Serfino, Estate, Corporate

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G.R. No. L-40858 September 15, 1987


SPOUSES FEDERICO SERFINO and LORNA BACHAR, petitioners, 
- versus -
THE COURT OF APPEALS and LOPEZ SUGAR CENTRAL MILL CO., INC., respondents.

PARAS, J.:

Before Us are two (2) Petitions for certiorari to review the decision 1 of the Court of Appeals als in CA-G.R.
No. 37748-R, consolidated for Our disposition since they arose from the same factual background.

The records of the case show that on August 25, 1937, a parcel of land consisting of 21.1676 hectares situated in
the Municipality of Sagay, Province of Negros Occidental, was patented in the name of Pacifico Casamayor,
under Homestead Patent No. 44139. Upon registration of said patent in the office of the Register of Deeds of
Negros Occidental, OCT No. 1839 was issued by said office in the name of Pacifico Casamayor. On December
14, 1945, the latter sold said land in favor of Nemesia D. Baltazar.

Apparently, OCT No. 1839 was lost during the war and upon petition of Nemesia Baltazar, the Court of First
Instance of Negros Occidental ordered 2 the reconstitution thereof. Pursuant thereto, OCT No. 14-R (1839) was
issued on January 18, 1946 in the name of Pacifico Casamayor. On that same day, TCT No. 57-N was issued in
the name of Nemesia Baltazar but after the cancellation of OCT No. 14-R (1839).

On August 25, 1951, Nemesia Baltazar, sold said property to Lopez Sugar Central Mill Co., Inc. (Lopez Sugar
Central, for brevity). The latter, however did not present the documents for registration until December 17, 1964
to the Office of the Registry of Deeds. Said office refused registration upon its discovery that the same property
was covered by another certificate of title, TCT No. 38985, in the name of Federico Serfino.

An inquiry into this discrepancy reveals that the Provincial Treasurer of Negros Occidental on October 30, 1956
had conducted a public auction sale of this property for tax delinquency for the period starting the year 1950.
Notice of this public auction sale was sent to Pacifico Casamayor but none to Nemesia Baltazar and Lopez
Sugar Million There being no public bidders on the scheduled date of sale, the Provincial Treasurer of Negros
Occidental issued a Certification of Sale of Delinquent Real Property over the disputed land to the Province of
Negros Occidental. On May 14, 1964, upon payment of the amount of P1,838.49 by Federico Serfino, a
Certificate of Repurchase of Real Property was issued and executed by the Provincial Treasurer in favor of
Federico Serfino, for and in behalf of Pacifico Casamayor.

On May 28, 1964, Serfino filed a petition with the Court of First Instance of Negros Occidental for the
Reconstitution of OCT No. 1839 in the name of Pacifico Casamayor, upon the allegation that said title was lost.
After due publication and hearing, said OCT was ordered reconstituted and thus OCT No. RP-1304 (1839) was
issued by the Registry of Deeds in the name of Casamayor.

On October 30, 1964, Serfino petitioned the court for confirmation of his title to the land as purchaser in the
auction sale. On October 31, 1964, court granted the petition and on November 2, 1964, OCT No. RP-1304
(1839) was cancelled and TCT No. 38985 was issued in the name of Federico Serfino, married to Lorna Bachar.

On November 19, 1964, the spouses Serfinos mortgaged the land to the Philippine National Bank (PNB) to
secure a loan in the amount of P5,000.00. Said mortgage in favor of PNB was inscribed in TCT No. 38985.
Hence, this was the situation of the land when the Office of the Register of Deeds refused registration of the
property in question requested by the Lopez Sugar Central.

The lower court in its Order, dated January 16, 1965 in the Petition of the Office of the Register of Deeds
seeking the cancellation of either TCT No. 57-N (in the name of Nemesia Baltazar) or TCT No. 38985 (in the
name of Lopez Sugar Central), ordered Lopez Sugar Central and spouses Serfino to take the necessary steps
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towards the clearing of their respective titles before a court of general jurisdiction. Pursuant thereto, Lopez
Sugar Central, on May 5, 1965, instituted an action for 1) annulment of OCT No. RP-1304 (1839), of TCT No.
38985 and of the mortgage executed by the Serfinos in favor of PNB, 2) for the registration of the Deed of Sale,
3) for the issuance of a TCT in its name and 4) for recovery of possession of the disputed land from the Serfinos.

On February 4, 1966, the lower court rendered its decision, 3 the dispositive portion reading as follows:

WHEREFORE, and considering the conclusions and opinion set forth above, judgment is
hereby rendered as follows:

1. The Register of Deeds of Negros Occidental is hereby ordered to cancel Transfer Certificate
of Title No. 38985;

2. The same Register of Deeds is ordered to register the deed of sale executed by Nemesia D.
Baltazar on August 25, 1951, and after cancelling Transfer Certificate of Title No. 57-N and
other titles issued prior thereto, to issue a new transfer certificate of title in the name of Lopez
Sugar Central Mill Co., Inc., upon previous payments of the legal fees;

3. The Lopez Sugar Central Mill Co., Inc., shall pay the Philippine National Bank, Bacolod
Branch, the sum of P5,261.11 secured by a real estate mortgaged registered and annotated on
Transfer Certificate of Title 38985 which shall be carried over in the new transfer certificate of
title to be issued to the Lopez Sugar Central Mill Co., Inc. with the right of recourse to the
Assurance Fund; and

4. The defendant, Federico Serfino, is hereby ordered to vacate the land in question and to
deliver the possession thereof to the plaintiff;

5. The plaintiff is exempt from reimbursing the defendant, Federico Serfino, for the sum of
P602.94 which the latter paid for the repurchase of the land in question for the reason that the
former is already burdened with the payment of the mortgage indebtedness with the Philippine
National Bank in the amount of P5,261.11; and

6. The Court makes no award for damages and costs.

SO ORDERED. (Rollo L-40751, pp. 117 & 118, Joint Record on Appeal, Annex "D", p. 50)

Both parties appealed from this decision of the trial court. Ruling on the assignment of errors, the appellate court
affirmed the judgment of the trial court with modification in its decision, the pertinent portion reading as
follows:

Plaintiff contends that the mortgage executed by the Serfinos in favor of PNB is null and void,
because the property conveyed in mortgage did not belong to them. The contention is
meritorious. That the mortgagor should be the absolute owner of the property mortgaged is an
essential requisite for the validity of a contract of mortgage (Art. 2085, Civil Code); and a
mortgage constituted by one not the owner of the property mortgaged is null and void, the
registration of the mortgage notwithstanding (Parqui vs. PNB, 96 Phil. 157). Thus, the mortgage
lien of PNB in the contract executed in its favor by the Serfinos did not attach to the property in
question.

The argument advanced by appellee PNB that it is a mortgagee in good faith deserves scant
consideration. Note that when the mortgage was constituted, the disputed land was covered by a
valid and existing title, TCT No. 57-N, in the name of Nemesis D. Baltazar. Indeed, the whole
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world, including appellee PNB, is charged with notice thereof. Consequently, that portion of the
trial court's decision declaring plaintiff liable to the PNB for payment of the sum of P5,261.11
should beset aside.

As to the plaintiff's claim for damages against the Serfinos, We find the same devoid of merit.
Whatever injury plaintiff may have suffered was occasioned by the faulty and defective
indexing and filing system in the office of the Register of Deeds of Negros Occidental, and not
by any intentional Act on the part of the Serfino Spouses. Anyway, the evidence fails to show
that they deliberately intended to cause damage to plaintiff.

However, equity dictates that plaintiff should reimburse the Serfino spouses of the sum of
P1,839.49, representing the unpaid taxes and penalties paid by the latter when they repurchased
the property from the province of Negros Occidental.

WHEREFORE, with the modifications above indicated, the judgment appealed from is hereby
affirmed. No costs.

