G.R. No. 176703/G.R. No. 176721, June 28, 2017
Municipality of Cainta, Petitioner, vs. City of Pasig and Uniwide Sales Warehouse Club, Inc., Respondents; and Uniwide Sales Warehouse Club, Inc., Petitioner, vs. City of Pasig and Municipality of Cainta, Respondents.

FACTS

Uniwide operated a business on properties covered by Transfer Certificates of Title (TCTs) issued by the Registry of Deeds of Pasig City, explicitly stating the location as Pasig. From 1989 to 1996, Uniwide secured permits and paid local taxes to Pasig. In 1997, however, upon notice and documentary claims from the Municipality of Cainta that the properties were within its territory, Uniwide ceased payments to Pasig and began paying taxes to Cainta. Consequently, Pasig filed a collection case against Uniwide for unpaid 1997 taxes. Uniwide filed a third-party complaint against Cainta for reimbursement. A separate boundary dispute case between Cainta and Pasig over the subject properties was pending before another court.

ISSUE

The primary issue is whether the RTC-Pasig, in the tax collection case, correctly relied on the location stated in Uniwide’s Torrens titles to determine which local government unit (LGU) has the right to collect taxes, notwithstanding a pending boundary dispute case.

RULING

The Supreme Court affirmed the rulings of the lower courts, holding that Pasig has the right to collect the taxes. The legal logic is anchored on the principle of indefeasibility and conclusiveness of a Torrens title. The TCTs, which are incontrovertible evidence of ownership, unequivocally state the properties are situated in Pasig. For the purpose of the tax collection suit, this declaration is conclusive on the question of territorial jurisdiction. Allowing Cainta to present contrary evidence to challenge the location would constitute an impermissible collateral attack on the titles, which is prohibited by the Property Registration Decree. The pending boundary dispute case does not preclude the tax collection case, as the latter can be resolved solely based on the face of the certificates of title. The Court emphasized that the boundary dispute is a separate in rem proceeding that does not suspend the collection of taxes, which is an action in personam against the taxpayer. Consequently, Uniwide was liable to pay Pasig the delinquent taxes. On the third-party complaint, the Court upheld the order for Cainta to reimburse Uniwide for the taxes paid to it, based on the principle against unjust enrichment, as Cainta had no right to collect taxes from properties conclusively located within Pasig’s jurisdiction.