G.R. No. L-18536 March 31, 1965

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

REGALA, J.:

This is an appeal, on purely legal questions, from a decision of the Court of First Instance of Quezon City, Branch IV, declaring the intervenor-appellee, Teodoro Santos, entitled to the possession of the car in dispute.

The records before this Court disclose that sometime in May, 1959, Teodoro Santos advertised in two metropolitan papers the sale of his FORD FAIRLANE 500. In the afternoon of May 28, 1959, a certain L. De Dios, claiming to be a nephew of Vicente Marella, went to the Santos residence to answer the ad. However, Teodoro Santos was out during this call and only the latter's son, Irineo Santos, received and talked with De Dios. The latter told the young Santos that he had come in behalf of his uncle, Vicente Marella, who was interested to buy the advertised car.

On being informed of the above, Teodoro Santos instructed his son to see the said Vicente Marella the following day at his given address: 1642 Crisostomo Street, Sampaloc, Manila. And so, in the morning of May 29, 1959, Irineo Santos went to the above address. At this meeting, Marella agreed to buy the car for P14,700.00 on the understanding that the price would be paid only after the car had been registered in his name.

Irineo Santos then fetched his father who, together with L. De Dios, went to the office of a certain Atty. Jose Padolina where the deed of the sale for the car was executed in Marella's favor. The parties to the contract thereafter proceeded to the Motor Vehicles Office in Quezon City where the registration of the car in Marella's name was effected. Up to this stage of the transaction, the purchased price had not been paid.

From the Motor Vehicles Office, Teodoro Santos returned to his house. He gave the registration papers and a copy of the deed of sale to his son, Irineo, and instructed him not to part with them until Marella shall have given the full payment for the car. Irineo Santos and L. De Dios then proceeded to 1642 Crisostomo Street, Sampaloc, Manila where the former demanded the payment from Vicente Marella. Marella said that the amount he had on hand then was short by some P2,000.00 and begged off to be allowed to secure the shortage from a sister supposedly living somewhere on Azcarraga Street, also in Manila. Thereafter, he ordered L. De Dios to go to the said sister and suggested that Irineo Santos go with him. At the same time, he requested the registration papers and the deed of sale from Irineo Santos on the pretext that he would like to show them to his lawyer. Trusting the good faith of Marella, Irineo handed over the same to the latter and thereupon, in the company of L. De Dios and another unidentified person, proceeded to the alleged house of Marella's sister.

At a place on Azcarraga, Irineo Santos and L. De Dios alighted from the car and entered a house while their unidentified companion remained in the car. Once inside, L. De Dios asked Irineo Santos to wait at the sala while he went inside a room. That was the last that Irineo saw of him. For, after a considerable length of time waiting in vain for De Dios to return, Irineo went down to discover that neither the car nor their unidentified companion was there anymore. Going back to the house, he inquired from a woman he saw for L. De Dios and he was told that no such name lived or was even known therein. Whereupon, Irineo Santos rushed to 1642 Crisostomo to see Marella. He found the house closed and Marella gone. Finally, he reported the matter to his father who promptly advised the police authorities.

That very same day, or on the afternoon of May 29, 1959 Vicente Marella was able to sell the car in question to the plaintiff-appellant herein, Jose B. Aznar, for P15,000.00. Insofar as the above incidents are concerned, we are bound by the factual finding of the trial court that Jose B. Aznar acquired the said car from Vicente Marella in good faith, for a valuable consideration and without notice of the defect appertaining to the vendor's title.

While the car in question was thus in the possession of Jose B. Aznar and while he was attending to its registration in his name, agents of the Philippine Constabulary seized and confiscated the same in consequence of the report to them by Teodoro Santos that the said car was unlawfully taken from him.

In due time, Jose B. Aznar filed a complaint for replevin against Captain Rafael Yapdiangco, the head of the Philippine Constabulary unit which seized the car in question Claiming ownership of the vehicle, he prayed for its delivery to him. In the course of the litigation, however, Teodoro Santos moved and was allowed to intervene by the lower court.

At the end of the trial, the lower court rendered a decision awarding the disputed motor vehicle to the intervenor-appellee, Teodoro Santos. In brief, it ruled that Teodoro Santos had been unlawfully deprived of his personal property by Vicente Marella, from whom the plaintiff-appellant traced his right. Consequently, although the plaintiff-appellant acquired the car in good faith and for a valuable consideration from Vicente Marella, the said decision concluded, still the intervenor-appellee was entitled to its recovery on the mandate of Article 559 of the New Civil Code which provides:

ART. 559. The possession of movable property acquired in good faith is equivalent to title. Nevertheless, one who lost any movable or has been unlawfully deprived thereof, may recover it from the person in possession of the same.

If the possessor of a movable lost or of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor.

From this decision, Jose B. Aznar appeals.

The issue at bar is one and simple, to wit: Between Teodoro Santos and the plaintiff-appellant, Jose B. Aznar, who has a better right to the possession of the disputed automobile?

We find for the intervenor-appellee, Teodoro Santos.

The plaintiff-appellant accepts that the car in question originally belonged to and was owned by the intervenor-appellee, Teodoro Santos, and that the latter was unlawfully deprived of the same by Vicente Marella. However, the appellant contends that upon the facts of this case, the applicable provision of the Civil Code is Article 1506 and not Article 559 as was held by the decision under review. Article 1506 provides:

ART. 1506. Where the seller of goods has a voidable title thereto, but his, title has not been voided at the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith, for value, and without notice of the seller's defect of title.

The contention is clearly unmeritorious. Under the aforequoted provision, it is essential that the seller should have a voidable title at least. It is very clearly inapplicable where, as in this case, the seller had no title at all.

Vicente Marella did not have any title to the property under litigation because the same was never delivered to him. He sought ownership or acquisition of it by virtue of the contract. Vicente Marella could have acquired ownership or title to the subject matter thereof only by the delivery or tradition of the car to him.

Under Article 712 of the Civil Code, "ownership and other real rights over property are acquired and transmitted by law, by donation, by testate and intestate succession, and in consequence of certain contracts, by tradition." As interpreted by this Court in a host of cases, by this provision, ownership is not transferred by contract merely but by tradition or delivery. Contracts only constitute titles or rights to the transfer or acquisition of ownership, while delivery or tradition is the mode of accomplishing the same (Gonzales v. Rojas, 16 Phil. 51; Ocejo, Perez and Co. v. International Bank, 37 Phil. 631, Fidelity and Deposit Co. v. Wilson, 8 Phil. 51; Kuenzle & Streiff v. Wacke & Chandler, 14 Phil. 610; Easton v. Diaz Co., 32 Phil. 180).

For the legal acquisition and transfer of ownership and other property rights, the thing transferred must be delivered, inasmuch as, according to settled jurisprudence, the tradition of the thing is a necessary and indispensable requisite in the acquisition of said ownership by virtue of contract. (Walter Laston v. E. Diaz & Co. & the Provincial Sheriff of Albay, supra.)

So long as property is not delivered, the ownership over it is not transferred by contract merely but by delivery. Contracts only constitute titles or rights to the transfer or acquisition of ownership, while delivery or tradition is the method of accomplishing the same, the title and the method of acquiring it being different in our law. (Gonzales v. Roxas, 16 Phil. 51)

In the case on hand, the car in question was never delivered to the vendee by the vendor as to complete or consummate the transfer of ownership by virtue of the contract. It should be recalled that while there was indeed a contract of sale between Vicente Marella and Teodoro Santos, the former, as vendee, took possession of the subject matter thereof by stealing the same while it was in the custody of the latter's son.

There is no adequate evidence on record as to whether Irineo Santos voluntarily delivered the key to the car to the unidentified person who went with him and L. De Dios to the place on Azcarraga where a sister of Marella allegedly lived. But even if Irineo Santos did, it was not the delivery contemplated by Article 712 of the Civil Code. For then, it would be indisputable that he turned it over to the unidentified companion only so that he may drive Irineo Santos and De Dios to the said place on Azcarraga and not to vest the title to the said vehicle to him as agent of Vicente Marella. Article 712 above contemplates that the act be coupled with the intent of delivering the thing. (10 Manresa 132)

The lower court was correct in applying Article 559 of the Civil Code to the case at bar, for under it, the rule is to the effect that if the owner has lost a thing, or if he has been unlawfully deprived of it, he has a right to recover it, not only from the finder, thief or robber, but also from third persons who may have acquired it in good faith from such finder, thief or robber. The said article establishes two exceptions to the general rule of irrevindicability, to wit, when the owner (1) has lost the thing, or (2) has been unlawfully deprived thereof. In these cases, the possessor cannot retain the thing as against the owner, who may recover it without paying any indemnity, except when the possessor acquired it in a public sale. (Del Rosario v. Lucena, 8 Phil. 535; Varela v. Finnick, 9 Phil. 482; Varela v. Matute, 9 Phil. 479; Arenas v. Raymundo, 19 Phil. 46. Tolentino, id., Vol. II, p. 261.)

