Petitioners seek in this  appeal the review of the decision of the Court of Appeals confirming in toto  the judgment of the Court of First Instance  of Quezon Province wherein the contract of sale with right of redemption executed by plaintiff-appellee Nicolas  Miras on   November 1, 1930 in favor of the spouses Laureano Asturias and Julia Orozco (petitioners' predecessors- in-interest)  covering the land in question, was declared one of mortgage with usurious interest and therefore null and void.  The defendants, now petitioners, were consequently ordered to vacate the portion  (4/5)  of the land occupied by them, to pay plaintiff the  amount of P4,410.00 which represents  the  value of the coconuts gathered by them from 1931 to 1941 and from 1946 to  1948 in the concept of usurious interest, minus P500.00 which  is the capital  of the loan;  a  further sum of  P5,760.00 which they were able  to   obtain  from the  produce of the land since 1948; and to return  the P30.00  paid on  account of  the usurious interest  from 1928 to 1930.

The contention  of the  petitioners is that both the  trial court and the Court of Appeals erred  in  admitting and giving credence to  the oral testimony of   plaintiff Miras tending  to  vary the terms of  the  pacto de  retro  sale (Exh. 1 or B), contrary to the survivorship disqualification rule [Sec. 26(c), Rule 123, Rules of Court]; in not holding that the action of plaintiff has already prescribed and  that defendants-petitioners acquired title to  the land by  prescription, and in ordering them to refund the alleged usurious interest  and the fruits of the land since  1930. The pertinent facts as found by the trial court  and affirmed by the Court of  Appeals are as follows:

In order to pay his debt to the Philippine National Bank, Nicolas Miras, on November 1,  1928, obtained  from the spouses Laureano Asturias and  Julia Orozco,  a loan of P500.00 at 3% interest per month secured by a  mortgage in a  private  document  of the   land in  question.  Two years later, in 1930, having paid only P30.00 as interest while the total indebtedness reached the  sum of P830.00 P500.00 representing the capital and P330.00 the balance of the unpaid  interest for two years Nicolas Miras,  upon the request of the spouses, executed on November 1, 1930, a written document of sale with the right of repurchase within  seven years covering the same property for the amount of P830.00.   Although not  expressed in the contract, the parties  agreed that the spouses? in payment of the stipulated 3%  per month interest on the P830.00, were to be permitted  to gather and benefit by the fruits of the coconut trees planted and  growing on the land.   Miras remained in possession of the land, cultivating the portion not  occupied  by the coconuts and   raising therein other plants.

After Laureano Asturias died in 1934, and before the death of his widow,  Julia Orozco in 1937, Miras  offered to redeem the property but the latter requested him to postpone the  same  to a later date as she had not yet sufficiently benefited from the capital invested as the price of copra unexpectedly went down after 1930.  Upon Julia Orozco's death in July 1937, Miras made the same offer to redeem the property from  petitioners herein, successors-in-interest of  the  spouses, who made the same request as their deceased mother,  and to which  request Miras once more agreed.

In 1938, one year  after Julia Orozco's death, petitioners discovered the document Exh.  1  or B  and noting that it was  in the form of a sale, they agreed to partition the land among  themselves notwithstanding the  fact  that their father, Laureano Asturias,  did not include said property in his will and Miras continued in possession thereof, paying  land  taxes  thereon.  In   1943,   Amparo,   Romeo and  Apolonia Camilon, children of the deceased Constancia Asturias, one  of the heirs of the creditor spouses, reconveyed to respondent Nicolas Miras  their one fifth  (1/5) portion of the property in question,  upon  receipt from him  of the sum of P210.00, their share of the credit against Miras.

When the petitioners attempted to enter the property in 1946 and tried to  fence the same in 1948, in order to exclude Nicolas  Miras therefrom, the latter filed an action for forcible entry and prevented the petitioners from continuing their act.  In the same year, because of petitioners' continued refusal  to have the property redeemed, Miras filed the present case.

