ROMERO V.
CA
G.R. No. 107207, 23 November 1995
PETITIONER: Virgilio R. Romero
RESPONDENTS: Court of Appeals and Enriqueta Chua Vda. De Ongsiong
Facts: Petitioner Romero is a civil engineer who decided to put up a central warehouse
in Manila. The spouses Flores offered the land of private respondent Ms. Ongsiong.
Since Romero wanted to buy the land, he agreed to advance an amount of P50,000.00
which would be used to eject the squatters in the area. As a result, a Deed of
Conditional Sale was executed between the parties. A complaint for ejectment was filed
but the decision ordering the squatters to vacate the property was rendered beyond the
agreed 60-day period stipulated in the contract. Ms. Ongsiong sought to return the
downpayment but Romero refused to accept the return and decided to take it upon
himself the ejectment of the squatters. Notwithstanding the offer, Ms. Ongsiong filed a
complaint to rescind the deed of conditional sale. The RTC dismissed the complaint.
The CA reversed the decision.
Issue: Whether vendor Ongsiong may unilaterally rescind the contract on the ground of
failure to perform her own obligation
Ruling: No, the vendor Ongsiong do not have the power or authority to rescind the
contract. According to Article 1911 of the Civil Code, the right of resolution of a party is
predicated on the breach of faith by the other party that violates the reciprocity between
them. Clearly, it is the injured party who has the option to rescind the contract.
Moreover, Article 1545 the injured party is given the option to either refuse to
proceed with the agreement or waive the condition. In this case, Romero has
waived the performance of the condition to free the property from squatters.
Facts: Petitioner Virgilio Romero is a civil engineer engaged in the business of
production, manufacture and exportation of perlite filter aids, permalite insulation and
processed perlite ore. In 1998, petitioner Romero and his foreign partners decided to
put up a central warehouse in Metro Manila. Alfonso Flores and his wife, accompanied
by a broker, offered a parcel of land located in Parañaque, Manila owned by the private
respondent Ongsiong.
The Flores spouses proposed to petitioner Romero that should he advance the amount
of P50,000.00 which could be used in taking up an ejectment case against the
squatters, private respondent Ongsiong would agree to sell the property for only
P800.00/sqm. Petitioner paid the P50,000.00 and consequently a contract denominated
“Deed of Conditional Sale” was executed between petitioner Romero and private
respondent Ongsiong.
The contract stated that the vendor agrees to sell the property to the vendee, subject to
the following conditions: a) P50,000 to be paid upon the execution of the contract; b) the
balance of the purchase price (P1,511,600) be paid 45 days after the removal of the
squatters; c) upon full payment, the deed of absolute sale will immediately be executed,
signed and delivered to the vendee; d) that if after 60 days from the date of the
execution of the contract the vendor shall fail to remove the squatters, the
downpayment shall be returned to the vendee; and e) that failure to pay the purchase
price after 45 days from the notification of the removal of the squatters, the
downpayment of P50,000 shall be forfeited in favor of the vendor.
Private respondent Ongsiong filed a complaint for ejectment against the squatter
families and the MTC rendered a judgement ordering the squatters to vacate the
premises. Since the decision was rendered beyond the 60 day period stipulated in the
contract, private respondent Ongsiong sent a letter seeking to return the P50,000.00
since she could not “get rid of the squatters”. Petitioner, in his reply through his counsel,
proposed to take it upon himself to eject the squatters provided that the expenses
incurred shall be chargeable to the purchase price of the land.
According to Atty. Yuseco, counsel of private respondent, the Deed of Conditional Sale
had been rendered null and void due to Ongsiong’s failure to evict the squatters within
the agreed 60-day period and added that private respondent decided to retain the
property. Atty. Apostol, counsel for petitioner, sent a letter to Ms. Ongsiong demanding
that the absolute Deed of Sale be executed and explaining that the contract of sale
between the parties was perfected and that it does not grant her the option to rescind
the contract and to retain the property should she fail to comply with her obligation, and
such power to rescind is granted to the petitioner or vendee.
Due to the continued refusal of Romero to accept the return of the downpayment, Ms.
