EQUATORIAL CASE

FACTS

Carmelo & Bauermann, Inc. (Carmelo) used to own a parcel of land, together with two 2- storey buildings
constructed thereon, located at Claro M. Recto Avenue, Manila, and covered by TCT No. 18529 issued in
its name by the Register of Deeds of Manila. On June 1, 1967, Carmelo entered into a Contract of Lease
with Mayfair Theater Inc. (Mayfair) for a period of 20 years. Two years later, on March 31, 1969, Mayfair
entered into a second Contract of Lease with Carmelo for the lease of another portion of the latter’s
property -- namely, a part of the second floor of the two-storey building, and two store spaces on the
ground floor and the mezzanine. In that space, Mayfair put up another movie house known as Miramar
Theater. The Contract of Lease was likewise for a period of 20 years. Both leases contained a provision
granting Mayfair a right of first refusal to purchase the subject properties. However, on July 30, 1978 -
within the 20-year-lease term -- the subject properties were sold by Carmelo to Equatorial Realty
Development, Inc. (“Equatorial”) for the total sum of P11,300,000, without their first being offered to
Mayfair.

As a result of the sale of the subject properties to Equatorial, Mayfair filed a Complaint before the
Regional Trial Court of Manila for the annulment of the Deed of Absolute Sale between Carmelo and
Equatorial, specific performance, and damages. After trial on the merits, the lower court rendered a
Decision in favor of Carmelo and Equatorial. On appeal CA completely reversed and set aside the
judgment of the lower court. The decision of the Court became final and executory on March 17, 1997.
On April 25, 1997, Mayfair filed a Motion for Execution, which the trial court granted. However,
Carmelo could no longer be located. Thus, following the order of execution of the trial court, Mayfair
deposited with the clerk of court a quo its payment to Carmelo in the sum of P11,300,000 less P847,000
as withholding tax. The lower court issued a Deed of Reconveyance in favor of Carmelo and a Deed of
Sale in favor of Mayfair. On the basis of these documents, the Registry of Deeds of Manila cancelled
Equatorial’s titles and issued new Certificates of Title in the name of Mayfair.

ISSUES:
1. Whether or not the contract of sale is validly rescinded though there was no actual delivery made.
2. 2. Whether or not the rentals paid concede actual delivery.

RULING:
A contract of sale is valid until rescinded, and ownership of the thing sold is not acquired by mere
agreement, but by tradition or delivery. In the case, it shows that delivery was not actually effected; in
fact, it was prevented by a legally effective impediment. Not having been the owner, petitioner cannot be
entitled to the civil fruits of ownership like rentals of the thing sold. Furthermore, petitioner’s bad faith, as
again demonstrated by the specific factual milieu of said Decision, bars the grant of such benefits.
In this case, it is clear that petitioner never took actual control and possession of the property sold, in view
of respondent’s timely objection to the sale and the continued actual possession of the property. The
objection took the form of a court action impugning the sale which, as we know, was rescinded by a
judgment rendered by this Court in the mother case. It has been held that the execution of a contract of
sale as a form of constructive delivery is a legal fiction. It holds true only when there is no impediment
that may prevent the passing of the property from the hands of the vendor into those of the vendee. When
there is such impediment, “fiction yields to reality - the delivery has not been effected.” Hence,
respondent’s opposition to the transfer of the property by way of sale to Equatorial was a legally sufficient
impediment that effectively prevented the passing of the property into the latter’s hands.

 BOCALING CASE

Facts
A property was leased to Raould and Christopher Bonnevie by the administratix, Africa De Reynoso for a
period of one year with monthly rental of P4,000. The contract of lease provides that if the lessor decides
to sell the property, the lessees shall be given a first priority to purchase the same. The lessees were then
notified that the leased premises are out for sale and was given 30 days from receipt of the letter within
which to exercise their right of first priority to purchase. She said that in the event that they did not
exercise the said right, she would expect them to vacate the property not later than March, 1977. They
were also notified that the property has been sold since they failed to exercise their right.

ISSUE: WON the contract of sale was not voidable but rescissible

HELD: The respondent court correctly held that the Contract of Sale was not voidable but rescissible.
Under Article 1380 to 1381(3) of the Civil Code, a contract otherwise valid may nonetheless be
subsequently rescinded by reason of injury to third persons, like creditors. The status of creditors could be
validly accorded the Bonnevies for they had substantial interests that were prejudiced by the sale of the
subject property to the petitioner without recognizing their right of first priority under the Contract of
Lease. According to Tolentino, rescission is a remedy granted by law to the contracting parties and even
to third persons, to secure reparation for damages caused to them by a contract, even if this should be
valid, by means of the restoration of things to their condition at the moment prior to the celebration of
said contract. 4 It is a relief allowed for the protection of one of the contracting parties and even third
persons from all injury and damage the contract may cause, or to protect some incompatible and preferent
right created by the contract. Rescission implies a contract which, even if initially valid, produces a
lesion or pecuniary damage to someone that justifies its invalidation for reasons of equity.
LEE CASE

FACTS

Midas Diversified Export Corporation (MDEC) and Manila Home Textile, Inc. (MHI) entered into two
separate Credit Line Agreements (CLAs) with Respondent Bangkok Bank Public Company, Limited
(Bangkok Bank) on November 29, 1995 and April 17, 1996, respectively. MDEC and MHI are owned and
controlled by the Lee family: Thelma U. Lee, Maybelle L. Lim, Daniel U. Lee and Samuel U. Lee
(Samuel). Both corporations have interlocking directors and management led by the Lee family; and
engaged in the manufacturing and export of garments, ladies' bags and apparel. On July 25, 1996, MDEC
was likewise granted a loan facility by Asiatrust Development Bank, Inc. (Asiatrust). This facility had an
available credit line of forty million pesos (PhP 40,000,000) for letters of credit, advances on bills and
export packing; and a separate credit line of two million dollars (USD 2,000,000) for bills purchase.

In the meantime, in May 1997, Samuel bought several parcels of land in Cupang, Antipolo, and later
entered into a joint venture with Louisville Realty and Development Corporation to develop the properties
into a residential subdivision, called Louisville Subdivision. These properties in Cupang, Antipolo are the
subject properties in the instant case (Antipolo properties) and are covered by Transfer Certificate of Title.

MDEC and MHI initially had made payments with their CLAs until they defaulted and incurred aggregate
obligations to Bangkok Bank in the amount of USD 1,998,554.60 for MDEC and USD 800,000 for MHI.
Similarly, the Lee corporations defaulted in their obligations with other creditors
On February 16, 1998, MDEC, MHI, and three other corporations owned by the Lee family filed before
the Securities and Exchange Commission (SEC) a Consolidated Petition for the Declaration of a State of
Suspension of Payments and for Appointment of a Management Committee/Rehabilitation Receiver.
On February 20, 1998, the SEC issued a Suspension Order enjoining the Lee corporations from disposing
of their property in any manner except in the ordinary course of business, and from making any payments
outside the legitimate expenses of their business during the pendency of the petition.

 On July 20, 1999, Bangkok Bank filed the instant case before the RTC. The RTC dismissed the case.
However, the CA granted the appeal, and reversed and set aside the RTC decision. Hence, this petition.

ISSUE: Whether or not Bangkok Bank can maintain an action to rescind the REM on the subject Antipolo
properties despite its failure to exhaust all legal remedies to satisfy its claim.

HELD

The Supreme Court ruled that under Sec. 5.2 of RA 8799, the SEC's original and exclusive jurisdiction
over all cases enumerated under Sec. 5 of PD 902-A was transferred to the appropriate RTC. RA 8799,
Sec. 5.2, however, expressly stated as an exception, that the "the Commission shall retain jurisdiction
over pending suspension of payment/rehabilitation cases filed as of 30 June 2000 until finally disposed."
Accordingly, the Consolidated Petition for the Declaration of a State of Suspension of Payments and for
Appointment of a Management Committee/Rehabilitation Receiver filed on February 16, 1998 by
MDEC, MHI and three other corporations owned by the Lee family, remained under the jurisdiction of
the SEC until finally disposed of pursuant to the last sentence of Sec. 5.2 of RA 8799.

The SEC's jurisdiction is evident from the statutorily vested power of jurisdiction, supervision and control
by the SEC over all corporations, partnerships or associations, which are grantees of primary franchise,
license or permit issued by the government to operate in the Philippines, and its then original and
exclusive jurisdiction over petitions for suspension of payments of said entities. Secs. 3 and 5 of PD 902-
A pertinently provides: Sec. 3. The Commission shall have absolute jurisdiction, supervision and control
over all corporations, partnerships or associations, who are the grantees of primary franchise and/or a
license or permit issued by the government to operate in the Philippines; and in the exercise of its
authority, it shall have the power to enlist the aid and support of any and all enforcement agencies of the
government, civil or military.
Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange
Commission over corporations, partnerships and other forms of associations registered with it as
expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear
and decide cases involving: (d) Petitions of corporations, partnerships or associations to be declared in the
state of suspension of payments in cases where the corporation, partnership or association possesses
sufficient property to cover all its debts but foresees the impossibility of meeting them when they
respectively fall due or in cases where the corporation, partnership or association has no sufficient assets
to cover its liabilities, but is under the management of a Rehabilitation Receiver or Management
Committee created pursuant to this Decree. In sum, the Supreme Court granted the petition.

SIGUAN CASE

FACTS:

Lim issued two Metrobank checks in the sums of P300,000 and P241,668, respectively, payable to "cash."
Upon presentment by petitioner with the drawee bank, the checks were dishonored for the reason
"account closed." Demands to make good the checks proved futile. As a consequence, a criminal case for
violation of Batas Pambansa were filed by petitioner against Lim. The court a quo convicted Lim as
charged. The case is pending before this Court for review and docketed as G.R. No. 134685. It also
appears that on 31 July 1990, Lim was convicted of estafa by the RTC of Quezon City in Criminal Case
No. Q-89-22162 filed by a certain Victoria Suarez. This decision was affirmed by the Court of Appeals.
On appeal, however, the Supreme Court, in a decision promulgated on 7 April 1997, acquitted Lim but
held her civilly liable in the amount of P169,000, as actual damages, plus legal interest. Meanwhile, on 2
July 1991, a Deed of Donation conveying parcels of land and purportedly executed by Lim on 10 August
1989 in favor of her children, Linde, Ingrid and Neil, was registered with the Office of the Register of
Deeds of Cebu City. New transfer certificates of title were thereafter issued in the names of the donees.

 On 23 June 1993, petitioner filed an accion pauliana against Lim and her children before Branch 18 of the
RTC of Cebu City to rescind the questioned Deed of Donation and to declare as null and void the new
transfer certificates of title issued for the lots covered by the questioned Deed. The complaint was
docketed as Civil Case No. CEB-14181. Petitioner claimed therein that sometime in July 1991, Lim,
through a Deed of Donation, fraudulently transferred all her real property to her children in bad faith and
in fraud of creditors, including her; that Lim conspired and confederated with her children in antedating
the questioned Deed of Donation, to petitioner's and other creditors' prejudice; and that Lim, at the time of
the fraudulent conveyance, left no sufficient properties to pay her obligations. On the other hand, Lim
denied any liability to petitioner. She claimed that her convictions in Criminal Cases Nos. 22127-28 were
erroneous, which was the reason why she appealed said decision to the Court of Appeals. As regards the
questioned Deed of Donation, she maintained that it was not antedated but was made in good faith at a
time when she had sufficient property. Finally, she alleged that the Deed of Donation was registered only
on 2 July 1991 because she was seriously ill. In its decision of 31 December 1994 the trial court ordered
the rescission of the questioned deed of donation; (2) declared null and void the transfer certificates of
title issued in the names of private respondents Linde, Ingrid and Neil Lim; (3) ordered the Register of
Deeds of Cebu City to cancel said titles and to reinstate the previous titles in the name of Rosa Lim; and
(4) directed the LIMs to pay the petitioner, jointly and severally, the sum of P10,000 as moral damages;
P10,000 as attorney's fees; and P5,000 as expenses of litigation. On appeal, the Court of Appeals, in a
promulgated on 20 February 1998, reversed the decision of the trial court and dismissed petitioner's
accion pauliana. It held that two of the requisites for filing an accion pauliana were absent, namely, (1)
there must be a credit existing prior to the celebration of the contract; and (2) there must be a fraud, or at
least the intent to commit fraud, to the prejudice of the creditor seeking the rescission. According to the
Court of Appeals, the Deed of Donation, which was executed and acknowledged before a notary public,
appears on its face to have been executed on 10 August 1989. Under Section 23 of Rule 132 of the Rules
of Court, the questioned Deed, being a public document, is evidence of the fact which gave rise to its
execution and of the date thereof. No antedating of the Deed of Donation was made, there being no
convincing evidence on record to indicate that the notary public and the parties did antedate it. Since
Lim's indebtedness to petitioner was incurred in August 1990, or a year after the execution of the Deed of
Donation, the first requirement for accion pauliana was not met. Anent petitioner's contention that
assuming that the Deed of Donation was not antedated it was nevertheless in fraud of creditors because
Victoria Suarez became Lim’s creditor on 8 October 1987, the Court of Appeals found the same
untenable, for the rule is basic that the fraud must prejudice the creditor seeking the rescission

ISSUE: WON the Deed of Donation is valid

HELD: The Supreme Court upheld the validity of the deed of donation. In the present case, the fact that
the questioned Deed was registered only on 2 July 1991 is not enough to overcome the presumption as to
the truthfulness of the statement of the date in the questioned deed, which is 10 August 1989. Petitioner's
claim against Lim was constituted only in August 1990, or a year after the questioned alienation. Thus,
the first two requisites for the rescission of contracts are absent. Even assuming arguendo that petitioner
became a creditor of Lim prior to the celebration of the contract of donation, still her action for rescission
would not fare well because the third requisite was not met. Under Article 1381 of the Civil Code,
contracts entered into in fraud of creditors may be rescinded only when the creditors cannot in any
manner collect the claims due them. Also, Article 1383 of the same Code provides that the action for
rescission is but a subsidiary remedy which cannot be instituted except when the party suffering damage
has no other legal means to obtain reparation for the same. The term "subsidiary remedy" has been
defined as "the exhaustion of all remedies by the prejudiced creditor to collect claims due him before
rescission is resorted to." It is, therefore, essential that the party asking for rescission prove that he has
exhausted all other legal means to obtain satisfaction of his claim. Petitioner neither alleged nor proved
that she did so. On this score, her action for the rescission of the questioned deed is not maintainable even
if the fraud charged actually did exist." The fourth requisite for an accion pauliana to prosper is not
present either.

KHE HONG CHENG CASE

 FACTS
Petitioner Khe Hong Cheng, alias Felix Khe, is the owner of Butuan Shipping Lines to which the
Philippine Agricultural Trading Corporation used its vessel M/V Prince Eric Corporation to ship 3,400
bags of Copra at Masbate for delivery to Dipolog. Such shipping of 3, 400 bags was covered by a marine
insurance policy issued by American Home Insurance Company (eventually Philam). However, said
vessel sank somewhere between Negros Island and Northern Mindanao which resulted to the total loss of
the shipment. Insurer Philam paid the amount of P 354, 000.00, which is the value of the copra, to
Philippine Agricultural Trading Corporation. American Home was thereby subrogated unto the rights of
the consignee and filed a case to recover money paid to the latter, based on breach of common carriage.
While the case was pending, Khe Hong Cheng executed deeds of donations of parcels of land in favor of
his children. As a consequence of a favorable judgment for American Home, a writ of execution to
garnish Khe Hong Cheng’s property was issued but the sheriff failed to implement the same for Cheng’s
property were already transferred to his children. Consequently, American home filed a case for the
rescission of the deeds of donation executed by petitioner in favor of children for such were made in fraud
of his creditors. Petitioner answered saying that the action should be dismissed for it already prescribed.
Petitioner posited that the registration of the donation was on December 27, 1989 and such constituted
constructive notice. And since the complaint was filed only in 1997, more than four years after
registration, the action is thereby barred by prescription.

ISSUE:
whether or not accion pauliana/ rescission of the deed of donation is proper.

HELD:
For an accion pauliana to accrue, the following requisites must concur: (1) the plaintiff asking for
rescission has a credit prior to the alienation, although demandable late; (2) that the debtor has made a
subsequent contract conveying a patrimonial benefit to a third person; (3) that the creditor has no other
Legal remedy to satisfy his claim; but would benefit by rescission of the conveyance to the third person;
(4) that the act being impugned is fraudulent; and (5) that the third person who received the property
conveyed, if by onerous title, has been an accomplice in the fraud. All the above enumerated elements are
present in the case at bar.

