1. G.R. No.

77266 July 19, 1989

ARTHUR PAJUNAR and INVENCIA PAJUNAR, petitioners,

vs.
HON. COURT OF APPEALS, MAURO ELUNA and TEOFILA ELUNA, respondents.
PARAS, J.:
This is a petition for review on certiorari seeking to set aside the decision of the Second Division of
the Court of Appeals ** in C.A. G.R. No. SP. 02247 (UDK 7544), entitled "Arthur & Invencia Pajunar v. Hon. Pedro Gabaton, Judge,
RTC, Branch XLI, Negros Oriental, Mauro Eluna and Teofila Eluna" for Recovery of Personal Property with Writ of Replevin which affirmed the
Order of the aforenamed Regional Trial Court of Negros Oriental *** which reads:

This is a case of Recovery of Personal Property with a Writ of Replevin filed by one
Arthur and Invencia Pajunar as plaintiffs, against one Mauro and Teofila Eluna as
defendants, tried and decided by the Municipal Court of Siaton.
The decision is in favor of the defendants and against the plaintiffs apparently based
primarily on the preponderance of evidence and prescription.
Upon close reading of the exhaustive memorandum submitted by each of the parties
in this case and a close perusal of all the evidences on record and checking them
against the decision itself appealed, this court is of the opinion and so holds that the
grounds upon which this decision is based are well taken, so that there is nothing that
this court can add neither can deduct for the same conforms to the thinking of this
court.
WHEREFORE, premises considered, the appealed decision of the above-entitled case
rendered by the Municipal Court of Siaton is hereby affirmed. (Rollo, p. 9)
The facts of the case as found by public respondent Court of Appeals are as follows:
Sometime in 1969, respondent Mauro Eluna bartered his three-year old male cow for one year old
female carabao then in the possession of Aurelio Enopia. The female carabao, which is the one in
question, bore the brand "ART" in her front and hind legs at the time she was acquired by Mauro.
Although the animal was branded, said respondent did not or could not register the transfer to him.
In March, 1980, petitioner Arthur Pajunar learned that the disputed carabao was in the possession
of respondent Eluna. Claiming that he was the original owner of the carabao which got lost in 1974,
petitioner demanded her return. He demanded also the delivery to him of the two offsprings of the
carabao which were five years and eight months old at the time they were registered in 1980.
When Eluna refused to do so despite repeated demands, petitioner went to court to recover
possession (Rollo, pp. 10-11).
From the adverse order of the Regional Trial Court, plaintiff appealed to public respondent Court of
Appeals.
In its decision dated October 30, 1986, the Court of Appeals affirmed the decision of the lower
court, with appellate tribunal declaring:
Consequently, since respondent Eluna had possessed the carabao since 1969, that is,
for more than ten (10) years, he acquired ownership by prescription under Article
1132 of the Civil Code.

ART. 1132. The ownership of movables prescribes through uninterrupted possession

for four years in good faith.
The ownership of personal property also prescribes through uninterrupted possession
for eight years, without need of any other condition.
With regard to the right of the owner to recover personal property lost or of which he
has been illegally deprived, as well as with respect to movables acquired in a public
sale, fair or market, or from a merchant's store, the provisions of articles 559 and
1505 of this Code shall be observed. (1955a).
On March 23, 1987, the Court resolved, after considering the pleadings filed by both respondent
and petitioner, to give due course to the petition.
The three assignments of error raised by the petitioner (Rollo, p. 4) in this case, may be reduced to
one main issue:
Whether or not the findings of the lower court which were affirmed by the Court of
Appeals are supported by substantial evidence.
Petitioner contends that private respondent Eluna has failed to establish his ownership of the
mestisa carabao found in his possession. Since the female carabao bears the brand "ART" on the
fore and hind legs of the animal as branded by petitioners before it got lost (Rollo, p. 4), failure of
defendant Mauro Eluna to register in his name the said carabao, constitutes a flaw in his ownership
as required by law (Rollo, pp. 10-11).
Private respondents claim that the female carabao has been in their possession for more than ten
(10) years as the subject carabao was acquired by the defendants now respondents through barter
from one Aurelio Enopia in 1969. The incident was discovered by the plaintiffs only in March, 1980.
Hence respondents acquired ownership of said carabao by prescription under Article 1132 of the
Civil Code (Rollo, p. 12) as found by public respondent Court of Appeals.
The trial court's findings of facts carry great weight for having the advantage of having examined
the deportment and demeanor of the witnesses. The only exception to the rule is when the trial
court plainly overlooked certain facts and circumstances of weight and influence which, if
considered, will materially alter the result of the case (People v. Ramos, 153 SCRA 276 [1987];
People v. Camay, 152 SCRA 401 [1987]).
A careful examination of the records shows that there are circumstances of substance and value
which were overlooked and which affect the result of the case.
This can be gleaned from the decision of the Court of Appeals, when it stated:
In issuing the foregoing order, the respondent Judge apparently relied on the findings
of fact and conclusions of law made by the Municipal Court of Siaton, Negros Oriental.
Unfortunately, the decision of the Municipal Court was wanting in many respects
particularly in its findings. It failed, for instance, to make a determination of certain
factual matters which could have helped in the faster disposition of the case. Instead
of general statements explaining why he was adopting the decision of the Municipal
Court, it would have been better if the respondent Judge had made his own finding
and analysis of the evidence on record. This was called for because the respondent
Judge was acting in the exercise of the appellate jurisdiction of his court. (Emphasis
supplied) (Rollo, p. 10)

Well-settled is the rule that findings of facts of the Appellate Court are generally binding on this
Court (People v. Atanacio, 128 SCRA 22 [1984] Aguirre v. People, 155 SCRA 337 [1987]; Cue Bie v.
Intermediate Appellate Court, 154 SCRA 599 [1987]). However, there are exceptions to the general
rule that findings of facts of the Court of Appeals are binding upon the Supreme Court as when the
Court of Appeals clearly misconstrued and misapplied the law, drawn from incorrect conclusions of
fact established by evidence and otherwise at certain conclusions which are based on
misapprehension of facts and pure conjectures, and made inferences which are manifestly mistaken
and absurd (Chase v. Buencamino, Jr., 136 SCRA 365 [1985]; Baliwag Transit, Inc. v. CA, 147 SCRA
82 [1987]; International Harvester, Inc. v. Joson & CA, 149 SCRA 641 [1987]; Maclan v. Santos, 156
SCRA 542 [1987]; Mendoza v. CA, 156 SCRA 597 [1987]).
From the records it is clear that although the animal was branded "ART" in her front and hind legs
at the time she was acquired by respondent Mauro, said respondent did not or could not register
the transfer to him in accordance with Section 529 of the Revised Administrative Code (Rollo, p.
11).
Section 529 of the Revised Administrative Code provides:
Registration necessary to validity of transfer. No transfer shall be valid unless the
same is registered and a certificate of transfer obtained as herein provided, but the
large cattle under two years of age may be registered and branded gratis for the
purpose of effecting a valid transfer, if the registration and transfer are made at the
same time.
The records show that respondents did not comply with this requirement (Petition, p. 2; Rollo, p. 3).
Respondents are not possessors in good faith, as a possessor in good faith is one not aware that
there exists in his title or mode of acquisition any flaw which invalidates it. Furthermore, failure of a
party to exercise precaution to acquaint himself with the defects in the title of his vendor precludes
him claiming possession in good faith (Caram v. Laureta, 103 SCRA [1981] cited in Manotok Realty,
Inc. v. Court of Appeals, 134 SCRA 325 [1985]).
This duty to make a closer inquiry into the certificate of registration of the female carabao which
was the subject of the barter, defendant Mauro Eluna should have performed but did not. Thus, his
being in bad faith, in acquiring the carabao from his vendor, Aurelio Enopia.
Thus, as has been stressed by this Court:
A purchaser cannot close his eyes to facts which should put a reasonable man upon
his guard, and then claim that he acted in good faith under the belief that there was
no defect in the title of the vendor. His mere refusal to believe that such defect exists,
or his willful closing of the eyes to the possibility of the existence of a defect in his
vendor's title will not make him an innocent purchaser for value, if it afterwards
develops that the title was in fact defective and it appears that he had such notice of
the defect would have led to its discovery had he acted with the measure of
precaution which may reasonably be required of a prudent man in a like situation.
(Leung Lee v. Strong, 37 Phil. 644, see also Emos v. Zusuarregui, 53 Phil. 197, cited in
Francisco v. Court of Appeals, 153 SCRA 330).
It is clear from the foregoing that possession in good faith for four (4) years is not applicable,
neither can possession in bad faith of eight (8) years benefit respondents, for when the owner of a
movable has lost or has been illegally deprived of his property he can recover the same without
need to reimburse the possessor, as provided in Art. 559 of the Civil Code which states:

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. (464a)
Neither can Art. 716 of the Civil Code apply, for this article evidently refers to a possessor in good
faith. Art. 716 say:
The owner of a swarm of bees shall have a right to pursue them to another's land,
indemnifying the possessor of the latter for the damage. If the owner has not pursued
the swarm, or ceases to do so within two consecutive days, the possessor of the land
may occupy or retain the same. The owner of domesticated animals may also claim
them within twenty days to be counted from their occupation by another person. This
period having expired, they shall pertain to him who has caught and kept them.
(612a)
PREMISES CONSIDERED, the decision of the Court of Appeals in CA-G.R. SP No. 02247 is REVERSED
and SET ASIDE and petitioners Arthur Pajunar and Invencia Pajunar are declared the owners of the
carabaos in question. SO ORDERED
2. G.R. No. 80298

April 26, 1990

EDCA PUBLISHING & DISTRIBUTING CORP., petitioner,

vs.
THE SPOUSES LEONOR and GERARDO SANTOS, doing business under the name and style of
"SANTOS BOOKSTORE," and THE COURT OF APPEALS, respondents.
CRUZ, J.:
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, which was sustained by the Regional Trial
Court, which was in turn sustained by the Court of Appeals. The petitioner asks us to declare that
all these courts have erred and should be reversed.
1

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. 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. On October 7, 1981, Cruz
4

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 that there was no such person in its employ. Further verification revealed
that Cruz had no more account or deposit with the Philippine Amanah Bank, against which he had
drawn the payment check. EDCA then went 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.
7

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 over to the petitioner.
9

Protesting this high-handed action, the private respondents sued for recovery of the books after
demand for their return was rejected by EDCA. A writ of preliminary attachment was issued and the
petitioner, after initial refusal, finally surrendered the books to the private respondents. As
previously stated, the petitioner was successively rebuffed in the three courts below and now hopes
to secure relief from us.
10

To begin with, the Court expresses its disapproval of the arbitrary action of the petitioner in taking
the law into its own hands and forcibly recovering the disputed books from the private respondents.
The circumstance that it did so with the assistance of the police, which should have been the first
to uphold legal and peaceful processes, has compounded the wrong even more deplorably.
Questions like the one at bar are decided not by policemen but by judges and with the use not of
brute force but of lawful writs.
Now to the merits
It is the contention of the petitioner that the private respondents have not 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 good faith has been
dismissed by the lower courts, and we agree. Leonor Santos first ascertained the ownership of the
books from the EDCA invoice showing that they had been sold to Cruz, who said he was selling
them for a discount because he was in financial need. Private respondents are in the business of
buying and selling books and often deal with hard-up sellers who urgently have to part with their
books at reduced prices. To Leonor Santos, Cruz must have been only one of the many such sellers
she was accustomed to dealing with. It is hardly bad faith for any one in the business of buying and
selling books to buy them at a discount and resell them for a profit.
But the real issue here is whether the petitioner has been unlawfully deprived of the books because
the check issued by the impostor in payment therefor was dishonored.
In its extended memorandum, EDCA cites numerous cases holding that the owner who has been
unlawfully deprived of personal property is entitled to its recovery except only where the property
was purchased at a public sale, in which event its return is subject to reimbursement of the
purchase price. The petitioner is begging the question. It is putting the cart before the horse. Unlike
in the cases invoked, it has yet to be established in the case at bar that EDCA has been unlawfully
deprived of the books.

