G.R.NO.

L-36249
March 29, 1985
ANIANO OBAA, petitioner,
vs.
THE COURT OF APPEALS AND ANICETO SANDOVAL, respondents.
MELENCIO-HERRERA, J.:
Petitioner seeks a review of the Decision of respondent Appellate Court (in CA-G.R. No. 44345-R) ordering him in an
action for Replevin to return to Aniceto SANDOVAL, private respondent herein, 170 cavans of rice or to pay its value in
the amount of P37.25 per cavan, with legal interest from the filing of the Complaint until fully paid.
SANDOVAL is the owner and manager of the "Sandoval and Sons Rice Mill" located in Rosales, Pangasinan. He is
engaged in the buying and selling of palay.
On November 21, 1964, SANDOVAL was approached by a certain Chan Lin who offered to purchase from him 170
cavans of clean rice (wagwag variety) at the price of P37.26 per cavan, delivery to be made the following day at
petitioner's store in San Fernando, La Union, with payment to be made thereat by Chan Lin to SANDOVAL's
representative. SANDOVAL accepted the offer as he knew petitioner and had had previous transactions with him.
As agreed, the 170 cavans of rice were transported the following day on a truck belonging to SANDOVAL to petitioner's
store in San Fernando, La Union. Chan Lin accompanied the shipment. Upon arrival thereat, the goods were unloaded
but when the truck driver attempted to collect the purchase price from Chan Lin, the latter was nowhere to be found.
The driver tried to collect from petitioner, but the latter refused stating that he had purchase the goods from Chan Lin
at P33.00 per cavan and that the price therefore had already been paid to Chan Lin.
Further demands having been met with refusal, SANDOVAL, as plaintiff, filed suit for replevin against petitioner, then
the defendant, before the Municipal Court of San Fernando, La Union, which ordered petitioner-defendant to pay to
SANDOVAL one-half () of the cost of the rice or P2,805.00.
On appeal by petitioner-defendant to the then Court of First Instance of La Union, the parties agreed to adopt
SANDOVAL's testimony before the Municipal Court. After trial de novo, judgment was rendered dismissing the
complaint against petitioner-defendant.
On appeal to respondent Appellate Court, SANDOVAL obtained a reversal in his favor, as follows:
WHEREFORE, the appealed decision is hereby set aside and another one entered ordering defendant-appellee to return
the one hundred and seventy cavans of rice to plaintiff- appellant or to pay its value in the amount of P 37.25 per
cavan, with legal interest from the filing of the complaint until fully paid and with costs against the appellee. 1
Before us, petitioner-defendant takes issue with the following Appellate Court findings:
From the evidence presented by the parties, it is evident that this is a simple case of swindling perpetuated by Chan
Lin at the expense of the plaintiff and the defendant. The act of Chan Lin in purchasing plaintiff's rice at the price of P
37.25 per cavan and thereafter offering the same goods to defendant at a much lower price is an indication that it was
never his intention to comply with his obligation to plaintiff. It is clear that Chan Lin's only purpose in entering into said
contract with plaintiff was to acquire the physical possession of the goods and then to pass them on to defendant on
the pretext that he is the owner thereof. Premises considered, therefore, Chan Lin cannot be considered as the owner
of the goods at the time the same was said to have been sold to the defendant-appellee. Considering that defendant
acquired the 170 cavans of rice from a person who is not the owner thereof, it is therefore clear that he acquired no
greater right than his predecessor-in-interest.
Finally, on principle of equity, it is but proper that plaintiff-appellant be allowed to recover the one-hundred and
seventy cavans of rice or its value. Being the undisputed owner of the above mentioned goods, the appellant cannot
be deprived of its ownership without the corresponding payment. 2
We agree with petitioner-defendant that there was a perfected sale. Article 1475 of the Civil Code lays down the
general rule that there is perfection when there is consent upon the subject matter and price, even if neither is
delivered.
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.
xxx
xxx
xxx
Ownership of the rice, too, was transferred to the vendee, Chan Lin, upon its delivery to him at San Fernando, La
Union, the place stipulated 3 and pursuant to Articles 1477 and 1496 of the same Code:
Art. 1477.
The ownership of the thing sold shall be transferred to the vendee upon the actual or constructive
delivery thereof.
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 to 1501, or in any manner signifying an agreement that the possession is
transferred from the vendor to the vendee.
At the very least, Chan Lin had a rescissible title to the goods for the non-payment of the purchase price, but which
had not been rescinded at the time of the sale to petitioner.

However, from petitioner-defendant's own testimony before the Court of First Instance, he admits that three days after
the delivery, he was repaid the sum of P5,600.00 by Chan Lin, who was then accompanied by SANDOVAL's driver, and
that he had delivered the rice back to them. On rebuttal, however, the driver denied that the rice had ever been
returned. 4 The driver's version is the more credible, for, as SANDOVAL's counsel had manifested in open Court, if
return of the rice had been effected, they would have withdrawn the complaint. 5 Following is the admission made by
petitioner-defendant:
Q
After the third day ... when that request for you to hold the rice was already overdue, what happened?
A
This is what happened. Chan Lin and the driver with the same truck that they used to unload the rice, came to
me.
Q
What day was that?
A
That was I think, Thursday, about 4:30 P.M.
Q
Do you know the date?
A
November 26, I think.
Q
What did they do when this driver and Mr. Chan Lin came back?
A
They told me that they wanted the rice back and give my money back.
Q
Did they give you your money back?
A
Yes.
Q
How much?
A
They gave me P5.600.
COURT:
Q
They gave you that amount?
A
Yes, sir.
ATTY. GUALBERTO:
Q
Did they tell you why they were getting back the rice and giving you back your money?
A
Yes. The complete rice, and Vallo (SANDOVAL's driver) told me, he wanted to return the rice to the ricemill, that
is what Vallo and the Chinese agreed with Aniceto Sandoval.
Q
Did the Chinese tell you that he made agreement with Sandoval to get back the rice?
A Yes.
COURT:
Q
Did you receive the money?
A
Yes , sir 6
Having been repaid the purchases price by Chan Lin , the sale, as between them, had been voluntarily rescinded, and
petitioner-defendant was thereby divested of any claim to the rice. Technically, therefore, he should return the rice to
Chan Lin, but since even the latter, again from petitioner-defendant's own testimony above-quoted, was ready to
return the rice to SANDOVAL, and the latter's driver denies that the rice had been returned by petitioner-defendant
cannot be allowed to unjustly enrich himself at the expense of another by holding on to property no longer belonging
to him. 7 In law and in equity, therefore, SANDOVAL is entitled to recover the rice, or the value theref since hewas not
paid the price therefor.
WHEREFORE, albeit on a different premise, the judgment under review is hereby AFFIRMED. Costs against petitioner.
SO ORDERED.
Plana, Relova, Gutierrez, Jr., De la Fuente and Alampay, JJ., concur.
Teehankee, J., took no part.
February 28, 1985
G.R. No. , ,
vs.
,.
, J.:
Petitioner seeks a review of the Decision of respondent Appellate Court (in CA-G.R. No. 44345-R) ordering him in an
action for Replevin to return to Aniceto SANDOVAL, private respondent herein, 170 cavans of rice or to pay its value in
the amount of P37.25 per cavan, with legal interest from the filing of the Complaint until fully paid.

