FIRST DIVISION
[G.R. No. 183022. November 21, 2018.]
ZENAIDA MENDOZA and A-5 FARMS CORPORATION, petitioners, vs.REX G. RICO, respondent.
[G.R. No. 183138. November 21, 2018.]
KATHERINE T. TINGSON, IN HER CAPACITY AS TREASURER OF ILOILO CITY, petitioner, vs.REX G. RICO, respondent.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, First Division, issued a Resolution dated November 21, 2018, which reads as follows:
"G.R. No. 183022 (ZENAIDA MENDOZA and A-5 FARMS CORPORATION, Petitioners, v. REX G. RICO, Respondent.)
G.R. No. 183138 (KATHERINE T. TINGSON, in her capacity as TREASURER OF ILOILO CITY, Petitioner, v. REX G. RICO, Respondent.) — G.R. No. 183022 is an appeal 1 from the November 28, 2007 decision 2 and May 6, 2008 resolution 3 in CA-G.R. CV No. 00495 whereby the Court of Appeals (CA) reversed the judgment of the Regional Trial Court (RTC) 4 in Iloilo City, Branch 31 in Civil Case No. 03-27664, and denied its motion for reconsideration, for lack of merit, respectively.
On July 30, 2008, 5 the Court consolidated G.R. No. 183022 with G.R. No. 183138 (Katherine T. Tingson, in her capacity as Treasurer of Iloilo City v. Rex G. Rico); however, G.R. No. 183138 was later declared terminated under the resolution dated June 10, 2009 6 for failure of the petitioner therein to file the intended petition for review on certiorari within the extended period which expired on July 7, 2008. 7 The resolution dated June 10, 2009 became final and executory on August 18, 2009. 8
Antecedents
We adopt the following antecedents as narrated by the CA in its assailed decision, to wit:
On September 27, 2001, the Office of the City Treasurer of Iloilo City, sold at public auction for tax delinquency the lot owned by A-5 Farms Corporation covered by Transfer Certificate of Title No. 61936, particularly described as follows:
"A parcel of land (Lot No. 2510 of the Cadastral Survey of Iloilo), with all buildings and improvements, except those herein expressly noted as belonging to other persons, situated in the Municipality of Iloilo. Bounded on the NE., by Calle Rizal; on the SE., by Lots Nos. 2509 and 2511; on the SW., by Calle Guzman; and on the NW., by Lot No. 2509; containing an area of NINE HUNDRED AND FIFTY NINE (959) SQUARE METERS, more or less."
Petitioner-appellant was the highest bidder in said auction sale; consequently, a Certificate of Sale of Delinquent Real Property was issued to him by the Office of the City Treasurer. DHITCc
On December 4, 2001, petitioner-appellant received a copy of the Notice of Redemption from the Office of the City Treasurer, informing him that the subject land was already redeemed by a certain Zenaida Mendoza, in behalf of A-5 Farms Corporation.
Thereafter, petitioner-appellant wrote several letters to Office of the City Treasurer questioning the authority of said Zenaida Mendoza de Asis to redeem the subject property as it is registered in the name of A-5 Farms Corporation. Petitioner-appellant argued that in the absence of any board resolution authorizing Zenaida Mendoza to redeem the subject property, the redemption is not valid.
On March 28, 2003, more than a year after the execution sale, petitioner-appellant wrote another letter requesting the Office of the City Treasurer to execute and deliver to him the Certificate of Final Sale covering the subject land.
In response to such letter, the Office of the City Treasurer wrote a letter dated April 3, 2003 informing petitioner-appellant that their office is now precluded from issuing a Final Deed to Purchaser because the subject property was validly redeemed by A-5 Farms Corporation through its President, Zenaida Mendoza, on November 19, 2001.
On June 9, 2003, petitioner-appellant filed a Petition for Mandamus with Damages before the court a quo, seeking to compel the Office of the City Treasurer of Iloilo City to issue the Certificate of Final Sale in his favor.
