SECOND DIVISIONDELFIN TAN,Petitioner,-versus-ERLINDA C. BENOLIRAO,ANDREW C. BENOLIRAO,ROMANO C. BENOLIRAO,DION C. BENOLIRAO,SPS. REYNALDO TANINGCOand NORMA D. BENOLIRAO,EVELYN T. MONREAL, andANN KARINA TANINGCO,Respondents.G.R. No. 153820

Present:*QUISUMBING,J.,CARPIO-MORALES,**NACHURA,BRION,andABAD,JJ.Promulgated:October 16, 2009

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D E C I S I O N

BRION,J.:

Is an annotation made pursuant to Section 4, Rule 74 of the Rules of Court (Rules) on a certificate of title covering real property considered an encumbrance on the property? We resolve this question in the petition for review oncertiorari[1]filed by Delfin Tan (Tan) to assail the decision of the Court of Appeals (CA) in CA-G.R. CV No. 52033[2]and the decision of the Regional Trial Court (RTC)[3]that commonly declared the forfeiture of hisP200,000.00 down payment as proper, pursuant to the terms of his contract with the respondents.THE ANTECEDENTSThe facts are not disputed. Spouses Lamberto and Erlinda Benoliraoand the Spouses Reynaldo and Norma Taningcowere the co-owners of a 689-square meter parcel of land (property) located in Tagaytay City and covered by Transfer Certificate of Title (TCT) No. 26423. OnOctober 6, 1992, the co-owners executed a Deed of Conditional Sale over the property in favor of Tan for the price ofP1,378,000.00. The deed stated:a)An initial down-payment of TWO HUNDRED (P200,000.00) THOUSAND PESOS, Philippine Currency, upon signing of this contract; then the remaining balance of ONE MILLION ONE HUNDRED SEVENTY EIGHT THOUSAND (P1,178,000.00) PESOS, shall be payable within a period of one hundred fifty (150) days from date hereof without interest;

b)That for any reason, BUYER fails to pay the remaining balance within above mentioned period, the BUYER shall have a grace period of sixty (60) days within which to make the payment, provided that there shall be an interest of 15% per annum on the balance amount due from the SELLERS;

c)That should in case (sic) the BUYER fails to comply with the terms and conditions within the above stated grace period, then the SELLERS shall have the right to forfeit the down payment, and to rescind this conditional sale without need of judicial action;

d)That in case, BUYER have complied with the terms and conditions of this contract, then the SELLERS shall execute and deliver to the BUYER the appropriate Deed of Absolute Sale;

Pursuant to the Deed of Conditional Sale, Tan issued and delivered to the co-owners/vendors Metrobank Check No. 904407 forP200,000.00 as down payment for the property, for which the vendors issued a corresponding receipt.OnNovember 6, 1992, Lamberto Benolirao died intestate. Erlinda Benolirao (his widow and one of the vendors of the property) and her children, as heirs of the deceased, executed an extrajudicial settlement of Lambertos estate onJanuary 20, 1993.On the basis of the extrajudicial settlement, a new certificate of title over the property, TCT No. 27335, was issued onMarch 26, 1993in the names of the Spouses Reynaldo and Norma Taningco and Erlinda Benolirao and her children.Pursuant to Section 4, Rule 74 of the Rules, the following annotation was made on TCT No. 27335:x x x any liability to credirots (sic), excluded heirs and other persons having right to the property, for a period of two (2) years, with respect only to the share of Erlinda, Andrew, Romano and Dion, all surnamed Benolirao

As stated in the Deed of Conditional Sale, Tan had untilMarch 15, 1993to pay the balance of the purchase price.By agreement of the parties, this period was extended by two months, so Tan had untilMay 15, 1993to pay the balance.Tan failed to pay and asked for another extension, which the vendors again granted.Notwithstanding this second extension, Tan still failed to pay the remaining balance due onMay 21, 1993.The vendors thus wrote him a letter demanding payment of the balance of the purchase price within five (5) days from notice; otherwise, they would declare the rescission of the conditional sale and the forfeiture of his down payment based on the terms of the contract.Tan refused to comply with the vendors demand and instead wrote them a letter (datedMay 28, 1993) claiming that the annotation on the title, made pursuant to Section 4, Rule 74 of the Rules, constituted an encumbrance on the property that would prevent the vendors from delivering a clean title to him.Thus, he alleged that he could no longer be required to pay the balance of the purchase price and demanded the return of his down payment.When the vendors refused to refund the down payment, Tan, through counsel, sent another demand letter to the vendors onJune 18, 1993.The vendors still refused to heed Tans demand, prompting Tan to file on June 19, 1993 a complaint with the RTC of Pasay City for specific performance against the vendors, including Andrew Benolirao, Romano Benolirao, Dion Benolirao as heirs of Lamberto Benolirao, together with Evelyn Monreal and Ann Karina Taningco (collectively, therespondents).In his complaint, Tan alleged that there was a novation of the Deed of Conditional Sale done without his consent since the annotation on the title created an encumbrance over the property.Tan prayed for the refund of the down payment and the rescission of the contract.OnAugust 9, 1993, Tan amended his Complaint, contending that if the respondents insist on forfeiting the down payment, he would be willing to pay the balance of the purchase price provided there is reformation of the Deed of Conditional Sale.In the meantime, Tan caused the annotation on the title of a notice oflis pendens.OnAugust 21, 1993, the respondents executed a Deed of Absolute Sale over the property in favor of Hector de Guzman (de Guzman) for the price ofP689,000.00.Thereafter, the respondents moved for the cancellation of the notice oflis pendenson the ground that it was inappropriate since the case that Tan filed was a personal action which did not involve either title to, or possession of, real property.The RTC issued an order datedOctober 22, 1993granting the respondents motion to cancel thelis pendensannotation on the title.Meanwhile, based on the Deed of Absolute Sale in his favor, de Guzman registered the property and TCT No. 28104 was issued in his name. Tan then filed a motion to carry over thelis pendensannotation to TCT No. 28104 registered in de Guzmans name, but the RTC denied the motion.On September 8, 1995, after due proceedings, the RTC rendered judgment ruling that the respondents forfeiture of Tans down payment was proper in accordance with the terms and conditions of the contract between the parties.[4]The RTC ordered Tan to pay the respondents the amount ofP30,000.00, plusP1,000.00 per court appearance, as attorneys fees, and to pay the cost of suit.On appeal, the CA dismissed the petition and affirmed the ruling of the trial courtin toto.Hence, the present petition.THE ISSUESTan argues that the CA erred in affirming the RTCs ruling to cancel thelis pendensannotation on TCT No. 27335.Due to the unauthorized novation of the agreement, Tan presented before the trial court two alternative remedies in his complaint either the rescission of the contract and the return of the down payment, or the reformation of the contract to adjust the payment period, so that Tan will pay the remaining balance of the purchase price only after the lapse of the required two-year encumbrance on the title.Tan posits that the CA erroneously disregarded the alternative remedy of reformation of contract when it affirmed the removal of thelis pendensannotation on the title.Tan further contends that the CA erred when it recognized the validity of the forfeiture of the down payment in favor of the vendors. While admitting that the Deed of Conditional Sale contained a forfeiture clause, he insists that this clause applies only if the failure to pay the balance of the purchase price was through his own fault or negligence.In the present case, Tan claims that he was justified in refusing to pay the balance price since the vendors would not have been able to comply with their obligation to deliver a clean title covering the property.Lastly, Tan maintains that the CA erred in ordering him to pay the respondentsP30,000.00, plusP1,000.00 per court appearance as attorneys fees, since he filed the foregoing action in good faith, believing that he is in the right.The respondents, on the other hand, assert that the petition should be dismissed for raising pure questions of fact, in contravention of the provisions of Rule 45 of the Rules which provides that only questions of law can be raised in petitions for review oncertiorari.THE COURTS RULINGThe petition is granted.No new issues can be raised in the MemorandumAt the onset, we note that Tan raised the following additional assignment of errors in his Memorandum: (a) the CA erred in holding that the petitioner could seek reformation of the Deed of Conditional Sale only if he paid the balance of the purchase price and if the vendors refused to execute the deed of absolute sale; and (b) the CA erred in holding that the petitioner was estopped from asking for the reformation of the contract or for specific performance.The CourtsSeptember 27, 2004Resolution expressly stated that No new issues may be raised by a party in his/its Memorandum.Explaining the reason for this rule, we said that:

The raising of additional issues in a memorandum before the Supreme Court is irregular, because said memorandum is supposed to be in support merely of the position taken by the party concerned in his petition, and the raising of new issues amounts to the filing of a petition beyond the reglementary period. The purpose of this rule is to provide all parties to a case a fair opportunity to be heard. No new points of law, theories, issues or arguments may be raised by a party in the Memorandum for the reason that to permit these would be offensive to the basic rules of fair play, justice and due process.[5]Tan contravened the Courts explicit instructions by raising these additional errors.Hence, we disregard them and focus instead on the issues previously raised in the petition and properly included in the Memorandum.Petition raises a question of lawContrary to the respondents claim, the issue raised in the present petition defined in the opening paragraph of this Decision is a pure question of law.Hence, the petition and the issue it presents are properly cognizable by this Court.Lis pendens annotation not proper in personal actionsSection 14, Rule 13 of the Rules enumerates the instances when a notice oflis pendenscan be validly annotated on the title to real property:Sec. 14. Notice of lis pendens.

