G.R. No.
L-3546           September 13, 1907 Flores had any authority from Pia del Rosario to pledge them; rather, on the
PIA DEL ROSARIO, plaintiff-appellant, 
vs.
JUAN LUCENA, ET AL., defendants-appellees.
Perfecto Gabriel for appellant.
Vicente Ilustre for appellees.
ARELLANO, C.J.:
A complaint having been filed against Juan Lucena as his wife, Praxedes
Flores, and also against Teresa Verches the last named alone appeared at the
trial and answered the complaint.
Among the facts alleged in the complaint, the following are of importance in
this appeal:
I. That the plaintiff is the lower of the jewels, which are
subsequently specified together with their respective valuation.
II. That the said jewels are now detained by the defendant Teresa
Verches, to whom they were pawned by the other defendants, the
married coupled, without the knowledge or consent of the
plaintiff, for which act the defendant Praxedes was convicted
of estafa by this same court and sentenced to five months
of presidio correccional, both she and her husband being bound to
return the jewels otherwise to pay for them.
The principal object of the complaint was to obtain from the court a
declaration that the jewels were the property of the plaintiff and that, in view
thereof, they should be returned to her and the defendants sentenced to pay
the costs and expresses of the action.
The court rendered judgment in favor of the plaintiff, Pia del Rosario, and
against the defendant Teresa Verches, for the possession of the jewels
described in the complaint provided, however, that 500 pesos, Philippine
currency plaintiff to the defendant Teresa Verches, or in case the jewel could
not be returned the married couple, Juan Lucena and Praxedes Flores, jointly
and severally, and against Teresa Verches for the sum of P1,555, less P500,
and the costs in the action.
The plaintiff appealed from this decision, and in her brief she sets forth the
alleged errors contained in the judgment appealed from. The conclusion is:
1. That the defendant in answer to the complaint alleged —
III. That the said jewels we pledge by the other defendant,
Praxedes Flores, in the name of the plaintiff, Da. Pia del Rosario,
which act was subsequently ratified by the plaintiff. (B. of E., 4.)
2. That it is an undisputed fact that the jewels were delivered by Pia del
Rosario to Praxedes Flores for sale on commission for the term of two
months, after which, if not sold, that should be returned to the owner; and,
3. That by reason of having pledged them for the purpose of gain to the
amount of 500 pesos. Praxedes Flores was convicted of estafa in, criminal
proceedings instituted against her.
From the answer of the defendant it appears that she accepted the contract of
pledge, and that she received the jewels in the name of Pia del Rosario,
without the least proof appearing in the record of the case that Praxedes
1
contrary, it is acknowledged in the judgment appealed from that the
transaction carried out by Praxedes Flores was made without the knowledge
or consent of Pia del Rosario.
If Teresa Verches accepted the jewels as a pledge constitution by Praxedes
Flores in the name of Pia del Rosario without ascertaining whether the latter
had given the former any order or authority for the pledging given of her
jewels, Teresa Verches must stand the risk if when relying from her
acceptance of the pledge, even if when relying upon her judgment she was
improperly or falsely informed; and it would not just nor logical that the
consequences of her reception, due to her own mistake, or to deceit employed
by a stranger, should fall on the owner of the jewels who, without having
taken any part in the transaction, became the victim of a crime. The conflict
between the right of the owner of movable property who has either lost it or
been illegally therefore and that of the creditor who has loaned money
thereon and holds it in pledge can not be decided against the owner, to whom
the Civil Code grants ba right of action to recover the property from whoever
may be in possession. (Art. 464.)
The exceptions to article 464 are herein contained, namely: (1) If the
possessors of personal property, lost or stolen, has acquired it at a public sale;
(2) in favor of Montes de Piedad established under authorization of the
Government; and (3) with regard to things acquired on exchange, or at this
fairs or markets or from a merchant lawfully engage in similar business. the
defendant was not with any of the exception under which she could refuse to
make restitution of the property without reimbursement of the amount
advanced upon the pledge.
Therefore the decision which provides for such reimbursement before the
return of the jewels is not based on any law whatever. On the contrary, it is in
violation of article 464 of the Civil Code.
It is true that a subsequent ratification by the owner, of the illegal act
performed by an agent without, his consent, is equivalent to an order, and
confirms the otherwise unlawful act of the agent; but such subsequent
ratification must appear in like manner as the order itself. No such ratification
of the illegal act committed by Paraxedes Flores can arise out of the fact that
a son of the plaintiff called at the house of the defendant in order to inquire if
the that he intended to redeem them. Nor is a real intent to redeem stolen
property a subsequent ratification of an illegal act whereby the owner was
deprived of the same.
We therefore hold that it is improper to compel the plaintiff to reimburse the
defendant in the sum of 3500 pesos, Philippine Currency, which Praxedes
Flores obtained through the commission of an unlawful act, but that it is
proper and in accordance with the law to compel the defendant to returned to
the plaintiff, absolutely and unconditionally, the jewels in question.
Wherefore the judgment appealed from is hereby reversed without special as
to costs, and the jewels shall be forthwith returned to the plaintiff. So
ordered.
G.R. No. L-3890            January 2, 1908
JOSEFA VARELA, plaintiff-appellee, 
vs.
JOSEPHINE FINNICK, defendant-appellant.
Gibbs and Gale, for appellant. 
Southworth and Ingersoll, for appellee.
TORRES, J.:
Some time during the months of November and December, 1905, Nicolasa
Pascual received from Josefa Varela several jewels, whereof the quantity and
description are stated in the judgment appealed from; some of the jewels were
owned by Varela and other belonged to strangers; all, however, came from
Varela and were delivered to Pascual to be sold on commission, with the
express obligation on the part of the latter to pay to the former the proceeds
of the sale of said jewels, or to return them if unsold.
Nicolasa Pascual, however, far from complying with her duty, pawned the
said jewels at various dates during said months, as appears from the pawn
tickets issued by the owner of H.J. Finnick's pawnshop, where the jewels had
been pledged; that jewels were thus misappropriated, and the amount of the
loan granted thereon embezzled, to the prejudice of Josefa Varela.
Upon the filing of the complaint, proceedings were instituted, under cause
No. 2429, against Nicolas Pascual for the crime of estafa, and the accused,
being found guilty under articles 534 and 535, paragraph 5, of the Penal
Code, was sentenced to the penalty of one year and eleven months of  prision
correccional, to make restitution of the jewels misappropriated or to pay the
value thereof, and, in case of insolvency, to suffer the corresponding
subsidiary imprisonment; said judgment became final and the accused is now
undergoing the penalty imposed upon her.
the possession of a third party, such as a pawnshop, and notwithstanding the
fact that they were lawfully acquired by it, its right to institute proceedings
against whoever may be liable therefor being reserved as provided by article
120 of the Penal Code.
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 have 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.

