1.

G.R. No. L-47661

July 31, 1987

which respondent Pablo Encabo objected and filed an Answer in opposition thereto. Essentially, both parties in LTA Case No. 490 (Encabo and the spouses Cario) claimed the right to purchase the lot in question from the LTA. After the submission of their respective pleadings and evidence, the LTA rendered a decision holding that the status quo should be maintained. It reasoned out that "the authenticity of the alleged deed (Exh. "D-1") is not for this office to decide, as only the courts have that prerogative."6 The Carios appealed the decision of the LTA to the Office of the President, which affirmed it. Motions for reconsideration were filed by the Cario's but were denied, the last denial being contained in a letter dated 22 March 1963, signed by Acting Assistant Executive Secretary Juan S. Cancio.7 The Carios refused to give up the possession of the lot despite the rulings of the LTA and the Office of the President; thereafter, the Encabos filed an action in the Court of First Instance of Manila to declare them as the owners of the lot and for the Carios to deliver the possession of the lot itself, and to pay rentals for their occupancy of the properties plus attorney's fees. After hearing and trial, the lower court rendered decision in favor of the plaintiffs therein the Encabos now private respondents, the dispositive part of which reads as follows:8 WHEREFORE, the court renders judgment holding that the plaintiffs Pablo Encabo and his wife Juanita de los Santos Encabo are entitled to Lot No. 1, Block 4, Plan Psd-24819; that the deed of sale executed by the Land Authority on April 18, 1967, in favor of said spouses is hereby upheld; that the registration of the said deed of sale by the Register of Deeds of Manila and the issuance of Transfer Certificate of Title No. 87826 in favor of the plaintiffs Encabo are also upheld; that the order of this Court dated September 8, 1967, cancelling and declaring the said deed of sale without any effect is hereby set aside; that in the event that the Register of Deeds, has already cancelled Certificate of Title No. 67825 as ordered by this Court in its order of September 8, 1967, the said Register of Deeds, upon payment of the required legal fees, is ordered to register again the Deed of Sale of Lot 1, Block 4, Plan Psd-24819 executed by the Land Authority on April 18, 1967, in favor of the plaintiffs Pablo Encabo and his wife Juanita de los Santos Encabo and issue in their favor a new certificate of title for the lot in question; that if Transfer Certificate of Title No. 87826 has not been cancelled by the Register of Deeds, the same shall remain valid and in full force and effect. The defendants spouses Juanito Cario and Cirila Vicencio are declared the owners of the house constructed on the lot in question. They should remove the same within sixty (60) days after this judgment shall become final, otherwise, the same shall be ordered demolished. Plaintiffs and the Land Authority will recover costs from defendants Cario. Not satisfied with the aforementioned decision of the Court of First Instance of Manila, the herein petitioners (as defendants therein) appealed the same to the Court of Appeals which, as earlier stated, affirmed the decision of the trial court in all respects. Hence, this petition for review filed by the petitioners.

JUANITO CARIO and CIRILA VICENCIO, petitioners, vs. COURT OF APPEALS, PABLO ENCABO and JUANITA DE LOS SANTOS, and LAND AUTHORITY, respondents. PADILLA, J.: Petition for certiorari filed by the spouses Juanito Cario and Cirila Vicencio, seeking the review and reversal of the decision* of respondent Court of Appeals, dated 15 November 1977, in CA-G.R. No. 49495-R which affirmed the decision of the Court of First Instance of Manila, Branch XXIII, Civil Case No. 57861, and its resolution, dated 6 January 1978, denying the petitioners' motion for reconsideration. The facts derived from the records are as follows: On 22 January 1954, Pablo Encabo formally applied with the Land Estates Division, Bureau of Lands, to purchase a parcel of land designated as Lot 1, Block 4, Plan Psd-24819, which was a part of the Tuason Estate purchased by the government pursuant to the provisions of Commonwealth Act No. 539, for resale to bona fide tenants or occupants who are qualified to own public land in the Philippines.1 Thereafter, Encabo, through petitioner Cirila Vicencio, supposedly as "agent, " came to an agreement with Josue Quesada transferring rights over the lot to the latter, conditioned on approval by the Land Tenure Administration (LTA, for short). The husband of Cirila Vicencio (Juanito Cario) is a relative of Quesada; Cirila Vicencio is also a "comadre" of Quesada's wife.2 The transfer of rights by Encabo to Quesada was not put in writing but payment of the price for the rights transferred was evidenced by receipts (Exhibits "A" and "B") on which Cirila Vicencio signed as a witness. On 30 July 1957, the LTA, unaware of the transfer of rights by Encabo to Quesada, adjudicated the lot in favor of Encabo, and the LTA and Encabo signed an "Agreement to Sell" (Exh. "G1"). LTA later came to know about the "transfer" of rights from Encabo to Quesada. It disapproved the same on the ground that Quesada was not qualified to acquire the lot because he is already a lot owner.3 However, before the LTA's disapproval of the transfer of Encabo's rights to Quesada, the latter had entered into possession of the lot in question. Quesada had also allowed Cirila Vicencio to enter into possession and occupancy of the same lot.4 In November (undated) 1958, Encabo executed a Deed of Sale of House and Transfer of Rights (Exh. "D-1"), purportedly conveying to herein petitioners (Juanito Cario and Cirila Vicencio), his rights over the lot, subject to approval of the LTA. On 17 December 1958, Encabo wrote a letter to the LTA (Exh. "1") requesting permission to transfer his rights. Another such request was made on 20 April 1960 (Exh. "2") but without making mention of who the transferee would be, just like in the first letter. On 18 April 1960, however, Encabo and Quesada executed a document wherein the latter purportedly resold to the former (Encabo) the house and the rights over the lot. 5 On 19 April 1960, Juanito Cario filed a petition with the LTA seeking approval of the transfer to herein petitioners of rights to the lot in question on the basis of the Deed of Sale of House and Transfer of Rights executed by Pablo Encabo (Exh. "D-1"). The petition of Juanito Cario was docketed as LTA Case No. 490, to

