OBLIGATIONS AND CONTRACTS: CASE DIGESTS FOR FINAL EXAMS
GULTIANO
GENERAL PROVISIONS ON CONTRACTS
ABS-CBN BROADCASTING CORP. v. COURT OF
APPEALS,
301 SCRA 592
FACTS: In 1992, ABS-CBN Broadcasting Corporation,
through its vice president Charo Santos-Concio,
requested Viva Production, Inc. to allow ABS-CBN to
air at least 14 films produced by Viva. Pursuant to this
request, a meeting was held between Viva’s
representative (Vicente Del Rosario) and ABS-CBN’s
Eugenio Lopez (General Manager) and Santos-
Concio was held on April 2, 1992. During the meeting
Del Rosario proposed a film package which will allow
ABS-CBN to air 104 Viva films for P60 million. Later,
Santos-Concio, in a letter to Del Rosario, proposed a
counterproposal of 53 films (including the 14 films
initially requested) for P35 million. Del Rosario
presented the counter offer to Viva’s Board of
Directors but the Board rejected the counter offer.
Several negotiations were subsequently made but
on April 29, 1992, Viva made an agreement with
Republic Broadcasting Corporation (referred to as
RBS – or GMA 7) which gave exclusive rights to RBS to
air 104 Viva films including the 14 films initially
requested by ABS-CBN.
ABS-CBN now filed a complaint for specific
performance against Viva as it alleged that there is
already a perfected contract between Viva and
ABS-CBN in the April 2, 1992 meeting. Lopez testified
that Del Rosario agreed to the counterproposal and
he (Lopez) even put the agreement in a napkin
which was signed and given to Del Rosario. ABS-CBN
also filed an injunction against RBS to enjoin the latter
from airing the films. The injunction was granted. RBS
now filed a countersuit with a prayer for moral
damages as it claimed that its reputation was
debased when they failed to air the shows that they
promised to their viewers. RBS relied on the ruling in
People vs Manero and Mambulao Lumber vs PNB
which states that a corporation may recover moral
damages if it “has a good reputation that is
debased, resulting in social humiliation”. The trial
court ruled in favor of Viva and RBS. The Court of
Appeals affirmed the trial court.
ISSUES: (1) Whether a contract was perfected in the
April 2, 1992 meeting between the representatives of
the two corporations. (2) Whether a corporation, like
RBS, is entitled to an award of moral damages upon
grounds of debased reputation.
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by ERNIE Y.
RULING: (1) No. There is no proof that a contract was
perfected in the said meeting. Lopez’ testimony
about the contract being written in a napkin is not
corroborated because the napkin was never
produced in court. Further, there is no meeting of the
minds because Del Rosario’s offer was of 104 films for
P60 million was not accepted. And that the alleged
counter-offer made by Lopez on the same day was
not also accepted because there’s no proof of such.
The counter offer can only be deemed to have
been made days after the April 2 meeting when
Santos-Concio sent a letter to Del Rosario containing
the counter-offer. Regardless, there was no showing
that Del Rosario accepted. But even if he did
accept, such acceptance will not bloom into a
perfected contract because Del Rosario has no
authority to do so.
As a rule, corporate powers, such as the power; to
enter into contracts; are exercised by the Board of
Directors. But this power may be delegated to a
corporate committee, a corporate officer or
corporate manager. Such a delegation must be
clear and specific. In the case at bar, there was no
such delegation to Del Rosario. The fact that he has
to present the counteroffer to the Board of Directors
of Viva is proof that the contract must be accepted
first by the Viva’s Board. Hence, even if Del Rosario
accepted the counter-offer, it did not result to a
contract because it will not bind Viva sans
authorization.
(2) No. The award of moral damages cannot be
granted in favor of a corporation because, being an
artificial person and having existence only in legal
contemplation, it has no feelings, no emotions, no
senses. It cannot, therefore, experience physical
suffering and mental anguish, which call be
experienced only by one having a nervous system.
No moral damages can be awarded to a juridical
person. The statement in the case of People vs
Manero and Mambulao Lumber vs PNB is a mere
obiter dictum hence it is not binding as a
jurisprudence.
MONTINOLA v. VICTORIAS MILLING CO.
54 Phil. 782
FACTS: The petitioners Victorias Planters Association,
Inc. and North Negros Planters Association, Inc. are
OBLIGATIONS AND CONTRACTS: CASE DIGESTS FOR FINAL EXAMS
non-stock corporations and are composed of sugar
cane planters having been established as the
representative entities of the numerous sugar cane
planters in the districts of Victorias, Manapla and
Cadiz. The sugar cane productions were milled by
the respondent corporation. Petitioners are the ones
in charge of taking up with the respondent
corporation problems which may come up. At
various dates, the sugarcane planters executed
identical milling contracts setting forth the terms and
conditions which the sugar central “North Negros
Sugar Co. Inc.” would mill the sugar produced by the
sugar cane planters. Because of the Japanese
occupation, the North Negros Sugar Co., Inc. did not
reconstruct its destroyed central and it had made
arrangements with the respondent Victorias Milling
Co., Inc. for said respondent corporation to mill the
sugarcane produced by the planters of Manapla
and Cadiz holding milling contracts with it. When the
planters-members of the North Negros Planters
Association, Inc. considered that the stipulated 30-
year period of their milling contracts had already
expired and terminated and the planters-members
of the Victorias Planters Association, Inc. likewise
considered the stipulated30-year period of their
milling contracts as having likewise expired and
terminated. Respondent has refused to accept the
fact that the 30-year period has expired. They
contend that the 30 years stipulated in the contracts
referred to 30 years of milling – not 30 years in time.
They contend that as there was no milling during 4
years of the recent war and 2 years of
reconstruction, 6 years of service still has to be
rendered by petitioners.
ISSUE: Whether the respondent is correct.
RULING: The trial court rendered judgment, which
the Supreme Court affirmed. The reason the planters
failed to deliver the sugar cane was the war or a
fortuitous event. The appellant ceased to run its mill
due to the same cause. Fortuitous event relieves the
obligor from fulfilling a contractual obligation. The
fact that the contracts make reference to "first
milling" does not make the period of thirty years one
of thirty milling years. The seventh paragraph of
Annex "C", not found in the earlier contracts
(Annexes "A", "B", and "B-1"), quoted by the appellant
in its brief, where the parties stipulated that in the
event of flood, typhoon, earthquake, or other
force majeure
, war, insurrection, civil commotion, organized strike,
etc., the contract shall be deemed suspended
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by ERNIE Y. GULTIANO
during said period, does not mean that the
happening of any of those events stops the running
of the period agreed upon. It only relieves the parties
from the fulfillment of their respective obligations
during that time. To require the planters to deliver the
sugar cane which they failed to deliver during the
four years of the Japanese occupation and the two
years after liberation when the mill was being rebuilt
is to demand from the obligors the fulfillment of an
obligation which was impossible of performance at
the time it became due. Nemo tenetur ad
impossibilia
ROSENSTOCK v. BURKE
46 Phil. 217
FACTS: Defendant wrote a letter to the offeror: "In
connecton with the yacht Bronzewing, I am in
positon and am willing to entertain the purchase of
it under the following terms."
ISSUE: Was there an offer here that was certain
which, if accepted, could compel the writer to really
buy the yacht?
RULING: No, because here the offer was neither
definite nor certain. Said the Supreme Court: “To
convey the idea of a resolution to purchase, a man
of ordinary intelligence and common culture would
use these clear and simple words: ‘I offer to
purchase,’ I want to purchase,’ ‘I am in position to
purchase…’ It must be presumed that a man in his
transactions in good faith used the best means of
expressing his mind that his intelligence and culture
so permit as to convey and exteriorize his will
faithfully and unequivocally. The word ‘entertain’
applied to an act does not mean the resolution to
perform said act. It was not a definite or certain offer,
but a mere invitation to a proposal being made to
him, which might be accepted by him or not.”
Note: If two are offered, but they are independent
of each other (such as a sale of a parcel of land, and
the lease of an automobile), acceptance of one
does not imply acceptance of the other. BUT if one
contract depends upon another, like a contract of
loan provided it is secured by a contract or
mortgage, it is essential that there be an agreement
on BOTH transactions. Otherwise, there can be as yet
no meeting of the minds.
OBLIGATIONS AND CONTRACTS: CASE DIGESTS FOR FINAL EXAMS
BATANGAN v. COJUANGCO
78 Phil. 481
FACTS: On October 29, 1943, Atty. Marcelino Lontok,
who has represented the herein appellant, sent
Isidra Cojuangco a missive with three postal money
orders for P800, stating that he was remitting that
amount in behalf of his client "in accordance with
your agreement," and promising to pay the balance
"at the shortest possible time." The amount was
rejected by Mrs. Cojuangco, who told she had not
had any agreement with his client.
Atty. Lontok sent a letter through a messenger to Mrs.
Cojuangco's counsel, Atty. Antonio Lucero, in
Manila, enclosing the same money orders for P800
and P708.30 in paper money. This tender was also
refused.
Attorney Lontok came to this court with a motion to
order the appellee to comply with the offer she had
made in her brief. That motion was "rejected" in a
resolution for having been filed after the entry of
judgment."
The lower court declared that "the statement
contained in the brief of the defendant herein and
footnoted in the decision of the Supreme Court
(was) a promise on the part of the defendant herein
to resell the land in question to the plaintiff herein."
Nevertheless, it found that "the time for him
(Batangan) to accept the promise was from the
date of the brief of the defendant herein until the
entry of judgment," and that the acceptance
having been made after the judgment had been
rendered, it came too late.
The question of the conclusiveness of our resolution
referred to is not pressed in this appeal. Apparently
abandoning her plea in this regard, the appellee
makes no reference in her brief to her former
contention that this action is res adjudicata. And she
seems to take for granted that the signification in her
brief of her willingness to allow the repurchase of the
property constituted a formal offer that could have
served as basis for the creation of legal relations.
ISSUE: Whether the appellee's offer has been duly
accepted by the appellant.
