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PERFORMANCE OR

CONSUMMATION OF SALE O

BLIGATIONS OF SELLER

1. To Preserve the Subject Matter


Article 1163 of the Civil Code lays down a rule applicable
to obligations and contracts in general, that [E]very person
obliged to give a determinate thing is also obliged to take
care of it with the proper diligence of a good father of a family,
unless the law or the stipulation of the parties requires another
standard of care.
When a sale covers a specifi c or determinate object, upon
perfection and even prior to delivery, and although the seller still
owns the subject matter, he is already obliged to take care of
the subject matter with the diligence of a good father of a family;
otherwise, he becomes liable to the buyer for breach of such
obligation, as when the thing deteriorates or is lost through
sellers fault.
The ancillary obligation to preserve the subject matter of
the sale involves a personal obligation to do, rather than a real
obligation to give, and arises as a necessary legal assurance
to the buyer that the seller would be able to comply fully with the
main obligation to deliver the object of sale.
2. To Deliver the Subject Matter
Under Article 1495 of the Civil Code, the seller is bound: (a)
to transfer the ownership of, and (b) to deliver the thing, which
is the object of the sale to the buyer. Even in the defi nition of
sale under Article 1458, it covers the twin-obligations of the seller to transfer the ownership of and to
deliver a determinate thing.
Although the wordings of both Articles 1458 and 1495 seem to
separate delivery of the subject matter from the transfer of
ownership, nonetheless, the means by which the seller can
transfer the ownership of the subject matter is by the mode of
tradition or delivery, whether actual or constructive.
As early as in Kuenzle & Streiff v. Watson & Co., 1 the Supreme
Court held that where there is no express provision that the title
shall not pass until payment of the price, and the thing sold has
been delivered, title passes from the moment the thing sold is
placed in the possession and control of the buyer. In spite of the
reciprocal nature of a sale, it is not the prior payment of price that
determines the effects of delivery of the subject matter.
Ocejo, Perez & Co. v. International Banking Corp., 2 also
held that delivery produces its natural effects in law, the principal
and most important of which being the conveyance of ownership,

without prejudice to the right of the seller to claim payment of the


price. Normally therefore, as a consequence of a valid sale, the
delivery of the subject matter ipso jure transfers its ownership to
the buyer.
3. To Deliver the Fruits and Accessories
Under Article 1164 of the Civil Code, which applies only to
an obligation to deliver a determinate thing, the transferee has a
right to the fruits of the thing from the time the obligation to deliver
it arises; however, he shall acquire no real right over them until
the same has been delivered to him.
Every obligation to deliver a determinate thing is coupled with
a specifi c provision under Article 1537, that the seller is bound to
deliver the thing sold and its accessions and accessories in the
condition in which they were upon the perfection of the contract,
and all the fruits shall pertain to the buyer from the day on which
the contract was perfected.
Unlike in the principle of res perit domino where it is the
owner of the thing who bears the risk of loss and benefi ts from the
fruits of the thing owned, in a sale involving a determinate subject
matter, even prior to delivery and transfer of ownership thereof
to the buyer, the buyer already has certain rights enforceable
against the seller, pertaining to the subject matter. This is in
accordance with the principle that the accessories always
follow the principal; and since the subject matter is intended for
delivery to the buyer from the point of perfection of the sale, then
necessarily the accessories and fruits must from then on be held
for the account of the buyer.
4. To Warrant the Subject Matter
Under Article 1495 of the Civil Code, with the fulfi llment of
the primary obligation to deliver the subject matter, the seller is
then obliged to warrant the thing which is the object of the sale.
The warranties of the seller are discussed in details in Chapter
12.
TRADITION AS A CONSEQUENCE OF A VALID SALE
1. Essence of Tradition
Equatorial Realty Dev., Inc. v. Mayfair Theater, Inc., 3 had
explained quite vividly the mode of tradition when it held that
ownership of the thing sold is a real right, which the buyer acquires
only upon delivery of the thing to him in any of the ways specifi ed
in Articles 1497 to 1501 of the Civil Code, or in any other manner
signifying an agreement that the possession is transferred from
the vendor to the vendee. This right is transferred, not merely by
contract, but also by tradition or delivery. Non nudis pactis sed

traditione dominia rerum transferantur. And there is said to be


delivery if and when the thing sold is placed in the control and
possession of the vendee.4 The Court held further that delivery
is a composite act, in which both parties must join and the minds
of both parties concur; it is an act by which one party parts with the title to and the possession of the
property, and the other
acquires the right to and the possession of the same. 5
Santos v. Santos, 6 held that the critical factor in the different
modes of effecting delivery, which gives legal effect to the act is
the actual intention of the vendor to deliver, and its acceptance
by the vendee. Without that intention, there is no tradition.7 This
is quite an inelegant way to put forth the principle on tradition
based on two factors:
(a) Acceptance, although an obligation on the
part of the buyer, is not essential for delivery
by the seller to achieve its legal effects;
and
(b) An express intention on the matter by the
parties to a sale, at the point of delivery is
not essential for tradition to produce its legal
consequences.
The legal effects of the parties intention must be gauged at
the point of perfection by which the obligation to deliver the subject
matter is created: was there mutual intention and agreement to
transfer the ownership of the subject matter; if in the affi rmative,
there is a valid sale; if in the negative, we have a simulated sale
which is void ab initio. Besides, the rule has always been that
tradition that is effected by reason of a valid sale would produce
its legal consequences, without the parties having to say so, or
particularly intend it at the point of delivery. 8
The essence of the Equatorial Realty and Santos rulings is
that tradition produces its legal consequences from the fact that
delivery is effected pursuant to a valid sale. Consequently, in one
case, 9 it was held that there is no transfer of ownership by the execution of a deed of sale merely intended
to accommodate the
buyer to enable him to generate funds for his business venture,
simply because there was no valid sale behind the purported act
of constructive delivery.
In another case, 10 it was held that when the auction sale of
the subject properties to the bank was void, no valid title passed
in its favor; consequently, the subsequent sale and delivery of
the properties thereof by the bank was also nullity (i.e., title held
by the banks buyer was void) under the elementary principle of
nemo dat quod non habet, one cannot give what one does not

