1

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-32974 July 30, 1979

BARTOLOME ORTIZ, petitioner,

vs.
HON. UNION C. KAYANAN, in his capacity as Judge of the Court of First Instance of
Quezon, Branch IV; ELEUTERIO ZAMORA, QUIRINO COMINTAN, VICENTE
FERRO, AND GREGORIO PAMISARAN, respondents.

Salonga, Ordoñ;ez, Yap, Sicat & Associates and Salvador, Ulgado & Carbon for petitioner.

Jose A. Cusi for private respondents.

ANTONIO, J.:1äwphï1.ñët

Petition for certiorari and Prohibition with Preliminary Injunction to nullify the Order of
respondent Judge directing the execution of the final judgment in Civil Case No. C-90, entitled
"Bartolome Ortiz vs. Secretary of Agriculture and Natural Resources, et al.," and the Writ of
Execution issued to implement said Order, allegedly for being inconsistent with the judgment
sought to be enforced.

Civil Case No. C-90 was filed by Bartolome Ortiz who sought the review and/or annulment of
the decision of the Secretary of Agriculture and Natural Resources, giving preference to the sales
applications of private respondents Quirino Comintan and Eleuterio Zamora over Lot No. 5785,
PLS-45, located at Barrio Cabuluan, Calauag, Quezon.

The factual background of the case, as found by respondent Court, is as follows:têñ.£îhqwâ£

... The lot in controversy was formerly the subject of Homestead Application No.
122417 of Martin Dolorico II, plaintiff's ward who died on August 20, 1931; that
since then it was plaintiff who continued the cultivation and possession of the
property, without however filing any application to acquire title thereon; that in
the Homestead Application No. 122417, Martin Dolorico II named his uncle,
Martin Dolorico I as his heir and successor in interest, so that in 1951 Martin
Dolorico I executed an affidavit relinquishing his rights over the property in favor
of defendants Quirino Comintan and Eleuterio Zamora, his grandson and son-in-
law, respectively, and requested the Director of Lands to cancel the homestead
 2

application; that on the strength of the affidavit, Homestead Application No.

122417 was cancelled and thereafter, defendants Comintan and Zamora filed their
respective sales applications Nos. 8433 and 9258; that plaintiff filed his protest on
November 26, 1951 alleging that he should be given preference to purchase the
lot inasmuch as he is the actual occupant and has been in continuous possession of
the same since 1931; and inspite of plaintiff's opposition, "Portion A" of the
property was sold at public auction wherein defendant Comintan was the only
bidder; that on June 8, 1957, investigation was conducted on plaintiff's protest by
Assistant Public Lands Inspector Serapion Bauzon who submitted his report to the
Regional Land Officer, and who in turn rendered a decision on April 9, 1958,
dismissing plaintiff's claim and giving due course to defendants' sales applications
on the ground that the relinquishment of the homestead rights of Martin Dolorico
I in favor of Comintan and Zamora is proper, the former having been designated
as successor in interest of the original homestead applicant and that because
plaintiff failed to participate in the public auction, he is forever barred to claim the
property; that plaintiff filed a motion for reconsideration of this decision which
was denied by the Director of Lands in his order dated June 10, 1959; that, finally,
on appeal to the Secretary of Agriculture and Natural Resources, the decision
rendered by the Regional Land Officer was affirmed in toto. 1

On March 22, 1966, respondent Court rendered judgment in the afore-mentioned civil case, the
dispositive portion of which reads as follows:têñ.£îhqwâ£

IN VIEW OF THE FOREGOING CONSIDERATIONS, judgment is hereby

rendered awarding Lot No. 5785-A of PLS-45, (Calauag Public Land
Subdivision) one-half portion of the property in litigation located at Bo.
Cabuluan, Calauag, Quezon, in favor of defendant QUIRINO COMINTAN, being
the successful bidder in the public auction conducted by the bureau of Lands on
April 18, 1955, and hereby giving due course to the Sales Application No. 9258
of defendant Eleuterio Zamora over the other half, Lot No. 5785-B of PLS-45,
Calauag, without prejudice to the right of plaintiff BARTOLOME ORTIZ to
participate in the public bidding of the same to be announced by the Bureau of
Lands, Manila. However, should plaintiff Bartolome Ortiz be not declared the
successful bidder thereof, defendants Quirino Comintan and Eleuterio Zamora
are ordered to reimburse jointly said plaintiff the improvements he has introduced
on the whole property in the amount of THIRTEEN THOUSAND SIX HUNDRED
THIRTY-TWO (P13,632.00) PESOS, the latter having the right to retain the
property until after he has been fully paid therefor, without interest since he
enjoys the fruits of the property in question, with prejudice and with costs again
the plaintiff.2

Plaintiff appealed the decision to the Court of Appeals.

Two (2) years after the rendition of the judgment by the court a quo, while the case was pending
appeal and upon petition of private respondents Quirino Comintan and Eleuterio Zamora,
respondent Court appointed respondent Vicente Ferro, Clerk of Court, as Receiver to collect tolls
 3

on a portion of the property used as a diversion road. On August 19, 1969, the Court of Appeals
issued a Resolution annulling the Order appointing the Receiver. Subsequently, on February 19,
1970, the Appellate Court affirmed the decision of the trial court. A petition for review on
certiorari of the decision of the Court of Appeals was denied by this Court on April 6, 1970. At
this point, private respondents filed a petition for appointment of a new receiver with the court a
quo. This petition was granted and the receiver was reappointed. Petitioner sought the annulment
of this Order with the Court of Appeals, but said Court ruled that its decision had already become
final and that the records of the case were to be remanded to the trial court.

Not satisfied with such denial, petitioner filed a petitioner for certiorari, prohibition and
mandamus with preliminary injunction before this Court, 3 praying for the annulment of the
Order reappointing the Receiver. On July 13, 1970, the petition was dismissed by this Court on
the ground of insufficient showing of grave abuse of discretion.

II

The judgment having become final and executory private respondents filed a motion for the
execution of the same, praying as follows:têñ.£îhqwâ£

WHEREFORE, it is respectfully prayed of this Honorable Court to order the

issuance of a writ of execution in accordance with the judgment of this Honorable
Court, confirmed by the Court of Appeals and the Supreme Court, commanding
any lawful officer to deliver to defendants Comintan and Zamora the land subject
of the decision in this case but allowing defendants to file a bond in such amount
as this Honorable Court may fix, in lieu of the P13,632.00 required to be paid to
plaintiff, conditioned that after the accounting of the tools collected by plaintiff,
there is still an amount due and payable to said plaintiff, then if such amount is
not paid on demand, including the legal interests, said bond shall be held
answerable.

Ordering further the plaintiff to render an accounting of the tolls he collected from
March of 1967 to December 31, 1968 and from September 1969 to March 31,
1970, and deliver said tolls collected to the receiver and if judgment is already
executed, then to Quirino Comintan and Eleuterio Zamora; and,

Finally, to condemn plaintiff to pay moral damages for withholding the tools
which belong to your movant in an amount this Court may deem just in the
premises.4

Acting upon the foregoing motion, respondent Judge issued an Order, dated September 23, 1970,
stating, among others, the following: têñ.£îhqwâ£

The records further disclosed that from March 1967 to December 31, 1968,
piaintiff Bartolome Ortiz collected tolls on a portion of the propertv in question
wherein he has not introduced anv improvement particularlv on Lot No. 5785-A;
PLS-45 awarded to defendant Quirino Comintan, thru which vehicular traffic was
 4

detoured or diverted, and again from September 1969 to March 31, 1970, the
plaintiff resumed the collection of tools on the same portion without rendering
any accounting on said tolls to the Receiver, who, was reappointed after
submitting the required bond and specifically authorized only to collect tolls
leaving the harvesting of the improvements to the plaintiff.

xxx xxx xxx

ln virtue of he findings of this Court as contained in the dispositive portion of its

decision, the defendants are jointly obligated to pay the plaintiff in the amount of
P13,632.00 as reasonable value of the improvements he introduced on the whole
property in question, and that he has the right of retention until fully paid. It can
be gleaned from the motion of the defendants that if plaintiff submits an
accounting of the tolls he collected during the periods above alluded to, their
damages of about P25,000.00 can more than offset their obligation of P13,362.00
in favor of the plaintiff, thereafter the possession of the land be delivered to the
defendants since the decision of the Supreme Court has already become final and
executory, but in the interregnum pending such accounting and recovery by the
Receiver of the tolls collected by the plaintiff, the defendants pray that they
allowed to put up a bond in lieu of the said P13,632.00 to answer for damages of
the former, if any.

On the other hand, plaintiff contends in his opposition, admitting that the decision
of the Supreme Court has become final and executory; (1) the offer of a bond in
lieu of payment of P13,632.00 does not, and cannot, satisfy the condition imposed
in the decision of this Court which was affirmed in toto; (2) the public sale of
Portion "B" of the land has still to take place as ordained before the decision
could be executed; and, (3) that whatever sums plaintiff may derive from the
property cannot be set off against what is due him for the improvements he made,
for which he has to be reimbursed as ordered.

xxx xxx xxx

Let it be known that plaintiff does not dispute his having collected tolls during the
periods from March 1967 to December 31, 1968 and from September 1969 to
March 31, 1970. The Supreme Court affirmed the decision of this Court its
findings that said tolls belong to the defendant, considering that the same were
collected on a portion of the land question where the plaintiff did not introduce
any improvement. The reimbursement to the plaintiff pertains only to the value of
the improvements, like coconut trees and other plants which he introduced on the
whole property. The tolls collected by the plaintiff on an unimproved portion
naturally belong to the defendants, following the doctrine on accretion. Further,
the reappointment of a Receiver by this Court was upheld by the Supreme Court
when it denied the petition for certiorari filed by the plaintiff, bolstering the legal
claim of defendants over said tolls. Thus, the decision of the Supreme Court
rendered the decision of this Court retroactive from March 22, 1966 although
 5

pending accounting of the tolls collected by the plaintiff is justified and will not
prejudice anybody, but certainly would substantially satisfy the conditions
imposed in the decision. However, insofar as the one-half portion "B" of the
property, the decision may be executed only after public sale by the Bureau of
Lands shall be accomplished.

WHEREFORE, finding the Motion for Execution filed by the defendants to be

meritorious, the same is granted; provided, however, that they put up a bond equal
the adjudicated amount of P13,632.00 accruing in favor of the plaintiff, from a
reputable or recognized bonding or surety company, conditioned that after an
accounting of the tolls collected by the plaintiff should there be found out any
balance due and payable to him after reckoning said obligation of P13,632.00 the
bond shall be held answerable therefor.5

Accordingly, a Writ of Execution was issued after private respondent Quirino Comintan had
filed the required bond. The writ directed the Sheriff to enforce the decision of the Court, and
stated, part in, the following:têñ.£îhqwâ£

But should there be found any amount collectible after accounting and deducting
the amount of P3,632.00, you are hereby ordered that of the goods and chattels of
Bartolome Ortiz of Bo. Kabuluan, Calauag, Quezon, be caused to be made any
excess in the above-metioned amount together with your lawful fees and that you
render same to defendant Quirino Comintan. If sufficient personal property
cannot be found thereof to satisfy this execution and lawful fees thereon, then you
are commanded that of the lands and buildings of the said BARTOLOME ORTIZ
you make the said excess amount in the manner required by the Rules of Court,
and make return of your proceedings within this Court within sixty (60) days from
date of service.

You are also ordered to cause Bartolome Ortiz to vacate the property within
fifteen (15) days after service thereof the defendant Quirino Comintan having
filed the required bond in the amount of THIRTEEN THOUSAND SIX
HUNDRED THIRTY-TWO (P13,632.00) PESOS. 6

On October 12, 1970, petitioner filed a Motion for Reconsideration of the aforesaid Order and
Writ of Execution, alleging:têñ.£îhqwâ£

(a) That the respondent judge has no authority to place respondents in possession
of the property;

(b) That the Supreme Court has never affirmed any decision of the trial court that
tolls collected from the diversionary road on the property, which is public land,
belong to said respondents;

(c) That to assess petitioner a P25,000.00 liability for damages is purely punitive
imposition without factual or legal justification.
 6

The foregoing Motion for Reconsideration was denied by respondent Judge per Order dated
November 18, 1970. Saod Order states, in part:têñ.£îhqwâ£

It goes without saying that defendant Comintan is entitled to be placed in

possession of lot No. 5785-A of PLS-45 (Calauag Public Land Subdivision) and
enjoyment of the tolls from March, 1967 to March, 1968 and from September,
1969 to March 31, l970 which were received by plaintiff Bartolome Ortiz,
collected from the property by reason of the diversion road where vehicular traffic
was detoured. To defendant Comintan belongs the tolls thus collected from a
portion of the land awarded to him used as a diversionary road by the doctrine of
accretion and his right over the same is ipso jure, there being no need of any
action to possess said addition. It is so because as consistently maintained by the
Supreme Court, an applicant who has complied with all the terms and conditions
which entitle him to a patent for a particular tract of publlic land, acquires a
vested right therein and is to be regarded as equitable owner thereof so that even
without a patent, a perfected homestead or sales application is a property right in
the fullest sense, unaffectcd by the fact that the paramount title is still in the
Government and no subsequent law can deprive him of that vested right The
question of the actual damages suffered by defendant Comintan by reason of the
unaccounted tolls received by plaintiff had already been fully discussed in the
order of September 23, 1970 and the Court is honestly convinced and believes it
to be proper and regular under the circumstances.

Incidentally, the Court stands to correct itself when in the same order, it directed
the execution of he decision with respect to the one-half portion "B" of the
property only after the public sale by the Bureau of Lands, the same being an
oversight, it appearing that the Sales Application of defendant Eleuterio Zamora
had already been recognized and full confirmed by the Supreme Court.

In view thereof, finding the motion filed by plaintiff to be without merit, the Court
hereby denies the same and the order of September 23, 1970 shall remain in full
force subject to the amendment that the execution of the decision with respect to
the one-half portion "B" shall not be conditioned to the public sale by the Bureau
of Lands.

SO ORDERED.7

III

Petitioner thus filed the instant petition, contending that in having issued the Order and Writ of
Execution, respondent Court "acted without or in excess of jurisdiction, and/or with grave abuse
of discretion, because the said order and writ in effect vary the terms of the judgment they
purportedly seek to enforce." He argued that since said judgment declared the petitioner a
possessor in good faith, he is entitled to the payment of the value of the improvements
introduced by him on the whole property, with right to retain the land until he has been fully paid
such value. He likewise averred that no payment for improvements has been made and, instead, a
 7

bond therefor had been filed by defendants (private respondents), which, according to petitioner,
is not the payment envisaged in the decision which would entitle private respondents to the
possession of the property. Furthermore, with respect to portion "B", petitioner alleges that,
under the decision, he has the right to retain the same until after he has participated and lost in
the public bidding of the land to be conducted by the Bureau of Lands. It is claimed that it is only
in the event that he loses in the bidding that he can be legally dispossessed thereof.

It is the position of petitioner that all the fruits of the property, including the tolls collected by
him from the passing vehicles, which according to the trial court amounts to P25,000.00, belongs
to petitioner and not to defendant/private respondent Quirino Comintan, in accordance with the
decision itself, which decreed that the fruits of the property shall be in lieu of interest on the
amount to be paid to petitioner as reimbursement for improvements. Any contrary opinion, in his
view, would be tantamount to an amendment of a decision which has long become final and
executory and, therefore, cannot be lawfully done.

Petitioner, therefore, prayed that: (1) a Writ of Preliminary Injunction be issued enjoining the
enforcement of the Orders of September 23, 1970 and November 18, 1970, and the Writ of
Execution issued thereto, or restoring to petitioner the possession of the property if the private
respondents had been placed in possession thereof; (2) annulling said Orders as well as the Writ
of Execution, dissolving the receivership established over the property; and (3) ordering private
respondents to account to petitioner all the fruits they may have gathered or collected from the
property in question from the time of petitioiier's illegal dispossession thereof.

On January 29, 1971, this Court issued the Writ of Preliminary Injunction. On January 30, 1971,
private respondents filed a Motion for Reconsideration and/or Modification of the Order dated
January 29, 1971. This was followed by a Supplemental Motion for Reconsideration and
Manifestation on February 3, 1971. In the latter motion, private respondents manifested that the
amount of P14,040.96, representing the amount decreed in the judgment as reimbursement to
petitioner for the improvements, plus interest for six months, has already been deposited by them
in court, "with the understanding that said amount shall be turned over to the plaintiff after the
court a quo shall have determined the improvement on Lot 5785-A, and subsequently the
remaining balance of the deposit shall be delivered to the petitioner (plaintiff therein) in the
event he loses the bid for Lot 5785-B in favor of private respondent Eleuterio Zamora."8 The
deposit is evidenced by a certification made by the Clerk of the Court a quo.9 Contending that
said deposit was a faithful compliance with the judgment of the trial court, private respondent
Quirino Comintan prayed for the dissolution of the Writ of Injunction.

It appears that as a consequence of the deposit made by private respondents, the Deputy, Sheriff
of Calauag, Quezon ousted petitioner's representative from the land in question and put private
respondents in possession thereof. 10

On March 10, 1971, petitioner filed a "Comment on Respondents' 'Motion for Reconsideration'
dated January 29, 1971' and 'Supplemental Motion for Reconsideration and Manifestation,'"
contending that the tender of deposit mentioned in the Suplemental Motion was not really and
officially made, "inasmuch as the same is not supported by any official receipt from the lower
court, or from its clerk or cashier, as required by law;" that said deposit does not constitute
 8

sufficient compliance with the judgment sought to be enforced, neither was it legally and validly
made because the requisites for consignation had not been complied with; that the tender of legal
interest for six months cannot substitute petitioner's enjoyment of the fruits of the property as
long as the judgment in Civil Case No. C-90 has not been implemented in the manner decreed
therein; that contrary to the allegations of private respondents, the value of the improvements on
the whole property had been determined by the lower court, and the segregation of the
improvements for each lot should have been raised by them at the opportune moment by asking
for the modification of the decision before it became final and executory; and that the tolls on the
property constituted "civil fruits" to which the petitioner is entitled under the terms of the
decision.

IV

The issue decisive of the controvery is—after the rendition by the trial court of its judgment in
Civil Case No. C-90 on March 22, 1966 confirming the award of one-half of the property to
Quirino Comintan—whether or not petitioner is still entitled to retain for his own exclusive
benefit all the fruits of the property, such as the tolls collected by him from March 1967 to
December 1968, and September 1969 to March 31, 1970, amounting to about P25,000.00. In
other words, petitioner contends that so long as the aforesaid amount of P13,632,00 decreed in
the judgment representing the expenses for clearing the land and the value of the coconuts and
fruit trees planted by him remains unpaid, he can appropriate for his exclusive benefit all the
fruits which he may derive from the property, without any obligation to apply any portion thereof
to the payment of the interest and the principal of the debt.

