Calacala vs. Republic of the Philippines

A complaint for quieting of title fails to state a cause of action where the plaintiffs, as heirs of the judgment obligor, no longer hold legal or equitable title after failing to redeem the property within the one-year redemption period, and they do not challenge the validity of the registered sheriff’s certificate of sale. Upon expiration of the redemption period in an execution sale, the purchaser is substituted to all the rights, title, interest, and claim of the judgment obligor, and the subsequent issuance of a final deed of sale is a mere formality.

Petitioners are the legal heirs of the deceased spouses Camilo Calacala and Conchita Calacala, who were the registered owners of a parcel of land in Barangay Balincanaway, Rosales, Pangasinan, covered by Transfer Certificate of Title No. T-21204 of the Registry of Deeds of Pangasinan. The spouses offered the parcel as a property bond to secure the provisional release of an accused in a criminal case pending before the then Court of First Instance of Pangasinan.

The spouses Camilo Calacala and Conchita Calacala, predecessors-in-interest of petitioners, were the registered owners of a parcel of land situated at Barangay Balincanaway, Rosales, Pangasinan, covered by Transfer Certificate of Title No. T-21204 of the Registry of Deeds of Pangasinan. To secure the provisional release of an accused in a criminal case then pending before the Court of First Instance of Pangasinan, the spouses offered the parcel as a property bond. When the accused failed to appear at his scheduled arraignment on 4 November 1981, the CFI ordered the bond forfeited in favor of the government; after the bondman failed to produce the body of the accused, judgment was rendered against the bond in the amount of ₱3,500.00.

Thereafter, the court issued a Writ of Execution directing the provincial sheriff to levy on the parcel and sell it at public auction to satisfy the bond. In compliance, the deputy provincial sheriff issued on 26 July 1982 a Notice of Levy addressed to the Register of Deeds of Pangasinan, who on 19 August 1982 caused its annotation on TCT No. T-21204 as Entry No. 83188.

A public auction of the parcel was held on 24 September 1982, at which the Republic submitted a bid of ₱3,500.00, the amount of the judgment on the bond. On the same day, a Sheriff’s Certificate of Sale was issued in favor of the Republic as the winning bidder. On 5 October 1982, the certificate was registered and annotated on TCT No. T-21204 as Entry No. 83793, giving the spouses Calacala one year from that date within which to redeem the property. They never redeemed it; the spouses died on 13 January 1988 and 8 January 1994.

Claiming ownership as legal heirs of the deceased spouses, petitioners filed a complaint for Quieting of Title and Cancellation of Encumbrance on TCT No. T-21204 against respondents Republic and Sheriff Juan C. Marquez. Docketed as Civil Case No. 1239-R and raffled to Branch 53 of the RTC at Rosales, Pangasinan, the complaint prayed for the cancellation of Entries No. 83188 and 83793 or their declaration as null and void. Respondent Republic moved to dismiss on the grounds of failure to state a cause of action and prescription of petitioners’ right to redeem.

In their opposition, petitioners contended that by moving to dismiss for failure to state a cause of action, the Republic hypothetically admitted all the allegations in the complaint, specifically that despite the lapse of nineteen years, the Republic did not secure the necessary Certificate of Final Sale and Writ of Possession and failed to execute an Affidavit of Consolidation of Ownership. Petitioners submitted that the Republic’s rights over the land had either prescribed, been abandoned, or been waived, and that the Republic likewise admitted the allegation that petitioners and their predecessors-in-interest had been in continuous possession of the land and paying the realty taxes thereon.

