Intac v. Court of Appeals
REITERATIONFacts
The Antecedents: Ireneo Mendoza, married to Salvacion Fermin, owned a property covered by TCT No. 106530. Ireneo sold the property to his niece, Angelina Mendoza-Intac, and her husband, Mario Intac (Spouses Intac), via a Deed of Absolute Sale dated October 25, 1977, for a stated consideration of P60,000.00. Despite the sale, Ireneo, Salvacion, and their children, Josefina and Martina Mendoza (respondents), continued to reside in the premises, pay realty taxes, and lease out portions of the property. After Ireneo's death in 1982, respondents continued their possession and tax payments. In 1993, respondents discovered that TCT No. 106530 had been cancelled and TCT No. 242655 was issued in the names of Spouses Intac. Procedural History: Respondents filed a Complaint for Cancellation of TCT No. 242655 and reconveyance, alleging the sale was simulated and void. During the pendency of the case, Mario Intac died and was substituted by his heirs (petitioners). The RTC ruled that the Deed of Absolute Sale was an equitable mortgage, declared it null and void, ordered the cancellation of TCT No. 242655, and the issuance of a new title in the name of Ireneo Mendoza. The CA affirmed the RTC's decision, declaring the Deed of Absolute Sale null and void for being simulated, but modified the RTC's ruling by not declaring it an equitable mortgage. The CA ordered the cancellation of TCT No. 242655 and reinstatement of Ireneo Mendoza as the registered owner. The Petition: Petitioners (Heirs of Intac) filed a Petition for Review on Certiorari, assailing the CA's decision, arguing that the deed of sale was valid and binding, with all elements of a contract of sale present.
Issue(s)
Whether the Deed of Absolute Sale dated October 25, 1977, was a simulated contract or a valid agreement. Whether the action for cancellation of title and reconveyance has prescribed.
Ruling
The petition is DENIED. The Court affirmed the decision of the Court of Appeals, declaring the Deed of Absolute Sale dated October 25, 1977, null and void for being absolutely simulated. Consequently, TCT No. 242655 issued in the names of Spouses Intac was ordered cancelled, and the property was to be reinstated in the name of Ireneo Mendoza. The claim of prescription was dismissed due to the respondents' continued actual possession of the property.
Ratio Decidendi
On the issue of whether the Deed of Absolute Sale was simulated: The Court held that the Deed of Absolute Sale was absolutely simulated and therefore void. This conclusion was based on the absence of consideration and the intent to sell, as demonstrated by the parties' actions. The testimony of Marietto, a witness to the deed, was crucial, stating that Ireneo Mendoza intended only to lend the title to Spouses Intac to use as collateral for a loan, not to sell the property. Petitioners failed to present concrete evidence to disprove this testimony or to prove payment of the purchase price, which further strengthened the claim of simulation. The Court noted that Spouses Intac never asserted ownership by collecting rents or demanding possession, and only attempted to register the property after Ireneo and Salvacion's deaths, which are badges of simulation. The fact that respondents remained in possession, leased portions, and collected rentals, while Spouses Intac only began paying real estate taxes in 1999 for the years 1996-1997, also belied the claim of a valid sale. The Court reiterated that registration does not vest title, especially when the underlying transaction is void. On the issue of prescription: The Court ruled that the action for reconveyance did not prescribe because the respondents remained in actual possession of the subject property. It is a well-settled doctrine that if a person claiming to be the owner is in actual possession thereof, the right to seek reconveyance, which in effect seeks to quiet title to the property, does not prescribe. The Court cited previous rulings where undisturbed possession grants a continuing right to seek judicial aid to ascertain the nature of an adverse claim. Therefore, respondents' continuous possession preserved their right to file the suit to clear the cloud over their title, irrespective of the ten-year prescriptive period from the date of registration.
Main Doctrine
A contract of sale is absolutely simulated and thus void if there is no consideration and no intent to sell, as evidenced by the parties' contemporaneous and subsequent acts. In such cases, an action for reconveyance does not prescribe if the claimant remains in actual possession of the property.