Facts:

The case at hand involves Demosthenes R. Arbilon as the petitioner and Sofronio Manlangit as the respondent. The dispute concerns the recovery of possession of an Atlas Copco Compressor. The background of the case dates back to November 1997 when the compressor was in the possession of the petitioner, yet the ownership was claimed by the respondent. Sofronio Manlangit filed a complaint alleging he had purchased a compressor and an accompanying stainless pump from Davao Diamond Industrial Supply on credit, amounting to P200,000.00 for the compressor and P65,000.00 for the pump. Despite demanding the return of the compressor, petitioner failed to comply, prompting the complaint for recovery of possession.

The petitioner contended in his Answer that the respondent was not the owner of the compressor because he had failed to pay for it. The petitioner claimed to have assumed the payment obligations for the compressor to facilitate mining operations. Initially, the Regional Trial Cou

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Facts:

Procedural History and Context

• The case originated from a complaint for recovery of possession of personal properties with a writ of replevin and/or sum of money, damages, and attorney’s fees filed by respondent, Sofronio Manlangit, against petitioner, Demosthenes R. Arbilon.
• The dispute centered on the possession and ownership of an Atlas Copco Compressor, which had been delivered to the respondent following the issuance of a writ by the Regional Trial Court (RTC) of Davao City, Branch 33 in Civil Case No. 27,498-99.
• The RTC had previously dismissed the respondent’s complaint and ordered the return of possession of the compressor to the petitioner based on facts established at trial.

Factual Background Regarding the Transaction

• The respondent claimed to have purchased on credit one compressor (along with one unit of Stainless Pump, 3 horsepower, single phase) from Davao Diamond Industrial Supply, with the purchase prices being P200,000.00 for the compressor and P65,000.00 for the pump.
• Respondent alleged that the compressor remained in the petitioner’s possession from November 1997 until the filing of his complaint and that petitioner, despite demands, had refused to return it.
• In his Answer with Counterclaim, petitioner contended that the respondent was not the true owner because the purchase price of the compressor was never fully paid by him.
• Petitioner further claimed that he had voluntarily assumed the payment obligation for the compressor in installments on behalf of Double A’s mining operations.

Developments at the Regional Trial Court (RTC)

• The RTC, after posting of the bond, granted the writ of replevin and delivered the compressor to the respondent.
• During the trial, evidence emerged that the respondent at one time operated a gold mine in Davao del Norte, and later, when funds ran out, petitioner and Major Efren Alcuizar took over operations; subsequently, Lucia Sanchez Leanillo became the financier and allegedly paid for the installments on the compressor.
• The RTC ruled in favor of petitioner on May 5, 2003, essentially dismissing the complaint for lack of a cause of action.
• Key Findings:
• The respondent had purchased the compressor and pump on installment from Davao Diamond.

ii. The respondent failed to pay the total purchase price as he surrendered the compressor and pump via a letter dated August 5, 1999, despite Leanillo already having made payments on the compressor through installment receipts. iii. As a result, the RTC held that the respondent, by voluntarily surrendering the property, forfeited his rights and interest in the compressor. ii. Dissolving the writ of seizure and declaring that respondent was not entitled to possession of the compressor. iii. Ordering the return of the compressor (and accessories, if any) to petitioner (or Leanillo, if applicable). iv. Awarding petitioner attorney’s fees and litigation expenses.

Developments at the Court of Appeals (CA)

• On January 14, 2011, the CA reversed the RTC’s ruling.
• The CA declared that respondent was the owner of the compressor and therefore entitled to its possession.
• It ordered petitioner to reimburse respondent’s litigation expenses and attorney’s fees.
• The CA’s reasoning included:
• Identification of the transaction between respondent and Davao Diamond as a contract to sell.
• Observation that the Sales Invoice contained a reservation of ownership clause, stipulating that the goods remained the seller’s property until full payment was made.
• Determination that despite delivery, the title to the compressor had not transferred until the full purchase price was paid.
• Regarding the payment by Leanillo:
• The CA found that Leanillo had paid the installments on the compressor.
• It held that her payment was made on behalf of the respondent, not pursuant to an independent contract of sale.
• The CA ruled that while Leanillo could seek reimbursement for the benefit conferred to respondent, there was insufficient proof that the payment came from any partnership share between the parties.

Final Resolution by the Supreme Court

• Petitioner filed a petition for review on certiorari challenging the CA ruling.
• The Supreme Court addressed two core issues:
• Whether the CA erred in declaring respondent the owner (and hence possessor) of the compressor.
• Whether Leanillo’s payment should be considered as coming from respondent’s partnership share.
• Ultimately, the Supreme Court denied the petition, thereby affirming the CA decision that declared Sofronio Manlangit as the lawful owner and possessor of the compressor.

Issue:

Ownership and Possession of the Compressor

• Whether the Court of Appeals erred in ruling that the respondent, Sofronio Manlangit, is the owner of the Atlas Copco Compressor and, accordingly, entitled to its possession.
• Whether the underlying contract between the respondent and Davao Diamond was a contract to sell, thus requiring full payment for the transfer of title despite the delivery of the compressor.

Characterization of Leanillo’s Payment

• Whether the money paid by Lucia Sanchez Leanillo for the compressor should be considered as payment from the respondent’s partnership share.
• Whether such payment, made by a third party, would obligate the respondent to reimbursement under the relevant provisions of the Civil Code.

Pre-Trial Disclosure and Issue Inclusion

• Whether issues not raised in the pre-trial order—specifically relating to the existence of a partnership and the source of payment for the compressor—could be considered at trial.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)