Singson v. BPI

Facts:

Singson was one of the defendants in a civil case filed before the CFI Manila. Judgment was rendered sentencing him and his co-defendants Celso Lobregat and Villa-Abrille & Co. to pay the sum of P105,539.56 to Philippine Milling Co. Singson and Lobregat appealed, while the decision became final and executory as to Villa-Abrille. A writ of garnishment was issued to BPI against the Villa-Abrille’s account.

The clerk of BPI who received the writ saw the petitioner’s name and, without reading the full text, wrote a letter for the signature of the bank President, informing Singson of the garnishment. Subsequently, Singson issued two checks. The one issued in favor of B.M. Glass Service was dishonoured, and so petitioner’s account with the latter was closed. Singson wrote a letter to the bank, claiming that his account is not included in the writ of garnishment. Having confirmed so, the bank President Santiago Friexas apologized to Singson and rectified the mistake. Singson filed a claim for damages. The lower court ruled that damages for quasi-delict cannot be sustained because the relationship between the parties is contractual. Petitioner and his wife appealed the case.

Issue:

Whether damages based on torts can be awarded based on a contract

Held:

The existence of a contract between the parties does not bar the commission of a tort by the one against the order and the consequent recovery of damages therefor. The act that breaks the contract may also be a tort.

FGU Insurance Corp. v. CA

Facts:

On April 21, 1987, a car owned by private respondent FILCAR Transport Inc., rented to and driven by Dahl-Jensen, a Danish tourist, swerved into the right and hit the car owned by Lydia Soriano and driven by Benjamin Jacildone. Dahl-Jensen did not possess a Philippine driver’s license. Petitioner, as the insurer of Soriano’s car, paid the latter P25,382.20 and, by way of subrogation, sued FILCAR, Dahl-Jensen, and Fortune Insurance Corporation, FILCAR’s insurer, for quasi-delict. The trial court dismissed the petition for failure to substantiate the claim for subrogation. The Court of Appeals affirmed the decision, but on the ground that only Dahl-Jensen’s negligence was proven, not that of FILCAR. Hence, this instant petition.

Issues:

(1) Whether an action based on quasi-delict will prosper against a rent-a-car company and, consequently, its insurer for fault or negligence of the car lessee in driving the rented vehicle

(2) Whether the ruling in MYC-Agro-Industrial Corporation v. Vda. de Caldo is applicable in the case at bar

Held:

(1) We find no reversible error committed by respondent court in upholding the dismissal of petitioner's complaint. The pertinent provision is Art. 2176 of the Civil Code which states: "Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict . . . . ". To sustain a claim based thereon, the following requisites must concur: (a) damage suffered by the plaintiff; (b) fault or negligence of the defendant; and, (c) connection of cause and effect between the fault or negligence of the defendant and the damage incurred by the plaintiff. We agree with respondent court that petitioner failed to prove the existence of the second requisite, i.e., fault or negligence of defendant FILCAR, because only the fault or negligence of Dahl-Jensen was sufficiently established, not that of FILCAR. It should be noted that the damage caused on the vehicle of Soriano was brought about by the circumstance that Dahl-Jensen swerved to the right while the vehicle that he was driving was at the center lane. It is plain that the negligence was solely attributable to Dahl-Jensen thus making the damage suffered by the other vehicle his personal liability. Respondent FILCAR did not have any participation therein. Respondent FILCAR being engaged in a rent-a-car business was only the owner of the car leased to Dahl-Jensen. As such, there was no vinculum juris between them as employer and employee. Respondent FILCAR cannot in any way be responsible for the negligent act of Dahl-Jensen, the former not being an employer of the latter.

(2) Petitioner's insistence on MYC-Agro-Industrial Corporation is rooted in a misapprehension of our ruling therein. In that case, the negligent and reckless operation of the truck owned by petitioner corporation caused injuries to several persons and damage to property. Intending to exculpate itself from liability, the corporation raised the defense that at the time of the collision it had no more control over the vehicle as it was leased to another; and, that the driver was not its employee but of the lessee. The trial court was not persuaded as it found that the true nature of the alleged lease contract was nothing more than a disguise effected by the corporation to relieve itself of the burdens and responsibilities of an employer. We upheld this finding and affirmed the declaration of joint and several liability of the corporation with its driver.

Vergara v. CA

Facts:

A vehicular accident occurred on August 5, 1979, when Martin Belmonte, while driving a cargo truck belonging to petitioner Vicente Vergara, rammed the store-residence of private respondent Amadeo Azarcon, causing damage assessed at P53,024.22. The trial court rendered decision in favor of private respondent, ordering the petitioner to pay, jointly and severally with Traveller’s Insurance and Surety Corporation, the following: (a) P53,024.22 as actual damages; (b) P10,000.00 as moral damages; (c) P10,000.00 as exemplary damages; and (d) the sum of P5,000.00 for attorney's fees and the costs. The insurance company was sentenced to pay to the petitioner the following: (a) P50,000.00 for third party liability under its comprehensive accident insurance policy; and (b) P3,000.00 for and as attorney's fees. The Court of Appeals affirmed the decision in toto; hence, this instant petition for certiorari.

Issue:

Whether the petitioner is guilty of quasi-delict

Held:

It was established by competent evidence that the requisites of a quasi-delict are present in the case at bar. These requisites are: (1) damages to the plaintiff; (2) negligence, by act or omission, of which defendant, or some person for whose acts he must respond, was guilty; and (3) the connection of cause and effect between such negligence and the damages. The fact of negligence may be deduced from the surrounding circumstances thereof. According to the police report, "the cargo truck was travelling on the right side of the road going to Manila and then it crossed to the center line and went to the left side of the highway; it then bumped a tricycle; and then another bicycle; and then said cargo truck rammed the store warehouse of the plaintiff." According to the driver of the cargo truck, he applied the brakes but the latter did not work due to mechanical defect. Contrary to the claim of the petitioner, a mishap caused by defective brakes can not be consideration as fortuitous in character. Certainly, the defects were curable and the accident preventable.

