CEBU WINLAND DEVELOPMENT CORPORATION, petitioner vs.

ONG SIAO HUA, respondent

G.R. No. 173215, May 21, 2009 | Puno, C.J. kam

TOPIC: Actions and Remedies; Articles 1539, 1542, 1543

SUMMARY: Respondent bought 2 condominium units, 155 sqm each in size from petitioner, based on petitioner’s price
list indicating a P22,378.95 price per square meter. Deeds of absolute sale were sent for respondent’s signature upon
completion of the installment payments (after 24 months). The deeds indicated that the units were only 127 sqm each
so respondent ordered a verification survey and found out that units were only 110 sqm each. Respondent demanded
for a refund equivalent to the amount of the total number of square meters that he overpaid for (155 minus 110 x 2
units), or around 2 million pesos.
Petitioner contends that according to the six-month prescription period provided in Article 1543, respondent’s
action has already prescribed. The SC held otherwise, for the concept of “delivery” as contemplated in Article 1543
refers to the concurrent transfer of both the possession and ownership of the property. In this case, since the deeds of
absolute sale were to be executed only upon full payment of respondent, the parties did not intend to transfer the
ownership to respondent right away. No “delivery” yet has been effected and thus, action has not yet prescribed.

DOCTRINES:
 “Delivery” as used in the Law of Sales refers to the concurrent transfer of two things: (1) possession and (2)
ownership. 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.
 (Not related to main issue) 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. (Sa
Article 1542 or kapag lump sump lang ‘to applicable)

FACTS: Petition to review CA’s resolution

 Vendor: Cebu Winland Development Corporation (owner of Cebu Winland Tower Condominium located in
Juana Osmeña Extension, Cebu City)
Vendee: Ong Siao Hua (2 condominium units & 4 parking slots)
Subject properties: Unit Nos. 2405 & 2406; Parking slots 91, 99, 101, & 103
 Vendor offered condo units to vendee while the condo was still undergoing construction (pre-selling rate with
3% discount). 30% required downpayment, 24 monthly equal installments for balance.
The Sale:
 January 6, 1995 – Vendor accepted offer & bought 2 condo units and 4 parking slots.
 IMPORTANT: Vendor’s price list indicated an area of 155 sqm per condo unit and a price per square meter at
P22,378.95. The price for the parking lot is P240,000.00 each.
 Vendee paid P2,298,655.08 as downpayment and issued 24 postdated checks (P223,430.70 each) for the
balance of the purchase price (P5,362,385.19) computed as follows:
 No written document was executed with regard to this transaction.
 October 10, 1996 – Possession was turned over to vendee.
 January 31, 1997 – Purchase price was fully paid with the last check dated
Jan 31, 1997. Vendee requested for the condominium certificates of title
evidencing ownership. Vendor sent the Deeds of Absolute Sale to vendee for
vendee’s signature.

The Conflict:
 Upon examination of the deeds, vendee was distressed to see that the stated
floor area is only 127 sqm when 155 sqm was stated in the price list.
 Vendee caused a verification survey and discovered that actual area was
only 110 sqm.
 Vendee demanded a refund amounting to P 2,014,105.50 for the excess
computed as follows but vendor refused to refund:
155 sq.m. – 110 = 45 x 2 units = 90 sq.m. x P22,378.95 = P2,014,105.50
Complaints & proceedings: (Daming offices)
A. Regional office of the Housing and Land Use Regulatory Board (HLURB) in Cebu City
o August 7, 1998 – Vendee filed a complaint in HLURB for the refund amount plus interest, moral damages, &
attorney’s fees, including suspension of vendor’s license to sell.
 oDISPOSITIVE: Dec. 6, 1999 – Arbiter DISMISSED the complaint. Vendor not guilty of misrepresentation.
Properties were delivered on October 10, 1996 but complaint was only filed on August 7, 1998. Vendee’s action
has already prescribed pursuant to NCC Article 15431, in relation to Articles 1539 & 1542.
o Counterclaim was also dismissed for no evidence was found that vendee was acting in bad faith in filing the
complaint.
B. Board of Commissioners of the HLURB (the Board)
o A Petition for Review of the regional’s office (letter A) decision was filed by vendee.
o The Board ordered an ocular inspection of the condo units to be conducted by an independent engineer.
o Two measurements were ordered by the Board: (1) based on master deed; (2) based on internal surface of the
perimeter wall.
o Geodetic engineer’s findings:
Unit 2405- Based on internal face of perimeter wall = 109 sqm.; Based on master deed = 115 sqm.
Unit 2406- Based on internal face of perimeter wall = 110 sqm.; Based on master deed = 116 sqm.
o DISPOSITIVE: June 8, 2004 – MODIFIED. Affirmed arbiter’s finding that action has prescribed already (Art.
1543). However, the Board found that there was a mistake regarding the object of the sale constituting a
ground for rescission based on NCC Articles 1330 and 13312. At the option of VENDEE, contract is rescinded.
VENDOR to refund amount paid (~7 million) and VENDEE to turn over the condo units & parking slots.
C. Office of the President (OP)
o Vendor filed an appeal to the OP arguing that action has prescribed. OP granted appeal and REINSTATED
arbiter’s finding. MR by respondent / vendee was DENIED.
D. Court of Appeals (CA) – VENDEE appealed to CA. CA held that action has not prescribed. MR by petitioner /
vendor DENIED. Hence, this petition.

