For the second time in as many years, the Quezon City government has swooped down on the Manila Seedling Bank Foundation (MSBF) garden and padlocked it, preventing customers from entering. The timing is very unfortunate because it is during the Christmas season that many customers buy plants and flowers, especially poinsettias. The closure will mean big losses to the tenants.
City Hall contends that the tenants have no business permits and that the MSBF has not paid taxes on the property. City Hall has sold the property at a public auction where it was the lone bidder. Using policemen and members of its Department of Public Order and Safety (DPOS), it seized the seven-hectare property on Quezon Avenue and Agham Road, claiming to be the owner. True? False, said the MSBF.
But first a background: The property owned by the National Housing Authority (NHA) was awarded to the MSBF in 1977 through Presidential Proclamation No. 1670. The MSBF was given usufructuary right to the property for 50 years. It is tasked with producing seedlings for the government’s reforestry program and for home gardeners.
This usufructuary right was upheld by the Supreme Court in National Housing Authority vs. Court of Appeals, Bulacan Garden Corp. and Manila Seedling Bank Foundation Inc., GR 148830, April 13, 2005.
Mayor Herbert Bautista publicly acknowledged that the land belongs to the NHA, and not the city government, during the opening of the 2013 horticulture show at the Quezon Memorial Park.
“Here at the Quezon Memorial Circle we can assert ownership,” Mayor Bautista was quoted by the newspaper Balita as saying. “This is ours, not like the Manila Seedling Bank property which is still owned by the National Housing Authority.”
With the mayor’s admission, why did City Hall occupy the property and claim it as its own?
Because, City Hall said, the NHA and MSBF did not pay real estate taxes on the property.
But under Section 19 of the Urban Development and Housing Act (UDHA) or RA 7279, the NHA is exempt from real property taxes: “The National Housing Authority, being the primary government agency in charge of providing housing for the underprivileged or homeless, shall be exempted from the payment of all fees and charges of any kind, whether local or national, such as income and real estate taxes, …”
This exemption enjoyed by the NHA is recognized by the Bureau of Internal Revenue in its ruling 071-98 dated May 25, 1998, and by the Land Registration Authority in its Circular 1-2004 dated Jan. 26, 2004.
Being exempt from real property taxes, the NHA property under the MSBF’s usufruct cannot be validly sold in a public auction on account of nonpayment of real estate taxes. Hence, the supposed sale at public auction of the NHA property under usufruct to MSBF is null and void.
City Hall has neither denied the foregoing nor shown evidence that would cast doubt on it.
Is the MSBF liable for real estate taxes on the property, notwithstanding the Local Government Code?
No. The MSBF’s liability for real property taxes is governed by the Law on Usufruct found in the Civil Code, which provides that the taxes which, during the usufruct, may be imposed directly on the capital, shall be at the expense of the owner. In fact, if the taxes had been advanced by the usufructuary, he shall recover the amount at the termination of the usufruct.
Again, this exemption by the MSBF from real property taxes under Article 597 of the Civil Code is not disputed by City Hall.
Was the MSBF’s usufruct over the property terminated by a claim of change of ownership?
Again, no. Usufruct, being a real right (Vide Elizegui vs. Manila Lawn Tennis Club, 2 Phil., 313, Civil Code of the Philippines), attaches to the property in usufruct whoever gets to be its owner. Accordingly, the MSBF’s usufructuary right over the property in question is not extinguished by a change of ownership of such property—i.e., the acquisition by the Quezon City government of the property in usufruct did not extinguish the MSBF’s usufructuary rights over it.
Besides, under the Law on Usufruct embodied in the Civil Code, change of ownership of the property in usufruct is not a cause for the termination of the usufruct (Vide Articles 603-612).
And with more reason in this case, because the sale at public auction of the property in usufruct is illegal and therefore null and void.
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Those of you who miss “Music and Memories,” the musical program of Willie Nepomuceno and Boots Anson-Roa that station dzMM had unceremoniously taken off the air, will be glad to know that Willie has a show tomorrow at the Music Museum in Greenhills. His daughter Freda, an accomplished actress, will also be there as the “Pork Barrel Queen.”
Willie needs no introduction as the country’s foremost impersonator, satirist, and comedian. The Dec. 14 show promises to be as funny as his earlier shows, with more surprises besides. Who will Willie impersonate this time? Sen. Miriam Defensor-Santiago? Sen. Juan Ponce Enrile? Or Manny Pacquiao with his billion-peso tax problems? Find out tomorrow.
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KAPIHAN NOTES. The guest at Monday’s Kapihan sa Manila at Diamond Hotel is Interior Secretary Mar Roxas, who is engaged in a word-and-video war with Tacloban Mayor Alfred Romualdez. Roxas will talk about what actually happened in Tacloban after Supertyphoon “Yolanda” devastated Eastern Visayas.