random rants contra c t s

8/20/2019 random rants contra c t s

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Case Digests on Contracts

Case: George Batchelder vs. Central Bank of the Philippines, March 29, 1972, J. Fernando.Facts: George Batchelder, who is an American citizen but permanentl residing in the !hilippines, is engaged in theconstruction business" Batchelder, in compliance with Monetary Board Resolution No. 857 ( #ilipino and resident Americancontractors underta$ing construction pro%ects in &' militar bases in the !hilippines shall be authorized to utilize 9() o*the proceeds o* their contracts *or the purchase o* construction e+uipment, and etc" and Monetary Board Resolution No.695 -Agent ban$ should, upon compliance with its terms, credit the contractor.s accounts in pesos, the buing rate beinggo/erned b the appropriate rules and regulations", surrendered to the Central Ban$ through the latter.s authorized agents,his dollar earnings and applied with the latter *or license to utilize 9() o* his surrendered earnings" 0owe/er, the CentralBan$ ne/er heeded to the plainti**.s application arguing that the Monetar Board esolutions relied upon simpl laid down polic without in an wa gi/ing rise to a /alid and binding agreement to which the law should gi/e e**ect" he trial court*ound *or Batchelder" 3n appeal, Central Ban$ interposed an issue that there was no such contractual obligation betweenthe parties which will hold Central Ban$ liable there*ore"Issue: Whether there exist a contract between Central Bank and Batchelder, a dollar earner by virtue of the Monetary

Board Resolutions of the former.

Held: !. 4hat was done b the Central Ban$ was merel to issue in pursuance o* its rule5ma$ing power the resolutions"here is no +uestion that the Central Ban$ as a public corporation could enter into contracts" 6t is so pro/ided *or amongthe corporate powers /ested in it" hus: he Central Ban$ is hereb authorized to adopt, alter, and use a corporate sealwhich shall be %udiciall noticed8 to ma$e contracts8 to lease or own real personal propert, and to sell or otherwise disposeo* the same8 to sue and be sued8 and otherwise to do and per*orm an and all things that ma be necessar or proper tocarr out the purposes o* this Act" o doubt would ha/e arisen there*ore i* de*endant Central Ban$, uti lizing a powerepressl granted, did enter into a contract with plainti**" 6t could ha/e done so, but it did not do so" or is this to deal un%ustl with plainti**" ;e*endant Central Ban$ in its motion to dismiss be*ore the lower court was +uiteeplicit as to wh under the circumstances, no right could be recognized as possessed b him" As set *orth in such pleading:

4e contend that Monetar Board esolution o" une 17, 19?(, as amended b Monetar Boardesolution o" ?9=, dated April 2une (, 19


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Facts: ;ais iu was an emploee o* !latinum !lans whose business is pre5need industr" 'he was the ;i/ision Mar$eting;irector *rom 19


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But e/en assuming that such a right o* repurchase is granted under the Compra/enta, the petitioner correctl asserts thatthe same has alread prescribed" &nder Art" 1=(< o* the Ci/il Code o* 'pain -Art," 1?(? o* the Ci/il Code o* the!hilippines, the right to redeem or repurchase, in the absence o* an epress agreement as to time, shall last *our ears *romthe date o* the contract" 6n this case then, the right to repurchase, i* it was at *our guaranteed under in the Compra/enta,should ha/e been eercise within *our ears *rom March 21, 191 -indubitabl the date o* eecution o* the contract, or atthe latest in 19="6n the respondent courtEs resolution, it is *urther ruled that the right to repurchase was gi/en birth b the condition precedent pro/ided *or in the phrase siempre cuando estos ultimos pueden hacer la compra -when the buer has moneto bu" 6n other words, it is the respondent courtEs contention that the right ma be eercised onl when the buer hasmone to bu" 6* this were so, the second paragraph o* Article 1=(< would appl P there is agreement as to the time,although it is inde*inite, there*ore, the right should be eercised within ten ears, because the law does not *a/or suspendedownership" 'ince the alleged right to repurchase was attempted to be eercised b Ficente 'antiago onl in 19??, or 2=

ears *rom the date o* the contract, the said right has undoubtedl epired"he law pro/ides that *or con/entional redemption to ta$e place, the /endor should reser/e, in no uncertain terms, the rightto repurchase the thing sold" hus, the right to redeem must be epressl stipulated in the contract o* sale in order that itma ha/e legal eistence"

Case: Banco Filipino -avings and )ortgage Bank vs. Hon. avarro and Florante Del 2alle, >ul 2


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partEs -the debtor participation being reduced to the alternati/e to ta$e it or lea/e it -Rua /s"@aw &nion S oc$ 6nsurance Co", 9= !hil anuar 1=, 1997, co/ered b postdatedchec$s, Dplus balloon pament o* the remaining principal balance and interest and other charges, i* an, on ;ecember 1,2((1" he Cit !rosecutor and ;3> dismissed the case" 0ence, Metroban$ *iled a petition *or certiorari and mandamus toCA" CA li$ewise a**irmed the decisions o* the Cit !rosecutor and ;3> stating that, while no/ation does not etinguishcriminal liabilit, it ma pre/ent the rise o* such liabilit as long as it occurs prior to the *iling o* the criminal in*ormationin court"Issue: Whether or not the "ebt 4ettlement $&reement between Metroolitan Bank and /rust Comany and 3niversal is

tantamount to a novation of obli&ation by the latter to the former which extin&uishes the criminal liability for 7stafa by

the latter.

Held: !. 6nitiall, it is best to emphasize that Dno/ation is not one o* the grounds prescribed b the e/ised !enal Code

*or the etinguishment o* criminal liabilit" 6n a catena o* cases, it was ruled that criminal liabilit *or esta*a is nota**ected b a compromise or no/ation o* contract" 6n 5ira%a v. 0eole and Recuerdo v. 0eole, this Court ruled that in acrime o* esta*a, reimbursement or belated pament to the o**ended part o* the mone swindled b the accused does notetinguish the criminal liabilit o* the latter" 4e also held in 0eole v. Moreno and in 0eole v. 1adera that Dcriminal

liabilit *or esta*a is not a**ected b compromise or no/ation o* contract, *or it is a public o**ense which must be prosecuted and punished b the Go/ernment on its own motion e/en though complete reparation should ha/e been madeo* the damage su**ered b the o**ended part" 'imilarl in the case o* Metroolitan Bank and /rust Comany v. /onda cited b petitioner, we held that in a crime o* esta*a, reimbursement o* or compromise as to the amount misappropriated,a*ter the commission o* the crime, a**ects onl the ci/il liabilit o* the o**ender, and not his criminal liabilit"hus, the doctrine that e/ol/ed *rom the a*orecited cases is that a compromise or settlement entered into a*ter thecommission o* the crime does not etinguish accused.s liabilit *or esta*a" either will the same bar the prosecution o*said crime" Accordingl, in such a situation, as in this case, the complaint *or esta*a against respondents should not bedismissed %ust because petitioner entered into a ;ebt 'ettlement Agreement with &ni/ersal" /en the 3'G arri/ed at thesame conclusion:Contrar to the conclusion o* public respondent, the ;ebt 'ettlement Agreement entered into between petitioner and&ni/ersal Con/erter !hilippines etinguishes merel the ci/il aspect o* the latter.s liabilit as a corporate entit but not the

criminal liabilit o* the persons who actuall committed the crime o* esta*a against petitioner Metroban$"

Case: Prudential Bank and %rust Co'pan& 3BPI7 vs. $i1a&1a& *#asolo, 'eptember 27, 2(1(, J. Carpio )orales.Facts: @eonor Falenzuela5osales inherited two parcels o* land in @aguna which upon her death were inherited b herheirs thereb appointing @iwawa Abasolo as their agent thru the '!A empowering the latter to sell the properties" 3ne,Corazon Marasigan epressed her interest in buing that same properties but because she had no mone et she suggestedthe idea o* *irst mortgaging the properties to !rudential Ban$ and the proceeds o* which would be paid directl to Abasolo"3n consultation with !rudential Ban$.s emploee named orberto Mendiola, a ;eed o* Absolute 'ale was eecutedthereb trans*erring to Marasigan the propert with assurance that the proceeds thereof would 'e paid directly to 4'asolo.4hen all went well with the loan, in the absence o* a written re+uest *or a ban$ guarantee, the !BC released the proceedso* the loan to Marasigan, whom latter despite repeated demands *ailedto pa the purchase price o* the properties"Marasigan onl paid in $ind but ne/er the entire purchase price" 0ence, Abasolo *iled a complaint *or collection o* sum o*mone and annulment o* sale and mortgage with damages" Marasigan, howe/er, denied the eistence o* an agreementthat the proceeds be paid to Abasolo and that the pament in $ind was alread su**icient" C ruled in *a/or o* Abasoloordering !BC to pa Abasolo in the e/ent that Marasigan *ailed to pa" CA a**irmed"Issue: Whether or not 0B/C would be subsidiarily liable to $basolo in the absence of any contractual relationshi

between the two.