On the 22nd of September, 1906, the representative of Josefa Varela claimed,

in writing, the return of the jewels above referred to, which were the subject
matter of said prosecution, and separate proceedings having been instituted, Article 1857 of the Civil Code provides that —
the manager of the property of the late Finnick was made a party thereto. On
the 17th of October, in answer to the complaint of Josefa Varela, the manager
The following are essential requisites of the contracts of pledge
denied all that had been alleged by the latter, and, although admitting that the
and of mortgage:
jewels had been pledged at the pawnshop of the late Finnick, further denied
that they were the subject of estafa or any other crime committed by Nicolasa
Pascual; she further stated that Finnick was provided with a license to engage 1. . . .
in the loan business under the laws in force, and that he accepted the said
jewels in good faith because Nicolasa Pascual was fully and duly authorized
2. That the thing pledged or mortgaged be owned by the person
to pledge the same; therefore, the defendant was entitled to their possession,
who pledges or mortgages it.
and she finally asked that the request of Josefa Varela be dismissed with
costs.
Nicolasa Pascual was not the owner of the jewels pledged at the pawnshop of
Finnick.
Neither in the said cause nor in the present proceedings does it appear as
proven that Josefa Varela authorized Nicolasa Pascual to pledge the jewels or
to dispose of the pawn tickets issued by the pawnshop, and the mere Article 1859 of said code provides that —
affirmation of Nicolasa Pascual is insufficient when the same is contradicted
and denied by Josefa Varela. If said affirmation had been substantiated, the
crime of estafa could not have been proven, and the accused would not have A creditor can not appropriate to himself the things given in
been convicted in said cause. pledge or under mortgage, nor dispose of them.

Article 17 of the Penal Code provides that —
Every person criminally liable for a crime or misdemeanor is also
civilly liable.
In accordance with this provision the supreme court [of Spain] in its decision
of the 3d of January, 1877, has established the following doctrine:
While actual possession of personal property is equivalent to a title thereto,
so long as no proof is offered that the same was acquired in bad faith, yet
from the time that the latter condition is proven, such as the loss of the thing,
or that the owner was unlawfully deprived of it, the latter is entitled to the
recovery thereof within the limits fixed by law, because the holder lacks the
good faith indispensable to the protection of his possession.
Article 1955 of said code prescribes:

In order that civil liability may be decreed in a prosecution it is
necessary that it arise from or be the consequence of criminal
liability; therefore, if the accused was acquitted of a crime, any
court sentencing him by reason of the same to pay certain
indemnity does so in violation of this article.
Nicolasa Pascual was convicted of estafa of the jewels in question, and as the
sentence became final, so much so that she is now undergoing her term of
imprisonment, the balance of the judgment must be complied with — that is,
the restitution of the jewels misappropriated, because they are at hand and
have not disappeared. This restitution must be made even if the jewels are in
The ownership of personal property prescribes by uninterrupted
possession in good faith for a period of three years.
That ownership of personal property also prescribed by
uninterrupted for six years, without the necessity of any other
condition.
The provisions of article 464 of this code shall be observed with
regard to the rights of the owner to recover the personal property
lost or of which he may have been illegally deprived, and also
with regard to those acquired at an auction, on exchanges, at fairs

2
 or markets, or from a merchant legally established or customarily
engaged in the traffic of similar objects.
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, in
accordance with the judgment entered in the aforesaid cause for estafa,
wherein, the accused having been found guilty, the right of Josefa Varela to
recover the jewels in question is expressly acknowledged.
Therefore, in view of the foregoing, and accepting the conclusions stated in
the judgment appealed from, it is our opinion that the same should be
affirmed, and it is so ordered.
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.
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
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
One gold ring set with a diamond of ordinary size
One gold bracelet with five small diamonds and eight brillantitos de almendras
One pair of gold picaporte earrings with two diamonds of ordinary size and two
small ones
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.
3
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
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.
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 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.
4
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
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 cannot 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.
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
5
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 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.
G.R. No. L-18536             March 31, 1965 He found the house closed and Marella gone. Finally, he reported the matter
to his father who promptly advised the police authorities.
JOSE B. AZNAR, plaintiff-appellant, 
vs. That very same day, or on the afternoon of May 29, 1959 Vicente Marella
RAFAEL YAPDIANGCO, defendant-appellee;  was able to sell the car in question to the plaintiff-appellant herein, Jose B.
TEODORO SANTOS, intervenor-appellee. 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
Florentino M. Guanlao for plaintiff-appellant.
without notice of the defect appertaining to the vendor's title.
Rafael Yapdiangco in his own behalf as defendant-appellee.
Lorenzo Sumulong, R. B. Hilao and B. S. Felipe for intervenor-appellee.
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
REGALA, J.:
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.
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,
In due time, Jose B. Aznar filed a complaint for replevin against Captain
Teodoro Santos, entitled to the possession of the car in dispute.
Rafael Yapdiangco, the head of the Philippine Constabulary unit which
seized the car in question Claiming ownership of the vehicle, he prayed for its
The records before this Court disclose that sometime in May, 1959, Teodoro delivery to him. In the course of the litigation, however, Teodoro Santos
Santos advertised in two metropolitan papers the sale of his FORD moved and was allowed to intervene by the lower court.
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
At the end of the trial, the lower court rendered a decision awarding the
answer the ad. However, Teodoro Santos was out during this call and only
disputed motor vehicle to the intervenor-appellee, Teodoro Santos. In brief, it
the latter's son, Irineo Santos, received and talked with De Dios. The latter
ruled that Teodoro Santos had been unlawfully deprived of his personal
told the young Santos that he had come in behalf of his uncle, Vicente
property by Vicente Marella, from whom the plaintiff-appellant traced his
Marella, who was interested to buy the advertised car.
right. Consequently, although the plaintiff-appellant acquired the car in good
faith and for a valuable consideration from Vicente Marella, the said decision
On being informed of the above, Teodoro Santos instructed his son to see the concluded, still the intervenor-appellee was entitled to its recovery on the
said Vicente Marella the following day at his given address: 1642 Crisostomo mandate of Article 559 of the New Civil Code which provides:
Street, Sampaloc, Manila. And so, in the morning of May 29, 1959, Irineo
Santos went to the above address. At this meeting, Marella agreed to buy the
ART. 559. The possession of movable property acquired in good
car for P14,700.00 on the understanding that the price would be paid only
faith is equivalent to title. Nevertheless, one who lost any movable
after the car had been registered in his name.
or has been unlawfully deprived thereof, may recover it from the
person in possession of the same.
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
If the possessor of a movable lost or of which the owner has been
car was executed in Marella's favor. The parties to the contract thereafter
unlawfully deprived, has acquired it in good faith at a public sale,
proceeded to the Motor Vehicles Office in Quezon City where the
the owner cannot obtain its return without reimbursing the price
registration of the car in Marella's name was effected. Up to this stage of the
paid therefor.
transaction, the purchased price had not been paid.

From this decision, Jose B. Aznar appeals.

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.
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:

At a place on Azcarraga, Irineo Santos and L. De Dios alighted from the car ART. 1506. Where the seller of goods has a voidable title thereto,
and entered a house while their unidentified companion remained in the car. but his, title has not been voided at the time of the sale, the buyer
Once inside, L. De Dios asked Irineo Santos to wait at the sala while he went acquires a good title to the goods, provided he buys them in good
inside a room. That was the last that Irineo saw of him. For, after a faith, for value, and without notice of the seller's defect of title.
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
The contention is clearly unmeritorious. Under the aforequoted provision, it
there anymore. Going back to the house, he inquired from a woman he saw
is essential that the seller should have a voidable title at least. It is very
for L. De Dios and he was told that no such name lived or was even known
clearly inapplicable where, as in this case, the seller had no title at all.
therein. Whereupon, Irineo Santos rushed to 1642 Crisostomo to see Marella.

