Art. 1438.

One who has allowed another to assume apparent ownership of personal property for the
purpose of making any transfer of it, cannot, if he received the sum for which a pledge has been
constituted, set up his own title to defeat the pledge of the property, made by the other to a pledgee
who received the same in good faith and for value.

Estoppel by acceptance of benefits, generally

 Estoppel is frequently based upon the acceptance and retention by one having knowledge and notice of
the facts, of benefits from a transaction, contract, instrument regulation, or statute which he might have
rejected or contested.

Estoppel by acceptance of benefits finds application in many different files and under a wide variety of
circumstances. One such example is Art. 1438.
 Pledge – a contract, by virtue of which, the debtor delivers to the creditor or to a third person a movable,
or document evidencing incorporeal rights, for the purpose of securing the fulfillment of a principal
obligation with the understanding that when the obligation is fulfilled, the thing delivered shall be
returned with all its fruits and accessions.

Estoppel by acceptance of benefits v. ratification

It has been said that the case is referable to the principles of ratification when no fraud, either actual or
constructive is involved.
 The results produced, however, is clearly the same and the distinction is not usually made.
 Such estoppel precludes one who accepts the benefits from repudiating the accompanying or resulting
obligation, and may operate to prevent a party from profiting by his own wrong.

Jurisprudential examples and principles on estoppel by acceptance of benefits

1. Where an employee had accepted the benefits accruing from the abolition of his office by enjoying his
unused vacation and sick leave and receiving the corresponding gratuity, he is estopped from questioning
its validity or deemed to have waived the right to contest the same. (Magana v Auditor General)

2. Note, however, that quitclaims executed by laborers are commonly frowned upon as contrary to public
policy and ineffective to bar claims for the full measure of the workers’ right under the law.
 Acceptance of benefits such as separation pay by employees does NOT amount to estoppel. (Blue Bar
Coconut Phil Inc v NLRC)

3. In a case, the appointees, having accepted the acting appointments as acting Mayor, Vice-Mayor, and
councilors of a newly created municipality, and having acted thereunder for a considerable time, the court
ruled that they cannot now be heard to say that such appointments were permanent. (Cabiling v Pabualan)

4. The heirs, after securing approval of a project of partition and its execution, questioned the jurisdiction
of the probate court to order delivery of property in their possession. The Court however held that in the
face of what they have done, they are estopped from attacking the validity of the partition, or any part of it.
 A party cannot, in law and in good conscience, be allowed to reap the fruits of a partition, agreement,
or judgment and then repudiate what does not suit him. (Borja v Vda. De Torres v Encarnacion)

5. A person who obtains a license under a law and seeks for a time to enjoy the benefits thereof, cannot
afterwards, and when the license is sought to be revoked, question the constitutionality of the act.
(Philippine Scrappers, Inc v Auditor General)
Art. 1439. Estoppel is effective only as between the parties thereto or their successors in interest.

Persons affected by estoppel

An estoppel operates only on the parties to the transaction out of which it arises and their privies.
 This is true notwithstanding that the privies are not personally liable on the covenants creating the
estoppel.

Conversely, if anybody may be heard to challenge the application of the doctrine of estoppel, it is only the
party against whom it may be invoked.
 Thus, a stranger to the transaction is neither bound by, nor in a position to take advantage of, an estoppel
arising therefrom.
 This is because mutuality is an essential element of estoppel; and estoppel must bind both parties or
neither is bound.

Doctrines based on jurisprudence

1. If a private corporation intentionally or negligently clothes its officers or agents with apparent power to
perform acts for it, the corporation will be estopped to deny that such apparent authority is real as to innocent
third persons dealing in good faith such officers or agents. (Francisco v GSIS)

2. The government is generally NOT estopped by the mistake or error on the part of its officials or agents.
(Luciano v Estrella)