Balatbat v. CA

Facts:

A parcel of land was acquired by plaintiff Aurelio Roque and Maria Mesina during their conjugal union. Maria died on August 28, 1966. On June 15, 1977, Aurelio filed a case for partition. The trial court held that Aurelio is entitled to the ½ portion at his share in the conjugal property, and 1/5 of the other half which formed part of Maria’s estate, divided equally among him at his 4 children. The decision having become final and executory, the Register of Deeds of Manila issued a transfer certificate of title on October 5, 1979 according to the ruling of the court. On April 1, 1980, Aurelio sold his 6/10 share to spouses Aurora Tuazon-Repuyan and Jose Repuyan, as evidenced by a deed of absolute sale. On June 21, 1980, Aurora caused the annotation of her affidavit of adverse claim. On August 20, 1980, Aurelio filed a complaint for rescission of contract grounded on the buyers’ failure to pay the balance of the purchase price. On February 4, 1982, another deed of absolute sale was executed between Aurelio and his children, and herein petitioner Clara Balatbat, involving the entire lot. Balatbat filed a motion for the issuance of writ of possession, which was granted by the court on September 20, 1982, subject to valid rights and interests of third persons. Balatbat filed a motion to intervene in the rescission case, but did not file her complaint in intervention. The court ruled that the sale between Aurelio and Aurora is valid.

Issues:

(1) Whether the alleged sale to private respondents was merely executory

(2) Whether there was double sale

(3) Whether petitioner is a buyer in good faith and for value

Held:

(1) Contrary to petitioner's contention that the sale dated April 1, 1980 in favor of private respondents Repuyan was merely executory for the reason that there was no delivery of the subject property and that consideration/price was not fully paid, we find the sale as consummated, hence, valid and enforceable. The Court dismissed vendor's Aurelio Roque complaint for rescission of the deed of sale and declared that the Sale dated April 1, 1980, as valid and enforceable. No appeal having been made, the decision became final and executory.

The execution of the public instrument, without actual delivery of the thing, transfers the ownership from the vendor to the vendee, who may thereafter exercise the rights of an owner over the same. In the instant case, vendor Roque delivered the owner's certificate of title to herein private respondent. The provision of Article 1358 on the necessity of a public document is only for convenience, not for validity or enforceability. It is not a requirement for the validity of a contract of sale of a parcel of land that this be embodied in a public instrument. A contract of sale being consensual, it is perfected by the mere consent of the parties. Delivery of the thing bought or payment of the price is not necessary for the perfection of the contract; and failure of the vendee to pay the price after the execution of the contract does not make the sale null and void for lack of consideration but results at most in default on the part of the vendee, for which the vendor may exercise his legal remedies.

(2) Article 1544 of the Civil Code provides that in case of double sale of an immovable property, ownership shall be transferred (1) to the person acquiring it who in good faith first recorded it in the Registry of Property; (2) in default thereof, to the person who in good faith was first in possession; and (3) in default thereof, to the person who presents the oldest title, provided there is good faith. In the case at bar, vendor Aurelio Roque sold 6/10 portion of his share to private respondents Repuyan on April 1, 1980. Subsequently, the same lot was sold again by vendor Aurelio Roque (6/10) and his children (4/10), represented by the Clerk of Court pursuant to Section 10, Rule 39 of the Rules of Court, on February 4, 1982. Undoubtedly, this is a case of double sale contemplated under Article 1544 of the New Civil Code.

Evidently, private respondents Repuyan's caused the annotation of an adverse claim on the title of the subject property on July 21, 1980. The annotation of the adverse claim in the Registry of Property is sufficient compliance as mandated by law and serves notice to the whole world. On the other hand, petitioner filed a notice of lis pendens only on February 2, 1982. Accordingly, private respondents who first caused the annotation of the adverse claim in good faith shall have a better right over herein petitioner. As between two purchasers, the one who has registered the sale in his favor, has a preferred right over the other who has not registered his title even if the latter is in actual possession of the immovable property. Further, even in default of the first registrant or first in possession, private respondents have presented the oldest title. Thus, private respondents who acquired the subject property in good faith and for valuable consideration established a superior right as against the petitioner.

(3) Petitioner cannot be considered as a buyer in good faith. If petitioner did investigate before buying the land on February 4, 1982, she should have known that there was a pending case and an annotation of adverse claim was made in the title of the property before the Register of Deeds and she could have discovered that the subject property was already sold to the private respondents. It is incumbent upon the vendee of the property to ask for the delivery of the owner's duplicate copy of the title from the vendor. One who purchases real estate with knowledge of a defect or lack of title in his vendor cannot claim that he has acquired title thereto in good faith as against the true owner of the land or of an interest therein; and the same rule must be applied to one who has knowledge of facts which should have put him upon such inquiry and investigation as might be necessary to acquaint him with the defects in the title of his vendor. Good faith, or the want of it is not a visible, tangible fact that can be seen or touched, but rather a state or condition of mind which can only be judged of by actual or fancied tokens or signs.

Ladanga v. CA

Facts:

Clemencia Aseneta, a spinster, had a nephew named Bernardo and a niece named Salvacion. She legally adopted Bernardo in 1961. On April 6, 1974, Clemencia signed 9 deeds of sale in favor of Salvacion for various real properties, one being the Paco property which is the subject of this petition, and purportedly sold for P26,000. In May 1975, Bernardo, as guardian of Clemencia, filed a case for reconveyance of the Paco property. Clemencia testified that she had not received a single centavo from Salvacion. The trial court, affirmed by the Court of Appeals, declared the sale void.

Issue:

Whether the sale is void for lack of consideration

Held:

The Ladanga spouses contend that the Appellate Court disregarded the rule on burden of proof. This contention is devoid of merit because Clemencia herself testified that the price of P26,000 was not paid to her. The burden of the evidence shifted to the Ladanga spouses. They were not able to prove the payment of that amount. The sale was fictitious. A contract of sale is void and produces no effect whatsoever where the price, which appears therein as paid, has in fact never been paid by the purchaser to the vendor. It was not shown that Clemencia intended to donate the Paco property to the Ladangas. Her testimony and the notary's testimony destroyed any presumption that the sale was fair and regular and for a true consideration.

