G.R. No.

90423 September 6, 1991

FRANCIS LEE, petitioner,
vs.
COURT OF APPEALS, PEOPLE OF THE PHILIPPINES AND PELAGIA
PANLINO DE CHIN, respondents.
Arturo S. Santos for petitioner.

MEDIALDEA, J.:p
This is a petition for review on certiorari to set aside the decision of the Court of Appeals dated June
29, 1989 which reversed the decision of the Regional Trial Court (RTC), National Capital Judicial
Region, Branch 129 at Caloocan City, Metro Manila, and reinstated as well as affirmed in toto the
decision of the Metropolitan Trial Court (MTC), Branch 2, same city. The RTC decision found the
petitioner guilty of the crime of light coercion, the dispositive portion of which reads:
IN VIEW OF ALL THE FOREGOING, the judgment appealed from is hereby
modified. The accused Francis Lee is hereby found guilty beyond reasonable doubt
of the crime of light coercion, as penalized under paragraph 2 of Article 287 of the
Revised Penal Code and he is hereby sentenced to suffer a penalty of TWENTY (20)
DAYS of ARRESTO MENOR and to pay one-third (1/3) of the costs. (p. 40, Rollo)
On the other hand, the MTC decision convicted the petitioner of the offense of grave coercion, the
pertinent portion of the same is hereby quoted as follows:
WHEREFORE, premises considered, the Court finds the accused Francis Lee, guilty
beyond reasonable doubt of the offense of Grave Coercion, as charged, defined and
penalized under Art. 286 of the Revised Penal Code, and is hereby sentenced to
suffer an imprisonment of THREE (3) MONTHS, of arresto mayor, medium, and to
pay a fine of P250.00, with cost.
The accused is further ordered to indemnify the offended party, Pelagia Paulino de
Chin, by way of civil liability the sum of P5,000.00 as moral damages and the sum of
P2,000.00 as exemplary damages.
... (p. 33, Rollo)
The facts as stated by the respondent Court of Appeals are undisputed, thus:
At about 10:00 o'clock in the morning of June 20, 1984, the complainant Maria
Pelagia Paulino de Chin, 23 years old, was fetched from her house at 112 BLISS

Site, 8th Avenue, Caloocan City by Atanacio Lumba, a bank employee, upon the
instruction of the petitioner Branch Manager Francis Lee of Pacific Banking
Corporation (hereinafter referred to as bank). Upon arriving at the office of Pacific
Banking Corporation located at Caloocan City, petitioner Francis Lee did not attend
to her immediately. After an hour later, the petitioner confronted the complainant
about a forged Midland National Bank Cashier Check No. 3526794, which the latter
allegedly deposited in the account of Honorio Carpio. During the said confrontation,
the petitioner Francis Lee was shouting at her with piercing looks and threatened to
file charges against her unless and until she returned all the money equivalent of the
subject cashier check. Accordingly, the complainant was caused to sign a prepared
withdrawal slip, and later, an affidavit prepared by the bank's lawyer, where she was
made to admit that she had swindled the bank and had return the money equivalent
of the spurious check. During her stay at the said bank, the complainant, who was
five (5) months in the family way, was watched by the bank's employees and security
guards. It was about six o'clock in the afternoon of the same day when the
complainant was able to leave the bank premises.
Upon the other hand, the petitioner, 37 years old, presented his version, basically a
denial of the charges, to wit: he was the Branch Bank Manager of Pacific Banking
Corporation. After having been informed that Midland National Bank Cashier Check
No. 3526794 was dishonored for being spurious, he examined the relevant bank
records and discovered that complainant Maria Pelagia Paulino de Chin was
instrumental in inducing their bank to accept the subject dollar check and was also
the one who withdrew the proceeds thereof, by utilizing a withdrawal slip purportedly
signed by Honorio Carpio. Petitioner, thru Atanacio Lumba, invited the complainant to
his office. Responding to his invitation, the complainant arrived at the bank before
noon of June 20, 1984, but was not attended to immediately as the petitioner had to
attend to other bank clients. The complainant was merely informed about the subject
fake dollar check that was deposited with said bank upon her assurance that it was
genuine. The complainant was not compelled into signing the withdrawal slip, but she
acted freely and voluntarily in executing her affidavit and in returning the money
equivalent of the subject check. There was nothing unusual during her lengthy stay in
the bank. (pp. 44-45, Rollo)
The sole issue posed in this petition is whether or not the acts of petitioner in simply "shouting at the
complainant with piercing looks" and "threats to file charges against her" are sufficient to convict him
of the crime of grave coercion (p. 6, Rollo).
Article 286 of the Revised Penal Code provides:
ART. 286. Grave coercions. The penalty of arresto mayor and a fine not exceeding
500 pesos shall be imposed upon any person who, without authority of law, shall, by
means of violence, prevent another from doing something not prohibited by law, or
compel him to do something against his will, whether it be right or wrong.

If the coercion be committed for the purpose of compelling another to perform any
religious act or to prevent him from so doing, the penalty next higher in degree shall
be imposed.
Considering that the present case does not involve violence but intimidation, the provisions of Article
1335 of the New Civil Code on intimidation are relevant. It states:
Art. 1335. ...
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 the intimidation, the age, sex and condition of the person
shall be borne in mind.
A threat to enforce once's claim through competent authority, if the claim is just or
legal, does not vitiate consent.
As a general rule, the findings of facts of the Court of Appeals command utmost respect. However,
such findings are disregarded if there appears in the record some fact or circumstance of weight and
influence which has been overlooked or the significance of which has been misinterpreted that, if
considered, would affect the result of the case (see San Sebastian College v. Court of Appeals, et
al., G.R. No. 84401, May 15, 1991).
While the appellate court emphasized the pregnancy and feminine gender of the complainant, it
overlooked other significant personal circumstances which are material in determining the presence
of coercion in this case.
The records show that complainant is a highly educated person who is familiar with banking
procedures. She is a graduate of Business Administration major in Banking and Finance from NCBA.
She also finished one semester of MA in graduate school. In 1983, complainant worked with the
Insular Bank of Asia and America as a bank teller (TSN, November 20, 1984, pp. 5-7; Records, pp.
96-98).
Likewise, it appears that complainant actively participated in the deposit and withdrawal of the
proceeds of the controversial check. We find that she told Honorio Carpio (Carpio, for short), a
relative and payee of the check; to open a savings account with the Pacific Banking Corporation
(Bank, for short) and accompanied him; that subsequently, she presented a Midland National Bank
Cashier's check payable to Carpio in the sum of $5,200.00 to Mr. Lamberto R. Cruz (Cruz, for short),
PRO Manager, Foreign Department; that she claimed that she was requested by her uncle to
deposit the check for collection; that she was a bank depositor and she "knew somebody
downstairs"; that she assured Cruz that the check would be honored between banks (TSN, April 15,
1985, pp. 89-92; Records, 180-183); that on June 11, 1984, the bank, after the usual clearing period,
sent out a notice to Carpio that the proceeds of the check were already credited to his account but

the same was returned to the bank because the address was false or not true; that the total amount
of the check in pesos was P92,557.44; that the total deposit of Carpio was P92,607.44, his initial
deposit of P50.00 being added to the amount of the check; that on the same day, complainant
personally inquired from the bank whether the proceeds of the check have already been credited to
Carpio's account (TSN, June 11, 1985, p. 163, records, p. 163); that upon an affirmative answer, the
bank records show that on that day, the complainant withdrew the sum of P12,607.00 thru a
withdrawal slip purportedly signed by Carpio; that in the interim, Carpio allegedly left abroad (Annex
C, p. 17, Records); that on June 13, 1984, she withdrew the sum of P80,000.44 from Carpio's
account by means of a withdrawal slip allegedly signed by Carpio and then, she closed his account;
that out of the said amount, she redeposited the sum of P50,000.00 to her own savings account and
received in cash the remaining balance of P30,000.44; and on June 15 and 18, 1984, complainant
withdrew the amounts of P2,000.00 and P18,000.00, respectively from her savings account (Exh.
"3", Records, p. 15, in relation to TSN, October 8, 1985, pp. 194-195, Records, pp. 286-287).
In the light of the foregoing circumstances, petitioner's demand that the private respondent return the
proceeds of the check accompanied by a threat to file criminal charges was not improper. There is
nothing unlawful on the threat to sue. In the case of Berg v. National City Bank of New York (102
Phil. 309, 316), We ruled that:
... It is a practice followed not only by banks but even by individuals to demand
payment of their accounts with the threat that upon failure to do so an action would
be instituted in court. Such a threat is proper within the realm of the law as a means
to enforce collection. Such a threat cannot constitute duress even if the claim proves
to be unfounded so long as the creditor believes that it was his right to do so.
The Solicitor General argues that the complainant was intimidated and compelled into disclosing her
time deposit, signing the typewritten withdrawal slip and the affidavit by the petitioner's threat to
detain her at the bank.
At this point, there is a need to make a distinction between a case where a person gives his consent
reluctantly and against his good sense and judgment and where he gives no consent at all, as where
he acts against his will under a pressure he cannot resist. Thus, in Vales v. Villa (35 Phil. 769, 789),
We ruled:
... It is clear that one acts as voluntarily and independently in the eye of the law when
he acts reluctantly and with hesitation as when he acts spontaneously and joyously.
Legally speaking he acts as voluntarily and freely when he acts wholly against his
better sense and judgment as when he acts in conformity with them. Between the
two acts there is no difference in law. But when his sense, judgment, and his will
rebel and he refuses absolutely to act as requested, but is nevertheless overcome by
force or intimidation to such an extent that he becomes a mere automaton and acts
mechanically only, a new element enters, namely, a disappearance of the personality
of the actor. He ceases to exist as an independent entity with faculties and judgment,
and in his place is substituted another the one exercising the force or making use
of the intimidation. While his hand signs, the will which moves it is another's. While a
contract is made, it has, in reality and in law, only one party to it; and, there being

only one party, the one using the force or the intimidation, it is unenforceable for lack
of a second party.
From these considerations it is clear that every case of alleged intimidation must be
examined to determine within which class it falls. If it is within the first class it is not
duress in law, if it falls in the second, it is.
The circumstances of this case reveal that the complainant, despite her protestations, indeed
voluntarily, albeit reluctantly, consented to do all the aforesaid acts.
Bearing in mind her involvement in the deposit and encashment of the check, the complainant
admitted to being nervous upon being informed that the check was spurious (TSN, November 20,
1984, p. 15; Record, p. 106)
We find that complainant's lengthy stay at the bank was not due to the petitioner's threat. It was
rather due to her desire to prove her innocence. Her testimony on this point is a revelation:
Atty. Dizon: (counsel for petitioner)
You are always talking of signing the withdrawal slip by force, is it not
that earlier you admitted that no actual force was employed upon you
in connection with the signing of this document and the force that you
are claiming was the alleged shouting against you coupled with the
statement that you could not leave?
A Yes, sir.
Q When Mr. Lee was requiring you to sign the withdrawal slip did it
not occur to you to leave the bank?
Atty. Pangilinan:
The question has already been answered she said she cannot leave
because she is being threatened.
Atty. Dizon:
That was during the time when she first met Mr. Lee.
Court:
Witness may answer.
A When I was about to sign the withdrawal slip I inquired from him If I
signed it I can leave already but he insisted that I should not leave,
Sir.

Q When he told you that did it not occur to you to stand up and go out
of the bank?
A No, Sir.
Q Why?
A He was insisting that I return the amount I have withdrawn
especially on June 18 when I withdrew P18,000.00, Sir.
COURT:
The question is why did you not leave and disregarded him?
A Because I cannot just leave him that way, Your Honor.
Atty. Dizon:
Why? What was the reason that you cannot leave him?
A Because he is insisting that the responsibility of one person be my
responsibility and at that time I was feeling nervous and he did not
tell me to stand up and leave, Sir. (ibid, pp. 18-20, Records, pp. 109111)
In her insistence to clear up her name, it is not farfetched for Us to think that the complainant
voluntarily but grudgingly returned the money to show good faith. Thus, it was she who informed the
petitioner about the existence of the RCBC Time Deposit Certificate (Exh. "A", pp. 4-5, Records).
The allegation that she did so because of petitioner's threats came from the complainant herself.
She has not been able to present any other witness to buttress her claim.
Further, We find that contrary to complainant's allegations in her affidavit (ibid, p. 5) it was not the
petitioner who suggested the encashment of the RCBC Time Deposit Certificate but her sister; and
that again, it was not the petitioner who agreed to the sister's suggestion but Cruz, the PRO
Manager, Foreign Department of the bank (TSN, January 8, 1985, pp. 40-41, Records, pp. 131-132).
Moreover, while complainant claimed that her freedom of movement was restrained, she, however,
was able to move about freely unguarded from the office of the petitioner situated at the ground floor
to the office of Cruz at the mezzanine floor where her sister found her (ibid, pp. 39- 40, Records, pp.
130-131). Undoubtedly, during that time, there were many bank clients who transacted business with
the bank (TSN, November 20, 1984, p. 21; Records, p. 112). The bank security guards then were at
their posts. Complainant herself admitted that they manifested no overt acts to prevent her from
leaving despite the alleged loud threats of the petitioner (ibid, pp. 20- 21, Records, pp. 111-112)
which could be heard considering that the door to petitioner's office was kept open (TSN, October 8,
1985, p. 184, Records, p. 276). Given such atmosphere, the complainant still did not leave the bank.

The respondent court cited the prepared typewritten withdrawal slip and the non-presentation of the
complainant's passbook as indicators of her involuntary acts.
We disagree. The petitioner testified that the general rule was that the bank requires the
presentation of the passbook whenever withdrawals are made. However, there was an exception to
this rule, i.e. when the depositor is a regular customer in depositing or withdrawing money in the
bank (TSN, October 8, 1985, pp. 189-190, Records, pp. 281-282). The prosecution failed to submit
evidence to rebut his contentions. Besides, the trial court's conclusion that the withdrawal slip was
typewritten was without basis considering that the complainant merely averred that the withdrawal
slip was already prepared when she signed it (Exh. "A", Records, p. 4).
We also take exception to the following ruling of the appellate court:
It must be noted that the position of a bank manager is one of prestige and dignity
and when the said bank was cheated or swindled it certainly reflects on the capability
and efficiency of the manager and one can just imagine the kind of mental attitude
and feeling of anger the latter would have towards the alleged swindler. Shouting,
raising of voice and dagger looks are common characteristics of an angry man and
that was what accused Lee exhibited to a fragile weaker sex and pregnant offended
party. It would be natural to get angry with someone who had victimized you.
Naturalness, however is not always righteous. It is like taking the law into your hands
and that was what the accused Lee did. (CA Decision, pp. 11-12, Rollo, pp. 52-53)
This pronouncement creates an impression that the petitioner had made a personal case out of the
situation. However, the evidence does not support this view. We find that at the time the check was
deposited and encashed, the petitioner was then on leave (TSN, June 11, 1985, p. 156; Records, p.
248). Under this circumstance, it is not fair to consider the bank's mistake in accepting and paying
the check as the petitioner's mistake which could militate against his efficiency. The petitioner
attributed the mistake in the payment of the forged check to the usual risks in banking business. He
stated:
Atty. Pangilinan, Private prosecutor (authorized by the Fiscal to
prosecute the case in the latter's stead)
Q So you no longer consider him (Carpio) as entitled in (sic) the
proceeds of the chek (sic) and therefore at that point of (sic) time you
will now concede that the payment made by you to him was a big
mistake?
A When we were asking for the respondent and we were locating
Honorio Carpio and we cannot locate him, I consider that a mistake,
Sir.
Q It was a big mistake as a matter of fact?

