I.

POSSESSION AND THE KINDS

THEREOF
1. Reyes v. Court of Appeals G.R. No.
127608, September 30, 1999
FACTS:
In this case, the petitioner (Guadalupe Reyes) was the owner
of a parcel of land located in Project 4, Quezon City. In 1967,
petitioner executed a deed of sale over one-half of the parcel
land in favor of the respondent (Juanita Raymundo).
Consequently, a new title was issued in the names of both the
petitioner and the respondent as co-owners. Thereafter
respondent was granted a P17,000.00 loan by the GSIS,
where she was employed, with her one-half (1/2) share of the
property as collateral. In 1969, petitioner executed another
deed of sale in favor of the respondent over her remaining
interest in the property, for which reason, a new title was
issued in the name of the respondent for the entire property.
It turned out that petitioner was prevailed upon by the
respondent to transfer the title to the whole property in favor of
the latter in order to obtain a loan from the GSIS pursuant to
an agreement with respondent that they would construct an
apartment on the property through the proceeds of an
additional loan that respondent would secure from the GSIS
with the entire

300-square meter property as collateral, which additional loan,

however, did not materialize. In the meantime, the house
situated on the lot subject matter of the second sale was being
leased out by the petitioner to the Spouses Palacios since
1967. In 1984, petitioner allegedly refused to receive the
rentals thus prompting the Palacios spouses to file in 1985 a
petition for consignation, which resulted in a compromise
agreement between the parties within two months after its fi
ling. It appears however that the Palacios spouses were
subsequently ejected from the premises but managed
somehow to return. When a contempt case was fi led by
petitioner against her lessees, respondent intervened and
claimed ownership of the property. Respondent likewise
claimed of the existence of a lease contract between her and
the Palacios spouses supposedly dated 17 March 1987 but
retroactive to 1 January 1987.
In 1987, the trial court dismissed the case and from then on,
the Palacioses paid rentals to respondent, prompting the
petitioner to file in 1987 a case against the respondent for the
cancellation of the latters title to the property on the
ground that the deed of sale between them were merely
simulated. The trial court ruled in favor of the petitioner on the
ground that the deeds of sale between the parties were merely
simulated, hence, void. On appeal, the Court of Appeals
reversed the decision and ruled in favor of the respondent
based on the grounds, among others, that: (1) petitioners
cause of action had prescribed since the complaint should
have been fi led either within ten (10) years from 1969 as an
action to recover title to real property, or within ten (10) years
from 1970 as an action based on a written contract; and (2)
petitioners cause of action was barred by laches having
allowed respondent to stay in possession of the lot in question

for eighteen (18) years after the execution of the second deed
of sale.

Petitioner elevated the case to the Supreme Court, which ruled

in her favor, thus

RULING:
Petitioner posits that it was only in 1987 when respondent
intervened in the contempt case alleging to be the owner and
lessor did her cause of action accrue; hence, her complaint
filed on 23 August 1987 has not yet prescribed. Petitioner
asserts that the 10 January 1970 agreement is more credible
and probable than the second deed of sale because such
document contains their real intention.
In Heirs of Jose Olviga v. Court of Appeals, we restated the
rule that an action for reconveyance of a parcel of land based
on implied or constructive trust prescribes in ten (10) years,
the point of reference being the date of registration of the deed
or the date of the issuance of the certifi cate of title over the
property. However, we emphasized that this rule applies only
when the plaintiff or the person enforcing the trust is not in
possession of the property since if a person claiming to be the
owner thereof is in actual possession of the property the right
to seek reconveyance, which in effect seeks to quiet title to the
property, does not prescribe. The reason is that the one who is
in actual possession of a piece of land claiming to be the
owner thereof may wait until his possession is disturbed or his
title is attacked before taking steps to vindicate his right. His
undisturbed possession gives him a continuing right to seek
the aid of a court of equity to ascertain and determine the

nature of the adverse claim of a third party and its effect on his
own title, which right can be claimed only by one who is in
possession.
Actual possession of land consists in the manifestation of acts
of dominion over it of such a nature as those a party would
naturally exercise over his own property. It is not necessary
that the owner of a parcel of land should himself occupy the
property as someone in his name may perform the act. In
other words, the owner of real estate has possession, either
when he himself is physically in occupation of the property, or
when another person who recognizes his rights as owner is in
such occupancy. This declaration is conformably with Art. 524
of the Civil Code providing that possession may be exercised
in ones own name or in the name of another.
An example of actual possession of real property by an owner
through another is a lease agreement whereby the lessor
transfers merely the temporary use and enjoyment of the thing
leased. The Palacios spouses have been the lessees of
petitioner since 1967 occupying the house erected on the
property subject of the second sale. Petitioner was in actual
possession of the property through the Palacioses and
remained so even after the execution of the second deed of
sale. It was only in 1987 when respondent asserted
ownership over the property and showed a lease contract
between her and the Palacioses dated 17 March 1987 but
effective 1 January 1987 that petitioners possession was
disturbed. Consequently, the action for reconveyance fi led on
23 August 1987 based on circumstances obtaining herein and
contrary to the fi nding of respondent court has not prescribed.
To be accurate, the action does not prescribe. Under Art.
1144, par. (1), of the Civil Code, an action upon a written
contract must be brought within ten (10) years from the time
the right of action accrues. And so respondent court also relied

on this provision in ruling that petitioners cause of action had

prescribed. This is error. What is applicable is Art. 1410 of the
same Code which explicitly states that the action or defense
for the declaration of the inexistence of a contract, such as the
second deed of sale, does not prescribe. Respondent court
declared petitioner guilty of laches anchored on the finding
that for eighteen (18) years after the execution of the contract,
respondent was in possession of the lot in question. But this
finding is utterly unsupported by the evidence.
On the contrary, the Palacioses alleged in their petition for
consignation fi led 13 March 1985 that they were renting the
apartment of the respondent (petitioner herein) located at No.
4-F Calderon Street, Project 4, Quezon City, since 1967 up to
the present. Even respondent herself admitted in her lease
contract of 17 March 1987 with the Palacios spouses that the
LESSEES have been staying in the premises since 1967
under a previous lease contract with Guadalupe S. Reyes
which, however, already expired. Having thus corrected the fi
nding of respondent court, our concern now is to determine
whether laches should be appreciated against petitioner. The
essence of laches is the failure or neglect for an unreasonable
and unexplained length of time to do that which, by exercising
due diligence, could or should have been done earlier; it is the
negligence or omission to assert a right within a reasonable
time, warranting a presumption that the party entitled to assert
it either has abandoned it or declined to assert it.

