G.R. No. L-36249 - Obana vs. Court of Appeals

Case Summary (G.R. No. L-36249)

Petitioner

Aniano Obana purchased 170 cavans of rice from Chan Lin, who in turn had acquired them from Sandoval. Petitioner is the party ordered by the Appellate Court to return the rice or pay its value and who seeks review before the Supreme Court.

Respondent (Private)

Aniceto Sandoval, asserting ownership of the 170 cavans of rice and seeking recovery (replevin) or payment for the rice because Sandoval alleged nonpayment by the intermediate purchaser, Chan Lin.

Key Dates and Transaction Events

November 21, 1964: Chan Lin offered to purchase 170 cavans of clean wagwag rice from Sandoval at P37.25 per cavan, delivery to be made the following day to petitioner’s store in San Fernando, La Union; payment to be made there by Chan Lin to Sandoval’s representative. Sandoval accepted.
Following day (delivery date): Rice transported on Sandoval’s truck to petitioner’s store in San Fernando; Chan Lin accompanied the shipment; upon attempted collection the purchaser (Chan Lin) could not be located to pay.
Approximately three days later (petitioner’s testimony points to November 26): Petitioner testified he received P5,600 from Chan Lin and returned the rice to Chan Lin and the driver (this was disputed by Sandoval’s driver).
Trial and other proceedings: Testimony and trial-stenographic notes include dates in 1967; procedural history follows.

Applicable Law and Constitutional Context

Applicable constitutional framework at the time of decision: the 1973 Constitution (decision predates the 1987 Constitution). Primary substantive law applied: provisions of the Civil Code cited by the Court — Article 1475 (perfection of sale by meeting of minds on thing and price), Article 1477 (ownership transferred upon actual or constructive delivery), Article 1496 (ownership acquired by the vendee upon delivery in specified ways), Article 1521 (place of delivery controlling), and Article 22 (equity/unjust enrichment principle invoked by the Court).

Procedural History

Municipal Court of San Fernando, La Union: Sandoval filed replevin; Municipal Court ordered defendant (petitioner) to pay one-half of the cost of the rice (P2,805.00).
Court of First Instance (trial de novo): On appeal by petitioner, parties adopted Sandoval’s testimony before the Municipal Court; the Court of First Instance dismissed the complaint against petitioner.
Court of Appeals: Reversed the trial court and ordered petitioner to return the 170 cavans of rice to Sandoval or pay its value at P37.25 per cavan, with legal interest and costs.
Supreme Court (this decision): Review by petitioner of the Appellate Court’s decision.

Factual Findings Relevant to Disposition

Sandoval sold 170 cavans to Chan Lin at P37.25 per cavan, with delivery to petitioner’s store.
Rice was delivered to petitioner’s store and unloaded; Chan Lin accompanied the shipment but disappeared when payment was sought.
Petitioner asserted he had purchased the rice from Chan Lin at P33.00 per cavan and that he had already paid Chan Lin; petitioner later testified he received P5,600 back from Chan Lin and returned the rice to Chan Lin and the driver.
Sandoval’s driver denied that the rice was returned to Sandoval or to Chan Lin by petitioner.
Sandoval’s counsel indicated that if the rice had in fact been returned, they would have withdrawn the complaint—this undercut petitioner’s claim of voluntary return to Sandoval or bona fide retention.

Appellate Court’s Reasoning (as challenged)

The Appellate Court characterized the transaction as a swindle by Chan Lin who used Sandoval’s rice to pass on to petitioner while not being the true owner; it concluded Chan Lin was not owner at the time he purportedly sold to petitioner, so petitioner acquired no greater right than Chan Lin had. The Appellate Court allowed recovery in favor of Sandoval on principles of ownership and equity.

Issue(s) Presented to the Supreme Court

Whether (1) the sale to Chan Lin and subsequent sale to petitioner was perfected and whether ownership passed to Chan Lin and then to petitioner; and (2) whether Sandoval was entitled to recovery of the rice or its value given intervening events (payment, alleged return of price, and alleged return of rice).

Legal Analysis — Perfection of Sale and Transfer of Ownership

The Supreme Court agreed with petitioner’s contention that the sale between Sandoval and Chan Lin was a perfected sale under Article 1475 of the Civil Code: a contract of sale is perfected at the meeting of minds upon the thing and the price. The Court further held that ownership passed to the vendee upon actual delivery pursuant to Articles 1477 and 1496; delivery occurred at petitioner’s store as stipulated, and Article 1521 (place of delivery) was applicable. Thus, as a matter of contract and property law, Chan Lin acquired ownership upon delivery. At minimum, Chan Lin held a rescissible title for nonpayment prior to any rescission.

