G.R. No. L-6763. January 31, 1955
VISAYAN REALTY, INC., PLAINTIFF AND APPELLANT, VS. BIBIANO L. MEER, IN HIS CAPACITY AS COLLECTOR OF INTERNAL REVENUE, DEFENDANT AND APPELLANT.
BAUTISTA ANGELO, J.:
First Instance of Cebu against the Collector of Internal Revenue seeking the
refund of the sum of P69,138.67 paid as forest charges.
Defendant, in his answer denied the claim and, by way of counterclaim,
alleged that plaintiff is still indebted to the Government in the sum of
P9,986.70, representing forest charges and surcharges he has not paid during the
period from November, 1935 to December, 1940.
The case was submitted on a stipulation of facts, and thereafter the court
rendered judgment dismissing both plaintiff’s complaint as well as defendant’s
counterclaim. But, on a motion for reconsideration, the court amended its
decision, the dispositive part of which reads as follows:
“In view thereof, this Court, after reconsidering its conclusions in its
original decision, Hereby pronounces judgment declaring tha plaintiff entitled
to the recovery of P20,716.52, corresponding to the forest charges from December
29, 1928 to November 4, 1940, which they have paid under protest minus the sum
of P9.986.70, due in favor of defendant the “Collector of Internal Revenue, or a
balance of P10,729.82 which the Court orders said defendant to pay to plaintiff
in accordance with the means provided for by law with the costs against the
defendant.”
From this judgment both parties have appealed, plaintiff from that portion
which orders defendant to pay to plaintiff only a balance of P10,729.82 instead
of what is claimed in the complaint, and defendant from that portion which
declares that plaintiff is entitled to recover the amount of P20,716.52 and not
only the amount of P15,940.66, and in any event, from that portion which holds
that plaintiff and its predecessors-in-interst were exempted from the payment of
the corresponding forest charges mentioned in the complaint.
In 1927, Fortunato S. Veloso, Manuel H. Veloso, Gabino M. Veloso and
Buenaventura M. Veloso filed with the Department of Agriculture and Commerce
sales applications for four tracts of land situated in barrio Odiongan,
municipality of Gingoog, Oriental Misamis, which were numbered 9204, 9207, 9208
and 9269, respectively. On September 8, 1928, the Director of Forestry certified
that said tracts of land were not needed for forest purposes subject to the
condition that the applicants cannot cut and dispose of for commercial purposes
any timber growing thereon without license from the Bureau of Forestry. Said
tracts of land were awarded for sale to the aforementioned four persons in the
year 1929, the parcel covered by sales application No. 9204 having been awarded
on June 10, 1929, that covered by sales application No. 9207 on July 12, 1929;
that covered by sales application No. 9208 on February 5, 1929; and that covered
by sales application No. 9269 on July 11, 1929.
In 1935, the four awardees transferred their rights and interest under the
sales applications to the Visayan Realty, Inc., plaintiff herein. This transfer
was approved by the Secretary of Agriculture and Commerce on September 6, 1940,
and on November 7, 1940, patents were issued to the plaintiff by the Director of
Lands and sent to the Register of Deed? for registration. Accordingly the
Register of Deeds issued for each parcel of land Original Certificates of Title
Nos. 3, 4, 5 and 6.
It also appears that the Bureau of Forestry issued Ordinary Timber License
No. 486-K, on April 16, 1934 and Ordinary Timber License No. 461-A in January,
1936 in favor of the Estate of Mariano G. Veloso, Inc., granting the latter the
right to cut timber within an area of 576 hectares covered by the sales
applications above mentioned. Subsequently, a similar license was issued to the
plaintiff covering the same area which was supplemented by a letter of the
Director of Forestry dated August 5, 1937 and, still later, the Bureau of
Forestry issued two more licenses to the plaintiff for the same purpose, which
were supplemented by letters of the Director of Forestry dated September 22,
1938, February 25, 1939, and June 12, 1940, authorizing plaintiff to cut timber
from the four tracts of land above mentioned.
From January 13, 1930 to November 4, 1940 the Collector of Internal Revenue
collected from the plaintiff the amount of P69,138.67 representing forest
charges for the timber cut and removed from said four tracts of land. The
payments made during the period from January 13, 1930 to June 1, 1939 amounting
to P53,198.01 were made without protest. However, the payments corresponding to
the period from July 3, 1939 to November 4, 1940 amounting to P15,940.66 were
made under protest. It also appears that plaintiff had not paid to the
Government the amount of P9,986.70 for forest charges and surcharges
corresponding to the period from November, 1935 to December, 1940 despite the
demand made for its payment by the Collector of Internal Revenue.
