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[ GR No. L-12758, Nov 28, 1959 ]



106 Phil. 619

[ G.R. No. L-12758, November 28, 1959 ]




This  is an appeal from an order of the Court of  First Instance of  Manila directing the  cancellation of the  annotation of a deed of sale on the back of Transfer Certificate of Title  No.  38606.

On February 5,  1957, Francisco College,  Inc. filed a petition before the court a quo alleging that Jose J.  Francisco was the owner of a parcel  of land containing  an area of 260  sq. m., more or less,  with the building and improvements thereon, situated in the City of Manila, and covered by Transfer Certificate of Title No. 9865; that Francisco  mortgaged the property to the Rehabilitation Finance Corporation and because he failed to comply with the conditions  of the mortgage, the  same was foreclosed and the property sold at  public auction on April 12, 1950 to the Rehabilitation Finance Corporation as the highest bidder; that on July 13, 1951, the Register of Deeds  issued to said corporation Transfer Certificate of Title No. 26609 free from any  lien or encumbrance; that on February 17, 1955,  petitioner bought the property from the Rehabilitation Finance Corporation for the sum of P62,000.00 and the Register of Deeds issued in its favor Transfer Certificate of  Title No. 38606 also free from any lien  or encumbrance; that on account of an alleged tax sale made by the city  treasurer  on  August 4,  1949 in  favor  of Luciano L. Tapia and Tomas P. Panganiban  of the same property allegedly  owned by Jose  Urrutia Francisco for the latter's failure  to pay the taxes thereon for the years 1945, 1946 and 1947, the Register  of  Deeds of Manila demanded  from petitioner its  owner's duplicate transfer certificate  of title and inscribed thereon the alleged sale of  the  property made by  the  said treasurer; and on February  5, 1957, petitioner filed  the  instant  petition praying for the cancellation  of  the annotation  above referred to.

On March 4, 1957, Luciano L. Tapia and Tomas  P. Panganiban filed  a written opposition alleging that the property in question belonged to Jose Urrutia Francisco; that due to his failure to pay taxes for the year 1945, 1946 and 1947, the property was sold at public auction on February 14, 1948 by the City Treasurer of Manila, the same having been adjudicated to oppositors for the sum of P276.00, and that upon failure of Francisco to redeem the property within one year, the city treasurer executed on August 4, 1949 a final deed  of sale in favor  of oppositors, which sale has become final and irrevocable.

On March 7, 1957, the court, overruling the opposition, ordered the cancellation of the annotation in question on the back of Transfer Certificate of Title No, 38006.  Oppositors filed a  motion for reconsideration, and  when the same was  denied, they interposed the present  appeal.  The first point raised by oppositors is  that  the  trial court erred in not dismissing the petition for the reason that their opposition raises a controversial question which cannot be acted upon by it in its capacity as land registration court  under Section 112 of  the Land Registration Act in view of its special and limited  jurisdiction.

