insert in the writing the price, $3,200, and then refused to sign it because the lot did not
contain the area which the plaintiff, through the broker, had represented that it contained. He
SALES (Full)
FRANCISCO IRURETA GOYENA,Plaintiff-Appellee, vs. ILDEFONSO TAMBUNTING,Defendant-
Appellant.
Jose Robles Lahesa, for appellant.
Manuel Torres, for appellee.
WILLARD, J.:
The plaintiff's principal owned a tract of land and the building thereon known as No. 20 Calle
San Jose, Ermita, Manila. This tract contained 152.46 square meters of land. A broker,
representing the plaintiff, stated to the defendant that this lot was for sale and, on information
received from the plaintiff, that it measured 23 meters in front and 8 meters in
depth.chanrobles virtual law library
The broker had nothing more to do with the matter, and the plaintiff and defendant had
certain negotiations between themselves concerning the sale.chanrobles virtual law library
On March 12, 1901, the defendant signed the following document:
On this date I have bought from Don Francisco Yrureta Goyena a lot at No. 20 Calle San Jose,
Ermita, for the sum of thirty-two hundred pesos, this money to be paid as soon as the bill of
sale is signed. Manila, March 12, 1901. (Signed) Tambunting.
The plaintiff signed a similar document. What the negotiations between the parties were prior
to the signing of the these documents does not appear. There is no evidence whatever in the
record that they came to any agreement in regard to the sale other than the one contained in
the papers of March 12.chanrobles virtual law library
The defendant took from the office of the notary employed to make the formal transfer the
title papers which showed the area of the lot of land to be 152.46 square meters, kept them
for several days, and returned them to the notary. On the day assigned for the execution of the
instrument, all the parties being in the office of the notary, the defendant told the latter to
expressed his willingness to sign it if a proportional reduction was made in the price. This the
plaintiff refused to make, and this action was brought under article 1451 of the Civil
Code.chanrobles virtual law library
The question to be decided is: Ought the plaintiff to make this reduction?chanrobles virtual law
library
The private contract expresses a specific thing as the object of the contract. Upon this point
there is no controversy. There is no doubt as to which lot is No. 20 on Calle San Jose, of the
District of Ermita of the city of Manila.chanrobles virtual law library
The private contract specifies a certain price, 3,200 pesos. There is no controversy whatsoever
upon this point. There is no question that this sum is there specified plainly and specifically,
and without being made subject to any condition whatever.chanrobles virtual law library
Is this a perfect contract?chanrobles virtual law library
Evidently nothing is lacking for the existence of a perfect contract of purchase and sale. Article
1445 of the Civil Code is as follows: "By the contract of purchase and sale one of the
contracting parties undertakes to deliver a specific thing, and the other to pay therefore a price
certain, in money or in some thing representing it.chanrobles virtual law library
Article 1450 of the same Code is a follows: "The sale shall be perfected between vendor and
vendee and shall be binding on both of them, if they have agreed upon the thing which is the
object of the contract and upon the price, even when neither has been delivered."chanrobles
virtual law library
This private document was not a more draft or project. It can not be said that the purchase is
not to be understood as perfected until the execution of the public instrument. That private
document is not subject to any term or condition whatever.chanrobles virtual law library
The least that can be said about the private document is that it contains a promise to buy, not
a mere project of sale, and a promise to buy, according to article 1451, confers upon the
contracting parties the right to reciprocally demand the performance of the contract. If the
contract were not perfected no right would accrue in favor of the contracting parties to
1
reciprocally demand its performance. A thing which has no existence can produce no
effect.chanrobles virtual law library
Because it is merely a private document which contemplates the subsequent execution of a
public instrument, it does not follow that it is not enforceable as it now stands. "Contracts,"
says article 1278, "shall be obligatory whatever may be the form in which they have been
entered into, provided that the essential elements for their validity are present," to wit,
a determinate thing, aprice certain, and a meeting of the minds with respect to the object of
the contract. Hence the contract in question is obligatory.chanrobles virtual law library
But the defendant says: "I can not pay the 3,200 pesos indicated in the private document,
inasmuch as the lot does not contain a sufficient number of meters to be worth this sum total
of 3,200 pesos, at so much a meter. I made the purchase at so much a meter." He then cites
article 469, 2, which is: "If the sale of real property should be made with a statement of its
area, at the rate of a certain price for a unit of measure or number, the vendor shall be obliged
to deliver to the vendee, if the latter should require it, all that may have been mentioned in the
contract; but should this not be possible, the vendee may choose between a proportional
reduction in the price or the rescission of the contract: Provided, That in the latter case the
decrease in the real estate is not less than one-tenth of the area given it.
The same shall be done, even when the area appears to be the same, if any part of the real
estate is not of the character mentioned in the contract.chanrobles virtual law library
The rescission in such case shall only take place at the will of the vendee, when the inferior
value of the thing sold exceeds one-tenth of the price agreed upon.
In reply to the contention of the defendant the plaintiff cites article 1471, which says in part:
"In the sale of real estate made for a fixed price and not at the rate of a specified sum for a unit
of measure or number, the increase or decrease of the same shall not be considered, even
when greater or less area or amount than that stated in the contract may be
found."chanrobles virtual law library
The plaintiff also says: "The fact is that in a private document no statement is made of any
superficial area, nor of a price on the basis of a unit of measure or number. Hence, I am under
no obligation to deliver any determinate area or number or measure, but simply lot No. 20
Calle San Jose, as to whose specific individuality there is no controversy or doubt."chanrobles
virtual law library
Article 1218 says: "Public documents may be used as evidence against the contracting parties
and those who contract under them with respect to the statements therein contained, made
by the contracting parties."chanrobles virtual law library
Article 1225 says: "A private document, legally acknowledged, has the same value as the public
instrument between those who have signed the same, and their privies."chanrobles virtual law
library
Hence it follows that, whether evidenced by a public instrument or by a private document, the
contract is what the words of the parties indicate. It will not avail the defendant to say, "But
my intention was not what my words express." The defendant bought a specific article and
agreed to pay $3,200 for it. The fact that the article is not as large as he thought it was does
not relieve him from the necessity of paying that price. It was just such cases as this that article
1471, 1, was intended to cover. If the defendant intended to buy by the meter he should have
so stated in the contract. Not only does the contract not so state, but there is no evidence in
the case that the parties ever discussed at all the price which should be paid for each
meter.chanrobles virtual law library
There was considerable evidence in the case concerning an agreement by the plaintiff to
reduce the price and the plaintiff in answering interrogatories propounded by the defendant
said that, after the objection of the defendant to carry out the contract, he did agree to make a
proportional reduction. The case shows, however, that this answer and the testimony of the
defendant and his witness referred to a conversation at the house of the defendant, and that
this statement of the plaintiff was made when he thought that the difference was slight, not
amounting to more than a meter or two, and that a proportional reduction would not decrease
the price more than 20 or 30 pesos. We do not think that this admission of the defendant is
sufficient of itself to prove a contract by measure in the face of the written document and the
entire absence of other evidence to that end. We rather construe it as indicating a willingness
on the part of the plaintiff to abate a trifle from what he was entitled to demand with the
purpose of obtaining an amicable settlement of the controversy and avoiding
litigation.chanrobles virtual law library
Upon the whole evidence we think the judgment below is right, and it is accordingly affirmed,
with costs of this instance against the defendant.chanrobles virtual law library
2
Arellano, C.J., Cooper, Smith, Mapa, and Ladd, JJ., concur.
Torres, J., withdrew from this case.
UNION MOTOR CORPORATION, petitioner-appellant, vs. THE COURT OF APPEALS, JARDINE-
MANILA FINANCE, INC., SPOUSES ALBIATO BERNAL and MILAGROS BERNAL, respondents-
appelles.
DECISION
DE LEON, JR., J.:
[1]
Before us on appeal, by way of a petition for review on certiorari, is the Decision dated
[2] [3]
March 30, 1994 and Resolution dated September 14, 1994 of the Court of Appeals which
affirmed the Decision dated March 6, 1989 of the Regional Trial Court of Makati, Metro Manila,
Branch 150, in Civil Case No. 920 as well as its Resolution dated September 14, 1994 which
denied the Motion for Reconsideration of the petitioner.
The facts are as follows:
On September 14, 1979, the respondent Bernal spouses purchased from petitioner Union
Motor Corporation one Cimarron Jeepney for Thirty Seven Thousand Seven Hundred Fifty Eight
Pesos and Sixty Centavos (P37,758.60) to be paid in installments. For this purpose, the
respondent spouses executed a promissory note and a deed of chattel mortgage in favor of the
petitioner. Meanwhile, the petitioner entered into a contract of assignment of the promissory
note and chattel mortgage with Jardine-Manila Finance, Inc. Through Manuel Sosmea, an
agent of the petitioner, the parties agreed that the respondent spouses would pay the amount
of the promissory note to Jardine-Manila Finance, Inc., the latter being the assignee of the
petitioner. To effectuate the sale as well as the assignment of the promissory note and chattel
mortgage, the respondent spouses were required to sign a notice of assignment, a deed of
assignment, a sales invoice, a registration certificate, an affidavit, and a disclosure
statement. The respondent spouses were obliged to sign all these documents for the reason
that, according to Sosmea, it was a requirement of petitioner Union Motor Corporation and
Jardine-Manila Finance, Inc. for the respondent spouses to accomplish all the said documents
in order to have their application approved. Upon the respondent spouses tender of the
downpayment worth Ten Thousand Thirty-Seven Pesos (P10,037.00), and the petitioners
acceptance of the same, the latter approved the sale. Although the respondent spouses have
not yet physically possessed the vehicle, Sosmea required them to sign the receipt as a
condition for the delivery of the vehicle.
The respondent spouses continued paying the agreed installments even if the subject motor
vehicle remained undelivered inasmuch as Jardine-Manila Finance, Inc. promised to deliver the
subject jeepney. The respondent spouses have paid a total of Seven Thousand Five Hundred
Seven Pesos (P7,507.00) worth of installments before they discontinued paying on account of
non-delivery of the subject motor vehicle. According to the respondent spouses, the reason
why the vehicle was not delivered was due to the fact that Sosmea allegedly took the subject
motor vehicle in his personal capacity.
