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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.
Emiliano S. Samson, R. Balderrama-Samson, Mary Anne B. Samson
for petitioner.
Cendana Santos, Delmundo & Cendana for private respondents.
CRUZ, J.:
The case before us calls for the interpretation of Article 559 of the
Civil Code and raises the particular question of when a person
may be deemed to have been "unlawfully deprived" of movable
property in the hands of another. The article runs in full as
follows:
Art. 559. The possession of movable property acquired in good
faith is equivalent to a title. Nevertheless, one who has lost any
movable or has been unlawfully deprived thereof, may recover it
from the person in possession of the same.
If the possessor of a movable lost or of which the owner has been
unlawfully deprived has acquired it in good faith at a public sale,
the owner cannot obtain its return without reimbursing the price
paid therefor.
The movable property in this case consists of books, which were
bought from the petitioner by an impostor who sold it to the
private respondents. Ownership of the books was recognized in
the private respondents by the Municipal Trial Court, 1 which was
sustained by the Regional Trial Court, 2 which was in turn
sustained by the Court of Appeals. 3 The petitioner asks us to
declare that all these courts have erred and should be reversed.
This case arose when on October 5, 1981, a person identifying
himself as Professor Jose Cruz placed an order by telephone with
the petitioner company for 406 books, payable on delivery. 4
EDCA prepared the corresponding invoice and delivered the books
as ordered, for which Cruz issued a personal check covering the
purchase price of P8,995.65. 5 On October 7, 1981, Cruz sold 120
of the books to private respondent Leonor Santos who, after
verifying the seller's ownership from the invoice he showed her,
paid him P1,700.00. 6
Meanwhile, EDCA having become suspicious over a second order
placed by Cruz even before clearing of his first check, made
inquiries with the De la Salle College where he had claimed to be a
dean and was informed that there was no such person in its
employ. Further verification revealed that Cruz had no more
account or deposit with the Philippine Amanah Bank, against
which he had drawn the payment check. 7 EDCA then went to the
police, which set a trap and arrested Cruz on October 7, 1981.
Investigation disclosed his real name as Tomas de la 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.
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
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we agree. Leonor Santos first ascertained the ownership of the
books from the EDCA invoice showing that they had been sold to
Cruz, who said he was selling them for a discount because he was
in financial need. Private respondents are in the business of
buying and selling books and often deal with hard-up sellers who
urgently have to part with their books at reduced prices. To
Leonor Santos, Cruz must have been only one of the many such
sellers she was accustomed to dealing with. It is hardly bad faith
for any one in the business of buying and selling books to buy
them at a discount and resell them for a profit.
But the real issue here is whether the petitioner has been
unlawfully deprived of the books because the check issued by the
impostor in payment therefor was dishonored.
In its extended memorandum, EDCA cites numerous cases holding
that the owner who has been unlawfully deprived of personal
property is entitled to its recovery except only where the property
was purchased at a public sale, in which event its return is subject
to reimbursement of the purchase price. The petitioner is begging
the question. It is putting the cart before the horse. Unlike in the
cases invoked, it has yet to be established in the case at bar that
EDCA has been unlawfully deprived of the books.
The petitioner argues that it was, because the impostor acquired
no title to the books that he could have validly transferred to the
private respondents. Its reason is that as the payment check
bounced for lack of funds, there was a failure of consideration
that nullified the contract of sale between it and Cruz.
The contract of sale is consensual and is perfected once
agreement is reached between the parties on the subject matter
and the consideration. According to the Civil Code:

