47. ACOL vs.

PHIL COMM
CREDIT
Acol lost his credit card issued by respondent. He immediately
informed the latter of such loss. PhilComm advised him to put into
writing the notice of loss and to submit it, together with the
extension cards of his wife and daughter, w/c Acold did.

Acols card was used by somebody which amounted to P76,067.28.
The accredited establishments reported the invoices for such
purchases to respondent which then billed petitioner for that
amount. Acol refused to pay but respondent said: that it was the
most practicable procedure and policy of the company. It cited
provision no. 1 of the Terms and Conditions Governing The
Issuance and Use of the Bankard found at the back of the
application form:

xxx Holders responsibility for all charges made through
the use of the card shall continue until the expiration or
its return to the Card Issuer or until a reasonable time
after receipt by the Card Issuer of written notice of loss of
the Card and its actual inclusion in the Cancellation
Bulletin. Xxx

W/N provision no. 1 of the Terms and Conditions was valid and
binding on the petitioner, given that the contract was one of
adhesion. NO.
The same being contrary to public policy. Article 1306 of the Civil Code prohibits
contracting parties from establishing stipulations contrary to public policy.


As petitioner points out, the effectivity of the cancellation of the lost card rests on
an act entirely beyond the control of the cardholder. Worse, the phrase after a
reasonable time gives the issuer the opportunity to actually profit from
unauthorized charges despite receipt of immediate written notice from the
cardholder.


Under such a stipulation, petitioner could have theoretically done everything in
his power to give respondent the required written notice. But if respondent took
a reasonable time (which could be indefinite) to include the card in its
cancellation bulletin, it could still hold the cardholder liable for whatever
unauthorized charges were incurred within that span of time. This would have
been truly iniquitous, considering the amount respondent wanted to hold
petitioner liable for.

49. PNB vs. PADILLA Padilla was granted by PNB a credit line of P1.8M, secured by a
Real Estate Mortgage, for a term of 2 years, with 18% interest per
annum. Private respondent executed in favor of the PNB a Credit
Agreement, 2 Promissory NotesP90,000 each, and a Real
Estate Mortgage Contract. All these contracts contained a uniform
stipulation that PNB may increase the interest whenever it may
please.

W/N the creditor, PNB, may unilaterally change or increase the
interest rate stipulated at will and as often as it pleased. NO.

The unilateral action of PNB in increasing the interest rate on the
private respondents loan violated the mutuality of contracts
ordained in Art. 1308: The contract must bind both contracting
parties; its validity or compliance cannot be left to the will of one of
them.

In order that obligations arising from contracts may have the force of
law between the parties, there must be mutuality between the
Hence, even assuming that the P1.8M loan agreement between PNB and the
private respondent gave PNB a license (although in fact there was none) to
increase the interest rate at will during the term of the loan, that license would
have been null and void for being violative of the principle of mutuality essential
in contracts. It would have invested the loan agreement with the character of a
contract of adhesion, where the parties do not bargain on equal footing, the
weaker partys (the debtor) participation being reduced to the alternative to take
it or leave it. Such a contract is a veritable trap for the weaker party whom the
courts of justice must protect against abuse and imposition.

PNBs successive increase of the interest rate on the private respondents loan,
over the latters protest, were arbitrary as they violated an express provision of
the Credit AgreementSec. 9.01---that the terms may be amended only by
instrument in writing signed by the party to be bound as burdened by such
amendment. The increases imposed by PNB also contravene Art. 1956 of the
Civil Code which provides that no interest shall be due unless it has been
expressly stipulated in writing.

The debtor herein never agreed in writing to pay the interest increases fixed by



parties based on their essential equality. A contract containing a
condition which makes its fulfillment dependent exclusively upon the
uncontrolled will of one of the contracting parties is void.
the PNB beyond 24% per annum, hence he is not bound to pay a higher rate
than that.
54. MONTECILLO vs. REYNES
55. FRANCISCO vs. HERRERA
56. CORONEL vs. CONSTANTINO
57. LAUDICIO vs. ARIAS
58. VILANUEVA vs. CA
59. ADELFA jovits
60. SERRA vs. CA
61. MALBAROSA vs. CA
62. VDA. DE APE vs. CA Fortunato De Ape1 of the 11 heirs of deceasedallegedly sold
his part of the inherited land to one Lumayno as evidenced by a
RECEIPT. Lumayno wanted to register the claimed sale transaction,
she demanded that Fortunato execute the corresponding deed of
sale and to receive the balance of the consideration.

