Ong Yiu vs. CA
Subsequently, petitioners sent CA and Magdalena Estates a
FACTS:
Petitioner, a passenger of respondent PAL, was scheduled to attend a trial in Butuan
City. Arriving at Bancasi Airport, Butuan, his luggage which contained vital
documents needed for his trial the next day couldn’t be found. PAL Butuan sent a
message to PAL Cebu which was informed by PAL Manila that the luggage has been
overcarried to Manila. Petitioner wired PAL Cebu demanding the delivery of his
luggage otherwise he would hold PAL liable for damages for causing him
inconvenience, worry and anxiety. The next day, the petitioner went to Bancasi
Airport but immediately left so when the luggage arrived, he was no longer there.
Dagorro, driver of the petitioner, volunteered to take the luggage to the latter. He
opened the luggage and examine its contents but did not touch them. Upon
delivery to the petitioner, he refused to accept the luggage on ground that the folder
containing the exhibits was missing. He went to Cebu to demand for his luggage to
be produced intact and be compensated for actual and moral damages, and to know
the personnel who pilfered the baggage. However PAL Cebu still was not able to
pinpoint the one responsible and to find the missing documents.
Thus petitioner filed a complaint for damages for breach of contract, which LC
granted. Both parties appealed, petitioner because only awarded P80,000 and
defendant which reversed the decision of LC.
ISSUE: Whether PAL is liable for damages and gross negligence and for acting in
bad faith for the loss of the baggage? No. PAL has exercised due diligence and
has exerted all efforts to locate to missing luggage; thus petitioner is not
entitled to moral nor exemplary damages. Despite the absence of a
contract, the ticket binds the passengers to the policies and provisions of
PAL.
DECISION:
the respondent PAL had not acted in bad faith which is a breach of duty through ill
will. PAL’s duty was to look for the petitioner’s luggage which has been miscarried;
and PAL exerted due diligence to comply with such duty. Efforts has been exerted to
locate the missing luggage as seen in the sending of the telegraphic message and
the delivery of the luggage. In the absence of fraud or bad faith, petitioner is not
entitled to moral damages. Neither is he entitled to exemplary damages as
defendant has not acted in a wanton reckless and oppressive manner. Likewise, the
decision of the CA to lower the liability of the carrier to P100 for the lost luggage was
proper. Despite the fact that he had not entered into a contract of carriage with PAL
limiting the latter’s liability, he is bound by the provisions of the ticket which states
that for failure to declare a higher value for his luggage, he is bound by the P100
charge for miscarriage.
Velasco vs. CA
FACTS:
The Velasco family leased a property from Magdalena Estates, and sometime in
1962 offered to purchase the lot which Lorenzo Velasco, thru Socorro Velasco, made
a P10K deposit. When plaintiff tendered an amount of P20K to Magdalena, it was not
accepted. Defendant avers that it refused to accept the tendered payment as it
considered the offer to sell rescinded for failure of petitioner to complete the down
payment before Dec 1962. The plaintiff avers that there was a perfected contract to
sell by virtue of the deposit if P10K as down payment.
Petitioners initially filed a motion for specific performance to compel defendants to
execute the sale which was dismissed and for moral and exemplary damages. Upon
appeal, petitioners were required by CA to file their printed record on appeal within
60 days from receipt.
motion for Extension of Time on ground of failures in the printing machines.
Respondents then filed a motion to dismiss the appeal of the petitioners which was
granted by the CA on grounds that the motion for extension which was supposedly
filed by petitioners on Jan 15, 1969 was filed at a later date beyond the required
time; and that the carrier of Makati Post office was merely induced to postmark the
letters addressed to CA and counsel for respondent Jan 15, 1969.
ISSUES:
a. whether the CA gravely abused its discretion in rendering its decision
dismissing the appeal of the petitioners? No. the CA found that the
petitioners failed to file the printed record on appeal on time; thus
it was proper to dismiss the motion for the extension.
b. Whether the agreement of Velasco and Magdalena Estates was a perfected
deed of sale? No. The contracting parties failed to meet and agree
as to the manner of payment of down payment and installments.
An agreement on the manner of payment is an essential element in
a contract of sale.
DECISION:
The CA did not act arbitrarily on grounds that the fact that registry receipts are
dated Jan 15 does not establish an unrebuttable presumption of the real date of
mailing as evidenced by the testimonies of Malindog, a postmaster of the Makati
Post Office. As petitioners failed to comply with its duty of filing the printed record
on appeal within 60 days of receipt thereof, their motion for the extension of period
to file printed record is deemed inexistent.
There was no perfected contract of sale because the minds of the parties did not
meet as regards to the manner of payment. Petitioners also admit that they and
respondents still had to meet how and when the down payment and installment
payments were to be paid. A definite agreement on the manner of payment of the
purchase price is an essential element in the formation of a binding contract of sale.
the fact that a deposit of P10K is made does not prove the perfection of any
purchase and sale agreement.
DISSENT (Teehankee)
The late submission of the printed record on appeal does not call for the dismissal of
the appeal. The fact that the petitioners have made a deposit of P10K deserves a
consideration of the appeal. The 60-day period is imposed as a procedural rule,
indispensable to prevent needless delays and speedy discharge of judicial business.
