Tagaytay-Taal Tourist Development Corporation vs. Court of Appeals

A Regional Trial Court sitting as a land registration or cadastral court has no jurisdiction to grant a petition for entry of a new certificate of title under Section 75 of P.D. 1529 where the registered owner interposes serious opposition raising controversial matters; such relief can only be granted if there is unanimity among the parties or no adverse claim or serious objection, otherwise the case becomes controversial and must be threshed out in an ordinary action before a court of general jurisdiction.

The petitioner was a domestic corporation that owned four parcels of land with an aggregate area of 220 hectares, covered by TCT Nos. T-9816, T-9817, T-9818, and T-9819. The properties were mortgaged on June 7, 1976, to Filipinas Manufacturers Bank and Trust Company by Benjamin Osias, who represented himself as President and Chairman of the Board of the petitioner. A dispute arose regarding the composition of the petitioner's corporate officers and board of directors, which led to litigation over the validity of the mortgage and the authority of those who purported to act for the corporation. The properties in question were located in Barrio Birinayan, Municipality of Talisay, Province of Batangas, according to the technical descriptions in the certificates of title.

The petitioner, Tagaytay-Taal Tourist Development Corporation, was the registered owner of four parcels of land with an aggregate area of 220 hectares, covered by TCT Nos. T-9816, T-9817, T-9818, and T-9819 of the Register of Deeds of Tagaytay City. On June 7, 1976, the properties were mortgaged to Filipinas Manufacturers Bank and Trust Company by Benjamin Osias, who represented himself as President and Chairman of the Board of the petitioner. Two of the parcels, Lot 10-A and Lot 10-B, covered by TCT Nos. T-9816 and T-9817 respectively, were described in their technical descriptions as situated in the Barrio of Birinayan, Municipality of Talisay, Province of Batangas.

Owing to a dispute regarding the composition of its corporate officers and board of directors, the petitioner filed a complaint in June 1976 to nullify the mortgage with the Regional Trial Court of Cavite, docketed as Civil Case No. TG-346, with a prayer for the issuance of a writ of preliminary injunction. The trial court issued a temporary restraining order enjoining the Register of Deeds from registering the mortgage and directing it to hold the four titles for safekeeping. On August 13, 1979, the trial court dismissed the complaint for lack of jurisdiction, stating that the determination of the legitimate corporate officers was a question falling within the jurisdiction of the Securities and Exchange Commission. This decision was subsequently upheld by the Supreme Court in G.R. No. 55521.

In the meantime, the parcels covered by TCT Nos. T-9816 and T-9817 allegedly became delinquent in the payment of real estate taxes for the years 1976-1983, in the amounts of P131,465.20 and P950,616.11 respectively. The properties were sold at public auction on November 28, 1983, to satisfy the taxes, with respondent City itself as the successful bidder, and a Certificate of Sale was issued on the same date. On June 30, 1989, respondent City registered the final bills of sale over the lots. On July 14, 1989, respondent City filed before the Regional Trial Court of Cavite, sitting as a land registration court, an unnumbered petition for the entry of new certificates of title over the lots in its name. The petitioner opposed the petition, alleging that the tax delinquency sale was null and void for lack of valid and proper notice to it, and that at the time of the sale, no official could properly represent it because the question of who were its lawful officers was yet to be resolved by the SEC.

On July 19, 1991, during the pendency of the appeal in the Court of Appeals, the petitioner filed with the Regional Trial Court of Cavite, sitting as a regular court, a petition docketed as Civil Case No. TG-1196, assailing the authority of respondent City to levy real estate tax on the properties on the ground that they are located in the Province of Batangas, not in Tagaytay City. On September 24, 1991, the RTC in Civil Case No. TG-1196 granted the petitioner's application for a writ of preliminary injunction. On October 21, 1994, the RTC rendered a decision in Civil Case No. TG-1196 annulling and setting aside the public auction sale, the Certificate of Sale, and the Final Bills of Sale, and directing the Register of Deeds to cancel the annotations on the titles. No appeal was taken from this decision, and it became final and executory.

• Lack of Jurisdiction of the Land Registration Court: Petitioner argued that the Regional Trial Court of Cavite, sitting as a land registration/cadastral court, did not have jurisdiction to hear and decide respondent City's petition for entry of new certificate of title, and that the Court of Appeals erred in affirming the lower court's decision.
• Invalidity of the Delinquency Sale for Lack of Notice: Petitioner argued that assuming the lower court had jurisdiction, the petition should have been denied because the public auction sale of its properties was conducted without due and valid notice, and that at the time of the sale, there was no definite person clothed with authority to act for and in behalf of the corporation.
• Prematurity and Prejudicial Question: Petitioner argued that the decision of the Court of Appeals was premature because the issue of respondent City's authority to levy real estate taxes on the properties was still pending determination in Civil Case No. TG-1196, which constituted a prejudicial question that should have been resolved ahead of the petition for entry of a new certificate of title.
• Effect of Final Decision in Civil Case No. TG-1196: In its Supplemental Petition, petitioner argued that the final and executory decision in Civil Case No. TG-1196, which found that respondent City had no authority to levy real estate taxes on the properties and annulled the auction sale, left no basis for the decisions of the Court of Appeals and the RTC.

