NORKIS DISTRIBUTORS, INC.,petitioner,vs. THE COURT OF APPEALS & ALBERTO NEPALES,respondents.G.R. No. 91029 February 7, 1991 GRIO-AQUINO,J.:p

Article 1496: "in the absence of an express assumption of risk by the buyer, the things sold remain at seller's risk until the ownership thereof is transferred to the buyer". There was neither an actual nor constructive delivery of the thing sold.

The purpose of the execution of the sales invoice and the registration of the vehicle in the name of Alberto Nepales with the Land Registration Commission was not to transfer the ownership and dominion over the motorcycle to him, but only to comply with the requirements of the DBP for processing private respondent's motorcycle loan.

LORENZO PASCUAL and LEONILA TORRES,plaintiffs-appellees, vs.UNIVERSAL MOTORS CORPORATION,Defendant-Appellant.G.R. No. L-27862 November 20, 1974MAKALINTAL,C.J.:

Vendor precluded from further extrajudicial foreclose of additional securityIf the vendor under such circumstance is prohibited from having a recourse against the additional security for reasons therein stated, there is no ground why such vendor should not likewise be precluded from further extrajudicially foreclosing the additional security put up by the vendees themselves, it being tantamount to a further action that would violate Article 1484 of the Civil Code, for there is actually no difference between an additional security put up by the vendee himself and such security put up by a third party insofar as how the burden would ultimately fall on the vendee himself is concerned.

FILINVEST CREDIT CORPORATION,Petitioner, v. THE COURT OF APPEALS, JOSE SY BANG and ILUMINADA TAN-SY BANG, * respondents.[G.R. No. 82508. September 29, 1989.]SARMIENTO,J.

FINANCING INSTITUTION AS OWNER IS NOT IMMUNE FRAOM ANY RECOURSE FROM BUYER; Bent on acquiring a rock crusher, the private respondents applied for financial assistance from the petitioner, FILINVEST Credit Corporation. The petitioner agreed to extend to the private respondents financial aid on the following conditions: that the machinery be purchased in the petitioners name; that it be leased (with option to purchase upon the termination of the lease period) to the private respondents; and that the private respondents execute a real estate mortgage in favor of the petitioner as security for the amount advanced by the latter. Held: While it is accepted that the petitioner is a financing institution, it is not, however, immune from any recourse by the private respondents. Notwithstanding the testimony of private respondent Jose Sy Bang that he did not purchase the rock crusher from the petitioner, the fact that the rock crusher was purchased from Rizal Consolidated Corporation in the name and with the funds of the petitioner proves beyond doubt that the ownership thereof was effectively transferred to it. It is precisely this ownership which enabled the petitioner to enter into the "Contract of Lease of Machinery and Equipment" with the private respondents.

A CONTRACT IS WHAT THE LAW DEFINES IT AND THE PARTIES INTEND IT TO BE, NOT WHAT IF IS CALLED BY THE PARTIES. The real intention of the parties should prevail. The nomenclature of the agreement cannot change its true essence, i.e., a sale on installments. It is basic that a contract is what the law defines it and the parties intend it to be, not what it is called by the parties. It is apparent here that the intent of the parties to the subject contract is for the so-called rentals to be the installment payments. Upon the completion of the payments, then the rock crusher, subject matter of the contract, would become the property of the private respondents. This form of agreement has been criticized as a lease only in name.

REMEDIES OF SELLER OF MOVABLES PAYABLE IN INSTALLMENTS WHERE BUYER FAILS TO PAY TWO OR MORE INSTALLMENTS; REMEDIES ARE ALTERNATIVE NOT CUMULATIVE. Under Article 1484 of the New Civil Code, the seller of movables in installments, in case the buyer fails to pay two or more installments, may elect to pursue either of the following remedies: (1) exact fulfillment by the purchaser of the obligation; (2) cancel the sale; or (3) foreclose the mortgage on the purchased property if one was constituted thereon. It is now settled that the said remedies are alternative and not cumulative and therefore, the exercise of one bars the exercise of the others.