But this should be distinguished from the mandatory 30-day period to perfect appeal
where failure calls for the dismissal of the unperfected appeal. Such a harsh penalty
appears to be in derogation of the purpose of the Rules of Court which is the proper
and just determination of a litigation.
Weldon vs. CA
FACTS:
Petitioner drafted plans for a theater building which private respondent Cancio
intended to put up. He submitted a proposal for the supervision of the construction
on commission basis which private respondent never signed. Included is a setting up
a revolving fund of P10K for the costs replenished by Cancio and the payment to
petitioner of a 10% of total costs as commission. Upon payment of the P10K,
petitioner sent another proposal stipulating a price of P600K for the construction
entitled “Building Contract”. Subsequent payments were made by Cancio as per
accomplishment until he fully paid the P600K. However, petitioner still demanded
payment of the commission which Cancio refused to pay. Hence, petitioner initiated
a suit for the recovery of the 10% of the total cost of construction as commission.
CFI ruled that the agreement was a contract of supervision of construction and
ordered in favor of the Petitioner, ordering Cancio to pay the commission which the
CA reversed.
ISSUES:
Whether or not parties are bound by the first proposal or by the second proposal?
Parties are bound by the second proposal, Building Contract, as the first
proposal containing the provision on commission was never perfected.
Subsequent payments were only made after the signing of the second
proposal; thus it was the intention of the parties to enforce such contract.
DECISION:
The first proposal is simply a proposal as it was never perfected as a contract. Only
an absolute acceptance of a definite offer manifests consent necessary to perfect a
contract. The mere payment of P10K was not an unqualified acceptance of the offer
of the first proposal. The second proposal, signed by the contracting parties, has
already been consummated when the building was completed. Therefore, its validity
and binding effect cannot be disputed by the contracting parties. The subsequent
payments made by Cancio only after the signing of the Building Contract prove that
it was the second proposal that was intended to be fulfilled. It cannot be said that
these amounts are mere replenishments in accordance to the first proposal. Since it
is fully paid, there is no basis for the petitioner’s demand for the commission. To
allow such payment would be equivalent to changing the terms of the contract
which needed the consent of the owner of the building.
Maria Cristina vs, CA
FACTS:
There was a previous case involving the same parties but different parcels of land
which was filed by Metraco, represented by Ceferina Jocson, against MCFC which the
TC ruled in favor of Metraco rescinding the deed of transfer and ordering MCFC to
reconvey the rights of its acquired land to Metraco. The CA set aside the decision of
the TC. It held that the remedy for nonpayment of the price is either rescission of
the contract or exacting fulfillment. The action for rescission, which must be filed
within 4 years, has been barred by prescription as it was filed by Metraco only after
9 years. In another complaint, Ceferina Jocson sought a similar action for
reconveyance which had the same fate as the earlier case.
In the case a bar, the another action for reconveyance was filed by private
respondent against petitioner which the TC granted and ordered petitioner to
reconvey to her all rights and interest on the land. The appellate court affirmed the
decision of the TC on grounds that petitioners had failed to pay the balance of the
purchase price and they failed to reconvey the land to private respondent even after
they have acceded to it. The act of petitioners in acceding to the demand of private
respondent, after the former’s failure to pay the balance, is a contract. Hence, this
petition.
ISSUES:
Whether the act of the petitioner acceding to the reconveyance of the land
constituted a contract between the parties? No. the letter of petitioner to
private respondent did not reach perfection or the concurrence of definite
offer and unconditional acceptance.
DECISION:
The letter of petitioner cannot be considered a perfected agreement between the
parties as it does not comply with the requisite definite offer or unconditional
acceptance.
Sanchez vs. Rigos
FACTS:
Plaintiff and defendant executed an “Option to Purchase” whereby defendant
agreed and promised to sell to Sanchez a parcel of land; and it shall be terminated if
Sanchez failed to exercise her right to buy within 2 years. However, several tenders
of payment made by Sanchez were rejected by defendant, thus she deposited the
amount to the CFI and commenced an action for specific performance. The
defendant avers that the contract was null and void for being unilateral. The TC
ruled in favor of Sanchez ordering defendant to execute the deed of conveyance. On
appeal, plaintiff alleges that the promise in the contract is reciprocally demandable
pursuant to Art 1479, as the parties had agreed and committed to buy and to sell
the land respectively.
ISSUES:
Whether parties are bound by the Option to Purchase? No. the Option to
purchase was not supported by a consideration distinct from price;
therefore it is merely an offer of a contract of sale and not a contract. It is
binding only when accepted by petitioner which was not done.
DECISION:
The Option to Purchase did not impose upon the plaintiff the obligation to purchase
the defendant’s property, but merely an option to buy. Likewise, there is nothing
stipulated in the contract that the promise is supported by a consideration distinct
from the price for the sale of the land. Art 1354 applies to contract in general while
Art 1479 refers to a sale or an accepted unilateral promise to buy and sell which
shall be binding only if supported by a consideration distinct from price. Since, the
Option to Purchase was not supported by a consideration distinct from price, such
promise is not binding as a contract but merely an offer of a contract of sale not
binding until accepted. The buyer, petitioner in the case, is free to buy or not
(Atkins, Kroll & Co.).
