CONSTRUCTIVE DELIVERY

AVILES VS. ARCEGA 44 PHIL 924

Facts:

Plaintiff (herein petitioner) bring and action to recover title to a house of mixed materials erected
on a leasehold land of the Nagtahan estate. While plaintiff claim owership of said house, the
defendants (herein respondents) assert title in themselves. Ith may raise the question, which of the
two sales was the title to the house in dispute transferred.

The house in question originally belongs to Sps. Vinancio and Vicenta Alcantara (owner). On
October 1917, the owner sold the said house in a public document to the plaintiff, with a stipulation
that during 4 months from sale, the owners would continue in possession of the house. It should
be noted that plaintiff never had possession of the house even after the expiration of the 4 months
following the sale.

On March 13, 1918, the same owners, who continued having possession of the house, in a public
document sold the same house to the defendants (herein respondents), who then and there took
possession of said house. Thus the case for recovery of title was filed.

At the trial of the case, the parties entered into the following stipulation of facts:
1. That the house in dispute in this case was on October 10, 1917, sold by the owners to the
plaintiffs, and acknowledge on the 8th of November 1971, before the notary public, it having been
stipulated that during 4 months from the 10th of October, 1917, the vendors would continue in
possession of the house the expenses for repair, land and other tax to be for their account, as well as
the payment of the rent for the lot on which it is erected.

2. That in a document dated March 13, 1918, and acknowledged on the following day before the
notary public, the same property was sold by the same owners to defendants, who took possession
of the property, as stated in the complaint, the plaintiff never taken possession thereof.

The trial court rendered judgment declaring defendants to be the owners of the house. Plaintiffs
appealed.

Issue:

Whether or not the trial court was correct in declaring the second sale as the valid sale.

Ruling:

Yes. The court entertains no doubt, either under the facts or under the law of hte case, as to the
right of the defendants to the house in question, with absolute exclusion of the plaintiffs.
The Court has already seen that the plaintiff never took possession of the house, as stipulated by the
parties, while the second purchasers did. Under the Civil Code (old), the conclusion is inevitable
that the title to the house was transmitted not to the plaintiff but to the defendants.

The Court is of the opinion that the plaintiff cannot invoke symbolic delivery by the execution of the
public document of sale, inasmuch as there was not, nor could there have been, such delivery, the
same being prevented by the express stipulation contained in the deed of sale, to the effect that the
vendors did not part with the possession of the house but would continue therein for 4 months.
Article 1462 (now 1498 under the new code) of the Civil code says:
If the sale should be made by means of a public instrument, the execution thereof shall be
equivalent to the delivery of the thing which is the subject-matter of the contract unless the
contrary appears or may be clearly inferred from such instrument.

At the time therefore of the execution of the deed in favor of the plaintiff who is the first purchaser,
there was no symbolic delivery because there was an express stipulation to the contrary. It cannot
be said that after the lapse of the 4 months following, during which the vendors were to continue in
possession of the house, according to the stipulation, any symbolic delivery subsisted. Nothing can
subsist that did not exist before. It cannot be said the symbolic delivery spontaneously took after
the lapse of the 4months stipulated, for there is no law providing that it should take place after the
execution of the document where there is a stipulation to the contrary. The law does not say that
such symbolic delivery is suspended when at the execution of the document a stipulation to the
contrary is made. The law simply says that no symbolic tradition can take place, when there is a
stipulation to the contrary.

As we understand the law, there is symbolic delivery when the sale is made in a public document,
and nothing appears therein to the contrary either expressly or impliedly; and no such symbolic
delivery can be held to take palce when, as in the instant case, there is in the document a stipulation
to the contrary.

This kind of tradition, however, is as to its efficaciousness, subject to the terms of the document, fo r
if it appears therein, or can be inferred therefrom, that it was not the intention of the parties to
make delivery, no tradition can be deem end to have taken place. Such would be the case, for
instance, where a certain date is fixed when the purchase should take possession of the thing, or
where in the case of last installment is made, the tile to the property should not be deemed to have
been transmitted, or where the vendor reserves the right to use and enjoy the property until the
gathering of the pending crops.

Neither can it be said that the house must be presumed to have been delivered to the first
purchaser after the lapse of the four month aforesaid, for such a presumption is overthrown by the
fact stipulated by the parties that this first purchaser never took possession of the house.
 CONSTRUCTIVE DELIVERY

JOSE FLORENDO, Plaintiff-Appellee, v. EUSTAQUIO P. FOZ, defendant and appellee. JUAN

CALVO and LUIS FOZ, sureties of the defendant Eustaquio P. Foz, Appellants.

