De Los Angeles v. Heirs of Yapchiongco

[CA No. 23569-R. April 2, 1965.] CENON DE LOS ANGELES , plaintiff and appellee , vs . THE HEIRS OF THE LATE CARMEN YAPCHIONGCO, ET AL. , defendants and appellants . Senen Carsi Cruz for defendants and appellants. Pio G . Balingcongan for plaintiff and appellee. SYLLABUS 1. TAX SALES; VALIDITY; REGISTERED PROPERTY; NOTICE MUST BE GIVEN TO REGISTERED OWNER. Section 35 of Commonwealth Act No. 470, known as the Assessment Law, which requires that notice of a tax sale must be given to the delinquent owner, has reference to the registered owner , liable to pay taxes, although the delinquent property remains assessed in the name of the party against whom the tax proceedings is directed (Cabrera vs . The Provincial Treasurer of Tayabas, 75 Phil. 780). 2. ID.; ID.; ID.; IDENTITY OF PROPERTY; VARIANCE; EFFECT. Variance in the description of the property stated in the notice of tax sale from that appearing in the certificate of title, with respect to boundaries, location and area, is fatal, and the proceeding in such a case does not really give to the registered owner the notice demanded by the requirements of due process. (Velayo vs . Ordoveza, et al., G. R. No. L-9061, November 18, 1957). 3. ID.; ACTION IS "IN PERSONAM". The action to recover delinquent taxes upon land is an action in personam , and the tax deed issued thereunder conveys only such title as was vested in the delinquent taxpayer. 4. ID.; UNREGISTERED TAX SALE. A tax sale does not bind the registered property and does not affect the owner, under Section 50 of Act 496, until it is registered as required by Section 77 of the same Act. D E C I S I O N LUCERO , J p : As originally decreed on June 28, 1934 , the parcel of land situated in the Barrio of Catic, Municipality of Aliaga, Province of Nueva Ecija, covered by OCT 19582, containing an area of 44,414 sq. m., is registered as follows: cdt 1. Mamerto Corpuz 4/8 share 2. Amado Corpus 1/8 share 3. Cenon de los Angeles (herein plaintiff), 2 years of age 1/8 share 4. Florentino Castillo, 12 years; Eulogio Castillo, 7 years; Guadalupe Castillo, 5 years; Teodora Castillo, 4 years 1/8 share 5. Arsenia Corpuz, 12 years; Cipriano Corpus, 6 years 1/8 share On April 3, 1936 , co-owners Mamerto Corpuz and Amado Corpuz sold their undivided 5/8 shares to spouses Bernardo Ganao and Juana de la Rosa the said area, according to the Deed of Sale, Exhibit 2, being "in the northeastern part of the major area of the land." In consequence of its registration, TCT 10208 was issued on April 14, 1936 (Exh. 2-A). On April 14, 1937 , spouses Bernardo Ganao and Juana de la Rosa sold the 5/8 shares acquired above to Carmen Yapchiongco and Soledad Yapchiongco and accordingly TCT 12098 was issued on August 9, 1937 (Exh. 3). On February 21, 1950 , Soledad Yapchiongco sold her interest to Carmen Yapchiongco and, in pursuance thereof, the present title (TCT No. T-6312) was issued on February 23, 1950 (Exhs. 4 and 4-a). As title TCT No. T-6312 (Exh. A) now stands, Carmen Yapchiongco is the registered owner of 5/8 shares and the registered owners of the remaining 3/8 shares remained as they were in 1934. It appears, however, that on August 20, 1941 , the real property of Mamerto Corpuz under Tax Declaration 18779 was sold at public auction by the Municipal Treasurer of Aliaga, Nueva Ecija, for tax delinquency, to Luis Castillo who thereupon paid the sum of P31.90 (Exh. 7-official receipt). On February 24, 1943 , the Provincial Treasurer of Nueva Ecija issued to auction bidder Luis Castillo a Final Bill of Sale (Exh. 8). This Final Bill of Sale states that "whereas, the real property declared in the name of Mamerto Corpuz under Tax No. 18779, has been delinquent in the payment of taxes for the years 1936 to 1941 . . . in the total amount of P31.90 . . ." The Final Bill of Sale (Exh. 8) was registered by Carmen Yapchiongco under Act 3344 on February 27, 1950 (Exh. 9). As described in the Final Bill of Sale (Exh. 8) and in Tax Declaration 18779 issued in the name of Mamerto Corpuz (Exh. 10), the property sold at public auction is as follows: "A land containing an area of 16,559 square