GR 160380; (July, 2009) (Digest)
G.R. No. 160380 ; July 30, 2009
SPOUSES EDUARDO and LETICIA MONTAÑO, Petitioners, vs. ROSALINA FRANCISCO, THE CITY GOVERNMENT OF ILOILO, ROMEO V. MANIKAN, City Treasurer of Iloilo City, and ERLINDA C. ZARANDIN, Head of the Treasurer’s Enforcement Group, Respondents.
FACTS
Petitioners Spouses Montaño entered into a Deed of Conditional Sale with the Government Service Insurance System (GSIS) for a house and lot in 1977, occupied it in 1980, and paid amortizations. In 1994, they discovered that respondent Rosalina Francisco had purchased the property at a public auction for delinquent real property taxes in 1991. The Certificate of Sale was annotated on the title. The Montaños alleged they received no notice of tax delinquency, the auction sale, or their right of redemption, as all notices were sent to “GSIS c/o Baldomero Dagdag.”
The Montaños filed an action for nullity of sale and damages. The Regional Trial Court (RTC) ruled in their favor, invalidating the auction sale due to the City Treasurer’s failure to comply with statutory notice and publication requirements. The Court of Appeals reversed the RTC, upholding the validity of the tax delinquency proceedings.
ISSUE
Whether the tax delinquency proceedings, including the auction sale, were valid despite the lack of direct notice to the petitioners.
RULING
The Supreme Court affirmed the Court of Appeals and upheld the validity of the tax sale. The legal logic rests on the principle that the obligation to pay real property tax is a direct burden on the property itself, and the taxpayer of record is the registered owner. At the time of the auction, the registered owner was GSIS, not the Montaños, who were merely conditional buyers without yet having full legal title. Consequently, the statutory notices of delinquency and sale were correctly addressed to the GSIS as the entity legally liable for the tax. The petitioners, having only an inchoate interest, did not have the legal personality to be notified under the Real Property Tax Code (P.D. No. 464). The Court emphasized that tax sales are proceedings in rem, binding against the whole world, and the government is not required to seek out unknown claimants or persons with unrecorded interests. The petitioners’ remedy was to protect their interest by annotating their adverse claim on the title, which they belatedly did only in 1994. Their failure to ensure the tax payments, despite their possession, did not invalidate the otherwise regular proceedings conducted against the registered owner.