RULING: We are of the opinion that the acceptance
was tardy. An offer of compromise settlement must
be accepted within a reasonable time. And
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by ERNIE Y. GULTIANO
acceptance or rejection of an offer of compromise
may be inferred from circumstances. The appellant's
failure to act on the offer before the judgment was
entered was an implied rejection of said offer.
In pushing the appeal to final conclusion, the
appellant made it clear that he was not interested in
his creditor's liberal concession. A compromise has
for its purpose the avoidance or termination of a law
suit. With the rendition of judgment, the reason which
induced the appellee to make her proposition
ceased to exist.
Again, acceptance in order to conclude the
agreement must in every respect meet and
correspond with the terms and conditions of the
offer. Granting that the appellant acted on time,
payment of P800 fell short of the appellee's
requirement. The appellee wanted P1,508.28 in
cash. This was the least she was entitled to, being the
amount which the court below had found to be due
her. In her proposition, she did not even include any
interest.
The substantial variance between the amount in the
offer and the amount tendered not only made the
purported acceptance inoperative but "put an end
to the negotiations without forming a contract unless
the party making the offer agreed to the suggested
modification."
Otherwise, as the trial judge aptly observed,
"promisors would be tied to their promises indefinitely
and would not be able to dispose of the property
involved" in the promise or offer. In addition, the
promisor would be placed in a position where he
would always lose without anything to gain. The
promisee could wait until judgment is rendered and
accepted the offer of compromise if the judgment
happened to be more onerous to him.
LAUDICO v. ARIAS
43 Phil. 270
FACTS: Defendant, Vicente Arias, who, with his
codefendants, owned the building Nos. 205 to 221
on Carriedo Street, on his behalf and that of his co-
owners, wrote a letter to the plaintiff, Mamerto
Laudico, giving him an option to lease the building
to a third person, and transmitting to him for that
purpose a tentative contract in writing containing
OBLIGATIONS AND CONTRACTS: CASE DIGESTS FOR FINAL EXAMS
the conditions upon which the proposed lease
should be made. Later Mr. Laudico presented his co-
plaintiff, Mr. Fred. M. Harden, as the party desiring to
lease the building. On one hand, other conditions
were added to those originally contained in the
tentative contract, and, on the other, counter-
propositions were made and explanations
requested on certain points in order to make them
clear. Mr. Laudico, finally wrote a letter to Mr. Arias
on March 6, 1919, advising him that all his
propositions, as amended and supplemented, were
accepted. It is admitted that this letter was received
by Mr. Arias by special delivery at 2.53 p.m. of that
day. On that same day, at 11.25 in the morning, Mr.
Arias had, in turn, written a letter to the plaintiff, Mr.
Laudico, withdrawing the offer to lease the building.
ISSUE: Whether the plaintiff in this action is that the
defendants be compelled to execute the contract
of lease of the building.
RULING: No, under article 1262, paragraph 2, of the
Civil Code, an acceptance by letter does not have
any effect until it comes to the knowledge of the
offerer. Therefore, before he learns of the
acceptance, the latter is not yet bound by it and
can still withdraw the offer. Consequently, when Mr.
Arias wrote Mr. Laudico, withdrawing the offer, he
had the right to do so, inasmuch as he had not yet
received notice of the acceptance. And when the
notice of the acceptance was received by Mr. Arias,
it no longer had any effect, as the offer was not then
in existence, the same having already been
withdrawn. There was no meeting of the minds,
through offer and acceptance, which is the essence
of the contract. While there was an offer, there was
no acceptance, and when the latter was made and
could have a binding effect, the offer was then
lacking.
SANCHEZ v. RIGOS
45 SCRA 368
FACTS: On 3 April 1961, Nicolas Sanchez and
Severina Rigos executed an instrument, entitled
“Option to Purchase,” whereby Mrs. Rigos “agreed,
promised and committed . . . to sell” to Sanchez, for
the sum of P1,510.00, a parcel of land situated in the
barrios of Abar and Sibot, municipality of San Jose,
province of Nueva Ecija, and more particularly
described in TCT NT-12528 of said province, within
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by ERNIE Y. GULTIANO
two (2) years from said date with the understanding
that said option shall be deemed “terminated and
elapsed,” if “Sanchez shall fail to exercise his right to
buy the property” within the stipulated period.
Inasmuch as several tenders of payment of the sum
of P1,510.00, made by Sanchez within said period,
were rejected by Mrs. Rigos, on 12 March 1963, the
former deposited said amount with the CFI Nueva
Ecija and commenced against the latter the present
action, for specific performance and damages. On
11 February 1964, after the filing of defendant’s
answer, both parties, assisted by their respective
counsel, jointly moved for a judgment on the
pleadings. Accordingly, on 28 February 1964, the
lower court rendered judgment for Sanchez,
ordering Mrs. Rigos to accept the sum judicially
consigned by him and to execute, in his favor, the
requisite deed of conveyance. Mrs. Rigos was,
likewise, sentenced to pay P200.00, as attorney’s
fees, and the costs. Hence, the appeal by Mrs. Rigos
to the Court of Appeals, which case was the
certified by the latter court to the Supreme Court
upon the ground that it involves a question purely of
law.
ISSUE: Whether the contract is valid and binding.
RULING: Option without consideration is a mere
offer of a contract of sale, which is not binding until
accepted. If the option is given without a
consideration, it is a mere offer of a contract of sale,
which is not binding until accepted. If, however,
acceptance is made before a withdrawal, it
constitutes a binding contract of sale, even though
the option was not supported by a sufficient
consideration... (77 Corpus Juris Secundum p. 652.
See also 27 Ruling Case Law 339 and cases cited.) It
can be taken for granted that the option contract
was not valid for lack of consideration. But it was, at
least, an offer to sell, which was accepted by latter,
and of the acceptance the offeror had knowledge
before said offer was withdrawn. The concurrence of
both acts — the offer and the acceptance — could
at all events have generated a contract, if none
there was before (arts. 1254 and 1262 of the Civil
Code; Zayco vs. Serra, 44 Phil. 331.) In other words,
since there may be no valid contract without a
cause or consideration, the promisor is not bound by
his promise and may, accordingly, withdraw it.
Pending notice of its withdrawal, his accepted
promise partakes, however, of the nature of an offer
to sell which, if accepted, results in a perfected
contract of sale.
OBLIGATIONS AND CONTRACTS: CASE DIGESTS FOR FINAL EXAMS
CONSENT
MERCADO v. ESPIRITU
37 Phil. 37
FACTS: Margarita Espiritu was the owner of a 48-
hectare land. In 1897, she died and the land was left
to her husband (Wenceslao Mercado) and her
children, Domingo Mercado, Josefa Mercado and 3
other siblings.
Apparently however, during the lifetime of Margarita
in 1894, she executed a deed of sale transferring
about 71% of her land (covering 15 cavanes of
seeds) to her brother Luis Espiritu (father of Jose
Espiritu) for P2,000.00. After her death, Wenceslao
had a hard time making ends meet for his family and
so he took out a loan from Luis in the amount of
P375.00. The loan was secured by the remainder of
the lot. Later, that loan was increased to P600.00.
In May 1910, Luis entered into a notarized agreement
with Domingo and Josefa whereby the two, while
purporting to be of legal age, acknowledged the
sale and the loan previously entered into by their
parents with Luis. In the same agreement, the siblings
agreed that for and in consideration of the amount
of P400.00, they are transferring the remainder 29%
(covering 6 cavanes of seeds) to Luis.
But later, the siblings contested the said agreement.
Luis later died and he was substituted by Jose. It is
the contention of Domingo et al that the agreement
is void because they were only minors, 19 and 18
years of age respectively, when the contract was
entered into in May 1910 (21 being the age of
minority at that time).
ISSUE: Whether the agreement between Luis and
Domingo et al in May 1910 is valid despite the
minority of the latter party.
RULING: The courts laid down that such sale of real
estate was still valid since it was executed by minors,
who have passed the ages of puberty and
adolescence, and are near the adult age, and that
the minors pretended that they had already
reached their majority.
Article 38. Minority, insanity or imbecility, the state of
being a deaf-mute, prodigality and civil-interdiction
are mere restrictions on the capacity to act, and do
not exempt the incapacitated person from certain
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by ERNIE Y. GULTIANO
obligations, as when the latter arise from his acts or
from property relations, such as easements.
Also, these minors cannot be permitted afterwards
to excuse themselves from compliance with the
obligation assumed by them or seek their
annulment. This is in accordance with the provisions
of the law on estoppels.
*** This is in accordance with the provisions of the law
on estoppel.
Art 1431 of Civil Code. Through estoppel, an
admission or representation is rendered conclusive
upon the person making it, and cannot be denied or
disproved as against the person relying thereon.
This is also in accordance with the provisions of Rule
123, Sec 68, Par. A
Rule 123, sec 68, Par. A...” Whenever a party has, by
his own declaration, act or omission, intentionally
and deliberately led another to believe a particular
thing to be true, and to act upon such belief, he
cannot, in any litigation arising out of such
declaration, act or omission, cannot be permitted to
falsify it.
BAMBALAN v. MARAMBA
51 Phil. 417
FACTS: Bambalan’s parents Paula Prado and her first
husband, Isidro Bambalan Y Calcotura received a
loan from Genoveva Muerong and German
Maramba in 1915. Calcotura died leaving
Bambalan as the sole heir of his estate. In 1922,
Muerong and Maramba forced Bambalan, who was
at that time, a minor, to sell their land as payment for
the loan. Bambalan signed, but said that he was
forced because they were threatening his mother
with imprisonment. Muerong and Maramba bought
Bambalan’s first cedula to acknowledge the
document.
ISSUE: Whether sale of the land to Maramaba and
Muerong is valid.
RULING: The sale is void as to the plaintiff, because
he was a minor at the time of execution. The
Doctrine laid down in the case of Mercado vs.
Espiritu is not applicable to this case, because the
OBLIGATIONS AND CONTRACTS: CASE DIGESTS FOR FINAL EXAMS
plaintiff did not pretend to be of age, and the
defendant knew him as a minor.
