1.
Essential NCC 1318
Art. 1318. There is no contract unless the following requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established.
a) Consent of the contracting parties NCC 1319
Art. 1319. Consent is manifested by the meeting of the offer and the
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.
Acceptance made by letter or telegram does not bind the offerer except
from the time it came to his knowledge. The contract, in such a case, is
presumed to have been entered into in the place where the offer was
made.
b) Offer NCC 1321, 1323-1326
Art. 1321. The person making the offer may fix the time, place, and
manner of acceptance, all of which must be complied with.
Art. 1323. An offer becomes ineffective upon the death, civil interdiction,
insanity, or insolvency of either party before acceptance is conveyed.
Art. 1324. When the offerer 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accept, the offer may be withdrawn at any time before acceptance by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
a consideration, as something paid or promised.
Art. 1325. Unless it appears otherwise, business advertisements of things
for sale are not definite offers, but mere invitations to make an offer.
Art. 1326. Advertisements for bidders are simply invitations to make
proposals, and the advertiser is not bound to accept the highest or lowest
bidder, unless the contrary appears.
c) Acceptance NCC 1320, 1322, 1319
Art. 1320. An acceptance may be express or implied.
Art. 1322. An offer made through an agent is accepted from the time
acceptance is communicated to him.
Art. 1319. Consent is manifested by the meeting of the offer and the
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.
C.W. ROSENSTOCK , as administrator of H.W. Elser v. EDWIN BURKE |
G.R. No. 20732 | 26 Sept 1974 | Avacena J.
Facts: The defendant Edwin Burke owned a motor yacht, known as
Bronzewing, which he acquired in Australia in the year 1920 for the purpose
of selling it here. This yacht was purely for recreation and as no purchaser
presented himself, it had been moored for several months until the plaintiff H.
W. Elser, at the beginning of the year 1922, began negotiations with the
defendant for the purchase thereof. The defendant called at the office of the
plaintiff to speak with him about the matter and as a result of the interview
held between them the plaintiff in the presence of the defendant wrote a letter
addressed to the latter which is literally as follows:
"MY DEAR MR. BURKE:
"In connection with the yacht Bronzewing, I am
in position and am willing to entertain the purchase of
it under the following terms:
"(a) The purchase price to be P80,000, Philippine
currency.
"(b) Initial payment of P10,000 to be made within
sixty (60) days.
"(c) Payment of the balance to be made in
installments of P5,000 per month, with interest on deferred
payments at 9 per cent payable semiannually.
"(d) As security for the above, I am to deposit with
you P80,000, in stock of the J. K. Pickering Co.,
commercial value P400,000, book value P600,000.
 Statement covering this will be furnished you on request.
Issue: Was there an offer here that was certain, an offer which, if accepted,
could compel the writer to really buy the yacht?
Ratio: No. The letter begins as follows: "In connection with the yacht
Bronzewing, I am in position and am willing to entertain the purchase of it
under the following terms . . ." The whole question is reduced to determining
what the intention of the plaintiff was in using that language.
To convey the idea of a resolution to pursue, a man of ordinary intelligence
and common culture would use these clear and simple words, I offer to
purchase, I want to purchase, I am in position to purchase. And the stronger
is the reason why the plaintiff should have expressed his intention in the
same way, because, according to the defendant, he was a prosperous and
progressive merchant. It must be presumed that a man in his transactions in
good faith uses the best means of expressing his mind that his intelligence
and culture permit so as to convey and exteriorize his will faithfully and
unequivocally. But the plaintiff instead of using in his letter the expression I
want to purchase, I offer to purchase, I am in position to purchase, or other
similar language of easy and unequivocal meaning, used this other, I am in
position and am willing to entertain the purchase of the yacht. The word
"entertain" applied to an act does not mean the resolution to perform said,
act, but simply a position to deliberate for deciding to perform or not to
perform said act. Taking into account only the literal and technical meaning
of the word "entertain," it seems to us clear that the letter of the plaintiff
cannot be interpreted as a definite offer to purchase the yacht, but simply a
position to deliberate whether or not he would purchase the yacht. It was
but a mere invitation to a proposal being made to him, which might be
accepted
The expression "I am in position to entertain the purchase of the vessel upon
the following terms . . ." does not mean a definite offer to purchase, but
merely the idea that a proposition be made to him which he would accept or
reject according to the result of his deliberation.
Our conclusion is that the letter of the plaintiff was not a definite offer and that
the plaintiff is bound to pay the amount of the repairs of the yacht in exchange
for the use thereof.
NICOLAS SANCHEZ v. SEVERINA RIGOS | GR No. L-25494, Jun 14, 1972
| CONCEPCION, C.J
Facts: plaintiff Nicolas Sanchez and defendant Severina Rigos executed an
instrument, entitled "Option to Purchase," whereby Mrs. Rigos "agreed,
promised and committed * * * to sell" to Sanchez, for the sum of P1,510.00, a
parcel of land situated in the barrios of Abar and Sibot, municipality of San
Jose, province of Nueva Ecija, and more particularly described in Transfer
Certificate of Title No. NT-12528 of said province, within two (2) years from
said date, with the understanding that said option shall be deemed
"terminated and elapsed," if "Sanchez shall fail to exercise his right to buy the
property" within the stipulated period.
Several tenders of payment of the sum of P1,510.00, were made by Sanchez
within said period,but were rejected by Mrs. Rigos, on March 12, 1963, the
Sanchez deposited said amount with the Court of First Instance of Nueva
Ecija and commenced against the latter the present action, for specific
performance and damages.
In his complaint plaintiff alleges that, by virtue of the option under
consideration, "defendant agreed and committed to sell" and "the plaintiff
agreed and committed to buy" the land described in the option, Hence,
plaintiff maintains that the promise contained in the contract is "reciprocally
demandable," pursuant to the first paragraph of said Article 1479.
Issue: WON Rigos is bound by Sanchez’ acceptance even though the option
is not supported by a separate consideration.
Ratio: Yes. The Supreme Court affirmed the lower court’s decision.
The instrument executed in 1961 is not a "contract to buy and sell," but
merely granted SANCHEZ an option to buy, as indicated by its own title
"Option to Purchase." The option did not impose upon Sanchez the
obligation to purchase Rigos' property. Rigos "agreed, promised and
committed" herself to sell the land to Sanchez, but there is nothing in the
contract to indicate that her aforementioned agreement, promise and
undertaking is supported by a consideration "distinct from the price" stipulated
for the sale of the land.
Article 1479 refers to "an accepted unilateral promise to buy or to sell." 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.
CAPALLA v. COMELEC | G.R. Nos. 201112, 201121, 201127, 201413 | 23
Oct 2013 | Peralta J.
Facts: The Comelec and Smartmatic-TIM entered into a Contract for the
Provision of an Automated Election System for the May 10, 2010
Synchronized National and Local Elections (AES Contract) which is a
Contract of Lease with Option to Purchase (OTP) the goods listed therein
consisting of the Precinct Count Optical Scan (PCOS), both software and
hardware. The Comelec opted not to exercise the same except for 920 units
of PCOS machines. Subsequently, the Comelec issued Resolution resolving
to seriously consider exercising the OTP subject to certain conditions. It
issued another Resolution resolving to exercise the OTP in accordance with
the AES Contract.Later, the COMELEC issued Resolution resolving to accept
Smartmatic-TIM’s offer to extend the period to exercise the OTP. The
agreement on the Extension of the OTP under the AES Contract (Extension
Agreement) was eventually signed. Finally, it issued Resolution resolving to
approve the Deed of Sale between the Comelec and Smartmatic-TIM to
purchase the latter’s PCOS machines to be used in the upcoming elections.
The Deed of Sale was forthwith executed.
Issue: W/N the assailed resolutions and transactions are valid.
Ratio: Yes. The SC decided in favor of respondents and placed a stamp of
validity on the assailed resolutions and transactions entered into. Based on
the AES Contract, the Court sustained the parties’ right to amend the same by
extending the option period. Considering that the performance security had
not been released to Smartmatic-TIM, the contract was still effective which
can still be amended by the mutual agreement of the parties, such
amendment being reduced in writing. To be sure, the option contract is
embodied in the AES Contract whereby the Comelec was given the right to
decide whether or not to buy the subject goods listed therein under the terms
and conditions also agreed upon by the parties.
Clearly, under the AES Contract, the Comelec was given until December 31,
2010 within which to exercise the OTP the subject goods listed therein
including the PCOS machines. The option was, however, not exercised within
said period. But the parties later entered into an extension agreement giving
the Comelec until March 31, 2012 within which to exercise it. With the
extension of the period, the Comelec validly exercised the option and
eventually entered into a contract of sale of the subject goods. The extension
of the option period, the subsequent exercise thereof, and the eventual
execution of the Deed of Sale became the subjects of the petitions
challenging their validity in light of the contractual stipulations of respondents
and the provisions of RA 9184.
As the Court simply held in the assailed decision that the moment the
performance security is released, the contract would have ceased to exist.
However, since it is without prejudice to the surviving provisions of the
contract, the warranty provision and the period of the option to purchase
survive even after the release of the performance security. While these
surviving provisions may have different terms, in no way can we then consider
the provision on the OTP separate from the main contract of lease such that it
cannot be amended under Article 19. Thus, not only the option and warranty
provisions survive but the entire contract as well. In light of the contractual
provisions, the SC sustained the amendment of the option period.
MALBAROSA V. CA G.R. No. 125761, April 30, 2003
Petitioner: Salvador Malbarosa
Respondent: CA and SEA Development CORP (SEADC)
Nature: Petition for review on certiorari of the CA’s decision in affirming the
RTC’s decision that there existed no perfected contract between Malbarosa
and SEADC.
FACTS:
1. Malbarosa was the president of Philtectic Corporation which was
wholly-owned and controlled by SEADC.
2. SEADC assigned to Malbarosa one of its vehicles - Mitsubishi Gallant
Super Saloon car and issued membership certificates in the
Architectural Center.
3. Malbarosa told Senan Valero, vice-chairman of Philtectic Corporation,
his desire to retire from SEADC and requested to be given his
incentive compensation as president of Philtectic to him. And so he
sent his resignation and request for his incentive compensation.
4. SEADC signed a letter-offer addressed to Malbarosa accepting his
resignation and that he was entitled to an incentive compensation of
P 251,057.67 and proposed that such amount be satisfied through
transferring the Mitsubishi Saloon Car and the membership share of
subsidiary in the Architectural Center.
5. SEADC required that if Malbarosa agrees to the offer, he had to affix
his conformity on the space provided thereof and the date on the right
bottom portion of the letter.
6. Malbarosa was dismayed when he read the letter and learned that he
was being offered an incentive compensation of only P251,057.67.
He refused to sign the letter-offer on the space provided.
7. More than 2 weeks had lapse, but still no signature was given.
Philtectic withdrew the letter-offer and demanded Malbarosa the
 return of the car and his membership certificate.
8. Malbarosa replied that he cannot comply with said demand as he had
already accepted the letter-offer.
9. With such refusal, SEADC filed a complaint for recovery of persnal
property with replvin with damages. The trial court granted the writ of
replevin and the sheriff took possession of the vehicle.
The trial court and the CA ruled that there existed no perfected contract
between SEADC and Malbarosa and the latter to pay SEADC lease rentals
for the use of the saloon car. Thus this petition.
Issue: WON there was a valid acceptance on Malbarosa’s part of the letter-
offer of SEADC.
RULING:
No. Article 1318 of the Civil codes provides the essential requisites of a
contract; Consent of the contracting parties, Object certain which is the
subject matter of the contract and Cause of the obligation which is
established. 
 September 3, 1986). The bank received and regarded these amounts as
Acceptance of an offer must be made known to the offeror. Unless the offeror
knows of the acceptance, there is no meeting of the minds of the parties, no
real concurrence of offer and acceptance. The offeror may withdraw its offer
and revoke the same before acceptance thereof by the offeree. The contract
is perfected only from the time an acceptance of an offer is made known to
the offeror. The contract is not perfected if the offeror revokes or withdraws its
offer and the revocation or withdrawal of the offeror is the first to reach the
offeree. The acceptance of the offeree of the offer after knowledge of the
revocation or withdrawal of the offer is inefficacious.
SEADC required Malbarosa to accept the offer by affixing his signature on the
space provided in said letter- offer and writing the date of said acceptance,
thus foreclosing an implied acceptance or any other mode of acceptance
Malbarosa.
It must be underscored that there was no time frame fixed by SEADC for
Malbarosa to accept or reject its offer. When the offeror has not fixed a period
for the offeree to accept the offer, and the offer is made to a person present,
the acceptance must be made immediately.
The petition is dismissed and the CA’s decision is affirmed.
Traders Royal Bank v. Cuison Lumber Co., Inc.,
G.R. No. 174286|June 5, 2009|Brion J.
Facts: Cuison Lumber Co., Inc.(CLCI) through its then president, Roman
Cuison Sr., obtained two loans from the bank. The loans were secured by a
real estate mortgage over a parcel of land
CLCI failed to pay the loan, prompting the bank to extrajudicially foreclose the
mortgage on the subject property. The bank was declared the highest bidder
at the public auction that followed, conducted on August 1, 1985.
In a series of written communications between CLCI and the bank, CLCI
manifested its intention to restructure its loan obligations and to repurchase
the subject property.
