties is
unable to read, as in this case, or if the contract is in a language not understood by him, and mistake or fraud is alleged, the
person enforcing the contract must show that the terms thereof have been fully explained to the former. 19We have scoured the
records of this case and we found no proof that the respondents discharged their legal duty of explaining to Marcelina, who
testified that she and her mother were illiterate, the terms of the instrument.

The fraud perpetrated upon Marcelina and Emerenciana having been clearly established, the lower court was correct in
annulling and voiding the Pagkakaloob. As the trial court ratiocinated:

Pitted against Marcelina's categorical denial and clear repudiation of the "Pagkakaloob", defendants could only offer the
testimony of their son Emerick Vicente who was not even present during the execution of the questioned document, Exh. "A"
of the plaintiffs. The central figure of the controversy Emma Vicente deliberately chose to waive her presence much less did
she testify in Court to rebut the testimony of Marcelina. Her failure to testify is evidence against the defendants. Neither did
the defendants present the witnesses to the "Pagkakaloob" nor the Notary Public, Atty. Cresenciano Santiago, so they could
have controverted and refuted the repudiation made by Marcelina Espino. This failure is evidence against the defendants. x x
x.20

The Court of Appeals anchored its assailed pronouncements on the fact that the Pagkakaloob was notarized. While it is true
that deeds which have been notarized are presumed to have been duly executed, this presumption of regularity can be
rebutted by clear and convincing evidence as in this case. As earlier stated, the due execution of the Pagkakaloob suffered from
infirmities which derogate from the presumption of regularity that notarization attaches to it. Further, Marcelina testified that
she never appeared before Cresenciano C. Santiago who allegedly notarized the Pagkakaloob.

Anent the weight accorded by the Court of Appeals to the tax declarations in the names of the respondents and the realty tax
receipts, we hold that while it is true that tax declarations and tax receipts are good indicia of possession in the concept of an
owner, the same must be accompanied by possession for a period sufficient for prescription. By themselves, tax declarations
and tax receipts do not conclusively prove ownership.21 We have reviewed the records of this case and we find that even at the
time of the filing of the application by respondent Emma Vicente for the issuance of a free patent over the subject property, the
person occupying the same was Emerenciana Espino. Ireneo Guballa, a Public Land Inspector/Investigator of the CENRO, and a
disinterested third party, testified that Emerenciana and Marcelina were the occupants of the property prior to and at the time
that he conducted the ocular inspection on the premises.22

WHEREFORE, the petition is GRANTED. The assailed Decision dated October 25, 2004 and the May 27, 2005 Resolution of the
Court of Appeals in CA-G.R. CV No. 67640 are ANNULED and SET ASIDE. The October 25, 1999 Decision of the Regional Trial
Court of Malolos, Bulacan, Branch 19 in Civil Case No. 431-M-97 ordering the annulment of the "Pagkakaloob" for being null
and void, declaring Tax Declaration Nos. 96-05003-03502 and 03503 and 96-05003-03506 void ab initio, declaring Free
Patent No. 031405-97-10063 void ab initio and ordering herein respondent to pay P10,000.00 to the petitioners as attorney's
fees, is REINSTATED.

SO ORDERED.

FIRST DIVISION

RURAL BANK OF SIATON, G.R. No. 152483


(NEGROS ORIENTAL), INC.,
Petitioner, Present:
Panganiban, C.J. (Chairperson),
- versus - Ynares-Santiago,

Austria-Martinez,

Callejo, Sr., and

Chico-Nazario, JJ.

FELIX MACAJILOS and

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 133
QUIRICO MACAJILOS, JR., Promulgated:

Respondents.

July 14, 2006

x ---------------------------------------------------------------------------------------- x

DECISION

YNARES-SANTIAGO, J.:

This petition for review on certiorari assails the April 18, 2001 Decision [1] of the Court of Appeals in CA-G.R. CV No.
51290, which affirmed the July 12, 1995 Decision[2] of the Regional Trial Court of Negros Oriental, Dumaguete City, Branch 39
in Civil Case No. 9049, and the November 12, 2001 Resolution[3] denying petitioner Rural Bank of Siaton, Inc.s (RBSI) motion
for reconsideration.

The controversy arose from the complaint for removal of cloud over title to and/or recovery of real property and
damages filed by Felix Macajilos and Quirico Macajilos, Jr. (Macajilos) against RBSI and Fidela Macalipay (Fidela) on July 27,
1987.

In their complaint,[4] Macajilos alleged that they are the children of the late Gregoria Macalipay Macajilos who during
her lifetime owned and possessed a parcel of residential land situated at Poblacion, Siaton, Negros Oriental with an area of 441
square meters; that upon Gregorias death on July 25, 1959, Macajilos inherited the subject property as compulsory heirs of
Gregoria, their father Quirico Macajilos, Sr. having predeceased Gregoria; that in 1975, Macajilos allowed Juanito Macalipay, a
nephew of Gregoria to build a house on the subject property where he lived together with his wife Fidela, and their son,
Lamberto; that Fidela and Lamberto continued to live in the house even after the death of Juanito; that on February 12, 1975,
Fidela executed an Affidavit of Heirship before a Notary Public at Dumaguete City falsely claiming to be the sole heir of
Gregoria Macalipay and adjudicating to herself the subject property; that the tax declaration in the name of Gregoria Macalipay
was cancelled and transferred to the name of Fidela under Tax Declaration No. 022478; that Lamberto was the manager of
RBSI when Fidela obtained a loan using as collateral the subject property; that Fidela defaulted thus the subject property was
foreclosed and sold at public auction with RBSI as the only and highest bidder; that Fidela failed to redeem the property thus
RBSI was able to transfer the tax declaration to its name; that Macajilos have always been in actual possession under claim of
ownership of the subject property from the time of their mothers death up to the present; that RBSI knew that Fidela did not
own the subject property; that Macajilos filed a criminal case for estafa through falsification of public document (Criminal Case
No. 9096 before the Municipal Trial Court in Cities, Dumaguete City, Branch I) against Fidela and Lamberto immediately upon
discovery of the foreclosure sale; thatin her counter affidavit in the preliminary investigation of that criminal case, Fidela
denied that she signed the Affidavit of Heirship.

In its answer,[5] RBSI claimed it considered Fidela to be the owner of the subject property as she was in actual physical
possession thereof when she applied for a loan; that Macajilos maliciously built a house on the subject property pretending to
be the owners thereof; that, if they owned the subject property, they are already in estoppel since the mortgage document was

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 134
duly registered with the Register of Deeds and they have constructive notice thereof; that the extrajudicial foreclosure and the
public auction proceedings were duly published and that the Sheriffs Certificate of Sale in favor of RBSI and the final deed of
sale were registered with the Register of Deeds of the Province of Negros Oriental.

On the other hand, Fidela averred in her answer [6] that the property belonged to her late husband, Juanito Macalipay; that she
lacks formal education and anything she did was the work of her son, Lamberto, who was at the time the manager of RBSI.

After trial, the trial court found in favor of Macajilos, thus:

WHEREFORE, on the basis of the foregoing discussion, judgment is hereby rendered:

1. Declaring the foreclosure of the mortgaged property null and void ab initio;

2. Declaring [Macajilos] the rightful owners of the land subject matter of this case;

3. Ordering the Provincial Assessors Office to cancel Tax Dec. No. 022478 in the name of Fidela Macalipay and
issue another Tax Declaration in the name of Felix Macajilos and Quirico Macajilos covering the same
property;

4. Ordering the Rural Bank of Siaton, Inc. to immediately release from mortgage the land covered by Tax Dec.
022478 in the name of Fidela Macalipay; and

5. Ordering the Rural Bank of Siaton, Inc. to pay [Macajilos] the following:

a. P10,000.00 as moral damages;

b. P10,000.00 as exemplary damages;

c. P5,000.00 as attorneys fees; and

d. costs of the suit.

SO ORDERED.[7]

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 135
The trial court noted that RBSI failed to ascertain whether Fidela was the lawful owner of the property being
mortgaged. Rather, it relied on the tax declaration in Fidelas name and the Affidavit of Ownership and Possession that she
executed. No investigator inspected the premises. Thus, the trial court ruled that RBSI must suffer for its failure to investigate
and determine the lawful owner of the subject property who turned out to be Macajilos.

The Court of Appeals denied RBSIs appeal and affirmed the decision of the trial courtin toto. Hence, this petition.

The assigned errors revolve around four principal issues: (1) who between Macajilos and RBSI has a superior right
over the property, (2) assuming the Macajilos brothers have a better right, whether RBSI was a mortgagee-buyer in good faith
of the subject property, (3) assuming the Macajilos brothers have a better right, whether they are barred from recovering the
subject property due to estoppel and laches, and (4) whether the award of damages in favor of Macajilos was proper.

RBSI principally raises questions of fact that have been settled by the court a quo. As a general rule, questions of fact
are not covered by a petition for review under Rule 45 of the Rules of Court because it is limited to a review of errors of law
committed by the appellate court especially so in the case at bar where the findings of fact of the trial court and Court of
Appeals coincide and are, thus, binding on this Court. [8] However, RBSI claims that the instant case falls under recognized
exceptions to this general rule because the lower courts conclusions are grounded entirely on speculations, surmises or
conjectures,[9] and are based on a misapprehension of facts.[10]

After a review of the records, we rule that RBSI failed to impugn the ruling of the lowers courts on the main issue of
ownership over the subject property. However, the award of damages should be modified by deleting the award of exemplary
damages for lack of factual and legal bases.

Anent the first issue, RBSI contends that Fidela owned the mortgaged property based on her answer to the complaint where
she asserted that she inherited the subject property from her late husband, Juanito Macalipay. It argues that the lower courts
should not have given credence to the subsequent repudiation by Fidela of her ownership over the subject property during the
pre-trial conference as the same was done allegedly in exchange for her being dropped from the instant case.

The contention lacks merit.

To begin with, Fidela was not dropped from the case. During the hearing onApril 18, 1988, the trial court sought to
have Fidela dropped from the case considering her admission during the pre-trial conference that Macajilos owned the subject
property. However, counsel for Macajilos objected.[11] Consequently, Atty. Rosalinda Ybaez continued to represent Fidela
throughout the trial of this case.

Moreover, RBSI has failed to produce evidence to show that Fidelas admission was not freely and knowingly
given. While it is true that Fidela was no longer presented as a witness after the pre-trial conference for reasons not borne out
by the records, this does not necessarily mean that her repudiation of ownership over the subject property was prompted by
ill-will against RBSI. The pre-trial order datedDecember 2, 1987 reflected Fidelas admissions during the pre-trial conference:
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 136
2. Co-defendant Fidela Macalipays claims: that the property in question did really belong to
plaintiffs [herein respondents Macajilos brothers] by virtue of their rightful succession to the same; that it was
her own son, Lamberto Macalipay, who subsequently became an officer-in-charge as manager of co-defendant
Rural Bank of Siaton, who so maneuvered her into signing certain documents, in effect making her a debtor of
Rural Bank of Siaton, which circumstances were never explained to her by her son Lamberto Macalipay; and
that as a consequence of it, said Rural Bank of Siaton did grant a loan to her although the proceeds of said loan
only went into the hands of Lamberto Macalipay, her son; that Fidela Macalipay recognizes the fact that she
absolutely had nothing, and in fact still has nothing, to do with the property in question, the same propertys
ownership being always that of plaintiffs, which ownership she recognizes; [12] (Italics supplied)

Although the records do not contain the transcript during the pre-trial conference, it should be noted that on April 18,
1988, the trial court recalled the events that transpired during the pre-trial conference where Fidela freely and knowingly
acknowledged that Macajilos were the rightful owners of the subject property, thus:

COURT:

Then, what happened now[?] Did you convince Fidela that she was just a daughter-in law? In this
case, Fidela was a daughter-in-law of

Logronio:[13]

The first cousin of the plaintiffs.

COURT:

Fidela Macalipay whom you are representing is merely the daughter

Ybaez:[14]

Is the mother of Lamberto

COURT:

Wait a minute, is the wife of the plaintiffs cousin?

Ybaez:

Yes, your honor.

COURT:

And even her husband, the plaintiffs cousin, had nothing to do with this property, right?

Ybaez:

Yes, that is what the defendant

COURT:
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 137
And even your client, the co-defendant Fidela Macalipay, admits that it was only her son, Lamberto,
who soon became OIC

Logronio:

Who was the OIC at the time.

COURT:

Yes, who soon became the OIC of the Rural Bank who did something using Fidelas name. Is that
correct?

Logronio:

Yes, your honor.

xxxx

COURT:

But Fidela said, Yes, the plaintiff really owned this property, admitting it.

Ybaez:

Yes, your honor.

COURT:

What is the problem of this case now?

Logronio:

So, we have no more problem with Fidela, as far as ownership is concerned. Our target now is the
Rural Bank of Siaton who appears to have purchased this property and the foreclosure, and have it
transferred to their name and even threatening to eject the plaintiffs who are the real owners x x
x.[15](Emphasis supplied)

As regards Fidelas initial assertion of ownership over the subject property, we agree with the findings of the Court of
Appeals that the same should not be given weight. It bears stressing that only a thumb mark appears on top of her printed
name at the last page of her answer and the name of the lawyer who prepared the same was not even indicated. The records
also show that Fidelas answer was belatedly filed with the trial court. In her opposition[16] to the motion to have her declared
in default, there was a plea for understanding and a statement that the attached answer was prepared by an unnamed lawyer,
without being formally engaged, out of pity and compassion for Fidela who was an indigent. Thus, as between the allegations
in the answer which was merely thumbmarked by Fidela and prepared by an unknown lawyer, and her admissions in open
court with the assistance of her counsel of record, Atty. Rosalinda Ybaez, during the pre-trial conference of this case, the lower
courts correctly gave weight to the latter.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 138
At any rate, the lower courts finding that the subject property rightly belonged to Macajilos was not principally
grounded on Fidelas admission. Rather, this admission merely confirmed the undisputed documentary evidence which
showed Gregoria Macalipay as the owner of the subject property and the same passed on to her two sons upon her death. The
records show that Tax Declaration No. 858[17]covering the period prior to the year 1949,[18] Tax Declaration No. 13895[19] for
the year 1949, Tax Declaration No. 25864 [20] for the year 1969 and Tax Declaration No. 10651 [21] for the year 1974 over the
subject property were all in the name of Gregoria Macalipay. It is true that tax declarations or realty tax payments are not
conclusive evidence of ownership, however, they constitute good indicia of possession in the concept of owner and a claim of
title over the subject property.[22]Coupled with her uncontested actual possession of the subject property, these tax
declarations constitute strong evidence of ownership over the subject property by Gregoria Macalipay, [23] the mother of herein
respondents Macajilos.

The tax declarations in the name of Gregoria Macalipay takes on great significance because Fidela tacked her claim of
ownership to that of Gregoria Macalipay. In 1975, Fidela had Tax Declaration No. 10651 in the name of Gregoria Macalipay
cancelled through the execution of an Affidavit of Heirship where she claimed to be the sole heir of Gregoria Macalipay. Yet,
she was merely the wife of Juanito who was a nephew of Gregoria. Neither she nor Juanito could inherit from Gregoria whose
compulsory heirs are respondents Macajilos. Clearly, the Affidavit of Heirship was fraudulent and could never be Fidelas
source of ownership over the subject property. Neither could Tax Declaration No. 022478 in the name of Fidela and the
Affidavit of Ownership and Possession be the source of any derivative right of ownership of RBSI over the subject property
considering that these documents were the products of the aforementioned fraudulent scheme. Thus, the trial court correctly
ruled that the mortgage over the subject property and the foreclosure proceedings were a nullity, and that respondents
Macajilos brothers should be declared the lawful owners of the subject property.

We note that in its Memorandum,[24] RBSI contended, among others, that should this Court rule in favor of Macajilos, the
mortgage should be declared valid insofar as the one-half portion of the subject property is concerned, based on the alleged
admission by respondent Quirico Macajilos, Jr. on cross-examination that there was an oral settlement of the estate of Gregoria
Macalipay where respondents Macajilos brothers agreed that the subject property should be apportioned between respondent
Quirico Macajilos, Jr. and Fidela Macalipay.

This issue is being raised by RBSI for the first time on appeal and only belatedly in its memorandum before this Court. Well-
settled is the rule that points of law, theories, issues and arguments not adequately brought to the attention of the trial court
need not be, and ordinarily will not be, considered by a reviewing court as they cannot be raised for the first time on
appeal.[25] An issue which was neither averred in the complaint nor raised during the trial in the court below cannot be raised
for the first time on appeal as it would be offensive to the basic rules of fair play, justice and due process. [26] Thus, we cannot
bend backwards to examine this issue raised by RBSI at this late stage in the proceedings.

Be that as it may, even if we were to consider RBSIs new theory and, thus, assume that the aforementioned oral
settlement did take place, the relinquishment of respondent Felix Macajilos one-half share in the subject property in favor of

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 139
Fidela would amount to an oral donation of real property which, under Article 749 [27] of the Civil Code, is null and void.[28] This
void donation to Fidela did not ripen into ownership through acquisitive prescription because, as will be discussed in detail
shortly, RBSI was a mortgagee-buyer in bad faith. Only six years had elapsed from the auction sale to the filing of the instant
case, which is less than the required 30-year-period for extraordinary acquisitive prescription[29] to set in.