In the case of Cruz v. Pahati, et al., 52 O.G. 3053 this Court has already ruled that

Under Article 559 of the new Civil Code, a person illegally deprived of any movable may recover it from the person in possession of the same and the only defense the latter may have is if he has acquired it in good faith at a public sale, in which case, the owner cannot obtain its return without reimbursing the price paid therefor. In the present case, plaintiff has been illegally deprived of his car through the ingenious scheme of defendant B to enable the latter to dispose of it as if he were the owner thereof. Plaintiff, therefore, can still recover possession of the car even if it is in the possession of a third party who had acquired it in good faith from defendant B. The maxim that "no man can transfer to another a better title than he had himself" obtains in the civil as well as in the common law. (U.S. v. Sotelo, 28 Phil. 147)

Finally, the plaintiff-appellant here contends that inasmuch as it was the intervenor-appellee who had caused the fraud to be perpetrated by his misplaced confidence on Vicente Marella, he, the intervenor-appellee, should be made to suffer the consequences arising therefrom, following the equitable principle to that effect. Suffice it to say in this regard that the right of the owner to recover personal property acquired in good faith by another, is based on his being dispossessed without his consent. The common law principle that where one of two innocent persons must suffer by a fraud perpetrated by another, the law imposes the loss upon the party who, by his misplaced confidence, has enabled the fraud to be committed, cannot be applied in a case which is covered by an express provision of the new Civil Code, specifically Article 559. Between a common law principle and a statutory provision, the latter must prevail in this jurisdiction. (Cruz v. Pahati, supra)

UPON ALL THE FOREGOING, the instant appeal is hereby dismissed and the decision of the lower court affirmed in full. Costs against the appellant.

DIGESTFACTS: Teodoro advertised for sale his Ford Fairlane car. De Dios approached them purporting to be a nephew of Marella. Teodoro transacted with Marella who agreed to buy the car, agreeing to pay the same only after the car has been registered in his name. The Deed was registered in his name, but Marella has yet to pay so the documents were not delivered to him, he pleaded with Ireneo, Teodoros son, that they proceed to Marellas sister to secure the shortage of cash. Ireneo agreed. They proceeded thereto, Ireneo was accompanied by De Dios and an anonymous person. De Dios was able to induce Ireneo to hand over the documents under the pretext that he will show them to his lawyer, Ireneo agreed. De Dios made Ireneo wait and thereafter escaped with the car and the deed. Marella was then able to sell the car to Aznar. The police thereafter seized the car in Aznars possession. Aznar countered with a complaint for Replevin.

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

HELD: YES. Teodoro was clearly unlawfully deprived of the car. There was no valid delivery to Marella, hence the latter acquired no title to the car. Delivery must be coupled with intent. That being the case, Teodoro hasthe right to claim the car not only from the thief, butalso from 3rd persons who may have acquired it in goodfaith. The buyer would only be entitled toreimbursement if he purchased the same in good faithfrom a public sale.

G.R. No. 59550January 11, 1995

EDILBERTO NOEL (now PINITO W. MERCADO) as ADMINISTRATOR OF THE INTESTATE ESTATE OF GREGORIO NANAMAN and HILARIA TABUCLIN, petitioner, vs.COURT OF APPEALS and JOSE C. DELESTE, respondents.

G.R. No. 60636January 11, 1995

PINITO W. MERCADO, as SPECIAL ADMINISTRATOR OF THE INTESTATE ESTATE OF GREGORIO NANAMAN and HILARIA TABUCLIN, petitioner, vs.HONORABLE COURT OF APPEALS and JOSE C. DELESTE, respondents.

QUIASON, J.:

The consolidated cases, G.R. Nos. 59550 and 60636, are petitions for review on certiorari under Rule 45 of the Revised Rules of court of the Amended Decision dated May 14, 1981 of the Court of Appeals in CA-G.R. No. 56303-R, which affirmed in toto the decision of the Court of First Instance, Branch II, Lanao del Norte in Special Proceedings No. 596 (II-94) in favor of Jose C. Deleste, private respondent herein.

Gregorio Nanaman and Hilaria Tabuclin (Nanaman spouses) were a childless, legally-married couple. Gregorio, however, had a child named Virgilio Nanaman by another woman. Since he was two years old, Virgilio was reared by Gregorio and Hilaria. He was sent to school by the couple until he reached third year of the law course.

During their marriage, Gregorio and Hilaria acquired certain property including a 34.7-hectare land in Tambo, Iligan City on which they planted sugarcane, corn and bananas. They also lived there with Virgilio and fifteen tenants.

On October 2, 1945, Gregorio died. Hilaria then administered the property with the help of Virgilio enjoyed the procedure of the land to the exclusion of Juan Nanaman, the brother of Gregorio, and Esperanza and Caridad Nanaman, Gregorio's daughters by still another woman. In 1953, Virgilio declared the property in his name for taxation purposes under Tax Declaration No. 5534 (Exhs. 13 & 13-A). On November 1, 1952, Hilaria and Virgilio, mortgaged the 34.7-hectare land in favor of private respondent, in consideration of the amount of P4,800.00 (Exh. 5).On February 16, 1954, Hilaria and Virgilio executed a deed of sale over the same tract of land also in favor of private respondent in consideration of the sum of P16,000.00 (Exh. 7). Witnesses to the sale were the wife of Virgilio, Rosita S. Nanaman, Rufo C. Salas, the driver of private respondent, and Remedios Pilotan. The document was notarized on February 17, 1954 and was registered with the Register of Deeds of Iligan city on March 2, 1954. The tax declaration in the name of Virgilio was cancelled and a new tax declaration was issued in the name of private respondent. Having discovered that the property was in arrears in the payment of taxes from 1952, private respondent paid the taxes for 1952, 1953 and 1954 (Exhs. 13-B, 13-C & 14-B). From then on, private respondent has paid the taxes on the property.

On May 15, 1954, Hilaria died. On October 27, 1954, Esperanza and Caridad Nanaman filed intestate estate proceedings concerning the estate of their father, Gregorio. Included in the list of property of the estate was the 34.7-hectare land. Inasmuch as only Esperanza, Caridad and Virgilio Nanaman were named as heirs of Gregorio in the petition, Juan Nanaman, Gregorio's brother, opposed it. On November 26, 1954, the petition was amended to include the estate of Hilaria with Alejo Tabuclin, Hilaria's brother, and Julio Tabuclin, a son of Hilaria's deceased brother, Jose, as additional petitioners.

Having been appointed special administrator of the estate of the Nanaman couple, Juan Nanaman included the 34.7-hectare land in the list of the assets of the estate.

Juan also reported that Virgilio took the amount of P350.00 from the procedure of the estate without prior permission and that five tenants in contempt of court. Accordingly, in its Order of January 30, 1956, the probate court required private respondent and said tenants to appear before it and "show cause why they should not be cited for contempt for illegally interfering in the land" under special administration.

On June 16, 1956, when Edilberto Noel took over as regular administrator of the estate, he was not able to take possession of the land in question because it was in the possession of private respondent and some heirs of Hilaria.

On July 18, 1957, private respondent and the heirs of the Nanaman spouses executed an amicable settlement of the Nanaman estate. In the document, private respondent agreed "to relinquish his rights to one-half (1/2) of the entire parcel of land in Tambo, Iligan City, indicated in item 1 under the Estate, sold to him by Hilaria Tabuclin, in favor of all the heirs of the abovementioned intestate [estate] for the reason that not all of the heirs of Gregorio Nanaman have signed and agreed" (G.R. No. 60636, Rollo, p. 67). The court approved the amicable settlement but when it was questioned by some heirs, the court set aside its approval and declared it null and void (Exh. H-1).

The court thereafter ordered Noel, as regular administrator, to file an action to recover the 34.7-hectare land from private respondent. Consequently, on April 30, 1963, Noel filed an action against private respondent for the version of title over the 34.7-hectare land to the Nanaman estate and to order private respondent to pay the rentals and attorney's fees to the estate.

On December 14, 1973, the trial court rendered a decision, holding that the action for annulment of the deed of sale had prescribed in 1958 inasmuch as the sale was registered in 1954 and that Gregorio's heirs had slept on their rights by allowing Hilaria to exercise rights of ownership over Gregorio's share of the conjugal property after his death in 1945. On the issue that Hilaria had no authority to dispose of one-half of the property pertaining to her husband, the trial court ruled: (1) that Hilaria in effect acted as administratrix over the estate of Gregorio; (2) that she sold the 34.7- hectare land in order to pay the debts of the conjugal partnership; and (3) that out of the purchase price of P16,000.00, P4,000.00 was in payment to private respondent (who was a doctor of medicine) for medical services rendered and medicine administered during Gregorio's ailment and P800.00 was used to pay taxes in arrears.