The petitioner argues that it was, because the impostor acquired no title to the books that he could
have validly transferred to the private respondents. Its reason is that as the payment check
bounced for lack of funds, there was a failure of consideration that nullified the contract of sale
between it and Cruz.
The contract of sale is consensual and is perfected once agreement is reached between the parties
on the subject matter and the consideration. According to the Civil Code:
Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon
the thing which is the object of the contract and upon the price.
From that moment, the parties may reciprocally demand performance, subject to the
provisions of the law governing the form of contracts.
xxx

xxx

xxx

Art. 1477. The ownership of the thing sold shall be transferred to the vendee upon the actual
or constructive delivery thereof.
Art. 1478. The parties may stipulate that ownership in the thing shall not pass to the
purchaser until he has fully paid the price.
It is clear from the above provisions, particularly the last one quoted, that ownership in the thing
sold shall not pass to the buyer until full payment of the purchase only if there is a stipulation to
that effect. Otherwise, the rule is that such ownership shall pass from the vendor to the vendee
upon the actual or constructive delivery of the thing soldeven if the purchase price has not yet
been paid.
Non-payment only creates a right to demand payment or to rescind the contract, or to criminal
prosecution in the case of bouncing checks. But absent the stipulation above noted, delivery of the
thing sold will effectively transfer ownership to the buyer who can in turn transfer it to another.
In Asiatic Commercial Corporation v. Ang, the plaintiff sold some cosmetics to Francisco Ang, who
in turn sold them to Tan Sit Bin. Asiatic not having been paid by Ang, it sued for the recovery of the
articles from Tan, who claimed he had validly bought them from Ang, paying for the same in cash.
Finding that there was no conspiracy between Tan and Ang to deceive Asiatic the Court of Appeals
declared:
11

Yet the defendant invoked Article 464 of the Civil Code providing, among other things that
"one who has been unlawfully deprived of personal property may recover it from any person
possessing it." We do not believe that the plaintiff has been unlawfully deprived of the
cartons of Gloco Tonic within the scope of this legal provision. It has voluntarily 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.
12

In Tagatac v. Jimenez, 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:
13

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. We cannot see the justice in transferring EDCA's loss to the
1wphi1

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.

[G.R. No. 86051. September 1, 1992.]

JAIME LEDESMA, Petitioner, v. THE HONORABLE COURT OF APPEALS and CITIWIDE MOTORS,
INC., Respondents.
SYLLABUS
1. CIVIL LAW; POSSESSION; REQUISITES TO MAKE POSSESSION OF MOVABLE PROPERTY EQUIVALENT TO TITLE. It
is quite clear that a party who (a) has lost any movable or (b) has been unlawfully deprived thereof can recover the
same from the present possessor even if the latter acquired it in good faith and has, therefore, title thereto for
under the first sentence of Article 559, such manner of acquisition is equivalent to a title. There are three (3)
requisites to make possession of movable property equivalent to title, namely: (a) the possession should be in good
faith; (b) the owner voluntarily parted with the possession of the thing; and (c) the possession is in the concept of
owner. (TOLENTINO, A.M., Civil Code of the Philippines, Vol. II, 1983 ed., 275-276, citing 2-II Colin and Capitant 942;
De Buen: Ibid., 1009, 2 Salvat 165; 4 Manresa 339). Undoubtedly, one who has lost a movable or who has been
unlawfully deprived of it cannot be said to have voluntarily parted with the possession thereof. This is the
justification for the exceptions found under the second sentence of Article 559 of the Civil Code.
2. CIVIL LAW; SPECIAL CONTRACTS; CONTRACT OF SALE; ABSENCE OF CONSIDERATION; EFFECT THEREOF. There
was a perfected unconditional contract of sale between private respondent and the original vendee. The former
voluntarily caused the transfer of the certificate of registration of the vehicle in the name of the first vendee even
if the said vendee was represented by someone who used a fictitious name and likewise voluntarily delivered the
cars and the certificate of registration to the vendees alleged representative Title thereto was forthwith transferred
to the vendee. The subsequent dishonor of the check because of the alteration merely amounted to a failure of
consideration which does not render the contract of sale void, but merely allows the prejudiced party to sue for
specific performance or rescission of the contract, and to prosecute the impostor for estafa under Article 315 of the
Revised Penal Code.

DECISION

DAVIDE, JR., J.:

Petitioner impugns the Decision of 22 September 1988 of respondent Court of Appeals 1 in C.A.-G.R. CV No. 05955 2
reversing the decision of then Branch XVIII-B (Quezon City) of the then Court of First Instance (now Regional Trial
Court) of Rizal in a replevin case, Civil Case No. Q-24200, the dispositive portion of which reads:
chanroblesvirt ualawlibrary

"Accordingly, the Court orders the plaintiff to return the repossessed Isuzu Gemini, 1977 Model vehicle, subject of
this case to the defendant Ledesma. The incidental claim (sic) for damages professed by the plaintiff are dismissed
for lack of merit. On defendants counterclaim, Court (sic) makes no pronouncement as to any form of damages,
particularly, moral, exemplary and nominal in view of the fact that Citiwide has a perfect right to litigate its claim,
albeit by this pronouncement, it did not succeed." 3
which was supplemented by a Final Order dated 26 June 1980, the dispositive portion of which reads:

jgc:chanrobles.com.ph

"IN VIEW OF THE FOREGOING, the Court grants defendant Ledesma the sum of P35,000.00 by way of actual
damages recoverable upon plaintiffs replevin bond. Plaintiff and its surety, the Rizal Surety and Insurance Co., are
hereby ordered jointly and severally to pay defendant Jaime Ledesma the sum of P10,000.00 as damages for the
wrongful issue of the writ of seizure, in line with Rule 57, Sec. 20, incorporated in Rule 60, Sec. 10.

In conformity with the rules adverted to, this final order shall form part of the judgment of this Court on September
5, 1979.
The motion for reconsideration of the judgment filed by the plaintiff is hereby DENIED for lack of merit. No costs at
this instance." 4
The decision of the trial court is anchored on its findings that (a) the proof on record is not persuasive enough to
show that defendant, petitioner herein, knew that the vehicle in question was the object of a fraud and a swindle 5
and (b) that plaintiff, private respondent herein, did not rebut or contradict Ledesmas evidence that valuable
consideration was paid for it.
The antecedent facts as summarized by the respondent Court of Appeals are as follows:

jgc:chanrobles.com.ph

"On September 27, 1977, a person representing himself to be Jojo Consunji, purchased purportedly for his father, a
certain Rustico T. Consunji, two (2) brand new motor vehicles from plaintiff-appellant Citiwide Motors, Inc., more
particularly described as follows:
chanrobles lawlibrary : rednad

a) One (1) 1977 Isuzu Gemini, 2-door Model PF 50ZIK, with Engine No. 751214 valued at P42,200.00; and
b) One (1) 1977 Holden Premier Model 8V41X with Engine No. 198-1251493, valued at P58,800.00.
Said purchases are evidenced by Invoices Nos. 3054 and 3055, respectively. (See Annexes A and B).
On September 28, 1977, plaintiff-appellant delivered the two-above described motor vehicles to the person who
represented himself as Jojo Consunji, allegedly the son of the purported buyers Rustico T. Consunji, and said person
in turn issued to plaintiff-appellant Managers Check No. 066-110-0638 of the Philippine Commercial and Industrial
Bank dated September 28, 1977 for the amount of P101,000.00 as full payment of the value of the two (2) motor
vehicles.
However, when plaintiff-appellant deposited the said check, it was dishonored by the bank on the ground that it was
tampered with, the correct amount of P101.00 having been raised to P101,000.00 per the banks notice of dishonor
(Annexes F and G).
On September 30, 1977, plaintiff-appellant reported to the Philippine Constabulary the criminal act perpetrated by
the person who misrepresented himself as Jojo Consunji and in the course of the investigation, plaintiff-appellant
learned that the real identity of the wrongdoer/impostor is Armando Suarez who has a long line of criminal cases
against him for estafa using this similar modus operandi.
On October 17, 1977, plaintiff-appellant was able to recover the Holden Premier vehicle which was found abandoned
somewhere in Quezon City.
On the other hand, plaintiff-appellant learned that the 1977 Isuzu Gemini was transferred by Armando Suarez to
third persona and was in the possession of one Jaime Ledesma at the time plaintiff-appellant instituted this action
for replevin on November 16, 1977.
In his defense, Jaime Ledesma claims that he purchases (sic) and paid for the subject vehicle in good faith from its
registered owner, one Pedro Neyra, as evidenced by the Land Transportation Commission Registration Certificate
No. RCO1427249.
chanrobles.com.ph : virt ual law library

After posting the necessary bond in the amount double the value of the subject motor vehicle, plaintiff-appellant
was able to recover possession of the 1977 Isuzu Gemini as evidenced by the Sheriffs Return dated January 23,
1978." 6
After trial on the merits, the lower court rendered the decision and subsequently issued the Final Order both earlier
adverted to, which plaintiff (private respondent herein) appealed to the respondent Court of Appeals; it submitted
the following assignment of errors:
jgc:chanrobles.com.ph

"The trial court erred.

