Dec 21 2011 Obligations and Contracts

Marin v. Adil G.R. No. 47986 Facts: The Armadas were expecting to inherit some lots from their uncle. Marin had hereditary rights in the estates of her parents. A deed of exchange was executed wherein it was stipulated that both parties acknowledge that the exchange operates to their individual and mutual benefit and advantage, for the reason that the property being ceded, transferred, conveyed and unclaimed by one party to the other is situated in the place where either is a resident resulting in better administration of the properties. But the expected land was adjudicated to Soledad, sister of Marin. So, the Armadas and other heirs sued Soledad for claiming to be the sole heir of their uncle, but ended in a compromise where the Armadas were awarded two lots. Marin waived, renounced and quitclaimed her share in her parents estate in favour of her another sister Aurora. She cannot anymore fulfil her obligations in her signed deed of exchange with the Armadas. The Armadas filed a rescisorry action against Marin. Issue: Did Armadas action prescribe? Held: No. The action to declare contracts void and inexistent does not prescribe. It is evident from the deed of exchange that the intention of the parties relative to the lots cannot be definitely ascertained. This circumstance renders the exchange void. Rongavilla v. CA G.R. No. 83974 Facts: The Dela Cruz sisters were the aunts of Dolores Rongavilla. They borrowed P2,000 from the Rongavillas to have their rooftop repaired. Later, petitioners went back to their aunts to have them sign a contract. Taking advantage of their lack of education, the sisters were made to believe that such document, typewritten in English, was just for the acknowledgment of their debt. After four years, petitioners asked their aunts to vacate the land subject to litigation claiming that she and her husband were the new owners. After verifying with the Registry of Deeds, the aunts were surprised that what they have signed was actually a deed of sale. Their land title was cancelled and the ownership was transferred to their nephews. The land was mortgaged with the Cavite Development Bank. Issue:

Was the deed of sale void? Held: Yes. While petitioners claimed they were regularly paying taxes on the land in question, they had no second thoughts stating at the trial and on appeal that they had resorted to doctoring the price stated in the disputed Deed of Sale, allegedly to save on taxes. While it is true that public documents are presumed genuine and regular under the Rules of Court, this presumption is a rebuttable presumption which may be overcome by clear, strong and convincing evidence. Cristobal v. Gomez G.R. No. 27014 Facts: Epifanio sold a property with pacto de retro to Yangco. It was stipulated that the property is redeemable within five years. When the period expired, Yangco extended it. In order to redeem, Epifanio asked Banas for a loan. Banas agreed, with the condition that Marcelino and Telesfora be responsible for the loan. The two entered into a private partnership in participation which stipulated that the property shall be returned to Epifanio as soon as the capital employed have been covered. Epifanio died. He left Paulina and their children. Marcelino acquired exclusive rights over the property when Telesfora conveyed her interest to him. Marcelino sold the property to Banas, with pacto de retro, redeemable within five years. He redeemed it from Banas. Marcelino submitted a notarial document wherein Epifanio certifies that Marcelino had requested him to draw up a notarial act showing the properties which Marcelino was known to be the true owner. Marcelino relies upon this instrument as proving title in him, contending that Epifanio and his successors are estopped from claiming said lot. Issue: Are the heirs of Epifanio estopped from claiming the property? Held: No. Estoppel may not be invoked by a person party to the collusion, by reason that he could not have been misled. The document executed by Epifanio was merely laying the basis of a scheme to defeat Yangcos rights under his contract of purchase of 1891, or to defeat Epifanios other creditors. DBP v. CA G.R. No. 28774 Facts: DBP bought 91,188.30 square meters of land, consisting of 159 lots, in the proposed Diliman Estate Subdivision of the PHHC. However, the sale of the lots to DBP, Lots 2 and 4, which form part of said 159 lots, were still sold by PHHC to the spouses Nicandro, for which 2 deeds of sale were issued to them by PHHC. Upon learning of PHHCs previous transaction with DBP, the

spouses filed a complaint against DBP and the PHHC to rescind the sale of Lots 2 and 4 by PHHC in favor of DBP. The CFI held that the sale of Lots 2 and 4, to DBP is null and void, for being in violation of Section 13 of the DBP Charter. Issue: Do the spouses possess the legal personality to question the legality of the sale? Held: Yes. The spouses stand to be prejudiced by reason of their payment in full of the purchase price for the same lots which had been sold to DBP by virtue of the transaction in question.The general rule is that the action for the annulment of contracts can only be maintained by those who are bound either principally or subsidiarily by virtue thereof. However, a person who is not obliged principally or subsidiarily in a contract may exercise an action for nullity of the contract if he is prejudiced in his rights with respect to one of the contracting parties, and can show the detriment which could positively result to him from the contract in which he had no intervention. Goldenrod v CA G.R. No. 126812 Facts: Barretto owned parcels of land which were mortgaged to UCPB. Barretto failed to pay; the properties were foreclosed. Goldenrod made an offer to Barretto that it would buy the properties and pay off the remaining balance of Barrettos loan with UCPB. It paid Barretto 1 million pesos as part of the purchase price. The remaining balance would be paid once Barretto had consolidated the titles. On the date that Goldenrod was supposed to pay, Goldenrod asked for an extension. UCPB agreed. When the extension date arrived, Goldenrod asked for another extension. UCPB refused. Barretto successfully consolidated the titles. Goldenrod informed Barretto that it would not be able to push through with their agreement. It asked Barretto to return the 1 million pesos. Barretto did not give in to Goldenrods rescission. Instead, it sold the property that was part of their agreement to Asiaworld. Issue: Should Goldenrod be paid back the 1 million pesos? Held: Yes. Rescission creates the obligation to return the things which were the object of the contract together with the fruits and interest. Barretto is obliged to pay Goldenrod back because 1) Goldenrod decided to rescind the sale; 2) the transaction was called off and; 3) the property was sold to a third person. By virtue of the extrajudicial rescission of the contract to sell by Goldenrod, without opposition from Barretto, who in turn sold it to a third person, Barretto had the obligation to return the 1 million pesos plus legal interest from the date it received the notice of rescission.

