National Housing Corp. v.

Juco 134 SCRA 172 (1985)

Facts: Juco was an employee of the NHA. He filed a complaint for illegal
dismissal w/ MOLE but his case was dismissed by the labor arbiter on the ground
that the NHA is a govt-owned corp. and jurisdiction over its employees is vested
in the CSC. On appeal, the NLRC reversed the decision and remanded the case
to the labor arbiter for further proceedings. NHA in turn appealed to the SC.
Issue: Are employees of the NHC, a GOCC without original charter, covered by
the Labor Code or by laws and regulations governing the civil service.
Held: Sec. 11, Art XII-B of the Constitution specifically provides: "The Civil
Service embraces every branch, agency, subdivision and instrumentality of the
Government, including every government owned and controlled corporation. The
inclusion of GOCC within the embrace of the civil service shows a deliberate
effort at the framers to plug an earlier loophole which allowed GOCC to avoid the
full consequences of the civil service system. All offices and firms of the
government are covered.
This consti provision has been implemented by statute PD 807 is unequivocal
that personnel of GOCC belong to the civil service and subject to civil service
requirements. "Every" means each one of a group, without exception. This case
refers to a GOCC. It does not cover cases involving private firms taken over by
the government in foreclosure or similar proceedings.
For purposes of coverage in the Civil Service, employees of govt- owned or
controlled corps. whether created by special law/formed as subsidiaries are
covered by the Civil Service Law, not the Labor Code, & the fact that pvt. corps.
Owned/controlled by the govt may be created by special charter does not mean
that such corps. not created by special law are not covered by the Civil Service.
The infirmity of the resp's position lies in its permitting the circumvention or
emasculation of Sec. 1, Art. XII-B [now Art IX, B, Sec. 2 (1)] of the Consti. It
would be possible for a regular ministry of govt to create a host of subsidiary
corps. under the Corp. Code funded by a willing legislature. A govt-owned corp.
could create several subsidiary corps. These subsidiary corps. would enjoy the
best of two worlds. Their officials and employees would be privileged individuals,
free from the strict accountability required by the Civil Service Dec. & the
regulations of the COA. Their incomes would not be subject to the competitive
restraint in the open market nor to the terms and conditions of civil service employment.

Conceivably, all govt-owned or controlled corps. could be created, no longer by

special charters, but through incorp. under the general law. The Constitutional
amendment including such corps. in the embrace of the civil service would cease
to have application. Certainly, such a situation cannot be allowed.
TanvsBantigue
A232squaremeterlotsituatedatLaLoma,QC.Saidpropertywasregisteredinthe
nameofGorgoniaBanteguiunderTCTNo.47163oftheRegisterofDeedsofQC,issued
onMay6,1959,andlaterreconstitutedunderTCTNo.28458.
Banteguiacquiredthepropertysometimein1954&rentedittospousesCaedo.In1970,
sheleftfortheUSA.ShereturnedtothePHinJan1988&executedherspecialpowerof
attorney,makingGuadalupeB.Bautistaherrepresentative,afterw/c,shewentbacktotheUS.

Hertaxesonthesaidpropertywerepaid,butonlyuntil1977.Therealpropertytaxes
fromtheyear1978to1983amountingtoP3,034.99,inclusiveofpenalties,werenotpaid.
ForfailureofBanteguitopaysaidtaxes,thecitytreasurerofQCsoldsaidpropertyat
publicauctionheldonNov21,1984,tothespousesCapistrano,forthesumofP10000.
TheCertificateofSaleofDelinquentPropertywassubsequentlyissuedintheirfavoronNov26,1984.

Sincethepropertywasnotredeemedw/inthe1yrredemptionperiod,titletosaid
propertywasconsolidatedtotheCapistranos&TCTNo.361851wasissuedintheir
namesonJune4,1987.TheCapistranos,however,didnottakepossessionoftheland.
Theyalsodidnotpayrealpropertytaxesthereon.
Thepropertywaslatersoldin1988bytheCapistranostospousesPereyraforP60,000.
TheirTCTwascancelled&anewTCTNo.2059wasissuedin1989inthenameofthe
Pereyras,whoalsodidnottakepossessionofthepropertyinquestion.Buttheymortgagedthe
sametotheRuralBankofImus,Cavite,whichwasannotatedonthetitleoftheproperty.

