G.R. No. L-22245; October 30, 1969
JUAN PARREÑO, plaintiff-appellant, vs. IRENEO GANANCIAL, defendant-appellee.

FACTS

The property in dispute is Lot No. 1097 of the Sagay cadastre. It was declared for tax purposes in the name of Sebastian Parreño. In 1956, the property was sold at public auction for unpaid real estate taxes. The winning bidder was Juan Parreño (appellant), to whom a certificate of sale and later a final bill of sale were issued, both stating the delinquent taxpayer was Sebastian Parreño. The final bill of sale was registered in 1958. However, a greater portion of the lot was in the possession of Ireneo Ganancial (appellee). Juan Parreño filed an action to recover possession and the value of products from Ganancial. The trial court dismissed the complaint.
Material antecedent facts from official records show Lot No. 1097 was formerly public land subject to homestead applications. In a 1950 decision, the Director of Lands rejected Sebastian Parreño’s application; amended Ireneo Ganancial’s application to cover only portion “A” of the lot; and gave Juan Parreño a period to file an application for portion “B”. Juan Parreño’s subsequent petition for relief was denied in 1951. Thus, at the time of the tax sale, Sebastian Parreño was not the owner and had no rights to the property. Appellee Ganancial only obtained a tax declaration in his own name and paid taxes in 1959.

ISSUE

Whether the tax sale of the property, assessed in the name of Sebastian Parreño who had no ownership rights, effectively transferred title to appellant Juan Parreño as against the actual possessor and rightful claimant, appellee Ireneo Ganancial.

RULING

No. The judgment appealed from is affirmed. The tax sale was ineffective against appellee Ganancial. The sale of real estate for delinquent taxes is a proceeding in personam, not in rem. What is sold is only the particular interest of the person in whose name the land is assessed. Since Sebastian Parreño had no right whatsoever to the property when it was sold for his alleged tax delinquency, the purchaser (appellant) acquired nothing by derivative title from him. Appellant could not claim good faith or rely on the tax declaration in Sebastian Parreño’s name as evidence of ownership because appellant, as a party in the prior homestead case, knew or was charged with notice of the Director of Lands’ decision rejecting Sebastian Parreño’s application and recognizing Ganancial’s rights to portion “A”. Appellant’s cited case (Paguio vs. Ruiz) is inapplicable as there the declared owner was the real owner, unlike here. The ruling is without prejudice to appellant’s right to recover from appellee the amount paid in the tax sale to the extent appellee benefited.