Art. 1475. The contract of sale is perfected at the moment there is
a meeting of minds upon the thing which is the object of the
contract and upon the price.
From that moment, the parties may reciprocally demand
performance, subject to the provisions of the law governing the
form of contracts.
xxx xxx xxx
Art. 1477. The ownership of the thing sold shall be transferred to
the vendee upon the actual or constructive delivery thereof.
Art. 1478. The parties may stipulate that ownership in the thing
shall not pass to the purchaser until he has fully paid the price.
It is clear from the above provisions, particularly the last one
quoted, that ownership in the thing sold shall not pass to the
buyer until full payment of the purchase only if there is a
stipulation to that effect. Otherwise, the rule is that such
ownership shall pass from the vendor to the vendee upon the
actual or constructive delivery of the thing sold even if the
purchase price has not yet been paid.
Non-payment only creates a right to demand payment or to
rescind the contract, or to criminal prosecution in the case of
bouncing checks. But absent the stipulation above noted, delivery
of the thing sold will effectively transfer ownership to the buyer
who can in turn transfer it to another.
In Asiatic Commercial Corporation v. Ang,11 the plaintiff sold
some cosmetics to Francisco Ang, who in turn sold them to Tan Sit
Page |3
Bin. Asiatic not having been paid by Ang, it sued for the recovery
of the articles from Tan, who claimed he had validly bought them
from Ang, paying for the same in cash. Finding that there was no
conspiracy between Tan and Ang to deceive Asiatic the Court of
Appeals declared:
Yet the defendant invoked Article 464 12 of the Civil Code
providing, among other things that "one who has been unlawfully
deprived of personal property may recover it from any person
possessing it." We do not believe that the plaintiff has been
unlawfully deprived of the cartons of Gloco Tonic within the scope
of this legal provision. It has voluntarily parted with them
pursuant to a contract of purchase and sale. The circumstance
that the price was not subsequently paid did not render illegal a
transaction which was valid and legal at the beginning.
In Tagatac v. Jimenez,13 the plaintiff sold her car to Feist, who
sold it to Sanchez, who sold it to Jimenez. When the payment
check issued to Tagatac by Feist was dishonored, the plaintiff sued
to recover the vehicle from Jimenez on the ground that she had
been unlawfully deprived of it by reason of Feist's deception. In
ruling for Jimenez, the Court of Appeals held:
The point of inquiry is whether plaintiff-appellant Trinidad C.
Tagatac has been unlawfully deprived of her car. At first blush, it
would seem that she was unlawfully deprived thereof, considering
that she was induced to part with it by reason of the chicanery
practiced on her by Warner L. Feist. Certainly, swindling, like
robbery, is an illegal method of deprivation of property. In a
manner of speaking, plaintiff-appellant was "illegally deprived" of
her car, for the way by which Warner L. Feist induced her to part
with it is illegal and is punished by law. But does this "unlawful

deprivation" come within the scope of Article 559 of the New Civil
Code?
xxx xxx xxx
. . . The fraud and deceit practiced by Warner L. Feist earmarks
this sale as a voidable contract (Article 1390 N.C.C.). Being a
voidable contract, it is susceptible of either ratification or
annulment. If the contract is ratified, the action to annul it is
extinguished (Article 1392, N.C.C.) and the contract is cleansed
from all its defects (Article 1396, N.C.C.); if the contract is
annulled, the contracting parties are restored to their respective
situations before the contract and mutual restitution follows as a
consequence (Article 1398, N.C.C.).
However, as long as no action is taken by the party entitled, either
that of annulment or of ratification, the contract of sale remains
valid and binding. When plaintiff-appellant Trinidad C. Tagatac
delivered the car to Feist by virtue of said voidable contract of
sale, the title to the car passed to Feist. Of course, the title that
Feist acquired was defective and voidable. Nevertheless, at the
time he sold the car to Felix Sanchez, his title thereto had not
been avoided and he therefore conferred a good title on the
latter, provided he bought the car in good faith, for value and
without notice of the defect in Feist's title (Article 1506, N.C.C.).
There being no proof on record that Felix Sanchez acted in bad
faith, it is safe to assume that he acted in good faith.
The above rulings are sound doctrine and reflect our own
interpretation of Article 559 as applied to the case before us.
Actual delivery of the books having been made, Cruz acquired
ownership over the books which he could then validly transfer to
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the private respondents. The fact that he had not yet paid for
them to EDCA was a matter between him and EDCA and did not
impair the title acquired by the private respondents to the books.
One may well imagine the adverse consequences if the phrase
"unlawfully deprived" were to be interpreted in the manner
suggested by the petitioner. A person relying on the seller's title
who buys a movable property from him would have to surrender
it to another person claiming to be the original owner who had
not yet been paid the purchase price therefor. The buyer in the
second sale would be left holding the bag, so to speak, and would
be compelled to return the thing bought by him in good faith
without even the right to reimbursement of the amount he had
paid for it.
It bears repeating that in the case before us, Leonor Santos took
care to ascertain first that the books belonged to Cruz before she
agreed to purchase them. The EDCA invoice Cruz showed her
assured her that the books had been paid for on delivery. By
contrast, EDCA was less than cautious — in fact, too trusting in
dealing with the impostor. Although it had never transacted with
him before, it readily delivered the books he had ordered (by
telephone) and as readily accepted his personal check in payment.
It did not verify his identity although it was easy enough to do
this. It did not wait to clear the check of this unknown drawer.
Worse, it indicated in the sales invoice issued to him, by the
printed terms thereon, that the books had been paid for on
delivery, thereby vesting ownership in the buyer.
Surely, the private respondent did not have to go beyond that
invoice to satisfy herself that the books being offered for sale by
Cruz belonged to him; yet she did. Although the title of Cruz was
presumed under Article 559 by his mere possession of the books,
 Page |5

