G.R. No. 125055 October 30, 1998 A. FRANCISCO REALTY AND DEVELOPMENT CORPORATION, petitioner, vs.

COURT OF APPEALS and SPOUSES ROMULO S.A. JAVILLONAR and ERLINDA P. JAVILLONAR, respondents. MENDOZA, J.: This is a petition for review on certiorari of the decision rendered on February 29, 1996 by the Court of Appeals 1reversing, in toto, the decision of the Regional Trial Court of Pasig City in Civil Case No. 62290, as well as the appellate court's resolution of May 7, 1996 denying reconsideration. Petitioner A. Francisco Realty and Development Corporation granted a loan of P7.5 Million to private respondents, the spouses Romulo and Erlinda Javillonar, in consideration of which the latter executed the following documents: (a) a promissory note, dated November 27, 1991, stating an interest charge of 4% per month for six months; (b) a deed of mortgage over realty covered by TCT No. 58748, together with the improvements thereon; and (c) an undated deed of sale of the mortgaged property in favor of the mortgagee, petitioner A. Francisco Realty. 2 The interest on the said loan was to be paid in four installments: half of the total amount agreed upon (P900,000.00) to be paid in advance through a deduction from the proceeds of the loan, while the balance to be paid monthly by means of checks post-dated March 27, April 27, and May 27, 1992. The promissory note expressly provided that upon "failure of the MORTGAGOR (private respondents) to pay the interest without prior arrangement with the MORTGAGEE (petitioner), full possession of the property will be transferred and the deed of sale will be registered. 3 For this purpose, the owner's duplicate of TCT No. 58748 was delivered to petitioner A. Francisco Realty. Petitioner claims that private respondents failed to pay the interest and, as a consequence, it registered the sale of the land in its favor on February 21, 1992. As a result, TCT No. 58748 was cancelled and in lieu thereof TCT No. PT85569 was issued in the name of petitioner A. Francisco Realty. 4 Private respondents subsequently obtained an additional loan of P2.5 Million from petitioner on March 13, 1992 for which they signed a promissory note which reads: PROMISSORY NOTE For value received I promise to pay A. FRANCISCO REALTY AND DEVELOPMENT CORPORATION, the additional sum of Two Million Five Hundred Thousand Pesos (P2,500,000.00) on or before April 27, 1992, with interest at the rate of four percent (4%) a month until fully paid and if after the said date this note and/or the other promissory note of P7.5 Million remains

unpaid and/or unsettled, without any need for prior demand or notification, I promise to vacate voluntarily and willfully and/or allow A.FRANCISCO REALTY AND DEVELOPMENT CORPORATION to appropriate and occupy for their exclusive use the real property located at 56 Dragonfly, Valle Verde VI, Pasig, Metro Manila. 5 Petitioner demanded possession of the mortgaged realty and the payment of 4% monthly interest from May 1992, plus surcharges. As respondent spouses refused to vacate, petitioner filed the present action for possession before the Regional Trial Court in Pasig City. 6 In their answer, respondents admitted liability on the loan but alleged that it was not their intent to sell the realty as the undated deed of sale was executed by them merely as an additional security for the payment of their loan. Furthermore, they claimed that they were not notified of the registration of the sale in favor of petitioner A. Francisco Realty and that there was no interest then unpaid as they had in fact been paying interest even subsequent to the registration of the sale. As an alternative defense, respondents contended that the complaint was actually for ejectment and, therefore, the Regional Trial Court had no jurisdiction to try the case. As counterclaim, respondents sought the cancellation of TCT No. PT-85569 as secured by petitioner and the issuance of a new title evidencing their ownership of the property. 7 On December 19, 1992, the Regional Trial Court rendered a decision, the dispositive portion of which reads as follows: WHEREFORE, prescinding from the foregoing considerations, judgment is hereby rendered declaring as legal and valid, the right of ownership of A. Francisco Realty Find Development Corporation, over the property subject of this case and now registered in its name as owner thereof, under TCT No. 85569 of the Register of Deeds of Rizal, situated at No. 56 Dragonfly Street, Valle Verde VI, Pasig, Metro Manila. Consequently, defendants are hereby ordered to cease and desist from further committing acts of dispossession or from withholding possession from plaintiff of the said property as herein described and specified. Claim for damages in all its forms, however, including attorney's fees, are hereby denied, no competent proofs having been adduced on record, in support thereof. 8 Respondent spouses appealed to the Court of Appeals which reversed the decision of the trial court and dismissed the complaint against them. The appellate court ruled that the Regional Trial Court had no jurisdiction over the case because it was actually an action for unlawful detainer which is exclusively cognizable by municipal trial courts. Furthermore, it ruled that, even presuming

jurisdiction of the trial court, the deed of sale was void for being in fact a pactum commissorium which is prohibited by Art. 2088 of the Civil Code. Petitioner A. Francisco Realty filed a motion for reconsideration, but the Court of Appeals denied the motion in its resolution, dated May 7, 1996. Hence, this petition for review on certiorari raising the following issues: WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT THE REGIONAL TRIAL COURT HAD NO JURISDICTION OVER THE COMPLAINT FILED BY THE PETITIONER. WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT THE CONTRACTUAL DOCUMENTS SUBJECT OF THE INSTANT CASE ARE CONSTITUTIVE OF PACTUM COMMISSORIUM AS DEFINED UNDER ARTICLE 2088 OF THE CIVIL CODE OF THE PHILIPPINES. On the first issue, the appellate court stated: Ostensibly, the cause of action in the complaint indicates a case for unlawful detainer, as contradistinguished from accion publiciana. As contemplated by Rule 70 of the Rules of Court, an action for unlawful detainer which falls under the exclusive jurisdiction of the Metropolitan or Municipal Trial Courts, is defined as withholding from by a person from another for not more than one year, the possession of the land or building to which the latter is entitled after the expiration or termination of the supposed rights to hold possession by virtue of a contract, express or implied. (Tenorio vs. Gamboa, 81 Phil. 54; Dikit vs. Dicaciano, 89 Phil. 44). If no action is initiated for forcible entry or unlawful detainer within the expiration of the 1 year period, the case may still be filed under the plenary action to recover possession by accion publiciana before the Court of First Instance (now the Regional Trial Court) (Medina vs. Valdellon, 63 SCRA 278). In plain language, the case at bar is a legitimate ejectment case filed within the 1 year period from the jurisdictional demand to vacate. Thus, the Regional Trial Court has no jurisdiction over the case. Accordingly, under Section 33 of B.P. Blg. 129 Municipal Trial Courts are vested with the exclusive original jurisdiction over forcible entry and unlawful detainer case. (Sen Po Ek Marketing Corp. vs. CA, 212 SCRA 154 [1990]) 9 We think the appellate court is in error. What really distinguishes an action for unlawful detainer from a possessory action (accion publiciana) and from a reivindicatory action (accion reivindicatoria) is that the first is limited to the question of possession de facto.