Held: !. 6n the absence o* a lender5borrower relationship between petitioner and @iwawa, there is no inherentobligation o* petitioner to release the proceeds o* the loan to her" o a ban$ing institution, well5de*ined lending policiesand sound lending practices are essential to per*orm its lending *unction e**ecti/el and minimize the ris$ inherent in anetension o* credit" 6n order to identi* and monitor loans that a ban$ has etended, a sstem o* documentation isnecessar" &nder this *old *alls the issuance b a ban$ o* a guarantee which is essentiall a promise to repa the liabilitieso* a debtor, in this case Corazon" 6t would be contrar to established ban$ing practice i* Mendiola issued a ban$ guarantee,e/en i* no re+uest to that e**ect was made"

he principle of relati%ity of contracts in Article 111 o* the Ci/il Code supports petitioner.s cause:

Art" 111" Contracts ta$e e**ect onl between the parties, their assigns and heirs,ecept in case where the rights and obligations arising *rom the contract are not transmissible btheir nature, or b stipulation or b pro/ision o* law" he heir is not liable beond the /alue o*the propert he recei/ed *rom the decedent"

6* a contract should contain some stipulation in *a/or o* a third person, he mademand its *ul*illment pro/ided he communicated his acceptance to the obligor be*ore itsre/ocation" A mere incidental bene*it or interest o* a person is not su**icient" he contracting parties must ha/e clearl and deliberatel con*erred a *a/or upon a third person" -underscoring

supplied

#or @iwawa to pro/e her claim against petitioner, a clear and deliberate act o* con*erring a *a/or upon hermust be present" A written re+uest would ha/e su**iced to pro/e this, gi/en the nature o* a ban$ing business, not to mentionthe amount in/ol/ed"

'ince it has not been established that petitioner had an obligation to @iwawa, there is no breach to spea$ o*"@iwawa.s claim should onl be directed against Corazon" !etitioner cannot thus be held subisidiaril liable"

Case: *sian Catha& Finance and $easing Corporation vs. -pouses Cesario Gravador and or'a De 2era and-pouses Du'igpi, >ul =, 2(1(, J. achura.Facts: Asian Catha #inance and @easing Corporation -AC#@C etended a loan o* ight 0undred housand !esos-!


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o* pament8 and it illegall imposed li+uidated damages" he real estate mortgage, on the other hand, contains a pro/isionon the wai/er o* the mortgagor.s right o* redemption, a pro/ision that is contrar to law and public polic" espondentsadded that AC#@C /iolated epublic Act o" 7?=, or the ruth in @ending Act, in the disclosure statement that should beissued to the borrower" C denied the application *or 3 b respondent and therea*ter dismissed the complaintsustaining the /alidit o* the promissor note and real estate mortgage stating among others that, resondents are well-educated individuals who could not fei&n naivet8 in the execution of the loan documents " 6t, there*ore, re%ectedrespondents. claim that AC#@C decei/ed them into signing the promissor note, disclosure statement, and deed o* realestate mortgage" he C *urther held that the alleged de*ects in the promissor note and in the deed o* real estatemortgage are too insubstantial to warrant the nulli*ication o* the mortgage" 6t added that a promissor note is not one o* theessential elements o* a mortgage8 thus, re*erence to a promissor note is neither indispensable nor imperati/e *or the/alidit o* the mortgage" CA re/ersed the trial court.s decision"Issue: Whether or not the sub9ect romissory note and real estate mort&a&e is one of contract of adhesion.

Held: +-. he supposed wai/er b the mortgagors was contained in a statement made in *ine print in the M" 6t wasmade in the *orm and language prepared b HpetitionerIAC#@C while the HrespondentsI merel a**ied their signatures oradhesion thereto" 6t thus parta$es o* the nature o* a contract o* adhesion" 6t is settled that doubts in the interpretation o*stipulations in contracts o* adhesion should be resol/ed against the part that prepared them" his principle especiallholds true with regard to wai/ers, which are not presumed, but which must be clearl and con/incingl shown" H!etitionerIAC#@C presented no e/idence hence it *ailed to show the e**icac o* this wai/er"Moreo/er, to sa that the mortgagor.s right o* redemption ma be wai/ed through a *ine print in a mortgage contract is, inthe last analsis, tantamount to placing at the mortgagee.s absolute disposal the propert *oreclosed" 6t would render practicall nugator this right that is pro/ided b law *or the mortgagor *or reasons o* public polic" A contract o* adhesionma be struc$ down as /oid and unen*orceable *or being sub/ersi/e to public polic, when the wea$er part is completeldepri/ed o* the opportunit to bargain on e+ual *ooting"

Case: Pepito 2elasco, et al. vs. C* and G-I-, >anuar 2ue )ora, et al., Ma 29, 19?7, J. Castro.Facts: nri+ue Mora, owner o* 3ldsmobile sedan model 19=?, bearing plate o" RC5 mortgaged the same to the 0"'"ees, 6nc", with the condition that the *ormer would insure the automobile with the latter as bene*iciar" he automobilewas therea*ter insured on >une 2, 19=9 with the 'tate Bonding S 6nsurance Co", 6nc", and motor car insurance polic A5(?1= was issued to nri+ue Mora" ;uring the e**ecti/it o* the insurance contract, the car met with an accident" heinsurance compan then assigned the accident to the Bane Ad%ustment Co" *or in/estigation and appraisal o* the damage"nri+ue Mora, without the $nowledge and consent o* the 0"'" ees, 6nc", authorized the Boni*acio Bros" 6nc" to *urnishthe labor and materials, some o* which were supplied b the Aala Auto !arts Co" #or the cost o* labor and materials,nri+ue Mora was billed at !2,1(2"7 through the 0"0" Bane Ad%ustment Co" 6n the meantime, the car was deli/ered tonri+ue Mora without the consent o* the 0"'" ees, 6nc", and without pament to the Boni*acio Bros" 6nc" and the AalaAuto !arts Co" o* the cost o* repairs and materials" &pon the theor that the insurance proceeds should be paid directl tothem, the Boni*acio Bros" 6nc" and the Aala Auto !arts Co" *iled on Ma


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the insurance contract omitted such stipulation, which is a circumstance that supports the said conclusion" 3n the otherhand, the loss paable clause o* the insurance polic stipulates that @oss, i* an, is paable to 0"'" ees, 6nc"indicating that it was onl the 0"'" ees, 6nc" which the intended to bene*it"4e li$ewise obser/e *rom the brie* o* the 'tate Bonding S 6nsurance Compan that it has /ehementl opposed theassertion or pretension o* the appellants that the are pri/ to the contract" 6* it were the intention o* the insurancecompan to ma$e itsel* liable to the repair shop or materialmen, it could ha/e easil inserted in the contract a stipulation tothat e**ect" o hold now that the original parties to the insurance contract intended to con*er upon the appellants the bene*itclaimed b them would re+uire us to ignore the indespensable re+uisite that a stipulation pour autrui must be clearlepressed b the parties, which we cannot do"As regards paragraph o* the insurance contract, a perusal thereo* would show that instead o* establishing pri%ity 'etweenthe appellants and the insurance compan, such stipulation merel establishes the procedure that the insured has to *ollowin order to be entitled to indemnit *or repair" his paragraph there*ore should not be construed as bringing into eistence

in *a/or o* the appellants a right o* action against the insurance compan as such intention can ne/er be in*erred there*rom"

Case : )iguel Florentino, et al. vs. -alvador ncarnacion, et al., 'ept" (, 1977, J. Guerrero.Facts: >ust a*ter the death o* ncarnacion #6orentino in 191 up to last ear and as had alwas been the case since timeimmomorial the products o* the land made sub%ect matter o* this land has been used in answering *or the pament *or thereligious *unctions speci*ied in the ;eed tra%udicial !artition belated August 2, 197" his arrangement about the products answering *or the comment o* epenses *or religions *unctions as mentioned abo/e was not registered in theo**ice o* the egister o* ;eeds under Act o , Act 9? or and, other sstem o* registration" he heirs, howe/er, o*ncarnacion *iled with C#6 o* 6locos 'ur an application *or registration o* a parcel o* agricultural land and the re/ocationo* the said pro/ision in the ;eed pertaining to the products o* such land sub%ect to pament o* religious *unctionsepenses"Issue: Whether or not the stiulation, arran&ement or &rant is revocable at the otion of the co-heirs.