I
IN HOLDING THAT THE DEFENDANT IS ENTITLED TO THE POSSESSION OF THE CAR;
II

IN HOLDING THAT THE DEFENDANT IS AN INNOCENT PURCHASER IN GOOD FAITH AND FOR VALUE;
III
IN RULING THAT THE PLAINTIFF SHOULD RETURN THE CAR TO DEFENDANT, DISMISSING ITS CLAIM FOR DAMAGES,
AND GRANTING DEFENDANT P35,000.00 DAMAGES RECOVERABLE AGAINST THE REPLEVIN BOND AND P101,000.00
DAMAGES FOR ALLEGED WRONGFUL SEIZURE;
IV
IN RENDERING THE DECISION DATED SEPTEMBER 3, 1979 AND THE FINAL ORDER DATED JUNE 26, 1980." 7
In support of its first and second assigned errors, private respondent cites Article 559 of the Civil Code which
provides:
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"ARTICLE 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."
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Without in any way reversing the findings of the trial court that herein petitioner was a buyer in good faith and for
valuable consideration, the respondent Court ruled that:
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"Under Article 559, Civil Code, the rule is to the effect that if the owner has 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 persons who
may have acquired it in good faith from such finder, thief or robber. The said article establishes two (2) exceptions to
the general rule of irrevendicability (sic), to wit: when the owner (1) has lost the thing, or (2) has been unlawfully
deprived thereof. In these cases, the possessor cannot retain the thing as against the owner who may recover it
without paying any indemnity, except when the possessor acquired it in a public sale. (Aznar v. Yapdiangco, 13
SCRA 486).
Put differently, where the owner has lost the thing or has been unlawfully deprived thereof, the good faith of the
possessor is not a bar to recovery of the movable unless the possessor acquired it in a public sale of which there is
no pretense in this case. Contrary to the court a assumption, the issue is not primarily the good faith of Ledesma for
even if this were true, this may not be invoked as a valid defense, if it be shown that Citiwide was unlawfully
deprived of the vehicle.
In the case of Dizon v. Suntay, 47 SCRA 160, the Supreme Court had occasion to define the phrase unlawfully
deprived, to wit:
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. . . it extends to all cases where there has been no valid transmission of ownership including depositary or lessee
who has sold the same. It is believed that the owner in such a case is undoubtedly unlawfully deprived of his
property and may recover the same from a possessor in good faith.
x

In the case at bar, the person who misrepresented himself to be the son of the purported buyer, Rustico T. Consunji,
paid for the two (2) vehicles using a check whose amount has been altered from P101.00 to P101,000.00. There is
here a case of estafa. Plaintiff was unlawfully deprived of the vehicle by false pretenses executed simultaneously
with the commission of fraud (Art. 315 2(a) R.P.C.). Clearly, Citiwide would not have parted with the two (2) vehicles
were it not for the false representation that the check issued in payment thereupon (sic) is in the amount of
P101,000.00, the actual value of the two (2) vehicles." 8
In short, said buyer never acquired title to the property; hence, the Court rejected the claim of herein petitioner that
at least, Armando Suarez had a voidable title to the property.
His motion for reconsideration having been denied in the resolution of the respondent Court of 12 December 1988, 9
petitioner filed this petition alleging therein that:
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"A
THE HONORABLE COURT OF APPEALS ERRED IN APPLYING ARTICLE 559 OF THE NEW CIVIL CODE TO THE INSTANT
CASE DESPITE THE FACT THAT PRIVATE RESPONDENT CITIWIDE MOTORS, INC. WAS NOT UNLAWFULLY DEPRIVED OF
THE SUBJECT CAR, AS IN FACT CITIWIDE VOLUNTARILY PARTED WITH THE TITLE AND POSSESSION OR (sic) THE SAME
IN FAVOR OF ITS IMMEDIATE TRANSFEREE.
B
THE FACTUAL MILIEU OF THE INSTANT CASE FALLS WITHIN THE OPERATIVE EFFECTS OF ARTICLES 1505 AND 1506 OF
THE NEW CIVIL CODE CONSIDERING THAT THE IMMEDIATE TRANSFEREE OF THE PRIVATE RESPONDENT CITIWIDE
MOTORS, INC., ACQUIRED A VOIDABLE TITLE OVER THE CAR IN QUESTION WHICH TITLE WAS NOT DECLARED VOID
BY A COMPETENT COURT PRIOR TO THE ACQUISITION BY THE PETITIONER OF THE SUBJECT CAR AND ALSO BECAUSE
PRIVATE RESPONDENT, BY ITS OWN CONDUCT, IS NOW PRECLUDED FROM ASSAILING THE TITLE AND POSSESSION
BY THE PETITIONER OF THE SAID CAR." 10
There is merit in the petition. The assailed decision must be reversed.
The petitioner successfully proved that he acquired the car in question from his vendor in good faith and for
valuable consideration. According to the trial court, the private respondents evidence was not persuasive enough to
establish that petitioner had knowledge that the car was the object of a fraud and a swindle and that it did not rebut
or contradict petitioners evidence of acquisition for valuable consideration. The respondent Court concedes to such
findings but postulates that the issue here is not whether petitioner acquired the vehicle in that concept but rather,
whether private respondent was unlawfully deprived of it so as to make Article 559 of the Civil Code apply.
It is quite clear that a party who (a) has lost any movable or (b) has been unlawfully deprived thereof can recover
the same from the present possessor even if the latter acquired it in good faith and has, therefore, title thereto for
under the first sentence of Article 559, such manner of acquisition is equivalent to a title. There are three (3)
requisites to make possession of movable property equivalent to title, namely: (a) the possession should be in good
faith; (b) the owner voluntarily parted with the possession of the thing; and (c) the possession is in the concept of
owner. 11
Undoubtedly, one who has lost a movable or who has been unlawfully deprived of it cannot be said to have
voluntarily parted with the possession thereof. This is the justification for the exceptions found under the second
sentence of Article 559 of the Civil Code.
The basic issue then in this case is whether private respondent was unlawfully deprived of the cars when it sold the
same to Rustico Consunji, through a person who claimed to be Jojo Consunji, allegedly the latters son, but who
nevertheless turned out to be Armando Suarez, on the faith of a Managers Check with a face value of P101,000.00,
dishonored for being altered, the correct amount being only P101.00.
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Under this factual milieu, the respondent Court was of the opinion, and thus held, that private respondent was
unlawfully deprived of the car by false pretenses.
We disagree. There was a perfected unconditional contract of sale between private respondent and the original
vendee. The former voluntarily caused the transfer of the certificate of registration of the vehicle in the name of the
first vendee even if the said vendee was represented by someone who used a fictitious name and likewise
voluntarily delivered the cars and the certificate of registration to the vendees alleged representative Title thereto
was forthwith transferred to the vendee. The subsequent dishonor of the check because of the alteration merely
amounted to a failure of consideration which does not render the contract of sale void, but merely allows the
prejudiced party to sue for specific performance or rescission of the contract, and to prosecute the impostor for
estafa under Article 315 of the Revised Penal Code. This is the rule enunciated in EDCA Publishing and Distributing
Corp. v. Santos, 12 the facts of which do not materially and substantially differ from those obtaining in the instant
case. In said case, a person identifying himself as Professor Jose Cruz, dean of the De la Salle College, placed an
order by telephone with petitioner for 406 books, payable upon delivery. Petitioner agreed, prepared the
corresponding invoice and delivered the books as ordered, for which Cruz issued a personal check covering the
purchase price. Two (2) days later, Cruz sold 120 books to private respondent Leonor Santos who, after verifying the
sellers ownership from the invoice the former had shown her, paid the purchase price of P1,700.00. Petitioner
became suspicious over a second order placed by Cruz even before his first check had cleared, hence, it made
inquiries with the De la Salle College. The latter informed the petitioner that Cruz was not in its employ. Further
verification revealed that Cruz had no more account or deposit with the bank against which he drew the check.
Petitioner sought the assistance of the police which then set a trap and arrested Cruz. Investigation disclosed his
real name, Tomas de la Pea, and his sale of 120 of the books to Leonor Santos. On the night of the arrest; the
policemen whose assistance the petitioner sought, forced their way into the store of Leonor and her husband,
threatened her with prosecution for the buying of stolen property, seized the 120 books without a warrant and
thereafter turned said books over to the petitioner. The Santoses then sued for recovery of the books in the

Municipal Trial Court which decided in their favor; this decision was subsequently affirmed by the Regional Trial
Court and sustained by the Court of Appeals. Hence, the petitioner came to this Court by way of a petition for review
wherein it insists that it was unlawfully deprived of the books because as the check bounced for lack of funds, there
was failure of consideration that nullified the contract of sale between it and the impostor who then acquired no title
over the books. We rejected said claim in this wise:
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"The contract of sale is consensual and is perfected once agreement is reached between the parties on the subject
matter and the consideration. According to the Civil Code:
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ART. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the
object of the contract and upon the price.
From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing
the form of contracts.
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ART. 1477. The ownership of the thing sold shall be transferred to the vendee upon the actual or constructive
delivery thereof.
ART. 1478. The parties may stipulate that ownership in the thing shall not pass to the purchaser until he has fully
paid the price.
It is clear from the above provisions, particularly the last one quoted, that ownership in the thing sold shall not pass
to the buyer until full payment of the purchase price only if there is a stipulation to that effect. Otherwise, the rule is
that such ownership shall pass from the vendor to the vendee upon the actual or constructive delivery of the thing
sold even if the purchase price has not yet been paid.
Non-payment only creates a right to demand payment or to rescind the contract, or to criminal prosecution in the
case of bouncing checks. But absent the stipulation above noted, delivery of the thing sold will effectively transfer
ownership to the buyer who can in turn transfer it to another." 13
In the early case of Chua Hai v. Hon. Kapunan, 14 one Roberto Soto purchased from the Youngstown Hardware,
owned by private respondent, corrugated galvanized iron sheets and round iron bars for P6,137.70, in payment
thereof, he issued a check drawn against the Security Bank and Trust Co. without informing Ong Shu that he (Soto)
had no sufficient funds in said bank to answer for the same. In the meantime, however, Soto sold the sheets to,
among others, petitioner Chua Hai. In the criminal case filed against Soto, upon motion of the offended party, the
respondent Judge ordered petitioner to return the sheets which were purchased from Soto. Petitioners motion for
reconsideration having been denied, he came to this Court alleging grave abuse of discretion and excess of
jurisdiction. In answer to the petition, it is claimed that inter alia, even if the property was acquired in good faith, the
owner who has been unlawfully deprived thereof may recover it from the person in possession of the same unless
the property was acquired in good faith at a public sale. 15 Resolving this specific issue, this Court ruled that Ong
Shu was not illegally deprived of the possession of the property:
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". . . It is not denied that Ong Shu delivered the sheets to Soto upon a perfected contract of sale, and such delivery
transferred title or ownership to the purchaser. Says Art. 1496:
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Art. 1496. The ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any
of the ways specified in articles 1497 to 1501, or in any other manner signifying an agreement that the possession
is transferred from the vendor to the vendee. (C.C.)
The failure of the buyer to make good the price does not, in law, cause the ownership to revest in the seller until and
unless the bilateral contract of sale is first rescinded or resolved pursuant to Article 1191 of the new Civil Code.
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And, assuming that the consent of Ong Shu to the sale in favor of Soto was obtained by the latter through fraud or
deceit, the contract was not thereby rendered void ab initio, but only voidable by reason of the fraud, and Article
1390 expressly provides that:
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ART. 1390. The following contracts are voidable or annullable, even though there may have been no damage to the
contracting parties:
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(1) Those where one of the parties is incapable of giving consent to a contract;
(2) Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud.
These contracts are binding, unless they are annulled by a proper action in court. They are susceptible of

ratification.
Agreeably to this provision, Article 1506 prescribes:

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ARTICLE 1506. Where the seller of goods has a voidable title thereto, but his title has not been avoided 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 sellers defect of title. (C.C.)
Hence, until the contract of Ong Shu with Soto is set aside by a competent court (assuming that the fraud is
established to its satisfaction), the validity of appellants claim to the property in question can not be disputed, and
his right to the possession thereof should be respected." 16
It was therefore erroneous for the respondent Court to declare that the private respondent was illegally deprived of
the car simply because the check in payment therefor was subsequently dishonored; said Court also erred when it
divested the petitioner, a buyer in good faith who paid valuable consideration therefor, of his possession thereof.

chanrobles virtualawlibrary

chanrobles.com:chanrobles.com.ph

WHEREFORE, the challenged decision of the respondent Court of Appeals of 22 September 1988 and its Resolution
of 12 December 1988 in C.A.-G.R. CV No. 05955 are hereby SET ASIDE and the Decision of the trial court of 3
September 1979 and its Final Order of 26 June 1980 in Civil Case No. Q-24200 are hereby REINSTATED, with costs
against private respondent Citiwide Motors, Inc.
SO ORDERED.

3. G.R. No. L-20264 January 30, 1971

CONSUELO S. DE GARCIA and ANASTACIO GARCIA, petitioners,

vs.
HON. COURT OF APPEALS, ANGELINA D. GUEVARA and JUAN B. GUEVARA, respondents.
FERNANDO, J.:
This petition for certiorari to review a decision of respondent Court of Appeals was given due course
because it was therein vigorously asserted that legal questions of gravity and of moment, there
being allegations of an unwarranted departure from and a patent misreading of applicable and
controlling decisions, called for determination by this Tribunal. The brief for petitioners-spouses,
however, failed to substantiate such imputed failings of respondent Court. The performance did not
live up to the promise. On the basis of the facts as duly found by respondent Court, which we are
not at liberty to disregard, and the governing legal provisions, there is no basis for reversal. We
affirm.
The nature of the case presented before the lower court by private respondent Angelina D.
Guevara, assisted by her spouse, Juan B. Guevara, as plaintiffs, was noted in the decision of
respondent Court of Appeals thus: "Plaintiff seeks recovery of `one (1) lady's diamond ring 18 cts.
white gold mounting, with one (1) 2.05 cts. diamond-solitaire, and four (4) brills 0.10 cts. total
weight' which she bought on October 27, 1947 from R. Rebullida, Inc." 1 Then came a summary of
now respondent Guevara of her evidence: "Plaintiff's evidence tends to show that around October 11,
1953 plaintiff while talking to Consuelo S. de Garcia, owner of La Bulakea restaurant recognized her
ring in the finger of Mrs. Garcia and inquired where she bought it, which the defendant answered from
her comadre. Plaintiff explained that that ring was stolen from her house in February, 1952. Defendant
handed the ring to plaintiff and it fitted her finger. Two or three days later, at the request of plaintiff,
plaintiff, her husband Lt. Col. Juan Guevara, Lt. Cementina of Pasay PD, defendant and her attorney
proceeded to the store of Mr. Rebullida to whom they showed the ring in question. Mr. Rebullida a
examined the ring with the aid of high power lens and after consulting the stock card thereon, concluded
that it was the very ring that plaintiff bought from him in 1947. The ring was returned to defendant who
despite a written request therefor failed to deliver the ring to plaintiff. Hence, this case. Later on when
the sheriff tried to serve the writ of seizure (replevin), defendant refused to deliver the ring which had
been examined by Mr. Rebullida, claiming it was lost."2
How the defendant, Consuelo S. de Garcia, the present petitioner before us, along with her husband
Anastacio Garcia, sought to meet plaintiff's claim was narrated thus: "On the other hand, defendant

denied having made any admission before plaintiff or Mr. Rebullida or the sheriff. Her evidence
tends to show that the ring (Exhibit 1) was purchased by her from Mrs. Miranda who got it from
Miss Angelita Hinahon who in turn got it from the owner, Aling Petring, who was boarding in her
house; that the ring she bought could be similar to, but not the same ring plaintiff purchased from
Mr. Rebullida which was stolen; that according to a pawn-shop owner the big diamond on Exhibit 1
was before the trial never dismantled. When dismantled, defendant's diamond was found to weigh
2.57 cts."3
Plaintiff lost in the lower court. She elevated the matter to respondent Court of Appeals with the
judgment of the lower court being reversed. It is this decision now under review.
These are the facts as found by respondent Court of Appeals: "That the ring brought by the parties
for examination by Rafael Rebullida on December 14, 1953 was the same ring purchased by
plaintiff from R. Rebullida, Inc. on October 27, 1947 and stolen in February, 1952 has been
abundantly established by plaintiff's evidence. Before plaintiff lost the ring, she had been wearing it
for six years and became familiar with it. Thus, when she saw the missing ring in the finger of
defendant, she readily and definitely identified it. Her identification was confirmed by Mr. Rafael
Rebullida, whose candid testimony is entitled to great weight, with his 30 years experience behind
him in the jewelry business and being a disinterested witness since both parties are his customers.
Indeed, defendant made no comment when in her presence Rebullida after examining the ring and
stock card told plaintiff that that was her ring, nor did she answer plaintiff's letter of demand, ...
asserting ownership. Further confirmation may be found in the extra-judicial admissions, contained
in defendant's original and first amended answers ..."4
These further facts likewise appeal therein: "The foregoing proof is not counter-balanced by the
denial on the part of defendant or the presentation of the ring, Exhibit I, which has a diamondsolitaire 2.57 cts., or much heavier than the lost diamond weighing 2.05 cts. only. It is noteworthy
that defendant gave a rather dubious source of her ring. Aling Petring from whom the ring
supposedly came turned out to be a mysterious and ephemeral figure. Miss Hinahon did not even
know her true and full name, nor her forwarding address. She appeared from nowhere, boarded
three months in the house of Miss Hinahon long enough to sell her diamond ring, disappearing from
the scene a week thereafter. Indeed, the case was terminated without any hearing on the thirdparty and fourth-party complaints, which would have shown up the falsity of defendant's theory.
Moreover, Mrs. Baldomera Miranda, third-party defendant, who tried to corroborate defendant on
the latter's alleged attempt to exchange the ring defendant bought through her, is [belied] by her
judicial admission in her Answer that appellee `suggested that she would make alterations to the
mounting and structural design of the ring to hide the true identity and appearance of the original
one' (Cunanan vs. Amparo, 45 O.G. 3796). Finally, defendant is refuted by her own extra-judicial
admissions ... although made by defendant's counsel. For an attorney who acts as counsel of record
and is permitted to act such, has the authority to manage the cause, and this includes the authority
to make admission for the purpose of the litigation... Her proffered explanation that her counsel
misunderstood her is puerile because the liability to error as to the identity of the vendor and the
exchange of the ring with another ring of the same value, was rather remote." 5
It is in the light of the above facts as well as the finding that the discrepancy as to the weight
between the diamond-solitaire in Exhibit I and the lost diamond was due to defendant having
"substituted a diamond-solitaire of plaintiff with a heavier stone" that the decision was rendered,
respondent Court reversing the lower court and ordering defendant, now petitioner Consuelo S. de
Garcia, to return plaintiff's ring or fact value of P1,000.00 and costs, as well as to pay plaintiff
P1,000.00 as attorney's fee and P1,000.00 as exemplary damages. Hence this appeal.
To repeat, there is no occasion to reverse respondent Court. It correctly applied the law to the facts
as found.

1. The controlling provision is Article 559 of the Civil Code. It reads thus: "The possession of
movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any
movable or has been unlawfully deprived thereof may recover it from the person in possession of
the same. If the possessor of a movable lost of which the owner has been unlawfully deprived, has
acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the
price paid therefor." Respondent Angelina D. Guevara, having been unlawfully deprived of the
diamond ring in question, was entitled to recover it from petitioner Consuelo S. de Garcia who was
found in possession of the same. The only exception the law allows is when there is acquisition in
good faith of the possessor at a public sale, in which case the owner cannot obtain its return
without reimbursing the price. As authoritative interpreted in Cruz v. Pahati, 6 the right of the owner
cannot be defeated even by proof that there was good faith by the acquisition by the possessor. There is
a reiteration of this principle in Aznar v. Yapdiangco.7 Thus: "Suffice it to say in this regard that the right
of the owner to recover personal property acquired in good faith by another, is based on his being
dispossessed without his consent. The common law principle that where one of two innocent persons
must suffer by a fraud perpetrated by the another, the law imposes the loss upon the party who, by his
misplaced confidence, has enabled the fraud to be committed, cannot be applied in a case which is
covered by an express provision of the new Civil Code, specifically Article 559. Between a common law
principle and statutory provision, the latter must prevail in this jurisdiction." 8
2. It is thus immediately apparent that there is no merit to the contention raised in the first
assigned error that her possession in good faith, equivalent to title, sufficed to defeat respondent
Guevara's claim. As the above cases demonstrate, even on that assumption the owner can recover
the same once she can show illegal deprivation. Respondent Court of Appeals was so convinced
from the evidence submitted that the owner of the ring in litigation is such respondent. That is a
factual determination to which we must pay heed. Instead of proving any alleged departure from
legal norms by respondent Court, petitioner would stress Article 541 of the Civil Code, which
provides: 'A possessor in the concept of owner has in his favor the legal presumption that he
possesses with a just title and he cannot be obliged to show or prove it." She would accord to it a
greater legal significance than that to which under the controlling doctrines it is entitled. The brief
for respondents did clearly point out why petitioner's assertion is lacking in support not only from
the cases but even from commentators. Thus: "Actually, even under the first clause, possession in
good faith does not really amount to title, for the reason that Art. 1132 of the Code provides for a
period of acquisitive prescription for movables through `uninterrupted possession for four years in
good faith' (Art. 1955 of the old Spanish Code, which provided a period of three years), so that
many Spanish writers, including Manresa, Sanchez Roman, Scaevola, De Buen, and Ramos, assert
that under Art. 464 of the Spanish Code (Art. 559 of the New Civil Code), the title of the possessor
is not that of ownership, but is merely a presumptive title sufficient to serve as a basis of
acquisitive prescription (II Tolentino, Civil Code of the Phil. p. 258: IV Manresa, Derecho Civil
Espaol, 6th Ed., p. 380). And it is for the very reason that the title established by the first clause of
Art. 559 is only a presumptive title sufficient to serve as a basis for acquisitive prescription, that the
clause immediately following provides that `one who has lost any movable or has been unlawfully
deprived thereof, may recover it from the person in possession of the same.' As stated by the
Honorable Justice Jose B. L. Reyes of this Court in Sotto vs. Enage (C.A.), 43 Off. Gaz. 5075, Dec.
1947: `Article 559 in fact assumes that possessor is as yet not the owner; for it is obvious that
where the possessor has come to acquire indefeasible title by, let us say, adverse possession for
the necessary period, no proof of loss or illegal deprivation could avail the former owner of the
chattel. He would no longer be entitled to recover it under any condition.' " 9
lwph1.t

