Cases on Consummation Stage- Sales

7/26/2019 Cases on Consummation Stage- Sales

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SECOND DIVISION

G.R. No. 133895 October 2, 2001

ZENAIDA M. SANTOS,petitioner,vs.

CALIXTO SANTOS, ALBERTO SANTOS, ROSA SANTOS-CARREON and ANTONIO SANTOS, respondents.

QUISUMBING, J .:

This petition for review1seeks to annul and set aside thedecision date March 10, 1998 of the Court of Appeals that

affirmed the decision of the Regional Trial Court of Manila,

Branch 48, dated March 17, 1993. Petitioner also seeks to

annul the resolution that denied her motion for reconsideration.

Petitioner Zenaida M. Santos is the widow of Salvador Santos,

a brother of private respondents Calixto, Alberto, Antonio, all

surnamed Santos and Rosa Santos-Carreon.

The spouses Jesus and Rosalia Santos owned a parcel of land

registered under TCT No. 27571 with an area of 154 square

meters, located at Sta. Cruz Manila. On it was a four-door

apartment administered by Rosalia who rented them out. The

spouses had five children, Salvador, Calixto, Alberto, Antonioand Rosa.

On January 19, 1959, Jesus and Rosalia executed a deed of

sale of the properties in favor of their children Salvador and

Rosa. TCT No. 27571 became TCT No. 60819. Rosa in turn

sold her share to Salvador on November 20, 1973 which

resulted in the issuance of a new TCT No. 113221. Despite the

transfer of the property to Salvador, Rosalia continued to lease

receive rentals form the apartment units.1wphi1.nt

On November 1, 1979, Jesus died. Six years after or on

January 9, 1985, Salvador died, followed by Rosalia who died

the following month. Shortly after, petitioner Zenaida, claiming

to be Salvador's heir, demanded the rent from Antonio

Hombrebueno,2a tenant of Rosalia. When the latter refused to

pay, Zenaida filed and ejectment suit against him with the

Metropolitan Trial Court of Manila, Branch 24, which eventually

decided in Zenaida's favor.

On January 5, 1989, private respondents instituted an action

for reconveyance of property with preliminary injunction against

petitioner in the Regional Trial Court of Manila, where they

alleged that the two deeds of sale executed on January 19,

1959 and November 20, 1973 were simulated for lack of

consideration. They were executed to accommodate Salvador

in generation funds for his business and providing him with

greater business flexibility.

In her Answer, Zenaida denied the material allegations in thecomplaint as special and affirmative defenses, argued that

Salvador was the registered owner of the property, which could

only be subjected to encumbrances or liens annotated on the

title; that the respondents' right to reconveyance was already

barred by prescription and laches; and that the complaint state

no cause of action.

On March 17, 1993, the trial court decided in private

respondents' favor, thus:

WHEREFORE, viewed from all the foregoing considerations,

judgment is hereby made in favor of the plaintiffs and against

the defendants:

a) Declaring Exh. "B", the deed of sale executed by Rosalia

Santos and Jesus Santos on January 19, 1959, as entirely null

and void for being fictitious or stimulated and inexistent and

without any legal force and effect:

b) Declaring Exh. "D", the deed of sale executed by Rosa

Santos in favor of Salvador Santos on November 20, 1973,

also as entirely null and void for being likewise fictitious or

stimulated and inexistent and without any legal force and

effect;

c) Directing the Register of Deeds of Manila to cancel Transfer

Certificate of Title No. T-113221 registered in the name of

Salvador Santos, as well as, Transfer Certificate of Title No.

60819 in the names of Salvador Santos, Rosa Santos, and

consequently thereafter, reinstating with the same legal force

and effect as if the same was not cancelled, and which shall in

all respects be entitled to like faith and credit; Transfer

Certificate of Title No. T-27571 registered in the name of

Rosalia A. Santos, married to Jesus Santos, the same to be

partitioned by the heirs of the said registered owners in

accordance with law; and

d) Making the injunction issued in this case permanent.

Without pronouncement as to costs.

SO OREDERED.3

The trial court reasoned that notwithstanding the deeds of sale

transferring the property to Salvador, the spouses Rosalia and

Jesus continued to possess the property and to exercise rights

of ownership not only by receiving the monthly rentals, but also

by paying the realty taxes. Also, Rosalia kept the owner's

duplicate copy of the title even after it was already in the name

of Salvador. Further, the spouses had no compelling reason in1959 to sell the property and Salvador was not financially

capable to purchase it. The deeds of sale were therefore

fictitious. Hence, the action to assail the same does not

prescribe.4

Upon appeal, the Court of Appeals affirmed the trial court's

decision dated March 10, 1998. It held that in order for the

execution of a public instrument to effect tradition, as provided

in Article 1498 of the Civil Code,5the vendor shall have had

control over the thing sold, at the moment of sale. It was not

enough to confer upon the purchaser the ownership and the

right of possession. The thing sold must be placed in his

control. The subject deeds of sale did not confer upon

Salvador the ownership over the subject property, becauseeven after the sale, the original vendors remained in dominion,

control, and possession thereof. The appellate court further

said that if the reason for Salvador's failure to control and

possess the property was due to his acquiescence to his

mother, in deference to Filipino custom, petitioner, at least,

should have shown evidence to prove that her husband

declared the property for tax purposes in his name or paid the

land taxes, acts which strongly indicate control and

possession. The appellate court disposed:

WHEREFORE, finding no reversible error in the decision

appealed from, the same is hereby AFFIRMED. No

pronouncement as to costs.


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SO ORDERED.6

Hence, this petition where petitioner avers that the Court of

Appeals erred in:

I.

HOLDING THAT THE OWNERSHIP OVER THE

LITIGATED PROPERTY BY THE LATE HUSBAND OF

DEFENDANT-APPELLANT WAS AFFECTED BY HIS

FAILURE TO EXERCISE CERTAIN ATTRIBUTES OF

OWNERSHIP.

II.

HOLDING THAT DUE EXECUTION OF A PUBLIC

INSTRUMENT IS NOT EQUIVALENT TO DELIVERY OF THE

LAND IN DISPUTE.

III.

NOT FINDING THAT THE CAUSE OF ACTION OF

ROSALIA SANTOS HAD PRESCRIBED AND/OR BARRED

BY LACHES.

IV.