Note, however, that it in the above case it is no longer

necessary for the Court to dwell on the provisions of Article
524 of the New Civil Code in order to resolve the question of
prescription of the action fi led by the petitioner. The Courts

ruling that such action was imprescriptible pursuant to Article

1410 of the New Civil Code would have been suffi cient since
there was a fi nding that the deeds of sale executed by the
petitioner in favor of the respondent were merely simulated.
Since there was a fi nding that the sale of the entire property in
favor of the respondent was a nullity, the action fi led by the
petitioner may only be defeated if the latter was guilty of
laches. But as the Court has shown, the petitioner was not
guilty of laches because even the respondent herself admitted
the existence of the contract of lease between the Palacio
spouses and the petitioner from 1967 up to 1987. It was only
in 1987 that the petitioner was apprised of the fact that
respondent was asserting an interest adverse to the petitioner.
All told, this case could be resolved without need of relying on
the provisions of Article 524 of the New Civil Code and the
case of Heirs of Jose Olviga v. Court of Appeals.
If the concept of possession in anothers name is to be
understood in the light of the foregoing view, then the
possession in ones own name being referred to in Article 524
shall now be limited only to the kind of possession being
exercised by the owner himself personally. If such will be the
case, then there will no difference at all between possession
in the concept of owner under Article 525 and possession in
ones own name in the present article. Hence, in order to
avoid duplication it is more logical to view possession in
anothers name in Article 524 as referring only to the
possession by a person without any right of his own and one
which is strictly of an agent or merely an instrument in the
exercise of such possession, e.g., possession by a caretaker.
On the other hand, possession in ones own name embraces
all kinds of possession anchored on a juridical title or right,
e.g., possession by the owner himself, possession by a lessee
or a mere usufructuary. If both the fact of possession and the
right to such possession are found in the same person, such

possession is said to be exercised in ones own name. If, on

the other hand, the right to the possession is in one person
while the fact of possession is in another person and the latter
merely acts in representation of the former, the latters
possession is said to be exercised in anothers name. In this
case, the actual possessor (the agent) is not considered in law
as legal possessor because the possession is not by virtue of
his own right. As it is, possession may be exercised in ones
own name or in that of another. It is not necessary that the
owner or holder of the thing exercise personally the rights of
possession. Rights of possession may be exercised through
agents.

2. Santos v. Manalili 475 SCRA 679

(2005)
FACTS:
The subject matter of this case is a parcel of land which
originally formed part of the Furukawa Plantation owned by a
Japanese national and situated in the District of Toril, Davao
City. After the war, the land was turned over to the Philippine
government and administered by the National Abaca and
Other Fibers Corporation, and thereafter by the respondent
Board of Liquidators (BOL). In 1970, Reynaldo Manalili,
predecessor-in-interest of respondent Ronald C. Manalili, fi led
with the BOL an application to purchase the subject property,
attaching therewith his Occupants Affi davit. The application
was favorably acted upon and in 1972 Manalili paid the down
payment. Thereafter, Manalili declared the land for taxation

purposes. The Manalilis administered the land before they left

for Manila in 1972. After they moved to Manila, they appointed
an administrator to oversee the land and the improvements
and crops they have planted thereon, such as bananas and
coconut trees. 1981, after the lapse of nine (9) years and even
as the BOL had already issued a Certifi cation of Full Payment
endorsing the approval of the sale of the land in question to
applicant Reynaldo Manalili, petitioner Rodolfo Santos fi led a
protest before the BOL and requested for an investigation. He
claimed to be the actual occupant of the property and that he
introduced considerable improvements thereon, as against
respondent Manalili who was never in possession, occupation
and cultivation of the same. In ruling for the respondent
Manalili, the Court explained
The two (2) courts below, in unanimously upholding the
validity of the sale of the land in question to the Manalilis,
likewise affi rmed the BOLs finding that the Manalilis had a
better right of possession thereto. Preponderant evidence of
respondent have sufficiently established that as early as 1970,
Reynaldo Manalili, respondents predecessor-in-interest, had
already fi led an Affi davit of Occupancy with the BOL, the
government agency tasked to administer it; that the Manalilis
administered the land before they left for Manila in 1972; that
after they moved to Manila they appointed an administrator to
oversee the land and the improvements and crops they have
planted thereon, such as bananas and coconut trees; and that
the Manalilis have been paying the real estate taxes for the
subject land even before the sale thereof to them. The
circumstance that after the sale, the Manalilis resided in
Manila and Pangasinan is of no moment. As it is, possession
may be exercised in ones own name or in that of another. It is
not necessary that the owner or holder of the thing exercise
personally the rights of possession. Rights of possession may
be exercised through agents. In contrast, petitioners claim of

having bought the land from a certain Ernesto Abalahin who,

in turn, bought it from one Col. Agsalud, allegedly a guerrilla
veteran who occupied the lot from 1956 to 1959, is without
basis. For one, no proof has been presented by petitioner as
to the alleged title of Col. Agsalud or the transfer of any rights
from the latter to Ernesto Abalahin, petitioners alleged
immediate transferor. For another, the supposed Deed of
Absolute Sale between petitioner and Ernesto Abalahin does
not even sufficiently identify the lot which was the subject of
the sale. Worse, that same deed is not notarized and is
unregistered. A sale of a piece of land appearing in a private
deed cannot be considered binding on third persons if it is not
embodied in a public instrument and recorded in the Registry
of Deeds. Verily, it was only in 1981 that Abalahin entered the
subject land without permission, and that in 1982, petitioner,
together with Abalahin and one Lumaad, illegally cut trees on
the land, thereby prompting the Manalilis to report their
unlawful entry to the local barrio captain.