Mrs. Cuison, the widow and administratrix of the estate of Roman Cuison
Sr., wrote the bank's Officer-in-Charge, Remedios Calaguas, a letter
indicating her offered terms of repurchase.
CLCI paid the bank P50,000.00 (on August 8, 1986) and P85,000.00 (on
"earnest money" for the repurchase of the subject property.
On October 20, 1986, the bank sent Atty. Roman Cuison, Jr.
(Atty. Cuison), as the president and general manager of CLCI, a letter
informing CLCI of the bank's board of directors' resolution of October 10,
1986 (TRB Repurchase Agreement), laying down the conditions for the
repurchase of the subject property:
CLCI failed to comply with the above terms notwithstanding the extensions of
time given by the bank.
On August 28, 1987, Atty. Cuison, by letter, requested that CLCI's
outstanding obligation of P1,221,075.61 (as of July 31, 1987) be reduced to
P1 million, and the amount of P221,075.61 be condoned by the bank.
To show its commitment to the request, CLCI... paid the bank P100,000.00
and P200,000.00 on August 28, 1987. The bank credited both payments as
earnest money.
A year later, CLCI inquired about the status of its request.
The bank responded that the request was still under consideration by the
bank's Manila office.
On September 30, 1988, the bank informed CLCI that it would resell the
subject property at an offered price of P3... million, and gave CLCI 15 days to
make a formal offer
On October 26, 1988, CLCI offered to repurchase the subject property for
P1.5 million, given that it had already tendered the amount of P400,000.00
as... earnest money.
Through its counsel, CLCI demanded... that the bank rectify the repurchase
agreement to reflect the true consideration agreed upon for which the earnest
money had been given.
CLCI and Mrs. Cuison, on February 10, 1989, filed with the RTC a complaint
for breach of contract, specific performance, damages, and attorney's fees
against the bank.
the bank filed its Answer alleging that the TRB repurchase... agreement was
already cancelled given CLCI's failure to comply with its provisions
Issue: W/N there is a presence or absence of consent as a requisite for a
perfected contract to repurchase the subject property
Ratio: The facts of the present case, although ambivalent in some respects,
point on the whole to the conclusion that both parties agreed to the
repurchase of the subject property.
These indicators notwithstanding, we find that CLCI accepted the terms of the
TRC Repurchase Agreement and thus unqualifiedly accepted the bank's
counter-offer under the TRB Repurchase Agreement and, in fact, partially
executed the agreement
(a) The letter-reply dated November 29, 1986 of Atty. Cuison, as president
and general manager of CLCI, to the bank (in response to the bank's demand
letter dated November 27, 1986 to pay 20% of the bid price); CLCI requested
an extension of time, until the end... of December 1986, to pay its due
obligation;[28]
(b) Mrs. Cuison's letter-reply of February 3, 1987 (to the bank's letter of
January 13, 1987) showed that she acknowledged CLCI's failure to comply
with its requested extension and proposed a new payment scheme that would
be reasonable given CLCI's critical... economic difficulties; Mrs. Cuizon
tendered a check for P135,091.57, which represented 50% of the 20% bid
price;[29]
(c) The CLCI's continuous payments of the repurchase price after their receipt
of the bank's letter of October 20, 1986;
(d) CLCI's possession of the subject property pursuant to paragraph 5 of the
TRB Repurchase Agreement, notwithstanding the absence of a signed
contract to sell between the parties;
We counted the following facts, too, as indicators leading to the conclusion
that a perfected contract existed: CLCI did not raise any objection to the terms
and conditions of the TRB Repurchase Agreement, and instead,
unconditionally paid without protests or... objections... we conclude that while
there was a perfected contract between the parties, the... bank effectively
cancelled the contract when it communicated with CLCI that it would sell the
subject property at a higher price to third parties, giving CLCI 15 days to make
a formal offer, and disregarding CLCI's counter-offer to buy the subject
property for P1.5 million.
We note, additionally, that the TRB Repurchase Agreement is in the nature of
a contract to sell where the title to the subject property remains in the bank's
name, as the vendor, and shall only pass to the respondents, as vendees,
upon the full payment of the... repurchase price.
Viewed in this light, the bank cannot be compelled to perform its obligations
under the TRB Repurchase Agreement that has been rendered ineffective by
the... respondents' non-performance of their own obligations.
Second, the respondents violated the terms and conditions of the TRB
Repurchase Agreement when they failed to pay their obligations under the
agreement as these obligations fell due.
The respondents are ordered to... vacate the subject property and to restore
its possession to the petitioner bank.
Principles:
a binding contract may exist between the parties whose minds have met,
although they did not affix their signatures to any written document
The settled rule for contracts to sell is that the full payment of the purchase
price is a positive suspensive condition; the failure to pay in full is not to be
considered a breach, casual or serious, but simply an event that... prevents
the obligation of the vendor to convey title from acquiring any obligatory force.
TALAMPAS v MOLDEX REALTY G.R. No. 170134 | June 17 2015 | Brion J.
Facts: Facts: The petitioner is the owner and general manager of Angel V.
Talampas, Jr. Construction (AVTJ Construction), a business engaged in
general engineering and building. On December 16, 1992, the petitioner
entered into a contract with the respondent to develop a residential
subdivision known as the Metrogate Silang Estates, for the contract price of
P10,500,000.00, to be paid by the respondent through progress billings. The
respondent made an initial down payment of P500,000.00 at the start of the
contract.
On May 14, 1993, the respondent, through Engr. Almeida, ordered the
suspension of construction work on the site, instead of terminating the project
in accordance with the respondent's instructions in its (belatedly received)
April 23, 1993 letter to the petitioner. The respondent alleged that, on May 21,
1993, its Vice-President Engr. Po and Engr. Talampas of AVTJ Construction
met to discuss the possible termination of their contract or the suspension of
construction works on the Metrogate project. In this meeting, Engr. Talampas
chose to terminate their contract.
On June 1, 1993, the petitioner wrote Engr. Almeida to ask for the
confirmation of the Metrogate project's status. On June 10, 1993, the
petitioner received from the respondent the amount of P474,679.28 as
payment for Progress Billing No. 3 (which billing the petitioner requested in a
letter to the respondent dated May 31, 1993). On June 15, 1993, the
petitioner wrote Engr. Po, informing the latter that he had not yet received
from the respondent the letter officially terminating their contract. On June 16,
1993, the petitioner received from the respondent a letter dated April 23,
1993, expressing the respondent's
decision to terminate the parties' contract. The petitioner alleged that it was
only then (June 16, 1993) that he was formally informed of the respondent's
decision to terminate their contract.
On August 13, 1993, the petitioner received from the respondent the amount
of P297,090.43 as payment for earthworks and road base preparations done
on the Metrogate subdivision as of July 12, 1993 (Progress Billing No. 4). On
August 18, 1993, the petitioner sent a demand letter to the respondent for the
payment of P1,485,000.00 for unpaid construction equipment rentals from
May 14, 1993 to June 16, 1993, and P2,100,000.00 as unrealized profits,
among others. Meanwhile, the petitioner received from the respondent the
amount of P209,606.56 for the release of all "retention fees" withheld by the
respondent from the petitioner's billings.
On November 5, 1993, the petitioner filed a complaint for breach of contract
against the respondent. This is the root complaint of the present case
Issue:
1. W/N the contract termination was mutual.
2. W/N the lack of DAR conversion clearance which was not disclosed to the
petitioner prior to the bidding and execution of the contract constitutes bad
faith or fraud on the part of respondent.
Ratio:
1. No. The court ruled that that the respondent failed to comply with its
contractual stipulations on the unilateral termination when it terminated their
contract due to the redesign of the Metrogate Silang Estates' subdivision plan.
The respondent could not have validly and unilaterally terminated its contract
with the petitioner, as the latter has not committed any of the stipulated acts of
default. In fact, the petitioner at that time was willing and able to perform his
obligations under their contract.
Aside from self-serving testimony, the respondent failed to prove the
petitioner's consent, express or implied, to the termination of the subject
contract. The respondent contended that the petitioner's request for an official
letter of termination was proof that the latter consented to the termination of
their contract. We disagree with this view. The request for an official letter of
termination does not necessarily mean consent to the termination; by itself,
the request for an official letter of termination does not really signify an
agreement; it was nothing more than a request for a final decision from the
respondent.
2. No. Nothing in the evidence showed that the respondent was under any
legal or contractual obligation to disclose the project's conversion clearance
status to the petitioner, or that the presence of a conversion clearance was a
consideration for the petitioner's entry into the contract with the respondent.
Article 1339 of the Civil Code provides that "failure to disclose facts, when
there is a duty to reveal them, as when the parties are bound by confidential
relations, constitutes fraud." Otherwise stated, the innocent non-disclosure of
facts, when no duty to reveal them exists, does not amount to fraud.
d) Object NCC 1347-1349
Art. 1347. All things which are not outside the commerce of men, including future
things, may be the object of a contract. All rights which are not intransmissible may
also be the object of contracts.
No contract may be entered into upon future inheritance except in cases expressly
authorized by law.
All services which are not contrary to law, morals, good customs, public order or
public policy may likewise be the object of a contract.
Art. 1348. Impossible things or services cannot be the object of contracts.
Art. 1349. The object of every contract must be determinate as to its kind. 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.
Blas v Santos | GR No. L-14070 | 1961 | Labrador J.
Facts: This action was instituted by plaintiffs against the administration of the
estate of Maxima Santos, to secure a judicial declaration that one-half of the
properties left by Maxima Santos Vda. de Blas, the greater bulk of which are
set forth and described in the project of partition presented in the proceedings
for the administration of the estate of the deceased Simeon Blas, had been
promised by the deceased Maxima Santos to be delivered upon her death
and in her will to the plaintiffs, and requesting that the said properties so
promised be adjudicated to the plaintiffs.The alleged promise of the deceased
Maxima Santos is contained in a document executed by Maxima Santos on
December 26, 1936. The complaint also alleges that the plaintiffs are entitled
to inherit certain properties enumerated in paragraph 3 thereof, situated in
Malabon, Rizal and Obando, Bulacan, but which properties have already
been included in the inventory of the estate of the deceased Simeon Blas and
evidently partitioned and conveyed to his heirs in the proceedings for the
administration of his estate. Spouses Simeon Blas and Marta Cruz have three
children they also have grandchildren. One year after Marta Cruz died, Blas
married Maxima Santos but they don’t have children and the properties that
he and his former wife acquired during the first marriage were not liquidated.
Simeon Blas executed a will disposing half of his properties in favor of
Maxima the other half for payment of debts, Blas also named a few devisees
and legatees therein. In lieu of this, Maxima executed a document whereby
she intimated that she understands the will of her husband; that she promises
that she’ll be giving, upon her death, one-half of the properties she’ll be
acquiring to the heirs and legatees named in the will of his husband; that she
can select or choose any of them depending upon the respect, service, and
treatment accorded to her by said heirs. On 1937 Simeon Blas died while
Maxima died on 1956 and Rosalina Santos became administrator of her
estate. In the same year, Maria Gervacio Blas, child of Simeon Blas in his first
marriage, together with three other grandchildren of Simeon Blas (heirs of
Simeon Blas), learned that Maxima did not fulfill her promise as it was learned
that Maxima only disposed not even one-tenth of the properties she acquired
from Simeon Blas. The heirs are now contending that they did not partition
Simeon Blas’ property precisely because Maxima promised that they’ll be
receiving properties upon her death.
Issue: Whether or not the heirs can acquire the properties that Maxima
promised with them.
Ratio: Yes, they can acquire the properties that Maxima promised with them
because it was stated in Art. 1347 that “No contract may be entered into upon
future inheritance except in cases expressly authorized by law.” because a
document signed by the testator's wife, promising that she would respect and
obey all the dispositions in the latter's will, and that she would hold one-half of
her share in the conjugal assets in trust for the heirs and legatees of her
husband in his will, with the obligation of conveying the same to such of his
heirs or legatees as she might choose in her last will and testament, is a
compromise and at the same time a contract with sufficient cause or
consideration.||In this case the contract was authorized by law because the
promise made by Maxima to their heirs before she died is a valid reason and
it should be enforceable upon her death and her heirs can now acquire the
succession of the properties in issue.
It is evident that Maxima Santos did not comply with her obligation to devise
one-half of her conjugal properties to the heirs and legatees of her husband.
She does not state that she had complied with such obligation in her will. If
she intended to comply therewith by giving some of the heirs of Simeon Blas
the properties mentioned above, the most that can be considered in her favor
is to deduct the value of said properties from the total amount of properties
which she had undertaken to convey upon her death.
TANEDO v CA | 252 SCRA 80 | 1996 | Ponente
Facts: Lazaro Tañedo executed a deed of absolute sale in favor of Ricardo
Tañedo and Teresita Barrera in which he conveyed a parcel of land which he
will inherit. Upon the death of his father he executed an affidavit of conformity
to reaffirm the said sale. He also executed another deed of sale in favor of the
spouses covering the parcel of land he already inherited. Ricardo registered
the last deed of sale in the registry of deeds in their favor.
Ricardo later learned that Lazaro sold the same property to his children
through a deed of sale.

