Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-22136 December 17, 1924
RAMON LOPE, petitioner-appellee,
vs.
T!E D"RECTOR O# LANDS, respondent-appellant.
Attorney-General Villa-Real for appellant.
Antonio Gonzalez for appellee.

$O!NSON, J.:
The principal question presented b this appeal is !
"##$E% &hether the sale of land in the Cit of Manila, under the procedure adopted for the recover
of delinquent ta'es, has the effect of cuttin( off all prior liens upon the propert sold.
)ACT#%
The &hole stor of this action *a be told in a fe& &ords. The Cit of Manila, b a decision of the
court a quo, in the collection of a land ta' of P+,.+-, b the *ethod per*itted b the Ad*inistrative
Code, deprived the .irector of the Bureau of /ands, a bureau of the "nsular 0overn*ent, of a prior
lien, in the su* of P1,12,, in the for* of a *ort(a(e dul re(istered, &hich *ort(a(e lien e'isted
before the ta' lien in question.
3n 4anuar 15, 1256, Ra*on /ope7 filed a petition in the Court of )irst "nstance of the Cit of
Manila, containin(, a*on( others, the follo&in( alle(ations%
8a9 Nove*ber :, 1255, one of t&o parcels of land belon(in( to Rufo de 4esus, situated in Pandacan,
Cit of Manila, &as sold b the cit assessor and collector at public auction for the su* of P+,.+- for
the pa*ent of ta'es due thereon, correspondin( to the ears 125,, 1251, and 1255, to the
petitioner Ra*on /ope7, as the hi(hest bidder.
8b9 3&ner, Rufo de 4esus failed to redee* said one parcel of land &ithin one ear fro* the date of
the sale, and the sale beca*e absolute and the cit assessor and collector on the ;th da of
Nove*ber, 125+, e'ecuted in favor of Ra*on /ope7, as purchaser, a deed convein( to hi* the title
thereto, free fro* all liens of an <ind &hatsoever.
8c9 Ra*on /ope7 presented said deed to the re(istrar of deeds of the Cit of Manila, requestin( that
the certificate of title No. 56-;, then in the na*e of Rufo de 4esus, be cancelled insofar as it
recovered the said second parcel, and that a ne& title be issued therefore in his na*e, free fro* all
liens and incu*brances of an <ind &hatsoever, in accordance &ith section 5-,, of the
Ad*inistrative Code.
8d9 Re(istrar of deeds denied said request, first, because the petitioner did not present the duplicate
certificate of said title No. 56-;= second, because on said title there appeared a notation of a
*ort(a(e e'ecuted b said Rufo de 4esus in favor of the 0overn*ent of the Philippine "slands,
represented b the .irector of /ands, to secure a debt of P1,12,, &hich still re*ained unpaid=
and, third, because in the absence of an order of the Court of )irst "nstance to that effect, he could
not issue a ne& certificate of title for said lot, free fro* the encu*brance of said *ort(a(e.
8e9 Rufo de 4esus de*anded for the deliver of said certificate of title and that he had *ade no
response to said request= that the petitioner did not <no& &hether such certificate of title &as in the
possession of Rufo de 4esus or of the .irector of /ands, as the representative of the 0overn*ent of
the Philippine "slands, the o&ner and holder of said *ort(a(e= and that the .irector of /ands or the
said Rufo de 4esus be required to deliver to the re(istrar of deeds said certificate of title No. 56-; for
cancellation.
8f9 "t is contended b the petitioner that in accordance &ith the provisions of section 5-,, of the
Ad*inistrative Code, he &as entitled to a ne& certificate of title coverin( said parcel of land sold for
ta'es, and that said ne& certificate should be issued free fro* all incu*brances &hatsoever= that the
0overn*ent of the Philippine "slands or its representative, the .irector of /ands, could not clai* an
lien over said parcel of land so sold for ta'es under the provisions of section 562: of the
Ad*inistrative Code.
$pon the fore(oin( facts, the petitioner praed% )irst, that an order be issued directin( the re(istrar
of deeds of the Cit of Manila to cancel said certificate of title No. 56-;, insofar as it affected the
second parcel= second, that a ne& certificate of title be issued in the na*e of Ra*on /ope7, free
fro* all liens and encu*brances of an <ind &hatsoever= and third, that either the .irector of /ands
or Rufo de 4esus, as the case *a be, be required to deliver the duplicate certificate of title No. 56-;
to the re(istrar of deeds for cancellation.
