Sale of Non Owner

G.R. No.
61584 November 25, 1992
DONATO S. PAULMITAN, JULIANA P. FANESA and RODOLFO FANESA, petitioners,

vs.
COURT OF APPEALS, ALICIO PAULMITAN, ELENA PAULMITAN, ABELINO PAULMITAN, ANITA
PAULMITAN, BAKING PAULMITAN, ADELINA PAULMITAN and ANITO PAULMITAN, respondents.
ROMERO, J.:
This is a petition for review on certiorari seeking the reversal of the decision 1 of the Court of Appeals,
dated July 14, 1982 in CA-G.R. No. 62255-R entitled "Alicio Paulmitan, et al. v. Donato Sagario Paulmitan,
et al." which affirmed the decision 2 of the then Court of First Instance (now RTC) of Negros Occidental,
12th Judicial District, Branch IV, Bacolod City, in Civil Case No. 11770.
The antecedent facts are as follows:
Agatona Sagario Paulmitan, who died sometime in 1953, 3 left the two following parcels of land located in
the Province of Negros Occidental: (1) Lot No. 757 with an area of 1,946 square meters covered by
Original Certificate of Title (OCT) No. RO-8376; and (2) Lot No. 1091 with an area of 69,080 square
meters and covered by OCT No. RO-11653. From her marriage with Ciriaco Paulmitan, who is also now
deceased, Agatona begot two legitimate children, namely: Pascual Paulmitan, who also died in 1953, 4
apparently shortly after his mother passed away, and Donato Paulmitan, who is one of the petitioners.
Petitioner Juliana P. Fanesa is Donato's daughter while the third petitioner, Rodolfo Fanes, is Juliana's
husband. Pascual Paulmitan, the other son of Agatona Sagario, is survived by the respondents, who are
his children, name: Alicio, Elena, Abelino, Adelina, Anita, Baking and Anito, all surnamed Paulmitan.
Until 1963, the estate of Agatona Sagario Paulmitan remained unsettled and the titles to the two lots
mentioned above remained in the name of Agatona. However, on August 11, 1963, petitioner Donato
Paulmitan executed an Affidavit of Declaration of Heirship, extrajudicially adjudicating unto himself Lot No.
757 based on the claim that he is the only surviving heir of Agatona Sagario. The affidavit was filed with
the Register of Deeds of Negros Occidental on August 20, 1963, cancelled OCT No. RO-8376 in the name
of Agatona Sagario and issued Transfer Certificate of Title (TCT) No. 35979 in Donato's name.
As regards Lot No. 1091, Donato executed on May 28, 1974 a Deed of Sale over the same in favor of
petitioner Juliana P. Fanesa, his daughter. 5
In the meantime, sometime in 1952, for non-payment of taxes, Lot No. 1091 was forfeited and sold at a
public auction, with the Provincial Government of Negros Occidental being the buyer. A Certificate of Sale
over the land was executed by the Provincial Treasurer in favor of the Provincial Board of Negros
Occidental. 6
On May 29, 1974, Juliana P. Fanesa redeemed the property from the Provincial Government of Negros
Occidental for the amount of P2,959.09. 7
On learning of these transactions, respondents children of the late Pascual Paulmitan filed on January 18,
1975 with the Court of First Instance of Negros Occidental a Complaint against petitioners to partition the
properties plus damages.
Petitioners set up the defense of prescription with respect to Lot No. 757 as an affirmative defense,
contending that the Complaint was filed more than eleven years after the issuance of a transfer certificate
of title to Donato Paulmitan over the land as consequence of the registration with the Register of Deeds, of
Donato's affidavit extrajudicially adjudicating unto himself Lot No. 757. As regards Lot No. 1091, petitioner
Juliana P. Fanesa claimed in her Answer to the Complaint that she acquired exclusive ownership thereof
not only by means of a deed of sale executed in her favor by her father, petitioner Donato Paulmitan, but
also by way of redemption from the Provincial Government of Negros Occidental.
Acting on the petitioners' affirmative defense of prescription with respect to Lot No. 757, the trial court
issued an order dated April 22, 1976 dismissing the complaint as to the said property upon finding merit in
petitioners' affirmative defense. This order, which is not the object of the present petition, has become
final after respondents' failure to appeal therefrom.
SALES ***** RAMIL O. MALIPOL Page 1

Trial proceeded with respect to Lot No. 1091. In a decision dated May 20, 1977, the trial court decided in
favor of respondents as to Lot No. 1091. According to the trial court, the respondents, as descendants of
Agatona Sagario Paulmitan were entitled to one-half (1/2) of Lot No. 1091, pro indiviso. The sale by
petitioner Donato Paulmitan to his daughter, petitioner Juliana P. Fanesa, did not prejudice their rights.
And the repurchase by Juliana P. Fanesa of the land from the Provincial Government of Negros Occidental
did not vest in Juliana exclusive ownership over the entire land but only gave her the right to be
reimbursed for the amount paid to redeem the property. The trial court ordered the partition of the land
and directed petitioners Donato Paulmitan and Juliana P. Fanesa to pay private respondents certain
amounts representing the latter's share in the fruits of the land. On the other hand, respondents were
directed to pay P1,479.55 to Juliana P. Fanesa as their share in the redemption price paid by Fanesa to the
Provincial Government of Negros Occidental. The dispositive portion of the trial court's decision reads:
WHEREFORE, judgment is hereby rendered on the second cause of action pleaded in the
complain as follows:
1. The deed of sale (Exh. "F") dated May 28, 1974 is valid insofar as the one-half undivided
portion of Lot 1091 is concerned as to vest ownership over said half portion in favor of
defendant Juliana Fanesa and her husband Rodolfo Fanesa, while the remaining half shall
belong to plaintiffs, pro-indiviso;
2. Lot 1091, Cadastral Survey of Pontevedra, Province of Negros Occidental, now covered by
TCT No. RO-11653 (N.A.), is ordered partitioned. The parties must proceed to an actual
partition by property instrument of partition, submitting the corresponding subdivision within
sixty (60) days from finality of this decision, and should they fail to agree, commissioners of
partition may be appointed by the Court;
3. Pending the physical partition, the Register of Deeds of Negros Occidental is ordered to
cancel Original Certificate of Title No. RO-11653 (N.A.) covering Lot 1091, Pontevedra
Cadastre, and to issue in lieu thereof a new certificate of title in the name of plaintiffs and
defendants, one-half portion each, pro-indiviso, as indicated in paragraph 1 above;
4. Plaintiffs are ordered to pay, jointly and severally, defendant Juliana Fanesa the amount of
P1,479.55 with interest at the legal rate from May 28, 1974 until paid;
5 Defendants Donato Sagario Paulmitan and Juliana Paulmitan Fanesa are ordered to account
to plaintiffs and to pay them, jointly and severally, the value of the produce from Lot 1091
representing plaintiffs' share in the amount of P5,000.00 per year from 1966 up to the time
of actual partition of the property, and to pay them the sum of P2,000.00 as attorney's fees
as well as the costs of the suit.
xxx xxx xxx
On appeal, the Court of Appeals affirmed the trial court's decision. Hence this petition.
To determine the rights and obligations of the parties to the land in question, it is well to review, initially,
the relatives who survived the decedent Agatona Sagario Paulmitan. When Agatona died in 1953, she was
survived by two (2) sons, Donato and Pascual. A few months later in the same year, Pascual died, leaving
seven children, the private respondents. On the other had, Donato's sole offspring was petitioner Juliana P.
Fanesa.
At the time of the relevant transactions over the properties of decedent Agatona Sagario Paulmitan, her
son Pascual had died, survived by respondents, his children. It is, thus, tempting to apply the principles
pertaining to the right of representation as regards respondents. It must, however, be borne in mind that
Pascual did no predecease his mother, 8 thus precluding the operation of the provisions in the Civil Code
on the right of representation 9 with respect to his children, the respondents. When Agatona Sagario
Paulmitan died intestate in 1952, her two (2) sons Donato and Pascual were still alive. Since it is well-
settled by virtue of Article 777 of the Civil Code that "[t]he rights to the succession are transmitted from
the moment of the death of the decedent," 10 the right of ownership, not only of Donato but also of
Pascual, over their respective shares in the inheritance was automatically and by operation of law vested
in them in 1953 when their mother died intestate. At that stage, the children of Donato and Pascual did
not yet have any right over the inheritance since "[i]n every inheritance, the relative nearest in degree
excludes the more distant
ones." 11 Donato and Pascual excluded their children as to the right to inherit from Agatona Sagario
Paulmitan, their mother.