IGNORING PETITIONER'S ALLEGATION TO THE

EFFECT THAT PLAINTIFF DR. ROSA [S.] CARREON IS NOT

DISQUALIFIED TO TESTIFY AS TO THE QUESTIONED

DEEDS OF SALE CONSIDERING THAT SALVADOR

SANTOS HAS LONG BEEN DEAD.7

In this petition, we are asked to resolve the following:

1. Are payments of realty taxes and retention of possession

indications of continued ownership by the original owners?

2. Is a sale through a public instrument tantamount to delivery

of the thing sold?

3. Did the cause of action of Rosalia Santos and her heirsprescribe?

4. Can petitioner invoke the "Dead Man's Statute?"8

On the first issue, petitioner contends that the Court of Appeals

erred in holding that despite the deeds of sale in Salvador's

favor, Jesus and Rosalia still owned the property because the

spouses continued to pay the realty taxes and possess the

property. She argues that tax declarations are not conclusive

evidence of ownership when not supported by evidence. She

avers that Salvador allowed his mother to possess the property

out of respect to her in accordance with Filipino values.

It is true that neither tax receipts nor declarations of ownership

for taxation purposes constitute sufficient proof of ownership.

They must be supported by other effective proofs.9These

requisite proofs we find present in this case. As admitted by

petitioner, despite the sale, Jesus and Rosalia continued to

possess and administer the property and enjoy its fruits by

leasing it to third persons.10Both Rosa and Salvador did not

exercise any right of ownership over it.11 Before the second

deed of sale to transfer her share over the property was

executed by Rosa, Salvador still sought she permission of his

mother.12Further, after Salvador registered the property in his

name, he surrendered the title to his mother.13These are clear

indications that ownership still remained with the original

owners. In Serrano vs. CA,139 SCRA 179, 189 (1985), we

held that the continued collection of rentals from the tenants by

the seller of realty after execution of alleged deed of sale is

contrary to the notion of ownership.

Petitioner argues that Salvador, in allowing her mother to use

the property even after the sale, did so out of respect for her

and out of generosity, a factual matter beyond the province of

this Court.14Significantly, inAlcos vs. IAC162 SCRA 823, 837

(1988), we noted that the buyer's immediate possession and

occupation of the property corroborated the truthfulness and

authenticity of the deed of sale. Conversely, the vendor'scontinued possession of the property makes dubious the

contract of sale between the parties.

On the second issue, is a sale through a public instrument

tantamount to delivery of the thing sold? Petitioner in her

memorandum invokes Article 147715of the Civil Code which

provides that ownership of the thing sold is transferred to the

vendee upon its actual or constructive delivery. Article 1498, in

turn, provides that when the sale is made through a public

instrument, its execution is equivalent to the delivery of the

thing subject of the contract. Petitioner avers that applying said

provisions to the case, Salvador became the owner of the

subject property by virtue of the two deeds of sale executed in

his favor.

Nowhere in the Civil Code, however, does it provide that

execution of a deed of sale is a conclusive presumption of

delivery of possession. The Code merely said that the

execution shall be equivalent to delivery. The presumption can

be rebutted by clear and convincing evidence.16Presumptive

delivery can be negated by the failure of the vendee to take

actual possession of the land sold.17

In Danguilan vs. IAC,168 SCRA 22, 32 (1988), we held that

for the execution of a public instrument to effect tradition, the

purchaser must be placed in control of the thing sold. When

there is no impediment to prevent the thing sold from

converting to 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 nor make use of it himself or through another

in his name, then delivery has not been effected.

As found by both the trial and appellate courts and amply

supported by the evidence on record, Salvador was never

placed in control of the property. The original sellers retained

their control and possession. Therefore, there was no real

transfer of ownership.

Moreover, in Norkis Distributors, Inc. vs. CA, 193 SCRA 694,

698-699 (1991), citing the land case ofAbuan vs. Garcia,14

SCRA 759 (1965), we held that the critical factor in the

different modes of effecting delivery, which gives legal effect to

the act is the actual intention of the vendor to deliver, and its

acceptance by the vendee. Without that intention, there is no

tradition. In the instant case, although the spouses Jesus and

Rosalia executed a deed of sale, they did not deliver the

possession and ownership of the property to Salvador and

Rosa. They agreed to execute a deed of sale merely to

accommodate Salvador to enable him to generate funds for his

business venture.

On the third issue, petitioner argues that from the date of the

sale from Rosa to Salvador on November 20, 1973, up to his


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death on January 9, 1985, more or less twelve years had

lapsed, and from his death up to the filing of the case for

reconveyance in the court a quoon January 5, 1989, four

years had lapsed. In other words, it took respondents about

sixteen years to file the case below. Petitioner argues that an

action to annul a contract for lack of consideration prescribes in

ten years and even assuming that the cause of action has not

prescribed, respondents are guilty of laches for their inaction

for a long period of time.

Has respondents' cause of action prescribed? In Lacsamanavs. CA, 288 SCRA 287, 292 (1998), we held that the right to

file an action for reconveyance on the ground that the

certificate of title was obtained by means of a fictitious deed of

sale is virtually an action for the declaration of its nullity, which

does not prescribe. This applies squarely to the present case.

The complaint filed by respondent in the court a quowas for

the reconveyance of the subject property to the estate of

Rosalia since the deeds of sale were simulated and fictitious.

The complaint amounts to a declaration of nullity of a void

contract, which is imprescriptible. Hence, respondents' cause

of action has not prescribed.

Neither is their action barred by laches. The elements of laches

are: 1) conduct on the part of the defendant, or of one underwhom he claims, giving rise to the situation of which the

complaint seeks a remedy; 2) delay in asserting the

complainant's rights, the complainant having had knowledge or

notice of the defendant's conduct as having been afforded an

opportunity to institute a suit; 3) lack of knowledge or notice on

the part of the defendant that the complainant would assert the

right in which he bases his suit; and 4) injury or prejudice to the

defendant in the event relief is accorded to the complainant, or

the suit is not held barred.18These elements must all be

proved positively. The conduct which caused the complaint in

the court a quowas petitioner's assertion of right of ownership

as heir of Salvador. This started in December 1985 when

petitioner demanded payment of the lease rentals from Antonio

Hombrebueno, the tenant of the apartment units. FromDecember 1985 up to the filing of the complaint for

reconveyance on January 5, 1989, only less than four years

had lapsed which we do not think is unreasonable delay

sufficient to bar respondents' cause of action. We likewise find

the fourth element lacking. Neither petitioner nor her husband

made considerable investments on the property from the time it

was allegedly transferred to the latter. They also did not enter

into transactions involving the property since they did not claim

ownership of it until December 1985. Petitioner stood to lose

nothing. As we held in the same case of Lacsamana vs. CA,

cited above, the concept of laches is not concerned with the

lapse of time but only with the effect of unreasonble lapse. In

this case, the alleged 16 years of respondents' inaction has no

adverse effect on the petitioner to make respondents guilty of

laches.