In anaction affecting the title or the right of possessionof real property, the plaintiff and the defendant, when affirmative relief is claimed in his answer, may record in the office of the registry of deeds of the province in which the property is situated a notice of the pendency of the action. Said notice shall contain the names of the parties and the object of the action or defense, and a description of the property in that province affected thereby. Only from the time of filing such notice for record shall a purchaser, or encumbrancer of the property affected thereby, be deemed to have constructive notice of the pendency of the action, and only of its pendency against the parties designated by their real names.

The notice of lis pendens hereinabove mentioned may be cancelled only upon order of the court, after proper showing that the notice is for the purpose of molesting the adverse party, or that it is not necessary to protect the rights of the party who caused it to be recorded.

The litigation subject of the notice oflis pendensmust directly involve a specific property which is necessarily affected by the judgment.[6]Tans complaint prayed for either the rescission or the reformation of the Deed of Conditional Sale.While the Deed does have real property for its object, we find that Tans complaint is anin personamaction, as Tan asked the court to compel the respondents to do something either to rescind the contract and return the down payment, or to reform the contract by extending the period given to pay the remaining balance of the purchase price.Either way, Tan wants to enforce his personal rights against the respondents, not against the property subject of the Deed.As we explained inDomagas v. Jensen:[7]

The settled rule is that the aim and object of an action determine its character. Whether a proceeding isin rem, orin personam, orquasi in remfor that matter, is determined by its natureand purpose, and by these only.A proceedingin personamis a proceeding to enforce personal rights and obligations brought against the person and is based on the jurisdiction of the person, although it may involve his right to, or the exercise of ownership of, specific property, or seek to compel him to control or dispose of it in accordance with the mandate of the court. The purpose of a proceedingin personamis to impose, through the judgment of a court, some responsibility or liability directly upon the person of the defendant. Of this character are suits to compel a defendant to specifically perform some act or actions to fasten a pecuniary liability on him.

Furthermore, as will be explained in detail below, the contract between the parties was merely a contract to sell where the vendors retained title and ownership to the property until Tan had fully paid the purchase price.Since Tan had no claim of ownership or title to the property yet, he obviously had no right to ask for the annotation of alis pendensnoticeon the title of the property.Contract is a mere contract to sellA contract is what the law defines it to be, taking into consideration its essential elements, and not what the contracting parties call it.[8]Article 1485 of the Civil Code defines a contract of sale as follows:Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent.

A contract of sale may be absolute or conditional.

The very essence of acontract of saleis thetransfer of ownershipin exchange for a price paid or promised.[9]In contrast, acontract to sellis defined as abilateral contract whereby the prospective seller, whileexpressly reserving the ownership of the propertydespite delivery thereof to the prospective buyer,binds himself to sell the property exclusively to the prospective buyerupon fulfillment of the condition agreed,i.e.,full payment of the purchase price.[10]Acontract to sell may not even be considered as aconditional contract of salewhere the seller may likewisereserve titleto the property subject of the sale until thefulfillment of a suspensive condition,becausein a conditional contract of sale, the first element of consent is present, although it is conditioned upon the happening of a contingent event which may or may not occur.[11]

In the present case, the true nature of the contract is revealed by paragraph D thereof, which states:xxx

d)That in case, BUYER has complied with the terms and conditions of this contract, then the SELLERS shall execute and deliver to the BUYER the appropriate Deed of Absolute Sale;

xxx

Jurisprudence has established that wherethe seller promises to execute a deed of absolute sale upon the completion by the buyer of the payment of the price, the contract is only a contract to sell.[12]Thus, while the contract is denominated as a Deed of Conditional Sale, the presence of the above-quoted provision identifies the contract as being a mere contract to sell.A Section 4, Rule 74 annotation is an encumbrance on the propertyWhile Tan admits that he refused to pay the balance of the purchase price, he claims that he had valid reason to do so the sudden appearance of an annotation on the title pursuant to Section 4, Rule 74 of the Rules, which Tan considered an encumbrance on the property.We find Tans argument meritorious.The annotation placed onTCT No.27335, the new title issued to reflect the extrajudicial partition of Lamberto Benoliraos estate among his heirs, states:x x x any liability to credirots (sic), excluded heirs and other persons having right to the property, for a period of two (2) years,with respect only to the share of Erlinda, Andrew, Romano and Dion, all surnamed Benolirao[Emphasis supplied.]

This annotation was placed on the title pursuant to Section 4, Rule 74 of the Rules, which reads:

Sec. 4.Liability of distributees and estate. -If it shall appear at any time within two (2) years after the settlement and distribution of an estate in accordance with the provisions of either of the first two sections of this rule, that an heir or other person has been unduly deprived of his lawful participation in the estate, such heir or such other person may compel the settlement of the estate in the courts in the manner hereinafter provided for the purpose of satisfying such lawful participation. Andif withinthe same time oftwo (2) years, it shall appear that there are debts outstanding against the estate which have not been paid, or that an heir or other person has been unduly deprived of his lawful participation payable in money, the court having jurisdiction of the estate may, by order for that purpose, after hearing,settle the amount of such debts or lawful participation and order how much and in what manner each distributee shall contribute in the payment thereof, and may issue execution,if circumstances require,against the bond provided in the preceding section or against the real estate belonging to the deceased, or both. Such bond and such real estate shall remain charged with a liability to creditors, heirs, or other persons for the full period of two (2) years after such distribution, notwithstanding any transfers of real estate that may have been made. [Emphasis supplied.]Senator Vicente Francisco discusses this provision in his bookThe Revised Rules of Court in the Philippines,[13]where he states:

The provision of Section 4, Rule 74 prescribes the procedure to be followed if within two years after an extrajudicial partition or summary distribution is made, an heir or other person appears to have been deprived of his lawful participation in the estate, or some outstanding debts which have not been paid are discovered.When the lawful participation of the heir is not payable in money, because, for instance, he is entitled to a part of the real property that has been partitioned, there can be no other procedure than to cancel the partition so made and make a new division,unless, of course,the heir agrees to be paid the value of his participation with interest. But in case the lawful participation of the heir consists in his share in personal property of money left by the decedent, or in case unpaid debts are discovered within the said period of two years, the procedure is not to cancel the partition, nor to appoint an administrator to re-assemble the assets, as was allowed under the old Code, but the court, after hearing, shall fix the amount of such debts or lawful participation in proportion to or to the extent of the assets they have respectively received and, if circumstances require, it may issue execution against the real estate belonging to the decedent, or both. The present procedure is more expedient and less expensive in that it dispenses with the appointment of an administrator and does not disturb the possession enjoyed by the distributees.[14][Emphasis supplied.]

An annotation is placed on new certificates of title issued pursuant to the distribution and partition of a decedents real properties to warn third persons on the possible interests of excluded heirs or unpaid creditors in these properties.The annotation, therefore, creates a legal encumbrance or lien on the real property in favor of the excluded heirs or creditors.Where a buyer purchases the real property despite the annotation, he must be ready for the possibility that the title could be subject to the rights of excluded parties.The cancellation of the sale would be the logical consequence where: (a) the annotation clearly appears on the title, warning all would-be buyers; (b) the sale unlawfully interferes with the rights of heirs; and (c) the rightful heirs bring an action to question the transfer within the two-year period provided by law.

As we held inVda. de Francisco v. Carreon:[15]

And Section 4, Rule 74 xxx expressly authorizes the court to give to every heir his lawful participation in the real estate notwithstanding any transfers of such real estate and to issue execution thereon. All this implies that,when within the amendatory period the realty has been alienated, the court in re-dividing it among the heirs has the authority to direct cancellation of such alienation in the same estate proceedings, whenever it becomes necessary to do so.To require the institution of a separate action for such annulment would run counter to the letter of the above rule and the spirit of these summary settlements. [Emphasis supplied.]

Similarly, inSps. Domingo v. Roces,[16]we said:

The foregoing rule clearly covers transfers of real property toanyperson, as long as the deprived heir or creditor vindicates his rights within two years from the date of the settlement and distribution of estate. Contrary to petitioners contention,the effects of this provision are not limited to the heirs or original distributees of the estate properties, but shall affectanytransferee of the properties. [Emphasis supplied.]

Indeed, inDavid v. Malay,[17]although the title of the property had already been registered in the name of the third party buyers, we cancelled the sale and ordered the reconveyance of the property to the estate of the deceased for proper disposal among his rightful heirs.By the time Tans obligation to pay the balance of the purchase price arose on May 21, 1993 (on account of the extensions granted by the respondents), a new certificate of title covering the property had already been issued onMarch 26, 1993, which contained theencumbrance on the property; the encumbrance would remain so attached until the expiration of the two-year period.Clearly, at this time, the vendors could no longer compel Tan to pay the balance of the purchase since considering they themselves could not fulfill their obligation to transfer a clean title over the property to Tan.Contract to sell is not rescinded but terminatedWhat then happens to the contract?We have held in numerous cases[18]that the remedy of rescission underArticle 1191 cannot apply to mere contracts to sell.Weexplained the reason for this inSantos v. Court of Appeals,[19]where we said:[I]n acontract to sell, title remains with the vendor and does not pass on to the vendee until the purchase price is paid in full.Thus, in acontract to sell, the payment of the purchase price is a positive suspensive condition.Failure to pay the price agreed upon is not a mere breach, casual or serious, but a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory force.This is entirely different from the situation in a contract of sale, where non-payment of the price is a negative resolutory condition. The effects in law are not identical. In a contract of sale, the vendor has lost ownership of the thing sold and cannot recover it, unless the contract of sale is rescinded and set aside.In a contract to sell, however, the vendor remains the owner for as long as the vendee has not complied fully with the condition of paying the purchase price.If the vendor should eject the vendee for failure to meet the condition precedent, he isenforcing the contract and not rescinding it.x x xArticle 1592 speaks of non-payment of the purchase price as a resolutory condition.It does not apply to a contract to sell. As to Article 1191, it is subordinated to the provisions of Article 1592 when applied to sales of immovable property. Neither provision is applicable [to a contract to sell]. [Emphasis supplied.]We, therefore, hold that the contract to sell was terminated when the vendors could no longer legally compel Tan to pay the balance of the purchase price as a result of the legal encumbrance which attached to the title of the property.Since Tans refusal to pay was due to the supervening event of a legal encumbrance on the property and not through his own fault or negligence, wefind and so hold that the forfeiture of Tans down payment was clearly unwarranted.Award of Attorneys feesAs evident from our previous discussion, Tan had a valid reason for refusing to pay the balance of the purchase price for the property. Consequently, there is no basis for the award of attorneys fees in favor of the respondents.On the other hand, we award attorneys fees in favor of Tan, since he was compelled to litigate due to the respondents refusal to return his down payment despite the fact that they could no longer comply with their obligation under the contract to sell,i.e., to convey a clean title. Given the facts of this case, we find the award ofP50,000.00 as attorneys fees proper.Monetary award is subject to legal interestUndoubtedly, Tan made a clear and unequivocal demand on the vendors to return his down payment as early asMay 28, 1993.Pursuanttoour definitive ruling inEastern Shipping Lines, Inc. v. Court of Appeals,[20]we hold that the vendors should return theP200,000.00 down payment to Tan, subject to the legal interest of 6% per annum computed fromMay 28, 1993, the date of the first demand letter.