As a rule, factual-findings of the Appellate Court are binding on this Court.9 As held in Dra. Sofia L. Prudenciado v. Alliance Transport System, Inc. and Jose Layson, et al.:10 . . . . factual findings of the Court of Appeals are binding on the Supreme Court, but said findings are subject to scrutiny if such are diametrically opposed to those of the trial court. In the present case, the findings of fact and conclusions of the Court of First Instance and the Court of Appeals are not at variance; the same is true with the findings of fact of the LTA as submitted by the public respondent Land Authority.11 As was held in Buyco v. People,12 this Court on appeal by certiorari from the Court of Appeals, could not find otherwise where the Amnesty Commission, the Court of First Instance and the Court of Appeals all found, in effect, that the evidence did not show that the appellant had acted in the manner contemplated by Amnesty Proclamation No. 8, after he had been given an opportunity to bring the homicide with which he was charged within its terms. As we see it, the only legal question that stands as the basis of this petition centers on whether the respondent Court of Appeals committed grave abuse of discretion in concluding that the Deed of Sale of House and Transfer of Rights (Exhibit D-1 "), on which the petitioners have based their application over the questioned lot, is simulated and, therefore, an inexistent deed of sale. This Court finds that there is substantial and convincing evidence that Exhibit "D-1" was a simulated deed of sale and transfer of rights, to warrant the affirmance of the decision of the respondent Court of Appeals. The characteristic of simulation is the fact that the apparent contract is not really desired or intended to produce legal effects nor in any way alter the judicial situation of the parties.13 Under the circumstances surrounding their transaction, the parties knew that the document Exhibit "D1" was at once fictitious and simulated where none of the parties intended to be bound thereby. The testimony of Cirila Vicencio during her direct examination was grossly inconsistent with her statements in the LTA administrative case which she previously filed. She testified in the lower court that she paid the Encabos five hundred pesos (P500.00) for the lot, whereas, in the LTA administrative case she said that it was one thousand pesos (P1,000.00). 14 Aside from the purported Deed of Sale (Exhibit "D-1"), there is no other document which evidences the payment of a sum of money by Cario to the Encabos for the disputed lot. Cirila Vicencio also testified in the lower court that Exhibit "D-1" was signed by Pablo and Juanita Encabo in Cario's house at 4214 K Int. 8, Sociego, Sta. Mesa, whereas, in the LTA administrative case, she testified that it was signed in Las Pinas, Rizal, the residence of the Encabos.15 These inconsistencies in the testimony of the Carios are badges of untruthfulness, showing that no actual and real sale of the lot in question took place between the Encabos and the Carios. The testimony of a witness does not merit credibility or inspire confidence where it is inconsistent and incompatible with his statements on other occasions concerning the same fact.16 Strongly indicative of the simulated character of Exhibit ,"D-1" is the fact that the Carios could not produce the receipts evidencing their alleged payments to the Land Authority for the disputed lot, nor were they able to produce the Agreement to Sell (Exhibit "G-1"). According to Cirila Vicencio, Juana Encabo took from her the Agreement to Sell and the receipts of payments

to the Land Authority in order to mortgage the land. The Carios, who are the supposed vendees, did not even remonstrate or offer a word of objection to this act of the Encabos. Cirila Vicencio, on cross-examination, testified thus: Q. Do you have the receipts evidencing your payment? A. I have but Juana Encabo got them from me. Q. Why did she get the receipts from you? A. SHE REQUESTED ME TO SEND HER THE AGREEMENT TO SELL AND THE RECEIPTS FOR THE MONTHLY RENTALS BECAUSE ACCORDING TO HER SHE WOULD MORTGAGE THE DOCUMENTS. 17 xxx xxx xxx

Q. If you claim to have purchased the property in question, why did you still permit the Encabos to mortgage the property? Atty. Olandesca: Objection, the question is vague. Court: Witness may answer. A. BECAUSE I AM THE KOMADRE OF THE YOUNG ENCABOS, SO I TRUSTED THEM. 18 Previously, on direct examination, the testimony of Cirila Vicencio, was quite different. She testified thus: Q. Do you have th receipts evidencing your payment? A. I have but Juana Encabo got them from me. Q. Why did she get the receipts from you? A. She requested me to lend her the Agreement to Sell and the receipts for the monthly rentals because according to her she would mortgage the documents. Q. When did she borrow the documents from you? A. About 1960. Q. And what did you tell her? A. I got angry and was so worried about it. Q. Why were you worried? A. Because I was being embarassed to my neighbors. When they arrived in our house they brought a document with them and asked me to sign said document. Q. I am showing to you a document dated April 1960 marked as Ex. 4 (a Deed of Resale) between the

