Case Summary (G.R. No. 86051)
Key Dates and Procedural History
- Purchase transaction occurred on September 27–28, 1977.
- Initial replevin action filed on November 16, 1977.
- Trial court decision issued on September 3, 1979.
- Final order issued on June 26, 1980.
- Court of Appeals reversed the trial court decision on September 22, 1988.
- Supreme Court decision rendered on September 1, 1992.
Applicable Law
The 1987 Philippine Constitution serves as the constitutional basis for the case. Relevant provisions of the 1950 New Civil Code govern contractual obligations, sales, and ownership transfer, including Articles 559, 1475, 1477, 1478, 1390, and 1506. Additional reference is made to the Revised Penal Code, Article 315 on estafa.
Factual Background
A person impersonating "Jojo Consunji," claiming to act for Rustico T. Consunji, purchased two vehicles from Citiwide Motors: a 1977 Isuzu Gemini and a 1977 Holden Premier, paying with a manager’s check totaling ₱101,000.00. However, the check was altered from ₱101.00 to ₱101,000.00 and was subsequently dishonored by the bank due to tampering. The fraudster was identified as Armando Suarez, with a history of similar estafa cases. The Holden was recovered; the Isuzu Gemini had been transferred to Jaime Ledesma, who claimed to have bought it in good faith from Pedro Neyra.
Trial Court Findings
The trial court ruled in favor of Jaime Ledesma, finding no conclusive evidence that he knew the vehicle was subject to fraud. The court found that Citiwide Motors failed to rebut Ledesma’s evidence that valuable consideration was paid. Thus, the court ordered Citiwide to return possession of the vehicle to Ledesma and awarded damages against Citiwide for the wrongful issuance of the writ of seizure.
Court of Appeals Ruling
The Court of Appeals reversed the trial court’s decision, applying Article 559 of the Civil Code. It held that since Citiwide Motors was unlawfully deprived of the vehicle through fraud, the good faith and value paid by Ledesma did not bar Citiwide’s right to recover the vehicle. The court emphasized the exceptions to possession equating to ownership under Article 559, whereby the original owner may recover lost or unlawfully deprived movables without indemnity, except when the possessor acquired the item at a public sale. Since no public sale was involved, Citiwide’s ownership was deemed intact, rendering Ledesma’s claim invalid.
Petitioner’s Arguments on Appeal
Ledesma contended that the Court of Appeals erred in: A) Applying Article 559 improperly since Citiwide voluntarily parted with title and possession to its immediate transferee. B) Failing to apply Articles 1505 and 1506 of the Civil Code, which provide that a vendee with a voidable title who sells in good faith and for value passes good title to a subsequent buyer until and unless the contract is rescinded by a competent court.
Supreme Court Analysis
The Supreme Court found merit in Ledesma’s petition, reinstating the trial court’s decision. Key points include:
Contract of Sale and Transfer of Ownership: Under Articles 1475 and 1477, a contract of sale is perfected by meeting of minds on the object and price, and ownership transfers upon delivery unless otherwise stipulated. Citiwide Motors voluntarily delivered the vehicles and transferred registration to the original buyer, thus vesting ownership.
Effect of Dishonored Check: Non-payment or dishonor of the check constitutes failure of consideration and grounds for rescission or damages, but does not render the contract void ab initio. Ownership had already passed to the vendee, who was responsible for fraudulent acts.
Voidable Title and Good Faith Acquisition: Pursuant to Article 1506, a vendee with a voidable title who has not had the contract rescinded can transfer good title to a buyer in good faith and for value. Jaime Ledesma, acting as a purchaser in good faith, acquired valid ownership rights.
Application of Article 559: The Court clarified that the exception allowing recovery without indemnity applies only to owners who “lost” or were “unlawfully deprived” of the property. Since Citiwide voluntarily parted with possession and title under a perfec
Case Syllabus (G.R. No. 86051)
Background and Procedural History
- Petitioner Jaime Ledesma challenges the September 22, 1988 decision of the Court of Appeals in C.A.-G.R. CV No. 05955, which reversed the trial court’s ruling on a replevin case (Civil Case No. Q-24200).
- The trial court initially ordered the return of the repossessed 1977 Isuzu Gemini vehicle to Ledesma and dismissed Citiwide Motors’ claim for damages.
- The trial court’s final order granted Ledesma actual damages of ₱35,000 recoverable from the replevin bond and ₱10,000 damages for wrongful seizure against Citiwide Motors and its surety.
- The Court of Appeals reversed the trial court’s decision, holding that Citiwide Motors was unlawfully deprived of the vehicle and had the right to recover possession despite Ledesma being a purchaser in good faith.
- Petitioner filed a motion for reconsideration which was denied by the Court of Appeals, leading to the present petition for review.
Factual Antecedents
- On September 27, 1977, an impostor representing himself as "Jojo Consunji" purchased two new vehicles from Citiwide Motors: a 1977 Isuzu Gemini and a 1977 Holden Premier, evidenced by proper invoices.
- The impostor paid by Manager’s Check for ₱101,000.00, but upon deposit, the check was dishonored due to tampering — the amount was actually only ₱101.00.
- Citiwide Motors reported the fraud to authorities and learned the impostor was Armando Suarez, a known estafa offender.
- While Citiwide recovered the Holden Premier, the Isuzu Gemini had been transferred to Jaime Ledesma, who claimed to have bought it in good faith for value from the registered owner, Pedro Neyra.
- After posting a bond, Citiwide repossessed the Isuzu Gemini through a writ of seizure.
- The trial court concluded Ledesma had purchased the vehicle in good faith and for valuable consideration and that Citiwide was unlawfully deprived of the vehicle.
Legal Issues Presented
- Whether the Court of Appeals erred in applying Article 559 of the Civil Code, holding Citiwide Motors was unlawfully deprived of the vehicle even though it voluntarily parted with its possession and title to an immediate transferee.
- Whether Articles 1505 and 1506 of the New Civil Code apply, as the immediate transferee allegedly acquired a voidable but not void title, which had not been declared void by a competent court prior to Ledesma’s acquisition.
- Whether Ledesma, a purchaser in good faith and for value, can be divested of his ownership due to the impostor’s fraud on the original seller.
Relevant Statutory Provisions and Doctrine
- Article 559, Civil Code: Possession of movable property acquired in good faith is equivalent to title except when owner has lost or been unlawfully deprived thereof. In such cases, owner may recover without indemnity unless possession was acquired at a public sale.
- Article 1505, Civil Code: T