FIRST PHILIPPINE HOLDINGS CORPORATION

VS.
TRANS MIDDLE EAST (PHILS.) EQUITIES INC.
G.R. No. 179505 December 4, 2009
Facts: FPHC, formerly known as Meralco Securities Corporation, is a holding
company engaged in power generation and distribution, property development and
manufacturing. FPHCs controlling interest is owned by the Lopez family. TMEE, on
the other hand, is also a domestic corporation, allegedly owned by Benjamin
(Kokoy) Romualdez. On 24 May 1984, FPHC allegedly sold its 6,299,179 shares of
common stock in Philippine Commercial International Bank (PCIB), now EquitablePCI Bank, to TMEE.The 6,299,179 shares of common stock in PCIB are part of the
sequestered properties that were allegedly illegally amassed by Benjamin
Romualdez during the twenty-year reign of former President Ferdinand E. Marcos,
and are among the purported ill-gotten wealth sought to be recovered by the
Presidential Commission on Good Government (PCGG) via a civil case docketed as
Civil Case No. 0035 before the Sandiganbayan
Issue: Whether or not the sale of the disputed shares of stock is void.
Held: Undoubtedly, the entirety of the allegations in the complaint-in-intervention
makes up a case of a voidable contract of sale - not a void one. These
circumstances surrounding the questioned transaction fit in with what Article 1390
of the Civil Code contemplates as voidable contracts, viz:
Art. 1390. The following contracts are voidable or annullable, even though there
may have been no damage to the contracting parties:
(2) Those where the consent is vitiated by mistake, violence, intimidation, undue
influence, or fraud.
Thus, contracts where consent is given through fraud are voidable or annullable.
These are not void ab initio since voidable or anullable contracts are existent, valid,
and binding, although they can be annulled because of want of capacity or the
vitiated consent of one of the parties. However, before such annulment, they are
considered effective and obligatory between parties. While FPHCs complaint prayed
for the declaration of nullity of the disputed sale transaction, such prayer does not
determine the nature of the action at hand. It is the material allegations of fact in
the complaint, not the legal conclusion made therein or the prayer that determines
the nature of the case. As ruled by this Court, it is the body and not the caption or
the prayer of the complaint that determines the nature of the action. As the
complaint-in-intervention substantially alleged that the contract was voidable, the
four-year prescriptive period under Art. 1391 of the New Civil Code will apply.

THE ESTATE OF PEDRO C. GONZALES and HEIRS OF PEDRO C. GONZALES,

VS.
THE HEIRS OF MARCOS PEREZ
G.R. No. 169681 November 5, 2009
Facts: The former Municipality of Marikina in the Province of Rizal used to own a
parcel of land located in Barrio Concepcion of the said municipality. The said
property was subdivided into three lots, namely, lots A, B and C. On January 14,
1966, the Municipal Council of Marikina passed Resolution No. 9, series of 1966
which authorized the sale through public bidding of Municipal Lots A and C. On April
25, 1966, a public bidding was conducted wherein Pedro Gonzales was the highest
bidder. Two days thereafter, the Municipal Council of Marikina issued Resolution No.
75 accepting the bid of Pedro. Thereafter, a deed of sale was executed in favor of
the latter which was later forwarded to the Provincial Governor of Rizal for his
approval. The Governor, however, did not act upon the said deed. Pedro sold to
Marcos Perez a portion of Lot C, denominated as Lot C-3, which contains an area of
375 square meters. The contract of sale was embodied in a Deed of Sale which,
however, was not notarized. Subsequently, Pedro and Marcos died. On February 7,
1992, the Municipality of Marikina, through its then Mayor Rodolfo Valentino,
executed a Deed of Absolute Transfer of Real Property over Lots A and C in favor of
the Estate of Pedro C. Gonzales. The Transfer Certificate of Title (TCT) No. 223361,
covering Lot C, was issued in the name of the said estate. On October 1, 1992,
herein respondents sent a demand letter to one of herein petitioners asking for the
reconveyance of the subject property. However, petitioners refused to reconvey the
said lot.
Issue: Whether or not the contract of sale is valid and binding.
Held: Yes, it is valid and binding. On the question of whether the subject Deed of
Sale is invalid on the ground that it does not appear in a public document, Under
Article 1403, the sale of real property should be in writing and subscribed by the
party charged for it to be enforceable. In the case before the Court, the Deed of Sale
between Pedro and Marcos is in writing and subscribed by Pedro and his wife
Francisca; hence, it is enforceable under the Statute of Frauds. However, not having
been subscribed and sworn to before a notary public, the Deed of Sale is not a
public document and, therefore, does not comply with Article 1358 of the Civil Code.
Nonetheless, it is a settled rule that the failure to observe the proper form
prescribed by Article 1358 does not render the acts or contracts enumerated therein
invalid. It has been uniformly held that the form required under the said Article is
not essential to the validity or enforceability of the transaction, but merely for
convenience. The Court agrees with the CA in holding that a sale of real property,