Facts:

The appellants became the sureties of the defendant on an appeal bond, the condition of which was
"that the appellant was obligated to the appellee in the sum of P2,000 Philippine currency, for the
fulfillment of the judgment appealed from in case it should be wholly or partly affirmed." Said
judgment was as follows: "For the reasons above expressed, the court decrees the specific
performance by the defendant of the contract for the purchase and sale of the lands, said defendant
to deliver to plaintiff the land described in the complaint; said defendant paying to the plaintiff the
rents which he would save received for said lands described in the complaint from the 1st day of
July, 1909, until full compliance with this judgment; that from the P4,000 deposited in the
provincial treasury of Ilocos Sur there be paid to the Roman Catholic Apostolic Church of Vigan the
mortgage now due which the said church holds against the defendant, together with the costs of the
action; that the balance of the said P4,000 after satisfying this decree shall be paid to the said
defendant." Said balance of the P4,000, after the deduction of the mortgage of the Roman Catholic
Apostolic Church, instead of being paid over to the defendant in this case, the appellant in the case
in which the bond was given, was seized by another judgment creditor and applied to the payment
of another and different judgment. Upon the appeal of the sureties from a judgment rendered
against them upon said bond, Held: That the fulfillment of the said provision in the judgment
ordering that the balance of the P4,000 which remained after the payment of the mortgage of the
Roman Catholic Apostolic Church, be turned over the defendant in this case, the appellant in the
case in which the bond was given, was not a condition precedent to their liability upon the bond,
and that they were liable thereon although said provision was not carried out.

Issue(s):

1. Whether or not the Court of First Instance erred in not declaring invalid and of force or effects
the payment of the sum of P1,079.41 to the sheriff of Ilocos Sur in part satisfaction of the execution
issued by the clerk of the Court of First Instance of Manila on the 30th day of April, 1912.

2. Whether or not the court erred in not declaring null and void the undertaking executed by Juan
Calvo and Luis Foz jointly and severally with Eustaquio P. Foz upon the ground that said Foz was
insolvent at the time of and since the execution of said undertaking.

Ruling:

1. The appellants argue that they bound themselves to the fulfillment of the judgment in case it
should be affirmed and that said judgment contained a clause that the balance of the P4,000, after
paying the mortgage held by the Roman Catholic Apostolic Church, should be turned over to the
appellant in the action in which said judgment was obtained; and that it was a breach of the
condition upon which the bond was given to permit that sum to be turned over for the payment of
another and different judgment. They also argue that said sum having been paid to a stranger
instead of to the defendant and appellant, the execution in all its parts of the judgment appealed
from was rendered impossible, the defendant was deprived of certain resources which he
otherwise would have had, and the plaintiff and appellee in this case would have collected upon his
execution said sum of P1,079.41, thus reducing to that extent the sum which the sureties must pay.

Perhaps the appellants have some grievance at the manner in which the P1,079.41 was handled by
the court when we look at the requirement of the judgment for the execution of which they stood
guarantors. It is a grievance, however, which, in our judgment, cannot be remedied in this
proceeding or on this appeal, even if it be conceded that it have a remedy at all.

The sureties bound themselves to the fulfillment of the judgment, not in those particulars in which
it was favorable to the appellants, but to those in which it was favorable to the appellee. The
appellee, if his judgment should be affirmed, was entitled to receive a certain sum of money, or sum
which, by a subsequent procedure, was made certain. To assure him the payment of this sum, the
obligation was incurred by the sureties on the bond. They may have had, generally speaking, strong
reasons to believe that in case they were obliged to pay the judgment they would receive the benefit
of the sum of P1,079.41, which the court had ordered to be turned over to the defendant after the
payment of the church mortgage. This, however, was merely an expectation, a hope rather than a
right.

The judgment upon which that sum was paid might have taken preference over the judgment for
the payment of which they stood surety. In that event there would have been grave doubt of the
efficacy of the order, if contested , that said sum of P1,079.41 be paid upon said judgment, as against
the rights of the judgment creditor upon whose judgment the sum was actually paid.

2. We might say that we have been cited to no provision of law, and we know of none, which
renders an appeal bond void because the appellant happens to be insolvent at the time the bond is
executed. The precise purpose of a bond on appeal is to protect the appellee from the insolvency of
the appellant and to assure to him the effective execution of the judgment on the termination of the
litigation.

To say the least, the sureties took the chance of having that sum withdrawn from the defendants
resources and paid upon another obligation, or of having it paid to Foz himself for his personal use.
As a legal proposition the sureties agreed to see that the judgment appealed from should be paid if
affirmed, and that is all that the appellee is asking of them.

The judgment appealed from is hereby affirmed, with costs against the appellants.
 CONSTRUCTIVE DELIVERY

LUZON BROKERAGE CO., INC., , vs. MARITIME BUILDING CO., INC., and MYERS BUILDING CO.,
INC., defendants, MARITIME BUILDING CO., INC.

FACTS :

Defendant Myers Building Co., Inc., owner of three parcels of land in the City of Manila, together
with the improvements thereon, sold it to Maritime Building Co., Inc., for 1million through a
contract of "Deed of Conditional Sale". P50, 000.00 of this price was paid upon the execution of the
said contract and the parties agreed that the balance of P950, 000.00 was to be paid in monthly
installments at the rate of P10,000.00 with interest of 5% per annum until the same was fully paid.

