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    Dy Jr. v. CA 198 SCRA 826

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    ANTHONY SALVADICO
    1) Perfecto Dy wanted to buy a tractor from his brother Wilfredo Dy, who had mortgaged the tractor to Libra Finance. Libra Finance approved the sale, and Wilfredo Dy executed a deed of sale to Perfecto Dy. 2) Although actual possession did not change, the Supreme Court ruled there was constructive delivery through the public deed of sale. 3) The sale between the brothers was valid and binding, as Libra Finance had consented to the sale and Perfecto Dy's assumption of the mortgage. Therefore, the tractor belonged to Perfecto Dy when it was later seized, not Wilfredo Dy.

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    Dy Jr. v. CA 198 SCRA 826

    Uploaded by

    ANTHONY SALVADICO
    87 views3 pages
    1) Perfecto Dy wanted to buy a tractor from his brother Wilfredo Dy, who had mortgaged the tractor to Libra Finance. Libra Finance approved the sale, and Wilfredo Dy executed a deed of sale to Perfecto Dy. 2) Although actual possession did not change, the Supreme Court ruled there was constructive delivery through the public deed of sale. 3) The sale between the brothers was valid and binding, as Libra Finance had consented to the sale and Perfecto Dy's assumption of the mortgage. Therefore, the tractor belonged to Perfecto Dy when it was later seized, not Wilfredo Dy.

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    Dy-Jr.-v.-CA-198-SCRA-826

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    1) Perfecto Dy wanted to buy a tractor from his brother Wilfredo Dy, who had mortgaged the tractor to Libra Finance. Libra Finance approved the sale, and Wilfredo Dy executed a deed of sale to Perfecto Dy. 2) Although actual possession did not change, the Supreme Court ruled there was constructive delivery through the public deed of sale. 3) The sale between the brothers was valid and binding, as Libra Finance had consented to the sale and Perfecto Dy's assumption of the mortgage. Therefore, the tractor belonged to Perfecto Dy when it was later seized, not Wilfredo Dy.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    87 views3 pages

    Dy Jr. v. CA 198 SCRA 826

    Uploaded by

    ANTHONY SALVADICO
    1) Perfecto Dy wanted to buy a tractor from his brother Wilfredo Dy, who had mortgaged the tractor to Libra Finance. Libra Finance approved the sale, and Wilfredo Dy executed a deed of sale to Perfecto Dy. 2) Although actual possession did not change, the Supreme Court ruled there was constructive delivery through the public deed of sale. 3) The sale between the brothers was valid and binding, as Libra Finance had consented to the sale and Perfecto Dy's assumption of the mortgage. Therefore, the tractor belonged to Perfecto Dy when it was later seized, not Wilfredo Dy.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    University of Mindanao - College of Legal Education

    SALES

    46. DY, JR. V. CA, 198 SCRA 826

    Case Name DY, JR. VS. COURT OF APPEALS

    Docket Number | Date G.R. No. 92989. July 8, 1991

    Ponente GUTIERREZ, JR.

    Petitioner PERFECTO DY, JR.

    Respondents COURT OF APPEALS, GELAC TRADING INC., and ANTONIO V.


    GONZALES

    Doctrine Constructive delivery:

    In the instant case, actual delivery of the subject tractor could not
    be made. However, there was constructive delivery already upon
    the execution of the public instrument pursuant to Article 1498 and
    upon the consent or agreement of the parties when the thing sold
    cannot be immediately transferred to the possession of the
    vendee.

    RELEVANT FACTS

     The petitioner, Perfecto Dy and Wilfredo Dy are brothers. Sometime in 1979, Wilfredo Dy
    purchased a truck and a farm tractor through financing extended by Libra Finance and
    Investment Corporation (Libra). Both truck and tractor were mortgaged to Libra as security
    for the loan.

     The petitioner wanted to buy the tractor from his brother so on August 20, 1979, he wrote a
    letter to Libra requesting that he be allowed to purchase from Wilfredo Dy the said tractor
    and assume the mortgage debt of the latter. In a letter dated August 27, 1979, Libra thru its
    manager, Cipriano Ares approved the petitioner’s request.