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An unlawful detainer suit (accion interdictal) together with forcible entry are the two forms of an ejectment suit that may be filed to recover possession of real property. Aside from the summary action of ejectment, accion publiciana or the plenary action to recover the right of possession andaccion reivindicatoria or the action to recover ownership which includes recovery of possession, make up the three kinds of actions to judicially recover possession. Illegal detainer consists in withholding by a person from another of the possession of a land or building to which the latter is entitled after the expiration or termination of the former's right to hold possession by virtue of a contract, express or implied. An ejectment suit is brought before the proper inferior court to recover physical possession only or possession de facto and not possession de jure, where dispossession has lasted for not more than one year. Forcible entry and unlawful detainer are quieting processes and the one-year time bar to the suit is in pursuance of the summary nature of the action. The use of summary procedure in ejectment cases is intended to provide an expeditious means of protecting actual possession or right to possession of the property. They are not processes to determine the actual title to an estate. If at all, inferior courts are empowered to rule on the question of ownership raised by the defendant in such suits, only to resolve the issue of possession. Its determination on the ownership issue is, however, not conclusive. 10 The allegations in both the original and the amended complaints of petitioner before the trial court clearly raise issues involving more than the question of possession, to wit: (a) the validity of the Transfer of ownership to petitioner; (b) the alleged new liability of private respondents for P400,000.00 a month from the time petitioner made its demand on them to vacate; and (c) the alleged continuing liability of private respondents under both loans to pay interest and surcharges on such. As petitioner A. Francisco Realty alleged in its amended complaint: 5. To secure the payment of the sum of 7.5 Million together with the monthly interest, the defendant spouses agreed to execute a Deed of Mortgage over the property with the express condition that if and when they fail to pay monthly interest or any infringement thereof they agreed to convert the mortgage into a Deed of Absolute Sale in favor of the plaintiff by executing Deed of Sale thereto, copy of which is hereto attached and incorporated herein as Annex "A"; 6. That in order to authorize the Register of Deeds into registering the Absolute Sale and transfer to the plaintiff, defendant delivered unto the plaintiff the said

Deed of Sale together with the original owner's copy of Transfer Certificate of Title No. 58748 of the Registry of Rizal, copy of which is hereto attached and made an integral part herein as Annex "B"; 7. That defendant spouses later secured from the plaintiff an additional loan of P2.5 Million with the same condition as aforementioned with 4% monthly interest; 8. That defendants spouses failed to pay the stipulated monthly interest and as per agreement of the parties, plaintiff recorded and registered the Absolute Deed of Sale in its favor on and was issued Transfer Certificate of Title No. PT-85569, copy of which is hereto attached and incorporated herein as Annex "C"; 9. That upon registration and transfer of the Transfer Certificate of Title in the name of the plaintiff, copy of which is hereto attached and incorporated herein as Annex "C", plaintiff demanded the surrender of the possession of the above-described parcel of land together with the improvements thereon, but defendants failed and refused to surrender the same to the plaintiff without justifiable reasons thereto; Neither did the defendants pay the interest of 4% a month from May, 1992 plus surcharges up to the present; 10. That it was the understanding of the parties that if and when the defendants shall fail to pay the interest due and that the Deed of Sale be registered in favor of plaintiff, the defendants shall pay a monthly rental of P400,000.00 a month until they vacate the premises, and that if they still fail to pay as they are still failing to pay the amount of P400,000.00 a month as rentals and/or interest, the plaintiff shall take physical possession of the said property; 11 It is therefore clear from the foregoing that petitioner A. Francisco Realty raised issues which involved more than a simple claim for the immediate possession of the subject property. Such issues range across the full scope of rights of the respective parties under their contractual arrangements. As held in an analogous case: The disagreement of the parties in Civil Case No. 96 of the Justice of the Peace of Hagonoy, Bulacan extended far beyond the issues generally involved in unlawful detainer suits. The litigants therein did not raise merely the question of who among them was entitled to the possession of the fishpond of Federico Suntay. For all judicial purposes, they likewise prayed of the court to rule on their respective rights under the various contractual documents their respective deeds of lease, the deed of assignment and the

promissory note upon which they predicate their claims to the possession of the said fishpond. In other words, they gave the court no alternative but to rule on the validity or nullity of the above documents. Clearly, the case was converted into the determination of the nature of the proceedings from a mere detainer suit to one that is "incapable of pecuniary estimation" and thus beyond the legitimate authority of the Justice of the Peace Court to rule on. 12 Nor can it be said that the compulsory counterclaim filed by respondent spouses challenging the title of petitioner A. Francisco Realty was merely a collateral attack which would bar a ruling here on the validity of the said title. A counterclaim is considered a complaint, only this time, it is the original defendant who becomes the plaintiff (Valisno v. Plan, 143 SCRA 502 (1986). It stands on the same footing and is to be tested by the same rules as if it were an independent action. Hence, the same rules on jurisdiction in an independent action apply to a counterclaim (Vivar v. Vivar, 8 SCRA 847 (1963); Calo v. Ajar International, Inc. v. 22 SCRA 996 (1968); Javier v. Intermediate Appellate Court, 171 SCRA 605 (1989); Quiason, Philippine Courts and Their Jurisdictions, 1993 ed., p. 203). 13 On the second issue, the Court of Appeals held that, even "on the assumption that the trial court has jurisdiction over the instant case," petitioner's action could not succeed because the deed of sale on which it was based was void, being in the nature of a pactum commissorium prohibited by Art. 2088 of the Civil Code which provides: Art. 2088. The creditor cannot appropriate the things given by way to pledge or mortgage, or dispose of them. Any stipulation to the contrary is null and void. With respect to this question, the ruling of the appellate court should be affirmed. Petitioner denies, however, that the promissory notes contain a pactum commissorium. It contends that What is envisioned by Article 2088 of the Civil Code of the Philippines is a provision in the deed of mortgage providing for the automatic conveyance of the mortgaged property in case of the failure of the debtor to pay the loan (Tan v. West Coast Life Assurance Co., 54 Phil. 361). A pactum commissorium is a forfeiture clause in a deed of mortgage (Hechanova v. Adil, 144 SCRA 450; Montevergen v. Court of Appeals, 112 SCRA 641; Report of the Code Commission, 156). Thus, before Article 2088 can find application herein, the subject deed of mortgage must be scrutinized to