have.
a. Types of Delivery
The Law on Sales under the Civil Code recognizes two
general types of delivery that will effectively transfer ownership of
the subject matter to the buyer and would constitute compliance
by the seller of his obligations under a valid contract of sale: (a)
actual or physical delivery; and (b) constructive delivery.
Froilan v. Pan Oriental Shipping Co., 11 held that in the
absence of stipulation to the contrary, the ownership of the thing
sold passes to the buyer upon the actual or constructive delivery
thereof.
Alfredo v. Borras, 12 held that it is not necessary that the
seller himself delivers title of the property to the buyer because
the thing sold is understood as delivered when it is placed in the
control and possession of the buyer. In that decision, the seller
himself introduced the tenant to the buyers as the new owners of
the land, and from that time on the buyers acted as landlord, and
thereby there was deem to have been delivery.
1. Actual Delivery
Under Article 1497 of the Civil Code, there is actual or
physical delivery when the thing sold is placed in the control and possession of the buyer. 13 Although
possession is the best gauge
when there is control, nonetheless control can take other forms
other than actual physical possession.
Thus, Power Commercial and Industrial Corp. v. Court of
Appeals, 14 held that for both actual or constructive delivery [t]he
key word is control, not possession,15 in determining the legal
effect of tradition. Power Commercial considered that the lot sold
had been placed under the control of the buyer, as evidenced
by the subsequent fi ling by the buyer of an ejectment suit, which
signifi ed that the buyer was the new owner which intended
to obtain for itself, and to terminate said occupants actual
possession thereof.
2. Constructive Delivery
Under Article 1496 of the Civil Code, constructive delivery
can take several forms, and may be any manner signifying an
agreement that the possession is transferred from the vendor
to the vendee. The essence of most forms of constructive
delivery is the existence of an agreement between the seller
and the buyer, and that the latter is understood to have control
of the subject matter of sale.
The discussions on the execution of a public instrument as
a form of constructive delivery should be considered as setting
the same basic premise or principles as to all other forms of

constructive delivery. The importance of using the execution of a


public instrument pursuant to a valid sale, as the prime example
to highlight the doctrines to cover all types of constructive delivery
comes from its applicability to all types of subject matter, whether
movable or immovable, tangible or intangible.
a. Execution of Public Instrument
Under Article 1498 of the Civil Code, in the case of both
movables and immovables, when the sale is made through a
public instrument, the execution thereof shall be equivalent to the delivery of the subject matter of sale, if
from the deed the
contrary does not appear or cannot clearly be inferred. 16 In
several cases, 17 the Court held that the notarized deed of sale
has two functions:
(a) It operates as a formal or symbolic delivery
of the property sold; and
(b) It authorizes the buyer to use the document
as proof of ownership.
Therefore, the general rule is that the execution of a public
instrument has the same legal effects as actual or physical
delivery, i.e., it transfers the ownership of the subject matter to
the buyer, and constitutes valid compliance by the seller of his
primary obligations under the sale. 18
Of course, the foregoing rules apply only to a public instrument
that evidences a valid sale. Thus, Torcuator v. Bernabe, 19 held
that a special power of attorney authorizing the agents to execute
a deed of sale over the property can by no means be interpreted
as delivery or conveyance of ownership over said property, thus:
Taken by itself, in fact, the special power of attorney can be
interpreted as tied up with any number of property arrangements,
such as a contract of lease or a joint venture.20
(1) Constructive Delivery Has the Same Legal Effect
as Actual or Physical Delivery
Municipality of Victorias v. Court of Appeals, 21 held that the
legal effects and consequences of actual or physical delivery,
also apply equally to constructive delivery: Similarly, when the
sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the
thing which is the object
of the contract, if from the deed, the contrary does not appear or
cannot be clearly inferred.22
The concept has been aptly summed-up in Sabio v.
International Corporate Bank, 23 where the Court held
Under Article 1498 ... the mere execution of the deed
of conveyance in a public instrument is equivalent to
the delivery of the property. ... prior physical delivery or
possession is not legally required. It is well-established

that ownership and possession are two entirely


different legal concepts. Just as possession is not a
defi nite proof of ownership, neither is non-possession
inconsistent with ownership. Thus, it is of no legal
consequence that respondents were never in actual
possession or occupation of the subject property. They,
nevertheless, perfected and completed ownership
and title to the subject property. Notwithstanding the
presence of illegal occupants on the subject property,
transfer of ownership by symbolic delivery under Article
1498 can still be effected through the execution of the
deed of conveyance. 24

The author therefore takes exception to the ruling in Ten


Forty Realty and Dev. Corp. v. Cruz, 25 where the Supreme
Court held that [N]owhere in the Civil Code is it provided that
the execution of a Deed of Sale is a conclusive presumption of
delivery of possession of a piece of real estate. This Court has
held that the execution of a public instrument gives rise only
to a prima facie presumption of delivery. Such presumption is
destroyed when the delivery is not effected because of legal
impediment ... negated by the failure of the vendee to take
actual possession of the land sold. The Ten Forty Realty ruling
confuses between the twin functions of a public instrument, fi rst being merely an evidence of a sale, and
second, a public
instrument being the main, but not the only ingredient, in what
constitutes constructive delivery. By itself a deed of sale is
merely a species of evidence, and it becomes an integral part
of tradition when coupled with other requirements mandated by
jurisprudence, namely, control over the subject matter at the time
of execution and the passage of reasonable time for the control
to remain.
(2)When Execution of Public Instrument
Does Not Produce Effects of Delivery
There are cases when the execution of public instruments
covering valid sales do not produce the effects of tradition.
First, when in the execution of a public instrument, there is
a stipulation to the contrary. 26 Phil. Suburban Dev. v. Auditor, 27
held that such express reservation or contrary inference would
be present when:
(a) A certain date is fi xed for the purchaser to
take possession of the property subject of
the conveyance;
(b) In case of sale by installments, it is stipulated
that until the last installment is made, the
title to the property should remain with the

seller;
(c) When the seller reserves the right to use
and enjoy the property until the gathering of
the pending crops; or
(d) Where the seller has no control over the
thing sold at the moment of the sale, and,
therefore, its material delivery could not
have been made.
Phil. Suburban held that since the execution of the public
instrument was preceded by actual delivery of the subject real estate, then tradition was effected in spite
of the condition stated
in the instrument that the seller should fi rst register the deed of
sale and secure a new title in the name of the buyer before the
latter shall pay the balance of the purchase price, which did not
preclude the transmission of ownership, thus: In the absence
of an express stipulation to the contrary, the payment of the
purchase price of the goods is not a condition precedent to the
transfer of title to the buyer, but title passes by the delivery.28
This well-established rule is contrary to what was said in
Heirs of Severina San Miguel v. Court of Appeals, 29 that [i]n a
contract of sale, title only passes to the vendee upon full payment
of the stipulated consideration, or upon delivery of the thing
sold. In fact, Balatbat v. Court of Appeals, 30 held that [D]evoid
of stipulation that ownership in the thing shall not pass to the
purchaser until he has fully paid the price [Art. 1478], ownership
in the thing shall pass from the seller to the buyer upon actual or
constructive delivery of the thing sold even if the purchase price
has not yet been fully paid. Failure of the buyer to make good the
price does not, in law, cause the ownership to revest to the seller
unless the bilateral contract of sale is fi rst rescinded or resolved
pursuant to Art. 1191.31
In Fortune Tobacco Corp. v. NLRC, 32 where the resolution of
the issues boiled down to whether there was an actual sale of the
employers plant and facilities, the Court held that the execution
of the deed of conditional sale with provision that the fi nal deed of
sale was to be executed only upon full payment, did not transfer
ownership of the subject matter by the delivery thereof. It also
held that even accepting that the plant and its facilities have been
sold on a conditional basis, there can be no actual sale thereof
[i.e., transfer of ownership] unless the plant and its facilities are
unconditionally conveyed ... by virtue of a fi nal or absolute deed
of sale in accordance with the terms and conditions stated in the
agreement between the parties.

