City Government of Antipolo and the City Treasurer of Antipolo vs. Transmix Builders & Construction, Inc.

The "delinquent owner" under Section 258 of the Local Government Code is the person registered as owner of the real property based on the certificate of title, not the tax declaration; failure of the treasurer to send the required notices to the delinquent registered owner renders void not only the levy, but the consequent public auction and sale of the subject property.

The City Government of Antipolo and its City Treasurer are the local government units and official responsible for the assessment and collection of real property taxes within Antipolo City. Respondent Transmix Builders & Construction, Inc. is a corporation that purchased three parcels of land from Clarisa San Juan Santos in January 1997, with new Transfer Certificates of Title issued in its name. The dispute concerns the proper interpretation of Section 258 of Republic Act No. 7160, the Local Government Code of 1991, which requires the treasurer to send the warrant of levy to the "delinquent owner" of the real property, and whether the treasurer may rely solely on tax declarations in identifying the owner for purposes of notice. The LGC repealed Presidential Decree No. 464, which had previously governed the levy of real property for tax delinquency.

Clarisa San Juan Santos originally owned three parcels of land in Antipolo City, covered by TCT Nos. 175110, 175111, and 175112, with tax declarations indicating her address as "3rd St. Concepcion, Marikina City." In January 1997, respondent Transmix Builders & Construction, Inc. purchased the three lots from Santos. The titles under Santos's name were cancelled, and new titles were issued in respondent's name: TCT Nos. 328857, 328858, and 328859. However, respondent failed to transfer the corresponding tax declarations under its name.

On October 30, 2005, the City Treasurer published a Notice of Delinquency of Real Properties in The Philippine Star, covering several properties with unpaid real property taxes, including the three lots owned by respondent. The City Treasurer sent Notices of Levy dated November 11, 2005 to the city assessor and the Register of Deeds. On November 21, 2005, the City Treasurer issued Warrants of Levy over respondent's properties and sent them to Santos at her given address. The City Treasurer published a Notice of Public Auction Sale in The Philippine Star on November 27, 2005. The auction sale was held on December 28, 2005, and due to want of bidders, the subject properties were forfeited in favor of the City Government of Antipolo, with a Declaration of Forfeiture of Delinquent Real Property issued for each lot on the same date.

On February 26, 2009, respondent's President, Leodegario R. Santos, wrote the City Treasurer requesting an opportunity to settle and pay the delinquencies, claiming they were unaware of the assessments and statements of account sent to Santos. On July 12, 2010, the City Government of Antipolo passed City Ordinance No. 2010-398, entitled "An Ordinance Prescribing the Date of Payment Without Interest of Delinquent Realty Taxes in the City of Antipolo," which granted amnesty from interest on real property taxes due but unpaid on or before December 31, 2009, subject to conditions, but excluding properties disposed of at public auction. The City Treasurer issued Notices of Real Property Tax Delinquency for the years 1997 to 2010 for each lot on October 19, 2010, sent to Santos, bearing the address "C/O TRANSMIX BUILDERS & CONST INC. 2 SUMULONG HIGHWAY MAYAMOT ANTIPOLO CITY." On November 17, 2010, respondent updated and settled the RPT due on the three lots. The Office of the City Treasurer issued Certifications on January 27, 2011, indicating the amounts paid.

However, the Office of the City Treasurer sent a Letter to respondent dated February 17, 2011, stating that since the properties were already forfeited, the payments would be held in trust until a resolution by a competent authority. The subject parcels of land were registered under the name of the City Government of Antipolo on March 28, 2011, with new titles and tax declarations issued in its name. Aggrieved, respondent filed a Complaint for declaration of nullity of public auction, certificate of sale, titles, and/or reconveyance on December 18, 2014, alleging that the levy, sale, and eventual forfeiture were void for lack of notice.