Cabaliw v. Sadorra G.R. No. 25650 Facts: Cabaliw was the second wife of Benigno. During their marriage, they bought 2 parcels of land. They had a daughter Soledad. Benigno abandoned his wife Cabaliw, thus the latter filed an action in court for support. The Court ordered Benigno to pay her P75 a month. However, Benigno did not pay and instead sold their property to his son-in-law Soterro. The transaction was done without Isidoras consent. Prior to the sale, Soterro already knew that there was a judgment rendered against his father-in-law but proceeded to buy the property anyway. When Cabaliw found out, she instituted an action along with her daughter to recover the properties. Issue: Is there a presumption of fraud? Held: Yes. Alienations by onerous title are presumed fraudulent when made by persons against whome some judgment has been rendered or some writ of attachment has been issued. Benigno was ordered by the Court to pay Cabaliw support and he failed to do so. Instead, he sold his properties to his son-in-law. The close relationship between Benigno and Soterro is a badge of fraud. Soterro knew about the judgment against Benigno but proceeded to purchase the properties anyway. He cannot be said to be a purchaser in good faith. The presumption of fraud is not overcome by the fact that the transactions were all made in the nature of public instruments between Soterro and Benigno. The properties sold were conjugal properties. These cannot be sold without Cabaliws consent. Municipality of Cavite v. Rojas G.R. No. 9069 Facts: The municipal council of Cavite by Resolution No. 10, leased to Rojas some 70 or 80 square meters of Plaza Soledad, on condition that she pay rent quarterly in advance according to the schedule fixed in Ordinance No. 43, series of 1903 and that she obligate herself to vacate said land within 60 days subsequent to notification to that effect. Upon such notification, however, she refused to vacate the land, forcing the municipality to file a complaint before the CFI to order her to vacate the land. After a hearing of the case, the CFI dismissed the complaint. Issues: (1) Is the contract valid? (2) If in the negative, what are the obligations of the parties?

Held: (1) No. Article 1271 of the Old Civil Code, prescribes that everything which is not outside the commerce of man may be the object of a contract, and plazas and streets are outside of this commerce. Communal things that cannot be sold because they are by their very nature outside of commerce are those for public use, such as the plazas, streets, common lands, rivers, fountains, etc. (2) Rojas must restore and deliver possession of the land described in the complaint to the municipality of Cavite, which in its turn must restore to her all the sums it may have received from her in the nature of rentals just as soon as she restores the land improperly leased. Eastern Shipping Lines, Inc. v. Margarine-Verkaufs-Union GmbH G.R. No. L-31087 93 SCRA 257 Facts: MARGARINE-VERKAUFS-UNION, a corporation not engaged in business in the Philippines, was the consignee of copra in bulk shipped from Cebu on board EASTERN SHIPPING LINESs vessel for discharge at Hamburg, Germany. Petitioners bill of lading for the cargo provided that the contract shall be governed by the laws of the Flag of the Ship carrying the goods. In case of average, same shall be adjusted according to York-Antwerp Rules. While the vessel was off Gibraltar, a fire broke out aboard the and caused water damage to the copra. EASTERN SHIPPING LINES rejected MARGARINE-VERKAUFS-UNION GmbH s claim for payment. Issue: Should Article 848 of the Code of Commerce govern this case despite the bill of lading which expressly contained for the application of the York-Antwerp Rules which provide for MARGARINE-VERKAUFS-UNION GmbHs fun recovery of the damage loss? Held: No. We hold that the lower court correctly ruled the cited codal article to be not applicable in this particular case for the reason that the bill of lading contains an agreement to the contrary. There is a clear and irreconcilable inconsistency between the York-Antwerp Rules expressly adopted by the parties as their contract under the bill of lading which sustains Easterns claim and the codal article cited by Margarine which would bar the same. A contract of adhesion as embodied in the printed bill of lading issued for the shipment to which the consignee merely adhered, having no choice in the matter, and consequently, any ambiguity must be construed against the author