San Juan vs.

Castro

GR No. 174617, December 27, 2007

Facts:

Petitioner, registered owners of real properties in Marikina City, with consent of his wife, conveyed by
deed of assignment, the properties to the Saints and Angels Realty Corp. (SARC), by virtue of
incorporations, in exchange for shares of stock therein with a par value of P2,000,000.0, placed in
San Juan’s name and the remaining par value in the name of his wife. Respondents’ representatives
went to the City Treasurer’s Office of Marikina to pay the transfer tax based on the consideration
stated in the deed of assignment. City Treasurer Castro informed him however that the tax due is
based on the fair market value of the property.

Petitioner protested the basis of the tax due. To which, the respondent replied stating that in cases of
transfer or real property not involving monetary consideration, it is certain that the fair market value
or the zonal value of the property is the basis of the tax rate.

Petitioner filed before the RTC of Marikina a petition for mandamus and damages against respondent
in his capacity as City Treasurer, among others, praying that respondent be compelled to “perform a
ministerial duty to accept payment of transfer tax based on the actual consideration” of the transfer
and assignment”, citing Section 135 of the LGC.

Issue:

When can a protest of assessment be availed of?

Ruling:

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

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.
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.

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 jurisdiction[15] or paid the tax
and then sought a refund.

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.