Ocejo, Perez, & Co. v.

The International Banking Corporation

G.R. No. 10658 – Feb. 14, 1918
J. Fisher

Topic: Transfer of Ownership > General Rule

Transfer of Ownership > Kinds of Delivery > Real or Actual Delivery

Plaintiff-Appellee: Ocejo, Perez, & Co.

Defendant-Appellant: International Banking Corporation
Intervenor-Appellant: Francisco Chua Seco

Case Summary: Seller (Plaintiff Ocejo) delivered the sugar to the Buyer’s (Chong) warehouse.
Buyer’s creditor (Bank) took possession of the sugar by locking the warehouse where the sugar is.
Buyer refused to pay, therefore Seller sought to repossess the sugar, but the Bank will not heed the
request. Question of who has the right over the sugar (Seller, Creditor, or Buyer). The Court held that it
was the Buyer who has a right over the sugar. The contention of the Seller was that they were never
divested of ownership by reason of the Buyer’s non-payment. But the court held that in this case, the
fact of non-payment is not a bar against the transfer of ownership from the Seller to the Buyer. The
mere fact of delivery by the Seller, when it left the sugar in the Buyer’s warehouse, effectively leaving
it in the latter’s control, constituted a transfer of ownership.

Doctrine: General rule is that delivery by the Seller to the Buyer transfers ownership to the Buyer of
the thing sold. [This case is an example of actual delivery.]

Effect of non-payment:
 If it was stipulated that transfer won’t effect until full payment of the price agreed upon, then the
fact of non-payment serves as an obstacle against the buyer from acquiring ownership over the
thing sold.
 Otherwise (when there’s no stipulation), mere delivery transfers ownership to the buyer, and the
fact of non-payment is no bar.

Facts:
 Mar 7, 1914: Chua Teng Chong executed and delivered to Defendant International Banking
Corporation a promissory note. Attached to this note is a private document indicating that Chong
deposited 5,000 piculs of sugar in Warehouse #1008 in Calle Toneleros, Binondo as security.
 Mar 24: Contract of sale of 5,000 piculs of sugar between Plaintiff Ocejo (seller) and Chong. There
was no agreement as to terms of payment.
 Apr 16: Ocejo delivered the sugar to Warehouse #119 in Muelle de la Industria, Chong’s other
warehouse. Ocejo did not demand payment.
 Apr 17: Ocejo demanded payment from Chong, but Chong refused to pay.
o Bank’s representative visited Warehouse #1008 and discovered that there’s only 1,800 piculs
of sugar. Chong directed him to Warehouse #119. The representative locked the warehouse
using the Bank’s padlock.
 Since Chong wouldn’t pay, Ocejo sought to repossess the sugar. They demanded the sugar from the
Bank. Bank refused to give it back.
 Chong was declared insolvent and Intervenor Francisco Chua Seco was appointed as his assignee.
 Ocejo filed a complaint naming the Bank as defendant.
o Ocejo was granted replevin. Subsequently, the parties, by agreement, sold the sugar and the
proceeds deposited in a bank, subject to the order of the court upon the final disposition of the
case.
 Seco intervened, asserting a preferential right to the sugar or its proceeds upon the ground that the
delivery of the sugar by Ocejo, by virtue of which it passed into the possession and control of Chong,
had the effect of transmitting the title of the sugar to the latter, and that, on the other hand, the pledge
asserted by the bank was null and void. Contends that the sugar is property of the insolvent state.
 The Lower Court rendered a judgement in favor of Ocejo.

Who is the rightful owner of the sugar or its proceeds? – Seco/the insolvent estate

1. WON there was a transfer of ownership from Ocejo to Chong? – YES

 Ocejo: there was no transfer because Chong did not yet pay the full price of the sugar.
o Likened the transaction to a cash sale in retail stores where payment and delivery are
simultaneously performed.
 In transactions which do not specify the terms of payment, the seller has the right to demand payment
simultaneous with the delivery. But, notwithstanding this right, if the seller delivers without payment
being made, he will be considered to have extended to a credit to the buyer, and delivery already
transfers ownership.
 Effect of non-payment:
o If it was stipulated that transfer won’t effect until full payment of the price agreed
upon, then the fact of non-payment serves as an obstacle against the buyer from
acquiring ownership over the thing sold.
o Otherwise (when there’s no stipulation), mere delivery transfers ownership to the
buyer, and the fact of non-payment is no bar.
 Here, when Ocejo left the sugar in Warehouse #119, effectively leaving it in Chong’s control, there
was delivery constituting transfer of ownership.

Ruling: REVERSED in favor of Seco. Seco is entitled to receive the proceeds of the sale of the sugar.

“The decision of the court below is therefore reversed, and it is decided that the assignee of the bankruptcy
of Chua Teng Chong is entitled to the product of the sale of the sugar here in question, to wit, P10,826.76,
together with the interest accruing thereon, reserving to the seller the right to file his claim in the insolvency
proceedings. So ordered.”

Dissent – (J. xxx):