5/3/23, 2:06 PM [ G.R. No. 192536.

March 15, 2017 ]

807 Phil. 394 ← click for PDF copy

THIRD DIVISION
[ G.R. No. 192536. March 15, 2017 ]
DEMETRIO R. ALCANTARA, PETITIONER, VS. REPUBLIC OF THE
PHILIPPINES, THRU ITS AGENCY, BUREAU OF INTERNAL
REVENUE, REVENUE REGION NO. 11-B, DAVAO CITY; AMERIGO D.
VILLEGAS, REVENUE ENFORCEMENT OFFICER, REVENUE
REGION NO. 11-B; TEODORICA R. ARCEGA, ASSISTANT REGIONAL
DIRECTOR, BIR REVENUE REGION NO. 11-B; JOSE C. BATAUSA,
REGIONAL DIRECTOR, BIR REVENUE REGION NO. 11-B;
THEMISTOCLES R. MONTALBAN, ASSISTANT COMMISSIONER,
COLLECTION SERVICE OF BIR; REGISTER OF DEEDS OF DAVAO
CITY; AND MAXIMO LAGAHIT, RESPONDENTS.
DECISION

BERSAMIN, J.:

An action directly brought in the Regional Trial Court (RTC) ostensibly to demand
reconveyance of property sold upon forfeiture for non­payment of a tax assessment is to be
dismissed for failure of the plaintiff to claim for refund or credit with the Commissioner of
Internal Revenue. The failure to resort to administrative remedies rendered the assessment final.

The Case

Under review are the decision promulgated on November 4, 2009[1] and resolution promulgated
on May 13, 2010,[2] whereby the Court of Appeals (CA) in CA-G.R. CV No. 79261
respectively dismissed the appeal of the petitioner and denied his motion for reconsideration.

As a consequence, the decision rendered on February 28, 2003 by the RTC in Davao City in
Civil Case No. 25,401-97 entitled Demetrio Alcantara v. Republic of the Philippines, et al.[3]
dismissing the petitioner's complaint for declaration of nullity of notice of seizure of real
property, declaration of forfeiture of real property, deed of sale and for specific performance for
reconveyance of real property stands.

Antecedents

The CA summarized the facts as follows:

Plaintiff-appellant Demetrio R. Alcantara (hereinafter, appellant) was the owner of a

parcel of land, 301 square meters in area, situated at Panorama Monies, Buhangin,
Davao City, and covered by Transfer Certificate of Title (TCT) No. T-113015.
https://elibrary.judiciary.gov.ph/assets/dtSearch/dtSearch_system_files/dtisapi6.dll?cmd=getdoc&DocId=62712&Index=%2a4aeb4dbdcceeda9b59b8… 1/15
5/3/23, 2:06 PM [ G.R. No. 192536. March 15, 2017 ]

Defendants-appellees (hereinafter, appellees) are: The Republic of the Philippines

thru its agency, Bureau of Internal Revenue (BIR), Revenue Region No. 11-B,
Davao City and the following officers of the said Revenue Region: Region
Enforcement Officer Amerigo D. Villegas, Assistant Regional Director Teodorica R.
Arcega, and Regional Director Jose C. Batausa; Themistocles R. Montalban,
Assistant Commissioner for Collection Service of the BIR; the Register of Deeds of
Davao City; and Maximo Lagahit.

On April 15, 1983 and April 16, 1984, appellant filed his income tax returns for,
respectively, the years 1982 and 1983.

On December 14, 1987, Crispin Vallejo, Jr., Assistant Regional Director of the
Revenue Region No. 11-B of the BIR, Davao City, wrote appellant informing him
that P32,076.52 was still due from him representing deficiency income tax and fixed
tax, surcharge, interest and compromise penalty for kite payment, and inviting him
to call at "the Chief, Assessment Branch Room 107 Milagros Building Ilustre Street,
this City for an informal conference to enable" appellant "to go over our findings and
present objections thereto, if any".

The letter was addressed thus:

Mr. Demetrio R. Alcantara

Ecoland Subdivision, Matina
Davao City

There was no response from appellant.

On February 15, 1988, the BIR issued two (2) demand letters - with respective
accompanying income tax assessment notices - to appellant at the same address. The
demand letters were signed by Vallejo for Commissioner of Internal Revenue (CIR)
Bienvenido A. Tan Jr.

The first letter reads:

This is to inform you that in the investigation conducted by an examiner

of this Office on your 1982 & 1983 income and other internal revenue
tax liabilities, it was ascertained that there is still due from you the total
amount of THIRTY THOUSAND SEVEN HUNDRED NINETY
SEVEN & 36/100 (P30,797.36) representing deficiency income taxes
and interests for late payment.

