PERFECTO DY, JR. petitioner, vs. COURT OF APPEALS, GELAC TRADING INC.

, and
ANTONIO V. GONZALES, Respondents.
G.R. No. 92989 July 8, 1991
FACTS:
Wilfredo Dy purchased a truck and a farm tractor through LIBRA which was also
mortgaged with the latter, as a security to the loan.
Petitioner, expresses his desire to purchased his brothers tractor in a letter to LIBRA
which also includes his intention to shoulder its mortgaged. LIBRA approved the
request. At the time that Wilfredo Dy executed a deed of absolute sale in favor of
petitioner, the tractor and truck were in the possession of LIBRA for his failure to pay
the amortization.
When petitioner finally fulfilled its obligation to pay the tractor, LIBRA would only
release the same only if he would also pay for the truck. In order to fulfill LIBRAs
condition, petitioner convinced his sister to pay for the remaining truck, to which
she released a check amounting to P22,000. LIBRA however, insisted that the check
must be first cleared before it delivers the truck and tractor.
Meanwhile, another case penned Gelac Trading Inc vs. Wilfredo Dy was pending in
Cebu as a case to recover for a sum of money (P12,269.80). By a writ of execution
the court in Cebu ordered to seize and levy the tractor which was in the premise of
LIBRA, it was sold in a public auction to which it was purchased by GELAC. The latter
then sold the tractor to Antonio Gonzales.
RTC rendered in favor of petitioner.
CA dismissed the case, alleging that it still belongs to Wilfredo Dy.
ISSUE:
Whether or not there was a consummated sale between Petitioner and LIBRA?
HELD:NO. The mortgagor who gave the property as security under a chattel
mortgage did not part with the ownership over the same. He had the right to sell it
although he was under the obligation to secure the written consent of the
mortgagee. And even if no consent was obtained from the mortgagee, the validity
of the sale would still not be affected.
Article 1496 of the Civil Code states that the ownership of the thing sold is acquired
by the vendee from the moment it is delivered to him in any of the ways specified in
Articles 1497 to 1501 or in any other manner signing an agreement that the
possession is transferred from the vendor to the vendee. In the instant case, actual
delivery of the subject tractor could not be made. However, there was constructive
delivery already upon the execution of the public instrument pursuant to Article

1498 and upon the consent or agreement of the parties when the thing sold cannot
be immediately transferred to the possession of the vendee.
The payment of the check was actually intended to extinguish the mortgage
obligation so that the tractor could be released to the petitioner. It was never
intended nor could it be considered as payment of the purchase price because the
relationship between Libra and the petitioner is not one of sale but still a mortgage.
The clearing or encashment of the check which produced the effect of payment
determined the full payment of the money obligation and the release of the chattel
mortgage. It was not determinative of the consummation of the sale. The
transaction between the brothers is distinct and apart from the transaction between
Libra and the petitioner. The contention, therefore, that the consummation of the
sale depended upon the encashment of the check is untenable.

UNION MOTOR CORPORATION vs.THE COURT OF APPEALS

Facts: Bernal spouses purchased from Union Motor Corporation one Cimarron
Jeepney to be paid in installments and executed a promissory note and a deed of
chattel mortgage in favor of the petitioner. They entered into a contract of
assignment of the promissory note and chattel mortgage with Jardine-Manila
Finance, Inc through Manuel Sosmea, an agent of the petitioner, although the
respondent spouses have not yet physically possessed the vehicle. Sosmea
required them to sign the receipt as a condition for the delivery of the vehicle that
Spouses continued paying the installments even if the subject motor vehicle
remained undelivered in asmuch as Jardine-Manila Finance, Inc. promised to deliver
the subject jeepney. The respondent spouses have paid a total of worth of
installments before they discontinued paying on account of non-delivery of the
subject motor vehicle, the reason why the vehicle was not delivered was due to the
fact that Sosmea allegedly took the subject motor vehicle in his personal
capacity.Jardine-Manila Finance, Inc., filed a complaint for a sum of money, against
the respondent Bernal spouses before the then Court of First Instance of Manila.The
complaint was amended and transferred to the Regional Trial Court of Makati to
include petitioner Union Motor Corporation as alternative defendant.Trial court
rendered a decision ordering petitioner to pay the spouses. Not satisfied the
petitioner interposed an appeal before the Court of Appeals while the respondent
spouses appealed to hold the petitioner solidarily liable with Jardine-Manila Finance,
Inc. Appeal was denied.
Issue1: Whether there has been a delivery, physical or constructive, of the subject
motor vehicle
Held : NO. The respondent Bernal spouses should bear the loss thereof in
accordance with Article 1504 that when the ownership of goods is transferred to the
buyer, the goods are at the buyers risk. But Bernal spouses never came into

