FIRST DIVISION
G.R. No. 80298 April 26, 1990
EDCA PUBLISHING & DISTRIBUTING CORP., petitioner,
vs.
THE SPOUSES LEONOR and GERARDO SANTOS, doing business under the name and style of "SANTOS BOOKSTORE," and THE COURT OF APPEALS, respondents.
Emiliano S. Samson, R. Balderrama-Samson, Mary Anne B. Samson for petitioner.
Cendana Santos, Delmundo & Cendana for private respondents.
CRUZ, J.:
The
case before us calls for the interpretation of Article 559 of the Civil
Code and raises the particular question of when a person may be deemed
to have been "unlawfully deprived" of movable property in the hands of
another. The article runs in full as follows:
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.
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 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.
xxx xxx xxx
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?
xxx xxx xxx
. . . 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 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. 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.
Narvasa, Gancayco, Griño-Aquino and Medialdea, JJ., concur.
Footnotes
1 Presided by Judge Jose B. Herrera.
2 Presided by Judge Ernesto S. Tengco.
3 Buena, J., with Castro-Bartolome and Cacdac, Jr., JJ., concurring.
4 Rollo pp. 9-10.
5 Ibid., p. 10.
6 Id., p. 37; TSN, Orig Records, pp. 215-219.
7 Rollo p. 10.
8 Ibid., p. 11.
9 Id., p. 37.
10 Id., p. 38.
11 Vol. 40, O.G. S. No. 15, p. 102.
12 Substantially reproduced in what is now Article 559.
13 Vol. 53, O.G. No. 12, p. 3792.
