JOSEFA VARELA CASE 1908

The exception contained in paragraph 3 of said article is not applicable to the present case because a
pawnshop does not enjoy the privilege established by article 464 of the Civil Code. The owner of the
loan office of Finnick Brothers, notwithstanding the fact that he acted in good faith, did not acquire
the jewels at a public sale; it is not a question of public property, securities, or other such effects, the
transfer, sale, or disposal of which is subject to the provisions of the Code of Commerce. Neither does
a pawnshop enjoy the privilege granted to a Monte de Piedad; therefore, Josefa Varela, who lost said
jewels and was deprived of the same in consequence of a crime, is entitled to the recovery thereof
from the pawnshop of Finnick Brothers, where they were pledged; the latter can not lawfully refuse
to comply with the provisions of article 120 of the Penal Code, as it is a question of jewels which have
been misappropriated by the commission of the crime of estafa, and the execution of the sentence
which orders the restitution of the jewels can not be avoided because of the good faith with which
the owner of the pawnshop acquired them, inasmuch as they were delivered to the accused, who was
not the owner nor authorized to dispose of the same.

Article 1857 of the Civil Code provides that —

The following are essential requisites of the contracts of pledge and of mortgage:

1. ...

2. That the thing pledged or mortgaged be owned by the person who pledges or mortgages it.

Nicolasa Pascual was not the owner of the jewels pledged at the pawnshop of Finnick.

Article 1859 of said code provides that —

A creditor can not appropriate to himself the things given in pledge or under mortgage, nor dispose of
them.

While actual possession of personal property is equivalent to a title thereto, so long as no proof is
offered that the same was acquired in bad faith, yet from the time that the latter condition is proven,
such as the loss of the thing, or that the owner was unlawfully deprived of it, the latter is entitled to
the recovery thereof within the limits fixed by law, because the holder lacks the good faith
indispensable to the protection of his possession.

Article 1955 of said code prescribes:

That ownership of personal property also prescribed by uninterrupted for six years, without the
necessity of any other condition.

The provisions of article 464 of this code shall be observed with regard to the rights of the owner to
recover the personal property lost or of which he may have been illegally deprived, and also with
regard to those acquired at an auction, on exchanges, at fairs or markets, or from a merchant legally
established or customarily engaged in the traffic of similar objects.

In the present case not only has the ownership and the origin of the jewels misappropriated been
unquestionably proven but also that the accused, acting fraudulently and in bad faith, disposed of
them and pledged them contrary to agreement, with no right of ownership, and to the prejudice of
the injured party, who was thereby illegally deprived of said jewels; therefore, in accordance with the
provisions of article 464, the owner has an absolute right to recover the jewels from the possession of
whosoever holds them, in accordance with the judgment entered in the aforesaid cause for estafa,
wherein, the accused having been found guilty, the right of Josefa Varela to recover the jewels in
question is expressly acknowledged.

Therefore, in view of the foregoing, and accepting the conclusions stated in the judgment appealed
from, it is our opinion that the same should be affirmed, and it is so ordered.

THELMA ARANAS CASE(2014)

Under Section 6(a), Rule 78 of the Rules of Court, the letters of administration may be granted at the
discretion of the court to the surviving spouse, who is competent and willing to serve when the
person dies intestate. Upon issuing the letters of administration to the surviving spouse, the RTC
becomes duty–bound to direct the preparation and submission of the inventory of the properties of
the estate, and the surviving spouse, as the administrator, has the duty and responsibility to submit
the inventory within three months from the issuance of letters of administration pursuant to Rule 83
of the Rules of Court, viz:

Section 1. Inventory and appraisal to be returned within three months. – Within three (3) months
after his appointment every executor or administrator shall return to the court a true inventory and
appraisal of all the real and personal estate of the deceased which has come into his possession or
knowledge. In the appraisement of such estate, the court may order one or more of the inheritance
tax appraisers to give his or their assistance.