Notes:
Civil Code, Article 38. Minority, insanity or imbecility,
the state of being a deaf-mute, prodigality and civil-
interdiction are mere restrictions on the capacity to
act, and do not exempt the incapacitated person
from certain obligations, as when the latter arise from
his acts or from property relations, such as
easements.
Civil Code, Art. 1327. The following cannot give
consent to a contract:
(1) Unemancipated minors;
(2) Insane or demented persons, and deaf-mutes
who do not know how to write. (1263a)
Civil Code, Art. 1390. The following contracts are
voidable or annullable, even though there may
have been no damage to the contracting parties:
(1) Those where one of the parties is incapable of
giving consent to a contract;
(2) Those where the consent is vitiated by mistake,
violence, intimidation, undue influence or fraud.
SIA SUAN v. ALCANTARA
85 Phil. 669
FACTS: On August 3, 1931, a deed of sale was
executed by Rufino Alcantara and his sons Damaso
Alcantara and Ramon Alcantara conveying to Sia
Suan five parcels of land to petitioner Sia Suan.
On August 27, 1931, Gaw Chiao (husband of Sia
Suan) received a letter from Francisco Alfonso,
attorney of Ramon Alcantara, informing him that
Ramon Alcantara was a minor and accordingly
disavowing the contract.
After Gaw Chiao responded to the letter, Ramon
Alcantara went to the office of Gaw Chiao’s counsel
ratifying the sale. Ramon Alcantara received from
Gaw Chiao the sum of P500 as payment for the sold
parcels of land.
On August 8, 1940, an action was instituted by
Ramon Alcantara in the Court of First Instance of
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by ERNIE Y. GULTIANO
Laguna for the annulment of the deed of sale on the
ground of his minority at the time of sale. Action was
denied and Sia Suan, Gaw Chiao, Ramon’s father
and brother, Nicolas and Antonio Azores were
absolved.
Ramon brought the case to CA, which reversed the
decision of the CFI of Laguna.
ISSUE: Whether the Deed of Sale executed on August
31, 1931 is null and void.
RULING: Ramon Alcantara in his minority may not be
allowed to execute the deed of sale but with his act
of ratification, the contract was given a binding
effect.
The SC ruled that Ramon is not allowed to annul such
deed, because he already ratified it. The letter
written by him informing the appellants of his minority
constituted an effective disaffirmance of the sale,
and that although the choice to disaffirm will not by
itself avoid the contract until the courts adjudge the
agreement to be invalid, said notice shielded
Ramón from laches and consequent estoppels.
Ramon may have executed his acts in bad faith for
he earned money from Gaw Chiao as a result of the
sale and its ratification, yet he summons the courts to
annul the sale because he executed it while still a
minor. The appealed decision of the Court of
Appeals is hereby reversed and the appellants
absolved from the complaint, with costs against the
appellee, Ramon Alcantara.
BRAGANZA v. DE VILLA ABRILLE
G.R. No. L-12471
FACTS: Rosario Braganza and her sons loaned from
De Villa Abrille P70,000 in Japanese war notes and in
consideration thereof, promised in writing to pay him
P10,00 + 2% per annum in legal currency of the
Philippines 2 years after the cessation of the war.
Because they have no paid, Abrille sued them in
March 1949. The Manila court of first instance and
CA held the family solidarily liable to pay according
to the contract they signed. The family petitioned to
review the decision of the CA whereby they were
ordered to solidarily pay De Villa Abrille P10,000 + 2%
interest, praying for consideration of the minority of
the Braganza sons when they signed the contract.
OBLIGATIONS AND CONTRACTS: CASE DIGESTS FOR FINAL EXAMS
ISSUE: Whether the boys, who were 16 and 18
respectively, are to be bound by the contract of
loan they have signed.
RULING: The SC found that Rosario will still be liable to
pay her share in the contract because the minority
of her sons does not release her from liability. She is
ordered to pay 1/3 of P10,000 + 2% interest.
However, with her sons, the SC reversed the decision
of the CA which found them similarly liable due to
their failure to disclose their minority. The SC
sustained previous sources in Jurisprudence – “in
order to hold the infant liable, the fraud must be
actual and not constructive. It has been held that his
mere silence when making a contract as to his age
does not constitute a fraud which can be made the
basis of an action of deceit.”
The boys, though not bound by the provisions of the
contract, are still liable to pay the actual amount
they have profited from the loan. Art. 1340 states that
even if the written contract is unenforceable
because of their non-age, they shall make restitution
to the extent that they may have profited by the
money received. In this case, 2/3 of P70,00, which is
P46,666.66, which when converted to Philippine
money is equivalent to P1,166.67.
VICES OF CONSENT
DUMASUG v. MODELO
34 Phil. 252
FACTS: On June 17, 1912, counsel for Andrea
Dumasug filed a written complaint in the Court of
First Instance of Cebu, in which he alleged that
about the month of November, 1911, defendant
persuaded plaintiff to sign a document by falsely
and maliciously making her believe that it contained
an engagement on plaintiff’s part to pay defendant
a certain sum of money as expresses occasioned the
latter by reason of a lawsuit in which plaintiff
Dumasug was one of the parties and was protected
and aided by defendant; that this document,
plaintiff, who does not know how to write, signed by
affixing her mark thereto, believing in good faith that
defendant had told her the truth and that said
document referred to the expenses incurred by
defendant; but that three months after the
execution of said document, defendant took
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by ERNIE Y. GULTIANO
possession of a carabao belonging to plaintiff and
also of two parcels of land, likewise belonging to her,
situated in the barrio of Katang, pueblo of Argao,
Cebu, the area and boundaries of which are
specified in the complaint, and notified plaintiff that
she had conveyed to him by absolute sale said
parcels of land and the plow carabao; that in spite
of plaintiff’s opposition and protests, defendant took
possession of said property and, up to the date of
the complaint, continued to hold possession thereof
and to enjoy the products of the lands and of the
labor of the carabao; and that, by reason of such
acts, defendant had caused loss and damage to
plaintiff in the sum of P1,000. Said counsel therefore
prayed the court to render judgment by declaring
null and void and of no value whatever the alleged
contract of purchase and sale of the carabao and
the two parcels of land described in the complaint,
to order defendant to restore to plaintiff said work
animal and lands, and, besides, to pay her the sum
of P1,000 for the loss and damage caused her, in
addition to the costs of the suit.
ISSUE: Whether the instrument of purchase and sale
of two parcels of land and a plow carabao is null
and void.
RULING: Yes, it is null and void. It is, then, perfectly
evident that the document Exhibit 1, by means of
which defendant made himself the owner of the
properties in question is not the instrument of debt
which Andrea Dumasug had signed, and if it is the
same one its contents were not duly and faithfully
explained to plaintiff in the act of its execution. In
either case, the consent said to have been given by
Andrea Dumasug in said document Exhibit 1 is null
and void, as it was given by mistake (arts. 1265 and
1266, Civil Code). This error invalidates the contract,
because it goes to the very substance of the thing
which was the subject matter of said contract, for,
had the maker thereof truly understood the contents
of said document, she would neither have
accepted nor authenticated it by her mark.
This case is an example of Mistake of Fact which is
Mistake as to the Nature of the Contract. If the
mistake refers to the nature of the contract, the error
or mistake goes to the essence thereof. This may
invalidate the contract. In this case Andrea
Dumasug affixed her thumb mark on the document
that presented to her believing that it was a deed of
mortgaged and not a deed of sale therefore her
consent vitiated the contract.
OBLIGATIONS AND CONTRACTS: CASE DIGESTS FOR FINAL EXAMS
JOAQUIN v. MITSUMINE
34 Phil. 858
FACTS: On July 30, 1914, Attorney Leocadio Joaquin,
in his own behalf, filed a written complaint in the
Court of First Instance of Manila against the
defendant, O. Mitsumine, alleging that on July 1,
1914, the plaintiff executed an instrument whereby
he gave a chattel mortgage on certain apparatus
for the manufacture of aerated water as security for
the payment in two installments of the sum of P525;
that the said mortgage deed was entirely null and
void for the reason that it had been executed by the
plaintiff by mistake, inasmuch as in May, 1914, he
had instructed the defendant to acquire the said
machine at the request of the plaintiff's client,
Macario Vito, and that the latter was responsible for
the payment of the said P525.
On August 20, 1914, the defendant answered the
above complaint, denying all the allegations therein
contained except those that were expressly
admitted in his answer and that after the defendant
had ordered the machine from Japan and delivered
it to the plaintiff to his entire satisfaction, plaintiff paid
defendant P200 on account and agreed to pay the
balance of P525 in two installments by signing two
promissory notes and a mortgage deed.
The court rendered the judgment absolving the
defendant O. Mitsumine from the complaint,
decreeing that the mortgage executed by the
plaintiff Leocadio Joaquin to the defendant was
valid, and ordering the plaintiff to pay to the
defendant the sum of P525, plus P105 for the
expenses of collection.
ISSUE: Whether Leocadio Joaquin is liable for the two
promissory notes and a mortgage deed executed in
favor of O. Mitsumine for the purchase of a machine
for the manufacture of Aerated Water.
RULING: The Court held that Leocadio Joaquin is
liable for the two promissory notes and a mortgage
deed executed in favor of O. Mitsumine as the
record shows it to have been duly proven that on
April 15, 1914, he signed and forwarded to the
commercial establishment of the defendant,
Mitsumine, named the Nippon Bazar, which was an
order to procure a complete machine for the
manufacture of aerated waters.
8
by ERNIE Y. GULTIANO
ASIAN v. JALANDONI
45 Phil. 296
FACTS: The parties agreed upon the sale of the land
there in question, they had in mind chiefly the area
and quality of the land, the subject of the contract,
as will be seen from the letter of Asiain dated May 6,
1920, in which, among other things, Purchase of land
of Mr. Luis Asiain and his wife Maria Cadenas, by B.
Jalandoni, containing 25 hectares more or less of
land bounded by property of the purchaser, with its
corresponding crop, estimated at 2,000 piculs, the
total value of which is 55 thousand. The price is to be
paid by paying 30 thousand at the signing of the
document, and 25 thousand within one year with
interest at the rate of 10 per cent.” In accordance
with the foregoing memorandum the deed of sale
was executed in the City of Iloilo, the parties
stipulating among other things, the following:
“(1) That Luis Asiain does hereby promise and bind
himself to sell to Benjamin Jalandoni a parcel of and
of the hacienda “Maria” of the aforesaid Luis Asiain,
situated in the municipality of La Carlota, Province of
Occidental Negros, P.I.