Ongsiong filed with the RTC for the rescission of the deed of “conditional” sale which
the RTC dismissed on the ground that Ms. Onsiong had no right to rescind the contract
since it was her who violated her obligation to eject the squatters and that she is not the
injured party. The CA opined that the contract was subject to a resolutory condition of
the ejectment of the squatters, the non-occurrence of which resulted in the failure of the
object of the contract and that it was Romero who was not ready to pay the purchase
price after Ms. Ongsiong substantially complied with her obligation.
Issue: Whether the vendor Ms. Ongsiong may demand the rescission of the contract for
a cause traceable to his own failure to fulfill his obligation - NO
Ruling: In contracts of sale particularly, Article 1545 of the Civil Code, allows the
obligee to choose between proceeding with the agreement of waiving the performance
of the condition
The term "condition" in the context of a perfected contract of sale pertains, in reality, to
the compliance by one party of an undertaking the fulfillment of which would beckon, in
turn, the demandability of the reciprocal prestation of the other party. The reciprocal
obligations referred to would normally be, in the case of vendee, the payment of the
agreed purchase price and, in the case of the vendor, the fulfillment of certain express
warranties (which, in the case at bench is the timely eviction of the squatters on the
property).
From the moment the contract is perfected, the parties are bound not only to the
fulfillment of what has been expressly stipulated but also to all the consequences which,
according to their nature, may be in keeping with good faith, usage and law. Under the
agreement, private respondent is obligated to evict the squatters on the property. The
ejectment of the squatters is a condition the operative act of which sets into motion the
period of compliance by petitioner of his own obligation, i.e., to pay the balance of the
purchase price. Private respondent's failure "to remove the squatters from the property"
within the stipulated period gives petitioner the right to either refuse to proceed with the
agreement or waive that condition in consonance with Article 1545 of the Civil Code.
This option clearly belongs to petitioner and not to private respondent. Evidently,
Romero has waived the performance of the condition to free the property from
squatters.
Similarly, under Article 1911, the right of resolution of a party is predicated on the
breach of faith by the other party that violates the reciprocity between them. It is private
respondent who has failed in her obligation under the contract. Petitioner did not breach
the agreement. He has agreed, in fact, to shoulder the expenses of the execution of the
judgment in the ejectment case and to make arrangements with the sheriff to effect
such execution. Since Ms. Ongsiong is not the injured party, the action for rescission is
not warranted.
Wherefore, the decision of the CA is reversed and set aside and another is entered
ordering petitioner to pay private respondent the balance of the purchase price and the
latter to execute the deed of absolute sale in favor of petitioner.
BABASA vs. Court of Appeals
G.R. No. 124045 May 21, 1998
Facts: The Babasa spouses (vendor) entered into a contract of “conditiona sale of registered
lands” with Tabangao Realty (vendee) over 3 parcels of land in Batangas City for P2M, P300K
as downpayment.
It was agreed that the balance of the purchase price shall be paid by Tabangao upon
presentation by the Babasas of transfer certificates of titles in their name in favor of Tabangao
within twenty (20) months from the signing of the contract.
Consequently, Tabangao leased the parcels of land to Shell. Shell immediately started the
construction thereon of a Liquefied Petroleum Gas Terminal Project, an approved zone export
enterprise of the Export Processing Zone.
Two days prior to the expiration of the 20-month period, specifically on 31 December 1982, the
Babasas asked Tabangao for an indefinite extension within which to deliver clean titles over the
lots. Because Tabangao did not want to pay the montly interests.
The Babasa spouses executed a notarized unilateral rescission dated 28 February 1983 to
which TABANGAO responded by reminding the BABASAS that they were the ones who did not
comply with their contractual obligation to deliver clean titles within the stipulated 20-month
period, hence, had no right to rescind their contract. The BABASAS insisted on the unilateral
rescission and demanded that SHELL vacate the lots. The Babasas put up structures to to
impede the movements of persons and vehicles in the lot.
Babasa’s contention:
Their contract with Tabangao became null and void with the expiration of the 20-month period
given them within which to deliver clean certificates of title. The contract was a lease contract,
not of sale. Even assuming that it was indeed a sale, its nature was conditional only, the efficacy
of which was extinguished upon the non-happening of the condition (non-delivery of clean
certificates of title w/in 20 mos).
