Dela Cruz Oblicon 2

Obligations and Contracts Case Reviewer Part 2
be resolved, PUREFOODS already awarded the project and

General Provisions: (Articles 1305 to 1317) entered into a contract with JARDINE which incidentally was not
one of the bidders.
1. A contract is a meeting of minds: Article 13051  FEMSCO now comes to court asking PUREFOODS to honor its
contract and for JARDINE to cease and desist from delivering and
Jardine Davies vs. CA, 333 SCRA 684 installing the two generators at PUREFOODS.
Bidding, implied acceptance – perfection of contract  /Trial Court rendered a decision in favour of FEMSCO
 CA also rendered a decision affirming the trial court’s decision
 Pure Foods Corporation, to remedy and curtail further losses  PUREFOODS contend that its letter to FEMSCO was not an
due to the series of power failures, decided to install two 1500KW acceptance of the proposal but a mere qualified acceptance
generators in its food processing plant in San Roque, Marikina City which required FEMSCO’s express conforme and since
 In 1992, it conducted a bidding for the supply and installation of PUREFOODS never received a conforme, it is very well within
the generators and out of the eight bidders who attended the pre- reason to revoke its counter-offer. Hence no contract was
bidding conference, only three bidders submitted their bid perfected between PUREFOODS AND FEMSCO
proposals and gave bonds equivalent to 5% of their respective bids
as required. DID A PERFECTED CONTRACT EXIST BETWEEN PUREFOODS AND
 In December that same year, PUREFOODS confirmed the award of FEMSCO?
the contract to FEMSCO
o This will confirm that Pure Foods Corp. has awarded to ASSUMING THERE WAS A PERFECTED CONTRACT, IS THERE ANY
your firm the project…payable by progress billing with 10% SHOWING THAT JARDINE INDUCED OR CONNIVED WITH
retention…retained amount shall be released 30 days after PUREFOODS TO VIOLATE ITS CONTRACT WITH FEMSCO?
the acceptance of the completed project and upon posting
of the guarantee bond equivalent to 20% of the contract SC RULED:
price.  On contracts
o …Once finalized, we shall ask you to sign the formal o A contract is a juridical convention manifested in legal
contract embodying the foregoing terms and conditions form, by virtue of which one or more persons bind
 FEMSCO submitted the required performance bond and the themselves in favour of another or others, or reciprocally,
contractor’s all-risk insurance policy which PUREFOODS, through to the fulfilment of a prestation to give, to do or not to do.
its VP acknowledged in a letter sent to FEMSCO. o Requisites of a contract:
 FEMSCO also made arrangements with its principal and started  Consent of contracting parties
the PUREFOODS project by purchasing the necessary materials.  Object certain which is the subject matter of the
 PUREFOODS returned to FEMSCO the bidder’s bond as requested contract
 Subsequently, PUREFOODS, through its Senior VP  Cause of the obligation which is established
unilaterally cancelled the award as significant factors were o Acceptance may be expressed or implied
uncovered which warranted them a total review of the project  Art 13262 of the Code applies
 FEMSCO protested the cancellation of the award and sought a  Terms and Conditions of the Bidding –
meeting with PUREFOODS, however, even before the matter is to “advertisement”
 Bid proposals – “offers”
1Article 1305 – A contract is a meeting of the mind between two

persons whereby one binds himself, with respect to the other, to give 2Article 1326 – Advertisements for bidders are simply invitations to
something or to render some service make proposals
By: Cyndy dela Cruz, 1-D

Hoarding is a crime. Share away <3
 Reply of PUREFOODS – “acceptance of  Azcuna now comes to court not to contest his ejectment but to
offer” take particular exception insofar as the 3,000Php per day as
 Even assuming that the “letter” constituted a damages and contends that the same is a penalty shocking to
conditional counter-offer, the “acceptance” of the conscience and clearly contrary to public policy
PUREFOODS of the performance bond and the
insurance constituted an implied acceptance of WHETHER OR NOT THE 3,000PHP PENALTY IS EXCESSIVE AND
FEMSCO to PUREFOODS’ counter-proposal IMPROPER
and accordingly, at this point the contract
was PERFECTED. SC RULED:
 On third party inducement  “That after the termination of the lease, the LESSEE shall
o Article 13143 allows for awarding of damages in cases peaceably deliver to the LESSOR the leased premises…In
where a third party induces the party to a contract to case of LESSEE’S FAILURE LESSOR HAS THE RIGHT TO
violate the same. CHARGE THE LESSEE 1,000PER DAY AS DAMAGES…”
o There is no showing of specific evidence to warrant  The above-quoted portion of the lease contract is clearly an
FEMSCO’s claim that JARDINE induced PUREFOODS to agreement for liquidated damages
violate the contract therefore JARDINE is not liable to pay  By virtue of Article 1306, the parties have the freedom to stipulate
FEMSCO damages. such that the same should not be contrary to law, good customs,
morals, public order and public policy.
2. Freedom To Stipulate4: Article 1306  The Court finds nothing immoral nor illegal with the
stipulation
Azcuna, Jr. vs. CA, 255 S 215
1,000per day damages, lease contract, not immoral Manila Bay Club vs. CA, 245 S 715
 Azcuna entered into a lease contract with the Barcelonas in which Lease, breach of insurance clause, right to unilateral cancellation,
he occupied three units of the building owned by the latter. not contrary to law..etc
 Came expiration date of the lease and without an agreed
renewal coupled by petitioner’s failure to surrender the leased  A ten-year lease contract was entered into by the Sabenianos and
units despite of private respondent’s demands, the latter filed an herein petitioner Manila Bay Club Corporation
ejectment case against Azcuna  However the lease contract was short-lived due to Manila Bay
 The RTC as well as CA rendered a decision ordering Azcuna to pay: Club’s failure to insure the leased building in favor of the private
o Sum of 25,000Php as rental for the continued use by the respondents
three units in question  Private respondents invoked the “special clause” to justify their
o Further sum of 3,000Php per day by way of damages action
for his failure to turn-over peacefully the subject units o …if the tenant shall at any time neglect to perform or
o Attorney’s fees and suit comply with any of the…stipulations…this lease contract
shall be automatically terminated and cancelled
WHETHER OR NOT MANILA BAY CLUB CORP. VIOLATED THE
3 Article 1314 – Any third person who induces another to violate his
INSURANCE CLAUSE
contract shall be liable for damages
4 Article 1306 - The contracting parties may establish such
WHETHER OR NOT PRIVATE RESPONDENTS CAN VALIDLY
stipulations, clauses, terms and conditions as they may deem UNILATERALLY RESCIND THE CONTRACT SINCE THE BREACH WAS
convenient, provided they are not contrary to law, morals, good MERELY SLIGHT OR CASUAL
customs, public order or public policy

 The parties committed a crime or misdemeanor and Article

SC RULED: 1305 of the Old Civil Code or Article 14115 of the New Civil
 On the insurance clause Code prevents such recovery
o The building must be insured and the insurance premium
must be for the account of the LESSEE… Cui vs. Arellano University, 2 S 205
o The trial court’s findings that there is a failure to Scholarship, requiring refund in order to get transcript, violative of
designate private respondents as beneficiaries in the public policy
insurance policies is affirmed.
o During the testimony of Manila Bay’s own witness, he Cui took up preparatory law course in Arellano University and after
admitted that they in fact failed to comply with the finishing the same, enrolled in the College of Law which, during all
insurance clause and that they are aware that this is a time in his stay was awarded scholarship grants and scholastic
ground for rescission merits so that his semestral tuition were returned to him during
 On the gravity of the breach the ends of each semester
o The tenor of the rescission clause of the contract intended  But during his last year in law school, he was not able to pay his
mandatory compliance with all the provisions of the tuition due to the severed connection of his uncle who was then
contract the Dean of the College of Law who transferred to Abad Santos
o Thus upon petitioner’s failure to comply with the Law School.
mandatory requirement of the insurance clause, it is well  By reason of this, Cui transferred to Abad Santos for his last year
within the right of the private respondents to rescind the and during the time of applying for the bar examinations he
contract needed to secure his transcript from respondent university
o As long as such agreements are not contrary to law,  Respondent University required Cui to return whatever amount
morals, good customs, public policy or public order, they they have given him for his scholarship pursuant to the agreement
shall have the force of law between the parties he signed with the University:
o In consideration of the scholarship granted to me by the
De Leon vs. CA, 186 S 345 University, I hereby waive my right to transfer to another
school without having refunded to the University the
 equivalent of my scholarship cash
Batarra vs. Marcos, 7 P 156 WHETHER OR NOT THE ABOVE-QUOTED PROVISION IS VALID
Breach of promise to marry upon carnal connection, married man-
single woman, in pari delicto, no awarding of damages
5 Article 1411 – when the nullity proceeds from the illegality of the
 Batarra complains of Marcos’ breach of promise to marry whereby
cause or object of the contract, and the act constitutes a criminal
Marcos induced Batarra to submit herself to sexual relations with
him on account of such promise of marriage offense, both parties are in pari delicto, they shall have no action
 The facts appearing in the record does not constitute that of against each other, and both shall be prosecuted. Moreover, the
the crime of seduction because the plaintiff is not under 23 provisions of the Penal Code relative to the disposal of effects or
years of age therefore it cannot be the basis for the awarding of instruments of a crime shall be applicable to the things or price of the
damages contract
 The defendant may have been liable for his breach of promise to
marry, the carnal connection being the cause or consideration This rule shall be applicable when only one of the parties is guilty;
of the promise but the innocent one may claim what he has given, and shall not be
bound to comply with his promise

SC RULED:  He has rendered legal services as head of the legal department of

 The stipulation in question is contrary to public policy and hence, OMICO
null and void  On a prior civil case instituted by Catolico against OMICO, he asks
the court from OMICO to return to him the 10 certificates of
stock which the corporation borrowed from him as his capacity as
Ferrazzini vs. GSell, 34 P 697 stockholder and for the payment of his services as legal counsel
Contracts in restraint of trade, void against public policy
for the corporation
 A relation of master and servant was entered into by the parties
which created certain duties and obligations on the contract
SHOULD CATOLICO BE RENDERED A JUDGMENT TO HIS FAVOR
 The master furnishing the servant with a reasonably safe place to
ON THE PAYMENT OF HIS SERVICES AS LEGAL COUNSEL?
work and not to discharge him until the expiration of six months
after notice
SC RULED:
 The servant serving with utmost loyalty, faithfulness and
 On the void ab initio contract
obedience to all reasonable orders not inconsistent with the
o The contract which was entered into was patently void
contract
because it is contrary to law and public policy
 The plaintiff was discharged for reason that he acted in
o The contract entered into constituted a private
contravention of the contract with his master, violating the express
practice of law and in contravention of the express
order of the master not to leave the factory during work hours to
provision of Section 35, Rule 138 of the Revised
drink
Rules od Court
 Furthermore, the defendant demands a sum of 10,000Php
o This rule is based on sound reasons of public policy
from the servant for violating one of the terms of their
o The object of this contract, being contrary to law, is
contract:
void from the beginning
o entering into an enterprise or whatsoever in the Philippine
o Therefore, Catolico cannot validly ask for the
islands without written permission from the master during
payment of his professional services since he should
the period of employment and for a term of five years from
have known, or he is ought to know that when he
and after the termination of employment without regard to
was elevated as a judge of the Court of First Instance,
the cause of such termination
his right to practice law as an attorney is suspended
and will continue to be suspended as long as he
WHETHER OR NOT THE MASTER CAN VALIDLY UPHOLD THE ABOVE-
occupied the judicial position
QUOTED PROVISION
SC RULED: 3. Innominate contracts6: Article 1307

 The stipulation was clearly one in undue and unreasonable
restraint of trade and therefore void as against public policy Perez vs. Pomar, 2 P 682
I do that you may give, implied consent, valid and enforceable,
interpreter
Omico Mining and Industrial Corp vs. Vallejos, 63
S 301
Contract of professional services between company and judge of
CFI, void ab initio, judges not allowed to privately practice
6 Article 1307 – Innominate contracts shall be regulated by the
stipulations of the parties, by the provisions of Titles I and II of this
 Alfredo Catolico, judge of the Court of First Instance entered into a book, by the rules governing the most analogous nominate contracts
contract of professional services with herein petitioner-corporation and by the customs of the place

 Don Vicente Perez, through a verbal request, acted as Pacific Steel Corp. various steel bars worth 2,650,916.40Php
interpreter between Don Eugenio Pomar and the military covered by a total of 12 invoices which stipulated as follows:
authorities for the reason that Pomar is not capable of o Interest at 24% per annum is to be charged to all
understanding the English language accounts overdue plus 25% additional on unpaid invoice
 On many occasions Perez accompanied Pomar in his meetings for attorney’s fees aside from the court cost…
and conferences and interpreted for the latter  Petitioner made partial payments but failed to pay subsequent
 Large profits were achieved by the Compania General de payments which urged herein respondent to institute an action
Tobacos as result of the foregoing and Perez, by reason of this for collection of a sum of money
request, was obliged to abandon his own business in  Petitioner, in its answer denied that it authorized the purchase
consideration of being paid for his services orders from the respondent and it had no knowledge as to the
 Pomar contends that no agreement has ensued and that he truth of the invoices
is did not oblige Perez to render him services as an interpreter  RTC and CA ruled in favor of Cathay Pacific and hereby orders
and that Perez did this on his private capacity and not as Asian Construction to pay the sum plus interests stipulated in the
agent of the company invoice but all other fees
IS POMAR LIABLE TO PAY PEREZ FOR HIS SERVICES?  Petitioners question the 24% interest among other questions of
law and contends that it has not consented to such
SC RULED:
 On Innominate Contracts WHETHER THE 24% INTEREST IMPOSED IN THE JUDGEMENT
o Although it would not appear that ay written contract was RENDERED BY THE RTC AND CA IS VOID
entered into between the parties, we must consider that
there was a tacit and mutual consent as to the SC RULED:
rendition of the services which gives rise to the  On contracts of adhesion
obligation upon the person benefited by the  The sales invoices are by their nature, contracts of adhesion, a
services to make compensation therefore since the take it or leave it contract and are binding as ordinary
bilateral obligation to render service as interpreter, contracts
on the one hand and on the other to pay for the  Parties being offered of this kinds of contracts are free to reject it
services rendered is thereby incurred. entirely and if they adhere, they give their consent and such
o Consideration of the contract was the mutual benefit will be a perfected contract and such stipulations will have
which will be derived from the service rendered the force of law between the parties
o The fact that there was a concurrence of the three  Petitioner is presumed to have full knowledge and to have acted
elements in a contract, it would be valid to consider with due care, or at the very least, have been aware of the terms
that what they entered into was a perfected contract and and conditions of the contract.
such is enforceable  Thus, the award of the 24% interest is valid and enforceable
Asian Construction vs. Cathay Pacific Steel, June 4. Mutuality of Contracts: Article 13087
29, 2010 UCPB vs. Beluso, 530 S 567
Sales invoice, 24% interest, Contracts of Adhesion, binding as Interest left at sole will of the lender-violative of mutuality of
ordinary contract contracts
 On several occasions in June and July of 1997, Asian Construction
and Development Corporation purchased from respondent Cathay 7Article 1308 – The contracts must bind both contracting parties; its
validity or compliance cannot be left to the will of one of them

 UCPB granted the spouses Belouso a Promissory Notes Line under credit to the user by assuring full disclosure of such cost
a Credit Agreement whereby the latter could avail from the former with a view of preventing the uninformed use of credit to
credit of up to a maximum amount of 1.2Million Pesos the detriment of the national economy
 In view of the foregoing, a real estate mortgage over a parcel of
land was constituted as additional security for the obligation
 Credit agreement was subsequently amended to allow for a
Joaquin vs. Mitsumine, 34 P 858
Defects in the contract, not proven by conclusive evidence,
higher credit limit
induced defendant to believe that he is the purchaser of the
 UCPB applied for interest rates on different promissory notes
object of the contract, estoppels
ranging from 18% to 34%
 The spouses were able to pay some of the principal, as well as
 Attorney Leocadio Joaquin filed a complaint against Mitsumine
interest for some of the promissory notes, however, towards the
alleging that the real purchaser in their contract for the
latter have failed to make any payments
importation in Japan of a machine for manufacture of aerated
 UCPB foreclosed the properties to secure the spouses credit line
water which led him to execute a chattel mortgage instrument was
which have already ballooned to 3,784,603Php
not him but his client, Vito and that the same deed shall be
 RTC and CA ruled in favor of the spouses and rendered a
declared null and void
judgment declaring void the interest rate used by UCPB
 Facts leading to Joaquin’s complaint revealed that that in April of
1914, Joaquin asked defendant in his own name to import from
WAS THE INTEREST RATE USED BY UCPB VOID?
Japan a machine for the manufacture of aerated water which
Joaquin agreed to pay upon delivery of the machine
SC RULED:
 200Php of which was paid on his account and 525Php
 On the interest rate stipulations
agreed to be paid on installments
o The promissory note revealed the ff stipulations:
 For value received…I/We…jointly and severally
WHETHER THE MORTGAGE DEED WAS NULL AND VOID
promise to pay UCPB …the sum of … with the
interest thereon at the rate indicative of DBD
SC RULED:
retail rate or as determined by the Branch
 On the validity and authenticity of the mortgage deed
Head
o Record shows that on April of 1914, Joaquin has signed
o Article 1308 provides that the contracts must bind both
and forwarded to the commercial establishment of
parties and its validity or compliance cannot be left to the
Mitsumine, named the Nippon Bazaar an order to
will of one of them
procure a complete machine for the manufacture of
o As held in Garcia v. Rita Legarda, Inc, a contract
aerated waters
containing a condition which makes its fulfillment
o Validity and authenticity of the mortgage deed is
depended exclusively upon the uncontrolled will of one of
unquestionable
the contracting parties is void.
o No error has been proven nor has Joaquin proved that
o The provision stating that the interest shall be at the
the real purchaser was his client Vito.
rate indicative of DBD retail rate is indeed dependent
o If a party alleges defects in a contract so that it could
solely on the will of the bank and thus VOID for it gives the
be set aside, he must prove conclusively the
bank unfettered discretion on what the rate may be
existence of the defects because the validity and
o The provision does not even specify a margin above
fulfillment of the contract cannot be left to the will of
or below the DBD retail rate and thus violative of the
one of the parties
provision in the Truth in Lending Act which aims to protect
the citizens from lack of awareness of the true cost of

o Furthermore, the plaintiff, deliberately and

intentionally, by his own acts, induced the defendant 5. Relativity of Contracts:
to believe that he was the real purchaser of the Integrated Packing vs. CA, 333 S 170
aerated machine, therefore he is estopped from Failure to pay of one party – cease of delivery of another, breach
denying or contradicting his previous acts and on part of the party who failed to pay, reciprocal obligations
statements in regard to the matter conditioned on the fulfillment of the other
Garcia vs. Legarda, 21 S 555  Integrating Packing Corp. and Fil-Anchor Paper Co. executed an
Stipulation for grace period in cases of failure to pay, valid, cannot order agreement whereby Fil-Anchor paper bound itself to deliver
be arbitrarily exercised without breach of another party to petitioner reams of paper and in accordance with the SOP of the
parties, the materials were to be paid within a minimum of
 Herein petitioner Garcia and Rita Legarda Inc. entered into thirty days and maximum of ninety days from delivery
several contracts to sell of subdivided lots situated in Manila  Later, petitioner entered into a contract with Philippine Appliance
o In case the party of the SECOND PART fails to satisfy Corporation to print three volumes of cultural books for delivery on
any monthly installments…he is granted a month of November 1978,1979 and 1980
grace within which to make the retarded  Fil-Anchor delivered to petitioner 1,097 reams of bond paper out of
paymen…should a period of 90 days elapse to begin the 3,450 reams as stated in the agreement and petitioner
the expiration of the month of grace herein mentioned, demanded delivery of the remaining reams for this will greatly
the party of the FIRST PART has the right to declare prejudice him in his obligations
this contract cancelled and of no effect…as if the  However, petitioner failed to pay upon further delivery
contract had never been entered into  When petitioner entered into another contract with Philacor, it
 Garcia has been paying monthly installments until July 1951 failed to fully comply with its contract.
 As of August of 1951-May 1952, Garcia has failed to pay  Trial court rendered a decision ordering petitioner to pay private
despite several demands to pay the installments in arrears respondents the sum representing the value of printing paper
 Thus, on June of 1952, Rita Legarda Inc. cancelled the contract delivery however it also ruled on the awarding of moral damages
by virtue of the express provision in the contract of private respondent to petitioner and ruled that were it not
DO THE SUBJECT PROVISION VIOLATE THE MUTUALITY OF for the delay of private respondent’s delivery,
CONTRACTS? petitioner could have sold books to Philacor
 CA rendered a decision deleting the part of awarding
SC RULED:
moral damages for lack of factual basis
 On the stipulation
o The stipulation merely gives the vendor the right to WHETHER OR NOT PRIVATE RESPONDENT VIOLATED THE
declare the contract cancelled and of no effect upon ORDER AGREEMENT
fulfillment of the conditions set forth.
o The stipulation does not leave the validity or compliance WHETHER OR NOT PRIVATE RESPONDENT IS LIABLE FOR
of the contract entirely to the will of one of the PETITIONER’S BREACH TO PHILACOR
contracting parties
o The power thus granted cannot be said to be immoral, SC RULED:
much less than unlawful for it could be exercised – not
 On the alleged violation of the order agreement
arbitrarily but only upon the other contracting party
o The transaction between the contracting parties is a
committing the breach of contract of non-payment of
the installments agreed upon contract of sale whereby private respondent
obligates itself to deliver printing paper and the

petitioner obligates itself to pay a sum of money  Petitioner undertook to pay 3,000Php a month as consideration
for its equivalent for the reservation of its option
o The above gave rise to reciprocal obligations such  Petitioner has never failed to pay any installment payment until
Encarnacion died and for this reason, Petitioner directed his
that the obligation of one is dependent upon the
payments to Victor, son of Encarnacion, who in turn refused
obligation of another
acceptance of such payment
o Petitioner did not fulfill its side of the contract  TCT for the subject lot was issued in the name of Victor
o Private respondent’s suspension of delivery is legally  Petitioner offered tender of rental fee but Victor refused the same
justified in Article 15838 hence this complaint for specific performance
 On petitioner’s breach with PHILACOR WHETHER OR NOT THE CONTRACT OF LEASE WITH OPTION TO BUY
o Private respondent is not a party to the agreement ENTERED INTO BY THE LATE ENCARNACION BARTOLOME WITH
with Philacor PETITIONER WAS TERMINATED UPON HER DEATH
o The paper specified in the agreement of petitioner
SC RULED:
to Philacor is not the same paper which private
 On transmissibility of contracts
respondent undertook to deliver to petitioner.
o Article 13119 provides that the heirs are bound by the
o There is thus no basis to hold petitioner liable for any contracts entered into by the predecessors-in-interest
damages except when the rights and obligations are not
transmissible by their nature, by stipulations or by
DKC Holdings vs. CA, 329 S 666 provision of law
Transmissible contract, contracts involving property rights, death o A good measure for determining whether a contract
of a party in transmissible contracts does not excuse non- terminates upon the death of one of the parties is whether
performance it is of such character that it may be performed by the
promissor’s personal representative
 DKC Holdings, in 1988, entered into a Contract of Lease with o In the case at bar, the subject matter of the contract is
Option to Buy with Encarnacion Bartolome likewise a lease, which is a property right. The death of
o Option must be exercised within a period of two years a party does not excuse non performance of a
counted from the signing of the contract contract which involves a property right, and the
rights and obligations thereunder pass to the
personal representatives of the deceased
8 Article 1583 – When there is a contract of sale of goods to be
6. Stipulation Pour Autrui: Article 131110
delivered by stated installments, which are to be separately paid for,
and the seller makes defective deliveries in respect of one or more
installments, or the buyer neglects or refuses without just cause to 9 Article 1311 – Contracts take effect only between the parties, their
take the delivery of or pay for one or more installments, it depends in assigns and heirs, except in cases where the rights and obligations
each case on the terms of the contract and the circumstances of the arising from the contract are not transmissible by their nature, or by
case, whether the breach of the contract is so material as to justify stipulation or by provision of law. The heir is not liable beyond the
the injured party in refusing to proceed further and suing for value of the property he received from the decedent
damages for breach of the entire contract, or whether the breach is 10 Article 1311 – Contracts take effect only between the parties, their
severable giving rise to a claim for compensation but not to a right to assigns and heirs, except it case where the rights and obligations
treat the whole contract as broken arising from the contract are not transmissible by their nature, or by

Marmont Hotel vs. CA, 168 S 373 o A stipulation pour autrui is a stipulation in favor of a
Stipulation pour autrui in favor of Marmont Hotel, spouses acted in third person conferring a clear and deliberate favor upon
violation of the second MOA him, which stipulation is found in a contract entered into
by the parties neither of whom acted as agent of the
 A Memorandum of Agreement was entered into between Maris beneficiary
Trading and petitioner Marmont Resort Hotel Enterprises o The fact that the spouses accepted such MOA terms,
o Maris Trading undertook to drill for water and to provide all respondent spouses clearly are aware of its express
equipment necessary to install and complete a water stipulations regarding the water facility for the resort and
supply facility to service the hotel such refusal to give permission to survey a portion of their
 A second MOA was entered into between Maris Trading and land is contrary to principles of honesty, good faith
spouses Guiang and fair dealing
o That Maris has dug, drilled and tapped water source for Coquia vs. Fieldmen’s Insurance, 26 S 178
Marmont Resort…has erected, built, and drilled for the Contract pour autrui, insurance policy
water source of Marmont on the land owned by Guiang
with the latter’s permission  Field Insurance Company issued in favor of Manila Yellow Taxicab
o In consideration of the sum of …the spouses hereby sell, Inc. a common carrier accident insurance policy
transfer and cede all possessory rights, interests and o The company will …indemnify the Insured in the event of
claims over the portion of the lot… accident caused by pr arising out of the use of the Motor
 After some time, the water in Marmont Resort Hotel became Vehicle…
inadequate to meet the hotel’s needs therefore the hotel secured  While the policy was in force, a taxicab of the Insured met a
the services of another contractor which, upon permission to vehicular accident at Mangaldan Pangasinan
inspect the water pump installed on the portion of the land owned  Insured filed a claim for 5,000Php however, Insurer rejected the
by the spouses, the latter refused to give such same and offered to pay 2,000Php but the Insured did not
CAN THE SPOUSES VALIDLY REFUSE TO GIVE PERMISSION accept it
NOTWITHSTANDING THE MOA ENTERED INTO?  Insured and Coquia’s parents (parents of the deceased driver) filed
a complaint against the company and the trial court rendered a
SC RULED: decision ordering the Insurer to pay the Insured 4,000Php
 On the stipulation pour autrui  Insurer questions the cause of action of Coquia and contends that
o Stipulations in the MOA appear to have been designed Coquia has no contractual relation to the company therefore
precisely to benefit petitioner and thus, partake of the cannot be made party to the case filed.
nature of stipulations pour autrui DO THE COQUIA’S HAVE CAUSE OF ACTION IN THE CASE AT BAR?
stipulation or by law, The heir is not liable beyond the value of the SC RULED:
property he received from the decedent  On the stipulation pour autrui
o The enforcement of a stipulation pour autrui may be
demanded by a third party for whose benefit it was made,
If a contract should contain some stipulation in favor of a third
although not a party to the contract before the stipulation
person, he may demand its fulfillment provided he communicated his in his favor is revoked by the contracting parties.
acceptance to the obligor before its revocation. A mere incidental o Pursuant to the stipulations, the Company will indemnify
benefit or interest of a person is not sufficient. The contracting any authorized Driver who is driving the motor vehicle…
parties must have clearly and deliberately conferred a favor upon a
third person

the company at its option may make indemnity payable card number does not appear on the latest cancellation
directly to the claimants or the heirs of the claimants… bulletin of lost, suspended and cancelled cards
o Thus, it is clear from the foregoing that the Coquias have o Stipulation is a pour autrui stipulation and in this case,
direct cause of action and had properly joined the Insured private respondent’s offer to pay constitutes not only
un filing the complaint therein acceptance of the said stipulation but also an explicit
communication of his acceptance to the obligor.
 On negligence
Mandarin Villa vs. CA, 257 S 538 o Test for negligence: Did the defendant in doing the alleged
Credit card, moral damages, pour autrui stipulations
negligent act use the reasonable care and caution which an
ordinary prudent person would have used in the same
 Clodualdo de Jesus, a lawyer and a businessman hosted a dinner
situation?
for his friends at the Mandarin Villa Seafoods Village
o The rule regarding Point of Sale reveals that whenever
 After the dinner, the waiter handed to him 2,658Php and by this
the words “CARD EXPIRED” flashes on the screen,
reason he handed the waiter his credit card issued by the
petitioner should check the embossed expiry date on
Philippine Commercial Credit Card (BANKARD)
the card itself…
 Card was accepted by the waiter who returned a few moments
o The embossed date on the card showed that it has not
later and audibly informed the private respondent that the card
expired yet and hence petitioner did not use the
had expired
reasonable care and caution which an ordinary
 Private respondent responded saying that the expiration date was
prudent person would have used in the same
clearly embossed on the card and the date embossed thereon
situation
was still far from said expiry date.
 Upon second try, the machine continued dishonoring the card,
hence, private respondent, being mocked at by his peers, secured Everett Steamship vs. CA, 297 S 496
his BPI credit card from his card and used it to pay for the meal Bill of lading stipulation-in small letters-does not affect validity of
and the same was honored stipulation, just and reasonable, supported by legal provisions on
 Private respondent now comes to court to ask that Mandarin Villa the contract of carriage, consignee bound by stipulations
be liable to pay moral and exemplary damages
 Private respondent imported three crates of bus spare parts from
WHETHER OR NOT PETITIONER IS BOUND TO ACCEPT PAYMENT BY its supplier, Maruman Trading Co.
MEANS OF CREDIT CARD  The crates were shipped from Nagoya, Japan to Manila on board
ADELFAEVERETTE, owned by herein petitioner. The crates
WHETHER OR NOT PETITIONER IS NEGLIGENT UNDER THE were covered by a bill of lading which included a stipulation in
CIRCUMSTANCES OBTAINING IN THIS CASE cases of loss
o All claims for which the carrier may be liable shall be
SC RULED: adjusted and settled on the basis of the shipper’s net
 On accepting the payment by means of credit card invoice cost…The carrier shall not be liable for any loss or
o Petitioner contends that it cannot be faulted for the damage…to an amount exceeding One Hundred
cashier’s refusal to accept the credit card for the same is Thousand Yen…unless the value of the goods higher than
not a legal tender this amount is declared in writing by the shipper before
o However, by virtue of the agreement entered into by the receipt of the goods by the carrier…
PCCCI and Mandarin, Mandarin shall honor validly issued  Upon arrival of the port of Manila, it was discovered that one of the
PCCCI credit cards provided they are not expired and the crates of bus spare parts was missing thus Maruman Trading now

asks that Everette Steamship pay for the value of the lost cargo o The shipper, Maruman Trading has been extensively
amounting to One Million Five Hundred Fifty Two Thousand engaged in the trading business thus it cannot be said to
Five Hundred Yen. be ignorant to such business transactions involving the
 However, due to the stipulations indicated in the bill of lading, shipment of its goods to its customers
Everette offered to pay only One Hundred Thousand Yen, the  On the binding character of the stipulation to the consignee
maximum amount stipulated in said stipulation o Even if the consignee was not a signatory to the contract
 Trial Court and Court of Appeals ruled in favor of Maruman Trading of carriage between the shipper and the carrier, the
and concluded that said provisions in the bill of lading are not consignee can still be bound by the contract
binding for it was printed in letters so small that Maruman o There is no question of right of a consignee to recover
Trading would not be aware of such conditions from the carrier or the shipper for loss of or damage to
 Private respondent further contends that he is not bound by goods although the document may have been, as in
the stipulations thereof because he was not a signatory to the bill practice, drawn up only by the consignor and the carrier
of lading
WAS THE STIPULATION IN CASES OF LOSS OR DAMAGE IN THE

