Demosthenes Arbilon v. Sofronio Manlangit, G.R. No. 197920, January 22, 2018

FACTS:

This case stemmed from a Complaint for recovery of possession of personal properties with writ of replevin and/or sum of money, with damages and attorney's fees filed by respondent against petitioner.

In his complaint, respondent alleged that he purchased on credit one (1) compressor and one (1) unit of Stainless Pump, 3 horsepower, single phase for ₱200,000.00 and ₱65,000.00, respectively, from Davao Diamond Industrial Supply. Respondent claimed that the compressor had been in the possession of petitioner from November 1997 up to the time of the filing of the complaint, that despite demand, petitioner failed to return the same to respondent.

In his Answer with Counterclaim, petitioner argued that the respondent is not the owner of the compressor. Petitioner alleged that the ownership of the compressor was never vested to respondent since the latter failed to pay the purchase price of ₱200,000.00. Petitioner alleged that he voluntarily assumed the obligation to pay the compressor to Davao Diamond in four installments as it was indispensable in the mining operations of Double A.

The RTC, upon posting of the bond, granted the writ of replevin and the compressor was delivered to respondent.

During the trial, respondent alleged that he was once a financier and operator of a gold mine in Davao del Norte but when he ran out of funds, petitioner and Major Efren Alcuizar took over the mining operations. When petitioner and Alcuizar also ran out of funds, Lucia Sanchez Leanillo became the financier of the mining operations. It appears that Leanillo paid for the installments of the compressor on account of a separate contract of sale entered into by Davao Diamond with her.

The RTC ruled in favor of the petitioner.

The CA reversed the RTC and held that respondent is the owner of the compressor.

 

ISSUE:

Whether the respondent has complied with his obligation to fully pay the purchase price?

 

RULING:

YES. To determine who has the better right to possession of the compressor, examination of the contract between respondent and Davao Diamond is in order. The CA is of the opinion that the contract between respondent and Davao Diamond is merely a contract to sell, as such, mere delivery of the thing sold does not result to the transfer of ownership to the buyer.

In a contract to sell, the seller explicitly reserves the transfer of title to the buyer until the fulfillment of a condition, that is, the full payment of the purchase price. Title to the property is retained by the seller until the buyer fully paid the price of the thing sold.

Leanillo claimed that she paid for the installments on the compressor. However, she claimed that Davao Diamond entered into an independent contract of sale.

Other than the self-serving statements of Leanillo, no other evidence was presented to support her allegation that Davao Diamond entered into a separate contract with her. In fact, at the time Leanillo paid the compressor in 1998, there is no evidence that Davao Diamond revoked, rescinded or cancelled the contract to sell with respondent.

Moreover, it must be considered that in view of the existing contract to sell between respondent and Davao Diamond, the latter cannot simply sell the property to petitioner. A contact to sell is a bilateral contract whereby the prospective seller, while expressly reserving the ownership over the thing sold despite the delivery thereof to the prospective buyer, binds himself to sell the property exclusively to the prospective buyer upon full payment of the purchase price. Thus, in the absence of any revocation or cancellation of the contract to sell with respondent, Davao Diamond cannot legally sell the compressor to petitioner.

Nevertheless, the records of the case show that Leanillo paid the compressor in behalf of respondent.

The answer of petitioner to the complaint of respondent stated that the former voluntarily assumed paying the compressor since the same was beneficial to the mining operations of Double A. Further, the receipts issued by Davao Diamond to Leanillo state that the same is "in partial payment of the existing account incurred by respondent" and is "in partial payment of respondent's account with Davao Diamond relative to one (1) unit compressor."

The above-mentioned circumstances indubitably show that Leanillo paid the compressor not in her own right but in behalf of respondent. If indeed Davao Diamond sold the compressor to Leanillo and that the latter paid the compressor in accordance with her separate contract with Davao Diamond, such fact would have appeared in the receipts. Sadly, that is not the case. There is nothing in the records that would compel Us to declare that there is an independent contract of sale between Leanillo and Davao Diamond.

Having ruled that Leanillo paid the compressor in behalf of respondent, the latter has therefore complied with his obligation to fully pay the compressor. Ownership of the compressor can now legally pass to respondent. As such, the latter has the right to possess the compressor since possession is an attribute of ownership.