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.1âwphi1 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-18536 March 31, 1965
JOSE B. AZNAR, plaintiff-appellant,
vs.
RAFAEL YAPDIANGCO, defendant-appellee;
TEODORO SANTOS, intervenor-appellee.
Florentino M. Guanlao for plaintiff-appellant.
Rafael Yapdiangco in his own behalf as defendant-appellee.
Lorenzo Sumulong, R. B. Hilao and B. S. Felipe for intervenor-
appellee.
REGALA, J.:
This is an appeal, on purely legal questions, from a decision of the
Court of First Instance of Quezon City, Branch IV, declaring the
intervenor-appellee, Teodoro Santos, entitled to the possession of
the car in dispute.
The records before this Court disclose that sometime in May,
1959, Teodoro Santos advertised in two metropolitan papers the
sale of his FORD FAIRLANE 500. In the afternoon of May 28, 1959,
a certain L. De Dios, claiming to be a nephew of Vicente Marella,
went to the Santos residence to answer the ad. However, Teodoro
Santos was out during this call and only the latter's son, Irineo
Santos, received and talked with De Dios. The latter told the
young Santos that he had come in behalf of his uncle, Vicente
Marella, who was interested to buy the advertised car.
On being informed of the above, Teodoro Santos instructed his
son to see the said Vicente Marella the following day at his given
address: 1642 Crisostomo Street, Sampaloc, Manila. And so, in the
morning of May 29, 1959, Irineo Santos went to the above
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address. At this meeting, Marella agreed to buy the car for
P14,700.00 on the understanding that the price would be paid
only after the car had been registered in his name.
Irineo Santos then fetched his father who, together with L. De
Dios, went to the office of a certain Atty. Jose Padolina where the
deed of the sale for the car was executed in Marella's favor. The
parties to the contract thereafter proceeded to the Motor
Vehicles Office in Quezon City where the registration of the car in
Marella's name was effected. Up to this stage of the transaction,
the purchased price had not been paid.
From the Motor Vehicles Office, Teodoro Santos returned to his
house. He gave the registration papers and a copy of the deed of
sale to his son, Irineo, and instructed him not to part with them
until Marella shall have given the full payment for the car. Irineo
Santos and L. De Dios then proceeded to 1642 Crisostomo Street,
Sampaloc, Manila where the former demanded the payment from
Vicente Marella. Marella said that the amount he had on hand
then was short by some P2,000.00 and begged off to be allowed
to secure the shortage from a sister supposedly living somewhere
on Azcarraga Street, also in Manila. Thereafter, he ordered L. De
Dios to go to the said sister and suggested that Irineo Santos go
with him. At the same time, he requested the registration papers
and the deed of sale from Irineo Santos on the pretext that he
would like to show them to his lawyer. Trusting the good faith of
Marella, Irineo handed over the same to the latter and thereupon,
in the company of L. De Dios and another unidentified person,
proceeded to the alleged house of Marella's sister.
At a place on Azcarraga, Irineo Santos and L. De Dios alighted
from the car and entered a house while their unidentified
companion remained in the car. Once inside, L. De Dios asked

