In Corporate Strategies Development Corp. v. Agojo, the Supreme Court ruled that tax delinquency sales must adhere strictly to the requirements of the Local Government Code (LGC) to protect property owners’ due process rights. The Court emphasized that there is no presumption of regularity in administrative actions that deprive a taxpayer of property through a tax sale. This decision reinforces the importance of proper notice and procedure in tax sales, safeguarding individuals from potentially unfair property loss.

Can a Tax Sale Be Invalidated Due to Lack of Notice?

Corporate Strategies Development Corporation (CSDC) owned a property in Makati City but failed to pay real property taxes from 1994 to 2006, leading to a tax delinquency. The City Treasurer of Makati issued a warrant of levy, and the property was sold at public auction to Norman A. Agojo, the highest bidder. After the one-year redemption period, Agojo petitioned the Regional Trial Court (RTC) for the issuance of a new certificate of title in his name. CSDC opposed the petition, claiming they did not receive notice of the tax delinquency or the warrant of levy, and that the auction sale violated procedural requirements under the LGC. The RTC initially sided with CSDC, declaring the auction sale invalid, but the Court of Appeals (CA) reversed this decision, upholding the sale based on the presumption of regularity in the performance of official duties. The Supreme Court then took up the case to resolve whether the tax sale was valid despite the alleged lack of notice and procedural lapses.

The Supreme Court reversed the CA’s decision, emphasizing that tax delinquency sales are in derogation of property rights and due process. As such, there is no presumption of regularity in administrative actions that result in depriving a taxpayer of their property through a tax sale. Instead, the burden of proving compliance with all legal requirements for a valid tax sale lies with the buyer, in this case, Agojo. The Court cited the landmark case of Valencia v. Jimenez and Fuster, which established that due process in tax proceedings must be established by proof, and the purchaser of a tax title bears the burden of showing the regularity of all proceedings leading up to the sale.

The Court then examined whether Agojo had fulfilled his burden of proving compliance with the LGC’s requirements for a valid tax delinquency sale. Section 254 of the LGC requires that a notice of delinquency be posted at the main hall and in a publicly accessible and conspicuous place in each barangay of the local government unit concerned. It must also be published once a week for two consecutive weeks in a newspaper of general circulation in the province, city, or municipality. Furthermore, Section 258 of the LGC mandates that the warrant of levy be mailed to or served upon the delinquent owner, or if they cannot be located, the administrator or occupant of the property. Written notice of the levy with the attached warrant must also be mailed to or served upon the assessor and the Registrar of Deeds, who shall annotate the levy on the tax declaration and certificate of title of the property.

The Supreme Court found that Agojo failed to demonstrate compliance with these requirements. There was no evidence that CSDC ever received the notice of levy, nor was there proof of service on the occupant of the property. Actual notice to the delinquent taxpayer is essential, and the lack of such notice renders the sale null and void, even if there was proper advertisement or publication. This is because administrative proceedings for the sale of private lands for non-payment of taxes are considered in personam. Moreover, there was no proof that the notice of tax delinquency was posted at the Makati City Hall and in Barangay Dasmariñas, where the property is located, or that the required advertisements were properly effected.

In light of these deficiencies, the Supreme Court concluded that there was reason to doubt the validity of the tax delinquency sale. Agojo failed to prove that he derived his right over the property from a valid proceeding under the LGC. The Court distinguished this case from Bank of the Philippines Islands v. Evangeline L. Puzon, where the presumption of regularity was applied because there was additional evidence showing compliance with the requirements of a valid foreclosure sale. In contrast, Agojo relied solely on the presumption of regularity without providing sufficient evidence of compliance with the LGC’s requirements.

The Court emphasized that the requirements for a tax delinquency sale under the LGC are mandatory and must be strictly followed to protect taxpayers and prevent collusion between buyers and public officials. Notice of the sale to the delinquent landowners and the public is an essential requirement, and failure to provide such notice invalidates the sale. Holding a tax sale without the requisite notice violates the delinquent taxpayer’s right to due process. Consequently, the Supreme Court reversed the CA’s amended decision and reinstated the RTC’s decision, which dismissed the petition for the issuance of a new certificate of title.

This case serves as a crucial reminder of the importance of due process and strict compliance with legal requirements in tax delinquency sales. It clarifies that the burden of proof lies with the buyer to demonstrate that all necessary steps were taken to ensure a fair and transparent process. This decision protects property owners from potential abuses and underscores the need for local government units to adhere to the LGC’s provisions meticulously.

FAQs

What was the key issue in this case?	The key issue was whether a tax delinquency sale was valid despite the lack of proper notice to the property owner and other procedural lapses, as required by the Local Government Code (LGC). The Supreme Court examined if the presumption of regularity applied to such sales.
Who had the burden of proof in this case?	The Supreme Court clarified that the buyer at the tax sale, Norman Agojo, had the burden of proving that all legal requirements for a valid tax sale were met, rather than the property owner (CSDC) proving the sale’s invalidity.
What is the significance of ‘notice’ in tax delinquency sales?	Proper notice to the property owner is an essential requirement for a valid tax delinquency sale. The absence of notice violates the property owner’s right to due process and can render the sale null and void, even if other procedural requirements are met.
What does the Local Government Code (LGC) require for tax delinquency sales?	The LGC requires that a notice of delinquency be posted in public places and published in a newspaper of general circulation. It also requires that the warrant of levy be mailed to or served upon the delinquent owner, the assessor, and the Registrar of Deeds.
Why is there no presumption of regularity in tax delinquency sales?	The Supreme Court has consistently held that there is no presumption of regularity in administrative actions that result in depriving a taxpayer of their property through a tax sale. This is because such sales are in derogation of property rights and due process.
How does this case affect local government units?	This case underscores the need for local government units to strictly adhere to the requirements of the LGC when conducting tax delinquency sales. Failure to do so can result in the invalidation of the sale and potential legal challenges.
Can inadequate price be a factor in invalidating a tax sale?	While the Supreme Court did not delve deeply into the issue of inadequacy of price, the fact that the bid price was only five percent of the property’s zonal valuation was mentioned as a point of concern raised by the petitioners.
What was the final outcome of the case?	The Supreme Court reversed the Court of Appeals’ decision and reinstated the Regional Trial Court’s decision, which dismissed the petition for the issuance of a new certificate of title, effectively invalidating the tax delinquency sale.

In conclusion, this decision reinforces the principle that tax delinquency sales must comply strictly with the requirements of the Local Government Code to protect the due process rights of property owners. It serves as a reminder to local government units to ensure proper notice and procedure in all tax sale proceedings.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: CORPORATE STRATEGIES DEVELOPMENT CORP. VS. NORMAN A. AGOJO, G.R. No. 208740, November 19, 2014