though not consigned in a public instrument or formal writing, is, nevertheless, valid
and binding among the parties, for the time-honored rule is that even a verbal
contract of sale of real estate produces legal effects between the parties. Stated
differently, although a conveyance of land is not made in a public document, it does
not affect the validity of such conveyance. Article 1358 does not require the
accomplishment of the acts or contracts in a public instrument in order to validate
the act or contract but only to insure its efficacy.

BIENVENIDO M. CASIO, JR.

VS
THE COURT OF APPEALS and OCTAGON REALTY DEVELOPMENT
CORPORATION.
G.R. No. 133803 September 16, 2005
Facts:
Octagon Realty Development Corporation filed a complaint for rescission
of contract with damages against petitioner Bienvenido M. Casio, Jr ., owner and
proprietor of the Casio Wood Parquet and Sanding Services, relative to the parties
agreement for the supply and installation by petitioner of narra wood parquet
ordered by respondent. On October 2, 1991 in the Regional Trial Court at Pasig City.
The trial court, upon a finding that petitioner is the one who breached the parties
agreement, rendered judgment for respondent and awarded P2,111,061.69 by way
of actual and compensatory damages; and P50,000.00, as attorneys fees. On
appeal, the Court of Appeals affirmed the trial courts decision with the modification
that the petitioner be made to pay the respondent as actual and compensatory
damages, the amount of P1,662,003.80, with interest thereon at the legal rate from
the finality of this judgment until fully paid.
Issue: Whether or not the rescission of the questioned contract is valid and holds
the petitioner liable for breach of contract.
Held: With the reality that petitioner has failed to comply with his prestations under
his contract with respondent, the latter is vested by law with the right to rescind the

parties agreement, conformably with Article 1191 of the Civil Code. It must be
stressed, though, that the right to rescind a contract for non-performance of its
stipulations is not absolute. The general rule is that rescission of a contract will not
be permitted for a slight or casual breach, but only for such substantial and
fundamental violations as would defeat the very object of the parties in making the
agreement. Here, contrary to petitioners asseveration, the breach he committed
cannot, by any measure, be considered as slight or casual. For sure, petitioners
failure to make complete delivery and installation way beyond the time stipulated
despite respondents demands is doubtless a substantial and fundamental breach,
more so when viewed in the light of the large amount of money respondent had to
pay another contractor to complete petitioners unfinished work.