Irineo Santos to wait at the sala while he went inside a room. That
was the last that Irineo saw of him. For, after a considerable
length of time waiting in vain for De Dios to return, Irineo went
down to discover that neither the car nor their unidentified
companion was there anymore. Going back to the house, he
inquired from a woman he saw for L. De Dios and he was told that
no such name lived or was even known therein. Whereupon,
Irineo Santos rushed to 1642 Crisostomo to see Marella. He found
the house closed and Marella gone. Finally, he reported the
matter to his father who promptly advised the police authorities.
That very same day, or on the afternoon of May 29, 1959 Vicente
Marella was able to sell the car in question to the plaintiff-
appellant herein, Jose B. Aznar, for P15,000.00. Insofar as the
above incidents are concerned, we are bound by the factual
finding of the trial court that Jose B. Aznar acquired the said car
from Vicente Marella in good faith, for a valuable consideration
and without notice of the defect appertaining to the vendor's
title.
While the car in question was thus in the possession of Jose B.
Aznar and while he was attending to its registration in his name,
agents of the Philippine Constabulary seized and confiscated the
same in consequence of the report to them by Teodoro Santos
that the said car was unlawfully taken from him.
In due time, Jose B. Aznar filed a complaint for replevin against
Captain Rafael Yapdiangco, the head of the Philippine
Constabulary unit which seized the car in question Claiming
ownership of the vehicle, he prayed for its delivery to him. In the
course of the litigation, however, Teodoro Santos moved and was
allowed to intervene by the lower court.
Page |7
At the end of the trial, the lower court rendered a decision
awarding the disputed motor vehicle to the intervenor-appellee,
Teodoro Santos. In brief, it ruled that Teodoro Santos had been
unlawfully deprived of his personal property by Vicente Marella,
from whom the plaintiff-appellant traced his right. Consequently,
although the plaintiff-appellant acquired the car in good faith and
for a valuable consideration from Vicente Marella, the said
decision concluded, still the intervenor-appellee was entitled to
its recovery on the mandate of Article 559 of the New Civil Code
which provides:
ART. 559. The possession of movable property acquired in good
faith is equivalent to title. Nevertheless, one who lost any
movable or has been unlawfully deprived thereof, may recover it
from the person in possession of the same.
If the possessor of a movable lost or of which the owner has been
unlawfully deprived, has acquired it in good faith at a public sale,
the owner cannot obtain its return without reimbursing the price
paid therefor.
From this decision, Jose B. Aznar appeals.
The issue at bar is one and simple, to wit: Between Teodoro
Santos and the plaintiff-appellant, Jose B. Aznar, who has a better
right to the possession of the disputed automobile?
We find for the intervenor-appellee, Teodoro Santos.
The plaintiff-appellant accepts that the car in question originally
belonged to and was owned by the intervenor-appellee, Teodoro
Santos, and that the latter was unlawfully deprived of the same by
Vicente Marella. However, the appellant contends that upon the