Issues:
1.WON the contract was a lease contract? NO, It was a CONTRACT OF SALE.
2. WON the Babasas have the right to rescind the contract on the premise that they have not
complied with their obligation to deliver the titles to Tabangao (thus making such contract null
and void)? NO
Held:
1. The contract is laden with terms and stipulations clearly indicative of a contract of sale.
The parties desire and mutually “agreed on the sale and purchase of the three parcels of
land”. There was a “vendors” and a “vendee”, not lessor and lessee. In fact, Tabangao
was granted absolute and unconditional right to take immediate possession of the
premises. Even if there was no word “ownership” mentioned in the contract, it does not
mean that the contract was one of lease. It is too late for petitioners to insist that the
contract is not what they intended it to be.
Even if it was titled as a contract of conditional sale, it is one of absolute sale. There is
absolutely no proviso reserving title to the Babasas until full payment of the purchase price, nor
any stipulation giving them the right to unilaterally rescind the contract in case of non-payment.
A deed of sale is absolute in nature although denominated a “conditional sale” absent such
stipulations. In such cases, ownership of the thing sold passes to the vendee upon the
constructive or actual delivery thereof. Constructive delivery was accomplished upon the
execution of the contract without any reservation to the Babasas. Actual delivery was made
when Tabangao took unconditional possession of the lots and leased them to Shell.
2. Babasa’s act of unilaterally rescinding their contract with Tabangao was improper. In
fact, it should Tabangao who has the right to rescind the contract on account of
Babasa’s failure to do its obligation to deliver clean certificates of title. Besides, it would
be the height of inequity to allow the BABASAS to rescind their contract of sale with
TABANGAO by invoking as a ground therefor their own failure to deliver the titles over
the lots within the stipulated period.
A condition imposed to perfect a contract is different from a condition imposed for the
performance of an obligation. The non-fulfillment of a condition to perfect a contract result in the
failure of a contract. The failure to comply with the conditions imposed for a performance of a
contract merely gives the other party (Tabangao) the option to either refuse to proceed with the
sale or to waive the condition.
090 Power Commercial and Industrial Corp. v. CA, supra
GR 119745, June 20, 1997
Topic: Implied warranties; warranty against eviction
FACTS:
1. Petitioner Power Commercial & Industrial Development Corporation (PowerCom), an industrial asbestos
manufacturer, needed a bigger office space and warehouse for its products.
2. January 31, 1979: Petitioner PowerCom entered into a contract of sale with the respondent spouses
Reynaldo and Angelita R. Quiambao—involving a 612-sq. m. parcel of land in San Antonio Village,
Makati City
3. The parties agreed that petitioner PowerCom would pay private respondents spouses Quiambao
P108,000.00 as down payment, and the balance of P295,000.00 upon the execution of the deed of transfer
of the title. Further, petitioner assumed, as part of the purchase price, the existing mortgage on the land.
In full satisfaction thereof, he paid P79,145.77 to respondent PNB
4. June 1, 1979: respondent spouses mortgaged again said land to PNB to guarantee a loan of
P145,000.00… P80,000.00 of which was paid to respondent spouses. Petitioner PowerCom agreed to
assume payment of the loan.
5. June 26, 1979: the parties executed a Deed of Absolute Sale With Assumption of Mortgage. On the
same date, Mrs. C.D. Constantino, then General Manager of PowerCom, submitted to PNB said deed
with a formal application for assumption of mortgage
6. February 15, 1980: PNB informed respondent spouses that, for petitioner’s failure to submit the papers
necessary for approval pursuant to the former’s letter dated January 15, 1980, the application for
assumption of mortgage was considered withdrawn; that the outstanding balance of P145,000.00 was
deemed fully due and demandable; and that said loan was to be paid in full within fifteen (15) days from
notice
7. Petitioner PowerCom paid PNB P41,880.45 on June 24, 1980 and P20,283.14 on December 23, 1980,
payments which were to be applied to the outstanding loan.
