TESTATE ESTATE OF CONCORDIA T. LIM, plaintiff-appellant, vs.
CITY OF MANILA, JESUS
I. CALLEJA, in his capacity as City Treasurer of Manila, NICOLAS CATIIL, in his capacity as
City Assessor of Manila, and/or GOVERNMENT SERVICE INSURANCE SYSTEM, defendants-
appellees.
G.R. No. 90639
February 21, 1990
This is an appeal from the decision of the Regional Trial Court of Manila, Branch 29 dismissing a
complaint for a "sum of money and/or recovery of real estate taxes paid under protest" which was
certified and elevated to this Court by the Court of Appeals as a case involving pure questions of law.
FACTS:
On February 13, 1969, the late Concordia Lim obtained a real estate loan from the defendant-
appellee Government Service Insurance System (GSIS) in the amount of P875,488.54, secured by
a mortgage constituted on two (2) parcels of land formerly covered by Transfer Certificates of
Title registered in Manila with a three-story building thereon and located on No. 810 Nicanor
Reyes St. (formerly Morayta), Sampaloc, Manila.
When Lim failed to pay the loan, the mortgage was extrajudicially foreclosed and the subject
properties sold at public auction. The GSIS, being the highest bidder, bought the properties. Upon
Lim's failure to exercise her right of redemption, the titles to the properties were consolidated in
favor of the GSIS in 1977.
When Lim failed to pay the loan, the mortgage was extrajudicially foreclosed and the subject
properties sold at public auction. The GSIS, being the highest bidder, bought the properties. Upon
Lim's failure to exercise her right of redemption, the titles to the properties were consolidated in
favor of the GSIS in 1977.
The defendant City Treasurer of Manila required the plaintiff-appellant to pay the real estate taxes
due on the properties for the years 1977, 1978 and the first quarter of 1979 in the amount of
P67,960.39, before the titles could be transferred to the plaintiff-appellant. The latter paid the
amount under protest.
On July 11, 1979, the plaintiff-appellants counsel sent a demand letter requesting the GSIS to
reimburse the taxes paid under protest. The GSIS refused.
On September 6, 1979, a demand letter was sent to the City Treasurer of Manila to refund the
amount but the latter also refused.
On March 14, 1980, the plaintiff filed an action before the trial court for a sum of money for the
refund or reimbursement of the real estate taxes paid under protest.
After trial, the lower court dismissed the complaint for lack of jurisdiction. It ruled that the case
involves a protested action of the City Assessor which should have been flied before the Local
Board of Assessment Appeals of Manila (citing Section 30 of the Real Property Tax Code [P.D.
No. 464]) in line with the principle that all administrative remedies must first be exhausted.
The lower court also cited by way of obiter dictum, the case of City of Baguio v. Busuego, 100
SCRA 116 (1980) wherein this Court ruled that while the GSIS may be exempt from the payment
of real estate tax, the exemption does not cover properties the beneficial use of which was granted
to other taxable persons. This ruling supports the lower court's view that the tax had attached to
the subject properties for the years 1977, 1978 and first quarter of 1979. The lower court further
stated that the plaintiff-appellant had assumed liability for the real estate taxes because of the
provision in the Deed of Sale with the GSIS that: "any and all the taxes, ... relative to the
execution and/or implementation of this Deed, ... shall be for the account of and paid by the
VENDEE.
Issue: whether or not plaintiff-appellant has the right to recover
HELD:
The opinion of the lower court that the ruling in City of Baguio v. Busuego, supra justifies the imposition
of the tax on plaintiff-appellant is erroneous. The instant case does not present a similar contractual
stipulation. The contract here which is alleged to include the condition that the buyer shall shoulder the
taxes is a Contract of Sale. In the Busuego case, there was merely a Contract to Sell for the duration of
which the party who shall be liable for the taxes about to be due is the buyer as per agreement.
In the case at bar, what was assumed by the vendee was the liability for taxes and other expenses "relative
to the execution and/or implementation" of the Deed of Absolute Sale "including among others,
documentation, documentary and science stamps, expenses for registration and transfer of titles ... " This
clause was stipulated for the purpose of clarifying which of the parties should bear the costs of execution
and implementation of the sale and to comply with Article 1487 of the Civil Code.
Moreover, the taxes mentioned in the clause here refer to those necessary to the completion of the sale
and accruing after the making of such sale on April 11, 1990 such as documentary stamp tax and capital
gains tax.
The facts of the case constrain us to rule that the plaintiff-appellant is not liable to pay the real property
tax due for the years 1977, 1978 and first quarter of 1979. The clause in the Deed of Sale cannot be
interpreted to include taxes for the periods prior to April 11, 1979, the date of repurchase. The facts of the
case constrain us to rule that the plaintiff-appellant is not liable to pay the real property tax due for the
years 1977, 1978 and first quarter of 1979. The clause in the Deed of Sale cannot be interpreted to include
taxes for the periods prior to April 11, 1979, the date of repurchase. The facts of the case constrain us to
rule that the plaintiff-appellant is not liable to pay the real property tax due for the years 1977, 1978 and
first quarter of 1979. The clause in the Deed of Sale cannot be interpreted to include taxes for the periods
prior to April 11, 1979, the date of repurchase.