On September 11, 1981, Jardine-Manila Finance, Inc., filed a complaint for a sum of money,
docketed as Civil Case No. 42849, against the respondent Bernal spouses before the then Court
of First Instance of Manila. This case was later on transferred to the Regional Trial Court of
Makati, Branch 150. On November 10, 1981, the complaint was amended to include petitioner
Union Motor Corporation as alternative defendant, the reason being that if the respondent
spouses refusal to pay Jardine-Manila Finance, Inc. was due to petitioners non-delivery of the
unit, the latter should pay Jardine-Manila Finance, Inc. what has been advanced to the
petitioner. After the petitioner filed its answer, the respondent spouses filed their amended
answer with cross-claim against the former and counterclaim against Jardine-Manila Finance,
Inc. Following the presentation of evidence of Jardine-Manila Finance, Inc., the respondent
spouses presented as witnesses Albiato Bernal and Pacifico Tacub in support of their defense
and counterclaim against the plaintiff and cross-claim against the petitioner. The petitioner did
not present any evidence inasmuch as the testimony of the witness it presented was ordered
stricken off the record for his repeated failure to appear for cross-examination on the
scheduled hearings. The trial court deemed the presentation of the said witness as having been
waived by the petitioner.
On March 6, 1989, the trial court rendered a decision, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered ordering:
1. Plaintiff to pay spouses Bernals the sum of P7,507.15 plus legal interest until fully paid;
2. Union Motor Corporation to pay defendants spouses Bernals the downpayment in the
amount of P10,037.00, plus legal interest until fully paid;
3
3. Union Motor Corporation to pay plaintiff P23,268.29, plus legal interest until fully paid, and
attorneys fees equivalent to 20% of the amount due to plaintiff.
Union Motor Corporation shall further pay defendants spouses Bernals the sum of P20,000.00
[4]
as moral damages, P10,000.00 as attorneys fees and costs of suit.
The petitioner interposed an appeal before the Court of Appeals while the respondent spouses
appealed to hold the petitioner solidarily liable with Jardine-Manila Finance, Inc. The appellate
court denied both appeals and affirmed the trial courts decision by holding that:
Now, as to the appeal of defendant Union Motors, it must be noted that said defendant had
failed to adduce evidence in court to support its claim of non-liability. We cannot see how the
absence of any evidence in favor of said defendant can result in favorable reliefs to its side on
appeal. There is simply no evidence to speak of in appellant Union Motors favor to cause a
reversal of the lower courts decision. In the case of Tongson v. C.A. G.R. No. 77104, Nov. 6,
1992, the Supreme Court reiterated that:
As mandated by the Rules of Court, each party must prove his own affirmative allegation, i.e.,
one who asserts the affirmative of the issue has the burden of presenting at the trial such
amount of evidence required by law to obtain a favorable judgment: by preponderance of
evidence in civil cases, and by proof beyond reasonable doubt in criminal cases. x x x.
Hence, the instant petition anchored on the following assigned errors:
I Jardine-Manila Finance, Inc., and the petitioner conspired to defraud and deprive them of the
THE HONORABLE COURT OF APPEALS (SECOND DIVISION) GRAVELY ERRED AND ABUSED ITS
DISCRETION IN NOT FINDING THAT THE LOWER COURT A QUOS DECISION OF MARCH 6, 1989
IS CONTRARY TO LAW AND THE EVIDENCE ON RECORD;
II
THE HONORALBLE COURT OF APPEALS (SECOND DIVISION) GRAVELY ERRED AND ABUSED ITS
DISCRETION IN NOT FINDING THAT THE APPEALED DECISION WAS RENDERED IN DEPRIVATION
AND IN DENIAL OF HEREIN PETITIOENR-APPELLANTS RIGHT TO DUE PROCESS.
The first issue to be resolved in the instant case is whether there has been a delivery, physical
or constructive, of the subject motor vehicle.
On this score, petitioner Union Motor Corporation maintains that the respondent spouses are
not entitled to a return of the downpayment for the reason that there was a delivery of the
subject motor vehicle. According to the petitioner, the appellate court erred in holding that no
delivery was made by relying exclusively on the testimonial evidence of respondent Albiato
Bernal without considering the other evidence on record, like the sales invoice and delivery
receipt which constitute an admission that there was indeed delivery of the subject motor
vehicle. Also, there was a constructive delivery of the vehicle when respondent Albiato Bernal
signed the registration certificate of the subject vehicle. Inasmuch as there was already
delivery of the subject motor vehicle, ownership has been transferred to the respondent
spouses. The Chattel Mortgage Contract signed by the respondent Bernal spouses in favor of
the petitioner likewise proves that ownership has already been transferred to them for the
reason that, under Article 2085 of the New Civil Code, the mortgagor must be the owner of the
[5]
property. As owners of the jeepney, the respondent Bernal spouses should bear the loss
thereof in accordance with Article 1504 of the New Civil Code which provides that when the
ownership of goods is transferred to the buyer, the goods are at the buyers risk whether actual
delivery has been made or not. These, then, are the contentions of the petitioner.
The main allegation of the respondent Bernal spouses, on the other hand, is that they never
came into possession of the subject motor vehicle. Thus, it is but appropriate that they be
reimbursed by the petitioner of the initial payment which they made. They also claim that
subject motor vehicle for which they suffered damages.
We rule in favor of the respondent Bernal spouses.
Undisputed is the fact that the respondent Bernal spouses did not come into possession of the
subject Cimarron jeepney that was supposed to be delivered to them by the petitioner. The
registration certificate, receipt and sales invoice that the respondent Bernal spouses signed
were explained during the hearing without any opposition by the petitioner. According to
testimonial evidence adduced by the respondent spouses during the trial of the case, the said
documents were signed as a part of the processing and for the approval of their application to
buy the subject motor vehicle. Without such signed documents, no sale, much less delivery, of
the subject jeepney could be made. The documents were not therefore an acknowledgment by
4
respondent spouses of the physical acquisition of the subject motor vehicle but merely a
requirement of petitioner so that the said subject motor vehicle would be delivered to them.
We have ruled that the issuance of a sales invoice does not prove transfer of ownership of the
thing sold to the buyer; an invoice is nothing more than a detailed statement of the nature,
[6]
quantity and cost of the thing sold and has been considered not a bill of sale.
The registration certificate signed by the respondent spouses does not conclusively prove that
constructive delivery was made nor that ownership has been transferred to the respondent
spouses. Like the receipt and the invoice, the signing of the said documents was qualified by
the fact that it was a requirement of petitioner for the sale and financing contract to be
approved. In all forms of delivery, it is necessary that the act of delivery, whether constructive
or actual, should be coupled with the intention of delivering the thing. The act, without the
[7]
intention, is insufficient. The critical factor in the different modes of effecting delivery which
gives legal effect to the act, is the actual intention of the vendor to deliver, and its acceptance
[8]
by the vendee. Without that intention, there is no tradition. Enlightening is Addison v. Felix
[9]
and Tioco wherein we ruled that:
The Code imposes upon the vendor the obligation to deliver the thing sold. The thing is
considered to be delivered when it is placed in the hands and possession of the vendee. (Civil
Code, Art. 1462). It is true that the same article declares that the execution of a public
instrument is equivalent to the delivery of the thing which is the object of the contract, but, in
order that this symbolic delivery may produce the effect of tradition, it is necessary that the
vendor shall have had control over the thing sold that, at the moment of the sale, its material
delivery could have been made. It is not enough to confer upon the purchaser the ownership
and the right of possession. The thing sold must be placed in his control. When there is no
impediment whatever to prevent the thing sold passing into the tenancy of the purchaser by
the sole will of the vendor, symbolic delivery through the execution of a public instrument is
sufficient. But if, notwithstanding the execution of the instrument, the purchaser cannot have
the enjoyment and material tenancy of the thing and make use of it himself or through another
in his name, because such tenancy and enjoyment are opposed by the interposition of another
will, then fiction yields to reality-the delivery has not been effected. (Italics supplied)
The act of signing the registration certificate was not intended to transfer the ownership of the
subject motor vehicle to respondent Bernal spouses inasmuch as the petitioner still needed the
same for the approval of the financing contract with Jardine-Manila Finance, Inc. The record
shows that the registration certificate was submitted to Jardine-Manila Finance, Inc., which
took possession thereof until Sosmea requested the latter to hand over the said document to
him. The fact that the registration certificate was still kept by Jardine-Manila Finance, Inc. and
its unhesitating move to give the same to Sosmea just goes to show that the respondent
spouses still had no complete control over the subject motor vehicle as they did not even
possess the said certificate of registration nor was their consent sought when Jardine-Manila
Finance, Inc. handed over the said document to Sosmea.
Inasmuch as there was neither physical nor constructive delivery of a determinate thing, (in
[10]
this case, the subject motor vehicle) the thing sold remained at the sellers risk. The
petitioner should therefore bear the loss of the subject motor vehicle after Sosmea allegedly
stole the same.
Petitioners reliance on the Chattel Mortgage Contract executed by the respondent spouses
does not help its assertion that ownership has been transferred to the latter since there was
neither delivery nor transfer of possession of the subject motor vehicle to respondent
spouses. Consequently, the said accessory contract of chattel mortgage has no legal effect
whatsoever inasmuch as the respondent spouses are not the absolute owners thereof,
ownership of the mortgagor being an essential requirement of a valid mortgage
[11]
contract. The Carlos case cited by the petitioner is not applicable to the case at bar for the
reason that in the said case, apart from the fact that it has a different issue, the buyer took
possession of the personal property and was able to sell the same to a third party. In the
instant case, however, the respondent spouses never acquired possession of the subject motor
vehicle. The manifestations of ownership are control and enjoyment over the thing owned. The
respondent spouses never became the actual owners of the subject motor vehicle inasmuch as
they never had dominion over the same.
The petitioner also disputes the finding of the appellate court that there was no delivery. It did
not consider, according to the petitioner, the fact that the circumstance of non-delivery was
not shown and that the respondent spouses never made any demand for the possession of the
vehicle. Contrary to the petitioners allegation, the respondent spouses presented sufficient
evidence to prove that Sosmea took delivery and possession of that subject motor vehicle in
[12]
his personal capacity as shown by a document on which he (Sosmea) personally
acknowledged receipt of the registration certificate from Jardine-Manila Finance, Inc. Also,
respondent Albiato Bernal testified to the effect that they went several times to the office of
5
the petitioner to demand the delivery of the subject motor vehicle. The petitioner failed to
refute that testimonial evidence considering that it waived its right to present evidence.