Nation vs. IAC
FACTS:
Petitioners executed a real estate mortgage in favor of respondent bank as security
for a loan. Because of its failure to pay the loan, an extrajudicial foreclosure was
applied and a certificate of sale was executed in favor of the bank. The redemption
period was for two years, and since no redemption was made, a Final Deed of Sale
was issued in the bank’s favor. Petitioners claim that they were granted an
extension period which the bank denied. Petitioner filed a petition for writ of
possession which court granted. Subsequently, the bank filed a complaint for the
annulment of the deed of sale alleging that it was premature since they were
granted an extension to redeem the property. TC ruled that there was indeed an
extension in the redemption period although the petitioners were not given a
specific time to pay and redeem but were given such time as their means would
permit. The redemption period would have expired on Jan 1977 but the Certificate of
Final Sale was only executed on Feb 1977 strengthening the petitioner’s claim of an
extension. This does not novate the original contract on mortgage, merely changes
the period of redemption. TC ruled that a specific time must be set and ordered the
annulment of the Deed of Sale. Petitioners are assailing that the TC erred in not
holding that the offer by appellees to the appellants were made after the
redemption period had already expired.
DECISION:
The mere declaration of appellees that they tendered the redemption money within
the period but was refused by the bank is untenable as there was no valid reason for
refusal. And it there was indeed a refusal , they should have deposited the money
with the sheriff which they failed to do. the right to redeem becomes functus officio
on the date of expiry, and its exercise after the period is not really redemption but
of repurchase. And repurchase of a foreclosed property imposes no obligation as the
purchaser may or may not sell the property.
Serra vs. CA
FACTS:
Respondent bank, desiring to put up a branch in Masbate, negotiated with
petitioner, owner of a parcel of land, for the purchase of the land. Instead, a
Contract of Lease with Option to Buy was executed which provides that the
respondent bank has an option to purchase the land within 10 years and petitioner
must have, within the 10 year period, registered the land under Torrens System.
Failure to register the land under Torrens System will give the bank the right to be
paid the market value of the building. Petitioner alleges that as soon as the property
was registered, he kept on pursuing the bank manager to purchase the lot, and it
was only after 10 years the respondent bank decided to buy the property to which
petitioner replied that he is no longer selling the property.
A complaint for specific performance was filed by respondent bank alleging that the
informed the petitioner of their desire to stay permanently once the office was
opened. Petitioner argues that the option was not supported by any consideration
distinct from price and thus is not binding; and that the delayed acts forfeited the
claim of the bank. TC ordered the execution of a deed of sale in favor of bank which
was affirmed by CA on ground that it was supported by a distinct consideration.
ISSUE:
Whether the Contract of Lease with Option to Buy was binding on the parties? Yes.
For failure of the petitioner to withdraw the unilateral contract to sell
before the acceptance of the bank, it became a bilateral contract between
the parties where each party may demand fulfillment. The acts of the
petitioner also meant that he understood the provisions of the contract.
DECISION:
The contract was valid between the parties as it was considered a contract of
adhesion which is binding as ordinary contracts. In a unilateral promise to sell, when
the debtor (seller) fails to withdraw the promise before the acceptance by the
creditor (buyer), it becomes a bilateral contract to sell and to buy because of the
acceptance of the buyer there is already a meeting of minds. In addition, the
subsequent acts of petitioner of registering the land under Torrens system and
pursuing the manager to effect the sale means he understood the terms of the
contract.
Ang Yu Asuncion vs. CA
FACTS:
Petitioners are tenants of a commercial and residential spaces owned by defendant
Unijeng since 1935. They were informed by the defendants that the latter were
selling the premises and the former were given the priority to acquire the same. The
petitioner filed a complaint to compel the defendants to sell the property to them for
failure to specify the terms and conditions of the sale. TC, however, found that the
there was no contract of sale at all as defendant’s offer to sell was never accepted
by the petitioners since they did not agree upon the terms of the proposed sale. CA
affirmed but added that the claim for specific performance and the demand for
damages cannot be pursued as there was no meeting of the minds.
However, the Unijeng executed a Deed of Sale, transferring the property to Buen
Realty who are considered the new owners of the property. Buen Realty demanded
that the lessees, including petitioners, to vacate the premises. The petitioners filed a
motion for execution of the earlier decision on grounds that it has become final to
the effect that should the defendants decide to sell the property petitioners are
given the right of first refusal. Thus a writ of execution was executed. However, CA
ruled that orders of the lower court are without force.
ISSUES:
Whether the right of first refusal granted to the petitioner binds the owners of the
properties to sell the same to them? No. it is not a perfected contract of sale
as the right to exercise the right is dependent on the owner;s intention to
enter into a contract with the buyer. The breach of such right cannot
justify the issuance of a writ of execution nor specific performance.
DECISION:
Until the contract is perfected, it cannot serve as a binding juridical relation. In the
law on sales, the “right of first refusal” cannot be deemed a perfected contract of
sale nor can it be considered an option or offer as this would require a certainty on
the object and cause of the contract. In a right of first refusal, while the object be
determinate, the exercise of right is dependent on the owner’s intention to enter
into a binding relation with the buyer. Thus, a breach of a right of first refusal, not
being a perfected contract, cannot justify an issuance of writ of execution nor
sanction a specific performance. Lastly, there was nothing in the decision of the CA
the decreed he execution of a deed of sale between the Unijengs and the petitioner
or fixing the price of the sale.
