LILIA APAS, PLAINTIFF-APPELLANT, VS. ROY SALUBRE, IN HIS PERSONAL CAPACITY AND IN HIS CAPACITY AS THE PROVINCIAL TREASURER OF THE PROVINCE OF CEBU; PALMA BATOBALANOS IN HER PERS…

Apas versus Salubre

The Case

This is a petition for review of a trial court's dismissal of a complaint that sought to nullify a public auction sale of real property conducted by the Province of Cebu to satisfy delinquent real property taxes. The plaintiff, Lilia Apas, sued the Provincial Treasurer, a member of his staff, the winning bidder, and the subdivision that sold her the lot, asking the court to restrain the auction and to allow her to redeem. The case matters because it settles a jurisdictional rule: before any court may entertain a suit attacking the validity of a tax sale, the taxpayer must first deposit the purchase price plus interest, and that requirement is not excused simply because the property was once registered in the name of a tax-exempt government instrumentality.

Procedural History

Lilia Apas filed her complaint with a prayer for a temporary restraining order and injunction before the Regional Trial Court of Mandaue City. The trial court, in a Resolution dated 12 January 2012, dismissed the complaint for lack of jurisdiction because she had not made the deposit required by Section 267 of the Local Government Code. She moved for reconsideration, which the trial court denied in an Order dated 28 May 2012. She then appealed to the Supreme Court under Rule 41 of the Rules of Court, assigning as her sole error that the dismissal was contrary to the rulings in National Housing Authority versus Iloilo City and GSIS versus City Treasurer of Manila.

Facts

Lilia Apas purchased a lot in Nangka, Consolacion, Cebu, through a loan obtained from the Government Service Insurance System, and on 7 March 2011 the GSIS executed a deed of absolute sale over the lot in favor of the spouses Lilia and Rogelio Apas. Before that deed, however, the lot had been sold at public auction. On 26 June 2009, the Province of Cebu sold the property to Marilyn Celocia for 38,500 pesos to satisfy delinquent real property taxes, and a Certificate of Sale of Delinquent Real Property to Purchaser dated 1 July 2009 was issued. The delinquent taxpayer named in the certificate was V and G Better Homes Subdivision, care of Lilia Apas.

By a Memorandum dated 8 September 2010, the Office of the Provincial Treasurer ordered Lilia Apas to vacate the property within thirty days. She then filed her complaint, alleging that the auction was held without her knowledge, that she had tried to pay the unpaid taxes but was refused because the lot had already been sold, and that the subdivision had failed to disclose the tax liabilities. The defendants countered that the required notices were sent to her, posted at the barangay and municipal bulletin boards, and published three times in a newspaper in June 2009.

Marilyn Celocia raised the decisive defense: under Section 267 of the Local Government Code, the complaint could not be entertained unless Apas first deposited the purchase price plus two percent interest per month from the date of sale. Apas did not make the deposit, and the trial court dismissed the case on that ground.

Issues

• Whether or not the trial court correctly dismissed the complaint for lack of jurisdiction because the plaintiff failed to make the deposit required by Section 267 of the Local Government Code.
• Whether or not the plaintiff may claim the tax exemption of the GSIS to excuse her from the deposit requirement.

Applicable Provisions

Section 267 of Republic Act Number 7160, the Local Government Code of 1991, provides:

Section 267. Action Assailing Validity of Tax Sale. No court shall entertain any action assailing the validity of any sale at public auction of real property or rights therein under this Title until the taxpayer shall have deposited with the court the amount for which the real property was sold, together with interest of two percent per month from the date of sale to the time of the institution of the action. The amount so deposited shall be paid to the purchaser at the auction sale if the deed is declared invalid but it shall be returned to the depositor if the action fails.

This is the provision the Court construes, and it is the very ground on which the complaint was dismissed.

Ruling

On the first issue, the Court held that the appeal lacked merit. The deposit is a jurisdictional requirement, and the non-payment of it warrants dismissal of the action. The Court stressed the categorical language of the statute:

No court shall entertain any action assailing the validity of any sale at public auction of real property or rights therein under this Title until the taxpayer shall have deposited with the court the amount for which the real property was sold, together with interest of two percent per month from the date of sale to the time of the institution of the action.

The Court explained that the deposit is not a tax measure; it is meant to reimburse the purchaser should the sale be declared invalid. Mere intention to pay does not satisfy the law. Apas never made the deposit, even after her complaint was dismissed and even when she filed her motion for reconsideration with the assistance of counsel.

On the second issue, the Court held that Apas cannot invoke the GSIS exemption. In the cases she cited, the parties claiming exemption were the GSIS and the National Housing Authority themselves. Here, the party claiming the exemption is a private individual. The property was still registered in the name of the GSIS when it was sold at auction, so it was the GSIS, not Apas, that should have claimed the exemption. The Court also noted that the tax attaches to the property and is chargeable against the taxable person who had actual or beneficial use and possession of it, regardless of whether that person is the owner.

Doctrine

First, the deposit under Section 267 of the Local Government Code is a jurisdictional prerequisite. No court may entertain an action assailing the validity of a public auction sale of real property for tax delinquency until the taxpayer has deposited the amount of the sale plus two percent interest per month from the date of sale to the institution of the action. Non-payment warrants dismissal, and a mere intention to pay does not comply with the law.

Second, the tax exemption of a government instrumentality such as the GSIS belongs to that entity and may be claimed only by it. A private person who acquired the property from the exempt entity cannot borrow that exemption to escape the deposit requirement.

Disposition

The appeal was dismissed, and the trial court's Resolution of 12 January 2012 and its Order of 28 May 2012 denying reconsideration were affirmed in toto.

Remember This

Memorize this line: the Section 267 deposit is jurisdictional, and non-payment means the court never acquires jurisdiction over a suit attacking a tax sale. Examiners use this case to test the requisites for assailing a tax sale and the limits of the GSIS tax exemption when invoked by a private transferee.