The amount due is computed as follows:

1982 Deficiency P
 
Income Tax Due 7,530.81
Add: Interest from 04-
4,518.49 
16-83 to 02-15-88
   
https://elibrary.judiciary.gov.ph/assets/dtSearch/dtSearch_system_files/dtisapi6.dll?cmd=getdoc&DocId=62712&Index=%2a4aeb4dbdcceeda9b59b8… 2/15
5/3/23, 2:06 PM [ G.R. No. 192536. March 15, 2017 ]

P
T O TAL  
12,049.30
   
1983 Deficiency P
 
Income Tax Due 11,717.54
Add: Interest from 04-
7,030.52 
16-84 to 02-15-88
   
P
T O TAL  
8,748.06
   
TOTAL AMOUNT
P
DUE &  
30,797.36
COLLECTIBLE

In view of the foregoing, demand is hereby made upon you to pay the
total amount of P30,797.36 to the Collection Agent thereat on or before
March 15, 1983, so that this case may be considered closed and
terminated.

The second letter was for the amount of P1,294.70, representing deficiency fixed
tax, surcharge, interest and compromise penalty for late payment.

Still there was no response.

On August 12, 1991, the CIR, through appellee Montalban, issued a Warrant of
Distraint and/or Levy against the properties of appellant. The address of the
appellant in the said Warrant was the same as in the above-cited communications to
him. In the lower portion of the warrant, appellee Villegas certified that -

X X X ON THE 17th DAY OF OCTOBER 1991, A COPY OF THE

WARRANT OF DISTRAINT AND/OR LEVY WAS:

A. SERVED TO THE TAX PAYER OR HIS REPRESENTATIVE AS

ACKNOWLEDGED HEREUNDER:

________________________________
TAXPAYER OR HIS REPRESENTATIVE

B. SERVED CONSTRUCTIVELY BECAUSE THE TAXPAYER OR HIS

REPRESENTATIVE REFUSED TO ACKNOWLEDGE THE SERVICE OF
THE WARRANT, OR WAS NOT IN THE PREMISES.

There were no entries in cither of the two boxes above. Neither the taxpayer's name
nor that of his representative printed above the line provided therefor. Nor was there
any signature above the said line.

Subsequently, Villegas issued to appellant at the same address a Notice of Seizure of

https://elibrary.judiciary.gov.ph/assets/dtSearch/dtSearch_system_files/dtisapi6.dll?cmd=getdoc&DocId=62712&Index=%2a4aeb4dbdcceeda9b59b8… 3/15
5/3/23, 2:06 PM [ G.R. No. 192536. March 15, 2017 ]

Real Property notifying him that his property, covered by TCT No. T-113015, had
been levied upon to satisfy the sum of P32,076.52 as internal revenue tax, surcharge
and interest and would be sold "for cash, to the highest bidder at the Lobby, main
building, City [sic] of Davao City, Municipality of Davao City [sic] on the 30th day
of April 1992, beginning at 10:00 o'clock a.m. of the said day". At the bottom of the
Notice, Villegas certified that -

x x x I have on this date served a copy of this notice to Mr. Baldovino S.

Lagbao, Mgr. Of Panorama Home on this 6th day of March, 1992 at
10:45 A.M.

On May 4, 1992, Villegas issued a Declaration of Forfeiture of Real Property

declaring that since "no bidder appeared or the highest bid is insufficient to pay
taxes", the levied property was "forfeited to the Government of the Republic of the
Philippines in satisfaction of the tax/taxes" due.

On May 13, 1993, appellee Arcega wrote the Register of Deeds of Davao City
requesting that, in view of the lapse of the one-year redemption period for appellant
to redeem the property, a new title issue over the subject property in the name of the
Republic of the Philippines. Thus, on May 18, 1993, appellee Register of Deeds of
Davao City cancelled TCT No. T-113015 and issued a new TCT No. T-195677 in the
name of Republic of the Philippines.

Subsequently, the BIR, through appellee Batausa, issued a Notice of Sale informing
the public of a resale, pursuant to Section 217 of the National Internal Revenue
Code, of the above property through public auction to be held on June 9, 1995. In the
said resale, appellee Maximo Lagahit was proclaimed the winning/highest bidder.
On June 29, 1995, a deed of sale was executed by and between the CIR through
Director Batausa and appellant Lagahit for the sale of the said property. On the same
day, a new title - TCT No. T-244532 - was issued in the name of appellee Lagahit.

