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RULING: (1) No. There is no proof that a contract was
ABS-CBN BROADCASTING CORP. v. COURT OF perfected in the said meeting. Lopez’ testimony
APPEALS, about the contract being written in a napkin is not
301 SCRA 592 corroborated because the napkin was never
produced in court. Further, there is no meeting of the
FACTS: In 1992, ABS-CBN Broadcasting Corporation, minds because Del Rosario’s offer was of 104 films for
through its vice president Charo Santos-Concio, P60 million was not accepted. And that the alleged
requested Viva Production, Inc. to allow ABS-CBN to counter-offer made by Lopez on the same day was
air at least 14 films produced by Viva. Pursuant to this not also accepted because there’s no proof of such.
request, a meeting was held between Viva’s The counter offer can only be deemed to have
representative (Vicente Del Rosario) and ABS-CBN’s been made days after the April 2 meeting when
Eugenio Lopez (General Manager) and Santos- Santos-Concio sent a letter to Del Rosario containing
Concio was held on April 2, 1992. During the meeting the counter-offer. Regardless, there was no showing
Del Rosario proposed a film package which will allow that Del Rosario accepted. But even if he did
ABS-CBN to air 104 Viva films for P60 million. Later, accept, such acceptance will not bloom into a
Santos-Concio, in a letter to Del Rosario, proposed a perfected contract because Del Rosario has no
counterproposal of 53 films (including the 14 films authority to do so.
initially requested) for P35 million. Del Rosario
presented the counter offer to Viva’s Board of As a rule, corporate powers, such as the power; to
Directors but the Board rejected the counter offer. enter into contracts; are exercised by the Board of
Several negotiations were subsequently made but Directors. But this power may be delegated to a
on April 29, 1992, Viva made an agreement with corporate committee, a corporate officer or
Republic Broadcasting Corporation (referred to as corporate manager. Such a delegation must be
RBS – or GMA 7) which gave exclusive rights to RBS to clear and specific. In the case at bar, there was no
air 104 Viva films including the 14 films initially such delegation to Del Rosario. The fact that he has
requested by ABS-CBN. to present the counteroffer to the Board of Directors
of Viva is proof that the contract must be accepted
ABS-CBN now filed a complaint for specific first by the Viva’s Board. Hence, even if Del Rosario
performance against Viva as it alleged that there is accepted the counter-offer, it did not result to a
already a perfected contract between Viva and contract because it will not bind Viva sans
ABS-CBN in the April 2, 1992 meeting. Lopez testified authorization.
that Del Rosario agreed to the counterproposal and
he (Lopez) even put the agreement in a napkin (2) No. The award of moral damages cannot be
which was signed and given to Del Rosario. ABS-CBN granted in favor of a corporation because, being an
also filed an injunction against RBS to enjoin the latter artificial person and having existence only in legal
from airing the films. The injunction was granted. RBS contemplation, it has no feelings, no emotions, no
now filed a countersuit with a prayer for moral senses. It cannot, therefore, experience physical
damages as it claimed that its reputation was suffering and mental anguish, which call be
debased when they failed to air the shows that they experienced only by one having a nervous system.
promised to their viewers. RBS relied on the ruling in No moral damages can be awarded to a juridical
People vs Manero and Mambulao Lumber vs PNB person. The statement in the case of People vs
which states that a corporation may recover moral Manero and Mambulao Lumber vs PNB is a mere
damages if it “has a good reputation that is obiter dictum hence it is not binding as a
debased, resulting in social humiliation”. The trial jurisprudence.
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 MONTINOLA v. VICTORIAS MILLING CO.
April 2, 1992 meeting between the representatives of 54 Phil. 782
the two corporations. (2) Whether a corporation, like
RBS, is entitled to an award of moral damages upon FACTS: The petitioners Victorias Planters Association,
grounds of debased reputation. Inc. and North Negros Planters Association, Inc. are


non-stock corporations and are composed of sugar during said period, does not mean that the
cane planters having been established as the happening of any of those events stops the running
representative entities of the numerous sugar cane of the period agreed upon. It only relieves the parties
planters in the districts of Victorias, Manapla and from the fulfillment of their respective obligations
Cadiz. The sugar cane productions were milled by during that time. To require the planters to deliver the
the respondent corporation. Petitioners are the ones sugar cane which they failed to deliver during the
in charge of taking up with the respondent four years of the Japanese occupation and the two
corporation problems which may come up. At years after liberation when the mill was being rebuilt
various dates, the sugarcane planters executed is to demand from the obligors the fulfillment of an
identical milling contracts setting forth the terms and obligation which was impossible of performance at
conditions which the sugar central “North Negros the time it became due. Nemo tenetur ad
Sugar Co. Inc.” would mill the sugar produced by the impossibilia
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 ROSENSTOCK v. BURKE
Co., Inc. for said respondent corporation to mill the 46 Phil. 217
sugarcane produced by the planters of Manapla
and Cadiz holding milling contracts with it. When the FACTS: Defendant wrote a letter to the offeror: "In
planters-members of the North Negros Planters connecton with the yacht Bronzewing, I am in
Association, Inc. considered that the stipulated 30- positon and am willing to entertain the purchase of
year period of their milling contracts had already it under the following terms."
expired and terminated and the planters-members
of the Victorias Planters Association, Inc. likewise ISSUE: Was there an offer here that was certain
considered the stipulated30-year period of their which, if accepted, could compel the writer to really
milling contracts as having likewise expired and buy the yacht?
terminated. Respondent has refused to accept the
fact that the 30-year period has expired. They RULING: No, because here the offer was neither
contend that the 30 years stipulated in the contracts definite nor certain. Said the Supreme Court: “To
referred to 30 years of milling – not 30 years in time. convey the idea of a resolution to purchase, a man
They contend that as there was no milling during 4 of ordinary intelligence and common culture would
years of the recent war and 2 years of use these clear and simple words: ‘I offer to
reconstruction, 6 years of service still has to be purchase,’ I want to purchase,’ ‘I am in position to
rendered by petitioners. purchase…’ It must be presumed that a man in his
transactions in good faith used the best means of
ISSUE: Whether the respondent is correct. expressing his mind that his intelligence and culture
so permit as to convey and exteriorize his will
RULING: The trial court rendered judgment, which faithfully and unequivocally. The word ‘entertain’
the Supreme Court affirmed. The reason the planters applied to an act does not mean the resolution to
failed to deliver the sugar cane was the war or a perform said act. It was not a definite or certain offer,
fortuitous event. The appellant ceased to run its mill but a mere invitation to a proposal being made to
due to the same cause. Fortuitous event relieves the him, which might be accepted by him or not.”
obligor from fulfilling a contractual obligation. The
fact that the contracts make reference to "first Note: If two are offered, but they are independent
milling" does not make the period of thirty years one of each other (such as a sale of a parcel of land, and
of thirty milling years. The seventh paragraph of the lease of an automobile), acceptance of one
Annex "C", not found in the earlier contracts does not imply acceptance of the other. BUT if one
(Annexes "A", "B", and "B-1"), quoted by the appellant contract depends upon another, like a contract of
in its brief, where the parties stipulated that in the loan provided it is secured by a contract or
event of flood, typhoon, earthquake, or other mortgage, it is essential that there be an agreement
force majeure on BOTH transactions. Otherwise, there can be as yet
, war, insurrection, civil commotion, organized strike, no meeting of the minds.
etc., the contract shall be deemed suspended


BATANGAN v. COJUANGCO acceptance or rejection of an offer of compromise

78 Phil. 481 may be inferred from circumstances. The appellant's
failure to act on the offer before the judgment was
FACTS: On October 29, 1943, Atty. Marcelino Lontok, entered was an implied rejection of said offer.
who has represented the herein appellant, sent
Isidra Cojuangco a missive with three postal money In pushing the appeal to final conclusion, the
orders for P800, stating that he was remitting that appellant made it clear that he was not interested in
amount in behalf of his client "in accordance with his creditor's liberal concession. A compromise has
your agreement," and promising to pay the balance for its purpose the avoidance or termination of a law
"at the shortest possible time." The amount was suit. With the rendition of judgment, the reason which
rejected by Mrs. Cojuangco, who told she had not induced the appellee to make her proposition
had any agreement with his client. ceased to exist.