• Condonation of RPT: Petitioners argued that condonation of RPT could not be granted in favor of respondent because, pursuant to the LGC, condonation should only occur when the Sangguniang Panlungsod enacts an ordinance specifically condoning such RPT, and only in cases of general failure of crops, substantial decrease in the price of agricultural or agri-based products, or calamity in the city, coupled with a recommendation of the Local Disaster Coordinating Council — none of which were present.

• Violation of Sec. 276 of the LGC: Petitioners posited that applying the City Ordinance in respondent's favor would violate Sec. 276 of the LGC, which provides that condonation of RPT is applied prospectively, taking effect on the succeeding year or years following the effectivity of the ordinance; respondent cannot validly avail of the amnesty without contravening Sec. 276 since it would be retroactively applied to tax delinquencies that accrued prior to its enactment.

• Scope of the City Ordinance: Petitioners argued that the City Ordinance did not effectively condone respondent's tax delinquency, but merely provided tax delinquents with amnesty from interest, and under paragraph 3, Sec. 4 of the City Ordinance, properties disposed during public auction to satisfy RPT and delinquencies are not included.

• Estoppel: Petitioners argued that they are not estopped from accepting respondent's belated payments because the State cannot be estopped by the mistakes or errors of its officials or agents, especially in the absence of proof that it dealt capriciously or dishonorably with its citizens.

• Sufficiency of Notices to Santos: Petitioners argued that the City Treasurer cannot be faulted for not sending notices to respondent because under Sec. 73 of P.D. No. 464, the treasurer is only required to send notices either at the address shown in the tax rolls or property tax record cards, or at the registered owner's residence, if known; since the tax declarations still reflected Santos as the registered owner, the City Treasurer had correctly sent the notices to her.

• Entitlement to Deposit: Petitioners argued that should the levy, sale, and forfeiture be held null and void, the City Government of Antipolo is still entitled to the deposit to cover the unpaid taxes on the land.

• Procedural Defect: Respondent countered that the instant petition should be dismissed as it raises both factual and legal issues.

• Presumption of Regularity: Respondent contended that the presumption of regularity does not apply when taxpayers are deprived of their properties.

• Duty to Notify Registered Owner: Respondent argued that petitioners cannot dispense with their obligation to send the notices to respondent as the registered owner, most especially since the subject properties were registered to respondent under the Torrens system.

• Unjust Enrichment: Respondent argued that petitioners would unjustly be enriched by the forfeiture considering that the tax delinquency only amounted to ₱2,448,887.19, while the three lots have an estimated value of ₱90,000,000.00.

• No Immunity from Estoppel: Respondent posited that local government units do not enjoy immunity from suit, and therefore cannot benefit from the principle of estoppel.

• Propriety of Direct Appeal: Whether the direct appeal from the RTC to the Supreme Court was proper given that the petition raises pure questions of law.

• Validity of Levy, Sale, and Forfeiture: Whether the levy, sale, and forfeiture of the subject properties were valid where the City Treasurer sent notices to the previous owner based on tax declarations rather than to the registered owner based on the certificates of title.

• Availment of Amnesty: Whether respondent properly availed of the amnesty under City Ordinance No. 2010-398 despite the exclusion of properties disposed of at public auction.

• Estoppel: Whether petitioners are estopped from accepting RPT payments from respondent.

• Return of Deposit: Whether the deposit made by respondent should be returned.

• Propriety of Direct Appeal: Yes. The direct appeal was proper because the RTC rendered the assailed Decision and Order in the exercise of its original jurisdiction, and the petition raised pure questions of law that did not require assessment or evaluation of evidence.

• Validity of Levy, Sale, and Forfeiture: No. The levy, sale, and subsequent forfeiture of the subject properties were void. Section 258 of the LGC requires sending the notice of levy to the registered owner based on the certificate of title, not the tax declaration; failure to do so violates due process and renders the proceedings void.

• Availment of Amnesty: Yes. Respondent properly availed of the amnesty under the City Ordinance because the levy, auction sale, and forfeiture were void, and therefore the subject properties did not fall under the exception for properties "disposed of at public auction."