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determine if it contains such a provision giving the creditor the right "to appropriate the things given by way of mortgage without following the procedure prescribed by law for the foreclosure of the mortgage" (Ranjo v. Salmon, 15 Phil. 436). IN SHORT, THE PROSCRIBED STIPULATION SHOULD BE FOUND IN THE MORTGAGE DEED ITSELF. 14 The contention is patently without merit. To sustain the theory of petitioner would be to allow a subversion of the prohibition in Art. 2088. In Nakpil v. Intermediate Appellate Court, 15 which involved the violation of a constructive trust, no deed of mortgage was expressly executed between the parties in that case: Nevertheless, this Court ruled that an agreement whereby property held in trust was ceded to the trustee upon failure of the beneficiary to pay his debt to the former as secured by the said property was void for being a pactum commissorium. Itwas there held: The arrangement entered into between the parties, whereby Pulong Maulap was to be "considered sold to him (respondent) . . ." in case petitioner fails to reimburse Valdes, must then be construed as tantamount to apactum commissorium which is expressly prohibited by Art. 2088 of the Civil Code. For, there was to be automatic appropriation of the property by Valdez in the event of failure of petitioner to pay the value of the advances. Thus, contrary to respondent's manifestations, all the elements of a pactum commissorium were present: there was a creditor-debtor relationship between the parties; the property was used as security for the loan; and, there was automatic appropriation by respondent of Pulong Maulap in case of default of petitioner.16 Similarly, the Court has struck down such stipulations as contained in deeds of sale purporting to be pacto de retro sales but found actually to be equitable mortgages. It has been consistently held that the presence of even one of the circumstances enumerated in Art. 1602 of the New Civil Code is sufficient to declare a contract of sale with right to repurchase an equitable mortgage. This is so because pacto de retro sales with the stringent and onerous effects that accompany them are not favored. In case of doubt, a contract purporting to be a sale with the right to repurchase shall be construed as an equitable mortgage. Petitioner, to prove her claim, cannot rely on the stipulation in the contract providing that complete and absolute title shall be vested on the vendee should the vendors fail to redeem the property on the specified date. Such stipulation that the ownership of the

property would automatically pass to the vendee in case no redemption was effected within the stipulated period is void for being a pactum commissorium which enables the mortgagee to acquire ownership of the mortgaged property without need of foreclosure. Its insertion in the contract is an avowal of the intention to mortgage rather that to sell the property. 17 Indeed, in Reyes v. Sierra 18 this Court categorically ruled that a mortgagee's mere act of registering the mortgaged property in his own name upon the mortgagor's failure to redeem the property amounted to the exercise of the privilege of a mortgagee in a pactum commissorium. Obviously, from the nature of the transaction, applicant's a predecessor-in-interest is a mere mortgagee, and ownership of the thing mortgaged is retained by Basilia Beltran, the mortgagor. The mortgagee, however, may recover the loan, although the mortgage document evidencing the loan was nonregistrable being a purely private instrument. Failure of mortgagor to redeem the property does not automatically vest ownership of the property to the mortgagee, which would grant the latter the right to appropriate the thing mortgaged or dispose of it. This violates the provision of Article 2088 of the New Civil Code, which reads: The creditor cannot appropriate the things given by way of pledge or mortgage, or dispose by them. Any stipulation to the contrary is null and void. The act of applicant in registering the property in his own name upon mortgagor's failure to redeem the property would to a pactum commissorium which is against good morals and public policy. 19 Thus, in the case at bar, the stipulations in the promissory notes providing that, upon failure of respondent spouses to pay interest, ownership of the property would be automatically transferred to petitioner A. Francisco Realty and the deed of sale in its favor would be registered, are in substance a pactum commissorium. They embody the two elements of pactum commissorium as laid down in Uy Tong v. Court of Appeals, 20 to wit: The prohibition on pactum commissorium stipulations is provided for by Article 2088 of the Civil Code: Art. 2088. The creditor cannot appropriate the things given by way of pledge or mortgagee, or dispose of the same. Any stipulation to the contrary is null and void. The aforequoted provision furnishes the two elements for pactum commissorium to exist: (1) that there should

be a pledge or mortgage wherein a property is pledged or mortgaged by way of security for the payment of the principal obligation; and (2) that there should be a stipulation for an automatic appropriation by the creditor of the thing pledged or mortgaged in the event of non-payment of the principal obligation within the stipulated period. 21 The subject transaction being void, the registration of the deed of sale, by virtue of which petitioner A. Francisco Realty was able to obtain TCT No. PT-85569 covering the subject lot, must also be declared void, as prayed for by respondents in their counterclaim. WHEREFORE, the decision of the Court of Appeals is AFFIRMED, insofar as it dismissed petitioner's complaint against respondent spouses on the ground that the stipulations in the promissory notes are void for being apactum commissorium, but REVERSED insofar as it ruled that the trial court had no jurisdiction over this case. The Register of Deeds of Pasig City is hereby ORDERED to CANCEL TCT No. PT-85569 issued to petitioner and ISSUE a new one in the name of respondent spouses. SO ORDERED.

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G.R. No. L-64159 September 10, 1985 CIRCE S. DURAN and ANTERO S. GASPAR, petitioners, vs. INTERMEDIATE APPELLATE COURT, ERLINDA B. MARCELO TIANGCO and RESTITUTO TIANGCO,respondents. RELOVA, J.: The respondent then Court of Appeals rendered judgment, modifying the decision of the then Court of First Instance of Rizal, which reads as follows: (1) the complaint of the plaintiffs (herein petitioners) is hereby DISMISSED; (2) the defendants-appellants spouses Erlinda B. Marcelo Tiangco and Restituto Tiangco (herein private respondents) are hereby declared the lawful owners of the two (2) parcels of land and all the improvements thereon including the 12-door apartment thereon described in the complaint, in the counterclaim, in the cross-claim, and in the Sheriff's Certificate of Sale; (3) the plaintiffs-appellants and the defendant-appellee Fe S. Duran are hereby ordered to deliver to (the Tiangcos) the two parcels of land and all the improvements thereon including the 12-door apartment thereon, subject matter of the complaint, counterclaim, and cross-claim, and in the Sheriff's Certificate of Sale; (4) the plaintiffs-appellants and the defendant-appellee Fe S. Duran are hereby ordered to pay solidarily to the Tiangcos the sum of Two Thousand Four Hundred Pesos (P2,400) a month from May 16, 1972 until delivery of possession of the properties in question to said Tiangco spouses, representing rentals collected by plaintiffs-appellants and defendant- appellee Fe S. Duran; (5) the plaintiffs-appellants and defendant-appellee Fe S. Duran are hereby ordered to pay solidarily to the spouses Tiangco the sum of Twenty Thousand Pesos (P20,000) as damages for attorney's fees, and the sum of Twenty-Five Thousand Pesos (P25,000) for moral damages, and the costs. (pp. 149-150, Rollo) The antecedent facts showed that petitioner Circe S. Duran owned two (2) parcels of land (Lots 5 and 6, Block A, Psd 32780) covered by Transfer Certificate of Title No. 1647 of the Register of Deeds of Caloocan City which she had purchased from the Moja Estate. She left the Philippines in June 1954 and returned in May 1966. On May 13, 1963, a Deed of Sale of the two lots mentioned above was made in favor of Circe's mother, Fe S. Duran who, on December 3, 1965, mortgaged the same property to private respondent Erlinda B. Marcelo-Tiangco. When petitioner Circe S. Duran came to know about the mortgage made by her mother, she wrote the Register of Deeds of Caloocan City informing the latter that she had not given her mother any authority to sell or mortgage any of her properties in the Philippines. Failing to get an answer from the registrar, she returned to the Philippines. Meanwhile, when her mother, Fe S. Duran, failed to redeem the mortgage properties, foreclosure proceedings were initiated by

