SALE BY NON-OWNERS/BY ONE HAVING VOIDABLE TITLE: LIFE only surviving heir of Agatona Sagario.

ving heir of Agatona Sagario. The affidavit was filed with the

OF A CONTRACT OF SALE Register of Deeds of Negros Occidental on August 20, 1963, cancelled
OCT No. RO-8376 in the name of Agatona Sagario and issued Transfer

Certificate of Title (TCT) No. 35979 in Donato's name.

DONATO S. PAULMITAN, JULIANA P. FANESA and RODOLFO FANESA vs.

As regards Lot No. 1091, Donato executed on May 28, 1974 a Deed of Sale
COURT OF APPEALS
over the same in favor of petitioner Juliana P. Fanesa, his daughter. 5
G.R. No. 61584 November 25, 1992
In the meantime, sometime in 1952, for non-payment of taxes, Lot No.

Agatona Sagario Paulmitan, who died sometime in 1953, 3 left the two 1091 was forfeited and sold at a public auction, with the Provincial

following parcels of land located in the Province of Negros Occidental: (1) Government of Negros Occidental being the buyer. A Certificate of Sale

Lot No. 757 with an area of 1,946 square meters covered by Original over the land was executed by the Provincial Treasurer in favor of the

Certificate of Title (OCT) No. RO-8376; and (2) Lot No. 1091 with an area Provincial Board of Negros Occidental. 6

of 69,080 square meters and covered by OCT No. RO-11653. From her
On May 29, 1974, Juliana P. Fanesa redeemed the property from the
marriage with Ciriaco Paulmitan, who is also now deceased, Agatona
Provincial Government of Negros Occidental for the amount of
begot two legitimate children, namely: Pascual Paulmitan, who also died
P2,959.09. 7
in 1953, apparently shortly after his mother passed away, and Donato
4

Paulmitan, who is one of the petitioners. Petitioner Juliana P. Fanesa is On learning of these transactions, respondents children of the late Pascual

Donato's daughter while the third petitioner, Rodolfo Fanes, is Juliana's Paulmitan filed on January 18, 1975 with the Court of First Instance of

husband. Pascual Paulmitan, the other son of Agatona Sagario, is survived Negros Occidental a Complaint against petitioners to partition the

by the respondents, who are his children, name: Alicio, Elena, Abelino, properties plus damages.

Adelina, Anita, Baking and Anito, all surnamed Paulmitan.

Petitioners set up the defense of prescription with respect to Lot No. 757

Until 1963, the estate of Agatona Sagario Paulmitan remained unsettled as an affirmative defense, contending that the Complaint was filed more

and the titles to the two lots mentioned above remained in the name of than eleven years after the issuance of a transfer certificate of title to

Agatona. However, on August 11, 1963, petitioner Donato Paulmitan Donato Paulmitan over the land as consequence of the registration with

executed an Affidavit of Declaration of Heirship, extrajudicially the Register of Deeds, of Donato's affidavit extrajudicially adjudicating

adjudicating unto himself Lot No. 757 based on the claim that he is the unto himself Lot No. 757. As regards Lot No. 1091, petitioner Juliana P.
Fanesa claimed in her Answer to the Complaint that she acquired Provincial Government of Negros Occidental. The dispositive portion of

exclusive ownership thereof not only by means of a deed of sale executed the trial court's decision reads:
in her favor by her father, petitioner Donato Paulmitan, but also by way of
WHEREFORE, judgment is hereby rendered on the second cause of action
redemption from the Provincial Government of Negros Occidental.
pleaded in the complain as follows:
Acting on the petitioners' affirmative defense of prescription with respect
1. The deed of sale (Exh. "F") dated May 28, 1974 is valid insofar as the
to Lot No. 757, the trial court issued an order dated April 22, 1976
one-half undivided portion of Lot 1091 is concerned as to vest ownership
dismissing the complaint as to the said property upon finding merit in
over said half portion in favor of defendant Juliana Fanesa and her
petitioners' affirmative defense. This order, which is not the object of the
husband Rodolfo Fanesa, while the remaining half shall belong to
present petition, has become final after respondents' failure to appeal
plaintiffs, pro-indiviso;
therefrom.
2. Lot 1091, Cadastral Survey of Pontevedra, Province of Negros
Trial proceeded with respect to Lot No. 1091. In a decision dated May 20,
Occidental, now covered by TCT No. RO-11653 (N.A.), is ordered
1977, the trial court decided in favor of respondents as to Lot No. 1091.
partitioned. The parties must proceed to an actual partition by property
According to the trial court, the respondents, as descendants of Agatona
instrument of partition, submitting the corresponding subdivision within
Sagario Paulmitan were entitled to one-half (1/2) of Lot No. 1091, pro
sixty (60) days from finality of this decision, and should they fail to agree,
indiviso. The sale by petitioner Donato Paulmitan to his daughter,
commissioners of partition may be appointed by the Court;
petitioner Juliana P. Fanesa, did not prejudice their rights. And the

repurchase by Juliana P. Fanesa of the land from the Provincial
Government of Negros Occidental did not vest in Juliana exclusive
ownership over the entire land but only gave her the right to be
reimbursed for the amount paid to redeem the property. The trial court
ordered the partition of the land and directed petitioners Donato
Paulmitan and Juliana P. Fanesa to pay private respondents certain
amounts representing the latter's share in the fruits of the land. On the
other hand, respondents were directed to pay P1,479.55 to Juliana P.
Fanesa as their share in the redemption price paid by Fanesa to the
3. Pending the physical partition, the Register of Deeds of Negros
Occidental is ordered to cancel Original Certificate of Title No. RO-11653
(N.A.) covering Lot 1091, Pontevedra Cadastre, and to issue in lieu thereof
a new certificate of title in the name of plaintiffs and defendants, one-half
portion each,pro-indiviso, as indicated in paragraph 1 above;
4. Plaintiffs are ordered to pay, jointly and severally, defendant Juliana
Fanesa the amount of P1,479.55 with interest at the legal rate from May
28, 1974 until paid;
5 Defendants Donato Sagario Paulmitan and Juliana Paulmitan Fanesa are virtue of Article 777 of the Civil Code that "[t]he rights to the succession

ordered to account to plaintiffs and to pay them, jointly and severally, the are transmitted from the moment of the death of the decedent," 10 the
value of the produce from Lot 1091 representing plaintiffs' share in the right of ownership, not only of Donato but also of Pascual, over their
amount of P5,000.00 per year from 1966 up to the time of actual partition respective shares in the inheritance was automatically and by operation of

of the property, and to pay them the sum of P2,000.00 as attorney's fees law vested in them in 1953 when their mother died intestate. At that

as well as the costs of the suit. stage, the children of Donato and Pascual did not yet have any right over
the inheritance since "[i]n every inheritance, the relative nearest in degree
xxx xxx xxx
excludes the more distant

On appeal, the Court of Appeals affirmed the trial court's decision. Hence ones." 11 Donato and Pascual excluded their children as to the right to

this petition. inherit from Agatona Sagario Paulmitan, their mother.

To determine the rights and obligations of the parties to the land in From the time of the death of Agatona Sagario Paulmitan to the
question, it is well to review, initially, the relatives who survived the subsequent passing away of her son Pascual in 1953, the estate remained

decedent Agatona Sagario Paulmitan. When Agatona died in 1953, she unpartitioned. Article 1078 of the Civil Code provides: "Where there are

was survived by two (2) sons, Donato and Pascual. A few months later in two or more heirs, the whole estate of the decedent is, before its partition,

the same year, Pascual died, leaving seven children, the private owned in common by such heirs, subject to the payment of debts of the

respondents. On the other had, Donato's sole offspring was petitioner deceased." 12 Donato and Pascual Paulmitan were, therefore, co-owners

Juliana P. Fanesa. of the estate left by their mother as no partition was ever made.

At the time of the relevant transactions over the properties of decedent When Pascual Paulmitan died intestate in 1953, his children, the

Agatona Sagario Paulmitan, her son Pascual had died, survived by respondents, succeeded him in the co-ownership of the disputed

respondents, his children. It is, thus, tempting to apply the principles property. Pascual Paulmitan's right of ownership over an undivided

pertaining to the right of representation as regards respondents. It must, portion of the property passed on to his children, who, from the time of

however, be borne in mind that Pascual did no predecease his Pascual's death, became co-owners with their uncle Donato over the

mother, 8 thus precluding the operation of the provisions in the Civil disputed decedent estate.
Code on the right of representation 9 with respect to his children, the
Petitioner Juliana P. Fanesa claims ownership over Lot No. 1091 by virtue
respondents. When Agatona Sagario Paulmitan died intestate in 1952, her
of two transactions, namely: (a) the sale made in her favor by her father
two (2) sons Donato and Pascual were still alive. Since it is well-settled by
Donato Paulmitan; and (b) her redemption of the land from the Provincial Liat, 44 Phil. 320 (1923)]. This is because under the aforementioned codal

of Negros Occidental after it was forfeited for non-payment of taxes. provision, the sale or other disposition affects only his undivided share
and the transferee gets only what would correspond to his grantor in the
When Donato Paulmitan sold on May 28, 1974 Lot No. 1091 to his
partition of the thing owned in common [Ramirez v. Bautista, 14 Phil. 528
daughter Juliana P. Fanesa, he was only a co-owner with respondents and
(1909)]. Consequently, by virtue of the sales made by Rosalia and
as such, he could only sell that portion which may be allotted to him upon
Gaudencio Bailon which are valid with respect to their proportionate
termination of the co-ownership. 13 The sale did not prejudice the rights
shares, and the subsequent transfers which culminated in the sale to
of respondents to one half (1/2) undivided share of the land which they
private respondent Celestino Afable, the said Afable thereby became a
inherited from their father. It did not vest ownership in the entire land
co-owner of the disputed parcel of land as correctly held by the lower
with the buyer but transferred only the seller's pro-indiviso share in the
court since the sales produced the effect of substituting the buyers in the
property 14 and consequently made the buyer a co-owner of the land until
enjoyment thereof [Mainit v. Bandoy, 14 Phil. 730 (1910)].
it is partitioned. In Bailon-Casilao v. Court of Appeals, 15 the Court,
through Justice Irene R. Cortes, outlined the effects of a sale by one co- From the foregoing, it may be deduced that since a co-owner is entitled

owner without the consent of all the co-owners, thus: to sell his undivided share, a sale of the entire property by one co-owner

without the consent of the other co-owners is not null and void. However,
The rights of a co-owner of a certain property are clearly specified in
only the rights of the co-owner-seller are transferred, thereby making the
Article 493 of the Civil Code, Thus:
buyer a co-owner of the property.

