Cabalhin vs. Lansuela

Ownership of a thing sold is transferred to the vendee only upon actual or constructive delivery thereof, and the execution of a public instrument gives rise only to a prima facie presumption of delivery which is negated by the failure of the vendee to take actual possession of the land sold. 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.

The controversy involves a parcel of agricultural land (irrigated riceland) situated in Barangay Dacutan, Municipality of Esperanza, Province of Agusan del Sur, with an area of 34,661 square meters. The property was registered in the name of Isidoro Cabalhin under Original Certificate of Title (OCT) No. P-2133 issued on September 3, 1958. Isidoro passed away in 1974, and petitioner Isabelo Cabalhin claims to be his only child and heir. The dispute centers on competing claims of ownership arising from an alleged series of conveyances spanning from 1968 to 1988, none of which were registered with the land registration authorities.

The subject of the controversy is a parcel of agricultural land (irrigated riceland) situated in Barangay Dacutan, Municipality of Esperanza, Province of Agusan del Sur, with an area of 34,661 square meters. The property was registered in the name of Isidoro Cabalhin under Original Certificate of Title (OCT) No. P-2133 issued on September 3, 1958. Isidoro passed away in 1974.

On May 31, 2002, petitioner Isabelo Cabalhin filed a Complaint for Recovery of Possession with Preliminary and/or Temporary Restraining Order against respondents Spouses Bonifacio and Isidra Lansuela. Petitioner alleged that he was in actual, public, continuous, peaceful and adverse possession of the subject land, having inherited the same from his father, Isidoro, who was in actual possession and cultivation of the land during his lifetime. In June 1993, while petitioner was visiting relatives in Barobo, Surigao del Sur, Bonifacio, with the aid of some men, by means of force, intimidation, stealth, and strategy, entered the property and planted it with rice. Upon returning from Surigao del Sur in 1997, petitioner demanded that respondents vacate his property, but Bonifacio made threats against his life and safety. Bonifacio claimed to have bought the land from Isidoro, but petitioner could not recall any such conveyance. Petitioner alleged that one year before his demise, Isidoro had given him OCT No. P-2133 and advised him to take good care of the land and administer it.

In their Answer with Affirmative Defenses and Counterclaims, respondents averred that since May 1988, they had been in peaceful possession of the subject land on which they planted rice and other agricultural products. They narrated that the property was already sold by Isidoro to Enrique Perales under a Deed of Sale dated June 20, 1968. The heirs of Perales sold the same to Teodoro Estorion by virtue of a Deed of Extrajudicial Partition with Simultaneous Sale dated August 31, 1973. Under a Deed of Sale dated January 24, 1979, Estorion sold the property to Segros Manaay who, in turn, sold it to Bonifacio under a Deed of Absolute Sale dated May 9, 1988. Respondents had been paying the real estate taxes due on the land, as evidenced by receipts of tax payments.

The trial court granted petitioner's plea for a Temporary Restraining Order on April 23, 2003, enjoining respondents from further planting rice on the disputed land, to vacate the same, and to refrain from disturbing petitioner's possession. On September 19, 2003, the trial court ordered that the proceeds of the harvest from the subject land be deposited with the court. At the pre-trial, the parties agreed to a simultaneous filing of position papers and, thereafter, the case would be submitted for resolution.

The RTC rendered judgment in favor of petitioner on November 28, 2007, holding that the certificate of title in petitioner's possession serves as an indefeasible and incontrovertible title. The trial court observed that the series of deeds of sale were not registered despite the lapse of 35 years, which is not the usual practice of persons who register real property to prove their ownership by purchase. The trial court opined that the failure of respondents to register the land over a considerable length of time implies that they do not believe themselves to be the owners. The CA reversed, ruling that an unrecorded deed of sale is binding between the parties and their privies because actual notice is equivalent to registration, and that registration is not a mode of acquiring ownership. The CA further faulted petitioner for failing to discharge his burden of showing that the land possessed by respondents is the very same property that belongs to him, and that the sales embodied in the series of documents were bogus.