• Estoppel: No. Petitioners are not estopped from levying the subject properties despite accepting payments from respondent, because the State is not subject to estoppel by the mistakes or errors of its officials or agents, and the City Treasurer's acceptance of payment was qualified.

• Return of Deposit: Yes. The deposit should be returned to respondent because the delinquent RPT had already been paid under the amnesty, and paying the deposit to the city government would unjustly enrich it.

• Propriety of Direct Appeal: The Court applied the rules in Mandaue Realty & Resources Corporation vs. Court of Appeals, which provide that a direct appeal from the RTC to the Supreme Court is warranted only when the RTC exercised its original jurisdiction and only questions of law are raised. The Court found that the issues concerning the validity of the levy, the application of estoppel, and the entitlement to the deposit involve pure questions of law that do not require recalibration of the evidence.

• Validity of Levy, Sale, and Forfeiture: The Court held that auction sale of land for delinquency of RPT is in personam, unlike land registration proceedings which are in rem. Mere publication and posting are insufficient notices in tax sales; personal notice to the taxpayer is essential. The Court traced the legislative history from P.D. No. 464, which used the term "delinquent taxpayer," to the LGC, which employed the phrase "delinquent owner." The change in phraseology was intentional, applying the maxim casus omissus pro omisso habendus est. The LGC requires the warrant to be mailed or served upon the delinquent owner of the real property or person having legal interest therein, or the administrator or occupant if the owner is out of the country or cannot be located. The Court held that the term "owner" refers to the registered owner based on the certificate of title, consistent with the principle of indefeasibility of Torrens title. The City Treasurer cannot feign ignorance of the registration because the Torrens title serves as constructive notice. The Court distinguished Talusan vs. Tayag, where the purported owners failed to register the deed of sale and were barred by laches, from the present case where respondent registered the properties and was in possession. The Court also distinguished Aquino vs. Quezon City, which applied P.D. No. 464 and involved a registered owner who failed to amend his address for over 25 years. The Court cited Estate of Jacob vs. Court of Appeals for the proposition that the treasurer should not have simply relied on the tax declaration and should have verified from the Register of Deeds who the registered owner was. The Court further held that while respondent failed to declare the properties for taxation, the assessor has a corresponding duty under Sec. 204 of the LGC to declare the property in the name of the defaulting owner. The City Treasurer carries the onus probandi to prove compliance with the procedure, and local government units do not enjoy presumption of regularity in forfeiture proceedings.

• Availment of Amnesty: The Court held that the instant case does not fall under any of the exceptions in Sec. 4 of the City Ordinance because the levy, auction sale, and forfeiture were void for failure to strictly observe due process. Respondent had paid the delinquent RPT for 1997 to 2009 and updated its payment for 2010, satisfying the conditions for the amnesty.

• Estoppel: The Court held that the State is not subject to estoppel by the mistakes or errors of its officials or agents, especially in the absence of proof that it dealt capriciously or dishonorably with its citizens. The City Treasurer's acceptance of respondent's payment was qualified, as the letter explicitly stated the payment would be held in trust until a resolution by a competent authority, and respondent was allowed to withdraw the amount anytime. Acceptance of tax payments cannot amount to estoppel which would effectively result in the condonation of a tax liability.

• Return of Deposit: The Court held that under Sec. 267 of the LGC, the required deposit should be paid only to the purchaser of real property should the auction sale be held invalid, in the nature of a repurchase. However, since the levy and forfeiture were void and the delinquent RPT had already been paid under the amnesty, the deposit should be returned to respondent to avoid unjust enrichment of the city government.

• In personam nature of tax sales — Auction sale of land for delinquency of real property tax is in personam, unlike land registration proceedings which are in rem. Mere publication and posting are insufficient notices in tax sales; personal notice to the taxpayer is essential in administrative proceedings of forfeiture of real property. The Court applied this doctrine to hold that the City Treasurer's failure to send personal notice to respondent as the registered owner rendered the levy, sale, and forfeiture void.