facts of this case, the applicable provision of the Civil Code is
Article 1506 and not Article 559 as was held by the decision under
review. Article 1506 provides:
ART. 1506. Where the seller of goods has a voidable title thereto,
but his, title has not been voided at the time of the sale, the buyer
acquires a good title to the goods, provided he buys them in good
faith, for value, and without notice of the seller's defect of title.
The contention is clearly unmeritorious. Under the aforequoted
provision, it is essential that the seller should have a voidable title
at least. It is very clearly inapplicable where, as in this case, the
seller had no title at all.
Vicente Marella did not have any title to the property under
litigation because the same was never delivered to him. He sought
ownership or acquisition of it by virtue of the contract. Vicente
Marella could have acquired ownership or title to the subject
matter thereof only by the delivery or tradition of the car to him.
Under Article 712 of the Civil Code, "ownership and other real
rights over property are acquired and transmitted by law, by
donation, by testate and intestate succession, and in consequence
of certain contracts, by tradition." As interpreted by this Court in a
host of cases, by this provision, ownership is not transferred by
contract merely but by tradition or delivery. Contracts only
constitute titles or rights to the transfer or acquisition of
ownership, while delivery or tradition is the mode of
accomplishing the same (Gonzales v. Rojas, 16 Phil. 51; Ocejo,
Perez and Co. v. International Bank, 37 Phil. 631, Fidelity and
Deposit Co. v. Wilson, 8 Phil. 51; Kuenzle & Streiff v. Wacke &
Chandler, 14 Phil. 610; Easton v. Diaz Co., 32 Phil. 180).
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For the legal acquisition and transfer of ownership and other
property rights, the thing transferred must be delivered, inasmuch
as, according to settled jurisprudence, the tradition of the thing is
a necessary and indispensable requisite in the acquisition of said
ownership by virtue of contract. (Walter Laston v. E. Diaz & Co. &
the Provincial Sheriff of Albay, supra.)
So long as property is not delivered, the ownership over it is not
transferred by contract merely but by delivery. Contracts only
constitute titles or rights to the transfer or acquisition of
ownership, while delivery or tradition is the method of
accomplishing the same, the title and the method of acquiring it
being different in our law. (Gonzales v. Roxas, 16 Phil. 51)
In the case on hand, the car in question was never delivered to
the vendee by the vendor as to complete or consummate the
transfer of ownership by virtue of the contract. It should be
recalled that while there was indeed a contract of sale between
Vicente Marella and Teodoro Santos, the former, as vendee, took
possession of the subject matter thereof by stealing the same
while it was in the custody of the latter's son.
There is no adequate evidence on record as to whether Irineo
Santos voluntarily delivered the key to the car to the unidentified
person who went with him and L. De Dios to the place on
Azcarraga where a sister of Marella allegedly lived. But even if
Irineo Santos did, it was not the delivery contemplated by Article
712 of the Civil Code. For then, it would be indisputable that he
turned it over to the unidentified companion only so that he may
drive Irineo Santos and De Dios to the said place on Azcarraga and
not to vest the title to the said vehicle to him as agent of Vicente
Marella. Article 712 above contemplates that the act be coupled
with the intent of delivering the thing. (10 Manresa 132)
 Page |9