Art. 493. Each co-owner shall have the full ownership of his part and of
Applying this principle to the case at bar, the sale by petitioner Donato
the fruits and benefits pertaining thereto, and he may therefore alienate,
Paulmitan of the land to his daughter, petitioner Juliana P. Fanesa, did not
assign or mortgage it and even substitute another person its enjoyment,
give to the latter ownership over the entire land but merely transferred to
except when personal rights are involved. But the effect of the alienation
her the one half (1/2) undivided share of her father, thus making her the
or mortgage, with respect to the co-owners, shall be limited to the
co-owner of the land in question with the respondents, her first cousins.
portion which may be allotted to him in the division upon the termination
of the co-ownership. [Emphasis supplied.] Petitioner Juliana P. Fanesa also claims ownership of the entire property
by virtue of the fact that when the Provincial Government of Negros
As early as 1923, this Court has ruled that even if a co-owner sells the
Occidental bought the land after it was forfeited for non-payment of
whole property as his, the sale will affect only his own share but not those
taxes, she redeemed it.
of the other co-owners who did not consent to the sale [Punsalan v. Boon
The contention is without merit.
The redemption of the land made by Fanesa did not terminate the co-
ownership nor give her title to the entire land subject of the co-
ownership. Speaking on the same issue raised by petitioners, the Court,
in Adille v. Court of Appeals, 16 resolved the same with the following
pronouncements:
The petition raises a purely legal issue: May a co-owner acquire exclusive
ownership over the property held in common?
Essentially, it is the petitioners' contention that the property subject of
dispute devolved upon him upon the failure of his co-heirs to join him in
its redemption within the period required by law. He relies on the
provisions of Article 1515 of the old Civil Code, Article 1613 of the present
Code, giving the vendee a retro the right to demand redemption of the
entire property.
There is no merit in this petition.
The right of repurchase may be exercised by co-owner with respect to his
share alone (CIVIL CODE, art. 1612, CIVIL CODE (1889), art. (1514.). While
the records show that petitioner redeemed the property in its entirety,
shouldering the expenses therefor, that did not make him the owner of all
of it. In other words, it did not put to end the existing state of co-
ownership (Supra, Art. 489). There is no doubt that redemption of
property entails a necessary expense. Under the Civil Code:
Art. 488. Each co-owner shall have a right to compel the other co-owners
to contribute to the expenses of preservation of the thing or right owned
in common and to the taxes. Any one of the latter may exempt himself
from this obligation by renouncing so much of his undivided interest as
may be equivalent to his share of the expenses and taxes. No such waiver
shall be made if it is prejudicial to the co-ownership.
The result is that the property remains to be in a condition of co-
ownership. While a vendee a retro, under Article 1613 of the Code, "may
not be compelled to consent to a partial redemption," the redemption by
one co-heir or co-owner of the property in its totality does not vest in him
ownership over it. Failure on the part of all the co-owners to redeem it
entitles the vendee a retro to retain the property and consolidate title
thereto in his name (Supra, art. 1607). But the provision does not give to
the redeeming co-owner the right to the entire property. It does not
provide for a mode of terminating a co-ownership.
Although petitioner Fanesa did not acquire ownership over the entire lot
by virtue of the redemption she made, nevertheless, she did acquire the
right to reimbursed for half of the redemption price she paid to the
Provincial Government of Negros Occidental on behalf of her co-owners.
Until reimbursed, Fanesa hold a lien upon the subject property for the
amount due her. 17
Finally, petitioners dispute the order of the trial court, which the Court of
Appeals affirmed, for them to pay private respondents P5,000.00 per year
from 1966 until the partition of the estate which represents the share of
private respondents in the fruits of the land. According to petitioners, the
land is being leased for P2,000.00 per year only. This assigned error,
however raises a factual question. The settled rule is that only questions of
law may be raised in a petition for review. As a general rule, findings of
fact made by the trial court and the Court of Appeals are final and
conclusive and cannot be reviewed on appeal. 18
WHEREFORE, the petition is DENIED and the decision of the Court of
Appeals AFFIRMED.
SO ORDERED.
MINDANAO ACADEMY, INC. vs. ILDEFONSO D. YAP
G.R. No. L-17681 February 26, 1965
By deed entitled "Mutual Agreement," executed on May 10, 1964, Rosenda
A. de Nuqui (widow of deceased Sotero Dionisio) and her son Sotero
Dionisio, Jr. sold three parcels of residential land in Oroquieta, Misamis
Occidental, and another parcel in Ozamis City in favor of Ildefonso D. Yap.
Included in the sale were certain buildings situated on said lands as well
as laboratory equipment, books, furniture and fixtures used by two
schools established in the respective properties, the Mindanao Academy
in Oroquieta and the Misamis Academy in Ozamis City. The aggregate
price stated in the deed was P100,700.00, to be paid according to the
terms and conditions specified in the contract.
Besides Rosenda and her son Sotero, Jr., both of whom signed the
instrument, Adelaida Dionisio-Nuesa (a daughter of Rosenda) is also
named therein as co-vendor, but actually did not take part either
personally or through her uncle and supposed attorney-in-fact, Restituto
Abuton.
These three Rosenda and her two children above named are
referred to in the deed as the owners pro-indiviso of the properties sold.
The truth, however, was that there were other co-owners of the lands,
namely, Erlinda D. Diaz, Ester Aida D. Bas, Rosalinda D. Belleza, and Luz
Minda D. Dajao, children also of Rosenda by her deceased husband
Sotero Dionisio, Sr., and that as far as the school building, equipment,
books, furniture and fixtures were concerned, they were owned by the
Mindanao Academy, Inc., a corporation operating both the Mindanao
Academy in Oroquieta and the Misamis Academy in Ozamis City.
The buyer, Ildefonso D. Yap, obtained possession of the properties by
virtue of the sale, took over the operation of the two schools and even
changed their names to Harvardian Colleges. In view thereof two actions
were commenced in the Court of First Instance of Misamis Occidental.
The first was for annulment of the sale and recovery of rents and
damages (Civil Case No. 1774, filed May 3, 1955) with the Mindanao
Academy, Inc., the five children of Rosenda Nuqui who did not take part
in the deed of sale, and several other persons who were stockholders of
the said corporation, as plaintiffs, and the parties who signed the deed of
sale as defendants. The second action was for rescission (Civil Case No.
1907, filed July 17, 1956) with Rosenda Nuqui, Sotero Dionisio, Jr. and
Erlinda D. Diaz (and the latter's husband Antolin Diaz) as plaintiffs, and
Ildefonso D. Yap as lone defendant. The other four children of Rosenda
did not join, having previously ceded and quitclaimed their shares in the
litigated properties in favor of their sister Erlinda D. Diaz.
The two actions were tried jointly and on March 31, 1960 the court a (2) To return all the Records of the Mindanao Academy and Misamis

quo rendered judgment as follows: Academy;

In both Cases (3) To pay to the plaintiffs stockholders of the Mindanao Academy, Inc.,

the amount of P10,000.00 as nominal damages, P3,000.00 as exemplary

(1) The Mutual Agreement is hereby declared null and void ab initio;
damages; and P2,000.00 as attorney's fees. These damages shall be

(2) Defendant Ildefonso D. Yap is hereby ordered to pay the costs of the apportioned to each of the stockholders named as plaintiffs in said case in

proceedings in both cases. proportion to their respective interests in the corporation.

In Civil Case No. 1907 only Ildefonso D. Yap appealed from the foregoing judgment and has

assigned five errors therein.

(1) Defendant Ildefonso D. Yap is hereby ordered to restore to the

plaintiffs in said case all the buildings and grounds described in the I. He first contends that the lower court erred "in declaring that the

Mutual Agreement together with all the permanent improvements mutual agreement dated May 10, 1954 ... is entirely void and legally non-

thereon; existent in that the vendors therein ceded to defendant-appellant not

only their interests, rights, shares and participation in the property sold
(2) To pay to the plaintiffs therein the amount of P300.00 monthly from
but also those that belonged to persons who were not parties thereto."
July 31, 1956 up to the time he shall have surrendered the properties in

question to the plaintiffs herein, plus P1,000.00 as attorney's fees to The lower court did not rule categorically on the question of rescission

plaintiffs Antolin and Erlinda D. Diaz. considering it unnecessary to do so in view of its conclusion that the

contract of sale is null and void. This conclusion is premised on two

In Civil Case No. 1774 only
grounds: (a) the contract purported to sell properties of which the sellers

(1) Defendant Ildefonso D. Yap is hereby ordered to restore to the were not the only owners, since of the four parcels of land mentioned in

Mindanao Academy, Inc., all the books laboratory apparatus, furniture the deed their shares consisted only of 7/12, (6/12 for Rosenda Nuqui and

and other equipments described in the Mutual Agreement and specified 1/12 for Sotero, Jr.), while in the buildings, laboratory equipment, books,

in the inventory attached to the Records of this case; or in default thereof, furniture and fixtures they had no participation at all, the owner being the

their value in the amount of P23,500.00; Mindanao Academy, Inc.; and (b) the prestation involved in the sale was
indivisible, and therefore incapable of partial annulment, inasmuch as the
buyer Yap, by his own admission, would not have entered into the
transaction except to acquire all of the properties purchased by him.
These premises are not challenged by appellant. But he calls attention to
one point, namely, that the four children of Rosenda Nuqui who did not
take part in the sale, besides Erlinda Dionisio Diaz, quitclaimed in favor of
the latter their interests in the properties; and that the trial court held that
Erlinda as well as her husband acted in bad faith, because "having
reasonable notice of defendants' having unlawfully taken possession of
the property, they failed to make reasonable demands for (him) to vacate
the premises to respect their rights thereto." It is argued that being herself
guilty of bad faith, Erlinda D. Diaz, as owner of 5/12 undivided interest in
the properties (including the 4/12 ceded to her by her four sisters), is in no
position to ask for annulment of the sale. The argument does not
convince us. In the first place the quitclaim, in the form of an extrajudicial
partition, was made on May 6, 1956, after the action for annulment was
filed, wherein the plaintiffs were not only Erlinda but also the other co-
owners who took no part in the sale and to whom there has been no
imputation of bad faith. Secondly, the trial court's finding of bad faith is
an erroneous conclusion induced by a manifest oversight of an
undisputed fact, namely, that on July 10, 1954, just a month after the deed
of sale in question, Erlinda D. Diaz did file an action against Ildefonso D.
Yap and Rosenda Nuqui, among others, asserting her rights as co-owner
of the properties (Case No. 1646). Finally, bad faith on the part of Erlinda
would not militate against the nullity of the sale, considering that it
included not only the lands owned in common by Rosenda Nuqui and her
six children but also the buildings and school facilities owned by the
Mindanao Academy, Inc., an entity which had nothing to do with the
transaction and which could be represented solely by its Board of
Trustees.
The first assignment of error is therefore without merit.
II. The second and third errors are discussed jointly in appellant's brief.
They read as follows:
THE LOWER COURT ERRED IN HOLDING DEFENDANT-APPELLANT
LIABLE FOR RENTS AND ATTORNEY'S FEES IN THE SUM OF P1,000.00
AFTER DECLARING THAT ALL THE PLAINTIFFS-APPELLEES IN CIVIL CASE
NO. 1907 ACTED IN BAD FAITH.
THE LOWER COURT ERRED IN HOLDING THAT PLAINTIFFS-APPELLEES IN
SAID CIVIL CASE NO. 1907 ARE ENTITLED TO RECOVER ALL THE LANDS,
BUILDINGS AND OTHER PERMANENT IMPROVEMENTS DESCRIBED IN
THE MUTUAL AGREEMENT DATED MAY 10, 1954.
The lower court correctly found that both vendors and vendee in the sale
acted in bad faith and therefore must be treated, vis-a-vis each other, as
having acted in good faith. The return of the properties by the vendee is a
necessary consequence of the decree of annulment. No part of the
purchase price having been paid, as far as the record shows, the trial
court correctly made no corresponding order for the restitution thereof.
In regard to the rents the trial court found that prior to the sale the
Mindanao Academy, Inc., was paying P300.00 monthly for its occupancy
of the lands on which the buildings are situated. This is the amount the
defendant has been ordered to pay to the plaintiffs in Civil Case No. 1907,
beginning July 31, 1956, when he filed his "first pleading" in the case. son Sotero. Erlinda D. Diaz could just as well have refrained from joining