Manila International Airport Authority

VS.
The Hon. Hendrick F. Gingoyon
G.R. No. 155879 December 2, 2005
Facts :MIAA owns a 1,064-square meter land at the corner of Merville Avenue and
South Luzon Expressway West Service Road, Pasay City. Petitioner filed an
ejectment suit before the Metropolitan Trial Court of Pasay City, Branch 46 against
private respondent, Moreland Realty, Inc., occupant of the aforecited land.
Petitioner alleged that private respondent deprived it of said land by force,
intimidation, strategy or stealth. On September 5, 1997, said court rendered its
decision ordering private respondent to vacate the disputed land. Later, to avoid a
protracted litigation, petitioner and private respondent entered into a compromise
agreement where they agreed to execute a lease contract. They agreed to adopt
the rental rates stated in MIAA Administrative Order No. 1, Series of 1993,
stipulating P39.60/sqm. monthly rental. It was further agreed upon that the contract
may be modified or altered only by written agreement of the parties or by an
administrative order duly issued or promulgated after the contract was signed.
Later, on June 30, 1998, petitioner had a change of administration. The new
administration sent private respondent a bill dated July 6, 1998, demanding rent
based on the increased rates in A.O. No. 1, Series of 1998. Private respondent
refused, explaining that paragraph 7.17 of the contract prohibited any amendment
of the rental rates based on A.O. No. 1, Series of 1993 except by their written
agreement or by administrative orders promulgated or issued after May 29, 1998.
Since A.O. No. 1, Series of 1998 was issued on April 2, 1998, it was an amendatory
administrative order not within the provisions of the contract, said private

respondent. Petitioner insisted on its demand and threatened to cancel the

contract.
Issue: Whether or not the various stipulations of a contract are to be interpreted
together.
Held: In interpreting a contract, its provisions should be read not in isolation but in
relation to each other and in their entirety so as to render them effective, having in
mind the intention of the parties and the purpose to be achieved. The various
stipulations of a contract are to be interpreted together, attributing to the doubtful
ones that sense which may result from all of them taken jointly. Thus, in this case,
the phrase any subsequent administrative orders in paragraph 2.04 of the
contract should not be read in isolation, as what petitioner has erroneously done,
but should be read together with the provisions of paragraph 7.17 of the case. The
parties would not have stipulated in paragraph 2.01 that the monthly rental shall be
based on the old provisions of A.O. No. 1, Series of 1993 if they intended that upon
the effectivity of the lease, A.O. No. 1, Series of 1998 was to apply instead. That
they did not stipulate in paragraph 2.01 that rental rates in the latter administrative
order shall apply even though said order was already existent during the
negotiations, and even though they knew that the order was to take effect on the
same day as the lease, proves that they really intended to be bound by the rates in
A.O. No. 1, Series of 1993.
Anselmo Taghoy
VS.
Sps. Felixberto Tigol Jr. and Rosita Tigol
G.R. No. 159665 August 3, 2010
Facts: Spouses Filomeno Taghoy and Margarita Amit owned an 11,067 square
meter parcel of land, known as Lot 3635-B, located in Barrio Agus, Lapu-Lapu City,
Cebu. Filomeno died intestate on February 12, 1976. On July 27, 1979, his widow,
Margarita, and their seven children, as heirs of the deceased, executed a Deed of
Extrajudicial Settlement and Sale, adjudicating to themselves the subject property
and selling the same to Rosita and her husband Felixberto for P1, 000.00.
Subsequently, on September 7, 1981 and August 10, 1982, Filomeno's heirs
executed two (2) Deeds of Confirmation of Sale, confirming the supposed sale of the
subject property by Filomeno and Margarita in favor of the respondents for
P1,000.00. Simultaneous with the execution of the deeds, however, the respondents
executed explanatory Joint Affidavits attesting that the sale was without any
consideration, and was only executed to secure a loan. Seven (7) years later, on
April 17, 1990, the heirs filed a complaint against the respondents and for
declaration of nullity of the respondents' TCT and for judicial partition. They alleged
that the deeds of confirmation of sale became the bases for the transfer of the title

in the respondents' names, but the sale was fictitious or simulated, as evidenced by
the respondents' own explanatory joint affidavits attesting that the transfer was for
the purpose only of convenience in securing a loan, not for absolute conveyance or
sale.
Issues:
Whether or not the sale was absolutely simulated.
Whether or not he sale was void.
Held:
The joint affidavits are very solid pieces of evidence in the petitioners' favor. They
constitute admissions against interest made by the respondents under oath. An
admission against interest is the best evidence that affords the greatest certainty of
the facts in dispute, based on the presumption that no man would declare anything
against himself unless such declaration is true. It is fair to presume that the
declaration corresponds with the truth, and it is his fault if it does not, Thus, by the
respondents' own admissions, they never intended to be bound by the sale; they
merely executed the documents for convenience in securing a bank loan, and they
agreed to reconvey the subject property upon payment of the loan. The sale was
absolutely simulated and, therefore, void.