Atty. Lontok sent a letter through a messenger to Mrs. Again, acceptance in order to conclude the
Cojuangco's counsel, Atty. Antonio Lucero, in agreement must in every respect meet and
Manila, enclosing the same money orders for P800 correspond with the terms and conditions of the
and P708.30 in paper money. This tender was also offer. Granting that the appellant acted on time,
refused. payment of P800 fell short of the appellee's
requirement. The appellee wanted P1,508.28 in
Attorney Lontok came to this court with a motion to cash. This was the least she was entitled to, being the
order the appellee to comply with the offer she had amount which the court below had found to be due
made in her brief. That motion was "rejected" in a her. In her proposition, she did not even include any
resolution for having been filed after the entry of interest.
The substantial variance between the amount in the
The lower court declared that "the statement offer and the amount tendered not only made the
contained in the brief of the defendant herein and purported acceptance inoperative but "put an end
footnoted in the decision of the Supreme Court to the negotiations without forming a contract unless
(was) a promise on the part of the defendant herein the party making the offer agreed to the suggested
to resell the land in question to the plaintiff herein." modification."
Nevertheless, it found that "the time for him
(Batangan) to accept the promise was from the Otherwise, as the trial judge aptly observed,
date of the brief of the defendant herein until the "promisors would be tied to their promises indefinitely
entry of judgment," and that the acceptance and would not be able to dispose of the property
having been made after the judgment had been involved" in the promise or offer. In addition, the
rendered, it came too late. promisor would be placed in a position where he
would always lose without anything to gain. The
The question of the conclusiveness of our resolution promisee could wait until judgment is rendered and
referred to is not pressed in this appeal. Apparently accepted the offer of compromise if the judgment
abandoning her plea in this regard, the appellee happened to be more onerous to him.
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 LAUDICO v. ARIAS
property constituted a formal offer that could have 43 Phil. 270
served as basis for the creation of legal relations.
FACTS: Defendant, Vicente Arias, who, with his
ISSUE: Whether the appellee's offer has been duly codefendants, owned the building Nos. 205 to 221
accepted by the appellant. on Carriedo Street, on his behalf and that of his co-
owners, wrote a letter to the plaintiff, Mamerto
RULING: We are of the opinion that the acceptance Laudico, giving him an option to lease the building
was tardy. An offer of compromise settlement must to a third person, and transmitting to him for that
be accepted within a reasonable time. And purpose a tentative contract in writing containing


the conditions upon which the proposed lease two (2) years from said date with the understanding
should be made. Later Mr. Laudico presented his co- that said option shall be deemed “terminated and
plaintiff, Mr. Fred. M. Harden, as the party desiring to elapsed,” if “Sanchez shall fail to exercise his right to
lease the building. On one hand, other conditions buy the property” within the stipulated period.
were added to those originally contained in the Inasmuch as several tenders of payment of the sum
tentative contract, and, on the other, counter- of P1,510.00, made by Sanchez within said period,
propositions were made and explanations were rejected by Mrs. Rigos, on 12 March 1963, the
requested on certain points in order to make them former deposited said amount with the CFI Nueva
clear. Mr. Laudico, finally wrote a letter to Mr. Arias Ecija and commenced against the latter the present
on March 6, 1919, advising him that all his action, for specific performance and damages. On
propositions, as amended and supplemented, were 11 February 1964, after the filing of defendant’s
accepted. It is admitted that this letter was received answer, both parties, assisted by their respective
by Mr. Arias by special delivery at 2.53 p.m. of that counsel, jointly moved for a judgment on the
day. On that same day, at 11.25 in the morning, Mr. pleadings. Accordingly, on 28 February 1964, the
Arias had, in turn, written a letter to the plaintiff, Mr. lower court rendered judgment for Sanchez,
Laudico, withdrawing the offer to lease the building. ordering Mrs. Rigos to accept the sum judicially
consigned by him and to execute, in his favor, the
ISSUE: Whether the plaintiff in this action is that the requisite deed of conveyance. Mrs. Rigos was,
defendants be compelled to execute the contract likewise, sentenced to pay P200.00, as attorney’s
of lease of the building. fees, and the costs. Hence, the appeal by Mrs. Rigos
to the Court of Appeals, which case was the
RULING: No, under article 1262, paragraph 2, of the certified by the latter court to the Supreme Court
Civil Code, an acceptance by letter does not have upon the ground that it involves a question purely of
any effect until it comes to the knowledge of the law.
offerer. Therefore, before he learns of the
acceptance, the latter is not yet bound by it and ISSUE: Whether the contract is valid and binding.
can still withdraw the offer. Consequently, when Mr.
Arias wrote Mr. Laudico, withdrawing the offer, he RULING: Option without consideration is a mere
had the right to do so, inasmuch as he had not yet offer of a contract of sale, which is not binding until
received notice of the acceptance. And when the accepted. If the option is given without a
notice of the acceptance was received by Mr. Arias, consideration, it is a mere offer of a contract of sale,
it no longer had any effect, as the offer was not then which is not binding until accepted. If, however,
in existence, the same having already been acceptance is made before a withdrawal, it
withdrawn. There was no meeting of the minds, constitutes a binding contract of sale, even though
through offer and acceptance, which is the essence the option was not supported by a sufficient
of the contract. While there was an offer, there was consideration... (77 Corpus Juris Secundum p. 652.
no acceptance, and when the latter was made and See also 27 Ruling Case Law 339 and cases cited.) It
could have a binding effect, the offer was then can be taken for granted that the option contract
lacking. 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
SANCHEZ v. RIGOS both acts — the offer and the acceptance — could
45 SCRA 368 at all events have generated a contract, if none
there was before (arts. 1254 and 1262 of the Civil
FACTS: On 3 April 1961, Nicolas Sanchez and Code; Zayco vs. Serra, 44 Phil. 331.) In other words,
Severina Rigos executed an instrument, entitled since there may be no valid contract without a
“Option to Purchase,” whereby Mrs. Rigos “agreed, cause or consideration, the promisor is not bound by
promised and committed . . . to sell” to Sanchez, for his promise and may, accordingly, withdraw it.
the sum of P1,510.00, a parcel of land situated in the Pending notice of its withdrawal, his accepted
barrios of Abar and Sibot, municipality of San Jose, promise partakes, however, of the nature of an offer
province of Nueva Ecija, and more particularly to sell which, if accepted, results in a perfected
described in TCT NT-12528 of said province, within contract of sale.


CONSENT obligations, as when the latter arise from his acts or

from property relations, such as easements.
37 Phil. 37 Also, these minors cannot be permitted afterwards
to excuse themselves from compliance with the
FACTS: Margarita Espiritu was the owner of a 48- obligation assumed by them or seek their
hectare land. In 1897, she died and the land was left annulment. This is in accordance with the provisions
to her husband (Wenceslao Mercado) and her of the law on estoppels.
children, Domingo Mercado, Josefa Mercado and 3
other siblings. *** This is in accordance with the provisions of the law
on estoppel.
Apparently however, during the lifetime of Margarita
in 1894, she executed a deed of sale transferring Art 1431 of Civil Code. Through estoppel, an
about 71% of her land (covering 15 cavanes of admission or representation is rendered conclusive
seeds) to her brother Luis Espiritu (father of Jose upon the person making it, and cannot be denied or
Espiritu) for P2,000.00. After her death, Wenceslao disproved as against the person relying thereon.
had a hard time making ends meet for his family and
so he took out a loan from Luis in the amount of This is also in accordance with the provisions of Rule
P375.00. The loan was secured by the remainder of 123, Sec 68, Par. A
the lot. Later, that loan was increased to P600.00.
Rule 123, sec 68, Par. A...” Whenever a party has, by
In May 1910, Luis entered into a notarized agreement his own declaration, act or omission, intentionally
with Domingo and Josefa whereby the two, while and deliberately led another to believe a particular
purporting to be of legal age, acknowledged the thing to be true, and to act upon such belief, he
sale and the loan previously entered into by their cannot, in any litigation arising out of such
parents with Luis. In the same agreement, the siblings declaration, act or omission, cannot be permitted to
agreed that for and in consideration of the amount falsify it.
of P400.00, they are transferring the remainder 29%
(covering 6 cavanes of seeds) to Luis.

But later, the siblings contested the said agreement. BAMBALAN v. MARAMBA
Luis later died and he was substituted by Jose. It is 51 Phil. 417
the contention of Domingo et al that the agreement
is void because they were only minors, 19 and 18 FACTS: Bambalan’s parents Paula Prado and her first
years of age respectively, when the contract was husband, Isidro Bambalan Y Calcotura received a
entered into in May 1910 (21 being the age of loan from Genoveva Muerong and German
minority at that time). Maramba in 1915. Calcotura died leaving
Bambalan as the sole heir of his estate. In 1922,
ISSUE: Whether the agreement between Luis and Muerong and Maramba forced Bambalan, who was
Domingo et al in May 1910 is valid despite the at that time, a minor, to sell their land as payment for
minority of the latter party. the loan. Bambalan signed, but said that he was
forced because they were threatening his mother
RULING: The courts laid down that such sale of real with imprisonment. Muerong and Maramba bought
estate was still valid since it was executed by minors, Bambalan’s first cedula to acknowledge the
who have passed the ages of puberty and document.
adolescence, and are near the adult age, and that
the minors pretended that they had already ISSUE: Whether sale of the land to Maramaba and
reached their majority. Muerong is valid.

