CRUZ v. PAHATI

The common law principle that the one who has made the happening of fraud possible through misplaced confidence must suffer the consequence cannot be applied since there is an express provision covering the case. Article 559, a statutory provision, prevails over a common law principle.

FACTS:

Jesusito Belizo is a second hand car dealer who sold an automobile (not indicated what type) to plaintiff Jose Cruz. After a year, Belizo offered to sell the sell the same car to a certain buyer. Plaintiff agreed and since the certificate of registration was missing, Cruz made a letter addressed to the Motor Section of the Bureau of Public Works for the issuance of a new certificate.

Cruz gave the letter to Belizo to be submitted to the said office and he gave the car as well on the latter’s pretext that he was going to show it to a prospective buyer. The letter was falsified, making it appear that a deed of sale was executed in favor of Belizo, who then got a certificate of registration on his name.
Belizo was able to sell the car to respondent Bulahan who later sold it to Pahati, but the sale was cancelled so the car went back to Bulahan.

ISSUE:

Between two innocent and parties in good faith, who has a better right over the property?

HELD:

Cruz, the original owner has the better right for it cannot be disputed that plaintiff had been illegally deprived through ingenious schemes by Belizo and that Art 559 and 1505 are applicable in this situation.

1. Art 559 clearly indicates that the one who has lost any movable or has been lawfully deprived thereof, may recover it from the person in possession of the same and the only defense is if the other party has acquired it in good faith and at a public sale.

2. Art 1505 clearly says that in cases where a sale is made not by owner and was made without authority, the buyer acquires no better right than that of the seller unless the owner is estopped.
Moreover, if Bulahan had been more diligent, he could have seen that the letter had an erased portion which could’ve aroused his suspicion and made him conscious on making inquiries which he failed to do.
The contention of Bulahanan re common law principle that the one who has made the happening of fraud possible through misplaced confidence must suffer the consequence cannot be applied since there is an express provision covering the case.