GR 176929; (July, 2008) (Digest)
G.R. No. 176929 ; July 4, 2008
INOCENCIO Y. LUCASAN for himself and as the Judicial Administrator of the Intestate Estate of the late JULIANITA SORBITO LUCASAN, petitioner, vs. PHILIPPINE DEPOSIT INSURANCE CORPORATION (PDIC) as receiver and liquidator of the defunct PACIFIC BANKING CORPORATION, respondents.
FACTS
Petitioner Inocencio Lucasan and his late wife owned two lots in Bacolod City. In 1972, Pacific Banking Corporation (PBC) extended a loan to Lucasan. Upon his failure to pay, PBC obtained a favorable judgment. To satisfy the debt, the properties were levied upon and sold at public auction to PBC in 1981. A certificate of sale was duly annotated on the titles. Neither Lucasan nor the mortgagee banks redeemed the properties within the statutory period, but PBC never filed a petition for consolidation of ownership. In 1997, Lucasan wrote to respondent PDIC, PBC’s receiver, seeking to cancel the certificate of sale and offering to pay PBC’s claim. PDIC denied the request, stating the properties were acquired assets and could only be reacquired through a public sale at their current appraised value.
Lucasan then filed a petition for declaratory relief/quieting of title with the Regional Trial Court (RTC). He sought to cancel the annotations (the notice of embargo and certificate of sale) on his titles, arguing they cast a cloud, and offered to pay P100,000. PDIC moved to dismiss for lack of cause of action, contending the annotations were valid and effective, arising from a lawful execution sale. The RTC granted the motion to dismiss, a decision affirmed by the Court of Appeals.
ISSUE
Whether the RTC correctly dismissed Lucasan’s complaint for quieting of title.
RULING
Yes. The Supreme Court affirmed the dismissal. An action for quieting of title under Article 476 of the Civil Code requires a cloud on title, defined as an instrument, record, or claim that appears valid or effective on its face but is, in truth, invalid or inoperative. The annotations on Lucasan’s titles—the notice of embargo and the certificate of sale—were not invalid or inoperative. They were the direct and valid consequences of a final judgment and a subsequent execution sale. Therefore, no cloud existed to warrant the action.
The Court clarified that after the redemption period expired without redemption, PBC (and later PDIC) became the absolute owner of the properties, though the titles remained in Lucasan’s name due to the lack of consolidation. Lucasan’s offer in 1997 was not an act of redemption but a proposal for repurchase. Redemption is a right exercised within a statutory period, imposing an obligation on the purchaser to accept. Repurchase after that period is discretionary for the owner. PDIC, as the absolute owner, was not obligated to resell the properties to Lucasan and was within its rights to set a reacquisition price based on current appraisal. The Court distinguished cases where redemption was allowed beyond the period, noting they involved a valid tender of payment made within the redemption period, which did not occur here. Consequently, Lucasan’s petition was a disguised attempt to compel a sale at a price he desired, not a proper action to quiet title.