meters, located at Cabag (not Catic as the title recites), Barrio of San Pablo, Municipality of Aliaga. Bounded on the N , by land of declarant (Mamerto Corpuz); on the E , by Bernardo Ganao; on the S , by Policarpio Tumpalan; and on the W , by Bernardino de los Santos. Covered by Tax Declaration 18779 issued in the name of Mamerto Corpuz." Note: Tax Decl. 18779 states that the land is covered by plan PSU-1703, whereas the entire titled land of 44,414 sq. m. is lot No. 1, plan PSU-17303. The boundary descriptions of the titled land and the land sold at public auction to Luis Castillo are not identical. On April 5, 1943 , Luis Castillo (the auction purchaser) sold the above-described property to Carmen Yapchiongco by virtue of public document, Exhibit 6, specifically stating in the said Deed of Sale that "the said land not being registered under Land Registration Act 496 nor under the Spanish Mortgage Law, I (Luis Castillo) agree to register the same under the provisions of the law." (Exh. 6) According to the testimony of Jose T. Santos, surviving husband of Carmen Yapchiongco (the latter having died on October 5, 1953), "my wife (Carmen Yapchiongco) took possession of the 3/8 portion in 1943" (tsn. 71, Vol. I, Yango). In other words, Carmen Yapchiongco believed and assumed that the forfeited property represents the 3/8 shares of the other registered co-owners. Plaintiff Cenon Angeles and the other registered co-owners are the grandchildren of the deceased Mamerto Corpuz (tsn. 71, id. and recitals of Deed of Sale, Exh. B). Since the registered co-owners were minors in 1934 as the title so states, they claim (which sounds believable) that they learned of their inheritance, for the first time, in the year 1953 thru an information relayed to Cenon de los Angeles by Pilar Castillo, a common cousin (tsn. 13, Vol. I, id ). Accompanied by a lawyer, Cenon de los Angeles obtained from the Register of Deeds a co-owner's duplicate title on May 6, 1953 (Exh. A-1) and thereafter contacted his cousins, the other registered co-owners. It appears from the evidence that the following registered co-owners died intestate, single and without issues, to wit: (a) Eulogio Castillo, in May 1949; (b) Teodora Castillo, in 1943; (c) Arsenia Corpuz, in 1951; and (d) Cipriano Corpuz, in 1943 (Exh. B). Guadalupe Castillo is still living but waived her hereditary right (Exh. B). Florentino Castillo died on January 5, 1936 in Aliaga, Nueva Ecija, leaving as heirs: (i) Agapito Castillo; (ii) Anastacio Castillo; (iii) Elpidio Castillo; and (iv) Gertrudes Castillo (Exh. B). On May 27, 1953, the said surviving heirs of Florentino Castillo, together with uncle Cenon de los Angeles and aunt Guadalupe Castillo, claiming to be sole heirs of the above-named deceased registered co-owners, to wit, Eulogio Castillo, Teodora Castillo, Arsenia Corpuz and Cipriano Corpuz, executed a deed of sale (Exh. B) whereby, for and in consideration of P500.00, the surviving co-owners and heirs, sold all their rights to Cenon de los Angeles, thereby consolidating into Cenon de los Angeles the 3/8 shares of the whole land. This deed of sale (partaking also the character of an extrajudicial partition) is the document which plaintiff Cenon de los Angeles seeks to register on TCT No. T-6312 but the registration could not be accomplished because the defendant-heirs of the deceased Carmen Yapchiongco refused to surrender to the Register of Deeds the owner's duplicate of the aforesaid title which is admittedly in their custody. On May 27, 1953 , also, the alleged surviving heirs of the deceased co-owners executed a power of attorney empowering Cenon de los Angeles to claim on their behalf 2/8 share of the produce of the land in question from 1936 up to 1952 (Exh. C). On September 12, 1953 , counsel for Cenon de los Angeles sent by registered mail a formal demand to Carmen Yapchiongco claiming for 3/8 share of the produce of the land from 1937 up to and including 1952 (Exhs. D, D-1, and D-2). Carmen Yapchiongco's counsel replied on November 3, 1953, calling attention to the Luis Castillo deed of sale (Exh. 6) which consolidated the ownership of the whole