private respondent Erlinda B. Marcelo Tiangco and, ultimately, the sale by the sheriff and the issuance of Certificate of Sale in favor of the latter. Petitioner Circe S. Duran claims that the Deed of Sale in favor of her mother Fe S. Duran is a forgery, saying that at the time of its execution in 1963 she was in the United States. On the other hand, the adverse party alleges that the signatures of Circe S. Duran in the said Deed are genuine and, consequently, the mortgage made by Fe S. Duran in favor of private respondent is valid. With respect to the issue as to whether the signature of petitioner Circe S. Duran in the Deed of Sale is a forgery or not, respondent appellate court held the same to be genuine because there is the presumption of regularity in the case of a public document and "the fact that Circe has not been able to satisfactorily prove that she was in the United States at the time the deed was executed in 1963. Her return in 1966 does not prove she was not here also in 1963, and that she did not leave shortly after 1963. She should have presented her old passport, not her new one. But even if the signatures were a forgery, and the sale would be regarded as void, still it is Our opinion that the Deed of Mortgage is VALID, with respect to the mortgagees, the defendants-appellants. While it is true that under Art. 2085 of the Civil Code, it is essential that the mortgagor be the absolute owner of the property mortgaged, and while as between the daughter and the mother, it was the daughter who still owned the lots, STILL insofar as innocent third persons are concerned the owner was already the mother (Fe S. Duran) inasmuch as she had already become the registered owner (Transfer Certificates of Title Nos. 2418 and 2419). The mortgagee had the right to rely upon what appeared in the certificate of title, and did not have to inquire further. If the rule were otherwise, the efficacy and conclusiveness of Torrens Certificate of Titles would be futile and nugatory. Thus the rule is simple: the fraudulent and forged document of sale may become the root of a valid title if the certificate has already been transferred from the name of the true owner to the name indicated by the forger (See De la Cruz v. Fable, 35 Phil. 144; Blondeau et al. v. Nano et al., 61 Phil. 625; Fule et al. v. Legare et al., 7 SCRA 351; see also Sec. 55 of Act No. 496, the Land Registration Act). The fact that at the time of the foreclosure sale proceedings (1970-72) the mortgagees may have already known of the plaintiffs' claim is immaterial. What is important is that at the time the mortgage was executed, the mortgagees in good faith actually believed Fe S. Duran to be the owner, as evidenced by the registration of the property in the name of said Fe S. Duran (pp. 146-147, Rollo)." In elevating the judgment of the respondent appellate court to Us for review, petitioners discussed questions of law which, in effect and substance, raised only one issue and that is whether private respondent Erlinda B. MarceloTiangco was a buyer in good faith and for value. Guided by previous decisions of this Court, good faith consists in the possessor's belief that the person from whom he received the thing was the owner of the same and could convey his title (Arriola vs. Gomez dela Serna, 14 Phil. 627). Good faith, while it is always to be presumed in the absence of proof

to the contrary, requires a well-founded belief that the person from whom title was received was himself the owner of the land, with the right to convey it (Santiago vs. Cruz, 19 Phil. 148). There is good faith where there is an honest intention to abstain from taking any unconscientious advantage from another (Fule vs. Legare, 7 SCRA 351). Otherwise stated, good faith is the opposite of fraud and it refers to the state of mind which is manifested by the acts of the individual concerned. In the case at bar, private respondents, in good faith relied on the certificate of title in the name of Fe S. Duran and as aptly stated by respondent appellate court "[e]ven on the supposition that the sale was void, the general rule that the direct result of a previous illegal contract cannot be valid (on the theory that the spring cannot rise higher than its source) cannot apply here for We are confronted with the functionings of the Torrens System of Registration. The doctrine to follow is simple enough: a fraudulent or forged document of sale may become the ROOT of a valid title if the certificate of title has already been transferred from the name of the true owner to the name of the forger or the name indicated by the forger." (p. 147, Rollo) Thus, where innocent third persons relying on the correctness of the certificate of title issued, acquire rights over the property, the court cannot disregard such rights and order the total cancellation of the certificate for that would impair public confidence in the certificate of title; otherwise everyone dealing with property registered under the torrens system would have to inquire in every instance as to whether the title had been regularly or irregularly issued by the court. Indeed, this is contrary to the evident purpose of the law. Every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and the law will in no way oblige him to go behind the certificate to determine the condition of the property. Stated differently, an innocent purchaser for value relying on a torrens title issued is protected. A mortgagee has the right to rely on what appears in the certificate of title and, in the absence of anything to excite suspicion, he is under no obligation to look beyond the certificate and investigate the title of the mortgagor appearing on the face of said certificate. Likewise, We take note of the finding and observation of respondent appellate court in that petitioners were guilty of estoppel by laches "in not bringing the case to court within a reasonable period. Antero Gaspar, husband of Circe, was in the Philippines in 1964 to construct the apartment on the disputed lots. This was testified to by Circe herself (tsn., p. 41, Nov. 27, 1973). In the process of construction, specifically in the matter of obtaining a building permit, he could have discovered that the deed of sale sought to be set aside had been executed on May 13, 1963 (the building permit needed an application by the apparent owner of the land, namely, Circe's mother, Fe S. Duran). And then again both plaintiffs could have intervened in the foreclosure suit but they did not. They kept silent until almost the last moment when they finally decided, shortly before the sheriff's sale, to file a third-party claim. Clearly, the plaintiffs can be faulted for their estoppel by laches." (p. 148, Rollo) IN VIEW OF THE FOREGOING, We find the petition without merit and hereby AFFIRMED in toto the decision of respondent appellate court promulgated on August 12, 1981. SO ORDERED.