Anent the second issue, the petitioner claims that the trial court committed a violation of due
process when it ordered the striking off of the testimony of the petitioners witness as well as
the declaration that petitioner has abandoned its right to present evidence. According to the
petitioner, the delays in the hearing of the case were neither unjust nor deliberate. It just so
happened that from August 5, 1986 up to June 1987, the designated counsel for the petitioner
was either appointed to the government or was short of time to go over the records of the
case inasmuch as he was a new substitute counsel. During the last time the petitioners counsel
moved for the postponement of the case, witness Ambrosio Balones was not available due to
gastro-enteritis as shown by a medical certificate.
Well-settled is the rule that factual findings of the Court of Appeals are conclusive on the
parties and not reviewable by the Supreme Court and they carry even more weight when the
[13]
Court of Appeals affirms the factual findings of the trial court. In the present case, the trial
court found that after the direct testimony of petitioners witness, Ambrosio Balones, the
continuation of the cross-examination was postponed and re-scheduled for four (4) times from
November 21, 1986 up to June 19, 1987, all at the instance of petitioner Union Motor
Corporation. For three (3) times, the witness did not appear whenever the case was called for
hearing. On June 19, 1987, when asked by the trial court why the witness was not present, the
petitioners counsel could not give any good reason for his absence. Neither did the petitioner
offer to present any other witness to testify on that day. The appellate court assented to these
findings by quoting the decision of the trial court, to wit:
Defendant Union Motors Corporation has no evidence as the testimony of its only witness,
Ambrosio Balones, was orderd stricken off the record in the hearing of June 19, 1987, for his
continuous failure to appear on scheduled hearings. The Court further considered said
[14]
defendant to have waived further presentation of evidence.
The petitioner attempts to shift the blame on the respondents for the failure of its witness,
Balones, to finish his testimony. It was at the instance of Atty. Tacub, counsel for the
respondents, that the testimony of petitioners witness, Balones, was discontinued after Atty.
Tacub asked for a recess and later on for the postponement of the cross-examination of the
said witness. The petitioner had the duty to produce its witness when he was called to finish
his testimony. To place the blame on the respondent spouses is to put a premium on the
negligence of the petitioner to require its own witness to testify on cross-examination. By
presenting witness Balones on direct-examination, the petitioner had the corresponding duty
to make him available for cross-examination in accordance with fair play and due process.The
respondents should not be prejudiced by the repeated failure of the petitioner to present its
said witness for cross-examination. Hence, the trial court ordered that the unfinished
testimony of said witness be stricken off the record.
However, we cannot affirm that part of the ruling of the courts a quo awarding moral damages
to the respondents. For moral damages to be awarded in cases of breach of contract, the
[15]
plaintiff must prove bad faith or fraudulent act on the part of the defendant. In the instant
case, the allegations about connivance and fraudulent schemes by the petitioner and Manuel
Sosmea were merely general allegations and without any specific evidence to sustain the said
claims. In fact, Exhibit 1 which bears the name and signature of Sosmea as the person who
received the registration certificate militates against the respondent spouses claim that the
petitioner connived with its agent to deprive them of the possession of the subject motor
vehicle. The said document shows that Sosmea acted only in his personal and private capacity,
thereby effectively excluding any alleged participation of the petitioner in depriving them of
the possession of the subject motor vehicle. The petitioner should not be held liable for the
acts of its agent which were done by the latter in his personal capacity.
However, we affirm the award of attorneys fees. When a party is compelled to litigate with
third persons or to incur expenses to protect his interest, attorneys fees should be
[16]
awarded. In the present case, the respondent spouses were forced to implead the petitioner
Union Motor Corporation on account of the collection suit filed against them by Jardine-Manila
Finance, Inc., a case which was eventually won by the respondent spouses.
WHEREFORE, the appealed Decision dated March 30, 1994 of the Court of Appeals is hereby
AFFIRMED with the MODIFICATION that the award of moral damages is deleted. With costs
against the petitioner.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, and Buena, JJ., concur.
Quisumbing, J., on official leave.
G.R. No. L-27829 August 19, 1988
6
PHILIPPINE VIRGINIA TOBACCO ADMINISTRATION, petitioner,
vs.
HON. WALFRIDO DE LOS ANGELES, Judge of the Court of First Instance of Rizal, Branch IV
(Quezon City) and TIMOTEO A. SEVILLA, doing business under the name and style of
PHILIPPINE ASSOCIATED RESOURCES and PRUDENTIAL BANK AND TRUST
COMPANY, respondents.
Lorenzo F. Miravite for respondent Timoteo Sevilla.
Ferrer & Ranada Law Office for respondent Prudential Bank & Trust Co.
PARAS, J.:
In these petition and supplemental petition for Certiorari, Prohibition and mandamus with
Preliminary Injunction, petitioner Philippine Virginia Tobacco Administration seeks to annul
and set aside the following Orders of respondent Judge of the Court of First Instance of Rizal,
Branch IV (Quezon City) in Civil Case No. Q-10351 and prays that the Writ of Preliminary
Injunction (that may be) issued by this Court enjoining enforcement of the aforesaid Orders be
made permanent. (Petition, Rollo, pp. 1-9)
They are:
The Order of July 17, 1967:
AS PRAYED FOR, the Prudential Bank & Trust Company is hereby directed to release and deliver
to the herein plaintiff, Timoteo A. Sevilla, the amount of P800,000.00 in its custody
representing the marginal deposit of the Letters of Credit which said bank has issued in favor of
the defendant, upon filing by the plaintiff of a bond in the um of P800,000.00, to answer for
whatever damage that the defendant PVTA and the Prudential Bank & Trust Company may
suffer by reason of this order. (Annex "A," Rollo, p. 12)
The Order of November 3,1967:
IN VIEW OF THE FOREGOING, the petition under consideration is granted, as follows: (a) the
defendant PVTA is hereby ordered to issue the corresponding certificate of Authority to the
plaintiff, allowing him to export the remaining balance of his tobacco quota at the current
world market price and to make the corresponding import of American high-grade tobacco; (b)
the defendant PVTA is hereby restrained from issuing any Certificate of Authority to export or
import to any persons and/or entities while the right of the plaintiff to the balance of his quota
remains valid, effective and in force; and (c) defendant PVTA is hereby enjoined from opening
public bidding to sell its Virginia leaf tobacco during the effectivity of its contract with the
plaintiff.
xxx xxx xxx
In order to protect the defendant from whatever damage it may sustain by virtue of this order,
the plaintiff is hereby directed to file a bond in the sum of P20,000.00. (Annex "K," Rollo, pp. 4-
5)
The Order of March 16, 1968:
WHEREFORE, the motion for reconsideration of the defendant against the order of November
3, 1967 is hereby DENIED. (Annex "M," Rollo, P. 196)
The facts of the case are as follows:
Respondent Timoteo Sevilla, proprietor and General Manager of the Philippine Associated
Resources (PAR) together with two other entities, namely, the Nationwide Agro-Industrial
Development Corp. and the Consolidated Agro-Producers Inc. were awarded in a public bidding
the right to import Virginia leaf tobacco for blending purposes and exportation by them of
PVTA and farmer's low-grade tobacco at a rate of one (1) kilo of imported tobacco for every
nine (9) kilos of leaf tobacco actually exported. Subsequently, the other two entities assigned
their rights to PVTA and respondent remained the only private entity accorded the privilege.
The contract entered into between the petitioner and respondent Sevilla was for the
importation of 85 million kilos of Virginia leaf tobacco and a counterpart exportation of 2.53
million kilos of PVTA and 5.1 million kilos of farmer's and/or PVTA at P3.00 a kilo. (Annex "A," p.
55 and Annex "B," Rollo, p. 59) In accordance with their contract respondent Sevilla purchased
from petitioner and actually exported 2,101.470 kilos of tobacco, paying the PVTA the sum of
P2,482,938.50 and leaving a balance of P3,713,908.91. Before respondent Sevilla could import
the counterpart blending Virginia tobacco, amounting to 525,560 kilos, Republic Act No. 4155
was passed and took effect on June 20, 1 964, authorizing the PVTA to grant import privileges
7
at the ratio of 4 to 1 instead of 9 to 1 and to dispose of all its tobacco stock at the best price
available.
Thus, on September 14, 1965 subject contract which was already amended on December 14,
1963 because of the prevailing export or world market price under which respondent will be
exporting at a loss, (Complaint, Rollo, p. 3) was further amended to grant respondent the
privileges under aforesaid law, subject to the following conditions: (1) that on the 2,101.470
kilos already purchased, and exported, the purchase price of about P3.00 a kilo was
maintained; (2) that the unpaid balance of P3,713,908.91 was to be liquidated by paying PVTA
the sum of P4.00 for every kilo of imported Virginia blending tobacco and; (3) that respondent
Sevilla would open an irrevocable letter of credit No. 6232 with the Prudential Bank and Trust
Co. in favor of the PVTA to secure the payment of said balance, drawable upon the release
from the Bureau of Customs of the imported Virginia blending tobacco.
While respondent was trying to negotiate the reduction of the procurement cost of the
2,101.479 kilos of PVTA tobacco already exported which attempt was denied by petitioner and
also by the Office of the President, petitioner prepared two drafts to be drawn against said
letter of credit for amounts which have already become due and demandable. Respondent
then filed a complaint for damages with preliminary injunction against the petitioner in the
amount of P5,000,000.00. Petitioner filed an answer with counterclaim, admitting the
execution of the contract. It alleged however that respondent, violated the terms thereof by
causing the issuance of the preliminary injunction to prevent the former from drawing from
the letter of credit for amounts due and payable and thus caused petitioner additional damage
of 6% per annum.
A writ of preliminary injunction was issued by respondent judge enjoining petitioner from
drawing against the letter of credit. On motion of respondent, Sevilla, the lower court
dismissed the complaint on April 19, 1967 without prejudice and lifted the writ of preliminary
injunction but petitioner's motion for reconsideration was granted on June 5,1967 and the
Order of April 19,1967 was set aside. On July 1, 1967 Sevilla filed an urgent motion for
reconsideration of the Order of June 5, 1967 praying that the Order of dismissal be reinstated.
But pending the resolution of respondent's motion and without notice to the petitioner,
respondent judge issued the assailed Order of July 17, 1967 directing the Prudential Bank &
Trust Co. to make the questioned release of funds from the Letter of Credit. Before petitioner
could file a motion for reconsideration of said order, respondent Sevilla was able to secure the
releaseof P300,000.00 and the rest of the amount. Hence this petition, followed by the
supplemental petition when respondent filed with the lower court an urgent ex-parte petition
for the issuance of preliminary mandatory and preventive injunction which was granted in the
resolution of respondent Judge on November 3, 1967, above quoted. On March 16, 1968,
respondent Judge denied petitioner's motion for reconsideration. (Supp. Petition, Rollo, pp.
