G.R. No. 166838, June 15, 2011
STA. LUCIA REALTY & DEVELOPMENT, INC., PETITIONER, VS. CITY OF PASIG, RESPONDENT, MUNICIPALITY OF CAINTA, PROVINCE OF RIZAL, INTERVENOR.
Petitioner
Sta. Lucia Realty & Development, Inc. (Sta. Lucia) is the
registered owner of several parcels of land with Transfer Certificates
of Title (TCT) Nos. 39112, 39110 and 38457, all of which indicated that
the lots were located in Barrio Tatlong Kawayan, Municipality of Pasig [5] (Pasig).
The parcel of land covered by TCT No. 39112 was consolidated with that covered by TCT No. 518403, which was situated in Barrio Tatlong Kawayan, Municipality of Cainta, Province of Rizal (Cainta).
The two combined lots were subsequently partitioned into three, for
which TCT Nos. 532250, 598424, and 599131, now all bearing the Cainta
address, were issued.
TCT No. 39110 was also divided into two lots, becoming TCT Nos. 92869 and 92870.
The
lot covered by TCT No. 38457 was not segregated, but a commercial
building owned by Sta. Lucia East Commercial Center, Inc., a separate
corporation, was built on it. [6]
Upon
Pasig’s petition to correct the location stated in TCT Nos. 532250,
598424, and 599131, the Land Registration Court, on June 9, 1995,
ordered the amendment of the TCTs to read that the lots with respect to
TCT No. 39112 were located in Barrio Tatlong Kawayan, Pasig City. [7]
On January 31, 1994, Cainta filed a petition [8]
for the settlement of its land boundary dispute with Pasig before the
RTC, Branch 74 of Antipolo City (Antipolo RTC). This case, docketed as
Civil Case No. 94-3006, is still pending up to this date.
On November 28, 1995, Pasig filed a Complaint, [9]
docketed as Civil Case No. 65420, against Sta. Lucia for the collection
of real estate taxes, including penalties and interests, on the lots
covered by TCT Nos. 532250, 598424, 599131, 92869, 92870 and 38457,
including the improvements thereon (the subject properties).
Sta.
Lucia, in its Answer, alleged that it had been religiously paying its
real estate taxes to Cainta, just like what its predecessors-in-interest
did, by virtue of the demands and assessments made and the Tax
Declarations issued by Cainta on the claim that the subject properties
were within its territorial jurisdiction. Sta. Lucia further argued
that since 1913, the real estate taxes for the lots covered by the above
TCTs had been paid to Cainta. [10]
Cainta
was allowed to file its own Answer-in-Intervention when it moved to
intervene on the ground that its interest would be greatly affected by
the outcome of the case. It averred that it had been collecting the
real property taxes on the subject properties even before Sta. Lucia
acquired them. Cainta further asseverated that the establishment of the
boundary monuments would show that the subject properties are within
its metes and bounds. [11]
Sta.
Lucia and Cainta thereafter moved for the suspension of the
proceedings, and claimed that the pending petition in the Antipolo RTC,
for the settlement of boundary dispute between Cainta and Pasig,
presented a “prejudicial question” to the resolution of the case. [12]
The
RTC denied this in an Order dated December 4, 1996 for lack of merit.
Holding that the TCTs were conclusive evidence as to its ownership and
location, [13] the RTC, on August 10, 1998, rendered a Decision in favor of Pasig:
WHEREFORE,
in view of the foregoing, judgment is hereby rendered in favor of
[Pasig], ordering Sta. Lucia Realty and Development, Inc. to pay
[Pasig]:1) P273,349.14 representing unpaid real estate taxes and penalties as of 1996, plus interest of 2% per month until fully paid;
2) P50,000.00 as and by way of attorney’s fees; and
3) The costs of suit.
Judgment
is likewise rendered against the intervenor Municipality of Cainta,
Rizal, ordering it to refund to Sta. Lucia Realty and Development, Inc.
the realty tax payments improperly collected and received by the former
from the latter in the aggregate amount of P358, 403.68. [14]
After
Sta. Lucia and Cainta filed their Notices of Appeal, Pasig, on
September 11, 1998, filed a Motion for Reconsideration of the RTC’s
August 10, 1998 Decision.