Lastly, petitioner in her memorandum seeks to expunge the

testimony of Rosa Santos-Carreon before the trial court in view

of Sec. 23, Rule 130 of the Revised Rules of Court, otherwise

known as the "Dead Man's Statute."19It is too late for

petitioner, however, to invoke said rule. The trial court in its

order dated February 5, 1990, denied petitioner's motion to

disqualify respondent Rosa as a witness. Petitioner did not

appeal therefrom. Trial ensued and Rosa testified as a witness

for respondents and was cross-examined by petitioner's

counsel. By her failure to appeal from the order allowing Rosa

to testify, she waived her right to invoke the dean man's

statute. Further, her counsel cross-examined Rosa on matters

that occurred during Salvadors' lifetime. In Goi vs. CA, 144

SCRA 222, 231 (1986) we held that protection under the dead

man's statute is effectively waived when a counsel for a

petitioner cross-examines a private respondent on matters

occurring during the deceased's lifetime. The Court of appeals

cannot be faulted in ignoring petitioner on Rosa's

disqualification.1wphi1.nt

WHEREFORE, the instant petition is DENIED. The assaileddecision dated March 10, 1998 of the Court of Appeals, whichsustained the judgment of the Regional Trial Court dated

March 17, 1993, in favor of herein private respondents, is

AFFIRMED. Costs against petitioner.

SO ORDERED.

FIRST DIVISION

G.R. No. 97130 June 19, 1991

FRANCISCO N. DY, JR., Substituted by his Estate Rep. by

ROSARIO PEREZ-DY, Administratrix,petitioner,vs.COURT OF APPEALS and FERTILIZER MARKETINGCOMPANY OF THE PHILIPPINES,respondents.

Loreta F. Sablaya for petitioner.

Rayala & Associates for private respondent.

GRIO-AQUINO, J .:

This is a petition for review of the Court of Appeals' decision

dated December 11, 1990, which affirmed in totothe decision

of the Regional Trial Court of Makati dated July 18, 1988,

which ordered the petitioner to pay the private respondent the

sum of P337,120.00 plus interest of 12%per annum, attorney's

fees and costs.

Private respondent Fertilizer Marketing Company of the

Philippines filed an action to collect from Francisco Dy, Jr.

(now deceased) and the Francisco Dy, Jr. Trading Corporation

the sum of P337,120.00 as unpaid balance on their purchase

of fertilizers on credit from the private respondent.

The defendants were declared in default on August 15, 1983

for failure to answer the complaint within the reglementary

period. Private respondent was thereafter allowed to present

its evidence ex partebefore the Branch Clerk of Court.

Subsequently, the defendants filed a motion to admit their

answer, but it was denied by the court. They filed a motion forreconsideration; it was granted; the order of default was set

aside; their answer was admitted; and they were allowed to

present their evidence without retaking the plaintiff s evidence.

On the date set for the reception of their evidence, the

defendants failed to appear despite due notice, so, judgment

was rendered by the trial court against them on January 4,

1984.

On appeal to the Court of Appeals, the judgment by default

was set aside and the case was remanded to the lower court

for pre-trial and trial on the merits (AC-G.R. CV No. 03747, p.

46, Rollo).


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At the pre-trial conference on November 12, 1987, the plaintiff

and defendant Francisco Dy, Jr. appeared, but there was no

appearance for the defendant trading corporation, so it was

declared in default again and the plaintiff was allowed to

present its evidence ex partebefore the Branch Clerk of Court.

However, in that same pre-trial conference the parties agreed

that the evidence previously presented by the plaintiff shall

remain on record for purposes of the continuation of the trial,

subject to cross-examination in open court, and, that the

presentation of the affidavits in question and answer form will

constitute the direct testimony of the defendant's witnesseslikewise subject to cross-examination of the adverse counsel.

On motion for reconsideration, the order of default against the

corporation was lifted. A second motion for reconsideration

was filed by the defendants on January 22, 1988 to set aside

the agreement for trial by affidavits but it was denied by the

court.

On the date of the hearing set on April 25, 1988, the

defendants failed to appear to present their evidence despite

due notice, hence, they were deemed to have waived the

presentation of their evidence. The case was submitted for

decision upon the plaintiffs evidence.

On July 18, 1988, the trial court rendered a decision

(mentioned earlier) for the plaintiff and against the defendants.

The latter appealed to the Court of Appeals (CA-G.R. CV No.

23540) alleging that the court a quoerred (1) in reinstating the

nullified proceedings on August 19, 1983 before the Branch

Clerk of Court; (2) in denying her procedural due process; and

(3) in awarding damages against her.

During the pendency of the appeal, Francisco Dy, Jr. passed

away on June 20, 1989. His wife, Rosario Perez-Dy, as judicial

administratrix of his estate, prosecuted the appeal (Azarraga

vs. Cortes, 9 Phil. 698).

On December 11, 1990, the Court of Appeals dismissed the

appeal (CA-G.R. CV No. 23540) for lack of merit.

In this petition for review of that decision, the petitioner

reiterates the same issues that she raised in the Court of

Appeals.

With regard to the validity of the proceedings before the

Branch Clerk of Court, we agree with the observations of the

Court of Appeals that:

Appellant is now estopped from questioning the retention of the

proceedings held on August 19, 1983 before the Branch Clerk

of Court since her husband agreed to the same during the pre-

trial conference held on November 12, 1987. Agreements

reached at the pre-trial conference and embodied in the pre-trial order shall control the subsequent course of the trial and

should not be disturbed unless there could be manifest

injustice.

The agreement is not unjust to appellant. Aside from appellant

having the right to adduce evidence on her behalf, the parties

agreed that the evidence presented by appellee before the

Branch Clerk of Court would be retained, with appellant having

the right to cross-examine appellee's witnesses.

x x x x x x x x x

The agreement of the parties as contained in the pre-trial order

is not invalid. The parties are authorized by the Rules of Court

to consider "[s]uch other matters as may aid in the prompt

disposition of the action." An authority believes this includes

"agreement on certain matters so that witnesses need not and

will not be called." Undoubtedly, the procedure agreed upon by

the parties in this case would have greatly accelerated the trial

and the decision therein, which, at the, time of the pre-trial

conference, had been pending for three years and had already

gone up on appeal to this Court. (pp. 27-28, Rollo.)

