ACQUISITION FROM A NON DOMINO IN SPANISH CIVIL LAW
José Manuel de Torres Perea
Profesor Titular de Derecho Civil
The Spanish System for transmitting the ownership and other real rights over assets is based on the theory of the title to the property and delivery of the transferred thing (Teoría del título y del modo). It is understood that the transferor should be the real owner of the thing. Spanish Law follows the Roman rule which establishes that nobody can transfer property that is not his own. This norm is applied with the only two exceptions stated by art. 34 LH relating to acquisition of immovable property in good faith, and art. 464 SCC relating to acquisition of movable property in good faith. However, a careful reading of articles 1124, 1295 and 1895 of the Spanish Civil Code (SCC) may lead to a review of these criteria. This paper aims to examine the nature of this issue in the Spanish Law. We have chosen this subject as a topic for a legal Spanish Philippines Congress as this article is based on some identical provisions of both Civil Codes: In fact, articles 609, 649, 650, 1124, 1295 and 1897 of the SCC are identical to articles of the 712, 766, 767, 1191, 1384 and 2160 of the Philippines Civil Code (PCC). Therefore, the debate and arguments followed by the Spanish scholars could easily be discussed in a Philippines context.
Spanish law, Philippines law, property, transfer of property, protection of appearance, delivery of property, tradition, remote cause, third party.
1.- TITLE TO THE PROPERTY AND DELIVERY AS REQUIREMENTS TO ACQUIRE A REAL RIGHT
In Spanish law, art. 609 SCC (identical to art. 712 PCC) governs the system of acquiring ownership and other rights over property. This provision includes ownership as acquired by occupancy and ownership and other real rights over property acquired and transmitted by law, by donation, by testate or intestate succession, and in consequence of certain acts by tradition. Finally, it is worth adding that they may also be acquired by means of prescription.
Therefore, the Spanish System for transmitting the ownership and other real rights over property is based on the theory of the title to the property and delivery of the transferred thing (Teoría del título y del modo). On an obligational level delivery is a means of payment, a way to fulfill the obligation, however, on a real level delivery is made in order to transmit the possession and acquire an ius in rem right.
This theory is inherited from Roman law. In order to transfer the property, the ancient Roman law offered the method of formalism. On the one hand, res mancipi (rural or urban properties located in the Italian peninsula, slaves, pack animals…) provided that the transmission was made by the mancipatio before the librepens through a precise legal formulation and it was made by the in iure cessio before the praetor through a precise legal formulation. On the other hand, in relation with res nec mancipi (all other things) conversely provided the transmission was made by tradition (delivery). In times of Byzantine Law the spiritualisation of tradition took place; and the transmission was sometimes possible by the simple will of the parties. As a result of this evolution current Spanish law provides different spiritualized forms of tradition or delivery (symbolic, instrumental, brevi manu, constitutum possessorium...) 1
The forms of this tradition in the Spanish Law are regulated by arts. 1462 to 1464 SCC 2. The basic form is by real tradition, which implies the material delivery of the thing. The thing sold shall be understood as delivered, when it is placed in the control and possession of the vendee (1462.1 SCC).
The symbolic tradition is implied by the delivery of an ancillary or accessory thing that symbolises the main thing. With regard to movable property, its delivery may also be made by the delivery of the keys of the place or depository where it is stored or kept (art. 1463 SCC). By analogy, this tradition is also applied to immovable property. In this case the delivery of the key of the house symbolises the delivery of the whole house.
The delivery of the title of ownership (“títulos de pertenencia”) byplacing the title of ownership in the possession of the vendee or the use by the vendee of his rights, with the vendor's consent, shall be understood as a delivery (art.1464 SCC)
Another form is by delivery by agreement between the parties. For movable property the delivery may likewise be made by the mere consent or agreement of the contracting parties, if the thing sold cannot be transferred to the possession of the vendee at the time of the sale, or if the latter already had it in his possession for any other reason (art.1463 SCC). When the vendee already has the thing in his possession the delivery is called Traditio brevi manu. If the vendor keeps possession of the thing after the transmission (e.g. in case the vendor keeps the sold dwelling as usufructuary) the tradition is called constitutum possessorium. Immovable property can be applied to both the Traditio brevi manu and the constitutum possessorium.
