Belmonte v. de Santos

[CA No. 30614-R. February 6, 1964.] REDEMPTA BELMONTE and MAMERTO JACINTO, JR. , plaintiffs and appellants, vs . ALBERTO DE SANTOS, defendant and appellee , and NORMA T. SOLIDUM and LEONARDO S. SOLIDUM , defendants and appellants . Arturo M . Tolentino and Alfredo B . Concepcion for plaintiffs and appellants. Sipin, Solidum & Solidum for defendants and appellants. De Santos & Delfino for defendant and appellee. SYLLABUS 1. TAX SALE; REGULARITY OF PROCEEDINGS NOT PRESUMED; BURDEN OF PROOF UPON PURCHASER. In sales of private property for tax delinquency, there is no presumption in favor of the regularity of the administrative proceedings leading towards the sale of the delinquent property; and as a general rule, the burden is upon the purchaser of a tax title to show the regularity of all the proceedings leading up to the sale (Valencia vs . Jimenez, 11 Phil. 492, 498-500; Camo vs . Boyco, 29 Phil. 437; Lucido et al. vs . Jorge Isais, et al., 43 O. G. No. 10, pp. 4159-4161; Adriano Soncuya vs . Martin Montefrio, et al., CA-G. R. No. 5572-R, October 23, 1951; Cortez vs . Ateneo de Manila, CA-G. R. No. 9587-R, August 12, 1953; Fabian et al. vs . Capistrano et al., CA-G. R. No. 11005-R, March 30, 1954). Deviations from any of the requirements render the tax sale proceedings and tax title null and void. 2. ID.; ISSUE OF VALIDITY OF PROCEEDINGS MAY BE RAISED IN ANSWER. The party raising the issue of validity of the tax sale proceedings need not be the plaintiff as the same can be set up in the answer (1 Freeman on Judgment, p. 616; Scanlon vs . Campbell, 55 S. W. 501; Northwestern & P. Hypotheek vs . Ridpath, 29 Wash. 637, 70 Pac. 568 cited in 1 Freeman on Judgment, p. 617; 85 C. J. S. Sec. 969, pp. 446-47. 3. EJECTMENT; TAX SALE; POWER OF COURT TO ANNUL TAX SALE PROCEEDINGS. In an action for ejectment, the Court may nullify the tax sale proceedings when the same is within the issues raised in the pleadings, in order to avoid multiplicity of suits. D E C I S I O N ENRIQUEZ , J p : This is an action for ejectment filed by the plaintiffs against defendant Alberto de Santos and on the warranty of Norma T. Solidum and Leonardo S. Solidum, alleging that plaintiffs are the registered owners of Lot 105, Psd-790 situated in Barrio Malibay, Pasay City containing an area of 1,360 square meters. In the answer, Alberto de Santos alleges among others that the property has always been owned by him; that irregularities attended the tax sale as well as the corresponding certificates of titles issued in favor of appellants who are purchasers in bad faith. In their answer, the Solidums claimed to have acquired the property at a public auction sale for tax delinquency and that plaintiffs knew that defendant Alberto de Santos has been in possession of the property even prior to its purchase by plaintiffs. The evidence shows that Alberto de Santos is the registered owner of Lot 105, evidenced by TCT No. 182 of Pasay City. He has constructed a house thereon of strong materials worth around P40,000.00, where he has resided up to the present. On June 30, 1956, a notice of sale of delinquent real property was issued by the City Treasurer of Pasay City wherein Lot 105 among others was advertised for sale on December 10 to 14, 1956 inclusive, without the knowledge of Alberto de Santos. On December 10, 1956, Norma T. Solidum was awarded Lot 105 for the sum of P311.27. After publication of the petition for TCT in view of the allegation of Solidum that the address of Alberto de Santos was unknown, TCT No. 182 was ordered cancelled by the court without the knowledge and consent of the registered owner thereof and TCT No. 6905 issued in lieu thereof. Thereafter, plaintiffs purchased the parcel of land in controversy from defendants Norma T. Solidum and her husband resulting in the issuance of TCT No. 6971. After trial, judgment was rendered in favor of Alberto de Santos, the dispositive part of which reads: Wherefore, decision is hereby rendered against the plaintiffs and defendant spouses Norma T. Solidum and Leonardo S. Solidum and in favor of defendant Alberto de Santos by dismissing the present complaint filed by the plaintiffs, filed against Alberto de Santos and ordering the plaintiffs Redempta Belmonte and Mamerto Jacinto, as well as the defendants Norma T. Solidum and Leonardo S. Solidum to pay jointly and severally the sum of P1,000.00 