3. Bukidnon Doctors Hospital, Inc. v.

MBTC G.R. No. 161882, July 8, 2005
In this case, petitioner (Bukidnon Doctors Hospital, Inc.) was a
mortgagor of respondent (MBTC). Upon petitioners failure to
pay the mortgage obligation, respondent foreclosed the
mortgage and acquired the property during the public auction.
Petitioner likewise failed to redeem the foreclosed property
from the respondent within the redemption period.
Subsequently, however, the parties entered into a lease

agreement to enable the petitioner to continue its operation.

After almost two years after said agreement, respondent
demanded that the petitioner vacate the leased premises.
When the petitioner refused, respondent initiated an ex parte
proceeding for the issuance of a writ of possession. The issue
in this case is the propriety of the issuance of a writ of
possession for the purpose of evicting a mortgagor who
became a lessee of the mortgaged properties after the
mortgagee acquired ownership thereof. The Court held
The law and jurisprudence are clear that in extrajudicial
foreclosure proceedings, an order for a writ of possession
issues as a matter of course, upon proper motion, after the
expiration of the redemption period without the mortgagor
exercising the right of redemption, or even during the
redemption period provided a bond is posted to indemnify the
debtor in case the foreclosure sale is shown to have been
conducted without complying with the requirements of the law
or without the debtor violating the mortgage contract. The
rationale for the ministerial issuance of a writ of possession is
to put the foreclosure buyer in possession of the property sold
without delay, since the right to possession is founded on
ownership of the property. However, in the instant case, a writ
of possession was not the correct remedy for the purpose of
ousting the petitioner from the subject premises. It must be
noted that possession is the holding of a thing or the
enjoyment of a right. It is acquired by the material occupation
of a thing or the exercise of a right, or by the fact that a thing
or right is subject to the action of ones will, or by the proper
acts and legal formalities established for acquiring such right.
By material occupation of a thing, it is not necessary that the
person in possession should be the occupant of the property;
the occupancy can be held by another in his name. Thus
Articles 524 and 525 of the Civil Code provide: Art. 524.
Possession may be exercised in ones own name or in that of

another. Art. 525. The possession of things or rights may be

had in one of two concepts: either in the concept of owner, or
in that of the holder of the thing or right to keep or enjoy it, the
ownership pertaining to another person. In other words, an
owner of a real estate has possession, either when he himself
is physically occupying the property, or when another person
who recognizes his rights as owner is occupying it. In the case
at bar, it is not disputed that after the foreclosure of the
property in question and the issuance of new certifi cates of
title in favor of the respondent, the petitioner and the
respondent entered into a contract of lease of the subject
properties. This new contractual relation presupposed that the
petitioner recognized that possession of the properties had
been legally placed in the hands of the respondent, and that
the latter had taken such possession but delivered it to the
former as lessee of the property. By paying the monthly
rentals, the petitioner also recognized the superior right of the
respondent to the possession of the property as owner
thereof. And by accepting the monthly rentals, the respondent
enjoyed the fruits of its possession over the subject property.
Clearly, the respondent is in material possession of the subject
premises. Thus, the trial courts issuance of a writ of
possession is not only superfl uous, but improper under the
law. Moreover, as a lessee, the petitioner was a legitimate
possessor of the subject properties under Article 525 of the
Civil Code. Thus, it could not be deprived of its lawful
possession by a mere ex parte motion for a writ of possession.
x x x In a nutshell, where a lease agreement, whether express
or implied, is subsequently entered into by the mortgagor and
the mortgagee after the expiration of the redemption period
and the consolidation of title in the name of the latter, a case
for ejectment or unlawful detainer, not a motion for a writ of
possession, is the proper remedy in order to evict from the
questioned premises a mortgagor-turned-lessee. The rationale

for this rule is that a new relationship between the parties has
been created. What applies is no longer the law on
extrajudicial foreclosure, but the law on lease. And when an
issue arises, as in the case at bar, regarding the right of the
lessee to continue occupying the leased premises, the rights
of the parties must be heard and resolved in a case for
ejectment or unlawful detainer under Rule 70 of the Rules of
Court.

4. Carlos v. Republic of the Philippines

468 SCRA 709 (2005)
In this case, petitioner (Maria Carlos) filed an application for
registration and confirmation of title over a parcel of land with
an area of 3,975 square meters located at Pusawan, Ususan,
Taguig, Metro Manila. She claimed that she is the owner of
said parcel of land which she openly, exclusively and
notoriously possessed and occupied since July 12, 1945 or
earlier under a bona fide claim of ownership and that by
tacking her possession with that of her predecessors-ininterest, she has been in possession of the land for more than
50 years. The trial court granted her application. On appeal by
the Republic of the Philippines to the Court of Appeals, the
appellate court reversed the decision on the ground that the
applicant at the time she filed her application for registration of
title was no longer in possession and occupation of the land in
question, the same already being sold by the applicants
mother to Ususan Development Corporation. Hence, the Court
of Appeals concluded that the requirements for confirmation of
imperfect title, one of which is that the applicant must be in
possession in the concept of owner, have not been complied

with. In sustaining the decision of the Court of Appeals, the

Supreme Court held

Nonetheless, even if it were true that it was petitioner who

had actual possession of the land at that time, such
possession was no longer in the concept of an owner.
Possession may be had in one of two ways: possession in
the concept of an owner and possession of a holder. A
possessor in the concept of an owner may be the owner
himself or one who claims to be so. On the other hand, one
who possesses as a mere holder acknowledges in another a
superior right which he believes to be ownership, whether his
belief be right or wrong. Petitioner herein acknowledges the
sale of the property to Ususan Development Corporation in
1996 and in fact promised to deliver the certifi cate of title to
the corporation upon its obtention. Hence, it cannot be said
that her possession since 1996 was under a bona fi de claim
of ownership. Under the law, only he who possesses the
property under a bona fi de claim of ownership is entitled to
confirmation of title.

