Laperal v. City of Manila
REITERATIONFacts
The Antecedents: The City of Manila notified Sabina Sioco Viuda de Escaler, owner of a lowland property, that it would be filled due to public health concerns, and she consented. The filling commenced on April 27, 1929, and concluded on July 27, 1929. Prior to completion, on April 30, 1929, Escaler conveyed the land to her son-in-law, Rafael Fernandez. A new title was issued to Fernandez on May 9, 1929, noting it was subject to subsisting incumbrances under Section 39 of Act No. 496. On November 6, 1929, Fernandez mortgaged the land to Roberto Laperal and Victorina G. de Laperal for P80,000. The City Assessor, on April 18, 1930, assessed the cost of filling as a special tax of P10,335.93, payable in ten annual installments of P1,411.51 from 1930. Due to an insolvency proceeding against Fernandez, the mortgage was unpaid. The sheriff sold the land at public auction on November 7, 1932, to the Laperals as highest bidders for P92,000. The Laperals, as mortgagees, paid only sheriff's fees. A new title was issued to the Laperals on December 14, 1932, also subject to subsisting incumbrances under Act No. 496. The annual installments for the filling cost for 1930, 1931, 1932, and 1933, amounting to P8,329.52, were unpaid. The City of Manila demanded payment from the Laperals, who paid under protest on November 9, 1933. Procedural History: The plaintiffs-appellants (Laperals) appealed the judgment of the Court of First Instance of Manila, which absolved the defendants (City of Manila and Sabina Sioco Viuda de Escaler) from the complaint. The trial court held that the cost of filling was a special tax constituting a lien superior to other real rights, binding on the land and its possessor, and that the doctrine of caveat emptor applied. The Petition: The appellants assigned errors concerning the trial court's holding that the cost of filling was a special tax superior to other liens, that it was an incumbrance under Section 39 of Act No. 496, the application of caveat emptor, and the constitutionality of Section 5 of Act No. 3352.
Issue(s)
Whether the cost of filling made by the City of Manila constitutes a special tax that is a lien superior to all other preferred real rights, binding upon any person in possession of the land and upon the land itself. Whether the cost of the City of Manila for the filling is an incumbrance included among those enumerated in section 39 of Act No. 496, which appears in the title under the clause "subject, however, to such of the incumbrances mentioned in section 39 of said law as may be subsisting." Whether the doctrine of caveat emptor was correctly applied, and if the City of Manila should be ordered to return the sum paid under protest, and Sabina Sioco be ordered to pay the cost of the filling. Whether section 5 of Act No. 3352 is unconstitutional in providing that the cost of filling constitutes a special tax upon the land and that the annual installments due constitute a lien upon the land that takes precedence over any and all other liens.
Ruling
The Supreme Court affirmed the decision of the Court of First Instance of Manila. It held that the special tax for filling is a lien superior to other liens and that the plaintiffs-appellants, as purchasers at a foreclosure sale, are liable for the unpaid installments. The Court also ruled that the constitutionality of a law cannot be raised for the first time on appeal.
Ratio Decidendi
On the nature of the special tax and its lien: The Court held that the special tax for filling, as provided under Act No. 3352, constitutes a lien that takes precedence over any and all other liens upon the property. This is because Section 5 of Act No. 3352 explicitly states that such sums due shall constitute liens on the property against which they were assessed and shall take precedence over any and all other liens, excepting only those arising from the non-payment of the annual tax itself. The Court further clarified that this special tax falls within the second exception of Section 39 of Act No. 496, which pertains to taxes within two years after they become due and payable. However, the Court distinguished this special tax from ordinary taxes, noting that the delinquency in one installment does not make the entire tax due and payable, and the total payment becomes due only after the last installment. Therefore, the two-year limitation for taxes under Section 39 of Act No. 496 is not applicable to this specific special tax. On the applicability of Section 39 of Act No. 496 and the doctrine of caveat emptor: The Court found that the special tax for filling is an incumbrance subsisting on the property. While Section 39 of Act No. 496 generally protects subsequent purchasers of registered land who take title for value and in good faith from unnoted incumbrances, it provides exceptions, including taxes. The Court applied the doctrine laid down in Hongkong and Shanghai Banking Corporation vs. Rafferty, stating that in real estate or special assessment taxation, a person cannot escape liability by buying without notice. Therefore, the fact that the plaintiffs-appellants had no knowledge of the special tax does not relieve them from the obligation to pay it, as it was a subsisting incumbrance. The doctrine of caveat emptor was deemed applicable in this context, meaning the buyers were expected to exercise due diligence regarding the property's status. On the liability of Sabina Sioco Viuda de Escaler: The Court ruled that Sabina Sioco Viuda de Escaler should not be ordered to pay the special tax to the City of Manila. This is because she was no longer the owner of the land at the time it was mortgaged to the plaintiffs-appellants, nor was she the owner at the time the plaintiffs-appellants acquired it through foreclosure. Her liability would have been as the owner at the time the tax was assessed and became due, but the subsequent transfer of ownership shifted this responsibility. On the constitutionality of Section 5 of Act No. 3352: The Court held that the question of the constitutionality of Section 5 of Act No. 3352 could not be raised for the first time on appeal. Citing previous rulings, the Court emphasized that constitutional questions must be raised in the pleadings and passed upon by the lower court to be considered on appeal, unless the statute affects the jurisdiction of the court. Since this issue was not raised in the trial court, it could not be entertained by the Supreme Court.
Main Doctrine
The special tax for land filling, assessed under Act No. 3352, constitutes a lien that takes precedence over other liens, and a mortgagee who purchases the mortgaged property at a foreclosure sale is not relieved from the obligation to pay such tax, even if it was not noted on the certificate of title, as the two-year limitation for taxes under Section 39 of Act No. 496 is not applicable to this type of special tax.