ASSET PRIVATIZATION TRUST vs.
TJ ENTERPRISES WON the sale was on an “as-is-where-is” basis; if so, WON TJ was responsible
J. Tinga | May 8, 2009
TOPIC: KINDS OF DELIVERY; REAL OR ACTUAL DELIVERY (NCC 1497)
FACTS
1. On Nov. 7, 1990, APT and TJ entered into an absolute deed of sale over certain
refrigeration machineries identified as Lots 2, 3, and 5. TJ paid the full amount of
84,000.
2. After 2 days, TJ demanded the delivery of the machinery it purchased. In March
1991, APT issued Gate Pass No. 4955. TJ was able to pull out the properties
from the compound.
3. However, during the hauling of Lot 2 consisting of 16 items, only 9 items were
pulled out by TJ while 7 items were left behind. Creative Lines (CL) employees
prevented TJ from hauling the remaining machineries.
4. TJ filed a complaint for specific performance and damages against APT and CL.
During the pendency of the case, TJ was able to pull out the remaining
machineries. However, upon inspection, it was discovered that there were
damages and missing parts.
5. APT argued that upon the execution of the deed of sale, it had complied with its
obligation to deliver the object of the sale since there was no contrary stipulation.
APT further argued that being a sale on an “as-is-where-is” basis, it was TJ’s
duty to take possession of the property. APT claimed that there was already a
constructive delivery of the machineries.
6. The RTC ruled that APT is liable for breach of contract and should pay for actual
damages. The CA affirmed the RTC in toto. Hence, this appeal.
ISSUE / RATIO
WON there was a constructive delivery of the machineries upon the execution
of the deed of absolute sale – NO
As a general rule, when the sale is made through a public instrument, its execution
shall be equivalent to delivery. However, it is necessary that the vendor shall have
control over the thing sold at the moment of sale in order that its material delivery
could have been made. A person who does not have actual possession of the thing
sold cannot transfer constructive possession by the execution of a public instrument.
Here, there was no constructive delivery upon the execution of the deed of absolute
sale or upon the issuance of the gate pass since it was not APT but CL which had
actual possession of the property. The presumption of constructive delivery is not
applicable as it has to yield to the reality that TJ was not placed in possession and
control of the property.
to take possession of the property – YES; NO
The phrase “as-is-where-is” pertains solely to the physical condition of the thing sold,
not to its legal situation. The “as-is-where-is” basis merely describes the actual state
and location of the thing sold by APT to TJ. This depiction does not alter APT’s
responsibility to deliver the property to respondent.
WON the presence of the disclaimer of warranty in the deed of absolute sale
absolves APT from all warranties, implied or otherwise – NO
The vendor is bound to transfer the ownership of and deliver, as well as warrant the
thing which is the object of the sale. A perusal of the deed of absolute sale shows that
both APT and TJ represented and warranted to each other that head had all the
requisite power and authority to enter into the deed of absolute sale and that they
shall perform each of their respective obligations under the deed.
Here, there was no actual or constructive delivery of the things sold. Thus, APT has
not performed its obligation to transfer ownership and possession of the things sold to
respondent.
WON the failure to make actual delivery was not due to the fault and was
beyond the control of APT, thus the claim for damages has no basis – NO
APT contends that its failure to deliver was beyond its control. APT contends that the
refusal of CL to allow the hauling of the machineries was a fortuitous event.
The SC quotes the CA and held that CL’s refusal to allow the hauling is not a
fortuitous event which exculpates APT from the payment of damages. This event
cannot be considered as unavoidable or unforeseen. APT knew that the properties
sold were in the premises leased by CL. It should have made arrangements with CL
beforehand for the smooth and orderly hauling of the machineries.
The principle embodied in the act of God doctrine strictly requires that the act muse
be one occasioned exclusively by the violence of human nature and all human
agencies are to be excluded from creating or entering into the cause of the mischief.
When the cause is found to be in part the result of man’s participation, whether
through fault, negligence, or omission, the whole occurrence is thereby humanized
and removed from the rules applicable to the acts of God.
Assuming arguendo that CL’s refusal to allow the hauling is a fortuitous event, APT
will still be liable for damages based on NCC 1170.
DISPOSITIVE CA Decision is affirmed