The presentation of the plaintiff's evidence before the Branch

Clerk of Court was not void. The Supreme Court, in the case of

Continental Bank vs. Tiangco, et al. (94 SCRA 715) departing

from its contrary statement in the Lim Tan Hu case(66 SCRA

425), declared that a decision based on evidence heard by a

deputy clerk of court as commissioner is valid and enforceable

because it was rendered by a court of competent jurisdiction,

was not impaired by extrinsic fraud, nor by lack of due process

and there was no showing that the private respondents were

prejudiced by such a procedure, or that the commissioner

committed any mistake or abuse of discretion, or that the

proceedings were vitiated by collusion and collateral fraud.

That ruling applies four square to this case.

The practice of designating the clerk of court as a

commissioner to receive evidence in the event of the non-

appearance of the defendant and its counsel, is not irregular

and is sanctioned by Rule 33 of the Rules of Court on trial by

commissioner (J.M. Tuazon, Inc. vs. Dela Rosa, 18 SCRA 591

Wassmer vs. Velez, 12 SCRA 648).

The petitioner was not denied due process. As pointed out by

the appellate court:

. . . Appellant retained her right to present evidence on her

behalf and the opportunity to cross-examine the witnesses

already presented by appellee. At any rate, if appellant

believes that her right to procedural due process had been

curtailed, the same was due to a voluntary waiver by her

husband. (p. 28, Rollo)

WHEREFORE, the petition for review is denied for lack of

merit. Costs against the petitioners.

SO ORDERED.


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EN BANC

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 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 onthe 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 thesums 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 shebe 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, at the 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 theywere 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.

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 the indisputable 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 rescissionrelied 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 thefulfillment 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 appealed from, 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


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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 deliver

the 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 suchcontrolover 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

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 whom the

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 takespossession 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.

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 onJune 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, together with 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.

SECOND DIVISION

G.R. No. 120820 August 1, 2000

SPS. FORTUNATO SANTOS and ROSALINDA R SANTOS,

petitioners,vs.

COURT OF APPEALS, SPS. MARIANO R. CASEDA andCARMEN CASEDA, respondents.

QUISUMBING, J.:

For review on certiorari is the decision of the Court of Appeals,

dated March 28, 1995, in CA-G.R. CV No. 30955, which

reversed and set aside the judgment of the Regional Trial

Court of Makati, Branch 133, in Civil Case No. 89-4759.

Petitioners (the Santoses) were the owners of a house and lot

informally sold, with conditions, to herein private respondents

(the Casedas). In the trial court, the Casedas had complained

that the Santoses refused to deliver said house and lot despiterepeated demands. The trial court dismissed the complaint for

specific performance and damages, but in the Court of

Appeals, the dismissal was reversed, as follows:

"WHEREFORE, in view of the foregoing, the decision appealed

from is hereby REVERSED and SET ASIDE and a new one

entered:

"1. GRANTING plaintiffs-appellants a period of NINETY (90)

DAYS from the date of the finality of judgment within which to

pay the balance of the obligation in accordance with their

agreement;


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"2. Ordering appellees to restore possession of the subject

house and lot to the appellants upon receipt of the full amount

of the balance due on the purchase price; and

"3. No pronouncement as to costs.

"SO ORDERED."1

The undisputed facts of this case are as follows:

The spouses Fortunato and Rosalinda Santos owned the

house and lot consisting of 350 square meters located at Lot 7,Block 8, Better Living Subdivision, Paraaque, Metro Manila,

as evidenced by TCT (S-11029) 28005 of the Register of

Deeds of Paraaque. The land together with the house, was

mortgaged with the Rural Bank of Salinas, Inc., to secure a

loan of P150,000.00 maturing on June 16, 1987.

Sometime in 1984, Rosalinda Santos met Carmen Caseda, a

fellow market vendor of hers in Pasay City and soon became

very good friends with her. The duo even became kumadres

when Carmen stood as a wedding sponsor of Rosalinda's

nephew.

On June 16, 1984, the bank sent Rosalinda Santos a letter

demanding payment of P16,915.84 in unpaid interest and othercharges. Since the Santos couple had no funds, Rosalinda

offered to sell the house and lot to Carmen. After inspecting

the real property, Carmen and her husband agreed.

Sometime that month of June, Carmen and Rosalinda signed a

document, which reads:

"Received the amount of P54,100.00 as a partial payment of

Mrs. Carmen Caseda to the (total) amount of 350,000.00

(house and lot) that is own (sic) by Mrs. Rosalinda R. Santos.

(Sgd.) Carmen H. Caseda

direct buyer

Mrs. Carmen Caseda

"(Sgd.) Rosalinda Del R. Santos

Owner

Mrs. Rosalinda R. Santos

House and Lot

Better Living Subd. Paraaque, Metro Manila

Section V Don Bosco St."2

The other terms and conditions that the parties agreed upon

were for the Caseda spouses to pay: (1) the balance of themortgage loan with the Rural bank amounting to P135,385.18;

(2) the real estate taxes; (3) the electric and water bills; and (4)

the balance of the cash price to be paid not later than June 16,

1987, which was the maturity date of the loan.3

The Casedas gave an initial payment of P54,100.00 and

immediately took possession of the property, which they then

leased out. They also paid in installments, P81,696.84 of the

mortgage loan. The Casedas, however, failed to pay the

remaining balance of the loan because they suffered

bankruptcy in 1987. Notwithstanding the state of their finances,

Carmen nonetheless paid in March 1990, the real estate taxes

on the property for 1981-1984. She also settled the electric

bills from December 12, 1988 to July 12, 1989. All these

payments were made in the name of Rosalinda Santos.

In January 1989, the Santoses, seeing that the Casedas

lacked the means to pay the remaining installments and/or

amortization of the loan, repossessed the property. The

Santoses then collected the rentals from the tenants.

