Spouses Pingol v. Heirs of Donasco
REITERATIONFacts
The Antecedents: Spouses Vicente and Lourdes Pingol (petitioners) entered into a "DEED OF ABSOLUTE SALE OF ONE-HALF (1/2) [OF] AN UNDIVIDED PORTION OF A PARCEL OF LAND" with Francisco N. Donasco (predecessor-in-interest of private respondents) on February 17, 1969, for P20,530.00. Donasco paid P2,000.00 as advance payment and P8,369.00 in monthly installments from January 1970 until 1972, leaving a balance of P10,161.00. Donasco took possession of the segregated Lot No. 3223-A and constructed a house thereon. He died on July 13, 1984. Procedural History: The heirs of Francisco Donasco filed an action for specific performance and damages against the Spouses Pingol, averring that petitioners refused to accept the balance of P10,161.00 plus interest and demanded an unreasonable amount. They also alleged acts of forcible entry and encroachment. The Regional Trial Court (RTC) dismissed the complaint, ruling that the deed was a contract to sell, that ownership did not pass to Donasco, and that the action had prescribed. The Court of Appeals reversed the RTC decision, upholding the deed as an absolute sale, declaring the heirs as owners, and ordering the acceptance of the balance plus interest. The Petition: The Spouses Pingol filed a petition for review on certiorari with the Supreme Court, assailing the Court of Appeals' findings that the deed was an absolute sale, that the failure to fully pay was not a ground for cancellation, and that the action was not barred by prescription.
Issue(s)
Whether Exhibit "A" is an absolute deed of sale or a contract to sell. Whether the failure to fully pay the consideration within the stipulated period constitutes a breach that cancels the sale. Whether the action for specific performance filed by the heirs of the vendee is barred by the statute of limitations.
Ruling
The Supreme Court affirmed the decision of the Court of Appeals with modification. It ruled that Exhibit "A" is a contract of sale, ownership transferred upon delivery, and the action to quiet title is imprescriptible. The Court modified the ruling by ordering the payment of legal interest on the unpaid balance from January 6, 1976.
Ratio Decidendi
On whether Exhibit "A" is an absolute deed of sale or a contract to sell: The Court held that Exhibit "A" embodies a contract of sale. The plain tenor of the deed, which states that the vendor "hereby . . . SELL, CONVEY AND CONVEY by way Absolute Sale the one-half (1/2) portion . . . to the VENDEE," clearly indicates an intention to transfer ownership. Furthermore, the vendor did not reserve title until full payment nor did the deed contain a stipulation for unilateral rescission upon default. The Court cited Dignos vs. Court of Appeals to support the principle that a deed is absolute if it lacks such reservations or stipulations. The acts of the parties, including the delivery of possession, construction of a house, subdivision of the property, and continuous occupancy by the vendee and his heirs, further demonstrated the intention of an absolute sale. The delivery of the object of the contract divested the vendor of ownership. On whether failure to fully pay constitutes a breach that cancels the sale: The Court ruled that the failure to fully pay the agreed price was not a ground for cancellation of the sale. As an absolute sale, ownership transferred upon delivery. Under Article 1592 of the New Civil Code, even if a stipulation for rescission upon failure to pay at the agreed time exists, the vendee may still pay as long as no judicial or notarial demand for rescission has been made. The Court noted that neither the trial court nor the Court of Appeals found that such a demand was made, and the vendor's assertion of having declared the contract cancelled was not proven by judicial or notarial demand. On whether the action is barred by the statute of limitations: The Court disagreed with the petitioners' contention that the action had prescribed. While denominated as specific performance, the Court found the action to be in effect an action to quiet title. Citing Bucton vs. Gabar and Sapto, et al. v. Fabiana, the Court explained that when a vendee is in possession of the property, an action to quiet title to remove the cloud on their ownership is imprescriptible. The refusal of the petitioners to recognize the sale and their insistence that the obligation to transfer title was rendered ineffective cast a cloud on the title of the private respondents. Possession of the property by the vendee and their heirs, coupled with their equitable title, is sufficient to bring an action to quiet title, which is a continuing right not barred by prescription.
Main Doctrine
A deed denominated as an "Absolute Deed of Sale" is considered a contract of sale, not a contract to sell, when there is no stipulation reserving title in the seller until full payment or granting the seller the right to unilaterally rescind upon default. In such cases, ownership transfers upon delivery, and an action to quiet title based on such ownership is imprescriptible.