Article 38. Minority, insanity or imbecility, the state of RULING: The sale is void as to the plaintiff, because
being a deaf-mute, prodigality and civil-interdiction he was a minor at the time of execution. The
are mere restrictions on the capacity to act, and do Doctrine laid down in the case of Mercado vs.
not exempt the incapacitated person from certain Espiritu is not applicable to this case, because the


plaintiff did not pretend to be of age, and the Laguna for the annulment of the deed of sale on the
defendant knew him as a minor. ground of his minority at the time of sale. Action was
denied and Sia Suan, Gaw Chiao, Ramon’s father
Notes: and brother, Nicolas and Antonio Azores were
Civil Code, Article 38. Minority, insanity or imbecility,
the state of being a deaf-mute, prodigality and civil- Ramon brought the case to CA, which reversed the
interdiction are mere restrictions on the capacity to decision of the CFI of Laguna.
act, and do not exempt the incapacitated person
from certain obligations, as when the latter arise from ISSUE: Whether the Deed of Sale executed on August
his acts or from property relations, such as 31, 1931 is null and void.
RULING: Ramon Alcantara in his minority may not be
Civil Code, Art. 1327. The following cannot give allowed to execute the deed of sale but with his act
consent to a contract: of ratification, the contract was given a binding
(1) Unemancipated minors;
(2) Insane or demented persons, and deaf-mutes The SC ruled that Ramon is not allowed to annul such
who do not know how to write. (1263a) deed, because he already ratified it. The letter
written by him informing the appellants of his minority
Civil Code, Art. 1390. The following contracts are constituted an effective disaffirmance of the sale,
voidable or annullable, even though there may and that although the choice to disaffirm will not by
have been no damage to the contracting parties: itself avoid the contract until the courts adjudge the
agreement to be invalid, said notice shielded
(1) Those where one of the parties is incapable of Ramón from laches and consequent estoppels.
giving consent to a contract;
(2) Those where the consent is vitiated by mistake, Ramon may have executed his acts in bad faith for
violence, intimidation, undue influence or fraud. 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
SIA SUAN v. ALCANTARA Appeals is hereby reversed and the appellants
85 Phil. 669 absolved from the complaint, with costs against the
appellee, Ramon Alcantara.
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. BRAGANZA v. DE VILLA ABRILLE
G.R. No. L-12471
On August 27, 1931, Gaw Chiao (husband of Sia
Suan) received a letter from Francisco Alfonso, FACTS: Rosario Braganza and her sons loaned from
attorney of Ramon Alcantara, informing him that De Villa Abrille P70,000 in Japanese war notes and in
Ramon Alcantara was a minor and accordingly consideration thereof, promised in writing to pay him
disavowing the contract. P10,00 + 2% per annum in legal currency of the
Philippines 2 years after the cessation of the war.
After Gaw Chiao responded to the letter, Ramon Because they have no paid, Abrille sued them in
Alcantara went to the office of Gaw Chiao’s counsel March 1949. The Manila court of first instance and
ratifying the sale. Ramon Alcantara received from CA held the family solidarily liable to pay according
Gaw Chiao the sum of P500 as payment for the sold to the contract they signed. The family petitioned to
parcels of land. review the decision of the CA whereby they were
ordered to solidarily pay De Villa Abrille P10,000 + 2%
On August 8, 1940, an action was instituted by interest, praying for consideration of the minority of
Ramon Alcantara in the Court of First Instance of the Braganza sons when they signed the contract.


ISSUE: Whether the boys, who were 16 and 18 possession of a carabao belonging to plaintiff and
respectively, are to be bound by the contract of also of two parcels of land, likewise belonging to her,
loan they have signed. situated in the barrio of Katang, pueblo of Argao,
Cebu, the area and boundaries of which are
RULING: The SC found that Rosario will still be liable to specified in the complaint, and notified plaintiff that
pay her share in the contract because the minority she had conveyed to him by absolute sale said
of her sons does not release her from liability. She is parcels of land and the plow carabao; that in spite
ordered to pay 1/3 of P10,000 + 2% interest. of plaintiff’s opposition and protests, defendant took
possession of said property and, up to the date of
However, with her sons, the SC reversed the decision the complaint, continued to hold possession thereof
of the CA which found them similarly liable due to and to enjoy the products of the lands and of the
their failure to disclose their minority. The SC labor of the carabao; and that, by reason of such
sustained previous sources in Jurisprudence – “in acts, defendant had caused loss and damage to
order to hold the infant liable, the fraud must be plaintiff in the sum of P1,000. Said counsel therefore
actual and not constructive. It has been held that his prayed the court to render judgment by declaring
mere silence when making a contract as to his age null and void and of no value whatever the alleged
does not constitute a fraud which can be made the contract of purchase and sale of the carabao and
basis of an action of deceit.” the two parcels of land described in the complaint,
to order defendant to restore to plaintiff said work
The boys, though not bound by the provisions of the animal and lands, and, besides, to pay her the sum
contract, are still liable to pay the actual amount of P1,000 for the loss and damage caused her, in
they have profited from the loan. Art. 1340 states that addition to the costs of the suit.
even if the written contract is unenforceable
because of their non-age, they shall make restitution ISSUE: Whether the instrument of purchase and sale
to the extent that they may have profited by the of two parcels of land and a plow carabao is null
money received. In this case, 2/3 of P70,00, which is and void.
P46,666.66, which when converted to Philippine
money is equivalent to P1,166.67. 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
VICES OF CONSENT which Andrea Dumasug had signed, and if it is the
same one its contents were not duly and faithfully
DUMASUG v. MODELO explained to plaintiff in the act of its execution. In
34 Phil. 252 either case, the consent said to have been given by
Andrea Dumasug in said document Exhibit 1 is null
FACTS: On June 17, 1912, counsel for Andrea and void, as it was given by mistake (arts. 1265 and
Dumasug filed a written complaint in the Court of 1266, Civil Code). This error invalidates the contract,
First Instance of Cebu, in which he alleged that because it goes to the very substance of the thing
about the month of November, 1911, defendant which was the subject matter of said contract, for,
persuaded plaintiff to sign a document by falsely had the maker thereof truly understood the contents
and maliciously making her believe that it contained of said document, she would neither have
an engagement on plaintiff’s part to pay defendant accepted nor authenticated it by her mark.
a certain sum of money as expresses occasioned the
latter by reason of a lawsuit in which plaintiff This case is an example of Mistake of Fact which is
Dumasug was one of the parties and was protected Mistake as to the Nature of the Contract. If the
and aided by defendant; that this document, mistake refers to the nature of the contract, the error
plaintiff, who does not know how to write, signed by or mistake goes to the essence thereof. This may
affixing her mark thereto, believing in good faith that invalidate the contract. In this case Andrea
defendant had told her the truth and that said Dumasug affixed her thumb mark on the document
document referred to the expenses incurred by that presented to her believing that it was a deed of
defendant; but that three months after the mortgaged and not a deed of sale therefore her
execution of said document, defendant took consent vitiated the contract.



34 Phil. 858 45 Phil. 296

FACTS: On July 30, 1914, Attorney Leocadio Joaquin, FACTS: The parties agreed upon the sale of the land
in his own behalf, filed a written complaint in the there in question, they had in mind chiefly the area
Court of First Instance of Manila against the and quality of the land, the subject of the contract,
defendant, O. Mitsumine, alleging that on July 1, as will be seen from the letter of Asiain dated May 6,
1914, the plaintiff executed an instrument whereby 1920, in which, among other things, Purchase of land
he gave a chattel mortgage on certain apparatus of Mr. Luis Asiain and his wife Maria Cadenas, by B.
for the manufacture of aerated water as security for Jalandoni, containing 25 hectares more or less of
the payment in two installments of the sum of P525; land bounded by property of the purchaser, with its
that the said mortgage deed was entirely null and corresponding crop, estimated at 2,000 piculs, the
void for the reason that it had been executed by the total value of which is 55 thousand. The price is to be
plaintiff by mistake, inasmuch as in May, 1914, he paid by paying 30 thousand at the signing of the
had instructed the defendant to acquire the said document, and 25 thousand within one year with
machine at the request of the plaintiff's client, interest at the rate of 10 per cent.” In accordance
Macario Vito, and that the latter was responsible for with the foregoing memorandum the deed of sale
the payment of the said P525. was executed in the City of Iloilo, the parties
stipulating among other things, the following:
On August 20, 1914, the defendant answered the
above complaint, denying all the allegations therein “(1) That Luis Asiain does hereby promise and bind
contained except those that were expressly himself to sell to Benjamin Jalandoni a parcel of and
admitted in his answer and that after the defendant of the hacienda “Maria” of the aforesaid Luis Asiain,
had ordered the machine from Japan and delivered situated in the municipality of La Carlota, Province of
it to the plaintiff to his entire satisfaction, plaintiff paid Occidental Negros, P.I.
defendant P200 on account and agreed to pay the
balance of P525 in two installments by signing two “(2) That Benjamin Jalandoni does hereby promise
promissory notes and a mortgage deed. and bind himself to purchase the aforesaid parcel of
land in the sum of P55,000 upon certain conditions
The court rendered the judgment absolving the specified in a memorandum signed by the parties
defendant O. Mitsumine from the complaint, which is in the hands of Attorneys Padilla & Treñas.”
decreeing that the mortgage executed by the
plaintiff Leocadio Joaquin to the defendant was Jalandoni then took possession of the land, milled
valid, and ordering the plaintiff to pay to the the cane at La Carlota Central, from which he
defendant the sum of P525, plus P105 for the realized 800 piculs and 23 cates of the centrifugal
expenses of collection. sugar. And after he had secured from Asiain the
certificate of title, he had a surveyor measure the
ISSUE: Whether Leocadio Joaquin is liable for the two land, which was found to contain only 18 hectares,
promissory notes and a mortgage deed executed in 54 centares, and 22 centares. Jalandoni had paid
favor of O. Mitsumine for the purchase of a machine P30,000 leaving an unpaid balance of P25,000 of the
for the manufacture of Aerated Water. purchase price of P55,000 stipulated in the contract.
Asiain sued to recover the balance from Jalandoni.
RULING: The Court held that Leocadio Joaquin is
liable for the two promissory notes and a mortgage The competent court declared the deed of sale
deed executed in favor of O. Mitsumine as the void, absolved the defendant from paying P25,000
record shows it to have been duly proven that on and ordered the parties to return what they had
April 15, 1914, he signed and forwarded to the received under the contract. Upon appeal to the
commercial establishment of the defendant, Supreme Court, the judgment was affirmed on the
Mitsumine, named the Nippon Bazar, which was an ground that both parties had acted by a mutual
order to procure a complete machine for the mistake.
manufacture of aerated waters.
ISSUE: Whether the seller and buyer misrepresented
each other or committed an error.