Equatorial vs. Mayfair
FACTS:
Carmelo owned a parcel of land with a two story building. He entered into a contract
of lease with Mayfair for use by the latter as a movie theater, Maxim Theater. It
entered into a second contract for lease of another portion of the contract to put up
another movie house, Miramar theater. The contracts of lease provided that if
Carmelo desire to sell the leased properties, Mayfair shall be given 30-day exclusive
option to purchase the same; and in case it is sold to one other than Mayfair, the
new owner is bound to recognize the lease. Subsequently, Carmelo informed Mayfair
of its desire to sell the entire property, but Mayfair answered that they only desire to
buy the leased portion. Four years later, Carmelo sold its entire land and building,
including the leased premises housing the two theaters, to petitioner by virtue of a
Deed of Absolute Sale. thus, Mayfair filed an action for specific performance and
annulment of the sale of the leased portion. Carmelo, on the other hand, averred
that it had informed Mayfair of its desire to sell the property and the counter-offer of
Mayfair to buy only the leased portions was impossible; and that the option to
purchase by Mayfair is null and void for lack of consideration. LC dismissed the
complaint on ground that paragraph 8 of the lease contracts is an option clause
which cannot bind Carmelo to sell the property for lack of distinct consideration.
CA reversed the decision of the LC on ground that since paragraph 8 does not state
a fixed price for the purchase of the leased portion, an essential element for a
contract of sale, paragraph 8 is a right of first refusal and not option to purchase. It
also ruled that the deed of Absolute Sale between Carmelo and Equatorial was
covered by 4 titles demonstrating the possibility of independently selling each
parcel. Hence, this petition.
ISSUE:
Whether paragraph 8 of the lease contracts was an option to purchase or a right of
first refusal?
It is a right of first refusal as there is no definite price nor an independent
consideration is stipulated.
DECISION:
It is not an option clause which must indicate a definite price to be binding but a
right of first refusal. No option to purchase has been granted to Mayfair under the
lease contracts as nothing in paragraph 8 would bring them into the ambit of usual
offer or option requiring an independent consideration.
Petitioners acted in bad faith in rendering paragraph 8 inutile. Carmelo violated the
right of first refusal granted to Mayfair when Carmelo abandoned its negotiations
then sold the property to Equatorial within the 30-day exclusive option. Since
Equatorial is a buyer in bad faith, sale of the property is rescissible. Mayfair can only
exercise its right of first refusal only if the fraudulent sale is rescinded.
SEPARATE OPINION (Padilla)
The court should order the rescission of the sale to let Mayfair exercise its right of
first refusal. Mayfair should not be required to pay a compounded interest of 12%
per annum as there was no stipulation in writing and neither had Mayfair incurred
delay in the performance of its obligation.
SEPARATE OPINION (Panganiban)
With respect to the sale of property, Mayfair was not a party but insofar as the right
of first refusal is concerned, Mayfair is the creditor. As such creditor, Mayfair had the
right to impugn the sale because it was done to defraud him of his right to acquire
the property. Rescission and specific performance would be effective remedies to
enforce a right of first refusal. The right of first refusal established an obligation on
the part of Carmelo to deliver to Mayfair a formal offer of sale in the event the
former decides to sell it. But instead, Carmelo gave it to Equatorial, violating his
right of first refusal.
C & C Commercial vs. Menor
FACTS:
Justice Cloribel of CFI of Manila ordered the GM of NAWASA to allow petitioner to
participate as a bidder for the supply of asbestos cement pipes wherein it was the
lowest bidder. Menor, the GM of Nawasa, required petitioner to submit tax clearance
certificate pursuant to Presidential Administrative Order 68. Long after Cloribel’s
judgment when he had no more jurisdiction to amend it, petitioner filed a motion
wherein it prayed that Nawasa officials award the contract for the supply of asbestos
to petitioner which Cloribel granted. Subsequently, petitioner filed in LC a petition
for mandamus praying that Nawasa and Menor be restrained from awarding the
contract to another bidder and be ordered to award the same to petitioner which
was denied.
Nawasa awarded the contract to Regal Trading as the lowest complying bidder
which was approved by the President. Petitioner asked this court to enjoin the
implementation of the said contract.
ISSUE:
Whether the order of Judge Cloribel compelling Nawasa to award the said contract to
petitioner was binding in the part of Nawasa? No. Judge Cloribel did not just act
without jurisdiction but refusal of Nawasa to grant the contract to
petitioner was likewise justified as it failed to comply with the requirement
of a tax clearance certificate. Also, what was delivered to petitioner was
merely an advertisement for a bidding which does not bind the advertiser
to accept the bids.
DECISION:
Judge Cloribel acted without jurisdiction in issuing his order thus the order is void.