In February 1989, Carmen Caseda sold her fishpond in

Batangas. She then approached petitioners and offered to pay

the balance of the purchase price for the house and lot. The

parties, however, could not agree, and the deal could not push

through because the Santoses wanted a higher price. For

understandably, the real estate boom in Metro Manila at this

time, had considerably jacked up realty values. On August 11,

1989, the Casedas filed Civil Case No. 89-4759, with the RTC

of Makati, to have the Santoses execute the final deed of

conveyance over the property, or in default thereof, to

reimburse the amount of P180,000.00 paid in cash and

P249,900.00 paid to the rural bank, plus interest, as well as

rentals for eight months amounting to P32,000.00, plus

damages and costs of suit.1wphi1.nt

After trial on the merits, the lower court disposed of the case as

follows:

"WHEREFORE, judgment is hereby ordered:

(a) dismissing plaintiff's (Casedas') complaint; and

(b) declaring the agreement; marked as Annex "C" of the

complaint rescinded. Costs against plaintiffs.

"SO ORDERED."4

Said judgment of dismissal is mainly based on the trial court's

finding that:

"Admittedly, the purchase price of the house and lot was

P485,385.18, i.e. P350,000.00 as cash payment andP135,385.18, assumption of mortgage. Of it plaintiffs

[Casedas] paid the following: (1) P54,100.00 down payment;

and (2) P81,694.64 installment payments to the bank on the

loan (Exhs. E to E-19) or a total of P135,794.64. Thus,

plaintiffs were short of the purchase price. They cannot,

therefore, demand specific performance."5

The trial court further held that the Casedas were not entitled

to reimbursement of payments already made, reasoning that:

"As earlier mentioned, plaintiffs made a total payment of

P135,794.64 out of the purchase price of P485,385.18. The

property was in plaintiffs' possession from June 1984 to

January 1989 or a period of fifty-five months. During that time,plaintiffs leased the property. Carmen said the property was

rented for P25.00 a day or P750.00 a month at the start and in

1987 it was increased to P2,000.00 and P4,000 a month. But

the evidence is not precise when the different amounts of

rental took place. Be that as it may, fairness demands that

plaintiffs must pay defendants for the exercise of dominical

rights over the property by renting it to others. The amount of

P2,000.00 a month would be reasonable based on the average

of P750.00, P2,000.00, P4,000.00 lease-rentals charged.

Multiply P2,000 by 55 months, the plaintiffs must pay

defendants P110,000 for the use of the property. Deducting

this amount from the P135,794.64 payment of the plaintiffs on
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the property the difference is P25,794.64. Should the plaintiffs

be entitled to a reimbursement of this amount? The answer is

in the negative. Because of failure of plaintiffs to liquidated the

mortgage loan on time, it had ballooned from its original figure

of P135,384.18 as of June 1984 to P337,280.78 as of

December 31, 1988. Defendants [Santoses] had to pay the last

amount to the bank to save the property from foreclosure.

Logically, plaintiffs must share in the burden arising from their

failure to liquidate the loan per their contractual commitment.

Hence, the amount of P25,794.64 as their share in the

defendants' damages in the form of increased loan-amount, isreasonable."6

On appeal, the appellate court, as earlier noted, reversed the

lower court. The appellate court held that rescission was not

justified under the circumstances and allowed the Caseda

spouses a period of ninety days within which to pay the

balance of the agreed purchase price.

Hence, this instant petition for review on certiorari filed by the

Santoses.

Petitioners now submit the following issues for our

consideration:

WHETHER OR NOT THE COURT OF APPEALS, HASJURISDICTION TO DECIDE PRIVATE RESPONDENT'S

APPEAL INTERPOSING PURELY QUESTIONS OF LAW.

WHETHER THE SUBJECT TRANSACTION IS NOT A

CONTRACT OF ABSOLUTE SALE BUT A MERE ORAL

CONTRACT TO SELL IN WHICH CASE JUDICIAL DEMAND

FOR RESCISSION (ART. 1592,7CIVIL CODE) IS NOT

APPLICABLE.

ASSUMINGARGUENDOTHAT A JUDICIAL DEMAND FOR

RESCISSION IS REQUIRED, WHETHER PETITIONERS'

DEMAND AND PRAYER FOR RESCISSION CONTAINED IN

THEIR ANSWER FILED BEFORE THE TRIAL SATISFIED

THE SAID REQUIREMENT.

WHETHER OR NOT THE NON-PAYMENT OF MORE THAN

HALF OF THE ENTIRE PURCHASE PRICE INCLUDING THE

NON-COMPLIANCE WITH THE STIPULATION TO

LIQUIDATE THE MORTGAGE LOAN ON TIME WHICH

CAUSED GRAVE DAMAGE AND PREJUDICE TO

PETITIONERS, CONSTITUTE SUBSTANTIAL BREACH TO

JUSTIFY RESCISSION OF A CONTRACT TO SELL UNDER

ARTICLE 11918(CIVIL CODE).

On the first issue, petitioners argue that, since both the parties

and the apellate court adopted the findings of trial court,9no

questions of fact were raised before the Court of Appeals.

According to petitioners, CA-G.R. CV No. 30955, involved onlypure questions of law. They aver that the court a quo had no

jurisdiction to hear, much less decide, CA-G.R. CV No. 30955,

without running afoul of Supreme Court Circular No. 290 (4)

[c].10

There is a question of law in a given case when the doubt or

difference arises as to how the law is on a certain set of facts,

and there is a question of fact when the doubt or difference

arises as to the truth or falsehood of the alleged facts.11But we

note that the first assignment of error submitted by

respondents for consideration by the appellate court dealt with

the trial court's finding that herein petitioners got back the

property in question because respondents did not have the

means to pay the installments and/or amortization of the

loan.12The resolution of this question involved an evaluation of

proof, and not only a consideration of the applicable statutory

and case laws. Clearly, C.A.-G.R. CV No. 30955 did not

involve pure questions of law, hence the Court of Appeals had

jurisdiction and there was no violation of our Circular No. 2-90.

Moreover, we find that petitioners took an active part in the

proceedings before the Court of Appeals, yet they did not raise

there the issue of jurisdiction. They should have raised this

issue at the earliest opportunity before the Court of Appeals. Aparty taking part in the proceedings before the appellate court

and submitting his case for its decision ought not to later on

attack the court's decision for want of jurisdiction because the

decision turns out to be adverse to him.13

The secondand third issuesdeal with the question: Did the

Court of Appeals err in holding that a judicial rescission of the

agreement was necessary? In resolving both issues, we must

first make a preliminary determination of the nature of the

contract in question: Was it a contract of sale, as insisted by

the respondents or a mere contract to sell, as contended by

petitioners?