We find this contention untenable.

There is no question that a possessor in good faith is entitled to the fruits received before the
possession is legally interrupted. 11 Possession in good faith ceases or is legally interrupted from
the moment defects in the title are made known to the possessor, by extraneous evidence or by
the filing of an action in court by the true owner for the recovery of the property. 12 Hence, all the
fruits that the possessor may receive from the time he is summoned in court, or when he answers
the complaint, must be delivered and paid by him to the owner or lawful possessor. 13

However, even after his good faith ceases, the possessor in fact can still retain the property,
pursuant to Article 546 of the New Civil Code, until he has been fully reimbursed for all the
necessary and useful expenses made by him on the property. This right of retention has been
considered as one of the conglomerate of measures devised by the law for the protection of the
possessor in good faith. Its object is to guarantee the reimbursement of the expenses, such as
those for the preservation of the property,14 or for the enhancement of its utility or
productivity.15 It permits the actual possessor to remain in possession while he has not been
reimbursed by the person who defeated him in the possession for those necessary expenses and
useful improvements made by him on the thing possessed. The principal characteristic of the
right of retention is its accessory character. It is accessory to a principal obligation. Considering
that the right of the possessor to receive the fruits terminates when his good faith ceases, it is
necessary, in order that this right to retain may be useful, to concede to the creditor the right to
secure reimbursement from the fruits of the property by utilizing its proceeds for the payment of
 9

the interest as well as the principal of the debt while he remains in possession. This right of
retention of the property by the creditor, according to Scaevola, in the light of the provisions of
Article 502 of the Spanish Civil Code,16 is considered not a coercive measure to oblige the
debtor to pay, depriving him temporarily of the enjoyment of the fruits of his property, but as a
means of obtainitig compensation for the debt. The right of retention in this case is analogous to
a contract of antichresis and it cati be considered as a means of extinguishing the obligation,
inasmuch as the right to retain the thing lasts only for the period necessary to enable the creditor
to be reimbursed from the fruits for the necessary and useful expenses. 17

According to Manresa, the right of retention is, therefore, analogous to that of a pledge, if the
property retained is a movable, and to that of antichresis, if the property held is
immovable.18 This construction appears to be in harmony with similar provisions of the civil law
which employs the right of retention as a means or device by which a creditor is able to obtain
the payment of a debt. Thus, under Article 1731 of the New Civil Code, any person who has
performed work upon a movable has a right to retain it by way of pledge until he is paid.
Similarly, under Article 1914 of the same Code, the agent may retain in pledge the things which
are the object of the agency until the principal effects reimbursement of the funds advanced by
the former for the execution of the agency, or he is indemnified for all damages which he may
have suffered as a consequence of the execution of the agency, provided he is free from fault. To
the same effect, the depositary, under Article 1994 of the same Code, may retain the thing in
pledge until the full payment of what may be due him by reason of the deposit. The usufructuary,
pursuant to Article 612 of the same Code, may retain the property until he is reimbursed for the
amount paid for taxes levied on the capital (Article 597) and tor extraordinary repairs (Article
594).

In all of these cases, the right of retention is used as a means of extinguishing the obligation. As
amply observed by Manresa: "El derecho de retencion, lo hemos dicho, es el derecho de prenda o
el de anticresis constituido por la ley con independencia de las partes." 19 In a pledge, if the thing
pledged earns or produces fruits, income, dividends or interests, the creditor shall compensate
what he receives with those which are owing him.20 In the same manner, in a contract of
antichresis, the creditor acquires the right to receive the fruits of an immovable of his debtor with
the obligation to apply them to payment of the interest, if owing, and thereafter to the principal
of his credit. 21 The debtor can not reacquire enjoyment of the immovable until he has actually
paid what he owes the creditor. 22

Applying the afore-cited principles to the case at bar, petitioner cannot appropriate for his own
exclusive benefit the tolls which he collected from the property retained by him. It was his duty
under the law, after deducting the necessary expenses for his administration, to apply such
amount collected to the payment of the interest, and the balance to the payment of the obligation.

We hold, therefore, that the disputed tolls, after deducting petitioner's expenses for
administration, belong to Quirino Comintan, owner of the land through which the toll road
passed, further considering that the same was on portions of the property on which petitioner had
not introduced any improvement. The trial court itself clarified this matter when it placed the toll
road under receivership. The omission of any mention of the tolls in the decision itself may be
 10

attributed to the fact that the tolls appear to have been collected after the rendition of the
judgment of the trial court.

The records further reveal that earnest efforts have been made by private respondents to have the
judgment executed in the most practicable manner. They deposited in court the amount of the
judgment in the sum of P13,632.00 in cash, subject only to the accounting of the tolls collected
by the petitioner so that whatever is due from him may be set off with the amount of
reimbursement. This is just and proper under the circumstances and, under the law,
compensation or set off may take place, either totally or partially. Considering that petitioner is
the creditor with respect to the judgment obligation and the debtor with respect to the tolls
collected, Comintan being the owner thereof, the trial court's order for an accounting and
compensation is in accord with law. 23

With respect to the amount of reimbursement to be paid by Comintan, it appears that the
dispositive portion of the decision was lacking in specificity, as it merely provided that Comintan
and Zamora are jointly liable therefor. When two persons are liable under a contract or under a
judgment, and no words appear in the contract or judgment to make each liable for the entire
obligation, the presumption is that their obligation is joint or mancomunada, and each debtor is
liable only for a proportionate part of the obligation. 24 The judgment debt of P13,632.00 should,
therefore, be pro-rated in equal shares to Comintan and Zamora.

Regarding Lot 5785-B, it appears that no public sale has yet been conducted by the Bureau of
Lands and, therefore, petitioner is entitled to remain in possession thereof. This is not disputed
by respondent Eleuterio Zamora. 25 After public sale is had and in the event that Ortiz is not
declared the successful bidder, then he should be reimbursed by respondent Zamora in the
corresponding amount for the improvements on Lot 5785-B.

WHEREFORE, in view hereof, the Order of respondent Court of November 18, 1970 is hereby
modified to conform to the foregoing judgment. The Writ of Preliminary Injunction, dated
January 29, 1971, is hereby dissolved. Without special pronouncement as to costs.

G.R. No. L-9989 March 13, 1918

EDUARDO CUAYCONG, ET AL., plaintiffs-appellees, vs.
RAMONA BENEDICTO, ET AL., defendants-appellants.

SYLLABUS
1. ROADS AND STREETS; EASEMENTS; REGISTRATION OF LAND; TORRENTS
TITLE. — Unless is made to appear upon the certificate of title that the boundaries of any given
highway, way, or private way upon the land have been determined, the right to such highway,
way, or private way is unaffected by the registration of the title.

2. REALTY; ENCUMBRANCES; PRESUMPTIONS. — Real property is presumed to be free

from liens and encumbrances.

3. ROADS AND STREETS; UPKEEP BY GOVERNMENT; PRESUMPTION. — Where it

appears that a road has been kept in repair by private enterprise and that the Government has not
 11

contributed to the cost of its construction or maintenance, such road will be presumed to be
private.
4. ID; PRESUMPTION; USER; TOLERANCE; PUBLIC USE. — The mere fact that a tract of
land has been used for a long time as a road will not warrant the presumption that it has been
dedicated to the public.

5. REALITY; PRESCRIPTION; POSSESSION; TOLERANCE . — Possession, to constitute the

foundation of a perspective right, must be possession under claim of title. Acts of a possessory
character performed by one who holds by the mere tolerance of the owner cannot be made the
basis of the perspective acquisition of rights.

6. IMMEMORIAL POSSESSION; EVIDENCE. — Under the Spanish law the proof of

immemorial possession required something more than the memory of living witnesses.

7. EASEMENTS OF WAY; USER; TOLERANCE; PRESCRIPTION. — The permissive use by

an adjacent proprietor of a road or path over the land of another no matter how long continued,
will not create an easement of way prescription.

DECISION
FISHER, J.:
The issues in this case relate to the right of plaintiffs to make use of two roads existing on
the Hacienda Toreno, a tract of land in the municipality of Victorias, Negros Occidental, the
property of the defendants, Blasa Benedicto and Ramona Benedicto. One of these roads is
referred to in the proceedings as the Nanca-Victorias road and the other as the Dacuman —
Toreno road. The Court of First Instance held that those of the plaintiffs who claimed to be
entitled to make use of the Dacuman — Toreno road had failed to establish the asserted right,
and dismissed the action as to them. From this decision they appealed to this court but, their brief
not having been filed within the time prescribed by the rules, their appeal was dismissed, on
motion of defendants, by resolution dated February 14, 1916. Consequently, the issues presented
on this appeal are limited to those which relate to the rights of the parties with respect to the
Nanca-Victorias road, and the determination of the correctness of the decision of the court
concerning that part of the controversy submitted to its decision.

The allegations in the complaint with respect to the Nanca-Victorias road are that the
appellees, Eduardo Cuaycong, Lino Cuaycong, and Eulalio Dolor, are the owners of a group of
haciendas situated between the southern boundary of the Hacienda Toreno and the barrio of
Nanca, of the municipality of Seravia, and that the appellees Silverio Ginoo, Gervasio Ascalon,
and Juan Ledesma, are the lessees of part of said haciendas; that more than twenty years the
appellees and their predecessors in interest have made use of the Nanca-Victorias road, which
crosses the Hacienda Toreno, openly, publicly, and continiously, with the knowledge of the
owners of the said hacienda, for the purpose of conveying the products of their haciendas to the
town of Victorias and to the landing place there situated, and for the purpose of transporting
supplies from those points to their haciendas, making use of the said road by means of carts,
carabaos, and other usual means of transportation; that there is no outlet to a public road from the
hacienda occupied by these plaintiffs, the only road and way by which the products of the
plaintiffs' property can be taken to the town of Victorias and to the landing place there being
 12

across the Hacienda Toreno by the road marked on the plan attached to the complaint; that on the
fifteenth day of November, 1912, the defendants closed the road in question at the point at which
it crosses the Hacienda Toreno, and refused to permit plaintiffs to continue using it; that
plaintiffs were about to commence to grind their crop of sugar cane, and that, if prevented from
transporting their sugar across the Hacienda Toreno to their point of embarkation, would suffer
damages difficult to estimate. Upon these averments of fact the plaintiffs prayed for a judgment
that they are entitled to use the road in question as they have been using it in the past, and that a
perpetual injunction be issued against plaintiffs restraining them from impending such use. Upon
the filing of the complaint, plaintiffs moved the court to issue a preliminary injunction
restraining defendants from interfering with the use of the road during the pendency of the suit,
which motion was granted by the court.

Defendants in their answer put in issue all the special averments of the complaint, as
above set forth, and by way of counterclaim and special defense, averred that the road crossing
the Hacienda Toreno, over which plaintiffs claim the right of passage, is the private property of
defendants; and, further, that they have not refused plaintiffs permission to pass over this road
but have required them to pay toll for the privilege of doing so. Defendants also claimed
damages for the use of the road by plaintiffs during the pendency of the suit, alleging that the
preliminary injunction had been improvidently issued upon false statements contained in the
verified complaint filed by plaintiffs.

The case was tried in July, 1913. The court on December 8, 1913, rendered judgment,
dismissing the complaint with respect to the plaintiffs Felix Suarez, Probo Jereza, Enrique
Azcona, and Melecio Pido, these being the plaintiffs who claimed the right to use the Dacuman
— Toreno road. With respect to the Nanca-Victorias road, the court held that it was a public
highway over which the public had acquired a right of use by immemorial prescription, and
ordered the issuance of a perpetual injunction against plaintiffs, restraining them from interfering
in any manner with the use of the said road.

The conclusion of the court with respect to the facts affecting the Nanca-Victorias road are as
follows:
Turning to a consideration of the evidence relative to the Nanca-Victorias road we
find incontestable proof that it has been in existence for at least forty years. That
the hacenderos located in the southwestern section of Victorias and the public
generally passed over it freely and that it was used for all purposes of
transportation of farm produce, animals, etc. and by pedestrians as well as
carromatas and other conveyances without break or interruption until two or three
years ago when the defendants announced that the road was private and that those
who wished to pass over it with sugar carts would be obliged to pay a toll of ten
centavos — all other vehicles, it appears, were permitted to pass free charge. This
arrangement seems to have existed during the years of 1911 and 1912 and part of
1913, the money being collected apparently from some hacenderos and not from
others. There is some reason to believe from the evidence presented by defendants
themselves that the practice of making these payments to hacienda 'Toreno'
originated in an attempt to raise a fund for the repair of the road. There is no
evidence that any other hacenderos between Nanca and Victorias or any other
 13

person made any attempt to close the road or to collect toll. On the contrary the
road appears to have been repaired by the hacenderos when it needed repairing
and everyone used it on equal terms until the defendants in 1910 or 1911
interposed the objection that the road in dispute was private. This we think is a
fair deduction from the evidence and although it is asserted that toll was collected
at an earlier date by the late Leon Montinola, brother of the defendant Ruperto
Montinola, there is no tangible evidence that this was so and that toll has been
paid only during the years of 1911, 1912, and part of 1913.

The question presented by the assignment of error are in effect:

(a) Is the Nanca-Victorias road at the point at which it traverses the Hacienda
Toreno a public highway or not?
(b) If it be held that the road in question is not a public highway, have plaintiffs
proven their acquisition of an easement of way over the Hacienda Toreno at the
point traversed by the road in question?

The trial judge, in holding that the road in question is public, bases in conclusion upon
the fact, which he deems to have been proven, that the road has been in existence "from time
immemorial," and had been "continiously used as a public road . . . and open to public as such
for thirty or forty years . . . until . . . the defendants undertook to claim it as private and to collect
toll for the passage of carts." (Bill of Exceptions, p. 56.) There is no doubt that for the past thirty
or forty years a road has existed between the former site of the town of Victorias and the barrio
of Nanca, of the municipality of Seravia, and that this road crosses defendants' hacienda. It is
also true that during this period the plaintiffs and their predecessors in the ownership of the
hacienda now held by them have made use of this road for the purpose of going and coming from
their haciendas to the town of Victorias; but the question is whether this use was limited to the
plaintiffs, and their tenants and employees, or whether it was, as held by the lower court, a use
enjoyed by the public in general. Plaintiffs produced only two witnesses, Segundo de Leon (stet.
notes, pp. 21-22) and Eduardo Cuaycong, (stet. notes, pp. 27-33) to testify as regards the use of
the Nanca-Victorias road. Several other witnesses testified on behalf of plaintiffs, but their
testimony relates to the Dacuman — Toreno road, which is not involved in this appeal. We have
carefully read the testimony of the witnesses Leon and Cuaycong, given upon their direct and
cross examination, but we have been unable to find that either of them has testified that the road
in question was ever used by the public in general. These witnesses testified with regard to the
use of the road by the present and former owners and occupants of the estates of Bacayan,
Esperanza, Alcaigan, Pusot, and Dolores for the transportation of the products of these estates to
the town of Victorias, and of supplies and agricultural implements from Victorias to the
haciendas, but neither of them testified expressly that any other use had been made of said road.
Nevertheless, it may be reasonably inferred from the testimony of these witnesses that all
persons having occasion to travel between Victorias and the haciendas of Bacayan, Esperanza,
Alacaigan, Pusot, and Dolores, whether or not they were owners, tenants, or employees of said
estates, made use of the road now in dispute, crossing the Hacienda Toreno, and to this limited
extent it may be said that the public made use of the road, but there is nothing in the evidence to
indicate that the so — called public use extended beyond this.
 14

Apart from the fact that there is no direct evidence to support the finding of the court
concerning the general public use of the road in dispute, the record contains data strongly tending
to show that when the complaint was filed plaintiffs did not contend that the road was a public
highway, but merely contended that they had acquired by prescription an easement of way across
the Hacienda Toreno. For example, the action is entitled an "action concerning a right of away."
(Bill of Exceptions, pp. 64 and 65.) It is not averred in the complaint that the road in question
was used by the public. On the contrary, it is averred that it was used by the plaintiffs and their
predecessors. The averment in paragraph 8 of the complaint that the plaintiffs have no other
"outlet to a public road" than that which they have been accustomed to used by going across the
defendants' hacienda for the purpose of going to the town of Victorias also shows that when they
commenced this action they had in mind the provisions of articles 564, et seq. of the Civil Code,
which relate to the method of establishing the compulsory easement of way. The owners of an
existing easement, as well as those whose properties are adjacent with a public road, have no
occasion to invoke these provisions of the Code, which relate to the creation of new rights, and
not the enforcement of rights already in existence.

It is true in the opening statement made to the court, counsel for plaintiffs, who was not
the same attorney by whom the complaint was signed, stated that plaintiffs contend that the road
in question is public, but as no evidence was introduced tending to establish this contention
concerning the Nanca — Victorias road, counsel for defendants had no occasion to object upon
the ground that such testimony was not relevant to the averments of the complaint. No evidence
was taken to indicate that at any time since the road in question has been in existence any part of
the expense of its upkeep has been defrayed by the general government, the province, or the
municipality. The trial judge said upon this subject:

It is true that whatever repairs were made on the road were made irregularly. The
municipality of Victorias had no funds to devote to the construction and repair of
roads, and the upkeep of the road depending entirely therefore on the initiative of
the persons who used it, was attended to only at such times as repairs were
absolutely necessary. (Bill of Exceptions, p. 49.)

The court also held that it appears from the government grant issued in 1885 to the
original owner of the hacienda adjacent to the Hacienda Toreno on its western boundary, that the
Nanca-Victorias road at that time separated that estate from the Jalbuena Hacienda, and that
these facts constitute "circumstantial evidence that the road was in existence in 1885." We have
examined the document to which the court refers, and we agree that the road in question existed
in 1885; but we do not believe that the document in question proves that the road was public
highway.

Another circumstance established by the evidence, and which is some importance in the
determination of this issue, is that although the defendants closed the Nanca-Victorias road in the
month of February, 1911, and since that time have collected toll from persons passing over it
with carts loaded with sugar, including those belonging to several of the plaintiffs, nothing was
done by them to prevent the continuation of this restriction until December, 1912, when this
action was commenced. It is natural to assume that if plaintiffs had considered that the road in
question was public, they would have protested immediately against the action of the defendants,
 15

and would have either commenced a civil action, as they subsequently did, or would have
brought about a prosecution under section 16 of Act No. 1511.