Mate v. CA

Facts:

On October 6, 1986, Josefina “Josie” Rey and private respondent Tan went to the residence of petitioner in Tacloban City. Josie solicited his help to stave her off her prosecution by respondent for violation of B. P. 22. Josie asked petitioner to cede to respondent his 3 lots. Josie explained to him that he was in no danger of losing his property as they will be redeemed by her own funds. After a long discussion, petitioner agreed to execute a fictitious deed of sale with right to repurchase after 6 months. Josie gave petitioner 2 post-dated checks to be used in redeeming the property. However, the checks were both dishonoured. Realizing that he was swindled, he sent a telegram to Josie, and looked for her in Manila, but she was nowhere to be found. Petitioner filed a criminal case against Josie for violation of B. P. 22, but the case was archived since Josie could not be located. Petitioner filed a case for annulment of contract with damages against Josie and respondent. Josie was declared in default and the case proceeded against respondent. Both the trial court and the Court of Appeals upheld the validity of the sale.

Issue:

Whether the sale was null and void for want of consideration

Held:

It is plain that consideration existed at the time of the execution of the deed of sale with right of repurchase. It is not only appellant's kindness to Josefina, being his cousin, but also his receipt of P420,000.00 from her which impelled him to execute such contract. Furthermore, while petitioner did not receive the P1.4 Million purchase prices from respondent Tan, he had in his possession a postdated check of Josie Rey in an equivalent amount precisely to repurchase the two lots on or before the sixth month. Unfortunately, the two checks issued by Josie Rey were worthless. Both were dishonored upon presentment by petitioner with the drawee banks. However, there is absolutely no basis for petitioner to file a complaint against private respondent Tan and Josie Rey to annul the pacto de retro sale on the ground of lack of consideration, invoking his failure to encash the two checks. Petitioner's cause of action was to file criminal actions against Josie Rey under B.P. 22, which he did. The filing of the criminal cases was a tacit admission by petitioner that there was a consideration of the pacto de retro sale.

Bagnas v. CA

Facts:

Hilario Mateum died on March 11, 1964, single, without ascendants or descendants, and survived only by petitioners who are his collateral relatives. He left no will, no debts, and an estate consisting of 29 parcels of land in Kawit and Imus, 10 of which are involved in this controversy. On April 3, 1964, respondents who are also collateral relatives of the deceased, but more remote, registered 2 deeds of sale purportedly executed by Mateum in their favor. The considerations were P1.00 and “services rendered, being rendered, and to be rendered for my benefit”. On the strength of the deeds, respondents were able to secure title over the 10 parcels of land. On May 22, 1964, petitioners commenced a suit against respondents, seeking annulment of the deeds of sale a fictitious, fraudulent or falsified or, alternatively, as donations void for want of acceptance in public instrument. Respondents contend that the sales were made for valuable considerations, and attacked the legal standing of the petitioners as being mere collateral heirs.

Issues:

(1) Whether petitioners have the legal standing to sue

(2) Whether the sale is void for want of consideration

Held:

(1) The law as it is now no longer deems contracts with a false cause, or which are absolutely simulated or fictitious, merely voidable, but declares them void, i.e., inexistent ("nulo") unless it is shown that they are supported by another true and lawful cause or consideration. A logical consequence of that change is the juridical status of contracts without, or with a false, cause is that conveyances of property affected with such a vice cannot operate to divest and transfer ownership, even if unimpugned. If afterwards the transferor dies the property descends to his heirs, and without regard to the manner in which they are called to the succession, said heirs may bring an action to recover the property from the purported transferee. As pointed out, such an action is not founded on fraud, but on the premise that the property never leaves the estate of the transferor and is transmitted upon his death to heirs, who would labor under no incapacity to maintain the action from the mere fact that they may be only collateral relatives and bound neither principally or subsidiarily under the deed or contract of conveyance.

(2) Upon the consideration alone that the apparent gross, not to say enormous, disproportion between the stipulated price (in each deed) of P l.00 plus unspecified and unquantified services and the undisputably valuable real estate allegedly sold worth at least P10,500.00 going only by assessments for tax purposes which, it is well-known, are notoriously low indicators of actual value plainly and unquestionably demonstrates that they state a false and fictitious consideration, and no other true and lawful cause having been shown, the Court finds both said deeds, insofar as they purport to be sales, not merely voidable, but void ab initio. Neither can the validity of said conveyances be defended on the theory that their true causa is the liberality of the transferor and they may be considered in reality donations because the law also prescribes that donations of immovable property, to be valid, must be made and accepted in a public instrument, and it is not denied by the respondents that there has been no such acceptance which they claim is not required. The transfers in question being void, it follows as a necessary consequence and conformably to the concurring opinion in Armentia, with which the Court fully agrees, that the properties purportedly conveyed remained part of the estate of Hilario Mateum, said transfers notwithstanding, recoverable by his intestate heirs, the petitioners herein, whose status as such is not challenged.

Ong v. Ong

Facts:

On February 25, 1976, Imelda Ong, for and in consideration of P1.00 and other valuable considerations, executed a quitclaim over a parcel of land in Makati in favor of Sandra Maruzzo, then a minor. On November 19, 1980, Imelda revoked the quitclaim and donated the property to her son Rex. On June 20, 1983, Sandra, through her guardial ad litem Alfredo Ong, filed an action to recover the land and to declare the donation to Rex null and void. In their responsive pleading, petitioners claimed that the quitclaim is equivalent to a donation which requires acceptance by the donee, and since Sandra was a minor, there was no valid acceptance. The trial court ruled that the quitclaim is equivalent to a sale. The Intermediate Appellate Court affirmed the decision.

