Tagatac vs.

Jimenez
Monday, September 8, 2014
Facts:

Trinidad Tagatac bought a car for $4,500 in the US. After 7 months, she brought the car to the
Philippines.

Warner Feist, who pretended to be a wealthy man, offered to buy Trinidads car for P15,000, and
Tagatac was amenable to the idea. Hnece, a deed of sale was exceuted.

Feist paid by means of a postdated check, and the car was delivered to Feist. However, PNB refused
to honor the checks and told her that Feist had no account in said bank.

Tagatac notified the law enforcement agencies of the estafa committed by Feist, but the latter was
not apprehended and the car disappeared.

Meanwhile, Feist managed succeeded in having the cars registration certificate (RC) transferred in
his name. He sold the car to Sanchez, who was able to transfer the registration certificate to his name.

Sanchez then offered to sell the car to defendant Liberato Jimenez, who bought the car for P10,000
after investigating in the Motor Vehicles Office.

Tagatac discovered that the car was in California Car Exchanges (place where Jimenez displayed the
car for sale), so she demanded from the manager for the delivery of the car, but the latter refused.

Tagatac filed a suit for the recovery of the cars possession, and the sheriff, pursuant to a warrant of
seizure that Tagatac obtained, seized and impounded the car, but it was delivered back to Jimenez upon his
filing of a counter-bond.

The lower court held that Jimenez had the right of ownership and possession over the car.

Issue: WON Jimenez was a purchaser in good faith and thus entitled to the ownership and possession of the
car. YES
Held:
It must be noted that Tagactac was not unlawfully deprived of his car
In this case, there is a valid transmission of ownership from true owner [Tagatac] to the swindler [Feist],
considering that they had a contract of sale (note: but such sale is voidable for the fraud and deceit by Feist).
The disputable presumption that a person found in possession of a thing taken in the doing of a recent
wrongful act is the taker and the doer of the whole act does NOT apply in this case because the car was not
stolen from Tagatac, and Jimenez came into possession of the car two months after Feist swindled Tagatac.
Jimenez was a purchaser in good faith for he was not aware of any flaw invalidating the title
from the seller of the car
In addition, when Jimenez acquired the car, he had no knowledge of any flaw in the title of the person from
whom he acquired it. It was only later that he became fully aware that there were some questions regarding
the car, when he filed a petition to dissolve Tagatacs search warrant which had as its subject the car in
question.
The contract between Feist and Tagactac was a voidable contract, it can be annulled or ratified
. . . The fraud and deceit practiced by Warner L. Feist earmarks this sale as a voidable contract (Article 1390
N.C.C.). Being a voidable contract, it is susceptible of either ratification or annulment.
(
If the contract is ratified, the action to annul it is extinguished (Article 1392, N.C.C.) and the contract is
cleansed from all its defects (Article 1396, N.C.C.); if the contract is annulled, the contracting parties are
restored to their respective situations before the contract and mutual restitution follows as a consequence
(Article 1398, N.C.C.).
Being a voidable contract, it remains valid and binding until annulled
However, as long as no action is taken by the party entitled, either that of annulment or of ratification, the
contract of sale remains valid and binding. When plaintiff-appellant Trinidad C. Tagatac delivered the car to
Feist by virtue of said voidable contract of sale, the title to the car passed to Feist. Of course, the title that
Feist acquired was defective and voidable.

Nevertheless, at the time he sold the car to Felix Sanchez, his title thereto had not been avoided and he
therefore conferred a good title on the latter, provided he bought the car in good faith, for value and without
notice of the defect in Feist's title (Article 1506, N.C.C.). There being no proof on record that Felix Sanchez
acted in bad faith, it is safe to assume that he acted in good faith.

SUN BROTHERS & CO. [SBC] v. JOSE VELASCO & CO KANG CHIU
1958 / Angeles / Appeal from CFI judgment [Note that this is a CA, not SC, decision.]
FACTS
SBC delivered to Francisco Lopez an Admiral refrigerator. The stipulated price was P1,700, but only the

downpayment of P500 was paid. Their contract stipulated the following:

Lopez shall not remove the ref nor part possession without the express written consent of SBC.
In the event of a violation of the agreement, SBC may rescind the contract of sale and recover
possession of the ref. In addition, any amount previously paid shall be forfeited as liquidated damages, and
the ref remains as SBCs absolute property until Lopez is able to pay the full purchase price.
Without SBCs knowledge, Lopez (who misrepresented himself as Jose Lim) sold it to JV Trading (owned by
Jose Velasco) for P850, and Lopez executed a document that stated that he is the absolute owner of the ref.
Without SBCs knowledge, after displaying the ref at his store, JV Trading sold the ref to Co Kang Chiu for
P985, and it was delivered to the latters house.
SBC filed a complaint for replevin against Lopez and Co Kang Chiu (later, JV Trading / Jose Velasco was
included), and asked for a preliminary writ of replevin for the recovery of the possession of the ref, and it was
issued. However, on Co Kang Chius request and having filed a counter-bond, the ref was not taken out of his
residence.
CFI decided in favor of SBC, declaring it as the absolute owner. Co Kang Chiu should return ref, or else, Lopez
shall pay full amount of P1,700 to SBC, and JV Trading should reimburse Co Kang Chiu the amount of P985.
CFI ERRED; CO KANG CHIU IS THE ABSOLUTE OWNER; LOPEZ MUST PAY SBC P1,700
ALSO, NCC 1505 PARAGRAPH 3 (ON MERCHANT STORE) SHOULD BE APPLIED
The lower court erred in applying the first paragraph of NCC 1505. It is true that Lopez never had title since it
would only be vested on him upon full payment of the purchase price. As regards JV Trading, it did not
acquire any better right than what Lopez had. The Court also found that he was not a purchaser in good
faith. Since he was purchasing a ref from a private person who is not engaged in such business, he should
have inquired WON Lopez has paid for the ref in full.
Paragraph 3 should be applied since Co Kang Chiu purchased the ref from JV Trading, which is a merchant
store. Co Kang Chiu should be declared to have acquired a valid title, although his predecessors-in-interest
did not have any right of ownership thereto. Here is a case where an imperfect or void title ripens into a valid
one, because of some intervening causes.
The rights and interests of an innocent buyer for value should be protected when it comes into clash
with the rights and interests of a vendor. This is embodied in NCC 1505 (3) to facilitate commercial sales of
movables and to give stability to business transactions.
SBCs recourse should be a claim for indemnity against Lopez, and not recovery upon reimbursement,
since SBC did not lose ref nor was the company unlawfully deprived of it.