Nawasa was likewise justified in not awarding the contract to petitioner because it
had not tax clearance certificate since it had a pending tax case in the BIR. It is not
the duty of Nawasa to award the contract to petitioner even if it was the lowest
bidder, as according to its Addendum no. 1 it reserved the right to reject the bid of
any bidder; thus, petitioner has no cause to dispute the award as it was rejected by
Nawasa. Advertisements for bidders are simply invitation to make proposals and the
advertiser is not bound to accept the lowest or highest bidder unless the contrary
appears.
Tang vs. CA
FACTS:
Lee See Guat, a woman who spoke only Chinese and was illitrate, applied for a life
insurance with respondent Philippine American Life Insurance. It was written in
English. She again applied for an additional insurance and because her first
application has just been approved, no further medical examination was made.
Thereafter, she died of lung cancer and her nephew, the beneficiary, claimed for
their face value which respondent refused to pay on ground that insured was guilty
of concealment and misrepresentation at the time she applied for the insurance
policies. The case filed by the beneficiary was denied by LC whose decision was
affirmed by CA on ground that the insured deliberately concealed material facts
about her condition. Petitioner avers that because insured spoke only Chinese and
was illiterate, she could not be held guilty of concealment because insurer has not
proved that the terms had been fully explained to her.
DECISION:
The obligation to show that the terms of the contract had been fully explained
devolves on the party seeking to enforce it. Case at bar, the company is not seeking
to enforce the contract; hence it was under no obligation to prove that the terms
were fully explained. Thus, Art 1332 is inapplicable in the case at bar and the
insured was guilty of concealment.
Cayabyab vs. IAC
FACTS:
Respondents Gabriel, Soledad, Francesca are children of co-respondent spouses
Faustino Landingin and Agapita Ferrer. Petitioner is the son of Agapita Ferrer by her
first husband, Ludovico Cayabyab. In a complaint filed against petitioner,
respondents asked for the annulment of the deeds of sale and the recovery of
possession of four parcels of land. They alleged that petitioner was able to obtain
the signatures of the spouses through fraud, undue influence, and abuse of
confidence. Petitioner avers that he acquired the land by virtue of a Deed of
Absolute Sale executed by the spouses in his favor. TC dismissed the complaint
which IAC reversed ordering the annulment of the deeds of sale and declaring the
heirs of the spouses as owners of the parcels of land. Hence, this petition.
DECISION:
The subject lands formerly belonged to the conjugal partnership of spouses. It is a
general rule that whoever alleges fraud must substantiate his allegation since it is
presumed that a person takes ordinary care. An exception to such is art 1332
concerning an illiterate party. In the case at car, both spouses were illiterate and can
only understand Pangasinense and Ilocano but all the deeds were written in English.
Since fraud is alleged by respondent, the burden shifted to the petitioner to prove
the contract had been explained to the vendors. But petitioner failed to discharge
this burden. Likewise, the testimonies of Ceralde and Cerezo are not sufficient to
rule in favor of petitioner as Ceralde, as an alleged witness, was absent went the
alleged act of explaining the terms of the contract in Pangasinense occurred.
De Leon vs. CA
FACTS:
Private respondent and petitioner entered into a de facto separation due to
irreconcilable differences, with petitioner going to the US where she obtained
American citizenship. She filed with the Superior Court in San Francisco a petition for
the dissolution of marriage (divorce) against private respondent where she is
likewise claiming for support and distribution of properties. Petitioner succeeded in
entering into a Letter-Agreement with her mother-in-law which states that the latter
binds herself to answer for the obligations of private respondent Jose Vicente
regarding support and distribution of the properties. Macaria, the mother-in-law,
made cash payments to Sylvia in compliance with her obligation. Upon approval by
the court of the dissolution of their conjugal partnership, private respondent moved
for reconsideration alleging that petitioner made a verbal reformation as there was
no such agreement for the payment of P4,500 monthly support. While this was
pending, Macaria filed a motion to intervene alleging that she was the owner of the
properties which was granted. She is likewise assailing the validity of the Letter-
Agreement which had for its purpose the termination of the marital relationship
since her signing was due to fear of a troublesome separation of his son. TC
rendered Letter-Agreement as null and void. Which CA affirmed. Hence, this petition.
DECISION:
Contained in the Letter-Agreement was word “relations” which may pertain to
property relation as petitioner alleges it to be or marital relations as Macaria alleges
it to be. Such ambiguity in a contract must be construed against the party who
caused the ambiguity. Thus, it must be ruled against Sylvia who constructed the
Letter-Agreement. However, there is likewise no valid cause in favor of Macaria.
Macaria’s claim that Sylvia threatened her to bring Jose Vicente to court which led
her to sign the Letter-Agreement, is not the intimidation referred by the law which is
a real and serious fear. Neither was it shown that the condition that Sylvia will
eliminate her inheritance rights moved Macaria to enter into the contract. It was
concluded by the Court that both parties acted in violation of the laws but the
doctrine of pari delicto cannot be applied. Hence it must be ruled in favor of Macaria.
Abando vs. Lozada
FACTS:
Petitioners, owners of 3 parcels of land , met Pucan, the president of Prime
Exchange through the efforts of the Cuevas, the treasurer of Prime Exchange Co. An
offer for the spouses to invest in Prime Exchange and to incorporate their lots as
contribution to Prime Exchange was made; but was rejected by the spouses.