land to Carmen Yapchiongco (see Atty. Gavino M. Yapchiongco's letter, RA 138-141). In this letter, counsel for the heirs of Carmen Yapchiongco admitted that Carmen Yapchiongco took possession and occupied the 1.6559 hectares acquired from Luis Castillo "from April 5, 1943" (RA 140). The above-narrated facts would explain why the present action was instituted by Cenon de los Angeles on March 22, 1954. The purpose is to compel the heirs of Carmen Yapchiongco to surrender the owner's duplicate of TCT No. T-6312 to enable Cenon de los Angeles to register the partition-Deed of Sale (Exh. D, dated May 27, 1953), consolidating the 3/8 share in his (Cenon's) name and to compel also the heirs of said Carmen Yapchiongco to pay to Cenon de los Angeles (by virtue of his power of attorney, Exh. C) the 3/8 share in the harvest from 1937 up to 1954 (RA 6-7). The defenses interposed by the heirs of Carmen Yapchiongco, the present defendants, are: (1) the title to the whole parcel covered by TCT No. T-6312 has been consolidated in said deceased; (2) the Cenon de los Angeles deed of sale, Exh. B, is null and void for want of consideration; and (3) the action to recover alleged share in the harvest from 1937 to 1952 has prescribed (RA 41-43). After proper trial and introduction of evidence, the lower court rendered judgment on January 28, 1958 as follows: "Wherefore, judgment is hereby rendered in favor of the plaintiff Cenon de los Angeles and against the defendants, the heirs of the late Carmen Yapchiongco, ordering the said defendants and their father and guardian-ad-litem, Jose T. Santos: 1. To deliver TCT NO. 6312 (owner's duplicate copy, Exh. A), to the plaintiff or to the office of the Register of Deeds of Nueva Ecija for the purpose of annotating therein the Deed of Sale, Exhibit B, executed in favor of the plaintiff by the other co-owners of the two-eight (2/8) portion of the land described in said Transfer Certificate of Title; 2. To deliver to the plaintiff 392 cavans of palay or their total value of P3,138.00; 3. To pay the plaintiff the sum of P500.00 as attorney's fees; and 4. To pay the costs." (RA 119-120) From this decision, the defendant-heirs of the deceased Carmen Yapchiongco appealed, assigning nine (9) errors, to wit: (1) in finding the Luis Castillo lot different from the 3/8 portion; (2) in holding the tax sale void ab initio ; (3) in refusing to issue subpoena duces tecum to the Municipal Treasurer of Aliaga and to the Provincial Treasurer of Nueva Ecija; (4) in not holding that the 3/8 share belongs to Carmen Yapchiongco; (5) in ordering the surrender of the owner's duplicate of title; (6) in requiring the delivery of 392 cavans of palay or their value; (7) in not ruling that Cenon de los Angeles has no right to bring the present action as regards the 2/8 share; (8) in holding that Cenon de los Angeles is entitled to collect the value of palay produced from the 3/8 from 1941 to 1956 and attorney's fees; and (9) in dismissing defendants' counterclaims, i.e., (i) consolidation of title in name of defendants and (ii) P1,000 for attorney's fees and P500 for expenses of litigation. As we review the various aspects of the present case, we believe that the crucial issue on which all others revolve is the validity of the tax sale. Let it be emphasized at this instance that the tax delinquency proceedings was directed against Mamerto Corpuz alone and no others (Exh. 8). On August 20, 1941, when the tax auction sale was held, Mamerto Corpuz's registered 4/8 share in the property in litigation was no longer existing, the same having been conveyed to spouses Bernardo Ganao and Juana de la Rosa as far back as April 3, 1936 (Exh. 2) in consequence of which sale TCT 10208 was issued to said spouses Bernardo Ganao and Juana de la Rosa on April 14, 1936 (Exh. 2-A). As the Final Tax Bill of Sale, Exh. 8, has so clearly indicated, the forfeiture proceedings was held in accordance with Commonwealth Act 470 known as the Assessment Law. Under Section 35 of Com. Act 470, it is required that "copy of the notice shall be forthwith sent by registered mail or by messenger to the delinquent taxpayer (which in