Noel appealed to the Court of Appeals. In its Decision of February 18, 1980, the appellate court ruled that the transaction between Hilaria and Virgilio on one hand and private respondent on the other, was indeed a sale. It found that no fraud, mistake or misrepresentation attended in the execution of the deed of sale and that no proof was shown that the contract was merely a mortgage.

The appellate court, however, agreed with Noel that Hilaria could not validly sell the 37.7-hectare land because it was conjugal property, and Hilaria could sell only her one-half share thereof.

On the issue of prescription, the appellate court ruled that since no fraud, mistake or misrepresentation attended the execution of the deed of sale, the prescriptive period of ten years had not yet elapsed when the action to recover the property was filed in 1963. Moreover, the appellate court held that in the absence of proof of adverse possession by Hilaria, she should be considered as holding the property pursuant to her usufructuary rights over the same under the provisions of the Spanish Civil Code of 1889, the law in force at the time of the death of Gregorio.

Finding that Noel's claim for rentals of P5,000.00 per annum from 1957 was uncontroverted, the appellate court ruled that one-half thereof belonged to the estate of Gregorio. The dispositive portion of the decision states:

WHEREFORE, the judgment appealed from is set aside and another is hereby entered declaring the intestate estate of Gregorio Nanaman and the defendant-appellee co-owners of the land in question in the proportion of one-half (1/2) interest each; ordering defendant-appellee Jose C. Deleste to return to plaintiff-appellant, as administrator of Gregorio Nanaman's estate the land in question, and to pay plaintiff as such administrator the sum of P2,500.00 as rental of the 1/2 interest of the estate from the year 1957 until the land is returned to the estate with legal interest from the filing of plaintiff's complaint; and, to, pay the expenses of litigation and attorney's fees to plaintiff in the sum of P3,000.00. Costs against the appellee, Jose C. Deleste (G.R. No. 60636, Rollo, p. 42).

Private respondent filed a motion for the reconsideration of said decision praying for the total affirmance of the decision of the trial court. Noel also filed a motion for reconsideration praying for the return of ownership and possession of the entire tract of land to the estate of the 34.7-hectare land.

The appellate court took into account that since Gregorio's death, Hilaria and Virgilio took physical possession of the property and enjoyed its fruits which were delivered to them by the tenants; that Virgilio instituted said tenants; and that he declared the property in his own name for tax purposes. The court also ruled that the non-payment of the real estate taxes by Juan constituted abandonment of the property and his non-filing of an action to recover the same from the time that private respondent "usurped" the property until the filing of the complaint in 1963 by Noel amounted to laches (G.R. No. 60636, Rollo, p. 50).

Hence, the appellate court tacked "the physical possession of Hilaria and Virgilio to the possession of the defendant for another nine (9) years up to the time the complaint was filed." It considered the "change of conditions or relations" which had transpired in the case such as private respondent's registration of his muniment of title over the property; the cancellation of Virgilio's tax declaration and the issuance of another tax declaration in the name of private respondent; private respondent's payment of taxes from 1952 "up to the present;" the execution of a new tenancy agreement between private respondent and the tenants; and private respondent's purchase of plows, a carabao and insecticides for use in the ricefield.

Stating that it was "proscribed from taking away property from the alert and the industrious and dumping it into the hands and possession of one has previously slept on his rights," the appellate court in its amended decision decreed:

WHEREFORE, Our decision of February 18, 1980 is hereby affirmed and reiterated insofar as it upheld the regularity and due execution of the deed of sale (Exh. A or 7) and the transaction affecting the undivided one-half portion of the property described in par. 3 of the complaint appertaining to the share of Hilaria Tabuclin, as evidenced by said Exh. A or 7, and is reconsidered and set aside and another one entered affirming the decision of the lower court in all its parts, including the award of damages and the costs of suit. No costs in this instance (G.R. No. 60636, Rollo, p. 52).

II

Pinito W. Mercado, as new administrator of the estate, appealed to this Court, questioning the court of Appeals' Amended Decision applying the doctrine of laches and equating the said doctrine with acquisitive prescription (G.R. No. 59550).

Subsequently, another petition for certiorari to declare the sale to private respondent as an equitable mortgage, was filed by Atty. Bonifacio Legaspi (G.R. No. 60636). Said counsel explained that he represented the heirs of Hilaria while the counsel in G.R. No. 59550 represented the heirs of Gregorio (G.R. No. 60636, Rollo, pp. 104-107). These two cases, arising as they do from the same decision of the Court of Appeals, were consolidated in the resolution of September 2, 1991 and are herein jointly considered.

III

There are no cogent reasons to deviate from the ruling of the Court of Appeals that the contract involving the 34.7-hectare property was one of sale and not of mortgage in the absence of a showing that the findings complained of are totally devoid of support in the record or that they are so glaringly erroneous as to constitute serious abuse of discretion (Andres v. Manufacturers Hanover & Trust Corporation, 177 SCRA 618 [1989]). It should be noted that two contracts had been executed involving said property (the November 1, 1952 mortgage and the February 16, 1954 sale). In the absence of proof of gross inadequacy of the price, that the sale was made with what might appear as an inadequate consideration does not make the contract one of mortgage (Askay v. Cosalan, 46 Phil. 179 [1924]).

We find, however, that the resolution of these petitions hinges on whether Hilaria and Virgilio could dispose of the entire property sold to private respondent and assuming that they did not have full ownership thereof, whether the right of action to recover the share of the collateral heirs of Gregorio had prescribed or been lost through laches.

Gregorio died in 1945 long before the effectivity of the Civil Code of the Philippines on August 30, 1950. Under Article 2263 of the said Code, "rights to the inheritance of a person who died, with or without a will, before the effectivity of this Code, shall be governed by the Civil Code of 1889, by other previous laws, and by the rules of Court."

Thus, succession to the estate of Gregorio was governed primarily by the provisions of the Spanish Civil Code of 1889. Under Article 953 thereof, a spouse like Hilaria, who is survived by brothers or sisters or children of brothers or sisters of the decedent, as is obtaining in this case, was entitled to receive in usufruct the part of the inheritance pertaining to said heirs. Hilaria, however, had full ownership, not merely usufruct, over the undivided half of the estate (Spanish Civil Code of 1889, Art. 493). It is only this undivided half-interest that she could validly alienate.

On the other hand, Virgilio was not an heir of Gregorio under the Spanish Civil Code of 1889. Although he was treated as a child by the Nanaman spouses, illegitimate children who were not natural were disqualified to inherit under the said Code (Cid v. Burnaman, 24 SCRA 434 [1968]). Article 998 of the Civil Code of the Philippines, which gave an illegitimate child certain hereditary rights, could not benefit Virgilio because the right of ownership of the collateral heirs of Gregorio had become vested upon his death (Civil Code of the Philippines, Art. 2253; Uson v. Del Rosario, 92 Phil. 530 [1953]). Therefore, Virgilio had no right at all to transfer ownership over which he did not own.

In a contract of sale, it is essential that the seller is the owner of the property he is selling. The principal obligation of a seller is "to transfer the ownership of" the property sold (Civil Code of the Philippines, Art. 1458). This law stems from the principle that nobody can dispose of that which does not belong to him (Azcona v. Reyes, 59 Phil. 446 [1934]; Coronel v. Ona, 33 Phil. 456 [1916). NEMO DAT QUAD NON HABET .

While it cannot be said that fraud attended the sale to private respondent, clearly there was a mistake on the part of Hilaria and Virgilio in selling an undivided interest in the property which belonged to the collateral heirs of Gregorio.

The sale, having been made in 1954, was governed by the Civil Code of the Philippines. Under Article 1456 of said Code, an implied trust was created on the one-half undivided interest over the 34.7-hectare land in favor of the real owners.

Said Article provides:

If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes.

In Diaz v. Gorricho, 103 Phil. 261 (1958), the Court said that Article 1456 merely expresses a rule recognized in Gayondato v. Insular Treasurer, 49 Phil. 244 (1926). Applying said rule, the Gayondato court held that the buyer of a parcel of land at a public auction to satisfy a judgment against a widow acquired only one-half interest the land corresponding to the share of the window and the other half belonging to the heirs of her husband became impressed with a constructive trust in behalf of said heirs.

On the issue of prescription, we hold that the action for recovery of title or possession over the 34.7-hectare land had not yet prescribed when the complaint was filed on April 30, 1963.

In its Amended Decision, the Court of Appeals reckoned the prescriptive period from the death of Gregorio on October 2, 1945.

Under the law in force in 1945, the surviving spouse was given the management of the conjugal property until the affairs of the conjugal partnership were terminated. The surviving spouse became the owner of one-half interest of the conjugal estate in his own right. he also became a trustee with respect to the other half for the benefit of whoever may be legally entitled to inherit the said portion. "He could therefore no more acquire a title by prescription against those for whom he was administering the conjugal estate than could a guardian his ward or a judicial administrator against the heirs of an estate. . . . The surviving husband as the administrator and liquidator of the conjugal estate occupies the position of a trustee of the highest order and is not permitted by the law to hold that estate or any portion thereof adversely to those for whose benefit the law imposes upon him duty of administration and liquidation" (Pamittan v. Lasam, 60 Phil. 908 [1934]).