Anent the second issue, we agree with the trial court and the Court of Appeals that RBSI was a mortgagee-buyer in bad
faith. The subject property was mortgaged three times by Fidela to RBSI, to wit: in 1975 for P2,000.00, in 1976 for 10,000.00,
and in 1978 for P12,300.00. After fully paying the first two mortgage debts, Fidela failed to pay the third thus the property was
extrajudicially foreclosed and sold at public auction with RBSI as the only and highest bidder. However, in contracting the
aforesaid mortgages, RBSI failed to exercise the proper diligence in verifying the true owners of the subject
property. Certainly, a mortgagee is not expected to conduct an exhaustive investigation on the history of the mortgagors title
but RBSI, especially because it is a banking institution, must have at least exercised due diligence before entering into said
contract. Banks are expected to exercise more care and prudence than private individuals in their dealings because their
business is impressed with public interest.[30]

It is a standard practice for banks before approving a loan to send representatives to the premises of the land offered
as collateral and to investigate who are the real owners thereof. [31] However, in the case at bar, no investigator was sent to the
location of the subject property to verify the real owners thereof. Instead, RBSI relied solely on Tax Declaration No. 022478 in
the name of Fidela as well as the Affidavit of Possession and Ownership that RBSI required her to execute. [32] Atty. Teodoro
Singson, a witness for RBSI, explained that when RBSI was established in 1974, there was so much money coming from the
Central Bank that the bank was in a hurry to grant loans and was not strict with the documents presented by prospective
borrowers as collateral.[33]

What is more, Atty. Singson admitted that RBSI was aware that Tax Declaration No. 022478 in the name of Fidela was
previously in the name of Gregoria Macalipay and that the tax declaration was transferred to the name of Fidela through the
Affidavit of Heirship she executed naming her as the sole heir of Gregoria Macalipay. [34] However, it did not take steps to
ascertain whether Fidela was, indeed, the sole heir of Gregoria Macalipay. Rather, it placed full faith on the false representation
of Fidela that her husband, Juanito Macalipay, was the son of Gregoria Macalipay. [35] To make matters worse, neither did it
inquire from Lamberto, son of Fidela, who was then the manager of the bank when the first loan was granted to her in 1975, as
to whether his father, Juanito Macalipay, was the son of Gregoria Macalipay. [36]

As its defense, RBSI dwells on the alleged error of the trial court in finding Lamberto as the manager of RBSI when the
mortgage debts were contracted when in fact Lamberto was a mere clerk-typist. However, the records show that RBSI
categorically admitted during the pre-trial conference that Lamberto was the manager of the bank when the loan transactions
took place.[37] Even in its Reply[38] dated June 21, 2002 filed before this Court, RBSI admitted that Lamberto was the officer-in-
charge (OIC) of the bank prior to 1978 or when the first two mortgage debts were contracted by his mother, Fidela, and that
Lamberto was demoted to the rank of a clerk-typist only in 1978.[39]

At any rate, we need not belabor this point because whether Lamberto was an OIC or a mere clerk-typist of the bank
when the mortgage debts were contracted will not excuse RBSI from exercising prudence in verifying the true owners of the

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 140
subject property. The fact that Lamberto was the son of its prospective debtor, Fidela, should have prompted RBSI to be more
cautious in granting the loan.

Based on the foregoing, it is clear that RBSI chose to close its eyes to facts which should have put a reasonable man on
his guard.[40] Far from being prudent, RBSI hastily granted the loan without investigation, and placed full faith on the false
documents submitted by Fidela. Consequently, it cannot now claim that it acted in good faith on the belief that there was no
defect in the title of Fidela.

While the findings of the lower courts that RBSI was a mortgagee-buyer in bad faith is in accord with the evidence on record,
we must point out, however, that they overlooked the fact that the subject property is an unregistered piece of land. As we
ruled in David v. Bandin,[41] which was reiterated in Sales v. Court of Appeals,[42]the issue of good faith or bad faith of a buyer is
relevant only where the subject of the sale is a registered land but not where the property is an unregistered land. One who
purchases an unregistered land does so at his peril. His claim of having bought the land in good faith, i.e., without notice that
some other person has a right to, or interest in, the property, would not protect him if it turns out that the seller does not
actually own the property. Nevertheless, the application of this doctrine will not affect the outcome of this case. RBSI bought
the property during the auction sale at its own peril and must suffer the consequences of its failure to investigate the true
owners of the subject property who turned out to be respondents Macajilos brothers. Although the discussion on RBSIs bad
faith would now seem superfluous given the application of this doctrine, the finding of bad faith is still relevant in the
resolution of the last issue with respect to the award of damages.

Anent the third issue, we likewise agree with the findings of the Court of Appeals that respondent Macajilos brothers are not
barred by laches or estoppel from recovering the ownership of the subject property. They are not estopped from denying the
representations of Fidela that she owns the subject property because they were never privy to the loan agreements between
the bank and Fidela. The fact that the mortgages and subsequent foreclosure proceedings were duly registered with the
register of deeds will not cure their nullity because Fidela never owned the subject property.

Neither can respondent Macajilos brothers be said to have slept on their rights.Essentially, laches is the failure or
neglect, for an unreasonable and unexplained length of time, to do that which, by the exercise of due diligence, could or should
have been done earlier; it is negligence or omission to assert a right within a reasonable time, warranting a presumption that
the party entitled to assert it has either abandoned or declined to assert it. [43]

In the case at bar, respondents Macajilos brothers performed acts which showed their intent to assert their rightful
ownership over the subject property. Specifically, in 1980, respondent Quirico Macajilos, Jr. came across the notice of public
auction of the subject property in the public market.[44] Upon investigation with the provincial assessors office, he discovered
that Fidela had mortgaged the subject property to RBSI by transferring the tax declaration to her name after falsely claiming in
the Affidavit of Heirship that she was the sole heir of Gregoria Macalipay.

Consequently, in 1981 or within a year from the discovery of the fraudulent scheme perpetuated by Fidela,
respondents Macajilos brothers filed a criminal case against Fidela and Lamberto for estafa through falsification of public
document.[45]After knowing about the foreclosure of the subject property, respondent Quirico Macajilos, Jr. took possession of
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 141
the subject property[46] and demanded Fidela to vacate. In 1987, the instant case to remove cloud over the title and/or
recovery of real property and damages was filed by respondents Macajilos brothers against RBSI as an off-shoot of the latters
demand on respondent Quirico Macajilos to vacate the subject property. All in all, these acts show that respondents Macajilos
brothers did not sleep on their rights but reasonably took steps to assert their ownership over the subject property.

Anent the fourth issue, we note that the task of fixing the amount of damages primarily rests with the trial court as the
circumstances of each case may warrant provided that the bases therefor are fully established. [47] In the case at bar, the trial
court awarded moral and exemplary damages as well as attorneys fees in view of its finding that RBSI acted in bad faith. [48] As
previously discussed, this finding of bad faith by the trial court is sufficiently supported by the evidence on record. However,
the award of exemplary damages should be deleted since there is no clear and convincing proof that RBSI acted in a wanton,
fraudulent, reckless, oppressive or malevolent manner to warrant the imposition of the same.[49]

WHEREFORE, the petition is PARTLY GRANTED. The April 18, 2001 Decision and November 12, 2001 Resolution of
the Court of Appeals in CA-G.R. CV No. 51290 which affirmed the July 12, 1995 Decision of the Regional Trial Court of Negros
Oriental, Dumaguete City, Branch 39 in Civil Case No. 9049 declaring respondents Felix Macajilos and Quirico Macajilos, Jr. the
rightful owners of the subject property, are AFFIRMED with the MODIFICATION that the award of exemplary damages
is DELETED for lack of basis.

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 169898 October 27, 2006

SPOUSES ANITA AND HONORIO AGUIRRE, petitioners,


vs.
HEIRS OF LUCAS VILLANUEVA, NAMELY: JOSE T. VILLANUEVA, PABLO T. VILLANUEVA, PEDRO T. VILLANUEVA,
RODOLFO T. VILLANUEVA, DELIA V. DELA TORRE, JUANITA V. INGLES, & SABELITO V. GELITO, respondents.

DECISION

YNARES-SANTIAGO, J.:

This petition for review on certiorari under Rule 45 of the Rules of Court assails the Decision 1 dated March 17, 2005 of the
Court of Appeals in CA-G.R. CV No. 72530 which affirmed the Decision2 dated August 6, 2001 of the Regional Trial Court of
Kalibo, Aklan, Branch 8, in Civil Case No. 5745, declaring private respondents as absolute owners of the subject parcel of land.
Likewise assailed is the September 20, 2005 Resolution3 denying petitioners motion for reconsideration.

A complaint for annulment or declaration of nullity of deed of exchange, tax declarations and recovery of ownership and
possession with damages was filed by private respondents against petitioners.

Private respondents alleged that they are the legitimate children and grandson of the late spouses Lucas Villanueva and Regina
Tupas Villanueva; that during the lifetime of Lucas Villanueva, he owned a parcel of residential land designated as Lot 764-A
situated at Barangay Balabag, Malay, Aklan with an area of 140 square meters, more or less, and declared for taxation
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 142
purposes under his name under Tax Declaration No. 252 (1947); that spouses Villanueva possessed the subject parcel of land
during their lifetime openly, publicly and continuously in the concept of an owner and after their death, they were succeeded
by their children; that sometime in August 1997, petitioners and their hired laborers fenced the whole land in question
without the knowledge and consent of private respondents; that when confronted by private respondents concerning the
fencing of the land, petitioners alleged that they acquired the same through inheritance from their father, Eutiquiano Salazar,
who in turn purchased the land from the late Ciriaco H. Tirol by virtue of a Deed of Exchange of Real Property.

In their Answer,4 petitioners claimed that petitioner Anita S. Aguirre is the lawful owner and actual possessor of the land in
question, it being a portion of a bigger parcel of land she inherited from her deceased parents Eutiquiano Salazar and Regina
Supetran Salazar who bought the land from Ciriaco H. Tirol per Deed of Exchange of Real Property 5 dated December 31, 1971
and registered in the Office of the Register of Deeds of Aklan; that the parcel of land is included under Tax Declaration No.
4033 (1953) in the name of Trinidad vda. de Tirol and the same is in the possession of the Tirol family as owner thereof
continuously, openly and adversely even before the second world war; that the land had been surveyed as part of Cadastral
Lot 764, NP-06-000001, Malay Cadastre, in the name of Eutiquiano Salazar by the Bureau of Lands; that the land has been
declared under Tax Declaration No. 1264 (1974) and subsequent tax declarations in the name of Eutiquiano Salazar; that the
land was first fenced with bamboos in 1981 and with cement hollow blocks in 1985 without any opposition from private
respondents; and that the action is barred by prescription and private respondents are guilty of laches in failing to assert their
alleged right of ownership after the lapse of more than fifty (50) years since it was possessed by the heirs of the late Trinidad
vda. de Tirol.

On August 6, 2001, the trial court rendered judgment, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered:

1. Declaring the plaintiffs the lawful owners and entitled to possession of the land in question identified as Lot
764-A in the Commissioner's Sketch marked Exhibit "L", and as owners, are entitled to the possession of the
same;

2. Ordering the defendants to restore possession of the land in question to the plaintiffs;

3. Ordering the defendants to pay the plaintiffs the sum of One Thousand Eight Hundred Pesos (P1,800.00) by
way of litigation expenses, and another sum of Fifteen Thousand Pesos (P15,000.00) as reimbursement for
attorney's fees; and

4. Ordering the Provincial Assessor of Aklan to issue a new tax declaration of the land in question in the name
of the plaintiffs upon compliance of the requirements of that office and upon payment of appropriate taxes on
the land including back taxes, if any.

For insufficiency of evidence, plaintiffs claim for moral damages is denied and for lack of merit, defendants
counterclaim is DISMISSED.

With cost against the defendants.

SO ORDERED.6

The trial court noted that the tax declarations in the name of Trinidad vda. de Tirol and the survey plan did not establish the
fact that Ciriaco Tirol is the owner and possessor of the land in question, thus, he has no right to transfer ownership of the
same to Eutiquiano Salazar; that petitioners were not possessors in good faith since they knew as early as 1954 that private
respondents were in possession of the land; that petitioners did not acquire the land via extraordinary acquisitive prescription
considering that their possession only lasted for 26 years from 1971 up to 1997 when private respondents first instituted the
complaint.

On March 17, 2005, the Court of Appeals rendered a decision denying petitioners appeal and affirming in toto the trial courts
decision.

Petitioners motion for reconsideration was denied hence this petition raising the following issues:

I. THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE AGUIRRES HAD ACQUIRED TITLE OVER THE
DISPUTED PROPERTY VIA ORDINARY ACQUISITIVE PRESCRIPTION;

II. THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE VILLANUEVAS CAUSE OF ACTION HAD BEEN
BARRED BY PRESCRIPTION;

III. THE COURT OF APPEALS ERRED IN REFUSING TO APPLY THE EQUITABLE RULE ON LACHES;

IV. THE COURT OF APPEALS ERRED IN FINDING THAT THE VILLANUEVAS WERE IN "POSSESSION" AND
"OWNERSHIP" OF THE DISPUTED PROPERTY PRIOR TO THE EXECUTION OF THE DEED OF EXCHANGE BETWEEN
CIRIACO TIROL AND THE AGUIRRES ASCENDANT-PREDECESSOR IN 1971;
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 143
V. THE COURT OF APPEALS ERRED IN RULING THAT THE AGUIRRES HAVE NOT PROVED THE ROOT OF THEIR
RIGHT OF OWNERSHIP OVER THE DISPUTED PROPERTY; AND

VI. THE COURT OF APPEALS ERRED IN NOT APPRECIATING FOR THE AGUIRRES THE FACT THAT THE LATTER HAD
"JUST TITLE," AND HAD BEEN IN POSSESSION OF THE DISPUTED PROPERTY "IN GOOD FAITH" SINCE 1971. 7

We find merit in the petition.

This Court is not a trier of facts. However, if the inference drawn by the appellate court from the facts is manifestly mistaken,
as in the instant case, we can review the evidence in order to arrive at the correct factual conclusions based on the record.8

Prescription, in general, is a mode of acquiring (or losing) ownership and other real rights through the lapse of time in the
manner and under conditions laid down by law, namely, that the possession should be in the concept of an owner, public,
peaceful, uninterrupted and adverse. Acquisitive prescription is either ordinary or extraordinary. Ordinary acquisitive
prescription requires possession in good faith and with just title for 10 years. Without good faith and just title, acquisitive
prescription can only be extraordinary in character which requires uninterrupted adverse possession for 30 years. 9

Thus, for ordinary acquisitive prescription to set in, possession must be for at least 10 years, in good faith and with just title.
Possession is "in good faith" when there is a reasonable belief that the person from whom the thing is received has been the
owner thereof and could thereby transmit his ownership.10 There is "just title" when the adverse claimant comes into
possession of the property through any of the modes recognized by law for the acquisition of ownership or other real rights,
but the grantor is neither the owner nor in a position to transmit the right. 11

In the instant case, we find sufficient evidence to support petitioners claim that the requirements for ordinary prescription
are present.

The trial court found that petitioners possession was for more than 10 years and with just title, thus:

There is no question that the defendants have been in public, and uninterrupted possession of the land in question in
the concept of an owner for a span of twenty six (26) years from the time the land in question was included in the
deed of exchange in 1971 up to the time the plaintiffs complained in 1997 (Exh. "K"). There is also no question that
defendants possession of the land in question was with just title. Just title in the sense that the defendants acquired
the land in question by way of exchange which is one of the modes recognized by law in acquiring ownership. 12

Contrary however to the findings of the trial court, petitioners possessed the property in good faith. Petitioner Anita Aguires
father, Eutiquiano Salazar, bought the subject property from Ciriaco Tirol, whose claim on the property is founded on the
following documents: (1) Tax Declaration No. 729 in the name of Trinidad vda. de Tirol for the year 1945 (Exhibit "4"); (2) Tax
Declaration No. 4033 in the name of Trinidad vda. de Tirol for the year 1953 (Exhibit "4-A"); and (3) the survey plan approved
by the Bureau of Lands in 1952 (Exhibit "6"). Thus, petitioners honestly believed that ownership of the subject parcel of land
was transmitted to Anita by succession from his deceased father, and who thereafter possessed the property and exercised
dominion over it.

Likewise, the trial courts finding that petitioner Anita Aguirre was not a possessor in good faith since she knew as early as
1954 that private respondents were in possession of the disputed land has no basis. Anita Aguirre testified that Magdalena
Tupas built a house in the controverted property in 1957 with the permission of Bernardo Escalante, the administrator of the
Tirols.13

To prove their ownership, petitioners presented Tax Declaration No. 1264 for the year 1974 (Exhibit "4-B") and other tax
declarations (Exhibits "4-C, "4-D", "5" and submarkings) for the year 1980 to 1994, in the name of Eutiquiano Salazar
declaring the subject land for taxation purposes. While tax declarations and receipts are not conclusive evidence of ownership
and do not prove title to the land, nevertheless, when coupled with actual possession, they constitute evidence of great weight
and can be the basis of a claim of ownership through prescription.14

Records also show that Lucas Villanueva, private respondents predecessor-in-interest, did not actually possess the subject
property during his lifetime. Private respondent Delia Villanueva Dela Torre, testified that her parents while still alive resided
in Sitio Din-iwid, Balabag, Malay, Aklan, about less than a kilometer away from the land in question. 15 Neither did any of the
private respondents ever reside therein.16 The actual possession by the private respondents rests solely on the possession of
Magdalena Tupas and her husband for eight years allegedly with the permission of Regina Tupas Villanueva. However, the
testimonies of Rubio Sastre and Magdalena Tupas regarding the actual possession of Lucas Villanueva through planting of
trees and gathering of fruits cannot be given full weight and credence because the witnesses were of tender years then, barely
seven or twelve years old, and did not have discernment of the concept of possession and ownership. Moreover, no evidence
was presented on how Lucas Villanueva acquired the land in question from Eusebio Sacapano, the uncle of Regina Tupas
Villanueva. In addition, Tax Declaration No. 252 for the year 1947 (Exhibit "C") in the name of Lucas Villanueva does not have
probative value since it was executed four years after the death of Lucas Villanueva in 1943. Tax receipts submitted by the
private respondents in payment for the year 1986 up to 1996 were actually paid on the same day, February 20, 1996 by his
son Dionito Villanueva.17

On the other hand, after buying the property in 1971, petitioners possessed the same in the concept of an owner. They
peacefully occupied it, built fences, planted plants and used the same as ingress and egress towards their cottages. Having
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 144
been in continuous possession and enjoyment of the disputed land in good faith and with a just title since 1971 until 1997,
petitioners doubtlessly obtained title by ordinary acquisitive prescription.

Moreover, the action is barred by laches which is defined as the failure to assert a right for an unreasonable and unexplained
length of time, warranting a presumption that the party entitled to assert it has either abandoned or declined to assert it. This
equitable defense is based upon grounds of public policy, which requires the discouragement of stale claims for the peace of
society.18

In the instant case, private respondents knew as early as 1981 that petitioners are building fences in the perimeter of the
disputed land but did not take action to assert their rights over the subject parcel of land. They waited 16 long years to oust
petitioners from the possession of the land. Definitely, laches had already set in.