SANDOVAL is the owner and manager of the "Sandoval and Sons Rice Mill" located in Rosales, Pangasinan. He is
engaged in the buying and selling of palay.
On November 21, 1964, SANDOVAL was approached by a certain Chan Lin who offered to purchase from him 170
cavans of clean rice (wagwag variety) at the price of P37.26 per cavan, delivery to be made the following day at
petitioner's store in San Fernando, La Union, with payment to be made thereat by Chan Lin to SANDOVAL's
representative. SANDOVAL accepted the offer as he knew petitioner and had had previous transactions with him.
As agreed, the 170 cavans of rice were transported the following day on a truck belonging to SANDOVAL to petitioner's
store in San Fernando, La Union. Chan Lin accompanied the shipment. Upon arrival thereat, the goods were unloaded
but when the truck driver attempted to collect the purchase price from Chan Lin, the latter was nowhere to be found.
The driver tried to collect from petitioner, but the latter refused stating that he had purchase the goods from Chan Lin
at P33.00 per cavan and that the price therefore had already been paid to Chan Lin.
Further demands having been met with refusal, SANDOVAL, as plaintiff, filed suit for replevin against petitioner, then
the defendant, before the Municipal Court of San Fernando, La Union, which ordered petitioner-defendant to pay to
SANDOVAL one-half (?) of the cost of the rice or P2,805.00.
On appeal by petitioner-defendant to the then Court of First Instance of La Union, the parties agreed to adopt
SANDOVAL's testimony before the Municipal Court. After trial de novo, judgment was rendered dismissing the
complaint against petitioner-defendant.
On appeal to respondent Appellate Court, SANDOVAL obtained a reversal in his favor, as follows:
WHEREFORE, the appealed decision is hereby set aside and another one entered ordering defendant-appellee to return
the one hundred and seventy cavans of rice to plaintiff- appellant or to pay its value in the amount of P 37.25 per
cavan, with legal interest from the filing of the complaint until fully paid and with costs against the appellee. 1
Before us, petitioner-defendant takes issue with the following Appellate Court findings:
From the evidence presented by the parties, it is evident that this is a simple case of swindling perpetuated by Chan
Lin at the expense of the plaintiff and the defendant. The act of Chan Lin in purchasing plaintiff's rice at the price of P
37.25 per cavan and thereafter offering the same goods to defendant at a much lower price is an indication that it was
never his intention to comply with his obligation to plaintiff. It is clear that Chan Lin's only purpose in entering into said
contract with plaintiff was to acquire the physical possession of the goods and then to pass them on to defendant on
the pretext that he is the owner thereof. Premises considered, therefore, Chan Lin cannot be considered as the owner
of the goods at the time the same was said to have been sold to the defendant-appellee. Considering that defendant
acquired the 170 cavans of rice from a person who is not the owner thereof, it is therefore clear that he acquired no
greater right than his predecessor-in-interest.
Finally, on principle of equity, it is but proper that plaintiff-appellant be allowed to recover the one-hundred and
seventy cavans of rice or its value. Being the undisputed owner of the above mentioned goods, the appellant cannot
be deprived of its ownership without the corresponding payment. 2
We agree with petitioner-defendant that there was a perfected sale. Article 1475 of the Civil Code lays down the
general rule that there is perfection when there is consent upon the subject matter and price, even if neither is
delivered.

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.
xxx xxx xxx
Ownership of the rice, too, was transferred to the vendee, Chan Lin, upon its delivery to him at San Fernando, La
Union, the place stipulated 3 and pursuant to Articles 1477 and 1496 of the same Code:
Art. 1477. The ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery
thereof.
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 to 1501, or in any manner signifying an agreement that the possession is
transferred from the vendor to the vendee.
At the very least, Chan Lin had a rescissible title to the goods for the non-payment of the purchase price, but which
had not been rescinded at the time of the sale to petitioner.
However, from petitioner-defendant's own testimony before the Court of First Instance, he admits that three days after
the delivery, he was repaid the sum of P5,600.00 by Chan Lin, who was then accompanied by SANDOVAL's driver, and
that he had delivered the rice back to them. On rebuttal, however, the driver denied that the rice had ever been
returned. 4 The driver's version is the more credible, for, as SANDOVAL's counsel had manifested in open Court, if
return of the rice had been effected, they would have withdrawn the complaint. 5 Following is the admission made by
petitioner-defendant:
Q After the third day ... when that request for you to hold the rice was already overdue, what happened?
A This is what happened. Chan Lin and the driver with the same truck that they used to unload the rice, came to me.
Q What day was that?
A That was I think, Thursday, about 4:30 P.M.
Q Do you know the date?
A November 26, I think.
Q What did they do when this driver and Mr. Chan Lin came back?
A They told me that they wanted the rice back and give my money back.
Q Did they give you your money back?
A Yes.
Q How much?

A They gave me P5.600.

COURT:
Q They gave you that amount?
A Yes, sir.
ATTY. GUALBERTO:
Q Did they tell you why they were getting back the rice and giving you back your money?
A Yes. The complete rice, and Vallo (SANDOVAL's driver) told me, he wanted to return the rice to the ricemill, that is
what Vallo and the Chinese agreed with Aniceto Sandoval.
Q Did the Chinese tell you that he made agreement with Sandoval to get back the rice?
A Yes.
COURT:
Q Did you receive the money?
A Yes , sir 6
Having been repaid the purchases price by Chan Lin , the sale, as between them, had been voluntarily rescinded, and
petitioner-defendant was thereby divested of any claim to the rice. Technically, therefore, he should return the rice to
Chan Lin, but since even the latter, again from petitioner-defendant's own testimony above-quoted, was ready to
return the rice to SANDOVAL, and the latter's driver denies that the rice had been returned by petitioner-defendant
cannot be allowed to unjustly enrich himself at the expense of another by holding on to property no longer belonging
to him. 7 In law and in equity, therefore, SANDOVAL is entitled to recover the rice, or the value theref since hewas not
paid the price therefor.
WHEREFORE, albeit on a different premise, the judgment under review is hereby AFFIRMED. Costs against petitioner.
SO ORDERED.