128- 130)
Pursuant to the resolution of July 21, 1967, the Supreme Court required respondent to file an
answer to the petition within 10 days from notice thereof and upon petitioner's posting a bond
of fifty thousand pesos (P50,000.00), a writ of preliminary mandatory injunction was issued
enjoining respondent Judge from enforcing and implementing his Order of July 17,1967 and
private respondents Sevilla and Prudential Bank and Trust Co. from complying with and
implementing said order. The writ further provides that in the event that the said order had
already been complied with and implemented, said respondents are ordered to return and
make available the amounts that might have been released and taken delivery of by
respondent Sevilla. (Rollo, pp. 16-17)
In its answer, respondent bank explained that when it received the Order of the Supreme
Court to stop the release of P800,000.00 it had already released the same in obedience to
ailieged earlier Order of the lower Court which was reiterated with ailieged admonition in a
subsequent Order. (Annex "C," Rollo, pp. 37-38) A Manifestation to that effect has already
been filed c,irrency respondent bank (Rollo, pp. 19-20) which was noted c,irrency this Court in
the resolution of August 1, 1967, a copy of which was sent to the Secretary of Justice. (Rollo, p.
30)
Before respondent Sevilla could file his answer, petitioner filed a motion to declare him and
respondent bank in contempt of court for having failed to comply with the resolution to this
court of July 21, 1967 to the effect that the assailed order has already been implemented but
respondents failed to return and make available the amounts that had been released and
taken delivery of by respondent Sevilla. (Rollo, pp. 100-102)
In his answer to the petition, respondent Sevilla claims that petitioner demanded from him a
much higher price for Grades D and E tobacco than from the other awardees; that petitioner
violated its contract by granting indiscriminately to numerous buyers the right to export and
import tobacco while his agreement is being implemented, thereby depriving respondent of his
exclusive right to import the Virginia leaf tobacco for blending purposes and that respondent
Judge did not abuse his discretion in ordering the release of the amount of P800,000.00 from
8
the Letter of Credit, upon his posting a bond for the same amount. He argued further that the
granting of said preliminary injunction is within the sound discretion of the court with or
without notice to the adverse party when the facts and the law are clear as in the instant case.
He insists that petitioner caretaker.2 claim from him a price higher than the other awardees
and that petitioner has no more right to the sum in controversy as the latter has already been
overpaid when computed not at the price of tobacco provided in the contract which is
inequitable and therefore null and void but at the price fixed for the other awardees. (Answer
of Sevilla, Rollo, pp. 105-111)
In its Answer to the Motion for Contempt, respondent bank reiterates its allegations in the
Manifestation and Answer which it filed in this case. (Rollo, pp. 113-114)
In his answer, (Rollo, pp. 118-119) to petitioner's motion to declare him in contempt,
respondent Sevilla explains that when he received a copy of the Order of this Court, he had
already disbursed the whole amount withdrawn, to settle his huge obligations. Later he filed a
supplemental answer in compliance with the resolution of this Court of September 15, 1967
requiring him to state in detail the amounts allegedly disbursed c,irrency him out of the
withdrawn funds. (Rollo, pp. 121-123)
Pursuant to the resolution of the Supreme Court on April 25, 1968, a Writ of Preliminary
Injunction was issued upon posting of a surety bond in the amount of twenty thousand pesos
(P20,000.00) restraining respondent Judge from enforcing and implementing his orders of
November 3, 1967 and March 16, 1968 in Civil Case No. Q-10351 of the Court of First Instance
of Rizal (Quezon City).
Respondent Sevilla filed an answer to the supplemental petition (Rollo, pp. 216-221) and so did
respondent bank (Rollo, p. 225). Thereafter, all the parties filed their respective memoranda
(Memo for Petitioners, Rollo, pp. 230-244 for Resp. Bank, pp. 246-247; and for Respondents,
Rollo, pp. 252-257). Petitioners filed a rejoinder (rollo, pp. 259-262) and respondent Sevilla
filed an Amended Reply Memorandum (Rollo, pp. 266274). Thereafter the case was submitted
for decision:' in September, 1968 (Rollo, p. 264).
Petitioner has raised the following issues:
1. Respondent Judge acted without or in excess of jurisdiction or with grave abuse of discretion
when he issued the Order of July 17, 1967, for the following reasons: (a) the letter of credit
issued by respondent bank is irrevocable; (b) said Order was issued without notice and (c) said
order disturbed the status quo of the parties and is tantamount to prejudicing the case on the
merits. (Rollo, pp. 7-9)
2. Respondent Judge likewise acted without or in excess of jurisdiction or with grave abuse of
discretion when he issued the Order of November 3, 1967 which has exceeded the proper
scope and function of a Writ of Preliminary Injunction which is to preserve the status quo and
caretaker.2 therefore assume without hearing on the merits, that the award granted to
respondent is exclusive; that the action is for specific performance a d that the contract is still
in force; that the conditions of the contract have already been complied with to entitle the
party to the issuance of the corresponding Certificate of Authority to import American high
grade tobacco; that the contract is still existing; that the parties have already agreed that the
balance of the quota of respondent will be sold at current world market price and that
petitioner has been overpaid.
3. The alleged damages suffered and to be suffered by respondent Sevilla are not irreparable,
thus lacking in one essential prerequisite to be established before a Writ of Preliminary
Injunction may be issued. The alleged damages to be suffered are loss of expected profits
which can be measured and therefore reparable.
4. Petitioner will suffer greater damaaes than those alleged by respondent if the injunction is
not dissolved. Petitioner stands to lose warehousing storage and servicing fees amounting to
P4,704.236.00 yearly or P392,019.66 monthly, not to mention the loss of opportunity to take
advantage of any beneficial change in the price of tobacco.
5. The bond fixed by the lower court, in the amount of P20,000.00 is grossly inadequate, (Rollo,
pp. 128-151)
The petition is impressed with merit.
In issuing the Order of July 17, 1967, respondent Judge violated the irrevocability of the letter
of credit issued by respondent Bank in favor of petitioner. An irrevocable letter of credit
caretaker.2 during its lifetime be cancelled or modified Without the express permission of the
beneficiary (Miranda and Garrovilla, Principles of Money Credit and Banking, Revised Edition,
p. 291). Consequently, if the finding agricul- the trial on the merits is that respondent Sevilla
has ailieged unpaid balance due the petitioner, such unpaid obligation would be unsecured.
9
In the issuance of the aforesaid Order, respondent Judge likewise violated: Section 4 of Rule 15
of the Relatiom, Rules of Court which requires that notice of a motion be served by the
applicant to all parties concerned at least three days before the hearing thereof; Section 5 of
the same Rule which provides that the notice shall be directed to the parties concerned; and
shall state the time and place for the hearing of the motion; and Section 6 of the same Rule
which requires proof of service of the notice thereof, except when the Court is satisfied that
the rights of the adverse party or parties are not affected, (Sunga vs. Lacson, L-26055, April 29,
1968, 23 SCRA 393) A motion which does not meet the requirements of Sections 4 and 5 of
Rule 15 of the Relatiom, Rules of Court is considered a worthless piece of paper which the
Clerk has no right to receiver and the respondent court a quo he has no authority to act
thereon. (Vda. de A. Zarias v. Maddela, 38 SCRA 35; Cledera v. Sarn-j-iento, 39 SCRA 552; and
Sacdalan v. Bautista, 56 SCRA 175). The three-day notice required by law in the filing of a
motion is intended not for the movant's benefit but to avoid surprises upon the opposite party
and to give the latter time to study and meet the arguments of the motion. (J.M. Tuason and
Co., Inc. v. Magdangal, L-1 5539. 4 SCRA 84).
More specifically, Section 5 of Rule 58 requires notice to the defendant before a preliminary
injunction is granted unless it shall appear from facts shown bv affidavits or by the verified
complaint that great or irreparable injury would result to the applyin- before the matter can be
heard on notice. Once the application is filed with the Judge, the latter must cause ailieged
Order to be served on the defendant, requiring him to show cause at a given time and place
why the injunction should not be granted. The hearing is essential to the legality of the
issuance of a preliminary injunction. It is ailieged abuse of discretion on the part of the court to
issue ailieged injunction without hearing the parties and receiving evidence thereon
(Associated Watchmen and Security Union, et al. v. United States Lines, et al., 101 Phil. 896).
In the issuance of the Order of November 3, 1967, with notice and hearing notwithstanding the
discretionary power of the trial court to Issue a preliminary mandatory injunction is not
absolute as the issuance of the writ is the exception rather than the rule. The party appropriate
for it must show a clear legal right the violation of which is so recent as to make its vindication
an urgent one (Police Commission v. Bello, 37 SCRA 230). It -is granted only on a showing that
(a) the invasion of the right is material and substantial; (b) the right of the complainant is clear
and unmistakable; and (c) there is ailieged urgent and permanent necessity for the writ to
prevent serious decision ( Pelejo v. Court of Appeals, 117 SCRA 665). In fact, it has always been
said that it is improper to issue a writ of preliminary mandatory injunction prior to the final
hearing except in cases of extreme urgency, where the right of petitioner to the writ is very
clear; where considerations of relative inconvenience bear strongly in complainant's favor;
where there is a willful and unlawful invasion of plaintiffs right against his protest and
remonstrance the injury being a contributing one, and there the effect of the mandatory
injunctions is rather to re-establish and maintain a pre-existing continuing relation between
the parties, recently and arbitrarily interrupted c,irrency the defendant, than to establish a new
relation (Alvaro v. Zapata, 11 8 SCRA 722; Lemi v. Valencia, February 28, 1963, 7 SCRA 469;
Com. of Customs v. Cloribel, L-20266, January 31, 1967,19 SCRA 234.
In the case at bar there appears no urgency for the issuance of the writs of preliminary
mandatory injunctions in the Orders of July 17, 1967 and November 3, 1967; much less was
there a clear legal right of respondent Sevilla that has been violated by petitioner. Indeed, it
was ailieged abuse of discretion on the part of respondent Judge to order the dissolution of the
letter of credit on the basis of assumptions that cannot be established except by a hearing on
the merits nor was there a showing that R.A. 4155 applies retroactively to respondent in this
case, modifying his importation / exportation contract with petitioner. Furthermore, a writ of
preliminary injunction's enjoining any withdrawal from Letter of Credit 6232 would have been
sufficient to protect the rights of respondent Sevilla should the finding be that he has no more
unpaid obligations to petitioner.
