JOSE B. AZNAR, PLAINTIFF AND APPELLANT, VS. RAFAEL YAP-DIANGCO, DEFENDANT AND APPELLEE; TEODORO SANTOS, INTERVENOR AND APPELLEE.

This is an appeal, on purely legal questions, from a decision of the Court of
First Instance of Quezon City, Branch IV, declaring
the intervenor-appellee, Teodoro Santos, entitled to the possession of the car in
dispute.

The records before this Court disclose that sometime in May, 1959, Teodoro Santos advertised in two metropolitan papers the
sale of his FORD FAIRLANE 500. In the afternoon of May 28, 1959, a certain L. De Dios, claiming to be a nephew of Vicente Marella, went to the
Santos residence to answer the ad.
However, Teodoro Santos was out during this call and
only the latter’s son, Irineo Santos received and
talked with De Dios. The latter told the young
Santos that he had come in behalf °f
his uncle, Vicente Marella, who was interested to buy
he advertised car.

On being informed of the above, Teodoro Santos
instructed his son to see the said Vicente Marella
.the following day at his given address: 1642 Crisostomo Street, Sampaloc, Manila. And so, in the morning of
May 29, 1959, Irineo Santos went to the above address. At this meeting,
Marella agreed to buy the car for P14,700.00 on the understanding that the price would be paid
only after the car had been registered in his name.

Irineo Santos then fetched his father who, together
with L. De Dios, went to the office of a certain Atty.
Jose Padolina where the deed of sale for the car was
executed in Marella’s favor. The parties to the
contract thereafter proceeded to the Motor Vehicles’ Office in
Quezon
City where the registration of the car in Marella’s name was. effected. Up to
this stage of the transaction, the purchase price had not been paid.
From the
Motor Vehicles Office, Teodoro Santos returned to his
house. He gave the registration papers and a copy of the deed of sale to his
son, Irineo, and instructed him not to part with them
until Marella shall have given the full payment for
the car. Irineo Santos and L. De Dios then proceeded to 1642 Crisostomo Street, Sampaloc in
Manila where the former demanded for
the payment from Vicente Marella. Marella said that the amount he had on hand then was short
by some P2,000.00 and begged off to be allowed to secure the shortage from a
sister supposedly living somewhere in Azcarraga Street
also in Manila. Thereafter, he ordered L. De Dios to
go to the said sister and suggested that Irineo Santos
to go with him. At the same time, he requested for the registration papers and
the deed of sale from Ireneo Santos on the pretext
that he would like to show them to h lawyers. Trusting the good faith of Marella, Irene” handed over the same to the latter and
thereupon, in the company of L. De Dios and another
unidentified person proceeded to the alleged house of Marella’s sister.

At a place in Azcarraga, lrineo Santos
and L. De Dios alighted from the car and entered a
house, while their unidentified companion remained in the car. Once inside, L.
De Dios asked lrineo
Santos to wait at the sala while he went inside a room. That was the last that
Ireneo saw of him. For, after a considerable length of
time waiting in vain for De Dios to return, Ireneo went down to discover that neither the car nor their
unidentified companion was there anymore. Going back to the house, he inquired
from a woman he saw for L. De Dios and he was told
that no such name lived or was even known therein. Whereupon,
Ireneo Santos rushed to 1642 Crisostomo to see Marella.
He found the house closed and Marella gone. Finally,
he reported the matter to his father who promptly advised the police authorities.

That very .same day, on the afternoon of May 29, 1959, Vicente Marella
was able to sell the car in question to the plaintiff-appellant herein, Jose B.
Aznar, for P15,000.00.
Insofar as the above incidents are concerned, we are bound by the factual
finding of the trial court that Jose B. Aznar acquired
the said car from Vicente Marella in good faith, for a
valuable consideration and without notice of the defect appertaining to the
vendor’s title.

While the car in question was thus in the possession of Jose B. Aznar and while he was attending to its registration in his
name, agents of the Philippine Constabulary seized and confiscated the same in
consequence of the report to them by Teodoro Santos
that the said car unlawfully taken from him.

In due time, Jose B. Aznar filed a complaint for
replevin against Captain Rafael Yapdiangco, the head of the Philippine Constabulary unit
which seized the car in Question. Claiming ownership of the vehicle, he prayed
for its delivery to him. In the course of the litigation, however, Teodoro Santos moved and was allowed to intervene by the
lower court.

At the end of the trial, the lower court rendered a decision awarding the
disputed motor vehicle to the intervenor-appellee,
Teodoro Santos. In brief, it ruled that Teodoro Santos had been unlawfully deprived of his personal
property by Vicente Marella, from whom the
plaintiff-appellant traces his right. Consequently, although the
plaintiff-appellant acquired the car in good faith and for a valuable
consideration from Vicente Marella, the said decision
concluded, still the in tervenor-appellee was entitled
to its recovery on the mandate of Article 559 of the New Civil Code which
provides:

“Art. 559. The possession of movable property acquired in good faith is
equivalent to 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 or 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.”

From this decision, Jose B. Aznar appeals.

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 posession 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 Artie’6 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 aforequofed 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 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 vs.
Rojas, 16 Phil. 51; Ocejo, Perez and Co. vs.
International Bank, 37 Phil. 631; Fidelity and Deposit Co. vs. Wilson, 8 Phil.
51; Kuenzle & Streiff
vs. Wacke & Chandler, 14 Phil. 610; Easton vs.
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 a
contract. (Waller Easton vs. 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 lights 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 vs. Rojas, 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 in 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 in Azcarraga and not 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
the 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 the third
person 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 vs. Pahati, et al., 98 Phil.,
788; 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 has
himself obtains in the civil as well as in the common law.”
(U.S. vs. Sootelo, 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 vs.
Paihati, supra)

UPON ALL THE FOREGOING, the instant appeal is hereby dismissed and the
decision of the lower court affirmed in full. Costs against
the appellant.

Bengzon, C. J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon, Makalintal, Bengzon J.P. and
Zaldivar, JJ.,
concur.