Cruz v.

Pahati
98 Phil. 788 (1956)

RE: Sale by A Seller Having Voidable Title

SALIENT FACTS:

1. A second hand car dealer (seller) offered to sell an automobile belonging to

another individual (owner).
2. In order to facilitate the issuance of a new registration certificate for the car, the
owner wrote a letter to the Bureau of Public Works which he entrusted to the
seller together with the automobile itself with the belief that the latter will show it
to a prospective buyer.
3. However, unknown to the owner, the seller falsified the said letter and converted
it into an authorized deed of sale in his favor by erasing a portion thereof and
adding in its place the words “sold the above car to Mr. Jesusito Belizo [seller] …”
4. With this fraudulent deed of sale, the seller succeeded in obtaining a registration
certificate in his name and subsequently sold the vehicle to an unsuspecting
individual (buyer).
5. The owner, upon knowing of the transaction, instituted an action before the court
insisting that he has a better right over it.
6. Meanwhile, the buyer argues that he was not aware of any defect in the title of
the seller; thus, he was a purchaser in good faith and was entitled to the disputed
vehicle.

ISSUE:

Whether or not the owner can still recover the vehicle even from a buyer in good faith.

SUPREME COURT HELD:

Resolution of the Issue:

Yes, the owner of the car, who was unlawfully deprived of his property, can still recover
the same from the buyer even if the latter claims to be a purchaser in good faith.
Law Applicable to the ISSUE AND FACTS:

Article 559 of the Civil Code provides that “one who has been unlawfully deprived of a
movable property may recover it from the person in possession of it.”

This is supplemented by Article 1505 which states that “where goods are sold by a
person who is not the owner thereof, and who does not sell them under authority or with
the consent of the owner, the buyer acquires no better title than the seller had …”

Application of the Law Cited in the Problem:

In this case, the owner has a better right over the car than the buyer because without a
doubt, the former was unlawfully deprived of his property pursuant to the falsified deed
of sale made by the seller. The owner may still recover possession of the vehicle even if
the buyer turns out to be in good faith.

However, it is important to note that the Supreme Court ruled that the buyer was, in fact,
not a purchaser in good faith since the apparent erasures on the deed of sale presented
by the seller should have already alerted him to make an inquiry as to the seller’s
authority to dispose of the vehicle.

Doctrine of the Case:

In all other cases of unlawful deprivation done through estafa, the original owner
recovers even from the buyer in good faith.

CRITIQUE AND ANALYSIS:

The Supreme Court appropriately upheld the right of the vehicle’s owner over that of the
buyer. When it comes to owners of movables that have been unlawfully deprived of their
property, Article 559 of the Civil Code is very clear that he may still recover from the one
who possesses it. Admittedly, the said provision provides an exception where an owner
cannot recover possession of a movable from a buyer, who acquired it in good faith at a
public sale, without reimbursing the price paid therefor. Such an instance is not present
in the case at bar.

Jurisprudence has also consistently reiterated the same doctrine to protect those that
have fallen victims to insidious schemes of estafa or swindling. As the Court observed,
this is in line with the legal maxim that, “No man can transfer to another a better title
than what he has himself.” It would be unjust if the seller, whose possession of the car
was merely a result of a fraudulent and criminal act, would be able to convey to another
individual a better title compared to the vehicle’s owner. No one should be able to
benefit from such a misfortune, not even a purchaser in good faith. Thus, in this
instance, the scales of the law would always tilt in favor of the restoration of possession
to the aggrieved owner.