From the time of the death of Agatona Sagario Paulmitan to the subsequent passing away of her son
Pascual in 1953, the estate remained unpartitioned. Article 1078 of the Civil Code provides: "Where there
are two or more heirs, the whole estate of the decedent is, before its partition, owned in common by such
heirs, subject to the payment of debts of the deceased." 12 Donato and Pascual Paulmitan were, therefore,
co-owners of the estate left by their mother as no partition was ever made.
When Pascual Paulmitan died intestate in 1953, his children, the respondents, succeeded him in the co-
ownership of the disputed property. Pascual Paulmitan's right of ownership over an undivided portion of
the property passed on to his children, who, from the time of Pascual's death, became co-owners with
their uncle Donato over the disputed decedent estate.
Petitioner Juliana P. Fanesa claims ownership over Lot No. 1091 by virtue of two transactions, namely: (a)
the sale made in her favor by her father Donato Paulmitan; and (b) her redemption of the land from the
Provincial of Negros Occidental after it was forfeited for non-payment of taxes.
When Donato Paulmitan sold on May 28, 1974 Lot No. 1091 to his daughter Juliana P. Fanesa, he was only
a co-owner with respondents and as such, he could only sell that portion which may be allotted to him
upon termination of the co-ownership. 13 The sale did not prejudice the rights of respondents to one half
(1/2) undivided share of the land which they inherited from their father. It did not vest ownership in the
entire land with the buyer but transferred only the seller's pro-indiviso share in the property 14 and
consequently made the buyer a co-owner of the land until it is partitioned. InBailon-Casilao v. Court of
Appeals, 15 the Court, through Justice Irene R. Cortes, outlined the effects of a sale by one co-owner
without the consent of all the co-owners, thus:
The rights of a co-owner of a certain property are clearly specified in Article 493 of the Civil Code,
Thus:
Art. 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits
pertaining thereto, and he may therefore alienate, assign or mortgage it and even substitute
another person its enjoyment, except when personal rights are involved. But the effect of the
alienation or mortgage, with respect to the co-owners, shall be limited to the portion which may be
allotted to him in the division upon the termination of the co-ownership. [Emphasis supplied.]
As early as 1923, this Court has ruled that even if a co-owner sells the whole property as his, the
sale will affect only his own share but not those of the other co-owners who did not consent to the
sale [Punsalan v. Boon Liat, 44 Phil. 320 (1923)]. This is because under the aforementioned codal
provision, the sale or other disposition affects only his undivided share and the transferee gets only
what would correspond to his grantor in the partition of the thing owned in common [Ramirez v.
Bautista, 14 Phil. 528 (1909)]. Consequently, by virtue of the sales made by Rosalia and Gaudencio
Bailon which are valid with respect to their proportionate shares, and the subsequent transfers
which culminated in the sale to private respondent Celestino Afable, the said Afable thereby became
a co-owner of the disputed parcel of land as correctly held by the lower court since the sales
produced the effect of substituting the buyers in the enjoyment thereof [Mainit v. Bandoy, 14 Phil.
730 (1910)].
From the foregoing, it may be deduced that since a co-owner is entitled to sell his undivided share,
a sale of the entire property by one co-owner without the consent of the other co-owners is not null
and void. However, only the rights of the co-owner-seller are transferred, thereby making the buyer
a co-owner of the property.
Applying this principle to the case at bar, the sale by petitioner Donato Paulmitan of the land to his
daughter, petitioner Juliana P. Fanesa, did not give to the latter ownership over the entire land but merely
transferred to her the one half (1/2) undivided share of her father, thus making her the co-owner of the
land in question with the respondents, her first cousins.
Petitioner Juliana P. Fanesa also claims ownership of the entire property by virtue of the fact that when the
Provincial Government of Negros Occidental bought the land after it was forfeited for non-payment of
taxes, she redeemed it.
The contention is without merit.
The redemption of the land made by Fanesa did not terminate the co-ownership nor give her title to the
entire land subject of the co-ownership. Speaking on the same issue raised by petitioners, the Court, in
Adille v. Court of Appeals, 16 resolved the same with the following pronouncements:
The petition raises a purely legal issue: May a co-owner acquire exclusive ownership over the
property held in common?
Essentially, it is the petitioners' contention that the property subject of dispute devolved upon him
upon the failure of his co-heirs to join him in its redemption within the period required by law. He
relies on the provisions of Article 1515 of the old Civil Code, Article 1613 of the present Code, giving
the vendee a retro the right to demand redemption of the entire property.
There is no merit in this petition.
The right of repurchase may be exercised by co-owner with respect to his share alone (CIVIL CODE,
art. 1612, CIVIL CODE (1889), art. (1514.). While the records show that petitioner redeemed the
property in its entirety, shouldering the expenses therefor, that did not make him the owner of all
of it. In other words, it did not put to end the existing state of co-ownership (Supra, Art. 489).
There is no doubt that redemption of property entails a necessary expense. Under the Civil Code:
Art. 488. Each co-owner shall have a right to compel the other co-owners to contribute to the
expenses of preservation of the thing or right owned in common and to the taxes. Any one of the
latter may exempt himself from this obligation by renouncing so much of his undivided interest as
may be equivalent to his share of the expenses and taxes. No such waiver shall be made if it is
prejudicial to the co-ownership.
The result is that the property remains to be in a condition of co-ownership. While a vendee a retro,
under Article 1613 of the Code, "may not be compelled to consent to a partial redemption," the
redemption by one co-heir or co-owner of the property in its totality does not vest in him ownership
over it. Failure on the part of all the co-owners to redeem it entitles the vendee a retro to retain the
property and consolidate title thereto in his name (Supra, art. 1607). But the provision does not
give to the redeeming co-owner the right to the entire property. It does not provide for a mode of
terminating a co-ownership.
Although petitioner Fanesa did not acquire ownership over the entire lot by virtue of the redemption she
made, nevertheless, she did acquire the right to reimbursed for half of the redemption price she paid to
the Provincial Government of Negros Occidental on behalf of her co-owners. Until reimbursed, Fanesa hold
a lien upon the subject property for the amount due her. 17
Finally, petitioners dispute the order of the trial court, which the Court of Appeals affirmed, for them to
pay private respondents P5,000.00 per year from 1966 until the partition of the estate which represents
the share of private respondents in the fruits of the land. According to petitioners, the land is being leased
for P2,000.00 per year only. This assigned error, however raises a factual question. The settled rule is that
only questions of law may be raised in a petition for review. As a general rule, findings of fact made by the
trial court and the Court of Appeals are final and conclusive and cannot be reviewed on appeal. 18
WHEREFORE, the petition is DENIED and the decision of the Court of Appeals AFFIRMED.
SO ORDERED.
Gutierrez, Jr., Bidin, Davide, Jr., Romero and Melo, JJ., concur.
PAULMITAN v CA
FACTS: When Agatona died, she was succeeded by 2 sons: Pascual and Donato. She left 2 parcels of land.
Pascual died leaving 7 heirs. The titles remained in the name of Agatona and the lots were never partitioned.
Donato, thereafter, executed an affidavit of Declaration of Heirshipunilaterally adjudicating one of the lots to
himself. He thereafter sold the entire lot to his daughter Juliana. For the failure to pay taxes, the lot was forfeited and
sold at a public auction, but Juliana later redeemed the property. The Heirs of Pascual then surfaced and sought to
partition the property.
ISSUE: W/N Juliana became the owner of the entire lot upon her redemption of the property

HELD: NO.From the moment of Agatonas death, her heirs, Pascual and Donato, became co-owners of the
undivided lot. When Donato died, his pro-indiviso share transferred to his heirs. That being the case, when Donato
sold the entire property to his daughter, he was merely co-owner thereof and transferred only his undivided share.
If a co-owner alienates the entire property without the consent of the other co-owners, the sale will affect only his
share. Thus, only undivided share passed on to Juliana. The fact that Juliana redeemed the property does not
operate to terminate the co-ownership. It merely entitles her to reimbursement from the other co- owners
redemption being a necessary expense. Until reimbursement, Juliana holds a lien upon the lot for the amount due to
her. However, a partition is in order.

G.R. No. L-17681 February 26, 1965
MINDANAO ACADEMY, INC., MAURICIO O. BAS, ERLINDA D. DIAZ, accompanied by her husband
ANTOLIN DIAZ, ESTER AIDA D. BAS, accompanied by her husband MAURICIO O. BAS,
ROSALINDA D. BELLEZA, accompanied by her husband APOLINARIO BELLEZA, LUZ MINDA D.
DAJAO, accompanied by her husband ELIGIO C. DAJAO, ADELAIDA D. NUESA, accompanied by
her husband WILSON NUESA, PEDRO N. ABUTON, SY PAOCO, JOSEFA DIGNUM, and PERFECTO
VELASQUEZ, plaintiffs-appellees, vs. ILDEFONSO D. YAP, ROSENDA A. DE NUQUI, and SOTERO A.
DIONISIO, JR., defendants, ILDEFONSO D. YAP, defendant-appellant.
-----------------------------
G.R. No. L-17682 February 26, 1965
ROSENDA A. DE NUQUI, SOTERO DIONISIO, JR., ERLINDA DIONISIO-DIAZ and ANTOLIN DIAZ,
plaintiffs-appellees, vs. ILDEFONSO D. YAP, defendant-appellant.
MAKALINTAL, J.:
By deed entitled "Mutual Agreement," executed on May 10, 1964, Rosenda A. de Nuqui (widow of
deceased Sotero Dionisio) and her son Sotero Dionisio, Jr. sold three parcels of residential land in
Oroquieta, Misamis Occidental, and another parcel in Ozamis City in favor of Ildefonso D. Yap. Included in
the sale were certain buildings situated on said lands as well as laboratory equipment, books, furniture and
fixtures used by two schools established in the respective properties, the Mindanao Academy in Oroquieta
and the Misamis Academy in Ozamis City. The aggregate price stated in the deed was P100,700.00, to be
paid according to the terms and conditions specified in the contract.
Besides Rosenda and her son Sotero, Jr., both of whom signed the instrument, Adelaida Dionisio-Nuesa (a
daughter of Rosenda) is also named therein as co-vendor, but actually did not take part either personally
or through her uncle and supposed attorney-in-fact, Restituto Abuton.
These three Rosenda and her two children above named are referred to in the deed as the owners
pro-indiviso of the properties sold. The truth, however, was that there were other co-owners of the lands,
namely, Erlinda D. Diaz, Ester Aida D. Bas, Rosalinda D. Belleza, and Luz Minda D. Dajao, children also of
Rosenda by her deceased husband Sotero Dionisio, Sr., and that as far as the school building, equipment,
books, furniture and fixtures were concerned, they were owned by the Mindanao Academy, Inc., a
corporation operating both the Mindanao Academy in Oroquieta and the Misamis Academy in Ozamis City.
The buyer, Ildefonso D. Yap, obtained possession of the properties by virtue of the sale, took over the
operation of the two schools and even changed their names to Harvardian Colleges. In view thereof two
actions were commenced in the Court of First Instance of Misamis Occidental. The first was for annulment
of the sale and recovery of rents and damages (Civil Case No. 1774, filed May 3, 1955) with the Mindanao
Academy, Inc., the five children of Rosenda Nuqui who did not take part in the deed of sale, and several
other persons who were stockholders of the said corporation, as plaintiffs, and the parties who signed the
deed of sale as defendants. The second action was for rescission (Civil Case No. 1907, filed July 17, 1956)
with Rosenda Nuqui, Sotero Dionisio, Jr. and Erlinda D. Diaz (and the latter's husband Antolin Diaz) as
plaintiffs, and Ildefonso D. Yap as lone defendant. The other four children of Rosenda did not join, having
previously ceded and quitclaimed their shares in the litigated properties in favor of their sister Erlinda D.
Diaz.
The two actions were tried jointly and on March 31, 1960 the court a quo rendered judgment as follows:
In both Cases
(1) The Mutual Agreement is hereby declared null and void ab initio;
(2) Defendant Ildefonso D. Yap is hereby ordered to pay the costs of the proceedings in both cases.
In Civil Case No. 1907 only
(1) Defendant Ildefonso D. Yap is hereby ordered to restore to the plaintiffs in said case all the
buildings and grounds described in the Mutual Agreement together with all the permanent
improvements thereon;

