Dalisay Investments, Inc. v. Social Security System
REITERATIONFacts
The Antecedents: Respondent Social Security System (SSS) filed cases against the Dalisay Group of Companies (DGC) for unremitted employee contributions. Desiderio Dalisay, President of petitioner Desiderio Dalisay Investments, Inc. (DDII), offered a land and building to offset DGC's liabilities. Initial negotiations failed due to disagreement on valuation. Later, Atty. Honesto Cabarroguis, DGC's lawyer, offered the properties for P2,000,000.00 during a meeting with SSS' Committee on Buildings, Supplies and Equipment. DDII's Board of Directors issued a Resolution authorizing the sale to SSS to settle liabilities. Appraisers valued the lots at P1,954,777.78. During the meeting, Atty. Cabarroguis assured SSS that the properties would be turned over free of liens and encumbrances. SSS accepted the offer at P2,000,000.00. SSC Resolution No. 849-s.82 accepted the dacion en pago, subject to conditions, including the application of the amount to premium contributions, penalties, and loan obligations, and that criminal cases would not be withdrawn. DDII was informed of the acceptance and conditions. DDII, through its Acting President, informed SSS of the planned turnover of the building by August 15, 1982. Heirs of Regina L. Dalisay executed an Affidavit of Consent for the sale. Desiderio Dalisay passed away in 1989. DDII's liabilities to SSS allegedly amounted to P15,689,684.93 by 1995. Philippine National Bank (PNB) executed a Deed of Confirmatory Sale in favor of DDII for reacquired properties, including the subject property. SSS filed an Affidavit of Adverse Claim due to DDII's failure to turn over the titles. SSS demanded the titles, noting that the PNB mortgage had been settled but titles were not delivered. DDII, through its President, cited pending issues, including claims by Desiderio F. Dalisay Sr.'s estate and the accuracy of SSS's claimed amount. DDII requested reevaluation, proposing condonation of penalties, payment of original liabilities, return of property, and withdrawal of claims against the estate. DDII later proposed offsetting SSS obligations with back rentals, alleging SSS owed P34,217,988.19 in back rentals. DDII filed a complaint for Quieting of Title, Recovery of Possession, and Damages against SSS. Procedural History: The Regional Trial Court (RTC) ruled in favor of DDII, declaring no perfected dacion en pago and ordering SSS to vacate and pay damages. The Court of Appeals (CA) reversed the RTC, finding a perfected dacion en pago and dismissing DDII's complaint. The CA also ruled that DDII's claim was barred by laches. DDII filed a petition for review on certiorari. The Petition: DDII seeks the reversal of the CA decision, arguing that there was no perfected dacion en pago, that the TCTs remaining in its name indicate the contract was in the preparatory stage, and that its action was not barred by prescription or laches.
Issue(s)
Whether or not there was a perfected "Dacion en Pago". Whether or not the fact that the Transfer Certificates of Title over the subject properties remained in the name of the petitioner is a strong indicium that the parties remained in the preparatory stage of contract-making. Whether or not the prescriptive period to file the action had already prescribed, and whether or not petitioner slept on its rights that would warrant the imposition of laches. On the nature of Dacion en Pago and its perfection.
Ruling
The Supreme Court denied the petition, affirming the Court of Appeals' decision. It ruled that a perfected dacion en pago existed, and consequently, DDII's action for quieting of title was dismissed. DDII was ordered to execute a Deed of Sale in favor of SSS and surrender the titles and tax declarations. SSS was ordered to recompute DDII's obligations.
Ratio Decidendi
On the issue of whether there was a perfected "Dacion en Pago": The Court held that there was a perfected dacion en pago. The negotiation stage involved DDII's offer, initially at P3,500,000.00, which was later reduced to P2,000,000.00 by Atty. Cabarroguis, DGC's representative. Despite the lack of explicit written authority for Atty. Cabarroguis, DDII's subsequent actions, including the turnover of possession and the absence of opposition to his representations, constituted implied ratification of his acts. The Court found that SSS's acceptance of the P2,000,000.00 offer was absolute and unqualified, thus perfecting the contract. The conditions mentioned in SSS's letter were not new impositions but rather a clarification of how the proceeds of the dacion would be applied, a proposal that originated from DDII itself. On the issue of whether the TCTs remaining in DDII's name indicates a preparatory stage: The Court ruled that the transfer of possession to SSS was tantamount to "delivery" or "tradition," signifying the transfer of ownership. The Court emphasized that ownership is acquired by delivery, not merely by stipulation. The turnover of the property, free from liens and encumbrances, was not merely for goodwill but a consummation of the dacion en pago. The failure to surrender the titles was a violation of the agreement, not proof that the contract was unperfected. On the issue of prescription and laches: The Court found that DDII's claim was barred by laches. DDII failed to assert its rights over the property for approximately 20 years after the consummation of the dacion en pago. The Court noted that DDII's actions, including offering the property for sale, vacating the premises, and then later claiming back rentals and seeking condonation of its obligations, demonstrated bad faith and an attempt to evade its contractual obligations. The prolonged inaction despite SSS's possession and the clear indications of a perfected agreement led the Court to conclude that DDII slept on its rights. On the nature of Dacion en Pago and its perfection: The Court reiterated that dacion en pago is a special mode of payment where property is alienated to the creditor in satisfaction of a debt. It is governed by the law on sales. The three stages of a contract of sale—negotiation, perfection, and consummation—apply. Perfection occurs upon the meeting of the minds on the object and price, and consummation occurs upon delivery. The Court found that all these stages were met in this case, with the offer and acceptance leading to perfection, and the physical turnover of the property constituting delivery and consummation.
Main Doctrine
A contract of dacion en pago is perfected upon the meeting of the minds as to the object and price, and consummated upon the delivery of the property, which signifies the transfer of ownership. The failure to immediately question the authority of a representative or to oppose agreements reached during negotiations, coupled with the subsequent turnover of the property, constitutes implied ratification and acceptance of the dacion en pago.