SO ORDERED. (Decision, Annex "A", pp. 40-42, Rollo-L40751)

From the aforesaid ruling, the spouses Serfino and the Philippine National Bank appealed to Us by way of
certiorari. Petitioners, spouses Serfinos 4 assign the following errors:

I. The Purchase by plaintiff-appellant corporation (Lopez Sugar Central) of the lot in question
was null and void from the beginning.

II. Petitioners are proper parties to challenge the legality of the sale of the land in question to
private respondent.

III. Notice to Nemesia Baltazar of the Tax Sale of the land in question was not essential to the
validity of the sale.

IV. The legality of the auction sale of the property in question was not in issue before the
court a quo.

Petitioner Philippine National Bank 5 submits the following.

ASSIGNMENT OF ERRORS

I. The Court of Appeals erred in holding that the auction sale of the disputed property was null
and void.

II. The Court of Appeals erred in not holding that petitioner is a mortgagee in good faith.

Petitioners spouses Serfinos maintain that sale of a land covered by homestead to be valid must have the
following requisites: 1) consent of the grantee 2) approval of the Secretary of Agriculture and Natural Resources
3) sale is solely for educational, religious, or charitable purposes or for a right of way (Sec. 121, CA No. 141 ).

Petitioner spouses Serfinos in support of their first assignment of error cited Sec. 121, CA No. 141 reading as
follows:
4

SEC. 121. Except with the consent of the grantee and the approval of the Secretary of
Agriculture and Commerce, and solely for commercial, industrial, educational, religious or
charitable purposes or for a right of way, no corporation, association, or partnership may
acquire or have any right, title, interest, or property right whatsoever to any land granted under
the free patent, homestead or individual sale provisions of this Act or to any permanent
improvement on such land.

They argue that since private respondent is a corporation, it is barred from owning land granted under the free
patent if the aforementioned requisites are not present. Such Pacifico Casamayor who obtained a Homestead
Patent and later an original certificate of title in his name. Later it was this original grantee who sold the land in
question to Nemesia Baltazar on December 14, 1945 or more than eight (8) years after he obtained his
homestead patent on August 25, 1937. On these facts, We now apply Sec. 118 of Commonwealth Act No. 141
which prohibits the alienation of homestead lots to private individual within five (5) years from the date of the
issuance of the patent and not Sec. 121 which governs sale to corporation. Since the grant was more than five (5)
years before, the transfer to Nemesia Baltazar was valid and legal. Nemesia Baltazar who became the titled or
registered owner as evidenced by TCT No. 57-N, could exercise acts of ownership over the land such as
disposing of it to private respondent by a deed of sale.

The assailed decision of the appellate court declares that the prescribed procedure in auction sales of property
for tax delinquency being in derogation of property rights should be followed punctiliously. Strict adherence to
the statutes governing tax sales is imperative not only for the protection of the tax payers, but also to allay any
possible suspicion of collusion between the buyer and the public officials called upon to enforce such laws.
Notice of sale to the delinquent land owners and to the public in general is an essential and indispensable
requirement of law, the non-fulfillment of which initiates the sale.

We give our stamp of approval on the aforementioned ruling of the respondent court. In the case at bar, there is
no evidence that Nemesia Baltazar, who had obtained a transfer certificate of title in her name on January 18,
1946, was notified of the auction sale which was scheduled on October 30, 1956. Neither was she furnished as
the owner of the delinquent real property with the certificate of sale as prescribed by Sec. 37 of Commonwealth
Act No. 470. These infirmities are fatal. Worth mentioning also is the fact that Lopez Sugar Central was not
entirely negligent in its payment of land taxes. The record shows that taxes were paid for the years 1950 to 1953
and a receipt therefor was obtained in its name. The sale therefore by the Province of Negros Occidental of the
land in dispute to the spouses Serfinos was void since the Province of Negros Occidental was not the real owner
of the property thus sold. In turn, the spouses Serfinos title which has been derived from that of the Province of
Negros Occidental is likewise void. A purchaser of real estate at the tax sale obtains only such title as that held
by the taxpayer, the principle of caveat emptor applies. Where land is sold for delinquency taxes under the
provisions of the Provincial Assessment Law, rights of registered but undeclared owners of the land are not
affected by the proceedings and the sale conveys only such interest as the person who has declared the property
for taxation has therein.

We now come to the arguments of petitioner Philippine National Bank. The appellate court in modifying the
trial court's decision nullified the mortgage in favor of Philippine National Bank and exempted Lopez Sugar
Central from the payment to PNB of the amount of the mortgage loan. Petitioner Philippine National Bank now
questions this maintaining that it is a mortgagee in good faith and as such is entitled to the protection of the law.

We find merit in petitioner's contention. The findings of fact by the trial court which were undisputed by the
contending parties show that after TCT No. 38985 had been issued in the name of Federico Serfino, he declared
the property in his name for the year 1965 under T.D. No. 9382, continuously paid the taxes and introduced
improvements thereon in the nature of feeder roads and sugar cane plants. It was under these circumstances that
PNB extended a loan to Serfino, secured by the land in question on the strength of TCT No. 38985 in the name
of the Serfinos and after a spot investigation by one of the bank inspectors who made a report of his
investigation. After the execution of a real estate mortgage in favor of the Philippine National Bank duly
annotated on the title of the Serfinos TCT No. 38985, the bank actually loaned Serfino the amount of P5,000.00
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which amounted to P5,261.11 as of August 17, 1965. Petitioner Philippine National Bank relied on TCT No.
38985, the genuineness of which is not in issue as it was really issued by the Register of Deeds of Negros
Occidental. Philippine National Bank had every right to rely on TCT No. 38985 as it was a sufficient evidence
of ownership of the mortgagor. The Philippine National Bank at that time had no way of knowing of the
existence of another genuine title covering the same land in question.

The fact that the public auction sale of the disputed property was not valid (for lack of notice of the auction sale
to the actual owner) can not in any way be attributed to the mortgagee's (PNB's) fault. The fact remains that in
spite of the lack of notice to the actual registered owner at that time (who was Nemesia Baltazar) the Register of
Deeds issued a TCT in the name of Federico Serfino married to Lorna Bachar which title was relied upon by
petitioner Philippine National Bank. The Register of Deeds disowned liability and negligence or connivance
claiming that existence of TCT No. 57-N in the name of Nemesia Baltazar was not found in the records of the
Register of Deeds for the reason that it did not exist in the index card as the land was not designated by cadastral
lot number. Thus the discrepancy was due to the faulty system of indexing the parcels of land. Be it noted that
the inability of the Register of Deeds to notify the actual owner or Lopez Sugar Central of the scheduled public
auction sale was partly due to the failure of Lopez Sugar Central to declare the land in its name for a number of
years and to pay the complete taxes thereon. Petitioner Philippine National Bank is therefore entitled to the
payment of the mortgage loan as ruled by the trial court and exempted from the payment of costs.

WHEREFORE, premises considered, with the slight modification that the PNB mortgage credit must be paid by
Lopez Sugar Central, the assailed decision is hereby AFFIRMED.