possession of the subject motor vehicle. It is but appropriate that they be

reimbursed by the petitioner of the initial payment which they made. The court
ruled in favor of the respondent Bernal spouses.Undisputed is the fact that the
respondent Bernal spouses did not come into possession of the subject Cimarron
jeepney that was supposed to be delivered to them by the petitioner.The
registration certificate, receipt and sales invoice that the respondent Bernal
spousessigned were signed as a part of the processing and for the approval of their
application to buy the subject motor vehicle. Without such signed documents, no
sale, much lessdelivery, of the subject jeepney could be made. The documents were
not therefore an acknowledgment by respondent spouses of the physical acquisition
of the subject motor vehicle but merely a requirement of delivery. Issuance of a
sales invoice does not provetransfer of ownership of the thing sold to the buyer; an
invoice is nothing more thana detailed statement of the nature, quantity and cost of
the thing sold and has beenconsidered not a bill of sale. The thing is considered to
be delivered when it is placed in the hands and possession of the vendee. (Civil
Code, Art. 1462). It is true that the same article declares that theexecution of a
public instrument is equivalent to the delivery of the thing which is theobject of the
contract, but, in order that this symbolic delivery may produce the effect, it is
necessary that the vendor shall have had control over the thing sold that, at
themoment of the sale, its material delivery could have been made. It is not enough
to confer upon the purchaser the ownership and the right of possession. The thing
sold must be placed in his control. When there is no impediment whatever to
prevent the thing sold passing into the tenancy of the purchaser by the sole will of
the vendor, symbolicdelivery through the execution of a public instrument is
sufficient . But if,notwithstanding the execution of the instrument, the purchaser
cannot have theenjoyment and material tenancy of the thing and make use of it
himself or throughanother in his name, because such tenancy and enjoyment are
opposed by theinterposition of another will, then the delivery has not been
effected .

CHUA HAI vs. HON. RUPERTO KAPUNAN, JR.

FACTS: Roberto Soto purchased from Youngstown Hardware, owned by Ong Shu, 700
corrugated galvanized iron sheets and 249 pieces of round iron bar for P6,137.70,
and in payment thereof he issued a check drawn against the Security Bank and
Trust Company for P7,000.00, without informing Ong Shu that he had no sufficient
funds in said bank to answer for the same. When the check was presented for
payment, it was dishonored for insufficiency of funds. Soto sold 165 sheets in
Pangasinan and 535 sheets in Calapan, Mindoro. Of those sold in Pangasinan, 100
were sold to petitioner Chua Hai. When the case was filed in the Court of First
Instance of Manila against Roberto Soto, for estafa, the offended party filed a
petition asking that the 700 galvanized iron sheets, which were deposited with the
Manila Police Department, be returned to him, as owner of the Youngstown

Hardware. Petitioner herein opposed the motion with respect to the 100 sheets that
he had bought from Soto. Notwithstanding the opposition, the court ordered the
return of the galvanized iron sheets to Ong Shu. Petitioner then presented a motion
to reconsider the order, alleging that by the return thereof to the offended party,
the court had not only violated the contract of deposit, because it was in that
concept that petitioner had delivered the 100 sheets to the Manila Police
Department, and that said return to Ong Shu amounted to a deprivation of his
property without due process of law. It is also claimed that Article 105 of the
Revised Penal Code, under whose authority the return was ordered, can be invoked
only after the termination of the criminal case and not while said criminal case is
still pending trial.

The court having given no heed to these protests on the part of the petitioner, the
latter brought the present petition to this Court alleging that the order of the
respondent judge constitutes a deprivation of petitioner's property without due
process of law, violating the contract of deposit under which the sheets were
delivered to the police department of the City of Manila, and determining the
respective rights of petitioner and respondent Ong Shu without a previous trial of
the criminal case all of which constitute a grave abuse of discretion and excess of
jurisdiction.
ISSUE: Whether or not the failure to make good tge price would rescind the sale
HELD: No.
It can not be assumed at this stage of the proceedings that respondent Ong Shu is
still the owner of the property; to do so it take for granted that the estafa was in fact
committed, when so far, the trial on the merits has not even started, and the
presumption of innocence holds full sway.
The civil liability of the offender to make restitution, under Art. 105 of the Revised
Penal Code, does not arise until his criminal liability is finally declared, since the
former is a consequence of the latter. Art. 105 of the Revised Penal Code, therefore,
can not be invoked to justify the order of the court below, since that very article
recognizes the title of an innocent purchaser when it says:
But even if the articles in dispute had not been acquired in a market, fair or
merchant's store, still, so far as disclosed, the facts do not justify a finding that the
owner, respondent Ong Shu, was illegally deprived of the iron sheets, at least in so
far as appellant was concerned. It is not denied that Ong Shu delivered the sheets
to Soto upon a perfected contract of sale, and such delivery transferred title or
ownership to the purchaser. The ownership of the thing sold is acquired by the
vendee from the moment it is delivered to him in any of the ways specified in

articles 1497 to 1501, or in any other manner signifying an agreement that the
possession is transferred from the vendor to the vendee.
The failure of the buyer to make good the price does not, in law, cause the
ownership to revest in the seller until and unless the bilateral contract of sale is first
rescinded or resolved pursuant to Article 1191 of the new Civil Code.
And, assuming that the consent of Ong Shu to the sale in favor of Sotto was
obtained by the latter through fraud or deceit, the contract was not thereby
rendered void ab initio, but only voidable by reason of the fraud,.
Hence, until the contract of Ong Shu with Sotto is set aside by a competent court
(assuming that the fraud is established to its satisfaction), the validity of appellant's
claim to the property in question cannot be disputed, and his right to the possession
thereof should be respected.
It is no excuse that the respondent Ong Shu was required to post a redelivery bond.
An indemnity bond, while answering for damages, is not, by itself alone, sufficient
reason for disturbing property rights, whether temporarily or permanently. If the
invasion is not warranted, the filing of a bond will not make it justifiable.