Kauffman vs. PNB, 42 P 182 (Digest from Paras,
BILL OF LADING BINDING? doctrines from original case)
Revocation must be mutual, stipulation pour autrui in favor of
IS THE PRIVATE RESPONDENT, AS CONSIGNEE, WHO IS NOT A Kauffman
SIGNATORY TO THE BILL OF LADING, BOUND BY THE  The Philippine Fiber and Produce Company for some consideration,
STIPULATIONS THEREOF? contracted with the Philippine National Bank.
 One of the stipulations was for the bank to order its representative
SC RULED: in New York to give a certain sum of money to Kaufmann, who was
 On the validity of the stipulation President of Phil. Fiber.
o A stipulation in the bill of lading limiting the common  After the order was given, the New York representative suggested
carriers liability is supported by pertinent provisions in the that the money be withheld from Mr. Kauffman in view of the
civil code in Articles 174911 and 1750 latter’s reluctance to pay for some company debts
o The stipulations in the bill of lading are just and  The Manila office then told the New York representative to
reasonable not to mention, clearly crafted withhold said money
o The contention that private respondent could not have  Later, Mr. Kauffman demanded payment and when this was
fairly agreed on the stipulation because the same was refused he instituted this action for the collection of a sum of
printed in small letters is invalid money
IS KAUFFMAN ENTITLED TO THE AMOUNT?
SC RULED:
11 Article 1749 – A stipulation that common carrier’s liability is  On the stipulation pour autrui
limited to the value of the goods appearing in the bill of lading, unless o There is a clear case of the stipulation pour autrui
the shipper or owner declares a greater value is binding o Demand for payment constituted an acceptance of
the stipulation
Article 1750 - A contract fixing the sum that may be recovered by the o It cannot be said that there had been a prior revocation of
owner or shipper for the loss, destruction or deterioration of the the stipulation, for while it is true that the Bank had
ordered its New York representative to withhold payment,
goods is valid, if it is reasonable and just under the circumstances
and has been freely and fairly agreed upon

still the revocation referred to in the law is the revocation o Thus, the fact that the promissory note was executed after
by both parties to the original contract the effectivity date of the merger does not militate against
o A stipulation in favor of a third person cannot be the petitioner. The agreement itself clearly provides that
revoked by the obligated party alone, without the all contracts – irrespective of the date of execution –
conformity of the other party entered into the name of CBTC shall be understood as
pertaining to the surviving bank
o The clause must have been deliberately included to
Associated Bank vs. CA, 291 S 513 protect the interests of the bank
 On or about September 19, 1975, Associated Banking Corporation
and Citizens Bank and Trust Company merged to form just one
banking corporation known as Associated Citizens Bank 7. Contractual Interference: Article 131412
 On or about March 10,1981, the Associated Citizens Bank changed Gilchrist vs. Cuddy 29 Phil 542
its corporate name to Associated Bank by virtue of the Amended ZIGOMAR movie, Interference by strangers, action for damages in
Articles for Incorporation favor of injured person, when there is already an adequate
 On September 7, 1977, Lorenzo Sr. executed in favor of remedy-injured person cannot file for injunction
Associated Bank a promissory note whereby the former
undertook to pay the latter the sum of 2,500,000Php on or  Cuddy, a resident of Manila, was the owner of the ZIGOMAR , a
before March 6, 1978 film. Gilchrist on the other hand was the owner of a movie theatre
 Defendant to date, still owes the bank 2,250,000Php and despite in Iloilo.
repeated demands the defendant failed to pay the amount due  A contract was entered into by Gilchrist and Cuddy in which the
WHETHER THE ASSOCIATED BANK, THE SURVIVING former leased to the latter, the ZIGOMAR for exhibition in the
CORPORATION, MAY ENFORCE THE PROMISSORY NOTE MADE BY latter’s theatre for a week.
PRIVATE RESPONDENT IN FAVOR OF CBTC, THE ABSORBED  A third party offered to show the film for a higher price but Cuddy
COMPANY, AFTER THE MERGER AGREEMENT HAD BEEN SIGNED informed the third party that the movie will not be available until
after six weeks
SC RULED:  Cuddy wilfully violated the contract in want of a higher profit in
 On enforcing the promissory note despite the merger which he accepted a third party offer of a higher price as a result
o Private respondent contends that since he issued the of the inducement of the third party
promissory note to CBTC on September 7, 1977, two years  Gilchrist files for injunction against the third parties and asks for
after the merger agreement has been executed, CBTC awarding of damages
could not have conveyed or transferred to petitioner its
interest on said note, which was not yet in existence at the IS THE THIRD PARTY LIABLE FOR DAMAGES?
time of the merger therefore the surviving bank had no
right to enforce the promissory note on private respondent WILL THE ACTION FOR INJUNCTION PROSPER?
o A closer perusal of the merger agreement reveals
the ff: SC RULED:
 Upon the effective date of the merger, all  On inducing parties to a contract to violate the same
references to CBTC in any deed, documents…shall
be deemed for all intents and purposes references
to ABC, the Surviving Bank, as if such references
were direct references to ABC
12Article 1314 – Any person who induces another to violate his
contract shall be liable for damages to the other contracting party

o The third party must necessarily known at the time they instead requested formal contracts with DCCSI in favor of
made the offer that the latter had booked the contracted Trendsetter Marketing. So Ping Bun claimed that after his
film for six weeks grandfather died, he has been religiously paying rent for
o There is the inevitable conclusion that the third parties the warehouse. Lease contracts in favour of Trendsetter
in the case at bar knowingly induced Cuddy to were executed
violate his contract with Gilchrist  Trial Court as well as Court of appeals ruled for the annulment of
o Thus, Cuddy as well as the third party who induced the contracts of lease as well as the awarding of damages to
the former to violate the contract are liable for private respondents
damages
 On the complaint for injunction DID THE APPELLATE COURT ERR IN AFFIRMING THE TRIAL
o As a rule, injunctions are denied to those who have an COURT’S DECISION FINDING SO PING BUN GUILTY OF TORTUOUS
adequate remedy at law INTERFERENCE OF THE CONDUCT?
o Thus, the fact that Gilchrist will be receiving the award for
damages from Cuddy and the third party, he can be validly SC RULED:
denied of recourse to injunction  On tortuous interference
o Damage is the loss, hurt or harm which results from
injury, and damages are the recompense or compensation
So Ping Bun vs. CA 314 S 751 awarded for the damages suffered
Textile Warehouse, Elements of tort interference,proof of malice,
o One becomes liable in an action for damages for a non-
interference justified if in furtherance of a business interest
trespassory invasion of another’s interest in the private
use and enjoyment of asset if
 Tek Hua Trading Corporation, through its managing partner, So
 The other has property rights and privileges with
Pek Giok, entered into lease agreements with DCCI of the
respect to the use or enjoyment interfered with
premises located in Binondo Manila to serve as warehouse for its
 The invasion is substantial
textile business.
 The defendant’s conduct is a legal cause of the
 They provided that should the lease continue to occupy the
invasion
premises after the term, the lease shall be on a month-to-month
 The invasion is either intentional and unreasonable
basis
or unintentional and actionable under negligence
 When the contracts expired, the parties did not renew the
rules
contracts, But Tek Hua continued to occupy the premises. In
o Elements of tort interference are:
1976, Tek Hua Trading was dissolved and herein private
 Existence of a valid contract
respondents formed Tek Hua Enterprising Corp
 Knowledge on the part of the third person of the
 So Pek Giok, managing partner of Tek Hua Trading died in 1986.
existence of the contract
So Pek Giok’s grandson So Ping Bun occupied the warehouse for
 Interference of the third person without legal
his own textile business, Trendsetter Marketing
justification or excuse
 DCCSI sent letters addressed to Tek Hua Enterprises informing of
o In the case at bar, Trendsetter Marketing asked DCCSI to
price increases and enclosed in the letters were new lease
execute lease contracts in its favour and as a result
contracts for signing. Private respondents did not answer any of
petitioner deprived respondents of latter’s property right.
the letters but still the lease contracts were not rescinded
o But though petitioner took interest in the property of
 Private respondents wrote a letter to Mr. So Ping Bun asking the
respondent and benefitted from it, nothing on the record
latter to vacate the warehouse in view of their decision to go back
imputes deliberate wrongful moves or malice on him
to the textile business. But petitioner refused to vacate and

o Interference is justified if the impetus of ones o Tortuous interference is penalized because it violates
conduct lies in a proper business interest rather than the property rights of a party in a contract to reap the
in wrongful motives benefits that should result there from
 On existence of a valid contract
o Notarized copy of the lease contract is an incontestable
Lagon vs. CA, 453 S 616 proof that a valid contract exists and such remains to
Bai Tonina Sepi, Tortuous interference with contractual
be prima facie evidence
relations, elements, knowledge on part of interferor that
o On Knowledge on part of interferor
valid contract exists, “induce”, financial or profit motivation
 Petitioner conducted his own personal inquiry
not tortuous interference
into the records of the estate and found no
suspicious circumstance that would have made
 Jose Lagon purchased from the state of Bai Tonina Sepi through an
a cautious man probe deeper and watch out for
intestate court, two parcels of land in Sultan Kudarat
any conflicting claim over the property.
 A few months after the sale, private respondent Menandro Lapuz
 Was there a wrongful motive?
filed a complaint for torts and damages against the petitioner
o Even assuming that the private respondent was able to
 Private respondent claims that he entered into a contract of lease
prove the renewal of his lease contract, the fact that
of the subject properties with Bai Tonina Sepi and has renewed the
he was unable to prove malice or bad faith on the
same and when Bai Tonina Sepi died, he started remitting his
part of the petitioner warrants the claim that tortuous
rental payments with the former’s heirs
intereference was never established
 The administrator of the estate thereafter advised him to stop
collecting rental payments in view of the fact that there is a new
owner to the property whom he discovered collecting rentals from 8. Contracts are perfected by mere consent: Article 131513
the tenants Luxuria Homes vs. CA, 302 S 315
 Petitioner on the other hand claimed that before he bought the Squatters, Luxuria Homes not party to any transactions, absence of
property he went to Atty. Benjamin Fajardo, the lawyer who mutual assent, no contract
allegedly notarized the lease contract between private respondent  Aida Posadas, together with her two minor children co-owned a
and Bai Tonina Sepi to verify if the lease contract had been parcel of land in Sucat, Muntinlupa which was occupied by the
renewed squatters. Posadas entered into negotiations with private
 Petitioner averred that Atty. Fajardo showed him four copies of the respondent regarding the development of the property into a
contract and revealed that they were all unsigned residential subdivision
 Trial Court and Court of Appeals ruled in favor of the private  Respondent Bravo worked on its negotiations with the squatters.
respondent and declared the lease contract renewed  Seven months later in 1989, Posadas assigned the property to
Luxury Homes Inc.
WHETHER OR NOT THE PURCHASE BY THE PETITIONER OF THE  In 1992, the harmonious and congenial relationship of Posadas
SUBJECT PROPERTY, DURING THE SUPPOSED EXISTENCE OF and Bravo turned sour when Posadas could not accept the
PRIVATE RESPONDENT’S LEASE CONTRACT WITH THE LATE BAI management contracts of the latter.
TONINA SEPI, CONSTITUTED TORTUOUS INTERFERENCE FOR
WHICH PETITIONER SHOULD BE HELD LIABLE FOR DAMAGES 13Article 1315 – Contracts are perfected by mere consent, and from
SC RULED: that moment, the parties are bound not only to the fulfillment of
 On tortuous interference what has been expressly stipulated but also to all consequences
which, according to their nature, may be in keeping with good faith,
usage and law.

Thus Bravo demands payment for the value of work done, and Rallos vs. Felix Go Chan, 81 S 251
Posadas refused the same General rule: Act of agent after death of principal-void ab initio
 Trial Court and CA rendered a decision in favor of bravo holding subject to exceptions
Posadas and Luxury Homes solidarily liable for the amount
demanded by Bravo  Attorney-in-fact, Simeon Rallos brother of the deceased, after the
CAN LUXURIA HOMES BE HELD LIABLE TO PRIVATE RESPONDENTS death of his principal, Concepcion Rallos, sold the latter’s
FOR THE TRANSACTIONS SUPPOSEDLY ENTERED INTO BETWEEN undivided shares in a parcel of land to Felix Go Chan and Sons
PETITIONER POSADAS AND PRIVATE RESPONDENTS? Realty Corporation pursuant to an SPA which the principal
executed in his favor
SC RULED:  Administrator of Rallos’ estate now comes to court praying for the
 On consent and on separate personality of the juridical court to declare the sale unenforceable and to recover the
entity disposed share
o There is no dispute to the fact that Posadas and Bravo  Trial court rendered a judgment declaring the sale null and void
entered into a contract in which the latter is to prepare the WHAT IS THE LEGAL EFFECT OF AN ACT PERFORMED BY AN AGENT
land for development and the former to pay the services AFTER THE DEATH OF HIS PRINCIPAL?
rendered
o Private respondents contend that Posadas formed Luxury IS THE SALE OF THE UNDIVIDED SHARE VALID ALTHOUGH IT WAS
Homes and assigned the property to the latter to evade EXECUTED AFTER THE DEATH OF THE PRINCIPAL?
payment and defraud creditors.
o However the contention did not find support in any of the SC RULED:
evidences presented  On the legal effect of the death of the principal
o It cannot be further contended that Posadas is an o Basic axiom in civil law that no one may contract in the
alter ego of Luxuria Homes since the latter is not name of another and if such contract was entered into
even a major stockholder of said corporation, hence, the same be declared unenforceable
each has its own identity/personality and cannot be o In the case at bar, there sprung a relationship of agency
held solidarily liable between the brother of Concepcion Rallos and
o Further, private respondents failed to show that Luxuria herself
Homes was a party to any of the stipulations/agreements o Established in law that the death of the principal in an
in which private respondents and Posadas entered into, agency extinguishes the relationship between the
therefore, whatever stipulations are present in the agent and the principal
agreement, the same cannot be binding to Luxuria Homes.  On the validity of the sale of the undivided share
o HOWEVER, there are exceptions to such rules provided for
9. Real contracts: by Article 1931 which provides that an act done by an
agent after the death of the principal is valid when:
10. Unenforceable contracts: Article 131714
A contract entered into in the name of another by one who has no

14Article 1317 – No one may contract in the name of another without authority or legal representation, or who has acted beyond his
being authorized by the latter, or unless he has by law a right to powers, shall be unenforceable, unless it is ratified, expressly or
represent him impliedly, by the person on whose behalf it has been executed, before
it is revoked by the other contracting party

 The agent acted without knowledge of the death of  On conflicting provisions

the principal o Provisions on the “forward sales” method as well as the
 Third person who contracted with the agent distribution of commodities, as contended by NAMARCO
himself acted in good faith were conflicting therefore, the contract could not have
 Two requisites must concur been binding upon him
o Agent Simeon Rallos knew of the death of Concepcion o However, upon further perusal of the resolution and the
at the time he sold the latter’s share contract, the resolutions compliment each other and thus
the BOD all understood the contract of sale to be in
accordance with the resolution of its governing body
United Namarco Distributors vs. NAMARCO, 114 P  On the validity of the contract
802 o At the time the new BOD refused to recognize the validity
(Facts include only those related to the issue in the subject matter) of the contract of sale, more than half of the goods had
 In 1959, prices of commodities had gone up to such an extent that already been delivered by NAMARCO to the
the President sought means to force down such prices FEDERATION who already disposed of them and for
 One solution was for NAMARCO to procure, buy and distribute such which, NAMARCO has accepted partial payments of
commodities as were in short supply, with a special non recurring the purchase price of the commodities amounting to
dollar allocation from the Central Bank 2,452,020PHP
 However, said plan is being prevented by the picketing of o NAMARCO’s acceptance of such partial payments
NAMARCO’s employees and this led them to execute another plan constitutes an implied ratification by its BOD of the
in which the importation of commodities be effected in the name of contract in question and precludes the rejection of the
various associations so that when the goods would arrive, the binding force of such contract
labor union in NAMARCO would not prevent their movement as
they would not be NAMARCO goods but of beneficiary associations
Essential Requisites: (Articles 1318 to 1355)
 Federation of United NAMARCO distributors submitted their
petition for trade assistance and entered into a contract of sale
(1) Consent of the contracting parties
with NAMARCO
 Parties proceeded with the terms in the contract of sale, deliveries Clarin vs. Rulona, 127 S 512
and payments have been made although remaining commodities Implied consent – acceptance of creditor by payment
have been undelivered  Exhibit A provides:
 Later, a new BOD and General Manager took over the o Authorize…a surveyor to survey on behalf
management of the NAMARCO and decided to discontinue with the of the Rulonas a portion of the share of a
contract of sale with respect to the commodities not actually lot from the CLARIN HERMANOS…10
delivered and it so notified the FEDERATION hectares awarded to Mr. and Mrs. Alberto
 FEDERATION however filed a complaint to compel NAMARCO to Rulona which the couple purchased
perform the contract of sale from the undersigned (CLARIN)…
 NAMARCO on the other hand contends that the contract of sale is  Exhibit B provides:
not binding with regard to conflicting provisions on the resolution o Received from Mr. Alberto Rulona… the
set forth by the President and the contract itself sum of 800Php as initial payment for the
WHETHER THE CONTRACT OF SALE IS BINDING ON APPELLANT 10hectares of land in Carmen Bohol
NAMARCO  Respondent filed a complaint for specific
performance on the ground that the petitioner and
SC RULED: his wife violated the terms of the agreement of

sale “by returning by their own volition and without (3) Cause of the obligation.
the consent of the plaintiff”, the amount of
1,100Php in six postal money orders covering the SECTION 1. – Consent
downpayment and first installment of the
10hectares of land in question at 2,500Php 1. Offer: 15
 Petitioner contends that there had been no Korean Air vs. Yuson, June 26, 2010;
perfected contract between them and the Retirement plan for Korean Air, early retirement plan Art. 287 of
respondent because the same was subject to the ff Labor Code, offer must be certain – the acceptance thereof would
conditions: not need further acts by the offeror
o Contract would be realized only if the co-
heirs would give their consent to the sale  Yuson was hired by Korean Air as its reservations agent, who
 Trial court and CA rendered a judgment in favor of thereafter was promoted to assistant manager and later, to
the respondent on the ground that the contract of passenger sales manager in 1999
sale, Exhibit A is a pure sale of the lot and is not  Sometime in 2000, Korean Air suffered a net loss of over
vitiated by any flaw therefore binding upon the 367,000,000Php thereby resulting to the reduction of the
parties to the contract company’s budget by 10%
WAS THERE A PERFECTED CONTRACT BETWEEN THE SPOUSES  In order to cut costs, Korean Air offered its employees an early
CLARIN AND HEREIN RESPONDENT RULONA? retirement program:
o Results of the operation of the year 2000 was bad…for this
SC RULED: reason, the budget for the next year is reduced by 10%
 On the perfection of the contract and to prevent further losses…implanted an early
o Exhibits A and B are by themselves prima facie evidence retirement program…
that indeed, there existed a perfected contract between  Yuson, in a letter addressed to Korean Air’s Philippine General
the petitioners and the respondent and such contract has Manager Suk, accepted the offer for early retirement
already been partially executed and fulfilled  However Suk, informed Yuson that she was excluded from the
o Contract of sale is a meeting of the minds upon the thing benefit program because she was retiring in 2002 and
which is the object of the contract and upon the price reiterated that the program is intended to those employees
o Such contract is binding in whatever form it may have who still have long years left with the Company…
been entered into  Yuson claims that Korean Air is bound by the perfected contract
 On implied consent and accused the company of harassment and discrimination
o The petitioner’s acceptance of th 800Php as evidenced by  Korean Air contends that the letter regarding the implementation
Exhibit B clearly showed his consent to the contract of the early retirement program is not an absolute offer but rather
thereby precluding him from rejecting its binding effect an invitation to possible qualified employees to consider the ERP
(federation of United Namarco v. Namarco) subject to the approval and acceptance of the comoany through
o The contract being valid and enforceable the petitioner the head office
cannot avoid its obligation by interposing that the contract
is not a public document, in fact he can even be
compelled by the respondent to execute a public 15For a contract to be perfected, the offer must be certain, definite
document to embody their valid and enforceable and complete
contract
Any modification or variation of the terms of the offer annuls the offer
(2) Object certain which is the subject matter of the contract (ABS-CBN Broadcasting v. CA)

 On her 60th birthday, January 8, 2002, Yuson availed of the Rosenstock vs. Burke, 46 P 217
optional retirement under Article 287 of the Labor Code Motor Yacht – Bronzewing,“I am in the position to entertain the
 Labor arbiter’s judgment – complaint for ERP is denied for lack of purchase…” – does not mean a definite offer to purchase, intention
merit however orders the company to give Yuson her retirement to be determined by the circumstances surrounding the case
benefits under art. 287
 NLRC - order Korean Air and Suk to pay Yuson her benefit under  Edwin Burke owned a motor yacht, Bronzewing, which he
the ERP acquired in Australia for the purpose of selling it here.
 CA – affirmed the NLRC’s ruling  The yacht was purely for recreation and as no purchaser presented
himself, the yacht was moored for several months until plaintiff
WAS THERE A PERFECTED CONTRACT BETWEEN KOREAN AIR AND Elser had began negotiations with Burke
YUSON?  Burke expressed in writing the ff:
o For the purpose expressed by you of organizing a yacht
SC RULED: club, I take pleasure in confirming my verbal offer to you
 On the retirement benefits of the motor yacht Bronzewing, at a price of one hundred
o It is to be noted that on February 14, 2003, Yuson and twenty thousand pesos. This offer is open for thirty
accepted 1, 671,546.92Php as retirement benefit under days from date
Article 287 by virtue of the compromise agreement  Rosenstock in turn executed the ff:
entered into by Korean Air and Yuson o In connection with Bronzewing, I am in position and am
o Her acceptance of the benefit entails her option to willing to entertain the purchase of it under the ff. terms:
retire under Article 287 and not under the ERP of the  Purchase price of 80,000Php
company  Initial payment…
o Yuson’s claim that the offer was certain and the MAIN ISSUE TO BE RESOLVED IS THE TRUE INTENTION OF
acceptance is absolute cannot be validly maintained. ROSENSTOCK ON HIS CHOSEN LANGUAGE
 An offer is a unilateral proposition made by one
party to another for the celebration of a contract. WHETHER OR NOT THE LETTER IS A DEFINITE OFFER TO
For an offer to be certain, a contract must come PURCHASE AND IF THE SAME IS BINDING AGAINST ROSENSTOCK
into existence by the mere acceptance of the
offeree without any further act on the SC RULED:
offeror’s part.  On the language of the letter
 In the case at bar, the offer is not certain o To convey the idea of a resolution to purchase, a man of
 The letter in part states that: Management, ordinary intelligence and common culture would use I offer
on its discretion, is hereby offering the to purchase, I want to purchase, I am in the position to
said early retirement program to its staff purchase
 Applications for the ERP were forwarded to o Rosenstock, a prosperous and progressive merchant could
the head office have expressed his intention in the same way as stated
 Korean Air’s intention is to prevent above because he ought to be knowledgeable of the fact
further losses and therefore could not that he should express his transactions in good faith
have intended to approve all and use the best means of expressing his mind
applications for the ERP o The language “i am in position and al willing to entertain
the purchase of the yacht” when applied to an act, does
not mean the resolution to perform said act, but

simply a position to deliberate for deciding to money orders amounting to 800Php

perform or not to perform said act promising to pay the balance at the shortest
o It was but a mere invitation to the proposal being possible time
made to him which might be accepted by him or not  Cojuangco was surprised since she did not
 Other circumstances which revealed the true intention of have any agreement with Batangan that the
Rosenstock sum of money from the court decision be
o Plaintiff never thought of acquiring the yacht for his paid to her by installments therefore the
personal use, but for the purpose of selling it to tender was refused
another thereby obtaining some gain in the WHETHER THERE WAS A CONCURRENCE OF THE MINDS OF THE
transaction PARTIES ON THE OBJECT AND CAUSE WHICH WILL CONSTITUTE
o Original idea of the plaintiff was to organize a yacht club THE CONTRACT
that would after wards acquire a yacht through him,
realizing some gain from the sale SC RULED:
o Therefore, plaintiff was not in a position to make a  On the meeting of the minds
definite offer for purchase, he being sure to be able o There is a substantial variance between the amount
to resell the yacht to another offered and the amount actually tendered. For perfection
of the settlement, the offerer must first give his
2. Acceptance:16 assent to the suggested modification consisting of the
(1) Absolute vs. Qualified: reduction in the price.
o In this case, Cojuangco was left with surprise on the
Batañgan v. Cojuangco, 78 P 481 modification made by herein petitioner for there was
Offer of compromise settlement must be
indeed no meeting of the minds which ensued
accepted within a reasonable time, any
 On then acceptance of the offer to modify
modifications on the amount due must be
o The appellant’s failure to act on the offer for
agreed upon by both parties
modifying the judgment of the court before the
 From the three civil cases filed, the most
judgement was entered into was an implied
recent of which rendered a decision as
rejection of the said offer
follows:
o Therefore, once the petitioner tries to pursue whatever
o In order to impress the appellant
offer he has communicated, is the same was not acted
that appelle is not interested in
upon in the reasonable period of time¸the offer cannot
owning the mortgaged property and
be said to have the essence of mutuality and thus cannot
that she was only forced for lack of
have no effect at all.
another buyer to acquire it in the
auction sale, she is willing to resell
the property to him for the same Zayco vs. Serra 44 P 326
amount in which it was purchased at Acceptance to give rise to birth of contract
the auction sale, that is, for must be plain and unconditional – no birth of
1,058.28Php provided it be in cash contract if acceptance involves new proposition
 Atty. Marcelino Lontok, representing
Batangan, sent Cojuangco three postal  Lorenzo Zayco and Salvador Serra entered
into a contract, the pertinent clauses which
are the ff:
16 Acceptance must be absolute and not conditional

Option to buy Palma Central for the

o (stipulation of assuming Serra’s obligations in PNB of his
sum of 1,000,000Php credit of 600,000)
o In case the purchase is made, and
the purchaser cannot pay in full, he o Therefore, without any conformity of the offer and
will be given a period not exceeding acceptance thereof which is plain and unconditional, the
three years within which to make full same could not have given rise to the birth of a contract
payment
 Lorenzo Zayco, wrote a letter to Serra (2) In person; via agent; by letter or telegram:
accepting the above-quoted contract and
placing at his disposal a cash order of the
Laudico vs. Arias, 43 P 270
BPI in Iloilo in the amount of 100,000Php in Digest from Paras, doctrines from original case
part payment of the price of Palma central material
o PNB agreed to transfer his (Serra’s) Offer-no acceptance, when accepted-offer
long term loan of 600,000Php to withdrawn, no birth of contract-no perfection
the account of Zayco and to hold the  Mr. Arias, on his behalf and of his co-owners
latter responsible for all the amounts wrote a letter to Mr. Laudico offering to lease
had and received on account of this the buildings at Carriedo St. Manila to the
loan latter.
o Demand to execute the deed of sale  On March 6, 1919, Laudico in turn wrote a
 Serra thereafter wrote to Zayco’s attorney, letter of complete acceptance, which
stating that the option contract was acceptance was received by Arias that same
cancelled and annulled afternoon
 Zayco brought a suit compelling Serra to  However, that same morning, Arias had
execute the deed of sale and conveyance of already written a letter to Laudico
the Palma Central withdrawing the offer
WAS THERE A PERFECTED CONTRACT BETWEEN ZAYCO AND WHETHER OR NOT THE CONTRACT OF LEASE WAS PERFECTED
SERRA? BETWEEN THE PARTIES
CAN ZAYCO VALIDLY COMPEL SERRA TO PERFORM ITS SC RULED:

OBLIGATIONS UNDER THE CONTRACT?  On the perfection of contract
o There was no contract perfected because before the
SC RULED: receipt of the letter of acceptance, the offer had already
 On Acceptance been withdrawn by Arias. It does not matter that the letter
o In order for an acceptance to have the effect of converting of withdrawal of arias may have been received later by the
an offer to sell into a perfect contract, it must be plain offeree than the receipt of the letter of acceptance by the
and unconditional and it will not be so, if it involves offeror.
any new proposition , for in that case, it will not be o What is essential is that the letter of withdrawal be
the acceptant’s conformity with the offer made prior to the knowledge of acceptance of the
offer
o Zayco’s acceptance of the option converted the offer of
Serra and even included additional propositions in
which Serra have not given his consent with

o Article 131917 paragraph 2 …an acceptance by the later  Tender of payment was made after Rigos refused to sell the
does not have any effect until it comes to the knowledge of property
the offerror. Therefore, before he learns of the acceptance,  It is admitted however, that there is no consideration paid for
the latter is not yet bound by it and can still withdraw the the option granted to Sanchez. The parties jointly filed a “Motion
offer for Judgment on the Pleadings”
o When Mr. Arias wrote to Mr. Laudico, withdrawing  The lower court resolved the case in favor of Sanchez, Rigos
the offer¸he had the right to do so inasmuch as he had appealed on questions of law
not yet received the notice of acceptance. And when the WHETHER OR NOT RIGOS CAN BE COMPELLED TO SELL THE
notice of acceptance was received by Mr. Arias, it no PROPERTY
longer had any effect, as the offer was not then in
existence the same having already been withdrawn WHETHER OR NOT THERE IS A CONTRACT TO BUY OR SELL
o While there was an offer, there was no acceptance, and
when the acceptance was made, the offer was lacking SC RULED:
and this could not have given birth to a contract  On compelling Rigos to sell the property
o Since there may be no valid contract without a
(3) Express or implied: cause or consideration, the promisor is not bound
(4) Effects of death, civil interdiction, insanity, or insolvency of by his promise and may, accordingly withdraw it.
either party before acceptance: (Art 40-41, RPC) o Pending notice of its withdrawal, his accepted
promise partakes however, of the nature of an
3. Option Contract: offer to sell, which, if accepted, results in a
perfected contract of sale
Sanchez vs. Rigos, 45 S 368; Art 1482, o Promise in an accepted unilateral promise to sell
NCC must prove existence of consideration.
Digest from Pineda Book, doctrines from original case  In order that said unilateral promise may be
material “binding” upon the promissory, Article 147918
 An “option to purchase” was executed between Sanchez and Rigos. requires the concurrence of a condition,
 Rigos agreed, promised and committed to sell Sanchez a parcel of namely, that the promise be supported by
land within two years from the date with the understanding that a consideration distinct from the price.
after the lapse of said period, the option is terminated if Sanchez  Promisee has the burden to prove such
shall fail to exercise his right to buy consideration
4. Business advertisements:
17Article 1319 – Consent is manifested by the meeting of the offer (1) Mere invitations to make an offer:
and the acceptance upon the thing and the cause which are to
constitute the contract. The offer must be certain and the acceptance
absolute. A qualified acceptance constitutes a counter-offer 18Article 1479 – A promise to buy and sell a determinate thing for a
price certain is reciprocally demandable
Acceptance made by letter or telegram does not bind the offeror
except from the time it came to his knowledge. The contract, in such An accepted unilateral promise to buy or to sell a determinate thing
a case, is presumed to have been entered into in the place where the for a price certain is binding upon the promissory if the promise is
offer was made. supported by a consideration distinct from the price

