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G.R. No. L-31189 March 31, 1987

MUNICIPALITY OF VICTORIAS, petitioner,

vs.

THE COURT OF APPEALS, NORMA LEUENBERGER and FRANCISCO SOLIVA, respondents.

Enrique I. Soriano, Jr. for private respondents.

PARAS,J.:

This is a Petition for Review on certiorari of the decision *of respondent Court of Appeals

promulgated on September 29, 1969 in CA-G.R. No. 35036-R (Rollo, p. 11) setting aside the

decision **of the Court of First Intance of Negros Occidental, Branch I, dated September 24,

1964 which dismissed the complaint for recovery of possession in Civil Case No. 181-S and

declared the cemetery site on Lot No. 76 in Victorias as property of the municipality of Victorias

(Record on Appeal, p. 9).

The dispositive portion of the questioned decision reads as follows:

IN VIEW OF THE FOREGOING, the judgment of the lower court is hereby set aside

and another is hereby rendered:

(1) Ordering the defendant municipality and/or thru its appropriate officials to

return and deliver the possession of the portion of Lot 76 used as cemetery or

burial site of the plaintiff-appellant.

(2) Ordering defendant municipality to pay the plaintiff-appellant the sum of

P400.00 a year from 1963 until the possession of said land is actually delivered.

Lot No. 76 containing an area of 208,157 sq. meters forms a part of Cadastral Lot No. 140

(Rollo, p. 11), a 27.2460 ha. sugar land located in Bo. Madaniog, Victorias, Negros Occidental, in

the name of the deceased Gonzalo Ditching under Tax Declaration No. 3429 of Negros

Occidental for the year 1941 (Exh. "3," Folder of Exhibits, p. 22). He was survived by his widow

Simeona Jingeo Vda. de Ditching and a daughter, Isabel, who died in 1928 (TSN, July 1, 1964, p.

7) leaving one off-spring, respondent Norma Leuenberger, who was then only six months old

(TSN, July 1, 1964, p. 34).

Respondent Norma Leuenberger, married to Francisco Soliva, inherited the whole of Lot No.

140 from her grandmother, Simeona J. Vda. de Ditching (not from her predeceased mother

Isabel Ditching). In 1952, she donated a portion of Lot No. 140, about 3 ha., to the municipality

for the ground of a certain high school and had 4 ha. converted into a subdivision. (TSN, July 1,

1964, p. 24).

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In 1963, she had the remaining 21 ha. or 208.157 sq. m. relocated by a surveyor upon request

of lessee Ramon Jover who complained of being prohibited by municipal officials from

cultivating the land. It was then that she discovered that the parcel of land, more or less 4 ha.

or 33,747 sq.m. used by Petitioner Municipality of Victorias, as a cemetery from 1934, is within

her property which is now Identified as Lot 76 and covered by TCT No. 34546 (TSN, July 1, 1964,

pp. 7-9; Exh. "4," Folder of Exhibits, p. 23 and Exh. "A," Folder of Exhibits, p. 1).

On May 20, 1963, Respondent wrote the Mayor of Victorias regarding her discovery,

demanding payment of past rentals and requesting delivery of the area allegedly illegally

occupied by Petitioner (Exh. "G, Folder of Exhibits, p. 15). When the Mayor replied that

Petitioner bought the land she asked to be shown the papers concerning the sale but was

referred by the Mayor to the municipal treasurer who refused to show the same (TSN, July 1,

1964, pp. 32-33).

On January 11, 1964, Respondents filed a complaint in the Court of First Instance of Negros

Occidental, Branch 1, for recovery of possession of the parcel of land occupied by the municipal

cemetery (Record on Appeal, p. 1). In its answer, petitioner Municipality, by way of special

defense, alleged ownership of the lot, subject of the complaint, having bought it from Simeona

Jingco Vda. de Ditching sometime in 1934 (Record on Appeal, p. 7). The lower court decided in

favor of the Municipality. On appeal Respondent appellate Court set aside the decision of the

lower court (Record on AppeaL p. 9); hence, this petition for review on certiorari.

This petition was filed with the Court on November 6, 1969 (Rollo, p. 2), the Record on Appeal

on December 19, 1969 (Rollo, p. 80). On January 5, 1970, the Court gave due course to the

petition (Rollo, p. 84).

The Brief for the Petitioner was filed on April 1, 1970 (Rollo, p. 88), the Brief for Respondentswas filed on May 18, 1970 (Rollo, p. 92).

On July 8, 1970, the Court resolved to consider the case submitted for decision without

Petitioner's Reply Brief, Petitioner having failed to file the brief within the period which expired

on June 10, 1970 (Rollo. p. 99).

On motion of counsel for the Respondents (Rollo, p. 104), the Court resolved on June 30, 1972

to allow respondent Francisco Soliva to continue the appeal in behalf of the estate of

respondent Norma Leuenberger who died on January 25, 1972, Respondent Francisco Soliva

having been appointed special administrator in Special Proceedings No. 84-V of the Court of

First Instance of Negros Occidental (Rollo, p. 110).

In their brief, petitioner raised the following errors of respondent Court of Appeals: (Brief for

the Petitioner, p. 1-3);

I.

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The Honorable Court of Appeals erred in holding that respondents Norma

Leuenberger and Francisco Soliva are the lawful owners of the land in litigation

as they are estopped from questioning the possession and ownership of herein

petitioner which dates back to more than 30 years.

II.

The Honorable Court of Appeals also erred in ordering the petition petitioner to

deliver the possession of the land in question to the respondents Nomia

Leuenberger and Francisco Soliva, by holding that non-annotation on the Torrens

Certificate of Title could not affect the said land when the possession by the

petitioner of the said land for over 30 years and using it as a public cemetery for

that length of time are sufficient proof of purchase and transfer of title and non-

annotation of the Certificate of Title did not render the sale ineffectual

III.

The Honorable Court of Appeals further erred in ordering the petitioner

Municipality of Victories to pay the respondents the sum of P400.00 a year from

1963 until possession is actually delivered because under the law, an owner of a

piece of land has no obligation to pay rentals as it owns and possesses the same.

There is merit in the petition.

It is undisputed that petitioner failed to present before the Court a Deed of Sale to prove its

purchase of the land in question which is included in the Transfer Certificate of Title No. T-

34546 in the name of private respondent Norma Leuenberger.

The pivotal issue in this case is whether or not the secondary evidence presented by the

petitioner municipality is sufficient to substantiate its claim that it acquired the disputed land

by means of a Deed of Sale.

Under the Best Evidence Rule when the original writing is lost or otherwise unavailable, the law

in point provides:

Sec. 4. Secondary evidence when original is lost or destroyed.When the

original writing has been lost or destroyed, or cannot be produced in court, upon

proof of its execution and loss or destruction or unavailability, its contents may

be proved by a copy, or by a recital of its contents in some authentic document,

or by the recollection of witnesses. (Rule 130, Rules of Court).

In lieu of a Deed of Sale, petitioner presented a certificate issued by the Archives Division of the

Bureau of Records Management in Manila, of a page of the 1934 Notarial Register of Vicente D.

Aragon with the following entries:

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Nature of InstrumentCompra venta 2 porciones Terrenos: Lotes Nos. 140-A y

140-B, Victorias, Neg. Occidental pago por esso despues aprobacion Jusgado la

Instance, Neg. Occidental causa civil 5116 Vendedora: Simeona Jingco Vda. de

Ditching . . . administradora Abint. G. Ditching

Comprador: Municipio Victorias, Neg. Occidental . . . . por su Pres.MpalVicente B. Arnaes

Valor: P750.00 ...

Vease copia correspondiente.

Names of-persons Executing/ Acknowledging:

Simeona Vda. de Ditching

Adm. Abint actuacion especial No. 5116

Jusgado la Instance Neg. Occidental

Vendedora

Vicente B. Arnaes

Pres. Municipal. Victorias

Comprador

Witnesses to the Signatures:

Esteban Jalandoni

Gregorio Elizalde

Date: Month

9 Julio 1934

Fees: P2.00

Cedulas:

Exenta por susexo

F1027880 Enero 26/34 Victories, Neg. Occidental

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Remarks.

En Victorias,Neg. Occidental

Los annexes A. y B. estan unidos

solamente en el original de la

escritura.

Respondent Court of Appeals was of the view (Rollo, p. 16) that a mere entry in the notarial

register of a notary public of an alleged sale cannot prove that a particular piece of land was

sold by one person to another, one of the important requirements being the indication of the

area and the technical description of the land being sold. In the present case, since no deed of

sale could be produced, there is no way of telling what particular portion of the property was

sold to defendant municipality and how big was the sale of the land conveyed to the defendant

municipality.

It will be observed that the entries in the notarial register clearly show: (a) the nature of the

instrument. a deed of sale; (b) the subject of the sale two parcels of land, Lot Nos. 140-A

and 140-B; (c) the parties of the contract the vendor Simeona J. Vda. de Ditching in her

capacity as Administrator in Civil Case No. 5116 of the Court of First Instance of Negros

Occidental and the vendee, Vicente B. Ananosa, Municipal Mayor of Victorias; (d) the

consideration P750.00; (e) the names of the witnesses Esteban Jalandoni and Gregoria Elizado;

and the date of the sale on July 9, 1934.