for and as attorney's fees, and that Transfer Certificate of Title No. 6971 in the name of the plaintiffs is hereby cancelled, and the plaintiffs are hereby ordered to deliver to the Register of Deeds of Pasay City and/or to the defendant Alberto de Santos Transfer Certificate of Title No. 6971 and in lieu of the same, the said Register of Deeds of Pasay City is hereby directed to issue a new one in favor of the defendant Alberto de Santos, with costs against the plaintiffs and the defendants spouses Leonardo S. Solidum and Norma T. Solidum. Plaintiffs Redempta Belmonte and Mamerto Jacinto and defendants Leonardo S. Solidum and Norma T. Solidum appealed to this court raising the following issues: (1) Whether the trial court had jurisdiction to receive evidence to show the nullity of the tax sale and order cancellation of TCT No. 6971; (2) Whether the tax sale proceedings is null and void as well as the tax title; and (3) Whether appellants are buyers in bad faith. 1. & 2. It is well-settled that in sales of private property for tax delinquency, there is no presumption in favor of the regularity of the administrative proceedings leading towards the sale of the delinquent property; and as a general rule, the burden is upon the purchaser of a tax title to show the regularity of all the proceedings leading up to the sale (Valencia vs . Jimenez, 11 Phil. 492, 498-500; Camo vs . W. Boyco, 29 Phil. 437; Lucido et al. vs . Jorge Isais, et al., 43 O. G. No. 10, pp. 4159-4161; Adriano Soncuya vs . Martin Montefrio, et al., CA-G. R. No. 5572-R, October 23, 1951; Cortez vs . Ateneo de Manila, CA-G. R. No. 9587-R, August 12, 1953; Fabian et al. vs . Capistrano et al., CA-G. R. No. 11005-R, March 30, 1954). Exact and complete adherence to the laws governing tax sales is indispensable, therefore not only for the protection of the taxpayer, but, also, to allay the possible suspicion of collusion between the buyer and the public servants called upon to enforce such laws. (Lucido et al. vs . Isais, et al., supra ). The reasons for this strict, punctilious and exact adherence to the statutes governing tax sales may be summarized as follows: Sales of real estate for the non-payment of taxes must be regarded in a great measure as an ex-parte proceeding. The owner is to be deprived of his land thereby; and a series of acts preliminary to the sale are to be performed to authorize it on the part of the assessors and collector, to which his attention may never have been particularly called; and experience and observation render it notorious that the amount paid by purchasers at such sales is uniformly trifling in comparison with the value of the property sold. (Brown vs . Veaxie, 25 Me. 359, 362; Fabian et al. vs . Capistrano, et al., supra ). Thus, this Court has nullified a tax sale (1) that did not comply with the requirement of posting notice of sale at or adjacent to the land sold (Cortez vs . Ateneo de Manila, supra ); (2) where the notice of sale by publication erroneously described the lot to be sold and the sale was made by an officer who is not designated by law for the purpose (Fabian et al. vs . Capistrano, supra ); (3) where there was no evidence as to the contents of the notice of sale, or that such notice was made in English or Spanish and the local dialect commonly used in the region and posted in a public conspicuous place in the barrio wherein the property is situated (Lucido & Katigbak vs . Isais, et al., 43 O. G. No. 10, pp. 4159-4161). In the instant case, it is established (1) that no notice of sale in Tagalog the dialect commonly used in Pasay City was issued by the City Treasurer, in violation of Section 53 of the Pasay Charter; (2) that no notice of seizure whatever was made or posted, contrary to the provisions of Section 50; (3) that Alberto de Santos, occupant of the land, was not ejected from the premises through the City Mayor as required by Section 51, nor was he served with notice of seizure and notice of sale; (4) that the Municipal Board of Pasay City was not notified of such sale, as required by Section 54; and (5) that no copy of notice of seizure and notice of sale was posted on the property in question in violation of Sections 50 and 53 of the Charter. These deviations under the aforecited authorities render the tax sale proceedings and tax title null and void. Nor is it correct to say that the non-compliance with the