The second assigned error is centered on the alleged failure to prove the identity of the diamond
ring. Clearly the question raised is one of the fact. What the Court of Appeals found is conclusive.
Again, petitioner could not demonstrate that in reaching such a conclusion the Court of Appeals
acted in an arbitrary manner. As made mention of in the brief for respondents two disinterested
witnesses, Mr. Rafael Rebullida as well as Lt. Col. Reynaldo Cementina of the Pasay City Police

Department, both of whom could not be accused of being biased in favor of respondent Angelina D.
Guevara, did testify as to the identity of the ring.
The third assigned error of petitioners would find fault with respondent Court relying "on the
weakness of the title or evidence" of petitioner Consuelo S. de Garcia. It is true, in the decision
under review, mention was made of petitioner Consuelo S. de Garcia making no comment when in
her presence Rebullida, after examining the ring the stock card, told respondent Angelina L.
Guevara that that was her ring, nor did petitioner answer a letter of the latter asserting ownership.
It was likewise stated in such decision that there were extra-judicial admissions in the original and
first amended answers of petitioner. In the appraisal of her testimony, respondent Court likewise
spoke of her giving a rather dubious source of her ring, the person from whom she allegedly bought
it turning out "to be a mysterious and ephemeral figure." As a matter of fact, as set forth a few
pages back, respondent Court did enumerate the flaws in the version given by petitioner. From the
weakness of the testimony offered which, as thus made clear, petitioner, did not even seek to
refute, she would raise the legal question that respondent Court relied on the "weakness of [her]
title or evidence" rather than on the proof justifying respondent Angelina D. Guevara's claim of
ownership. Petitioner here would ignore the finding of fact of respondent Court that such ownership
on her part "has been abundantly established" by her evidence. Again here, in essence, the
question raised is one of fact, and there is no justification for us to reverse respondent Court.
The legal question raised in the fourth assignment of error is that the matter of the substitution of
the diamond on the ring was a question raised for the first time on appeal as it was never put in
issue by the pleadings nor the subject of reception of evidence by both parties and not touched
upon in the decision of the lower court. Why no such question could be raised in the pleadings of
respondent Angelina D. Guevara was clarified by the fact that the substitution came after it was
brought for examination to Mr. Rebullida. After the knowledge of such substitution was gained,
however, the issue was raised at the trial according to the said respondent resulting in that portion
of the decision where the lower court reached a negative conclusion. As a result, in the motion for
reconsideration, one of the points raised as to such decision being contrary to the evidence is the
finding that there was no substitution. It is not necessary to state that respondent Court, exercising
its appellate power reversed the lower court. What was held by it is controlling. What is clear is that
there is no factual basis for the legal arguments on which the fourth assigned error is predicated.
What is said takes care of the fifth assigned error that respondent Court was mistaken in its finding
that there was such a substitution. Again petitioner would have us pass on a question of credibility
which is left to respondent Court of Appeals. The sixth assigned error would complain against the
reversal of the lower court judgment as well as petitioner Consuelo S. de Garcia being made to pay
respondent Angelina D. Guevara exemplary damages, attorney's fees and costs. The reversal is
called for in the light of the appraisal of the evidence of record as meticulously weighed by
respondent Court. As to the attorney's fees and exemplary damages, this is what respondent Court
said in the decision under review: "Likewise, plaintiff is entitled to recover reasonable attorney's
fees in the sum of P1,000, it being just and equitable under the circumstances, and another P1,000
as exemplary damages for the public good to discourage litigants from resorting to fraudulent
devices to frustrate the ends of justice, as defendant herein tried to substitute the ring, Exhibit 1,
for plaintiff's ring." 10 Considering the circumstances, the cursory discussion of the sixth assigned error
on the matter by petitioner fails to demonstrate that respondent Court's actuation is blemished by legal
defects.
WHEREFORE, the decision of respondent Court of Appeals of August 6, 1962 is hereby affirmed.
With costs.
4. G.R. No. L-30817 September 29, 1972

DOMINADOR DIZON, doing business under the firm name "Pawnshop of Dominador
Dizon", petitioner,
vs.
LOURDES G. SUNTAY, respondent.
FERNANDO, J.:p
In essence there is nothing novel in this petition for review of a decision of the Court of Appeals
affirming a lower court judgment sustaining the right of an owner of a diamond ring, respondent
Lourdes G. Suntay, as against the claim of petitioner Dominador Dizon, who owns and operates a
pawnshop. The diamond ring was turned over to a certain Clarita R. Sison, for sale on commission,
along with other pieces of jewelry of respondent Suntay. It was then pledged to petitioner. Since
what was done was violative of the terms of the agency, there was an attempt on her part to
recover possession thereof from petitioner, who refused. She had to file an action then for its
recovery. She was successful, as noted above, both in the lower court and thereafter in the Court of
Appeals. She prevailed as she had in her favor the protection accorded by Article 559 of the Civil
Code. 1 The matter was then elevated to us by petitioner. Ordinarily, our discretion would have been
exercised against giving due course to such petition for review. The vigorous plea however, grounded on
estoppel, by his counsel, Atty. Andres T. Velarde, persuaded us to act otherwise. After a careful perusal of
the respective contentions of the parties, we fail to perceive any sufficient justification for a departure
from the literal language of the applicable codal provision as uniformly interpreted by this Court in a
number of decisions. The invocation of estoppel is therefore unavailing. We affirm.
The statement of the case as well as the controlling facts may be found in the Court of Appeals
decision penned by Justice Perez. Thus: "Plaintiff is the owner of a three-carat diamond ring valued
at P5,500.00. On June 13, 1962, the plaintiff and Clarita R. Sison entered into a transaction wherein
the plaintiff's ring was delivered to Clarita R. Sison for sale on commission. Upon receiving the ring,
Clarita R. Sison executed and delivered to the plaintiff the receipt ... . The plaintiff had already
previously known Clarita R. Sison as the latter is a close friend of the plaintiff's cousin and they had
frequently met each other at the place of the plaintiff's said cousin. In fact, about one year before
their transaction of June 13, 1962 took place, Clarita R. Sison received a piece of jewelry from the
plaintiff to be sold for P500.00, and when it was sold, Clarita R. Sison gave the price to the plaintiff.
After the lapse of a considerable time without Clarita R. Sison having returned to the plaintiff the
latter's ring, the plaintiff made demands on Clarita R. Sison for the return of her ring but the latter
could not comply with the demands because, without the knowledge of the plaintiff, on June 15,
1962 or three days after the ring above-mentioned was received by Clarita R. Sison from the
plaintiff, said ring was pledged by Melia Sison, niece of the husband of Clarita R. Sison, evidently in
connivance with the latter, with the defendant's pawnshop for P2,600.00 ... ." 2 Then came this
portion of the decision under review: "Since the plaintiff insistently demanded from Clarita R. Sison the
return of her ring, the latter finally delivered to the former the pawnshop ticket ... which is the receipt of
the pledge with the defendant's pawnshop of the plaintiff's ring. When the plaintiff found out that Clarita
R. Sison pledged, she took steps to file a case of estafa against the latter with the fiscal's office.
Subsequently thereafter, the plaintiff, through her lawyer, wrote a letter ... dated September 22, 1962,
to the defendant asking for the delivery to the plaintiff of her ring pledged with defendant's pawnshop
under pawnshop receipt serial-B No. 65606, dated June 15, 1962 ... . Since the defendant refused to
return the ring, the plaintiff filed the present action with the Court of First Instance of Manila for the
recovery of said ring, with P500.00 as attorney's fees and costs. The plaintiff asked for the provisional
remedy of replevin by the delivery of the ring to her, upon her filing the requisite bond, pending the final
determination of the action. The lower court issued the writ of replevin prayed for by plaintiff and the
latter was able to take possession of the ring during the pendency of the action upon her filing the
requisite bond." 3 It was then noted that the lower court rendered judgment declaring that plaintiff, now
respondent Suntay, had the right to the possession of the ring in question. Petitioner Dizon, as
defendant, sought to have the judgment reversed by the Court of Appeals. It did him no good. The
decision of May 19, 1969, now on review, affirmed the decision of the lower court.