It is beyond question that the foregoing certificate is an authentic document clearlycorroborated and supported by: (a) the testimony of the municipal councilor of Victorias,

Ricardo Suarez, (Original TSN Hearing of September 14, 1964, pp. 1222) who negotiated the

sale; (b) the testimony of Emilio Cuesta, (Original TSN Hearing of September 14, 1964, pp. 2238)

the municipal treasurer of said municipality, since 1932 up to the date of trial on September 14,

1964, who personally paid the amount of P750.00 to Felipe Leuenberger as consideration of the

Contract of Sale; (c) Certificate of Settlement (Original Exhibits, p. 20) "as evidence of said

payment;" (d) Tax Declaration No. 429 (Ibid., p. 22) which was cancelled and was substituted by

Tax Declaration No. 3600 covering the portion of the property unsold (Decision, CFI, Neg.

Occidental Orig. Record on Appeal, p. 6) and (e) Tax Declaration No. 3601 (Ibid, p. 23) in the

name of the Municipal Government of Victorias covering the portion occupied as cemetery.

Tax Declaration No. 3601 shows on its face the boundaries as follows:

North NE Lot No. 140-C of the Subdivision

South SW Lot No. 140-C of the Subdivision

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West NW Lots Nos. 140-C & 140-B of the Subdivision.

The area is 33,747 sq.m.

At the back Exh. 4-A, the sale of a portion of the lot to the Municipality of Victorias was clearly

explained as follows:

Note: The whole Lot No. 140, belongs to Norma Leuenberger as evidenced by a

Transfer of Cert. of Title No. 18672. Portion of this Lot, (30,000 sq.m. was sold to

Municipality of Victories for Cemetery Site as evidenced by a Deed of Sale

executed by Simeona Jingco Vda. de Ditching in favor of the aforesaid

Municipality and ratified by Notary Public Mr. Vicente Aragon under Doc. No.

132; Page No. 2; Book No. 10, Series of 1934.

At the lowest portion under Memoranda it was explained that

The area under this declaration includes 3,746 sq. meters donated by Mrs.

Simeona Jingco Vda. de Ditching and used as road leading to the cemetery. "

(EXIL 4; Original Exhibits, p. 23).

The above-mentioned testimonies and documentary evidence sufficiently Identify the land sold

by the predecessors-in-interest of private respondent. To insist on the technical description of

the land in dispute would be to sacrifice substance to form which would undoubtedly result in

manifest injustice to the petitioner.

Moreover, it is expressly provided by law that the thing sold shall be understood as delivered,

when it is placed in the control and possession of the vendee. (Civil Code Art. 1497). Wherethere is no express provision that title shall not pass until payment of the price, and the thing

gold has been delivered, title passes from the moment the thing sold is placed in the possession

and control of the buyer. (Kuenzle & Streiff vs. Watson & Co., 13 PhiL 26 [1909]). Delivery

produces its natural effects in law, the principal and most important of which being the

conveyance of ownership, without prejudice to the right of the vendor to payment of the price.

(Ocejo, Perez & Co. vs. International Banking Corp., 37 PhiL 631 [1918]).

Similarly, when the sale is made through a public instrument, the execution thereof shall be

equivalent to the delivery of the thing which is the object of the contract, if from the deed, the

contrary does not appear or cannot be clearly inferred. (Civil Code Art. 1498). The execution of

the public instrument operates as a formal or symbolic delivery of the property sold and

authorizes the buyer to use the document as proof of ownership. (Florendo v. Foz, 20 PhiL 388

[1911]).

In the case at bar it is undisputed that petitioner had been in open, public, adverse and

continuous possession of the land for a period of more than thirty years. In fact, according to

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the municipal treasurer there are over 1000 graves in the cemetery. (Decision, Court of

Appeals, Rollo, pp. 11-22).

As correctly observed by Justice Magno S. Gatmaitan in his dissenting opinion (Rollo, pp. 23-28)

in the decision of this case by the Court of Appeals, the evidence establishes without debate

that the property was originally registered in 1916. Plaintiff was born only in 1928 and cannotpossibly be the registered owner of the original lot 140 at the time. Indeed, according to her

own evidence, (Exhibit A; Original Record pp. 13) she became the registered owner only in

1963. Likewise, it is undisputed that in the intestate estate of Gonzalo Ditching, the grandfather

of private respondent Norma Leunberger, it was her grandmother, Simeona, the surviving

spouse of Gonzalo who was named judicial administratrix. According to Norma's own

testimony, Isabel her mother, died in 1928 (TSN Aug. 12, 1964, p. 34) while Simeona the

grandmother died in 1942. (Ibid.) Therefore, as of 1934 when a document of sale was executed

by Simeona in favor of the municipality of Victories as indubitably shown in the notarial register

(Exhibit 5.A) in question, Simeona was still the administratrix of the properties left by her

husband, Gonzalo and of their conjugal partnership. Consequently, she is the only person who

could legally dispose of by sale this particular four- hectare portion of Lot 140. And so it is, that

in 1934, Simeona Ditching in her capacity as judicial administratrix made and executed the

document described in the Report as Lots 140-A and 140-B, showing clearly that they are

portions of the original big Lot 140. As this conveyance was executed by the judicial

administratrix, unquestionably the party authorized to dispose of the same, the presumption

must be that she did so upon proper authority of the Court of First Instance.

As to the description of the property sold, the fact that a notarial report shows that they are

portions of Lot 140 and the property in question occupied by the public cemetery is admittedly

a portion of said lot in the absence of evidence that there were other portions of Lot 140 ceded

unto the petitioner municipality, the inevitable conclusion is that the sale executed in theNotarial Register refers to the disputed lot.

Unfortunately, the purchaser Municipality of Victorias failed to register said Deed of Sale;

hence, when Simeona Jingco Vda. de Ditching died, her grand-daughter, respondent Norma

Leuenberger claimed to have inherited the land in dispute and succeeded in registering said

land under the Torrens system. Said land is now covered by Transfer Certificate of Title No. T-

34036 (Exhibit A, supra) issued by the Register of Deeds of -Negros Occidental on March 11,

1963 in the name of Norma Leuenberger, married to Francisco Soliva, containing an area of

208,157 square meters. As registered owner, she is unquestionably entitled to the protection

afforded to a holder of a Torrens Title.

Admittedly, it is well-settled that under the Torrens System "Every person receiving a certificate

of title in pursuance of a decree of registration, . . . shall hold the same free of all encumbrance

except those noted on said certificate ... " (Sec. 39, Act 496; now Sec. 43, PD 1529).

In the instant case, however, respondent Norma Leuenberger admitted that she inherited the

land covered by Transfer Certificate of Title No. T-34036 from her grandmother, who had

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already sold the land to the petitioner in 1934; hence, she merely stepped into the shoes of her

grandmother and she cannot claim a better right than her predecessor-in-interest. When she

applied for registration of the disputed land, she had no legal right to do so as she had no

ownership of the land since land registration is not a mode of acquiring ownership but only of

confirming ownership of the land. (Grande, et al. vs. Court of Appeals, et al., 115 Phil. 521.)"The

Torrens System was not established as a means for the acquisition of title to private land, ..." Itis intended merely to confirm and register the title which one may already have on the land.

Where the applicant possesses no title or ownership over the parcel of land, he cannot acquire

one under the Torrens system of Registration. (Torela, et al., vs. Torela, et al., L-27843, October

11, 1979).

While an inherently defective Torrens title may not ordinarily be cancelled even after proof of

its defect, the lawnevertheless safeguardsthe rightful party's interest in the titled land from

fraud and improper use of technicalities by snowing such party, in appropriate cases, to

judicially seek reconveyance to him of whatever he has been deprived of as long as the land has

not been transferred or conveyed to a purchaser in good faith. (Pedro Pascua, et al., vs.

Mariano Gopuyoc et al., L-23197, May 31, 1977.)

The Civil Code provides:

Art. 1456. If the property is acquired through mistake or fraud, the person

obtaining it is, by force of law, considered a trustee of an implied trust for the

benefit of the person from whom the property comes.

Thus, it has been held that where the land is decreed in the name of a person through fraud or

mistake, such person is by operation of law considered a trustee of an implied trust for the

benefit of the persons from whom the property comes. The beneficiary shag have the right tenforce the trust, notwithstanding the irrevocability of the Torrens title and the trustee and his

successors-in-interest are bound to execute the deed of reconveyance. (Pacheco vs. Arro, 85

Phil. 505; Escobar vs. Locsin, 74 Phil. 86).

As the land in dispute is held by private respondents in trust for the Municipality of Victorias, it

is logical to conclude that the latter can neither be deprived of its possession nor be made to

pay rentals thereof. Private respondent is in equity bound to reconvey the subject land to

the cestui que trust the Municipality of Victorias. The Torrens system was never calculated to

foment betrayal in the performance of a trust. (Escobar vs. Locsin, 74 Phil. 86).