this case was Mamerto Corpuz alone) at his residence if known to said treasurer." It is more than obvious therefore that, even assuming the property sold at public auction on August 20, 1941, to form part of the titled property and to correspond to the 3/8 share owned and registered in the names of: (a) Cenon de los Angeles, 1/8; (b) Florentino, Eulogio, Guadalupe and Teodora Castillo, 1/8; and (c) Arsenia Corpuz and Cipriano Corpuz, 1/8, still the said tax proceedings would and could not have affected the registered interests of the said co-owners. Thus, in the case of Cabrera vs . The Provincial Treasurer of Tayabas, 75 Phil. 780, the Honorable Supreme Court ruled: "Under Section 35 of Commonwealth Act No. 470, notice of the public sale must be given to the delinquent taxpayer. This has reference to the registered owner , liable to pay taxes, although the delinquent property remains assessed in the name of a former owner . There can be no reason why a Torrens title, which binds the whole world, cannot at least charge the Government which had issued it, with notice thereof." In this connection, the principle is well established that notice of tax sales to delinquent taxpayers is "an essential and indispensable requirement of the law, the nonfulfillment of which vitiates and nullifies the sale" (Aragon vs . Jorge and others, 85 Phil. 246). And not only that. As we have stated heretofore, the description of the property sold at the tax auction sale is so far apart and different from the titled property with respect to boundaries, location and area that the notice of sale, even assuming it arguendo to have been sent to the other co-owners, would not really give the notice demanded by the requirements of due process. The following undeniable evidences will prove this point: TCT No. T-6312, Exh. A Tax Decl . 18799-Mamerto Corpuz, Exhs. 10 and 8 NE Mariano Alvero N Mamerto Corpuz SW Roberto de los Santos and Bernardo de los Santos E Bernardo Ganao S Alejandro Corpuz and David Eduardo S Policarpio Tumpalan NW Mamerto Corpus W Bernardo de los Santos Location: Barrio Catic Location: Cabag, Barrio San Pablo Area: 16,655.25 sq. m. (that is the 3/8 share) Area: 16,559 sq. m. In the case of Velayo vs . Ordoveza et al., G. R. L-9061, November 18, 1957, the Honorable Supreme Court held that the variance in the description of the property so stated in the notice of sale from that appearing in its certificate of title is fatal. The facts of that case are: "In the notice of the public auction sale, the property to be sold is described as a 'land containing an area of 99 . 940 square meters, more or less, designated as lot 16, Block 35' of the City of Manila, whereas the properties of the Ordovezas, covered by Transfer Certificate of Title No. 79178, are described therein as lots Nos. 20 and 21 of Block No. 4002 of the Cadastral Survey of the City of Manila, with an area of 94 . 80 and 2.30 square meters, more or less, respectively. Held : Although both documents (notice of sales and transfer certificate of title) name Lepanto Street and give the same house number, the difference in the number of the block and in that of the lot, apart from the difference in area , are such as to have a confusing or misleading effect. The injurious consequences of such variance becomes more manifest when we consider that the lots of the Ordovezas are registered under the Torrens System and that its owners are, consequently, justified in relying upon the description given in their certificate of title as the one officially identifying said property. In other words, it is hardly possible to sanction the tax sales of a property with a description distinct and different from that which appears in its certificate of title, without affecting the essence of the Torrens System. This suggests the advisability or need of adopting means and ways tending to insure that the records of the assessment for purposes of real estate tax on registered properties contain a description thereof which dovetails with that of the records of the corresponding registration proceedings. Thus, instead of being merely a formality, which often does not really