Finally, an accion pauliana presupposes the following: 1) a judgment; 2) the issuance by the trial court of
a writ of execution for the satisfaction of the judgment; and 3) the failure of the sheriff to enforce and
satisfy the judgment of the court. In the case at bar, American exhausted all the properties of the debtor in
futility. The date of the trial court’s decision is immaterial. What is important is that the credit of the
plaintiff antedates that of the fraudulent alienation by the debtor of his property. After all, the decision of
the trial court against the debtor retroacts to the time when the debtor became indebted to the creditor.

 MANGAHAS CASE

FACTS
Pacifico died without a will and leaving three parcels of land. He left his wife, Eufrocina 4 legitimate
children and three illegitimate. Carmela Mangahas is one of the illegitimate children of Pacifico.

Later on, petitioner and other children of the deceased waived and ceded their respective shares over the
parcels of hand in favor of Eufrocina due to love, affection and the sum of P150,000. Carmela claims that
Eufrocina promised to give her an additional amount for her share in her father’s estate however, after
signing the deed, Eufrocina refused to pay claiming that she has no more money.

When Eufrocina has to settle her tax obligation in the BIR, she was asked to present a copy of the Deed
however she has none. She called Carmela to sign a copy of a deed which Carmela refused to do so.
Carmela instead asked for P1 Million in exhange of her signature. Eufrocina bargained to lower the price
which Carmela agreed to lower it to P600,000. However, Eufrocina has no money on hand that time. She
then executed a promissory note in favor of Carmela promising to pay her the amount of P600,000. When
the due fell, Eufrocina refused to pay despite several demands from Carmela which led to this case. The
RTC favored Carmela. The CA dismissed the complaint.

ISSUE: Whether or not the contract is voidable.

HELD: No, it is not voidable. Contracts are voidable where consent thereto is given through mistake,
violence, intimidation, undue influence, or fraud. Nowhere is it alleged that mistake, violence, fraud or
intimidation attended the execution of the promissory note. Still, respondent insists that she was forced
into signing the promissory note because the petitioner would not sign the document required by the BIR.
The Court held that the fact that respondents were forced to sign the documents does not amount to
vitiated consent. There is also no undue influence because for it to be present, the influence exerted must
have so overpowered or subjugated the mind of a contracting party as to destroy his free agency, making
him express the will if another rather than his own. Eufrocina may have desperately needed Carmela’s
signature but there is no showing that she was deprived of free agency when she signed the promissory
note. There is also no intimidation because the payment of penalties for delayed payment of taxes would
not qualify as a “reasonable and well grounded fear for an imminent and grave evil.”

 HERNANDEZ CASE

FACTS

The subject land is pro-indiviso owned by Cornelia, Atty. Hernandez, deceased father of Cecilio,
represented by Paciencia and Mena, also deceased and represented by heirs. DPWH filed for an
expropriation when the pro-indiviso owners of the lot subject for the expansion of South Luzon
Expressway refused to arrive at agreement for the P70 per square meter as a just compensation. When the
case was filed, a service contract were executed to give Cecilio 20% of any amount in excess of P70 per
sqm of respective shares for his effort in representing them and that whatever excess beyond P300 per
sqm will also be given to him as an additional incentive and that they’ll give him P1,500 each for the
preparation of the pleading before the RTC. A special power of attorney was also given to Cecilio as their
true and lawful attorney. The just compensation was then fixed at P21,964,500. However, petitioner
executed revocation of the SPA. Cornelia with her new lawyer, moved for the withdrawal of her share for
the just compensation. The Judge granted it with a condition that the just compensation will be released to
Cecilio. Cecilio then gave Cornelia P1,123,000 with a receipt and quitclaim. Upon knowing of the real
price, Cornelia moved to file a complaint to annul the quitclaim and to recover the sum of money.

ISSUE: WON the contracts present in the case are voidable.

HELD: The Court held that both the service contract and receipt and quitclaim were void. The first
vitiated by mistake and the second being fraudulent. The service contract has an obvious mistake because
at the time the case for just compensation was filed, the value of the land was only P70 per sqm compared
from when it is discovered which hit the ceiling price of P1, 500. If the service contract is to be followed,
Cecilio will be given 83.07% and there is no way in the contract that Cornelia agreed to give Cecilio such
amount. The second document is fraudulent because Cecilio did not disclose the truth and instead of
coming up with the request of his aunt, he made a contract intended to bar Cornelia from recovering any
further sum of money from the sale of her property.

FUENTES CASE

FACTS
Tarciano Roca obtained a lot from her mother, Sabina Tarroza under a deed of absolute sale. Tarciano
offered to sell the lot to Sps. Fuentes. They signed an agreement to sell, dated April 29, 1988, which
agreement expressly stated that it was to take effect in six months. The parties left their signed agreement
with Atty. Plagata.

According to the lawyer, he went to see Rosario in Manila and had her sign an affidavit of consent and
had it notarized in Zamboanga City. Sps. Fuentes paid the additional amount of P140,000 then a new title
was issued in the name of Sps. Fuentes who immediately constructed a building on the lot. Tarciano and
his wife, Rosario died.

Years later, their children filed an action for annulment of sale and reconveyance of the land against the
Fuentes spouses before the RTC. The Rocas claimed that the sale to the spouses was void since Tarciano's
wife, Rosario, did not give her consent to it. Her signature on the affidavit of consent had been forged.

ISSUE: Whether or not only Rosario, the wife whose consent was not had, could bring the action to annul
that sale.

HELD: The Fuentes spouses point out that it was to Rosario, whose consent was not obtained, that the
law gave the right to bring an action to declare void her husband's sale of conjugal land. But here, Rosario
died in 1990, the year after the sale. Does this mean that the right to have the sale declared void is forever

 lost? The answer is no. As stated above, that sale was void from the beginning. Consequently, the land
remained the property of Tarciano and Rosario despite that sale. When the two died, they passed on the
ownership of the property to their heirs, namely, the Rocas. As lawful owners, the Rocas had the right,
under Article 429 of the Civil Code, to exclude any person from its enjoyment and disposal. In fairness to
the Fuentes spouses, however, they should be entitled, among other things, to recover from Tarciano's
heirs, the Rocas, the P200,000.00 that they paid him, with legal interest until fully paid, chargeable
against his estate. (tsaka under family code)

GUIANG CASE

FACTS:
Over the objection of private respondent and while she was in Manila seeking employment, her husband
sold to the petitioners-spouses one half of their conjugal property, consisting of their residence and the lot
on which it stood.

ISSUE: Whether or not the contract of sale was voidable

HELD: the nullity of the contract of sale is premised on the absence of private respondent's consent. To
constitute a valid contract, the Civil Code requires the concurrence of the following elements: (1) cause,
(2) object, and (3) consent, the last element being indubitably absent in the case at bar. (kasi wala naman
sya sa place nila nung nagbenta ng property ung asawa niya)

DE BRAGANZA CASE

FACTS
On October 30, 1944, Rosario de Braganza and her sons Rodolfo and Guillermo (petitioners) received
from Fernando de Villa Abrille (respondent) a loan of P70,000 in Japanese war notes and promised in
writing to pay him P10,000 "in legal currency of the P. I. two years after the cessation of the present
hostilities or as soon as International Exchange has been established in the Philippines", plus 2% per
annum.

Because payment had not been made, Villa Abrille sued them in March 1949.In their Answer, defendants
claimed to have received P40,000 only--instead of P70,000. They also averred that Guillermo and
Rodolfo, being 16 and 18 respectively, were minors when they signed the promissory note.

The trial court rendered judgment holding petitioners solidarily liable to pay Villa Abrille the P10,000,
plus 2% annual interest. Likewise, the Court of Appeals found the minors liable reasoning that they did
not disclose in the promissory note that they were not yet of legal age. Relying on Mercado vs. Espiritu,
the CA held that “when minors pretended to be of legal age, when in fact they were not, they will not
later on be permitted to excuse themselves from the fulfillment of the obligation contracted by them
or to have it annulled.”

ISSUE: WON Rodolfo and Guillermo Braganza is legally bound by their signatures in the promissory
note.

HELD
From the minor's failure to disclose their minority in the same promissory note they signed, it does not
follow as a legal proposition, that they will not be permitted thereafter to assert it. They had no juridical
duty to disclose their inability.

The fraud of which an infant may be held liable to one who contracts with him in the belief that he is of
full age must be actual not constructive, and mere failure of the infant to disclose his age is not
sufficient." (American Jurisprudence)

 Under the Mercado case cited, the document signed therein by the minor specifically stated he was of age;
here the note contained no such statement. In other words, in the Mercado case, the minor was guilty of
active misrepresentation; whereas in this case, if the minors were guilty at all, it is of passive (or
constructive) misrepresentation.

Being minors, Rodolfo and Guillermo Braganza could not be legally bound by their signatures in the
promissory note.

FRANCISCO CASE

FACTS:
Eligio Herrera Sr. was the owner of two parcels of land which were brought by the petitioner. Contending
that the contract price for the two parcels of land was grossly inadequate, the children of Eligio, Sr.,
namely, Josefina Cavestany, Eligio Herrera, Jr., and respondent Pastor Herrera, tried to negotiate with
petitioner to increase the purchase price. When petitioner refused, herein respondent then filed a
complaint for annulment of sale.

In his complaint, respondent claimed ownership over the second parcel. He likewise claimed that the first
parcel, was subject to the co-ownership of the surviving heirs of Francisca A. Herrera, the wife of Eligio,
Sr., considering that she died intestate on April 2, 1990, before the alleged sale to petitioner. Finally,
respondent also alleged that the sale of the two lots was null and void on the ground that at the time of
sale, Eligio, Sr. was already incapacitated to give consent to a contract because he was already afflicted
with senile dementia, characterized by deteriorating mental and physical condition including loss of
memory.

ISSUE: The CA completely ignored the basic difference between a void and a merely voidable contract
thus missing the essential significance of the established fact of ratification by the respondent which
extinguished whatever basis respondent may have had in having the contract at bench anulled

HELD: Petitioner argues that while it is true that a demented person cannot give consent to a contract
pursuant to Article 1327, nonetheless the dementia affecting one of the parties will not make the contract
void per se but merely voidable.

A void or inexistent contract is one which has no force and effect from the very beginning. Hence, it is as
if it has never been entered into and cannot be validated either by the passage of time or by ratification.
There are two types of void contracts: (1) those where one of the essential requisites of a valid contract as
provided for by Article 1318[10] of the Civil Code is totally wanting; and (2) those declared to be so
under Article 1409[11] of the Civil Code. By contrast, a voidable or annullable contract is one in which
the essential requisites for validity under Article 1318 are present, but vitiated by want of capacity, error,
violence, intimidation, undue influence, or deceit.

Article 1318 of the Civil Code states that no contract exists unless there is a concurrence of consent of the
parties, object certain as subject matter, and cause of the obligation established. Article 1327 provides that
insane or demented persons cannot give consent to a contract. But, if an insane or demented person does
enter into a contract, the legal effect is that the contract is voidable or annullable as specifically provided
in Article 1390.

In the present case, it was established that the vendor Eligio, Sr. entered into an agreement with petitioner,
but that the former's capacity to consent was vitiated by senile dementia. Hence, we must rule that the
assailed contracts are not void or inexistent per se; rather, these are contracts that are valid and binding
unless annulled through a proper action filed in court seasonably. (Naging valid ung contract because si
respondent nagaccept ng payments. Kung talagang hindi sya agreeable sa contracts, dapat daw prinevent
niya or nag institute na sana sya ng action for reconveyance and have the payments consigned with the
court.)

 VILORIA CASE

FACTS:
Fernando purchased for himself and his wife, Lourdes, two (2) round trip airline tickets. According to
Spouses Viloria, Fernando agreed to buy the said tickets after Mager informed them that there were no
available seats at Amtrak, an intercity passenger train service provider in the United States.

Per the tickets, Spouses Viloria were scheduled to leave. Subsequently, Fernando requested Mager to
reschedule their flight to Newark to an earlier date. Mager informed him that flights to Newark via
Continental Airlines were already fully booked and offered the alternative of a round trip flight via
Frontier Air. Since flying with Frontier Air called for a higher fare of US$526.00 per passenger and would
mean traveling by night, Fernando opted to request for a refund.

Mager, however, denied his request as the subject tickets are non-refundable and the only option that
Continental Airlines can offer is the re-issuance of new tickets within one (1) year from the date the
subject tickets were issued. Fernando decided to reserve two (2) seats with Frontier Air. As he was having
second thoughts on traveling via Frontier Air, Fernando went to the Greyhound Station where he saw an
Amtrak station nearby.

Fernando made inquiries and was told that there are seats available and he can travel on Amtrak anytime
and any day he pleased. Fernando then purchased two (2) tickets for Washington, D.C. From Amtrak,
Fernando went to Holiday Travel and confronted Mager with the Amtrak tickets, telling her that she had
misled them into buying the Continental Airlines tickets by misrepresenting that Amtrak was already fully
booked.

Fernando reiterated his demand for a refund but Mager was firm in her position that the subject tickets are
non-refundable. Request for refund was denied and advised him that he may take the subject tickets to
any Continental ticketing location for the re-issuance of new tickets within two (2) years from the date
they were issued.

Upon returning to the Philippines, Fernando sent a letter to CAI on February 11, 1998, demanding a
refund and alleging that Mager had deluded them into purchasing the subject tickets

ISSUE

HELD

THE ROMAN CATHOLIC CHURCH CASE

FACTS
The Church contracted with respondent Regino Pante for the sale of the lot (thru a Contract to Sell and to
Buy on the belief that the latter was an actual occupant of the lot. The contract between them fixed the
purchase price at P11,200.00, with the initial P1,120.00 payable as down payment, and the remaining
balance payable in three years or until September 25, 1995.

Later on, the Church sold in favor of the spouses Nestor and Fidela Rubi (spouses Rubi) a 215-square
meter lot that included the lot previously sold to Pante. The spouses Rubi asserted their ownership by
erecting a concrete fence over the lot sold to Pante, effectively blocking Pante and his family’s access
from their family home to the municipal road.

As no settlement could be reached between the parties, Pante instituted with the RTC an action to annul
the sale between the Church and the spouses Rubi, insofar as it included the lot previously sold to him.
The Church filed its answer with a counterclaim, seeking the annulment of its contract with Pante. The
Church alleged that its consent to the contract was obtained by fraud when Pante, in bad faith,

 misrepresented that he had been an actual occupant of the lot sold to him, when in truth, he was merely
using the 32-square meter lot as a passageway from his house to the town proper. It contended that it was
its policy to sell its lots only to actual occupants. Since the spouses Rubi and their predecessors-in-
interest have long been occupying the 215-square meter lot that included the 32-square meter lot sold to
Pante, the Church claimed that the spouses Rubi were the rightful buyers.

ISSUE: The Church contends that the sale of the lot to Pante is voidable under Article 1390 of the Civil
Code.

HELD

The Court held that there’s no misrepresentation existed vitiating the seller’s consent and invalidating the
contract. Consent is an essential requisite of contracts as it pertains to the meeting of the offer and the
acceptance upon the thing and the cause which constitute the contract. To create a valid contract, the
meeting of the minds must be free, voluntary, willful and with a reasonable understanding of the various
obligations the parties assumed for themselves. Where consent, however, is given through mistake,
violence, intimidation, undue influence, or fraud, the contract is deemed voidable. However, not every
mistake renders a contract voidable.

The above facts, in our view, establish that there could not have been a deliberate, willful, or fraudulent
act committed by Pante that misled the Church into giving its consent to the sale of the subject lot in his
favor. That Pante was not an actual occupant of the lot he purchased was a fact that the Church either
ignored or waived as a requirement. In any case, the Church was by no means led to believe or do so by
Pante’s act; there had been no vitiation of the Church’s consent to the sale of the lot to Pante.

In the absence of any vitiation of consent, the contract between the Church and Pante stands valid and
existing. Any delay by Pante in paying the full price could not nullify the contract, since (as correctly
observed by the CA) it was a contract of sale. By its terms, the contract did not provide a stipulation that
the Church retained ownership until full payment of the price. The right to repurchase given to the Church
in case Pante fails to pay within the grace period provided would have been unnecessary had ownership
not already passed to Pante.

