G.R. No. L-11108 - Chua Hai vs. Kapu, Jr.

On January 31, 1956, Roberto Soto purchased from Youngstown Hardware, owned by Ong Shu, 700 corrugated galvanized iron sheets and 249 pieces of round iron bar for P6,137.70.
Payment was made by Soto through a check drawn against the Security Bank and Trust Company for P7,000.00, despite insufficient funds in his account.
Upon presentation, the check was dishonored for insufficiency of funds.

Soto proceeded to sell the 700 sheets by dividing them, selling 165 sheets in Pangasinan and 535 in Calapan, Mindoro.
Of the sheets sold in Pangasinan, 100 pieces were purchased by petitioner Chua Hai, who acted in good faith and for valuable consideration.

A criminal case (People vs. Roberto Soto, Criminal Case No. 34250) was filed against Soto for estafa, which involved the hardware materials.
As part of the criminal proceedings, the 700 galvanized iron sheets were deposited with the Manila Police Department.
The offended party (Ong Shu, owner of Youngstown Hardware) sought the return of these sheets based on his ownership, while petitioner Chua Hai opposed the motion regarding the 100 sheets he had purchased.

The lower court, presided over by Judge Ruperto Kapunan, Jr. of the Court of First Instance of Manila, ordered the return of the 700 sheets—with retention of five sheets for evidence—to Ong Shu but required the offended party to post a bond amounting to twice the value of 100 sheets in favor of Chua Hai.
Petitioner Chua Hai filed a motion to reconsider the order, arguing that:

The return of the sheets violated the contract of deposit under which he had delivered the goods to the police.
His property was being deprived without due process of law.
Article 105 of the Revised Penal Code, which was invoked by the court, could not be applied prior to the termination of the criminal proceedings.

As the owner, Ong Shu had a right to recover possession regardless of good faith acquisition by a third party.
The restitution provisions under Article 105 were applicable even if the property was in the hands of an innocent purchaser, subject to a bond to protect his claim.

Whether Article 105 of the Revised Penal Code, which provides for restitution of the property seized in connection with a crime, can be invoked while the criminal case is still pending trial.
Whether the restitution provision should await a final determination of criminal liability before affecting the rights of a bona fide purchaser.

Whether the return of the galvanized iron sheets to Ong Shu, the purported owner, amounted to a deprivation of Chua Hai’s property without due process of law.
Whether the good faith possession and purchase by Chua Hai should be respected over the preliminary criminal proceedings against Soto.

Whether the order impairing Chua Hai’s possession violated the contract of deposit he had with the Manila Police Department.
Whether the remedy for determining the respective rights between a bona fide purchaser and the alleged owner should lie exclusively in the criminal proceeding or rather through a separate civil action.