G.R. No. 197920, January 22, 2018
DEMOSTHENES R. ARBILON, Petitioner, vs. SOFRONIO MANLANGIT, Respondent.

FACTS

Respondent Sofronio Manlangit filed a complaint for recovery of possession with writ of replevin against petitioner Demosthenes Arbilon over an Atlas Copco Compressor. Manlangit alleged he purchased the compressor on credit from Davao Diamond Industrial Supply and that Arbilon had possessed it since 1997 without returning it despite demand. Arbilon countered that Manlangit never became the owner because he failed to pay the purchase price, and that Lucia Sanchez Leanillo had subsequently paid for the compressor in installments to Davao Diamond. The Regional Trial Court (RTC) ruled in favor of Arbilon, dismissing the complaint and ordering the compressor’s return to him and Leanillo, finding that Manlangit had voluntarily surrendered his rights to the property by writing to Davao Diamond.
The Court of Appeals (CA) reversed the RTC, declaring Manlangit the owner and entitled to possession. The CA characterized the original transaction as a contract to sell, where ownership is reserved by the seller until full payment. It held that Leanillo’s payment of the installments effectively completed the purchase price, thereby vesting ownership in Manlangit as the original buyer. The CA further ruled that Leanillo’s payment was considered made for the benefit of Manlangit, but that reimbursement was not required as evidence suggested the payment came from Manlangit’s partnership share.

ISSUE

The core issue is whether respondent Sofronio Manlangit is the lawful owner of the compressor entitled to its possession.

RULING

The Supreme Court denied the petition and affirmed the CA decision, upholding Manlangit’s ownership. The legal logic proceeds from the nature of the original contract. The Sales Invoice between Manlangit and Davao Diamond contained a stipulation that the goods “shall remain the property of the SELLER until fully paid by the BUYER.” This establishes a contract to sell, not a contract of sale. In a contract to sell, ownership is not transferred to the buyer until the suspensive condition of full payment is met. Crucially, the full payment of the purchase price by a third party, Leanillo, satisfied this condition. Applying Article 1236 of the Civil Code, which states that payment by a third party who has an interest in the fulfillment of the obligation benefits the debtor, the Court held that Leanillo’s payment inured to Manlangit’s benefit. Consequently, the suspensive condition was fulfilled, and ownership of the compressor was automatically transferred to Manlangit as the original buyer under the contract to sell.
The Court clarified that while Leanillo may have a right to seek reimbursement from Manlangit under Article 1236, such a claim could not be adjudicated in this case as Leanillo was not impleaded as a party. The relief granted was limited to the issue of ownership and possession between the parties litigant. Therefore, Manlangit, as the owner, is entitled to possession of the compressor, without prejudice to any separate action for reimbursement Leanillo may pursue.