Petitioners argue that the transaction between them and

respondents was a mere contract to sell, and not a contract of

sale, since the sole documentary evidence (Exh. D, receipt)

referring to their agreement clearly showed that they did not

transfer ownership of the property in question simultaneous

with its delivery and hence remained its owners, pending

fulfillment of the other suspensive conditions, i.e. full payment

of the balance of the purchase price and the loan

amortizations. Petitioners point to Manuel v. Rodriguez, 109

Phil. 1 (1960) and Luzon Brokerage Co., Inc. v. Maritime

Building Co., Inc., 43 SCRA 93 (1972), where he held that

article 1592 of the Civil Code is inapplicable to a contract to

sell. They charge the court a quo with reversible error in

holding that petitioners should have judicially rescinded the

agreement with respondents when the latter failed to pay theamortizations on the bank loan.

Respondents insist that there was a perfected contract of sale,

since upon their partial payment of the purchase price, they

immediately took possession of the property as vendees, and

subsequently leased it, thus exercising all the rights of

ownership over the property. This showed that transfer of

ownership was simultaneous with the delivery of the realty

sold, according to respondents.

It must be emphasized from the outset that a contract is what

the law defines it to be, taking into consideration its essential

elements, and not what the contracting parties call it.14Article

1458

15

of the Civil Code defines a contract of sale. Note thatthe said article expressly obliges the vendor to transfer the

ownership of the thing sold as an essential element of a

contract of sale.16We have carefully examined the contents of

the unofficial receipt, Exh. D, with the terms and conditions

informally agreed upon by the parties, as well as the proofs

submitted to support their respective contentions. We are far

from persuaded that there was a transfer of ownership

simultaneously with the delivery of the property purportedly

sold. The records clearly show that, notwithstanding the fact

that the Casedas first took then lost possession of the disputed

house and lot, the title to the property, TCT No. 28005 (S-

11029) issued by the Register of Deeds of Paraaque, has
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remained always in the name of Rosalinda Santos.17Note

further that although the parties agreed that the Casedas

would assume the mortgage, all amortization payments made

by Carmen Caseda to the bank were in the name of Rosalinda

Santos.18We likewise find that the bank's cancellation and

discharge of mortgage dated January 20, 1990, was made in

favor of Rosalinda Santos.19The foregoing circumstances

categorically and clearly show that no valid transfer of

ownership was made by the Santoses to the Casedas. Absent

this essential element, their agreement cannot be deemed a

contract of sale. We agree with petitioner's averment that theagreement between Rosalinda Santos and Carmen Caseda is

a contract to sell. In contracts to sell, ownership is reserved the

by the vendor and is not to pass until full payment of the

purchase price. This we find fully applicable and

understandable in this case, given that the property involved is

a titled realty under mortgage to a bank and would require

notarial and other formalities of law before transfer thereof

could be validly effected.

In view of our finding in the present case that the agreement

between the parties is a contract to sell, it follows that the

appellate court erred when it decreed that a judicial rescission

of said agreement was necessary. This is because there was

no rescission to speak of in the first place. As we earlierpointed, in a contract to sell, title remains with the vendor and

does not pass on to the vendee until the purchase price is paid

in full, Thus, in contract to sell, the payment of the purchase

price is a positive suspensive condition. Failure to pay the price

agreed upon is not a mere breach, casual or serious, but a

situation that prevents the obligation of the vendor to convey

title from acquiring an obligatory force.20This is entirely

different from the situation in a contract of sale, where non-

payment of the price is a negative resolutory condition. The

effects in law are not identical. In a contract of sale, the vendor

has lost ownership of the thing sold and cannot recover it,

unless the contract of sale is rescinded and set aside.21In a

contract to sell, however, the vendor remains the owner for as

long as the vendee has not complied fully with the condition of

paying the purchase. If the vendor should eject the vendee for

failure to meet the condition precedent, he is enforcing the

contract and not rescinding it. When the petitioners in the

instant case repossessed the disputed house and lot for failure

of private respondents to pay the purchase price in full, they

were merely enforcing the contract and not rescinding it. As

petitioners correctly point out the Court of Appeals erred when

it ruled that petitioners should have judicially rescinded the

contract pursuant to Articles 1592 and 1191 of the Civil Code.

Article 1592 speaks of non-payment of the purchase price as a

resolutory condition. It does not apply to a contract to sell.22As

to Article 1191, it is subordinated to the provisions of Article

1592 when applied to sales of immovable property.23

Neitherprovision is applicable in the present case.

As to the last issue, we need not tarry to make a determination

of whether the breach of contract by private respondents is so

substantial as to defeat the purpose of the parties in entering

into the agreement and thus entitle petitioners to rescission.

Having ruled that there is no rescission to speak of in this case,

the question is moot.

WHEREFORE, the instant petition is GRANTEDand theassailed decision of the Court of Appeals in CA-G.R. CV No.

30955 is REVERSEDand SET ASIDE. The judgment of theRegional Trial Court of Makati, Branch 133, with respect to the

DISMISSALof the complaint in Civil Case No. 89-4759, ishereby REINSTATED. No pronouncement as to

costs.1wphi1.nt

SO ORDERED.

SECOND DIVISION

G.R. No. 168499 November 26, 2012

SPOUSES EROSTO SANTIAGO and NELSIE SANTIAGO,Petitioners,

vs.

MANCER VILLAMOR, CARLOS VILLAMOR, JOHNVILLAMOR and DOMINGO VILLAMOR, JR.,Respondents.

D E C I S I O N

BRION, J .:

We resolve the petition for review on certiorari1tiled by

spouses Eros to Santiago and Nelsie Santiago (petitioners) to

challenge the August 10, 2004 decision2and the June 8, 2005

resolution3of the Court of Appeals (CA) in CA-G.R. CV No.

59112. The CA decision set aside the May 28, 1997 decision4of the Regional Trial Court (RTC) of San Jacinto, Masbate,

Branch 50, in Civil Case No. 201. The CA resolution denied the

petitioners' subsequent motion for reconsideration.

THE FACTUAL ANTECEDENTS

In January 1982,5the spouses Domingo Villamor, Sr. and

Trinidad Gutierrez Villamor (spouses Villamor, Sr.), the parents

of Mancer Villamor, Carlos Villamor and Domingo Villamor, Jr.