On June 6, 1997, appellant instituted the action below before the RTC of Davao City
where it was docketed as Civil Case No. 25,401-97 and raffled to Branch 11. In his
complaint, appellant alleged that when he wanted to pay the realty tax on his
Buhangin property for the year 1997, his payment was not accepted by the
Assessor's Office in Davao City for the reason that the owner of said property is no
longer the plaintiff but a certain MAXIMO LAGAHIT - which fact brought shock
waves to the plaintiff; that upon verification from the Register of Deeds of Davao
City, appellant was surprised to find that his certificate of title was cancelled on May
18, 1993 and that TCTs were subsequently issued in the name of the Republic of the
Philippines and then to Maximo Lagahit; that appellant found that he was deprived
of his property when the BIR "made it appear falsely" in the Income Tax Assessment
Notices that he "was residing at Ecoland Subdivision, Matina, Davao City", when, in
fact, he and his family had left Davao City for the United States in August 1985; that
as a result of assessment notices which were not validly served on appellant,
appellees Montalban and Villegas pursued their illegal acts of levying and seizing
appellant's property by issuing a "farcical" Warrant of Distraint and/or Levy, Notice
of Seizure of Real Property, Declaration of Forfeiture of Real Property, all without
https://elibrary.judiciary.gov.ph/assets/dtSearch/dtSearch_system_files/dtisapi6.dll?cmd=getdoc&DocId=62712&Index=%2a4aeb4dbdcceeda9b59b8… 4/15
5/3/23, 2:06 PM [ G.R. No. 192536. March 15, 2017 ]

notice or service of the same whatsoever to appellant; that appellant "felt extremely
aggrieved" due to appellees' "unlawful acts and irregularities" committed, which
deprived the former of his property without due process of law. Thus, appellant
prayed for the declaration as null and void ab initio of the above-mentioned notices
of assessment, the notice of seizure of real property, the declaration of forfeiture of
real property, and the deed of sale. He also prayed that defendants be ordered to
reconvey to him the subject property or that the BIR and its officers involved be
compelled to reacquire the said property from Lagahit at their own expense. Finally,
appellant prayed for P300,000.00 as moral damages, P100,000.00 as exemplary
damages, P50,000.00 as attorney's fees plus P1,000.00 per appearance fee,
P5,000.00 initially as expenses, and costs of the suit.

In their answer, appellees alleged that -

16. That defendant Bureau of Internal Revenue knows that TCT No. T-
113015 was cancelled with due process and that the defendants have not
committed unlawful acts and irregularities, but on the contrary, the
forfeiture of plaintiffs real property was done legally and regularly after
complying with the requisite due process.

16-1. That the defendants maintain that the assessment for his 1982 and
1983 deficiency income tax of P32,076.52 (Exhibit "C") was legally
assessed including interest of P32,076.52, not P30,797.36 x x x at the
time of auction sale last June 9, 1995 (Exhibit "E", "E-l", "E-2" and "E-
3"), as published in a newspaper of general circulation;

16-2. That on the basis of the legal assessment made by defendants

within the period provided by law, with notice to his last known address
at Ecoland, City Hall of Davao City, defendants Bureau of Internal
Revenue, Themistocles R. Montalban and Amerigo D. Villegas, pursued
their legal acts of levying and seizing plaintiffs real property above-
described by issuing x x x:

(a) A legal warrant of distraint and levy (Exhibit "F") wherein

they truly stated that plaintiff "failed and refused and still fails
and refuses to pay" the deficiency income taxes of P32,076.52
notwithstanding the demands made by them and defendant
Amerigo D. Villegas also truly certified thereunder that "a
copy of warrant of distraint and/or levy was served to the
taxpayer or his representative" as acknowledged hereunder
served constructively on the 6th day of March 1992 and
warrant of distraint and/or levy on the 17th day of October
1991 witnessed by Severina Reyes and Nareiso Apolinario.

(b) A genuine Notice of Seizure of real property dated March

6, 1992 indicating his last known address at Ecoland, Matina,
Davao City ... Although defendant Amerigo D. Villegas knew
that the taxpayer migrated to the United States, he was
https://elibrary.judiciary.gov.ph/assets/dtSearch/dtSearch_system_files/dtisapi6.dll?cmd=getdoc&DocId=62712&Index=%2a4aeb4dbdcceeda9b59b8… 5/15
5/3/23, 2:06 PM [ G.R. No. 192536. March 15, 2017 ]

informed by Ms. Aleta Zerrudo that she cannot give the

address of Mr. Demetrio R. Alcantara in the United States. He
made a certification therein that he served a copy thereof to
Mr. Valdovino S. Lagbao of Panorama Monies, Buhangin,
Davao City, on the 6th day of March 1992 at 10:00 o'clock
A.M. pursuant to Section 224, wherein the suspension of the
running of statute of limitation shall be suspended when the
taxpayer cannot be located in the address given by him in the
return filed upon which a tax is being assessed or collected;
xxx xxx xxx; when the warrant of distraint or levy is duly
served upon the taxpayer, his authorized representative, or a
member of his household with sufficient discretion, x x x; and
when the taxpayer is out of the Philippines.

(c) A declaration of forfeiture of real property on May 6, 1992

with due notice, filed a notice of tax lien on August 12, 1991
(Exhibit "J", "J-1", "J-3" and "J-4");

16-3 That on May 13, 1993, defendant Teodorica R. Arcega wrote a letter
to the Register of Deeds of Davao City requesting the latter to issue a
new title of the subject property in the name of the Republic of the
Philippines and TCT No. T-195677 was issued. Such act was a legal and
lawful performance of her duties. The procedures undertaken were in
compliance with due process of law ...

