Lucasan v. Philippine Deposit Insurance Corporation
REITERATIONFacts
1. The Antecedents: Inocencio Y. Lucasan and his deceased wife Julianita Sorbito owned two lots in Bacolod City. In 1972, Pacific Banking Corporation (PBC) extended a loan to Lucasan, who, along with his co-maker, failed to pay. PBC subsequently filed a collection case, and in 1979, the RTC ordered Lucasan and his co-maker to pay the outstanding amount. To satisfy the judgment, the RTC issued a writ of execution, leading to the levy and subsequent auction sale of Lucasan's properties in May 1981, where PBC emerged as the highest bidder. 2. Procedural History: Following the auction sale and the annotation of the certificate of sale on Lucasan's titles in June 1981, neither Lucasan nor the prior mortgagees (PNB and RPB) redeemed the properties within the statutory period. PBC, however, did not pursue consolidation of ownership. Years later, in January 1997, Lucasan, after settling his debts with PNB and RPB, contacted the Philippine Deposit Insurance Corporation (PDIC), PBC's receiver, to cancel the certificate of sale. PDIC denied this request, proposing instead a public bidding for the properties. Consequently, Lucasan filed a petition for declaratory relief with the RTC of Bacolod City, seeking the cancellation of the notice of embargo and certificate of sale. The RTC dismissed his petition, a decision affirmed by the Court of Appeals (CA). 3. The Petition: Before the Supreme Court, Lucasan argues that the CA erred in affirming the dismissal of his petition. He contends that the CA disregarded Section 75 of Presidential Decree No. 1529 and relevant jurisprudence, particularly Cometa v. Court of Appeals, which he believes are applicable to his case. Lucasan asserts that the notice of embargo and certificate of sale were merely levies on his interest in the lots, citing Quezon Bearing & Parts Corporation. He maintains he has a valid cause of action for quieting of title, seeking the cancellation of the annotations that allegedly becloud his ownership, and argues that the RTC and CA improperly dismissed his complaint without considering these points.
Issue(s)
Whether the RTC and CA erred in dismissing Lucasan's petition for quieting of title for lack of cause of action. Whether Lucasan has a legal or equitable title to the subject properties despite failing to redeem them within the redemption period. Whether the notice of embargo and certificate of sale constitute a cloud on Lucasan's title that is invalid or inoperative.
Ruling
The petition is DENIED. The Decision and Resolution of the Court of Appeals are AFFIRMED.
Ratio Decidendi
On Issue 1: The Supreme Court affirmed the dismissal of Lucasan's petition for quieting of title, finding that the RTC and CA did not err. The Court reiterated that an action to quiet title requires the plaintiff to possess legal or equitable title and demonstrate that the encumbrance is actually invalid or inoperative. Lucasan failed to meet these requisites. His claim that the annotations created a cloud on his title was unfounded because the levy on execution and the subsequent sale were validly conducted pursuant to a final judgment. The Court emphasized that Lucasan's failure to redeem the properties within the statutory period extinguished his right, rendering his subsequent offer a repurchase, not a redemption. On Issue 2: Lucasan no longer possessed any legal or equitable title to the subject parcels of land. The levy on execution and the public auction sale, culminating in the registration of the certificate of sale on June 5, 1981, were valid proceedings. Under the rules then in effect, the redemption period was twelve months from the registration of the certificate of sale. Lucasan admitted his failure to redeem the properties within this period due to financial constraints. Consequently, his right to redeem was extinguished, and ownership of the properties vested absolutely in PBC. His subsequent payment of loans to PNB and RPB did not revive his lost rights over the foreclosed properties. On Issue 3: Lucasan failed to demonstrate that the notice of embargo and the certificate of sale were invalid or inoperative. He did not assail the validity of the levy on execution or the certificate of sale itself. The RTC correctly noted that the levy created a lien in favor of PBC over Lucasan's interest, subject to prior encumbrances. Even after redeeming from PNB and RPB, the lien of PBC remained. The Court clarified that PBC's failure to file a petition for consolidation of ownership did not operate to restore Lucasan's lost rights, as the expiration of the redemption period already made the sale absolute. The issuance of a final deed of sale is merely a formality confirming the title already vested in the purchaser.
Main Doctrine
An action for quieting of title requires the plaintiff to have legal or equitable title to the property and to show that the instrument, record, claim, encumbrance, or proceeding casting a cloud on the title is in fact invalid or inoperative. Failure to redeem property within the statutory period extinguishes the right to redeem, and subsequent offers to repurchase are not by force of law but by agreement, with the purchaser not bound by the original bid price.