SANTIAGO CRUZADO, plaintiff-appellant vs. ESTEFANIA BUSTOS, et.al, defendants-appellees.

G.R. No. L-10244. February 29, 1916.

TOPIC: Nature & Effects of Obligation: Compliance with Obligations (In obligations to give)

FACTS:
This appeal, by bill of exception, was taken from the judgment of June 17, 1914, in which the trial judge
absolved defendants from the complaint and plaintiff from the cross-complaint, without express
finding as to costs. Counsel for plaintiff appealed from this judgment and moved for a new trial.
a) Plaintiff-Appellant’s Arguments (Cruzado-Lost)
Counsel for the plaintiff filled a written complaint on October 8, 1910, amended on September 25, 1913,
in which he alleged that plaintiff was the owner of certain rural property situated in the barrio of
Dolores, formerly San Isidro, of the municipality of Bacolor, Pampanga, that the defendants had,
since the year 1906, up to the present, been detaining the said parcel of land, and had refused to
deliver the possession thereof to plaintiff and to recognize his ownership of the same, notwithstanding
the repeated demands made upon them; that by such detention, the plaintiff had suffered losses and
damages to the amount of P3,500.
He therefore asked for judgment declaring plaintiff to be the owner of the said parcel of land and ordering
defendants to return it to plaintiff and to pay the latter P3,500 for losses and damages, and the costs.
Plaintiff’s counsel, in answer to the said cross-complaint, specifically denied all of the allegations and, in
special defense, reproduced plaintiff's amended complaint and alleged that the facts set forth in the
cross-complaint did not constitute a cause of action. He therefore prayed that plaintiff be absolved
from the cross-complaint and that judgment be rendered against defendants, in conformity with the
prayer of his complaint.

b) Defendants-Appelles’ Argument’s (Bustos and Escaler-Won)

Bustos: The demurrer filed by the defendant Bustos having been overruled, in her answer she made a
general denial of all the allegations of the complaint, and, as a special defense, alleged that the title to the
said land, produced by the plaintiff, was not a lawful one, for the reason that only a simulated sale of the
land was made by the between herself and the deceased Agapito Geronimo Cruzado, plaintiff's father, and
that for more than thirty years preceding the present time she had been the sole, exclusive, and lawful
owner of the said parcel of land in question; that she had been holding it quietly, peaceably, publicly and
in good faith; that it formed an integral part of another larger parcel of land; that in September, 1891, with
plaintiff's knowledge, the defendant Bustos sold and conveyed all the said property to the other defendant,
Manuel Escaler, who then acquired the possession and ownership of the said parcel of land, and had
retained such ownership and possession up to the present time; that at no time and on no account
whatever had plaintiff or any other person except defendants acquired possession of the said parcel of
land or any part thereof, nor any right or title therein.
She therefore prayed to be absolved from the complaint, with the costs against plaintiff.

Escaler: The other defendant, Escaler, in an amended answer to the aforementioned complaint, denied all
of the allegations and, as a special defense, alleged that plaintiff's title to the said land was illegal as only
a simulated sale was made by and between Agapito Geronimo Cruzado and Bernardino Dizon; that
defendants had been in possession of the said parcel of land for more than thirty years; that the defendant
Escaler in good faith purchased the land in question from Estefania Bustos, widow of Dizon, without ever
having had any notice of any defect in the vendor's title; that plaintiff had knowledge of the contract of
sale of the land in question yet did nothing to oppose its purchase by the defendant Escaler, wherefore the
latter, in acquiring the property, did so under the belief that the plaintiff Santiago Cruzado had no right or
interest therein.
He prayed that the complaint be dismissed, with the costs against plaintiff, and that an injunction
issue to restrain the latter from interfering with the defendant Escaler in the enjoyment of his property and
rights and from performing any act prejudicial to his interests.

Counsel for defendants, in a cross-complaint set forth: that the defendant Escaler acquired in good faith
from Bustos the land in question at a time when there was no record in the property registry to show
that this land belonged to a third person or any other than the vendor; that, on entering into possession
of the property, Escaler spent P4,000 in-improvements and in the repair of a long dike and that half of
the sum was paid by Escaler while the other half by Bustos; and that in case the judgment of the court
should be adverse to defendants, these latter, as owners in good faith, were entitled to be indemnified
by plaintiff for the said expenses.

ISSUES:
1. Whether or not the deed of sale of 65 balitas of land situated in the municipality of Bacolor,
Pampanga, executed by Bustos, in favor of Agapito Geronimo Cruzado was simulated;
 2. Whether or not the rights Agapito G. Cruzado transmitted at his death to his son, the herein
plaintiff-appellant, by virtue of the deed of sale of the land in litigation, executed by its owner
Estefania Bustos may compel the defendants-appellees to deliver the land to the former; and

3. Whether or not such apparent alienation of the 65 balitas of land, the supposed vendee continued
in possession thereof, without the supposed purchaser having taken possession of the property
until its owner Bustos sold to Escaler not only the 65 balitas of land but also all the remainder of
the agricultural land, and that Escaler was then and, until the date of plaintiff's claim, continued to
be in peaceable, uninterrupted possession of the said whole tract of land; and

FINDINGS OF THE Lower Court:

The trial judge absolved defendants from the complaint and plaintiff from the cross-complaint, without
express finding as to costs.