• Casus omissus pro omisso habendus est — A person, object, or thing omitted from an enumeration in a statute must be held to have been omitted intentionally. The Court applied this maxim to interpret the change in phraseology from "delinquent taxpayer" in P.D. No. 464 to "delinquent owner" in the LGC as intentional, emphasizing that the notice must be served to the owner, whose name may or may not be reflected in the tax records.

• Indefeasibility of Torrens title — The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned. The Torrens system makes no distinction and is obligatory upon the whole world; it is as binding on buyers as on local government treasurers. The Court applied this doctrine to hold that the City Treasurer was under constructive notice that respondent was the registered owner and should have sent the notices to respondent.

• Burden of proof on taxing authority — Local government units do not enjoy presumption of regularity in forfeiture proceedings of real property; the burden of proof is upon the local government to prove that it had religiously complied with the rules. The Court applied this doctrine, citing Cruz vs. City of Makati, to hold that petitioners failed to overcome the onus probandi of proving compliance with the procedure in levying the subject properties.

• State not subject to estoppel — The State is not subject to estoppel by the mistakes or errors of its officials or agents, especially in the absence of proof that it dealt capriciously or dishonorably with its citizens. The Court applied this doctrine to hold that the City Treasurer's acceptance of respondent's payment, which was qualified and held in trust, could not bind the City Government of Antipolo in estoppel.

• "Section 258 of Republic Act (R.A.) No. 7160, also known as the Local Government Code of 1991 (LGC), requires the treasurer of the local government to send the warrant of levy to the delinquent owner of the real property, among others. The term 'delinquent owner' shall be construed as the person registered as owner of the realty based on the certificate of title, and not on the tax declaration. The failure of the treasurer to send the required notices to the delinquent registered owner of the property shall render void not only the levy, but the consequent public auction and sale of the subject property." — This opening statement articulates the core holding of the case, defining the term "delinquent owner" and the consequence of failure to notify the registered owner.

• "The change in the phraseology in the LGC ensures that the rightful person entitled to the notice, who may or may not be the owner or person registered in the title or in the tax declaration, is accorded due process." — This passage explains the significance of the change from "delinquent taxpayer" in P.D. No. 464 to "delinquent owner" in the LGC, emphasizing the due process requirement.

• "In ascertaining the identity of the delinquent taxpayer, for purposes of notifying him of his tax delinquency and the prospect of a distraint and auction of his delinquent property, petitioner City Treasurer should not have simply relied on the tax declaration." — Quoted from Estate of Jacob v. Court of Appeals, this passage establishes the duty of the treasurer to verify the registered owner from the Register of Deeds rather than relying solely on tax declarations.

• "Notice of sale to the delinquent [landowners] and to the public in general is an essential and indispensable requirement of law, the non-fulfillment of which vitiates the sale. Thus, the holding of a tax sale despite the absence of the requisite notice is tantamount to a violation of delinquent taxpayer's substantial right to due process." — Quoted from Spouses Sarmiento v. Court of Appeals, this passage underscores the essential nature of notice in tax sales and the consequence of its absence.

• Estate of Jacob vs. Court of Appeals, 347 Phil. 752 (1997) — Controlling precedent; the Court annulled a public auction sale and held that the City Treasurer should not have simply relied on the tax declaration in notifying the tax-delinquent owner, and should have verified from the Register of Deeds who the registered owner was. The Court applied this case to the present facts, finding them squarely similar.

• Talusan vs. Tayag, 408 Phil. 373 (2001) — Followed; the Court held that personal notice to the registered owner is required under P.D. No. 464, and that the registered owner is deemed the taxpayer for purposes of collection of RPT. Distinguished on the facts because in Talusan, the purported owners failed to register the deed of sale and were barred by laches, whereas respondent herein registered the properties.