WHEREFORE, the petition is GRANTED. The Decision dated March 17, 2005 of the Court of Appeals in CA-G.R. CV No. 72530,
affirming the decision of the Regional Trial Court of Kalibo, Aklan, Branch 8, in Civil Case No. 5745, is
hereby REVERSED and SET ASIDE. Petitioners are hereby DECLARED as lawful owners of the subject property through
acquisitive prescription.

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 168222 April 18, 2006

SPS. TEODULO RUMARATE, (deceased) and ROSITA RUMARATE; deceased TEODULO RUMARATE is represented
herein by his Heirs/Substitutes, namely, ANASTACIA RUMARATE, CELSO RUMARATE, MARINA RUMARATE, ROMEO
RUMARATE, GUILLERMO RUMARATE, FIDEL RUMARATE, MERLINDA RUMARATE, MARISSA RUMARATE, CLEMENCIA
RUMARATE, SANCHO RUMARATE and NENITA RUMARATE, Petitioners,
vs.
HILARIO HERNANDEZ, JOAQUIN HERNANDEZ, SALVADOR HERNANDEZ, BENJAMIN HERNANDEZ, LEONORA
HERNANDEZ-LAZA, VICTORIA HERNANDEZ-MERCURIO, RODRIGOHERNANDEZ, BERNARDO HERNANDEZ, LOURDES
HERNANDEZ-CABIDA, MARIO SALVATIERRA, ADELAIDA FONTILA-CIPRIANO, and THE REGISTER OF DEEDS OF
QUEZON PROVINCE, Respondents.

DECISION

YNARES-SANTIAGO, J.:

Assailed in this petition for review is the May 26, 2005 Decision 1 of the Court of Appeals in CA-G.R. CV No. 57053, which
reversed and set aside the March 31, 1997 Decision2 of the Regional Trial Court of Calauag, Quezon, Branch 63, in Civil Case
No. C-964, declaring petitioners as owners of Lot No. 379 with an area of 187,765 square meters and located in Barrio
Catimo,3 Municipality of Guinayangan, Province of Quezon.

The facts show that on September 1, 1992, petitioner spouses Teodulo Rumarate (Teodulo) and Rosita Rumarate filed an
action for reconveyance of real property and/or quieting of title with damages against respondent heirs of the late spouses
Cipriano Hernandez and Julia Zoleta.4 Teodulo averred that Lot No. 379 was previously possessed and cultivated by his
godfather, Santiago Guerrero (Santiago), a bachelor, who used to live with the Rumarate family in San Pablo City. Between
1923 and 1924, Santiago and the Rumarate family transferred residence to avail of the land distribution in Catimo,
Guinayangan, Quezon. From 1925 to 1928, Santiago occupied Lot No. 379 cultivating five hectares thereof. Before moving to
Kagakag, Lopez, Quezon in 1929, Santiago orally bequeathed his rights over Lot No. 379 to Teodulo and entrusted to him a
copy of a Decision of the Court of First Instance (CFI) of Tayabas dated April 21, 1925 recognizing his (Santiago) rights over
Lot No. 379.5 Since Teodulo was only 14 years old then, his father helped him cultivate the land. 6 Their family thereafter
cleared the land, built a house7 and planted coconut trees, corn, palay and vegetables thereon.8 In 1960, Santiago executed an
"Affidavit (quit-claim)"9 ratifying the transfer of his rights over Lot No. 379 to Teodulo. Between 1960 and 1970, three
conflagrations razed the land reducing the number of coconut trees growing therein to only 400, but by the time Teodulo
testified in 1992, the remaining portions of the land was almost entirely cultivated and planted with coconuts, coffee,
jackfruits, mangoes and vegetables.10 From 1929, Teodulo and later, his wife and 11 children possessed the land as owners
and declared the same for taxation, the earliest being in 1961.11

In 1970, Teodulo discovered that spouses Cipriano Hernandez and Julia Zoleta, respondents predecessors-in-interest, were
able to obtain a title over Lot No. 379. He did not immediately file a case against respondents because he was advised to just
remain on the land and pay the corresponding taxes thereon.12

Respondents, on the other hand, claimed that on November 11, 1964, Santiago sold the questioned lot to their parents, the
spouses Cipriano Hernandez and Julia Zoleta, for P9,000.00.13 Respondents alleged that on April 21, 1925, the CFI of Tayabas

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 145
rendered a Decision written in Spanish, declaring Lot No. 379 as a public land and recognizing Santiago as claimant thereof in
Cadastral Proceeding No. 12. However, no title was issued to Santiago because he failed to file an Answer. Spouses Cipriano
Hernandez and Julia Zoleta filed a motion to re-open Cadastral Proceeding No. 12, alleging that though no title was issued in
the name of Santiago, the same decision is, nevertheless, proof that Santiago was in possession of Lot No. 379 since 1925 or for
more than 30 years. Having succeeded in the rights of Santiago, the spouses prayed that Cadastral Proceeding No. 12 be re-
opened and that the corresponding title over Lot No. 379 be issued in their name. On September 13, 1965, the CFI of Tayabas
rendered a decision adjudicating Lot No. 379 in favor of the spouses, in whose name Original Certificate of Title (OCT) No. O-
1184414 was issued on the same date.15 Cipriano Hernandez planted coconut trees on the land through the help of a certain
Fredo16 who was instituted as caretaker. In 1970, Fredo informed Cipriano Hernandez that he will no longer stay on the land
because there are people instructing him to discontinue tilling the same. 17

After the death of the spouses,18 respondents executed a deed of partition over the subject lot and were issued TCT No. T-
237330 on June 28, 1988 in lieu of OCT No. O-11844.19

Respondent Joaquin Hernandez (Joaquin) testified that in 1964, he accompanied his father in inspecting the lot which was
then planted with coconut trees.20 Thereafter, he visited the land twice, once in 1966 and the other in 1970. From 1966 up to
the time he testified, his family declared the lot for taxation and paid the taxes due thereon. 21 Joaquin explained that after the
death of his father in 1971, he no longer visited the land and it was only when the complaint was filed against them when he
learned that petitioners are in actual possession of the property.22 He added that his siblings had planned to convert Lot No.
379 into a grazing land for cattle but decided to put it off for fear of the rampant operations then of the New Peoples Army
between the years 1965-1970.23 1avvphil.net

On March 31, 1997, the trial court rendered a decision in favor of petitioners. It held that since the latter possessed the land in
the concept of an owner since 1929, they became the owners thereof by acquisitive prescription after the lapse of 10 years,
pursuant to the Code of Civil Procedure. Thus, when Santiago sold the lot to respondents parents in 1964, the former no
longer had the right over the property and therefore transmitted no title to said respondents. The dispositive portion of the
trial courts decision, reads:

WHEREFORE, in the light of all the foregoing considerations judgment is hereby rendered in favor of the plaintiffs and against
the defendants, to wit:

1. Declaring that the parcel of land (Lot No. 379 of the Cadastral Survey of Guinayangan, Cadastral Case No. 12, LRC
Cadastral Record No. 557), situated in Brgy. Katimo, Tagkawayan, Quezon had been fraudulently, deceitfully and
mistakenly registered in the names of the spouses Cipriano Hernandez and Julia Zoleta;

2. Declaring that herein defendants [heirs] of spouses Cipriano Hernandez and Julia Zoleta have no better rights than
their parents/predecessors-in-interest, they having stepped only on (sic) their shoes;

3. Declaring that the plaintiff Rosita Victor Rumarate and substitute plaintiffs-[heirs] of the deceased Teodulo
Rumarate are the true, real and legal owners/or the owners in fee simple absolute of the above described parcel of
land;

4. Ordering the defendants to convey the above-described parcel of land to plaintiff Rosita Victor Rumarate and to the
substitute plaintiffs (heirs) of the deceased Teodulo Rumarate;

5. Ordering the Register of Deeds for Quezon Province in Lucena City to cancel Transfer Certificate of Title No. T-
237330 and to issue in lieu thereof a new certificate of title in favor of plaintiff Rosita Victor Rumarate and the
substitute plaintiffs (heirs) of the deceased plaintiff Teodulo Rumarate, in accordance with law and settled
jurisprudence; and

6. Ordering the defendants to pay the costs of the suit.1avvphil.net

SO ORDERED.24

Respondents appealed to the Court of Appeals which on May 26, 2005, reversed and set aside the decision of the trial court. It
ruled that Teodulo did not acquire title over Lot No. 379, either by donation or acquisitive prescription; that Teodulos bare
allegation that Santiago orally bequeathed to him the litigated lot is insufficient to prove such transfer of ownership; and that
even assuming that the property was truly donated by Santiago to Teodulo in 1929, or in the 1960 Affidavit, said conveyance is
void for not complying with the formalities of a valid donation which require the donation and the acceptance thereof by the
donee to be embodied in a public instrument. Both requirements, however, are absent in this case because in 1929, the alleged
donation was not reduced to writing while the purported 1960 donation was never accepted in a public document by Teodulo.
The appellate court thus surmised that since it was not established that Santiago donated Lot No. 379 to Teodulo, it follows
that the latter also failed to prove that he possessed the land adversely, exclusively and in the concept of an owner, a vital
requisite before one may acquire title by acquisitive prescription. In conclusion, the Court of Appeals ruled that even assuming
further that Teodulo had a right over the property, his cause of action is now barred by laches because he filed an action only
in 1992 notwithstanding knowledge as early as 1970 of the issuance of title in the name of spouses Cipriano Hernandez and
Julia Zoleta. The decretal portion of the decision states:

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 146
WHEREFORE, premises considered, the instant appeal is GRANTED. The assailed March 31, 1997 decision of the Regional Trial
Court of Calauag, Quezon, Branch 63, in Civil Case No. C-964 is hereby REVERSED and SET ASIDE. No costs.

SO ORDERED.25

Hence, the instant appeal.

The issue to be resolved is to whom should Lot No. 379 be awarded? To petitioners who possessed and cultivated the lot since
1929 up to the present, but do not have a certificate of title over the property, or to respondents who have a certificate of title
but are not in possession of the controverted lot?

In an action for quieting of title, the court is tasked to determine the respective rights of the parties so that the complainant
and those claiming under him may be forever free from any danger of hostile claim. 26 Under Article 47627 of the Civil Code, the
remedy may be availed of only when, by reason of any instrument, record, claim, encumbrance or proceeding, which appears
valid but is, in fact, invalid, ineffective, voidable or unenforceable, a cloud is thereby cast on the complainants title to real
property or any interest therein. Article 477 of the same Code states that the plaintiff must have legal or equitable title to, or
interest in the real property which is the subject matter of the suit.

For an action to quiet title to prosper, two indispensable requisites must concur, namely: (1) the plaintiff or complainant has a
legal or an equitable title to or interest in the real property subject of the action; and (2) the deed, claim, encumbrance or
proceeding claimed to be casting cloud on his title must be shown to be in fact invalid or inoperative despite its prima
facie appearance of validity or legal efficacy.28

In Evangelista v. Santiago,29 it was held that title to real property refers to that upon which ownership is based. It is the
evidence of the right of the owner or the extent of his interest, by which means he can maintain control and, as a rule, assert a
right to exclusive possession and enjoyment of the property.

In the instant case, we find that Teodulos open, continuous, exclusive, notorious possession and occupation of Lot No. 379, in
the concept of an owner for more than 30 years vested him and his heirs title over the said lot. The law applicable at the time
Teodulo completed his 30-year possession (from 1929 to 1959) of Lot No. 379, in the concept of an owner was Sec. 48(b) of
Commonwealth Act No. 141 or the Public Land Act, as amended by Republic Act (RA) No. 1942, effective June 22, 195730 which
provides:

Sec. 48. The following-described citizens of the Philippines, occupying lands of the public domain or claiming to own any such
lands or an interest therein, but whose titles have not been perfected or completed, may apply to the Court of First Instance
(now Regional Trial Courts) of the province where the land is located for confirmation of their claims and the issuance of a
certificate of title thereafter, under the Land Registration Act (now Property Registration Decree), to wit:

xxxx

(b) Those who by themselves or through their predecessors-in-interest have been, in continuous, exclusive, and notorious
possession and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition or ownership, for
at least thirty years immediately preceding the filing of the application for confirmation of title, except when prevented by
war or force majeure. Those shall be conclusively presumed to have performed all the conditions essential to a government
grant and shall be entitled to a certificate of title under the provisions of this chapter.

When the conditions specified therein are complied with, the possessor is deemed to have acquired, by operation of law, a
right to a government grant, without necessity of a certificate of title being issued, and the land ceases to be part of the public
domain. The confirmation proceedings would, in truth be little more than a formality, at the most limited to ascertaining
whether the possession claimed is of the required character and length of time; and registration thereunder would not confer
title, but simply recognize a title already vested. The proceedings would not originally convert the land from public to private
land, but only confirm such conversion already effected by operation of law from the moment the required period of
possession became complete. 31

In the instant case, the trial court gave full faith and credence to the testimony of Teodulo and his witnesses that his
(Teodulos) possession of the land since 1929 was open, continuous, adverse, exclusive, and in the concept of an owner. It is a
settled rule in civil cases as well as in criminal cases that in the matter of credibility of witnesses, the findings of the trial courts
are given great weight and highest degree of respect by the appellate court considering that the latter is in a better position to
decide the question, having heard the witnesses themselves and observed their deportment and manner of testifying during
the trial.32

A careful examination of the evidence on record shows that Teodulo possessed and occupied Lot No. 379 in the concept of an
owner. Since 1929, Teodulo cultivated the controverted land, built his home, and raised his 11 children thereon. In 1957, he
filed a homestead application over Lot No. 379 but failed to pursue the same. 33After his demise, all his 11 children, the
youngest being 28 years old,34 continued to till the land. From 1929 to 1960, Santiago never challenged Teodulos possession
of Lot No. 379 nor demanded or received the produce of said land. For 31 years Santiago never exercised any act of ownership
over Lot No. 379. And, in 1960, he confirmed that he is no longer interested in asserting any right over the land by executing in
favor of Teodulo a quitclaim.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 147
Indeed, all these prove that Teodulo possessed and cultivated the land as owner thereof since 1929. While the oral donation in
1929 as well as the 1960 quitclaim ceding Lot No. 379 to Teodulo are void for non-compliance with the formalities of donation,
they nevertheless explain Teodulo and his familys long years of occupation and cultivation of said lot and the nature of their
possession thereof.

In Bautista v. Poblete,35 the Court sustained the registration of a parcel of land in the name of the successors-in-interest of the
donee notwithstanding the invalidity of the donation inasmuch as said donee possessed the property in the concept of an
owner. Thus

There is no question that the donation in question is invalid because it involves an immovable property and the donation was
not made in a public document as required by Article 633 of the old Civil Code, in connection with Article 1328 of the same
Code (concerning gifts propter nuptias), but it does not follow that said donation may not serve as basis of acquisitive
prescription when on the strength thereof the donee has taken possession of the property adversely and in the concept of
owner.

It follows therefore that Teodulos open, continuous, exclusive, and notorious possession and occupation of Lot No. 379 for 30
years, or from 1929 to 1959 in the concept of an owner, earned him title over the lot in accordance with Sec. 48 (b) of the
Public Land Act. Considering that Lot No. 379 became the private property of Teodulo in 1959, Santiago had no more right to
sell the same to spouses Cipriano Hernandez and Julia Zoleta in 1964. Consequently, the latter and herein respondents did not
acquire ownership over Lot No. 379 and the titles issued in their name are void.

Interestingly, respondents adopted the theory that Santiago acquired title over Lot No. 379 not from the April 21, 1925
Decision of the CFI of Tayabas which merely recognized his rights over said lot, but from his more than 30 years of possession
since 1925 up to 1964 when he sold same lot to their (respondents) predecessors-in-interest, the spouses Cipriano Hernandez
and Julia Zoleta. On the basis of said claim, said spouses filed an action for, and successfully obtained, confirmation of
imperfect title over Lot No. 379, pursuant to Sec. 48 (b) of the Public Land Act.

However, the records do not support the argument of respondents that Santiagos alleged possession and cultivation of Lot No.
379 is in the nature contemplated by the Public Land Act which requires more than constructive possession and casual
cultivation. As explained by the Court in Director of Lands v. Intermediate Appellate Court:36

It must be underscored that the law speaks of "possession and occupation." Since these words are separated by the
conjunction and, the clear intention of the law is not to make one synonymous with the other. Possession is broader than
occupation because it includes constructive possession. When, therefore, the law adds the wordoccupation, it seeks to delimit
the all-encompassing effect of constructive possession. Taken together with the words open, continuous,
exclusive and notorious, the word occupation serves to highlight the fact that for one to qualify under paragraph (b) of the
aforesaid section, his possession of the land must not be mere fiction. As this Court stated, through then Mr. Justice Jose P.
Laurel, in Lasam vs. The Director of Lands:

"x x x Counsel for the applicant invokes the doctrine laid down by us in Ramos vs. Director of Lands (39 Phil. 175, 180). (See
also Rosales vs. Director of Lands, 51 Phil. 302, 304). But it should be observed that the application of the doctrine of
constructive possession in that case is subject to certain qualifications, and this court was careful to observe that among these
qualifications is one particularly relating to the size of the tract in controversy with reference to the portion actually in
possession of the claimant. While, therefore, possession in the eyes of the law does not mean that a man has to have his feet
on every square meter of ground before it can be said that he is in possession, possession under paragraph 6 of section 54 of
Act No. 926, as amended by paragraph (b) of section 45 of Act No. 2874, is not gained by mere nominal claim. The mere
planting of a sign or symbol of possession cannot justify a Magellan-like claim of dominion over an immense tract of territory.
Possession as a means of acquiring ownership, while it may be constructive, is not a mere fiction x x x."

Earlier, in Ramirez vs. The Director of Lands, this Court noted:

"x x x The mere fact of declaring uncultivated land for taxation purposes and visiting it every once in a while, as was done by
him, does not constitute acts of possession."