Encabos and the Carios) consisting of an original and three duplicate copies, do you recognize this document? A. This is the document they brought to me for signature. Q. When Juana Encabo went to see you asking you to sign the document, Exhibit 4 and you said that you were angry and embarassed, what did you do? A. I fainted because of my anger and embarassment. Q. Did you file any complaint with the LTA because of that? A. Yes, sir. 19 According to Cirila Vicencio, the receipts were borrowed one (1) week before the case was filed on 19 April 1960. 20 It would appear then that she delivered to Mrs. Encabo all the papers relative to the disputed lot so that the latter can mortgage the same, despite the fact that there was already an obvious misunderstanding as to who was the real owner of the house and lot. If these papers relative to the lot were really in her possession, the reasons she gave for delivering them to the Encabos are varied. A more credible reason for the surrender of the papers was the one cited by the Carios in their petition to the LTA (Exhibit 100), wherein they alleged "that due to evident machinations employed by the respondent upon the petitioner and by taking undue advantage of the latter's innocence and good faith in his dealings with the former, the respondent herein has maneuvered the petitioner into releasing to him the official receipts issued to the petitioner for the corresponding payments made on the lot. But these allegations were never pursued by the petitioners in the lower court. Instead, they gave different versions which all the more weakened their stand. Granting that the papers relative to the lot were really in the possession of the Carios, the fact that they were delivered by Cirila Vicencio to Juana Encabo, amounted to an act of complete ownership and control of the property by the Encabos. As held in Serrano v. CA,21 this Court finds it strange that respondent (Macaraya) would allow petitioner (Serrano) to receive the fruits of the subject property several months after he acquired absolute ownership of the same. This is contrary to the principle of ownership. The respondent Court also found as a fact that the names of the Carios were not mentioned as the proposed transferees in the two applications with the LTA filed by Pablo Encabo for transfer of rights (at a time when the alleged "Deed of Sale and Transfer of Rights," Exhibit "D-1" was already executed in favor of the Carios). These applications with the LTA were mere speculations on the part of the Encabos if they should desire to sell the lot later on (these applications were later withdrawn by the Encabos in a letter dated May 9, 1960 [Exhibit 113] and no inference can be made that they intended to transfer the lot specifically to the Carios. If there were really an intent, then there was no reason which would stop the Encabos from putting the name of the Carios as transferees, just like in the application to transfer to Quesada wherein the latter's name was specifically mentioned. All these appear to clearly indicate a positive lack of intention of the Encabos to transfer any right to the petitioners (Carios). Another factor which leads the Court not to disturb the respondent Court's finding that Exhibit "D-1" is a simulated

document is the fact that such document was executed in November 1958 while the Carios petitioned the LTA to approve the transfer in their names of Encabos' rights to the lot on the basis of such deed of sale, only on 19 April 1960. The application was made just a day after 18 April 1960 when Josue Quesada resold to Encabo, for the same consideration of P1,500.00 the house and rights to the lot previously conveyed by the latter to the former, pursuant to a previous agreement between Quesada and the Encabos, providing for such a resale should the transfer to Quesada of the Encabos' rights to the lot be disapproved by the LTA. Why did it take the petitioners that long to wait before they appealed with the LTA if they really believed that Exhibit "D-1" was valid and effective right from the time it was executed in November 1958? Such lack of eagerness on the part of the Carios to apply with the LTA for the transfer of the lot into their name reveals their own conviction that the Deed of Sale is not real and effective between them and the Encabos. There is merit to the Encabos' claim that the simulated deed of sale in favor of the Carios was executed in order to protect the money Quesada invested in the purchase of the rights to the lot in question, which transfer of said lot to his name was later on disapproved by the LTA. As can be gleaned from the testimony of Josue Quesada, he did this by putting Cirila Vicencio as the vendee in the stipulated Deed of Sale, when in fact, Encabo and Quesada meant her only as a dummy for the latter. To this effect Quesada testified, despite the warning given to him by the court that his statement might incriminate him.22 Such candor in the testimony of Quesada gives credibility to the Encabos claim. From the testimonies of the witnesses, it can be deduced that Cirila Vicencio was privy to all the transactions relating to the sale of the disputed lot between Encabo and Quesada so that it is entirely possible for Cirila Vicencio to have been used by Encabo and Quesada as their dummy in the simulated deed of sale and for Cirila Vicencio herself to lend a hand in the scheme so as to protect the interests of Quesada, and in the process, protect herself as she was occupying the disputed lot at the instance of Quesada. Even at the start, it was Cirila Vicencio who introduced Quesada to the Encabos in connection with a house and the right to the lot, which according to Cirila Vicencio, was being sold by Juanita de los Santos-Encabo. Not only that, Cirila Vicencio signed as a witness on Exhibits "A" and "B" which are the receipts of payment for the disputed lot by Quesada to Encabo.1avvphi1 The circumstances surrounding the execution of the document Exhibit "D-1" as recounted by the petitioners are bereft of credence. They are so weak that they lead to the conclusion that indeed, there was no real and actual Deed of Sale entered into. The petitioners herein have nothing else to support their claim over the disputed lot except for the Deed of Sale, Exhibit "D-1" which is even unnotarized, and the exact date of execution, unknown. Whereas, on the other hand, the private respondents clearly have a preponderance of evidence negating the validity of such deed. Contracts of sale are void and produce no effect whatsoever where the price, which appears therein as paid, has in fact never been paid by the vendee to the vendor. 23 A sale of land without consideration, but intended merely to protect a party to a joint venture for the cash advances he was to make for the realty subdivision that the parties wanted to put up, is null and void.24 The law is clear on this matter. The Civil Code provides: Art. 1409. The following contracts are inexistent and void from the beginning:

xxx

xxx

xxx

(2) Those which are absolutely simulated or fictitious; xxx xxx xxx

executed a "DEED OF ABSOLUTE SALE OF ONE-HALF OF (1/2) [OF] AN UNDIVIDED PORTION OF A PARCEL OF LAND" in favor of Francisco N. Donasco which was acknowledged before a notary public. The parcel of land referred to herein is Lot No. 3223 and the pertinent portions of the document read as follows: That for and in consideration of the sum of TWENTY THOUSAND AND FIVE HUNDRED THIRTY (P20,530.00) PESOS, Philippine Currency, the VENDOR hereby these presents SELL, CONVEY AND CONVEY by way of Absolute Sale the one-half (1/2) portion, equivalent to Two Hundred Seventy Four and point Fifty (274.50) square meters, to VENDEE, the abovementioned property, his heirs, assigns and successors-ininterest; That the VENDOR hereby confesses and acknowledges the receipt of TWO THOUSAND (P2,000.00) PESOS from VENDEE as advanced (sic) and partial payment to the above-cited consideration of the Sale herein mentioned, leaving therefor a balance of Eighteen Thousand and Five Hundred Thirty (P18,530) Pesos to be paid in several equal installments within a period of six (6) years, beginning January, 1970; That after computing the above-mentioned equal installments, the VENDEE agrees and undertakes to pay unto the VENDOR a monthly amount equivalent to Two Hundred Fifty Seven (sic) and Thirty Six Centavos (P257.36) within a period of Seventy One (71) months and on the Seven Two [sic] (72) month, the amount of (P257.44) as the last and final installment thereof; That the VENDEE agrees that in case of default in the payment of the installment due the same shall earn a legal rate of interest, and to which the VENDOR likewise agrees; That the VENDEE undertakes to pay unto the VENDOR the herein monthly installment within the first five (5) days of each month and the same shall be made available and to be paid at the residence of the VENDOR, payment to be made either directly to the VENDOR, his wife or his authorized representative or factor; That in case of partition of the above-described property between herein VENDOR and VENDEE the same shall be divided into two (2) equal parts, the VENDOR gets the corner facing J. De Jesus and Malolos Avenue and the VENDEE shall get the portion with fifteen 15 meters frontage facing J. De Jesus Street only. 1 Pursuant to the contract, Donasco paid P2,000.00 to Pingol. The one-half portion, designated as Lot No. 3223-A, was then segregated from the mother lot, and the parties prepared a subdivision plan (Exhibit "C") which was approved by the Land Registration Commission. 2 Francisco immediately took possession of the subject lot and constructed a house thereon. In January 1970, he started paying the monthly installments but was able to pay only up to 1972. On 13 July 1984, Francisco Donasco died. At the time of his demise, he had paid P8,369.00, plus the P2,000.00 advance payment, leaving a balance of P10,161.00 on the contract

These contracts cannot be ratified. Neither can the right to set up the defense of illegality be waived. Furthermore, even without going into the merits and/or validity of Exhibit "D-1", it is clear that there has been no legal transfer of rights in favor of the Carios because neither the LTA nor the Land Authority has approved or given due course to such transfer of rights.25 The LTA never waived its right to approve the transfer of rights. It only ruled that the status quo will be maintained so long as the Court has not yet ruled on the authenticity of document Exhibit "D-1". The ownership of the lot by the Carios is still contingent on the approval of the LTA upon their compliance with all the requirements of the latter. Since no approval or due course has yet been given by the LTA or LA to such transfer of rights, the document Exhibit "D-1" is not enforceable against the latter. WHEREFORE, the petition is hereby DENIED for lack of merit. Costs against the petitioners. SO ORDERED. Yap, Melencio-Herrera, Paras and Sarmiento, JJ., concur. 2. G.R. No. 102909 September 6, 1993

SPOUSES VICENTE and LOURDES PINGOL, petitioners, vs. HON. COURT OF APPEALS and HEIRS OF FRANCISCO N. DONASCO, namely: MELINDA D. PELAYO, MARIETTA D. SINGSON, MYRNA D. CUEVAS, NATIVIDAD D. PELAYO, YOLANDA D. CACERES and MARY DONASCO, respondents. Bernardo S. Chan for petitioners. Orlando A. Galope for respondents.

DAVIDE, JR., J.: An action denominated as one for specific performance and damages was brought by the private respondents against the petitioners before the Regional Trial Court (RTC) of Caloocan City which, after due trial, rendered a decision in favor of the petitioners. On appeal, the respondent Court reversed the trial court's decision. It is from this judgment that the petitioners have appealed to this Court by way of a petition for review on certiorari. The material facts of this case are simple and undisputed. Petitioner Vicente Pingol is the owner of Lot No. 3223 of the Cadastral Survey of Caloocan, with an area of 549 square meters, located at Bagong Barrio, Caloocan City and more particularly described in Transfer Certificate of Title (TCT) No. 7435 of the Registry of Deeds of Caloocan City. On 17 February 1969, he