5. Kasilag v. Roque 69 Phil. 217

In this case, Ambrosio mortgaged in favor of the petitioner the
improvements she made on her land acquired by a homestead
patent. When Ambrosio was not able to pay the interest on the
loan, she and the petitioner verbally agreed that she would
convey to the latter the possession of the land subject to the

condition that the petitioner would not collect the interest,

would introduce improvements thereon and would be entitled
to the fruits. Pursuant to such verbal agreement, the petitioner
did all three conditions. After the death of Ambrosio, her heirs
sought to annul the contracts which she entered into with the
petitioner on the ground that the same were in violation of
Section 116 of the Public Land Act prohibiting any alienation or
encumbrance of lands acquired under the free patent for a
period of fi ve years from the date of the issuance of the
patent. This law, however, allows the pledge or mortgage of
the improvements thereon. When the case reached the
appellate court, the Court of Appeals modifi ed the judgment of
the lower court by declaring the petitioner possessor in bad
faith for taking the land in violation of Section 116 of the Public
Land Act. In resolving the issue of whether petitioner was a
possessor in good faith or not, the Court held

xxx
It is a fact that the petitioner is not conversant with the laws
because he is not a lawyer. In accepting the mortgage of the
improvements he proceeded on the well-grounded belief that
he was not violating the prohibition regarding the alienation of
the land. In taking possession thereof and in consenting to
receive its fruits, he did not know, as clearly as a jurist does,
that the possession and enjoyment of the fruits are attributes
of the contract of antichresis and that the latter, as a lien, was
prohibited by Section 116. These considerations again bring
us to the conclusion that, as to the petitioner, his ignorance of
the provisions of section 116 is excusable and may, therefore,
be the basis of his good faith. The petitioner is deemed a
possessor in good faith.

II. ACQUISITION

1. Escritor, Jr. v. IAC 155 SCRA

577 (1987)
In this case, Miguel Escritor filed an application for the titling
of a parcel of land located at Atimonan, Quezon. There being
no opposition to his application, the cadastral court rendered a
decision on May 15, 1958 adjudicating the lot with its
improvements in favor of claimant Escritor and confi rming his
title thereto. Immediately thereafter, Escritor took possession
of the property. On August 2, 1958, Simeon Acua, fi led a
petition for review of the above-mentioned decision contending
that it was obtained by claimant Escritor through fraud and
misrepresentation. While the proceedings in this case were
going on, Escritor died. His heirs subsequently took
possession of the property.
On February 16, 1971 or thirteen years after the disputed
decision was rendered, the court adjudicated in favor of
Acuna, ordering the heirs of Escritor to vacate the land. A writ
of possession was later issued and the heirs of Escritor
voluntarily gave up their possession. In 1975, Acuna fi led
another case against the heirs of Escritor for recovery of
damages for the fruits of the land which was allegedly
possessed by the defendants unlawfully for thirteen years.
Acua alleged that the registration of the lot was effectuated

by the deceased Escritor through fraud, malice, and

misrepresentation. Hence, according to him, Escritor and his
heirs were possessors in bad faith. The lower court rendered a
decision dismissing Acuas complaint fi nding that that the
heirs of Escritor were in good faith possessing under a just
title. On appeal, the Intermediate Appellate Court held that the
heirs of Escritor were possessors in bad faith from 1958 up to
1971 and should be held accountable for damages. The
Supreme Court, on appeal, reversed the judgment of the
IAC. The Court explained

Nevertheless, assuming that claimant Escritor was a

possessor in bad faith, this should not prejudice his
successors-in-interest, petitioners herein, as the rule is that
only personal knowledge of the fl aw in ones title or mode of
acquisition can make him a possessor in bad faith, for bad
faith is not transmissible from one person to another, not even
to an heir. As Article 534 of the Civil Code explicitly provides,
one who succeeds by hereditary title shall not suffer the
consequences of the wrongful possession of the decedent, if it
is not shown that he was aware of the fl aws affecting it; ...
The reason for this article is that bad faith is personal and
intransmissible. Its effects must, therefore, be suffered only by
the person who acted in bad faith; his heir should not be
saddled with such consequences. Under Article 527 of the
Civil Code, good faith is always presumed, and upon him who
alleges bad faith on the part of a possessor rests the burden
of proof. If no evidence is presented proving bad faith, like in
this case, the presumption of good faith remains. Respondent
Acuna, on the other hand, bases his complaint for damages
on the alleged fraud on the part of the petitioners predecessor
in having the land registered under his (the predecessors)

name. A review of the record, however, does not indicate the

existence of any such fraud. It was not proven in the cadastral
court nor was it shown in the trial court. Lot No. 2749 was not
awarded to Escritor on the basis of his machinations. What is
clear is that in the hearing of January 22, 1958, the Court
permitted Escritor to adduce his evidence of ownership
without opposing evidence as the lot had become
uncontested. Respondent Acuna himself failed to appear in
this hearing because of a misunderstanding with a lawyer.
There is no fi nding that such failure to appear was caused by
petitioners in this case. On the contrary, all the requirements of
publication were followed. Notice of hearing was duly
published. Clearly then, the allegation of fraud is without basis.
Respondent having failed to prove fraud and bad faith on the
part of petitioners, We sustain the trial courts finding that
petitioners were possessors in good faith and should,
therefore, not be held liable for damages.

2. Heirs of Pedro Laurora, et al. v.

Sterling Technopark III, et al. G.R. No.
146815, April 9, 2003
In 1969, the application of Pedro Laurora to buy the
subject lot was approved by the government. In 1974, Pedro
requested the DAR for the transfer of the lot to Juan Manaig,
which request was acted upon favorably by the DAR. In 1976,
the Spouses Laurora executed a Deed of Sale over the lot in
favor of Juan Manaig, which sale was approved by the DAR.
Subsequently, Manaig sold the land to Mile Resources

Development Corporation which, in turn, sold it to S. P.