Plaintiff-appellant in its first assignment of error contends that the lower
court erred in ruling that the ownership of the four tracts of land did not pass
to the plaintiff when the award of the sales was made in 1929 but only when the
sales patents were “registered in the Office of the Register of Deeds or when
the corresponding certification of title covering the lands were issued in favor
of the plaintiff. Plaintiff-appellant contends that the title to those four
tracts of land passed from the Government to said plaintiff as of the dates when
the sales applications of its predecessors-in-interest were approved in 1929 and
not when certificates of title were issued by the Register of Deeds in 1940,
because the issuance of said certificates of title is but a matter of formality
which cannot diminish nor affect the substantial fact that the naked
ownership of said lands had already passed from the Government to plaintiff’s
predecessors-in-interest from the time their sales applications had been awarded
to them. From this time, plaintiff contends, the sales became perfected and
binding between the parties.
The claim of plaintiff-appellant cannot be entertained. The award of a sales
application merely authorizes the applicant to take possession of the land so
that he coutd comply with the requirements prescribed by law before a final
patent can be issued in his favor (Section 28, Commonwealth Act No, 141).[1] Before these requirements are complied
with, the Government still remains the owner thereof, as in fact the application
could still be cancelled and the land awarded to another applicant should it be
shown that the legal requirements had not been complied with. What divests the
Government of its title to the land is the issuance of the sales patent and its
subsequent registration in the Office of the Register of Deeds. Such
registration is the operative act that would bind the land and convey its
ownership to the applicant (Section 107, Commonwealth Act No. 141; Section 122,
Act No. 496). Since the timber in question was cut by the plaintiff before the
issuance of sales patent in its name or in that of its predecessors-in-interest,
it follows that plaintiff was not yet the owner of the lands when the timber
growing thereon had been cut, and so it cannot claim exemption from the payment
of the forest charges upon the mere plea that it already acquired ownership of
said lands.
The case of Government of the Philippine Islands vs. Wagner &
Wagner, 49 Phil., 944, relied upon by the plaintiff is not in point. This case
is predicated on the concurring opinion of Justice Johnson in another case[2] which has reference to the fulfillment of
subsequent conditions or conditions to be complied with after the issuance of
the patent, whereas the present case refers to precedent conditions, or
conditions to be complied with before the issuance of the patent. The
circumstances surrounding the two cases are therefore different.
Moreover, Section 1513 of the Revised Administrative Code[3] expressly provides that forest charges
“shall be collected for all wood cut upon any land the title to which is not
registered with the Director of Forestry as required by the Forest Law”, and, in
the absence of such registration , “wood cut and removed from alleged private
lands shall be considered as cut and removed under license from public forest or
forest reserves.” This requirement is mandatory, and failure to comply with it
would subject the timber cut to forest charges, and this requirement was not
complied with by the plaintiff.
The fact that the Director of Forestry has certified that the four tracts of
land in question were not needed for forest purposes and can therefore be opened
to public sale does not take said lands out of the operation of said Section
1513 of the Revised Administrative Code for the only reason behind such
certification is to remove said land from the classification of timber or
mineral lands and transfer it to that of agricultural or alienable lands so that
it could be opened to private disposal and be utilized for agricultural
purposes. In fact, when said certification was made, it was so made subject to
the condition that the applicant can not cut and dispose of for commercial
purposes any timber growing thereon without license from the Director of
Forestry. And in order to implement this intent of the law, the Bureau of
Forestry issued the following administrative order:
“Utilization of Forest Products.—The utilization of forest products
which may exist on areas certified as alienable and disposable under this Order
or on areas within approved homestead or sales application shall still be
subject to the Forest and Internal Revenue Laws and regulations; Provided,
however, That the holder of approved homestead or sales, application may be
allowed to cut, gather and remove from the land reasonable amount of timber and
other products which may need for his own personal use and not for sale or
barter, and such forest products shall be considered as cut, gathered and
removed under a gratuitous license.” (Forestry Administrative Order No. 13—1,
Section 7).
Having reached the foregoing conclusion, we don’t deem it necessary to
discuss the other errors assigned by defendant-appellant for the reason that
whether the forest charges in question were paid or not under protest would be
immaterial in view of our finding that the plaintiff is not exempted from the
payment of said forest charges.
Wherefore, the decision appealed from is reversed. Plaintiff-appellant is
hereby ordered to pay to defendant-appellant the sum of P9,986.70 representing
the forest charges and surcharges said plaintiff has failed to pay during the
period from November, 1935 to December, 1940. without pronouncement as to
costs.
Paras, C.J., Pablo, Bengzon, Padilla, Montermyor, Reyes, A., Jugo,
Labrador, Concepcion, and Reyes, J.B.L., JJ., concur.
Judgment reversed.
[1] Before any patent is issued, the
purchaser must show actual occupancy, cultivation, and improvement of at least
one-fifth of the land.
[2] Compana General de Tabacos
vs. Topino, et al., 4 Phil., 33.
[3] Later superseded by Section 266 of
Commonwealth Act No., known as National Internal Revenue Code.