Fortunato denied Lumaynos claim and insisted that what they had
was an EXPIRED contract of LEASE. He never sold his share in
Lot-A to Lumayno and that his signature appearing on the purported
receipt was forged.

Lumayno: when their lease contract was about to expire they
agreed instead to enter into a contract of sale. Thereafter, she
asked her son-in-law Flores to prepare the aforementioned
RECEIPT. Flores read the document to Fortunato and asked
the latter whether he had any objection thereto. Fortunato then
went on to affix his signature on the receipt.

W/N the receipt signed by Fortunato proves the existence of a
contract of sale between him and Lumayno. NO.
A contract of sale is a consensual contract, thus, it is perfected by mere consent
of the parties. For there to be a perfected contract of sale, however, the following
elements must be present: consent, object, and price in money or its equivalent.

To be valid, consent must meet the following requisites:
it should be intelligent, or with an exact notion of the
matter to which it refers;
it should be free and it should be spontaneous.
Intelligence in consent is vitiated by error; freedom by
violence, intimidation or undue influence; spontaneity by
fraud.

In this jurisdiction, the GENERAL RULE is that he who alleges fraud or mistake
in a transaction must substantiate his allegation as the presumption is that a
person takes ordinary care for his concerns and that private dealings have been
entered into fairly and regularly. The EXCEPTION to this rule is provided for
under Article 1332 of the Civil Code which provides that "[w]hen one of the
parties is unable to read, or if the contract is in a language not understood by
him, and mistake or fraud is alleged, the person enforcing the contract must
show that the terms thereof have been fully explained to the former."
Flores testimony: he was very much aware of Fortunato's inability to read and
write in the English language, he did not bother to fully explain to the latter the
substance of the receipt. It is precisely in situations such as this when the
wisdom of Article 1332 of the Civil Code readily becomes apparent which is "to
protect a party to a contract disadvantaged by illiteracy, ignorance, mental
weakness or some other handicap.
63. MAYOR vs. BELEN Mayorsellersold to Belenbuyera parcel of land for P18K.
Belen had paid almost 2/3 of the price when she RESOLD the same
to Mayor, evidenced by Kasulatan ng Bilihang Tuluyan.

Belen accepted the same land as security for Mayors loan from her
ART. 1338. There is fraud when, through insidious words or machinations of one
of the contracting parties, the other is induced to enter into a contract which,
without them, he would not have agreed to.
FRAUD refers to all kinds of deception, whether through insidious machination,
manipulation, concealment or misrepresentation to lead another party into error.



in the amount of P12K, evidenced by Kasulatan ng Sanglaan.

Belen then filed for ANNULMENT of these 2 Kasulatans grounded
on FRAUD. Mayor made her believe that the first sale to her (Belen)
was void and that she might lose what she had already paid which
amounted to 70% of the purchase price.

It turned out that the scheme was in fact a ruse employed by
Romulo and Andrea to re-acquire the property, thus, Lourdess
consent in the execution of the Kasulatan ng Bilihang Tuluyan and
Kasulatan ng Sanglaan was obtained through fraud and undue
influence.
W/N FRAUD attended the execution of the Kasulatan ng Bilihan
and Kasulatan ng Sanglaan. YES.
The deceit employed must be serious. It must be sufficient to impress or lead an
ordinarily prudent person into error, taking into account the circumstances of
each case.

Lourdes M. Belen had a limited educational attainment. Although the 2
Kasulatans executed in Tagalog, a close scrutiny thereof shows that they are
practically literal translations of their English counterparts. Thus, the mere fact
that the documents were executed in the vernacular neither clarified nor
simplified matters for Lourdes who admitted on cross-examination that she
merely finished Grade 3, could write a little, and understand a little of the
Tagalog language.