A When it comes to the falling of the business considering the big

amount I would say big mistake but only a mistake, it was a usual risk
in banking business, Sir.
Q But of course Mr. Lee, being a mistake that mistake will harm and
tense your personality as a Bank Manager?
A It is up to our Manager to decide but when it comes to other
transactions I am handling Three Million plus and considering that
check I don't think with all modesty it will affect me, Sir.
Q But you are called upon to try to recover any money which was in
your judgment was unlawfully taken from you by anybody
A When it comes to procedure I don't think it was unlawfully taken, as
a matter of fact it was our bank who credited this account, Sir.
Q So it is your bounded (sic) duty to recover money which was paid
to someonelse (sic) which payment is not due to him, am I correct?
A It is the duty of our lawyer to recover it, Sir.
Q Is it not a fact that your lawyer is only your agent?
Atty. Dizon:
I think we are going too far, it has nothing to do with the particular
incident subject matter of the criminal offense.
Court:
I see the point of the defense but the witness is very intelligent, I can
see the point of counsel, because in order not to effect his integrity he
resorted to this, for example in case of a bank employee who stole
P500.00 and the other one is P200.00, it could have the same
mistake which is supposed to be admonished by removal. You
answer.
A Yes that is the same case whether it is small or big but when it
comes to the Manager the Head Office is very understanding when it
comes to bogus checks and of course my work is a supervisory. Sir.
(ibid, pp. 170-171; Records, pp. 263-264)
The most telling proof of the absence of intimidation was the fact that the complainant refused to
sign the promissory note in spite of the alleged threats of the petitioner (TSN, January 8, 1985, p. 48;
Records, p. 139). American authorities have declared that "(t)he force which is claimed to have

compelled criminal conduct against the will of the actor must be immediate and continuous and
threaten grave danger to his person during all of the time the act is being committed. That is, it must
be a dangerous force threatened 'in praesenti.' It must be a force threatening great bodily harm that
remains constant in controlling the will of the unwilling participant while the act is being performed
and from which he cannot then withdraw in safety." (State v. Hood, 165 NE 2d, 28, 31-32, Emphasis
ours).
The complainant proferred excuses for her action. For one, she claimed that her sister's presence
helped her recover her composure (TSN, November 20, 1984, p. 29, Records, p. 120).
We are not persuaded. If indeed she had recovered her composure because of her sister's
presence, she could have just left the premises in a huff without encashing the RCBC Time Deposit
Certificate or if they (complainant and sister) were already at the RCBC, they could have desisted
from encashing the check and then could have left for home notwithstanding the alleged presence of
Mr. Lumba who was no longer in his own bank but among the RCBC clients or she could have
refused to sign the affidavit which was handed to her first before the promissory note. Yet, she did
neither of these logical possibilities.
Secondly, she averred that she refused to sign the promissory note because she was able to read its
contents unlike the affidavit and she realized that she would have a great responsibility to return the
amount taken by Carpio (ibid, pp. 27-28, Records, pp. 118-119).
Such an excuse is flimsy and weak. It is strange that complainant's sister, who was with her, failed to
corroborate her statement that she was denied the opportunity to read the affidavit. Her bare
assertion simply confirms the voluntariness of her actions. All her disputed acts were geared towards
proving her good faith. Complainant was willing to return the sum of P48,000.00 she took since it
was only up to this amount where her involvement lies. However, as soon as she realized that she
would have the enormous task of reimbursing the bank the balance of the proceeds of the forged
check allegedly taken by Carpio, she refused to cooperate any further. Notwithstanding the alleged
threats of petitioner, she did not budge. Thus, We find it as a logical consequence that she merely
asked for the receipt of the P18,000.00 she deposited rather than the cancellation of her earlier
withdrawal. On this point, complainant claimed that after her refusal to sign the document, she no
longer insisted on the return of the money because she felt that it was the only way she could leave
the bank premises (TSN, November 20, 1984, p. 31, Records, p. 120). This pretense, however, was
belied by her subsequent actuations. We find that she and her sister left the bank unescorted to eat
their snack; that they were required by the petitioner to come back; and that they decided not to eat
but instead went home (TSN, November 20, 1984, pp. 31-32, Records, pp. 122-123 and January 8,
1965, pp. 49-50, Records, pp. 140-141). With such behavior, We are at a loss to understand how
coercion could attach in this case. Obviously, the complainant has not been cowed into submission.
Against this backdrop, We hold that coercion did not exist in this case. Consequently, the petitioner
should be acquitted.
ACCORDINGLY, the decision appealed from is hereby REVERSED and a new one hereby entered
ACQUITTING the accused of the crime of grave coercion.

SO ORDERED.
Narvasa (Chairman), Cruz and Grio-Aquino, JJ., concur.

G.R. No. L-9421

July 24, 1915

L.L. HILL, plaintiff-appellant,

vs.
MAXIMINA CH. VELOSO, ET AL., defendants-appellees.
Martin M. Levering for appellant.
P.E. del Rosario for appellee.
ARELLANO, C.J.:
On December 30, 1910, Maximina Ch. Veloso, the wife of Manuel M. Tio Cuana, and Domingo
Franco, the first named with the consent of her husband, executed and signed a document of the
following tenor:
For value of the goods we have received in La Cooperativa Filipina we promise to pay jointly and
severally to Michael & Co., S. en C., or its order, in the municipality of Cebu, the sum of six thousand
three hundred and nineteen pesos and thirty-three centavos (6,319.33), in the manner hereinafter
set forth, with interest on such part of said principal as may remain unpaid at the end of each month
at the rate of one and a half per cent per month until the principal shall have been completely paid.
The said sum of six thousand three hundred and nineteen pesos and thirty-three centavos
(P6,319.33) shall be paid at the rate of five hundred pesos (P500) monthly on or before the 15th day
of each month, and the interest shall also be paid monthly. In case said monthly payments are not
made in the manner that we have promised hereinabove, then all the unpaid principal shall become
immediately demandable, at the option of the owner of this promissory note. In case suit be brought
for the collection of the amount of this promissory note or any part thereof, we bind ourselves jointly
and severally to pay an additional and reasonable sum as fees of the plaintiff's attorney in said suit.
(Sgd.) MAXIMINA CH. VELOSO.
DOMINGO FRANCO.
I consent to my wife, Maximina Ch. Veloso, signing the foregoing document.
(SGD.) MANUEL M. TIO CUANA.
Cebu, P.I., December 30, 1910.
This promissory note was indorsed to L.L. Hill on January 12, 1911. The following indorsement
appears on the back:

JANUARY 12, 1911.

Pay to the order of L.L. Hill.
E. MICHAEL, S. en C .
By E. MICHAEL, Gerente.
Two thousand pesos have been paid on this note that is, four installments of P500 each on
February 10, March 16, April 16, and May 22, 1911, respectively.
On July 5, 1911, L.L. Hill brought the present suit to recover the following sums: P4,319.33, with
interest thereon at the rate of 1 per cent per month from July 1, 1911, until said sum should be
entirely paid; P473.18 as interest on the principal of said note from December 30 to June 30, 1911;
P1,000 as fees for plaintiff's attorney in this suit and for the costs of the proceedings against the
defendants, Maximina Ch. Veloso and Manuel Martinez Tio Cuana.
Defendants, in answer to the complaint, alleged as a special defense that "about the middle of
December, 1910, the deceased Domingo Franco, who was their son-in-law, had stated to them that
attorney Martin M. Levering, in his capacity as guardian of the minor children of Potenciano Chiong
Velos, had suggested to the said Franco the necessity of the defendants' executing in Levering's
behalf a document in which it should be set forth that the defendants would pay to Levering, in his
capacity of guardian of said minors, the sum of P8,000 which defendants had borrowed from
Damasa Ricablanca, the former guardian of these minors, in view of the fact that the court had
removed this latter from office and appointed said attorney in her stead; that, by reason of this
statement by Levering to Franco, and having, as they did have, confidence in said decedent,
Domingo Franco, on account of his being a member of their family, defendants were willing to
execute in behalf of the said attorney, Levering, a document that should be set forth the sum owed
by them to the wards represented by Levering; that, consequently, said Domingo Franco had
defendants said paper would be filled out inside his office by recording on the sheet the obligation
contracted by them in behalf of said wards; that defendants did in fact sign the said paper for the
purpose indicated, and, up to the death of said Domingo Franco, which occurred in May of the
present year (1911) confided in his good faith and in the belief that the paper which they had signed
had been duly filled out with the obligation contracted by them in behalf of said wards and had been
delivered to attorney Martin M. Levering as guardian of said minors, but that after the said Franco
died they learned that at no time had he ever delivered to said attorney any document whatever
signed by defendants; that they believed that the paper which said deceased had them sign for the
alleged purpose aforementioned was filled out with a totally different obligation from that which they
had been made to believe would be set forth therein. Defendants therefore alleged that, as they had
had no transaction whatever with Michael & Co., S. en C., nor with the plaintiff, and as they had not
received any kind of goods whatever from said firm, and it appearing that they, together with the
deceased Domingo Franco, seemingly signed the promissory note, plaintiff's Exhibit A, all these
reasons induced them to believe, and they so alleged, that the said deceased, without their consent,
utilized the aforementioned paper for the execution of said promissory note. Defendants further
alleged that at no time did they intended to execute any promissory note in behalf of Michael & Co.,
S. en C.; that it was false that Michael & Co. delivered goods to them in La Cooperativa Filipina; and

that, of their own free will, they did not execute any document whatever in behalf of the creditor
mentioned in said promissory note."
Evidence was adduced by the parties, after which the Court of First Instance of Cebu, who tried the
case, rendered judgment absolving defendants from the complaint, with their costs.
Plaintiff appealed, and his appeal having been heard and the evidence reviewed, it appears:
That the trial court sustained defendants' special defense in all its parts, making it the principal
ground for his judgment, to wit, that defendants' signatures on the promissory note were obtained by
means of the fraud alleged in their answer to the complaint and that defendants at the trial explicitly
acknowledged their signatures. The defendant Maximina Ch. Veloso testified that her son-in-law,
Domingo Franco, had her sign the document in blank; that when she did so contained no writing;
and that if he made her sign it, and if she did sign it, it was because Franco had told her that
Levering compelled her to execute a document in his behalf "for the minor children of Damasa
Ricablanca," her sister-in-law and widow of Potenciano Ch. Veloso, who had deposited with her
P8,000 belonging to her minor children to whom witness acknowledged herself to be indebted in the
said sum of P8,000.
Assuming this to be true, by the recognition of the signature of this promissory note, the document
became completely effective, unless there be proof of some exception permitted by law. Were there
such an exception, the maker was the person obliged to proved it and, in the present case, that
person is the defendant; and the latter has presented absolutely no proof of the mistake by reason of
which she says she signed the promissory note, nor of the fraud or deceit she charges to her son-inlaw, Domingo Franco, now deceased. Far from it, something else was shown to have been proven
by her own testimony and acts. On her being cross-questioned as to whether it was true that, as she
says, she signed the promissory note in blank thinking that she was signing an obligation in behalf of
Levering as guardian of the estate belonging to the minor children of her deceased brother, she
replied that it was, that she had been told by the said Domingo Franco that it was such an obligation,
and so she was willing to sign it, because "it was really a debt."
From this testimony of Maximina Ch. Veloso and from her written answer, it appears that in
December, 1910, she signed in blank the promissory note now in question; that she signed it in the
belief that the obligation which it would contain would be that of acknowledging her debt of P8,000 in
favor of the minor children of Damasa Ricablanca and of paying it to Levering, who at that time was
the guardian of then said minors; that for this reason, in her written answer of August 4, 1911, she
set up that special defense of error and deceit, when she saw that the obligation contained in the
document signed in blank was a promissory note made out to Michael & Co. for P6,319 and some
centavos.
It appears that Levering, as guardian of the minor children of Damasa Ricablanca, commenced
proceedings on November 1, 1911, to recover the P8,000 owed by the defendant Maximina Ch.
Veloso, and that the latter, on January 15, 1912, answered the complaint stating that her debt was
owing to Damasa Ricablanca herself in her own right, but not her capacity of guardian of her minor
children. (Record, pp. 34 and 36.)

If she said this in 1912, it cannot be maintained that in 1910, on being required to recognize and pay
the debt of P8,000, she consented to sign a document in blank recognizing the debt and binding
herself to pay it to Levering as the then guardian of the minor children of Damasa Ricablanca. What
would have been natural and logical is that then, as in 1912, she would have refused to execute said
obligation in writing in favor of Levering, as she did reject it on January 18, 1912, since she did not
consider herself to be in debt to the minors, but to their mother.
This being shown by the record, the allegation of that other fact, entirely contradicted at trial by the
same person, cannot be considered as proof of the error and deceit alleged in this action.
It is likewise proven in this case that during the trial, after the defendant Veloso had acknowledged
the debt owing the minors represented by Levering, she was cross-questioned as to why she had
denied it in 1912 when she was sued for its payment; she replied that possibly demand had been
made upon her for payment, but that she did not remember, and on being cross-questioned as to
whether she remembered that judgment had been rendered against her, she replied that she did and
that she had been informed of it by her own attorney.
This is the only thing in the record which may be opposed to the truth and presumption of truly
offered by the contents of a document freely and willingly signed.
This is not proof, much less preponderant proof, that can outweigh the contents of the promissory
note that is the basis of the complaint; on the contrary, it is conclusive proof of the falsity of the other
cause of debt alleged in the special defense.
But even granted that no such proofs existed in the case; even granted that it was proven at trial that
Domingo Franco acted in the manner stated in the answer and in the defendant Maximina Ch.
Veloso's testimony, yet even so, the deceit and error alleged could not annul the consent of the
contracting parties to the promissory note, nor exempt this defendant from the obligation incurred.
The deceit, in order that it may annul the consent, must be that which the law defines as a cause.
"There is deceit when by words or insidious machinations on the part ofone of the contracting
parties, the other is induced to execute a contract which without them he would not have made."
(Civ. Code, art. 1269.)
Domingo Franco is not one of the contracting parties who may have deceitfully induced
the other contracting party, Michael & Co., to execute the contract. The one and the other contracting
parties, to whom the law refers, are the active and the passive subjects of the obligation, the party of
the first part and the part of the second part who execute the contract. The active subject and party
of the first part of the promissory note in question is Michael & Co., and the passive subject and the
party of the second part are Maximina Ch. Veloso and Domingo Franco; two, or be they more, who
are one single subject, one single party. Domingo Franco is not onecontracting party with regard to
Maximina Ch. Veloso as the other contracting party. They both are but one single contracting party in
contractual relation with, or as against, Michael & Co. Domingo Franco, like any other person who
might have been able to to induce Maximina Ch. Veloso to act in the manner she is said to have
done, under the influence of deceit, would be, for this purpose, but a third person. There would then
not be deceit on the part of the one of the contracting parties exercised upon the other contracting
party, but deceit practiced by a third person.

"In accordance with the text of the Code, which coincides with that of other foreign codes, deceit by
a third person does not in general annul consent, and in support of this opinion it is alleged that, in
such a case, the two contracting parties act in good faith, (on the hypothesis set forth, Michael &
Co., and Maximina Ch. Veloso); that there is no reason for making one of the parties suffer for the
consequences of the act of a third person in whom the other contracting party may have reposed an
imprudent confidence. Notwithstanding these reasons, the deceit caused by a third person may
produce effects and, in some cases, bring about the nullification of the contract. This will happen
when the third person causes the deceit in connivance with, or at least with the knowledge, without
protest, of the favored contracting party: the most probable suppositions, in which the latter cannot
be considered exempt from the responsibility. Moreover, and even without the attendance of that
circumstance, the deceit caused by a third person might lead the contracting party upon whom it was
practiced into error, and as such, though it be not deceit, may vitiate consent. In any case, this deceit
may give rise to more or less extensive and serious responsibility on the part of the third person, and
a corresponding right of action for the contracting party prejudiced" (in the present hypothesis,
Maximina Ch. Veloso against Domingo Franco). (8 Manresa, 659, 2d Ed.)
With respect to the true cause of the debt or cause of the contract, it is not necessary to set forth any
consideration whatever, because, as the deceit and error alleged cannot be estimated, it is of no
importance whether the La Cooperativa Filipina, whose goods were the cause of the debt,
exclusively belonged to one or the other of the debtors, the obligation of debt and payment being
joint. But if any consideration with respect to this error alleged on appeal were necessary, it would be
that the evidence against the finding contained in the judgment appealed from is very conclusive.
Isabelo Alburo, a witness for the defense and manager of La Cooperativa Filipina, testified that the
goods furnished by Michael were received in the store La Cooperativa Filipina; that he signed the
bills for collection; that the bill-heads bore the printed legend "La Cooperativa Filipina de Maximina
Ch. Veloso;" and that all the forms, books and accounts were printed in the same manner. The
municipal treasurer exhibited the registry books and testified that the license for that establishment
was issued in the name of Maximina Ch. Veloso, and the appellee herself testified that she was
aware that it was conducted in her name.
The third assignment of error should be considered like the foregoing two. The statement is in all
respects inadmissible that the promissory note in question is absolutely null and void, not merely
annulable, and that is such cases the Supreme Court has decided that no rights can be acquired by
a person who obtains a promissory note by indorsement, in support of which averment the decisions
in the cases of Palma vs. Caizares (1 Phil. Rep., 602) and Lichauco vs. Martinez (6 Phil. Rep., 594)
are cited.
In neither of these decisions is such a doctrine set up The syllabus in the first case says: "A
promissory note which represents a gambling debt and is therefore unenforceable in the hands of
the payee, obtains no greater validity in the hands of an assignee in the absence of showing that the
debtor has consented to and approved of the assignment."
And that of the second case:" Money lost at a prohibited game cannot be recovered, though the
loser deliver to the winner his note for the amount lost.
An assignee of such note who took it after it became due has no more rights than assignor.