The lower court was correct in applying Article 559 of the Civil Finally, the plaintiff-appellant here contends that inasmuch as it
Code to the case at bar, for under it, the rule is to the effect that if was the intervenor-appellee who had caused the fraud to be
the owner has lost a thing, or if he has been unlawfully deprived perpetrated by his misplaced confidence on Vicente Marella, he,
of it, he has a right to recover it, not only from the finder, thief or the intervenor-appellee, should be made to suffer the
robber, but also from third persons who may have acquired it in consequences arising therefrom, following the equitable principle
good faith from such finder, thief or robber. The said article to that effect. Suffice it to say in this regard that the right of the
establishes two exceptions to the general rule of irrevindicability, owner to recover personal property acquired in good faith by
to wit, when the owner (1) has lost the thing, or (2) has been another, is based on his being dispossessed without his consent.
unlawfully deprived thereof. In these cases, the possessor cannot The common law principle that where one of two innocent
retain the thing as against the owner, who may recover it without persons must suffer by a fraud perpetrated by another, the law
paying any indemnity, except when the possessor acquired it in a imposes the loss upon the party who, by his misplaced
public sale. (Del Rosario v. Lucena, 8 Phil. 535; Varela v. Finnick, 9 confidence, has enabled the fraud to be committed, cannot be
Phil. 482; Varela v. Matute, 9 Phil. 479; Arenas v. Raymundo, 19 applied in a case which is covered by an express provision of the
Phil. 46. Tolentino, id., Vol. II, p. 261.) new Civil Code, specifically Article 559. Between a common law
principle and a statutory provision, the latter must prevail in this
In the case of Cruz v. Pahati, et al., 52 O.G. 3053 this Court has jurisdiction. (Cruz v. Pahati, supra)
already ruled
that — UPON ALL THE FOREGOING, the instant appeal is hereby
dismissed and the decision of the lower court affirmed in full.
Under Article 559 of the new Civil Code, a person illegally Costs against the appellant.
deprived of any movable may recover it from the person in
possession of the same and the only defense the latter may have
is if he has acquired it in good faith at a public sale, in which case,
the owner cannot obtain its return without reimbursing the price
paid therefor. In the present case, plaintiff has been illegally
deprived of his car through the ingenious scheme of defendant B
to enable the latter to dispose of it as if he were the owner
thereof. Plaintiff, therefore, can still recover possession of the car
even if it is in the possession of a third party who had acquired it
in good faith from defendant B. The maxim that "no man can
transfer to another a better title than he had himself" obtains in
the civil as well as in the common law. (U.S. v. Sotelo, 28 Phil. 147)

TAGATAC VS JIMENEZ
53 OG 3792
FACTS:
Trinidad Tagatac bought a car for $4,500 in the US. After 7
months, she brought the car to the Philippines.
Warner Feist, who pretended to be a wealthy man, offered to buy
Trinidad’s car for P15,000, and Tagatac was amenable to the idea.
Hnece, a deed of sale was exceuted.
Feist paid by means of a postdated check, and the car was
delivered to Feist. However, PNB refused to honor the checks and
told her that Feist had no account in said bank.
Tagatac notified the law enforcement agencies of the estafa
committed by Feist, but the latter was not apprehended and the
car disappeared.
Meanwhile, Feist managed succeeded in having the car’s
registration certificate (RC) transferred in his name. He sold the
car to Sanchez, who was able to transfer the registration
certificate to his name.
Sanchez then offered to sell the car to defendant Liberato
Jimenez, who bought the car for P10,000 after investigating in the
Motor Vehicles Office.
Tagatac discovered that the car was in California Car Exchange’s
(place where Jimenez displayed the car for sale), so she
demanded from the manager for the delivery of the car, but the
latter refused.
Tagatac filed a suit for the recovery of the car’s possession, and
the sheriff, pursuant to a warrant of seizure that Tagatac
P a g e | 10
obtained, seized and impounded the car, but it was delivered back
to Jimenez upon his filing of a counter-bond.
The lower court held that Jimenez had the right of ownership and
possession over the car.
ISSUE:W/N Jimenez was a purchaser in good faith and thus
entitled to the ownership and possession of the car. YES
HELD:
It must be noted that Tagatac was not unlawfully deprived of his
car
In this case, there is a valid transmission of ownership from true
owner [Tagatac] to the swindler [Feist], considering that they had
a contract of sale (note: but such sale is voidable for the fraud and
deceit by Feist).
The disputable presumption that a person found in possession of
a thing taken in the doing of a recent wrongful act is the taker and
the doer of the whole act does NOT apply in this case because the
car was not stolen from Tagatac, and Jimenez came into
possession of the car two months after Feist swindled Tagatac.
Jimenez was a purchaser in good faith for he was not aware of any
flaw invalidating the title from the seller of the car
In addition, when Jimenez acquired the car, he had no knowledge
of any flaw in the title of the person from whom he acquired it. It
was only later that he became fully aware that there were some
questions regarding the car, when he filed a petition to dissolve
Tagatac’s search warrant which had as its subject the car in
question.
 P a g e | 11

The contract between Feist and Tagactac was a voidable contract,

it can be annulled or ratified

. . . The fraud and deceit practiced by Warner L. Feist earmarks

this sale as a voidable contract (Article 1390). 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) and the contract is cleansed from all its defects
(Article 1396); 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).