Delivery by the issuing of a public deed can be made when the sale is made through a public instrument. The execution or conclusion thereof shall be equivalent to the delivery of the thing that is the object of the contract, if from the deed does not appear or cannot clearly be inferred the contrary (art. 1462 SCC). This means of delivery is applied to both movable and immovable property. An exception to this is if it can be inferred from the deed that another purpose was desired 3.
For the delivery of incorporeal property, with respect to incorporeal property, the execution or conclusion of a public deed shall be equivalent to the delivery of the thing that is the object of the contract, if from the deed the contrary is not apparent or it cannot be clearly be inferred (1462.2 and 1464 SCC). In any other case, the placing of the titles of ownership in the possession of the vendee or the use by the vendee of his rights, with the vendor's consent, shall be understood as a delivery (art. 1464 SCC). What is really important is that the possession of the accipiens or of the transferee can be recognised by third parties.
2.- THE ROMAN RULE “NOBODY CAN TRANSFER PROPERTY THAT IS NOT ITS OWN”, AND ITS APPLICATION TO THE SPANISH LAW
The theory of the title to the property and delivery of the transferred thing (Teoría del título y del modo) is provided for in the Base 20 of the Law of Bases of 1888, and developed, as it has been saild, by art.609 SCC (or art. 712 PCC). This theory may be an interpretation of the Roman “tradition” based on the cause. Following this theory, the transmission needs of two different elements: a precedent contract known as title, “título” or tradition or Delivery of possession providing a means of acquiring “modo de adquirir” 4 .
This means that two essential elements are required: a contract must exist (sale, barter agreement or exchange contract…) as well as tradition or delivery. In addition, other requirements are necessary: the pre-existence of ownership or possession in the concept of an owner and intention of the parties to transmit and acquire. However, the Spanish system has significant exceptions.
The general principle is Nemo plus iura alium transferre potest quam ipse haberet: nobody can transfer property that is not its own. The problem with this is that sometimes the person who transfers the property is not the real owner. This causes a legal certainty problem if anybody acquires the thing from the transferee. The legal solution is to protect the appearance created by the transmission on certain occasions when the following requirements concur; transmission made by a non dominus, acquisition made on a paying basis, for remuneration or consideration (título oneroso) and good faith.
In the case of the acquisition of immovable property from a non domino, art. 34 of the Mortgage Law or Ley Hipotecaria (ML/LH) states that a third party can transfer rights in good faith in exchange for consideration. If the registration allows for this transfer, the acquisition will be maintained once the right has been registered, despite further annulment of the title of the transferor by virtue of reasons that are not reflected in the Registry.
Therefore, the requirements to deserve legal protection are that the third party who acquires the transferred right is of good faith; the acquisition is for consideration or remuneration; the transferor is registered in the Property Registry as owner of the transferred right and; the transferee files his acquisition with the Property Registry.
In the case of acquisition of immovable property from a non domino, art. 464 SCC (its first part in art. 559 PCC) protects the acquirer in good faith, and states that the possession of movable property acquired in good faith is equivalent to a title. Scholars argue if it is a title of property or a title to acquire the property by usucaption or acquisitive prescription.
Nevertheless, an exception to this is when the one who has lost any movable or has been unlawfully deprived thereof may recover it from the person in possession of the same. If the possessor of movable property is lost or that the owner has been unlawfully deprived, so long as he has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid. In addition, the owner of things pawned in Pawnshops should reimburse the amount of the pledge in order to recover his property. Finally, when a thing is acquired in an exchange, fair or market the commercial law is applied, resulting a special protection for the purchaser in good faith
In conclusion, the Roman rule that establishes that nobody can transfer property that is not his own is followed in Spanish law, with the only two exceptions established in art. 34 LH related to acquisition of immovable property in good faith, and in art. 464 SCC related to acquisition of movable property in good faith.