G.R. No. L-20264

January 30, 1971
CONSUELO S. DE GARCIA and ANASTACIO GARCIA, petitioners,
vs.
HON. COURT OF APPEALS, ANGELINA D. GUEVARA and JUAN B. GUEVARA, respondents.
Deogracias T. Reyes and Jose M. Luison for petitioners.
Tolentino and Garcia and D.R. Cruz for private respondents.
FERNANDO, J.:
This petition for certiorari to review a decision of respondent Court of Appeals was given due course because it was
therein vigorously asserted that legal questions of gravity and of moment, there being allegations of an unwarranted
departure from and a patent misreading of applicable and controlling decisions, called for determination by this
Tribunal. The brief for petitioners-spouses, however, failed to substantiate such imputed failings of respondent Court.
The performance did not live up to the promise. On the basis of the facts as duly found by respondent Court, which we
are not at liberty to disregard, and the governing legal provisions, there is no basis for reversal. We affirm.
The nature of the case presented before the lower court by private respondent Angelina D. Guevara, assisted by her
spouse, Juan B. Guevara, as plaintiffs, was noted in the decision of respondent Court of Appeals thus: "Plaintiff seeks
recovery of `one (1) lady's diamond ring 18 cts. white gold mounting, with one (1) 2.05 cts. diamond-solitaire, and four
(4) brills 0.10 cts. total weight' which she bought on October 27, 1947 from R. Rebullida, Inc." 1 Then came a summary
of now respondent Guevara of her evidence: "Plaintiff's evidence tends to show that around October 11, 1953 plaintiff
while talking to Consuelo S. de Garcia, owner of La Bulakea restaurant recognized her ring in the finger of Mrs. Garcia
and inquired where she bought it, which the defendant answered from her comadre. Plaintiff explained that that ring
was stolen from her house in February, 1952. Defendant handed the ring to plaintiff and it fitted her finger. Two or
three days later, at the request of plaintiff, plaintiff, her husband Lt. Col. Juan Guevara, Lt. Cementina of Pasay PD,
defendant and her attorney proceeded to the store of Mr. Rebullida to whom they showed the ring in question. Mr.
Rebullida a examined the ring with the aid of high power lens and after consulting the stock card thereon, concluded
that it was the very ring that plaintiff bought from him in 1947. The ring was returned to defendant who despite a
written request therefor failed to deliver the ring to plaintiff. Hence, this case. Later on when the sheriff tried to serve
the writ of seizure (replevin), defendant refused to deliver the ring which had been examined by Mr. Rebullida,
claiming it was lost."2
How the defendant, Consuelo S. de Garcia, the present petitioner before us, along with her husband Anastacio Garcia,
sought to meet plaintiff's claim was narrated thus: "On the other hand, defendant denied having made any admission
before plaintiff or Mr. Rebullida or the sheriff. Her evidence tends to show that the ring (Exhibit 1) was purchased by
her from Mrs. Miranda who got it from Miss Angelita Hinahon who in turn got it from the owner, Aling Petring, who was
boarding in her house; that the ring she bought could be similar to, but not the same ring plaintiff purchased from Mr.
Rebullida which was stolen; that according to a pawn-shop owner the big diamond on Exhibit 1 was before the trial
never dismantled. When dismantled, defendant's diamond was found to weigh 2.57 cts." 3
Plaintiff lost in the lower court. She elevated the matter to respondent Court of Appeals with the judgment of the lower
court being reversed. It is this decision now under review.
These are the facts as found by respondent Court of Appeals: "That the ring brought by the parties for examination by
Rafael Rebullida on December 14, 1953 was the same ring purchased by plaintiff from R. Rebullida, Inc. on October 27,
1947 and stolen in February, 1952 has been abundantly established by plaintiff's evidence. Before plaintiff lost the
ring, she had been wearing it for six years and became familiar with it. Thus, when she saw the missing ring in the
finger of defendant, she readily and definitely identified it. Her identification was confirmed by Mr. Rafael Rebullida,
whose candid testimony is entitled to great weight, with his 30 years experience behind him in the jewelry business
and being a disinterested witness since both parties are his customers. Indeed, defendant made no comment when in
her presence Rebullida after examining the ring and stock card told plaintiff that that was her ring, nor did she answer
plaintiff's letter of demand, ... asserting ownership. Further confirmation may be found in the extra-judicial admissions,
contained in defendant's original and first amended answers ..." 4
These further facts likewise appeal therein: "The foregoing proof is not counter-balanced by the denial on the part of
defendant or the presentation of the ring, Exhibit I, which has a diamond-solitaire 2.57 cts., or much heavier than the
lost diamond weighing 2.05 cts. only. It is noteworthy that defendant gave a rather dubious source of her ring. Aling
Petring from whom the ring supposedly came turned out to be a mysterious and ephemeral figure. Miss Hinahon did
not even know her true and full name, nor her forwarding address. She appeared from nowhere, boarded three months
in the house of Miss Hinahon long enough to sell her diamond ring, disappearing from the scene a week thereafter.
Indeed, the case was terminated without any hearing on the third-party and fourth-party complaints, which would have
shown up the falsity of defendant's theory. Moreover, Mrs. Baldomera Miranda, third-party defendant, who tried to
corroborate defendant on the latter's alleged attempt to exchange the ring defendant bought through her, is [belied]
by her judicial admission in her Answer that appellee `suggested that she would make alterations to the mounting and
structural design of the ring to hide the true identity and appearance of the original one' (Cunanan vs. Amparo, 45 O.G.