Furthermore, after a judgment has become final and executory, the rate oflegal interest, whether the obligation was in the form of a loan or forbearance of money or otherwise, shall be 12% per annum from such finality until its satisfaction. Accordingly, the principal obligation ofP200,000.00 shall bear 6% interest from the date of first demand or fromMay 28, 1993.From the date the liability for the principal obligation and attorneys fees has become final and executory,an annual interest of 12% shall be imposed on these obligations until their final satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.WHEREFORE, premises considered, we herebyGRANTthe petition and, accordingly,ANNULandSET ASIDEtheMay 30, 2002decision of the Court of Appeals in CA-G.R. CV No. 52033. Another judgment is rendered declaring the Deed of Conditional Sale terminated and ordering the respondents to return theP200,000.00 down payment to petitioner Delfin Tan, subject to legal interest of 6% per annum, computed fromMay 28, 1993.The respondents are also ordered to pay, jointly and severally, petitioner Delfin Tan the amount ofP50,000.00 as and by way of attorneys fees.Once this decision becomes final and executory,respondents are ordered to pay interest at 12% per annum on the principal obligation as well as the attorneys fees,until full payment of these amounts. Costs against the respondents.

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Republic of the PhilippinesSUPREME COURTManila

THIRD DIVISION

G.R. No. 159578 February 18, 2009ROGELIA DACLAG and ADELINO DACLAG (deceased), substituted by RODEL M. DACLAG, and ADRIAN M. DACLAG,Petitioners,vs.ELINO MACAHILIG, ADELA MACAHILIG, CONRADO MACAHILIG, LORENZA HABER and BENITA DEL ROSARIO,Respondents.

R E S O L U T I O N

AUSTRIA-MARTINEZ,J.:Before us is petitioners' Motion for Reconsideration of our Decision dated July 28, 2008 where we affirmed the Decision dated October 17, 2001 and the Resolution dated August 7, 2003 of the Court of Appeals (CA) in CA-G.R. CV No. 48498.

Records show that while the land was registered in the name of petitioner Rogelia in 1984, respondents complaint for reconveyance was filed in 1991, which was within the 10-year prescriptive period.

We ruled that since petitioners bought the property when it was still an unregistered land, the defense of having purchased the property in good faith is unavailing. We affirmed the Regional Trial Court (RTC) in finding that petitioners should pay respondents their corresponding share in the produce of the subject land from the time they were deprived thereof until the possession is restored to them.

In their Motion for Reconsideration, petitioners contend that the 10-year period for reconveyance is applicable if the action is based on an implied or a constructive trust; that since respondents' action for reconveyance was based on fraud, the action must be filed within four years from the discovery of the fraud, citingGerona v. De Guzman,1which was reiterated inBalbin v. Medalla.2We do not agree.

InCaro v. Court of Appeals,3we have explicitly held that "the prescriptive period for the reconveyance of fraudulently registered real property is 10 years reckoned from the date of the issuance of the certificate of titlex x x."4However, notwithstanding petitioners' unmeritorious argument, the Court deems it necessary to make certain clarifications. We have earlier ruled that respondents' action for reconveyance had not prescribed, since it was filed within the 10-year prescriptive period.

However, a review of the factual antecedents of the case shows that respondents' action for reconveyance was not even subject to prescription.The deed of sale executed by Maxima in favor of petitioners was null and void, since Maxima was not the owner of the land she sold to petitioners, and the one-half northern portion of such land was owned by respondents. Being an absolute nullity, the deed is subject to attack anytime, in accordance with Article 1410 of the Civil Code that an action to declare the inexistence of a void contract does not prescribe. Likewise, we have consistently ruled that when there is a showing of such illegality, the property registered is deemed to be simply held in trust for the real owner by the person in whose name it is registered, and the former then has the right to sue for the reconveyance of the property.5An action for reconveyance based on a void contract is imprescriptible.6As long as the land wrongfully registered under the Torrens system is still in the name of the person who caused such registration, an action in personam will lie to compel him to reconvey the property to the real owner.7In this case, title to the property is in the name of petitioner Rogelia; thus, the trial court correctly ordered the reconveyance of the subject land to respondents.

Petitioners next contend that they are possessors in good faith, thus, the award of damages should not have been imposed. They further contend that under Article 544, a possessor in good faith is entitled to the fruits received before the possession is legally interrupted; thus, if indeed petitioners are jointly and severally liable to respondents for the produce of the subject land, the liability should be reckoned only for 1991 and not 1984.

We find partial merit in this argument.

Article 528 of the Civil Code provides that possession acquired in good faith does not lose this character, except in a case and from the moment facts exist which show that the possessor is not unaware that he possesses the thing improperly or wrongfully. Possession in good faith ceases from the moment defects in the title are made known to the possessors, by extraneous evidence or by suit for recovery of the

property by the true owner. Whatever may be the cause or the fact from which it can be deduced that the possessor has knowledge of the defects of his title or mode of acquisition, it must be considered sufficient to show bad faith.8Such interruption takes place upon service of summons.9lawphil.netArticle 544 of the same Code provides that a possessor in good faith is entitled to the fruits only so long as his possession is not legally interrupted. Records show that petitioners received a summons together with respondents' complaint on August 5, 1991;10thus, petitioners' good faith ceased on the day they received the summons. Consequently, petitioners should pay respondents 10 cavans ofpalayper annum beginning August 5, 1991 instead of 1984.

Finally, petitioner would like this Court to look into the finding of the RTC that "since Maxima died in October 1993, whatever charges and claims petitioners may recover from her expired with her"; and that the proper person to be held liable for damages to be awarded to respondents should be Maxima Divison or her estate, since she misrepresented herself to be the true owner of the subject land.

We are not persuaded.

Notably, petitioners never raised this issue in their appellants' brief or in their motion for reconsideration filed before the CA. In fact, they never raised this matter before us when they filed their petition for review. Thus, petitioners cannot raise the same in this motion for reconsideration without offending the basic rules of fair play, justice and due process, specially since Maxima was not substituted at all by her heirs after the promulgation of the RTC Decision.

WHEREFORE, petitioners Motion for Reconsideration isPARTLYGRANTED. The Decision of the Court of Appeals dated July 28, 2008 isMODIFIEDonly with respect to prescription as discussed in the text of herein Resolution, and the dispositive portion of the Decision isMODIFIEDto the effect that petitioners are ordered to pay respondents 10 cavans ofpalayper annum beginning August 5, 1991 instead of 1984.

SO ORDERED.MA. ALICIA AUSTRIA-MARTINEZAssociate JusticeActing Chairperson

WE CONCUR:

LEONARDO A. QUISUMBING*Associate Justice

ANTONIO T. CARPIO**Associate Justice

MINITA V. CHICO-NAZARIOAssociate Justice

ANTONIO EDUARDO B. NACHURAAssociate Justice

A T T E S T A T I O NI attest that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

MA. ALICIA AUSTRIA-MARTINEZ***Associate JusticeActing Chairperson, Special Third Division

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, and the Division Acting Chairpersons Attestation, it is hereby certified that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNOChief Justice

Footnotes*In lieu of Justice Consuelo Ynares-Santiago, per Special Order No. 564 dated February 12, 2009.

**Carpio,J.designated member in lieu of Reyes,J., (ret.) per Raffle dated February 11, 2009.

***In lieu of Justice Consuelo Ynares-Santiago, per Special Order No. 563 dated February 12, 2009.

1G.R. No. L-4258, January 18, 1951, 11 SCRA 153.

2195 Phil. 475 (1981).

3G.R. No. 76148, December 20, 1989, 180 SCRA 401.

4Id. at 407.

5Salomon v. Intermediate Appellate Court, G.R. No. 70263, May 14, 1990, 185 SCRA 352, 363.

6Id.,Lacsamana v. Court of Appeals, 351 Phil. 526, 534 (1998).

7Id., citingBaranda v. Baranda, 234 Phil. 64, 77 (1987).

8Wong v. Carpio, G.R. No. 50264, October 21, 1991, 203 SCRA 118, 125.