ThesetransferswereunknowntoBanteguiandtheCaedos,despitethefactthatEvelyn
PereyraisthedaughteroftheCaedos.Allthistime,theactualoccupants,theCaedos,
consideredthemselvesastenantsofBantegui.
Banteguiappliedforadministrativereconstitutionofhertitle,asitwaslostinafire.
ReconstitutedTitlewassubsequentlyissuedinhername.Shepaidtherealtytaxesonthe
subjectpropertyfortheyears19871989.ThecitytreasurerofQCrefusedtoaccepther
paymentfortheyear1990.
OnMay3,1990,saidpropertywasagainsoldbythePereyrastothespousesRamon&
RositaTanforP350,000,withthelatterpayingtheamountofP300,000totheRural
BankofImus,Caviteforthereleaseofthemortgageperagreementbytheparties.They
paidtheoverduetaxes&otherexpensesincurredbythePereyraspertainingtosaid
mortgage.
TheTansalsodidnottakeimmediatepossessionofthepropertyorinformCaedosof
theirtitletotheland.Towardsthelatterpartof1990,theTansinformedtheCaedosof
theirownershipovertheproperty&demandedthattheCaedosvacatetheproperty.They
subsequentlyfiledanactionforejectmentagainsttheCaedosbeforetheMTCofQCon
Jan18,1991.OnOct31,1991,theCourtruledinfavoroftheTans.TheCaedosthen
interposedanappealonFeb2,1992,w/cwasremandedtothesameCourtforfurther
proceedings,&forfailureoftheCaedostoappearduringthehearingofthecase,they
weredeclaredindefault&weresubsequentlyejectedfromthepropertyonFeb20,1994,
whenthehousethattheyerectedthereonwasdemolished.
OnFeb11,1992,Bantegui,thruhersisterGuadalupeBautista,&joinedbythespouses
Caedo,filedaComplaintforAnnulmentofSale,Injunction&Damagesw/theRTCofQC.
The trial courts Decision is in favor of respondents, petitioners appealed to the CA.

RulingoftheCourtofAppeals

Indeclaringthatpetitionerswerenotpurchasersingoodfaith&hadnobetterrighttothe
subjectproperty,theappellatecourtgavetheffreasons.First,theauctionsalewastainted
withirregularities:nonoticesofdelinquencyandofsaleweresenttotheowner.
2nd,theownercontinuedtopayrealtytaxesontheproperty,evenafterthedateofthesale.She
wouldnothavedonesohadshebeenawarethatithadalreadybeenauctionedoff.
3rd,thesellingpricewasgrosslyinadequate&wouldrenderthesaleitselfvoid.
Fourth,thepurchasersfailedtotakepossessionoftheproperty,paytherealtaxes,&informthe
lesseesofthepurchase.Asaresult,thelattercontinuedtopayrenttotheowner.

Asstatedearlier,theCAaffirmedthetrialcourtsDecision.
Hence,thisPetition.
TheIssue:Whethertheauctionsalewasvalid.
TheCourtsRuling
ThetaxsaledidnotconformtotherequirementsprescribedunderPDNo.464(Real
PropertyTaxCode).
1st,nonoticeofdelinquencyorofsalewasgiventoeitherBantegui/toherrepresentative.
SEC65.Noticeofdelinquencyinthepaymentoftherealpropertytax.
SEC73.Advertisementofsaleofrealpropertyatpublicauction.

