University of the Philippines College of Law

[Digest maker’s initials] D2022

Case Name POWER COMMERCIAL v. CA
Topic OBLIGATIONS OF THE SELLER
Case No. | Date G.R. 119745 | June 20, 1997
Ponente PANGANIBAN., J.
Power Commercial purchased a property from Spouses Quiambao and assumed the mortgage
executed by the same. Power Commercial obligated itself to pay the mortgage as part of the deed
of sale. Power Commercial sought the rescission of the sale, stating that Spouses Quiambao failed
Case Summary
to eject the lessees and deliver the property, and that PNB return its payments. The Court held
that Spouses Quiambao were not obligated to eject the lessees as it was not stipulated in the deed
of sale.
The obligation of the seller is what is directly stipulated in the contract. Absent any stipulation, the
Doctrine
seller may not be obligated to perform the same.

RELEVANT FACTS

• January 31, 1979 - Power Commercial & Industrial Development Corporation entered into a contract of sale with
Spouses Reynaldo and Angelita R. Quiambao for an office space and warehouse situated in a 612sqm land in San
Antonio Vilalge, Makati City.
o P108,000 DOWN PAYMENT
o P295,000 BALANCE UPON EXECUTION OF DEED OF TRANSFER
o Power Commercial assumed existing deed of mortgage and paid PNB P79,145.77.
• June 1, 1979 - Spouses Quiambao mortgaged the same property to PNB to guarantee a loan of P145,000, P80,000
of which was paid to spouses. Power Commercial assumed the payment of the Loan.
• June 26, 1979 – Deed of Absolute Sale with Assumption of Mortgage was executed
o Salient provisions of deed:
▪ Consideration: P295,000
▪ Mortgaged to PNB for P145,000; Power Commercial assumes balance
• Mrs. C.D. Constantino, General Manager of Power Commercial, submitted to PNB the Deed of Absolute Sale with
Assumption of Mortgage and formally applied to assume the mortgage
• February 15, 1980 – PNB informed spouses that Power Commercial failed to submit necessary papers, hence
their assumption was considered withdrawn and the balance of P145,000 due and demandable
o Power Commercial paid P41,880.45 and P20,283.14
o It requested PNB to transfer title and mortgage to their name so they may take action to take physical
possession
▪ PNB stated there were interest arrearages amounting to P25,826.08 to be settled first, and part of
the principal
• Power Commercial filed a civil case against Spouses Quiambao for recission and damages, and demanded that
PNB return payments made as it was never allowed to assume the mortgage; property was foreclosed by PNB and
bought in a public auction
• RTC RULING : Spouses failed to deliver actual possession and entitled Power Commercial to recission of sale;
PNB obliged to return the payments made as it failed to approve assumption of mortgage
• CA RULING : Reversed RTC decision – deed of sale did not obligate the spouses to eject the lessees from the
land as a condition of the sale; there was no breach to justify rescission

RATIO DECIDENDI
W/N Spouses Quiambao breached its obligations, warranting a rescission – NO
It was not a stipulated condition in the sale that spouses were to eject the lessees and deliver actual and physical
possession.

The provision Power Commercial refers to in the deed does not impose a condition but is a warranty written as
follows: 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,
 University of the Philippines College of Law
[Digest maker’s initials] D2022
against any claims whatsoever of any and all third persons; subject, however, to the provisions hereunder provided
to wit.

If Power Commercial intended to impose on the Spouses the obligation to eject the tenants from the lot sold, it should
have included in the contract a provision to that effect. Absent such stipulation, it was not intended to make its non
fulfillment a ground for rescission.

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.

Power Commercial can not ask PNB to return its payments as under the deed of sale, it was obligated to assume
the payment of the amortization of the mortgage.

RULING

CA affirmed.