Secondly, when at the time of the execution of the public


instrument, the subject matter was not subject to the control of
the seller, then the legal effects of delivery would not happen.
Addison v. Felix, 34 held earlier that it is the duty of the
seller to deliver the thing sold, and that symbolic delivery by the
execution of a public instrument is equivalent to actual delivery
only when the thing sold is subject to the control of the seller, so
that at the moment of sale, its material delivery could have been
made,35 which talks of capacity rather than an actual physical
delivery. The moment of sale referred to was of course the
consummation stage, thus
The Code imposes upon the vendor the obligation
to deliver the thing sold. The thing is considered to be
delivered when it is placed in the hands and possession
of the vendee. ... It is true that the same article declares
that the execution of a public instrument is equivalent
to the delivery of the thing which is the object of the
contract, but, in order that this symbolic delivery may
produce the effect of tradition, it is necessary that the
vendor shall have such control over the thing sold that,
at the moment of the sale, its material delivery could
have been made. It is not enough to confer upon the
purchaser the ownership and the right of possession.
The thing sold must be placed in his control. When
there is no impediment whatsoever to prevent the thing
sold from passing into the tenancy of the purchaser by
the sole will of the vendor, symbolic delivery through
the execution of a public instrument is sufficient. But
if, notwithstanding the execution of the instrument, the
purchaser cannot have the enjoyment and material
tenancy of the thing and make use of it himself or
through another in his name, because such tenancy
and enjoyment are opposed by the interposition of
another will, then fiction yields to reality the delivery
has not been effected

Addison however recognized that if the sale had been made


under the express agreement of imposing upon the purchaser
the obligation to take the necessary steps to obtain the material
possession of the thing sold, and it were proven that she knew
that the thing was in the possession of a third person claiming to
have property rights therein, such agreement would perfectly be
valid,37 and there would have been full compliance by the seller
of his obligations under the sale, by the mere execution of the
public instrument.
In effect, Addison does not intend to place constructive
delivery at a lower category than that of actual delivery, and

there is no implication in the ruling that for constructive delivery


to produce the effects of tradition, it has to be coupled by
subsequent actual delivery or by the actual taking of physical
possession by the buyer. Otherwise, if constructive delivery
cannot do the job without actual delivery being made later on,
then constructive delivery would not in reality be a separate
form of tradition.
The Addison doctrine was reiterated in Power Commercial
and Industrial Corp. v. Court of Appeals, 38 where the Court
emphasized that the operative word in the doctrine is not
possession but control. In Power Commercial, the buyer was
fully aware of the existence of squatters on the property at the
time of the transactions and even undertook the job of evicting
them. The Court held that the buyer cannot contend later on
that the execution of the deed of sale in a public document did
not operate as a symbolic delivery to transfer possession to the
buyer due to the presence of occupants on the lot sold, thus:
Although most authorities consider transfer of
ownership as the primary purpose of sale, delivery
remains an indispensable requisite as our law does
not admit the doctrine of transfer of property by mere
consent. 39The Civil Code provides that delivery can either
be (1) ACTUAL (Article 1497) or (2) CONSTRUCTIVE
(Articles 1498-1501). Symbolic delivery (Article 1498),
as a species of constructive delivery, effects the
transfer of ownership through the execution of a public
document. Its effi cacy can, however, be prevented if
the vendor does not possess control over the thing
sold, 40 in which case this legal fi ction must yield to
reality. The key word is control, not possession, of the
land ... Considering that the deed of sale between the
parties did not stipulate or infer otherwise, delivery was
effected through the execution of said deed. 41

Nevertheless, the statement in Power Commercial that


our law does not admit the doctrine of transfer of property by
mere consent, is not accurate, since under Article 1496 of the
Civil Code, the ownership of the thing sold is acquired by the
buyer from the moment it is delivered to him in any of the ways
specifi ed by law, or in any other manner signifying an agreement
that the possession is transferred from the vendor to the vendee.
As discussed hereunder, traditio longa manu and other forms of
symbolic delivery involve a mere agreement that buyer is now
the owner and possessor of the subject matter.
Thirdly, from the decision in Pasagui v. Villablanca, 42 we
can infer an additional element into the Addison doctrine, that

in order that the execution of public instrument to produce the


effect of tradition, not only must the seller have actual control
of the object of the sale at the execution of the instrument, but
that such control or ability to transfer physical possession and
enjoyment must subsist for a reasonable length of time after the
instruments execution.
We can only infer the ruling from the decision because
Pasagui actually covered the main issue of whether the proper
action that should have been fi led was one of forcible entry, which
required plaintiffs prior possession; it was therefore a decision,
not on sale, but on jurisdiction and proper remedy. It held that
although a public instrument had been executed to cover the sale,
and despite the facts showing that the third-party claimants of the
subject parcel of land came into possession after the instrument
was executed, there was no delivery ever made by the seller
even by constructive delivery as to conclude that the buyer ever
had title, possession or control of the subject real estate.
The implied Pasagui ruling of control for a reasonable
period after execution of the instrument is an important ingredient
for constructive delivery; otherwise, the execution of a public
instrument, as a mode of delivery, would create undue burden on
the part of the buyer, who would be compelled to literally jump
into the possession of the subject matter soon after signing the
instrument, for he would then obtain no remedy from the seller.
The rationale for such inferred ruling should apply equally to all
forms of constructive delivery, since tradition being an obligation
on the part of the seller, the burden must continue to be with the
seller to grant the buyer reasonable period to take possession of
the subject matter. The ruling has since obtained doctrinal status
when it was reiterated in Danguilan v. Intermediate Appellate
Court, 43 and Vda. de Sarmiento v. Lesaca. 44
It is clear therefore, that without the other requisites mandated
by jurisprudence (i.e., control at time of delivery and passage
of reasonable time), the mere execution of a public instrument
does not create a conclusive presumption of delivery, which
presumption can be rebutted by clear and convincing evidence,
such as when the buyer failed to take actual possession or there
was continued enjoyment by the seller of possession. 45
(3) Special Variation to Addison Doctrine
The Addison doctrine seemed to have been strained in the
case of Dy, Jr. v. Court of Appeals, 46 where a brother bought
through a deed of absolute sale a tractor from his brother- seller, which at the time of the execution of the
instrument, was
mortgaged to and in the possession of the mortgagee. The

