G.R. Nos. 140836 & 140907; June 8, 2007
ILIGAN BAY MANUFACTURING CORP., UNITED COCONUT OIL MILLS, INC., and JEREMIAS BENICO, Petitioners, vs. HENRY DY, Respondent.

FACTS

The case involves a parcel of land owned by petitioner Iligan Bay Manufacturing Corp. (IBMC), which was mortgaged to and later foreclosed by co-petitioner United Coconut Oil Mills, Inc. (UNICOM). Due to IBMC’s unpaid real estate taxes, the Provincial Treasurer of Lanao del Norte levied upon and sold the property at a public tax auction in 1988, with respondent Henry Dy emerging as the highest bidder. Dy, an attachment creditor of IBMC in separate civil cases, subsequently exercised his right of legal redemption under the Real Property Tax Code (PD 464) by tendering payment to the Provincial Treasurer in April 1989. The Treasurer initially acknowledged receipt but later refused to issue a certificate of redemption, citing a Provincial Prosecutor’s opinion that redemption by a lienholder must be effected through a court action.
While Dy’s request was pending, UNICOM also expressed its intent to redeem the property as the owner. The Provincial Treasurer, after seeking further legal advice, accepted UNICOM’s redemption payment in September 1989 and issued a Certificate of Redemption in its favor in November 1989, subsequently informing Dy that his tender was ineffective and his payment could be withdrawn.

ISSUE

Whether respondent Henry Dy validly exercised his right of legal redemption over the property sold at the tax delinquency sale.

RULING

The Supreme Court ruled that Henry Dy did NOT validly exercise his right of redemption. The legal logic centers on the proper mode of redemption prescribed by the applicable law, Presidential Decree No. 464 (The Real Property Tax Code). The Court distinguished between two classes of redemptioners under Section 78: the owner (or anyone for him) who may redeem administratively by payment to the provincial treasurer, and any other person having a lien or claim who must redeem judicially by filing an action in court. Dy, as an attachment creditor, fell under the second category. His mere tender of payment to the Provincial Treasurer was an insufficient administrative act; the law required him to institute a court proceeding to effect redemption. Consequently, his action was infirm. In contrast, UNICOM, as the owner through its predecessor IBMC, properly redeemed the property administratively by paying the required amount to the treasurer. The Court emphasized that while the policy of the law is to aid redemption, this right must be exercised in the manner prescribed by statute. Since Dy failed to comply with the mandatory judicial process for lienholders, his redemption attempt was invalid, and UNICOM’s subsequent valid redemption extinguished Dy’s inchoate right.