G.R. No. 106812 June 10, 1997
Tagaytay-Taal Tourist Development Corporation, petitioner, vs. Court of Appeals (Special Ninth Division) and The City of Tagaytay, respondents.

FACTS

Petitioner Tagaytay-Taal Tourist Development Corporation was the registered owner of four parcels of land, two of which, covered by TCT Nos. T-9816 and T-9817, are specifically described as being situated in the Barrio of Birinayan, Municipality of Talisay, Province of Batangas. These properties were mortgaged in 1976. Due to a dispute over its corporate officers, petitioner filed a complaint to nullify the mortgage, and the trial court issued a temporary restraining order directing the Register of Deeds to hold the titles. The trial court later dismissed the complaint for lack of jurisdiction, a decision upheld by the Supreme Court. Meanwhile, the City of Tagaytay declared the properties delinquent for unpaid real estate taxes from 1976-1983 and sold them at a public auction on November 28, 1983, with the City as the successful bidder. The City registered the final bills of sale on June 30, 1989, and on July 14, 1989, filed a petition with the Regional Trial Court (RTC) of Cavite, sitting as a land registration court, for the entry of new certificates of title in its name. Petitioner opposed, arguing the tax sale was void for lack of valid notice. The RTC granted the City’s petition on December 5, 1989, ruling petitioner’s rights were lost through prescription or laches. The Court of Appeals affirmed this decision on November 11, 1991. During the pendency of the appeal, petitioner filed a separate case (Civil Case No. TG-1196) with the RTC of Cavite, sitting as a regular court, assailing the City’s authority to levy taxes on the grounds that the properties were located in Batangas, not Tagaytay City. The RTC in that case granted petitioner’s petition on October 21, 1994, annulling the public auction sale and related certificates for lack of authority, a decision which became final and executory. Petitioner filed a supplemental petition in the Supreme Court based on this final judgment.

ISSUE

The primary issue is whether the Court of Appeals erred in affirming the RTC’s decision ordering the issuance of new certificates of title to the City of Tagaytay, considering the subsequent final and executory judgment in Civil Case No. TG-1196 which annulled the tax sale for lack of authority.

RULING

The Supreme Court granted the petition and reversed the decision of the Court of Appeals. The Court held that the final and executory decision in Civil Case No. TG-1196, which declared the City of Tagaytay without authority to levy taxes on the Batangas properties and annulled the auction sale, constitutes a supervening event that renders the execution of the appealed decision unjust and inequitable. The Court found that the RTC, acting as a land registration court in the petition for entry of new title, had limited jurisdiction and could not determine the validity of the tax sale, which was a controversial issue properly within the jurisdiction of a regular court. Since the regular court in Civil Case No. TG-1196 had definitively ruled the tax sale void, there remained no legal basis for the City to consolidate ownership and obtain new titles. The Court emphasized that a final judgment, while immutable, may be set aside when its execution would be unjust due to a supervening event. Therefore, the Court of Appeals’ decision was reversed, and the City’s petition for entry of new certificates of title was denied.