In the instant case, Santiagos short-lived possession and cultivation of Lot No. 379 could not vest him title. While he tilled the
land in 1925, he ceased to possess and cultivate the same since 1928. He abandoned the property and allowed Teodulo to
exercise all acts of ownership. His brief possession of Lot No. 379 could not thus vest him title. Nemo potest plus juris ad alium
transferre quam ipse habet. No one can transfer a greater right to another than he himself has. Hence, spouses Cipriano
Hernandez and Julia Zoleta and herein respondents did not acquire any right over the questioned lot and the title issued in
their names are void, because of the legal truism that the spring cannot rise higher than the source.37

Furthermore, spouses Cipriano Hernandez and Julia Zoleta cannot be considered as purchasers in good faith because they had
knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry. 38 The Court notes
that Santiago was not residing in Lot No. 379 at the time of the sale. He was already 81 years old, too old to cultivate and
maintain an 18-hectare land. These circumstances should have prompted the spouses to further inquire who was actually
tilling the land. Had they done so, they would have found that Teodulo and his family are the ones possessing and cultivating
the land as owners thereof.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 148
In the same vein, respondents could not be considered as third persons or purchasers in good faith and for value or those who
buy the property and pay a full and fair price for the same39 because they merely inherited Lot No. 379 from spouses
Cipriano Hernandez and Julia Zoleta.

Then too, even if Santiago acquired title over Lot No. 379 by virtue of the April 21, 1925 Decision of the CFI of Tayabas, and not
on account of his alleged 30-year possession thereof, we will still arrive at the same conclusion. This is so because the
declaration of this Court that petitioners are the rightful owners of the controverted lot is based on Teodulos own possession
and occupation of said lot under a bona fide claim of acquisition of ownership, regardless of the manner by which Santiago
acquired ownership over same lot.

On the issue of prescription, the settled rule is that an action for quieting of title is imprescriptible, as in the instant case,
where the person seeking relief is in possession of the disputed property. A person in actual possession of a piece of land
under claim of ownership may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his
right, and that his undisturbed possession gives him the continuing right to seek the aid of a court of equity to ascertain and
determine the nature of the adverse claim of a third party and its effect on his title. 40 Considering that petitioners herein
continuously possessed Lot No. 379 since 1929 up to the present, their right to institute a suit to clear the cloud over their title
cannot be barred by the statute of limitations.

Neither could petitioners action be barred by laches because they continuously enjoyed the possession of the land and
harvested the fruits thereof up to the present to the exclusion of and without any interference from respondents. They cannot
therefore be said to have slept on their rights as they in fact exercised the same by continuously possessing Lot No. 379.

On the contrary, we find that it is respondents who are actually guilty of laches. Though not specifically pleaded, the Court can
properly address the issue of laches based on petitioners allegation in the complaint that "[n]either spouses Cipriano
Hernandez and Julia Zoleta x x x nor [herein respondents] had taken steps to possess or lay adverse claim to said parcel of land
from the date of their registration of title in November, 1965 up to the present." 41 Such averment is sufficient to impute
abandonment of right on the part of respondents. At any rate, laches need not be specifically pleaded. On its own initiative, a
court may consider it in determining the rights of the parties.42

The failure or neglect, for an unreasonable length of time to do that which by exercising due diligence could or should have
been done earlier constitutes laches. It is negligence or omission to assert a right within a reasonable time, warranting a
presumption that the party entitled to assert it has either abandoned it or declined to assert it. While it is by express provision
of law that no title to registered land in derogation of that of the registered owner shall be acquired by prescription or adverse
possession, it is likewise an enshrined rule that even a registered owner may be barred from recovering possession of
property by virtue of laches.43

In applying the doctrine of laches, we have ruled that where a party allows the following number of years to lapse from the
emergence of his cause of action without enforcing his claim, laches sets in: 36 years; 12 years; 50 years; 34 years; 37 years; 32
years; 20 years; 47 years; 11 years; 25 years; 40 years; 19 years; 27 years; 7 years; 44 years; 4 years; and 67 years. 44

The elements of laches are: (1) conduct of a party on the basis of which the other party seeks a remedy; (2) delay in asserting
ones rights, despite having had knowledge or notice of the other partys conduct and having been afforded an opportunity to
institute a suit; (3) lack of knowledge or notice on the part of a party that the person against whom laches is imputed would
assert the right; and (4) injury or prejudice to the party asserting laches in the event the suit is allowed to prosper. 45

All these elements are present in this case. Petitioners continuous possession and occupation of Lot No. 379 should have
prompted the respondents to file an action against petitioners, but they chose not to. Respondents cannot deny knowledge of
said possession by petitioners as they even asserted in their Answer that in 1970, Teodulo ousted the tenant they
(respondents) instituted in the lot. From 1970 up to the filing of petitioners complaint in 1992, or after 22 years, respondents
never bothered to assert any right over Lot No. 379. Respondent Joaquin Hernandez testified that he and his siblings had a
plan to convert the land into a grazing land for cattle but decided to put it off for fear of the rampant operations of the New
Peoples Army between the years 1965-1970. However, even after said years, respondents took no step to implement their
plan. Worse, among the siblings of spouses Cipriano Hernandez and Julia Zoleta who are all living in the Philippines, 46 only
Joaquin Hernandez visited the land and only thrice, i.e., once in each years of 1964, 1966 and 1970. Thereafter, not one of them
paid visit to Lot No. 379, up to the time Joaquin Hernandez testified in 1996, 47 despite the fact that two of them are living only
in Calauag, Quezon; one in Agdangan, Quezon;48 and two in Lucena City.49Neither did they send a notice or correspondence to
petitioners invoking their right over the property. From all indications, the late spouses Cipriano Hernandez and Julia Zoleta as
well respondents, have neglected Lot No. 379. Were it not for this action instituted by petitioners in 1992, their conflicting
claims over the property could not have been settled. It goes without saying that to lose a property that has been in the family
from 1929 up to the present, or for 77 years will certainly cause irreparable pecuniary and moral injury to petitioners,
especially so if the same ancestral land will be lost under most unfair circumstances in favor of respondents who appear to
have no real interest in cultivating the same.

Finally, payment of taxes alone will not save the day for respondents. Only a positive and categorical assertion of their
supposed rights against petitioners would rule out the application of laches. It means taking the offensive by instituting legal
means to wrest possession of the property which, however, is absent in this case. Respondents payment of taxes alone,
without possession could hardly be construed as an exercise of ownership. What stands out is their overwhelming passivity by
allowing petitioners to exercise acts of ownership and to enjoy the fruits of the litigated lot for 22 years without any
interference.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 149
In sum, the Court finds that Lot No. 379 should be adjudicated in favor of petitioners.

One last point. Notwithstanding this Courts declaration that Lot No. 379 should be awarded in favor of petitioners, their title
over the same is imperfect and is still subject to the filing of the proper application for confirmation of title under Section 48
(b) of the Public Land Act, where the State and other oppositors may be given the chance to be heard. It was therefore
premature for the trial court to direct the Register of Deeds of Lucena City to issue a certificate of title in the name of
petitioners.

Nevertheless, the imperfect title of petitioners over Lot No. 379 is enough to defeat the certificate of title issued to
respondents.50

WHEREFORE, the petition is GRANTED and the May 26, 2005 Decision of the Court of Appeals in C.A. GR. CV No. 57053,
is REVERSED and SET ASIDE. The March 31, 1997 Decision of the Regional Trial Court of Calauag, Quezon, Branch 63, in Civil
Case No. C-964, awarding Lot No. 379 in favor petitioners and ordering the cancellation of respondents Transfer Certificate of
Title No. T- 237330, is REINSTATED with the MODIFICATIONdeleting the trial courts order directing the Register of Deed of
Lucena City to issue a certificate of title in the name of petitioners.

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Baguio City

FIRST DIVISION

G.R. NO. 146556 April 19, 2006

DANILO L. PAREL, Petitioner,


vs.
SIMEON B. PRUDENCIO, Respondent.

DECISION

AUSTRIA-MARTINEZ, J.:

Before us is a petition for review on certiorari filed by Danilo Parel (petitioner) which seeks to set aside the Decision 1 dated
March 31, 2000 of the Court of Appeals (CA) which reversed the Decision of the Regional Trial Court (RTC), Branch 60, Baguio,
in Civil Case No. 2493-R, a case for recovery of possession and damages. Also assailed is CA Resolution2 dated November 28,
2000.

On February 27, 1992, Simeon Prudencio (respondent) filed a complaint for recovery of possession and damages against
petitioner with the RTC Baguio alleging that: he is the owner of a two-storey residential house located at No. 61 Forbes Park
National Reservation near Department of Public Service (DPS) compound, Baguio City; such property was constructed solely
from his own funds and declared in his name under Tax Declaration No. 47048; he commenced the construction of said house
in 1972 until its completion three years later; when the second floor of said house became habitable in 1973, he allowed
petitioners parents, Florentino (now deceased) and Susan Parel, to move therein and occupy the second floor while the
construction of the ground floor was on-going to supervise the construction and to safeguard the materials; when the
construction of the second floor was finished in 1975, respondent allowed petitioners parents and children to transfer and
temporarily reside thereat; it was done out of sheer magnanimity as petitioners parents have no house of their own and since
respondents wife is the older sister of Florentino, petitioners father; in November 1985, respondent wrote Florentino a
notice for them to vacate the said house as the former was due for retirement and he needed the place to which petitioners
parents heeded when they migrated to U.S. in 1986; however, without respondents knowledge, petitioner and his family
unlawfully entered and took possession of the ground floor of respondents house; petitioners refusal to vacate the house
despite repeated demands prompted respondent to file the instant action for recovery of possession. Respondent also asked
petitioner for a monthly rental of P3,000.00 from April 1988 and every month thereafter until the latter vacates the said
premises and surrender possession thereof; and for moral and exemplary damages, attorneys fees and cost of suit.

Petitioner filed his Answer with Counterclaim alleging that: his parents are the co-owners of the said residential house, i.e., the
upper story belongs to respondent while the ground floor pertains to petitioners parents; he is occupying the ground floor
upon the instruction of his father, Florentino, with respondents full knowledge; his parents spent their own resources in
improving and constructing the said two-storey house as co-owners thereof; the late Florentino was an awardee of the land on
which the house stands and as a co-owner of the house, he occupied the ground floor thereof; the demand to vacate was
respondents attempt to deprive petitioners parents of their rights as co-owner of the said house; that respondent had filed
ejectment case as well as criminal cases against them involving the subject house which were all dismissed. Petitioner asked
for the dismissal of the complaint and prayed for damages and attorneys fees.

After trial on the merits, the RTC rendered a Decision3 dated December 15, 1993, the dispositive portion of which reads:

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 150
WHEREFORE, premises considered, the Court hereby declares that the house erected at No. 61 DPS Compound, Baguio City is
owned in common by the late Florentino Parel and herein plaintiff Simeon Prudencio and as such the plaintiff cannot evict the
defendant as heirs of the deceased Florentino Parel from said property, nor to recover said premises from herein defendant.

Likewise, the plaintiff is ordered to:

(a) pay the defendant in the total sum of P20,000.00 for moral and actual damages;

(b) pay the defendant P20,000.00 in Attorneys fees and P3,300.00 in appearance fees;

(c) pay the costs of this suit.4

The RTC found the following matters as conclusive: that petitioners father was an allocatee of the land on which the subject
house was erected, as one of the lowly-paid government employees at that time when then Mayor Luis Lardizabal gave them
the chance to construct their own house on said reservation; that respondent failed to show proof of any contract, written or
oral, express or implied, that the late Florentino and his family stayed on the house not as co-owners but as mere lessees, nor
any other proof that would clearly establish his sole ownership of the house; and, that the late Florentino was the one who
gathered the laborers for the construction of the house and paid their salaries. Thus, the RTC ruled that co-ownership existed
between respondent and petitioners father, Florentino.

The RTC concluded that respondent and petitioners father agreed to contribute their money to complete the house; that since
the land on which said house was erected has been allocated to petitioners father, the parties had the understanding that once
the house is completed, petitioners father could keep the ground floor while respondent the second floor; the trial court
questioned the fact that it was only after 15 years that respondent asserted his claim of sole ownership of the subject house;
respondent failed to disprove that petitioners father contributed his own funds to finance the construction of the house; that
respondent did not question (1) the fact that it was the deceased Florentino who administered the construction of the house as
well as the one who supplied the materials; and (2) the fact that the land was in Florentinos possession created the
impression that the house indeed is jointly owned by respondent and Florentino.

The RTC did not give credence to the tax declaration as well as the several documents showing the City Assessors assessment
of the property all in respondents name since tax declarations are not conclusive proof of ownership. It rejected the affidavit
executed by Florentino declaring the house as owned by respondent saying that the affidavit should be read in its entirety to
determine the purpose of its execution; that it was executed because of an advisement addressed to the late Florentino by the
City Treasurer concerning the propertys tax assessment and Florentino, thought then that it should be the respondent who
should pay the taxes; and that the affidavit cannot be accepted for being hearsay.

Aggrieved by such decision, respondent appealed to the CA. In a Decision dated March 31, 2000, the CA reversed the trial court
and declared respondent as the sole owner of the subject house and ordered petitioner to surrender possession of the ground
floor thereof to respondent immediately. It also ordered petitioner to pay respondent a monthly rental of P2,000.00 for use or
occupancy thereof from April 1988 until the former actually vacates the same and the sum of P50,000.00 as attorneys fees and
cost of suit.

The CA found as meritorious respondents contention that since petitioner failed to formally offer in evidence any
documentary evidence, there is nothing to refute the evidence offered by respondent. It ruled that the trial courts statement
that "defendants occupancy of the house is due to a special power of attorney executed by his parents most specially the
deceased Florentino Parel who is in fact a co-owner of said building" is wanting of any concrete evidence on record; that said
power of attorney was never offered, hence, could not be referred to as petitioners evidence to support his claim; that except
for the bare testimonies of Candelario Regua, the carpenter-foreman, that it was Florentino who constructed the house and
Corazon Garcia, the former barangay captain, who testified that the lot was allocated to petitioners father, there was no
supporting document which would sufficiently establish factual bases for the trial courts conclusion; and that the rule on offer
of evidence is mandatory.

The CA found the affidavit dated September 24, 1973 of Florentino, petitioners father, stating that he is not the owner of the
subject house but respondent, as conclusive proof of respondents sole ownership of the subject house as it is a declaration
made by Florentino against his interest. It also found the tax declarations and official receipts representing payments of real
estate taxes of the questioned property covering the period 1974 to 1992 sufficient to establish respondents case which
constitute at least proof that the holder has a claim of title over the property.

Petitioners motion for reconsideration was denied in a Resolution dated November 28, 2000.1avvphil.net

Hence, the instant petition for review on certiorari with the following Assignment of Errors:

1. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING RESPONDENT AS THE OWNER OF THE BUILDING AT
61 FORBES PARK NATIONAL RESERVATION, NEAR DPS COMPOUND, BAGUIO CITY, NOTWITHSTANDING THE FINDING OF
THE REGIONAL TRIAL COURT OF CO-OWNERSHIP BETWEEN THE LATE FLORENTINO PAREL AND RESPONDENT;

2. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN ORDERING PETITIONER TO SURRENDER POSSESSION OF THE
GROUND FLOOR OF THE SUBJECT BUILDING TO RESPONDENT;

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 151
3. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN ORDERING PETITIONER TO PAY
RESPONDENT P2,000.00/MONTH FOR USE OR OCCUPANCY OF THE SUBJECT PREMISES FROM APRIL 1988 UNTIL
PETITIONER ACTUALLY VACATES THE SAME;

4. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN ORDERING PETITIONER TO PAY TO RESPONDENT P50,000.00
ATTORNEYS FEES AND COSTS OF SUIT;

5. THE HONORABLE COURT OF APPEALS ERRED IN DENYING PETITIONERS MOTION FOR RECONSIDERATION. 5

Petitioner concedes that while his former counsel failed to make a formal offer of his documentary evidence before the trial
court and that the court shall consider no evidence which has not been formally offered, he maintains that the said rule is not
absolute, citing the case of Bravo, Jr. v. Borja; 6 that his documentary evidence which were not formally offered in evidence
were marked during the presentation of the testimony of petitioners witnesses and were part of their testimonies; that these
evidence were part of the memorandum filed by him before the trial court on July 12, 1993.

Petitioner insists that even in the absence of the documentary evidence, his testimony as well as that of his witnesses
substantiated his claim of co-ownership of the subject house between his late father and respondent as found by the trial
court.

Petitioner argues that the CA erred in finding the affidavit of petitioners father declaring respondent as owner of the subject
house as conclusive proof that respondent is the true and only owner of the house since the affidavit should be read in its
entirety to determine the purpose for which it was executed.

Petitioner further contends that since he had established his fathers co-ownership of the subject house, respondent has no
legal right to eject him from the property; that he could not be compelled to pay rentals for residing in the ground floor of the
subject house; that respondent should bear his own expenses and be adjudged liable for damages which petitioner sustained
for being constrained to litigate.

The principal issue for resolution is whether petitioner was able to prove by preponderance of evidence that his father was a
co-owner of the subject two-storey residential house.

The issue raised by petitioner is mainly factual in nature. In general, only questions of law are appealable to this Court under
Rule 45. However, considering that the findings of the RTC and CA are contradictory, the review of the case is in order.7

We agree with the CA that respondent had shown sufficient evidence to support his complaint for recovery of possession of
the ground floor of the subject house as the exclusive owner thereof. Respondent presented the affidavit dated September 24,
1973 executed by Florentino and sworn to before the Assistant City Assessor of Baguio City, G.F. Lagasca, which reads:

I, FLORENTINO PAREL, 42 years of age, employee, and residing at Forbes Park, Reservation No. 1, after having been sworn to
according to law depose and say:

That he is the occupant of a residential building located at Forbes Park, Reservation No. 1, Baguio City which is the subject of
an advicement addressed to him emanating from the Office of the City Assessor, Baguio City, for assessment and declaration
for taxation purposes;

That I am not the owner of the building in question;

That the building in question is owned by Mr. Simeon B. Prudencio who is presently residing at 55 Hyacinth, Roxas District,
Quezon City.

