Gonzalez v. Peña
REITERATIONFacts
The Antecedents: Petitioner Delfin C. Gonzales, Jr. was adjudged liable to respondent Magdaleno M. Peña for agency fees and damages amounting to P28.5 million. Pending appeal, Peña moved for execution, which led to the sale of petitioner's Alabang Country Club, Inc. (ACCI) shares to Peña on October 16, 2000. Peña subsequently sold these shares to respondent Arsenia Vera on May 2, 2001. Procedural History: This Court, in a Decision dated October 19, 2011, vacated the RTC of Bago City's Decision dated May 28, 1999, declaring it null and void. Consequently, the execution pending appeal was also declared without effect, entitling Urban Bank and its officers, including petitioner, to the full restoration of their properties. The case was remanded to the RTC of Makati City, Branch 65, for restitution proceedings. The Petition: Petitioner sought the restoration of his actual ACCI shares. The RTC denied this, ruling that the sale to Vera was valid as she was an innocent purchaser for value, making actual restitution impossible. The RTC directed Peña to pay the value of the property instead. Petitioner's motion for reconsideration was denied, leading to the present petition.
Issue(s)
Whether the Regional Trial Court (RTC) complied with the directive to restore to the original owners their properties illegally obtained by respondent Peña. Whether the sale of the ACCI shares by Peña to Vera was valid despite the underlying execution sale being declared null and void. Whether actual restitution of the ACCI shares to the petitioner was legally or physically impossible.
Ruling
The Petition is granted. The Omnibus Resolution dated April 30, 2014, and the Resolution dated September 17, 2014, of the RTC of Makati City, Branch 65, are reversed and set aside insofar as they refused to restore the actual ownership of the club shares to the original owners. The RTC is ordered to fully and expeditiously execute the Court's Decision dated October 19, 2011, to restore and deliver to Urban Bank and its directors the full ownership and possession of all their actual properties executed pending appeal.
Ratio Decidendi
On the compliance with the directive to restore properties: The RTC failed to comply with this Court's directive in Urban Bank, Inc. v. Peña when it refused to restore the actual ownership of the petitioner's club shares. The Court explicitly stated that if the property was sold on execution pending appeal and the respondent was the winning bidder, he must fully restore the property, and only if actual restitution is impossible should he pay the full value. The RTC's refusal was based on the shares being sold to a third party, which was not a valid reason to deny actual restitution. On the validity of the sale to Vera: The sale of the ACCI shares by Peña to Vera was not valid. Peña acquired the shares through a null and void execution sale. Consequently, he could not have been a valid transferee of the property, and his successor-in-interest, Vera, could not have validly acquired those shares. The RTC erred in considering Vera an innocent purchaser for value in a void transaction, as the principle of nemo dat quod non habet (no one can give what one does not have) applies. On the impossibility of actual restitution: The RTC erred in characterizing the actual restitution of the ACCI shares as "impossible." For an obligation to be considered impossible under Article 1266 of the Civil Code, physical or legal impossibility must be proven. The RTC made no finding of physical impossibility. Petitioner correctly pointed out that shares, being movable properties, can be transferred back by recording the transaction in the stock and transfer book. Furthermore, Article 1505 of the Civil Code states that a buyer acquires no better title than the seller had, unless the owner is precluded by conduct. Since Peña's acquisition was void, his buyers acquired no better title, and the true owners are not legally precluded from claiming their actual properties. Therefore, legal impossibility was also not established.
Main Doctrine
A sale conducted pursuant to an execution pending appeal that has been declared null and void is likewise void, and the successor-in-interest of the buyer acquires no better title than the seller. Actual restitution of the property is not legally or physically impossible merely because the property has been transferred to a third party, especially when the transfer itself is void.