G.R. No. 171033 - Quezon City Mayor vs. Rizal Commercial Banking Corp.

Case Summary (G.R. No. 171033)

Factual Background

The facts were undisputed. The spouses Roberto and Monette Naval mortgaged certain titled properties to secure a loan from Rizal Commercial Banking Corporation. Foreclosure occurred in 1998 and Rizal Commercial Banking Corporation was the highest bidder; Certificates of Sale were issued in its favor on August 4, 1998 but were allegedly registered only on February 10, 2004. Separately, the City Treasurer of Quezon City conducted a tax delinquent auction on May 30, 2003. Two townhouse units and an adjoining lot subject to TCT Nos. N-167986, N-167987, and N-167988 were adjudged to Alvin Emerson S. Yu as highest bidder; certificates reflecting that sale were registered with the Register of Deeds on February 10, 2004. On June 10, 2004, Rizal Commercial Banking Corporation tendered payment of assessed tax delinquencies, interest, and costs to the City Treasurer, but the payment was refused. The bank sought administrative acceptance and a certificate of redemption; that request was denied, and the bank then filed a petition for mandamus with a prayer for injunctive relief before the RTC.

Trial Court Proceedings

The RTC initially issued an Order dated December 6, 2004 denying the petition for mandamus, concluding that reliance on P.D. No. 464, Sec. 78, was misplaced given the enactment of R.A. No. 7160. The petitioner filed a motion for reconsideration. On December 6, 2005 the RTC reversed and rendered a Decision granting the petition for mandamus. The RTC ordered the public respondents to accept the tender of redemption payment, to issue a certificate of redemption in favor of Rizal Commercial Banking Corporation, and to cancel the certificate of tax sale issued to the private respondent. The RTC reasoned that the one-year redemption period should be counted from the date of registration or annotation of the certificate of sale at the Register of Deeds and stated that Section 261 of R.A. No. 7160 did not amend Section 78 of P.D. No. 464.

Questions Presented on Review

Petitioners challenged the RTC Decision on two principal grounds. First, they argued that the RTC decided a question of law contrary to statute and jurisprudence by treating Section 78 of P.D. No. 464 as still effective and not repealed by R.A. No. 7160. Second, petitioners contended that the RTC resolved issues not properly placed before it, namely the applicability of the Quezon City Revenue Code of 1993 (Section 14[a], paragraph 7) and whether the redemption period should be reckoned from the date of annotation of the sale or from the date of sale under Section 261 of R.A. No. 7160. Rizal Commercial Banking Corporation responded that the RTC merely referenced Section 78 and that it had not altered its cause of action by invoking the Quezon City ordinance later in the proceedings; the bank maintained that it timely exercised the right of redemption.

Legal Framework

Section 78 of P.D. No. 464 previously provided that the redemption period ran within one year from the date of registration of the sale. R.A. No. 7160, however, contains Section 261, which provides for redemption within one year from the date of sale, and Section 534(c), which expressly repealed P.D. No. 464 among other presidential decrees. The Quezon City Revenue Code of 1993, enacted pursuant to local autonomy under Art. X, Sec. 5, 1987 Constitution and R.A. No. 7160, contains Section 14(a), paragraph 7, prescribing that the redemption period be counted within one year from the date of the annotation of the sale at the proper registry. The Court recognized prior jurisprudence establishing that R.A. No. 7160 repealed P.D. No. 464.

Supreme Court's Analysis and Reasoning

The Court acknowledged that R.A. No. 7160 was the general law governing the computation of real property tax liabilities from January 1, 1992 onward and that its repealing clause expressly included P.D. No. 464. The Court therefore treated Section 261 as the governing general provision on redemption, which states redemption runs within one year from the date of sale. The Court then addressed the apparent conflict between this general provision and the local special provision in the Quezon City Revenue Code. Applying the principle that a special law applicable to a limited territorial area may prevail as an exception to a general law, the Court sought to harmonize the provisions rather than nullify the local ordinance. The Court also invoked the established policy favoring redemption and the liberal construction owed to redemption statutes in order to effectuate the owner’s right where no prejudice would result. Reconciling the texts, the Court construed the phrase “one year from the date of sale” in Section 261 of R.A. No. 7160 to mean “one year from the date of the annotation of the sale of the property at the proper registry” within the context of Quezon City’s local ordinance. The Court found that such construction gave effect to both the general law and the particular regulatory choice of the local government acting under its taxing power.