Properties, Inc. Since 1969 up to the time of the sale of the
property to S. P. Properties, Inc., the Spouses Laurora were in
possession of the same where they planted trees. In 1997,
Sterling Technopark III and S.P. Properties, Inc., through its
employees, bulldozed and uprooted the trees and plants, and
with the use of armed men and by means of threats and
intimidation, succeeded in forcibly ejecting the spouses
Laurora. The spouses thereafter fi led an ejectment case
against Sterling Technopark III and S.P. Properties, Inc. In their
defense, the defendants alleged that the complainants were
not the owners of the land because they already disposed of it
in 1976 as shown by legal documents. In upholding the claim
of the Spouses Laurora, the Court explained that the only
issue in forcible entry cases is the physical or material
possession of real property. Stated otherwise, said the Court,
only prior physical possession, not title, is the issue in forcible
entry case. The issue of ownership in ejectment cases is to be
resolved only when it is intimately intertwined with the issue of
possession, to such an extent that the question of who had
prior possession cannot be determined without ruling on the
question of who the owner of the land is. Since in this case, no
such intertwinement has been shown since the claim of
ownership is not being made in order to prove prior
possession, the ejectment court cannot intrude or dwell upon
the issue of ownership. The Court added

Notwithstanding the actual condition of the title to the property,

a person in possession cannot be ejected by force, violence or
terror not even by the owners. If such illegal manner of
ejectment is employed, as it was in the present case, the party
who proves prior possession in this case, petitioners can
recover possession even from the owners themselves.

Granting arguendo that petitioners illegally entered into and

occupied the property in question, respondents had no right to
take the law into their own hands and summarily or forcibly
eject the occupants therefrom. Verily, even if petitioners were
mere usurpers of the land owned by respondents, still they are
entitled to remain on it until they are lawfully ejected therefrom.
Under appropriate circumstances, respondents may file, other
than an ejectment suit, an accion publiciana a plenary
action intended to recover the better right to possess; or an
accion reivindicatoria an action to recover ownership of real
property. The availment of the aforementioned remedies is the
legal alternative to prevent breaches of peace and criminal
disorder resulting from the use of force by claimants out to
gain possession. The rule of law does not allow the mighty and
the privileged to take the law into their own hands to enforce
their alleged rights. They should go to court and seek judicial
vindication.

3. Cequea v. Bolante G.R. No. 137944,

April 6, 2000
This case involves a parcel of land situated in Binangonan,
Rizal and covered by a tax declaration. Prior to 1954, the land
was originally declared for taxation purposes in the name of
Sinforoso Mendoza, father of respondent Honorata Mendoza
Bolante. Sinforoso was the occupant of the said property until
his death in 1930. When Sinforoso died, his brother
(Margarito) took possession of the land and cultivated the
same with his son, Miguel. At the same time, respondent and
her mother continued residing on the land. When respondent
came of age in 1948, she paid the realty taxes on the land for

the years 1932 up to 1948. In 1953, Margarito declared the

land for taxation purposes in his name and paid the realty
taxes beginning 1952. When Margarito died, Miguel continued
cultivating the land. During the time that Margarito and Miguel
were cultivating the land, respondent and her mother were
living on the same land. In 1985, Miguel was physically ousted
from the property by the respondent. Litigations thereafter
ensued between the respondent and the petitioners
(daughters of Margarito and sisters of Miguel) on the question
of who shall be considered as the preferred possessor.

The lower court in the said case ruled in favor of the

petitioners on the strength of the tax declaration of their father
(Margarito). On appeal, the appellate court reversed the ruling
of the trial court and ruled that the respondent was the
preferred possessor under Article 538 of the Civil Code
because she was in notorious, actual, exclusive and
continuous possession of the land since 1985. Petitioners
disputed this ruling. They contended that she came into
possession through force and violence, contrary to Article 536
of the Civil Code. On this particular issue, the Supreme Court
made the following pronouncements

We concede that despite their dispossession in 1985, the

petitioners did not lose legal possession because possession
cannot be acquired through force or violence. To all intents
and purposes, a possessor, even if physically ousted, is still
deemed the legal possessor. Indeed, anyone who can prove
prior possession, regardless of its character, may recover
such possession.

After making the said ruling, the Court did not, however,
consider the petitioners as the preferred possessors.
Neither did the Court consider the petitioners as the
present possessors. This is due to the fact that the
possession by the petitioners and/or their predecessorsin-interest was not exclusive. The Court explained

However, possession by the petitioners does not prevail over

that of the respondent. Possession by the former before 1985
was not exclusive, as the latter also acquired it before 1985.
The records show that the petitioners father and brother, as
well as the respondent and her mother were simultaneously in
adverse possession of the land.
Before 1985, the subject land was occupied and cultivated by
the respondents father (Sinforoso), who was the brother of
petitioners father (Margarito), as evidenced by Tax
Declaration No. 26425.
When Sinforoso died in 1930, Margarito took possession of
the land and cultivated it with his son Miguel. At the same
time, respondent and her mother continued residing on the lot.
When respondent came of age in 1948, she paid realty taxes
for the years 1932-1948. Margarito declared the lot for
taxation in his name in 1953 and paid its realty taxes
beginning 1952. When he died, Miguel continued cultivating
the land. As found by the CA, the respondent and her mother
were living on the land, which was being tilled by Miguel until
1985 when he was physically ousted by the respondent.

In resolving the issue of possession, the Court eventually

ruled in favor of the respondent because she has been in
possession for a longer period. The Court thus held

Based on Article 538 of the Civil Code, the respondent is the

preferred possessor because, benefi ting from her fathers tax
declaration of the subject lot since 1926, she has been in
possession thereof for a longer period. On the other hand,
petitioners father acquired joint possession only in 1952.