9Id., citingManotok Realty, Inc. v. Tecson, G.R. No. L-47475, August 19, 1988, 164 SCRA 587, 592, citingMindanao Academy, Inc. v. Yap,121 Phil. 204, 210 (1965).

10Records, pp. 5-6.

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FIRST DIVISION

[G.R. No. 130115, July 16, 2008]

FELIX TING HO, JR., MERLA TING HO BRADEN, JUANA TING HO LYDIA TING HO BELENZO, PETITIONERS, VS. VICENTE TENG GUI, RESPONDENT.

D E C I S I O NPUNO, CJ.:This is a Petition for Review onCertiorari[1]assailing the Decision[2]of the Court of Appeals (CA) in CA-G.R. CV No. 42993 which reversed and set aside the Decision of the Regional Trial Court (RTC) of Olongapo City, Branch 74, in Civil Case No. 558-0-88.

The instant case traces its origin to an action for partition filed by petitioners Felix Ting Ho, Jr., Merla Ting Ho Braden, Juana Ting Ho and Lydia Ting Ho Belenzo against their brother, respondent Vicente Teng Gui, before the RTC, Branch 74 of Olongapo City. The controversy revolves around a parcel of land, and the improvements established thereon, which, according to petitioners, should form part of the estate of their deceased father, Felix Ting Ho, and should be partitioned equally among each of the siblings.

In their complaint before the RTC, petitioners alleged that their father Felix Ting Ho died intestate on June 26, 1970, and left upon his death an estate consisting of the following:

a) A commercial land consisting of 774 square meters, more or less, located at Nos. 16 and 18 Afable St., East Bajac-Bajac, Olongapo City, covered by Original Certificate of Title No. P-1064 and Tax Declaration No. 002-2451;

b) A two-storey residential house on the aforesaid lot;

c) A two-storey commercial building, the first floor rented to different persons and the second floor, Bonanza Hotel, operated by the defendant also located on the above described lot; and

d) A sari-sari store (formerly a bakery) also located on the above described lot.[3]

According to petitioners, the said lot and properties were titled and tax declared under trust in the name of respondent Vicente Teng Gui for the benefit of the deceased Felix Ting Ho who, being a Chinese citizen, was then disqualified to own public lands in the Philippines; and that upon the death of Felix Ting Ho, the respondent took possession of the same for his own exclusive use and benefit to their exclusion and prejudice.[4]

In his answer, the respondent countered that on October 11, 1958, Felix Ting Ho sold the commercial and residential buildings to his sister-in-law, Victoria Cabasal, and the bakery to his brother-in-law, Gregorio Fontela.[5]He alleged that he acquired said properties from the respective buyers on October 28, 1961 and has since then been in possession of subject properties in the concept of an owner; and that on January 24, 1978, Original Certificate of Title No. P-1064 covering the subject lot was issued to him pursuant to a miscellaneous sales patent granted to him on January 3, 1978.[6]

The undisputed facts as found by the trial court (RTC), and affirmed by the appellate court (CA), are as follows:

[T]he plaintiffs and the defendant are all brothers and sisters, the defendant being the oldest. They are the only legitimate children of the deceased Spouses Felix Ting Ho and Leonila Cabasal. Felix Ting Ho died on June 26, 1970 while the wife Leonila Cabasal died on December 7, 1978. The defendant Vicente Teng Gui is the oldest among the children as he was born on April 5, 1943. The father of the plaintiffs and the defendant was a Chinese citizen although their mother was Filipino. That sometime in 1947, the father of the plaintiffs and defendant, Felix Ting Ho, who was already then married to their mother Leonila Cabasal, occupied a parcel of land identified to (sic) as Lot No. 18 Brill which was thereafter identified as Lot No. 16 situated at Afable Street, East Bajac-Bajac, Olongapo City, by virtue of the permission granted him by the then U.S. Naval Reservation Office, Olongapo, Zambales. The couple thereafter introduced improvements on the land. They built a house of strong material at 16 Afable Street which is a commercial and residential house and another building of strong material at 18 Afable Street which was a residential house and a bakery. The couple, as well as their children, lived and resided in the said properties until their death. The father, Felix Ting Ho had managed the bakery while the mother managed the sari-sari store.Long before the death of Felix Ting Ho, who died onJune 26, 1970, he executed onOctober 11, 1958a Deed of AbsoluteSaleof a house of strong material located at16 Afable Street, Olongapo, Zambales, specifically described in Tax Dec. No. 5432, in favor of Victoria Cabasal his sister-in-law (Exh. C).This Deed of Sale cancelled the Tax Dec. of Felix Ting Ho over the said building (Exh. C-1) and the building was registered in the name of the buyer Victoria Cabasal, as per Tax Dec. No. 7579 (Exh. C-2).On the same date, October 11, 1958 the said Felix Ting Ho also sold a building of strong material located at 18 Afable Street, described in Tax Dec. No. 5982, in favor of Gregorio Fontela, of legal age, an American citizen, married (Exh. D).This Deed of Sale, in effect, cancelled Tax Dec. No. 5982 and the same was registered in the name of the buyer Gregorio Fontela, as per Tax Dec. No. 7580 (Exh. D-2).In turn Victoria Cabasal and her husband Gregorio Fontela sold to Vicente Teng Gui on October 28, 1961 the buildings which were bought by them from Felix Ting Ho and their tax declarations for the building they bought (Exhs. C-2 and D-2) were accordingly cancelled and the said buildings were registered in the name of the defendant Vicente Teng Gui (Exhs. C-3 and D-3).On October 25, 1966 the father of the parties Felix Ting Ho executed an Affidavit of Transfer, Relinquishment and Renouncement of Rights and Interest including Improvements on Land in favor of his eldest son the defendant Vicente Teng Gui. On the basis of the said document the defendant who then chose Filipino citizenship filed a miscellaneous sales application with the Bureau of Lands.Miscellaneous Sales Patent No. 7457 of the land which was then identified to be Lot No. 418, Ts-308 consisting of 774 square meters was issued to the applicant Vicente Teng Gui and accordingly on the 24thof January, 1978 Original Certificate of Title No. P-1064 covering the lot in question was issued to the defendant Vicente Teng Gui.Although the buildings and improvements on the land in question were sold by Felix Ting Ho to Victoria Cabasal and Gregorio Fontela in 1958 and who in turn sold the buildings to the defendant in 1961 the said Felix Ting Ho and his wife remained in possession of the properties as Felix Ting Ho continued to manage the bakery while the wife Leonila Cabasal continued to manage the sari-sari store. During all the time that the alleged buildings were sold to the spouses Victoria Cabasal and Gregorio Fontela in 1958 and the subsequent sale of the same to the defendant Vicente Teng Gui in October of 1961 the plaintiffs and the defendant continued to live and were under the custody of their parents until their father Felix Ting Ho died in 1970 and their mother Leonila Cabasal died in 1978.[7](Emphasis supplied)

In light of these factual findings, the RTC found that Felix Ting Ho, being a Chinese citizen and the father of the petitioners and respondent, resorted to a series of simulated transactions in order to preserve the right to the lot and the properties thereon in the hands of the family. As stated by the trial court:

After a serious consideration of the testimonies given by both one of the plaintiffs and the defendant as well as the documentary exhibits presented in the case, the Court is inclined to believe that Felix Ting Ho, the father of the plaintiffs and the defendant, and the husband of Leonila Cabasal thought of preserving the properties in question by transferring the said properties to his eldest son as he thought that he cannot acquire the properties as he was a Chinese citizen. To transfer the improvements on the land to his eldest son the defendant Vicente Teng Gui, he first executed simulated Deeds of Sales in favor of the sister and brother-in-law of his wife in 1958 and after three (3) years it was made to appear that these vendees had sold the improvements to the defendant Vicente Teng Gui who was then 18 years old. The Court finds that these transaction (sic) were simulated and that no consideration was ever paid by the vendees.

x x x x x x x x x

With regards (sic) to the transfer and relinquishment of Felix Ting Ho's right to the land in question in favor of the defendant, the Court believes, that although from the face of the document it is stated in absolute terms that without any consideration Felix Ting Ho was transferring and renouncing his right in favor of his son, the defendant Vicente Teng Gui, still the Court believes that the transaction was one of implied trust executed by Felix Ting Ho for the benefit of his family...[8]Notwithstanding such findings, the RTC considered the Affidavit of Transfer, Relinquishment and Renouncement of Rights and Interests over the land as a donation which was accepted by the donee, the herein respondent. With respect to the properties in the lot, the trial court held that although the sales were simulated, pursuant to Article 1471 of the New Civil Code[9]it can be assumed that the intention of Felix Ting Ho in such transaction was to give and donate such properties to the respondent. As a result, it awarded the entire conjugal share of Felix Ting Ho in the subject lot and properties to the respondent and divided only the conjugal share of his wife among the siblings. The dispositive portion of the RTC decision decreed:

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendant as the Court orders the partition and the adjudication of the subject properties, Lot 418, Ts-308, specifically described in original Certificate of Title No. P-1064 and the residential and commercial houses standing on the lot specifically described in Tax Decs. Nos. 9179 and 9180 in the name of Vicente Teng Gui in the following manner, to wit: To the defendant Vicente Teng Gui is adjudicated an undivided six-tenth (6/10) of the aforementioned properties and to each of the plaintiffs Felix Ting Ho, Jr., Merla Ting-Ho Braden, Juana Ting and Lydia Ting Ho-Belenzo each an undivided one-tenth (1/10) of the properties...[10]From this decision, both parties interposed their respective appeals. The petitioners claimed that the RTC erred in awarding respondent the entire conjugal share of their deceased father in the lot and properties in question contrary to its own finding that an implied trust existed between the parties. The respondent, on the other hand, asserted that the RTC erred in not ruling that the lot and properties do not form part of the estate of Felix Ting Ho and are owned entirely by him.