CONTRACT OF LEASE WITH OPTION TO BUY, RESORTED TO AS A MEANS OF CIRCUMVENT ARTICLE 1484 OF NEW CIVIL CODE. Indubitably, the device contract of lease with option to buy is at times resorted to as a means to circumvent Article 1484, particularly paragraph (3) thereof. Through the set-up, the vendor, by retaining ownership over the property in the guise of being the lessor, retains, likewise, the right to repossess the same, without going through the process of foreclosure, in the event the vendee-lessee defaults in the payment of the installments. There arises therefore no need to constitute a chattel mortgage over the movable sold. More important, the vendor, after repossessing the property and, in effect, canceling the contract of sale, gets to keep all the installments-cum-rentals already paid.

BETWEEN TWO PARTIES, HE WHO BY HIS NEGLIGENCE CAUSED THE LOSS, SHALL BEAR THE SAME. Considering that between the parties, it is the private respondents, by reason of their business, who are presumed to be more knowledgeable, if not experts, on the machinery subject of the contract, they should not therefore be heard now to complain of any alleged deficiency of the said machinery. It is their failure or neglect to exercise the caution and prudence of an expert, or, at least, of a prudent man, in the selection, testing, and inspection of the rock crusher that gave rise to their difficulty and to this conflict. A well-established principle in law is that between two parties, he, who by his negligence caused the loss, shall bear the same.

WARRANTY; EXPRESS WAIVER OF WARRANTIES ABSOLVED SELLER FROM ANY LIABILITY ARISING FROM ANY DEFECT OR DEFICIENCY OF MACHINERY At any rate, even if the private respondents could not be adjudged as negligent, they still are precluded from imputing any liability on the petitioner. One of the stipulations in the contract they entered into with the petitioner is an express waiver of warranties in favor of the latter. By so signing the agreement, the private respondents absolved the petitioner from any liability arising from any defect or deficiency of the machinery they bought. The stipulation on the machines production capacity being "typewritten" and that of the waiver being "printed" does not militate against the latters effectivity. As such, whether "a capacity of 20 to 40 tons per hour" is a condition or a description is of no moment. What stands is that the private respondents had expressly exempted the petitioner from any warranty whatsoever.

BUYER SHOULD INSPECT A PRODUCT BEFORE PURCHASE AND NOT RETURN IT FOR DEFECTS DISCOVERED LATER ON. Taking into account that due to the nature of its business and its mode of providing financial assistance to clients, the petitioner deals in goods over which it has no sufficient know-how or expertise, and the selection of a particular item is left to the client concerned, the latter, therefore, shoulders the responsibility of protecting himself against product defects. This is where the waiver of warranties is of paramount importance. Common sense dictates that a buyer inspects a product before purchasing it (under the principle of caveat emptor or "buyer beware") and does not return it for defects discovered later on, particularly if the return of the product is not covered by or stipulated in a contract or warranty.

WAIVER NOT CONSIDERED A MERE SUPRLUSAGE IN CONTRACT. to declare the waiver as non-effective, as the lower courts did, would impair the obligation of contracts. Certainly, the waiver in question could not be considered a mere surplusage in the contract between the parties. Moreover, nowhere is it shown in the records of the case that the private respondent has argued for its nullity or illegality. In any event, we find no ambiguity in the language of the waiver or the release of warranty. There is therefore no room for any interpretation as to its effect or applicability vis-a-vis the deficient output of the rock crusher. Suffice it to say that the private respondents have validly excused the petitioner from any warranty on the rock crusher. Hence, they should bear the loss for any defect found therein.

When purported Lessor takes possession of subject movable, it is treated legally as a foreclosure and the barring effects applicable to foreclosure remedy, not rescission, are given application.SPOUSES ROMULO DE LA CRUZ and DELIA DE LA CRUZ, and DANIEL FAJARDO, petitioners, vs. ASIAN CONSUMER AND INDUSTRIAL FINANCE CORPORATION and the HONORABLE COURT OF APPEALS, respondents.[G.R. No. 94828. September 18, 1992.]BELLOSILLO,J.:

REMEDIES OF UNPAID SELLER OF PERSONAL PROPERTY PAYABLE IN INSTALLMENT The instant case is covered by the so-called "Recto Law", now Art. 1484 of the New Civil Code, which provides: "In a contract of sale of personal property the price of which is payable in installments, the vendor may exercise any of the following remedies: (1) Exact fulfillment of the obligation, should the vendee fail to pay; (2) Cancel the sale, should the vendee's failure to pay cover two or more installments; (3) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the vendee's failure to pay cover two or more installments. In this case, he shall have no further action against the purchaser to recover any unpaid balance of the price. Any agreement to the contrary shall be void." In this jurisdiction, the three (3) remedies provided for in the "Recto Law" are alternative and not cumulative; the exercise of one would preclude the other remedies. Consequently, should the vendee-mortgagor default in the payment of two or more of the agreed installments, the vendor-mortgagee has the option to avail of any of these three (3) remedies: either to exact fulfillment of the obligation, to cancel the sale, or to foreclose the mortgage on the purchased chattel, if one was constituted.

EFFECT OF FAILURE OF VENDOR TO FORECLOSE THE MORTGAGED PROPERTY. while ASIAN eventually succeeded in taking possession of the mortgaged vehicle, it did not pursue the foreclosure of the mortgage as shown by the fact that no auction sale of the vehicle was ever conducted. It is worth noting that it is the fact of foreclosure and actual sale of the mortgaged chattel that bar recovery by the vendor of any balance of the purchaser's outstanding obligation not satisfied by the sale. If the vendor desisted, on his own initiative, from consummating the auction sale, such desistance was a timely disavowal of the remedy of foreclosure, and the vendor can still sue for specific performance". There being no actual foreclosure of the mortgaged property, ASIAN is correct in resorting to an ordinary action for collection of the unpaid balance of the purchase price.

POSSESSION OF MORTGAGED PROPERTY SHOULD BE RETURNED TO MORTGAGEE-VENDEE UPON PAYMENT OF UNPAID BALANCE We note however that the trial court, as well as the Court of Appeals failed to consider that the vehicle was already in the possession of ASIAN when it directed petitioners herein to pay P184,466.67 representing the balance of the purchase price of the mortgaged property. Law and equity will not permit ASIAN to have its cake and eat it too, so to speak. By allowing ASIAN to retain possession of the vehicle and then directing petitioners to pay the unpaid balance would certainly result in unjust enrichment of the former. Accordingly, the ownership and possession of the vehicle should be returned to petitioners by ASIAN in the condition that it was when delivered to it, and if this be no longer feasible, to deduct from the adjudged liability of petitioners the amount of P60,000.00, its corresponding appraised value.

LEOVILLO C. AGUSTIN, petitioner, vs. COURT OF APPEALS and FILINVEST FINANCE CORP., respondents. [G.R. No. 107846.April 18, 1997]FRANCISCO,J.

ARTICLE 1484(3) THEREOF; RECOVERABLE EXPENSES ABOVE VALUE RECEIVED FROM FORECLOSURE SALE At any rate, even if we were to brush aside the "law of the case" doctrine we find the award for repossession expenses still proper. In Filipinas Investment & Finance Corporation v. Ridad, the Court recognized an exception to the rule stated under Article 1484(8) upon which petitioner relies. "Recoverable expenses would, in our view, include expenses properly incurred in effecting seizure of the chattel and reasonable attorney's fees in prosecuting the action for replevin."

EDCA PUBLISHING & DISTRIBUTING CORP.,Petitioner, v. THE SPOUSES LEONOR and GERARDO SANTOS, doing business under the name and style of "SANTOS BOOKSTORE," and THE COURT OF APPEALS,Respondents.[G.R. No. 80298. April 26, 1990.]CRUZ,J.:

ART. 559. The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof, may recover it from the person in possession of the same.

If the possessor of a movable lost or of which the owner has been unlawfully deprived has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor.

DOMINADOR DIZON, doing business under the firm name "Pawnshop of Dominador Dizon", petitioner, vs. LOURDES G. SUNTAY, respondent.G.R. No. L-30817 September 29, 1972FERNANDO, J p:

CIVIL LAW; PROPERTY; OWNERSHIP AND POSSESSION; RIGHT OF OWNER OF IMMOVABLE PROPERTY UN-LAWFULLY DEPRIVED THEREOF A diamond ring valued at P5,500.00 was delivered by respondent Lourdes C. Suntay to a certain Clarita R. Sison for sale on commission. After the lapse of a considerable time without the latter having returned the ring nor its purchase price, demands were made upon her by the owner upon which a pawnshop ticket, the receipt of the pledge with petitioner Dominador Dizon's pawnshop, ,was delivered. Since what was done was violative of the terms of the agency, there was an attempt to recover possession by an action for recovery and by the provisional remedy of replevin. The dispossessed owner having prevailed, both in the lower and in the Court of Appeals, the matter was then elevated to this Court by petitioner grounded on estoppel. HELD: The invocation of estoppel is unavailing. Respondent-owner Lourdes G. Suntay has in her favor the protection accorded by Art. 559 of the Civil Code which provides that: "The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof may recover it from the person in possession of the same. If the possessor of a movable lost or of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price therefore."

TEEHANKEE, J., Concurring:CIVIL LAW; PROPERTY; RIGHT OF OWNER OF MOVABLE PROPERTY UNLAWFULLY DEPRIVED THEREOF; TERM "UNLAWFULLY DEPRIVE" IN ARTICLE 559 OF THE CIVIL CODE. If our legislature had intended to narrow their scope of the term "unlawfully deprived" to "stolen" as advocate by Tolentino, it certainly would have adopted and used such narrower term rather than the broad language of article 464 off the old Spanish Civil Code with its long-established and accepted meaning in accordance with our jurisprudence.

RIGHT OF DISPOSSESSED OWNER TO RECOVER DOES NOT PRECLUDE THE RIGHT OF THE POSSESSOR TO ADEQUATE PROTECTION AND OPPORTUNITY TO CONTEST THE OWNER'S CLAIM OF RECOVERY. The civil action that the owner must resort to for the recovery of his personal property of which he has been unlawfully deprived as against the possessor (where the latter refuses to honor the claim, presumably on same valid doubts as to the genuineness of the claim) gives the possessor every adequate protection and opportunity to contest the owner's claim of recovery. The owner must therein establish by competent evidence his lawful claim, and show to the court's satisfaction his lawful ownership of the article claimed and that he had been unlawfully deprived thereof.

POWER COMMERCIAL AND INDUSTRIAL CORPORATION, petitioner, vs. COURT OF APPEALS, SPOUSES REYNALDO and ANGELITA R. QUIAMBAO and PHILIPPINE NATIONAL BANK, respondents.[G.R. No. 119745.June 20, 1997]PANGANIBAN,J.:

CIVIL LAW; CONTRACT; SALE; TYPES OF DELIVERY, CONSTRUED. The Civil Code provides that delivery can either be (1) actual (Article 1497) or (2) constructive (Articles 1498-1501). Symbolic delivery (Article 1498), as a species of constructive delivery, effects the transfer of ownership through the execution of a public document. Its efficacy can, however, be prevented if the vendor does not possess control over the thing sold, in which case this legal fiction must yield to reality. The Court has consistently held that: [Addison vs. Felix, 38 Phil. 404,408 (1918); Vda de Sarmiento vs Lesaca, 108 Phil. 900, 902-903 (1960); and Danguilan vs Intermediate Appellate Court, 168 SCRA 22, 32, November 28, 1988.) ". . . (I)n order that this symbolic delivery may produce the effect of tradition, it is necessary that the vendor shall have had such control over the thing sold that . . . its material delivery could have been made. It is not enough to confer upon the purchaser the ownership and the right of possession. The thing sold must be placed in his control When there is no impediment whatever to prevent the thing sold passing into the tenancy of the purchaser by the sole will of the vendor, symbolic delivery through the execution of a public instrument is sufficient. But if, notwithstanding the execution of the instrument, the purchaser cannot have the enjoyment and material tenancy of the thing and make use of it himself or through another in his name, because such tenancy and enjoyment are opposed by the interposition of another will, then fiction yields to reality the delivery has not been effected."

BREACH OF WARRANTY AGAINST EVICTION; WHEN PRESENT. A breach of warranty against eviction requires the concurrence of the following circumstances: (1) The purchaser has been deprived of the whole or part of the thing sold; (2) This eviction is by a final judgment; (3) The basis thereof is by virtue of a right prior to the sale made by the vendor; and (4) The vendor has been summoned and made co-defendant in the suit for eviction at the instance of the vendee. In the absence of these requisites, a breach of the warranty against eviction under Article 1547 cannot be declared.