SO ORDERED.
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[G.R. Nos. 120435. December 22, 1997]


ESTATE OF THE LATE MERCEDES JACOB represented by MERCEDITA JACOB,
DONATO JACOB JR., ERENEO JACOB and LILIAN JACOB QUINTO, petitioners,
- versus -
COURT OF APPEALS, SPOUSES RAMON R. TUGBANG and VIRGINIA S. TUGBANG,
REGISTER OF DEEDS OF QUEZON CITY and CITY TREASURER OF QUEZON
CITY, respondents.
BELLOSILLO, J.:

These two (2) petitions are heard jointly by the Court for the reason that they involve a common issue of
jurisdiction over the nature of the action.
G.R. No. 120435
Petitioners allege that in 1981 Mercedes Jacob, registered owner of the land subject matter hereof and
covered by Transfer Certificate of Title No. 39178, left for the United States.Before she did, she asked her son-
in-law Luciano Quinto Jr. to pay the real estate taxes on her property. However, Luciano Jr. was not allowed to
pay by the City Treasurer's Office as he had no written authorization from her. Luciano Jr. and his wife Lilian
Jacob Quinto attempted several times to pay but they were as many times refused.
In 1984 respondent City Treasurer of Quezon City sent a notice to Mercedes Jacob through her daughter
Lilian Jacob Quinto that her real estate taxes on the property were delinquent.Lilian was also informed that the
land was already sold at public auction on 24 August 1983 to private respondent Virginia Tugbang
for P6,800.00 to satisfy the tax delinquency of the land.
Mercedes Jacob came to know of the sale on 6 September 1983 when she received from respondent City
Treasurer a Notice of Sale of Real Property addressed to her husband.Members of Mercedes' family tried to
redeem the property from Virginia Tugbang but she evaded them until the Final Bill of Sale was issued to her.
On 30 September 1985 Virginia filed a petition for the cancellation of TCT No. 39178 and the issuance of a
new certificate of title in her name alleging in par. 4 of her petition that -

x x x (On) August 27, 1985, the period of redemption on the sold property having already expired and the
registered owner-delinquent taxpayer, Mercedes Jacob, and any other interested party, did not, within the said
period, take any step to redeem the property and pursue any lawful remedy to impeach the proceedings or to
enforce any lien or claim thereon, thereby allowing the sale to become final and absolute, [1]

thereby disregarding and frustrating the efforts of the Jacobs to redeem the property after depositing  P2,000.00
with the City Treasurer as redemption price. On 3 March 1989 TCT No. 39178 was canceled and TCT No.
81860 was issued in the name of Virginia Tugbang.
On 17 May 1993 petitioners Mercedita Jacob, Donato Jacob, Jr., Ereneo Jacob and Lilian Jacob-Quinto,
heirs of the late Mercedes Jacob, filed a complaint with the Regional Trial Court of Quezon City against
respondent spouses Ramon R. Tugbang and Virginia S. Tugbang, docketed as Civil Case No. Q-93-15976, for
annulment or cancellation of the auction sale, the final bill of sale, TCT No. 81860, and for redemption of the
property plus damages. However, the trial court dismissed the petition purportedly for lack of jurisdiction as the
petition was deemed to be -

x x x in reality a petition to annul and set aside the Decision rendered on March 13, 1994  by the Regional Trial
Court, Quezon City, Branch 106, canceling petitioner Mercedes Jacob's TCT No. 39178 x x x x consolidating
title to the property covered thereby in herein private respondent Virginia S. Tugbang, and ordering the issuance
of a new title in her favor. [2]
7

On 12 October 1994 petitioners filed with us a petition for review on certiorari under Rule 45 of the Rules
of Court which we certified on 9 November 1994 to the Court of Appeals. The appellate court however
dismissed the petition for lack of merit. Thus this petition for reversal of the decision of the Court of Appeals
and for judgment directing the RTC - Br. 82, Quezon City, to proceed with the trial of Civil Case No.  Q-93-
15976.
The petition must be granted. It is axiomatic that the averments of the complaint determine the nature of the
action, hence, the jurisdiction of the courts. This is because the complaintmust contain a concise statement of the
ultimate facts constituting the plaintiff's cause of action and specify the relief sought. [3]
A cursory examination of the petition readily shows that it is an action for reconveyance. The petition states
that "petitioners are not after the annulment of the judgment of the Regional Trial Court, Quezon City, Branch
106. The remedy of petitioners under the law is an action for reconveyance the jurisdiction of which is vested in
the Regional Trial Court." [4] In Sevilla v. De los Angeles  [5] reconveyance was allowed where the procurement
of a transfer certificate of title was made under circumstances of constructive trust based on fraudulent
representations. In the instant case the complaint alleges that respondent Virginia Tugbang procured a transfer
certificate of title upon her fraudulent representation in her petition for cancellation of title. This way of
acquiring title creates what is called "constructive trust" in favor of the defrauded party and grants to the latter a
right to the reconveyance of the property. Thus it has been held that if a person obtains legal title to property by
fraud or concealment courts will impress upon the title a so-called "constructive trust" in favor of the defrauded
party. The use of the word "trust" in this sense is not technically accurate but as courts are agreed in
administering the same remedy in a certain class of frauds as are administered in fraudulent breaches of trusts,
and as courts and the profession have concurred in calling such frauds constructive trusts, there can be no
misapprehension in continuing the same phraseology, while a change might lead to confusion and
misunderstanding. [6]
In Alzua v. Johnson  [7] we declared that under our system of pleading it is the duty of the courts to grant the
relief to which the parties are shown to be entitled by the allegations in their pleadings and the facts proved at
the trial, and the mere fact that they themselves misconstrued the legal effect of the facts thus alleged and proved
will not prevent the court from placing the just construction thereon and adjudicating the issue accordingly.
As the petition makes out a case for reconveyance and not a mere annulment of an RTC judgment as
viewed under par. (2), Sec. 9, BP Blg. 129, jurisdiction over the case is clearly vested in the Regional Trial
Court of Quezon City as provided in par. (2), Sec. 19, BP Blg. 129 -

Sec. 19. Jurisdiction  in  civil cases. - Regional Trial Courts shall exercise exclusive original jurisdiction: x x x


x (2) In all civil actions which involve the title to, or possession of, real property, or any interest therein, except
actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which is
conferred upon Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts x x x x

Moreover, the Regional Trial Court has jurisdiction over the petition as it may be considered only as a
continuation of the original proceeding for cancellation of title which in view of its non-litigious character is
summary in nature. Furthermore, under Sec. 2 of PD 1529 otherwise known as the Property Registration
Decree, the jurisdiction of the Regional Trial Court sittingas a land registration court is no longer as
circumscribed as it was under the former Land Registration Act (Act 496), so that now a Regional Trial Court,
like the RTC of Quezon City which issued a new title to respondent Virginia Tugbang in lieu of the old one, has
the authority to act not only on applications for original registration but also over all petitions filed after original
registration of title, with power to hear and determine all questions arising from such applications or petitions. [8]
As to whether such an action should be granted requires further evidence culled from a full-blown trial;
hence, Civil Case No. Q-93-15976 previously dismissed by the trial court should be reinstated so that the parties
may be able to present their evidence.
G.R. No. 120974
8