Issue: W/N the Tañedo spouses have a better right over the property against
shall not invalidate a contract, unless there has been fraud, mistake or undue
the children of Lazaro Tañedo.
influence.
Ratio: Yes. Since a future inheritance generally cannot be a subject of a
contract, the deed of sale and the affidavit of conformity made by Lazaro has
no effect. The subject of dispute therefore is the deed of sale made by him in
favor of spouses Tañedo and another to his children after he already legally
acquired the property.
Thus, although the deed of sale in favor of private respondents was later than
the one in favor of petitioners, ownership would vest in the former because of
the undisputed fact of registration. On the other hand, petitioners have not
registered the sale to them at all.
Petitioners contend that they were in possession of the property and that
private respondents never took possession thereof. As between two
purchasers, the one who 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.
e) Cause NCC 1350-1355
Cause of Contracts
ARTICLE 1350. In onerous contracts the cause is understood to be, for each
contracting party, the prestation or promise of a thing or service by the other; in
remuneratory ones, the service or benefit which is remunerated; and in contracts
of pure beneficence, the mere liberality of the benefactor.
ARTICLE 1351. The particular motives of the parties in entering into a contract are
different from the cause thereof.
ARTICLE 1352. Contracts without cause, or with unlawful cause, produce no
effect whatever. The cause is unlawful if it is contrary to law, morals, good
customs, public order or public policy.
ARTICLE 1353. The statement of a false cause in contracts shall render them
void, if it should not be proved that they were founded upon another cause which
is true and lawful.
ARTICLE 1354. Although the cause is not stated in the contract, it is presumed
that it exists and is lawful, unless the debtor proves the contrary.
ARTICLE 1355. Except in cases specified by law, lesion or inadequacy of cause
CONCHITA LIGUEZ, petitioner, vs.THE HONORABLE COURT OF
APPEALS, MARIA NGO VDA. DE LOPEZ, ET AL., respondents.
| L-11240| 18 Dec 1957 | Reyes, J.
FACTS: Petitioner Liguez filed a complaint against herein respondents, the
widow and heirs of the late Salvador Lopez, for the recovery of land donated
to her by the decedent Salvador Lopez.
Petitioner argues that it is the legal owner of the land pursuant to a deed of
donation of the said land in her favor. However, the respondents argue that
the donation was null and void for having an illicit causa or consideration. The
donation was allegedly made by Salvador Lopez (who was already married at
that time with Maria Ngo) with the motive to enter into marital relations with
Conchita Liguez. At the time the deed of donation was ratified, Liguez was still
16 years old, a minor. Respondents further aver that the donation was made
in view of the desire of Salvador Lopez, a man of mature years, to have
sexual relations with Liguez. Liguez and Lopez lived together in the house
built upon such subject land until Lopez was killed on 1943 by guerrillas who
believed him to be pro-Japanese.
In response to the arguments of the respondents, the petitioner contends that
the donation cannot be deemed void for having an illicit cause because under
Art 1274 of the Civil Code in effect at that time, "in contracts of pure
beneficence the consideration is the liberality of the donor", and that liberality
per se can never be illegal, since it is neither against law or morals or public
policy.
ISSUE: Whether or not the deed of donation of Salvador Lopez in favor of
Liguez is based from an illicit cause?
HELD: Yes. It was an illicit motive. However, even if it was an illicit motive, the
petitioners having privity over the decedent’s estate, are procedurally barred
from questioning the validity of the deed of donation. Hence, the remedy of
the heirs is to assert their compulsory shares as legitime (i.e., ensure that
what was donated is only from the free portion of the decedent’s estate).Case
remanded to lower court for proper determination of the decedent’s free
portion in his estate.
On illicit cause: The Supreme Court explained that: the motive may be
regarded as causa when it predetermines the purpose of the contract. In
the present case, it is scarcely disputable that Lopez would not have
conveyed the property in question had he known that appellant would refuse
to cohabit with him; so that the cohabitation was an implied condition to the
donation, and being unlawful, necessarily tainted the donation itself.Lopez
could not donate the entirety of the property in litigation, to the prejudice of his
wife Maria Ngo, because said property was conjugal in character and the right
of the husband to donate community property is strictly limited by law.
On determining the share of the donation: The heirs’ right as a legitime out
of his estate [should not be prejudiced], since the legitime is granted them by
the law itself, over and above the wishes of the deceased. Hence, the forced
heirs are entitled to have the donation set aside in so far as in officious: i.e., in
excess of the portion of free disposal (Civil Code of 1889, Articles 636, 654)
computed as provided in Articles 818 and 819, and bearing in mind that
"collationable gifts" under Article 818 should include gifts made not only in
favor of the forced heirs, but even those made in favor of strangers, as
decided by the Supreme Court of Spain in its decisions of 4 May 1899 and 16
June 1902. So that in computing the legitimes, the value of the property to
herein appellant, Conchita Liguez, should be considered part of the donor's
estate. Once again, only the court of origin has the requisite date to determine
whether the donation is inofficious or not. Hence, case is remanded to court of
origin for computation.
MAXIMINO CARANTES vs. COURT OF APPEALS, BILAD CARANTES,
LAURO CARANTES, EDUARDO CARANTES and MICHAEL TUMPAO |
GR No. L-33360 | April 25, 1977 | Castro, C.J
Facts: Mateo Carantes was the original owner of Lot No. 44 situated at
Baguio City as evidenced by Original Certificate of Tile No. 3 issued in his
name on September 22, 1910. In 1913, Mateo died. He was survived by his
widow Ogasia and six children.
In 1930, construction of the Loakan Airport was commenced by the
Government. Because a portion of Lot No. 44 was needed for the landing
field, the Government instituted proceedings for its expropriation. For the
purpose, Lot No. 44 was subdivided into 44-A to 44-E. The portion
expropriated was Lot No. 44-A.
In 1933, Special Proceedings were filed with the court for the settlement of
the estate of the late Mateo. One of his sons, herein petitioner Maximino, was
appointed and qualified as judicial administrator of the estate. Maximino filed
a project of partition wherein he listed as the heirs of Mateo who were entitled
to inherit the estate, himself and his brothers and sisters. Apparently, because
negotiations were under way for the purchase by the Government for the
purpose of widening the Loakan Airport, the only property listed by Maximino
in the project of partition was the remaining portion of Lot No. 44.
On Oct. 23, 1939, a deed denominated “Assignment of Right to Inheritance”
was executed by four of Mateo’s children, and the heirs of Apung Carantes
(also a son of Mateo), assigning to Maximino their rights to inheritance in Lot
No. 44. The stated monetary consideration for the assignment was P1.00.
However, the document contains a recital to the effect that the said lots, “by
agreement of all the direct heirs and heirs by representation of the
deceased Mateo as expressed and conveyed verbally by him during his
lifetime, rightly and exclusively belong to the particular heir, Maximino,
now and in the past in the exclusive, continuous, peaceful and
notorious possession of the same for more than ten years.”
On the same date, Maximino sold to the Government Lots Nos. 44-B and 44-
C and divided the proceeds of sale among himself and the other heirs of
Mateo.
Upon joint petition of the heirs, the CFI of Baguio City issued an Order in
another proceeding - Administrative Case No. 368 - cancelling OCT No. 3.
Pursuant thereto, the said title was cancelled, and in its place, TCT No. 2533
was issued in the joint names of the five children of Mateo and the children of
Apung as co-owners pro indiviso, or one-sixth share for each child. When
Maximino registered the deed of “Assignment of Right to Inheritance”, TCT
No. 2533 was cancelled, and in lieu thereof, TCT No. 2540 was issued in the
name of Maximino. On the same date, Maximino executed a formal deed of
sale in favor of the Government over Lots No. 44-B and 44-C. As a result, the
remaining lots were Lots Nos. 44-D and RR-E, issued in the name of
Maximino, who is the sole owner of the said lots.
A complaint was filed alleging that the respondents only executed the deed of
“Assignment of Right to Inheritance” only because they were made to believe
by Maximino that the said instrument embodied the understanding among the
parties that it merely authorized the defendant Maximino to convey portions of
Lot No. 44 to the government in their behalf. In short, they are alleging that
the deed of “Assignment of Right to Inheritance” be declared null and void on
the ground of fraud.
The trial court rendered its decision saying that an action based on fraud
prescribes in four years from the discovery of the fraud, and in this case, the
fraud allegedly perpetrated by Maximino must be deemed to have been
discovered in 1940, but the case was filed in 1958. Hence, ownership had
vested in Maximino by acquisitive prescription. Trial court dismissed the
complaint. However, the Court of Appeals reversed the decision. Definitely, no express trust was created in favor of the private respondents. If
trust there was, it could only be — as held by respondent court — a
Issue: W/N the deed of “Assignment of Right to Inheritance” should be constructive trust, which is imposed by law. In constructive trusts there is
declared null and void neither promise nor fiduciary relations; the so-called trustee does not
recognize any trust and has no intent to hold the property for the beneficiary.
Ratio: Article 1390 of the New Civil Code provides that a contract "where the
consent is vitiated by mistake, violence, intimidation, undue influence or Lastly, the CA held that there was constructive trust created in favor of the
fraud," is voidable or annullable. Even article 1359, which deals on private respondents and held that an action for reconveyance based on
reformation of instruments, provides in its paragraph 2 that "If mistake, fraud, constructive trust is imprescriptible. The SC failed to find support therein for
inequitable conduct, or accident has prevented a meeting of the minds of the the holding of the respondent court. In any event, it is not settled that an
parties, the proper remedy is not reformation of the instrument but annulment action for reconveyance based on implied or constructive trust is prescriptible.
of the contract," When the consent to a contract was fraudulently obtained, It prescribes in ten years.
the contract is avoidable. Fraud or deceit does not render a contract void ab
initio and can only be a ground for rendering the contract voidable or The judgment of the Court of Appeals is set aside.
annullable pursuant to article 1390 of the new Civil Code by a proper action in
court. The present action being one to annul a contract on the ground of
fraud, its prescriptive period is four years from the time of the discovery of the Sps. Buenaventura vs. Court of Appeals
fraud.
G.R. No. 126376. November 20, 2003. Carpio, J.
The next question that must be resolved is: from what time must fraud be
Facts: Defendant spouses Leonardo Joaquin and Feliciana Landrito are the
deemed to have been discovered in the case at bar?
parents of plaintiffs Consolacion, Nora, Emma and Natividad as well as of
defendants Fidel, Tomas, Artemio, Clarita, Felicitas, Fe, and Gavino, all
The weight of authorities is to the effect that the registration of an instrument
surnamed JOAQUIN. The married Joaquin children are joined in this action by
in the Office of the Register of Deeds constitutes constructive notice to the
their respective spouses. Sought to be declared null and void ab initio are
whole world, and, therefore, discovery of the fraud is deemed to have taken
certain deeds of sale of real property executed by defendant parents
place at the time of the registration. In this case the deed of assignment was
Leonardo Joaquin and Feliciana Landrito in favor of their co-defendant
registered on March 16, 1940, and in fact on the same date T.C.T. No. 2533
children and the corresponding certificates of title issued in their names.
in the names of the heirs of Mateo Carantes was cancelled, and T.C.T. No.
2540 in the name of the petitioner was issued in lieu thereof. The four-year
In seeking the declaration of nullity of the aforesaid deeds of sale and
period within which the private respondents could have filed the present
certificates of title, plaintiffs, in their complaint, aver:
action consequently commenced on March 16, 1940; and since they filed it
only on September 4, 1958, it follows that the same is barred by the statute of
“The deeds of sale, Annexes C, D, E, F, and G, [and K] are simulated as they
limitations.
are, are NULL AND VOID AB INITIO because:
a) Firstly, there was no actual valid consideration for the deeds of sale xxx
The respondent court refused to accord recognition to the rule of constructive
over the properties in litis;
notice, because, according to it, there was a fiduciary relationship between
b) Secondly, assuming that there was consideration in the sums reflected in
the parties. Upon this premise it concluded that the four-year prescriptive
the questioned deeds, the properties are more than three-fold times more
period should be deemed to have commenced in February, 1958 when
valuable than the measly sums appearing therein;
private respondents had actual notice of the fraud. Without resolving the
c) Thirdly, the deeds of sale do not reflect and express the true intent of the
question of whether or not constructive notice applies when a fiduciary
parties (vendors and vendees); and
relationship exists between the parties — a point which is not in issue in this
d) Fourthly, the purported sale of the properties in litis was the result of a
case — we hold that the respondent court's conclusion, lacking the necessary
deliberate conspiracy designed to unjustly deprive the rest of the compulsory
premise upon which it should be predicated, is erroneous.
heirs (plaintiffs herein) of their legitime
 rescission, even after he has chosen fulfillment, if the latter should become
Defendants, on the other hand aver (1) that plaintiffs do not have a cause of
impossible.
action against them as well as the requisite standing and interest to assail
The court shall decree the rescission claimed, unless there be just cause
their titles over the properties in litis; (2) that the sales were with sufficient
authorizing the fixing of a period.
considerations and made by defendants parents voluntarily, in good faith, and
with full knowledge of the consequences of their deeds of sale; and (3) that
This is understood to be without prejudice to the rights of third persons who have
the certificates of title were issued with sufficient factual and legal basis. The
acquired the thing, in accordance with articles 1385 and 1388 and the Mortgage
trial court ruled in favor of the defendants and dismissed the complaint which
Law.
was affirmed by the Court of Appeals.