Further, affiant say not.8 (Underscoring supplied)

Section 38 of Rule 130 of the Rules of Court provides:

SEC. 38. Declaration against interest. The declaration made by a person deceased, or unable to testify, against the interest of
the declarant, if the fact asserted in the declaration was at the time it was made so far contrary to the declarant's own interest,
that a reasonable man in his position would not have made the declaration unless he believed it to be true, may be received in
evidence against himself or his successors-in-interest and against third persons.

The theory under which declarations against interest are received in evidence notwithstanding they are hearsay is that the
necessity of the occasion renders the reception of such evidence advisable and, further that the reliability of such declaration
asserts facts which are against his own pecuniary or moral interest. 9

The affiant, Florentino, who died in 1989 was petitioners father and had adequate knowledge with respect to the subject
covered by his statement. In said affidavit, Florentino categorically declared that while he is the occupant of the residential
building, he is not the owner of the same as it is owned by respondent who is residing in Quezon City. It is safe to presume that
he would not have made such declaration unless he believed it to be true, as it is prejudicial to himself as well as to his
childrens interests as his heirs.10 A declaration against interest is the best evidence which affords the greatest certainty of the
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 152
facts in dispute.11 Notably, during Florentinos lifetime, from 1973, the year he executed said affidavit until 1989, the year of
his death, there is no showing that he had revoked such affidavit even when a criminal complaint for trespass to dwelling had
been filed by respondent against him (Florentino) and petitioner in 1988 regarding the subject house which the trial court
dismissed due to the absence of evidence showing that petitioner entered the house against the latters will and held that the
remedy of respondent was to file an action for ejectment;12 and even when a complaint for unlawful detainer was filed against
petitioner and his wife also in 1988 which was subsequently dismissed on the ground that respondents action should be
an accion publiciana which is beyond the jurisdiction of the Municipal Trial Court.13

Moreover, the building plan of the residential house dated January 16, 1973 was in the name of respondent and his wife. It was
established during petitioners cross-examination that the existing structure of the two-storey house was in accordance with
said building plan.14

Notably, respondent has been religiously paying the real estate property taxes on the house declared under his name since
1974.15 In fact, petitioner during his cross-examination admitted that there was no occasion that they paid the real estate taxes
nor declared any portion of the house in their name.16

We agree with the CA that while tax receipts and declarations are not incontrovertible evidence of ownership, they constitute
at least proof that the holder has a claim of title over the property.17 The house which petitioner claims to be co-owned by his
late father had been consistently declared for taxation purposes in the name of respondent, and this fact, taken with the other
circumstances above-mentioned, inexorably lead to the conclusion that respondent is the sole owner of the house subject
matter of the litigation.

Respondent having established his claim of exclusive ownership of the subject property, it was incumbent upon petitioner to
contravene respondents claim. The burden of evidence shifted to petitioner to prove that his father was a co-owner of the
subject house.

We held in Jison v. Court of Appeals, to wit:18

xxx Simply put, he who alleges the affirmative of the issue has the burden of proof, and upon the plaintiff in a civil case, the
burden of proof never parts. However, in the course of trial in a civil case, once plaintiff makes out a prima facie case in his
favor, the duty or the burden of evidence shifts to defendant to controvert plaintiff's prima facie case, otherwise, a verdict
must be returned in favor of plaintiff. Moreover, in civil cases, the party having the burden of proof must produce a
preponderance of evidence thereon, with plaintiff having to rely on the strength of his own evidence and not upon the
weakness of the defendants. The concept of "preponderance of evidence" refers to evidence which is of greater weight, or
more convincing, that which is offered in opposition to it; at bottom, it means probability of truth. 19

In this case, the records show that although petitioners counsel asked that he be allowed to offer his documentary evidence in
writing, he, however, did not file the same.20 Thus, the CA did not consider the documentary evidence presented by petitioner.
Section 34 of Rule 132 of the Rules of Court provides:

Section 34. Offer of evidence. The court shall consider no evidence which has not been formally offered. The purpose for
which the evidence is offered must be specified.

A formal offer is necessary because it is the duty of a judge to rest his findings of facts and his judgment only and strictly upon
the evidence offered by the parties to the suit.21 It is a settled rule that the mere fact that a particular document is identified
and marked as an exhibit does not mean that it has thereby already been offered as part of the evidence of a party.22

Petitioner insists that although his documentary evidence were not formally offered, the same were marked during the
presentation of the testimonial evidence, thus it can properly be taken cognizance of relying in Bravo, Jr. v. Borja.23

Such reliance is misplaced. In Bravo Jr., we allowed evidence on minority by admitting the certified true copy of the birth
certificate attached to a motion for bail even if it was not formally offered in evidence. This was due to the fact that the birth
certificate was properly filed in support of a motion for bail to prove petitioners minority which was never challenged by the
prosecution and it already formed part of the records of the case. The rule referred to in the Bravo case was Section 7 of Rule
133 of the Rules of Court which provides:

Section 7. Evidence on motion.- When a motion is based on facts not appearing of record, the court may hear the matter on
affidavits or depositions presented by the respective parties, but the court may direct that the matter be heard wholly or
partly on oral testimony or depositions.

and not Section 34 of Rule 132 of the Rules of Court which is the one applicable to the present case.

Even assuming arguendo that the documentary evidence of petitioner should be considered in his favor, the evidence showing
that respondent had filed civil and criminal cases against petitioner which were dismissed as well as the alleged Special Power
of Attorney of petitioners parents whereby they authorized petitioner to stay in the ground floor of the house, did not
establish co-ownership of Florentino and respondent of the subject house.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 153
The testimonies of petitioner and his witnesses failed to show that the subject house is co-owned by petitioners father and
respondent.

Candelario Regua merely testified that he was hired by petitioners father, Florentino, to construct the residential building in
1972;24 that he listed the materials to be used for the construction which was purchased by Florentino;25 that he and his men
received their salaries every Saturday and Wednesday from Florentino or his wife, respectively; 26 that he had not met nor seen
respondent during the whole time the construction was on-going.27 On cross-examination, however, he admitted that he
cannot tell where the money to buy the materials used in the construction came from. 28

Corazon Garcia merely testified that Florentino started building the house when he was allocated a lot at DPS compound, that
she knew Florentino constructed the subject house29 and never knew respondent. 30 The bare allegation that Florentino was
allocated a lot is not sufficient to overcome Florentinos own affidavit naming respondent as the owner of the subject house.

Petitioner himself testified that it was his father who saw the progress of the construction and purchased the materials to be
used; 31 and as a young boy he would follow-up some deliveries upon order of his father 32 and never saw respondent in the
construction site. The fact that not one of the witnesses saw respondent during the construction of the said house does not
establish that petitioners father and respondent co-owned the house.

We also find that the CA did not err in ordering petitioner to pay respondent being the sole owner of the subject house a
monthly rental of P2,000.00 from April 1988, the date of the extra-judicial demand, until petitioner actually vacates the subject
house. Although the CA made no ratiocination as to how it arrived at the amount of P2,000.00 for the monthly rental, we find
the same to be a reasonable compensation for the use of the ground floor of the subject house which consists of a living room,
a dining room, a kitchen and three bedrooms. The rental value refers to the value as ascertained by proof of what the property
would rent or by evidence of other facts from which the fair rental value may be determined. 33

We likewise affirm the CAs award of attorneys fees in favor of respondent. Article 2208 of the Civil Code allows the recovery
of attorneys fees in cases when the defendants act or omission has compelled the plaintiff to litigate with third persons or to
incur expenses to protect his interest 34 and in any other case where the court deems it just and equitable that attorneys fees
and expenses of litigation should be recovered 35 which are both shown in the instant case.

WHEREFORE, the decision of the Court of Appeals dated March 31, 2000 and its Resolution dated November 28, 2000
are AFFIRMED.

Costs against petitioner.

SO ORDERED.

FIRST DIVISION

THE HEIRS OF EMILIO G.R. No. 160832

SANTIOQUE, represented by

FELIMON W. SANTIOQUE,

Petitioners, Present:

PANGANIBAN, CJ.,

- versus - Chairperson,

YNARES-SANTIAGO,

AUSTRIA-MARTINEZ,

CALLEJO, SR., and

THE HEIRS OF EMILIO CALMA, CHICO-NAZARIO, JJ.

FABIAN CALMA, AGATONA


CALMA, and DEMETRIA

CALMA, represented by LOPE

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 154
AKOL and LUCIA CALMA-AKOL,

and the REGISTER OF DEEDS

OF THE PROVINCE OF TARLAC, Promulgated:

Respondents.

October 27, 2006

--------------------------------------------------------------------------------------------

DECISION

CALLEJO, SR., J.:

This is a petition for review on certiorari of the Decision [1] of the Court of Appeals (CA) in CA-G.R. CV No. 65352 affirming the

Decision[2] of the Regional Trial Court (RTC) in Civil Case No. 8634, as well as the Resolution dated November 21, 2003which

denied the motion for reconsideration thereof.

On March 31, 1932, the Governor General granted a homestead patent over a 20.9740-hectare parcel of land located

in Barrio Tibag, Tarlac, Tarlac. On the basis of said patent, Original Certificate of Title (OCT) No. 1112 was issued by the

Register of Deeds on April 21, 1932. The title was cancelled by Transfer Certificate of Title (TCT) No. 13287. On November 27,

1953, TCT No. 13287 was cancelled by TCT No. 19181 under the names of Agatona Calma, Fabian Calma, Emilio Calma and

Demetria Calma.[3] On September 23, 1954, the parties executed a contract of lease in favor of the Spouses Lope A. Akol, who

then executed an Assignment of Leasehold Rights under the Contract of Lease in favor of the Rehabilitation Finance

Corporation (RFC) on January 26, 1955.[4]

In the meantime, Fabian Calma died intestate. A petition for the administration of his estate was filed in the RTC of

Tarlac docketed as Special Proceedings No. 1262. Lucia Calma was appointed as administratrix of the estate. The heirs

executed a Deed of Partition over the property on April 17, 1967. On September 13, 1967,[5] TCT No. 19181 was cancelled by

TCT No. 71826 in the names of Agatona Calma, Emilio Calma, Demetria Calma and Fabian Calma.

Meanwhile, in 1967, a 20.564-ha parcel of land located in Tibag, Tarlac and identified as Lot No. 3844 of Pat-H-132104

- prt. was declared for taxation purposes under the name of Emilio Santioque (Tax Dec. No. 19675).[6] However, the declaration

did not bear the name and signature of the declarant.

On June 3, 1973, Santioque died intestate. His children, Felimon, Rose, Filomena, Jose, Josefina, Ana, Rufino, and

Avelina, all surnamed

Santioque, filed on February 29, 1998, a complaint in the RTC of Tarlac for declaration of nullity of title, reconveyance, with

damages, over a piece of land situated in Tibag, Tarlac City. The case was docketed as Civil Case No. 8634.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 155
The heirs claimed that on March 31, 1932, Emilio was awarded Homestead Patent No. 18577 by virtue of Homestead

Application No. 132104 over a lot located in Barrio Tibag, Tarlac City; the said lot was identified as Lot No. 3844 of the Tarlac

Cadastre No. 274, with an area of 20.5464 hectares; OCT No. 1112 was issued to Emilio on April 21, 1932, and from then had

enjoyed full ownership and dominion over the said lot; and prior to his death, Emilio ordered Felimon to work for the recovery

of the said property.[7] They further averred that when Felimon went to the Register of Deeds of Tarlac for a final verification,

he discovered that the lot covered by OCT No. 1112 was already registered in the names of Agatona, Fabian, Emilio and

Demetria, all surnamed Calma, under TCT No. 19181 issued on November 27, 1953. It appeared from the said TCT No. 19181

that the title was a transfer from TCT No. 13287.[8]

The heirs contended that Emilio was the first registrant of the subject lot and, as such, was its lawful owner. The land
could no longer be the subject matter of subsequent cadastral proceedings, and any title issued pursuant thereto would be
void. They prayed that judgment be rendered in their favor, as follows:

WHEREFORE, it is most respectfully prayed that after due notice and hearing, judgment be rendered
ordering the nullification of TCT No. 19181 and TCT No. 13287 of the Register of Deeds of Tarlac and
upholding and declaring the existence, legality and validity of the Homestead Patent bearing No. 18577 and
OCT No. 1112 issued in the name of the late Emilio Santioque and

1. Ordering Defendants to reimburse to the Plaintiffs the income, profits or benefits unjustly derived
by them from TCT No. 19181 and 13287 the estimation of which is left to the sound discretion of the
Honorable Court;

2. Ordering the Defendants to pay to the Plaintiffs the amount of P50,000.00 as attorneys fees;

3. Cost of suit;

4. Any and all remedies just and equitable under the premises.[9]

The heirs of Calma filed a motion to dismiss the complaint alleging that (a) the action had prescribed and was barred
by laches; (b) the claim has been abandoned, and (c) the complaint stated no cause of action.[10] The court denied the
motion. The heirs of Calma filed their answer, reiterating the grounds and allegations in their motion to dismiss by way of
special and affirmative defenses.[11]

During trial, Felimon Santioque testified for the plaintiffs. He admitted that they had no copy of OCT No. 1112; the
Register of Deeds likewise had no record of the said title, nor TCT No. 13287.[12] He discovered from the said office that the
subject lot was covered by TCT No. 19181 with the names of Agatona Calma and her co-heirs as owners.[13] The title was, in
turn, cancelled and replaced by TCT No. 71286 also in the names of Agatona Calma and her co-heirs.

On cross-examination, Felimon declared that his father, Emilio, mentioned the property to the plaintiffs sometime
before he died in 1973. From that time on, he tried to ascertain the particulars of the property and succeeded in 1990 only
when he went through the records at the Community Environment and Natural Resources Office (CENRO). [14]

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 156
Felimon declared that, on August 4, 1992, he secured a document from the Lands Management Bureau (LMB) stating
that on March 1 to 6, 1930, a parcel of land with an area of 209,746 square meters located in Tibag, Tarlac, Tarlac, was
surveyed by W. Santiago and approved on February 27, 1932.[15] However, the document was not certified by the Chief
Geodetic Engineer. Neither did the plaintiffs present the employee of the Bureau who prepared the document to testify on its
authenticity.

Felimon admitted that Amando Bangayan, Chief, Records Management Division of the LMB certified that, based on the
survey records of Cadastral Survey No. 274 and as indicated in the Area Sheet of Lot 3844, Cad. 274, Emilio Santioque was the
claimant of the lot. However, the Bureau had no available records of Homestead Application No. 132104 and Homestead
Patent No. 18577 dated March 31, 1932.[16] Felino Cortez, Chief, Ordinary and Cadastral Decree Division of the Land
Registration Authority (LRA), certified that after due verification of the records of the Book of Cadastral Lots, Lot 3844 had
been the subject of Cadastral Case No. 61, LRC Cad. Record No. 1879; the case had been decided but no final decree of
registration had been issued; and the lot was subject to the annotation con patent No. 18577 segun report of B.L.[17] The
Register of Deeds of Tarlac stated that, onJanuary 25, 1998, despite diligent efforts, he could not locate TCT No. 13287 and OCT
No. 1112 or any other document leading to the issuance of TCT No. 19181. He explained that in 1987 and 1988, his office had
to be reconstructed, and titles and documents had to be moved from one place to another. [18] The Register of Deeds issued a
certification[19] dated September 10, 1998 stating that despite diligent efforts, he could not locate OCT No. 1112 or any
document showing how it was cancelled. The Records Officer of the Register of Deeds in Tarlac City also certified that OCT No.
1112 and TCT No. 13287 could not be found despite diligent efforts. [20]

After the heirs of Santioque rested their case, the defendants, heirs of Calma, demurred to plaintiffs evidence and
sought its dismissal on the ground that the latter failed to establish a preponderance of evidence to support their ownership
over the property.[21]

On August 11, 1999, the trial court issued an Order [22] granting the demurrer and dismissing the complaint on the
ground that plaintiffs failed to establish their case.

The heirs of Santioque appealed said order to the CA claiming that

THE TRIAL COURT ERRED IN HOLDING THAT PLAINTIFFS-APPELLANTS FAILED TO PROVE THAT ORIGINAL
CERTIFICATE OF TITLE NO. 1112 WAS ISSUED IN THE NAME OF EMILIO SANTIOQUE, THE PLAINTIFFS
PREDECESSOR-IN-INTEREST, DESPITE THE FACT THAT SUFFICIENT, ADEQUATE AND CONVINCING
EVIDENCE HAVE BEEN PRESENTED TO PROVE THAT SAID OCT 1112 WAS ISSUED IN THE NAME OF EMILIO
SANTIOQUE.

II

THE TRIAL COURT ERRED IN RESORTING TO SPECULATIONS, SURMISES AND CONJECTURES WHEN IT
RULED THAT OCT 1112 COULD HAVE BEEN ISSUED TO ANOTHER PERSON OTHER THAN THE LATE EMILIO
SANTIOQUE.

III

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 157
THE TRIAL COURT ALSO RESORTED TO SPECULATIONS, SURMISES AND CONJECTURES WHEN IT HELD
THAT THERE WAS NO EVIDENCE TO PROVE THAT PATENT NO. 18577 WAS ISSUED TO EMILIO SANTIOQUE,
THUS DISREGARDING THE COMPETENT AND SUFFICIENT EVIDENCE ADDUCED BY PLAINTIFFS-
APPELLANTS TO PROVE THAT SAID PATENT WAS ISSUED TO EMILIO SANTIOQUE.

IV

THE TRIAL COURT ERRED IN HOLDING THAT TCT NO. 19181 ISSUED TO DEFENDANTS-APPELLEES WAS
PRESUMED TO HAVE BEEN ISSUED IN THE ORDINARY COURSE OF BUSINESS WHEN IN FACT ITS ISSUANCE
IS PLAINLY FRAUDULENT AND EVIDENTLY ANOMALOUS.

THE TRIAL COURT ERRED IN SWEEPINGLY CONCLUDING THAT DEFENDANTS-APPELLEES HAVE ACQUIRED
THE SUBJECT PROPERTY BY ACQUISITIVE PRESCRIPTION AND IN RULING THAT PLAINTIFFS-APPELLANTS
HAVE SLEPT ON THEIR RIGHT FOR MANY YEARS AND THAT THEY HAVE CONSTRUCTIVE NOTICE OF THE
ISSUANCE OF DEFENDANTS-APPELLEES TITLE, THUS THEY ARE ESTOPPED BY LACHES.

