Case Summary (G.R. No. 133895)
Factual Background
The spouses Jesus and Rosalia Santos owned a 154-square-meter parcel in Sta. Cruz, Manila, registered as Transfer Certificate of Title No. 27571, on which a four-door apartment stood and from which Rosalia collected rentals. The spouses had five children, including Salvador and Rosa. On January 19, 1959, Jesus and Rosalia executed a deed of sale in favor of Salvador and Rosa, which resulted in the reissuance of title as TCT No. 60819. On November 20, 1973, Rosa sold her share to Salvador, producing TCT No. 113221. Despite the transfers, Rosalia continued to administer the apartments and receive rentals. Salvador apparently registered the title in his name but later surrendered the owner's duplicate to Rosalia.
Post-Death Events and Initial Proceedings
Jesus died on November 1, 1979; Salvador died on January 9, 1985; Rosalia died approximately one month after Salvador. After Salvador's death, petitioner, as his widow, asserted heirship and demanded rental payments from a tenant, Antonio Hombrebueno, and brought an ejectment action which she won at the Metropolitan Trial Court. Thereafter, on January 5, 1989, respondents, as co-heirs of Jesus and Rosalia, filed a reconveyance action with a prayer for preliminary injunction alleging that the 1959 and 1973 deeds of sale were simulated and lacked consideration.
Trial Court Proceedings and Judgment
Petitioner answered and denied the material allegations and pleaded in special and affirmative defenses that Salvador was the registered owner, that the title could only be affected by annotations for encumbrances or liens, and that respondents’ right to reconveyance was barred by prescription and laches. On March 17, 1993, the Regional Trial Court rendered judgment in favor of respondents, declaring the 1959 and 1973 deeds of sale null and void as fictitious and ordering the cancellation of the subsequent titles and the reinstatement of TCT No. 27571 to be partitioned by the heirs. The trial court relied on the continued possession and enjoyment of the property by Jesus and Rosalia, their collection of rentals, payment of realty taxes, and retention of the owner’s duplicate as evidencing that the spouses retained ownership and that the deeds were simulated.
Court of Appeals Decision
The Court of Appeals affirmed the trial court’s judgment on March 10, 1998. The appellate court emphasized that, under Art. 1498, the execution of a public instrument is equivalent to delivery only if the vendor had control of the thing sold at the moment of sale and the purchaser was placed in control. The appellate court found that the vendors retained dominion, control, and possession, and that petitioner failed to rebut that finding with evidence that Salvador exercised ownership attributes such as declaring the property for taxation or paying taxes.
Issues Presented to the Supreme Court
The Supreme Court framed the issues as whether payments of realty taxes and retention of possession indicate continued ownership by the original owners; whether a sale by public instrument is tantamount to delivery of the land; whether respondents’ cause of action prescribed or was barred by laches; and whether petitioner could invoke the protection of Rule 130, Sec. 23 regarding the disqualification of an interested adverse witness.
Petitioner's Contentions on Ownership and Delivery
Petitioner argued that tax declarations and payments are not conclusive evidence of ownership without supporting proof and that Salvador allowed his mother to possess the property out of respect in accordance with Filipino custom. Petitioner further asserted that under Art. 1477 and Art. 1498 ownership transferred to Salvador upon actual or constructive delivery and that execution of the public instruments effected such delivery.
Ownership and Possession: Supreme Court Analysis
The Court observed that tax declarations and receipts are not conclusive but found ample corroborative evidence that ownership remained with Jesus and Rosalia. The Court relied on uncontradicted facts that the spouses continued to possess, to collect rentals, and to exercise ownership functions after the alleged sales; that Salvador did not exercise ownership; that Salvador sought his mother’s permission before transfers; and that Salvador surrendered the title to his mother. The Court cited Serrano v. CA and Alcos v. IAC for the proposition that a seller’s continued collection of rentals and retention of possession after an alleged sale undermines the authenticity of the sale. The Court concluded that these facts supported the trial court’s finding that the deeds were simulated and that ownership remained in the original owners.
Delivery by Public Instrument: Supreme Court Analysis
The Court addressed the contention that execution of public instruments conclusively effected tradition under Art. 1498 and Art. 1477. It held that the statutory equivalence of execution to delivery creates a presumption that is rebuttable by clear and convincing evidence. The Court applied its precedents, including Danguilan v. IAC, and explained that a deed of sale effects tradition only if the purchaser is placed in control and enjoyment of the thing sold, and only if the vendor intends to deliver and the vendee accepts such delivery, as reiterated in Norkis Distributors, Inc. v. CA and Abuan v. Garcia. Because Salvador was never placed in control and the vendors retained the material tenancy and enjoyment, the presumption of delivery was rebutted and no tradition occurred.
