G.R. No. 23105. February 21, 1925
GEO. H. FAIRCHILD, PLAINTIFF AND APPELLEE, VS. MARCELINO SARMIENTO, TREASURER OF MINDORO, DEFENDANT AND APPELLANT.
The
plaintiff, under the provisions of Act No. 926, is the lessee of a
parcel of land of the public domain in ‘the barrio of Pandurucan,
municipality of San Jose, Province of Mindoro, specifically described
in the lease and marked Exhibit A, and which is attached to, and made a
part of, the complaint. For the years 1920, 1921, 1922 and 1923, the
leased land was assessed for taxation purposes by the provincial
assessor, and taxes thereon for the corresponding years were levied
upon the land and paid by the plaintiff under protest, amounting to
P424.27, which amount the plaintiff seeks to recover from the defendant
in this action.
The case was submitted upon the following stipulated facts:
“It is agreed by and between the parties in the above entitled action:
“That
the plaintiff is a resident of the City of Manila, Philippine Islands;
that the defendant is the duly appointed, qualified, and acting
treasurer of the Province of Mindoro, Philippine Islands.“That,
under the provisions of Act No. 926, the plaintiff is the lessee of a
parcel of land of the public domain, situated in the barrio of
Pandurucan, municipality of San Jose, Province of Mindoro, Philippine
Islands, and described in the lease marked Exhibit A attached to the
complaint.“That for the years 1920, 1921, 1922, and 1923,
the said land was assessed for taxation purposes by the provincial
assessor of said province and taxes levied and paid thereon under
protest by plaintiff as follows:
] ]Dec. 28, 1922. ] May 31, 1923.
The
lower court rendered judgment for the plaintiff, from which the
defendant appeals, contending, first, that it erred in not holding that
the lands are subject to taxation, and, second, that Act No. 926, under
whose provisions the lease was executed constitutes a contract between
the plaintiff and the Government of the Philippine Islands, and it is
evident that such a contract could not subsequently be modified without
the consent of the lessee and to his damage, and, third, because Act
No. 926 does not contain any clause whereby the plaintiff is bound to
pay land tax on the leased land, and considering that section 113 of
Act No. 2874 only took effect after the contract of lease between the
said parties became effective, it is obvious that the plaintiff cannot
be compelled to pay the land tax demanded by the defendant, so much so
that on the dates or years to which said taxes correspond, the contract
of lease had not yet expired, and, fourth, in holding that the
plaintiff does not come under the provisions of section 113 of Act No
2874, and in rendering judgment for the plaintiff.
JOHNS, J.:
It is conceded that the Government is the owner of the land in question
and that it was leased by the Government to the plaintiff under the
provisions of Public Land Act No. 926.
Among other things, section 344 of the Administrative Code provides:
“Property exempt from tax.—The exemptions shall be as follows:
“(a)
Property owned by the United States of America, the Government of the
Philippine Islands, or by any province or municipality in the
Philippine Islands.”
In the case of Manila Trading & Supply Co. vs.
City of Manila (45 Phil., 400), this court held that a lessee, under
the terms and provisions of Act No. 1654, must pay taxes on the leased
land.
Among other things, Act No. 1654 provides:
“Every
such lease shall also contain a provision for the payment of the tax or
taxes levied on said land or improvements and providing that upon the
failure of the lessee to pay any such tax or taxes or any part thereof
the lease shall forwith cease and determine.”
That Act further provides:
“All
lands leased under the provisions of the foregoing sections of this
Act, and all improvements thereon, shall be subject to local taxation
against the lessees, their heirs, executors, administrators,
successors, or assigns, to the same extent as if such lessees, their
heirs, executors, administrators, successors, or assigns, were the
owners of both land and improvements.”
There are no such provisions in Act No. 926. Neither is there any covenant or agreement in plaintiff’s lease.
In construing Act No. 1654, we held:
“When
the plaintiff applied for and obtained its lease, the covenant to pay
the taxes was one of the considerations for, and which entered into,
the execution of the lease, and was a condition precedent to obtaining
the lease.”
The converse of that
proposition is also true that where lands of the public domain are
leased at a stipulated rental and the lease does not contain any
provisions for the payment of the taxes by the lessee, it must follow
that the exemption from the payment of taxes is one of the
considerations for the leasing of the land at the stipulated rental. In
other words, if, under the terms of the lease, the lessee was required
to pay taxes on the land, the amount of such taxes would be deducted
from the stipulated rental. The fact that section 344 provides that
property owned by the Government of the Philippine Islands is exempt
from taxation, throws the burden upon the Government to prove that the
lessee of such lands should pay taxes on the leased land. Hence, in the
absence of some covenant or contract to pay taxes, a lessee under Act
No. 926 is not liable for the payment of taxes.
The judgment of the lower court is affirmed, without costs. So ordered.
Johnson, Malcolm, Villamor, Ostrand, and Romualdez, JJ., concur.