price. 3 Lot No. 3223-A remained in the possession of Donasco's heirs. On 19 October 1988, the heirs of Francisco Donasco filed an action for "Specific Performance and Damages, with Prayer for Writ of Preliminary Injunction" against the spouses Vicente and Lourdes Pingol (petitioners herein) before the RTC of Caloocan City. The action was docketed as Civil Case No. 13572 and raffled off to Branch 125 of the said court. In their complaint, 4 the plaintiffs (private respondents herein) averred that after the death of their father, they offered to pay the balance of P10,161.00 plus the stipulated legal rate of interest thereon to Vicente Pingol but the latter rebuffed their offer and has "been demanding for a bigger and unreasonable amount, in complete variance to what is lawfully due and payable." They stated that they had "exerted earnest efforts to forge or reach an amicable and peaceful settlement with the defendants" for the payment of the property in question but to no avail. They further alleged that the defendants were committing "acts of forcible entry and encroachment" upon their land and asked that a writ of preliminary injunction be issued to restrain the defendants from the acts complained of. Plaintiffs then prayed that the defendants be ordered, inter alia: a. . . . to accept the amount of P10,161.00, more or less, plus the stipulated legal rate of interest due thereon, as full and complete payment of the balance for the agreed price/consideration on the one- half (1/2) portion of the parcel of land . . .; [and] b. . . . to execute the final deed of sale on the one-half (1/2) portion of the lot . . . in accordance with the partition reflected in the survey and subdivision plan, . . . . 5 In their answer with counterclaim, 6 defendants admitted the execution of the aforementioned deed of sale, the segregation of the portion sold and the preparation and approval of the subdivision plan, but set up the following special and affirmative defenses: (1) plaintiffs' cause of action had already prescribed; (2) the deed of sale embodied a conditional contract of sale "as the consideration is to be paid on installment basis within a period of six years beginning January, 1970"; (3) the subdivision plan was prepared on the assumption that Francisco Donasco would be able to comply with his obligation; (4) when Francisco died, he had not fully paid the total consideration agreed upon; and (5) considering the breach by Francisco of his contractual obligation way back in 1976, the sale was deemed to have been cancelled and the continuous occupancy of Francisco after 1976 and by his heirs thereafter was by mere tolerance of Vicente Pingol. They then asked that the plaintiffs be ordered to vacate the premises and to pay them attorney's fees and a reasonable compensation for the use of the land. In their Reply and Answer to Counterclaim, 7 the plaintiffs pointed out that there is no provision in the deed of sale for its cancellation in case of default in the payment of the monthly installments and invoked Article 1592 of the New Civil Code. They specifically denied the allegations in the counterclaim. The issues having been joined, the case was then tried on the merits. On 22 January 1990, the trial court rendered a decision 8 dismissing the complaint and ordering the plaintiffs to pay the defendants P350.00 as reasonable monthly rental for the

use of the premises from the filing of the complaint, P10,000.00 by way of attorney's fees, and the costs of the suit. It held that: (1) the deed of absolute sale in question, marked and offered in evidence as Exhibit "A," is a contract to sell, not a contract of sale, since Vicente Pingol had no intention to part with the ownership of the loan unless the full amount of the agreed price had been paid; (2) the contract was deemed to have been cancelled from the moment the late father of the plaintiffs defaulted in the payment of the monthly installments; (3) title and ownership over the lot did not pass to Francisco Donasco and his heirs since the contract to sell was never consummated; and (5) assuming, arguendo, that the plaintiffs have a cause of action for specific performance, such action had already prescribed since the complaint was filed only on 19 October 1988 or more than ten years from the time that they could have lawfully demanded performance. 9 Plaintiffs elevated the case to the Court of Appeals where the appeal was docketed as CA-G.R. CV No. 25967. On 12 November 1991, the said court rendered a decision 10 reversing the appealed decision and decreeing as follows: WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE and another one is rendered: (1) Ordering appellee-vendor Vicente Pingol to accept the sum of P10,161.00, plus the legal interest due thereon from the date of institution of this action on October 19, 1988; (2) Upholding the validity of the "DEED OF ABSOLUTE SALE OF ONE- HALF (1/2) (of) AN UNDIVIDED PORTION OF A PARCEL OF LAND" (Exh. A), and by virtue and on the strength of which declaring the "Heirs of the Deceased Francisco N. Domingo" as the owners of the 274.50 sq. m. land, denominated as Lot 3223-A, (LRC) Psd-146255 under the technical description (exh. D) and reflected in the Plan of Subdivision Survey which was approved By Commissioner of Land Registration on August 13, 1971 (exh. C), representing one-half portion [of] lot 3223, situated at the corner of Malolos Avenue and G. de Jesus St., Bagong Barrio, Caloocan City, and covered by TCT No. 7435 of the Registry of Deeds of Caloocan City (exh. B); and (3) Ordering the defendants-appellees to pay the costs. SO ORDERED. 11 The Court of Appeals ruled that the deed of sale in question reveals the clear intention of Vicente Pingol to part with the ownership of the one-half portion of the land by way of an absolute sale; that the failure to fully pay the agreed price was not a ground for the cancellation of the sale; and that the plaintiffs' action is imprescriptible since it is akin to an action to quiet title to property in one's possession. 12 Dissatisfied with the decision of the Court of Appeals, the defendants, hereinafter referred to as the petitioners, filed this petition for certiorari on 9 January 1992. Plaintiffs, hereinafter referred to as the private respondents, filed their comment thereto on 10 September 1992 to which the petitioners filed a reply 11 November 1992. We gave due course to the petition and required the parties to submit their respective memoranda, 13 which they subsequently complied with.