Issue:

Whether the quitclaim is equivalent to a deed of sale or to a deed of donation

Held:

The execution of a deed purporting to convey ownership of a realty is in itself prima facie evidence of the existence of a valuable consideration, the party alleging lack of consideration has the burden of proving such allegation. Even granting that the Quitclaim deed in question is a donation, Article 741 of the Civil Code provides that the requirement of the acceptance of the donation in favor of minor by parents of legal representatives applies only to onerous and conditional donations where the donation may have to assume certain charges or burdens. Donation to an incapacitated donee does not need the acceptance by the lawful representative if said donation does not contain any condition. In simple and pure donation, the formal acceptance is not important for the donor requires no right to be protected and the donee neither undertakes to do anything nor assumes any obligation. The Quitclaim now in question does not impose any condition.

Mapalo v. Mapalo

Facts:

Miguel Mapalo and Candida Quiba, simple illiterate farmers, were registered owners of a residential land in Manaoag, Pangasinan. Out of love and affection for Maximo Mapalo, Miguel’s brother who was about to get married, they decided to donate the eastern half of the land. However, they were deceived into signing a deed of absolute sale of the entire land on October 15, 1936. The document showed a consideration of P500, but the spouses actually did not receive anything. The spouses built a fence segregating the donated land. They continued to possess the western part up to the present. Not known to them, on March 15, 1938, Maximo registered the deed of sale in his favor and was able to obtain a TCT. On October 20, 1951, Maximo sold the entire land to the Narcisos, and a TCT was issued. The Narcisos took possession of the eastern part and filed a suit against Miguel and Candida, as well as Floro Guieb and Rosalia Mapalo Guieb who had a house on the western portion consented by the spouses. The spouses filed an answer with counterclaim, seeking cancellation of the TCT of the Narcisos on the ground that their consent to the deed of sale in favor of Maximo was obtained through fraud. The spouses also instituted a complaint to nullify the deeds of sale in 1936 and 1951. The trial court tried the case jointly. It ruled in favor of Miguel and Candida. The appellate court, however, reversed the judgment and rendered the sale valid on the ground of prescription. According to the appellate court, the sale is voidable and subject to annulment only within 4 years after discovery of fraud. It reckoned March 15, 1938, the date of registration, to be the reckoning period.

Issues:

(1) Whether, under the old civil code which was in effect during the execution of the sale, the sale to Maximo is void or merely voidable

(2) Whether the Narcisos were purchasers in good faith

Held:

(1) For a contract to exist at all, three essential requisites must concur: (1) consent, (2) object, and (3) cause or consideration. The Court of Appeals is right in that the element of consent is present as to the deed of sale of October 15, 1936. For consent was admittedly given, albeit obtained by fraud. Accordingly, said consent, although defective, did exist. In such case, the defect in the consent would provide a ground for annulment of a voidable contract, not a reason for nullity ab initio. The parties are agreed that the second element of object is likewise present in the deed of October 15, 1936, namely, the parcel of land subject matter of the same. Not so, however, as to the third element of cause or consideration. As regards the eastern portion of the land, the Mapalo spouses are not claiming the same, it being their stand that they have donated and freely given said half of their land to Maximo Mapalo. And since they did not appeal from the decision of the trial court finding that there was a valid and effective donation of the eastern portion of their land in favor of Maximo Mapalo, the same pronouncement has become final as to them, rendering it no longer proper herein to examine the existence, validity efficacy of said donation as to said eastern portion. Now, as to the western portion, however, the fact not disputed herein is that no donation by the Mapalo spouses obtained as to said portion. Accordingly, we start with the fact that liberality as a cause or consideration does not exist as regards the western portion of the land in relation to the deed of 1936; that there was no donation with respect to the same.

Was there a cause or consideration to support the existence of a contrary of sale? Since the deed of sale of 1936 is governed by the Old Civil Code, it should be asked whether its case is one wherein there is no consideration, or one with a statement of a false consideration. If the former, it is void and inexistent; if the latter, only voidable, under the Old Civil Code. As observed earlier, the deed of sale of 1936 stated that it had for its consideration Five Hundred (P500.00) Pesos. In fact, however, said consideration was totally absent. According to Manresa, what is meant by a contract that states a false consideration is one that has in fact a real consideration but the same is not the one stated in the document. A contract of purchase and sale is null and void and produces no effect whatsoever where the same is without cause or consideration in that the purchase price which appears thereon as paid has in fact never been paid by the purchaser to the vendor.

(2) What was the necessity, purpose and reason of Pacifico Narciso in still going to the spouses Mapalo and asked them to permit their brother Maximo to dispose of the above-described land? To this question it is safe to state that this act of Pacifico Narciso is a conclusive manifestation that they (the Narcisos) did not only have prior knowledge of the ownership of said spouses over the western half portion in question but that they also have recognized said ownership. It also conclusively shows their prior knowledge of the want of dominion on the part of their vendor Maximo Mapalo over the whole land and also of the flaw of his title thereto. Under this situation, the Narcisos may be considered purchasers in value but certainly not as purchasers in good faith.

Uy v. CA

Facts:

Petitioners William Uy and Rodel Roxas are agents authorized to sell 8 parcels of land. Petitioners offered to sell the land to NHA for a housing project. On February 14, 1989, NHA passed a resolution approving the acquisition of said lands, and pursuant to this the parties executed Deeds of Absolute Sale. However, only 5 out of 8 lands were paid for by NHA because of a report from DENR that the remaining area is located at an active landslide area and are therefore not conducive for housing. On November 22, 1991, NHA issued a resolution canceling the sale of the remaining lands and offered P1.225 million to the landowners as daños perjuicios. On March 9, 1992, petitioners filed a complaint for damages against NHA and its general manager Robert Balao. The RTC declared the cancellation to be justified, but awarded the amount offered by NHA. The Court of Appeals affirmed the decision, but deleted the award.

