Case Summary (G.R. No. 91029)
Key Dates and Procedural Posture
Sale executed: September 20, 1979.
Vehicle registration in buyer’s name: November 6, 1979.
Alleged delivery to Julian Nepales: January 22, 1980.
Accident and total wreck: February 3, 1980.
DBP released loan proceeds: March 20, 1980.
Trial Court decision for plaintiff: August 27, 1985.
Court of Appeals affirmed (with modification): August 21, 1989.
Supreme Court decision (denying petition): February 7, 1991.
Factual Background
Alberto Nepales agreed to purchase a new Yamaha motorcycle from Norkis for P7,500, payable by a DBP Letter of Guaranty and secured by a chattel mortgage in favor of DBP. Norkis issued Sales Invoice No. 0120 signed by Nepales. The motorcycle remained physically in Norkis’ possession. The unit was registered with the Land Transportation Commission in Nepales’ name on November 6, 1979; registration fees were paid by Nepales (official receipt admitted). On January 22, 1980, the motorcycle was allegedly delivered to Julian Nepales; this alleged delivery was denied by Alberto. The motorcycle was presented to DBP’s appraiser. On February 3, 1980 the motorcycle was involved in an accident while being driven by Zacarias Payba and was a total wreck; it was returned to and stored in Norkis’ warehouse. On March 20, 1980 DBP released loan proceeds to Norkis; Nepales later paid the P328 difference resulting from price increase and demanded delivery. When delivery could not be effected, Nepales sued for specific performance with damages. Norkis defended on the ground that ownership and risk had already passed to Nepales prior to the accident.
Issue Presented
Which party bears the loss when the motorcycle was totally destroyed before actual delivery: the seller (Norkis) or the buyer (Nepales)? Subsidiary question: whether ownership and risk of loss had already been transferred to the buyer at the time of destruction.
Parties’ Contentions
Petitioner (Norkis): The contract of sale was perfected and the thing sold was determinate; after perfection of sale but before delivery, the risk of loss shifts to the vendee under the cited Civil Code provisions. Constructive delivery occurred by issuance of the sales invoice in Nepales’ name, by registration of the vehicle in Nepales’ name, and by issuance of an official receipt for registration fees.
Private respondent (Nepales): There was no actual or constructive delivery; the sales invoice and registration were issued only to satisfy DBP’s requirements for the loan and did not evidence an intent by Norkis to transfer ownership or dominion. Julian’s alleged receipt of the motorcycle was not proven as Nepales denied authorizing Julian; the presence of a third‑party driver (Payba) at the time of the accident undermines any claim that Nepales had control or possession of the unit.
Legal Principles and Authorities Relied Upon
- Delivery must effectuate transfer of ownership and requires not only an act of delivery but the intention to deliver; an act without the requisite intention is insufficient.
- Sales invoice, standing alone, is not equivalent to a bill of sale or proof of transfer of ownership.
- Symbolic or constructive delivery (e.g., execution of a public instrument) operates only if the vendor had the control necessary to place the thing in the purchaser’s material possession at the time; where an interposed will prevents enjoyment and material tenancy by the purchaser, the fiction of delivery does not prevail (Addison v. Felix and Tioco; Abuan v. Garcia).
- Article 1496 of the Civil Code: absent an express assumption of risk by the buyer, things sold remain at the seller’s risk until ownership is transferred.
- Doctrine of res perit domino: loss falls upon the owner of the thing at the time of loss.
Court’s Analysis on Constructive Delivery and Intention
The courts rejected Norkis’ contention that issuance of the sales invoice or registration created constructive delivery and thereby shifted risk. The sales invoice was characterized as merely a detailed statement of nature, quantity and cost, not a bill of sale; it did not prove transfer of ownership. The Court emphasized that any form of delivery—actual or constructive—must be accompanied by the vendor’s intention to deliver and the purchaser’s acceptance. Here, the registration and issuance of the invoice were done to meet DBP’s condition that a chattel mortgage be executed as prerequisite to loan approval; Norkis’ apparent purpose was to facilitate the loan, not to relinquish its control over the motorcycle or to transfer ownership and dominion to Nepales prior to release of the loan proceeds and payment. Where the vendor retains control such that the purchaser cannot have material possession and enjoyment, symbolic delivery is ineffectual.
Court’s Findings on Evidence of Possession and Agency
The Court found that Norkis failed to prove that Julian Nepales acted as Alberto’s authorized agent or that Alberto had taken possession before the accident. Th
...continue readingCase Syllabus (G.R. No. 91029)
Facts
- Petitioner Norkis Distributors, Inc. (Norkis) is the distributor of Yamaha motorcycles in Negros Occidental, with office in Bacolod City and Avelino Labajo as its Branch Manager.