Both of these decisions deal with a promissory note for a sum of money lost at a prohibited game;
and, in the case at bar, we have not to do with a promissory note of this nature. "The promissory
note in question says the trial court was indorsed to L.L. Hill on January 12, 1911. The note
had then already become due, although the date specified in the note for the payment of the first
amount of P500 of the principal had not yet arrived." (Bill of ex., p. 13.).
If the date for the payment of the first amount of P500 had not yet arrived, it follows that the note had
not yet fallen due, because it could have no other due date than that of the first installment, and this
fact was finally recognized by the court in another order wherein he says: "It appears that the court
erred in that part of his order where he held that the promissory note in question fell due on the date
of its conveyance by indorsement to L.L. Hill." (Bill of ex., p. 16.)
So that, neither by reason of the indorsement, nor by reason of its object, is the promissory note null,
or annulable, and the aforecited decisions are absolutely inapplicable to the case at bar.
The absolution of the defendants from the complaint being unsupported by any grounds of fact or
law, it devolves upon this court to set forth the conclusions of fact and law on which this decision
rests.
The defendants' signatures on the promissory note herein concerned were identified at the trial.
These signatures were written and the obligation was contracted, without error or deceit.
There is no evidence whatever that Michael & Co. threatened to bring suit against Domingo Franco
unless Maximina Ch. Veloso signed with Domingo Franco a promissory note for the said sum.
The facts constituting the consideration for the contract contained in the promissory note are fully
proven (though proof was not necessary, as a presumption of law, not destroyed by any evidence
whatever to the contrary, lies in its favor), because it has been fully proven that the goods, the
consideration for the debt, were received in the La Cooperativa Filipina. It was likely fully proven that
the La Cooperativa Filipina belonged to the defendant, with or without Domingo Franco having a
share therein, and that the goods came from Michael & Co.
There is nothing to support the finding that the sale of the goods by Michael & Co. was a sale to
Domingo Franco only. There is no proof whatever that Levering, as the guardian of the minor
children of Potenciano Veloso, had required Maximina Veloso in December, 1910, to sign a
document recognizing her debt to said minors, nor that Domingo Franco acted, for this purpose, as
the defendants' attorney and adviser. With regard to the defendants' debt of P8,000 to the minor
children of Potenciano Veloso and Damasa Ricablanca, the instrument attesting this debt, executed
by the defendants in favor of Damasa Ricablanca was who then the guardian of said minors, had
already existed since June 30, 1907, and appears on page 34 of the record.
The facts alleged in the special defense can not in any wise be held to be proven, as above
demonstrated in our examination of the parol evidence adduced in this case, and, besides, because
of this other consideration: If, as stated in the special defense, "Domingo Franco, who was a son-inlaw of the defendants, had told them that attorney Martin M. Levering, in his capacity as guardian of

the minor children of Potenciano Ch. Veloso, had suggested to Franco the necessity of
the defendants' executing an instrument setting out that they would pay to the said Attorney Martin
M. Levering, in his capacity of guardian of said minors, the sum of P8,000 which defendants had
borrowed from Damasa Ricablanca, the former guardian of said minors;" and if, as held by the trial
court in his judgment, Domingo Franco had then acted as defendants' attorney and adviser, there is
nothing in the record to show why Domingo Franco had to sign such an instrument attesting a debt
to the minors, as the principal obligor, when the creditor required no one but the defendants to sign
such a document; nor was it shown why, on such a supposition, Manuel Martinez did not have to
sign the instrument except merely to authorize his wife, by his permission as her husband, to sign it,
when in the special defense it is admitted that the document in question contains an
acknowledgment of the debt of P8,000 "which the defendants had borrowed from Damasa
Ricablanca."
The alleged error Cannot be sustained. There is no other signed document than the promissory note
presented with the intention, on its being signed, of securing the payment of the goods sold to the La
Cooperativa Filipina.
That is what the document says, and its contents must be accepted, pursuant to section 297 of Act
No. 190 (Code of Civil Procedure).
The remainder of the principal owing, P4,319.33, must be paid. Payment must also be made of the
covenanted interest at the rate of 1 per cent per month from July 1, 1911, until the whole of the
said sum be completely paid; and, finally the P1,000 stipulated in the contract as fees for the
plaintiff's attorney in this case must be paid.
With respect to the P473.18, interest on the principal of said promissory note from December 30,
1910, to June 30, 1911, this amount cannot be recovered, because, in conformity with article 1110 of
the Civil Code, a receipt from the creditor for the principal, that contains no stipulation regarding
interest, extinguishes the obligation of the debtor with regard thereot; and the receipts issued by the
International Bank show that no reservation whatever was made with respect to the interest on the
P2,000 paid on account.
The judgment appealed from is reversed. Twenty days after notification of this decision, let judgment
be entered against the defendant Maximina Ch. Veloso ordering the payment of P4,319, with the
stipulated interest thereon at the rate of 1 per cent per month from July 1, 1911, and of P1,000 as
attorney's fees, with costs of first instance, without special finding as to the costs of this second
instance, it is so ordered.
Torres, Johnson, Carson, Trent, and Araullo, JJ., concur.

G.R. No. 108253 February 23, 1994

LYDIA L. GERALDEZ, petitioner,

vs.
HON. COURT OF APPEALS and KENSTAR TRAVEL
CORPORATION, respondents.
Natividad T. Perez for petitioner.
Bito, Lozada, Ortega & Castillo for private respondent.

REGALADO, J.:
Our tourism industry is not only big business; it is a revenue support of the nation's economy. It has
become a matter of public interest as to call for its promotion and regulation on a cabinet level. We
have special laws and policies for visiting tourists, but such protective concern has not been equally
extended to Filipino tourists going abroad. Thus, with the limited judicial relief available within the
ambit of present laws, our tourists often prefer who fail to deliver on their undertakings. This case
illustrates the recourse of one such tourist who refused to forget.
An action for damages by reason of contractual breach was filed by petitioner Lydia L. Geraldez
against private respondent Kenstar Travel Corporation, docketed as Civil Case No. Q-90-4649 of the
Regional Trial Court of Quezon City, Branch 80. 1 After the parties failed to arrive at an amicable
settlement, trial on the merits ensued.
Culling from the records thereof, we find that sometime in October, 1989, Petitioner came to know
about private respondent from numerous advertisements in newspapers of general circulation
regarding tours in Europe. She then contacted private respondent by phone and the latter sent its
representative, Alberto Vito Cruz, who gave her the brochure for the tour and later discussed its
highlights. The European tours offered were classified into four, and petitioner chose the
classification denominated as "VOLARE 3" covering a 22-day tour of Europe for $2,990.00. She paid
the total equivalent amount of P190,000.00 charged by private respondent for her and her sister,
Dolores.
Petitioner claimed that, during the tour, she was very uneasy and disappointed when it turned out
that, contrary to what was stated in the brochure, there was no European tour manager for their
group of tourists, the hotels in which she and the group were bullited were not first-class, the UGC
Leather Factory which was specifically added as a highlight of the tour was not visited, and the
Filipino lady tour guide by private respondent was a first timer, that is, she was performing her duties
and responsibilities as such for the first time. 2
In said action before the Regional Trial Court of Quezon City, petitioner likewise moved for the
issuance of a writ of preliminary attachment against private respondent on the ground that it
committed fraud in contracting an obligation, as contemplated in Section 1(d), Rule 57 of the Rules

of Court, to which no opposition by the latter appears on the record. This was granted by the court a
quo 3 but the preliminary attachment was subsequently lifted upon the filing by private respondent of
a counterbond amounting to P990,000.00. 4
During the pendency of said civil case for damages, petitioner also filed other complaints before the
Department of Tourism in DOT Case No. 90-121 and the Securities and Exchange Commission in
PED Case No. 90-3738, 5wherein, according to petitioner, herein private respondent was meted out
a fine of P10,000.00 by the Commission and P5,000.00 by the Department, 6 which facts are not
disputed by private respondent in its comment on the present petition.
On July 9, 1991, the court a quo rendered its decision 7 ordering private respondent to pay petitioner
P500.000.00 as moral damages, P200,000.00 as nominal damages, P300,000.00 as exemplary
damages, P50,000.00 as and for attorney's fees, and the costs of the suit. 8 On appeal, respondent
court 9 deleted the award for moral and exemplary damages, and reduced the awards for nominal
damages and attorney's fees to P30,000.00 and P10,000.00, respectively. 10
Hence, the instant petition from which, after sifting through the blades of contentions alternately
thrust and parried in the exchanges of the parties, the pivotal issue that emerges is whether or not
private respondent acted in bad faith or with gross negligence in discharging its obligations under the
contract.
Both the respondent court and the court a quo agree that private respondent failed to comply
faithfully with its commitments under the Volare 3 tour program, more particularly in not providing the
members of the tour group with a European tour manger whose duty, inter alia, was to explain the
points of interest of and familiarize the tour group with the places they would visit in Europe, and in
assigning instead a first timer Filipino tour guide, in the person of Rowena Zapanta, 11 to perform that
role which definitely requires experience and knowledge of such places. It is likewise undisputed that
while the group was able to pay a visit to the site of the UGC Leather Factory, they were brought
there at a very late hour such that the factory was already closed and they were unable to make
purchases at supposedly discounted prices. 12 As to the first-class hotels, however, while the court a
quo found that the hotels were not fist-class, respondent court believed otherwise, or that, at least,
there was substantial compliance with such a representation.
While clearly there was therefore a violation of the rights of petitioner under the aforementioned
circumstances, respondent court, contrary to the findings of the trial court, ruled that no malice or
bad faith could be imputed to private respondent, hence there is no justification for the award of
moral and exemplary damages. Furthermore, it held that while petitioner is entitled to nominal
damages, the amount awarded by the trial court was unconscionable since petitioner did not suffer
actual or substantial damage from the breach of contract, 13 hence its reduction of such award as
hereinbefore stated.
After thorough and painstaking scrutiny of the case records of both the trial and appellate courts, we
are satisfactorily convinced, and so hold, that private respondent did commit fraudulent
misrepresentations amounting to bad faith, to the prejudice of petitioner and the members of the tour
group.

By providing the Volare 3 tourist group, of which petitioner was a member, with an inexperienced and
a first timer tour escort, private respondent manifested its indifference to the convenience,
satisfaction and peace of mind of its clients during the trip, despite its express commitment to
provide such facilities under the Volare 3 Tour Program which had the grandiose slogan "Let your
heart sing. 14
Evidently, an inexperienced tour escort, who admittedly had not even theretofore been to
Europe, 15 cannot effectively acquaint the tourists with the interesting areas in the cities and places
included in the program, or to promptly render necessary assistance, especially where the latter are
complete strangers thereto, like witnesses Luz Sui Haw and her husband who went to Europe for
their honeymoon. 16
We agree with petitioner that the selection of Zapanta as the group's tour guide was deliberate and
conscious choice on the part of private respondent in order to afford her an on-the-job training and
equip her with the proper opportunities so as to later qualify her as an "experienced" tour guide and
eventually be an asset of respondent corporation. 17 Unfortunately, this resulted in a virtual project
experimentation with petitioner and the members of the tour as the unwitting participants.
We are, therefore, one with respondent court in faulting private respondent's choice of Zapanta as a
qualified tour guide for the Volare 3 tour package. It brooks no argument that to be true to its
undertakings, private respondent should have selected an experienced European tour guide, or it
could have allowed Zapanta to go merely as an understudy under the guidance, control and
supervision of an experienced and competent European or Filipino tour guide, 18 who could give her
the desired training.
Moreover, a tour guide is supposed to attend to the routinary needs of the tourists, not only when the
latter ask for assistance but at the moment such need becomes apparent. In other words, the tour
guide, especially by reason of her experience in previous tours, must be able to anticipate the
possible needs and problems of the tourists instead of waiting for them to bring it to her attention.
While this is stating the obvious, it is her duty to see to it that basic personal necessities such as
soap, towels and other daily amenities are provided by the hotels. It is also expected of her to see to
it that the tourists are provided with sanitary surroundings and to actively arrange for medical
attention in case of accidents, as what befell petitioner's sister and wherein the siblings had to
practically fend for themselves since, after merely calling for an ambulance, Zapanta left with the
other tour participants. 19
Zapanta fell far short of the performance expected by the tour group, her testimony in open court
being revelatory of her inexperience even on the basic function of a tour guide, to wit:
Q Now, are you aware that there were times that the tourists under
the "Volare 3" were not provided with soap and towels?
A They did not tell me that but I was able to ask them later on but
then nobody is complaining. 20 . . . .

The inability of the group to visit the leather factory is likewise reflective of the neglect and ineptness
of Zapanta in attentively following the itinerary of the day. This incompetence must necessarily be
traced to the lack of due diligence on the part of private respondent in the selection of its employees.
It is true that among the thirty-two destinations, which included twenty-three cities and special visits
to nine tourist spots, this was the only place that was not visited. 21 It must be noted, however, that
the visit to the UGC Leather Factory was one of the highlights 22 of the Volare 3 program which even
had to be specifically inserted in the itinerary, hence it was incumbent upon the organizers of the tour
to take special efforts to ensure the same. Besides, petitioner did expect much from the visit to that
factory since it was represented by private respondent that quality leather goods could be bought
there at lower prices. 23
Private respondent represents Zapanta's act of making daily overseas calls to Manila as an exercise
of prudence and diligence on the latter's part as a tour guide. 24 It further claims that these calls were
needed so that it could monitor the progress of the tour and respond to any problem
immediately. 25 We are not persuaded. The truth of the matter is that Zapanta, as an inexperienced
trainee-on-the-job, was required to make these calls to private respondent for the latter to gauge her
ability in coping with her first assignment and to provide instructions to her. 26
Clearly, therefore, private respondent's choice of Zapanta as the tour guide is a manifest disregard of
its specific assurances to the tour group, resulting in agitation and anxiety on their part, and which
deliberate omission is contrary to the elementary rules of good faith and fair play. It is extremely
doubtful if any group of Filipino tourists would knowingly agree to be used in effect as guinea pigs in
an employees' training program of a travel agency, to be conducted in unfamiliar European countries
with their diverse cultures, lifestyles and languages.
On the matter of the European tour manager, private respondent's advertisement in its tour contract
declares and represents as follows:
FILIPINO TOUR ESCORT!
He will accompany you throughout Europe. He speaks your language, shares your
culture and feels your excitement.
He won't be alone because you will also be accompanied by a . . .
EUROPEAN TOUR MANAGER!
You get the best of both worlds. Having done so may tours in the past with people
like you, he knows your sentiments, too. So knowledgeable about Europe, there is
hardly a question he can't answer. 27
Private respondent contends that the term "European Tour Manager" does not refer to an individual
but to an organization, allegedly the Kuoni Travel of Switzerland which supposedly prepared the
itinerary for its "Volare Europe Tour," negotiated with all the hotels in Europe, selected tourist spots
and historical places to visit, and appointed experienced local tour guides for the tour group. 28

We regret this unseemly quibbling which perforce cannot be allowed to pass judicial muster.
A cursory reading of said advertisement will readily reveal the express representation that the
contemplated European tour manager is a natural person, and not a juridical one as private
respondent asserts. A corporate entity could not possibly accompany the members of the tour group
to places in Europe; neither can it answer questions from the tourists during the tour. Of course, it is
absurd that if a tourist would want to know how he could possibly go to the nearest store or
supermarket, he would still have to call Kuoni Travel of Switzerland.
Furthermore, both lower courts observed, and we uphold their observations, that indeed private
respondent had the obligation to provide the tour group not only with a European tour manger, but
also with local European tour guides. The latter, parenthetically, were likewise never made
available. 29 Zapanta claims that she was accompanied by a European local tour guide in most of the
major cities in Europe. We entertain serious doubts on, and accordingly reject, this pretension for
she could not even remember the name of said European tour guide. 30 If such a guide really
existed, it is incredible why she could not even identify the former when she testified a year later,
despite the length of their sojourn and the duration of their association.
As to why the word "he" was used in the aforequoted advertisement, private respondent maintains
that the pronoun "he" also includes the word "it," as where it is used as a "nominative case form in
general statements (as in statutes) to include females, fictitious persons (as corporations)." 31 We are
constrained to reject this submission as patently strained and untenable. As already demonstrated, it
is incredible that the word "he" was used by private respondent to denote an artificial or corporate
being. From its advertisement, it is beyond cavil that the import of the word "he" is a natural and not
a juridical person. There is no need for further interpretation when the wordings are clear. The
meaning that will determine the legal effect of a contract is that which is arrived at by objective
standards; one is bound, not by what he subjectively intends, but by what he leads others
reasonably to think he intends. 32
In an obvious but hopeless attempt to arrive at a possible justification, private respondent further
contends that it explained the concept of a European tour manager to its clients at the pre-departure
briefing, which petitioner did not attend. 33 Significantly, however, private respondent failed to present
even one member of the tour group to substantiate its claim. It is a basic rule of evidence that a party
must prove his own affirmative allegations. 34 Besides, if it was really its intention to provide a
juridical European tour manager, it could not have kept on promising its tourists during the tour that a
European tour manager would come, 35 supposedly to join and assist them.
Veering to another line of defense, private respondent seeks sanctuary in the delimitation of its
responsibility as printed on the face of its brochure on the Volare 3 program, to wit:
RESPONSIBILITIES: KENSTAR TRAVEL CORPORATION, YOUR TRAVEL AGENT,
THEIR EMPLOYEES OR SUB-AGENTS SHALL BE RESPONSIBLE ONLY
FOR BOOKING AND MAKING ARRANGEMENTS AS YOUR AGENTS. Kenstar
Travel Corporation, your travel Agent, their employees or sub-agents assume no
responsibility or liability arising out of or in connection with the services or lack of
services, of any train, vessel, other conveyance or station whatsoever in the

performance of their duty to the passengers or guests, neither will they be

responsible for any act, error or omission, or of any damages, injury, loss, accident,
delay or irregularity which may be occasioned by reason (of) or any defect
in . . . lodging place or any facilities . . . . (Emphasis by private respondent.) 36
While, generally, the terms of a contract result from the mutual formulation thereof by the parties
thereto, it is of common knowledge that there are certain contracts almost all the provisions of which
have been drafted by only one party, usually a corporation. Such contracts are called contracts of
adhesion, because the only participation of the party is the affixing of his signature or his "adhesion"
thereto. 37 In situations like these, when a party imposes upon another a ready-made form of
contract, 38 and the other is reduced to the alternative of taking it or leaving it, giving no room for
negotiation and depriving the latter of the opportunity to bargain on equal footing, a contract of
adhesion results. While it is true that an adhesion contract is not necessarily void, it must
nevertheless be construed strictly against the one who drafted the same. 39 This is especially true
where the stipulations are printed in fine letters and are hardly legible as is the case of the tour
contract 40 involved in the present controversy.
Yet, even assuming arguendo that the contractual limitation aforequoted is enforceable, private
respondent still cannot be exculpated for the reason that responsibility arising from fraudulent acts,
as in the instant case, cannot be stipulated against by reason of public policy. Consequently, for the
foregoing reasons, private respondent cannot rely on its defense of "substantial compliance" with the
contract.
Private respondent submits likewise that the tour was satisfactory, considering that only petitioner,
out of eighteen participants in the Volare 3 Tour Program, actually complained. 41 We cannot accept
this argument. Section 28, Rule 130 of the Rules of Court declares that the rights of a party cannot
be prejudiced by an act, declaration, or omission of another, a statutory adaptation of the first branch
of the hornbook rule of res inter alios acta 42 which we do not have to belabor here.
Besides, it is a commonly known fact that there are tourists who, although the tour was far from what
the tour operator undertook under the contract, choose to remain silent and forego recourse to a suit
just to avoid the expenses, hassle and rancor of litigation, and not because the tour was in accord
with was promised. One does not relish adding to the bitter memory of a misadventure the
unpleasantness of another extended confrontation. Furthermore, contrary to private respondent's
assertion, not only petitioner but two other members of the tour group, Luz Sui Haw and Ercilla
Ampil, confirmed petitioner's complaints when they testified as witnesses for her as plaintiff in the
court below. 43
Private respondent likewise committed a grave misrepresentation when it assured in its Volare 3 tour
package that the hotels it had chosen would provide the tourists complete amenities and were
conveniently located along the way for the daily itineraries. 44 It turned out that some of the hotels
were not sufficiently equipped with even the basic facilities and were at a distance from the cities
covered by the projected tour. Petitioner testified on her disgust with the conditions and locations of
the hotels, thus:

Q And that these bathrooms ha(ve) bath tub(s) and hot and cold
shower(s)?
A Not all, sir.
Q Did they also provide soap and towels?
A Not all, sir, some (had) no toilet paper. 45
Q Which one?
A The 2 stars, the 3 stars and some 4 stars (sic) hotels.
Q What I am saying . . .
A You are asking a question? I am answering you. 2 stars, 3 stars
and some 4 stars (sic) hotels, no soap, toilet paper and (the) bowl
stinks. . . .
xxx xxx xxx
Q And that except for the fact that some of these four star hotels were
outside the city they provided you with the comfort?
A Not all, sir.
Q Can you mention some which did not provide you that comfort?
A For example, if Ramada Hotel Venezia is in Quezon City, our hotel
is in Meycauayan. And if Florence or Ferenze is in manila, our hotel is
in Muntinlupa. 46
xxx xxx xxx
A One more hotel, sir, in Barcelona, Hotel Saint Jacques is also
outside the city. Suppose Barcelona is in Quezon City, our hotel is in
Marilao. We looked for this hotel inside the city of Barcelona for three
(3) hours. We wasted our time looking for almost all the hotels and
places where to eat. That is the kind of tour that you have. 47
Luz Sui Haw, who availed of the Volare 3 tour package with her husband for their honeymoon,
shared the sentiments of petitioner and testified as follows:
Q . . . Will you kindly tell us why the hotels where you stayed are not
considered first class hotels?