RULING: The judgment was affirmed on the ground No. 535-E, but the defendants refused to accept the
that both parties had acted by a mutual mistake. exchange. The plaintiffs' insistence is quite
The vendor undertook to deliver to the vendee a understandable, since lot No. 535-E has an area of
parcel of land some 25 hectares in area and of such 2,612 square meters as compared to the 1,808
a quality as to be able to produce 2,000 piculs of square-meter area of lot No. 535-A.
centrifugal sugar. The vendee, in turn, agreed to buy
said parcel of land with the understanding that it In their answer to the complaint, the defendants
contained that area and was of the quality alleged that the reference to lot No. 535-E in the
guaranteed by the vendor. Inasmuch as the land deed of sale was an involuntary error; that the
had neither the area nor the quality the vendor had intention of the parties to that sale was to convey the
assured the vendee it had, it is clear the latter was lot correctly identified as lot No. 535-A. On the basis
entitled to rescind the contract, upon the strength of of the foregoing allegations the defendants
the authorities cited in the opinion of the court. We interposed a counterclaim, praying that the plaintiffs
believe that Jalandoni was entitled to rescind that be ordered to execute in their favor the
contract, inasmuch as the vendor did not deliver a corresponding deed of transfer with respect to Lot
parcel of land of the area and quality stipulated in No. 535-E. The trial court rendered judgment in favor
the contract. The judgment appealed from is of the plaintiffs.
reversed, and it is held that the contract between
the parties is valid and binding upon them. ISSUE: Whether there has been a valid sale in view
Wherefore, the defendants are absolved from the 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
ATILANO v. ATILANO drafting of the document. The mistake did not vitiate
28 SCRA 231 the consent of the parties, or affect the validity and
binding effect of the contract between them. The
FACTS: In 1916, Atilano I acquired lot No. 535 by new Civil Code provides a remedy by means of
purchase. In 1920, he had the land subdivided into reformation of the instrument. This remedy is
five parts, identified as lots Nos. 535-A, 535-B, 535-C, available when, there having been a meeting of the
535-D and 535-E, respectively. After the subdivision minds of the parties to a contract, their true intention
had been effected, Atilano I executed a deed of is not expressed in the instrument purporting to
sale covering lot No. 535-E in favor of his brother embody the agreement by reason of mistake, fraud,
Atilano II. Three other portions, namely, lots Nos. 535- inequitable conduct or accident.
B, 535-C, and 535-D, were likewise sold to other
persons. Atilano retained for himself the remaining In this case, the deed of sale executed in 1920 need
portions of the land, presumably covered by the title no longer be reformed. The parties have retained
to lot No. 535-A. upon his death, the title to this lot possession of their respective properties
passed to Ladislao, in whose name the conformably to the real intention of the parties to
corresponding certificate was issued. that sale, and all they should do is to execute mutual
deed of conveyance.
On 1959, Atilano II and his children had the land
resurveyed so that it could be properly subdivided. Therefore, the judgment appealed from is reversed.
However, they discovered that the land they were The plaintiffs are ordered to execute a deed of
actually occupying on the strength of the deed of conveyance of lot No. 535-E in favor of the
sale was lot No. 353-A and not lot 535-E, while the defendants, and the latter, in turn, are ordered to
land which remained in the possession of Atilano I, execute a similar document, covering lot No. 535-A,
and which was passed to Ladislao was lot No. 353-E in favor of the plaintiffs. Costs against the latter.
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


RUIZ v. ATIENZA ISSUE: Whether Jose Ruiz was intimidated into

O.G. 20 August 1941 marrying Pelagia Atienza.

FACTS: This is an appeal from a decision of the Manila RULING: No. As to the first, it appears that in the
Court of First Instance denying plaintiff's demand for course of the conversation during the visit, Ruiz made
the annulment of his marriage with defendant the statement that he could not marry Pelagia
contracted on November 14, 1938, with all the because he was already a married man. This so
outward legal formalities. aroused Jose Atienza that he grabbed Ruiz' necktie,
exclaiming: "So you mean to fool my daughter!"
Previous to February, 1938, Jose Ruiz and Pelagia Those present intervened quickly, and the dispute
Atienza, both single, were sweethearts. Loving stopped. The flare of anger is easily understandable.
perhaps too well, she allowed him, in a moment of But it is not sufficiently established that Jose Atienza
weakness, to have his way, with the result that nine displayed any "balisong", or made any threat
months later she became an unmarried mother. against the life of Ruiz. In fact, only a one-and-a-half-
inch knife was found in his possession by the
After the baby's birth, i.e., on November 14, 1938, policeman whom the companions of Ruiz called
Pelagia's father Jose Atienza, Atty. Villavicencio (her upon seeing what they believed to be the beginning
cousin-in-law), and three other persons visited Jose of trouble.
Ruiz at the boarding house where he lived, in Oregon
street. They requested, and after some discussion, As to the threat to obstruct his admission to the Bar,
convinced him to marry Pelagia. With his cousin by filing against him for immorality, the authorities are
Alfredo Asuncion, he went with Jose Atienza and unanimous that it is not such a duress as to constitute
companions to Tanduay street, where Pelagia was a reason for annulling the marriage. * * * and where
living. From there the party, joined by Pelagia and a man marries under the threat of, or constraint from,
others, went to the Aglipayan church at Maria Clara a lawful prosecution for seduction or bastardy, he
street, Manila, then proceeded to secure a marriage cannot avoid the marriage on the ground of duress;
license, and later returned to the same Aglipayan * * *.
church where the marriage was celebrated in the
evening. As to the promise by Atty. Villavicencio, it is apparent
that when defendant was invited to go with them
Four days later, alleging that he had been forced and marry Pelagia, he had some fears that he might
into wedlock, Jose Ruiz brought this suit to secure its be subjected to bodily harm in retaliation for the
avoidance. His counsel has 'dramatized the visit of dishonor inflicted upon her family. For this reason, he
Jose Atienza and companions, and the "plans" had to be assured by Villavicencio that he would be
drawn to force Jose Ruiz into the marriage, Jose's safe if he went with them. From this statement, we
passive and downcast attitude, all in an effort to cannot infer what appellant’s attorney would
maintain the proposition that Jose Ruiz went with cleverly infer, i.e., that Ruiz would not be safe if he
them that afternoon "convinced" by the following did not follow them.
Appellant would make it appear that that afternoon
a. the threats of the father supported by his Ruiz was practically kidnapped by Pelagia's relatives
"balisong"; until after the marriage ceremony.
b. the unveiled intimidation by Atty.
Villavicencio that if he would not marry a. That cannot be true.
Pelagia Atienza, he would have difficulty b. He had many occasions to escape, as
when he would take the bar examinations pointed out in appellee's brief.
because, as he said, many have been c. He had companions in the house whom he
rejected admission to the bar on the ground could have asked for help.
of immorality; d. There was even the policeman.
c. the promise of Atty. Villavicencio that Ruiz
would be physically "safe" if he would go with Now, considering that the law presumes strongly the
them. validity of marriage once the formal ceremonies
have been completed, we are led to the conclusion