- On September 20, 1979, private respondent Alberto Nepales bought from the Norkis–Bacolod branch a brand new Yamaha Wonderbike motorcycle, Model YL2DX, Engine No. L2-329401K, Frame No. NL2-0329401, color maroon, then displayed in the Norkis showroom.
- The agreed price was P7,500.00, payable by means of a Letter of Guaranty from the Development Bank of the Philippines (DBP), Kabankalan Branch, which Norkis Branch Manager Labajo agreed to accept; credit was extended to Nepales for the price of the motorcycle payable by DBP upon release of his motorcycle loan.
- As security for the loan, Nepales was to execute a chattel mortgage on the motorcycle in favor of DBP; Branch Manager Labajo issued Norkis Sales Invoice No. 0120 (Exh. 1) showing the contract of sale had been perfected; Nepales signed the sales invoice to signify his conformity with the terms of the sale.
- The motorcycle remained in Norkis’ possession after the sale transaction was perfected.
- On November 6, 1979, the motorcycle was registered with the Land Transportation Commission in the name of Alberto Nepales; a registration certificate was issued on that date (Exh. 2-b). Registration fees were paid by Nepales, evidenced by official receipt (Exh. 3).
- On January 22, 1980, the motorcycle was delivered to a certain Julian Nepales, who was alleged by Norkis to be Alberto’s agent; Alberto denied such agency.
- The record shows that Alberto and Julian Nepales presented the unit to DBP’s Appraiser–Investigator Ernesto Arriesta at the DBP Kabankalan branch.
- The motorcycle met with an accident on February 3, 1980 at Binalbagan, Negros Occidental; DBP’s investigation revealed that the unit was being driven by one Zacarias Payba at the time of the accident. The unit became a total wreck and was returned and stored inside Norkis’ warehouse.
- On March 20, 1980, DBP released the proceeds of Nepales’ motorcycle loan to Norkis in the total sum of P7,500. By March 1980 the price had increased to P7,828; Nepales paid the difference of P328 and demanded delivery of the motorcycle, which Norkis could not effect.
Lower Court Proceedings and Relief Sought
- Nepales filed an action for specific performance of a contract of sale with damages against Norkis in the Regional Trial Court (RTC), Sixth Judicial Region, Branch LVI, Himamaylan, Negros Occidental, docketed as Civil Case No. 1272, alleging that Norkis failed to deliver the purchased motorcycle, thereby causing him damages.
- Norkis answered that the motorcycle had already been delivered to Nepales before the accident, and thus the risk of loss or damage was borne by Nepales as owner.
Trial Court Decision (RTC)
- After trial, the RTC rendered judgment on August 27, 1985 in favor of Nepales and against Norkis.
- The RTC ordered the defendants to pay solidarily to the plaintiff the present value of the motorcycle which was totally destroyed, plus interest equivalent to what the DBP Kabankalan Sub-Branch would have to charge the plaintiff on his account, plus P50.00 per day from February 3, 1980 until full payment of said present value, plus P1,000.00 as exemplary damages, and costs of litigation.
- The RTC further provided that in lieu of paying the present value, the defendants could deliver to the plaintiff a brand-new motorcycle of the same brand, kind and quality as the one destroyed on February 3, 1980.
Court of Appeals Proceedings and Ruling
- On appeal, the Court of Appeals affirmed the RTC judgment on August 21, 1989, but deleted the award of P50.00 per day from February 3, 1980 until payment of the present value of the damaged vehicle.
- The Court of Appeals denied Norkis’ motion for reconsideration, prompting the petition for review to the Supreme Court.
Principal Issue Presented
- Who should bear the loss of the motorcycle — i.e., whether ownership had been transferred to Nepales at the time the motorcycle was destroyed such that the risk of loss had already shifted to him.
Arguments of Petitioner (Norkis)
- Norkis argued that after the contract of sale had been perfected (Art. 1475, Civil Code) and even before delivery, the risk of loss shifts from vendor to vendee; under Art. 1262, the vendor’s obligation to deliver a determinate thing is extinguished if the thing is lost by fortuitous event; thus the vendee assumes the risk of loss by fortuitous event after perfection of contract to time of delivery.
- Norkis conceded there was no “actual” delivery, but contended there was constructive delivery by reason of: (1) issuance of Sales Invoice No. 0120 (Exh. 1) in Nepales’ name and his signature thereon; (2) registration of the vehicle on November 6, 1979 with the Land Transportation Commission in Nepales’ name (Exh. 2); and (3) issuance of official receipt (Exh. 3) for payment of registration fees.