GLORIA OCAMPO AND TERESITA TAN

VS.
LANDBANKOF THE PHILIPPINES
GR No. 164968, July 3, 2009
Facts: In 1991, Ocampo and her daughter, Tan obtained from the Landbank a
PhP10M quedan loan upon issuance of promissory notes which was released to
them by Quedan Rural Credit Guarantee Corporation (Quedancor) guaranteed to
pay Landbank their loan but only up to 80% of the outstanding loan plus interests at
the time of maturity. Pursuant thereto, Ocampo and Tan delivered to Landbank
quedans and executed a Deed of Assignment covering 41,690cavans of palay in
favor of Quedancor. Ocampo and Tan constituted a Real Estate Mortgage (REM) over
2 parcels of unregistered land owned by Ocampo to secure the remaining 20%.
Such encumbrance was annotated in the land title when Ocampo filed for the lands
registration. When Ocampo failed to pay the 3 remaining PNs on Oct. 2,1991,
Lanbank filed the Claim for guarantee payment with Quedancor; Criminal case of
estafa against Ocampo for disposing stocks of palay covered by the quedans;
Extrajudicial foreclosure of REM (re: 20% of loan)The Ex-Officio Provincial Sheriff
issued a notice of Extrajudicial Sale (Public Auction).RTC issued TRO on the public
auction and favored Ocampo and Tan when they filed a Complaint for Declaration of
Nullity and Damages with Application of a Writ of Preliminary Injunction against
Landbank and the Sheriff on the basis on forgery regarding the REM on the 20% of
the loan. RTC issued TRO on the public auction and favored Ocampo and Tan when
they filed a Complaint for Declaration of Nullity and Damages with Application of a
Writ of Preliminary Injunction against Landbank and the Sheriff on the basis on
forgery regarding the REM on the 20% of the loan
Issues:
Whether or not the Deed of Real Estate Mortgage was void?
Whether or not the loan was already extinguished, assuming it was valid.
Held: No, the Deed of REM was valid. There is no forgery. The real issue is fraud and
not forgery. Ocampo claimed that she was led to believe by Landbank that the form
she signed was to process her PhP5M loan application and not to secure the subject
20% of the loan. Granting for the sake of argument that there was fraud, such
contract was merely voidable where an action should have been instituted within 4
years from discovery.
No, the loan was not yet extinguished. The loan was between Ocampo and
Landbank. Yet, she did not include Landbank as party to the Deed of Assignment
despite evidence on record showing her indebtedness to Landbank. Ocampo hastily
executed the Deed of Assignment and conveyed some of her properties to

Quedancor without prior notice to Landbank. Dacion en pago is the delivery and
transmission of ownership of a thing by the debtor to the creditor as an accepted
equivalent of the performance of an obligation. The required consent is absent in
this case. Landbank had no participation much less consented to the execution of
the Deed of Assignment. Hence, no extinguishment of loan can be had.