They agreed that in case of failure on the part of the vendee to pay any of the installments due and
payable, the contract shall be annulled at the option of the vendor and all payments already made
by vendee shall be forfeited and the vendor shall have right to re-enter the property and take
possession thereof.

Later the installment was decreased to P5,000.00 per month and the interest was raised to 5-1/2%
per annum. The monthly installments were regularly paid until February . It failed to pay the
monthly installment corresponding to the month of March 1961. the Vice-President, of the
Maritime Building Co., Inc., wrote a letter to the President of Myers, , requesting for a moratorium
(suspension) on the monthly payment of the installments until the end of the year , because the
company was encountering difficulties in connection with the operation of the warehouse business.
However, it answered that the monthly payments due were not payable to the Myers Estate but to
the Myers Building Co., Inc., and that the Board of Directors of the Myers Co., Inc. refused to grant
the request for moratorium for suspension of payments.

Maritime Building Co., Inc. failed to pay the monthly installments the Myers Building Co., Inc. made
a demand for the payment of the installments that had become due and payable.the Myers Building
Co., Inc. wrote the Maritime Building Co., Inc. another letter advising it of the cancellation of the
Deed of Conditional Sale entered into between them and demanding the return of the possession of
the properties and holding the Maritime Building Co., Inc. liable for use and occupation of the said
properties at P10,000.00 monthly.

Myers Building Co., Inc. also demanded Luzon Brokerage Co., Inc. to whom the Maritime Building
Co., Inc. leased the properties, the payment of monthly rentals of P10,000.00 and the surrender of
the same to it. Thus , it prompted file interpleader against the Maritime Building Co., Inc.

Myers Building Co., Inc. in its answer filed a cross-claim against the Maritime Building Co., Inc.
praying for the confirmation of its right to cancel the said contract. However, the contract between
the Maritime Building Co., Inc. and the Luzon Brokerage Co., Inc. was extended by mutual
agreement for a period of four (4) more years.
 Maritime Building Co., Inc. contends (1) that the Myers Building Co., Inc. cannot cancel the contract
entered into by them for the conditional sale of the properties in question extrajudicially and (2)
that it had not failed to pay the monthly installments due under the contract and, therefore, is not
guilty of having violated the same.

According to Maritime, the suspension. of the payment of installments due to Myers Building arose
from an award of backwages made by the Court of Industrial Relations in favor of members of
Luzon Labor Union who served the Fil-American forces in Bataan in early 1942 at the instance of
the employer Luzon Brokerage Co. and for which F. H. Myers, former majority stockholder of the
Luzon Brokerage Co., had allegedly promised to indemnify E. M. Schedler (who controlled
Maritime) when the latter purchased Myers' stock in the Brokerage Company. Schedler contended
that he was being sued for the backpay award of some P325,000, when it was a liability of Myers, or
of the latter's estate upon his death.

TRIALCOURTS DECISION
The trial court found the position of Schedler indefensible, and that Maritime, by its failure to pay,
committed a breach of the sale contract; that Myers Company, from and after the breach, became
entitled to terminate the contract, to forfeit the installments paid, as well as to repossess, and
collect the rentals of, the building from its lessee, Luzon Brokerage Co., in view of the terms of the
conditional contract of sale.

Maritime invokes Article 1592 of the Civil Code of the Philippines as entitle it to pay despite its
default.

ISSUE :

W/N MARITIME may pay even after the expiration of the period as stipulated under Art 1592.

HELD:

NO. Appellant overlooks that its contract with appellee Myers is not the ordinary sale envisaged by
Article 1592, transferring ownership simultaneously with the delivery of the real property sold, but
one in which the vendor retained ownership of the immovable object of the sale, merely
undertaking to convey it provided the buyer strictly complied with the terms of the contract. In
suing to recover possession of the building from Maritime, appellee Myers is not after the
resolution or setting aside of the contract and the restoration of the parties to the status quo ante,
as contemplated by Article 1592, but precisely enforcing the provisions of the agreement that it is
no longer obligated to part with the ownership or possession of the property because Maritime
failed to comply with the specified condition precedent, which is to pay the installments as they fell
due.
The distinction between contracts of sale and contract to sell with reserved title has been
recognized by this Court in repeated decisions upholding the power of promisors under contracts
to sell in case of failure of the other party to complete payment, to extrajudicially terminate the
operation of the contract, refuse conveyance and retain the sums or installments already received,
where such rights are expressly provided for, as in the case at bar.

ART. 1592. In the sale of immovable property, even though it may have been stipulated that upon
failure to pay the price at the time agreed upon the rescission of the contract shall of right take
place, the vendee may pay, even after the expiration of the period, as long as no demand for
rescission of the contract has been made upon him either judicially or by a notarial act. After the
demand, the court may not grant him a new term.
CONSTRUCTIVE DELIVERY