Issues:

(1) Whether the petitioners are real parties in interest

(2) Whether the cancellation is justified

Held:

(1) Petitioners claim that they lodged the complaint not in behalf of their principals but in their own name as agents directly damaged by the termination of the contract. Petitioners in this case purportedly brought the action for damages in their own name and in their own behalf. An action shall be prosecuted in the name of the party who, by the substantive law, has the right sought to be enforced. Petitioners are not parties to the contract of sale between their principals and NHA. They are mere agents of the owners of the land subject of the sale. As agents, they only render some service or do something in representation or on behalf of their principals. The rendering of such service did not make them parties to the contracts of sale executed in behalf of the latter. Since a contract may be violated only by the parties thereto as against each other, the real parties-in-interest, either as plaintiff or defendant, in an action upon that contract must, generally, either be parties to said contract. Petitioners have not shown that they are assignees of their principals to the subject contracts. While they alleged that they made advances and that they suffered loss of commissions, they have not established any agreement granting them "the right to receive payment and out of the proceeds to reimburse [themselves] for advances and commissions before turning the balance over to the principal[s]."

(2) The cancellation was not a rescission under Article 1191. Rather, the cancellation was based on the negation of the cause arising from the realization that the lands, which were the object of the sale, were not suitable for housing. Cause is the essential reason which moves the contracting parties to enter into it. In other words, the cause is the immediate, direct and proximate reason which justifies the creation of an obligation through the will of the contracting parties. Cause, which is the essential reason for the contract, should be distinguished from motive, which is the particular reason of a contracting party which does not affect the other party. Ordinarily, a party's motives for entering into the contract do not affect the contract. However, when the motive predetermines the cause, the motive may be regarded as the cause. In this case, it is clear, and petitioners do not dispute, that NHA would not have entered into the contract were the lands not suitable for housing. In other words, the quality of the land was an implied condition for the NHA to enter into the contract. On the part of the NHA, therefore, the motive was the cause for its being a party to the sale. We hold that the NHA was justified in canceling the contract. The realization of the mistake as regards the quality of the land resulted in the negation of the motive/cause thus rendering the contract inexistent.

Loyola v. CA

Facts:

In dispute is a parcel of land in Binan, originally owned in common by siblings Mariano and Gaudencia Zarraga. Mariano predeceased her sister, who died without offspring on August 5, 1983, at the age of 97. Victorina and Cecilia, sisters of Mariano and Gaudencia, are the original plaintiffs in this case, and when they died, they were substituted by the petitioners who are heirs of Victorina. Cecilia died childless. Private respondents, some are children of Mariano and some are heirs of Jose Zarraga, are first cousins of petitioners. Repondents allege that they are the lawful owners of the land, the one-half share inherited by their father, and the other half purchased from their aunt Gaudencia.

On August 24, 1980, Gaudencia allegedly sold her share to private respondents, evidenced by a notarised document entitled “Bilihang Tuluyan ng Kalahati ng Isang Lagay na Lupa”. A TCT was eventually issued. On January 31, 1985, Victorina and Cecilia filed a complaint for the purpose of annulling the sale and the TCT. The trial court rendered judgment in their favor, but such was reversed by the Court of Appeals.

Issue:

Whether the alleged sale between Gaudencia and respondents is valid

Held:

Petitioners vigorously assail the validity of the execution of the deed of absolute sale suggesting that since the notary public who prepared and acknowledged the questioned Bilihan did not personally know Gaudencia, the execution of the deed was suspect. The rule is that a notarized document carries the evidentiary weight conferred upon it with respect to its due execution, and documents acknowledged before a notary public have in their favor the presumption of regularity. By their failure to overcome this presumption, with clear and convincing evidence, petitioners are estopped from questioning the regularity of the execution of the deed.

Petitioners suggest that all the circumstances lead to the conclusion that the deed of sale was simulated. Simulation is "the declaration of a fictitious will, deliberately made by agreement of the parties, in order to produce, for the purposes of deception, the appearances of a juridical act which does not exist or is different what that which was really executed." Characteristic of simulation is that the apparent contract is not really desired or intended to produce legal effect or in any way alter the juridical situation of the parties. Perusal of the questioned deed will show that the sale of the property would convert the co-owners to vendors and vendees, a clear alteration of the juridical relationships. This is contrary to the requisite of simulation that the apparent contract was not really meant to produce any legal effect. Also in a simulated contract, the parties have no intention to be bound by the contract. But in this case, the parties clearly intended to be bound by the contract of sale, an intention they did not deny.The requisites for simulation are: (a) an outward declaration of will different from the will of the parties; (b) the false appearance must have been intended by mutual agreement; and (c) the purpose is to deceive third persons. None of these are present in the assailed transaction.

Petitioners fault the Court of Appeals for not considering that at the time of the sale in 1980, Gaudencia was already 94 years old; that she was already weak; that she was living with private respondent Romana; and was dependent upon the latter for her daily needs, such that under these circumstances, fraud or undue influence was exercised by Romana to obtain Gaudencia's consent to the sale. The rule on fraud is that it is never presumed, but must be both alleged and proved. For a contract to be annulled on the ground of fraud, it must be shown that the vendor never gave consent to its execution. If a competent person has assented to a contract freely and fairly, said person is bound. There also is a disputable presumption, that private transactions have been fair and regular. Applied to contracts, the presumption is in favor of validity and regularity. In this case, the allegation of fraud was unsupported, and the presumption stands that the contract Gaudencia entered into was fair and regular.

Petitioners also claim that since Gaudencia was old and senile, she was incapable of independent and clear judgment. However, a person is not incapacitated to contract merely because of advanced years or by reason of physical infirmities. Only when such age or infirmities impair his mental faculties to such extent as to prevent him from properly, intelligently, and fairly protecting his property rights, is he considered incapacitated. Petitioners show no proof that Gaudencia had lost control of her mental faculties at the time of the sale. The notary public who interviewed her, testified that when he talked to Gaudencia before preparing the deed of sale, she answered correctly and he was convinced that Gaudencia was mentally fit and knew what she was doing.