Upon the evidence taken and admissions contained in the pleadings and those made
during the course of the trial we consider that the following findings are warranted:

1. The town of Victorias has always been the shipping point of the products of the
Hacienda Toreno, and of the haciendas of appellees, as well as the place from
which supplies were brought to those properties.

2. For thirty or forty years before the commencement of the suit a wagon road,
herein called the Nanca-Victorias road, has been in existence, connecting the
haciendas of appellees with the town of Victorias, and this road traverses the
property of defendants. Since the removal of the town of Victorias to a new site
the Nanca-Victorias road has been used by appellees in travelling between their
properties and the provincial road which crosses the Hacienda Toreno from east to
west.

3. No public funds have at any time been expended on the construction or upkeep
of the Nanca-Victorias road, but from time to time work has been done on it by
the laborers employed by the present and former owners of the Hacienda Toreno
and the haciendas owned by the appellees and their predecessors in title.

4. The Nanca-Victorias wagon road, including that part of it which crosses the
Hacienda Toreno, has for thirty-five or forty years been used by the appellees and
their predecessors in title for the transportation, by the usual means, of the
products of their estates to their shipping points in or near the town of Victorias,
and the transportation to their estates of all supplies required by them, and has
been used by all persons having occasion to travel to and from all or any of the
estates now owned by the appellees.

5. The use of the Nanca-Victorias road in the manner and by the person above
mentioned was permitted without objection by the owners of the Hacienda Toreno
until the year 1911, when they closed it, and began charging a toll of 5 centavos
for each cart which passed over the road, including carts belonging to the
appellants, until restrained from continuing to do so by the preliminary injunction
granted in this case.

6. The Nanca-Victorias road constitutes the only outlet from the estates of
appellants to the nearest public road which is the provincial road which crosses
the Hacienda Toreno from east to west.

Upon these facts the questions of law to be decided are:

(a) Is the Nanca-Victorias road a public highway?
 16

(b) If the Nanca-Victoria road, or that part of it which crosses the Hacienda
Toreno, is not a public highway, is it subject to a private easement of way in favor
of the appellees?

The defendants are the owners of the Hacienda Toreno under a Torrens title issued in
accordance with the Land Registration Act, conferring to them its absolute ownership, subject
only to the limitations of paragraph four of section 39 of said Act. It is admitted that there is no
annotation on the certificate of title regarding the road here in question, either as a "public road"
or as a "private way established by law," and, therefore, the questions presented by this appeal
are to be determined precisely as they would be had the Hacienda Toreno not been brought under
the operation of the Land Registration Act. The plaintiffs being the owners of the property in
question, the presumption of law is that it is free from any lien or encumbrance whatever, and the
burden therefore rests upon plaintiffs to establish the contrary. As this court said in case of Fabie
vs. Lichauco and the children of Francisco L. Roxas (11 Phil. Rep., 14):

It is settled of law that a property is assumed to be free from all encumbrance

unless the contrary is proved.

There is admittedly no evidence to show that the land occupied by the road here in
question was any time conveyed to the general government or any of its political subdivisions by
the present or any of the former owners of the Hacienda Toreno. There is no evidence, even
remotely, tending to show that the road existed prior to the time when the property now known
as the Hacienda Toreno passed from the State into private ownership. The record fails to disclose
any evidence whatever tending to show that the Government has at any time asserted any right or
title in or to the land occupied by the road, or that it has incurred any expense whatever in its
upkeep or construction. The Civil Code defines as public roads those which are constructed by
the State (art. 339), and as provincial and town roads those "the expense of which is borne by
such towns or provinces." (Civil Code, art. 344.) While it is not contended that this definition is
exclusive, it does show that during the Spanish regime, under normal conditions, roads which
were public were maintained at the public expense, and that the fact that at no time was any
expense incurred by the Government with respect to the road here in question tends strongly to
support the contention of the defendants that it is private way.

During the Spanish regime the law required each able to bodied citizen not within one of
the exempted classes to work a certain number of days in each year, his labor to be devoted to
"services of general utility" to the municipality of his residence. (Royal Decree of July 11, 1883,
art. 5.) Under this Decree and the Regulations for its enforcement (Berriz, vol. 11, 258) the
greater part of the work on the public road of the Islands was accomplished. Had the road here in
question been a public way, it is reasonable to assume that the polistas of the town of Victorias
would have been employed in maintaining it. It is most significant that no mention is made in the
testimony of the plaintiffs' witnesses of any work of this character having been done on the road
at any time, particularly in view of the fact that their attention was drawn to this point. (Stet.
note, pp. 8, 10, 11, 12, 13 and 14.)

The evidence shows that the repairs were made by the owners of the estates benefited by
the road, and by their laborers, as a pure voluntary act for their own convenience and interest.
 17

There being no evidence of a direct grant to the government of the land occupied by the road in
question or that any Government funds or labor were expended upon it, the question presents
itself whether the use to which the road has been put was such as to justify the conclusion of the
lower court that it has become public property. There being no evidence that the original use of
the road by plaintiffs' predecessors was based upon any grant of the fee to the road or of an
easement of way, or that it began under the assertion of a right on their part, the presumption
must be that the origin of the use was the mere tolerance or license of the owners of the estates
affected.

This being so, has that merely permissive use been converted into a title vested in the
public at large, or in the plaintiffs by reason of their ownership of the land beneficially affected
by the use?

Had it been shown that the road had been maintained at the public expense, with the
acquiescence of the owners of the estates crossed by it, this would indicate such adverse
possession by the government as in course of time would ripen into title or warrant the
presumption of a grant or of a dedication. But in this case there is no such evidence, and the
claims of plaintiffs, whether regarded as members of the public asserting a right to use the road
as such, or as persons claiming a private easement of way over the land of another must be
regarded as resting upon the mere fact of user.

If the owner of a tract of land, to accommodate his neighbors or the public in general,
permits them to cross his property, it is reasonable to suppose that it is not his intention, in so
doing, to divest himself of the ownership of the land so used, or to establish an easement upon it
and that the persons to whom such permission, tacit or express, is granted, do not regard their
privilege of use as being based upon an essentially revocable license. If the use continues for a
long period of time, no change being made in the relations of the parties by any express or
implied agreement, does the owner of the property affected lose his right of revocation? Or,
putting the same question in another form, does the mere permissive use ripen into title by
prescription?

It is a fundamental principle of the law in this jurisdiction concerning the possession of

real property that such possession is not affected by acts of a possessory character which are
"merely tolerated" by the possessor, or which are due to his license (Civil Code, arts. 444 and
1942). This principle is applicable not only with respect to the prescription of the dominium as a
whole, but to the prescription of right in rem. In the case of Cortes vs. Palanca Yu Tibo (2 Phil.
Rep., 24, 38), the Court said:
The provision of article 1942 of the Civil Code to the effect that acts which are
merely tolerated produce no effect with respect to possession is applicable as
much to the prescription of real rights as to the prescription of the fee, it being a
glaring and self-evident error to affirm the contrary, as does the appellant in his
motion papers. Possession is the fundamental basis of the prescription. Without it
no kind of prescription is possible, not even the extraordinary. Consequently, if
acts of mere tolerance produce no effect with respect to possession, as that article
provides, in conformity with article 444 of the same Code, it is evident that they
can produce no effect with respect to prescription, whether ordinary or
 18

extraordinary. This is true whether the prescriptive acquisition be of a fee or of

real rights, for the same reason holds in one and the other case; that is, that there
has been no true possession in the legal sense of the word. (See also Ayala de
Roxas vs. Maglonso, 8 Phil Rep., 745; Municipality of Nueva Caceres vs.
Director of Lands and Roman Catholic Bishop of Nueva Caceres, 24 Phil. Rep.,
485.)

Possession, under the Civil Code, to constitute the foundation of a prescriptive right, must
be possession under claim of title (en concepto de dueno), or use the common law equivalent of
the term, it must be adverse. Acts of a possessory character performed by one who holds by mere
tolerance of the owner are clearly not en concepto de dueño, and such possessory acts, no matter
how long so continued, do not start the running of the period of prescription.

A similar question was presented in the case of the Roman Catholic Archbishop of
Manila vs. Roxas (22 Phil. Rep., 450), in which case it appeared that Roxas, the owner of
the Hacienda de San Pedro Macati, claimed a right of way across the property of the church to
Calle Tejeron, a public street of the town of San Pedro Macati. The proof showed that the road in
question had been used by the tenants of the Hacienda de San Pedro Macati for the passage of
carts in coming and leaving the hacienda "from time immemorial," and further that the road had
been used for time out of mind, not only by the tenants of the hacienda but by many other people
in going and coming from a church half-way between the boundary line of the hacienda and
Calle Tejeron. The court held that the facts did not give rise to a prescriptive right of easement in
favor of the owner of the hacienda, upon the ground that such use "is to be regarded as
permissive and under an implied license, and not adverse. Such a use is not inconsistent with the
only use which the proprietor thought fit to make of the land, and until the appellee thinks proper
to inclose it, such use is not adverse and will not preclude it from enclosing the land when other
views of its interest render it proper to do so. And though an adjacent proprietor may make such
use of the open land more frequently than another, yet the same rule will apply unless there be
some decisive act indicating a separate and exclusive use under a claim of right. A different
doctrine would have a tendency to destroy all neighborhood accommodations in the way of
travel; for if it were once understood that a man, by allowing his neighbor to pass through his
farm without objection over the pass-way which he used himself, would thereby, after the lapse
of time, confer a right on such neighbor to require the pass-way to be kept open for his benefit
and enjoyment, a prohibition against all such travel would immediately ensue."

The decisions of the supreme court of Louisiana, a State whose jurisdiction is based, as is
our own, upon the Roman Law, and whose Civil Code is taken, as is our own,. very largely from
the Code of Napoleon, are particularly persuasive in matters of this character. In the case of
Torres vs. Fargoust (37 La. Ann., 497), cited by appellants in their brief, in which the issues were
very similar to those of the present case, the court held that—

The mere fact that for thirty or forty years the public was permitted to pass over
this ground would not of itself constitute the place a locus publicus . . . dedication
must be shown by evidence so conclusive as to exclude all idea of private
ownership; . . . such dedication cannot be inferred from ere user alone; . . . no one
 19

is presumed to give away his property. The burden is on him who avers a
divestiture of ownership to prove it clearly.

We are, therefore, of the opinion, and so hold, that upon the facts established by the
evidence it does not appear that the road in question is a public road or way. We are also of the
opinion that plaintiffs have failed to show that they have acquired by prescription a private right
of passage over the lands of defendants. The supreme court of Spain has decided that under the
law in force before the enactment of the Civil Code, the easement of way was discontinuous, and
that while such an easement might be acquired by prescription, it must be used in good faith, in
the belief of the existence of the right, and such user must have been continuous from time
immemorial. (Judgment of December 15, 1882.) In the appealed decision the court below says
that the plaintiffs and their predecessors made use of the road in question "from time
immemorial," but there is no evidence whatever in the record to sup[port this finding, although it
is true that the evidence shows the existence of the road and its use by the plaintiffs and their
predecessors for thirty-five or forty years. Speaking of the evidence required under the present
Code of Civil Procedure to show immemorial use of an easement, this court said in the case of
Ayal de Roxas vs. Case (8 Phil. Rep., 197, 198):

Third Partida in title 31, law 15 . . . says that discontinues servitudes . . . must be
proved by usage or a term so long that men can not remember its commencement.
. . . In many judgments the supreme court of Spain has refused to accept proof of
any definite number of years as a satisfaction of this requirement of the law. . . .
We are of the opinion that in order to establish a right of prescription [title of
prescription based upon use from time immemorial] something more required
than memory of living witnesses. Whether this something should be the
declaration of persons long dead, repeated by those who testify, as exacted by the
Spanish law, or should be the common reputation of ownership recognized by the
Code of Procedure, it is unnecessary for us to decide. On either theory the
appellant has failed in his proof . . . .

The same thing may be said in this case. Witnesses have testified that they have known
the road for a certain period of years, beginning at a time prior to the enactment of the Civil
Code, but no evidence has been made to prove immemorial use by either of the means of proof
mentioned in this decision cited, nor is immemorial user averred in the complaint as the basis of
the right. It is evident, therefore, that no vested right by user from time immemorial had been
acquired by plaintiffs at the time the Civil Code took effect. Under that Code (art 539) no
discontinuous easement could be acquired by prescription in any event. Assuming, without
deciding, that this rule has been changed by the provisions of the present Code of Civil
Procedure relating to prescription, and that since its enactment discontinuous easement may be
required by prescription, it is clear that this would not avail plaintiffs. The Code of Civil
Procedure went into effect on October 1, 1901. The term of prescription for the acquisition of
rights in real estate is fixed by the Code (sec. 41) at ten years. The evidence shows that in
February, 1911, before the expiration of the term of ten years since the time the Code of Civil
Procedure took effect, the defendants interrupted the use of the road by the plaintiffs by
constructing and maintaining a toll gate on it and collecting toll from persons making use of it
with carts and continued to do so until they were enjoined by the granting of the preliminary
 20

injunction by the trial court in December, 1912. Our conclusion is, therefore, that the plaintiffs
have not acquired by prescription a right to an easement of way over the defendant's property;
that their use of the Nanca-Victorias road across the Hacienda Toreno was due merely to the tacit
license and tolerance of the defendants and their predecessors in title; that license was essentially
revokable; and that, therefore, the defendants were within their rights when they closed the road
in 1911.

While in the allegations from the plaintiffs' complaint it might be inferred that it was their
purpose to seek to impose upon the defendants the easement to which arts. 564 et seq. of the
Civil Code relate, that purpose was evidently abandoned, and the case was tried upon a wholly
different theory. Proof was offered to show that the right of passage across defendants' land is
necessary to enable plaintiffs to get their products to market, but there was no offer on their part
to pay defendants the indemnity required by section 564.

For the reasons stated the judgment of the court below is reversed, the injunction issued
against defendants is allowed on this appeal. So ordered.

THIRD DIVISION

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

JAIME LEDESMA, Petitioner, v. THE HONORABLE COURT OF APPEALS and

CITIWIDE MOTORS, INC., Respondents.

Ledesma, Saludo & Associates for Petitioner.

Magtanggol C. Gunigundo for Private Respondent.

SYLLABUS

1. CIVIL LAW; POSSESSION; REQUISITES TO MAKE POSSESSION OF MOVABLE

PROPERTY EQUIVALENT TO TITLE. — It is quite clear that a party who (a) has lost any
movable or (b) has been unlawfully deprived thereof can recover the same from the present
possessor even if the latter acquired it in good faith and has, therefore, title thereto for under the
first sentence of Article 559, such manner of acquisition is equivalent to a title. There are three
(3) requisites to make possession of movable property equivalent to title, namely: (a) the
possession should be in good faith; (b) the owner voluntarily parted with the possession of the
thing; and (c) the possession is in the concept of owner. (TOLENTINO, A.M., Civil Code of the
Philippines, Vol. II, 1983 ed., 275-276, citing 2-II Colin and Capitant 942; De Buen: Ibid., 1009,
2 Salvat 165; 4 Manresa 339). Undoubtedly, one who has lost a movable or who has been
unlawfully deprived of it cannot be said to have voluntarily parted with the possession thereof.
This is the justification for the exceptions found under the second sentence of Article 559 of the
Civil Code.
 21

2. CIVIL LAW; SPECIAL CONTRACTS; CONTRACT OF SALE; ABSENCE OF

CONSIDERATION; EFFECT THEREOF. — There was a perfected unconditional contract of
sale between private respondent and the original vendee. The former voluntarily caused the
transfer of the certificate of registration of the vehicle in the name of the first vendee — even if
the said vendee was represented by someone who used a fictitious name — and likewise
voluntarily delivered the cars and the certificate of registration to the vendee’s alleged
representative Title thereto was forthwith transferred to the vendee. The subsequent dishonor of
the check because of the alteration merely amounted to a failure of consideration which does not
render the contract of sale void, but merely allows the prejudiced party to sue for specific
performance or rescission of the contract, and to prosecute the impostor for estafa under Article
315 of the Revised Penal Code.

DECISION

DAVIDE, JR., J.:

Petitioner impugns the Decision of 22 September 1988 of respondent Court of Appeals 1 in

C.A.-G.R. CV No. 05955 2 reversing the decision of then Branch XVIII-B (Quezon City) of the
then Court of First Instance (now Regional Trial Court) of Rizal in a replevin case, Civil Case
No. Q-24200, the dispositive portion of which reads:chanroblesvirtualawlibrary

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

which was supplemented by a Final Order dated 26 June 1980, the dispositive portion of which
reads:jgc:chanrobles.com.ph

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

In conformity with the rules adverted to, this final order shall form part of the judgment of this
Court on September 5, 1979.

The motion for reconsideration of the judgment filed by the plaintiff is hereby DENIED for lack
of merit. No costs at this instance." 4
 22

The decision of the trial court is anchored on its findings that (a) the proof on record is not
persuasive enough to show that defendant, petitioner herein, knew that the vehicle in question
was the object of a fraud and a swindle 5 and (b) that plaintiff, private respondent herein, did not
rebut or contradict Ledesma’s evidence that valuable consideration was paid for it.

The antecedent facts as summarized by the respondent Court of Appeals are as

follows:jgc:chanrobles.com.ph

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

a) One (1) 1977 Isuzu Gemini, 2-door Model PF 50ZIK, with Engine No. 751214 valued at
P42,200.00; and

b) One (1) 1977 Holden Premier Model 8V41X with Engine No. 198-1251493, valued at
P58,800.00.

Said purchases are evidenced by Invoices Nos. 3054 and 3055, respectively. (See Annexes A and
B).

On September 28, 1977, plaintiff-appellant delivered the two-above described motor vehicles to
the person who represented himself as Jojo Consunji, allegedly the son of the purported buyers
Rustico T. Consunji, and said person in turn issued to plaintiff-appellant Manager’s Check No.
066-110-0638 of the Philippine Commercial and Industrial Bank dated September 28, 1977 for
the amount of P101,000.00 as full payment of the value of the two (2) motor vehicles.

However, when plaintiff-appellant deposited the said check, it was dishonored by the bank on the
ground that it was tampered with, the correct amount of P101.00 having been raised to
P101,000.00 per the bank’s notice of dishonor (Annexes F and G).

On September 30, 1977, plaintiff-appellant reported to the Philippine Constabulary the criminal
act perpetrated by the person who misrepresented himself as Jojo Consunji and in the course of
the investigation, plaintiff-appellant learned that the real identity of the wrongdoer/impostor is
Armando Suarez who has a long line of criminal cases against him for estafa using this similar
modus operandi.