that although plaintiff may not have looked upon in this case and plaintiff does not rely upon it in his
the ceremony as the happy culmination of brief in this court. His consent was not obtained by
youthful romance, still the evidence does not deceit in any of the transactions. There did not exist
warrant a pronouncement that his consent to it was in any one of the transactions complained of a
obtained through force or intimidation. condition where “by words and insidious
machinations on the part of one of the contracting
Indeed, we may advert to the provision of the parties the other is (was) induced to execute a
Marriage Law which, referring to "force" or contract which, without them, he would not have
"violence", does not seem to include mere made.”
intimidation, at least where it does not in legal effect
amount to force or violence. At any rate, it is ISSUE: Whether it is valid to annul a series of real
unnecessary to pass on the effect of this legal estate transactions on the ground of duress.
distinction. For even though appellant has presented
his case in the best possible light, yet appellee's RULING: The same may be said with greater force of
attorney has successfully met the issues, upholding a case where a person’s own voluntary act,
the judge's conclusion of fact that neither violence uninfluenced by another, has put him in a
nor duress attended the marriage celebration. 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
VALES v. VILLA made, or to record an instrument, or to exclude from
G.R. No. 10028, December 16, 1916 the operation of its terms things verbally agreed to
be excluded, etc., may place a person in a
FACTS: This is an action to set aside certain transfers disadvantageous position with respect to another;
of real estate from the plaintiff to one of the and the demand that he pay to secure his
defendants and to require that defendant to extrication is not illegal, and a payment made
recover by good and sufficient conveyance the title pursuant to such demand is not necessarily
to such properties; to refund to the plaintiff a certain voidable. He pays for his lack of foresight. While the
sum paid by plaintiff for the recovery of certain other demand may be reprehensible morally, it is not
real estate; and for an accounting by the illegal and of itself is not ground for relief.
defendants of the rents, issues and profits of certain
real estate during a certain period; and for P25,000 There must, then, be a distinction to be made
damages. between a case where a person gives his consent
reluctantly and even against his good sense and
It appears that the defendant Felipa Silvestre is a judgment, and where he, in reality, gives no consent
widow, 70 years of age, and is the aunt of the at all, as where he executes a contract or performs
defendant Maria Guia Garcia, wife of the an act against his will under a pressure which he
defendant Simeon A. Villa. cannot resist. It is clear that one acts as voluntarily
and independently in the eye of the law when he
With regard to the Salsipuedes and Padre Faura acts reluctantly and with hesitation as when he acts
properties the plaintiff claims that they were spontaneously and joyously. Legally speaking he
obtained from him and that he was induced to acts as voluntarily and freely when he acts wholly
execute conveyances therefor in favor of the against his better sense and judgment as when he
defendant Maria Guia Garcia under the threat that, acts in conformity with them. Between the two acts
if he did not do so, the defendants would not there is no difference in law. But when his sense,
reconvey to him the properties described in the judgment, and his will rebel and he refuses
conveyance of the 22d of March 1909; that is, that absolutely to act as requested, but is nevertheless
they would repudiate the verbal agreement which overcome by force or intimidation to such an extent
plaintiff alleges was attached to that conveyance. that he becomes a mere automation and acts
mechanically only, a new element enters, namely, a
That fact however must be alleged and proved and disappearance of the personality of the actor. He
relied upon before it can be utilized by the person ceases to exist as an independent entity with
asserting its existence. It was not alleged or proved faculties and judgment, and in his place is


substituted another — the one exercising the force First, then, applying the principles already
or making use of intimidation. While his hand signs, enunciated: Was there intimidation in this case
the will which moves it is another’s. While a contract under the facts as related by plaintiff himself, leaving
is made, it has, in reality and in law, only one party to out of account the conclusions drawn and stated in
it; and, there being only one party, the one using the the brief of counsel? Summing up the whole case
force or the intimidation, it is unenforceable for lack under these facts, it is clear that all that defendants
of a second party. did was to refuse to live up to their verbal agreement
with the plaintiff unless he gave them an additional
From these considerations, it is clear that every case consideration therefor. Plaintiff had his choice. He
of alleged intimidation must be examined to could refuse to pay again for the right which he had
determine within which class it falls. If it is within the paid for once, and go into court for relief, or he could
first class it is not duress in law, if it falls in the second, pay the price asked. His judgment operated upon
it is. the situation thus presented and he concluded that,
from his point of view, his interests would be best
But into whichever class it falls the party coerced subserved by paying the additional consideration.
may, as we have seen, waive his right to annul the But having paid it, he found himself in precisely the
contract and to recover damages. He may do this situation he was before. The verbal agreement to
expressly or impliedly. He may expressly accept the reconvey, which he claims he had twice paid for,
agreement as it stands, or in a modified from, and was still verbal, and he was no better off than before.
live up to it as thus accepted. Or, he may He took no receipt showing the purpose of the
compromise by paying something to be relieved payment; he required no writing to protect himself
from its effects or to have its terms changed. Or, he from the very trap into which he had once fallen;
may accept benefits under the contract. In any one but, instead, with the very persons who had refused
of which cases, and there are others not now to live up to their original agreement because it was
necessary to mention, he renounces and waives his verbal, he not only made another verbal agreement
defense of intimidation and thereby eliminates that but also paid them, without a scrap of paper to show
element as one having any influence on the case for it or specify its object, the sum of P10,000 on that
thereafter. agreement. Not only this, but he did the same thing
a second time. The defendants having refused to
Article 1265 of the Civil Code tells us when duress fulfill the second verbal agreement and having
exists: “Consent given by error, under violence, by refused to give him credit for the P10,000 paid, he
intimidation, or deceit shall be void.” Article 1267 entered into a third agreement under which he paid
provides that “violence exists when, in order to exact them P15,000. But still the agreement was verbal. Still
consent, irresistible force is used;” and the there was no receipt, no writing, nothing but the
“intimidation exists when one of the contracting naked word that had twice before been
parties is inspired with a reasonable and well- repudiated. Again, for the tried time, there was a
grounded fear of suffering an imminent and serious refusal to fulfill and the plaintiff, to obtain the very
injury to his person or thing which had been the subject-matter of these
property...” Article 1268 declares the effect of prior verbal contracts, paid a fourth consideration of
violence and intimidation on the contract. It P6,800. This time he succeeded. On the payment of
provides: the fourth consideration he secured in black and
white the title to the property which had so eluded
Violence or intimidation shall annul the obligation, him.
even if it should have been employed by a third
person who did not take part in the contract. But, even though it should be found that the
execution of the conveyance of the Salsipuedes
There is no question of error or violence in this case; and Padre Faura properties and the payment of the
and we have already disposed of that of deceit. consideration of P6,800 for the recovery of the
Intimidation resulting from the fear of losing his properties described in the original conveyance
property, if he did not comply with defendants’ remaining unsold, together with all the other acts of
demands, is the element relied on. 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


recover on the record. His acts in general not only August 5, 1930, he entered the same hospital and
contradicted the most material portions of his was treated by the same physician for chronic
testimony, but he must be held to have ratified the pyelocystitis and for incipient pulmonary
conveyances, payments, and acts referred to and tuberculosis; on the 13th of the same month he
to have renounce the right o interpose the defense returned to the hospital and was treated by the
which intimidation originally offered him. 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-
MUSNGI v. WEST COAST LIFE INSURANCE INC. bronchitis and chronic suppurative pyelocystitis; on
61 Phil. 864 the 27th of the same month he again entered the
same hospital and was treated for the same
FACTS: Arsenio T. Garcia was insured by the WCLIC in ailments; on December 11, 1930, he again entered
the sum of P5,000. Garcia was again insured by the the hospital and was treated for the same ailments;
WCLIC in the sum of P10,000. The two policies were on the 18th of the same month, he again entered the
valid and subsisting at the time of the death of the hospital and was treated for the same ailments; on
insured on December 30, 1932. The beneficiaries in the 28th of the same month he again entered the
said policies, Segundina Musñgi and Buenaventura hospital and was treated for the same ailments, and,
Garcia demanded upon the WCLIC for the payment finally, on January 11, 1931, he again entered the
of the two policies, but the defendant company hospital and was treated by the same doctor for the
refused to pay. same ailments.

The two policies were issued upon applications filed The defendant contended at the outset that the two
by the insured on July 20, 1931 and October 15, of policies did not create any valid obligation because
the same year, respectively. In both applications, the they were fraudulently obtained by the insured. The
insured had to answer inquiries as to his state of appealed decision holds that the health of the
health and that of his family, which he did voluntarily. insured before the acceptance of his applications
In each of the said applications the following and the issuance of the policies could neither be
question was asked: "1. What physician or discussed nor questioned by the defendant,
practitioner or any other person not named above because the insured was examined by three
have you consulted or been treated by, and for physicians of the company and all of them
what illness, or ailment? (If none, so state.)" In the first unanimously certified that he was in good health
application, the insured answered "None", and in the and that he could be properly insured.
second, "No". These answers of the insured as well as
his other statements contained in his applications ISSUE: Whether the two answers given by the insured
were one of the causes or considerations for the in his applications are false, and if they were the
issuance of the policies, and they so positively cause, or one of the causes, which induced the
appear therein. defendant to issue the policies.