Held: !. 4e *ind that the trial court erred in holding that the stipulation, arrangement or grant -hibit 351 is re/ocableat the option o* the co5owners" 4hile a stipulation in *a/or o* a third person has no binding e**ect in itsel* be*ore itsacceptance b the part *a/ored, the law does not pro/ide when the third person must ma$e his acceptance" As a rule, thereis no time at such third person has a*ter the time until the stipulation is re/o$ed" 0ere, 4e *ind that the Church accepted thestipulation in its *a/or be*ore it is sought to be re/o$ed b some o* the co5owners, namel the petitioners5appellants herein"6t is not disputed that *rom the time o* the with o* ;oWa ncarnacion #lorentino in 191, as had alwas been the case sincetime immemorial up to a ear be*ore the *iring o* their application in Ma 19?, the Church had been en%oing the bene*itso* the stipulation" he en%oment o* bene*its *lowing there*rom *or almost se/enteen ears without +uestion *rom an+uarters can onl be construed as an implied acceptance b the Church o* the stipulation pour autrui be*ore its re/ocation"4e hold that said stipulation is a stipulation pour autrui. 4 stipulation pour autrui is a stipulation in *a/or o* a third personcon*erring a clear and deliberate *a/or upon him, and which stipulation is merel a part o* a contract entered into b the parties, neither o* whom acted as agent o* the third person, and such third person and demand its *ul*illment pro/o$ed thathe communicates his to the obligor be*ore it is re/o$ed" he re+uisites are: -1 that the stipulation in *a/or o* a third personshould be a part, not the whole, o* the contract8 -2 that the *a/orable stipulation should not be conditioned or compensated b an $ind o* obligation whate/er8 and - neither o* the contracting bears the legal represented or authorization o* third person"o constitute a /alid stipulation pour autrui it must be the purpose and intent o* the stipulating parties to bene*it the thirdand it is not su**icient that the third person ma be incidentall bene*ited b the stipulation" he *airest test to determinewhether the interest o* third person in a contract is a stipulation pour autrui or merel an incidental interest, is to rel uponthe intention o* the parties as disclosed b their contract" 6n appling this test, it meters not whether the stipulation is in thenature o* a gi*t or whether there is an obligation owing *rom the promisee to the third person" hat no such obsorptioneists ma in some degree assist in determining whether the parties intended to bene*it a third person"

Case: Bank of *'erica % ? -* vs. I*C and *ir Cargo and %ravel Corporation, o/" 11, 19


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they deri%e their rights.+ 3he 'inding effect of contracts upon the heirs of the deceased party is not altered 'y the pro%ision in our Rules of -ourt that money de'ts of a deceased must 'e li!uidated and paid from his estate 'efore theresidue is distri'uted among said heirs (Rule 892. 3he reason is that whate%er payment is thus made from the estate isultimately a payment 'y the heirs and distri'utees& since the amount of the paid claim in fact diminishes or reduces the shares that the heirs would ha%e 'een entitled to recei%e.

General rule: A part.s contractual rights and obligations are transmissible to the successors" "atio: 3he rule is aconse!uence of the progressi%e depersonali0ation+ of patrimonial rights and duties that& as o'ser%ed 'y ictorio ,olacco& has characteri0ed the history of these institutions. 1rom the Roman concept of a relation from person to person&the o'ligation has e%ol%ed into a relation from patrimony to patrimony& with the persons occupying only a representati%e position& 'arring those rare cases where the o'ligation is strictly personal& i.e.& is contracted intuitu personae& inconsideration of its performance 'y a specific person and 'y no other. 3he transition is mar*ed 'y the disappearance of

the imprisonment for de't.ceptions:1" he nature o* the obligation o* the suret or guarantor does not warrant the conclusion that his peculiar

indi/idual +ualities are contemplated as a principal inducement *or the contract"2" 6ntransmissibilit b stipulation o* the parties" Being eceptional and contrar to the general rule, this

intransmissibilit should not be easil implied, but must be epressl established, or at the /er least, clearlin*erable *rom the pro/isions o* the contract itsel*, and the tet o* the agreements sued upon nowhere indicatethat the are non5trans*erable" Because under the law -Article 111, a person who enters into a contract isdeemed to ha/e contracted *or himsel* and his heirs and assigns, it is unnecessar *or him to epresslstipulate to that e**ect8 hence, his *ailure to do so is no sign that he intended his bargain to terminate upon hisdeath" 'imilarl, that the @uzon 'uret Co", did not re+uire bondsman 0emad to eecute a mortgageindicates nothing more than the compan.s *aith and con*idence in the *inancial stabilit o* the suret, but notthat his obligation was strictl personal"

" Dot transmissible b operation o* law"a" he pro/ision ma$es re*erence to those cases where the law epresses that the rights or

obligations are etinguished b death, as is the case in legal support -Article ((, parentalauthorit -Article 27, usu*ruct -Article ?(, contracts *or a piece o* wor$ -Article 172?, partnership -Article 1


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Issue: Whether or not there was a erfected contract between the etitioner and the rivate resondents to reair the

vessel Aamboan&a-.

Held: !. here was not et a meeting o* the minds as to the cause o* the contract" he cause o* a contract has beende*ined as the essential reason which mo/es the contracting parties to enter into it -< Manresa, =th dition, p" =(" 6nother words, the cause is the immediate, direct and proimate reason which %usti*ies the creation o* an obligation thru thewill o* the contracting parties - Castan, th dition, p" 7" -General nterprises, 6nc" /" @ianga Ba @ogging Co", 6nc",11 'CA 7, 79" #or the pri/ate respondent, the cause o* the contract was the repair o* its /essel Xamboanga5> while*or the petitioner the cause would be its commitment to repair the /essel and ma$e it seaworth" %he telegra's datedJanuar& 6;, Januar& 9, and Januar& 9, 6;4 sent #& the petitioner to the private respondent, ho1ever, indicate

that the for'er had not accepted the repair of Ea'#oanga/J, the reason #eing that the e(tent of the repair to #e

'ade necessitated a 'aor e(pense so that the petitioner insisted on the presence of the private respondent for

evaluation #efore it accepted the repair of the 1ooden vessel. hat the petitioner had not et consented to the contract is

e/ident when on >anuar 2 4:R??M?N3 4/ 3> 3


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Facts: 6n 19?1 @ucio @ee, whose name was later changed to @ucio @ee odriguez, was doing business under the tradename 4eldon Construction, the predecessor5in5interest o* the herein petitioner, 4@;3 C3'&C63C3!3A63" he latter corporation was incorporated in >ul, 19? as a closed corporation composed o* @ucio ee-owner o* 4eldon Construction, his wi*e, his sister and the latterEs husband, and a cousin" he assets o* 4eldonConstruction were trans*erred to, and its liabilities assumed b the new corporation" 0ence, the instant case was brought b4@;3 C3'&C63 C3!3A63 as successor5in5interest o* 4eldon Construction and @ucio @ee"!rior to March 7, 19?1, @ucio @ee dra*ted plans *or a theater5apartment building which pri/ate respondent Cancio intendedto put up" herea*ter, on March 7, 19?1, he submitted to the latter a proposal *or the super/ision o* the construction o* said building on commission basis" he proposal was signed not b @ee but b his o**ice manager, Antonio 4ong" he pri/aterespondent ne/er a**ied his signature on the document"Among the pro/isions Contained in the proposal was the setting up o* a re/ol/ing *und o* !1(,((("(( !esos *or the costsand ependitures to be incurred in the construction o* the building, such as materials and labor among others" he *und was

to be replenished b the owner o* the building *rom time to time - $d " /he roosal also rovided for the ayment toWeldon Construction of a commission of ten er cent !)6# of the total cost of the buildin&.Issue: Whether or not the contract rovidin& for the commission of Weldon was erfected.