On October 17, 1977, plaintiff-appellant was able to recover the Holden Premier vehicle which
was found abandoned somewhere in Quezon City.

On the other hand, plaintiff-appellant learned that the 1977 Isuzu Gemini was transferred by
Armando Suarez to third persona and was in the possession of one Jaime Ledesma at the time
plaintiff-appellant instituted this action for replevin on November 16, 1977.
 23

In his defense, Jaime Ledesma claims that he purchases (sic) and paid for the subject vehicle in
good faith from its registered owner, one Pedro Neyra, as evidenced by the Land Transportation
Commission Registration Certificate No. RCO1427249.chanrobles.com.ph : virtual law library

After posting the necessary bond in the amount double the value of the subject motor vehicle,
plaintiff-appellant was able to recover possession of the 1977 Isuzu Gemini as evidenced by the
Sheriff’s Return dated January 23, 1978." 6

After trial on the merits, the lower court rendered the decision and subsequently issued the Final
Order both earlier adverted to, which plaintiff (private respondent herein) appealed to the
respondent Court of Appeals; it submitted the following assignment of
errors:jgc:chanrobles.com.ph

"The trial court erred.

IN HOLDING THAT THE DEFENDANT IS ENTITLED TO THE POSSESSION OF THE

CAR;

II

IN HOLDING THAT THE DEFENDANT IS AN INNOCENT PURCHASER IN GOOD

FAITH AND FOR VALUE;

III

IN RULING THAT THE PLAINTIFF SHOULD RETURN THE CAR TO DEFENDANT,

DISMISSING ITS CLAIM FOR DAMAGES, AND GRANTING DEFENDANT P35,000.00
DAMAGES RECOVERABLE AGAINST THE REPLEVIN BOND AND P101,000.00
DAMAGES FOR ALLEGED WRONGFUL SEIZURE;

IV

IN RENDERING THE DECISION DATED SEPTEMBER 3, 1979 AND THE FINAL ORDER
DATED JUNE 26, 1980." 7

In support of its first and second assigned errors, private respondent cites Article 559 of the Civil
Code which provides:jgc:chanrobles.com.ph

"ARTICLE 559. The possession of movable property acquired in good faith is equivalent to a
title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof, may
recover it from the person in possession of the same.
 24

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."cralaw virtua1aw library

Without in any way reversing the findings of the trial court that herein petitioner was a buyer in
good faith and for valuable consideration, the respondent Court ruled
that:chanroblesvirtualawlibrary

"‘Under Article 559, Civil Code, the rule is to the effect that if the owner has lost a thing, or if he
has been unlawfully deprived of it, he has a right to recover it not only from the finder, thief or
robber, but also from third persons who may have acquired it in good faith from such finder,
thief or robber. The said article establishes two (2) exceptions to the general rule of
irrevendicability (sic), to wit: when the owner (1) has lost the thing, or (2) has been unlawfully
deprived thereof. In these cases, the possessor cannot retain the thing as against the owner who
may recover it without paying any indemnity, except when the possessor acquired it in a public
sale.’ (Aznar v. Yapdiangco, 13 SCRA 486).

Put differently, where the owner has lost the thing or has been unlawfully deprived thereof, the
good faith of the possessor is not a bar to recovery of the movable unless the possessor acquired
it in a public sale of which there is no pretense in this case. Contrary to the court a assumption,
the issue is not primarily the good faith of Ledesma for even if this were true, this may not be
invoked as a valid defense, if it be shown that Citiwide was unlawfully deprived of the vehicle.

In the case of Dizon v. Suntay, 47 SCRA 160, the Supreme Court had occasion to define the
phrase unlawfully deprived, to wit:chanrob1es virtual 1aw library

‘. . . it extends to all cases where there has been no valid transmission of ownership including
depositary or lessee who has sold the same. It is believed that the owner in such a case is
undoubtedly unlawfully deprived of his property and may recover the same from a possessor in
good faith.’

x x x

In the case at bar, the person who misrepresented himself to be the son of the purported buyer,
Rustico T. Consunji, paid for the two (2) vehicles using a check whose amount has been altered
from P101.00 to P101,000.00. There is here a case of estafa. Plaintiff was unlawfully deprived of
the vehicle by false pretenses executed simultaneously with the commission of fraud (Art. 315
2(a) R.P.C.). Clearly, Citiwide would not have parted with the two (2) vehicles were it not for the
false representation that the check issued in payment thereupon (sic) is in the amount of
P101,000.00, the actual value of the two (2) vehicles." 8

In short, said buyer never acquired title to the property; hence, the Court rejected the claim of
herein petitioner that at least, Armando Suarez had a voidable title to the property.

His motion for reconsideration having been denied in the resolution of the respondent Court of
 25

12 December 1988, 9 petitioner filed this petition alleging therein that:chanrobles

virtualawlibrary chanrobles.com:chanrobles.com.ph

"A

THE HONORABLE COURT OF APPEALS ERRED IN APPLYING ARTICLE 559 OF THE

NEW CIVIL CODE TO THE INSTANT CASE DESPITE THE FACT THAT PRIVATE
RESPONDENT CITIWIDE MOTORS, INC. WAS NOT UNLAWFULLY DEPRIVED OF
THE SUBJECT CAR, AS IN FACT CITIWIDE VOLUNTARILY PARTED WITH THE
TITLE AND POSSESSION OR (sic) THE SAME IN FAVOR OF ITS IMMEDIATE
TRANSFEREE.

THE FACTUAL MILIEU OF THE INSTANT CASE FALLS WITHIN THE OPERATIVE
EFFECTS OF ARTICLES 1505 AND 1506 OF THE NEW CIVIL CODE CONSIDERING
THAT THE IMMEDIATE TRANSFEREE OF THE PRIVATE RESPONDENT CITIWIDE
MOTORS, INC., ACQUIRED A VOIDABLE TITLE OVER THE CAR IN QUESTION
WHICH TITLE WAS NOT DECLARED VOID BY A COMPETENT COURT PRIOR TO THE
ACQUISITION BY THE PETITIONER OF THE SUBJECT CAR AND ALSO BECAUSE
PRIVATE RESPONDENT, BY ITS OWN CONDUCT, IS NOW PRECLUDED FROM
ASSAILING THE TITLE AND POSSESSION BY THE PETITIONER OF THE SAID CAR."
10

There is merit in the petition. The assailed decision must be reversed.

The petitioner successfully proved that he acquired the car in question from his vendor in good
faith and for valuable consideration. According to the trial court, the private respondent’s
evidence was not persuasive enough to establish that petitioner had knowledge that the car was
the object of a fraud and a swindle and that it did not rebut or contradict petitioner’s evidence of
acquisition for valuable consideration. The respondent Court concedes to such findings but
postulates that the issue here is not whether petitioner acquired the vehicle in that concept but
rather, whether private respondent was unlawfully deprived of it so as to make Article 559 of the
Civil Code apply.

It is quite clear that a party who (a) has lost any movable or (b) has been unlawfully deprived
thereof can recover the same from the present possessor even if the latter acquired it in good
faith and has, therefore, title thereto for under the first sentence of Article 559, such manner of
acquisition is equivalent to a title. There are three (3) requisites to make possession of movable
property equivalent to title, namely: (a) the possession should be in good faith; (b) the owner
voluntarily parted with the possession of the thing; and (c) the possession is in the concept of
owner. 11

Undoubtedly, one who has lost a movable or who has been unlawfully deprived of it cannot be
said to have voluntarily parted with the possession thereof. This is the justification for the
exceptions found under the second sentence of Article 559 of the Civil Code.
 26

The basic issue then in this case is whether private respondent was unlawfully deprived of the
cars when it sold the same to Rustico Consunji, through a person who claimed to be Jojo
Consunji, allegedly the latter’s son, but who nevertheless turned out to be Armando Suarez, on
the faith of a Manager’s Check with a face value of P101,000.00, dishonored for being altered,
the correct amount being only P101.00.chanrobles virtual lawlibrary

Under this factual milieu, the respondent Court was of the opinion, and thus held, that private
respondent was unlawfully deprived of the car by false pretenses.

We disagree. There was a perfected unconditional contract of sale between private respondent
and the original vendee. The former voluntarily caused the transfer of the certificate of
registration of the vehicle in the name of the first vendee — even if the said vendee was
represented by someone who used a fictitious name — and likewise voluntarily delivered the
cars and the certificate of registration to the vendee’s alleged representative Title thereto was
forthwith transferred to the vendee. The subsequent dishonor of the check because of the
alteration merely amounted to a failure of consideration which does not render the contract of
sale void, but merely allows the prejudiced party to sue for specific performance or rescission of
the contract, and to prosecute the impostor for estafa under Article 315 of the Revised Penal
Code. This is the rule enunciated in EDCA Publishing and Distributing Corp. v. Santos, 12 the
facts of which do not materially and substantially differ from those obtaining in the instant case.
In said case, a person identifying himself as Professor Jose Cruz, dean of the De la Salle College,
placed an order by telephone with petitioner for 406 books, payable upon delivery. Petitioner
agreed, prepared the corresponding invoice and delivered the books as ordered, for which Cruz
issued a personal check covering the purchase price. Two (2) days later, Cruz sold 120 books to
private respondent Leonor Santos who, after verifying the seller’s ownership from the invoice
the former had shown her, paid the purchase price of P1,700.00. Petitioner became suspicious
over a second order placed by Cruz even before his first check had cleared, hence, it made
inquiries with the De la Salle College. The latter informed the petitioner that Cruz was not in its
employ. Further verification revealed that Cruz had no more account or deposit with the bank
against which he drew the check. Petitioner sought the assistance of the police which then set a
trap and arrested Cruz. Investigation disclosed his real name, Tomas de la Peña, and his sale of
120 of the books to Leonor Santos. On the night of the arrest; the policemen whose assistance the
petitioner sought, forced their way into the store of Leonor’ and her husband, threatened her with
prosecution for the buying of stolen property, seized the 120 books without a warrant and
thereafter turned said books over to the petitioner. The Santoses then sued for recovery of the
books in the Municipal Trial Court which decided in their favor; this decision was subsequently
affirmed by the Regional Trial Court and sustained by the Court of Appeals. Hence, the
petitioner came to this Court by way of a petition for review wherein it insists that it was
unlawfully deprived of the books because as the check bounced for lack of funds, there was
failure of consideration that nullified the contract of sale between it and the impostor who then
acquired no title over the books. We rejected said claim in this wise:jgc:chanrobles.com.ph

"The contract of sale is consensual and is perfected once agreement is reached between the
parties on the subject matter and the consideration. According to the Civil Code:chanrob1es
virtual 1aw library
 27

ART. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the
thing which is the object of the contract and upon the price.

From that moment, the parties may reciprocally demand performance, subject to the provisions
of the law governing the form of contracts.chanrobles.com : virtual law library

x x x

ART. 1477. The ownership of the thing sold shall be transferred to the vendee upon the actual or
constructive delivery thereof.

ART. 1478. The parties may stipulate that ownership in the thing shall not pass to the purchaser
until he has fully paid the price.

It is clear from the above provisions, particularly the last one quoted, that ownership in the thing
sold shall not pass to the buyer until full payment of the purchase price only if there is a
stipulation to that effect. Otherwise, the rule is that such ownership shall pass from the vendor to
the vendee upon the actual or constructive delivery of the thing sold even if the purchase price
has not yet been paid.

Non-payment only creates a right to demand payment or to rescind the contract, or to criminal
prosecution in the case of bouncing checks. But absent the stipulation above noted, delivery of
the thing sold will effectively transfer ownership to the buyer who can in turn transfer it to
another." 13

In the early case of Chua Hai v. Hon. Kapunan, 14 one Roberto Soto purchased from the
Youngstown Hardware, owned by private respondent, corrugated galvanized iron sheets and
round iron bars for P6,137.70, in payment thereof, he issued a check drawn against the Security
Bank and Trust Co. without informing Ong Shu that he (Soto) had no sufficient funds in said
bank to answer for the same. In the meantime, however, Soto sold the sheets to, among others,
petitioner Chua Hai. In the criminal case filed against Soto, upon motion of the offended party,
the respondent Judge ordered petitioner to return the sheets which were purchased from Soto.
Petitioner’s motion for reconsideration having been denied, he came to this Court alleging grave
abuse of discretion and excess of jurisdiction. In answer to the petition, it is claimed that inter
alia, even if the property was acquired in good faith, the owner who has been unlawfully
deprived thereof may recover it from the person in possession of the same unless the property
was acquired in good faith at a public sale. 15 Resolving this specific issue, this Court ruled that
Ong Shu was not illegally deprived of the possession of the property:jgc:chanrobles.com.ph

". . . It is not denied that Ong Shu delivered the sheets to Soto upon a perfected contract of sale,
and such delivery transferred title or ownership to the purchaser. Says Art. 1496:chanrob1es
virtual 1aw library

‘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
 28

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.chanrobles lawlibrary : rednad

And, assuming that the consent of Ong Shu to the sale in favor of Soto was obtained by the latter
through fraud or deceit, the contract was not thereby rendered void ab initio, but only voidable
by reason of the fraud, and Article 1390 expressly provides that:chanrob1es virtual 1aw library

‘ART. 1390. The following contracts are voidable or annullable, even though there may have
been no damage to the contracting parties:chanrob1es virtual 1aw library

(1) Those where one of the parties is incapable of giving consent to a contract;

(2) Those where the consent is vitiated by mistake, violence, intimidation, undue influence or
fraud.

These contracts are binding, unless they are annulled by a proper action in court. They are
susceptible of ratification.’

Agreeably to this provision, Article 1506 prescribes:chanrob1es virtual 1aw library

‘ARTICLE 1506. Where the seller of goods has a voidable title thereto, but his title has not been
avoided at the time of the sale, the buyer acquires a good title to the goods, provided he buys
them in good faith, for value, and without notice of the seller’s defect of title.’ (C.C.)

Hence, until the contract of Ong Shu with Soto is set aside by a competent court (assuming that
the fraud is established to its satisfaction), the validity of appellant’s claim to the property in
question can not be disputed, and his right to the possession thereof should be respected." 16

It was therefore erroneous for the respondent Court to declare that the private respondent was
illegally deprived of the car simply because the check in payment therefor was subsequently
dishonored; said Court also erred when it divested the petitioner, a buyer in good faith who paid
valuable consideration therefor, of his possession thereof.chanrobles virtualawlibrary
chanrobles.com:chanrobles.com.ph

WHEREFORE, the challenged decision of the respondent Court of Appeals of 22 September

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

SO ORDERED.
 29

G.R. No. L-30817 September 29, 1972

DOMINADOR DIZON, doing business under the firm name "Pawnshop of Dominador
Dizon", petitioner, vs.
LOURDES G. SUNTAY, respondent.

SYLLABUS
1. CIVIL LAW; PROPERTY; OWNERSHIP AND POSSESSION; RIGHT OF OWNER OF
IMMOVABLE PROPERTY UN-LAWFULLY DEPRIVED THEREOF; CASE AT BAR. — A
diamond ring valued at P5,500.00 was delivered by respondent Lourdes C. Suntay to a certain
Clarita R. Sison for sale on commission. After the lapse of a considerable time without the latter
having returned the ring nor its purchase price, demands were made upon her by the owner upon
which a pawnshop ticket, the receipt of the pledge with petitioner Dominador Dizon’s pawnshop,
,was delivered. Since what was done was violative of the terms of the agency, there was an
attempt to recover possession by an action for recovery and by the provisional remedy of
replevin. The dispossessed owner having prevailed, both in the lower and in the Court of
Appeals, the matter was then elevated to this Court by petitioner grounded on estoppel. HELD:
The invocation of estoppel is unavailing. Respondent-owner Lourdes G. Suntay has in her favor
the protection accorded by Art. 559 of the Civil Code which provides that: "The possession of
movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost
any movable or has been unlawfully deprived thereof may recover it from the person in
possession of the same. If the possessor of a movable lost or of which the owner has been
unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its
return without reimbursing the price therefore."

2. REMEDIAL LAW; ESTOPPEL; BASIS. — Estoppel as known to the Rules of Court and
prior to that, to the Court of Civil Procedure has its roots in equity. Good faith is its basis. It is a
response to the demands of moral right and natural justice.

3. ID.; ID.; REQUISITES. — For estoppel to exist, it is indispensable that there be a declaration,
act or omission by the party who is sought to be bound. Nor is this all. It is equally a requisite
that he, who would claim the benefits of such a principle must have altered his position, having
been so intentionally and deliberately led to comport himself thus, by what was declared or what
was done or failed to be done. If thereafter a litigation arises, the former would not be allowed to
disown such act, declaration or omission. A court is to see to it that there is no turning back on
one’s word or a repudiation of one’s act.

4. ID.; ID.; PETITIONER IN CASE AT BAR CANNOT SUCCESSFULLY INVOKE THE

PRINCIPLE OF ESTOPPEL; REASONS. — Petitioner cannot assert that his appeal finds
support in the doctrine of estoppel. Neither the promptings of equity nor the mandates of moral
tight and natural justice come to his rescue. He is engaged in a business where presumably
ordinary prudence would manifest itself to ascertain whether or not an individual who is offering
a jewelry by way of pledge is entitled to do so. If no such care be taken, perhaps because of the
difficulty of resisting opportunity for profit, he should be the last to complain if thereafter the
 30

right of the true owner of such jewelry should be recognized. The law for this sound reason
accords the latter protection.

TEEHANKEE, J., Concurring:

1. CIVIL LAW; PROPERTY; RIGHT OF OWNER OF MOVABLE PROPERTY
UNLAWFULLY DEPRIVED THEREOF; TERM "UNLAWFULLY DEPRIVE" IN ARTICLE
559 OF THE CIVIL CODE. — If our legislature had intended to narrow their scope of the term
"unlawfully deprived" to "stolen" as advocate by Tolentino, it certainly would have adopted and
used such narrower term rather than the broad language of article 464 off the old Spanish Civil
Code with its long-established and accepted meaning in accordance with our jurisprudence.

2. ID.; ID.; ID; CRIMINAL CONVICTION OF EMBEZZLER, NOT NECESSARY. — The

contention that the owner may recover the lost article of which he has been unlawfully deprived
without reimbursement of the sum received by the "embezzler, is to add a requirement that is not
in the codal article and to unduly prejudice the victim of embezzlement, as pointed out by the
Court in Arenas v. Raymundo, 19 Phil. 47.

