G.R. no.

97347
Jaime Ong vs. Court of Appeals and Robles couple
July 6, 1999

Facts:
Petitioner Jaime Ong and respondents, Robles couple executed an “Agreement of
Purchase and Sale” with regard to 2 parcels of land, on which a rice mill and a piggery
were found and thus included.  The terms and conditions of the contract included an
initial payment, payment for the loan of the sellers including interest, and the balance to
be satisfied in 4 equal quarterly installments.
As agreed, petitioner took possession of the subject property and everything else
thereon upon satisfaction of the initial payment. However, petitioner failed to comply
with the payment for the loan. Plus, the checks that the petitioner issued to the couple
as payment for the balance were dishonored due to insufficient funds. To avoid
foreclosure, the respondent couple sold the ricemill with the knowledge and conformity
of petitioner.
Respondents sought for the rescission of the properties due to the latter’s failure to
comply with the terms and conditions on the contract.

RTC ruled in favor of the Robles couple and ordered the restitution of the properties.
The couple were also ordered to return an amount, as determined by the court, to Ong.

CA affirmed the decision in contemplation of Article 1191 of The New Civil Code

Issue:
(1) whether the contract entered into by the parties may be validly rescinded under
Article 1191 of the New Civil Code as distinguished to Article 1383 of the same.
 (2) whether the parties had novated their original contract as to the time and manner
of payment.

HELD:

The Contract entered into by the parties was a “Contract to Sell” which means that the
payment of the purchase price is a positive suspensive condition, the failure of which is
not a breach, casual or serious, but a situation that prevents the obligation of the
vendor to convey title from acquiring an obligatory force.

Respondents bound themselves to deliver a deed of absolute sale and clean title
covering the two parcels of land upon full payment by the buyer of the purchase price
of P2,000,000.00 subject to the fulfillment of the suspensive condition of full payment of
the purchase price by the petitioner. Petitioner, however, failed to complete payment of
the purchase price. The non-fulfillment of the condition of full payment rendered the
contract to sell ineffective and without force and effect.
As to the issue on novation, in order for novation to take place, the concurrence of the
following requisites is indispensable: (1) there must be a previous valid obligation; (2)
there must be an agreement of the parties concerned to a new contract; (3) there must
be the extinguishment of the old contract; and (4) there must be the validity of the new
contract. 25 The aforesaid requisites are not found in the case at bench.

David Reyes vs. Jose Lim, G.R. No. 134241, August 11, 2003

Facts:
Petitioner David Reyes filed a complaint for annulment of contract and damages
against respondents. The complaint alleged that Reyes as seller and Lim as buyer
entered into a contract to sell a parcel of land located along F.B. Harrison Street,
Pasay City with a monthly rental of P35,000.
The complaint claimed that Reyes had informed Harrison Lumber to vacate the
Property before the end of January 1995. Reyes also informed Keng and Harrison
Lumber that if they failed to vacate by 8 March 1995, he would hold them liable for the
penalty of P400,000 a month as provided in the Contract to Sell. It was also alleged
that Lim connived with Harrison Lumber not to vacate the Property until the P400,000
monthly penalty would have accumulated and equaled the unpaid purchase price of
P18,000,000.
Keng and Harrison Lumber denied that they connived with Lim to defraud Reyes, and
that Reyes approved their request for an extension of time to vacate the Property due
to their difficulty in finding a new location for their business. Harrison Lumber claimed
that it had already started transferring some of its merchandise to its new business
location in Malabon.
Lim filed his Answer stating that he was ready and willing to pay the balance of the
purchase price. Lim requested a meeting with Reyes through the latter’s daughter on
the signing of the Deed of Absolute Sale and the payment of the balance but Reyes
kept postponing their meeting. Reyes offered to return the P10 million down payment
to Lim because Reyes was having problems in removing the lessee from the Property.
Lim rejected Reyes’ offer and proceeded to verify the status of Reyes’ title to the
Property. Lim learned that Reyes had already sold the Property to Line One Foods
Corporation Lim denied conniving with Keng and Harrison Lumber to defraud
Reyes.Reyes filed a Motion for Leave to File Amended Complaint due to supervening
facts. These included the filing by Lim of a complaint for estafa against Reyes as well
as an action for specific performance and nullification of sale and title plus damages
before another trial court. The trial court granted the motion.
In his Amended Answer Lim prayed for the cancellation of the Contract to Sell and for
the issuance of a writ of preliminary attachment against Reyes. The trial court denied
the prayer for a writ of preliminary attachment.
Lim requested in open court that Reyes be ordered to deposit the P10 million down
payment with the cashier of the Regional Trial Court of Parañaque. The trial court
granted this motion.
Reyes filed a Motion to Set Aside the Order on the ground the Order practically granted
the reliefs Lim prayed for in his Amended Answer. The trial court denied Reyes’
motion.
The trial court denied Reyes’ Motion for Reconsideration. In the same order, the trial
court directed Reyes to deposit the P10 million down payment with the Clerk of Court.
Reyes filed a Petition for Certiorari with the Court of Appeals and prayed that the
orders of the trial court be set aside for having been issued with grave abuse of
discretion amounting to lack of jurisdiction. But the Court of Appeals dismissed the
petition for lack of merit.
Hence, this petition for review.