MIAILHE CASE

FACTS
Miailhe were the former registered owners of 3 parcels of land. During the height of the martial law, the
Republic of the Philippines forcible and unlawfully took possession of the properties and continued
without paying rentals despite demands. The Office of the President showed interest in the subject
properties and directed defendant DBP to acquire for the government the subject properties from plaintiff.
through threats and intimidation employed by defendants, plaintiffs, under duress, were coerced into
selling the subject properties to defendant DBP for the grossly low price. That defendant DBP, in turn,
sold the subject properties to [Respondent] Republic of the Philippines, through the Office of the
President. That the only factor which caused plaintiffs to sell their properties to defendant DBP was the
threats and intimidation employed upon them by defendants. That after the late President Marcos left the
country on February 24, [sic] 1986 after the EDSA revolution, plaintiffs made repeated extrajudicial
demands upon defendants for [the] return and reconveyance of subject properties to them. That despite
demands, defendants unjustifiably failed and refused, and still unjustifiably fail and refuse, to return and
reconvey the subject properties to plaintiff.

ISSUE: whether the action for the annulment of the Contract of Sale has prescribed.

HELD:
This Court held that a complaint may be dismissed when the facts showing the lapse of the prescriptive
period are apparent from the records. In its words:

 "x x x. We have ruled that trial courts have authority and discretion to dismiss an action on the ground of
prescription when the parties' pleadings or other facts on record show it to be indeed time-barred; x x x
and it may do so on the basis of a motion to dismiss, or an answer which sets up such ground as an
affirmative defense; or even if the ground is alleged after judgment on the merits, as in a motion for
reconsideration; or even if the defense has not been asserted at all, as where no statement thereof is found
in the pleadings, or where a defendant has been declared in default. What is essential only, to repeat, is
that the facts demonstrating the lapse of the prescriptive period, be otherwise sufficiently and
satisfactorily apparent on the record; either in the averments of the plaintiff's complaint, or otherwise
established by the evidence."

The records in this case indubitably show the lapse of the prescriptive period, thus warranting the
immediate dismissal of the Complaint.

In the present case, there is as yet no obligation in existence. Respondent has no obligation to reconvey
the subject lots because of the existing Contract of Sale. Although allegedly voidable, it is binding unless
annulled by a proper action in court.[12] Not being a determinate conduct that can be extrajudically
demanded, it cannot be considered as an obligation either. Since Article 1390 of the Civil Code states that
voidable "contracts are binding, unless they are annulled by a proper action in court," it is clear that the
defendants were not obligated to accede to any extrajudicial demand to annul the Contract of Sale.[13]

In the absence of an existing obligation, petitioner cannot be considered a creditor, and Article 1155 of the
Civil Code cannot be applied to his action. Thus, any extrajudicial demand he made did not, or will not,
interrupt the prescription of his action for the annulment of the Contract of Sale.

FIRST PHILIPPINE HOLDINGS CASE

FACTS
FPHC allegedly sold their shares of common stock in PCIB. which are part of the sequestered properties
that were allegedly illegally amassed by Benjamin Romualdez during the twenty-year reign of former
President Ferdinand E. Marcos, and are among the purported ill-gotten wealth sought to be recovered by
the Presidential Commission on Good Government (PCGG). According to FPHC, said shares were
obtained by TMEE through fraud and acts contrary to law, morals, good customs and public policy.[3]
Such being the case, their acquisition is either voidable or void or unenforceable.

ISSUE: WON the fact of prescription has set in.

HELD: Under Article 1391 of the Civil Code, a suit for the annulment of a voidable contract on account
of fraud shall be filed within four years from the discovery of the same, thus:
Article 1391. An action for annulment shall be brought within four years.
This period shall begin: In case of intimidation, violence or undue influence, from the time the defect of
the consent ceases.
In case of mistake or fraud, from the time of the discovery of the same.
Here, from the time the questioned sale transaction on 24 May 1984 took place, FPHC did not deny that it
had actual knowledge of the same. Simply, petitioner was fully aware of the sale of the PCIB shares to
TMEE. Despite all this knowledge, petitioner did not question the said sale from its inception and some
time thereafter. It was only after four years and seven months had lapsed following the knowledge or
discovery of the alleged fraudulent sale that petitioner assailed the same. By then, it was too late for
petitioner to beset the same transaction, since the prescriptive period had already come into play. As ruled
in Philipppine Free Press, Inc. v. Court of Appeals

CABILAO CASE

FACTS

 Lorna purchased a residential house and lot from Socorro through her mother, Antonieta who purchased
the property on her behalf since she was in the United States. Lorna through Judith filed for issuance of a
new owner’s duplicate but was opposed by Sps. Buyser on the ground that they were in possession of the
said title after buying the same from Socorro. Soccoro denied having sold the propety to Lorna. However,
due to the controversy, Socorro repurchased the subject property. Lorna and Judith filed for declaration of
nullity of a pacto de retro sale between Socorro and Sps. Buyser.

ISSUE WON the Deed of Sale between Lorna and Socorro is valid

HELD: Article 1305 of New Civil Code (NCC) provides that a contract is "a meeting of minds between
two persons whereby one binds himself, with respect to the other, to give something or to render some
service." The essential requisites are: (1) consent of the contracting parties; (2) object certain which is the
subject matter of the contract; and (3) cause of the obligation which is established. In the present case, all
the elements of a valid contract are present. In the case at bar, the Deed of Sale validly transferred the
ownership over TCT No. T-59 from Socorro to Lorna in consideration of Pl 0,000.00. Arguing the
absence of consent on her part, Socorro claims that the Deed of Sale is null and void since her signature
thereon was obtained through fraud, or under the guise of a contract of loan. However, the evidence on
record belies her theory.

KATIPUNAN CASE

FACTS
Braulio Jr. was assisted by his brother, petitioner Miguel Katipunan, entered into a Deed of Absolute Sale
with brothers Edgardo Balguma and Leopoldo Balguma, Jr. (co-petitioners), represented by their father
Atty. Leopoldo Balguma, Sr., involving the subject property for a consideration of P187,000.00.
Consequently, respondent's title to the property was cancelled and in lieu thereof that it was registered and
issued in the names of the Balguma brothers. In January, 1986, Atty. Balguma, then still alive, started
collecting rentals from the lessees of the apartments. Brauli Jr. filed a complaint for annulment of the
Deed of Absolute Sale. He averred that his brother Miguel, Atty. Balguma and Inocencio Valdez
(defendants therein, now petitioners) convinced him to work abroad. They even brought him to the NBI
and other government offices for the purpose of securing clearances and other documents which later
turned out to be falsified. Through insidious words and machinations, they made him sign a document
purportedly a contract of employment, which document turned out to be a Deed of Absolute Sale. By
virtue of the said sale, brothers Edgardo and Leopoldo, Jr. (co-defendants), were able to register the title
to the property in their names. Respondent further alleged that he did not receive the consideration stated
in the contract. He was shocked when his sister Agueda Katipunan-Savellano told him that the Balguma
brothers sent a letter to the lessees of the apartment informing them that they are the new owners. Finally,
he claimed that the defendants, now petitioners, with evident bad faith, conspired with one another in
taking advantage of his ignorance, he being only a third grader.

ISSUE WON the Contract is voidable

HELD: A contract of sale is born from the moment there is a meeting of minds upon the thing which is
the object of the contract and upon the price.[14] This meeting of the minds speaks of the intent of the
parties in entering into the contract respecting the subject matter and the consideration thereof.[15] Thus,
the elements of a contract of sale are consent, object, and price in money or its equivalent.[16] Under
Article 1330 of the Civil Code, consent may be vitiated by any of the following: (a) mistake, (2) violence,
(3) intimidation, (4) undue influence, and (5) fraud.[17] The presence of any of these vices renders the
contract voidable. The circumstances surrounding the execution of the contract manifest a vitiated consent
on the part of respondent. Undue influence was exerted upon him by his brother Miguel and Inocencio
Valdez (petitioners) and Atty. Balguma. It was his brother Miguel who negotiated with Atty. Balguma.
However, they did not explain to him the nature and contents of the document. Worse, they deprived him
of a reasonable freedom of choice. It bears stressing that he reached only grade three. Thus, it was
impossible for him to understand the contents of the contract written in English and embellished in legal

 jargon. Even the trial court, in reinstating the case which it earlier dismissed, took cognizance of the
medical finding of Dr. Revilla (presented by respondent's counsel as expert witness) who testified during
the hearing of respondent's motion for reconsideration of the first order dismissing the complaint.
According to her, based on the tests she conducted, she found that respondent has a very low IQ and a
mind of a six-year old child.[19] In fact, the trial court had to clarify certain matters because Braulio was
either confused, forgetful or could not comprehend.[20] Thus, his lack of education, coupled with his
mental affliction, placed him not only at a hopelessly disadvantageous position vis-á -vis petitioners to
enter into a contract, but virtually rendered him incapable of giving rational consent. To be sure, his
ignorance and weakness made him most vulnerable to the deceitful cajoling and intimidation of
petitioners.

JUMALON CASE

FACTS
De Leon and herein petitioner, Nilo R. Jumalon, executed a Conditional Sales Agreement whereby the
former purchased from the latter a house and lot. umalon executed in favor of De Leon a Deed of
Absolute Sale. Title was transferred to De Leon.

ISSUE: ) whether De Leon was entitled to annul the sale.

HELD: respondent de Leon was entitled to annul the sale. There was fraud in the sale of the subject
house. It is not safely habitable. It is built in a subdivision area where there is an existing 30-meter right
of way of the Manila Electric Company (Meralco) with high-tension wires over the property, posing a
danger to life and property. The construction of houses underneath the high tension wires is prohibited as
hazardous to life and property because the line carries 115,000 volts of electricity, generates tremendous
static electricity and produces electric sparks whenever it rained. On the issue of prescription of action,
we find that the action to annul the sale was filed a year and four months from the execution of the
contract, hence, within the prescriptive period prescribed under the law

REGAL FILMS CASE

FACTS
Gabriel "Gabby" Concepcion, a television artist and movie actor, through his manager Lolita Solis,
entered into a contract with petitioner Regal Films, Inc., for services to be rendered by respondent in
petitioner's motion pictures. Petitioner, in turn, undertook to give two parcels of land to respondent. the
parties renewed the contract, incorporating the same undertaking on the part of petitioner to give
respondent the two parcels of land mentioned in the first agreement. Despite the appearance of respondent
in several films produced by petitioner, the latter failed to comply with its promise to convey to
respondent the two aforementioned lots. respondent and his manager filed an action against petitioner
contending that he was entitled to rescind the contract, plus damages, and to be released from further
commitment to work exclusively for petitioner owing to the latter's failure to honor the agreement.

ISSUE

HELD: Verily, consent could be given not only by the party himself but by anyone duly authorized and
acting for and in his behalf. But by respondent's own admission, the addendum was entered into without
his knowledge and consent. A contract entered into in the name of another by one who ostensibly might
have but who, in reality, had no real authority or legal representation, or who, having such authority, acted
beyond his powers, would be unenforceable.[7] The addendum, let us then assume, resulted in an
unenforceable contract, might it not then be susceptible to ratification by the person on whose behalf it
was executed? The answer would obviously be in the affirmative; however, that ratification should be
made before its revocation by the other contracting party.[8] The adamant refusal of respondent to accept
the terms of the addendum constrained petitioner, during the preliminary conference held on 23 June
1995, to instead express its willingness to release respondent from his contracts prayed for in his

 complaint and to thereby forego the rejected addendum. Respondent's subsequent attempt to ratify the
addendum came much too late for, by then, the addendum had already been deemed revoked by
petitioner.

IGLESIA FILIPINA INDEPENDIENTE CASE

FACTS

ISSUE

HELD: Note, however, that the only signatory to the Compromise Agreement is Right Rev. Ernesto M.
Tamayo, Bishop of the Diocesan Church of Tuguegarao, purportedly authorized by the Supreme Bishop,
Most Reverend Ephraim S. Fajutagana, via a Special Power of Attorney dated as far back as September
27, 2011. This would give rise to the same question of whether the Supreme Bishop is indeed authorized
to enter into a contract of sale in behalf of petitioner. The Court stated in its Decision dated February 3,
2014, that “any sale of real property requires not just the consent of the Supreme Bishop but also the
concurrence of the laymen's committee, the parish priest, and the Diocesan Bishop, as sanctioned by the
Supreme Council.” The Compromise Agreement, which stipulates that the subject property would be sold
to a third party and the proceeds therefrom divided between herein parties, again raises the issue of the
authority of the person acting in behalf of petitioner.

AVERIA CASE

FACTS
Macaria and Marcos have cntracted marriage. When Macaria became widowed she married Roberto.
When Roberto died, he left 3 adjoining residential lots. In an Extrajudicial Partition and Summary
Settlement of the Estate of Romero, the house and lot in Sampaloc was appointed to Macaria. She filed a
complaint and further alleged that fraud was employed by her co-heirs in the partition which she was
granted with an additional 30Sqm of the estate of Romero became final and executory. Gregorio and
Teresa’s families liver with Macaria until her death. Later on, Domingo, Angel and Felipe and Susan who
was the widow of deceased Felimon filed a complaint against Gregorio and niece Sylvanna Vergara for
judicial partition of the property.

Gregorio however established that 1/2 of the property was verbally sold to them due to their kindness in
caring for Macaria before her death and that Domingo sold and assigned to the Sps Gregorio his 1/6 share
in the remaining 1/2 portion of the property. The RTC late on said that the remaining 5/6 portion of the
property may still be subject of partition among the heirs.

ISSUE: . THE COURT OF APPEALS (SECOND DIVISION) ERRED IN ITS FINDING THAT THE
RECEPTION OF PAROL EVIDENCE TO THE EFFECT THAT RESPONDENT DOMINGO AVERIA
HAD ALREADY SOLD HIS ONE SIXTH (1/6) SHARE IN THE SUBJECT PROPERTY IN FAVOR OF
PETITIONER GREGORIO AVERIA IS NOT IN ACCORDANCE WITH LAW

HELD:
Indeed, except for the testimony of petitioner Gregorio bearing on the verbal sale to him by Macaria of
the property, the testimonies of petitioners' witnesses Sylvanna Vergara Clutario and Flora Lazaro Rivera
bearing on the same matter were not objected to by respondents. Just as the testimonies of Gregorio, Jr.
and Veronica Bautista bearing on the receipt by respondent Domingo on July 23, 1983 from Gregorio's
wife of P5,000.00 representing partial payment of the P10,000.00 valuation of his (Domingo's) 1/6 share

 in the property, and of the testimony of Felimon Dagondon bearing on the receipt by Domingo of
P5,000.00 from Gregorio were not objected to. Following Article 1405 of the Civil Code,17 the contracts
which infringed the Statute of Frauds were ratified by the failure to object to the presentation of parol
evidence, hence, enforceable.

CABALES CASE

FACTS
Rufino died and left a parcel of land to his surviving wife and children. One of which is Rito who is the
petitioner in this case. Brothers and co-owners Bonifacio, Albino and Alberto sold the subject property to
Dr. Corrompido for P2,000 with right to repurchase within 8 years. The three siblings divided the
proceeds of the sale among themselves. Within the 8 year period, Bonifacio and Albino. The document of
sale with pacto de retro was released after Saturnina paid for the share of her deceased son, Alberto,
including his vale of P300. Later on, Saturnina and her 4 children sold the subject parcel of land. The
deed contain a provision wherein the share of Alberto and Rito in the sale will be held by the vendee and
to be paid and delivered only to them upon reaching the age of 21. When Alberto died, Nelson was the
one who got his share amounting P176.34 because Saturnina paid Dr. Corrompido and the share of
Alberto in the redemption of the sale with pacto de retro. When Nelson learned about the sale through
Rito, they filed for redemption of the subject land and damages. They contended that they ciukd have not
sold the property when they were minors.

ISSUE: WON the contract of sale is unenforceable

HELD: The legal guardian only has the plenary power of administration of the minor's property. It does
not include the power of alienation which needs judicial authority. Thus, when Saturnina, as legal
guardian of petitioner Rito, sold the latter's pro-indiviso share in subject land, she did not have the legal
authority to do so. ccordingly, the contract of sale as to the pro-indiviso share of petitioner Rito was
unenforceable. However, when he acknowledged receipt of the proceeds of the sale on July 24, 1986,
petitioner Rito effectively ratified it. This act of ratification rendered the sale valid and binding as to him.

With respect to petitioner Nelson, on the other hand, the contract of sale was void. He was a minor at the
time of the sale. Saturnina or any and all the other co-owners were not his legal guardians with judicial
authority to alienate or encumber his property. It was his mother who was his legal guardian and, if duly
authorized by the courts, could validly sell his undivided share to the property. She did not. Necessarily,
when Saturnina and the others sold the subject property in its entirety to respondents-spouses, they only
sold and transferred title to their pro-indiviso shares and not that part which pertained to petitioner Nelson
and his mother. Consequently, petitioner Nelson and his mother retained ownership over their undivided
share of subject property.