3796). Finally, defendant is refuted by her own extra-judicial admissions ... although made by defendant's counsel. For
an attorney who acts as counsel of record and is permitted to act such, has the authority to manage the cause, and
this includes the authority to make admission for the purpose of the litigation... Her proffered explanation that her
counsel misunderstood her is puerile because the liability to error as to the identity of the vendor and the exchange of
the ring with another ring of the same value, was rather remote." 5
It is in the light of the above facts as well as the finding that the discrepancy as to the weight between the diamondsolitaire in Exhibit I and the lost diamond was due to defendant having "substituted a diamond-solitaire of plaintiff with
a heavier stone" that the decision was rendered, respondent Court reversing the lower court and ordering defendant,
now petitioner Consuelo S. de Garcia, to return plaintiff's ring or fact value of P1,000.00 and costs, as well as to pay
plaintiff P1,000.00 as attorney's fee and P1,000.00 as exemplary damages. Hence this appeal.
To repeat, there is no occasion to reverse respondent Court. It correctly applied the law to the facts as found.
1.
The controlling provision is Article 559 of the Civil Code. It reads thus: "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 therefor." Respondent Angelina D. Guevara, having been unlawfully deprived
of the diamond ring in question, was entitled to recover it from petitioner Consuelo S. de Garcia who was found in
possession of the same. 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. As authoritative
interpreted in Cruz v. Pahati, 6 the right of the owner cannot be defeated even by proof that there was good faith by
the acquisition by the possessor. There is a reiteration of this principle in Aznar v. Yapdiangco.7Thus: "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 the 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 statutory provision, the
latter must prevail in this jurisdiction."8
2.
It is thus immediately apparent that there is no merit to the contention raised in the first assigned error that
her possession in good faith, equivalent to title, sufficed to defeat respondent Guevara's claim. As the above cases
demonstrate, even on that assumption the owner can recover the same once she can show illegal deprivation.
Respondent Court of Appeals was so convinced from the evidence submitted that the owner of the ring in litigation is
such respondent. That is a factual determination to which we must pay heed. Instead of proving any alleged departure
from legal norms by respondent Court, petitioner would stress Article 541 of the Civil Code, which provides: 'A
possessor in the concept of owner has in his favor the legal presumption that he possesses with a just title and he
cannot be obliged to show or prove it." She would accord to it a greater legal significance than that to which under the
controlling doctrines it is entitled.lwph1.t The brief for respondents did clearly point out why petitioner's assertion
is lacking in support not only from the cases but even from commentators. Thus: "Actually, even under the first clause,
possession in good faith does not really amount to title, for the reason that Art. 1132 of the Code provides for a period
of acquisitive prescription for movables through `uninterrupted possession for four years in good faith' (Art. 1955 of
the old Spanish Code, which provided a period of three years), so that many Spanish writers, including Manresa,
Sanchez Roman, Scaevola, De Buen, and Ramos, assert that under Art. 464 of the Spanish Code (Art. 559 of the New
Civil Code), the title of the possessor is not that of ownership, but is merely a presumptive title sufficient to serve as a
basis of acquisitive prescription (II Tolentino, Civil Code of the Phil. p. 258: IV Manresa, Derecho Civil Espaol, 6th Ed.,
p. 380). And it is for the very reason that the title established by the first clause of Art. 559 is only a presumptive title
sufficient to serve as a basis for acquisitive prescription, that the clause immediately following provides that `one who
has lost any movable or has been unlawfully deprived thereof, may recover it from the person in possession of the
same.' As stated by the Honorable Justice Jose B. L. Reyes of this Court in Sotto vs. Enage (C.A.), 43 Off. Gaz. 5075,
Dec. 1947: `Article 559 in fact assumes that possessor is as yet not the owner; for it is obvious that where the
possessor has come to acquire indefeasible title by, let us say, adverse possession for the necessary period, no proof
of loss or illegal deprivation could avail the former owner of the chattel. He would no longer be entitled to recover it
under any condition.' "9
The second assigned error is centered on the alleged failure to prove the identity of the diamond ring. Clearly the
question raised is one of the fact. What the Court of Appeals found is conclusive. Again, petitioner could not
demonstrate that in reaching such a conclusion the Court of Appeals acted in an arbitrary manner. As made mention of
in the brief for respondents two disinterested witnesses, Mr. Rafael Rebullida as well as Lt. Col. Reynaldo Cementina of
the Pasay City Police Department, both of whom could not be accused of being biased in favor of respondent Angelina
D. Guevara, did testify as to the identity of the ring.
The third assigned error of petitioners would find fault with respondent Court relying "on the weakness of the title or
evidence" of petitioner Consuelo S. de Garcia. It is true, in the decision under review, mention was made of petitioner

Consuelo S. de Garcia making no comment when in her presence Rebullida, after examining the ring the stock card,
told respondent Angelina L. Guevara that that was her ring, nor did petitioner answer a letter of the latter asserting
ownership. It was likewise stated in such decision that there were extra-judicial admissions in the original and first
amended answers of petitioner. In the appraisal of her testimony, respondent Court likewise spoke of her giving a
rather dubious source of her ring, the person from whom she allegedly bought it turning out "to be a mysterious and
ephemeral figure." As a matter of fact, as set forth a few pages back, respondent Court did enumerate the flaws in the
version given by petitioner. From the weakness of the testimony offered which, as thus made clear, petitioner, did not
even seek to refute, she would raise the legal question that respondent Court relied on the "weakness of [her] title or
evidence" rather than on the proof justifying respondent Angelina D. Guevara's claim of ownership. Petitioner here
would ignore the finding of fact of respondent Court that such ownership on her part "has been abundantly
established" by her evidence. Again here, in essence, the question raised is one of fact, and there is no justification for
us to reverse respondent Court.
The legal question raised in the fourth assignment of error is that the matter of the substitution of the diamond on the
ring was a question raised for the first time on appeal as it was never put in issue by the pleadings nor the subject of
reception of evidence by both parties and not touched upon in the decision of the lower court. Why no such question
could be raised in the pleadings of respondent Angelina D. Guevara was clarified by the fact that the substitution came
after it was brought for examination to Mr. Rebullida. After the knowledge of such substitution was gained, however,
the issue was raised at the trial according to the said respondent resulting in that portion of the decision where the
lower court reached a negative conclusion. As a result, in the motion for reconsideration, one of the points raised as to
such decision being contrary to the evidence is the finding that there was no substitution. It is not necessary to state
that respondent Court, exercising its appellate power reversed the lower court. What was held by it is controlling. What
is clear is that there is no factual basis for the legal arguments on which the fourth assigned error is predicated.
What is said takes care of the fifth assigned error that respondent Court was mistaken in its finding that there was such
a substitution. Again petitioner would have us pass on a question of credibility which is left to respondent Court of
Appeals. The sixth assigned error would complain against the reversal of the lower court judgment as well as petitioner
Consuelo S. de Garcia being made to pay respondent Angelina D. Guevara exemplary damages, attorney's fees and
costs. The reversal is called for in the light of the appraisal of the evidence of record as meticulously weighed by
respondent Court. As to the attorney's fees and exemplary damages, this is what respondent Court said in the decision
under review: "Likewise, plaintiff is entitled to recover reasonable attorney's fees in the sum of P1,000, it being just
and equitable under the circumstances, and another P1,000 as exemplary damages for the public good to discourage
litigants from resorting to fraudulent devices to frustrate the ends of justice, as defendant herein tried to substitute the
ring, Exhibit 1, for plaintiff's ring." 10 Considering the circumstances, the cursory discussion of the sixth assigned error
on the matter by petitioner fails to demonstrate that respondent Court's actuation is blemished by legal defects.
WHEREFORE, the decision of respondent Court of Appeals of August 6, 1962 is hereby affirmed. With costs.