For a more expeditious disposition of the case at bar, Rule 39 of the Rules of Court provides:

SEC. 10. Judgment for Specific acts; vesting title. ... If real or personal property

is within the Philippines, the court in lieu of directing a conveyance thereof may

enter judgment divesting the title of any party and vesting it in others and such

judgment shall have the force and effect of a conveyance executed in due form

of law.

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Finally, the conclusions and findings of fact by the trial court are entitled to great weight on

appeal and should not be disturbed unless for strong and cogent reasons because the trial court

is in a better position to examine real evidence, as well as to observe the demeanor of the

witnesses while testifying in the case. (Chase v. Buencamino, Sr., 136 SCRA 365 [1985]).

PREMISES CONSIDERED, the judgment of the respondent appellate court is hereby SET ASIDEand the decision of the Court of First Instance of Negros Occidental, Branch I-Silay City in Civil

Case No. 181-S declaring the cemetery site (Exh. E-2) on Lot No. 76 in Victories as the property

of the municipality of Victorias, is hereby REINSTATED. Additionally, We hereby order (a) the

petitioner to have the disputed land segregated by a licensed surveyor from the rest of Lot No.

76 described in Transfer Certificate of Title No. T-34036 and to have the corresponding

subdivision plan, duly approved by the Land Registration Commission, submitted to the court of

origin for approval; (b) the private respondents Norma Leuenberger and Francisco Soliva to be

divested of their title to the disputed land under Rule 39, Sec. 10, Rules of Court; and (c) the

Register of Deeds of Negros Occidental to cancel Transfer Certificate of Title No. 34036 and

issue, in lieu thereof, one title in the name of the Municipality of Victories for the disputed land

and another title in the names of the private respondents Norma Leuenberger and Francisco

Soliva for the rest of Lot No. 76. Without costs.

SO ORDERED.

Fernan (Chairman), Gutierrez, Jr., Padilla, Bidin, and Cortes, JJ., concur.

G.R. No. L-12342 August 3, 1918

A. A. ADDISON,plaintiff-appellant,

vs.

MARCIANA FELIX and BALBINO TIOCO,defendants-appellees.

Thos. D. Aitken for appellant.

Modesto Reyes and Eliseo Ymzon for appellees.

FISHER,J.:

By a public instrument dated June 11, 1914, the plaintiff sold to the defendant Marciana Felix,

with the consent of her husband, the defendant Balbino Tioco, four parcels of land, described in

the instrument. The defendant Felix paid, at the time of the execution of the deed, the sum of

P3,000 on account of the purchase price, and bound herself to pay the remainder in

installments, the first of P2,000 on July 15, 1914, and the second of P5,000 thirty days after the

issuance to her of a certificate of title under the Land Registration Act, and further, within ten

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years from the date of such title P10, for each coconut tree in bearing and P5 for each such tree

not in bearing, that might be growing on said four parcels of land on the date of the issuance of

title to her, with the condition that the total price should not exceed P85,000. It was further

stipulated that the purchaser was to deliver to the vendor 25 per centum of the value of the

products that she might obtain from the four parcels "from the moment she takes possession

of them until the Torrens certificate of title be issued in her favor."

It was also covenanted that "within one year from the date of the certificate of title in favor of

Marciana Felix, this latter may rescind the present contract of purchase and sale, in which case

Marciana Felix shall be obliged to return to me, A. A. Addison, the net value of all the products

of the four parcels sold, and I shall obliged to return to her, Marciana Felix, all the sums that she

may have paid me, together with interest at the rate of 10 per cent per annum."

In January, 1915, the vendor, A. A. Addison, filed suit in Court of First Instance of Manila to

compel Marciana Felix to make payment of the first installment of P2,000, demandable in

accordance with the terms of the contract of sale aforementioned, on July 15, 1914, and of the

interest in arrears, at the stipulated rate of 8 per cent per annum. The defendant, jointly with

her husband, answered the complaint and alleged by way of special defense that the plaintiff

had absolutely failed to deliver to the defendant the lands that were the subject matter of the

sale, notwithstanding the demands made upon him for this purpose. She therefore asked that

she be absolved from the complaint, and that, after a declaration of the rescission of the

contract of the purchase and sale of said lands, the plaintiff be ordered to refund the P3,000

that had been paid to him on account, together with the interest agreed upon, and to pay an

indemnity for the losses and damages which the defendant alleged she had suffered through

the plaintiff's non-fulfillment of the contract.

The evidence adduced shows that after the execution of the deed of the sale the plaintiff, atthe request of the purchaser, went to Lucena, accompanied by a representative of the latter,

for the purpose of designating and delivering the lands sold. He was able to designate only two

of the four parcels, and more than two-thirds of these two were found to be in the possession

of one Juan Villafuerte, who claimed to be the owner of the parts so occupied by him. The

plaintiff admitted that the purchaser would have to bring suit to obtain possession of the land

(sten. notes, record, p. 5). In August, 1914, the surveyor Santamaria went to Lucena, at the

request of the plaintiff and accompanied by him, in order to survey the land sold to the

defendant; but he surveyed only two parcels, which are those occupied mainly by the brothers

Leon and Julio Villafuerte. He did not survey the other parcels, as they were not designated to

him by the plaintiff. In order to make this survey it was necessary to obtain from the Land Court

a writ of injunction against the occupants, and for the purpose of the issuance of this writ the

defendant, in June, 1914, filed an application with the Land Court for the registration in her

name of four parcels of land described in the deed of sale executed in her favor by the plaintiff.

The proceedings in the matter of this application were subsequently dismissed, for failure to

present the required plans within the period of the time allowed for the purpose.

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The trial court rendered judgment in behalf of the defendant, holding the contract of sale to be

rescinded and ordering the return to the plaintiff the P3,000 paid on account of the price,

together with interest thereon at the rate of 10 per cent per annum. From this judgment the

plaintiff appealed.

In decreeing the rescission of the contract, the trial judge rested his conclusion solely on theindisputable fact that up to that time the lands sold had not been registered in accordance with

the Torrens system, and on the terms of the second paragraph of clause (h) of the contract,

whereby it is stipulated that ". . . within one year from the date of the certificate of title in favor

of Marciana Felix, this latter may rescind the present contract of purchase and sale . . . ."

The appellant objects, and rightly, that the cross-complaint is not founded on the hypothesis of

the conventional rescission relied upon by the court, but on the failure to deliver the land sold.

He argues that the right to rescind the contract by virtue of the special agreement not only did

not exist from the moment of the execution of the contract up to one year after the registration

of the land, but does not accrue until the land is registered. The wording of the clause, in fact,

substantiates the contention. The one year's deliberation granted to the purchaser was to be

counted "from the date of the certificate of title ... ." Therefore the right to elect to rescind the

contract was subject to a condition, namely, the issuance of the title. The record show that up

to the present time that condition has not been fulfilled; consequently the defendant cannot be

heard to invoke a right which depends on the existence of that condition. If in the cross-

complaint it had been alleged that the fulfillment of the condition was impossible for reasons

imputable to the plaintiff, and if this allegation had been proven, perhaps the condition would

have been considered as fulfilled (arts. 1117, 1118, and 1119, Civ. Code); but this issue was not

presented in the defendant's answer.

However, although we are not in agreement with the reasoning found in the decision appealedfrom, we consider it to be correct in its result. The record shows that the plaintiff did not deliver

the thing sold. With respect to two of the parcels of land, he was not even able to show them to

the purchaser; and as regards the other two, more than two-thirds of their area was in the

hostile and adverse possession of a third person.

The Code imposes upon the vendor the obligation to deliverthe thing sold. The thing is

considered to be delivered when it is placed "in the hands and possession of the vendee." (Civ.

Code, art. 1462.) It is true that the same article declares that the execution of a public

instruments is equivalent to the delivery of the thing which is the object of the contract, but, in

order that this symbolic delivery may produce the effect of tradition, it is necessary that the

vendor shall have had such controlover the thing sold that, at the moment of the sale, its

material delivery could have been made. It is not enough to confer upon the purchaser

the ownershipand the rightof possession. The thing sold must be placed in his control. When

there is no impediment whatever to prevent the thing sold passing into the tenancy of the

purchaser by the sole will of the vendor, symbolic delivery through the execution of a public

instrument is sufficient. But if, notwithstanding the execution of the instrument, the purchaser

cannot have the enjoyment and material tenancy of the thing and make use of it himself or

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through another in his name, because such tenancy and enjoyment are opposed by the

interposition of another will, then fiction yields to reality the delivery has not been effected.

As Dalloz rightly says (Gen. Rep., vol. 43, p. 174) in his commentaries on article 1604 of the

French Civil code, "the word "delivery" expresses a complex idea . . . the abandonment of the

thing by the person who makes the delivery and the taking control of it by the person to whomthe delivery is made."

The execution of a public instrument is sufficient for the purposes of the abandonment made

by the vendor; but it is not always sufficient to permit of the apprehension of the thing by the

purchaser.