(2) To pay to the plaintiffs therein the amount of P300.00 monthly from July 31, 1956 up to the
time he shall have surrendered the properties in question to the plaintiffs herein, plus P1,000.00 as
attorney's fees to plaintiffs Antolin and Erlinda D. Diaz.
In Civil Case No. 1774 only
(1) Defendant Ildefonso D. Yap is hereby ordered to restore to the Mindanao Academy, Inc., all the
books laboratory apparatus, furniture and other equipments described in the Mutual Agreement and
specified in the inventory attached to the Records of this case; or in default thereof, their value in
the amount of P23,500.00;
(2) To return all the Records of the Mindanao Academy and Misamis Academy;
(3) To pay to the plaintiffs stockholders of the Mindanao Academy, Inc., the amount of P10,000.00
as nominal damages, P3,000.00 as exemplary damages; and P2,000.00 as attorney's fees. These
damages shall be apportioned to each of the stockholders named as plaintiffs in said case in
proportion to their respective interests in the corporation.
Ildefonso D. Yap appealed from the foregoing judgment and has assigned five errors therein.
I. He first contends that the lower court erred "in declaring that the mutual agreement dated May 10, 1954
... is entirely void and legally non-existent in that the vendors therein ceded to defendant-appellant not
only their interests, rights, shares and participation in the property sold but also those that belonged to
persons who were not parties thereto."
The lower court did not rule categorically on the question of rescission considering it unnecessary to do so
in view of its conclusion that the contract of sale is null and void. This conclusion is premised on two
grounds: (a) the contract purported to sell properties of which the sellers were not the only owners, since
of the four parcels of land mentioned in the deed their shares consisted only of 7/12, (6/12 for Rosenda
Nuqui and 1/12 for Sotero, Jr.), while in the buildings, laboratory equipment, books, furniture and fixtures
they had no participation at all, the owner being the Mindanao Academy, Inc.; and (b) the prestation
involved in the sale was indivisible, and therefore incapable of partial annulment, inasmuch as the buyer
Yap, by his own admission, would not have entered into the transaction except to acquire all of the
properties purchased by him.
These premises are not challenged by appellant. But he calls attention to one point, namely, that the four
children of Rosenda Nuqui who did not take part in the sale, besides Erlinda Dionisio Diaz, quitclaimed in
favor of the latter their interests in the properties; and that the trial court held that Erlinda as well as her
husband acted in bad faith, because "having reasonable notice of defendants' having unlawfully taken
possession of the property, they failed to make reasonable demands for (him) to vacate the premises to
respect their rights thereto." It is argued that being herself guilty of bad faith, Erlinda D. Diaz, as owner of
5/12 undivided interest in the properties (including the 4/12 ceded to her by her four sisters), is in no
position to ask for annulment of the sale. The argument does not convince us. In the first place the
quitclaim, in the form of an extrajudicial partition, was made on May 6, 1956, after the action for
annulment was filed, wherein the plaintiffs were not only Erlinda but also the other co-owners who took no
part in the sale and to whom there has been no imputation of bad faith. Secondly, the trial court's finding
of bad faith is an erroneous conclusion induced by a manifest oversight of an undisputed fact, namely, that
on July 10, 1954, just a month after the deed of sale in question, Erlinda D. Diaz did file an action against
Ildefonso D. Yap and Rosenda Nuqui, among others, asserting her rights as co-owner of the properties
(Case No. 1646). Finally, bad faith on the part of Erlinda would not militate against the nullity of the sale,
considering that it included not only the lands owned in common by Rosenda Nuqui and her six children
but also the buildings and school facilities owned by the Mindanao Academy, Inc., an entity which had
nothing to do with the transaction and which could be represented solely by its Board of Trustees.
The first assignment of error is therefore without merit.
II. The second and third errors are discussed jointly in appellant's brief. They read as follows:
THE LOWER COURT ERRED IN HOLDING DEFENDANT-APPELLANT LIABLE FOR RENTS AND
ATTORNEY'S FEES IN THE SUM OF P1,000.00 AFTER DECLARING THAT ALL THE PLAINTIFFS-
APPELLEES IN CIVIL CASE NO. 1907 ACTED IN BAD FAITH.

THE LOWER COURT ERRED IN HOLDING THAT PLAINTIFFS-APPELLEES IN SAID CIVIL CASE NO.
1907 ARE ENTITLED TO RECOVER ALL THE LANDS, BUILDINGS AND OTHER PERMANENT
IMPROVEMENTS DESCRIBED IN THE MUTUAL AGREEMENT DATED MAY 10, 1954.
The lower court correctly found that both vendors and vendee in the sale acted in bad faith and therefore
must be treated, vis-a-vis each other, as having acted in good faith. The return of the properties by the
vendee is a necessary consequence of the decree of annulment. No part of the purchase price having been
paid, as far as the record shows, the trial court correctly made no corresponding order for the restitution
thereof.
In regard to the rents the trial court found that prior to the sale the Mindanao Academy, Inc., was paying
P300.00 monthly for its occupancy of the lands on which the buildings are situated. This is the amount the
defendant has been ordered to pay to the plaintiffs in Civil Case No. 1907, beginning July 31, 1956, when
he filed his "first pleading" in the case. There can be no doubt that Erlinda D. Diaz is entitled to recover a
share of the said rents in proportion to her own interests in the lands and the interest in the four co-
owners which she had acquired. Rosenda Nuqui and her son Sotero, it is true, acted in bad faith when they
sold the properties as theirs alone, but so did the defendant Yap when he purchased them with knowledge
of the fact that there were other co-owners. Although the bad faith of one party neutralizes that of the
other and hence as between themselves their rights would be as if both of them had acted in good faith at
the time of the transaction, this legal fiction of Yap's good faith ceased when the complaint against him
was filed, and consequently the court's declaration of liability for the rents thereafter is correct and proper.
A possessor in good faith is entitled to the fruits only so long as his possession is not legally interrupted,
and such interruption takes place upon service of judicial summons (Arts. 544 and 1123, Civil Code).
In our opinion the award of attorney's fees to Erlinda D. Diaz and her husband is erroneous. Civil Case No.
1907, in which said fees have been adjudged, is for rescission (more properly resolution) of the so-called
"mutual agreement" on the ground that the defendant Yap failed to comply with certain undertakings
specified therein relative to the payment of the purchase price. Erlinda Diaz was not a party to that
agreement and hence had no cause of action for rescission. And as already stated, the trial court did not
decide the matter of rescission because of the decree of annulment it rendered in the other case (Civil
Case No. 1774), wherein the defendants are not only Ildefonso D. Yap but also Rosenda Nuqui and her son
Sotero. Erlinda D. Diaz could just as well have refrained from joining as plaintiff in the action for
rescission, not being a party to the contract sought to be rescission and being already one of the plaintiffs
in the other action. In other words, it cannot be said with justification that she was constrained to litigate,
in Civil Case No. 1907, because of some cause attributable to the appellant.
The appellant claims reimbursement for the value of the improvements he allegedly introduced in the
schools, consisting of a new building worth P8,000.00 and a toilet costing P800.00, besides laboratory
equipment, furniture, fixtures and books for the libraries. It should be noted that the judgment of the trial
court specifies, for delivery to the plaintiffs (in Civil Case No. 1907), only "the buildings and grounds
described in the mutual agreement together with all the permanent improvements thereon." If the
defendant constructed a new building, as he alleges, he cannot recover its value because the construction
was done after the filing of the action for annulment, thus rendering him a builder in bad faith who is
denied by law any right of reimbursement.
In connection with the equipment, books, furniture and fixtures brought in by him, he is not entitled to
reimbursement either, because the judgment does not award them to any of the plaintiffs in these two
actions. What is adjudged (in Civil Case No. 1774) is for the defendant to restore to the Mindanao
Academy, Inc. all the books, laboratory apparatus, furniture and other equipment "described in the Mutual
Agreement and specified in the Inventory attached to the records of this case; or in default thereof, their
value in the amount of P23,500.00." In other words, whatever has been brought in by the defendant is
outside the scope of the judgment and may be retained by him.
III. The appellant's fourth assignment of error refers to the nominal and exemplary damages, as well as
the attorney's fees, granted to the stockholders of the Mindanao Academy, Inc. The trial court awarded no
compensatory damages because the Mindanao Academy, Inc. had been operating the two schools at a loss
before the sale in question, and the defendant himself was no more successful after he took over. Are the
stockholders of the said corporation who joined as plaintiffs in Civil Case No. 1774 entitled to nominal and
exemplary damages? We do not believe so. According to their second amended complaint they were joined
merely pro forma, and "for the sole purpose of the moral damage which has been all the time alleged in
the original complaint." Indeed the interests of the said stockholders, if any, were already represented by
the corporation itself, which was the proper party plaintiff; and no cause of action accruing to them
separately from the corporation is alleged in the complaint, other than that for moral damages due to
"extreme mental anguish, serious anxiety and wounded feelings." The trial court, however, ruled out this

claim for moral damages and no appeal from such ruling has been taken. The award for nominal and
exemplary damages should be eliminated in toto.
The award for attorney's fees in the amount of P2,000.00 should be upheld, although the same should be
for the account, not of the plaintiff stockholders of the Mindanao Academy, Inc., but of the corporation
itself, and payable to their common counsel as prayed for in the complaint.
IV. Under the fifth and last assignment of error the appellant insists on the warranty provided for in clause
VI of the deed of sale in view of the claims of the co-owners who did not take part therein. The said clause
provides: "if any claim shall be filed against the properties or any right, share or interest which are in the
possession of the party of the First Part (vendors) which had been hereby transferred, ceded and conveyed
unto the party of the Second Part (vendee) the party of the First Part assumes as it hereby holds itself
answerable.
It is unnecessary to pass upon the question posed in this assignment of error in view of the total
annulment of the sale on grounds concerning which both parties thereto were at fault. The nullity of the
contract precludes enforcement of any of its stipulations.
WHEREFORE, the judgment appealed from is modified by eliminating therefrom the award of attorney's
fees of P1,000.00 in favor of Erlinda D. Diaz and her husband, plaintiffs in Civil Case No. 1907, and the
award of nominal and exemplary damages in Civil Case No. 1774; and making the award of attorney's fees
in the sum of P2,000.00 payable to counsel for the account of the Mindanao Academy, Inc. instead of the
plaintiff stockholders. In all other respects the judgment appealed from is affirmed. No pronouncement as
to costs.
MINDANAO v YAP
FACTS: Rosenda and Sotero were among co-owners of 3 parcels of land, which they sold to Ildefonso Yap for some
P100K without the consent of the other co-owners. They included in the sale certain buildings and laboratory and
other educational equipment within the said properties, which were actually owned by Mindanao Academy.
Mindanao Academy and the other co-owners assailed the validity of the sale. The trial court declared the sale null
and void. Yap contends that Erlinda, one of the co-owners owning 5/12 share of the co-ownership, does not have the
standing to challenge the sale for being in bad faith.
ISSUE: W/N the sale is null and void as to its entirety
HELD: YES. Although the general rule is that if a co- owner alienates the entire property without the consent of the
other co-owners, the sale will affect only his share, such rule does not apply if the property cannot be
partitioned/subdivided. In this case, aside from the fact that Rosenda and Sotero cannot sell the entire property
including the school equipment, they cannot also sell their undivided share in the co-ownership. Otherwise, the
properties sold would be subject to a partition, which cannot happen to the properties in this case. School equipment,
as well as the buildings, are indivisible. Thus, they cannot be subject to partition.