The possession of Virgilio, his registration of the land in his name for tax purposes, his hiring of tenants to till the land, and his enjoyment of the produce of the tenants, appear more as acts done to help Hilaria in managing the conjugal property. There is no evidence to prove indubitably that Virgilio asserted a claim of ownership over the property in his own right and adverse to all including Hilaria.

In the same manner, the doctrine of laches does not apply. Upon orders of the court in the intestate proceedings, Noel, the administrator of the estate of the Nanaman spouses, immediately filed an action to recover possession and ownership of the property. There is no evidence showing any failure or neglect on his part, for an unreasonable and unexplained length of time, to do that which, by exercising due diligence, could or should have been done earlier (Cristobal v. Melchor, 78 SCRA 175 [1977]). The doctrine of stale demands would apply only where by reason of the lapse of time, "[i]t would be inequitable to allow a party to enforce his legal rights" (Z.E. Lotho, Inc. v. Ice and cold Storage Industries of the Philippines, Inc., 3 SCRA 744 [1961]). Moreover, this Court, except for every strong reasons, is not disposed to sanction the application of the doctrine of laches to prejudice or defeat the right of an owner or original transferee (Raneses v. Intermediate Appellate Court, 187 SCRA 397 [1990]).

The action to recover the undivided half-interest of the collateral heirs of Gregorio prescribes in ten years. The cause of action is based on Article 1456 of the Civil Code of the Philippines, which made private respondent a trustee of an implied trust in favor of the said heirs. Under Article 1144 of the Civil Code of the Philippines, actions based upon an obligation created by law, can be brought within ten years from the time the right of action accrues (Rosario v. Auditor General, 103 Phil. 1132 [1958]).

The ten-year prescriptive period within which the collateral heirs of Gregorio could file an action to recover their share in the property sold to private respondent ( prescripcion extintiva) accrued only on march 2, 1954, when the deed of sale was registered with the Register of Deeds (Cf. Arradaza v. Court of Appeals, 170 SCRA 12 [1987]). From march 2, 1954 to April 30, 1963, when the complaint for the recovery of the property was filed, less than ten years had elapsed. Therefore, the action had not been barred by prescription.

The ten-year prescriptive period before title to real estate shall vest by adverse possession ( prescripcion adquisitiva) is also reckoned in the case of private respondent from March 2, 1954 (Corporacion de PP. Agustinos Recoletos v. Crisostomo, 32 Phil. 427 [1915]).

WHEREFORE, the Amended Decision dated May 14, 1981 of the Court of Appeals is REVERSED and SET ASIDE and the Decision dated February 18, 1980 is REINSTATED and AFFIRMED in toto.

SO ORDERED.

Asset Privatization Trust vs. T.J. EnterpriseG.R. No. 167195 May 8, 2009Facts:Petitioner was a government entity created for the purpose to conserve, to provisionally manage and to dispose assets of government institutions. It had acquired assets consisting of machinery and refrigeration equipment stored at the Golden City compound which was leased to and in the physical possession of Creative Lines, Inc., (Creative Lines). These assets were beingsold on an as-is-where-is basis.Petitioner and respondent entered into an absolute deed of sale over certain machineryand refrigeration equipment wherein respondent paid the full amount as evidenced by petitioners receipt. After two (2) days, respondent demanded the delivery of the machinery ithad purchased. Petitioner issued a Gate Pass to respondent to enable them to pull out from thecompound the properties designated ; however, during the hauling of Lot No. 2 consisting of sixteen (16) items, only nine (9) items were pulled out by respondent. Respondent filed acomplaint for specific performance and damages against petitioner and Creative Lines. Uponinspection of the remaining items, they found the machinery and equipment damaged and hadmissing parts. Petitioner claimed that there was already a constructive delivery of the machineryand equipment upon the execution of the deed of sale it had complied with its obligation todeliver the object of the sale since there was no stipulation to the contrary and it was the duty of respondent to take possession of the property.The RTC ruled that petitioner is liable for breach of contract and should pay for the actualdamages suffered by respondent. It found that at the time of the sale, petitioner did not havecontrol over the machinery and equipment and, thus, could not have transferred ownership byconstructive delivery. The Court of Appeals affirmed the judgment; hence, this petition.Issue:Whether or not the petitioner had complied with its obligations to make delivery of the properties and failure to make actual delivery of the properties was not attributable was beyondthe control of petitioner?Held: No. There was no constructive delivery of the machinery and equipment upon theexecution of the deed of absolute sale or upon the issuance of the gate pass since it was not the petitioner but Creative Lines which had actual possession of the property. The presumption of constructive delivery is not applicable as it has to yield to the reality that the purchaser was not placed in possession and control of the property.Petitioner also claims that its failure to make actual delivery was beyond its control. It posits that the refusal of Creative Lines to allow the hauling of the machinery and equipment wasunforeseen and constituted a fortuitous event. The matter of fortuitous events is governed by Art.1174 of the Civil Code which provides that except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires assumption of risk, no person shall be responsible for those events which could not be foreseen,or which though foreseen, were inevitable. A fortuitous event may either be an act of God, or natural occurrences such as floods or typhoons, or an act of man such as riots, strikes or wars. However, when the loss is found to be partly the result of a persons participation whether byactive intervention, neglect or failure to act, the whole occurrence is humanized and removedfrom the rules applicable to a fortuitous event. Thus, the risk of loss or deterioration of propertyis borne by petitioner. Thus, it should be liable for the damages that may arise from the delay.

G.R. No. L-10027 November 13, 1915

ROSENDO HERNAEZ y ESPINOSA, plaintiff-appellant, vs.MATEO HERNAEZ y ESPINOSA, ET AL., defendants-appellants.

TRENT, J.:

The spouses, Pedro Hernaez and Juana Espinosa, died, leaving several legitimate descendants. Neither of their estates had been divided up to the date of the institution of this action, but were both under administration. Their son, Domingo Hernaez y Espinosa, sold all his interest in both his father's and mother's estate to his son, Vicente Hernaez y Tuason, on November 6, 1901. Notwithstanding the fact that Domingo Hernaez y Espinosa had thus parted with all his interest in the estates of his two parents, he executed a document of sale in favor of Alejandro Montelibano y Ramos on February 27, 1907, in which he purported to convey all his undivided interest in his mother's estate. On the same date he executed another document of sale in which he purported to convey to Jose Montelibano Uy-Cana four-eighteenths of his interest in his mother's estate. Both of these sales were made with the connivance of his son, Vicente Hernaez y Tuason. Hence, although Vicente Hernaez y Tuason had actually purchased all of his father's interests in the estates of Pedro Hernaez and Juana Espinosa as early as November 6, 1901, and was, on February 27, 1907, the undoubted owner thereof, he is effectually estopped from asserting his title as against either of the vendees mentioned in the documents of sale dated February 27, 1907, to which we have just referred. (Code Civ. Pro., sec. 333, No. 1.) Bigelow on Estoppel (p. 607) says:

. . . it is now a well-established principle that where the true owner of property, for however short a time, holds out another, or, with knowledge of his own right, allows another to appear as the owner of or as having full power of disposition over the property, the same being in the latter's actual possession, and innocent third parties are thus led into dealing with such apparent owner, they will be protected.

On August 19, 1912, Jose Montelibano Uy-Cana sold his interest in the estate to Alejandro Montelibano y Ramos. By this transfer, the latter stood owner of all the interest of Domingo Hernaez y Espinosa in the estate of Pedro Hernaez, and five-eighteenths of his interest in the estate of Juana Espinosa as against Vicente Hernaez y Espinosa.

It is admitted that Rosendo Hernaez y Espinosa, another son of the deceased spouses administrator of the estates, was notified of Montelibano's purchases on January 8, 1913, when he received notice of Montelibano's motion, entered in the administration proceedings, asking that he (Montelibano) be substituted as assignee of the interests of various heirs of the estate which he had acquired by purchase. Notwithstanding this knowledge, Rosendo Hernaez y Espinosa entered into a contract of sale with Vicente Hernaez y Tuason, whereby the latter purported to convey all the interest, which he had acquired from his father, in the estate of the deceased spouses, Pedro Hernaez and Juana Espinosa. It will be remembered that he purchased his father's share of the estate on November 6, 1901; that he is estopped from asserting title to any interest in his grandfather's estate and in five-eighteenths of his grandmother's estate. Rosendo Hernandez y Espinosa purchased with full knowledge of these facts. He, therefore, acquired thirteen-eighteenths of the interest of Domingo Hernaez y Espinosa in the estate of the latter's mother nothing more. lawph!l.net

That rule is that the holder [Alejandro Montelibano y Ramos] of a prior equitable right has priority over the purchaser [Rosendo Hernandez y Espinosa] of a subsequent estate (whether legal or equitable) without value, or with notice of the equitable right, but not as against a subsequent purchaser for value and without notice. (Ewart on Estoppel, p. 199.)

