EDCA PUBLISHING & DISTRIBUTING CORP. v.

SANTOS (1990) Facts:

A person identifying himself as Prof. Jose Cruz placed an order by telephone with EDCA for 406 books, payable on delivery. EDCA prepared the corresponding invoice and delivered the books as ordered for which Cruz issued a personal check of P8,995.65. Cruz sold 120 of the books to Leonor Santos who paid him P1,700 after verifying the sellers ownership from the invoice he showed. EDCA became suspicious over a second order placed by Cruz even before clearing his first check. So EDCA made inquiries with the DLSU College of which he claimed to be a dean but was informed that there was no such person in their employ. Cruz also had no more account with Philippine Amanah Bank against which he had drawn the payment check. EDCA then went to the police to set up a trap and arrested Cruz whose real name was Tomas dela Pena. EDCA sought the assistance of the police which forced their way into the store of Santos and threatened her with prosecution for buying stolen property. They seized the 120 books without warrant and loaded them into EDCAs van. Santos sued for recovery of the books. A writ of preliminary attachment was issued and EDCA finally surrendered the books back to Santos. The lower courts were in favor of Santos.

Issue(s)/Held: WHETHER EDCA was unlawfully deprived of movable property (books) in the hands of another because the check issued by Cruz in payment was dishonored applying Art. 559. NO. Ratio 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. EDCA contends that Santos was not able to establish ownership of the disputed books because they have not even produced a receipt to prove that they bought it.

But the first sentence of Art. 559 provides that the possession of movable property acquired in good faith is equivalent to a title, thus dispensing with further proof. Santos is a buyer in good faith because she first ascertained the ownership of the books from the EDCA invoice showing that they have been sold to Cruz. Santos is in the business of buying and selling goods. To Santos, Cruz was only one of the many sellers she was accustomed to dealing with. Santos first ascertained that the books belonged to Cruz before buying them. By contrast, EDCA was less than cautious in dealing with Cruz. Although it had never transacted with Cruz before, it readily delivered the books he ordered by telephone and readily accepted his personal check as payment. It did not verify his identity. It did not wait to clear Cruzs check. Worse, it indicated in the sales invoice that the books had been paid for on delivery thereby vesting ownership in Cruz. EDCA argues that Cruz acquired no title to the books because his check was dishonored thus could not have validly transferred the books to Santos. But a contract of sale is consensual and perfected once an agreement is reached between the parties on the subject matter and consideration. 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 general rule is that 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 been paid. In this case, there was no stipulation so the general rule applies. Non-payment only creates a right to (1) demand payment, (2) rescind the contract and (3) have a cause of action for criminal prosecution for bouncing checks. Actual delivery of the books having been made, Cruz acquired ownership over the books which he could validly transfer to Santos. The fact that he had not yet paid for them was a matter between Cruz and EDCA and did not impair the title acquired by Santos over the books. There is no unlawful deprivation if the seller voluntarily parted with it pursuant to a contract of sale. The fact that price was not subsequently paid did not render illegal a transaction which was valid and legal at the beginning.