47. ACOL vs. PHIL Acol lost his credit card issued by respondent.

t. The same being contrary to public policy. Article 1306 of

COMM CREDIT He immediately informed the latter of such loss. the Civil Code prohibits contracting parties from
PhilComm advised him to put into writing the establishing stipulations contrary to public policy.
notice of loss and to submit it, together with the
extension cards of his wife and daughter, w/c
Acold did.

As petitioner points out, the effectivity of the cancellation

Acol’s card was used by somebody which
amounted to P76,067.28. The accredited
establishments reported the invoices for such
purchases to respondent which then billed
petitioner for that amount. Acol refused to pay
but respondent said: that it was the most
“practicable procedure and policy of the
company.” It cited provision no. 1 of the “Terms
and Conditions Governing The Issuance and Use
of the Bankard” found at the back of the
application form:
xxx Holder’s responsibility for all charges
made through the use of the card shall
continue until the expiration or its return
to the Card Issuer or until a reasonable
time after receipt by the Card Issuer of
written notice of loss of the Card and its
actual inclusion in the Cancellation
Bulletin. Xxx
of the lost card rests on an act entirely beyond the
control of the cardholder. Worse, the phrase “after a
reasonable time” gives the issuer the opportunity to
actually profit from unauthorized charges despite receipt
of immediate written notice from the cardholder.
Under such a stipulation, petitioner could have
theoretically done everything in his power to give
respondent the required written notice. But if respondent
took a “reasonable” time (which could be indefinite) to
include the card in its cancellation bulletin, it could still
hold the cardholder liable for whatever unauthorized
charges were incurred within that span of time. This
would have been truly iniquitous, considering the amount
respondent wanted to hold petitioner liable for.

W/N provision no. 1 of the Terms and

Conditions was valid and binding on the
petitioner, given that the contract was one
 of adhesion. NO.
49. PNB vs. PADILLA Padilla was granted by PNB a credit line of
P1.8M, secured by a Real Estate Mortgage, for a
term of 2 years, with 18% interest per annum.
Private respondent executed in favor of the PNB
a Credit Agreement, 2 Promissory Notes—
P90,000 each, and a Real Estate Mortgage
Contract. All these contracts contained a uniform
stipulation that PNB may increase the interest
whenever it may please.
W/N the creditor, PNB, may unilaterally
change or increase the interest rate
stipulated at will and as often as it
pleased. NO.
The unilateral action of PNB in increasing the
interest rate on the private respondent’s loan
violated the mutuality of contracts ordained in
Art. 1308: The contract must bind both
contracting parties; its validity or compliance
cannot be left to the will of one of them.
In order that obligations arising from contracts
may have the force of law between the parties,
there must be mutuality between the parties
based on their essential equality. A contract
containing a condition which makes its
fulfillment dependent exclusively upon the
uncontrolled will of one of the contracting parties
Hence, even assuming that the P1.8M loan agreement
between PNB and the private respondent gave PNB a
license (although in fact there was none) to increase the
interest rate at will during the term of the loan, that
license would have been null and void for being violative
of the principle of mutuality essential in contracts. It
would have invested the loan agreement with the
character of a contract of adhesion, where the parties do
not bargain on equal footing, the weaker party’s (the
debtor) participation being reduced to the alternative “to
take it or leave it.” Such a contract is a veritable trap for
the weaker party whom the courts of justice must protect
against abuse and imposition.
PNB’s successive increase of the interest rate on the
private respondent’s loan, over the latter’s protest, were
arbitrary as they violated an express provision of the
Credit Agreement—Sec. 9.01---that the terms “may be
amended only by instrument in writing signed by the
party to be bound as burdened by such amendment.” The
increases imposed by PNB also contravene Art. 1956 of
the Civil Code which provides that “no interest shall be
due unless it has been expressly stipulated in writing.”
The debtor herein never agreed in writing to pay the
interest increases fixed by the PNB beyond 24% per
annum, hence he is not bound to pay a higher rate than
that.
 is void.