Petitioners contend that the Court of Appeals erred: I IN HOLDING THAT THE DOCUMENT (EXHIBIT "A") DENOMINATED AS "ABSOLUTE DEED OF SALE OF ONE-HALF () OF AN UNDIVIDED PORTION OF A PARCEL OF LAND" IS AN ABSOLUTE DEED OF SALE SUFFICIENT TO CONFER OWNERSHIP ON THE VENDEE AND HIS SUCCESSORS-IN-INTEREST, DESPITE THE FACT THAT BY ITS TERMS AND CONDITIONS, LIKE THE PRICE BEING PAYABLE ON INSTALLMENTS WITHIN A FIXED PERIOD, THE SAME IS A CONDITIONAL DEED OF SALE. II IN HOLDING THAT NOTWITHSTANDING THE FACT THAT THE VENDEE FAILED TO COMPLY WITH THE TERMS OF THE CONTRACT (EXHIBIT "A") SPECIFICALLY TO COMPLETE THE PAYMENT OF THE CONSIDERATION ON THE DATE STIPULATED IN THE CONTRACT WHICH WAS SUPPOSED TO BE IN JANUARY 1976, COMPLETE PAYMENT THEREOF CAN STILL BE ENFORCED IN AN ACTION INSTITUTED BY THE HEIRS OF THE VENDEE FILED ON OCTOBER 19, 1988 OR A PERIOD OF MORE THAN TWELVE (12) YEARS FROM THE TIME COMPLETE PAYMENT SHOULD HAVE BEEN MADE; III IN HOLDING THAT THE PRIVATE RESPONDENTS' ACTION IS ONE WHICH IS AN OFFER TO COMPLETE THE PAYMENT LEFT UNPAID BY PRIVATE RESPONDENTS' FATHER WHICH DOES NOT PRESCRIBE; IV IN HOLDING THAT PRIVATE RESPONDENTS' CAUSE OF ACTION HAS NOT PRESCRIBE. 14 The decisive issue in this case is whether Exhibit "A" embodies a contract of sale or a contract to sell. The distinction between the two is important for in a contract of sale, the title passes to the vendee upon the delivery of the thing sold, whereas in a contract to sell, by agreement, ownership is reserved in the vendor and is not to pass until the full payment of the price. In a contract of sale, the vendor has lost and cannot recover ownership until and unless the contract is resolved or rescinded, whereas in a contract to sell, title is retained by the vendor until the full payment of the price, such payment being a positive suspensive condition, failure of which is not a breach but an event that prevented the obligation of the vendor to convey title from becoming effective. 15 A perusal of Exhibit "A" leads to no other conclusion than that it embodies a contract of sale. The plain and clear tenor of the "DEED OF ABSOLUTE SALE OF ONE-HALF (1/2) [OF] AN UNDIVIDED PORTION OF A PARCEL OF LAND" is that "the VENDOR hereby . . . SELL, CONVEY AND CONVEY by way Absolute Sale the one-half (1/2) portion . . . to the VENDEE . . . his heirs, assigns and successors-in-interest." That the vendor, petitioner Vicente Pingol, had that clear intention was

further evidenced by his failure to reserve his title thereto until the full payment of the price. In Dignos vs. Court of Appeals, 16 we held that a deed of sale is absolute in nature although denominated as a "Deed of Conditional Sale" where there is no stipulation in the deed that title to the property sold is reserved in the seller until the full payment of the price, nor is there a stipulation giving the vendor the right to unilaterally resolve the contract the moment the buyer fails to pay within a fixed period. Exhibit "A" contains neither stipulation. What is merely stated therein is that "the VENDEE agrees that in case of default in the payment of the installments due the same shall earn a legal rate of interest, and to which the VENDOR likewise agrees." Furthermore, as found by the Court of Appeals, the acts of the parties, contemporaneous and subsequent to the contract, clearly show that an absolute deed of sale was intended, by the parties and not a contract to sell: [P]ursuant to the deed, the vendor delivered actual and constructive possession of the property to the vendee, who occupied and took such possession, constructed a building thereon, had the property surveyed and subdivided and a plan of the property was prepared and submitted to the Land Registration Commission which approved it preparatory to segregating the same and obtaining the corresponding TCT in his name. Since the sale, appellee continuously possessed and occupied the property as owner up to his death on July 13, 1984 and his heirs, after his death, continued the occupancy and possession of the property up to the present. Those contemporaneous and subsequent events are demonstrative acts that the vendor since the sale recognized the vendee as the absolute owner of the property sold. All those attributes of ownership are admitted by defendants in their answer, specifically in paragraphs 7 and 9 of their special and affirmative defenses. 17 The contract here being one of absolute sale, the ownership of the subject lot was transferred to the buyer upon the actual and constructive delivery thereof. The constructive delivery of the subject lot was made upon the execution of the deed of sale 18 while the actual delivery was effected when the private respondents took possession of and constructed a house on Lot No. 3223-A. The delivery of the object of the contract divested the vendor of the ownership over the same and he cannot recover the title unless the contract is resolved or rescinded pursuant to Article 1592 of the New Civil Code which provides that: In the sale of immovable property, even though it may have been stipulated that upon failure to pay the price at the time agreed upon the rescission of the contract shall of right take place, the vendee may pay, even after the expiration of the period, as long as no demand for rescission of the contract has been made upon him either judicially or by a notarial act. After the demand, the court may not grant him a new term. Both the trial court and the Court of Appeals did not find that a notarial or judicial rescission of the contract had been made. Although Vicente Pingol asserts that he had declared to Francisco Donasco that he was cancelling the contract, he did not

prove that his demand for rescission was made either judicially or by a notarial act. Petitioners fault the respondent Court for holding that the action of the petitioners is not barred by the statute of limitations. They argue that the private respondents' action, being based upon a written contract, has prescribed since it was brought only in 1988 or more than ten years from the time when the latter could have lawfully demanded performance. 19 We disagree. Although the private respondents' complaint before the trial court was denominated as one for specific performance, it is in effect an action to quiet title. In this regard, the following excerpt from Bucton vs. Gabar 20 isapropos: The real and ultimate basis of petitioners' action is their ownership of one- half of the lot coupled with their possession thereof, which entitles them to a conveyance of the property. In Sapto, et al. v. Fabiana [103 Phil. 683, 686-87 (1958)], this Court, speaking thru Mr. Justice J.B.L. Reyes, explained that under the circumstances no enforcement of the contract is needed, since the delivery of possession of the land sold had consummated the sale and transferred title to the purchaser, and that, actually, the action for conveyance is one to quiet title, i.e., to remove the cloud upon the appellee's ownership by the refusal of the appellants to recognize the sale made by their predecessors. That a cloud has been cast on the title of the private respondents is indubitable. Despite the fact that the title had been transferred to them by the execution of the deed of sale and the delivery of the object of the contract, the petitioners adamantly refused to accept the tender of payment by the private respondents and steadfastly insisted that their obligation to transfer title had been rendered ineffective. A vendee in an oral contract to convey land who had made part payment thereof, entered upon the land and had made valuable improvements thereon, is entitled to bring suit to clear his title against the vendor who had refused to transfer the title to him. It is not necessary that the vendee has an absolute title, an equitable title being sufficient to clothe him with personality to bring an action to quiet title. 21 Prescription thus cannot be invoked against the private respondents for it is aphoristic that an action to quiet title to property in one's possession is imprescriptible. 22 The rationale for this rule has been aptly stated thus: The owner of real property who is in possession thereof may wait until his possession is invaded or his title is attacked before taking steps to vindicate his right. A person claiming title to real property, but not in possession thereof, must act affirmatively and within the time provided by the statute. Possession is a continuing right as is the right to defend such possession. So it has been determined that an owner of real property in possession has a continuing right to invoke a court of equity to remove a cloud that is a continuing menace to his title. Such a menace is compared to a continuing nuisance or trespass which is treated as successive nuisances or trespasses, not barred by statute until