“(2) That Benjamin Jalandoni does hereby promise
and bind himself to purchase the aforesaid parcel of
land in the sum of P55,000 upon certain conditions
specified in a memorandum signed by the parties
which is in the hands of Attorneys Padilla & Treñas.”
Jalandoni then took possession of the land, milled
the cane at La Carlota Central, from which he
realized 800 piculs and 23 cates of the centrifugal
sugar. And after he had secured from Asiain the
certificate of title, he had a surveyor measure the
land, which was found to contain only 18 hectares,
54 centares, and 22 centares. Jalandoni had paid
P30,000 leaving an unpaid balance of P25,000 of the
purchase price of P55,000 stipulated in the contract.
Asiain sued to recover the balance from Jalandoni.
The competent court declared the deed of sale
void, absolved the defendant from paying P25,000
and ordered the parties to return what they had
received under the contract. Upon appeal to the
Supreme Court, the judgment was affirmed on the
ground that both parties had acted by a mutual
mistake.
ISSUE: Whether the seller and buyer misrepresented
each other or committed an error.
OBLIGATIONS AND CONTRACTS: CASE DIGESTS FOR FINAL EXAMS
RULING: The judgment was affirmed on the ground
that both parties had acted by a mutual mistake.
The vendor undertook to deliver to the vendee a
parcel of land some 25 hectares in area and of such
a quality as to be able to produce 2,000 piculs of
centrifugal sugar. The vendee, in turn, agreed to buy
said parcel of land with the understanding that it
contained that area and was of the quality
guaranteed by the vendor. Inasmuch as the land
had neither the area nor the quality the vendor had
assured the vendee it had, it is clear the latter was
entitled to rescind the contract, upon the strength of
the authorities cited in the opinion of the court. We
believe that Jalandoni was entitled to rescind that
contract, inasmuch as the vendor did not deliver a
parcel of land of the area and quality stipulated in
the contract. The judgment appealed from is
reversed, and it is held that the contract between
the parties is valid and binding upon them.
Wherefore, the defendants are absolved from the
complaint
ATILANO v. ATILANO
28 SCRA 231
FACTS: In 1916, Atilano I acquired lot No. 535 by
purchase. In 1920, he had the land subdivided into
five parts, identified as lots Nos. 535-A, 535-B, 535-C,
535-D and 535-E, respectively. After the subdivision
had been effected, Atilano I executed a deed of
sale covering lot No. 535-E in favor of his brother
Atilano II. Three other portions, namely, lots Nos. 535-
B, 535-C, and 535-D, were likewise sold to other
persons. Atilano retained for himself the remaining
portions of the land, presumably covered by the title
to lot No. 535-A. upon his death, the title to this lot
passed to Ladislao, in whose name the
corresponding certificate was issued.
On 1959, Atilano II and his children had the land
resurveyed so that it could be properly subdivided.
However, they discovered that the land they were
actually occupying on the strength of the deed of
sale was lot No. 353-A and not lot 535-E, while the
land which remained in the possession of Atilano I,
and which was passed to Ladislao was lot No. 353-E
and not lot No. 535-A.
On 1960, the heirs of Atilano II alleging, inter alia, that
they offered to surrender to the possession of lot No.
535-A and demanded in return the possession of lot
9
by ERNIE Y. GULTIANO
No. 535-E, but the defendants refused to accept the
exchange. The plaintiffs' insistence is quite
understandable, since lot No. 535-E has an area of
2,612 square meters as compared to the 1,808
square-meter area of lot No. 535-A.
In their answer to the complaint, the defendants
alleged that the reference to lot No. 535-E in the
deed of sale was an involuntary error; that the
intention of the parties to that sale was to convey the
lot correctly identified as lot No. 535-A. On the basis
of the foregoing allegations the defendants
interposed a counterclaim, praying that the plaintiffs
be ordered to execute in their favor the
corresponding deed of transfer with respect to Lot
No. 535-E. The trial court rendered judgment in favor
of the plaintiffs.
ISSUE: Whether there has been a valid sale in view
of the real intention of the parties.
RULING: From the facts and circumstances, the
object is lot No. 535-A and its designation as lot No.
535-E in the deed of sale was a simple mistake in the
drafting of the document. The mistake did not vitiate
the consent of the parties, or affect the validity and
binding effect of the contract between them. The
new Civil Code provides a remedy by means of
reformation of the instrument. This remedy is
available when, there having been a meeting of the
minds of the parties to a contract, their true intention
is not expressed in the instrument purporting to
embody the agreement by reason of mistake, fraud,
inequitable conduct or accident.
In this case, the deed of sale executed in 1920 need
no longer be reformed. The parties have retained
possession of their respective properties
conformably to the real intention of the parties to
that sale, and all they should do is to execute mutual
deed of conveyance.
Therefore, the judgment appealed from is reversed.
The plaintiffs are ordered to execute a deed of
conveyance of lot No. 535-E in favor of the
defendants, and the latter, in turn, are ordered to
execute a similar document, covering lot No. 535-A,
in favor of the plaintiffs. Costs against the latter.
OBLIGATIONS AND CONTRACTS: CASE DIGESTS FOR FINAL EXAMS
RUIZ v. ATIENZA
O.G. 20 August 1941
FACTS: This is an appeal from a decision of the Manila
Court of First Instance denying plaintiff's demand for
the annulment of his marriage with defendant
contracted on November 14, 1938, with all the
outward legal formalities.
Previous to February, 1938, Jose Ruiz and Pelagia
Atienza, both single, were sweethearts. Loving
perhaps too well, she allowed him, in a moment of
weakness, to have his way, with the result that nine
months later she became an unmarried mother.
After the baby's birth, i.e., on November 14, 1938,
Pelagia's father Jose Atienza, Atty. Villavicencio (her
cousin-in-law), and three other persons visited Jose
Ruiz at the boarding house where he lived, in Oregon
street. They requested, and after some discussion,
convinced him to marry Pelagia. With his cousin
Alfredo Asuncion, he went with Jose Atienza and
companions to Tanduay street, where Pelagia was
living. From there the party, joined by Pelagia and
others, went to the Aglipayan church at Maria Clara
street, Manila, then proceeded to secure a marriage
license, and later returned to the same Aglipayan
church where the marriage was celebrated in the
evening.
Four days later, alleging that he had been forced
into wedlock, Jose Ruiz brought this suit to secure its
avoidance. His counsel has 'dramatized the visit of
Jose Atienza and companions, and the "plans"
drawn to force Jose Ruiz into the marriage, Jose's
passive and downcast attitude, all in an effort to
maintain the proposition that Jose Ruiz went with
them that afternoon "convinced" by the following
"arguments":
a. the threats of the father supported by his
"balisong";
b. the unveiled intimidation by Atty.
Villavicencio that if he would not marry
Pelagia Atienza, he would have difficulty
when he would take the bar examinations
because, as he said, many have been
rejected admission to the bar on the ground
of immorality;
c. the promise of Atty. Villavicencio that Ruiz
would be physically "safe" if he would go with
them.
10
by ERNIE Y. GULTIANO
ISSUE: Whether Jose Ruiz was intimidated into
marrying Pelagia Atienza.
RULING: No. As to the first, it appears that in the
course of the conversation during the visit, Ruiz made
the statement that he could not marry Pelagia
because he was already a married man. This so
aroused Jose Atienza that he grabbed Ruiz' necktie,
exclaiming: "So you mean to fool my daughter!"
Those present intervened quickly, and the dispute
stopped. The flare of anger is easily understandable.
But it is not sufficiently established that Jose Atienza
displayed any "balisong", or made any threat
against the life of Ruiz. In fact, only a one-and-a-half-
inch knife was found in his possession by the
policeman whom the companions of Ruiz called
upon seeing what they believed to be the beginning
of trouble.
As to the threat to obstruct his admission to the Bar,
by filing against him for immorality, the authorities are
unanimous that it is not such a duress as to constitute
a reason for annulling the marriage. * * * and where
a man marries under the threat of, or constraint from,
a lawful prosecution for seduction or bastardy, he
cannot avoid the marriage on the ground of duress;
* * *.
As to the promise by Atty. Villavicencio, it is apparent
that when defendant was invited to go with them
and marry Pelagia, he had some fears that he might
be subjected to bodily harm in retaliation for the
dishonor inflicted upon her family. For this reason, he
had to be assured by Villavicencio that he would be
safe if he went with them. From this statement, we
cannot infer what appellant’s attorney would
cleverly infer, i.e., that Ruiz would not be safe if he
did not follow them.
Appellant would make it appear that that afternoon
Ruiz was practically kidnapped by Pelagia's relatives
until after the marriage ceremony.
a. That cannot be true.
b. He had many occasions to escape, as
pointed out in appellee's brief.
c. He had companions in the house whom he
could have asked for help.
d. There was even the policeman.
Now, considering that the law presumes strongly the
validity of marriage once the formal ceremonies
have been completed, we are led to the conclusion
OBLIGATIONS AND CONTRACTS: CASE DIGESTS FOR FINAL EXAMS
that although plaintiff may not have looked upon
the ceremony as the happy culmination of
youthful romance, still the evidence does not
warrant a pronouncement that his consent to it was
obtained through force or intimidation.
Indeed, we may advert to the provision of the
Marriage Law which, referring to "force" or
"violence", does not seem to include mere
intimidation, at least where it does not in legal effect
amount to force or violence. At any rate, it is
unnecessary to pass on the effect of this legal
distinction. For even though appellant has presented
his case in the best possible light, yet appellee's
attorney has successfully met the issues, upholding
the judge's conclusion of fact that neither violence
nor duress attended the marriage celebration.
