G.R. No.

L-40858 September 15, 1987

Facts:

 On 25 August 1937, a parcel of land was patented in the name of Pacifico Casamayor (OCT 1839). On 14
December 1945, he sold said land in favor of Nemesia D. Balatazar (TCT No. 57-N, 18 January 1946). OCT 1839
was lost during the war and upon petition of Nemesia Baltazar, the Court of First Instance of Negros Occidental
ordered the reconstitution thereof.
 Pursuant thereto, OCT 14-R (1839) was issued on 18 January 1946 in the name of Pacifico Casamayor. On that
same day, TCT 57-N was issued in the name of Nemesia Baltazar but after the cancellation of OCT 14-R (1839).
 On 15 August 1951, Nemesia Baltazar, sold said property to Lopez Sugar Central Mill Co., and the latter did not
present the documents for registration until 17 December 1964 to the Office of the Registry of Deeds. Said office
refused registration upon its discovery that the same property was covered by another certificate of title, TCT 38985,
in the name of Federico Serfino.
 On 19 November 1964, the spouses Serfinos mortgaged the land to the Philippine National Bank (PNB) to secure a
loan in the amount of P5,000.00; which was inscribed in TCT No. 38985.
 The Lopez Sugar Central instituted an action to recover said land; and the lower court rendered a decision ordering
the cancellation of TCT No. 38985; issuance of a new TCT in the name of plaintiff; and the payment of the plaintiff
PNB the loan of spouses Serfinos secured by said land. Both parties appealed from this decision of the trial court.
 Ruling on the assignment of errors, the appellate court affirmed the judgment of the trial court with modification in its
decision setting aside the decision of the trial court declaring plaintiff liable to PNB for payment, however, ordering the
plaintiff to reimburse the Serfino spouses of the sum P1,839.49, representing the unpaid taxes and penalties paid by
the latter when they repurchased the property. Hence, the appeal by the spouses Serfino and PNB to the
Supreme Court.
Issue: Whether the auction sale of the disputed property was null and void.

Held: The assailed decision of the appellate court declares that 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 tax payers, but also to allay any possible suspicion of collusion
between the buyer and the public officials called upon to enforce such laws. 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. In
the present case, Lopez Sugar Central was not entirely negligent in its payment of land taxes. The record shows that taxes
were paid for the years 1950 to 1953 and a receipt therefor was obtained in its name. The sale therefore by the Province of
Negros Occidental of the land in dispute to the spouses Serfinos was void since the Province of Negros Occidental was not
the real owner of the property thus sold. In turn, the spouses Serfinos title which has been derived from that of the Province of
Negros Occidental is likewise void. However, the fact that the public auction sale of the disputed property was not valid cannot
in any way be attributed to the mortgagee’s fault. The inability of the Register of Deeds to notify the actual owner or Lopez
Sugar Central of the scheduled public auction sale was partly due to the failure of Lopez Sugar Central to declare the land in
its name for a number of years and to pay the complete taxes thereon. PNB is therefore entitled to the payment of the
mortgage loan as ruled by the trial court and exempted from the payment of costs.
The Supreme Court affirmed the assailed decision, with modification that PNB mortgage credit must be paid by
Lopez Sugar Central.
Disposition :

WHEREFORE, premises considered, with the slight modification that the PNB mortgage credit must be paid by Lopez Sugar
Central, the assailed decision is hereby AFFIRMED.

Principle :

Strict adherence to the statutes governing tax sales is imperative not only for the protection of the tax payers, but also to allay
any possible suspicion of collusion between the buyer and the public officials called upon to enforce such laws.

A purchaser of real estate at the tax sale obtains only such title as that held by the taxpayer, the principle of caveat
emptor applies. Where land is sold for delinquency taxes under the provisions of the Provincial Assessment Law, rights of
registered but undeclared owners of the land are not affected by the proceedings and the sale conveys only such interest as
the person who has declared the property for taxation has therein.

Caveat Emptor - Latin for "let the buyer beware." A doctrine that often places on buyers the burden to reasonably examine
property before purchase and take responsibility for its condition. Especially applicable to items that are not covered under a
strict warranty.