purchase was with the knowledge of the mortgagee who insisted


that delivery to the buyer shall be made only upon the clearing of
the check payment on the mortgage debt. In the meantime, the
tractor was executed upon by a judgment creditor of the brotherseller while still in the possession of the
mortgagee.
The issue before the Court was whether the execution
effected upon the tractor to enforce the brother-sellers judgment
debt was still valid, since the tractor was already sold to the
brother-buyer. The judgment creditor insisted that at the time of
the execution of the deed of sale, no constructive delivery was
effected since the consummation of the sale was dependent upon
the clearance and encashment of the check which was issued in
payment of the tractor.
In ruling for the brother-buyer, Justice Gutierrez held in
Dy, Jr., that [T]he mortgagor who gave the property as security
under a chattel mortgage did not part with the ownership over the
same. He had a right to sell it although he was under obligation
to secure the written consent of the mortgagor.47 He held that
in addition to Article 1498 of the Civil Code which recognized
the execution of public instrument as constructive delivery, under
Article 1499, it is provided that the delivery of movable property
may likewise be made by the mere consent or agreement of
the contracting parties, if the thing sold cannot be transferred to
the possession of the vendee at the time of sale, or if the latter
already had it in his possession for any other reason.
Nevertheless, Justice Gutierrez recognized that [I]n the
instant case, actual delivery of the subject tractor could not be
made. However, there was constructive delivery already upon
the execution of the public instrument pursuant to Art. 1498 and
upon the consent or agreement of the parties when the thing
sold cannot be immediately transferred to the possession of the
vendee. (Art. 1499).48 With the acknowledgment that actual
delivery could not be effected, because possession of the tractor
was with the mortgagee, under the Addison doctrine, constructive
delivery through the execution of the public instrument could not
produce the effects of tradition, as to have made the brotherbuyer the owner of the subject matter.
In addressing this particular point raised by the respondent
Court of Appeals in its appealed decision, Justice Gutierrez held
that [W]hile it is true that [the seller] was not in actual possession
and control of the subject tractor, his right of ownership was not
divested from him upon his default. Neither could it be said that
[the mortgagee] was the owner of the subject tractor because the
mortgagee can not become the owner of or convert and appropriate to himself the property mortgaged.
(Art. 2088, Civil Code)

Said property continues to belong to the mortgagor.49 The only


proper way to treat the Dy, Jr. ruling is to consider that when it
comes to a third-party and the issue centers on the title or ownership of the subject matter of a sale, then
constructive delivery by
the execution of the public instrument would produce the effect
of tradition, but only insofar as title is concerned, provided that at
the time of the execution there was no legal impediment on the
part of the seller to transfer title to the buyer, even if at the time
of sale, control or possession of the subject matter was not in the
hands of the seller.
In any event, the variation in Dy, Jr. is not really that crucial,
since Addison itself recognized that if the sale had been made
under the express agreement of imposing upon the purchaser
the obligation to take the necessary steps to obtain the material
possession of the thing sold, and it were proven that she knew
that the thing was in the possession of a third person claiming
to have property rights therein, such agreement would perfectly
be valid,50 and therefore execution of the public document by
itself would produce the legal effects of tradition and effectively
transfer ownership to the buyer, even when the subject matter is
in the hands of a third party. Symbolic Delivery
As to movables, constructive delivery may also be made
by the delivery of the keys of the place or depository where the
movable is stored or kept. 51
Symbolic delivery must involve or cover the subject matter,
and cannot take a form relating to the payment of the purchase
price. Thus, Lorenzo Dev. Corp. v. Court of Appeals, 52 held that
the issuance of an acknowledgment receipt of the partial payment
for the property bought cannot be taken to mean a transfer of
ownership thereof to the buyer because no constructive delivery
of the real property could have been effected by virtue thereof.
c. Constitutum Possessorium
This mode of constructive delivery takes effect when at the
time of the perfection of the sale, the seller held possession of
the subject matter in the concept of owner, and pursuant to the
contract, the seller continues to hold physical possession thereof
no longer in the concept of an owner, but as a lessee or any other
form of possession other than in the concept of owner. 53
d. Traditio Brevi Manu
This mode of delivery is opposite that of constitutum
possessorium, where before the sale, the would-be buyer was
already in possession of the would-be subject matter of the
sale, say as a lessee, and pursuant to sale, he would now hold
possession in the concept of an owner. but as owners now through symbolic delivery known as traditio

brevi manu.
e. Traditio Longa Manu
This is delivery of a thing merely by agreement, such as when
the seller points the property subject matter of the sale by way of
delivery without need of actually delivering physical possession
thereof. Thus, under Article 1499 of the Civil Code, the delivery of
movable property may be made by the mere consent or agreement
of the contracting parties, if the thing sold cannot be transferred to
the possession of the buyer at the time of the sale.
f. Delivery of Incorporeal Property
An incorporeal property having no physical existence, its
delivery can only be effected by constructive delivery. Article
1501 of the Civil Code recognizes three (3) types of constructive
delivery specifi cally applicable to incorporeal property, thus:
(a) When the sale is made through a public
instrument, the execution thereof shall be
equivalent to the delivery of the thing which
is the object of the contract, if from the deed
the contrary does not appear or cannot
clearly be inferred;
(b) By the placing of the titles of ownership in
the possession of the buyer; or
(c) The use and enjoyment by the buyer of the
rights pertaining to the incorporeal property,
with the sellers consent.
g. Delivery by Negotiable Document of Title
A person to whom a negotiable document of title has been
duly negotiated acquires thereby such title to the goods as
transferor had or had ability to convey to a purchaser in good
faith for value, and also the title of the persons to whom the
documents was originally. 55 Therefore, the buyer of the goods
Heirs of Pedro Escanlar v. Court of Appeals, 54 illustrates
the application of traditio brevi manu. In that case, prior to
the sale, would-be buyers were in possession of the subject
property as lessees. Upon sale to them of the rights, interests
and participation as to the one-half () portion pro indiviso, they
remained in possession, not in the concept of lessees anymore
can by the process of negotiation of the covering document have
a title better than that of his immediate seller.
On other hand, the buyer to whom a document of title has
been transferred by assignment, acquires only his transferors title
to the goods, and always subject to the terms of any agreement
with the transferor. 56
Since an invoice is not a negotiable document of title, the

issuance thereof would not constitute constructive delivery. 57


h. Delivery Through Carrier
Delivery through a carrier as a form of constructive delivery
necessarily pertains only to a sale of goods. The general rule,
and in the absence of stipulation or circumstances to the contrary,
delivery to carrier is deemed delivery to the buyer, the premise
being that the carrier acts as an agent of the buyer.
This default rule is best illustrated by Article 1523 of the Civil
Code, where, if in pursuance of a sale, the seller is authorized or
required to send the goods to the buyer, delivery of the goods to
a carrier, whether named by the buyer or not, for the purpose of
transmission to the buyer is deemed to be a delivery of the goods
to the buyer, unless a contrary intent appears.
Unless otherwise authorized by the buyer, the seller must
make such contract with the carrier on behalf of the buyer as may
be reasonable, having regard to the nature of the goods and the
other circumstances of the case. If the seller omits to do so, and
the goods are lost or damaged in the course of the transit, the
buyer may decline to treat the delivery to the carrier as delivery to
himself, or may hold the seller responsible for damages. 58
Unless otherwise agreed, where goods are sent by the seller
to the buyer under circumstances in which the seller knows or
ought to know that it is usual to insure, the seller must give such
notice to the buyer as may enable him to insure them during their
transit, and if the seller fails to do so, the goods shall be deemed
to be at his risk during such transit. 59
(1) F.A.S. Sales
Under such arrangement, the seller pays all charges and is
subject to risk until the goods are placed alongside the vessel.60
In other words, delivery of the goods alongside the vessel
completes the effect of tradition.
(2) F.O.B. Sales
In mercantile contracts of American origin, f.o.b. stands
for the words free on board, and under such arrangement
the seller shall bear all expenses until the goods are delivered,
depending on whether the goods are to be delivered f.o.b. at
the point of shipment or at the point of destination. 61 Under an
f.o.b., shipping point arrangement, delivery of the goods to the
carrier is equivalent to delivery to the buyer, and at that point the
risk of loss pertains to the buyer.
Under an f.o.b., destination arrangement, only when the
vessel has arrived at the point of destination would there be
delivery to the buyer and prior to that point in time, the risk of loss
over the subject matter of the sale will be borne by the seller.