Being a voidable contract, it remains valid and binding until

annulled

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.

NB: ART. 1506. Where the seller of goods has a voidable title
thereto, but his title has not been avoided at the time of the sale,
the buyer acquires a good title to the goods provided he buys
them in good faith, for value, and without notice of the seller’s
defect of title.

EDCA PUBLISHING VS SPS. SANTOS
G.R. No. 80298, April 26, 1990
FACTS:
On October 5, 1981, a person identifying himself as Prof. Jose Cruz
ordered 406 books from EDCA Publishing. EDCA Subsequently
prepared the corresponding invoice and delivered the books as
ordered, for which Cruz issued a personal check covering the
purchase price of said books. Subsequently on October 7, 1981,
Cruz sold 120 of the books to Leonor Santos who, after verifying
the seller’s ownership from the invoice he showed her, paid him
P1,700.
Upon verification by EDCA, it was discovered that Cruz was not
employed as professor by De La Salle College and that he had no
more account or deposit with Phil. Amanah Bank, the bank where
he allegedly drawn the payment check. Upon arrest of Cruz by the
police, it was revealed that his real name was Tomas dela Pena
and that there was a further sale of 120 books to Sps. Santos.
EDCA, through the assistance of the police forced their way into
the store of Sps. Santos and threatened Leonor with prosecution
for buying stolen property. The 120 books were seized and were
later turned over to EDCA.
This resulted to Sps. Santos filing a case for recovery of the books
after their demand for the return of the books was rejected.
ISSUE: W/N EDCA may retrieve the books from Santos. NO (W/N
EDCA has been unlawfully deprived of the books because the heck
issued by Cruz in payment thereof was dishonored. NO.)
HELD:
P a g e | 12
EDCA argues that because Cruz, the impostor acquired no title to
the books, the latter could not have validly transferred such to
Sps. Santos. 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.
However, upon perusal of the provisions on the Law on Sales, a
contract of sale is consensual and is perfected once agreement is
reached between the parties on the subject matter and the
consideration. As provided in Art. 1478- 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.
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.
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
 P a g e | 13

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.

Santos did not need to go beyond that invoice to satisfy herself

that the books being offered for sale by Cruz actually belonged to
him; yet she still 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.

NB: Law on Property

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 therefore.

AZNAR VS YAPDIANGCO
Facts:
Theodoro Santos advertised in the newspapers the sale of his
Ford Fairlane 500.
After the advertisement, a certain de Dios, claiming to be the
nephew of Vicente Marella, went to the residence of Santos and
expressed his uncle’s intent to purchase the car.
Since Santos wasn't around, it was Irineo (son of Theodoro) who
talked with de Dios. On being informed, Santos advised his son to
see Marella, which the son did.
Marella expressed his intention to purchase the car. A deed of
sale was prepared and Irineo was instructed by his father not to
part with the deed and the car without receiving the purchase
price from Marella.
Upon arriving at the house of Vicente Marella, he said that his
money was short and that he had to borrow from his sister.
Marella then instructed de Dios and Irineo to go the supposed
house of the sister to obtain the money with an unidentified
person.
He also asked Irineo to leave the deed to have his lawyer see it.
Relying on the good faith of Marella, Irineo did as requested.
Upon arriving at the house of Marella’s supposed to be sister, de
Dios and the unidentified person then disappeared together with
the car. Santos reported the incident to the authorities.
P a g e | 14
Thereafter, Marella was able to sell the land to Aznar. While in
possession of the car, police authorities confiscated the same
from him.
Aznar filed an action for replevin (to recover the car). Claiming
ownership of the vehicle, he prayed for its delivery to him.
In the course of the litigation, however, Teodoro Santos moved
and was allowed to intervene by the lower court.
Lower court ruled in favor of Teodoro Santos saying that he has
been unlawfully deprived of his car and he retains ownership of
the same.
Issue: Between Teodoro Santos and the plaintiff-appellant, Jose B.
Aznar, who has a better right to the possession of the disputed
automobile? Teodoro Santos
HELD:
Article 559 is applicable in this case and not Article 1506 which
was cited by petitioner Aznar
ART. 1506. Where the seller of goods has a voidable title thereto,
but his, title has not been voided at the time of the sale, the buyer
acquires a good title to the goods, provided he buys them in good
faith, for value, and without notice of the seller's defect of title.
The contention is clearly unmeritorious. Under the aforequoted
provision, it is essential that the seller should have a voidable title

