G.R. No. 207791 - City of Davao vs. Intestate Estate of Dalisay

Case Summary (G.R. No. 207791)

Properties and Forfeiture Proceedings

The Estate owned five properties in Davao City that were subject to tax delinquency, resulting in public auction scheduled on July 19, 2004. No bidders appeared, leading the City to acquire the properties pursuant to Section 263 of the Local Government Code, which mandates the local treasurer to purchase such properties on behalf of the local government unit in case of no bidder at auction, and to issue a declaration of forfeiture. The law grants the delinquent taxpayer or their representative a right to redeem the properties within one year from the date of forfeiture by paying the full amount of real estate tax, related interests, and costs.

Declarations of Forfeiture and Redemption Tender

Contrary to the requirement that the declaration of forfeiture be made within two days after purchase, the declarations for these properties were issued belatedly on September 13, 2005—more than a year after the auction. Despite this, the City annotated these declarations on the titles on October 3, 2005. The Estate later inquired about redemption costs in 2006 and tendered P5,000,000.00 on September 13, 2006. The City refused to accept the payment, contending that the redemption period had already expired a year after the auction date, July 19, 2005. Consequently, the Estate filed an action for redemption, consignation, and damages.

Trial Court and Court of Appeals Rulings

The Regional Trial Court ruled in favor of the Estate, ordering the City to accept the tendered amount and issue a certificate of redemption, also awarding damages and legal fees. On appeal, the Court of Appeals (CA) affirmed the decision, emphasizing the City’s delay in issuing the declarations of forfeiture as a critical factor. The CA applied the principle that redemption laws are to be liberally construed in favor of property owners, thereby reasoning that the one-year redemption period should be counted from the date of the declaration of forfeiture, not from the auction date.

Issues Presented

The City raised four errors on appeal: (1) the one-year redemption period should commence from the date of the auction sale (forfeiture), not the date of declaration issuance; (2) the City is not estopped from denying the erroneous statement made in the declarations; (3) the Local Government Code’s provisions were not an express repeal of prior laws governing redemption periods under P.D. 464 and Act 496; and (4) the award of damages and attorney’s fees was improper.

Parties’ Arguments on Redemption Period

The City argued that “within one year from the date of such forfeiture” as stated in Section 263 refers to the date when the properties were purchased by the City at the public auction. The declarations of forfeiture merely serve to facilitate registration and do not affect the reckoning of the redemption period. The City further claimed that the principle that government cannot be estopped by its agents’ errors applied, thus disclaiming the binding effect of the late declarations.

The Estate contended that the phrase “date of such forfeiture” necessarily meant the date of the issuance of the declaration of forfeiture, relying on the textual use of the term “any such declaration” within the same provision. The Estate posited that redemption rights begin only upon formal issuance of the declarations.

Legal Issue for Resolution

The primary legal issue was whether the one-year redemption period for tax-forfeited properties purchased by the local government for lack of bidders begins at the date of the auction or at the date the declaration of forfeiture is issued.

Supreme Court’s Analysis on Liberal Construction of Redemption Laws

The Supreme Court acknowledged the jurisprudential principle that redemption statutes are liberally construed to favor property owners, as codified in precedents such as Doronila v. Vasquez and Tolentino v. Court of Appeals, which permit redemption even after the lapse of statutory periods in exceptional cases to promote justice. However, the Court also emphasized that redemption is nevertheless a statutory privilege that requires strict compliance with statutory requirements and timelines. The right to redeem is not absolute or inherent but created and circumscribed by law.

Statutory Interpretation of “Date of Such Forfeiture”

The Court rejected the Estate’s interpretation that the redemption period commences from the issuance of the declaration of forfeiture. The Court found the City's argument more consistent with the statutory context and purpose of Section 263. Since the local government’s acquisition of the property at auction due to lack of bidders effectuates the forfeiture, this event logically constitutes the “date of such forfeiture.” The declaration of forfeiture is a ministerial act primarily to facilitate registration and does not create or delay the ownership vesting process. To hold otherwise would undermine the statutory operation of forfeiture and redemption, imposing an unwarranted condition on the local government’s acquired rights.

Precedential Support: City Mayor v. RCBC

The Court relied on its earlier ruling in City Mayor v. RCBC, which clarified that under the Local Government Code, the period of redemption for tax delinquent properties is counted from the date of sale (auction), not from the date of registration of sale certificates. This decision effectively replaced prior rules under P.D. 464. The Court found it equitable and consistent to apply similar reckoning to Section 263 cases, thereby requiring the redemption period for government-purchased properties to commence from the auction date.

