G.R. No. 481943 , December 27, 1941
Carlos Young, plaintiff-appellant, vs. The City of Manila; Victor Alfonso, in his capacity as Treasurer of the City of Manila; and Jose Garrido, in his capacity as Engineer of the City of Manila, defendants. The City of Manila, appellant.

FACTS

Carlos Young owned the Antipolo Subdivision in Manila. The Director of Health declared certain lots within it—five street areas (25,498.70 sqm) and fifteen residential lots (5,174.30 sqm)—a nuisance and menace to public health due to being low and waterlogged, ordering them filled to at least 15 cm above street grade under Act No. 3352 . The City Engineer notified Young to fill them within 90 days or the City would do so. Young did not contest the order but, claiming the filling cost (estimated at P80,000) exceeded half the lots’ assessed value (not exceeding P33,673), exercised his option under Section 3 of Act No. 3352 to sell the land to the City at market value instead of reimbursing the filling cost. The City proceeded to fill portions at a cost of P24,164.06. Negotiations ensued: Young offered to sell the street areas at P2 per sqm (citing adjoining land sales at ~P5.50 per sqm) contingent on the City taking over streets in other subdivisions; the City Engineer counteroffered to pay the assessed value of P1 per sqm for the street areas, subject to Municipal Board approval. For the residential lots, the City Assessor noted they commanded at least P3.50 per sqm, but no formal City offer was made. Young refused to reimburse the filling costs. The City, invoking Section 5 of Act No. 3352 and related Administrative Code provisions, advertised the lots for auction to recover its expenses. Due to no bidders, the lots were forfeited to the City, and after Young failed to redeem them, the forfeiture was made absolute. Young sued to compel the City to purchase the lots at market value and to refund taxes paid under protest. The trial court ruled in favor of Young, ordering the City to purchase the lots at market value in their pre-filled state. Both parties appealed.

ISSUE

Whether the City of Manila is obligated under Section 3 of Act No. 3352 to purchase the lots (both street areas and residential lots) from Carlos Young at current market value, given that the cost of filling exceeded half their assessed value.

RULING

The Supreme Court modified the trial court’s judgment.
1. Regarding the Street Areas: The City is not obligated to purchase them. Section 3 of Act No. 3352 presupposes land subject to commerce (i.e., that can be disposed of by public auction). Street areas in a subdivision are set aside for public use; the owner, having incorporated their cost into the price of the residential lots, represents to lot buyers that these areas are withdrawn from commerce. The owner cannot sell them without violating contracts with the buyers, and the City cannot subsequently sell them either. Therefore, the option to sell to the City under Act No. 3352 does not apply to street areas. Young’s claim for the street areas’ market value is dismissed. However, if Young chooses to retain title to these street lots, the City must retransfer them upon his reimbursement of all filling expenses.
2. Regarding the Residential Lots: The City is obligated to purchase them. Section 3 grants the owner the option to sell to the City at current market value if the filling cost exceeds half the assessed value. The Court determined a just and reasonable market value for the fifteen residential lots (aggregate 5,174.30 sqm) to be P5 per square meter (considering they were lowlands, sold for cash in bulk, and in light of the sales context of adjoining lots). The City is ordered to purchase and pay for them at this rate, with legal interest from the date the judgment becomes final.
3. Regarding Tax Refund: Young is not entitled to a refund of taxes paid under protest, as his offer to sell did not relieve him of tax obligations.
The appeals were partially granted and denied accordingly.