This action &as co**enced in the Court of )irst "nstance of the Cit of Manila on the 15th da of
4anuar, 1256. The onl proof of service of the co**ence*ent of said action is, that a cop of the
petition &as left at the residence of Rufo de 4esus in Pandacan, in the hands of a person residin( at
his residence, &hich person refused to si(n a receipt for said petition. The record contains no proof
that the 0overn*ent of the Philippine "slands or the .irector of /ands &as served &ith a cop of the
petition or had an notice of its presentation. Not&ithstandin( that fact, ho&ever a hearin( &as held
on said petition on the 1:th da of 4anuar, 1256, at ; o>cloc< a.*. The record does sho&, ho&ever,
that at said hearin( there appeared the attorne for the petitioner, and Mr. 4avier 0on7ale7, attorne
for the .irector of /ands. No other persons appeared. The .irector of /ands, accordin( to a
*e*orandu* b the court a quo , conceded that a ne& certificate of title should be issued in favor of
the petitioner, but that there should be noted thereon the lien held b the 0overn*ent of the
Philippine "slands for the su* of P1,12,, invo<in(, in aid of his petition, article 1: of the Mort(a(e
/a& and section +2 and -1 of Act No. 62?.
$pon the issue thus presented, the court a quo on the 1;th da of 4anuar, 1256, issued an order
directin( the .irector of /ands to deliver to the re(istrar of deeds of the Cit of Manila &ithin five
das the duplicate certificate of title No. 56-;, and ordered the said re(istrar of deeds to cancel the
sa*e and to issue a ne& certificate of title to said parcel of land in favor of Ra*on /ope7, &ithout
nothin( thereon the e'istence of said *ort(a(e in favor of the .irector of /ands, and to issue a ne&
certificate to the other parcel of land to Rufo de 4esus and to note on said ne& certificate the
e'istence of said *ort(a(e. There is nothin( of record sho&in( the separate value of said t&o lots,
and for the purposes of this discussion it is not necessar.
3n the second da of )ebruar, 1256, the Attorne-0eneral appeared on behalf of the .irector of
/ands and praed for a reconsideration of the decision of the 1;th da of 4anuar, 1256. #aid
*otion &as based upon the (round that the petitioner, Ra*on /ope7, &as not entitled to have a ne&
certificate of title issued to hi*, free fro* all liens &hatsoever upon said second parcel of land
*ort(a(ed b Rufo de 4esus to the .irector of /ands, for the reason that he had acquired said
propert at public sale and that he could b no *eans have a better title than the o&ner of the land
at the ti*e of said sale. The Attorne-0eneral, in support of his *otion, relied upon the decision of
this court in the case of Government of the Philippine Islands vs. Adriano 861 Phil., 1159 and
sections :: and ;, of Act No. ;5. The Attorne-0eneral praed that the order of 4anuar 1;th be
*odified to the effect that the ne& title to be issued to Ra*on /ope7 for said parcel No. 5 should
bear a notation of the e'istence of said *ort(a(e in favor of the 0overn*ent of the Philippine
"slands or the .irector of /ands.
After a consideration of the *otion of the Attorne-0eneral and the opposition thereto, the
@onorable C.A. "*perial, on the ?th da of )ebruar, 1256, denied the sa*e. The Attorne-0eneral,
after dul e'ceptin( to the Aud(*ent and order denin( the *otion for rehearin(, appealed and *ade
several assi(n*ents of error.
The A%%or&e'-Ge&er(), *& +*, -*r,% (,,*.&me&% o- error, co&%e&/, that Bthe lo&er court erred in
not holdin( that the ta' proceedin( under &hich Ra*on /ope7 clai*s an indefeasible title is a
proceedin( in personam and not in rem .B
An e'a*ination of practicall all of the authorities has been *ade upon the question &hether or not
the proceedin( for the collection of ta'es upon real estate is an action in personam or an action in
rem. The result of that e'a*ination is, that the authorities are about equall divided. #o*e hold that
the proceedin( is an action in personam &hile others hold that it is an action in rem. "n this
Aurisdiction, b virtue of the procedure adopted in relation &ith the re*ed (iven, &e have held in the
case of Government of the Philippine Islands vs. Adriano,supra, that the proceedin(s here are in
personam and not in rem. 8Calencia vs. 4i*ene7 and )uster, 11 Phil., 625.9lawphi .net
An (c%*o& in rem *a be defined as an action or proceedin( instituted a(ainst a thin( and not
a(ainst a particular person. 8In re #tore>s Dill, 5, """. App., 1;+, 12,.9
Chief 4ustice Marshall, in discussin( an action in rem, said% B" have al&as understood that &here a
process is to be served on the thin( itself, b the service of a process and *a<in( procla*ation, the
court is authori7ed to decide upon it 8the thin(9 &ithout notice to an individual defendant, to &hich
all the &orld are parties. The clai*ant is a part, &hether he spea<s or is silent, &hether he asserts
his clai* or abandons it.B .ecisions in such cases are bindin( and conclusive, not onl on the
parties liti(atin(, but on all others. Ever one &ho can possibl be affected b the decision has a
ri(ht to appear and assert his o&n ri(hts b beco*in( an actual part to the proceedin(.