Issue:
Whether on not the equity jurisdiction is an applicable law on the matter?

Held:
The instant case, the Supreme Court held that if this was a case where there is hiatus
in the law and in the Rules of Court. If this case was left alone, the hiatus will result in
unjust enrichment to Reyes at the expense of Lim. Here the court excercised equity
jurisdiction.The purpose of the exercise of equity jurisdiction in this case is to prevent
unjust enrichment and to ensure restitution so that substantial justice may be attained
in cases where the prescribed or customary forms of ordinary law are inadequate.
The Supreme Court also state that rescission is possible on
ly when the person demanding rescission can return whatever he may be obliged to
restore. A court of equity will not rescind a contract unless there is restitution, that is,
the parties are restored to the status quo ante.
In this case, it was just, equitable and proper for the trial court to order the deposit of
the P10 million down payment. The decision of the Court of Appeals.was affirmed.

Leonardo v. CA
G.R. No. 125485, 13 September 2004

FACTS:
Petitioner Restituta Leonardo is the only legitimate child of the late Sps. Tomasina Paul
and Balbino Leonardo. Private respondents Teodoro, Victor, Corazon, Piedad, et. al,
all surnamed Sebastian, are the illegitimate children of Tomasina with Jose Sebastian
after she separated from Balbino Leonardo. In 1988, private respondent Corazon
Sebastian with her niece and a certain Bitang, came to Restituta’s house to persuade
her to sign a deed of extrajudicial partition of the estate of Tomasina Paul and Jose
Sebastian. Before signing the document, Restituta allegedly insisted that they wait for
her husband Jose Ramos so he could translate the document which was written in
English. Subsequently, she proceeded to sign the document even without her husband
and without reading the document, on the assurance of private respondent Corazon
that she will get her share as a legitimate daughter. Petitioner then asked private
respondent Corazon and her companions to wait for her husband so he could read the
document. When petitioner’s husband arrived, however, private respondent Corazon
and her companions had left without leaving a copy of the document. It was only when
petitioner hired a lawyer that they were able to secure a copy and read the contents
thereof.
Petitioner refuted private respondents’ claim that they were the legitimate children and
sole heirs of Jose Sebastian and Tomasina Paul since the latter were never married to
each other, thus, the extrajudicial partition was therefore unlawful and illegal. Petitioner
also claimed that her consent was vitiated because she was deceived into signing the
extrajudicial settlement. She further denied having appeared before a Judge of  MTC of
Urbiztondo, Pangasinan to acknowledge the execution of the extrajudicial partition.
 ISSUE:
Whether the consent given by petitioner to the extrajudicial settlement of the estate
was given voluntarily.

