G.R. No. L-11262 - Castillo vs. Pajo

Megaworld Corporation was the registered owner of parking slots evidenced by Condominium Certificates of Title (CCT) Nos. 593823 (Two Lafayette property) and 64023 (Manhattan property) in Makati City.
Due to non-payment of real property taxes from 2000 to 2008, the City Government of Makati issued a Warrant of Levy over these properties.

On December 20, 2005, the properties were sold at a public auction conducted by the City Government of Makati.
Jerome K. Solco emerged as the highest bidder, bidding P33,080.03 for the Two Lafayette property and P32,356.83 for the Manhattan property; subsequent certificates of sale were issued to him on the same day.
With no redemption by Megaworld, a Final Deed of Conveyance was executed by the local treasurer on February 22, 2007.

Solco initiated a Petition before the RTC of Makati (LRC Case No. M-5031), seeking the issuance of four new Condominium Certificates of Title and the nullification of the existing CCTs still held by Megaworld.
Megaworld filed a Comment/Opposition with compulsory counterclaims, asserting that earlier contracts to buy and sell – one with Abdullah D. Dimaporo (for a unit in Two Lafayette property) and another with Jose V. Delos Santos (for a unit in Manhattan property) – had conveyed ownership along with associated tax obligations.
Consequently, from the year 2000 onward, Megaworld did not pay the real property taxes, arguing that the buyers assumed such responsibilities upon delivery.

Megaworld alleged that the auction process was predicated on fatal anomalies, including:

Lack of proper notification of the warrant of levy to Megaworld, Dimaporo, and Delos Santos.
Failure to post the Notice of Delinquency in conspicuous places in each barangay as required by law.
Incomplete or deficient published notices missing essential recitals mandated under Section 254 of RA 7160.
Improper service of the warrants of levy to the Register of Deeds and City Assessor, as evidenced by delayed annotations on both the CCTs and tax declarations.
The levying officer’s failure to verify receipt by Megaworld and to file a written report on service to the City Council.
Advertisement for the public sale conducted without due notice to Megaworld or proper service to the concerned government offices.
Auctioned amounts were suspiciously low given the prime characteristics of the properties.
Solco’s position as the lone bidder raised questions of collusion or irregularity.
Absence of official stenographic records or minutes of the auction proceedings.
Evidence showing that the warrants of levy and the annotations on the title occurred on January 5, 2006, after the auction sale had been held on December 20, 2005.

Delos Santos instituted a separate RTC action involving Solco, Megaworld, and relevant city officials; this action was eventually settled via a compromise agreement.
In April 2010, Solco moved to dismiss the case regarding the Manhattan property, leading the dispute to focus solely on the Two Lafayette property.
The RTC ruled in favor of Solco on October 2, 2012, ordering Megaworld to surrender its duplicate CCT and directing the issuance of a new title in Solco’s name.
Megaworld’s subsequent Motion for Reconsideration was denied on February 19, 2013.
On appeal, the Court of Appeals (CA) reversed the RTC ruling by finding substantial irregularities in the tax sale proceedings, specifically noting non-compliance with RA 7160 provisions (Sections 254, 258, and 260).
The CA nullified the entire auction proceedings, including the levy, the Certificate of Sale, and the Final Deed of Conveyance, and ordered the cancellation of annotations on the affected CCT.
Solco’s Motion for Reconsideration before the CA was denied on July 23, 2014, prompting the present petition.

Whether a tax sale can be challenged and its validity scrutinized in a land registration case.
Whether the land registration court, given the consolidation of title issues under PD No. 1529, has the authority to adjudicate matters that involve the validity of a tax sale.

Whether the tax sale involved in the case was validly conducted in compliance with the strict statutory requirements under RA 7160.
Whether the alleged deficiencies in the levy notice, publication, service, and timing of annotations vitiate the auction process.

Whether Solco, having relied on the presumption of good faith and regularity of public official acts, can be considered a good faith purchaser despite evidence of irregularities.
Whether the absence of owing due diligence by Solco affects his status as a bona fide purchaser in the context of a nullified tax sale.