There can be no doubt that Erlinda D. Diaz is entitled to recover a share as plaintiff in the action for rescission, not being a party to the contract
of the said rents in proportion to her own interests in the lands and the sought to be rescission and being already one of the plaintiffs in the other
interest in the four co-owners which she had acquired. Rosenda Nuqui action. In other words, it cannot be said with justification that she was

and her son Sotero, it is true, acted in bad faith when they sold the constrained to litigate, in Civil Case No. 1907, because of some cause

properties as theirs alone, but so did the defendant Yap when he attributable to the appellant.
purchased them with knowledge of the fact that there were other co-
The appellant claims reimbursement for the value of the improvements he
owners. Although the bad faith of one party neutralizes that of the other
allegedly introduced in the schools, consisting of a new building worth
and hence as between themselves their rights would be as if both of them
P8,000.00 and a toilet costing P800.00, besides laboratory equipment,
had acted in good faith at the time of the transaction, this legal fiction of
furniture, fixtures and books for the libraries. It should be noted that the
Yap's good faith ceased when the complaint against him was filed, and
judgment of the trial court specifies, for delivery to the plaintiffs (in Civil
consequently the court's declaration of liability for the rents thereafter is
Case No. 1907), only "the buildings and grounds described in the mutual
correct and proper. A possessor in good faith is entitled to the fruits only
agreement together with all the permanent improvements thereon." If the
so long as his possession is not legally interrupted, and such interruption
defendant constructed a new building, as he alleges, he cannot recover its
takes place upon service of judicial summons (Arts. 544 and 1123, Civil
value because the construction was done after the filing of the action for
Code).
annulment, thus rendering him a builder in bad faith who is denied by law

In our opinion the award of attorney's fees to Erlinda D. Diaz and her any right of reimbursement.
husband is erroneous. Civil Case No. 1907, in which said fees have been
In connection with the equipment, books, furniture and fixtures brought in
adjudged, is for rescission (more properly resolution) of the so-called
by him, he is not entitled to reimbursement either, because the judgment
"mutual agreement" on the ground that the defendant Yap failed to
does not award them to any of the plaintiffs in these two actions. What is
comply with certain undertakings specified therein relative to the payment
adjudged (in Civil Case No. 1774) is for the defendant to restore to the
of the purchase price. Erlinda Diaz was not a party to that agreement and
Mindanao Academy, Inc. all the books, laboratory apparatus, furniture
hence had no cause of action for rescission. And as already stated, the
and other equipment "described in the Mutual Agreement and specified
trial court did not decide the matter of rescission because of the decree of
in the Inventory attached to the records of this case; or in default thereof,
annulment it rendered in the other case (Civil Case No. 1774), wherein the
their value in the amount of P23,500.00." In other words, whatever has
defendants are not only Ildefonso D. Yap but also Rosenda Nuqui and her
been brought in by the defendant is outside the scope of the judgment IV. Under the fifth and last assignment of error the appellant insists on the

and may be retained by him.
III. The appellant's fourth assignment of error refers to the nominal and
exemplary damages, as well as the attorney's fees, granted to the
stockholders of the Mindanao Academy, Inc. The trial court awarded no
compensatory damages because the Mindanao Academy, Inc. had been
operating the two schools at a loss before the sale in question, and the
defendant himself was no more successful after he took over. Are the
stockholders of the said corporation who joined as plaintiffs in Civil Case
No. 1774 entitled to nominal and exemplary damages? We do not believe
warranty provided for in clause VI of the deed of sale in view of the claims
of the co-owners who did not take part therein. The said clause provides:
"if any claim shall be filed against the properties or any right, share or
interest which are in the possession of the party of the First Part (vendors)
which had been hereby transferred, ceded and conveyed unto the party
of the Second Part (vendee) the party of the First Part assumes as it
hereby holds itself answerable.
It is unnecessary to pass upon the question posed in this assignment of
error in view of the total annulment of the sale on grounds concerning

so. According to their second amended complaint they were joined which both parties thereto were at fault. The nullity of the contract
merely pro forma, and "for the sole purpose of the moral damage which precludes enforcement of any of its stipulations.
has been all the time alleged in the original complaint." Indeed the
WHEREFORE, the judgment appealed from is modified by eliminating
interests of the said stockholders, if any, were already represented by the
therefrom the award of attorney's fees of P1,000.00 in favor of Erlinda D.
corporation itself, which was the proper party plaintiff; and no cause of
Diaz and her husband, plaintiffs in Civil Case No. 1907, and the award of
action accruing to them separately from the corporation is alleged in the
nominal and exemplary damages in Civil Case No. 1774; and making the
complaint, other than that for moral damages due to "extreme mental
award of attorney's fees in the sum of P2,000.00 payable to counsel for
anguish, serious anxiety and wounded feelings." The trial court, however,
the account of the Mindanao Academy, Inc. instead of the plaintiff
ruled out this claim for moral damages and no appeal from such ruling
stockholders. In all other respects the judgment appealed from is
has been taken. The award for nominal and exemplary damages should
affirmed. No pronouncement as to costs
be eliminated in toto.

The award for attorney's fees in the amount of P2,000.00 should be

upheld, although the same should be for the account, not of the plaintiff
stockholders of the Mindanao Academy, Inc., but of the corporation itself,
and payable to their common counsel as prayed for in the complaint.
FELIX BUCTON AND NICANORA GABAR BUCTON vs. ZOSIMO GABAR,
JOSEFINA LLAMOSO GABAR AND THE HONORABLE COURT OF APPEALS
G.R. No. L-36359 January 31, 1974
Plaintiff Nicanora Gabar Bucton (wife of her co-plaintiff Felix Bucton) is the
sister of defendant Zosimo Gabar, husband of his co-defendant Josefina
Llamoso Gabar.
This action for specific performance prays, inter-alia, that defendants-
spouses be ordered to execute in favor of plaintiffs a deed of sale of the
western half of a parcel of land having an area of 728 sq. m. covered by
TCT No. II (from OCT No. 6337) of the office of the Register of Deeds of
Misamis Oriental.
Plaintiffs' evidence tends to show that sometime in 1946 defendant
Josefina Llamoso Gabar bought the above-mentioned land from the
spouses Villarin on installment basis, to wit, P500 down, the balance
payable in installments. Josefina entered into a verbal agreement with her
sister-in-law, plaintiff Nicanora Gabar Bucton, that the latter would pay
one-half of the price (P3,000) and would then own one-half of the land.
Pursuant to this understanding Nicanora on January 19, 1946 gave her
sister-in-law Josefina the initial amount of P1,000, for which the latter
signed a receipt marked as Exhibit A.
Subsequently, on May 2, 1948 Nicanora gave Josefina P400. She later
signed a receipt marked as Exhibit B.
On July 30, 1951 plaintiffs gave defendants P1,000 in concept of loan, for
which defendant Zosimo Gabar signed a receipt marked as Exhibit E.
Meanwhile, after Josefina had received in January, 1946 the initial amount
of P1,000 as above stated, plaintiffs took possession of the portion of the
land indicated to them by defendants and built a modest nipa house
therein. About two years later plaintiffs built behind the nipa house
another house for rent. And, subsequently, plaintiffs demolished the nipa
house and in its place constructed a house of strong materials, with three
apartments in the lower portion for rental purposes. Plaintiffs occupied
the upper portion of this house as their residence, until July, 1969 when
they moved to another house, converting and leasing the upper portion
as a dormitory.
In January, 1947 the spouses Villarin executed the deed of sale of the land
abovementioned in favor of defendant Josefina Llamoso Gabar, Exhibit I,
to whom was issued on June 20, 1947 TCT No. II, cancelling OCT No.
6337. Exhibit D.
Plaintiffs then sought to obtain a separate title for their portion of the
land in question. Defendants repeatedly declined to accommodate
plaintiffs. Their excuse: the entire land was still mortgaged with the
Philippine National Bank as guarantee for defendants' loan of P3,500
contracted on June 16, 1947: Exhibit D-1.
Plaintiffs continued enjoying their portion of the land, planting fruit trees
and receiving the rentals of their buildings. In 1953, with the consent of
defendants (who were living on their portion), plaintiffs had the entire
land surveyed and subdivided preparatory to obtaining their separate title
to their portion. After the survey and the planting of the concrete
monuments defendants erected a fence from point 2 to point 4 of the
plan, Exhibit I, which is the dividing line between the portion pertaining to
defendants, Exhibit I-1, and that pertaining to plaintiffs, Exhibit I-2.
In the meantime, plaintiffs continued to insist on obtaining their separate
title. Defendants remained unmoved, giving the same excuse. Frustrated,
plaintiffs were compelled to employ Atty. Bonifacio Regalado to intercede;
counsel tried but failed. Plaintiffs persevered, this time employing Atty.
Aquilino Pimentel, Jr. to persuade defendants to comply with their
obligation to plaintiffs; this, too, failed. Hence, this case, which has cost
plaintiffs P1,500 in attorney's fees.
Defendants' evidence based only on the testimony of defendant
Josefina Llamoso Gabar denies agreement to sell to plaintiffs one-half
of the land in litigation. She declared that the amounts she had received
from plaintiff Nicanora Gabar Bucton first, P1,000, then P400 were
loans, not payment of one-half of the price of the land (which was
P3,000). This defense is devoid of merit.
When Josefina received the first amount of P1,000 the receipt she signed,
Exhibit A, reads:
Cagayan, Mis. Or.
January 19, 1946
Received from Mrs. Nicanora Gabar the sum of one thousand (P1,000)
pesos, victory currency, as part payment of the one thousand five
hundred (P1,500.00) pesos, which sum is one-half of the purchase value of
Lot No. 337, under Torrens Certificate of Title No. 6337, sold to me by
Mrs. Carmen Roa Villarin.
"(Sgd.) Josefina Ll. Gabar".
On the basis of the facts quoted above the trial court on February 14,
1970, rendered judgment the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered for plaintiffs:
1) Ordering defendants within thirty days from receipt hereof to execute a
deed of conveyance in favor of plaintiffs of the portion of the land
covered by OCT No. II, indicated as Lot 337-B in the Subdivision Plan,
Exhibit I, and described in the Technical Description, Exhibit 1-2; should
defendants for any reason fail to do so, the deed shall be executed in
their behalf by the Provincial Sheriff of Misamis Oriental or his Deputy;
2) Ordering the Register of Deeds of Cagayan de Oro, upon presentation
to him of the above-mentioned deed of conveyance, to cancel TCT No. II
and in its stead to issue Transfer Certificates of Title, to wit, one to
plaintiffs and another to defendants, based on the subdivision Plan and
Technical Description above-mentioned; and ordering defendants to
present and surrender to the Register of Deeds their TCT No. II so that the
same may be cancelled; and
3) Ordering defendants to pay unto plaintiffs attorney's fees in the
amount of P1,500 and to pay the costs.
SO ORDERED.
Appeal was interposed by private respondents with the Court of Appeals,
which reversed the judgment of the trial court and ordered petitioners'
complaint dismissed, on the following legal disquisition:
Appellees' alleged right of action was based on the receipt (Exh. A) which
was executed way back on January 19, 1946. An action arising from a
written contract does not prescribe until after the lapse of ten (10) years
from the date of action accrued. This period of ten (10) years is expressly
provided for in Article 1144 of the Civil Code.
From January 19, 1946 to February 15, 1968, when the complaint was filed
in this case, twenty-two (22) years and twenty-six (26) days had elapsed.
Therefore, the plaintiffs' action to enforce the alleged written contract
(Exh. A) was not brought within the prescriptive period of ten (10) years
from the time the cause of action accrued.
The land in question is admittedly covered by a torrens title in the name
of Josefina Llamoso Gabar so that the alleged possession of the land by
the plaintiffs since 1947 is immaterial because ownership over registered
realty may not be acquired by prescription or adverse possession (Section
40 of Act 496).
It is not without reluctance that in this case we are constrained to sustain
the defense of prescription, for we think that plaintiffs really paid for a
portion of the lot in question pursuant to their agreement with the
defendants that they would then own one-half of the land. But we cannot
apply ethical principles in lieu of express statutory provisions. It is by law
provided that:
"ART. 1144. The following actions must be brought within ten years from
the time the right of action accrues:
1. Upon a written contract;
2. Upon an obligation created by law;
3. Upon a judgment."
If eternal vigilance is the price of safety, one cannot sleep on one's right
and expect it to be preserved in its pristine purity.
Petitioners' appeal is predicated on the proposition that owners of the
property by purchase from private respondents, and being in actual,
continuous and physical possession thereof since the date of its purchase,
their action to compel the vendors to execute a formal deed of
conveyance so that the fact of their ownership may be inscribed in the
corresponding certificate of title, had not yet prescribed when they filed
the present action.
We hold that the present appeal is meritorious.
1. There is no question that petitioner Nicanora Gabar Bucton paid
P1,500.00 to respondent Josefina Gabar as purchase price of one-half of
the lot now covered by TCT No. II, for respondent Court of Appeals found
as a fact "that plaintiffs really paid for a portion of the lot in question
pursuant to their agreement with the defendants that they would own
one-half (1/2) of the land." That sale, although not consigned in a public
instrument or formal writing, is nevertheless valid and binding between
petitioners and private respondents, for the time-honored rule is that
even a verbal contract of sale or real estate produces legal effects
between the parties.1 Although at the time said petitioner paid P1,000.00
as part payment of the purchase price on January 19, 1946, private
respondents were not yet the owners of the lot, they became such owners
on January 24, 1947, when a deed of sale was executed in their favor by The real and ultimate basis of petitioners' action is their ownership of