continued without interruption for a length of time sufficient to affect a change of title as a matter of law. 23 Private respondents shall, however, be liable to pay the legal rate of interest on the unpaid balance of the purchase price from the date default or on 6 January 1976, when the entire balance should have been paid, pursuant to the provision in the deed of sale. WHEREFORE, except as above modified, the Decision appealed from is hereby AFFIRMED. As modified, the interest on the unpaid balance of P10,161.00, at the legal rate, shall be computed from 6 January 1976. Upon the payment by the private respondents to the petitioners of the said amount and the interest thereon, the latter are ordered to deliver Transfer Certificate of Title No. 7435 to the Register of Deeds of Caloocan City who shall cancel the same and issue two new transfer certificates of title in lieu thereof, one of which shall be in the name of the herein private respondents covering Lot No. 3223-A and the other in the name of the petitioners covering the remainder of the lot. SO ORDERED. Cruz, Grio-Aquino, Bellosillo and Quiason, JJ., concur. 3. PINGOL V. CA 226 SCRA 118

FACTS: Pingol owned a parcel of land, half of its undivided portion he sold Donasco. Later, the land was separated from the mother lot. Donasco died, leaving a large unpaid balance for the land. The heirs filed an action for specific performance. Pingol then was asking for a larger amount and didn't want to accept payment of balance.

HELD: Although the complaint filed was an action for specific performance, it was actually an action to quiet title. A cloud has been cast on the title. Despite the fact that title has been conferred to them through the sale, the petitioners refused to receive the tender of payment being made by them. 4. [G.R. No. 120690. March 26, 1998] FRANCISCO HOLGADO and HRS. OF PEDRO ESCANLAR, namely BERNARDO, FELY, SONIA, LILY, DYESEBEL and NOEMI all surnamed ESCANLAR petitioners, vs., HON. COURT OF APPEALS, GENEROSA MARTINEZ, CARMEN CARIAN, RODOLFO CARI-AN, NELLY CHUA CARI-AN, for herself and as guardian ad litem of her minor son, LEONELL C. CARI-AN and FREDISMINDA CARI-AN, and SP. PAQUITO CHUA and NEY SARROSA CHUA and REGISTER OF DEEDS OF NEGROS OCCIDENTAL,respondents. RESOLUTION ROMERO, J.: Before this Court are the following motions: (a) [First] Motion[1] dated November 29, 1997, filed by petitioners heirs of Pedro Escanlar and Francisco Holgado; (b) Motion for Leave to

File Second Motion for Partial Reconsideration and Clarification[2] dated February 9, 1998; and (c) Second Motion for Partial Reconsideration and Clarification[3] of even date, the latter two motions having been filed by petitioners Edwin and Elisa Jayme (the Jaymes). These motions all pertain to this Courts decision[4] promulgated on October 23, 1997, the decretal portion of which states: WHEREFORE, the petitions are hereby GRANTED. The decision of the Court of Appeals under review is hereby REVERSED AND SET ASIDE. The case is REMANDED to the Regional Trial Court of Negros Occidental, Branch 61 for petitioners and private respondents Cari-an or their successors-in-interest to determine exactly which 1/2 portion of Lot Nos. 1616 and 1617 will be owned by each party, at the option of petitioners. The trial court is DIRECTED to order the issuance of the corresponding certificates of title in the name of the respective parties and to resolve the matter of rental payments of the land not delivered to the Chua spouses subject to the rates specified above with legal interest from date of demand. wherein we ruled, inter alia, that the first sale to petitioners Francisco Holgado and the late Pedro Escanlar by the Cari-an heirs (the Cari-ans) of the one-half portions of Lots 1616 and 1617 pertaining to the share in the conjugal estate of their predecessor Victoriana Cari-an was valid while the subsequent conveyance of the same to respondents Paquito Chua and Ney Sarrosa-Chua (the Chuas) was not. In particular, petitioners are seeking clarification of that part of the decision which states: 5. Recapitulating, we have held that the September 15, 1978 deed of sale of rights, interests and participations is valid and that the sellers-private respondents Cari-an were fully paid the contract price. However, it must be emphasized that what was sold was only the Cari-ans hereditary shares in Lot Nos. 1616 and 1617 being held pro indiviso by them and is thus a valid conveyance only of said ideal shares. Specific or designated portions of land were not involved. Consequently, the subsequent sale of 8 parcels of land, including Lot Nos. 1616 and 1617, to the spouses Chua is valid except to the extent of what was sold to petitioners in the September 15, 1978 conveyance. It must be noted, however, that the probate court in Special Proceeding No. 7-7279 desisted from awarding the individual shares of each heir because all the properties belonging to the estate had already been sold. Thus it is not certain how much private respondents Cari-an were entitled to with respect to the two lots, or if they were even going to be awarded shares in said lots. The proceedings surrounding the estate of Nombre and Cari-an having attained finality for nearly a decade now, the same cannot be re-opened. The protracted proceedings which have undoubtedly left the property under a cloud and the parties involved in a state of uncertainty compels us to resolve it definitively. The decision of the probate court declares private respondents Cari-an as the sole heirs by representation of Victoriana Cari-an who was indisputably entitled to half of the estate. There being no exact apportionment of the shares of each heir and no competent proof that the heirs received unequal shares in the disposition of the estate, it can be assumed that the heirs of Victoriana Cari-an collectively are entitled to half of each property in the estate. More particularly, private respondents