DE OUANO CASE

FACTS
In 1949, the National Airport Corporation (NAC), MCIAA’s predecessor agency pursued a program to
expand the Lahug Airport in Cebu City. As an assurance from the government, there is a promise of
reconveyance or repurchase of said property so long as Lahug ceases its operation or transfer its operation
to Mactan – Cebu Airport. Some owners refused to sell, and that the Civil Aeronautics Administration
filed a complaint for the expropriation of said properties for the expansion of the Lahug Airport. The trial
court then declared said properties to be used upon the expansion of said projects and order for just
compensation to the land owners, at the same time directed the latter to transfer certificate or ownership
or title in the name of the plaintiff. At the end of 1991, Lahug Airport completely ceased its operation

 while the Mactan- Cebu airport opened to accommodate incoming and outgoing commercial flights. This
then prompted the land owners to demand for the reconveynace of said properties being expropriated by
the trial court under the power of eminent domain. Hence these two consolidated cases arise.

In G.R. No. 168812 MCIAA is hereby ordered by court to reconvey said properties to the land owners
plus attorney’s fee and cost of suit, while in G.R. No. 168770, the RTC ruled in favor of the petitioners
Oaunos and against the MCIAA for the reconveynace of their properties but was appealed by the latter
and the earlier decision was reversed, the case went up to the CA but the CA affirmed the reversed
decision of the RTC.

ISSUE: Whether or not the testimonials of the petitioners proving the promises, assurances and
representations by the airport officials and lawyers are inadmissible under the Statue of Frauds.

HELD: Under the rule on the Statute of Frauds, as expressed in Article 1403 of the Civil Code, a contract
for the sale or acquisition of real property shall be unenforceable unless the same or some note of the
contract be in writing and subscribed by the party charged. Subject to defined exceptions, evidence of the
agreement cannot be received without the writing, or secondary evidence of its contents. MCIAA’s
invocation of the Statute of Frauds is misplaced primarily because the statute applies only to executory
and not to completed, executed, or partially consummated contracts. Petition is GRANTED.

SHOEMAKER CASE

FACTS:
Defendant company, La tondena, Inc. entered into a written contract of lease of services with plaintiff
Harry Ives Shoemaker for a period of 5 years, with a compensation consisting of 8% of the net earnings
of defendant. That during each year that the contract was in force, plaintiff would receive monthly during
the period of the contract of the sum of Php 1,500.00 or Php 18,000.00 per annum as minimum
compensation if 8% of the net earnings of the aforementioned alleged business would not reach the
amount.

The defendant company alleged that there were changes in the contract in which both the parties agreed
upon. Plaintiff filed a complaint against defendant company. The defendant interposed a demurrer based
on the ground that the facts therein alleged do not constitute a cause of action, since it is not averred that
the alleged mutual agreement modifying the contract of lease of services, has been put in writing, whereas
it states that its terms and conditions may only be modified upon the written consent of both parties.

ISSUE: Whether or not the ocurt a quo ered in sustaining the demurrer interposed by the defendant
company to the second amended complaint filed by plaintiff, on the ground that the facts alleged therein
do not constitute a couse of action.

RULING: When in an oral contract which by its terms, is not to be performed within 1 year from the
execution thereof, one of the contracting parties has complied within the year with the obligations
imposed on him said contract, the other party cannot avoid the fulfillment of what is incumbent on him
under the same contract by invoking the statute of frauds because the latter aims to prevent and not to
protect fraud.

 HEIRS OF ALIDO CASE

FACTS
Alido registered a parcel of land under her name. In 1978, Campano was able to take possession of the
land and the owner's duplicate of OCT No. F-16558, and paid its realty taxes. Allegedly, Alido had sold
the property to her. When Alido died, her heirs executed a Deed of Adjudication of the property and
sought to register the property in their names however Campano refused to surrender the owner’s
duplicate title.

ISSUE WHETHER THERE WAS A VALID SALE OF REAL PROPERTY BETWEEN ALIDO AND
RESPONDENT

HELD: Contracts which have all essential requisites for their validity are obligatory regardless of the
form they are entered into, except when the law requires that a contract be in some form to be valid or
enforceable.[14] Article 1358 of the Civil Code provides that the following must appear in a public
instrument:

Acts and contracts which have for their object the creation, transmission,
(1) modi cation or extinguishment of real rights over immovable property; sales of real
property or of an interest therein are governed by articles 1403, No. 2, and 1405;
The cession, repudiation or renunciation of hereditary rights or of those of the
(2)
conjugal partnership of gains;
The power to administer property, or any other power which has for its object an act
(3) appearing or which should appear in a public document, or should prejudice a third
person;
The cession of actions or rights proceeding from an act appearing in a public
(4)
document. (Emphasis supplied)

Article 1403(2) of the Civil Code, or otherwise known as the Statute of Frauds, requires that covered
transactions must be reduced in writing, otherwise the same would be unenforceable by action. In other
words, sale of real property must be evidenced by a written document as an oral sale of immovable
property is unenforceable.

Nevertheless, it is erroneous to conclude that contracts of sale of real property without its term being
reduced in writing are void or invalid

ORDUNA CASE

FACTS

Gabriel Sr. sold the subject lot to petitioner Antonita Ordua, but no formal deed was executed to
document the sale. The contract price was apparently payable in installments as Antonita remitted from
time to time and Gabriel Sr. accepted partial payments. One of the Orduas would later testify that Gabriel
Sr. agreed to execute a final deed of sale upon full payment of the purchase price. Antonita and her sons,
Dennis and Anthony Ordua, were already occupying the subject lot on the basis of some arrangement
undisclosed in the records and even constructed their house thereon. They also paid real property taxes for

fi

 the house and declared it for tax purposes, as evidenced by Tax Declaration in which they place the
assessed value of the structure at PhP 20,090.

When Gabriel Sr, died his son Gabriel Jr secured the title over the subject lot and continued accepting
payments from the petitioners. Later on, Gabriel Jr wrote Antonita authorizing her to fence off the said lot
and to construct a road in the adjacent lot. He also acknowledged several receipt of payments. Despite all
of the payments made, Gabriel Jr. still sell it to Bernard without the knowledge of the petitioners.

ISSUE: Whether or not the sale of the subject lot by Gabriel Sr. to Antonita is unenforceable under the
Statute of Frauds

HELD: The Court disagreed to the decision of RTC and CA ruling that the contract is unenforceable for
non-compliance with Statute of Fraud. The Statute of Frauds, in context, provides that a contract for the
sale of real property or of an interest therein shall be unenforceable unless the sale or some note or
memorandum thereof is in writing and subscribed by the party or his agent. However, where the verbal
contract of sale has been partially executed through the partial payments made by one party duly received
by the vendor, as in the present case, the contract is taken out of the scope of the Statute. the Statute
simply provides the method by which the contracts enumerated in Art. 1403 (2) may be proved but does
not declare them invalid because they are not reduced to writing. In fine, the form required under the
Statute is for convenience or evidentiary purposes only. A contract that infringes the Statute of Frauds is
ratified by the acceptance of benefits under the contract. Evidently, Gabriel, Jr., as his father earlier, had
benefited from the partial payments made by the petitioners. Thus, neither Gabriel Jr. nor the other
respondents-successive purchasers of subject lots-could plausibly set up the Statute of Frauds to thwart
petitioners' efforts towards establishing their lawful right over the subject lot and removing any cloud in
their title. As it were, petitioners need only to pay the outstanding balance of the purchase price and that
would complete the execution of the oral sale.

ROSENCAR CASE

FACTS:
Plaintiffs and plaintiffs-intervenors averred that they are the lessess since 1971 of a two- story residential
apartment and owned by spouses Faustino and Cresencia Tiangco. The lease was nocovered by any
contract. The lesses were renting the premises then for Php 150.00 a month and were allegedly verbally
granted by the lessors the pre-emptive right to purchase the property if ever they decide to sell the same.
Upon the death of the spouses Tiangco, the management of the property was adjudicated to their heirs
who were represented by Eufrocina deLeon.
The lessees received a letter from de Leon advising them that the heirs of the late spouses have already
sold the property to Resencor.
The lessees filed an action f\before th RTC praying for the following: a) rescission of the Deed of
Absolute Sale between de Leon and Rocencor, b) the defendants Rosencor/Rene Joaquin be ordered to
reconvey the property to de Leon, c) de Leon be ordered to reimburse the plaintiffs for the repair of the
property or apply the said amount as part of the purchase of the property.
The RTC dismissed the complaint while the Ca reversed the decision of the RTC.

ISSUE:
Whether or not a right of first refusal is indeed covered by the provisions of the NCC on the Statute of
Frauds.

RULING:

A right of first refusal is not among those listed as unenforceable under the statute of frauds. Furthermore,
the application of Article 1403, par. 2(e) of the NCC, presupposes the existence of a perfected, albeit
unwritten, contract of sale. A right of first refusal, such as the one involved in the instant case, is not by

 any means a perfected contract of sale of real property. At best, it is a contractual grant, not of the sale of
the real property involed byt of the right of first refusal over the property sought to be sold. It is thus
evident that the statute of frauds does not contemplate cases involving a right of right of first refusal. As
such, a right of first refusal need not be written to be enforceable and may be proven by oral evidence.

FIRME CASE

FACTS

Petitioner Spouses Firme are the registered owner of a parcel of land. Bukal Enterprises filed a complaint
for specific performance and damages with the trial court, alleging that the Spouses Firme reneged on
their agreement to sell the property. The complaint asked the trial court to order the Spouses Firme to
execute the deed of sale and to delover the title of the property to Bukal Enterpises upon payment of the
agreed purchase price. The RTC rendered its decision against Bukal. The CA reversed and set aside the
decision of the RTC.

ISSUE:
Whether or not Statute of Frauds is applicable.

RULING:
The CA held that partial performance of the contract of sale takes the oral contract out of the scope of
Statute of Frauds. This conclusion arose from the appellate court’s erroneous finding that there was a
perfected contract of sale. The records shoe that there was no perfected contract of sale. There is therefore
no basis for the application of the Stature of Frauds. The application of the Statute of Frauds presupposes
the existence of a perfected contract.

FULLIDO CASE

Facts
Grili decided to build a residential house where he and Fullido would stay whenever he would be
vacationing in the country. He financially assisted Fullido in procuring a lot from her parents which was
registered in her name. They constructed a house funded by Grili and upon completion, they maintained a
common-law relationship and lived there whenever Grili was in the Philippines. They executed a contract
of lease, a MOA and a SPA to define their respective rights over the house and lot. The lease contract
provided that Grili would rent the lot under the name of Fullido for 50 years and to be automatically
renewed in the amount of P10,000 for the whole term and that Fullido is prohibted from selling, donating,
or encumbering the said lot without the written consent of Grilli.

The MOA stated that Grili paid for the purchase and construction of the house and lot and that ownership
of the house and lot was to reside with him; and that should the common-law relationship be terminated,
Fullido could only sell the house and lot to whomever Grilli so desired.

Lastly, the SPA allowed Grilli to administer, manage, and transfer the house and lot on behalf of Fullido.

Their relationship was harmonious, but it turned sour after 16 years of living together. Both charged each
other with infidelity. They could not agree who should leave the common property, and Grilli sent formal
letters to Fullido demanding that she vacate the property, but these were unheeded.

ISSUE: whether a contract could be declared void in a summary action of unlawful detainer.

 HELD: A void contract cannot be the source of any right; it cannot be utilized in an ejectment suit. A void
or inexistent contract may be defined as one which lacks, absolutely either in fact or in law, one or some
of the elements which are essential for its validity.[20] It is one which has no force and effect from the
very beginning, as if it had never been entered into; it produces no effect whatsoever either against or in
favor of anyone.[21] Quod nullum est nullum producit effectum. Article 1409 of the New Civil Code
explicitly states that void contracts also cannot be ratified; neither can the right to set up the defense of
illegality be waived. Accordingly, there is no need for an action to set aside a void or inexistent contract

Clearly, contracts may be declared void even in a summary action for unlawful detainer because,
precisely, void contracts do not produce legal effect and cannot be the source of any rights. To emphasize,
void contracts may not be invoked as a valid action or defense in any court proceeding, including an
ejectment suit. The next issue that must be resolved by the Court is whether the assailed lease contract
and MOA are null and void.

Francisco Case

Facts

Petitioner bought 2 parcels of land from Eligio Herrera Sr. The children of Eligio, Sr. conteneded that the
contract price for the two parcels of land was grossly inadequate so they tried to negotiate with petitioner.
However petitioner refused. The children of Herrera filed a complaint for annulment of sale. The RTC
rendered its decision in favor of the children that Ca affirmed the decision of RTC.

ISSUE: Whether or not said contract is void.

RULING: In the present case, it was established that the vendor Eligio, Sr. entered into an agreement with
petitioner, but that the former’s capacity to consent was vitiated by senile dementia. Hence, we must rule
that the assailed contracts are not void or inexistent per se; rather, these are contracts that are valid and
binding unless annulled through a proper action filed in court seasonably. An annullable contract may be
rendered perfectly valid by ratification, which can be express or implied. Implied ratification may take the
form of accepting and retaining the benefits of a contract. As found by the trial court and the Court of
Appeals, upon learning of the sale, respondent negotiated for the increase of the purchase price while
receiving the installment payments. It was only when respondent failed to convince petitioner to increase
the price that the former instituted the complaint for reconveyance of the properties. Clearly, respondent
was agreeable to the contracts, only he wanted to get more. Further, there is no showing that respondent
returned the payments or made an offer to do so. This bolsters the view that indeed there was ratification.
One cannot negotiate for an increase in the price in one breath and in the same breath contend that the
contract of sale is void.

Agan v. Philippine International Air Terminals Co., Inc., G.R. No. 155001, May 5, 2003

Facts:
Asia’s Emerging Dragon Corp. (AEDC) submitted an unsolicited proposal to the Philippine Government
through the Department of Transportation and Communication (DOTC) and Manila International Airport
Authority (MIAA) for the construction and development of the NAIA IPT III under a build-operate-and-
transfer arrangement pursuant to R.A. No. 6957, as amended by R.A. No. 7718 (BOT Law).

The DOTC issued the notice of award for the NAIA IPT III project to the Paircargo Consortium, which
later organized into herein respondent PIATCO.
Various petitions were filed before this Court to annul the 1997 Concession Agreement, the ARCA and
the Supplements and to prohibit the public respondents DOTC and MIAA from implementing them.

In a decision dated May 5, 2003, this Court granted the said petitions and declared the 1997 Concession
Agreement, the ARCA and the Supplements null and void.






 Respondent PIATCO, respondent-Congressmen and respondents-intervenors now seek the reversal of the
May 5, 2003 decision and pray that the petitions be dismissed.

ISSUE: Whether or not the contract is valid.

RULING:
Section 19, Article XII of the 1987 Constitution mandates that the State prohibit or regulate monopolies
when public interest so requires. Monopolies are not per se prohibited. Given its susceptibility to abuse,
however, the State has the bounden duty to regulate monopolies to protect public interest. Such regulation
may be called for, especially in sensitive areas such as the operation of the country’s premier international
airport, considering the public interest at stake. By virtue of the PIATCO contracts, NAIA IPT III would
be the only international passenger airport operating in the Island of Luzon, with the exception of those
already operating in Subic Bay Freeport Special Economic Zone ("SBFSEZ"), Clark Special Economic
Zone ("CSEZ") and in Laoag City. Undeniably, the contracts would create a monopoly in the operation of
an international commercial passenger airport at the NAIA in favor of PIATCO.

Gonzalo v. Tarnate, G.R. No. 160600, Jan. 15, 2014

FACTS

After the Department of Public Works and Highways (DPWH) had awarded on July 22, 1997 the contract
for the improvement of the SadsadanMaba- ay Section of the Mountain Province-Benguet Road in the
total amount of ~7,014,963 .33 to his company, Gonzalo Construction, 1 petitioner Domingo Gonzalo
(Gonzalo) subcontracted to respondent John Tarnate, Jr. (Tarnate) on October 15, 1997, the supply of
materials and labor for the project under the latter's business known as JNT Aggregates. Their agreement
stipulated, among others, that Tarnate would pay to Gonzalo eight percent and four percent of the contract
price, respectively, upon Tarnate's first and second billing in the project.

Gonzalo assigned to Tarnate an amount equivalent to 10% of the total collection from the DPWH project.
The 10% represents the rent for the equipment that had been utilized for the project. In the deed of
assignment, Gonzalo further authorized Tarnate to use the official receipt of Gonzalo Construction in the
processing of the documents relative to the collection of the 10% retention fee and in encashing the check
to be issued by the DPWH for that purpose. During the processing of the documents for the 10% retention
fee, Gonzalo unilaterally rescinded the deed of assignment. The disbursement voucher for the 10%
retention fee was issued and released to Gonzalo. Tarnate demanded the payment of the retention fee from
Gonzalo, but to no avail. Thus, he brought this suit.