3. ID.; ID.; ID.; RIGHT OF DISPOSSESSED OWNER TO RECOVER DOES NOT

PRECLUDE THE RIGHT OF THE POSSESSOR TO ADEQUATE PROTECTION AND
OPPORTUNITY TO CONTEST THE OWNER’S CLAIM OF RECOVERY. — The civil action
that the owner must resort to for the recovery of his personal property of which he has been
unlawfully deprived as against the possessor (where the latter refuses to honor the claim,
presumably on same valid doubts as to the genuineness of the claim) gives the possessor every
adequate protection and opportunity to contest the owner’s claim of recovery. The owner must
therein establish by competent evidence his lawful claim, and show to the court’s satisfaction his
lawful ownership of the article claimed and that he had been unlawfully deprived thereof.

DECISION
FERNANDO, J.:p
In essence there is nothing novel in this petition for review of a decision of the Court of
Appeals affirming a lower court judgment sustaining the right of an owner of a diamond ring,
respondent Lourdes G. Suntay, as against the claim of petitioner Dominador Dizon, who owns
and operates a pawnshop. The diamond ring was turned over to a certain Clarita R. Sison, for
sale on commission, along with other pieces of jewelry of respondent Suntay. It was then
pledged to petitioner. Since what was done was violative of the terms of the agency, there was an
attempt on her part to recover possession thereof from petitioner, who refused. She had to file an
action then for its recovery. She was successful, as noted above, both in the lower court and
thereafter in the Court of Appeals. She prevailed as she had in her favor the protection accorded
by Article 559 of the Civil Code.1 The matter was then elevated to us by petitioner. Ordinarily,
our discretion would have been exercised against giving due course to such petition for review.
The vigorous plea however, grounded on estoppel, by his counsel, Atty. Andres T. Velarde,
persuaded us to act otherwise. After a careful perusal of the respective contentions of the parties,
we fail to perceive any sufficient justification for a departure from the literal language of the
applicable codal provision as uniformly interpreted by this Court in a number of decisions. The
invocation of estoppel is therefore unavailing. We affirm.
 31

The statement of the case as well as the controlling facts may be found in the Court of
Appeals decision penned by Justice Perez. Thus: "Plaintiff is the owner of a three-carat diamond
ring valued at P5,500.00. On June 13, 1962, the plaintiff and Clarita R. Sison entered into a
transaction wherein the plaintiff's ring was delivered to Clarita R. Sison for sale on commission.
Upon receiving the ring, Clarita R. Sison executed and delivered to the plaintiff the receipt ... .
The plaintiff had already previously known Clarita R. Sison as the latter is a close friend of the
plaintiff's cousin and they had frequently met each other at the place of the plaintiff's said cousin.
In fact, about one year before their transaction of June 13, 1962 took place, Clarita R. Sison
received a piece of jewelry from the plaintiff to be sold for P500.00, and when it was sold,
Clarita R. Sison gave the price to the plaintiff. After the lapse of a considerable time without
Clarita R. Sison having returned to the plaintiff the latter's ring, the plaintiff made demands on
Clarita R. Sison for the return of her ring but the latter could not comply with the demands
because, without the knowledge of the plaintiff, on June 15, 1962 or three days after the ring
above-mentioned was received by Clarita R. Sison from the plaintiff, said ring was pledged by
Melia Sison, niece of the husband of Clarita R. Sison, evidently in connivance with the latter,
with the defendant's pawnshop for P2,600.00 ... ."2 Then came this portion of the decision under
review: "Since the plaintiff insistently demanded from Clarita R. Sison the return of her ring, the
latter finally delivered to the former the pawnshop ticket ... which is the receipt of the pledge
with the defendant's pawnshop of the plaintiff's ring. When the plaintiff found out that Clarita R.
Sison pledged, she took steps to file a case of estafa against the latter with the fiscal's office.
Subsequently thereafter, the plaintiff, through her lawyer, wrote a letter ... dated September 22,
1962, to the defendant asking for the delivery to the plaintiff of her ring pledged with defendant's
pawnshop under pawnshop receipt serial-B No. 65606, dated June 15, 1962 ... . Since the
defendant refused to return the ring, the plaintiff filed the present action with the Court of First
Instance of Manila for the recovery of said ring, with P500.00 as attorney's fees and costs. The
plaintiff asked for the provisional remedy of replevin by the delivery of the ring to her, upon her
filing the requisite bond, pending the final determination of the action. The lower court issued
the writ of replevin prayed for by plaintiff and the latter was able to take possession of the ring
during the pendency of the action upon her filing the requisite bond."3 It was then noted that the
lower court rendered judgment declaring that plaintiff, now respondent Suntay, had the right to
the possession of the ring in question. Petitioner Dizon, as defendant, sought to have the
judgment reversed by the Court of Appeals. It did him no good. The decision of May 19, 1969,
now on review, affirmed the decision of the lower court.

In the light of the facts as thus found by the Court of Appeals, well-nigh conclusive on
use, with the applicable law being what it is, this petition for review cannot prosper. To repeat,
the decision of the Court of Appeals stands.

1. There is a fairly recent restatement of the force and effect of the governing codal norm in De
Gracia v. Court of Appeals.4 Thus: "The controlling provision is Article 559 of the Civil Code. It
reads thus: 'The possession of movable property acquired in good faith is equivalent to a title.
Nevertheless, one who has lost any movable or has been unlawfully deprived thereof may
recover it from the person in possession of the same. If the possessor of a movable lost of which
the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner
cannot obtain its return without reimbursing the price paid therefor.' Respondent Angelina D.
Guevara, having been unlawfully deprived of the diamond ring in question, was entitled to
 32

recover it from petitioner Consuelo S. de Garcia who was found in possession of the same. The
only exception the law allows is when there is acquisition in good faith of the possessor at a
public sale, in which case the owner cannot obtain its return without reimbursing the price. As
authoritatively interpreted in Cruz v. Pahati, the right of the owner cannot be defeated even by
proof that there was good faith in the acquisition by the possessor. There is a reiteration of this
principle in Aznar v. Yapdiangco. Thus: 'Suffice it to say in this regard that the right of the owner
to recover personal property acquired in good faith by another, is based on his being
dispossessed without his consent. The common law principle that were one of two innocent
persons must suffer by a fraud perpetrated by another, the law imposes the loss upon the party
who, by his misplaced confidence, has enabled the fraud to be committed, cannot be applied in a
case which is covered by an express provision of the new Civil Code, specifically Article 559.
Between a common law principle and a statutory provision, the latter must prevail in this
jurisdiction." "5

2. It must have been a recognition of the compulsion exerted by the above authoritative
precedents that must have caused petitioner to invoke the principle of estoppel. There is clearly a
misapprehension. Such a contention is devoid of any persuasive force.

Estoppel as known to the Rules of Court6 and prior to that to the Court of Civil
Procedure,7 has its roots in equity. Good faith is its basis.8 It is a response to the demands of
moral right and natural justice.9 For estoppel to exist though, it is indispensable that there be a
declaration, act or omission by the party who is sought to be bound. Nor is this all. It is equally a
requisite that he, who would claim the benefits of such a principle, must have altered his
position, having been so intentionally and deliberately led to comport himself thus, by what was
declared or what was done or failed to be done. If thereafter a litigation arises, the former would
not be allowed to disown such act, declaration or omission. The principle comes into full play. It
may successfully be relied upon. A court is to see to it then that there is no turning back on one's
word or a repudiation of one's act. So it has been from our earliest decisions. As Justice Mapa
pointed out in the first case, a 1905 decision, Rodriguez v. Martinez, 10 a party should not be
permitted "to go against his own acts to the prejudice of [another]. Such a holding would be
contrary to the most rudimentary principles of justice and law." 11 He is not, in the language of
Justice Torres, in Irlanda v. Pitargue, 12 promulgated in 1912, "allowed to gainsay [his] own acts
or deny rights which [he had] previously recognized." 13Some of the later cases are to the effect
that an unqualified and unconditional acceptance of an agreement forecloses a claim for interest
not therein provided. 14 Equally so the circumstance that about a month after the date of the
conveyance, one of the parties informed the other of his being a minor, according to Chief
Justice Paras, "is of no moment, because [the former's] previous misrepresentation had already
estopped him from disavowing the contract. 15 It is easily understandable why, under the
circumstances disclosed, estoppel is a frail reed to hang on to. There was clearly the absence of
an act or omission, as a result of which a position had been assumed by petitioner, who if such
elements were not lacking, could not thereafter in law be prejudiced by his belief in what had
been misrepresented to him. 16 As was put by Justice Labrador, "a person claimed to be estopped
must have knowledge of the fact that his voluntary acts would deprive him of some rights
because said voluntary acts are inconsistent with said rights." 17 To recapitulate, there is this
pronouncement not so long ago, from the pen of Justice Makalintal, who reaffirmed that estoppel
 33

"has its origin in equity and, being based on moral right and natural justice, finds applicability
wherever and whenever the special circumstances of a case so demand." 18

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

WHEREFORE, the decision of the Court of Appeals of May 19, 1969 is affirmed, with
costs against petitioner.
 34

G.R. No. L-50264 October 21, 1991

IGNACIO WONG, petitioner, vs.
HON. LUCAS D. CARPIO, as Presiding Judge, Court of First Instance of Davao del Sur,
Branch V and MANUEL MERCADO, respondents.

DECISION
BIDIN, J.:
This is a petition for review on certiorari, certified to this Court by the Court of Appeals
as it involves purely question of law, seeking the annulment of the September 29, 1978 decision
of the then Court of First Instance ** of Davao del Sur, Branch V, in Civil Case No. 1258 which
reversed the February 20, 1978 decision of the Municipal Court of Sta. Maria, *** Davao del Sur
in an action for Forcible Entry (Civil Case No. 13) ordering the dismissal of the complaint as
well as the counterclaim.
The undisputed facts of this case, as found by both the trial court and the then Court of
First Instance of Davao del Sur, are as follows:

On the basis of the admission of parties in their respective pleadings, the oral
testimonies of all witnesses for both plaintiff and defendants and the documentary
evidence offered and admitted this Court finds that plaintiff Manuel Mercado
acquired his rights to possess the land in litigation, particularly lot 3 (LRC) Pcs-
295, (situated at Colonga, Sta. Maria, Davao del Sur) and which is particularly
described and embraced in Transfer Certificate of title No. (T-4244) T-972 from
William Giger by virtue of a deed of sale with right to repurchase which was
executed in 1972 for a consideration of P3,500.00 (testimony of plaintiff, T.S.N.,
p. 3, hearing of January 7, 1977). Then, in 1973, William Giger again asked an
additional amount of P2,500.00 from plaintiff and so he required William Giger to
sign a new deed of Pacto de Retro Sale (Exhibit "A") on November 5,1973 at
Davao City before Notary Public Gregorio C. Batiller (T.S.N., p. 5, hearing of
January 7, 1977). In 1972, plaintiff began harvesting only the coconut fruits and
he paid the taxes on the land (Exhibits B to E) for Mr. Giger. He went periodically
to the land to make copra but he never placed any person on the land in litigation
to watch it. Neither did he reside on the land as he is a businessman and
storekeeper by occupation and resides at Lower Sta. Maria, Davao del Sur while
the land in litigation is at Colongan, Sta. Maria. Neither did he put any sign or hut
to show that he is in actual possession (p. 8, T.S.N., p. 7, hearing of January 14,
1978). He knew defendants' laborers were in the land in suit as early as August,
1976 and that they have a hut there but he did not do anything to stop them.
Instead plaintiff was happy that there were people and a hut on the land in suit (p.
14, T.S.N., hearing of January 14, 1978).
 35

Before July, 1976, defendant Ignacio Wong went to the land in litigation to find
out if there were other people residing there or claiming it besides the owner and
he found none. So, in July, 1976, defendant Ignacio Wong bought the parcel of
land in litigation from William Giger and his wife Cecilia Valenzuela (Exhibit 5).
After the execution of Exhibit 5, defendant Ignacio Wong asked for the delivery
of the title to him and so he has in his possession TCT No. (T-4244) T-974
(Exhibit 6) in the name of William Giger. Mr. Wong declared the land in suit for
taxation purposes in his name (Exhibit 7). He tried to register the pacto de
retro sale with the Register of Deeds by paying the registration fee (Exhibit 8) but
due to some technicalities, the pacto de retro sale could not be registered. The
defendant Wong placed laborers on the land in suit, built a small farm house after
making some clearings and fenced the boundaries. He also placed signboards
(T.S.N., pp. 14-15, hearing of September 15, 1977). On September 27, 1976,
plaintiff Manuel Mercado again went to the land in suit to make copras. That was
the time the matter was brought to the attention of the police of Sta. Maria, Davao
del Sur and the incident entered in the police blotter (Exhibit 11). Then on
November 18, 1976, defendant Wong ordered the hooking of the coconuts from
the land in litigation and nobody disturbed him. But on November 29, 1976,
defendant received a copy of plaintiff's complaint for forcible entry with
summons to answer which is the case now before the Court. During the pendency
of this instant complaint for forcible entry, spouses William Giger and Cecilia
Valenzuela filed a case for reformation of instrument with the Court of First
Instance of Digos, Davao del Sur against plaintiff Mercado (Exhibit 4). The case
pertains to Exhibit "A" of plaintiff. (pp. 1-3, CA Decision, pp. 82-84, Rollo).

On the basis of the aforestated undisputed facts, the Municipal Court of Sta. Maria,
Davao del Sur in its February 20, 1978 Decision found that herein petitioner (defendant Ignacio
Wong) had prior, actual and continuous physical possession of the disputed property and
dismissed both the complaint and the counter-claim.

On appeal, the then Court of First Instance of Davao del Sur, in its September 29, 1978
Decision drew a completely different conclusion from the same set of facts and ruled in favor of
herein private respondent (plaintiff Manuel Mercado). The decretal portion of the said decision,
reads:

WHEREFORE, the Court finds the plaintiff to have taken possession of the
property earlier in point of time and defendant is an intruder and must, as he is
hereby ordered to return, the possession of the land in question for the plaintiff,
paying a monthly rental of P400.00 from August, 1976, till the property is
returned with costs against the defendant. Judgment is reversed.

Petitioner filed the instant petition with the Court of Appeals. But the Court of Appeals,
in its March 1, 1979 Resolution **** found that the only issue is a pure question of law —
the correctness of the conclusion drawn from the undisputed facts and certified the case to
this Court.
 36

In its April 4, 1979 Resolution, the Second Division of this Court docketed the case in
this Court and considered it submitted for decision.

Petitioner alleged two (2) errors committed by respondent judge, to wit:

A) THE CONCLUSION DRAWN BY RESPONDENT JUDGE THAT PETITIONER IS AN

INTRUDER IS WITHOUT FACTUAL AND LEGAL BASIS FOR PURPOSES OF A
FORCIBLE ENTRY.

B) THE CONCLUSION DRAWN BY RESPONDENT JUDGE THAT PETITIONER MUST

PAY A MONTHLY RENTAL OF P400.00 FROM AUGUST, 1976 TILL THE PROPERTY IS
RETURNED HAS NO LEGAL AND FACTUAL BASIS.

The petition is without merit.

Petitioner, in claiming that the private respondent has not established prior possession,
argues that private respondent's periodic visit to the lot to gather coconuts may have
been consented to and allowed or tolerated by the owner thereof for the purposes of paying an
obligation that may be due to the person gathering said nuts and that a person who enters a
property to gather coconut fruits and convert the same to copras may only be a hired laborer who
enters the premises every harvest season to comply with the contract of labor with the true owner
of the property.

The argument is untenable.

It should be stressed that "possession is acquired by the material occupation of a thing or

the exercise of a right, or by the fact that it is subject to the action of our will, or by the proper
acts and legal formalities for acquiring such right." (Art. 531, Civil Code; Rizal Cement Co., Inc.
vs. Villareal, 135 SCRA 15 [1985]); and that the execution of a sale thru a public instrument
shall be equivalent to the delivery of the thing, unless there is stipulation to the contrary . . . . If,
however, notwithstanding the execution of the instrument, the purchaser cannot have the
enjoyment and material tenancy of the thing and make use of it herself, because such tenancy
and enjoyment are opposed by another, then delivery has not been effected. (Paras, Civil Code of
the Philippines, Vol. II, 1989 Ed., p. 400).

Applying the above pronouncements on the instant case, it is clear that possession passed
from vendor William Giger to private respondent Manuel Mercado by virtue of the first sale a
retro (Exhibit A), and accordingly, the later sale a retro (Exhibit 5) in favor of petitioner failed to
pass the possession of the property because there is an impediment — the possession exercised
by private respondent. Possession as a fact cannot be recognized at the same time in two
different personalities except in the cases of co-possession. Should a question arise regarding the
fact of possession, the present possessor shall be preferred; if there are two possessions, the one
longer in possession, if the dates of possession are the same, the one who presents a title; and if
these conditions are equal, the thing shall be placed in judicial deposit pending determination of
its possession or ownership through proper proceedings (Art. 538, Civil Code).
 37

As to petitioner's query that "Is the entry of petitioner to the property characterized by
force, intimidation, threat, strategy, or stealth in order to show that private respondent has had
possession so that the case is within the jurisdiction of the inferior court?" (p. 15, Petition; p.
16, Rollo). The same is answered in the affirmative.

The act of entering the property and excluding the lawful possessor therefrom necessarily
implies the exertion of force over the property, and this is all that is necessary. Under the rule,
entering upon the premises by strategy or stealth is equally as obnoxious as entering by force.
The foundation of the action is really the forcible exclusion of the original possessor by a person
who has entered without right. The words "by force, intimidation, threat, strategy, or stealth"
include every situation or condition under which one person can wrongfully enter upon real
property and exclude another who has had prior possession therefrom. If a trespasser enters upon
land in open daylight, under the very eyes of person already clothed with lawful possession, but
without the consent of the latter, and there plants himself and excludes such prior possessor from
the property, the action of forcible entry and detainer can unquestionably be maintained, even
though no force is used by the trespasser other than such as is necessarily implied from the mere
acts of planting himself on the ground and excluding the other party. (Tolentino, Civil Code of
the Philippines, Vol. II, 1983 Ed., pp. 243-244; Drilon vs. Gaurana, 149 SCRA 342 [1987]).

Anent the award of rentals in favor of private respondent, the same is in order.
Petitioner's argument that there is no legal or factual basis for the payment of monthly rentals
because bad faith on the part of petitioner was never proved deserves no merit.

It should be noted that possession acquired in good faith does not lose this character
except in the case and from the moment facts exist which show that the possessor is not unaware
that he possesses the thing improperly or wrongfully. (Art. 528, Civil Code).