A Because the hotels where we went, sir, (are) far from the City and
the materials used are not first class and at times there were no
towels and soap. And the two (2) hotels in Nevers and Florence the
conditions (are) very worse (sic). 48
Q Considering that you are honeymooners together with your
husband, what (were) your feelings when you found out that the
condition were not fulfilled by the defendant?
A I would like to be very honest. I got sick when I reached Florence
and half of my body got itch (sic). I think for a honeymooner I would
like to emphasize that we should enjoy that day of our life and it
seems my feet kept on itching because of the condition of the hotel.
And I was so dissatisfied because the European Tour Manager was
not around there (were) beautiful promises. They kept on telling us
that a European Tour Manager will come over; until our Paris tour
was ended there was no European tour manager. 49
xxx xxx xxx
Q You will file an action against the defendant because there was a
disruption of your happiness, in your honeymoon, is that correct?
A That is one of my causes of (sic) coming up here. Secondly, i was
very dissatisfied (with) the condition. Thirdly, that Volare 89 it says it
will let your heart sing. That is not true. There was no European tour
(manager) and the highlights of the tour (were) very poor. The hotels
were worse (sic) hotels. 50
Q All the conditions of the hotels as you . . .
A Not all but as stated in the brochure that it is first class hotel. The
first class hotels state that all things are beautiful and it is neat and
clean with complete amenities and I encountered the Luxembourg
hotel which is quite very dilapidated because of the flooring when you
step on the side "kumikiring" and the cabinets (are) antiques and as
honeymooners we don't want to be disturbed or seen. 51
xxx xxx xxx
Q None of these are first class hotels?
A Yes, sir.
Q So, for example Ramada Hotel Venezia which according to Miss
Geraldez is first class hotel is not first class hotel?

A Yes, sir.
Q You share the opinion of Miss Geraldez?
A Yes, sir.
Q The same is true with Grand Hotel Palatino which is not a first
class hotel?
A Yes, sir.
Q And Hotel Delta Florence is not first class hotel?
A That is how I got my itch, sir. Seven (7) days of itch.
Q How about Hotel Saint-Jacquez, Paris?
A It is far from the city. It is not first class hotel.
Q So with Hotel Le Prieure Du Coeur de Jesus neither a first class
hotel?
A Yes, sir.
Q Hotel De Nevers is not a first class hotel?
A Yes, sir.
Q Hotel Roc Blanc Andorra is not a first class hotel?
A Yes, sir.
Q Saint Just Hotel, Barcelona is not a first class hotel?
A Yes, sir.
Q Hotel Pullman Nice neither is not a first class hotel?
A Yes, sir.
Q Hotel Prinz Eugen and Austrotel are not first class hotels?
A Yes, sir. 52
Private respondent cannot escape responsibility by seeking refuge under the listing of first-class
hotels in publications like the "Official Hotel and Resort Guide" and Worldwide Hotel Guide." 53 Kuoni

Travel, its tour operator,54 which prepared the hotel listings, is a European-based travel
agency 55 and, as such, could have easily verified the matter of first-class accommodations. Nor can
it logically claim that the first-class hotels in Europe may not necessarily be the first-class hotels here
in the Philippines. 56 It is reasonable for petitioner to assume that the promised first-class hotels are
equivalent to what are considered first-class hotels in Manila. Even assuming arguendo that there is
indeed a difference in classifications, it cannot be gainsaid that a first-class hotel could at the very
least provide basic necessities and sanitary accommodations. We are accordingly not at all
impressed by private respondent's attempts to trivialize the complaints thereon by petitioner and her
companions.
In a last ditch effort to justify its choice of the hotels, private respondent contends that it merely
provided such "first class" hotels which are commensurate to the tourists budget, or which were,
under the given circumstances, the "best for their money." It postulated that it could not have offered
better hostelry when the consideration paid for hotel accommodations by the tour participants was
only so much, 57 and the tour price of $2,990.00 covers a European tour for 22 days inclusive of
lower room rates and meals. 58 this is implausible, self-serving and borders on sophistry.
The fact that the tourists were to pay a supposedly lower amount, such that private respondent
allegedly retained hardly enough as reasonable profit, 59 does not justify a substandard form of
service in return. It was private respondent, in the first place, which fixed the charges for the
package tour and determined the services that could be availed of corresponding to such price.
Hence, it cannot now be heard to complain that it only made a putative marginal profit out of the
transaction. if it could not provide the tour participants with first-class lodgings on the basis of the
amount that they paid, it could and should have instead increased the price to enable it to arrange
for the promised first-class accommodations.
On the foregoing considerations, respondent court erred in deleting the award for moral and
exemplary damages. Moral damages may be awarded in breaches of contract where the obligor
acted fraudulently or in bad faith. 60From the facts earlier narrated, private respondent can be faulted
with fraud in the inducement, which is employed by a party to a contract in securing the consent of
the other.
This fraud or dolo which is present or employed at the time of birth or perfection of a contract may
either be dolocausante or dolo incidente. The first, or causal fraud referred to in Article 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 incidente, or incidental fraud
which is referred to in Article 1344, are those which are not serious in character and without which
the other party would still have entered into the contract. 61Dolo causante determines or is the
essential cause of the consent, while dolo incidente refers only to some particular or accident of the
obligations. 62 The effects of dolo causante are the nullity of the contract and the indemnification of
damages, 63 and dolo incidente also obliges the person employing it to pay damages. 64
In either case, whether private respondent has committed dolo causante or dolo incidente by making
misrepresentations in its contracts with petitioner and other members of the tour group, which
deceptions became patent in the light of after-events when, contrary to its representations, it
employed an inexperienced tour guide, housed the tourist group in substandard hotels, and reneged

on its promise of a European tour manager and the visit to the leather factory, it is indubitably liable
for damages to petitioner.
In the belief that an experienced tour escort and a European tour manager would accompany them,
with the concomitant reassuring and comforting thought of having security and assistance readily at
hand, petitioner was induced to join the Volare 3 tourists, instead of travelling alone 65 She likewise
suffered serious anxiety and distress when the group was unable to visit the leather factory and
when she did not receive first-class accommodations in their lodgings which were misrepresented as
first-class hotels. These, to our mind, justify the award for moral damages, which are in the category
of an award designed to compensate the claimant for that injury which she had suffered, and not as
a penalty on the wrongdoer, 66 we believe that an award of P100,000.00 is sufficient and reasonable.
When moral damages are awarded, especially for fraudulent conduct, exemplary damages may also
be decreed. Exemplary damages are imposed by way of example or correction for the public good,
in addition to moral, temperate, liquidated or compensatory damages. According to the code
Commission, exemplary damages are required by public policy, for wanton acts must be
suppressed. 67 An award, therefore, of P50,000.00 is called for to deter travel agencies from
resorting to advertisements and enticements with the intention of realizing considerable profit at the
expense of the public, without ensuring compliance with their express commitments. While, under
the present state of the law, extraordinary diligence is not required in travel or tour contracts, such as
that in the case at bar, the travel agency acting as tour operator must nevertheless be held to strict
accounting for contracted services, considering the public interest in tourism, whether in the local or
in the international scene. Consequently, we have to likewise reject the theory of private respondent
that the promise it made in the tour brochure may be regarded only as "commendatory trade talk." 68
With regard to the honorarium for counsel as an item of damages, since we are awarding moral and
exemplary damages, 69 and considering the legal importance of the instant litigation and the efforts of
counsel evident from the records of three levels of the judicial hierarchy, we favorably consider the
amount of P20,000.00 therefor.
WHEREFORE, premises considered, the decision of respondent Court of Appeals is hereby SET
ASIDE, and another one rendered, ordering private respondent Kenstar Travel Corporation to pay
petitioner Lydia L. Geraldez the sums of P100,000.00 by way of moral damages, P50,000.00 as
exemplary damages, and P20,000.00 as and for attorney's fees, with costs against private
respondent. The award for nominal damages is hereby deleted.
Padilla, Nocon and Puno, JJ., concur.
Narvasa, C.J., took no part.

G.R. No. 90270 July 24, 1992

ARMANDO V. SIERRA, petitioner,

vs.
HON. COURT OF APPEALS, EPIFANIA EBARLE, SOL AND ELE
EBARLE, respondents.

CRUZ, J.:
A promissory note is supposed to be a genuine document acknowledging a loan duly received and
promising to pay the same on the date indicated in accordance with the conditions therein set forth.
There is no record is there cannot be of the number of times such a promise has been fulfilled
and the debt discharged. But our casebooks are replete with reports of litigations where the
promissory note has been rejected and even indignantly denounced. The usual objection is that it is
spurious or fabricated, or vitiated by fraud or duress or undue influence, or not reflective of the true
intention of the parties.
The present petition is a case in point.
On November 2, 1984, the petitioner filed a complaint against the private respondents in the
Regional Trial Court of Dumaguete City. He sought recovery of a sum of money be allegedly lent
them under the following promissory note which he annexed to his complaint:
PROMISSORY NOTE
For value received, WE, EPIFANIA EBARLE, SOL EBARLE, & ELE EBARLE, hereby
promise to pay Mr. Armando V. Sierra, his heirs and assigns, the sum of EIGHTY
FIVE THOUSAND PESOS ONLY (P85,000.00) Philippine Currency, on or before
October 8, 1984 at his residence in Dumaguete City.
In case of default, I will shoulder all expenses incurred in the collection and attorney's
fees of P1,000.00 plus an interest of 12% per annum.
September 8, 1984
Dumaguete City
WITNESSES:
1. (Illegible) 2. _______________

SUBSCRIBED AND SWORN TO BEFORE ME this 8th day of September 1984 at the
City of Dumaguete.

(Sgd.)
FRAN
CISCO
B.
ZERNA
, JR.
Notary
Public
In their separate answers, the private respondents denied under oath "the genuineness, due
execution, legality and validity" of the promissory note. They alleged that the note was executed
"under duress, fear and undue influence." As affirmative defenses, they claimed that they had been
tacked into signing the note for P85,000.00 (and another note for P54,550.00, but not the subject of
this suit) and that the amount owing to the petitioner was only P20,000.00. This represented the loan
he had extended to Epifania Ebarle, mother of the other private respondents, Sol Ebarle and Ele
Ebarle. They also counterclaimed for damages.
At the trial, the petitioner testified that he had lent the private respondents the sum of P85,000.00
which they said they needed "to pay some cattle for fattening to be inspected by the inspector of the
Land Bank that day" in connection with their application for a loan of P400,000.00 from the said bank
to finance their logging and cattle business. The application was apparently not approved. When the
note fell due, he made demands for their payment, which were ignored. He thereupon filed is
complaint.
For their part, the private respondents declared that on September 8, 1984, they were asked by the
petitioner to sign two promissory notes, one for P85,000.00 and another for P54,550.00, in
consideration of Epifania Ebarle's outstanding debt of P20,000.00 to him. They said they initially
objected because of the amounts indicated in the said notes. They eventually agreed, however, on
the petitioner's assurance that the documents were a mere formality that he had to show his
business partner, who was demanding immediate payment of the said loan. The petitioner also said
that if a complaint was filed against them for recovery under the notes, what they should do was not
answer so that they would be declared in default. A new agreement would then be concluded for the
correct amount of Epifania Ebarle's loan and with easier terms of payment.
On July 21, 1988, the trial court rendered a decision holding that the promissory note for P85,000.00
was invalid and that the private respondents were liable to the petitioner only for the loan of
P20,000.00. 1 On appeal, this decision was affirmed by the respondents court. 2 The petitioner then came
to this Court to seek reversal of the courts below on factual and legal grounds.
The petitioner argues that the Court of Appeals committed reversible error in the interpretation of the
promissory note in light of the established facts. It also erred in not according the said note the
presumption of validity as a duly executed public document.
Required to submit a comment, the private respondents contended that the assignment of errors
raised only questions of fact, the determination of which by the lower courts was as a rule final and

conclusive upon this Court. In reply, the petitioner submitted that the erroneous findings of fact made
by the respondent court removed the case from the general rule and justified a review of the
challenged decision.
The Court has gone over the records of this case and finds that there was indeed a
misapprehension of facts by the trial and appellate courts. The testimonies of the private
respondents on the circumstances surrounding the execution of the promissory note are, in our view,
not believable.
The Rules of Court provide that "when the terms of an agreement have been reduced to writing, it is
to be considered as containing all such terms, and, therefore, there can be, between the parties and
their successors in interest, no evidence of the terms of the agreement other than the contents of the
writing." 3 It is true that parol evidence may be admitted to challenge the contents of such agreement
"where a mistake or imperfection of the writing, or its failure to express the true intent and agreement of
the parties, or the validity of the agreement is put in issue by the pleadings." 4 However, such evidence
must be clear and convincing and of such sufficient credibility as to overturn the written agreement.
The private respondents are not unlettered peasants with a modicum of intelligence and unfamiliar
with business and legal matters. They are educated persons with not a little experience in business
affairs and possibly even legal transactions. They own and operate an hacienda consisting of 33
hectares. Epifania Ebarle was a professor in English for 25 years at the Silliman University. Sol
Ebarle holds a degree in commerce, Ele Ebarle in agriculture. There is no question that these three
professionals fully understood the import and consequences of what they were doing when they
signed the two promissory notes on September 8, 1984.
The notes were written in plain English and consisted of only two short paragraphs. There was no
fine print to conceal hidden meanings. Each was a simple promise to pay to the petitioner, for value
received, the amounts indicated therein not later than October 8, 1984, at his residence and to
assume all litigation expenses, with 12% interest, in case of default.
The private respondents say they had misgivings about signing the notes but they signed them just
the same upon the petitioner's prodding. That is strange, considering their insistence that all Epifania
Ebarle owed the petitioner was the amount of P20,000.00, which she claimed to have received
earlier. If that was all she really obtained, it is difficult to understand why all three of them signed the
promissory notes for a total indebtedness of P139,550.00 or almost seven times the mother's
alleged loan. Their natural reaction when asked to sign the notes would have been an irate refusal.
What they should have done was demand the correction of the notes to reflect the true amount of
the debt in only one note and to sign it only after such correction. Instead, each of them, one
after the other, willingly signed the two notes, the first in the morning and the second in the afternoon
of the same day, without any reservation whatsoever.
The private respondents say that the petitioner was in a hurry to conclude the transactions, but the
fact is that they themselves were not. There was apparently no cogent reason for the immediate
signing of the notes as far as they themselves were concerned. After all, Epifania Ebarle had already
received the alleged original and only loan of P20,000.00, or so they say, which they were simply

being made to affirm. Moreover, as they also insist, they had not received, nor did they expect to
receive, the amounts indicated in the two notes.
In this connection, we cannot agree that they could not have received the amounts stated in the
notes because it was not likely that the petitioner would keep such large amounts of cash in his
house. That is a mere conjecture. The petitioner operates his own vineyard as well as his father's
hacienda, besides dealing in the sale of cars and real estate. His transactions require ready cash
now and then, which is why he keeps substantial sums of money available in his house.
In any case, as he says correctly, it is his prerogative to keep money in his house in whatever
amount he pleases, especially since he feels quite secure there with his guards and dogs. What is
important is that the notes the private respondents signed expressly and categorically acknowledged
that they received the specific amounts indicated therein. Whether the money came from the bank or
from the petitioner's house did not affect the validity of their acknowledged indebtedness.
Epifania Ebarle testified that she was also worried about the petitioner's assurance that if they
allowed themselves to be declared in default when sued, a new agreement with easier terms and for
the correct amount of P20,000.00 would be concluded between them. Asked if she understood what
default meant, she said she did. Nevertheless, despite her uneasiness, she signed the two
promissory notes one after the other, and so did her children even if they also felt a similar anxiety. It
was only afterwards, she said, that she "went to a lawyer."
Remarkably, all three of the private respondents signed the two notes notwithstanding their claimed
individual reluctance. One of them at least could have voiced his or her apprehensions and made
efforts to be dissuade the others from signing, but no one did. Everyone signed. And not only that.
Having signed one note in the morning,all of them again signed the second promissory note in the
afternoon, again with no one expressing his or her misgivings. It is as if they were all mesmerized by
the petitioner into signing the promissory notes although, as they now say in hindsight, they were all
doing so against their better judgment.
The facts belie this supposition.
Sol Ebarle admitted on the stand that no harassment or threat in any form was employed by the
petitioner upon any of them. 5
Neither were they subjected to any undue influence, which is described in the Civil Code thus:
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.
This definition is amplified by Tolentino, who says that "undue influence is any means employed
upon a party which, under the circumstances, he could not well resist, and which controlled his

volition and induced him to give his consent to the contract, which otherwise he would not have
entered into. It must, in some measure, destroy the free agency of a party and interfere with the
exercise of that independent discretion which is necessary for determining the advantage or
disadvantage of a proposed contract. In every such case, there is a moral coercion. The moral
coercion may be effected through threats, expressed or implied, or through harassing tactics." 6
Fraud must also be discounted, for according to the Civil Code:
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. 1344. In order that fraud may make a contract voidable, it should be serious and
should not have been employed by both contracting parties.
To quote Tolentino again, the "misrepresentation constituting the fraud must be established by full,
clear, and convincing evidence, and not merely by a preponderance thereof. The deceit must be
serious. The fraud is serious when it is sufficient to impress, or to lead an ordinarily prudent person
into error; that which cannot deceive a prudent person cannot be a ground for nullity. The
circumstances of each case should be considered, taking into account the personal conditions of the
victim." 7
The non-presentation at the trial of the notary public who attested the promissory notes did not have
the effect of invalidating them. It is well settled that the evidentiary nature of public documents must
be sustained in the absence of strong, complete, and conclusive proof of its nullity.
A notarial document, guaranteed by public attestation in accordance with the law,
must be sustained in full force and effect so long as he who impugns it does not
present strong, complete, and conclusive proof of its falsity or nullity on accounts of
some flaw or defect provided against by law. 8
A mere denial of the receipt of the loan, which is stated in a clear and unequivocal manner in a public instrument, is not
sufficient. To overthrow the recitals of a mortgage deed, clear, convincing and more than merely preponderant evidence
is necessary. A contrary rule would throw wide open doors to fraud.