G.R. No. L-36359 January 31, 1974
FELIX BUCTON AND NICANORA GABAR BUCTON, petitioners, vs.ZOSIMO GABAR, JOSEFINA
LLAMOSO GABAR AND THE HONORABLE COURT OF APPEALS, respondents.
ANTONIO, J.:
Appeal from the decision of the Court of Appeals in CA-G.R. No. 49091-R, dated January 10, 1973,
reversing the judgment of the trial court and dismissing the complaint filed by herein petitioners, and from
said appellate court's resolution, dated February 5, 1973, denying petitioners' motion for reconsideration.
The facts of the case, as found by the trial court, which have not been disturbed by respondent Court of
Appeals, are as follows:
Plaintiff Nicanora Gabar Bucton (wife of her co-plaintiff Felix Bucton) is the sister of defendant
Zosimo Gabar, husband of his co-defendant Josefina Llamoso Gabar.
This action for specific performance prays, inter-alia, that defendants-spouses be ordered to
execute in favor of plaintiffs a deed of sale of the western half of a parcel of land having an area of
728 sq. m. covered by TCT No. II (from OCT No. 6337) of the office of the Register of Deeds of
Misamis Oriental.
Plaintiffs' evidence tends to show that sometime in 1946 defendant Josefina Llamoso Gabar bought
the above-mentioned land from the spouses Villarin on installment basis, to wit, P500 down, the
balance payable in installments. Josefina entered into a verbal agreement with her sister-in-law,
plaintiff Nicanora Gabar Bucton, that the latter would pay one-half of the price (P3,000) and would
then own one-half of the land. Pursuant to this understanding Nicanora on January 19, 1946 gave
her sister-in-law Josefina the initial amount of P1,000, for which the latter signed a receipt marked
as Exhibit A.
Subsequently, on May 2, 1948 Nicanora gave Josefina P400. She later signed a receipt marked as
Exhibit B.
On July 30, 1951 plaintiffs gave defendants P1,000 in concept of loan, for which defendant Zosimo
Gabar signed a receipt marked as Exhibit E.
Meanwhile, after Josefina had received in January, 1946 the initial amount of P1,000 as above
stated, plaintiffs took possession of the portion of the land indicated to them by defendants and
built a modest nipa house therein. About two years later plaintiffs built behind the nipa house
another house for rent. And, subsequently, plaintiffs demolished the nipa house and in its place
constructed a house of strong materials, with three apartments in the lower portion for rental
purposes. Plaintiffs occupied the upper portion of this house as their residence, until July, 1969
when they moved to another house, converting and leasing the upper portion as a dormitory.
In January, 1947 the spouses Villarin executed the deed of sale of the land abovementioned in favor
of defendant Josefina Llamoso Gabar, Exhibit I, to whom was issued on June 20, 1947 TCT No. II,
cancelling OCT No. 6337. Exhibit D.
Plaintiffs then sought to obtain a separate title for their portion of the land in question. Defendants
repeatedly declined to accommodate plaintiffs. Their excuse: the entire land was still mortgaged
with the Philippine National Bank as guarantee for defendants' loan of P3,500 contracted on June
16, 1947: Exhibit D-1.
Plaintiffs continued enjoying their portion of the land, planting fruit trees and receiving the rentals
of their buildings. In 1953, with the consent of defendants (who were living on their portion),
plaintiffs had the entire land surveyed and subdivided preparatory to obtaining their separate title
to their portion. After the survey and the planting of the concrete monuments defendants erected a
fence from point 2 to point 4 of the plan, Exhibit I, which is the dividing line between the portion
pertaining to defendants, Exhibit I-1, and that pertaining to plaintiffs, Exhibit I-2.

In the meantime, plaintiffs continued to insist on obtaining their separate title. Defendants
remained unmoved, giving the same excuse. Frustrated, plaintiffs were compelled to employ Atty.
Bonifacio Regalado to intercede; counsel tried but failed. Plaintiffs persevered, this time employing
Atty. Aquilino Pimentel, Jr. to persuade defendants to comply with their obligation to plaintiffs; this,
too, failed. Hence, this case, which has cost plaintiffs P1,500 in attorney's fees.
Defendants' evidence based only on the testimony of defendant Josefina Llamoso Gabar denies
agreement to sell to plaintiffs one-half of the land in litigation. She declared that the amounts she
had received from plaintiff Nicanora Gabar Bucton first, P1,000, then P400 were loans, not
payment of one-half of the price of the land (which was P3,000). This defense is devoid of merit.
When Josefina received the first amount of P1,000 the receipt she signed, Exhibit A, reads:
Cagayan, Mis. OR
January 19, 1946
Received from Mrs. Nicanora Gabar the sum of one thousand (P1,000) pesos, victory currency, as part
payment of the one thousand five hundred (P1,500.00) pesos, which sum is one-half of the purchase value
of Lot No. 337, under Torrens Certificate of Title No. 6337, sold to me by Mrs. Carmen Roa Villarin.
"(Sgd.) Josefina Ll. Gabar".
On the basis of the facts quoted above the trial court on February 14, 1970, rendered judgment the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered for plaintiffs:
1) Ordering defendants within thirty days from receipt hereof to execute a deed of conveyance in
favor of plaintiffs of the portion of the land covered by OCT No. II, indicated as Lot 337-B in the
Subdivision Plan, Exhibit I, and described in the Technical Description, Exhibit 1-2; should
defendants for any reason fail to do so, the deed shall be executed in their behalf by the Provincial
Sheriff of Misamis Oriental or his Deputy;
2) Ordering the Register of Deeds of Cagayan de Oro, upon presentation to him of the above-
mentioned deed of conveyance, to cancel TCT No. II and in its stead to issue Transfer Certificates of
Title, to wit, one to plaintiffs and another to defendants, based on the subdivision Plan and
Technical Description above-mentioned; and ordering defendants to present and surrender to the
Register of Deeds their TCT No. II so that the same may be cancelled; and
3) Ordering defendants to pay unto plaintiffs attorney's fees in the amount of P1,500 and to pay the
costs.
SO ORDERED.
Appeal was interposed by private respondents with the Court of Appeals, which reversed the judgment of
the trial court and ordered petitioners' complaint dismissed, on the following legal disquisition:
Appellees' alleged right of action was based on the receipt (Exh. A) which was executed way back
on January 19, 1946. An action arising from a written contract does not prescribe until after the
lapse of ten (10) years from the date of action accrued. This period of ten (10) years is expressly
provided for in Article 1144 of the Civil Code.
From January 19, 1946 to February 15, 1968, when the complaint was filed in this case, twenty-two
(22) years and twenty-six (26) days had elapsed. Therefore, the plaintiffs' action to enforce the
alleged written contract (Exh. A) was not brought within the prescriptive period of ten (10) years
from the time the cause of action accrued.
The land in question is admittedly covered by a torrens title in the name of Josefina Llamoso Gabar
so that the alleged possession of the land by the plaintiffs since 1947 is immaterial because
ownership over registered realty may not be acquired by prescription or adverse possession
(Section 40 of Act 496).

It is not without reluctance that in this case we are constrained to sustain the defense of
prescription, for we think that plaintiffs really paid for a portion of the lot in question pursuant to
their agreement with the defendants that they would then own one-half of the land. But we cannot
apply ethical principles in lieu of express statutory provisions. It is by law provided that:
"ART. 1144. The following actions must be brought within ten years from the time the right of
action accrues:
1. Upon a written contract;
2. Upon an obligation created by law;
3. Upon a judgment."
If eternal vigilance is the price of safety, one cannot sleep on one's right and expect it to be
preserved in its pristine purity.
Petitioners' appeal is predicated on the proposition that owners of the property by purchase from private
respondents, and being in actual, continuous and physical possession thereof since the date of its
purchase, their action to compel the vendors to execute a formal deed of conveyance so that the fact of
their ownership may be inscribed in the corresponding certificate of title, had not yet prescribed when they
filed the present action.
We hold that the present appeal is meritorious.
1. There is no question that petitioner Nicanora Gabar Bucton paid P1,500.00 to respondent Josefina
Gabar as purchase price of one-half of the lot now covered by TCT No. II, for respondent Court of Appeals
found as a fact "that plaintiffs really paid for a portion of the lot in question pursuant to their agreement
with the defendants that they would own one-half (1/2) of the land." That sale, although not consigned in
a public instrument or formal writing, is nevertheless valid and binding between petitioners and private
respondents, for the time-honored rule is that even a verbal contract of sale or real estate produces legal
effects between the parties. 1 Although at the time said petitioner paid P1,000.00 as part payment of the
purchase price on January 19, 1946, private respondents were not yet the owners of the lot, they became
such owners on January 24, 1947, when a deed of sale was executed in their favor by the Villarin spouses.
In the premises, Article 1434 of the Civil Code, which provides that "[w]hen a person who is not the owner
of a thing sells or alienates and delivers it, and later the seller or grantor acquires title thereto, such title
passes by operation of law to the buyer or grantee," is applicable. 2 Thus, the payment by petitioner by
Nicanora Gabar Bucton of P1,000.00 on January 19, 1946, her second payment of P400.00 on May 2,
1948, and the compensation, up to the amount of P100.00 (out of the P1,000.00-loan obtained by private
respondents from petitioners on July 30, 1951), resulted in the full payment of the purchase price and the
consequential acquisition by petitioners of ownership over one-half of the lot. Petitioners therefore became
owners of the one-half portion of the lot in question by virtue of a sale which, though not evidenced by a
formal deed, was nevertheless proved by both documentary and parole evidence.
2. The error of respondent Court of Appeals in holding that petitioners' right of action had already
prescribed stems from its belief that the action of petitioners is based on the receipt Exh. "A" which was
executed way back on January 19, 1946, and, therefore, in the view of said appellate court, since
petitioners' action was filed on February 15, 1968, or after the lapse of twenty-two (22) years and twenty-
six (26) days from, the date of said document, the same is already barred according to the provisions of
Article 1144 of the New Civil Code. The aforecited document (Exh. "A"), as well as the other documents of
similar import (Exh. "B" and Exh. "E"), are the receipts issued by private respondents to petitioners,
evidencing payments by the latter of the purchase price of one-half of the lot.
The real and ultimate basis of petitioners' action is their ownership of one-half of the lot coupled with their
possession thereof, which entitles them to a conveyance of the property. In Sapto, et al. v. Fabiana,3 this
Court, speaking thru Mr. Justice J.B.L. Reyes, explained that, under the circumstances no enforcement of
the contract is needed, since the delivery of possession of the land sold had consummated the sale and
transferred title to the purchaser, and that, actually, the action for conveyance is one to quiet title, i.e., to
remove the cloud upon the appellee's ownership by the refusal of the appellants to recognize the sale
made by their predecessors. We held therein that "... it is an established rule of American jurisprudence
(made applicable in this jurisdiction by Art. 480 of the New Civil Code) that actions to quiet title to
property in the possession of the plaintiff are imprescriptible (44 Am. Jur. p. 47; Cooper vs. Rhea, 20
L.R.A. 930; Inland Empire Land Co. vs. Grant County, 138 Wash. 439, 245 Pac. 14).