RULING:
No. Contracts where consent is given by mistake or because of violence, intimidation,
undue influence or fraud are voidable. These circumstances are defects of the will, the
existence of which impairs the freedom, intelligence, spontaneity, and voluntariness of
the party in giving consent to the agreement. In determining whether consent is
vitiated, Courts are given a wide latitude in weighing the facts considering the age,
physical infirmity, intelligence, relationship and the conduct of the parties at the time of
making the contract and subsequent thereto, irrespective of whether the contract is in a
public or private writing.
In this case,  private respondents failed to offer any evidence to prove that the
extrajudicial settlement of the estate was explained in a language known to the
petitioner, i.e. the Pangasinan dialect. Clearly, petitioner, who only finished Grade 3,
was not in a position to give her free, voluntary and spontaneous consent without
having the document, which was in English, explained to her in the Pangasinan dialect.

Swedish Match v. CA

FACTS:
Swedish Match AB (SMAB) had 3 subsidiary corporations in the Philippines, all
organized under Philippine laws, to wit: Phimco Industries (Phimco), Provident Tree
Farms (PTF), and OTT/Louie. STORA, the parent company of SMAB, decided to sell
SMAB of Sweden and its worldwide match, lighter, and shaving products operation to
Swedish Match NV (SMNV).
Ed Enriquez, VP of Swedish Match Sociedad Anonimas (SMSA) which is SMAB’s
management company, was held under strict instructions that the sale of Phimco
shares should be executed on or before 30 June 1990 in view of the tight loan
covenants of SMNV. He came to the Philippines and informed the Philippine financial
and business circles that the Phimco shares were for sale. Several interested parties
tendered offers to acquire the Phimco shares one of which was private respondent,
Antonio Litonjua, the president and general manager of ALS Management &
Development Corporation.
On November 1989, Litonjua submitted to SMAB a firm offer to buy all of the latter’s
shares in Phimco and all of Phimco’s shares in PTF and OTT for P750,000,000.00.
However, CEO Massimo Rossi informed respondents that their price offer was below
their expectations. Again, on May 1990, Litonjua offered to buy the disputed shares,
excluding the lighter division for US$36M. Rossi wrote that ALS should undertake a
due diligence process or pre-acquisition audit and review of the draft contract for the
Match and Forestry activities of Phimco at ALS convenience. 2 days prior to the
deadline for submission of the final bid, Litonjua told Rossi that they would be unable to
submit the final offer by 30 June 1990, considering that the acquisition audit of Phimco
and the review of the draft agreements had not yet been completed. Thus, Enriquez
sent notice to Litonjua that they would be constrained to entertain bids from other
parties in view of Litonjua’s failure to make a firm commitment for the shares of
Swedish Match. In his letter, Litonjua asserted that they submitted the best bid and that
they were already finalizing the terms of the sale.
More than 2 months from receipt of Litonjua’s last letter, Enriquez advised the former
that the proposed sale of SMAB’s shares in Phimco with local buyers did not
materialize. Enriquez then invited Litonjua to resume negotiations with SMAB for the
sale of Phimco shares. He indicated that SMAB would be prepared to negotiate with
ALS on an exclusive basis for a period of 15 days from 26 September 1990 subject to
the terms contained in the letter. Additionally, Enriquez clarified that if the sale would
not be completed at the end of the 15-day period, SMAB would enter into negotiations
with other buyers. Litonjua emphasized that the new offer constituted an attempt to
reopen the already perfected contract of sale of the shares in his favor. CA ruled that
the series of written communications between petitioners and respondents collectively
constitute a sufficient memorandum of their agreement under Article 1403 of the Civil
Code. Thus, letters exchanged by and between the parties, taken together, were
sufficient to establish that an agreement to sell the disputed shares to respondents was
reached. On the other hand, petitioners stress that Litonjua made it clear in his letters
that the quoted prices were merely tentative and still subject to further negotiations
between him and the seller. They point out that there was no meeting of the minds on
the essential terms and conditions of the sale because SMAB did not accept
respondent’s offer that consideration would be paid in Philippine pesos. They argued
as well that the foregoing circumstances prove that they failed to reach an agreement
on the sale of the Phimco shares.
ISSUE:
Was there a perfected contract of sale with respect to Phimco shares?