The mere assertion of the private respondents that the notes were not notarized in their presence
does not meet this standard of proof. In any event, a promissory note does not have to be notarized
to be binding. The private respondents have admitted signing the two notes and they have not
succeeded in proving that they did so "under duress, fear and undue influence."
The private respondents' argument that the two promissory notes are spurious because they were
signed separately on the same day is in fact an argument against them. As they acutely observe, if
indeed the purpose of the notes was simply to acknowledge and renew the P20,000.00 loan, then it
could have been accomplished in only one promissory note specifying this amount. True enough.
But the point is that the purpose was not to acknowledge the supposed loan. It was to acknowledge
the two separate loans. The fact that two promissory notes were signed indicates that two different

loans were actually extended, not simultaneously but successively, one in the morning and the other
in the afternoon of September 8, 1984.
It is a no less significant consideration that no written evidence of the supposed original loan of
P20,000.00 extended to Epifania Ebarle has been presented. None of the private respondents has
produced a copy of any promissory note therefor, to prove that there was really such a loan. As a
businessman, and there being no special relationship between him and the private respondents, the
petitioner would have required a written acknowledgment of that loan, and given a copy of such
instrument to the borrower.
In sum, this Court is asked to believe that three highly educated persons, to acknowledge an alleged
debt of only P20,000.00 owed by one of them, signed on the same day two notarized promissory
notes for the total amount of P139,550.00 on the assurance by the petitioner that it was a mere
"formality." The notes were written in plain English, without the "whereases" and "wherefores" of the
legal idiom, and could not have been misunderstood or not comprehended by them. What is even
worse, the private respondents insist that when they expressed their hesitation, the petitioner
assured them that if they were sued on the notes, all they should do was allow themselves to be
declared in default and a new and more liberal agreement specifying the correct amount of their loan
would then be concluded. Although they admitted knowing the meaning of default, they nevertheless
accepted this assurance and freely signed the notes without reservation. None of the three private
respondents tried to dissuade the others when all of them signed the first note in the morning, and
this same acquiescence was repeated when all three of them, again in common concert, signed the
second note that same afternoon.
The defense is preposterous. Despite its acceptance by the lower courts, we reject it as a rank
invention.
A promissory note is a solemn acknowledgment of a debt and a formal commitment to repay it on
the date and under the conditions agreed upon by the borrower and the lender. A person who signs
such an instrument is bound to honor it as a legitimate obligation duly assumed by him through the
signature he affixes thereto as a token of his good faith. If he reneges on his promise without cause,
he forfeits the sympathy and assistance of this Court and deserves instead its sharp repudiation. So
must it be in the case at bar.
WHEREFORE, the appealed decision is REVERSED and SET ASIDE and a new judgment is hereby
rendered requiring the private respondents to pay the petitioner the sum of P85,000.00, with 12%
interest from September 8, 1984, until full payment, plus P15,000.00 as moral damages and
P15,000.00 as attorney's fees. Costs against the respondents.
SO ORDERED.
Grio-Aquino, Medialdea and Bellosillo, JJ., concur.

G.R. No. L-20659

November 3, 1923

MARIANO S. TUASON, plaintiff-appellant,

vs.
CRISANTO MARQUEZ, defendant-appellee.
Ramon Sotelo for appellant.
Emiliano T. Tirona for appellee.

MALCOLM, J.:
Out of the vicissitudes of the unfortunate Electric Light Company of Lucena, Tayabas, has arisen the
present litigation between Mariano S. Tuason, plaintiff and appellant, and Crisanto Marquez,
defendant and appellee. The facts are not in dispute, and the legal phases of the case are fairly
evident.
On March 5, 1921, Crisanto Marquez, the owner of the electric light plan of Lucena Tayabas,
called Sucesores del Lucena Electric, gave an option to Antonio Tuason for the purchase of the plant
for P14,400. The option was taken advantage of by Mariano S. Tuason, the real principal, on the 9th
of the same month and year, and the contracts as then formulated was ratified before a notary public
on the 18th of the month and year. The agreement was, that Tuason was to pay Marquez a total of
P14,400; P2,400 within sixty days, and the remainder, P12,000, within a year. The first installment
was paid subsequent to the sixty-day period; the second installment has not been paid.
Tuason being once in possession of the electric light plant, it was run under the management of the
Consolidated Electric Company for about sixteen months, that is, from March 20, 1921, to July 19,
1922. On the date last mentioned, the property was sold under execution by reason of a judgment in
the case of Levy Hermanos vs. The Philippine Electric Light Company. The purchaser at said sale
was Gregorio Marquez, brother of Crisanto Marquez, who paid P5,501.57 for the property.
With this general background of the controversy, we have to give special attention to one clause in
the contract and its antecedents. The contract Exhibit B entered into by Tuason and Marquez
included as a portion of the property sold by Marquez to Tuason "el derecho a la franquicia
concedido a la Compaia para la explotacion de la industria a que la misma esta dedicada."
It appears that originally in either 1913 or 1914, a franchise for thirty-five years was granted the
Lucena Electric Company. The rights of this company passed to Crisanto Marquez at a sheriff's sale
on September 10, 1919. The company seems never to have functioned very efficiently either at that
time or at any other time, as appears from the constant complaint of the municipal authorities of
Lucena. Evidently, Marquez became disgusted with the business, with the result that on February
28, 1921, that is, prior to the accomplishment of the contract, he announced to the Public Utility
Commissioner his intention to give up the franchise. On March 29, 1921, that is, subsequent to the
accomplishment of the contract, the Public Utility Commissioner took action and declared cancelled
the franchise acquired by Crisanto Marquez from the Lucena Electric Light, Ice & Water Company.

Tuason and his outfit were permitted to operate the company pursuant to a special license which
was to continue until they obtained a new franchise. The new franchise was finally granted by the
Public Utility Commissioner with certain conditions, which amounted to a renovation of the entire
plant. It was then, following a knowledge of what was expected by the Government, and following
the execution sale, that Tuason conceived the idea of bringing action against Marquez for a
rescission of the contract.
In the complaint filed in the Court of First Instance of Manila, Mariano S. Tuason, the plaintiff, asked
for judgment against Crisanto Marquez, defendant, for a total of P37,400. The answer and crosscomplaint of the defendant asked for a dismissal of the action and for an allowance of a total of
P12,654.50 from the plaintiff. The case was submitted on an agreed statement of facts in relation
with certain telegrams of record. Judgment was rendered, absolving the defendant from the
complaint and permitting the defendant to recover from the plaintiff P12,240, with legal interest from
August 1, 1922. Parenthetically, it may be explained that P12,000 of this judgment represented the
amount still due on the contract, and P240 represented rent which the plaintiff was expected to pay
the defendant.
The plaintiff claims in effect that the contract should be rescinded and that he should be allowed his
damages, on account of the misrepresentation and fraud perpetrated by the defendant in selling an
electric light plan with a franchise, when the defendant had already given up his rights to that
franchise. In this connection, however, it should be emphasized that the contract in making mention
of the property of the electric light company, merely renewed a previous inventory of the property.
The franchise, therefore, was not the determining cause of the purchase. Indeed, the franchise was
then in force and either party could easily have ascertained its status by applying at the office of the
Public Utility Commissioner. The innocent non-disclosure of a fact does not effect the formation of
the contract or operate to discharge the parties from their agreement. The maxim caveat
emptorshould be recalled.
The equitable doctrine termed with questionable propriety "estoppel by laches," has particular
applicability to the facts before us. Inexcusable delay in asserting a right and acquiescene in existing
conditions are a bar to legal action. The plaintiff operated the electric light plant for about sixteen
months without question; he made the first payment on the contract without protest; he bestirred
himself to secure what damages he could from the defendant only after the venture had proved
disastrous and only after the property had passed into the hands of a third party.
lawphil.net

We find no proof of fraud on the part of the defendant and find the plaintiff in estopped to press his
action.
In accordance with the foregoing, we are clearly of the opinion that judgment should be, as it is
hereby affirmed, with costs against the appellant. So ordered.
Johnson, Street, Avancea, Villamor Johns, and Romualdez, JJ., concur.

G.R. No. 110672 September 14, 1999

RURAL BANK OF STA. MARIA, PANGASINAN, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, ROSARIO R. RAYANDAYAN,
CARMEN R. ARCEO, respondents.
G.R. No. 111201 September 14, 1999
ROSARIO R. RAYANDAYAN and CARMEN R. ARCEO, petitioners,
vs.
COURT OF APPEALS, HALSEMA INC. and RURAL BANK OF STA.
MARIA, PANGASINAN, INC., respondents.

GONZAGA-REYES, J.:
Before us are two consolidated 1 petitions for review on certiorari under Rule 45 of the Revised Rules of
Court. In G.R. No. 110672, petitioner Rural Bank of Sta. Maria, Pangasinan, assails portions of the
Decision dated March 17, 1993, and the Resolution dated January 25, 1993, of the Court of Appeals 2 in
CA-G.R. CV No. 21918, which affirmed with modification the Decision of the Regional Trial Court (Branch
6, Baguio City) 3 in Civil Case No. 890-R entitled "Rosario R. Rayandayan and Carmen R. Arceo versus
Rural Bank of Sta. Maria, Pangasinan and Halsema, Inc." In G.R. No. 111201, petitioners Rosario R.
Rayandayan and Carmen R. Arceo likewise assail portions of said Decision adverse to it.
The facts as found by the trial court and adopted by the Court of Appeals insofar as pertinent to the
instant petitions are as follows:
. . ., the Court Finds that a parcel of land of about 49,969 square meters, located in
Residence Section J, Camp 7, Baguio City, covered by TCT T-29817 (land for short)
is registered in the name of Manuel Behis, married to Cristina Behis (Exhibit "B").
Said land originally was part of a bigger tract of land owned by Behis (one name),
father of Manuel Behis, covered by OCT-0-33 (Exhibit "26", Halsema, for history of
the land). And upon the latter's death on September 24, 1971, his children, namely:
Saro Behis, Marcelo Behis, Manuel Behis, Lucia Behis, Clara Behis and Arana
Behis, in an extrajudicial settlement with Simultaneous Sale of Inheritance
dated September 28, 1978, agreed to sell the land to Manuel Behis, married to
Cristina Behis (Exhibit "2", Halsema) but which subsequently was explained as only
an arrangement adopted by them to facilitate transactions over the land in a
Confirmation of Rights of Co-Ownership over real Property dated September 26,
1983, showing that the Behis brothers and sisters, including Manuel Behis, are still
co-owners thereof (Exhibit "30", Halsema, Exhibit "AA").

Manuel Behis mortgaged said land in favor of the Bank in a Real Estate Mortgage
dated October 23, 1978 (Exhibit "Q-1") as security for loans obtained, covered by six
promissory notes and trust receipts under the Supervised Credit Program in the total
sum of P156,750.00 (Exhibit "Q-2" to "Q-7", Exhibits "4-A" to "4-F", Halsema) and
annotated at the back of the title on February 13, 1979 as Entry No. 85538-10-231
(Exhibit "1-A-1", Halsema). The mortgage, the promissory notes and trust receipts
bear the signatures of both Manuel Behis and Cristina Behis.
Unfortunately thereafter, Manuel Behis was delinquent in paying his debts.
On January 9, 1985, Manuel Behis sold the land to the plaintiffs 4 in a Deed of
Absolute Sale with Assumption of Mortgage for the sum of P250,000.00 (Exhibit "A")
which bears the signature of his wife Cristina Behis. Manuel Behis took it upon himself to
secure the signature of his wife and came back with it. On the same date of January 9,
1985, plaintiffs and Manuel Behis simultaneously executed another Agreement
(Exhibit "15") whereby plaintiffs are indebted to Manuel Behis for the sum of
P2,400,000.00 payable in installments with P10,000.00 paid upon signing and in case of
default in the installments, Manuel Behis shall have legal recourse to the portions of the
land equivalent to the unpaid balance of the amounts in installments. Obviously, the real
consideration of the sale of the land of Manuel Behis to the plaintiffs iscontained in this
Agreement (Exhibit "15").
Plaintiffs did not present to the Register of Deeds of Baguio said two contracts and
ask that the title, TCT T-29817 in the name of Manuel Behis be cancelled and a new
one issued in their name which normally a buyer does. Neither did plaintiffs annotate
at the back of the title the aforesaid two contracts. Nor did they immediately go to the
Bank and present said two contracts. Thus, the title to the land, TCT No. T-29817,
remained in the name of Manuel Behis.
Pursuant to their two contracts with Manuel Behis, plaintiffs paid him during his
lifetime the sum of P10,000.00 plus P50,000.00 plus P145,800.00 (Exhibit "U" as
stipulated in the hearing), and the sum of P21,353.75 for the hospitalization, medical
and burial expenses of Manuel Behis when he died on June 21, 1985 (Exhibit "II",
"JJ", "KK", "LL", "PP", "OO", and "RR"). Obviously, from the above payments, the
plaintiffs were unable to complete their full payment to Manuel Behis of the sale of
the land as it is nowhere near P2,400,000.00.
Meantime, the loan in the name of Manuel Behis with the Bank secured by the Real
Estate Mortgage on the land continued to accumulate being delinquent. By May 30,
1985, in a Statement of Account (Exhibit "D") sent to Manuel Behis by the Bank thru
the Paredes Law Office for collection, the debt of P150,750.00 has ballooned into
P316,368.13, with interest and other charges. In fact, the Bank, thru its President,
Vicente Natividad, initiated foreclosure proceedings. But after the usual publication,
the same was discontinued since many parties were interested to buy the land
outside the said procedure but none materialized.

On June 19, 1985, Atty. William Arceo, in behalf of Manuel Behis, wrote a letter
asking for a more detailed Statement of Account from the Bank broken down as to
principal, interest and other charges (Exhibit "E").
Thereafter, plaintiffs finally presented the Deed of Absolute Sale with Assumption of
Mortgage (Exhibit "A") to the Bank when negotiating with its principal stockholder,
Engr. Edilberto Natividad, in Manila, but did not show to the latter the Agreement
(Exhibit "15") with Manuel Behis providing for the real consideration of
P2,400,000.00. And thus, on August 1, 1985, a Memorandum of Agreement(Exhibit
"F") was entered into between plaintiffs, as assignees of Manuel Behis, and the
Bank, the salient features of which are:
xxx xxx xxx
3. That during the lifetime of Manuel Behis he had executed a Deed
of Absolute Sale with Assumption of Mortgage in favor of Carmen
Arceo and Rosario Rayandayan;
4. That the total obligation of the late Manuel Behis to the Bank
amounts to P343,782.22;
5. That the assignees hereby offer to redeem the aforesaid real
property and the Bank hereby agrees to release the mortgage
thereon under the following terms and conditions:
(a). That the amount of P35,000.00 shall be paid by
the assignees to the Bank upon execution of this
Agreement;
(b). That the amount of P108, 000.00 shall be paid by
the assignees to the Bank at the rate of P36,000.00 a
month payable on September 15, 1985, October 15,
1985 and November 15, 1985;
(c). That the balance of P200,000.00 shall be
renewed for one year and shall be secured by another
mortgage over the same property which is renewable
every year upon payment of interests and at least 10
percent of the principal;
(d). That the bank shall release the mortgage of
Manuel Behis and a new mortgage shall be executed
by the assignees and the bank shall give its consent
for the transfer of the title under the name of the
assignees.

xxx xxx xxx.