The prevailing rule is that the right of a plaintiff to have his title to land quieted, as against one who
is asserting some adverse claim or lien thereon, is not barred while the plaintiff or his grantors
remain in actual possession of the land, claiming to be owners thereof, the reason for this rule
being that while the owner in fee continues liable to an action, proceeding, or suit upon the adverse
claim, he has a continuing right to the aid of a court of equity to ascertain and determine the nature
of such claim and its effect on his title, or to assert any superior equity in his favor. He may wait
until his possession is disturbed or his title in attacked before taking steps to vindicate his right. But
the rule that the statute of limitations is not available as a defense to an action to remove a cloud
from title can only be invoked by a complainant when he is in possession. One who claims property
which is in the possession of another must, it seems, invoke remedy within the statutory period.
(44 Am. Jur., p. 47)
The doctrine was reiterated recently in Gallar v. Husain, et al., 4 where We ruled that by the delivery of the
possession of the land, the sale was consummated and title was transferred to the appellee, that the
action is actually not for specific performance, since all it seeks is to quiet title, to remove the cloud cast
upon appellee's ownership as a result of appellant's refusal to recognize the sale made by his predecessor,
and that as plaintiff-appellee is in possession of the land, the action is imprescriptible. Considering that the
foregoing circumstances obtain in the present case, We hold that petitioners' action has not prescribed.
WHEREFORE, the decision and resolution of respondent Court of Appeals appealed from are hereby
reversed, and the judgment of the Court of First Instance of Misamis Oriental, Branch IV, in its Civil Case
No. 3004, is revived. Costs against private respondents.
Zaldivar (Chairman), Fernando, Barredo, Fernandez, Aquino, JJ., concur.
BUCTON v GABAR
FACTS: Josefina bought a parcel of land from Villarin. By verbal agreement, Josefina sold a portion thereof to
Nicanora for P3,000. Nicanora paid P1,000 then P400all evidence by receiptsthen she loaned Josefina P1,000
and thereafter along with her spouse, took possession of the lot and built their house as well as apartments thereon.
Villarin then issued a Deed of Sale to Josefina, but the latter refused to execute the corresponding Deed of Sale to
Nicanora. Josefina claimed that the amounts paid by Nicanora were in the concept of loans. Thus, Nicanora filed a
case for specific performance.
ISSUE: W/N there was a sale between Josefina and Nicanora
HELD: YES. Assuming that at the time when Josefina sold the lot to Nicanora, she was not yet the owner thereof.
When Villarin executed the Deed of Sale in her favor, title passed to Nicanora by operation of law. Although the
sale between Josefina and Nicanora was verbal, it was as between them. Considering that Nicanora has paid the
purchase price, she became owner of of the lot. Likewise, although the complaint was titled specific performance
it was actually one for quieting of title, which is imprescriptible so long as the plaintiff is in possession of the lot.

G.R. No. L-8255 July 11, 1957
CITY OF MANILA, plaintiff-appellee, vs. BUGSUK LUMBER CO., defendant-appellant.
FELIX, J.:
Bugsuk Lumber Company, Inc., a domestic corporation with field office at Balabak, Palawan, and principal
office at 703 San Fernando, Binondo, Manila, was organized to:
(a) Comprar y vender maderas y para dedicarse, en general a toda clase de negocios sobre
maderas;
(T buy and sell lumber and to engage in general, in any kind of business concerning lumber);
(b) Solicitor del Gobiern o adquirir, en la forma permitia por la ley, concessiones madereras si el
negocio asi lo exige;
(To apply from the Government or to acquire in any manner permitted by law, lumber concessions
if the business would so require);
(c) Aserrar maderas y comprar trozos de madera, en caso de que el negocio de la corporacion lo
exija; y
(To saw lumber and to buy logs, in case the business of the corporation would so demand; and)
(d) Hacer toda clase de negocios relacionados directa o indirectamente con los fines para los cuales
se ha creado esta corporacion (Exhibit "A").
(To make all kinds of business that may be directly or indirectly in line with the purposes for which
this corporation has been created).
In 1951 and during the 1st, 2nd and 3rd quarters of 1952, the Bugsuk Lumber Company made sales of
lumber to several firms including Pio Barreto & Sons, Inc., Gotamco & Sons, Co., Basilan Lumber Co., Dy
Pac & So, Inc., Central Sawmill, Woodart Inc., Felipe Yupangco & Sons, Inc., Jacinto Music Store and P. E.
Domingo & Co., Inc. (Exhibits B to B-23).
On October 10, 1952, the Office of the Treasurer of the City of Manila sent a demand to the Company for
the payment of the amount of P544.50 for license fees corresponding to the years 1951 and 1952, and
P40.00 for the necessary mayor's permit, on the ground that said business firm was found to be engaged
in the sales of timber products without first securing the required licenses and permits pursuant to City
Ordinances Nos. 3420, 3364 and 3000. (Exhibit C). The Company must have refused or failed to pay said
imposts because on June 11, 1953, the City Fiscal of Manila filed a complaint against the Bugsuk Lumber
Co., Inc., with the Municipal Court of Manila alleging, among others, that defendant Company sold at
wholesale to different lumber dealers in Manila during the 1st, 2nd, 3rd and 4th quarters of 1951 and the
1st, 2nd and 3rd quarters of 1952 different kinds of lumber for which it should have paid a quarterly
license tax of P40.000 or a total of P280.00 as provided by Ordinance No. 3000, as amended; that during
the 2nd, 3rd and 4th quarters of 1951 and the 1st, 2nd, 3rd and 4th quarters of 1952, defendant
Company sold at retail to different firms lumber for which it should have paid a total amount of P215.00
for license fees and the mayor's permit of P20.00; that despite repeated demands, defendant Company
refused and failed to pay the same and, therefore, prayed that judgment be rendered ordering the
defendant Company to pay the City of Manila the amount of P584.50 representing license fees and
mayor's permit fees, with legal interests thereon and surcharges and for such other relief as may be
deemed just and equitable in the premises.
Defendant Bugsuk Lumber Co., Inc., filed an answer on October 12, 1953, contesting plaintiff's allegation
that it sold lumber at wholesale transactions because what it actually sold were unprocessed logs; neither
did it sell at retail because the timbers were delivered directly from the vessel to the lumber dealers, and
set up the affirmative defenses that the Bugsuk Lumber Company was essentially a producer, having no
lumber yard of any kind in Manila or elsewhere, nor kept a store where lumber or logs could be sold, and
that its products (logs) were sold directly from the lumber concession to the dealers in Manila; that as
such producer, it had paid the taxes required by law such as the ordinary Timber License fee, Privilege tax
(producer), sales tax, forestry charges, reforestation fees, residence taxes, and the municipal licenses in

Bugsuk, Palawan; that the taxes in the form of license and permit fees sought to be collected by the City
would constitute double taxation, and prayed for the dismissal of the complaint.
The record shows that the Municipal Court of Manila rendered judgment in favor of plaintiff and defendant
Company appealed the case to the Court of First Instance of Manila based practically in the same
arguments. On July 18, 1954, the Court of First Instance rendered decision holding that the Company sold
logs to various firms in wholesale and retail transactions and although defendant had no store or lumber
yard in the City, this fact alone cannot destroy the findings of the inspector of the City Treasurer's Office
that it sold logs to different buyers in Manila; that the imposition of the taxes in question did not constitute
double taxation and that the municipal taxes sought to be collected by the City authorities were not
excessive and, consequently, ordered the defendant Company to pay the sum of P584.50 plus legal
interests and costs.
From this decision, therein defendant took the matter to this Court and in this instance alleged that the
lower Court erred:
1. In holding that appellant is a wholesale dealer and not a producer within the meaning of the tax
ordinance;
2. In holding that appellant is a retail dealer and not a producer within the meaning of the tax
ordinance; and
3. In holding that appellant is liable under the municipal ordinances imposing taxes in wholesale
and retail dealers because defendant is not a dealer but a producer.
We could see from the foregoing set of facts that the only question at issue in this case is whether or not
appellant, maintaining a principal office in Manila, receiving orders for its products and accepting in said
office payments thereto, can be considered a dealer in this City and is, therefore, subject to the payment
of the license tax and permit fees in question.
Appellant does not dispute the power of the Municipal Board of the City of Manila to enact Ordinance No.
3000 requiring wholesale and retail dealers to secure and pay the mayor's permit annually, neither does it
contest the validity of Ordinance No. 3364 which contains the following provision:
Group 2. Retail dealers in new (not yet used) merchandise, which dealers are not yet subject to the
payment of any municipal tax, such as; (1) Retail dealers in General Merchandise and (2) retail
dealers exclusively engaged in the sale of electrical supplies; sporting goods; office equipment and
materials; rice; textile including knitted wares; hardwares, including glasswares; cooking utensils
and construction materials; papers; books including stationery; (Ordinance No. 3364);
nor of Ordinance No. 3420 which provides:
SEC. 1. Municipal Tax on wholesalers in General Merchandise. There shall be paid by every
person, firm or corporation engaging in business as wholesale dealer in general merchandise, a
municipal tax based on wholesales, or on the receipts of exchange value of goods sold, exchanged
or transferred, in accordance with the following: (Ordinance No. 3420.)
A dealer has been defined as:
A dealer, in the common acceptation and, therefore, in the legal meaning of the word, is not one
who buys to keep or makes to sell, but one who buys to sell again; the middleman between the
producer and the consumer of the commodity (In re Hemming, 51 F. 2d 850).
It has been said that a dealer stands immediately between the producer and the consumer, and
depends for his profit, not upon the labor he bestows on his commodities, but upon the skill and
foresight with which he watches the markets (State vs. J. Watts Kearny & Sons, 160 So. 77).
In the light of the above definitions, appellant certainly does not fall within the common and ordinary
acceptation of the word "dealer" for there is no controversy as to the fact that what appellant sold was the
produce of its concession in Palawan. Even conceding, therefore, that the lumber which appellant disposed
of comes within the connotation of 'construction materials' (Group 2, Ordinance No. 3364) and of the term
"general merchandise" (used in Ordinances Nos. 3364 and 3420), which was defined as:

All articles subject to the payment of percentage taxes or graduated fixed taxes, but not articles
subject to the payment of specific taxes under the provisions of the Internal Revenue Code. It shall
also include poultry, livestock, fish and other allied products (Ordinance No. 3420).
We see no reason why a producer or manufacturer selling its own produce or manufactured goods would
be considered a dealer just to make it liable for the corresponding dealer's tax, as is the case in the instant
appeal.
Appellee, however, in asserting that appellant Company is a dealer relied on the case of Atlantic Refining
Co. vs.Van Valkenburg, 265 Pa. 456; 109 A. 208, wherein it was held that the term dealer includes "one
who carries on the business of selling goods, wares and merchandise manufactured by him at a store or
warehouse apart from his own manufactory", and it was the contention of the City Fiscal that the office at
703 San Fernando, Binondo, Manila, where appellant received orders and receipted payment for such
orders is actually a store.
Appellant admittedly maintained said principal office but averred that it was used merely to facilitate the
payment of the tax obligations of said Company, to receive orders of its timber produce and accept
payments therefor, and not for any purpose connected with the business of buying and selling. Did the fact
that appellant received orders of its goods and accepted payments thereto in said office make such office a
store? .
Lexicographers defined a store as:
Any place where goods are kept for sale, whether by wholesale or retail; a shop (Webster's New
International Dictionary, 2nd ed., p. 2486).
Any place where goods are deposited and sold by one engaged in buying and selling them (Black's
Law Dictionary, 4th ed., p. 1589).
It was also said that:
A store is any place where goods are kept for sale or sold, whether by wholesale or retail (Standard
Oil Co.vs. Green, 34 F. Supp. 30). It also applies to a building or room in which goods of any kind or
in which goods, wares and merchandise are kept for sale, or to any building used for the sale of
goods of any kind (Jackson vs. Lane, 59 A. 2d 662; 142 N. J. Eq. 193).
It could be seen that the placing of an order for goods and the making of payment thereto at a principal
office does not transform said office into a store, for it is a necessary element that there must also be
goods or wares stored therein or on display, and provided also that the firm or person maintaining that
office is actually engaged in the business of buying and selling. These elements are wanting in the case at
bar for it needs no further clarification that the principal office alluded to as a store only serves to facilitate
the transactions relative to the sale of its produce, but does not act as a dealer or intermediary between
its field office and its customers.
We may further add that this matter was already passed upon by this Court when, through Mr. Justice
Alejo Labrador, it held that:
It may be admitted that the manufacturer becomes a dealer if he carries on the business of selling
goods or the products manufactured by him at a store or warehouse apart from his own shop or
manufactory. But plaintiff-appellee did not carry on the business of selling sugar at stores or at its
warehouses. It entered into the contracts of sale at its central office in Manila and made deliveries
of the sugar sold from its warehouses. It does not appear that the plaintiff keeps stores at its
warehouses and engages in selling sugar in said stores. Neither does it appear that any one who
desires to purchase sugar from it may go to the warehouses and there purchase sugar. All that it
does was to sell the sugar it manufactured; it does not open stores for the sale of such sugar.
Plaintiff-appellee did not, therefore, engage in the business of selling sugar. (Central Azucarera de
Don Pedro vs. City of Manila et al., 97 Phil., 627).
Wherefore, the decision appealed from is hereby reversed and appellant declared exempt from the
liabilities sought to be charged against it under the provisions of the aforementioned ordinances, without
pronouncement as to costs. It is so ordered.

CITY OF MANILA v BUGSUK LUMBER
FACTS: Bugsuk Lumber had an office in Manila. The City Treasurer assessed it for license fees and mayors
permitalleging that Bugsuk sold at wholesale and retail to different lumber dealers in Manila. Bugsuk refused to
pay alleging that the lumber it produced were delivered directly from the shipper to the buyer, that they paid the
appropriate Timber License Fees and that their Manila Office only received orders and accepted payments. Bugsuk
alleges that it is not a dealer and its office is not a store to warrant the imposition of the additional taxes.
ISSUE: W/N Bugsuk is liable for the additional taxes
HELD: NO. A dealer buys to sell again; Bugsuk produced its own lumber from Palawan. Thus, it is not a dealer. Its
Manila office is not a store as well. A store is a place where goods are kept for salewhether for retail or wholesale.
The Manila office only processed the orders and payments; it did not keep goods therein or act as a dealer or
intermediary between the field office and the customers. Thus, it is not liable for the said taxes.

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, 1 which was sustained by the Regional Trial Court, 2 which was in turn
sustained by the Court of Appeals. 3 The petitioner asks us to declare that all these courts have erred and
should be reversed.
This case arose when on October 5, 1981, a person identifying himself as Professor Jose Cruz placed an
order by telephone with the petitioner company for 406 books, payable on delivery. 4 EDCA prepared the
corresponding invoice and delivered the books as ordered, for which Cruz issued a personal check covering
the purchase price of P8,995.65. 5 On October 7, 1981, Cruz sold 120 of the books to private respondent
Leonor Santos who, after verifying the seller's ownership from the invoice he showed her, paid him
P1,700.00. 6
Meanwhile, EDCA having become suspicious over a second order placed by Cruz even before clearing of his
first check, made inquiries with the De la Salle College where he had claimed to be a dean and was
informed 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. 7
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. 8
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. 10 As previously stated, the
petitioner was successively rebuffed in the three courts below and now hopes to secure relief from us.
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 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.
In Asiatic Commercial Corporation v. Ang,11 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:
Yet the defendant invoked Article 464 12 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.
In Tagatac v. Jimenez,13 the plaintiff sold her car to Feist, who sold it to Sanchez, who sold it to Jimenez.
When the payment check issued to Tagatac by Feist was dishonored, the plaintiff sued to recover the

vehicle from Jimenez on the ground that she had been unlawfully deprived of it by reason of Feist's
deception. In ruling for Jimenez, the Court of Appeals held:
The point of inquiry is whether plaintiff-appellant Trinidad C. Tagatac has been unlawfully deprived
of her car. At first blush, it would seem that she was unlawfully deprived thereof, considering that
she was induced to part with it by reason of the chicanery practiced on her by Warner L. Feist.
Certainly, swindling, like robbery, is an illegal method of deprivation of property. In a manner of
speaking, plaintiff-appellant was "illegally deprived" of her car, for the way by which Warner L. Feist
induced her to part with it is illegal and is punished by law. But does this "unlawful deprivation"
come within the scope of Article 559 of the New Civil Code?
xxx xxx xxx
. . . The fraud and deceit practiced by Warner L. Feist earmarks this sale as a voidable contract
(Article 1390 N.C.C.). Being a voidable contract, it is susceptible of either ratification or annulment.
If the contract is ratified, the action to annul it is extinguished (Article 1392, N.C.C.) and the
contract is cleansed from all its defects (Article 1396, N.C.C.); if the contract is annulled, the
contracting parties are restored to their respective situations before the contract and mutual
restitution follows as a consequence (Article 1398, N.C.C.).
However, as long as no action is taken by the party entitled, either that of annulment or of
ratification, the contract of sale remains valid and binding. When plaintiff-appellant Trinidad C.
Tagatac delivered the car to Feist by virtue of said voidable contract of sale, the title to the car
passed to Feist. Of course, the title that Feist acquired was defective and voidable. Nevertheless, at
the time he sold the car to Felix Sanchez, his title thereto had not been avoided and he therefore
conferred a good title on the latter, provided he bought the car in good faith, for value and without
notice of the defect in Feist's title (Article 1506, N.C.C.). There being no proof on record that Felix
Sanchez acted in bad faith, it is safe to assume that he acted in good faith.
The above rulings are sound doctrine and reflect our own interpretation of Article 559 as applied to the
case before us.
Actual delivery of the books having been made, Cruz acquired ownership over the books which he could
then validly transfer to the private respondents. The fact that he had not yet paid for them to EDCA was a
matter between him and EDCA and did not impair the title acquired by the private respondents to the
books.
One may well imagine the adverse consequences if the phrase "unlawfully deprived" were to be
interpreted in the manner suggested by the petitioner. A person relying on the seller's title who buys a
movable property from him would have to surrender it to another person claiming to be the original owner
who had not yet been paid the purchase price therefor. The buyer in the second sale would be left holding
the bag, so to speak, and would be compelled to return the thing bought by him in good faith without even
the right to reimbursement of the amount he had paid for it.
It bears repeating that in the case before us, Leonor Santos took care to ascertain first that the books
belonged to Cruz before she agreed to purchase them. The EDCA invoice Cruz showed her assured her
that the books had been paid for on delivery. By contrast, EDCA was less than cautious in fact, too
trusting in dealing with the impostor. Although it had never transacted with him before, it readily delivered
the books he had ordered (by telephone) and as readily accepted his personal check in payment. It did not
verify his identity although it was easy enough to do this. It did not wait to clear the check of this unknown
drawer. Worse, it indicated in the sales invoice issued to him, by the printed terms thereon, that the books
had been paid for on delivery, thereby vesting ownership in the buyer.
Surely, the private respondent did not have to go beyond that invoice to satisfy herself that the books
being offered for sale by Cruz belonged to him; yet she did. Although the title of Cruz was presumed under
Article 559 by his mere possession of the books, these being movable property, Leonor Santos
nevertheless demanded more proof before deciding to buy them.
It would certainly be unfair now to make the private respondents bear the prejudice sustained by EDCA as
a result of its own negligence.1wphi1 We cannot see the justice in transferring EDCA's loss to the
Santoses who had acted in good faith, and with proper care, when they bought the books from Cruz.
While we sympathize with the petitioner for its plight, it is clear that its remedy is not against the private
respondents but against Tomas de la Pea, who has apparently caused all this trouble. The private
respondents have themselves been unduly inconvenienced, and for merely transacting a customary deal
not really unusual in their kind of business. It is they and not EDCA who have a right to complain.
WHEREFORE, the challenged decision is AFFIRMED and the petition is DENIED, with costs against the
petitioner.
EDCA PUBLISHING v SANTOS
FACTS: EDCA sold books to Tomas dela Pena who fraudulently represented himself to be Prof. Jose Cruz, a Dean
of DLSU. EDCA delivered him the books, the check Tomas issued was dishonored because he did not have an
account at all. Tomas thereafter sold the books at a discount to Leonor Santos. EDCA, with the aid of the police,
stormed the Santos Bookstore to retrieve the books.
ISSUE: W/N EDCA may retrieve the books from Santos
HELD: NO. Ownership of the books passed to Tomas upon the delivery thereof. He had the right to transfer the
same to Santos. The fact that he did not pay for the books only warrants rescission or an action for payment. EDCA
cannot be considered to have been unlawfully deprived under the CC as to warrant recovery of the books from
Santos. Possession of movable property acquired in good faith is equivalent to title. Santos was a buyer in good
faith, thus he is protected by the law.