After the death of the insured and as a result of the RULING: On the first point, the facts above set out
demand made by the beneficiaries upon the leave no room for doubt. The insured knew that he
defendant to pay the value of the policies, the latter had suffered from a number of ailments, including
discovered that the aforementioned answers were incipient pulmonary tuberculosis, before subscribing
false and fraudulent, because the truth was that the the applications, yet he concealed them and
insured, before answering and signing the omitted the hospital where he was confined as well
applications and before the issuance of the policies, as the name of the lady physician who treated him.
had been treated in the General Hospital by a lady That this concealment and the false statements
physician for different ailments. constituted fraud, is likewise clear, because the
defendant by reason thereof accepted the risk
It indisputably appears that between May 13 and 19, which it would otherwise have flatly refused. When
1929, the insured had entered the General Hospital not otherwise specially provided for by the Insurance
in Manila, and was treated by Dr. Cruz for peptic Law, the contract of life insurance is governed by the
ulcer and chronic catarrhal nasopharyngitis; on general rules of the civil law regarding contracts.


Article 1261 of the Civil Code provides that there is likewise elected by the board as the agent and
no contract unless there should be, in addition to administrator general of such company.
consent and a definite object, a consideration for
the obligation established. And article 1276 provides The factual backdrop being during US occupation,
that the statement of a false consideration shall the US Government wanted to secure title over the
render the contract void. The two answers being one friar lands. To accomplish this objective, Governor
of the considerations of the policies, and it for the Philippines entered into negotiations for the
appearing that they are false and fraudulent, it is purchase of the Dominican lands, during which
evident that the insurance contracts were null and Repide represented Philippine Sugar Estates. The first
void and did not give rise to any right to recover their offer of the Governor was to purchase the subject
value or amount. lands in the amount of $6,043,219.47. As the majority
stockholder of Philippine Sugar Estates and without
One ground for the rescission of a contract of prior consultation with the other stockholders,
insurance under the Insurance Act is a Repide rejected the offer. For the second offer, the
"concealment", which in section 25 is defined as "A purchase price was increased to $7,535,000.
neglect to communicate that which a party knows
and ought to communicate". Appellant argues that While negotiations for the second offer were
the alleged concealment was immaterial and ongoing and while still holding out for a higher price
insufficient to avoid the policy. of the Dominican lands, Repide took steps to
purchase the 800 shares of stock of Philippine Sugar
In an action on a life insurance policy where the Estates. These shares were owned by Mrs. Eleanor
evidence conclusively shows that the answers to Strong (Strong) which were then in the possession of
questions concerning diseases were untrue, the truth her agent, F. Stuart Jones (Jones). Repide, instead of
or falsity of the answers become the determining seeing Jones, employed Kauffman who later on
factor. If the policy was procured by fraudulent employed Sloan, a broker, to purchase the shares of
representations, the contract of insurance Strong. Jones sold the 800 shares of Strong for 16,000
apparently set forth therein was never legally Mexican currency. For this sale transaction a check
existent. It can fairly be assumed that had the true of one Rueda Ramos was issued.
facts been disclosed by the assured, the insurance
would never have been granted. Later on, the negotiations for the purchase of the
Dominican lands were concluded and a contract of
In Joyce, The Law of Insurance, second edition, sale was subsequently executed. This sale
volume 3, Chapter IV, is found the following: transaction increased the value of the shares of
stocks originally owned by Strong from 16,000
"Concealment exists where the assured has Mexican currency to 76,256 US currency. During the
knowledge of a fact material to the risk, and negotiations regarding the purchase of the shares of
honesty, good faith and fair dealing requires that he stock of Strong, not one word of the facts affecting
should communicate it to the assured, but he the value of this stock was made known to her nor
designedly and intentionally withholds the same.” 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.
41 Phil. 947, May 3, 1909 Strong filed a complaint for the recovery of her 800
shares. She argued that her agent Jones had no
FACTS: Among the lands comprising the friar lands authority to sell her shares and that Repide
are the Dominican lands, the only valuable asset fraudulently concealed the facts affecting their
owned by the corporation Philippine Sugar Estates value.
Development Company Limited (Philippine Sugar
Estates). Francisco Gutierrez Repide (Repide), ISSUE: Was there fraud in effecting the purchase of
defendant, was the majority stockholder and one of Strong’s shares?
the five directors of Philippine Sugar Estates. He was


RULING: Yes. With the factual circumstances of this TUASON v. MARQUEZ

case, it became the duty of Repide, acting in good 45 Phil. 381
faith, to state the facts before making the purchase
of Strong’s shares. That Repide was one of the FACTS: On March 5, 1921, Crisanto C. Marquez,
directors of Philippine Sugar Estates was but one of owner of the electric light plant of Lucena, Tayabas
the facts upon which liability is asserted. He was not agreed to franchised with Tuason and to pay
only a director, but he owned three-fourths of the Marquez a total of P14,400; P2,400 within the sixty
shares of its stock, and was, at the time of the days and remainder, P12,000 within a year. The 1st
purchase of the stock, administrator general of the installment was paid subsequent to the sixty-day
company with large powers and engaged in the period; 2nd installment has not been paid. During
negotiations which finally led to the sale of the March 20, 1921 to July 19, 1922, Consolidated
company’s lands at a price which greatly enhanced Electric Light Plant, once in possession by Tuason. The
the value of the stock. He was the negotiator for the property was sold to Gregorio Marquez, brother of
sale of the Dominican lands and was acting Crisanto Marquez at P5,501.57. While on 1913 to
substantially as the agent of the shareholders of 1914, a franchise for thirty-five years was granted the
Philippine Sugar Estates by reason of his ownership Lucena Electric Company. The rights of this
of the shares in the company. Because of such Company passed to Crisanto Marquez at sheriff’s
ownership and agency, no one knew as well as he sale on September 10,1919. Marquez, became
does about the exact condition of the negotiations. disgusted with the business result on February 28,
He was the only one who knew of the probability of 1921, prior to the accomplishment of the contract,
the sale of the Dominican lands to the government he announced to the Public Utility Commissioner his
and of the probable purchase price. Under these intention to give up the franchise. Tuason permitted
circumstances, Repide employed an agent to to operate the company pursuant to a special
purchase the stock of Strong, concealed his own license which was to continue until they obtained a
identity and his knowledge of the state of new franchised granted by Republic Utility
negotiations and their probable result. The Commissioner with certain conditions amounting to
concealment of his identity while procuring the the renovation of the entire plant. Tuason conceive
purchase of the stock, by his agent, was in itself the idea of bringing active against Marques for
strong evidence of fraud on the part of Repide. By rescission of the contract. The plaintiff filed complain
such means, the more easily was he able to avoid in CFI Manila against Crisanto Marquez for P37,400.
questions relative to the negotiations for the sale of The defendant asked for a dismissal action and an
Dominican lands and actual misrepresentations allowance of P12,654.50 from plaintiff.
regarding that subject. He kept up the concealment
as long as he could by giving the check of a third ISSUE: Whether the defendant is liable for the
person Rueda Ramos, for the purchase money. This damages due to honorable disclosure of fact
move of Repide was a studied and intentional pertaining to the renovation of plant as a requisite
omission to be characterized as part of the after the franchise has been granted.
deceitful machinations to obtain the purchase
without giving any information whatever as to the RULING: No, it should be emphasized that the
state and probable result of the negotiations and to contract in making mention of the property, the
obtain a lower price for the shares of Strong. After Electric Light Company merely renewed a previous
the purchase of stock, he continued negotiations for inventory of the property. The franchise, therefore,
the sale of the Dominican lands as the administrator was not determining cause of purchase. Indeed, the
general and eventually entered into a contract of franchise was then in force and either party could
sale. The whole transaction gives conclusive easily have ascertained its status by applying at the
evidence of the overwhelming influence Repide office of the Public Utility Commissioner. The
had in the negotiations and it is clear that the final innocent non-disclosure of a fact does not affect the
consummation was in his hands at all times. formation of the contract or operate to discharge
the parties from this agreement.


RESCISSIBLE CONTRACTS formalities, knowledge of the existence of the new

partnership or community of property must at least
BORJA v. ADDISON be brought home to third persons dealing with the
G.R. No. L-18010 June 21, 1992 surviving husband in regard to the community real
property in order to bind them by the community
FACTS: Eulalio Belisario acquired the two parcels of agreement.
land in question. He was married to Paula Ira, whose
son was Maximo Belisario, but such fact does not Thus, the Supreme Court held that for the partnership
appear in the records. The property regime of the to be binding to third persons, and for Ferrer’s
spouses was that of community of property. Eulalio argument to be valid, such partnership must be in
Belisario conveyed the two parcels of land to a accordance with the formalities of the Code of
certain Jose Castillo, reserving the right to Commerce. In effect, the whole property was
repurchase. After the death his wife, Eulalio and conveyed to Borja in fee simple.
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 AQUINO v. TANEDO
and confiscated for non-payment of taxes. G.R. No. L-12457, January 22, 1919

A civil case was filed and order of attachment was FACTS: Aquino purchased from Tanedo several
issued against the lands. At public auction, said parcels of land (P45,000). By virtue of this contract
lands were sold to McClure, represented by Addison. the plaintiff took possession of the lands purchased.
Said order and notice were served upon Maximo Later the plaintiff and the defendant, agreed to
and Eulalio; and the same was presented to the consider the previous contract as rescinded. As a
registry of deeds but no entries have been made. result, the plaintiff returned to the defendant the
The attached lands were thereafter sold to the lands. The defendant, on his part, instead of
judgment creditor, McClure, represented by returning the price received by him, subscribed in
Addison, but the sale was not recorded. favor of the plaintiff another document in which he
acknowledges that he owes the plaintiff the sum of
Eulalio, without Maximo’s permission, executed in P12,000.
favor of Basilio Borja, who had no knowledge of the
common ownership, a deed of sale of two parcels The defendant only paid the plaintiff the P2,000 in
of land in question, reserving the right to repurchase. accordance with the contract. Subsequently, the
On March 30, 1917, Addison purchased the land at plaintiff filed against the defendant an action in the
the sheriff’s execution sale. However, the sheriff’s Court of First Instance of Tarlac, wherein he
execution sales were fatally defective for want of demanded of the defendant the payment of the
sufficient publication of the notices of sale. Borja now P10,000.
seeks registration of the land, against the opposition
of the heirs of Maximo. The opposition claimed that ISSUE: Is the plaintiff obliged to return to the
Eulalio had no right to sell Maximo’s share of the defendant the products to the lands that the plaintiff
land. collected during his possession?