Issue: Whether or not they have cause of action against appellees? 2) Warranties in sales contracts

Ratio: No. Petitioners Complaint betrays their motive for filing this case. In
Toledo V. CA 167838 August 5, 2015
their Complaint, petitioners asserted that the purported sale of the properties
in litis was the result of a deliberate conspiracy designed to unjustly deprive
Facts: Del Rosario Realty (represented by Pedro Del Rosario) entered into a
the rest of the compulsory heirs (plaintiffs herein) of their legitime. Petitioners
Contract to Sell a land with spouses Leonardo Faustino and Angelina Lim
strategy was to have the Deeds of Sale declared void so that ownership of the
("Faustino spouses").
lots would eventually revert to their respondent parents. If their parents die
.
still owning the lots, petitioners and their respondent siblings will then co-own
The Faustino spouses sold their rights over the property to spouses Vicente
their parents estate by hereditary succession. It is evident from the records
Padiernos and the latter agreed to assume the former's obligations under the
that petitioners are interested in the properties subject of the Deeds of Sale,
original contract to sell.
but they have failed to show any legal right to the properties. The trial and
appellate courts should have dismissed the action for this reason alone. An
Meanwhile, Pedro Del Rosario executed a deed assigning all of his rights and
action must be prosecuted in the name of the real party-in-interest
interests in the contract to sell to Socorro A. Ramos. In the same deed,
Socorro Ramos acknowledged and "approved the transfer or assignment of
Petitioners do not have any legal interest over the properties subject of the
rights made by spouses Leonardo Faustino and Angelina Lim in favor of
Deeds of Sale. As the appellate court stated, petitioners right to their parents
Vicente Padiernos" over the property including "all the incidental rights,
properties is merely inchoate and vests only upon their parents death. While
interests and obligations inherent thereto."
still living, the parents of petitioners are free to dispose of their properties. In
their overzealousness to safeguard their future legitime, petitioners forget that
Thereafter, Vicente Padiernos sold one-half of the property to petitioner Jose
theoretically, the sale of the lots to their siblings does not affect the value of
Toledo and his wife Elisa Padierno (hereafter, "spouses Toledo"). The deed
their parents estate. While the sale of the lots reduced the estate, cash of
embodying the Partial Assignment of Rights noted that the spouses Toledo
equivalent value replaced the lots taken from the estate.
had already commenced payment of the installments. It further provided that
the spouses Toledo shall "continue payments until fully paid," with said
Natural elements payments to be made in the name of Vicente Padiernos as the purchaser on
record. After completion of payment, the Toledo spouses shall own one-half
of the property.
1) Right to resolve NCC 1191
Vicente Padiernos sold the remaining half of the property to spouses Virgilio
ARTICLE 1191. The power to rescind obligations is implied in reciprocal ones, in and Leticia Padiernos. Later on, Virgilio and Leticia Padiernos assigned their
case one of the obligors should not comply with what is incumbent upon him. rights over the property to their children, petitioners Glenn and Danilo
Padiernos.
The injured party may choose between the fulfillment and the rescission of the
obligation, with the payment of damages in either case. He may also seek Consequently, spouses Toledo and spouses Virgilio and Leticia Padiernos
paid quarterly installments on the property until full payment. When petitioners
requested for the release of the owner's duplicate certificate of title,
respondent Antonio A. Ramos, representing the heirs of Socorro Ramos,
issued a Certification stating that while the property "has been paid in full by
Mr. Vicente Padiernos. . . Title #44436 could not be released pending final
decision of the Supreme Court."
Virgilio Padiernos and petitioner Jose Toledo constructed their houses on the
property, resided therein, and paid the corresponding real property taxes.
In the meantime, it appears that execution proceedings were taken against
the estate of Socorro Ramos. As a consequence, eighteen (18) parcels of
land belonging to the estate, including the property, were sold in auction to
Guillermo N. Pablo and Primitiva C. Cruz, who thereafter sold said properties
to ARC Marketing.
Enrique A. Ramos, et. al, all heirs of Socorro A. Ramos, filed a Complaint for
Nullity of Execution Sale against auction sale winners Guillermo N. Pablo and
Primitiva C. Cruz, and their transferee ARC Marketing. Enrique A. Ramos, et.
al, by way of a Deed of Assignment, assigned all their rights and interests in
the case (and the properties it covered) to Lourdes A. Ramos.
Civil Case was settled, and the parties entered into a Final Compromise
Agreement. Under the Compromise Agreement, then sole plaintiff Lourdes A.
Ramos agreed to settle the case for the total compromise amount of
P2,000,000.00 to be paid by ARC Marketing to the former in installments.
Petitioners Jose Toledo, Glenn Padiernos and Danilo Padiernos filed a
complaint for reconveyance and damages.
Enrique Ramos moved to dismiss the case on the ground that petitioners
failed to state a cause of action against him because he has already assigned
his interests in Civil Case No. Q-22850 (and consequently, over the property)
to his co-respondent Lourdes Ramos. ARC Marketing, on the other hand,
sought the dismissal of the complaint on the following grounds: xxxx xxx (5)
the complaint shows that petitioners failed to comply with the conditions of the
contract to sell and (6) laches, among others.
In a Resolution dated December 15, 1997, Regional Trial Court denied the
Motion to Dismiss filed by Enrique Ramos.
The Court of Appeals found that RTC did not act with grave abuse of
discretion in dismissing petitioners' complaint due to lack of jurisdiction.
Issue: WN the petitioners have cause of action for reconveyance
Ruling: Yes. While the contract to sell indeed provided for the ipso facto
cancellation of the contract "without need of notification or judicial action,"
jurisprudence requires, for cancellation to be effective, that written notice be
sent to the defaulter informing him of said cancellation/rescission. 62 In Palay,
Inc. v. Clave, we held that the cancellation of the contract to sell was void
because of lack of notice.
In this case, it does not appear that ARC Marketing (nor its predecessors-in-
interest) took any steps to cancel the contract and/or eject petitioners from the
premises (much less notify petitioners about said cancellation) prior to the
latter's institution of the action for reconveyance. ARC Marketing's
predecessors-in-interest also seemed to have continued to accept payments
for the property without protest or qualification. Respondent Antonio A.
Ramos, representing the heirs of Socorro A. Ramos, even issued a
certification acknowledging full payment for the property long before the same
was allegedly adjudged in ARC Marketing's favor in 1993. ARC Marketing is
thus estopped from invoking cancellation of the contract to defeat petitioner’s
rights over the property
D. Stages of a contract NCC 1315 NCC 1316
Art. 1315. Contracts are perfected by mere consent, and from that moment the
parties are bound not only to the fulfillment of what has been expressly stipulated
but also to all the consequences which, according to their nature, may be in
keeping with good faith, usage and law.
Art. 1316. Real contracts, such as deposit, pledge and Commodatum, are not
perfected until the delivery of the object of the obligation.
E. Essential Requisites of Contracts - NCC 1318 - 1319
Art. 1318. There is no contract unless the following requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established.
Art. 1319. Consent is manifested by the meeting of the offer and the 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.
Acceptance made by letter or telegram does not bind the offerer except from the
time it came to his knowledge. The contract, in such a case, is presumed to have
been entered into in the place where the offer was made.
a) Consent freely given
b) Offer and acceptance
Advertisement is not an offer but an invitation to make an offer
Qualified acceptance; counter-offer
Capacity to give consent:
i . If one party is minor and the other is not, the contract is voidable
ii. If both parties are minors, the contract is unenforceable
Vices of consent
I. Mistake - NCC 1330-1334
Art. 1330. A contract where consent is given through mistake, violence,
intimidation, undue influence, or fraud is voidable.
Art. 1331. In order that mistake may invalidate consent, it should refer to the
substance of the thing which is the object of the contract, or to those conditions
which have principally moved one or both parties to enter into the contract.
Mistake as to the identity or qualifications of one of the parties will vitiate consent
only when such identity or qualifications have been the principal cause of the
contract.
A simple mistake of account shall give rise to its correction.
Art. 1332. When one of the parties is unable to read, or if the contract is in a
language not understood by him, and mistake or fraud is alleged, the person
enforcing the contract must show that the terms thereof have been fully explained
to the former.
Art. 1333. There is no mistake if the party alleging it knew the doubt, contingency
or risk affecting the object of the contract.
Art. 1334. Mutual error as to the legal effect of an agreement when the real
purpose of the parties is frustrated, may vitiate consent.
THEIS V. CA | G.R. No. 126013 | February 12, 1997 | HERMOSISIMA, JR.
Petitioner: Heinzrich and Betty Theis (Spouses Theis)
Respondent: CA
Private Respondent: Calsons Development Corporation
Facts:
1. Calsons Development Corporation is the owner of 3 adjacent parcels
of land in Tagaytay:
a. TCT 15515 - parcel no. 1
b. TCT 15516 - parcel no. 2
c. TCT 15684 - parcel no. 3
2. Adjacent to parcel no. 3 is a vacant lot denominated as parcel no. 4
3. Calsons constructed a 2 storey house on parcel no. 3 and parcel 1
and 2 were left idle.
4. In a survey conducted in 1985, parcel no. 3 was erroneously
indicated to cover TCT 15515 and parcel 1 and 2 were mistakenly
surveyed to be located on parcel no. 4 and covered by TCT 15516
and 15684.
5. Unaware of this mistake by which Calsons appeared to be the owner
of parcel no. 4, Calsons sold said parcel no. 4 to Spouses Theis.
6. Upon execution of the Deed of Sale, Calsons delivered TCT 15516
and 15684 to Spouses Theis and immediately registered the same
with the Registry of Deeds Tagaytay.
7. Upon the return of the spouses from abroad, they discovered that
parcel no. 4 was owned by another person. They discovered that the
lots sold to them were actually parcel no. 2 and 3. Parcel no. 3
however could not have been sold to the Spouses as there was a 2
storey house constructed therein.
8. The Spouses insisted that they wanted parcel no. 4 which is the idle
lot adjacent to parcel no. 3.
9. The mistake in the identity of the lots is traceable to the erroneous
survey conducted in 1985.
10. To remedy the mistake, Calsons offered parcel no 1 and 2 and the
return of an amount double the price paid by the spouses but both
offered were rejected.
11. Calsons had no choice but to file an action for annulment of deed of
sale and reconveyance of the properties in the RTC. The RTC ruled
in their favor ruling that there was indeed a mistake in the
identification of the parcels of land intended to be the subject of said
sale. The CA affirmed the decision of the RTC upon appeal of the
 Spouses and ruled that clearly there was honest mistake on the part
of Calsons which they tried to remedy.
Issue: WON the Deed of Sale is correctly annulled after finding that there was
a mistake in the identification of the parcels of land intended to be the subject
of the sale.
Ruling:
Yes. Petition is denied.
According to Article 1390 of the NCC; The following contracts are voidable or
annullable, even though there may have been no damage to the contracting
parties: Those where the consent is vitiated by mistake, violence, intimidation,
undue influence, or fraud.
In the case at bar, the private respondent obviously committed an honest
mistake in selling parcel no. 4. As correctly noted by the Court of Appeals, it is
quite impossible for said private respondent to sell the lot in question as the