8Cunnin(ha* vs. #han<lin, ?, Cal., 11;, 15-.9
A proceedin( in rem, in a strict sense, is one ta<en strictl a(ainst propert, and has for its obAect the
disposition of the propert, &ithout reference to the title of individual clai*ants. 01% *& ( )(r.er (&/
more .e&er() ,e&,e %+e 2+r(,e 32rocee/*&. in rem3 *, (22)*e/ %o (c%*o&, be%4ee& 2(r%*e,,
4+ere %+e /*rec% ob5ec% *, %o re(c+ (&/ /*,2o,e o- 2ro2er%' o4&e/ b' %+em, or o- ,ome
*&%ere,% %+ere*&. 8Arndt vs. 0ri((s, 1+6 $.#., +1?.9
A proceedin( brou(ht to deter*ine the status of a particular thin( itself and &hich is confined to the
subAect-*atter in specie, is in rem, the Aud(*ent bein( intended to deter*ine the state or condition,
and, pro facto, to render the thin( &hat the Aud(*ent declares it to be. Process *a be served on
the thin( itself and b such service and *a<in( procla*ation, the court is authori7ed to decide upon
it &ithout notice to persons, all the &orld bein( parties. 8Cross vs. Ar*stron(, 66 3hio #t., ?1+=
Doodruff vs. Talor, 5, Ct., ?+, :+.9
A BAud(*ent in remB is an adAudication pronounced upon the state of so*e particular subAect-*atter
b a court havin( co*petent authorit for that purpose= &hile a BAud(*ent in personamB is, in for* as
&ell as in substance, bet&een persons clai*in( a particular ri(ht, and that it is so inter parties,
appears b the record itself. A BAud(*entin remB differs fro* a BAud(*ent in personamB in this, that
the latter is, in for* as &ell as substance, bet&een the parties clai*in( the ri(ht, and that it is so
inter parties, appears b the record, and it is bindin( onl upon the parties appearin( to be such b t
he record, and those clai*in( b the*. But a BAud(*ent in remB is founded upon a proceedin(
instituted not a(ainst the person as such but a(ainst or upon a particular thin( or subAect-*atter,
&hose state or condition is to be deter*ined, and a Aud(*ent is a sole*n declaration upon the
status of the thin( and it ipso facto renders it &hat it declares it to be. 8Doodruff vs. Talor, supra.9
"n a BAud(*ent in personamB &hen propert is sold thereunder at public auction, the ri(hts of the
o&ner onl are sold, &hile in a BAud(*ent in remB the res itself is sold.
An e'a*ination of the re*edies for the collection of unpaid *unicipal ta'es sho&s that different
states have adopted different *ethods. The *ethods *a be su**ari7ed as% )irst, an action to
recover personal Aud(*ent= second, an action to enforce a lien on land= third, a su**ar sale of the
propert on &hich the ta'es are in lien= and, fourth, b distraint. "n the Philippine "slands the
/e(islature has adopted practicall the third *ethod, b a su**ar sale of the propert on &hich the
ta'es have beco*e a lien b advertisin( and a sale at public auction. $nder that sste* the Cit of
Manila *a sell either personal propert or the land upon &hich the ta' e'ists. The Cit of Manila
*a use its discretion either b proceedin( a(ainst the personal propert of the ta'paer or a(ainst
the land upon &hich the ta' has been levied. The fact that the Cit of Manila has the option of
proceedin( a(ainst the real or personal propert, evidentl is the fact &hich induced this court in the
t&o decisions cited above 80overn*ent of the Philippine "slands vs. Adriano, supra= Calencia vs.
4i*ene7, and )uster, supra9, to decide that in this Aurisdiction the action to collect delinquent ta'es
upon real propert is an action in personam and not in rem.
