CEBU WINLAND DEVELOPMENT

CORPORATION, petitioner, vs. ONG

SIAOHUA,respondent.
DECISION

PUNO,C.J :
p

BeforeusisaPetitionforReview 1filedunderRule45of
theRulesofCourtassailingtheDecision 2 datedFebruary
14,2006oftheCourtofAppealsanditsResolution3dated
June2,2006denyingpetitioner'smotionforreconsideration
ofthesaiddecision.
Thefactsareundisputed.
Petitioner,CebuWinlandDevelopmentCorporation,isthe
owneranddeveloperofacondominiumprojectcalledthe
Cebu Winland Tower Condominium located in Juana
OsmeaExtension,CebuCity.
Respondent,OngSiaoHua,isabuyeroftwocondominium
unitsandfourparkingslotsfrompetitioner.
SometimebeforeJanuary6,1995whiletheCebuWinland
Tower Condominium was under construction, petitioner
offered to sell to respondent condominium units at
promotionalprices.Asanaddedincentive,petitioneroffered
a3%discountprovided30%ofthepurchasepriceispaidas
downpayment andthe balance paid in24equal monthly
installments.
EcDSHT

On January 6, 1995, respondent accepted the offer of

petitionerandboughttwocondominiumunitsdesignatedas

Unit Nos. 2405 and 2406, as well as four parking slots

designatedasslots91,99,101and103(subjectproperties).
The areapercondominiumunit as indicatedinpetitioner's
pricelistis155squaremetersandthepricepersquaremeter
is P22,378.95. Theprice for the parking slotis P240,000
each. Respondent, therefore, paid P2,298,655.08 as down
paymentandissued24postdatedchecksintheamountof
P223,430.70percheckforthebalanceofthepurchaseprice
inthetotalamountofP5,362,385.19computedasfollows:4
155sq.m./unitx2unitsxP22,378.95/sq.m.
4parkingslotsatP240,000/slot

Subtotal
Less:3%discount

Netpurchaseprice
30%downpayment

BalanceatP223,430.70permonthfor24months

On October10,1996,possessionofthesubjectproperties
wasturnedovertorespondent.5
Afterthepurchasepricewasfullypaidwiththelastcheck
dated January31,1997,respondentrequestedpetitionerfor
thecondominiumcertificatesoftitleevidencingownership
oftheunits.Petitionerthensenttorespondent,forthelatter's
signature, documents denominated as Deeds of Absolute
Saleforthetwocondominiumunits.
UponexaminationofthedeedofabsolutesaleofUnitNo.
2405 and the identical document for Unit No. 2406,
respondentwasdistressedtofindthatthestatedfloorareais
only127squaremeterscontrarytotheareaindicatedinthe
pricelistwhichwas155squaremeters.Respondentcauseda
verification survey of the said condominium units and

discoveredthattheactualareaisonly110squaremetersper
unit. Respondent demanded from petitioner to refund the
amountofP2,014,105.50representingexcesspayments for
thedifferenceinthearea,computedasfollows:6
155sq.m.110=45x2units=90sq.m.x
P22,378.95=P2,014,105.50

Petitionerrefusedtorefundthesaidamounttorespondent.
Consequently,respondentfiledaComplaint 7 onAugust7,
1998intheRegionalOfficeoftheHousingandLandUse
RegulatoryBoard(HLURB)inCebuCity,prayingforthe
refundofP2,014,105.50plusinterest,moraldamagesand
attorney's fees, including the suspension of petitioner's
licensetosell.ThecasewasdocketedasHLURBCaseNo.
REM0220080798.
OnDecember6,1999,the HousingandLandUseArbiter
(theArbiter)renderedaDecision8dismissingthecomplaint.
TheArbiterfoundpetitionernotguiltyofmisrepresentation.
Considering further that the subject properties have been
delivered on October 10, 1996 and respondent filed his
complaintonlyonAugust7,1998,theArbiterfurtherruled
thatrespondent'sactionhadalreadyprescribed pursuantto
Article1543, 9 inrelationtoArticles1539and1542, 10 of
theCivilCode.Thedispositiveportionofthesaiddecision
reads:
CcaASE