give the notice demanded by the requirements of due process, the advertisement of tax sales prescribed by law would furnish substantially the information and warning it is meant to convey to, among others, the owner and delinquent taxpayer, in order that he may either make payment before the sale, and thus suspend the same, or redeem his property within the statutory period. Petition of Velayo to cancel the certificate of title of the Ordovezas and to issue a title in his name is denied." Furthermore, the rule in this jurisdiction is that "the action to recover delinquent taxes upon land is an action in personam and that the tax deed issued thereunder conveyed only such title as was vested in the delinquent taxpayer. In a judgment in personam when property is sold thereunder at public auction, the rights of the owner only are sold, while in a judgment in rem , the res itself is sold" (Lopez vs. Director of Lands, 47 Phil. 23). Since Mamerto Corpuz, the delinquent taxpayer, had no more rights in the titled property when the auction sale was held, it stands irresistibly clear that Luis Castillo did not acquire any right therefrom with respect to the titled land or a portion thereof. This is on the assumption (without admitting of course) that the auctioned property forms an integral part of the titled land. Considering that the tax proceeding is an action in personam , it cannot bind persons other than Mamerto Corpuz, the delinquent taxpayer against whom it was solely directed. The res itself (the 3/8 share of the co-owners) remains therefore untouched. Here, there is no clear and definite evidence that the auctioned land is part of the titled property, much less that it corresponds to the 3/8 share of the minor co-owners. At any rate the rule also in this jurisdiction is that the auction purchaser (in this case Luis Castillo and his successor, Carmen Yapchiongco) has the burden of proving that all the requirements of law for such sale have been met. The rule of caveat emptor applies to the purchaser at the sale. So in the case at bar, only the particular interest of Mamerto Corpuz was sold. To paraphrase the Hon. Supreme Court in the case of Pantaleon vs . Santos, L-10289, July 31, 1957, "As the proceedings in the case at bar are not proceedings in rem but merely in personam , it follows as a necessary consequence that the rights of the registered but undeclared owners were not affected by the proceedings in the sale for delinquency." On top of all this is the omission to register the tax sale on TCT No. T-6312 as required by Section 77 of Act 496. Under Section 50 of Act 496, the act of registration is indispensable in order to convey and affect the portion auctioned to Luis Castillo. In the case of Metropolitan Water District vs . Aurelio Reyes, 74 Phil. 142, the Hon. Supreme Court held that "the tax sale made by the City Treasurer to respondent on May 4, 1937 did not bind the land and did not affect the petitioner until it was registered on November 3, 1938." Premises considered, the lower Court was right in declaring the tax auction sale as null and void (RA 116). cdt In view of the highly controversial nature of the issues raised herein, the lower Court was also correct in ordering the surrender of the owner's duplicate within this case (Republic vs . Laperal, L-14228, June 30, 1960). The last issue to be resolved is the matter of the harvests. The Luis Castillo deed of sale to Carmen Yapchiongco over the forfeited property (which Carmen Yapchiongco honestly believed in good faith corresponded to the 3/8 share of the other registered co-owners) is dated April 5, 1943 (Exh. 6). Carmen Yapchiongco even caused the tax declaration of the forfeited property to be transferred in her name in 1951 as per tax declaration 3391 (Exh. 11) and, in 1956, same was replaced by tax declaration 4681 (Exh. 12). From the dorsal annotation on Exhibit 11 and from tax receipt, Exhibit 13, Carmen Yapchiongco appears to have paid the taxes on the forfeited property, thereby showing how earnestly she believed her acquisition to be legal and proper. According to Carmen Yapchiongco's husband (Jose T. Santos), the