Alejandro Montelibano y Ramos has acquired in his interest in the estate of the deceased spouses for a valuable consideration and in good faith, and there remains to the plaintiff, Rosendo Hernaez y Espinosa, only the right of subrogation allowed him by article 1067 of the Civil Code, which reads as follows:

If any of the heirs should sell his hereditary rights to a stranger before the division, all or any of the co-heirs may subrogate himself in the place of the purchaser, reimbursing him for the value of the purchase, provided they do so within the period of a month, to be counted from the time they were informed thereof.

On January 24, 1913, the plaintiff instituted this action seeking to subrogate himself in the rights acquired by Montelibano in the estate. Unless the plaintiff can be charged with actual notice of the conveyance by which Montelibano acquired these interests, prior to January 8, 1913, it is clear that he has opportunely asserted his right of subrogation. This is purely a question of fact. As to the sales whereby Domingo Hernaez y Espinosa parted with that portion of his interest in the estate which is now held by Alejandro Montelibano, as well as to those sales made by other heirs to Montelibano, the trial court found that the plaintiff, Rosendo Hernaez y Espinosa, was not chargeable with notice prior to January 8, 1913. After a careful examination of the record we see no reason for disturbing this finding of fact. As a consequence, the plaintiff, Rosendo Hernaez y Espinosa, is entitled to exercise his right of subrogation in accordance with article 1067, above quoted. lawph!1.net

The interest which Jose Montelibano Uy-Cana purchased from Domingo Hernaez y Espinosa on February 27, 1907, for the sum of P4,500, he afterwards transferred to Alejandro Montelibano y Ramos for the sum of P10,000. In rendering judgment, the trial court decreed that the plaintiff, Rosendo Hernaez y Espinosa, should pay the latter sum for the privilege of exercising the right of subrogation. This was error. Article 1067 of the Civil Code provides that the co-heir may exercise this right of subrogation upon the payment to the purchaser of another heir's interest, "el precio de la compra" (the purchase price). Obviously, if the interest had not been resold, the plaintiff, Rosendo Hernaez y Espinosa, would have had to pay only the price for which Uy-Cana acquired it. The purpose of the article cannot be evaded by a reconveyance of the interest to a third person at a higher price. Subsequent purchasers of the interest acquire it burdened with the right of subrogation of co-heirs at the price for which the heir who sold it parted with it.

It is urged that the prices in some of the deeds of sale by which Alejandro Montelibano y Ramos purchased the interest of various heirs in the estates are fictitious. This is a question of fact upon which both parties adduced evidence, and we concur in the opinion of the trial court that there is no basis to the charge. For the foregoing reasons, the judgment of the court is modified by substituting, as the price of subrogation of the interest originally purchased by Jose Montelibano Uy-Cana, the sum of P4,500, as set out in Exhibit 7, for the sum of P10,000, the consideration expressed in Exhibit 10. As modified, the judgment appealed from is affirmed, without costs. So ordered.

[G.R. No. 10599. December 24, 1915. ]

VICENTA JALBUENA, Plaintiff-Appellant, v. SALVADOR LIZARRAGA Et. Al., Defendants-Appellees.

D E C I S I O N

TRENT, J. :

On May 22,1903, Salvador Lizarraga, as judgment creditor, caused the sheriff of the Province of Iloilo to levy upon an old sugar-mill as the property of Ildefonso Doronila, the judgment debtor and husband of the plaintiff. At the time of the levy Doronila stated to the sheriff that the mill belonged to him. The sale took place about the last of July, 1913. The purchaser at this public sale sold the mill to Lopez. The present action was instituted on November 26, 1913, by the plaintiff for the purpose of recovering the mill or its value upon the ground that the same was her exclusive property and that her husband had no interest therein. From a judgment dismissing the cause after a hearing on the merits, the plaintiff appealed.

The plaintiff knew that the old sugar-mill had been levied upon at the levy was made and also knew that it would be sold as the property of her husband. Notwithstanding these facts, she stood by and permitted the sale to go forward without making the slightest protest or claim until the property had passed into the hands of Lopez. Upon these facts the trial court held that the plaintiff was estopped from asserting her claim of ownership against the defendants, or either of them. this holding is assigned as an error, and in support of this alleged error the plaintiff cites and relies upon the doctrine enunciated by this court in the cases of Waite v. Peterson (8 Phil. Rep., 449) Lopez v. Alvarez (9 Phil. Rep., 28); Uy Piaoco v. Osmea (9 Phil. Rep., 299); Ariston v. Cea (Phil. Rep., 109) and Bonzon v. Standard Oil Co. and Osorio (27 Phil. Rep., 141).

An examination of the above cited cases will show that they do not support the plaintiffs contention. In the first case the interested party made a demand upon the sheriff for the return of the property levied upon. The second case had do not with the question of preferred creditors. In the third case there was also a claim made upon the sheriff for the return of the property soon after it was attached. In the fourth case there was likewise a claim made upon the sheriff for the release of the property before it was sold under execution. In the last case the court used the following language: "In this jurisdiction, under the general principle that one person may not enrich himself at the expense of another, a judgment creditor would not be permitted to retain the purchase price of the land sold as the property of a judgment debtor after it has been made to appear that the judgment debtor had no title to the land and that the purchaser had failed to secure title thereto, and we find no difficulty, therefore, in accepting a liberal construction of the statute which arrives at the same equitable result." This is a correct statement of the law; but it has nothing to do with the question of estoppel.

An execution is an order to the sheriff to attach and sell the property of the judgment debtor. If he sells the property of another person, he exceeds his authority and the true owner may issue in trespass for damages or for the recovery of the property, provide he has not lost his right to do so by his own conduct. Upon this point, the rule is stated in 16 Cyc., thus: "When a person having title to or an interest in property knowingly stands by and suffers it to be sold under a judgment or decree, without asserting his title or right or making it known to the bidders, he cannot afterward set up his claim." (Citing a long array of cases from Florida, Georgia, Illinois, Kentucky, South Carolina, New York, North Carolina, Pennsylvania, and Conklin v. Wehrman, 38 Fed., 874.)"

Bigelow on Estoppel says: ". . . it is now a well established principle that where the true owner of property, for however short a time , holds out another ,or, with knowledge of his own right, allows another to appear, as the owner of or as having full power of disposition over the property, the same being in the latters actual possession, and innocent third parties are thus led into dealing with some [such] apparent owner, they will be protected." (Quoted with approval in the case of Hernaez v. Hernaez, 32 Phil. Rep., 214.)

The foregoing quotations from Cyc. and Bigelow are in harmony with No. 1 of section 333 of the Code of Civil Procedure, wherein it is provided that " Whenever a party has, by his own declaration, act, or omission, intentionally and deliberately led another to believe a particular thing true, and to act upon such belief, he can not, in any litigation arising out of such declaration, act, or omission, be permitted t falsify it."cralaw virtua1aw library

The phrase "stood by" does not an actual presence, but implies knowledge under such circumstances as to render in the duty of the prossessor to communicate it. The herein plaintiff had, as we have indicated, full knowledge of the fact that the property was gong to be sold to pay the debts of her husband. She did not communicate her claim to the purchaser, and it is now too late to assert such a claim.

For the foregoing reasons, the judgment appealed from is affirmed, with costs against the Appellant. So ordered.

BUCTON v GABARFACTS: Josefina (Gabar) bought a parcel of land from Villarin. By verbal agreement, Josefina sold a portion thereof to Nicanora (Bucton) for P3,000. Nicanora paid P1,000 then P400all evidence by receiptsthen she loaned Josefina P1,000 and thereafter along with her spouse, took possession of the lot and built their house as well as apartments thereon. Villarin then issued a Deed of Sale to Josefina, but the latter refused to execute the corresponding Deed of Sale to Nicanora. Josefina claimed that the amounts paid by Nicanora were in the concept of loans. Thus, Nicanora filed a case for specific performance.

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

HELD: YES. Assuming that at the time when Josefina sold the lot to Nicanora, she was not yet the owner thereof. When Villarin executed the Deed of Sale in her favor, title passed to Nicanora by operation of law. Although the sale between Josefina and Nicanora wasverbal, it was as between them. Considering thatNicanora has paid the purchase price, she becameowner of of the lot. Likewise, although the complaintwas titled specific performance it was actually one forquieting of title, which is imprescriptible so long as theplaintiff is in possession of the lot.

G.R. No. L-36359January 31, 1974

FELIX BUCTON AND NICANORA GABAR BUCTON, petitioners, vs.ZOSIMO GABAR, JOSEFINA LLAMOSO GABAR AND THE HONORABLE COURT OF APPEALS, respondents.