Schuback & Sons vs. CA

Facts:

On October 16, 1981, defendant submitted to plaintiff the list of bus spare parts he wanted to purchase to its counterpart in Hamburg. Plaintiff sent an offer on the items listed. On December 4, 1981, defendant informed plaintiff that he preferred genuine to replacement parts, and requested a 15% discount. On December 17, plaintiff submitted its formal offer. On December 24, defendant submitted a purchase order, and submitted the quantity on December 29. Plaintiff immediately ordered the items from Schuback Hamburg, which thereafter ordered the same from NDK, a supplier in Germany. Plaintiff sent a pro-forma invoice to be used in applying for letter of credit. On February 16, 1982, plaintiff reminded defendant to open a letter of credit to avoid delay in shipment. Defendant mentioned the difficulty he was encountering in procuring the same. Plaintiff continued receiving invoices and partial deliveries from NDK. On October 18, 1982, plaintiff again reminded the defendant to open a letter of credit. Defendant replied that he did not make a valid purchase order and that there was no definite contract between him and the plaintiff. Plaintiff sent a rejoinder explaining that there is a valid Purchase Order and suggesting that defendant either proceed with the order and open a letter of credit or cancel the order and pay the cancellation fee of 30% of F.O.B. value, or plaintiff will endorse the case to its lawyers. Demand letters sent to defendant by plaintiff's counsel dated March 22, 1983 and June 9, 1983 were to no avail. Consequently, petitioner filed a complaint for recovery of actual or compensatory damages, unearned profits, interest, attorney's fees and costs against private respondent.

Issue:

Whether or not a contract of sale has been perfected between the parties

Held:

Article 1319 of the Civil Code states: "Consent is manifested by the meeting of the offer and acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter offer." The facts presented to us indicate that consent on both sides has been manifested. The offer by petitioner was manifested on December 17, 1981 when petitioner submitted its proposal containing the item number, quantity, part number, description, the unit price and total to private respondent. On December 24, 1981, private respondent informed petitioner of his desire to avail of the prices of the parts at that time and simultaneously enclosed its Purchase Order. At this stage, a meeting of the minds between vendor and vendee has occurred, the object of the contract: being the spare parts and the consideration, the price stated in petitioner's offer dated December 17, 1981 and accepted by the respondent on December 24, 1981.

National Grains Authority v. IAC

Facts:

On August 23, 1979, private respondent Leon Soriano offered to sell palay grains to NFA through William Cabal, the provincial manager in Tuguegarao. The documents submitted were processed, and he was given a quota of 2,640 cavans, which is the maximum number of cavans he may sell to NFA. On the same day and on the following day, Soriano delivered 630 cavans, which were no rebagged, classified and weighed. When he demanded payment, he was told that payment will be held in abeyance since Mr. Cabal was still investigating on an information received that Soriano was not a bona fide farmer. Instead of withdrawing the palay, Soriano insisted that the palay grains be delivered and paid. He filed a complaint for specific performance. Petitioners contend that the delivery was merely made for the purpose of offering it for sale because until the grains were rebagged, classified and weighed, they are not considered sold.

Issue:

Whether there was a perfected sale

Held:

Soriano initially offered to sell palay grains produced in his farmland to NFA. When the latter accepted the offer by noting in Soriano's Farmer's Information Sheet a quota of 2,640 cavans, there was already a meeting of the minds between the parties. The object of the contract, being the palay grains produced in Soriano's farmland and the NFA was to pay the same depending upon its quality. The fact that the exact number of cavans of palay to be delivered has not been determined does not affect the perfection of the contract. Article 1349 of the New Civil Code provides: ". . .. The fact that the quantity is not determinate shall not be an obstacle to the existence of the contract, provided it is possible to determine the same, without the need of a new contract between the parties." In this case, there was no need for NFA and Soriano to enter into a new contract to determine the exact number of cavans of palay to be sold. Soriano can deliver so much of his produce as long as it does not exceed 2,640 cavans. From the moment the contract of sale is perfected, it is incumbent upon the parties to comply with their mutual obligations or "the parties may reciprocally demand performance" thereof.

National Grains Authority v. IAC

Facts:

On August 23, 1979, private respondent Leon Soriano offered to sell palay grains to NFA through William Cabal, the provincial manager in Tuguegarao. The documents submitted were processed, and he was given a quota of 2,640 cavans, which is the maximum number of cavans he may sell to NFA. On the same day and on the following day, Soriano delivered 630 cavans, which were no rebagged, classified and weighed. When he demanded payment, he was told that payment will be held in abeyance since Mr. Cabal was still investigating on an information received that Soriano was not a bona fide farmer. Instead of withdrawing the palay, Soriano insisted that the palay grains be delivered and paid. He filed a complaint for specific performance. Petitioners contend that the delivery was merely made for the purpose of offering it for sale because until the grains were rebagged, classified and weighed, they are not considered sold.

Issue:

Whether there was a perfected sale

Held:

Soriano initially offered to sell palay grains produced in his farmland to NFA. When the latter accepted the offer by noting in Soriano's Farmer's Information Sheet a quota of 2,640 cavans, there was already a meeting of the minds between the parties. The object of the contract, being the palay grains produced in Soriano's farmland and the NFA was to pay the same depending upon its quality. The fact that the exact number of cavans of palay to be delivered has not been determined does not affect the perfection of the contract. Article 1349 of the New Civil Code provides: ". . .. The fact that the quantity is not determinate shall not be an obstacle to the existence of the contract, provided it is possible to determine the same, without the need of a new contract between the parties." In this case, there was no need for NFA and Soriano to enter into a new contract to determine the exact number of cavans of palay to be sold. Soriano can deliver so much of his produce as long as it does not exceed 2,640 cavans. From the moment the contract of sale is perfected, it is incumbent upon the parties to comply with their mutual obligations or "the parties may reciprocally demand performance" thereof.

Yu Tek & Co. v. Gonzales

Facts:

A contract was executed between the herein parties, whereby Mr. Basilio Gonzales acknowledges the receipt of P3,000 from Yu Tek & Co., and that in consideration of which he obligates himself to deliver to the latter 600 piculs of sugar of the first and second grade, according to the result of polarization, within 3 months. There is a stipulation providing for rescission with P1,200 penalty in case of failure to deliver. No sugar was delivered, so plaintiff filed a case praying for the judgment of P3,000 plus P1,200. P3,000 was awarded, thus, both parties appealed.