VALES v. VILLA
G.R. No. 10028, December 16, 1916
FACTS: This is an action to set aside certain transfers
of real estate from the plaintiff to one of the
defendants and to require that defendant to
recover by good and sufficient conveyance the title
to such properties; to refund to the plaintiff a certain
sum paid by plaintiff for the recovery of certain other
real estate; and for an accounting by the
defendants of the rents, issues and profits of certain
real estate during a certain period; and for P25,000
damages.
It appears that the defendant Felipa Silvestre is a
widow, 70 years of age, and is the aunt of the
defendant Maria Guia Garcia, wife of the
defendant Simeon A. Villa.
With regard to the Salsipuedes and Padre Faura
properties the plaintiff claims that they were
obtained from him and that he was induced to
execute conveyances therefor in favor of the
defendant Maria Guia Garcia under the threat that,
if he did not do so, the defendants would not
reconvey to him the properties described in the
conveyance of the 22d of March 1909; that is, that
they would repudiate the verbal agreement which
plaintiff alleges was attached to that conveyance.
That fact however must be alleged and proved and
relied upon before it can be utilized by the person
asserting its existence. It was not alleged or proved
11
by ERNIE Y. GULTIANO
in this case and plaintiff does not rely upon it in his
brief in this court. His consent was not obtained by
deceit in any of the transactions. There did not exist
in any one of the transactions complained of a
condition where “by words and insidious
machinations on the part of one of the contracting
parties the other is (was) induced to execute a
contract which, without them, he would not have
made.”
ISSUE: Whether it is valid to annul a series of real
estate transactions on the ground of duress.
RULING: The same may be said with greater force of
a case where a person’s own voluntary act,
uninfluenced by another, has put him in a
disadvantageous position — a position which
another may unjustly make use of to his injury. The
failure to reduce a contract to writing, or to have
witnesses present when a verbal agreement is
made, or to record an instrument, or to exclude from
the operation of its terms things verbally agreed to
be excluded, etc., may place a person in a
disadvantageous position with respect to another;
and the demand that he pay to secure his
extrication is not illegal, and a payment made
pursuant to such demand is not necessarily
voidable. He pays for his lack of foresight. While the
demand may be reprehensible morally, it is not
illegal and of itself is not ground for relief.
There must, then, be a distinction to be made
between a case where a person gives his consent
reluctantly and even against his good sense and
judgment, and where he, in reality, gives no consent
at all, as where he executes a contract or performs
an act against his will under a pressure which he
cannot resist. It is clear that one acts as voluntarily
and independently in the eye of the law when he
acts reluctantly and with hesitation as when he acts
spontaneously and joyously. Legally speaking he
acts as voluntarily and freely when he acts wholly
against his better sense and judgment as when he
acts in conformity with them. Between the two acts
there is no difference in law. But when his sense,
judgment, and his will rebel and he refuses
absolutely to act as requested, but is nevertheless
overcome by force or intimidation to such an extent
that he becomes a mere automation and acts
mechanically only, a new element enters, namely, a
disappearance of the personality of the actor. He
ceases to exist as an independent entity with
faculties and judgment, and in his place is
OBLIGATIONS AND CONTRACTS: CASE DIGESTS FOR FINAL EXAMS
substituted another — the one exercising the force
or making use of intimidation. While his hand signs,
the will which moves it is another’s. While a contract
is made, it has, in reality and in law, only one party to
it; and, there being only one party, the one using the
force or the intimidation, it is unenforceable for lack
of a second party.
From these considerations, it is clear that every case
of alleged intimidation must be examined to
determine within which class it falls. If it is within the
first class it is not duress in law, if it falls in the second,
it is.
But into whichever class it falls the party coerced
may, as we have seen, waive his right to annul the
contract and to recover damages. He may do this
expressly or impliedly. He may expressly accept the
agreement as it stands, or in a modified from, and
live up to it as thus accepted. Or, he may
compromise by paying something to be relieved
from its effects or to have its terms changed. Or, he
may accept benefits under the contract. In any one
of which cases, and there are others not now
necessary to mention, he renounces and waives his
defense of intimidation and thereby eliminates that
element as one having any influence on the case
thereafter.
Article 1265 of the Civil Code tells us when duress
exists: “Consent given by error, under violence, by
intimidation, or deceit shall be void.” Article 1267
provides that “violence exists when, in order to exact
consent, irresistible force is used;” and the
“intimidation exists when one of the contracting
parties is inspired with a reasonable and well-
grounded fear of suffering an imminent and serious
injury to his person or
property...” Article 1268 declares the effect of
violence and intimidation on the contract. It
provides:
Violence or intimidation shall annul the obligation,
even if it should have been employed by a third
person who did not take part in the contract.
There is no question of error or violence in this case;
and we have already disposed of that of deceit.
Intimidation resulting from the fear of losing his
property, if he did not comply with defendants’
demands, is the element relied on.
12
by ERNIE Y. GULTIANO
First, then, applying the principles already
enunciated: Was there intimidation in this case
under the facts as related by plaintiff himself, leaving
out of account the conclusions drawn and stated in
the brief of counsel? Summing up the whole case
under these facts, it is clear that all that defendants
did was to refuse to live up to their verbal agreement
with the plaintiff unless he gave them an additional
consideration therefor. Plaintiff had his choice. He
could refuse to pay again for the right which he had
paid for once, and go into court for relief, or he could
pay the price asked. His judgment operated upon
the situation thus presented and he concluded that,
from his point of view, his interests would be best
subserved by paying the additional consideration.
But having paid it, he found himself in precisely the
situation he was before. The verbal agreement to
reconvey, which he claims he had twice paid for,
was still verbal, and he was no better off than before.
He took no receipt showing the purpose of the
payment; he required no writing to protect himself
from the very trap into which he had once fallen;
but, instead, with the very persons who had refused
to live up to their original agreement because it was
verbal, he not only made another verbal agreement
but also paid them, without a scrap of paper to show
for it or specify its object, the sum of P10,000 on that
agreement. Not only this, but he did the same thing
a second time. The defendants having refused to
fulfill the second verbal agreement and having
refused to give him credit for the P10,000 paid, he
entered into a third agreement under which he paid
them P15,000. But still the agreement was verbal. Still
there was no receipt, no writing, nothing but the
naked word that had twice before been
repudiated. Again, for the tried time, there was a
refusal to fulfill and the plaintiff, to obtain the very
thing which had been the subject-matter of these
prior verbal contracts, paid a fourth consideration of
P6,800. This time he succeeded. On the payment of
the fourth consideration he secured in black and
white the title to the property which had so eluded
him.
But, even though it should be found that the
execution of the conveyance of the Salsipuedes
and Padre Faura properties and the payment of the
consideration of P6,800 for the recovery of the
properties described in the original conveyance
remaining unsold, together with all the other acts of
the plaintiff which militate against his interest, were
obtained and procured by means of intimidation, still
we believe that the plaintiff would not be entitled to
OBLIGATIONS AND CONTRACTS: CASE DIGESTS FOR FINAL EXAMS
recover on the record. His acts in general not only
contradicted the most material portions of his
testimony, but he must be held to have ratified the
conveyances, payments, and acts referred to and
to have renounce the right o interpose the defense
which intimidation originally offered him.
MUSNGI v. WEST COAST LIFE INSURANCE INC.
61 Phil. 864
FACTS: Arsenio T. Garcia was insured by the WCLIC in
the sum of P5,000. Garcia was again insured by the
WCLIC in the sum of P10,000. The two policies were
valid and subsisting at the time of the death of the
insured on December 30, 1932. The beneficiaries in
said policies, Segundina Musñgi and Buenaventura
Garcia demanded upon the WCLIC for the payment
of the two policies, but the defendant company
refused to pay.
The two policies were issued upon applications filed
by the insured on July 20, 1931 and October 15, of
the same year, respectively. In both applications, the
insured had to answer inquiries as to his state of
health and that of his family, which he did voluntarily.
In each of the said applications the following
question was asked: "1. What physician or
practitioner or any other person not named above
have you consulted or been treated by, and for
what illness, or ailment? (If none, so state.)" In the first
application, the insured answered "None", and in the
second, "No". These answers of the insured as well as
his other statements contained in his applications
were one of the causes or considerations for the
issuance of the policies, and they so positively
appear therein.
After the death of the insured and as a result of the
demand made by the beneficiaries upon the
defendant to pay the value of the policies, the latter
discovered that the aforementioned answers were
false and fraudulent, because the truth was that the
insured, before answering and signing the
applications and before the issuance of the policies,
had been treated in the General Hospital by a lady
physician for different ailments.
It indisputably appears that between May 13 and 19,
1929, the insured had entered the General Hospital
in Manila, and was treated by Dr. Cruz for peptic
ulcer and chronic catarrhal nasopharyngitis; on
13
by ERNIE Y. GULTIANO
August 5, 1930, he entered the same hospital and
was treated by the same physician for chronic
pyelocystitis and for incipient pulmonary
tuberculosis; on the 13th of the same month he
returned to the hospital and was treated by the
same physician for chronic suppurative pyelocystitis
and for chronic bronchitis; on the 20th of the same
month he again entered the hospital and was
treated by the same doctor for acute tracheo-
bronchitis and chronic suppurative pyelocystitis; on
the 27th of the same month he again entered the
same hospital and was treated for the same
ailments; on December 11, 1930, he again entered
the hospital and was treated for the same ailments;
on the 18th of the same month, he again entered the
hospital and was treated for the same ailments; on
the 28th of the same month he again entered the
hospital and was treated for the same ailments, and,
finally, on January 11, 1931, he again entered the
hospital and was treated by the same doctor for the
same ailments.
The defendant contended at the outset that the two
policies did not create any valid obligation because
they were fraudulently obtained by the insured. The
appealed decision holds that the health of the
insured before the acceptance of his applications
and the issuance of the policies could neither be
discussed nor questioned by the defendant,
because the insured was examined by three
physicians of the company and all of them
unanimously certified that he was in good health
and that he could be properly insured.
ISSUE: Whether the two answers given by the insured
in his applications are false, and if they were the
cause, or one of the causes, which induced the
defendant to issue the policies.
RULING: On the first point, the facts above set out
leave no room for doubt. The insured knew that he
had suffered from a number of ailments, including
incipient pulmonary tuberculosis, before subscribing
the applications, yet he concealed them and
omitted the hospital where he was confined as well
as the name of the lady physician who treated him.