The supreme court of Spain, interpreting article 1462 of the Civil Code, held in its decision of

November 10, 1903, (Civ. Rep., vol. 96, p. 560) that this article "merely declares that when the

sale is made through the means of a public instrument, the execution of this latter is equivalent

to the delivery of the thing sold: which does not and cannot mean that this fictitious tradition

necessarily implies the real tradition of the thing sold, for it is incontrovertible that, while its

ownership still pertains to the vendor (and with greater reason if it does not), a third person

may be in possession of the same thing; wherefore, though, as a general rule, he who

purchases by means of a public instrument should be deemed . . . to be the possessor in fact,

yet this presumption gives way before proof to the contrary."

It is evident, then, in the case at bar, that the mere execution of the instrument was not a

fulfillment of the vendors' obligation to deliver the thing sold, and that from such non-

fulfillment arises the purchaser's right to demand, as she has demanded, the rescission of the

sale and the return of the price. (Civ. Code, arts. 1506 and 1124.)

Of course if the sale had been made under the express agreement of imposing upon the

purchaser the obligation to take the necessary steps to obtain the material possession of the

thing sold, and it were proven that she knew that the thing was in the possession of a third

person claiming to have property rights therein, such agreement would be perfectly valid. But

there is nothing in the instrument which would indicate, even implicitly, that such was the

agreement. It is true, as the appellant argues, that the obligation was incumbent upon the

defendant Marciana Felix to apply for and obtain the registration of the land in the new registry

of property; but from this it cannot be concluded that she had to await the final decision of the

Court of Land Registration, in order to be able to enjoy the property sold. On the contrary, it

was expressly stipulated in the contract that the purchaser should deliver to the vendor one-

fourth "of the products ... of the aforesaid four parcels from the moment when she takes

possession of them until the Torrens certificate of title be issued in her favor." This obviously

shows that it was not forseen that the purchaser might be deprived of her possession during

the course of the registration proceedings, but that the transaction rested on the assumption

that she was to have, during said period, the material possession and enjoyment of thefour

parcels of land.

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Inasmuch as the rescission is made by virtue of the provisions of law and not by contractual

agreement, it is not the conventional but the legal interest that is demandable.

It is therefore held that the contract of purchase and sale entered into by and between the

plaintiff and the defendant on June 11, 1914, is rescinded, and the plaintiff is ordered to make

restitution of the sum of P3,000 received by him on account of the price of the sale, togetherwith interest thereon at the legal rate of 6 per annum from the date of the filing of the

complaint until payment, with the costs of both instances against the appellant. So ordered.

Torres, Johnson, Street, Malcolm and Avancea, JJ.,concur.

G.R. No. 91889 August 27, 1993

MANUEL R. DULAY ENTERPRISES, INC., VIRGILIO E. DULAY AND NEPOMUCENO

REDOVAN, petitioners,

vs.

THE HONORABLE COURT OF APPEALS, EDGARDO D. PABALAN, MANUEL A. TORRES, JR.,

MARIA THERESA V. VELOSO AND CASTRENSE C. VELOSO, respondents.

Virgilio E. Dulay for petitioners.

Torres, Tobias, Azura & Jocson for private respondents.

NOCON,J.:

This is a petition for review on certiorari to annul and set aside the decision1of the Court of

Appeals affirming the decision2

of the Regional Trial Court of Pasay, Branch 114 Civil Cases Nos.

8198-P, and 2880-P, the dispositive portion of which reads, as follows:

Wherefore, in view of all the foregoing considerations, in this Court hereby

renders judgment, as follows:

In Civil Case No. 2880-P, the petition filed by Manuel R. Dulay Enterprises, Inc.

and Virgilio E. Dulay for annulment or declaration of nullity of the decision of the

Metropolitan Trial Court, Branch 46, Pasay City, in its Civil Case No. 38-81

entitled "Edgardo D. Pabalan, et al., vs. Spouses Florentino Manalastas, et al.," is

dismissed for lack of merits;

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In Civil Case No. 8278-P, the complaint filed by Manuel R. Dulay Enterprises, Inc.

for cancellation of title of Manuel A. Torres, Jr. (TCT No. 24799 of the Register of

Deeds of Pasay City) and reconveyance, is dismissed for lack or merit, and,

In Civil Case No. 8198-P, defendants Manuel R. Dulay Enterprises, Inc. and

Virgilio E. Dulay are ordered to surrender and deliver possession of the parcel ofland, together with all the improvements thereon, described in Transfer

Certificate of Title No. 24799 of the Register of Deeds of Pasay City, in favor of

therein plaintiffs Manuel A. Torres, Jr. as owner and Edgardo D. Pabalan as real

estate administrator of said Manuel A. Torres, Jr.; to account for and return to

said plaintiffs the rentals from dwelling unit No. 8-A of the apartment building

(Dulay Apartment) from June 1980 up to the present, to indemnify plaintiffs,

jointly and severally, expenses of litigation in the amount of P4,000.00 and

attorney's fees in the sum of P6,000.00, for all the three (3) cases. Co-defendant

Nepomuceno Redovan is ordered to pay the current and subsequent rentals on

the premises leased by him to plaintiffs.

The counterclaim of defendants Virgilio E. Dulay and Manuel R. Dulay

Enterprises, Inc. and N. Redovan, dismissed for lack of merit. With costs against

the three (3) aforenamed defendants.3

The facts as found by the trial court are as follows:

Petitioner Manuel R. Dulay Enterprises, Inc, a domestic corporation with the following as

members of its Board of Directors: Manuel R. Dulay with 19,960 shares and designated as

president, treasurer and general manager, Atty. Virgilio E. Dulay with 10 shares and designated

as vice-president; Linda E. Dulay with 10 shares; Celia Dulay-Mendoza with 10 shares; and Atty.Plaridel C. Jose with 10 shares and designated as secretary, owned a property covered by TCT

No. 178804and known as Dulay Apartment consisting of sixteen (16) apartment units on a six

hundred eighty-nine (689) square meters lot, more or less, located at Seventh Street (now

Buendia Extension) and F.B. Harrison Street, Pasay City.

Petitioner corporation through its president, Manuel Dulay, obtained various loans for the

construction of its hotel project, Dulay Continental Hotel (now Frederick Hotel). It even had to

borrow money from petitioner Virgilio Dulay to be able to continue the hotel project. As a

result of said loan, petitioner Virgilio Dulay occupied one of the unit apartments of the subject

property since property since 1973 while at the same time managing the Dulay Apartment at

his shareholdings in the corporation was subsequently increased by his father.5

On December 23, 1976, Manuel Dulay by virtue of Board Resolution

No 186

of petitioner corporation sold the subject property to private respondents spouses

Maria Theresa and Castrense Veloso in the amount of P300,000.00 as evidenced by the Deed of

Absolute Sale.7

Thereafter, TCT No. 17880 was cancelled and TCT No. 23225 was issued to

private respondent Maria Theresa Veloso.8Subsequently, Manuel Dulay and private

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respondents spouses Veloso executed a Memorandum to the Deed of Absolute Sale of

December 23, 19769dated December 9, 1977 giving Manuel Dulay within (2) years or until

December 9, 1979 to repurchase the subject property for P200,000.00 which was, however, not

annotated either in TCT No. 17880 or TCT No. 23225.

On December 24, 1976, private respondent Maria Veloso, without the knowledge of ManuelDulay, mortgaged the subject property to private respondent Manuel A. Torres for a loan of

P250,000.00 which was duly annotated as Entry No. 68139 in TCT No. 23225.10

Upon the failure of private respondent Maria Veloso to pay private respondent Torres, the

subject property was sold on April 5, 1978 to private respondent Torres as the highest bidder in

an extrajudicial foreclosure sale as evidenced by the Certificate of Sheriff's Sale11

issued on

April 20, 1978.

On July 20, 1978, private respondent Maria Veloso executed a Deed of Absolute Assignment of

the Right to Redeem12

in favor of Manuel Dulay assigning her right to repurchase the subject

property from private respondent Torres as a result of the extra sale held on April 25, 1978.

As neither private respondent Maria Veloso nor her assignee Manuel Dulay was able to redeem

the subject property within the one year statutory period for redemption, private respondent

Torres filed an Affidavit of Consolidation of Ownership13

with the Registry of Deeds of Pasay

City and TCT No. 2479914

was subsequently issued to private respondent Manuel Torres on

April 23, 1979.

On October 1, 1979, private respondent Torres filed a petition for the issuance of a writ of

possession against private respondents spouses Veloso and Manuel Dulay in LRC Case No.

1742-P. However, when petitioner Virgilio Dulay was never authorized by the petitionercorporation to sell or mortgage the subject property, the trial court ordered private respondent

Torres to implead petitioner corporation as an indispensable party but the latter moved for the

dismissal of his petition which was granted in an Order dated April 8, 1980.

On June 20, 1980, private respondent Torres and Edgardo Pabalan, real estate administrator of

Torres, filed an action against petitioner corporation, Virgilio Dulay and Nepomuceno Redovan,

a tenant of Dulay Apartment Unit No. 8-A for the recovery of possession, sum of money and

damages with preliminary injunction in Civil Case, No. 8198-P with the then Court of First

Instance of Rizal.