(3) C.I.F. Sales


The letters c.i.f. found in British contracts stand for costs,
insurance, and freight; they signify that the price fi xed covers
not only the costs of the goods, but the expense of freight and
insurance to be paid by the seller. 62 Under that arrangement, the
amount quoted by the seller and agreed to by the buyer, covers
not only the cost of the merchandise (i.e., the price), but also the
cost of insurance and freight. There are two schools of thought
on the effect of delivery under c.i.f. sales.
Under the fi rst school of thought, since in a c.i.f. arrangement,
the costs of insurance and freight are ultimately to be borne by the
buyer, as part of the price he has obligated himself to pay, then
it would mean that the carrier acts as an agent of the buyer who
pays the freight, and therefore delivery to the carrier is delivery
to the buyer. In addition, since the insurance over the goods
shipped is for the account of the buyer, then clearly the buyer has
obtained ownership over the goods during the shipment period
since this is required under the insurance law for the buyer to
have insurable interest.
The other school of thought provides that in quoting a c.i.f.
price, that means that both parties agree that the seller takes on
the responsibility of insuring the goods and providing for their
shipment to the buyer, and for which responsibility he gets a
package price. Under such circumstances, delivery by the seller
of the goods to the carrier is not equivalent to delivery to the
buyer, and the seller must continue to bear the risk of loss during
the shipment period since this is an integral part of his obligation
under the agreed terms of the sale.
In the early case of Behn, Meyer & Co. v. Yangco, 63 where
the shipping terms were c.i.f., Manila on goods coming from
New York, the Court held that [I]f the contract be silent as to
the person or mode by which the goods are to be sent, delivery
by the vendor to a common carrier, in the usual and ordinary
course of business, transfers the property to the vendee.64 The
implication is clear therefore in Behn Meyer & Co. that a c.i.f.
arrangement signifi es that the price fi xed covers not only the
costs of the goods, but the expense of freight and insurance
to be paid by the seller, and therefore seller bears the risk of
loss during shipment. It held that [A] specifi cation in a contract
relative to the payment of freight can be taken to indicate the
intention of the parties in regard to the place of delivery. If the
buyer is to pay the freight, it is reasonable to suppose that he
does so because the goods become his at the point of shipment.

On the other hand, if the seller is to pay the freight, the inference is equally strong that the duty of the
seller is to have the goods
transported to their ultimate destination and that title to property
does not pass until the goods have reached their destination.65
Nevertheless, Behn, Meyer & Co. upheld the principle
that both of the terms c.i.f. and f.o.b. merely make rules of
presumption which yield to proof of contrary intention.66 The Court
then held that since in the instant case the c.i.f. arrangement
was accompanied with the word Manila which was the point of
destination, then this must be taken to mean that the contract
price, covering costs, insurance, and freight, signifi es that the
delivery was to be made at Manila.67
In Pacifi c Vegetable Oil Corp. v. Singzon, 68 the Court held
that under an arrangement c.i.f. Pacifi c Coast (the point of
destination), the vendor is to pay not only the cost of the goods,
but also the freight and insurance expenses, and, as it was
judicially interpreted, this is taken to indicate that the delivery is
to be made at the port of destination.
Behn, Meyer & Co. and Pacifi c Vegetable agree with the
second school of thought that since c.i.f. includes both insurance
and freight expenses to be paid by the seller, ordinarily therefore,
in a c.i.f. arrangement, the risk of loss for the account of the buyer
arises only when the vessel arrives at the point of destination.
On the other hand General Foods v. NACOCO, 69 upholds
the fi rst school of thought that [t]here is no question that under
an ordinary C.I.F. agreement, delivery to the buyer is complete
upon delivery of the goods to the carrier and tender of the
shipping and other documents required by the contract and the
insurance policy taken in the buyers behalf.70 General Foods
therefore holds that although it is the seller who may make the
arrangement for the insurance coverage and freightage of the
goods, he does this for the account and benefi t of the buyer, who
has agreed to pay for such amounts.
In General Foods, the price was quoted CIF New York
(the point of destination), and although the Court did not place
signifi cance on the indication of New York it held that [t]here is
equally no question that the parties may, by express stipulation
or impliedly (by making the buyers obligation depend on arrival
and inspection of the goods), modify a CIF contract and throw
the risk upon the seller until arrival in the port of destination.71
The Court took into consideration that the price agreed upon was
to be based on net landed weights and it held that delivery by
the seller to the carrier in Manila of the goods covered was not
delivery to the buyer, and the risk of loss of the goods during the

voyage was to be borne by the seller.


The lesson learned from all of these is that the shipping
arrangements in a sale create, by commercial usage, certain
presumptive effects; however, such presumptive effects must
give away, rather easily, to any stipulation or even intimation
to the contrary. The courts have therefore tended to look at
other stipulations or indications in the agreement to fi nd the
true intentions of the parties as to the transfer of the risk of
loss before they would apply the presumptive effects of such
acronyms. EFFECTS AND COMPLETENESS OF DELIVERY
For tradition to produce the twin legal consequences of
transferring ownership to the buyer and effecting the fulfi llment
of the primary obligations of the seller, two principles must apply,
namely:
(a) Delivery must be made pursuant to a valid
sale; and
(b) Delivery must be effected when seller has
ownership over the subject matter of sale
so delivered.
a. Delivery Must Be Made Pursuant to a Valid Sale
Since tradition takes effect in the consummation stage of
sale, it presupposes that there has been a valid passage through
perfection stage that has given rise to a valid and binding sale
that is capable of performance. Consequently, delivery would
produce the effect of transferring ownership to the buyer only
when it is made pursuant to a valid sale.
When a sale is fi ctitious, and therefore void and inexistent,
as there was no consideration for the same, no title over the
subject matter of the sale can be conveyed. Nemo potest nisi
quod de jure potest No man can do anything except what he
can do lawfully. 72
b. Delivery Must Be Made By Seller Who Has
Ownership over the Subject Matter
Likewise, delivery would produce the effect of transferring
ownership only if at the time of delivery the seller still had
ownership over the subject matter. This stems from the principle
that no man can dispose of that which does not belong to him.
(Nemo dat quod non habet.)73
c. To Whom Delivery Must Be Made
Lagoon v. Hooven Comalco Industries, Inc., 74 held that
where it is stipulated that deliveries must be made to the buyer
or his duly authorized representative named in the contracts, the
seller is bound to deliver in such manner only, unless the buyer
specifi cally designated someone to receive delivery d. When Buyer Refuses to Accept