The RTC, on October 9, 1998, granted Pasig’s motion in an Order [15] and modified its earlier decision to include the realty taxes due on the improvements on the subject lots:
WHEREFORE,
premises considered, the plaintiff’s motion for reconsideration is
hereby granted. Accordingly, the Decision, dated August 10, 1998 is
hereby modified in that the defendant is hereby ordered to pay plaintiff
the amount of P5,627,757.07 representing the unpaid taxes and penalties
on the improvements on the subject parcels of land whereon real estate
taxes are adjudged as due for the year 1996. [16]
Accordingly, Sta. Lucia filed an Amended Notice of Appeal to include the RTC’s October 9, 1998 Order in its protest.
On
October 16, 1998, Pasig filed a Motion for Execution Pending Appeal, to
which both Sta. Lucia and Cainta filed several oppositions, on the
assertion that there were no good reasons to warrant the execution
pending appeal. [17]
On April 15, 1999, the RTC ordered the issuance of a Writ of Execution against Sta. Lucia.
On May 21, 1999, Sta. Lucia filed a Petition for Certiorari under Rule 65 of the Rules of Court with the Court of Appeals to assail the RTC’s order granting the execution. Docketed as CA-G.R. SP No. 52874,
the petition was raffled to the First Division of the Court of Appeals,
which on September 22, 2000, ruled in favor of Sta. Lucia, to wit:
WHEREFORE, in view of the foregoing, the instant petition is hereby GIVEN DUE COURSE and GRANTED by
this Court. The assailed Order dated April 15, 1999 in Civil Case No.
65420 granting the motion for execution pending appeal and ordering the
issuance of a writ of execution pending appeal is hereby SET ASIDE and declared NULL and VOID.[18]
The
Court of Appeals added that the boundary dispute case presented a
“prejudicial question which must be decided before x x x Pasig can
collect the realty taxes due over the subject properties.” [19]
Pasig sought to have this decision reversed in a Petition for Certiorari filed before this Court on November 29, 2000, but this was denied on June 25, 2001 for being filed out of time. [20]
Meanwhile,
the appeal filed by Sta. Lucia and Cainta was raffled to the (former)
Seventh Division of the Court of Appeals and docketed as CA-G.R. CV No. 69603. On June 30, 2004, the Court of Appeals rendered its Decision, wherein it agreed with the RTC’s judgment:
WHEREFORE, the appealed Decision is hereby AFFIRMED with the MODIFICATION that the award of P50,000.00 attorney’s fees is DELETED. [21]
In affirming the RTC, the Court of Appeals declared that there was no proper legal basis to suspend the proceedings. [22]
Elucidating on the legal meaning of a “prejudicial question,” it held
that “there can be no prejudicial question when the cases involved are
both civil.” [23] The Court of Appeals further held that the elements of litis pendentia and forum shopping, as alleged by Cainta to be present, were not met.
Sta.
Lucia and Cainta filed separate Motions for Reconsideration, which the
Court of Appeals denied in a Resolution dated January 27, 2005.
Undaunted, Sta. Lucia and Cainta filed separate Petitions for Certiorari
with this Court. Cainta’s petition, docketed as G.R. No. 166856 was
denied on April 13, 2005 for Cainta’s failure to show any reversible
error. Sta. Lucia’s own petition is the one subject of this decision. [24]
In praying for the reversal of the June 30, 2004 judgment of the Court of Appeals, Sta. Lucia assigned the following errors:
ASSIGNMENT OF ERRORS
I
THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING [WITH MODIFICATION] THE DECISION OF THE REGIONAL TRIAL COURT IN PASIG CITY
II.
THE
HONORABLE COURT OF APPEALS ERRED IN NOT SUSPENDING THE CASE IN VIEW OF
THE PENDENCY OF THE BOUNDARY DISPUTE WHICH WILL FINALLY DETERMINE THE
SITUS OF THE SUBJECT PROPERTIESIII.
THE
HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE PAYMENT OF
REALTY TAXES THROUGH THE MUNICIPALITY OF CAINTA WAS VALID PAYMENT OF
REALTY TAXESIV.