Held: !. 6n /iew o* all the *oregoing considerations this Court *inds that the agreement between the parties is thecontract o* construction *or a stipulated price which is a$in to a contract *or a piece o* wor$ de*ined in the a*ore+uotedarticle" Both parties ha/ing *ull per*ormed their reciprocal obligations in accordance with said contract, petitioner isestopped *rom in/o$ing an entirel di**erent agreement so as to demand additional consideration" 3nce a contract has beenconsummated, there is nothing le*t to be done or to be demanded b the parties thereto" All obligations arising *rom thecontract are etinguished"As set b the parties, the consideration *or the construction o* the Ga heater building is !?((,((("(( !esos whichamount has been *ull paid b the pri/ate respondent" %here is no #asis for the petitioners de'and for the pa&'ent ofP59,;. Pesos as co''ission of ten per cent 367 of the total cost of construction.

he *irst proposal submitted b 4eldon Construction *or rendering ser/ice under a contract o* super/ision -hibit A issimpl that, a proposal" 6t ne/er attained per*ection as the contract between the parties" 3nl an absolute or un+uali*iedacceptance o* a de*inite o**er mani*ests the consent necessar to per*ect a contract -Article 119, ew Ci/il Code" head/ance pament o* !1(,((("(( !esos was not an un+uali*ied acceptance o* the o**er contained in the *irst proposal-hibit A as in *act an entirel new proposal -hibit was submitted b 4eldon Construction subse+uentl" 6*, asclaimed b the petitioner, the parties had alread agreed upon a contract o* super/ision under hibit A, wh then was a

second proposal madeN Res ipsa lo!uitur. he eistence o* the second proposal belies the per*ection o* an contract arising*rom the *irst proposal "

Case: C ? C Co''ercial Corp. vs. *ntonio )enor 3 $ctin& as :en. Mana&er of =ational Waterworks and 4ewera&e $uthority# and )e'#ers of the Co''ittee on Pre/>ualification, *@*-*, >an" 27, 19uino.Facts: >udge Cloribel o* the Court o* #irst 6nstance o* Manila in his decision dated March 1, 19?7 in Ci/il Case o"??7=(, a mandamus case, ordered the Acting General Manager o* the ational 4aterwor$s and 'ewerage Authorit andthe members o* the Committee on !re5Ruali*ication to allow C S C Commercial Corporation to participate as a +uali*ied bidder in the public bidding *or the suppl o* asbestos cement pressure pipes to the awasa in spite o* the *act that it had a pending ta case and had no ta clearance certi*icate" B /irtue o* that %udgment, which became *inal because the awasadid not appeal, C S C Commercial Corporation too$ part in the bidding" 4hen the bids were opened on Ma 1ul ?, 19?? reser/ed theright to re%ect the bid o* an bidder -p" =, ecord on Appeal"here*ore, a bidder whose bid is re%ected has no cause *or complaint nor a right to dispute the award to another bidder-sguerra S 'ons /s" Atona, 11 !hil" 11ul1, 19anuar 19=, !ablo ncabo *ormall applied with the @and states ;i/ision, Bureau o* @ands, to purchasea parcel o* land designated as @ot 1, Bloc$ , !lan !sd52osue Ruesada trans*erring rights o/er the lot to the latter, conditioned on appro/al bthe @and enure Administration -@A, *or short" he trans*er o* rights b ncabo to Ruesada was not put in writing but pament o* the price *or the rights trans*erred was e/idenced b receipts" 6n o/ember -undated 19=uanito CariWo was doc$eted as @ACase o" 9(, to which respondent !ablo ncabo ob%ected and *iled an Answer in opposition thereto" @A ruled inmaintaining the status +uo" CariWo appealed to 3**ice o* the !resident and re*used to gi/e up possession o* the land"0ence, ncobo *iled an action in C#6 o* Manila declaring them as owners" @ower court *a/ored ncobo" CA a**irmed"Issue: Whether or not "eed of 4ale of ?ouse and /ransfer of Ri&hts on which the etitioners have based their

alication over the questioned lot is simulated and therefore an inexistent deed of sale.

Held: +-. his Court *inds that there is substantial and con/incing e/idence that hibit ;51 was a simulated deed o*sale and trans*er o* rights, to warrant the a**irmance o* the decision o* the respondent Court o* Appeals" he characteristico* simulation is the *act that the apparent contract is not reall desired or intended to produce legal e**ects nor in an waalter the %udicial situation o* the parties"1 &nder the circumstances surrounding their transaction, the parties $new that the

document hibit ;51 was at once *ictitious and simulated where none o* the parties intended to be bound thereb"'trongl indicati/e o* the simulated character o* hibit ,;51 is the *act that the CariWos could not produce the receiptse/idencing their alleged paments to the @and Authorit *or the disputed lot, nor were the able to produce the Agreementto 'ell"Contracts o* sale are /oid and produce no e**ect whatsoe/er where the price, which appears therein as paid, has in *actne/er been paid b the /endee to the /endor" A sale o* land without consideration, but intended merel to protect a part toa %oint /enture *or the cash ad/ances he was to ma$e *or the realt subdi/ision that the parties wanted to put up, is null and/oid" he law is clear on this matter" he Ci/il Code pro/ides:

Art" 1(9" he *ollowing contracts are ineistent and /oid *rom the beginning: -2 hose which are absolutel simulated or *ictitious8 hese contracts cannot be rati*ied" either can the right to set up the de*ense o* illegalit be wai/ed"

#urthermore, e/en without going into the merits andLor /alidit o* hibit ;51, it is clear that there has been no legaltrans*er o* rights in *a/or o* the CariWos because neither the @A nor the @and Authorit has appro/ed or gi/en due courseto such trans*er o* rights"2= he @A ne/er wai/ed its right to appro/e the trans*er o* rights" 6t onl ruled that the status +uowill be maintained so long as the Court has not et ruled on the authenticit o* document hibit ;51" he ownership o*

the lot b the CariWos is still contingent on the appro/al o* the @A upon their compliance with all the re+uirements o* thelatter" 'ince no appro/al or due course has et been gi/en b the @A or @A to such trans*er o* rights, the documenthibit ;51 is not en*orceable against the latter"

http://www.lawphil.net/judjuris/juri1987/jul1987/gr_l-47661_1987.html#fnt13http://www.lawphil.net/judjuris/juri1987/jul1987/gr_l-47661_1987.html#fnt13http://www.lawphil.net/judjuris/juri1987/jul1987/gr_l-47661_1987.html#fnt13http://www.lawphil.net/judjuris/juri1987/jul1987/gr_l-47661_1987.html#fnt25http://www.lawphil.net/judjuris/juri1987/jul1987/gr_l-47661_1987.html#fnt25http://www.lawphil.net/judjuris/juri1987/jul1987/gr_l-47661_1987.html#fnt25http://www.lawphil.net/judjuris/juri1987/jul1987/gr_l-47661_1987.html#fnt13http://www.lawphil.net/judjuris/juri1987/jul1987/gr_l-47661_1987.html#fnt25


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Case: )anuel $agun


12/22

'CA 99 wherein this Court ruled that e/en a /erbal contract o* sale o* real estate produces legal e**ects between the parties"Issue: Whether or not the unnotari%ed deed of sale urortedly executed on $u&ust ), )*DE by the rimitive owner

0edro ;illanueva, in favor of etitioners, can be considered as a valid instrument for effectin& the alienation by way of

sale of a arcel of land re&isterd under the /orrens 4ystem.

Held: !. rue, as argued b appellants, a pri/ate con/eance o* registered propert is /alid as between the parties"0owe/er, the onl right the /endee o* registered propert in a pri/ate document is to compel through court processes the/endor to eecute a deed o* con/eance su**icient in law *or purposes o* registration" !lainti**s5appellantsE reliance onArticle 1=? o* the Ci/il Code is un*ortunate" he general rule enunciated in said Art" 1=? is that contracts are obligator,in whate/er *orm the ma ha/e been entered, pro/ided all the essential re+uisites *or their /alidit are present" he netsentence pro/ides the eception, re+uiring a contract to be in some *orm when the law so re+uires *or /alidit oren*orceabilit" 'aid law is 'ection 127 o* Act 9? which re+uires, among other things, that the con/eance be eecuted

be*ore the %udge o* a court o* record or cler$ o* a court o* record or a notar public or a %ustice o* the peace, who shallcerti* such ac$nowledgment substantiall in *orm net hereina*ter stated"'uch law was /iolated in this case" he action o* the egister o* ;eeds o* @aguna in allowing the registration o* the pri/atedeed o* sale was unauthorized and did not lend a bit o* /alidit to the de*ecti/e pri/ate document o* sale"&pon consideration o* the *acts and circumstances surrounding the eecution o* the assailed document, the trial court*ound that said pri/ate document -hibit B was null and /oid and that it was signed b somebod else not !edroFillanue/a" 'uch *indings o* *act besides being based on the records, were sustained b the Court o* Appeals"

Case: $i' +hi $u&a vs. C* and Hind -ugar Co'pan&, 'ept"11, 19anuar 27, 1971, petitioner withdrew*rom the compan warehouse in /aring +uantities a total amount o* ,7= piculs under substitute deli/er orders, lea/inga balance o* =( piculs undeli/ered"3n >anuar 22, 1971, the +uestion o* pament cropped out between the parties" !etitioner claimed that he had paid!12,97="(( to the compan o**icials, Cashier Garcia and Manager Abalos on o/ember 1" 197( and as proo* o* his pament, he re*erred to the contract, particularl to the stipulation stating erms: Cash upon sing o* this contract"espondent compan o**icials denied the claim o* the petitioner, alleging that petitioner ne/er paid *or the sugar on o/ember 1, 197( or at an time therea*ter" An audit report or eamination o* the boo$s o* the compan made bternal Auditor Fictorino ;aroa showed no pament b petitioner"3n Ma 17, 1971, petitioner, as plainti** below, *iled the complaint against the de*endant 0ind 'ugar Compan stating ?causes o* actions" he trial court *a/ored @im" But CA re/ersed"Issue: Whether or not ayment has already been made.