deceased Carmen took possession and occupied the 3/8 portion (thinking it to be the forfeited property) only in 1943 (tsn. 71, Vol. I, Yango). Thus, in Carmen Yapchiongco's reply-letter thru counsel of November 3, 1953, she stated that she occupied "the 1.6559 hectares from April 5, 1943 " (RA 140). There is every reason therefore to accept that the possession of Carmen Yapchiongco over the co-owners' 3/8 portion began only from April 5, 1943 and not from 1941 as was found by the trial court. It is true that tenant Eugenio Agustin (who testified for Cenon de los Angeles) declared that he worked on the whole litigated land from 1941, but it was not improbable that this tenant occupied the whole land upon seeing there were no occupants on the remaining 3/8. Be that as it may, it cannot be denied at all that the late Carmen Yapchiongco was a possessor in good faith of the 3/8 portion. Article 526, NCC, provides: "Art. 526, NCC. He is deemed a possessor in good faith who is not aware that there exists in his title or mode of acquisition any flaw which invalidates it. "He is deemed a possessor in bad faith who possesses in any case contrary to the foregoing. "Mistake upon a doubtful or difficult question of law may be the basis of good faith." Correspondingly, if Carmen Yapchiongco was possessor in good faith by reason of her conviction that what she purchased from Luis Castillo was the remaining 3/8 share of the registered co-owners, it is clear that the fruits collected by her became her own and she is not obliged to return them to the plaintiff and the other co-owners. In purchasing the land in question, she did so in good faith and was fully convinced that Luis Castillo from whom she purchased it was the real owner thereof and could transmit title thereto. Under Article 544, NCC (Art. 451, old), "a possessor in good faith is entitled to the fruits received before the possession is legally interrupted." In the case of Alunen vs . Tilan, 66 Phil. 463, the Hon. Supreme Court ruled that "appellee's possession from the moment of the purchase up to the date on which he was served with summons in connection with the complaint was and should be considered as one in good faith, and, under such circumstances, he had a perfect right to keep and enjoy the fruits of said land, at least until he was served with summons in connection with the present case by virtue of the complaint filed by the plaintiffs against him for the recovery of possession and ownership thereof." Besides, even assuming that Carmen Yapchiongco was legally obligated to return the 3/8 share of the harvests from 1941, this obligation is chargeable against the estate and not against the individual heirs (Rule 87, Section 5, old). The present case was instituted on March 22, 1954. Upon the other hand, the defendant-heirs succeeded upon the occupied 3/8 share from the moment of Carmen Yapchiongco's death which was on October 5, 1953 (Art. 777, NCC). Carmen Yapchiongco's good faith and thereafter her heirs' (the herein defendants) ceased on March 22, 1954, when the present complaint was filed. Pursuant to the findings of the trial court, the plaintiff as the present owner of the 3/8 share is entitled to "three-eight (3/8) of 55% of 144 cavans of palay for the years 1955 to 1958 or 30 cavans worth P255.00 computed at P8.50 per cavan" (RA 119). This is the only amount which the plaintiff is legally entitled to recover. WHEREFORE, in the light of the foregoing, except for reducing the amount of the harvests recoverable from P3,138.00 to P255.00, the judgment appealed from is hereby affirmed in all other respects, with costs in both instances against the defendant-appellants. The Register of Deeds of Nueva Ecija should pass upon the question of whether Cenon de los Angeles' deed of sale dated May 27, 1953, Exhibit B, known as Doc. 295, Page 66, Book III, Series of 1953 of Notary Public Pio G. Balingcongan is acceptable for registration or not and to return the owner's duplicate to the defendants within 5 days from the denial or the registration of the said document as the case may be. cdtech SO ORDERED. Narvasa and Esguerra, JJ . , concur.