Alberto Sta. Maria owned a parcel of land covered by TCT No. 68818 which he sold in 1964 to Teresa L.
Valencia who, as a consequence, had the title canceled and TCT No. 79818 issued in her name. She however
failed to have the tax declaration transferred in her name. Thus she paid the real estate taxes from 1964 to 1978
in the name of its previous owner Alberto Sta. Maria.
On 20 December 1973 Valencia entered into a contract of sale of the property on installment with a
mortgage in favor of respondent Bernardita C. Tolentino. However, from 1979 to 1983 Valencia failed to pay
the real estate taxes due on the land. As a result, notices of tax delinquency and intent to sell the property [9] were
sent to Alberto Sta.
Maria's address which was simply stated as "Olongapo, Zambales." The notices were then returned to
petitioner City Treasurer of Quezon City for a "better complete address." [10]
In the auction sale on 29 February 1984 the spouses Romeo and Verna Chua bought the land in question,
which was already covered by TCT No. 79818 in the name of Teresa L. Valencia. On 5 March 1984 a certificate
of sale was issued to the Chua spouses but it showed on its face that the land was still covered by TCT No.
68818 and not TCT No. 79818.Apparently, the Office of the City Treasurer was unaware that TCT No. 68818
had already been canceled by TCT No. 79818. However, in the Final Bill of Sale issued to the Chua spouses on
15 May 1985 TCT No. 79818 still appeared in the name of Alberto Sta. Maria, the former owner, [11] so that the
vendee spouses lost no time in filing a petition with the Regional Trial Court of Quezon City for the cancellation
of TCT No. 79818 and the issuance of a new title in their name. On 4 February 1987 the court granted their
petition and TCT No. 357727 was issued in the name of the spouses Romeo and Verna Chua.
In the meantime, on 2 February 1987, respondent Bernardita C. Tolentino paid in full the purchase price of
the property so that Teresa L. Valencia executed a deed of absolute sale in her favor. On 2 August 1988, in view
of the fire that gutted the Office of the Register of Deeds of Quezon City, Tolentino filed a petition for
reconstitution of TCT No. 79818.
Sometime in April 1989, as purchasers of the property in the auction sale, the Chuas demanded delivery of
possession from Bernardita C. Tolentino and Teresa L. Valencia. As a consequence, Tolentino sued for
annulment of the auction sale in the Regional Trial Court of Quezon
City. Finding the action to be well taken, the trial court granted the petition. The Court of Appeals affirmed the
court a quo. Hence this petition for review on certiorari by the City Treasurer of Quezon City under Rule 45 of
the Rules of Court.
Petitioner City Treasurer cites Galutira v. Ramones,  [12] a decision of the Court of Appeals, in support of
his position that the trial court has no jurisdiction over the case as it is one for annulment and cancellation of
TCT No. 357727 which is vested in the Court of Appeals pursuant to par. (2), Sec. 9, BP Blg.
129. [13] In Galutira it was held that "in the law of pleading, courts are called upon to pierce the form and go into
the substance, not to be misled by a false or wrong name given to a pleading because the title thereof is not
controlling and the court should be guided by its averments x x x x" Apparently the ruling is contrary to
petitioner's very own position. While the complaint of Bernardita C. Tolentino is captioned as one for annulment
of auction sale with damages, it is not an action for annulment of judgment which should be filed with the Court
of Appeals. In fact, from the allegations in the complaint it can be gathered that a reconveyance was intended by
Tolentino, in which case, jurisdiction is vested in the trial court.
Under Sec. 55 of the Land Regitration Act, as amended by Sec. 53 of PD No. 1529, [14] an original owner of
registered land may seek the annulment of the transfer thereof on the ground of fraud and the proper remedy is
reconveyance. However, such remedy is without prejudice to the rights of an innocent purchaser for value
holding a certificate of title.
As regards the propriety of the nullification of the auction sale in the instant case, which still remains
unresolved, petitioner submits that he had done everything incumbent upon him to do in proceeding with the
auction sale. Besides, not only was original vendee Valencia remiss in her obligation to secure a new tax
declaration in her name but she likewise failed to pay the real property taxes for 1979 to 1983.  Therefore,
petitioner City Treasurer of Quezon City reiterates, the validity of the auction sale should instead be sustained
conformably with Estella v.Court of Appeals.  [15]
9

Section 73 of PD No. 464 provides -

Sec. 73. Advertisement of sale of real property at public auction. - After the expiration of the year for which the
tax is due, the provincial or city treasurer shall advertise the sale at public auction of the entire delinquent real
property, except real property mentioned in subsection (a) of Section forty hereof, to satisfy all the taxes and
penalties due and the costs of sale. Such advertisement shall be made by posting a notice for three consecutive
weeks at the main entrance of the provincial building and of all municipal buildings in the province, or at the
main entrance of the city or municipal hall in the case of cities, and in a public and conspicuous place in (the)
barrio or district wherein the property is situated, in English, Spanish and the local dialect commonly used, and
by announcement for at least three market days at the market by the crier, and, in the discretion of the provincial
or city treasurer, by publication once a week for three consecutive weeks in a newspaper of general circulation
published in the province or city.

The notice, publication, and announcement by crier shall state the amount of the taxes, penalties and costs of


sale; the date, hour, and place of sale, the name of the taxpayer against whom the tax was assessed; and the kind
or nature of property and, if land, its approximate area, lot number, and location stating the street and  block
number, district or barrio, municipality and the province or city where the property to be sold is situated (italics
supplied).

Copy of the notice shall forthwith be sent either by registered mail or by messenger, or through the barrio
captain, to the delinquent taxpayer, at his address as shown in the tax rolls or property tax recordcards of the
municipality or city where the property is located, or at his residence, if known to said treasurer or barrio
captain; Provided, however, that a return of the proof of service under oath shall be filedby the person making
the service with the provincial or city treasurer concerned (italics supplied).

There is no dispute that the requirements of law as regards posting of the notice, publication  and
announcement by crier have been complied with. [16] The controversy lies in the failure of petitioner City
Treasurer to notify effectively the delinquent taxpayer who at the time of the auction sale was Teresa L.
Valencia. Apparently, petitioner proceeded on the wrong premise that the property was still owned by the
former registered owner, Alberto Sta. Maria, who sold the property to Valencia in 1964.  In fact, at the time of
the auction sale, the property was already covered by a conditional sale on installment in favor of respondent
Bernardita C. Tolentino. Plainly, at the time of the auction sale, Alberto Sta. Maria who appeared to have been
notified of the auction sale was no longer the registered owner, much less the delinquent taxpayer.
In ascertaining the identity of the delinquent taxpayer, for purposes of notifying him of his tax delinquency
and the prospect of a distraint and auction of his delinquent property, petitioner City Treasurer should not have
simply relied on the tax declaration. The property being covered by the Torrens system, it would have been
more prudent for him, which was not difficult to do, to verify from the Office of the Register of Deeds of
Quezon City where the property is situated and as to who the registered owner was at the time the auction sale
was to take place, to determine who the real delinquent taxpayer was within the purview of the third paragraph
of Sec. 73. For one who is no longer the lawful owner of the land cannot be considered the "present registered
owner" because, apparently, he has already lost interest in the property, hence is not expected to defend the
property from the sale at auction. The purpose of PD No. 464 is to collect taxes from
the delinquent taxpayer and, logically, one who is no longer the owner of the property cannot be considered
the delinquent taxpayer.
While we understand the earnestness and initiative of local governments to collect taxes, the same must be
collected from the rightful debtors and not from those who may only appear to be the registered owners in the
official files. Certainly, properties change hands as fast as their owners can, and to deprive the present owners of
their properties by notifying only the previous owners who no longer have any interest in them will amount not
only to inequity and injustice but even to a violation of their constitutional rights to property and due
process. This interpretation as well as its ratiocination was explained as early as 1946 in Cabrera v.
The Provincial Treasurer of Tayabas  [17] where the parties therein seemed to be in the same predicament as the
parties herein.
10

In Cabrera the notice of auction sale was sent to the declared owner but was
returned "unclaimed." Nevertheless, the auction sale proceeded and the property was sold to the highest
bidder. It turned out that the property had been previously conveyed by the declared owner to another who, upon
learning of the sale, filed a complaint attacking the validity of the auction sale for lack of notice to the registered
owner, and that although the land remained in the assessment books in the name of her transferor, she had
become its registered owner several years prior to the auction sale. We resolved the controversy in this manner -

x x x x The appellee was admittedly not notified of the auction sale, and this also vitiates the proceeding. She is
the registered owner of the land and, since 1934, has become liable for the taxes thereon. For all purposes,
she is the delinquent taxpayer 'against whom the taxes were assessed' referred to in Section 34 of the
Commonwealth Act No. 470. It cannot be Nemesio Cabrera (declared owner) for the latter's obligation to pay
taxes ended where the appellee's liability began (underscoring supplied).

x x x x The sale in favor of the appellant (purchaser at auction sale) cannot bind the appellee, since the land
purportedly conveyed was owned by Nemesio Cabrera, not by the appellee; and at the time of sale, Nemesio
Cabrera had no interest whatsoever in the land in question that could have passed to the appellant.