On July 21, 1980, petitioner corporation filed an action against private respondents spouses

Veloso and Torres for the cancellation of the Certificate of Sheriff's Sale and TCT No. 24799 in

Civil Case No. 8278-P with the then Court of First Instance of Rizal.

On January 29, 1981, private respondents Pabalan and Torres filed an action against spouses

Florentino and Elvira Manalastas, a tenant of Dulay Apartment Unit No. 7-B, with petitioner

corporation as intervenor for ejectment in Civil Case No. 38-81 with the Metropolitan Trial

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Court of Pasay City which rendered a decision on April 25, 1985, dispositive portion of which

reads, as follows:

Wherefore, judgment is hereby rendered in favor of the plaintiff (herein private

respondents) and against the defendants:

1. Ordering the defendants and all persons claiming possession under them to

vacate the premises.

2. Ordering the defendants to pay the rents in the sum of P500.000 a month

from May, 1979 until they shall have vacated the premises with interest at the

legal rate;

3. Ordering the defendants to pay attorney's fees in the sum of P2,000.00 and

P1,000.00 as other expenses of litigation and for them to pay the costs of the

suit.15

Thereafter or on May 17, 1985, petitioner corporation and Virgilio Dulay filed an action against

the presiding judge of the Metropolitan Trial Court of Pasay City, private respondents Pabalan

and Torres for the annulment of said decision with the Regional Trial Court of Pasay in Civil Case

No. 2880-P.

Thereafter, the three (3) cases were jointly tried and the trial court rendered a decision in favor

of private respondents.

Not satisfied with said decision, petitioners appealed to the Court of Appeals which rendered a

decision on October 23, 1989, the dispositive portion of which reads, as follows:

PREMISES CONSIDERED, the decision being appealed should be as it is hereby

AFFIRMED in full.16

On November 8, 1989, petitioners filed a Motion for Reconsideration which was denied on

January 26, 1990.

Hence, this petition.

During the pendency of this petition, private respondent Torres died on April 3, 1991 as shown

in his death certificate 17and named Torres-Pabalan Realty & Development Corporation as hisheir in his holographic will

18dated October 31, 1986.

Petitioners contend that the respondent court had acted with grave abuse of discretion when it

applied the doctrine of piercing the veil of corporate entity in the instant case considering that

the sale of the subject property between private respondents spouses Veloso and Manuel

Dulay has no binding effect on petitioner corporation as Board Resolution No. 18 which

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authorized the sale of the subject property was resolved without the approval of all the

members of the board of directors and said Board Resolution was prepared by a person not

designated by the corporation to be its secretary.

We do not agree.

Section 101 of the Corporation Code of the Philippines provides:

Sec. 101. When board meeting is unnecessary or improperly held. Unless the by-

laws provide otherwise, any action by the directors of a close corporation

without a meeting shall nevertheless be deemed valid if:

1. Before or after such action is taken, written consent thereto is signed by all

the directors, or

2. All the stockholders have actual or implied knowledge of the action and make

no prompt objection thereto in writing; or

3. The directors are accustomed to take informal action with the express or

implied acquiese of all the stockholders, or

4. All the directors have express or implied knowledge of the action in question

and none of them makes prompt objection thereto in writing.

If a directors' meeting is held without call or notice, an action taken therein

within the corporate powers is deemed ratified by a director who failed to

attend, unless he promptly files his written objection with the secretary of thecorporation after having knowledge thereof.

In the instant case, petitioner corporation is classified as a close corporation and consequently

a board resolution authorizing the sale or mortgage of the subject property is not necessary to

bind the corporation for the action of its president. At any rate, corporate action taken at a

board meeting without proper call or notice in a close corporation is deemed ratified by the

absent director unless the latter promptly files his written objection with the secretary of the

corporation after having knowledge of the meeting which, in his case, petitioner Virgilio Dulay

failed to do.

It is relevant to note that although a corporation is an entity which has a personality distinct

and separate from its individual stockholders or members,19

the veil of corporate fiction may

be pierced when it is used to defeat public convenience justify wrong, protect fraud or defend

crime.20

The privilege of being treated as an entity distinct and separate from its stockholder or

members is therefore confined to its legitimate uses and is subject to certain limitations to

prevent the commission of fraud or other illegal or unfair act. When the corporation is used

merely as an alter ego or business conduit of a person, the law will regard the corporation as

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the act of that person.21

The Supreme Court had repeatedly disregarded the separate

personality of the corporation where the corporate entity was used to annul a valid contract

executed by one of its members.

Petitioners' claim that the sale of the subject property by its president, Manuel Dulay, to private

respondents spouses Veloso is null and void as the alleged Board Resolution No. 18 was passedwithout the knowledge and consent of the other members of the board of directors cannot be

sustained. As correctly pointed out by the respondent Court of Appeals:

Appellant Virgilio E. Dulay's protestations of complete innocence to the effect

that he never participated nor was even aware of any meeting or resolution

authorizing the mortgage or sale of the subject premises (see par. 8, affidavit of

Virgilio E. Dulay, dated May 31, 1984, p. 14, Exh. "21") is difficult to believe. On

the contrary, he is very much privy to the transactions involved. To begin with,

he is a incorporator and one of the board of directors designated at the time of

the organization of Manuel R. Dulay Enterprise, Inc. In ordinary parlance, the

said entity is loosely referred to as a "family corporation". The nomenclature, if

imprecise, however, fairly reflects the cohesiveness of a group and the parochial

instincts of the individual members of such an aggrupation of which Manuel R.

Dulay Enterprises, Inc. is typical: four-fifths of its incorporators being close

relatives namely, three (3) children and their father whose name identifies their

corporation (Articles of Incorporation of Manuel R. Dulay Enterprises, Inc. Exh.

"31-A").22

Besides, the fact that petitioner Virgilio Dulay on June 24, 1975 executed an affidavit23

that he

was a signatory witness to the execution of the post-dated Deed of Absolute Sale of the subject

property in favor of private respondent Torres indicates that he was aware of the transactionexecuted between his father and private respondents and had, therefore, adequate knowledge

about the sale of the subject property to private respondents.

Consequently, petitioner corporation is liable for the act of Manuel Dulay and the sale of the

subject property to private respondents by Manuel Dulay is valid and binding. As stated by the

trial court:

. . . the sale between Manuel R. Dulay Enterprises, Inc. and the spouses Maria

Theresa V. Veloso and Castrense C. Veloso, was a corporate act of the former

and not a personal transaction of Manuel R. Dulay. This is so because Manuel R.

Dulay was not only president and treasurer but also the general manager of the

corporation. The corporation was a closed family corporation and the only non-

relative in the board of directors was Atty. Plaridel C. Jose who appeared on

paper as the secretary. There is no denying the fact, however, that Maria

Socorro R. Dulay at times acted as secretary. . . ., the Court can not lose sight of

the fact that the Manuel R. Dulay Enterprises, Inc. is a closed family corporation

where the incorporators and directors belong to one single family. It cannot be

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concealed that Manuel R. Dulay as president, treasurer and general manager

almost had absolute control over the business and affairs of the corporation.24

Moreover, the appellate courts will not disturb the findings of the trial judge unless he has

plainly overlooked certain facts of substance and value that, if considered, might affect the

result of the case,25

which is not present in the instant case.

Petitioners' contention that private respondent Torres never acquired ownership over the

subject property since the latter was never in actual possession of the subject property nor was

the property ever delivered to him is also without merit.

Paragraph 1, Article 1498 of the New Civil Code provides:

When the sale is made through a public instrument, the execution thereof shall

be equivalent to the delivery of the thing which is the object of the contract, if

from the deed the contrary do not appear or cannot clearly be inferred.

Under the aforementioned article, the mere execution of the deed of sale in a public document

is equivalent to the delivery of the property. Likewise, this Court had held that:

It is settled that the buyer in a foreclosure sale becomes the absolute owner of

the property purchased if it is not redeemed during the period of one year after

the registration of the sale. As such, he is entitled to the possession of the said

property and can demand it at any time following the consolidation of ownership

in his name and the issuance to him of a new transfer certificate of title. The

buyer can in fact demand possession of the land even during the redemption

period except that he has to post a bond in accordance with Section 7 of Act No.3133 as amended. No such bond is required after the redemption period if the

property is not redeemed. Possession of the land then becomes an absolute

right of the purchaser as confirmed owner.26

Therefore, prior physical delivery or possession is not legally required since the execution of the

Deed of Sale in deemed equivalent to delivery.

Finally, we hold that the respondent appellate court did not err in denying petitioner's motion

for reconsideration despite the fact that private respondents failed to submit their comment to

said motion as required by the respondent appellate court from resolving petitioners' motion

for reconsideration without the comment of the private respondent which was required merely

to aid the court in the disposition of the motion. The courts are as much interested as the

parties in the early disposition of cases before them. To require otherwise would unnecessarily

clog the courts' dockets.