THE HONORABLE COURT OF
APPEALS ERRED IN NOT HOLDING THAT IN THE MEANTIME THAT THE BOUNDARY
DISPUTE CASE IN ANTIPOLO CITY REGIONAL TRIAL COURT IS BEING FINALLY
RESOLVED, THE PETITIONER STA. LUCIA SHOULD BE PAYING THE REALTY TAXES ON
THE SUBJECT PROPERTIES THROUGH THE INTERVENOR CAINTA TO PRESERVE THE
STATUS QUO.[25]
Pasig,
countering each error, claims that the lower courts correctly decided
the case considering that the TCTs are clear on their faces that the
subject properties are situated in its territorial jurisdiction. Pasig
contends that the principles of litis pendentia, forum shopping, and res judicata
are all inapplicable, due to the absence of their requisite elements.
Pasig maintains that the boundary dispute case before the Antipolo RTC
is independent of the complaint for collection of realty taxes which was
filed before the Pasig RTC. It avers that the doctrine of “prejudicial
question,” which has a definite meaning in law, cannot be invoked where
the two cases involved are both civil. Thus, Pasig argues, since there
is no legal ground to preclude the simultaneous hearing of both cases,
the suspension of the proceedings in the Pasig RTC is baseless.
Cainta
also filed its own comment reiterating its legal authority over the
subject properties, which fall within its territorial jurisdiction.
Cainta claims that while it has been collecting the realty taxes over
the subject properties since way back 1913, Pasig only covered the same
for real property tax purposes in 1990, 1992, and 1993. Cainta also
insists that there is a discrepancy between the locational entries and
the technical descriptions in the TCTs, which further supports the need
to await the settlement of the boundary dispute case it initiated.
The errors presented before this Court can be narrowed down into two basic issues:
1)
Whether the RTC and the CA were correct in deciding Pasig’s Complaint
without waiting for the resolution of the boundary dispute case between
Pasig and Cainta; and2) Whether Sta. Lucia should continue
paying its real property taxes to Cainta, as it alleged to have always
done, or to Pasig, as the location stated in Sta. Lucia’s TCTs.
We
agree with the First Division of the Court of Appeals in CA-G.R. SP No.
52874 that the resolution of the boundary dispute between Pasig and
Cainta would determine which local government unit is entitled to
collect realty taxes from Sta. Lucia. [26]
The Local Government Unit entitled
To Collect Real Property Taxes
The
Former Seventh Division of the Court of Appeals held that the
resolution of the complaint lodged before the Pasig RTC did not
necessitate the assessment of the parties’ evidence on the metes and
bounds of their respective territories. It cited our ruling in Odsigue v. Court of Appeals [27] wherein we said that a certificate of title is conclusive evidence of both its ownership and location. [28]
The Court of Appeals even referred to specific provisions of the 1991
Local Government Code and Act. No. 496 to support its ruling that Pasig
had the right to collect the realty taxes on the subject properties as
the titles of the subject properties show on their faces that they are
situated in Pasig. [29]
Under
Presidential Decree No. 464 or the “Real Property Tax Code,” the
authority to collect real property taxes is vested in the locality where the property is situated:
Sec. 5. Appraisal of Real Property.
— All real property, whether taxable or exempt, shall be appraised at
the current and fair market value prevailing in the locality where the property is situated.x x x x
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. (Emphases ours.)
This requisite was reiterated in Republic Act No. 7160, also known as the 1991 the Local Government Code, to wit:
Section 201. Appraisal of Real Property. – All
real property, whether taxable or exempt, shall be appraised at the
current and fair market value prevailing in the locality where the property is situated.
The Department of Finance shall promulgate the necessary rules and
regulations for the classification, appraisal, and assessment of real
property pursuant to the provisions of this Code.Section 233. Rates of Levy.
– A province or city or a municipality within the Metropolitan Manila
Area shall fix a uniform rate of basic real property tax applicable to their respective localities as follows: x x x. (Emphases ours.)
The
only import of these provisions is that, while a local government unit
is authorized under several laws to collect real estate tax on
properties falling under its territorial jurisdiction, it is imperative to first show that these properties are unquestionably within its geographical boundaries.