ANTONIO, J.:1wph1.t

Appeal from the decision of the Court of Appeals in CA-G.R. No. 49091-R, dated January 10, 1973, reversing the judgment of the trial court and dismissing the complaint filed by herein petitioners, and from said appellate court's resolution, dated February 5, 1973, denying petitioners' motion for reconsideration.

The facts of the case, as found by the trial court, which have not been disturbed by respondent Court of Appeals, are as follows:

Plaintiff Nicanora Gabar Bucton (wife of her co-plaintiff Felix Bucton) is the sister of defendant Zosimo Gabar, husband of his co-defendant Josefina Llamoso Gabar.

This action for specific performance prays, inter-alia, that defendants-spouses be ordered to execute in favor of plaintiffs a deed of sale of the western half of a parcel of land having an area of 728 sq. m. covered by TCT No. II (from OCT No. 6337) of the office of the Register of Deeds of Misamis Oriental.

Plaintiffs' evidence tends to show that sometime in 1946 defendant Josefina Llamoso Gabar bought the above-mentioned land from the spouses Villarin on installment basis, to wit, P500 down, the balance payable in installments. Josefina entered into a verbal agreement with her sister-in-law, plaintiff Nicanora Gabar Bucton, that the latter would pay one-half of the price (P3,000) and would then own one-half of the land. Pursuant to this understanding Nicanora on January 19, 1946 gave her sister-in-law Josefina the initial amount of P1,000, for which the latter signed a receipt marked as Exhibit A.

Subsequently, on May 2, 1948 Nicanora gave Josefina P400. She later signed a receipt marked as Exhibit B.

On July 30, 1951 plaintiffs gave defendants P1,000 in concept of loan, for which defendant Zosimo Gabar signed a receipt marked as Exhibit E.

Meanwhile, after Josefina had received in January, 1946 the initial amount of P1,000 as above stated, plaintiffs took possession of the portion of the land indicated to them by defendants and built a modest nipa house therein. About two years later plaintiffs built behind the nipa house another house for rent. And, subsequently, plaintiffs demolished the nipa house and in its place constructed a house of strong materials, with three apartments in the lower portion for rental purposes. Plaintiffs occupied the upper portion of this house as their residence, until July, 1969 when they moved to another house, converting and leasing the upper portion as a dormitory.

In January, 1947 the spouses Villarin executed the deed of sale of the land abovementioned in favor of defendant Josefina Llamoso Gabar, Exhibit I, to whom was issued on June 20, 1947 TCT No. II, cancelling OCT No. 6337. Exhibit D.

Plaintiffs then sought to obtain a separate title for their portion of the land in question. Defendants repeatedly declined to accommodate plaintiffs. Their excuse: the entire land was still mortgaged with the Philippine National Bank as guarantee for defendants' loan of P3,500 contracted on June 16, 1947: Exhibit D-1.Plaintiffs continued enjoying their portion of the land, planting fruit trees and receiving the rentals of their buildings. In 1953, with the consent of defendants (who were living on their portion), plaintiffs had the entire land surveyed and subdivided preparatory to obtaining their separate title to their portion. After the survey and the planting of the concrete monuments defendants erected a fence from point 2 to point 4 of the plan, Exhibit I, which is the dividing line between the portion pertaining to defendants, Exhibit I-1, and that pertaining to plaintiffs, Exhibit I-2.

In the meantime, plaintiffs continued to insist on obtaining their separate title. Defendants remained unmoved, giving the same excuse. Frustrated, plaintiffs were compelled to employ Atty. Bonifacio Regalado to intercede; counsel tried but failed. Plaintiffs persevered, this time employing Atty. Aquilino Pimentel, Jr. to persuade defendants to comply with their obligation to plaintiffs; this, too, failed. Hence, this case, which has cost plaintiffs P1,500 in attorney's fees.

Defendants' evidence based only on the testimony of defendant Josefina Llamoso Gabar denies agreement to sell to plaintiffs one-half of the land in litigation. She declared that the amounts she had received from plaintiff Nicanora Gabar Bucton first, P1,000, then P400 were loans, not payment of one-half of the price of the land (which was P3,000). This defense is devoid of merit.

When Josefina received the first amount of P1,000 the receipt she signed, Exhibit A, reads:

Cagayan, Mis. Or.January 19, 1946

Received from Mrs. Nicanora Gabar the sum of one thousand (P1,000) pesos, victory currency, as part payment of the one thousand five hundred (P1,500.00) pesos, which sum is one-half of the purchase value of Lot No. 337, under Torrens Certificate of Title No. 6337, sold to me by Mrs. Carmen Roa Villarin."(Sgd.) Josefina Ll. Gabar".

On the basis of the facts quoted above the trial court on February 14, 1970, rendered judgment the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered for plaintiffs:

1)Ordering defendants within thirty days from receipt hereof to execute a deed of conveyance in favor of plaintiffs of the portion of the land covered by OCT No. II, indicated as Lot 337-B in the Subdivision Plan, Exhibit I, and described in the Technical Description, Exhibit 1-2; should defendants for any reason fail to do so, the deed shall be executed in their behalf by the Provincial Sheriff of Misamis Oriental or his Deputy;

2)Ordering the Register of Deeds of Cagayan de Oro, upon presentation to him of the above-mentioned deed of conveyance, to cancel TCT No. II and in its stead to issue Transfer Certificates of Title, to wit, one to plaintiffs and another to defendants, based on the subdivision Plan and Technical Description above-mentioned; and ordering defendants to present and surrender to the Register of Deeds their TCT No. II so that the same may be cancelled; and

3)Ordering defendants to pay unto plaintiffs attorney's fees in the amount of P1,500 and to pay the costs.SO ORDERED.

Appeal was interposed by private respondents with the Court of Appeals, which reversed the judgment of the trial court and ordered petitioners' complaint dismissed, on the following legal disquisition:

Appellees' alleged right of action was based on the receipt (Exh. A) which was executed way back on January 19, 1946. An action arising from a written contract does not prescribe until after the lapse of ten (10) years from the date of action accrued. This period of ten (10) years is expressly provided for in Article 1144 of the Civil Code.

From January 19, 1946 to February 15, 1968, when the complaint was filed in this case, twenty-two (22) years and twenty-six (26) days had elapsed. Therefore, the plaintiffs' action to enforce the alleged written contract (Exh. A) was not brought within the prescriptive period of ten (10) years from the time the cause of action accrued.

The land in question is admittedly covered by a torrens title in the name of Josefina Llamoso Gabar so that the alleged possession of the land by the plaintiffs since 1947 is immaterial because ownership over registered realty may not be acquired by prescription or adverse possession (Section 40 of Act 496).

It is not without reluctance that in this case we are constrained to sustain the defense of prescription, for we think that plaintiffs really paid for a portion of the lot in question pursuant to their agreement with the defendants that they would then own one-half of the land. But we cannot apply ethical principles in lieu of express statutory provisions. It is by law provided that:

"ART. 1144.The following actions must be brought within ten years from the time the right of action accrues:1.Upon a written contract;2.Upon an obligation created by law;3.Upon a judgment."

If eternal vigilance is the price of safety, one cannot sleep on one's right and expect it to be preserved in its pristine purity.

Petitioners' appeal is predicated on the proposition that owners of the property by purchase from private respondents, and being in actual, continuous and physical possession thereof since the date of its purchase, their action to compel the vendors to execute a formal deed of conveyance so that the fact of their ownership may be inscribed in the corresponding certificate of title, had not yet prescribed when they filed the present action.

We hold that the present appeal is meritorious.1.There is no question that petitioner Nicanora Gabar Bucton paid P1,500.00 to respondent Josefina Gabar as purchase price of one-half of the lot now covered by TCT No. II, for respondent Court of Appeals found as a fact "that plaintiffs really paid for a portion of the lot in question pursuant to their agreement with the defendants that they would own one-half (1/2) of the land." That sale, although not consigned in a public instrument or formal writing, is nevertheless valid and binding between petitioners and private respondents, for the time-honored rule is that even a verbal contract of sale or real estate produces legal effects between the parties. 1 Although at the time said petitioner paid P1,000.00 as part payment of the purchase price on January 19, 1946, private respondents were not yet the owners of the lot, they became such owners on January 24, 1947, when a deed of sale was executed in their favor by the Villarin spouses. In the premises, Article 1434 of the Civil Code, which provides that "[w]hen a person who is not the owner of a thing sells or alienates and delivers it, and later the seller or grantor acquires title thereto, such title passes by operation of law to the buyer or grantee," is applicable. 2 Thus, the payment by petitioner by Nicanora Gabar Bucton of P1,000.00 on January 19, 1946, her second payment of P400.00 on May 2, 1948, and the compensation, up to the amount of P100.00 (out of the P1,000.00-loan obtained by private respondents from petitioners on July 30, 1951), resulted in the full payment of the purchase price and the consequential acquisition by petitioners of ownership over one-half of the lot. Petitioners therefore became owners of the one-half portion of the lot in question by virtue of a sale which, though not evidenced by a formal deed, was nevertheless proved by both documentary and parole evidence.