16-4. That after acquiring a new title to the property in the name of the
Republic of the Philippines and pursuant to the requirements and
conditions provided by law, defendant Jose C. Batausa conducted a resale
at public auction and legally and lawfully sold plaintiffs above-described
real property in favor of the highest bidder, Maximo Lagahit, pursuant to
Sec. 217 of the Tax Code at a conscionable and sufficient consideration
of P73,500.00 and the Commissioner of Internal Revenue, represented by
Regional Director Jose C. Batausa, had the absolute right to conduct a
resale of real property under Section 315, now 216, 217 and Consulta
832 of the Land Registration Commission.

16-5. The aforesaid Deed of Sale is legally sufficient in form and

defendants maintain that due process and due notice had been complied
with by defendants [BIR] and its' officers in levying and seizing plaintiffs
above-described property. Defendant Register of Deeds of Davao City,
was lawfully performing their duties in giving due course and issuing
Transfer Certificate of Title No. T-244532 in the name of defendant
Maximo Lagahit, the highest bidder in the auction, and who is a buyer in
good faith for value.

xxxx

20. That defendants acted with justice and had observed honesty and

https://elibrary.judiciary.gov.ph/assets/dtSearch/dtSearch_system_files/dtisapi6.dll?cmd=getdoc&DocId=62712&Index=%2a4aeb4dbdcceeda9b59b8… 6/15
5/3/23, 2:06 PM [ G.R. No. 192536. March 15, 2017 ]

good faith in doing their duties of levying plaintiffs real property and
deny specifically that they have prejudiced the herein plaintiff. As a
consequence, no unlawful acts and irregularities had been committed and
therefore, they are not liable for exemplary damages as government
officers doing their duties of levying the real property of the plaintiff;

On March 10, 1999, the RTC, Branch 11, upon being apprised of the fact that the
present controversy involved tax matters under the Internal Revenue Code, ordered
the transfer of the case to the "designated special courts to take cognizance of tax
matters and all matters relating to Internal Revenue Code". The case was reassigned
to Branch 16, one of the two branches of the RTC of Davao City so designated.[4]

Judgment of the RTC

After trial, the RTC dismissed the complaint, holding that the respondents could not be faulted
for Alcantara's failure to receive the assessment because the BIR and its officials had only relied
on the address indicated in his tax returns; and that he had never informed the respondents of
any change of his address.[5]

Decision of the CA

The same fate awaited Alcantara's appeal. The CA dismissed the appeal on the ground that the
RTC had no jurisdiction over the complaint because he was thereby seeking to challenge the
validity of the assessment made by the BIR. According to the CA, the Tax Code mandated that
the taxpayer should administratively protest the assessment with the Commissioner of Internal
Revenue before going to court, but he did not do so; hence, he did not exhaust his administrative
remedies, rendering his action dismissible. The CA observed that even assuming that the RTC
had jurisdiction over the complaint, the CA did not have jurisdiction over the appeal because it
was the Court of Tax Appeals (CTA) that had the authority to entertain the same as provided for
by Republic Act 1125, as amended.[6]

Issues

Alcantara now insists on the competence of the RTC to take cognizance of his complaint. He
insists that his complaint is one for the declaration of the nullity of TCT No. T-195677 and TCT
No. T-244532 and for the reconveyance of property that fell within the exclusive and original
jurisdiction of the RTC as provided for in Batas Pambansa Blg. 129, as amended, due to such
causes of action being incapable of pecuniary estimation and involving title to, or possession of,
real property, or any interest therein; that the CA erred in requiring him to exhaust
administrative remedies before going to the RTC; and that because the CTA had no jurisdiction,
and, as such, had no power to declare certificate of titles as null and void, the CA was the proper
appellate forum for him.

Countering, the respondents, through the Office of the Solicitor General, aver that the action of
Alcantara was a suit against the State; hence, conformably with the doctrine of state immunity
from suit, the same should be dismissed because the State did not consent to the action; the CA's
ruling that neither the RTC nor the CA had jurisdiction, original and appellate, respectively, to
act on the complaint was not erroneous; and that they (individual respondents) could not be
https://elibrary.judiciary.gov.ph/assets/dtSearch/dtSearch_system_files/dtisapi6.dll?cmd=getdoc&DocId=62712&Index=%2a4aeb4dbdcceeda9b59b8… 7/15
5/3/23, 2:06 PM [ G.R. No. 192536. March 15, 2017 ]

liable for damages due to having acted in good faith in levying on and auctioning Alcantara's
property.[7]

The decisive issues are, therefore: (a) whether or not the CA erred in ruling that the RTC had no
jurisdiction to try and decide Alcantara's complaint; and (b) whether or not the CA erred in
ruling that the proper appellate authority to question the decision of the RTC was the CTA.[8]

Ruling of the Court

The appeal lacks merit.