Accentuating on the importance of delineating territorial boundaries, this Court, in Mariano, Jr. v. Commission on Elections [30] said:
The
importance of drawing with precise strokes the territorial boundaries
of a local unit of government cannot be overemphasized. The boundaries must be clear for they define the limits of the territorial jurisdiction of a local government unit. It can legitimately exercise powers of government only within the limits of its territorial jurisdiction. Beyond these limits, its acts are ultra vires.
Needless to state, any uncertainty in the boundaries of local
government units will sow costly conflicts in the exercise of
governmental powers which ultimately will prejudice the people’s
welfare. This is the evil sought to be avoided by the Local Government
Code in requiring that the land area of a local government unit must be
spelled out in metes and bounds, with technical descriptions. [31] (Emphasis ours.)
The significance of accurately defining a local government unit’s boundaries was stressed in City of Pasig v. Commission on Elections, [32]
which involved the consolidated petitions filed by the parties herein,
Pasig and Cainta, against two decisions of the Commission on Elections
(COMELEC) with respect to the plebiscites scheduled by Pasig for the
ratification of its creation of two new Barangays. Ruling on the
contradictory reliefs sought by Pasig and Cainta, this Court affirmed
the COMELEC decision to hold in abeyance the plebiscite to ratify the
creation of Barangay Karangalan; but set aside the COMELEC’s other decision, and nullified the plebiscite that ratified the creation of Barangay Napico in Pasig, until the boundary dispute before the Antipolo RTC had been resolved. The aforementioned case held as follows:
- The Petition of the City of Pasig in G.R. No. 125646 is DISMISSED for lack of merit; while
- The
Petition of the Municipality of Cainta in G.R. No. 128663 is GRANTED.
The COMELEC Order in UND No. 97-002, dated March 21, 1997, is SET ASIDE
and the plebiscite held on March 15, 1997 to ratify the creation of
Barangay Napico in the City of Pasig is declared null and void.
Plebiscite on the same is ordered held in abeyance until after the
courts settle with finality the boundary dispute between the City of
Pasig and the Municipality of Cainta, in Civil Case No. 94-3006. [33]
Clearly
therefore, the local government unit entitled to collect real property
taxes from Sta. Lucia must undoubtedly show that the subject properties
are situated within its territorial jurisdiction; otherwise, it would be
acting beyond the powers vested to it by law.
Certificates of Title as
Conclusive Evidence of Location
While
we fully agree that a certificate of title is conclusive as to its
ownership and location, this does not preclude the filing of an action
for the very purpose of attacking the statements therein. In De Pedro v. Romasan Development Corporation, [34] we proclaimed that:
We
agree with the petitioners that, generally, a certificate of title
shall be conclusive as to all matters contained therein and conclusive
evidence of the ownership of the land referred to therein. However, it
bears stressing that while certificates of title are indefeasible,
unassailable and binding against the whole world, including the
government itself, they do not create or vest title. They merely
confirm or record title already existing and vested. They cannot be used
to protect a usurper from the true owner, nor can they be used as a
shield for the commission of fraud; neither do they permit one to enrich
himself at the expense of other. [35]
In Pioneer Insurance and Surety Corporation v. Heirs of Vicente Coronado, [36]
we set aside the lower courts’ ruling that the property subject of the
case was not situated in the location stated and described in the TCT,
for lack of adequate basis. Our decision was in line with the doctrine
that the TCT is conclusive evidence of ownership and location. However,
we refused to simply uphold the veracity of the disputed TCT, and
instead, we remanded the case back to the trial court for the
determination of the exact location of the property seeing that it was
the issue in the complaint filed before it. [37]
In City Government of Tagaytay v. Guerrero, [38] this Court reprimanded the City of Tagaytay for levying taxes on a property that was outside its territorial jurisdiction, viz:
In
this case, it is basic that before the City of Tagaytay may levy a
certain property for sale due to tax delinquency, the subject property
should be under its territorial jurisdiction. The city officials are
expected to know such basic principle of law. The failure of the
city officials of Tagaytay to verify if the property is within its
jurisdiction before levying taxes on the same constitutes gross
negligence. [39] (Emphasis ours.)