Held: +-. Considering the admitted *act that the contract o* sale -hibit A was prepared in the o**ice o* respondentcompan b Generoso Bongato, Assistant to the Manager o* the compan, upon instruction o* General Manager miliano@" Abalos who is a lawer, and 4e are now con*ronted with the /aring or con*licting interpretations o* the parties thereto,

the respondent compan contending that the stipulation erms: Cash upon signing o* this contract does not mean that theagreement was a cash transaction because no mone was paid b the petitioner at the time o* the signing thereo*, whereasthe petitioner insists that it was a cash transaction inasmuch as he paid cash amounting to !12,97="(( upon the signing o*the contract, the pament ha/ing been made at around 1:( in the a*ternoon o* o/ember 1, 197( to the cashier, eodoroGarcia, and Manager Abalos although the sale was agreed to in the morning o* the same da, o/ember 1, 197(, thecon*licting interpretations ha/e shrouded the stipulation with ambiguit or /agueness" hen, the cardinal rule should andmust appl, which is that the interpretation shall not *a/or the part who caused the ambiguit -Art" 177, ew Ci/ilCode" @e rule that in the instant case, the interpretation to #e taken shall not favor the respondent co'pan& sinceit is the part& 1ho caused the a'#iguit& in its preparation.

4e do not agree with the meaning o* the pro/ision in the contract ascribed b the respondent court in its decision that:'tated in another wa, the pro/ision o* the Contract in +uestion means that the pa ment o* the !12,97="(( 6' 3#3@@34 or 6' 3 B MA; -and 3 4A' MA; upon the signing o* said contract" As alread dra*ted or drawnup, complete and *inalized with all the signatures thereon o* the contracting parties and presented in court as hibit Awithout an change whatsoe/er in the mode o* pament, such pro/ision plainl and simpl means that the pament was inCA'0, and not on C;6" he ambiguit raised b the use o* the words or phrases in the +uestioned pro/ision must beresol/ed and interpreted against the respondent compan"6n truth the stipulation in the contract which reads: erms: Cash upon signing o* this contract is /er clear and simple in

its meaning, lea/ing no doubt in 3ur minds upon the intention o* the contracting parties, hence, the *irst rule o* contractinterpretation that the literal meaning o* its stipulation shall control, is the go/erning rule at hand" esorting to 4ebsterEshird ew 6nternational ;ictionar, p" 2=1=, *or the de*inition o* the word upon which literall means, among others,1(a -1: immediatel *ollowing on8 /er soon a*ter8 """ b: on the occasion o* at the time o*8 """ the clear import o* the

stipulation is that pament was made on the occasion o* or at the time o* the signing o* the contract and not that pamentwill *ollow the signing" 4e must adopt the *ormer meaning because it is such an interpretation that would most ade+uatelrender the contract e**ectual, *ollowing Article 17 o* the ew Ci/il Code which pro/ides:

4rt. DG7G. $f some stipulation of any contract should admit of se%eral meanings& it shall 'e understood as'earing that import which is most ade!uate to render it effectua.

he e/idence *or the petitioner establishes that a*ter paing the cash consideration to Cashier Garcia and Manager Abalos,the parties signed the contract and therea*ter a signed cop o* said contract was gi/en to petitioner and also the *our -deli/er orders co/ering the ,(une 2?, 19=9,a complaint *or eminent domain against de*endant5appellee, Carmen M" Fda" de Castell/i, %udicial administratri o* theestate o* the late Al*onso de Castell/i -hereina*ter re*erred to as Castell/i, o/er a parcel o* land situated in the barrio o*'an >ose, #loridablanca, !ampanga" 6n its complaint, the epublic alleged, among other things, that the *air mar$et /alueo* the abo/e5mentioned lands, according to the Committee on Appraisal *or the !ro/ince o* !ampanga, was not more than!2,((( per hectare, or a total mar$et /alue o* !2=9,??9"1(8 and praed, that the pro/isional /alue o* the lands be *ied at!2=9"??9"1(, that the court authorizes plainti** to ta$e immediate possession o* the lands upon deposit o* that amount withthe !ro/incial reasurer o* !ampanga8 that the court appoints three commissioners to ascertain and report to the court the %ust compensation *or the propert sought to be epropriated, and that the court issues therea*ter a *inal order o*condemnation"3n >une 29, 19=9 the trial court issued an order *iing the pro/isional /alue o* the lands at !2=9,??9"1("6n her motion to dismiss *iled on >ul 1, 19=9, Castell/i alleged, among other things, that the land under heradministration, being a residential land, had a *air mar$et /alue o* !1="(( per s+uare meter, so it had a total mar$et /alue

o* !11,ul 1, 19=?8 that the epublic be ordered to pa her !=,(((,((("(( as unrealized pro*its,and the costs o* the suit" he epublic argues that the takin& should be reckoned from the year )*GE when by virtue ofa secial lease a&reement between the Reublic and aellee Castellvi, the former was &ranted the ri&ht and

rivile&e to buy the roerty should the lessor wish to terminate the lease, and that in the e/ent o* such sale, it wasstipulated that the *air mar$et /alue should be as o* the time o* occupanc8 and that the permanent impro/ementsamounting to more that hal* a million pesos constructed during a period o* twel/e ears on the land, sub%ect o*epropriation, were indicati/e o* an agreed pattern o* permanenc and stabilit o* occupanc b the !hilippine Air #orcein the interest o* national 'ecurit"Issue : Whether or not the value of the land should be comuted at the time when the Reublic occuied the land as

lessee.

Held : !. 3he Repu'licFs claim that it had the =right and pri%ilege= to 'uy the property at the %alue that it had at thetime when it first occupied the property as lessee nowhere appears in the lease contract " 4hat was agreed epressl in paragraph o" = o* the lease agreement was that, should the lessor re+uire the lessee to return the premises in the same

condition as at the time the same was *irst occupied b the A#!, the lessee would ha/e the right and pri/ilege -or optiono* paing the lessor what it would *airl cost to put the premises in the same condition as it was at the commencement o*the lease, in lieu o* the lesseeEs per*ormance o* the underta$ing to put the land in said condition" he *air /alue at thetime o* occupanc, mentioned in the lease agreement, does not re*er to the /alue o* the propert i* bought b the lessee, butre*ers to the cost o* restoring the propert in the same condition as o* the time when the lessee too$ possession o* the propert" 'uch *air /alue cannot re*er to the purchase price, *or purchase was ne/er intended b the parties to the leasecontract" 6t is a rule in the interpretation o* contracts that 0owe/er general the terms o* a contract ma be, the shall not be understood to comprehend things that are distinct and cases that are di**erent *rom those upon which the partiesintended to agree -Art" 172, Ci/il Code"

Case : astern -hipping $ines, Inc. 2s. )argarine/2erkaufs/0nion G'#H, 'ept" 27, 1979, J. %eehankee. 3*cting7Facts: espondent corporation, a 4est German corporation not engaged in business in the !hilippines, was the consigneeo* =(( long tons o* !hilippine copra in bul$ with a total /alue o* &'V 1(une


13/22

1ustice o* the !eace o* Baambang, !angasinan" his couple had a daughter named 'oledad 'adorra" ;uring theirmarriage, the spouses ac+uired two -2 parcels o* land situated in 6niangan, ;upa, ue/a Fizcaa" 0a/ing beenabandoned b her husband, 6sidora Cabaliw instituted an action *or support with the Court o* #irst 6nstance o* Manila,entitled 6sidora Cabaliw de 3rden /ersus Benigno 'adorra doc$eted therein as Ci/il Case o" 19" 3n >anuar (,19, %udgment was rendered re+uiring Benigno 'adorra to pa his wi*e, 6sidora Cabaliw, the amount o* !7="(( a month interms o* support as o* >anuar 1, 19, and !1=("(( in concept o* attorneEs *ees and the costs"&n$nown to 6sidora Cabaliw, on August 19, 19, Benigno 'adorra eecuted two -2 deeds o* sale o/er the two parcels o*land abo/e described in *a/or o* his son5in5law, 'otero 'adorra, the latter being married to ncarnacion 'adorra, adaughter o* Benigno 'adorra b his *irst marriage" Because o* the *ailure o* her husband to compl with the %udgment o*support, 6sidora Cabaliw *iled in Ci/il Case 192 a motion to cite Benigno 'adorra *or contempt and the Court o* #irst6nstance o* Manila in its 3rder o* Ma 12, 197, authorized 6sidora to ta$e possession o* the con%ugal propert, toadminister the same, and to a/ail hersel* o* the *ruits thereo* in pament o* the monthl support in arrears" 4ith this ordero* the Court, 6sidora proceeded to ue/a Fizcaa to ta$e possession o* the a*orementioned parcels o* land, and it was thenthat she disco/ered that her husband had sold them to his son5in5law 'otero" 3n #ebruar 1, 19(, 6sidora *iled with theCourt o* #irst 6nstance o* ue/a Fizcaa Ci/il Case o" 9 against her husband and 'otero 'adorra *or the reco/er o*the lands in +uestion on the ground that the sale was *ictitious8 at the same time a notice o* lis pendens was *iled with the

egister o* ;eeds o* ue/a Fizcaa"6n Ma o* 19(, Benigno 'adorra died"Issue: Whether or not the sale by Beni&no to 4otero 4adorra was valid.