The allegations in the complaint and the character of the relief sought determine the nature of an
action as well as which court has jurisdiction over the action. The nature of a pleading is
determined by allegations therein made in good faith, the stage of the proceeding at which it is
filed, and the primary objective of the party filing the same.[9] Accordingly, a review of the
allegations is proper in order to determine the real nature of the cause of action pleaded in the
complaint.

The complaint pertinently alleges as follows:

11. That the above-described real property was purchased by the plaintiff with his
hard-earned money on installment basis from its former owner with the plan to put
up his own residential house thereon where he could spend the rest of his life upon
his return from the United States of America after retirement; Thus before he left
Davao City for the United States of America in August 1985 he had it titled in his
name in order that he could "rest secure, without the necessity of waiting in the
portals of the court, or sitting in the mirador de su casa to avoid the possibility of
losing his land." [Registration of Land Titles and Deeds, by Narciso Peña, p. 24]

12. That the plaintiff's ownership of the above-described real property is evidenced
by a Transfer Certificate of Title No. T-113015 issued in his name by the Register of
Deeds of Davao City, a machine copy of which is attached hereto as ANNEX "A" to
form part hereof;

13. That being the absolute owner of the above-described property, the plaintiff [thru
his authorized representative] has religiously paid the corresponding realty taxes
therefor and this fact is evidenced by the following Official Receipts of the
Republic of the Philippines issued to the plaintiff during the last five years [from
1992 to 1996], to wit:

13.1Official Receipts Nos. 4629172 Q and 4628422 Q all dated 1-17-96

machine copies of which are attached hereto as ANNEXES "B" and
"B-1";

13.2Official Receipts Nos. 8671852 P and 8669352 P all dated 3-27-95

machine copies of which are attached hereto as ANNEXES "C" and
"C-1";

https://elibrary.judiciary.gov.ph/assets/dtSearch/dtSearch_system_files/dtisapi6.dll?cmd=getdoc&DocId=62712&Index=%2a4aeb4dbdcceeda9b59b8… 8/15
5/3/23, 2:06 PM [ G.R. No. 192536. March 15, 2017 ]

13.3Official Receipts Nos. 7533667 P and 7532042 P all dated 3-29-94

machine copies of which are attached hereto as ANNEXES "D" and
"D-1";

13.4Official Receipt No. 3863896 P dated 3-18-93 a machine copy of

which is attached hereto as ANNEX "E"; and

13.5Official Receipt No. 7519929 O dated 3-17-92 a machine copy of

which is attached hereto as ANNEX "F" to form part hereof;

14. That however, when the plaintiff [thru his authorized representative] wanted to
pay the realty tax for this year [1997] for the above-described property, his payment
was not accepted by the office of the Davao City Assessor for the reason that the
owner of the said property is no longer the plaintiff but a certain MAXIMO
LAGAHIT - which fact brought shock waves to the plaintiff;

15. That upon hearing the shocking information that his above-described property is
already owned by a certain MAXIMO LAGAHIT, the plaintiff caused the
verification of the existence of his aforesaid TCT No. T-113015 with the Office of
the Register of Deeds of Davao City and he was surprised to find out that it was
cancelled on 5-18-93 by the Register of Deeds of Davao City without giving him
due process of law and a new TCT No. T-195677 was issued in the name of the
Republic of the Philippines; A CERTIFIED TRUE COPY of the cancelled TCT No.
T-113015 is attached hereto as ANNEX "G";

16. That after knowing that his said TCT No. 1-113015 was cancelled without giving
him due process of law, plaintiff further caused the verification of the same and he
found out that the defendants committed the following unlawful acts and
irregularities as their basis for depriving the plaintiff of his property without due
process of law, namely:

16.1Beyond the period of limitation prescribed by law [See Sec. 203,

NIRC] and long after the plaintiff had left Davao City for the United
States of America, the BIR made it appear that it assessed plaintiff's
income tax returns for 1982 and 1983 with alleged deficiency
income taxes and interests amounting to P30,797.36; Worse, the BIR
falsely made it appear in its alleged INCOME TAX ASSESSMENT
NOTICES that the plaintiff was residing at Ecoland Subdivision,
Matina, Davao City, altho the truth was that he and his family left
Davao City in August 1985 for the United States of America; Neither
were the alleged INCOME TAX ASSESSMENT NOTICES
published in a newspaper of general circulation; Machine copies of
the alleged INCOME TAX ASSESSMENT NOTICES are attached
hereto as ANNEXES "H" and "H-1";