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
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.
AZNAR v YAPDIANGCO
FACTS: Teodoro advertised for sale his Ford Fairlane car. De Dios approached them purporting to be a nephew of
Marella. Teodoro transacted with Marella who agreed to buy the car, agreeing to pay the same only after the car has
been registered in his name. The Deed was registered in his name, but Marella has yet to pay so the documents
were not delivered to him, he pleaded with Ireneo, Teodoros son, that they proceed to Marellas sister to secure the
shortage of cash. Ireneo agreed. They proceeded thereto, Ireneo was accompanied by De Dios and an anonymous
person. De Dios was able to induce Ireneo to hand over the documents under the pretext that he will show them to
his lawyer, Ireneo agreed. De Dios made Ireneo wait and thereafter escaped with the car and the deed. Marella was
then able to sell the car to Aznar. The police thereafter seized the car in Aznars possession. Aznar countered with a
complaint for Replevin.
ISSUE: W/N Teodoro may recover the car from Aznar
HELD: YES. Teodoro was clearly unlawfully deprived of the car. There was no valid delivery to Marella, hence the
latter acquired no title to the car. Delivery must be coupled with intent. That being the case, Teodoro has the right to

claim the car not only from the thief, but also from 3rd persons who may have acquired it in good faith. The buyer
would only be entitled to reimbursement if he purchased the same in good faith from a public sale.

G.R. No. L-8257 April 13, 1956
JOSE R. CRUZ, plaintiff-appellant, vs. REYNALDO PAHATI, ET AL., defendants-appellees.
BAUTISTA ANGELO, J.:
This is an action of replevin instituted by plaintiff in the Court of Firts Instance of Manila to recover the
possession of an automobile and certain amount as damages and attorney's fees resulting from his illegal
deprivation thereof.
The original defendants were Reynaldo Pahati and Felixberto Bulahan but, upon amendment of the
complaint, Jesusito Belizo was included as party defendant who was summoned by publication because his
whereabouts were not known. Belizo failed to appear or answer the complaint and so he was declared
default.
Pahati admitted having bought the automobile from Bulahan, for the sum of P4,900 which he paid in
check. When the Manila Police Department impounded the automobile, he cancelled the sale and stopped
the payment of the check and as a result he returned the automobile to Bulahan who in turned surrended
the check for cancellation. He set up a counterclaim for the sum of P2,000 as attorney's fees.
Bulahan on his part claims that he acquired the automobile from Jesusito Belizo for value and without
having any knowledge of any defect in the title of the latter; that plaintiff had previously acquired title to
said automobile by purchase from Belizo as evidenced by a deed of sale executed to that effect; that later
plaintiff delivered the possession of the automobile to Belizo for resale and to facilitate it he gave the latter
a letter of authority to secure a new certificate of registration in his name (plaintiff's) and that by having
clothed Belizo with an apparent ownership or authority to sell the automobile, plaintiff is now estopped to
deny such ownership or authority. Bulahan claims that between two innocent parties, he who gave
occasion, through his conduct, to the falsification committed by Belizo, should be the one to suffer the loss
and this one is the plaintiff. Bulahan also set up a counterclaim for P17,000 as damages and attorney's
fees.
After the presentation of the evidence, the court rendered judgment declaring defendant Bulahan entitled
to the automobile in question and consequently ordered the plaintiff to return it to said defendant and,
upon his failure to do so, to pay him the sum of P4,900, with legal interest from the date of the decision.
The claim for damages and attorney's fees of Bulahan was denied. Defendant Belizo was however ordered
to indemnify the plaintiff in the amount of P4,900 and pay the sum of P5,000 as moral damages. The
counterclaim of defendant Pahati was denied for lack of evidence. The case was taken directly to this Court
by the plaintiff.
The lower court found that the automobile in question was originally owned by the Nothern Motors, Inc.
which later sold it to Chinaman Lu Dag. This Chinaman sold it afterwards to Jesusito Belizo and the latter
in turn sold it to plaintiff. Belizo was then a dealer in second hand cars. One year thereafter, Belizo offered
the plaintiff to sell the automobile for him claiming to have a buyer for it. Plaintiff agreed. At that time,
plaintiff's certificate of registration was missing and, upon the suggestion of Belizo, plaintiff wrote a letter
addressed to the Motor Section of the Bureau of Public Works for the issuance of a new registration
certificate alleging as reason the loss of the one previously issued to him and stating that he was intending
to sell his car. This letter was delivered to Belizo on March 3, 1952. He also turned over Belizo the
automobile on the latter's pretext that he was going to show it to a prospective buyer. On March 7, 1952,
the letter was falsified and converted into an authorized deed of sale in favor of Belizo by erasing a portion
thereof and adding in its place the words "sold the above car to Mr. Jesusito Belizo of 25 Valencia, San
Francisco del Monte, for Five Thousand Pesos (P5,000)." Armed with this deed of sale, Belizo succeeded in
ontaining a certificate of registration in his name on the same date, March 7, 1952, and also on the same
date, Belizo sold the car to Felixberto Bulahan who in turn sold it to Reynaldo Pahati, a second hand car
dealer. These facts show that the letter was falsified by Belizo to enable him to sell the car to Bulahan for
a valuable consideration.
This is a case which involves a conflict of rights of two persons who claim to be the owners of the same
property; plaintiff and defendant Bulahan. Both were found by the lower court to be innocent and to have
acted in good faith. They were found to be the victims of Belizo who falsified the letter given him by
plaintiff to enable him to sell the car of Bulahan for profit. Who has, therefore, a better right of the two
over the car?.
The law applicable to the case is Article 559 of the new Civil Code which provides:

ART. 559. The possession of movable property acquired in good faith is equivalent to a title.
Nevertheless, one who has lost any movable or has been unlawfully deprived thereof, may recover
it from the person in possession of the same.
If the possessor of a movable lost or of which the owner has been unlawfully deprived, has acquired
paid therefor.
It appears that "one who has lost any movable or has been unlawfully deprived thereof, may recover it
from the person in possession of the same" and the only defense the latter may have is if he "has acquired
it in good faith at a public sale" in which case "the owner cannot obtain its return without reimbursing the
price paid therefor." And supplementing this provision, Article 1505 of the same Code provides that "where
goods are sold by a person who is not the owner thereof, and who does not sell them under authority or
with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless
the owner of the goods is by his conduct precluded from denying the seller's authority to sell.
Applying the above legal provisions to the facts of this case, one is inevitably led to the conclusion that
plaintiff has a better right to the car in question than defendant Bulahan for it cannot be disputed that
plaintiff had been illegally deprived thereof because of the ingenious scheme utilized by Belizo to enable
him to dispose of it as if he were the owner thereof. Plaintiff therefore can still recover the possession of
the car even if defendant Bulahan had acted in good faith in purchasing it from Belizo. Nor can it be
pretended that the conduct of plaintiff in giving Belizo a letter to secure the issuance of a new certificate of
registration constitutes a sufficient defense that would preclude recovery because of the undisputed fact
that that letter was falsified and this fact can be clearly seen by a cursory examination of the document. If
Bulahan had been more diligent he could have seen that the pertinent portion of the letter had been
erased which would have placed him on guard to make an inquiry as regards the authority of Belizo to sell
the car. This he failed to do.
The right of the plaintiff to the car in question can also be justified under the doctrine laid down in U. S.
vs. Sotelo, 28 Phil., 147. This is a case of estafa wherein one Sotelo misappropriated a ring belonging to
Alejandra Dormir. In the course of the decision, the Court said that "Whoever may have been deprived of
his property in consequence of a crime is entitled to the recovery thereof, even if such property is in the
possession of a third party who acquired it by legal means other than those expressly stated in Article 464
of the Civil Code" (p. 147), which refers to property pledged in the "Monte de Piedad", an establishment
organized under the authority of the Government. The Court further said: It is a fundamental principle of
our law of personal property that no man can be divested of it without his own consent; consequently,
even an honest purchaser, under a defective title, cannot resist the claim of the true owner. The maxim
that 'No man can transfer a better title than he has himself "obtain in the civil as well as in the common
law." (p. 158).
Counsel for appellee places much reliance on the common law principle that "Where one of two innocent
parties must suffer by a fraud perpetrated by another, the law imposes the loss upon the party who, by his
misplaced confidence, has enabled the fraud to be committed" (Sager vs. W. T. Rawleight Co. 153 Va.
514, 150 S. E. 244, 66 A.L.R. 305), and contends that, as between plaintiff and Bulahan, the former
should bear the loss because of the confidence he reposed in Belizo which enabled the latter to commit the
falsification. But this principle cannot be applied to this case which is coverred by an express provision of
our new Civil Code. Between a common law principle and a statutory provision, the latter must
undoubtedly prevail in this jurisdiction. Moreover we entertain serious doubt if, under the circumstances
obtaining, Bulahan may be considered more innocent than the plaintiff in dealing with the car in question.
We prefer not to elaborate on this matter it being necessary considering the conclusion we have reached.
Wherefore, the decision appealed from is reversed. The Court declares plaintiff to be entitled to recover
the car in question, and orders defendant Jesusito Belizo to pay him the sum of P5,000 as moral damages,
plus P2,000 as attorney's fees. The Court absolves defendant Bulahan and Pahati from the complaint as
regards the claim for damages, reserving to Bulahan whatever action he may deem proper to take against
Jesusito Belizo. No costs.
Paras, C. J., Bengzon, Padilla, Montemayor, Jugo, Labrador, Concepcion, Reyes, J. B. L., and Endencia,
JJ.,concur.
Reyes, A., J., concur in the result.