On appeal, the CA reversed and set aside the decision of the RTC. The appellate court held that the deceased Felix Ting Ho was never the owner and never claimed ownership of the subject lot since he is disqualified under Philippine laws from owning public lands, and that respondent Vicente Teng Gui was the rightful owner over said lot by virtue of Miscellaneous Sales Patent No. 7457 issued in his favor,viz:

The deceased Felix Ting Ho, plaintiffs' and defendant's late father, was never the owner of the subject lot, now identified as Lot No. 418, Ts-308 covered by OCT No. P-1064 (Exh. A; Record, p. 104). As stated by Felix Ting Ho no less in the "Affidavit of Transfer, Relinquishment and Renouncement of Rights and Interest" etc. (Exh. B: Record, p. 107), executed on October 25, 1966 he, the late Felix Ting Ho, was merely a possessor or occupant of the subject lot "by virtue of a permission granted... by the thenU.S.Naval Reservation Office, Olongapo, Zambales".The late Felix Ting Ho was never the owner and never claimed ownership of the land. (Emphasis supplied)

The affidavit, Exhibit B, was subscribed and sworn to before a Land Investigator of the Bureau of Lands and in the said affidavit, the late Felix Ting Ho expressly acknowledged that because he is a Chinese citizen he is not qualified to purchase public lands under Philippine laws for which reason he thereby transfers, relinquishes and renounces all his rights and interests in the subject land, including all the improvements thereon to his son, the defendant Vicente Teng Gui, who is of legal age, single, Filipino citizen and qualified under the public land law to acquire lands.

x x x x x x x x x

Defendant Vicente Teng Gui acquired the subject land by sales patent or purchase from the government and not from his father, the late Felix Ting Ho.It cannot be said that he acquired or bought the land in trust for his father because on December 5, 1977 when the subject land was sold to him by the government and on January 3, 1978 when Miscellaneous Sales Patent No. 7457 was issued, the late Felix Ting Ho was already dead, having died on June 6, 1970 (TSN, January 10, 1990, p. 4).[11]Regarding the properties erected over the said lot, the CA held that the finding that the sales of the two-storey commercial and residential buildings and sari-sari store to Victoria Cabasal and Gregorio Fontela and subsequently to respondent were without consideration and simulated is supported by evidence, which clearly establishes that these properties should form part of the estate of the late spouses Felix Ting Ho and Leonila Cabasal.

Thus, while the appellate court dismissed the complaint for partition with respect to the lot in question, it awarded the petitioners a four-fifths (4/5) share of the subject properties erected on the said lot. The dispositive portion of the CA ruling reads as follows:

WHEREFORE, premises considered, the decision appealed from is REVERSED and SET ASIDE and NEW JUDGMENTrendered:

1. DISMISSING plaintiff-appellants' complaint with respect to the subject parcel of land, identified as Lot No. 418, Ts-308, covered by OCT No. P-1064, in the name of plaintiff-appellants [should be defendant-appellant];

2. DECLARING that the two-storey commercial building, the two-storey residential building and sari-sari store (formerly a bakery), all erected on the subject lot No. 418, Ts-308, form part of the estate of the deceased spouses Felix Ting Ho and Leonila Cabasal, and that plaintiff-appellants are entitled to four-fifths (4/5) thereof, the remaining one-fifth (1/5) being the share of the defendant-appellant;

3. DIRECTING the courta quoto partition the said two-storey commercial building, two-storey residential building and sari-sari store (formerly a bakery) in accordance with Rule 69 of the Revised Rules of Court and pertinent provisions of the Civil Code;

4. Let the records of this case be remanded to the court of origin for further proceedings;

5. Let a copy of this decision be furnished the Office of the Solicitor General; and

6. There is no pronouncement as to costs.

SO ORDERED.[12]Both petitioners and respondent filed their respective motions for reconsideration from this ruling, which were summarily denied by the CA in its Resolution[13]dated August 5, 1997. Hence, this petition.

According to the petitioners, the CA erred in declaring that Lot No. 418, Ts-308 does not form part of the estate of the deceased Felix Ting Ho and is owned alone by respondent. Respondent, on the other hand, contends that he should be declared the sole owner not only of Lot No. 418, Ts-308 but also of the properties erected thereon and that the CA erred in not dismissing the complaint for partition with respect to the said properties.

The primary issue for consideration is whether both Lot No. 418, Ts-308 and the properties erected thereon should be included in the estate of the deceased Felix Ting Ho.

We affirm the CA ruling.

With regard to Lot No. 418, Ts-308, Article XIII, Section 1 of the 1935 Constitution states:

Section 1.All agricultural timber, and mineral lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy and other natural resources of the Philippinesbelong to the State, and their disposition, exploitation, development, or utilization shall be limited to citizens of the Philippines or to corporations or associations at least sixty per centum of the capital of which is owned by such citizens,subject to any existing right, grant, lease, or concession at the time of the inauguration of the Government established under this Constitution... (Emphasis supplied)Our fundamental law cannot be any clearer. The right to acquire lands of the public domain is reserved for Filipino citizens or corporations at least sixty percent of the capital of which is owned by Filipinos. Thus, inKrivenko v. Register of Deeds,[14]the Court enunciated that:

...Perhaps the effect of our construction is to preclude aliens, admitted freely into thePhilippinesfrom owning sites where they may build their homes. But if this is the solemn mandate of the Constitution, we will not attempt to compromise it even in the name of amity or equity.We are satisfied, however, that aliens are not completely excluded by the Constitution from the use of lands for residential purposes. Since their residence in the Philippines is temporary, they may be granted temporary rights such as a lease contract which is not forbidden by the Constitution. Should they desire to remain here forever and share our fortunes and misfortunes, Filipino citizenship is not impossible to acquire.[15]In the present case, the father of petitioners and respondent was a Chinese citizen; therefore, he was disqualified from acquiring and owning real property in the Philippines. In fact, he was only occupying the subject lot by virtue of the permission granted him by the then U.S. Naval Reservation Office of Olongapo, Zambales. As correctly found by the CA, the deceased Felix Ting Ho was never the owner of the subject lot in light of the constitutional proscription and the respondent did not at any instance act as the dummy of his father.

On the other hand, the respondent became the owner of Lot No. 418, Ts-308 when he was granted Miscellaneous Sales Patent No. 7457 on January 3, 1978, by the Secretary of Natural Resources "By Authority of the President of the Philippines," and when Original Certificate of Title No. P-1064 was correspondingly issued in his name. The grant of the miscellaneous sales patent by the Secretary of Natural Resources, and the corresponding issuance of the original certificate of title in his name, show that the respondent possesses all the qualifications and none of the disqualifications to acquire alienable and disposable lands of the public domain. These issuances bear the presumption of regularity in their performance in the absence of evidence to the contrary.

Registration of grants and patents involving public lands is governed by Section 122 of Act No. 496, which was subsequently amended by Section 103 of Presidential Decree No. 1529,viz:Sec. 103.Certificate of title pursuant to patents.--Whenever public land is by the Government alienated, granted or conveyed to any person, the same shall be brought forthwith under the operation of this Decree. It shall be the duty of the official issuing the instrument of alienation, grant, patent or conveyance in behalf of the Government to cause such instrument to be filed with the Register of Deeds of the province or city where the land lies, and to be there registered like other deeds and conveyance, whereupon a certificate of title shall be entered as in other cases of registered land, and an owner's duplicate issued to the grantee. The deeds, grant, patent or instrument of conveyance from the Government to the grantee shall not take effect as a conveyance or bind the land, but shall operate only as a contract between the Government and the grantee and as evidence of authority to the Register of Deeds to make registration. It is the act of registration that shall be the operative act to affect and convey the land, and in all cases under this Decree registration shall be made in the office of the Register of Deeds of the province or city where the land lies. The fees for registration shall be paid by the grantee.After due registration and issuance of the certificate of title, such land shall be deemed to be registered land to all intents and purposes under this Decree.[16](Emphasis supplied)

Under the law, a certificate of title issued pursuant to any grant or patent involving public land is as conclusive and indefeasible as any other certificate of title issued to private lands in the ordinary or cadastral registration proceeding. The effect of the registration of a patent and the issuance of a certificate of title to the patentee is to vest in him an incontestable title to the land, in the same manner as if ownership had been determined by final decree of the court, and the title so issued is absolutely conclusive and indisputable, and is not subject to collateral attack.[17]

Nonetheless, petitioners invoke equity considerations and claim that the ruling of the RTC that an implied trust was created between respondent and their father with respect to the subject lot should be upheld.

This contention must fail because the prohibition against an alien from owning lands of the public domain is absolute and not even an implied trust can be permitted to arise on equity considerations.

In the case ofMuller v. Muller,[18]wherein the respondent, a German national, was seeking reimbursement of funds claimed by him to be given in trust to his petitioner wife, a Philippine citizen, for the purchase of a property in Antipolo, the Court, in rejecting the claim, ruled that:

Respondent was aware of the constitutional prohibition and expressly admitted his knowledge thereof to this Court. He declared that he had the Antipolo property titled in the name of the petitioner because of the said prohibition. His attempt at subsequently asserting or claiming a right on the said property cannot be sustained.

The Court of Appeals erred in holding that an implied trust was created and resulted by operation of law in view of petitioner's marriage to respondent. Save for the exception provided in cases of hereditary succession, respondent's disqualification from owning lands in thePhilippinesis absolute. Not even an ownership in trust is allowed.Besides, where the purchase is made in violation of an existing statute and in evasion of its express provision, no trust can result in favor of the party who is guilty of the fraud. To hold otherwise would allow circumvention of the constitutional prohibition.

