The Supreme Court has clarified that the one-year period to redeem tax-delinquent properties purchased by a local government due to lack of bidders begins from the date of the auction sale, not from the issuance of the declaration of forfeiture. This decision emphasizes that property owners must act promptly to protect their rights. Delay in inquiring about redemption and reliance on potentially erroneous documents issued by local treasurers can result in the loss of redemption rights. This ruling serves as a crucial reminder for taxpayers to be vigilant and proactive in managing their tax obligations and understanding the timelines for redemption.

From Auction Block to Ownership: When Does the Redemption Clock Really Start Ticking?

This case revolves around the estate of Amado S. Dalisay, which owned several properties in Davao City. Due to unpaid real estate taxes, these properties were put up for public auction on July 19, 2004. With no bidders present, the City Government of Davao acquired the properties under Section 263 of the Local Government Code (LGC), also known as Republic Act (R.A.) No. 7160. This provision allows local government units to purchase properties in the absence of other bidders to satisfy tax claims. Section 263 of the LGC outlines the process for local governments to acquire properties when there are no bidders at a tax auction:

Section 263. Purchase of Property By the Local Government Units for Want of Bidder. – In case there is no bidder for the real property advertised for sale as provided herein, the real property tax and the related interest and costs of sale, the local treasurer conducting the sale shall purchase the property in behalf of the local government unit concerned to satisfy the claim and within two (2) days thereafter shall make a report of his proceedings which shall be reflected upon the records of his office. It shall be the duty of the Registrar of Deeds concerned upon registration with his office of any such declaration of forfeiture to transfer the title of the forfeited property to the local government unit concerned without the necessity of an order from a competent court.

Within one (1) year from the date of such forfeiture, the taxpayer or any of his representative, may redeem the property by paying to the local treasurer the full amount of the real property tax and the related interest and the costs of sale. If the property is not redeemed as provided herein, the ownership thereof shall be vested on the local government unit concerned.

More than a year later, on September 13, 2005, the City Treasurer issued Declarations of Forfeiture for the properties. These declarations stated that the Estate had one year from the date of the declaration to redeem the properties. The Estate, relying on this information, tendered payment to the City Treasurer on September 13, 2006. The City refused, arguing that the one-year redemption period had already expired on July 19, 2005, a year after the auction. This refusal prompted the Estate to deposit the payment with the Regional Trial Court (RTC) and file an action for redemption, consignation, and damages against the City.

The RTC ruled in favor of the Estate, ordering the City to accept the payment. The Court of Appeals (CA) affirmed this decision, emphasizing the need for a liberal interpretation of redemption laws. The CA reasoned that the City’s delay in issuing the Declarations of Forfeiture should not prejudice the Estate. The Supreme Court, however, reversed the CA’s decision, setting aside the lower courts’ rulings. The central question before the Supreme Court was whether the one-year redemption period should be counted from the date of the auction or the date of the issuance of the declaration of forfeiture.

The Supreme Court acknowledged the principle of liberally construing redemption laws to favor property owners. However, the Court emphasized that the right to redeem is a statutory privilege and must be exercised in accordance with the law. A simplistic application of liberal construction rules is not always sufficient, especially when deeper issues are involved, such as the rights of the purchaser and compliance with statutory requirements. The Court found that the term “forfeiture,” as used in Section 263 of the LGC, refers to the date when the tax-delinquent properties were sold at public auction. This is the point at which the local government purchases the property due to the absence of other bidders.

The Supreme Court distinguished this case from situations involving private purchasers. It cited City Mayor v. RCBC, which clarified that the redemption period for tax-delinquent properties is counted from the date of sale, not the date of registration of the certificate of sale, as was previously the rule under Presidential Decree (P.D.) No. 464. While the redemption period is generally counted from the date of sale, the Supreme Court has also recognized exceptions based on specific local ordinances. When local ordinances provide a different procedure, they prevail over the general provisions of the Local Government Code.

The Court also addressed the issue of the City Treasurer’s delay in issuing the Declarations of Forfeiture. While the general rule is that the State cannot be estopped by the mistakes of its officials, the Court considered the specific circumstances of this case. The Estate was aware of the auction and the potential forfeiture of its properties, yet it waited more than a year to inquire about the redemption price. The Court found the timing of the issuance of the Declarations of Forfeiture, with its statement that the Estate had one year from the date of issuance to redeem the properties, to be suspect.

The Supreme Court held that the City should not be deprived of its right due to the suspect actions of its officer. Allowing the Estate to benefit from the erroneous information in the Declarations of Forfeiture would undermine the policy of enabling local governments to collect real property taxes. The Court also emphasized the importance of public officers serving with responsibility, integrity, loyalty, and efficiency, as mandated by the Constitution. The Court held that the Estate’s right of redemption had expired, resulting in the consolidation of ownership of the properties by the City. The failure of the Estate to validly exercise its right of redemption within the statutory period resulted in the City having full rights to the properties.

FAQs

What was the key issue in this case?	The central issue was determining the starting point for the one-year redemption period for tax-delinquent properties purchased by a local government: the date of the auction sale or the date of the declaration of forfeiture.
What is the Local Government Code’s (LGC) stance on property redemption?	The LGC, particularly Section 263, provides a framework for local governments to handle tax-delinquent properties, including purchasing them in the absence of bidders and setting a one-year redemption period for the original owners.
Why did the Supreme Court rule against the Estate in this case?	The Supreme Court ruled against the Estate because the one-year redemption period begins from the date of the auction sale, which had already passed when the Estate attempted to redeem the properties. Additionally, the Estate’s delay in inquiring about redemption and reliance on a potentially erroneous document weakened its case.
Does the date of the ‘Declaration of Forfeiture’ influence the start of the redemption period?	No, the Supreme Court clarified that the date of the Declaration of Forfeiture does not determine the start of the redemption period. The period starts from the date of the auction sale.
How does this ruling affect property owners with tax delinquencies?	This ruling emphasizes the importance of promptly addressing tax delinquencies and understanding the redemption timelines. Property owners should act quickly to redeem their properties within one year from the auction date to avoid losing their ownership rights.
Can local ordinances affect the redemption period?	Yes, local ordinances can modify the general rules on redemption periods. If a local ordinance provides a different procedure or timeline, it will generally prevail over the LGC’s default provisions.
What should property owners do if they receive conflicting information from the local treasurer’s office?	Property owners should seek clarification from legal counsel and gather all relevant documents to determine the correct redemption period. It is crucial to act promptly and not solely rely on potentially erroneous information.
What is the significance of the City Mayor v. RCBC case in relation to this ruling?	The City Mayor v. RCBC case clarified that the redemption period starts from the date of sale, not the date of registration of the certificate of sale, aligning with Section 261 of the LGC, which the Court deemed applicable to the present case.
Is there recourse if a local treasurer provides incorrect information?	While the State generally cannot be estopped by the mistakes of its officers, property owners may have recourse for damages caused by the negligence or misconduct of public officials, although this does not extend the statutory redemption period.

In conclusion, this case serves as a cautionary tale for property owners regarding tax obligations and redemption rights. The Supreme Court’s decision underscores the importance of understanding and adhering to statutory deadlines, especially in cases of tax delinquency and property forfeiture. Acting promptly and seeking legal advice when necessary are crucial steps in protecting property rights.

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: THE CITY OF DAVAO VS. THE INTESTATE ESTATE OF AMADO S. DALISAY, G.R. No. 207791, July 15, 2015