Possession in good faith ceases from the moment defects in the title are made known to
the possessors, by extraneous evidence or by suit for recovery of the property by the true owner.
Whatever may be the cause or the fact from which it can be deduced that the possessor has
knowledge of the defects of his title or mode of acquisition, it must be considered sufficient to
show bad faith. (Tolentino, Civil Code of the Philippines, Vol. II, p. 226). Such interruption
takes place upon service of summons (Manotok Realty vs. Judge Tecson, 164 SCRA 587 [1988]
citing Mindanao Academy, Inc. v. Yap (13 SCRA 190 [1965]). In the latter case, this Court held:

. . . Although the bad faith of one party neutralizes that of the other and hence as
between themselves their rights would be as if both of them had acted in good
faith at the time of the transaction, this legal fiction of Yap's good faith ceased
when the complaint against him was filed, and consequently the court's
declaration of liability for the rents thereafter is correct and proper. A possessor in
good faith is entitled to the fruits only so long as his possession is not legally
interrupted, and such interruption takes place upon service of judicial summons
(Arts. 544 and 1123, Civil Code).

A perusal of the records of the case shows that petitioner received private respondent's
complaint for forcible entry with summons on November 29, 1976 (Rollo, p. 46). His good faith
 38

therefore ceased on November 29,1976. Accordingly, the computation of the payment of

monthly rental should start from December, 1976, instead of August, 1976.

WHEREFORE, with the modification that the computation of the monthly rental should
start from December, 1976 instead of August, 1976, the September 29, 1978 decision of
respondent judge is Affirmed in all other respects, with costs against petitioner. SO ORDERED.

G.R. No. 82680 August 15, 1994

NICANOR SOMODIO, petitioner, vs.
COURT OF APPEALS, EBENECER PURISIMA, and FELOMINO AYCO, respondents.

SYLLABUS
1. REMEDIAL LAW; APPEALS; FINDINGS OF FACT OF THE COURT OF APPEALS ARE
BINDING ON THE SUPREME COURT; EXCEPTION. — As a general rule, the findings of
fact of the Court of Appeals are binding on this Court. This rule, however, is not without
exceptions, one of which is when the factual findings of the Court of Appeals and the trial court
are contrary to each other. In such a case, this Court may scrutinize the evidence on record in
order to arrive at the correct findings based on the record.

2. CIVIL LAW; EJECTMENT; PRIOR POSSESSION DE FACTO; PROOF THEREOF

ENTITLES A PERSON TO POSSESSION OVER THE PROPERTY. — In ejectment cases, the
only issue for resolution is who is entitled to the physical or material possession of the property
involved, independent of any claim of ownership set forth by any of the party-litigants. Anyone
of them who can prove prior possession de facto may recover such possession even from the
owner himself. This rule holds true regardless of the character of a party’s possession, provided
that he has in his favor priority of time which entitles him to stay on the property until he is
lawfully ejected by a person having a better right by either accion publiciana or accion
reivindicatoria.

3. ID.; ID.; ID.; ID.; CASE AT BAR. — Petitioner took possession of the property sometime in
1974 when he planted the property to coconut trees, ipil-ipil trees and fruit trees. In 1976, he
started the construction of a building on the property. It is immaterial that the building was
unfinished and that he left for Kidapawan for employment reasons and visited the property only
intermittently. Possession in the eyes of the law does not mean that a man has to have his feet on
every square meter of ground before it can be said that he is in possession. It is sufficient that
petitioner was able to subject the property to the action of his will. . . . Even if the Court of
Appeals is correct in its finding that petitioner started introducing improvements on the land only
in 1981, he still enjoyed priority of possession because respondent Purisima entered the premises
only in 1983.

4. ID.; ID.; ID.; AS DISTINGUISHED FROM OWNERSHIP. — Petitioner’s prior possession

over the property, however, is not synonymous with his right of ownership over the same. As
earlier stated, resolution of the issue of possession is far from the resolution of the issue of
ownership. Forcible entry is merely a quieting process and never determines the actual title to an
estate.
 39

DECISION
QUIASON, J.:
This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court to
reverse and set aside the Decision dated September 29, 1987 and the Resolution dated February
2, 1988 of the Court of Appeals in CA-G.R. SP No. 11602.
I
On October 21, 1974, Jose Ortigas executed an instrument designated as a Transfer of
Rights, conveying to Wilfredo Mabugat the possession of a residential lot situated at Rajah
Muda, Bula, General Santos City and described in the said instrument as:

Lot No. (Unnumbered), bounded on the North by Temporary Road, on the South
by Customs Zone (Sarangani Bay), on the East by Public Land, and on the West
by Public Land.

Nicanor Somodio, herein petitioner, contributed one-half of the purchase price. On

October 22, 1974, Mabugat executed an Affidavit of Trust expressly recognizing the right of
petitioner over one-half undivided portion of the lot. Later, petitioner discovered in the District
Land Office that the lot was numbered "6328-X, Csd 2281-D." Thereafter, petitioner and
Mabugat partitioned the property into two portions, with petitioner taking the western part.
Immediately after the partition, petitioner took possession of his portion and planted thereon ipil-
ipil trees, coconut trees and other fruit-bearing trees.

In 1976, petitioner began construction of a structure with a dimension of 22-by-18 feet on

his lot. His employment, however, took him to Kidapawan, North Cotabato, and he left the
unfinished structure to the case of his uncle. He would visit the property every three months or
on weekened when he had time.

Sometime in October 1977, petitioner allowed respondent Felomino Ayco, to transfer his
hut to petitioner's lot. About six years later, petitioner demanded that Ayco vacate the premises
but such demand proved futile. Hence, on August 23, 1983, petitioner filed an action for
unlawful detainer with damages against respondent Ayco before the Municipal Trial Court,
Branch I, General Santos, docketed as Civil Case No. 2032-II.

Meanwhile, on June 26, 1983, respondent Ebenecer Purisima entered the land and
constructed a house thereon. Four days later, petitioner filed against respondent Purisima a
complaint for forcible entry before the same court docketed as Civil Case No. 2013-I. Said case
was later consolidated with Civil Case No. 2032-II.

In his answer, respondent Purisima averred that the lot was a portion of the land subject
of his application for miscellaneous sales patent with the Bureau of Lands. Purisima described
the lot in question as:
Lot No. 6328-Y, CSD-2281-D, Bula, General Santos, Cotabato. Bounded on the
North by 6328-X; on the South by Sarangani Bay; on the East by a Municipal
Road; and on the West by Lot No. 6328-W, containing an area of 1,095 square
meters and covered by Tax Declaration No. 9647 (Rollo, p. 36; Emphasis
supplied).
 40

Respondent Purisima contended that his father, a geodetic engineer, had surveyed the
parcel of land comprising of Lots Nos. 6427 and 6328 for the Small Farmers Fishpond
Association, Inc. in February 1958, and that his father's survey plan was approved by the
Director of Lands in 1960. Respondent Ayco, on the other hand, did not present any evidence but
merely anchored his right to possess the property on the evidence of Purisima.

On April 30, 1986, the trial court rendered a decision finding that respondent Purisima
built his house "almost on the spot where Somodio's unfinished house" stood "thru stealth and
strategy," not knowing that the house was built on Lot No. 6328-X and not on Lot No. 6328-Y,
the lot said respondent was claiming (Rollo, p. 43). The court went on to state that:

. . . . He (private respondent Purisima) was a frequent visitor in Rajah Muda and

had sometimes stayed with Mrs. Maturan in Judge Purisima's house on the
adjoining lots, and could not have remained unaware of the possession of
Somodio. He must have depended on the thought that it was his father who made
the subdivision survey and had fenced an area which he had claimed. He did not
exactly verify that the area fenced by his father had an area of only 1,095 square
meters, which did not include the are Lot No. 6328-X could eventually be
standing on his property, for Lot No. 6328-X is not claimed by him and has not
been applied for even by his father. His father has been abroad and has not taken
steps to apply for Lot No. 6328-X. This lot is not declared for taxation purposes in
the name of any claimant-applicant. Unless and until there would be an
administrative proceedings and the title ultimately issued in favor of an applicant,
the possession of the actual claimant and occupant has to be respected and
maintained in the interest of public order . . . (Rollo, pp. 43-44).

The Municipal Trial Court further held that petitioner was the actual possessor of Lot No.
6328-X. The court did not believe respondent Ayco's claim that the administratrix of the estate of
respondent Purisima's father authorized him to build a hut on Lot No. 6328-X in 1976. At any
rate, the court said that respondent Ayco was willing to vacate the premises provided he be given
financial assistance to do so (Rollo, pp. 43-44).

Nothing that the ocular inspection of the area showed that the houses of respondents
Purisima and Ayco were "inside Lot No. 6328-X" and not on Lot No. 6328-Y, the Municipal
Trial Court held that the case became one which entailed mere removal of the houses from the
lot in question. Accordingly, the court ordered private respondents to remove their respective
houses, to deliver the land to petitioner, and to pay attorney's fees and litigation expenses.

On appeal, the Regional Trial Court, Branch 22, General Santos City, affirmed in toto the
decision of the Municipal Trial Court. Respondent then elevated the cases on a petition for
review to the Court of Appeals, which, in its decision dated September 27, 1987, set aside the
decisions of the two trial courts and ordered the dismissal of the two complaints filed by
petitioner.
 41

The Court of Appeals held that herein petitioner had not "clearly and conclusively
established physical, prior possession over Lot No. 6328-X."

Petitioner's motion for the reconsideration of the decision of the Court of Appeals having
been denied, he filed the instant petition for review on certiorari.

We grant the petition.

II
The procedural issue raised by private respondents should first be resolved. The issue is
whether the instant petition is proper considering that petitioner "merely touch(es) upon
questions of fact which had been carefully considered" by the Court of Appeals (Rollo, p. 92).
As a general rule, the findings of fact of the Court of Appeals are binding on this Court. This
rule, however, is not without exceptions, one of which is when the factual findings of the Court
of Appeals and the trial court are contrary to each other. In such a case, this Court may scrutinize
the evidence on record in order to arrive at the correct findings based on the record (Valenzuela
v. Court of Appeals, 191 SCRA 1 [1990]; Roman Catholic Bishop of Malolos, Inc. v.
Intermediate Appellate Court, 191 SCRA 411 [1990]).

Upon a review of the records, we are convinced that petitioner indeed enjoyed priority of
possession over Lot No. 6328-X, notwithstanding respondent Purisima's claim to the contrary.

In ejectment cases, the only issue for resolution is who is entitled to the physical or
material possession of the property involved, independent of any claim of ownership set forth by
any of the party-litigants. Anyone of them who can prove prior possession de facto may recover
such possession even from the owner himself. This rule holds true regardless of the character of
a party's possession, provided, that he has in his favor priority of time which entitles him to stay
on the property until he is lawfully ejected by a person having a better right by either accion
publiciana or accion reivindicatoria (De Luna v. Court of Appeals, 212 SCRA 276 [1992]).

Petitioner took possession of the property sometime in 1974 when he planted the property
to coconut trees, ipil- ipil trees and fruit trees. In 1976, he started the construction of a building
on the property. It is immaterial that the building was unfinished and that he left for Kidapawan
for employment reasons and visited the property only intermittently. Possession in the eyes of
the law does not mean that a man has to have his feet on every square meter of ground before it
can be said that he is in possession (Ramos v. Director of Lands, 39 Phil. 175 [1918]). It is
sufficient that petitioner was able to subject the property to the action of his will.

Article 531 of the Civil Code of the Philippines provides:

Possession is acquired by the material occupation of a thing or the exercise of a
right, or by the fact that it is subject to the action of our will, or by the proper acts
and legal formalities established for acquiring such right.

Even if the Court of Appeals is correct in its finding that petitioner started introducing
improvements on the land only in 1981, he still enjoyed priority of possession because
respondent Purisima entered the premises only in 1983.
 42

It should be emphasized that the Court of Appeals noted that none of the parties had
produced tax declarations or applications as public land claimants. As such, what should have
been scrutinized is who between the claimants had priority of possession.

Moreover, neither is the fact that respondent Purisima's father surveyed the property of
help to his cause. As the Court of Appeals found, respondent Purisima's father surveyed the land
for the Small Farmers Fishpond Association, Inc., not for himself. Although respondent Purisima
now claims that Lot No. 6328-X was in payment of his fee for the services of his father and that
he caused the construction of a perimeter wall in the area, these facts do not mean that
respondent Purisima himself had prior possession. He did not present any proof that his father
had authorized him to enter the land as his successor-in-interest. Neither did he present proof that
between 1958, when his father allegedly took possession of the land, and 1983, when said
respondent himself entered the land, his father ever exercised whatever right of possession he
should have over the property. Under these circumstances, priority in time should be the pivotal
cog in resolving the issue of possession.

The Court of Appeals opined that petitioner had not properly identified the lot he had
occupied. The matter of identification of the land, however, had been resolved by respondent
Purisima's admission in his pleadings, as well as by two ocular inspections.

In his answer to the complaint, respondent Purisima claimed possession over Lot No.
6328-Y, while petitioner identified the lot adjacent to it, Lot NO. 6328-X, as the area where
private respondents built their houses. That these two lots are distinct from one another was
resolved by the ocular inspection conducted by a Senior Geodetic Engineer of the Office of the
City Engineer, who found that "south of lot 6328-H across a 10 meter wide road is lot 6328-Y
and from thence to the south is lot 6328-X." On June 13, 1985, the Municipal Trial Court judge
himself went to the premises in question and discovered that aside from the houses of
respondents Purisima and Ayco, five other houses had been built on Lot No. 6328-X.

Petitioner's prior possession over the property, however, is not synonymous with his right
of ownership over the same. As earlier stated, resolution of the issue of possession is far from the
resolution of the issue of ownership. Forcible entry is merely a quieting process and never
determines the actual title to an estate (German Management & Services, Inc. v. Court of
Appeals, 177 SCRA 495 [1989]; Manuel v. Court of Appeals, 199 SCRA 603 [1991].

WHEREFORE, the decision of the Court of Appeals is REVERSED and SET ASIDE
and that of the trial courts REINSTATED. Costs against private respondents. SO ORDERED.

G.R. No. 80298 April 26, 1990

EDCA PUBLISHING & DISTRIBUTING CORP., petitioner, vs.
THE SPOUSES LEONOR and GERARDO SANTOS, doing business under the name and
style of "SANTOS BOOKSTORE," and THE COURT OF APPEALS, respondents.

DECISION
CRUZ, J.:
 43

The case before us calls for the interpretation of Article 559 of the Civil Code and raises
the particular question of when a person may be deemed to have been "unlawfully deprived" of
movable property in the hands of another. The article runs in full as follows:

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

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

The movable property in this case consists of books, which were bought from the
petitioner by an impostor who sold it to the private respondents. Ownership of the books was
recognized in the private respondents by the Municipal Trial Court, 1 which was sustained by the
Regional Trial Court, 2 which was in turn sustained by the Court of Appeals. 3 The petitioner
asks us to declare that all these courts have erred and should be reversed.

This case arose when on October 5, 1981, a person identifying himself as Professor Jose
Cruz placed an order by telephone with the petitioner company for 406 books, payable on
delivery. 4 EDCA prepared the corresponding invoice and delivered the books as ordered, for
which Cruz issued a personal check covering the purchase price of P8,995.65. 5 On October 7,
1981, Cruz sold 120 of the books to private respondent Leonor Santos who, after verifying the
seller's ownership from the invoice he showed her, paid him P1,700.00. 6

Meanwhile, EDCA having become suspicious over a second order placed by Cruz even
before clearing of his first check, made inquiries with the De la Salle College where he had
claimed to be a dean and was informed that there was no such person in its employ. Further
verification revealed that Cruz had no more account or deposit with the Philippine Amanah
Bank, against which he had drawn the payment check. 7 EDCA then went to the police, which set
a trap and arrested Cruz on October 7, 1981. Investigation disclosed his real name as Tomas de
la Peña and his sale of 120 of the books he had ordered from EDCA to the private respondents. 8

On the night of the same date, EDCA sought the assistance of the police in Precinct 5 at
the UN Avenue, which forced their way into the store of the private respondents and threatened
Leonor Santos with prosecution for buying stolen property. They seized the 120 books without
warrant, loading them in a van belonging to EDCA, and thereafter turned them over to the
petitioner. 9

Protesting this high-handed action, the private respondents sued for recovery of the books
after demand for their return was rejected by EDCA. A writ of preliminary attachment was
issued and the petitioner, after initial refusal, finally surrendered the books to the private
respondents. 10 As previously stated, the petitioner was successively rebuffed in the three courts
below and now hopes to secure relief from us.
 44

To begin with, the Court expresses its disapproval of the arbitrary action of the petitioner
in taking the law into its own hands and forcibly recovering the disputed books from the private
respondents. The circumstance that it did so with the assistance of the police, which should have
been the first to uphold legal and peaceful processes, has compounded the wrong even more
deplorably. Questions like the one at bar are decided not by policemen but by judges and with
the use not of brute force but of lawful writs.
Now to the merits

It is the contention of the petitioner that the private respondents have not established their
ownership of the disputed books because they have not even produced a receipt to prove they
had bought the stock. This is unacceptable. Precisely, the first sentence of Article 559 provides
that "the possession of movable property acquired in good faith is equivalent to a title," thus
dispensing with further proof.

The argument that the private respondents did not acquire the books in good faith has
been dismissed by the lower courts, and we agree. Leonor Santos first ascertained the ownership
of the books from the EDCA invoice showing that they had been sold to Cruz, who said he was
selling them for a discount because he was in financial need. Private respondents are in the
business of buying and selling books and often deal with hard-up sellers who urgently have to
part with their books at reduced prices. To Leonor Santos, Cruz must have been only one of the
many such sellers she was accustomed to dealing with. It is hardly bad faith for any one in the
business of buying and selling books to buy them at a discount and resell them for a profit.

But the real issue here is whether the petitioner has been unlawfully deprived of the
books because the check issued by the impostor in payment therefor was dishonored.

In its extended memorandum, EDCA cites numerous cases holding that the owner who
has been unlawfully deprived of personal property is entitled to its recovery except only where
the property was purchased at a public sale, in which event its return is subject to reimbursement
of the purchase price. The petitioner is begging the question. It is putting the cart before the
horse. Unlike in the cases invoked, it has yet to be established in the case at bar that EDCA has
been unlawfully deprived of the books.

The petitioner argues that it was, because the impostor acquired no title to the books that
he could have validly transferred to the private respondents. Its reason is that as the payment
check bounced for lack of funds, there was a failure of consideration that nullified the contract of
sale between it and Cruz.