The appellee may be criticized for her failure to have the land transferred to her name in the assessment
record. The circumstance, nevertheless, cannot supplant the absence of notice. Of course, it is the duty of any
person acquiring at the time real property to prepare and submit a tax declaration within sixty days
(Commonwealth Act No. 470, section 12), but it is no less true that when the owner refuses or fail to make the
required declaration, the provincial assessor should himself declare the property in the name of  the defaulting
owner (Commonwealth Act No. 470, Sec. 14). In this case, there is absolutely no showing that the appellee
had deliberately failed to make the declaration to defraud the tax officials; and it may be remarked that there can
be no reason why her Torren title, which binds the whole world, cannot at least charge the Government which
had issued it, with notice thereof x x x x

Forty years later, in Serfino v. Court of Appeals,  [18] we reiterated the Cabrera doctrine and nullified the
auction sale because -

x x x x the prescribed procedure in auction sales of property for tax delinquency being in derogation of property
rights should be followed punctiliously. Strict adherence to the statutes governing tax sales is imperative not
only for the protection of the taxpayers, but also to allay any possible suspicion of collusion between the buyer
and the public officials called upon to enforce such laws. Notice of sale to the delinquent landowners and to the
public in general is an essential and indispensable requirement of law, the non-fulfillment of which vitiates the
sale x x x x A purchaser of real estate at the tax sale obtains only such title as that held by the taxpayer,
the principle of caveat emptor applies. Where land is sold for delinquency taxes under the provisions of the
Provincial Assessment Law, rights of registered but undeclared owners of the land are not affected by the
proceedings and the sale conveys only such interest as the person who has declared the property for taxation has
therein.

The principle in Cabrera, reiterated in Serfino, should be, as it still is, considered valid doctrine today,
despite Estella which petitioner invokes as the latest rule on the matter. Quite significantly, Estella did not make
any reference to the Cabrera and Serfino cases, much less did it pass upon, reverse or modify them; instead, the
Court simply declared -

Under the particular circumstances of the case, we hold that the City Treasurer had done everything that was
legally incumbent upon him. Not only did he send the pertinent notices to the declared owner, he also caused the
mandatory publication of the notice of public auction in two (2) newspapers of general circulation pursuant to
Section 65 of PD No. 464. The notices were understandably mailed toConcepcion because as far as the City
Treasurer was concerned, she was still the 'declared owner' since the assessment of the property in question
was still in her name. It should be recalled that while petitioners had promptly secured a new
11

transfer certificate of title in their name after the 1970 acquisition, they neglected to effect the


necessary change in the tax declaration as then required by (Sec. 12 of Commonwealth Act No. 470
Assessment Law) and later by P.D. No. 464 x x x x (italics supplied).

All told, if it were really true that petitioners were never given the opportunity to protect their rights, they had
only themselves to blame for the catastrophe that befell them. Not having been apprised
bypetitioners of a change in ownership of the subject property, the government was never placed in a position to
give them that opportunity (italics supplied).

In Estella we relied on our ruling in Paguio v. Ruiz  [19] where we emphasized the requirement of
declaration by the owner under Sec. 2484 of the Revised Administrative Code [20]-

x x x x the duty of each person acquiring real estate in the city to make a new declaration thereof with the
advertence that failure to do so shall make the assessment in the name of the previous owner valid and binding
on all persons interested, and for all purposes, as though the same had been assessed in the name of its actual
owner (italics supplied).

When the property was sold by Sta. Maria to Valencia in 1964 the law applicable was RA No.
537 [21] which provided for the same requirement under its Sec. 48. [22] However, the law in force at the time of
the auction sale on 29 February 1984 was already PD No. 464 [23] which did not contain the aforecited
phrase. The new law, Sec. 11 of PD No. 464, merely states -

Any person who shall transfer real property to another shall notify the assessor of the province or city wherein
the property is situated within sixty (60) days from the date of such transfer. The notification shall include the
particulars of the transfer, the description of the property alienated and the name and address of the transferee.

The fact that the pertinent phrase, "'failure to do so shall make the assessment in the name of the previous
owner valid and binding on all persons interested, and for all purposes, as though the same had been assessed
in the name of its actual owner," found in both RA No. 537 and RA No. 409 was not incorporated in PD No.
464 implies that the assessment of the subject property in 1983 in the name of Sta. Maria would not bind, much
less adversely affect, Valencia. This, in spite of the non-declaration by Valencia of the property in her name as
required by the law, for there is no longer any statutory waiver of the right to contest assessment by the actual
owner due to mere non-declaration. We can infer from the omission that the assessment in the name of the
previous owner is no longer deemed an assessment in the name of the actual owner.
It is therefore clear that the delinquent taxpayer referred to under Sec. 72 of PD No. 464 is the actual owner
of the property at the time of the delinquency and mere compliance by the provincial or city treasurer with Sec.
65 of the decree is no longer enough. [24] The notification to the right person, i.e., the real owner, is an essential
and indispensable requirement of the law, non-compliance with which renders the auction sale void.
The registered owner need not be entirely blamed for her failure to transfer the tax declaration in her
name. Section 7 of PD No. 464 directs the assessor, in case the owner fails to make a return, to list the real estate
for taxation and charge the tax against the true owner if known, and if unknown, then as against the unknown
owner. In this way, a change of ownership may be ascertained. Along the same line did we rule in Cabrera.
WHEREFORE, the petition in G.R. No. 120435 is GRANTED. The decision and resolution of respondent
Court of Appeals which affirmed the dismissal of the complaint of petitioners by the RTC-Br. 82, Quezon City,
are SET ASIDE and Civil Case No. Q-93-15976 is REINSTATED. The trial court is directed to hear and decide
this case with deliberate dispatch.
The petition in G.R. No. 120974, on the other hand, is DENIED. The decision and resolution of respondent
Court of Appeals affirming with modification that of the trial court are AFFIRMED. The public auction sale
conducted on 29 February 1984 is declared VOID for lack of notice to the registered owner Teresa L.
Valencia. Transfer Certificate Title No. 357727 and Tax Declaration No. B-091-01469 in the name of the
12

spouses Romeo and Verna Chua are ANNULLED. The Register of Deeds of Quezon City is ordered to cancel
TCT No. 357727 and issue in lieu thereof a new one in the name of respondent Bernardita  C.
Tolentino. Petitioner City Treasurer of Quezon City is ordered to cancel likewise Tax Declaration No. B-091-
01469 and issue in lieu thereof a new tax declaration in the name of respondent Bernardita C. Tolentino.  The
award of attorney's fees is deleted.
SO ORDERED.

G.R. No. 208740. November 19, 2014


CORPORATE STRATEGIES DEVELOPMENT CORP., and RAFAEL R. PRIETO, Petitioners, 
- versus -
NORMAN A. AGOJO, Respondent.

MENDOZA, J.:

In this petition for review on certiorari under Rule 45 of the Rules of Court, Corporate Strategies Development
Corporation (CSDC) and Rafael R. Prieto (Prieto) seek the review of the March 18, 2013 Amended
Decision1 and August 15, 2013 Resolution2 of the Court of Appeals (CA), in CA-G.R. CV No. 96076. In the
said rulings, the CA reversed the January 15, 2010 Decision of the Regional Trial Court of Makati City, Branch
150 (RTC), which dismissed the petition filed by Norman A. Agojo (respondent) for the issuance of a new
certificate of title covering a parcel of land registered in the name of CSDC on the ground that the auction sale
conducted by the City of Makati was null and void.
13

The Facts

CSDC is the registered owner of a parcel of land in Makati City located at Lot 18, Block 29 of Pcs-1310 and
covered by Transfer Certificate of Title (TCT)No. 125211, with an area of 1,000 square meters. It is likewise
covered by Tax Declaration Nos. F00401455 and F00401456, in the name of CSDC.