WHEREFORE, the petition is DENIED and the decision appealed from is hereby AFFIRMED.

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SO ORDERED.

G.R. No. L-21998 November 10, 1975

CALIXTO PASAGUI and FAUSTA MOSAR, plaintiffs-appellants,

vs.

ESTER T. VILLABLANCA, ZOSIMO VILLABLANCA, EUSTAQUIA BOCAR and CATALINA

BOCAR defendants-appellees.

Julio Siayngco for plaintiffs-appellants.

Filomeno Arteche, Jr. for defendants-appellees. .

ANTONIO,J.:

The only issue posed by this appeal is whether or not, from the nature of the action pleaded as

appears in the allegations of the complaint, the aforesaid action is one of forcible entry, within

the exclusive jurisdiction of the municipal court. .

On February 4, 1963, appellants Calixto Pasagui and Fausta Mosar filed a complaint with the

Court of First Instance at Tacloban City, alleging that onNovember 15, 1962, for and inconsideration of Two Thousand Eight Hundred Pesos (P2,800.00), they bought from appellees

Eustaquia Bocar and Catalina Bocar a parcel of agricultural land with an area of 2.6814

hectares, situated in Hamindangon, Pastrana, Leyte; that the corresponding document of sale

was executed, notarized on the same date, and recorded in the Registry of Deeds of Tacloban,

Leyte on November 16, 1962; that during the first week of February, 1963, defendant spouses

Ester T. Villablanca and Zosimo Villablanca, "illegally and without any right, whatsoever, took

possession of the above property harvesting coconuts from the coconut plantation thereon,

thus depriving plaintiffs" of its possession; that despite demands made by the plaintiffs upon

the above-mentioned defendants "to surrender to them the above-described property and its

possession" the latter failed or refused to return said parcel of land to the former, causing them

damage; and that Eustaquia and Catalina Bocar, vendors of the property, are included

defendants in the complaint by virtue of the warranty clause contained in the document of sale.

Plaintiffs prayed for a decision ordering defendants to surrender the possession of the parcel of

land above-described to them and to pay damages in the amounts specified. .

On February 21, 1963, appellees moved to dismiss the complaint on the ground that the Court

of First Instance had no jurisdiction over the subject matter, the action being one of forcible

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entry. Appellants opposed the Motion to Dismiss asserting that the action is not one for forcible

entry inasmuch as in the complaint, there is no allegation that the deprivation of possession

was effected through "force, intimidation, threat, strategy or stealth." .

On May 13, 1963, the trial court issued an order dismissing the complaint for lack of

jurisdiction, it appearing from the allegations in the complaint that the case is one for forcibleentry which belongs to the exclusive jurisdiction of the Justice of the Peace (now Municipal

Court) of Pastrana, Leyte. The first Motion for Reconsideration was denied on May 27, 1963

and the second was likewise denied on July 5, 1963. From the aforementioned orders, appeal

on a pure question of law was interposed to this Court. .

It is well-settled that what determines the jurisdiction of the municipal court in a forcible entry

case is the nature of the action pleaded as appears from the allegations in the complaint. In

ascertaining whether or not the action is one of forcible entry within the original exclusive

jurisdiction of the municipal court, the averments of the complaint and the character of the

relief sought are the ones to be consulted.. 1.

In the case at bar, the complaint does not allege that the plaintiffs were in physical possession

of the land and have been deprived of that possession through force, intimidation, threat,

strategy, or stealth. It simply avers that plaintiffs-appellants bought on November 12, 1962

from defendants-appellees Eustaquia Bocar and Catalina Bocar the parcel of land in question

for the amount of P2,800.00; that a deed of sale was executed, notarized and registered;that

"during this first week of February, 1963, defendants Ester T. Villablanca and her husband,

Zosimo Villablanca, illegally and without any right whatsoever, took possession of the above

described property, harvesting coconuts from the coconut plantation therein, thus depriving of

its possession herein plaintiffs, and causing them damages for the amount of EIGHT HUNDRED

PESOS (P800.00)"; that for the purpose of enforcing the vendors' warranty in case of eviction,Eustaquia Bocar and Catalina Bocar were also included as defendants; and, therefore, plaintiffs-

appellants pray that a decision be rendered, ordering (a) defendants Ester T. Villablanca and her

husband, Zosimo Villablanca, "to surrender the possession of the above described property to

said plaintiffs"; (b) defendants Ester T. Villablanca and her husband, Zosimo Villablanca, "to pay

to said plaintiffs the amount of EIGHT HUNDRED PESOS (P800.00) as damages for the

usurpation by them of said property"; and (c) defendants Eustaquia Bocar and Catalina Bocar

"to pay the plaintiffs the amount of P2,800.00, plus incidental expenses, as provided for by Art.

1555 of the Civil Code, in case of eviction or loss of ownership to said above described property

on the part of plaintiffs." .

It is true that the execution of the deed of absolute sale in a public instrument is equivalent to

delivery of the land subject of the sale.2

This presumptive delivery only holds true when there is

no impediment that may prevent the passing of the property from the hands of the vendor into

those of the vendee. It can be negated by the reality that the vendees actually failed to obtain

material possession of the land subject of the sale.. 3It appears from the records of the case at

bar that plaintiffs-appellants had not acquired physical possession of the land since its purchase

on November 12, 1962. As a matter of fact, their purpose in filing the complaint in Civil Case

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No. 3285 is precisely to "get the possession of the property."4

In order that an action may be

considered as one for forcible entry, it is not only necessary that the plaintiff should allege his

prior physical possession of the property but also that he was deprived of his possession by any

of the means provided in section 1, Rule 70 of the Revised Rules of Court, namely: force,

intimidation, threats, strategy and stealth. For, if the dispossession did not take place by any of

these means, the courts of first instance, not the municipal courts, have jurisdictions.. 5Thebare allegation in the complaint that the plaintiff has been "deprived" of the land of which he is

and has been the legal owner for a long period has been held to be insufficient.6

It is true that

the mere act of a trespasser in unlawfully entering the land, planting himself on the ground and

excluding therefrom the prior possessor would imply the use of force. In the case at bar, no

such inference could be made as plaintiffs-appellants had not claimed that they were in actual

physical possession of the property prior to the entry of the Villablancas. Moreover, it is evident

that plaintiffs-appellants are not only seeking to get the possession of the property, but as an

alternative cause of action, they seek the return of the price and payment of damages by the

vendors "in case of eviction or loss of ownership" of the said property. It is, therefore, not the

summary action of forcible entry within the context of the Rules. .

WHEREFORE, the order of dismissal is hereby set aside, and the case remanded to the court a

quo for further proceedings. Costs against defendants-appellees. .

Barredo, Actg. (Chairman), Aquino, Concepcion, Jr. and Martin. JJ., concur. .

Fernando (Chairman), J, is on leave. .

Footnotes

1 Cananay v. Sarmiento, 79 Phil. 36.

2 Article 1498, Civil Code of the Philippines.

3 Montenegro v. Roxas de Gomez, 58 Phil. 723; Masallo v. Cesar. 39 Phil. 134;

Addison v. Felix and Tioco, 38 Phil. 404.

4 p. 21, Record on Appeal; p. 9, Brief of Appellants.

5 Valderama Lumber Manufacturer's Co., Inc. v. L. S. Sarmiento, 5 SCRA 287, 291.

"In the present case the allegation in the complaint is simply that the plaintiff has

been "deprived" of the land of which he is and has been the legal owner for a

long period. This allegation is not sufficient to show that the action is based upon

the provisions of said section 80. Moreover, upon an examination of the prayer

of the complaint, it is seen that the plaintiff is not only seeking to be repossessed

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of the land but desires also a declaration that he is the owner of the same. It is

quite clear, from an examination of the complaint, that, had the same been

presented in the court of the justice of the peace, it would have been

demurrable, for the reason that the facts alleged fail to show that the plaintiff

had been dispossessed by any of the methods mentioned in said section 80.

"It is a general rule of pleading and practice that in all pleadings filed in courts of

special jurisdiction, the special facts giving the court jurisdiction must be

specially alleged and set out. Unless these special jurisdictional facts are alleged,

the complaint is demurrable. The complaint in the present case not containing

allegations showing the special jurisdiction of the justice of the peace, the same

would have been demurrable had it been filed in the court of justice of the

peace.

"Said section 80 does not cover all of the cases of dispossession of lands.

Whenever the owner is dispossessed by any other means than those mentioned

in said section, he may maintain his action in a Court of First Instance, and it is

not necessary for him to wait until the expiration of twelve months before

commencing an action to be repossessed and to be declared to be the owner of

said land. The summary action before a justice of the peace is given only for the

special circumstances mentioned in said section (80). In all other cases Courts of

First Instance have jurisdiction, even though the twelve months have not

elapsed. (Alonzo vs. Municipality of Placer, 5 Phil. Rep., 71; Roman Catholic

Church vs. Familiar, 11 Phil. Rep., 310; Gutierrez vs. Rosario, 15 Phil. Rep., 116.)."

(Gumiran v. Gumiran, 21 Phil. 174, 178-179.)

