Bautista vs. Sioson

In a double sale of unregistered property under Article 1473 of the Civil Code, the first purchaser is deemed to have taken possession first where, by virtue of a constitutum possessorium, the vendor remains in physical occupation as a lessee, such that the vendor's subsequent sale to a second purchaser cannot convey lawful possession or ownership.

The case involves the interpretation of Article 1473 of the Civil Code (old), which governs the disposition of property sold to different vendees when the sales are not recorded in the registry of property. The provision prescribes a hierarchy of preferences: if there is no entry in the registry, the property belongs to the person who first took possession of it in good faith; and absent both registration and possession, to the one presenting the oldest title, provided good faith is present. The doctrine of constitutum possessorium—a legal fiction by which a vendee is deemed to have acquired possession of property while the vendor retains physical occupation as lessee—bears directly on which purchaser is deemed to have first taken possession.

On September 4, 1912, Francisco Sioson and his wife Lorenza de la Cruz, through a notarial instrument, sold to Rosalio Bautista a camarin of strong materials with an iron roof and a house of mixed materials with a nipa roof—both buildings constructed on lots in Malabon, Rizal, belonging to the chaplaincy known as Concepcion—for the price of P400, under the right of repurchase within two years from the date of the contract. The instrument stipulated that if the vendors did not repurchase the properties within that term, the sale would become absolute and ownership would consolidate in the purchaser without need of a further instrument. On the same date, Bautista, through a separate notarial instrument, leased the same properties back to Sioson and de la Cruz at an annual rent of P100 for a period of two years, with the lessees binding themselves to report any disturbance by third persons and any defects in the building. Neither the deed of sale nor the lease was recorded in the registry of property.

On June 12, 1913, Lorenza de la Cruz died. Thereafter, on August 5, 1914—approximately one year and eleven months after the first sale and while the two-year repurchase period had not yet lapsed—Francisco Sioson executed a notarial instrument selling the same camarin to Raymundo de la Cruz for P422, likewise under a right of repurchase. This second instrument stipulated that if Sioson returned P422 within six months from August 1, 1914, De la Cruz would be obliged to execute a resale; otherwise, the sale would become absolute without further instrument. This second sale was also not recorded in the registry of property. At the time of the second sale, Sioson remained in physical possession of the camarin as lessee under the lease-back arrangement with Bautista.

Bautista filed a complaint on June 30, 1916, alleging that the repurchase term had lapsed without the vendors having repurchased the buildings, that ownership had thereby consolidated in his favor, and that De la Cruz was then in material possession of the camarin claiming ownership, while Francisco Santos Paulino occupied the house under a like title. Sioson and Santos Paulino were declared in default for failure to answer. De la Cruz admitted paragraphs 1 and 6 of the complaint and denied the rest, alleging in special defense that the camarin was his exclusive property. The trial court found that Bautista's ownership had consolidated, ordered De la Cruz to deliver the camarin, ordered Sioson to pay P200 in unpaid rent, absolved Santos Paulino for lack of evidence of possession, and divided the costs between Sioson and De la Cruz.

• Exclusive Ownership: De la Cruz maintained that the camarin described in the complaint was of his exclusive ownership, denying the material allegations of the complaint except paragraphs 1 and 6, and prayed for absolution from the complaint with costs against the plaintiff.

• Double Sale — Better Right: Whether the first purchaser, Bautista, or the second purchaser, De la Cruz, has the better right to the camarin sold twice by the original owner Sioson, neither sale having been recorded in the registry of property.
• Constitutum Possessorium — First Possession: Whether the lease-back arrangement executed on the same date as the first sale constitutes possession by the first purchaser sufficient to prevail over the second purchaser's subsequent physical possession under Article 1473 of the Civil Code.

• Double Sale — Better Right: Yes. Bautista, the first purchaser, has the better right to the camarin, his ownership having consolidated upon the lapse of the two-year repurchase period without redemption by the vendors.
• Constitutum Possessorium — First Possession: Yes. The constitutum possessorium lease-back arrangement constituted symbolic delivery and constructive possession by Bautista as of September 4, 1912, making him the first to take possession under Article 1473, and rendering Sioson's subsequent possession merely that of a tenant without authority to convey ownership to De la Cruz.

• Double Sale — Better Right: Article 1473 of the Civil Code provides that where the same property is sold to different vendees and no entry is made in the registry, the property belongs to the person who first took possession of it in good faith. Both sales were embodied in notarial instruments but neither was recorded. The dispositive question was therefore which purchaser first took possession. The Court found that Bautista acquired possession first by operation of the constitutum possessorium, and that Sioson, when he sold to De la Cruz, occupied the camarin not as owner but as lessee. A tenant holds possession precariously and in representation of the owner; Sioson thus had no right to convey lawful possession under title of owner to De la Cruz. Although De la Cruz may have acted in good faith—there being no registry entry to alert him to the prior sale—his physical possession was subsequent and unlawful, derived from a vendor who lacked the capacity of owner. The Court found it unnecessary to resolve collateral issues regarding whether Sioson could validly sell only after his wife's death and whether the second sale's price derived from jueteng proceeds, since De la Cruz could not have acquired any right to the camarin regardless.