From 1994 to 2006, its real property taxes in the amount of P1,458,199.85, had not been paid. As a result, a
warrant was issued on April 7, 2006, by the City Treasurer of Makati subjecting the property to levy pursuant to
Section 258 of the Local Government Code (LGC).3 A public auction sale was then conducted on May 24, 2006,
during which respondent turned out to be the highest bidder with a bid amount of P2,000,000.00. Consequently,
a certificate of sale was issued in his favor on even date. The said certificate was later registered with the
Registry of Deeds.

With the issuance of the Final Deed of Conveyance on July 3, 2007, or after the expiration of the one (1) year
redemption period, respondent filed with the RTC a petition for the issuance of a new certificate of title for the
subject property. The case was docketed as LRC Case No. M-5050. On February 13, 2008, an order was issued
by the RTC setting the case for hearing and directing the service of the notice of hearing upon all interested
persons – the petitioners herein, the Land Registration Authority (LRA), and the Register of Deeds of Makati
City.

On August 22, 2008,4 CSDC filed its opposition to the said petition; while Prieto, in his capacity as CSDC
President, filed his on October 20, 2008. As oppositors, CSDC and Prieto (petitioners) alleged that they did not
receive a notice of tax delinquency orthe warrant subjecting the property; that the pertinent notice and warrant
were apparently sent to CSDC’s old office address at 6/F Tuscan Building, Herrera St., Legaspi Village, Makati
City, despite its transfer to another location years ago; and that the sale violated the procedural requirements
prescribed under the LGC. Specifically, they questioned the following: (a) the failure of the City Treasurer to
exert further steps to send the warrant at the address where the property itself was located; (b) the failure to
serve the warrant on the occupant of the property as mandated by Section 258 of the LGC; (c) the failure to
serve the copies of the warrant of levy upon the Register of Deeds and the City Assessor of Makati prior to the
auction sale following the said provision in relation to Section 260 of the LGC; (d) the failure to annotate the
notice of levy on the title of the property prior to the conduct of the auction sale on May 24, 2006;and (e) the
gross inadequacy of the bid price for the property considering that it only represented five (5) percent of the
value of the property in the total amount of P35,000,000.00 based on the zonal valuation. Because of these
alleged defects, petitioner assailed the auction sale for being defective pursuant to the provisions of the LGC.

On August 23, 2008, CSDC filed a motion to deposit the amount of P3,080,000.00 pursuant to Section 267 of
the LGC,5 as a guarantee to respondent should the sale be declared void. The RTC granted the said motion in its
August 29, 2008 Order. After the filing of their respective memoranda, the case was submitted for decision by
the RTC.

On January 15, 2010, the RTC rendered a decision which voided the auction sale. The dispositive portion of the
said decision reads:

WHEREFORE, for failure of the petitioner to present sufficient and competent evidence to entitle him to the
reliefs sought in his petition, particularly, his failure to prove compliance of the legal requirements for a valid
tax delinquency sale which evidently affected the substantive rights of the oppositor, the auction sale of the
subject property by the City Treasurer to him is declared invalid.

As a consequence of the nullification of the sale, the amount deposited by the oppositor with the Clerk of Court,
RTC, Makati covered by official receipt no. 0205076 dated September 9, 2008 in the amount of P3,086,000.00
intended to cover the amount for which the lot with improvement was sold including interest of 2% per month
from date of sale up to the filing of the opposition shall be paid to the petitioner as purchaser in the auction sale.
14

SO ORDERED.6

Unsatisfied, respondent filed an appeal with the CA. He alleged that the RTC erred in not upholding the
presumption of regularity in the performance of the official duties of the City Treasurer of Makati.

On January 26, 2012, the CA decided to affirm the findings and conclusions of the RTC. It held that there was
failure on the part of the City of Makati to fully comply with the requirements of publication, posting and
service of the notice of delinquency and warrant of levy laid down by the LGC before proceeding with the
auction sale, and that the RTC correctly dismissed the petition for the issuance of a new certificate of title filed
by the respondent, to wit:

WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us DENYINGthe instant
appeal for lack of merit. The Decision rendered by Branch 150 of the Regional Trial Court of the National
Capital Judicial Region in the City of Makati on January 15, 2010 in LRC Case No. M. 5050 is hereby
AFFIRMED in toto.

SO ORDERED.7

On February 29, 2012 respondent moved for reconsideration. On March 18, 2013, the CA reconsidered its
decision, thus, reversing its earlier pronouncement. It held as valid the subject auction sale on the basis of the
presumption of regularity in the performance of the City Treasurer’s duties. It held in part that "as to the other
requirements for a valid tax delinquency sale of real property such as publication, service and posting of notice
of such sale and the warrant of levy thereon, these should be deemed complied with because the sale was
conducted by the OIC-Treasurer of Makati in the performance of her official duty." 8 Hence: WHEREFORE, in
view of all the foregoing premises, judgment is hereby rendered by us RECONSIDERING our original decision
promulgated on January 26, 2012, SETTING ASIDEthe said decision and RENDERING a new one setting
aside the decision rendered by the court a quo on January 15, 2010 in LRC Case No. M-5050, thus declaring
asvalid the auction sale of the land covered by TCT No. 125211 of the Registry of Deeds of Makati City,
together with the house existing thereon, that was made by the City Treasurer of Makati in favor of the
petitioner-appellant and directing the Register of Deeds of Makati City to issue to the petitioner-appellant a new
certificate of title for the said land in his name.

SO ORDERED.9

Aggrieved, petitioners asked for reconsideration. In a resolution, dated August 15, 2013, the CA denied their
motion.10

Hence, this petition. GROUNDS FOR THE PETITION

A. THE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE ERROR OF LAW IN


APPLYING THE PRESUMPTION OF REGULARITY OF AN OFFICIAL ACT IN A TAX
DELIQUENCY SALE.

B. THE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE ERROR OF LAW IN


DISREGARDING THE LEGAL REQUIREMENTS OF TAX DELIQUENCY SALE.

C. THE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE ERROR OF LAW IN


PASSING ON TO PETITIONERS THE BURDEN OF PROOF IN DETERMINING THE VALIDITY
OF THE SALE.
15

D. THE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE ERROR OF LAW


FOR FAILURE TO CONSIDER THE GROSS INADEQUACY OF THE PRICE IN DECLARING
THE VALIDITY OF THE SALE.11

Petitioners submit that the CA erred in: (1) applying the presumption of regularity of an official act in a tax
delinquency case; (2) disregarding the legal requirements of a tax delinquency sale; (3) passing on to the
petitioners the burden of proof in determining the validity of the sale; and in (4) failing to consider the gross
inadequacy of the bid price.

Citing Spouses Sarmiento, et al. v. CA, 12 petitioners argue that "there can be no presumption of regularity of any
administrative action which results in depriving a taxpayer of his property through a tax sale; "that, as such, it is
incumbent upon respondentto prove the regularity of all proceedings leading to the sale; and that reliance on the
presumption of regularity should, therefore, not apply in administrative proceedings. It is their position that
respondent’s merereliance on the presumption of regularity shows his failure to discharge the burden of proving
compliance with the mandatory and indispensable requirements of a valid auction sale pursuant to LGC as held
by the Court in Engracio Francia v. IAC and Ho Fernandez. 13 Petitioners refer specifically to the failure in
notifying them of the delinquency and to the fact that no notice of levy was served on them or on the occupant
of the subject property. They further manifest that the Register of Deeds and the City Assessor were not notified
of the levy prior to the sale. There was no annotation on the title prior to the auction either.

In his Comment,14 respondent asks that the pleadings filed by petitioners be expunged from the records on
account of the failure of their counsels to indicate observance with the MCLE requirements for the fourth
compliance period.15 It is his submission that the instant petition should be treated as if not signed and a mere
scrap of paper following Bar Matter No. 1922, 16 in relation to Bar Matter No. 850, 17 which mandates all
practicing lawyers to indicate in all pleadingsthe MCLE Compliance Certificate Number.

