Heirs of Jose Extremadura vs. Manuel Extremadura and Marlon Extremadura

An action for quieting of title prospers upon proof of equitable title, which is established by a notarized deed of sale together with the vendee's exercise of the rights and obligations of ownership — including the receipt of the land's fruits and the payment of taxes — even where possession is exercised through another who recognizes the vendee's title.

Jose Extremadura and Manuel Extremadura are brothers, and Marlon Extremadura is Manuel's son and Jose's nephew. The agricultural land in dispute, located in Sitio Ponong, Barrio Rizal, Casiguran, Sorsogon, was owned by the spouses Alfredo H. Extremadura and Corazon S. Extremadura, the uncle and aunt of Jose and Manuel. The controversy concerns the ownership of that parcel as between Jose, who traces his claim to a conveyance from Corazon, and the respondents, who assert possession in the concept of owner. Article 476 of the Civil Code supplies the statutory framework for the action for quieting of title by which the competing claims were placed before the courts.

Jose Extremadura, a resident of Manila, purchased three parcels of agricultural land in Sitio Ponong, Barrio Rizal, Casiguran, Sorsogon from his aunt Corazon S. Extremadura, the widow of his uncle Alfredo H. Extremadura, under a Deed of Absolute Sale dated December 18, 1984. The conveyance was made for and in consideration of ₱6,000.00, which Jose duly paid, and for which he paid the required capital gains tax. Because he lived in Manila, Jose left one of the three parcels — the subject land, with an area of 3.4945 square meters — in the care of his brother Manuel Extremadura, on the arrangement that Manuel and Manuel's son Marlon would deliver the produce of the land to him.

From 1984 until 1995, Manuel and Marlon delivered the produce of the subject land to Jose, who received the fruits thereof and paid the taxes on the property. After 1995, respondents continuously refused to deliver the produce of the land or to vacate the same despite Jose's repeated demands.

Respondents, for their part, averred that they had been in open, continuous, peaceful, adverse, and uninterrupted possession of the subject land, where their residential house stands, and in the concept of owner for almost fifty years, and that Jose's action was therefore already barred by prescription or laches. They characterized the portions of the land's produce they had given Jose as merely in keeping with the Filipino culture of sharing blessings with siblings and relatives, and argued that the deed of absolute sale Jose presented was not the legal or beneficial title contemplated by Article 476 of the Civil Code.

Manuel's testimony at trial, however, was to a different effect. He admitted that the owners of the land were his uncle and aunt, Alfredo and Corazon; that neither had sold, donated, or executed any document transferring ownership of the property to him; and that the taxes were paid in the names of Alfredo and Corazon because Alfredo was the owner of the property. He likewise admitted that he had given Jose products and, at times, chicken whenever Jose came home from Manila, and had sent products to him through other people, explaining only that he did so because Jose was his brother. When asked what he could show the court to prove that the land had been transferred, inherited, or given to him, he answered that he lived there.

On these facts, the Regional Trial Court found that Jose had a better right to the land, the deed of absolute sale in his favor being notarized and thus enjoying the presumption of regularity, and that respondents' possession had not been in the concept of an owner. The Court of Appeals, on the other hand, found that Jose had never been placed in possession and control of the subject land, that the land was not in the possession of the alleged vendor Corazon, and that Jose had failed to probe the rights of the actual possessors of the land and to clarify the true nature of their possession before purchasing the same.

• Prescription and Laches: Respondents averred that they had been in open, continuous, peaceful, adverse, and uninterrupted possession of the subject land, where their residential house stands, and in the concept of owner for almost fifty years, so that Jose's action was already barred by prescription or laches.
• Nature of the Produce Delivered: Respondents claimed that the fact that they gave Jose portions of the land's produce was merely in keeping with the Filipino culture of sharing blessings with siblings and relatives, and not an acknowledgment of Jose's ownership.
• Absence of Legal or Beneficial Title: Respondents argued that the deed of absolute sale presented by Jose was not the legal or beneficial title contemplated by Article 476 of the Civil Code.

• Quieting of Title — Legal or Equitable Title: Whether the Court of Appeals correctly dismissed Civil Case No. 2005-7552 filed by Jose.

• Quieting of Title — Legal or Equitable Title: No. The dismissal was reversed, Jose having satisfactorily established equitable title over the subject land through a notarized deed of sale and his exercise of the rights and obligations of ownership, the prima facie presumption of constructive delivery arising from the public instrument not having been negated.