HELD:
No. There was no perfected contract of sale since Litonjua’s letter of proposing
acquisition of the Phimco shares for US$36M was merely an offer. Consent in a
contract of sale should be manifested by the meeting of the offer and acceptance upon
the thing and the cause which are to constitute the contract. The lack of a definite offer
on the part of respondents could not possibly serve as the basis of their claim that the
sale of the Phimco shares in their favor was perfected, for one essential element of a
contract of sale was obviously wanting the price certain in money or its equivalent. The
price must be certain, otherwise there is no true consent between the parties.
Respondents’ failure to submit their final bid on the deadline set by petitioners
prevented the perfection of the contract of sale. It was not perfected due to the
absence of one essential element which was the price certain in money or its
equivalent.

GUIANG SPOUSES vs. CA AND CORPUZ

GR. No. 125172
June 26, 1998

FACT: 
Gilda Corpuz and Judie Corpuz are legally married spouses. The spouses has 3
children.
The Corpuz couple, with plaintiff-wife Gilda Corpuz as vendee, bought a lot located in
South Cotabato, and particularly from Manuel Callejo who signed as vendor through a
conditional deed of sale.
Later, the Corpuz spouses sold one-half portion of their Lot spouses Guiang. The latter
have since then occupied the one-half portion [and] built their house thereon .They are
thus adjoining neighbors of the Corpuzes.
Gilda left for Manila trying to look for work abroad and her departure was with the
consent of her husband. She was not able to go abroad though. She stayed for
sometime in Manila.
After his wife’s departure for Manila, defendant Judie seldom went home to the
conjugal dwelling.
Sometime in 1990, Harriet Corpuz learned that her father intended to sell the remaining
one-half portion including their house, of their homelot to defendants Guiangs. She
wrote a letter to her mother informing her. She [Gilda Corpuz] replied that she was
objecting to the sale. Harriet, however, did not inform her father about this; but instead
gave the letter to Mrs. Luzviminda Guiang so that she [Guiang] would advise her father
However, in the absence of his wife Gilda defendant Judie pushed through the sale of
the remaining one-half portion. He sold to defendant Luzviminda Guiang thru a
document known as “Deed of Transfer of Rights” the remaining one-half portion of their
lot and the house standing .Transferor Judie Corpuz’s children Junie and Harriet
signed the document as witness.
Four (4) days, obviously to cure whatever defect in defendant Judie  title over the lot
transferred, defendant Luzviminda Guiang as vendee executed another agreement
over the lot , this time with Manuela Jimenez Callejo, a widow of the original registered
owner from whom the Corpuz spouses originally bought the lot , who signed as
vendor . Judie signed as a witness to the sale. The new sale described the lot
differently but it is obvious from the mass of evidence that the correct lot is the very lot
earlier sold to the corpus spouses.