Invoking the principle that a court is not only a court of law but also a court of equity, is likewise misplaced. It has been held that equity as a rule will follow the law and will not permit that to be done indirectly which, because of public policy, cannot be done directly...[19]Coming now to the issue of ownership of the properties erected on the subject lot, the Court agrees with the finding of the trial court, as affirmed by the appellate court, that the series of transactions resorted to by the deceased were simulated in order to preserve the properties in the hands of the family. The records show that during all the time that the properties were allegedly sold to the spouses Victoria Cabasal and Gregorio Fontela in 1958 and the subsequent sale of the same to respondent in 1961, the petitioners and respondent, along with their parents, remained in possession and continued to live in said properties.

However, the trial court concluded that:

In fairness to the defendant, although the Deeds of Sale executed by Felix Ting Ho regarding the improvements in favor of Victoria Cabasal and Gregorio Fontela and the subsequent transfer of the same by Gregorio Fontela and Victoria Cabasal to the defendant are all simulated, yet,pursuant to Article 1471 of the New Civil Code it can be assumed that the intention of Felix Ting Ho in such transaction was to give and donate the improvements to his eldest son the defendant Vicente Teng Gui...[20]Its finding was based on Article 1471 of the Civil Code, which provides that:

Art. 1471. If the price is simulated, the sale is void, but the act may be shown to have been in reality a donation, or some other act or contract.[21]The Court holds that the reliance of the trial court on the provisions of Article 1471 of the Civil Code to conclude that the simulated sales were a valid donation to the respondent is misplaced because its finding was based on amere assumptionwhen the law requires positive proof.

The respondent was unable to show, and the records are bereft of any evidence, that the simulated sales of the properties were intended by the deceased to be a donation to him. Thus, the Court holds that the two-storey residential house, two-storey residential building and sari-sari store form part of the estate of the late spouses Felix Ting Ho and Leonila Cabasal, entitling the petitioners to a four-fifths (4/5) share thereof.

IN VIEW WHEREOF, the petition isDENIED. The assailed Decision dated December 27, 1996 of the Court of Appeals in CA-G.R. CV No. 42993 is herebyAFFIRMED.

SO ORDERED.THIRD DIVISION

[G.R. 139047, September 11, 2008]

SPOUSES EMMA H. VER REYES AND RAMON REYES, PETITIONERS, VS. DOMINADOR SALVADOR, SR., EMILIO FUERTE, FELIZA LOZADA, ROSALINA PADLAN, AURORA TOLENTINO, TRINIDAD L. CASTILLO, ROSARIO BONDOC, MARIA Q. CRISTOBAL AND DULOS REALTY & DEVELOPMENT CORPORATION, TRINIDAD LOZADA, JOHN DOE AND RICHARD DOE, RESPONDENTS.

[G.R. NO. 139365]

MARIA Q. CRISTOBAL AND DULOS REALTY & DEVELOPMENT CORPORATION, PETITIONERS, VS. DOMINADOR SALVADOR, SR., EMILIO FUERTE, FELIZA LOZADA, TRINIDAD LOZADA, ROSALINA PADLAN, AURORA TOLENTINO, TRINIDAD L. CASTILLO, ROSARIO BONDOC, SPOUSES EMMA H. VER REYES AND RAMON REYES, RESPONDENTS.

D E C I S I O NCHICO-NAZARIO, J.:The two Petitions for Review onCertiorari[1]now before this Court seek to challenge, under Rule 45 of the Rules of Court, the Decision[2]dated 17 June 1999 of the Court of Appeals in CA-G.R. CV No. 35688, which reversed and set aside the Decision[3]dated 25 November 1991 of the Regional Trial Court (RTC) of Pasay City, Branch 119, in the consolidated cases of LRC Case No. LP-553-P (an application for registration of title to real property) and Civil Case No. 6914-P (an action to declare ownership over real property, formerly numbered Pq-8557-P). The Court of Appeals upheld the title of Rosario Bondoc to the disputed property, thus, overturning the finding of the RTC of Pasay City that Maria Q. Cristobal and Dulos Realty & Development Corporation have a registrable title to the same property.

The Contracts

At the core of the controversy in the Petitions at bar is a parcel of unregistered land located in Tungtong, Las Pias, formerly of the Province of Rizal, now a part of Metro Manila, designated as Lot 1 of Plan Psu-205035, with an area of 19,545 square meters (subject property). It previously formed part of a bigger parcel of agricultural land[4]first declared in the name of Domingo Lozada (Domingo) in the year 1916 under Tax Declaration No. 2932.[5]

During the lifetime of Domingo, he was married twice. From his first marriage to Hisberta Guevarra in the year 1873,[6]he fathered two children, namely Bernardo and Anatalia. After the death of Hisberta, Domingo married Graciana San Jose in the year 1887[7]and their marriage produced two children, namely Nicomedes and Pablo.

Domingo and Graciana died on 27 February 1930 and 12 August 1941, respectively. On 18 March 1965, Nicomedes and the heirs of his brother Pablo entered into anExtrajudicial Settlement of the Estate[8]of their parents Domingo and Graciana. According to the settlement, the entire parcel of agricultural land declared in the name of Domingo[9]was divided into two, Lot 1 and Lot 2, in accordance with the approved subdivision plan Psu-205035. The subject property,i.e., Lot 1, was adjudicated to Nicomedes; while Lot 2 was given to the heirs of Pablo. Nicomedes then declared the subject property in his name in 1965 under Tax Declaration No. 2050.[10]

On 23 June 1965, Nicomedes executed aDeed of Conditional Sale[11]over the subject property in favor of Emma Ver Reyes (Emma), which provided:

That the Vendor [Nicomedes] is the true and lawful owner of a parcel of land situated at Tungtong, Las Pinas, Rizal, more particularly described as follows:

"A parcel of land (Lot 1 of plan Psu-205035), x x x; containing an area of NINETEEN THOUSAND FIVE HUNDRED FOURTY FIVE (19,545) SQUARE METERS, more or less, and still a portion of the land covered by Tax Declaration No. 2304 of Las Pinas, Rizal, in the name of Domingo Lozada, and with a total assessed value of P1,860.00."

That the [subject property] is aparaphernal property of the Vendor[Nicomedes], the same having been inherited by him from his deceased mother, Graciana San Jose, but was declared for taxation in the name of his deceased father, Domingo Lozada;

That for and in consideration of the sum of FOUR PESOS AND FIFTY CENTAVOS (P4.50), Philippine Currency, per square meter to be paid by the Vendee to the Vendor, the said Vendor by these presents herebySELLS, CEDES, TRANSFERS and CONVEYS by way of CONDITIONAL SALEthe above-described parcel of land together with all the improvements thereon to the said Vendee [Emma], her heirs, assigns and successors, free from all liens and encumbrances, under the following terms and conditions, to wit:

1. That the Vendee [Emma] will pay the Vendor [Nicomedes] as follows:

(a). TWENTY FIVE PERCENT (25%) of the total price on the date of the signing of this contract;

(b). The next TWENTY FIVE PERCENT (25%) of the total price upon the issuance of the title for the land described above; and

(c). The balance of FIFTY PERCENT (50%) of the total price within one (1) year from the issuance of the said title;

2. Thatif the Vendee [Emma] fails to pay the Vendor [Nicomedes] the sums stated in paragraphs 1(b) and 1(c) above within the period stipulated and after the grace period of one (1) month for each payment, this contract shall automatically be null and void and of no effectwithout the necessity of any demand, notice or filing the necessary action in court, andthe Vendor [Nicomedes] shall have the full and exclusive right to sell, transfer and convey absolutely the above-described property to any person, but the said Vendor [Nicomedes] shall return to the Vendee [Emma] all the amount paid to him by reason of this contract without any interest upon the sale of the said property to another person;

3. That the total price shall be subject to adjustment in accordance with the total area of the above-described property that will be finally decreed by the court in favor of the herein Vendor [Nicomedes]; and

4. Thatthe Vendor [Nicomedes] will execute a final deed of absolute sale covering the said property in favor of the Vendee [Emma] upon the full payment of the total considerationin accordance with the stipulations above. (Emphases ours.)

The Deed of Conditional Sale was registered in the Registry of Property for Unregistered Lands in August 1965.[12]

It would appear from the records of the case that Emma was only able to pay the first installment of the total purchase price agreed upon by the parties. Furthermore, as will be discussed later on, Nicomedes did not succeed in his attempt to have any title to the subject property issued in his name.

On 14 June 1968, Nicomedes entered into another contract involving the subject property with Rosario D. Bondoc (Rosario). Designated as anAgreement of Purchase and Sale,[13]the significant portions thereof states:

NOW, THEREFORE, for and in consideration of the foregoing premises and of the sum of ONE HUNDRED SEVENTY FIVE THOUSAND NINE HUNDRED FIVE PESOS (P175,905.00) Philippine Currency, which the BUYER [Rosario] shall pay to the SELLER [Nicomedes] in the manner and form hereinafter specified,the SELLER [Nicomedes] by these presents hereby agreed and contracted to sell all his rights, interests, title and ownership over the parcel of land x x x unto the BUYER [Rosario], who hereby agrees and binds herself to purchase from the former, the aforesaid parcel of land, subject to the following terms and conditions:

1. Upon the execution of this Agreement, the BUYER [Rosario] shall pay the SELLER [Nicomedes], the sum of FIFTEEN THOUSAND PESOS (P15,000.00), Philippine Currency.