• Quieting of Title — Legal or Equitable Title: An action for quieting of title requires that the plaintiff have a legal or equitable title to, or interest in, the property subject of the action; legal title denotes registered ownership, while equitable title means beneficial ownership. Equitable title is derived through a valid contract or relation and consists in the right of the party to have the legal title transferred to him, and in order for a plaintiff to draw such title to himself, he must show that the one from whom he derives his right had himself a right to transfer. Jose's title was derived through a contract of sale evidenced by a notarized Deed of Absolute Sale dated December 18, 1984, whereby Corazon, the widow of Alfredo, transferred the subject land and two other adjoining parcels to Jose for ₱6,000.00, which Jose paid, and for which he paid the required capital gains tax. That Corazon had the right to transfer the land by virtue of her ownership thereof was established during trial through Manuel's own admissions that the owners of the land were his uncle and aunt, Alfredo and Corazon; that neither had sold, donated, or executed any document transferring ownership to him; and that taxes were paid in their names because Alfredo was the owner. The Court of Appeals, while expressing no misgivings on the existence and execution of the deed of sale, nonetheless held that the notarized deed did not constitute constructive delivery so as to affect the transfer of ownership from seller to buyer. That holding was mistaken. Article 1477 of the Civil Code recognizes that ownership of the thing sold is transferred to the vendee upon the actual or constructive delivery thereof; Article 1497 provides that the thing sold is understood as delivered when it is placed in the control and possession of the vendee; and Article 1498 lays down the general rule that the execution of a public instrument is equivalent to 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 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 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. Here, the prima facie presumption of constructive delivery to Jose was not successfully negated by proof that the subject land was not actually placed in his control and possession. Possession is acquired by the material occupation of a thing or the exercise of a right, or by the fact that it is subject to the action of our will, or by the proper acts and legal formalities established for acquiring such right, and Jose exercised possession of the subject land through Manuel, and eventually Marlon, whom he allowed to stay and care for the land in exchange for the delivery of the produce thereof. Article 524 of the Civil Code provides that possession may be exercised in one's own name or in that of another, and jurisprudence teaches that it is not necessary that the owner of a parcel of land should himself occupy the property, as someone in his name may perform the act; the owner of real estate has possession either when he himself is physically in occupation of the property, or when another person who recognizes his rights as owner is in such occupancy. The fact that respondents delivered the produce of the land to Jose, which Manuel admitted in open court, can only be construed as his recognition of Jose's ownership despite his tenuous claim that he merely did so because Jose is his brother. Not only did Jose exercise his right as owner by receiving the fruits of the land, he likewise performed his duties by paying taxes therefor, evidence of which he presented during trial; although tax declarations or realty tax payments are not conclusive evidence of ownership, they are good indicia of possession in the concept of owner, for no one in his right mind would be paying taxes for a property that is not in his actual or at least constructive possession, and they constitute at least proof that the holder has a claim of title over the property. Manuel, by contrast, merely claimed that he paid taxes on the land but never presented proof of the alleged payments, and the weakness of his case was further exposed by his faulty supposition that he had become the owner of the land only because he was born on the same and had lived thereon. Thus, by sheer preponderance of evidence, Jose — not only through the execution of the Deed of Absolute Sale in his favor, but also as evinced by his exercise of the rights and obligations of an owner — proved his title over the subject land, and the action for quieting of title should prosper to the benefit of his heirs.

• Requisites of an action for quieting of title — For an action to quiet title to prosper, two indispensable requisites must concur: (1) the plaintiff or complainant has a legal or an equitable title to or interest in the real property subject of the action; and (2) the deed, claim, encumbrance, or proceeding claimed to be casting a cloud on his title must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy. The Court applied the first requisite, holding that Jose's equitable title was sufficiently established, and treated respondents' claim of ownership as the cloud to be removed.
• Legal title distinguished from equitable title — Legal title denotes registered ownership, while equitable title means beneficial ownership. Equitable title is a title derived through a valid contract or relation and based on recognized equitable principles; it is the right in the party to whom it belongs to have the legal title transferred to him, and in order for a plaintiff to draw it to himself, he must show that the one from whom he derives his right had himself a right to transfer. Jose's equitable title arose from the notarized deed of sale executed by Corazon, whose ownership and capacity to transfer were established by Manuel's admissions.
• Constructive delivery and the prima facie presumption under Articles 1497 and 1498 — Ownership of the thing sold is transferred to the vendee upon actual or constructive delivery, and the thing sold is understood as delivered when placed in the control and possession of the vendee. The execution of a public instrument is equivalent to delivery if from the deed the contrary does not appear or cannot clearly be inferred, but this gives rise only to a prima facie presumption of delivery, which is negated by the vendee's failure 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 found that the presumption in Jose's favor was not negated.
• Possession through another (Articles 524 and 531) — Possession may be exercised in one's own name or in that of another, and possession is acquired by the material occupation of a thing or the exercise of a right, by the fact that it is subject to the action of our will, or by the proper acts and legal formalities established for acquiring such right. It is not necessary that the owner of a parcel of land should himself occupy the property, as someone in his name may perform the act; the owner has possession either when he is physically in occupation or when another person who recognizes his rights as owner is in such occupancy. Jose's arrangement with Manuel and Marlon, under which they stayed on and cared for the land in exchange for delivering its produce, constituted possession through another.
• Tax declarations and realty tax payments as indicia of possession — Although tax declarations or realty tax payments are not conclusive evidence of ownership, they are good indicia of possession in the concept of owner, for no one in his right mind would pay taxes on property not in his actual or at least constructive possession; they constitute at least proof that the holder has a claim of title over the property, and the voluntary declaration of a property for taxation manifests the declarant's desire to obtain title and his adverse claim against the State and all other interested parties. Jose's tax payments, supported by evidence, strengthened his bona fide claim, while Manuel's bare claim of tax payment, unsupported by proof, did not.
• Preponderance of evidence in civil cases — The Court resolved the competing claims by weighing the evidence, concluding that by sheer preponderance of evidence Jose proved his title to the subject land through both the execution of the Deed of Absolute Sale and his exercise of the rights and obligations of ownership.