Plaintiffs did not annotate the Memorandum of Agreement in the title, TCT T-29817.
Pursuant to the Memorandum of Agreement, plaintiffs paid the Bank the following:
(1) P35,000.00 on August 1, 1985 as initial deposit
when the Agreement was signed (Exhibits "G" and
"H");
(2) P15,000.00 on September 16, 1985 (Exhibit "I")
and P21,000.00 on September 20, 1985 (Exhibit "J")
to cover the obligation of P36,000.00 on September
15, 1985;
(3) P20,000.00 on October 17, 1985 (Exhibit "K") and
P16,000.00 on October 25, 1985 (Exhibit "L") to cover
the obligation to pay P36,000.00 on October 15,
1985;
(4) P36,000.00 in the form of dollars remitted to Engr.
Edilberto Natividad on December 18, 1985 (Exhibit
"N") to cover the obligation to pay P36,000.00 on
November 15, 1985.
After the last payment of P36,000.00 on December 18, 1985, received in dollars
(Exhibit "N") whichcompleted the P143,000.00 under paragraphs 5 (a) and 5 (b) of
the memorandum of AgreementEngr. Edilberto Natividad, wrote a letter (Exhibit "M")
to Vicente Natividad, with instructions that payment be duly credited and Atty. Arceo
will communicate about the transfer of title to them and to consult the Bank's counsel
on the matter, and with instructions also to Ana Acosta of the Rural Bank of Tuba to
debit said amount from the savings of Edilberto Natividad. . . ..
From the above payments made, the total amount of P143,000.00 as required by
paragraphs 5 (a) and 5 (b) of the Memorandum of Agreement was fully paid by
plaintiffs although they were not paid on time.
Meanwhile, on September 5, 1985, Cristina Behis, widow of Manuel Behis, wrote a
letter to the Bank (Exhibit "3", Halsema) claiming the Real Estate mortgage was
without her signature. And in another letter dated October 28, 1985 to the Bank
(Exhibit 4, Halsema), Cristina Behis stressed she did not authorize anybody to
redeem the property in her behalf as one of the mortgagors of the land.
On January 7, 1986, plaintiffs demanded in a letter (Exhibit "O") that the
Bank comply with its obligation under the Memorandum of Agreement to (1) release
the mortgage of Manuel Behis, (2) give its consent for the transfer of title in the name

of the plaintiffs, and (3) execute a new mortgage with plaintiffs for the balance of
P200,000.00 over the same land.
Meanwhile on January 18, 1986, Cristina Behis went to the Bank inquiring about her
protest about her signature. The Bank told her it did not receive her two letters and
instead advised her to write the Bank again as well as the plaintiffs about her
objections.
In a reply letter dated February 11, 1986, (Exhibit "B") to the demand of the plaintiffs,
the Bank said it cannot comply because of supervening circumstances, enclosing the
two letters of Cristina Behis dated September 5, 1985 and October 28, 1985 which
they said were both self explanatory, and suggested that plaintiffs take up the matter
with Mrs. Cristina Behis.
On February 15, 1986, as suggested by the Bank, Cristina Behis wrote another letter
to the Bank claiming this time that she was not a party to the Deed of Absolute Sale
with Assumption of Mortgage and her signature was forged (Exhibit "5", Halsema)
and requesting the Bank not to release the title with copy furnished to the plaintiffs
(Exhibit "5-B", Halsema).
Then, months passed, and nothing was heard from the plaintiffs by the Bank. On the
first week of July, 1986, Teodoro Verzosa, President of Halsema, Inc., heard about
the land and got interested and had preliminary talks with Vicente Natividad,
President of the Bank, and with Edilberto Natividad, the principal stockholder of the
bank.
xxx xxx xxx
. . ., upon suggestion of the lawyer of Halsema, an Assignment of Mortgage was
entered into on July 28, 1986 between Halsema and the Bank for the consideration
of P520,765.45 (Exhibit "1", Bank) which amount was the total indebtedness of
Manuel Behis with the Bank at the time (Exhibit "7-A", Halsema). Note however, that
what was assigned was the Mortgage made originally by Manuel Behis and not the
Mortgage as assumed by plaintiffs under a restructured and liberalized terms.
1wphi1.nt

As explained by Halsema lawyer, she suggested the Assignment of Mortgage as the

cheapest and fastest way for Halsema to acquire the property of Manuel Behis as (1)
they assume the role of the Bank as Mortgagee with the assignment of mortgage
credit, (2) they acquire the property for the amount only of the mortgage debt at the
time, (3) after execution thereof, the Bank is out of the picture, and (4) in case of
foreclosure, Halsema controls the foreclosure proceedings and is assured of its
legality.
In turn, the Bank explained it entered into the Assignment of Mortgage because at
the time itconsidered the Memorandum of Agreement cancelled as first, plaintiffs
failed to settle the objections of Cristina Behis aforesaid on her signature being

forged in the Deed of Sale with Assumption of Mortgage despite the lapse of time
from February, 1986 to July, 1986. Second, the terms of the Memorandum of
Agreement have not been fully complied with as the payments were not made on
time on the dates fixed therein; and third, their consent to the Memorandum of
Agreement was secured by the plaintiffs thru fraud as the Bank was not
shown the Agreement containing the realconsideration of P2,400.000.00 of the sale
of the land of Manuel Behis to plaintiffs.
On the same date of July 28, 1986, Vicente Natividad of the Bank sent notice of the
Assignment of Mortgage to the debtor mortgagor, Manuel Behis (already dead at the
time) and Cristina Behis. Notice of the Assignment of Mortgage was not sent to
plaintiffs for as aforesaid what was assigned was the Mortgage originally made by
Manuel Behis and not the Mortgage as assumed by plaintiffs under the restructured
and liberalized terms in the Memorandum of Agreement which was considered by the
Bank as cancelled.
xxx xxx xxx
After the assignment of mortgage, the Bank returned the P143,000.00 to plaintiffs
(Exhibit "13", Bank). But the latter rejected the same maintaining the Memorandum of
Agreement is valid until annulled by Court Action. Subsequently, however, the Bank
paid plaintiffs P143,000.00 and P90,000.00 interest in settlement of the criminal case
of Estafa against Edilberto Natividad and Vicente Natividad (Exhibit "14", Bank).
In the meantime, since the account of the late Manuel Behis has been delinquent
and his widow, Cristina Behis, and his brothers and sisters could not pay as in fact
they have already assigned their rights to redeem, Halsema as Mortgage Creditor in
place of the Bank instituted foreclosure proceedings by filing an Application for
Foreclosure of Real Estate Mortgage in the Office of the Sheriff on July 31, 1986
(Exhibit "37", Halsema) setting the public auction sale on September 2, 1986 and
was published and posted as required by law. A Notice of Foreclosure was sent
directly to the mortgagor (Exhibit "38", Halsema) and the public auction sale was held
on September 2, 1986 at 10:00 a.m. at the City Hall, Baguio City, with Halsema as
the only bidder to whom accordingly the Sheriff's Certificate of Sale was issued
(Exhibit "8", Halsema).
At the auction sale, the lawyer of Halsema was approached by the plaintiff Rosario
Rayandayan who told the former that the land foreclosed was also sold to the
plaintiffs. Since plaintiffs could not do anything anymore, they registered and
annotated on the title, TCT T-29817, their adverse claim on September 3, 1986. 5
Since the Bank could not comply with the Memorandum of Agreement, petitioners Rayandayan and
Arceo instituted Civil Case No. 890-R before the Regional Trial Court of Baguio City (Branch 6)
against the Rural Bank of Sta. Maria, Pangasinan and Halsema, Inc. for "Specific Performance,
Declaration of Nullity and/or Annulment of Assignment of Mortgage and Damages" on September 5,
1986, and caused a notice of lis pendens annotated at the back of the title, TCT T-29817, on the

same date. On March 6, 1989, judgment was rendered, the dispositive portion of the decision
pertinent to this case reads:
WHEREFORE, in view of All the Foregoing, Judgment is hereby rendered, as
follows:
1. xxx xxx xxx;
2. Declaring the Deed of Sale with assumption of Mortgage (Exhibit
"A") and the Agreement (Exhibit "15") taken together valid until
annulled or cancelled;
3. Ordering the Bank to pay the plaintiffs the sum of P30,000.00 as
Moral Damages, P10,000.00 as Exemplary Damages, P20,000.00 as
Attorney's fees and P5,000.00 as litigation expenses for their bad
faith in violating the Memorandum of Agreement which took place
while the Memorandum of Agreement was still valid there being no
court action first filed to nullify it before entering into the Assignment
of Mortgage;
4. Ordering the plaintiffs to pay the Bank the sum of P30,000.00 as
Moral Damages, P10,000.00 as Exemplary Damages, P20,000.00 as
Attorney's fees and P5,000.00 as litigation expenses for plaintiffs' bad
faith in deceiving the Bank to enter into the Memorandum of
Agreement;
5. Ordering the setting off in compensation the Damages awarded to
plaintiffs and the Bank.
6. xxx xxx xxx;
7. Declaring the Memorandum of Agreement as annulled due to the
fraud of plaintiffs;
8. xxx xxx xxx;
9. xxx xxx xxx;
10. xxx xxx xxx,
Without pronouncement as to costs.
SO ORDERED. 6

From the decision, plaintiffs Rayandayan and Arceo and defendant Halsema, Inc. appealed.
Defendant Rural Bank of Sta. Maria, Pangasinan did not appeal. 7 The Court of Appeals rendered
herein assailed decision, the dispositive portion insofar as pertinent to this case reads:
WHEREFORE, premises considered, decision is hereby rendered:
1. xxx xxx xxx;
2. xxx xxx xxx;
3. xxx xxx xxx;
4. Declaring the Deed of Absolute Sale with
Assumption of Mortgage, Exhibit A and the
Memorandum of Agreement, Exhibit F, valid as
between the parties thereto;
5. Ordering and sentencing defendant Rural Bank of
Sta. Maria, Pangasinan to pay plaintiffs-appellants the
sum of
P229,135.00 as actual damages, the sum of
P30,000.00 as moral damages, P10,000.00 as
exemplary damages, P20,000.00 as attorney's fees
and P5,000.00 as litigation expenses;
6. Affirming the dismissal of all other counterclaims for
damages;
7. Reversing and setting aside all other dispositions
made by the trial court inconsistent with this decision;
8. There is no pronouncement as to costs.
SO ORDERED. 8
In sum, the Court of Appeals in its assailed decision: (1) affirmed the validity of the Memorandum of
Agreement between the parties thereto; (2) reversed and set aside the finding of the trial court on
the bad faith of Rayandayan and Arceo in concealing the real purchase price of the land sold to
them by Manuel Behis during negotiations with the bank on the assumption of the mortgage debt; (3)
modified the trial court's finding as to the damages due Rayandayan and Arceo from the bank by
adding P229,135.00 as actual damages: (4) dismissed the counterclaim for damages by the bank
and deleted the portion on the set-off of damages due between the bank on the one hand, and
Rayandayan and Arceo on the other.
Motions for reconsideration were filed by plaintiffs-appellants Rayandanan and Arceo and
defendant Rural Bank of Sta. Maria, Pangasinan which were denied for lack of merit. 9

Hence, the instant consolidated petitions.

In a Resolution dated August 25, 1993, this Court denied the petition for review on certiorari (G.R.
No. 111201) filed by Rayandayan and Arceo for having been filed out of time and for late payment
of docket fees. 10Petitioners Rayandayan and Arceo moved to reconsider; this Court in a Resolution
dated November 22, 1993, resolved to deny the same with finality considering petitioners failed to show
any compelling reason and to raise any substantial argument which would warrant a modification of the
said resolution. 11
What remains for resolution then is G.R. No. 110672, wherein petitioner Rural Bank of Sta. Maria,
Pangasinan, contends that:
I
THE MEMORANDUM OF AGREEMENT (EXH. "F") ENTERED INTO BETWEEN
PRIVATE RESPONDENTS, AS ALLEGED ASSIGNEES OF MANUEL BEHIS, AND
PETITIONER BANK IS VOIDABLE AND MUST BE ANNULLED.
II
PRIVATE RESPONDENTS ARE IN BAD FAITH, HENCE, THEY ARE NOT
ENTITLED TO THE SUMS OF P30,000.00 AS MORAL DAMAGES; P10,000.00 AS
EXEMPLARY DAMAGES; P20,000.00 AS ATTORNEY'S FEES; AND P5,000.00 AS
LITIGATION EXPENSES. 12
The petition is devoid of merit.
Briefly, the antecedents material to this appeal are as follows: A Deed of Absolute Sale with
Assumption of Mortgage was executed between Manuel Behis as vendor/assignor and Rayandayan
and Arceo as vendees/assignees for the sum of P250,000.00. On the same day, Rayandayan and
Arceo together with Manuel Behis executed another Agreement embodying the real consideration
of the sale of the land in the sum of P2,400,000.00. Thereafter, Rayandayan and Arceo negotiated
with the principal stockholder of the bank, Engr. Edilberto Natividad in Manila, for the assumption of
the indebtedness of Manuel Behis and the subsequent release of the mortgage on the property by
the bank. Rayandayan and Arceo did not show to the bank the Agreement with Manuel Behis
providing for the real consideration of P2,400,000.00 for the sale of the property to the former.
Subsequently, the bank consented to the substitution of plaintiffs as mortgage debtors in place of
Manuel Behis in a Memorandum of Agreement between private respondents and the bank with
restructured and liberalized terms for the payment of the mortgage debt. Instead of the bank
foreclosing immediately for non-payment of the delinquent account, petitioner bank agreed to
receive only a partial payment of P143,000.00 by installment on specified dates. After payment
thereof, the bank agreed to release the mortgage of Manuel Behis; to give its consent to the transfer
of title to the private respondents; and to the payment of the balance of P200,000.00 under new
terms with a new mortgage to be executed by the private respondents over the same land.

This brings us to the first issue raised by petitioner bank that the Memorandum of Agreement is
voidable on the ground that its consent to enter said agreement was vitiated by fraud because
private respondents withheld from petitioner bank the material information that the real consideration
for the sale with assumption of mortgage of the property by Manuel Behis to Rayandayan and
Arceo is P2,400,000.00, and not P250,000.00 as represented to petitioner bank. According to
petitioner bank, had it known of the real consideration for the sale, i.e. P2.4 million, it would not have
consented into entering the Memorandum of Agreement with Rayandayan and Arceo as it was put
in the dark as to the real capacity and financial standing of private respondents to assume the
mortgage from Manuel Behis. Petitioner bank pointed out that it would not have assented to the
agreement, as it could not expect the private respondents to pay the bank the approximately
P343,000.00 mortgage debt when private respondents have to pay at the same time P2,400,000.00
to Manuel Behis on the sale of the land.
The kind of fraud that will vitiate a contract refers to those insidious words or machinations resorted
to by one of the contracting parties to induce the other to enter into a contract which without them he
would not have agreed to. 13 Simply stated, the fraud must be the determining cause of the contract, or
must have caused the consent to be given. It is believed that the non-disclosure to the bank of the
purchase price of the sale of the land between private respondents and Manuel Behis cannot be the
"fraud" contemplated by Article 1338 of the Civil Code. 14 From the sole reason submitted by the petitioner
bank that it was kept in the dark as to the financial capacity of private respondents, we cannot see how
the omission or concealment of the real purchase price could have induced the bank into giving its
consent to the agreement; or that the bank would not have otherwise given its consent had it known of the
real purchase price.
First of all, the consideration for the purchase of the land between Manuel Behis and herein private
respondents Rayandayan and Arceo could not have been the determining cause for the petitioner
bank to enter into the memorandum of agreement. To all intents and purposes, the bank entered into
said agreement in order to effect payment on the indebtedness of Manuel Behis. As correctly ruled
by the Court of Appeals:
. . . . The real consideration for the sale with assumption of mortgage, or the nondisclosure thereof, was not the determining influence on the consent of the bank.
The bank received payments due under the Memorandum of Agreement, even if
delayed. It initially claimed that the sale with assumption of mortgage was invalid not
because of the concealment of the real consideration of P2,400,000.00 but because
of the information given by Cristina Behis, the widow of the mortgagor Manuel Behis
that her signature on the deed of absolute sale with assumption of mortgage was
forged. Thus, the alleged nullity of the Memorandum of Agreement, Exhibit F, is a
clear afterthought. It was raised by defendant bank, by way of counterclaim only after
it was sued.
The deceit which avoids the contract exists where the party who obtains the consent
does so by means of concealing or omitting to state material facts, with intent to
deceive, by reason of which omission or concealment the other party was induced to
give a consent which he would not otherwise have given (Tolentino, Commentaries
and Jurisprudence on the Civil Code, Vol. IV, p. 480). In this case, the consideration

for the sale with assumption of mortgage was not the inducement to defendant bank
to give a consent which it would not otherwise have given.
Indeed, whether the consideration of the sale with assumption of mortgage was
P250,000.00 as stated in Exhibit A, or P2,400,000.00 as stated in the Agreement,
Exhibit 15, should not be of importance to the bank. Whether it was P250,000.00 or
P2,400,000.00 the bank's security remained unimpaired.
The stipulation in Exhibit 15, reading "in case of default in all of the above, Manuel
Behis shall have legal recourse to the portion of the parcel of land under TCT No. T29817 equivalent to the unpaid balance of the amount subject of this Agreement",
obviously even if revealed would not have induced defendant bank to withhold its
consent. The legal recourse to TCT No. T-29817 given to Manuel Behis, under the
Agreement, is subordinate and inferior to the mortgage to the bank.
We are, therefore, constrained to uphold the validity of the Memorandum of
Agreement, Exhibit F, and reverse and set aside the ruling declaring the same
annulled allegedly due to fraud of plaintiffs-appellants (paragraph 7, dispositive
portion).
With the above conclusion reached, the award of moral and exemplary damages,
attorney's fees and expenses of litigation in favor of defendant bank and against
plaintiffs-appellants in paragraph 4 of the dispositive portion of the decision of the
trial court must likewise be reversed and set aside; and similarly, paragraph 5. The
basis for the award, which we quote "for plaintiffs' bad faith in deceiving the Bank to
enter into the Memorandum of Agreement" is not correct as we have discussed. 15
Secondly, pursuant to Article 1339 of the Civil Code 16, silence or concealment, by itself, does not
constitute fraud, unless there is a special duty to disclose certain facts, or unless according to good faith
and the usages of commerce the communication should be made. Verily, private respondents
Rayandayan and Arceo had no duty, and therefore did not act in bad faith, in failing to disclose the real
consideration of the sale between them and Manuel Behis.
Thirdly, the bank had other means and opportunity of verifying the financial capacity of private
respondents and cannot avoid the contract on the ground that they were kept in the dark as to the
financial capacity by the non-disclosure of the purchase price. As correctly pointed out by
respondent court, the bank security remained unimpaired regardless of the consideration of the sale.
Under the terms of the Memorandum of Agreement, the property remains as security for the
payment of the indebtedness, in case of default of payment. Thus, petitioner bank does not and can
not even allege that the agreement was operating to its disadvantage. In fact, the bank admits that
no damages has been suffered by it. 17
Consequently, not all the elements of fraud vitiating consent for purposes of annulling a contract
concur, to wit: (a) It was employed by a contracting party upon the other; (b) It induced the other
party to enter into the contract; (c) It was serious; and; (d) It resulted in damages and injury to the
party seeking annulment. 18 Petitioner bank has not sufficiently shown that it was induced to enter into

the agreement by the non-disclosure of the purchase price, and that the same resulted in damages to the
bank. Indeed, the general rule is that whosoever alleges fraud or mistake in any transaction must
substantiate his allegation, since it is presumed that a person takes ordinary care for his concerns and
that private transactions have been fair and regular. Petitioner bank's allegation of fraud and deceit have
not been established sufficiently and competently to rebut the presumption of regularity and due
execution of the agreement.

