Title
Gamilla vs. Burgundy Realty Corp.
Case
G.R. No. 212246
Decision Date
Jun 22, 2015
BRC failed to pay real estate taxes, leading to an auction sale of its property to Gamilla. BRC challenged the sale, but the Supreme Court ruled in Gamilla's favor, citing BRC's non-compliance with deposit requirements and proper notice of delinquency.
auction sale
real estate tax
public auction

Case Summary (G.R. No. 212246)

Facts Leading to the Public Auction

BRC was the registered owner of a condominium unit with a total floor area of thirty (30) square meters, covered by CCT No. 5708, located at B. Gonzales, Loyola Heights, Diliman, Quezon City (the subject property). On May 10, 2005, the City Treasurer of Quezon City sent BRC a Statement of Delinquency informing it that real estate tax in the amount of P36,323.38 remained unpaid and requiring payment within ten (10) days, with a warning that legal action would follow if payment was not made. On July 28, 2005, the City Treasurer sent a Final Notice of Delinquency, reiterating that the tax remained unpaid and that it had been included in the list of delinquent real properties. The City Treasurer thereafter issued a Warrant of Levy, which was inscribed and annotated on Tax Declaration No. D-056-08799, and the Notice of Levy was annotated on CCT No. 5708 and registered with the Register of Deeds.

The Notice of Sale of Delinquent Real Property was published in Manila Standard Today on September 5, 2005 and September 12, 2005, and in Manila Bulletin on September 11, 2005. The notice was also written in English and Filipino, posted at the main entrance of Quezon City Hall for two (2) consecutive weeks, and posted in public and conspicuous places and marketplaces in the barangay where the subject property was located. On September 15, 2005, the public auction was conducted, and Gamilla was declared the highest bidder. On September 30, 2005, a certificate of sale was issued in her favor, and its annotation was later made with the Register of Deeds. After one year, the City Treasurer executed the Final Bill of Sale in Gamilla’s favor, and Gamilla annotated it on CCT No. 5708.

Proceedings Before the RTC: Petition for Cancellation and Opposition

After the lapse of the redemption period, Gamilla filed with the RTC a petition for the cancellation of CCT No. 5708 and the issuance of a new certificate of title in her name. BRC opposed, contending that the auction sale did not comply with the requirements of Sections 176 and related provisions under R.A. No. 7160, particularly alleging that there was no notice of levy and that the statement of delinquency addressed to BRC did not constitute the notice required by law. BRC also denied receiving the final notice of delinquency.

In response, Gamilla asserted that BRC’s opposition should not be entertained because of BRC’s failure to observe the requirements under Section 267 of R.A. No. 7160, including the deposit of the amount for which the property was sold plus interest from the date of sale up to the institution of the action. The RTC issued an Order dated November 10, 2008 directing BRC to deposit the amount for which the real property was sold as mandated by Section 267. When BRC filed a motion for clarification with alternative motion for extension to deposit, the RTC, in an Order dated May 22, 2009, ruled that the Opposition was an action contemplated under Section 267, and it required the necessary deposit within thirty (30) days.

On November 27, 2009, because BRC failed to comply with the deposit orders, the RTC declared BRC in default and expunged its opposition from the records. It likewise declared other government agencies in default where they did not file an opposition despite notice. Gamilla was then allowed to present evidence ex parte. On June 23, 2010, the RTC rendered a decision in Gamilla’s favor. It found no irregularity in both procedural and substantive requirements of the auction sale. It further held that, given BRC’s failure to redeem after one year, the RTC ordered cancellation of CCT No. 5708 and the issuance of a new certificate in Gamilla’s name.