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 Pea 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.1wphi1 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 Pea, 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. L-31606

March 28, 1983
DONATO REYES YAP and MELITONA MARAVILLAS, petitioners,
vs.
HON. EZEKIEL S. GRAGEDA, as Judge of the Court of First Instance of Albay and JOSE A. RICO,respondents.
Jose P. Oira for petitioners.
Rodolfo A. Madrid for respondents.
GUTIERREZ, JR., J.:
We are asked in this petition to review the amended decision of the respondent court which declared as absolutely null
and void the sale of a residential lot in Guinobatan, Albay to a Chinese national and ordered its reconveyance to the
vendors thirty years after the sale inspite of the fact that the vendee had been a naturalized Filipino citizen for fifteen
years at the time.
We grant the petition. The questioned decision and the order amending it are reversed and set aside.
The facts are not disputed.
On April 12, 1939, Maximino Rico, for and in his own behalf and that of the minors Maria Rico, Filomeno Rico, Prisco
Rico, and Lourdes' Rico, executed a Deed of Absolute Sale (Annex 'A' to the complaint) over Lot 339 and a portion of
Lot 327 in favor of the petitioner Donato Reyes Yap who was then a Chinese national. Respondent Jose A. Rico is the
eldest son of Maximino Rico, one of the vendors in Annex 'A'.
Subsequently, the petitioner as vendee caused the registration of the instrument of sale and the cancellation of
Original Certificates of Title Nos. 29332 and 29410 and the consequent issuance in his favor of Transfer Certificate of
Title No. T-2433 covering the two lots subject matter of the Contract of Sale.
After the lapse of nearly fifteen years from and after the execution of the deed of absolute sale, Donato Reyes Yap was
admitted as a Filipino citizen and allowed to take his oath of allegiance to the Republic of the Philippines. He was,
thereafter, issued Certificate of Naturalization No. 7, File No. 19 of the Court of First Instance of Albay.
On December 1, 1967, the petitioner ceded the major portion of Lot No. 327 consisting of 1,078 square meters which
he acquired by purchase under the deed of sale in favor of his engineer son, Felix Yap, who was also a Filipino citizen
because of the Filipino citizenship of his mother and the naturalization of his father Donato Reyes Yap.
Subsequently, Lourdes Rico, aunt and co-heir of respondent Jose A. Rico. sold the remaining portion of Lot 327 to the
petitioner who had his rights thereon duly registered under Act 496. Petitioner, Donato Reyes Yap, has been in
possession of the lots in question since 1939, openly, publicly, continuously, and adversely in the concept of owner
until the present time. The petitioner has one surviving son by his first marriage to a Filipino wife. He has five children
by his second marriage also to a Filipina and has a total of 23 grandchildren all of whom are Filipino citizens.
The respondent court considered Section 5, Article XIII of the 1935 Constitution that "no private agricultural land shall
be transferred or assigned except to individuals, corporations, or associations qualified to acquire or hold lands of the
public domain in the Philippines" to be an absolute and unqualified prohibition and, therefore, ruled that a conveyance
contrary to it would not be validated nor its void nature altered by the subsequent naturalization of the vendee.
The dispositive portion of the amended decision reads:
WHEREFORE, in view of all the foregoing, the Contract of Sale embodied in the 'Escritura de Compra Venta' which is
attached to the Complaint as Annex 'A', is hereby declared null and void ab initio and without any legal force and
effect.
The action to recover Lot 339 of the Cadastral Survey of Guinobatan, Albay, covered by Transfer Certificate of Title No.
T2433. and Lot 327 covered by the same Transfer Certificate of Title, is hereby granted to plaintiff, upon payment of
the consideration price of P150.00 and declaring plaintiff as the lawful owner and entitled to the possession thereof.
Defendant Donato Reyes Yap is hereby ordered to produce his Transfer Certificate of Title No. T-2433 to the Register of
Deeds of Albay, so as to enable said office to make the due and proper annotations on said title as well as in the
original of the declaration of nullity as herein adjudged. Let Transfer Certificate of Title issued to plaintiff, concerning
said Lots 339 and 327 of the Cadastral Survey of Guinobatan, Albay.
COSTS AGAINST DEFENDANTS.
The rulings in Vasquez v.Leng Seng Giap et al. (96 Phil. 447) and Sarosa Vda. de Bersabia v. Cuenco (113 SCRA 547)
sustain the petitioner's contentions. We stated in Sarosa Vda de Bersabia:
There should be no question that the sale of the land in question in 1936 by Epifania to Ong King Po was inexistent and
void from the beginning (Art. 1409 [7], Civil Code) because it was a contract executed against the mandatory provision
of the 1935 Constitution, which is an expression of public policy to conserve lands for the Filipinos. Said provision
reads:
Save in cases of hereditary succession, no private agricultural land shall be transferred or assigned except to in.
individuals, corporations, or associations, qualified to acquire or hold lands of the public domain.
Had this been a suit between Epifania and Ong King Po she could have been declared entitled to the litigated land on
the basis, as claimed, of the ruling in Philippine Banking Corporation vs. Lui She, reading:

... For another thing, and this is not only cogent but also important. Article 1416 of the Civil Code provides as an
exception to the rule on pari delicto that when the agreement is not illegal per se but is merely prohibited, and the
prohibition by the law is designed for the protection of the plaintiff, he may, if public policy is thereby enhanced,
recover what he has sold or delivered. ...
But the factual set-up has changed. The litigated property is now in the hands of a naturalized Filipino. It is no longer
owned by a disqualified vendee. Respondent, as a naturalized citizen, was constitutionally qualified to own the subject
property. There would be no more public policy to be served in allowing petitioner Epifania to recover the land as it is
already in the hands of a qualified person. Applying by analogy the ruling of this Court in Vasquez vs. Giap and Leng
Seng Giap & Sons:
... if the ban on aliens from acquiring not only agricultural but also urban lands, as construed by this Court in the
Krivenko case, is to preserve the nation's lands for future generations of Filipinos, that aim or purpose would not be
thwarted but achieved by making lawful the acquisition of real estate by aliens who became Filipino citizens by
naturalization.
Only recently, we had occasion to reiterate the above rulings in Vicente Godines v. Fong Pak Luen, et al. (G.R. No. L36731, January 27, 1983).
WHEREFORE, the amended judgment of the respondent court is hereby REVERSED and SET ASIDE. The complaint is
DISMISSED.
SO ORDERED.