The usage of the word all in Section 1, supra, demands the inclusion of all the real and personal
properties of the decedent in the inventory.22 However, the word all is qualified by the phrase which
has come into his possession or knowledge, which signifies that the properties must be known to the
administrator to belong to the decedent or are in her possession as the administrator. Section 1
allows no exception, for the phrase true inventory implies that no properties appearing to belong to
the decedent can be excluded from the inventory, regardless of their being in the possession of
another person or entity.

AZNAR CASE (1965)

The issue at bar is one and simple, to wit: Between Teodoro Santos and the plaintiff-appellant, Jose B.
Aznar, who has a better right to the possession of the disputed automobile?

We find for the intervenor-appellee, Teodoro Santos.

The plaintiff-appellant accepts that the car in question originally belonged to and was owned by the
intervenor-appellee, Teodoro Santos, and that the latter was unlawfully deprived of the same by
Vicente Marella. However, the appellant contends that upon the facts of this case, the applicable
provision of the Civil Code is Article 1506 and not Article 559 as was held by the decision under review.
Article 1506 provides:

ART. 1506. Where the seller of goods has a voidable title thereto, but his, title has not been voided at
the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith,
for value, and without notice of the seller's defect of title.

The contention is clearly unmeritorious. Under the aforequoted provision, it is essential that the seller
should have a voidable title at least. It is very clearly inapplicable where, as in this case, the seller had
no title at all.

Vicente Marella did not have any title to the property under litigation because the same was never
delivered to him. He sought ownership or acquisition of it by virtue of the contract. Vicente Marella
could have acquired ownership or title to the subject matter thereof only by the delivery or tradition
of the car to him.

Under Article 712 of the Civil Code, "ownership and other real rights over property are acquired and
transmitted by law, by donation, by testate and intestate succession, and in consequence of certain
contracts, by tradition." As interpreted by this Court in a host of cases, by this provision, ownership is
not transferred by contract merely but by tradition or delivery. Contracts only constitute titles or
rights to the transfer or acquisition of ownership, while delivery or tradition is the mode of
accomplishing the same (Gonzales v. Rojas, 16 Phil. 51; Ocejo, Perez and Co. v. International Bank, 37
Phil. 631, Fidelity and Deposit Co. v. Wilson, 8 Phil. 51; Kuenzle & Streiff v. Wacke & Chandler, 14 Phil.
610; Easton v. Diaz Co., 32 Phil. 180).

For the legal acquisition and transfer of ownership and other property rights, the thing transferred
must be delivered, inasmuch as, according to settled jurisprudence, the tradition of the thing is a
necessary and indispensable requisite in the acquisition of said ownership by virtue of contract.
(Walter Laston v. E. Diaz & Co. & the Provincial Sheriff of Albay, supra.)

So long as property is not delivered, the ownership over it is not transferred by contract merely but by
delivery. Contracts only constitute titles or rights to the transfer or acquisition of ownership, while
delivery or tradition is the method of accomplishing the same, the title and the method of acquiring it
being different in our law. (Gonzales v. Roxas, 16 Phil. 51)

In the case on hand, the car in question was never delivered to the vendee by the vendor as to
complete or consummate the transfer of ownership by virtue of the contract. It should be recalled
that while there was indeed a contract of sale between Vicente Marella and Teodoro Santos, the
former, as vendee, took possession of the subject matter thereof by stealing the same while it was in
the custody of the latter's son.

There is no adequate evidence on record as to whether Irineo Santos voluntarily delivered the key to
the car to the unidentified person who went with him and L. De Dios to the place on Azcarraga where
a sister of Marella allegedly lived. But even if Irineo Santos did, it was not the delivery contemplated
by Article 712 of the Civil Code. For then, it would be indisputable that he turned it over to the
unidentified companion only so that he may drive Irineo Santos and De Dios to the said place on
Azcarraga and not to vest the title to the said vehicle to him as agent of Vicente Marella. Article 712
above contemplates that the act be coupled with the intent of delivering the thing. (10 Manresa 132)

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 confidence on Vicente Marella, he, the
intervenor-appellee, should be made to suffer the consequences arising therefrom, following the
equitable principle to that effect. Suffice 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)