(2) Advertisements for bidders: WHETHER OR NOT THE DEED OF SALE CAN VALIDLY BE DECLARED
ANNULLED
5. Incapacitated persons to give consent to a contract: (Art 1491,
NCC; Art 87, FC; Art 37-38, NCC) SC RULED:
(1) Minors; exceptions:  On the defense of minority
Bambalan vs. Maramba, 51 P 417, o No evidence in the record appears that the plaintiffs were
Contract of purchase and sale executed by a in fact minors when they signed such deed of sale for no
minor – void, minority known to the parties certified copies were presented of their respective
baptismal certificates, nor did they adduce additional

Isidro Bambalan was the owner, with Torrens title of the evidence to prove their minority
subject land and the plaintiff herein is the sole heir of the o Even assuming that there is sufficient evidence to
deceased Isidro Bambalan warrant the petitioners claims that they were minors
 Maramba contends that the land was validly sold to them when they entered into the contract, it was evidently
however plaintiff asserts that while it is true that he signed presented that they stated that they were of legal age
said document, he did so by intimidation made upon his at the time they executed and signed it, and on that
mother with Genoveva Muerong (to whom his mother account, the sale was perfectly valid
was indebted to) who threatened the former with  Rule on minors
imprisonment by reason of non-payment of the debt o In the sale of real estate, made by minors who pretend
WHETHER OR NOT BAMBALAN, SOLE HEIR, VALIDLY SOLD THE to be of legal age, when in fact they are not, is valid and
LAND TO THE MARAMBAS cannot be permitted to excuse themselves from the
fulfillment of the obligations contracted by them, or
SC RULED: to have them annulled in pursuance of the provisions
 On vitiated consent - MINORS of law
o The document is vitiated to the extent of being void
as regards to Bambalan for the reason that the latter, at Braganza vs. de Ville Abrille, 105 P
the time he signed it, was still a minor, which is clearly 456
shown by the record and it does not appear that it was his Mother and minor sons required solidarily to
real intention to sell the land in question pay, defense of minority only insofar as the
Mercado, et al. vs. Espiritu, 37 P share of the minors in the solidary obligation
215;  Petitioners received from respondent as a loan, 70,000Php in
Active misrepresentation, intention to defraud,
Japanese war notes in which the former promised to undertake
liable
the obligation jointly and severally
 This is a case of active misrepresentation made by Domingo and
 Because payment had not been made, Villa abrille sued them
Josefa Mercado who now asks the court to declare the deed of sale
 Rosario Braganza aver that her sons during the signing of the
with respect to Espiritu annulled for they signed said contracts
promissory notes were minors
during their minority
WHETHER OR NOT THE PERSONAL DEFENSE OF MINORITY CAN BE
 It could be deduced from the long line of facts that when the
INVOKED BY ROSARIO BRAGANZA IN THE CASE AT BAR
instrument was being crafted, Domingo and Josefa, as revealed
upon perusal of the evidences presented stated that they were
SC RULED:
of legal age at the time they executed and signed it
 On the incapacity of the parties

oThe failure of the minor to disclose his minority when large tract of land which was mainly the reason why vendee
making a contract does not per se, constitute a fraud purchased such land. But vendee found out that such was a
which can be made the basis of an action of deceit. In misrepresentation such that the external portions have already
order to hold the minor liable the fraud must be actual been sold to other buyers
and not constructive
 There was no active misrepresentation on the
part of the minors and no explicit mention of
Atilano vs. Atilano, 28 P 231
Article 1162, reformation of the contract in
majority was made by the minors in executing the
cases where there was a simple mistake in the
instrument
drafting of the document
o Therefore, the minors cannot be legally bound by their
 Atilano intended to buy Lot E but instead was delivered an
signatures
instrument purporting to Lot A. But because of such real intention
 Restitution of benefit received
to buy and reside in E, he has taken possession of lot E only to find
o Although the written contract in unenforceable with regard
out that what was written in the instrument was that of A. In the
to the minors, the minors must make restitution to the
instant case, there was no vitiation of consent for there was only a
extent that they have profited from the thing they received
simple mistake as to the drafting of the instrument which
can be instantly remedied by its reformation
(2) Insane persons and deaf-mutes who do not know how to
write:
(3) Drunk or under hypnotic spell: Teran vs. Villanueva, 56 P 677
Caveat emptor – buyer beware, when
purchaser had been given the opportunity to
6. Vice of Consent: ascertain the area and quality of the land, he
cannot make any objections as to the defect of
Hernandez vs. Hernandez, March 9, 2011 what has been delivered to him for such sale
requires due diligence in the part of the vendee
Quitclaims are also contracts which can be voided if there was
since vendors would always, by nature, try to
fraud or intimidation that leads to lack of consent
convince vendees by over describing the
 In the instant case, Cecilio, the co-owner of the property in
subject properties to be sold.
question which was expropriated by DPWH, did not disclose the
truth as to the actual partition of shares with Cornelia but instead
executed a “quitclaim” that bars the latter from instituting any
action should the received share be prejudicial
a. Illiterates:
Tan vs Mandap 429 S 712;
Dionisio Mandap being crippled and totally
(1) Mistake:
blind, was made to execute a deed of sale
Gomez vs. Linton, 45 P 653; in which the legal wife moved for the
Misrepresentation as to the boundaries of the annulment due to vitiated consent due to
land to be sold. Mandap’s physical injuries. Article 1332
 By a point of vendor’s finger, he pointed to the delineation of the speaks of persons who is unable to read
land to be sold to vendee, making vendee believe that the external or understand the language in the
portions of the land are included in the purchase as well as the contract, stressing the need to satisfy the

strict requirement of the provision that of a third party, counsel – consent with free
the terms of the contract be adequately will-duress cannot be invoked
explained to the person before he can  Alejandro Macleod is the managing partner of Aldecoa and Co.
enter into such contract  He withdrew from the management when the company went into
liquidation
 HSBC, on the other hand, was a creditor to the firm for several
Dela Cruz vs. Dela Cruz 419 S hundred thousand pesos
648)  On April, the bank began a civil action against Macleod, his wife
Mother contends that her consent was and the firm known as Viuda e Hijos de Escano
vitiated by her son who took advantage of  Bank alleges that an undertaking by Aldecoa and Co. had been
their close relations to induce her to sign hypothecated to the bank to secure the latter’s indebtedness BUT
an instrument which appeared to be a this obligation had been wrongfully transferred by Macleod
Deed of Sale. But it was revealed by the into an obligation in favor of his wife TO THE PREJUDICE OF
SC that the mother could not have been THE BANK
not knowledgeable of the English  Come May, Aldecoa began a civil action against Macleod for
language for there were instances and recovery of shares of stock of 161,000Php and damages, basing
evidences showed that she in fact its right to recover upon the alleged criminal misconduct of
understood the same. Macleod in his management of the firm’s affairs
 Aldecoa claims that they had made discoveries of many frauds
which Macleod had perpetrated against the company and had
b. Adhesion:
defrauded that for several hundred thousands of pesos
Calilap-Asmeron vs. DBP,  Macleod, having knowledge of this criminal suit against him, went
November 23, 2011 from Manila to the Portuguese colony of Macau (not covered by the
Contracts of adhesion are carefully extradition treaty of the Philippines)
prepared contracts by a corporation – a  Attorneys for the respective parties began
take it or leave it contract. Mortgage negotiations/settlements and compromise of the differences
obligation and loan contract with DBP- then pending and a clearance of Mr. Macleod from all claims and
contract of adhesion. Petitioner cannot demands from his creditors IF THE PARTY FOR MACLEOD
properly invoke that she was illiterate. WOULD AGREE TO CONVEY ALL HIS PROPERTY AS WELL AS
She had failed to prove the same for when A PORTION OF HIS WIFE’S PROPERTY
she appeared in court, she seemed  Wife rejected the above settlement as well as the subsequent
educated, her correspondences to the settlement entered into
judge written in the English language.  A long conference ensued between the parties in which the party
for Aldecoa and Co. gave the ff statements:
o If the wife would assent to all requirements of the
(2) Violence: company and the bank the civil suits against herself
(3) Intimidation: and her husband would be dismissed and the
(4) Undue influence: criminal charges against him withdrawn, while if she
refused her husband must either spend the rest of
a. Martinez vs. HSBC, 15 P 252, his life in Macao or be criminally prosecuted on the
Consent under duress, influence directly to the charges already filed and to be filed
person – duress, influence with the assistance

 Later on, the wife acceded to the terms, the bank thereafter o Cases in which threats are made directly to the
had taken possession of their property, husband returned but the complaining party(the attorneys are the one negotiating
wife negotiated for a portion of her property in which the in this case)
company and the bank refused thus, this civil action. o The wife never stood alone in the negotiations, she had the
 Wife contends that the agreement could not have been binding for assistance of legal counsels who all have the legal
being void because her consent was obtained under duress 19 learning, business intelligence and experience
o Did the wife consent? YES!
WAS THE CONSENT GIVEN UNDER INTIMIDATION?
SC RULED:
b. Bañez vs. CA, 59 S 15;
Influence obtained by persuasion or argument
 On consent and annulment of contracts
or by appeal to the affection does not qualify as
o For contracts to be annulled in light of this defense, it
using undue influence. Senator in this case only
should be shown that the plaintiff never gave her
sent such letter to persuade People’s Homesite
consent to the execution thereof
and Housing Corporation to approved such
o If a competent person has once assented to a contract
assignment of rights to Banez. Such influence
freely and fairly, HE IS BOUND!
made in the case at bar is due influence
o The consent in cases of fraud, duress, undue influence
is not consent at all. The person has not acted. He has
done nothing c. Vales vs. Villa, 35 P 769
o A contract is valid even though one of the parties
Verbal agreement, unlimited requests for reconveyance –
entered into it against his wishes and desires or even
unlimited threats – unlimited execution of conveyance, no undue
against his better judgement.
influence, implied ratification of nullity
o A contract is valid also even if they are entered into by
 Felipa Silvestre is a widow, 70 years of age and the aunt of Garcia,
one of the parties without hope of advantage or profit
the wife of herein defendant Villa
o In the case at bar, it is not enough nor conclusive that
 Vales was the owner of the five houses of strong materials located
the plaintiff now regrets having entered into such
in Ermita Manila
contract and that she disliked entering into such.
 Vales became indebted to Silvestre in the sum of 20,000Php and
o In LEGAL EFFECT there is no difference between a contract
in that year executed a conveyance of his properties with a
wherein one of the contracting parties exchanges one
repurchase clause which gives Vales an option to repurchase
condition for another because he looks for greater gain or
within 1 year from the date of conveyance
profit and an agreement wherein one of the contracting
 Vales did not repurchase on the agreed date and instead
parties agrees to accept the lesser of the two
obtained an additional loan and through the request of Silvestre,
disadvantages
conveyed the properties to Garcia by reason that Silvestre was
o The consent given in this case is free and untrammeled
already of old age and Garcia is her legitimate heir
 On cases in which duress is applicable/present
 Vales contends that they agreed upon a repurchase at any time
o Cases in which there was no time within which to
however defendants deny such agreements
deliberate the manner (there were several negotiations in
 Shortly thereafter, two parcels of property were sold to Judge
the case at bar)
Jocson and another parcel to Garchitorena
o Cases in which there was no opportunity to take the
 Plaintiff contends that he had paid 25,000Php in consideration of
advice of persons (present are the parties’ legal counsels)
their verbal agreement that if he should pay the same, the
properties shall be reconveyed to him
19 Coercion, compulsion by threat or force

 Plaintiff further contends that his subsequent conveyances of his a. Strong vs. Gutierrez, 6 P 680;
properties in Salsipuedes and Faura was in light of an inducement Existence of fraud, concealment of identity, non-
by the defendants that should he not do such conveyance, the disclosure of the actual course of business
defendants would not reconvey to him the properties as
agreed upon o Francisco Gutierrez Repide (Repide), defendant, was the majority
WAS THERE INTIMIDATION IN THE CASE AT BAR? stockholder and one of the five directors of Philippine Sugar
Estates. He was likewise elected by the board as the agent and
SC RULED: administrator general of such company
 On the verbal agreement o US Government wanted to secure title over the friar lands. To
o Plaintiff contends that each one of the conveyances accomplish this objective, Governor for the Philippines entered into
between him and defendants subsequent to the original negotiations for the purchase of the Dominican lands, during which
conveyance was an extortion. The defendants, in order to Repide represented Philippine Sugar Estates.
intimidate him, and thereby obtain the conveyance, o The first offer of the Governor was to purchase the subjects lands
threatened him with a refusal to comply with the in the amount of 6,043,219.47USD in which Repide rejected. In
verbal agreement the second offer, the suggested purchase price was increased to
o At each conveyance, the defendants agreed, always 7,535,000USD
verbally, by the time that plaintiff asks that his properties o While negotiations for the second offer where ongoing, Repide took
be reconveyed, a new threat is made, a fresh extortion steps to purchase 800 shares of stock of PSE owned by Mrs.
o It was plaintiff who put himself in such a Eleanor Strong in which the shares are in the possession of her
disadvantageous position by not executing an agent, Jones.
instrument evidencing such verbal agreement owing o Repide, employed Kauffman who later on employed Sloan, a
to the fact that such verbal agreements are hard to broker to purchase the shares of Strong.
prove. o Jones sold the 800 shares of Strong for 16,000Mexican
o All men are presumed to be sane and normal and in their pesos.
relations with others in the business of life, they must o Later on, negotiations for the purchase of the Dominican lands
take care of themselves and use the best possible were concluded and a contract of sale was subsequently executed.
judgment in order for them to arrive at the most The sale transaction increased the value of the shares of stocks
efficient of all decisions originally owned by Strong from 16,000Mexican currency to
o Plaintiff is not unprotected and without remedy for 76,256USD
he can always go to court for such relief, but in his o During the negotiations regarding the purchase of the shares of
exercise of judgment, he chose not to stock, not one word of the facts affecting the value of this stock
 On ratification and renunciation was made known to her, nor her agent Jones
o Civil code substantially provides that the action of nullity o After the sale of the Dominican lands and after the purchase of the
can be ratified expressly or impliedly 800 shares of Strong, Repide became the owner of 30,400 out
o In the case at bar, there has been implied ratification of of the 42,030 shares of Philippine Sugar Estates
the supposed-to-be void agreement when, being aware of o Strong filed a complaint for the recovery of 800 shares. She
its nullity, the plaintiff who had the right to invoke it argued that her agent Jones had no authority to sell her shared
should execute an act which necessarily implies his and that Repide fraudulenty concealed the facts affecting their
wish to renounce such a right value
WAS THERE FRAUD IN EFFECTING THE PURCHASE OF
(5) Fraud: STRONG’S SHARES?

SC RULED: o A writ of execution was further issued by the MTC and levied upon
o On account of fraud and duty of Repide to state the facts the personal properties found inside the leased premises.
before any purchase transaction The levied properties were sold to Cacho as the highest bidder but
o With the factual circumstances of this case, it became failed to pay the purchase price of 120,000Php therefore another
the duty of Repide, acting in good faith, to state the public auction was held in which respondents are the highest
facts before making the purchase of Strong’s shares. bidders
o Repide was one of the directors of Philippine Sugar o Petitioner filed a complaint for the annulment of the MTC decision
Estates as well as the owner of ¾ of the shares of its and damages with the RTC and alleged that the decision and
stock. He was the negotiator, administrator of the subsequent writ of execution were obtained through fraud,
shares of stocks and by this reason, no one but he, deceit, chicanery, malice, bad faith, unlawful intent, false
knows well about the exact conditions of the testimony, among others…
negotiations o RTC rendered a decision finding the nature of fraud in this case as
o Repide employed an agent to purchase the stocks of not extrinsic but declared the implementation of the writ of
Strong, concealed his own identity and knowledge execution void, furthermore it moved for the awarding of
of the state of its negotiations and their probable moral and exemplary damages as well as the value of
result (Strong evidence of fraud in the case at unrealized profits as a result of the execution sale
bar) o Respondents challenged the decision contending that the RTC
erred in its judgment for the awarding of damages
b. Woodhouse vs. Halili 93 P 526; WHETHER OR NOT PETITIONER IS ENTITLED TO DAMAGES AND
c. Cacho vs. Bonifacio 476 S 869; ATTORNEY’S FEES
Fraud in the annulment of judgments v. fraud that justifies liability
for damages, lease agreement, writ of execution void SC RULED:
o Spouses Bonifacio owns a commercial building in Paranaque in o On extrinsic fraud
which they entered into a lease agreement with Editha Food o Extrinsic fraud is the kind of fraud necessary to annul a
Corporation owned by the Spouses David, on the three-adjoining judgment, a situation wherein the litigant commits acts
stalls of the building outside of the trial of the case, the effect of which prevents
o 17,000Php monthly, 2 years, expire on June 1990 a party from having a trial, a real contest, or from
o The leased premises were converted into a restaurant presenting all of his case to court.
o Compalint for unlawful detainer was instituted against David for o There was no extrinsic fraud in this case, thus the
non-payment and despite repeated demands, rental arrearage in earlier decision of the MTC was not annulled but
the amoung of 187,000Php instead the court ruled for the awarding of damages
o The above-mentioned complaint was initially dismissed but since the kind of fraud contemplated in this case is
subsequently revived that kind of fraud which gives rise to liability for
o Chandra Cacho and David, executed new contracts of lease over damages
the same premises. Cacho took over the management of the o The respondents, fully cognizant of petitioner’s contractual
restaurant and had the leased premises renovated and paid the rights and her active management of the leased premises,
monthly rentals to respondent could have acted more prudently and in keeping with the
o The above-mentioned complaint that was initially dismissed had dictates of fairness and justice, should have earlier
been rendered a decision by the MTC ordering David to vacate the informed the petitioner of the unilateral cancellation of
leased premises and return its possession to respondents the lease agreement subject of the litigation pending
in court at that time AND SHOULD HAVE INCLUDED

HER WHEN THEY REVIVED THE EJECTMENT CASE o Vidal refused to receive such payment, and prompted
AGAINST DAVID Paterno to file an action against Vidal but this never came
o Clearly, respondents are liable for damages for the kind of to trial and the checks where destroyed during the war
fraud enunciated in this case and they could not question operations
the awarding of damages to petitioner o Araneta now files an action against Paterno to compel the
latter to deliver a clear title to the lots and a
cancellation of Vidal’s mortgage.
d. Araneta vs. De Paterno 91 P 786; WAS THERE A VALID DEED OF ABSOLUTE SALE BETWEEN
Bobs mag-english, claimed defense of fraud, fraud not proven, lack ARANETA AND PATERNO?
of prudence in managing defendant’s affairs
o Paterno is the registered owner of certain portions of a big block of WAS THERE FRAUD ON THE PART OF ARANETA?
residential land in Sta. Mesa Manila.
o The land was subdivided into city lots, most of which were SC RULED:
occupied by lessees who had contracts of lease which were to
o On the deed of absolute sale
expire on December 31, 1952
o The contemplated execution of the deed of
o A salient stipulation in the contracts revealed: absolute sale was not contingent on the
o In the event the owner and lessor should decide to sell the cancellation of the mortgage, therefore there was
property the lessees were to be given priority over other no need to settle the mortgage first. The
buyers if they should desire to buy their leaseholds. agreement only provided that the absolute sale
o In 1940 and 1941, Paterno obtained from Jose Vidal several loans shall be executed upon the determination of the
amounting to 90,098Php and constituted a first mortgage to specific lots to be sold to Araneta
secure the debt. She subsequently obtaine additional loans o On the defense of fraud
upon the same security o De Paterno alleges that her attorneys did not
o Contract was novated and the time of payment was fixed at 2 inform her about the contents of the deed and that
years, and the second and last novation, 4 years the same was in English and for this reason, she
o Paz decided to sell the entire property for 400,000Php and did not read it
entered into negotiations with Gregorio Araneta and executed a o The root of the controversy was Exhibit A:
contract named “Promise to Buy and Sell”  Araneta Inc. would hold Paz Tuason liable
o Paterno is to sell and the latter would buy for 400,000Php for the lost checks that were supposed to
he entire estate under these terms be paid to Vidal but were destroyed during
o Letters were sent to the lessees giving them until August the war operations
31, 1943 an option to buy the lots they occupied. Some o Paterno alleges that had she understood the
of the lessees bought their part of the property and were language of the contract, and had her attorneys
given deeds of conveyance informed her of such stipulations, she could not
o Araneta, thereafter executed a deed of sale to the lots with have agreed to such one-sided contract
the exclusion of the lots sold to tenants and those which o A vendor could not be considered to have been
were mortgaged deceived into signing a deed of sale where the
o A day before the execution of the deed of sale, a day after circumstances show that:
the signing of the agreement to buy and sell, De Paterno,  She is intelligent and well educated and
to fulfill his mortgage obligation to Vidal, offered a check had been managing her affairs
for 143, 150Php

 She had an able attorney who was o The franchise was not really the determining cause of the
assisting her in the law suit purchase and the plaintiff could have easily applied at the
 She has a son who is a leading citizen and office of the Public Utility Commissioner for an issuance of
a business man and knew the English a new one.
language very well o On the innocent non-disclosure of fact
o If she signed the deed of sale without being o This is a case of an innocent non-disclosure of fact and
apprised of its import, it can hardly be that the defendant did not have the intention of defrauding
conceived that she did not have her attorney the plaintiff
or her son, who took active part in the o There was no proof of fraud in this case and the innocent
negotiations, read it to her afterwards non-disclosure of fact does not necessarily affect the
o There was no proof of fraud in the case at bar formation of the contract or operate to discharge the
parties from their agreement
e. Tuason vs. Marquez, 45 P 381;
Franchise not main consideration in deed of sale-can easily be re-
obtained, innocent non-disclosure of fact-not fraud
o Marquez is the owner of the electric light plant of Lucena, Tayabas f. Songco vs. Sellner, 37 P 254;
and gave an option to Antonio Tuason for the purchase of the plant Exaggerated comment para makabenta, buyer fell for the exag
for 14,400Php comment, not false representation for being a matter of opinion,
o The option was taken advantage by Tuason and subsequently buyer shall exercise prudence in dealing with his affairs
executed a contract which was as formulated, ratified and
notarized o George Sellner was the owner of the farm in Floridablanca
o They agreed on payment of installments. First installment was Pampanga, which was contiguous to a farm owned by Songco
made, however there was failure to pay upon second installment o Both properties had considerable quantities of sugar cane waiting
o Tuason, later, contends that the contract shall be rescinded by to be cut.
reason of misrepresentation and fraud by Marquez o One obstacle was that the owners of the central were not sure
they could mill his cane and would not promise to take it
o Originally in 1913-1914, a franchise for 35 years was
o Sellner conceived the idea of buying cane from Songco motivated
granted to Lucena Electric Company in which its rights
by the idea of a right of way over Songco’s land for conveying his
were passed to Marquez at a sheriff’s sale. The company
own sugar to the central
never seemed to have functioned very efficiently either at
o Songco, in dealing with Sellner, told the latter, that his estimate
that time or any other time therefore upon being disgusted
on the produce of his case was 3,000 piculs of sugar, and
with the business, he gave up its franchise. The franchise
Sellner bought the crop believing that this estimate is
was cancelled subsequent to the perfection of the
substantially correct
contract between Tuason and by this reason, Tuason
o However, as the crop turned out, only 2,017 piculs were
now comes to court for the awarding of a sum of
produced and that Sellner turned out to be the one prejudiced by
money plus damages
this
SHOULD THE CONTRACT BE RESCINDED ON ACCOUNT OF
o He now comes to court alleging that the promissory note in which
MISREPRESENTATION AND FRAUD?
he signed was obtained through false and fraudulent
representations herein specified
SC RULED:
WAS THERE AN EXISTENCE OF FRAUD IN THE CASE AT BAR?
o On the franchise

SC RULED: therefore he should have exercised prudence and cannot

o On false representation now avoid his obligations in the contract
o The seller of the cane standing in the certain field, making
exaggerated comments concerning the probable yield of
sugar leaves the purchaser the right not to rely to such 7. Usual exaggerations in trade:
statement until proven substantially
o Songco’s statement may have been disingenuous and 8. Mere expression of an opinion:
uncandid but Sellner is still bound to pay the price
stipulated 9. Misrepresentation:
o Sellner should have judged with his own eyes as to (1) By a third person:
the character of the cane
a. Hill vs. Veloso, 31 P 160
g. Azarraga vs. Gay 52 P 599 Defense of deceit, if third party deceit – parties in good faith shall
Examined the real estate himself-acceded to the purchase, if false, not be prejudiced, deceit contemplates action by principal parties
cannot not avoid the contract for he himself failed to exercise such to a contract, promissory note upheld, obligation exists, deceit
prudence unproven and inapplicable
o Plaintiff sold two parcels of land to the defendant for a lump sum o Maximina Ch. Veloso and Domingo Franco executed and signed a
of 47,000Php payable in installments document of the ff tenor:
o Vendee paid 5,000Php when the contract was signed. The vendor o For the value of goods we have received…we promise to
delivered the Torrens title to the first parcel to the vendee, who, pay jointly and severally to Michael and Co. or its order,
pursuant to the agreement, paid him 20,000Php. …the sum of six thousand three hundred and nineteen
o Torrens title for the second parcel was issued however, vendee pesos and thirty three centavos…
failed to pay the price in consideration of the same o Two thousand pesos have been paid to this note
o Plaintiff claims the sum of 22,000Php with legal interest o Hill brought the present suit to recover sums of money outstanding
o Defendant claims that the plaintiff, knowing that the second parcel to the promissory note
of land he sold had an area of 60 hectares, by representation, led o Defendants alleged as a special defense that:
the defendant to believe that said second parcel of land contained o About the middle of December 1910, the deceased
98 hectares and thus made it appear on the deed of sale and Domingo Franco who was their son-in-law had told them
induced vendee to bind herself to such purchase and terms thereof that Atty. Levering , in his capacity as guardian of the
minor children of the Velosos, would pay to him the sum of
WAS THERE FRAUD IN THE CASE AT BAR? 8,000Php which defendants have borrowed to the former
guardian.
SC RULED: o Domingo Franco had defendants sign, outside his office, a
o On false representations blank paper, stating to them that said paper would be filled
o When the purchaser proceeds to make investigations by out inside his office in behalf of them
himself, and the vendor does nothing to prevent such o Defendants did in fact sign the paper.
investigation from being as complete as the former might o Franco died and defendants knew that Franco did not
wish, the purchaser cannot later allege that the vendor deliver the note to Levering and that the paper was filled
made false representations to him out with a totally different obligation as in this case.
o Vendor in this case proceeded to investigate Exhibit 4, or CAN THE DEFENDANTS VALIDLY INVOKE THE DEFENSE OF DECEIT?
if he has not done so, he was supplied with the instrument
revealing the actual size of the parcel of land to be bought, SC RULED:

o On deceit Mutual mistake – equity will rescind a contract for mutual mistake,
o There is deceit when by words or insidious mistake so material that it goes into the essence of the ground-
machinations on the part of one of the contracting thus a ground for rescission
parties, the other is induced to execute a contract o Luis Asiain, is the owner of the hacienda known as “Maria” situated
which without them he would not have made in the municipality of La Carlota, Province of Negros Occidental
o Domingo Franco is not one of the contracting parties who o Benjamin Jalandoni is the owner of another hacienda adjoining
may have deceitfully induced the other contracting part that of Asiain
Michael and Co. to execute the contract o Asiain and Jalandoni met one day. Asiain told Jalandoni that he
o The one and the other party contemplated by law are was willing to sell a portion of his hacienda for the sum of
the active and passive subjects of the obligation 55,000Php. With a wave of his hand, Asiain indicated the tract of
o Active Subject – Michael and co. land in question, affirming that it contained between 25 and 30
o Passive subject – Veloso and Franco hectares and that it can produce 2,000piculs of sugar
o Both Veloso and Franco are one single contracting o But Jalandoni remained doubtful as to the extent of the land, and
party. Asiain wrote a letter to this effect:
o Deceit in this case is not one of a deceit of the one o …I would bet that you pay only one-half. I am not a
contracting party to the other but a deceit caused by a surveyor, but these days I had pleasure to survey the land
third person and I know more or less of its area
o In the text of the civil code, deceit by a third person o I assure that there are 2,000 piculs of sugar
does not generally annul consent and in cases where the o In case the sugar does not amount to 2,000 piculs, I will
contracting parties acted in good faith (Michael and Co. pay in sugar all such amount as will be necessary to
and Veloso), there is no reason for making the parties complete the 2,000
suffer for the consequences of the act of a third person in o Thereafter, Asiain and Jalandoni, having met in Iloilo prepared and
who the other contracting party may have imposed signed a MOA
imprudent confidence. o Purchase of land by Jalandoni containing 25 hectares
o On the delivery of goods more or less of land…Mr. Asiain is under obligation to
o HOWEVER, upon further perusal of the facts of the case, it take care of all the plantation until the planting is finished
was discovered that the goods in consideration of the and in case the crop is in excess of 2,000 piculs, all excess
debt were received in La Cooperativa Filipina and that will belong to Asiain
the latter belonged to defendant or without Franco having o Once in possession of the land, Jalandoni did two things:
a share within and that the goods came from Michael and o Had the sugar cane ground in La Carlota Sugar
Co., thus signifying the existence of an obligation of the Central with the result that it gave an output of 800
defendants to plaintiffs piculs and 23 cates of sugar
o The document unequivocally states the obligation to pay o Procured a surveyor to survey the land and discovered
for delivery, defendants signed it, defendants were proven that it was only 18hectares
to have received such goods, thus, even though the o Of the purchase price, Jalandoni had only paid 30,000Php leaving
instrument was, as they allege, brought about by the a balance of 25,000
deceit of Franco unto them, the obligation still exists and o Action was instituted by Asiain to collect the outstanding balance
the promissory note enforceable of the purchase price
o Jalandoni asked that he be absolved from the complaint and that
(2) In good faith: he and Asiain return to their original positions and return to each
other whatever they have received
a. Asiasin vs. Jalandoni, 45 P 296 o CFI ruled in favor of Jalandoni