same is not owned by it. The good faith of the private respondent is evident in
the fact that when the mistake was discovered, it immediately offered two
other vacant lots to the petitioners or to reimburse them with twice the amount
paid. That petitioners refused either option left the private respondent with no
other choice but to file an action for the annulment of the deed of sale on the
ground of mistake. This was also enunciated in the case of Mariano V. CA.
According to Article 1331, In order that mistake may invalidate consent, it
should refer to the substance of the thing which is the object of the contract,
or to those conditions which have principally moved one or both parties to
enter into the contract.
The concept of error in this article must include both ignorance, which is the
absence of knowledge with respect to a thing, and mistake properly speaking,
which is a wrong conception about said thing, or a belief in the existence of
some circumstance, fact, or event, which in reality does not exist. In both
cases, there is a lack of full and correct knowledge about the thing. The
mistake committed by the private respondent in selling parcel no. 4 to the
petitioners falls within the second type. Verily, such mistake invalidated its
consent and as such, annulment of the deed of sale is proper.
Thus, to allow the petitioners to take parcel no. 3 would be to countenance
unjust enrichment. Considering that petitioners intended at the outset to
purchase a vacant lot, their refusal to accept the offer of the private
respondent to give them two (2) other vacant lots in exchange, as well as their
insistence on parcel no. 3, which is a house and lot, is manifestly
unreasonable.
II. Violence and intimidation NCC 1335-1337
Art. 1335. There is violence when in order to wrest consent, serious or irresistible
force is employed.
There is intimidation when one of the contracting parties is compelled by a
reasonable and well-grounded fear of an imminent and grave evil upon his person
or property, or upon the person or property of his spouse, descendants or
ascendants, to give his consent.
To determine the degree of intimidation, the age, sex and condition of the person
shall be borne in mind.
A threat to enforce one's claim through competent authority, if the claim is just or
legal, does not vitiate consent.
Art. 1336. Violence or intimidation shall annul the obligation, although it may have
been employed by a third person who did not take part in the contract.
Art. 1337. There is undue influence when a person takes improper advantage of
his power over the will of another, depriving the latter of a reasonable freedom of
choice. The following circumstances shall be considered: the confidential, family,
spiritual and other relations between the parties, or the fact that the person alleged
to have been unduly influenced was suffering from mental weakness, or was
ignorant or in financial distress.
MERCEDES MARTINEZ vs. THE HONGKONG & SHANGHAI BANKING
CORPORATION G.R. No. 5496. February 19, 1910
MORELAND, J p:
Facts: Alejandro S. Macleod was for many years the managing partner of
Aldecoa & Co. in the city of Manila. He withdrew from the management on the
31st day of December, 1906, when Aldecoa & Co. went into liquidation. At the
time the Aldecoa & Co. ceased active business the Hongkong & Shanghai
Banking Corporation was a creditor of that firm to the extent of several
hundred thousand pesos and claimed to have a creditor's lien in the nature of
a pledge over certain properties of the debtor. While these negotiations were
pending Aldecoa & Co. claimed that they have made discoveries of many
frauds which Macleod had perpetrated against the company during the period
of his management, whereby the company had been defrauded of many
thousands of pesos.
It becoming apparent that criminal proceedings would be instituted against
him, Macleod went from Manila to the Portuguese colony of Macao. Aldecoa
& Co. filed a complaint against Mr. Macleod, charging him with the falsification
of the commercial document, and a warrant of arrest was issued.
The wife of Mr. Macleod, Mercedes, was informed that if she assented to the
requirements of Aldecoa & Co. and the bank the civil suits against herself and
her husband would be dismissed and the criminal charges against him
withdrawn, while if she refused her husband must either spend the rest of his
life in Macao or criminally prosecuted on the charges already filed and to be
filed. At that interview plaintiff refused to accede to the terms of settlement but
later acceded. After Aldecoa & Co. and the bank had taken possession of the
property of plaintiff and her husband, conveyed to the, the civil suits were
dismissed, the criminal charges withdrawn, and Mr. Macleod returned from
Macao to Manila.
Plaintiff seeks to annul a contract on the ground that her consent was
obtained under duress. Under the contract, she agreed to convey several
properties to Aldecoa & Co. and HSBC as a settlement of their claims against
her and her husband, who fled the country. It was established at the trial that
during the period of negotiation, representations were made to her by the
defendants and concurred in by her lawyers, that if she assented to the
requirements of the defendants, the civil suit against herself and her husband
would be dismissed and the criminal charges against the latter withdrawn, but
if she refused, her husband must either spend the rest of his life abroad or be
criminally prosecuted.
Issue: WON there was duress which would invalidate the contract.
Ratio: No. There is no duress that will invalidate the contract.
Article 1335 of the Civil Code in its last paragraph provides that: “A threat to
enforce one’s claim through competent authority, if the claim is just or legal
does not vitiate consent”.
In order that this contract can be annulled it must be shown that the plaintiff
never gave her consent to the execution thereof. It is, however, necessary to
distinguish between real duress and the motive which is present when one
gives his consent reluctantly. A contract is valid even though one of the
parties entered into it against his wishes and desires or even against his
better judgment. Contracts are also valid even though they are entered into by
one of the parties without hope of advantage or profit. A contract whereby
reparation is made by one party for injuries which he has willfully inflicted
upon another is one which from its inherent nature is entered into reluctantly
by the party making the reparation. He is confronted with a situation in which
he finds the necessity of making reparation or of taking the consequences,
civil or criminal, of his unlawful acts. He makes the contract of reparation with
extreme reluctance and only by the compelling force of the punishment
threatened. Nevertheless, such contract is binding and enforceable. Petition is
dismissed.
III. Fraud NCC 1338-1346
Art. 1338. There is fraud when, through insidious words or machinations of one of
the contracting parties, the other is induced to enter into a contract which, without
them, he would not have agreed to.
Art. 1339. Failure to disclose facts, when there is a duty to reveal them, as when
the parties are bound by confidential relations, constitutes fraud.
Art. 1340. The usual exaggerations in trade, when the other party had an
opportunity to know the facts, are not in themselves fraudulent.
Art. 1341. A mere expression of an opinion does not signify fraud, unless made by
an expert and the other party has relied on the former's special knowledge.
Art. 1342. Misrepresentation by a third person does not vitiate consent, unless
such misrepresentation has created substantial mistake and the same is mutual.
Art. 1343. Misrepresentation made in good faith is not fraudulent but may
constitute error.
Art. 1344. In order that fraud may make a contract voidable, it should be serious
and should not have been employed by both contracting parties.
Incidental fraud only obliges the person employing it to pay damages. (1270)
Art. 1345. Simulation of a contract may be absolute or relative. The former takes
place when the parties do not intend to be bound at all; the latter, when the parties
conceal their true agreement.
Art. 1346. An absolutely simulated or fictitious contract is void. A relative
simulation, when it does not prejudice a third person and is not intended for any
purpose contrary to law, morals, good customs, public order or public policy binds
the parties to their real agreement.
INTERNATIONAL CORPORATE BANK (now Union Bank of the
Philippines) V. Spouses GUECO
Facts:
Spouses Gueco obtained a loan from petitioner International Corporate Bank
(now Union Bank of Philippines) to purchase a car. Respondent spouses
executed a promissory note in consideration, which were payable in monthly
installment and chattel mortgage over the car.
The spouses however, defaulted payment. The car was detained by the bank.
When Dr. Gueco delivered the manger’s check of P150,000, the car was not
released because of his refusal to sign the Joint Motion to Dismiss (JMD).
The bank insisted that the JMD is a standard operating procedure to effect a
compromise and to preclude future filing of claims or suits for damages.
Gueco spouses filed an action against the bank for fraud, failing to inform
them regarding JMD during the meeting & for not releasing the car if they do
not sign the said motion.
Issue: Whether or not International Corporate Bank was guilty of fraud.
Ratio:
No. Fraud has been defined as the deliberate intention to cause damage
or prejudice. It is the voluntary execution of a wrongful act, or a willful
omission, knowing and intending the effects which naturally and
necessarily arise from such act or omission. The fraud referred to in
Article 1170 of the Civil Code is the deliberate and intentional evasion of
the normal fulfillment of obligation. The court fails to see how the act of
the petitioner bank in requiring the respondent to sign the joint motion
to dismiss could constitute as fraud.
The joint motion to dismiss cannot in any way have prejudiced Dr. Gueco.
The motion to dismiss was in fact also for the benefit of Dr. Gueco, as the
case filed by petitioner against it before the lower court would be dismissed
with prejudice.
Two kinds of fraud:
Dolo causante requisites
The joint motion to dismiss was but a natural consequence of the compromise
agreement and simply stated that Dr. Gueco had fully settled his obligation,
hence, the dismissal of the case. Petitioner’s act of requiring Dr. Gueco to
sign the joint motion to dismiss cannot be said to be a deliberate attempt on
the part of petitioner to renege on the compromise agreement of the parties.
We fail to see how the act of the petitioner bank in requiring the
respondent to sign the joint motion to dismiss could constitute as fraud.
True, petitioner may have been remiss in informing Dr. Gueco that the
signing of a joint motion to dismiss is a standard operating procedure of
petitioner bank. However, this can not in anyway have prejudiced Dr.
Gueco. The motion to dismiss was in fact also for the benefit of Dr.
Gueco, as the case filed by petitioner against it before the lower court
would be dismissed with prejudice.
The whole point of the parties entering into the compromise agreement was in
order that Dr. Gueco would pay his outstanding account and in return
petitioner would return the car and drop the case for money and replevin
before the Metropolitan Trial Court. The joint motion to dismiss was but a
natural consequence of the compromise agreement and simply stated that Dr.
Gueco had fully settled his obligation, hence, the dismissal of the case.
Petitioner's act of requiring Dr. Gueco to sign the joint motion to dismiss can
not be said to be a deliberate attempt on the part of petitioner to renege on
the compromise agreement of the parties. It should, likewise, be noted that in
cases of breach of contract, moral damages may only be awarded when the
breach was attended by fraud or bad faith.
The law presumes good faith. Dr. Gueco failed to present even an iota (a
small amount) of evidence to overcome this presumption. In fact, the act
of petitioner bank in lowering the debt of Dr. Gueco from P184,000.00 to
P150,000.00 is indicative of its good faith and sincere desire to settle the
case. If respondent did suffer any damage, as a result of the withholding
of his car by petitioner, he has only himself to blame. Necessarily, the
claim for exemplary damages must fail. In no way, may the conduct of
petitioner be characterized as wanton, fraudulent, reckless, oppressive
or malevolent