Similarly, there is merit in petitioner's contention that the question of exclusiveness of the
award is ailieged issue raised by the pleadings and therefore a matter of controversy, hence a
preliminary mandatory injunction directing petitioner to issue respondent Sevilla a certificate
of authority to import Virginia leaf tobacco and at the same time restraining petitioner from
issuing a similar certificate of authority to others is premature and improper.
The sole object of a preliminary injunction is to preserve the status quo until the merit can be
heard. It is the last actual peaceable uncontested status which precedes the pending
controversy (Rodulfo v. Alfonso, L-144, 76 Phil. 225), in the instant case, before the Case No. Q-
10351 was filed in the Court of First Instance of Rizal. Consequently, instead of operating to
preserve the status quo until the parties' rights can be fairly and fully investigated and
determined (De los Reyes v. Elepano, et al., 93 Phil. 239), the Orders of July 17, 1966 and
March 3, 1967 serve to disturb the status quo.
Injury is considered irreparable if it is of such constant and frequent recurrence that no fair or
reasonable redress can be had therefor in a court of law (Allundorff v. Abrahanson, 38 Phil.
585) or where there is no standard c,irrency which their amount can be measured with
10
reasonable accuracy, that is, it is not susceptible of mathematical computation (SSC v. Bayona,
et al., L-13555, May 30, 1962).
Any alleged damage suffered or might possibly be suffered by respondent Sevilla refers to
expected profits and claimed by him in this complaint as damages in the amount of FIVE
Million Pesos (P5,000,000.00), a damage that can be measured, susceptible of mathematical
computation, not irreparable, nor do they necessitate the issuance of the Order of November
3, 1967.
Conversely, there is truth in petitioner's claim that it will suffer greater damage than that
suffered by respondent Sevilla if the Order of November 3, 1967 is not annulled. Petitioner's
stock if not made available to other parties will require warehouse storage and servicing fees in
the amount of P4,704,236.00 yearly or more than P9,000.000.00 in two years time.
Parenthetically, the alleged insufficiency of a bond fixed by the Court is not by itself ailieged
adequate reason for the annulment of the three assailed Orders. The filing of ailieged
insufficient or defective bond does not dissolve absolutely and unconditionally ailieged
injunction. The remedy in a proper case is to order party to file a sufficient bond (Municipality
of La Trinidad v. CFI of Baguio - Benguet, Br. I, 123 SCRA 81). However, in the instant case this
remedy is not sufficient to cure the defects already adverted to.
PREMISES CONSIDERED, the petition is given due course and the assailed Orders of July 17,
1967 and November 3, 1967 and March 16, 1968 are ANNULLED and SET ASIDE; and the
preliminary injunctions issued c,irrency this Court should continue until the termination of Case
No. Q-10351 on the merits.
SO ORDERED,
G.R. No. L-17527 April 30, 1963
SUN BROTHERS APPLIANCES, INC., plaintiff-appellee,
vs.
DAMASO P. PEREZ, defendant-appellant.
Dominador A. Alafriz for plaintiff-appellee.
Robert P. Halili & Associates for defendant-appellant.
LABRADOR, J.:
This is an action brought by the plaintiff to recover from defendant the sum of P1,404.00, the
price of one Admiral Air Conditioner, Slim Style, Model 100-23-1 H.P., Serial No. 2978828,
delivered to the defendant by the plaintiff under a conditional sale agreement entered into by
and between them on December 6, 1958, in the City of Manila, plus stipulated interest of 12%
from January 6, 1959 until the same is fully paid, together with P200 as attorney's fees, and
costs. Defendant answered that the air-conditioner in question was delivered to him installed
in the office of the defendant located at Gardiner street, Lucena, Quezon on December 14,
1959 but that said air-conditioner was totally destroyed by fire which occured in the morning
of December 28, 1958 at 2 o'clock. Defendant further claimed that the machine was destroyed
by force majeure, not by the defendant's fault and/or negligence and, therefore, he is not
liable under the conditional sale, Annex "A", which the parties, plaintiff and defendant, had
executed.
At the trial of the case the parties entered into a stipulation of facts, the most important
provision of which are as follows:
1. That defendant admits that on December 6, 1958, he entered into a Conditional Sale
Agreement with the plaintiff, copy of which contract is attached to the complaint as Annex "A";
2. That pursuant to the terms and conditions provided in the said Conditional Sale Agreement
the plaintiff delivered to the defendant (1) Admiral Air Conditioner Slim Style Model 100-23-1
HP, Serial No. 2978828 with the contract price of P1,678.00 and that said Air Conditioner was
received by the defendant;
3. That defendant made a down payment of P274.00 on December 6, 1958, pursuant to the
terms and conditions of the Conditional Sales Agreement; and Air Conditioner was installed by
the plaintiff, thru its representative, at Lucena, Quezon;
4. That said Air Conditioner was burned on December 27,1958, on or about 2:00 o'clock in the
morning, however, defendant will present evidence to show that the Air Conditioner subject of
the complaint herein was burned where it was installed by the plaintiff;
5. That defendant, after making down payment of P274.00 to the plaintiff, did not pay any of
the monthly installments of P78.00 thereafter, leaving a balance of P1,404.00 in favor of the
plaintiff;
11
6. That after defendant presents evidence to prove that the Air Conditioner was burned where
it was installed by the plaintiff to the satisfaction of this Honorable Court, the parties agree to
leave to this Honorable Court the resolution of the issue whether loss by fire extinguishes the
obligation of the defendant to pay to the plaintiff the subsequent installments of the initial
payment;"
The Court of First Instance before which the action was brought rendered judgment
condemning the defendant to pay the plaintiff the amount demanded in the complaint,
including interest and attorney's fees. The defendant has appealed the case directly to us as
involving only a question of law.
The conditional sale executed by the plaintiff and defendant contained the following
stipulation:
"2. Title to said property shall vest in the Buyer only upon full payment of the entire account as
herein provided, and only upon complete performance of all the other conditions herein
specified:
"3. The Buyer shall keep said property in good condition and properly protected against the
elements, at his/its address above-stated, and undertakes that if said property or any part
thereof be lost, damaged, or destroyed for any causes, he shall suffer such loss, or repair such
damage, it being distinctly understood and agreed that said property remains at Buyer's risk
after delivery;"
The Court below declared that as the buyer would be liable in case of loss for any cause, such
buyer assumed liability even in case of loss by fortuitous event; so it rendered judgment
declaring defendant liable for the sun demanded together with interest and attorney's fees.
Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and
approved by this Honorable Court, without prejudice to the parties adducing other evidence to
prove their case not covered by this stipulation of facts. 1äwphï1.ñët
In this Court on appeal defendant-appellant argues that inasmuch as the title to the property
sold shall vest in the buyer only upon full payment of the price, the loss of the vendor; that the
phrase "for any cause" used in paragraph 2 of the agreement may not be interpreted to
include a fortuitous event absolutely beyond the control of the appellant; and that although
Article 1174 of the new Civil Code recognizes the exception on fortuitous event when the
parties to a contract expressly so stipulate, the phrase "for any cause" used in the contract did
not indicate any intention of the parties that the loss of the unit due to fortuitous event is to be
included within the responsibility of the vendor.
In answer to the arguments above set forth the appellee argues that the stipulation in the
contract of sale whereby the buyer shall be liable for any loss, damage or destruction for any
cause, is not contrary to law, morals or public policy and is specifically authorized to be
stipulated upon between the parties by Article 1174 of the Civil Code; that the risk of loss was
expressly stipulated to be undertaken by the buyer, even if the title to the property sold
remained, also by stipulation, in the vendor; that the terms "any cause" used in the agreement
includes a fortuitous event, and an express stipulation making the vendee responsible in such
case is valid.
We believe that the agreement making the buyer responsible for any loss whatsoever,
fortuitous or otherwise, even if the title to the property remains in the vendor, is neither
contrary to law, nor to morals or public policy. We have held such stipulation to be legal in the
case of Government vs. Amechazurra, 10 Phil. 637 (Tolentino, Commentaries on the Civil Code,
Vol. IV, p. 120)and declare it to be based on a sound public policy in conditional sales according
to American decisions.
"The weight of authority support the rule that where goods are sold and delivered to the
vendor under an agreement that the title is to remain in the vendor until payment, the loss or
destruction of the property while in the possession of the vendor before payment, without his
fault, does not relieve him from the obligation to pay the price, and he, therefore, suffers the
loss. In accord with this rule are the provisions of the Uniform Sales Act and the Uniform
Conditional Sales Act. There are several basis for this rule. First is the absolute and
unconditional nature of the vendee's promise to pay for the goods. The promise is nowise
dependent upon the transfer of the absolute title. Second is the fact that the vendor has fully
performed his contract and has nothing further to do except receive payment, and the vendee
received what he bargained for when he obtained the right of possession and use of the goods
and the right to acquire title upon making full payment of the price. A third basis advanced for
the rule is the policy of providing an incentive to care properly for the goods, they being
exclusively under the control and dominion of the vendee." (47 Am. Jur., pp. 81-82).
We, therefore, agree with the trial court that the loss by fire or fortuitous event was expressly
agreed in the contract to be borne by the buyer and this express agreement is not contrary to
12
law but sanctioned by it as well as by the demands of sound, public policy. The judgment of the Marella agreed to buy the car for P14,700.00 on the understanding that the price would be
court below is affirmed, with costs against defendant-appellant. paid only after the car had been registered in his name.

Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, Barrera, Paredes, Dizon, Regala and Irineo Santos then fetched his father who, together with L. De Dios, went to the office of a
Makalintal, JJ., concur. certain Atty. Jose Padolina where the deed of the sale for the car was executed in Marella's
Padilla, J., did not take part. favor. The parties to the contract thereafter proceeded to the Motor Vehicles Office in Quezon
Judgment affirmed. 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.
G.R. No. L-18536 March 31, 1965
From the Motor Vehicles Office, Teodoro Santos returned to his house. He gave the
JOSE B. AZNAR, plaintiff-appellant, registration papers and a copy of the deed of sale to his son, Irineo, and instructed him not to
vs. part with them until Marella shall have given the full payment for the car. Irineo Santos and L.