o Plaintiff appealed to the above-decision o Concepcion Feliz, children and grandchildren entered into an extra-
MUST THE DEED BE RESCINDED? judicial settlement of the deceased’s estate consisting one half of
the properties allegedly belonging to the CPG
SC RULED: o Among the properties listed as conjugal were the two parcels of
o On mutual mistake land in Bulacan which was divided to the heirs in this manner:
o As evidently seen in the instrument executed , the word o ½ to Concepcion Felix
“more or less” indicated that the seller of the land was not o ¾ of the remaining will be transferred to the step children
at all precise of the actual dimensions of his land o ¼ to the others
o A mutual mistake as to the quantity of the land sold may o TCT were executed in the name of the heirs
afford ground for equitable relief. o An SPA was executed, naming Concepcion Felix the attorney in
o It is well settled hat a purchaser of land, when it is sold in fact of the heirs, who is authorized to manage their shares in the
gross, or with the description “more or less” does not fishpond
thereby ipso facto take all the risk of quantity in the tract. o Later, the heirs ended their co-ownership with Concepcion Felix,
o If the difference between the real and represented quantity and divided and segregated their own properties
is very great, both parties act obviously under a o Rodriguez children executed another document, granting
mistake which it is the duty of the court of equity to Concepcion Felix, lifetime usufruct over the fishpond
correct o Concepcion Felix thereafter, appeared to have leased the fishpond
o Mutual mistake of the contracting parties which is so from the Rodriguez’ for a period of five years
material as to go to the essence of the contract is a ground o Relationship turned sour as Concepcion Felix failed to remit the
for relief and rescission revenue from the fruits of the fishpond and thus a demand for
payment was instituted
10. Simulation of a contract: o The action to declare null and void the conveyance of
(1) Absolute vs. relative: properties was based from the allegation that the late
Rodriguez, forced their daughter to convey the properties in
a. Rodriguez vs. Rodriguez, 127 P favor of Concepcion Felix and Rodriguez’s CPG and prays
294; that the TCTs as well as the extrajudicial settlement be
Contract absolutely simulated – void, simulated transfer of declared null and void
property-not proven, widower mindful of the conveyance and
consented to it, lapse of 4years to bring action WERE THE CONVEYANCES IN ISSUE OBTAINED UNDER DURESS,
o Concepcion Felix is the widow of the late Don Felipe Calderon with INEXISTENT AND SIMULATED AND WITHOUT CONSIDERATION?
whom she had one living child, Concepcion Calderon.
o Concepcion Felix contracted a second marriage with Domingo SC RULED:
Rodriguez, widower with four children o On the defense of violence and intimidation
o Prior to her marriage to Rodriguez, Concepcion Feliz was the o The evidence is not convincing that the contracts of
registered owner of 2 fishponds in Bulacan transfer from Concepcion Felix to her daughter, and from
o Concepcion Felix appeared to have executed a deed of sale the latter to her mother and stepfather were executed
conveying ownership of the aforesaid properties to her daughter, through violence or intimidation.
Concepcion Calderon which Calderon in turn appeared to have o What is more decisive is that duress being merely a
transferred to her mother and stepfather by means of a document vice or defect of consent, an action based upon it
executed must be brought within four years after it has
o Domingo Rodriguez died intestate, survived by his widow ceased
Concepcion Felix and his children

o The present action has only been brought after 28 years fictitiously sold, from attachment by Dr. Ramon Papa to whom
after the duress has ceased. Therefore the cause of action Lorenzo Perez had endorsed a note for 4,000Php executed and
is clearly barred. signed by Trinidad
o On the charge of simulation
o The charge of simulation is untenable for the IS THE CONTRACT NULL AND VOID?
characteristic of simulation is the fact that the apparent
contract is not really desired or intended to produce legal SC RULED:
effects or in a way, alter the juridical situation of the o On simulated contracts
parties. o The contract of sale in the case at bar has for its cause
o Thus, where a person, in order to place his property or consideration the amount of 10,000Php and both
beyond the reach of his creditors, simulates a transfer of it this consideration as well as the subject matter of the
to another, he does not really intend to divest himself of contract are lawful and are not penalized by law
his title and control of the property; hence, the deed of o However, as the contract was simulated and has
transfer is but a sham. not stipulated a consideration/price thereof the
o But appellant contends that the sale by her to her consideration being thus lacking said contract is null
daughter, and the subsequent sale by the latter to and void per se or non-existent
appellant and her husband, the late Domingo Rodriguez, o The object of the contracting parties or the
were done for the purpose of converting the property motives to which the vendors had in entering into the
from paraphernal to conjugal, thereby vesting a half simulated contract should not be confused with the
interest in Rodriguez, and evading the prohibition consideration which was not present in the transaction
against donations from one spouse to another during
coverture (Civil Code of 1889, Art. 1334).
o If this is true, then the appellant and her daughter must
c. Borromero vs. Borromeo, 98 P 432;
Sales, fictitious sale, sale without a consideration, real property in
have intended the two conveyance to be real and effective;
Cebu
for appellant could not intend to keep the ownership of the
o Johanne Borromeo, widower of the late Dr. Maximo Borromeo
fishponds and at the same time vest half of them in her
allege that during her marriage with the deceased, Maximo bought
husband. The two contracts of sale then could not
a real property in Cebu becoming one of the conjugal properties of
have been simulated, but were real and intended to
her husband and herself
be fully operative, being the means to achieve the
o Before his death, he was made to sign a fictitious deed of saleb
result desired.
in favor of Dr. Borromeo purporting to convey said property for
3,000Php
b. Gonzales vs. Trinidad, 67 P 682; o Property was assessed at 42,480Php and had a market value of
Fictitious and simulated contracts, supposed vendors did not 80,000Php
receive stipulated price, no cause or consideration, null and void o Sale was fictitious as no payment of the stated price was made
and the price stated was inadequate
o Respondents executed in favor of petitioner a deed of sale of an o Defendants took possession of the property in bad faith and
urban property for 10,000Php. deprived the deceased of the fruits and rentals amounting to not
o As the property was mortgaged to the Bureau of lands, for less than 100Php a month
6,500Php the purchasers assumed encumbrance WAS THE CONTRACT FICTITIOUS/SIMULATED?
o The sale was simulated and the supposed vendors did not receive
the alleged price, the idea being to save the property, which was SC RULED:

o On the bringing of the action to annul a contract by a wife o CA ruled that deed of sale was void for lack of Simeona’s consent,
whose deceased husband has entered into a contract the general power of attorney being insufficient to warrant consent
without consideration o Petitioners argue that the subject sale is valid as to Mauricio’s
o The respondents content that the wife will not be allowed share in the properties
to contest the sale until after the liquidation of the o Respondents maintain that they are co-owners of the properties by
deceased’s conjugal property is erroneous succession and that the deed of sale is void for lack of Simona’s
o The widow who has interest in the property may be consent and that the same is simulated
allowed to contest the sale even before the liquidation of
the CPG WHETHER OR NOT THE DEED WAS SIMULATED
o On the alleged fictitious contract SC RULED:

o In the case at bar, the sale is alleged to be fictitious o On the requirement of wife’s consent
because no payment of the stated price was made. The o CA erred in declaring the deed of sale void
sale, therefore was non-existent because one of the o Under the civil code only the wife can annul a contract
essential elements of a contract was absent that disposes of conjugal real property without her consent
o There was defect in the consent of the wife thus, o Simona’s heirs are not the parties who can invoke the
the gross inadequacy of the price (which generally would defense of lack of wife’s consent since this defense is
not amount to voiding the contract) would have the personal to Simona
effect of voiding the contract o On simulation
o As proof for the simulation, heirs point out to the
d. Bravo Guerrero vs. Bravo, 465 S consideration of 1,000Php which they contend as being
244 grossly inadequate compared to the actual value of the
Simulation of contract, inadequacy of price, properties
o Spouses Mauricio Bravo and Simona Andaya owned two parcels of o Simulation of the contract and gross inadequacy of price
land located along Metro Manila are distinct legal concepts with different effects
o Simona executed a General Power of Attorney appointing o Simulation of the contract –nullifies the contract, there is
Mauricio as her attorney-in-fact in which she authorized Mauricio no real agreement to that effect between the parties
to mortgage or otherwise hypothecate, sell, assign and dispose of o Gross inadequacy does not necessarily nullify the contract
any and all property – it nevertheless embodies an agreement between the
o Mauricio subsequently mortgaged the properties to PNB and DBP parties. When the parties agree on a price as the
o Mauricio thereafter executed a Deed of Sale with Assumption of actual consideration, the sale is not simulated
Real Estate Mortgage conveying the properties to the Bravos despite the inadequacy of the price
o The sale was conditioned on the payment of 1,000Php and on the Unless the gross inadequacy of the contract signifies a defect in
assumption by the vendees of the PNB and DBP mortgages over the consent or that the parties had a different intention, the same
the properties remains valid
o Deed of sale was notarized but was not annotated and neither was
it presented to PNB and DBP and the same continued to be in
Mauricio’s name SECTION 2. - Object of Contracts
o Bravo moved for the annulment of the deed of sale and allege that
it was simulated to prejudice the other heirs (1) Commerce of Men:
o RTC ruled that the sale did not prejudice the heirs as the Blas vs. Santos, 1 S 899;
properties were conveyed with valuable consideration

Wife promised to deliver ½ of husband’s estate, Definition Chickboy husband, legal wife and common-law wife, DUH!
of future inheritance, not future inheritance for the properties Renunciation of future inheritance cannot be entertained in the
were already existing at the time of promise first place because future inheritance cannot be valid objects to a
contract
 Simon Blas had two marriages in his lifetime
 The first marriage was with Marta Cruz who died and thereafter  Maria Uson was the lawful wife of Faustino Nebrada, who, because
they had not made any liquidation of their property and which he was chickboy and stuff (haha joke lang), had a common-law
property were included in the assets of the second marriage with wife, Maria del Rosario who now claims for the share of their
Maxima Santos. illegitimate children on the estate of Faustino Nebrada
 Petitioners here are heirs of Marta Cruz whom Maxima Santos,  Maria del Rosario contends that in a public document executed
through Exhibit A, has promised ½ of the estate of her husband by Maria Uson and Faustino Nebrada, they agreed to separate
to: as husband and wife and that Maria Uson was given a
o Ipinapangako sa pamamagitan ng kasulatang ito na ang parcel of land by way of alimony and in return she
lahat ng maiiwang pagaari at kayamanan naming mag- renounced her right to inherit any other property that may
asawa,…ipagkakaloob ko ang kalahati sa mga herederos o be left by her husband upon his death
pinamamanahan ng aking asawa…  It should be noted that Faustino Nebrada died in 1945, before the
 Trial court said that Exhibit A has not created any right in favor of effectivity of the New Civil Code
the plaintiffs since it cannot be considered as a valid and
enforeceable contract because it deals with future CAN THE RIGHT FOR FUTURE INHERITANCE BE RENOUNCED?
inheritance
DO THE RULES ENSHRINED IN THE NEW CIVIL CODE APPLY TO THE
WAS EXHIBIT A VOID AND UNENFORCEABLE FOR DEALING WITH CASE AT BAR?
FUTURE INHERITANCE?
SC RULED:
SC RULED:  On renouncing the right to future inheritance
 On future inheritance o The Old Civil code which was in effect upon the death of
o Exhibit A is not a contract of future inheritance Faustino Nebrada substantially provides that the property
o A future inheritance is any property or right not in belongs to the heirs at the moment of the death of the
existence or capable of determination at the time of the ancestor as completely as if the ancestor had executed and
contract, that a person may in the future acquire by delivered to them a deed for the same before his death
succession. o Maria Uson, being the lawful wife of Faustino Nebrada, is
o The properties subject of Exhibit A are well-defined the sole-heir of the latter and by virtue of the above-
properties for it was found out that when Exhibit A was mentioned provision of the Old Civil Code, property passes
made in December 26, 1936, the conjugal properties to her.
subject of the instrument were already existing at that o But defendant contends that Maria Uson has already
time and shortly thereafter Simon Blas’ death, an renounced her right to any future inheritance…This
instrument which revealed the inventory of properties cannot be so, since in the first place, a contract with a
made by Simon Blas’ was reviewed by Maxima Santos. future inheritance as its object is not a valid contract at all
therefore such renunciation cannot be entertained
for in the first place, there is NOTHING to renounce
Uson vs. Del Rosario, 92 P 530  On the effectivity of the New Civil Code

o The civil code gives illegitimate children the status of  The ones employed to mill the sugar being
natural children who are entitled to successional rights temporary ones, went home to their families and
o However, in the case at bar, there is already a vested left the central
right in the subject properties as a result of the death of  The Hacienda being adjacent to the Philippine
Faustino. There could have been an effect of retroactivity, Army Camp, becomes, in time of war, a handy
but present a vested right, the retroactivity cannot impair ground for impending military activity on the part
said rights. of the enemy
 To produce or mill sugar cane at the time of war
(2) Impossible Things or Services: will be contrary to public policy as it would be
giving aid or comfort to the enemy
Castro vs. Longa, 89 P 581 o In light of the circumstances above-stated, the defense of
War time, failed to reach quota, alleged breach but not
force majeure would be sufficient enough to justify the
proved because of existence of force majeure, contracts strictly
alleged breach of Longa in their contract of lease.
construed against the one who prepared it
 On the stipulations in the contract in cases of force majeure
 Contract of lease was entered into by the Castros and Longa in
o There was no express stipulation on the matter in cases of
which, for a period of six agricultural years, lessee is to mill sugar
force majeure in the contract and if the lessors contend
and would advance 3,000Php every start of the year which would
that there was such a stipulation, it shall be explicitly and
be liquidated upon the sale of the sugar corresponding to the
boldly found in the lease contract therein
lessors
o Besides, in interpreting and construing the lease contract,
 In the first two agricultural years, Longa was able to pay the
it shall be construed strictly against those who prepared
corresponding rentals and was able to mill the quota set for the
the contract. And in the case at bar, it was the husband
said years.
of Castro who prepared the same.
 However, during the break out of war, the lessee was only able to
mill 1,319.92 piculs of sugar out of his quota of 9,086 piculs. No
quedans thereafter was issued since the Inspector of the Philippine SECTION 3. - Cause of Contracts
Sugar Administration had absented himself from the Central
therefore the lessors did not liquidate the sale of the sugar (1) Presumption:
corresponding to them to the lessee a. Raet vs. CA, 295 S 677;
 Because of the failure of lessee to deliver the leased land upon Figures referred to as prices are mere estimates,
termination of the contract free from cogon grass, sugar points lacks the essential requisites for the perfection of
and rations and for the failure of lessee to deliver on quota, lessors contracts
filed an action against him making him liable to pay the rentals  Spouses Raet and Spouses Mitra negotiated with Amparo Gatus
due for the difference between what he has delivered and the concerning the possibility of buying the rights of the latter to
quota set, as well as damages and all other costs. certain units at the Las Villas de Sto. Nino Subdivision in Bulacan,
IS LONGA LIABLE UNDER THE TERMS OF THE CONTRACT FOR a property of GSIS developed by Phil-Ville Development and
FAILURE TO DELIVER BY REASON OF FORCE MAJEURE? Housing Corporation
 Spouses Raet and Mitra paid Gatus 40,000Php and 35,000Php for
SC RULED: which they were issued receipts by Gatus in her own name.
 On force majeure  As both the spouses were not GSIS members, they had to look for
o Because of the break out of the war: GSIS members to whom they could use their policies.
 Both have found policies to use but GSIS subsequently
disapproved the load applications of the petitioners

 Phil-Ville then advised the spouses to seek other sources of time the spouses applied for the purchase of the
financing but for the meantime, allowed them to remain in units
the premises  No written contracts to evidence the alleged
 Upon the failure of the spouses to raise money, Phil-Ville asked sales. Contracts of such importance shall be
them, in separate letters to vacate the units they were occupying reduced in writing
but petitioners refused to do so
 Phil-Ville filed an ejectment case and the Municipal Trial Court
b. PBC vs. Lui She, 21 S 52;
Motive or purpose is illegal, conceal prohibited
ruled in favor of them
transfer of lands to aliens
 Later, spouses filed a complaint for specific performance and
 Justina Santos and her sister Lorenza were the owners of a piece
damages against Amparo Gatus in which HLURB gave judgment in
of land in Manila with 2,582.30 sq. m.
the former’s favor
 In it are two residential houses, one of which is where Justina and
 The HLURB judgment was assailed by Phil-Ville contending that
her sister are living, and the other, a long time lessee , Wong
they have no jurisdiction over the case at bar since the MTC had
 In September, Justina became the sole owner of the land as her
already rendered judgment for the spouses’ ejectment
sister died with no other heir
WERE THERE PERFECTED CONTRACTS OF SALE BETWEEN
o Then, already advanced in years, crippled, blind, and an
PETITIONERS AND PRIVATE RESPONDENTS OVER THE SUBJECT
invalid, she was left with no other relative to live with
UNITS?
except for her 17 dogs and 8 maids (haha wala lang
ininclude ko lang to, nakakaawa eh hahaha)
SC RULED:
 Justina’s dreary existence was at times brightened up by the
 On the jurisdiction of the HLURB
children of Wong.
o The jurisdiction of HLURB is exclusive. It has been held to
 Wong was the trusted man of Justina to whom she delivered
extend to the determination of the question whether there
various amounts for safekeeping including the rentals for the
is a perfected contract between a condominium buyer and
leased property
developer.
 And thereafter, Justina executed a document which gave an
o The decision on the ejectment case is conclusive only on
extention of the lease of Wong for another 50 years and Wong has
the question of possession of the subject premises
been given the right to withdraw from it anytime. Further, another
 On the perfection of contract
document was made giving Wong an option to buy the property
o The parties in the case at bar did not reach any agreement
within 10 years which was conditioned on his obtaining
with regard to the sale of the units in question
Philippine citizenship
o Records do not show the total cost of the units in question
 Application for naturalization was withdrawn because it was found
and the payment schemes therefor
out that he was not a resident of Rizal.
 Figures referred to were mere estimates and
 Subsequently, Justina had a change of heart claiming that the
thus, lacked the essential requisites for the
various documents made by her was by reason of the
perfection of the contracts
machinations and inducements practiced by Wong
 Petitioners dealt with Gatus, who is not an agent of
Phil-Ville. For one to validly represent himself
WHAT IS THE MOTIVE OF THE PARTIES IN THIS CASE?
as agent, it shall be reduced to writing, which
Gatus did not possess
IS THE MOTIVE HERE DIFFERENT FROM THE CAUSE OF THE
 Since Gatus is not an agent of Phil-Ville, Phil-Ville
CONTRACT?
had no knowledge of the figures given by Gatus
and thus, could not have ratified the same at the
WHAT IS THE LEGAL EFFECT OF THE MOTIVE?

 Spouses contend that they did not and never executed a

SC RULED: Promissory Note and Chattel Mortgage in favor of Security
Finance. They claimed that they bought the car in cash as
 On the motive of the parties evidenced by the Vehicle Sales Invoice
o Generally, particular motives of the parties are different  RTC ruled directing the branch sheriff to seize the subject car and
from the cause of the contract, but the case at bar take it into his custody upon further opinions from the contract
exemplifies the exception that the motive may be  CA reversed the RTC decision
regarded as causa when it predetermines the
purpose of the contract. ARE THE PROMISSORY NOTES AND DEEDS OF MORTGAGE IN THIS
o The motive or purpose of the agreement which has CASE VALID CONTRACTS?
resulted in the virtual transfer of ownership to the
lessee, is to circumvent the Constitutional prohibition SC RULED:
of transfer of lands to aliens  On the signed promissory notes and deeds of mortgage
 On the legal effect o Saguid admitted that the signature was his, but he
o The motive or purpose above-mentioned is the illegal clarified that when he signed said documents as a
causa rendering the contract void result of the pushing of Sonny Quijano, he signed
o Article 1416 shall apply, an exception to the in pari delicto them in blank
rule in Article 1412. Section 5, Article 13 of the  On the essential elements of the contract
Constitution substantially provides that the lands must be o A contract of loan is governed by the rules as to the
conserved for the Filipinos, therefore no private requisites and validity in contracts in general
agricultural land shall be transferred or assigned except to o From the record, it is clear that what Saguid admitted was
individuals, corporations or associations. Because of only his signatures in the documents and not the
public policy, the lessor will be allowed to recover contents thereof
the property o Saguid signed the promissory note for Sonny Quijano who
promised to facilitate the purchase of another motor
vehicle to be converted into a taxicab but not for
c. Saquid vs. Security Finance Inc., 477 S respondent
256  On the presumption that there is consideration
Presumption of consideration cannot be attacked by mere o Under Article 1354 of the Civil Code, it is presumed that
assertion that there is no consideration, promissory note and consideration exists and is lawful unless the debtor proves
deeds of mortgage, signature but not content itself, lacking the contrary
essential requisites, preponderance of evidence o This presumption cannot be overthrown by a mere
 Decision of first civil case filed was for Security of Finance to pay assertion that it has no consideration
Spouses Saguid the daily earnings of the seized motor vehicle o To overcome the presumption of consideration, the alleged
as well as damages… lack of consideration must be shown by preponderance
 Security Finance contends that Spouses Saguin that in a of evidence
promissory note executed by the, they jointly and severally bound
themselves to pay the amount due them in monthly installments Kinds:
and further contended that spouses defaulted in complying with (2) Cause vs. Motive:
the terms and conditions of the promissory note and thereby a. Liguez vs. CA, 102 P 577;
became due and demandable either through payment of the
amount due or the surrender of the mortgaged motor vehicle

Cause only when contract is of pure beneficence,

without self-interest by donor, remuneratory contracts – (3) Legality:
consideration is service or benefit a. Velez vs. Ramas, 40 P 787,
 A donation was made by Salvador Lopez to herein petitioner Refrain from instituting criminal prosecution- void for
Liguez in view of Lopez’ desire to have sexual relations with being an illicit character of consideration
petitioner.  Teodoro Velez and wife are the owners of a pawnshop and had
 It was alleged that Lopez confessed his love for petitioner to the employed Restituta Quirante (wife of Salomon Ramas) in some
instrumental witnesses, with the remark that Liguez’ parents capacity therein
would not allow Lopez to live with her unless he first  Quirante abstracted various sums of money belonging to the
donated the land in question pawnshop which constituted the offense of estafa
o That the DONOR, Salvador P. Lopez, for and in  In light of this, defendants executed a document:
consideration of his love and affection for the said DONEE, o …In order to prevent said woman from being brought
Conchita Liguez, and also for the good and valuable before the courts for the unlawful act she has executed,
services rendered to the DONOR by the DONEE, does by the persons subscribing this document have guaranteed to
these presents, voluntarily give, grant and donate to the the said Teodoro Velez and Hermenegilda Veloso the
said donee… payment of the sum plus interest until fully paid…
 Liguez now comes to court claiming ownership of the parcel of
land, allegedly donated by Lopez CAN AN ACTION BE MAINTAINED UPON THIS CONTRACT?
WAS THE DEED OF DONATION NULL AND VOID? SC RULED:

 On illicit consideration
SC RULED: o A promise given in consideration of a promise on the part
 On causa v. motive of the oblige to refrain from instituting a criminal
o The motive of the parties may be regarded as causa when prosecution is void on account of the illicit character of the
it predetermines the purpose of the contract consideration
 On cause or consideration o It is contrary to public policy to allow parties to make an
o Liberality of the donor is deemed causa only in those agreement designed to prevent or stifle prosecution for the
contracts that are of “pure” beneficence; that is, crime
contracts designed solely and exclusively to procure
the welfare of the beneficiary without any intent of b. Liam Law vs. Olympic Sawmill, 129 S
producing any satisfaction for the donor. 449
o Self interest must be totally absent on the part of the 6,000Php added to original obligation lawful unless debtor proves
transferor the contrary through strong and convincing evidence, not proven
 On the pari delicto rule that the accessory obligation was illegal
o The rule is that parties to an illegal contract, if equally  Liam Law loaned 10,000Php without interest to defendant
guilty, will not be aided by the law, but will both be left partnership in which said loan was due on January 31, 1960
where it finds them.  But Liam Law asked for an extension and was thus granted
o Complete bar of the party from pleading the illegality  Come March 17, 1960, parties executed another loan document
of the bargain either as a cause of action or defense but the obligation was increased to 6,000Php
 There was a failure to pay and thus defendant instituted a
b. Gonzales vs. Trinidad, 67 P 682 collection case. Liam Law contends that the additional 6,000Php
constituted usurious interest

WAS THE ADDITIONAL 6,000PHP OF THE OBLIGATION ILLEGAL?  No document was drawn up to embody and evidence the oral
partition however it held that it was not necessary to notify
SC RULED: petitioner Flora et.al of the sale of Ambrocio et.al to Lim
 On the presumption of the presence of the consideration
o Article 1354 of the Civil Code substantially presumes that a WAS THERE AN ORAL PARTITION OF THE SUBJECT LANDS, AND IF
consideration exists and is lawful unless the debtor proves SUCH EXISTS, ARE THEY VALID?
the contrary.
o No evidentiary hearing has been held and it has been IS THERE A NEED TO REDUCE THE AGREEMENT IN WRITING?
concluded that the 6,000Php obligation was not illegal
o The 6,000Php in this case only come in the form of SC RULED:
liquidated damages by virtue of the prior non-payment  On the existence of the oral partition
o When Flora was under cross-examination she had
(4) Lesion: (Art 1381, NCC) judicially admitted that there existed an oral partition by
outrightly answering that she is aware that ½ of the
CHAPTER 3 property was allotted for them and the other ½ to the
FORM OF CONTRACTS other party
 On contracts of partition
(1) Forms o Party of Flora continuously submits that there is no note
a. No Form: or memorandum or any deed of partition offered in
evidence and thus, absence of which would not render the
Tan vs. Lim, 296 S 455; contract obligatory
Contracts of partition need not be in any kind of
o However, Petitioners failed to cite any provision of
form, no law requiring reduction into writing for partition,
the law which requires that contracts of partition be
hence whether verbal nor written-the same is obligatory
reduced into writing
 The property in question has an area of 488 sq. meters. ½ was
o Contracts are obligatory in whatever form they may have
inherited by Flora et. al and the other ½ by Ambrocio et.al
been entered into provided all essential requirements are
 In several deeds of sale, respondents Ambrocio et.al sold their
present
interest to the property to Lim.
o Neither is a note or memorandum necessary for the
 On the other hand, petitioners Flora et.al leased to co-petitioner
enforceability of a contract of partition
Tan the remaining ½ portion of the property for a period of three
o If the law requires a document or other special forms, as
years
in the sale of a real property, the contracting parties may
 According to the trial court, Ambrocio et.al failed to comply
compel each other to observe that form. But in the case
with the requisites of Article 1620 on giving a written notice
at bar, no legal provision has required a document or
for the sale of the undivided interest on the property before
any other special forms concerning partition of
and at the time the deeds of sale were executed in favor of Lim
property
 On the other hand, CA was of the view that Ambrocio et.al and
petitioners Flora et.al were able to secure the issuance of the TCTs
in their names and agreed to partition the property with San Lorenzo Dev’t Corp. vs. CA, 449 S
respondents Ambrocio getting the interior part of the property 99
and Flora, the anterior part of the property Buyer in good faith SLDC, contract to sell and not
contract of sale

o Spouses Lu owned two parcels of land situated in Sta. Rosa the actual delivery of the land has not yet been made
Laguna to his favor
o Spouses Lu purportedly sold the two parcels of land to Babasanta o On SLDC being a buyer in good faith
in which Babasanta had a downpayment of 50,000Php. o When SLDC inspected the titles, there were no liens,
o Several other payments were made totaling to 200,000Php encumbrances therefore it had all the reason to rely on the
o In May, Babasanta wrote a letter to Lu demanding the execution of correctness of the certificate of title and it was not obliged
the final deed of sale so that he could effect full payment of to go beyond he certificate to determines the condition of
the purchase price and furthermore notified Lu that he has the property
received information that a third party bought the property without o Since he was the first to register the property in the
his knowledge and consent registry, he is the rightful owner of the property
o Pacita Lu answered the letter and acknowledged that she has subject in this case
agreed to sell the property to Babasanta however, she reminded
Babasanta that when the balance of the purchase price b. Exception: (Art 748, 749, 1581, 1874, 2134, 1956, 1773,
became due, and when Babasanta asked for a reduction of 1403(2))
price and Lu refused, Babasanta backed out of the sale. Lu c. Prescriptibility:
on the other hand, returned the 50,000Php to Babasanta
o Babasanta contends that from the moment that Lu have agreed for
Vda de Espiritu vs. CFI of Canta, 47 S
him to buy subject land, a contract of sale has already been 354
perfected and from that moment, ownership has already Oral contracts, prescription – within six years from
transferred to him accrual of cause of action
o San Lorenzo Development Corporation here intervened and alleged o Defendants had verbally sold to petitioner the two parcels of land
that it was a buyer in good faith, was the first to register in question for 3,000Php and in consequence the delivery of
the deed to the registry and thus, has a better right to the said land together with the corresponding transfer
property certificate of titles was made in petitioner’s favor.
o No deed of sale was executed at that time because private
WHO BETWEEN BABASANTA AND SLDC HAS BETTER RIGHT OVER respondents promised that they would do as sons as the titles
THE TWO PARCELS OF LAND SUBJECT OF THE INSTANT CASE? which were then in the name of their predecessor were transferred
to their names
SC RULED: o Despite demands made by petitioner, respondents without
o On the nature of the contract of Lu to Babasanta justifiable cause refused to comply with the just and valid
o An analysis of the facts obtaining in the case reveals that demand
the agreement between Babasanta and Spouses Lu is a o Defendants denied that the transaction was a sale and alleged that
contract to sell and not a contract of sale. it was merely an antichresis whereby petitioner had loaned to
o In contracts to sell, ownership only transfers to the buyer them 1,500Php for which she demanded the delivery of the lands
upon full payment of the purchase price as security
o Although there was no express mention of the nature of o Defendants further contend that the complaint for an oral
the contract when they consummated their agreement, the contract shall have been brought to court within six years
subsequent acts of the parties evidently show that their since the cause of action accrued and the same has
intention was that of a contract to sell and not a contract prescribed in the case at bar
of sale since while Bambalan was still unable to pay
the full purchase price, the title of the land as well as DOES THE PETITIONER HAVE THE CAUSE OF ACTION IN THIS
CASE?