ALEJANDRO V. TANKEH,vs. DEVELOPMENT BANK OF THE
PHILIPPINES, STERLING SHIPPING LINES, INC., RUPERTO V. TANKEH,
VICENTE ARENAS, and ASSET PRIVATIZATION TRUST
G.R. No. 171428. November 11, 2013|| LEONEN, J.
Facts: Respondent Ruperto V. Tankeh is the president of Sterling Shipping
Lines, Inc. It was incorporated on April 23, 1979 to operate ocean-going
vessels engaged primarily in foreign trade. Ruperto V. Tankeh applied for a
$3.5 million loan from public respondent Development Bank of the Philippines
for the partial financing of an ocean-going vessel named the M/V Golden
Lilac. To authorize the loan, Development Bank of the Philippines required
that the following conditions be met:
1) A first mortgage must be obtained over the vessel, which by then
had been renamed the M/V Sterling Ace;
2) Ruperto V. Tankeh, petitioner Dr. Alejandro V. Tankeh, Jose Marie
Vargas, as well as respondents Sterling Shipping Lines, Inc. and
Vicente Arenas should become liable jointly and severally for the
amount of the loan;
XXXXX
According to petitioner Dr. Alejandro V. Tankeh, Ruperto V. Tankeh
approached him sometime in 1980. Ruperto informed petitioner that he
was operating a new shipping line business. Petitioner claimed that
respondent, who is also petitioner's younger brother, had told him that
petitioner would be given one thousand (1,000) shares to be a director of
the business. The shares were worth P1,000,000.00.
In 1981, petitioner signed the Assignment of Shares of Stock with
Dolo incidente - usual exaggeration does not vitiate consent
Voting Rights and the promissory note. The loan was then approved
by DBP. Sometime in 1987, DBP sold the M/V Sterling Ace in
Singapore. Petitioner filed several Complaints and that the
promissory note he signed in 1981 be declared null and void on the
ground that he was fraudulently deceive into signing the contract.
Issue: Whether the fraud contemplated serious enough to render a contract
voidable.
Ratio: Yes.
Ruperto V. Tankeh was liable for the commission of incidental fraud for
refusing to allow petitioner to participate in the management of the business.
Although there was no fraud that had been undertaken to obtain petitioner’s
consent, there was fraud in the performance of the contract. The records
showed that petitioner had been unjustly excluded from participating in the
management of the affairs of the corporation. This exclusion from the
management in the affairs of Sterling Shipping Lines, Inc. constituted fraud
incidental to the performance of the obligation.There are two types of fraud
contemplated in the performance of contracts: dolo incidente or incidental
fraud and dolo causante or fraud serious enough to render a contract
voidable.
Dolo Causante or causal fraud (Art.1338)
● are those deceptions or misrepresentations of a serious character
employed by one party and without which the other party would not
have entered into the contract.
● Dolo causante determines or is the essential cause of the consent.
● The effects of dolo causante are the nullity of the contract and the
indemnification of damages.
Dolo incidente, or incidental fraud (Art. 1344)
● are those which are not serious in character and without which the
other party would still have entered into the contract.
● refers only to some particular or accident of the obligation. and
● dolo incidente obliges the person employing it to pay damages.
LAMBERTO SONGCO vs. GEORGE C. SELLNER, G.R. No. L-11513
December 4, 1917 | STREET, J
Facts: Defendant George C. Sellner and plaintiff Lamberto Songco are
owners of contiguous sugarcane farms in Floridablanca, Pampanga. Both
farms had sugarcane ready for cutting. Sellner wished to mill his cane at a
nearby sugar central, but the owners were not sure they could mill his cane
and would not promise to take it. However, he found out the central was going
to mill Songco’s cane, so he conceived the idea of buying the latter’s cane
and then running his own cane with that of the other during the milling.
Sellner bought Songco’s cane for P12,000, executing three promissory notes
of P4k each.
Two of these notes were paid; the third is the subject of the present action.
Sellner claimed the third promissory note was obtained through the false
representations of Songco, who told him the cane would produce 3,000 piculs Simulation
of sugar. Sellner then bought the crop believing this estimate to be
substantially correct, when in fact Songco’s cane only yielded 2,017 piculs.
Blanco v. Quasha, G.R. No. 133148, 17 November 1999
After the toll for the milling was deducted, the net amount left to Sellner was
Ynares-Santiago, J:
even less. The lower court ruled for plaintiff Songco; thus, this appeal by
Sellner.
Facts: Mary Ruth C. Elizalde was an American national who owned a house
and lot situated on a 2,500 square-meter parcel of land in Forbes Park,
Issue: Whether Songco’s representation constitutes fraud
Makati. On May 22, 1975, she entered into a Deed of Sale over the property
in favor of Parex Realty Corporation, for and in consideration of the amount of
Ratio: No. The Court affirmed the decision appealed from. Based on the
P625,000.00payable in 25 equal annual installments of P25,000.00
evidence, the Court concluded
commencing on May 22, 1975 and ending on May 22, 1999. Also on May 22,
that Songco knew he had greatly exaggerated the probable produce of his
1975, Parex executed a Contract of Lease with Elizalde, whereby the same
fields, he having produced from these same fields for several years. He would
parcel of land was leased to the latter for a term of 25 years for a monthly
have known that the year’s harvest would yield less than the amount he had
rental of $2,083.34 orP25,000.08 a year. The rental payments shall be
claimed. However, the Court still ruled that this did not amount to fraud. A
credited to and applied in reduction of the agreed yearly installments of the
misrepresentation upon a mere matter of opinion is not an actionable
purchase price of the property.
deceit, nor is it a sufficient ground for avoiding a contract as fraudulent.
(The Court did not outright cite Art. 1341, but this principle is found in the
A transfer of title was made in 1975. Despite the transfer of title, she
article.)
continued to pay the Forbes Park Association dues and garbage fees until her
demise in 1990. Likewise, she undertook to pay the realty taxes on the
That Songco had refused to guarantee his claim of a 3,000 picul yield should
property during the term of the lease. Petitioner, the special administrator of
have warned Sellner that the estimate was mere opinion. A man must
Elizalde’s estate, by letter dated June 13, 1990, demanded from respondents,
assume the consequences if, at his own peril, he relies upon an
the individual stockholders and directors of Parex, the reconveyance of the
affirmation made by someone whose interest might prompt an
title to the property to the estate of Elizalde or, in the alternative, to assign all
exaggeration in the value of his property.
shares of Parex to said estate.
Further, not every false representation regarding the subject matter of a
Respondents ignored the demand. Petitioner brought the action to the court
contract will render it void. The Court said that the fraud must pertain to
and alleged that the sale of the property was absolutely simulated and
matters of fact that substantially affect the buyer’s interest, and not simple
fictitious and, therefore, null and void.
matters of opinion, judgment, probability, or expectation.
Issue: Whether or not the sale-lease-back agreement of the parties is void
Art. 1341 also provides the exception for the expression of opinion; that is, if
being simulated or fictitious.
one with special or expert knowledge expressed the opinion, and he took
advantage of the ignorance of the other party, it is considered a false
Ratio: NO. The sale-lease-back agreement was valid. The simulation of a
representation.
contract may be absolute or relative. The former takes place when the parties
do not intend to be bound at all; the latter, when the parties conceal their true
Sellner tried to avail this defense when he claimed that he was a novice in the
agreement. The former is null and void, while the latter is binding to the
business while Songco was an experienced farmer. The Court, however, did
parties if it does not prejudice a third person and is not intended for any
not accept his defense.
purpose contrary to law, morals, good customs, public order or public policy.
Thus, the Court held that Sellner was still liable for the amount of the
third promissory note, as in the judgment of the lower court
Petitioner cannot correctly claim that there was no consideration for the
contracts of sale and lease only because the amount of the annual
installments of the purchase price dovetails with the rate of rentals stipulated
in the lease contract. Elizalde’s continued occupancy of the premises even
after she sold it to Parex constitutes valuable consideration which she
received as compensation for the sale. The contract is valid and binding upon
the parties.
Edilberto Cruz et al., vs. Bancom Finance Corporation | GR No. 147788 |
March 19, 2002 | Panganiban, J.
Facts: In 1978, Norma Sulit offered to purchase an agricultural land owned by
brothers Rev. Fr. Edilberto Cruz and Simplicio Cruz. The asking price was
P700,000, but Sulit only had P25,000, which Fr. Cruz accepted as earnest
money. Sulit failed to pay the balance.
Capitalizing on the close relationship of a Candelaria Sanchez with the
brothers, Sulit succeeded in having Cruz execute a document of sale of the
land in favor of Sanchez for P150,000. Pursuant to the sale, Sulit was able to
transfer the title of the land in her name.
Evidence show that aside from the P150,000, Sanchez undertook to pay the
brothers the amount of P655,000, representing the balance of the actual price
of the land. Later, in a Special Agreement, Sulit assumed Sanchez’s
obligation to pay said amount. Unknown to the Cruz brothers, Sulit managed
to obtain a loan from Bancom secured by a mortgage over the land.
Upon failure on the part of Sulit to pay the balance, the Cruz brothers filed this
complaint for reconveyance of the land.
Meanwhile, Sulit defaulted in her payment to the bank so her mortgage was
foreclosed. Bancom was declared the highest bidder and was issued a
certificate of title over the land.
Issue: Whether or not Bancom was a mortgagee in good faith? NO
Ratio: As a general rule, every person dealing with registered land may safely
rely on the correctness of the certificate of title and is no longer required to
look behind the certificate in order to determine the actual owner.
This rule is, however, subject to the right of a person deprived of land through
fraud to bring an action for reconveyance, provided the rights of innocent
purchasers for value and in good faith are not prejudiced. An innocent
purchaser for value or any equivalent phrase shall be deemed, under Section
38 of the Act 496, to include an innocent lessee, mortgagee or any other
encumbrancer for value.
Bancom claims that, being an innocent mortgagee, it should not be required
to conduct an exhaustive investigation on the history of the mortgagor’s title
before it could extend a loan.
Bancom, however, is not an ordinary mortgagee; it is a mortgagee-bank. As
such, unlike private individuals, it is expected to exercise greater care and
prudence in its dealings, including those involving registered lands. A banking
institution is expected to exercise due diligence before entering into a
mortgage contract. The ascertainment of the status or condition of a property
offered to it as security for a loan must be a standard and indispensable part
of its operations.
Jurisprudence provides:
“The rule that persons dealing with registered lands can rely solely on the
certificate of title does not apply to banks.
Banks, indeed, should exercise more care and prudence in dealing even with
registered lands, than private individuals, for their business is one affected
with public interest, keeping in trust money belonging to their depositors,
which they should guard against loss by not committing any act of negligence
which amounts to lack of good faith by which they would be denied the
protective mantle of the land registration statute, Act [No.] 496, extended only
to purchasers for value and in good faith, as well as to mortgagees of the
same character and description.”
b) Object certain NCC 1347-1349
Art. 1347. All things which are not outside the commerce of men, including future
things, may be the object of a contract. All rights which are not intransmissible may
also be the object of contracts.
No contract may be entered into upon future inheritance except in cases expressly
authorized by law.
All services which are not contrary to law, morals, good customs, public order or
public policy may likewise be the object of a contract.
Art. 1348. Impossible things or services cannot be the object of contracts.