6
Vicente Marella did not have any title to the property under litigation because
the same was never delivered to him. He sought ownership or acquisition of
it by virtue of the contract. Vicente Marella could have acquired ownership or
title to the subject matter thereof only by the delivery or tradition of the car to
him.
Under Article 712 of the Civil Code, "ownership and other real rights over
property are acquired and transmitted by law, by donation, by testate and
intestate succession, and in consequence of certain contracts, by tradition."
As interpreted by this Court in a host of cases, by this provision, ownership is
not transferred by contract merely but by tradition or delivery. Contracts only
constitute titles or rights to the transfer or acquisition of ownership, while
delivery or tradition is the mode of accomplishing the same (Gonzales v.
Rojas, 16 Phil. 51; Ocejo, Perez and Co. v. International Bank, 37 Phil. 631,
Fidelity and Deposit Co. v. Wilson, 8 Phil. 51; Kuenzle & Streiff v. Wacke &
Chandler, 14 Phil. 610; Easton v. Diaz Co., 32 Phil. 180).
For the legal acquisition and transfer of ownership and other
property rights, the thing transferred must be delivered, inasmuch
as, according to settled jurisprudence, the tradition of the thing is a
necessary and indispensable requisite in the acquisition of said
ownership by virtue of contract. (Walter Laston v. E. Diaz & Co.
& the Provincial Sheriff of Albay, supra.)
So long as property is not delivered, the ownership over it is not
transferred by contract merely but by delivery. Contracts only
constitute titles or rights to the transfer or acquisition of
ownership, while delivery or tradition is the method of
accomplishing the same, the title and the method of acquiring it
being different in our law. (Gonzales v. Roxas, 16 Phil. 51)
Under Article 559 of the new Civil Code, a person illegally
deprived of any movable may recover it from the person in
possession of the same and the only defense the latter may have is
if he has acquired it in good faith at a public sale, in which case,
the owner cannot obtain its return without reimbursing the price
paid therefor. In the present case, plaintiff has been illegally
deprived of his car through the ingenious scheme of defendant B
to enable the latter to dispose of it as if he were the owner thereof.
Plaintiff, therefore, can still recover possession of the car even if it
is in the possession of a third party who had acquired it in good
faith from defendant B. The maxim that "no man can transfer to
another a better title than he had himself" obtains in the civil as
well as in the common law. (U.S. v. Sotelo, 28 Phil. 147)
Finally, the plaintiff-appellant here contends that inasmuch as it was the
intervenor-appellee who had caused the fraud to be perpetrated by his
misplaced confidence on Vicente Marella, he, the intervenor-appellee, should
be made to suffer the consequences arising therefrom, following the equitable
principle to that effect. Suffice it to say in this regard that the right of the
owner to recover personal property acquired in good faith by another, is
based on his being dispossessed without his consent. The common law
principle that where one of two innocent persons must suffer by a fraud
perpetrated by another, the law imposes the loss upon the party who, by his
misplaced confidence, has enabled the fraud to be committed, cannot be
applied in a case which is covered by an express provision of the new Civil
Code, specifically Article 559. Between a common law principle and a
statutory provision, the latter must prevail in this jurisdiction. (Cruz v.
Pahati, supra)
UPON ALL THE FOREGOING, the instant appeal is hereby dismissed and
the decision of the lower court affirmed in full. Costs against the appellant.

In the case on hand, the car in question was never delivered to the vendee by
Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera,
the vendor as to complete or consummate the transfer of ownership by virtue
Paredes, Dizon, Makalintal, Bengzon, J.P., and Zaldivar, JJ., concur.
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 G.R. No. 80298               April 26, 1990
was in the custody of the latter's son.
EDCA PUBLISHING & DISTRIBUTING CORP., petitioner, 
There is no adequate evidence on record as to whether Irineo Santos vs.
voluntarily delivered the key to the car to the unidentified person who went THE SPOUSES LEONOR and GERARDO SANTOS, doing business
with him and L. De Dios to the place on Azcarraga where a sister of Marella under the name and style of "SANTOS BOOKSTORE," and THE
allegedly lived. But even if Irineo Santos did, it was not the delivery COURT OF APPEALS, respondents.
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
Emiliano S. Samson, R. Balderrama-Samson, Mary Anne B. Samson for
he may drive Irineo Santos and De Dios to the said place on Azcarraga and
petitioner.
not to vest the title to the said vehicle to him as agent of Vicente Marella.
Cendana Santos, Delmundo & Cendana for private respondents.
Article 712 above contemplates that the act be coupled with the intent of
delivering the thing. (10 Manresa 132)

The lower court was correct in applying Article 559 of the Civil Code to the
case at bar, for under it, the rule is to the effect that if the owner has lost a CRUZ, J.:
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
The case before us calls for the interpretation of Article 559 of the Civil Code
have acquired it in good faith from such finder, thief or robber. The said
and raises the particular question of when a person may be deemed to have
article establishes two exceptions to the general rule of irrevindicability, to
been "unlawfully deprived" of movable property in the hands of another. The
wit, when the owner (1) has lost the thing, or (2) has been unlawfully
article runs in full as follows:
deprived thereof. In these cases, the possessor cannot retain the thing as
against the owner, who may recover it without paying any indemnity, except
when the possessor acquired it in a public sale. (Del Rosario v. Lucena, 8 Art. 559. The possession of movable property acquired in good
Phil. 535; Varela v. Finnick, 9 Phil. 482; Varela v. Matute, 9 Phil. 479; faith is equivalent to a title. Nevertheless, one who has lost any
Arenas v. Raymundo, 19 Phil. 46. Tolentino, id., Vol. II, p. 261.) movable or has been unlawfully deprived thereof, may recover it
from the person in possession of the same.
In the case of Cruz v. Pahati, et al., 52 O.G. 3053 this Court has already
ruled 
that —

7
 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 we agree. Leonor Santos
first ascertained the ownership of the books from the EDCA invoice showing
8
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.
x x x           x x x          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 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?
x x x           x x x          x x x
. . . 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
9
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, 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. 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
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. "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 In his defense, Jaime Ledesma claims that he purchases (sic) and paid for the
Citiwide has a perfect right to litigate its claim, albeit by this pronouncement, subject vehicle in good faith from its registered owner, one Pedro Neyra, as
it did not succeed." evidenced by the Land Transportation Commission Registration Certificate
which was supplemented by a Final Order dated 26 June 1980, the dispositive No. RCO1427249. virtual law library
portion of which reads:jgc:chanrobles.com.ph
After posting the necessary bond in the amount double the value of the
"IN VIEW OF THE FOREGOING, the Court grants defendant Ledesma the subject motor vehicle, plaintiff-appellant was able to recover possession of
sum of P35,000.00 by way of actual damages recoverable upon plaintiff’s the 1977 Isuzu Gemini as evidenced by the Sheriff’s Return dated January
replevin bond. Plaintiff and its surety, the Rizal Surety and Insurance Co., are 23, 1978." 6 
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 After trial on the merits, the lower court rendered the decision and
with Rule 57, Sec. 20, incorporated in Rule 60, Sec. 10. subsequently issued the Final Order both earlier adverted to, which plaintiff
(private respondent herein) appealed to the respondent Court of Appeals; it
In conformity with the rules adverted to, this final order shall form part of the submitted the following assignment of errors
judgment of this Court on September 5, 1979.
"The trial court erred.
The motion for reconsideration of the judgment filed by the plaintiff is I
hereby DENIED for lack of merit. No costs at this instance."

