G.R. No. L-14524; October 24, 1960
Felix Molina, petitioner, vs. Court of Appeals and Basilisa Manjon, respondents.

FACTS

Petitioner Felix Molina and respondent Basilisa Manjon were parties in Civil Case No. 2796 of the Court of First Instance of Camarines Sur. Manjon filed a complaint to recover possession of a parcel of land from Molina. Molina, in his answer and counterclaim, alleged that Manjon sold the land to him around 1938, with the sale formalized in a notarized deed (Exhibit 1) in 1943, and that he had been in continuous possession since 1938. He prayed for the dismissal of the complaint, a declaration that Manjon’s title was void, and other relief. Manjon, in reply to the counterclaim, denied the due execution of the sale, claiming it was fictitious. She testified that in 1943, Molina, then her overseer, informed her that guerrilla soldiers would arrest her due to a complaint from a third party over the land. Fearing arrest, she agreed to Molina’s suggestion to execute a simulated deed of sale in his favor so he could defend the property in his name. She signed Exhibit 1 but had Molina sign a statement (Exhibit D) admitting the transaction was only a simulated sale. Molina denied this story and asserted that Exhibit D was a forgery, offering samples of his genuine signature for comparison. The trial court, without ruling on whether the sale was simulated, declared Manjon the lawful owner on the ground that she could not have validly sold the land in 1938 or 1943 because it was still part of the public domain at that time; a sales patent was issued to her by the government only on June 4, 1948. The Court of Appeals affirmed this decision, also deeming it unnecessary to determine if the sale was fictitious, based on the same reasoning that Manjon lacked ownership at the time of the alleged sale. Molina appealed, assigning as error the lower courts’ failure to resolve the issue of whether the sale was simulated.

ISSUE

Whether the Court of Appeals erred in affirming the trial court’s decision without resolving the factual issue of whether the deed of sale (Exhibit 1) was simulated and whether the accompanying statement (Exhibit D) was a forgery, particularly in light of the legal principle that a seller who later acquires title to the property conveys that title to the buyer by operation of law.

RULING

Yes. The Supreme Court found the appeal meritorious. It held that the lower courts erred in not passing upon the crucial factual issue of whether the sale was simulated. The Court reiterated the settled doctrine, derived from the common law principle of estoppel by deed and embodied in Article 1435 of the Civil Code, that when a person who is not the owner of a thing sells or alienates and delivers it, and later the seller acquires title thereto, such title passes by operation of law to the buyer or grantee. This rule, applied in Philippine jurisprudence as early as Llacer vs. Muñoz de Bustillo (12 Phil. 328) and reaffirmed in Pang Lim and Galvez vs. Lo Seng (42 Phil. 282), means that if the sale to Molina in 1938 or 1943 was genuine and not simulated, it would be operative in law, and the title Manjon later acquired in 1948 would pass to Molina by operation of law. The Supreme Court, however, could not itself resolve this factual question, as the evidence was not before it and the parties had not discussed it in their submissions. Consequently, the decisions of the trial court and the Court of Appeals were reversed and set aside. The case was remanded to the Court of Appeals for further proceedings to consider and decide the specific issues of (1) whether the deed of sale (Exhibit 1) was simulated, and (2) whether the statement (Exhibit D) was a forgery.