Under the Law on Sales, “[t]he ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof.” (Article 1477, Civil Code). There is actual delivery when the thing sold is placed in the control and possession of the buyer (Article 1497, Civil Code). On the other hand, constructive delivery is that mode of delivery provided for by law other than placing the buyer in the actual control and possession of the thing sold. It is made in the manner specified in Articles 1498 to 1501 of the Civil Code or in any other manner signifying an agreement to transfer the possession from the seller to buyer (Article 1496, Civil Code).
One of the modes of constructive delivery is provided for in Article 1498 of the Civil Code, which states that “[w]hen 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.” A reading of the text of Article 1477, in conjunction with Articles 1496[1] and 1498, would show that constructive delivery through the execution of a public instrument is sufficient by itself to transfer ownership to the buyer.
However, under prevailing case law, constructive delivery by the execution of a public instrument is equivalent to delivery only when the seller shall have had such control over the thing sold that at the moment of the sale its actual delivery could have been made. Otherwise put, there should be no impediment to the buyer taking actual possession of the thing sold upon the execution of the public instrument.
The provenance of the “no impediment to buyer’s possession” requirement is the 1918 case of Addison v. Felix, 38 Phil. 404. In said case, Addison sold in a public instrument to Felix a parcel of land, 2/3 of which was in the possession of Villafuerte, who claimed ownership thereof. Addison sued Felix for the price of the sale. Felix filed an answer and counterclaimed for rescission of the sale since she could not take actual possession of the 2/3 portion. Addison argued that rescission could not take place since he had complied with his obligation to deliver the property to Felix through the execution of the sale in a public instrument.
The Court held that rescission was proper since there was no delivery of the 2/3 portion of the land sold. The Court held that there was no constructive delivery since there was an impediment to the buyer taking actual possession of the 2/3 portion, that is, the adverse possession of Villafuerte.
The Addison ruling is not justified by the text of Article 1462 of the Spanish Civil Code,[2] the then governing law. Said article provides that “[w]here the sale has been made pursuant to a public deed, the execution thereof shall be equivalent to the delivery of the thing constituting the subject matter of the contract, unless it should result or it should be clearly deduced otherwise from the public deed.” The law provides for only one exception, that is, unless it should be clearly deduced from the public deed or unless it should result therefrom that its execution is not equivalent to delivery.
The reasoning adopted by the Court was for the purpose of refuting the seller’s claim that the buyer could not rescind since there was delivery. However, there was no need for the Court to craft a judicial exception to Article 1462. The Court could have simply relied upon the buyer’s remedy of rescission under Article 1124 of the Spanish Civil Code, it appearing that the transfer of physical possession to the buyer was an important consideration of the sale agreement.
The re-examination of Addison becomes more imperative with the passage of the present Civil Code. Under Article 1477, “[t]he ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof.” (Emphasis supplied). Similarly, Article 1496 provides that “[t]he ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in articles 1497 to 1501.” (Emphasis supplied). One of the ways specified is Article 1498 on constructive delivery through the execution of a public instrument.[3]
However, the Addison doctrine still continues to hold sway even after the enactment of the new Civil Code. It has even transmogrified into a doctrine which could be invoked against the buyer to defeat his or her claim of title to the property purchased in a public instrument.[4] This iteration of the Addison doctrine incentivizes third persons to encroach on the property subject of the sale and thereby frustrate the transfer of ownership to the buyer.
The Addison doctrine relegates constructive delivery by execution of a public instrument from a separate and independent mode of delivery to a mere adjunct of actual delivery. One may very well ask why the law would provide for constructive delivery under Article 1498, when its effectivity would after all hinge on the seller’s ability to effect actual delivery at the time of the sale, thus defeating the primary purpose of constructive delivery which is to serve as an alternative to actual delivery.
It is thus earnestly suggested that the Addison doctrine be re-examined and abandoned for not being in accord with the provisions of the Civil Code. This would also foster the stability of written contracts since the enforcement of the sale would not be held hostage by extrinsic factors, avoid uncertainty in the ownership of the property sold, and empower buyers to protect their legitimate interests.
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[1] The ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in articles 1497 to 1501, or in any other manner signifying an agreement that the possession is transferred from the vendor to the vendee (emphasis supplied).
[2] Now Article 1498, Civil Code.
[3] It should be noted that the buyer has an adequate remedy in case of the seller’s failure to place the buyer in actual possession of the thing sold. The buyer may sue the seller for breach of implied warranty under Article 1547(1) of the Civil Code or in proper cases sue for rescission under Article 1191 of the same code. Hence, there is no need for the application of the Addison doctrine to provide relief to the buyer.
[4] See Danguilan v. Intermediate Appellate Court, 168 SCRA 22 (1988); Ten Forty Realty & Dev’t Corp. v. Cruz, 410 SCRA 484 (2003); and Santiago v. Villamor, 686 SCRA 313 (2012).