The decision of the trial court is anchored on its findings that (a) the proof on IN HOLDING THAT THE DEFENDANT IS ENTITLED TO THE
record is not persuasive enough to show that defendant, petitioner herein, POSSESSION OF THE CAR;
knew that the vehicle in question was the object of a fraud and a swindle 5 II
and (b) that plaintiff, private respondent herein, did not rebut or contradict
Ledesma’s evidence that valuable consideration was paid for it.
IN HOLDING THAT THE DEFENDANT IS AN INNOCENT
The antecedent facts as summarized by the respondent Court of Appeals are PURCHASER IN GOOD FAITH AND FOR VALUE;
as III

"On September 27, 1977, a person representing himself to be Jojo Consunji,

purchased purportedly for his father, a certain Rustico T. Consunji, two (2) IN RULING THAT THE PLAINTIFF SHOULD RETURN THE CAR TO
brand new motor vehicles from plaintiff-appellant Citiwide Motors, Inc., DEFENDANT, DISMISSING ITS CLAIM FOR DAMAGES, AND
more particularly described as follows:chanrobles lawlibrary : rednad GRANTING DEFENDANT P35,000.00 DAMAGES RECOVERABLE
AGAINST THE REPLEVIN BOND AND P101,000.00 DAMAGES FOR
a) One (1) 1977 Isuzu Gemini, 2-door Model PF 50ZIK, with Engine No. ALLEGED WRONGFUL SEIZURE;
751214 valued at P42,200.00; and IV

b) One (1) 1977 Holden Premier Model 8V41X with Engine No. 198-
1251493, valued at P58,800.00. IN RENDERING THE DECISION DATED SEPTEMBER 3, 1979 AND
THE FINAL ORDER DATED JUNE 26, 1980." 7 
Said purchases are evidenced by Invoices Nos. 3054 and 3055, respectively.
(See Annexes A and B). In support of its first and second assigned errors, private respondent cites
Article 559 of the Civil Code which provides:
On September 28, 1977, plaintiff-appellant delivered the two-above described
motor vehicles to the person who represented himself as Jojo Consunji, "ARTICLE 559. The possession of movable property acquired in good faith
allegedly the son of the purported buyers Rustico T. Consunji, and said is equivalent to a title. Nevertheless, one who has lost any movable or has
person in turn issued to plaintiff-appellant Manager’s Check No. 066-110- been unlawfully deprived thereof, may recover it from the person in
0638 of the Philippine Commercial and Industrial Bank dated September 28, possession of the same.
1977 for the amount of P101,000.00 as full payment of the value of the two
(2) motor vehicles. 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
However, when plaintiff-appellant deposited the said check, it was obtain its return without reimbursing the price paid therefor."
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 Without in any way reversing the findings of the trial court that herein
of dishonor (Annexes F and G). petitioner was a buyer in good faith and for valuable consideration, the
respondent Court ruled that:
On September 30, 1977, plaintiff-appellant reported to the Philippine
Constabulary the criminal act perpetrated by the person who misrepresented "‘Under Article 559, Civil Code, the rule is to the effect that if the owner has
himself as Jojo Consunji and in the course of the investigation, plaintiff- lost a thing, or if he has been unlawfully deprived of it, he has a right to
appellant learned that the real identity of the wrongdoer/impostor is Armando recover it not only from the finder, thief or robber, but also from third
Suarez who has a long line of criminal cases against him for estafa using this persons who may have acquired it in good faith from such finder, thief or
similar modus operandi. 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
On October 17, 1977, plaintiff-appellant was able to recover the Holden been unlawfully deprived thereof. In these cases, the possessor cannot retain
Premier vehicle which was found abandoned somewhere in Quezon City. 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.
On the other hand, plaintiff-appellant learned that the 1977 Isuzu Gemini was Yapdiangco, 13 SCRA 486).
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 Put differently, where the owner has lost the thing or has been unlawfully
replevin on November 16, 1977. 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

10
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  held, that private respondent was unlawfully deprived of the car by false
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 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.
B the books as ordered, for which Cruz issued a personal check covering the
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  her with prosecution for the buying of stolen property, seized the 120 books
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
11
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.
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
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
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
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
(1) Those where one of the parties is incapable of giving consent to a
ART. 1475. The contract of sale is perfected at the moment there is a meeting contract;
of minds upon the thing which is the object of the contract and upon the
price. (2) Those where the consent is vitiated by mistake, violence, intimidation,
undue influence or fraud.
From that moment, the parties may reciprocally demand performance, subject
to the provisions of the law governing the form of contracts.chanrobles.com : These contracts are binding, unless they are annulled by a proper action in
virtual law library court. They are susceptible of ratification.’
x          x       x
Agreeably to this provision, Article 1506 prescribes:chanrob1es virtual 1aw
library
ART. 1477. The ownership of the thing sold shall be transferred to the
vendee upon the actual or constructive delivery thereof. ‘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
ART. 1478. The parties may stipulate that ownership in the thing shall not good title to the goods, provided he buys them in good faith, for value, and
pass to the purchaser until he has fully paid the price. without notice of the seller’s defect of title.’ (C.C.)

It is clear from the above provisions, particularly the last one quoted, that Hence, until the contract of Ong Shu with Soto is set aside by a competent
ownership in the thing sold shall not pass to the buyer until full payment of court (assuming that the fraud is established to its satisfaction), the validity of
the purchase price only if there is a stipulation to that effect. Otherwise, the appellant’s claim to the property in question can not be disputed, and his right
rule is that such ownership shall pass from the vendor to the vendee upon the to the possession thereof should be respected." 16 
actual or constructive delivery of the thing sold even if the purchase price has
not yet been paid. 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
Non-payment only creates a right to demand payment or to rescind the payment therefor was subsequently dishonored; said Court also erred when it
contract, or to criminal prosecution in the case of bouncing checks. But divested the petitioner, a buyer in good faith who paid valuable consideration
absent the stipulation above noted, delivery of the thing sold will effectively therefor, of his possession thereof.chanrobles virtualawlibrary
transfer ownership to the buyer who can in turn transfer it to another." 13  chanrobles.com:chanrobles.com.ph

In the early case of Chua Hai v. Hon. Kapunan, 14 one Roberto Soto WHEREFORE, the challenged decision of the respondent Court of Appeals
purchased from the Youngstown Hardware, owned by private respondent, of 22 September 1988 and its Resolution of 12 December 1988 in C.A.-G.R.
corrugated galvanized iron sheets and round iron bars for P6,137.70, in CV No. 05955 are hereby SET ASIDE and the Decision of the trial court of 3
payment thereof, he issued a check drawn against the Security Bank and September 1979 and its Final Order of 26 June 1980 in Civil Case No. Q-
Trust Co. without informing Ong Shu that he (Soto) had no sufficient funds 24200 are hereby REINSTATED, with costs against private respondent
in said bank to answer for the same. In the meantime, however, Soto sold the Citiwide Motors, Inc.
sheets to, among others, petitioner Chua Hai. In the criminal case filed
against Soto, upon motion of the offended party, the respondent Judge SO ORDERED.
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 G.R. No. 967            May 19, 1903
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
DARIO AND GAUDENCIO ELEIZEGUI, plaintiffs-appellees, 
Court ruled that Ong Shu was not illegally deprived of the possession of the
vs.
property:jgc:chanrobles.com.ph
THE MANILA LAWN TENNIS CLUB, defendant-appellant.
". . . 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 Pillsburry and Sutro for appellant.
the purchaser. Says Art. 1496:chanrob1es virtual 1aw library Manuel Torres Vergara for appellee.