8. On March 17, 1982, petitioner filed Civil Case No. 45217 against respondent spouses for rescission and
damages
9. Petitioner demanded the return of the payments it made on the ground that its assumption of mortgage
was never approved
10. May 31, 1983: while this case was pending, the mortgage was foreclosed. The property was
subsequently bought by PNB during the public auction
11. TC: ruled that the failure of respondent spouses to deliver actual possession to petitioner entitled the
latter to rescind the sale, and in view of such failure and of the denial of the latter’s assumption of
mortgage, PNB was obliged to return the payments made by the latter
12. CA: reversed the trial court. it held that the deed of sale between respondent spouses and petitioner did
not obligate the former to eject the lessees from the land in question as a condition of the sale, nor was
the occupation thereof by said lessees a violation of the warranty against eviction. Hence, there was no
substantial breach to justify the rescission of said contract or the return of the payments made
13. Petitioner contends:
there was a substantial breach of the contract between the parties warranting rescission
CA gravely erred in failing to consider in its decision that a breach of implied warranty under Article
1547 in relation to Article 1545 of the Civil Code applies in the case-at-bar.
ISSUE:
1. WON the alleged “failure” of respondent spouses to eject the lessees from the lot in question
and to deliver actual and physical possession can be considered a substantial breach of
condition
2. WON there was a substantial breach of the contract between the parties warranting rescission
HELD:
1. No.
2. No. It is petitioner’s failure to establish any breach of the warranty against eviction. Despite its
protestation that its acquisition of the lot was to enable it to set up a warehouse for its asbestos
products and that failure to deliver actual possession thereof defeated this purpose, still no breach of
warranty against eviction can be appreciated because the facts of the case do not show that the
requisites for such breach have been satisfied.
RATIO:
The deed of sale provides: ““We hereby also warrant that we are the lawful and absolute owners of the
above described property, free from any lien and/or encumbrance, and we hereby agree and warrant to
defend its title and peaceful possession thereof in favor of the said Power Commercial and Industrial
Development Corporation, its successors and assigns, against any claims whatsoever of any and all third
persons; subject, however, to the provisions hereunder provided to wit:”
1. The alleged “failure” of respondent spouses to eject the lessees from the lot in question and to deliver
actual and physical possession thereof cannot be considered a substantial breach of a condition for two
reasons: first, such “failure” was not stipulated as a condition -- whether resolutory or suspensive -- in
the contract; and second, its effects and consequences were not specified either. The provision adverted
to by petitioner does not impose a condition or an obligation to eject the lessees from the lot.
If the parties intended to impose on respondent spouses the obligation to eject the tenants from
the lot sold, it should have included in the contract a provision similar to that referred to in
Romero vs. Court of Appeals, where the ejectment of the occupants of the lot sold by private
respondent was the operative act which set into motion the period of petitioner’s compliance
with his own obligation, i.e., to pay the balance of the purchase price. In the case cited, the
contract specifically stipulated that the ejectment was a condition to be fulfilled; otherwise, the
obligation to pay the balance would not arise. This is not so in the case at bar.
Absent a stipulation therefor, we cannot say that the parties intended to make its nonfulfillment a ground
for rescission. If they did intend this, their contract should have expressly stipulated so.
2. Requisites of Breach of Warranty Against Eviction: A breach of this warranty requires the concurrence of
the following circumstances:
(a) The purchaser has been deprived of the whole or part of the thing sold;
(b) This eviction is by a final judgment;
(c) The basis thereof is by virtue of a right prior to the sale made by the vendor; and
(d) The vendor has been summoned and made co-defendant in the suit for eviction at the instance of the
vendee.
In the absence of these requisites, a breach of the warranty against eviction under Article 1547 cannot
be declared.
As correctly pointed out by CA, the presence of lessees does not constitute an encumbrance of the land,
nor does it deprive petitioner of its control thereof.
We note, however, that petitioner’s deprivation of ownership and control finally occurred when it failed
and/or discontinued paying the amortizations on the mortgage, causing the lot to be foreclosed and sold at
public auction. But this deprivation is due to petitioner’s fault, and not to any act attributable to the
vendor-spouses.
