Desiderio Dalisay Investments, Inc vs Social Security System

Facts:
Respondent SSS filed a case against petitioner Dalisay Investments for collection of unremitted
SSS premium contributions of petitioner’s employees. Desiderio Dalisay, President of petitioner,
sent a letter to the respondent offering the subject land and building to offset the Dalisay group
of company’s liabilities, however, negotiation did not take place because the parties failed to
arrive at an agreement as to the appraised value. Desiderio sent a letter seeking further
negotiation suggesting that Asian Appraisal to make the appraisal which the Social Security
Commission Agreed. The appraisers sent a letter to petitioner stating the total value of the lot.
However, on a meeting between the SSS committee on buildings and the DGC, the latter’s
counsel stated that DGC is in financial distress and is in no way capable of settling its obligation
in cash and stated that the authority to offer the properties would be their way of settling their
obligation. The offer was accepted. The SSC informed DDII of its acceptance of the proposed
dation in payment. Desiderio Dalisay then passed away. Eddie Jara, assistant vice-president of
SSS executed an affidavit of adverse claim over the properties stating that the Dalisay
Investments failed to turn over the certificates of title to SSS. Jara sent a demand letter to
Dalisay but to no avail because the properties subject of the dacionare being claimed by the
estate of Desiderio Dalisay. DDII then filed a complaint for Quieting of title, recovery of
possession and damages against SSS which was affirmed.

Issue:
Whether or not there was a perfected dacion en pago

Ruling:
No.

Ratio:
The court held that for an action to quiet title to prosper, two indispensable requisites must
concur. First, the plaintiff or complainant must have a legal or an equitable title to or interest in
the real property subject of the action and the deed, claim, encumbrance, or proceeding
claimed to be casting cloud on his title must be shown to be in fact invalid or inoperative
despite its prima facie appearance of validity or legal efficacy.

In this case, the presence or absence of these two requisites is hinged on te question of wheter
or not the proposed dacion en pago was ineed perfected, thereby vesting unto SSS a legitimate
title and interest over the properties in question. In other words, if it can be proved that the
proposed dacion was perfected, or ven consummated, then SSS’ claim which allegedly casts a
cloud on DDII’s title is valid and operative, and consequently, the action for quieting of title filed
by DDII will not prosper.