‘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 ARELLANO, C. J.:
to 1501, or in any other manner signifying an agreement that the possession
is transferred from the vendor to the vendee.’ (C.C.) This suit concerns the lease of a piece of land for a fixed consideration and to
endure at the will of the lessee. By the contract of lease the lessee is expressly
The failure of the buyer to make good the price does not, in law, cause the authorized to make improvements upon the land, by erecting buildings of
ownership to revest in the seller until and unless the bilateral contract of sale both permanent and temporary character, by making fills, laying pipes, and
is first rescinded or resolved pursuant to Article 1191 of the new Civil making such other improvements as might be considered desirable for the
Code.chanrobles lawlibrary : rednad comfort and amusement of the members.

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
With respect to the term of the lease the present question has arisen. In its
decision three theories have been presented: One which makes the duration
depend upon the will of the lessor, who, upon one month's notice given to the
lessee, may terminate the lease so stipulated; another which, on the contrary,
makes it dependent upon the will of the lessee, as stipulated; and the third, in
accordance with which the right is reversed to the courts to fix the duration of
the term.

12
The first theory is that which has prevailed in the judgment below, as appears
from the language in which the basis of the decision is expressed: "The court
is of the opinion that the contract of lease was terminated by the notice given
by the plaintiff on August 28 of last year . . . ." And such is the theory
maintained by the plaintiffs, which expressly rests upon article 1581 of the
Civil Code, the law which was in force at the time the contract was entered
into (January 25, 1890). The judge, in giving to this notice the effect of
terminating the lease, undoubtedly considers that it is governed by the article
relied upon by the plaintiffs, which is of the following tenor: "When the term
has not been fixed for the lease, it is understood to be for years when an
annual rental has been fixed, for months when the rent is monthly. . . ." The
second clause of the contract provides as follows: "The rent of the said land is
fixed at 25 pesos  per month." (P. 11, Bill of Exceptions.)
In accordance with such a theory, the plaintiffs might have terminated the
lease the month following the making of the contract — at any time after the
first month, which, strictly speaking, would be the only month with respect to
which they were expressly bound, they not being bound for each successive
month except by a tacit renewal (art. 1566) — an effect which they might
prevent by giving the required notice.
Although the relief asked for in the complaint, drawn in accordance with the
new form of procedure established by the prevailing Code, is the restitution
of the land to the plaintiffs (a formula common to various actions),
nevertheless the action which is maintained can be no other than that
of desahucio, in accordance with the substantive law governing the contract.
The lessor — says article 1569 of the Civil Code — may judicially dispossess
the lessee upon the expiration of the conventional term or of the legal term;
the conventional term — that is, the one agreed upon by the parties; the legal
term, in defect of the conventional, fixed for leases by articles 1577 and 1581.
We have already seen what this legal term is with respect to urban properties,
in accordance with article 1581.
Hence, it follows that the judge has only to determine whether there is or is
not conventional term. If there be a conventional term, he can not apply the
legal term fixed in subsidium  to cover a case in which the parties have made
no agreement whatsoever with respect to the duration of the lease. In this case
the law interprets the presumptive intention of the parties, they having said
nothing in the contract with respect to its duration. "Obligations arising from
contracts have the force of law between the contracting parties and must be
complied with according to the tenor of the contracts." (Art. 1091 of the Civil
Code.)
The obligations which, with the force of law, the lessors assumed by the
contract entered into, so far as pertaining to the issues, are the following:
"First. . . . They lease the above-described land to Mr. Williamson, who takes
it on lease, . . . for all the time  the members of the said club may desire to use
it . . . Third. . . . the owners of the land undertake to maintain the club as
tenant as long as the latter shall see fit, without altering in the slightest
degree the conditions of this contract, even though the estate be sold."
It is necessary, therefore, to answer the first question: Was there, or was there
not, a conventional term, a duration, agreed upon in the contract in question?
If there was an agreed duration, a conventional term, then the legal term —
the term fixed in article 1581 — has no application; the contract is the
supreme law of the contracting parties. Over and above the general law is the
special law, expressly imposed upon themselves by the contracting parties.
Without these clauses 1 and 3, the contract would contain no stipulation with
respect to the duration of the lease, and then article 1581, in connection with
article 1569, would necessarily be applicable. In view of these clauses,
however, it can not be said that there is no stipulation with respect to the
duration of the lease, or that, notwithstanding these clauses, article 1581, in
connection with article 1569, can be applied. If this were so, it would be
necessary to hold that the lessors spoke in vain — that their words are to be
disregarded — a claim which can not be advanced by the plaintiffs nor
upheld by any court without citing the law which detracts all legal force from
such words or despoils them of their literal sense.
13
It having been demonstrated that the legal term can not be applied, there
being a conventional term, this destroys the assumption that the contract of
lease was wholly terminated by the notice given by the plaintiffs, this notice
being necessary only when it becomes necessary to have recourse to the legal
term. Nor had the plaintiffs, under the contract, any right to give such notice.
It is evident that they had no intention of stipulating that they reserved the
right to give such notice. Clause 3 begins as follows: "Mr. Williamson, or
whoever may succeed him as secretary of said club, may terminate this lease
whenever desired without other formality than that of giving a month's
notice. The owners of the land undertake to maintain the club as tenant as
long as the latter shall see fit." The right of the one and the obligation of the
others being thus placed in antithesis, there is something more, much more,
than the inclusio unius, exclusio alterius. It is evident that the lessors did not
intend to reserve to themselves the right to rescind that which they expressly
conferred upon the lessee by establishing it exclusively in favor of the latter.
It would be the greatest absurdity to conclude that in a contract by which the
lessor has left the termination of the lease to the will of the lessee, such a
lease can or should be terminated at the will of the lessor.
It would appear to follow, from the foregoing, that, if such is the force of the
agreement, there can be no other mode of terminating the lease than by the
will of the lessee, as stipulated in this case. Such is the conclusion maintained
by the defendant in the demonstration of the first error of law in the
judgment, as alleged by him. He goes so far, under this theory, as to maintain
the possibility of a perpetual lease, either as such lease, if the name can be
applied, or else as an innominate contract, or under any other denomination,
in accordance with the agreement of the parties, which is, in fine, the law of
the contract, superior to all other law, provided that there be no agreement
against any prohibitive statute, morals, or public policy.
It is unnecessary here to enter into a discussion of a perpetual lease in
accordance with the law and doctrine prior to the Civil Code now in force,
and which has been operative since 1889. Hence the judgment of the supreme
court of Spain of January 2, 1891, with respect to a lease made in 1887, cited
by the defendant, and a decision stated by him to have been rendered by the
Audiencia of Pamplona in 1885 (it appears to be rather a decision by the head
office of land registration of July 1, 1885), and any other decision which
might be cited based upon the constitutions of Cataluna, according to which a
lease of more than ten years is understood to create a life tenancy, or even a
perpetual tenancy, are entirely out of point in this case, in which the subject-
matter is a lease entered into under the provisions of the present Civil Code,
in accordance with the principles of which alone can this doctrine be
examined.
It is not to be understood that we admit that the lease entered into was
stipulated as a life tenancy, and still less as a perpetual lease. The terms of the
contract express nothing to this effect. They do, whatever, imply this idea. If
the lease could last during such time as the lessee might see fit, because it has
been so stipulated by the lessor, it would last, first, as long as the will of the
lessee — that is, all his life; second, during all the time that he may have
succession, inasmuch as he who contracts does so for himself and his heirs.
(Art. 1257 of the Civil Code.) The lease in question does not fall within any
of the cases in which the rights and obligations arising from a contract can
not be transmitted to heirs, either by its nature, by agreement, or by provision
of law. Furthermore, the lessee is an English association.
Usufruct is a right of superior degree to that which arises from a lease. It is a
real right and includes all the jus utendi  and  jus fruendi. Nevertheless, the
utmost period for which a usufruct can endure, if constituted in favor a
natural person, is the lifetime of the usufructuary (art. 513, sec. 1); and if in
favor of juridical person, it can not be created for more than thirty years. (Art.
515.) If the lease might be perpetual, in what would it be distinguished from
an emphyteusis? Why should the lessee have a greater right than the
usufructuary, as great as that of an emphyteuta, with respect to the duration of
the enjoyment of the property of another? Why did they not contract for a
usufruct or an emphyteusis? It was repeatedly stated in the document that it
was a lease, and nothing but a lease, which was agreed upon: "Being in the
full enjoyment of the necessary legal capacity to enter into this contract
of lease . . . they have agreed upon the lease of said estate . . . They lease to
Mr. Williamson, who receives it as such. . . . The rental  is fixed at 25 pesos a
month. . . . The owners bind themselves to maintain the club as tenant. . . .
Upon the foregoing conditions they make the present contract of lease. . . ."
(Pp. 9, 11, and 12, bill of exceptions.) If it is a lease, then it must be for
a determinate period. (Art. 1543.) By its very nature it must be temporary,
just as by reason of its nature an emphyteusis must be perpetual, or for an
unlimited period. (Art. 1608.)
sufficient. With equal reason should we refer to section 2, which deals with
obligations with a term, in the same chapter and title, if a question concerning
the term arises out of a contract of lease, as in the present case, and within
this section we find article 1128, which decides the question.
The judgment was entered below upon the theory of the expiration of a legal
term which does not exist, as the case requires that a term be fixed by the
courts under the provisions of article 1128 with respect to obligations which,
as is the present, are terminable at the will of the obligee. It follows,
therefore, that the judgment below is erroneous.