The Court emphasized, however, that Article 538 of the New

Civil Code settles only the question of possession and that
possession is different from ownership. With respect to the
question on ownership, the same should be established in one
of the ways provided by law. In this case, according to the
Court, the question of ownership could be settled by
determining who between the claimants has proven acquisitive
prescription. The Court ruled again in favor of the respondent

Ownership of immovable property is acquired by ordinary

prescription through possession for ten years. Being the sole
heir of her father, respondent showed through his tax receipt
that she had been in possession of the land for more than ten
years since 1932. When her father died in 1930, she
continued to reside there with her mother. When she got
married, she and her husband engaged in kaingin inside the
disputed lot for their livelihood.
Respondents possession was not disturbed until 1953 when
the petitioners father claimed the land. But by then, her
possession, which was in the concept of owner, public,
peaceful, and uninterrupted had already ripened into
ownership. Furthermore she herself, after her fathers demise,
declared and paid realty taxes for the disputed land. Tax
receipts and declarations of ownership for taxation, when

coupled with proof of actual possession of the property, can be

the basis of a claim for ownership through prescription.
In contrast, the petitioners, despite thirty-two years of farming
the subject land, did not acquire ownership. It is settled that
ownership cannot be acquired by mere occupation. Unless
coupled with the element of hostility toward the true owner,
occupation and use, however long, will not confer title by
prescription or adverse possession. Moreover, the petitioners
cannot claim that their possession was public, peaceful and
uninterrupted. Although their father and brother arguably
acquired ownership through extraordinary prescription
because of their adverse possession for thirtytwo years (19531985), this supposed ownership cannot extend to the entire
disputed lot, but must be limited to the portion that they
actually farmed.

III. EFFECT OF POSSESSION

1. Marcelo v. Court of Appeals 305
SCRA 800 (1999)
The heirs of the deceased Jose Marcelo filed with the RTC an
action to recover a portion of an unregistered land in Sta.
Lucia, Angat, Bulacan. They alleged that two parcels of land,
owned by the late Jose Marcelo and his spouse, had been
encroached by Fernando Cruz and Servando Flores. After
trial, a decision was rendered in favor of the heirs of Jose
Marcelo; however, on appeal to the Court of Appeals, the
same was reversed. Hence, this petition assailing the decision

of the Court of Appeals which ruled that the action initiated by

Marcelos heirs would not prosper on the theory that Flores
already has acquired ownership of the disputed land by
ordinary acquisitive prescription.
According to Marcelos heirs, the parcel of land subject of
litigation was originally owned by Jose Marcelo and they had
been in continuous possession thereof since 1939. In 1967,
they discovered that a portion of said property had been
encroached upon by Cruz, but Cruz still sold his property,
including the encroached parcel of land to Flores. Cruz,
however, alleged that the disputed land is part of the land he
acquired in 1960 from the heirs of Jorge Sarmiento, which he
(Cruz) had surveyed and declared for taxation purposes.
Then, in 1968, he sold the whole lot to Flores who then
occupied and cultivated the same.
The contract executed by Cruz and the heirs of Sarmiento
includes the encroached property, as found by the trial court
and the appellate court. And when Cruz sold the land to
Flores, the latter immediately took possession of the same to
the exclusion of all others and promptly paid the realty taxes
thereon. From that time on, Flores had been in possession of
the entire area in the concept of an owner and holding it in that
capacity for almost 14 years before the heirs of Marcelo
initiated their complaint in 1982. The records of the case
supported the holding of the appellate court that the
requirements for ordinary prescription have been duly met
Flores took possession of the controverted property in good
faith and with just title because the said portion was an
integral part of the bigger tract of land which he bought from
Cruz. Further, Flores possession was not only in the concept
of an owner but also public, peaceful and uninterrupted.
Hence, the Court found no cogent reasons to reverse the

findings of the appellate court and thus gave its

affirmance to the assailed decision.

2. MWSS v. Court of Appeals 143

SCRA 623 (1986)
The City of Dagupan (hereinafter referred to as the CITY) fi led
a complaint against the former National Waterworks and
Sewerage Authority (hereinafter referred to as the NAWASA),
now the Metropolitan Waterworks and Sewerage System
(hereinafter referred to as MWSS), for recovery of the
ownership and possession of the Dagupan Waterworks
System. NAWASA interposed as one of its special defenses
R.A. No. 1383 which vested upon it the ownership, possession
and control of all waterworks systems throughout the
Philippines and as one of its counterclaims the reimbursement
of the expenses it had incurred for necessary and useful
improvements amounting to P255,000.00. Judgment was
rendered by the trial court in favor of the CITY on the basis of
a stipulation of facts.
The trial court found NAWASA to be a possessor in bad faith
and hence, not entitled to the reimbursement claimed by it.
NAWASA appealed to the then Court of Appeals and argued in
its lone assignment of error that the CITY should have been
held liable for the amortization of the balance of the loan
secured by NAWASA for the improvement of the Dagupan
Waterworks System. The appellate court affirmed the
judgment of the trial court. MWSS, successor-in-interest of the
NAWASA, appealed to this Court raising the sole issue of
whether or not it has the right to remove all the useful

improvements introduced by NAWASA to the Dagupan

Waterworks System, notwithstanding the fact that NAWASA
was found to be a possessor in bad faith. In support of its
claim for removal of said useful improvements, MWSS argues
that the pertinent laws on the subject, particularly Articles 546,
547 and 549 of the Civil Code of the Philippines, do not defi
nitely settle the question of whether a possessor in bad faith
has the right to remove useful improvements. The Supreme
Court held

xxx
Does a possessor in bad faith have the right to remove useful
improvements? The answer is clearly in the negative.
Recognized authorities on the subject are agreed on this
point. Article 449 of the Civil Code of the Philippines provides
that he who builds, plants or sows in bad faith on the land of
another, loses what is built, planted or sown without right to
indemnity. As a builder in bad faith, NAWASA lost whatever
useful improvements it had made without right to indemnity
(Santos v. Mojica, Jan. 31, 1969, 26 SCRA 703).
Moreover, under Article 546 of said code, only a possessor in
good faith shall be refunded for useful expenses with the right
of retention until reimbursed; and under Article 547 thereof,
only a possessor in good faith may remove useful
improvements if this can be done without damage to the
principal thing and if the person who recovers the possession
does not exercise the option of reimbursing the useful
expenses. The right given a possessor in bad faith is to
remove improvements applies only to improvements for pure
luxury or mere pleasure, provided the thing suffers no injury
thereby and the lawful possessor does not prefer to retain

them by paying the value they have at the time he enters into
possession (Article 549, Id.).