• Non-Registration of Deeds of Sale: Petitioner argued that the purported deeds of sale did not transfer ownership of the subject land to respondents and the alleged vendees before him considering that these were not registered as required by law.
• Lack of Good Faith: Petitioner maintained that respondents and the previous alleged vendees were not purchasers in good faith, being aware of petitioner's cultivation of the land at the time they supposedly bought it, and that the title was not delivered to anyone of them.
• Registration as Operative Act: Petitioner contended that registration being the operative act that binds the land, the unregistered deeds of sale did not make the alleged vendees, nor respondents, the owners of the disputed land.

• Possession of Title Not Dispositive: Respondents contended that mere possession by petitioner of the certificate of title did not validate his claim of ownership over the subject land already conveyed by his father during his lifetime.
• Loss of Ownership by Isidoro: Respondents argued that Isidoro had lost ownership of his property which was already excluded from the inheritance of petitioner.
• Genuineness of Deeds Uncontested: Respondents maintained that none of the series of deeds of transfers had been contested by petitioner as to their genuineness and due execution.

• Transfer of Ownership Through Delivery: Whether respondents acquired ownership of the land covered by OCT No. P-2133 in the name of Isidoro.

• Transfer of Ownership Through Delivery: No. Respondents did not acquire ownership of the disputed land because there was no actual or constructive delivery of the property to them. Under Articles 1496, 1497, 1498, and 1501 of the Civil Code, ownership of the thing sold is acquired by the vendee only upon actual or constructive delivery, and the execution of a public instrument gives rise only to a prima facie presumption of delivery which is negated by the failure of the vendee to take actual possession of the land sold.

• Transfer of Ownership Through Delivery: The Court held that while a contract of sale is perfected by mere consent, ownership of the thing sold is acquired only upon its delivery to the buyer. Upon the perfection of the sale, the seller assumes the obligation to transfer ownership and to deliver the thing sold, but the real right of ownership is transferred only "by tradition" or delivery thereof to the buyer. The Court cited Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc., which described delivery as "a composite act, a thing in which both parties must join and the minds of both parties concur," and that both actual and constructive forms of delivery contemplate "the absolute giving up of the control and custody of the property on the part of the vendor, and the assumption of the same by the vendee."

The Court found that the CA erred in ruling that ownership of the disputed land was validly transferred to respondents by virtue of the deed of absolute sale executed by Manaay despite the latter not being in possession of either the land or the title. Respondents, as vendees, were not placed in possession and control of the land they bought simply because Manaay did not have such possession. Manaay could not have effected a constructive delivery of the land to respondents by his execution of the Deed of Absolute Sale dated May 9, 1988.

Citing Spouses Santiago vs. Villamor, the Court explained that the execution of a public instrument gives rise only to a prima facie presumption of delivery, which is negated by the failure of the vendee to take actual possession of the land sold. 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. 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 Court further observed that when their vendor Manaay had no possession of either the land or the title despite the alleged prior sale transactions over the property, respondents should have been put on guard and should have investigated further why petitioner remains the possessor of the land which was supposedly sold a long time ago. None of the alleged vendees had taken possession of the land. The trial court aptly observed that these purported vendees' unexplained failure and neglect to register the sales in their favor for a considerable period of time is simply contrary to the usual practice of purchasers of real property, which leads to the conclusion that they did not regard themselves as owners. Even Bonifacio failed to register his interest or claim and just proceeded to pay real property taxes without actual delivery of the property to him. The Court noted that it is "uncharacteristic of a conscientious buyer of real estate not to cause the immediate registration of his deed of sale, as well as the issuance of a new certificate of title in his name," more so where the inaction of the purported vendees lasted for more than 30 years.

While the Court sustained the trial court's disposition on the issue of ownership, it found the award of moral and exemplary damages, as well as litigation expenses in favor of petitioner, bereft of factual and legal support, and thus deleted the same.

• Tradition as Mode of Acquiring Ownership — Under the Civil Code, ownership of the thing sold is transferred to the vendee upon the actual or constructive delivery thereof. The perfection of a contract of sale does not transfer ownership; rather, the seller assumes the obligation to transfer ownership and to deliver the thing sold, but the real right of ownership is transferred only by tradition or delivery thereof to the buyer. In this case, the Court applied this doctrine to hold that respondents did not acquire ownership because their vendor Manaay had no possession of either the land or the title, and thus could not effect constructive delivery.