Based on the foregoing, the second issue raised by petitioner bank must likewise fail. Petitioner
bank's imputation of bad faith to private respondents premised on the same non-disclosure of the
real purchase price of the sale so as to preclude their entitlement to damages must necessarily be
resolved in the negative. Petitioner bank does not question the actual damages awarded to private
respondents in the amount of P229,135.00, but only the moral damages of P30,000.00, exemplary
damages of P10,000.00, attorney' s fees of P20,000.00 and litigation expenses of P5,000.00. We
may no longer examine the amounts awarded by the trial court and affirmed by the appellate court
as petitioner bank did not appeal from the decision of the trial court. It is well-settled that a party who
does not appeal from the decision may not obtain any affirmative relief from the appellate court other
than what he has obtained from the lower court, if any, whose decision is brought up on appeal. 19
WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals, dated March
17, 1993 is AFFIRMED. No costs.
1wphi1.nt

SO ORDERED.
Melo, Vitug and Purisima, JJ., concur.
Panganiban, J., no part. Former counsel of a party.

G.R. No. L-29449

December 29, 1928

LEODEGARIO AZARRAGA, plaintiff-appellee,

vs.
MARIA GAY, defendant-appellant.
Araneta and Zaragoza for appellant.
Azarraga and Panis for appellee.

VILLAMOR, J.:
By a public document Exhibit A, dated January 17, 1921, the plaintiff sold two parcels of lands to the
defendant for the lump sum of P47,000, payable in installments.

The conditions of the payment were: P5,000 at the time of signing the contract Exhibit A; P20,000
upon delivery by the vendor to the purchaser of the Torrens title to the first parcel described in the
deed of sale, P10,000 upon delivery by the vendor to the purchaser of Torrens title to the second
parcel; and lastly the sum of P12,000 one year after the delivery of the Torrens title to the second
parcel.
The vendee paid P5,000 to the vendor when the contract was signed. The vendor delivered the
Torrens title to the first parcel to the vendee who, pursuant to the agreement, paid him P20,000. In
the month of March 1921, Torrens title to the second parcel was issued and forthwith delivered by
the vendor to the vendee who, however, failed to pay the P10,000 as agreed, neither did she pay the
remaining P12,000 one year after having received the Torrens title to the second parcel.
The plaintiff here claims the sum of P22,000, with legal interest from the month of April 1921 on the
sum of P10,000, and from April 1922 on the sum of P12,000, until full payment of the amounts
claimed.
The defendant admits that she purchased the two parcels of land referred to by plaintiff, by virtue of
the deed of sale Exhibit A, but alleges in defense: (a) That the plaintiff knowing that the second
parcels of land he sold had an area of 60 hectares, by misrepresentation lead the defendant to
believe that said second parcel contained 98 hectares, and thus made it appear in the deed of sale
and induced the vendee to bind herself to pay the price of P47,000 for the two parcels of land, which
he represented contained an area of no less than 200 hectares, to which price the defendant would
not have bound herself had she known that the real area of the second parcel was 60 hectares, and,
consequently, she is entitled to a reduction in the price of the two parcels in proportion to the area
lacking, that is, that the price be reduced to P38,000; (b) that the defendant, in addition to the
amounts acknowledged by the plaintiff, had paid other sums amounting to P4,000; and (c) that the
defendants never refused to pay the justly reduced price, but the plaintiff refused to receive the just
amount of the debt.
And by way of cross-complaint, the defendant prays that she be indemnified in the sum of P15,000
for damages sustained by her by reason of the malicious filing of the instant complaint.
The plaintiff, replying to the amended answer, alleges that the contract of sale in question was made
only for the lump sum of P47,000, and not at the rate of so much per hectare, and that the
defendant's claim for alleged damages has prescribed.
The lower court, having minutely analyzed the evidence adduced by the parties held that neither the
plaintiff nor the defendant gave any importance to the area of the land in consenting to the contract
in question, and that there having been no fraud when the parties agreed to the lump sum for the
two parcels of land described in the deed Exhibit A, following article 1471 of the Civil Code, ordered
the defendant to pay the plaintiff the sum of P19,300 with legal interest at 8 per cent per annum from
April 30, 1921 on the sum of P7,300, and from April 30, 1922, on the sum of P12,000. And finally
dismissed the defendant's cross-complaint, without special pronuncement as to costs.
A motion for a new trial having been denied, this case was brought up to this court through the
proper bill of exceptions.

The appellant alleges that the trial court erred in not considering that the plaintiff induced the
defendant by deceit, to pay him the stipulated price for the two parcels he sold, stating falsely in the
deed of sale that the second of said parcels had an area of 98 hectares when he knew that in reality
it only had about 60 hectares more or less, or at least, if such deceit was not practised that mre that
there was a mistake on the part of Maria Gay in believing that said second parcel contained 98
hectares.
As a question of fact the trial court found from the evidence adduced by the parties, that the plaintiff
had not practised any deception in agreeing with the defendant upon the sale of the two parcels of
land described in Exhibit A. We concur with the trial court in this conclusion. It appears of record that
before the execution of the contract Exhibit A, the defendant went over the plaintiff's land and made
her wn calculations as to the area of said two parcels. But this not all. The plaintiff delivered to the
defendant the documents covering the land he was trying to sell. As to the first parcel there is no
question whatever and the defendant's contention is limited solely to the actual area of the second
parcel. The defendant had document Exhibit 4 in her possession which is the deed by which the
plaintiff acquired the land from the original owner, Crispulo Beramo, in which document it appears
that the area of the second parcel is about 70 hectares. It was the defendant who intrusted the
drawing of the deed of sale Exhibit A to her attorney and notary, Hontiveros, and it is to be presumed
that both she and the lawyer who drew the document Exhibit A, had read the contents of the
document Exhibit 4. The plaintiff declares that he signed the document between 5 and 7 in the
afternoon of that day and he did not pay any attention to the area of the second parcel, probably in
the belief that in the drawing of the document the data concerning the area of the land had been
taken from the said Exhibit 4. The defendant testified that she received from the plaintiff a note or
piece of paper containing the data to be inserted in the contract Exhibit A. The plaintiff denies this
and said note or piece of paper was not presented at the trial. We are of opinion that this testimony
of the defendant's is unimportant, because, in reality, if the plaintiff had delivered Exhibit 4 to the
defendant, there was no need to deliver to her another note to indicate the area of the second which
already appeared in the said Exhibit 4.
If, notwithstanding the fact that it appeared in Exhibit 4 that the area of the second parcel was,
approximately, 70 hectares, the defendant, however, stated in said document Exhibit A that said
second parcel contained 98 hectares as was admitted by him in his interviews with the plaintiff in the
months of April and June, 1924, then she has no right to claim from the plaintiff the shortage in area
of the second parcel. Furthermore, there is no evidence of record that the plaintiff made
representatin to the defendant as to the area of said second parcel, and even if he did make such
false representations as are now imputed to him by the defendant, the latter accepted such
representations at her own risk and she is the only one responsible for the consqunces of her
inexcusable credulousness. In the case of Songco vs. Sellner (37 Phil., 254), the court said:
The law allows considerable latitude to seller's statements, or dealer's talk; and experience
teaches that it as exceedingly risky to accept it at its face value.
Assertions concerning the property which is the subject of a contract of sale, or in regard to
its qualities and characteristics, are the usual and ordinary means used by sellers to obtain a
high price and are always understood as affording to buyers no grund from omitting to make
inquires. A man who relies upon such an affirmation made by a person whose interest might

so readily prompt him to exaggerate the value of his property does so at his peril, and must
take the consequences of his own imprudence.
The defendant had ample opportunity to appraise herself of the condition of the land which she
purchased, and the plaintiff did nothing to prevent her from making such investigation as she
deemed fit, and as was said in Songco vs. Sellner, supra, when the purchaser proceeds to make
investigations by himself, and the vendor does nothing to prevent such investigation from being as
complete as the former might wish, the purchaser cannot later allege that the vendor made false
representations to him. (National Cash Register Co. vs. Townsend, 137 N. C., 652; 70 L. R. A., 349;
Williamson vs. Holt, 147 N. C., 515.) The same doctrine has been sustained by the courts of the
United States in the following cases, among others: Misrepresentation by a vendor of real property
with reference to its area are not actionable, where a correct description of the property was given in
the deed and recorded chain of title, which the purchaser's agent undertook to investigate and report
upon, and the vendor made on effort to prevent a full investigation." (Shappirio vs. Goldberg, 48 Law.
ed., 419.) "One who contracts for the purchase of real estate in reliance on the representations and
statements of the vendor as to its character and value, but after he has visited and examined it for
himself, and has had the means and opportunity of verifying such statements, cannot avoid the
contract on the ground that they were false or exaggerated." (Brown vs. Smith, 109 Fed., 26.)
That the defendant knew that the area of the second parcel was only about 70 hectares is shown by
the fact that she received the document Exhibit 4 before the execution of the contract Exhibit A, as
also Exhibit E-3 on September 30, 1920; which is the notification of the day for the trial of the
application for registratin of said parcel, wherein it appears that it had an area of 60 hectares more or
less, and by the fact that she received from the plaintiff in the month of June 1924 the copy of the
plans of the two parcels, wherein appear their respective areas; and yet, in spite of all this, she did
not complain of the difference in the area of said second parcel until the year 1926. Moreover, the
record contains several of the defendant's letters to the plaintiff in the years 1921 to 1925, in which
said defendant acknowledges her debt, and confining herself to petitioning for extentions of time
within which to make payment for the reasons given therein. But in none of these letters is there any
allusion to such lack of area, nor did she complain to the plaintiff of the supposed deceit of which she
believes she is a victim. All of which, in our opinion, shows that no such deceit was practised, as the
trial court rightly found.
As to the alleged error to the effect that the trial court failed to order the reduction from the price due
on the second parcel as stated in the contract of sale Exhibit A, the proportional price of the area
lacking, we are of the opinion that said error has no legal ground.
It appears that by the contract Exhibit A, the parties agreed to the sale of two parcels of land, the first
one containing 102 hectares, 67 ares and 32 centares, and the second one containing about 98
hectares, for the lump sum of P47,000 payable partly in cash and partly in installments. Said two
parcels are defind by means of the boundaries given in the instrument. Therefore, the case falls
within the provision of article 1471 of the Civil Code, which reads as follows:
ART. 1471. In case of the sale of real estate for a lump sum and not at the rate of a specified
price for each unit of measure, there shall be no increase or decrease of the price even if the
area be found to be more or less than that stated in the contract.

The same rule shall apply when two or more estates are sold for a single price; but, if in
addition to a statement of the boundaries, which is indispensable in every conveyance of real
estate, the area of the estate should be designated in the contract, the vendor shall be
obliged to deliver all that is included with such boundaries, even should it exceed the area
specified in the contract; and, should he not be able to do so, he shall suffer a reduction of
the price in proportion to what is lacking of the area, unless the contract be annulled by
reason of the vendee's refusal to accept anything other than that which was stipulated.
The plaintiff contends that, in accrdance with the first paragraph of this article, the defendant has no
right to ask for the reduction of price, whatever may be the area of the two parcels of land sold her.
On the ther hand, the defendant contends that, according to paragraph 2 of the same article of the
Civil Code, she has a right to ask for a reduction of the price due on the second parcel, in proportion
to the area lacking.
In his comments on the article cited, Manresa says, among other things:
. . . if the sale was made for a price per unit of measure or number, the consideration of the
contract with respect to the vendee, is the number of such units, or, if you wish, the thing
purchased as determined by the stipulated number of units. But if, on the other hand, the
sale was made for a lump sum, the consideration of the contract is the object sold,
independently of its number or measure, the thing as determined by the stipulated
boundaries, which has been called in law a determinate object.
This difference in consideration between the two cases implies a distinct regulation of the
obligation to deliver the object, because, for an acquittance delivery must be made in
accordance with the agreement of the parties, and the performance of the agreement must
show the confirmation in fact, of the consideratin which induces each of the parties to enter
into the contract.
From all this, it follows that the provisions of article 1471 concerning the delivery
of determinate objects had to be materially different from those governing the delivery of
things sold a price per unit of measure or number. Let us examine it, and for the sake of
greater clearness, let us expound it as we understand it.
With respect to the delivery of determinate objects two cases may arise, either the
determinate object is delivered as stipulated, that is, delivering everything included within the
boundaries, inasmuch as it is the entirety thereof that distinguishes the determinate object;
or that such entirety is impaired in the delivery by failing to deliver to the purchaser
something included within the boundaries. These are the two cases for which the Code has
provided although, in our opinion, it has not been sufficiently explicit in expressing the
distinction; hence, at first sight, the article seems somewhat difficult to understand.
The first paragraph and the first clause of the second paragraph of article 1471 deal with the
first of said cases; that is where everything included within the boundaries as set forth in the
contract has been delivered. The Code goes on to consider the case where a definite area or
number has been expressed in the contract, and enunciates the rule to be followed when,

after delivery, the area included within said bundaries is found not to coincide with the
aforesaid content or number. Said rule may be thus stated: Whether or not the object of sale
be one realty for a lump sum, or two or more for a single price also a lump sum, and,
consequently, not for so much per unit of measure or number, there shall be no increase or
decrease in the price even if the area be found to be more or less than that stated in the
contract.
Thus understood the reason for the regulation is clear and no doubts can arise from its
application. It is concerned with determinate objects. The consideration of the contract, and
the thing to be delivered is adeterminate object, and not the number of units it contains. The
price is determined with relation to it; hence, its greater or lesser area cannot influence the
increase or decrease of the price agreed upon. We have just learned the reason for the
regulation, bearing in mind that the Code has rightly considered an object as determinate for
the purposes now treated, when it is a single realty as when it is two or more, so long as they
are solds for a single price constituting a lump sum and not for a specified amount per unit of
measure or number.
We have stated that the second possible case in the delivery of determinate objects is that in
which, on account or circumstances of diverse possible origins, everything included within
the boundaries is not delivered.
We have indicated about that where everything included within the boundaries is delivered
there can be no increase or decrease in price, no matter whether the area be more or less
than that given in the contract. From this a very important consequence follows, to wit: That if
the vendor is bound to deliver a determinate object, he is bound to deliver all of it, that is,
everything within its boundaries, in the contract, and that from the moment he fails to do so,
either because he cannot, or because, ignoring the meaning of the contract, he alleges that it
contains a greater area than that stipulated, the contract is partially unfulfilled and it is but
just the certain actions be available to the vendee for the protection of his right.
The rule in the latter case is found in the second paragraph of article 1471, with the
exception of the first clause which refers of the former hypothesis. This rule may be stated as
follows: Whether or not the object of the sale be one realty for a lump sum, or two or more for
a single price also a lump sum, and, consequently not at the rate of a specified price for each
unit of measuring or number, the vendor shall be bound to deliver everything that is included
within the boundaries stated, although it may exceed the area or number expressed in the
contract; in case he cannot deliver it, the purchaser shall have the right either to reduce the
price proportionately to what is lacking of the area or number, or to rescind the contract at his
option.
Comprehending the meaning of a sale of a determinate object, it is easily understod how, in
cases wherein by virtue of the rule enunciated, the vendor has to deliver a greater area than
that expressed in the contract, there is, strictly speaking, no excess of area, inasmuch as
one may always properly ask, excess with respect to what? With respect to the area
appearing in the deed, it will be answered. But as this area was not taken into account in
entering into the contract inasmuch as the parties made neither the amount of the price, nor

the efficacy of the contract to depend on the number of its units; since area was written in to
fulfill a formal requisite demanded by the present rules upon the drawing of public
instruments, but as a condition essential to the contract, which, if it were not true, would not
be consummated, it results in the long run, that this detail of the written recital, with respect
to which the excess is to be estimated, is so negligible, so inconsistent, so haphazard, and in
the vast majority of cases so wide of the mark, that it is impossible to calculate the excess;
and considering the nature of a contract of sale of a definite object, it cannot be strictly held
that there is any excess at all.
If everything within the stipulated boundaries is not delivered, then the determination object
which was the consideration of the contract for the vendee, is not delivered; hence his power
to nullify it. However, it might be (and this he alone can say), that although he has not
received the object, according to the stipulated terms, it suits him; hence his power to carry
the contract into effect with the just decrease in price referred to in the article under
comment.
The manner in which the matter covered by this article was distributed in its two paragraphs
constributes to making it difficult to understand. The rule might have been clearly stated had
the first clause of the second paragraph been included in the first paragraph, the latter to end
with the words: "The same rule shall apply when two or more estates are sold fos a single
price." And if by constituting an independent paragraph, with the rest of the second
paragraph, it were made to appear more expressly that the rule of the second paragraph
thus drawn referred to all the cases of paragraph one, as we have expounded, namely, to the
case of a sale of one single estate and that of two or more for one single price, the rule
would have been clearer.
In our opinion, this would have better answered what we deem to be the indubitable intention
of the legislator.
Some eminent commentators construe the last part of article 1471 in a different way. To them
the phrase "and should he not be able to do so" as applied to the vendor, does not mean as
apparently it does "should he not be able to deliver all that is included within the boundaries
stated," but this other thing namely, that if by reason of the fact that a less area is included
within the boundaries than that expressed in the contract, it is not possible for the vendor to
comply therewith according to its literal sense, he must suffer the effects of the nullity of the
contract or a reduction of the price proportionately what may be lacking of the area or
number. It is added as a ground for this solution that if the vendor fulfills the obligations, as
stated in the article, by delivering what is not included with in the boundaries, there can
never be any case of proportionate reduction of the price on account of shortage of area,
because he does not give less who delivers all that he bound himself to.
1awphi1.net