G.R. No. L-69970 November 28, 1988

FELIX DANGUILAN, petitioner,

vs.

INTERMEDIATE APPELLATE COURT, APOLONIA MELAD, assisted by her husband, JOSE

TAGACAY,respondents.

Pedro R. Perez, Jr. for petitioner.

Teodoro B. Mallonga for private respondent.

CRUZ, J.:

The subject of this dispute is the two lots owned by Domingo Melad which is claimed by both

the petitioner and the respondent. The trial court believed the petitioner but the respondent

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court, on appeal, upheld the respondent. The case is now before us for a resolution of the

issues once and for all.

On January 29, 1962, the respondent filed a complaint against the petitioner in the then Court

of First Instance of Cagayan for recovery of a farm lot and a residential lot which she claimed

she had purchased from Domingo Melad in 1943 and were now being unlawfully withheld bythe defendant.

1In his answer, the petitioner denied the allegation and averred that he was the

owner of the said lots of which he had been in open, continuous and adverse possession,

having acquired them from Domingo Melad in 1941 and 1943.2The case was dismissed for

failure to prosecute but was refiled in 1967.3

At the trial, the plaintiff presented a deed of sale dated December 4, 1943, purportedly signed

by Domingo Melad and duly notarized, which conveyed the said properties to her for the sum

of P80.00.4She said the amount was earned by her mother as a worker at the Tabacalera

factory. She claimed to be the illegitimate daughter of Domingo Melad, with whom she and her

mother were living when he died in 1945. She moved out of the farm only when in 1946 Felix

Danguilan approached her and asked permission to cultivate the land and to stay therein. She

had agreed on condition that he would deliver part of the harvest from the farm to her, which

he did from that year to 1958. The deliveries having stopped, she then consulted the municipal

judge who advised her to file the complaint against Danguilan. The plaintiff 's mother, her only

other witness, corroborated this testimony.5

For his part, the defendant testified that he was the husband of Isidra Melad, Domingo's niece,

whom he and his wife Juana Malupang had taken into their home as their ward as they had no

children of their own. He and his wife lived with the couple in their house on the residential lot

and helped Domingo with the cultivation of the farm. Domingo Melad signed in 1941 a private

instrument in which he gave the defendant the farm and in 1943 another private instrument inwhich he also gave him the residential lot, on the understanding that the latter would take care

of the grantor and would bury him upon his death.6Danguilan presented three other

witnesses7to corroborate his statements and to prove that he had been living in the land since

his marriage to Isidra and had remained in possession thereof after Domingo Melad's death in

1945. Two of said witnesses declared that neither the plaintiff nor her mother lived in the land

with Domingo Melad.8

The decision of the trial court was based mainly on the issue of possession. Weighing the

evidence presented by the parties, the judge9held that the defendant was more believable

and that the plaintiff's evidence was "unpersuasive and unconvincing." It was held that the

plaintiff's own declaration that she moved out of the property in 1946 and left it in the

possession of the defendant was contradictory to her claim of ownership. She was also

inconsistent when she testified first that the defendant was her tenant and later in rebuttal that

he was her administrator. The decision concluded that where there was doubt as to the

ownership of the property, the presumption was in favor of the one actually occupying the

same, which in this case was the defendant.10

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The review by the respondent court11

of this decision was manifestly less than thorough. For

the most part it merely affirmed the factual findings of the trial court except for an irrelevant

modification, and it was only toward the end that it went to and resolved what it considered

the lone decisive issue.

The respondent court held that Exhibits 2-b and 3-a, by virtue of which Domingo Melad hadconveyed the two parcels of land to the petitioner, were null and void. The reason was that

they were donations of real property and as such should have been effected through a public

instrument. It then set aside the appealed decision and declared the respondents the true and

lawful owners of the disputed property.

The said exhibits read as follows:

EXHIBIT 2-b is quoted as follows:12

I, DOMINGO MELAD, of legal age, married, do hereby declare in this receipt the

truth of my giving to Felix Danguilan, my agricultural land located at Barrio Fugu-

Macusi, Penablanca, Province of Cagayan, Philippine Islands; that this land is

registered under my name; that I hereby declare and bind myself that there is no

one to whom I will deliver this land except to him as he will be the one

responsible for me in the event that I will die and also for all other things needed

and necessary for me, he will be responsible because of this land I am giving to

him; that it is true that I have nieces and nephews but they are not living with us

and there is no one to whom I will give my land except to Felix Danguilan for he

lives with me and this is the length175 m. and the width is 150 m.

IN WITNESS WHEREOF, I hereby sign my name below and also those present inthe execution of this receipt this 14th day of September 1941.

Penablanca Cagayan, September 14, 1941.

(SGD.) DOMINGO MELAD

WITNESSES:

1. (T.M.) ISIDRO MELAD

2. (SGD.) FELIX DANGUILAN

3. (T.M.) ILLEGIBLE

EXHIBIT 3-a is quoted as follows:13

I, DOMINGO MELAD, a resident of Centro, Penablanca, Province of Cagayan, do

hereby swear and declare the truth that I have delivered my residential lot at

Centro, Penablanca, Cagayan, to Felix Danguilan, my son-in-law because I have

no child; that I have thought of giving him my land because he will be the one to

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take care of SHELTERING me or bury me when I die and this is why I have

thought of executing this document; that the boundaries of this lot ison the

east, Cresencio Danguilan; on the north, Arellano Street; on the south by Pastor

Lagundi and on the west, Pablo Pelagio and the area of this lot is 35 meters going

south; width and length beginning west to east is 40 meters.

IN WITNESS HEREOF, I hereby sign this receipt this 18th day of December 1943.

(SGD.) DOMINGO MELAD

WITNESSES:

(SGD.) ILLEGIBLE

(SGD.) DANIEL ARAO

It is our view, considering the language of the two instruments, that Domingo Melad did intend

to donate the properties to the petitioner, as the private respondent contends. We do not

think, however, that the donee was moved by pure liberality. While truly donations, the

conveyances were onerousdonations as the properties were given to the petitioner in

exchange for his obligation to take care of the donee for the rest of his life and provide for his

burial. Hence, it was not covered by the rule in Article 749 of the Civil Code requiring donations

of real properties to be effected through a public instrument. The case at bar comes squarely

under the doctrine laid down in Manalo v. De Mesa,14

where the Court held:

There can be no doubt that the donation in question was made for a valuable

consideration, since the donors made it conditional upon the donees' bearing

the expenses that might be occasioned by the death and burial of the donorPlacida Manalo, a condition and obligation which the donee Gregorio de Mesa

carried out in his own behalf and for his wife Leoncia Manalo; therefore, in order

to determine whether or not said donation is valid and effective it should be

sufficient to demonstrate that, as a contract, it embraces the conditions the law

requires and is valid and effective, although not recorded in a public instrument.

The private respondent argues that as there was no equivalence between the value of the lands

donated and the services for which they were being exchanged, the two transactions should be

considered pure or gratuitous donations of real rights, hence, they should have been effected

through a public instrument and not mere private writings. However, no evidence has been

adduced to support her contention that the values exchanged were disproportionate or

unequal.

On the other hand, both the trial court and the respondent court have affirmed the factual

allegation that the petitioner did take care of Domingo Melad and later arranged for his burial

in accordance with the condition imposed by the donor. It is alleged and not denied that he

died when he was almost one hundred years old,15

which would mean that the petitioner

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farmed the land practically by himself and so provided for the donee (and his wife) during the

latter part of Domingo Melad's life. We may assume that there was a fair exchange between

the donor and the donee that made the transaction an onerous donation.

Regarding the private respondent's claim that she had purchased the properties by virtue of a

deed of sale, the respondent court had only the following to say: "Exhibit 'E' taken togetherwith the documentary and oral evidence shows that the preponderance of evidence is in favor

of the appellants." This was, we think, a rather superficial way of resolving such a basic and

important issue.

The deed of sale was allegedly executed when the respondent was only three years old and the

consideration was supposedly paid by her mother, Maria Yedan from her earnings as a wage

worker in a factory.16

This was itself a suspicious circumstance, one may well wonder why the

transfer was not made to the mother herself, who was after all the one paying for the lands.

The sale was made out in favor of Apolonia Melad although she had been using the surname

Yedan her mother's surname, before that instrument was signed and in fact even after she got

married. 17The averment was also made that the contract was simulated and prepared after

Domingo Melad's death in 1945.18

It was also alleged that even after the supposed execution

of the said contract, the respondent considered Domingo Melad the owner of the properties

and that she had never occupied the same.19

Considering these serious challenges, the appellate court could have devoted a little more time

to examining Exhibit "E" and the circumstances surrounding its execution before pronouncing

its validity in the manner described above. While it is true that the due execution of a public

instrument is presumed, the presumption is disputable and will yield to contradictory evidence,

which in this case was not refuted.