WHEREFORE, Premises Considered,

judgment is hereby rendered DISMISSING
thisComplaint,andorderingthepartiestodo
thefollowing,towit:
1.FortheComplainanttoSIGNthetwo
(2) Deed[s] of Absolute Sale
whichthisBoardfindstobein
order within 30 days from

finalityofthisdecision;and
2.FortheRespondenttoDELIVERthe
corresponding condominium
certificate of title for the two
units namely units 2405 and
2406 free from all liens and
encumbrances.
Consequently, the counterclaim is likewise
dismissed for it finds no evidence that
Complainant acted in bad faith in filing this
complaint.
Costagainsttheparties.
SOORDERED.11

Aggrieved,respondentfiledaPetitionforReview ofsaid
decisionwiththeBoardofCommissionersoftheHLURB
(the Board). In the course of its proceedings, the Board
ordered that an ocular inspection of Unit Nos. 2405 and
2406be conductedbyanindependentengineer.TheBoard
furtherorderedthatthereshouldbetwomeasurementsofthe
areas in controversy, one based on the master deed and
anotherbasedontheinternalsurfaceoftheperimeterwall.
After the ocular inspection, the independent geodetic
engineerfoundthefollowingmeasurements:
Unit2405

Unit2406

Basedoninternalfaceofperimeterwall
Basedonmasterdeed

Basedoninternalfaceofperimeterwall
Basedonmasterdeed

Thereafter,theBoardrendereditsDecision 13datedJune8,
2004affirmingtheArbiter'sfindingthatrespondent'saction
hadalreadyprescribed.However,theBoardfoundthatthere

=
=

=
=

wasamistakeregardingtheobjectofthesaleconstitutinga
groundforrescissionbasedonArticles1330and133114of
theCivilCode.Hence,theBoardmodifiedthedecisionof
theArbiterasfollows:
Wherefore[,]thedecisionofthe[O]fficebelow
is hereby modified with the following
additionaldirective:
In the alternative, and at the option of the
complainant,thecontractisrescindedandthe
respondent is directed to refund to (sic)
P7,660,550[.]27whilecomplainantisdirected
toturnoverpossessionoftheunits2405,2406
andthefourparkinglotstotherespondent.
AETcSa

Soordered.15

NotsatisfiedwiththedecisionoftheBoard,petitionerfiled
an appeal to the Office of the President arguing that the
Boarderredingrantingrelieftorespondentconsideringthat
the latter's action had already prescribed. On March 11,
2005, the Office of the President rendered a Decision 16
finding that respondent's action had already prescribed
pursuanttoArticle1543oftheCivilCode.Thedispositive
portionofsaiddecisionreadsasfollows:
WHEREFORE, premises considered, the
DecisiondatedJune8,2004oftheHLURBis
hereby MODIFIED and the Decision dated
December 6, 1999 of the Housing and Land
UseArbiterisherebyREINSTATED.
SOORDERED.17

RespondentfiledaMotionforReconsiderationbutthesame
wasdeniedbytheOfficeofthePresidentinaResolution 18
datedJune20,2005.Hence,respondentfileda Petitionfor

ReviewbeforetheCourtofAppeals.
OnFebruary14,2006,the CourtofAppealsrenderedthe
assailed Decision finding that respondent's action has not
prescribed.ThedispositiveportionoftheDecisionreads:
WHEREFORE, in view of the foregoing
premises, judgment is hereby rendered by us
GRANTING the petition filed in this case,
REVERSING and SETTING ASIDE the
assailedDecisionandResolutionoftheOffice
ofthePresidentdatedMarch11,2005andJune
20, 2005, respectively, and reinstating the
Decision promulgated by the Board of
Commissioners of the HLURB on June 8,
2004.
SOORDERED.19