Theauctionsaleofrealpropertyforthecollectionofdelinquenttaxesisinpersonam,not
inrem.Althoughsufficientinproceedingsinremlikelandregistration,merenoticeby
publicationwillnotsatisfytherequirementsofproceedingsinpersonam.Publicationof
thenoticeofdelinquencywillnotsuffice,consideringthattheprocedureintaxsalesisin
personam.Itisstillincumbentuponthecitytreasurertosendthenoticedirectlytothe
taxpayertheregisteredownerofthepropertyinordertoprotectthelattersinterests.
Althoughprecededbyproperadvertisement&publication,anauctionsaleisvoidabsent
anactualnoticetoadelinquenttaxpayer.
Thesaleoflandfortaxdelinquencyisinderogationofpropertyrights&dueprocess.
Inthepresentcase,noticeseitherofdelinquency/ofsalewerenotgiventothedelinquent
taxpayer.Thosenoticesaremandatory,&failuretoissuetheminvalidatesasale.
While it is true that TCT have already been issued in the names of the subsequent
purchasers,theyshouldnonethelessbeinvalidated.Consideringthefailuretoabideby
themandatoryrequirementsofaproceedinginpersonam,nobettertitlethanthatofthe
originalownercanbeassumedbythetransferees.
Besides,theincontrovertiblenatureofacertificateoftitleappliesonlywhentheissue
involvedisthevalidityoftheoriginal&notofthetransfer.Subsequenttitlesissuedto
the prejudice of the rightful owner will produce no legal effects whatsoever. Quod
nullumest,nullumproduciteffectum.Thatwhichisanullityproducesnoeffect.
Moreover,failuretoassertownershipoverapropertyisindicativeofthedoubtfulvalidity
ofitssale.
Theimmediatepurchasersinthepresentcaseneithertookpossessionnorinformedthe
occupants(theCaedos)oftheformersallegedacquisitionoftheproperty.Thepurchasers
did not even demand rent or ask them to vacate, as a result of which the Caedos
continuedtopayrenttoBantegui.Indeed,registeredownershavetherighttoenjoythe
propertythattheyown,includingthejusutendiortherighttoreceivefromitwhateverit
produces.
2nd,onlyacopyoftheResolutionofRTCofQC,Br85,confirmingthefinalbillofsale
totheCapistranos,hasbeensubmittedbythecitytreasurertoshowthevalidityofthe
sale.
Third,Sec80ofPD464providesthatanybalanceoftheproceedsofthesaleleftafter
deductingtheamountofthetaxes&penaltiesdue&thecostsofsale,shallbereturnedto
theowner/hisrepresentative.Againcontrarytothemandateofthelaw,thebalanceofthe
proceedsfromthetaxsalewasnotevenreturnedtoBantegui/herrepresentativeafterthe
issuanceofthefinalbillofsale.Thefailuretoreturntheproceedsreinforcedtheapparent
irregularitynotonlyintheconductofthetaxsale,butalsoinitssubsequentdisposition.
Fourth,petitionerswerenotinnocentpurchasersforvalue.Despitetheirawarenessof
defectsintheirtitle,theystillfailedtoinvestigateortakethenecessaryprecaution.
A purchaser of real estate at the tax sale obtains only such title as that held bythe
taxpayer;theprincipleof caveatemptor applies.Purchaserscannotclosetheireyesto
factsthatshouldhaveputanyreasonablepersonuponguard,&thenclaimthattheyacted
ingoodfaithunderthebeliefthattherewasnodefectinthetitle.Ifpetitionersdonot
investigate/takeprecautiondespiteknowingcertainfacts,theycannotbeconsideredin
goodfaith
In the present case, the exercise of the right of possession over the property was
attemptedbynoneofthepurchasers,exceptpetitioners.Informationaboutthepurchase
wasnotatallrelayedbyPereyratotheCaedoswhowereherveryownparents.Whenthe
landsoldisinthepossessionofapersonotherthanthevendor,thepurchaserisrequired
togobeyondthecertificateoftitleandmakeinquiriesconcerningtherightsoftheactual
possessor.

Furthermore,asidefromBantegui,thepurchaserspaidrealpropertytaxes,asrequiredof
everyregisteredpropertyowner.Thetaxonrealpropertyforanyyearshallattachto,
becomedueandpayablefrom,&bethepersonalliabilityofitsowneratthebeginningof
theyear.ThecitygovernmentallowedBanteguitocontinuepayingrealpropertytaxes
evenaftertheredemptionperiod&theconfirmationofthefinalbillofsale.Moreover,
therecordsmentionnopaymentofrealpropertytaxesfrom1984to1986.

Finally,Banteguiremainedincontinuouspossessionoftheownersduplicatecopyofthe
CertificateofTitle.Shewasevenallowedtoundertakeanadministrativereconstitutionof
herfilecopyafteritsdestructionbyfire.Accordingly,theRegisterofDeedsissueda

reconstitutedtitleinhername,inwhichthepropertyhadbeenregisteredasearlyas1959.
Forreasonsknownonlytotheallegedpurchasers,noattemptwasevenmadetohavethe
titleimmediatelycancelled.Itisbasicthatregistrationdoesnotvesttitle,whichisamere
evidenceoftitletoaproperty.

Moreimportant,thereconstitutedtitlewasalloweddespitethefactthatseveralTCTshad
alreadybeenpreviouslyissuedinfavorofpetitionerspredecessorsininterest.Although

reconstitution alone neither confirms nor adjudicates ownership, considering the

surroundingcircumstancesofthiscase,theCourtherebyconfirmsBanteguisrightful
ownershipoftheproperty.
WHEREFORE, the Petition is hereby DENIED

, and the assailed Decision and

ResolutionareAFFIRMED

.Costsagainstpetitioners.