FACTS:

The respondent spouses, Bernal, entered into a contract with Jardine-Manila Finance, Inc. for the purchase of a vehicle. Although they were approved for the application, they did not physically receive the vehicle. They continued to make payments based on the assurance of Jardine-Manila Finance, Inc. that the vehicle would be delivered. However, the vehicle was not delivered due to the alleged act of the petitioner's agent, Manuel Sosmeña, who supposedly took the vehicle for personal use. As a result, the respondent Bernal spouses filed a lawsuit against the petitioner. The trial court ruled in favor of the respondent spouses, ordering the petitioner to reimburse the installments paid, the downpayment, damages, and attorney's fees. The Court of Appeals upheld the trial court's decision, finding that the petitioner failed to present evidence to prove their non-liability. The petitioner then appealed to the Supreme Court.

ISSUES:

1. Whether there was a valid transfer of ownership of the subject motor vehicle to the respondent Bernal spouses.

2. Whether the petitioner is liable for the loss of the subject motor vehicle.

3. Whether the respondent spouses acquired possession and ownership of the subject motor vehicle.

4. Whether there was a violation of due process in the trial court's order to strike off the testimony of the petitioner's witness.

5. Whether or not the respondent spouses are entitled to the payment of attorney's fees.

6. Whether or not the award of moral damages is proper.

RULING:

1. The court ruled that there was no valid transfer of ownership of the subject motor vehicle to the respondent Bernal spouses. The registration certificate, receipt, and sales invoice that the respondent spouses signed were merely requirements of the petitioner for the approval of their application to buy the vehicle. The signing of these documents did not signify the physical acquisition of the vehicle. The act of signing the registration certificate was not intended to transfer ownership as the petitioner still needed it for the approval of the financing contract with another party. Therefore, without delivery of the vehicle or intent to deliver, ownership was not transferred.

2. As there was no physical or constructive delivery of the subject motor vehicle, the court held that the risk of loss remained with the petitioner. The petitioner should bear the loss of the vehicle after it was allegedly stolen by a third party.

3. The respondent spouses did not acquire possession and ownership of the subject motor vehicle. They never had control and enjoyment over the vehicle, as they never became the actual owners and never had dominion over it. The petitioner presented evidence, including a document acknowledging receipt of the registration certificate by Sosmeña, to prove that the respondent never took delivery and possession of the vehicle. The respondent's testimonial evidence of their demand for delivery was not refuted by the petitioner.

4. There was no violation of due process in the trial court's order to strike off the testimony of the petitioner's witness. The trial court found that the witness failed to appear for cross-examination on multiple occasions, even when the case was called for hearing. The petitioner failed to provide a good reason for the witness's absence and did not offer to present any other witness. The petitioner had the duty to produce its witness for cross-examination, and the blame could not be shifted to the respondent spouses. Hence, the trial court ordered that the unfinished testimony be stricken off the record.

5. The Court affirmed the decision of the Court of Appeals and held that the respondent spouses are entitled to the payment of attorney's fees.

6. The Court modified the decision of the Court of Appeals and deleted the award of moral damages.

PRINCIPLES:

• The issuance of a sales invoice does not prove transfer of ownership of the thing sold to the buyer. An invoice is merely a detailed statement of the nature, quantity, and cost of the thing sold.

• In all forms of delivery, the act of delivery must be coupled with the intention of delivering the thing. Without intention, there is no tradition.

• Delivery is sufficient when the thing sold is placed in the hands and possession of the buyer.

• The execution of a public instrument is equivalent to the delivery of the thing sold only if the vendor had control over the thing and its material delivery could have been made at the time of sale.

• In the absence of impediments preventing the thing sold from passing into the possession of the buyer, symbolic delivery through the execution of a public instrument is sufficient.

• The registration certificate alone does not conclusively prove that constructive delivery was made or ownership was transferred. Control and possession of the certificate remained with a third party, indicating that the buyer did not have complete control over the vehicle.

• Possession and ownership of property require control and enjoyment over the thing owned.

• Factual findings of the Court of Appeals are conclusive and carry weight when affirming the factual findings of the trial court.

• Moral damages in cases of breach of contract require proof of bad faith or fraudulent acts on the part of the defendant.

• Attorney's fees may be awarded when a party is compelled to litigate or incur expenses to protect their interest.

• The payment of attorney's fees is generally governed by the principle of "no cure, no pay" wherein the attorney is entitled to compensation only if the client's cause is successful. (Issue 1)

• The award of moral damages requires the presence of certain elements, such as physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, and moral shock. (Issue 2)