CA not in fault when it invoked Article 1332 of the Civil Code which states:
When one of the parties is unable to read, or if the contract is in a language not
understood by him, and mistake or fraud is alleged, the person enforcing the
contract must show that the terms thereof have been fully explained to the
former.

As aptly pointed out by the CA, the principle that a party is presumed to know
the import of a document to which he affixes his signature is modified by the
foregoing article. Under the said article, where a party is unable to read or when
the contract is in a language not understood by a party and mistake or fraud is
alleged, the obligation to show that the terms of the contract had been fully
explained to said party who is unable to read or understand the language of the
contract devolves on the party seeking to enforce it.
64. BAUTISTA vs. CA The deceased uncle of petitioner allegedly sold and conveyed to the
latter a land during the uncles lifetime, as evidenced by a DEED OF
ABSOLUTE SALE.

Respondent claiming to be the illegitimate child of the deceased
instituted a complaint for the declaration of nullity of sale and title
with damages. he presented testimonies of expert witnesses who
claimed that the signature of Cesar Morelos on the Deed of
Absolute Sale and the fingerprint appearing on his Residence
Certificate were not his.
w/n the DEED of ABSOLUTE SALE was VALID. YES.
The presumption of validity and regularity prevails over allegations of forgery
and fraud. As against direct evidence consisting of the testimony of a witness
who was physically present at the signing of the contract and who had personal
knowledge thereof, the testimony of an expert witness constitutes indirect or
circumstantial evidence at best. Carmelita Marcelino, the witness to the Deed of
Absolute Sale, confirmed the genuineness, authenticity and due execution
thereof. Having been physically present to see the decedent Cesar Morelos and
petitioner Laura Bautista affix their signatures on the document, the weight of
evidence preponderates in favor of petitioners.
As to the alleged insufficient consideration of the sale of the property, the mere
inadequacy of the price does not affect its validity when both parties are in a
position to form an independent judgment concerning the transaction, unless
fraud, mistake or undue influence indicative of a defect in consent is present.

A
contract may consequently be annulled on the ground of vitiated consent and
not due to the inadequacy of the price. In the case at bar, however, no evidence
to prove fraud, mistake or undue influence indicative of vitiated consent was



presented other than the respondent's self-serving allegations.
65. DAUDEN-HERNAEZ vs. HON.
WALFRIDO DE LOS ANGELES
Dauden-Hernaez, a motion picture actress, had filed a complaint
against private respondents, to recover P14,700.00 representing a
balance allegedly due said petitioner for her services as leading
actress.

It was dismissed because the "claim of plaintiff was not evidenced
by any written document, either public or private", and the complaint
"was defective on its face" for violating Articles 1356 and 1358 of
the Civil Code.

Complaint was amended. Defendant argued against it:
amended complaint did not vary in any material
respect from the original complaint except in minor
details, and suffers from the same vital defect of the
original complaint", which is the violation of Article 1356
of the Civil Code, in that the contract sued upon was not
alleged to be in writing; that by Article 1358 the writing
was absolute and indispensable, because the amount
involved exceeds five hundred pesos.

W/N the contract for personal services involving more than
P500.00 was either invalid of unenforceable under Article 1358,
last par.

NO. THERE WAS A VALID AND ENFORCEABLE CONTRACT
EVEN IF THERE IS NO CONTRACT IN WRITING. Contracts are
valid and binding from their perfection regardless of form whether
they be oral or written. This is plain from Articles 1315 and 1356 of
the present Civil Code.

The essential requisites of a contract are: (1) consent (2) proper
subject matter, and (3) consideration or causa for the obligation
assumed (Article 1318). So that once the three elements exist, the
contract is generally valid and obligatory, regardless of the form,
oral or written, in which they are couched.


To this general rule, the Code admits exceptions, set forth in Article 1356 (2).