Furthermore, respondent argues thatpetitioners failed to overturn the disputable presumption of regularity
accorded to the official actions of the City Government of Makati pursuant to Section 3(m) of Rule 131 of the
Rules of Court;18 that he has clearly proven his right over the subject property as evidenced by the Warrant of
Levy, Notice of Public Auction of Real Properties, Certification of Posting, Certificate of Sale, Annotations of
Warrant of Levy and the Certificate of Sale and Final Deed of Conveyance covering the subject property; that
the burden of proof in determining the validity of the sale rests with petitioners; that the Notice of Tax
Delinquency and the Warrant of Levy were sent to CSDC; that the Notice of Warrant of Levy was served on the
City Assessor and the Register of Deeds; and that inadequacy of the bid price is not a ground to nullify the sale.

In their Reply,19 petitioners call the attention of the Court to the fact that their counsels, Atty. Guillerganand
Atty. Leynes, have already submitted their MCLE Certificates for the Fourth Compliance Period 20 on March 26,
2014 and May 5, 2014, respectively. They opined that an outright dismissal of this petition on a mere technical
ground as inconsistent with the ruling of the Court in Alcantara v. The Phil. Commercial and International
Bank21 where it was held that rules of procedure were mere tools aimed at facilitating the attainment of justice,
rather than its frustration. As regards this issue, petitioners ask the Court’s liberality.

On a substantive note, petitioners disagree with the contentions of respondent that the presumption of regularity
is applicable in tax delinquency sales. They assertthat this Court has held in many cases that no presumption of
regularity is enjoyed by any administrative action which results in depriving a taxpayer of his property.
Petitioners believe that the burden to prove compliance with the mandatory requirements of a valid auction sale
lies on respondent. It is in this respect that respondent allegedly failed because no documentary evidence was
presented showing that proper service of notice of tax delinquency and notice of levy, including the publication
and posting, was effected.

The Court’s Ruling


16

The Court grants the petition. Under Section 75 of Presidential Decree (P.D.) No. 1529, otherwise known as the
Property Registration Decree,22the registered owner is given the right to pursue legal and equitable remedies to
impeach or annul the proceedings for the issuance of new certificates of title upon the expiration of the
redemption period. In this case, petitioners opposed the issuance of a new certificate of title in favor of the
respondent on the ground that the auction sale was null and void. It was submitted that the auction sale was
made without affording the petitioners dueprocess of law attributable to the following errors:

(a) the failure of the City Treasurer to exert further steps to send the warrant at the address where the
property itself was located;

(b) the failure to serve the warrant on the occupant of the property as mandated by Section 258 of the
LGC;

(c) the failure to serve the copiesof the warrant of levy upon the Register of Deeds and the City Assessor
of Makati prior to the auction sale following the said provision in relation to Section 260 of the LGC;

(d) the failure to annotate the notice of levy on the title of the property prior to the conduct of the
auction sale on May 24, 2006; and

(e) the gross inadequacy of the bid price for the property considering that it only represented five (5)
percent of the value of the property in the total amount of P35,000,000.00 based on the zonal valuation.

Because of these alleged defects, petitioners assailed the auction sale for being defective pursuant to the
provisions of the LGC.

Respondent is of the view that the auction sale enjoys the presumption of regularity. The CA agreed with him
when it reversed the RTC ruling holding the auction sale as invalid.

The Court, however, does not.

In Spouses Sarmiento v. CA, 23 this Court reiterated the rule that there could be no presumption of the regularity
of any administrative action which resulted in depriving a taxpayer of his property through a tax sale. This is an
exception to the rule that administrative proceedings are presumed to be regular. This has been the rule since the
1908 case of Valencia v. Jimenez and Fuster24 where this Court held:

The American law does not create a presumption of the regularity of any administrative action which results in
depriving a citizen or taxpayer of his property, but, on the contrary, the due process of law to be followed in tax
proceedings must be established by proof and the general rule is that the purchaser of a tax title is bound to take
upon himself the burden of showing the regularity of all proceedings leading up to the sale. The difficulty of
supplying such proof has frequently lead to efforts on the part of legislatures to avoid it by providing by statute
that a tax deed shall be deemed either conclusive or presumptive proof of such regularity.

Those statutes attributing to it a conclusive effect have been held invalid as operating to deprive the owner of his
property without due process of law. But those creating a presumption only have been sustained as affecting a
rule of evidence, changing nothing but the burden of proof. (Turpin v. Lemon, 187 U.S., 51.)

The tax law applicable to Manila does not attempt to give any special probative effect to the deed of the assessor
and collector, and therefore leaves the purchaser to establish the regularity of all vital steps in the assessment
and sale. (Emphasis supplied)

In 1915, the Court reiterated this doctrine in Camo v. Boyco. 25 It was written therein that no presumption of the
regularity existed in any administrative action which resulted in depriving a citizen or taxpayer of his property.
17

It further stated that on the contrary, the due process of law to be followed in tax proceedings must be
established by proof and the general rule was that the purchaser of a tax title was bound to take upon himself the
burden of showing the regularity ofall proceedings leading up to the sale.

And in the 2003 case of Requiron v. Sinaban, 26 this Court likewise pronounced that it was incumbent upon the
buyer at an auction sale to prove the regularity of all proceedings leading to the sale for the buyer could not rely
on the presumption of regularity accorded to ordinary administrative proceedings.

The above jurisprudential tenor clearly demonstrates that the burden to prove compliance with the validity of the
proceedings leading up to the tax delinquency sale is incumbent upon the buyer or the winning bidder, which, in
this case, is the respondent. This is premised on the rule that a sale of land for tax delinquency is in derogation
of property and due process rights of the registered owner. In order to be valid, the steps required by law must
be strictly followed.27

The burden to show that such steps were taken lies on the person claiming its validity, for the Court cannot
allow mere presumption of regularity to take precedence over the right of a property owner to due process
accorded no less than by the Constitution.

It is, thus, necessary to determine whether respondent has fulfilled his burden of proving compliance with the
requirements for a valid tax delinquency sale.

Under Section 254 of the LGC, it is required that the notice of delinquency must be posted at the mainhall and in
a publicly accessible and conspicuous place in each barangay of the local government unit concerned. It shall
also be published once a week for two (2) consecutive weeks, in a newspaper of general circulation in the
province, city, or municipality.

Section 258 of the LGC further requires that should the treasurer issue a warrant of levy, the same shall be
mailed to or served upon the delinquent owner of the real property or person having legal interest therein, or in
case he is out of the country or cannot be located, the administrator or occupant of the property. At the same
time, the written notice of the levy with the attached warrant shall be mailed to or served upon the assessor and
the Registrar of Deeds of the province, city or municipality within the Metropolitan Manila Area where the
property is located, who shall annotate the levy on the tax declaration and certificate of title of the property,
respectively.

Section 260 of the LGC also mandates that within thirty (30) days after service of the warrant of levy, the local
treasurer shall proceed to publicly advertise for sale or auction the property or a usable portion thereof as may be
necessary to satisfy the tax delinquency and expenses of sale. Such advertisement shall be effected by posting a
notice at the main entrance of the provincial, city or municipal building, and in a publicly accessible and
conspicuous place in the barangay where the real property is located, and by publication once a week for two (2)
weeks in a newspaper of general circulation in the province, city or municipality where the property is located.