out of his possession or has been lost? We are of the opinion,

and so hold, that this question must be answered in the
negative.
Manresa, in his Commentaries upon the provisions of the Civil
Code, says (vol. 4, p. 291):

3. US v. Laurente Rey 8 Phil. 500

(1907)
In this case, three boxes containing money, amounting to at
least 25,000 pesos, were on board the steamer Cantabria. The
ship, however, was totally wrecked off the small Island of
Mababuy. Defendant Laurente Rey and several others
discovered the existence and location of the wrecked steamer
and took from the boxes the sum of 15,000 pesos. Defendant
Rey was later on charged with the crime of robbery. For his
defense, defendant Rey contended that the property was
abandoned property and therefore, granting that he had taken
possession of the same, he was not guilty of the crime of
robbery when he appropriated it to his own use. When the
case reached the Supreme Court, it was held that there
was no abandonment of the property and that defendant
Rey was guilty of the crime of robbery. The Court
explained

The evidence shows, if it can be believed, that the defendant

and his companions entered the wrecked ship and removed
therefrom the said money and appropriated the same to his
own use in about twenty-four hours after the time of sinking of
the said ship. Can one be charged with the abandonment of
his property without even knowing that the same has passed

He who has a right may renounce it. This act by which thing is
voluntary renounced constitutes an abandonment. There is no
real intention to abandon a property when, as in the case of a
shipwreck or a fi re, things are thrown into the sea upon the
highway.
Certainly the owner of the property cannot be held to have
abandoned the same until at least he has some knowledge of
the loss of its possession or of the loss of the thing.
Property cannot be considered abandoned under the law and
the possession left vacant for the finder until the spes
recuperandi is gone and the animus revertendi is finally given
up. (The Ann L. Lockwood, 37 Fed. Rep., 233.)
The theory of abandonment on the part of the owners of the
money stolen is fully refuted by the fact that some weeks after
the wreck of the said ship they sent men to the place of the
wreck for the purpose of recovering the property which
belonged to them, which was on board the ship at the time of
her sinking. The mere fact that cargo is sunk with a ship
wrecked at sea by no means deprives the owner of said cargo
of his property therein. The owner certainly still had the right to
reclaim such property and to recover the same if possible. If it
should be recovered by others, the real owner would be
entitled to recover its value less the necessary expense of
recovering the same and carrying it shore by the most
approved appliances for that purpose by others. (Murphy v.
Dunham, 38 Fed. Rep., 503.)

If the defendant and his companions had recovered the cargo

from the sunken ship for the benefit of the owners of the same,
he might have been entitled to compensation of his labor, but
when he entered the sunken ship and took therefrom, by force,
the property of another before actual abandonment by the
owner and appropriated the same to his own use, he was,
under the provisions of the Penal Code in force in the
Philippine Islands, guilty of the crime of robbery.

4. Aznar v. Yapdiangco 13 SCRA

486 (1965)
In May, 1959, Teodoro Santos advertised in two metropolitan
papers the sale of his Ford Fairlane 500. In the afternoon of
May 28, 1959, a certain L. De Dios, claiming to be a nephew
of Vicente Marella, went to the Santos residence to answer the
ad. However, Teodoro Santos was out during this call and only
his son, Ireneo Santos, received and talked with De Dios. The
latter told the young Santos that he had come in behalf of his
uncle, Vicente Marella, who was interested to buy the
advertised car. On being informed of this, Teodoro Santos
instructed his son Ireneo to see the said Vicente Marella the
following day at his given address. The following day, Ireneo
Santos went to the said address.
At this meeting, Marella agreed to buy the car for P14,700.00
on the understanding that the price would be paid only after
the car had been registered in his name. Pursuant to such
condition, Ireneo Santos transferred the registration of the car
in the name of Marella even without the payment of the
purchased price. When Ireneo Santos turned over to Marella
the registration papers and a copy of the deed of sale and

demanded for the payment of the purchase price, Marella

begged off to be allowed to secure the money from a sister
supposedly living in another place. Thereafter, Marella ordered
L. De Dios to go to the said sister and suggested that Ireneo
Santos go with him. At the same time, Marella requested the
registration papers and the deed of sale from Ireneo Santos on
the pretext that he would like to show them to his lawyer.
Trusting the good faith of Marella, Ireneo handed over the
same to the latter and thereupon, in the company of L. De
Dios and another unidentifi ed person, proceeded to the
alleged house of Marellas sister. At a certain place on
Azcarraga Street, Ireneo Santos and L. De Dios alighted from
the car and entered a house while their unidentified
companion remained in the car. Once inside, L. De Dios asked
Ireneo Santos to wait at the sala while he went inside a room.
That was the last that Ireneo saw of him. For, after a
considerable length of time waiting in vain for De Dios to
return, Ireneo went down to discover that neither the car nor
their unidentified companion was there anymore. Going back
to the house, he inquired from a woman he saw for L. De Dios
and he was told that no such name lived or was even known
therein. Whereupon, Ireneo Santos rushed to the alleged
house of Marella to see the latter. He found the house closed
and Marella gone.
Finally, he reported the matter to his father who promptly
advised the police authorities. On that same day, Marella was
able to sell the car in question to Jose B. Aznar for
P15,000.00, the latter acting in good and without notice of the
defect appertaining to the vendors title. While the car in
question was in the possession of Jose B. Aznar and while he
was attending to its registration in his name, agents of the
Philippine Constabulary seized and confi scated the same in
consequence of the report to them by Teodoro Santos that the