Held: !. he *acts narrated in the *irst portion o* this ;ecision which are not disputed, con/incingl show or pro/e thatthe con/eances made b Benigno 'adorra in *a/or o* his son5in5law were *raudulent" #or the heart o* the matter is thatabout se/en months a*ter a %udgment was rendered against him in Ci/il Case o" 192 o* the Court o* #irst 6nstance o*Manila and without paing an part o* that %udgment, Benigno 'adorra sold the onl two parcels o* land belonging to thecon%ugal partnership to his son5in5law" 'uch a sale e/en i* made *or a /aluable consideration is presumed to be in *raud o*the %udgment creditor who in this case happens to be the o**ended wi*e"Article 1297 o* the old Ci/il Code which was the law in *orce at the time o* the transaction pro/ides:

Contracts b /irtue o* which the debtor alienates propert b gratuitous title are presumed to be made in *raudo* creditors" 4lienations 'y onerous title are also presumed fraudulent when made b persons against whom some %udgment has been rendered in an instance or some writ o* attachment has been issued" he decision orattachment need not re*er to the propert alienated and need not ha/e been obtained b the part see$ingrescission" -emphasis supplied

he abo/e5+uoted legal pro/ision was totall disregarded b the appellate court, and there lies its basic error"

#urthermore, the presumption o* *raud established b the law in *a/or o* petitioners is bolstered b other indicia o* bad*aith on the part o* the /endor and /endee" /hus !)# the vendee is the son-in-law of the vendor. In the early caseofRe&alado vs. 1uchsin&er F Co., ( 0hil. +'(, this Court held that the close relationshi between the vendor and the

vendee is one of the known bad&es of fraud. !'# $t the time of the conveyance, the vendee, 4otero, was livin& with his

father-in-law, the vendor, and he knew that there was a 9ud&ment directin& the latter to &ive a monthly suort to his

wife Isidora and that his father-in-law was avoidin& ayment and execution of the 9ud&ment. + !D# It was known to the

vendee that his father-in-law had no roerties other than those two arcels of land which were bein& sold to him. ; he*act that a /endor trans*ers all o* his propert to a third person when there is a %udgment against him is a strong indicationo* a scheme to de*raud one who ma ha/e a /alid interest o/er his properties"

Case: Hongkong and -hanghai Banking Corporation vs. "alph Pauli and -pouses -all& Garganera and )ateoGarganera, Ma (, 19une 1, 19=7, the 0ong$ong S 'hanghai Ban$ing Corporation *iled a complaint against the de*endant alph!auli, to collect the sum o* !2=acinto !ublic @and'ubdi/ision, 'an >acinto, Masbate"6n 19=1, Gimena Almosara sold the lots to the spouses duardo #elipe and 0ermogena F" #elipe" he sale was madewithout the consent o* her husband, Maimo"3n April 2?, 197?, the heirs o* Maimo Aldon, namel his widow Gimena and their children 'o*ia and 'al/ador Aldon,*iled a complaint in the Court o* #irst 6nstance o* Masbate against the #elipes" he complaint which was doc$eted as Ci/ilCase o" 272 alleged that the plainti**s were the owners o* @ots 17(, 171 and 11=8 that the had orall mortgaged the

same to the de*endants8 and an o**er to redeem the mortgage had been re*used so the *iled the complaint in order toreco/er the three parcels o* land"he de*endants asserted that the had ac+uired the lots *rom the plainti**s b purchase and subse+uent deli/er to them"he trial court *a/ored the #elipes as law*ul owners thereto" 0owe/er, it was re/ersed b CA" 0ence, this petition"Issue: Whether or not the sale of land to the 5elies by one of the souses is voidable.

Held: +-. %he vie1 that the contract 'ade #& Gi'ena is a voida#le contract is supported #& the legal provision

that contracts entered #& the hus#and 1ithout the consent of the 1ife 1hen such consent is re>uired, are annulla#le

at her instance during the 'arriage and 1ithin ten &ears fro' the transaction >uestioned. -Art" 17, Ci/il Code"According to Art" 19( o* the Ci/il Code, among the /oidable contracts are HIhose where one o* the parties is incapableo* gi/ing consent to the contract" -!ar" 1" 6n the instant case5Gimena had no capacit to gi/e consent to the contract o*sale" he capacit to gi/e consent belonged not e/en to the husband alone but to both spouses"GimenaEs contract is not rescissible *or in such contract all the essential elements are untainted but GimenaEs consent wastainted" either can the contract be classi*ied as unen*orceable because it does not *it an o* those described in Art" 1( o* the Ci/il Code" And *inall, the contract cannot be /oid or ineistent because it is not one o* those mentioned in Art" 1(9o* the Ci/il Code" B process o* elimination, it must per*orce be a /oidable contract"he /oidable contract o* Gimena was sub%ect to annulment b her husband onl during the marriage because he was the/ictim who had an interest in the contract" Gimena, who was the part responsible *or the de*ect, could not as$ *or its

annulment" heir children could not li$ewise see$ the annulment o* the contract while the marriage subsisted because themerel had an inchoate right to the lands sold"he termination o* the marriage and the dissolution o* the con%ugal partnership b the death o* Maimo Aldon did notimpro/e the situation o* Gimena" 4hat she could not do during the marriage, she could not do therea*ter" he case o* 'o*ia


14/22

and 'al/ador Aldon is di**erent" A*ter the death o* Maimo the ac+uired the right to +uestion the de*ecti/e contractinso*ar as it depri/ed them o* their hereditar rights in their *atherEs share in the lands" he *atherEs share is one5hal* -1L2o* the lands and their share is two5thirds -2L thereo*, one5third -1L pertaining to the widow"

Case: House International Building %enants *ssociation, Inc. vs. I*C, Centerto1n )arketing Corp., et al., >une (,19ul 19=, a*ter the plans o* subdi/ision andsegregation o* the lot had been appro/ed b the Bureau o* @ands, laintiff tendered to defendant the urchase ricewhich the latter refused to accet, without cause or reason. 0ence, 3rtega sued @eonardo *or speci*ic per*ormance" helatter argued that the oral contract o* sale is unen*orceable"Issue: Whether or not the oral contract of sale is unenforceable.

Held: !. 6t is admitted b both parties that an oral agreement to sell a piece o* land is not en*orceable" -Art" 1(, Ci/ilCode, 'ection 21, ule 12, ules o* Court" !lainti**, howe/er, argues that the contract in +uestion, although /erbal, was partiall per*ormed because plainti** desisted *rom claiming the portion o* lot 6 in +uestion due to the promise o* de*endant

to trans*er said portion to her a*ter the issuance o* title to de*endant" he court thin$s that e/en granting that plainti** realldesisted to claim not on oral promise to sell made b de*endant, the oral promise to sell cannot be en*orced" he desistanceto claim is not a part o* the contract o* sale o* the land" 3nl in essential part o* the eecutor contract will, i* it has alread been per*ormed, ma$e the /erbal contract en*orceable, pament o* price being an essential part o* the contract o* sale" the

abo/e means that partial per*ormance o* a sale contract occurs only when part o* the purchase price is paid, it surelconstitutes a de*ecti/e statement o* the law" American >urisprudence in its title 'tatute o* #rauds lists other acts o* partial per*ormance, such as possession, the ma$ing o* impro/ements, rendition o* ser/ices, pament o* taes, relin+uishment o*rights, etc"hus, it is stated that he continuance in possession ma, in a proper case, be su**icientl re*erable to the parol contract o* sale to constitute a part per*ormance thereo*" here ma be additional acts or peculiar circumstances which su**icientlre*er the possession to the contract" " " " Continued possession under an oral contract o* sale, b one alread in possessionas a tenant, has been held a su**icient part per*ormance, where accompanied b other acts which characterize the continued possession and re*er it to the contract o* purchase" Hence, as there 1as partial perfor'ance, the principle e(cludingparol contracts for the sale of realt&, does not appl&.