• Proper Remedy: Petitioners contended that the complaint for quieting of title and cancellation of encumbrance on TCT No. T-21204, filed before the RTC, Branch 53, Rosales, Pangasinan, was the proper remedy.
• Sufficient Cause of Action: Petitioners argued that the complaint stated a sufficient cause of action because they remained the owners of the parcel despite their failure to redeem it within the one-year redemption period; the Republic failed to secure the Certificate of Final Sale, execute an Affidavit of Consolidation of Ownership, and obtain a writ of possession within ten years from the registration of the Certificate of Sale on 5 October 1982.
• Prescription, Abandonment, or Waiver: Petitioners maintained that the Republic’s rights over the property had prescribed or had been abandoned or waived, citing Article 1142 of the Civil Code, and that the Republic had not perfected its title.
• Hypothetical Admission: Petitioners asserted that the Republic’s motion to dismiss hypothetically admitted the allegations that it failed to secure the Certificate of Final Sale and Writ of Possession, failed to execute an Affidavit of Consolidation of Ownership, and that petitioners and their predecessors had been in continuous possession and paying realty taxes.

• Perfected Title by Non-Redemption: Respondent Republic maintained that its rights and title as owner were already perfected by the mere failure of petitioners and/or their predecessors-in-interest to redeem the property within one year from the registration or annotation of the Sheriff’s Certificate of Sale on TCT No. T-21204, in accordance with Section 33, Rule 39 of the 1997 Rules of Civil Procedure.
• Grounds for Dismissal: Respondent Republic moved to dismiss the complaint on the grounds that it failed to state a cause of action and that petitioners’ right to redeem had prescribed.

• Propriety of Dismissal / Cause of Action: Whether the trial court properly dismissed petitioners’ complaint for quieting of title for failure to state a cause of action.
• Requisites of Quieting of Title: Whether petitioners have a legal or equitable title to or interest in the real property and whether the alleged cloud on their title is in fact invalid or inoperative despite its prima facie appearance of validity.
• Effect of Failure to Secure Final Sale, Consolidation, and Writ of Possession: Whether the Republic’s failure to secure a Certificate of Final Sale, execute an Affidavit of Consolidation of Ownership, and obtain a writ of possession within ten years from the registration of the Certificate of Sale prescribed, waived, or abandoned its rights, or restored petitioners’ rights.
• Perfection of Title: Whether the Republic perfected its title upon petitioners’ failure to redeem the property within one year from the registration of the Sheriff’s Certificate of Sale.

• Propriety of Dismissal / Cause of Action: Yes. The dismissal was proper because the complaint failed to state a cause of action for quieting of title; the indispensable requisites for that action were absent.
• Requisites of Quieting of Title: No. Petitioners lacked legal or equitable title after failing to redeem, and they did not put in issue the validity of the registered Sheriff’s Certificate of Sale.
• Effect of Failure to Secure Final Sale, Consolidation, and Writ of Possession: No. The Republic’s failure to secure a final sale, execute an affidavit of consolidation, and obtain a writ of possession did not restore petitioners’ rights, prescribe against the government, or amount to waiver or abandonment; upon expiration of redemption, the purchaser acquired the judgment obligor’s rights under Section 33, Rule 39.
• Perfection of Title: Yes. The Republic’s title was perfected upon the expiration of the one-year redemption period; the subsequent final deed of sale was a mere formality.

