G.R. No.

174617               December 27, 2007

ROMULO D. SAN JUAN, Petitioner,

DECISION

CARPIO MORALES, J.:

Romulo D. San Juan (petitioner), registered owner of real properties in Rancho Estate I, Concepcion
II, Marikina City covered by Transfer Certificates of Title Nos. 160435, 236658, and 233877,1 with
the consent of his wife, conveyed on August 24, 2004, by Deed of Assignment,2 the properties to the
Saints and Angels Realty Corporation (SARC), then under the process of incorporation, in exchange
for 258,434 shares of stock therein with a total par value of ₱2,584,340. Two hundred thousand
(200,000) of the said shares of stock with a par value of ₱2,000,000 were placed in San Juan’s
name while the remaining 58,434 shares of stock with a par value of ₱584,340 were placed in the
name of his wife.

On June 24, 2005, the Securities and Exchange Commission approved the Articles of Incorporation
of SARC.3

Respondent’s representative thereafter went to the Office of the Marikina City Treasurer to pay the
transfer tax based on the consideration stated in the Deed of Assignment.4 Ricardo L. Castro
(respondent), the City Treasurer, informed him, however, that the tax due is based on the fair market
value of the property.5

Petitioner in writing protested the basis of the tax due in reply to which respondent wrote:

In your letter, you asserted that there is no monetary consideration involved in the afore-mentioned
transfer of the properties inasmuch as what you received as transferor thereof, are shares of stock of
said realty company in exchange of the properties transferred.

In reply, we wish to inform you that in cases of transfer of real property not involving monetary
consideration, it is certain that the fair market value or zonal value of the property is the basis of the
tax rate. As provided for under the Local [G]overnment Code, fair market value is defined as the
price at which a property may be sold by a seller who is not compelled to sell and bought by the
buyer who is not compelled to buy. Hence, the preliminary computation based on the fair market
value of the property made by the revenue collector is correct.6 (Underscoring supplied)

Petitioner thus filed before the Regional Trial Court (RTC) of Marikina City a
Petition7 for mandamus and damages against respondent in his capacity as Marikina City Treasurer
praying that respondent be compelled to "perform a ministerial duty, that is, to accept the payment of
transfer tax based on the actual consideration of the transfer/assignment."8

Citing Section 135 of the Local Government Code which provides:

Sec. 135. Tax on Transfer of Real Property Ownership. (a) The province [or the city pursuant to
Section 151 of the Local Government Code] may impose a tax on the sale, donation, barter, or on
any other mode of transferring ownership or title of real property at the rate of not more than fifty
percent (50%) of the one percent (1%) of the total consideration involved in the acquisition of the
property or the fair market value in case the monetary consideration involved in the transfer is not
substantial, whichever is higher. The sale, transfer or other disposition of real property pursuant to
R.A. 6657 shall be exempt from this tax. (Emphasis supplied),

petitioner contended:

It is beyond dispute that under the abovementioned provision of the law, transfer tax is computed on
the total consideration involved. The intention of the law is not to automatically apply the "whichever
is higher" rule. Clearly, from a reading of the above-quoted provision, it is only when there is a
monetary consideration involved and the monetary consideration is not substantial that the
tax rate is based on the higher fair market value  . . . 9 (Emphasis, underscoring, and italics in
original)

In his Comment on petitioner’s petition before the RTC, respondent stated:

xxxx

"[M]onetary consideration" as used in Section 135 of R.A. 7160 does not only pertain to the price or
money involved but likewise, as in the case of donations or barters, this refers to the value or
monetary equivalent of what is received by the transferor.

In the case at hand, the monetary consideration involved is the par value of shares of
stocks acquired by the petitioner in exchange for his real properties. As admitted by the petitioner
himself, the fair market value of the properties transferred is more than seven million pesos. It is
undeniable therefore that the actual consideration for the assignment in the amount of two million
five hundred eighty four thousand and three hundred forty pesos (P2,584,340.00) is far less
substantial than the aforesaid fair market value. Thus, the City Treasurer is constrained to assess
the transfer tax on the higher base.10

xxxx

The respondent did not refuse to accept payment, it is the petitioner that refuses to pay the
correct amount of transfer tax.