The contract of sale is consensual and is perfected once agreement is reached between the
parties on the subject matter and the consideration. According to the Civil Code:

Art. 1475. The contract of sale is perfected at the moment there is a meeting of
minds upon the thing which is the object of the contract and upon the price.

From that moment, the parties may reciprocally demand performance, subject to
the provisions of the law governing the form of contracts.
 45

xxx xxx xxx

Art. 1477. The ownership of the thing sold shall be transferred to the vendee upon
the actual or constructive delivery thereof.

Art. 1478. The parties may stipulate that ownership in the thing shall not pass to
the purchaser until he has fully paid the price.

It is clear from the above provisions, particularly the last one quoted, that ownership in
the thing sold shall not pass to the buyer until full payment of the purchase only if there is a
stipulation to that effect. Otherwise, the rule is that such ownership shall pass from the vendor to
the vendee upon the actual or constructive delivery of the thing sold even if the purchase price
has not yet been paid.

Non-payment only creates a right to demand payment or to rescind the contract, or to

criminal prosecution in the case of bouncing checks. But absent the stipulation above noted,
delivery of the thing sold will effectively transfer ownership to the buyer who can in turn transfer
it to another.

In Asiatic Commercial Corporation v. Ang,11 the plaintiff sold some cosmetics to

Francisco Ang, who in turn sold them to Tan Sit Bin. Asiatic not having been paid by Ang, it
sued for the recovery of the articles from Tan, who claimed he had validly bought them from
Ang, paying for the same in cash. Finding that there was no conspiracy between Tan and Ang to
deceive Asiatic the Court of Appeals declared:

Yet the defendant invoked Article 464 12 of the Civil Code providing, among
other things that "one who has been unlawfully deprived of personal property may
recover it from any person possessing it." We do not believe that the plaintiff has
been unlawfully deprived of the cartons of Gloco Tonic within the scope of this
legal provision. It has voluntarily parted with them pursuant to a contract of
purchase and sale. The circumstance that the price was not subsequently paid did
not render illegal a transaction which was valid and legal at the beginning.

In Tagatac v. Jimenez,13 the plaintiff sold her car to Feist, who sold it to Sanchez, who
sold it to Jimenez. When the payment check issued to Tagatac by Feist was dishonored, the
plaintiff sued to recover the vehicle from Jimenez on the ground that she had been unlawfully
deprived of it by reason of Feist's deception. In ruling for Jimenez, the Court of Appeals held:

The point of inquiry is whether plaintiff-appellant Trinidad C. Tagatac has been

unlawfully deprived of her car. At first blush, it would seem that she was
unlawfully deprived thereof, considering that she was induced to part with it by
reason of the chicanery practiced on her by Warner L. Feist. Certainly, swindling,
like robbery, is an illegal method of deprivation of property. In a manner of
speaking, plaintiff-appellant was "illegally deprived" of her car, for the way by
which Warner L. Feist induced her to part with it is illegal and is punished by law.
But does this "unlawful deprivation" come within the scope of Article 559 of the
New Civil Code?
 46

xxx xxx xxx

. . . The fraud and deceit practiced by Warner L. Feist earmarks this sale as a
voidable contract (Article 1390 N.C.C.). Being a voidable contract, it is
susceptible of either ratification or annulment. If the contract is ratified, the action
to annul it is extinguished (Article 1392, N.C.C.) and the contract is cleansed
from all its defects (Article 1396, N.C.C.); if the contract is annulled, the
contracting parties are restored to their respective situations before the contract
and mutual restitution follows as a consequence (Article 1398, N.C.C.).

However, as long as no action is taken by the party entitled, either that of

annulment or of ratification, the contract of sale remains valid and binding. When
plaintiff-appellant Trinidad C. Tagatac delivered the car to Feist by virtue of said
voidable contract of sale, the title to the car passed to Feist. Of course, the title
that Feist acquired was defective and voidable. Nevertheless, at the time he sold
the car to Felix Sanchez, his title thereto had not been avoided and he therefore
conferred a good title on the latter, provided he bought the car in good faith, for
value and without notice of the defect in Feist's title (Article 1506, N.C.C.). There
being no proof on record that Felix Sanchez acted in bad faith, it is safe to assume
that he acted in good faith.

The above rulings are sound doctrine and reflect our own interpretation of Article 559 as
applied to the case before us.

Actual delivery of the books having been made, Cruz acquired ownership over the books
which he could then validly transfer to the private respondents. The fact that he had not yet paid
for them to EDCA was a matter between him and EDCA and did not impair the title acquired by
the private respondents to the books.

One may well imagine the adverse consequences if the phrase "unlawfully deprived"
were to be interpreted in the manner suggested by the petitioner. A person relying on the seller's
title who buys a movable property from him would have to surrender it to another person
claiming to be the original owner who had not yet been paid the purchase price therefor. The
buyer in the second sale would be left holding the bag, so to speak, and would be compelled to
return the thing bought by him in good faith without even the right to reimbursement of the
amount he had paid for it.

It bears repeating that in the case before us, Leonor Santos took care to ascertain first that
the books belonged to Cruz before she agreed to purchase them. The EDCA invoice Cruz
showed her assured her that the books had been paid for on delivery. By contrast, EDCA was
less than cautious — in fact, too trusting in dealing with the impostor. Although it had never
transacted with him before, it readily delivered the books he had ordered (by telephone) and as
readily accepted his personal check in payment. It did not verify his identity although it was easy
enough to do this. It did not wait to clear the check of this unknown drawer. Worse, it indicated
in the sales invoice issued to him, by the printed terms thereon, that the books had been paid for
on delivery, thereby vesting ownership in the buyer.
 47

Surely, the private respondent did not have to go beyond that invoice to satisfy herself
that the books being offered for sale by Cruz belonged to him; yet she did. Although the title of
Cruz was presumed under Article 559 by his mere possession of the books, these being movable
property, Leonor Santos nevertheless demanded more proof before deciding to buy them.

It would certainly be unfair now to make the private respondents bear the prejudice
sustained by EDCA as a result of its own negligence. We cannot see the justice in transferring
EDCA's loss to the Santoses who had acted in good faith, and with proper care, when they
bought the books from Cruz.

While we sympathize with the petitioner for its plight, it is clear that its remedy is not
against the private respondents but against Tomas de la Peña, who has apparently caused all this
trouble. The private respondents have themselves been unduly inconvenienced, and for merely
transacting a customary deal not really unusual in their kind of business. It is they and not EDCA
who have a right to complain.

WHEREFORE, the challenged decision is AFFIRMED and the petition is DENIED, with
costs against the petitioner.

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

CONSUELO S. DE GARCIA and ANASTACIO GARCIA, petitioners, vs.
HON. COURT OF APPEALS, ANGELINA D. GUEVARA and JUAN B.
GUEVARA, respondents.

DECISION
FERNANDO, J.:
This petition for certiorari to review a decision of respondent Court of Appeals was given
due course because it was therein vigorously asserted that legal questions of gravity and of
moment, there being allegations of an unwarranted departure from and a patent misreading of
applicable and controlling decisions, called for determination by this Tribunal. The brief for
petitioners-spouses, however, failed to substantiate such imputed failings of respondent Court.
The performance did not live up to the promise. On the basis of the facts as duly found by
respondent Court, which we are not at liberty to disregard, and the governing legal provisions,
there is no basis for reversal. We affirm.

The nature of the case presented before the lower court by private respondent Angelina
D. Guevara, assisted by her spouse, Juan B. Guevara, as plaintiffs, was noted in the decision of
respondent Court of Appeals thus: "Plaintiff seeks recovery of `one (1) lady's diamond ring 18
cts. white gold mounting, with one (1) 2.05 cts. diamond-solitaire, and four (4) brills 0.10 cts.
total weight' which she bought on October 27, 1947 from R. Rebullida, Inc."1 Then came a
summary of now respondent Guevara of her evidence: "Plaintiff's evidence tends to show that
around October 11, 1953 plaintiff while talking to Consuelo S. de Garcia, owner of La Bulakeña
restaurant recognized her ring in the finger of Mrs. Garcia and inquired where she bought it,
which the defendant answered from her comadre. Plaintiff explained that that ring was stolen
from her house in February, 1952. Defendant handed the ring to plaintiff and it fitted her finger.
 48

Two or three days later, at the request of plaintiff, plaintiff, her husband Lt. Col. Juan Guevara,
Lt. Cementina of Pasay PD, defendant and her attorney proceeded to the store of Mr. Rebullida
to whom they showed the ring in question. Mr. Rebullida a examined the ring with the aid of
high power lens and after consulting the stock card thereon, concluded that it was the very ring
that plaintiff bought from him in 1947. The ring was returned to defendant who despite a written
request therefor failed to deliver the ring to plaintiff. Hence, this case. Later on when the sheriff
tried to serve the writ of seizure (replevin), defendant refused to deliver the ring which had been
examined by Mr. Rebullida, claiming it was lost."2

How the defendant, Consuelo S. de Garcia, the present petitioner before us, along with
her husband Anastacio Garcia, sought to meet plaintiff's claim was narrated thus: "On the other
hand, defendant denied having made any admission before plaintiff or Mr. Rebullida or the
sheriff. Her evidence tends to show that the ring (Exhibit 1) was purchased by her from Mrs.
Miranda who got it from Miss Angelita Hinahon who in turn got it from the owner, Aling
Petring, who was boarding in her house; that the ring she bought could be similar to, but not the
same ring plaintiff purchased from Mr. Rebullida which was stolen; that according to a pawn-
shop owner the big diamond on Exhibit 1 was before the trial never dismantled. When
dismantled, defendant's diamond was found to weigh 2.57 cts."3

Plaintiff lost in the lower court. She elevated the matter to respondent Court of Appeals
with the judgment of the lower court being reversed. It is this decision now under review.

These are the facts as found by respondent Court of Appeals: "That the ring brought by
the parties for examination by Rafael Rebullida on December 14, 1953 was the same ring
purchased by plaintiff from R. Rebullida, Inc. on October 27, 1947 and stolen in February, 1952
has been abundantly established by plaintiff's evidence. Before plaintiff lost the ring, she had
been wearing it for six years and became familiar with it. Thus, when she saw the missing ring in
the finger of defendant, she readily and definitely identified it. Her identification was confirmed
by Mr. Rafael Rebullida, whose candid testimony is entitled to great weight, with his 30 years
experience behind him in the jewelry business and being a disinterested witness since both
parties are his customers. Indeed, defendant made no comment when in her presence Rebullida
after examining the ring and stock card told plaintiff that that was her ring, nor did she answer
plaintiff's letter of demand, ... asserting ownership. Further confirmation may be found in the
extra-judicial admissions, contained in defendant's original and first amended answers ..."4

These further facts likewise appeal therein: "The foregoing proof is not counter-balanced
by the denial on the part of defendant or the presentation of the ring, Exhibit I, which has a
diamond-solitaire 2.57 cts., or much heavier than the lost diamond weighing 2.05 cts. only. It is
noteworthy that defendant gave a rather dubious source of her ring. Aling Petring from whom the
ring supposedly came turned out to be a mysterious and ephemeral figure. Miss Hinahon did not
even know her true and full name, nor her forwarding address. She appeared from nowhere,
boarded three months in the house of Miss Hinahon long enough to sell her diamond ring,
disappearing from the scene a week thereafter. Indeed, the case was terminated without any
hearing on the third-party and fourth-party complaints, which would have shown up the falsity of
defendant's theory. Moreover, Mrs. Baldomera Miranda, third-party defendant, who tried to
corroborate defendant on the latter's alleged attempt to exchange the ring defendant bought
 49

through her, is [belied] by her judicial admission in her Answer that appellee `suggested that she
would make alterations to the mounting and structural design of the ring to hide the true identity
and appearance of the original one' (Cunanan vs. Amparo, 45 O.G. 3796). Finally, defendant is
refuted by her own extra-judicial admissions ... although made by defendant's counsel. For an
attorney who acts as counsel of record and is permitted to act such, has the authority to manage
the cause, and this includes the authority to make admission for the purpose of the litigation...
Her proffered explanation that her counsel misunderstood her is puerile because the liability to
error as to the identity of the vendor and the exchange of the ring with another ring of the same
value, was rather remote."5

It is in the light of the above facts as well as the finding that the discrepancy as to the
weight between the diamond-solitaire in Exhibit I and the lost diamond was due to defendant
having "substituted a diamond-solitaire of plaintiff with a heavier stone" that the decision was
rendered, respondent Court reversing the lower court and ordering defendant, now petitioner
Consuelo S. de Garcia, to return plaintiff's ring or fact value of P1,000.00 and costs, as well as to
pay plaintiff P1,000.00 as attorney's fee and P1,000.00 as exemplary damages. Hence this
appeal.

To repeat, there is no occasion to reverse respondent Court. It correctly applied the law to
the facts as found.

1. The controlling provision is Article 559 of the Civil Code. It reads thus: "The possession of
movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost
any movable or has been unlawfully deprived thereof may recover it from the person in
possession of the same. If the possessor of a movable lost of which the owner has been
unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its
return without reimbursing the price paid therefor." Respondent Angelina D. Guevara, having
been unlawfully deprived of the diamond ring in question, was entitled to recover it from
petitioner Consuelo S. de Garcia who was found in possession of the same. The only exception
the law allows is when there is acquisition in good faith of the possessor at a public sale, in
which case the owner cannot obtain its return without reimbursing the price. As authoritative
interpreted in Cruz v. Pahati,6 the right of the owner cannot be defeated even by proof that there
was good faith by the acquisition by the possessor. There is a reiteration of this principle
in Aznar v. Yapdiangco.7 Thus: "Suffice it to say in this regard that the right of the owner to
recover personal property acquired in good faith by another, is based on his being dispossessed
without his consent. The common law principle that where one of two innocent persons must
suffer by a fraud perpetrated by the another, the law imposes the loss upon the party who, by his
misplaced confidence, has enabled the fraud to be committed, cannot be applied in a case which
is covered by an express provision of the new Civil Code, specifically Article 559. Between a
common law principle and statutory provision, the latter must prevail in this jurisdiction."8

2. It is thus immediately apparent that there is no merit to the contention raised in the first
assigned error that her possession in good faith, equivalent to title, sufficed to defeat respondent
Guevara's claim. As the above cases demonstrate, even on that assumption the owner can recover
the same once she can show illegal deprivation. Respondent Court of Appeals was so convinced
from the evidence submitted that the owner of the ring in litigation is such respondent. That is a
 50

factual determination to which we must pay heed. Instead of proving any alleged departure from
legal norms by respondent Court, petitioner would stress Article 541 of the Civil Code, which
provides: 'A possessor in the concept of owner has in his favor the legal presumption that he
possesses with a just title and he cannot be obliged to show or prove it." She would accord to it a
greater legal significance than that to which under the controlling doctrines it is entitled. The
brief for respondents did clearly point out why petitioner's assertion is lacking in support not
only from the cases but even from commentators. Thus: "Actually, even under the first clause,
possession in good faith does not really amount to title, for the reason that Art. 1132 of the Code
provides for a period of acquisitive prescription for movables through `uninterrupted possession
for four years in good faith' (Art. 1955 of the old Spanish Code, which provided a period of three
years), so that many Spanish writers, including Manresa, Sanchez Roman, Scaevola, De Buen,
and Ramos, assert that under Art. 464 of the Spanish Code (Art. 559 of the New Civil Code), the
title of the possessor is not that of ownership, but is merely a presumptive title sufficient to serve
as a basis of acquisitive prescription (II Tolentino, Civil Code of the Phil. p. 258: IV Manresa,
Derecho Civil Español, 6th Ed., p. 380). And it is for the very reason that the title established by
the first clause of Art. 559 is only a presumptive title sufficient to serve as a basis for acquisitive
prescription, that the clause immediately following provides that `one who has lost any movable
or has been unlawfully deprived thereof, may recover it from the person in possession of the
same.' As stated by the Honorable Justice Jose B. L. Reyes of this Court in Sotto vs. Enage
(C.A.), 43 Off. Gaz. 5075, Dec. 1947: `Article 559 in fact assumes that possessor is as yet not the
owner; for it is obvious that where the possessor has come to acquire indefeasible title by, let us
say, adverse possession for the necessary period, no proof of loss or illegal deprivation could
avail the former owner of the chattel. He would no longer be entitled to recover it under any
condition.' "9

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

The third assigned error of petitioners would find fault with respondent Court relying "on
the weakness of the title or evidence" of petitioner Consuelo S. de Garcia. It is true, in the
decision under review, mention was made of petitioner Consuelo S. de Garcia making no
comment when in her presence Rebullida, after examining the ring the stock card, told
respondent Angelina L. Guevara that that was her ring, nor did petitioner answer a letter of the
latter asserting ownership. It was likewise stated in such decision that there were extra-judicial
admissions in the original and first amended answers of petitioner. In the appraisal of her
testimony, respondent Court likewise spoke of her giving a rather dubious source of her ring, the
person from whom she allegedly bought it turning out "to be a mysterious and ephemeral figure."
As a matter of fact, as set forth a few pages back, respondent Court did enumerate the flaws in
the version given by petitioner. From the weakness of the testimony offered which, as thus made
clear, petitioner, did not even seek to refute, she would raise the legal question that respondent
Court relied on the "weakness of [her] title or evidence" rather than on the proof justifying
 51

respondent Angelina D. Guevara's claim of ownership. Petitioner here would ignore the finding
of fact of respondent Court that such ownership on her part "has been abundantly established" by
her evidence. Again here, in essence, the question raised is one of fact, and there is no
justification for us to reverse respondent Court.

The legal question raised in the fourth assignment of error is that the matter of the
substitution of the diamond on the ring was a question raised for the first time on appeal as it was
never put in issue by the pleadings nor the subject of reception of evidence by both parties and
not touched upon in the decision of the lower court. Why no such question could be raised in the
pleadings of respondent Angelina D. Guevara was clarified by the fact that the substitution came
after it was brought for examination to Mr. Rebullida. After the knowledge of such substitution
was gained, however, the issue was raised at the trial according to the said respondent resulting
in that portion of the decision where the lower court reached a negative conclusion. As a result,
in the motion for reconsideration, one of the points raised as to such decision being contrary to
the evidence is the finding that there was no substitution. It is not necessary to state that
respondent Court, exercising its appellate power reversed the lower court. What was held by it is
controlling. What is clear is that there is no factual basis for the legal arguments on which the
fourth assigned error is predicated.