• Prescription and Laches: Respondent City argued that the petitioner was barred by prescription and laches from questioning the lack of notice of the delinquency sales because it knew of such sale at least on November 27, 1984, when it secured from the Supreme Court, through its President Eduardo L. Santos, a telegraphic restraining order enjoining the City from consolidating title over the subject properties.

• Jurisdiction of the Land Registration Court: Whether the Regional Trial Court of Cavite, sitting as a land registration or cadastral court, had jurisdiction to hear and decide respondent City's petition for the cancellation of TCT Nos. T-9816 and T-9817 and the issuance of new ones in the name of respondent City despite serious opposition by petitioner.
• Authority to Levy Real Estate Tax: Whether respondent City had the right to levy real estate tax over the properties covered by TCT Nos. T-9816 and T-9817.

• Jurisdiction of the Land Registration Court: No. The RTC sitting as a land registration or cadastral court had no jurisdiction to hear and decide the petition because the issues raised involved substantial or controversial matters that could only be resolved by a court of general jurisdiction. Relief under Section 75 of P.D. 1529 can only be granted if there is unanimity among the parties or no adverse claim or serious objection; otherwise, the case becomes controversial and should be threshed out in an ordinary case.
• Authority to Levy Real Estate Tax: No. Respondent City had no authority to levy real estate taxes on the properties because they are actually located in the Municipality of Talisay, Province of Batangas, not in Tagaytay City, as finally determined in Civil Case No. TG-1196, which had become final and executory.

• Jurisdiction of the Land Registration Court: The Court reasoned that Section 75 of P.D. 1529 allows the purchaser at a sale of registered land to petition the court for the entry of a new certificate of title, but this right is qualified by the provision that before the entry of a new certificate, the registered owner may pursue all legal and equitable remedies to impeach or annul such proceedings. In this case, the petitioner's opposition raised serious and controversial matters: (a) lack of notice to it, depriving it of due process; (b) the properties were subject of a serious controversy regarding the validity of the mortgage and the question of who were the lawful directors and officers of the corporation, which was pending before the SEC; and (c) respondent City had no authority to impose realty tax because the properties are located in Talisay, Batangas. Citing In Re: Balanga vs. Court of Appeals, the Court held that the right to petition for a new certificate is not absolute but subject to the determination of any objection relative to the validity of the proceedings leading to the transfer, which should be threshed out in a separate appropriate action. The Court also noted that there was nothing on record to show to whom the notice of the delinquency sale was sent and who received it, which was critical considering the unresolved question of who were the lawful corporate officers. The Court rejected the Court of Appeals' reliance on prescription and laches, holding that the knowledge of Eduardo L. Santos of the delinquency sale could not be considered notice to the petitioner because his capacity as director and corporate officer had been questioned by other stockholders, and the SEC had issued an injunction enjoining him from representing himself as a director and officer. Consequently, the RTC acted without jurisdiction, making its decision null and void, and the Court of Appeals' decision affirming it had no leg to stand on.
• Authority to Levy Real Estate Tax: The Court held that the RTC sitting as a land registration court could not have ordered the issuance of new certificates of title if the delinquency sale was invalid because the properties are actually located in Talisay, Batangas, not in Tagaytay City. Under P.D. 464 (Real Property Tax Code), the collection of real property tax is the responsibility of the treasurer of the province, city, or municipality where the property is situated. The RTC in Civil Case No. TG-1196 had already ruled, in a decision that became final and executory, that the properties are situated in Talisay, Batangas, and that the assessment of real estate taxes by respondent City and the auction sale were null and void. The Court quoted with favor the RTC's finding that under Republic Act No. 1418, the entire barrios of Caloocan and Birinayan were returned to the Municipality of Talisay, Batangas, and therefore the properties were no longer within the territorial jurisdiction of Tagaytay City.

• Jurisdiction of Land Registration Courts over Petitions for New Certificates of Title — Under Section 75 of P.D. 1529 (formerly Section 78 of Act 496), a petition for the entry of a new certificate of title after a sale of registered land may be granted by the RTC sitting as a land registration court only if there is unanimity among the parties or no adverse claim or serious objection on the part of any party in interest. Where the registered owner interposes serious opposition raising substantial and controversial matters, the case becomes controversial and must be threshed out in an ordinary action before a court of general jurisdiction. The right to petition for a new certificate is not absolute but is subject to the determination of any objection relative to the validity of the proceedings leading to the transfer.
• Notice in Tax Delinquency Sales — Notice of sale to the delinquent landowner and to the public in general is an essential and indispensable requirement of law in tax delinquency sales, the non-fulfillment of which vitiates the sale. The prescribed procedure in auction sales of property for tax delinquency, being in derogation of property rights, should be followed punctiliously. Strict adherence to the statutes governing tax sales is imperative not only for the protection of the taxpayers but also to allay any possible suspicion of collusion between the buyer and the public officials called upon to enforce such laws.
• Territorial Jurisdiction in Real Property Taxation — Under P.D. 464 (Real Property Tax Code), the collection of real property tax is the responsibility of the treasurer of the province, city, or municipality where the property is situated. A local government unit cannot validly collect real property taxes over properties that are outside its territorial jurisdiction, and a tax delinquency sale conducted by a local government unit over properties outside its territory is null and void.