Since delivery of the subject matter of the sale is an


obligation on the part of the seller, the acceptance thereof by
the buyer is not a condition for the completeness of delivery. 75
Even with such refusal of acceptance, delivery, whether actual
or constructive, will produce its legal effects, as, for example,
transferring the risk of loss of the subject matter to the buyer who
has become the owner thereof.
Under Article 1588 of the Civil Code, when the buyers
refusal to accept the goods is without just cause, the title thereto
passes to him from the moment they are placed at his disposal.
However, even under such circumstances, the seller is still
legally obliged to take certain steps as not to be held liable for
consequent loss or damage to the goods.
1. Rules on Effects of Delivery for Movables
Article 1522 of the Civil Code provides the rules on the
delivery of goods
(a) Where the seller delivers to the buyer
a quantity of goods less than what he
contracted to sell, the buyer may reject
them; but if the buyer accepts or retains the
goods so delivered, knowing that the seller
is not going to perform the contract in full,
he must pay for them at the contract rate;
(b) If, however, the buyer has used or disposed
of the goods delivered before he knows that
the seller is not going to perform his contract
in full, the buyer shall not be liable for more
than the fair value to him of the goods so
received;
(c) Where the seller delivers to the buyer
a quantity of goods larger than what he
contracted to sell, the buyer may accept the goods covered in the contract and reject the
rest; if the buyer accepts the whole of the
goods so delivered he must pay for them
at the contract rate; if the subject matter is
indivisible, the buyer may reject the whole
of the goods; or
(d) Where the seller delivers to the buyer the
goods contracted but mixed with goods of a
different description, the buyer may accept
the contracted goods and reject the rest; if
the subject matter is indivisible, the buyer
may reject the goods entirely.
a. When Goods Held by Third Party

Where the goods at the time of sale are in the possession of


a third person, the seller has not fulfi lled his obligation to deliver
to the buyer unless and until such third person acknowledges to
the buyer that he holds the goods on the buyers behalf. 76
b. Reservation of Ownership
Despite delivery, ownership will not transfer to the buyer in
case of express reservation, such as when the parties stipulate
that ownership will not transfer until the purchase price is fully
paid, 77 or until certain conditions are fulfi lled. 78
Article 1503 of the Civil Code gives the following instances
when there is an implied reservation of ownership:
(a) Where goods are shipped, and by the bill of
lading the goods are deliverable to the seller
or his agent, the seller thereby reserves the
ownership in the goods.
But, if except from the form of the bill of
lading, ownership would have passed to the
buyer on shipment of the goods, the sellers property in the goods shall be deemed to be
only for purpose of securing performance of
the buyers obligations, in which case the
buyer bears the risk of loss;
(b) Where goods are shipped, and by the bill of
lading the goods are deliverable to the order
of the buyer or of his agent, but possession
of the bill of lading is retained by the seller or
his agent, the seller thereby reserves a right
to the possession of the goods as against
the buyer, and ownership is still transferred
to the buyer;
(c) Where the seller of goods draws on the
buyer for the price and transmits the bill of
exchange and bill of lading together to the
buyer to secure acceptance or payment of
the bill of exchange, the buyer is bound to
return the bill of lading if he does not honor
the bill of exchange, and if he wrongfully
retains the bill of lading he acquires no
added right thereby.
In the last case, however, if the bill of lading provides
that the goods are deliverable to the buyer or to the order of
the person named therein, one who purchases in good faith
for value the bill of lading, or goods from the buyer will obtain
the ownership in the goods, although the bill of exchange has
not been honored, provided that such purchaser has received

delivery of the bill of lading endorsed by the consignee named


therein, or of the goods, without notice of the facts making the
transfer wrongful. 79
c. Obligation as to Accessories and Accessions
In the sale of movables, in addition to the obligation of the
seller to deliver the accessories and accessions in the condition
in which they were upon the perfection of the contract, 80 the seller must deliver to the buyer a quantity of
goods that should not be
less than what he contracted to sell, otherwise the buyer may
reject them. 81
d. Sale in Mass of Movables
The sale of movables under Article 1522 of the NCC,
should be distinguished from the sale of specifi c mass under
Article 1480 which provides for the sale of fungible things, made
independently and for a single price, or without consideration of
their weight, number, or measure.
In Gaite v. Fonacier, 82 which involved the sale of iron ore,
it was held that if there is no provision in the contract for the
measuring or weighing of the fungible movables sold in order to
complete or perfect the sale, nor is the price agreed upon by the
parties to be based upon such measurement, then the subject
matter of the sale is, therefore, a determinate object, the mass,
and not the actual number of units or tons contained therein, so
that all that was required of the seller Gaite was to deliver in good
faith to his buyer all of the ore found in the mass, notwithstanding
that the quantity delivered is less than the amount estimated by
them.83
e. Sale by Description and/or Sample
In a sale of goods by description or sample, the sale may
be rescinded if the bulk of the goods delivered do not correspond
with the description or the sample, and if the contract be by
sample as well as by description, it is not suffi cient that the bulk of
goods correspond with the sample if they do not also correspond
with the description. 84 By their very nature, sales of goods by
sample and/or description, should allow the buyer a reasonable
opportunity of inspection or of comparing the bulk with the sample
or the description before accepting their delivery.
Mendoza v. David, 86 held that there is sale by sample when
a small quantity is exhibited by the seller as a fair specimen of the
bulk, which is not present and there is no opportunity to inspect
or examine the same, thus: To constitute a sale by sample, it
must appear that the parties treated the sample as the standard
of quality and that they contracted with reference to the sample

with the understanding that the product to be delivered would


correspond with the sample.87
Mendoza described a sale of goods by description as one
where a seller sells things as being of a particular kind, the buyer
not knowing whether the sellers representations are true or false,
but relying on them as true; or as otherwise stated, where the
buyer has not seen the article sold and relies on the description
given to him by the seller, or has seen the goods, but the want of
identity is not apparent on inspection. 88
The Court in Mendoza also held that the term sale by
sample does not include an agreement to manufacture goods
to correspond with the pattern, especially where in that case
the three sets of furniture were manufactured according to the
specifi cations provided by the buyer, and not in accordance with
the replicas displayed in the sellers shop.
Engel v. Mariano Velasco & Co., 89 held that even in sales
by description and/or sample, the purchaser will not be released
from his obligation to accept and pay for the goods by deviations
on the part of the seller from the exact terms of the contract, if
the purchaser had acquiesced to such deviations after due notice
thereof.
Pacifi c Commercial Co. v. Ermita Market & Cold Stores, 90
held that when the machine delivered by the seller is in accordance
with the description stated in the sales contract, the buyer cannot
refuse to pay the balance of the purchase price and the cost of
installation even if it proves that the machine cannot be used satisfactorily for the purposes for which he
bought it when such
purpose was not made known to the seller.
f. On Sale or Return
Under Article 1502 of the NCC, when goods are delivered to
the buyer on sale or return to give the buyer an option to return
the goods instead of paying the price, the ownership passes to
the buyer on delivery, but he may revest the ownership in the
seller by returning or tendering the goods within the time fi xed
in the contract, or, if no time has been fi xed, within a reasonable
time.
g. Sale on Approval, Trial, Satisfaction, or Acceptance
On the other hand, Article 1502 provides that when goods
are delivered to the buyer on approval or on trial or on satisfaction, or other similar terms, the ownership
therein passes to the
buyer only: (a) when he signifi es his approval or acceptance to
the seller or does any other act adopting the transaction; or (b)
if the buyer does not signify his approval or acceptance, but retains the goods without giving notice of
rejection, then if a time