16.2On the basis of the aforesaid illegal assessment made beyond the
period of limitation prescribed by law and altho NO NOTICE thereof
whatsoever was validly served on the plaintiff, defendants BIR,
Themistocles R. Montalban, and Amerigo D. Villegas pursued in
https://elibrary.judiciary.gov.ph/assets/dtSearch/dtSearch_system_files/dtisapi6.dll?cmd=getdoc&DocId=62712&Index=%2a4aeb4dbdcceeda9b59b8… 9/15
5/3/23, 2:06 PM [ G.R. No. 192536. March 15, 2017 ]

their illegal acts of levying and seizing plaintiff's above-described

property by issuing

(a) A farcical WARRANT OF DISTRAINT AND/OR LEVY

wherein they FALSELY stated that the plaintiff "failed, and
refused and still fails and refuses to pay the deficiency income
taxes of P32,076.52 notwithstanding the demands made by
them" and defendant AMERIGO D. VILLEGAS also
FALSELY certified thereunder that "a copy of the warrant of
distraint and/or levy was [A] served to the taxpayer or his
representative as acknowledged hereunder [B] served
constructively because the taxpayer or his representative
refused, to acknowledge the service of the warrant, or was
not in the premises." A machine (sic) of the WARRANT OF
DISTRAINT AND/OR LEVY is attached hereto as ANNEX
"I";

(b) A farcical NOTICE OF SEIZURE OF REAL PROPERTY

dated March 6, 1992 indicating FALSELY plaintiff's address
as being at Ecoland, Matina, Davao City, a machine copy of
which is attached as ANNEX "J"; Altho defendant
AMERIGO D. VILLEGAS knew very well that the plaintiff
had emigrated to the United States of America per his letter
dated February 27, 1989, a machine copy of which is
attached hereto as ANNEX "K", he FALSELY made it appear
in the said NOTICE OF SEIZURE OF REAL PROPERTY
that the plaintiff's address was at Ecoland, Matina, Davao
City; Worse, he made an empty certification therein that he
served a copy thereof to a certain Mr. Baldovino S. Lagbao
who had absolutely NO CONTACT with the plaintiff and
which kind of service was not authorized by law [See Sec.
213. NIRC].

(c) A DECLARATION OF FORFEITURE OF REAL

PROPERTY on May 6, 1992 without any notice whatsoever
to the plaintiff, a machine copy of which is attached hereto as
ANNEX "L";

16.3On May 13, 1993 defendant TEODORICA R. ARCEGA wrote a

letter to the Register of Deeds of Davao City requesting the latter to
issue a new title of the subject property in the name of the Republic
of the Philippines altho, as clearly shown in the foregoing facts, the
proceedings undertaken by the public defendants are null and void ab
initio for lack of the requisite due process of law; A machine copy of
the letter is attached hereto as ANNEX "M";

16.4Without complying with the requirements and conditions provided

under the law, defendant JOSE C. BATAUSA illegally sold plaintiff's
above-described property in favor of defendant MAXIMO
https://elibrary.judiciary.gov.ph/assets/dtSearch/dtSearch_system_files/dtisapi6.dll?cmd=getdoc&DocId=62712&Index=%2a4aeb4dbdcceeda9b59b… 10/15
5/3/23, 2:06 PM [ G.R. No. 192536. March 15, 2017 ]

LAGAHIT at an unconscionable and measly consideration of only

P73,500.00 altho, under the law [See Sec. 217, NIRC], defendant
JOSE C. BATAUSA did not have the authority to sell the same; This
fact is evidenced by a Deed of Sale a machine copy of which is
attached hereto as ANNEX "N";

16.5Altho the aforesaid Deed of Sale [Annex N] is manifestly

insufficient in form and despite the nullity of the proceedings
undertaken by the BIR and its officers in levying or seizing plaintiff's
above-described property, defendant Register of Deeds of Davao
City gave due course thereto and issued Transfer Certificate of Title
No. T-244532 in the name of defendant MAXIMO LAGAHIT, who
was obviously not a buyer in good faith for value;

17. That having felt extremely aggrieved of the unlawful acts and irregularities
committed by the defendants in depriving him of his property without due process of
law, plaintiff had to fly to Davao City from the United States of America to institute
appropriate action to compel the defendants to reconvey his above-described
property to him; And when he arrived in Davao City he discovered that a BIG For
Sale sign has been erected at the site of his above-described property, which
prompted him to file a NOTICE OF ADVERSE CLAIM with the defendant Register
of Deeds of Davao City; A machine copy of the NOTICE OF ADVERSE CLAIM is
attached hereto as ANNEX "O";

But for reasons not in accordance with law [See Sec. 70, P.D. 1529] the defendant
Register of Deeds refused to register plaintiff's aforesaid NOTICE OF ADVERSE
CLAIM [Annex O] as per letter dated May 29, 1997, a machine copy of which is
attached hereto as ANNEX "P";