In the light of the facts as thus found by the Court of Appeals, well-nigh conclusive on use, with the
applicable law being what it is, this petition for review cannot prosper. To repeat, the decision of the
Court of Appeals stands.
1. There is a fairly recent restatement of the force and effect of the governing codal norm in De
Gracia v. Court of Appeals. 4 Thus: "The controlling provision is Article 559 of the Civil Code. It reads
thus: 'The possession of movable property acquired in good faith is equivalent to a title. Nevertheless,
one who has lost any movable or has been unlawfully deprived thereof may recover it from the person in
possession of the same. If the possessor of a movable lost of which the owner has been unlawfully
deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without
reimbursing the price paid therefor.' Respondent Angelina D. Guevara, having been unlawfully deprived
of the diamond ring in question, was entitled to recover it from petitioner Consuelo S. de Garcia who was
found in possession of the same. The only exception the law allows is when there is acquisition in good
faith of the possessor at a public sale, in which case the owner cannot obtain its return without
reimbursing the price. As authoritatively interpreted in Cruz v. Pahati, the right of the owner cannot be
defeated even by proof that there was good faith in the acquisition by the possessor. There is a
reiteration of this principle in Aznar v. Yapdiangco. Thus: 'Suffice it to say in this regard that the right of
the owner to recover personal property acquired in good faith by another, is based on his being
dispossessed without his consent. The common law principle that were one of two innocent persons
must suffer by a fraud perpetrated by another, the law imposes the loss upon the party who, by his
misplaced confidence, has enabled the fraud to be committed, cannot be applied in a case which is
covered by an express provision of the new Civil Code, specifically Article 559. Between a common law
principle and a statutory provision, the latter must prevail in this jurisdiction." " 5
2. It must have been a recognition of the compulsion exerted by the above authoritative precedents
that must have caused petitioner to invoke the principle of estoppel. There is clearly a
misapprehension. Such a contention is devoid of any persuasive force.
Estoppel as known to the Rules of Court 6 and prior to that to the Court of Civil Procedure, 7 has its roots
in equity. Good faith is its basis. 8 It is a response to the demands of moral right and natural justice. 9 For
estoppel to exist though, it is indispensable that there be a declaration, act or omission by the party who
is sought to be bound. Nor is this all. It is equally a requisite that he, who would claim the benefits of
such a principle, must have altered his position, having been so intentionally and deliberately led to
comport himself thus, by what was declared or what was done or failed to be done. If thereafter a
litigation arises, the former would not be allowed to disown such act, declaration or omission. The
principle comes into full play. It may successfully be relied upon. A court is to see to it then that there is
no turning back on one's word or a repudiation of one's act. So it has been from our earliest decisions. As
Justice Mapa pointed out in the first case, a 1905 decision,Rodriguez v. Martinez, 10 a party should not be
permitted "to go against his own acts to the prejudice of [another]. Such a holding would be contrary to
the most rudimentary principles of justice and law." 11 He is not, in the language of Justice Torres,
in Irlanda v. Pitargue, 12promulgated in 1912, "allowed to gainsay [his] own acts or deny rights which [he
had] previously recognized." 13 Some of the later cases are to the effect that an unqualified and
unconditional acceptance of an agreement forecloses a claim for interest not therein provided. 14 Equally
so the circumstance that about a month after the date of the conveyance, one of the parties informed
the other of his being a minor, according to Chief Justice Paras, "is of no moment, because [the former's]
previous misrepresentation had already estopped him from disavowing the contract. 15 It is easily
understandable why, under the circumstances disclosed, estoppel is a frail reed to hang on to. There was
clearly the absence of an act or omission, as a result of which a position had been assumed by
petitioner, who if such elements were not lacking, could not thereafter in law be prejudiced by his belief
in what had been misrepresented to him. 16 As was put by Justice Labrador, "a person claimed to be
estopped must have knowledge of the fact that his voluntary acts would deprive him of some rights
because said voluntary acts are inconsistent with said rights." 17 To recapitulate, there is this
pronouncement not so long ago, from the pen of Justice Makalintal, who reaffirmed that estoppel "has its
origin in equity and, being based on moral right and natural justice, finds applicability wherever and
whenever the special circumstances of a case so demand." 18

How then can petitioner in all seriousness assert that his appeal finds support in the doctrine of
estoppel? Neither the promptings of equity nor the mandates of moral right and natural justice
come to his rescue. He is engaged in a business where presumably ordinary prudence would
manifest itself to ascertain whether or not an individual who is offering a jewelry by way of a pledge
is entitled to do so. If no such care be taken, perhaps because of the difficulty of resisting
opportunity for profit, he should be the last to complain if thereafter the right of the true owner of
such jewelry should be recognized. The law for this sound reason accords the latter protection. So it
has always been since Varela v.
Finnick, 19 a 1907 decision. According to Justice Torres: "In the present case not only has the ownership
and the origin of the jewels misappropriated been unquestionably proven but also that the accused,
acting fraudulently and in bad faith, disposed of them and pledged them contrary to agreement, with no
right of ownership, and to the prejudice of the injured party, who was thereby illegally deprived of said
jewels; therefore, in accordance with the provisions of article 464, the owner has an absolute right to
recover the jewels from the possession of whosoever holds them, ... ." 20 There have been many other
decisions to the same effect since then. At least nine may be cited. 21 Nor could any other outcome be
expected, considering the civil code provisions both in the former Spanish legislation 22 and in the
present Code. 23 Petitioner ought to have been on his guard before accepting the pledge in question.
Evidently there was no such precaution availed of. He therefore, has only himself to blame for the fix he
is now in. It would be to stretch the concept of estoppel to the breaking point if his contention were to
prevail. Moreover, there should have been a realization on his part that courts are not likely to be
impressed with a cry of distress emanating from one who is in a business authorized to impose a higher
rate of interest precisely due to the greater risk assumed by him. A predicament of this nature then does
not suffice to call for less than undeviating adherence to the literal terms of a codal provision. Moreover,
while the activity he is engaged in is no doubt legal, it is not to be lost sight of that it thrives on taking
advantage of the necessities precisely of that element of our population whose lives are blighted by
extreme poverty. From whatever angle the question is viewed then, estoppel certainly cannot be justly
invoked.
WHEREFORE, the decision of the Court of Appeals of May 19, 1969 is affirmed, with costs against
petitioner.
5. G.R. No. L-18536

March 31, 1965

JOSE B. AZNAR, plaintiff-appellant,

vs.
RAFAEL YAPDIANGCO, defendant-appellee;
TEODORO SANTOS, intervenor-appellee.
REGALA, J.:
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 uncle, Vicente Marella, who was interested to buy the advertised car.
On being informed of the above, Teodoro Santos instructed his son to see the said Vicente Marella
the following day at his given address: 1642 Crisostomo Street, Sampaloc, Manila. And so, in the
morning of May 29, 1959, Irineo Santos went to the above address. At this meeting, Marella agreed

to buy the car for P14,700.00 on the understanding that the price would be paid only after the car
had been registered in his name.
Irineo Santos then fetched his father who, together with L. De Dios, went to the office of a certain
Atty. Jose Padolina where the deed of the sale for the car was executed in Marella's favor. The
parties to the contract thereafter proceeded to the Motor Vehicles Office in Quezon City where the
registration of the car in Marella's name was effected. Up to this stage of the transaction, the
purchased price had not been paid.
From the Motor Vehicles Office, Teodoro Santos returned to his house. He gave the registration
papers and a copy of the deed of sale to his son, Irineo, and instructed him not to part with them
until Marella shall have given the full payment for the car. Irineo Santos and L. De Dios then
proceeded to 1642 Crisostomo Street, Sampaloc, Manila where the former demanded the payment
from Vicente Marella. Marella said that the amount he had on hand then was short by some
P2,000.00 and begged off to be allowed to secure the shortage from a sister supposedly living
somewhere on Azcarraga Street, also in Manila. Thereafter, he ordered L. 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 of sale from Irineo Santos on the pretext that he would like to
show them 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 another unidentified person, proceeded to
the alleged house of Marella's sister.
At a place on Azcarraga, Irineo Santos and L. De Dios alighted from the car and entered a house
while their unidentified companion remained in 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, after a
considerable length of time waiting in vain for De Dios to return, Irineo went down to discover that
neither the car nor their unidentified companion was there anymore. Going back to the house, he
inquired from a woman he saw for L. De Dios and he was told that no such name lived or was even
known therein. Whereupon, Irineo Santos rushed to 1642 Crisostomo to see Marella. He found the
house closed and Marella gone. Finally, he reported the matter to his father who promptly advised
the police authorities.
That very same day, or on the afternoon of May 29, 1959 Vicente Marella was able to sell the car in
question to the plaintiff-appellant herein, Jose B. Aznar, for P15,000.00. Insofar as the above
incidents are concerned, we are bound by the factual finding of the trial court that Jose B. Aznar
acquired the said car from Vicente Marella in good faith, for a valuable consideration and without
notice of the defect appertaining to the vendor's title.
While the car in question was thus in the possession of Jose B. Aznar and while he was attending to
its registration in his name, agents of the Philippine Constabulary seized and confiscated the same
in consequence of the report to them by Teodoro Santos that the said car was unlawfully taken from
him.
In due time, Jose B. Aznar filed a complaint for replevin against Captain 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:
ART. 559. The possession of movable property acquired in good faith is equivalent to title.
Nevertheless, one who 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.
From this decision, Jose B. Aznar appeals.
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 possession of the disputed automobile?
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, it is essential that the
seller should have a voidable title at least. It is very clearly inapplicable where, as in this case, the
seller had no title at all.
Vicente Marella did not have any title to the property under litigation because the same was never
delivered to him. He sought ownership or acquisition of it by virtue of the contract. Vicente Marella
could have acquired ownership or title to the subject matter thereof only by the delivery or tradition
of the car to him.
Under Article 712 of the Civil Code, "ownership and other real rights over property are acquired and
transmitted by law, by donation, by testate and intestate succession, and in consequence of certain
contracts, by 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 delivery. Contracts only constitute titles or
rights to the transfer or acquisition of ownership, while delivery or tradition is the mode of
accomplishing the same (Gonzales v. Rojas, 16 Phil. 51; Ocejo, Perez and Co. v. International Bank,
37 Phil. 631, Fidelity and Deposit Co. v. Wilson, 8 Phil. 51; Kuenzle & Streiff v. Wacke & Chandler, 14
Phil. 610; Easton v. Diaz Co., 32 Phil. 180).
For the legal acquisition and transfer of ownership and other property rights, the thing
transferred must be delivered, inasmuch as, according to settled jurisprudence, the tradition
of the thing is a necessary and indispensable requisite in the acquisition of said ownership
by virtue of contract. (Walter Laston v. E. Diaz & Co. & the Provincial Sheriff of Albay, supra.)