DOCTRINE
Requisites of Breach of Warranty Against Eviction: A breach of this warranty requires the concurrence of the
following circumstances:
(a) The purchaser has been deprived of the whole or part of the thing sold;
(b) This eviction is by a final judgment;
(c) The basis thereof is by virtue of a right prior to the sale made by the vendor; and
(d) The vendor has been summoned and made co-defendant in the suit for eviction at the instance of the
vendee.
Babasa vs. CA
Under a “car-swapping” scheme, Bruno Soledad sold his Mitsubishi GSR sedan 1982 model to
Jaime Ang. For his part, Ang conveyed to Soledad his Mitsubishi Lancer model 1988. Ang, a
buyer and seller of used vehicles, later offered the Mitsubishi GSR for sale through Far Eastern
Motors, a second-hand auto display center. The vehicle was eventually sold to Paul Bugash.
Before the deed could be registered in Bugash‘s name, however, the vehicle was seized by
virtue of a writ of replevin on account of the alleged failure of Ronaldo Panes, the owner of the
vehicle prior to Soledad, to pay the mortgage debt constituted thereon.
To secure the release of the vehicle, Ang paid BA Finance. Soledad refused to reimburse,
despite repeated demands, drawing Ang to charge him for Estafa with abuse of confidence. By
Resolution, the City Prosecutor‘s Office dismissed the complaint for insufficiency of evidence,
drawing Ang to file for consecutive complaints for damages against Soledad before the
Regional Trial Court (RTC) of Cebu City. Subsequently, the RTC rendered judgment in favor of
Ang “for the sake of justice and equity, and in consonance with the salutary principle of non-
enrichment at another‘s expense. The RTC then ordered Soledad to pay Ang the amount the
latter paid to BA Finance.
Soledad then appealed to the Appellate Court, which reverses the decision of the RTC. The
Court of Appeals dismissed Ang‘s petition on the ground that the filing of said complaint seeking
the awarding of damages for breach of warranty has already prescribed.
Hence, this petition to the High Court.
ISSUE:
1) Whether or not Ang‘s cause of action had not yet prescribed when he filed the complaint
2) Whether or not Ang can recover from Soledad the amount he paid BA Finance on account of
the mortgage debt - NO
HELD:
First Issue
The resolution of the sole issue of whether the complaint had prescribed hinges on a
determination of what kind of warranty is provided in the Deed of Absolute Sale subject of the
present case.
A warranty is a statement or representation made by the seller of goods, contemporaneously
and as part of the contract of sale, having reference to the character, quality or title of the
goods, and by which he promises or undertakes to insure that certain facts are or shall be as he
then represents them. Warranties by the seller may be express or implied. Art. 1546 of the Civil
Code defines express warranty – Any affirmation of fact or any promise by the seller relating to
the thing is an express warranty if the natural tendency of such affirmation or promise is to
induce the buyer to purchase the same, and if the buyer purchases the thing relying thereon. On
the other hand, an implied warranty is that which the law derives by application or inference
from the nature of the transaction or the relative situation or circumstances of the parties,
irrespective of any intention of the seller to create it.
The ruling in Engineering & Machinery Corporation vs. Court of Appeals states that “the
prescriptive period for instituting actions based on a breach of express warranty is that specified
in the contract, and in the absence of such period, the general rule on rescission of contract,
which is four years (Article 1389, Civil Code).”
As for actions based on breach of implied warranty, the prescriptive period is, under Art. 1571
(warranty against hidden defects of or encumbrances upon the thing sold) and Art. 1548
(warranty against eviction), six months from the date of delivery of the thing sold.
In declaring that he owned and had clean title to the vehicle at the time the Deed of Absolute
Sale was forged, Soledad gave an implied warranty of title. In pledging that he “will defend the
same from all claims or any claim whatsoever and will save the vendee from any suit by the
government of the Republic of the Philippines,” Soledad gave a warranty against eviction.
Given Ang‘s business of buying and selling used vehicles, he could not have merely relied on
Soledad‘s affirmation that the car was free from liens and encumbrances. He was expected to
have thoroughly verified the car‘s registration and related documents.
Since what Soledad, as seller, gave was an implied warranty, the prescriptive period to file a
breach thereof is six months after the delivery of the vehicle, following Art. 1571. But even if the
date of filing of the action is reckoned from the date petitioner instituted his first complaint for
damages on November 9, 1993, and not on July 15, 1996 when he filed the complaint subject of
the present petition, the action just the same had prescribed, it having been filed 16 months
after July 28, 1992, the date of delivery of the vehicle.