Instead, they leased the lots where they promised to construct a building
administered by the spouses and guaranteed the spouses an annual income. Thus,
Pucan and Cuevas presented copies of the alleged lease contract to the spouses for
their signatures. Unknown to the spouses, only one of the copies is the lease
contract. Through deceit and trickery, they were able to obtain the signatures of the
spouses without reading everything. Subsequently, Pucan borrowed the transfer
certificates of title from the spouses on pretext that it was needed for the
construction of the building. Again, they succeeded in making the spouses sign the
document purportedly needed by the engineer. The spouses discovered that the
first batch of documents was really a Joint Venture Agreement and the second is a
Deed of Assignment of the land in favor of Prime Exchange. No building was ever
erected nor did they become stockholders of Prime Exchange. They later found out
that the lands were sold to Pucan who mortgaged two parcels to spouses Lozada.
For failure of Pucan to pay the loan, extrajudicial foreclosure was instituted leading
to the transferring of the titles to the land to spouses Lozada as the highest bidder.
Petitioner filed an action for the revival and restoration of the Transfer Certificates,
the nullification of the Joint Venture Agreement , the Deed of Assignment and the
subsequent mortgage which TC granted. CA modified the decision declaring spouses
Lozada as lawful owners of the two parcels of land.
DECISION:
The acts done by Cuevas and Puca constitute fraud. When fraud is employed to
obtain the consent, the contract is merely voidable and not void as petitioners allege
it to be. Hence, it was valid since nullity was never decreed by the court. In addition,
the spouses Lozada are buyers in good faith or an honest intention to abstain from
taking advantage of another. The spouses were not aware of the fraud and deceit
used by Pucan upon the original owners of the land as they had no duty to inspect
the property before the grant of the loan. Absence of this knowledge, they are
considered lawful owners of the land.
Alcasid vs. CA
FACTS:
Private respondent offered to purchase from petitioner two parcels of land it owns. It
replied that it was willing to sell her share if her co-owners would sell their
respective shares. The petitioner engaged the services of Atty. Fernandez to
negotiate the sale, without knowing that he was also representing private
respondent. Atty. Fernandez confirmed to petitioner that all her co-owners were to
sell their respective shares. Thus, petitioner signed a Deed of Sale. however, upon
learning that her co-owners did not agree to sell their shares, petitioner filed a
complaint for the annulment of the contract of sale which TC granted but was
reversed by CA on ground that the complaint stated no cause of action. Hence, this
petition. Petitioner alleges that the complaint was based upon fraud and undue
influence which vitiated her consent; and were it not for the misrepresentation of
Atty. Fernandez, she would not have agree to sell her share.
DECISION:
On the matter of fraud, to invalidate consent, error must be real and not one that
could have been avoided by the party alleging it. Petitioner could have avoided the
alleged mistake had she exerted efforts to verify from her co-owners if they really
consented to sell their shares. As to undue influence which is a destruction of the
free agency of the party, the petitioner executed the contract of her own free will
and choice and not from duress. Hence, petitioner did not have cause of action.
Samson vs. CA
FACTS:
A Commercial unit owned by Susana Realty Corp. was leased to private respondent
Angel Santos for her haberdashery store, Santos & Sons. Susana Realty, lessor,
informed respondents that the lease contract would not be renewed upon its expiry.
Nonetheless, the lease contract extended and respondents continued to occupy
beyond the extended term. Respondents were informed by the lessor of the
increase in rentals, pending renewal of his contract until the arrival of Rosa
Madrigal, one of the owners of Susana Realty. Subsequently, petitioner offered to
buy the store of Santos & Sons and respondent’s right to lease. Private respondent
presented petitioner with a letter informing the latter that the lease contract was
impliedly renewed and will be formally renewed upon arrival of Tanya Madrigal.
Petitioner paid P150K as down payment and the balance of P150K will be paid upon
formal renewal of the lease contract; and subsequently occupied the store.
However, petitioner was informed by Susana Realty, addressed to Santos & Sons,
ordering the latter to vacate as private respondent Santos failed to renew the lease.
Petitioner filed an action for damages against private respondent Santos for fraud
and bad faith when the latter stated that the lease contract with Susana Realty has
been impliedly renewed; and that induced him to buy the store. The TC ruled in
favor of petitioner but was modified by CA, reducing the amount awarded. Hence,
this petition.
ISSUE:
Whether private respondent Angel Santos committed fraud and bad faith in
representing to petitioner that the contract of lease has been impliedly renewed by
Susana Realty? No. As a purchaser of the properties, petitioner should have
verified the status of the lease contract with Susana Realty if it was indeed
renewed or not. For failure to exert efforts and exercise diligence, it
cannot now claim that it has been deceived.
DECISION:
Private respondent was not guilty of fraud nor bad faith as the lessor had no
intention to renew the lease contract as evidenced by the extension granted only
until Dec 1984. Since the agreement was a conditional contract, the object of which
relates to a future right, petitioner had every opportunity to verify the status of the
lease contract with Susan Realty but failed to do so. For failure to exercise due
diligence and as no efforts were exerted by the petitioner, he cannot now claim that
he has been deceived. No clear and convincing evidence were presented to prove
fraud.