VI

THE TRIAL COURT ERRED IN REFUSING WITHOUT VALID CAUSE TO ISSUE SUBPOENA DUCES
TECUM AND AD TESTIFICANDUM TO THE REGISTER OF DEEDS OF TARLAC AND THE LAND REGISTRATION
AUTHORITY IN ORDER TO SHED LIGHT ON THE WHEREABOUTS OF OCT 1112 AND THE ISSUANCE OF TCT
NOS. 13287, 19181 AND 71826.[23]

On August 30, 2000, Felimon Santioque wrote to the Director of the National Bureau of Investigation (NBI),

Federico Opinion, Jr., requesting for his assistance in investigating the disappearance of the copy of the Registrar of Deeds

of Tarlac of OCT No. 1112 and TCT No. 13287.[24] Attached to the said letter were the following certifications and

investigation reports of the LRA:

1. Xerox copy of TCT No. 71826 dated September 13, 1967 under the names of Agatona Calma, Emilio
Calma, Dorotea Calma and Lucia Calma.[25]

2. Certified xerox copy Tax Declaration No. 22116 in the name of Agatona Calma, et al;[26]

3. Certified xerox copy of Tax Declaration No. 39766 in the name of Agatona Calma, et al;[27]

4. Certified xerox copy of Tax Declaration No. 35226 in the names of Agatona Calma, et al; [28]

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 158
5. Certified xerox copy of the Investigation Report of Mr. Felix Cabrera Investigator, Land Registration
Authority, dated September 30, 1999, finding that there are no documents in the Registry supporting the
cancellation of OCT 1112 and the issuance of TCT Nos. 13287, and that TCT No. 71826 is irregularly
issued inasmuch as no transaction which would justify its issuance appears in the Primary Entry Book; [29]

6. Certification of Mr. Andres B. Obiena, Records Officer I of the Register of Deeds of Tarlac, Tarlac, dated
April 5, 1999, that OCT No. 1112 could not be located in the archives;[30]

7. Certification of Mr. Meliton I. Vicente, Jr., Community Environment and Natural Resources Officer of the
DENR, Region III, that Lot No. 3844 is already covered by Homestead Application No. 132104 with Patent
No. 1877 issued to Emilio Santioque on March 31, 1932;[31]

8. Certified xerox copy of Record Book Page 383 signed by Florida S. Quiaoit, Records Management Unit,
CENRO III-6, Tarlac City, showing that Emilio Santioque is a claimant of Lot No. 3844 under Homestead
Application No. HA-132104 and Patent No. 1877;[32]

9. Certified xerox copy of Area Sheet over Lot 3844 prepared for Emilio Santioque, certified by Emilanda M.
David, Record Officer 1, DENRO, San Fernando, Pampanga dated February 29, 2000;[33]

10. Certified xerox copy of Case No. 6, Cad Record No. I, showing that Emilio Santioque was the claimant of
Lot No. 3844, under Pat-H-132104 Part.[34]

The heirs of Santioque did not present the said documents at the trial below but they included the same in their
appellants brief.

Without waiting for the report of the NBI on their request, the heirs of Santioque filed a motion with the CA for the
early resolution of the case.[35] On June 27, 2003, the CA affirmed the appealed decision.[36] The appellate court did not give
probative weight to the certifications and other documents submitted by the heirs of Santioque, as their authenticity had not
been established and the signatories therein were not presented for cross-examination. It noted that none of the crucial
documents were presented in the trial court. Assuming that OCT No. 1112 was indeed issued to Emilio Santioque, the claim of
his heirs was nevertheless barred by laches; the latter must bear the consequences of their fathers inaction.

The heirs of Santioque filed a motion for reconsideration, which the CA resolved to deny on November 21, 2003.[37]

The heirs of Santioque, now petitioners, seek relief from this Court on the following issues:
I.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN NOT GIVING CREDENCE TO THE
CERTIFICATIONS, DOCUMENTS, RECORDS AND PICTURES SUBMITTED BY PETITIONER BEFORE THE SAID
COURT ON THE GROUND THAT THEY WERE NOT SUBMITTED IN EVIDENCE AT THE TRIAL AND THAT
THEIR AUTHENTICITY HAS NOT BEEN ESTABLISHED, DESPITE THE FACT THAT PETITIONERS FAILURE TO
SUBMIT THE SAME AS EVIDENCE BEFORE THE TRIAL COURT AND TO ESTABLISH THEIR AUTHENTICITY
WAS DUE TO THE PREMATURE AND UNJUSTIFIED DISMISSAL OF THEIR COMPLAINT, WHICH WAS
TANTAMOUNT TO DENIAL OF THEIR RIGHT TO BE HEARD AND TO DUE PROCESS.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 159
II.
THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT DESPITE PETITIONERS FAILURE TO
PRESENT THEIR ORIGINAL CERTIFICATE OF TITLE, OCT NO. 1112, SUFFICIENT AND CONVINCING
EVIDENCE WERE ADDUCED BY PETITIONERS TO PROVE THAT SAID TITLE WAS ISSUED TO THEIR
PREDECESSOR-IN-INTEREST, EMILIO SANTIOQUE. ON THE OTHER HAND, SINCE PETITIONERS COMPLAINT
WAS DISMISSED BY THE TRIAL COURT ON RESPONDENTS DEMURRER TO EVIDENCE, THE RESPONDENTS
FAILED EITHER (1) TO CONTROVERT THE EVIDENCE ADDUCED BY PETITIONERS IN SUPPORT OF THEIR
CLAIM OVER THE SUBJECT PROPERTY OR THEIR PRETENSION OF FACTS.

III.
THE HONORABLE COURT OF APPEALS GRAVELY MISAPPREHENDED THE FACTS OF THE CASE WHEN IT
HELD THAT RESPONDENTS ARE IN ACTUAL POSSESSION OF THE SUBJECT PROPERTY, DESPITE CLEAR
ABSENCE OF EVIDENCE BY RESPONDENTS TO SUPPORT THEIR CLAIM OF POSSESSION AND AS EVIDENCED
BY THE PICTURES SUBMITTED BY PETITIONERS.

IV.
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONERS DID NOTHING TO RECOVER
THEIR CERTIFICATE OF TITLE, OCT NO. 1112, IN A DIRECT ACTION IF INDEED SAID OCT NO. 1112 WAS
ISSUED TO EMILIO SANTIOQUE AND INVALIDLY CANCELLED AND REPLACED WITH TCT NO. 13287 IN THE
NAME OF RESPONDENTS, AND THAT THE PETITIONERS SHOULD BEAR THE CONSEQUENCES OF THEIR
FATHER EMILIO SANTIOQUES INACTION, DESPITE THE FACT THAT PETITIONERS HAVE BEEN VIGILANT OF
THEIR RIGHTS AND, HENCE, PRESCRIPTION AND LACHES DO NOT BAR PETITIONERS COMPLAINT.

V.
WHETHER OR NOT REMAND OF THE INSTANT CASE TO THE LOWER COURT IS PROPER, INSTEAD OF A
DECISION ON THE MERITS.[38]

Petitioners contend that the appellate court erred in not giving credence to the certifications, records, documents and
pictures they attached to their appellants brief. They aver that they had not yet discovered the said documents when they
presented their evidence at the trial court; hence, they could have presented the documents and their affiants during the
rebuttal stage of the proceedings had the trial court not prematurely aborted the proceedings before it. They insist that they
were denied their right to due process when the trial court granted respondents demurrer to evidence and dismissed the
case.[39]

Petitioners aver that they have clearly shown and proven their claim over the property, particularly through Tax Dec.
No. 19675 and the contents of the Record Book. They posit that judicial notice should be taken that tax declarations are usually
issued in the name of the prospective owner upon a showing of the basis of ownership. On the other hand, respondents have
no factual and evidentiary basis to support their claim over the subject property since they have not adduced before the trial
court any documentary and testimonial evidence to support ownership of the property. Petitioners further contend that they
have clearly shown, through the pictures they submitted before the appellate court, that respondents have not been in actual
possession of the property; hence, it cannot be presumed that respondents, as registered owners, are likewise in possession of
the subject property.[40]

Petitioners aver that prescription and laches do not bar their complaint since they have been vigilant in protecting their rights.
They contend that Emilio was old and sickly and died at an old age. Laches presupposes negligence, and neither Emilio nor his
successors were negligent in protecting their rights over the subject property. It took sometime before they could lodge a
complaint against respondents because they had to make inquiries first and retrieve documents from different offices to
support their claim.[41]

For their part, respondents aver that there were no indicia of proof that OCT No.1112 was really issued to Emilio. The evidence
proffered by the petitioners only tends to prove that Emilio was a mere claimant. It is not incumbent upon the respondents to
present any proof that they are the owners of the subject lot because the property is registered in their name. The mere fact
that the records are not available would notipso facto mean that the transactions made affecting OCT No. 1112 were
irregular.[42]

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 160
Respondents further aver that the appellate court was correct in not giving credence to the documents, which were
not submitted during the trial even though they were obtainable at that time. To allow the introduction of these documents on
appeal would violate the essence of due process as the respondents would not be able to interpose objections to their
admissibility. Even if these documents were admitted, they would not help petitioners case since they would still not prove
that Emilios claim ripened into full ownership. Respondents likewise agree with the finding of the appellate court that the
complaint is already barred by prescription and laches.[43]

The petition is without merit.

The core issues in this case are: (1) whether the trial court erred in granting the demurrer to evidence of respondents,
and (2) whether petitioners claim is barred by prescription and laches.

On the first issue, the Court holds that CA ruling which affirmed that of the RTC granting the demurrer is correct.

Demurrer to evidence authorizes a judgment on the merits of the case without the defendant having to submit
evidence on his part as he would ordinarily have to do, if it is shown by plaintiffs evidence that the latter is not entitled to the
relief sought. The demurrer, therefore, is an aid or instrument for the expeditious termination of an action, similar to a motion
to dismiss, which a court or tribunal may either grant or deny.[44]

A demurrer to evidence may be issued when, upon the facts and the law, the plaintiff has shown no right to
relief.[45] Where the plaintiffs evidence together with such inferences and conclusions as may reasonably be drawn therefrom
does not warrant recovery against the defendant, a demurrer to evidence should be sustained.[46] A demurrer to evidence is
likewise sustainable when, admitting every proven fact favorable to the plaintiff and indulging in his favor all conclusions
fairly and reasonably inferable therefrom, the plaintiff has failed to make out one or more of the material elements of his
case,[47] or when there is no evidence to support an allegation necessary to his claim.[48] It should be sustained where the
plaintiffs evidence is prima facie insufficient for a recovery.[49]

Petitioners, as plaintiffs below, were obliged to prove their claim in their complaint that their father, Emilio, applied
for and was granted Homestead Patent No. 18577, and that OCT No. 1112 was issued by the Register of Deeds in his name on
the basis of said patent. Petitioners had the burden of proof to present evidence on the fact in issue to establish their claim by
their own evidence required by law.[50] More so, where, as in this case, on the face of TCT No. 19181 under the names of the
respondents, it was derived from TCT No. 13287, which in turn cancelled OCT No. 1112 issued on April 21, 1932 on the basis
of a homestead patent. It must be stressed that the original certificate of title carries a strong presumption that the provisions
of law governing the registration of land have been complied with. The OCT enjoys a presumption of validity. Once the title is
registered, the owners can rest secure on their ownership and possession. [51] Once a homestead patent granted in accordance
with law is registered, the certificate of title issued in virtue of said patent has the force and effect of a Torrens title issued
under the land registration law.[52]

In the present case, petitioners failed to prove the material allegations in their complaint that Emilio Santioque
applied for and was granted Patent No. 18577 and that OCT No. 1112 was issued on the basis thereof. We quote with approval
the ruling of the RTC:

The plaintiffs failed to prove that OCT [N]o. 1112 was issued in the name of Emilio Santioque. It was
issued all right, but there is no evidence it was in the name of Emilio Santioque. OCT [N]o. 1112 could have
been in the name of another person. Exhibit B merely shows that Emilio Santioque is a survey claimant.

Exhibit A contradicted all these claims of plaintiffs. It is stated therein that Lot No. 3844 of Tarlac
Cadastre, Cadastral Case [N]o. 61, L.R.C. Record No. 1879 was previously decided but no final decree of
registration has yet issued thereon. Hence, there was already a decision by the cadastral court. In whose favor
the land was awarded is a mystery up to the date.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 161
There is also no evidence that [P]atent [N]o. 18577 was issued to Emilio Santioque. In fact, there is no
available record to prove that [P]atent [N]o. 18577 was in the name of Emilio Santioque. (Exhibit B-1) It is
safe to assume that the decision of the cadastral Court awarded the land to a person who was also the
awardee of [P]atent [N]o. 18577, because of the entry said lot is subject to annotation quote: con patent no.
18577 segun report of the B.L. , this being the very reason why no decree of registration was issued pursuant
to the cadastral proceeding.[53]

Petitioners even failed to present Homestead Application No. 132104 allegedly filed by Emilio with the Bureau of
Lands. In fact, as evidenced by the Certification of the LMB, it had no record of said application and patent. The records of the
LMB relative to Cadastral Case No. 61 and LRC Cad. Record No. 1879 were, likewise, not presented.

It should be noted that, under Section 14 of Commonwealth Act 141, The Public Land Act, there are certain
requirements that a homestead applicant should comply with before a patent could be issued to him, thus:

SECTION 14. No certificate shall be given or patent issued for the land applied for until at least one-
fifth of the land has been improved and cultivated. The period within which the land shall be cultivated shall
not be less than one nor more than five years, from the date of the approval of the application. The applicant
shall, within the said period, notify the Director of Lands as soon as he is ready to acquire the title. If at the
date of such notice, the applicant shall prove to the satisfaction of the Director of Lands, that he has resided
continuously for at least one year in the municipality in which the land is located, or in a municipality
adjacent to the same, and has cultivated at least one-fifth of the land continuously since the approval of the
application, and shall make affidavit that no part of said land has been alienated or encumbered, and that he
has complied with all the requirements of this Act, then, upon the payment of five pesos, as final fee, he shall
be entitled to a patent.

Petitioners failed to present competent and credible evidence that Emilio Calma complied with the aforesaid
requirements before his death.

Petitioners rely on Tax Dec. No. 19675 to substantiate their claim over the subject property. However, it is axiomatic
that tax receipts and tax declarations of ownership for taxation purposes do not constitute sufficient proof of ownership. They
must be supported by other effective proofs.[54]

The appellate court was also correct in not giving credence to the certifications which petitioners submitted before it
on the ground that the
said documents were not presented in the trial court. Petitioners, thus, failed to prove the authenticity of said documents
because they failed to present the government officials who certified the same.

It is well settled that courts will consider as evidence only that which has been formally offered, [55] otherwise, the
opposing party would be denied due process of law.[56] Thus, the Court explained in one case that

A formal offer is necessary since judges are required to base their findings of fact and judgment onlyand
strictlyupon the evidence offered by the parties at the trial. To allow a party to attach any document to his
pleading and then expect the court to consider it as evidence may draw unwarranted consequences. The
opposing party will be deprived of his chance to examine the document and object to its admissibility. The
appellate court will have difficulty reviewing documents not previously scrutinized by the court below. [57]

Petitioners, however, contend that they could have presented the said documents during the rebuttal stage of the
proceedings before the trial court. It bears stressing, however, that a plaintiff is bound to introduce all evidence that supports
his case during the presentation of his evidence in chief.[58] A party holding the affirmative of an issue is bound to present all of
the evidence on the case in chief before the close of the proof, and may not add to it by the device of rebuttal. [59] After the
parties have produced their respective direct proofs, they are allowed to offer rebutting evidence only. [60]

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 162
Generally, rebuttal evidence is confined to that which explains, disproves, or counteracts evidence introduced by the
adverse party. It is not intended to give a party an opportunity to tell his story twice or to present evidence that was proper in
the case in chief. [61] However, the court for good reasons, in the furtherance of justice, may permit them to offer evidence upon
their original case, and its ruling will not be disturbed in the appellate court where no abuse of discretion appears. This is
usually allowed when the evidence is newly discovered, or where it has been omitted through inadvertence or mistake, or
where the purpose of the evidence is to correct evidence previously offered.[62]

It is true that petitioners failed to adduce rebuttal evidence because respondents filed a Demurrer to Evidence.
However, petitioners should have filed a motion for new trial based on newly-discovered evidence under Rule 37, Section 2 of
the 1997 Rules of Civil Procedure after the trial court granted the demurrer and dismissed the complaint.

Petitioners aver that the documents they submitted on appeal were not yet discovered during the presentation of
their evidence before the trial court.[63]Assuming this claim to be true, the Court notes however, that petitioners nevertheless
failed to establish that they could not, with reasonable diligence, have discovered and produced the documents at the trial, and
prove that such documents would probably alter the result, if presented. The documents belatedly submitted by petitioners on
appeal can hardly be considered newly discovered since they are public records.Petitioners could have earlier secured copies
thereof during trial. Moreover, a perusal of these documents reveals that even if admitted, they would not, in any way, bolster
petitioners case, or remedy the vacuum in their evidence-in-chief.

Further, we agree with the appellate court that petitioners complaint is barred by prescription and laches. An action
for reconveyance prescribes in ten years, the point of reference being the date of registration of the deed or the date of
issuance of the certificate of title over the property.[64] Even if we reckon the prescription period from TCT No. 19181 issued
on November 27, 1953, the only title verified to be in the name of respondents, more than ten years have already elapsed since
then until the time the petitioners filed their complaint on February 29, 1998. An action for reconveyance is imprescriptible
only when the plaintiff is in actual possession of the property.[65] In the present case, there is no showing that petitioners were
in actual possession of the subject property.

In any event, petitioners cause of action is likewise barred by laches. The essence of laches or stale demands is the
failure or neglect for an unreasonable and unexplained length of time to do that which, by exercising due diligence, could or
should have been done earlier, thus giving rise to the presumption that the party entitled to assert it either has abandoned or
declined to assert it.[66] Petitioners right of action had long been barred by laches during the lifetime of their father, their
predecessor in interest; petitioners must necessarily bear the consequences of their predecessors inaction. We quote, with
approval, the following ruling of the CA:

The trial court further held that There is also no evidence that patent No. 18577 was issued to Emilio
Santioque. In fact, there is no available record to prove that patent No. 18577 was in the name of Emilio
Santioque. (Exhibit B-1). We add that nowhere in the certificates of title presented by appellants is the source
of OCT No. 1112 indicated as Homestead Patent No. 18577.