So long as property is not delivered, the ownership over it is not transferred by contract
merely but by delivery. Contracts only constitute titles or rights to the transfer or acquisition
of ownership, while delivery or tradition is the method of accomplishing the same, the title
and the method of acquiring it being different in our law. (Gonzales v. Roxas, 16 Phil. 51)
In the case on hand, the car in question was never delivered to the 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 was indeed a contract of sale between Vicente Marella and Teodoro Santos, the
former, as vendee, took possession of the subject matter thereof by stealing the same while it was
in the custody of the latter's son.
There is no adequate evidence on record as to whether Irineo Santos voluntarily delivered the key
to the car to the unidentified person who went with him and L. De Dios to the place on Azcarraga
where a sister of Marella allegedly lived. But even if Irineo Santos did, it was not the delivery
contemplated by Article 712 of the Civil Code. For then, it would be indisputable that he turned it
over to the unidentified companion only 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 Vicente Marella.
Article 712 above contemplates that the act be coupled with the intent of delivering the thing. (10
Manresa 132)
The lower court was correct in applying Article 559 of the Civil Code to the case at bar, for under it,
the rule is to the effect that if the owner has 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 persons
who may have acquired it in good faith from such finder, thief or robber. The said article establishes
two exceptions to the general rule of irrevindicability, to wit, when the owner (1) has lost the thing,
or (2) has been unlawfully deprived thereof. In these cases, the possessor cannot retain the thing
as against the owner, who may recover it without paying 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. Matute, 9 Phil. 479; Arenas v. Raymundo, 19 Phil. 46. Tolentino, id., Vol. II, p. 261.)
In the case of Cruz v. Pahati, et al., 52 O.G. 3053 this Court has already ruled
that
Under Article 559 of the new Civil Code, a person illegally deprived of any movable 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. In the present case, plaintiff has
been illegally deprived of his car through the ingenious scheme of defendant B to enable the
latter to dispose of it as if he were the owner thereof. 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 defendant B. The maxim that "no man can transfer to another a better title
than he had himself" obtains in the civil as well as in the common law. (U.S. v. Sotelo, 28
Phil. 147)
Finally, the plaintiff-appellant here contends that inasmuch as it was the intervenor-appellee who
had caused the fraud to be perpetrated by his misplaced confidence on Vicente Marella, he, the
intervenor-appellee, should be made to suffer the consequences arising therefrom, following the
equitable principle to that effect. Suffice it to say in this regard that the right of the owner to
recover personal property acquired in good faith by another, is based on his being dispossessed
without his consent. The common law principle that where one of two innocent persons must suffer
by a fraud perpetrated by another, the law imposes the loss upon the party who, by his misplaced
confidence, has enabled the fraud to be committed, cannot be applied in a case which is covered

by an express provision of the new Civil Code, specifically Article 559. Between a common law
principle and a statutory provision, the latter must prevail in this jurisdiction. (Cruz v. Pahati, supra)
UPON ALL THE FOREGOING, the instant appeal is hereby dismissed and the decision of the lower
court affirmed in full. Costs against the appellant.
6. G.R. No. L-51333 February 19, 1991
RAMONA R. LOCSIN, accompanied by her husband RENATO L. LOCSIN; TERESITA R.
GUANZON, accompanied by her husband ROMEO R. GUANZON; CELINA R. SIBUG
accompanied by her husband CARLOS V. SIBUG; MA. LUISA R. PEREZ, accompanied by
her husband JOSE V. PEREZ; EDITHA R. YLANAN, accompanied by her husband CARLOS
W. YLANAN; and ANA MARIE R. BENEDICTO, accompanied by her husband JOSE LUIS U.
BENEDICTO, petitioners,
vs.
HONORABLE JUDGE VICENTE P. VALENZUELA, Judge of the Court of First Instance of
Negros Occidental, Branch III and SPOUSES JOSEPH SCHON and HELEN BENNETT
SCHON, respondents.

G.R. No. L-52289 February 19, 1991

RAMONA R. LOCSIN, accompanied by her husband RENATO R. LOCSIN; TERESITA R.
GUANZON, accompanied by her husband ROMEO G. GUANZON; CELINA R. SIBUG,
accompanied by her husband CARLOS V. SIBUG; MA. LUISA R. PEREZ, accompanied by
her husband JOSE V. PEREZ; EDITHA R. YLANAN, accompanied by her husband CARLOS
W. YLANAN; and ANA MARIE R. BENEDICTO, accompanied by her husband JOSE LUIS U.
BENEDICTO, petitioners,
vs.
CARLOS PANALIGAN, AMADO MARQUEZ, HERBERT PEDROS, ANTONIO FELICIANO, JR.,
HUGO AGUILOS, ALBERTO GUBATON, JULIA VDA. DE ESQUELITO, SERAFIN JANDOQUELE,
SEREFIAS ESQUESIDA, CARLOS DELA CRUZ, ELISEO GELONGOS, ESPINDION JOCSON,
SALVADOR MUNUN, ULFIANO ALEGRIA, and IRINEO BALERA, and the Spouses JOSEPH
SCHON and HELEN BENNETT SCHONrespondents.
FELICIANO, J.:p
There are two (2) petitions for review before us: (1) G.R. No. 51333 which asks for review of the
decision of the then Court of First Instance CFI of Negros Occidental, Branch 3, in Civil Case No.
13823; and (2) G.R. No. 52289 which seeks review of the decision of the then Court of Agrarian
Relations ("CAR"), 11th Judicial District, in CAR Case No. 76. Both the CFI of Negros Occidental and
the CAR dismissed petitioners' complaint for lack of jurisdiction. The Supreme Court, in a Resolution
dated 16 June 1982, consolidated G.R. Nos. 51333 and 52289.
In a Resolution 1 dated 18 May 1989, the Court partly resolved the consolidated petitions by declaring
that the appropriate Regional Trial Court had jurisdiction over the two (2) cases.
The facts relevant for resolution of the remaining substantive aspects of the CFI case and the CAR
case, may be summarized from the Court's Resolution of 18 May 1989
Petitioner Ramona R. Locsin, Teresita Guanzon, Celia R. Sibug, Maria Rosa R. Perez,
Editha Ylanan and Ana Marie R. Benedicto were co-owners of a large tract of
agricultural land known as "Hacienda Villa Regalado" located in Barrio Panubigan

Canlaon City, Negros Occidental. The tract of land was covered by Transfer Certificate
of Title No. T-494 and there more particularly described in the following terms:
TRANSFER CERTIFICATE OF TITLE NO. T-494
A parcel of land . . . containing an area of THREE MILLION THIRTY-THREE
THOUSAND AND FORTY-EIGHT (3,033,048) square meters, more or less.
(Rollo, of G.R. No. 52289, p. 31.)
A portion of this land, known as Lot No. 2-C-A-3 and consisting of an area of 60.07464
hectares, was subject to the lifetime usufructuary rights of respondent Helen Schon.
The bulk of this lot was cultivated by the following lessees-tenants who customarily
delivered the rentals to Helen Schon:
xxx xxx xxx
(Rollo, of G.R. No. 51333, p. 4.)
On 22 October 1972, after the onset of the martial law administration of former
President Marcos, Presidential Decree No. 27 was promulgated, decreeing the
"Emancipation of Tenants." The tract of land owned in common by petitioners,
including the portion thereof subject to Helen Schon's usufructuary rights, fell within
the scope of the "Operation Land Transfer". In consequence, staff members of the
Department of Agrarian Relations advised the tenants-tillers of said land, and the
necessary parcellary map sketch was made and submitted to the Bureau of Land
Office in Dumaguete City. (Rollo, of G.R. No. 51333, Annex "A" of Petition, pp. 19-20)
Petitioners through counsel sought the opinion of the DAR as to who (petitioners or
respondent Helen Schon) should be entitled to receive the rental payments which
continued to be made by the respondent tenants to Helen Schon. The DAR District
Officer rendered an opinion on 13 May 1977 that the rental payments as of October
1972 were properly considered as amortization payments for the land and as such
should pertain to the landowners and not to the usufructuary. (Id., p. 5)
1. Civil Case No. 13828, Court of First Instance, Negros Occidental.
On 22 May 1978, petitioners filed against spouses Joseph and Helen Schon Civil Case
No. 13828 . . ., for collection of rentals plus damages with prayer for preliminary
injunction. There petitioners claimed that since the land subject to Helen Schon's
usufructuary rights was among the parcels of land which collectively had been
declared by the DAR as a land reform area pursuant to Presidential Decree No. 27, the
rental payments which the respondent spouses had been collecting from the tenants
really pertained and should be delivered to the petitioners, beginning from 21 October
1972, as constituting or forming part of the amortization payments for the land to be
made by the tenants. Petitioners sought in that case to recover from the Schons all
such rentals or the money value thereof, and prayed for injunction to prevent
respondents from collecting any further rental payments from the tenants of the land
involved.
Upon the other hand, in the Answer filed on 12 July 1978, the respondents Schon
contended that . . ., upon the assumption arguendo that the Court of First Instance did
have jurisdiction, Article 609 of the Civil Code must in any case be applied by that
court in resolving the case.
2. CAR Case No. 76, Court of agrarian Relations

Approximately five (5) months after filing their complaint before the Negros
Occidental Court of First Instance, petitioners filed a second complaint on 13 October
1978, this time with the Court of Agrarian Relations, 11th Judicial District, San Carlos
City. In this complaint before the Agrarian Court, petitioners impleaded as
corespondents of the spouses Schon the tenants who were cultivating the land
burdened with the usufruct of Helen Schon. Petitioners prayed that the respondent
tenants be required to pay to petitioners (rather than to the spouses Schon) all future
rentals beginning with the crop year of 1978 and every year thereafter, until full
payment of the amortization payment computed by the DAR. In their Answer, the
respondents Schon once again asserted lack of jurisdiction over the subject matter of
the case, this time on the part of the Court of Agrarian Relations. . . .
The respondent tenants, for their part, agreed with the Schons that there was no
tenancy relationship existing in respect of the land cultivated by them, since such
land had already been brought within the ambit of "Operation Land Transfer", and
prayed that the petitioners and the usufructuary be required to litigate among
themselves their respective rights before the proper court. 2
As noted earlier, the Agrarian Court rendered a decision dismissing petitioners' complaint in CAR
Case No. 76, declaring itself as bereft of jurisdiction to decide that case.
On appeal by petitioners, the Court of Appeals ruled that since the only issue presented in
the appeal was whether or not the CAR had subject matter jurisdiction over the case, the
appeal raised "a pure question of law" and certified the case to this Court for disposition.
On 16 March 1979, the CFI of Negros Occidental dismissed petitioners' complaint upon the
ground that jurisdiction to hear and decide that case was vested in the CAR. This order was
brought directly to this Court by petitioners.
In our Resolution dated 18 May 1989, the Court, after declaring that jurisdiction over the two
(2) cases was lodged in the appropriate Regional Trial Court by virtue of the provisions of
Section 19 (7) of Batas Pambansa Blg. 129, required the petitioners and private respondents
in G.R. Nos. 51333 and 52289 to file simultaneous memoranda on the remaining nonjurisdiction issues. At the same time, the Court directed the Solicitor General to file a motion
for intervention on behalf of the Government and to submit a memorandum on the same
issues. Both parties and the Solicitor-General complied.
The substantive issues to be resolved here are the following:
(1) As between the naked owners and the usufructuary, who should be entitled to the
amounts paid by the tenants beginning 21 October 1972? and
(2) What is the legal character of the payments made by the tenants beginning 21
October 1972 payments on the price of the land itself or civil fruits of the land?
The two (2) above issues are obviously interrelated and the Court will discuss them together.
Petitioners insist that the payments made by private respondent tenants to private respondent
Helen Schon beginning on 21 October 1972 should be considered as amortization payments for the
price of the land and as such should belong to the landowners and not to the usufructuary. Upon
the other hand, private respondent Helen Schon urges that those amounts should pertain to her
considering that her rights as usufructuary persist during her lifetime and have not been
extinguished by operation of the Land Reform Law. the further argues that assuming her
usufructuary rights had been extinguished, the provisions of Article 609 of the Civil Code should be
applied, and that thereunder she would be entitled either to replacement of the land burdened with