Issues:

(1) Whether compliance of the obligation to deliver depends upon the production in defendant’s plantation

(2) Whether there is a perfected sale

(3) Whether liquidated damages of P1,200 should be awarded to the plaintiff

Held:

(1) There is not the slightest intimation in the contract that the sugar was to be raised by the defendant. Parties are presumed to have reduced to writing all the essential conditions of their contract. While parol evidence is admissible in a variety of ways to explain the meaning of written contracts, it cannot serve the purpose of incorporating into the contract additional contemporaneous conditions which are not mentioned at all in the writing, unless there has been fraud or mistake. It may be true that defendant owned a plantation and expected to raise the sugar himself, but he did not limit his obligation to his own crop of sugar. Our conclusion is that the condition which the defendant seeks to add to the contract by parol evidence cannot be considered. The rights of the parties must be determined by the writing itself.

(2) We conclude that the contract in the case at bar was merely an executory agreement; a promise of sale and not a sale. At there was no perfected sale, it is clear that articles 1452, 1096, and 1182 are not applicable. The defendant having defaulted in his engagement, the plaintiff is entitled to recover the P3,000 which it advanced to the defendant, and this portion of the judgment appealed from must therefore be affirmed.

(3) The contract plainly states that if the defendant fails to deliver the 600 piculs of sugar within the time agreed on, the contract will be rescinded and he will be obliged to return the P3,000 and pay the sum of P1,200 by way of indemnity for loss and damages. There cannot be the slightest doubt about the meaning of this language or the intention of the parties. There is no room for either interpretation or construction. Under the provisions of article 1255 of the Civil Code contracting parties are free to execute the contracts that they may consider suitable, provided they are not in contravention of law, morals, or public order. In our opinion there is nothing in the contract under consideration which is opposed to any of these principles.

Pichel v. Alonzo

Facts:

Respondent Prudencio Alonzo was awarded by the Government that parcel of land in Basilan City in accordance with Republic Act No. 477. The award was cancelled by the Board of Liquidators on January 27, 1965 on the ground that, previous thereto, plaintiff was proved to have alienated the land to another, in violation of law. In 1972, plaintiff's rights to the land were reinstated.

On August 14, 1968, plaintiff and his wife sold to defendant Luis Pichel all the fruits of the coconut trees which may be harvested in the land in question for the period, September 15, 1968 to January 1, 1976, in consideration of P4,200.00. Even as of the date of sale, however, the land was still under lease to one, Ramon Sua, and it was the agreement that part of the consideration of the sale, in the sum of P3,650.00, was to be paid by defendant directly to Ramon Sua so as to release the land from the clutches of the latter. Pending said payment plaintiff refused to allow the defendant to make any harvest. In July 1972, defendant for the first time since the execution of the deed of sale in his favor, caused the harvest of the fruit of the coconut trees in the land.

Alonzo filed for the annulment of the contract on the ground that it violated the provisions of R.A. 477, which states that lands awarded under the said law shall not be subject to encumbrance or alienation, otherwise the awardee shall no longer be entitled to apply for another piece of land. The lower court ruled that the contract, which it held as a contract of lease, is null and void.

Issues:

(1) Whether the respondent had the right or authority to execute the "Deed of Sale" in 1968, his award having been cancelled previously by the Board of Liquidators on January 27, 1965

(2) Whether the contract is one for lease of the land, or for sale of coconut fruits

(3) Whether the contract is an encumbrance as contemplated by R.A. 477

Held:

(1) Until and unless an appropriate proceeding for reversion is instituted by the State, and its reacquisition of the ownership and possession of the land decreed by a competent court, the grantee cannot be said to have been divested of whatever right that he may have over the same property. Herein respondent is not deemed to have lost any of his rights as grantee during the period material to the case at bar, i.e., from the cancellation of the award in 1965 to its reinstatement in 1972. Within said period, respondent could exercise all the rights pertaining to a grantee.

(2) A perusal of the deed fails to disclose any ambiguity or obscurity in its provisions, nor is there doubt as to the real intention of the contracting parties. The terms of the agreement are clear and unequivocal, hence the literal and plain meaning thereof should be observed. The document in question expresses a valid contract of sale. It has the essential elements of a contract of sale. The subject matter of the contract of sale in question are the fruits of the coconut trees on the land during the years from September 15, 1968 up to January 1, 1976, which subject matter is a determinate thing. Under Article 1461 of the New Civil Code, things having a potential existence may be the object of the contract of sale. Pending crops which have potential existence may be the subject matter of sale. The essential difference between a contract of sale and a lease of things is that the delivery of the thing sold transfers ownership, while in lease no such transfer of ownership results as the rights of the lessee are limited to the use and enjoyment of the thing leased.

The contract was clearly a "sale of the coconut fruits." The vendor sold, transferred and conveyed "by way of absolute sale, all the coconut fruits of his land," thereby divesting himself of all ownership or dominion over the fruits during the seven-year period. The possession and enjoyment of the coconut trees cannot be said to be the possession and enjoyment of the land itself because these rights are distinct and separate from each other, the first pertaining to the accessory or improvements (coconut trees) while the second, to the principal (the land). A transfer of the accessory or improvement is not a transfer of the principal. It is the other way around, the accessory follows the principal. Hence, the sale of the nuts cannot be interpreted nor construed to be a lease of the trees, much less extended further to include the lease of the land itself.

The grantee of a parcel of land under R.A. No. 477 is not prohibited from alienating or disposing of the natural and/or industrial fruits of the land awarded to him. What the law expressly disallows is the encumbrance or alienation of the land itself or any of the permanent improvements thereon. Permanent improvements on a parcel of land are things incorporated or attached to the property in a fixed manner, naturally or artificially. They include whatever is built, planted or sown on the land which is characterized by fixity, immutability or immovability. Houses, buildings, machinery, animal houses, trees and plants would fall under the category of permanent improvements, the alienation or encumbrance of which is prohibited. The purpose of the law is not violated when a grantee sells the produce or fruits of his land. On the contrary, the aim of the law is thereby achieved, for the grantee is encouraged and induced to be more industrious and productive, thus making it possible for him and his family to be economically self-sufficient and to lead a respectable life. At the same time, the Government is assured of payment on the annual installments on the land. We agree with herein petitioner that it could not have been the intention of the legislature to prohibit the grantee from selling the natural and industrial fruits of his land, for otherwise, it would lead to an absurd situation wherein the grantee would not be able to receive and enjoy the fruits of the property in the real and complete sense.