xxxx

The petitioner did not exhaust the available administrative remedies. Under the Local
Government Code, the petitioner should have filed an appeal on the tax assessment and made a
payment under protest pending the resolution thereof. The issues raised in the case therein, being
matters of facts and law, the petitioner should have availed of the aforesaid relief before resorting to
a court action. x x x

xxxx

The subject of this Petition is the performance of a duty which is not ministerial in
character. Assessment of tax liabilities or obligations and the corresponding duty to collect the same
involves a degree of discretion. It is erroneous to assume that the City Treasurer is powerless to
ascertain if the payment of the tax obligation is proper or correct.

xxxx
Mandamus cannot lie to compel the City Treasurer to accept as full compliance a tax payment which
in his reasoning and assessment is deficient and incorrect.11 (Emphasis in the original)

Finding for respondent, Branch 272 of the Marikina City RTC dismissed the petition by Decision of
August 22, 2006.

Hence, the present Petition for Review on Certiorari,12 petitioner faulting the RTC with having
committed serious errors of law in dismissing the petition for mandamus with damages.13

For mandamus to lie, petitioner must comply with Section 3 of Rule 65 of the Rules of Court which
provides:

SEC. 3. Petition for Mandamus. -- When any tribunal, corporation, board, officer or person unlawfully
neglects the performance of an act which the law specifically enjoins as a duty resulting from an
office, trust, or station, or unlawfully excludes another from the use and enjoyment of a right or office
to which such other is entitled, and there is no other plain, speedy and adequate remedy in the
ordinary course of law, the person aggrieved thereby may file a verified petition in the proper court,
alleging the facts with certainty and praying that judgment be rendered commanding the respondent,
immediately or at some other time to be specified by the court, to do the act required to be done to
protect the rights of the petitioner and to pay the damages sustained by the petitioner by reason of
the wrongful acts of the respondent.

x x x x (Underscoring supplied)

In the case at bar, the condition that "there is no other plain, speedy and adequate remedy in the
ordinary course of law" is absent.

Under Section 195 of the Local Government Code which is quoted immediately below, a taxpayer
who disagrees with a tax assessment made by a local treasurer may file a written protest thereof:14

SECTION 195. Protest of Assessment. – When the local treasurer or his duly authorized
representative finds that the correct taxes, fees, or charges have not been paid, he shall issue a
notice of assessment stating the nature of the tax, fee, or charge, the amount of deficiency, the
surcharges, interests and penalties. Within sixty (60) days from the receipt of the notice of
assessment, the taxpayer may file a written protest with the local treasurer contesting the
assessment; otherwise, the assessment shall become final and executory. The local treasurer shall
decide the protest within sixty (60) days from the time of its filing. If the local treasurer finds the
protest to be wholly or partly meritorious, he shall issue a notice cancelling wholly or partially the
assessment. However, if the local treasurer finds the assessment to be wholly or partly correct, he
shall deny the protest wholly or partly with notice to the taxpayer. The taxpayer shall have thirty
(30) days from the receipt of the denial of the protest or from the lapse of the sixty-day (60)
period prescribed herein within which to appeal with the court of competent jurisdiction,
otherwise the assessment becomes conclusive and unappealable. (Emphasis and underscoring
supplied)

That petitioner protested in writing against the assessment of tax due and the basis thereof is on
record as in fact it was on that account that respondent sent him the above-quoted July 15, 2005
letter which operated as a denial of petitioner’s written protest.
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Petitioner should thus have, following the earlier above-quoted Section 195 of the Local Government
Code, either appealed the assessment before the court of competent jurisdiction15 or paid the tax
and then sought a refund.16

Petitioner did not observe any of these remedies available to him, however. He instead opted to file
a petition for mandamus to compel respondent to accept payment of transfer tax as computed by
him.

Mandamus lies only to compel an officer to perform a ministerial duty (one which is so clear and
specific as to leave no room for the exercise of discretion in its performance) but not a discretionary
function (one which by its nature requires the exercise of judgment).17 Respondent’s argument that
"[m]andamus cannot lie to compel the City Treasurer to accept as full compliance a tax payment
which in his reasoning and assessment is deficient and incorrect" is thus persuasive.

WHEREFORE, the petition is DENIED.

Costs against petitioner, Romulo D. San Juan.

SO ORDERED.