Cari-an are entitled to half of Lot Nos. 1616 and 1617, i.e. 14, 675 square meters of Lot No. 1616 and 230,474 square meters of Lot No. 1617. Consequently, petitioners, as their successors-ininterest, own said half of the subject lots and ought to deliver the possession of the other half, as well as pay rents thereon, to the private respondents Ney Sarrosa Chua and Paquito Chua but only if the former (petitioners) remained in possession thereof. The rate of rental payments to be made were given in evidence by Ney Sarrosa Chua in her unrebutted testimony on July 24, 1989: For the fishpond (Lot No. 1617) - From 1982 up to 1986, rental payment of P3,000.00 per hectare; from 1986-1989 (and succeeding years), rental payment of P10,000.00 per hectare. For the riceland (Lot No. 1616) - 15 cavans per hectare per year; from 1982-1986, P125.00 per cavan; 19871988, P175.00 per cavan; and 1989 and succeeding years, P200.00 per cavan. (Underscoring supplied). Petitioners would have this Court take a second look at its supposed automatic award to the Chuas of the other halves representing the late Guillermo Nombres shares in Lot Nos. 1616 and 1617 on the grounds that: (a) these other halves have never been the subject of the present litigation or the double sale complained of by petitioners; and (b) there are certain undivided interests in these other halves which have been conveyed by some Nombre heirs to Escanlar who in turn sold the same to the Jaymes. In other words, the Jaymes, according to petitioners, are actually entitled to the one-half portions of Lot Nos. 1616 and 1617 previously sold by the Cari-ans to Escanlar and Holgado and the validity of which have been upheld by this Court plus certain portions of the other halves of the same lots sold this time by some Nombre heirs to Escanlar. For these reasons, petitioners argue that there is no basis at all in fact and in law for the Court to award the entire one-half portions of the said lots to the Chuas, as well as to charge the Jaymes rental payments thereon. Upon closer scrutiny and re-examination of the records, the Court is convinced that there is merit in the above contentions. It is a fact that the other ideal one-half shares of the late Guillermo Nombre in Lot Nos. 1616 and 1617 have never been entirely sold to the Chuas because some of the Nombre heirs who are composed of the descendants of Guillermo Nombres brothers and sisters[5] likewise sold their undivided shares to Escanlar who in turn conveyed them to the Jaymes. All these transactions are duly evidenced by several deeds of sale[6] and a Memorandum of Agreement[7] dated August 31, 1984, whose validity and authenticity have not been impugned by any party. As a matter of fact, there were also some shares which were not conveyed at all to either Chuas or Jaymes. In any event, these sales by the Nombre heirs to Escanlar whose interests were eventually acquired by the Jaymes had the effect of increasing the latters ownership beyond the one-half portions of the subject lots originally sold by the Cari-ans. Correspondingly, the Chuas are entitled only to those portions as have been conveyed to them which actually amount to less than the one-half participation of Guillermo Nombre in each of said lots. More particularly, these are the ideal shares which they have acquired from Lazaro Nombre, Victorio Madalag, Domingo Campillanos, and Sofronio Campillanos by virtue of the September 21, 1982 deed of sale, as well as from Felicidad Nombre, Potencia Brillas, and Enrique Campillanos, through instruments other than said deed. In view of the foregoing findings, it necessarily follows that there is no justification for the Jaymes to be compelled to turn over one-half of Lot No. 1616 and one-half of Lot No. 1617, and be held liable to pay the Chuas rentals with respect to those portions. On the contrary, we find it equitable instead to hold the

Chuas answerable for reasonable rentals to the extent of their possession of portions of Lot Nos. 1616 and 1617 which now properly belong to the Jaymes by virtue of the above findings. ACCORDINGLY, the Court hereby resolves to GRANT the above motions of petitioners heirs of Pedro Escanlar and Francisco Holgado, as well as that of the spouses Edwin A. Jayme and Elisa T. Jayme. The decision of this Court dated October 23, 1997, insofar as it awarded one-half of Lot No. 1616 and one-half of Lot No. 1617 to the spouses Paquito and Ney Sarrosa-Chua, and which made the spouses Jayme liable for rental payments thereon, is VACATED and SET ASIDE. In lieu thereof, a new one is entered to read as follows: WHEREFORE, the petitions are hereby GRANTED. The decision of the Court of Appeals under review is hereby REVERSED AND SET ASIDE. The case is REMANDED to the Regional Trial Court of Negros Occidental, Branch 61, for petitioners and private respondents or their successors-in-interest to determine exactly the portions which will be owned by each party in accordance with the foregoing resolution, at the option of petitioners. The trial court is likewise DIRECTED to order the issuance of the corresponding certificates of title in the name of the respective parties and to determine how much rentals the Chuas have to pay the Jaymes from the time the former possessed, if they did at all, the portions pertaining to the latter up to the time the same are restored. SO ORDERED. Narvasa, JJ., concur. C.J. (Chairman), Kapunan and Purisima,