Appeal to the Court of Appeals

BRC elevated the RTC decision to the Court of Appeals. The CA reversed and set aside the RTC decision. The CA’s reasoning focused on alleged irregularities in notice. It held that the auction sale was tainted by the lack of proof that BRC was given the required notice of delinquency and the warrant of levy. Specifically, it considered that Gamilla’s claim that certain individuals—Eleonor Rulo (Rulo) and Arlene Tayag (Tayag)—received the statement of delinquency and the final notice of delinquency and warrant of levy for and on behalf of BRC was unsubstantiated because no evidence was presented to establish that those individuals were authorized representatives or administrators of BRC. Gamilla’s motion for reconsideration was denied, prompting the petition before the Supreme Court.

Issues Raised in the Petition

The Supreme Court was asked to resolve: (one) whether the CA correctly took cognizance of the case despite BRC’s failure to comply with the deposit requirement under Section 267 of R.A. No. 7160; and (two) whether the auction sale should be annulled due to the City Treasurer’s alleged failure to send the notice of delinquency to BRC.

The Parties’ Contentions

Gamilla maintained that the CA should not have entertained the appeal because BRC failed to deposit the amount for which the property was sold as required by Section 267. She treated the requirement as jurisdictional and argued that noncompliance should have resulted in dismissal. She further invoked the presumption of regularity in the performance of official duty regarding the personal delivery of the statement of delinquency, the final notice of delinquency, and the warrant to levy, which she claimed were received by Rulo and Tayag, and she argued that BRC’s mere denial was insufficient to overthrow that presumption.

BRC insisted that the auction sale was void from the beginning because the City Treasurer allegedly did not comply with the statutory notice requirements under Sections 176 and 178 of R.A. No. 7160. It reiterated that it was not properly served with the notice of levy and that the statement of delinquency did not meet the legal requirement of notice. It also denied receiving the final notice of delinquency.

Ruling of the Supreme Court on the First Issue: Compliance with Section 267

The Supreme Court held that the petition was meritorious. On the first issue, it ruled that the CA erred in taking cognizance of the case. The Court emphasized that Section 267 of R.A. No. 7160 expressly provides that no court shall entertain any action assailing the validity or sale at public auction of real property unless the taxpayer deposits with the court the amount for which the real property was sold, together with interest at two percent (2%) per month from the date of sale until the institution of the action. The Court characterized this condition as a jurisdictional requirement, such that nonpayment warranted dismissal of the action. Since BRC did not make the required deposit, the RTC should not have acted on BRC’s opposition. Accordingly, the Supreme Court found that the CA’s decision to reverse the RTC on the merits was procedurally infirm because the case should not have been entertained in the first place.

Ruling of the Supreme Court on the Second Issue: Notice of Delinquency and Levy

On the second issue, the Supreme Court discussed the notice provisions governing tax sales. It cited Sections 176 and 178 of R.A. No. 7160, explaining that after delinquency, the levy on real property must be effected with the preparation of a duly authenticated certificate and must include written notice of the levy to the delinquent taxpayer, or to the agent or manager, or if none, to the occupant of the property. It also noted that within thirty (30) days after the levy, the local treasurer must proceed to publicly advertise for sale or auction with the required posting and publication, and the advertisement must contain, among other details, the amount of taxes due, the time and place of sale, the name of the taxpayer, and a short description of the property.

The Court reiterated that strict adherence to notice requirements in tax sales is imperative to protect taxpayers and reduce any possible suspicion of collusion. It then examined the records and found that BRC was properly notified of its tax delinquency and of the proceedings relative to the auction sale. The Court observed that the statement of delinquency sent to BRC included an explanation that the realty tax for years 1997 to 2004 remained unpaid, with computation of taxes due and penalties, and it also that BRC acknowledged receipt of this statement in its opposition before the RTC. Although BRC argued that the statement of delinquency was not the notice required by law, the Supreme Court rejected the argument. It held that while the statement might not have been captioned as “Notice of Delinquency,” its contents nevertheless sufficiently informed BRC of its deficiency in real property taxes and penalties, along with a reminder to settle the obligation to avoid legal inconvenience.

Beyond the statement of delinquency, the Court found that the City

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