said car was unlawfully taken from him. On the question of

whether Teodoro Santos can recover the car from Jose Aznar
without need of indemnifying the latter, the Court ruled in the
affi rmative applying the provisions of Article 559 of the New
Civil Code. The Court explained
The lower court was correct in applying Article 559 of the Civil
Code to the case at bar, for under it, the rule is to the effect
that if the owner has lost a thing, or if he has been unlawfully
deprived of it, he has a right to recover it, not only from the
finder, thief or robber, but also from third persons who may
have acquired it in good faith from such finder, thief or robber.
The said article establishes two exceptions to the general rule
of irrevindicability, to wit, when the owner: (1) has lost the
thing, or (2) has been unlawfully deprived thereof. In these
cases, the possessor cannot retain the thing as against the
owner, who may recover it without paying any indemnity,
except when the possessor acquired it in a public sale. (Del
Rosario v. Lucena, 8 Phil. 535; Varela v. Finnick, 9 Phil. 482;
Varela v. Matute, 9 Phil. 479; Arenas v. Raymundo, 19 Phil.
46. Tolentino, id., Vol. II, p. 261.)
In the case of Cruz v. Pahati, et al., 52 O.G. 3053, this Court
has already ruled that: Under Article 559 of the new Civil
Code, a person illegally deprived of any movable may recover
it from the person in possession of the same and the only
defense the latter may have is if he has acquired it in good
faith at a public sale, in which case, the owner cannot obtain
its return without reimbursing the price paid therefor. In the
present case, plaintiff has been illegally deprived of his car
through the ingenious scheme of defendant B to enable the
latter to dispose of it as if he were the owner thereof. Plaintiff,
therefore, can still recover possession of the car even if it is in
the possession of a third party who had acquired it in good
faith from defendant B. The maxim that no man can transfer

to another a better title than he had himself obtains in the civil

as well as in the common law. (U.S. v. Sotelo, 28 Phil. 147)
Finally, the plaintiff-appellant here contends that inasmuch as
it was the intervenor-appellee who had caused the fraud to be
perpetrated by his misplaced confi dence on Vicente Marella,
he, the intervenor-appellee, should be made to suffer the
consequences arising therefrom, following the equitable
principle to that effect. Suffi ce it to say in this regard that the
right of the owner to recover personal property acquired in
good faith by another, is based on his being dispossessed
without his consent. The common law principle that where one
of two innocent persons must suffer by a fraud perpetrated by
another, the law imposes the loss upon the party who, by his
misplaced confidence, has enabled the fraud to be committed,
cannot be applied in a case which is covered by an express
provision of the new Civil Code, specifically Article 559.
Between a common law principle and a statutory provision,
the latter must prevail in this jurisdiction. (Cruz v. Pahati,
supra)

5. Cruz v. Pahati 52 O.G. 3253

Belizo sold the car in question to plaintiff. Belizo was
then a dealer in second hand cars. One year thereafter, Belizo
offered the plaintiff to sell the automobile for him claiming to
have a buyer for it. Plaintiff agreed. At that time plaintiffs certifi
cate of registration was missing and, upon the suggestion of
Belizo, plaintiff wrote a letter addressed to the Motor Section of
the Bureau of Public Works for the issuance of a new
registration certifi cate alleging as reason the loss of the one

previously issued to him and stating that he was intending to

sell his car.
This letter was delivered to Belizo on March 3, 1952.
He also turned over to Belizo the automobile on the latters
pretext that he was going to show it to a prospective buyer. On
March 7, 1952, the letter was falsifi ed and converted into an
authorized deed of sale in favor of Belizo. Armed with this
deed of sale, Belizo succeeded in obtaining a certifi cate of
registration in his name on the same date of March 7, 1952,
and also on the same date Belizo sold the car to Felixberto
Bulahan who in turn sold it to Renlado Pahati, a second hand
dealer. These facts show that the letter was falsifi ed to enable
him to sell the car to Bulahan for a valuable consideration.

Applying the pertinent legal provisions to the facts of this

case, one is inevitably led to the conclusion that plaintiff
has a better right to the car in question than defendant
Bulahan for it cannot be disputed that plaintiff had been
illegally deprived thereof because of the ingenious
scheme utilized by Belizo to enable him to dispose of it as
if he were the owner thereof. Nor can it be pretended that
the conduct of plaintiff in giving Belizo a letter to secure the
issuance of a new certifi cate of registration constitutes a suffi
cient defense that could preclude recovery because of the
undisputed fact that the letter was falsifi ed and this fact can
be clearly seen by a cursory examination of the document.
Counsel for appellee places much reliance on the common law
principle that where one of two innocent parties must suffer by
a fraud perpetrated by another, the law imposes the loss upon
the party who, by his misplaced confi dence, has enabled the
fraud to be committed, and contends that as between plaintiff
and Bulahan, the former should bear the loss because of the

confi dence he reposed in Belizo which enabled the latter to

commit the falsifi cation. But this principle cannot be applied to
this case which is covered by an express provision of our new
Civil Code. Between a common law principle and a statutory
provision, the latter must undoubtedly prevail in this
jurisdiction.

6. EDCA Publishing & Distributing Corp.

v. Santos 184 SCRA 614 (1990)
On 5 October 1981, a person identifying himself as Professor
Jose Cruz placed an order by telephone with EDCA Publishing
and Distributing Corporation for 406 books, payable on
delivery. 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. On
7 October 1981, Cruz sold 120 of the books to Leonor Santos
who, after verifying the sellers ownership from the invoice he
showed her, paid him P1,700.00. Meanwhile, EDCA having
become suspicious over a second order placed by Cruz even
before clearing of his fi rst 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. EDCA then went to the police,
which set a trap and arrested Cruz on 7 October 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
Leonor Santos (and Gerardo Santos, doing business as
Santos Bookstore). On the night of said date 7 October 1981,
EDCA sought the assistance of the police in Precinct 5 at the

UN Avenue, which forced their way into Santos Bookstore 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
EDCA. Protesting this high-handed action, the Santos spouses
sued for recovery of the books after demand for their return
was rejected by EDCA. A writ of preliminary attachment was
issued and EDCA, after initial refusal, fi nally surrendered the
books to the Santos spouses. On the question of whether
EDCA was unlawfully deprived of the books sold to the Santos
couple, the Supreme Court held
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 nullifi ed 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, 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 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, 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 Feists
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 fi rst
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 ratifi cation or
annulment. If the contract is ratifi ed, 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 ratifi cation, 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 Feists 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
sellers 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.