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G.R. No. L-5741

March 13, 1911

ESTANISLAUA ARENAS, ET AL., plaintiffs-appellees, vs. FAUSTO O. RAYMUNDO, defendant-appellant. TORRES, J.: This is an appeal field by the defendant from a judgment of conviction rendered by the Hon. Judge Araullo. On the date of August 31, 1908, the attorneys for the plaintiffs, Estanislaua Arenas and Julian La O, brought suit against Fausto O. Raymundo, alleging, as a cause of action, that Estanislaua Arenas was the owner and proprietor of the jewelry described below with the respective value thereof: Two gold tamborin rosaries, without bow or reliquary at P40 each One lady's comb for fastening the hair, made of gold and silver, adorned with pearls of ordinary size and many small pearls, one of which is missing One gold ring set with a diamond of ordinary size One gold bracelet with five small diamonds and eightbrillantitos de almendras One pair of gold picaporte earrings with two diamonds of ordinary size and two small ones P80 80 1,000 700 1,100

The plaintiffs alleged that the said jewelry, during the last part of April or the beginning of May, 1908, was delivered to Elena de Vega to sell on commission, and that the latter, in turn, delivered it to Conception Perello, likewise to sell on commission, but that Perello, instead of fulfilling her trust, pledged the jewelry in the defendant's pawnshop, situated at No. 33 Calle de Ilaya, Tondo, and appropriated to her own use the money thereby obtained; that on July 30, 1908, Conception Perello was prosecuted for estafa, convicted, and the judgment became final; that the said jewelry was then under the control and in the possession of the defendant, as a result of the pledge by Perello, and that the former refused to deliver it to the plaintiffs, the owners thereof, wherefore counsel for the plaintiffs asked that judgment be rendered sentencing the defendant to make restitution of the said jewelry and to pay the costs. In the affidavit presented by the attorney for the plaintiffs dated September 2, 1908, after a statement and description of the jewelry mentioned, it is set forth that the defendant was retaining it for the reason given in the complaint, and that it was not sequestrated for the purpose of satisfying any tax or fine or by reason of any attachment issued in compliance with any judgment rendered against the plaintiffs' property. In discharge of the writ of seizure issued for the said jewelry on the 2nd of September, 1908, aforementioned, the sheriff of this city made the return that

he had, on the same date, delivered one copy of the bond and another of the said writ to the defendant personally and, on the petition and designation of the attorney for the plaintiffs, proceeded to seize the jewelry described in the writ, taking it out of the defendant's control, and held it in his possession during the five days prescribed by law. On the 15th of the same month and year, five days having elapsed without the defendant's having given bond before the court, the sheriff made delivery of all the jewelry described in the said order to the attorney for the plaintiff to the latter's entire satisfaction, who with the sheriff signed the return of the writ. After the demurrer to the complaint had been overruled the defendant answered, setting forth that he denied each and all of the allegations thereof which were not specifically admitted, explained, or qualified, and as a special defense alleged that the jewelry, the subject matter of the complaint was pledged on his pawnshop by Conception Perello, the widow of Pazos, as security for a loan of P1,524, with the knowledge, consent, and mediation of Gabriel La O, a son of the plaintiffs, as their agent, and that, in consequence thereof, the said plaintiffs were estopped from disavowing the action of the said Perello; the defendant therefore prayed that the complaint be dismissed and that the jewelry seized at the instance of the plaintiffs, or the amount of the loan

made thereon, together with the interest due, be returned to the defendant, with the costs of the suit against the plaintiffs. The case came up for hearing on March 17, 1909, and after the presentation of oral testimony by both parties, the count, on June 23 of the same year, rendered judgment sentencing the defendant to restore to the plaintiff spouses the jewelry described in the complaint, the right being reserved to the defendant to institute his action against the proper party. The counsel for the defendant excepted to this judgment, asked that the same be set aside, and a new trial granted. This motion was denied, exceptions was taken by the appellant, and the proper bill of exceptions was duly approved certified to, and forwarded to the clerk of this court. This is an action for the replevin of certain jewelry delivered by its owner for sale on commission, and pledged without his knowledge by Concepcion Perello in the pawnshop of the defendant, Fausto O. Raymundo, who refuses to deliver the said jewelry unless first redeemed. The said Concepcion Perello, who appropriated to herself the money derived from the pledging of the jewels before mentioned, together with others, to the prejudice of their owner Estanislaua Arenas, was prosecuted in the Court of First Instance of this City in cause No. 3955 and sentenced on July 30, 1908, to

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the penalty of one year eight months and twenty-one days of prision correccional, to restore to the offended party the jewelry specified in the complaint, or to pay the value thereof, amounting to P8,660, or, in case of insolvency, to suffer the corresponding subsidiary imprisonment, and to pay the costs. This judgment is attested by the certified copy attached under letter D to folio 26 of the record of the proceedings in the case of the same plaintiff against Antonio Matute the pledgee of the other jewelry also appropriated by the said Concepcion Perello which record forms a part of the evidence in this cause. Perello having pledged the jewelry in question to the defendant Raymundo, and not having redeemed it by paying him the amount received, it follows that the convicted woman, now serving the sentence imposed upon her, could not restore the jewelry as ordered in that judgment, which has become final by the defendant's acquiescence. Article 120 of the Penal Code prescribes: The restitution of the thing itself must be made, if be in the possession of a third person, who had acquired it in a legal manner, reserving, however, his action against the proper person. Restitution shall be made, even though the thing may be in the possession of a third person, who had acquired it in a legal manner, reserving, however, his action against the proper person. This provision is not applicable to a case in which the third person has acquired the thing in the manner and with the requisites established by law to make it unrecoverable. The provisions contained in the first two paragraphs of the preinserted article are based on the uncontrovertible principle of justice that the party injured through a crime has, as against all others, a preferential right to be indemnified, or to have restored to him the thing of which he was unduly deprived by criminal means. In view of the harmonious relation between the different codes in force in these Islands, it is natural and logical that the aforementioned provision of the Penal Code, based on the rule established in article 17 of the same, to wit, that every person criminally liable for a crime or misdemeanor is also civilly liable, should be in agreement and accordance with the provisions of article 464 of the Civil Code which prescribes: The possession of personal property, acquired in good faith, is equivalent to a title thereto. However, the person who has lost personal property or has been illegally deprived thereof may recover it from whoever possesses it. If the possessor of personal property, lost or stolen, has acquired it in good faith at a public sale, the owner can not recover it without reimbursing the price paid therefor. Neither can the owner of things pledged in pawnshops, established with the authorization of the Government, recover them, whosoever may be the person who pledged them, without previously refunding to the institution the amount of the pledge and the interest due. With regard to things acquired on exchange, or at fairs or markets or from a merchant legally established and usually employed in similar dealings, the provisions of the Code of Commerce shall be observed.