Umali vs CA
FACTS:
Santiago Rivera was the nephew of Mauricia Castillo. The Castillo family owns 4
parcels of land which was given as security for a loan from DBP. For failure to pay,
foreclosure of the property was about to be initiated. However, instead of foreclosing
the properties a MOA was executed between Slobec Realty, represented by its
President Santiago Rivera, and the Castillo Family converting into a subdivision the 4
parcels of land to raise the necessary fund. Rivera approached Cervantes, President
of Bormacheco, to purchase 2 tractors evidence by a Sales Agreement between
Bormacheco and Slobec. In return, Slobec executed in favor of Bormacheco a
Chattel Mortgage over the tractors as security for the balance. As further security,
Slobec obtained from Insurance Corporation of the Philippines (ICP) a Surety bond,
secured by an Agreement of Counter-Guaranty with Real Estate Mortgage executed
by Rivera and Mauricia Castillo as mortgagor and ICP as mortgagee. Thus ICP
guaranteed the obligation of Slobec with Bormacheco.
For violation of the terms and conditions of the Counter- Guaranty Agreement, the
properties of the Castillos were foreclosed. For failure to redeem the properties
within 1 year, ownership of the ICP was consolidated evidenced by a Deed of Sale of
Real Estate. Then, ICP sold and transferred the titles to PM Parts the parcels of land.
PM Parts ordered Mauricia Castillo to vacate the premises, but it refused to do so.
Petitioner, the appointed administratrix of the properties, filed an action for the
annulment of the title. Petitioners aver that all the transactions entered between
Rivera, as President of Slobec and Cervantes, as VP of Bormacheco (i.e. Sales
Agreement, Chattel Mortgage and the Agreement of Counter Guaranty) are all
fraudulent and simulated as Rivera never paid Bormacheco for the tractors.
Therefore the transactions are all null and void. TC granted the complaint on ground
that all the transactions were void for being entered into in fraud but was reversed
by CA.
ISSUES:
a. Whether the transactions entered into are null and void for being entered
into with fraud and for being absolutely simulated? No. The acts of
Rivera proves that the petitioners intended to be bound by the
terms and conditions of the contracts; thus the defense of
simulation cannot be justified. Likewise, fraud cannot prosper as
petitioners failed to show that they were induced to enter into the
contract through insidious words or machinations.
b. Whether the foreclosure instituted by ICP on the subject properties are
valid? No. ICP was never liable to Bormacheco for failure of Slobec
to comply with its obligation to the former. Bormacheco never
notified ICP in writing to demand payment, pursuant to the
Suretyship contract, nor was ICP liable for the defaults of Slobec
after the expiry of the Contract.
DECISION:
Petitioners are seeking to pierce the veil of corporate entity (corporation is a distinct
juridical personality from its stockholder) of Bormacheco, ICP, PM Parts, alleging that
these corporations employed fraud in causing the foreclosure and the sale of
properties petitioners owned. But such in not the proper remedy as petitioners do
not seek to impose a claim against the individual members of the three corporations
but merely seeking the nullity of the foreclosure sale.
The failure of Rivera to pay the consideration in the Sales Agreement with
Bormacheco cannot justify a declaration of nullity of the contract. The contracts
entered into by the parties are neither absolutely simulated of fraudulent. Absolute
simulation occurs when the parties do not intend to be bound by the contracts at all.
However, the acts of Rivera in receiving, using the tractor and issuing a surety bond
in favor of Bormacheco proves that the petitioners intended to be bound by these
contracts. Neither an allegation of fraud prosper as petitioners failed to show that
they were induced to enter into the contract through insidious words or
machinations.
The Suretyship Contract provides that ICP shall not be liable for any claim not filed in
writing within 30 days from the expiration of the bond. There was no evidence that
Bormacheco notified ICP in writing to demand payment. Hence, ICP could not validly
foreclose the properties as it never incurred any liability under the surety bond for
failure to be notified in writing. Also, the guaranty of ICP in favor of Slobec was valid
only for 12 months and thereafter the liability of Slobec became an unsecured
obligation. The default of Slobec during the period after the expiry of the guaranty
cannot be a valid basis for the exercise of the right to foreclose by ICP as it was not
liable for the said obligation.
Lastly, PM Parts cannot raise the defense of good faith in buying the properties as
Cervantes, serveing as VP of Bormacheco and later President of Pm Parts cannot be
said to have no knowledge of the transactions between Bormacheco and the
petitioners.
Carino vs. CA
FACTS:
Pablo Encabo applied with the Bureau of Lands to purchase a parcel of land which
was part of the Tuason Estate purchased by the Government for resale to tenants
qualified to own public land in the Philippines. Encabo, through an agent, came to an
agreement with Quesada, transferring rights over the lot to the latter, conditioned
on approval by the Land Tenure Administration (LTA). LTA, unaware of the transfer
of rights to Quesada, adjudicated the lot in favor of Encabo evidenced by an
Agreement to Sell. Upon knowledge of the transfer of rights of Encabo to Quesada,
LTA disapproved the same on ground that the Quesada was unqualified to acquire
the lot as he is already a lot owner. Notwithstanding, Quesada entered into
possession of the lot and allowed his agent, the wife of petitioner, to occupy the
same.