Second Issue
On the merits of his complaint for damages, even if Ang invokes breach of warranty against
eviction as inferred from the second part of the earlier-quoted provision of the Deed of Absolute
Sale, the following essential requisites for such breach: (1) The purchaser has been deprived of
the whole or part of the thing sold; (2) This eviction is by a final judgment; (3) The basis thereof
is by virtue of a right prior to the sale made by the vendor; and (4) The vendor has been
summoned and made co-defendant in the suit for eviction at the instance of the vendee, have
not been met. For one, there is no judgment which deprived Ang of the vehicle. For another,
there was no suit for eviction in which Soledad as seller was impleaded as co-defendant at the
instance of the vendee.
Finally, even under the principle of solutio indebiti which the RTC applied, Ang cannot recover
from Soledad the amount he paid BA Finance. For, as the appellate court observed, Ang settled
the mortgage debt on his own volition under the supposition that he would resell the car. It
turned out that he did pay BA Finance in order to avoid returning the payment made by the
ultimate buyer Bugash. It need not be stressed that Soledad did not benefit from Ang‘s paying
BA Finance, he not being the one who mortgaged the vehicle, hence, did not benefit from the
proceeds thereof.
Cebu Windland Development Corporation vs Hua
G.R. No. 173215, May 21, 2009
Facts: Hua bought 2 condominium units from Cebu Winland Development Corporation. The
area per condominium unit as indicated in the price list is 155 square meters and the price
per square meter is P22,378.95.
On October 10, 1996, possession of the subject properties was turned over to Hua.
After the purchase price was fully paid on January 31, 1997, Cebu Winland sent to Hua
Deeds of Absolute Sale for the two condominium units for signature. Upon examination of
the deed of absolute sale, Hua was distressed to find that the stated floor area is only 127
square meters contrary to the area indicated in the price list which was 155 square meters.
Hua caused a verification survey of the said condominium units and discovered that the
actual area is only 110 square meters per unit. Hua demanded from Cebu Winland to refund
the amount of P2,014,105.50 representing excess payments for the difference in the area,
computed as follows: 155 sq.m. -110 = 45 x 2 units = 90 sq.m. x P22,378.95 =
P2,014,105.50.
Cebu Winland refused to refund the said amount. Consequently, Hua filed a Complaint on
August 7, 1998 in the Regional Office of the Housing and Land Use Regulatory Board
(HLURB) in Cebu City. The Arbiter ruled that Hua's action had already prescribed pursuant to
Article 1543, in relation to Articles 1539 and 1542, of the Civil Code. Hua appealed.
Cebu Winland argues that it delivered possession of the subject properties to Hua on
October 10, 1996, hence, Hua's action filed on August 7, 1998 has already prescribed.
Hua, on the one hand, contends that his action has not prescribed because the prescriptive
period has not begun to run as the same must be reckoned from the execution of the deeds
of sale which has not yet been done.
Issues: 1. Whether Hua's action has prescribed.
2. Whether the sale in the case is one made with a statement of its area or at the rate of a
certain price for a unit of measure and not for a lump sum.
Held:
1. The action has not yet prescribed.
Article 1497 contemplates what is known as real or actual delivery, when the thing
sold is placed in the control and possession of the vendee. Article 1498, on the one hand,
refers to symbolic delivery by the execution of a public instrument. It should be noted,
however, that Article 1498 does not say that the execution of the deed provides a
conclusive presumption of the delivery of possession. It confines itself to providing that the
execution thereof is equivalent to delivery, which means that the presumption therein can
be rebutted by means of clear and convincing evidence. Thus, the presumptive delivery by
the execution of a public instrument can be negated by the failure of the vendee to take
actual possession of the land sold.
Delivery 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. In its natural
sense, delivery means something in addition to the delivery of property or title; it means
transfer of possession.
