Cruzado vs. Bustos and Escaler

A contract of sale that is simulated and where the purchase price is not paid and the thing sold is never delivered does not transfer ownership. The buyer acquires only a personal right to demand fulfillment, which is subject to prescription.

The case involves a dispute over a 65-balita parcel of land in Pampanga. In 1875, Estefania Bustos executed a deed of sale over the land in favor of Agapito Geronimo Cruzado. The sale was intended only to make Cruzado appear to own property so he could post a bond required for his appointment as a procurador (a court officer). The land remained in Bustos's possession. She later sold it to Manuel Escaler in 1891. Cruzado's son, Santiago, filed an action in 1910 to recover the land from Bustos and Escaler.

• Filed in the Court of First Instance of Pampanga (trial court).
• The trial court absolved the defendants (Bustos and Escaler) from the complaint.
• Plaintiff appealed directly to the Supreme Court via a bill of exceptions (the procedural mechanism at the time).

• In 1875, Estefania Bustos, with her husband, executed a public instrument (Exhibit A) selling 65 balitas of land to Agapito Geronimo Cruzado for P2,200.
• The purpose was to allow Cruzado to mortgage the land and meet the bond requirement for his appointment as a procurador.
• The purchase price was never paid. Cruzado never took possession of the land; Bustos and her successors continued to possess and cultivate it.
• Cruzado used the deed to mortgage the land as security for his official bond in 1876.
• Cruzado died sometime between 1882 and 1890.
• In 1891, Bustos sold the entire tract, including the 65 balitas, to Manuel Escaler, who took immediate possession.
• In 1910, Santiago Cruzado filed an action to recover ownership and possession of the 65 balitas from Bustos (then administrator of her estate) and Escaler.

• The deed of sale (Exhibit A) was a valid and binding contract that transferred ownership of the land to his father.
• As heir, he succeeded to his father's rights of ownership.
• Defendants were unlawfully detaining the property.

• The sale was simulated and fictitious; no price was paid, and no possession was delivered.
• Even if the sale was initially valid, the plaintiff's action had prescribed.
• Defendant Escaler was a purchaser in good faith and for value, and he had acquired ownership through prescription.

• Procedural Issues: N/A
• Substantive Issues:
  1. Whether the deed of sale (Exhibit A) was simulated and did not transfer ownership.
  2. Whether the plaintiff's action to recover the property had prescribed.

• Procedural: N/A
• Substantive:
  1. Yes, the sale was simulated and did not transfer ownership. The SC held that a contract of sale requires not only consent but also delivery of the thing sold and payment of the price for ownership to transfer. Here, the price was never paid, and the buyer never took possession. The deed was executed merely as a favor to help Cruzado secure his appointment. Therefore, Cruzado acquired no real right (ownership) over the land, only a personal right to demand its delivery, which he never exercised.
  2. Yes, the action had prescribed. The SC found that defendant Escaler had possessed the land in good faith, under a claim of ownership, continuously and adversely from 1891 until the complaint was filed in 1910—a period of more than 10 years. This constituted ordinary acquisitive prescription. Furthermore, even the personal action to enforce the simulated sale had prescribed under the 30-year period applicable at the time.

• Tradition (Delivery) as a Mode of Acquiring Ownership — Under Article 609 of the Civil Code, ownership is transferred through tradition or delivery, not merely by contract. The SC applied this to hold that since the land was never delivered to Cruzado, he never became its owner.
• Perfection vs. Consummation of a Contract — The SC distinguished between a perfect consensual contract of sale (which creates personal obligations) and its consummation (which transfers ownership). The sale here was perfected but never consummated due to non-payment and non-delivery.
• Prescription of Actions — The SC applied the prescriptive periods under the old Spanish laws (Novísima Recopilación, Partidas) and the Civil Code. A real action (reivindicación) prescribes after 30 years; a personal action prescribes after 10 (or 20) years. Both periods had lapsed.

• "The simulation of the said sale was effected by making a pretended contract which bore the appearance of truth, when really and truly there was no contract, because the contracting parties did not in fact intend to execute one, but only to formulate a sale..."
• "The purchaser is also a creditor with respect to the products of the thing sold, and article 1095 of the Civil Code prescribes... 'he shall not acquire a property right thereto until it has been delivered to him.'"
• "The fiction created by means of the execution and delivery of a public instrument produces no effect if the person acquiring it never takes possession of the thing sold or acquired..."

• Garcia v. Reyes (17 Phil. 127) — Cited by the plaintiff in a procedural objection; the SC distinguished it.
• Spanish Supreme Court Decisions (1890, 1898, 1901, 1899) — Cited as persuasive authority on the distinction between perfecting and consummating a sale, and on the presumption of non-payment when the notary does not attest delivery of the price.

• Civil Code Articles 609, 1095, 1450, 1462, 1473, 1939, 1963, 1964 — Governing acquisition of ownership by tradition, rights of creditors/buyers, delivery of things sold, double sales, and prescription of actions.
• Act No. 190 (Code of Civil Procedure), Sections 38, 39, 43 — Referenced regarding prescription.
• Law 5, Title 8, Book 1 of the Novísima Recopilación & Law 21, Title 29, Partida 3 — Old Spanish laws on prescription periods.

• N/A (The decision was unanimous).