Plaintiff then returned home. She found her children staying with other households.
Only Junie was staying in their house. Gilda gathered her children together and stayed
at their house. Her husband was nowhere to be found. She was informed by her
children that their father had a wife already.
For staying in their house sold by her husband, plaintiff was complained against by
defendant Luzviminda Guiang and her husband before the Barangay authorities for
trespassing. The parties thereat signed a document known as “amicable settlement”. In
full, the settlement provides for, to wit:
That respondent, Mrs. Gilda Corpuz and her three children, namely: Junie, Hariet and
Judie to leave voluntarily the house of Mr. and Mrs. Antonio Guiang, where they are
presently boarding without any charge, on or before April 7, 1990…
Believing that she had received the shorter end of the bargain, Gilda went to the
Barangay Captain to question her signature on the amicable settlement. She was
referred however to the Office-In-Charge at the time, and the latter in turn told her that
he could not do anything on the matter.
This particular point not rebutted. The Barangay Captain who testified did not deny that
Mrs. Gilda Corpuz approached him for the annulment of the settlement. We thus
conclude that Mrs. Corpuz really approached the Barangay Captain for the annulment
of the settlement. Annulment not having been made, plaintiff stayed put in her house
and lot.
Defendant-spouses Guiang followed thru the amicable settlement with a motion for the
execution of the amicable settlement, filing the same with the MTC of  Koronadal. The
proceedings [are] still pending before the said court, with the filing of the instant suit.
As a consequence of the sale, the spouses Guiang spent for the preparation of the
Deed of Transfer of Rights, as the amount they paid to Mrs. Manuela Callejo, having
assumed the remaining obligation of the Corpuzes to Mrs. Callejo and expenses
particularly the taxes and other expenses towards the transfer of the title to the
spouses Guiangs were incurred for the whole lot.
Private Respondent Gilda Corpuz filed an Amended Complainant  against her husband
Judie and Petitioner-Spouses Guiang. The said Complaint sought the declaration of a
certain deed of sale, which involved the conjugal property of private respondent and
her husband, null and void.
The trial court rendered a judgment is rendered for Gilda and against the defendants
therein, declaring both the Deed of Transfer of Rights “amicable settlement” as null
void and of no effect; Recognizing as lawful and valid the ownership and possession of
plaintiff Gilda over the remaining one-half portion of subject lot 9; and ordering plaintiff
Gilda to reimburse defendants Luzviminda Guiang the amount corresponding to the
payment made by defendants Guiangs to Manuel Callejo for the unpaid balance of the
account of plaintiff in favor of Manuel Callejo.
Dissatisfied, petitioners-spouses filed an appeal with the CA. Respondent Court
affirmed the decision of the trial court
Reconsideration was similarly denied by the same court, hence this petition.