Issue: WON the deed of assignment was void.

Held: According to Article 1412 (1) of the Civil Code, the guilty parties to an illegal contract cannot
recover from one another and are not entitled to an affirmative relief because they are in pari delicto or in
equal fault. The doctrine of in pari delicto is a universal doctrine that holds that no action arises, in equity
or at law, from an illegal contract; no suit can be maintained for its specific performance, or to recover the
property agreed to be sold or delivered, or the money agreed to be paid, or damages for its violation; and
where the parties are in pari delicto, no affirmative relief of any kind will be given to one against the
other. Nonetheless, the application of the doctrine of in pari delicto is not always rigid. An accepted
exception arises when its application contravenes well-established public policy. In this jurisdiction,
public policy has been defined as “that principle of the law which holds that no subject or citizen can
lawfully do that which has a tendency to be injurious to the public or against the public good

Department of Public Works and Highways v. Quiwa G.R. No. 183444. Feb. 8, 2012

Facts

 In 1992, a number of contractors, including herein respondents, were engaged by the DPWH through its
Project Manager, Philip F.Mez, for the aforesaid services pursuant to an emergency project under the
Mount Pinatubo Rehabilitation Project.Respondents claimed that they had accomplished works on
the Sacobia-Bamban-Parua River Control Project pursuant to this emergency projectunder two
construction agreements with the DPWH, his construction company, the R.E.Q. Construction.
Initially, R.E.Q. Construction filed its money claim with the DPWH, which referred the matter to the
Commission on Audit.The COA returned the claims to the DPWH with the information that the latter had
already been given the funds and the authority to disburse them. When respondent Quiwa filed his claims
with the DPWH, it failed to act on these, resulting in the withholding of the payment due him, despite the
favorable report and Certification of Completion. DPWH mainly argued that there was no valid contract
between it and respondents.It claimed that there was no certification of the availability of funds issued by
the DPWH Chief Accountant or by the head of its accounting unit as required by Executive Order No.
292, or the Administrative Code of 1987.

Issue: WON the contracts were void for not complying with Sections 85 and 86 of PD. 1445

Held: It has been settled in several cases that payment for services done on account of the government,
but based on a void contract, cannot be avoided. Those sections require an appropriation for the contracts
and a certification by the chief accountant of the agency or by the head of its accounting unit as to the
availability of funds. It was, however, undisputed that there was no certification from the chief accountant
of DPWH regarding the said expenditure.In addition, the project manager has a limited authority to
approve contracts in an amount not exceeding P1 million.Notwithstanding these irregularities, where
there was no appropriation and where the contracts were considered void due to technical reasons, the
government is bound to satisfy claims against it.

De Belen Vda. de Cabalu v. Tabu, G.R. No. 188417. Sept. 24, 2012

FACTS
Faustina died without any children. A non-probated holographic will states to assign and distribute her
property to her nephews and nieces. Domingo, the son of the deceased her Benjamin, allegedly executed a
Deed of Sale of Undivided Parcel of Land disposing 9,000 sqm share of the land to Laureano Cabalu. A
Deed of Extra judicial succession with Partition was imparted to Domingo which 4,500sqm of which was
sold to his nephew, Tabamo. The remaining 4,500 were titled under his name. Two months after Domingo
died, he purportedly executed of Deed of Absolute Sale in favor of Tabu. The resultant transfer of title
was registered which was then subsequently divided into two (one for tabu and one for his wife). Dolores
Tabu and the heirs of Domingo filed an unlawful detainer action against Meliton Cabalu and others. The
heirs claimed that the defendants were merely allowed to occupy the subject lot by their late father,
Domingo, but, when asked to vacate the property, they refused to do so. The case was ruled in favor of
Domingo's heirs and a writ of execution was subsequently issued.

ISSUE: WON the Deed of Absolute Sales were null and void

HELD: It has been held that a contract entered into upon future inheritance is void. Under Article 1347 of
the Civil Code, "No contract may be entered into upon future inheritance except in cases expressly
authorized by law." Paragraph 2 of Article 1347, characterizes a contract entered into upon future
inheritance as void. The law applies when the following requisites concur: (i) the succession has not yet
been opened; (ii) the object of the contract forms part of the inheritance; and (ii) the promisor has, with
respect to the object, an expectancy of a right which is purely hereditary in nature. In this case, at the time
the deed was executed in 1975, Faustina's will was not yet probated; the object of the contract, the 9,000
square meter property, still formed part of the inheritance of his father from the estate of Faustina; and
Domingo had a mere inchoate hereditary right therein. Domingo became the owner of the said property
only on August 1, 1994, the time of execution of the Deed of Extrajudicial Succession with Partition by
the heirs of Faustina, when the 9,000 square meter lot was adjudicated to him.



 Also, deed of sale executed after death of contracting party is void for being fictitious. Regarding the deed
of sale covering the remaining 4,500 square meters of the property executed in favor of Renato Tabu, it is
evidently null and void. The document itself, the Deed of Absolute Sale, dated October 8, 1996, readily
shows that it was executed on August 4, 1996 more than two months after the death of Domingo.
Contracting parties must be juristic entities at the time of the consummation of the contract. Stated
otherwise, to form a valid and legal agreement it is necessary that there be a party capable of contracting
and a party capable of being contracted with. Hence, if any one party to a supposed contract was already
dead at the time of its execution, such contract is undoubtedly simulated and false and, therefore, null and
void by reason of its having been made after the death of the party who appears as one of the contracting
parties therein. The death of a person terminates contractual capacity.

The contract being null and void, the sale to Tabu produced no legal effects and transmitted no rights.

La Buga’al-Blaan v. Ramos, 1 December 2004

Facts: The Petition for Prohibition and Mandamus before the Court challenges the constitutionality of (1)
Republic Act 7942 (The Philippine Mining Act of 1995) (2) its Implementing Rules and Regulations
(DENR Administrative Order [DAO] 96-40); and (3) the Financial and Technical Assistance Agreement
(FTAA) dated 30 March 1995, executed by the government with Western Mining Corporation
(Philippines), Inc. (WMCP).

In a previous Decision, (decided January 27, 2004) the Court en banc declared as unconstitutional certain
provisions of RA 7942, DAO 96-40, as well as of the entire FTAA executed between the government and
WMCP after concluding that FTAAs are essentially service contracts which, though permitted under the
1973 Constitution, are prohibited under the 1987 Constitution.

The Decision struck down the FTAA for having been executed in violation of Section 2 of Article XII of
the 1987 Constitution. Service contracts are prohibited because they effectively vest on foreign entities
the full management and control over the exploitation of our natural resources, in violation of the
principle of the sovereignty of the state over its own natural resources.

Subsequently, DENR Secretary Victor Ramos filed separate Motions for Reconsideration.

Issue: WON FTAA is void and not transferable.

Held: FTAA is not void, thus transferable. The FTAA does not vest in the foreign corporation full control
and supervision over the exploration, development and utilization of mineral resources, to the exclusion
of the government. The government does not have to micro-manage the mining operations and dip its
hands into the day-to-day management of the enterprise in order to be considered as having overall
control and direction. Besides, for practical and pragmatic reasons, there is a need for government
agencies to delegate certain aspects of the management work to the contractor.

Jaworski v. PAGCOR, 14 January 2004

Facts
Issue: Does Presidential Decree No. 1869 authorize PAGCOR to contract any part of its franchise to
SAGE by authorizing the latter to operate Internet gambling?

Held: While PAGCOR is allowed under its charter to enter into operator's and/or management contracts, it
is not allowed under the same charter to relinquish or share its franchise, much less grant a veritable
franchise to another entity such as SAGE. PAGCOR can not delegate its power in view of the legal
principle of delegata potestas delegare non potest, inasmuch as there is nothing in the charter to show that

 it has been expressly authorized to do so. In Lim v. Pacquing,[10] the Court clarified that "since ADC has
no franchise from Congress to operate the jai-alai, it may not so operate even if it has a license or permit
from the City Mayor to operate the jai-alai in the City of Manila." By the same token, SAGE has to obtain
a separate legislative franchise and not "ride on" PAGCOR's franchise if it were to legally operate on-line
Internet gambling. The Grant of Authority and Agreement to Operate Sports Betting and Internet Gaming
executed by PAGCOR in favor of SAGE is declared NULL and VOID.

Hadja Fatima v. Hadji Abubacar, 2 August 2010

FACTS
Maruhom was awarded a market stall which he orally sold to Fatima wherein a Deed of Assignment was
executed to confirm the sale and that petitioners leased the stall to respondent for P250.00 renewable
every year at the option of the petitioners. The rent increased to P300 and P400 wherein the respondents
religiously paif. However, they simply stopped paying rentals. He promised to pay but he failed. The
demands of the petiitoners fell on deaf ears. respondent admitted selling the subject stall for P20,000.00 to
petitioners, but averred that the sale was with right to repurchase; and on condition that he would remain
in possession of the subject stall as long as he wants. He signed the Deed of Assignment on petitioners'
assurance that the conditions they earlier agreed upon were contained in the deed. Being illiterate, he just
relied on petitioners' assurances. Respondent denied that he refused to pay the agreed monthly rentals;
alleging that petitioners were the ones who refused to receive the rental payments and instead demanded
payment of P150,000.00. The Deed of Assignment, he added, failed to express the true intent and
agreement of the parties; and his signature thereon was procured by fraud, deceit, and misrepresentation;
hence, void ab initio. Respondent further averred that the complaint failed to state a cause of action, as
petitioners failed to comply with the provisions of Presidential Decree (P.D.) No. 1508, or the
Katarungang Pambarangay Law, and the Local Government Code of 1991.

ISSUE: the CA erred in declaring that the transaction they had with respondent was a loan with mortgage;
and invalidating the Deed of Assignment.

HELD: Records show that the stall is owned by the City Government of Marawi. Respondent, as a mere
grantee of the subject stall, was prohibited from selling, donating, or otherwise alienating the same
without the consent of the City Government; violation of the condition shall automatically render the sale,
donation, or alienation null and void.[18] Thus, we sustain the CA in declaring the Deed of Assignment
null and void, but we cannot abide by the CA's final disposition.

Respondent was well aware that as mere grantee of the subject stall, he cannot sell it without the consent
of the City Government of Marawi. Yet, he sold the same to petitioners. The records, however, are bereft
of any allegation and proof that petitioners had actual knowledge of the status of respondent's ownership
of the subject stall. Petitioners can, therefore, recover the amount they had given under the contract.

INFOTECH v COMELEC

FACTS

Congress passed Republic Act 8046,5 which authorized Comelec to conduct a nationwide demonstration
of a computerized election system and allowed the poll body to pilot-test the system in the March 1996
elections in the Autonomous Region in Muslim Mindanao (ARMM). On December 22, 1997, Congress
enacted Republic Act 84366 authorizing Comelec to use an automated election system (AES) for the
process of voting, counting votes and canvassing/ consolidating the results of the national and local
elections. It also mandated the poll body to acquire automated counting machines (ACMs), computer
equipment, devices and materials; and to adopt new electoral forms and printing materials.

ISSUE:



 Whether the Commission on Elections, the agency vested with the exclusive constitutional mandate to
oversee elections, gravely abused its discretion when, in the exercise of its administrative functions, it
awarded to MPC the contract for the second phase of the comprehensive Automated Election System.

RULING:
In the case of a consortium or joint venture desirous of participating in the bidding, it goes without saying
that the Eligibility Envelope would necessarily have to include a copy of the joint venture agreement, the
consortium agreement or memorandum of agreement -- or a business plan or some other instrument of
similar import -- establishing the due existence, composition and scope of such aggrupation. Otherwise,
how would Comelec know who it was dealing with, and whether these parties are qualified and capable of
delivering the products and services being offered for bidding.

In the instant case, no such instrument was submitted to Comelec during the bidding process. This fact
can be conclusively ascertained by scrutinizing the two-inch thick "Eligibility Requirements" file
submitted by Comelec last October 9, 2003, in partial compliance with this Court?s instructions given
during the Oral Argument. This file purports to replicate the eligibility documents originally submitted to
Comelec by MPEI allegedly on behalf of MPC, in connection with the bidding conducted in March 2003.
Included in the file are the incorporation papers and financial statements of the members of the supposed
consortium and certain certificates, licenses and permits issued to them.

Liguez v. CA, Liguez v. CA, G.R. No. L-11240 December 18, 1957

FACTS:
Liguez filed a complaint against the widow and heirs of the late Salvador P. Lopez to recover a parcel of
51.84 hectares of land. Plaintiff averred to be its legal owner, pursuant to a deed of donation of said land,
executed in her favor by the late owner, Salvador P. Lopez. The defense interposed that the donation was
null and void for having an illicit cause or consideration, which was plaintiff's entering into marital
relations with Salvador P. Lopez, a married man; and that the property had been adjudicated to the
appellees as heirs of Lopez by the court.The Court of Appeals held that the deed of donation was
inoperative, and null and void (1) because the husband, Lopez, had no right to donate conjugal property to
the plaintiff appellant; and (2) because the donation was tainted with illegal causa or consideration (illicit
sexual relation), of which donor and donee were participants. Appellant vigorously contends that the
Court of First Instance as well as the Court of Appeals erred in holding the donation void for having an
illicit cause or consideration. It is argued that under Article 1274 of the Civil Code of 1889 (which was
the governing law in 1943, when the donation was executed), "in contracts of pure beneficence the
consideration is the liberality of the donor", and that liberality per se can never be illegal, since it is
neither against law or morals or public policy.

ISSUE: Whether or not the deed of donation made by Lopez in favor of Liguez was valid.

RULING: Under Article 1274, liberality of the donor is deemed causa only in those contracts that are of
"pure" beneficence; that is to say, contracts designed solely and exclusively to procure the welfare of the
beneficiary, without any intent of producing any satisfaction for the donor; contracts, in other words, in
which the idea of self-interest is totally absent on the part of the transferor. Here the fact that the late
Salvador P. Lopez was not moved exclusively by the desire to benefit appellant Conchita Liguez, but also
to secure her cohabiting with him, so that he could gratify his sexual impulses. This is clear from the
confession of Lopez to the witnesses Rodriguez and Ragay that he was in love with appellant, but her
parents would not agree unless he donated the land in question to her. Actually, therefore, the donation
was but one part of an onerous transaction (at least with appellant's parents) that must be viewed in its

 totality. Thus considered, the conveyance was clearly predicated upon an illicit causa. Appellant seeks to
differentiate between the alleged liberality of Lopez, as causa for the donation in her favor, and his desire
for cohabiting with appellant, as motives that impelled him to make the donation, and quotes from
Manresa and the jurisprudence of this Court on the distinction that must be maintained between causa and
motives. It is well to note, however, that Manresa himself, while maintaining the distinction and
upholding the inoperativeness of the motives of the parties to determine the validity of the contract,
expressly excepts from the rule those contracts that are conditioned upon the attainment of the motives of
either party. Appellees, as successors of the late donor, being thus precluded from pleading the defense of
immorality or illegal causa of the donation, the total or partial ineffectiveness of the same must be decided
by different legal principles. In this regard, the Court of Appeals correctly held that Lopez could not
donate the entirety of the property in litigation, to the prejudice of his wife Maria Ngo, because said
property was conjugal in character, and the right of the husband to donate community property is strictly
limited by law. Appellant Conchita Liguez was declared by the Supreme Court entitled to so much of the
donated property as may be found, upon proper liquidation, not to prejudice the share of the widow Maria
Ngo in the conjugal partnership with Salvador P. Lopez or the legitimes of the forced heirs of the latter.

Philippine Banking Corporation v. Lui She, 21 SCRA 52

FACTS
Justina who inherited parcels of land in Manila executed a contract of lease in favor of Wong, covering a
portion already leased to him and another portion of the property. The lease was for 50 years, although the
lessee was give the right to withdraw at anytime from the agreement with a stipulated monthly rental. She
executed another contract giving Wong the option to buy the leased premises for P120,000 payable within
10 years at monthly installment of P1,000. The option was conditioned on his obtaining Philippine
citizenship, which was then pending. His application for naturalization was withdrawn when it was
discovered that he was a resident of Rizal. She executed two other contracts one extending the term to 99
years and the term fixing the term of the option of 50 years. In the two wills, she bade her legatees to
respect the contract she had entered into with Wong, but it appears to have a change of heart in a codicil.
Claiming that the various contracts were made because of her machinations and inducements practiced by
him, she now directed her executor to secure the annulment of the contracts. The complaint alleged that
Wong obtained the contracts through fraud. Wong denied having taken advantage of her trust in order to
secure the execution of the contracts on question. He insisted that the various contracts were freely and
voluntarily entered into by the parties. The lower court declared all the contracts null and void with the
exception of the first, which is the contract of lease.