the Villarin spouses. In the premises, Article 1434 of the Civil Code, which one-half of the lot coupled with their possession thereof, which entitles
provides that "[w]hen a person who is not the owner of a thing sells or them to a conveyance of the property. In Sapto, et al. v. Fabiana,3 this
alienates and delivers it, and later the seller or grantor acquires title Court, speaking thru Mr. Justice J.B.L. Reyes, explained that, under the

thereto, such title passes by operation of law to the buyer or grantee," is circumstances no enforcement of the contract is needed, since the

applicable.2 Thus, the payment by petitioner by Nicanora Gabar Bucton of delivery of possession of the land sold had consummated the sale and
P1,000.00 on January 19, 1946, her second payment of P400.00 on May 2, transferred title to the purchaser, and that, actually, the action for

1948, and the compensation, up to the amount of P100.00 (out of the conveyance is one to quiet title, i.e., to remove the cloud upon the

P1,000.00-loan obtained by private respondents from petitioners on July appellee's ownership by the refusal of the appellants to recognize the sale
30, 1951), resulted in the full payment of the purchase price and the made by their predecessors. We held therein that "... it is an established
consequential acquisition by petitioners of ownership over one-half of the rule of American jurisprudence (made applicable in this jurisdiction by Art.

lot. Petitioners therefore became owners of the one-half portion of the lot 480 of the New Civil Code) that actions to quiet title to property in the
in question by virtue of a sale which, though not evidenced by a formal possession of the plaintiff are imprescriptible (44 Am. Jur. p. 47;

deed, was nevertheless proved by both documentary and parole Cooper vs. Rhea, 20 L.R.A. 930; Inland Empire Land Co. vs. Grant County,

evidence. 138 Wash. 439, 245 Pac. 14).

2. The error of respondent Court of Appeals in holding that petitioners' The prevailing rule is that the right of a plaintiff to have his title to land

right of action had already prescribed stems from its belief that the action quieted, as against one who is asserting some adverse claim or lien

of petitioners is based on the receipt Exh. "A" which was executed way thereon, is not barred while the plaintiff or his grantors remain in actual

back on January 19, 1946, and, therefore, in the view of said appellate possession of the land, claiming to be owners thereof, the reason for this
court, since petitioners' action was filed on February 15, 1968, or after the rule being that while the owner in fee continues liable to an action,

lapse of twenty-two (22) years and twenty-six (26) days from, the date of proceeding, or suit upon the adverse claim, he has a continuing right to
said document, the same is already barred according to the provisions of the aid of a court of equity to ascertain and determine the nature of such

Article 1144 of the New Civil Code. The aforecited document (Exh. "A"), as claim and its effect on his title, or to assert any superior equity in his favor.
well as the other documents of similar import (Exh. "B" and Exh. "E"), are He may wait until his possession is disturbed or his title in attacked before
the receipts issued by private respondents to petitioners, evidencing taking steps to vindicate his right. But the rule that the statute of

payments by the latter of the purchase price of one-half of the lot. limitations is not available as a defense to an action to remove a cloud
from title can only be invoked by a complainant when he is in possession.
One who claims property which is in the possession of another must, it
seems, invoke remedy within the statutory period. (44 Am. Jur., p. 47)
The doctrine was reiterated recently in Gallar v. Husain, et al.,4 where We
ruled that by the delivery of the possession of the land, the sale was
consummated and title was transferred to the appellee, that the action is
actually not for specific performance, since all it seeks is to quiet title, to
remove the cloud cast upon appellee's ownership as a result of
appellant's refusal to recognize the sale made by his predecessor, and
that as plaintiff-appellee is in possession of the land, the action is
imprescriptible. Considering that the foregoing circumstances obtain in
the present case, We hold that petitioners' action has not prescribed.
WHEREFORE, the decision and resolution of respondent Court of Appeals
appealed from are hereby reversed, and the judgment of the Court of
First Instance of Misamis Oriental, Branch IV, in its Civil Case No. 3004, is
revived. Costs against private respondents.
EDCA PUBLISHING & DISTRIBUTING CORP. vs. THE SPOUSES LEONOR
and GERARDO SANTOS
G.R. No. 80298 April 26, 1990
The case before us calls for the interpretation of Article 559 of the Civil
Code and raises the particular question of when a person may be deemed
to have been "unlawfully deprived" of movable property in the hands of
another. The article runs in full as follows:
Art. 559. 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 or 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.
The movable property in this case consists of books, which were bought
from the petitioner by an impostor who sold it to the private respondents.
Ownership of the books was recognized in the private respondents by the
Municipal Trial Court, 1 which was sustained by the Regional Trial
Court, 2 which was in turn sustained by the Court of Appeals. 3 The
petitioner asks us to declare that all these courts have erred and should
be reversed.
This case arose when on October 5, 1981, a person identifying himself as
Professor Jose Cruz placed an order by telephone with the petitioner
company for 406 books, payable on delivery. 4 EDCA prepared the
corresponding invoice and delivered the books as ordered, for which Cruz
issued a personal check covering the purchase price of P8,995.65. 5 On
October 7, 1981, Cruz sold 120 of the books to private respondent Leonor
Santos who, after verifying the seller's ownership from the invoice he
showed her, paid him P1,700.00. 6
Meanwhile, EDCA having become suspicious over a second order placed
by Cruz even before clearing of his first check, made inquiries with the De
la Salle College where he had claimed to be a dean and was informed compounded the wrong even more deplorably. Questions like the one at

that there was no such person in its employ. Further verification revealed bar are decided not by policemen but by judges and with the use not of
that Cruz had no more account or deposit with the Philippine Amanah brute force but of lawful writs.
Bank, against which he had drawn the payment check. 7 EDCA then went
Now to the merits
to the police, which set a trap and arrested Cruz on October 7, 1981.

Investigation disclosed his real name as Tomas de la Pea and his sale of
120 of the books he had ordered from EDCA to the private respondents.
On the night of the same date, EDCA sought the assistance of the police
in Precinct 5 at the UN Avenue, which forced their way into the store of
the private respondents and threatened Leonor Santos with prosecution
for buying stolen property. They seized the 120 books without warrant,
loading them in a van belonging to EDCA, and thereafter turned them
It is the contention of the petitioner that the private respondents have not
8
established their ownership of the disputed books because they have not
even produced a receipt to prove they had bought the stock. This is
unacceptable. Precisely, the first sentence of Article 559 provides that "the
possession of movable property acquired in good faith is equivalent to a
title," thus dispensing with further proof.
The argument that the private respondents did not acquire the books in

over to the petitioner. 9

good faith has been dismissed by the lower courts, and we agree. Leonor
Santos first ascertained the ownership of the books from the EDCA
Protesting this high-handed action, the private respondents sued for
invoice showing that they had been sold to Cruz, who said he was selling
recovery of the books after demand for their return was rejected by
them for a discount because he was in financial need. Private respondents
EDCA. A writ of preliminary attachment was issued and the petitioner,
are in the business of buying and selling books and often deal with hard-
after initial refusal, finally surrendered the books to the private
up sellers who urgently have to part with their books at reduced prices.
respondents. 10 As previously stated, the petitioner was successively
To Leonor Santos, Cruz must have been only one of the many such sellers
rebuffed in the three courts below and now hopes to secure relief from
she was accustomed to dealing with. It is hardly bad faith for any one in
us.
the business of buying and selling books to buy them at a discount and

To begin with, the Court expresses its disapproval of the arbitrary action resell them for a profit.
of the petitioner in taking the law into its own hands and forcibly
But the real issue here is whether the petitioner has been unlawfully
recovering the disputed books from the private respondents. The
deprived of the books because the check issued by the impostor in
circumstance that it did so with the assistance of the police, which should
payment therefor was dishonored.
have been the first to uphold legal and peaceful processes, has
In its extended memorandum, EDCA cites numerous cases holding that Art. 1478. The parties may stipulate that ownership in the thing shall not

the owner who has been unlawfully deprived of personal property is pass to the purchaser until he has fully paid the price.
entitled to its recovery except only where the property was purchased at a
It is clear from the above provisions, particularly the last one quoted, that
public sale, in which event its return is subject to reimbursement of the
ownership in the thing sold shall not pass to the buyer until full payment
purchase price. The petitioner is begging the question. It is putting the
of the purchase only if there is a stipulation to that effect. Otherwise, the
cart before the horse. Unlike in the cases invoked, it has yet to be
rule is that such ownership shall pass from the vendor to the vendee upon
established in the case at bar that EDCA has been unlawfully deprived of
the actual or constructive delivery of the thing sold even if the purchase
the books.
price has not yet been paid.
The petitioner argues that it was, because the impostor acquired no title
Non-payment only creates a right to demand payment or to rescind the
to the books that he could have validly transferred to the private
contract, or to criminal prosecution in the case of bouncing checks. But
respondents. Its reason is that as the payment check bounced for lack of
absent the stipulation above noted, delivery of the thing sold will
funds, there was a failure of consideration that nullified the contract of
effectively transfer ownership to the buyer who can in turn transfer it to
sale between it and Cruz.
another.
The contract of sale is consensual and is perfected once agreement is
In Asiatic Commercial Corporation v. Ang, 11 the plaintiff sold some
reached between the parties on the subject matter and the consideration.
cosmetics to Francisco Ang, who in turn sold them to Tan Sit Bin. Asiatic
According to the Civil Code:
not having been paid by Ang, it sued for the recovery of the articles from
Art. 1475. The contract of sale is perfected at the moment there is a Tan, who claimed he had validly bought them from Ang, paying for the

meeting of minds upon the thing which is the object of the contract and same in cash. Finding that there was no conspiracy between Tan and Ang
upon the price. to deceive Asiatic the Court of Appeals declared:

From that moment, the parties may reciprocally demand performance, Yet the defendant invoked Article 464 12
of the Civil Code providing,

subject to the provisions of the law governing the form of contracts. among other things that "one who has been unlawfully deprived of

personal property may recover it from any person possessing it." We do

xxx xxx xxx
not believe that the plaintiff has been unlawfully deprived of the cartons
Art. 1477. The ownership of the thing sold shall be transferred to the of Gloco Tonic within the scope of this legal provision. It has voluntarily

vendee upon the actual or constructive delivery thereof. parted with them pursuant to a contract of purchase and sale. The
circumstance that the price was not subsequently paid did not render
illegal a transaction which was valid and legal at the beginning.
In Tagatac v. Jimenez,13 the plaintiff sold her car to Feist, who sold it to
Sanchez, who sold it to Jimenez. When the payment check issued to
Tagatac by Feist was dishonored, the plaintiff sued to recover the vehicle
from Jimenez on the ground that she had been unlawfully deprived of it
by reason of Feist's deception. In ruling for Jimenez, the Court of Appeals
held:
The point of inquiry is whether plaintiff-appellant Trinidad C. Tagatac has
been unlawfully deprived of her car. At first blush, it would seem that she
was unlawfully deprived thereof, considering that she was induced to part
with it by reason of the chicanery practiced on her by Warner L. Feist.
Certainly, swindling, like robbery, is an illegal method of deprivation of
property. In a manner of speaking, plaintiff-appellant was "illegally
deprived" of her car, for the way by which Warner L. Feist induced her to
part with it is illegal and is punished by law. But does this "unlawful
deprivation" come within the scope of Article 559 of the New Civil Code?
xxx xxx xxx
. . . 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.).
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.
The above rulings are sound doctrine and reflect our own interpretation
of Article 559 as applied to the case before us.
Actual delivery of the books having been made, Cruz acquired ownership
over the books which he could then validly transfer to the private
respondents. The fact that he had not yet paid for them to EDCA was a
matter between him and EDCA and did not impair the title acquired by
the private respondents to the books.
One may well imagine the adverse consequences if the phrase "unlawfully
deprived" were to be interpreted in the manner suggested by the
petitioner. A person relying on the seller's title who buys a movable
property from him would have to surrender it to another person claiming
to be the original owner who had not yet been paid the purchase price
therefor. The buyer in the second sale would be left holding the bag, so
to speak, and would be compelled to return the thing bought by him in
good faith without even the right to reimbursement of the amount he
had paid for it.
It bears repeating that in the case before us, Leonor Santos took care to
ascertain first that the books belonged to Cruz before she agreed to
purchase them. The EDCA invoice Cruz showed her assured her that the
books had been paid for on delivery. By contrast, EDCA was less than
cautious in fact, too trusting in dealing with the impostor. Although it
had never transacted with him before, it readily delivered the books he
had ordered (by telephone) and as readily accepted his personal check in
payment. It did not verify his identity although it was easy enough to do
this. It did not wait to clear the check of this unknown drawer. Worse, it
indicated in the sales invoice issued to him, by the printed terms thereon,
that the books had been paid for on delivery, thereby vesting ownership
in the buyer.
Surely, the private respondent did not have to go beyond that invoice to
satisfy herself that the books being offered for sale by Cruz belonged to
him; yet she did. Although the title of Cruz was presumed under Article
559 by his mere possession of the books, these being movable property,
Leonor Santos nevertheless demanded more proof before deciding to
buy them.
It would certainly be unfair now to make the private respondents bear the
prejudice sustained by EDCA as a result of its own negligence. 1wphi1 We
cannot see the justice in transferring EDCA's loss to the Santoses who had
acted in good faith, and with proper care, when they bought the books
from Cruz.
While we sympathize with the petitioner for its plight, it is clear that its
remedy is not against the private respondents but against Tomas de la
Pea, who has apparently caused all this trouble. The private respondents
have themselves been unduly inconvenienced, and for merely transacting
a customary deal not really unusual in their kind of business. It is they and
not EDCA who have a right to complain.
WHEREFORE, the challenged decision is AFFIRMED and the petition is
DENIED, with costs against the petitioner.
JOSE B. AZNAR vs. RAFAEL YAPDIANGCO
G.R. No. L-18536 March 31, 1965
This is an appeal, on purely legal questions, from a decision of the Court
of First Instance of Quezon City, Branch IV, declaring the intervenor-
appellee, Teodoro Santos, entitled to the possession of the car in dispute.
The records before this Court disclose that sometime in May, 1959,
Teodoro Santos advertised in two metropolitan papers the sale of his
FORD FAIRLANE 500. In the afternoon of May 28, 1959, a certain L. De
Dios, claiming to be a nephew of Vicente Marella, went to the Santos
residence to answer the ad. However, Teodoro Santos was out during this
call and only the latter's son, Irineo Santos, received and talked with De
Dios. The latter told the young Santos that he had come in behalf of his of sale from Irineo Santos on the pretext that he would like to show them

uncle, Vicente Marella, who was interested to buy the advertised car. to his lawyer. Trusting the good faith of Marella, Irineo handed over the
same to the latter and thereupon, in the company of L. De Dios and
On being informed of the above, Teodoro Santos instructed his son to
another unidentified person, proceeded to the alleged house of Marella's
see the said Vicente Marella the following day at his given address: 1642
sister.
Crisostomo Street, Sampaloc, Manila. And so, in the morning of May 29,

1959, Irineo Santos went to the above address. At this meeting, Marella At a place on Azcarraga, Irineo Santos and L. De Dios alighted from the

agreed to buy the car for P14,700.00 on the understanding that the price car and entered a house while their unidentified companion remained in

would be paid only after the car had been registered in his name. the car. Once inside, L. De Dios asked Irineo Santos to wait at the sala
while he went inside a room. That was the last that Irineo saw of him. For,
Irineo Santos then fetched his father who, together with L. De Dios, went
after a considerable length of time waiting in vain for De Dios to return,
to the office of a certain Atty. Jose Padolina where the deed of the sale for
Irineo went down to discover that neither the car nor their unidentified
the car was executed in Marella's favor. The parties to the contract
companion was there anymore. Going back to the house, he inquired
thereafter proceeded to the Motor Vehicles Office in Quezon City where
from a woman he saw for L. De Dios and he was told that no such name
the registration of the car in Marella's name was effected. Up to this stage
lived or was even known therein. Whereupon, Irineo Santos rushed to
of the transaction, the purchased price had not been paid.
1642 Crisostomo to see Marella. He found the house closed and Marella

From the Motor Vehicles Office, Teodoro Santos returned to his house. gone. Finally, he reported the matter to his father who promptly advised

He gave the registration papers and a copy of the deed of sale to his son, the police authorities.
Irineo, and instructed him not to part with them until Marella shall have
That very same day, or on the afternoon of May 29, 1959 Vicente Marella
given the full payment for the car. Irineo Santos and L. De Dios then
was able to sell the car in question to the plaintiff-appellant herein, Jose B.
proceeded to 1642 Crisostomo Street, Sampaloc, Manila where the former
Aznar, for P15,000.00. Insofar as the above incidents are concerned, we
demanded the payment from Vicente Marella. Marella said that the
are bound by the factual finding of the trial court that Jose B. Aznar
amount he had on hand then was short by some P2,000.00 and begged
acquired the said car from Vicente Marella in good faith, for a valuable
off to be allowed to secure the shortage from a sister supposedly living
consideration and without notice of the defect appertaining to the
somewhere on Azcarraga Street, also in Manila. Thereafter, he ordered L.
vendor's title.
De Dios to go to the said sister and suggested that Irineo Santos go with

him. At the same time, he requested the registration papers and the deed
While the car in question was thus in the possession of Jose B. Aznar and owner cannot obtain its return without reimbursing the price paid

while he was attending to its registration in his name, agents of the therefor.
Philippine Constabulary seized and confiscated the same in consequence
From this decision, Jose B. Aznar appeals.
of the report to them by Teodoro Santos that the said car was unlawfully

taken from him. The issue at bar is one and simple, to wit: Between Teodoro Santos and

the plaintiff-appellant, Jose B. Aznar, who has a better right to the

In due time, Jose B. Aznar filed a complaint for replevin against Captain
possession of the disputed automobile?
Rafael Yapdiangco, the head of the Philippine Constabulary unit which

seized the car in question Claiming ownership of the vehicle, he prayed
for its delivery to him. In the course of the litigation, however, Teodoro
Santos moved and was allowed to intervene by the lower court.
At the end of the trial, the lower court rendered a decision awarding the
disputed motor vehicle to the intervenor-appellee, Teodoro Santos. In
brief, it ruled that Teodoro Santos had been unlawfully deprived of his
personal property by Vicente Marella, from whom the plaintiff-appellant
traced his right. Consequently, although the plaintiff-appellant acquired
the car in good faith and for a valuable consideration from Vicente
Marella, the said decision concluded, still the intervenor-appellee was
entitled to its recovery on the mandate of Article 559 of the New Civil
Code which provides:
We find for the intervenor-appellee, Teodoro Santos.
The plaintiff-appellant accepts that the car in question originally belonged
to and was owned by the intervenor-appellee, Teodoro Santos, and that
the latter was unlawfully deprived of the same by Vicente Marella.
However, the appellant contends that upon the facts of this case, the
applicable provision of the Civil Code is Article 1506 and not Article 559 as
was held by the decision under review. Article 1506 provides:
ART. 1506. Where the seller of goods has a voidable title thereto, but his,
title has not been voided at the time of the sale, the buyer acquires a
good title to the goods, provided he buys them in good faith, for value,
and without notice of the seller's defect of title.

The contention is clearly unmeritorious. Under the aforequoted provision,

ART. 559. The possession of movable property acquired in good faith is
it is essential that the seller should have a voidable title at least. It is very
equivalent to title. Nevertheless, one who lost any movable or has been
clearly inapplicable where, as in this case, the seller had no title at all.
unlawfully deprived thereof, may recover it from the person in possession
of the same. Vicente Marella did not have any title to the property under litigation
because the same was never delivered to him. He sought ownership or
If the possessor of a movable lost or of which the owner has been
acquisition of it by virtue of the contract. Vicente Marella could have
unlawfully deprived, has acquired it in good faith at a public sale, the
acquired ownership or title to the subject matter thereof only by the In the case on hand, the car in question was never delivered to the

delivery or tradition of the car to him. vendee by the vendor as to complete or consummate the transfer of
ownership by virtue of the contract. It should be recalled that while there
Under Article 712 of the Civil Code, "ownership and other real rights over
was indeed a contract of sale between Vicente Marella and Teodoro
property are acquired and transmitted by law, by donation, by testate and
Santos, the former, as vendee, took possession of the subject matter
intestate succession, and in consequence of certain contracts, by
thereof by stealing the same while it was in the custody of the latter's son.
tradition." As interpreted by this Court in a host of cases, by this provision,

ownership is not transferred by contract merely but by tradition or There is no adequate evidence on record as to whether Irineo Santos

delivery. Contracts only constitute titles or rights to the transfer or voluntarily delivered the key to the car to the unidentified person who
acquisition of ownership, while delivery or tradition is the mode of went with him and L. De Dios to the place on Azcarraga where a sister of
accomplishing the same (Gonzales v. Rojas, 16 Phil. 51; Ocejo, Perez and Marella allegedly lived. But even if Irineo Santos did, it was not the