18. That before the plaintiff resorted to this action, he went to the defendant BIR for
possible amicable settlement regarding the reconveyance of his above-described
property to him and he was able to personally talk with Atty. Mercelinda O. Yap who
in turn suggested to him to see defendant MAXIMO LAGAHIT on the matter; In
this light, a representation was made to Mr. & Mrs. Maximo Lagahit at their business
stall at the Agdao Public Market, Davao City, who immediately admitted plaintiff's
ownership of the property; As put it by both spouses, they were even surprised why
the Republic of the Philippines owned a residential lot situated at the Panorama
Homes Subdivision, Buhangin, Davao City; And when Mr. & Mrs. Maximo Lagahit
were asked about plaintiff's willingness [for purposes of buying peace] to get back
the property from them at the consideration they acquired plus cost of money and the
attendant expenses, their reaction was that they were selling it at P3,000.00 per
square meter [or a total price of P903,000.00], which shocked the plaintiff;[10]

xxxx

It is clear from the foregoing allegations that despite assailing the supposedly illegal
confiscation of his property in order to satisfy his tax liabilities, Alcantara was really
challenging the assessment and collection of taxes made against him for being in violation of his

https://elibrary.judiciary.gov.ph/assets/dtSearch/dtSearch_system_files/dtisapi6.dll?cmd=getdoc&DocId=62712&Index=%2a4aeb4dbdcceeda9b59b8… 11/15
5/3/23, 2:06 PM [ G.R. No. 192536. March 15, 2017 ]

right to due process. As such, the complaint concerned the validity of the assessment and
eventual collection of the taxes by the BIR. The declaration of nullity of the sale and
reconveyance was founded on the validity of the assessment and eventual collection by the BIR.
That the main relief sought by his complaint was "to declare the assessments conducted by the
BIR on the Income Tax Returns of [Alcantara] for 1982 and 1983 as null and void ab initio" as
well as to declare all notices and deeds in relation to collection of the assessed taxed liabilities
as null and void[11] bolsters this conclusion.

Accordingly, the CA correctly determined that the RTC had no jurisdiction to resolve the issues
raised in Alcantara's complaint.

The remedies available to a taxpayer like Alcantara were laid down by law. Section 229 of
Presidential Decree (P.D.) No. 1158,[12] the law in effect at the time of the disputed assessment,
stated that prior resort to the administrative remedies was necessary; otherwise, the assessment
would attain finality, viz.:

Sec. 229. Protesting of assessment. — When the Commissioner of Internal Revenue

or his duly authorized representative finds that proper taxes should be assessed, he
shall first notify the taxpayer of his findings. Within a period to be prescribed by
implementing regulations, the taxpayer shall be required to respond to said notice. If
the taxpayer fails to respond, the Commissioner shall issue an assessment based on
his findings.

Such assessment may be protested administratively by filing a request for

reconsideration or reinvestigation in such form and manner as may be
prescribed by implementing regulation within thirty (30) days from receipt of
the assessment; otherwise, the assessment shall become final and unappealable.

If the protest is denied in whole or in part, the individual, association or corporation

adversely affected by the decision on the protest may appeal to the Court of Tax
Appeals within thirty (30) days from receipt of the said decision; otherwise, the
decision shall become final, executory and demandable. [Emphasis Supplied]

Section 230 of P.D. No. 1158 allowed Alcantara to file his claim for refund for the erroneously
or illegally paid taxes. In this regard, such claim for refund was also a prerequisite before any
resort to the courts could be made to recover the erroneously or illegally paid taxes, to wit:

Sec. 230. Recovery of tax erroneously or illegally collected. — No suit or

proceeding shall be maintained in any court for the recovery of any national internal
revenue tax hereafter alleged to have been erroneously or illegally assessed or
collected, or of any penalty claimed to have been collected without authority, or of
any sum alleged to have been excessive or in any manner wrongfully collected, until
a claim for refund or credit has been duly filed with the Commissioner; but
such suit or proceeding may be maintained, whether or not such tax, penalty, or
sum has been paid under protest or duress.

In any case, no such suit or proceeding shall be begun after the expiration of two
years from the date of payment of the tax or penalty regardless of any supervening
https://elibrary.judiciary.gov.ph/assets/dtSearch/dtSearch_system_files/dtisapi6.dll?cmd=getdoc&DocId=62712&Index=%2a4aeb4dbdcceeda9b59b… 12/15
5/3/23, 2:06 PM [ G.R. No. 192536. March 15, 2017 ]

cause that may arise after payment: Provided, however, That the Commissioner may,
even without a written claim therefor, refund or credit any tax, where on the face of
the return upon which payment was made, such payment appears clearly to have
been erroneously paid.

Forfeiture of refund. — A refund check or warrant issued in accordance with the

pertinent provisions of this Code which shall remain unclaimed or uncashed within
five (5) years from the date the said warrant or check was mailed or delivered shall
be forfeited in favor of the government and the amount thereof shall revert to the
General Fund. [Bold emphasis supplied]

Yet, Alcantara immediately invoked the authority of the courts to protect his rights instead of
first going to the Commissioner of Internal Revenue for redress of his concerns about the
assessment and collection of taxes. His judicial recourse thus suffered from fatal prematurity
because his doing so rendered the assessment final.

