G.R. No. 231053 - Desiderio Dalisay Investments, Inc. vs. Social Security System

Case Summary (G.R. No. 231053)

Factual Background

The dispute involved a parcel of land and an erected building in Agdao, Davao City, covered by Transfer Certificate of Title Nos. T-18203, T-18204, T-255986, and T-255985, aggregating 2,450 sq.m. In 1976, SSS filed collection cases against the Dalisay Group of Companies for unremitted SSS contributions. On March 11, 1977, Desiderio Dalisay offered the subject property to SSS for P3,500,000 to offset the companies’ liabilities. After ensuing correspondence, appraisals and negotiations, an appraisal by Joson, Capili and Associates dated May 21, 1982 valued the lots at about P1,955,000. During a May 27, 1982 meeting, DGC’s counsel, Atty. Honesto Cabarroguis, stated he had authority to offer the properties for P2,000,000 and assured delivery free of liens and encumbrances; the Committee on Buildings, Supplies and Equipment recommended acceptance at P2,000,000. On June 9, 1982, the Social Security Commission adopted Resolution No. 849‑s.82 accepting the proposed dacion en pago at P2,000,000 subject to specified conditions. On June 17, 1982 SSS communicated this acceptance and invited preparation of documents for final transfer. DDII arranged for turnover and possession: a July 8, 1982 letter of its Acting President indicated readiness to turn over the building by August 15, 1982, and corporate action on July 24, 1982 authorized sale of certain parcels and authorized signatories. Subsequent events included a Deed of Confirmatory Sale executed by PNB on December 29, 1995, an Affidavit of Adverse Claim by SSS personnel in 1998, demand letters for titles, and, after alleged failures to deliver titles, DDII’s complaint for quieting of title, recovery of possession and damages filed on October 8, 2002.

Trial Court Proceedings

The RTC, Branch 14, resolved the case for DDII on July 22, 2010. The trial court declared DDII the true and absolute owner of the subject titles, ordered cancellation of SSS annotations, awarded P50,000.00 monthly for SSS’ occupation from June 6, 2002 until vacation, and ordered surrender of possession to DDII. The RTC found that the June 8, 1982 Memorandum amounted to a qualified acceptance or counter-offer and that DDII did not accept any counter-offer; the RTC further held that the mere turnover of possession did not constitute delivery or tradition necessary to transfer ownership and that a provision on automatic cancellation negated any perfected acceptance. The RTC denied DDII’s reconsideration by order of September 20, 2010.

Court of Appeals Ruling

The Court of Appeals reversed the RTC in an August 12, 2016 decision and dismissed DDII’s complaint for lack of merit. The CA held that the records established an outstanding obligation, a valid offer to pay by dacion en pago, SSS’ categorical and absolute acceptance, and consummation by delivery of the property to SSS. The appellate court treated the June 17, 1982 communication and related actions as an unequivocal acceptance and held that the conditions in that communication concerned the application of the consideration rather than qualification of acceptance. The CA also observed that, even assuming defect, DDII’s long inaction invoked laches. The CA denied DDII’s motion for reconsideration by resolution dated March 10, 2017.

Issues Presented to the Supreme Court

DDII sought relief by Rule 45 petition. The parties framed issues whether a perfected dacion en pago occurred; whether the continued registration of the TCTs in DDII’s name evidenced only preparatory negotiations; whether the action was time-barred; and whether DDII’s conduct warranted application of laches. The pivotal issue distilled by the Supreme Court was whether the proposed dacion en pago was perfected and, if so, whether SSS acquired title or interest that would defeat DDII’s action for quieting of title.

Petitioner’s Contentions

DDII contended that SSS did not give categorical acceptance but issued a qualified acceptance constituting a counter-offer, which DDII never accepted. DDII asserted that the subsequent turnover of possession was a gesture of goodwill during negotiation, not delivery consummating a sale. It also argued that retention of the TCTs in its name showed no completed transfer of ownership. Finally, DDII maintained that the cause of action for quieting of title did not accrue at the time of possession, so prescription and laches did not bar its claim.

Respondent’s Position

SSS, through its pleadings before the CA, maintained that DDII’s offer was reduced to P2,000,000 during the May 27, 1982 meeting, that SSC Resolution No. 849‑s.82 and the June 17, 1982 letter constituted an absolute acceptance, and that possession given to SSS consummated the dacion en pago by tradition, thereby vesting title and interest in SSS. The Supreme Court noted that SSS did not file an additional Comment after the Court required it but that its prior pleadings sufficed for decision.

Legal Standards Applied

The Supreme Court applied the law of dacion en pago under Art. 1245, Civil Code, which subjects dacion to the law on sales. The Court reiterated the three stages of a contract of sale—negotiation, perfection, and consummation—and applied Art. 1319, Civil Code on the requirement that the offer be certain and acceptance absolute. The Court relied on Arts. 1496 and 1497, Civil Code for the rule that ownership passes by delivery or by any agreement that possession is transferred as tradition, and on Art. 1910, Civil Code regarding ratification of an agent’s acts. The requisites for actions to quiet title under Art. 476, Civil Code were also applied: plaintiff’s legal or equitable title and the invalidity or inoperativeness of the instrument casting the cloud.