ISSUE: Whether Borja can demand registration of the RULING: We are of the opinion that the plaintiff
land in his name. should be absolved from this counterclaim.

RULING: Yes, there may have been a partnership The defendant invokes article 1295 of the Civil code,
between Eulalio and Maximo, still this fact was which prescribes that the rescission obliges the return
unknown to Borja. It was ruled that there is nothing in of the things which were the objects of the contract,
the law that requires that the partnership between with their fruits and the price with interest. But the
them be in writing for it to be valid. A surviving rescission mentioned in the contract is not the
husband may form a partnership with the heirs of the rescission referred to in this article 1295. Article 1295
deceased wife for the management and control of refers to contract that are rescindible in accordance
the community property, but in the absence of the with law in the cases expressly fixed thereby, but it


does not refer to contracts that are rescinded by were no funds to pay the same. The sheriff then
mutual consent and for the mutual convenience of levied on the steamer, took possession of the same
the contracting parties. It is simply another contract and announced it for public auction. Herein plaintiff
for the dissolution of a previous one, and its effects claimed that he is the owner of the steamer by virtue
should be determined by the agreement made by of the selling of all the properties of the said
the parties, or by application of the other legal Company.
provisions and not by article 1295.
ISSUES: (1) Whether there was a valid sale between
The defendant argues that as he bound himself to Oria Hermanos & Co. to Manuel Oria y Gonzales as
pay, and in fact did pay, interest on the P10,000 against the creditors of the company. (2) Whether
which he received from the plaintiff as [a part of] the the sale was fraudulent.
price of the land, it should be understood that the
plaintiff, reciprocally, also bound himself to return, on RULING: At the time of said sale the value of the
his part, the fruits which he collected from these assets of Oria Hermanos & Co., as stated by the
lands. However, plaintiff could not have bound partners themselves, was P274,000. The vendee of
himself to return to the defendant the fruits of the said sale was a son of Tomas Oria y Balbas and a
land that the plaintiff collected during his possession, nephew of the other two persons heretofore
inasmuch as the defendant did not pay, nor bind mentioned which said three brothers together
himself to pay, interest during the same time, as he constituted all of the members of said company.The
bound himself subsequent to the rescission. plaintiff is a young man of 25 years old and has no
property before the said selling. The court had laid
But the plaintiff held the lands by reason of his having down the rules in determining whether a there has
purchased them from the defendant. On this been fraud prejudicing creditors: 1) consideration of
account, his possession, until the contract of conveyance is fictitious; 2) transfer was made while
purchase and sale was dissolved and the lands were the suit against him (Tomas Oria y Balbas) was
returned by him, was in good faith. As such possessor pending; 3) sale by insolvent debtor; 4) evidence of
in good faith, the fruits collected by him become his insolvency; 5) transfer of all properties; 6) the sale
own (art. 451, Civil Code) and he is not obliged to was made between father and son; 7) and the
return them to the defendant. In the absence of any failure of the vendee to take exclusive possession of
covenant, this provision should be applied to the the property. The case at bar shows every one of the
instant case. badges of fraud.


G.R. No. L-7003 51 Phil. 763

FACTS: Gutierrez Hermanos filed an action for FACTS: Lichauco Corporation is the owner of
recovery of a sum of money against Oria Hermanos Hacienda Sevitana and Sapangbalen. Stockholders
& Co. and herein plaintiff filed an action for recovery of the said corporation were Faustino Lichauco and
also for the same defendant. Before the institution of her sister Nable Jose. Faustino contracted a loan to
the suits, members of the Company dissolved their Asia Baking Corporation amounting to P70, 000.00 to
relations and entered into a liquidation. Tomas Oria save their farm of sugarcane because of business
y Balbas acting in behalf of his co-owners entered troubles. Since the business of Faustino did not do
into a contract with the herein plaintiff for the well and he did not even pay his loan to the bank.
purpose of transferring and selling all the property Asia Banking Corporation filed a complaint against
which the Oria Hermanos & Co. owned and among Faustino for recovery of P146,242.11 due and owing
the goods stated on that instrument was the it to Lichauco Corporation. The bank upon their
steamship Serpantes and which the subject of this agreement wanted to get the hacienda from
litigation. When the Trail Court resolved the action for Faustino.
recovery filed by Gutierrez Hermanos and jugdment
was in his favor, the sheriff demanded to Tomas Oria Without the knowledge of her sister Nable Jose that
y Balbas to make payment but the latter said there Faustino contracted an agreement concerning the


hacienda, she questioned it since the property was requirements of law, hence the rescission was
also owned by her. A certificate of registry was issued ineffective, illegal, null and void, and invalid.
in her favor as the sole and exclusive owner of the
property. On July 26, 1984, private-respondents filed their
opposition to the above motion. In the meantime,
ISSUE: Whether the agreement between Faustino on August 6, 1984, petitioners formerly offered to pay
and Asia Banking Corporation was valid. private-respondents all the outstanding balance
under the Deed of Sale with Mortgage, which offer
RULING: No, because Faustino owed the bank was rejected by private respondents on August 7,
amounting to P70,000.00 only and the value of the 1984. On November 26, 1984, the respondent-Court
hacienda was about P400,000.00 the property denied the motion to dismiss.
maybe dispose in consideration of its value. The
property and his possessions will not be permitted to ISSUE: Whether the seller can resort to the remedy of
alienate because under Article 1382 of NCC any rescission under Article 1191.
payments made because of insolvency is invalid
under some circumstances. 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
SURIA v. IAC deliver a determinate thing to the buyer, who in turn,
151 SCRA 661 is obligated to pay a price certain in money or its
equivalent (Art. 1458, Civil Code). From the
FACTS: On March 31, 1975, plaintiffs being the owners respondents’ own arguments, we note that they
of a parcel of land situated at Barrio San Antonio, have fully complied with their part of the reciprocal
San Pedro, Laguna, entered into a contract obligation.
with herein defendants, a true copy of said contract. The petitioners’ breach of obligations is not with
respect to the perfected contract of sale but in the
The defendants violated the terms and conditions of obligations created by the mortgage contract.
the contract by failing to pay the stipulated Under Article 1883, the remedy of rescission is not a
installments and in fact only one installment due in principal action retaliatory in character but
July 1975 (paid very late in the month of September, becomes a subsidiary one which by law is available
1975) was made all the others remaining unsettled to only in the absence of any other legal remedy.
the present time;
The relationship between the parties is no longer one
Repeated verbal and written demands were made of buyer and seller because the contract of sale has
by plaintiff upon the defendants for the payment of been perfected and consummated. It is already one
the installments, some of said written demands of a mortgagor and a mortgagee. In consideration
having been made on September 24, 1981, February of the petitioners’ promise to pay on installment basis
7, 1982, February 24, 1983, March 13, 1983, and April the sum they owe the respondents, the latter have
12, 1983, but defendants for no justifiable reason fail. accepted the mortgage as security for the
On November 14, 1983, petitioners filed their answer obligation.
with counterclaim.
The petitioners have offered to pay the past due
On July 16, 1984, petitioners filed a motion to dismiss accounts. Considering the lower purchasing value of
complaint, alleging that: That plaintiffs are not the peso in terms of prices of real estate today, the
entitled to the subsidiary remedy of rescission respondents are correct in stating they have suffered
because of the presence of remedy of foreclosure in losses. However, they are also to blame for trusting
the Deed of Sale with Mortgage, secondly that, persons who could not or would not comply with
assuming arguendo that rescission were a proper their obligations in time. They could have foreclosed
remedy, it is apparent in the face of the Complaint on the mortgage immediately when it fell due
that the plaintiffs failed to comply with the instead of waiting all these years while trying to
enforce the wrong remedy.