2. [That] upon the delivery by the SELLER [Nicomedes] to the BUYER [Rosario] of a valid title of the aforesaid parcel of land, free from any and all liens and encumbrances, and the execution of the final Deed of Sale, the BUYER [Rosario] shall pay to the SELLER [Nicomedes], the sum of THIRTY SEVEN THOUSAND SEVEN HUNDRED FIVE PESOS (P37,705.00) Philippine Currency, and the final balance of ONE HUNDRED TWENTY THREE THOUSAND AND TWO HUNDRED PESOS (P123,200.00) Philippine Currency, one year from the date of execution of the final deed of sale, all without interest.

3. Thatin the event the BUYER [Rosario] fails to pay any amount as specified in Section 2, Paragraph II, then this contract, shall, by the mere fact of non-payment expire itself and shall be considered automatically cancelled, of no value and effect, and immediately thereafter the SELLER [Nicomedes] shall return to the BUYER [Rosario] the sums of money he had received from the BUYER [Rosario] without any interests andwhatever improvement or improvements made or introduced by the BUYER [Rosario] on the lot being sold shall accrue to the ownership and possession of the SELLER [Nicomedes].

x x x x

6.The SELLER [Nicomedes] hereby warrants the useful and peaceful possession and occupation of the lot subject matter of this agreement by the BUYER [Rosario]. (Emphasis ours.)

On 7 March 1969, Nicomedes and Rosario executed aJoint Affidavit,[14]whereby they confirmed the sale of the subject property by Nicomedes to Rosario through the Agreement of Purchase and Sale dated 14 June 1968. They likewise agreed to have the said Agreement registered with the Registry of Deeds in accordance with the provisions of Section 194 of the Revised Administrative Code, as amended by Act No. 3344. The Agreement of Purchase and Sale was thus registered on 10 March 1969.[15]

The records of this case show that, of the entire consideration stipulated upon in the Agreement, only the first installment was paid by Rosario. No title to the subject property was ever delivered to her since, at the time of the execution of the above contract, Nicomedes's application for the registration of the subject property was still pending.

Five months thereafter, Nicomedes executed on 10 August 1969 a third contract, aDeed of Absolute Sale of Unregistered Land,[16]involving a portion of the subject property measuring 2,000 square meters, in favor of Maria Q. Cristobal (Maria).[17]The relevant terms of the Deed recite:

THAT I, NICOMEDES J. LOZADA, of legal age, Filipino citizen, married and a resident of Las Pias, Rizal, Philippines, for and in consideration of the sum of TWENTY FIVE THOUSAND (P25,000.00) PESOS, Philippine currency, receipt of which is hereby acknowledged to my full and entire satisfaction, do herebysell, transfer and conveyto MARIA Q. CRISTOBAL, likewise of legal age, Filipino citizen, married to Juan [Dulos], and a resident of 114 Real Street, Las Pias, Rizal, Philippines, her heirs, executors, administrators and assigns,TWO THOUSAND SQUARE METERS (2,000) for an easement of way of a parcel of unregistered landsituated in the Barrio of Tungtong, Municipality of Las Pias, Province of Rizal, Philippines, exclusively belonging to and possessed by me, and more particularly described as follows:

"A parcel of land described under Tax Declaration No. 9575 (Lot No. 1, Psu 205035), situated in the Barrio of Tuntong, Municipality of Las Pias, Province of Rizal, Philippines. xxx [C]ontaining an area of 1.9545 hectares, more or less." (Emphasis ours.)

Nicomedes passed away on 29 June 1972. The Deed of Absolute Sale of Unregistered Land between Nicomedes and Maria was registered only on 8 February 1973,[18]or more than seven months after the former's death.

On 10 August 1979, Nicomedes's heirs, namely, the four children from his first marriage,[19]the six children from his second marriage,[20]and his surviving second spouse Genoveva Pallera Vda. De Lozada, executed aDeed of Extrajudicial Settlement of the Estate of the Late Nicomedes J. Lozada with Ratification of a Certain Deed of Absolute Sale of Unregistered Land.[21]The heirs declared in said Deed of Extrajudicial Settlement that the only property left by Nicomedes upon his death was the subject property. They also ratified therein the prior sale of a portion of the subject property made by Nicomedes in favor of Maria, but they clarified that the actual area of the portion sold as presented in the plan was 2,287 square meters, not 2,000 square meters. After excluding the portion sold to Maria, the heirs claimed equalpro indivisoshares in the remaining 17,258 square meters of the subject property.

On 30 July 1980, Nicomedes's heirs[22]collectively sold, for the sum of P414,192.00, their shares in the subject property in favor of Dulos Realty and Development Corporation (Dulos Realty), as represented by its President Juan B. Dulos,viaaDeed of Absolute Sale of an Unregistered Land.[23]The said Deed of Absolute Sale dated 30 July 1980, however, was not registered.

The Cases

On 11 April 1966, after executing the Deed of Conditional Sale in favor of Emma on 23 June 1965, Nicomedes filed an application for the registration of the subject property with the then Court of First Instance (CFI) of Pasig, docketed asLRC Case No. N-6577. The grandchildren of Domingo by his former marriage[24]opposed the application for registration and Emma and her husband Ramon filed their intervention.

Sometime in 1973, following the execution in her favor of the Agreement of Purchase and Sale dated 14 June 1968 and Joint Affidavit dated 7 March 1969, Rosario filed a motion to intervene in LRC Case No. N-6577 then pending before the CFI of Pasig; however, her motion was denied by the CFI of Pasig, in an Order dated 2 June 1973.[25]Rosario no longer appealed from the order denying her motion to intervene in said case.

In view of the conflicting claims over the subject property, the CFI of Pasig dismissed without prejudice LRC Case No. N-6577 on 21 November 1975 and ordered the parties therein, namely, the applicant Nicomedes and the oppositors/intervenors, to litigate first the issues of ownership and possession.[26]

Five years later, on 27 June 1980, Domingo's grandchildren from his first marriage, Dominador,et al.,[27]filed an Application for Registration[28]of title to the subject property with the CFI of Rizal, docketed asLRC Case No. LP-553-P. In their Application, Dominador,et al., alleged,inter alia, that they were the owners of the subject property by virtue of inheritance; they were the actual occupants of the said property; and, other than Emma, they had no knowledge of any encumbrance or claim of title affecting the same.

On 6 November 1980, Rosario, assisted by her husband Mariano Bondoc, invoking the Agreement of Purchase and Sale executed in her favor by Nicomedes on 14 June 1968, filed a Complaint[29]before the CFI of Rizal for the declaration in her favor of ownership over the subject property, with an application for a temporary restraining order or preliminary injunction, against Trinidad Lozada (one of Domingo's heirs from his first marriage who applied for registration of the subject property in LRC Case No. LP-553-P) and two other persons, who allegedly trespassed into the subject property. Rosario's complaint was docketed asCivil Case No. Pq-8557-P.

On 4 August 1981, the parties agreed to have LRC Case No. LP-553-P (the application for land registration of Dominador,et al.) consolidated with Civil Case No. Pq-8557-P (the action for declaration of ownership of Rosario).[30]

By subsequent events,[31]and in consideration of the location of the subject property in Las Pias, LRC Case No. LP-553-P and Civil Case No. Pq-8557-P, reinstated asCivil Case No. 6914-P, were finally transferred to and decided by the RTC of Pasay City.

In its Decision dated 25 November 1991, the RTC of Pasay City, Branch 119, disposed of the cases thus:

WHEREFORE, considering all the foregoing, the court denies the application of Dominador Salvador, Sr. et al, having no more right over the land applied for, dismisses Civil Case No. Pq-8557-P now 6914 for lack of merit, and hereby declaresMaria Cristobal Dulos and Dulos Realty and Development Corporationto have a registrable title, confirming title and decreeing the registration of Lot 1 PSU-205035 containing a total area of 19,545 square meters, 2,287 square meters of which appertains to Maria Cristobal Dulos married to Juan Dulos and the remaining portion, in favor of Dulos Realty and Development Corporation, without pronouncement as to costs.[32](Emphasis ours.)

In so ruling, the RTC rationalized that the subject property constituted Domingo's share in the conjugal properties of his second marriage to Graciana San Jose and, therefore, properly pertained to Nicomedes as one of his sons in said marriage. Being Domingo's heirs from his first marriage, Dominador,et al., were not entitled to the subject property.

The lower court also found that neither Emma nor Rosario acquired a better title to the subject property as against Maria and Dulos Realty. No final deed of sale over the subject property was executed in favor of Emma or Rosario, while the sales of portions of the same property in favor of Maria and of the rest to Dulos Realty were fully consummated as evidenced by the absolute deeds of sale dated 10 August 1969 and 30 July 1980, respectively.

Dominador,et al., Emma and her spouse Ramon Reyes (Ramon), and Rosario separately appealed to the Court of Appeals the foregoing Decision dated 25 November 1991 of the RTC of Pasay City.[33]Their consolidated appeals were docketed as CA-G.R. CV No. 35688.

Dominador,et al., however, moved to withdraw their appeal in light of the amicable settlement they entered into with Maria and Dulos Realty.[34]In a Resolution dated 24 September 1992,[35]the Court of Appeals granted their Motion to Withdraw Appeal. Dominador,et al.,later filed a motion to withdraw their earlier Motion to Withdraw Appeal, but this was denied by the Court of Appeals in a Resolution dated 15 January 1993.[36]

In their respective Briefs before the appellate court,[37]Emma and Rosario both faulted the RTC of Pasay City for awarding the subject property to Maria and Dulos Realty. They each claimed entitlement to the subject property and asserted the superiority of their respective contracts as against those of the others.