That this concealment and the false statements
constituted fraud, is likewise clear, because the
defendant by reason thereof accepted the risk
which it would otherwise have flatly refused. When
not otherwise specially provided for by the Insurance
Law, the contract of life insurance is governed by the
general rules of the civil law regarding contracts.
OBLIGATIONS AND CONTRACTS: CASE DIGESTS FOR FINAL EXAMS
Article 1261 of the Civil Code provides that there is
no contract unless there should be, in addition to
consent and a definite object, a consideration for
the obligation established. And article 1276 provides
that the statement of a false consideration shall
render the contract void. The two answers being one
of the considerations of the policies, and it
appearing that they are false and fraudulent, it is
evident that the insurance contracts were null and
void and did not give rise to any right to recover their
value or amount.
One ground for the rescission of a contract of
insurance under the Insurance Act is a
"concealment", which in section 25 is defined as "A
neglect to communicate that which a party knows
and ought to communicate". Appellant argues that
the alleged concealment was immaterial and
insufficient to avoid the policy.
In an action on a life insurance policy where the
evidence conclusively shows that the answers to
questions concerning diseases were untrue, the truth
or falsity of the answers become the determining
factor. If the policy was procured by fraudulent
representations, the contract of insurance
apparently set forth therein was never legally
existent. It can fairly be assumed that had the true
facts been disclosed by the assured, the insurance
would never have been granted.
In Joyce, The Law of Insurance, second edition,
volume 3, Chapter IV, is found the following:
"Concealment exists where the assured has
knowledge of a fact material to the risk, and
honesty, good faith and fair dealing requires that he
should communicate it to the assured, but he
designedly and intentionally withholds the same.”
STRONG AND STRONG v. REPIDE
41 Phil. 947, May 3, 1909
FACTS: Among the lands comprising the friar lands
are the Dominican lands, the only valuable asset
owned by the corporation Philippine Sugar Estates
Development Company Limited (Philippine Sugar
Estates). Francisco Gutierrez Repide (Repide),
defendant, was the majority stockholder and one of
the five directors of Philippine Sugar Estates. He was
14
by ERNIE Y. GULTIANO
likewise elected by the board as the agent and
administrator general of such company.
The factual backdrop being during US occupation,
the US Government wanted to secure title over the
friar lands. To accomplish this objective, Governor
for the Philippines entered into negotiations for the
purchase of the Dominican lands, during which
Repide represented Philippine Sugar Estates. The first
offer of the Governor was to purchase the subject
lands in the amount of $6,043,219.47. As the majority
stockholder of Philippine Sugar Estates and without
prior consultation with the other stockholders,
Repide rejected the offer. For the second offer, the
purchase price was increased to $7,535,000.
While negotiations for the second offer were
ongoing and while still holding out for a higher price
of the Dominican lands, Repide took steps to
purchase the 800 shares of stock of Philippine Sugar
Estates. These shares were owned by Mrs. Eleanor
Strong (Strong) which were then in the possession of
her agent, F. Stuart Jones (Jones). Repide, instead of
seeing Jones, employed Kauffman who later on
employed Sloan, a broker, to purchase the shares of
Strong. Jones sold the 800 shares of Strong for 16,000
Mexican currency. For this sale transaction a check
of one Rueda Ramos was issued.
Later on, the negotiations for the purchase of the
Dominican lands were concluded and a contract of
sale was subsequently executed. This sale
transaction increased the value of the shares of
stocks originally owned by Strong from 16,000
Mexican currency to 76,256 US currency. During the
negotiations regarding the purchase of the shares of
stock of Strong, not one word of the facts affecting
the value of this stock was made known to her nor
her agent, Jones. After the sale of Dominican lands
and after the purchase of the 800 shares of Strong,
Repide became the owner of 30,400 out of the
42,030 shares of Philippine Sugar Estates.
Strong filed a complaint for the recovery of her 800
shares. She argued that her agent Jones had no
authority to sell her shares and that Repide
fraudulently concealed the facts affecting their
value.
ISSUE: Was there fraud in effecting the purchase of
Strong’s shares?
OBLIGATIONS AND CONTRACTS: CASE DIGESTS FOR FINAL EXAMS
RULING: Yes. With the factual circumstances of this
case, it became the duty of Repide, acting in good
faith, to state the facts before making the purchase
of Strong’s shares. That Repide was one of the
directors of Philippine Sugar Estates was but one of
the facts upon which liability is asserted. He was not
only a director, but he owned three-fourths of the
shares of its stock, and was, at the time of the
purchase of the stock, administrator general of the
company with large powers and engaged in the
negotiations which finally led to the sale of the
company’s lands at a price which greatly enhanced
the value of the stock. He was the negotiator for the
sale of the Dominican lands and was acting
substantially as the agent of the shareholders of
Philippine Sugar Estates by reason of his ownership
of the shares in the company. Because of such
ownership and agency, no one knew as well as he
does about the exact condition of the negotiations.
He was the only one who knew of the probability of
the sale of the Dominican lands to the government
and of the probable purchase price. Under these
circumstances, Repide employed an agent to
purchase the stock of Strong, concealed his own
identity and his knowledge of the state of
negotiations and their probable result. The
concealment of his identity while procuring the
purchase of the stock, by his agent, was in itself
strong evidence of fraud on the part of Repide. By
such means, the more easily was he able to avoid
questions relative to the negotiations for the sale of
Dominican lands and actual misrepresentations
regarding that subject. He kept up the concealment
as long as he could by giving the check of a third
person Rueda Ramos, for the purchase money. This
move of Repide was a studied and intentional
omission to be characterized as part of the
deceitful machinations to obtain the purchase
without giving any information whatever as to the
state and probable result of the negotiations and to
obtain a lower price for the shares of Strong. After
the purchase of stock, he continued negotiations for
the sale of the Dominican lands as the administrator
general and eventually entered into a contract of
sale. The whole transaction gives conclusive
evidence of the overwhelming influence Repide
had in the negotiations and it is clear that the final
consummation was in his hands at all times.
15
by ERNIE Y. GULTIANO
TUASON v. MARQUEZ
45 Phil. 381
FACTS: On March 5, 1921, Crisanto C. Marquez,
owner of the electric light plant of Lucena, Tayabas
agreed to franchised with Tuason and to pay
Marquez a total of P14,400; P2,400 within the sixty
days and remainder, P12,000 within a year. The 1st
installment was paid subsequent to the sixty-day
period; 2nd installment has not been paid. During
March 20, 1921 to July 19, 1922, Consolidated
Electric Light Plant, once in possession by Tuason. The
property was sold to Gregorio Marquez, brother of
Crisanto Marquez at P5,501.57. While on 1913 to
1914, a franchise for thirty-five years was granted the
Lucena Electric Company. The rights of this
Company passed to Crisanto Marquez at sheriff’s
sale on September 10,1919. Marquez, became
disgusted with the business result on February 28,
1921, prior to the accomplishment of the contract,
he announced to the Public Utility Commissioner his
intention to give up the franchise. Tuason permitted
to operate the company pursuant to a special
license which was to continue until they obtained a
new franchised granted by Republic Utility
Commissioner with certain conditions amounting to
the renovation of the entire plant. Tuason conceive
the idea of bringing active against Marques for
rescission of the contract. The plaintiff filed complain
in CFI Manila against Crisanto Marquez for P37,400.
The defendant asked for a dismissal action and an
allowance of P12,654.50 from plaintiff.
ISSUE: Whether the defendant is liable for the
damages due to honorable disclosure of fact
pertaining to the renovation of plant as a requisite
after the franchise has been granted.
RULING: No, it should be emphasized that the
contract in making mention of the property, the
Electric Light Company merely renewed a previous
inventory of the property. The franchise, therefore,
was not determining cause of purchase. Indeed, the
franchise was then in force and either party could
easily have ascertained its status by applying at the
office of the Public Utility Commissioner. The
innocent non-disclosure of a fact does not affect the
formation of the contract or operate to discharge
the parties from this agreement.
OBLIGATIONS AND CONTRACTS: CASE DIGESTS FOR FINAL EXAMS
RESCISSIBLE CONTRACTS
BORJA v. ADDISON
G.R. No. L-18010 June 21, 1992
FACTS: Eulalio Belisario acquired the two parcels of
land in question. He was married to Paula Ira, whose
son was Maximo Belisario, but such fact does not
appear in the records. The property regime of the
spouses was that of community of property. Eulalio
Belisario conveyed the two parcels of land to a
certain Jose Castillo, reserving the right to
repurchase. After the death his wife, Eulalio and
Maximo Belisario occupied and administered the
two parcels of land in common. A partnership was
then created between the Eulalio and his son
Maximo. After some time, the lands were forfeited
and confiscated for non-payment of taxes.
A civil case was filed and order of attachment was
issued against the lands. At public auction, said
lands were sold to McClure, represented by Addison.
Said order and notice were served upon Maximo
and Eulalio; and the same was presented to the
registry of deeds but no entries have been made.
The attached lands were thereafter sold to the
judgment creditor, McClure, represented by
Addison, but the sale was not recorded.
Eulalio, without Maximo’s permission, executed in
favor of Basilio Borja, who had no knowledge of the
common ownership, a deed of sale of two parcels
of land in question, reserving the right to repurchase.
On March 30, 1917, Addison purchased the land at
the sheriff’s execution sale. However, the sheriff’s
execution sales were fatally defective for want of
sufficient publication of the notices of sale. Borja now
seeks registration of the land, against the opposition
of the heirs of Maximo. The opposition claimed that
Eulalio had no right to sell Maximo’s share of the
land.
ISSUE: Whether Borja can demand registration of the
land in his name.
RULING: Yes, there may have been a partnership
between Eulalio and Maximo, still this fact was
unknown to Borja. It was ruled that there is nothing in
the law that requires that the partnership between
them be in writing for it to be valid. A surviving
husband may form a partnership with the heirs of the
deceased wife for the management and control of
the community property, but in the absence of the
16
by ERNIE Y. GULTIANO
formalities, knowledge of the existence of the new
partnership or community of property must at least
be brought home to third persons dealing with the
surviving husband in regard to the community real
property in order to bind them by the community
agreement.