At any rate, even assuming the validity of the deed of sale, the record shows that the private

respondent did not take possession of the disputed properties and indeed waited until 1962 to

file this action for recovery of the lands from the petitioner. If she did have possession, she

transferred the same to the petitioner in 1946, by her own sworn admission, and moved out to

another lot belonging to her step-brother.20

Her claim that the petitioner was her tenant (later

changed to administrator) was disbelieved by the trial court, and properly so, for its

inconsistency. In short, she failed to show that she consummated the contract of sale by actual

delivery of the properties to her and her actual possession thereof in concept of purchaser-

owner.

As was held in Garchitorena v. Almeda:21

Since in this jurisdiction it is a fundamental and elementary principle that

ownership does not pass by mere stipulation but only by delivery (Civil Code, Art.

1095; Fidelity and Surety Co. v. Wilson, 8 Phil. 51), and the execution of a public

document does not constitute sufficient delivery where the property involved is

in the actual and adverse possession of third persons (Addison vs. Felix, 38 Phil.

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404; Masallo vs. Cesar, 39 Phil. 134), it becomes incontestable that even if

included in the contract, the ownership of the property in dispute did not pass

thereby to Mariano Garchitorena. Not having become the owner for lack of

delivery, Mariano Garchitorena cannot presume to recover the property from its

present possessors. His action, therefore, is not one of revindicacion, but one

against his vendor for specific performance of the sale to him.

In the aforecited case of Fidelity and Deposit Co. v. Wilson,22

Justice Mapa declared for the

Court:

Therefore, in our Civil Code it is a fundamental principle in all matters of

contracts and a well- known doctrine of law that "non mudis pactis sed traditione

dominia rerum transferuntur".In conformity with said doctrine as established in

paragraph 2 of article 609 of said code, that "the ownership and other property

rights are acquired and transmitted by law, by gift, by testate or intestate

succession, and, in consequence of certain contracts, by tradition". And as the

logical application of this disposition article 1095 prescribes the following: "A

creditor has the rights to the fruits of a thing from the time the obligation to

deliver it arises. However, he shall not acquire a real right" (and the ownership is

surely such) "until the property has been delivered to him."

In accordance with such disposition and provisions the delivery of a thing

constitutes a necessary and indispensable requisite for the purpose of acquiring

the ownership of the same by virtue of a contract. As Manresa states in his

Commentaries on the Civil Code, volume 10, pages 339 and 340: "Our law does

not admit the doctrine of the transfer of property by mere consent but limits the

effect of the agreement to the due execution of the contract. ... The ownership,the property right, is only derived from the delivery of a thing ... "

As for the argument that symbolic delivery was effected through the deed of sale, which was a

public instrument, the Court has held:

The Code imposes upon the vendor the obligation to deliverthe thing sold. The

thing is considered to be delivered when it is placed "in the hands and

possession of the vendee." (Civil Code, art. 1462). It is true that the same article

declares that the execution of a public instrument is equivalent to the delivery of

the thing which is the object of the contract, but, in order that this symbolic

delivery may produce the effect of tradition, it is necessary that the vendor shall

have had such controlover the thing sold that, at the moment of the sale, its

material delivery could have been made. It is not enough to confer upon the

purchaser the ownershipand the right of possession. The thing sold must be

placed in his control.When there is no impediment whatever to prevent the

thing sold passing into the tenancy of the purchaser by the sole will of the

vendor, symbolic delivery through the execution of a public instrument is

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sufficient. But if, notwithstanding the execution of the instrument, the purchaser

cannot have the enjoyment and material tenancy of the thing and make use of it

himself or through another in his name, because such tenancy and enjoyment

are opposed by the interposition of another will, then fiction yields to reality

the delivery has not been effected.23

There is no dispute that it is the petitioner and not the private respondent who is in actual

possession of the litigated properties. Even if the respective claims of the parties were both to

be discarded as being inherently weak, the decision should still incline in favor of the petitioner

pursuant to the doctrine announced in Santos & Espinosa v. Estejada24

where the Court

announced:

If the claim of both the plaintiff and the defendant are weak, judgment must be

for the defendant, for the latter being in possession is presumed to be the

owner, and cannot be obliged to show or prove a better right.

WHEREFORE, the decision of the respondent court is SET ASIDE and that of the trial court

REINSTATED, with costs against the private respondent. It is so ordered.

G.R. No. 92989 July 8, 1991

PERFECTO DY, JR. petitioner,

vs.

COURT OF APPEALS, GELAC TRADING INC., and ANTONIO V. GONZALES, respondents.

Zosa & Quijano Law Offices for petitioner.

Expedito P. Bugarin for respondent GELAC Trading, Inc.

GUTIERREZ, JR.,J.:p

This is a petition for review on certiorariseeking the reversal of the March 23, 1990 decision of

the Court of Appeals which ruled that the petitioner's purchase of a farm tractor was not validly

consummated and ordered a complaint for its recovery dismissed.

The facts as established by the records are as follows:

The petitioner, Perfecto Dy and Wilfredo Dy are brothers. Sometime in 1979, Wilfredo Dy

purchased a truck and a farm tractor through financing extended by Libra Finance and

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Investment Corporation (Libra). Both truck and tractor were mortgaged to Libra as security for

the loan.

The petitioner wanted to buy the tractor from his brother so on August 20, 1979, he wrote a

letter to Libra requesting that he be allowed to purchase from Wilfredo Dy the said tractor and

assume the mortgage debt of the latter.

In a letter dated August 27, 1979, Libra thru its manager, Cipriano Ares approved the

petitioner's request.

Thus, on September 4, 1979, Wilfredo Dy executed a deed of absolute sale in favor of the

petitioner over the tractor in question.

At this time, the subject tractor was in the possession of Libra Finance due to Wilfredo Dy's

failure to pay the amortizations.

Despite the offer of full payment by the petitioner to Libra for the tractor, the immediate

release could not be effected because Wilfredo Dy had obtained financing not only for said

tractor but also for a truck and Libra insisted on full payment for both.

The petitioner was able to convince his sister, Carol Dy-Seno, to purchase the truck so that full

payment could be made for both. On November 22, 1979, a PNB check was issued in the

amount of P22,000.00 in favor of Libra, thus settling in full the indebtedness of Wilfredo Dy

with the financing firm. Payment having been effected through an out-of-town check, Libra

insisted that it be cleared first before Libra could release the chattels in question.

Meanwhile, Civil Case No. R-16646 entitled "Gelac Trading, Inc.v.Wilfredo Dy", a collectioncase to recover the sum of P12,269.80 was pending in another court in Cebu.

On the strength of an aliaswrit of execution issued on December 27, 1979, the provincial

sheriff was able to seize and levy on the tractor which was in the premises of Libra in Carmen,

Cebu. The tractor was subsequently sold at public auction where Gelac Trading was the lone

bidder. Later, Gelac sold the tractor to one of its stockholders, Antonio Gonzales.

It was only when the check was cleared on January 17, 1980 that the petitioner learned about

GELAC having already taken custody of the subject tractor. Consequently, the petitioner filed an

action to recover the subject tractor against GELAC Trading with the Regional Trial Court of

Cebu City.

On April 8, 1988, the RTC rendered judgment in favor of the petitioner. The dispositive portion

of the decision reads as follows:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against

the defendant, pronouncing that the plaintiff is the owner of the tractor, subject

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matter of this case, and directing the defendants Gelac Trading Corporation and

Antonio Gonzales to return the same to the plaintiff herein; directing the

defendants jointly and severally to pay to the plaintiff the amount of P1,541.00

as expenses for hiring a tractor; P50,000 for moral damages; P50,000 for

exemplary damages; and to pay the cost. (Rollo, pp. 35-36)

On appeal, the Court of Appeals reversed the decision of the RTC and dismissed the complaint

with costs against the petitioner. The Court of Appeals held that the tractor in question still

belonged to Wilfredo Dy when it was seized and levied by the sheriff by virtue of the alias writ

of execution issued in Civil Case No. R-16646.

The petitioner now comes to the Court raising the following questions:

A.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS MISAPPREHENDED THE

FACTS AND ERRED IN NOT AFFIRMING THE TRIAL COURT'S FINDING THAT

OWNERSHIP OF THE FARM TRACTOR HAD ALREADY PASSED TO HEREIN

PETITIONER WHEN SAID TRACTOR WAS LEVIED ON BY THE SHERIFF PURSUANT

TO ANALIASWRIT OF EXECUTION ISSUED IN ANOTHER CASE IN FAVOR OF

RESPONDENT GELAC TRADING INC.

B.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS EMBARKED ON MERE

CONJECTURE AND SURMISE IN HOLDING THAT THE SALE OF THE AFORESAID

TRACTOR TO PETITIONER WAS DONE IN FRAUD OF WILFREDO DY'S CREDITORS,THERE BEING NO EVIDENCE OF SUCH FRAUD AS FOUND BY THE TRIAL COURT.

C.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS MISAPPREHENDED THE

FACTS AND ERRED IN NOT SUSTAINING THE FINDING OF THE TRIAL COURT THAT

THE SALE OF THE TRACTOR BY RESPONDENT GELAC TRADING TO ITS CO-

RESPONDENT ANTONIO V. GONZALES ON AUGUST 2, 1980 AT W