Court’s Analysis: Negotiation and Ratification

The Supreme Court found that the original P3,500,000 offer was validly reduced to P2,000,000 during the May 27, 1982 meeting. The Court declined to accept DDII’s late contention that Atty. Cabarroguis lacked authority to bind the corporation because DDII did not oppose the representations, arranged turnover promptly thereafter, and its Vice-President communicated readiness to turn over possession. The Court held that the corporation tacitly ratified Cabarroguis’ acts, invoking Art. 1910, and thus the P2,000,000 figure was the operative offer.

Court’s Analysis: Perfection by Acceptance

Examining the June 9, 1982 SSC Resolution and the June 17, 1982 letter, the Court concluded that SSS’ acceptance was absolute and unqualified within the meaning of Art. 1319. The Court interpreted the conditions stated by SSS as procedural directions on the application of the P2,000,000 consideration—proposals originating from DGC during the meeting—not as new conditions converting acceptance into a counter-offer. The Court observed that DDII bore the burden to show the P2,000,000 offer was invalid and that DDII failed to discharge that burden.

Court’s Analysis: Consummation by Delivery (Tradition)

The Supreme Court held that the transfer of possession and the surrounding communications and acts constituted delivery or tradition as contemplated in Arts. 1496–1497. The Court relied on the meeting transcript, the July 8, 1982 letter advising turnover by August 15, 1982, the corporation’s substitution request to PNB stating SSS’ interest, and subsequent events demonstrating DDII’s failure to surrender titles despite mortgage release. The Court found no reser

Case Syllabus (G.R. No. 231053)

Parties and Procedural Posture

Desiderio Dalisay Investments, Inc. was the petitioner in an action for quieting of title, recovery of possession, and damages before the Regional Trial Court, Branch 14, Davao City, docketed as Civil Case No. 29,353-02.
Social Security System was the respondent and adverse claimant who asserted ownership by virtue of a purported dacion en pago consummated in 1982.
The RTC rendered judgment in favor of Desiderio Dalisay Investments, Inc. on July 22, 2010, declaring the petitioner as true owner and ordering possession returned.
The Court of Appeals reversed the RTC in CA-G.R. CV No. 03233-MIN and dismissed the petition for quieting of title on August 12, 2016, with denial of reconsideration on March 10, 2017.
The petitioner filed a Petition for Review on Certiorari under Rule 45, Rules of Court before the Supreme Court, which affirmed the Court of Appeals and denied the petition.

Key Facts

The subject real property consisted of parcels covered by TCT Nos. T-18203, T-18204, T-255986, and T-255985, aggregating 2,450 sq.m., with an existing building in Agdao, Davao City.
Social Security System filed collection cases in 1976 against the Dalisay Group of Companies for unremitted SSS contributions and penalties.
On March 11, 1977, Desiderio Dalisay offered the property to SSS for P3,500,000 to offset the companies' liabilities.
A later appraisal by Joson, Capili and Associates dated May 21, 1982 valued the lots at P1,954,777.78, rounded to P1,955,000.
During a May 27, 1982 meeting, counsel Atty. Honesto Cabarroguis represented the Dalisay Group and stated authority to offer the properties at P2,000,000 and to deliver them free of liens and encumbrances.
The Social Security Commission issued Resolution No. 849 - s. 82, dated June 9, 1982, accepting the offer at P2,000,000, and SSS communicated its acceptance by letter dated June 17, 1982, specifying application of the P2,000,000 to outstanding premiums, penalties, and loan obligations.
Desiderio Dalisay Investments, Inc. sent a July 8, 1982 letter advising that it would turn over the building on August 15, 1982, and a Special Board Resolution of May 24, 1982 authorized sale to SSS and authorized Desiderio Dalisay or Veronica Dalisay-Tirol to sign sale documents.
A Deed of Confirmatory Sale by Philippine National Bank in favor of DDII was executed on December 29, 1995 for reacquired properties, and SSS filed an Affidavit of Adverse Claim on March 20, 1998 and demanded delivery of titles on April 2, 1998.
DDII filed the action for quieting of title on October 8, 2002, asserting no perfected dacion en pago and claiming P43,208,270.99 in back rentals from SSS.

Issues

Whether there was a perfected dacion en pago between Desiderio Dalisay Investments, Inc. and Social Security System.
Whether the continued registration of the Transfer Certificates of Title in the petitioner's name showed that the parties remained in the preparatory stage of contract-making.
Whether the petitioner's cause of action had prescribed at the time of filing.
Whether the petitioner’s long inaction warranted application of laches to bar relief.

Ruling and Disposition

The Supreme Court denied the petition and affirmed the Court of Appeals' reversal of the RTC's judgment, thereby dismissing the complaint for quieting of title for lack of merit.
The Court ordered Desiderio Dalisay Investments, Inc. to execute the Deed of Sale in favor of Social Security System consistent with the terms of the dacion en pago within ten days from finality.
The Court ordered Desiderio Dalisay Investments, Inc. to surrender the Owner's Duplicate of TCT Nos. T-18203, T-18204, T-255986, and T-255985, and the tax declarations over the properties to SSS within ten days from finality.
The Court directed the Clerk of Court to execute the Deed of Sale in favor of SSS should the petitioner refuse to do so, and directed the Register of Deeds of Davao City to cancel the subject titles and issue new ones in the name of SSS.
The