FINDINGS OF THE Court of Appeals:

Counsel of the plaintiff filed a motion which was denied, exception was taken by appellant, and, on
the filing of the proper bill of exceptions, the same was approved, certified, and transmitted to the
clerk of this court, together with a transcript of the evidence introduced at the trial.

RULING:
The errors assigned to the judgment appealed from have been duly refuted, the said judgment should be,
as it is hereby, affirmed, with the costs against the appellant.

Rule:
1. To judge from the evidence adduced in this case, there is ample ground for holding that the said
deed of sale of a parcel of 65 balitas of land was simulated, not to defraud any creditor or other
person interested in the land nor for the purpose of eluding any lawful obligation on the part of its
owner, Estafania Bustos, but for the sole purpose of doing a favor to the plaintiff’s father.

2. The rights of Agapito G. Cruzado over the land was not transmitted to herein plaintiff-appellant
since the deed of sale entered into by the former with defendant-appellee, Bustos, was not
consummated. The contract of purchase and sale, as consensual, is perfected by consent as to the
price and the thing and is consummated by the reciprocal delivery of the one and the other, the
full ownership of the thing sold being conveyed to the vendee, from which moment the rights of
 action derived from this right may be exercised.It is true that the thing sold or its price should
have been delivered in order that the contract of purchase and sale be deemed perfect on account
of its being consensual, and from it reciprocal obligations arise mutually to compel the parties to
effect its fulfillment; but there is no transmission of ownership until the thing has been delivered,
and the moment such delivery is made the contract of purchase and sale is regarded as
consummated. Article 1450 of the Civil Code, relied upon in this connection by the appellant,
refers solely to the perfection of the contract and not to its consummation.
The provisions under article 1095 of the Civil Code are also in accord with those of article 1462
which reads:
A thing sold shall be considered as delivered, when it is placed in the hands and
possession of the vendee. When the sale should be made by means of a public
instrument, the execution thereof shall be equivalent to the delivery of the thing which
is the object of the contract, if in said instrument the contrary does not appear or may be
clearly inferred.
The supreme court of Spain, in a decision dated February 20, 1899 laid down the doctrine that, in
accordance with the provisions of article 40 of the Mortgage Law, in the alienation of real
property it is understood that no price has been paid if the notary does not attest its delivery
or the contracting parties do not prove that it was previously paid.

3. Article 1473 of the Civil Code prescribes:

If the same thing should have been sold to different vendees, the ownership shall be
transferred to the person who may have first taken possession thereof in good faith, if it
should be personal property. Should it be real property, it shall belong to the person
acquiring it who first recorded it in the registry. Should there be no entry, the property
shall belong to the person who first took possession of it in good faith, and, in the
absence thereof, to the person who presents the oldest title, provided there is good faith.
Application:
1. The action brought by the plaintiff is evidently one for recovery of possession, founded on the
right transmitted to him by his father at his death, — a right arising from the said simulated deed
of sale of the land in question. This action is of course improper, not only because the sale was
simulated, but also because it was not consummated. The price of the land was not paid nor the
did the vendee took possession of the land until the time of his death, nor did any of his heirs did.
 2. It is unquestionable that the contract of sale of the 65 balitas of land was perfect and binding
upon both contracting parties, since they both appear in that instrument to have agreed upon the
thing sold which is the land and upon the price of P2,200; but it is also undeniable that the said
contract was not consummated since it is positively certain that the latter did not pay the purchase
price of P2,200, and never took possession of the land apparently sold in the said deed. The
failure to pay the purchase price, the record discloses another very important fact, that neither the
vendee nor his heirs, among these latter, the plaintiff, had at any time taken possession of the land
which in the said instrument Exhibit A appeared to have been sold, for, by the testimony of seven
competent witnesses examined and conclusively proven that the alleged vendor continued to
possess the said land supposed to be sold to the plaintiff-appellant’s father.

3. It is true that the deed of sale remained in possession of the vendee Cruzado, but the sale is not to
be considered as consummated by this because the said vendee never entered into possession of
the land and neither did his son. The latter, moreover, was unable to prove that at any time as
owner of the land he collected the fruits harvested thereon, or that any other person cultivated the
said land in the name and representation of his deceased father or of the plaintiff himself. 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.
From that time the new owner Manuel Escaler took possession of all the land sold by Bustos,
more than ten years had passed and that ordinary prescription had already elapsed. As Escaler
purchased the land and was holding it in good faith under a lawful title and was not disturbed in
his continuous and peaceable possession, it is therefore unquestionable that he has absolutely
acquired by prescription the ownership of the disputed land, and the action brought by plaintiff,
founded solely on a simulated sale executed by the original owner of the land, not to the
prejudice, but to the benefit, of the pretended vendee, cannot prevail against Escaler's rights.

Conclusion:
As neither the plaintiff nor his predecessor in interest took possession of the land in litigation, neither of
them acquired any property right therein and, consequently, could not and cannot now bring an
action for recovery of possession which arises out of a property right in a thing which belongs to
them and not a mere right productive of a personal obligation. The other defendant-appellee, Escaler,
having acquired the land in good faith, continue to be the owner of the land since the simulated sale
to herein plaintiff-appellant’s father did not acquire ownership over the land for not having paid the
price and that their contract was not deemed consummated.