• Propriety of Dismissal / Cause of Action: An action for quieting of title is a common law remedy grounded on equity. Under Article 476 of the New Civil Code, the remedy lies when an instrument, record, claim, encumbrance, or proceeding appears valid but is in truth invalid, ineffective, voidable, or unenforceable and may prejudice the complainant’s title. Article 477 requires the plaintiff to have a legal or equitable title to, or interest in, the real property, although possession is not required. The Court held that the complaint failed to satisfy the two indispensable requisites: a legal or equitable title in petitioners and a cloud shown to be in fact invalid or inoperative despite its prima facie validity.
• Requisites of Quieting of Title: Petitioners based their claim of legal title not on any independent writing in their favor but solely on the Republic’s failure to secure the Certificate of Final Sale, execute an Affidavit of Consolidation of Ownership, and obtain a writ of possession within ten years from the registration of the Certificate of Sale. That reliance could not stand. Petitioners’ predecessors-in-interest lost whatever right they had over the land from the moment they failed to redeem it during the one-year redemption period. The Republic’s subsequent inaction could not restore those rights. No provision of law or jurisprudence supports the proposition that such failure by a buyer in a foreclosure sale operates to return ownership to the foreclosed owner. The trial court correctly observed that the failure could not give rise to a presumption of waiver or abandonment or of prescription, because prescription does not lie against the government, and the government cannot be bound or estopped by the negligence or mistakes of its officials and employees.
• Effect of Failure to Secure Final Sale, Consolidation, and Writ of Possession: Section 33, Rule 39 of the 1997 Rules of Civil Procedure provides that upon expiration of the right of redemption, the purchaser or redemptioner shall be substituted to and acquire all the rights, title, interest, and claim of the judgment obligor to the property as of the time of the levy. Although the 1997 Rules did not exist when the facts transpired, the Court applied them retroactively because procedural laws are construed to apply to actions pending and undetermined at the time of their passage, and no vested right may attach to or arise from them. Moreover, the expiration of the one-year redemption period forecloses the obligor’s right to redeem and makes the sheriff’s sale absolute. The issuance thereafter of a final deed of sale is at best a mere formality and a mere confirmation of the title already vested in the purchaser.
• Perfection of Title: Because petitioners were not holders of any legal title over the property and were bereft of any equitable claim, the first requisite of an action to quiet title was wanting. Worse, petitioners never put in issue, and in fact admitted in their pleadings, the validity of the Sheriff’s Certificate of Sale duly registered on 5 October 1982. Thus, the second requisite—that the deed, claim, encumbrance, or proceeding alleged to cast a cloud on the plaintiff’s title be in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy—was likewise absent. The Republic’s title was therefore perfected by the expiration of the redemption period.

• Quieting of Title — A common law remedy grounded on equity for the removal of any cloud upon, or doubt or uncertainty with respect to, title to real property. Its purpose is to secure an adjudication that a claim of title to or interest in property adverse to the complainant is invalid, so that the complainant and those claiming under him may be free from danger of hostile claim. In this case, the Court used the doctrine to test whether petitioners’ complaint stated a cause of action.
• Requisites of an Action for Quieting of Title — Two indispensable requisites must concur: (1) the plaintiff or complainant has a legal or an equitable title to or interest in the real property subject of the action; and (2) the deed, claim, encumbrance, or proceeding claimed to be casting a cloud on his title must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy. The Court found both requisites absent because petitioners had no legal or equitable title after failing to redeem and did not challenge the registered Sheriff’s Certificate of Sale.
• Effect of Expiration of the Redemption Period in an Execution Sale — Under Section 33, Rule 39 of the 1997 Rules of Civil Procedure, upon expiration of the right of redemption, the purchaser or redemptioner is substituted to and acquires all the rights, title, interest, and claim of the judgment obligor to the property as of the time of the levy. The expiration forecloses the owner’s right to redeem and makes the sheriff’s sale absolute; the subsequent issuance of a final deed of sale is a mere formality, an act confirmatory of the title already vested in the purchaser and constituting official evidence of that fact. The Court applied this rule to hold that the Republic’s title was perfected and petitioners lost their rights.
• Prescription Does Not Lie Against the Government — The government cannot be bound or estopped by the negligence or mistakes of its officials and employees, and prescription does not run against it. The Court applied this doctrine to reject petitioners’ claim that the Republic’s failure to secure a final sale, execute an affidavit of consolidation, and obtain a writ of possession for more than ten years resulted in prescription, waiver, or abandonment of its rights.
• Retroactive Application of Procedural Laws — Procedural laws are construed to be applicable to actions pending and undetermined at the time of their passage and are deemed retroactive in that sense and to that extent. As a general rule, retroactive application of procedural laws cannot be considered violative of personal rights because no vested right may attach to or arise from them. The Court applied this doctrine to justify using Section 33, Rule 39 of the 1997 Rules of Civil Procedure even though the facts occurred before the Rules took effect.