Case: "osario Car#onnel vs. Jose Poncio, "a'on Infante and ''a Infante, Ma 12, 19=ose !oncio is the owner o* a parcel o* land which both osario Carbonell and mma 6n*ante o**ered to bu" 4hen!oncio was unable to $eep up with the installments due on his mortgage, he approached Carbonell and o**ered to sell thelot to the latter which the latter accepted with the proposed price o* 9"=( per s+uare meter which !oncio accepted"Carbonell and !oncio eecuted a document" And Carbonell paid !oncio 2(( -out o* !?7" 0owe/er, when Carbonell wasabout to pa the balance, !oncio told Carbonell that he could not proceed with the sale because he sold it alread to 6n*ante*or !,== -*or the assumption o* his mortgage with epublic 'a/ings Ban$" Carbonell sued !oncio and 6n*ante toreco/er the land" rial court dismissed the complaint upon the ground that Carbonell.s cause o* action is unen*orceable"Issue: Whether or not the sale of house and lot to Infante by 0oncio was valid.

Held: 4e are o* the opinion and so hold that the appeal is well ta$en" It is 1ell settled in this urisdiction t hat the-tatute of Frauds is applica#le onl& to e(ecutor& contracts 3Facturan vs. -a#anal, 6 Phil., 4697, not to contracts

that are totall& or artially perfor'ed -Almirol, et al", %s" Monserrat, < !hil", ?7, 7(8 obles %s" @izarraga 0ermanos, =(!hil", ur" 722572"6n the words o* *ormer Chie* >ustice Moran: he reason is simple" 6n eecutor contracts there is a wide *ield *or *raud because unless the be in writing there is no palpable e/idence o* the intention o* the contracting parties" he statute has precisel been enacted to pre/ent *raud" -Comments on the ules o* Court, b Moran, Fol" 666 H19=7 ed"I, p" 17


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between Celestina !erez and 'antiago Babao and as such the same are null and /oid" 0ence, Babao sued the estate o*Celestina *or the reco/er o* his share on the land"Issue: Whether or not the verbal a&reement between 4antia&o Babao and Celestina 0ere% is enforceable.

Held: !. his statute, *ormerl incorporated as 'ection 21 o* ule 12 o* our ules o* Court, is now *ound in Article1( o* the new Ci/il Code, which pro/ides, in so *ar as pertinent to this case, as *ollows:

6n the *ollowing cases an agreement herea*ter made shall be en*orceable b action unless the same, or somenote or memorandum thereo*, be in writing, and subscribed b the part charged or b his agent, e/idencethere*ore, o* the agreement cannot be recei/ed without the writing, or secondar e/idence o* its contents8-a An agreement that b its terms is not to be per*ormed within a ear *rom the ma$ing thereo*"-e An agreement " " " *or the sale o* real propert or o* an interest therein"

Appellants contends that the alleged /erbal agreement *alls under the paragraphs -a and -c abo/e5+uoted because thesame ma be considered as an agreement which b its terms is not to be per*ormed within one ear *rom the ma$ingthereo*, or one which in/ol/es a sale o* real propert or o* an interest therein" 6* this premise is correct, appellants contend,then the trial court erred in allowing the introduction o* parole e/idence to pro/e the alleged agreement o/er the /igorousob%ection o* counsel *or appellants"hat the alleged /erbal agreement is one which b its terms is not to be per*ormed within one ear is /er apparent *romthe allegations o* the complaint" hus, it is therein alleged that the agreement was allegedl made in 192 and b its terms'antiago Babao bound himsel* -1 to impro/e all the *orest trees and planting thereon coconuts, rice, corn and other cropssuch as bananas and bamboo trees, and -2 to act at the same time as administrator o* said land and impro/ements duringthe li*etime to Celestina !erez" And in consideration o* such underta$ing, Celestina !erez bound hersel* to gi/e anddeli/er, either to 'antiago Babao or his wi*e Cleo*e !erez, one5hal* - o* the whole area o* said land as impro/ed with allthe impro/ements thereon upon her death" 6t is also alleged in the complaint that Celestina !erez died on August 2,197, or 2 ears a*ter the ma$ing o* the alleged agreement while 'antiago Babao died on >anuar ?, 19


16/22

commission as his predecessor, one 3G K&6 who recei/ed 1() *or all *reight and passenger re/enues coming *romButuan Cit and = ) *or all *reight going to Butuan" 4 herea*ter, or on 27 >ul 197?, a *ormal Contract o* Agenc, mar$ed as hibit #, was eecuted between B6'AC3,represented b ecei/er Att" Adol*o F" Amor and Marciano C" 'anchez, represented b his authorized representati/ee+uiel Aranas" 3n ( >ul 197?, a*ter 'anchez *ound that !aragraph 1? o* the Contract o* agenc was +uite pre%udicialto him, he eecuted with B6'AC3 a 'upplemental 'hipping Agenc Contract, mar$ed as hibit G, which wasdul signed b ecei/er Att" Adol*o F" Amor on behal* o* B6'AC3 and Marciano C" 'anchez himsel*" 5 But, boththe Contract o* Agenc and the 'upplemental 'hipping Agenc Contract were ne/er submitted b Att" Adol*o Amor tothe recei/ership court *or its appro/al"4hile the shipping business o* B6'AC3 in Butuan Cit *lourished, e/identl to the mutual bene*it o* both parties, on2? ;ecember 1979, co5petitioner Ben%amin G" oa, as ecuti/e Fice5!resident o* B6'AC3, wrote 'anchez a letter6 ad/ising him that, e**ecti/e 1 >anuar 19is a'iding strictly with the terms of the contract.

Case: 2ictorino Hernande< vs. C* and -u#stituted Heirs of "ev. Fr. $ucio Garcia, April 27, 19a/ier that the deed o* sale is /oid and ineistent *orlac$ o* consent and consideration" 6t is a *act that on >anuar 17, 191, when the deed was eecuted, usebio was almost1(( ears old and was in a wea$ condition" 4ith that, it is ob/ious that ;el*incould not ha/e raised the amount o* 7(( asconsideration o* the land supposedl sold to him b usebio" he consideration is not onl grossl inade+uate but alsoshoc$ing to the conscience" o sane person would sell the land *or onl about ("(( per hectare" he Court, thence, *oundusebio not /oluntaril a**i his thumb mar$ on the deed o* sale"

Case: Potenciano )enil and 1ife Crispina a&ve vs. C*, *gueda Garan, et al., >ul 1, 197r", u*o a/e, and @ucio Calanias *orcibl too$ possession o* the said land, and *iled against petitionersCi/il Case o" 1?92 *or Ruieting o* itle be*ore Branch 11 o* the Court o* #irst 6nstance o* 'urigao del orte"Issue: Whether or not Menil can still recover the land from :aran.

Held: !. 6t is not disputed b the parties that the contract o* sale eecuted on Ma 7, 19?(, ha/ing been eecuted lessthan = ears *rom Ma 7, 19?(, the date the homestead patent was awarded to pri/ate respondent Agueda Garan, is nulland /oid *or being /iolati/e o* 'ection 11< o* C"A" 11 H!ublic @and ActI which pro/ides:

'ec" 11


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4rt. DJE9. 3he following contracts are ine)istent and %oid from the 'eginningL(D2 3hose whose cause& o'ect& or purpose is contrary to law& morals& good customs& pu'lic order or pu'lic policy(I2 3hose which are a'solutely simulated or fictitious(G2 3hose whose cause or o'ect did not e)ist at the time of the transaction(J2 3hose whose o'ect is outside the commerce of men(52 3hose which contemplate an impossi'le ser%ice(62 3hose where the intention of the parties relati%e to the principal o'ect of the contract cannot'e ascertained(72 3hose e)pressly prohi'ited or declared %oid 'y law.3hese contracts cannot 'e ratified. Neither can the right to set up the defense of illegality 'ewai%ed.