Although
it is true that “Pasig” is the locality stated in the TCTs of the
subject properties, both Sta. Lucia and Cainta aver that the metes and
bounds of the subject properties, as they are described in the TCTs,
reveal that they are within Cainta’s boundaries. [40]
This only means that there may be a conflict between the location as
stated and the location as technically described in the TCTs. Mere
reliance therefore on the face of the TCTs will not suffice as they can
only be conclusive evidence of the subject properties’ locations if both
the stated and described locations point to the same area.
The
Antipolo RTC, wherein the boundary dispute case between Pasig and Cainta
is pending, would be able to best determine once and for all the
precise metes and bounds of both Pasig’s and Cainta’s respective
territorial jurisdictions. The resolution of this dispute would
necessarily ascertain the extent and reach of each local government’s
authority, a prerequisite in the proper exercise of their powers, one of
which is the power of taxation. This was the conclusion reached by
this Court in City of Pasig v. Commission on Elections, [41]
and by the First Division of the Court of Appeals in CA-G.R. SP No.
52874. We do not see any reason why we cannot adhere to the same logic
and reasoning in this case.
The “Prejudicial Question” Debate
It
would be unfair to hold Sta. Lucia liable again for real property taxes
it already paid simply because Pasig cannot wait for its boundary
dispute with Cainta to be decided. Pasig has consistently argued that
the boundary dispute case is not a prejudicial question that would entail the suspension of its collection case against Sta. Lucia. This was also its argument in City of Pasig v. Commission on Elections, [42]
when it sought to nullify the COMELEC’s ruling to hold in abeyance
(until the settlement of the boundary dispute case), the plebiscite that
will ratify its creation of Barangay Karangalan. We agreed with the COMELEC therein that the boundary dispute case presented a prejudicial question and explained our statement in this wise:
To
begin with, we agree with the position of the COMELEC that Civil Case
No. 94-3006 involving the boundary dispute between the Municipality of
Cainta and the City of Pasig presents a prejudicial question which must first be decided before plebiscites for the creation of the proposed barangays may be held.The
City of Pasig argues that there is no prejudicial question since the
same contemplates a civil and criminal action and does not come into
play where both cases are civil, as in the instant case. While this may be the general rule, this Court has held in Vidad v. RTC of Negros Oriental, Br. 42,
that, in the interest of good order, we can very well suspend action on
one case pending the final outcome of another case closely interrelated
or linked to the first.In the case at bar, while the City
of Pasig vigorously claims that the areas covered by the proposed
Barangays Karangalan and Napico are within its territory, it can not
deny that portions of the same area are included in the boundary dispute
case pending before the Regional Trial Court of Antipolo. Surely,
whether the areas in controversy shall be decided as within the
territorial jurisdiction of the Municipality of Cainta or the City of
Pasig has material bearing to the creation of the proposed Barangays
Karangalan and Napico. Indeed, a requisite for the creation of a barangay
is for its territorial jurisdiction to be properly identified by metes
and bounds or by more or less permanent natural boundaries. Precisely
because territorial jurisdiction is an issue raised in the pending
civil case, until and unless such issue is resolved with finality, to
define the territorial jurisdiction of the proposed barangays would only be an exercise in futility. Not only that, we would be paving the way for potentially ultra vires acts of such barangays. x x x. [43] (Emphases ours.)
It
is obvious from the foregoing, that the term “prejudicial question,” as
appearing in the cases involving the parties herein, had been used
loosely. Its usage had been more in reference to its ordinary meaning,
than to its strict legal meaning under the Rules of Court. [44]
Nevertheless, even without the impact of the connotation derived from
the term, our own Rules of Court state that a trial court may control
its own proceedings according to its sound discretion:
POWERS AND DUTIES OF COURTS AND JUDICIAL OFFICERS
Rule 135SEC. 5. Inherent powers of courts. – Every court shall have power:
x x x x
(g) To amend and control its process and orders so as to make them comformable to law and justice.