• Prima Facie Presumption of Delivery from Execution of Public Instrument — The execution of a public instrument is 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, this gives rise only to a prima facie presumption of delivery, which is negated by the failure of the vendee to take actual possession of the land sold. 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. The Court applied this doctrine to find that no constructive delivery transpired upon the execution of the deed of sale between Manaay and respondents.

• "Delivery has been described as a composite act, a thing in which both parties must join and the minds of both parties concur. It is an act by which one party parts with the title to and the possession of the property, and the other acquires the right to and the possession of the same. In its natural sense, delivery means something in addition to the delivery of property or title; it means transfer of possession. In the Law on Sales, delivery may be either actual or constructive, but both forms of delivery contemplate 'the absolute giving up of the control and custody of the property on the part of the vendor, and the assumption of the same by the vendee.'" — This passage from Equatorial Realty Development, Inc. v. Mayfair Theater, Inc. defines the concept of delivery as a mode of acquiring ownership and was relied upon by the Court to explain why respondents did not acquire ownership of the disputed land.

• "However, the execution of a public instrument gives rise only to a [prima facie] presumption of delivery, which is negated by the failure of the vendee to take actual possession of the land sold. '[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.'" — This passage from Spouses Santiago v. Villamor articulates the controlling doctrine on constructive delivery and was the basis for the Court's conclusion that Manaay could not have effected constructive delivery of the land to respondents.

• "Indeed, it is 'uncharacteristic of a conscientious buyer of real estate not to cause the immediate registration of his deed of sale, as well as the issuance of a new certificate of title in his name.' More so in this case, where the inaction of the purported vendees lasted for more than 30 years." — This passage supports the Court's finding that the failure of the alleged vendees to register their sales for over three decades indicates they did not regard themselves as owners, negating the claim of valid transfer of ownership.

• Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc., 421 Phil. 709 (2001) — Cited as controlling authority defining the concept of delivery in the Law on Sales, emphasizing that delivery contemplates the absolute giving up of control and custody of the property by the vendor and the assumption of the same by the vendee.

• Cebu Winland Development Corporation vs. Ong Siao Hua, 606 Phil. 103 (2009) — Cited to elucidate the concept of delivery for the acquisition of the right of ownership, stating that ownership does not pass by mere stipulation but only by delivery, and that delivery signifies that the transmission of ownership from vendor to vendee has taken place.

• Spouses Santiago vs. Villamor, 699 Phil. 297 (2012) — Cited as controlling precedent for the rule that the execution of a public instrument gives rise only to a prima facie presumption of delivery, which is negated by the failure of the vendee to take actual possession of the land sold, and that a person who does not have actual possession of the thing sold cannot transfer constructive possession.

• Mahilum vs. Spouses Ilano, 761 Phil. 334 (2015) — Cited for the proposition that it is uncharacteristic of a conscientious buyer of real estate not to cause the immediate registration of his deed of sale and the issuance of a new certificate of title in his name.

• Neypes vs. Court of Appeals, 506 Phil. 613 (2005) — Cited in the procedural history for the fresh period rule that allowed respondents' notice of appeal to be given due course.

• Article 1477, Civil Code — Provides that the ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof. The Court applied this provision to determine that respondents did not acquire ownership of the disputed land absent actual or constructive delivery.

• Article 1496, Civil Code — Provides that the ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in Articles 1497 to 1501, or in any other manner signifying an agreement that the possession is transferred from the vendor to the vendee. This provision was the foundational rule applied by the Court.

• Article 1497, Civil Code — Provides that the thing sold shall be understood as delivered when it is placed in the control and possession of the vendee. The Court applied this to find that respondents were not placed in possession and control of the land.

• Article 1498, Civil Code — Provides that 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 clearly be inferred. The Court applied this provision to determine that the presumption of constructive delivery was negated by the failure of the vendee to take actual possession.

• Article 1501, Civil Code — Provides that with respect to incorporeal property, the provisions of the first paragraph of Article 1498 shall govern, and in any other case wherein said provisions are not applicable, the placing of the titles of ownership in the possession of the vendee or the use by the vendee of his rights, with the vendor's consent, shall be understood as a delivery. This provision was cited as part of the governing rules on delivery.

Caguioa, Lazaro-Javier, M. Lopez, and J. Lopez, JJ., concurred.