Co. v. International Bank, 37 Phil. 631, Fidelity and Deposit Co. v. Wilson, 8 delivery contemplated by Article 712 of the Civil Code. For then, it would
Phil. 51; Kuenzle & Streiff v. Wacke & Chandler, 14 Phil. 610; Easton v. Diaz be indisputable that he turned it over to the unidentified companion only

Co., 32 Phil. 180). so that he may drive Irineo Santos and De Dios to the said place on

Azcarraga and not to vest the title to the said vehicle to him as agent of
For the legal acquisition and transfer of ownership and other property
Vicente Marella. Article 712 above contemplates that the act be coupled
rights, the thing transferred must be delivered, inasmuch as, according to
with the intent of delivering the thing. (10 Manresa 132)
settled jurisprudence, the tradition of the thing is a necessary and

indispensable requisite in the acquisition of said ownership by virtue of The lower court was correct in applying Article 559 of the Civil Code to
contract. (Walter Laston v. E. Diaz & Co. & the Provincial Sheriff of the case at bar, for under it, the rule is to the effect that if the owner has

Albay, supra.) lost a thing, or if he has been unlawfully deprived of it, he has a right to

recover it, not only from the finder, thief or robber, but also from third
So long as property is not delivered, the ownership over it is not
persons who may have acquired it in good faith from such finder, thief or
transferred by contract merely but by delivery. Contracts only constitute
robber. The said article establishes two exceptions to the general rule of
titles or rights to the transfer or acquisition of ownership, while delivery or
irrevindicability, to wit, when the owner (1) has lost the thing, or (2) has
tradition is the method of accomplishing the same, the title and the
been unlawfully deprived thereof. In these cases, the possessor cannot
method of acquiring it being different in our law. (Gonzales v. Roxas, 16
retain the thing as against the owner, who may recover it without paying
Phil. 51)
any indemnity, except when the possessor acquired it in a public sale. (Del
Rosario v. Lucena, 8 Phil. 535; Varela v. Finnick, 9 Phil. 482; Varela v. common law principle that where one of two innocent persons must

Matute, 9 Phil. 479; Arenas v. Raymundo, 19 Phil. 46. Tolentino, id., Vol. II, suffer by a fraud perpetrated by another, the law imposes the loss upon
p. 261.) 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
In the case of Cruz v. Pahati, et al., 52 O.G. 3053 this Court has already
provision of the new Civil Code, specifically Article 559. Between a
ruled
common law principle and a statutory provision, the latter must prevail in
that
this jurisdiction. (Cruz v. Pahati, supra)
Under Article 559 of the new Civil Code, a person illegally deprived of any
UPON ALL THE FOREGOING, the instant appeal is hereby dismissed and
movable may recover it from the person in possession of the same and
the decision of the lower court affirmed in full. Costs against the
the only defense the latter may have is if he has acquired it in good faith
appellant.
at a public sale, in which case, the owner cannot obtain its return without

reimbursing the price paid therefor. In the present case, plaintiff has been
illegally deprived of his car through the ingenious scheme of defendant B
JOSE R. CRUZ vs. REYNALDO PAHATI, ET AL.
to enable the latter to dispose of it as if he were the owner thereof.
G.R. No. L-8257 April 13, 1956
Plaintiff, therefore, can still recover possession of the car even if it is in the

possession of a third party who had acquired it in good faith from

This is an action of replevin instituted by plaintiff in the Court of Firts
defendant B. The maxim that "no man can transfer to another a better
Instance of Manila to recover the possession of an automobile and certain
title than he had himself" obtains in the civil as well as in the common law.
amount as damages and attorney's fees resulting from his illegal
(U.S. v. Sotelo, 28 Phil. 147)
deprivation thereof.
Finally, the plaintiff-appellant here contends that inasmuch as it was the
The original defendants were Reynaldo Pahati and Felixberto Bulahan but,
intervenor-appellee who had caused the fraud to be perpetrated by his
upon amendment of the complaint, Jesusito Belizo was included as party
misplaced confidence on Vicente Marella, he, the intervenor-appellee,
defendant who was summoned by publication because his whereabouts
should be made to suffer the consequences arising therefrom, following
were not known. Belizo failed to appear or answer the complaint and so
the equitable principle to that effect. Suffice it to say in this regard that
he was declared default.
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

Pahati admitted having bought the automobile from Bulahan, for the sum
of P4,900 which he paid in check. When the Manila Police Department
impounded the automobile, he cancelled the sale and stopped the
payment of the check and as a result he returned the automobile to
Bulahan who in turned surrended the check for cancellation. He set up a
counterclaim for the sum of P2,000 as attorney's fees.
Bulahan on his part claims that he acquired the automobile from Jesusito
Belizo for value and without having any knowledge of any defect in the
title of the latter; that plaintiff had previously acquired title to said
automobile by purchase from Belizo as evidenced by a deed of sale
executed to that effect; that later plaintiff delivered the possession of the
automobile to Belizo for resale and to facilitate it he gave the latter a
letter of authority to secure a new certificate of registration in his name
(plaintiff's) and that by having clothed Belizo with an apparent ownership
or authority to sell the automobile, plaintiff is now estopped to deny such
ownership or authority. Bulahan claims that between two innocent parties,
he who gave occasion, through his conduct, to the falsification committed
by Belizo, should be the one to suffer the loss and this one is the plaintiff.
Bulahan also set up a counterclaim for P17,000 as damages and attorney's
fees.
After the presentation of the evidence, the court rendered judgment
declaring defendant Bulahan entitled to the automobile in question and
consequently ordered the plaintiff to return it to said defendant and,
upon his failure to do so, to pay him the sum of P4,900, with legal interest
from the date of the decision. The claim for damages and attorney's fees
of Bulahan was denied. Defendant Belizo was however ordered to
indemnify the plaintiff in the amount of P4,900 and pay the sum of P5,000
as moral damages. The counterclaim of defendant Pahati was denied for
lack of evidence. The case was taken directly to this Court by the plaintiff.
The lower court found that the automobile in question was originally
owned by the Nothern Motors, Inc. which later sold it to Chinaman Lu
Dag. This Chinaman sold it afterwards to Jesusito Belizo and the latter in
turn sold it to plaintiff. Belizo was then a dealer in second hand cars. One
year thereafter, Belizo offered the plaintiff to sell the automobile for him
claiming to have a buyer for it. Plaintiff agreed. At that time, plaintiff's
certificate of registration was missing and, upon the suggestion of Belizo,
plaintiff wrote a letter addressed to the Motor Section of the Bureau of
Public Works for the issuance of a new registration certificate alleging as
reason the loss of the one previously issued to him and stating that he
was intending to sell his car. This letter was delivered to Belizo on March
3, 1952. He also turned over Belizo the automobile on the latter's pretext
that he was going to show it to a prospective buyer. On March 7, 1952,
the letter was falsified and converted into an authorized deed of sale in
favor of Belizo by erasing a portion thereof and adding in its place the
words "sold the above car to Mr. Jesusito Belizo of 25 Valencia, San
Francisco del Monte, for Five Thousand Pesos (P5,000)." Armed with this
deed of sale, Belizo succeeded in ontaining a certificate of registration in
his name on the same date, March 7, 1952, and also on the same date,
Belizo sold the car to Felixberto Bulahan who in turn sold it to Reynaldo
Pahati, a second hand car dealer. These facts show that the letter was
falsified by Belizo to enable him to sell the car to Bulahan for a valuable
consideration.
This is a case which involves a conflict of rights of two persons who claim
to be the owners of the same property; plaintiff and defendant Bulahan.
Both were found by the lower court to be innocent and to have acted in
good faith. They were found to be the victims of Belizo who falsified the
letter given him by plaintiff to enable him to sell the car of Bulahan for
profit. Who has, therefore, a better right of the two over the car?.
The law applicable to the case is Article 559 of the new Civil Code which
provides:
ART. 559. 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 or 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.
It appears that "one who has lost any movable or has been unlawfully
deprived thereof, may recover it from the person in possession of the
same" and the only defense the latter may have is if he "has acquired it in
good faith at a public sale" in which case "the owner cannot obtain its
return without reimbursing the price paid therefor." And supplementing
this provision, Article 1505 of the same Code provides that "where goods
are sold by a person who is not the owner thereof, and who does not sell
them under authority or with the consent of the owner, the buyer
acquires no better title to the goods than the seller had, unless the owner
of the goods is by his conduct precluded from denying the seller's
authority to sell.
Applying the above legal provisions to the facts of this case, one is
inevitably led to the conclusion that plaintiff has a better right to the car in
question than defendant Bulahan for it cannot be disputed that plaintiff
had been illegally deprived thereof because of the ingenious scheme
utilized by Belizo to enable him to dispose of it as if he were the owner
thereof. Plaintiff therefore can still recover the possession of the car even
if defendant Bulahan had acted in good faith in purchasing it from Belizo.
Nor can it be pretended that the conduct of plaintiff in giving Belizo a
letter to secure the issuance of a new certificate of registration constitutes
a sufficient defense that would preclude recovery because of the
undisputed fact that that letter was falsified and this fact can be clearly
seen by a cursory examination of the document. If Bulahan had been
more diligent he could have seen that the pertinent portion of the letter
had been erased which would have placed him on guard to make an
inquiry as regards the authority of Belizo to sell the car. This he failed to
do.
The right of the plaintiff to the car in question can also be justified under
the doctrine laid down in U. S. vs. Sotelo, 28 Phil., 147. This is a case of
estafa wherein one Sotelo misappropriated a ring belonging to Alejandra
Dormir. In the course of the decision, the Court said that "Whoever may
have been deprived of his 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" (p. 147), which refers to property
pledged in the "Monte de Piedad", an establishment organized under the
authority of the Government. The Court further said: It is a fundamental
principle of our law of personal property that no man can be divested of
it without his own consent; consequently, even an honest purchaser,
under a defective title, cannot resist the claim of the true owner. The
maxim that 'No man can transfer a better title than he has himself "obtain
in the civil as well as in the common law." (p. 158).
Counsel for appellee places much reliance on the common law principle
that "Where one of two innocent parties 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" (Sager
vs. W. T. Rawleight Co. 153 Va. 514, 150 S. E. 244, 66 A.L.R. 305), and
contends that, as between plaintiff and Bulahan, the former should bear
the loss because of the confidence he reposed in Belizo which enabled
the latter to commit the falsification. But this principle cannot be applied
to this case which is coverred by an express provision of our new Civil
Code. Between a common law principle and a statutory provision, the
latter must undoubtedly prevail in this jurisdiction. Moreover we entertain
serious doubt if, under the circumstances obtaining, Bulahan may be
considered more innocent than the plaintiff in dealing with the car in
question. We prefer not to elaborate on this matter it being necessary
considering the conclusion we have reached.
Wherefore, the decision appealed from is reversed. The Court declares
plaintiff to be entitled to recover the car in question, and orders
defendant Jesusito Belizo to pay him the sum of P5,000 as moral
damages, plus P2,000 as attorney's fees. The Court absolves defendant
Bulahan and Pahati from the complaint as regards the claim for damages,
reserving to Bulahan whatever action he may deem proper to take against
Jesusito Belizo. No costs.
DOMINADOR DIZON, doing business under the firm name "Pawnshop of
Dominador Dizon vs. LOURDES G. SUNTAY
G.R. No. L-30817 September 29, 1972
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 ... ."2 Then came this portion of the decision under review: "Since the

a careful perusal of the respective contentions of the parties, we fail to plaintiff insistently demanded from Clarita R. Sison the return of her ring,
perceive any sufficient justification for a departure from the literal the latter finally delivered to the former the pawnshop ticket ... which is
language of the applicable codal provision as uniformly interpreted by the receipt of the pledge with the defendant's pawnshop of the plaintiff's