Application to the Present Case and Estoppel Considerations

The Court noted the significant delay of over a year by the City Treasurer in issuing the declarations of forfeiture contributed to the confusion. However, it maintained that the general rule that the State cannot be estopped by the actions or errors of its officials should prevail unless exceptional circumstances dictate otherwise, which was not shown here. The Estate’s failure to redeem within one year from the auction date resulted in the vesting of ownership in the City. The Court criticized the Estate’s reliance on the belated declarations and its own delay in inquiring and acting on redemption obligatio

Case Syllabus (G.R. No. 207791)

Background and Parties Involved

This case concerns a petition for review on certiorari under Rule 45 of the Rules of Court filed by the City of Davao, represented by its City Treasurer, against the Intestate Estate of Amado S. Dalisay, represented by Special Administrator Atty. Nicasio B. Paderna.
The petition assails the decisions of the Court of Appeals (CA), which affirmed the Regional Trial Court’s (RTC) ruling ordering the City of Davao to accept P5,000,000.00 as full payment to redeem the forfeited real estate properties of the Estate.
The properties in question are five (5) tax delinquent real estate parcels situated in Davao City, including lots and a building covered by specific Transfer Certificates of Title (TCTs) and Tax Declarations.

Factual Context and Procedural Posture

The properties were auctioned publicly on July 19, 2004, due to nonpayment of real estate taxes, as mandated under the Local Government Code (LGC), specifically Section 263 of Republic Act No. 7160.
No bidders appeared at the auction; thus, the City Government acquired the properties “for want of bidder,” based on the statutory provision allowing the local treasurer to purchase properties when no bidder is present.
The City Treasurer issued Declarations of Forfeiture for each of the five properties on September 13, 2005, more than a year after the public auction.
The deed of forfeiture explicitly stated the taxpayers had one (1) year from the date of the declaration of forfeiture to redeem the property by paying the required taxes, interests, and costs.
The City annotated these declarations on the corresponding TCTs on October 3, 2005.
The Estate inquired about the redemption amount in September 2006 and was given a billing statement with a total of approximately P4,996,534.67.
Subsequently, the Estate tendered P5,000,000.00 as payment for redemption but the City refused to accept it, asserting the redemption period had already expired one year after the auction (i.e., July 19, 2005).
The Estate then filed for redemption, consignation of payment, and damages, including attorney’s fees, with the RTC.
The RTC ruled in favor of the Estate, ordering acceptance of redemption payment and awarding damages and attorney’s fees.
The City appealed to the CA, which affirmed the RTC decision, applying a liberal construction of redemption laws favoring the property owner.
The City filed the present petition for review before the Supreme Court, asserting among others that the one-year redemption period should be reckoned from the auction date, not the later issuance of the Declarations of Forfeiture.

Legal Issues Presented

Whether the one (1) year redemption period for tax delinquent properties purchased by the local government “for want of bidder” should be reckoned from the date of the public auction/sale or from the date of the issuance of the Declaration of Forfeiture.
Whether the City Government is estopped from denying the erroneous statement in the Declaration of Forfeiture stating the redemption period begins from the date of said declaration.
Whether Section 263 of the LGC repealed prior laws on redemption periods and how it relates to P.D. 464 and Act 496 provisions.
Whether the City was liable for damages and attorney’s fees for refusing the Estate’s tender of payment.

Statutory and Jurisprudential Framework

Section 263 of RA 7160 (Local Government Code) provides the mechanism whereby if no bidder purchases tax delinquent real property at auction, the local treasurer shall purchase the property on behalf of the local government. The property can be redeemed within one (1) year from the “date of such forfeiture.”
Prior laws (P.D. 464, Act 496) allowed redemption within one (1) year from registration of the sale with the Register of Deeds.
The Court previously ruled in City Mayor of Davao City v. RCBC that RA 7160 repealed P.D. 464 and governed redemption periods, holding that the period runs from the date of sale, not from registration.
Jurisprudence favors liberal construction of redemption laws to protect owners' rights where no injury results from such favor.
However, the right to redeem is statutory, not inherent or proprietary; thus, strict compliance with the redemption period prescribed by law is necessary.
The principle that the government is generally not est