POWER COMMERCIAL AND INDUSTRIAL CORPORATION v.

COURT OF APPEALS
DOCTRINE: The 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 efficacy can, however, be prevented if
the vendor does not possess control over the thing sold, in which case this legal fiction must yield to reality.
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assumption of mortgage was considered withdrawn; that the outstanding balance of P145,000.00 was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. RTC: 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 that: (1) there was a substantial breach of the contract between the parties warranting
rescission; and (2) there was a mistake in payment made by petitioner, obligating PNB to return such
payments.
ISSUE: 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. - NO
RULING:
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.
With regard to effective symbolic delivery issue, the Court disagrees with petitioners allegation that the
respondent spouses failed to deliver the lot sold. Petitioner asserts that the legal fiction of symbolic delivery
yielded to the truth that, at the execution of the deed of sale, transfer of possession of said lot was impossible
due to the presence of occupants on the lot sold.
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. The
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 efficacy can, however, be prevented if the vendor does not
possess control over the thing sold, in which case this legal fiction must yield to reality.
The key word is control, not possession, of the land as petitioner would like us to believe. The Court has
consistently held that:
In order that this symbolic delivery may produce the effect of tradition, it is necessary that the vendor shall
have had such control over the thing sold that xxx 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 whatever to prevent the thing sold 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.
Considering that the deed of sale between the parties did not stipulate or infer otherwise, delivery was
effected through the execution of said deed. The lot sold had been placed under the control of petitioner;
thus, the filing of the ejectment suit was subsequently done. It signified that its new owner intended to obtain
for itself and to terminate said occupants actual possession thereof. Prior physical delivery or possession is
not legally required and the execution of the deed of sale is deemed equivalent to delivery. This deed
operates as a formal or symbolic delivery of the property sold and authorizes the buyer to use the document
as proof of ownership. Nothing more is required.