On the other hand, it can not be concluded that the termination of the contract
The judgment is reversed and the case will be remanded to the court below
is to be left completely at the will of the lessee, because it has been stipulated
with directions to enter a judgment of dismissal of the action in favor of the
that its duration is to be left to his will.
defendant, the Manila Lawn Tennis Club, without special allowance as to the
recovery of costs. So ordered.
The Civil Code has made provision for such a case in all kinds of obligations.
In speaking in general of obligations with a term it has supplied the
Mapa and Ladd, JJ., concur.
deficiency of the former law with respect to the "duration of the term when it
Torres, J., disqualified.
has been left to the will of the debtor," and provides that in this case the term
shall be fixed by the courts. (Art. 1128, sec. 2.) In every contract, as laid
G.R. No. L-29158          December 29, 1928
down by the authorities, there is always a creditor who is entitled to demand
the performance, and a debtor upon whom rests the obligation to perform the
undertaking. In bilateral contracts the contracting parties are mutually Estate of the deceased Rosendo Hernaez. RAFAEL R.
creditors and debtors. Thus, in this contract of lease, the lessee is the creditor ALUNAN, administrator-appellee, 
with respect to the rights enumerated in article 1554, and is the debtor with vs.
respect to the obligations imposed by articles 1555 and 1561. The term within ELEUTERIA CH. VELOSO, opponent-appellant.
which performance of the latter obligation is due is what has been left to the
will of the debtor. This term it is which must be fixed by the courts.
Hipolito Alo for appellant.
R. Nolan for appellee.
The only action which can be maintained under the terms of the contract is
that by which it is sought to obtain from the judge the determination of this
period, and not the unlawful detainer action which has been brought — an
action which presupposes the expiration of the term and makes it the duty of
the judge to simply decree an eviction. To maintain the latter action it is AVANCEÑA, C. J.:
sufficient to show the expiration of the term of the contract, whether
conventional or legal; in order to decree the relief to be granted in the former
This case deals with an account filed in these intestate proceedings for the
action it is necessary for the judge to look into the character and conditions of
settlement of the estate of the deceased Rosendo Hernaez by his judicial
the mutual undertakings with a view to supplying the lacking element of a
administrator, Rafael Alunan, and approved by the court below. Jose
time at which the lease is to expire. In the case of a loan of money or
Hernaez, one of the heirs interested in this proceedings, assigned the whole of
a commodatum of furniture, the payment or return to be made when the
his portion to Eleuteria Ch. Veloso, and the latter objects to some of the items
borrower "can conveniently do so" does not mean that he is to be allowed to
of the account filed, assigning four errors to the resolution of the court below.
enjoy the money or to make use of the thing indefinitely or perpetually. The
courts will fix in each case, according to the circumstances, the time for the
payment or return. This is the theory also maintained by the defendant in his In the first place, it is alleged that the lower court erred in imposing a
demonstration of the fifth assignment of error. "Under article 1128 of the preferred lien of P12,683.83 upon the Panaogao Hacienda, adjudicated to the
Civil Code," thus his proposition concludes, "contracts whose term is left to appellant Eleuteria Ch. Veloso. Before the partition, Jose Hernaez leased said
the will of one of the contracting parties must be fixed by the courts, . . . the Panaogao Hacienda for two harvests the stipulated rent being 12 per cent of
conditions as to the term of this lease has a direct legislative sanction," and he all the sugar to be produced thereon, provided, however, that he should pay at
cites articles 1128. "In place of the ruthless method of annihilating a solemn least 12 per cent of 8,000, even if the production should fall below this
obligation, which the plaintiffs in this case have sought to pursue, the Code amount. During the two years Jose Hernaez produced less than 8,000 piculs,
has provided a legitimate and easily available remedy. . . . The Code has and only 12 per cent of what he did produce was collected from him as rent,
provided for the proper disposition of those covenants, and a case can hardly thus leaving him indebted in an amount equal to the difference between 12
arise more clearly demonstrating the usefulness of that provision than the per cent of the sugar he produced, and 12 per cent of 8,000 piculs which he
case at bar." (Pp. 52 and 53 of appellant's brief.) had to pay at least. The P12,683.83 to which the first error refers is the value
of this difference and is therefore a legal debt of Jose Hernaez's transmitted to
the appellant, and affecting here participation in the intestate estate.
The plaintiffs, with respect to this conclusion on the part of their opponents,
According to an agreement previously entered into by and between the heirs,
only say that article 1128 "expressly refers to obligations in contracts in
the share belonging or which may belong to each heir shall be liable and
general, and that it is well known that a lease is included among special
subject to a lien in favor of all the heirs for any account or debt pending
contracts." But they do not observe that if contracts, simply because special
which the heirs may owe to the intestate estate.
rules are provided for them, could be excepted from the provisions of the
articles of the Code relative to obligations and contracts in general, such
general provisions would be wholly without application. The system of the This first error then is not well grounded.1awphi1.net
Code is that of establishing general rules applicable to all obligations and
contracts, and then special provisions peculiar to each species of contract. In
no part of Title VI of Book IV, which treats of the contract of lease, are there As to the second error, which is made to consist in the lower court having
any special rules concerning pure of conditional obligations which may be held that the sum of P20,000 is another lien upon the said Panaogao
stipulated in a lease, because, with respect to these matters, the provisions of Hacienda, in favor of the administrator Rafael Alunan, should the latter be
section 1, chapter 3, Title I, on the subject of obligations are wholly ordered to pay that sum in civil case No. 6391 of the Court of First Instance