Petitioner's Motion for Reconsideration 20 of the assailed

decisionhavingbeendeniedintheResolutiondatedJune2,
2006,petitionerisnowbeforeus,inthispetitionforreview
raisingthefollowinggrounds:
I.
TheCourtofAppealsErredinHoldingthatina
ContractofSaleOwnershipisNotTransferred
byDelivery[.]
II.
The Court of Appeals Erred in Holding that
Respondent'sActionhasNotPrescribed.
III.
TheCourtofAppealsErredandExceededits
JurisdictionWhenitFoundPetitionerGuiltyof
Misrepresentation as the Decision of the

HLURBBoardofCommissionersontheSame
Matter is Final With Respect to Respondent
Who Did Not Appeal Said Decision that
PetitionerDidNotCommitMisrepresentation.
21

The issue before us is whether respondent's action has

prescribed pursuanttoArticle1543,inrelationtoArticles
1539and1542oftheCivilCode,towit:
ART.1539.Theobligationtodeliverthething
soldincludesthatofplacinginthecontrolof
thevendeeallthatismentionedinthecontract,
inconformitywiththefollowingrules:
Ifthesaleofrealestateshouldbemadewitha
statementofitsarea,attherateofacertain
priceforaunitofmeasureornumber, the
vendor shall be obliged to deliver to the
vendee,ifthelattershoulddemandit,allthat
may have been stated in the contract; but,
should this be not possible, the vendee may
choosebetweenaproportionalreductionofthe
price and the rescission of the contract,
providedthat,inthelattercase,thelackinthe
areabenotlessthanonetenthofthatstated.
Thesameshallbedone,evenwhentheareais
thesame,ifanypartoftheimmovableisnotof
thequalityspecifiedinthecontract.
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
tenthofthepriceagreedupon.
Nevertheless, if the vendee would not have
bought the immovable had he known of its

smallerareaorinferiorquality,hemayrescind
thesale.(1469a)[Emphasissupplied]

ART.1542.Inthesaleofrealestate,madefora
lumpsumandnotattherateofacertainsum
foraunitofmeasureornumber,thereshallbe
noincreaseordecreaseoftheprice,although
therebeagreaterorlesserareaornumberthan
thatstatedinthecontract.
The same rule shall be applied when two or
moreimmovables aresoldforasingleprice;
but if, besides mentioning the boundaries,
whichis indispensableineveryconveyanceof
real estate, its area or number should be
designatedinthecontract,the vendorshallbe
boundtodeliverallthatisincludedwithinsaid
boundaries,evenwhenitexceedstheareaor
number specified inthecontract;and,should
he not be able to do so, he shall suffer a
reductionintheprice,inproportiontowhatis
lacking in the area or number, unless the
contractisrescindedbecausethevendeedoes
not accede to the failure to deliver what has
beenstipulated.(1471)[Emphasissupplied]
ART. 1543.The actions arising from Articles
1539and1542shallprescribeinsixmonths,
counted from the day of delivery. (1472a)
[Emphasissupplied]

Petitionerarguesthatitdeliveredpossessionofthesubject
properties to respondent on October 10, 1996, hence,
respondent's action filed on August 7, 1998 has already
prescribed.

Respondent,ontheonehand,contendsthathisactionhas
notprescribedbecausetheprescriptiveperiodhasnotbegun
torunasthesamemustbereckonedfromtheexecutionof
thedeedsofsalewhichhasnotyetbeendone.
Theresolutionoftheissueatbarnecessitatesascrutinyof
theconceptof"delivery"inthecontextoftheLawonSales
orasusedinArticle1543oftheCivilCode.UndertheCivil
Code,thevendorisboundtotransfertheownershipofand
deliver the thing which is the object of the sale. The
pertinentprovisionsoftheCivilCodeontheobligationof
thevendortodelivertheobjectofthesaleprovide:
cCTIaS

ART.1495.Thevendorisboundtotransferthe
ownershipofanddeliver,aswellaswarrantthe
thingwhichistheobjectofthesale.(1461a)
ART.1496.Theownershipofthethingsoldis
acquiredbythevendeefromthemomentitis
deliveredtohiminanyofthewaysspecifiedin
Articles1497to1501,or inanyothermanner
signifyinganagreementthatthepossessionis
transferredfromthevendortothevendee.(n)
ART.1497.Thethingsoldshallbeunderstood
asdelivered, whenitis placedinthecontrol
andpossessionofthevendee.(1462a)
ART.1498.When the sale ismade through a
public instrument, the execution thereof shall
beequivalenttothedeliveryofthethingwhich
istheobjectofthecontract,iffromthedeed
thecontrarydoesnotappearorcannotclearly
beinferred.
xxxxxxxxx