Alcantara argues that the resort to administrative remedies was futile for him because he could
not have sought reconsideration or filed a claim for refund during the period required of him by
the Tax Code clue to his being then out of the country.

Such argument did not excuse Alcantara from complying with the specific provisions of law on
his remedies. Even assuming to be true that he had not received the assessment, there was
greater reason for him to have first resorted to the Commissioner of Internal Revenue for the
reconsideration of the assessment before it attained finality. Section 229 of P.D. No. 1158
declared the finality of the assessment upon the lapse of 30 days from receipt of it.

Alcantara contends that the CA erred in ruling that the proper appellate court to bring his appeal
to was the CTA; that following Section 7 of Republic Act No. 1125, as amended by Republic
Act No. 9282, the CTA had no jurisdiction to declare the certificate of titles null and void; and
that the CA was instead the proper appellate court to review the adverse decision of the RTC in
his case.

The contention lacks persuasive force.

The complaint was brought to assail the assessment and collection made by the Commissioner
of Internal Revenue. Based on Republic Act No. 1125, prior to its amendment by Republic Act
No. 9282, the CTA had exclusive appellate jurisdiction over the appeal of the decisions of the
Commissioner of Internal Revenue, to wit:

Section 7. Jurisdiction. - The Court of Tax Appeals shall exercise exclusive

appellate jurisdiction to review by appeal, as herein provided.

(1) Decisions of the Collector of Internal Revenue in cases involving disputed

assessments, refunds of internal revenue taxes, fees or other charges, penalties
imposed in relation thereto, or other matters arising under the National
Internal Revenue Code or other law or part of law administered by the Bureau
of Internal Revenue;

xxxx
https://elibrary.judiciary.gov.ph/assets/dtSearch/dtSearch_system_files/dtisapi6.dll?cmd=getdoc&DocId=62712&Index=%2a4aeb4dbdcceeda9b59b… 13/15
5/3/23, 2:06 PM [ G.R. No. 192536. March 15, 2017 ]

Accordingly, the CA correctly dismissed Alcantara's appeal on the ground of lack of jurisdiction
to entertain the same. The erroneous appeal deserved no fate but dismissal. Section 2, Rule 50
of the Rules of Court expressly states: "An appeal erroneously taken to the Court of Appeals
shall not be transferred to the appropriate court but shall be dismissed outright." In Balaba v.
People,[13] the Court affirmed the CA's dismissal of the appeal because the appeal had been
erroneously taken to the CA instead of to the Sandiganbayan.

WHEREFORE, the Court DENIES the petition for review on certiorari; AFFIRMS the
decision promulgated on November 4, 2009 by the Court of Appeals; and ORDERS the
petitioner to pay the cost of the suit.

SO ORDERED.

Velasco, Jr., (Chairperson), Reyes, Jardeleza, and Tijam, JJ., concur.

April 3, 2017

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on March 15, 2017 a Decision, copy attached hereto, was rendered by
the Supreme Court in the above-entitled case, the original of which was received by this Office
on April 3, 2017 at 2:30 p.m.
 
Very truly yours,

(SGD)
WILFREDO V. LAPITAN
  Division Clerk of Court
   
  By:
   
  (SGD)
MISAEL DOMINGO C.
 
BATTUNG III
Deputy Division Clerk of
 
Court

[1]Rollo, pp. 33-51; penned by Associate Justice Romulo V. Borja and concurred in by
Associate Justice Elihu A. Ybañez and Associate Justice Danton Q. Bueser.

[2] Id. at 63-65.

https://elibrary.judiciary.gov.ph/assets/dtSearch/dtSearch_system_files/dtisapi6.dll?cmd=getdoc&DocId=62712&Index=%2a4aeb4dbdcceeda9b59b… 14/15
5/3/23, 2:06 PM [ G.R. No. 192536. March 15, 2017 ]

[3] Records, pp. 499-506.

[4] Rollo, pp. 34-42.

[5] Supra note 3.

[6] An Act Creating the Court of Tax Appeals.

[7] Rollo, pp. 72-96.

[8] Id. at 19.

[9]Villanueva v. Philippine Daily Inquirer, Inc., G.R. No. 164437, May 15, 2009, 588 SCRA 1,
10-11.

[10] Records, pp. 4-8.

[11] Id. at 9.

[12] A Decree to Consolidate and Codify All Internal Revenue Laws of the Philippines.

[13] G.R. No. 169519, July 17, 2009, 593 SCRA 210, 215.

Source: Supreme Court E-Library | Date created: October 09, 2020

This page was dynamically generated by the E-Library Content Management System

https://elibrary.judiciary.gov.ph/assets/dtSearch/dtSearch_system_files/dtisapi6.dll?cmd=getdoc&DocId=62712&Index=%2a4aeb4dbdcceeda9b59b… 15/15