The contention that under the rule of survivorship disqualification, the testimony of respondent Miras  is  inadmissible to vary the terms of  the  pacto de  retro  sale, is untenable  because, as found by the Court of Appeals, no timely objection has been made against the admission of such evidence.  Furthermore, one of the petitioners  (Felix Asturias)  was made  to testify  on  such  prohibited matters covered by the exclusion-rule  (t.s.n. May 27,  1953, pp. 65,  70-71).  In view  of this, petitioners are correctly deemed to have waived the benefit and protection of the rule.^[1]

As a consequence, the finding of fact of  the Court of Appeals, arrived at  after considering and evaluating the evidence, thus properly admitted, that the contract in  question is one of a loan with  usurious interest, and, therefore is null and void, is conclusive upon us and can not be reviewed.

The claim  of petitioners that the  action  of plaintiff respondent Miras has already prescribed, and that they in turn had acquired  title to  the land in question by acquisitive prescription, is without merit,  in view  of the fact that, as found by the Court of Appeals, the present action is one primarily for  revindication or recovery of property and only incidentally to declare the contract of sale  with right of repurchase null and void as having been executed for the  purpose  of disguising a  usurious  transaction. This is  evident from  the  allegations in  the  complaint and the reliefs prayed  for, which, it is a settled rule, determine the nature of an action or issue (Rone vs. Claro, L-4474, May 8, 1958).

Article 4  of the Civil Code  (the provision applicable to this transaction) provides that  "Acts performed  contrary to law are void, except in cases in which the law itself gives  validity to such  acts".  A contract designed to hide a  usurious agreement not only violates the law but contravenes public policy.  Such a contract can not be countenanced and is  therefore  illegal and void from its inception.  Such  being the case, the  prayer for  the declaration of its nullity is imprescriptible under Article  1410 of the New Civil Code.  It is true that this is a new  provision, but  its principle is equally  applicable to the  case at bar, as was held in the case  of Eugenio vs. Per dido 97 Phil., 41 where, in deciding that an action to annul a sale made 1932,  in  violation of the Homestead Act, had  not prescribed, this Court said:

"Under the existing classification, such a contract would be in existent and the 'action or defense for the declaration' of such in existence 'does not prescribe' (Article 1410, New Civil Code). While it is true that this is a new provision, it is nevertheless a  principle recognized  since Tipton vs. Velasco  (6 Phil. 67) that mere  lapse of time cannot give efficacy to  contracts that are null and void". vs. Beltran 97 Phil., 772; Angeles vs. Court of Appeals, 102 Phil.,  1006).

Neither did petitioners acquire title to the land by acquisitive prescription since it appears from the facts found by the Court of Appeals, that possession of the property was obtained by the petitioners only in 1946 and the original complaint was filed in 1948.  Their claim that their possession dates  back from  1930 when they  started gathering the coconuts from the land in the form of payment of the  usurious interest on the loan is groundless.  The mere fact that from 1930 they were permitted to enter the land for the purpose of gathering the fruits of the coconuts did not make them  possessors of the property in the concept  of  owners  to entitle them to claim prescription.  Such  possession  which was  sporadic and by mere tolerance of the owners and actual  possessors of the  land cannot be the basis of a claim of ownership by prescription.

Having thus arrived at the conclusions above set forth, the decision of  the Court of Appeals  ordering petitioners to refund to respondent Miras the usurious interest collected in the form of fruits of the land since 1930 is justified.

Wherefore, the decision of the Court of Appeals is hereby affirmed, with costs against petitioners.  So ordered.

Bengzon, C. J., Padilla, Bautista Angelo, Labrador, Paredes, Dizon, Regala, and Makalintal, JJ., concur.

 

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^[1] Abrenica vs. Gonda and De  Gracia,  34 Phil. 739; Arroyo vs. Azur, 76 Phil. 493.