this Court in a number of decisions. The invocation of estoppel is ring. When the plaintiff found out that Clarita R. Sison pledged, she took

therefore unavailing. We affirm. 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 ...
The statement of the case as well as the controlling facts may be found in
dated September 22, 1962, to the defendant asking for the delivery to the
the Court of Appeals decision penned by Justice Perez. Thus: "Plaintiff is
plaintiff of her ring pledged with defendant's pawnshop under pawnshop
the owner of a three-carat diamond ring valued at P5,500.00. On June 13,
receipt serial-B No. 65606, dated June 15, 1962 ... . Since the defendant
1962, the plaintiff and Clarita R. Sison entered into a transaction wherein
refused to return the ring, the plaintiff filed the present action with the
the plaintiff's ring was delivered to Clarita R. Sison for sale on commission.
Court of First Instance of Manila for the recovery of said ring, with P500.00
Upon receiving the ring, Clarita R. Sison executed and delivered to the
as attorney's fees and costs. The plaintiff asked for the provisional remedy
plaintiff the receipt ... . The plaintiff had already previously known Clarita
of replevin by the delivery of the ring to her, upon her filing the requisite
R. Sison as the latter is a close friend of the plaintiff's cousin and they had
bond, pending the final determination of the action. The lower court
frequently met each other at the place of the plaintiff's said cousin. In fact,
issued the writ of replevin prayed for by plaintiff and the latter was able to
about one year before their transaction of June 13, 1962 took place,
take possession of the ring during the pendency of the action upon her
Clarita R. Sison received a piece of jewelry from the plaintiff to be sold for
filing the requisite bond."3 It was then noted that the lower court
P500.00, and when it was sold, Clarita R. Sison gave the price to the
rendered judgment declaring that plaintiff, now respondent Suntay, had
plaintiff. After the lapse of a considerable time without Clarita R. Sison
the right to the possession of the ring in question. Petitioner Dizon, as
having returned to the plaintiff the latter's ring, the plaintiff made
defendant, sought to have the judgment reversed by the Court of
demands on Clarita R. Sison for the return of her ring but the latter could
Appeals. It did him no good. The decision of May 19, 1969, now on review,
not comply with the demands because, without the knowledge of the
affirmed the decision of the lower court.
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 In the light of the facts as thus found by the Court of Appeals, well-nigh
by Melia Sison, niece of the husband of Clarita R. Sison, evidently in conclusive on use, with the applicable law being what it is, this petition for

connivance with the latter, with the defendant's pawnshop for P2,600.00
review cannot prosper. To repeat, the decision of the Court of Appeals a case which is covered by an express provision of the new Civil Code,

stands. specifically Article 559. Between a common law principle and a statutory
provision, the latter must prevail in this jurisdiction." " 5
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 2. It must have been a recognition of the compulsion exerted by the
controlling provision is Article 559 of the Civil Code. It reads thus: 'The above authoritative precedents that must have caused petitioner to

possession of movable property acquired in good faith is equivalent to a invoke the principle of estoppel. There is clearly a misapprehension. Such

title. Nevertheless, one who has lost any movable or has been unlawfully a contention is devoid of any persuasive force.
deprived thereof may recover it from the person in possession of the
Estoppel as known to the Rules of Court 6 and prior to that to the Court of
same. If the possessor of a movable lost of which the owner has been
Civil Procedure,7 has its roots in equity. Good faith is its basis. 8 It is a
unlawfully deprived, has acquired it in good faith at a public sale, the
response to the demands of moral right and natural justice. 9 For estoppel
owner cannot obtain its return without reimbursing the price paid
to exist though, it is indispensable that there be a declaration, act or
therefor.' Respondent Angelina D. Guevara, having been unlawfully
omission by the party who is sought to be bound. Nor is this all. It is
deprived of the diamond ring in question, was entitled to recover it from
equally a requisite that he, who would claim the benefits of such a
petitioner Consuelo S. de Garcia who was found in possession of the
principle, must have altered his position, having been so intentionally and
same. The only exception the law allows is when there is acquisition in
deliberately led to comport himself thus, by what was declared or what
good faith of the possessor at a public sale, in which case the owner
was done or failed to be done. If thereafter a litigation arises, the former
cannot obtain its return without reimbursing the price. As authoritatively
would not be allowed to disown such act, declaration or omission. The
interpreted in Cruz v. Pahati, the right of the owner cannot be defeated
principle comes into full play. It may successfully be relied upon. A court is
even by proof that there was good faith in the acquisition by the
to see to it then that there is no turning back on one's word or a
possessor. There is a reiteration of this principle in Aznar v. Yapdiangco.
repudiation of one's act. So it has been from our earliest decisions. As
Thus: 'Suffice it to say in this regard that the right of the owner to recover
Justice Mapa pointed out in the first case, a 1905 decision, Rodriguez v.
personal property acquired in good faith by another, is based on his
Martinez, 10 a party should not be permitted "to go against his own acts to
being dispossessed without his consent. The common law principle that
the prejudice of [another]. Such a holding would be contrary to the most
were one of two innocent persons must suffer by a fraud perpetrated by
rudimentary principles of justice and law." 11
He is not, in the language of
another, the law imposes the loss upon the party who, by his misplaced
Justice Torres, in Irlanda v. Pitargue, 12 promulgated in 1912, "allowed to
confidence, has enabled the fraud to be committed, cannot be applied in
gainsay [his] own acts or deny rights which [he had] previously
recognized." 13Some 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 faith at a public sale, the owner cannot obtain its return without
angle the question is viewed then, estoppel certainly cannot be justly reimbursing the price paid therefor ."1
invoked.
Senator Tolentino's submittal in his commentaries on the Civil Code "that

WHEREFORE, the decision of the Court of Appeals of May 19, 1969 is the better view is to consider 'unlawfully deprived' as limited to unlawful

affirmed, with costs against petitioner. taking, such as theft or robbery, and should not include disposition
through abuse of confidence. Thus, if the owner has entrusted personal

property to a bailee, such as for transportation, pledge, loan or deposit,

without transmitting ownership, and the latter alienates it to a third

person who acquires it in good faith, the owner cannot recover it from
such third person, "is, as he himself admits, based on the express

provision of the French Code which allows the true owner of personal
property to recover it from the possessor in good faith without
reimbursement only "if it has been stolen from him." He concedes likewise

that "our Code, following the Spanish code, uses broader language than

that used in the French code" since our Code provides that the owner
Separate Opinions
who has been "unlawfully deprived" of personal property may recover it

TEEHANKEE, J., concurring: from the possessor without reimbursement, with the sole exception where

the possessor acquired the article in good faith at a public sale.2

I concur in the main opinion of Mr. Justice Fernando, tracing and
confirming the long settled and uniform jurisprudence since 1905 based He thus concedes finally that "(T)here are writers who believe that the

on the express statutory provision of article 559 of our Civil Code phrase 'unlawfully deprived' in our Code does not have the same

(formerly article 464 of the old Civil Code) that the owner "who has lost meaning as stolen in the French code; that it is used in the general sense,

any movable or has been unlawfully deprived thereof may recover it from and is not used in the specific sense of deprivation by robbery or theft.

the person in possession of the same," the only exception expressly Under this view, it extends to all cases where there has been no valid

provided in the codal article being that "if the possessor of a movable lost transmission of ownership, including the case where the proprietor has

of which the owner has been unlawfully deprived, has acquired it in good entrusted the thing to a borrower, depositary, or lessee who has sold the
same. It is believed that the owner in such case is undoubtedly unlawfully
deprived of his property, and may recover the same from a possessor in pledge entered into by both, is of course, null and void, and,

good faith" (citing De Buen: 2-II Colin & Capitant 1008; 1 Bonet consequently the jewelry so pawned can not serve as security for the
234)3 and cites the long unbroken line of decisions of the Court of payment of the sum loaned, nor can the latter be collected out of the
Appeals and of this Court upholding the import of the broader language value of the said jewelry.

of the codal article in question.

Article 1857 of the Civil Code prescribes as one of the essential requisites

Indeed, if our legislature had intended to narrow the scope of the term of the contracts of pledge and of mortgage, that the thing pledged or

"unlawfully deprived" to "stolen" as advocated by Tolentino, it certainly mortgaged must belong to the person who pledges or mortgages it. This

would have adopted and used such a narrower term rather than the essential requisite for the contract of pledge between Perello and the
broad language of article 464 of the old Spanish Civil Code with its long- defendant being absent as the former was not the owner of the jewelry

established and accepted meaning in accordance with our jurisprudence. 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

Petitioner's contentions at bar had long been disposed of in the Court's
express provision of the law, it can not confer upon the defendant any
1911 decision of Arenas vs. Raymundo,4 per Mr. Justice Florentino Torres,
rights in the pledged jewelry, nor impose any obligation toward him on
reiterating the doctrine of the earlier cases and holding that
the part of the owner thereof, since the latter was deprived of her

Even supposing that the defendant Raymundo had acted in good faith in possession by means of the illegal pledging of the said jewelry, a criminal

accepting the pledge of the jewelry in litigation, even then he would not act.

be entitled to retain it until the owner thereof reimburse him for the
Between the supposed good faith of the defendant Raymundo and the
amount loaned to the embezzler, since the said owner of the jewelry, the
undisputed good faith of the plaintiff Arenas, the owner of the jewelry,
plaintiff, did not make any contract with the pledgee, that would obligate
neither law nor justice permit that the latter, after being the victim of
him to pay the amount loaned to Perello, and the trial record does not
embezzlement, should have to choose one of the two extremes of a
disclose any evidence, even circumstantial, that the plaintiff Arenas
dilemma, both of which, without legal ground or reason, are injurious and
consented to or had knowledge of the pledging of her jewelry in the
prejudicial to her interests and rights, that is, she must either lose her
pawnshop of the defendant.
jewelry or pay a large sum received by the embezzler as a loan from the

For this reason, and because Concepcion Perello was not the legitimate defendant, when the plaintiff Arenas is not related to the latter by any
owner of the jewelry which she pledged to the defendant Raymundo, for legal or contractual bond out of which legal obligations arise.
a certain sum that she received from the latter as a loan, the contract of
xxx xxx xxx The civil action that the owner must resort to for the recovery of his

personal property of which he has been unlawfully deprived as against

The business of pawnshops, in exchange for the high and onerous
the possessor (where the latter refuses to honor the claim, presumably on
interest which constitutes its enormous profits, is always exposed to the
same valid doubts as to the genuineness of the claim) gives the possessor
contingency of receiving in pledge or security for the loans, jewels and
every adequate protection and opportunity to contest the owner's claim
other articles that have been robbed, stolen, or embezzled from their
of recovery. The owner must therein establish by competent evidence his
legitimate owners; and as the owner of the pawnshop accepts the
lawful claim, and show to the court's satisfaction his lawful ownership of
pledging of jewelry from the first bearer who offers the same and asks for
the article claimed and that he had been unlawfully deprived thereof.
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 I therefore find no reason to set aside the long settled interpretation
and more preferential protection than the owner of the jewels or other given by our jurisprudence to article 559 (formerly article 464) of our Civil

articles, who was deprived thereof by means of a crime and is entitled to Code in accordance with its clear and unambiguous language, as

be excused by the courts. reaffirmed in the case at bar.

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.

By the same token, the contention that the owner may recover the lost

article of which he has been unlawfully deprived without reimbursement

of the sum received by the embezzler from the pawnshop only after a

criminal conviction of the embezzler, is to add a requirement that is not in

the codal article and to unduly prejudice the victim of embezzlement, as

pointed out by the Court in Arenas, supra.


