G.R. No. L-9337, December 24, 1914
PRUDENCIO DE JESUS, plaintiff-appellee, vs. THE CITY OF MANILA, defendant-appellant.

FACTS:
In 1901, Pastor Lerma, then owner of a parcel of land in Manila, declared its area for taxation as 337,938.50 square meters, when its true area was 480,695.53 square meters. Consequently, 142,767.03 square meters escaped taxation from 1901 to 1910. In 1907, plaintiff Prudencio de Jesus purchased the land from Lerma, receiving a Torrens certificate of title under Act No. 496. In 1910, the City of Manila assessed back taxes for the escaped area from 1901 to 1910 against de Jesus as the current owner. To avoid distraint, de Jesus paid the taxes under protest and filed an action to recover the amount paid for the years prior to his ownership (19011906).

ISSUE:
Whether a purchaser for value and in good faith of land registered under the Torrens system (Act No. 496) takes the land free from liability for back taxes on an area that escaped taxation due to the prior owner’s false declaration, where such taxes were neither assessed nor levied prior to the purchase.

RULING:
Yes. The Supreme Court affirmed the trial court’s judgment in favor of de Jesus. Under Section 39 of Act No. 496 (the Land Registration Act), as amended, a purchaser for value and in good faith of registered land holds it free from all encumbrances except those noted on the certificate or specifically enumerated, including “taxes within two years after the same have become due and payable.” The Court emphasized that the fundamental purpose of the Torrens system is to provide an indefeasible and clean title, ensuring the free and fearless transferability of registered land. For past taxes to burden such land, they must have been due, payable, and subsisting as liens within two years prior to registration or transfer. Here, the back taxes for 19011906 were not assessed, levied, or due and payable at the time de Jesus acquired the land in 1907. Thus, as an innocent purchaser for value, he took the land free from those tax liabilities. The Court distinguished between liability in the hands of the original owner (who committed the false declaration) and a subsequent innocent purchaser, holding that the latter is protected under the Torrens system. De Jesus was liable only for taxes accruing during his ownership (1907 onward), which he had paid. The recovery of taxes paid for the pre-purchase period was proper.