On January 2, 1908, this court had occasion to decide, among other cases, two which were entirely analogous to the present one. They were No. 3889, Varela vs. Matute, and No. 3890, Varela vs. Finnick (9 Phil., 479, 482). In the decisions in both cases it appears that Nicolasa Pascual received various jewels from Josefa Varela to sell on commission and that, instead of fulfilling the trust or returning the jewels to their owner, she pledged some of them in the pawnshop of Antonio Matute and others in that of H.J. Finnick and appropriated to herself the amounts that she received, to the detriment of the owner of the jewelry. Tried estafa in cause No. 2429, the said Pascual was convicted and sentenced to the penalty of one year and eleven months of prision correccional, to restore to Varela, the jewelry appropriated, or to pay the value thereof, and, in case of insolvency, to subsidiary imprisonment; this judgment became final, whereupon the defendant began to serve her sentence. The case just cited is identical to that of Concepcion Perello. Josefa Varela, in separate incidental proceedings, demanded the restitution or delivery of possession of the said jewelry; the pledgees, the pawnbrokers, refused to comply with her demand, alleging, among other reasons, that they were entitled to possession. The two cases were duly tried, and the Court of First Instance pronounced judgment, supporting the plaintiff's claims in each. Both cases were appealed by the defendants, Matute and Finnick, and this court affirmed the judgments on the same grounds, with costs, and the decisions on appeal established the following legal doctrines: 1. Crimes against property; criminal and civil liability. Where, in a proceeding instituted by reason of a crime committed against property, the criminal liability of the accused has been declared, it follows that he shall also be held civilly liable therefor, because every person who is criminally responsible on account of a crime or misdemeanor is also civilly liable. 2. Id.; Recovery of property unlawfully in possession. Whoever may have been deprived this property in consequence of a crime is entitled to the recovery thereof, even if such property is in the possession of a third party who acquired it by legal means other than those expressly stated in article 464 of the Civil Code. 3. Personal property; title by possession. In order that the possession of personal property may be considered as a title thereto it is indispensable that the same shall have been acquired in good faith. 4. Id.; Ownership; prescription. The ownership of personal property prescribes in the manner and within the time fixed by articles 1955 and 1962, in connection with article 464, of the Civil Code. In the cause prosecuted against Perello, as also in the present suit, it was not proven that Estanislaua Arenas authorized the former to pawn the jewelry given to her by Arenas to sell on commission. Because of the mere fact of Perello's having been convicted and sentenced for estafa, and for the very reason that she is now serving her sentence must be complied with, that is, the jewelry misappropriated must be restored to its owner, inasmuch as it exists and has not disappeared this restitution must be made, although the jewelry is found in the pawnshop of Fausto O. Raymundo and the latter had acquired it by legal

means. Raymundo however retains his right to collect the amounts delivered upon the pledge, by bringing action against the proper party. This finding is in accord with the provisions of the above article 120 of the Penal Code and first paragraph of article 464 of the Civil Code. The aforementioned decision, No. 3890, Varela vs. Finnick, recites among other considerations, the following: The exception contained in paragraph 3 of said article is not applicable to the present case because a pawnshop does not enjoy the privilege established by article 464 of the Civil Code. The owner of the loan office of Finnick Brothers, notwithstanding the fact that he acted in good faith, did not acquire the jewels at a public sale; it is not a question of public property, securities, or other such effects, the transfer, sale, or disposal of which is subject to the provisions of the Code of Commerce. Neither does a pawnshop enjoy the privilege granted to a monte de piedad; therefore, Josefa Varela, who lost said jewels and was deprived of the same in consequence of a crime, is entitled to the recovery thereof from the pawnshop of Finnick Brothers, where they were pledged; the latter can not lawfully refuse to comply with the provisions of article 120 of the Penal Code, as it is a question of jewels which has been misappropriated by the commission of the crime of estafa, and the execution of the sentence which orders the restitution of the jewels can not be avoided because of the good faith with which the owner of the pawnshop acquired them, inasmuch as they were delivered to the accused, who was not the owner nor authorized to dispose of the same. Even supposing that the defendant Raymundo had acted in good faith in accepting the pledge of the jewelry in litigation, even then he would not be entitled to retain it until the owner thereof reimburse him for the amount loaned to the embezzler, since the said owner of the jewelry, the plaintiff, did not make any contract with the pledgee, that would obligate him to pay the amount loaned to Perello, and the trial record does not disclose any evidence, even circumstantial, that the plaintiff Arenas consented to or had knowledge of the pledging of her jewelry in the pawnshop of the defendant. For this reason, and because Conception Perello was not the legitimate owner of the jewelry which she pledged to the defendant Raymundo, for a certain sum that she received from the latter as a loan, the contract of pledge entered the jewelry so pawned can not serve as security for the payment of the sum loaned, nor can the latter be collected out of the value of the said jewelry. Article 1857 of the Civil Code prescribes as one of the essential requisites of the contracts of pledge and of mortgage, that the thing pledged or mortgaged must belong to the person who pledges or mortgages it. This essential requisite for the contract of pledge between Perello and the defendant being absent as the former was not the owner of the jewelry given in pledge, the contract is as devoid of value and force as if it had not been made, and as it was executed with marked violation of an express provision of the law, it can not confer upon the defendant any rights in the pledged jewelry, nor impose any obligation

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toward him on the part of the owner thereof, since the latter was deprived of her possession by means of the illegal pledging of the said jewelry, a criminal act. Between the supposed good faith of the defendant Raymundo and the undisputed good faith of the plaintiff Arenas, the owner of the jewelry, neither law nor justice permit that the latter, after being the victim of the embezzlement, should have to choose one of the two extremes of a dilemma, both of which, without legal ground or reason, are injurious and prejudicial to her interest and rights, that is, she must either lose her jewelry or pay a large sum received by the embezzler as a loan from the defendant, when the plaintiff Arenas is not related to the latter by any legal or contractual bond out of which legal obligations arise. It is true that the plaintiffs' son, attorney Gabriel La O, intervened and gave his consent when the Concepcion Perello pawned the jewelry in litigation with Fausto Raymundo for P1,524? In view of the evidence offered by the trial record, the answer is, of course, in the negative. The parents of the attorney Gabriel La O being surprised by the disagreeable news of the disappearance of various jewels, amounting in value to more than P8,600, delivered to Elena Vega for sale on commission and misappropriated by Conception Perello, who received them from Vega for the same purpose, it is natural that the said attorney, acting in representation of his parents and as an interested party, should have proceeded to ascertain the whereabouts of the embezzled jewelry an to enter into negotiations with the pawnshop of Fausto O. Raymundo, in whose possession he had finally learned were to be found a part of the embezzled jewels, as he had been informed by the said Perello herself; and although, at first, at the commencement of his investigations, he met with opposition on the part of the pledgee Raymundo, who objected to showing him the jewels that he desired to see in order to ascertain whether they were those embezzled and belonging to his mother, the plaintiff Arenas, thanks to the