The contention  is untenable for the simple reason that the issue involved  herein  is not one-of ownership but merely; of  priority of  the  sales made covering the  same property which is covered  by a Torrens Title.  The purpose of the petition is merely to ask for the  cancellation of the annotation made on the back of  petitioner's certificate  of title of the deed of sale made in  favor of oppositors by the City Treasurer of  Manila it beings alleged that  petitioner bought said  property  from its original owner in good faith and for value  free from any lien or encumbrance of any nature.  And this can be determined by a cursory examination of the pleadings in relation to the law and jurisprudence on the matter.  The trial court made a correct  evaluation of the  equities, of the parties when on  this matter it made the following pertinent consideration:
"It  appearing indisputably from the  pleadings of both  parties that the registration of the final deed of tax sale in question in the Office of the  Register of Deeds was  subsequent to the issuance of Transfer Certificate of.  Title No. 38606 in favor of the petitioner; this Court can find no valid reason to subject or subordinate the title, right and interests  bf the petitioner over said property, to such final deed of  tax sale.  Under the  provisions of the Land Registration Act, he who is first in time is  preferred in Sight. (Martinez de Gomez vs. Hugo, 48 Phil. 118.)  Moreover  Section 39 of said Act, provides, among other things, that every subsequent purchaser of registered land who takes certificate of title for value in good faith shall hold the same free of all encumbrances except those noted on said title.  In the  instant ease, when the title of the petitioner was issued, it was free of the annotation of the final deed of tax  sale in favor of the  oppositors.  Unless, therefore, the oppositors can positively prove otherwise in an independent action the herein petitioner is legally presumed to have  acquired the property described in Transfer Certificate of Title No. 38606 for value in good faith and by law  is entitled to hold tine  same free from such annotation of the final deed of sale."
It is true that  the taxes for which  the property was sold by the City Treasurer of Manila were for the years 1945,  1946 and 1947 and the property was sold at public auction on February 14, 1948 and therefore are of a nature that create  a statutory lien which need not be registered to be binding upon third persons, but it is likewise true that oppositors did not register their deed of sale until June 16, 1955, or months after Transfer Certificate of Title No. 38606 was issued in favor of petitioner.  We should bear in mind that there is a difference between a statutory lien established by law to protect a tax claim and the right of the purchaser of property sold to  satisfy the  Iten insofar as its effect and validity on a subsequent purchaser is concerned, for  while  a statutory lien need not be registered, the sate of registered-land to foreclose a tax lien need be registered to be considered preferred.  This is the issue squarely decided by this Court in the  case of Metropolitan Water District vs. Reyes, 74 Phil., 142, from  which we quote:
"Is it necessary to register a tax sale of real property covered by a Torrens Title to affect said property insofar as third persons are  concerned?  Respondent  contends  that since he bought the property at the foreclosure of a tax lien thereon and since by virtue of section 39 of Act  No. 496 a tax lien does not have to be registered, it was not  necessary for him to  register his certificate of sale in order to affect third persons.  Such contention fails to distinguish the lien  itself from  the foreclosure thereof.  It is not necessary to  register a tax lien because it is automatically registered,  once,  the tax  accrues,  by virtue of section 89, which expressly  provides that every person receiving a certificate of title in pursuance of a decree of registration and every subsequent purchaser of registered land who takes a certificate of title for value in good faith shall hold the same free  of all incumhrance except those noted on said certificate and any of the following incumbrances which may be subsisting:  '*  *  * taxes  within two years after the same  became due and payable *  *  *.'  But there is no provision of  law to the effect  that  the sale of  registered land to foreclose a tax lien need not be registered.  On the contrary, section 77 of Act No. 496 specifically provides (insofar as it is  pertinent here) that whenever registered land is sold for taxes or for any assessment, any officer's return, or any other instrument made in the course of proceedings to enforce such liens shall be filed and registered in the registration book, and a memorandum made upon the proper certificate, in each case, as an adverse claim or incumbrance.  Section 50 also expressly provides that the act  of registration shall  be the  operative act  to convey  and  affect  the land."
It appearing that  petitioner bought and registered the property in question from its original  owner free from any lien  or encumbrance, and oppositors registered their deed of  sale concerning  the same  properly  subsequent thereto, even if the property was sold for taxes within two years after the same become due and payable, it follows that  the deed of sale  of  oppositors cannot be deemed preferred over that of petitioner, and therefore the trial court did  not err  in ordering the cancellation of the annotation of said sale on the back of Transfer Certificate of Title No. 38606.  As this Court said in the Metropolitan Water District case: "It is clear therefore that the tax sale made by the City Treasurer to the respondent  on May  4, 1937 did not bind the land and  did not affect the petitioner until it was registered on  November 8, 1988" (Italics supplied.)

Wherefore, the order appealed from is affirmed, without pronouncement as to costs.

Paras, C. J., Bengzon, Padilla,  Labrador, Endencia, Barrera, and Gutierrez  David, JJ., concur.