Under the Civil Code, ownership does not pass by mere

stipulationbutonlybydelivery. 22 Manresaexplains, "the

deliveryofthething... signifiesthattitlehaspassed
fromthesellertothebuyer." 23 AccordingtoTolentino,
thepurposeofdeliveryisnotonlyfortheenjoymentofthe
thingbutalsoamodeofacquiringdominionanddetermines
thetransmissionofownership,thebirthoftherealright.The
deliveryunderanyoftheformsprovidedbyArticles1497to
1505ofthe CivilCode signifiesthatthetransmissionof
ownershipfromvendortovendeehastakenplace.24
Article1497abovecontemplateswhatisknownasrealor
actualdelivery,whenthethingsoldisplacedinthecontrol
andpossessionofthevendee.Article1498,ontheonehand,
refers to symbolic delivery by the execution of a public
instrument.Itshouldbenoted,however,thatArticle1498
does not say that the execution of the deed provides a
conclusive presumption of the delivery of possession. It
confines itself to providing that the execution thereof is
equivalent to delivery, which means that the presumption
thereincanberebuttedbymeansofclearandconvincing
evidence.Thus,thepresumptivedeliverybytheexecution
ofapublicinstrument canbenegatedbythefailureofthe
vendeetotakeactualpossessionofthelandsold.25
In Equatorial Realty Development, Inc. v. Mayfair
Theater,Inc.,26theconceptof"delivery"wasexplainedas
follows:
Deliveryhasbeendescribedasacompositeact,
athinginwhichbothpartiesmustjoinandthe
mindsofbothpartiesconcur. Itisanactby
whichonepartypartswiththetitletoand
thepossessionoftheproperty,andtheother
acquires theright toandthe possession of
thesame. Initsnaturalsense,deliverymeans

something in addition to the delivery of

property or title; it means transfer of
possession.IntheLawonSales,deliverymay
be either actual or constructive, but both
forms ofdeliverycontemplate"the absolute
givingupofthecontrolandcustodyofthe
propertyonthepartofthevendor,andthe
assumption of the same by the vendee."
(Emphasissupplied)

Inlightoftheforegoing,"delivery"asusedintheLaw
onSalesreferstotheconcurrenttransferoftwothings:
(1) possession and (2) ownership. This is the rationale
behindthejurisprudentialdoctrinethatpresumptivedelivery
viaexecutionofapublicinstrumentisnegatedbythereality
thatthevendeeactuallyfailedtoobtainmaterialpossession
ofthelandsubjectofthesale. 27 Inthesamevein,ifthe
vendeeisplacedinactualpossessionoftheproperty,but
by agreement of the parties ownership of the same is
retainedbythevendoruntilthevendeehasfullypaidthe
price,themeretransferofthepossessionoftheproperty
subjectofthesaleisnotthe"delivery"contemplatedin
theLawonSalesorasusedinArticle1543oftheCivil
Code.
Inthecaseatbar,itappearsthatrespondentwasalready
placedinpossessionofthesubjectproperties.However,itis
crystalclearthatthedeedsofabsolutesalewere stilltobe
executedbythepartiesuponpaymentofthelastinstallment.
Thisfactshowsthatownershipofthesaidpropertieswas
withheldbypetitioner.Followingcaselaw,itisevidentthat
thepartiesdidnotintendtoimmediatelytransferownership
ofthesubjectpropertiesuntilfullpaymentandtheexecution
ofthedeedsofabsolutesale. 28 Consequently, thereisno