has been fi xed for the return of the goods, on the expiration of
such time, and, if no time has been fi xed, on the expiration of a
reasonable time.
Vallarta v. Court of Appeals, 91 held that when the sale of a
movable is sale on acceptance, no ownership could have been
transferred to the buyer although he took possession thereof,
because [d]elivery, or tradition, as a mode of acquiring ownership
must be in consequence of a contract ..., e.g., sale,92 and in that
case there was as yet no contract when delivery was effected.
h. Form of Such Special Sales
Industrial Textile Manufacturing Co. v. LPJ Enterprises,
Inc., 93 held that for a sale to be considered and construed as a
sale or return or a sale on approval, there must be a clear agreement to either of such effect,
otherwise, the provisions of
Article 1502 of the Civil Code governing such sales cannot be
invoked by either party to the contract, and therefore must be in
writing, and cannot be proved by parol evidence:
... The provision in the Uniform Sales Act and the
Uniform Commercial Code from which Article 1502 was
taken, clearly requires an express written agreement
to make a sales contract either a sale or return or a
sale on approval. Parol or extrinsic testimony could
not be admitted for the purpose of showing that an
invoice or bill of sale that was complete in every aspect
and purporting to embody a sale without condition or
restriction constituted a contract of sale or return. If the
purchaser desired to incorporate a stipulation securing
to him the right to return, he should have done so at
the time the contract was made. On the other hand,
the buyer cannot accept part and reject the rest of the
goods since this falls outside the normal intent of the
parties in the on approval situation. 94

i. Written Proof of Delivery


Lao v. Court of Appeals, 95 confi rmed that in case of goods,
delivery is generally evidenced by a written acknowledgment of a
person that he has actually received the thing or the goods, as in
delivery receipts, under the following rules:
(a) A bill of lading cannot substitute for a
delivery receipt, because it is a written
acknowledgment of receipt of the goods by
the carrier and an agreement to transport
and deliver them at a specifi c place to a
person named or upon his order; it does
not evidence receipt of the goods by the
consignee or the person named in the bill of
lading; and

(b) A factory consignment invoice is not


evidence of actual delivery of the goods
since in the invoice nothing more than a
detailed statement of the nature, quantity
and cost of the thing sold, and it not proof
that the thing or goods were actually
delivered to the buyer or the consignee.
j. Time and Place of Delivery
Whether it is for the buyer to take possession of the goods
or for the seller to send them to the buyer is a question depending
in each case on the contract, express or implied, between the
parties. Apart from such contract, express or implied, or usage
of trade to the contrary, the place of delivery is sellers place of
business, if he has one, and if not, his residence. 96 In case of a
sale of specifi c goods, which to the knowledge of the parties when
the contract or the sale was made were in some other place, then
that place is the place of delivery. 97
Where by a sale the seller is bound to send the goods to the
buyer, but no time for sending them is fi xed, the seller is bound to
send them within a reasonable time. 98
Demand or tender of delivery may be treated as ineffectual
unless made at a reasonable hour; and what may be a reasonable
hour is a question of fact. 99
k. Seller Shall Pay Expenses of Delivery
Unless otherwise agreed, the expenses in putting the goods
into a deliverable state must be borne by the seller. 100
2. Rules on Effects of Delivery for Immovables
The following rules to determine completeness of delivery
shall apply when the subject matter of the sale is an immovable:
a. Where Immovables Sold Per Unit or Number
If the sale of real estate should be made with a statement
of its area, at the rate of a certain price for a unit of measure or
number, the seller is obliged to deliver to the buyer, if the latter
should demand it, all that may have been stated in the contract.
If this should not be possible, the buyer may choose between
a proportional reduction of the price, or the rescission of the
contract when in the latter case, the lack of area be not less than
one-tenth (1/10) of that stated. 101
In Rudolf Lietz, Inc. v. Court of Appeals, 102 it was held that
the statement of the area of the immovable is not conclusive and
the price may be reduced or increased depending on the area
actually delivered.
The rule applies, even when the area is the same, if any part

of the immovable is not of the quality specifi ed in the contract;


provided that rescission may take place when the inferior value
of the thing sold exceeds one-tenth (1/10) of the price agreed
upon. 103
Even when the smaller area or inferiority of quality does
not conform to the minimum amount or value provided by law
to allow rescission on the part of the buyer, nevertheless, if the
buyer would not have bought the immovable had he known of its
smaller area or inferior quality, he may rescind the sale. 104
On the other hand, if there is a greater area or number in
the immovable than that stated in the contract, the buyer may
accept the area included in the contract and reject the rest. If
he accepts the whole area, he must pay for the same at the
contract rate. 105
The foregoing rules also apply to judicial sales
b. Where Immovables Sold for a Lump Sum
In the sale of real estate made for a lump sum and not at
the rate of a certain sum for a unit of measure or number, there
shall be no increase or decrease of the price, although there
be a greater or lesser area or number than that stated in the
contract, 107 especially with the use of qualifying words of more
or less in describing the area. 108
The same rule applies when two or more immovables are
sold for a single price; but if, besides mentioning the boundaries
which is indispensable in every conveyance of real estate,
its area or number should be designated in the contract, the
vendor shall be bound to deliver all that is included within said
boundaries, even when it exceeds the area or number specifi ed
in the contract; and, should he not be able to do so, he shall
suffer a reduction in the price, in proportion to what is lacking in
the area or number, unless the contract is rescinded because
the buyer does not accede to the failure to deliver what has been
stipulated. 109
Nevertheless, in both Asiain v. Jalandoni, 110 and Roble v.
Arbasa, 111 the Court held that although under Article 1542, in
the sale of real estate by lump sum, there shall be no increase
or decrease of the price although there be a greater or lesser
area or number than that stated in the contract, the rule admits
of exception because the sale of land under description more
or less or similar words in designating quantity covers only a
reasonable excess or defi ciency.112 In Roble, the Court held that
a defi ciency or excess of 644 square meters is not reasonable.