#urther, noteworth is the *act that the second contract o* sale o/er the said homestead in *a/or o* the same /endee, petitioner !otenciano Menil, is *or the same price o* !1="((" Clearl, the un/aring term o* the said contract is amplemani*estation that the same is simulated and that no ob%ect or consideration passed between the parties to the contract" 6t ise/ident *rom the whole record o* the case that the homestead had long been in the possession o* the /endees upon theeecution o* the *irst contract o* sale on Ma 7, 19?(8 li$ewise, the amount o* !1="(( had long been paid to AguedaGaran on that same occasion" 4e *ind no e/idence to the contrar"

Case: Director of $ands vs. -ilveretra *#a#a, et al., #eb" 27, 1979, J. )akasiar.Facts: he ad/erse claimant, Att" Alberto B" #ernandez was retained as counsel b petitioner, Maimo Abar+uez, in Ci/ilCase o" 5?=7 o* the Court o* #irst 6nstance o* Cebu, entitled Maimo Abar+uez /s" Agripina Abar+uez, *or theannulment o* a contract o* sale with right o* repurchase and *or the reco/er o* the land which was the sub%ect matterthereo*" he Court o* #irst 6nstance o* Cebu rendered a decision on Ma 29, 19?1 ad/erse to the petitioner and so heappealed to the Court o* Appeals"@itigating as a pauper in the lower court and engaging the ser/ices o* his lawer on a contingent basis, petitioner, liable tocompensate his lawer whom he also retained *or his appeal eecuted a document on >une 1(, 19?1 in the Cebuano5Fisaan dialect whereb he obliged himsel* to gi/e to his lawer one5hal* -1L2 o* whate/er he might reco/er *rom @ots=?(( and =?(2 should the appeal prosper"Issue: Whether or not the contract for a contin&ent fee is rohibited by $rticle )G*) of the =ew Civil Code.

Held: !. his contention is without merit" Article 191 prohibits onl the sale or assignment between the lawer and hisclient, o* propert which is the sub%ect o* litigation" As 4 ha/e alread stated" he prohibition in said article a onl toapplies stated: he prohibition in said article applies onl to a sale or assignment to the lawer b his client o* the propert which is the sub%ect o* litigation" 6n other words, *or the prohibition to operate, the sale or t o* the propert mustta$e place during the pendency o* the litigation in/ol/ing the propert -osario Fda" de @aig /s" Court o* Appeals, et al",@52?o/ita ongo, were sur/i/ed bchildren" 3n April 17, 191une 1ul 1, 19?7, 2( 'CA 9('ligations and -ontracts& "urado& D969 ?d. emphasis supplied2.3he nullity of these contracts is definite and cannot 'e cured 'y ratification. 3he nullity is permanent& e%en if the causethereof has ceased to e)ist& or e%en when the parties ha%e complied with the contract spontaneously (p. 595& 3olentino& supra2.6n ?ugenio %s. ,erdido& et al., o" @57(anuar 1, 19=


18/22

Held: !. &n+uestionabl, the parties herein operated under an arrange'ent, co'onl& kno1n as the ka#its&ste', 1here#& a person 1ho has #een granted a certificate of convenience allo1s another person 1ho o1ns

'otors vehicles to operate under such franchise for a fee. A certi*icate o* public con/enience is a special pri/ilegecon*erred b the go/ernment " Abuse o* this pri/ilege b the grantees thereo* cannot be countenanced" he $abit sstemhas been 6denti*ied as one o* the root causes o* the pre/alence o* gra*t and corruption in the go/ernment transportationo**ices" 6n the words o* Chie* >ustice Ma$alintal, this is a pernicious sstem that cannot be too se/erel condemned" 6tconstitutes an imposition upon the good *aith o* the go/ernment"Although not outrightl penalized as a criminal o**ense, the $abit sstem is in/ariabl recognized as being contrar to public polic and, there*ore, /oid and ineistent under Article 1(9 o* the Ci/il Code, 6t is a *undamental principle that thecourt will not aid either part to en*orce an illegal contract, but will lea/e them both where it *inds them" &pon this premise, it was *lagrant error on the part o* both the trial and appellate courts to ha/e accorded the parties relie* *rom their predicament" Article 112 o* the Ci/il Code denies them such aid" 6t pro/ides:

4R3. DJDI. if the act in which the unlawful or for'idden cause consists does not constitute a criminal offense&the following rules shall 'e o'ser%ed(D2 when the fault& is on the part of 'oth contracting parties& neither may reco%er what he has gi%en 'y %irtueof the contract& or demand the performance of the otherFs underta*ing.

he de*ect o* ineistence o* a contract is permanent and incurable, and cannot be cured b rati*ication or b prescription"As this Court said in ?ugenio %. ,erdido, 9 the mere lapse o* time cannot gi/e e**icac to contracts that are null /oid"he principle o* in pari delicto is well $nown not onl in this %urisdiction but also in the &nited 'tates where common law pre/ails" &nder American %urisdiction, the doctrine is stated thus: he proposition is uni/ersal that no action arises, ine+uit or at law, *rom an illegal contract8 no suit can be maintained *or its speci*ic per*ormance, or to reco/er the propertagreed to be sold or deli/ered, or damages *or its propert agreed to be sold or deli/ered, or damages *or its /iolation" herule has sometimes been laid down as though it was e+uall uni/ersal, that where the parties are in pari delicto& noa**irmati/e relie* o* an $ind will be gi/en to one against the other" *lthough certain e(ceptions to the rule areprovided #& la1, @e see no cogent reason 1h& the full force of the rule should not #e applied in the instant case.

=?) pacto illicito non oritur actio= Ho action arises out o* an illicit bargainI is the tune5honored maim that must beapplied to the parties in the case at bar" 0a/ing entered into an illegal contract, neither can see$ relie* *rom the courts, andeach must bear the conse+uences o* his acts"

Case: Francisca *rsenal and "e'edios *rsenal vs. I*C, Heirs of %orcuato -uralta, >ul 1, 19


19/22

Facts: he pri/ate respondent #elipe Madlangawa claims that he has been occuping a parcel o* land in the Clara deambunting de @egarda 'ubdi/ision since 199 upon permission being obtained *rom Andres @adores, then an o/erseer o*the subdi/ision, with the understanding that the respondent would e/entuall bu the lot"3n April 2, 19=(, the owner o* the lot, Clara ambunting, died and her entire estate, including her paraphernal propertieswhich co/ered the lot occupied b the pri/ate respondent were placed under custodia legis"3n April 22, 19=(, the pri/ate respondent made a deposit *or the said lot in the sum o* !1,=(("(( which was recei/ed bFicente @egarda, husband o* the late owner" As e/idenced b the receipt issued b Ficente @egarda, the lot consisted o* anarea o* 2( s+uare meters and was sold at !("(( per s+uare meter" here, thus, remained an unpaid balance o* !=,7(("(( but the pri/ate respondent did not pa or was unable to pa this balance because a*ter the death o* the testatri, Claraambunting de @egarda, her heirs could not settle their di**erences" Apart *rom the initial deposit, no *urther pamentswere made *rom 19=("3n April 2anuar 2, and March 1?, 19??,ad/ising the occupants to /acate their respecti/e premises, otherwise, court action with damages would *ollow" 6n additionto these notices b publication, the petitioner sent circulars to the occupants to /acate"he pri/ate respondent was one o* the man occupants who re*used to /acate the lots the were occuping, so that onApril 2?, 19?udge Manalac on'eptember (, 191 issued ;ecree o" 511( ad%udicating @ot o" =(< to Kanas married to Maria Aglimot -h" C"@awer Faleriano '" Concha, 'r", an ad%oining owner o* Kanas since 19?, who became cler$ o* court, testi*ied that Kanashad alwas occupied the lot since 19? up to his death in D96I -1( tsn >une , 197(" 0is son *iled an ad/erse claim *orKanas">n 4ugust 7&D95E Kanas thumbmar$ed in ;apitan a deed o* sale and con/eance wherein he purportedl sold to Antonio@" Acalar o* ;apitan *or ,IEE his 15hectare land" he sale was notarized on the *ollowing da, August


20/22

Case: pifania -arsosa 2da de Barso#ia and Pacita 2allar vs. 2ictoriano Cuenco, April 1?, 19


21/22

o* the plainti**, he ma, i* public polic is thereb enhanced, reco/erwhat he has sold or deli/ered" """

But the *actual set5up has changed" he litigated propert is now in the hands o* a naturalized#ilipino" 6t is no longer owned b a dis+uali*ied /endee" espondent, as a naturalized citizen, wasconstitutionall +uali*ied to own the sub%ect propert" here would be no more public polic to be ser/ed in allowing petitioner pi*ania to reco/er the land as it is alread in the hands o* a+uali*ied person" Appling b analog the ruling o* this Court in Fas+uez /s" Giap and @eng'eng Giap S 'ons:

""" i* the ban on aliens *rom ac+uiring not onl agricultural but alsourban lands, as construed b this Court in the Uri/en$o case, is to preser/e the nationEs lands *or *uture generations o* #ilipinos, that aimor purpose would not be thwarted but achie/ed b ma$ing law*ul theac+uisition o* real estate b aliens who became #ilipino citizens bnaturalization"

3nl recentl, we had occasion to reiterate the abo/e rulings in icente :odines %. 1ong ,a* uen& et al" -G"" o" @5?71, >anuar 27, 19


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Case: Heirs of )arciana *vila vs. C* and *ladino Ch. Bacarrisas, o/" 1, 19

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