ISSUE (HELD): WON respondent’s (vendee) action has prescribed pursuant to Article 1543, in relation to Articles 1539
and 1542 of the Civil Code? (NO)

RATIO:
When did vendor deliver to the vendee? (No delivery in the purview of Art. 1543 happened.)
 Vendor argues that it delivered possession of properties to vendor on Oct. 10, 1996, hence, vendee’s action filed
on Aug. 7, 1998 has already prescribed.
 Vendee contends that 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.
 SC: Resolution of issue would need the scrutiny of the concept of “delivery” as used in Article 1543 1. The Court
enumerated the pertinent provisions on delivery: Articles 1495, 1496, 1497, & 1498.
 Under the Civil Code, ownership does not pass by mere stipulation but only by delivery. According to Tolentino,
the purpose of delivery is not only for the enjoyment of the thing but also a mode of acquiring dominion and
determines the transmission of ownership, the birth of the real right. The delivery under any of the forms
provided by Arts. 1497 to 1505 signifies that the transmission of ownership from vendor to vendee has
taken place.
ARTICLE 1497. The thing sold shall be understood as delivered, when it is placed in the control and possession of the vendee. (1462a)
ARTICLE 1498. 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.

 Art. 1497 – real or actual delivery, the thing sold is placed in the control & possession of the vendee.
 Art. 1498 – symbolic delivery. But 1498 does not say that execution of public instrument provides a conclusive
presumption of the delivery of possession. 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.
 In Law of Sales, delivery may be either actual or constructive, but both forms of delivery contemplate “the
absolute giving up of the control and custody of the property on the part of the vendor, and the assumption of
the same by the vendee.” (Equatorial Realty Development Inc. vs. Mayfair Theater Inc.)

“Delivery” as used in the Law of 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.

1ARTICLE 1543. The actions arising from Articles 1539 and 1542 shall prescribe in six months, counted from the day of delivery.
2ARTICLE 1330. A contract where consent is given through mistake, violence, intimidation, undue influence, or fraud is voidable.
ARTICLE 1331. In order that mistake may invalidate consent, it should refer to the substance of the thing which is the object of the contract, or to those
conditions which have principally moved one or both parties to enter into the contract.
Mistake as to the identity or qualifications of one of the parties will vitiate consent only when such identity or qualifications have been the principal cause of
the contract.
A simple mistake of account shall give rise to its correction.
  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.

As applied to this case: Vendee was placed in the possession of the properties. But the deeds of absolute sale were to be
executed upon full payment of the purchase price. It is evident that the parties did not intent to immediately transfer
the ownership of the properties until full payment and execution of the deeds of absolute sale. There is no “delivery”
to speak of in this case since what was transferred was possession only and not ownership of the properties.
 The transfer of possession on Oct. 10, 1996 cannot be considered as “delivery” within the purview of Art. 1543.
 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 respondent has not prescribed.

Is this sale one made w/ a statement of its area (Art. 1539 3) or at the rate of a certain price for a unit of measure
and not at a lump sum? (Yes)
 The difference between Arts. 1539 & 15424 was explained by Manresa:
Article 1539 Article 1542
 Sale made for a price per unit of measure:  Sale made for a lump sum:
Consideration of the contract w/ respect to the vendee: The Consideration of the contract: The object sold, independently
number of such units or the thing purchased as determined by of its number or measure, the thing as determined by the
the stipulated number of units. stipulated boundaries, the whole 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, Article 1539 is applicable, not Article 1542.

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, as evidence by his demand of
a refund or reduction of the price.

It was wrong for CA to reinstate the Board’s decision because Arts. 1330 & 1331 are not applicable in this case. In
order to make these articles applicable, the mistake must be material as to go to the essence of the contract; that
without such mistake, the agreement would not have been made. Vendee, even after finding out about the discrepancy,
still chose to remain in possession of the properties and sought a refund instead. This shows that vendee did not
consider the error in size significant enough to vitiate the contract.

DISPOSITIVE: CA decision AFFIRMED with MODIFICATION. Vendor to refund amount (~2M) to vendee, HLURB
Board decision not reinstated.

OTHER NOTES:
Article 1539: If vendor delivers less than the area agreed upon, vendee may demand for vendor either to (1) deliver ALL (demand
specific performance) or (2) proportionate reduction of the purchase price if delivery is not possible.
 If vendor delivers more than the area stated in the contract, vendee can (1) accept only the amount agreed upon or (2) accept
the whole area, provided he pays for the additional area at the contract rate.
Article 1542: 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.
 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.

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ARTICLE 1539. The obligation to deliver the thing sold includes that of placing in the control of the vendee all that is mentioned in the contract, in
conformity with the following rules:
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, if the latter should demand it, 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, provided that, in the latter case, the lack in the area be not less
than one-tenth of that stated.
The same shall be done, even when the area is the same, if any part of the immovable is not of the quality specified in the contract.
The rescission, in this case, shall only take place at the will of the vendee, when the inferior value of the thing sold exceeds one-tenth of the price
agreed upon.
Nevertheless, if the vendee would not have bought the immovable had he known of its smaller area or inferior quality, he may rescind the sale. (1469a)
4ARTICLE 1542. 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.
The same rule shall be applied 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 specified 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 vendee does not accede to the
failure to deliver what has been stipulated.