DE JESUS vs.
THE CITY OF MANILA
December 24, 1914 | MORELAND, J. | INTENT OR SPIRIT OF THE LAW
PETITIONER: PRUDENCIO DE JESUS
RESPONDENTS: THE CITY OF MANILA
DOCTRINE:
Section 39 of Act No. 496 (The Land Registration Act) provides that:
"Every applicant receiving a certificate of title in pursuance of a decree of registration, and every subsequent purchaser of registered land
who takes a certificate of title for value in good faith shall hold the same free of all incumbrances except those noted on said certificate,
and any of the following incumbrances which may be subsisting, namely:
"Second. Taxes within two years after the same have become due and payable."
In order for taxes to fall within those incumbrances, three things must be met: a) they must be taxes, b) they must be due and payable
and subsisting as liens, c) they must be due and payable within 2 years from the time when the land was originally registered or when
the transfer was made to the purchaser for value.
Thus, taxes due and payable for the first time in 1910 could not have been due and payable two years prior to 1907, the year which the
petitioner purchased the property in order to be exempt from the payment of such
FACTS:
in 1901, Pastor Lerma, who was the owner of a certain piece of land in manila, declared the same for taxation alleging its area to
be 337,938.5 sqm when in fact it was 480,695.53 sqm. Thus, there was a large area of the property that escaped the payment of
taxes from 1901 to 1910.
Petitioner De Jesus bought the land sometime in 1907 and was able to register the same under his name.
The City of Manila assessed the estate with taxes for the said years and proceeded to collect the same from De Jesus.
De Jesus payed P2,096.49 under protest in order to avoid litigation and thereafter filed an action to recover the amounts he
paid.
The Court of First Instance of Manila initially ruled for De Jesus ordering a refund worth P1,649.82 but when the City of Manila
appealed, the complaint for refund was subsequently dismissed prompting the present appeal before the Supreme Court.
ISSUE/s: May a purchaser for value and in good faith be required to pay the deficiency in taxes which escaped taxation because of the
original owner’s actions.
RULING: Yes. De Jesus must still pay for the taxes due from the property.
RATIO:
The Supreme Court highlighted that Section 39 of Act No. 496 (The Land Registration Act) is controlling in this case which
provides that:
o "Every applicant receiving a certificate of title in pursuance of a decree of registration, and every subsequent purchaser
of registered land who takes a certificate of title for value in good faith shall hold the same free of all incumbrances
except those noted on said certificate, and any of the following incumbrances which may be subsisting, namely:
o "Second. Taxes within two years after the same have become due and payable."
De Jesus primarily argues that pursuant to the provision above, his land should not be burdened with the land tax except for
those taxes corresponding to the years when he has held it. He argues that the tax is an encumbrance upon the property.
The Supreme Court denied the argument of De Jesus stating that the general purpose of the Land Registration Act was to create
and indefeasible title and one free from all charges, liens, and incumbrances except those preserved against it and such intent is
seen in Section 39 above.
In other words, the purpose was to give to the person registering an absolutely clean title that is not subject to hidden defects or
to any claim, restriction, limitation, nor reduction except those named in the certificate of registration.
However, the exceptions in the section above should not be enlarged beyond the action signification of the words used nor may
they be extended beyond the limits which the words themselves actually set. In the second paragraph, the Court notes that the
only taxes to which property held under a Torrens title is subject in the hands of the person who obtained the original
registration.
From that section, the Supreme Court lays down the requisites where taxes may fall under the exception of the above section.
Three things must be met: a) they must be taxes, b) they must be due and payable and subsisting as liens, c) they must be due
and payable within 2 years from the time when the land was originally registered or when the transfer was made to the
purchaser for value.
In the present case, the Supreme Court held that a crucial requisite in order to claim the exception was not met – in that the
taxes due to the property was not yet due and demandable when De Jesus acquired the property.
Under the tax laws, then in force, taxes are not due and payable until they have been levied or assessed as provided by law.
However, in this case, the taxes due from the undeclared portion of the property did not become due and payable until the
assessment of the City of Manila in 1910, the year where that portion of the property was assessed for the first time.
Thus, using the requisites to meet the exception above, taxes due and payable for the first time in 1910 could not have been due
and payable two years prior to 1907, the year which De Jesus purchased the property.
The plaintiff is liable for all taxes and assessments which were levied or assessed, or which might have been levied or assessed,
during his ownership of the lands. It appears that he realized that he was so liable and has paid the taxes for the years 1907 to
1910. He claims only the right to recover for the taxes paid for the years previous to the date of his purchase; and those taxes
not having been either due or payable and not having even been assessed or levied prior to the time when he purchased the
land, his contention is well founded.