• "It is essential for the plaintiff or complainant to have a legal title or an equitable title to or interest in the real property which is the subject matter of the action. Also, the deed, claim, encumbrance or proceeding that is being alleged as a cloud on plaintiff’s title must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy." — This passage states the two indispensable requisites of an action for quieting of title, which the Court found absent in petitioners’ complaint.
• "Upon the expiration of the right of redemption, the purchaser or redemptioner shall be substituted to and acquire all the rights, title, interest and claim of the judgment obligor to the property as of the time of the levy." — This is the controlling rule from Section 33, Rule 39 of the 1997 Rules of Civil Procedure that the Court applied to hold that the Republic acquired the judgment obligor’s rights upon expiration of the redemption period.
• "Note must be taken of the fact that under the Rules of Court the expiration of that one-year period forecloses the owner’s right to redeem, thus making the sheriff’s sale absolute. The issuance thereafter of a final deed of sale becomes a mere formality, an act merely confirmatory of the title that is already in the purchaser and constituting official evidence of that fact." — This passage explains why the Republic’s failure to secure a final deed did not defeat its already vested title and why petitioners could no longer claim ownership.
• "the Republic’s failure to do anything within ten (10) years or more following the registration of the Sheriff’s Certificate of Sale cannot give rise to a presumption that it has thereby waived or abandoned its right of ownership or that it has prescribed, "for prescription does not lie against the government", nor could it "be bound or estopped by the negligence or mistakes of its officials and employees"." — This passage rejects petitioners’ theory that the Republic’s inaction resulted in prescription, waiver, or abandonment of its rights.

• Baricuatro, Jr. vs. CA, 382 Phils. 15, 25 [2000] — Cited for the nature of an action for quieting of title as a common law remedy grounded on equity, whose purpose is to remove a cloud upon or doubt or uncertainty with respect to title to real property.
• Robles, et al. vs. CA, 384 Phils. 635, 647 [2000] — Cited for the rule that the plaintiff must have a legal or equitable title to or interest in the real property and that the deed, claim, encumbrance, or proceeding alleged as a cloud must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy.
• Lascano vs. Universal Steel Smelting Co., Inc., et al., 431 SCRA 248, 253 [2004] citing San Luis vs. Court of Appeals, 365 SCRA 279, 285 [2001] — Cited for the retroactive application of procedural laws to actions pending and undetermined at the time of their passage, and for the rule that no vested right may attach to or arise from procedural laws.
• Manuel vs. Philippine National Bank, et al., 101 Phils. 968, 971 [1957] — Cited for the rule that the expiration of the one-year redemption period forecloses the owner’s right to redeem and makes the sheriff’s sale absolute, and that the subsequent issuance of a final deed of sale is a mere formality confirmatory of the title already in the purchaser.

• Article 476, New Civil Code — Defines when an action to remove a cloud on title or to quiet title may be brought: whenever there is a cloud on title to real property or any interest therein by reason of any instrument, record, claim, encumbrance, or proceeding which is apparently valid or effective but is in truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title. The Court used this provision to frame the remedy and to conclude that petitioners failed to show the required cloud.
• Article 477, New Civil Code — Provides that the plaintiff must have legal or equitable title to, or interest in, the real property which is the subject matter of the action, and need not be in possession of said property. The Court applied this provision to hold that petitioners lacked the requisite legal or equitable title after the redemption period expired.
• Article 1142, Civil Code — Cited by petitioners in support of their claim that the Republic’s rights had prescribed. The Court rejected the prescription theory, holding that prescription does not lie against the government.
• Section 33, Rule 39, 1997 Rules of Civil Procedure — Provides that upon expiration of the right of redemption, the purchaser or redemptioner shall be substituted to and acquire all the rights, title, interest, and claim of the judgment obligor to the property as of the time of the levy. The Court applied this provision retroactively to hold that the Republic acquired the judgment obligor’s rights and that the final deed of sale was a mere formality.
• Rule 45, Rules of Court — The petitioners brought the case to the Supreme Court by petition for review on certiorari under Rule 45; the petition was denied and the trial court’s resolution and order were affirmed.

Justice Panganiban (Chairman), Justice Sandoval-Gutierrez, Justice Corona, and Justice Carpio-Morales concurred.