(respondents) and the grandparents of respondent John

Villamor, mortgaged their 4.5-hectare coconut land in Sta.

Rosa, San Jacinto, Masbate, known as Lot No. 1814, to the

Rural Bank of San Jacinto (Masbate), Inc. (San Jacinto Bank)

as security for a P10,000.00 loan.

For non-payment of the loan, the San Jacinto Bank

extrajudicially foreclosed the mortgage, and, as the highest

bidder at the public auction, bought the land. When the

spouses Villamor, Sr. failed to redeem the property within the

prescribed period, the San Jacinto Bank obtained a final deed

of sale in its favor sometime in 1991. The San Jacinto Bank

then offered the land for sale to any interested buyer.6

a. The Specific Performance Case

Since the respondents had been in possession and cultivation

of the land, they decided, together with their sister Catalina

Villamor Ranchez, to acquire the land from the San Jacinto

Bank. The San Jacinto Bank agreed with the respondents and

Catalina to a P65,000.00 sale, payable in installments. The

respondents and Catalina made four (4) installment payments

of P28,000.00, P5,500.00, P7,000.00 and P24,500.00 on

November 4, 1991, November 23, 1992, April 26, 1993 and

June 8, 1994, respectively.7

When the San Jacinto Bank refused to issue a deed of

conveyance in their favor despite full payment, the

respondents and Catalina filed a complaint against the San

Jacinto Bank (docketed as Civil Case No. 200) with the RTC

on October 11, 1994. The complaint was for specific

performance with damages.
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The San Jacinto Bank claimed that it already issued a deed of

repurchase in favor of the spouses Villamor, Sr.; the payments

made by the respondents and Catalina were credited to the

account of Domingo, Sr. since the real buyers of the land were

the spouses Villamor, Sr.8

In a February 10, 2004 decision, the RTC dismissed the

specific performance case. It found that the San Jacinto Bank

acted in good faith when it executed a deed of "repurchase" in

the spouses Villamor, Sr.s names since Domingo, Sr., along

with the respondents and Catalina, was the one whotransacted with the San Jacinto Bank to redeem the land.9

The CA, on appeal, set aside the RTCs decision.10The CA

found that the respondents and Catalina made the installment

payments on their own behalf and not as representatives of the

spouses Villamor, Sr. The San Jacinto Bank mistakenly

referred to the transaction as a "repurchase" when the

redemption period had already lapsed and the title had been

transferred to its name; the transaction of the respondents and

Catalina was altogether alien to the spouses Villamor, Sr.s

loan with mortgage. Thus, it ordered the San Jacinto Bank to

execute the necessary deed of sale in favor of the respondents

and Catalina, and to pay P30,000.00 as attorneys fees.11No

appeal appears to have been taken from this decision.

b. The Present Quieting of Title Case

On July 19, 1994 (or prior to the filing of the respondents and

Catalinas complaint for specific performance, as narrated

above), the San Jacinto Bank issued a deed of sale in favor of

Domingo, Sr.12On July 21, 1994, the spouses Villamor, Sr.

sold the land to the petitioners for P150,000.00.13

After the respondents and Catalina refused the petitioners

demand to vacate the land, the petitioners filed on October 20,

1994 a complaint for quieting of title and recovery of

possession against the respondents.14This is the case that is

now before us.

The respondents and Catalina assailed the San Jacinto Banks

execution of the deed of sale in favor of Domingo, Sr., claiming

that the respondents and Catalina made the installment

payments on their own behalf.15

In its May 28, 1997 decision,16the RTC declared the

petitioners as the legal and absolute owners of the land, finding

that the petitioners were purchasers in good faith; the spouses

Villamor, Sr.s execution of the July 21, 1994 notarized deed of

sale in favor of the petitioners resulted in the constructive

delivery of the land. Thus, it ordered the respondents to vacate

and to transfer possession of the land to the petitioners, and to

pay P10,000.00 as moral damages.17

On appeal, the CA, in its August 10, 2004 decision, found that

the petitioners action to quiet title could not prosper because

the petitioners failed to prove their legal or equitable title to the

land. It noted that there was no real transfer of ownership since

neither the spouses Villamor, Sr. nor the petitioners were

placed in actual possession and control of the land after the

execution of the deeds of sale. It also found that the petitioners

failed to show that the respondents and Catalinas title or claim

to the land was invalid or inoperative, noting the pendency of

the specific performance case, at that time on appeal with the

CA. Thus, it set aside the RTC decision and ordered the

dismissal of the complaint, without prejudice to the outcome of

the specific performance case.18

When the CA denied19the motion for reconsideration20that

followed, the petitioners filed the present Rule 45 petition.

THE PETITION

The petitioners argue that the spouses Villamor, Sr.s

execution of the July 21, 1994 deed of sale in the petitioners

favor was equivalent to delivery of the land under Article 1498

of the Civil Code; the petitioners are purchasers in good faithsince they had no knowledge of the supposed transaction

between the San Jacinto Bank and the respondents and

Catalina; and the respondents and Catalinas possession of

the land should not be construed against them (petitioners)

since, by tradition and practice in San Jacinto, Masbate, the

children use their parents property.

THE CASE FOR THE RESPONDENTS

The respondents and respondent John submit that they hold

legal title to the land since they perfected the sale with the San

Jacinto Bank as early as November 4, 1991, the first

installment payment, and are in actual possession of the land;

the petitioners are not purchasers in good faith since theyfailed to ascertain why the respondents were in possession of

the land.

THE ISSUE

The case presents to us the issue of whether the CA

committed a reversible error when it set aside the RTC

decision and dismissed the petitioners complaint for quieting

of title and recovery of possession.

OUR RULING

The petition lacks merit.

Quieting of title is a common law remedy for the removal of anycloud, doubt or uncertainty affecting title to real property. The

plaintiffs must show not only that there is a cloud or contrary

interest over the subject real property,21but that they have a

valid title to it.22Worth stressing, in civil cases, the plaintiff

must establish his cause of action by preponderance of

evidence; otherwise, his suit will not prosper.23

The petitioners anchor their claim over the disputed land on the

July 21, 1994 notarized deed of sale executed in their favor by

the spouses Villamor, Sr. who in turn obtained a July 19, 1994

notarized deed of sale from the San Jacinto Bank. On the other

hand, the respondents and respondent John claim title by

virtue of their installment payments to the San Jacinto Bank

from November 4, 1991 to June 8, 1994 and their actualpossession of the disputed land.

