G.R. No. 205652 - Procter and Gamble Asia Pte. Ltd. vs. Commissioner of Internal Revenue

The dispute involves a parcel of unregistered land in Tungtong, Las Piñas (Lot 1 of Plan Psu-205035), originally part of a larger agricultural tract declared in Domingo Lozada’s name in 1916 under Tax Declaration No. 2932.
Domingo Lozada, who married twice, left heirs from both marriages. His children from his first marriage and his children (and wife) from his second marriage later became involved in successive transactions concerning the disputed property.

On 18 March 1965, Nicomedes (child from Domingo’s second marriage) together with the heirs of Pablo (child from Domingo’s first marriage) entered into an Extrajudicial Settlement of the Estate, dividing the agricultural land into Lot 1 and Lot 2.
Lot 1—the subject property measuring 19,545 square meters—was adjudicated to Nicomedes, who subsequently declared it in his name under Tax Declaration No. 2050.

Nicomedes executed the Deed of Conditional Sale to Emma for a sale price based on P4.50 per square meter.
Payment terms included a twenty-five percent down payment on contract signing, another twenty-five percent upon issuance of title, and the remaining fifty percent within one year after title issuance.
The contract provided that failure of Emma to pay the stipulated installments within the grace period would automatically cancel the contract without the need for judicial intervention, reverting the property for resale.

Nicomedes entered into an Agreement of Purchase and Sale with Rosario, which required an initial payment followed by installment payments defined in the contract.
The contract stipulated that on delivery of a valid title and execution of a final Deed of Sale, further payments were to be made—otherwise, the contract would automatically cancel, rendering any improvements by the buyer to revert to Nicomedes.
A Joint Affidavit executed on 7 March 1969 confirmed the sale to Rosario and provided that registration would occur under the provisions of Section 194 of the Revised Administrative Code (as amended by Act No. 3344).

Nicomedes executed a Deed of Absolute Sale of Unregistered Land for a portion of the subject property (initially described as 2,000 square meters) in favor of Maria Q. Cristobal.
The document recited the specific description and area of the lot and was registered on 8 February 1973, after Nicomedes’ death (29 June 1972).

Sale of the Remaining Portion to Dulos Realty and Development Corporation (30 July 1980)

Nicomedes’ heirs executed a Deed of Extrajudicial Settlement of the Estate clarifying that the sole remaining property was the subject lot.
The heirs sold their pro indiviso shares in the remaining area (17,258 square meters) to Dulos Realty through a Deed of Absolute Sale.
This sale, like the transaction to Maria, was consummated with full payment and without stipulations preventing an immediate transfer of title.

An application for registration of title and an action for declaration of ownership filed by Domingo’s grandchildren and by Emma and her husband Ramon in Pasay City.
The Regional Trial Court (RTC) of Pasay City, Branch 119, issued a Decision on 25 November 1991, declaring that Maria Q. Cristobal and Dulos Realty and Development Corporation held a registrable title, while dismissing the claims of Emma and others.

Appeals consolidated under CA-G.R. CV No. 35688 resulted in the Court of Appeals (CA) rendering a Decision on 17 June 1999 which, among other points, treated the contracts in favor of Emma and Rosario as contracts to sell.
Petitions for Review on Certiorari were subsequently filed under Rule 45 in separate cases by Emma (and her husband) and by Maria & Dulos Realty, which were later consolidated by the Supreme Court.

Emma and Ramon contended that, despite the conditional nature of the sale, ownership had been transferred or constructively delivered to Emma because the instrument was public and she had paid realty taxes continuously.
Rosario, through her actions (registration of her agreement, payment of taxes, physical improvements like fencing) and her claim as a purchaser, argued for her right to the property.
Maria and Dulos Realty maintained that only the absolute sales—fully paid and with no conditions regarding the transfer of title—were effective in transferring ownership, asserting a superior right to the property.

Evidence presented included the contractual provisions, registration of instruments, payment of taxes, and prior court decisions.
The disputes examined issues regarding the effect of registration under Act No. 3344, the timing of contracts, and principles of prescription, laches, and res judicata.

Whether ownership of the disputed lot was validly and legally transferred to Emma Ver Reyes despite the conditional nature of her contract.
Whether the contracts executed in favor of Emma and Rosario constituted mere contracts to sell rather than contracts of sale, thereby failing to effectuate the transfer of title.
Whether Maria Q. Cristobal and Dulos Realty and Development Corporation, through their absolute sales, acquired a superior and valid title to the subject property.
Whether issues such as prescription, laches, and res judicata barred the claims of Emma, Rosario, or others based on the timing of their actions and interventions in the land registration case.
Whether the Court of Appeals erred in classifying Rosario’s agreement as a contract of sale based solely on the element of possession, and whether such classification affects the rights of the respective parties.