54. MONTECILLO vs.

REYNES

55. FRANCISCO vs.

HERRERA

56. CORONEL vs.

CONSTANTINO

57. LAUDICIO vs.

ARIAS

58. VILANUEVA vs. CA

59. ADELFA –jovits

60. SERRA vs. CA

61. MALBAROSA vs. CA

62. VDA. DE APE vs. CA Fortunato De Ape—1 of the 11 heirs of deceased
—allegedly sold his part of the inherited land to
one Lumayno as evidenced by a RECEIPT.
Lumayno wanted to register the claimed sale
transaction, she demanded that Fortunato
execute the corresponding deed of sale and to
receive the balance of the consideration.
A contract of sale is a consensual contract, thus, it is
perfected by mere consent of the parties. For there to be
a perfected contract of sale, however, the following
elements must be present: consent, object, and price in
money or its equivalent.

To be valid, consent must meet the following requisites:

Fortunato denied Lumayno’s claim and insisted
that what they had was an EXPIRED contract of
LEASE. He never sold his share in Lot-A to
Lumayno and that his signature appearing on
the purported receipt was forged.
• it should be intelligent, or with an exact
notion of the matter to which it refers;
• it should be free and it should be
spontaneous. Intelligence in consent is
vitiated by error; freedom by violence,
intimidation or undue influence;
 Lumayno: when their lease contract was about
to expire they agreed instead to enter into a
contract of sale. Thereafter, she asked her
son-in-law Flores to prepare the aforementioned
RECEIPT. Flores read the document to
Fortunato and asked the latter whether he
had any objection thereto. Fortunato then
went on to affix his signature on the
receipt.
W/N the receipt signed by Fortunato proves
the existence of a contract of sale between
him and Lumayno. NO.
63. MAYOR vs. BELEN Mayor—seller—sold to Belen—buyer—a parcel of
land for P18K. Belen had paid almost 2/3 of the
price when she RESOLD the same to Mayor,
evidenced by Kasulatan ng Bilihang Tuluyan.
Belen accepted the same land as security for
Mayor’s loan from her in the amount of P12K,
evidenced by Kasulatan ng Sanglaan.
spontaneity by fraud.
In this jurisdiction, the GENERAL RULE is that he who
alleges fraud or mistake in a transaction must
substantiate his allegation as the presumption is that a
person takes ordinary care for his concerns and that
private dealings have been entered into fairly and
regularly. The EXCEPTION to this rule is provided for
under Article 1332 of the Civil Code which provides that
"[w]hen one of the parties is unable to read, or if the
contract is in a language not understood by him, and
mistake or fraud is alleged, the person enforcing the
contract must show that the terms thereof have been
fully explained to the former."
Flores’ testimony: he was very much aware of Fortunato's
inability to read and write in the English language, he did
not bother to fully explain to the latter the substance of
the receipt. It is precisely in situations such as this when
the wisdom of Article 1332 of the Civil Code readily
becomes apparent which is "to protect a party to a
contract disadvantaged by illiteracy, ignorance, mental
weakness or some other handicap.
ART. 1338. There is fraud when, through insidious words
or machinations of one of the contracting parties, the
other is induced to enter into a contract which, without
them, he would not have agreed to.
FRAUD refers to all kinds of deception, whether through
insidious machination, manipulation, concealment or
misrepresentation to lead another party into error. The
deceit employed must be serious. It must be sufficient to
impress or lead an ordinarily prudent person into error,
taking into account the circumstances of each case.
 Belen then filed for ANNULMENT of these 2
Kasulatans grounded on FRAUD. Mayor made
her believe that the first sale to her (Belen) was
void and that she might lose what she had
already paid which amounted to 70% of the
purchase price.
It turned out that the scheme was in fact a ruse
employed by Romulo and Andrea to re-acquire
the property, thus, Lourdes’s consent in the
execution of the Kasulatan ng Bilihang Tuluyan
and Kasulatan ng Sanglaan was obtained