During trial, however, the Office of the City Treasurer admitted that it was not Zenaida Mendoza de Asis who redeemed the subject property in behalf of [A]-5 Farms Corporation but Rolando de Asis, the corporation's vice president. Nevertheless, it argued that even if it was Zenaida Mendoza de Asis who redeemed the subject property, the redemption is still valid because the Tax Declaration covering the subject land was in the name of "A-5 Farm Corporation, c/o Zenaida Mendoza de Asis."
On August 27, 2004, the court a quo rendered the assailed Decision dismissing the Petition. 9
The respondent appealed the judgment of the RTC to the CA.
On November 28, 2007, the CA promulgated its assailed decision, and disposed thusly:
WHEREFORE, the instant appeal is hereby GRANTED. The August 27, 2004 Decision of the Regional Trial Court, Branch 31, Iloilo City is hereby REVERSED AND SET ASIDE. Accordingly, the Office of the City Treasurer of Iloilo City is hereby directed to immediately issue the certificate of final sale and the corresponding title over the subject property in the name of petitioner appellant.
SO ORDERED.10
According to the CA, there was no valid redemption because petitioner Zenaida Mendoza (Mendoza) had not presented a board resolution authorizing her to redeem the property despite her being a stockholder, director and officer of the co-petitioner corporation. 11 The CA noted the Office of the City Treasurer's claim that it was actually Rolando Asis (Asis) who had redeemed the property, although only a photocopy of the minutes of the supposed special stockholders' meeting of the corporation had been presented to show that Asis was authorized to do so. 12 Even if the minutes of the special stockholders' meeting were to be admitted, the CA observed that the minutes still contained discrepancies, particularly in regard to the signature of Asis that seemed to have been forged. 13 The CA rejected the petitioners' contention that the corporation had ratified Asis' redemption of the property when it filed its answer to the petition for mandamus because at the time the answer was filed, the period to redeem had already lapsed. 14
Issue
Was there a valid redemption of the property?
Ruling of the Court
The Court finds that the redemption of the subject property was validly made by the representative of petitioner A-5 Farms Corporation. cEaSHC
Section 261 of the Local Government Code provides that:
Section 261. Redemption of Property Sold. — Within one (1) year from the date of sale, the owner of the delinquent real property or person having legal interest therein, or his representative, shall have the right to redeem the property upon payment to the local treasurer of the amount of the delinquent tax, including the interest due thereon, and the expenses of sale from the date of delinquency to the date of sale, plus interest of not more than two percent (2%) per month on the purchase price from the date of sale to the date of redemption. Such payment shall invalidate the certificate of sale issued to the purchaser and the owner of the delinquent real property or person having legal interest therein shall be entitled to a certificate of redemption which shall be issued by the local treasurer or his deputy.
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Based on the foregoing, the owner of the delinquent real property or any person having legal interest therein, or his representative, has the right to redeem the property within one year from the date of sale upon payment of the delinquent tax and other fees.
The petitioners insist that A-5 Farms Corporation, the original owner of the property, was a close family corporation because its incorporators, stockholders and officers were brothers and sisters, namely: Mendoza (President), Asis (Vice President), Dominador Asis, Jr. (Vice President), Carmelita Asis Sembrano (Secretary) and Roberto Asis (Treasurer). They had inherited the property from their parents and had transferred the same in the name of A-5 Farms Corporation. 15
Although the Articles of Incorporation of A-5 Farms Corporation 16 did not reflect the requisite provisions of Section 96 of the Corporation Code, 17 its corporate structure, management and operation sufficiently indicated it as coming under the Corporation Code's definition of a close corporation. With A-5 Farms Corporation being a close corporation, therefore, the resolution of its board of directors to give validity to an act of a director as provided under Section 101 18 of the Corporation Code was unnecessary. Thus, when all the stockholders or directors of the close corporation have actual/express or implied knowledge of the action of the board or any of the directors and none of them makes prompt objection thereto in writing, such action remains valid. Simply put, even without a board resolution approved during a board meeting, any action by a director of a close corporation shall be deemed valid provided all the stockholders or directors of the close corporation have knowledge thereof and makes no prompt written objection thereto.