Encabo executed a Deed of Sale of house and Transfer of rights, allegedly conveying
to petitioner his rights over the lot subject to approval of LTA. However, Encabo and
Quesada executed a document wherein the latter alleged;y resold to Encabo the
house and rights over the lot. Petitioner filed a petition with LTA seeking the
approval of the transfer of rights pursuant to the Deed of sale of house and transfer
of Rights to which Encabo objected. Essentially, Encabo and petitioners claimed the
right to purchase the lot to which LTA ruled that status quo should be maintained.
The Office of the President affirmed the same.
Thereafter, the Encabos filed with CFI an acitionto declare them the owners of the
lot which the TC granted which CA affirmed. Hence, this petition.
ISSUE:
Whether the Deed of Sale of house and Transfer of Right, on which petitioners have
based their application over the lot, is simulated and therefore an inexistent deed of
sale? Yes. The inconsistencies in the testimonies of petitioner regarding
the documents, failure to produce receipts evidencing the payment to LTA,
absence of the name of the petitioners as transferee of the rights over the
lot in the application filed with LTA indicates that the agreement was
indeed simulated; therefore is inexistent.
DECISION:
The parties knew that the Deed of Sale of House and Transfer of Rights was fictitious
and simulated where none of the parties intended to be bound thereby. First, the
testimony of petitioner during direct examination was inconsistent with her
testimony before LTA (e.g. amount of payment to Encabos, place of the signing of
the Deed); hence it shows that no actual sale took place between the Encabos and
petitioners. Second, since petitioners could not produce the receipts evidencing the
payment they made to LTA for the lots nor the Agreement to sell indicates that the
agreement was indeed simulated. Third, the names of the petitioner were never
mentioned as transferees in the two application with the LTA filed by Encabo.
Fourth, the document was executed in November 1958 while petitioners asked LTA
to approve the transfer of Encabo’s rights only on 1960. Lastly, the petitioners were,
as admitted by Encabo and Quesada, meant only to be dummies to protect the
money invested by Quesada to purchase the rights.
Olegario vs. CA
FACTS:
Spouses Marciliano and Aurelia Olegario, a childless couple, owned a parcel of land.
Petitioner Bonifacio Olegario is the brother of Marciliano and petitioner Adelaida is
the niece of Aurelia. Aurelia died, and to preclude her heirs from inheriting and to
avoid payment of taxes, a Deed of Absolute Sale was executed in favor of private
respondents, who the couple reared and educated. The contract of sale was not
registered. Marciliano died intestate and petitioner, being sole heirs of the spouses,
executed a Deed of Extra-judicial Settlement of the Estate in their favor.
Subsequently, they sold the land to Elena Adaon and Nestor Tejon. Private
Respondent filed a motion for the Annulment of Extra-judicial Settlement against
petitioners. On the other hand, petitioners assailed the Deed of Absolute Sale
between tehe spouses and private respondent. Elena Adaon and Nestor Tejon aver
that they were buyers in good faith. TC ruled in favor of private respondents, thus
the Extra-judicial Settlement and the Sale as annulled. CA affirmed this.
ISSUE:
Whether the inheritance right of the petitioners can be prejudiced by the sale of lot
by the deceased Marciliano to private respondent? Since, in the case at bar, the
motive of Marciliano in selling the land to private respondent was to
frustrate petitioner’s right of inheritance and avoid payment if tax, said
sale is fictitious and is thus null and void. Likewise, the sale cannot affect
third persons as the sale was not registered, pursuant to the Property
Registration Decree.
DECISION:
Petitioners, being the heirs of the spouses, are entitled to inherit the property. In a
contract of sale, consideration is different from motive. Consideration is some right,
interest, benefit conferred upon the promissory, to which he is otherwise, not
lawfully entitled. Motive is the condition of the mind which incites action. There may
be instances were motive of the parties may be regarded as the consideration when
it predetermines purpose of the contract. Since, in the case at bar, the motive of
Marciliano in selling the land to private respondent was to frustrate petitioner’s right
of inheritance and avoid payment if tax, said sale is fictitious and is thus null and
void.
In addition, the sale cannot affect third persons as the sale was not registered,
pursuant to the Property Registration Decree. Thus, the sale cannot prejudice
petitioners as well as Elena Adaon and nestor Tejon.
Liam Law vs. Olympic Sawmill
FACTS:
Plaintiff loaned P10K to defendant. When it was due, defendants failed to pay the
loan and the debtors asked for an extension of three months. Subsequently, the
parties executed another loan and the payment of P10K was extended but the
obligation was increased by P6K. defendants again failed to pay, thus plaintiff
instituted a collection case. Defendant, however, claimed that the addition P6K
constitutes usurious interest. TC ruled in favor of plaintiff ordering defendants to pay
tP10K plus the sum of P6K.
DECISION:
Regarding the agreement of the parties, the payment of P6K is presumed valid,
unless the debtor proves the contrary. Since, defendants failed to prove that the P6K
obligation was illegal; the sum binds the defendants, representing loss of interest
income, attorney’s fees and incidentals. Regarding to the defense that the sum of
P6K is a usurious interest, Usury Law which states the recovery of the usurious
interest paid, is not applicable to a case, as in the present case, where it is the
defendant and not the plaintiff who is alleging usury.