“Delivery” as used in the Law on Sales refers to the concurrent transfer of two things: (1)
possession and (2) ownership. This is the rationale behind the jurisprudential doctrine that
presumptive delivery via execution of a public instrument is negated by the reality that the
vendee actually failed to obtain material possession of the land subject of the sale. In the
same vein, if the vendee is placed in actual possession of the property, but by agreement of
the parties ownership of the same is retained by the vendor until the vendee has fully paid
the price, the mere transfer of the possession of the property subject of the sale is not the
“delivery” contemplated in the Law on Sales or as used in Article 1543 of the Civil Code.
In the case at bar, it appears that Cebu Windland was already placed in possession of the
subject properties. However, it is crystal clear that the deeds of absolute sale were still to
be executed by the parties upon payment of the last installment. This fact shows that
ownership of the said properties was withheld by petitioner. Following case law, it is
evident that the parties did not intend to immediately transfer ownership of the subject
properties until full payment and the execution of the deeds of absolute sale. Consequently,
there is no “delivery” to speak of in this case since what was transferred was possession
only and not ownership of the subject properties.
The transfer of possession of the subject properties on October 10, 1996, to Hua cannot be
considered as “delivery” within the purview of Article 1543 of the Civil Code. It follows that
since there has been no transfer of ownership of the subject properties since the deeds of
absolute sale have not yet been executed by the parties, the action filed by Hua has not
prescribed.
2. Article 1539 provides that “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 vendor shall be
obliged to deliver to the vendee all that may have been stated in the contract; but, should
this be not possible, the vendee may choose between a proportional reduction of the price
and the rescission of the contract.” Article 1542, on the one hand, provides that “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."
Article 1539 governs a sale of immovable by the unit, that is, at a stated rate per unit area.
In a unit price contract, the statement of area of immovable is not conclusive and the price
may be reduced or increased depending on the area actually delivered. If the vendor delivers
less than the area agreed upon, the vendee may oblige the vendor to deliver all that may be
stated in the contract or demand for the proportionate reduction of the purchase price if
delivery is not possible. If the vendor delivers more than the area stated in the contract, the
vendee has the option to accept only the amount agreed upon or to accept the whole area,
provided he pays for the additional area at the contract rate.
In some instances, a sale of an immovable may be made for a lump sum and not at a rate
per unit. The parties agree on a stated purchase price for an immovable the area of which
may be declared based on an estimate or where both the area and boundaries are stated.
In the case where the area of the immovable is stated in the contract based on an estimate,
the actual area delivered may not measure up exactly with the area stated in the contract.
According to Article 1542 of the Civil Code, 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. However, the discrepancy must not be substantial. A vendee of
land, when sold in gross or with the description "more or less" with reference to its area,
does not thereby ipso facto take all risk of quantity in the land. The use of "more or less" or
similar words in designating quantity covers only a reasonable excess or deficiency.
Where both the area and the boundaries of the immovable are declared, the area covered
within the boundaries of the immovable prevails over the stated area. In cases of conflict
between areas and boundaries, it is the latter which should prevail. What really defines a
piece of ground is not the area, calculated with more or less certainty, mentioned in its
description, but the boundaries therein laid down, as enclosing the land and indicating its
limits. In a contract of sale of land in a mass, it is well established that the specific
boundaries stated in the contract must control over any statement with respect to the area
contained within its boundaries. It is not of vital consequence that a deed or contract of
sale of land should disclose the area with mathematical accuracy. It is sufficient if its extent
is objectively indicated with sufficient precision to enable one to identify it. An error as to
the superficial area is immaterial. Thus, the obligation of the vendor is to deliver everything
within the boundaries, inasmuch as it is the entirety thereof that distinguishes the
determinate object.
In the case at bar, it is undisputed by the parties that the purchase price of the subject
properties was computed based on the price list prepared by petitioner, or P22,378.95 per
square meter. Clearly, the parties agreed on a sale at a rate of a certain price per unit of
measure and not one for a lump sum. Hence, it is Article 1539 and not Article 1542 which is
the applicable law. Accordingly, respondent is entitled to the relief afforded to him under
Article 1539, that is, either a proportional reduction of the price or the rescission of the
contract, at his option. Respondent chose the former remedy since he prayed in his
Complaint for the refund of the amount of P2,014,105.50 representing the proportional
reduction of the price paid to petitioner.