intervention of attorney Chicote and to the fact that they succeeded in obtaining from the embezzler, among other papers, the pawn ticket issued by Raymundo's pawnshop, Exhibit E, of the date of May 4, 1908, folio 19 of the record in the case against Matute, Gabriel La O succeeded in getting the defendant to show him the jewelry described in the said ticket together with other jewels that did not belong to La O's mother, that had been given the defendant by Ambrosia Capistrano, Perello's agent, in pledge or security for a loan of P170. Gabriel La O, continuing the search for other missing jewelry belonging to his mother, found that Fausto O. Raymundo was in possession of it and had received it from the same embezzler as security for a debt, although the defendant Raymundo would not exhibit it until he issued the pawn tickets corresponding to such jewels; therefore, at Raymundo's request, Perello, by means of the document Exhibit C, signed by herself and bearing date of June 10, 1908, folio 28 of the record, authorized her son Ramon to get from the defendant, in her name, the pawn tickets of the said other jewelry, for which such tickets had not yet been issued; Raymundo then wrote out the tickets Exhibits L, LL, and M, all dated June 22, 1908, and found on folios 20, 21 and 22 of the record of the aforesaid proceedings against Matute in the presence of the attorney Gabriel La O, who kept the said three pawn tickets, after he had made sure that the jewels described therein and which Raymundo, taking them out of his cabinet, exhibited to him at the time, were among those embezzled from his mother. So that, when the three aforementioned pawn tickets, Exhibits L, LL, and M, from the pawnshop of the defendant were made out, the latter already, and for some time previous, had in his possession as a pledge the jewelry described in them, and the plaintiffs' son naturally desiring to recover his parent's jewelry, was satisfied for the time being with keeping the three pawn tickets certifying that such jewelry was pawned to the defendant.

Moreover, the record discloses no proof that the attorney Gabriel La O consented to or took any part in the delivery of the jewelry in question to the defendant as a pledge, and both the said defendant, Raymundo, and the embezzler Perello, averred in their respective testimony that the said attorney La O had no knowledge of and took no part in the pledging of the jewelry, and Perello further stated that she had received all the money loaned to her by the defendant Raymundo. (Folios 13 to 14, and 76 to 80 of the record in the case against Matute.) The business of pawnshops, in exchange for the high and onerous interest which constitutes its enormous profits, is always exposed to the contingency of receiving in pledge or security for the loans, jewels and other articles that have been robbed, stolen, or embezzled from their legitimate owners; and as the owner of the pawnshop accepts the same and asks for money on it, without assuring himself whether such bearer is or is not the owner thereof, he can not, by such procedure, expect from the law better and more preferential protection than the owner of the jewels or other articles, who was deprived thereof by means of a crime and is entitled to be excused by the courts. Antonio Matute, the owner of another pawnshop, being convinced that he was wrong, refrained from appealing from the judgment wherein he was sentenced to return, without redemption, to the plaintiffs, another jewel of great value which had been pledged to him by the same Perello. He undoubtedly had in mind some of the previous decisions of this court, one of which was against himself. For the foregoing reasons, whereby the errors attributed to the judgment of the Court of First Instance have been discussed and decided upon, and the said judgment being in harmony with the law, the evidence and the merits of the case, it is proper, in our opinion, to affirm the same, as we hereby do, with the costs against the appellant. So ordered.

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G.R. No. L-30817 September 29, 1972 DOMINADOR DIZON, doing business under the firm name "Pawnshop of Dominador Dizon", petitioner, vs. LOURDES G. SUNTAY, respondent. FERNANDO, J.:p In essence there is nothing novel in this petition for review of a decision of the Court of Appeals affirming a lower court judgment sustaining the right of an owner of a diamond ring, respondent Lourdes G. Suntay, as against the claim of petitioner Dominador Dizon, who owns and operates a pawnshop. The diamond ring was turned over to a certain Clarita R. Sison, for sale on commission, along with other pieces of jewelry of respondent Suntay. It was then pledged to petitioner. Since what was done was violative of the terms of the agency, there was an attempt on her part to recover possession thereof from petitioner, who refused. She had to file an action then for its recovery. She was successful, as noted above, both in the lower court and thereafter in the Court of Appeals. She prevailed as she had in her favor the protection accorded by Article 559 of the Civil Code. 1 The matter was then elevated to us by petitioner. Ordinarily, our discretion would have been exercised against giving due course to such petition for review. The vigorous plea however, grounded on estoppel, by his counsel, Atty. Andres T. Velarde, persuaded us to act otherwise. After a careful perusal of the respective contentions of the parties, we fail to perceive any sufficient justification for a departure from the literal language of the applicable codal provision as uniformly interpreted by this Court in a number of decisions. The invocation of estoppel is therefore unavailing. We affirm. The statement of the case as well as the controlling facts may be found in the Court of Appeals decision penned by Justice Perez. Thus: "Plaintiff is the owner of a threecarat diamond ring valued at P5,500.00. On June 13, 1962, the plaintiff and Clarita R. Sison entered into a transaction wherein the plaintiff's ring was delivered to Clarita R. Sison for sale on commission. Upon receiving the ring, Clarita R. Sison executed and delivered to the plaintiff the receipt ... . The plaintiff had already previously known Clarita R. Sison as the latter is a close friend of the plaintiff's cousin and they had frequently met each other at the place of the plaintiff's said cousin. In fact, about one year before their transaction of June 13, 1962 took place, Clarita R. Sison received a piece of jewelry from the plaintiff to be sold for P500.00, and when it was sold, Clarita R. Sison gave the price to the plaintiff. After the lapse of a considerable time without Clarita R. Sison having returned to the plaintiff the latter's ring, the plaintiff made demands on Clarita R. Sison for the return of her ring but the latter could not comply with the demands because, without the knowledge of the plaintiff, on June 15, 1962 or three days after the ring above-mentioned was received by Clarita R. Sison from the plaintiff, said ring was pledged by Melia Sison, niece of the husband of Clarita R. Sison, evidently in connivance with the latter, with the defendant's pawnshop for P2,600.00 ... ." 2 Then came this portion of the decision under review: "Since the plaintiff insistently demanded from Clarita R. Sison the return of her ring, the latter finally delivered to the former the pawnshop ticket ... which is the receipt of the pledge with the defendant's pawnshop of the plaintiff's ring. When the plaintiff found out that Clarita R. Sison pledged, she took steps to file a case of estafa against the latter with the fiscal's office. Subsequently thereafter, the plaintiff, through her lawyer, wrote a letter ... dated September 22, 1962, to the defendant asking for the delivery to the plaintiff of her ring pledged with defendant's pawnshop under pawnshop receipt serial-B No. 65606, dated June 15, 1962 ... . Since the defendant refused to return the ring, the plaintiff filed the present action with the Court of First Instance of