G.R. No. L-65594

July 9, 1986
MAHARLIKA PUBLISHING CORPORATION, ANGELA CALICA, ADOLFO CALICA and the HEIRS OF THE LATE
PIO CALICA, petitioners,
vs.
SPOUSES LUZ R. TAGLE and EDILBERTO TAGLE and the GOVERNMENT SERVICE INSURANCE SYSTEM and
the HONORABLE INTERMEDIATE APPELLATE COURT, respondents.
GUTIERREZ, JR., J.:
The Government Service Insurance System (GSIS) was the registered owner of a parcel of land consisting of 1,373
square meters situated in the district of Paco and covered by Transfer Certificate of Title No. 5986 of the Registry of
Deeds of Manila.
On June 4, 1963, the GSIS entered into a conditional contract to sell the parcel of land to petitioner Maharlika
Publishing Corporation (Maharlika for short) together with the building thereon as well as the printing machinery and
equipment therein. Among the conditions of the sale are that the petitioner shall pay to the GSIS monthly installments
of P969.94 until the total purchase price shall have been fully paid and that upon the failure of petitioner to pay any
monthly installment within ninety (90) days from due date, the contract shall be deemed automatically cancelled.
After Maharlika failed to pay the installments for several months, the GSIS, on June 7, 1966, notified Maharlika in
writing of its arrearages and warned Maharlika that the conditions of the contract would be enforced should Maharlika
fail to settle its account within fifteen (15) days from notice. Because of Maharlika's failure to settle the unpaid
accounts, the GSIS notified Maharlika in writing on June 26, 1967 that the conditional contract of sale was annulled and
cancelled and required Maharlika to sign a lease contract. Maharlika refused to vacate the premises and to sign the
lease contract.
Sometime later, the GSIS published an invitation to bid several acquired properties, among which was the property in
question, to be held at the Office of the General Manager, second floor, GSIS Building, Arroceros Street, Manila, from
9:00 a.m. to 3:00 p.m. on February 12, 1971.
Meanwhile, on February 11, 1971, or one day before the scheduled public bidding, Maharlika represented by its
president Adolfo Calica addressed to GSIS a letter-proposal to repurchase their foreclosed properties proposing that
they be allowed to pay P11,000.00 representing ten percent (10%) of their total account; that they be allowed to pay
P18,300.00 as balance to complete the twenty-five percent (25%) of their total arrearages( P117,175.00) not later than
February 28, 1971 and the remaining seventy-five percent (75%) to be paid in twenty four (24) months.
This letter-proposal was discussed by Adolfo Calica with GSIS Board Vice-Chairman Leonilo Ocampo, who wrote a note
to the General Manager Roman Cruz, Jr., the last paragraph of which reads as follows:
It sounds fair and reasonable subject to your wise judgment, as usual. (Exhibit 4, Maharlika)
Said letter-proposal and Ocampo's note were taken by Calica to General Manager Cruz, Jr., who, in turn, wrote on the
face of Exhibit 4-Maharlika a note to one Mr. Ibaez which reads: "Hold Bidding. Discuss with me." The letter-proposal
together with two (2) checks amounting to P11,000.00 were submitted to the office of General Manager Cruz, Jr. and
were received by his Secretary.
On February 12, 1971, however, the public bidding of this particular property was held as scheduled prompting Adolfo
Calica to submit his bid to the Bidding Committee with a deposit of P11,000.00 represented by the same two checks
submitted to General Manager Cruz, Jr., together with his letter-proposal. His bid proposal reads: "I bid to match the
highest bidder."
The bidding committee rejected Maharlika's bid as an imperfect bid and recommended acceptance of private
respondent Luz Tagle's bid of P130,000.00 with a ten percent (10%) deposit of P13,000.00.
On February 19, 1971, the GSIS addressed a letter to Adolfo Calica informing him of the non-acceptance of his bid and
returning his two checks.
After approval and confirmation of the sale of the subject property to Luz Tagle on April 20, 1971, the GSIS executed a
Deed of Conditional Sale in favor of the Tagles on June 8, 1971.
Due to the refusal of petitioners to surrender the possession of the property in question, respondent spouses Luz R.
Tagle and Edilberto Tagle filed a case for Recovery of Possession with Damages with the Court of First Instance of
Manila which rendered the following decision on May 15, 1974:"
IN VIEW OF THE FOREGOING CONSIDERATIONS, the Court hereby renders judgment:
(a) declaring the letter-proposal (Exh.. 3-Maharlika) ineffective and without any binding effect, being imperfect to
create any contractual relation between GSIS and defendants Maharlika and Adolfo Calica;
(b)
declaring plaintiffs and (sic) entitled to the possession of the properties in question and directing, therefore,
defendants Maharlika and Adolfo Calica, or any person or persons holding or possessing the properties in their behalf,
to forthwith vacate the properties in question and to surrender the same to the plaintiffs;"
(c)
dismissing the complaint as against defendants 'Heirs of the deceased Pio Calica' (except Angela Calica) it
appearing that they were not properly summoned and represented in the instant suit:"

(d)
directing the defendants Maharlika, Adolfo Calica and Angela Calica, to pay jointly and severally the plaintiffs a
monthly rental of the properties in question in the sum of P976.00 a month commencing 12 February 1971, until the
said properties are vacated by said defendants, with legal interest of all sums due from 12 Feb. 1971 up to the
rendition of this judgment in this instant suit, such interest to commence from the filing of the complaint until the
same is fully paid; and that such monthly rentals commencing from the date of this judgment, shall also earn interest
at the legal rate unless paid within the first ten days of the current month for the rental of the preceding month;"
(e) dismissing the counterclaim of defendants Maharlika and the Calicas against plaintiffs;
(f) dismissing the cross-claim of defendants Maharlika and the Calicos against defendant GSIS;"
(g)
dismissing all other claims which the parties may have against each other; and
(h)
directing defendants Maharlika, Adolfo Calica and Angela Calica to pay the costs of this suit.
After a motion to set aside judgment and grant a new trial was denied by the trial court for lack of merit, the case was
brought on appeal to the former Court of Appeals on April 8, 1976. On March 2, 1983, the Intermediate Appellate Court
affirmed the decision of the trial court, stating as follows:
xxx
xxx
xxx
The mere offer to repurchase of the subject property and the deposit of the amount of P11,000.00 by the defendants
on February 11, 1971, does not have the effect of reviving the conditional deed of sale (Exhibit 4-GSIS, Ibid, p. 29)
executed by the GSIS and the defendants. To revive the said contract, and for the defendants to be deemed to have
repurchased the subject property, there should have been payment in favor of the GSIS of all the installments due and
interests thereon in the total amount of P117,175.00 as of February 11, 1971
But the defendants insist that the notations of Leonilo M. Ocampo, Vice-Chairman of the GSIS Board of Trustees, to
GSIS General Manager Roman Cruz, Jr. (Exhibits 4-A and 4-B Maharlika, Ibid, p. 76) as well as the notation of GSIS
General Manager Roman Cruz, Jr.' to hold bidding. Discuss with me' (Exhibit 4-C Maharlika, Ibid, p. 76) means that the
GSIS had accepted defendants' offer and had revived the conditional contract of sale dated June 4, 1963.
This interpretation is far-fetched. The notations referred to by the defendants do not show acceptance of defendants'
offer to repurchase the subject property. In fact, the defendants themselves were aware that their offer was not
accepted at all because they submitted to and participated in the bidding of the subject property on February 12,1971
(Exhibits K, K-1, 6, 6-A, Ibid, pp. 16-34), using its letter- proposal as deposit for its bid. But defendants' bid was rejected
because it was imperfect and not accompanied with a deposit of 10% of the highest bid (Exhibits B-1, 7 GSIS, 7-A
Maharlika, Ibid, pp. 5, 35), and that defendants' bid did not contain a specific bid price proposal (Exhibit 7 GSIS, Ibid, p.
35).
The consequent auction sale of the property on February 12, 1971 and execution of the conditional deed of sale in
favor of the plaintiffs (Exhibit A, Ibid, p. 1) is valid. The plaintiffs are entitled to the possession of the subject property.
xxx
xxx
xxx
A motion for reconsideration and/or new trial was filed by petitioners. The motion was denied by the respondent
Appellate Court.
Hence, this petition for review on certiorari filed on December 16,1983.
On January 9, 1984, we resolved to deny in a minute resolution, the petition for lack of merit. A timely motion for
reconsideration was filed by the petitioners which contained the following reasons to warrant review of the case:
It is apparent that petitioners will suffer serious injustice, consisting in the loss of the subject property, by reason of the
failure of respondent Court to decide questions of substance involved herein in a way not in accord with law and the
applicable decisions of this Honorable Court, such questions being the following:
(1)
Whether or not respondent Edilberto Tagle's being a GSIS officer at the time of the sale by the GSIS of the
subject property to his wife should be allowed to be introduced as newly discovered evidence or at any rate received in
the interest of justice;"
(2)
Whether or not respondent Court acted with grave abuse of discretion in ignoring the irregular appearance of
respondent Luz Tagle's bid and the inference of fraud flowing therefrom in the context of surrounding circumstances;
(3)
Whether or not the auction sale in question is void for having been conducted despite the directive of the GSIS
General Manager to suspend the same in virtue of petitioners' offer to repurchase the subject property and their
payment of P11,000.00 in checks as earnest money which he accepted.
Significantly, on September 21, 1984, the GSIS filed a Supplemental Memorandum submitting for resolution of this
Court the matter of whether the respondent spouses Luz and Edilberto Tagle can still enforce their claim as winning
bidders considering the fact that they have so far made only two payments to the GSIS amounting to P32,500.00 in
violation of the terms and conditions of the conditional sale executed in their favor and which provides for its
automatic cancellation in such case, or whether the petitioners can still repurchase the property in question as original
owners thereof.
We find the petitioners' motion for reconsideration impressed with merit.
The certification secured by the petitioners from GSIS on April 28, 1983 shows that Edilberto Tagle was Chief,
Retirement Division, GSIS, from 1970 to 1978. He worked for the GSIS since 1952. Strictly speaking, the evidence of
Mr. Tagle's being a GSIS official when his wife bid for the disputed property is not newly discovered evidence. However,