3- DOCTRINAL DEBATE ABOUT THE CONSEQUENCES OF THE INEFFECTIVENESS OF THE PRECEDENT LEGAL TRANSACTION
However, when Spanish scholars tried to answer some interesting questions about the link between tradition and contract a new controversy has emerged: What happens when the precedent legal transaction becomes ineffective? Does it imply the ineffectiveness of the subsequent transfer of property? Does it lead to automatic nullity of the acquisition?
Professor DIEZ-PICAZO5 proposes to come to some kind of conclusion after reading the articles 1124 6, 12957 , 649 and 650 8 SCC which protect the rights of the transferee or acquirer when he is in good faith. He concludes that the fact that the precedent legal transaction becomes ineffective in a moment after the conclusion of the contract in case of rescission of bilateral contracts in case of breach (“resolución”), rescission of fraudulent acts (“rescission”) and the revocation of legal transactions, does not always lead to the ineffectiveness of the subsequent transfer. He reaches the same conclusion in respect with the annulation of contracts (arts. 1303-1307 SCC) that creates a personal obligation of restitution. Finally, the author considers that in the case of absolute nullity of the contract the restitution or repayment obligation in case of subsequent transmission would be personal and not real. He believes that article 1897 SCC, (identical to art. 2160 PCC) could be applied. This provision creates a case of Indebiti condictio (in fact a solution indebiti), and states that he who in good faith accepts an undue payment of a thing certain and determinate shall only be responsible for the impairment or loss of the same or its accessories and accessions insofar as he has thereby been benefited. If he has alienated it, he shall return the price or assign the action to collect the sum. Therefore, when the accipiens or transferee keeps the thing, he must return it; but if not, he is only obliged to pay the pecuniary equivalent. Therefore the subsequent transmission is respected.
The conclusion that Professor DIEZ-PICAZO reaches is that in all these cases in which the precedent legal transaction loses its effectiveness from the starte or at a later point in time, do not necessary cause ineffectiveness of the subsequent transmission. This means that in spite of having as general criterion the prohibition of the acquisitions a non domino, the Spanish Law tends to protect the subsequent transmissions, without the necessity of meeting the requirements of articles 34 ML/LH or 464 SCC (Its first part in art. 559 PCC).
However, other scholars disagree. GULLÓN BALLESTEROS9 maintains that the ineffectiveness of the precedent legal transaction affects the subsequent transfer of the property, and leads to the ineffectiveness of the acquisition. He believes that the restitution obligation action of the Roman condictio indebiti has a personal nature, but this fact does not imply that the third parties who acquire from the accipiens or transferee by a subsequent transmission are invulnerable. This author believes that the Roman rule that states that Nemo plus iura alium transferre potest quam ipse haberet, should be applied with the only exceptions set forth by art. 34 ML/LH (in case of immovable property), and 464 SCC (in case of movable property)
DIEZ-PICAZO refuses this criterion and deduces from these different provisions that in our Civil Code the theory of the title to the property and delivery of the transferred thing (Teoría del título y del modo) has to be interpreted as a mechanism in which there is an immediate cause (“causa próxima”) which is a “causa solvendi”, and a mediate or remote cause “cause remote”, which is the original obligation that impose the payment or “solutio”. Therefore, he believes that the existence of the immediate cause, the will to pay and receive the payment, is enough to validate the transmission in spite of the fact that the mediate or remote cause contains an non-existent obligation. Moreover, when the Spanish Civil Code was written the authors followed the Argentinian Civil Code of VÉLEZ, and it is illuminating to see that the article 1897 of the Spanish Civil Code (2160 PCC) influenced by the article 787 of the Argentinian Civil Code, the former attributes to the restitution action a personal nature, and the former a real one.
