G.R. No. 161748 ; July 3, 2009
Spouses FRANCISCO and BETTY WONG and Spouses JOAQUIN and LOLITA WONG, Petitioners, vs. CITY OF ILOILO, ROMEO MANIKAN as City Treasurer of Iloilo, MELANIE UY and the ESTATE OF FELIPE UY, Respondents.

FACTS

The case involves a property originally owned by the Hodges spouses. It was sold to Vicente Chan in 1966, but the sale was never registered. Upon Chan’s death, his estate sold the property to petitioners, the Wong spouses, in 1967. Due to missing documents, petitioners could only annotate a notice of adverse claim on the title. In 1991, the City Treasurer of Iloilo published a notice of tax delinquency for the property. As the registered owners (the Hodges) could not be located, the property was sold at public auction to respondent Melanie Uy. A new title was issued in her name.
Petitioners filed a complaint to annul the tax sale, arguing it was void because the City Treasurer failed to send them personal notice as required by Section 73 of P.D. 464 (the Real Property Tax Code). The Regional Trial Court initially dismissed the case, ruling petitioners were not real parties-in-interest, but later reversed itself, holding the sale void for lack of notice. The Court of Appeals reinstated the dismissal, applying Section 83 of P.D. 464, which bars suits assailing a tax sale unless the taxpayer first deposits the purchase price with the court. The CA held petitioners failed to make this deposit.

ISSUE

Whether the Court of Appeals erred in dismissing the complaint based on petitioners’ non-compliance with the deposit requirement under Section 83 of P.D. 464.

RULING

The Supreme Court granted the petition and reversed the Court of Appeals. The legal logic is clear: the deposit requirement under Section 83 of P.D. 464 applies only to the “taxpayer,” defined as the person assessed for and liable to pay the tax. Under the law, the taxpayer is the registered owner of the property. At the time of the tax delinquency and auction, the registered owners were the Hodges spouses, not the petitioners. Petitioners, as mere claimants under an unregistered adverse claim, were not the statutory taxpayers. Therefore, the precondition of depositing the purchase price under Section 83 was not applicable to them. Their suit, which was fundamentally an action to quiet title based on their ownership claim and the alleged invalidity of the auction due to defective notice, could proceed without such deposit. The Court emphasized that the purpose of the deposit is to protect the government’s revenue interest and the purchaser, but this protection does not extend to barring suits by persons not legally considered the taxpayer under the code. The case was remanded for further proceedings on the merits of the annulment complaint.