The lack of a written objection from any director of a close corporation actually amounts to a form of ratification, which the Court defined in Yasuma v. Heirs of Cecilio S. de Villa, 19 to wit:
x x x Ratification means that the principal voluntarily adopts, confirms and gives sanction to some unauthorized act of its agent on its behalf. It is this voluntary choice, knowingly made, which amounts to a ratification of what was theretofore unauthorized and becomes the authorized act of the party so making the ratification. The substance of the doctrine is confirmation after conduct, amounting to a substitute for a prior authority. Ratification can be made either expressly or impliedly. Implied ratification may take various forms like silence or acquiescence, acts showing approval or adoption of the act, or acceptance and retention of benefits flowing therefrom.
Thus, despite the lack of a board resolution, the redemption made by Asis was valid and binding on the corporation. Moreover, there is no evidence showing that a written objection had been made by any of the directors against the redemption. Therefore, Asis was an authorized representative of the owner of the delinquent property.
The Court is likewise inclined to affirm the validity of the redemption in view of our ruling in Iligan Bay Manufacturing Corp. v. Dy20 which reminds us that:
We have established in jurisprudence that in cases involving redemption, the law protects the original owner. It is the policy of the law to aid rather than to defeat the owner's right. Therefore, redemption should be looked upon with favor and where no injury will follow, a liberal construction will be given to our redemption laws, specifically on the exercise of the right to redeem. x x x
WHEREFORE, the Court GRANTS the petition for review on certiorari; SETS ASIDE the decision promulgated on November 28, 2007 and resolution promulgated on May 6, 2008 by the Court of Appeals in CA-G.R. CV No. 00495; REINSTATES the decision rendered on August 27, 2004 by the Regional Trial Court in Iloilo City, Branch 31, dismissing Civil Case No. 03-27664; and ORDERS the respondent to pay the costs of suit. CTIEac
SO ORDERED."Bersamin, J., designated as Acting Chairperson per Special Order No. 2606 dated October 10, 2018; Gesmundo, J., designated as Additional Member per Special Order No. 2607 dated October 10, 2018.
Very truly yours,
(SGD.) LIBRADA C. BUENADivision Clerk of Court
Footnotes
1.Rollo (G.R. No. 183022), pp. 13-14, under Rule 45 of the Rules of Court.
2.Id. at 39-52; penned by Associate Justice Stephen C. Cruz, with Associate Justice Antonio L. Villamor and Associate Justice Amy C. Lazaro-Javier concurring.
3.Id. at 71-73.
4.Id. at 139-147; penned by Judge Rene S. Hortillo.
5.Id. at 203.
6.Rollo (G.R. No. 183138), pp. 22-23.
7.Rollo (G.R. No. 183022), p. 22.
8.Rollo (G.R. No. 183138), pp. 27-28.
9.Rollo (G.R. No. 183022), pp. 40-42.
10.Id. at 51.
11.Id. at 45.
12.Id. at 46.
13.Id. at 48-50.
14.Id. at 50.
15.Id. at 141.
16.Id. at 284-300.
17. Sec. 96. Definition and Applicability of Title. — A close corporation, within the meaning of this Code, is one whose articles of incorporation provide that: (1) All of the corporation's issued stock of all classes, exclusive of treasury shares, shall be held of record by not more than a specified number of persons, not exceeding twenty (20); (2) All of the issued stock of all classes shall be subject to one or more specified restrictions on transfer permitted by this Title; and (3) The corporation shall not list in any stock exchange or make any public offering of any of its stock of any class. Notwithstanding the foregoing, a corporation shall be deemed not a close corporation when at least two-thirds (2/3) of its voting stock or voting rights is owned or controlled by another corporation which is not a close corporation within the meaning of this Code.
18. Sec. 101. When board meeting is unnecessary or improperly held. — Unless the by-laws provide otherwise, any action by the directors of a close corporation without a meeting shall nevertheless be deemed valid if:
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2. All the stockholders have actual or implied knowledge of the action and make no prompt objection thereto in writing; or
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4. All the directors have express or implied knowledge of the action in question and none of them makes prompt objection thereto in writing.
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19. G.R. No. 150350, August 22, 2006, 499 SCRA 466, 471-472.
20. G.R. Nos. 140836 & 140907, June 8, 2007, 524 SCRA 55, 70.