After considering the parties evidence and arguments, we

agree with the CA that the petitioners failed to prove that they

have any legal or equitable title over the disputed land.

Execution of the deed of sale only a

prima facie presumption of delivery.

Article 1477 of the Civil Code recognizes that the "ownership o

the thing sold shall be transferred to the vendee upon the

actual or constructive delivery thereof." Related to this article is
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Article 1497 which provides that "the thing sold shall be

understood as delivered, when it is placed in the control and

possession of the vendee."

With respect to incorporeal property, Article 1498 of the Civil

Code lays down the general rule: the execution of a public

instrument "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 clearly be inferred." However, the

execution of a public instrument gives rise only to a prima facie

presumption of delivery, which is negated by the failure of thevendee to take actual possession of the land sold.24"A person

who does not have actual possession of the thing sold cannot

transfer constructive possession by the execution and delivery

of a public instrument."25

In this case, no constructive delivery of the land transpired

upon the execution of the deed of sale since it was not the

spouses Villamor, Sr. but the respondents who had actual

possession of the land. The presumption of constructive

delivery is inapplicable and must yield to the reality that the

petitioners were not placed in possession and control of the

land.

The petitioners are not purchasers in

good faith.

The petitioners can hardly claim to be purchasers in good faith.

"A purchaser in good faith is one who buys property without

notice that some other person has a right to or interest in such

property and pays its fair price before he has notice of the

adverse claims and interest of another person in the same

property."26However, where the land sold is in the possession

of a person other than the vendor, the purchaser must be wary

and must investigate the rights of the actual possessor; without

such inquiry, the buyer cannot be said to be in good faith and

cannot have any right over the property.27

In this case, the spouses Villamor, Sr. were not in possessionof the land.1wphi1The petitioners, as prospective vendees,

carried the burden of investigating the rights of the

respondents and respondent John who were then in actual

possession of the land. The petitioners cannot take refuge

behind the allegation that, by custom and tradition in San

Jacinto, Masbate, the children use their parents' property,

since they offered no proof supporting their bare allegation.

The burden of proving the status of a purchaser in good faith

lies upon the party asserting that status and cannot be

discharged by reliance on the legal presumption of good

faith.28The petitioners failed to discharge this burden.

Lastly, since the specific performance case already settled the

respondents and respondent John's claim over the disputedland, the dispositive portion of the CA decision (dismissing the

complaint without prejudice to the outcome of the specific

performance case29)is modified to reflect this fact; we thus

dismiss for lack of merit the complaint for quieting of title and

recovery of possession.

WHEREFORE, we hereby DENY the petition and ORDER the

DISMISSAL of Civil Case No. 201 before the Regional Trial

Court of San Jacinto, Masbate, Branch 50.

Costs against the petitioners.

SO ORDERED.

EN BANC

G.R. No. L-24069 June 28, 1968

LA FUERZA, INC.,petitioner,vs.

THE HON. COURT OF APPEALS and ASSOCIATEDENGINEERING CO., INC.,respondents.

Sycip, Salazar, Luna and Associates for respondent

Associated Engineering Co., Inc.

De Santos and Delfino for petitioner.

CONCEPCION, C.J .:

Ordinary action for the recovery of a sum of money. In due

course, the Court of First Instance of Manila rendered

judgment for defendant, La Fuerza, Inc. hereinafter referred

to as La Fuerza which was at first affirmed by the Court of

Appeals. On motion for reconsideration, the latter, however,

set aside its original decision and sentenced La Fuerza to pay

to the plaintiff, Associated Engineering Co., hereinafter

referred to as the Plaintiff the sum of P8,250.00, with

interest at the rate of 1% per month, from July, 1960 until fully

paid, plus P500 as attorney's fees and the costs. Hence, this

Petition for review on certiorari.

The facts, as found by the Court of First Instance and adopted

by the Court of Appeals, are:

The plaintiff (Associated Engineering, Co., Inc.) is a

corporation engaged in the manufacture and installation of flat

belt conveyors. The defendant (La Fuerza, Inc.) is also a

corporation engaged in the manufacture of wines. Sometime in

the month of January, 1960, Antonio Co, the manager of the

plaintiff corporation, who is an engineer, called the office of the

defendant located at 399 Muelle de Binondo, Manila and told

Mariano Lim, the President and general manager of the

defendant that he had just visited the defendant's plant at

Pasong Tamo, Makati, Rizal and was impressed by its sizeand beauty but he believed it needed a conveyor system to

convey empty bottles from the storage room in the plant to the

bottle washers in the production room thereof. He therefore

offered his services to manufacture and install a conveyor

system which, according to him, would increase production

and efficiency of his business. The president of the defendant

corporation did not make up his mind then but suggested to

Antonio Co to put down his offer in writing. Effectively, on

February 4, 1960, marked as Exhibit A in this case. Mariano

Lim did not act on the said offer until February 11, 1960, when

Antonio Co returned to inquire about the action of the

defendant on his said offer. The defendants president and

general manager then expressed his conformity to the offer

made in Exhibit A by writing at the foot thereof under the word"confirmation" his signature. He caused, however, to be added

to this offer at the foot a note which reads: "All specifications

shall be in strict accordance with the approved plan made part

of this agreement hereof." A few days later, Antonio Co made

the demand for the down payment of P5,000.00 which was

readily delivered by the defendant in the form of a check for the

said amount. After that agreement, the plaintiff started to

prepare the premises for the installations of the conveyor

system by digging holes in the cement floor of the plant and on

April 18, 1960, they delivered one unit of 110' 26" wide flat belt

conveyor, valued at P3,750.00, and another unit measuring

190' and 4" wide flat conveyor, valued at P4,500.00, or a total
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of P13,250.00. Deducting the down payment of P5,000.00 from

this value, there is a balance, of P8,250.00 to be paid by the

defendant upon the completion of the installation, Exhibit B.

The work went under way during the months of March and

April, during which time the president and general manager of

the defendant corporation was duly apprised of the progress of

the same because his plant mechanic, one Mr. Santos, had

kept him informed of the installation for which he gave the go

signal. It seems that the work was completed during the month

of May, 1960. Trial runs were made in the presence of thepresident and general manager of the defendant corporation,

Antonio Co, the technical manager of the plaintiff, and some

other people. Several trial runs were made then totalling about

five. These runs were continued during the month of June

where about three trial runs were made an

Documents

Cases on Consummation Stage- Sales