G.R. No. L-25152, February 26, 1968
THE PROVINCIAL SHERIFF OF PAMPANGA, CIRILO D. CABRAL and ZACARIAS PELAEZ, petitioners, vs. HON. COURT OF APPEALS and MARCIANO AGUSTIN, respondents.

FACTS

An action for recovery of a sum of money was filed by Cirilo D. Cabral and Zacarias Perez against Elpidio Agustin and Manuel Flores in the Court of First Instance of Bulacan. Elpidio Agustin operated a furniture store under the name “Modern Furniture Store” in Masantol, Pampanga. On January 9, 1961, a fire totally burned said store and its contents. Elpidio surrendered his business license on January 12, 1961. Subsequently, his brother, Marciano Agustin, established a new furniture store on the same site, adopting the same name “Modern Furniture Store,” and secured a new license on February 20, 1961. On that same date, Elpidio verbally transferred the business name “Modern Furniture Store” to Marciano. On July 13, 1961, the Court of First Instance of Bulacan rendered a judgment against Elpidio Agustin and Manuel Flores for a sum of money. After the decision became final, a writ of execution was issued. The Provincial Sheriff of Pampanga levied on pieces of furniture found in the “Modern Furniture Store.” Marciano Agustin filed a third-party claim, asserting ownership of the levied properties. After the judgment creditors posted an indemnity bond, the sheriff scheduled a public auction. Marciano then filed an action in the Court of First Instance of Pampanga to be declared owner of the furniture, with a preliminary injunction to stop the sale. The trial court dismissed his complaint. The Court of Appeals reversed the trial court, declaring Marciano the owner and awarding damages. The defendants appealed to the Supreme Court.

ISSUE

Does Article 1387 of the Civil Code on presumption of fraud apply to the transfer of the business name “Modern Furniture Store” from Elpidio Agustin to Marciano Agustin?

RULING

No, Article 1387 of the Civil Code does not apply. The provision presumes fraud in alienations by gratuitous or onerous title when made by a debtor against whom a judgment or writ of attachment has been issued. The Court of Appeals found, as a factual matter, that Marciano Agustin’s store was new and different from Elpidio’s, with new furniture sourced from Marciano’s capital, as Elpidio’s store and contents had been completely destroyed by fire. The verbal transfer referred only to the business name and style, not to the store or its contents. Since there was no actual transfer of the store or its furniture, Article 1387 finds no application. The transfer of the business name alone, under the circumstances, does not affect Marciano’s ownership of the furniture. The Supreme Court affirmed the decision of the Court of Appeals.