Valid and binding

When is the ownership of a thing sold acquired by the buyer? This is one of the questions raised in this case between the heirs of Paco and Magno.

The case involved a parcel of registered land owned by a municipality and subdivided into Lots A, B and C. Occupying Lots A and C were Paco and Magno and their respective families.

On January 14, 1966, the Municipal Council passed a resolution authorizing the sale through public bidding of said Lots A and C. So on April 25, 1966 a public bidding was conducted wherein Paco emerged as the highest bidder. Thus on April 27, 1966, the Municipal Council issued a resolution accepting Paco’s bid. Thereafter a Deed of Absolute Sale was executed by the Municipality in favor of Paco for P9,378.75.

Pursuant to Section 2156 of the Administrative Code, the Deed of Sale was forwarded to the Provincial Governor for approval. But the Governor did not act upon said deed.

In the meantime Paco allowed Magno and his family to continue occupying the portion of Lot C already possessed and occupied by them containing an area of 375 square meters. Then sometime in September 1966, Paco sold said portion to Magno as embodied in a Deed of Absolute Sale signed by Paco and his wife in the presence of two witnesses. The sale was not notarized however.

To segregate the property subject of the Deed of Sale from the remaining portion of Lot C, Magno had the same surveyed by a licensed surveyor who then prepared its technical description and denominated as Lot C-3.

Almost 26 years later or on February 7, 1992 when both Paco and Magno were already dead, The Municipality of Marikina through its then Mayor executed a Deed of Absolute Transfer over Lots A and C in favor of the Estate of Paco. So on June 25, 1992 Transfer Certificates of Title were issued to both Lots in the name of Paco’s estate.

Subsequently, the heirs of Paco executed a Deed of Extrajudicial Partition wherein Lot C was subdivided into three lots. As a result, new titles were issued wherein the 370 square meter portion of Lot C-3 subject of the Deed of Sale in favor of and occupied by Magno became Lot C-1 and covered by TCT No. 2447 while the remaining 5 square meters formed a portion of another lot denominated as Lot C-2 covered by TCT 2448.

On October 1, 1992, the heirs of Magno demanded from the heirs of Paco for the reconveyance of Lot C-3. Paco’s heirs however refused contending, among others, the Deed of Sale executed by Paco in favor of Magno covering Lot C-3 was not valid because when it was executed Paco was not yet the owner thereof. They argued that it was only on June 25, 1992 when a TCT was issued covering Lot C in the name of Paco’s estate when Paco became its owner. Were the heirs of Paco correct?

No. The ownership of a thing sold is acquired by the vendee from the moment it is delivered to him. A thing sold shall be understood as delivered when it is placed in the control and possession of the vendee (Article 1496 in relation to Article 1497, Civil Code)

In this case, Paco took control and possession of Lot C immediately after his bid was accepted by the Municipal Government. In fact both Paco and Magno together with their respective heirs were already occupying the subject property even before the same was sold to Paco and that after buying the same Paco allowed Magno and his family to stay thereon. This only shows that upon perfection of the contract of sale between the Municipality and Paco, the latter acquired ownership of the subject property by means of delivery of the same to him.

The absence of approval by the Provincial Governor of the said Contract of Sale does not per se make it null and void. Such contract is only considered voidable or annullable and is valid and binding, effective and obligatory between the parties, before it is set aside. In the present case, since the contract was never annulled or set aside, it has the effect of transferring ownership of subject property to Paco. Having lawfully acquired ownership of Lots A and C, Paco in turn had the full capacity to transfer ownership of these parcels of land or parts thereof, including the subject property (Lot C-3) which comprises a portion of Lot C (Estate of Gonzales et. al. vs. Heirs of Perez, G.R. 169681, November 5, 2009) 

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