"delivery"tospeakofinthiscasesincewhatwastransferred
was possession only and not ownership of the subject
properties.
We, therefore, hold that the transfer of possession of the
subjectpropertiesonOctober10,1996torespondentcannot
beconsidered as"delivery" withinthepurview of Article
1543oftheCivilCode.Itfollowsthatsincetherehasbeen
notransferofownershipofthesubjectpropertiessincethe
deedsofabsolutesalehavenotyetbeenexecutedbythe
parties,theactionfiledbyrespondenthasnotprescribed.
aCTcDH

Thenextissueiswhetherthesaleinthecaseatbarisone
madewithastatementofitsareaorattherateofacertain
priceforaunitofmeasureandnotforalumpsum.Article
1539providesthat"Ifthesaleofrealestateshouldbemade
withastatementofitsarea,attherateofacertainpricefora
unitofmeasureornumber, thevendorshallbeobligedto
delivertothevendee...allthatmayhavebeenstatedinthe
contract;but, shouldthisbenotpossible,the vendeemay
choosebetweenaproportionalreductionofthepriceandthe
rescissionofthecontract ...."Article1542,ontheone
hand,providesthat"Inthesaleofrealestate,madefora
lumpsumandnotattherateofacertainsumforaunitof
measureornumber,thereshallbenoincreaseordecreaseof
the price, although there be a greater or lesser area or
numberthanthatstatedinthecontract".
ThedistinctionbetweenArticle1539andArticle1542was
explainedbyManresa29asfollows:
...Ifthesalewasmadeforapriceperunitof
measure or number, the consideration of the
contract with respect to the vendee, is the
numberofsuchunits,or,ifyouwish,thething
purchased as determined by the stipulated

numberofunits.Butif,ontheotherhand,the
sale was made for a lump sum, the
considerationofthecontractistheobjectsold,
independently of its number or measure, the
thing as determined by the stipulated
boundaries, which has been called in law a
determinateobject.
This difference in consideration between the
twocases implies adistinct regulation ofthe
obligationtodelivertheobject,because,foran
acquittance delivery must be made in
accordancewiththeagreementoftheparties,
and the performance of the agreement must
show the confirmation, in fact, of the
considerationwhichinduceseachoftheparties
toenterintothecontract.

InRudolfLietz,Inc.v.CourtofAppeals,30weheld:
Article1539governsasaleofimmovableby
theunit,thatis,atastatedrateperunitarea.In
aunitpricecontract, thestatementofareaof
immovableisnotconclusiveandthepricemay
bereducedorincreaseddependingonthearea
actually delivered. If the vendor delivers less
than the area agreed upon, the vendee may
oblige the vendor to deliver all that may be
stated in the contract or demand for the
proportionatereductionofthepurchasepriceif
deliveryisnotpossible.Ifthevendordelivers
morethanthearea stated inthecontract,the
vendee has the option to accept only the
amount agreed upon or to accept the whole
area,providedhepaysfortheadditionalareaat
thecontractrate.

Insomeinstances,asaleofanimmovablemay
bemadeforalumpsumandnotatarateper
unit. The parties agree on a stated purchase
priceforanimmovabletheareaofwhichmay
bedeclaredbasedonanestimateorwhereboth
theareaandboundariesarestated.
Inthecasewheretheareaoftheimmovableis
statedinthecontractbasedonanestimate,the
actual area delivered may not measure up
exactly with the area stated in the contract.
AccordingtoArticle1542oftheCivilCode,in
thesaleofrealestate,madeforalumpsumand
notattherateofacertainsumforaunitof
measureornumber,thereshallbenoincrease
or decrease of the price although there be a
greaterorlesserareaornumberthanthatstated
inthecontract.However,thediscrepancymust
notbesubstantial.Avendeeofland,whensold
ingrossorwiththedescription"moreorless"
withreferencetoitsarea,doesnottherebyipso
facto takeallriskofquantityintheland.The
use of "more or less" or similar words in
designatingquantitycoversonlyareasonable
excessordeficiency.