CRUZ v PAHATI
FACTS: Jose Cruz delivered his car to Belizo for the latter to sell the same. Belizo forged the letter of Cruz to the
Motor Section of the Bureau of Public Works and converted the same into a Deed of Sale. Using the forged deed, he
had the car registered in his name. Thereafter, Belizo sold the car to Bulahan, who in turn sold the same to Pahati.
However, the car was impounded by the police, and the sale to Pahati was cancelled. Bulahan now contends that
between 2 innocent parties (Bulahan and Cruz), the person who made possible the injury must bear the lossin this
case, supposedly Cruz.
ISSUE: W/N Cruz may recover the car from Bulahan
HELD: YES. It is true that both Bulahan and Cruz acted in good faith. One who has lost a movable or had been
deprived of the same may recover it from the possessor. This rule applies squarely to this case. Thus, since Cruz
was unlawfully deprived by Belizo through the latters artifice, he is entitled to recover the same even against a
subsequent purchaser in good faith. The only exception to this rule is if the purchaser acquired the same from a
public salein which case, reimbursement is in order. It was, in fact, Bulahan who acted negligently in failing to
detect the forged Deed of Sale.

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. The matter was then elevated to us by petitioner. Ordinarily, our discretion would have been
1
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, 12
promulgated in 1912, "allowed to gainsay [his] own acts or deny rights which [he had] previously
recognized." 13 Some of the later cases are to the effect that an unqualified and unconditional acceptance
of an agreement forecloses a claim for interest not therein provided. 14 Equally so the circumstance that
about a month after the date of the conveyance, one of the parties informed the other of his being a
minor, according to Chief Justice Paras, "is of no moment, because [the former's] previous
misrepresentation had already estopped him from disavowing the contract. 15 It is easily understandable
why, under the circumstances disclosed, estoppel is a frail reed to hang on to. There was clearly the
absence of an act or omission, as a result of which a position had been assumed by petitioner, who if such
elements were not lacking, could not thereafter in law be prejudiced by his belief in what had been
misrepresented to him. 16 As was put by Justice Labrador, "a person claimed to be estopped must have
knowledge of the fact that his voluntary acts would deprive him of some rights because said voluntary acts
are inconsistent with said rights."17 To recapitulate, there is this pronouncement not so long ago, from the
pen of Justice Makalintal, who reaffirmed that estoppel "has its origin in equity and, being based on moral
right and natural justice, finds applicability wherever and whenever the special circumstances of a case so
demand." 18
How then can petitioner in all seriousness assert that his appeal finds support in the doctrine of estoppel?
Neither the promptings of equity nor the mandates of moral right and natural justice come to his rescue.
He is engaged in a business where presumably ordinary prudence would manifest itself to ascertain
whether or not an individual who is offering a jewelry by way of a pledge is entitled to do so. If no such
care be taken, perhaps because of the difficulty of resisting opportunity for profit, he should be the last to
complain if thereafter the right of the true owner of such jewelry should be recognized. The law for this
sound reason accords the latter protection. So it has always been since Varela v.
Finnick, 19 a 1907 decision. According to Justice Torres: "In the present case not only has the ownership
and the origin of the jewels misappropriated been unquestionably proven but also that the accused, acting
fraudulently and in bad faith, disposed of them and pledged them contrary to agreement, with no right of
ownership, and to the prejudice of the injured party, who was thereby illegally deprived of said jewels;
therefore, in accordance with the provisions of article 464, the owner has an absolute right to recover the
jewels from the possession of whosoever holds them, ... ." 20 There have been many other decisions to the
same effect since then. At least nine may be cited. 21 Nor could any other outcome be expected,
considering the civil code provisions both in the former Spanish legislation 22 and in the present Code. 23
Petitioner ought to have been on his guard before accepting the pledge in question. Evidently there was no
such precaution availed of. He therefore, has only himself to blame for the fix he is now in. It would be to
stretch the concept of estoppel to the breaking point if his contention were to prevail. Moreover, there

should have been a realization on his part that courts are not likely to be impressed with a cry of distress
emanating from one who is in a business authorized to impose a higher rate of interest precisely due to
the greater risk assumed by him. A predicament of this nature then does not suffice to call for less than
undeviating adherence to the literal terms of a codal provision. Moreover, while the activity he is engaged
in is no doubt legal, it is not to be lost sight of that it thrives on taking advantage of the necessities
precisely of that element of our population whose lives are blighted by extreme poverty. From whatever
angle the question is viewed then, estoppel certainly cannot be justly invoked.
WHEREFORE, the decision of the Court of Appeals of May 19, 1969 is affirmed, with costs against
petitioner.
DIZON v SUNTAY
FACTS: Lourdes Suntay is the owner of a 3-carat diamond ring valued at P5,500. She and Clarita Sison entered into
a transaction wherein the ring would be sold on commission. Clarita received the ring and issued a receipt. After
some time, Lourdes made demands for the return of the ring but the latter refused to comply. When Lourdes insisted
on the return, Clarita gave her the pawnshop ticket which is the receipt of the pledge and she found out that 3 days
after the ring was received by Clarita, it was pledged by Melia Sison, the niece of Claritas husband in connivance
with Clarita with the pawnshop of Dominador Dizon for P2,600. Lourdes then filed an estafa case. She then asked
Dominador Dizon for the return of the ring pledged but refused to return the ring thus the case filed by Lourdes.
The CFI issued a writ of replevin so Lourdes was able to have possession of the ring during the pendency of the
case. The CFI also ruled in her favor which was affirmed by the CA on appeal. Thus the case at bar.
ISSUE: W/N the CA erred in ruling that Lourdes has a right to possession of the ring
HELD: NO It reiterated the ruling in de Garcia v. CA, that the controlling provision is Art. 559 of the CC which
states that the possession ofmovable 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. Lourdes, being
unlawfully deprived of her ring thus she has a right to recover it from the current possessor. Dizon is engaged in a
business where presumably ordinary prudence would require him to inquire whether or not an individual who is
offering the jewelry by pledge is entitled to do so. The principle of estoppel cannot help him at all. Since there was
no precaution availed of, perhaps because of the difficulty of resisting opportunity for profit, he only has himself to
blame and should be the last to complain if the right of the true owner of the jewelry should be recognized.
Other issues raised: 1. Principle of estoppel = has its roots in equity, moral right and natural justice. For
estoppel to exist, there must be a declaration, act or omission by the party who is sought to be bound. A party
should not be permitted to go against his own acts to the prejudice of another.
Concurring opinion by J. Teehankee: Interpretation of the unlawfully deprived in Art. 559 of the CC. It is
understood to include all cases where there has been no valid transmission of ownership. If our legislature intended
interpretation to be that of the French Code, it certainly would have adopted and used a narrower term than the
broad language of Art. 559 (formerly 464) and the accepted meaning in accordance with our jurisprudence.

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G.R. No.

61584 November 25, 1992

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

The antecedent facts are as follows:

SALES ***** RAMIL O. MALIPOL Page 1

xxx xxx xxx

SALES ***** RAMIL O. MALIPOL Page 2

The contention is without merit.

There is no merit in this petition.

SALES ***** RAMIL O. MALIPOL Page 4

SALES ***** RAMIL O. MALIPOL Page 5

G.R. No. L-17682 February 26, 1965

In Civil Case No. 1907 only

SALES ***** RAMIL O. MALIPOL Page 6

In Civil Case No. 1774 only

The first assignment of error is therefore without merit.

SALES ***** RAMIL O. MALIPOL Page 7

SALES ***** RAMIL O. MALIPOL Page 8

ISSUE: W/N the sale is null and void as to its entirety

SALES ***** RAMIL O. MALIPOL Page 9

SALES ***** RAMIL O. MALIPOL Page 10

January 19, 1946

"(Sgd.) Josefina Ll. Gabar".

WHEREFORE, judgment is hereby rendered for plaintiffs:

SALES ***** RAMIL O. MALIPOL Page 11

1. Upon a written contract;

2. Upon an obligation created by law;

We hold that the present appeal is meritorious.

SALES ***** RAMIL O. MALIPOL Page 12

Zaldivar (Chairman), Fernando, Barredo, Fernandez, Aquino, JJ., concur.

ISSUE: W/N there was a sale between Josefina and Nicanora

SALES ***** RAMIL O. MALIPOL Page 13

CITY OF MANILA, plaintiff-appellee, vs. BUGSUK LUMBER CO., defendant-appellant.

SALES ***** RAMIL O. MALIPOL Page 14

nor of Ordinance No. 3420 which provides:

A dealer has been defined as:

SALES ***** RAMIL O. MALIPOL Page 15

Lexicographers defined a store as:

It was also said that:

SALES ***** RAMIL O. MALIPOL Page 16

ISSUE: W/N Bugsuk is liable for the additional taxes

SALES ***** RAMIL O. MALIPOL Page 17

Now to the merits

SALES ***** RAMIL O. MALIPOL Page 18

xxx xxx xxx

SALES ***** RAMIL O. MALIPOL Page 19

xxx xxx xxx

EDCA PUBLISHING v SANTOS

ISSUE: W/N EDCA may retrieve the books from Santos

SALES ***** RAMIL O. MALIPOL Page 21

JOSE B. AZNAR, plaintiff-appellant, vs. RAFAEL YAPDIANGCO, defendant-appellee;

From this decision, Jose B. Aznar appeals.

We find for the intervenor-appellee, Teodoro Santos.

SALES ***** RAMIL O. MALIPOL Page 23

ISSUE: W/N Teodoro may recover the car from Aznar

SALES ***** RAMIL O. MALIPOL Page 24

SALES ***** RAMIL O. MALIPOL Page 25

JOSE R. CRUZ, plaintiff-appellant, vs. REYNALDO PAHATI, ET AL., defendants-appellees.

BAUTISTA ANGELO, J.:

SALES ***** RAMIL O. MALIPOL Page 26

SALES ***** RAMIL O. MALIPOL Page 27

ISSUE: W/N Cruz may recover the car from Bulahan

SALES ***** RAMIL O. MALIPOL Page 28

SALES ***** RAMIL O. MALIPOL Page 29