o By reason of gratitude, plaintiff, for the meantime gave defendant

SC RULED: 150,000Php upon the condition that after the adjustment and
o On prescription accounting of the loans,the excess shall be returned to the plaintiff
o The nature of petitioner’s action may be said to be the one o After adjustments have been made, plaintiff now demands the
founded in an oral contract, which cannot be considered as return of the sum of 118,000Php in which defendants refused to
among those rendered unenforceable by the statute of pay by reason that there was no written agreement for such sum
frauds, for the simple reason that they have been, from and such is not obligatory upon them
petitioner’s point of view, almost fully consummated WAS THE VERBAL AGREEMENT OBLIGATORY?
by the delivery of lands in question and the
corresponding titles to her. SC RULED:
o Respondents are right in maintaining that the applicable o On agreements not in writing for sums greater than 500Php
provision is Article 1145 in that action for oral contracts o Whether the agreement is in writing or not is a question of
must be commenced within six years evidence
o Cause of action for petitioner accrued in 1948 but the o Even granting that the agreement is not in writing, the
present suit was instituted in 1964, thus petitioner’s circumstance does not militate against the validity or
cause/right of action has already prescribed. enforceability of said agreement because contracts are
binding upon the parties in whatever form they may have
(2) Form for Convenience: been entered into unless the law requires otherwise
o Article 1358 of the Civil Code requires that contracts
Shaffer vs. Palma, 131 P 22, involving more than 500Php shall be reduced to writing
Contracts involving amounts greater than 500 pesos must be
but nothing is said that such requirement is
made in writing – such is for convenience only and it does
necessary for their validity and enforceability for it is
not affect the validity or enforceability of the contract
only for matters of convenience
o Lynevitche and petitioner lived as husband and wife.
o Lynevitche has himself insured for 300,000Php with Great
American Insurance against accidental death. Hawaiian Phil. Co. vs. Hernaez, 45 P 746;
o Plaintiff and Lynevitche had obtained loans from herein defendants Extension of time of redemption of mortgage by verbal
for 32,000Php and to secure the payment of the loans and agreement, binding if with consideration otherwise it shall
advances made, Lynevitche delivered 175 of his shares in the be made in writing
British American Engineering Corporation and as well as executed
a deed of assignment of the insurance policy in favor of o Hernaez executed a real estate mortgage upon a certain parcel of
defendants on the agreement that it shall be to the extent land in favor of Alberto Kappeler for 10,000Php payable in August
of the total amount of loans of plaintiffs to defendants 1, 1922.
o Lynevitche died and the Great American Insurance Company o On October 21, 1922, this real estate was assigned by Kappeler to
issued a 300,000Php check in favor of defendant and the Hawaiian Philippine Company
plaintiff as assignees of the policy o Hernaez was alleged to never had paid any portion of the
o Plaintiff, confirming the agreement that the policy will only cover indebtedness thus resulting to two causes of action against him.
up to the extent of their total loan, endorsed the check worth (1- recover the 10,000Php, 2-recover land taxes which
300,000 Php and deposited it with the HSBC to await adjustment accumulated)
and determination of the exact amount o Hernaez set up as special defense that on occasion when he paid
the interest due on the mortgage, Mr. Gemperie, legal
representative of Kappeler, agreed verbally to extend that

time for the payment of the 10,000Php for a term of two o The cession, repudiation, or renunciation of hereditary
years. rights or of those of the CPG
WAS THE VERBAL AGREEMENT AS TO THE EXTENSION OF THE TIME o The power to administer property, or any other power
OF PAYMENT BINDING AND ENFORCEABLE? which has for its object an act appearing or which should
appear in a public document, or should prejudice a third
SC RULED: person
o The cession of actions or rights proceeding from an act
o On the effect of a verbal agreement to extend the time of appearing in a public document
payment o All contracts where the amount involved exceeds 500Php must
The common-law rule is to the effect that a verbal agreement to appear in writing, even a private one.
extend the time of payment of a mortgage is binding and suspends o On the lower court’s order of dismissal
the right to foreclose if founded on a good consideration and o The lower court’s order of dismissal is not in accordance
otherwise valid. But if made without consideration, it with the law. In the matter of formalities, contracts are
amounts to nothing and the mortgage may be forclosed at valid and binding from their perfection regardless of form,
any time whether they be oral or written.
o A mortgage deed of registered land may only be legally extended o The contract sued upon in the case at bar does not fall
by a form of written instrument sufficient in law for the purposes. under either exception. Hence this case must be remanded
Consideration is necessary for a modification of a contract such to the lower court for further proceedings
as an agreement for the extension of time of performance of a o This is an example of a contract of service which need
mortgage, and that the moving party must plead and prove such not be in written form in order to justify its validity and
consideration enforceability
Dauden vs. delos Angeles, 137 P 900

o Marlene Daude, a movie star, filed a complaint against X Co. to CHAPTER 4
recover 14,700Php representing the balance of her compensation REFORMATION OF INSTRUMENTS (Articles 1359 to 1369)
as leading actress in two motion pictures produced by the
company. (1) Basis:
o Upon the motion of the defendant, the lower court dismissed the a. San Miguel Brewery vs. Law Union and
complaint because the claim of the plaintiff was not evidence Rock, 40 P 674
by any written document, either public or private, in violation Harding epal-feeling insured-did not take precaution of
of Article 1358 of the NCC transferring the policy of insurance. No reformation needed
IS THIS ORDER OF DISMISSAL IN ACCORDANCE WITH THE LAW? because Brias has represented himself properly as mortgagee and
under the Insurance Code, a mortgagee can only claim insurance
SC RULED: up to the extent of his mortgage credit
o On which type of transactions shall appear in a public  Dunn, the owner of the subject property, as security of his debt to
document San Miguel Brewery, mortgaged said property to the latter.
o Acts and contracts which have for the object the creation,  Dunn authorized and requested San Miguel to effect insurance
transmission, modification and extinguishment of real itself
rights over immovable properties, sales of real property ir  Brias, the general manager of San Miguel Brewery, made a verbal
of an interest therein application to the Law Union and Rock Insurance Company to
effect the insurance to the extent of 15,000Php upon subject

property and when he was asked as to whether the Brewery subject of the Insurance Law, they can only claim insofar
was the owner of the property, he said that the company was as the extent of the mortgage credit
interested only as a mortgagee. No further information was o Furthermore, in order to justify the reformation of a
asked as to who is the owner of the property contract of insurance on the ground of the failure of the
 However, the insurance company only granted a policy up to the contract to express the intention of the contracting parties,
extent of the mortgage credit of San Miguel the proof must be of the most satisfactory character, and it
 Policies were named after the brewery and contained no other must be made clearly to appear that the minds of the
reference to any other interest in the property. contracting parties did actually meet in agreement
 Subsequently, Dunn sold the property to Harding, but no and that there was some mutual mistake in the
assignment of insurance or of the insurance policies was made to expression of their purpose. In this case, there was
him none
 Harding now comes to court claiming that he be made a party to
the recovery of the policy of the difference between the whole (2) Definition:
insurance policy granted to owners less the extent of the
mortgage credit of the Brewery
a. Sarming vs. Dy, 383 S 131
Mistake as to the designation of the lot to be sold, reformation is
proper, requisites for reformation of instruments present in the
DOES HARDING HAVE A PROPER CAUSE OF ACTION IN THIS CASE?
case, contemporaneous and subsequent acts that will reveal the
true intention of the parties to a contract – Alejandra occupying ½
SC RULED:
of the subject lot, Silveria did not oppose from the first place
 On Harding’s cause of action
o It is well-maintained that Harding is now the rightful owner
 Silveria is the co-owner of Lots No.5734 and 4163, in different
of the property.
shares
o However, it was clearly evidenced in the case at bar that
 Heirs of Jose, her co-owner in Lot. No. 4163, offered to sell to her
no assignment of policies were made after his
their one-half share but she declined for lack of money
purchase of the property
 Said share was later sold to Alejandra who sought to purchase Lot.
o Therefore, the right to claim the policies belong to the
No. 4163 but instead was delivered Lot. No. 5734
Brewery alone and that the Brewery can only be allowed to
 After the sale, Alejandra occupied one-half portion of Lot. O. 4163
claim the policy up to extent of its mortgage credit
while Lot. No. 5734 was still in the possession of Venancio and the
 On reformation
heirs of Maxima and Silveria
o Reformation will be resorted to by the courts if, during the
 It was only when Alejandra was about to buy the adjacent lot that
negotiations leading up to the writing of a policy of
she realized that what was indicated in the Settlement of Estate
insurance, the contracting parties agree that the insurance
and sale was Lot. No. 5734 and no 4163
shall be so written as to protect not only the interest of the
 Alejandra now comes to court asking for the reformation of the
applicant for the policy, as mortgagee, but also the
deed while Silveria contends that aside from not having any
residuary interest of the owner and the policy is, by
cause of action, reformation of the instrument is not proper
inadvertence, ignorance, or mistake, so written as to
WHETHER OR NOT THERE IS A CAUSE OF ACTION AGAINST
protect only the interest of the applicant.
SILVERIA FLORES
o However, in the case at bar, Brias explicitly and with
full intention, applied for an insurance policy in its
WHETHER OR NOT THE REFORMATION OF THE SUBJECT DEED IS
capacity as mortgagee without any information
PROPER BY REASON OF MISTAKE IN DESIGNATING THE CORRECT
given as to the personality of the owner, therefore,
LOT NUMBER

that reformation of the instrument in the case at bar

SC RULED: is proper
 On the cause of action
o Silveria Flores was a party to the contract. She is not only (3) Requisites:
the seller of the coconut trees herein but also one of the
heirs entitled to the estate of Venancio and Maxima, one of
a. Dizon vs. Gaborro, 83 S 688,
Rule on foreclosed properties – judgment debtor remains in
the heirs of Jose Flores.
possession of the property during period of redemption, real
o Her name did not appear as one of the sellers because she
intention is to assign possession of lands until debts are fully paid
never sold her share
 Jose Dizon is the owner of three parcels of land, subject matter of
o But it was her who delivered the subject lot to vendee
this litigation
Delfino
 He constituted a first mortgage lien in favor of DBP in order to
o Through Silveria’s actions, she had made the parties to
secure a loan in the sum of 38,000Php and a second mortgage
the deed believe that the lot intended to be the
lien in favor of PNB to secure his indebtedness to said bank in the
object of the contract and thus by mistake or
amount of 93,831.91Php
accident, as well as inequitable conduct, neither she
 Dizon defaulted in payment of his debt and DBP foreclosed the
nor her successors-in-interest could deny
mortgage extrajudicially
involvement in the transaction that resulted in a
 Gaborro subsequently became interested in the lands of Dizon and
deed that now ought to be reformed
they later on entered into a “Deed of Sale with Assumption of
 On reformation
Mortgage” and later, “Option to Purchase Real Estate”
o Requisites for reformation are:
 It was agreed that Gaborro is to assume the indebtedness of Dizon
 There must be a meeting of the minds of the
 Gaborro made several payments to DBP and PNB and has
parties to a contract
introduced improvements in the land therein
 The true intention of the parties were not disclosed
 Dizon wrote a letter to Gaborro expressing his offer to reimburse
in the instrument
Gaborro of what he had paid
 The non-disclosure was brought about by mistake,
 Gaborro did not accede to the demands and contended that he is
fraud, inequitable conduct or accident
now the owner of the subject lands and that there is nothing in
o In the case at bar, all requisites were present for there was
their agreement to prove that Dizon had the right to repurchase by
a mistake as to the designation of the lot intended to be
reimbursing what Gaborro had paid.
sold in the Settlement of Estate and Sale
WHAT IS THE REAL AGREEMENT OF GABORRO AND DIZON?
 On contemporaneous and subsequent actions that will
reveal the true intention of the parties to a contract
SC RULED:
o One-half of the lot is in the possession of plaintiff Alejandra
 On the real agreement
Delfino since 1965 to present day of the case
o True agreement between Dizon and Gaborro is that
o Why would Alejandra occupy and possess one-half of said
Gaborro would assume and pay the indebtedness of the
lot if it was not the parcel of land which was the
plaintiff to DBP and PNB and in consideration therefor,
object of the sale to her
Gaborro is to given the possession and enjoyment of the
o And besides, WHY HAS SILVERIA FLORES NOT
properties in question until the plaintiff shall have
OBJECTED WHEN ALEJANDRA OCCUPIED AND POSSESSED
reimbursed the full amount of 131,831.91Php plus 9%
SAID ½ OF SUBJECT LOT?
interest per annum
o It is definitely clear from the foregoing that what they
intended was the sale of Lot 4163 and not Lot 5734 and

o This was by virtue Act 3135, Section 6 as amended o That after the expiration of the ten years from January 1,
by Act 4118 under which the properties were 1960, the party of the second part may, at his option
extrajudicially foreclosed and sold, provides that: choose to extend this lease for another period of ten years
 In all case in which an extrajudicial sale is  He sought the reformation of the instrument by deletion of the
made under the special power hereinbefore paragraph above-stated for the very reason that while Resolution
referred to, the debtor, his successors-in- No. 1030 of the Municipal Board authorizes the City Mayor to enter
interest or any judicial creditor or judgment into a contract of lease, it does not provide for the authority to
creditor, or any person having a lien on the extend the period
property subsequent to the mortgage…may  Lazaro contends the ff:
redeem the same anytime within the term or o Action is premature
one year from and after the date of the sale… o There is no cause of action
o As what was also held in Magno v. Viola and Sotto, a o Court has no jurisdiction over the subject and the nature of
judgment debtor, whose property is levied on execution, the action
may transfer his right of redemption to any one whom he  Lower court granted the motion to dismiss of defendants
may desire provided that there is a right to redeem the IS THE LOWER COURT DECISION CORRECT INSOFAR AS IT
same DISMISSES THE ACTION FOR THE REFORMATION OF THE
o In the case at bar, Dizon retained the right to redeem the INSTRUMENT?
lands, the possession, use and enjoyment of the same
during the period of redemption SC RULED:
 On reformation o On the rationale behind the reformation
o Mistake is a ground for the reformation of the instrument, o It would be unjust and inequitable to allow the
when, there having been a meeting of the minds of the enforcement of a written instrument which does not reflect
parties to a contract, their true intention is not expressed or disclose the real meeting of the minds of the parties.
in the instrument purporting to embody the agreement, The rigor of legalistic rule that a written instrument
and one of the parties may ask for such reformation to the shall be final is thus tempered, to forestall the effect of
end that such true intention may be expressed. mistake, fraud, inequitable conduct or accident
o Real intention of the parties to this case was to o On the lower court’s decision
temporarily cede the possession of the properties to o Order was incorrect
Gaborro and within the period of redemption of the  On premature action:
foreclosed property, reimburse the value and redeem said  The lessee’s option to renew the contract
property. for another 10 years was not yet
b. City of Cabanatuan vs. Lazaro, 39 S exercisable when the action for the
reformation of the instrument was
653; instituted
 Sometime in December of 1959, The City of Cabanatuan, through  Just because the original and
its Mayor, entered into a lease agreement with Lazaro over a lot uncontestable lease term of 10 years had
 The City of Cabanatuan thereafter sought the reformation of the not yet expired does not render the
lease agreement in that, it failed to delete paragraph 6 thereof action premature, for this is the precise
which states: reason for bringing the action for
reformation – the option embodied in
the instrument is not the one

contemplated and intended by the o Petition fails on the ground that it failed to produce
parties to the contract clear, convincing and more than merely
 No cogent reason exists for holding so preponderant evidence
or to wait for 10 years to expire, for it o For an action of reformation to prosper:
will render the reformation more  There must have been meeting of the minds
difficult  Instrument does not express the true intention of
the parties to a contract
 Failure of the instrument to express the true
c. Emilio vs. Rapal, March 30, 2010 intention of the parties is due to mistake, fraud,
Dinadahilan pa na di daw marunong mag-English and did not
inequitable conduct or accident
understand the language of the agreement she entered into, failed
o Since the burden of proof for the action for the
to discharge- clear, convincing and more than merely
reformation of instrument rests on the person who insists
preponderant evidence, burden on proof on the party seeking
that the contract shall be reformed, petitioner in this case
reformation of the instrument
has failed to provide such quantum of proof needed to
 Emilio, by virtue of a grant of the NHA became the registered
render the reformation proper.
owner of a parcel of land with an area of 196 sq. meters whereon
she built a house, the adjoining portion thereof is being leased by
Rapal (4) When Available:
o 1996, Emilio borrowed 10,000Php from Rapal and further a. Jayme vs. Alampay, 62 S 131,
extended an additional of 60,000Php upon the condition that Prescriptive period for the action for reformation = 10 years,
Rapal is not to pay the monthly rentals from Feb. 1996 –
December 1998 as the total amount of 70,000Php would serve as o On December 24, 1964, Jayme and defendant Ong entered into an
advanced rentals agreement whereby they agreed that Jayme will borrow from Ong
o Atty. Patricio Balao-Ga notarized thereafter a document entitled the sum of 16,500Php on the security of a parcel of land
“Sale and Transfer of Rights over a Portion of a Parcel of o Ong required the petitioners to execute in his favor a deed of sale,
Land” executed by Emilio in which she sold Rapal 27 sq. meters of petitioners acceded for the reason that defendant is a good family
her lot together with the house constructed thereon for a friend and that they were in dire need of money
consideration of 90,000Php o Jayme contends that the deed of sale does not embody their true
o Emilio now contends that she signed the deed without its agreement which is to constitute a mortgage over subject lot.
contents being fully explained to her and thus now comes to o Petitioners, after the execution of the deed of sale continued to
court asking for the reformation of the deed THERE BEING NO occupy part of the premises without paying rentals to the
INTENTION AT ALL ON HER PART TO SELL THE PROPERTY AND defendant and continued collecting rents herein to other occupants
COULD NOT DO SO WITHOUT THE CONSENT OF NHA o Jayme by then was ready to pay off his indebtedness to Ong,
WILL THE REFORMATION PROSPER? however, Ong continuously refused to accept his payment
o Petitioners now come to court asking for the reformation of the
SC RULED: instrument they entered into, for it was that of a mortgage and not
o On reformation of an absolute sale
o Armi Munsayac, daughter of Emilio stated that from what o However, Ong contends that the action has already prescribed in
she knows, her mother was not able to finish her that the proper remedy of the petitioners should have been the
elementary school studies and could not fully understand annulment of the contract and not the reformation of the
English, and that her mother did not intend to sell her instrument
property to the respondent HAS THE ACTION PRESCRIBED?

IF SO, MAY ONG NOW DEMAND THE LAND FROM CARR SO THAT IT
SC RULED: WOULD BE RESOLD TO TECK?
o On prescription and the proper remedy
o The complaint for the reformation of the instrument clearly SC RULED:
alleged that the deed of sale did not express the true o On reformation
agreement of the parties and should be reformed into the o The contract may be reformed since one party was
mortgage that it actually was, and prayed that petitioners mistaken and the other acted fraudulently or inequitably in
be allowed to redeem the property by repaying the loan of such a way that the instrument does not show their true
16,500Php intention
o The applicable prescription period for such actions based o Ong may demand the reconveyance of the property to him
upon a written contract and for the reformation thereof if so that the land may be repurchased by Teck
10 years
o Petitioner’s action for reformation and recovery of title was CHAPTER 5
brought on November 29, 1972 less than eight years INTERPRETATION OF CONTRACTS (Articles 1370 to 1379)
after the execution of the questioned deed on December
24, 1964 and had therefore not prescribed. Rule 130, Sec. 9, 10, 12, 14 Revised Rules of Civil Procedure
b. Ong Chua vs. Carr, 53 P 975 General Rule:

Digest from Paras Book Heirs of Amparo del Rosario vs. Santos, 108 S 43;
Unilateral mistake, other party acted fraudulently, reformation Alleged verbal conditions which alter and vary the terms of a deed
may be resorted to of sale can’t be proved by parol evidence. The ground that the
o Teck sold his land to Ong with the right to repurchase within 4 written agreement fails to express the true intent of the parties
years. can only be invoked, as an exception to the parol evidence rule,
o Ong sold the land to Carr with the understanding that Carr was when the contract is literally ambiguous or obscure in its terms.
buying it, subject to the right of repurchase on the part of Teck.  Amparo Del Rosario entered into a contract with Atty. Andres
o At that time, Carr did not have enough money, therefore Carr Santos and his wife Aurora Santos where the latter sold to the
asked for a loan from an Association former a 20,000 sq. m. of land which is to be segregated from Lot
o The Association offered to give a loan provided Carr could offer, as 1.
security, land of which he was the absolute owner, that is, land  Said lot forms part of the several lots belonging to a certain Teofilo
which would not be the subject for example to repurchase Custodio, of which lots, Attorney Santos, by agreement with
o So Carr began to think. With the help of the lawyer who drafted the latter, as his attorney’s fees, owns ½ interests thereof.
the deed, Carr and Ong (who did not know English) signed a  Spouses Andres executed a Deed of Confirmation of Sale in
contract in which Carr was made out to be the absolute owner of favor of Del Rosario as soon as the title has been released and the
the land, and the words regarding the “right to repurchase” subdivision plan of said Lot 1 has been approved by the Land
omitted Registration Commissioner.
o Later, Teck was repurchasing the property from Ong and Ong  Due to the failure of the spouses Andres to execute the deed
demanded the reconveyance of the property from Carr after the fulfillment of the condition, Del Rosario claims malicious
o Carr refused on the ground that he was the absolute owner of the breach of a Deed of Sale.
land  Defendant filed a motion to dismiss setting up the defenses of lack
o Hence, Ong brought this action against Carr of jurisdiction of the court over the subject of the action lack of
MAY THE CONTRACT BE REFORMED? cause of action as well as the defense of prescription.

 They further alleged that the deed of sale was only an into the contract may be received to enable the court to
accommodation graciously extended, out of close friendship make a proper interpretation of the instrument.
between the defendants and the plaintiff, hence, tantamount to  The deed of sale is clear without any ambiguity,
waiver, abandonment or otherwise extinguishment of the demand
mistake or imperfection, much less obscurity or doubt
set in the complaint.
 Finally, defendants alleged that the claim on which the action or
in the terms.
suit is founded is unenforceable under the statute of frauds and
that the cause or object of the contract did not exist at the time of Labasan vs. Lacuesta, 86 S 16;
the transaction. Interpretation of contracts when words appear contrary to evident
 The lower court resolved to deny the motion to dismiss. After intention of the parties – the latter shall prevail over the former.
actions by respective parties, the lower court ordered When the price of alleged sale was too inadequate, contract will be
thedefendants to execute and convey to plaintiff the 200,000 sq. deemed a mortgage.
m. of land to be taken eitherfrom Lot 4 or from Lot 5-A of  Spouses Lacuesta were the owners of an unregistered, irrigated
Custodio’s lots, which defendants own ½ interest thereof. Riceland in Ilocos Norte and declared for taxation purposes in the
 Aggrieved by the aforesaid decision, the defendants filed an appeal name of Hermenigilda Lacuesta.
with the Court of Appeals which certified the records of the case to  Spouses Lacuesta, because of the urgent need for money and
the Supreme Court for final determination. sold a parcel of land to spouses Labasan.
 The sale of the parcel of land can be reconveyed provided 10
WHETHER OR NOT THE SALE IS VALID AS TO THE CAUSE OR years shall not have elapsed and Lacuesta’s still have the same
OBJECT OF THE CONTRACT amount of the money which was taken from the Labasans.
 On April 23, 1948 spouses Lacuesta filed with the CFI a complaint
SC RULED: against spouses Labasan, seeking reconveyance of the parcel of
 On the validity of the deed land.
o Execution of the Deed of Sale is valid  Spouses Lacuesta died and was substituted by their children.
 In the complaint, it was alleged that spouses Lacuesta secured a
notwithstanding the lack of any title to the lot by
loan P225.00 from Gelacio Labasan and as security for the
appellants at the time of execution of the Deed of payment of that loan, they offered their riceland; sometime
Sale in favor of appellee as there can be a sale of in 1943, they tendered payment of the loan but Labasan refused
an expected thing. to accept it; after "liberation" they offered again to pay their loan
 The ground that written agreement fails to express the true and demanded the return of their land but they were once more
intent of the parties can only be invoked, as an exception refused because defendants claimed that they were the owners of
to the parol evidence rule, when the contract is literally the property.
ambiguous or obscure in its terms.  In the answer to the complaint— that the Lacuesta conveyed by
means of a written document the land with right to repurchase the
 Such an exception obtains where the written contract is so
same within the period of ten years, but because of plaintiff's
ambiguous or obscure in terms that the contractual
failure to exercise that right within the stipulated period, the
intention of the parties cannot be understood from mere vendees a retro have became the absolute owners of the land and
reading of the instrument. the latter in fact donated the property to their son Roberto
 Extrinsic evidence of the subject matter of the contract, of Labasan who is now the owner of the property
the relations of the parties to each other, and of the facts  The CA set aside the judgment of the trial court and declared the
and circumstances surrounding them when they entered contract an equitable mortgage and ordered the defendants
Labasan to reconvey the land to the Lacuestas without the latter

paying the loan of P225.00 inasmuch as the same was deemed  The reason behind the execution of Exhibit "1-A" was that
paid from the fruits of the property which the Labasans had been the Lacuestas were in "urgent necessity for money" and
receiving for the past thirty-two years. had to secure a loan of P225.00 from Gelacio Labasan for
which the riceland was given as "security". The transaction
WAS THE CONTRACT ENTERED INTO BETWEEN SPOUSES between the parties to be a loan instead of a sale of real
CLEMENTE AND HERMENIGILDA LACUESTA AND SPOUSES property notwithstanding the terminology used in the
GALACIO AND MARCELA LABASAN A PACTO DE RETRO SALE OR document, after taking into account the surrounding
AN EQUITABLE MORTGAGE? circumstances of the transaction.
SC RULED:
 On the basic fundamental rule in the interpretation of
Prisma Construction vs. Pantaleon, March 9, 2010;
When the terms of a contract are clear and leave no doubt as to
contracts
the intention of the contracting parties, the literal meaning of its
 if the terms thereof are clear and leave no doubt upon the
stipulations governs; it is only when the contract is vague and
intention of the contracting parties the literal meaning of the
ambiguous that courts are permitted to resort to the interpretation
stipulation shall control, but when the words appear to be
of its terms to determine the parties’ intent.
contrary to the evident intention of the parties, the latter shall
 Pantaleon, the President and Chairman of the Board of
prevail over the former.
PRISMA, obtained a P1M loan from respondent, with a monthly
o Exhibit "1-A" in this case, it is evident that the terms of the
interest of P40k payable for 6mos., or a total obligation of
document are not clear and explicit on the real intent
P1,240,00.00 to be paid within 6mos. which was given
of the parties when they executed the aforesaid schedule for payments.
document.  To secure the payment of the loan, Pantaleon issued a
o However, a contract which used the terms “security,” promissory note given to Mr. Arthur Mancahvez which
“selling of land” and “urgent necessity for money” was Pantaleon signed in his capacity as authorized Board of
construed as a “contract of loan” and not a pacto de PRISMA.
retro sale.  Petitioners failed to completely pay within the stipulated 6
 On pacto de retro sale months period and as of January 4, 1997 petitioners had
o A pacto de retro sale may be deemed an equitable already paid a total of P1,108,772.00.
mortgage when executed due to urgent necessity for  However, the respondent found that the petitioners still had an
money. “Necessitous men are not, truly speaking, free outstanding balance of P1,364,151.00 to which it applied a 4%
men; but to answer a present emergency, they will submit monthly interest.
to any terms that the crafty may impose upon them”
hence courts should be vigilant for their protection. WHETHER THE PARTIES AGREED TO THE 4% MONTHLY INTEREST
 In view of the ambiguity caused by conflicting terminologies in the ON THE LOAN – IF SO, DOES THE RATE OF INTEREST APPLY TO THE
document, it becomes necessary to inquire into the reason behind 6-MONTH PAYMENT PERIOD ONLY OR UNTIL FULL PAYMENT OF
the transaction and other circumstances accompanying it so THE LOAN?
as to determine the true intent of the parties. Once the intent
becomes clear then it shall be made to prevail over what on its SC RULED:
face the document appears to be. Each case is to be resolved on  When the terms of the contract are clear and leave no room for
the basis of the circumstances attending the transaction doubt as to the intention of the contracting parties, the
 Exhibit "1-A" is a mere loan with security and not a pacto de literal meaning of its stipulations governs.
retro sale.