Thus, the Supreme Court held that for the partnership
to be binding to third persons, and for Ferrer’s
argument to be valid, such partnership must be in
accordance with the formalities of the Code of
Commerce. In effect, the whole property was
conveyed to Borja in fee simple.
AQUINO v. TANEDO
G.R. No. L-12457, January 22, 1919
FACTS: Aquino purchased from Tanedo several
parcels of land (P45,000). By virtue of this contract
the plaintiff took possession of the lands purchased.
Later the plaintiff and the defendant, agreed to
consider the previous contract as rescinded. As a
result, the plaintiff returned to the defendant the
lands. The defendant, on his part, instead of
returning the price received by him, subscribed in
favor of the plaintiff another document in which he
acknowledges that he owes the plaintiff the sum of
P12,000.
The defendant only paid the plaintiff the P2,000 in
accordance with the contract. Subsequently, the
plaintiff filed against the defendant an action in the
Court of First Instance of Tarlac, wherein he
demanded of the defendant the payment of the
P10,000.
ISSUE: Is the plaintiff obliged to return to the
defendant the products to the lands that the plaintiff
collected during his possession?
RULING: We are of the opinion that the plaintiff
should be absolved from this counterclaim.
The defendant invokes article 1295 of the Civil code,
which prescribes that the rescission obliges the return
of the things which were the objects of the contract,
with their fruits and the price with interest. But the
rescission mentioned in the contract is not the
rescission referred to in this article 1295. Article 1295
refers to contract that are rescindible in accordance
with law in the cases expressly fixed thereby, but it
OBLIGATIONS AND CONTRACTS: CASE DIGESTS FOR FINAL EXAMS
does not refer to contracts that are rescinded by
mutual consent and for the mutual convenience of
the contracting parties. It is simply another contract
for the dissolution of a previous one, and its effects
should be determined by the agreement made by
the parties, or by application of the other legal
provisions and not by article 1295.
The defendant argues that as he bound himself to
pay, and in fact did pay, interest on the P10,000
which he received from the plaintiff as [a part of] the
price of the land, it should be understood that the
plaintiff, reciprocally, also bound himself to return, on
his part, the fruits which he collected from these
lands. However, plaintiff could not have bound
himself to return to the defendant the fruits of the
land that the plaintiff collected during his possession,
inasmuch as the defendant did not pay, nor bind
himself to pay, interest during the same time, as he
bound himself subsequent to the rescission.
But the plaintiff held the lands by reason of his having
purchased them from the defendant. On this
account, his possession, until the contract of
purchase and sale was dissolved and the lands were
returned by him, was in good faith. As such possessor
in good faith, the fruits collected by him become his
own (art. 451, Civil Code) and he is not obliged to
return them to the defendant. In the absence of any
covenant, this provision should be applied to the
instant case.
ORIA V. MCMICKING
G.R. No. L-7003
FACTS: Gutierrez Hermanos filed an action for
recovery of a sum of money against Oria Hermanos
& Co. and herein plaintiff filed an action for recovery
also for the same defendant. Before the institution of
the suits, members of the Company dissolved their
relations and entered into a liquidation. Tomas Oria
y Balbas acting in behalf of his co-owners entered
into a contract with the herein plaintiff for the
purpose of transferring and selling all the property
which the Oria Hermanos & Co. owned and among
the goods stated on that instrument was the
steamship Serpantes and which the subject of this
litigation. When the Trail Court resolved the action for
recovery filed by Gutierrez Hermanos and jugdment
was in his favor, the sheriff demanded to Tomas Oria
y Balbas to make payment but the latter said there
17
by ERNIE Y. GULTIANO
were no funds to pay the same. The sheriff then
levied on the steamer, took possession of the same
and announced it for public auction. Herein plaintiff
claimed that he is the owner of the steamer by virtue
of the selling of all the properties of the said
Company.
ISSUES: (1) Whether there was a valid sale between
Oria Hermanos & Co. to Manuel Oria y Gonzales as
against the creditors of the company. (2) Whether
the sale was fraudulent.
RULING: At the time of said sale the value of the
assets of Oria Hermanos & Co., as stated by the
partners themselves, was P274,000. The vendee of
said sale was a son of Tomas Oria y Balbas and a
nephew of the other two persons heretofore
mentioned which said three brothers together
constituted all of the members of said company.The
plaintiff is a young man of 25 years old and has no
property before the said selling. The court had laid
down the rules in determining whether a there has
been fraud prejudicing creditors: 1) consideration of
conveyance is fictitious; 2) transfer was made while
the suit against him (Tomas Oria y Balbas) was
pending; 3) sale by insolvent debtor; 4) evidence of
insolvency; 5) transfer of all properties; 6) the sale
was made between father and son; 7) and the
failure of the vendee to take exclusive possession of
the property. The case at bar shows every one of the
badges of fraud.
ASIA BANKING CORPORATION v. NABLE JOSE
51 Phil. 763
FACTS: Lichauco Corporation is the owner of
Hacienda Sevitana and Sapangbalen. Stockholders
of the said corporation were Faustino Lichauco and
her sister Nable Jose. Faustino contracted a loan to
Asia Baking Corporation amounting to P70, 000.00 to
save their farm of sugarcane because of business
troubles. Since the business of Faustino did not do
well and he did not even pay his loan to the bank.
Asia Banking Corporation filed a complaint against
Faustino for recovery of P146,242.11 due and owing
it to Lichauco Corporation. The bank upon their
agreement wanted to get the hacienda from
Faustino.
Without the knowledge of her sister Nable Jose that
Faustino contracted an agreement concerning the
OBLIGATIONS AND CONTRACTS: CASE DIGESTS FOR FINAL EXAMS
hacienda, she questioned it since the property was
also owned by her. A certificate of registry was issued
in her favor as the sole and exclusive owner of the
property.
ISSUE: Whether the agreement between Faustino
and Asia Banking Corporation was valid.
RULING: No, because Faustino owed the bank
amounting to P70,000.00 only and the value of the
hacienda was about P400,000.00 the property
maybe dispose in consideration of its value. The
property and his possessions will not be permitted to
alienate because under Article 1382 of NCC any
payments made because of insolvency is invalid
under some circumstances.
SURIA v. IAC
151 SCRA 661
FACTS: On March 31, 1975, plaintiffs being the owners
of a parcel of land situated at Barrio San Antonio,
San Pedro, Laguna, entered into a contract
denominated as DEED OF SALE WITH MORTGAGE,
with herein defendants, a true copy of said contract.
The defendants violated the terms and conditions of
the contract by failing to pay the stipulated
installments and in fact only one installment due in
July 1975 (paid very late in the month of September,
1975) was made all the others remaining unsettled to
the present time;
Repeated verbal and written demands were made
by plaintiff upon the defendants for the payment of
the installments, some of said written demands
having been made on September 24, 1981, February
7, 1982, February 24, 1983, March 13, 1983, and April
12, 1983, but defendants for no justifiable reason fail.
On November 14, 1983, petitioners filed their answer
with counterclaim.
On July 16, 1984, petitioners filed a motion to dismiss
complaint, alleging that: That plaintiffs are not
entitled to the subsidiary remedy of rescission
because of the presence of remedy of foreclosure in
the Deed of Sale with Mortgage, secondly that,
assuming arguendo that rescission were a proper
remedy, it is apparent in the face of the Complaint
that the plaintiffs failed to comply with the
18
by ERNIE Y. GULTIANO
requirements of law, hence the rescission was
ineffective, illegal, null and void, and invalid.
On July 26, 1984, private-respondents filed their
opposition to the above motion. In the meantime,
on August 6, 1984, petitioners formerly offered to pay
private-respondents all the outstanding balance
under the Deed of Sale with Mortgage, which offer
was rejected by private respondents on August 7,
1984. On November 26, 1984, the respondent-Court
denied the motion to dismiss.
ISSUE: Whether the seller can resort to the remedy of
rescission under Article 1191.
RULING: There is no dispute that the parties entered
into a contract of sale as distinguished from a
contract to sell. By the contract of sale, the vendor
obligates himself to transfer the ownership of and to
deliver a determinate thing to the buyer, who in turn,
is obligated to pay a price certain in money or its
equivalent (Art. 1458, Civil Code). From the
respondents’ own arguments, we note that they
have fully complied with their part of the reciprocal
obligation.
The petitioners’ breach of obligations is not with
respect to the perfected contract of sale but in the
obligations created by the mortgage contract.
Under Article 1883, the remedy of rescission is not a
principal action retaliatory in character but
becomes a subsidiary one which by law is available
only in the absence of any other legal remedy.
The relationship between the parties is no longer one
of buyer and seller because the contract of sale has
been perfected and consummated. It is already one
of a mortgagor and a mortgagee. In consideration
of the petitioners’ promise to pay on installment basis
the sum they owe the respondents, the latter have
accepted the mortgage as security for the
obligation.
The petitioners have offered to pay the past due
accounts. Considering the lower purchasing value of
the peso in terms of prices of real estate today, the
respondents are correct in stating they have suffered
losses. However, they are also to blame for trusting
persons who could not or would not comply with
their obligations in time. They could have foreclosed
on the mortgage immediately when it fell due
instead of waiting all these years while trying to
enforce the wrong remedy.
OBLIGATIONS AND CONTRACTS: CASE DIGESTS FOR FINAL EXAMS
FACTS: On December 19, 1944, Fernando Hermosa
Sr., owner of certain real estate in San Sebastian
Spain, died. Intestate proceedings were instituted in
CFI of Samar for settlement of his estate and his
daughter Luz Hermosa was appointed administratrix.
On January 14, 1947, the administratrix requested
permission from the court to sell the property located
in Spain with a conformity of her co-heir Fernando
Hermosa Jr.
Alfonso Zobel was approached to buy the property
but, did not wish to have negotiation with heirs.
Luz and Fernando agreed to have the property
ceded and adjudicated to one of them who may
later carry on negotiation with prospective buyers.