aforecited requirements of the Pasay City Charter are tax sale proceedings, have not substantially impaired the rights of the taxpayer. The very fact that defendant-appellee was deprived of his property without his knowledge, precisely due to the non-compliance with the provisions of the law has gravely impaired his property rights, especially considering that the land in question containing an area of 1,360 square meters on which stands a residential house surrounded by an adobe fence, easily worth P60,000.00, was bidded for only P311.27. Now to procedural matters. "Under the principle of equity that he who seeks equity must do equity, it is the general rule, supported by the overwhelming weight of authority, that when the owner comes into equity seeking affirmative equitable relief against the holder of an invalid tax title by way of cancellation of the tax deed or certificate, the quieting of title to the land, or other relief which will in effect invalidate the tax sale and confirm his own title, and the taxes assessed against the owner for which the land was sold were valid, the owner must, as a condition precedent to obtaining the equitable relief sought, do equity by reimbursing the purchaser for the amount of taxes and penalties, interest, and costs justly chargeable against the land and paid by the purchaser, with legal interest from the time of such payment, from which may be deducted rents and other income from the land received by the purchaser while in possession under his tax title. . . . The same principle applies where the tax sale purchaser invokes the jurisdiction of equity to quiet his own title or seek other appropriate equitable relief, and the defendant, in addition to the denying the validity of the purchaser's title, seeks and obtains affirmative relief , quieting his own title, cancelling the deed, etc." (51 Am. Jur. pp. 988-89, Sec. 1148; 173 ALR 1181). " The proper practice is for the court to make an order requiring the owner to pay the purchaser at the tax sale all taxes paid by the latter upon the property, with interest thereon at the legal rate, within a reasonable time fixed by the order. If such payment is made, then a decree in the plaintiff's favor should be entered but if it is not made within the time allowed, the plaintiff should be denied any relief whatever . . . On appeal from the dismissal of a bill to set aside a tax deed, when the appellate court finds the plaintiffs entitled to such relief, except that they have not offered to reimburse the tax deed grantee for taxes and expenses paid , a matter that was not objected to below, the court will remand the cause with directions that if the plaintiffs, after opportunity given, make such reimbursement, the deed be set aside , and if not, the bill be again dismissed." ( Idem .) Section 58 (c) of the Pasay City Charter requires that the taxpayer pay in court the amount for which the land was sold before a court should entertain any suit assailing the validity of the tax sale of land in Pasay City. In the present case, appellee Alberto de Santos raises the issue of the validity of the tax sale proceedings as special defense (Rule 9, Section 9, Rules of Court; now Rule 6, Section 5-B, Revised Rules of Court), thus putting in issue directly the validity of the tax sale. Contrary to appellant's contention, the party raising such issue need not be the plaintiff as the same can be set up in the answer (1 Freeman on Judgment, p. 616; Scanlon vs . Campbell, 55 S. W. 501; Northwestern & P. Hypotheek vs . Ridpath, 29 Wash. 687, 70 Pac. 139; Hallack vs . Loft, 19 Colo. 74, 34 Pac. 568 cited in 1 Freeman on Judgment, p. 617; 85 C. J. S. Sec. 969, pp. 446-447). It is noted that when appellee offered evidence tending to show irregularities in the tax sale proceedings, appellant objected on the ground that the purchase price at the tax sale was not deposited in court. The objection was correctly overruled on appellee's argument that the irregularities would only tend to deny plaintiff's title as well as the title of the Solidums, in other words the defense is purely negative (Bittle vs . Cain, 278 NW 608, 224 Iowa 1332; 61 C.J. p. 1412 n6; 51 Am. Jur. 989). cdt However, the lower court did not only dismiss the complaint for ejectment, but also nullifies the tax sale proceedings, the tax title and TCTs issued thereafter, in an evident attempt to avoid