GR 146534; (September, 2009) (Digest)
G.R. No. 146534; September 18, 2009
SPOUSES HU CHUAN HAI and LEONCIA LIM HU, Petitioners, vs. SPOUSES RENATO UNICO and MARIA AURORA J. UNICO, Respondents.
FACTS
Respondent spouses Unico purchased a residential property in Quezon City in 1978, fully paid the price, built a house, and resided there. However, they failed to register the sale with the Registry of Deeds and did not declare the property in their names for tax purposes, leading to unpaid realty taxes. Due to this tax delinquency, the property was sold at a public auction in 1984 to petitioner spouses Hu. Petitioners subsequently filed and won a petition for consolidation of ownership in the RTC, resulting in the cancellation of the old title and the issuance of a new one in their names.
Upon discovering the new title in 1986 when they attempted to pay taxes, respondents filed a complaint to annul the tax sale. They argued the sale was void for lack of due process, as the statutory notices were sent only to the previous registered owners, the spouses de los Santos, and not to them as the actual occupants and owners. The RTC and the Court of Appeals ruled in favor of the respondents, nullifying the tax sale.
ISSUE
The primary issue is whether the tax sale of the property to petitioners is valid and whether respondents’ action for annulment is barred by res judicata.
RULING
The Supreme Court granted the petition, reversed the lower courts, and upheld the validity of the tax sale. The Court applied the principle of res judicata, ruling that the final and executory decision in the earlier land registration case (LRC Case No. Q-3458[86]), which granted the petition for consolidation of ownership, precluded the subsequent civil action for annulment (Civil Case No. Q-50553). The RTC in the annulment case should have dismissed the complaint on this ground.
On the substantive issue of the notice, the Court held the tax sale was valid. For real property taxation, the registered owner is deemed the taxpayer. The local treasurer must identify the delinquent taxpayer by verifying the records of the Register of Deeds, not merely relying on possession or a tax declaration. Here, respondents never registered their deed of sale; thus, the spouses de los Santos remained the registered owners per the Torrens title. Consequently, the City Treasurer correctly sent the notices of tax delinquency and sale to the registered owners of record. Respondents’ failure to comply with their legal duty to register the transfer and declare the property for taxation insulated them from receiving direct notice and could not invalidate an otherwise regular tax sale.