Art. 1349. The object of every contract must be determinate as to its kind. 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.
J.L.T. AGRO v. BALANSAG | G.R. No. 141882 | 11 Mar 2005 | Tinga, J.
Facts:
Don Julian Teves contracted two marriages, first with Antonia Baena and had
two kids namely Josefa and Emilio. After her death, he married Milagros
Teves and they had four children namely: Maria Teves, Jose Teves, Milagros
Teves and Pedro Teves. Thereafter, the parties to the case entered into a
Compromise Agreement.
When Antonia died an action for partition was instituted where the parties
entered into a Compromise Agreement which embodied the partition of all the
properties of Don Julian. On the basis of the compromise agreement, the CFI
declared a tract of land known as Hacienda Medalla Milagrosa as property
owned in common by Don Julian and his two children of the first marriage.
The property was to remain undivided during the lifetime of Don Julian. Josefa
and Emilio likewise were given other properties at Bais, including the electric
plant, the “movie property,” the commercial areas, and the house where Don
Julian was living. The remainder of the properties was retained by Don Julian.
On 16 November 1972, Don Julian, Emilio and Josefa executed a Deed of
Assignment of Assets with Assumption of Liabilities in favor of J.L.T. Agro,
Inc. (petitioner). Later, Don Julian, Josefa and Emilio also executed an
instrument entitled Supplemental to the Deed of Assignment of Assets with
the Assumption of Liabilities (Supplemental Deed) dated 31 July 1973. This
instrument transferred ownership over Lot No. 63, among other properties, in
favor of petitioner. The appellate court ruled that the supplemental deed,
conveying ownership to JLT agro is not valid because the Compromise
Agreement reserved the properties to Don Julian’s two sets of heirs their
future legitimes. The two sets of heirs acquired full ownership and possession
of the properties respectively adjudicated to them and Don Julian himself
could no longer dispose of the same. The appellate court in holding that the
Supplemental Deed is not valid, added that it contained a prohibited
preterition of Don Julian’s heirs from the second marriage.
Issue: (A.) Was there preterition in the case? (B) Whether or not the future
legitime can be determined, adjudicated and reserved prior to the death of
Don Julian
Ratio: (A) None. Manresa defines preterition as the omission of the heir in
the will. In the case at bar, Don Julian did not execute a will since what he
resorted to was a partition inter vivos of his properties, as evidenced by the
court approved Compromise Agreement. Thus, it is premature if not irrelevant
to speak of preterition prior to the death of Don Julian in the absence of a will
depriving a legal heir of his legitime. Besides, there are other properties which
the heirs from the second marriage could inherit from Don Julian upon his
death.
(B) As a general rule, No. Well-entrenched is the rule that all things, even
future ones, which are not outside the commerce of man may be the object of
a contract. The exception is that no contract may be entered into with respect
to future inheritance, and the exception to the exception is partition inter vivos
referred to in Article 1080.
The partition inter vivos of the properties of Don Julian is undoubtedly valid
pursuant to Article 1347. However, considering that it would become legally
operative only upon the death of Don Julian, the right of his heirs from the
second marriage to the properties adjudicated to him under the compromise
agreement was but a mere expectancy. It was a bare hope of succession to
the property of their father. Being the prospect of a future acquisition, the
interest by its nature was inchoate. Evidently, at the time of the execution of
the supplemental deed in favor of petitioner, Don Julian remained the owner
of the property since ownership over the subject lot would only pass to his
heirs from the second marriage at the time of his death.
c) Cause of the obligation NCC 1350-1355
Art. 1350. In onerous contracts the cause is understood to be, for each contracting
party, the prestation or promise of a thing or service by the other; in remuneratory
ones, the service or benefit which is remunerated; and in contracts of pure
beneficence, the mere liberality of the benefactor.
Art. 1351. The particular motives of the parties in entering into a contract are
different from the cause thereof.
Art. 1352. Contracts without cause, or with unlawful cause, produce no effect
whatever. The cause is unlawful if it is contrary to law, morals, good customs,
public order or public policy.
Art. 1353. The statement of a false cause in contracts shall render them void, if it
should not be proved that they were founded upon another cause which is true
and lawful.
Art. 1354. Although the cause is not stated in the contract, it is presumed that it
exists and is lawful, unless the debtor proves the contrary.
Art. 1355. Except in cases specified by law, lesion or inadequacy of cause shall
not invalidate a contract, unless there has been fraud, mistake or undue influence
II. Forms of Contracts
Art. 1356. Contracts shall be obligatory, in whatever form they may have been
entered into, provided all the essential requisites for their validity are present.
However, when the law requires that a contract be in some form in order that it
may be valid or enforceable, or that a contract be proved in a certain way, that
requirement is absolute and indispensable. In such cases, the right of the parties
stated in the following article cannot be exercised. (1278a)
Art. 1357. If the law requires a document or other special form, as in the acts and
contracts enumerated in the following article, the contracting parties may compel
each other to observe that form, once the contract has been perfected. This right
may be exercised simultaneously with the action upon the contract. (1279a)
Art. 1358. The following must appear in a public document:
● (1) Acts and contracts which have for their object the creation,
transmission, modification or extinguishment of real rights over immovable
property; sales of real property or of an interest therein a governed by
Articles 1403, No. 2, and 1405;
● (2) The cession, repudiation or renunciation of hereditary rights or of those
of the conjugal partnership of gains;
● (3) The power to administer property, or any other power which has for its
object an act appearing or which should appear in a public document, or
should prejudice a third person;
● (4) The cession of actions or rights proceeding from an act appearing in a
public document.
All other contracts where the amount involved exceeds five hundred pesos must
appear in writing, even a private one. But sales of goods, chattels or things in
action are governed by Articles, 1403, No. 2 and 1405. (1280a)
MARLENE DAUDEN-HERNAEZ, petitioner, vs. HON. WALFRIDO DE LOS
ANGELES, Judge of the Court of First Instance of Quezon City,
HOLLYWOOD FAR EAST PRODUCTIONS, INC., and RAMON
VALENZUELA, respondents. | G.R. No. L-27010 | April 30, 1969 | REYES,
J.B.L., Acting C.J.:
Facts:
Marlene Dauden-Hernaez, a movie actress, filed a case against Hollywood
Far East Productions its President and General Manager, Ramon Valenzuela,
to recover P14,700 allegedly the balance due for her services as leading
actress in two motion pictures. The complaint was dismissed by Judge De
Los Angeles mainly because her claim was not supported by an written
document, public or private in violation of Articles 1356 and 1358 of the Civil
Code. Upon a motion for reconsideration, the respondent judged dismissed
the same because the allegations were the same as the first motion.
According to Judge De Los Angeles, the contract sued upon was not alleged
to be in writing when Article 1358 requires it to be so because the amount
involved exceeds P500.
Issue: Whether or not a contract for personal services involving more than
P500.00 was either invalid or unenforceable under the last paragraph of
Article 1358?
Ratio: No. The order dismissing the complaint is set aside and the case is
remanded to the CFI
Consistent with the Spanish Civil Code in upholding spirit and intent
of the parties over formalities, in general, contracts are valid and binding from
their perfection regardless of whether they are oral or written.
However, as provided in the 2nd sentence of Art. 1356:
ART. 1356. Contracts shall be obligatory in whatever form they
may have been entered into, provided all the essential requisites for
their validity are present. However, when the law requires that a
contract be in some form in order that it may be valid or enforceable,
or that a contract be proved in a certain way, that requirement is
absolute and indispensable....
Thus, the two exceptions to the general rule that the form is irrelevant
to the binding effect of a contract are:
(a) Solemn Contracts - contracts which the law requires to be in some
particular form (writing) in order to make them valid and enforceable.
Examples:
1. Donation of immovable property (Art. 749) which must be in a public