LOSS, DETERIORATION, FRUITS & OTHER BENEFITS
PEDRO ROMAN vs. ANDRES GRIMALT
G.R. No. L-2412 April 11, 1906
On July 2, 1904, counsel for Pedro Roman filed a complaint in the Court of
First Instance of this city against Andres Grimalt, praying that judgment be
entered in his favor and against the defendant (1) for the purchase price
of the schooner Santa Marina, to wit, 1,500 pesos or its equivalent in
Philippine currency, payable by installments in the manner stipulated; (2)
for legal interest on the installments due on the dates set forth in the
complaint; (3) for costs of proceedings; and (4) for such other and further
remedy as might be considered just and equitable.
On October 24 of the same year the court made an order sustaining the
demurer filed by defendant to the complaint and allowing plaintiff ten
days within which to amend his complaint. To this order the plaintiff duly
excepted.
Counsel for plaintiff on November 5 amended his complaint and alleged
that between the 13th and the 23rd day of June, 1904, both parties,
through one Fernando Agustin Pastor, verbally agreed upon the sale of
the said schooner; that the defendant in a letter dated June 23 had
agreed to purchase the said schooner and of offered to pay therefor in
three installment of 500 pesos each, to wit, on July 15, September 15, and
November 15, adding in his letter that if the plaintiff accepted the plan of
payment suggested by him the sale would become effective on the
following day; that plaintiff on or about the 24th of the same month had
notified the defendant through Agustin Pastor that he accepted the plan
of payment suggested by him and that from that date the vessel was at
his disposal, and offered to deliver the same at once to defendant if he so
desired; that the contract having been closed and the vessel being ready
for delivery to the purchaser, it was sunk about 3 o'clock p. m., June 25, in
the harbor of Manila and is a total loss, as a result of a severe storm; and
that on the 30th of the same month demand was made upon the
defendant for the payment of the purchase price of the vessel in the
manner stipulated and defendant failed to pay. Plaintiff finally prayed that
judgment be rendered in accordance with the prayer of his previous
complaint.
Defendant in his answer asked that the complaint be dismissed with costs
to the plaintiff, alleging that on or about June 13 both parties met in a
public establishment of this city and the plaintiff personally proposed to
the defendant the sale of the said vessel, the plaintiff stating that the
vessel belonged to him and that it was then in a sea worthy condition;
that defendant accepted the offer of sale on condition that the title
papers were found to be satisfactory, also that the vessel was in a
seaworthy condition; that both parties then called on Calixto Reyes, a
notary public, who, after examining the documents, informed them that
they were insufficient to show the ownership of the vessel and to transfer
title thereto; that plaintiff then promised to perfect his title and about
June 23 called on defendant to close the sale, and the defendant
believing that plaintiff had perfected his title, wrote to him on the 23d of
June and set the following day for the execution of the contract, but,
upon being informed that plaintiff had done nothing to perfect his title,
he insisted that he would buy the vessel only when the title papers were
perfected and the vessel duly inspected.
Defendant also denied the other allegations of the complaint inconsistent
with his own allegations and further denied the statement contained in
paragraph 4 of the complaint to the effect that the contract was
completed as to the vessel; that the purchase price and method of
payment had been agreed upon; that the vessel was ready for delivery to
the purchaser and that an attempt had been made to deliver the same,
but admitted, however, the allegations contained in the last part of the
said paragraph.
The court below found that the parties had not arrived at a definite
understanding. We think that this finding is supported by the evidence
introduced at the trial.
A sale shall be considered perfected and binding as between vendor and
vendee when they have agreed as to the thing which is the object of the
contract and as to the price, even though neither has been actually
delivered. (Art. 1450 of the Civil Code.)
Ownership is not considered transmitted until the property is actually
delivered and the purchaser has taken possession of the value and paid
the price agreed upon, in which case the sale is considered perfected.
When the sale is made by means of a public instrument the execution
thereof shall be equivalent to the delivery of the thing which is the object
of the contract. (Art. 1462 of the Civil Code.)
Pedro Roman, the owner, and Andres Grimalt, the purchaser, had been
for several days negotiating for the purchase of the schooner Santa
Marina from the 13th to the 23d of June, 1904. They agreed upon the
sale of the vessel for the sum of 1,500 pesos, payable in three installments,
provided the title papers to the vessel were in proper form. It is so stated
in the letter written by the purchaser to the owner on the 23rd of June.
The sale of the schooner was not perfected and the purchaser did not
consent to the execution of the deed of transfer for the reason that the
title of the vessel was in the name of one Paulina Giron and not in the
name of Pedro Roman, the alleged owner. Roman promised, however, to
perfect his title to the vessel, but he failed to do so. The papers presented
by him did not show that he was the owner of the vessel.
If no contract of sale was actually executed by the parties the loss of the
vessel must be borne by its owner and not by a party who only intended
to purchase it and who was unable to do so on account of failure on the
part of the owner to show proper title to the vessel and thus enable them
to draw up the contract of sale.
The vessel was sunk in the bay on the afternoon of the 25th of June, 1904,

during a severe storm and before the owner had complied with the
LAWYERS COOPERATIVE PUBLISHING COMPANY vs. PERFECTO A.
condition exacted by the proposed purchaser, to wit, the production of
TABORA
the proper papers showing that the plaintiff was in fact the owner of the
G.R. No. L-21263 April 30, 1965
vessel in question.

The defendant was under no obligation to pay the price of the vessel, the On May 3, 1955, Perfecto A. Tabora bought from the Lawyers Cooperative

purchase of which had not been concluded. The conversations had Publishing Company one complete set of American Jurisprudence

between the parties and the letter written by defendant to plaintiff did not consisting of 48 volumes with 1954 pocket parts, plus one set of American
establish a contract sufficient in itself to create reciprocal rights between Jurisprudence, General Index, consisting of 4 volumes, for a total price of

the parties. P1,675.50 which, in addition to the cost of freight of P6.90, makes a total

of P1,682.40. Tabora made a partial payment of P300.00, leaving a

It follows, therefore, that article 1452 of the Civil Code relative to the injury
balance of P1,382.40. The books were duly delivered and receipted for by
or benefit of the thing sold after a contract has been perfected and
Tabora on May 15, 1955 in his law office Ignacio Building, Naga City.
articles 1096 and 1182 of the same code relative to the obligation to
deliver a specified thing and the extinction of such obligation when the In the midnight of the same date, however, a big fire broke out in that

thing is either lost or destroyed, are not applicable to the case at bar. locality which destroyed and burned all the buildings standing on one
whole block including at the law office and library of Tabora As a result,
The first paragraph of article 1460 of the Civil Code and section 335 of the
the books bought from the company as above stated, together with
Code of Civil Procedure are not applicable. These provisions contemplate
Tabora's important documents and papers, were burned during the
the existence of a perfected contract which can not, however, be enforced
conflagration. This unfortunate event was immediately reported by
on account of the entire loss of the thing or made the basis of an action
Tabora to the company in a letter he sent on May 20, 1955. On May 23,
in court through failure to conform to the requisites provided by law.
the company replied and as a token of goodwill it sent to Tabora free of

The judgment of the court below is affirmed and the complaint is charge volumes 75, 76, 77 and 78 of the Philippine Reports. As Tabora

dismissed with costs against the plaintiff. After the expiration of twenty failed to pay he monthly installments agreed upon on the balance of the

days from the date hereof let judgment be entered in accordance purchase price notwithstanding the long time that had elapsed, the
herewith and ten days thereafter let the case be remanded to the Court of company demanded payment of the installments due, and having failed,

First Instance for proper action. So ordered. to pay the same, it commenced the present action before the Court of
First Instance of Manila for the recovery of the balance of the obligation. Appellant now contends that since it was agreed that the title to and the

Plaintiff also prayed that defendant be ordered to pay 25% of the amount ownership of the books shall remain with the seller until the purchase
due as liquidated damages, and the cost of action. price shall have been fully paid, and the books were burned or destroyed
immediately after the transaction, appellee should be the one to bear the
Defendant, in his answer, pleaded force majeure as a defense. He alleged
loss for, as a result, the loss is always borne by the owner. Moreover, even
that the books bought from the plaintiff were burned during the fire that
assuming that the ownership of the books were transferred to the buyer
broke out in Naga City on May 15, 1955, and since the loss was due
after the perfection of the contract the latter should not answer for the
to force majeure he cannot be held responsible for the loss. He prayed
loss since the same occurred through force majeure. Here, there is no
that the complaint be dismissed and that he be awarded moral damages
evidence that appellant has contributed in any way to the occurrence of
in the amount of P15,000.00.
the conflagration.1wph1.t
After due hearing, the court a quo rendered judgment for the plaintiff. It
This contention cannot be sustained. While as a rule the loss of the object
ordered the defendant to pay the sum of P1,382.40, with legal interest
of the contract of sale is borne by the owner or in case of force
thereon from the filing of the complaint, plus a sum equivalent to 25% of
majeure the one under obligation to deliver the object is exempt from
the total amount due as liquidated damages, and the cost of action.
liability, the application of that rule does not here obtain because the law

Defendant took the case to the Court of Appeals, but the same is now on the contract entered into on the matter argues against it. It is true that

before us by virtue of a certification issued by that Court that the case in the contract entered into between the parties the seller agreed that the

involves only questions of law. ownership of the books shall remain with it until the purchase price shall

have been fully paid, but such stipulation cannot make the seller liable in
Appellant bought from appellee one set of American Jurisprudence,
case of loss not only because such was agreed merely to secure the
including one set of general index, payable on installment plan. It was
performance by the buyer of his obligation but in the very contract it was
provided in the contract that "title to and ownership of the books shall
expressly agreed that the "loss or damage to the books after delivery to
remain with the seller until the purchase price shall have been fully paid.
the buyer shall be borne by the buyer." Any such stipulation is sanctioned
Loss or damage to the books after delivery to the buyer shall be borne by
by Article 1504 of our Civil Code, which in part provides:
the buyer." The total price of the books, including the cost of freight,
amounts to P1,682.40. Appellant only made a down payment of P300.00 (1) Where delivery of the goods has been made to the buyer or to a
thereby leaving a balance of P1,382.40. This is now the import of the bailee for the buyer, in pursuance of the contract and the ownership in

present action aside from liquidated damages. the goods has been retained by the seller merely to secure performance
by the buyer of his obligations under the contract, the goods are at the

buyer's risk from the time of such delivery.

Neither can appellant find comfort in the claim that since the books were

destroyed by fire without any fault on his part he should be relieved from
the resultant obligation under the rule that an obligor should be held

exempt from liability when the loss occurs thru a fortuitous event. This is

because this rule only holds true when the obligation consists in the

delivery of a determinate thing and there is no stipulation holding him

liable even in case of fortuitous event. Here these qualifications are not
present. The obligation does not refer to a determinate thing, but is

pecuniary in nature, and the obligor bound himself to assume the loss
after the delivery of the goods to him. In other words, the obligor agreed
to assume any risk concerning the goods from the time of their delivery,

which is an exception to the rule provided for in Article 1262 of our Civil

Code.

Appellant likewise contends that the court a quo erred in sentencing him

to pay attorney's fees. This is merely the result of a misapprehension for

what the court a quo ordered appellant to pay is not 25% of the amount
due as attorney's fees, but as liquidated damages, which is in line with an

express stipulation of the contract. We believe, however, that the

appellant should not be made to pay any damages because his denial to

pay the balance of the account is not due to bad faith.

WHEREFORE, the decision appealed from is modified by eliminating that

portion which refers to liquidated damages. No costs.