2.The error of respondent Court of Appeals in holding that petitioners' right of action had already prescribed stems from its belief that the action of petitioners is based on the receipt Exh. "A" which was executed way back on January 19, 1946, and, therefore, in the view of said appellate court, since petitioners' action was filed on February 15, 1968, or after the lapse of twenty-two (22) years and twenty-six (26) days from, the date of said document, the same is already barred according to the provisions of Article 1144 of the New Civil Code. The aforecited document (Exh. "A"), as well as the other documents of similar import (Exh. "B" and Exh. "E"), are the receipts issued by private respondents to petitioners, evidencing payments by the latter of the purchase price of one-half of the lot.The real and ultimate basis of petitioners' action is their ownership of one-half of the lot coupled with their possession thereof, which entitles them to a conveyance of the property. In Sapto, et al. v. Fabiana, 3 this Court, speaking thru Mr. Justice J.B.L. Reyes, explained that, under the circumstances no enforcement of the contract is needed, since the delivery of possession of the land sold had consummated the sale and transferred title to the purchaser, and that, actually, the action for conveyance is one to quiet title, i.e., to remove the cloud upon the appellee's ownership by the refusal of the appellants to recognize the sale made by their predecessors. We held therein that "... it is an established rule of American jurisprudence (made applicable in this jurisdiction by Art. 480 of the New Civil Code) that actions to quiet title to property in the possession of the plaintiff are imprescriptible (44 Am. Jur. p. 47; Cooper vs. Rhea, 20 L.R.A. 930; Inland Empire Land Co. vs. Grant County, 138 Wash. 439, 245 Pac. 14).

The prevailing rule is that the right of a plaintiff to have his title to land quieted, as against one who is asserting some adverse claim or lien thereon, is not barred while the plaintiff or his grantors remain in actual possession of the land, claiming to be owners thereof, the reason for this rule being that while the owner in fee continues liable to an action, proceeding, or suit upon the adverse claim, he has a continuing right to the aid of a court of equity to ascertain and determine the nature of such claim and its effect on his title, or to assert any superior equity in his favor. He may wait until his possession is disturbed or his title in attacked before taking steps to vindicate his right. But the rule that the statute of limitations is not available as a defense to an action to remove a cloud from title can only be invoked by a complainant when he is in possession. One who claims property which is in the possession of another must, it seems, invoke remedy within the statutory period. (44 Am. Jur., p. 47)

The doctrine was reiterated recently in Gallar v. Husain, et al., 4 where We ruled that by the delivery of the possession of the land, the sale was consummated and title was transferred to the appellee, that the action is actually not for specific performance, since all it seeks is to quiet title, to remove the cloud cast upon appellee's ownership as a result of appellant's refusal to recognize the sale made by his predecessor, and that as plaintiff-appellee is in possession of the land, the action is imprescriptible. Considering that the foregoing circumstances obtain in the present case, We hold that petitioners' action has not prescribed.

WHEREFORE, the decision and resolution of respondent Court of Appeals appealed from are hereby reversed, and the judgment of the Court of First Instance of Misamis Oriental, Branch IV, in its Civil Case No. 3004, is revived. Costs against private respondents.

5. SUN BROS. & CO. v VELASCOFACTS: Sun Brothers sold an Admiral Refrigerator toLopez upon the agreement that ownership will only passto the latter upon payment of the full purchase price.Lopez paid only the downpayment and sold the same toJV Trading (owned by Velasco) and was displayed in thelatters store. It was thereafter bought by CO Kang Chiufrom JV Trading. Sun Brothers sought to recover therefrigerator.

SBC delivered to Lopez and Admiral refrigerator under a conditional sale agreement. Of the1700 pesos purchase price, a down payment of 500 pesos was made. It was stipulated thatLopez cannot remove the refrigerator without the written consent of SBC. It also remains as anabsolute property of SBC until the full payment of the price. Its violation would grant SBC theright to rescind the contract and forfeit the down payment.- Without SBCs knowledge, Lopez, misrepresenting himself as the owner, sold it to J.V. Trading which was owned by Velasco. The latter in turn sold it to Co who transferred the refrigerator tohis home.- SBC filed a writ of replevin at the municipal court which the latter issued in its favor. However, itwas not executed because Co filed a counter-bond with the court.- Co filed a cross-claim against Velasco and a counter-claim against SBC.- In the CFI, Vel asco and Cos answers were reproduced. It held SBC as the rightful owner of the refrigerator. Velasco and Co appealed

ISSUE: W/N Sun Brothers may recover the thingHELD: NO. It is true that where a person who is not theowner of a thing sells the same, the buyer acquires nobetter title than the seller has. In this case. Lopezobviously had no title to the goods for having failed topay the full price. It only follows that JV Trading had notitle thereto as Velasco was not in good faith. He shouldhave inquired if Lopez had good title to itthe same notbeing engaged in the business of selling appliances.HOWEVER, when the refrigerator passed to Co KangChiu, the latter acquired valid title thereto. Theexception to the foregoing rule is the purchase in goodfaith in a merchant store or a fair or a market. This rulefosters stability to commerce and business transactions.Co Kang Chiu purchased the refrigerator in a merchantstoreand for value and in good faith. Thus, he isprotected by the law. Sun Brothers would not beentitled to recover the refrigeratornot even if they payits valuesince they were not deprived of the sameunlawfully. Lopez is the one who should be liable to SunBrothers for the full purchase price of the ref.

[No. L-8420. May 31, 1956]LUCENA MASICLAT, ET AL., petitioner, vs. NATALIA CENTENO, respondent. Appeal by certiorari from the decision of the Court of Appeals reversing the judgment of the Court of FirstInstance of Pampanga and awarding the rice in questionto the defendant.1044

The appealed decision is correct, first, because the evidence does not clearly show the identity of the person who tried to buy the rice from the respondent, and neither does it show that the same person was the one who sold the commodity to Ramon Masiclat; and, second, although acojitraet of sale is perfected upon the parties having agreedas to the thing which is the subject matter of the contractand the price (Warner, Barnes & Co. vs. Inza, 43 Phil., 505; Article 1475, Civil Code), ownership is not consideredtransmitted until the property is actually delivered and thepurchaser has taken possession thereof and has paid theprice agreed upon (Romanvs. Grimalt, 6 Phil., 96; Article1524, Civil Code).Judgment appealed from affirmed, without pronouncementas to costs. Paras, CJ. Y ponente

TAGATAC v JIMENEZFACTS: Tagatac bought a car abroad and brought it tothe Philippines. Warner Feist deceived her into believingthat he was very rich and purchased her car. Shedelivered possession thereof. Levy (another name ofFeist) issued her a postdated check, which wasdishonored. Feist then disappeared with the car. Feistwas able to register the car in his name and eventuallysold the car to Sanchez, who then sold the same toJimenez. Jimenez even labored to verify the carsrecords with Motor Vehicle Office. Jimenez thendelivered the car to California Car Exchange for display.Tagatac, upon finding out, sought to recover the car,but Jimenez refused.ISSUE: W/N Jimenez may refuse to give the car backHELD: YES. Jimenez was a buyer in good faith of thecarhe had no knowledge of any defect in the title ofthe seller. It is true that one who has lost any movableor has been unlawfully deprived thereof may recoverthe same from the possessor. However, in this case, Tagatac was NOT unlawfully deprived within the contextof the Civil Code.The sale between Feist and Tagatac was merelyvoidablevalid until annulled. There was a validtransmission of ownership. The fact that Feist did notpay only gives rise to an action to resolve the contractor demand payment. When Feist sold the car toSanchez, the sale between him and Tagatac was stillvalid; therefore, good title passed to Sanchez. Asbetween 2 innocent parties, the one who made possiblethe injury must bear the loss.

DE GARCIA V. COURT OF APPEALS/ GUEVARA- Buying Lost or Stolen Goods

(Art 559) One who has lost or has been unlawfully deprived of any movable may recover the same from the possessor except when the owner has been unlawfully deprived of it and it has been obtained by the latter in good faith at a public sale wherein the former needs to reimburse the latter of the price paid.

:. THE ONLY EXCEPTION is acquisition in good faith of the possession at a public sale

FACTS:

Mrs. Guevara owned a pretty diamond ring with white gold mounting, 2.05 diamond-solitaire, and 4 brills. Sometime in February 1952, the ring was stolen from her house. Luckily, on October 1953 (barely a year after), she found it at a restaurant, La Bulakena, on the finger of the restaurant owner, Consuelo De Garcia.

Guevara asked De Garcia where she bought it and explained to her how she had lost it. When the ring was handed to her by De Garcia, it fitted her perfectly. The next time around, she brought her husband and Rebullida, the person whom she bought the ring from, to verify the identity of the ring. Rebullida examined the ring with the aid of high power lens and his 30 years of experience. He concluded that it was the very ring that he had sold to the Guevaras. After that, Guevara sent a written request for the ring, but De Garcia did not deliver it. When the sheriff tries to serve a writ of seizure, De Garica likewise refused to deliver the ring.