FACTS: On December 19, 1944, Fernando Hermosa moral damages and P500 as attorney’s fees and
Sr., owner of certain real estate in San Sebastian cost.
Spain, died. Intestate proceedings were instituted in
CFI of Samar for settlement of his estate and his ISSUE: Whether the action of rescission of the
daughter Luz Hermosa was appointed administratrix. contract of sale by the plaintiff is enforceable.

On January 14, 1947, the administratrix requested RULING: No, even if be granted that the plaintiff has
permission from the court to sell the property located sufficient legal ground to ask for the rescission of the
in Spain with a conformity of her co-heir Fernando sale, the fact remains that his right of action has
Hermosa Jr. already prescribed. It appears that he became of
age on January 7, 1948 and he only brought the
Alfonso Zobel was approached to buy the property presentation on May 28, 1954, or more than four
but, did not wish to have negotiation with heirs. years after the he attained the age of majority.
Under Article 1389 of NCC, action for rescission
Luz and Fernando agreed to have the property prescribes in four years from removal of one’s
ceded and adjudicated to one of them who may incapacity, and this happened more than four years
later carry on negotiation with prospective buyers. ago.

Luz Hermosa renewed negotiation of the sale of the We entertain a different opinion considering that the
property to Alfonso Zobel and agreed that the sale plaintiff did not take part in the sale and so he was
price would be P20,000.00. not aware of the circumstances under which it was
carried out. Apparently, he was of the belief that the
In order to protect the investment of the buyer, it was real consideration was P80,000 as it was made to
agreed to state in the deed of sale, the price of appear in the document and he brought this action
P80,000. However, problem arose in connection with in the belief that defendant has not paid the
the tax that may be made to pay if the price were balance of P60,000.
fixed at P80,000.00. So, it was agreed to reduce it to

On December 10,1947, Luz Hermosa executed the VOIDABLE CONTRACTS

necessary deed of sale with the remaining balance
of P5,000 after the property had been registered in THE ESTATE OF PEDRO C. GONZALES AND HEIRS OF
the name of the vendor. PEDRO C. GONZALES v. THE HEIRS OF MARCOS PEREZ
G.R. No. 169681, November 5, 2009
On April 27, 1948, the remainder was in effect paid
by Zobel to Luz Hermosa to complete the Pending approval or disapproval by the Provincial
transaction. Governor of a contract entered into by a
municipality which falls under the provisions of
Luz Hermosa died and Fernando Hermosa Jr. was Section 2196 of the Revised Administrative Code,
appointed as administrator of the estate of his late such contract is considered voidable. In the instant
grandfather. He demanded from Zobel the case, there is no showing that the contract of sale
payment of the balance of P60,000 as it was entered into between Pedro and the Municipality of
indicated in the deed of sale. Zobel refused to Marikina was ever acted upon by the Provincial
accede his demand. Governor. Hence, the subject contract should be
considered voidable. Voidable or annullable
On May 28, 1954, Fernando Hermosa Jr. filed action contracts, before they are set aside, are existent,
in CFI of Samar asking for specific performance or valid, and binding, and are effective and obligatory
the rescission of sale plus damages, in his capacity between the parties.
as Judicial Administrator.
In the present case, since the contract was never
The court found complaint unmeritorious and annulled or set aside, it had the effect of transferring
rendered judgment dismissing it but ordering the ownership of the subject property to Pedro. Having
plaintiff to pay the defendant of the sum of P1,000 as lawfully acquired ownership of Lots A and C, Pedro,


in turn, had the full capacity to transfer ownership of Furthermore, petitioner was afforded the reasonable
these parcels of land or parts thereof, including the opportunity required in Article 1584 of the Civil Code
subject property which comprises a portion of Lot C. 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
FULE v. COURT OF APPEALS more consistent with his exercise of ownership over
G.R. No. 112212, March 2, 1998 it. This gains credence when it is borne in mind that
he himself had earlier delivered the Tanay property
FACTS: Gregorio Fule, a banker and a jeweler, to Dr. Cruz by affixing his signature to the contract of
offered to sell his parcel of land to Dr. Cruz in sale. That after two hours he later claimed that the
exchange for P40,000 and a diamond earring jewelry was not the one he intended in exchange for
owned by the latter. A deed of absolute sale was his Tanay property, could not sever the juridical tie
prepared by Atty. Belarmino. On the same day, Fule that now bound him and Dr. Cruz. The nature and
went to the bank with Dichoso and Mendoza, and value of the thing he had taken preclude its return
Dr. Cruz arrived shortly thereafter. Dr. Cruz got the after that supervening period within which anything
earrings from her safety deposit box and handed it could have happened, not excluding the alteration
to Fule who, when asked if those were alright, of the jewelry or its being switched with an inferior
nodded and took the earrings. Two hours after, Fule kind.
complained that the earrings were fake. He filed a
complaint to declare the sale null and void on the Ownership over the parcel of land and the pair of
ground of fraud and deceit. emerald-cut diamond earrings had been transferred
to Dr. Cruz and petitioner, respectively, upon the
ISSUE: Whether the sale should be nullified on the actual and constructive delivery thereof. Said
ground of fraud. contract of sale being absolute in nature, title
passed to the vendee upon delivery of the thing sold
RULING: A contract of sale is perfected at the since there was no stipulation in the contract that
moment there is a meeting of the minds upon the title to the property sold has been reserved in the
thing which is the object of the contract and upon seller until full payment of the price or that the
the price. Being consensual, a contract of sale has vendor has the right to unilaterally resolve the
the force of law between the contracting parties contract the moment the buyer fails to pay within a
and they are expected to abide in good faith by fixed period.
their respective contractual commitments. It is
evident from the facts of the case that there was a While it is true that the amount of P40,000.00 forming
meeting of the minds between petitioner and Dr. part of the consideration was still payable to
Cruz. As such, they are bound by the contract unless petitioner, its nonpayment by Dr. Cruz is not a
there are reasons or circumstances that warrant its sufficient cause to invalidate the contract or bar the
nullification. transfer of ownership and possession of the things
exchanged considering the fact that their contract
Contracts that are voidable or annullable, even is silent as to when it becomes due and
though there may have been no damage to the demandable.
contracting parties are: (1) those where one of the
parties is incapable of giving consent to a contract; See also MERCADO v. ESPIRTU, 37 Phil. 215 and
and (2) those where the consent is vitiated by BRAGANZA V. DE VILLA ABRILLE 105 Phil. 456
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 TORRES & LOPEZ DE BUENO v. LOPEZ
entice petitioner into entering the contract of barter. GR No. 24569, February 26, 1926
It was in fact petitioner who resorted to machinations
to convince Dr. Cruz to exchange her jewelry for the FACTS: Tomas Rodriguez y Lopez, single, died on
Tanay property. February, 25, 1924 leaving all his estate to VL.


On August 10, 1923, Rodriguez designated Vicente

Lopez as administrator of his property due to his The capacity to comprehend the nature of the
feeble health, such was questioned by Margarita transaction in which the testator is engaged at the
Lopez. The CFI of Manila recognized Lopez as time, to recollect the property to be disposed of and
Rodriguez’s guardian. the persons who would naturally be supposed to
have claims upon the testator, and to comprehend
Tomas Rodriguez voiced out the need to form a will, the manner in which the instrument will distribute his
and Lopez has procured Judge Maximino Mina. property among the objects of his bounty.

Manuel Torres, one of the executors named in the The presumption is that every adult is sane. It is only
will, asked the will to be allowed. Such was also when those seeking to overthrow the will have
contested by Margarita Lopez on the following clearly established the charge of mental incapacity
grounds: that the courts will intervene to set aside a
testamentary document.
a. that testator lacked mental capacity because
at that time he had senile dementia and was (2) No. Theory of undue influence is rejected as not
under guardianship; proved. Rodriguez voluntary named Vicente F.
b. that undue influence had been exercised by the Lopez as his administrator. The latter subsequently
persons benefited; became his guardian. There is every indication that
c. the signature of Rodriguez was obtained through of all his relatives Tomas Rodriguez reposed the most
fraud and deceit. (Luz Lopez allegedly deceived confidence in Vicente F. Lopez and his daughter Luz
Rodriguez to sign by stating that such document Lopez de Bueno. Trial Judge entertained the idea of
he was about to sign was in connection with a preconceived plans but the witnesses in the signing
complaint against Castito, as witnessed by Dr. are men of standing (Judge Mine, Dr. Calderon,
Boanan one of the witnesses of the signing of the Herrara, De Asis, and Mr. Legarda).
One of the grounds for disallowing a will is that it was
Trial Court denied legalization of the will on the procured by undue and improper pressure and
ground of lack of mental capacity at the signing of influence on the art of the beneficiary or some other
the will by the testator. person for his benefit (Code of Civil Procedure, sec.,
ISSUES: (1) Whether Rodriguez has testamentary
capacity to consider the will valid. (2) Whether there Undue influence, Art. 1265 of CC, may be defined as
was undue influence in the procurement of the that which compelled the testator to do that which
signature of Rodriguez in the will. is against the will from fear the desire of peace or
from other feeling which is unable to resist.
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

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: