Portic vs. Cristobal

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 a contract to sell; registration of title does not vest ownership but merely serves as evidence of title, and where full payment is a suspensive condition that fails to occur, the vendee cannot acquire ownership even if registered as owner.

The dispute originated from a parcel of land with a three-door apartment in Valenzuela City. The property was originally owned by spouses Alcantara and Edrosalam, who sold it to the Portics. After the Portics defaulted on an assumed mortgage with the Social Security System (SSS), the SSS foreclosed. Before the redemption period expired, the Portics entered into an agreement to sell the property to Cristobal to enable her to redeem it from the SSS.

• RTC: Civil Case No. 4935-V-96 filed on June 6, 1996; Decision dated September 23, 1999 favored the Portics, ordering the quieting of title and reconveyance upon reimbursement of amounts paid by Cristobal (P145,025.89).
• CA: CA-GR CV No. 66393; Decision dated January 29, 2002 reversed the RTC, ordered Cristobal to pay the unpaid balance of P55,000.00 plus legal interest, and confirmed her ownership; Motion for Partial Reconsideration denied on November 18, 2002.
• SC: Petition for Review under Rule 45 granted; CA Decision and Resolution reversed and set aside; RTC Decision reinstated.

• Original Ownership: Spouses Clodualdo Alcantara and Candelaria Edrosalam were the registered owners (TCT No. T-71316).
• First Sale: On October 2, 1968, the original owners sold the property to the Portics with the condition that the Portics assume the mortgage with the SSS.
• Foreclosure: The Portics defaulted on the SSS mortgage; the SSS foreclosed and acquired the property at public auction as the highest bidder.
• May 22, 1984 Transactions: Before the expiration of the redemption period, the Portics and Cristobal executed:
  • A Memorandum of Agreement (MOA) for P200,025.89, with a down payment of P45,025.89 and the balance of P155,000.00 due on or before May 22, 1985. The MOA explicitly stated that ownership would be retained by the Portics until full payment, and that failure to pay would render the sale void with reimbursement to Cristobal.
  • A Deed of Sale with Assumption of Mortgage for P80,000.00 (P45,000.00 payable to SSS).
• July 30, 1984 Transactions:
  • The original owners (Alcantara/Edrosalam) executed a sale in favor of Cristobal for P50,000.00.
  • Cristobal executed a Deed of Mortgage in favor of the Portics to secure a P150,000.00 indebtedness.
  • Payment to SSS: Cristobal paid the indebtedness due to the SSS, enabling the redemption of the property.
  • Registration: On August 6, 1984, TCT No. T-71316 was cancelled and TCT No. T-113299 was issued in Cristobal's name.
  • Demand and Refusal: On May 20, 1996, the Portics demanded the unpaid balance of P55,000.00; Cristobal refused to pay.
  • Filing of Action: On June 6, 1996, the Portics filed a complaint for quieting of title, alleging the sale was void due to non-payment and seeking reconveyance of the title.
  • Possession: The Portics remained in possession of the property, collecting rentals from tenants and executing lease agreements, which Cristobal later sought to enforce through an unlawful detainer case.

• The action filed is for quieting of title, not for enforcement of a written contract.
• The Portics are in continuous possession of the property, evidenced by lease agreements with tenants and the unlawful detainer case filed by Cristobal against them.
• An action for quieting of title is imprescriptible as long as the plaintiffs remain in possession.
• The agreement was a contract to sell; ownership was never transferred because the full purchase price was not paid.

• The action is for enforcement of the MOA (a written contract), which has already prescribed under the 10-year reglementary period.
• Cristobal's title is indefeasible and valid, supported by the Deed of Absolute Sale with Assumption of Mortgage and the TCT issued in her name.
• The purchase price has been fully paid.
• The Portics are not in possession; they are mere lessees paying monthly rentals (initially P500, later P800).

• Procedural Issues:
  • Whether the action is for quieting of title or for enforcement of a written contract.
  • Whether the action has prescribed.
• Substantive Issues:
  • Whether the agreement between the parties is a contract to sell or a contract of sale.
  • Whether Cristobal acquired valid title to the property despite non-payment of the full purchase price.
  • Whether the Portics are in continuous possession of the premises.

• Procedural:
  • The action is for quieting of title, not enforcement of a written contract. The Portics sought to remove the cloud cast by TCT No. T-113299, which was registered on the basis of an agreement that had not been fully performed.
  • The action has not prescribed. The CA's finding that the Portics were in continuous possession of the premises is supported by substantial evidence and is conclusive. An action for quieting of title is imprescriptible where the plaintiff is in continuous possession.
• Substantive:
  • The agreement is a contract to sell, not a contract of sale. Paragraph 3 of the MOA expressly reserved ownership in the Portics until full payment of the balance (P155,000.00). Full payment was a positive suspensive condition; failure to comply merely prevented the effectivity of the obligation to convey title and did not constitute a breach of an existing obligation to transfer ownership.
  • Cristobal did not acquire valid title. Registration does not vest title; it merely serves as evidence of title. The land registration system does not give the registered owner a better title than what they actually possessed prior to registration. Since the underlying agreement was a contract to sell and the suspensive condition (full payment) was not fulfilled, ownership never transferred to Cristobal.
  • Under Article 1544 of the Civil Code, mere registration is insufficient to acquire title; good faith must concur. Cristobal could not feign good faith because she knew she had not fully paid the purchase price.
  • The RTC Decision ordering the quieting of title and reconveyance (subject to reimbursement by the Portics) is reinstated.

• Contract to Sell vs. Contract of Sale — A contract to sell is characterized by the reservation of ownership in the vendor until the fulfillment of a suspensive condition, typically the full payment of the purchase price. Until such condition occurs, the vendor retains ownership, and the vendee does not acquire a real right over the property. Non-payment is not a breach but an event that prevents the vendor's obligation to convey from becoming effective.
• Registration does not vest title — Registration merely serves as evidence of title; it is not a mode of acquiring ownership. The land registration system cannot confer a title better than what the registrant actually possessed at the time of registration.
• Action to Quiet Title (Article 476, Civil Code) — An action to remove a cloud on title caused by an instrument, record, or proceeding that is apparently valid but is actually invalid, ineffective, voidable, or unenforceable. It is a proceeding quasi in rem, conclusive only between the parties. It may be brought by a person other than the registered owner if that person retains actual title to the property.
• Prescription of Action to Quiet Title — The action is imprescriptible if the plaintiff is in continuous possession of the property.
• Double Sales (Article 1544, Civil Code) — Registration alone is not enough to acquire a new title; good faith must concur. A buyer who has not paid the full purchase price cannot be considered a buyer in good faith.

• "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. The absence of full payment suspends the vendors’ obligation to convey title."
• "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."
• "Full payment is a positive suspensive condition, and failure to comply with it is not a breach of obligation; it is merely an event that prevents the effectivity of the obligation of the vendor to convey the title."

• Dawson v. Register of Deeds of Quezon City — Cited for the principle that full payment in a contract to sell is a positive suspensive condition, the failure of which prevents the transfer of ownership.
• Solid State Multi-Products Corp. v. Court of Appeals and De Guzman Jr. v. Court of Appeals — Cited for the doctrine that registration does not vest title but merely confirms or evidences existing title.
• Vda. de Jomoc v. Court of Appeals — Cited for the rule under Article 1544 that registration alone is insufficient without good faith.
• Realty Sales Enterprise, Inc. v. IAC — Cited for the classification of suits to quiet title as proceedings quasi in rem.

• Article 476, Civil Code — Defines the action to quiet title as a remedy to remove a cloud on title caused by an instrument that is apparently valid but actually invalid or unenforceable.
• Article 1544, Civil Code — Governs double sales and requires good faith for registration to confer ownership.
• Rule 45, Rules of Court — Governs the procedure for Petition for Review to the SC.

N/A (Sandoval-Gutierrez, Corona, Carpio-Morales, and Garcia, JJ., concurred with the majority opinion without separate statements).