GR 172267; (August, 2008) (Digest)
G.R. No. 172267 ; August 20, 2008
NATIONAL HOUSING AUTHORITY, petitioner, vs. ILOILO CITY, as represented by its Mayor, HON. JERRY TREÑAS, ILOILO CITY TREASURER CATHERINE TINGSON, and ROSALINA FRANCISCO, respondents.
FACTS
The National Housing Authority (NHA) filed a complaint to annul a public auction sale of its property conducted by Iloilo City for non-payment of realty taxes. NHA argued the sale was void due to lack of notice and its status as a tax-exempt government agency. The City bought the property at auction and later sold it to respondent Rosalina Francisco. The respondents moved to dismiss the complaint, citing NHA’s failure to comply with the mandatory deposit requirement under Section 267 of the Local Government Code (R.A. 7160). This provision states that no court shall entertain an action assailing a tax auction’s validity unless the taxpayer deposits the auction sale amount plus interest. The trial court and the Court of Appeals dismissed NHA’s suit, ruling the deposit was a jurisdictional prerequisite.
ISSUE
Whether the NHA, as a tax-exempt government entity, is exempt from the mandatory deposit requirement under Section 267 of R.A. 7160 as a condition for filing an action to annul a tax auction sale.
RULING
The Supreme Court ruled in favor of NHA, reversing the lower courts. The legal logic is that the deposit under Section 267 is not a tax, fee, or charge from which NHA is statutorily exempt. Rather, it is a safeguard or guarantee intended to protect the auction purchaser and ensure the government’s financial interest is secured during litigation. The Court clarified that the term “taxpayer” in the provision should be construed broadly to include any “delinquent owner” or person with legal interest in the property, which encompasses NHA. However, the requirement is not absolute. The Court held that the government, including its agencies like NHA, is presumed solvent. This presumption of solvency satisfies the underlying purpose of the deposit, which is to guarantee payment if the suit fails. Therefore, compelling a government agency to make a cash deposit is unnecessary and superfluous. The case was remanded to the trial court for further proceedings on the merits.