ISSUE: 
Petition denied; the challenged decision affirmed
Whether the assailed Deed of Transfer of Rights was a void or a voidable contract
WON the execution of the “amicable settlement” can validly rectify the defect in the
assailed Deed of Transfer of Rights
HELD:
1.  VOID CONTRACT.
The Guiang spouses allege that absence of Gilda’s consent merely rendered the Deed
voidable under Article 1390 of the Civil Code, which provides:
Art. 1390. The following contracts are voidable or annullable, even though there may
have been no damage to the contracting parties…
(2) Those where the consent is vitiated by mistake, violence, intimidation, undue
influence or fraud.
These contracts are binding, unless they are annulled by a proper action in court. They
are susceptible of ratification.(n)
The error in petitioners’ contention is evident. Article 1390, par. 2, refers to contracts
visited by vices of consent, i.e., contracts which were entered into by a person whose
consent was obtained and vitiated through mistake, violence, intimidation, undue
influence or fraud. In this instance, private respondent’s consent to the contract of sale
of their conjugal property was totally inexistent or absent.
The said contract properly falls within the ambit of Article 124 of the Family Code,
which was correctly applied by the the lower court:
Art. 124. The administration and enjoyment of the conjugal partnership properly shall
belong to both spouses jointly. In case of disagreement, the husband’s decision shall
prevail, subject recourse to the court by the wife for proper remedy, which must be
availed of within five years from the date of the contract implementing such decision.
In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the conjugal properties, the other spouse may assume sole powers of
administration. These powers do not include the powers of disposition or
encumbrance which must have the authority of the court or the written consent of the
other spouse. In the absence of such authority or consent, the disposition or
encumbrance shall be void.
However, the transaction shall be construed as a continuing offer on the part of the
consenting spouse and the third person, and may be perfected as a binding contract
upon the acceptance by the other spouse or authorization by the court before the offer
is withdrawn by either or both offerors. (NOTES, #2)
Furthermore, it must be noted that the fraud and the intimidation referred to by
petitioners were perpetrated in the execution of the document embodying the amicable
settlement. Gilda Corpuz alleged during trial that barangay authorities made her sign
said document through misrepresentation and
coercion. 13 In any event, its execution does not alter the void character of the deed of
sale between the husband and the petitioners-spouses, as will be discussed later. The
fact remains that such contract was entered into without the wife’s consent.
In sum, the nullity of the contract of sale is premised on the absence of private
respondent’s consent. To constitute a valid contract, the Civil Code requires the
concurrence of the following elements: (1) cause, (2) object, and (3) consent, 14 the
last element being indubitably absent in the case at bar.
2. NO.  Insisting that the contract of sale was merely voidable, petitioners aver that it
was duly ratified by the contending parties through the “amicable settlement” they
executed.
The position is not well taken. The trial and the appellate courts have resolved this
issue in favor of the private respondent. The trial court correctly held:
By the specific provision of the law [Art. 1390, Civil Code] therefore, the Deed to
Transfer of Rights cannot be ratified, even by an “amicable settlement”. It cannot be
denied that the “amicable settlement” entered into by plaintiff Gilda spouses Guiang is
a contract. It is a direct offshoot of the Deed of Transfer of Rights. By express provision
of law, such a contract is also void:
Art. 1422. A contract which is the direct result of a previous illegal contract, is also void
and inexistent. (Civil Code of the Philippines).
In summation therefore, both the Deed of transfer of Rights and the “amicable
settlement” are null and void.
Doctrinally and clearly, a void contract cannot be ratified.
NOTES:
1. Comparing said law with its equivalent provision in the Civil Code, the trial court
adroitly explained the amendatory effect of the above provision in this wise: 12
The legal provision is clear. The disposition or encumbrance is void. It becomes still
clearer if we compare the same with the equivalent provision of the Civil Code of the
Philippines. Under Article 166 of the Civil Code, the husband cannot generally alienate
or encumber any real property of the conjugal partnership without the wife’s consent.
The alienation or encumbrance if so made however is not null and void. It is merely
voidable. The offended wife may bring an action to annul the said alienation or
encumbrance. Thus the provision of Article 173 of the Civil Code of the Philippines, to
wit:
Art. 173. The wife may, during the marriage and within ten years from the transaction
questioned, ask the courts for the annulment of any contract of the husband entered
into without her consent, when such consent is required, or any act or contract of the
husband which tends to defraud her or impair her interest in the conjugal partnership
property. Should the wife fail to exercise this right, she or her heirs after the dissolution
of the marriage, may demand the value of property fraudulently alienated by the
husband.(n)
This particular provision giving the wife ten (10) years . . . during [the] marriage to
annul the alienation or encumbrance was not carried over to the Family Code. It is thus
clear that any alienation or encumbrance made after August 3, 1988 when the Family
Code took effect by the husband of the conjugal partnership property without the
consent of the wife is null and void.
2. Neither can the “amicable settlement” be considered a continuing offer that was
accepted and perfected by the parties, following the last sentence of Article 124. The
order of the pertinent events is clear: after the sale, petitioners filed a complaint for
trespassing against private respondent, after which the barangay authorities secured
an “amicable settlement” and petitioners filed before the MTC a motion for its
execution. The settlement, however, does not mention a continuing offer to sell the
property or an acceptance of such a continuing offer. Its tenor was to the effect that
private respondent would vacate the property. By no stretch of the imagination, can the
Court interpret this document as the acceptance mentioned in Article 124.