NICOLAS SANCHEZ,
vs.
SEVERINA RIGOS,
G.R. No. L-25494
June 14, 1972

Facts: Nicolas Sanchez and Severina Rigos executed an instrument entitled Option
to Purchase wherein Mrs. Rigos agreed, promised and committed to sell to Mr.
Sanchez a parcel of land for the amount of P1,510 within two years from the date of
the instrument, with the understanding that the said option shall be deemed
terminated and elapsed if Mr. Sanchez shall fail to exercise his right to buy the
property within the stipulated period. Mrs. Rigos agreed and committed to sell and
Mr. Sanchez agreed and committed to buy. But there is nothing in the contract to
indicate that her agreement, promise and undertaking is supported by a
consideration distinct from the price stipulated for the sale of the land. Mr. Sanchez
has made several tenders of payment in the said amount within the period before
any withdrawal from the contract has been made by Mrs. Rigos, but was rejected
nevertheless.
Issue: Can an accepted unilateral promise to sell without consideration distinct
from the price be withdrawn arbitrarily?
Held: No, an accepted promise to sell is an offer to sell when accepted becomes a
contract of sale. Since there may be no valid contract without a cause or
consideration, the promisor is not bound by his promise and may, accordingly,
withdraw it. Pending notice of its withdrawal, his accepted promise partakes,
however, of the nature of an offer to sell which, if accepted, results in a perfected
contract of sale. This view has the advantage of avoiding a conflict between Articles
1324 on the general principles on contracts and 1479 on sales of the Civil
Code. Article 1324. When the offeror has allowed the offeree a certain period to
accept, the offer may be withdrawn at any time before acceptance by
communicating such withdrawal, except when the option is founded upon
consideration, as something paid or promised.

SPS. FELIPE AND LETICIA CANNU

vs.
SPS. GIL AND FERNANDINA GALANG AND NATIONAL HOME MORTGAGE
FINANCE CORPORATION,
G.R. No. 139523. May 26, 2005

Facts: Spouses Gil and Fernandina Galang agreed to sell their house and lot subject
to mortgage with the National Home Mortgage Finance Corp (NHMFC).Petitioner
Leticia Cannu agreed to buy the property for 120K & to assume the mortgage
obligations with the NHMFC. A deed of sale & assumption of mortgage was executed
& petitioners immediately took possession & occupied the house & lot. Despite
requests from Adelina R. Timbang (attorney-in-fact) and Fernandina Galang to pay
the balance of P45, 000.00 or in the alternative to vacate the property in question,
petitioners refused to do so. Because the Cannus failed to fully comply with their
obligations, respondent Fernandina Galang, on 21 May 1993, paid P233K as full
payment of her remaining mortgage loan with NHMFC.8 yrs had already elapsed
and petitioners have not yet complied with the obligation.The RTC ordered the deed
of sale with Assumption of Mortgage as rescinded as well as ordered mutual
restitution.
Issues:Whether or not t he action for rescission is subsidiary.
Held: No, The provision that applies in the case at bar is Article 1191. The
subsidiary character of the action for rescission applies to contracts enumerated in
Articles 138148 of the Civil Code.

The rescission in this case is not predicated on injury to economic interests of the
party plaintiff but on the breach of faith by the defendant, that violates the
reciprocity between the parties. It is not a subsidiary action. The rescission in 1191
is a principal action retaliatory in character, it being unjust that a party be held
bound to fulfill his promises when the other violates his.