• Aquino vs. Quezon City, 529 Phil. 486 (2006) — Distinguished; the Court held that the treasurer could not be faulted for not sending notices to the owner's address as indicated in the tax declarations, but that case applied P.D. No. 464 and involved a registered owner who failed to amend his address for over 25 years.

• Cruz vs. City of Makati, 840 Phil. 92 (2018) — Followed; the Court declared that local government units do not enjoy presumption of regularity in forfeiture proceedings, and the burden of proof is upon the local government to prove compliance with the rules. The Court cited this case for the principles of burden of proof and protection of taxpayers from abuse of taxing power.

• Spouses Sarmiento vs. Court of Appeals, 507 Phil. 101 (2005) — Followed; the Court held that notice of sale to the delinquent landowners and to the public in general is an essential and indispensable requirement of law, the non-fulfillment of which vitiates the sale, and that administrative proceedings for the sale of private lands for nonpayment of taxes being in personam, actual notice to the delinquent taxpayer is essential.

• Mandaue Realty & Resources Corporation vs. Court of Appeals, 801 Phil. 27 (2016) — Followed; the Court outlined the rules regarding appeals of cases decided by the RTC, establishing that a direct appeal to the Supreme Court is warranted only when the RTC exercised its original jurisdiction and only questions of law are raised.

• Valencia vs. Jimenez, 11 Phil. 492 (1908) — Followed; the Court established the principle that notice to the taxpayer is part of due process, and that the purchaser of a tax title is bound to take upon himself the burden of showing the regularity of all proceedings leading up to the sale.

• Section 258, Republic Act No. 7160 (Local Government Code of 1991) — The provision on Levy on Real Property, which requires the warrant of levy to be mailed to or served upon the delinquent owner of the real property or person having legal interest therein, or the administrator or occupant if the owner is out of the country or cannot be located. The Court interpreted "delinquent owner" to mean the registered owner based on the certificate of title.

• Section 254, Republic Act No. 7160 (Local Government Code of 1991) — The provision on Notice of Delinquency in the Payment of the Real Property Tax, requiring posting and publication of the notice of delinquency. The Court found that the City Treasurer complied with these posting and publication requirements, but that these were insufficient without personal notice to the registered owner.

• Section 202, Republic Act No. 7160 (Local Government Code of 1991) — The provision on Declaration of Real Property by the Owner or Administrator, imposing the duty on owners to file a sworn statement declaring the true value of their property. The Court acknowledged that respondent failed in this duty.

• Section 204, Republic Act No. 7160 (Local Government Code of 1991) — The provision on Declaration of Real Property by the Assessor, requiring the assessor to declare the property in the name of the defaulting owner if the owner fails to make such declaration. The Court cited this provision to show that the assessor has a corresponding duty to avoid errors as to whom the notice should be sent.

• Section 267, Republic Act No. 7160 (Local Government Code of 1991) — The provision on Action Assailing Validity of Tax Sale, requiring the taxpayer to deposit with the court the amount for which the real property was sold before the court can entertain an action assailing the validity of the sale. The Court applied this provision to determine that the deposit should be returned to respondent since the delinquent RPT had already been paid.

• Section 73, Presidential Decree No. 464 — The predecessor provision on notice of levy, which required the treasurer to send the notice to the delinquent taxpayer at his address as shown in the tax rolls or property tax record cards. The Court noted that this law was repealed by the LGC and that the term "taxpayer" as used therein was a misnomer that actually referred to the registered owner.

• Section 51, Presidential Decree No. 1529 (Property Registration Decree) — The provision stating that the act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned. The Court cited this provision to support the principle of indefeasibility of Torrens title.

• Section 4, City Ordinance No. 2010-398 — The provision enumerating properties not included in the payment of delinquent realty tax without interest, including properties disposed of at public auction. The Court held that since the levy and forfeiture were void, the subject properties did not fall under this exception.

Hernando, Zalameda, Rosario, and Marquez, JJ., concurred.