What is said takes care of the fifth assigned error that respondent Court was mistaken in
its finding that there was such a substitution. Again petitioner would have us pass on a question
of credibility which is left to respondent Court of Appeals. The sixth assigned error would
complain against the reversal of the lower court judgment as well as petitioner Consuelo S. de
Garcia being made to pay respondent Angelina D. Guevara exemplary damages, attorney's fees
and costs. The reversal is called for in the light of the appraisal of the evidence of record as
meticulously weighed by respondent Court. As to the attorney's fees and exemplary damages,
this is what respondent Court said in the decision under review: "Likewise, plaintiff is entitled to
recover reasonable attorney's fees in the sum of P1,000, it being just and equitable under the
circumstances, and another P1,000 as exemplary damages for the public good to discourage
litigants from resorting to fraudulent devices to frustrate the ends of justice, as defendant herein
tried to substitute the ring, Exhibit 1, for plaintiff's ring." 10 Considering the circumstances, the
cursory discussion of the sixth assigned error on the matter by petitioner fails to demonstrate that
respondent Court's actuation is blemished by legal defects.

WHEREFORE, the decision of respondent Court of Appeals of August 6, 1962 is hereby

affirmed. With costs.

G.R. No. L-5741 March 13, 1911

ESTANISLAUA ARENAS, ET AL., plaintiffs-appellees,

vs.
FAUSTO O. RAYMUNDO, defendant-appellant.

A.D. Gibbs, for appellant.

Gabriela La O, for appellees.
 52

TORRES, J.:

This is an appeal field by the defendant from a judgment of conviction rendered by the Hon.
Judge Araullo.

On the date of August 31, 1908, the attorneys for the plaintiffs, Estanislaua Arenas and Julian La
O, brought suit against Fausto O. Raymundo, alleging, as a cause of action, that Estanislaua
Arenas was the owner and proprietor of the jewelry described below with the respective value
thereof:

Two gold tamborin rosaries, without bow or reliquary

at P40 each P80

One lady's comb for fastening the hair, made of gold

and silver, adorned with pearls of ordinary size and
many small pearls, one of which is missing 80

One gold ring set with a diamond of ordinary size 1,000

One gold bracelet with five small diamonds and

eight brillantitos de almendras 700

One pair of gold picaporte earrings with two

diamonds of ordinary size and two small ones 1,100

The plaintiffs alleged that the said jewelry, during the last part of April or the beginning of May,
1908, was delivered to Elena de Vega to sell on commission, and that the latter, in turn, delivered
it to Conception Perello, likewise to sell on commission, but that Perello, instead of fulfilling her
trust, pledged the jewelry in the defendant's pawnshop, situated at No. 33 Calle de Ilaya, Tondo,
and appropriated to her own use the money thereby obtained; that on July 30, 1908, Conception
Perello was prosecuted for estafa, convicted, and the judgment became final; that the said
jewelry was then under the control and in the possession of the defendant, as a result of the
pledge by Perello, and that the former refused to deliver it to the plaintiffs, the owners thereof,
wherefore counsel for the plaintiffs asked that judgment be rendered sentencing the defendant to
make restitution of the said jewelry and to pay the costs.

In the affidavit presented by the attorney for the plaintiffs dated September 2, 1908, after a
statement and description of the jewelry mentioned, it is set forth that the defendant was
retaining it for the reason given in the complaint, and that it was not sequestrated for the purpose
of satisfying any tax or fine or by reason of any attachment issued in compliance with any
judgment rendered against the plaintiffs' property.

In discharge of the writ of seizure issued for the said jewelry on the 2nd of September, 1908,
aforementioned, the sheriff of this city made the return that he had, on the same date, delivered
one copy of the bond and another of the said writ to the defendant personally and, on the petition
and designation of the attorney for the plaintiffs, proceeded to seize the jewelry described in the
 53

writ, taking it out of the defendant's control, and held it in his possession during the five days
prescribed by law.

On the 15th of the same month and year, five days having elapsed without the defendant's having
given bond before the court, the sheriff made delivery of all the jewelry described in the said
order to the attorney for the plaintiff to the latter's entire satisfaction, who with the sheriff signed
the return of the writ.

After the demurrer to the complaint had been overruled the defendant answered, setting forth that
he denied each and all of the allegations thereof which were not specifically admitted, explained,
or qualified, and as a special defense alleged that the jewelry, the subject matter of the complaint
was pledged on his pawnshop by Conception Perello, the widow of Pazos, as security for a loan
of P1,524, with the knowledge, consent, and mediation of Gabriel La O, a son of the plaintiffs, as
their agent, and that, in consequence thereof, the said plaintiffs were estopped from disavowing
the action of the said Perello; the defendant therefore prayed that the complaint be dismissed and
that the jewelry seized at the instance of the plaintiffs, or the amount of the loan made thereon,
together with the interest due, be returned to the defendant, with the costs of the suit against the
plaintiffs.

The case came up for hearing on March 17, 1909, and after the presentation of oral testimony by
both parties, the count, on June 23 of the same year, rendered judgment sentencing the defendant
to restore to the plaintiff spouses the jewelry described in the complaint, the right being reserved
to the defendant to institute his action against the proper party. The counsel for the defendant
excepted to this judgment, asked that the same be set aside, and a new trial granted. This motion
was denied, exceptions was taken by the appellant, and the proper bill of exceptions was duly
approved certified to, and forwarded to the clerk of this court.

This is an action for the replevin of certain jewelry delivered by its owner for sale on
commission, and pledged without his knowledge by Concepcion Perello in the pawnshop of the
defendant, Fausto O. Raymundo, who refuses to deliver the said jewelry unless first redeemed.

The said Concepcion Perello, who appropriated to herself the money derived from the pledging
of the jewels before mentioned, together with others, to the prejudice of their owner Estanislaua
Arenas, was prosecuted in the Court of First Instance of this City in cause No. 3955 and
sentenced on July 30, 1908, to the penalty of one year eight months and twenty-one days
of prision correccional, to restore to the offended party the jewelry specified in the complaint, or
to pay the value thereof, amounting to P8,660, or, in case of insolvency, to suffer the
corresponding subsidiary imprisonment, and to pay the costs. This judgment is attested by the
certified copy attached under letter D to folio 26 of the record of the proceedings in the case of
the same plaintiff against Antonio Matute — the pledgee of the other jewelry also appropriated
by the said Concepcion Perello — which record forms a part of the evidence in this cause.

Perello having pledged the jewelry in question to the defendant Raymundo, and not having
redeemed it by paying him the amount received, it follows that the convicted woman, now
serving the sentence imposed upon her, could not restore the jewelry as ordered in that judgment,
which has become final by the defendant's acquiescence.
 54

Article 120 of the Penal Code prescribes:

The restitution of the thing itself must be made, if be in the possession of a third person,
who had acquired it in a legal manner, reserving, however, his action against the proper
person.

Restitution shall be made, even though the thing may be in the possession of a third
person, who had acquired it in a legal manner, reserving, however, his action against the
proper person.

This provision is not applicable to a case in which the third person has acquired the thing
in the manner and with the requisites established by law to make it unrecoverable.

The provisions contained in the first two paragraphs of the preinserted article are based on the
uncontrovertible principle of justice that the party injured through a crime has, as against all
others, a preferential right to be indemnified, or to have restored to him the thing of which he
was unduly deprived by criminal means.

In view of the harmonious relation between the different codes in force in these Islands, it is
natural and logical that the aforementioned provision of the Penal Code, based on the rule
established in article 17 of the same, to wit, that every person criminally liable for a crime or
misdemeanor is also civilly liable, should be in agreement and accordance with the provisions of
article 464 of the Civil Code which prescribes:

The possession of personal property, acquired in good faith, is equivalent to a title

thereto. However, the person who has lost personal property or has been illegally
deprived thereof may recover it from whoever possesses it.

If the possessor of personal property, lost or stolen, has acquired it in good faith at a
public sale, the owner can not recover it without reimbursing the price paid therefor.

Neither can the owner of things pledged in pawnshops, established with the authorization
of the Government, recover them, whosoever may be the person who pledged them,
without previously refunding to the institution the amount of the pledge and the interest
due.

With regard to things acquired on exchange, or at fairs or markets or from a merchant

legally established and usually employed in similar dealings, the provisions of the Code
of Commerce shall be observed.

On January 2, 1908, this court had occasion to decide, among other cases, two which were
entirely analogous to the present one. They were No. 3889, Varela vs. Matute, and No.
3890, Varela vs. Finnick (9 Phil., 479, 482).

In the decisions in both cases it appears that Nicolasa Pascual received various jewels from
Josefa Varela to sell on commission and that, instead of fulfilling the trust or returning the jewels
 55

to their owner, she pledged some of them in the pawnshop of Antonio Matute and others in that
of H.J. Finnick and appropriated to herself the amounts that she received, to the detriment of the
owner of the jewelry.

Tried estafa in cause No. 2429, the said Pascual was convicted and sentenced to the penalty of
one year and eleven months of prision correccional, to restore to Varela, the jewelry
appropriated, or to pay the value thereof, and, in case of insolvency, to subsidiary imprisonment;
this judgment became final, whereupon the defendant began to serve her sentence. The case just
cited is identical to that of Concepcion Perello.

Josefa Varela, in separate incidental proceedings, demanded the restitution or delivery of

possession of the said jewelry; the pledgees, the pawnbrokers, refused to comply with her
demand, alleging, among other reasons, that they were entitled to possession. The two cases were
duly tried, and the Court of First Instance pronounced judgment, supporting the plaintiff's claims
in each. Both cases were appealed by the defendants, Matute and Finnick, and this court affirmed
the judgments on the same grounds, with costs, and the decisions on appeal established the
following legal doctrines:

1. Crimes against property; criminal and civil liability. — Where, in a proceeding

instituted by reason of a crime committed against property, the criminal liability of the
accused has been declared, it follows that he shall also be held civilly liable therefor,
because every person who is criminally responsible on account of a crime or
misdemeanor is also civilly liable.

2. Id.; Recovery of property unlawfully in possession. — Whoever may have been

deprived this property in consequence of a crime is entitled to the recovery thereof, even
if such property is in the possession of a third party who acquired it by legal means other
than those expressly stated in article 464 of the Civil Code.

3. Personal property; title by possession. — In order that the possession of personal

property may be considered as a title thereto it is indispensable that the same shall have
been acquired in good faith.

4. Id.; Ownership; prescription. — The ownership of personal property prescribes in the

manner and within the time fixed by articles 1955 and 1962, in connection with article
464, of the Civil Code.

In the cause prosecuted against Perello, as also in the present suit, it was not proven that
Estanislaua Arenas authorized the former to pawn the jewelry given to her by Arenas to sell on
commission. Because of the mere fact of Perello's having been convicted and sentenced
for estafa, and for the very reason that she is now serving her sentence must be complied with,
that is, the jewelry misappropriated must be restored to its owner, inasmuch as it exists and has
not disappeared this restitution must be made, although the jewelry is found in the pawnshop of
Fausto O. Raymundo and the latter had acquired it by legal means. Raymundo however retains
his right to collect the amounts delivered upon the pledge, by bringing action against the proper
 56

party. This finding is in accord with the provisions of the above article 120 of the Penal Code
and first paragraph of article 464 of the Civil Code.

The aforementioned decision, No. 3890, Varela vs. Finnick, recites among other considerations,
the following:

The exception contained in paragraph 3 of said article is not applicable to the present case
because a pawnshop does not enjoy the privilege established by article 464 of the Civil
Code. The owner of the loan office of Finnick Brothers, notwithstanding the fact that he
acted in good faith, did not acquire the jewels at a public sale; it is not a question of
public property, securities, or other such effects, the transfer, sale, or disposal of which is
subject to the provisions of the Code of Commerce. Neither does a pawnshop enjoy the
privilege granted to a monte de piedad; therefore, Josefa Varela, who lost said jewels and
was deprived of the same in consequence of a crime, is entitled to the recovery thereof
from the pawnshop of Finnick Brothers, where they were pledged; the latter can not
lawfully refuse to comply with the provisions of article 120 of the Penal Code, as it is a
question of jewels which has been misappropriated by the commission of the crime
of estafa, and the execution of the sentence which orders the restitution of the jewels can
not be avoided because of the good faith with which the owner of the pawnshop acquired
them, inasmuch as they were delivered to the accused, who was not the owner nor
authorized to dispose of the same.

Even supposing that the defendant Raymundo had acted in good faith in accepting the pledge of
the jewelry in litigation, even then he would not be entitled to retain it until the owner thereof
reimburse him for the amount loaned to the embezzler, since the said owner of the jewelry, the
plaintiff, did not make any contract with the pledgee, that would obligate him to pay the amount
loaned to Perello, and the trial record does not disclose any evidence, even circumstantial, that
the plaintiff Arenas consented to or had knowledge of the pledging of her jewelry in the
pawnshop of the defendant.

For this reason, and because Conception Perello was not the legitimate owner of the jewelry
which she pledged to the defendant Raymundo, for a certain sum that she received from the latter
as a loan, the contract of pledge entered the jewelry so pawned can not serve as security for the
payment of the sum loaned, nor can the latter be collected out of the value of the said jewelry.

Article 1857 of the Civil Code prescribes as one of the essential requisites of the contracts of
pledge and of mortgage, that the thing pledged or mortgaged must belong to the person who
pledges or mortgages it. This essential requisite for the contract of pledge between Perello and
the defendant being absent as the former was not the owner of the jewelry given in pledge, the
contract is as devoid of value and force as if it had not been made, and as it was executed with
marked violation of an express provision of the law, it can not confer upon the defendant any
rights in the pledged jewelry, nor impose any obligation toward him on the part of the owner
thereof, since the latter was deprived of her possession by means of the illegal pledging of the
said jewelry, a criminal act.
 57

Between the supposed good faith of the defendant Raymundo and the undisputed good faith of
the plaintiff Arenas, the owner of the jewelry, neither law nor justice permit that the latter, after
being the victim of the embezzlement, should have to choose one of the two extremes of a
dilemma, both of which, without legal ground or reason, are injurious and prejudicial to her
interest and rights, that is, she must either lose her jewelry or pay a large sum received by the
embezzler as a loan from the defendant, when the plaintiff Arenas is not related to the latter by
any legal or contractual bond out of which legal obligations arise.

It is true that the plaintiffs' son, attorney Gabriel La O, intervened and gave his consent when the
Concepcion Perello pawned the jewelry in litigation with Fausto Raymundo for P1,524? In view
of the evidence offered by the trial record, the answer is, of course, in the negative.

The parents of the attorney Gabriel La O being surprised by the disagreeable news of the
disappearance of various jewels, amounting in value to more than P8,600, delivered to Elena
Vega for sale on commission and misappropriated by Conception Perello, who received them
from Vega for the same purpose, it is natural that the said attorney, acting in representation of his
parents and as an interested party, should have proceeded to ascertain the whereabouts of the
embezzled jewelry an to enter into negotiations with the pawnshop of Fausto O. Raymundo, in
whose possession he had finally learned were to be found a part of the embezzled jewels, as he
had been informed by the said Perello herself; and although, at first, at the commencement of his
investigations, he met with opposition on the part of the pledgee Raymundo, who objected to
showing him the jewels that he desired to see in order to ascertain whether they were those
embezzled and belonging to his mother, the plaintiff Arenas, thanks to the intervention of
attorney Chicote and to the fact that they succeeded in obtaining from the embezzler, among
other papers, the pawn ticket issued by Raymundo's pawnshop, Exhibit E, of the date of May 4,
1908, folio 19 of the record in the case against Matute, Gabriel La O succeeded in getting the
defendant to show him the jewelry described in the said ticket together with other jewels that did
not belong to La O's mother, that had been given the defendant by Ambrosia Capistrano,
Perello's agent, in pledge or security for a loan of P170.

Gabriel La O, continuing the search for other missing jewelry belonging to his mother, found
that Fausto O. Raymundo was in possession of it and had received it from the same embezzler as
security for a debt, although the defendant Raymundo would not exhibit it until he issued the
pawn tickets corresponding to such jewels; therefore, at Raymundo's request, Perello, by means
of the document Exhibit C, signed by herself and bearing date of June 10, 1908, folio 28 of the
record, authorized her son Ramon to get from the defendant, in her name, the pawn tickets of the
said other jewelry, for which such tickets had not yet been issued; Raymundo then wrote out the
tickets — Exhibits L, LL, and M, all dated June 22, 1908, and found on folios 20, 21 and 22 of
the record of the aforesaid proceedings against Matute — in the presence of the attorney Gabriel
La O, who kept the said three pawn tickets, after he had made sure that the jewels described
therein and which Raymundo, taking them out of his cabinet, exhibited to him at the time, were
among those embezzled from his mother.

So that, when the three aforementioned pawn tickets, Exhibits L, LL, and M, from the pawnshop
of the defendant were made out, the latter already, and for some time previous, had in his
possession as a pledge the jewelry described in them, and the plaintiffs' son naturally desiring to
 58

recover his parent's jewelry, was satisfied for the time being with keeping the three pawn tickets
certifying that such jewelry was pawned to the defendant.

Moreover, the record discloses no proof that the attorney Gabriel La O consented to or took any
part in the delivery of the jewelry in question to the defendant as a pledge, and both the said
defendant, Raymundo, and the embezzler Perello, averred in their respective testimony that the
said attorney La O had no knowledge of and took no part in the pledging of the jewelry, and
Perello further stated that she had received all the money loaned to her by the defendant
Raymundo. (Folios 13 to 14, and 76 to 80 of the record in the case against Matute.)

The business of pawnshops, in exchange for the high and onerous interest which constitutes its
enormous profits, is always exposed to the contingency of receiving in pledge or security for the
loans, jewels and other articles that have been robbed, stolen, or embezzled from their legitimate
owners; and as the owner of the pawnshop accepts the same and asks for money on it, without
assuring himself whether such bearer is or is not the owner thereof, he can not, by such
procedure, expect from the law better and more preferential protection than the owner of the
jewels or other articles, who was deprived thereof by means of a crime and is entitled to be
excused by the courts.

Antonio Matute, the owner of another pawnshop, being convinced that he was wrong, refrained
from appealing from the judgment wherein he was sentenced to return, without redemption, to
the plaintiffs, another jewel of great value which had been pledged to him by the same Perello.
He undoubtedly had in mind some of the previous decisions of this court, one of which was
against himself.

For the foregoing reasons, whereby the errors attributed to the judgment of the Court of First
Instance have been discussed and decided upon, and the said judgment being in harmony with
the law, the evidence and the merits of the case, it is proper, in our opinion, to affirm the same,
as we hereby do, with the costs against the appellant. So ordered.