It is thus seen that to the general rule that the form (oral or written) is irrelevant
to the binding effect inter parties of a contract that possesses the three validating
elements of consent, subject matter, and causa, Article 1356 of the Code
establishes only two exceptions, to wit:
a. Contracts for which the law itself requires that they be in some
particular form (writing) in order to make them valid and enforceable
(the so-called solemn contracts). Of these the typical example is the
donation of immovable property that the law (Article 749) requires to
be embodied in a public instrument in order "that the donation may be
valid", i.e., existing or binding. Other instances are the donation of
movables worth more than P5,000.00 which must be in writing,
"otherwise the donation shall be void" (Article 748); contracts to pay
interest on loans (mutuum) that must be "expressly stipulated in
writing" (Article 1956); and the agreements contemplated by Article
1744, 1773, 1874 and 2134 of the present Civil Code.
b. Contracts that the law requires to be proved by some writing
(memorandum) of its terms, as in those covered by the old Statute of
Frauds, now Article 1403(2) of the Civil Code. Their existence not
being provable by mere oral testimony (unless wholly or partly
executed), these contracts are exceptional in requiring a writing
embodying the terms thereof for their enforceability by action in court.

The contract sued upon by petitioner herein (compensation for services) does
not come under either exception. It is true that it appears included in Article
1358, last clause, providing that "all other contracts where the amount involved
exceeds five hundred pesos must appear in writing, even a private one." But
Article 1358 nowhere provides that the absence of written form in this case will
make the agreement invalid or unenforceable. On the contrary, Article 1357
clearly indicates that contracts covered by Article 1358 are binding and
enforceable by action or suit despite the absence of writing.
66. CLAUDEL v. CA A lot was being claimed by two sets of heirsHeirs of Cecilio
Claudel (wife and children) and Siblings of Cecilio who claimed that
several portions of the subject Lot had been purchased by their
parents from the deceased about 46 years earlier. The sale was
VERBAL.

However, in the event that a third party, as in this case, disputes the
ownership of the property, the person against whom that claim is brought can
not present any proof of such sale and hence has no means to enforce the
contract. Thus the Statute of Frauds was precisely devised to protect the parties
in a contract of sale of real property so that no such contract is enforceable
unless certain requisites, for purposes of proof, are met.



W/N the ORAL sale was valid. NO.

Rule of thumb: a sale of land, once consummated, is valid
regardless of the form it may have been entered into. For nowhere
does law or jurisprudence prescribe that the contract of sale be put
in writing before such contract can validly cede or transmit rights
over a certain real property between the parties themselves.


The purpose of the Statute of Frauds is to prevent fraud and perjury in the
enforcement of obligations depending for their evidence upon the unassisted
memory of witnesses by requiring certain enumerated contracts and
transactions to be evidenced in Writing.
67. BERMAN MEMORIAL PARK,
INC and LUISA CHONG vs.
FRANCISCO CHENG
Cheng purchased 2 memorial lotsLot 12 which he upgraded to Lot
24. Cheng received a statement of account from BMPI showing that
he still had a balance of P32,375.00. Cheng informed BMPI that
he had, in fact, made an overpayment of P77,375.00 for the two
lots.

Chong/BMI: the price of 24-Lot was actually P350,000.00, but that
the IMP had agreed to sell the lot to Cheng for P250,000.00,
less P110,000.00 of theP150,000.00 price of 12-Lot in
accordance w/their agreement.

How should the parties contract be interpreted?
Article 1370 of the New Civil Code provides that if the terms of a contract are
clear and leave no doubt upon the intention of the contracting parties, the literal
meaning of its stipulation shall control. No amount of extrinsic aids are required
and no further extraneous sources are necessary in order to ascertain the
parties intent, determinable as it is, from the contract itself. The records are
clear that the respondent understood the nature of the contract he entered into.

If, indeed, the stipulations as embodied in the aforementioned Pre-Need
Purchase Agreement were not the true intention of the parties, the respondent
should have filed the corresponding action for reformation of the contract. But he
did not.

The hornbook rule on interpretation of contracts gives primacy to the intention of
the parties, which is the law among them. Ultimately, their intention is to be
deciphered not from the unilateral post facto assertions of one of the parties, but
from the language used in the contract. And when the terms of the agreement,
as expressed in such language, are clear, they are to be understood literally, just
as they appear on the face of the contract.