"n Aurisdictions &here the action to recover delinquent ta'es upon land is an action in personam, the
ta' title issued thereunder is purel a derivative title and such a deed conves onl such title as &as
vested in the delinquent ta'paer. 0overn*ent of the Philippine "slands vs. Adriano, supra=
Mc.onald vs. @anna, -1 )ed. Rep., :+.9
The purchaser at a ta' sale (ets no better title under his deed than &as held b the person
assessed. "t is not disputed that the state *a decide &hat shall be liens upon propert and &hat
shall be the priorit thereof. Eet, nevertheless, a foreclosure of such liens cannot operate to destro
other liens &ithout a proceedin(, &hich &e are tau(ht to deno*inate, under the or(anic la&, as Bdue
process of la&.B
B Bdue process of la&,B as Mr. .aniel Debster said in his ar(u*ent before the #upre*e Court of
the $nited #tates in the fa*ous .art*outh Colle(e Case, is Bb the la& of the land ... a la& &hich
hears before it conde*ns= &hich proceeds upon inquir, and renders Aud(*ent onl after trial. The
re*ainin( is, that ever citi7en shall hold his life, libert, propert, and i**unities, under the
protection of the (eneral rules &hich (overn societ.B 86 Dheaton, $.#., -1;, -;1.9 B.ue process of
la&B conte*plates notice and opportunit to be heard before Aud(*ent is rendered, affectin( one>s
person or propert. B.ue process of la&B is not ever act, le(islative in for*, that is, la&. Arbitrar
po&er, enforcin( its edicts to the inAur of the persons and propert of the citi7ens, is not la&.lawphi .net
@E/.%
Dhile it is true that section 5-,, of Act No. 5:11 provides that, *& c(,e %+e %(62('er ,+()) &o%
re/eem %+e re()%' ,o)/ -or %+e 2('me&% o- /e)*&71e&% %(6e, 4*%+*& o&e 'e(r -rom %+e /(%e o-
%+e ,()e, %+e c*%' (,,e,,or (&/ co))ec%or ,+()) e6ec1%e ( /ee/, *& -orm (&/ e--ec% ,1--*c*e&% %o
co&8e' %o %+e 21rc+(,er ,o m1c+ o- %+e re() e,%(%e, (.(*&,% 4+*c+ %+e %(6e, +(8e bee&
(,,e,,e/, (, +(, bee& ,o)/, free from all liens of any kind whatsoever, %+e Le.*,)(%1re
cer%(*&)' /*/ &o% *&%e&/ %+(% 2er,o&, 4+o +o)/ ( )*e& (.(*&,% ,1c+ )(&/ ,+o1)/ be /e2r*8e/
%+ereo- 4*%+o1% ( &o%*ce (&/ (& o22or%1&*%' %o be +e(r/ be-ore %+e*r )*e& co1)/ be &1))*-*e/. No
rule is better established, under the due-process-of-la& provision of the or(anic la& of the land, than
the one &hich requires notice and an opportunit to be heard before an citi7en of the state can be
deprived of his ri(hts. That is the rule, &hether the action is in personam or in rem, &ith the
e'ception that in an action in rem substituted service *a be had. Pennoer vs. Neff, 2- $.#., :16=
Filbourn vs. Tho*pson, 1,+ $.#., 1?;.9
As &as stated above, the le(islature of the state has a perfect ri(ht to deter*ine &hat shall
constitute liens upon propert and the priorit thereof. The *ere fact, ho&ever, that A has, under the
la&, a prior lien upon the propert of B, does not Austif hi* in ta<in( arbitrar possession of said
propert &ithout notice and an opportunit to be heard b subsequent lien holders, if there are an.
To per*it such proceedin(s &ould allo& a violation of one of the funda*ental ri(hts of the citi7ens of
the state.
"n the present case the appellant had no notice &hatever of the proceedin(s b &hich his lien &as
nullified, and of course no opportunit to defend his ri(hts until after the issuance of the deed b the
cit assessor and collector to the appellee, b &hich the latter obtained a deed Bfree fro* all liens of
an <ind &hatsoeverB b virtue of &hich the appellant &as deprived of his ri(hts. De cannot (ive our
assent to a procedure b &hich citi7ens of the Philippine "slands *a be deprived of their ri(hts
&ithout a notice and an opportunit to defend the*.
"n vie& of the fore(oin( conclusions, &e dee* it unnecessar to discuss the other assi(n*ents of
error of the appellant.
3ur conclusions are% )irst, that 1&/er %+e 2roce/1re (/o2%e/ *& %+e 2re,e&% c(,e %+e
Go8er&me&% o- %+e P+*)*22*&e ",)(&/,, (, 2re,e&%e/ b' %+e D*rec%or o- L(&/,, +(, &o% bee&
/e2r*8e/ o- *%, mor%.(.e )*e& 12o& %+e 2ro2er%' *& 71e,%*o&9 ,eco&/, %+(% %+e 51/.me&% o- %+e
co1r% a quo, /e2r*8*&. *% o- *%, )*e& 4*%+o1% &o%*ce (&/ (& o22or%1&*%' %o be +e(r/, *, &1)) (&/
8o*/.
Therefore, it is hereb ordered and decreed that the Aud(*ent appealed fro* should be, and is
hereb pronounced null and void, and it is further ordered and decreed that the record be returned to
the court &hence it ca*e, &ith direction that a ne& certificate of title be issued for the one parcel of
land in question to the plaintiff, Ra*on /ope7, &ith an annotation thereon of the *ort(a(e lien held
b the appellant.
!alcolm" Avance#a" Villamor" $strand" and Romualdez" %%." concur.