Furthermore, we have acknowledged and affirmed this inherent power in our own decisions, to wit:
The
court in which an action is pending may, in the exercise of a sound
discretion, upon proper application for a stay of that action, hold the
action in abeyance to abide the outcome of another pending in another
court, especially where the parties and the issues are the same, for
there is power inherent in every court to control the disposition of
causes (sic) on its dockets with economy of time and effort for
itself, for counsel, and for litigants. Where the rights of parties to
the second action cannot be properly determined until the questions
raised in the first action are settled the second action should be
stayed.The power to stay proceedings is incidental to the power
inherent in every court to control the disposition of the cases on its
dockets, considering its time and effort, that of counsel and the
litigants. But if proceedings must be stayed, it must be done in order
to avoid multiplicity of suits and prevent vexatious litigations,
conflicting judgments, confusion between litigants and courts. It bears
stressing that whether or not the RTC would suspend the proceedings in
the SECOND CASE is submitted to its sound discretion. [45]
In
light of the foregoing, we hold that the Pasig RTC should have held in
abeyance the proceedings in Civil Case No. 65420, in view of the fact
that the outcome of the boundary dispute case before the Antipolo RTC
will undeniably affect both Pasig’s and Cainta’s rights. In fact, the
only reason Pasig had to file a tax collection case against Sta. Lucia
was not that Sta. Lucia refused to pay, but that Sta. Lucia had already
paid, albeit to another local government unit. Evidently, had the
territorial boundaries of the contending local government units herein
been delineated with accuracy, then there would be no controversy at
all.
In the meantime, to avoid further animosity, Sta. Lucia is directed to deposit the succeeding real property taxes due on the subject properties, in an escrow account with the Land Bank of the Philippines.
WHEREFORE, the instant petition is GRANTED. The June 30, 2004 Decision and the January 27, 2005 Resolution of the Court of Appeals in CA-G.R. CV No. 69603 are SET ASIDE.
The City of Pasig and the Municipality of Cainta are both directed to
await the judgment in their boundary dispute case (Civil Case No.
94-3006), pending before Branch 74 of the Regional Trial Court in
Antipolo City, to determine which local government unit is entitled to
exercise its powers, including the collection of real property taxes, on
the properties subject of the dispute. In the meantime, Sta. Lucia
Realty and Development, Inc. is directed to deposit the succeeding real
property taxes due on the lots and improvements covered by TCT Nos.
532250, 598424, 599131, 92869, 92870 and 38457 in an escrow account with
the Land Bank of the Philippines.
SO ORDERED.
Velasco, Jr.,* (Acting Chairperson), Bersamin,** Del Castillo, and Perez, JJ., concur.
* Per Special Order No. 1003 dated June 8, 2011.
** Additional member per Special Order No. 1000 dated June 8, 2011.
[1] Rollo,
pp. 39-55; penned by Associate Justice Ruben T. Reyes with Associate
Justices Eliezer R. De los Santos and Arturo D. Brion (now Associate
Justice of the Supreme Court), concurring.
[2] Id. at 57-58.
[3] Id. at 59-70.
[4] Id. at 71-72.
[5] Now City of Pasig.
[6] Rollo, pp. 12-13.
[7] Id. at 233.
[8] CA rollo, pp. 155-158.
[9] Rollo, pp. 75-81.
[10] Id. at 13.
[11] Id. at 88.
[12] Id. at 258.
[13] Id. at 69.
[14] Id. at 70.
[15] Id. at 71-72.
[16] Id. at 72.
[17] Id. at 237.
[18] Id. at 93.
[19] Id.
[20] Id. at 95.
[21] Id. at 54.
[22] Id. at 46.
[23] Id. at 47.
[24] Id. at 102.
[25] Id. at 17.
[26] Id. at 93.
[27] G.R. No. 111179, July 4, 1994, 233 SCRA 626.
[28] Id. at 631.
[29] Rollo, pp. 47-51.
[30] 312 Phil. 259 (1995).
[31] Id. at 265-266.
[32] 372 Phil. 864 (1999).
[33] Id. at 872.
[34] 492 Phil. 643 (2005).
[35] Id. at 655.
[36] G.R. No. 180357, August 4, 2009, 595 SCRA 263.
[37] Id. at 271-272.
[38] G.R. Nos. 140743 & 140745, September 17, 2009, 600 SCRA 33.
[39] Id. at 63.
[40] Rollo, pp. 32-33, 191-192.
[41] Supra note 32.
[42] Id.
[43] Id. at 869-870.
[44] Revised Rules of Court , Rule 111, Section 5.
[45] Security Bank Corporation v. Judge Victorio, 505 Phil. 682, 699-700 (2005).