• "for an action to quiet tide to prosper, two indispensable requisites must concur, namely: (1) the plaintiff or complainant has a legal or an equitable title to or interest in the real property subject of the action; and (2) the deed, claim, encumbrance, or proceeding claimed to be casting cloud on his title must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy." — This is the Court's canonical statement, drawn from Mananquil vs. Moico, of the two indispensable requisites for an action for quieting of title, and it supplied the framework for the entire ruling.
• "equitable title has been defined as '[a] title derived through a valid contract or relation, and based on. recognized equitable principles; the right in the party, to whom it belongs, to have the legal title transferred to him. x x x. In order that a plaintiff may draw to himself an equitable title, he must show that the one from whom he derives his right had himself a right to transfer. x x x.'" — This passage, drawn from PVC Investment & Mgt. Corporation vs. Borcena, defines the equitable title whose existence the Court of Appeals had wrongly denied, and it explains why proof of Corazon's ownership was material.
• "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 is the ratio decidendi on the delivery issue: it states the limits of the presumption under Article 1498 and explains why the Court of Appeals' reliance on Jose's lack of physical possession was misplaced.
• "It is not necessary that the owner of a parcel of land should himself occupy the property as someone in his name may perform the act. In other words, the owner of real estate has possession, either when he himself is physically in occupation of the property, or when another person who recognizes his rights as owner is in such occupancy" — Quoted from Piedad vs. Gurieza, this passage supplies the rule that reconciled Jose's residence in Manila with his exercise of possession through Manuel and Marlon.
• "Although tax declarations or realty tax payments of property are not conclusive evidence of ownership, nevertheless, they are good indicia of possession in the concept of owner for no one in his right mind would be paying taxes for a property that is not in his actual or at least constructive possession." — This passage from Republic of the Philippines vs. CA defines the evidentiary weight of tax payments and supported the Court's finding that Jose acted as owner while Manuel's contrary claim was unproven.

• Mananquil vs. Moico, 699 Phil. 120 (2012) — The controlling precedent on the requisites of an action for quieting of title; the Court adopted its formulation of the two indispensable requisites and its characterization of the remedy as essentially one grounded on equity.
• PVC Investment & Mgt. Corporation vs. Borcena, 507 Phil. 668 (2005) — Cited for the definition of equitable title and for the requirement that the plaintiff show that the person from whom he derives his right had himself a right to transfer; applied to establish that Jose's equitable title was traceable to Corazon's ownership.
• Santiago vs. Villamor, 699 Phil. 297 (2012) — Cited 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 vendee's failure to take actual possession, and that one without actual possession cannot transfer constructive possession by a public instrument; relied upon in rejecting the Court of Appeals' constructive-delivery analysis.
• Piedad vs. Gurieza, G.R. No. 207525, June 18, 2014, 727 SCRA 71 — Cited for the rule that an owner need not personally occupy the property and has possession when another who recognizes his rights as owner is in occupancy; applied to Jose's arrangement with Manuel and Marlon.
• Republic of the Philippines vs. CA, 328 Phil. 238 (1996) — Cited for the doctrine that tax declarations and realty tax payments, while not conclusive on ownership, are good indicia of possession in the concept of owner and proof of a claim of title; applied to Jose's tax payments and against Manuel's unsubstantiated claim of payment.

• Article 476, Civil Code — Governs the action for quieting of title, allowing an action to remove a cloud on title to real property by reason of any instrument, record, claim, encumbrance, or proceeding apparently valid or effective but in truth invalid, ineffective, voidable, or unenforceable and prejudicial to the title. It supplied the cause of action invoked by Jose, and respondents invoked it to argue that the deed of sale was not the legal or beneficial title it contemplates.
• 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 used it as the starting point for holding that ownership passed to Jose notwithstanding the absence of physical delivery.
• 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 it in finding that Jose's control over the land was exercised through Manuel and Marlon.
• Article 1498, Civil Code — Provides that 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. The Court held that this gave rise only to a prima facie presumption of delivery, which was not negated in this case.
• Article 524, Civil Code — Provides that possession may be exercised in one's own name or in that of another. The Court relied on it to hold that Jose's possession through Manuel and Marlon was legally effective.
• Article 531, Civil Code — Defines the acquisition of possession by the material occupation of a thing or the exercise of a right, by the fact that it is subject to the action of our will, or by the proper acts and legal formalities established for acquiring such right. The Court cited it in concluding that Jose exercised possession of the subject land through the respondents.

Sereno, C.J. (Chairperson); Leonardo-De Castro, J.; Bersamin, J.; and Caguioa, J. All concurred in the decision.