Luz Hermosa renewed negotiation of the sale of the
property to Alfonso Zobel and agreed that the sale
price would be P20,000.00.
In order to protect the investment of the buyer, it was
agreed to state in the deed of sale, the price of
P80,000. However, problem arose in connection with
the tax that may be made to pay if the price were
fixed at P80,000.00. So, it was agreed to reduce it to
P60,000.00.
On December 10,1947, Luz Hermosa executed the
necessary deed of sale with the remaining balance
of P5,000 after the property had been registered in
the name of the vendor.
On April 27, 1948, the remainder was in effect paid
by Zobel to Luz Hermosa to complete the
transaction.
Luz Hermosa died and Fernando Hermosa Jr. was
appointed as administrator of the estate of his late
grandfather. He demanded from Zobel the
payment of the balance of P60,000 as it was
indicated in the deed of sale. Zobel refused to
accede his demand.
On May 28, 1954, Fernando Hermosa Jr. filed action
in CFI of Samar asking for specific performance or
the rescission of sale plus damages, in his capacity
as Judicial Administrator.
The court found complaint unmeritorious and
rendered judgment dismissing it but ordering the
plaintiff to pay the defendant of the sum of P1,000 as
19
by ERNIE Y. GULTIANO
moral damages and P500 as attorney’s fees and
cost.
ISSUE: Whether the action of rescission of the
contract of sale by the plaintiff is enforceable.
RULING: No, even if be granted that the plaintiff has
sufficient legal ground to ask for the rescission of the
sale, the fact remains that his right of action has
already prescribed. It appears that he became of
age on January 7, 1948 and he only brought the
presentation on May 28, 1954, or more than four
years after the he attained the age of majority.
Under Article 1389 of NCC, action for rescission
prescribes in four years from removal of one’s
incapacity, and this happened more than four years
ago.
We entertain a different opinion considering that the
plaintiff did not take part in the sale and so he was
not aware of the circumstances under which it was
carried out. Apparently, he was of the belief that the
real consideration was P80,000 as it was made to
appear in the document and he brought this action
in the belief that defendant has not paid the
balance of P60,000.
VOIDABLE CONTRACTS
THE ESTATE OF PEDRO C. GONZALES AND HEIRS OF
PEDRO C. GONZALES v. THE HEIRS OF MARCOS PEREZ
G.R. No. 169681, November 5, 2009
Pending approval or disapproval by the Provincial
Governor of a contract entered into by a
municipality which falls under the provisions of
Section 2196 of the Revised Administrative Code,
such contract is considered voidable. In the instant
case, there is no showing that the contract of sale
entered into between Pedro and the Municipality of
Marikina was ever acted upon by the Provincial
Governor. Hence, the subject contract should be
considered voidable. Voidable or annullable
contracts, before they are set aside, are existent,
valid, and binding, and are effective and obligatory
between the parties.
In the present case, since the contract was never
annulled or set aside, it had the effect of transferring
ownership of the subject property to Pedro. Having
lawfully acquired ownership of Lots A and C, Pedro,
OBLIGATIONS AND CONTRACTS: CASE DIGESTS FOR FINAL EXAMS
in turn, had the full capacity to transfer ownership of
these parcels of land or parts thereof, including the
subject property which comprises a portion of Lot C.
FULE v. COURT OF APPEALS
G.R. No. 112212, March 2, 1998
FACTS: Gregorio Fule, a banker and a jeweler,
offered to sell his parcel of land to Dr. Cruz in
exchange for P40,000 and a diamond earring
owned by the latter. A deed of absolute sale was
prepared by Atty. Belarmino. On the same day, Fule
went to the bank with Dichoso and Mendoza, and
Dr. Cruz arrived shortly thereafter. Dr. Cruz got the
earrings from her safety deposit box and handed it
to Fule who, when asked if those were alright,
nodded and took the earrings. Two hours after, Fule
complained that the earrings were fake. He filed a
complaint to declare the sale null and void on the
ground of fraud and deceit.
ISSUE: Whether the sale should be nullified on the
ground of fraud.
RULING: A contract of sale is perfected at the
moment there is a meeting of the minds upon the
thing which is the object of the contract and upon
the price. Being consensual, a contract of sale has
the force of law between the contracting parties
and they are expected to abide in good faith by
their respective contractual commitments. It is
evident from the facts of the case that there was a
meeting of the minds between petitioner and Dr.
Cruz. As such, they are bound by the contract unless
there are reasons or circumstances that warrant its
nullification.
Contracts that are voidable or annullable, even
though there may have been no damage to the
contracting parties are: (1) those where one of the
parties is incapable of giving consent to a contract;
and (2) those where the consent is vitiated by
mistake, violence, intimidation, undue influence or
fraud. The records, however, are bare of any
evidence manifesting that private respondents
employed such insidious words or machinations to
entice petitioner into entering the contract of barter.
It was in fact petitioner who resorted to machinations
to convince Dr. Cruz to exchange her jewelry for the
Tanay property.
20
by ERNIE Y. GULTIANO
Furthermore, petitioner was afforded the reasonable
opportunity required in Article 1584 of the Civil Code
within which to examine the jewelry as he in fact
accepted them when asked by Dr. Cruz if he was
satisfied with the same. By taking the jewelry outside
the bank, petitioner executed an act which was
more consistent with his exercise of ownership over
it. This gains credence when it is borne in mind that
he himself had earlier delivered the Tanay property
to Dr. Cruz by affixing his signature to the contract of
sale. That after two hours he later claimed that the
jewelry was not the one he intended in exchange for
his Tanay property, could not sever the juridical tie
that now bound him and Dr. Cruz. The nature and
value of the thing he had taken preclude its return
after that supervening period within which anything
could have happened, not excluding the alteration
of the jewelry or its being switched with an inferior
kind.
Ownership over the parcel of land and the pair of
emerald-cut diamond earrings had been transferred
to Dr. Cruz and petitioner, respectively, upon the
actual and constructive delivery thereof. Said
contract of sale being absolute in nature, title
passed to the vendee upon delivery of the thing sold
since there was no stipulation in the contract that
title to the property sold has been reserved in the
seller until full payment of the price or that the
vendor has the right to unilaterally resolve the
contract the moment the buyer fails to pay within a
fixed period.
While it is true that the amount of P40,000.00 forming
part of the consideration was still payable to
petitioner, its nonpayment by Dr. Cruz is not a
sufficient cause to invalidate the contract or bar the
transfer of ownership and possession of the things
exchanged considering the fact that their contract
is silent as to when it becomes due and
demandable.
See also MERCADO v. ESPIRTU, 37 Phil. 215 and
BRAGANZA V. DE VILLA ABRILLE 105 Phil. 456
TORRES & LOPEZ DE BUENO v. LOPEZ
GR No. 24569, February 26, 1926
FACTS: Tomas Rodriguez y Lopez, single, died on
February, 25, 1924 leaving all his estate to VL.
OBLIGATIONS AND CONTRACTS: CASE DIGESTS FOR FINAL EXAMS
On August 10, 1923, Rodriguez designated Vicente
Lopez as administrator of his property due to his
feeble health, such was questioned by Margarita
Lopez. The CFI of Manila recognized Lopez as
Rodriguez’s guardian.
Tomas Rodriguez voiced out the need to form a will,
and Lopez has procured Judge Maximino Mina.
Manuel Torres, one of the executors named in the
will, asked the will to be allowed. Such was also
contested by Margarita Lopez on the following
grounds:
a. that testator lacked mental capacity because
at that time he had senile dementia and was
under guardianship;
b. that undue influence had been exercised by the
persons benefited;
c. the signature of Rodriguez was obtained through
fraud and deceit. (Luz Lopez allegedly deceived
Rodriguez to sign by stating that such document
he was about to sign was in connection with a
complaint against Castito, as witnessed by Dr.
Boanan one of the witnesses of the signing of the
will)
Trial Court denied legalization of the will on the
ground of lack of mental capacity at the signing of
the will by the testator.
ISSUES: (1) Whether Rodriguez has testamentary
capacity to consider the will valid. (2) Whether there
was undue influence in the procurement of the
signature of Rodriguez in the will.
RULING: (1) Yes. Rodriguez has testamentary
capacity to constitute a will. Though there was
conflict of medical opinions on the soundness of
mind of the testator. (Drs. Calderon, Domingo,
Herrera claimed that testator had full understanding
of the acts he was performing and that they were
witnesses in the said signing of the will; Drs. Delos
Angeles, Tietze and Burke certified that Rodriguez
was of unsound mind and is diagnosed of senile
dementia).
Code of Civil procedure prescribes a requisite that
the testator be of “sound mind”, a sound mind is a
disposing mind. One of the grounds of disallowing a
will is if the testator is insane or otherwise incapable
of the execution. With such the Court has adopted
a definition of Testamentary Capacity as:
21
by ERNIE Y. GULTIANO
The capacity to comprehend the nature of the
transaction in which the testator is engaged at the
time, to recollect the property to be disposed of and
the persons who would naturally be supposed to
have claims upon the testator, and to comprehend
the manner in which the instrument will distribute his
property among the objects of his bounty.
The presumption is that every adult is sane. It is only
when those seeking to overthrow the will have
clearly established the charge of mental incapacity
that the courts will intervene to set aside a
testamentary document.
(2) No. Theory of undue influence is rejected as not
proved. Rodriguez voluntary named Vicente F.
Lopez as his administrator. The latter subsequently
became his guardian. There is every indication that
of all his relatives Tomas Rodriguez reposed the most
confidence in Vicente F. Lopez and his daughter Luz
Lopez de Bueno. Trial Judge entertained the idea of
preconceived plans but the witnesses in the signing
are men of standing (Judge Mine, Dr. Calderon,
Herrara, De Asis, and Mr. Legarda).
One of the grounds for disallowing a will is that it was
procured by undue and improper pressure and
influence on the art of the beneficiary or some other
person for his benefit (Code of Civil Procedure, sec.,
634[4]).
Undue influence, Art. 1265 of CC, may be defined as
that which compelled the testator to do that which
is against the will from fear the desire of peace or
from other feeling which is unable to resist.