her usufruct (the fruits of which would then be payable to her) or payment of legal interest on the
amount of the purchase price of the land.
Presidential Decree No. 27, issued on 21 October 1972, declared the "emancipation of tenants"
tilling agricultural lands primarily devoted to rice and corn. It stated that:
xxx xxx xxx
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of
the powers in me vested by the Constitution as Commander-in-Chief of the Armed
Forces of the Philippines, and pursuant to Proclamation No. 1081, dated September
21, 1972, and General Order No. 1 dated September 22, 1972 as amended do hereby
decree and order the emancipation of all tenant farmers as of this day, October 21,
1972;
This shall apply to tenant farmers of private agricultural lands primarily devoted to
rice and corn under a system of sharecrop or lease-tenancy, whether classified as
landed estate or not;
The tenant-farmer, whether in land classified, as landed estate or not, shall be
deemed owner of a portion constituting a family size farm of five (5) hectares if not
irrigated and three (3) hectares if irrigated;
In all cases, the landowner may retain an area of not more than seven (7) hectares if
such landowner is cultivating such area or will now cultivate it;
For the purpose of determining the cost of the land to be transferred to the tenantfarmer pursuant to this Decree, the value of the land shall be equivalent to two and
one-half (2 1/2) times the average harvest of three normal crop years immediately
preceding the promulgation of this Decree;
The total cost of the land, including interest at the rate of six (6) percentum per
annum, shall be paid by the tenant in fifteen (15) years [in] fifteen equal annual
amortizations;
xxx xxx xxx
(Emphasis supplied)
Presidential Decree No. 57, dated 19 November 1972, amended Presidential Decree No. 27 and
prescribed in part as follows:
P.D. No. 57.
xxx xxx xxx
SECTION 1. To further accelerate the attainment of objectives set forth in Presidential
Decree No. 27, the following provisions are hereby corporated, to wit:
1. Landowner shall be exempt from the capital gains tax on the proceeds of the
amortization paid him by the tenant-purchaser and likewise from income tax due on
the accruing interests paid as an addition to the total cost of the land.
xxx xxx xxx

It is also important to adduce Department Circular No. 8, dated 1 April 1975, issued by the
Department of Agrarian Reform pursuant to Presidential Decree No. 27 and which constitutes
contemporaneous administrative construction of Presidential Decrees Nos. 27 and 57. Department
Circular No. 8 stated that:
xxx xxx xxx
3. Tenant-farmers are deemed owners of the land they till as of October 21,
1972, subject to the rules and regulations to be hereafter promulgated. On lands
already covered by Operation Land Transfer,the leasehold system shall be
provisionally maintained and the lease rentals paid by the tenant-farmersto the
landowner [shall] be credited as amortization payments. Payment of rentals shall be
stopped when the Land Bank shall have paid the cost of land. On lands not yet
covered by Operation Land Transfer, leasehold shall continue to govern the
relationship between the landowner and his tenant-tillers. (Emphasis supplied)
Finally, after the effective date of the 1987 Constitution, Executive Order No. 228 dated 17 July
1987 was promulgated and provided in part as follows:
SECTION 1. All qualified farmer beneficiaries are now deemed full owners as of
October 21, 1972 of the land they acquired by virtue of Presidential Decree No.
27 (hereinafter referred to as P.D. No. 27).
SECTION 2. Henceforth, the valuation of rice and corn lands covered by P.D. No. 27
shall be based on the average gross production determined by the Barangay
Committee on Land Production in accordance with Department Memorandum Circular
No. 26, series of 1973, and related issuances and regulations of the Department of
Agrarian Reform. The average gross production per hectare shall be multiplied by two
and a half (2.5), the product of which shall be multiplied by Thirty Five Pesos (P35.00),
the government support price for one cavan of 50 Kilos of palay on October 21, 1972,
or Thirty One Pesos (P31.00), the government support price for one cavan of 50 kilos
of corn on October 21, 1972, and the amount arrived at shall be the value of the rice
and corn land, as the case may be, for the purpose of determining its cost to the
farmer and compensation to the landowner, pursuant to Department of Agrarian
Reform Memorandum Circular No. 26, series of 1973, and other pertinent issuances.
In the event a party questions in court the resolution of the dispute, the landowner's
compensation claim shall still be processed for payment and the proceeds shall be
held in trust by the Trust Department of the Land Bank in accordance with the
provisions of Section 5 hereof, pending the resolution of the dispute before the court.
(Emphasis supplied)
Reading the foregoing provisions together, we observe that under Presidential Decree No. 2, the
basic statute, the tenant-farmer became owner of a family-size farm of five (5) hectares or, if the
land was irrigated, three (3) hectares, and that the tenant-owner had to pay for the cost of the land
within fifteen (15) years by paying fifteen (15) equal annual amortization payments. Thus, it
appears clear that ownership over lands (like Lot No. 2-C-A-3) subjected to Operation Land Transfer
moved from the registered owner (the old landowner) to the tenants (the new landowners). The
fifteen (15) annual amortizations to be paid by the tenants-owners were intended to replace the
landholdings which the old landowners gave up in favor of the new landowners, the tenantsowners. 3 It follows that in respect of land subjected to Operation Land Transfer, the tenants-farmers
became owners of the land they tilled as of the effective date of Presidential Decree No. 27, i.e., 21
October 1972. Pending full payment of the cost of the land to the old landowner by the Land Bank of the
Philippines, the leasehold system was "provisionally maintained" but the "lease rentals" paid by the
tenants-farmers prior to such full payment by the Land Bank to the old landowner, would be credited no
longer as rentals but rather as "amortization payments" of the price of the land, the un-amortized
portion being payable by the Land Bank. In respect of lands brought within the coverage of Operation
Land Transfer, the leasehold system was legally and effectively terminated immediately on 21 October

1972 (notwithstanding the curious statement in Department Circular No. 8 that it was "provisionally
maintained"). It was in respect of lands not yet subjected to the terms and effects of Operation Land
Transfer that the leasehold system did continue to govern the relationship between the "landowner and
his tenant-tillers".

The exemption of the old landowner from the capital gains tax on the amortization payments made
to him by the tenants-purchasers, under Presidential Decree No. 57 (supra), underscores the fact,
referred to above, that ownership or dominion over the land moved immediately from landowner to
tenant-farmer, rather than upon completion of payment of the price of the land. In general, capital
gains are realized only when the owner disposes of his property.
We believe and so hold that Lot No. 2-C-A-3 having been declared part of the land reform area and
subjected to Operation Land Transfer, the payments made on and after 21 October 1972 by the
private respondent tenants-farmers constituted amortization payments on the cost of the land that
they were required to pay under Presidential Decree No. 27. These payments, therefore, legally
pertain to petitioners, the former landowners as part of the compensation for the dominion over
land of which they were deprived by operation of Presidential Decree No. 27. Those payments can
not be characterized as rentals like those which had been paid to Helen Schon as usufructuary prior
to the promulgation of Presidential Decree No. 27 and prior to the effectivity of Operation Land
Transfer.
We turn to the question of what rights, if any, were retained by Helen Schon as a usufructuary, after
the effectivity of Presidential Decree No. 27. We believe that the usufruct which had therefore
existed as a jus in re aliena in favor of Helen Schon was effectively extinguished by Presidential
Decree No. 27. To hold, as private respondent Helen Schon apparently urges, that her usufruct was
not extinguished but rather remained impressed upon the land passing on to the new owners,
would obviously defeat the very purpose of the land reform statute. Presidential Decree No. 27 was
enacted to "emancipate" the tenants from the "bondage of the soil" by giving to tenants-farmers
ownership of the land which they were cultivating upon the assumption that they would work
harder to improve their lot in life if they became landowners rather than mere tillers of somebody
else's land. To hold Helen Schon as entitled to continue enjoying, as usufructuary, the natural or
civil fruits of Lot No. 2-C-A-3, would be to set at naught the major purpose projected by Presidential
Decree No. 27 and maintained by Executive Order No. 228.
This is not to say that respondent Helen Schon lost any and all rights upon the promulgation of
Presidential Decree No. 27. In a legal, technical sense, it may be difficult to hold that Presidential
Decree No. 27 resulted in the lands brought within the scope of Operation Land Transfer being
"expropriated for public use", as this term is used in Article 609 of the Civil Code, which reads thus:
Art. 609. Should the thing in usufruct be expropriated for public use, the owner shall
be obliged either to replace it with another thing of the same value and of similar
conditions, or to pay the usufructuary the legal interest on the amount of the
indemnity for the whole period of the usufruct. If the owner chooses the latter
alternative, he shall give security for the payment of the interest.
For it was not the Government or any of its agencies which took over ownership of the land
nor was such land devoted subsequently to "public use", since ownership was transferred
directly from former landowner to the tenant-tiller as new landowner, for the use and benefit
exclusively of the new landowner. While, however, Article 609 of the Civil Code may not be
strictly applicable, we believe that the situation contemplated in Article 609 is sufficiently
close to that which resulted from application of Presidential Decree No. 27 to the land here
involved. Bearing in mind that refusal to decide an otherwise unavoidable issue upon the
ground ofnon liquet ("it is not clear") is not a permissible response by a court where there is
no provision of law clearly and specifically applicable to the facts at hand, 4 we believe that
Article 609 should be applied to the present set of facts by analogy.

It follows that respondent Helen Schon, so long as her rights as usufructuary persist under the
instrument which gave birth to such rights, would be entitled to a replacement reasonably
equivalent to the land previously burdened with her usufructuary right, or to legal interest on the
amount of the indemnity or cost of the land paid by private respondent tenants-farmers and the
Land Bank. While the option or choice belongs to petitioners, considering that Helen Schon had
already received part of the purchase price of the land previously owned by petitioners from private
respondent tenants-farmers, and in the interest of expeditious justice, we consider it the second
alternative that should be given effect. Thus, from the monies that she actually received from
private respondent tenants-farmers on and after 21 October 1972, respondent Helen Schon is
entitled to retain an amount equivalent to the legal interest on said amounts for every year that the
usufruct would by its own terms have continued to exist had it not been extinguished by operation
of Presidential Decree No. 27; the balance of such amounts received by her shall be turned over to
petitioners. She is also entitled to the same right in respect of the balance of the price of the land
petitioners presumably received from the Land Bank.
WHEREFORE, for all the foregoing, private respondent spouses Joseph and Helen Schon are hereby
DIRECTED to deliver to petitioners the amounts paid to them by private respondent tenantsfarmers beginning on 21 October 1972, after deducting therefrom an amount equivalent to simple
legal interest thereon computed at six (6%) percentper annum on the amount received each year.
No pronouncement as to costs. SO ORDERED