Application to the Case and Pleading Issues

Applying its construction, the Court held that the redemption period for the subject properties began on February 10, 2004, the date of registration of the certificate of sale with the Register of Deeds, and thus expired on February 10, 2005. Rizal Commercial Banking Corporation tendered payment on June 10, 2004, which the Court found to be within the redemption period. The Court rejected petitioners’ contention that the bank’s failure to cite Section 14(a), paragraph 7 of the Quezon City Revenue Code in its initial petition barred reliance on that provision later in the proceedings. The Court observed that the bank had invoked the ordinance in its Memorandum and in its motion for reconsideration and that petitioners had an opportunity to oppose those submissions. The Court cited authority on the limited purpose of pleadings and on the fairness requirement that parties be given opportunity to address issues raised during trial, concluding that the bank did not fundamentally change its theory to the prejudice of petitioners.

Ruling and Disposition

The Supreme Court denied the petition for review and affirmed the December 6, 2005 D

Case Syllabus (G.R. No. 171033)

Parties and Procedural Posture

CITY MAYOR, CITY TREASURER, CITY ASSESSOR, ALL OF QUEZON CITY, AND ALVIN EMERSON S. YU, PETITIONERS filed a petition for review on certiorari assailing the RTC decision in SP. Civil Action Q-04-53522.
RIZAL COMMERCIAL BANKING CORPORATION, RESPONDENT was the purchaser at a foreclosure sale and sought judicial relief to compel acceptance of its tender of redemption.
The Regional Trial Court, Branch 101, Quezon City, initially denied relief on December 6, 2004 and thereafter, upon reconsideration, rendered a decision on December 6, 2005 granting mandamus in favor of the respondent.
The present petition sought reversal of the RTC decision and raised questions of statutory construction and procedural regularity.

Facts

The spouses Roberto and Monette Naval obtained a loan from RIZAL COMMERCIAL BANKING CORPORATION secured by a real estate mortgage over properties under TCT Nos. N-167986, N-167987, and N-167988.
The mortgage foreclosed in 1998 and RIZAL COMMERCIAL BANKING CORPORATION was the highest bidder at the foreclosure auction with Certificates of Sale issued on August 4, 1998 and allegedly registered only on February 10, 2004.
On May 30, 2003, the City Treasurer of Quezon City conducted an auction of tax delinquent properties which included the same parcels, and ALVIN EMERSON S. YU was adjudged the highest bidder at that tax sale.
Certificates of Sale of Delinquent Property issued to the tax purchaser were registered with the Register of Deeds on February 10, 2004.
RIZAL COMMERCIAL BANKING CORPORATION tendered payment for assessed tax delinquencies, interest, and costs on June 10, 2004, but the City Treasurer refused acceptance.
RIZAL COMMERCIAL BANKING CORPORATION filed administrative petition for acceptance and, upon denial, filed a petition for mandamus before the RTC to compel acceptance and issuance of a certificate of redemption.

Procedural History

The RTC denied the petition for mandamus in an Order dated December 6, 2004, principally on the ground that Presidential Decree No. 464 was repealed by Republic Act No. 7160.
RIZAL COMMERCIAL BANKING CORPORATION filed a motion for reconsideration raising due process and factual-allegation complaints and invoked the Quezon City Revenue Code provision in its later submissions.
The RTC granted the petition in a Decision dated December 6, 2005, ordering public respondents to accept the redemption tender, issue a certificate of redemption in the respondent's name, and cancel the certificate of tax sale issued to the private respondent.
The present petition for review on certiorari challenged the RTC's legal rulings and consideration of issues not initially pleaded.

Issues Presented

Whether Republic Act No. 7160 repealed Presidential Decree No. 464 insofar as the redemption period for tax delinquent property is concerned.
Whether the one-year redemption period is to be reckoned from the date of sale or from the date of registration/annotation of the certificate of sale.
Whether the RTC erred in relying upon or applying Section 14 (a), Paragraph 7 of the Quezon City Revenue Code of 1993 when that provision was not expressly pleaded in the original petition.
Whether the City Treasurer lawfully refused the respondent's tender of redemption payment.

Contentions of the Parties

Petitioners contended that P.D. No. 464 had been expressly repealed by R.A. No. 7160, that Section 261 of R.A. No. 7160 controlled and thus the one-year period ran from the date of sale, and that the RTC erred in acting on issues not pleaded.
Respondent contended that the RTC properly recognized the respondent's right to redeem within one year from registration, that citing Section 14 (a), Parag