4.- REFLECTION OF THIS CONTROVERSY IN THE SPANISH CASE LAW
In order to illustrate this interesting doctrinal debate with a real case, we can refer to the Ruling of the Spanish Supreme Court of 29 of May of 2006 10. In this case the company “Vallerhermoso SA” was owner of an apartment located in Madrid, which was sold to the company “Aserma SA”. This contract was made in a private document on 21st of September of 1976, at the moment in which the possession was delivered to the purchaser. It is important to point out that the price was deferred and the contract was subjected to conditions subsequent in case of non-payment.
The company “Aserma SA” later sold the apartment to a couple, Humberto and Guadalupe. This contract, made in a private document, was concluded on 15th of February of 1977, at the moment in which the purchasers acquired the possession of this immovable property. The buyers paid the total price of the sale.
The company “Aserma SA” never paid the agreed price to “Vallehermoso SA”. Therefore, the latter took legal action against the former in order to declare the contract rescinded as a result of the breach of the duties of the buyer. The Judge issued a judgment and when the latter tried to execute the ruling, he realized that Humberto and Guadalupe were living in the apartment. Therefore, he exercised an action for recovering the ownership of this property against the said couple. The Judge of First Instance n.42 of Madrid granted the claimant’s claim. However, the Provincial Court of Madrid reversed this judgment and the Spanish Supreme Court upheld the decision of the Appeals Court.
This decision was founded on the fact that the subsequent condition was not filed with the Land Registry, that neither the first nor the second contract were registered, and that the defendants deserved legal protection as they had acted in good faith (bona fides). In fact the Supreme Court applied the last paragraph or article 1124 SCC (1191 PCC), and considered that the effects of the rescission would be mitigated by this final part of the provision: “This is understood to be without prejudice to the rights of third persons who have acquired the thing”, in fact this provision refers article 1295 SCC (1384 PCC) that states that the rescission does not take place when “the things which are the object of the contract are legally in the possession of third persons who did not act in bad faith”.
In conclusion, we note that this is a debatable issue. The consequences of the ineffectiveness of a contract on a subsequent sale depend on the way in which the link between the tradition or delivery, and the precedent contract is observed. There are arguments to defend the admission of the Roman rule “nemo plus iura alium transferre potest quam ipse haberet” as a mandatory principle that impedes the protection of any acquisition from a vendor who is not the real owner of the thing, and there are arguments to protect these acquisitions. Nevertheless, the Civil Code establishes different mechanisms to protect the acquisitions made by third parties and it considers the restitution action as personal. Therefore, the thesis of DIEZ-PICAZO is useful in order to understand how the system works. In fact, the consideration of the cause as immediate and not remote offers a reasonable solution to a historical controversy; thesis now confirmed by the referred decision of the Supreme Court supported by Prof. O’CALLAGHAM.
As mentioned above, we have chosen this subject as a topic for a legal Spanish Philippines Congress as this article is based on some identical provisions of both Civil Codes. Therefore, the debate and arguments followed by the Spanish scholars could easily be relocated to a Philippines context. I would like to offer this work as an invitation to my Philippines colleagues in order to start an interesting exchange of ideas and opinions about how this matter is considered in both or jurisdictions, only the first step to start rebuilding a necessary and useful academic bridge.
2 These articles are similar to the articles 1497 to 1501 PCC, which refer an interesting update to the doctrinal evolution when the Philippine Civil Code was adopted (1950), for example the following text: The delivery of movable property may likewise be made by the mere consent or agreement of the contracting parties, if the thing sold cannot be transferred to the possession of the vendee at the time of the sale, or if the latter already had it in his possession for any other reason. There may also be tradition constitutum possessorium.