RAFAEL YAPDIANGCO, defendant-appellee; De Dios then proceeded to 1642 Crisostomo Street, Sampaloc, Manila where the former
TEODORO SANTOS, intervenor-appellee. 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
Florentino M. Guanlao for plaintiff-appellant.
sister supposedly living somewhere on Azcarraga Street, also in Manila. Thereafter, he ordered
Rafael Yapdiangco in his own behalf as defendant-appellee.
L. De Dios to go to the said sister and suggested that Irineo Santos go with him. At the same
Lorenzo Sumulong, R. B. Hilao and B. S. Felipe for intervenor-appellee.
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,
REGALA, J.:
Irineo handed over the same to the latter and thereupon, in the company of L. De Dios and
This is an appeal, on purely legal questions, from a decision of the Court of First Instance of another unidentified person, proceeded to the alleged house of Marella's sister.
Quezon City, Branch IV, declaring the intervenor-appellee, Teodoro Santos, entitled to the
At a place on Azcarraga, Irineo Santos and L. De Dios alighted from the car and entered a house
possession of the car in dispute.
while their unidentified companion remained in the car. Once inside, L. De Dios asked Irineo
The records before this Court disclose that sometime in May, 1959, Teodoro Santos advertised Santos to wait at the sala while he went inside a room. That was the last that Irineo saw of him.
in two metropolitan papers the sale of his FORD FAIRLANE 500. In the afternoon of May 28, For, after a considerable length of time waiting in vain for De Dios to return, Irineo went down
1959, a certain L. De Dios, claiming to be a nephew of Vicente Marella, went to the Santos to discover that neither the car nor their unidentified companion was there anymore. Going
residence to answer the ad. However, Teodoro Santos was out during this call and only the back to the house, he inquired from a woman he saw for L. De Dios and he was told that no
latter's son, Irineo Santos, received and talked with De Dios. The latter told the young Santos such name lived or was even known therein. Whereupon, Irineo Santos rushed to 1642
that he had come in behalf of his uncle, Vicente Marella, who was interested to buy the Crisostomo to see Marella. He found the house closed and Marella gone. Finally, he reported
advertised car. the matter to his father who promptly advised the police authorities.

On being informed of the above, Teodoro Santos instructed his son to see the said Vicente That very same day, or on the afternoon of May 29, 1959 Vicente Marella was able to sell the
Marella the following day at his given address: 1642 Crisostomo Street, Sampaloc, Manila. And car in question to the plaintiff-appellant herein, Jose B. Aznar, for P15,000.00. Insofar as the
so, in the morning of May 29, 1959, Irineo Santos went to the above address. At this meeting, above incidents are concerned, we are bound by the factual finding of the trial court that Jose

13
B. Aznar acquired the said car from Vicente Marella in good faith, for a valuable consideration
and without notice of the defect appertaining to the vendor's title.
While the car in question was thus in the possession of Jose B. Aznar and while he was
attending to its registration in his name, agents of the Philippine Constabulary seized and
confiscated the same in consequence of the report to them by Teodoro Santos that the said car
was unlawfully taken from him.
In due time, Jose B. Aznar filed a complaint for replevin against Captain Rafael Yapdiangco, the
head of the Philippine Constabulary unit which seized the car in question Claiming ownership
of the vehicle, he prayed for its delivery to him. In the course of the litigation, however,
Teodoro Santos moved and was allowed to intervene by the lower court.
At the end of the trial, the lower court rendered a decision awarding the disputed motor
vehicle to the intervenor-appellee, Teodoro Santos. In brief, it ruled that Teodoro Santos had
been unlawfully deprived of his personal property by Vicente Marella, from whom the plaintiff-
appellant traced his right. Consequently, although the plaintiff-appellant acquired the car in
good faith and for a valuable consideration from Vicente Marella, the said decision concluded,
still the intervenor-appellee was entitled to its recovery on the mandate of Article 559 of the
New Civil Code which provides:
ART. 559. The possession of movable property acquired in good faith is equivalent to title.
Nevertheless, one who lost any movable or has been unlawfully deprived thereof, may recover
it from the person in possession of the same.
If the possessor of a movable lost or of which the owner has been unlawfully deprived, has
acquired it in good faith at a public sale, the owner cannot obtain its return without
reimbursing the price paid therefor.
From this decision, Jose B. Aznar appeals.
The issue at bar is one and simple, to wit: Between Teodoro Santos and the plaintiff-appellant,
Jose B. Aznar, who has a better right to the possession of the disputed automobile?
We find for the intervenor-appellee, Teodoro Santos.
The plaintiff-appellant accepts that the car in question originally belonged to and was owned
by the intervenor-appellee, Teodoro Santos, and that the latter was unlawfully deprived of the
same by Vicente Marella. However, the appellant contends that upon the facts of this case, the
applicable provision of the Civil Code is Article 1506 and not Article 559 as was held by the
decision under review. Article 1506 provides:
ART. 1506. Where the seller of goods has a voidable title thereto, but his, title has not been
voided at the time of the sale, the buyer acquires a good title to the goods, provided he buys
them in good faith, for value, and without notice of the seller's defect of title.
The contention is clearly unmeritorious. Under the aforequoted provision, it is essential that
the seller should have a voidable title at least. It is very clearly inapplicable where, as in this
case, the seller had no title at all.
Vicente Marella did not have any title to the property under litigation because the same was
never delivered to him. He sought ownership or acquisition of it by virtue of the contract.
Vicente Marella could have acquired ownership or title to the subject matter thereof only by
the delivery or tradition of the car to him.
Under Article 712 of the Civil Code, "ownership and other real rights over property are
acquired and transmitted by law, by donation, by testate and intestate succession, and in
consequence of certain contracts, by tradition." As interpreted by this Court in a host of cases,
by this provision, ownership is not transferred by contract merely but by tradition or delivery.
Contracts only constitute titles or rights to the transfer or acquisition of ownership, while
delivery or tradition is the mode of accomplishing the same (Gonzales v. Rojas, 16 Phil. 51;
Ocejo, Perez and Co. v. International Bank, 37 Phil. 631, Fidelity and Deposit Co. v. Wilson, 8
Phil. 51; Kuenzle & Streiff v. Wacke & Chandler, 14 Phil. 610; Easton v. Diaz Co., 32 Phil. 180).
For the legal acquisition and transfer of ownership and other property rights, the thing
transferred must be delivered, inasmuch as, according to settled jurisprudence, the tradition of
the thing is a necessary and indispensable requisite in the acquisition of said ownership by
virtue of contract. (Walter Laston v. E. Diaz & Co. & the Provincial Sheriff of Albay, supra.)
So long as property is not delivered, the ownership over it is not transferred by contract merely
but by delivery. Contracts only constitute titles or rights to the transfer or acquisition of
ownership, while delivery or tradition is the method of accomplishing the same, the title and
the method of acquiring it being different in our law. (Gonzales v. Roxas, 16 Phil. 51)
14
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.
Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon, Makalintal,
Bengzon, J.P., and Zaldivar, JJ., concur.
G.R. No. L-11108 June 30, 1958
CHUA HAI, petitioner,
vs.
HON. RUPERTO KAPUNAN, JR. as Judge of the Court of First Instance of Manila and ONG
SHU,respondents.
Pedro Panganiban y Tolentino for petitioner.
German Lee for respondent Ong Shu.
REYES, J. B. L., J.:
Certiorari against an order of the Court of First Instance of Manila, Hon. Ruperto Kapunan, Jr.
presiding, ordering the return to the complainant in criminal case No. 34250, People vs.
Roberto Sotto, of 100 sheets of galvanized iron roofing which had been sold by the accused in
said case to petitioner herein, Chua Hai. The order is as follows:
15
Counsel for the complainant in this case seeks the return of the 700 sheets of galvanized iron
now with the Manila Police Department which form part of the hardware materials involved in
this case. Chua Hai, one of the persons who purchased from the accused one hundred (100)
pieces of the said galvanized iron sheets, opposes the said motion on the ground that the
question of ownership should be determined in the proper proceedings, claiming that he has a
valid title to the 100 pieces, having bought them from the accused Roberto Soto on February 1,
1956. Roberto Soto is presently at large, his arrest having been ordered by this Court on June
13, 1956, for failure to appear for trial.
Considering the provisions of Article 105 of the Revised Penal Code, the said 700 sheets, except
five of them which are to be retained for purposes of evidence, are hereby ordered returned to
the complainant, subject, however, to the condition that the complainant post a bond in an
amount equal to twice the value of 100 sheets in favor of Chua Hai who has a claim of
ownership to the said 100 sheets, and without prejudice on the part of said Chua Hai to file the
corresponding action on the matter of ownership thereof by virtue of his purchase from the
herein accused.
From the facts alleged in the pleadings presented in this case, we gather the following: On
January 31, 1956, Roberto Soto purchased from Youngstown Hardware, owned by Ong Shu,
700 corrugated galvanized iron sheets and 249 pieces of round iron bar for P6,137.70, and in
payment thereof he issued a check drawn against the Security Bank and Trust Company for
P7,000.00, without informing Ong Shu that he had no sufficient funds in said bank to answer
for the same. When the check was presented for payment, it was dishonored for insufficiency
of funds. Soto sold 165 sheets in Pangasinan and 535 sheets in Calapan, Mindoro. Of those sold
in Pangasinan, 100 were sold to petitioner Chua Hai. When the case was filed in the Court of
First Instance of Manila against Roberto Soto, for estafa, the offended party filed a petition
asking that the 700 galvanized iron sheets, which were deposited with the Manila Police
Department, be returned to him, as owner of the Youngstown Hardware. Petitioner herein
opposed the motion with respect to the 100 sheets that he had bought from Soto.
Notwithstanding the opposition, the court ordered the return of the galvanized iron sheets to
Ong Shu. Petitioner then presented a motion to reconsider the order, alleging that by the
return thereof to the offended party, the court had not only violated the contract of deposit,
because it was in that concept that petitioner had delivered the 100 sheets to the Manila
Police Department, and that said return to Ong Shu amounted to a deprivation of his property
without due process of law. It is also claimed that Article 105 of the Revised Penal Code, under
whose authority the return was ordered, can be invoked only after the termination of the
criminal case and not while said criminal case is still pending trial.