Whereboththeareaandtheboundariesofthe
immovable are declared, the area covered
within the boundaries of the immovable
prevails over the stated area. In cases of
conflictbetweenareasandboundaries,itisthe
latterwhichshouldprevail.Whatreallydefines
a piece of ground is not the area, calculated
with more or less certainty, mentioned in its
description, but the boundaries therein laid

down,asenclosingthelandandindicatingits
limits.Inacontractofsaleoflandinamass,it
iswellestablishedthatthespecificboundaries
stated in the contract must control over any
statement with respect to the area contained
within its boundaries. It is not of vital
consequencethatadeedorcontractofsaleof
landshoulddisclosetheareawithmathematical
accuracy. It is sufficient if its extent is
objectively indicated with sufficient precision
toenableonetoidentifyit.Anerrorastothe
superficial area is immaterial. Thus, the
obligationofthevendoristodelivereverything
within the boundaries, inasmuch as it is the
entirety thereof that distinguishes the
determinateobject.

Inthecaseatbar,itisundisputedbythepartiesthatthe
purchasepriceofthesubjectpropertieswascomputedbased
onthepricelistpreparedbypetitioner,orP22,378.95per
squaremeter.Clearly,thepartiesagreedonasaleatarateof
acertainpriceperunit ofmeasureandnotoneforalump
sum.Hence,itisArticle1539andnotArticle1542whichis
theapplicablelaw.Accordingly,respondentisentitledtothe
reliefaffordedtohimunderArticle1539,thatis,eithera
proportionalreductionofthepriceortherescissionofthe
contract,athisoption.Respondentchosetheformerremedy
since he prayed in his Complaint for the refund of the
amount of P2,014,105.50 representing the proportional
reductionofthepricepaidtopetitioner.
In its decision, the Court of Appeals held that the action
filed by respondent has not prescribed and reinstated the
decisionoftheBoard.Itisanerrortoreinstatethedecision
oftheBoard.TheBoard,initsdecision,heldthattherewas
a mistake regarding the object of the sale constituting a

groundforrescissionbasedonArticles1330and1331ofthe
Civil Code. It then granted the relief of rescission at the
optionofrespondent.Articles1330and1331oftheCivil
Codeprovide:
ART.1330.Acontractwhereconsentisgiven
throughmistake,violence,intimidation,undue
influence,orfraudisvoidable.(1265a)
ART. 1331.In order that mistake may
invalidate consent, it should refer to the
substanceofthethingwhichistheobjectofthe
contract, or to those conditions which have
principallymovedoneorbothpartiestoenter
intothecontract.
EACIcH

Wefindthatthesearticlesareinapplicabletothecaseatbar.
Inorderthatmistakemayinvalidateconsentandconstitutea
groundforannulmentofcontractbasedonArticle1331,the
mistake must be material as to go to the essence of the
contract;thatwithoutsuchmistake,theagreementwouldnot
havebeenmade. 31 Theeffectoferrormustbedetermined
largelybyitsinfluenceupontheparty. Ifthepartywould
haveenteredintothecontractevenifhehadknowledgeof
thetruefact,thentheerrordoesnotvitiateconsent.32
Inthecaseatbar,thereliefsoughtbyrespondentwasfora
refund and he continued to occupy the subject properties
afterhefoundoutthatthesameweresmallerinarea.All
theseshowthatrespondentdidnotconsidertheerrorinsize
significantenoughtovitiatethecontract.Hence,theCourt
ofAppealserredinaffirmingtheBoard'sdecisiontogrant
rescission based on Articles 1330 and 1331 of the Civil
Code.
IN VIEW WHEREOF, the petition is DENIED. The
decisionoftheCourtofAppealsisAFFIRMEDbutwiththe

MODIFICATION that the decision of the HLURB is not

reinstated.PetitionerisorderedtorefundtheamountofTwo
Million Fourteen Thousand One Hundred Five Pesos and
Fifty Centavos (P2,014,105.50) to respondent with legal
interestofsixpercent(6%)perannumfromAugust7,1998,
thedateofjudicialdemand.Atwelvepercent(12%)interest
perannum,inlieuofsixpercent(6%),shallbeimposedon
suchamountfromthedateofpromulgationofthisdecision
untilthepaymentthereof.Costsagainstpetitioner.
SOORDERED.