Power Commercial and Industrial Corporation v. CA

The petitioner in this case is an asbestos manufacturer and the vendee of a parcel of lot in San Antonio Village, Makati which it purchased to meet its office and warehouse needs. Conversely, the private respondents, spouses Quiambao, are the vendor of said lot which was mortgaged to the respondent bank, PNB. Such mortgage was assumed by the petitioner.

The case arose because the petitioner filed a Civil Case against the respondents for rescission and damages. The petitioner claims that the failure of respondent spouses to deliver actual possession to petitioner entitled the latter to rescind the sale. Petitioner alleges that the failure to deliver actual possession was due to squatters who have physical possession of the lot which deprives them of control of said lot.

Issue: Is the seller’s failure to eject lessees from a lot that is the subject of a contract of sale with assumption of mortgage a ground for rescission of such contract?

Held: No because the alleged “failure” of respondent spouses to eject the lessees from the lot in question and to deliver actual and physical possession thereof cannot be considered a substantial breach of a condition for two reasons: first, such “failure” was not stipulated as a condition—whether resolutory or suspensive—in the contract; and second, its effects and consequences were not specified either. Rescission shall not be allowed because the breach was not substantial and fundamental to the fulfilment by the petitioners of the obligation to sell.

Moreover, the symbolic delivery done by the spouses was effective. Symbolic delivery, as a species of constructive delivery, effects the transfer of ownership through the execution of a public document. While it is true that its efficacy can be prevented if the vendor does not possess control over the thing sold, prior physical deliver or possession is not required. The key word is control and not possession. In the case at bar, the lot sold had been placed under the control of petitioner; thus, the filing of the ejectment suit was subsequently done.

Dizon v. Suntay

The petitioner in this case is Dominador Dizon who owns and operates a pawnshop. The respondet Suntay, on the contrary is the owner of a diamond ring .

The case arose because the respondent Suntay filed a replevin for the recovery of the diamond ring. She filed it because she was not aware that the said ring was pledged1 to the petitioner by a certain Clarita Sison who is a close friend of the respondent’s cousin. Sison was supposed to sell it on commission and the pledge was violative of the terms of agency. The respondent filed the said case when the petitioner refused to return the ring.

Issue: Should the respondent be allowed to recover the ring?

Held: Yes. The controlling provision is Article 559 of the Civil Code: “The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof may recover it from the person in possession of the same. If the possessor of a movable lost of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefore.”

The only exception the law allows is when there is acquisition in good faith of the possessor at a public sale, in which case the owner cannot obtain its return without reimbursing the price. The right of the owner cannot be defeated even by proof that there was good faith in the acquisition by the possessor.

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 in Article 559.

1 Pledge- delivery by a debtor of a personal property to the creditor as a security for a debt.

EDCA Publishing & Distributing Corp. v. Santos

The petitioner in this case is a company which prints and sells books while the respondents, spouses Santos, run a bookstore.

The case arose because the private respondents sued the petitioner for the recovery of 120 books seized from the respondents without warrant. The petitioners seized the books because they were fraudulently purchased by Tomas de la Pena who pretended to be a dean at De La Salle College using a check that was not cleared because said person had no account or deposit with the bank against which he had drawn the payment check.

Petitioner claims 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.

Issue: 1. Do the respondents have ownership of the disputed books?

2. Was the petitioner unlawfully deprived of the books because the check issued by the impostor in payment therefore was dishonoured?

Held:

1. Yes. Article 559 provides that “the possession of movable property acquired in good faith is equivalent to a title”, thus dispensing of further proof.

There was good faith because the 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.

2. No. Petitioner was not unlawfully deprived because the object has voluntarily parted with them pursuant to a contract of purchase and sale. Ownership shall pass from the vendor to the vendee upon 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. Conclusively, the circumstance that the price was not subsequently paid did not render illegal a transaction which was valid and legal at the beginning.

*The fraud and deceit merely makes the sale as a voidable contract and is not within the scope of “unlawful deprivation” within the scope of Article 559.