The court having given no heed to these protests on the part of the petitioner, the latter
brought the present petition to this Court alleging that the order of the respondent judge
constitutes a deprivation of petitioner's property without due process of law, violating the
contract of deposit under which the sheets were delivered to the police department of the City
of Manila, and determining the respective rights of petitioner and respondent Ong Shu without
a previous trial of the criminal case — all of which constitute a grave abuse of discretion and
excess of jurisdiction. In answer to the petition, it is claimed that as respondent Ong Shu is the
owner of the property, he has the right to recover possession thereof even if said property
appears to have fallen into the possession of a third party who acquired it by legal means,
provided that said form of acquisition is not that provided for in Article 464 of the Civil Code
(where property has been pledged in a monte de piedad established under authority of the
Government) ; that even if the property was acquired in good faith, the owner who has been
unlawfully deprived thereof may recover it from the person in possession of the same unless a
person in possession acquired it in good faith at a public sale. (Art. 559, Civil Code of the
Philippines). It is also claimed that under the provisions of Article 105 of the Revised Penal
Code, under which restitution is made by a return of the thing itself whenever possible, the
galvanized iron sheets in question should be returned to the offended party, the owner, and
that there is no provision of law requiring that the criminal case must first be finally disposed of
before restitution of the goods swindled can be ordered returned to the owner. In answer to
the allegation that petitioner has been deprived of his property without due process of law, it
is alleged that same is without foundation because the petitioner was given ample time to be
heard. As to the claim that the galvanized iron sheets in question were deposited with the
Manila Police Department, it is argued that the delivery to the Manila Police Department was
by virtue of the order of the court, because the said sheets, were the subject of or are the
instruments of the commission of the crime of estafa, and the court had the power to order
the return thereof to the owner after it had satisfied itself of the ownership thereof by the
offended party. It is also alleged in defense that petitioner's rights, if any, are sufficiently
protected by the bond that the court has required to be filed.
We find the case meritorious, since petitioner's good faith is not questioned. To deprive the
possessor in good faith, even temporarily and provisionally, of the chattels possessed, violates
the rule of Art. 559 of the Civil Code. The latter declares that possession of chattels in good
faith is equivalent to title; i.e., that for all intents and purposes, the possessor is the owner,
16
until ordered by the proper court to restore the thing to the one who was illegally deprived
thereof. Until such decree is rendered (and it can not be rendered in a criminal proceeding in
which the possessor is not a party), the possessor, as presumptive owner, is entitled to hold
and enjoy the thing; and "every possessor has a right to be respected in his possession; and
should he be disturbed therein he shall be protected in or restored to said possession
established by the means established by the laws and the Rules of Court."(Art. 539, New Civil
Code).
The decision of the court below, instead of conforming to Arts. 559 and 539 of the Civil Code,
directs possessor to surrender the chattel to the claimant Ong Shu before the latter has proved
that he was illegally deprived thereof, without taking into account that the mere filing of a
criminal action for estafa is no proof that estafa was in fact committed. Instead of regarding
the possessor as the owner of the chattel until illegal deprivation is shown, the court below
regards the possessor of the chattel not as an owner, but as a usurper, and compels him to
surrender possession even before the illegal deprivation is proved. We see no warrant for such
a reversal of legal rules.
It can not be assumed at this stage of the proceedings that respondent Ong Shu is still the
owner of the property; to do so it take for granted that the estafa was in fact committed, when
so far, the trial on the merits has not even started, and the presumption of innocence holds full
sway.
In the third place, the civil liability of the offender to make restitution, under Art. 105 of the
Revised Penal Code, does not arise until his criminal liability is finally declared, since the former
is a consequence of the latter. Art. 105 of the Revised Penal Code, therefore, can not be
invoked to justify the order of the court below, since that very article recognizes the title of an
innocent purchaser when it says:
ART. 105. Restitution — . . .
The thing itself shall be restored, even though it be found in the possession of a third person
who has acquired it by lawful means, saving to the latter his action against the proper person
who may be liable to him.
This provision is not applicable in cases in which the thing has been acquired by the third
person in the manner and under the requirements which, by law, bar an action for its recovery.
(R.P.C.) (Emphasis supplied)
The last paragraph of Article 105 plainly refers to those cases where recovery is denied by the
civil law, notwithstanding the fact that the former owner was deprived of his chattels through
crime. One of these cases is that provided for in Art. 85 of the Code of Commerce:
ART. 85. — La compra de mercaderias en almacenes o tiendas abiertas al publico causara
prescripcion de derecho a favor del comprador respecto de las mercaderias adquiridas,
quedando a salvo en su caso los derechos del propietario de los objetos vendidos para ejercitar
las acciones civiles o criminales que puedan corresponderle contra el que los vendiere
indebidamente. (Civ. 464)
Para los efectos de esta prescripcion, se reputaran almacenes o tiendas abiertas al publico:
1.º Los que establezcan los comerciantes inscritos.
2.º Los que establezcan los comerciantes no inscritos, siempre que los almacenes o tiendas
permanezcan abiertos al publico por espacio de echo dias consecutivos, o se hayan anunciado
por medio de rotulos, muestras o titulos en el local mismo, o por avisos repartidos al publico o
insertos en los diarios de la localidad.
Notwithstanding the claim of some authors that this Art. 85 has been repealed, the fact is that
its rule exists and has been confirmed by Article 1505 of the new Civil Code:
ART. 1505. Subject to the provisions of this Title, where goods are sold by a person who is not
the owner thereof, and who does not sell them under authority or with 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.
Nothing in this Title, however, shall affect:
xxx xxx xxx
(3) Purchases made in a merchant's store, or in fairs, or markets in accordance with the Code
of Commerce and special laws. (C.C.)
But even if the articles in dispute had not been acquired in a market, fair or merchant's store,
still, so far as disclosed, the facts do not justify a finding that the owner, respondent Ong Shu,
was illegally deprived of the iron sheets, at least in so far as appellant was concerned. It is not
17
denied that Ong Shu delivered the sheets to Soto upon a perfected contract of sale, and such
delivery transferred title or ownership to the purchaser. Says Art. 1496:
ART. 1496. The ownership of the thing sold is acquired by the vendee from the moment it is
delivered to him in any of the ways specified in articles 1497 to 1501, or in any other manner
signifying an agreement that the possession is transferred from the vendor to the vendee.
(C.C.)
The failure of the buyer to make good the price does not, in law, cause the ownership to revest
in the seller until and unless the bilateral contract of sale is first rescinded or resolved pursuant
to Article 1191 of the new Civil Code.
And, assuming that the consent of Ong Shu to the sale in favor of Sotto was obtained by the
latter through fraud or deceit, the contract was not thereby rendered void ab initio, but only
voidable by reason of the fraud, and Article 1390 expressly provides that:
ART. 1390. The following contracts are voidable or annullable, even though there may have
been no damage to the contracting parties:
(1) Those where one of the parties is incapable of giving consent to a contract;
(2) Those where the consent is vitiated by mistake, violence, intimidation, undue influence or
fraud.
These contracts are binding, unless they are annulled by a proper action in court. They are
susceptible of ratification. (C.C.)
Agreeably to this provision, Article 1506 prescribes:
ART. 1506. Where the seller of goods has a voidable title thereto, but his title has not been
avoided at the time of the sale, the buyer acquires a good title to the goods, provided he buys
them in good faith, for value, and without notice of the seller's defect of title. (C.C.)
Hence, until the contract of Ong Shu with Sotto is set aside by a competent court (assuming
that the fraud is established to its satisfaction), the validity of appellant's claim to the property
in question cannot be disputed, and his right to the possession thereof should be respected.
It is no excuse that the respondent Ong Shu was required to post a redelivery bond. An
indemnity bond, while answering for damages, is not, by itself alone, sufficient reason for
disturbing property rights, whether temporarily or permanently. If the invasion is not
warranted, the filing of a bond will not make it justifiable.
Questions of ownership and possession being eminently civil in character, they should not be
settled by exclusive reference to the Revised Penal Code. If Ong Shu has reason to fear that
petitioner Chua Hai may dispose of the chattels in dispute and thereby render nugatory his
eventual right to restitution, then the proper remedy lies in a civil suit and attachment, not in
an order presuming to adjudicate in a criminal case the civil rights of one who is not involved
therein.
Summing up, we hold:
1) That the acquirer and possessor in good faith, of a chattel or movable property is entitled to
be respected and protected in his possession, as if he were the true owner thereof, until a
competent court rules otherwise;
2) That being considered, in the meantime, as the true owner, the possessor in good faith
cannot be compelled to I surrender possession nor to be required to institute an action for the
recovery of the chattel, whether or not an indemnity bond is issued in his favor;
3) That the filing of an information charging that the chattel was illegally obtained through
estafa from its true owner by the transferor of the bona fide possessor does not warrant
disturbing the possession of the chattel against the will of the possessor; and
4) That the judge taking cognizance of the criminal case against the vendor of the possessor in
good faith has not right to interfere with the possession of the latter, who is not a party to the
criminal proceedings, and such unwarranted interference is not made justifiable by requiring a
bond to answer for damages caused to the possessor.
Wherefore, the writ of certiorari is granted, and the order of the Court of First Instance of
Manila in Criminal Case No. 34250, dated July 31, 1956, is hereby revoked and set aside, as
issued in abuse of discretion amounting to excess of jurisdiction. Costs against appellant Ong
Shu.
18
Paras, C. J., Bengzon, Montemayor, Reyes, A., Bautista Angelo, Concepcion, and Endencia,
JJ., concur.
Separate Opinions
FELIX, J., concurring:
The issue in this case revolves around the proposition of whether or not "goods purchased by
an accused, for which he paid with a rubber check, can be seized from a third party who
bought the same in good faith and for a valuable consideration before the offender, who was
charged with estafa, is tried and convicted."
I concur with the reasons adduced in the majority decision but the main basis of my vote with
the majority of the Court is based on the principle that Article 105 of the Revised Penal Code
relied upon by the lower Court for the issuance of the order which We revoked and set aside in
this instance, cannot be invoked and made applicable to the case at bar.
As it is known, among the civil liabilities established by Articles 100 to 103 of the Revised Penal
Code restitution is included and Article 105 of the same Code dealing on restitution, provides
the following:
ART. 105. Restitution. How Made. — The restitution of the thing itself must be made whenever
possible, with allowance for the deterioration or diminution of value as determined by the
court.
The thing itself shall be restored, even though it be found in the possession of a third person
who has acquired it by lawful means, saving to the latter his action against the proper person
who may be liable to him.