Philippine Trust Co. v. Roldan

Facts:

Mariano Bernardo, a minor, inherited 17 parcels of land from his deceased father. Respondent, Mariano’s step-mother, was appointed his guardian. As guardian, she sold the 17 parcels to Dr. Ramos, her brother-in-law, for P14,700. After a week, Dr. Ramos sold the lands to her for P15,000. Subsequently, she sold 4 out of 17 parcels to Emilio Cruz. Petitioner replaced Roldan as guardian, and two months thereafter, this litigation sought to declare as null and void the sale to Dr. Ramos, and the sale to Emilio Cruz.

Issue:

Whether the sale of the land by the guardian is null and void for being violative of the prohibition for a guardian to purchase either in person or through the mediation of another the property of her ward

Held:

Remembering the general doctrine that guardianship is a trust of the highest order, and the trustee cannot be allowed to have any inducement to neglect his ward’s interest, and in line with the court’s suspicion whenever the guardian acquires ward’s property we have no hesitation to declare that in this case, in the eyes of the law, Socorro Roldan took by purchase her ward’s parcels thru Dr. Ramos, and that Article 1459 of the Civil Code applies.

Rubias v. Batiller

Facts:

Before the war with Japan, Francisco Militante filed an application for registration of the parcel of land in question. After the war, the petition was heard and denied. Pending appeal, Militante sold the land to petitioner, his son-in-law. Plaintiff filed an action for forcible entry against respondent. Defendant claims the complaint of the plaintiff does not state a cause of action, the truth of the matter being that he and his predecessors-in-interest have always been in actual, open and continuous possession since time immemorial under claim of ownership of the portions of the lot in question.

Issue:

Whether or not the contract of sale between appellant and his father-in-law was void because it was made when plaintiff was counsel of his father-in-law in a land registration case involving the property in dispute

Held:

The stipulated facts and exhibits of record indisputably established plaintiff's lack of cause of action and justified the outright dismissal of the complaint. Plaintiff's claim of ownership to the land in question was predicated on the sale thereof made by his father-in- law in his favor, at a time when Militante's application for registration thereof had already been dismissed by the Iloilo land registration court and was pending appeal in the Court of Appeals.

Article 1491 of our Civil Code (like Article 1459 of the Spanish Civil Code) prohibits in its six paragraphs certain persons, by reason of the relation of trust or their peculiar control over the property, from acquiring such property in their trust or control either directly or indirectly and "even at a public or judicial auction," as follows: (1) guardians; (2) agents; (3) administrators; (4) public officers and employees; judicial officers and employees, prosecuting attorneys, and lawyers; and (6) others especially disqualified by law.

Fundamental consideration of public policy render void and inexistent such expressly prohibited purchase (e.g. by public officers and employees of government property intrusted to them and by justices, judges, fiscals and lawyers of property and rights in litigation and submitted to or handled by them, under Article 1491, paragraphs (4) and (5) of our Civil Code) has been adopted in a new article of our Civil Code, viz, Article 1409 declaring such prohibited contracts as "inexistent and void from the beginning."

Indeed, the nullity of such prohibited contracts is definite and permanent and cannot be cured by ratification. The public interest and public policy remain paramount and do not permit of compromise or ratification. In his aspect, the permanent disqualification of public and judicial officers and lawyers grounded on public policy differs from the first three cases of guardians, agents and administrators (Article 1491, Civil Code), as to whose transactions it had been opined that they may be "ratified" by means of and in "the form of a new contact, in which cases its validity shall be determined only by the circumstances at the time the execution of such new contract. The causes of nullity which have ceased to exist cannot impair the validity of the new contract. Thus, the object which was illegal at the time of the first contract, may have already become lawful at the time of the ratification or second contract; or the service which was impossible may have become possible; or the intention which could not be ascertained may have been clarified by the parties. The ratification or second contract would then be valid from its execution; however, it does not retroact to the date of the first contract."

Guiang v. CA

Facts:

Over the objection of private respondent Gilda Corpuz and while she was in Manila seeking employment, her husband sold to the petitioners-spouses Antonio and Luzviminda Guiang one half of their conjugal peoperty, consisting of their residence and the lot on which it stood. Upon her return to Cotabato, respondent gathered her children and went back to the subject property. Petitioners filed a complaint for trespassing. Later, there was an amicable settlement between the parties. Feeling that she had the shorer end of the bargain, respondent filed an Amended Complaint against her husband and petitioners. The said Complaint sought the declaration of a certain deed of sale, which involved the conjugal property of private respondent and her husband, null and void.

Issue:

Whether the sale was void or merely voidable and was ratified by the amicable settlement

Held:

Respondent's consent to the contract of sale of their conjugal property was totally inexistent or absent. The nullity of the contract of sale is premised on the absence of private respondent's consent. To constitute a valid contract, the Civil Code requires the concurrence of the following elements: (1) cause, (2) object, and (3) consent, the last element being indubitably absent in the case at bar.

Neither can the "amicable settlement" be considered a continuing offer that was accepted and perfected by the parties, following the last sentence of Article 124. The order of the pertinent events is clear: after the sale, petitioners filed a complaint for trespassing against private respondent, after which the barangay authorities secured an "amicable settlement" and petitioners filed before the MTC a motion for its execution. The settlement, however, does not mention a continuing offer to sell the property or an acceptance of such a continuing offer. Its tenor was to the effect that private respondent would vacate the property. By no stretch of the imagination, can the Court interpret this document as the acceptance mentioned in Article 124.