 In the present case, the respondent issued a check for P1M. In the fourth year, and P439,230.00 for the final year, all net of
turn, Pantaleon, executed the promissory note. Thus, the P1M loan withholding taxes.
shall be payable within 6 months, or from January 8, 1994 up to  DBS paid a deposit of P1,200,000.00 and advance rentals
June 8, 1994. During this period, the loan shall earn an interest of P600,000.00.
of P40k per month, for a total obligation of P1,240,000.00 for the  Heavy rains flooded the leased property and submerged into
six-month period. The court note that this agreed sum can be water the DBS offices there along with its 326 repossessed
computed at 4% interest per month, but no such rate of interest vehicles. As a result, DBS wrote the Martins demanding that
was stipulated in the promissory note; rather a fixed sum they take appropriate steps to make the leased premises suitable
equivalent to this rate was agreed. as a parking yard for its vehicles.
 Article 1956 of the Civil Code specifically mandates that “no  Portions of the perimeter fence collapsed because of the
interest shall be due unless it has been expressly stipulated excessive amount of soil and rock that were haphazardly dumped
in writing.” Under this provision, the payment of interest in loans on it. DBS vacated the property but continued paying the monthly
or forbearance of money is allowed only if: rents.
(1) there was an express stipulation for the payment of  However, it made a final demand on the Martins to restore the
interest; and leased premises to tenantable condition at a certain date,
(2) the agreement for the payment of interest was reduced otherwise, it would rescind the lease contract
in writing.  The Martins contracted the services of Altitude Systems &
The court finds that the interest of P40k per month corresponds Technologies Co. for the reconstruction of the perimeter fence
only to the 6-month period of the loan, or from January 8, on the property.
1994 to June 8, 1994, as agreed upon by the parties in the  However, DBS claiming that the leased premises had become
promissory note. Thereafter, the interest on the loan should be at untenantable, DBS demanded rescission of the lease contract as
the legal interest rate of 12% per annum. well as the return of its deposit of P1,200,000.00
 The petitioners’ loan ofP1M shall bear interest of P40k per month
for 6 months from December 8, 1993 as indicated in the WHETHER OR NOT THE CA ERRED IN HOLDING THAT THE
promissory note. Any portion of this loan, unpaid as of the end of MARTINS ALLOWED THE LEASED PREMISES TO REMAIN
the six-month payment period, shall thereafter bear interest at UNTENANTABLE AFTER THE FLOODS, JUSTIFYING DBS’
12% per annum. The total amount due and unpaid, including RESCISSION OF THE LEASE AGREEMENT BETWEEN THEM; AND
accrued interests, shall bear interest at 12% per annum from the
finality of this Decision
WHETHER OR NOT THE CA ERRED IN HOLDING THAT DBS IS
ENTITLED TO THE RESCISSION OF THE LEASE CONTRACT
Martin vs. DBS Bank, June 16, 2010 ONLY FROM JULY 7, 1999 WHEN IT FILED ITS ACTION FOR
Unless the terms of a contract are against the law, morals, good RESCISSION, ENTITLING THE MARTINS TO COLLECT RENTS
customs , and public policy, such contract is law between the UNTIL THAT TIME.
parties and the terms bind them.
 The Martins, as lessors, entered into a lease contract with the SC RULED:
DBS Bank Philippines as lessee, covering a commercial warehouse
and lots that DBS was to use for office, warehouse, and parking  On the lease contract
yard for repossessed vehicles.
o Unless the terms of a contract are against the law,
 The lease was for 5 years, from March 1, 1997 to March 1, 2002,
morals, good customs, and public policy, such contract
at a monthly rent of P300,000.00 for the first year,P330,000.00 for
the second year, P363,000.00 for the third year, P399,300.00 for is law between the parties and its terms bind them.

o And in paragraph 7 of the lease contract between DBS - Parties, submitted a compromise agreement which states
and the Martins permitted rescission by either party that the parties agreed to forever waive, quitclaim, relinquish,
should the leased property become untenantable because and renounce whatever rights and interests they may have over
of natural causes. the parcels which was approved and adopted by the court.
- However, there appeared in the notarial register executed by
 The Martins claim that DBS cannot invoke the above since they
Salud Abejuela in favor of Ramon Ramos married to Nena Villamil
undertook the repair and reconstruction of the leased premises,
a contract of sale containing an area of 50,000sqm an
incurring P1.6 million in expenses. The Martins point out that alleged exclusive property of Salud Abejuela.
the option to rescind was available only if they failed to do - Respondents filed a suit against petitioner for the conveyance of
the repair work and reconstruction. title and partition of the lot.
 But, under their agreement, the remedy of rescission would  In this action, herein respondents, who are surviving spouse and
become unavailable to DBS only if the Martins, as lessors, made children of Honorio Ramos Sr., contend that Honorio Ramos Sr.,
the required repair and reconstruction after the damages by co-owned the above-mentioned Lot 2961 with Ramon Ramos; that
natural cause occurred, which meant putting the premises after the sale was simulated and fictitious the purpose being only to
the floods in such condition as would enable DBS to resume its use enable said Ramon Ramos to use the land as collateral security for
of the same for the purposes contemplated in the agreement, a loan as he did use it when he was granted a loan by the
Philippine National Bank
namely, as office, warehouse, and parking space for DBS’
repossessed vehicles. WHETHER THE DEED OF SALE EXECUTED BY SALUD IN
 Contrary to the ruling of the CA, it is not the filing of the action for PETITIONER’S FAVOR WAS SIMULATED
rescission that marks the violation of the lease agreement but the
failure of the Martins to repair and rehabilitate the property SC RULED:
despite demand.  The Deed of Sale was not simulated.
 Such intention is determined from the express terms of their
(1) Intention of the Parties: agreement as well as the contemporaneous and subsequent acts
of the contracting parties.
a. Ramos vs. Heirs of Ramos Sr., 381 S  A duly executed contract carries with it the presumption of
594; validity. The party who impugns its regularity has the burden of
The primary consideration in determining the true nature of a proving its simulation.
contract is the intention of the parties; such intention is  In the case at bar, we opine that respondents failed to show
determined from the express terms of their agreement as well as simulation. First, both the trial and the appellate courts agree that
from their contemporaneous and subsequent acts. The party who respondents failed to prove the existence of a contra documento.
impugns its regularity has the burden of proving its simulation  Second, mere mother-son relationship between the vendor
and the vendee does not prove their lack of intention to be
- Spouses Lucio Ramos and Salud Abejuela acquired real bound by the 1954 Deed of Absolute Sale. Not all contracts
properties in Cagayan de Oro City. between family members are fictitious because, by itself,
- They begot 4 children namely Juan, Honorio, Josefa and Ramon consanguinity is not proof of simulation.
Ramos whereupon when Lucio Ramos was still alive executed an
Extrajudicial Settelement of the estate of his deceased wife Salud.
- Juan Ramos and Josefa Ramos Reyes filed a complaint for partition
b. Carceller vs. CA, 302 S 719;
To ascertain the intent of the parties in a contractual
and annulment of confirmatory deeds of sale against Ramon
relationship, it is imperative that the various
Ramos and Honorio Ramos.

stipulations provided for in the contract be construed principal contract with any other person during the period
together, consistent with the parties’ contemporaneous designated, and, within that period, to enter into such contract
and subsequent acts as regards the execution of the with the one to whom the option was granted, if the latter should
contract. decide to use the option. It is a separate agreement distinct from
 Respondent State Investment Houses Inc. has a parcel the contract which the parties may enter into upon the
of land in Cebu City leased to petitioner Jose Ramon consummation of the option.
Caceller with an option to purchase valid until the  Once the intention of the parties has been ascertained, that
expiration of the lease contract. element is deemed as an integral part of the unequivocal part of
 3 weeks before the expiration of the contract, the contract as though it has been originally expressed in
petitioner made a request to the respondent for the unequivocal terms.
extension of the lease contact so he can have an
ample time to raise enough funds to avail of the option
of sale.
c. Almeda vs. Bathala Marketing, 542 S
 Respondent denied the request and a month after the 470)
expiration of the contract, petitioner made known his Stipulation “when any new tax will be effective”, VAT rate already
intention to buy the property. existing at the time of the commencement of the agreement – it
 Respondent reiterated the provisions in the contract could not have been the intention of the parties to include VAT in
and asked the petitioner to leave the property, which their original stipulation
will now be offered to the general public for a higher
price.  Ponciano Almeda leased a part of the Almeda compound to
Bathala Marketing for a monthly rental of 1,107, 348.69Php
CAN PETITIONER STILL EXERCISE HIS OPTION OF SALE EVEN  Pertinent provisions substantially provides that when any
AFTER THE TIME TO DO SUCH HAS ALREADY LAPSED? new tax will be effective, the monthly rentals will increase
such that the tax and that in cases of extraordinary inflation or
SC RULED: “devaluation”, the payment terms shall be in consonance with
 The contract must be interpreted together with the intention the original payment at the time of the entry/agreement on
of the parties. The letter of the plaintiff to the respondent the obligation
requesting for an extension is sufficient proof of his intent to avail  The Almeda’s advised Bathala Marketing that they will levy a
of the option of sale. VAT rate on the monthly rentals and that aside from it, a 73%
 In contractual relations, the law allows the parties reasonable increase in monthly payments are to be effected due to the
leeway on the terms of their agreement, which is the law extraordinary inflation/deflation faced by the Philippine
between them. When petitioner made his intention to buy known Currency
to the buyer one month after the expiration of contract is within a
reasonable time- frame. WHETHER OR NOT BATHALA MARKETING IS TO BEAR THE VAT
 Petitioner may buy the property but not anymore to the IMPOSED BY THE ALMEDAS
price stated in the contract. As such, respondent may increase
the price of the land but only to a reasonable and fair market SC RULED:
value.  On VAT
 An option is a preparatory contract in which one party grants to o Almedas relied on the clause which substantially provided
the other, for a fixed period and under specified conditions, the that new taxes will have the effect of being incorporated in
power to decide, whether or not to enter into a principal contract. the monthly rentals, BUT, the VAT was already subsisting
It binds the party who has given the option, not to enter into the at the time of their pursuance of the agreement,

THEREFORE, it could not have been the intention of the o It would have been utterly senseless if the purchase
parties to include a VAT rate in the middle of the price, if the sale was intended to be an actual sale,
consummation of the agreement would be the same as the purchase price paid by the
 On interpretation of contracts Petitioner to previous owner of the property without any
o Essential to contract construction is the ascertainment of interest whatsoever on profit
the intention of the parties and such determination must o Increase per month in the alleged redemption price is
take into account the contemporaneous and subsequent very compatible with the idea that the transaction was
acts of the parties. really intended by the parties to be a mortgage
o This intention once ascertained, is deemed an integral o Even after the “alleged sale” it was petitioner who
part of the contract expressly paid the taxes which, is included in cases were
there is presumed to be an equitable mortgage that exists
(2) Interpretation as a Whole:  When price is unusually inadequate
 Vendor remains in possession as lessee or
a. Bundalian vs. CA, 129 S 645 otherwise
Interpretation as a WHOLE, purchased property in July 1,
 Another instrument extending the period of
“allegedly sold” the same on the next day- could not be the
redemption
intention of the seller to buy the property one day and sell it the
 Purchaser retains for himself part of the purchase
day after without any profit out of it
price
 Vendor binds himself to pay the taxes

Bundalian purchased on July 1, 1975 from the Estate of Agapita
Sarao de Virata three contiguous parcels of land located at San
Juan Rizal for 499,200Php (3) Custom or Usage: (Art. 12 NCC, Sec. 2-3, Rule 129 New Rules of
 The following day, in a contract denominated as Deed of Sale Evidence; Sec. 10-19, Rules of Court; Andreas vs. BPI, 47 P 795)
with a Right to Repurchase, Bundalian sold the contiguous (4) Obscure words:
parcels of lands to private respondent for 499,200Php upon the a. Ildefonso vs. Sibal, 106 P 287;
agreement that the repurchase price shall escalate every month. Obscure words, …course through plaintiff as realtor of RE
 Petitioners thereafter filed a petition for reformation of the purchased, obscure words, contemplated was – there was no
instrument and declare the deed of sale with the right to compulsion to buy but intent was only to make plaintiff the AGENT,
repurchase an equitable mortgage and that the entire portion no liability, construed strictly against the one who crafted the
of the same deed referring to the accelerating purchase price be instrument
null and void for being usurious  Lucio Ildefonso and Sibal reached a compromise agreement in
WHETHER OR NOT THE DEED OF SALE WITH RIGHT TO order to render a joint motion to dismiss a civil case
REPURCHASE SHOULD BE DECLARED AS AN EQUITABLE MORTGAGE  Compromise agreement, in part, states that:
o …defendant promises that within two years from the date
SC RULED: hereof, he shall course through the plaintiff as Realtor the
 On interpretation of contracts former’s real estate purchase or transaction…and should
o There was present an intimate relation between the two defendant fail, he will be liable to pay an additional sum of
instruments in the case at bar (Absolute Sale – first two thousand pesos
transaction, Deed of Sale with right to repurchase –second  Plaintiff therefore, during the period agreed upon and in line with
transaction) for having been executed with one instrument the intention of the defendant to purchase a real estate worth
a day after another. around 400,000Php

 Defendant, however, told plaintiff that he could not buy any of

the properties being offered by plaintiff on the ground of SC RULED:
inappropriate or inadequacy of corporation funds  On interpretation
WHETHER OR NOT DEFENDANT HAS, UPON THE UNDISPUTED o Contractor is correct and since the government was the
FACTS ABOVE NARRATED, VIOLATED THE OBLIGATION IMPOSED one who crafted the contract and caused the ambiguity,
ON HIM BY THE COMPROMISE AGREEMENT the same shall be construed against it
o Not the intention of the contracting parties that the street
SC RULED: would be metalled
 On interpretation o When different interpretations of a provision are otherwise
o Defendant, under the compromise agreement, was under equally proper, the construction is to be taken which is the
obligation to make a real estate purchase through most favorable to the party in whose favor the provision
appellant as realtor, within a period of two years was made, and did not cause the ambiguity
o There is nothing in the disputed paragraph that can
be construed to mean that appellee bound himself to
CHAPTER 6
purchase the real property and pay the
RESCISSIBLE CONTRACTS (Articles 1380 to 1389)
corresponding penalty
o Intention was only to make private defendant an agent
(1) Rescission vs. Resolution: (Article 1191 and 1592)
which does not necessarily connote that subject
(2) Requisites:
properties shall be paid and bought on same date.
o If there are obscure words/ambiguous words in a a. Cannu vs. CA, 459 S 80
contract, it should be construed against the one who Rescission 1191 v. rescission1381; principal v. subsidiary action;
caused the contract failure to comply with what is incumbent v. lesion and damages
 Spouses Galang obtained a loan from Fortune Savings and Loans
Associations for 173,800Php to purchase a house and lot
b. Ong Yong vs. Tiu, 375 S 614;  To secure payment, a real estate mortgage was constituted on
c. Gov’t of the Phil vs. Derham Bros, 36 P said house in favor of Fortune Savings
960  In early 1990, NHMFC purchased the loan from Fortune Savings
Digest from Pineda and Paras Book, doctrines from original case and Loans Association for 173,800Php
copy  Cannu agreed to buy the property for 120,000Php and to assume
the balance of the mortgage obligations with the NHMFC and CERF
 In a contract, it was agreed that a metalled roadway would be Realty
built on the street where the real property was located to its  Out of the 120,000Php, only 75,000Php was paid by Cannu
entire length  A deed of sale with Assumption of mortgtoage was made and
 Now, the pronoun “its” may refer to any street or the real property entered into by and between spouses Galang and Cannu
 The government contended that the whole street shall be  The deed of sale stated that the price of the house and lot was
metalled, alleging that the antecedent of “its” was the 250,000Php and that Cannu will assume the mortgage of the
street property
 Upon the other hand, the contractor said that the “its” referred  Cannu immediately took possession and occupied the house and
throughout the length of the real property should be metalled lot
 It was the government who drafted the contract  However, the balance of 45,000Php was failed and being refused
WHICH CONTENTION IS CORRECT? GOVERNMENT OR to be paid by Cannu
CONTRACTOR?  Galang moved for the rescission of the deed of sale.

WHETHER OR NOT THE ACTION FOR RESCISSION IS SUBSIDIARY  There is alienation of property by gratuitous title
by the debtor who has not reserved sufficient
SC RULED: property to pay his debts contracted before such
 On the action for rescission contemplated in 1381 v. 1191 alienations or;
o Rescission or resolution in 1191 is the action when one  There is alienation of property by onerous title
fails to comply with what is incumbent upon him in a made by a debtor against whom some judgment
contract while rescission in 1381 is one in which lesion or has been rendered in any instance or some writ of
damage is caused to the contracting party or to a third attachment need not refer to the property
person alienated and need not have been obtained by the
o The action for rescission in 1191 is primary while the party seeking rescission
action for rescission in 1381 is subsidiary  In the case at bar, the object subject of the sale
o In the case at bar, there was failure of Cannu to comply was still an object to which an attachment in
with his obligation – which is to assume the mortgage levied upon in a case and the debtor in this
for the house and lot, therefore, the action for rescission case was rendered a judgment
is primary for it contemplates that of Article 1191.  There is clear a presumption of fraud in this
case and furthermore, it was tainted and
(3) Fraud of Creditors: confirmed by the badges of fraud:
1. The fact that the consideration of the conveyance is
a. CBC vs. CA, 327 S 378; fictitious or is inadequate.
Sale of property from father to son – badge of fraud 2. A transfer made by a debtor after suit has begun and
 First civil case concerns the case filed by Metrobank against while it is pending against him.
Alfonso Roxas Chua - a notice of levy affecting the property to the 3. A sale upon credit by an insolvent debtor.
extent of the ½ portion of the property 4. Evidence of large indebtedness or complete
 Second civil case was filed by China Bank against Alfonso Roxas insolvency.
5. The transfer of all or nearly all of his property by a
Chua – anchored on three promissory notes amounting to
debtor, especially when he is insolvent or greatly
250,000Php plus interest embarrassed financially.
 In 1986, a notice of levy on execution was issued and a certificate 6. The fact that the transfer is made between
of sale covering the ½ undivided portion of the property was father and son, when there are present other of
executed in favor of Metropolitan Bank and Trust Company the above circumstances
 1988, Alfonso Roxas Chua executed a public instrument 7. The failure of the vendee to take exclusive
denominated as “Assignment of Rights to Redeem” whereby he possession of all the property.
assigned his rights to redeem the one-half undivided portion of the
property to his son, Paulino Roxas Chua
WHETHER OR NOT THE ASSIGNMENT OF THE RIGHT OF b. Oria vs. McMicking 21 P 243
REDEMPTION MADE BY ALFONSO ROXAS CHUA IN FAVOR OF  Case no. 1 August 1909: Gutierrez Hermanos brought
RESPONDENT PAULINO WAS DONE TO DEFRAUD HIS CREDITORS an action vs Oria Hermanos to recover P147,204.28.
AND MAY BE RESCINED UNDER ARTICLE 1387 OF THE CIVIL CODE  Case no. 2 March 1910: Gutierrez Hermanos instituted another
action vs Oria Hermanos to recover P12,318.57.
SC RULED:  Oria Hermanos, on account of the expiration of their agreement of
 On the presumption of fraud: co-partnership dissolved their relations & entered into liquidation.
o There is presumption of fraud when: OH partners are brothers Tomas Oria, Casimiro Oria & Adolfo
Fuster Roble. Tomas, acting for himself & on behalf of his other

partners, entered into a contract with his son, Manuel Oria, for the  Suit was filed to annul the sale with respect to ½ of the properties
purpose of selling & transferring to Manuel, his heirs & assigns all because it belonged to Jerusalem.
properties of Oria Hermanos.  Notwithstanding said decision, defendants Juan B. Molina and
 Case no. 2 was decided ordering Oria Hermanos to pay Gutierrez Teodora Arenas mortgaged the two properties in favor of the China
Hermanos. Banking Corporation on, to answer for a loan obtained by them
 Sheriff demanded that Tomas, as liquidator, make the payment of from said bank in the amount of P2,000.
the said judgment. Since there were no more funds to pay WHETHER OR NOT THE MORTGAGE WAS VALID
the same, the sheriff levied upon steamer Serantes & announced
its sale at public auction. SC RULED:
 Manuel wrote a letter 3 days before the sale, claiming that  On the ½ belonging to the third person
he was the rightful owner of the steamer w/c was sold to him o The deed of mortgage with respect to the ½ of the
by OH. Sheriff proceeded with the sale wherein GH subsequently mortgaged property belonging to Jerusalem Gingco is null
bought the steamer. Thus, Manuel instituted this action. and void ab initio because the spouses absolutely had
no authority and could not mortgage a property
WHETHER OR NOT THE SALE FROM ORIA HERMANOS TO MANUEL belonging to a third person
WAS VALID AS AGAINST GUTIERREZ HERMANOS, A CREDITOR OF  On the ½ belonging to the mortgagors
THE COMPANY o Mortgage must be declared rescinded under Article 1291
of the Civil Code
SC RULED: o Jerusalem Gingco was not able to collect monetary
 On determining whether the sale is done to defraud the claims in view of the third party claim filed by China
creditors Banking Corporation based on the deed of mortgage in
o Presumption of fraud – the alienation was made by Oria question
Hermanos after a judgment has been rendered recovering o Deed of mortgage was executed after an adverse
a sum of money in two civil cases. decision has been rendered against Molina
o The steamer could have been a sufficient payment for his o Deed of mortgage in question has for its object a
debt, but he transferred nearly all his property when he is property in litigation and deed of mortgage was
insolvent and the creditors have no other means to executed by the spouses Molina without the knowledge
obtain credit and approval of neither the plaintiff nor the court having
cognizance of the litigation
(4) Accion Pauliana: (Article 1177) o Spouses Molina cannot allege that the one-half belonging
(5) Alienation of Things under Litigation: to them was free from litigation, because the action
involved the whole property
Contreras vs. CBC, 76 P 709; Rule 13,
(5) Others: (Articles 1098, 1189, 1526, 1534, 1539, 1542, 1556,
Section 14 RRC 1560, 1567, 1659;
Void ab initio- ½ property sold belongs to third person and seller
had absolutely no authority to sell the same. ½ Property in a. Rosencor Dev’t Corp. vs. Inquing, 354 S
litigation, mortgage be declared rescinded 119
 Spouses Arcadio Gingco and Dolores Contreras were the owners of Right of first refusal – need not be in writing, contractual grant
two properties. Dolores died, leaving Jerusalem Gingco (one of and not a perfected contract
the plaintiffs) as sole heir.  Respondents are lessees of a two-storey residential apartment
 Arcadio sold the properties to Juan B. Molina and Teodora owned by the late spouses Tiangco. The lease was not covered by
Arenas (co-defendants) any contract.

 The respondents were renting the premises for P150 a month and RESCINDED IN ORDER THAT SUCH THIRD PARTY CAN EXERCISE
were allegedly verbally granted by the lessors the pre-emptive THE RIGHT.
right to purchase the property should they decide to sell the same.
 Upon the death of the Tiangcos, the management of their
SC RULED:
properties was adjudicated to the heirs represented by De
Leon. The heirs allegedly promised the same right to first  On the right of first refusal
refusal. o The right of first refusal is not covered under the statute of
 In June 1990, the respondents received a letter from Atty. frauds
Aguila demanding that they vacate the premise so that the o Statute of frauds presupposes the existence of a
demolition of the building be undertaken. perfected contract
 In that same month, De Leon refused to accept the payment of the o In the case at bar, the right of first refusal was not a
rental claiming that they run out of receipt and that a new
perfected contract but a contractual grant and hence,
collector has been assigned.
 Thereafter, the respondents received a letter from De Leon cannot be validly classified as one of those existing under
offering to sell them the property for P2M. The respondents the Statute of Frauds
offered to buy the properties for P1M. De Leon said that she will o Evidence on the right of first refusal was
submit the offer to the heirs. However, nothing was heard from De substantially given in the court
Leon after that.  On contracts of sale entered into in violation of a third
 In November 1990, Rene Joaquin came to the leased premise and party’s right of first refusal
introduced himself as the new owner.
 In 1992 before the demolition can be undertaken, the barangay
interceded between the parties. It was found out by the
respondents that the property was already sold to the petitioners
when De Leon offered them to purchase the same property.
Moreover, it was sold for only P726K – much lower than the P2M
purchase price offered to the respondents.
 Respondents then filed a complaint for rescission of the
deed of absolute sale between petitioners and the Tiangcos.
WHETHER OR NOT THE RIGHT OF FIRST REFUSAL IS COVERED BY

THE PROVISIONS OF THE NEW CIVIL CODE ON THE STATUTE OF
FRAUDS.
WHETHER OR NOT THE RESPONDENTS HAVE SATISFACTORILY

PROVEN THEIR RIGHT OF FIRST REFUSAL OVER THE PROPERTY
SUBJECT OF THE DEED OF ABSOLUTE SALE BETWEEN PETITIONERS
AND THE TIANGCOS THROUGH DE LEON.
WHETHER OR NOT A CONTRACT OF SALE ENTERED INTO IN

VIOLATION OF A THIRD PARTY’S RIGHT OF FIRST REFUSAL CAN BE

o If the vendee was a purchaser in bad faith, a contract of SC RULED:

sale entered into in violation of a third party’s right of first  On remedy of foreclosure v. rescission 1381
refusal can be rescinded in order that such third party can o There is no dispute that the parties entered into a contract
of sale as distinguished from a contract to sell. The
exercise that right
relationship between the parties is no longer one of
o In the case at bar, Rosencor was in good faith and a buyer and seller because the contract of sale has
lawful possessor of the property and such contract of sale been perfected and consummated. It is already one of
cannot be rescinded a mortgagor and a mortgagee.
o But this does not mean that respondents are left
without any remedy for they can always file an action o In consideration of the petitioners' promise to pay on
for damages installment basis the sum they owe the respondents, the
latter have accepted the mortgage as security for the
(6) Subsidiary Action: obligation.
a. Suria vs. IAC, 151 S 661;
o The petitioners' breach of obligations is not with
If relationship is that of a mortgagor and a mortgagee, rescission
respect to the perfected contract of sale but in the
is not proper primarily but a foreclosure of mortgage must be
obligations created by the mortgage contract. The
exhausted first
remedy of rescission is not a principal action retaliatory in
 Private-respondents filed a complaint for rescission of contract and
character but becomes a subsidiary one which by law is
damages, alleging among others that:
available only in the absence of any other legal remedy.
o The plaintiffs entered into a contract denominated as DEED OF
(Art. 1384, Civil Code).
SALE WITH MORTGAGE, with herein defendants.
o The defendants violated the terms and conditions of the
contract by failing to pay the stipulated installments and in fact o Foreclosure here is not only a remedy accorded by law but,
only one installment due in July 1975 (paid very late in the as earlier stated, is a specific provision found in the
month of September, 1975) was made all the others remaining contract between the parties.
unsettled to the present time;
o That repeated verbal and written demands were made o There is, therefore, no cause for the resolution of the sale
by plaintiff upon the defendants for the payment of the as prayed for by the plaintiff. His action, at all events,
installments, but defendants for no justifiable reason should have been one for the foreclosure of the
failed to comply with the demands of plaintiffs; mortgage, which is not the action brought in this case.
 Petitioners filed a motion to dismiss complaint, alleging that:
o The plaintiffs are not entitled to the subsidiary remedy
of rescission because of the presence of remedy of b. Regalado vs. Luchsinger, Regalado vs.
foreclosure in the Deed of Sale with Mortgage Luchsinger, 5 P 625;
o Assuming arguendo that rescission were a proper remedy, it Sale of father to son –badge of fraud
is apparent in the face of the Complaint that the plaintiffs  This is the second appearance of this case in this court.
failed to comply with the requirements of law, hence the  Jose Regalado, the father, was prosecuted for the crime of estafa,
rescission was ineffective, illegal, null and void, and invalid. alleged to have been committed in the sale of the warehouse
WHETHER OR NOT THE SUBSIDIARY REMEDY OF RESCISSION CAN to his son Pedro, the plaintiff in this case. The decision in that
BE PROPERLY UPHELD IN THIS CASE case is reported in 1 Phil. Rep., 125.

 It was charged in that criminal case that the father had sold a WHETHER OR NOT THE SALE SHOULD BE SET ASIDE BECAUSE IT
warehouse to his son, representing it as free from WAS EXECUTED WITH THE INTENT TO DEFRAUD APPELLANT OF
incumbrance, when in fact it was encumbered by the HIS SHARE IN THE PROPERTIES SOLD
attachment which the defendants Luchsinger & Co. secured
in the present case. SC RULED:
 In the criminal case this court acquitted the defendant, basing  On the direct evidence of fraud
its decision exclusively upon the proposition that there was no o NO direct evidence of fraud exists.
evidence in the case that the attachment in question had ever o Gross inadequacy of the price in this case cannot justify
been recorded in the office of the registrar of property; and not the action for the rescission of the sale
having been so recorded no incumbrance existed. o Even if the fraud charged did not actually exist, there was
WHETHER THE SALE MADE IN 1990 , BY JOSE REGALADO, THE no allegation or evidence thaqt Goquiolay cannot obtain
FATHER, TO THE PLAINTIFF, PEDRO REGALADO, HIS SON, OF THE reparation from the widow and heirs of Tan Sin An
WAREHOUSE IN QUESTION WAS FRAUDULENT AS TO THE (7) Restriction:
DEFENDANTS LUCHSINGER AND CO. WHO WERE THE CREDITORS
OF THE FATHER
a. Goldenrod vs. CA, 299 S 141
Rescission in 1191, failure to comply with what is incumbent upon
the party
SC RULED:
 BARRETTO& SONS owned 43 parcels of land with a total area of
 On presumption of fraud
18,500 square meters located in QUIAPO which were mortgaged to
o A writ of execution had been issued, which levied upon the
UCPB.
warehouse, thus, rendering the warehouse an object of
 Barretto failed to pay; the properties were foreclosed.
the litigation
 Goldenrod made an offer to Barretto through its president
o Clear case of presumption of fraud, which
MATHAY that it would buy the properties and pay off the
furthermore is qualified by the badge of fraud of the
remaining balance of Barretto’s loan with UCPB.
sale of a property of a father to his son
 It paid Barretto 1 million pesos as EARNEST MONEY which shall
form the purchase price. The remaining balance would be paid
c. Goquiolay vs. Sycip, 9 S 663 once Barretto had consolidated the titles.
If there is no proof as to the contention that the  On the date that Goldenrod was supposed to pay, Goldenrod asked
creditors will not have any other means to obtain credit, for an extension. UCPB agreed. When the extension date arrived,
rescission cannot be maintained Goldenrod asked for another extension. UCPB refused. Barretto
 In 1949, lands owned by the partnership Goquiolay & Tan Sin An successfully consolidated the titles.
were sold by Kong Chai Pin, the widow of the managing partner,  Goldenrod informed Barretto that it would not be able to push
Tan Sin An (Executed in her dual capacity as Administratrix of the through with their agreement. It asked Barretto to return the 1
husband's estate and as partner in lieu of the husband), in favor of million pesos. Barretto did not give in to Goldenrod’s
the buyers Washington Sycip and Betty Lee for P153,726- P 37k rescission. Instead, BARRETO sold the property that was part of
paid in cash, balance for debts assumed by buyers. their agreement to ASIAWORLD.
 Goquiolay claims that the sale should be rescinded as it was  Barreto alleged that there was an agreement that when
intended to defraud him as evidenced by low price paid for Goldenrod fails to pay in full, the earnest money should be
the property, and the relationship between the buyers, the forfeited but the TRIAL COURT found that there was no
creditors of the partnership, and the widow of Tan Sin An. written agreement to that effect.
SHOULD GOLDRENROD BE PAID BACK HIS 1 MILLION PESOS
EARNEST MONEY?

o Alienations by onerous title are also presumed fraudulent

SC RULED: when made by persons against whom some judgment has
 On rescission 1191 been rendered or some writ of attachment has been
o The rescission contemplated in this case is that of Article issued. The decision or attachment need not have been
1191 – primarily acted upon in case of breach of faith/ obtained by the party seeking rescission
failure to comply with what is incumbent upon the parties  Other qualifying circumstances in the instant case
to the contract o At the time of the conveyance, the son-in-law was still
 Baretto is obliged to pay Goldenrod back because: living with his father-in-law, and he knew that there was
o Goldenrod decided to rescind the sales a judgment rendered directing the latter to pay his
o The transaction was called off and; indebtedness
o The property was sold to a third person by Goldenrod,
without opposition from Barretto, who in turn sold it to a
b. Alpuerto vs. Perez Pastor, 38 P 785;
Sale of property to son-in-law
third person, Barretto had the obligation, by virtue of
 The 3 parcels of real property which constitutes the subject matter
unjust enrichment to return the 1Million pesos plus
of the contention in this case formerly belonged to Juan
legal interest from the date it received the notice of the
Llenos.
rescission
 Eladio Alpuerto, asks the court to make a declaration against
Jose Perez Pastor, to the effect that the plaintiff is the owner
(8) Presumption of Fraud: thereof in full and absolute dominion. He also prays that the sale
a. Cabaliw vs. Sadorra, 64 S 310; of the property effected by the sheriff, Manuel Roa, to said
sale of property to son-in-law when son-in-law was knowledgeable defendant be declared null.
of the large indebtedness of father-in-law, fraudulent  Pastor denies the right of the plaintiff and asserts that the
 Cabaliw was the second wife of Benigno. transaction by which the plaintiff claims to have acquired titled
 During their marriage, they bought 2 parcels of land. was simulated or fictitious and that the supposed
 They had a daughter Soledad. conveyance was effected for the purpose of defrauding the
 Benigno abandoned his wife Cabaliw, thus the latter filed an defendant as creditor of Juan Llenos.
action in court for support.  It appears that, pending the proceedings, the defendant Pastor has
 The Court ordered Benigno to pay her P75 a month. However, died and an administrator, Eustaquio Lopez, has been substituted
Benigno did not pay and instead sold their property to his in his stead. Throughout the opinion, however, Pastor, the name of
son-in-law Soterro. the original party defendant, will be used in referring to the
 The transaction was done without Isidora’s consent. Prior to interest now represented by the administrator.
the sale, Soterro already knew that there was a judgment  The plaintiff claims by virtue of the document (Exhibit A), which
rendered against his father-in-law but proceeded to buy the purports to be a contract of sale with the privilege of
property anyway. When Cabaliw found out, she instituted an action repurchase. It recites a consideration of P2,500 the payment of
along with her daughter to recover the properties. which is acknowledged; and the stipulated period within which is
WHETHER OR NOT FRAUD CAN BE PRESUMED IN THE TRANSFER OF acknowledge; and the stipulated period within which the
THE LOTS IN QUESTION BY THE LATE BENIGNO SADORRA TO HIS vendor may repurchase the property is fixed at two years.
SON-IN-LAW SOTERRO  This documents is signed by the two contracting parties (Juan
Llenos and Eladio Alpuerto) and is attested by two subscribing
SC RULED: witnesses.
 On presumption of fraud  It purports on its face to have been executed on July 3, 1912; just
it was not acknowledged before a notary until December 3, 1914.

The property in question is assessed for the purposes of taxation  After Garay’s death in 1903, Nemesio Reyes was appointed as
at P5,000 or P6,000; and is worth more than twice the amount administrator of Garay’s estate.
which the plaintiff claims to have paid for it.  Reyes bought suit against Samesa for selling a property owned by
 In this action the plaintiff sought to recover from Juan Llenos Garay after his death, with the intent of defrauding the latter’s
a considerable sum of money; and Eladio Alpuerto, as son- legitimate heirs. The property was initially sold to Sinforoso Dondis
in-law of Juan Llenos, was aware of this litigation from the who had knowledge of Garay’s death. Judgment was in favor of
beginning. On January 27, 1913, or about six months after the the estate and in proceeding with its execution the sheriff levied
alleged sale of the property in question to Eladio Alpuerto upon Dondis’ properties.
judgment was rendered in said action in favor of the plaintiff for  The real ownership of Dondis’ properties is the issue in this
the sum of P3,789.13, with interest and costs. This judgment was suit.
affirmed upon appeal to the Supreme Court on November 20,  The plaintiffs claim that at the beginning the said lands belonged
1914. 1 An execution was thereafter issued on April 12, 1915, to Felipe Garay; that during his lifetime he sold them to Dondis
from the Court of First Instance upon said judgment was levied who latter sold them to Roman Ayles and Vicenta Panga (plaintiffs
upon the property in question as the property of Juan Llenos. and parents of his wife).
Before the sale was effected the plaintiff herein, Eladio Alpuerto,  Defendants allege that the sale was done to evade attachment of
notified the sheriff that he claimed the property as his own. his properties as supported by testimony of witnesses.
Nevertheless, the sheriff proceeded under indemnification and sold
the property at public sale to Jose Perez Pastor for the sum of WHETHER OR NOT THE SALE SHALL BE RESCINDED BY REASON
P1,100. OF FRAUD
WHETHER THE TRANSACTION EVIDENCED BY EXHIBIT A SHOULD
BE PRONOUNCED FRAUDULENT IN FACT SC RULED:
 In the consideration of this court due weight is accorded to the
SC RULED: construction which should be given to article 1387 of the Civil
 On the enumerated circumstances Code, to wit, that fraud in conveyances may be proved by
o Grantee is the son-in-law of the grantor means different and independent from the cases of
o At the time the conveyance was made an action is pending presumption established in article 1387; and the trial court
against the grantor to recover several thousand of pesos of having held, from the whole of the evidence, independent of
money such presumptions, that the debtor went into a complete state
o Consideration for the transfer is less than one-half of the of insolvency, selling the property in question to his wife’s
value of the property in question parents, and the sales were simulated, the purchasers being
o These are familiar badges of fraud accomplices in the fraud – all with the purpose of frustrating
o Contract must be annulled the legitimate rights pertaining to the Garay estate, and the
liabilities contracted.
c. Ayles vs. Reyes, 18 P 243;
Fraud was proved where it was shown that the debtor went into
insolvency and conniving with his parents, sold part of his property
to them and the sales were simulated and only for the purpose of d. Lee vs Bangkok Bank, Feb 9, 2011
frustrating liabilities contracted  Midas Diversified Export Corporation (MDEC) and Manila Home
 Felip Garay, a Spaniard, owed several real properties in Textile, Inc. (MHI) entered into two separate CREDIT LINE
Camarines. When he went to Spain in 1897, he appointed AGREEMENTS (CLAs) with Respondent BANGKOK BANK.
Francisco Samesa as his attorney-in-fact.  MDEC and MHI are owned and controlled by the LEE family.

 Bangkok bank required guarantees from the Lee family for the 2  Bangkok Bank discovered that the spouses Lee executed a REM to
CLAs so the Lee family executed guarantees in favor of the Bank. the properties in favor of ASIATRUST so they filed for the
 Under the guarantee: RESCISSION of the REM saying that the presumption of FRAUD
o Lee family irrevocably and unconditionally guaranteed, as applies by virtue of ART. 1387.
principal debtors, the payment of any and all indebtedness
of MDES and MHI with Bangkok Bank. WHETHER OR NOT PROPERTIES OWNED BY PRIVATE INDIVIDUALS
 Prior to the granting of the CLAs, Bangkok bank conducted a SHOULD BE COVERED BY A SUSPENSION ORDER ISSUED BY THE
property check on the Lee Family and required Samuel to submit a SEC IN AN ACTION FOR SUSPENSION OF PAYMENTS.
list of his properties. Bangkok bank HOWEVER did not require the
setting aside of any particular property to answer for any future WHETHER OR NOT ART. 1387 APPLIES IN THIS CASE FOR FRAUD
unpaid obligation. OF LEE AND SECURITY BANK AND LEE AND ASIATRUST.
 MDEC and MHI made several availments of the creditline from
Bangkok Bank which amounted to $3m. SC RULED:
 Later on MDEC was likewise granted a loan from ASIATRUST Bank  On suspension of payments
with a credit line of P 40m for letters of credit and $2m for bills  The subject properties ARE NOT COVERED by the
purchase. suspension order issued by SEC on Feb 20 because
 MDEC availed itsellf of the creditline from ASIATRUST, P10m the SEC only has JURISDICTION on petitions for
maturing on July 15, 1997, P11m on Feb. 6, 1998, P10m on Feb. suspension of payments ONLY on CORPORATIONS,
20, 1998. PARTNERSHIPS and ASSOCIATIONS; NOT INDIVIDUAL
 MDEC defaulted in the payment of loan of July 15, 1997 so PERSONS.
ASIATRUST required the Lee family to provide a collateral to  Here Samuel Lee executed the REM on the Antipolo
secure the loan. Thus Lee family executed a REM over properties properties in his capacity as a Private Individual. It is
they privately owned in Antipolo in favor of ASIATRUST. It was apparent that even if the members of the Lee Family are
only on FEB 23, 1998 that they executed a deed of mortgage joined as copetitioners with the Five corporations, this
which was actually notarized, registered, and annotated at the could not confer jurisdiction on the SEC over them as they
back of the titles. are private individuals.
 MDEC and MHI also defaulted in the payment to Bangkok Bank  Furthermore, the fact that the debts MDEC and MHI are
and also other corporations secured by the Lee Family will NOT put them and their
 On FEB. 16, 1998, Lee family filed before SEC a consolidated privately owned properties under SEC’s Jurisdiction.
petition for declaration of a state suspension of payments and for  THEREFORE, the SUSPENSION order issued by SEC did not
appointment of a management Committee/Rehabilitation Receiver. and could not have included the subject properties.
Lee family admitted that they had enough properties to cover all The presumption of fraud under ART. 1387 does not apply in this
their liabilities case.
 On FEB. 20, 1998, SEC issued a SUSPENSION ORDER enjoining  The presumption of fraud established under ART. 1387
LEE corps from DISPOSING of their property in any manner except DOES NOT apply to registered lands IF the judgment or
in the ordinary course of business, and from making any payments attachment made is not also registered.
outside the legitimate expenses of their business during the
pendency of the petition.  On the alleged fraud of Lee and SBC:
 Bangkok Bank instituted an action for preliminary attachment  In this case, prior to the annotation of the REM on FEB. 23,
covering the properties of the Lee Family in Antipolo before the SBC(security bank corporation – one of the creditors of Lee
RTC to recover the loans which they approved. Family) was able to acquire a writ of preliminary
attachment in its favor against Lee Family on Jan. 30,

1998 for the sum of money LEE owed to SBC on the brother of Santiago was named as guardian of the two daughters
Antipolo Titles because BANGKOK BANK is alleging FRAUD and Uy Soo Lim who were all minors at the time of the death
because of SBC’s acquisition of the writ of preliminary of the testator and duly qualified as such before the court
attachment. BUT this was NOT ANNOTATED so ART. 1387 on August 1902
doesn’t apply.  Tan Unchuan delivered the property to Basilio Uy Bundan that
were entitled to the children under the will
 Uy Bundan continued to administer the property
 Francisca reached majority, Concepcion is soon to be reaching
CHAPTER 7
majority and Uy Soo Lim had married, therefore Basilio was
VOIDABLE CONTRACTS (Articles 1390 to 1402)
ordered to present a plan of distribution of the estate in
accordance with the dispositions of the will of Santiago
(1) Incapacity and Vice of Consent
Pastrano
(2) Ratification:
 Guardian DID NOT comply at this order at once and before
a. Uy Soo Lim vs. Tan Unchuan, 38 P the plan of distribution can be carried out, objections on the
552; provisions of the will were distributed in court
Rescission and restitution. Contracts entered into by minors. Upon  Candida Vivares, claimed the right to one-half of the estate. On
reaching majority, can rescind subject to conditions: (1) rescind the other hand, Francisca and Concepcion claimed that Uy Soo Lim
within reasonable period of time after majority, (2) restitution of had no right under the law to the amount of the estate assigned
all consideration in minor’s possession upon reaching majority him in the will for the reason that the marriage of Santiago and
Chan Quieg was null and void
 Santiago Pastrano Uy Toco came to Manila when he was 13 years  Because of the purpose of frustrating the purpose of delivering to
old. In 1882, he married Candida Vivares and of this marriage Uy Soo Lim his share in his father’s estate, he arrived in Manila in
were born two daughters – Francisca and Concepcion. 1911 before the first formal protest in attacking his rights under
 At the time of the marriage, Santiago possessed very little the will
property. The large estate left by him in his death was acquired by  He employed Choa Tek Hee as his agent and adviser and executed
him during his marriage with Candida Vivares a power of attorney in his favor and he also secured the services
 In 1891, Santiago went to China and remained there for a little of two attorneys to represent him both in Manila and Cebu
less than a year. HE then had illicit relations with a Chinese  As per advise by his advisers, Uy Soo Lim, in accordance with the
woman, Chan Quieg agreement, executed a deed whereby he relinquished and sold
 Santiago returned to the Philippines where he remained until his to Francisca Pastrano all his rights, title and interest in the
death in 1902. He received letters from Chan Quieg informing him estate of the deceased in consideration of 82,500Php of which
that she had borne him A SON and it was in this belief that he 10,000 was received in cash and the balance by six promissory
dictated the provisions of his will notes payable to Choa Tek Hee
 When Santiago died the ff laid interest in his estate”:  The above deed is the subject of this action for annulment
o Wife, Candida Viveres  Uy Soo Lim now contends that he entered such deed as a result of
o Daughters the inducement by Unchuan and Basilio exercising undue
o Chan Quieg – other woman influence upon him by taking advantage of his youth, passions
o Uy Soo Lim – son and inexperience
 The terms of Santiago’s will reveals that he attempted to dispose a
greater part of his estate in favor of Uy Soo Lim MUST THE DEED BE ANNULLED?
 Tan Unchuan, The husband of Francisca (one of Santiago’s
daughters) was named executor of the will and Basilio Uy Bunan, SC RULED:

 On undue influence  No man can take advantage of his own wrong. The prohibition in
o Plaintiff now is and at the time of executing the bill of sale said article affects public policy, as it is designed to protect
was a youth of more than ordinary intelligence with a creditors of the CPG and other third persons. Petitioners shall not,
keen appreciation and understanding of all the elements of therefore be allowed to rest their cause of action to the lands
strength and weakness in his case that could only have upon the illegality of the partition which they attempted to
been bettered by a study of law as a profession make, otherwise they would profit by their own unlawful
o Upon the review of the evidence presented in court, at the act
time when plaintiff signed the deed, he was in possession
of all essential facts bearing upon his interest in the
c. Rosales vs. Reyes, 25 P 495
Pacto de retro sale. Plaintiff contends that contract shall be
estate and had an intelligent comprehension of the
annulled on the ground that Rivera was a minor when he entered
nature of the deed of cession, its contents and its
into the contract in 1902
effect upon its interests.
 Rivera sold a parcel of land to Reyes and Ordoveza for 800 Php
o The case could have been different if, at the time of
under a pacto de retro on the condition that repurchase cannot be
signing the deed, if plaintiff is a minor and had no
made until after 3 years from the date of the contract of sale
competent and careful advisers with him the court
 In this document, Rivera states that he was of age
could have well taken plaintiff’s claim
 In May of 1903 Rivera sold his right to repurchase to Rosales for
o But plaintiff had three advisers
1,075 Php and in the same document, Rivera states that he is 23
 On ratification
years of age
o Plaintiff may be a minor when he entered into the contract,
 Rosales contends that he tendered 800 Php to Reyes and
but tacitly ratified said contract when, after he became
Ordoveza with the request that the land be surrendered to him in
of age, he disposed the greater part of the proceeds after
accordance with the contract but they refused to accept the money
he had full knowledge of the facts
and comply with his request
 On main reason for failure of invoking rescission by reason
 Plaintiff now asks that the contract in question be annulled
of minority
MAY THE CONTRACT BE ANNULLED BY DEFENSE OF MINORITY?
o He had a full knowledge of his rights and failed to
disaffirm his contract within a reasonable time after
SC RULED:
his majority
 On the defense of minority and on ratification
o He failed to tender, or offered to produce and pay the
 The contract cannot be annulled for the reason that Rivera
consideration when he reached majority but proceeded to
ratified it by entering into the contract with Rosales in
alienating when he had no other funds with which to make
1903 wherein he stated that he was 23 years of age thus
reimbursement
amounting to an implied confirmation despite knowing
o Plaintiff CANNOT BE ALLOWED TO RESCIND WITHOUT
the existence of the nullity of the first contract
FIRST MAKING ANY RESTITUTION
entered into
b. De Luna vs Linatoc, 74 P 15; (3) Prescription
Without facts in original case. Mistake of law does not render the (4) Restitution:
contract voidable – ignorance of the law excuses no one from
compliance therewith
Philippine Trust Co. vs. Roldan, 99 P 393
 Petitioners did not know the prohibition against partition of  17 parcels of land was inherited by Mariano Bernardo from his
conjugal partnership during marriage and this fact is no valid father.
reason why they should ask for the annulment of the sales
made.

 In view of minority, guardianship proceedings were instituted, Compromise agreement signed in behalf of client by his lawyer
where Socorro Roldan was appointed as guardian. She was the who did so without his authorization is merely unenforceable and
surviving spouse of Marcelo Bernardo, stepmother of Mariano may be ratified expressly or impliedly
 This case concerns the validity of a compromise agreement where
 Socorro sold to Fidel Ramos the 17 parcels of land for 14,700Php,
the agreement was signed by a lawyer who did so without
the purpose of the sale being allegedly to invest the money in a
authorization of his client.
residential house which the minor desired to have
 Petitioners sued private respondents for partition of the lots
 In August 12, 1947, Socorro executed a proper deed of sale to inherited by both parties from their deceased father thereby
Fidel Ramos and on the following day, Fidel Ramos in turn entering into a compromise agreement – subject of this case
executed a deed of conveyance covering the same properties for
the sum of 15,000Php WAS THE COMPROMISE AGREEMENT VOID?
Philippine Trust Co. replaced Socorro as guardian and contended
that the conveyances shall be undone and the sale be annulled SC RULED:
because it violates the prohibition against the purchasing of the  On the compromise agreement
guardian of the property of her ward o Compromise agreement is not void but merely
SHOULD THE SALE BE ANNULLED? unenforceable
o Petitioners by their silence of 16 years and by their overt
SC RULED: acts of exchanging or bartering some of the lots
 On Guardianship as Trust awarded to them with some of the lots of private
respondents have doubtlessly ratified the act of their
o The general doctrine is that guardianship is a trust of the attorney
highest order, and the trustee cannot be allowed to have
any inducement to neglect his ward’s interest
o In the instant case, the court is convinced that in the eyes b. Rallos vs Felix Go Chan, 81 S 259
of law, Socorro Roldan took by purchase in her ward’s General rule: Act of agent after death of principal-void ab initio
parcels thru Dr. Ramos, and that Article 1459 of the Civil subject to exceptions
Code applies
 On restitution  Attorney-in-fact, Simeon Rallos brother of the deceased, after the
o The annulment of the contract of sale carries with it the death of his principal, Concepcion Rallos, sold the latter’s
obligation of Socorro Roldan to return the 17 parcels of undivided shares in a parcel of land to Felix Go Chan and Sons
lands together with their fruits and the duty of the minor, Realty Corporation pursuant to an SPA which the principal
through his guardian to repay 14,700Php with legal executed in his favor
interest  Administrator of Rallos’ estate now comes to court praying for the
court to declare the sale unenforceable and to recover the
disposed share
CHAPTER 8
 Trial court rendered a judgment declaring the sale null and void
UNENFORCEABLE CONTRACTS (n) (Articles 1403 to 1408)
WHAT IS THE LEGAL EFFECT OF AN ACT PERFORMED BY AN AGENT
AFTER THE DEATH OF HIS PRINCIPAL?
(1) Different Kinds:
(a) No authority:
IS THE SALE OF THE UNDIVIDED SHARE VALID ALTHOUGH IT WAS
a. Bumanlag vs. Alzate, 144 S 480; EXECUTED AFTER THE DEATH OF THE PRINCIPAL?

SC RULED: price of 1500Php payable in installments, to which 500Php had

 On the legal effect of the death of the principal already been advanced as payment and part of the full purchase
o Basic axiom in civil law that no one may contract in the price
name of another and if such contract was entered into  However, defendants contend that since the contract of sale was
the same be declared unenforceable verbal and not deduced into writing, the same is not binding and
o In the case at bar, there sprung a relationship of agency unenforceable.
between the brother of Concepcion Rallos and
herself WAS THE VERBAL CONTRACT OF SALE UNENFORCEABLE?
o Established in law that the death of the principal in an
agency extinguishes the relationship between the SC RULED:
agent and the principal  On the unenforceable contract and on parol contracts of
 On the validity of the sale of the undivided share sale
o HOWEVER, there are exceptions to such rules provided for o Section 335 of the Code of Civil Procedure makes only
by Article 1931 which provides that an act done by an ineffective the action for specific performance but does
agent after the death of the principal is valid when: not declare them void and of no legal effect
 The agent acted without knowledge of the death of o In the case at bar the verbal contract of sale is adduced
the principal as evidence not for the purpose of enforcing specific
 Third person who contracted with the agent performance but only for the purpose of entitling the
himself acted in good faith petitioners herein to have the land registered in their
 Two requisites must concur name and in this case, Section 335 of CCP does not apply
o Agent Simeon Rallos knew of the death of Concepcion  On executed contracts
at the time he sold the latter’s share o As the contract of sale involved in this case is an
executed contract, section 335 is inapplicable since it
refers to executed contracts
(b) Statute of Frauds:
o In the case at bar, the contract has already been
a. Almirol vs. Monserrat, 48 P 67; partially executed upon partial payment of 500Php.
Registration of land – parol contract of sale, makes only ineffective Therefore, even if the contract of sale of a real property
the action for specific performance of a contract but does not shall be reduced into writing, the same has been ratified
declare them null and void. Case at bar – parol contract of sale is by the subsequent acts of the parties, of giving and
adduced not for the purpose of enforcing performance but only as accepting payment as well as occupying the land herein
basis of lawful possession – section 335 of Code of Civil Procedure
is not applicable. Contract of sale in this case is an executed b. Hernandez vs. Andal, 78 P 196;
contract, section 335 is only applicable to merely executory Statute of frauds – rule on reducing a contract into writing –
contracts agreement of partition need not be reduced into writing.
Applicable only to executor contracts. General principle is that the
 Portion B of the parcel of land is owned by Bartolome Ricator and courts of equity have enforced oral partition when it has been
portion A of the same was acquired by Bartolome Ricator and completely or partly performed. If there are no rights of creditors
Maria Almirol involved, it is competent for the heirs of an estate to enter into an
 Domingo Almirol and Maria Carino contends that they have been in agreement for distribution in a manner and upon a plan different
possession of the lands since the year 1912 when Bartolome from those provided by law
Ricator, before his death, and his wife Maria Almirol delivered to  A small parcel of land containing some 5,000sq. meters was
them said land in pursuant to a verbal contract of sale for the inherited by four sisters and a brother.

 It was surveyed and is still assessed as a single lot, not in the no rights of creditors being involved, as in the case at
name of the co-owners but that of an uncle bar, it is competent for the heirs of an estate to enter into
 In January 23, 1944, two of the sisters sold a portion of the lot to an agreement for distribution in a manner and upon a plan
the defendant Andal who was neither a relative nor an adjoining different from those provided by law
owner
 Upon learning of the sale a week after, a third sister expressed her
desire to repurchase said portion of land and upon refusal of the
c. Robles vs. Lizarraga, 42 P 584;
Possessor in good faith who makes useful
buyer, she filed a complaint for the purpose of being subrogated to
improvements on the estate possessed is entitled to
the rights acquired by Andal
demand payment of the value thereof and to retain
 Andal was agreeable to the reconveyance provided he be paid to
estate until the expenditures incurres therein are
total sum of 910Php which he actually paid
paid to him. A document is admissible in evidence
 Sisters intervened in the case alleging that before the sale to Andal
when it is offered not to prove such accounts but
was made, the plaintiff had been given the option to acquire the
only for the purpose of showing the possessor’s
lot in question since there was already a verbal agreement of
good faith
partition
 Anastacia dela Rama died leaving a number of properties to her
 There has been no dispute further whatsoever on the
children
amount paid, but the Court resolves the issue of:
 Dela Rama children entered into a partnership with Lizarraga
WHETHER OR NOT AN AGREEMENT OF PARTITION IS REQUIRED TO
Hermanos by virtue of which the court awarded to said partnership
BE IN WRITING IN THE STATUTE OF FRAUD
the properties left by the deceased
 Evarista Robles, one of the heirs, ever since her mother died and
SC RULED:
while she was still alive, was already occupying the house subject
 On verbal contracts of partition
of this case by permission of her mother and later on with the
o The reason for the rule of the exclusion of partition in the
consent of her co-heirs.
Statute of Frauds is that partition is not a conveyance but
 She has made improvements on the house and has fixed its value
simply a separation and a designation of the part of
at 4,500Php and paying 40 pesos monthly as rent of the upper
the land which belongs to each tenant in common
story of the house
o Furthermore, courts of equity have enforced oral partition
 Hermanos notified Evarista that she will be raising the rent to
when it has been completely or partially performed
60pesos per month, on the upper story of the house however, the
o A parol partition may be sustained on the ground that the
latter refused to pay which made Hermanos institute an action for
parties thereto have acquiesced in and ratified the partition
ejectment.
by taking possession in severalty, exercising acts of
 Evarista on the other hand filed for an action of the recovery of the
ownership or otherwise recognizing the existence of the
improvements thereon
partition
o Rationale: The civil law looks upon the role of public
WHETHER EVARISTA IS THE OWNER OF THE IMPROVEMENTS AND
instruments in acts and contracts with greater
HAS THE RIGHT TO DEMAND PAYMENT OF THEIR VALUE
liberality with a view to better adaptation to human
frailties and idiosyncrasies. In their blind faith in
WHETHER SHE HAS THE RIGHT TO RETAIN TH BUILDING UNTIL
friends and relatives, and in their ignorance, men, in
SAID VALUE IS PAID TO HER
spite of laws, will continue to make verbal contracts.
o The requirement that a partition be put into writing has,
SC RULED:
for its purpose. The protection of creditors and the
protection of the heirs against tardy claims. However when

 On ownership of improvements  He was unable to continue the purchase and the work on the
o It was consistently enshrined in our Code of Civil house has been delayed
Procedure, that necessary expenditures shall be  Defendant accompanied Kabalsa to Reiss’ yard and entered into an
refunded to every possessor, but only the possessor oral promise of payment of the lumber
in good faith may retain the thing until they are  Defendant now alleges that he is not bound by the oral
repaid to him promise to pay as it was not reduced into writing and the
o Is Evarista a possessor in good faith? same is unenforceable
WAS THE ORAL PROMISE TO PAY NOT BINDING?
 Good faith is always presumed and the
burden of proof rests on the person alleging it SC RULED:
 Evarista began occupying the house when her  Test whether a promise to pay is within the statute of
mother was still alive, had the permission of doing frauds
so, and have introduced improvements as well as o If the promise is an original one, that is if the promisor
religiously paid for the rental payments thereon. becomes thereby primarily liable for the payment of the
 Evarista showed positive evidence sufficient to debt, the promise is not within the statute
support the conclusion that when she made the o If the promise is collateral to the agreement of the other
improvements of the building, she was possessing and the promisor becomes thereby liable as surety, the
it in good faith promise shall be in writing
 Generally, agreements of this character shall be o In the case at bar, promisor bound himself primarily,
made in writing for it to be admissible as therefore his promise to pay need not be reduced
evidence for its enforceability. HOWEVER, when into writing
such written document will only be for the purpose
of proving possession in good faith such written
agreement need not have the ff:
e. Syquia vs. CA, 151 S 507
All alleged oral assurances or promises of the representatives of
 Subscription by the party in charge
the lessor that the lessee should be given priority or a renewal of
 Formal note or memorandum
the lease contract cannot be enforceable. Parol evidence rule –
lessee’s claim is that he is entitled to a renewal of contract of lease
d. Reiss vs. Memije, 15 P 350; for the reason that the lessors had given him the option to renew
Statute of Frauds. Promise to pay the debt of another – credit the contract cannot be maintained
extended to promisor. Test of whether a promise is within the (c) Both parties incorporated
statute of frauds – original v. collateral – original (primarily liable,
need not be under statute of frauds) – collateral (promise must be (3) Ratification:
in writing) CASE AT BAR – original, therefore need not be in a. Averia vs. Averia, 436 S 459;
writing The contracts which infringed the statute frauds ratified by the
 Memije entered into a contract with Kabalsa for the repair of the failure to object to the presentation of parol evidemce is
house in the city of Manila enforceable.
 Contractor undertook to furnish the necessary materials including
a considerable amount of lumber to be used in repairs but because  Macaria and Marcos Averia contracted marriage which bore 6
he is not a man of commercial standing in the community, he children.
failed to secure credit for the lumber and thereby was compelled to  Macaria was widowed and she contracted 2nd marriage with
pay cash for the lumber to be used for the repair of the house Romero.

 Romero died leaving 3 adjoining lots in Sampaloc.  This is an action to compel the defendant Gonda to return to
 A deed of extrajudicial partition and summary settlement of the plaintiff Abrenica the two parcels of land which the latter
estate of Romero (a house and lot containing 150sqm) was alleges were sold by him under right of repurchase to the
apportioned to Macaria. defendant. The plaintiff alleged that the defendant refused to
 Alleging fraud was employed by her co-heirs in the partition of the deliver said property to him he endeavored to redeem the
estate of Romero, Macaria filed a action for annulment of title same and tendered payment to the defendant.
against her co-heirs.  The first of the defendants, Manuel Gonda (who had already
 Macaria’s son Gregorio and his family and daughter Teresa’s family sold said parcels to the other defendant Marcelino de Gracia)
lived with her until her death. alleged that about 19 years ago he was the sole possessor of
 6 years after Macaria’s demise, her children filed a complaint said parcels, and in the course of the trial, he endeavored to
against their brother Gregorio and niece Sylvanna representing her prove that they had been sold to him by the plaintiff and his
absent mother Teresa Averia for judicial partition pf the mother. The main controversy is whether said two parcels of
extramadura property inclusive of 30sqm judicially awarded. land were sold under right of repurchase or whether they were
 Gregorio and Sylvanna concluded in their answer that the plaintiffs conveyed to the defendant in absolute sale by the plaintiff’s
are not co-owners of the extramadura property as ½ is soleloy parents.
owned by Gregorio and 1/6 of the other half representing  During the trial, the plaintiff testified at length and answered
Domingo’s share had already been sold and assigned by Domingo all the questions asked him with respect to the said contract:
to Gregorio and his wife. the details of the same, the persons who witnessed it, the
place where it was made, and various other circumstances.
HAS RESPONDENTS WAIVED ANY OBJECTION TO THE These questions and answers cover six pages of the record,
ADMISSION OF PAROL EVIDENCE, HENCE, IT IS ADMISSIBLE and yet the defendants’ counsel raised no objection to the
AND ENFORCEABLE? examination, aside from challenging one of the questions as
irrelevant. It seems that only when the examination was
SC RULED: terminated did counsel for defendants move to strike out all of
 On the verbal sale the testimony given, on the ground that the period for the
 Gregorio bearing on the verbal sale to him by Macaria of the fulfillment of the contract exceeded one year and that it could
property, the testimonies of petitioners witnesses by Sylvanna not be proven except by means of a written instrument.
and Flora were not objected to by respondents. Art. 1405 the  Defendants’ counsel moved that the case be dismissed on the
contracts which infringed the statute of frauds were ratified by ground that, since the plaintiff's testimony was stricken out,
the failure to object to the presentation of parol evidence, there was no proof as to the real nature of the contract.
hence enforceable.
 Petitioners claimed that there was total performance of the WHETHER OR NOT CONTRACTS LIKE THIS, WHICH INFRINGES
contracts full payment of the objects having already been ,ade UPON STATUTE OF FRAUDS, ARE RATIFIED WHEN THE DEFENSE
to the vendee Gregorio even after Macaria’s death, continued FAILS TO OBJECT, OR ASK QUESTIONS ON CROSS-EXAMINATION.
to occupy the property until and after filing of the complaint
subject of the case at bar. SC RULED:
 This is sufficient to prov the conveyance of half of the subject
 On ratification
property by Macaria to Gregorio.
o There is ratification. As a rule of evidence, a protest or
objection against the admission of any evidence must be
made at the proper time, otherwise it is understood to
 Abrenica vs. Gonda, 34 P 739)
have been waived. A motion to strike out parol or

documentary evidence from the record is useless  A suit was filed against Basilio and his sister for specific
and ineffective if made without timely protest, performance and a notice of the lis pendens was duly entered
objection, or opposition on the part of the party against
whom it was presented.
 During the pendency of the case, the vendees recorded the sale
and obtained the title in their names, subject to the lis pendens
o Objection to the introduction of evidence should be made
before the question is answered. When no such objection  Before the expiration of the period of redemption, Arambulo was
is made, a motion to strike out the answer ordinarily allowed to repurchase the land from the vendees a retro by
comes too late. Plaintiff having testified to conversation consigning in court the purchase price.
between defendant’s son and himself until the direct  Ultimately, the court declared Arambulo absolute owner of the land
examination, defendant could not sit by and then object to by virtue of the constructive repurchase of the land
the “foregoing testimony" thereafter. WAS THE CONSIGNATION VALID?
o The plaintiff himself testifies that the sale of said lands
with right of repurchase, between him and the defendant SC RULED:
Gonda, was a verbal one and for the period of seven years,  On the consignation
made in the course of a conversation between the plaintiff
o Consignation was invalid because no notice of such deposit
and defendant.
was served upon the vendees a retro.
o The defendants’ counsel, however, did not endeavor
immediately to obtain from the witness a statement as to
o But while the consignation was invalid, title to the lands
was not consolidated because a period of 30 days is
whether that contract was set forth in any instrument. He
granted to the vendors a retro or their successors-in-
also did not object to the witness’ continuing to testify in
interest from the time the final judgment was
regard to the contract, nor did he in any way object to the
rendered in a civil action on the basis that the
questions they continued to ask. The fact that he did
contract was a true sale with the right to repurchase
object to one question as irrelevant, it indicates that he
within which to exercise such right
had no other objections.
o As no timely objection or protest was made to the o The notice of lis pendens recorded in the vendee’s
admission of the testimony of the plaintiff with respect to certificate did not deprive them of their right to the same
the contract; and as the motion to strike out said evidence o It only meant that if the plaintiff, the purchaser of the
came to late; and, furthermore, as the defendants land, should secure a judgment in his favor, he would step
themselves, by the cross-questions put by their counsel for into the shoes of the vendors a retro
the witnesses in respect to said contract, tacitly waived CHAPTER 9
their right to have it stricken out, that evidence, therefore, VOID AND INEXISTENT CONTRACTS
cannot be considered either inadmissible or illegal.
(1) Kinds:
Ariaga vda. de Gurrea vs. Suplico, 488 S 332;
(4) Attack by Third Persons: Tongoy vs. CA, 123 S 99;
a. Ayson vs. CA, 97 P 965 A void and inexistent contract is not susceptible to
 In 1942, Basilio Yalung executed a private document selling to ratification
Primo Arambulo a parcel of land Rongavilla vs. CA, 294 S 289;
 Subsequently, Arambulo discovered that Basilio and his sister had  The property subject of this controversy is a parcel of land
previously sold the same land to Simeon Ayson and Maural owned by sisters Mercedes and Florencia Dela Cruz in the
Lumanlan subject to a right of repurchase

proportion of ½ with Juanita Jimenez, their niece and sister SC RULED:

of Dolores Rongavilla (petitioner herein).  On vitiated consent
 After the land was subdivided, the Original Certificate of o As found by the trial court, the Dela Cruz sisters were
Title and TCT was kept in the possession of Juanita misled by Rongavilla into believing that what they signed
Jimenez. was a document acknowledging a loan.
 In May 1976, the Dela Cruz sisters borrowed P2000.00 from o The consent was not merely vitiated, it did not exist
the Spouses Rongavilla for the purpose of having their (Dela at all.
Cruzes) rooftop repaired o The sale of the property was far from their minds.
 A month later, Rongavilla and Jimenez went to their aunts’  As to the issue of consideration:
home, bringing with them a document typewritten in o The court notes that the deed makes mention of a
English for signature of their aunts. consideration of P2000.00.
 When Mercedes asked in Tagalog what it was about, o However, when the property was mortgaged, its value was
Rongavilla answered that it was just a document P40000.00.
evidencing the P2000.00 loan. o The gross inadequacy of the consideration deters the Court
 On account of that representation, the Dela Cruz’ signed from believing that the property was actually sold.
said document. After 4 years (September 1980), Rongavilla o It is more reasonable to assume that the
went to the house of Dela Cruz and asked them to vacate the amount of P2000.00 in the deed refers to the loan
land in question, claiming that she and her husband were extended by Rongavilla to her aunts. There was no
already its new owners. Upon checking with the Office of the consideration in this purported transaction.
Register of Deeds, they discovered that their Certificate o Moreover, Jimenez and her layer repeatedly declared that
of Title had been cancelled and a new one indeed had the true consideration paid was P7800.00 and not
been issued in favor of the Rongavillas. theP2000.00 that was stated in the deed of sale.
 They further discovered that said land had been mortgaged o It is also evident in the deed of sale that the consideration
with the Cavite Development Bank, and only then did they originally typed therein (P3000.00) was later on
realize that what they had previously been asked to sign was a substituted by the handwritten amount (P2000.00).
deed of sale. o The Rongavillas may have many possible motives for these
 The Dela Cruz’ filed a complaint before the Pasay RTC to have alterations, but these testimonies only establish one
the deed of sale declared void and inexistent. thing: the non-sanctity of the deed as a public instrument.
 They contended that they did not sell the property, they  On the issue of prescription:
did not receive any consideration on the supposed sale, o The Court ruled that the document having been declared void,
that their title to the property was cancelled to their the statute of limitations cannot apply.
damage and prejudice. o In this case, lack of consent and consideration made the
 On the other hand, the Rongavillas alleged that the land had deeds of sale void altogether and rendered them subject
been voluntarily sold, that there was consent to the sale, to attack at any time.
there was sufficient consideration, that the Dela Cruz sisters o Proper remedy: reconveyance.
had been fully apprised by the Notary Public as to what the
document was about, that prescription had set in, and that the
deed of sale contained all the requisites of a contract.
 The trial court ruled that the deed of sale was void and
Calimlim – Canullas vs. Fortun 129 S 675;
 Petitioner MERCEDES Calimlim-Canullas and FERNANDO Canullas
inexistent.
were married on December 19, 1962.
IS THE DEED OF SALE VOID AND INEXISTENT?

 They lived in a small house on the residential land in question with o Pursuant to the foregoing provision both the land and the
an area of approximately 891 sqm, at Pangasinan. building belong to the conjugal partnership but the
 After FERNANDO's father died in 1965, FERNANDO inherited the conjugal partnership is indebted to the husband for
land. the value of the land. The spouse owning the lot
 In 1978, FERNANDO abandoned his family and was living with becomes a creditor of the conjugal partnership for the
private respondent Corazon DAGUINES. During the pendency of value of the lot, which value would be reimbursed at the
this appeal, they were convicted of concubinage. liquidation of the conjugal partnership.
 In 1980, FERNANDO sold the subject property with the house to o It follows that FERNANDO could not have alienated
DAGUINES for the sum of P2,000.00. the house and lot to DAGUINES since MERCEDES had
 In the document of sale, FERNANDO described the house as not given her consent to said sale.
inherited from his deceased parents.  On the nullity of the contract of sale
 Unable to take possession of the lot and house, DAGUINES o 2nd issue, the contract of sale was null and void for being
initiated a complaint for quieting of title and damages against contrary to morals and public policy.
MERCEDES. The latter resisted and claimed that the house in o The sale was made by a husband in favor of a
dispute where she and her children were residing, including the concubine after he had abandoned his family and left
coconut trees on the land, were built and planted with conjugal the conjugal home where his wife and children lived and
funds and through her industry; that the sale of the land together from whence they derived their support. That sale was
with the house and improvements to DAGUINES was null and subversive of the stability of the family, a basic social
void because they are conjugal properties and she had not institution which public policy cherishes and protects.
given her consent to the sale. o Article 1409: Contracts whose cause, object, or purpose
 In its original judgment, respondent Court principally declared is contrary to law, morals, good customs, public order, or
DAGUINES "as the lawful owner of the land in question as well as public policy are void and inexistent from the very
the one-half of the house erected on said land." beginning.
o Article 1352: Contracts without cause, or with unlawful
WHETHER OR NOT THE CONSTRUCTION OF A CONJUGAL HOUSE ON cause, produce no effect whatsoever. The cause is
THE EXCLUSIVE PROPERTY OF THE HUSBAND IPSO FACTO GAVE unlawful if it is contrary to law, morals, good customs,
THE LAND THE CHARACTER OF CONJUGAL PROPERTY public order, or public policy.
WHETHER OR NOT THE SALE OF THE LOT TOGETHER WITH THE

HOUSE AND IMPROVEMENTS THEREON WAS VALID UNDER THE Mapalo vs. Mapalo, 123 P 979;
CIRCUMSTANCES SURROUNDING THE TRANSACTION  The spouses Miguel Mapalo and Candida Quiba are simple
illiterate farmers, were registered owners of a 1,635sqm
SC RULED: residential land in Manaoag, Pangasinan.
 On the conjugal character of the property  Spouses-owners, out of love and affection for Maximo Mapalo
o The determination of the first issue revolves around the — a brother of Miguel who was about to get married —
interpretation to the 2nd par of Article 158: decided to donate the eastern half of the land to him.
o Buildings constructed at the expense of the partnership  On October 15, 1936 however, they were deceived into
during the marriage on land belonging to one of the signing a deed of absolute sale over the entire land in his
spouses also pertain to the partnership, but the value of favor.
the land shall be reimbursed to the spouse who owns  Their signatures were procured by fraud where they were
the same. made to believe by Maximo Mapalo and by the attorney
who acted as notary public who “translated” the

document, that the same was a deed of donation in o For consent was admittedly given, albeit obtained by
Maximo’s favor covering one-half (the eastern half) of fraud. Accordingly, said consent, although defective, did
their land. exist.
 Although the document of sale stated a consideration of o In such case, the defect in the consent would provide a
P500.00, the spouses did not receive anything of value ground for annulment of a voidable contract, not a
for the land. reason for nullity ab initio.
 The attorney’s misbehavior was the subject of an investigation o The parties are agreed that the second element of object
but its result does not appear on record. is likewise present in the deed of October 15, 1936, the
 However during the hearing of these cases said notary public parcel of land. Not so, however, as to the third
was present but did not take the witness stand to rebut the element of cause or consideration.
plaintiffs’ testimony supporting the allegation of fraud in the  On the cause or consideration
preparation of the document. o Was there a cause or consideration to support the
 The spouses built a fence segregating the donated land. existence of a contrary of sale?
They continued to possess the western part up to the o Since the deed of sale of 1936 is governed by the Old
present. Civil Code, it should be asked whether its case is one
 Not known to them, on March 15, 1938, Maximo wherein there is no consideration, or one with a
registered the deed of sale in his favor and was able to statement of a false consideration. If the former, it is
obtain a TCT. void and inexistent; if the latter, only voidable, under
 Maximo sold the entire land to the Narcisos wherein the the Old Civil Code.
Narcisos took possession of the eastern part and filed a suit o As observed earlier, the deed of sale of 1936 stated that it
against Miguel and Candida, as well as Floro Guieb and Rosalia had for its consideration P500.00 said consideration
Mapalo Guieb who had a house on the western portion was totally absent.
consented by the spouses. o According to Manresa, what is meant by a contract that
 The spouses filed an answer with counterclaim, seeking states a false consideration is one that has in fact a real
cancellation of the TCT of the Narcisos on the ground that their consideration but the same is not the one stated in the
consent to the deed of sale in favor of Maximo was obtained document. A contract of purchase and sale is null and void
through fraud. and produces no effect whatsoever where the same is
 According to the appellate court, the sale is voidable and without cause or consideration in that the purchase price
subject to annulment only within 4 years after discovery which appears thereon as paid has in fact never been paid
of fraud. It reckoned March 15, 1938, the date of registration, by the purchaser to the vendor.
to be the reckoning period.  On the purpose of disposing the subject land
 o The act of Pacifico Narciso is a conclusive manifestation
WAS THE SALE VOID? OR MERELY VOIDABLE? that the Narcisos did not only have prior knowledge of the
ownership of said spouses over the western half portion in
SC RULED: question but that they also have recognized said
ownership.
 On void or inexistent contracts o It also conclusively shows their prior knowledge of the
o For a contract to exist at all, three essential requisites want of dominion on the part of their vendor Maximo
must concur: (a) consent, (b) object, and (c) cause or Mapalo over the whole land and also of the flaw of his title
consideration. The Court of Appeals is right in that the thereto. Under this situation, the Narcisos may be
element of consent is present as to the deed of sale of considered purchasers in value but certainly not as
October 15, 1936. purchasers in good faith.

Manzano vs. Garcia, Nov. 28, 2011 o In Estacio vs. Jaranilla, it was ruled that the court may
 Marcelino Garcia executed a deed of pacto de retro sale validly determine forgery from its own independent
in favor of Constancio Manzano, the predecessor-in- examination of the documentary evidence at hand.
interest and brother of Vicente Manzano for P80,500. o There is a need to clarify the proper basis for the nullity of
 The subject of the agreement is a land of 6,951 sqm the pacto de retro sale. It should not be based on Article
located Cagayan de Oro City. 1409 (enumerates examples of void contracts) in relation
 Under the said contract, Garcia purportedly reserved the to Article 1505 (which refers to an unenforceable contract
right to repurchase for the same price within 3 and is applicable only to goods) but Article 1318 which
months from the date of the instrument. enumerates the essential requisites of a valid contract.
 On July 12, 1992, Constancio Manzano passed away. His o Article 1318. There is no contract unless the
properties were adjudicated to his heirs. Vicente was following requisites concur:
named the administrator of the intestate estate of  Consent of the contracting parties;
Constancio Manzano.  Object certain which is the subject matter of the
 Garcia did not redeem the subject property within 3 contract;
months.  Cause of the obligation which is established.
 Consequently, Vicente issued a petition for consolidation of o There are two types of void contracts:
ownership of property.  those where one of the essential requisites of
 Garcia filed an opposition alleging that the pacto de a valid contract as provided for by Article 1318 of
retro sale was a forgery. He claimed that he and his the Civil Code is totally wanting; and
wife were in USA from June 1, 1988 to November 14,  those declared to be so under Article 1409 of
1992, and therefore could not have executed the pacto de the Civil Code. Conveyances by virtue of a forged
retro sale. signature are void ab initio. The absence of the
 Garcia filed a complaint for annulment of pacto de retro essential requisites of consent and cause or
sale and recovery of the owner’s title with preliminary consideration in these cases rendered the contract
injunction against Vicente. inexistent.
 The trial court held that Garcia failed to prove that
his signature in the pacto de retro sale was forged. (2) Imprescriptibility:
According to the court, Garcia should have presented Ras vs. Sua, 134 P 131;
an expert witness to determine whether the  To secure recovery of possession of a parcel of land which he
SIGNATURE WERE MADE BY THE SAME PERSON leased to the spouses Ramon and Estela Sua, Alejandro Ras filed a
complaint alleging, among other things, that on 25 February 1958
WHETHER OR NOT THE PACTO DE RETRO SALE WAS FORGED AND plaintiff, while in need of money and unaware of the provisions of
THEREFORE VOID AB INITIO Republic Act 477, leased to the defendants a four-hectare
parcel of land he acquired from the National Abaca and
SC RULED: Other Fibers Corporation (NAFCO), for a period of 3 years
 On contracts void ab initio (from 1 April 1958 to 1 April 1961) upon a consideration of
o The SC affirmed the ruling of the CA finding that the pacto P2,500.00;
de retro sale was forged and therefore, void ab initio.
There is no need to present the testimony of expert  Under the contract the lessees assumed the obligation to pay
witnesses to prove forgery. to the government the yearly installments on the land when
they fall due, as well as the taxes thereon, for the duration
of the lease;

 These obligations were again embodied in subsequent contracts 3  This is an exception to the rule of in pari delicto which is not
entered into by the parties, by virtue of which the lease was applicable to homestead grants, but is applicable to products
extended to a total period of 10 years and the improvements
 Lessees failed to pay the taxes on the land and the installments  Because of the principle, the homesteader or his heirs cannot
due to the NAFCO; and when defendants refused to pay said dues recover from the vendee the value of the improvements
to the government, as agreed upon, and to return to plaintiff made by them on the land.
possession of the subject parcel of land notwithstanding demand
therefor, the latter filed the present action.
Terre vs. Terre, 211 S 7;
 Claiming further that defendants had harvested from the land  Dorothy Terre first met Jordan Terre when they were 4th year high
since 1958 no less than 120,000 coconuts, plaintiff prayed for school classmates in Cadiz City High School.
judgment declaring as null and void the lease-contract of 25  She was then married to Merlito Bercenilla.
February 1958 and the contracts executed subsequent thereto;  Jordan courted her and this continued when they moved to
and ordering the defendants to deliver to him possession of Manila to pursue their education.
the land, together with the value of the harvested nuts  Jordan, then a freshman law student, told Dorothy that her
amounting to P7,200.00, and to pay him damages and marriage with Bercenilla was void ab initio because they
attorney’s fees for P3,000.00 and P1,500.00, respectively are first cousins.
WILL THE ACTION PROSPER?  Believing in Jordan and with the consent of her mother and ex-
in-laws, she married Jordan on June 14, 1977.
SC RULED:  Jordan wrote “single” as Dorothy’s civil status despite
 Comparing with Angeles v. CA (same doctrine) latter’s protests.
 Jordan said it didn’t matter because marriage was void to begin
with.
Angeles vs. CA, 102 P 1006;  After their marriage, Dorothy supported Jordan because he
 This is a case of determining whether the in pari delicto rule was still studying then. They had a son, Jason, who was
applies when both vendor and vendee are guilty of violating the born on June 25, 1981.
law, but nevertheless the heirs of the vendor suddenly move to  Shortly after she gave birth, Jordan disappeared.
reacquire the land even if it has been sold  She learned that he married Vilma Malicdem.
 In this case, in 1936, a homestead grant was issued to the  Dorothy filed charges for abandonment of minor, bigamy and
homesteader and sold the same to vendee. grossly immoral conduct. Jordan was already a member of the Bar
then.
 Homesteader died and was survived by his children.  Jordan claimed that he was unaware of Dorothy’s first marriage
 The heirs of the homesteader brought an action against the and that she sent her out of the house when he confronted her
vendee for the recovery of the homestead on the ground that the about it. He contracted the second marriage, believing that his
sale is void pursuant to Sec. 118 of the Public Land Law. Vendee marriage to Dorothy was void ab initio because of her prior
however, contends that there can be no recovery under the rule of subsisting marriage.
pari delicto WON A JUDICIAL DECLARATION OF NULLITY IS NEEDED TO ENTER
 SC ruled that even though the vendor and the vendee are in INTO A SUBSEQUENT MARRIAGE?
violation of Sec. 118 of the Public Land Law, the heirs should be
allowed to reacquire the land even if it has been sold, since SC RULED:
the avowed purpose of the law is to give said land to a  On bad faith and on obtaining a judicial declaration of
family for home and cultivation nullity of marriage

 Respondent has not rebutted complainant’s evidence as to the W/N ART. 40 OF THE FAMILY CODE THE REQUIRED NULLITY OF
basic fact which underscores that bad faith of respondent PREVIOUS MARRIAGE FOR PURPOSE OF REMARRIAGE SHALL
Terre. APPLY?
 The pretended defense is the same argument by which he
inveigled complainant into believing that her prior SC RULED:
marriage or Merlito A. Bercenilla being incestuous and  On the requisites of declaration of nullity of marriage
void ab initio (Dorothy and Merlito being allegedly first o Under the FC, there must be a judicial declaration of
cousins to each other), she was free to contract a second the nullity of a previous marriage before a party can
marriage with the respondent. enter into a 2nd marriage.
 Respondent Jordan Terre, being a lawyer, knew or should o Art. 40 is applicable to remarriages entered into after the
have known that such an argument ran counter to the effectivity of the FC regardless of the date of the first
prevailing case law of the supreme Court which holds that for marriage.
purposes of determining whether a person is legally free to o Said article is given "retroactive effect insofar as it does
contract a second marriage , a judicial declaration that the not prejudice or impair vested or acquired rights in
first marriage was null and void ab initio is essential. accordance w/ the NCC or other laws." (Art. 256, FC.) This
 Jordan has displayed a deeply flawed moral character. Dorothy is particularly true w/ Art. 40 w/c is a rule of procedure.
supported him, he got her pregnant then he abandoned her. o Respondent has not shown any vested right that was
He made a mockery of the institution of marriage. Thus, not impaired by the application of Art. 40 to his case.
worthy to be a member of the Bar. o The fact that procedural statutes may somehow affect the
litigants' rights may not preclude their retroactive
Atienza vs. Brillantes, 243 S 32; application to pending actions.
 This is an administrative complaint filed by Atienza for
 The retroactive application of procedural laws is not violative of
Gross Immorality and Appearance of Impropriety
any right of a person who may feel that he is adversely affected.
against J. Brillantes,
The reason is that as a general rule no vested right may attach to,
 It was alleged in the complaint that Brillantes has been
nor arise from, procedural laws.
cohabiting w/ Yolanda De Castro (w/ whom Atienza had 2
children) when he (Brillantes) was already married to one
Zenaida Ongkiko w/ whom he has 5 children. MWSS vs. CA, 297 S 287
 Respondent denies having been married to Ongkiko,  MWSS leased 128 hectares of its land to Capitol Hills Golf
although he admits having 5 children w/ her. & Country Club Inc. (CHGCCI) for 25 years with a
 He alleges that while he and Ongkiko went through a stipulation allowing the CHGCCI to exercise a right of first
marriage ceremony, the same was not valid for lack of refusal should the subject property be made open for sale.
marriage license.  The terms and conditions of CHGCCI’s purchase was
 The second marriage between the two also lacked the nonetheless subject to presidential approval.
required license.  Then President Marcos directed MWSS to negotiate the
 He claims that when he married De Castro in LA, cancellation of this lease agreement between MWSS and
California, he believed, in all good faith and for all legal CHGCCI.
intents and purposes, that he was single because his first  However, MWSS’ general manager, Ilustre, informed
marriage was solemnized w/o a license CHGCCI that the property was up for sale, and that as per
their contract, CHGCCI had the preferential right to buy
said property.

 The property was purchased, and President Marcos later on and its validity may be assailed only in an action for
approved this sale. that purpose. They can be confirmed or ratified.
 Then, BoT of MWSS also approved the sale by passing a  On the prescriptibility
resolution. o As the contracts were voidable, the 4 yr. prescriptive
 CHGCCI sold the land to Ayala. period under Art. 1391 of the New Civil Code will apply.
 Ten years later, MWSS filed an action against CHGCCI and o This article provides that the prescriptive period shall begin
Ayala in the Regional Trial Court praying for the in the cases of intimidation, violence or undue
declaration of nullity of the MWSS-CHGCCI Sales influence, from the time the defect of the consent
Agreement. ceases", and "in case of mistake or fraud, from the time
 MWSS holds that Ilustre was never given the authority by of the discovery of the same time".
the BoT to enter into the initial agreement, and therefore, o Prescription would have set in by February 26, 1990 or
the sale of the property was null and void. more than three years before petitioner MWSS' complaint
was filed.
W/N THE ACTION FOR THE NULLITY OF THE SALE OF THE o However, if petitioner MWSS' consent was vitiated by
PROPERTY HAS ALREADY PRESCRIBED? fraud, then the prescriptive period commenced upon
discovery.
SC RULED: o Discovery commenced from the date of the execution of
 On the elements of the contract the sale documents as petitioner was party thereto. At the
o The three elements of a contract — consent, the object, least, discovery is deemed to have taken place on the date
and the cause of obligation are all present. of registration of the deeds with the register of Deeds as
o It cannot be argued that the contract had for its object the registration is constructive notice to the world.
sale of the property and the cause or consideration thereof o Petitioner MWSS further contends that prescription does
was the price to be paid (on the part of respondents not apply as its complaint prayed not for the nullification of
CHGCCI/SILHOUETTE) and the land to be sold (on the part voidable contracts but for the declaration of nullity of
of petitioner MWSS). void ab initio contracts which are imprescriptible.
o Likewise, petitioner MWSS' consent to the Agreements is o This is incorrect, as the prayers in a complaint are not
patent on the face of these documents and on its determinative of what legal principles will operate based
own resolution No. 36-83. on the factual allegations of the complaint. And these
o MWSS admits that it consented to the sale of the property, factual allegations, assuming their truth, show that MWSS
with the qualification that such consent was allegedly consented to the sale, only that such consent was
unduly influenced by the President Marcos. purportedly vitiated by undue influence or fraud.
o Taking allegation to be hypothetically true, such would Therefore, the rules on prescription will operate.
have resulted in only voidable contracts because all
three elements of a contract, still obtained. (4) In pari delicto:
o The alleged vitiation of MWSS' consent did not make
the sale null and void ab initio. Voidable or anullable
a. Batarra vs. Marcos, 7 P 156;
Breach of promise to marry upon carnal connection, married man-
contracts are existent, valid, and binding, although
single woman, in pari delicto, no awarding of damages
they can be annulled because of want of capacity or
vitiated consent of the one of the parties,but before
 Batarra complains of Marcos’ breach of promise to marry whereby
annulment, they are effective and obligatory
Marcos induced Batarra to submit herself to sexual relations with
between parties. Hence, it is valid until it is set aside
him on account of such promise of marriage

 The facts appearing in the record does not constitute that of  Sarabillo died and Catalina de los Santos was appointed
the crime of seduction because the plaintiff is not under 23 administratrix of the estate.
years of age therefore it cannot be the basis for the awarding of  Upon discovery that the sale of the land to the Roman
damages Catholic Church was made in violation of Section 118 of
 The defendant may have been liable for his breach of promise to Commonwealth Act No. 141, De los Santos instituted the
marry, the carnal connection being the cause or consideration present action praying that the sale be declared null and
of the promise void.
 The parties committed a crime or misdemeanor and Article  It appears that the patent of land now disputed was issued to
1305 of the Old Civil Code or Article 141120 of the New Civil the late Julio Sarabillo in 1938, and the sale to the Roman
Code prevents such recovery Catholic Church took place in 1940.
 This shows that the sale was made before the expiration of the
period of five years from the date of the issuance of the
patent— clearly in contravention of the law.
b. Santos vs. Roman Catholic Church, 94 P  The approval of the Secretary does not have any curative
405 effect. That approval is merely a formality which the law
 A homestead patent covering a tract of land in the Province of requires. What is important is the period within which the sale
Cotabato was granted to Julio Sarabillo. is executed. The provision of the law which prohibits the sale
 He sold two hectares of said land to the Roman Catholic or encumbrance of the homestead within five years after the
Church of Midsayap to be dedicated to educational and grant of the patent is mandatory, because the purpose of the
charitable purposes. law is to "to preserve and keep in the family of the
 It was expressly agreed upon that the sale was subject to the homesteader that portion of public land which the State has
approval of the Secretary of Agriculture and Natural gratuitously given to him.
Resources.  Defendants claim that the sale is legal and valid, it
 A request for said approval was submitted in behalf of the having been executed for educational and charitable
Roman Catholic Church by Rev. Fr. Gerard Mongeau. purposes. Additionally, even if it be declared null and void, its
 However, no new title was issued in favor of the Church immediate effect would be not the return of the land to
although the deed was annotated on the back of the title appellee, but the reversion of the property to the State.
issued to the homesteader. Defendants set up as a defense the doctrine of pari delicto.
W/N THE PRINCIPLE OF PARI DELICTO WILL INVALIDATE THE

SALE TO ROMAN CATHOLIC CHURCH
20 Article 1411 – when the nullity proceeds from the illegality of the
cause or object of the contract, and the act constitutes a criminal SC RULED:
offense, both parties are in pari delicto, they shall have no action  On the pari delicto doctrine
against each other, and both shall be prosecuted. Moreover, the o This is an exception to the rule.
provisions of the Penal Code relative to the disposal of effects or o The principle of pari delicto has been applied by this Court
instruments of a crime shall be applicable to the things or price of the in a number of cases wherein the parties to a transaction
contract have proven to be guilty of having effected the transaction
with knowledge of the cause of its invalidity. But such
This rule shall be applicable when only one of the parties is guilty; cannot be invoked in this case, considering the
but the innocent one may claim what he has given, and shall not be philosophy and the policy behind the approval of the
Public Land Act.
bound to comply with his promise

o The principle of pari delicto recognizes certain exceptions,

one of them is when its enforcement or application runs
counter to an avowed fundamental policy or to public
interest.
o In the Rellosa case, "This doctrine is subject to one
important limitation, namely, "whenever public policy is
considered advanced by allowing either party to sue for
relief against the transaction."
o Delos Santos desires to nullify a transaction which
was done in violation of the law.
o Ordinarily the principle of pari delicto would apply to her
because her predecessor-in-interest has carried out the
sale with knowledge of its illegality. However, public
policy requires that she, as heir, be not prevented
from re-acquiring it because it was given by law to
her family for her home and cultivation. This is the
policy on which our homestead law is predicated.
o What is important to consider now is who between the
parties is better entitled to the possession of the land while
the government does not intrude and assert its title to the
homestead.
o Upon annulment of the sale, the purchaser's claim is
reduced to the purchase price and its interest. As against
the vendor or his heirs, the purchaser is no more
entitled to keep the land than any intruder.
 Their right to remain in possession of the land is no better than
that of appellee and, therefore, they should not be allowed to
remain in it to the prejudice of appellee during and until the
government takes steps toward its reversion to the State.
(a) Exceptions: (Articles 1413 – 1419)


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Dela Cruz Oblicon 2

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Obligations and Contracts Case Reviewer Part 2

be resolved, PUREFOODS already awarded the project and

1Article 1305 – A contract is a meeting of the mind between two

By: Cyndy dela Cruz, 1-D

By: Cyndy dela Cruz, 1-D

 The parties committed a crime or misdemeanor and Article

By: Cyndy dela Cruz, 1-D

SC RULED:  He has rendered legal services as head of the legal department of

SC RULED: 3. Innominate contracts6: Article 1307

By: Cyndy dela Cruz, 1-D

By: Cyndy dela Cruz, 1-D

By: Cyndy dela Cruz, 1-D

o Furthermore, the plaintiff, deliberately and

By: Cyndy dela Cruz, 1-D

By: Cyndy dela Cruz, 1-D

By: Cyndy dela Cruz, 1-D

By: Cyndy dela Cruz, 1-D

WAS THE STIPULATION IN CASES OF LOSS OR DAMAGE IN THE

By: Cyndy dela Cruz, 1-D

By: Cyndy dela Cruz, 1-D

By: Cyndy dela Cruz, 1-D

By: Cyndy dela Cruz, 1-D

A contract entered into in the name of another by one who has no

By: Cyndy dela Cruz, 1-D

 The agent acted without knowledge of the death of  On conflicting provisions

By: Cyndy dela Cruz, 1-D

By: Cyndy dela Cruz, 1-D

By: Cyndy dela Cruz, 1-D

simply a position to deliberate for deciding to money orders amounting to 800Php

By: Cyndy dela Cruz, 1-D

Option to buy Palma Central for the

CAN ZAYCO VALIDLY COMPEL SERRA TO PERFORM ITS SC RULED:

By: Cyndy dela Cruz, 1-D

By: Cyndy dela Cruz, 1-D

By: Cyndy dela Cruz, 1-D

By: Cyndy dela Cruz, 1-D

By: Cyndy dela Cruz, 1-D

By: Cyndy dela Cruz, 1-D

By: Cyndy dela Cruz, 1-D

By: Cyndy dela Cruz, 1-D

By: Cyndy dela Cruz, 1-D

By: Cyndy dela Cruz, 1-D

SC RULED: therefore he should have exercised prudence and cannot

By: Cyndy dela Cruz, 1-D

By: Cyndy dela Cruz, 1-D

By: Cyndy dela Cruz, 1-D

By: Cyndy dela Cruz, 1-D

o On the alleged fictitious contract SC RULED:

By: Cyndy dela Cruz, 1-D

By: Cyndy dela Cruz, 1-D

By: Cyndy dela Cruz, 1-D

By: Cyndy dela Cruz, 1-D

 Spouses contend that they did not and never executed a

By: Cyndy dela Cruz, 1-D

Cause only when contract is of pure beneficence,

WAS THE DEED OF DONATION NULL AND VOID? SC RULED:

By: Cyndy dela Cruz, 1-D

By: Cyndy dela Cruz, 1-D

By: Cyndy dela Cruz, 1-D

o By reason of gratitude, plaintiff, for the meantime gave defendant

By: Cyndy dela Cruz, 1-D

Dauden vs. delos Angeles, 137 P 900