• Constitutum Possessorium — First Possession: Article 1462 of the Civil Code provides that the execution of a public instrument is equivalent to delivery of the thing sold, unless the contrary appears or may be clearly inferred. Delivery may be real or feigned; the execution of a public instrument constitutes symbolic tradition. The lease-back instrument (Exhibit D) showed that Bautista, in his capacity as owner, leased the camarin to Sioson and de la Cruz, with the lessees binding themselves to report disturbances and defects—provisions consistent with a landlord-tenant relationship. By this legal fiction, Bautista was deemed to have entered into possession of the camarin upon execution of the deed of sale, and thereafter delivered it to Sioson in the capacity of lessee. Bautista was therefore the first person to take possession of the camarin as owner. De la Cruz's possession, acquired one year and eleven months later, was transmitted by Sioson, who held precariously as tenant and could not convey possession under title of owner as contemplated by Article 1473.

• Constitutum Possessorium — A legal fiction by which a vendee is deemed to have acquired possession of property sold even though the vendor retains physical occupation, the vendor thereafter holding the property as lessee in representation of the owner. The Court applied this doctrine to hold that Bautista, by executing a lease-back on the same date as the sale, was deemed to have first taken possession of the camarin as owner, such that Sioson's continued physical occupation was merely that of a tenant and could not support a subsequent sale conveying lawful possession to De la Cruz.
• Double Sale (Article 1473, Civil Code) — Where the same thing is sold to different vendees, if there is no entry in the registry of property, the property belongs to the person who first took possession of it in good faith; and absent both registration and possession, to the one presenting the oldest title, provided there is good faith. The Court applied this provision to an unregistered double sale, holding that the first purchaser's constructive possession through constitutum possessorium satisfied the "first took possession" requirement, prevailing over the second purchaser's subsequent physical possession.
• Symbolic Tradition by Public Instrument (Article 1462, Civil Code) — The execution of a public instrument is equivalent to delivery of the thing sold, unless the contrary appears or is clearly inferred. Delivery may be real or feigned, and in all forms it must reflect the will of the parties to deliver and receive. The Court relied on this provision to establish that Bautista's possession was legally effected upon execution of the notarial deed of sale, even without physical transfer.

• "the material possession which the other defendant, Raymundo de la Cruz, now enjoys, not only was subsequent by one year and eleven months, but also, on the other hand, is an unlawful possession which was transmitted to him by Francisco Sioson, who held the camarin precariously and in the capacity of tenant, and, consequently, without any right whatever to convey to Raymundo de la Cruz the possession under title of owner referred to in article 1473, aforementioned of the Civil Code." — This passage states the ratio decidendi: a vendor-lessee's possession is precarious and cannot transmit lawful possession to a second purchaser under Article 1473.

• "by the execution of the deed of sale of September 4, 1912, Rosalio Bautista entered into the material possession under title of owner, of the camarin sold to him by Francisco Sioson, and, by virtue of another instrument of lease, of the same date, the purchaser and owner of the camarin conveyed and delivered this building to the lessee in view of said contract." — This passage articulates how the constitutum possessorium operates to give the first purchaser constructive possession, establishing priority over the second purchaser.

• "In the instant case Francisco Sioson, on affecting the second sale in favor of Raymundo de la Cruz, was in possession of the camarin and occupied it, not in the capacity of owner, but in that of lessee or tenant, and therefore absolutely had no right to dispose of the building in the capacity of owner thereof; consequently Sioson could not convey to the second purchaser the lawful possession of the disputed camarin." — This passage defines the limitation on a vendor-lessee's capacity to alienate property already sold, which is the decisive factor distinguishing the two purchasers' rights.

• Article 1473, Civil Code (old) — Governs double sales: if the same property is sold to different vendees, ownership belongs to the one who first inscribed it in the registry; absent inscription, to the one who first took possession in good faith; absent both, to the one with the oldest title, provided good faith. The Court applied the second preference—first possession in good faith—holding that Bautista's constructive possession through constitutum possessorium preceded De la Cruz's physical possession.
• Article 1462, Civil Code (old) — Provides that execution of a public instrument is equivalent to delivery of the thing sold, unless the contrary appears or may be clearly inferred. The Court used this provision to establish that Bautista's notarial deed of sale effected symbolic delivery, giving him constructive possession as of September 4, 1912.

Arellano, C.J., Johnson, Araullo, Street, and Avanceña, JJ., concurred.

• Carson, J. — Dissented on the ground that the possession contemplated in Article 1473 is real, physical possession of the property, citing Manresa's commentaries. The dissent argued that holding constructive possession sufficient without any act giving notice to innocent subsequent purchasers—or of which they could inform themselves through due diligence—tends to defeat the just and equitable provisions of the law.