ISSUE: WON the contracts entered into by the parties are void

Held: The contract is void. The Court held the lease and the rest of the contracts were obtained with the
consent of Justina freely given and voluntarily, hence the claim that the consent was vitiated due to fraud
or machination is bereft of merit. However the contacts are not necessarily valid because the Constitution
provides that aliens are not allowed to own lands in the Philippines. The illicit purpose then becomes the
illegal causa, rendering the contracts void.

It does not follow from what has been said that because the parties are in pari delicto they will be left
where they are, without relief. For one thing, the original parties who were guilty of violation of
fundamental charter have died and have since substituted by their administrators to whom it would e
unjust to impute their guilt. For another thing, Article 1416 of the Civil Code provides an exception to the
pari de licto, that when the agreement is not illegal per se but is merely prohibited, and the prohibition of
the law is designed for the protection of the plaintiff, he may recover what he has paid or delivered.

Vigilar v. Aquino, G.R. No. 180388, January 18, 2011

FACTS

 On 19 June 1992, petitioner Angelito M. Twaño, then Officer-in-Charge (OIC)-District Engineer of the
Department of Public Works and Highways (DPWH) 2nd Engineering District of Pampanga sent an
Invitation to Bid to respondent Arnulfo D. Aquino, the owner of A.D. Aquino Construction and Supplies.
The bidding was for the construction of a dike by bulldozing a part of the Porac River at Barangay
Ascomo-Pulungmasle, Guagua, Pampanga.Subsequently, on 7 July 1992, the project was awarded to
respondent, and a "Contract of Agreement" was thereafter executed between him and concerned
petitioners for the amount of PhP1,873,790.69, to cover the project cost. By 9 July 1992, the project was
duly completed by respondent, who was then issued a Certificate of Project Completion dated 16 July
1992. Respondent Aquino, however, claimed that PhP1,262,696.20 was still due him, but petitioners
refused to pay the amount. He thus filed a Complaint for the collection of sum of money with damages
before the Regional Trial Court of Guagua, Pampanga. Petitioners avers that the complaint was a suit
against the state; that respondent failed to exhaust administrative remedies; and that the "Contract of
Agreement" covering the project was void for violating Presidential Decree No. 1445, absent the proper
appropriation and the Certificate of Availability of Funds. On 28 November 2003, the lower court ruled in
favor of respondent. On appeal, the CA reversed and set aside the decision of the lower court ,disposing
that the "CONTRACT AGREEMENT" entered into between the plaintiff-appellee’s construction
company, which he represented, and the government, through the Department of Public Works and
Highway (DPWH) – Pampanga 2nd Engineering District, is declared null and void ab initio.

ISSUE: WON the contract agreement is valid, thus making respondent liable

HELD: YES. Specifically, C.V. Canchela & Associates is similar to the case at bar, in that the contracts
involved in both cases failed to comply with the relevant provisions of Presidential Decree No. 1445 and
the Revised Administrative Code of 1987. Nevertheless, "the illegality of the subject Agreements
proceeds, it bears emphasis, from an express declaration or prohibition by law, not from any intrinsic
illegality. As such, the Agreements are not illegal per se, and the party claiming there under may recover
what had been paid or delivered. The government project involved in this case, the construction of a dike,
was completed way back on 9 July 1992. For almost two decades, the public and the government
benefitted from the work done by respondent. Petitioners cannot escape the obligation to compensate
respondent for services rendered and work done by invoking the state’s immunity from suit. This Court
has long established that the doctrine of governmental immunity from suit cannot serve as an instrument
for perpetrating an injustice to a citizen. Justice and equity sternly demand that the State's cloak of
invincibility against suit be shred in this particular instance, and that petitioners-contractors be duly
compensated — on the basis of quantum meruit — for construction done on the public works housing
project.

EPG Construction v. Vigilar, G.R. No. 131544. March 16, 2001

FACTS: In 1983, the Ministry of Human Settlement entered into a Memorandum of Agreement (MOA)
with the Ministry of Public Works and Highways, where the latter undertook to develop a housing project
by the ministry and on the site construct thereon 145 housing units. By virtue of the MOA, the Ministry of
Public Works and Highways forged individual contracts with herein petitioners EPG Construction Co.,
Ciper Electrical and Engineering, Septa Construction Co., Phil. Plumbing Co., Home Construction Inc.,
World Builders Inc., Glass World Inc., Performance Builders Development Co. and De Leon Araneta
Construction Co., for the construction of the housing units. Under the contracts, the scope of construction
and funding therefor covered only around “2/3 of each housing unit.” After complying with the terms of
said contracts, and by reason of the verbal request and assurance of then DPWH Undersecretary Aber
Canlas that additional funds would be available and forthcoming, petitioners agreed to undertake and
perform “additional constructions” for the completion of the housing units, despite the absence of
appropriations and written contracts to cover subsequent expenses for the “additional constructions.”
Petitioners received payment for what was originally stipulated. However, petitioners demanded payment
for the unpaid balance of P5,918,315.63 constituting payment for the additional constructions which
petitioners argued formed an implied contract. They claimed that payment should be based on the

 principle of quantum meruit. DPWH Secretary Gregorio Vigilar denied the subject money claims
prompting herein petitioners to file before the Regional Trial Court of Quezon City, Branch 226, a
Petition for Mandamus praying for payment.

ISSUE: Are petitioners entitled to payment?

RULING: Although the Court agreed with respondent’s postulation that the “implied contracts”, which
covered the additional constructions, are void, in view of violation of applicable laws, auditing rules and
lack of legal requirements, it nonetheless find the instant petition laden with merit and uphold, in the
interest of substantial justice, petitioners-contractors’ right to be compensated for the "additional
constructions" on the public works housing project, applying the principle of quantum meruit. To begin
with, petitioners-contractors assented and agreed to undertake additional constructions for the completion
of the housing units, believing in good faith and in the interest of the government and, in effect, the public
in general, that appropriations to cover the additional constructions and completion of the public works
housing project would be available and forthcoming. On this particular score, the records reveal that the
verbal request and assurance of then DPWH Undersecretary Canlas led petitioners-contractors to
undertake the completion of the government housing project, despite the absence of covering
appropriations, written contracts, and certification of availability of funds, as mandated by law and
pertinent auditing rules and issuances. To put it differently, the “implied contracts,” declared void in this
case, covered only the completion and final phase of construction of the housing units, which structures,
concededly, were already existing, albeit not yet finished in their entirety at the time the “implied
contracts” were entered into between the government and the contractors.

Amsay v. Board of Directors, G.R No. L- 13667 April 29, 1960

FACTS
Ansay et al. filed against NDC a complaint praying for a 20% Christmas bonus for theyears 1954 and
1955. The trial court dismissed the complaint ratiocinating that a bonusis an act of liberality and the court
takes it that it is not within its judicial powers to command respondents to be liberal and that Ansay et al.
admitted that NDC is not under legal duty to give such bonus and that the court has no power to compel a
party to comply with a moral obligation (Art. 142, New Civil Code.). Ansay et al. appealed and argued
that there exists a cause of action in their complaint because their claim rests on moral grounds or what in
brief is defined by law as a natural obligation.

ISSUE: Whether or not it is the obligation of NDC to give Christmas bonus to appellants?
HELD: NO. Article 1423 of the New Civil Code classifies obligations into civil or natural. “Civil
obligations are a right of action to compel their performance. Natural obligations, not being based on
positive law but on equity and natural law, do not grant a right of action to enforce their
performance, but after voluntary fulfillment by the obligor, they authorize the retention of what
has been delivered or rendered by reason thereof”. It is thus readily seen that an element of natural
obligation before it can be cognizable by the court is voluntary fulfillment by the obligor. Certainly
retention can be ordered butonly after there has been voluntary performance. But here there has been no
voluntary performance. In fact, the court cannot order the performance.

Manila Surety v Lim, GR No. L-9343 December 29, 1959

On February 26, 1946, in civil case No. 32 of the Justice of the Peace Court of Pasay,Valentin R. Lim
obtained a judgment against Irineo Facundo, "ordering the latter to vacate the premises described in
the complaint and to pay the plaintiff a monthly rental of P100 from February 18, 1955 until the
defendant vacate the premises and to pay the costs." Irineo Facundo did not appeal from the decision
but instead caused the filing of a special civil action for certiorari and prohibition (Case No. 7674)

 in the Court of First Instance of Rizal, entitled Irineo Facundo, petitioner, vs. Jose M. Santos, ex-
Justice of the Peace of Pasay, Ricardo C. Robles, as Justice of the Peace of Pasay, and Valentin
R. Lim, respondents, wherein a writ of preliminary injunction was issued upon the filing by Facundo of
a bond in the sum of P1000, which bond was posted by the Manila Surety & Fidelity Co., Inc. On
June 21, 1946, this case was dismissed by the Court of First Instance of Rizal and the dismissal' was
subsequently affirmed on appeal by the Supreme Court on December 17, 1946. On July 29, 1948,
Valentin R. Lim filed with the Court of First Instance of Rizal, in said case No. 7694, a motion for
the determination of damages sustained by him for uncollected rentals due to the issuance of the
above-mentioned writ of preliminary injunction in said case

ISSUES:That the requisites of solutio indebiti which is the only basis for the return of
the amount paid do not exist in the present case

RULING:
We find appellant's contention to be untenable, for the payment made by the herein
plaintiff-appellee to defendant-appellant was not voluntary; it was thru a coercive process of the
writ of execution issued at the instance and insistence of the defendant-appellant.

It is contented by defendant-appellant that there is no justification for ordering the return of the amount
in question as the court below did, for in the present case, the requisites of solutio indebiti
do not exist. Appellant's contention is untenable. The present action is for a sum of money and all the
parties involved are residents of the City of Manila as averred in paragraph 1 of the complaint. Under
Sec. 1 of Rule 5 of the Rules of Court, civil actions like the one in question may be commenced and
tried where the defendant or any of the defendants resides or may be found or where the plaintiff or
any of the plaintiffs resides, at the election of the plaintiff.

Heirs of Juan San Andres v. Rodriguez, G.R. No. 135634, May 31, 2000;

FACTS
Juan San Andres sold 345sqm of his property to Rodriguez. When he died, Ramon San Andres was
appointed to be the judicial administrator of the decedent’s estate. To lay down a consolidated plan for
estate, he hired Geodetic Engr. Penero who found out that Rodriguez have enlarged the area which he
purchased from Juan San Andres by 509sqm making it a total area of 854sqm. San Andres asked
Rodriguez to vacate the 509sqm and surrender it to them however, Rodriguez claimed that he bought the
509sqm property the day after the sale of the 345sqm evidenced by a receipt. Ramon San Andres also sent
Rodriguez a letter asking for the payment of the balance of the purchased price.

ISSUE: WON document (exhibit 2) is a contract to sell despire it’s lacking one of the essential elements
of a contract, namely, object certain and sufficiently described.

HELD:
Concomitantly, the object of the sale is certain and determinate. Under Article 1460 of the New Civil
Code, a thing sold is determinate if at the time the contract is entered into, the thing is capable of being
determinate without necessity of a new or further agreement between the parties. Here, this definition
finds realization.

That the contract of sale is perfected was confirmed by the former administrator of the estates, Ramon
San Andres, who wrote a letter to respondent on March 30, 1966 asking for P300.00 as partial payment
for the subject lot. As the Court of Appeals observed:
Without any doubt, the receipt profoundly speaks of a meeting of the mind between San Andres and
Rodriguez for the sale of the property adjoining the 345 square meter portion previously sold to
Rodriguez on its three (3) sides excepting the frontage. The price is certain, which is P15.00 per square
meter. Evidently, this is a perfected contract of sale on a deferred payment of the purchase price. All the

 pre-requisite elements for a valid purchase transaction are present. Sale does not require any formal
document for its existence and validity. And delivery of possession of land sold is a consummation of the
sale.

[This is an absolute contract of sale. A deed of sale is considered absolute in nature where there is neither
a stipulation in the deed that title to the property sold is reserved in the seller until full payment of the
price, nor one giving the vendor the right to unilaterally resolve the contract the moment the buyer fails to
pay within a fixed period.
Applying these principles to this case, it cannot be gainsaid that the contract of sale between the parties is
absolute, not conditional. There is no reservation of ownership nor a stipulation providing for a unilateral
rescission by either party. In fact, the sale was consummated upon the delivery of the lot to respondent.]

Babasa v. Court of Appeals, G.R. No.124045, May 21, 1998

FACTS
There is a contract of Conditional Sale of Registered Lands entered into by Sps. Babasa and Tabangao.
The title over the lots is in the name of third persons who had already executed deeds of reconveyance
and disclaimer in favor of Babasa. P300k upon signing of the contract and P1, 821, 920 upon presentation
by Babasa of the transfer certificate of titles within 20 months. In the meantime, the retained balance of
the purchase price would earn interest at seventeen percent (17%) per annum or P20,648.43 monthly
payable to the BABASAS until 31 December 1982. It was expressly stipulated that TABANGAO would
have the absolute and unconditional right to take immediate possession of the lots as well as introduce
any improvements thereon.

2 days prior to the expiration of the 20 months, Babasa asked for indefinite extension to deliver clean
titles and while the cases filed are still pending, Tabangao shall pay the monthly interest which Tabangao
refused. Babasa executed a unilateral rescission. Tabangao responded that Babasa was the one who did
not comply with their contractual obligation hence, had no right to rescind contract. Babasa insisted with
the unilateral rescission and demanded that Shell vacate the lots.

ISSUE:
WON the contract entered by the parties is a contract of sale
WON the contract is a conditional sale

HELD:
i. Yes, it is a contract of sale. The wordings from the opening whereas clause untill the end, the parties
were regarded as vendee and vendors.
ii. No. The contract is an absolute sale. There is absolutely no proviso reserving title in the BABASAS
until full payment of the purchase price, nor any stipulation giving them the right to unilaterally
rescind the contract in case of non-payment. A deed of sale is absolute in nature although
denominated a conditional sale" absent such stipulations.

Engineering and Machinery Corp. v. CA, G.R. No. 52267, Jan. 24, 1996;

FACTS
Engineering undertook to install the air-conditioning system in Alameda’s building through a signed
contract. System was completed and Alameda paid in full of the contract price. Almeda later learned
about the defects of the air-conditioning system of the building and based from the technical evaluation,
the air-conditioning system was defective and incapable of maintaining the desired room temperature.

Alameda said that the contract was not of a sale but a contract for a piece of work and the complain was
timely brought w/in 10 yr prescriptive period. Engineering alleged that the prescriptive period of 6mos

 had set in already covered under Art. 1566 anf 1567 regarding the responsibility of vendor for any hidden
defects in the thing sold.
ISSUE: WON the contract entered was of sale of for a piece of work (and the presciption)

HELD:
Clearly, the contract in question is one for a piece of work. It is not petitioner's line of business to
manufacture air-conditioning systems to be sold "off-the-shelf." Its business and particular field of
expertise is the fabrication and installation of such systems as ordered by customers and in accordance
with the particular plans and specifications provided by the customers. Naturally, the price or
compensation for the system manufactured and installed will depend greatly on the particular plans and
specifications agreed upon with the customers.

For the issue on prescription, the suit is not barred by prescription because it is not really for enforcement
of the warranties but one for breach of contract, thus the proper prescription period is not 6months but 10
years. Therefore, the action has not prescribed

Ker & Co., Inc. v. Lingad, G.R. No. L-20871, April 30, 1971

FACTS
Petitioner Ker & Co was assessed by then Commissioner of Internal Revenue Melecio R. Domingo the
sum of P20, 272.33 as the commercial broker’s percentage tax, surcharge, and compromise penalty for the
period 1949-1953. There was a request on the part of the petitioner for the cancellation of such
assessment but it was turned down. As a result, Ker & Co filed a petition for review with the Court of Tax
Appeals. CTA ruled that Ker & Co is liable as a commercial broker under Section 194 of the National
Internal Revenue Code.

Such liability arose from a contract with the US Rubber International, Ker & Co being the distributor
while US Rubber International was designated as the Company. The contract was to apply to transactions
between the former and petitioner, as Distributor, from July 1, 1948 to continue in force until terminated
by either party giving to the other sixty days' notice. The shipments would cover products “for
consumption in Cebu, Bohol, Leyte, Samar, Jolo, Negros Oriental, and Mindanao except *the province of
Davao”. Ker & Co, as Distributor, was precluded from disposing such products elsewhere than in the
above places unless written consent would first be obtained from the Company. It was required to exert
every effort to have the shipment of the products in the maximum quantity and to promote in every way
the sale thereof. The prices, discounts, terms of payment, terms of delivery and other conditions of sale
were subject to change in the discretion of the Company.