Even assuming that appellants constructive notice of another title over LotNo. 3844 could be
reckoned only from 1953 when TCT No. 19181 was issued to replace TCT No. 13287, still appellants and their
predecessors-in-interest waited 45 years before bringing the action below. Meanwhile, Lot No. 3844 became
the subject of various litigations among appellees and with third parties, as well as several transactions, such
as the contract of lease between Emilio Calmas heirs and spouses Lope A. Akol from 1954-1964 (Entry No.
46563); the Assignment of Leasehold rights to Rehabilitation Finance Corporation, 1955 (Entry No. 53205);
the Termination of Lease (Entry No. 1-7584; the Partial Release of Leasehold (Entry No. 65888). No proof was
submitted in the court below to belie the actual possession of the subject lot by the appellees, who as the
registered owners are also presumed to be in possession of the same.

While the indefeasibility of the Torrens title of appellees can be claimed only if a previous valid title
to the same parcel does not exist (Register of Deeds vs. Philippine National Bank, 13 SCRA 46), appellants have
failed to establish that OCT No. 1112 was issued in their fathers name and was later invalidly cancelled in
1947 and replaced with TCT No. 13287. Only in 1998 was an action brought to directly question the validity
of TCT No. 13287. The principle of laches has indeed come into play. Laches or stale demand is based upon
grounds of public policy which requires for the peace of society the discouragement of stale actions, and
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 163
unlike the statute of limitations is not a mere question of time but primarily a question of the inequality or
unfairness of permitting a right or claim to be enforced or asserted (Pangilinan vs. Court of Appeals, 279 SCRA
590). In Agne vs. Director of Lands, 181 SCRA 793, 809 [1990], it was held that the failure of the registered
owners to assert their claim over the disputed property for almost thirty (30) years constituted laches.

The question of laches is addressed to the sound discretion of the court. Laches being an equitable
doctrine, its application is controlled by equitable considerations, although the better rule is that courts
under the principle of equity will not be guided or bound strictly by the statute of limitations or doctrine of
laches when to do so would result in manifest wrong or injusticed result (Santiago vs. Court of Appeals, 278
SCRA 98).

We are aware of rulings to the effect that even if the defendants have been in actual possession of the
property for more than ten (10) years, the registered title of plaintiffs over the property cannot be lost by
prescription or laches (Board of Liquidators vs. Roxas, 179 SCRA 809); or that an action by the registered
owner to recover possession based on a Torrens title is not barred by laches (Dablo vs. Court of Appeals, 226
SCRA 621). However, the laches committed by the appellants pertained to the establishment of their very title
itself. Only after they have recovered their title could they then have standing to question the title of the
appellants and recover possession of the subject lot. Besides, it has been held that an action for reconveyance
or quieting of title instituted only after thirty (30) years could be barred by laches (City Government of Danao
vs. Monteverde Consunji, 358 SCRA 107).This being so, all the more should an action to recover title, filed after
45 years, be barred by laches where the complainants title is itself clearly doubtful. [67]

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. The Decision and Resolution of the
Court of Appeals in CA-G.R. CV No. 65352 are AFFIRMED. Cost against the petitioners.

SO ORDERED.

SECOND DIVISION

REPUBLIC OF THEPHILIPPINES, G.R. No. 143491


Petitioner,

Present:

PUNO, J., Chairperson,

SANDOVAL-GUTIERREZ,

*CORONA,

- versus - AZCUNA, and

GARCIA, JJ.

EFREN M. CARRASCO,
Respondent.
Promulgated:

December 6, 2006

x------------------------------------------------------------------------------------x

DECISION
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 164
GARCIA, J.:

Petitioner Republic of the Philippines, thru this petition for review on certiorari under Rule 45 of the Rules of Court, seeks to
annul and set aside the Decision[1] dated June 14, 2000 of the Court of Appeals (CA) in CA-G.R. CV No. 59566,
affirming in toto an earlier decision[2] of the Regional Trial Court (RTC) of Morong, Rizal, Branch 80, which ordered the
registration in the name of herein respondent Efren C. Carrasco of a parcel of land situated
at Tandang Kutyo, Sampaloc, Tanay, Rizal.

The factual antecedents:

On October 1, 1996, in the RTC of Morong, Rizal, respondent Efren M. Carrasco filed an application for registration of title over
a 17,637-square meter land situated atSitio Ulang Tubig, Tandang Kutyo, Sampaloc, Tanay, Province of Rizal.

In his application, docketed as Land Registration Case (LRC) No. 215-T and raffled to Branch 80 of the court,
respondent alleged that he is the owner in fee simple of the land sought to be registered; that said land is alienable and
disposable and not within any military or whatever kind of reservation; that to the best of his knowledge, the land has never
been mortgaged or encumbered or that any person has any interest thereon, legal or equitable; and that the subject land is
declared for taxation purposes in his name. Among the documents attached to the application were the individual plan and
technical description of the land; Diazo polyester film (SEPIA) of the original survey subdivision plan SGS-No. 04-000518-D of
which the subject land is a part; respondents Affidavit of Ownership dated August 22, 1996, therein stating that he took
possession of the land in 1990 from his predecessor, Norberto Mingao, who has occupied the land for the last 25 years; the
latters Deed of Waiver dated December 16, 1991, thereunder waiving his claim over the land in favor of the respondent; a
Certification from the Land Registration Authority as to the status of the land; Tax Declaration No. 017-4224 for the year 1996
in respondents name; and an official receipt dated September 13, 1996 of realty tax payment.

Petitioner Republic, through the Office of the Solicitor General (OSG), filed an opposition to the application. There
being no private oppositor, the trial court issued an order of general default on November 10, 1997 and proceeded on the
same day with the markings of the respondents documents and the reception ex parte of his evidence.

Thereafter, or on November 26, 1997, the respondent testified in support of his application. He likewise adduced the
testimony of one Teosito Avesado. Hereunder is the trial courts summation of respondents testimonial evidence:

Petitioner Efren Carrasco testified on November 26, 1997 that he is single, 24 years of age, a farmer
and residing at Tanay, Rizal, a Filipino; that he owned a parcel of land located
at Sitio Ulang Tubig, Barangay Tandang Kutyo, Tanay, Rizal with an area of 17,637 sq. meters; that the said
land has not been the subject of Original Registration of Title as amended by PD 1529; that he acquired the
said land from Norberto Mingao as his compensation for having worked with him and his acquisition as
evidenced by a Waiver executed by Norberto Mingao in favor of petitioner on December 16, 1991 which he
caused to be marked Exhibit E; that he also produced and showed to the Court as proof of his ownership to
the land an original survey subdivision plan No. SGS-04-000518-0, which he caused to be marked Exhibit F
and the particular Lot No. 16 on the map as Exhibit F-1; that he caused the survey of the property by a duly
licensed Geodetic Engineer in the person of Engineer Modesto Allado who prepared the technical
descriptions of the property now marked Exhibit G and issued a surveyors certificate which was marked
Exhibit H; that the land sought to be registered was declared for taxation purposes as shown in Tax
Declaration No. 017-4224 in the name of Efren Carrasco which was marked Exhibit I; that the taxes for the
said property was paid under Official Receipt No. 215109 dated September 13, 1996 marked Exhibit J; that
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 165
the boundary owners of his property sought to be registered are: on the East, Miguel Taclas, on the
North,Maximo Mondragon, on the South, Allan Alcantara and on the West, Jesus Consulta; that he has been in
continuously, openly, adversely in possession of the said property in the concept of an owner, while his
predecessors-in-interest has likewise been in possession of the same in the concept of an owner continuously,
openly, and adversely for more than 25 years; that there are no other persons claiming possession over the
property; that the same property has not been mortgaged or encumbered to any other persons or entities;
that the property subject matter of the case is not within a military or naval reservation.

On cross-examination, he testified and clarified that he was employed in the land of Norberto Mingao,
clearing and planting on the vast property he owns; that his father also had worked for Norberto Mingao for a
very long time and for the services that he and his father rendered, he was given by Mingao about 17,637
square meters of the more or less 600,000 square meters of land he owns; that in 1950 his father took over
the possession of the land, cultivated the same and planted fruit trees and growing crops; the said land was
given by Mr. Mingao to his father because of the services he rendered to Mingao by clearing, planting and
cultivating his vast track of lands; that it was in 1990 that he occupied the possession of his father by virtue of
the Deed of Waiver executed by Mingao in his favor.

The second witness of petitioner is Teosito Avesado, 69 years old, a businessman and a resident of
B.F. Homes Phase 3, Paraaque, Metro Manila; that he personally knows the applicant in this case as he is one
of the workers of NorbertoMingao, that he knew the land sought to be registered because he used to
visitMingao in that area as they happened to be the President and Vice President of the Magellan Agricultural
Corporation respectively; that he is interested in the petition so that people working with Mingao should be
given the rightful ownership and title to the land they hold; that Mr. Mingao had started to occupy a vast tract
of land during the early 1940s and because of his appreciation to the services of his workers who worked for
him in the land for a very long time, he gave a portion of his land to applicant. [3]

In a decision[4] dated February 4, 1998, the trial court, upon a finding that the respondent has sufficiently
established his ownership of the land in question, ordered the registration thereof in his name, thus:

Wherefore, it is hereby decreed that the property described as Lot 16, SGS-000518-D located
at Tandang Kutyo, Sampaloc, Tanay, Rizal with an area of 17,637 square meters may now be registered and
confirmed in the name of Efren N. Carrasco pursuant to the provisions of the Land Registration Act, and the
corresponding title to the property be issued in his name after payment of the required fees.

Let copies of this Decision be furnished the Solicitor General, the Land Registration Authority, the Department
of Environment and Natural Resources, the Provincial Government of Rizal, the Office of the District Engineer
of Rizal, the Municipality ofTanay, Rizal and the parties concerned.

SO ORDERED.

Insisting that (1) the land being applied for registration is not alienable public agricultural land; and (2) respondent is
not qualified to register the same under Presidential Decree (P.D.) No. 1529, [5] the Republic, through the OSG, appealed to the
CA whereat its appellate recourse was docketed as CA-G.R. CV No. 59566.

During the pendency of the appeal, the respondent filed a motion with the appellate court praying for the admission of
additional evidence, which additional evidence included an Affidavit of Ownership dated June 1, 1998 of Norberto Mingao.In
its resolution of February 9, 1999, however, the CA merely noted the motion.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 166
Eventually, in the herein assailed decision dated June 14, 2000, the CA dismissed the Republics appeal and
affirmed in toto the appealed decision of the trial court, to wit:

WHEREFORE, the judgment appealed from is hereby AFFIRMED in toto.

SO ORDERED.

In its decision, the CA held that the subject land is alienable in view of the certification from the Department of
Environment and Natural Resources (DENR) that the land was verified to be within the alienable and disposable land of the
public domain and outside of any civil or military reservation. On the issue of whether the respondent was qualified to have
the land registered in his name, the CA ruled in the affirmative having found the evidence sufficient to establish respondents
andMingaos ownership and possession of the land in accordance with the rule laid down in Republic v. Court of
Appeals[6] that occupation and cultivation for more than 30 years by an applicant and his predecessor-in-interest vest title
on such applicant so as to segregate the land from the mass of the public domain.

Unable to accept the judgment, the Republic is now with this Court via the present petition on the following grounds:

THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THELOWER COURTS RULING THAT
RESPONDENT IS QUALIFIED TO APPLY FOR THE REGISTRATION OF TITLE OVER THE SUBJECT PARCEL OF
LAND UNDER P.D. NO. 1529.

II

ASSUMING ARGUENDO THAT RESPONDENT IS QUALIFIED TO APPLY FOR REGISTRATION OF THE


QUESTIONED LOT, STILL THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT BASED ON
JURISPRUDENCE, REPUBLIC V. COURT OF APPEALS, 235 SCRA 567 (1994), RESPONDENT HAD BEEN IN
POSSESSION THEREOF WITHIN THE PERIOD PRESCRIBED BY LAW FOR THE SAME TO BE ACQUIRED
THROUGH JUDICIAL CONFIRMATION OF IMPERFECT TITLE.[7]

In his Comment,[8] respondent maintains that he is entitled to apply for registration of title over the subject property
because his open, adverse and continuous possession thereof for more than 30 years has ripened into ownership. In any event,
respondent argues that the CA has found his evidence sufficient to establish his and his predecessor-in-interests ownership
and possession of the land, which factual finding is conclusive on this Court.

The petition is impressed with merit.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 167
While the rule is well-settled that findings of fact of appellate courts are conclusive upon this Court, there are,

however, recognized exceptions thereto, among which is where the findings of fact are not supported by the record or are so

glaringly erroneous as to constitute a serious abuse of discretion. [9] Such exceptions obtain in this case.

Basically, the pivotal issue is whether the respondent was able to sufficiently prove his possession, in the concept of
an owner, of the land sought to be registered for the period required by law so as to entitle him to the registration thereof in
his name.

We resolve the issue in the negative.

Before one can register his title over a parcel of land, he must show that: (1) he, by himself or through his
predecessors-in-interest, has been in open, continuous, exclusive and notorious possession and occupation thereof under
a bona fide claim of ownership since June 12, 1945 or earlier; and (2) the land subject of the application is alienable and
disposable land of the public domain.[10]

For sure, Section 14, paragraph (1), of the Property Registration Decree (P.D. No. 1529) explicitly states:

SEC. 14. Who may apply. The following persons may file in the proper Court of First Instance [now the
Regional Trial Court] an application for registration of title to land, whether personally or through their duly
authorized representatives:

(1) Those who by themselves or through their predecessors-in-interest have been in


open, continuous, exclusive and notorious possession and occupation of alienable
and disposable lands of the public domain under a bona fide claim of ownership
sinceJune 12, 1945, or earlier.

We have no disagreement with the finding of the CA that the subject property is part of the alienable and disposable

agricultural lands of the public domain, having been classified as such by the DENR, an appropriate government agency for the

purpose. We part ways, however, with the CA in its conclusion that the respondent has established his ownership of the land in

question for the period of possession required by law.

Respondent anchors his claim of ownership on his allegation of continuous, open and adverse possession in the
concept of an owner by himself and through his predecessor-in-interest, Norberto Mingao, for more than 30 years.[11] Bearing
in mind the rule that a person who seeks registration of title to a piece of land must prove his claim by clear and convincing
evidence,[12] we find respondents evidence in this respect insufficient.

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 168
To begin with, the respondent failed to prove that Norberto Mingao from whom he allegedly derived his title, was the
owner of the subject land and hence can transmit rights over the same in his favor.

In his Deed of Waiver dated December 16, 1991, Mingao merely claimed ownership of the land and that he is waiving
his right and interest thereon in favor of the respondent. Significantly, the same Waiver did not even specifically state when his
(Mingaos) possession started. While, as rightly found by the CA, Mingao has been in possession of the land since 1950 based
on Mingaos Affidavit of Ownership dated June 1, 1998 which was presented while the case was pending appeal with the CA,
nonetheless, without more, said affidavit is not adequate to prove the fact ofpossession beginning that date. Indeed, it may not
be amiss to point out that Mingaodid not even testify in this case.

The Court cannot give full credence to respondents Affidavit of Ownershipdated August 22, 1996 for he simply alleged
therein that Mingao had occupied the land for the last 25 years. Likewise, respondents testimony
regarding Mingaospossession and ownership, aside from being self-serving, consists merely of general statements with no
specifics even as to when his predecessor began occupying the land. Indeed, such is hardly the well-nigh incontrovertible
evidence required in cases of this nature. Respondent must present proof of specific acts of ownership to substantiate his
claim and cannot just offer general statements which are mere conclusions of law than factual evidence of possession.

In the same vein, Teosito Avesados testimony cannot be relied upon to corroborate respondents claim as
to Mingaos possession as owner of the land, more so, when we are not sufficiently convinced as to said witness personal
acquaintance with Mingao or knowledge regarding the latters intention to give the subject land to the respondent.

Furthermore, there is no proof that Mingao declared the land in his name for taxation purposes or paid taxes due
thereon. True, a tax declaration by itself is not sufficient to prove ownership. Nonetheless, it may serve as sufficient basis for
inferring possession.[13] As we held in Republic v. Alconaba:[14]

While tax receipts and declarations are not incontrovertible evidence of ownership, they constitute,
at the least, proof that the holder has a claim of title over the property. The voluntary declaration of a piece of
property for taxation purposes not only manifests ones sincere and honest desire to obtain title to the
property, but also announces an adverse claim against the State and all other interested parties with an
intention to contribute needed revenues to the government. Such an act strengthens ones bona fide claim of
acquisition of ownership.

Hence, since Mingaos possession and ownership of the subject land were not sufficiently proven, Mingao himself
cannot validly transmit his rights over the land in respondents favor. At any rate, the mode by which respondent alleged to
have taken possession and ownership of the land is not one of those provided for under Article 712 of the Civil Code. [15]

To show how he acquired possession of the subject land from Mingao, respondent presented his Affidavit of
Ownership dated August 22, 1996 and MingaosDeed of Waiver dated December 16, 1991. But said documents cannot show that
there was a valid transmission of rights. As it were, respondents Affidavit of Ownership merely stated that he has taken

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 169
possession of the subject land in 1990 from Mingao.On the other hand, Mingaos Deed of Waiver is not, as aforestated, a mode of
acquiring ownership.

The waiver cannot even be considered a donation because it does not comply with the formalities required in order
for a donation of an immovable to be valid pursuant to Article 749 of the Civil Code [16] because respondents acceptance thereof
is lacking.

Also, prescription cannot be availed of to acquire ownership not only because the respondents possession was not in
the concept of an owner, but also because he failed to comply with the required period. Respondent cannot tack his possession
to that of Mingaos since there is no privity between them, the transmission of rights not having been proven. Thus,
respondents possession must be reckoned only from the time of his actual possession which, as admitted by him, commenced
in 1990.