Prescription and Laches: Supreme Court Analysis
The Court examined petitioner’s contention that respondents delayed an unreasonable period before filing suit. Relying on Lacsamana v. CA, the Court ruled that an action for reconveyance based on a fictitious deed is essentially an action for declaration of nullity of a void contract and is imprescriptible. The Court further addressed laches by restating the four elements required under Maneclang v. Buan and found them unproven. The Court noted that petitioner only asserted ownership and demanded rents beginning in December 1985 and that respondents filed suit on January 5, 1989, a lapse of less than four years. The Court found no prejudice to petitioner from respondents’ delay and concluded that laches did not bar the action.
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Case Syllabus (G.R. No. 133895)
Parties and Procedural Posture
- Petitioner Zenaida M. Santos is the widow and sole litigant claiming as heir of the deceased Salvador Santos.
- Respondents are Calixto Santos, Alberto Santos, Rosa Santos-Carreon and Antonio Santos, siblings and heirs asserting reconveyance in favor of the estate of Rosalia A. Santos.
- The parcel of land originally stood on Transfer Certificate of Title No. T-27571 in the name of Jesus and Rosalia Santos and later became T-60819 and ultimately T-113221 in Salvador Santos' name.
- On January 19, 1959, Jesus and Rosalia Santos executed a deed of sale in favor of their children Salvador and Rosa.
- On November 20, 1973, Rosa Santos sold her share to Salvador Santos, resulting in issuance of T-113221 in Salvador’s name.
- Jesus died on November 1, 1979, Salvador died on January 9, 1985, and Rosalia died the following month.
- Petitioner filed and prevailed in an ejectment suit to recover rents from tenant Antonio Hombrebueno prior to the reconveyance action.
- On January 5, 1989, Respondents filed an action for reconveyance with preliminary injunction in the Regional Trial Court of Manila.
- The RTC rendered judgment for Respondents on March 17, 1993, the Court of Appeals affirmed on March 10, 1998, and Petitioner sought review in this Court which denied the petition.
Key Factual Allegations
- Rosalia continued to lease and collect rents from the apartment units despite the deeds of sale to Salvador and Rosa.
- The original owners continued to pay realty taxes and retained the owner’s duplicate copy of the title after registration in Salvador’s name.
- Salvador surrendered the registered title to his mother and sought his mother’s permission before transactions affecting the property.
- The trial court found no compelling reason in 1959 for the spouses to sell and doubted Salvador’s financial capacity to have purchased the property.
- Respondents alleged that both deeds of sale were simulated and executed merely to accommodate Salvador’s need for funds.
Issues Presented
- Whether payments of realty taxes and retention of possession are indications of continued ownership by the original owners.
- Whether the execution of a sale through a public instrument is equivalent to delivery of the land in dispute.
- Whether the cause of action of Rosalia Santos and her heirs had prescribed or was barred by laches.
- Whether Petitioner could invoke the Dead Man's Statute to disqualify Rosa Santos-Carreon from testifying.
Contentions of the Parties
- Petitioner contended that tax declarations are not conclusive evidence of ownership and that Art. 1477 and Art. 1498 effected transfer by the public deeds executed in favor of Salvador.
- Petitioner further contended that the reconveyance action prescribed in ten years and that Respondents were guilty of laches, and she sought to disqualify Rosa under Rule 130, Sec. 23.
- Respondents contended that the deeds were simulated for lack of consideration, that the original owners retained dominion and control, and that reconveyance was necessary because title was obtained by fictitious instruments.
Statutory Framework
- Art. 1477 provides that ownership of the thing sold passes upon actual or constructive delivery.
- Art. 1498 provides that execution of a sale by public instrument shall be equivalent to delivery unless the deed shows the contrary.
- Rule 130, Sec. 23 is the provision commonly referred to as the Dead Man's Statute disqualifying adverse parties or their representatives from testifying as to matters occurring before a decedent’s death.
Trial Court Findings
- The RTC declared Exh. “B” (January 19, 1959 deed) and Exh. “D” (November 20, 1973 deed) null and void as fictitious, simulated, and inexistent.
- The RTC ordered cancellation of T-113221 and T-60819 and reinstatement of T-27571 in the name of Rosalia A. Santos for partition among heirs.
- The