ISSUE: WoN the relationship between Ker & Co and US Rubber was that of a vendor-vendee or
principal-broker?

HELD

The Court ruled that the relationship between Ker & Co and US Rubber was that of a brokerage or
agency. According to the National Internal Revenue Code, a commercial broker includes all persons,
other than importers, manufacturers, producers, or bona fide employees, who, for compensation or profit,
sell or bring about sales or purchases of merchandise for other persons or bring proposed buyers and
sellers together, or negotiate freights or other business for owners of vessels or other means of
transportation, or for the shippers, or consignors or consignees of freight carried by vessels or other means
of transportation.

Facts

 Maharlika Publishing Corp. v. Tagle, G.R. No. L-65594, July 9, 1986 (142 SCRA 553);

FACTS
GSIS entered into a conditional contract to sell the parcel of land to Maharlika Publishing Corporation
with the building. Among the conditions of the sale are that the petitioner shall pay to the GSIS monthly
installments until the total purchase price be fully paid and that upon failure of the same to pay any
monthly installment w/n 90 days from due date, the contract shall be deemed automatically canceled.

When Maharlika failed to pay the installments for several months, GSIS warned Maharlika that the
conditions of the contract would be enforced should Maharlika fail to settle its account within fifteen (15)
days from notice. Because of Maharlika's failure to settle the unpaid accounts, the GSIS notified
Maharlika in writing that the conditional contract of sale was annulled and cancelled and required
Maharlika to sign a lease contract. Maharlika refused to vacate the premises and to sign the lease
contract.

Sometime later, GSIS published an invitation to bid several acquired properties, among which was the
property in question. A day before the scheduled bidding, Adolfo Calica, the President of Maharlika, gave
the GSIS head office 2 checks worth 11,000 and a proposal for a compromise agreement. The GSIS
General Manager Roman Cruz gave a not to Maharlika saying “Hold Bidding. Discuss with me.”
However, the public bidding took place as scheduled and the property was subsequently awarded to Luz
Tagle, the wife of the GSIS Retirement Division Chief. Maharlika demanded that the sale be considered
null and void, as Mrs. Tagle should have been disqualified from bidding for the GSIS property. RTC and
CA both ruled that the Tagles were entitled to the property and Maharlika should vacate the premises.

ISSUE Whether or not Tagle are entitled to the property ?

HELD
NO. The sale to them was against public policy. First of all, the GSIS head office was stopped from
claiming that they did not give the impression to Maharlika that they were accepting the proposal for a
compromise agreement. The act of the general manager is binding on GSIS. Second, Article 1491 (4) of
the CC provides that public officers and employees are prohibited from purchasing the property of the
state or any GOCC or institution, the administration of which has been entrusted to them cannot purchase,
even at public or judicial auction, either in person or through the mediation of another. The SC held that
as an employee of the GSIS, Edilberto Tagle and his wife are disqualified from bidding on the property
belonging to the GSIS because it gives the impression that there was politics involved in the sale. It is not
necessary that actual fraud be shown, for a contract which tends to injure the public service is void
although the parties entered into it honestly and proceeded under it in good faith.

Ching v. Goyanko, Jr., G.R. No. 165879, Nov. 10, 2006 (506 SCRA 735);
FACTS
At the time of the registration of the properties, the petitioners were Chinese citizens that why it was
registered in the name of their Aunt, Sulpicia.

Sulpicia executed a Deed of Sale over the property in favor of respondents' father Goyanko. In turn,
Goyanko executed a Deed of Sale in favor of his common-law-wife herein petitioner Maria B. Ching.

After the death of Goyanko, respondents discovered that the ownership of the property had been
transferred in the name of the petitioner. The respondents then had the signature of their late father in the
deed of sale verified by the PNP Crime Lab which found the same to be forged. Respondents thus filed
with the RTC a complaint for recovery of property, praying for the nullification of the DOS and the
transfer Certificate Title and the issuance of a new one in favor of their father Goyanko.

 ISSUE: WoN the Contract of Sale and TCT in favor of Maria Ching null and void for being contrary to
morals and public policy

HELD: The subject property having been acquired during the existence of a valid marriage between
Joseph Sr. and Epifania dela Cruz-Goyanko, is presumed to belong to the conjugal partnership. Moreover,
while this presumption in favor of conjugality is rebuttable with clear and convincing proof to the
contrary, the court find no evidence on record to conclude otherwise. The record shows that while Joseph
Sr. and his wife Epifania have been estranged for years and that he and defendant-appellant Maria Ching,
have in fact been living together as common-law husband and wife, there has never been a judicial decree
declaring the dissolution of his marriage to Epifania nor their conjugal partnership. It is therefore
undeniable that the property located at Cebu City belongs to the conjugal partnership. Assuming that the
subject property was not conjugal, still the court cannot sustain the validity of the sale of the property by
Joseph, Sr. to defendant-appellant Maria Ching, there being overwhelming evidence on records that they
have been living together as common-law husband and wife.

The court therefore finds the contract of sale in favor of the defendant-appellant Maria Ching null and
void for being contrary to morals and public policy. The purported sale, having been made by Joseph Sr.
in favor of his concubine, undermines the stability of the family, a basic social institution which public
policy vigilantly protects.

Rubias v. Batiller, G.R. L- 35702, May 29, 1973 (51 SCRA 120);
FACTS

Plaintiff Domingo D. Rubias, a lawyer, filed a forcible Entry and unlawful Detainer, a suit to recover the
ownership and possession of certain portions of lot located in Iloilo which he bought from his father-in-
law, Francisco Militante against its present occupant defendant, Isaias Batiller, who illegally entered said
portions of the lot. In his answer defendant claims that it does not state a cause of action, the truth of the
matter being that he and his predecessors-in-interest have always been in actual, open and continuous
possession since time immemorial under claim of ownership of the portions of the lot in question.

It is contended that the contract of sale between the plaintiff and his father-in-law, Francisco Militante,
Sr., of the property was void, because it was made when plaintiff was the counsel of the latter in the Land
Registration case invoking Articles 1409 and 1491 of the Civil Code.

ISSUE: Whether or not the contract of sale between plaintiff and his father-in-law over the property
was void because it was made when plaintiff was counsel of his father-in-law in a land registration case
involving the property in dispute.

HELD: The purchase by a lawyer of the property in litigation from his client is categorically by Article
1491, paragraph (5) of the Civil Code, and that consequently, plaintiff’s purchase of the property in
litigation from his client was void and could produce no legal effect, by virtue of Article 1409, paragraph
(7) of our Civil Code which provides that contracts”expressly prohibited or declared void by law are
inexistent and that these contracts cannot be ratified.Article 1491 of our Civil Code prohibits certain
persons, by reason of the relation of trust or their peculiar control over the property, from acquiring such
property in their trust or control either directly or indirectly and “even at a public or judicial auction,” as
follows: (1) guardians; (2) agents; (3) administrators; (4) public officers and employees; (5) judicial
officers and employees; and (6) others especially disqualified by law. The rationale for that fundamental
consideration of public policy render void and inexistent such expressly prohibited purchase.

Article 1409 of the Civil Code, declared such prohibited contracts as “inexistent and void from the
beginning.” Indeed, the nullity of such prohibited contracts is definite and permanent and cannot be cured



 by ratification. The public interest and public policy remain paramount and do not permit of compromise
or ratification.

Ordonio v. Eduarte, A.M. No. 3216, March 16, 1992 (207 SCRA 229);

Ramos v. Ngaseo, A.C. No. 6210, Dec. 9, 2004 (445 SCRA 529);
FACTS

ISSUE

HELD: In the instant case, there was no actual acquisition of the property in litigation since the
respondent only made a written demand for its delivery which the complainant refused to comply. Mere
demand for delivery of the litigated property does not cause the transfer of ownership, hence, not a
prohibited transaction within the contemplation of Article 1491.

Macariola v. Judge Asuncion, A.M. No. 133-J, May 31, 1992 (114 SCRA 77);

FACTS: In a verified complaint dated August 6, 1968 Bernardita R. Macariola charged respondent Judge
Elias B. Asuncion of the Court of First Instance of Leyte with "acts unbecoming a judge." The
complainant alleged that that respondent Judge Asuncion violated Article 1491, paragraph 5, of the New
Civil Code in acquiring by purchase a portion of Lot No. 1184-E which was one of those properties
involved in Civil Case No. 3010 decided by him.

ISSUE: WON Judge Asuncion violated A. 1491

Held: The Court finds that there is no merit in the contention of complainant Bernardita R. Macariola. The
prohibition in the aforesaid Article applies only to the sale or assignment of the property which is the
subject of litigation to the persons disqualified therein. For the prohibition to operate, the sale or
assignment of the property must take place during the pendency of the litigation involving the property.

When the respondent Judge purchased on March 6, 1965 a portion of Lot 1184-E, the decision in Civil
Case No. 3010 which he rendered on June 8, 1963 was already final because none of the parties therein
filed an appeal within the reglementary period; hence, the lot in question was no longer subject of the
litigation.

Moreover, at the time of the sale on March 6, 1965, respondent's order dated October 23, 1963 and the
amended order dated November 11, 1963 approving the October 16, 1963 project of partition made
pursuant to the June 8, 1963 decision, had long become final for there was no appeal from said orders.
Furthermore, respondent Judge did not buy the lot in question on March 6, 1965 directly from the
plaintiffs in Civil Case No. 3010 but from Dr. Arcadio Galapon.
Therefore, the respondent Associate Justice of the Court of Appeals is hereby reminded to be more
discreet in his private and business activities.

Binayug v. Ugaddan, G.R. No. 181623, Dec. 5, 2012 (687 SCRA260)

FACTS
2 parcels of land was issued in the name of Gerado. He acquired the title through the grant of Homestead
Patent. When Gerardo died, the respondents discoveref that OCT has been cacelled and the records of
registry shows that Gerardo w/ consent of his wife, sold the subject properties to Juan.

ISSUE: whether or not Section 118 of the Public Land Act is applicable to their case
HELD: To reiterate, Section 118 of the Public Land Act, as amended, reads that "[e]xcept in favor of the














 Government or any of its branches, units, or institutions, or legally constituted banking corporations,
lands acquired under free patent or homestead provisions shall not be subject to encumbrance or
alienation from the date of the approval of the application and for a term of five years from and after the
date of issuance of the patent or grant x x x." The provisions of law are clear and explicit. A contract
which purports to alienate, transfer, convey, or encumber any homestead within the prohibitory period of
five years from the date of the issuance of the patent is void from its execution. In a number of cases, this
Court has held that such provision is mandatory.
In the present case, it is settled that Homestead Patent No. V-6269 was issued to Gerardo on January 12,
1951 and the Absolute Deed of Sale between Gerardo and Juan was executed on July 10, 1951, after a
lapse of only six months. Irrefragably, the alienation of the subject properties took place within the five-
year prohibitory period under Section 118 of the Public Land Act, as amended; and as such, the sale by
Gerardo to Juan is null and void right from the very start.
As a void contract, the Absolute Deed of Sale dated July 10, 1951 produces no legal effect whatsoever in
accordance with the principle "quod nullum est nullum producit effectum,"thus, it could not have
transferred title to the subject properties from Gerardo to Juan and there could be no basis for the issuance
of TCT No. T-106394 in Juan's name. A void contract is also not susceptible of ratification, and the action
for the declaration of the absolute nullity of such a contract is imprescriptible

Rufloe v. Burgos, G.R. No. 143573, Jan. 30, 2009 (577 SCRA 264);

FACTS
Elvira forged the signatures of Adoracion and Angel in a Deed of Sale to make it appear that the
disputed property was sold to her by the Sps Rufloe. Rufloes filed a complaint for damages
against Delos Reyes with the RTC of Pasay City alleging that the Deed of Sale was falsified as
the signatures appearing thereon were forged because Angel Rufloe died in 1974, which was four
(4) years before the alleged sale in favor of Delos Reyes.

The Burgos siblings, in turn, sold the same property to their aunt, Leonarda Burgos. However,
the sale in favor of Leonarda was not registered. Thus, no title was issued in her name. The
subject property remained in the name of the Burgos siblings who also continued paying the real
estate taxes thereon.

ISSUE: whether the sale of the subject property by Delos Reyes to the Burgos siblings and the
subsequent sale by the siblings to Leonarda were valid and binding

HELD The issue concerning the validity of the deed of sale between the Rufloes and Delos Reyes had
already been resolved with finality in Civil Case No. M-7690 by the RTC of Pasay City which declared
that the signatures of the alleged vendors, Angel and Adoracion Rufloe, had been forged. It is undisputed
that the forged deed of sale was null and void and conveyed no title. It is a well-settled principle that no
one can give what one does not have, nemo dat quod non habet. One can sell only what one owns or is
authorized to sell, and the buyer can acquire no more right than what the seller can transfer legally. Due to
the forged deed of sale, Delos Reyes acquired no right over the subject property which she could convey
to the Burgos siblings. All the transactions subsequent to the falsified sale between the spouses Rufloe
and Delos Reyes are likewise void, including the sale made by the Burgos siblings to their aunt,
Leonarda.

Chingkoe vs. Chingkoe, G.R. No. 244076. March 16, 2022

Faustino and Gloria were the owners of the property. Faustino said that he allowed Felix, his












 brother, to occupt the subject property. Upon the request of their mother, Faustino signed and
undated Deed of Sale over the subject property in favor of Felix with assurance that she’ll keep
the deed of sale to appease Felix who was alcoholic. However Felix said that he had been in
possession of the subject property evidenced by the signed Deed of Sale before a notary public.

ISSUE: WON the Deed of Sale was an absolute simulation therefore void.

HELD:
No, the Deed of Sale is not void. The main characteristic of an absolute simulation is that the
apparent contract is not really desired or intended to produce a legal effect or alter the parties’
juridical situation. However, a reading of Faustino’s testimony clearly shows that he fully
intended to be bound by the Deed of Sale. Regarding the payment, failure to pay consideration is
different from lack of consideration. Actual payment is not one of the three (3) essential
requisites of a valid contract. In other words, non-payment of an obligation does not render a
contract void, in which case, the remedy of the injured party is demand fulfillment of rescission
of the contract under A. 1191 of the Civil Code.

Cabilao v. Tampan, GR 209702, March 23, 2022

FACTS
Socorro sold the subject real property to Lorna through a notarized deed of sale. Later Socorro obtained
back the owner’s copy of the title and sold the property to another. Lorna filed a case for quieting of title.
Socoro said that the sale is void because of the consideration was only P10,000 while the value of the
property is much more. Also, the transfer of title was never transferred to Lorna. Socoro also said that she
is an illiterate and she did not know she was signing a deed of sale.

ISSUE: WON the Deed of Sale in favor of Lorna is valid

HELD: The Supreme Court held that Gross inadequacy of price does not affect the validity of a contract
of sale, unless it signifies a defect in the consent of that the parties actually intended a donation or some
other contract.

The title over the subject property remained under Socorro’s name despite the execution of the Deed of
Sale. However, this does not also affect the validity of the deed of sale. Transfer of the certificate of title
in the name of the buyer and transfer of ownership to the buyer are 2 different concepts and that transfer
of ownership is not by the issuance of new certificate title but by the execution of the instrument of sale in
a public document. Lastly, it is a settled-rule that a duly notarized document enjoyr prima facie
presumption of authenticity and due execution, as well as the full faith and credence attached too a public
instrument. Thus, a party assailing the authenticity and due execution if a notarized document is requires
to present evidence that is clear, convincing and more than merely preponderant. Which Socorro failed to
overcome the burden. Aside from her self-serving allegation that she did not know that she was signing a
Deed of Sale, there is nothing else on record that supports her assertion.



 Formaran v. Ong, G.R. No. 186264, July 8, 2013 (700 SCRA 758);

According to plaintiff’s complaint, she owns the parcel of land which was donated to her intervivos by
her uncle and aunt, spouses Melquiades Barraca and Praxedes Casidsid; that upon the proddings and
representation of defendant Glenda, that she badly needed a collateral for a loan which she was applying
from a bank to equip her dental clinic, plaintiff made it appear that she sold one-half of the parcel of land
to the defendant Glenda; that the sale was totally without any consideration and fictitious; that contrary to
plaintiff’s agreement with defendant Glenda for the latter to return the land, defendant Glenda filed a case
for unlawful detainer against the plaintiff. Defendant Glenda insisted on her ownership over the land in
question on account of a Deed of Absolute Sale executed by the plaintiff in her favor.