The exception to this rule is when expressly the buyer assumes


the risk on the actual area of the land bought.
c. Lump Sum Sale versus Sale by Unit
of Measure or Number
Santa Ana v. Hernandez, 114 clarifi ed the governing rule in
the sale of real property, whether to treat it as a lump-sum sale
or a sale per unit of measure or number. In that case, the sellersspouses sold to the buyer two separate
portions of a much
bigger land indicating in the instrument the total purchase price
and the areas of each of the sold portions totaling 17,000 square
meters, plus an indication of the boundaries. Subsequently, the
buyer refused to vacate the areas occupied by her which were
in excess of 17,000 square meters but which she alleged where
within the boundaries described in the instrument.
In affi rming that the contract between the parties was a
lump-sum sale, and therefore the buyer was entitled to occupy
all portions within the boundaries stated in the instrument,
even if they exceed 17,000 square meters, the Court held that
the sale made was of a defi nite and identifi ed tract, a corpus
certum, that obligated the vendors to deliver to the buyer all the
land within the boundaries, irrespective of whether its real area
should be greater or smaller than what is recited in the deed. ...
To hold the buyer to no more than the area recited on the deed,
it must be made clear therein that the sale was made by unit of
measure at a defi nite price for each unit.115
The Court also held that [i]f the defendant intended to
buy by the meters he should have so stated in the contract.
Also, based on the ruling of the Supreme Court of Spain, in
construing Article 1471 of the Spanish Civil Code, which was
copied verbatim in Article 1542 of our Civil Code, the Court
held that it is highly persuasive that as between the absence
of a recital of a given price per unit of measurement, and the
specifi cation of the total area sold, the former must prevail and
determines the applicability of the norms concerning sales for
a lump sum. 116 In short, Santa Ana provides that if the price per
unit of measure or number is not expressly provided for in the contract, the rules of lump sum sale shall
prevail in the sale of
real property.
Balantakbo v. Court of Appeals, 117 reiterated that the rule is
quite well-settled that what really defi nes a piece of land is not
the area calculated with more or less certainty mentioned in the
description but the boundaries therein laid down as enclosing the
land and indicating its limits: where the land is sold for a lump sum

and not so much per unit of measure or number, the boundaries


of the land stated in the contract determine the effects and scope
of the sale not the area thereof. 118
In Esguerra v. Trinidad, 119 the Court held
Under Article 1542, what is controlling is the entire
land included within the boundaries, regardless of
whether the real area should be greater or smaller than
that recited in the deed. This is particularly true since
the are of the land ... was described in the deed as
humigit kumulang, that is, more or less. A caveat is
in order, however, the use of more or less or similar
words in designating quantify covers only a reasonable
excess or defi ciency. A vendee of land sold in gross
or with the description more or less with reference
to its area does not thereby ipso facto take all risks of
quantity in the land. Numerical data are not of course
the sole gauge of unreasonableness of the excess
of defi ciency in area. Courts must consider a host of
other factors, in one case (Roble v. Arbas, 362 SCRA
69 [2001]), the Court found substantial discrepancy in
area due to contemporaneous circumstance. Citing
change in the physical nature of the property, it was
therein established that the excess area at the southern
portion was a product of reclamation, which explained
why the lands technical description in the deed of
sale indicated the seashore as its southern boundary,
hence the inclusion of the reclaimed area was declared
unreasonable. The increase by a fourth of a fraction of the area indicated in the deed of sale cannot be
considered an unreasonable excess. 120

d. Where Immovables Sold in Mass


A judicial sale in mass of separate known lots or parcels will
not be set aside, unless it is made to appear that a larger sum
could have been realized from a sale in parcels or that a sale
of less than the whole would have been suffi cient to satisfy the
debt. 121
e. Expenses of Delivery and Registration
on Real Estate
As discussed in greater details in the appropriate chapters,
the rules pertaining to, and the effects of, tradition, whether actual
or constructive, vary greatly when the subject matter of a valid
sale is real property, especially so when it is registered land. This
is because of the rather peremptory effect of registration in good
faith as the operative act principle under the Torrens system
embodied in the Property Registration Decree, 122 and the priority
of registration in good faith to determine ownership preference in
double sales rules in Article 1544 of the Civil Code.

The Supreme Court held in 2003 in Chua v. Court of


Appeals, 123 that registration of the title of the buyer over the
purchased real estate is not an ingredient necessary for tradition
to have full effect, thus
The obligation of the seller is to transfer to the buyer
ownership of the thing sold. In the sale of real property,
the seller is not obligated to transfer in the name of the
buyer a new certifi cate of title, but rather to transfer
ownership of the real property. There is a difference
between transfer of the certifi cate of title in the name of
the buyer, and the transfer of ownership to the buyer. The
buyer may become the owner of the real property even
if the certifi cate of title is still registered in the name of the seller. As between the seller and buyer, ownership
is transferred not by issuance of a new certifi cate of
title in the name of the buyer but by the execution of the
instrument of sale in a public document. 124 x x x. The
recording of the sale with the proper Registry of Deeds
and the transfer of the certifi cate of title in the name of
the buyer are necessary only to bind third parties to
the transfer of ownership. As between the seller and
the buyer, the transfer of ownership takes effect upon
the execution of a public instrument conveying the real
estate. Registration of the sale with the Registry of
Deeds, or the issuance of a new certifi cate of title, does
not confer ownership on the buyer. Such registration
or issuance of a new certifi cate of title is not one of the
modes of acquiring ownership.

Chua also held that although the buyer of a parcel of land


has more interest in having the capital gains tax paid immediately
since this is a pre-requisite to the issuance of a new Torrens title
in his name, nevertheless, as far as the government is concerned,
the capital gains tax remains a liability of the seller since it is a
tax on the sellers gain from the sale of the real estate. The Court
also emphasized that the payment of the capital gains tax is not
a pre-requisite to the transfer of ownership to the buyer, and
that the transfer of ownership took effect upon the signing and
notarization of the deed of absolute sale.
Earlier, Jose Clavano, Inc. v. HLURB, 125 held that a judgment
on a sale that decrees the obligations of the seller to execute and
deliver the deed of absolute sale and the certifi cate of title, does
not necessarily include within its terms the obligation on the part
of the seller to pay for the expenses in notarizing the deed of sale
and in obtaining new certifi cate of title.
The ruling in Jose Clavano, Inc. is contrary to the Courts
subsequent ruling in Chua where the Court decreed the
obligations of the seller to deliver the documents necessary to

allow the buyer to be able to effect registration of his purchase.


In fact, Vive Eagle Land, Inc. v. Court of Appeals, 126
subsequently held that under Article 1487 of the Civil Code, the
expenses for the registration of the sale should be shouldered
by the seller unless there is a stipulation to the contrary; and that
under Article 1495, the seller is obliged to transfer title over the
property and deliver the same to the vendee. The ruling in Vive
Eagle Land is again in stark contrast to the Courts earlier ruling in
Chua that registration of the title of the buyer over the purchased
real estate is not an ingredient necessary for tradition to have full
effect, and therefore the seller is not obligated to transfer in the
name of the buyer a new certifi cate of title, but rather to transfer
ownership of the real property. There is a difference between
transfer of the certifi cate of title in the name of the buyer, and the
transfer of ownership to the buyer.