14
of Iloilo, Mr. Alunan is agreeable that this holding be eliminated from the OZAETA, J.:
judgment appealed from.
Is a stock dividend fruit or income, which belongs to the usufructuary, or is it
The third error refers to the sum of P24,991.42 as attorney's fees and capital or part of the corpus of the estate, which pertains to the
compensation of the administrators who took part in this proceeding. This remainderman? That is the question raised in the appeal.
amount, it is alleged, is excessive. It appears that a great part of these fees
were paid to Jose Hernaez himself, the appellant's predecessor in interest, and
The deceased E. M. Bachrach, who left no forced heir except his widow
most of these fees, as well as of the attorney's fees, have already been
Mary McDonald Bachrach, in his last will and testament made various
approved by the court below. At all events, since it has been found necessary
legacies in cash and willed the remainder of his estate as follows:
to employ several lawyers and more than one administrator in this
proceeding, and taking into account the unusual amount of the interests
involved, we find no merit in the objection to this item of the account. Sixth: It is my will and do herewith bequeath and devise to my
beloved wife Mary McDonald Bachrach for life all the fruits and
usufruct of the remainder of all my estate after payment of the
The fourt error is made to consist in the lower court having admitted the
legacies, bequests, and gifts provided for above; and she may
partition proposed by the administrator in his account. According to this
enjoy said usufruct and use or spend such fruits as she may in any
account, the total amount to be partitioned among the heirs is P88,979.08,
manner wish.
which the administrator distributed equally among all the heirs, including the
widow's each one receiving P11,122.38.
The will further provided that upon the death of Mary McDonald Bachrach,
one-half of the all his estate "shall be divided share and share alike by and
This partition is object to with respect to the widow. It is alleged that the
between my legal heirs, to the exclusion of my brothers."
distributed amount is in money, and since the widow's right is only a
usufruct, and as there can be no usufruct of money, since it is a fungible
thing, the adjudication made to the widow was erroneous. It is incorrect to The estate of E. M. Bachrach, as owner of 108,000 shares of stock of the
say that there can be no usufruct of money, because it is a fungible thing (art. Atok-Big Wedge Mining Co., Inc., received from the latter 54,000 shares
482, Civil Code). representing 50 per cent stock dividend on the said 108,000 shares. On June
10, 1948, Mary McDonald Bachrach, as usufructuary or life tenant of the
estate, petitioned the lower court to authorize the Peoples Bank and Trust
It is likewise alleged, that, at any rate, this amount which should go to the
Company as administrator of the estate of E. M. Bachrach, to her the said
widow should be offset by the P55,000 which she has already received as a
54,000 share of stock dividend by endorsing and delivering to her the
pension. Neither do we find any ground for this error, since, according to the
corresponding certificate of stock, claiming that said dividend, although paid
agreement of the heirs already referred to, her portion in the inheritance either
out in the form of stock, is fruit or income and therefore belonged to her as
wholly or in part.
usufructuary or life tenant. Sophie Siefert and Elisa Elianoff, legal heirs of
the deceased, opposed said petition on the ground that the stock dividend in
Lastly, it is alleged, that the portion given to the widow is not in accordance question was not income but formed part of the capital and therefore
with law. We find the objection with respect to this point to be correct. The belonged not to the usufructuary but to the remainderman. And they have
widow, according to the law, only has a right to a portion of the estate equal appealed from the order granting the petition and overruling their objection.
to that of the legitime of each of the children without betterment. In the
instant case none of the children received a betterment. Consequently, the
While appellants admits that a cash dividend is an income, they contend that
widow should receive a portion equal to the share of each in the two-thirds of
a stock dividend is not, but merely represents an addition to the invested
the distributable amount making up the legitime, to be taken from the one-
capital. The so-called Massachusetts rule, which prevails in certain
third forming the betterment. Then, the other free third, which the decedent
jurisdictions in the United States, supports appellants' contention . It regards
failed to dispose of, must be partitioned among the heirs to the exclusion of
cash dividends, however large, as income, and stock dividends, however
the widow, as an addition to their legitime. Working out the computations on
made, as capital. (Minot vs. Paine, 99 Mass., 101; 96 Am. Dec., 705.) It holds
this basis, the widow should receive only P8,474.19.
that a stock dividend is not in any true sense any true sense any dividend at
all since it involves no division or severance from the corporate assets of the
Therefore, it being understood that there be eliminated from the decision the dividend; that it does not distribute property but simply dilutes the shares as
holding that the Panaogao Hacienda, which was adjudged to the appellant, they existed before; and that it takes nothing from the property of the
should answer for the amount of P20,000 as a lien in favor of Rafael Alunan corporation, and nothing to the interests of the shareholders.
should the latter be ordered to pay it in civil case No. 6391 of the Court of
First Instance of Iloilo, and it being further understood that the widow's
On the other hand, so called Pennsylvania rule, which prevails in various
portion is only P8,474.19, the remainder of the P88,979.08 which is
other jurisdictions in the United States, supports appellee's contention. This
distributable, pertaining to the heirs, share and share alike, excluding the
rule declares that all earnings of the corporation made prior to the death of the
widow, the judgment appealed from is affirmed, without special
testator stockholder belong to the corpus of the estate, and that all earnings,
pronouncement as to costs. So ordered.
when declared as dividends in whatever form, made during the lifetime of the
usufructuary or life tenant. (Earp's Appeal, 28 Pa., 368.)
G.R. No. L-2659             October 12, 1950
. . . It is clear that testator intent the remaindermen should have
In the matter of the testate estate of Emil Maurice Bachrach, deceased. only the corpus of the estate he left in trust, and that all dividends
MARY McDONALD BACHRACH,petitioner-appellee,  should go the life tenants. It is true that profits realized are not
vs. dividends until declared by the proper officials of the corporation,
SOPHIE SEIFERT and ELISA ELIANOFF, oppositors-appellants. but distribution of profits, however made, in dividends, and the
form of the distribution is immaterial. (In re Thompson's Estate,
262 Pa., 278; 105 Atl. 273, 274.)
Ross, Selph, Carrascoso and Janda for appellants.
Delgado and Flores for appellee.
In Hite vs. Hite (93 Ky., 257; 20 S. W., 778, 780), the Court of Appeals of
Kentucky, speaking thru its Chief Justice, said:

15
 . . . Where a dividend, although declared in stock, is based upon
the earnings of the company, it is in reality, whether called by one
name or another, the income of the capital invested in it. It is but a
mode of distributing the profit. If it be not income, what is it? If it
is, then it is rightfully and equitably the property of the life tenant.
If it be really profit, then he should have it, whether paid in stock
or money. A stock dividend proper is the issue of new shares paid
for by the transfer of a sum equal to their par value from the
profits and loss account to that representing capital stock; and
really a corporation has no right to a dividend, either in cash or
stock, except from its earnings; and a singular state of case — it
seems to us, an unreasonable one — is presented if the company,
although it rests with it whether it will declare a dividend, can
bind the courts as to the proper ownership of it, and by the mode
of payment substitute its will for that of that of the testator, and
favor the life tenants or the remainder-men, as it may desire. It
cannot, in reason, be considered that the testator contemplated
such a result. The law regards substance, and not form, and such a
rule might result not only in a violation of the testator's intention,
but it would give the power to the corporation to beggar the life
tenants, who, in this case, are the wife and children of the testator,
for the benefit of the remainder-men, who may perhaps be
unknown to the testator, being unborn when the will was
executed. We are unwilling to adopt a rule which to us seems so
arbitrary, and devoid of reason and justice. If the dividend be in
fact a profit, although declared in stock, it should be held to be
income. It has been so held in Pennsylvania and many other states,
and we think it the correct rule. Earp's Appeal, 28 Pa. St. 368;
Cook, Stocks & S. sec. 554. . . .
We think the Pennsylvania rule is more in accord with our statutory laws than
the Massachusetts rule. Under section 16 of our Corporation Law, no
corporation may make or declare any dividend except from the surplus profits
arising from its business. Any dividend, therefore, whether cash or stock,
represents surplus profits. Article 471 of the Civil Code provides that the
usufructuary shall be entitled to receive all the natural, industrial, and civil
fruits of the property in usufruct. And articles 474 and 475 provide as
follows:
ART. 474. Civil fruits are deemed to accrue day by day, and
belong to the usufructuary in proportion to the time the usufruct
may last.
ART. 475. When a usufruct is created on the right to receive an
income or periodical revenue, either in money or fruits, or the
interest on bonds or securities payable to bearer, each matured
payment shall be considered as the proceeds or fruits such right.
When it consists of the enjoyment of the benefits arising from an
interest in an industrial or commercial enterprise, the profits of
which are not distributed at fixed periods, such profits shall have
the same consideration.lawphil.net
In either case they shall be distributed as civil fruits, and shall be
applied in accordance with the rules prescribed by the next
preceding article.
The 108,000 shares of stock are part of the property in usufruct. The 54,000
shares of stock dividend are civil fruits of the original investment. They
represent profits, and the delivery of the certificate of stock covering said
dividend is equivalent to the payment of said profits. Said shares may be sold
independently of the original shares, just as the offspring of a domestic
animal may be sold independently of its mother.
16
The order appealed from, being in accordance with the above-quoted
provisions of the Civil Code, his hereby affirmed, with costs against the
appellants.
G.R. No. L-3691            November 21, 1951
JACINTO DEL SAZ OROZCO y MORTERA and MARIA PAZ
ALCANTARA, plaintiffs-appellants, 
vs.
SALVADOR ARANETA, FRANCISCO DEL SAZ OROZCO Y
LOPEZ, DOLORES DEL SAZ OROZCO Y LOPEZ, and the minors
FELISA, EUGENIO, ANTONIO, JOSE, MARIA Y CARLOS, all
surnamed DEL SAZ OROZCO Y LOPEZ whose natural guardian is
DOÑA CONCEPCION LOPEZ VDA. DE DEL SAZ
OROZCO, defendants-appellees.
La O and Feria and Nicasio D. Castillo for plaintiffs-appellants.
Araneta & Araneta for defendants-appellees.
JUGO, J.:
Eugenio del Saz Orozco died on February 7, 1922, leaving a will which he
had executed on March 5, 1921, and was afterwards duly admitted to probate.
The pertinent clause of that will provided that certain properties should be
given in life usufruct to his son Jacinto del Saz Orozco y Mortera, with the
obligation on his part to preserve said properties in favor of the other heirs
who were declared the naked owners thereof. Among these properties were
5,714 shares of stock of the Benguet Consolidated Mining Company,
according to the project of partition executed pursuant to said will and duly
approved by the court.
On September 11, 1934, the Benguet Consolidated Mining Company
declared and distributed stock dividends out of its surplus profits, the plaintiff
receiving his proportionate portion of 11,428 shares. On November 17, 1939,
said Mining Company again declared stock dividends out of its surplus
profits, of which the plaintiff received 17,142 shares, making a total of
28,570 shares.
The question at this issue is whether the stock dividend is part of the capital
which should be preserved in favor of the owners or an income of fruits of
the capital which should be given to and enjoyed by the life usufructuary, the
plaintiff herein, as his own exclusive property.
The same question was raised in the Matter of the Testate Estate of Emil
Maurice Bachrach, * G.R. No. L-2659 the decision of which was
promulgated on October 12, 1950. In that case, the question raised was stated
as follows:
Is a stock dividend fruit or income, which belongs to the
usufructuary, or is it capital or part of the corpus of the estate,
which pertains to the remainderman. That is the question raised in
this appeal.
In said case, Emil Maurice Bachrach was the owner of 108,000 shares of
stock of the Atok Big Wedge Mining Co., Inc. He received 54,000 shares,
representing 50 per cent stock dividend on said original shares. On June 10,
1948, Mary MacDonald Bachrach as life tenant or usufructuary of the estate
filed a motion asking the Court of First Instance to authorize the Peoples
Bank and Trust Company, as administrator of the estate of Emil Maurice
Bachrach, to transfer to her the said 54,000 shares of stock dividend by
indorsing and delivering to her the corresponding certificates of stock,
claiming that said dividend, although paid out in the form of stock, was fruit
or income and, therefore, belonged to her as usufructuary. The other heirs of
Bachrach opposed the motion on the ground that the stock dividend was part
of the capital or corpus of the estate and belonged to the remainderman. The
court granted the motion and the other heirs appealed.

Justice Ozaeta, with the unanimous concurrence of the other members of this
Court, ruled that a dividend, whether in the form of cash or stock, is income
and, consequently, should go to the usufructuary, taking into consideration
that a stock dividend as well as a cash dividend can be declared only out of
profits of the corporation, for it were declared out of the capital it would be a
serious violation of the law.

For the reason sustaining the doctrine, we refer to that recent decision.

The appellees attempt to differentiate the present case from that case,
contending that, while the doctrine in that case effected a just and equitable
distribution, the application of it in the present case would cause an injustice,
for, quoting Justice Holmes, "abstract propositions do not decide concrete
cases." We have examined the two cases carefully and we have not perceived
any difference which would justify a reversal or modification of the doctrine
in the Bachrach case.

One of the differences pointed out is that by the declaration of stock

dividends the voting power of the original shares of stock is considerably
diminished, and, if the stock dividends are not given to the remaindermen, the
voting power of the latter would be greatly impaired. Bearing in mind that the
number of shares of stock of the Benguet Consolidated Mining company is so
large, the diminution of the voting power of the original shares of stock in
this case cannot possibly affect or influence the control of the policies of the
corporation which is vested in the owners of the great block of shares. This
would not be a sufficient reason for modifying the doctrine of the Bachrach
case. These remarks are made in answer to the argument of the appellees in
this particular case, but they do not imply that if the diminution of the voting
power were considerable the doctrine should be modified.

With regard to the sum of P3,428.40 which is alleged to have been received
by the plaintiff from the Benguet Consolidated Mining Company, as a result
of the reduction of its capital in January, 1926, it appears that it has not been
proven that the plaintiff has received said sum; on the contrary, it was denied
by him as soon as he arrived in the Philippines from Spain. There is no
ground, therefore, for ordering the plaintiff to deliver such sum to the
defendants.

In view of the foregoing, the judgment appealed from is reversed, and it is

declared that the stock dividends amounting to 28,570 shares, above
mentioned, belongs to the plaintiff-appellant Jacinto del Saz Orozco y
Mortera exclusively and in absolute ownership. Without costs. It is so
ordered.

17