DOMINADOR DIZON, DOING BUSINESS UNDER THE FIRM NAME “PAWNSHOP OF DOMINADOR DIZON”, PETITIONER, VS. LOURDES G. SUNTAY, RESPONDENT.

Dizon versus Suntay

The Case

This is a petition for review brought by Dominador Dizon, who owns and operates a pawnshop under the firm name Pawnshop of Dominador Dizon, against Lourdes G. Suntay, the owner of a three-carat diamond ring. The ring had been entrusted to another person for sale on commission, and was then pledged to the pawnshop without the owner's knowledge or consent. The owner sued to recover the ring, and the question before the Supreme Court is whether her right as true owner prevails over the claim of the pawnshop, which took the pledge in good faith. The case matters because it fixes the rule under Article 559 of the Civil Code that the owner unlawfully deprived of a movable may recover it from whoever holds it, and because it rejects estoppel as a defense in favor of the pawnshop.

Procedural History

Lourdes G. Suntay filed an action for recovery of the ring, with attorney's fees and costs, before the Court of First Instance of Manila. She also asked for the provisional remedy of replevin, and upon filing the required bond she took possession of the ring during the pendency of the action. The lower court rendered judgment declaring that she had the right to possession of the ring. Dominador Dizon, as defendant, appealed to the Court of Appeals, which in its decision of May 19, 1969 affirmed the lower court. He then elevated the matter to the Supreme Court by petition for review. The Court noted that ordinarily it would have declined to give due course, but the vigorous plea of estoppel by his counsel persuaded it to act otherwise. After perusal of the contentions, the Supreme Court affirmed.

Facts

Lourdes G. Suntay owned a three-carat diamond ring valued at 5,500 pesos. On June 13, 1962, she delivered the ring to Clarita R. Sison for sale on commission, and Sison executed and delivered a receipt. Suntay had known Sison as a close friend of her cousin, and about a year earlier Sison had received a piece of jewelry from her to be sold for 500 pesos, and had given her the price when it was sold.

Three days later, on June 15, 1962, the ring was pledged with the pawnshop of Dominador Dizon for 2,600 pesos. The pledge was made by Melia Sison, niece of Clarita Sison's husband, evidently in connivance with Clarita, and without the knowledge of Suntay. After considerable time passed without the ring being returned, Suntay made demands on Clarita, who could not comply. Clarita finally delivered to Suntay the pawnshop ticket, which was the receipt of the pledge.

Upon learning of the pledge, Suntay took steps to file a case of estafa against Clarita with the fiscal's office. Through her lawyer, she wrote a letter dated September 22, 1962 to the pawnshop asking for delivery of the ring under pawnshop receipt serial B Number 65606, dated June 15, 1962. Dizon refused to return the ring, and she filed the action for its recovery.

Issues

• Whether or not the owner of a movable unlawfully deprived of it may recover it from a pawnshop that took it in pledge in good faith, without reimbursing the amount of the loan.
• Whether or not the pawnshop may invoke the principle of estoppel against the owner's claim.

Applicable Provisions

Article 559 of the Civil Code provides:

The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof may recover it from the person in possession of the same. If the possessor of a movable lost of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor.

This is the controlling provision, and it gives the owner the right to recover the ring from the pawnshop, the only exception being acquisition in good faith at a public sale, which is not the case here.

Rule 131, Section 3, paragraph a of the Rules of Court provides:

Whenever a party has, by his own declaration, act or omission, intentionally and deliberately led another to believe a particular thing true, and to act upon such belief, he cannot, in any litigation arising out of such declaration, act or omission, be permitted to falsify it.

This is the provision on estoppel that the pawnshop invoked, and the Court measured the facts against its requisites.

Ruling

On the first issue, the Court held that the owner's right to recover must prevail. The Court relied on its restatement of the governing norm in De Garcia versus Court of Appeals, quoting its own words:

The only exception the law allows is when there is acquisition in good faith of the possessor at a public sale, in which case the owner cannot obtain its return without reimbursing the price.

The Court stressed that the right of the owner cannot be defeated even by proof that there was good faith in the acquisition by the possessor. It also quoted Aznar versus Yapdiangco, holding that the common law principle that between two innocent persons the loss falls on the one whose misplaced confidence enabled the fraud cannot be applied where an express provision of the Civil Code, specifically Article 559, governs, and that between a common law principle and a statutory provision, the latter must prevail.

On the second issue, the Court held that estoppel is a frail reed to hang on to. For estoppel to exist, there must be a declaration, act or omission by the party sought to be bound, and the one claiming its benefits must have altered his position, having been intentionally and deliberately led to do so. Here there was a clear absence of such an act or omission by the owner. The Court recalled the rule that a person claimed to be estopped must have knowledge of the fact that his voluntary acts would deprive him of some rights because those acts are inconsistent with them. The pawnshop is engaged in a business where ordinary prudence would require ascertaining whether the person offering jewelry by way of pledge is entitled to do so. If no such care is taken, perhaps because of the difficulty of resisting the opportunity for profit, the pawnshop should be the last to complain if the right of the true owner is recognized. The Court added that courts are not likely to be impressed with a cry of distress from one in a business authorized to impose a higher rate of interest precisely because of the greater risk assumed, and that while the business is legal, it thrives on taking advantage of the necessities of the poor. From whatever angle the question is viewed, estoppel cannot be justly invoked.

Doctrine

Under Article 559 of the Civil Code, the possession of movable property acquired in good faith is equivalent to a title, but one who has lost any movable or has been unlawfully deprived thereof may recover it from the person in possession. The sole exception is acquisition in good faith at a public sale, in which case the owner cannot obtain its return without reimbursing the price paid. Good faith in the acquirer does not defeat the owner's right, and the common law rule of misplaced confidence yields to the express statutory provision. A pledge taken from one who is not the owner is void, and the pledgee acquires no right that can be enforced against the true owner. Estoppel requires a declaration, act or omission by the party sought to be bound, made intentionally and deliberately, upon which the other party relied and altered his position; absent these elements, a pawnshop cannot invoke it against the owner's claim.

Disposition

The Supreme Court affirmed the decision of the Court of Appeals, with costs against the petitioner, so Lourdes G. Suntay won and kept the right to the ring.

Remember This

The single line worth memorizing is that the owner unlawfully deprived of a movable may recover it from any possessor, even one in good faith, the only exception being a good faith purchase at a public sale. Examiners use this case to test Article 559, the void pledge of another's property, and the requisites of estoppel against a pawnshop.