(Article published in the June 24, 2002 issue of TODAY, Business Section)In these hard times, it is very tempting for estate owners to try to postpone the more tedious and painful tasks concerning their assets, usually thinking that there will always be time later to attend to those bothersome details. After all, the law is said to have been made by property owners, and, can be expected to lean in their favor. Sorry, this item shows how trying to save a few pesos in real estate taxes and sparing oneself the bother of registering the acquisition led to the lose of the entire property.
Sometime in 1981, a couple purchased a unit in a condominium located in Baguio City from a certain Elias Imperial. The couple took actual possession of the unit and since then had been in what lawyers love to allege in ownership contests over real estate "open, public, continuous, adverse possession in the concept of owners". They did not, however, do what most owners are expected to do, namely, rush to the Register of Deeds with the documents showing how they acquired the property together with the necessary clearances from the local and national tax authorities and ask that the former owners title be cancelled and a new one issued in their names. They also did not, as good owners should have done, pay the real estate taxes on their newly acquired condominium unit.
The City of Treasurer of Baguio, who is charged by law with the duty of collecting taxes for the countrys summer capital, obviously was not pleased with the new owners nonchalance about their tax liabilities. So, on 15 October 1985, he wrote to the person whom his records say is still the owner, Elias Imperial, to tell him that the unit would be sold at public auction in December of that year in order to satisfy the delinquent real estate taxes, penalties and costs of sale, unless payment of the taxes due which were stated at P4,039.80 were paid.
This notice is necessary because the collection of delinquent taxes is considered "in personam", i.e. against a particular person, namely the defaulting taxpayer, and not "in rem" or "against the world" where mere publication is sufficient notification compliance with the due process clause of the Constitution.
The real estate taxes due on the condominium unit remained unpaid, and so the process for enforced collection, which is now covered by Sections 254 to 260 of Chapter VI of Title II of Book II of the Local Government Code, was put in operation. The condominium unit was sold at public auction and a final bill of sale was issued to the winning bidder.
The buyers went to court to annul the auction sale and question the title issued to the bidder. As in most cases like this, where the suitor cannot dispute his non-payment of the taxes due, the complaint, in order to prosper, had to zero in on what can be argued as irregularities in the proceedings and non-compliance with statutory requirements. Among the technicalities raised was the lack of notice of delinquency to the couple. The notice was sent to Imperial and not to them.
The regional trial court of Baguio ruled for the buyer in the auction sale; on appeal to the Court of Appeals, the decision went in his favor also; and so, hence, the appeal by the couple to the Supreme Court.
On the question of who ought to be notified for purposes of auctioning off property in a tax sale, the Supreme Court stated no less than four times: for purposes of the real property tax the registered owner of the property is deemed the taxpayer (Talusan v. Tayag, G.R. No. 133698, promulgated April 4, 2001).
The importance of registration cannot be stressed too much. Section 51 of the Property Registration Decree (P.D. No. 1529) clearly warns that "the act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned " and that an unregistered deed "shall operate only as a contract between the parties and as evidence of authority to the Registry of Deeds to make registration".
"The law", says the Supreme Court, "helps the vigilant, but not those who sleep on their rights." The couple who bought the unit from Imperial, unfortunately for them, did not, despite being in possession, "take the necessary steps to protect and legitimize their interest."
The moral of the story? Justice Artemio Panganiban writes: "real property buyers must register their purchases as soon as possible and, equally important" they must pay their taxes on time."