     Thus, on September 4, 1979, Wilfredo Dy executed a deed of absolute sale in favor of the
    petitioner over the tractor in question. At this time, the subject tractor was in the possession
    of Libra Finance due to Wilfredo Dy’s failure to pay the amortizations.

     On December 27, 1979, the provincial sheriff seized and levied on the tractor which was in
    the premises of Libra in Carmen, Cebu. The tractor was subsequently sold at public auction
    where Gelac Trading was the lone bidder. Later, Gelac sold the tractor to one of its
    stockholders, Antonio Gonzales.
     Subsequently, petitioner filed an action to recover the subject tractor against GELAC
    Trading with the Regional Trial Court of Cebu City. The RTC rendered judgment in favor of
    the petitioner but the Court of Appeals reversed the decision and held that the tractor in
    question still belonged to Wilfredo Dy when it was seized and levied by the sheriff. Thus this
    petition.

    RATIO DECIDENDI

    ISSUE/S RATIO

     Whether or not the Yes, the sale between the parties was valid.
    sale of the tractor
    between Wilfredo Dy The Court held that there is no reason why Wilfredo Dy, as the chattel mortgagor
    and Perfecto Dy cannot sell the subject tractor. There is no dispute that the consent of Libra Finance
    (parties) was valid.
    was obtained in the instant case. In a letter dated August 27, 1979, Libra allowed the
    petitioner to purchase the tractor and assume the mortgage debt of his brother. The
    sale between the brothers was therefore valid and binding as between them
    and to the mortgagee, as well.

    Article 1496 of the Civil Code states that 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. We agree with the petitioner
    that Articles 1498 and 1499 are applicable in the case at bar.

    Article 1498 states: “Art. 1498. When 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.”

    Article 1499 provides: “Article 1499. The delivery of movable property may likewise
    be made by the mere consent or agreement of the contracting parties, if the thing
    sold cannot be transferred to the possession of the vendee at the time of the sale, or
    if the latter already had it in his possession for any other reason.

    In the instant case, actual delivery of the subject tractor could not be made.
    However, there was constructive delivery already upon the execution of the
    public instrument pursuant to Article 1498 and upon the consent or agreement
    of the parties when the thing sold cannot be immediately transferred to the
    possession of the vendee. (Art. 1499)

    While it is true that Wilfredo Dy was not in actual possession and control of the
    subject tractor, his right of ownership was not divested from him upon his default.
    Neither could it be said that Libra was the owner of the subject tractor because the
    mortgagee cannot become the owner of or convert and appropriate to himself the
    property mortgaged.

    Said property continues to belong to the mortgagor. The only remedy given to the
    mortgagee is to have said property sold at public auction and the proceeds of the
    sale applied to the payment of the obligation secured by the mortgagee.

    In the case at bar, the petitioner was fully aware of the existing mortgage of the
    subject tractor to Libra. In fact, when he was obtaining Libra’s consent to the sale, he
    volunteered to assume the remaining balance of the mortgage debt of Wilfredo Dy
    which Libra undeniably agreed to.

    The payment of the check was actually intended to extinguish the mortgage
    obligation so that the tractor could be released to the petitioner. It was never intended
    nor could it be considered as payment of the purchase price because the relationship
    between Libra and the petitioner is not one of sale but still a mortgage.

    It was not determinative of the consummation of the sale. The transaction between
    the brothers is distinct and apart from the transaction between Libra and the
    petitioner. The contention, therefore, that the consummation of the sale depended
    upon the encashment of the check is untenable.

    The sale of the subject tractor was consummated upon the execution of the public
    instrument on September 4, 1979. At this time constructive delivery was already
    effected. Hence, the subject tractor was no longer owned by Wilfredo Dy when
    it was levied upon by the sheriff in December, 1979.

    DECISION

    WHEREFORE, the petition is hereby GRANTED. The decision of the Court of Appeals
    promulgated on March 23, 1990 is SET ASIDE and the decision of the Regional Trial Court
    dated April 8, 1988 is REINSTATED.

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