GARCÍA CANTERO, Gabriel in “Hacia un subsistema comparado hispano-filipino dentro de la familia romano-germánica-canónica”, paper presented in the I Online International Congress on Latin-American and Philippine Civil Law: Concordances and Particularities 1-15 December 2013, http://www.eumed.net/eve/civil-law.html, states that: The Spanish Civil Code was adopted in 1889 in Philippines and was in force until the Independence from the United States. During this time, a fluid relation between the Supreme Courts of Philippines and Spain was maintained. This means that the Philippine Supreme Court knew and applied the case law doctrine of the Spanish Supreme Court. Therefore this explains why the Philippine Civil Code of 1949 adopted by the Law 386 of 18 of June introduced this Spanish doctrine in many of its provisions.
3 What happens if the tradens (former owner) retains the possession of the thing after concluding the public deed? He will be deemed as a mere possessor in a situation close to a squatter. What happens if the tradens is not the possessor of the thing when the sale deed is concluded? If he has only indirect possession (posesión mediata) such as in the case of a lease, then he transmits such an indirect possession. If tradens have no possession then the owner will not be considered as being the possessor and an action for the recovery of the ownership can be brought “acción reivindicatoria”).
4 Occasionally, it has been suggested that the situation of the purchaser after the conclusion of the contract deserves a special protection in order to acquire the property. It could be considered as a type of IUS AD REM, the right of the creditor to the delivery of the thing. The historical background, fiefdoms (“feudos”) and ecclesiastical benefits to these rights derive from the Middle Ages. In the Middle Ages, the lord used to give the fiefdom to the vassal through a ceremony of investiture (investidura). From this moment the vassal had the right to claim the delivery of the fiefdom, but he would only acquire the real right when he had acquired the possession of the fiefdom. In such a case after the investitute ceremony the vassal had not a real right, but a right to claim the delivery of the fiefdom and therefore, to be entitled with an ius in rem right. Consequently, an ius ad rem is a special situation in which the person has not yet a real right, but is in a situation close to getting it. However nowadays, the ius ad rem are not accepted as real rights, and cannot be applied to the title to the property and delivery of the transferred thing (Teoría del título y del modo).
5 DIEZ-PICAZO, Luis, Fundamentos de Derecho Civil Patrimonial, Volumen III, Civitas, Madrid, p. 797-798
6 Art. 1124 SCC, identical to art.1191 PCC states the power to rescind obligations is implied in reciprocal ones. In case one of the obligors should not comply with what is incumbent upon him. This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with articles 1295 and 1298 SCC (arts 1384 and first part of 1388 PCC) and the Mortgage Law
7 Art. 1295.2 SCC, identical to art. 1384.2 PCC, states that neither shall rescission (“rescisición por fraude o lesion”) take place when the things which are the object of the contract are legally in the possession of third persons who did not act in bad faith
8 Art.649 SCC, identical to art. 766 PCC: Although, the donation is revoked on account of ingratitude, nevertheless, the alienations and mortgages effected before the notation of the complaint for revocation in the Registry of Property shall subsist
Art. 650 SCC, identical to art. 767 PCC: In the case referred to in the first paragraph of the preceding article, the donor shall have a right to demand from the donee the value of property alienated which he cannot recover from third persons, or the sum for which the same has been mortgaged. The value of said property shall be fixed as of the time of the donation
9 GULLÓN BALLESTEROS, Antonio, Sistema de Derecho Civil II, Tecnos, Madrid, first edition, p. 85 (DIEZ-PICAZO in ob.cit p.798 refers to the opinion of GULLÓN BALLESTEROS written in this joint work).
10 Ruling of the Spanish Supreme Court of 29 of May of 2006. Reporting Judge: Xavier O’Callaghan Muñoz, (RJ 2006\3344)
See, SALAS CARCELLER, Antonio, “La protección de tercero no hipotecario en la adquisición de bienes inmuebles. Comentario a la sentencia del Tribunal Supremo de 29 de mayo de 2006”. Repertorio de Jurisprudencia Aranzadi, 2007, Vol. VII, Tomo LXXIII. Pp.247-249