Petitioner filed on action for annulment of the Deed of Sale against respondents before the Regional Trial
Court. The trial court rendered a Decision in favor of petitioner and against the respondent by declaring
the Deed of Absolute Sale null and void for being an absolutely simulated contract and for want of
consideration; declaring the petitioner as the lawful owner entitled to the possession of the land in
question. Respondents coursed an appeal to the CA. The CA reversed and set aside the Decision of the
trial court and ordered petitioner to vacate the land in question and restore the same to respondents.

ISSUE: WON the Deed of Absolute Sale is null and void for being a simulated contract

HELD
Yes. The Court believes and so holds that the subject Deed of Sale is indeed simulated as it is: 1. Totally
devoid of consideration2) it was executed on August 12, 1967, lessthan two months from the time the
subject land was donated to petitioner on June 25, 1967 by no less than the parents of respondent Glenda
Ong; (3) on May 18, 1978, petitioner mortgaged the land to the Aklan Development Bank for a
₱23,000.00 loan; (4) from the time of the alleged sale, petitioner has been in actual possession of the
subject land; (5) the alleged sale was registered on May 25, 1991 or about twenty four (24) years after
execution; (6) respondent Glenda Ong never introduced any improvement on the subject land; and (7)
petitioner’s house stood on a part of the subject land. These are facts and circumstances which may be
considered badges of bad faith that tip the balance in favor of petitioner. The amplitude of foregoing
undisputed facts and circumstances clearly shows that the sale of the land in question was purely
simulated. It is void from the very beginning. If the sale was legitimate, defendant Glenda should have
immediately taken possession of the land, declared in her name for taxation purposes, registered the sale,
paid realty taxes, introduced improvements therein and should not have allowed plaintiff to mortgage the
land. These omissions property militated against defendant Glends’s submission that the sale was
legitimate and the consideration was paid.

Intac v. CA, G.R. No. 173211, Oct. 11, 2012 (684 SCRA 88);
FACTS
During the lifetime of Ireneo Mendoza (Ireneo), he executed a deed of absolute sale involving a property
located in Bagong Pag-asa, Quezon City in favor of spouses Angelina and Mario Intac (spouses Intac).
Consequently, TCT No. 242655 was issued in favorof the spouses Intac. The deed was executed because
the spouses Intac needed to borrow the title of the property and to use the same as collateral for their loan
application. Respondents Josefina Mendoza-Roy and Martina Mendoza-Lozada, heirs of the late Ireneo,
sought the cancellation of TCT No. 242655 claiming that the sale was only simulated, and therefore, void.

ISSUE: WON the Deed of absolute sale was a simulated contract or a valid agreement
HELD:
Accordingly, for a contract to be valid, it must have three essential elements: (1) consent of the
contracting parties; (2) objectcertain which is the subject matter of the contract; and (3) cause of the

 obligation which is established. In a contract of sale, its perfection is consummated at the moment there is
a meeting of the minds upon the thing that is the object of the contract and upon the price. Consent is
manifested by the meeting of the offer and the acceptance of the thing and the cause, which are to
constitute the contract.

If the parties state a false cause in the contract to conceal their real agreement, the contract is only
relatively simulated and the parties are still bound by their real agreement. Hence, where the essential
requisites of a contract are present and the simulation refers only to the content or terms of the contract,
the agreement is absolutely binding and enforceable between the parties and their successors in interest.

In absolute simulation, there is a colorable contract but it has no substance as the parties have no intention
to be bound by it. The main characteristic of an absolute simulation is that the apparent contract is not
really desired or intended to produce legal effect or in any way alter the juridical situation of the parties.
As a result, an absolutely simulated or fictitious contract is void, and the parties may recover from each
other what they may have given under the contract.

In the case at bench, the Court is one with the courts below that no valid sale of the subject property
actually took place between the alleged vendors, Ireneo and Salvacion; and the alleged vendees, Spouses
Intac. There was simply no consideration and no intent to sell it. Petition is DENIED.

Villaceran v. De Guzman, G.R. No. 169055, Feb. 22, 2012 (666 SCRA 454)
FACTS

De Guzman alleged that she is the registered owner of a parcel of land covered by Transfer Certificate of
Title (TCT) No. T-236168, located in Echague, Isabela. On April 17, 1995, she mortgaged the lot to the
Philippine National Bank (PNB) of Santiago City to secure a loan of P600,000. In order to secure a bigger
loan to finance a business venture, De Guzman asked Milagros Villaceran to obtain an additional loan on
her behalf. She executed a Special Power of Attorney in favor of Milagros. Considering De Guzmans
unsatisfactory loan record with the PNB, Milagros suggested that the title of the property be transferred to
her and Jose Villaceran and they would obtain a bigger loan as they have a credit line of up toP5,000,000
with the bank. On June 19, 1996, De Guzman executed a simulated Deed of Absolute Sale in favor of the
spouses Villaceran. On the same day, they went to the PNB and paid the amount of P721,891.67 using the
money of the spouses Villaceran. The spouses Villaceran registered the Deed of Sale and secured TCT
No. T-257416 in their names. Thereafter, they mortgaged the property with FEBTC Santiago City to
secure a loan of P1,485,000. The loan was released and they failed to pay it so the property was
foreclosed in favor of the FEBTC. De Guzman filed an action for the annulment of the sale, but the RTC
and CA ruled that the Deed of sale was valid and binding.

ISSUE WON the contract is valid

HELD: Yes. Article 1345 of the Civil Code provides that the simulation of a contract may either be
absolute or relative. In absolute simulation, there is a colorable contract but it has no substance as the
parties have no intention to be bound by it. The main characteristic of an absolute simulation is that the
apparent contract is not really desired or intended to produce legal effect or in any way alter the juridical
situation of the parties. As a result, an absolutely simulated or fictitious contract is void, and the parties
may recover from each other what they may have given under the contract. However, if the parties state a
false cause in the contract to conceal their real agreement, the contract is only relatively simulated and the
parties are still bound by their real agreement. Hence, where the essential requisites of a contract are
present and the simulation refers only to the content or terms of the contract, the agreement is absolutely
binding and enforceable between the parties and their successors in interest.

 The primary consideration in determining the true nature of a contract is the intention of the parties. If the
words of a contract appear to contravene the evident intention of the parties, the latter shall prevail. Such
intention is determined not only from the express terms of their agreement, but also from the
contemporaneous and subsequent acts of the parties. In the case at bar, there is a relative simulation of
contract as the Deed of Absolute Sale dated June 19, 1996 executed by De Guzman in favor of petitioners
did not reflect the true intention of the parties.

It is worthy to note that both the RTC and the CA found that the evidence established that the aforesaid
document of sale was executed only to enable petitioners to use the property as collateral for a bigger
loan, by way of accommodating De Guzman. Thus, the parties have agreed to transfer title over the
property in the name of petitioners who had a good credit line with the bank. The CA found it
inconceivable for De Guzman to sell the property for ₱75,000 as stated in the June 19, 1996 Deed of Sale
when petitioners were able to mortgage the property with FEBTC for ₱1,485,000. Another indication of
the lack of intention to sell the property is when a few months later, on September 6, 1996, the same
property, this time already registered in the name of petitioners, was reconveyed to De Guzman allegedly
for ₱350,000.

Heirs of Ureta v. Heirs of Ureta, G.R. No. 165748, Sept. 14, 2011 (657 SCRA 551);
FACT

Alfonso was nancially well-off and begot 14 children. He has several properties. Francisco, the
municipal judge, suggested that in order to reduce the inheritance taxes, their father should make it
appear that he had sold some of his lands to his children. Accordingly, Alfonso executed four (4) Deeds of
Sale covering several parcels of land in favor of Policronio, Liberato,Prudencia, and his common-law
wife, Valeriana Dela Cruz.7 The Deed of Sale executed on October 25, 1969, in favor of Policronio,
covered six parcels of land, which are the properties in dispute in this case. Since the sales were only
made for taxation purposes and no monetary consideration was given, Alfonso continued to own, possess
and enjoy the lands and their produce.

ISSUE: WON the Deed of Absolute Sale is void

HELD: The Deed of Sale is, therefore, void for being absolutely simulated pursuant to Article 1409 (2) of
the Civil Code which provides: Art. 1409. The following contracts are inexistent and void from the
beginning; (2) Those which are absolutely simulated or fictitious;

Montecillo v. Reynes, G.R. No. 138018, July 26, 2002 (385 SCRA 244)

FACTS:
Respondents Ignacia Reynes and Spouses Abucay filed a complaint for Declaration of Nullity and
Quieting of Title against petitioner Rido Montecillo. Reynes signed a Deed of Sale in favor to Montecillo
in consideration for P47,000.00 purchase price payable within one month from the signing of the Deed of
Sale. Reynes further alleged that Montecillo failed to pay the purchase price after the lapse of the one-
month period, prompting Reynes to demand from Montecillo the return of the Deed of Sale. Since
Montecillo refused to return the Deed of Sale, Reynes executed a document unilaterally revoking the sale
and gave a copy of the document to Montecillo. Subsequently, Reynes signed a Deed of Sale transferring
to the Abucay Spouses the entire Mabolo Lot, at the same time confirming the previous sale of a 185-
square meter portion of the lot. Respondents, receiving information that the Register of Deeds of Cebu
City issued Certificate of Title No. 90805 in the name of Montecillo for the Mabolo Lot, argued that “for
lack of consideration there was no meeting of the minds” between Reynes and Montecillo. Thus, the trial
court should declare null and void ab initio Montecillo’s Deed of Sale, and order the cancellation of
Certificate of Title in the name of Montecillo.


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 ISSUE: WON the failure of Montecillo to pay the P47,000 as consideration for the lot prevented the
existence of the contract

HELD:
Yes, the Supreme Court holds that the failure of Montecillo to pay the purchase price of the lot ceases the
contract to exist. Under Article 1318 of the Civil Code, “there is no contract unless the following
requisites concur: (1) Consent of the contracting parties; (2) Object certain which is the subject matter of
the contract; (3) Cause of the obligation which is established.”

Where the deed of sale states that the purchase price has been paid but in fact has never been paid for lack
of consideration. This has been the well-settled rule as early as Ocejo Perez & Co. v. Flores:

In that case at bar, the agreed purchase price in consideration of the lot in questioned has in fact never
been paid by Monticillo to the Reyes. Hence, the deed of sale is null and void ab initio as such a sale is
non-existent or cannot be considered consummated.

Thus, the petition is DENIED.

Jocson v. CA, G.R. No. L-55322February 16, 1989 (170 SCRA 333)

FACTS
Emilio Jocon and Alejandra Jocson were husband and wife. The wife died first intestate then the husband
followed. Moises and Agustina are their children. Ernesto Vasquesz is the husband of Agustina.

The present controversy concerns the validity of three (3) documents executed by Emilio Jocson during
his lifetime. These documents purportedly conveyed, by sale, to Agustina Jocson-Vasquez what
apparently covers almost all of his properties, including his one-third (1/3) share in the estate of his wife.
Petitioner Moises Jocson assails these documents and prays that they be declared null and void and the
properties subject matter therein be partitioned between him and Agustina as the only heirs of their
deceased parents.

Petitioner claimed that the properties mentioned in Exhibits 3 and 4 are the unliquidated conjugal
properties of Emilio Jocson and Alejandra Poblete which the former, therefore, cannot validly sell. They
say it is conjugal properties of Emilio Jocson and Alejandra Poblete, because they were registered in the
name of “Emilio Jocson, married to Alejandra Poblete”.

ISSUE: WON the property registered under the name of “Emilio Jocson, married to Alejandra Poblete” is
conjugal property or exclusive property.

HELD: Exclusive. Article 60 of the CC proveides that All property of the marriage is presumed to belong
to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife.
The party who invokes this presumption must first prove that the property in controversy was acquired
during the marriage. In other words, proof of acquisition during the coverture is a condition sine qua non
for the operation of the presumption in favor of conjugal ownership.

It is thus clear that before Moises Jocson may validly invoke the presumption under Article 160 he must
first present proof that the disputed properties were acquired during the marriage of Emilio Jocson and
Alejandra Poblete. The certificates of title, however, upon which petitioner rests his claim is insufficient.
The fact that the properties were registered in the name of “Emilio Jocson, married to Alejandra Poblete”
is no proof that the properties were acquired during the spouses’ coverture. Acquisition of title and
registration thereof are two different acts. It is well settled that registration does not confer title but merely
confirms one already existing (See Torela vs. Torela, supra). It may be that the properties under dispute

 were acquired by Emilio Jocson when he was still a bachelor but were registered only after his marriage
to Alejandra Poblete, which explains why he was described in the certificates of title as married to the
latter.

Contrary to petitioner’s position, the certificates of title show, on their face, that the properties were
exclusively Emilio Jocson’s, the registered owner. This is so because the words “married to’ preceding
“Alejandra Poblete’ are merely descriptive of the civil status of Emilio Jocson. In other words, the import
from the certificates of title is that Emilio Jocson is the owner of the properties, the same having been
registered in his name alone, and that he is married to Alejandra Poblete.

Ong v. Ong, G.R. No. L-67888 October 8, 1985 (139 SCRA 133

FACTS
Imelda executed in favor of the private respondent Sandra Maruzzo, then a minor, a Quitclaim Deed
whereby she transferred, released, assigned and forever quit-claimed to Sandra Maruzzo, her heirs and
assigns, all her rights, title, interest and participation in the ONE-HALF (½) undivided portion of the
parcel of land.

Imelda Ong revoked the aforesaid Deed of Quitclaim and, thereafter, on January 20, 1982 donated the
whole property described above to her son, Rex Ong-Jimenez.

Sandra Maruzzo, through her guardian (ad litem) Alfredo Ong, filed for the recovery of ownership/
possession and nullification of the Deed of Donation over the portion belonging to her and for
Accounting. Petitioners claimed that the Quitclaim Deed is null and void inasmuch as it is equivalent to a
Deed of Donation, acceptance of which by the donee is necessary to give it validity. Further, it is averred
that the donee, Sandra Maruzzo, being a minor, had no legal personality and therefore incapable of
accepting the donation.

ISSUE: WON a quitclaim deed is equivalent to a Deed of Sale

HELD: The execution of a deed purporting to convey ownership of a realty is in itself prima facie
evidence of the existence of a valuable consideration, the party alleging lack of consideration has the
burden of proving such allegation. Even granting that the Quitclaim deed in question is a donation, Article
741 of the Civil Code provides that the requirement of the acceptance of the donation in favor of minor by
parents of legal representatives applies only to onerous and conditional donations where the donation may
have to assume certain charges or burdens (Article 726, Civil Code). The donation to an incapacitated
donee does not need the acceptance by the lawful representative if said donation does not contain any
condition. In simple and pure donation, the formal acceptance is not important for the donor requires no
right to be protected and the donee neither undertakes to do anything nor assumes any obligation. The
Quitclaim now in question does not impose any condition. Bad faith and inadequacy of the monetary
consideration do not render a conveyance inexistent, for the assignor’s liberality may be sufficient cause
for a valid contract (Article 1350, Civil Code), whereas fraud or bad faith may render either rescissible or
voidable, although valid until annulled, a contract concerning an object certain entered into with a cause
and with the consent of the contracting parties, as in the case at bar.”

Ladanga v. CA, G.R. No. L-55999, Aug. 24, 1984 (31 SCRA 361)
FACT
Clemencia Aseneta, a spinster, had a nephew named Bernardo and a niece named Salvacion. She
legally adopted Bernardo in 1961. On April 6, 1974, Clemencia signed 9 deeds of sale in favor of
Salvacion for various real properties, one being the Paco property which is the subject of this
petition, and purportedly sold for P26,000. In May 1975, Bernardo, as guardian of Clemencia,
led a case for reconveyance of the Paco property. Clemencia testi ed that she had not received
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 a single centavo from Salvacion. The trial court, af rmed by the Court of Appeals, declared the
sale void

ISSUE: WON the sale is void for lack of consideratio

HELD: The Ladanga spouses contend that the Appellate Court disregarded the rule on burden of
proof. This contention is devoid of merit because Clemencia herself testi ed that the price of
P26,000 was not paid to her. The burden of the evidence shifted to the Ladanga spouses. They
were not able to prove the payment of that amount. The sale was ctitious. A contract of sale is
void and produces no effect whatsoever where the price, which appears therein as paid, has in
fact never been paid by the purchaser to the vendor. It was not shown that Clemencia intended to
donate the Paco property to the Ladangas. Her testimony and the notary's testimony destroyed
any presumption that the sale was fair and regular and for a true consideration


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