through fraud and undue influence.
W/N FRAUD attended the execution of the
Kasulatan ng Bilihan and Kasulatan ng
Sanglaan. YES.
64. BAUTISTA vs. CA The deceased uncle of petitioner allegedly sold
and conveyed to the latter a land during the
Lourdes M. Belen had a limited educational attainment.
Although the 2 Kasulatans executed in Tagalog, a close
scrutiny thereof shows that they are practically literal
translations of their English counterparts. Thus, the mere
fact that the documents were executed in the vernacular
neither clarified nor simplified matters for Lourdes who
admitted on cross-examination that she merely finished
Grade 3, could write a little, and understand a little of
the Tagalog language.
CA not in fault when it invoked Article 1332 of the Civil
Code which states:
When one of the parties is unable to read, or if the
contract is in a language not understood by him, and
mistake or fraud is alleged, the person enforcing the
contract must show that the terms thereof have been
fully explained to the former.
As aptly pointed out by the CA, the principle that a party
is presumed to know the import of a document to which
he affixes his signature is modified by the foregoing
article. Under the said article, where a party is unable to
read or when the contract is in a language not understood
by a party and mistake or fraud is alleged, the obligation
to show that the terms of the contract had been fully
explained to said party who is unable to read or
understand the language of the contract devolves on the
party seeking to enforce it.
The presumption of validity and regularity prevails over
allegations of forgery and fraud. As against direct
 uncle’s lifetime, as evidenced by a DEED OF
ABSOLUTE SALE.
Respondent claiming to be the illegitimate child
of the deceased instituted a complaint for the
declaration of nullity of sale and title with
damages. he presented testimonies of expert
witnesses who claimed that the signature of
Cesar Morelos on the Deed of Absolute Sale and
the fingerprint appearing on his Residence
Certificate were not his.
w/n the DEED of ABSOLUTE SALE was
VALID. YES.
65. DAUDEN-HERNAEZ Dauden-Hernaez, a motion picture actress, had
vs. HON. WALFRIDO DE filed a complaint against private respondents, to
LOS ANGELES recover P14,700.00 representing a balance
allegedly due said petitioner for her services as
leading actress.
It was dismissed because the "claim of plaintiff
was not evidenced by any written document,
either public or private", and the complaint "was
defective on its face" for violating Articles 1356
and 1358 of the Civil Code.
evidence consisting of the testimony of a witness who
was physically present at the signing of the contract and
who had personal knowledge thereof, the testimony of an
expert witness constitutes indirect or circumstantial
evidence at best. Carmelita Marcelino, the witness to the
Deed of Absolute Sale, confirmed the genuineness,
authenticity and due execution thereof. Having been
physically present to see the decedent Cesar Morelos and
petitioner Laura Bautista affix their signatures on the
document, the weight of evidence preponderates in favor
of petitioners.
As to the alleged insufficient consideration of the sale of
the property, the mere inadequacy of the price does not
affect its validity when both parties are in a position to
form an independent judgment concerning the
transaction, unless fraud, mistake or undue influence
indicative of a defect in consent is present. A contract
may consequently be annulled on the ground of vitiated
consent and not due to the inadequacy of the price. In
the case at bar, however, no evidence to prove fraud,
mistake or undue influence indicative of vitiated consent
was presented other than the respondent's self-serving
allegations.
To this general rule, the Code admits exceptions, set forth
in Article 1356 (2).
It is thus seen that to the general rule that the form (oral
or written) is irrelevant to the binding effect inter parties
of a contract that possesses the three validating elements
of consent, subject matter, and causa, Article 1356 of the
Code establishes only two exceptions, to wit:

Complaint was amended. Defendant argued
against it:
amended complaint did not vary in
any material respect from the original
complaint except in minor details, and
suffers from the same vital defect of the
original complaint", which is the violation
of Article 1356 of the Civil Code, in that
the contract sued upon was not alleged
to be in writing; that by Article 1358 the
writing was absolute and indispensable,
because the amount involved exceeds
five hundred pesos.
W/N the contract for personal services
involving more than P500.00 was either
invalid of unenforceable under Article
1358, last par.
NO. THERE WAS A VALID AND ENFORCEABLE
CONTRACT EVEN IF THERE IS NO CONTRACT IN
WRITING. Contracts are valid and binding from
their perfection regardless of form whether they
be oral or written. This is plain from Articles
1315 and 1356 of the present Civil Code.
The essential requisites of a contract are: (1)
consent (2) proper subject matter, and (3)
consideration or causa for the obligation
a. Contracts for which the law itself requires that
they be in some particular form (writing) in order
to make them valid and enforceable (the so-
called solemn contracts). Of these the typical
example is the donation of immovable property
that the law (Article 749) requires to be embodied
in a public instrument in order "that the donation
may be valid", i.e., existing or binding. Other
instances are the donation of movables worth
more than P5,000.00 which must be in writing,
"otherwise the donation shall be void" (Article
748); contracts to pay interest on loans (mutuum)
that must be "expressly stipulated in writing"
(Article 1956); and the agreements contemplated
by Article 1744, 1773, 1874 and 2134 of the
present Civil Code.
b. Contracts that the law requires to be proved by
some writing (memorandum) of its terms, as in
those covered by the old Statute of Frauds, now
Article 1403(2) of the Civil Code. Their existence
not being provable by mere oral testimony
(unless wholly or partly executed), these
contracts are exceptional in requiring a writing
embodying the terms thereof for their
enforceability by action in court.
The contract sued upon by petitioner herein
(compensation for services) does not come under either
exception. It is true that it appears included in Article
1358, last clause, providing that "all other contracts
where the amount involved exceeds five hundred pesos
must appear in writing, even a private one." But Article
1358 nowhere provides that the absence of written form
in this case will make the agreement invalid or
 assumed (Article 1318). So that once the three
elements exist, the contract is generally valid
and obligatory, regardless of the form, oral or
written, in which they are couched.
66. CLAUDEL v. CA A lot was being claimed by two sets of heirs—
Heirs of Cecilio Claudel (wife and children) and
Siblings of Cecilio who claimed that several
portions of the subject Lot had been purchased
by their parents from the deceased about 46
years earlier. The sale was VERBAL.
W/N the ORAL sale was valid. NO.
Rule of thumb: a sale of land, once
consummated, is valid regardless of the form it
may have been entered into. For nowhere does
law or jurisprudence prescribe that the contract
of sale be put in writing before such contract can
validly cede or transmit rights over a certain real
property between the parties themselves.
67. BERMAN Cheng purchased 2 memorial lots—Lot 12 which
MEMORIAL PARK, INC he upgraded to Lot 24. Cheng received a
and LUISA CHONG vs. statement of account from BMPI showing that he
FRANCISCO CHENG still had a balance of P32,375.00. Cheng
informed BMPI that he had, in fact, made an
overpayment of P77,375.00 for the two
lots.
unenforceable. On the contrary, Article 1357 clearly
indicates that contracts covered by Article 1358 are
binding and enforceable by action or suit despite the
absence of writing.
However, in the event that a third party, as in this
case, disputes the ownership of the property, the person
against whom that claim is brought can not present any
proof of such sale and hence has no means to enforce the
contract. Thus the Statute of Frauds was precisely
devised to protect the parties in a contract of sale of real
property so that no such contract is enforceable unless
certain requisites, for purposes of proof, are met.
The purpose of the Statute of Frauds is to prevent fraud
and perjury in the enforcement of obligations depending
for their evidence upon the unassisted memory of
witnesses by requiring certain enumerated contracts and
transactions to be evidenced in Writing.
Article 1370 of the New Civil Code provides that if the
terms of a contract are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning of
its stipulation shall control. No amount of extrinsic aids
are required and no further extraneous sources are
necessary in order to ascertain the parties’ intent,
determinable as it is, from the contract itself. The records
are clear that the respondent understood the nature of
 the contract he entered into.

Chong/BMI: the price of 24-Lot was

actually P350,000.00, but that the IMP had
agreed to sell the lot to Cheng for P250,000.00,
less P110,000.00 of theP150,000.00 price
of 12-Lot in accordance w/their agreement.
If, indeed, the stipulations as embodied in the
aforementioned Pre-Need Purchase Agreement were not
the true intention of the parties, the respondent should
have filed the corresponding action for reformation of the
contract. But he did not.

How should the parties’ contract be

interpreted?
The hornbook rule on interpretation of contracts gives
primacy to the intention of the parties, which is the law
among them. Ultimately, their intention is to be
deciphered not from the unilateral post facto assertions of
one of the parties, but from the language used in the
contract. And when the terms of the agreement, as
expressed in such language, are clear, they are to be
understood literally, just as they appear on the face of the
contract.