we cannot simply ignore the fact that on February 12, 1971 when Adolfo Calica was desperately trying to retrieve the
property foreclosed against him, after receiving assurances from the highest GSIS officials that his letter- proposal
would be accepted and after the sale at public auction of the property was, in fact, ordered to be stopped, the wife of a
GSIS official would be allowed to bid for that property and would actually win in the bidding.
As stated by the petitioners, this important factor implicit in good government, should have been considered in the
interest of justice. It was incumbent under the law for GSIS to have rejected the bid of the wife of a GSIS official and to
have refused to enter into the deed of conditional sale with the respondents Tagle.
The petitioners bank on the allegation that the indirect participation of Edilberto Tagle in the public bidding creates a
"conflict of interests situation" which invalidates the aforesaid transaction under the precept laid down in Article 1409
paragraph (1) of the Civil Code making his participation void for being contrary to morals, good customs, and public
policy.
The Supreme Court has ample authority to go beyond the pleadings when in the interest of justice and the promotion
of public policy there is a need to make its own finding to support its conclusions. In this particular case, there is
absolutely no doubt that Mr. Edilberto Tagle was a GSIS Division Chief when his wife bid for the property being sold by
GSIS. The only issue is whether or not to consider this fact because it surfaced only after trial proper.
We declare it to be a policy of the law that public officers who hold positions of trust may not bid directly or indirectly
to acquire prop properties foreclosed by their offices and sold at public auction.
Article XIII, Section 1 of our Constitution states that:
Public office is a public trust. Public officers and employees shall serve with the highest degree of responsibility,
integrity, loyalty and efficiency, and shall remain accountable to the people.
We stated in Ancheta vs. Hilario (96 SCRA 62);
xxx
xxx
xxx
...A public servant must exhibit at all times the highest sense of honesty and integrity. ...
Under Article 1491 of the Civil Code the following persons cannot acquire by purchase, even at a public or judicial
auction, either in person or through the mediation of another:
(1) The guardian, the property of the person or persons who may be under his guardianship;
(2) Agents, the property whose administration or sale may have been intrusted to them, unless the consent of the
principal has been given;
(3) Executors and administrators, the property of the estate under administration;
(4)
Public officers and employees, the property of the State or of any subdivisions thereof, or of any government
owned or controlled corporation, or institution, the administration of which has been intrusted to them; this provision
shall apply to judges and government experts who, in any manner whatsoever, take part in the sale;
(5) Justices, judges, prosecuting attorneys, clerk of superior and inferior courts, and other officers and employees
connected with the administration of justice, the property and rights in litigation or levied upon an execution before
the court within whose jurisdiction or territory they exercise their respective functions; this prohibition includes the act
of acquiring by assignment and shall apply to lawyers, with respect to the property and rights which may be the object
of any litigation in which they may take part by virtue of their profession;
(6) Any others specially disqualified by law.
In so providing, the Code tends to prevent fraud, or more precisely, tends not to give occasion for fraud, which is what
can and must be done (Francisco, Sales, p. 111). We, therefore, reject the contention of respondents that the fact that
Edilberto Tagle was, at the time of the public bidding, a GSIS official, will not alter or change the outcome of the case.
A Division Chief of the GSIS is not an ordinary employee without influence or authority. The mere fact that he exercises
ample authority with respect to a particular activity, i.e., retirement, shows that his influence cannot be lightly
regarded.
The point is that he is a public officer and his wife acts for and in his name in any transaction with the GSIS. If he is
allowed to participate in the public bidding of properties foreclosed or confiscated by the GSIS, there will always be the
suspicion among other bidders and the general public that the insider official had access to information and
connections with his fellow GSIS officials as to allow him to eventually acquire the property. It is precisely the need to
forestall such suspicions and to restore confidence in the public service that the Civil Code now declares such
transactions to be void from the beginning and not merely voidable (Rubias vs. Batiller, 51 SCRA 120). The reasons are
grounded on public order and public policy. We do not comment on the motives of the private respondents or the
officers supervising the bidding when they entered into the contract of sale. Suffice it to say that it fags under the
prohibited transactions under Article 1491 of the Civil Code and, therefore, void under Article 1409.
In the case of Garciano vs. Oyao (102 SCRA 195), this Court held:
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...We need not exaggerate the importance of being absolutely free from any suspicion which may unnecessarily erode
the faith and confidence of the People in their government. As the Constitution categorically declared: 'Public office is a
public trust. Public officers and employees shall serve with the highest degree of responsibility, integrity, loyalty and
efficiency, and shall remain accountable to the people' (Art. XIII, Sec. 1, Constitution).

