San Juan v. Castro
REITERATIONFacts
The Antecedents: Petitioner Romulo D. San Juan, owner of real properties, executed a Deed of Assignment on August 24, 2004, conveying these properties to Saints and Angels Realty Corporation (SARC), a corporation then under incorporation, in exchange for 258,434 shares of stock with a total par value of ₱2,584,340. Two hundred thousand shares were placed in San Juan's name, and 58,434 in his wife's name. The Securities and Exchange Commission approved SARC's Articles of Incorporation on June 24, 2005. Respondent Ricardo L. Castro, the City Treasurer of Marikina City, informed petitioner's representative that the transfer tax due should be based on the fair market value of the property, not the stated consideration in the Deed of Assignment (shares of stock). Petitioner protested in writing, asserting that the transfer involved no monetary consideration, only shares of stock. Respondent, in reply, maintained that in cases of transfer of real property not involving monetary consideration, the fair market value or zonal value is the basis for the tax, citing the Local Government Code's definition of fair market value. Respondent's preliminary computation was based on the fair market value. Procedural History: Petitioner filed a Petition for mandamus and damages before the Regional Trial Court (RTC) of Marikina City, praying to compel the City Treasurer to accept payment of transfer tax based on the actual consideration (shares of stock). The RTC dismissed the Petition, finding for the respondent. The Petition: Petitioner filed a Petition for Review on Certiorari before the Supreme Court, faulting the RTC for dismissing the Petition for mandamus with damages.
Issue(s)
Whether mandamus lies to compel the City Treasurer to accept the payment of transfer tax based on the consideration stated in the Deed of Assignment (shares of stock) instead of the fair market value of the property, considering the City Treasurer's discretion. Whether the City Treasurer correctly assessed the transfer tax based on the fair market value of the property when the transfer involved shares of stock as consideration, and whether the monetary consideration was substantial. Whether petitioner exhausted available administrative remedies before filing a petition for mandamus.
Ruling
The petition is DENIED. Costs against petitioner, Romulo D. San Juan.
Ratio Decidendi
On the issue of mandamus and the City Treasurer's discretion: The Court held that mandamus will not lie to compel the City Treasurer to accept a tax payment that, in his reasoned assessment, is deficient and incorrect. The assessment of tax liabilities and the duty to collect them involve a degree of discretion, meaning the duty is not purely ministerial. The City Treasurer has the power to ascertain if the tax payment is proper or correct. Therefore, compelling him through mandamus to accept a payment based solely on the petitioner's asserted consideration, when the treasurer believes the fair market value should be the basis, is improper. The Court reiterated that mandamus is only available to compel the performance of a ministerial duty, not a discretionary function. On the basis of transfer tax assessment and substantiality of consideration: The Court affirmed the respondent's position that when the monetary consideration involved in the transfer of real property is not substantial, the fair market value or zonal value of the property should be the basis for the transfer tax. Section 135 of the Local Government Code provides that the tax is imposed on the total consideration involved or the fair market value, whichever is higher, in cases where the monetary consideration is not substantial. The respondent correctly determined that the par value of the shares of stock received by the petitioner (₱2,584,340) was substantially less than the fair market value of the properties transferred (stated by petitioner to be over seven million pesos), thus justifying the use of the fair market value as the tax base. On the exhaustion of administrative remedies: The Court found that the petitioner failed to exhaust available administrative remedies. Section 195 of the Local Government Code clearly outlines the procedure for protesting a tax assessment. After receiving a notice of assessment, the taxpayer has sixty (60) days to file a written protest with the local treasurer. If the protest is denied, the taxpayer has thirty (30) days to appeal to the court of competent jurisdiction. In this case, the petitioner's written protest was effectively denied by the City Treasurer's letter. Instead of appealing the assessment or paying under protest and seeking a refund, the petitioner directly filed a petition for mandamus, bypassing the prescribed administrative and judicial remedies.
Main Doctrine
Mandamus will not lie to compel a local treasurer to accept payment of transfer tax based on a consideration asserted by the taxpayer when the treasurer, exercising discretion, believes the tax should be based on the fair market value of the property due to unsubstantial monetary consideration, especially when administrative remedies for protest and appeal are available.