Jayson Dandan
VS.
Arfel Realty & Management Corp.
G.R. No. 173114 September 8, 2008
Facts:On 7 March 1992, Arfel Realty, represented by its president and general
manager Rafael Felix, sold to Dandan a parcel of land situated in Barrio Pamplona,
Las Pias, Metro Manila for the price of P320,000.00. The sale is evidenced by a
Deed of Absolute Sale. The lot was previously the subject of a Contract to Sell[5]
executed between Arfel Realty and the spouses Emerita and Carlito Sauro (the
Sauros). Under this contract, the Sauros undertook to pay the purchase price of
P690,000.00, with a 50% down payment of P345,000.00 and the balance payable in
sixty (60) equal installments of P9,528.52 including interest of 22% per annum.
While the Sauros claimed to have fully paid for the subject lot in the total amount of
P799,601.59 and demanded the delivery of title, Arfel Realty asserted that the
several checks drawn by the Sauros to effect payment were either dishonored by
the bank due to insufficiency of funds or were drawn against a closed account. Thus,
the Sauros allegedly still had an unpaid balance of P299,614.23.Dandan filed his
Position Paper, contending that the HLURB had no jurisdiction over the third-party
complaint as the case did not involve the sale of a house and lot but rather a
personal action for indemnification and payment of attorneys fees. He also
questioned the validity of the Agreement in that it was not supported by any
valuable consideration. He argued that he affixed his signature to the Agreement
unaware of its legal import and without any intention to be bound by it.
Issues:Whether or not Dandan is bound by the Agreement, the validity of which
devolves on the concurrence of three requisites, namely: (1) consent of the
contracting parties; (2) object certain which is the subject matter of the contract;
and (3) cause of the obligation which is established.
Held: While there is no dispute as to the object of the contract, Dandan harps on
vitiation of consent and lack of consideration to exculpate himself from the legal
consequences of the Agreement. He claims that he was merely implored to sign the
Agreement as an act of accommodation, not understanding its legal import and
never intending to assume any further liability other than what he paid for under
the Deed of Absolute Sale. The determination of the existence of a valid consent
principally rests on the provisions of the Agreement itself. Of course, the finding
that Dandan was made aware of the previous transaction between Arfel Realty and
the Sauros prior to the signing of the Agreement is a great boost. Arfel Realtys
assertion that Dandan knew of the previous contract between it and the Sauros was
not rebutted by the latter. Without doubt, Dandan is bound by the terms of the
Agreement, as well as by all the necessary consequences thereof. Courts are not
authorized to extricate parties from the necessary consequences of their acts, and

the fact that the contractual stipulations may turn out to be financially
disadvantageous will not relieve parties thereto of their obligations.

MANUEL C. PAGTALUNAN,
vs.
RUFINA DELA CRUZ VDA. DE MANZANO,
G.R. No. 147695
September 13, 2007
Facts:Patricio Pagtalunan entered into a Contract to Sell with private respondent
Manzano over a house and lot for P17K, to be paid in installments.P1500 as down
payment upon execution of the Contract P150 as equal monthly installments until
the full price is paid .The contract provides that in case of default in the payment of
any of the installments for 90 days after its due date, the contract would be
automatically rescinded without need of judicial declaration, and that all payments
made and all improvements done on the premises by respondent would be
considered as rentals for the use and occupation of the property or payment for
damages suffered, and respondent was obliged to peacefully vacate the premises
and deliver the possession thereof to the vendor. Manzano paid only P12,950. She
allegedly stopped paying after December 1979 without any justification or
explanation. Pagtalunan asserted that when respondent ceased paying her
installments, her status of buyer was automatically transformed to that of a lessee.
Therefore, she continued to possess the property by mere tolerance of Patricio and,
subsequently, of petitioner. Pagtalunan issued a demand letter for Manzano to
vacate the premises of the property.
Issue: Whether or not Pagtalunan may validly rescind the contract to sell on account
that the Manzano stopped paying the installments
Held: . No, the rescission must be notarial. The agreement could not be
automatically rescinded since there was delivery to the buyer. A judicial
determination of rescission must be secured by petitioner as a condition precedent
to convert the possession de facto of respondent from lawful to unlawful.
R.A No. 6552, which governs sales of real estate on installment, is applicable in the
resolution of this case. Now, it is incumbent upon petitioner to prove that the
Contract to Sell had been cancelled in accordance with R.A. No. 6552. R.A. No. 6552,
which requires a notarial act of rescission and the refund to the buyer of the full
payment of the cash surrender value of the payments on the property.
There being no valid cancellation of the Contract to Sell, Manzano has the right to
continue occupying the property subject of the Contract to Sell and the dismissal of
the unlawful detainer case was proper.
But considering that the Contract to Sell was not cancelled by the vendor validly in
accordance with R.A. No. 6552 and after 22 years of continuous possession of the

property, it is only right and just to allow respondent to pay her arrears and settle
the balance of the purchase price, subject to interests.