Manila for the recovery of said ring, with P500.00 as attorney's fees and costs. The plaintiff asked for the provisional remedy of replevin by the delivery of the ring to her, upon her filing the requisite bond, pending the final determination of the action. The lower court issued the writ of replevin prayed for by plaintiff and the latter was able to take possession of the ring during the pendency of the action upon her filing the requisite bond." 3 It was then noted that the lower court rendered judgment declaring that plaintiff, now respondent Suntay, had the right to the possession of the ring in question. Petitioner Dizon, as defendant, sought to have the judgment reversed by the Court of Appeals. It did him no good. The decision of May 19, 1969, now on review, affirmed the decision of the lower court. In the light of the facts as thus found by the Court of Appeals, well-nigh conclusive on use, with the applicable law being what it is, this petition for review cannot prosper. To repeat, the decision of the Court of Appeals stands. 1. There is a fairly recent restatement of the force and effect of the governing codal norm in De Gracia v. Court of Appeals. 4 Thus: "The controlling provision is Article 559 of the Civil Code. It reads thus: 'The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, 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 a movable lost of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor.' Respondent Angelina D. Guevara, having been unlawfully deprived of the diamond ring in question, was entitled to recover it from petitioner Consuelo S. de Garcia who was found in possession of the same. The only exception the law allows is when there is acquisition in good faith of the possessor at a public sale, in which case the owner cannot obtain its return without reimbursing the price. As authoritatively interpreted in Cruz v. Pahati, the right of the owner cannot be defeated even by proof that there was good faith in the acquisition by the possessor. There is a reiteration of this principle in Aznar v. Yapdiangco. Thus: 'Suffice it to say in this regard that the right of the owner to recover personal property acquired in good faith by another, is based on his being dispossessed without his consent. The common law principle that were one of two innocent persons must suffer by a fraud perpetrated by another, the law imposes the loss upon the party who, by his misplaced confidence, has enabled the fraud to be committed, cannot be applied in a case which is covered by an express provision of the new Civil Code, specifically Article 559. Between a common law principle and a statutory provision, the latter must prevail in this jurisdiction." " 5 2. It must have been a recognition of the compulsion exerted by the above authoritative precedents that must have caused petitioner to invoke the principle of estoppel. There is clearly a misapprehension. Such a contention is devoid of any persuasive force. Estoppel as known to the Rules of Court 6 and prior to that to the Court of Civil Procedure, 7 has its roots in equity. Good faith is its basis. 8 It is a response to the demands of moral right and natural justice. 9 For estoppel to exist though, it is indispensable that there be a declaration, act or omission by the party who is sought to be bound. Nor is this all. It is equally a requisite that he, who would claim the benefits of such a principle, must have altered his position, having been so intentionally and deliberately led to comport himself thus, by what was declared or what was done or failed to be done. If thereafter a litigation arises, the former would not be allowed to disown such act, declaration or omission. The principle comes into full play. It may successfully be relied upon. A court is to see to it then that there is no turning back on one's word or a repudiation of one's act. So it has been from our earliest decisions. As Justice Mapa pointed out in the first case, a 1905

decision, Rodriguez v. Martinez, 10 a party should not be permitted "to go against his own acts to the prejudice of [another]. Such a holding would be contrary to the most rudimentary principles of justice and law." 11 He is not, in the language of Justice Torres, in Irlanda v. Pitargue, 12 promulgated in 1912, "allowed to gainsay [his] own acts or deny rights which [he had] previously recognized." 13 Some of the later cases are to the effect that an unqualified and unconditional acceptance of an agreement forecloses a claim for interest not therein provided. 14 Equally so the circumstance that about a month after the date of the conveyance, one of the parties informed the other of his being a minor, according to Chief Justice Paras, "is of no moment, because [the former's] previous misrepresentation had already estopped him from disavowing the contract. 15 It is easily understandable why, under the circumstances disclosed, estoppel is a frail reed to hang on to. There was clearly the absence of an act or omission, as a result of which a position had been assumed by petitioner, who if such elements were not lacking, could not thereafter in law be prejudiced by his belief in what had been misrepresented to him. 16 As was put by Justice Labrador, "a person claimed to be estopped must have knowledge of the fact that his voluntary acts would deprive him of some rights because said voluntary acts are inconsistent with said rights." 17 To recapitulate, there is this pronouncement not so long ago, from the pen of Justice Makalintal, who reaffirmed that estoppel "has its origin in equity and, being based on moral right and natural justice, finds applicability wherever and whenever the special circumstances of a case so demand." 18 How then can petitioner in all seriousness assert that his appeal finds support in the doctrine of estoppel? Neither the promptings of equity nor the mandates of moral right and natural justice come to his rescue. He is engaged in a business where presumably ordinary prudence would manifest itself to ascertain whether or not an individual who is offering a jewelry by way of a pledge is entitled to do so. If no such care be taken, perhaps because of the difficulty of resisting opportunity for profit, he should be the last to complain if thereafter the right of the true owner of such jewelry should be recognized. The law for this sound reason accords the latter protection. So it has always been since Varela v. Finnick, 19 a 1907 decision. According to Justice Torres: "In the present case not only has the ownership and the origin of the jewels misappropriated been unquestionably proven but also that the accused, acting fraudulently and in bad faith, disposed of them and pledged them contrary to agreement, with no right of ownership, and to the prejudice of the injured party, who was thereby illegally deprived of said jewels; therefore, in accordance with the provisions of article 464, the owner has an absolute right to recover the jewels from the possession of whosoever holds them, ... ." 20 There have been many other decisions to the same effect since then. At least nine may be cited. 21 Nor could any other outcome be expected, considering the civil code provisions both in the former Spanish legislation 22 and in the present Code. 23 Petitioner ought to have been on his guard before accepting the pledge in question. Evidently there was no such precaution availed of. He therefore, has only himself to blame for the fix he is now in. It would be to stretch the concept of estoppel to the breaking point if his contention were to prevail. Moreover, there should have been a realization on his part that courts are not likely to be impressed with a cry of distress emanating from one who is in a business authorized to impose a higher rate of interest precisely due to the greater risk assumed by him. A predicament of this nature then does not suffice to call for less than undeviating adherence to the literal terms of a codal provision. Moreover, while the activity he is engaged in is no doubt legal, it is not to be lost sight of that it thrives on taking advantage of the necessities precisely of that element of our population whose lives are blighted by extreme poverty. From whatever angle the question is viewed then, estoppel certainly cannot be justly invoked. WHEREFORE, the decision of the Court of Appeals of May 19, 1969 is affirmed, with costs against petitioner.

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