But even assuming, in gratia argumenti, that respondent may validly derive his right of possession from Mingao, still,
he may not rightfully apply for confirmation of title to the land in question. For, as the CA correctly found, and which the
respondent does not dispute, Mingaos possession started only in 1950 which is 5 years later than the reckoning point of June
12, 1945 under the Property Registration Decree (P.D. No. 1529). It is thus clear that respondent failed to comply with the
period of possession and occupation not only as required by Section 14(1), supra, of the Property Registration Decree but also
by the Public Land Act or Commonwealth Act (C.A.) No. 141, the pertinent provision of which is Section 48(b):

Section 48. The following described citizens of the Philippines, occupying lands of the public domain or
claiming to own any such lands or an interest therein, but whose titles have not been perfected or completed,
may apply to the Court of first Instance of the province where the land is located for confirmation of their
claims and the issuance of a certificate of title therefore, under the Land Registration Act, to wit:

xxx xxx xxx x

(b) Those who by themselves or through their predecessors-in-interest have been in open, continuous,
exclusive, and notorious possession and occupation of agricultural lands of the public domain, under a bona
fide claim of acquisition of ownership, since June 12, 1945, or earlier, immediately preceding the filing of the
application for confirmation of title except when prevented by war or force majeure. These shall be
conclusively presumed to have performed all the conditions essential to a Government grant and shall be
entitled to a certificate of title under the provisions of this chapter.

Clearly then, the reliance placed by the appellate court in Republic v. Court of Appeals[17] where we ruled that
occupation and cultivation for more than 30 years by an applicant and his predecessor-in-interest vest title on such applicant
so as to segregate the land from the mass of public land, is erroneous. Said ruling has been effectively superseded by
subsequent legislations which amended Section 48(b) the Public Land Act. The case of Republic v. Doldol,[18] cited in Igtiben v.
Republic,[19]provides a summary of these amendments, to wit:

The original Section 48(b) of C.A. No. 141 provided for possession and occupation of lands of the
public domain since July 26, 1894. This was superseded by R.A. No. 1942 which provided for a simple thirty-
year prescriptive period of occupation by an applicant for judicial confirmation of imperfect title. The same,
Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 170
however, has already been amended by Presidential Decree No. 1073, approved onJanuary 25, 1977. As
amended Section 48(b) now reads:

Section 48. The following described citizens of the Philippines, occupying lands of the public domain or
claiming to own any such lands or an interest therein, but whose titles have not been perfected or completed,
may apply to the Court of first Instance of the province where the land is located for confirmation of their
claims and the issuance of a certificate of title therefore, under the Land Registration Act, to wit:

xxx xxx xxx x

(b) Those who by themselves or through their predecessors-in-interest have been in open, continuous,
exclusive, and notorious possession and occupation of agricultural lands of the public domain, under a bona
fide claim of acquisition of ownership,since June 12, 1945, or earlier, immediately preceding the filing of the
application for confirmation of title except when prevented by war or force majeure. These shall be
conclusively presumed to have performed all the conditions essential to a Government grant and shall be
entitled to a certificate of title under the provisions of this chapter. (Emphasis supplied.)

As presently phrased, the law requires that possession of lands of the public domain must be from June 12, 1945 or
earlier for the land to be acquired through judicial confirmation of imperfect or incomplete title.

In sum, the respondent could not have acquired an imperfect title to the land in question because he has not proved
possession openly, continuously and adversely in the concept of an owner since June 12, 1945, the period of possession
required by law.At best, he can only prove possession since 1990, the date which he admitted to have taken possession of the
subject parcel of land from Mingao.

WHEREFORE, the petition is GRANTED. Accordingly, the assailed decision dated June 14, 2000 of the CA in CA-G.R. CV
No. 59566 is REVERSED and SET ASIDE and LRC No. 215-T of the RTC of Morong, Rizal, Branch 80, is orderedDISMISSED.

No costs.

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 148423 December 6, 2006

ESPERANZA G. FRONDARINA, joined by her husband, PEDRO A. FRONDARINA, petitioners,


vs.
NAPOLEON MALAZARTE and LAURA P. MALAZARTE, respondents.

DECISION

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 171
VELASCO, JR., J.:

There is no standard by which the weight of conflicting evidence can be ascertained. We have no test of the truth of
human testimony except its conformity to our knowledge, observation, and experience.1

The Case

This petition for review seeks to overturn the Decision of the Court of Appeals (CA) in CA-G.R. SP No. 61335 which sustained
the Olongapo City Regional Trial Courts dismissal of the forcible entry complaint originally filed by petitioners Frondarina
spouses against the respondent Malazarte spouses in Civil Case No. 2853 before the Olongapo City Municipal Trial Court in
Cities (MTCC).

The Facts

Evidence culled from the records of the Olongapo City MTCC2 shows that on July 22, 1970, Lot 5, Block 15-B, Gordon Heights
Subdivision, Olongapo City (disputed lot), with an area of 450 square meters, was acquired by Flordelina Santos from
Iluminado Amar. On June 17, 1971, Cirila Gongora, petitioner Esperanza Frondarinas sister, in turn, acquired the disputed lot
from Santos, as shown in the Deed of Transfer of Possessory Right over a Lot (Exhibit "B"). On the same date, Gongora, as
Esperanza Frondarinas predecessor-in-interest, filed a Miscellaneous Sales Application (MSA) (Exhibit "D") with the Bureau
of Lands.

The disputed lot was also declared in Gongoras name for taxation purposes under Tax Declaration No. 32821 in 1970 (Exhibit
"E"), under Tax Declaration No. 16-0611 in 1974 (Exhibit "F"), and under Tax Declaration No. 16-0431 in 1980 (Exhibit "G").
She also paid the real estate taxes due on said property as shown by the April 12, 1985 Official Receipt No. 7841503,
representing real estate taxes on the property for the years 1980 to 1985 (Exhibit "H").

Petitioner Esperanza Frondarina, in turn, obtained the disputed lot from her sister, Cirila Gongora, on February 19, 1985, as
evidenced by the Waiver and/or Renunciation of Rights to a Parcel of Land (Exhibit "A"). On July 1, 1985, said petitioner
likewise filed an MSA with the Bureau of Lands over the disputed lot.

Petitioner Esperanza Frondarina also declared the disputed lot in her name in 1986 under Tax Declaration No. 004-3574
(Exhibit "J") and paid real estates taxes on the property for the years 1986 to 1988 (inclusive of Exhibits "K" to "K-3"). She also
had the lot surveyed (inclusive of Exhibits "L," "L-1," "M," "N," "N-1," "N-2," and "O"), fenced it with four (4) strands of barbed
wire, and tended two (2) mango and one (1) coconut trees and planted different kinds of vegetables on the lot.

Meanwhile, respondents Malazartes alleged that on March 1, 1988, they bought the said lot from Romeo Valencia (Exhibit "S");
and that they resided on the lot since May 1988. On the said date, respondents immediately started the construction of their
house on the lot without a building permitas their application was denied due to petitioners complaint. They also admitted
that an employee of the City Engineers Office told them to stop the construction because of the complaint and absence of a
building permit.

In the meantime, the records reveal that on March 18, 1988, after they allegedly bought the said lot, respondents threatened
petitioners caretaker, Lorenza Andrada. More so, according to petitioner Esperanza Frondarina, in her testimony, the
respondents dug holes to put up posts, riprapped the rear of the lot, and deposited hollow blocks to construct a house. On
March 28, 1988, when confronted by petitioners Frondarinas on why they entered petitioners lot, respondents replied that
they got permission to enter the land from Mr. Valencia, as they had bought it from him. Petitioners then reported the matter
to the City Engineers Office; and Mr. Malik of said office went to the said place and told the respondents to stop the
construction of the house as they had no building permit.

The respondents, however, continued the construction on the lot as shown in the photographs taken by petitioner Esperanza
Frondarina on May 18, 1988 (Exhibits "T," "T-1," "T-2," and "T-3"). Aggrieved, on April 5, 1988, petitioners sent a letter
request to City Engineer Nicolas D. de Leon (Exhibits "P," "P-1," and "S"); and on April 28, 1989, they also sent letters to then
Mayor Richard Gordon and Atty. Ma. Ellen Aguilar about respondents intrusion on their lot (Exhibits "R" and "Q,"
respectively).

Furthermore, the Olongapo City MTCC found that respondents witness, Romeo Valencia, admitted that his possession of the
disputed lot had already been questionedfor almost three (3) yearsby petitioners before he sold it to respondents.3 Thus,
according to the MTCC, "it is very clear from the evidence that [petitioners] did not only have prior possession of the subject
lot, but it is also clear that the possession of the land by [petitioners] 4was not adverse, uninterrupted, open and in the concept
of owners."

The Ruling of the Olongapo City MTCC

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 172
Finding that the "totality of evidence preponderates in favor of [petitioners Frondarinas] who have sufficiently established
their cause of action against [respondents Malazartes]," 5 the MTCC rendered its February 28, 2000 Decision in favor of
petitioners, the fallo of which reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants, as follows:

1. ordering the defendants and all and any other persons claiming under them to vacate the parcel of land
located at No. 5 Latires Street, Gordon Heights, Olongapo City, also identified as Lot 5, Block 15-B, Gordon
Heights Subdivision, Gordon Heights, Olongapo City, with an area of 450 square meters, declared in the name
of plaintiff Esperanza G. Frondarina under Tax Declaration No. 004-3574 and more particularly described
under paragraph 2 of the complaint, and to deliver its possession to the plaintiffs;

2. ordering the defendants to remove from the subject premises all constructions that they built thereat;

3. ordering the defendants, jointly and severally to pay unto the plaintiffs actual damages in the amount of
P3,000.00 and reasonable rentals of P500.00 every month from the time of forcible entry on March 18, 1988
until the time defendants have vacated the premises and delivered possession thereof to the plaintiffs; and

4. ordering the defendants to pay jointly and severally, unto the plaintiffs the sum of P15,000.00, as attorneys
fees, plus costs.6

On April 26, 2006, respondents Malazartes filed a Notice of Appeal 7 from the adverse Decision of the Olongapo City MTCC with
the Olongapo City Regional Trial Court (RTC) Branch 72.

The Ruling of the Olongapo City RTC

Upon respondents appeal, the Olongapo City RTC Branch 72 arrived at factual findings8 diametrically opposed to the facts
culled by the Olongapo City MTCC. According to the trial court, it was convinced that respondents were in actual and physical
possession of the disputed lot through their predecessor-in-interest, Romeo Valencia; because they bought it from him on
March 1, 1988 and they started to occupy the disputed lot on March 18, 1988 according to the testimony of Laura Malazarte.
The trial court said that "this [testimonial evidence] is the strong point in the evidence on record in favor of the
[respondents]."

The trial court further discoursed that:

[P]laintiffs failed to prove, with preponderance of evidence, that they were in actual and physical possession of the
subject land. The plaintiffs were not in personal actual and physical possession of the subject land. The plaintiffs
possession was through a caretaker. Esperanza Frondarina testified on this fact:

Q Did you occupy the property after it was sold to you by your sister?

A I have a caretaker, sir.

Q What is the name of your caretaker Mrs. Witness?

A Andrada sir.

(TSN, p. 4, Nov. 16, 1989).

The plaintiffs have only hearsay knowledge of who planted the two mango trees and one coconut tree.

Q Mrs. Frondarina, do you know who planted this two mango trees and one (1) coconut tree?

A Santos [Flordelina] from whom my sister bought the lot sir.

xxx

Q You were there present when these trees were planted Mrs. Witness?

A I was not present sir.

(TSN, pp. 11 to 12, Nov. 16, 1989).

The evidence of the plaintiffs in the imputed forcible entry sometime on March 18, 1988 was also hearsay. Mrs.
Esperanza Frondarinas testimony went this way:

Taxation Law 2. Local Tax. Real Property Tax. Tariffs and Customs. | 173
Q You said that you a have a caretaker of this lot on or about March 18, 1988, how was it possible for the
Malazarte to enter your lot if you a have a "bantay" there?

A My caretaker told me that she was being threatened.

Q Who threatened her?

A She told that she was threatened by the Malazarte and certain Mr. Valencia.

(TSN, p. 21, Nov. 16, 1988).

Moreover, the trial court reasoned that petitioners pieces of evidence on the issues of possession and forcible entry were of
"hearsay nature"which could have been remedied by presenting their caretaker, Andrada, who, according to the trial court,
was not presented as witness. Further, the Olongapo City RTC stated that petitioners did not explain why their caretaker could
not testifywhich led to its presumption that "if Andrada is presented, her testimony will be adverse to the cause of
[petitioners]." Thus, it found that the respondents were in personal, actual, and physical possession of the disputed lot; they
did not commit forcible entry; and the evidence on record supported their cause.

On September 13, 2000, the Olongapo City RTC rendered a Decision in favor of respondents Malazartes:

WHEREFORE, judgment is hereby rendered reversing in toto the Decision in Civil Case No. 2853 and a new decision is
issued dismissing the complaint. The plaintiffs are ordered to pay the defendants the sum of P6, 400.00 by way of
attorneys fees; and the costs of this suit.9

Unconvinced, the Frondarina spouses filed a petition for review10 with the CA on November 8, 2000 which was docketed as
CA-G.R. SP No. 61335.

The Ruling of the Court of Appeals

Finding no reversible error in the Olongapo City RTCs ruling, the Court of Appeals (CA) on March 13, 2001 rendered a
Decision affirming in toto11 the September 13, 2000 Decision of the trial court.

The CA sustained the findings and conclusions of the Olongapo City RTC that petitioners Frondarina spouses failed to prove
that they were in actual and physical possession of the disputed lot. It ruled that the Frondarina spouses possession was
through a caretaker, Lorenza Andrada, who did not appear as witness because of alleged threats made by respondents
Malazartes and their predecessor-in-interest, Romeo Valencia. However, the court a quo concluded that petitioner Esperanza
Frondarinas testimony on the alleged threat to her caretaker, Andrada, constituted hearsay evidence, as it was based on the
personal knowledge of said petitioner. Thus, the CA declared that respondents Malazartes imputed forcible entry was not
supported by evidence on record.12

Aggrieved, petitioners Frondarina spouses filed the instant petition for review on July 11, 2001 raising the following issues:13

I - THE COURT OF APPEALS RENDERED THE DECISION IN GRAVE ABUSE OF ITS DISCRETION IN THE APPRECIATION
OF FACTS;

II - THE AFFIRMING DECISION OF THE COURT OF APPEALS OMITTED PETITIONERS PRIOR, ACTUAL POSSESSION
ON THE DISPUTED PROPERTY, ESSENTIAL TO THE ISSUE IN FORCIBLE ENTRY;

III - THE APPELLATE DECISION RENDERS RECOGNITION OF PRIVATE RESPONDENTS UNLAWFUL ENTRY AS
LAWFUL, DISREGARDED THE MENACING ATTITUDE [OR] INTENT TO FORCIBLY ACQUIRE THE LAND BY FORCE.

The Courts Ruling

This petition for review is meritorious.

The preliminary matter to be addressed is whether the Court should entertain questions of fact in this petition.

A close perusal of the three issues presented for review before the Court readily reveals a lone issuewho between
petitioners Frondarina spouses and respondents Malazarte spouses have prior possession of the disputed lot. Undeniably, this
is a question of fact which is proscribed by Rule 45 of the 1997 Rules of Civil Procedure.

It is clear under Section 1, Rule 45 of the 1997 Rules of Civil Procedure that petitions for review on certiorari shall ONLY raise
questions of law. Questions of fact are not permitted because generally, the findings of fact of the CA are final, conclusive, and
cannot be reviewed on appeal. The reason behind the rule is that the Court is not a trier of facts and it is not its duty to review,
evaluate, and weigh the probative value of the evidence adduced before the lower courts.

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The bar on factual issues, however, admits of certain reasonable deviations like when the judgment is based on
misappreciation of facts or when the findings of facts of the CA are conflicting or contrary to the trial courts own findings.14

The records manifest that the conclusions of facts of the CA and the Olongapo City RTC are both contradictory or conflicting
with those of the Olongapo City MTCC. For this reason alone and so as to dispense equitable justice to those deserving, a
departure from the "factual issue bar rule" is timely and in order.

To reiterate, the core issue in this instant petition is who between petitioners Frondarinas and respondents Malazartes are
entitled to the possession of Lot 5, Block 15-B of the Gordon Heights Subdivision in Olongapo City.

After examining closely the transcripts of testimonies, the Court gives credence to petitioners claim that they and their
predecessors-in-interest had been in peaceful, physical possession of the said lot since 1971 for the following reasons:

1. Petitioner Esperanza Frondarina, housekeeper, resided at 81 Fendler Street, East Tapinac, Olongapo City; 15while Romeo
Valencia, driver of Olongapo City Councilor Jesus Danugrao, resided at Block 14, Gordon Heights, Olongapo City. Petitioners
visited the lot three (3) to four (4) times a week 16 and had a caretaker in the person of Lorenza Andrada. Romeo Valencia
claimed to have occupied the lot for 15 years from 1975 and had put up a riprap fence in 1980.17 Thus, it is apparent that none
of the parties actually resided at the said lot. The Court believes that the Frondarinas went to the lot three (3) or four (4) times
a week and exercised acts of ownership and possession over it by fencing the sides of the lot with barbwire, planting
vegetables like camote, okra, and others, and by tending two (2) mango trees and one (1) coconut tree planted by Esperanzas
sister, Cirila Gongora;18 and when they were not on the lot, their caretaker, Lorenza Andrada, a neighbor residing at an
adjacent lot, oversaw the disputed lot. The actuations of petitioners Frondarinas are more in accordance with the usual course
of human conduct and common experience. On the other hand, Mr. Romeo Valencias claim that he occupied the lot for 15
years deserves scant consideration for it was not possible for him to be on the said lot most of the time because his job as
Councilor Jesus Danugraos driver took up most of his time.

2. Mr. Romeo Valencia testified that he checked with the Bureau of Lands and City Assessor if there was no owner of the lot
before he occupied it in 1975; and he was told that the lot had not been declared in the name of any person. 19 This is false, for
as early as 1970, the lot was declared for taxation with the City Assessor in the name of Cirila Gongora through Tax Declaration