Law on Obligation and Contracts

14 Performance Task 1

RED, NIKKI YSABEL B.

BSAIS102A
Answer the following problems (10 Items x 5 points):

A. Read the case of Restituta Leonardo vs. Court of Appeals (G.R. No.
125485, September 13, 2004)

Answer the following questions:

a. What was the cause of Restituta Leonardo's action against her half-siblings?
Restituta Leonardo's action against her half-siblings was based on the claim that she
did not voluntarily give her consent to the extrajudicial settlement of the estate,
which was due to deceit and lack of understanding of the document as it was in
English and not explained to her in a language she understood.
b. What was the basis of such a claim or cause of action?
The basis of such a claim or cause of action was the alleged vitiated consent due to
Restituta's illiteracy, ignorance, and language barrier, which rendered her unable to
understand the terms and conditions of the extrajudicial settlement.
c. What was the main issue being resolved by the Supreme Court in the case?
The main issue being resolved by the Supreme Court in the case was whether
Restituta's consent to the extrajudicial settlement was voluntarily given and whether
the action filed by Restituta should have been for annulment rather than declaration
of nullity due to alleged vitiated consent.
d. What was the ruling of the Supreme Court?
The Supreme Court ruled that Restituta's consent was not voluntarily given, thereby
annulling the extrajudicial settlement.
e. According to the Supreme Court, what constitutes a valid consent? Enumerate the
requisites.
According to the Supreme Court, a valid consent in a contract requires the following
requisites:
1. Intelligence: The party giving consent must have the mental capacity to
understand the terms and conditions of the contract.
2. Freedom: The party giving consent must not be coerced, forced, or intimidated
into entering the contract.
3. Spontaneity: The party giving consent must not be acting under fraud or mistake.
4. Full understanding/Specific: The party giving consent must fully understand the
terms and conditions of the contract, especially if they have a language barrier or
limited education. Consent must relate to the specific procedure or treatment
proposed. It cannot be overly broad or vague.
Summary:
In the case of Restituta Leonardo vs. Court of Appeals (G.R. No. 125485, September
13, 2004), Restituta Leonardo filed an action against her half-siblings, claiming that
she did not voluntarily give her consent to the extrajudicial settlement of the estate
due to deceit and lack of understanding of the document, which was in English and
not explained to her in a language she understood.
The main issue being resolved by the Supreme Court in this case was whether
Restituta's consent to the extrajudicial settlement was voluntarily given and whether
the action filed by Restituta should have been for annulment rather than declaration
of nullity due to alleged vitiated consent.
The Supreme Court ruled that Restituta's consent was not voluntarily given, thereby
annulling the extrajudicial settlement. This means that Restituta did not give her full
and informed consent to the settlement, as she did not understand the terms and
conditions of the contract due to her illiteracy, ignorance, and language barrier.

According to the Supreme Court, a valid consent in a contract requires the following
requisites:
1. Intelligence: The party giving consent must have the mental capacity to
understand the terms and conditions of the contract.
2. Freedom: The party giving consent must not be coerced, forced, or intimidated
into entering the contract.
3. Spontaneity: The party giving consent must not be acting under fraud or mistake.
4. Full understanding: The party giving consent must fully understand the terms and
conditions of the contract, especially if they have a language barrier or limited
education.

In this case, Restituta did not meet these requisites, as she was unable to understand
the terms and conditions of the extrajudicial settlement due to her illiteracy and
language barrier. Therefore, her consent was not valid, and the Supreme Court
annulled the extrajudicial settlement.
B. Read the case of HEIRS OF DR. MARIO S. INTAC and ANGELINA
MENDOZA-INTAC, Petitioners, vs. COURT OF APPEALS (G.R. No.
173211, October 11, 2012)

Answer the following questions:

a. What type of contract was the subject of the case?
The type of contract that was the subject of the case was a simulated contract. A
simulated contract is one that is created for the purpose of deceiving others and
gaining an advantage, rather than being based on any real intent to transfer
ownership of the property or enter into a legally binding agreement. In this case, the
contract of sale between Ireneo and Intac was found to be a simulated contract due to
several factors, including the lack of consideration and consent, as well as the
simulated price and the absence of real estate taxes.
b. What was the allegation of the petitioners regarding the said contract?
The petitioners, the heirs of Dr. Mario S. Intac and Angelina Mendoza-Intac, alleged
that the contract of sale between Ireneo and Intac was void due to the lack of
consideration and consent, as well as other factors like the simulated price and the
absence of real estate taxes. They argued that the contract was not based on any real
intent to transfer ownership of the property, but rather was created for the purpose
of deceiving others and gaining an advantage. They also pointed out that the contract
did not comply with the legal requirements for a valid contract, such as the
requirement for something of value to be exchanged between the parties.
c. What was the allegation of the respondents regarding the said contract?
The respondents, Spouses Intac, alleged that the contract of sale was valid and that
they became the owners of the property despite its registration in their names. They
argued that the contract was based on a genuine intent to transfer ownership of the
property and that they had fully paid the purchase price, including the real estate
taxes. They also claimed that the contract was valid and legally binding, despite the
lack of consideration and consent, as well as the simulated price and the absence of
real estate taxes.
d. What was the ruling of the Supreme Court?
The ruling of the Supreme Court was that the contract of sale between Ireneo and
Spouses Intac was null and void ab initio due to the lack of consideration and
consent, as well as other factors like the simulated price and the absence of real
estate taxes. The court found that the contract was not based on any real intent to
transfer ownership of the property, but rather was created for the purpose of
deceiving others and gaining an advantage. The court also found that the contract did
not comply with the legal requirements for a valid contract, such as the requirement
for something of value to be exchanged between the parties.
e. What are the requisites of a valid contract, and why was the contract declared void
in the case?
The requisites of a valid contract are:
1. Offer and acceptance: There must be a clear and mutual understanding between
the parties regarding the terms and conditions of the contract. This means that all
parties involved in the contract must agree to the terms and conditions, and there
must be a meeting of the minds between the parties.

2. Consideration: There must be something of value exchanged between the parties,

such as money, property, or services. This means that one party must give something
up in exchange for the other party's promise to perform or refrain from performing a
specific act.

3. Capacity: All parties involved in the contract must have the legal capacity to enter
into a contract, meaning they are of legal age and are not under any legal disabilities
that would prevent them from entering into a contract. This means that the parties
must have the legal ability to enter into a contract and be legally competent to do so.

4. Legality: The subject matter of the contract must be legal and not prohibited or
restricted by any laws or regulations. This means that the contract must involve legal
activities or transactions that are not prohibited or restricted by any applicable laws
or regulations.

5. Formality: The contract must comply with any formal requirements specified by
the law, such as being in writing or being signed by the parties involved. This means
that the contract must meet the specific formal requirements set forth by the
applicable legal code or statutes.
Summary:
In summary, the Supreme Court found that the contract of sale between Ireneo and
Spouses Intac was null and void ab initio due to the lack of consideration and
consent, as well as other factors like the simulated price and the absence of real
estate taxes. The contract was simulated, meaning it was not based on any real intent
to transfer ownership of the property, but rather was created for the purpose of
deceiving others and gaining an advantage. Therefore, the contract did not meet the
requisites of a valid contract and was declared void. The court's ruling was based on
the principles of contract law, which require that contracts must be based on a
genuine intent to transfer ownership of the property, involve something of value
exchanged between the parties, and comply with the legal requirements for a valid
contract. The court's decision underscores the importance of these principles in
ensuring that contracts are legally binding and enforceable.