This provision is not applicable in cases in which the thing has been acquired by the third person
in the manner and under the requirements which, by law, bar an action for its recovery.
There is no dispute that petitioner herein, Chua Hai, purchased from Roberto Sotto 100 sheets
of galvanized iron roofing in good faith and for value, and there is no denial either that this
stock comes from and is a part of the 700 sheets that Roberto Sotto bought and paid with a
check that bounced for lack of funds. Under such circumstances, there is no question that the
purchase was perfected by the agreement of the respondent Ong Shu and defendant Sotto and
as a consequence of the transaction, upon delivery of the sheets to the latter, ownership of the
same was conveyed and transferred legally to the purchaser who, from that moment, with or
without payment of the consideration therefor was in turn entitled to sell and convey all or a
portion of the property in question to a third party who definitely acquired said goods,
specially when he acted in good faith and for value. Had those goods been sold on credit by
Ong Shu to Roberto Sotto, the failure of the latter to pay the purchase price thereof would not
entitle the vendor, under the circumstances obtaining in the instant case, to take the goods
from Chua Hai and much less without a previous court action. And the same thing can be said
in the case at bar where the vendor was induced to part with his property by the issuance of a
rubber check. Both in the case of sale on credit as well as on the case of sale through the
payment with rubber check, the transaction is perfected and the transfer of ownership
verified, the difference being only circumscribed to the liability of the first purchaser (Sotto)
1
which in the first case would be merely civil, while in the latter case is also criminal. The first
sale of the property having been legally consummated, the 100 sheets of galvanized iron
herein involved could not be recovered from Chua Hai even in case of Sotto's conviction
of estafa, because under the terms of Article 105 of the Revised Penal Code, the restitution of
the thing is not possible for the reason that said thing has been acquired by the third
persons (Chua Hai) in the manner under the requirements which (in addition to the other
means enumerated in the majority decision) bar, by law an action for its recovery. I am,
therefore, of the opinion and thus hold that in cases where the ownership of the effects of the
crime has already been transferred by the offender to an innocent third party, the restitution
of the thing itself referred to in Article 105 of the Revised Penal Code must necessarily be
limited to cases in which the offended party was illegally deprived of the property involved in
the crime committed, such as in cases of robbery and theft, but not to cams wherein the
offended party has not been deprived of his property which he delivered to the purchaser with
the expectation of course, of receiving the consideration of the sale.
I, therefore, concur in the majority decision penned by Mr. Justice J. B. L. Reyes.
LABRADOR, J., dissenting:
19
I dissent. Before proceeding to the discussion of the facts it seems necessary for an
understanding of this dissent that this is a certiorari originally instituted in this Court against an
order of Judge Ruperto Kapunan, Jr. of the Court of First Instance of Manila. As a case
of certiorari, not a petition for review, the only pertinent issue, as I see it, is whether under the
facts and circumstances of the case the order against which the petition is instituted was
issued in excess of jurisdiction or with grave abuse of discretion. The order issued by the
respondent judge was provisional in character, subject to the outcome of the criminal case and
any other future litigation respecting the property subject of the proceedings.
The certiorari seeks to set aside the order for the return to the complainant in criminal case
No. 34250, People vs. Roberto Sotto, of 100 sheets of galvanized iron roofing which had been
sold by the accused in said case to petitioner herein, Chua Hai. The order is as follows:
Counsel for the complainant in this case seeks the return of the 700 sheets of galvanized iron
now with the Manila Police Department which form part of the hardware materials involved in
this case. Chua Hai, one of the persons who purchased from the accused one hundred (100)
pieces of the said galvanized iron sheets, opposes the said motion on the ground that the
question of ownership should be determined in the proper proceedings, claiming that he has a
valid title to the 100 pieces, having bought them from the accused Roberto Sotto on February
1, 1956. Roberto Sotto is presently at large, his arrest having been ordered by this Court on
June 13, 1956, for failure to appear for trial.
Considering the provisions of Article 105 of the Revised Penal Code, the said 700 sheets, except
five of them which are to be retained for purposes of evidence, are hereby ordered returned to
the complainant, subject, however, to the condition that the complainant post a bond in an
amount equal to twice the value of 100 sheets in favor of Chua Hai who has a claim of
ownership to the said 100 sheets, and without prejudice on the part of said Chua Hai to file the
corresponding action on the matter of ownership thereof by virtue of his purchase from the
herein accused.
From the facts alleged in the pleadings prescribed in this case, we gather the following: On
January 31, 1956, Roberto Sotto purchased from Youngstown Hardware, owned by Ong Shu,
700 corrugated galvanized iron sheets and 249 pieces of round iron bar for P6,137.70, and in
payment thereof he issued a check drawn against the Security Bank and Trust Company for
P7,000.00, without informing Ong Shu that had no sufficient funds in said bank to answer for
the same. When the check was presented for payment it was dishonored for insufficiency of
funds. Sotto sold 165 sheets in Pangasinan and 535 sheets in Calapan, Mindoro. Of those sold
in Pangasinan, 100 was sold to petitioner Chua Hai. When the case was filed in the Court of
First Instance of Manila against Roberto Sotto, for estafa, the offended party filed a petition
asking that the 700 galvanized iron sheets which were deposited with the Manila Police
Department be returned to him, as owner of the Youngstown Hardware. Petitioner herein
opposed the motion with respect to the 100 sheets that he had bought from Sotto.
Notwithstanding the opposition the court ordered the return of the galvanized iron sheets to
Ong Shu. Petitioner then presented a motion to reconsider the order, alleging that by the
return thereof to the offended party, the court had not only violated the contract of deposit,
because it was in that concept that petitioner had deliver the 100 sheets to the Manila Police
Department, and that said return to Ong Shu amounted to a deprivation of his property
without due process of law. It is also claimed that Article 105 of the Revised Penal Code, under
whose authority the return was ordered, can be invoked only after the termination of the
criminal case and not while said criminal case is still pending trial.
The court giving no heed to these protests on the part of the petitioner, the latter brought the
present petition to this Court alleging that the order of the respondent judge constitutes a
deprivation of petitioner's property without due process of law, violating the contract of
deposit under which the sheets were delivered to the police department of the City of Manila,
and determining the respective rights of petitioner and respondent Ong Shu without a previous
trial of the criminal case — all of which constitute a grave abuse of discretion and excess of
jurisdiction. In answer to the petition it is claimed that as respondent Ong Shu is the owner of
the property, he has the right to recover possession thereof even if said property appears to
have fallen into the possession of a third party who acquired it by legal means, provided that
said form of acquisition is not that provided for in Article 464 of the Civil Code (where property
has been pledged in a monte de piedad established under authority of the Government) ; that
even if the property was acquired in good faith, the owner who has been unlawfully deprived
thereof may recover it from the person in possession of the same unless a person in possession
acquired it in good faith at a public sale (Art. 559, Civil Code of the Philippines). It is also
claimed that under the provisions of Article 105 of the Revised Penal Code, under which
restitution is made by a return of the thing itself whenever possible, the galvanized iron sheets
in question should be returned to the offended party, the owner, and that there is no provision
of law requiring that the criminal case must first be finally disposed of before restitution of the
goods swindled can be ordered returned to the owner. In answer to the allegation that
petitioner has been deprived of his property without due process of law, it is alleged that same
is without foundation because the petitioner was given ample time to be heard. As to the claim
20
that the galvanized iron sheets in question were deposited with the Manila Police Department,
it is argued that the delivery to the Manila Police Department was by virtue of the order of the
court, because the said sheets were the subject of or are the instruments of the commission of
the crime of estafa, and the court had the power to order the return thereof to the owner
after it had satisfied itself of the ownership thereof by the offended party. It is also alleged in
defense that petitioner's rights, if any, are sufficiently protected by the bond that the court has
required to be filed.
I find no merit in the contention that petitioner was deprived of the possession and ownership
of the galvanized iron sheets without due process of law, it appearing that sufficient
opportunity was given him to explain his right to the possession and ownership thereof when
he presented him motion for reconsideration which the court heard and which it finally denied.
The claim that the respective rights of the petitioner and the respondent owner can only be
decided in the final criminal action is also without merit. The criminal case seeks to determine
the fact of the commission of the crime by the accused. When as in this case it cannot be
seriously contended that the galvanized iron sheet in question were not the ones that the
accused had taken away from the offended party by illegal means, there is no advantage to be
gained by postponing the determination of the ownership of the stolen property as between
the offended party and the purchaser. Anyway, the order of the court is merely provisional in
character and it is expressly provided therein that the claims of the parties to the property are
to be determined in the final action that the petitioner may file, if he desires to do so.
The decision of the majority supposedly rests on the provisions of Article 599 of the Civil Code,
which is as follows:
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 can not obtain its return without
reimbursing the price paid therefor.
We fully agree with the majority that this Article covers the case, but we are of the humble
opinion that the provision that is applicable is not paragraph 1, but paragraph 2. Granting that
the petitioner was a possessor in good faith, the facts disclosed not by the information alone,
but by the motion for the return of the goods and other parts of the record show that these
movable properties used to belong to the respondent Ong Shu and that he was deprived
thereof unlawfully because a certain person purchased it with a bogus check. As between the
purchaser and Ong Shu, the lawful owner, even if the former is clothed with all the good faith,
the owner of the property Ong Shu has a better right to recover possession thereof. The
criminal law provides that the subject of a crime can always be recovered from whoever is in
possession of the same, irrespective of the good faith of the possessor. Were we to adopt the
ruling of the majority, we will be encouraging crooks because by artful connivance with
supposed buyers in good faith (and the worst part of it is good faith is always presumed), we
will have a holiday for crooks, thieves and robbers.
While it is true that the information does not deny the good faith of petitioner, but as against
that of the lawful owner, Ong Shu, the latter should be given preference.
It is not disputed that the respondent Ong Shu was originally the lawful owner. If that is so and
he was deprived of the property by a criminal act, how can such ownership now have been
destroyed and can now be denied. The only way by which the petitioner, the buyer from the
thief, can be protected in his possession is by applying the provisions of paragraph 2 of Article
599 of the Civil Code, which reads:
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 can not obtain its return without
reimbursing the price paid therefor.
Note that we have underlined the words public sale. This he has not proved and no evidence
has been shown or is insinuated in the record. Even if he had acquired it at public sale, the right
for reimbursement of the price still remains. The price is fully guaranteed by the bond
approved by the court.
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