instrument to be valid. in order "that the donation may be valid", i.e.,
existing or binding.
2. Donation of movables worth more than P5,000 (Art. 748) which must
be in writing otherwise they are void.
(b) Contracts that the law requires to be proved by some writing
(memorandum) of its terms, i.e. those covered by the old Statute of
Frauds, now Article 1403(2) of the Civil Code.
For the latter example, their existence are not provable by mere oral
testimony (unless wholly or partly executed) and are required to be in writing
to be enforceable by action in court.
However, the contract sued upon (compensation for services) does
not come under either exception. While the last clause of Article 1358
provides that "all other contracts where the amount involved exceeds five
hundred pesos must appear in writing, even a private one." Said Article does
not provide that the absence of a written form in this case will make the
agreement invalid or unenforceable.
On the contrary, Article 1357 clearly indicates that contracts covered
by Article 1358 are binding and enforceable by action or suit despite the
absence of writing.
Zamora v. Miranda G.R. 162930 December 2012
Facts: Petitioner is the daughter in law of Alberto Zamora while respondent
Rose Marie Miranda-Guanio is the daughter of respondent Beatriz Miranda.
Beatriz Miranda was the registered owner of the property in question, which is a
parcel of land in Davao City.
Petitioner allegedly went to the residence of Beatriz and that she sold to her the
said property for the sum of P50,000.00. An acknowledgment of the receipt was
prepared, and Beatriz allegedly signed the same. Petitioner rented out portions
of the property one day she learned that the tenants were being harassed and
were told to vacate since it was already sold to Ang.
Petitioner filed a case to nullify the deed of sale between Beatriz Miranda and
Ang and ordering respondent Beatriz Miranda to execute the corresponding
deed of sale in her favor.
Respondents caused the demolition of the structures on the property in question
declared that her mother owned the property, she did not appoint anyone to
administer it and disputed the claim of petitioner that the latter visited her mother
in 1972 because she gave birth to her first child and her mother took care of her
child. Therefore the signature on the receipt was not the signatures of her
mother.
RTC dismissed the complaint. on the ground that the receipt which was the
basis of petitioner's claim of ownership was a worthless piece of paper, because
it was established that the signature appearing on the receipt was not the
signature of respondent Beatriz Miranda and declared that the certificate of title
in the names of respondents Ang was a conclusive evidence of ownership.
CA - dismissed the appeal of petitioner, hence this appeal.
Issue: W/N the receipt evidencing sale of real property, being a private
document, be a basis of petitioner's claim over the subject property?
Ruling: NO, although the Court held that under Article 1358 formal requirements
are, for the benefit of third parties. Non-compliance therewith does not adversely
affect the validity of the contract nor the contractual rights and obligations of the
parties thereunder. However, in this case, the trial court dismissed petitioner's
complaint on the ground that the receipt dated October 23, 1972 is a worthless
piece of paper, which cannot be made the basis of petitioner's claim of
ownership over the property because it was established that the signature
appearing on the said receipt is not the signature of respondent Beatriz
Miranda.The receipt cannot prove ownership over the subject property as
respondent Beatriz Miranda's signature on the receipt, as vendor, has been
found to be forged.
SMPI V. BF HOMES GR 169343 August 5 2015
Facts: BF HOMES represented by Orendain (receiver) sold to SMPI 130 parcels
of land to the later with 44 345 sqm for 106million pesos and had completed the
payment in December of 1995. BF homes only delivered 110 TCTs out of the
130 TCTs. SMPI demanded the delivery of the remaining TCTs but BF homes
failed to deliver. SMPI field a complaint with specific performance and damages.
BF Homes alleged that the Deed of Absolute Sale executed in 1992 to 1993
were entree into by Orendain in his personal capacity and w/o authority, as his
appointment as rehabilitation receiver was revoked by SEC on may 1989 and
that the consideration paid by SMPI for the 130 lots was inadequate and
disadvantageous to BF HOMES and that the Deed of absolute sale were
undated and unauthorized.
Issue: WN SMPI is entitled to the delivery of the remaining TCTs for the lots
 a.) Transfer of ownership
purchased from BF homes
b.) Conveyance of use
c.) Rendition of service
Ruling: YES. Sec 25 of PD 957 explicitly mandates that the owner or developer
shall deliver the title of the lot or unit upon full payment. SMPI presented
adequate documents proving that there was indeed full payment given to Bf WT Construction vs. Province of Cebu | G.R. No. 208984| 09-16-2015 |
homes. Bf homes also expressly admitted receipt of some payments from SMPI. Perlas-Bernabe, J.
Upon full payment of the lots, BF homes had a mandatory obligation to deliver
the TCTs to SMPI. Facts:
When Philippines was tasked to host the ASEAN summit last 2006, PGMA
The contracts of sale of the 130 lots between bf homes and SMPI were actually designated Cebu as the host province. Right after such declaration, Province
reduced into writing into three Deeds of absolute sale which were signed. The of Cebu conducted a public bidding for the construction of the venue. WT
only defect was that the deeds were not notarized therefore not public Construction won the bidding for both phase 1 and phase 2 of the
documents as required by art 1358(1) of the civil code. The requirement for the construction. Thereafter, the Local Government of the Province of Cebu
public document is not the validity but for its efficacy. Although the conveyance requested WT to construct additional works that never went through the
of a land is not made in a public document, it does not affect the validity of such bidding process. When WT has finished all the works requested by the
conveyance. province, it has billed the province amounting to over P263M. Province of
Cebu refused to pay and therefore prompted WT to demand for such
payments. After two extrajudicial demands were made and Province of Cebu
A. For validity
still did not pay, WT decided to file a complaint against Province of Cebu
B. For enforceability - Statute of Fraud Art. 1403
before the RTC.
C. For registrability
RTC ruled in favor of WT plus 12% interest from the date of filing of
F. Classification of Contracts
complaint, attorney’s fees and costs of suit despite the fact the Cebu argued
that the additional works performed were illegal because it did not undergo
1.According to degree of dependence
any bidding. When Cebu filed an MR, it averred that the amount due was
only 257M and not 263M and in no way should they be liable to 12% interest.
a.) Preparatory
The matter was appealed before the CA and the CA upheld the ruling but
b.) Principal
reduced the interest from 12% to 6% since this was not a contract of loan but
c.) Accessory
a mere non-payment for services rendered. The CA has also noted that the
contract is considered to be valid and subsisting since Cebu has admitted that
2. According to perfection
the value that they owe WT is 257M.
a.) Consensual Issue: WON the liability of Cebu came from a loan or a forbearance of
b.) Real money? Forbearance of money
3. According to form Ratio:
Court has held that the contract involves forbearance of money since it came
a.) Common or informal from advance of cost of the additional works.
b.) Special or formal
“The term "forbearance," within the context of usury law, has been described
as a contractual obligation of a lender or creditor to refrain, during a given
period of time, from requiring the borrower or debtor to repay the loan or debt
then due and payable.
4. According to purpose
 In Estores v. Supangan, the Court explained that forbearance of money,
goods, or credit refers to arrangements other than loan agreements where a
person acquiesces to the temporary use of his money, goods or credits
pending the happening of certain events or fulfilment of certain conditions
such that if these conditions are breached, the said person is entitled not only
to the return of the principal amount given, but also to compensation for the
use of his money equivalent to the legal interest since the use or deprivation
of funds is akin to a loan”

Therefore, Cebu is liable to pay the entire amount of 253M plus legal interest
of 6% from the time of the filing of the complaint.

5. According to subject matter

a.) Things
b.) Services

6. According to the nature of the obligation

a.) Bilateral
b.) Unilateral

7. According to cause

a.) Onerous
b.) Gratuitous

8. According to risk

a.) Commutative
b.) Aleatory

9. According to the nature of the obligation

a.) Nominate
b.) Innominate, NCC 1307