multiplicity of suits and being within the issues raised in the pleadings. While the deposit in court of the selling price at the auction tax sale is a prerequisite to the interposition of a defense against a suit brought by the tax title claimant when defendant seeks affirmative relief (85 C. J. S. pp. 468-69 nn 31 & 32), substantial compliance therewith is sufficient (Wolf vs . Phillips, 172 SW 894, 116 Ark. 115; Brown vs . Frazier, 267 SW2d 251, 223 Ark. 671; 61 CJ p. 1409 n54). Hence, the judgment of the lower court may be upheld on condition that the land owner reimburse the Solidums of the amount paid by them and the Solidums in turn to return under their warranty the purchase money received from plaintiffs, with legal interest, both to be done within 90 days from the time the decision becomes final (51 Am. Jur. 989). 3. Norma T. Solidum testified that before the tax sale, she visited the premises and came to know that somebody was occupying the lot which is enclosed by an adobe stone fence whereon stands a house of strong materials, where Alberto de Santos used to go. Yet later in her petition for cancellation and issuance of new TCT in Case No. 62, she manifested that the present whereabouts of Alberto de Santos is unknown and cannot be ascertained by diligent inquiry. Her admissions that she did not personally ascertain through diligent inquiry the whereabouts of defendant De Santos nor did she ask her lawyer to check up where defendant could be located, belie her protestation of good faith. Again, when she filed a petition to cancel an entry of attachment in the title, she became aware that defendant De Santos could be reached also at Hacienda Esperanza No. 5, Guimba, Nueva Ecija; yet the copy of the petition was sent to 152 Aguado St., Manila as the address of De Santos. These circumstances sufficiently indicate that failure to notify herein Alberto de Santos of said petition which could have given him an opportunity to oppose it, was due to appellant's successful attempt to conceal the truth, amounting to fraud (2 Pomeroy's Equity Jurisprudence, pp. 1921-1922). Finally, plaintiffs spouses Jacinto, Jr. and Belmonte knew that the property was acquired by defendant Norma T. Solidum in an auction sale consequent of tax delinquency. Plaintiff Mamerto Jacinto likewise visited the land 3 days before acquisition and well knew that a house stands thereon which was not included in the auction, nevertheless, he made no attempt to find out who was occupying the land or who owned the house thereon. The best explanation he could give was that he did not "think there was any necessity" therefor. A prudent man in like situation would have inquired for, if not investigated, the owner of the house worth P40,000.00 standing on the lot he contemplated to purchase. The actuations of plaintiffs make them purchasers in bad faith (Leung vs . F. L. Strong Machinery Co., 37 Phil. 644, 651-52; Inquimboy vs . Cruz, L-19353, May 26, 1960; RFC vs . Javillonar, et al., L-14224, April 25, 1960). The tax sale proceedings and tax title of the Solidums having been declared null and void as well as plaintiffs' title, they should be reimbursed of the respective purchase price and taxes paid (Art. 1398, Civil Code; 51 Am. Jur. pp. 988-89, Sec. 1148) in the case of the Solidums, P311.27 and land taxes for 1956 to 1959 in the annual amount of P25.50, both with legal interest from date of payment, and plaintiffs the sum of P18,000.00 with legal interest from the filing of the amended complaint. With the modifications that the nullification and cancellation of TCT No. 6971 and the tax sale proceedings be conditioned upon the deposit in court by defendant Alberto de Santos of the sum of P311.27 plus P102.00 for taxes paid by the Solidums with legal interest from the date of payment, within 90 days after this decision shall have become final, and that Norma T. Solidum and Leonardo S. Solidum are ordered to reimburse to plaintiffs the sum of P18,000.00 with interest at the legal rate from July 13, 1960, when the amended complaint was filed, the judgment appealed from is affirmed in all other respects. In case appellee fails to pay within the period allowed, let a new judgment be entered for plaintiffs, ordering defendant Alberto de Santos to vacate the premises and remove his house within twenty-days thereafter. aisadc SO ORDERED. Sanchez and Fernndez, JJ . , concur.