According to De Garcia, she bought the ring from her kumare who got it from another Miss who in turn got it from the owner, a certain Aling Petring. Aling Petring however, was nowhere to be found. She boarded three months at the first buyers house but left a week after her landlady bought the ring. The first buyer did not even know Aling Petrings last name nor her forwarding address.De Garcia claims to be a holder in good faith and for value. She says her possession is equivalent to title.

[Note: There was a discrepancy as to the weight of the ring at the time it was purchased and at the time it was found, but this was because De Guevara substituted the diamond-solitaire with a heavier stone.]The lower court both ruled in favor of the buyer and CA reversed in favor of the owner, Guevara. Hence, the present petition.

ISSUE: Who has a better right?

RULING: Guevara (owner)

Article Article 559 again, applies. Remember that the article establishes two exceptions to the general rule of irrevindicability: 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. THE ONLY EXCEPTION is acquisition in good faith of the possession at a public sale.

There is no merit in the contention that De Garcias possession is in good faith, equivalent to title, sufficed to defeat the owners claim. Possession in good faith does not really amount to title for the reason that there is a period for acquisitive prescription for movable through uninterrupted possession of 4 years.

The title of the possessor in good faith is not that of ownership, but is merely a presumptive title sufficient to serve as a basis for acquisitive prescription. This, one who has lost any movable or has been unlawfully deprived thereof, may recover it from the person in possession of the same.Besides, De Garcias title, if any, was weak. Her source, Aling Petring, was dubious. She did not make a comment when Rebullida examined the ring nor did she answer Guevaras letter asserting ownership of it. Her testimony was weak!

Other facts1. Subject matter = 1 diamond ring 18 cts. white gold mounting, with 1 2.05 cts. diamond-solitaire, and 4 brills 0.10 cts. total weight.2. Mr. Rebullidas experience in the jewelry business = 30 years3. Mrs. Garcia = owner of La Bulakea restaurant4. Weight of the diamonds:5. substituted diamond = 2.57 cts.6. lost diamond (guevaras) = 2.05 cts7. Ruling of the CA = return the ring or pay P1,000 and costs, P1,000 (attys fees) & P1,000 as exemplary damages

EDCA PUBLISHING & DISTRIBUTING CORP. v. SANTOS (1990)Facts:A person identifying himself as Prof. Jose Cruz placed an order bytelephone with EDCA for 406 books, payable on delivery. EDCAprepared the corresponding invoice and delivered the books asordered for which Cruz issued a personal check of P8,995.65.Cruz sold 120 of the books to Leonor Santos who paid him P1,700 afterverifying the sellers ownership from the invoice he showed.EDCA became suspicious over a second order placed by Cruz evenbefore clearing his first check. So EDCA made inquiries with the DLSUCollege of which he claimed to be a dean but was informed that therewas no such person in their employ. Cruz also had no more accountwith Philippine Amanah Bank against which he had drawn the paymentcheck.EDCA then went to the police to set up a trap and arrested Cruz whosereal name was Tomas dela Pena.EDCA sought the assistance of the police which forced their way intothe store of Santos and threatened her with prosecution for buyingstolen property. They seized the 120 books without warrant and loadedthem into EDCAs van.Santos sued for recovery of the books. A writ of preliminaryattachment was issued and EDCA finally surrendered the books back toSantos. The lower courts were in favor of Santos.Issue(s)/Held:WHETHER EDCA was unlawfully deprived of movable property (books) in thehands of another because the check issued by Cruz in payment wasdishonored applying Art. 559. NO.RatioArt. 559 The possession of movable property acquired in good faith isequivalent to a title.Nevertheless, one who has lost any movable or has been unlawfullydeprived thereof, may recover it from the person in possession of thesame.If the possessor of a movable lost or of which the owner has beenunlawfully deprived has acquired it in good faith at a public sale, theowner cannot obtain its return without reimbursing the price paidtherefor.EDCA contends that Santos was not able to establish ownership of thedisputed books because they have not even produced a receipt toprove that they bought it.

But the first sentence of Art. 559 provides that the possession of movable property acquired in good faith is equivalent to a title, thusdispensing with further proof.Santos is a buyer in good faith because she first ascertained theownership of the books from the EDCA invoice showing that they havebeen sold to Cruz. Santos is in the business of buying and sellinggoods. To Santos, Cruz was only one of the many sellers she wasaccustomed to dealing with.Santos first ascertained that the books belonged to Cruz before buyingthem. By contrast, EDCA was less than cautious in dealing with Cruz.Although it had never transacted with Cruz before, it readily deliveredthe books he ordered by telephone and readily accepted his personalcheck as payment. It did not verify his identity. It did not wait to clearCruzs check.Worse, it indicated in the sales invoice that the books had been paidfor on delivery thereby vesting ownership in Cruz.EDCA argues that Cruz acquired no title to the books because hischeck was dishonored thus could not have validly transferred thebooks to Santos. But a contract of sale is consensual and perfectedonce an agreement is reached between the parties on the subjectmatter and consideration.Ownership in the thing sold shall not pass to the buyer until fullpayment of the purchase price ONLY if there is a stipulation to thateffect. Otherwise, the general rule is that ownership shall pass fromthe vendor to the vendee upon the actual or constructive delivery of the thing sold EVEN if the purchase price has not been paid. In thiscase, there was no stipulation so the general rule applies.Non-payment only creates a right to (1) demand payment, (2) rescindthe contract and (3) have a cause of action for criminal prosecution forbouncing checks.Actual delivery of the books having been made, Cruz acquiredownership over the books which he could validly transfer to Santos. The fact that he had not yet paid for them was a matter between Cruzand EDCA and did not impair the title acquired by Santos over thebooks.There is no unlawful deprivation if the seller voluntarily partedwith it pursuant to a contract of sale. The fact that price wasnot subsequently paid did not render illegal a transactionwhich was valid and legal at the beginning

Smith, Bell & Co. v Sotelo Matti (1992)FACTSPlaintiff Smith, Bell & Co and the defendant Mr. Vicente Sotel entered into a contract. Plaintiff hasto deliver (1) two steel tanks shipped from New York to Manilawithin three or four months, (2)two expellers shipped from SanFrancisco in the month of September 1918or as soon aspossible,and (3) two electric motors with approximate deliverywithin ninety days. This isnot guaranteed.The tanks arrived at Manila on 27 April 1919; the expellers on 26 October 1918; and the motorson 27 February 1919. Upon notification from plaintiff, defendant refused to receive any of thegoods or to pay for their price. Plaintiff alleged that the expellers and motors were in goodcondition.Plaintiff filed a complaint against the defendant. The defendant, Mr Sotelo and intervenor, ManilaOil Refining and By-Products Co., Inc., denied the plaintiffs allegations. They allege that due toplaintiffs delay in the delivery of goods, the intervenor suffered damages.The lower court absolved the defendants from the complaint insofar as the tanks and the electricmotors were concerned, but rendered judgment against them ordering them to receive expellersand pay the sum of P50,000, with legal interest and cost.Both parties appealed to the Court.ISSUEWhat period was fixed for the delivery of the goods? Did the plaintiff incur delay in thedelivery of goods?HELDIn all these contracts, there is a final clause as follows:The sellers are not responsible for delays cause by fires, riots on land or on thesea, strikes or other causes known as force majeure entirely beyond the control of thesellers or their representatives.Under these stipulations, it cannot be said that any definite date was fixed for the delivery of thegoods. xxx. From the record it appears that thee contracts were executed at the time of the worldwar when there existed rigid restrictions on the export from the united States xxx; hence clauseswere inserted in the contracts, regarding Government regulations, railroading embargoes, lack of vessel space, the exigencies of the requirements of the United States Government xxx. At thetime of the execution of the contracts, the parties were not unmindful of the contingency of theUnited States Government not allowing the export of the goods xxx.We cannot but conclude that the term which parties attempted to fix is so uncertain that oncecannot tell just whether, as a matter of fact, those articles could be brought to manila or not.Theobligation must be regarded as conditional.The delivery was subject to a condition thefulfillment of which depended not only upon the effort of the plaintiff, but upon the will of thirdpersons who could in no way be compelled to fulfill the condition.It is sufficiently proven in the record that the plaintiff has made all the efforts it could possibly beexpected to make under the circumstances, to bring the goods in question to Manila, as soon aspossible. Xxxit is obvious that the plaintiff has complied with its obligation.When the time of delivery is not fixed in the contract, time is regarded unessential. In such cases,the delivery must be made within a reasonable time. Xxx Reasonable time for the delivery of thegoods by the seller is to be determined by circumstances attending the particular transactions.Whether of not the delivery of the machinery in litigation was offered to the defendantwithin a reasonable time, is a question to be determined by the court. Xxx The plaintiff hasnot been guilty of any delay in the fulfillment of its obligation