Evidentiary Determinations and Effect of Repayment

Petitioner’s own testimony established that three days after delivery he received P5,600 from Chan Lin and purportedly returned the rice. The Court found the driver’s denial of return more credible and noted Sandoval’s counsel’s statement that they would have withdrawn the compla

Case Syllabus (G.R. No. L-36249)

Procedural Posture

Petition for review filed by Aniano Obana (petitioner) assailing the Decision of the Court of Appeals in CA-G.R. No. 44345-R in an action for replevin.
The Court of Appeals had ordered petitioner to return to Aniceto Sandoval (plaintiff-appellant in the appellate court) 170 cavans of rice or to pay its value at P37.25 per cavan, with legal interest from filing of the Complaint until fully paid, and costs against the appellee.
Underlying proceedings:
- Complaint for replevin filed by Sandoval in the Municipal Court of San Fernando, La Union.
- Municipal Court ordered petitioner to pay one-half of the cost of the rice (P2,805.00).
- On appeal to the Court of First Instance (then) of La Union, parties adopted plaintiff’s testimony before the Municipal Court; after trial de novo, the complaint was dismissed as to petitioner.
- On further appeal, the Court of Appeals reversed the Court of First Instance and ordered return or payment (as above).
The Supreme Court (Melencio-Herrera, J., writing) reviewed the Case of Record and affirmed the judgment under review albeit on a different legal premise. Costs were imposed against the petitioner.

Facts

Aniceto Sandoval owned and managed “Sandoval and Sons Rice Mill” in Rosales, Pangasinan, and was engaged in buying and selling palay.
On November 21, 1964, a certain Chan Lin approached Sandoval and offered to purchase 170 cavans of clean rice (wagwag variety) at P37.25 per cavan, with delivery to be made the following day at petitioner’s store in San Fernando, La Union, and payment to be made there by Chan Lin to Sandoval’s representative.
Sandoval accepted Chan Lin’s offer, having known petitioner and having had previous transactions with him.
The 170 cavans of rice were transported the following day on Sandoval’s truck to petitioner’s store in San Fernando, with Chan Lin accompanying the shipment.
Upon arrival and unloading, the truck driver attempted to collect the purchase price from Chan Lin, but Chan Lin was nowhere to be found.
The driver then attempted to collect from petitioner, who refused, stating he had purchased the goods from Chan Lin at P33.00 per cavan and that the purchase price had already been paid to Chan Lin.
After further refusals, Sandoval filed suit for replevin; petitioner became defendant in the municipal proceedings.

Procedural Facts and Prior Rulings (Chronology)

Municipal Court of San Fernando: ordered petitioner-defendant to pay one-half of the cost of the rice (P2,805.00).
Court of First Instance of La Union (trial de novo): judgment rendered dismissing the complaint against petitioner-defendant.
Court of Appeals: reversed the Court of First Instance and ordered defendant-appellee to return 170 cavans of rice to plaintiff-appellant or to pay its value at P37.25 per cavan, with legal interest from filing of Complaint until fully paid, and costs against appellee.
Supreme Court: reviewed, agreed to affirm the judgment under review albeit on a different premise; costs against petitioner.

Evidence and Key Testimony

Chan Lin accompanied the shipment to petitioner’s store but was absent when the driver attempted to collect payment at delivery.
Petitioner’s testimony before the Court of First Instance included an admission that three days after delivery Chan Lin and Sandoval’s driver returned, repaid petitioner P5,600.00, and petitioner delivered the rice back to them. Relevant excerpt of petitioner’s admission is quoted in the record (T.s.n., August 10, 1967, pp. 18-19).
On rebuttal, Sandoval’s driver denied that the rice had ever been returned to Sandoval or to Chan Lin (T.s.n., November 22, 1967, p. 3).
Sandoval’s counsel stated in open court that if return of the rice had been effected, they would have withdrawn the complaint (T.s.n., August 10, 1967, p. 21).

Issues Presented (as reflected in the record)

Whether the Court of Appeals correctly ordered petitioner to return 170 cavans of rice to Sandoval or to pay their value at P37.25 per cavan with legal interest from filing of the Complaint.
Whether the sale of rice to Chan