Primary Holding

The Supreme Court held that the agreement was a contract to sell, and because the vendee failed to fully pay the purchase price, ownership of the property did not transfer to her. Consequently, the action for quieting of title filed by the vendors was deemed proper and not prescribed as they remained in possession and legal owners of the property.

Background

Spouses Portic sold property to Anastacia Cristobal under an agreement that included conditions about payment of a balance. A dispute arose when Cristobal registered the title in her name despite allegedly not fully paying the balance, and Spouses Portic sought to quiet title, claiming the sale was void due to non-payment.

Facts

• 1. Spouses Alcantara originally owned the property and mortgaged it to the Social Security System (SSS).
• 2. Spouses Alcantara sold the property to Spouses Portic who assumed the mortgage.
• 3. Spouses Portic defaulted on mortgage payments, and SSS foreclosed.
• 4. Before the redemption period expired, Spouses Portic sold the property to Anastacia Cristobal for P200,025.89.
• 5. Cristobal paid P45,025.89 as down payment, with the P155,000.00 balance due by May 22, 1985. Failure to pay would void the sale.
• 6. Spouses Portic and Cristobal executed a Deed of Sale with Assumption of Mortgage for P80,000.00, with P45,000.00 to be paid to SSS.
• 7. Original owners, Spouses Alcantara, also executed a Deed of Sale to Cristobal for P50,000.00.
• 8. Cristobal executed a Deed of Mortgage to Spouses Portic for P150,000.00.
• 9. Cristobal paid the SSS mortgage.
• 10. Transfer Certificate of Title was issued to Cristobal.
• 11. In 1996, Spouses Portic demanded the P55,000.00 balance, which Cristobal refused to pay.
• 12. Spouses Portic filed a case to remove cloud on title, claiming non-payment voided the sale.
• 13. Cristobal claimed full payment, indefeasible title, and laches.

Arguments of the Petitioners

• 1. Their action was for quieting of title, which is imprescriptible as long as they are in possession.
• 2. Cristobal did not fully pay the agreed purchase price.
• 3. The agreement was that failure to pay the balance by May 22, 1985, would void the sale.
• 4. Cristobal's demand for them to sign a lease contract over the property and a prior unlawful detainer case she filed against them prove their possession.

Arguments of the Respondents

• 1. Her title is indefeasible.
• 2. The true agreement was an absolute Deed of Sale with Assumption of Mortgage.
• 3. She had fully paid the purchase price.
• 4. Spouses Portic's claim is barred by laches.
• 5. Spouses Portic were not in continuous possession, pointing to a lease agreement where they paid rent.
• 6. The action was actually for enforcement of a written contract, which has prescribed.

Issues

• 1. Whether the petitioners' cause of action is for quieting of title.
• 2. Whether the petitioners' cause of action has prescribed.
• 3. Essentially, the nature of the agreement between the parties (contract to sell or contract of sale).

Ruling

• 1. The Supreme Court ruled in favor of Spouses Portic, finding merit in their Petition.
• 2. The Court characterized the agreement as a contract to sell because ownership was explicitly reserved by Spouses Portic until full payment of the P155,000.00 balance.
• 3. Failure to pay the balance was not a breach but a suspensive condition that prevented the transfer of ownership.
• 4. Issuance of title to Cristobal did not vest ownership, as registration merely serves as evidence of title and does not improve the holder's actual right.
• 5. Since Cristobal did not fully pay, ownership remained with Spouses Portic, and her title constituted a cloud on their ownership.
• 6. The action to quiet title was deemed proper and not prescribed because Spouses Portic were in continuous possession of the property.
• 7. The Court reversed the CA and reinstated the RTC decision, ordering the quieting of title in favor of Spouses Portic and ordering Cristobal to pay the unpaid balance plus interest to Spouses Portic.

Doctrines

• 1. Contract to Sell: An agreement where ownership is reserved by the vendor and does not pass to the vendee until full payment of the purchase price.
• 2. Suspensive Condition: A condition whose fulfillment gives rise to an obligation. In a contract to sell, full payment is a suspensive condition for the transfer of ownership.
• 3. Quieting of Title: An action to remove clouds on title to real property to ensure its peaceful enjoyment.
• 4. Action Quasi in Rem: An action where an individual is named as defendant but the judgment is conclusive only between the parties, and it deals with status or rights in a thing.
• 5. Registration Does Not Vest Title: Registration under land registration laws merely serves as evidence of title and does not improve the actual ownership of the holder.
• 6. Unjust Enrichment: While not explicitly named as a doctrine invoked, the court's ordering of payment of the balance plus interest aligns with preventing unjust enrichment, as Cristobal was allowed to keep the property but had to pay the remaining balance.

Key Excerpts

• 1. "An agreement in which ownership is reserved in the vendor and is not to pass to the vendee until full payment of the purchase price is known as a contract to sell."
• 2. "Registration does not vest, but merely serves as evidence of, title to a particular property. Our land registration laws do not give title holders any better ownership than what they actually had prior to registration."
• 3. "Suits to quiet title are characterized as proceedings quasi in rem."

Precedents Cited

• 1. Realty Sales Enterprise, Inc. v. IAC: Used to define proceedings quasi in rem and quieting of title.
• 2. Asiavest Limited v. Court of Appeals: Used to further explain quasi in rem actions.
• 3. Valmonte v. Court of Appeals: Used to emphasize that quasi in rem judgments are conclusive only between parties.
• 4. Chacon Enterprises v. Court of Appeals; Mamadsual v. Moson: Cited to support the view that anyone other than the registered owner can file for quieting of title because "title" doesn't only mean the certificate of title.
• 5. Dawson v. Register of Deeds of Quezon City; Salazar v. Court of Appeals; Luzon Brokerage Co., Inc. v. Maritime Building Co., Inc.; Jacinto v. Kaparaz; Visayan Sawmill Co., Inc. v. Court of Appeals; Pingol v. Court of Appeals: Used to support the principle that registration does not vest title.
• 6. Solid State Multi-Products Corp. v. Court of Appeals; De Guzman Jr. v. Court of Appeals: Further supports the principle that registration is not enough to acquire title.
• 7. Vda. de Jomoc v. Court of Appeals; Bergado v. Court of Appeals; Concepcion v. Court of Appeals: Cited to emphasize that good faith must concur with registration under Article 1544 of the Civil Code.
• 8. Mallari v. Court of Appeals; Suplico v. Court of Appeals; De la Cruz v. Court of Appeals; Limketkai Sons Milling, Inc. v. Court of Appeals: Cited regarding the finality of factual findings by the Court of Appeals when supported by evidence.

Statutory and Constitutional Provisions

• 1. Article 476 of the Civil Code: Defines quieting of title and the grounds for such an action, used to establish the basis for Spouses Portic's suit.
• 2. Article 1544 of the Civil Code: Relates to double sales and good faith in registration, invoked in the context of arguing Cristobal could not claim good faith due to non-full payment.