at least. It is very clearly inapplicable where, as in this case, the
seller (Marella) had no title at all.
Marella did not have a title over the car because it was never
delivered to him
Vicente Marella sought ownership or acquisition of it by virtue of
the contract. Vicente Marella could have acquired ownership or
title to the subject matter thereof only by the delivery or tradition
of the car to him.
Under Article 712 of the Civil Code, "ownership and other real
rights over property are acquired and transmitted by law, by
donation, by testate and intestate succession, and in consequence
of certain contracts, by tradition." As interpreted by this Court in a
host of cases, by this provision, ownership is not transferred by
contract merely but by tradition or delivery. Contracts only
constitute titles or rights to the transfer or acquisition of
ownership, while delivery or tradition is the mode of
accomplishing the same.
Delivery vs. Tradition
So long as property is not delivered, the ownership over it is not
transferred by contract merely but by delivery. Contracts only
constitute titles or rights to the transfer or acquisition of
ownership, while delivery or tradition is the method of
accomplishing the same, the title and the method of acquiring it
being different in our law.
The car in question was never delivered to the vendee by the
vendor as to complete or consummate the transfer of ownership
by virtue of the contract
P a g e | 15
It should be recalled that while there was indeed a contract of
sale between Vicente Marella and Teodoro Santos, the former, as
vendee, took possession of the subject matter thereof by stealing
the same while it was in the custody of the latter's son.
There is no adequate evidence on record as to whether Irineo
Santos voluntarily delivered the key to the car to the unidentified
person who went with him and L. De Dios to the place on
Azcarraga where a sister of Marella allegedly lived. But even if
Irineo Santos did, it was not the delivery contemplated by Article
712 of the Civil Code. For then, it would be indisputable that he
turned it over to the unidentified companion only so that he may
drive Irineo Santos and De Dios to the said place on Azcarraga and
not to vest the title to the said vehicle to him as agent of Vicente
Marella. Article 712 above contemplates that the act be coupled
with the intent of delivering the thing.
Article 559 was applicable in this case (Doctrine of
irrevindicability)
The lower court was correct in applying Article 559 of the Civil
Code to the case at bar, for under it, the rule is to the effect that if
the owner has lost a thing, or if he has been unlawfully deprived
of it, he has a right to recover it, not only from the finder, thief or
robber, but also from third persons who may have acquired it in
good faith from such finder, thief or robber.
The said article establishes two exceptions to the general rule of
irrevindicability, to wit, when the owner (1) has lost the thing, or
(2) has been unlawfully deprived thereof. In these cases, the
possessor cannot retain the thing as against the owner, who may
recover it without paying any indemnity, except when the
possessor acquired it in a public sale.
 P a g e | 16

Aznar shall suffer the consequences

The common law principle that where one of two innocent
persons must suffer by a fraud perpetrated by another, the law
imposes the loss upon the party who, by his misplaced
confidence, has enabled the fraud to be committed, cannot be
applied in a case which is covered by an express provision of the
new Civil Code, specifically Article 559. Between a common law
principle and a statutory provision, the latter must prevail in this
jurisdiction.