• "Before the entry of a new certificate of title, the registered owner may pursue all legal and equitable remedies to impeach or annul such proceedings." — This passage from Section 75 of P.D. 1529 establishes the qualified nature of the purchaser's right to petition for a new certificate of title and the registered owner's right to challenge the validity of the proceedings leading to the sale.
• "The right, therefore, to petition for a new certificate under said section is not absolute but subject to the determination of any objection that may be interposed relative to the validity of the proceedings leading to the transfer of the land subject thereof which should be threshed out in a separate appropriate action." — This quotation from In Re: Balanga vs. Court of Appeals articulates the controlling doctrine that serious objections to the validity of the sale must be resolved in an ordinary action, not in a summary land registration proceeding.
• "Notice of sale to the delinquent land owners and to the public in general is an essential and indispensable requirement of law, the non-fulfillment of which vitiates the sale." — This passage states the rule that notice in tax delinquency sales is indispensable, and its absence renders the sale void.
• "The Regional Trial Court of Cavite, sitting as a land registration or cadastral court, could not have ordered the issuance of new certificates of title over the properties in the name of respondent City if the delinquency sale was invalid because said properties are actually located in the municipality of Talisay, Batangas, not in Tagaytay City." — This passage connects the validity of the tax delinquency sale to the territorial jurisdiction of the taxing authority, which is a prerequisite for the issuance of new certificates of title.

• In Re: Balanga vs. Court of Appeals, 1 SCRA 391 (1961) — Controlling precedent holding that the right to petition for a new certificate of title under Section 78 of Act 496 is not absolute but subject to the determination of any objection relative to the validity of the proceedings leading to the transfer, which should be threshed out in a separate appropriate action.
• Angeles vs. Razon, 106 Phil. 384 — Cited for the proposition that relief under Section 112 of Act 496 (now Section 108 of P.D. 1529) can only be granted if there is unanimity among the parties or no adverse claim or serious objection, otherwise the case becomes controversial and should be threshed out in an ordinary case.
• Tangunan vs. Republic, 94 Phil. 171 — Cited in support of the rule that land registration courts can only grant relief where there is no serious objection from a party in interest.
• Republic vs. Laperal, 108 Phil. 860 — Cited in support of the rule regarding the limited jurisdiction of land registration courts in granting relief involving certificates of title.
• Serfino vs. Court of Appeals, 154 SCRA (1987) — Cited for the proposition that the prescribed procedure in auction sales of property for tax delinquency, being in derogation of property rights, should be followed punctiliously, and that notice of sale is an essential and indispensable requirement of law.

• Section 75, Presidential Decree No. 1529 — Provides that upon the expiration of the redemption period after registered land has been sold for the enforcement of a lien, the purchaser may petition the court for the entry of a new certificate of title, subject to the condition that before the entry of a new certificate, the registered owner may pursue all legal and equitable remedies to impeach or annul such proceedings. The Court applied this provision to hold that the petitioner's serious opposition rendered the case controversial and beyond the jurisdiction of the land registration court.
• Section 5, Presidential Decree No. 464 (Real Property Tax Code) — Provides that all real property shall be appraised at the current and fair market value prevailing in the locality where the property is situated. Cited to support the territorial limitation on real property taxation.
• Section 39, Presidential Decree No. 464 (Real Property Tax Code) — Provides that the provincial, city, or municipal board or council shall fix a uniform rate of real property tax applicable to their respective localities. Cited to support the territorial limitation on real property taxation.
• Section 47, Presidential Decree No. 464 (Real Property Tax Code) — Provides for the imposition and collection of a special levy on lands comprised within the province, city, or municipality. Cited to support the territorial limitation on real property taxation.
• Section 57, Presidential Decree No. 464 (Real Property Tax Code) — Provides that the collection of the real property tax and the enforcement of the remedies provided for in the Code shall be the responsibility of the treasurer of the province, city, or municipality where the property is situated. The Court applied this provision to hold that respondent City could not validly collect real property taxes over properties outside its territorial jurisdiction.
• Commonwealth Act No. 338 — Cited in the RTC decision in Civil Case No. TG-1196, which the Court quoted with favor, regarding the territorial boundaries between the Province of Batangas and Tagaytay City.
• Republic Act No. 1418 — Cited in the RTC decision in Civil Case No. TG-1196, which the Court quoted with favor, as the law that returned the entire barrios of Caloocan and Birinayan to the Municipality of Talisay, Batangas, thereby removing the subject properties from the territorial jurisdiction of Tagaytay City.

• Bellosillo, J.
• Hermosisima, Jr., J.
• Vitug, J. (concurred in the result)
• Padilla, J. (on leave)