Respondent utterly failed to show compliance with the aforestated requirements. First, no evidence was adduced
to prove that the notice of levy was ever received by the CSDC. There was no proof either that such notice was
served on the occupant of the property. It is essential that there be an actual notice to the delinquent taxpayer,
otherwise, the sale is null and void although preceded by proper advertisement or publication. This proceeds
from the principle of administrative proceedings for the sale of private lands for non-payment of taxes being in
personam.28

Second, the notice of tax delinquency was not proven to have been posted at the Makati City Hall and in
Barangay Dasmariñas, Makati City, where the property is located. It was not proven either that the required
advertisements were effected in accordance with law. In fact, the RTC stated that:
18

[E]xcept for the certification issued by the City Administrator and the attachment described in the preceding
paragraph, no other proof was adduced to prove compliance with the other requirements of Section 254.
Specifically, petitioner failed to establish that the City Treasurer actually caused a Notice of Deliquency posted
in a publicly accessible and conspicuous place in Barangay Dasmariñas, Cypress St. where the property is
located. Petitioner is (sic) likewise failed to present proof that the Notice of Deliquency was published once a
week for two (2) consecutive weeks in a newspaper of general circulation in the city. The pleadings with
Annexes/Attachments do not support the conclusion that the notice of tax delinquency was published in a
newspaper of general circulation once a week for two (2) consecutive weeks without the Affidavit of Publication
of the newspaper’s publisher and the presentation of the issues of the newspaper where the notice of
delinquency is published. Likewise, the pleadings with attachment/annexes do not support the conclusion that
the City Treasurer of Makati, her deputy or any authorized officer of the city cause (sic) the notice of
delinquency posted in the barangay where the property is located. To be precise, the petitioner failed to show the
requirements under Sec. 254 (Notice of Deliquency in the payment of real property tax) have been fully
complied with.29

Having established the lack of proof of receipt of the notice of levy by CSDC or by the occupant of the subject
property, and of the fact of publication, there is clearly reason to doubt the validity of the proceedings leading to
the tax delinquency sale made in favor of the respondent. Verily, the inescapable fact that can be derived from
all these is respondent’s inability to prove that he derived his right over the property from a valid proceeding
pursuant to the requirements of the LGC.

In reversing itself, the CA took respondent’s side without recognizing the strict rules on tax delinquency sales. It
also erred in relying on Bank of the Philippines Islands v. Evangeline L. Puzon 30 for the Court finds it
inapplicable with the issue at hand. Although the Court has applied the presumption of regularity in that case,
there were other pieces of evidence which showed compliance with the requirements of a valid foreclosure sale.
In ruling that there was indeed compliance, the Court said as follows:

Besides, even if the notices of sale were not posted in public places, this does render the foreclosure sale invalid.
As held in Development Bank of the Philippines v. Aguirre, the failure to post a notice is not a ground for
invalidating the sale as long as the notice is duly published in a newspaper of general circulation. Thus,
publication of the notice of saleis sufficient compliance with the statutory requirement on notice-posting.

x x x           x x x          x x x

To prove compliance with the requisites for valid publication of the notice of sale, Citytrust offered the
following evidence: (1) Notice of Sheriff’s Sale, stating its publication at "The Guardian" newspaper on 1, 8,
and 15 February 1992; (2) Copies of "The Guardian" newspaper, for the issues dated 1-7 February 1992, 8-14
February 1992, and 15-21 February 1992, [ where the Notice of Sheriff’s Sale was published; and (3) Affidavit
of Publication by the General Manager of "The Guardian" newspaper stating that "The Guardian" is a weekly
newspaper, published and circulated in the Philippines and that the foreclosure sale was published in "The
Guardian" on 1, 8, and 15 February 1992. Moreover, in its motion for reconsideration filed with the Court of
Appeals, Citytrust attached a Certification issued on 25 April 2003 by the Office of the Clerk of Court of the
Regional Trial Court of Quezon City, attesting and confirming the qualification of "The Guardian" newspaper to
publish the Notice of Sheriff’s Sale.31 (citations omitted)

In comparison, respondent here merely attached the following in his petition: (1) sheriff’s return about the
service of the order issued by the RTC on February 13, 2008 upon the Register of Deeds, the LRA and the
petitioner marked as Exhibit A, (2) the certificate of posting of the court order and the petition in three
conspicuous public placesin Makati City marked as Exhibit B, (3) the order issued by the RTC on February 13,
2008 marked as Exhibit C, (4) the certified copy of the TCT No. 125211 marked as Exhibit E, (5) the Final
Deed of Conveyance marked as Exhibit F, (6) the warrant of levy on the property marked as Exhibit G, and (7)
the Certificate of Sale issued by the City Treasurer of Makati marked as Exhibit H. 32
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A cursory reading of the above-cited documents showed that these patently failed to prove the crucial
requirements for a valid tax sale. The fact that publication was effected was not clear and thus cannot be
presumed. Also, compliance with the other requirements was not proved, specifically the receipt of the notice of
levy by CSDC. In BPI, this was not the case. Besides, BPI did not deal with a tax delinquency sale, hence
inapplicable.

Moreover, respondent’s failures are highlighted by his vigorous reliance that it is the petitioners who should
prove the invalidity of the administrative proceedings. He merelystated in his Comment that the burden was
placed on the petitioners; that indeed it was petitioners who failed to adduce any evidence to support the claim
that no notice of tax delinquency and warrant of levy were received by CSDC; that petitioners should be blamed
for not receiving the notice for they should have informed the Register of Deeds, the City of Makati, and the
SEC of the change of business address; and that the notice of warrant was served on the City Assessor and
Register of Deeds, the factof which could have been verified by petitioners themselves had they doneso by
proceeding to the Office of the City Treasurer of Makati. He made these statements without adducing proof to
support his claim that faithful compliance with all the requirements of the LGC was made. Respondent could
have provided documentary proof to establish that he derived his right from a proceeding that did not violate the
petitioners’ right to due process. Yet, he chose to rely on the presumption of regularity, which is not even
applicable here. Indeed, respondent failed to exercise prudence in directing his affairs.

Respondent must be reminded that the requirements for a tax delinquency sale under the LGC are
mandatory.1âwphi1 Strict adherence to the statutes governing tax sales is imperative not only for the protection
of the taxpayers, but also to allay any possible suspicion of collusion between the buyer and the public officials
called upon to enforce the laws. Particularly, the notice of sale to the delinquent land owners and to the public in
general is an essential and indispensable requirement of law, the non-fulfilment of which vitiates the
sale.33 Thus, the holding of a tax sale despite the absence of the requisite notice, as in this case, is tantamount to
a violation of the delinquent taxpayer’s substantial right to due process. 34

For the foregoing reasons, the Court has no recourse but to agree with the RTC ruling, which was even affirmed
by the CA in its original decision. Undeniably, there was insufficiency of evidence to prove compliance with the
LGC requirements for a valid tax delinquency sale. As such, the Court finds no need to delve on the other issues
raised in this petition.

Finally, as to the issue of petitioners' counsel's compliance with the MCLE Certifications, the Court notes that
the required MCLE Certificates, showing fulfilment of the requirements for the fourth compliance period, have
been submitted. This renders the issue moot. SufTice it to state that the Court "cannot look with favor on a
course of action which would place the administration of justice in a straightjacket, for then the result would be
a poor kind of justice if there would be justice at all. Verily, judicial orders arc issued to be obeyed, nonetheless
a non-compliance is to be dealt with as the circumstances attending the case may warrant. What should guide
judicial action is the principle that a party-litigant is to be given the fullest opportunity to establish the merits of
his complaint of defense rather than for him to lose life, liberty, honor or property on technicalities." 35

WHEREFORE, the petition is GRANTED. The March 18, 2013 Amended Decision of the Court of Appeals and
its August 1 5, 2013 Resolution are hereby REVERSED and SET ASIDE. The January 15, 2010 Decision of the
Regional Trial Court of Makati City, Branch 150, dismissing the petition for the issuance of a new certificate of
title for lack of merit, is hereby AFFIRMED and REINSTATED.

SO ORDERED.
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