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Respondent Wilfredo Oyao, should avoid so far as reasonably possible a situation which would normally tend to arouse
any reasonable suspicion that he is utilizing his official position for personal gain or advantage to the prejudice of party
litigants or the public in general. In the language of then Justice, now Chief Justice Enrique M. Fernando in the case of
Pineda vs. Claudio (28 SCRA 34, 54): 'There may be occasion then where the needs of the collectivity that is the
government may collide with his private interest as an individual.
In Mclain vs. Miller County (23 SW 2d. 2-4; 255) the Court ruled that:
As the efficiency of the public service is a matter of vital concern to the public, it is not surprising that agreements
tending to injure such service should be regarded as being contrary to public policy. It is not necessary that actual
fraud should be shown, for a contract which tends to the injury of the public service is void, although the parties
entered into it honestly, and proceeded under it in good faith. The courts do not inquire into the motives of the parties
in the particular case to ascertain whether they were corrupt or not, but stop when it is ascertained that the contract is
one which is opposed to public policy. Nor is it necessary to show that any evil was in fact, done by or through the
contract. The purpose of the rule is to prevent persons from assuming a position where selfish motives may impel
them to sacrifice the public good to private benefit.
There is no need, therefore, to pass upon the issue of irregularity in the appearance of the private respondents' bid
and the alleged inference of fraud flowing therefrom.
We reiterate that assuming the transaction to be fair and not tainted with irregularity, it is still looked upon with
disfavor because it places the officer in a position which might become antagonistic to his public duty.
There are other grounds which contain us to grant this petition.
We now come to the issue whether or not there was a repurchase of the property in question from the GSIS effected by
the petitioners the day before the public bidding.
In Article 1475 of the Civil Code, we find that "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 law governing the form of contracts. "
This Court in the case of Central Bank of the Philippines vs. Court of Appeals (63 SCRA 431) ruled on the perfection of
government contracts in the following manner:
We are not persuaded that petitioner's posture conforms with law and equity. According to Paragraph IB 114.1 of the
Instructions to Bidders, Ablaza was 'required to appear in the office of the Owner (the Bank) in person, or, if a firm or
corporation, a duly authorized representative (thereof )and to execute the contract within five (5) days after notice
that the contract has been awarded to him. Failure or neglect to do so shall constitute a breach of agreement effected
by the acceptance of the Proposal. There can be no other meaning of this provision than that the Bank's acceptance of
the bid of respondent Ablaza effected an actionable agreement between them. We cannot read it in the unilateral
sense suggested by petitioner that it bound only the contractor, without any corresponding responsibility or obligation
at all on the part of the Bank. An agreement presupposed a meeting of minds and when that point is reached in the
negotiations between two parties intending to enter into a contract, the purported contract is deemed perfected and
none of them may thereafter disengage himself therefrom without being liable to the other in an action for specific
performance. "
In American Jurisprudence, 2d., Section 73 (pp. 186-187), we read:
The principle is fundamental that a party cannot be held to have contracted if there was no assent, and this is so both
as to express contracts and contracts implied in fact. There must be mutual assent or a meeting of minds in all
essential elements or terms in order to form a binding contract. However, ordinarily no more is meant by this than an
expression or manifestation of mutual assent, as an objective thing, is necessary, and that is generally deemed
sufficient in the formation of a contract ... In other words, appropriate conduct by the parties may be sufficient to
establish an agreement, and there may be instances where interchanged correspondence does not disclose the exact
point at which the deal was closed, but the actions of the parties may indicate that a binding obligation has been
undertaken.
It is undisputed that when the letter-proposal of petitioners was presented to GSIS General Manager Roman Cruz, Jr.,
he wrote on the face of such letter the words "Hold Bidding. Discuss with me." These instructions were addressed to
one Mr. Ibaez who was in-charge of public bidding. Thereafter, a deposit of P11,000.00 in checks was accepted by the
Secretary of Mr. Roman Cruz, Jr. In the light of these circumstances an inference may be made that General Manager
Cruz, Jr. had already accepted the petitioners' offer of repurchase or at the very least had led them to understand that
he had arrived at a decision to accept it.
It should also be noted that there is no serious denial as to General Manager Cruz, Jr.'s capacity to enter into binding
contractual obligations for GSIS without the prior approval of the Board of Trustees.
On the other hand, the letter of endorsement made by the GSIS Board Vice-Chairman Leonilo Ocampo which states
...subject to your wise judgment, as usual leads one to conclude that it has been the practice of GSIS to permit the
General Manager to do acts within the scope of his apparent authority.
In the case of Francisco vs. Government Service Insurance System (7 SCRA 577), we held that:

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... Corporate transactions would speedily come to a standstill were every person dealing with a corporation held dutybound to disbelieve every act of its responsible officers, no matter how regular they should appear on their face. This
Court has observed in Ramirez vs. Orientalist Co., 38 Phil. 634, 654-655, that
In passing upon the liability of a corporation in cases of this kind it is always well to keep in mind the situation as it
presents itself to the third party with whom the contract is made. Naturally he can have little or no information as to
what occurs in corporate meetings; and he must necessarily rely upon the external manifestation of corporate
consent. The integrity of commercial transactions can only be maintained by holding the corporation strictly to the
liability fixed upon it by its agents in accordance with law; and we would be sorry to announce a doctrine which would
permit the property of a man in the city of Paris to be whisked out of his hands and carried into a remote quarter of the
earth without recourse against the corporation whose name and authority had been used in the manner disclosed in
this case. As already observed, it is familiar doctrine that if a corporation knowingly permits one of its officers, or any
other agent, to do acts within the scope of an apparent authority, and thus holds him out to the public as possessing
power to do those acts, the corporation will, as against any one who has in good faith dealt with the corporation
through such agent, be estopped from denying his authority; and where it is said if the corporation permits' this means
the same as 'if the thing is permitted by the directing power of the corporation.
We note that the petitioners are not complete strangers entering into a contract with respondent GSIS for the first
time. There was an earlier contract to sell the same properties to the petitioners. That contract was perfected and
there had been partial compliance with its terms. The transaction now under question in this case merely referred to
the curing of certain defects which led to the cancellation of the earlier contract by GSIS. Under the peculiar
circumstances of this case, therefore, the acceptance of the petitioners' letter-proposal by Mr. Roman Cruz, Jr., the
person with authority to do so, and his order to his subordinates to stop the bidding so that they could first discuss the
matter with him, created an agreement of binding nature with the petitioners.
WHEREFORE, the decision and resolution of the Intermediate Appellate Court subject of the instant petition for review
on certiorari are hereby SET ASIDE. The conditional sale entered into between public respondent GSIS and private
respondents Luz and Edilberto Tagle is declared NULL and VOID for being contrary to public policy. The prayer of
petitioners for the repurchase of the subject property in an amount equal to the amount offered by private
respondents and to retain ownership and possession of the disputed property is GRANTED.
SO ORDERED.