On 17 June 1999, the Court of Appeals rendered its assailed Decision, ruling as follows:

As gathered above, both contracts [entered into with Emma and Rosario] gave Nicomedes, as vendor, the right to unilaterally rescind the contract the moment the buyer failed to pay within a fixed period (Pingol v. CA, 226 SCRA 118), after which he, as vendor, was obliged to return without interest the sums of money he had received from the buyer (under the Deed of Conditional Sale [to Emma], upon the sale of the property to another). Additionally, under the Agreement of Purchase and Sale [with Rosario],the vendor, in case of rescission, would become the owner and entitled to the possession of whatever improvements introduced by the buyer.

Under the Deed of Conditional Sale [to Emma], there was no provision that possession would be, in case of rescission, returned to the vendor, thereby implying that possession remained with him (vendor). Such being the case, it appears to be a contract to sell. Whereas under the Agreement of Purchase and Sale [with Rosario], the provision that in case of rescission, any improvements introduced by the vendee would become the vendor's implies that possession was transferred to the vendee and, therefore, it appears to be a contract of sale.

That the Agreement of Purchase and Sale [with Rosario] was a contract of sale gains light from the Joint Affidavit subsequently executed by Rosario and Nicomedes stating that "an Agreement of Purchase and Sale wherein the former (Nicomedes J. Lozada)sold to the latter(Rosario D. Bondoc) a parcel of land" had been executed but that the lot "not having been registered under Act No. 496 nor under the Spanish Mortgage Law, the parties hereto have agreed to register the Agreement of Purchase and Sale ... under the provision of Section 194 of the Revised Administrative Code, as amended by Act No. 3344."

Rosario registered the Agreement of Purchase and Sale alright on March 10, 1969. She paid taxes on the lot from 1980 - 1985. She fenced the lot with concrete and hollow blocks. And apart from opposing the land registration case, she filed a complaint against Trinidad, et al., for declaration ownership.

Article 1371 of the Civil Code provides:

"Art. 1371. In order to judge the intention of the contracting parties, their contemporaneous and subsequent acts shall be principally considered."

From the provisions of the Agreement of Purchase and Sale [to Rosario] and the subsequent acts of the parties then including the execution of the Joint Affidavit by Rosario and Nicomedes stating that "an Agreement of Purchase and Sale wherein the former (Nicomedes...)sold to the latter(Rosario...) a parcel of land", had been executed, there is no mistaking that the lot was sold to Rosario xxx.

Anent the effect of Rosario's registration of the Agreement of Purchase and Sale on Emma's contract involving the same lot, Act No. 3344 (Amending Sec. 194 of the Administrative Code [Recording of instruments or deeds relating to real estate not registered under Act No. 496 or under the Spanish Mortgage Law]) provides that any registration made under Sec. 194 of the Administrative Code "shall be understood to be without prejudice to a third party who has a better right".

"Better right", however, was not defined by law.

But author Narciso Pea is inclined to concur that "better right" should refer to a "right which must have been acquired by a third party independently of the unregistered deed, such as, for instance, title by prescription, and that it has no reference to rights acquired under that unregistered deed itself", he citing Nisce v. Milo, G.R. No. 425016, January 17, 1936 Unrep. 62 Phil. 976 x x x.

Given the fact that the contract in Emma's favor is a mere contract to sell, as against Rosario's contract which, as demonstrated above is one of sale and, in any event, independently of Emma's contract to sell, she has no claim of a better right unlike Rosario who has, not to mention the factthat she (Rosario) registered her contract earlier than Emma's, Rosario must prevail.

The lot having been previously sold to Rosario, there was no lot or portion thereof to be later sold to Maria and to Dulos Realty in 1979 and 1980, respectively.

WHEREFORE, the appealed Joint Decision is hereby REVERSED and SET ASIDE and another is rendered confirming the title ofRosario D. Bondocover subject lot, Lot 1, PSU-205035 containing an area of 19,545 sq.m., ordering its registration in her name, and dismissing the claims of ownership of all other claimants. Appellees Maria Cristobal and Dulos Realty and Development Corporation and all other claimants to subject land including all persons claiming under them are hereby ordered to vacate and restore possession to appellant Rosario D. Bondoc.

Upon issuance of title to subject lot, appellant Rosario D. Bondoc is ordered to pay the balance of the purchase price to the heirs of Nicomedes Lozada in accordance with the Agreement of Purchase and Sale executed by the latter in her favor. This judgment is without prejudice to the rights which Emma Ver Reyes and Maria Cristobal and Dulos Realty and Development Corporation might have against the estate or surviving heirs of Nicomedes Lozada to the extent that the latter was/were benefited.[38](Emphasis ours.)

Aggrieved, Emma and her husband Ramon,[39]as well as Maria and Dulos Realty,[40]without seeking reconsideration of the appellate court's decision, filed directly before this Court separate Petitions for Review onCertiorariunder Rule 45 of the Rules of Court, docketed as G.R. No. 139047 and G.R. No. 139365, respectively, assailing the 17 June 1999 Decision of the appellate court. Upon the manifestation and motion of Maria and Dulos Realty,[41]the two Petitions were ordered consolidated by this Court in a Resolution[42]dated 13 December 1999.

In their Petition, Emma and her husband Ramon raise the following issues:

I.

WHETHER OR NOT OWNERSHIP OF THE DISPUTED LOT WAS VALIDLY AND LEGALLY TRANSFERRED TO EMMA VER REYES.

II.

WHETHER OR NOT MARIA CRISTOBAL DULOS AND DULOS REALTY AND DEVELOPMENT CORPORATION ARE PURCHASERS IN BAD FAITH.

III.

WHETHER OR NOT EMMA VER REYES AND RAMON REYES ARE BARRED BY PRESCRIPTION OR LACHES.

IV.

WHETHER OR NOT THE COURT OF APPEALS PATENTLY AND GRAVELY ERRED IN CONFIRMING THE TITLE OF ROSARIO BONDOC OVER THE DISPUTED LOT, ORDERING ITS REGISTRATION IN HER NAME AND DISMISSING THE CLAIM OF EMMA VER REYES AND RAMON REYES.[43]Maria and Dulos Realty, on the other hand, submitted in their Petition the following issues for consideration of this Court:

I.

WHETHER OR NOT BONDOC'S AGREEMENT OF PURCHASE AND SALE AND SPOUSES REYES DEED OF CONDITIONAL SALE ARE REGISTRABLE ABSOLUTE CONVEYANCES IN FEE SIMPLE TO SERVE AS BASIS FOR AN AWARD AND REGISTRATION OF THE SUBJECT LOT IN THEIR FAVOR.

II.

WHETHER OR NOT RESPONDENTS BONDOC AND THE REYESES ARE BARRED BY LACHES AND/OR PRESCRIPTION.

III.

WHETHER OR NOT RESPONDENT BONDOC IS BARRED BYRES JUDICATA.[44]The fundamental issue that the Court is called upon to resolve is, in consideration of all the contracts executed by Nicomedes and/or his heirs involving the subject property, which party acquired valid and registrable title to the same.

Emma and Ramon contend that although the subject property was conditionally sold to them by Nicomedes, the "conditionality" of the sale did not suspend the transfer of ownership over the subject property from Nicomedes to Emma. Even though Nicomedes may automatically rescind the contract in case of non-payment by Emma of the balance of the purchase price, it did not bar the transfer of title to the subject property to Emma in the meantime. Emma and Reyes likewise claim that there was constructive delivery of the subject property to Emma, inasmuch as the Deed of Conditional Sale in her favor was a public instrument. Furthermore, Emma was in possession of the subject property in the concept of owner since she had been paying realty taxes for the same, albeit in the name of Nicomedes (in whose name it was declared), from the time of the sale in 1965 until 1972. Emma and Ramon also assert that Maria and Dulos Realty were in bad faith as the sales of the subject property in their favor, on 10 August 1969 and 30 July 1980, respectively, occurred only after the filing of the cases involving the property[45]and the registration of the sale to Emma. Finally, Emma and Ramon maintain that the Court of Appeals erred in ruling that the contract in favor of Rosario was a contract of sale for the sole reason that actual possession of the property was already transferred to the latter.

For their part, Maria and Dulos Realty point out that Emma and Rosario are not holders of absolute deeds of conveyances over the subject property, which would have entitled them to register the same in their respective names. They further buttress their alleged superior right to the subject property based on the execution of two notarized documents of sale in their favor, which constituted symbolic and constructive delivery of the subject property to them. Maria and Dulos Realty likewise assert that the claims of Emma and Rosario are already barred by laches and prescription because they only decided to enforce their respective rights over the subject property after Domingo's heirs filed with the CFI of Rizal on 27 June 1980 an application for registration of the subject property, docketed as LRC Case No. LP-553-P, notwithstanding their knowledge of Nicomedes's death on 29 June 1972. Lastly, Maria and Dulos Realty aver that Rosario is already barred byres judicatasince her motion to intervene in LRC Case No. 6577, the case instituted by Nicomedes to register the subject property, was denied by the CFI of Pasig. The dismissal of Rosario's motion to intervene in the case for registration of the subject property already became final and executory, thus, barring Rosario from pursuing her claim over the same.

This Court's Ruling

After a conscientious review of the arguments and evidence presented by the parties, the Court finds that the Deed of Conditional Sale between Nicomedes and Emma and the Agreement of Purchase and Sale between Nicomedes and Rosario were both merecontracts to selland did not transfer ownership or title to either of the buyers in light of their failure to fully pay for the purchase price of the subject property.

InCoronel v. Court of