According to this opinion, which we believe erroneous, if within the boundaries of the
property sold, there is included more area than that expressed in the title deeds, nothing can
be claimed by the vendor who losses the value of that excess, but if there is less area, then
he loses also because either the price is reduced or the contract is annulled. This theory

would be anomalous in case of sale of properties in bulk, but, especially, would work a gross
injustice which the legislator never intended.
There is no such thing. So long as the vendor can deliver, and for that reason, delivers all the
land included within the boundaries assigned to the property, there can be no claim
whatsoever either on his part, although the area may be found to be much greater than what
was expressed, nor on the part of the puchaser although that area may be in reality much
smaller. But as he sold everything within the boundaries and this is all the purchaser has
paid, or must pay for whether much or little, if afterwards it is found that he cannot deliver all,
because, for instance, a part, a building, a valley, various pieces of land, a glen, etc., are not
his, there is no sale of a determinate object, there is no longer a sale of the object agreed
upon, and the solution given by the article is then just and logical: Either the contract is
annulled or the price reduced proportionately.
We have quoted from Manresa's Commentaries at length for a better understanding of the doctrine
on the matter, inasmuch as the contending counsel have inserted in their respective briefs only such
portions of said commentaries as relate to their respective contentions.
It may be seen from a careful reading of the commentaries on said article 1471, that the great author
distinguishes between the two cases dealt with in article 1471, and formulates the proper rules for
each. In the delivery of a determinate object, says the author, two cases may arise; either the
determinate object is delivered as stipulated, that is, delivering everything included within the
boundaries, inasmuch as it is the entirety thereof that distinguishes the determinate object; or that
such entirely is impaired in the delivery by failing to deliver to the purchaser something included
within the boundaries. For the first case, Manresa gives the following rule: "Whether or not the object
of the sale be one realty for a lump sum, or two or more for a single price also a lump sum, and,
consequently, not for so much per unit of measure or number, there shall be no increase or decrease
in the price ecven if the area be found to be more or less than that stated in the contract." And for the
second case, this other: "Whether or not the object of the sale one realty for a lump sum, or two or
more for a single price also a lump sum, and, consequently, not at the rate a specified price for each
unit of measure or number, the vendor shall be bnound to deliver everything that is included within
the boundaries stated, although it may exceed the area or number expressed in the contract; in case
he cannot deliver it, the purchaser shall have the right either to reduce the price proportionately to
what is lacking of the area or number, or to rescind the contract, at his option."
Considering the facts of the present controversy, it seems clear to us that the rule formulated for the
second paragraph or article 1471 is inapplicable in the instant case inasmuch as all the land
included within the boundaries of the two parcels sold has been delivered inits entirety to the
vendee. There is no division of the land enclosed within the boundaries of the properties sold; the
determinate object which is the subject matter of the contract has been delivered by the vendor in its
entirety as he obligate himself to do. Therefore, there is no right to complain either on the part of the
vendor, even if there be a greater area than that stated in the deed, or on the part of the vendee,
though the area of the second parcel be really much smaller. (Irureta Goyena vs. Tambunting, 1
Phil., 490.)

With regard to the damages prayed for by the defendant, the lower court finally dismissed the crosscomplaint without special pronouncement as to costs. And according to the decision of the Supreme
Court od Spain of 1897, a judgment absolving a party from a claim of damages against him, who has
not contravened his obligations, does not violate articles 1101 and 1108 of the Civil Code.
With respect to the question of interest, the lower court likewise held that, as the defendant had not
paid the sum of P7,300 on April 30, 1921, when the plaintiff had delivered the certificate of title, she
was in default from that date and also from the date of one year thereafter, with respect to the sum of
P12,000, contituting the last period of the obligation. We are of the opinion that the lower court has
committed no error which should be corrected by this court.
The judgment appealed from being in accordance with the law, it should be as it is hereby, affirmed
with costs against the appellant. So ordered.
Avancea, C. J., Johnson, Street, Ostrand, Johns, Romualdez and Villa-Real, JJ., concur.

G.R. No. L-11513

December 4, 1917

LAMBERTO SONGCO, plaintiff-appellee,

vs.
GEORGE C. SELLNER, defendant-appellant.
Thos. D. Aitken for appellant.
Perfecto Gabriel for appellee.

STREET, J.:
In December, 1915, the defendant, George C. Sellner, was the owner of a farm at Floridablanca,
Pampanga, which was contiguous to a farm owned by the plaintiff Lamberto Songco. Both properties
had a considerable quantity of the sugar cane ready to be cut. At Dinalupijan, a short distance away,
was located a sugar central, and Sellner desired to mill his cane at this central. One obstacle was
that the owners of the central were not sure they could mill his cane and would not promise to take it.
Sellner, however, learning that the central was going to mill Songco's cane, conceived the idea of
buying the cane of the latter, expecting to run his own cane in that same time the other should be
milled. Another motive which evidently operated upon the mind of Sellner was the desire to get a
right of way over Songco's land for converting his own sugar to the central. Accordingly he bought
Songco's cane as it stood in the fields for the agreed sum of P12,000 and executed therefor three
promissory notes of P4,000 each. Two of these notes were paid; and the present action was

instituted to recover upon the third. From a judgement rendered in favor of the plaintiff, the defendant
has appealed.
The note, upon which the action was brought, was exhibited with the complaint. The answer of the
defendant was made under oath, and contained a general denial of all the allegations of the
complaint. The answer also contained the allegation, asserted by way of special defense, that the
promissory note in question was obtained from the defendant by means of certain false and
fraudulent representations therein specified. The note was admitted in evidence by the court; and
error is here assigned upon this action, on the ground that the genuineness and due execution of the
note was not proved. There is nothing in this contention for several reasons. In the first place a
general denial of a complaint does not raise a question as to the genuineness or due execution of a
written instrument. Under section 103 of the Code of Civil Procedure it is necessary that the
genuineness and due execution of the instrument shall be specifically denied before an issue is
raised up on this point. This means that the defendant must declare under oath that he did not sign
the document or that it is otherwise false or fabricated. Neither does the statement of the answer to
the effect that the instrument was procured by fraudulent representation raise any issue as to its
genuineness or due execution. On the contrary such a plea is an admission both of the genuineness
and due execution thereof, since it seeks to avoid the instrument upon a ground not affecting either.
Furthermore, in this particular case the fourth paragraph of the answer expressly admits the
execution of the instrument by the defendant.
The principal defense here urged relates to a false representation which, it is claimed, was made by
the plaintiff Songco with respect to the quantity of uncut cane standing in the fields at the time the
defendant Sellner became the purchaser thereof. Upon this point it is proved that Songco estimated
that this cane would produce 3,000 piculs of the sugar and that Sellner bought the crop believing this
estimate to be substantially correct. As the crop turned out it produced 2,017 piculs, gross, and after
the toll for milling was deducted the net left to Sellner was very much less. It appears that in the
course of negotiations Sellner requested Songco to guarantee the quantity which the latter claimed
to be in fields but he would not do so. He, however, repeated that he was sure the fields contained
the quantity estimated by him. Some evidence was introduced tending to show that the disparity
between Songco's estimate and the quantity actually obtained would have been more expeditiously
conducted. We do not think there is much in this; and even making allowance for weight
unnecessary lost, the harvest fell far short of the amount estimated by Songco. We think it is fairly
shown by the evidence that Songco knew at the time he made the representation in question that he
was greatly exaggerating the probable produce of his fields, and it is impossible to believe that his
estimate honestly reflected his true opinion. He knew what these same fields had been producing
over a long period of years; and he knew that, judging from the customary yield, the harvest of this
year should fall far below the amount stated.
Notwithstanding the fact that Songco's statement as to the probable output of his crop was
disingenuous and uncandid, we nevertheless think that Sellner was bound and that he must pay the
price stipulated. The representation in question can only be considered matter of opinion as the cane
was still standing in the field, and the quantity of the sugar it would produce could not be known with
certainty until it should be harvested and milled. Undoubtedly Songco had better experience and
better information on which to form an opinion on this question than Sellner. Nevertheless the latter

could judge with his own eyes as to the character of the cane, and it is shown that he measured the
fields and ascertained that they contained 96 1/2 hectares.
It is of course elementary that a misinterpretation upon a mere matter of opinion is not an actionable
deceit, nor is it a sufficient ground for avoiding a contract as fraudulent. We are aware that
statements may be found in the books to the effect that there is a difference between giving an
honest opinion and making a false representation as to what one's real opinion is. We do not think,
however, that this is a case where any such distinction should be drawn.
The law allows considerable latitude to seller's statements, or dealer's talk; and experience teaches
that it is exceedingly risky to accept it at its face value. The refusal of the seller to warrant his
estimate should have admonished the purchaser that that estimate was put forth as a mere opinion;
and we will not now hold the seller to a liability equal to that which would have been created by a
warranty, if one had been given.
Assertions concerning the property which is the subject of a contract of sale, or in regard to its
qualities and characteristics, are the usual and ordinary means used by sellers to obtain a high price
and are always understood as affording to buyers no ground for omitting to make inquiries. A man
who relies upon such an affirmation made by a person whose interest might so readily prompt him to
exaggerate the value of his property does so at his peril, and must take the consequences of his
own imprudence. The principles enunciated above are fully supported by the weight of the judicial
authority. In a case where the owners of a certain logs represented to their vendee that the logs
would produce a greater per cent of superior lumber than was actually realized, but refused to
warrant their quality and required the vendee to examine for himself before making the contract, it
was held that the vendee could not avoid the contract. (Fauntleroy vs. Wilcox, 80 Ill., 477.) In
Williamson vs. Holt (147 N. C., 515; 17 L. R. A. [N. S.], 240), it appeared that the defendant had
bought an ice plant with the knowledge that its operation had been abandoned because the output
did not equal its capacity. He had full opportunity to investigate its condition. It was held that he could
not avoid paying the purchase price because the vendor stated that, with some repairs, it would turn
out about a certain amount per day. In Poland vs. Brownell (131 Mass., 138), where a man who
bought a stock of goods had ample opportunity to examine and investigate, it was held that he could
not rely on the seller's misrepresentations as to the value of the goods or the extent of the business.
It would have been different if the seller had fraudulently induced him to forbear inquiries or
examination which he would otherwise have made.
It is not every false representation relating to the subject matter of a contract which will render it void.
It must be as to matters of fact substantially affecting the buyer's interest, not as to matters of
opinion, judgment, probability, or expectation. (Long vs. Woodman, 58 Me., 52; Hazard vs. Irwin, 18
Pick. [Mass.], 95; Gordon vs. Parmelee, 2 Allen [Mass.],212; Williamson vs. McFadden, 23 Fla., 143,
11 Am. St. Rep., 345.) When the purchaser undertakes to make an investigation of his own, and the
seller does nothing to prevent this investigation from being as full as he chooses to make it, the
purchaser cannot afterwards allege that the seller made misrepresentations. (National Cash
Register Co. vs. Townsend, 137 N. C., 652, 70 L. R. A., 349; Williamson vs. Holt, 147 N. C., 515.)
1awphi1.net

We are aware that where one party to a contract, having special or expert knowledge, takes
advantage of the ignorance of another to impose upon him, the false representation may afford

ground for relief, though otherwise the injured party would be bound. But we do not think that the fact
that Songco was an experienced farmer, while Sellner was, as he claims, a mere novice in the
business, brings this case within that exception.
An incident of this action was that the plaintiffs sued out an attachment against the defendant, at the
time of the institution of the suit, upon the ground that he was disposing of his property in fraud of his
creditors. This charge was completely refuted by proof showing that the defendant is a man of large
resources and had not attempted to convey away his property as alleged. The court below therefore
found that this attachment had been wrongfully sued out, and awarded damages to the defendant
equivalent to the amount actually paid out by him in procuring the dissolution of the attachment. No
appeal was taken from this action of the court by the plaintiff; but the defendant assigns error to the
action of the court in refusing to award to him further damages for the injury done to his credit. In this
connection he shows that one of his creditors, being appraised of the fact that the defendant had
been made the subject of an attachment, withheld further credit and forced him to sell a large
quantity of sugar at a price much lower than he would have received if he could have carried it a few
weeks longer. We think the court below committed no error in refusing to award damages upon this
grounds, as such damages were remote and speculative. It could hardly be foreseen as a probable
consequence of the suing out of this attachment that the hands of the creditors would come down
upon their unfortunate client with such disastrous results; and the plaintiff certainly cannot be held
accountable for the complications of the defendant's affairs which made possible the damage which
in fact resulted. The court below also refused to award punitive damages claimed by the plaintiff on
the ground that the attachment was maliciously sued out. The action of the court in this respect will
not be here disturbed.
From what has been said it follows that the judgment of the court below must be affirmed, with costs
against the appellant. So ordered.
Arellano, C. J., Torres, Carson, Araullo, and Malcolm, JJ., concur.

G.R. No. L-11872

December 1, 1917

DOMINGO MERCADO and JOSEFA MERCADO, plaintiffs-appellants,

vs.
JOSE ESPIRITU, administrator of the estate of the deceased Luis
Espiritu, defendant-appellee.
Perfecto Salas Rodriguez for appellants.
Vicente Foz for appellee.

TORRES, J.:
This is an appeal by bill of exceptions, filed by the counsel for the plaintiffs from the judgment of
September 22, 1914, in which the judge of the Seventh Judicial District dismissed the complaint filed
by the plaintiffs and ordered them to keep perpetual silence in regard to the litigated land, and to pay
the costs of the suit.
By a complaint dated April 9, 1913, counsel for Domingo and Josefa Mercado brought suit in the
Court of First Instance of Bulacan, against Luis Espiritu, but, as the latter died soon thereafter, the
complaint was amended by being directed against Jose Espiritu in his capacity of his administrator
of the estate of the deceased Luis Espiritu. The plaintiffs alleged that they and their sisters
Concepcion and Paz, all surnamed Mercado, were the children and sole heirs of Margarita Espiritu,
a sister of the deceased Luis Espiritu; that Margarita Espiritu died in 1897, leaving as her
paraphernal property a tract of land of 48 hectares in area situated in the barrio of Panducot,
municipality of Calumpit, Bulacan, and bounded as described in paragraph 4 of the amended
complaint, which hereditary portion had since then been held by the plaintiffs and their sisters,
through their father Wenceslao Mercado, husband of Margarita Espiritu; that, about the year 1910,
said Luis Espiritu, by means of cajolery, induced, and fraudulently succeeded in getting the plaintiffs
Domingo and Josefa Mercado to sign a deed of sale of the land left by their mother, for the sum of
P400, which amount was divided among the two plaintiffs and their sisters Concepcion and Paz,
notwithstanding the fact that said land, according to its assessment, was valued at P3,795; that onehalf of the land in question belonged to Margarita Espiritu, and one-half of this share, that is, onefourth of said land , to the plaintiffs, and the other one-fourth, to their two sisters Concepcion and
Paz; that the part of the land belonging to the two plaintiffs could produce 180 cavanes of rice per
annum, at P2.50 per cavan, was equivalent to P450 per annum; and that Luis Espiritu had received
said products from 1901 until the time of his death. Said counsel therefore asked that judgment be
rendered in plaintiffs' favor by holding to be null and void the sale they made of their respective
shares of their land, to Luis Espiritu, and that the defendant be ordered to deliver and restore to the
plaintiffs the shares of the land that fell to the latter in the partition of the estate of their deceased
mother Margarita Espiritu, together with the products thereof, uncollected since 1901, or their
equivalent, to wit, P450 per annum, and to pay the costs of the suit.
In due season the defendant administrator answered the aforementioned complaint, denying each
and all of the allegations therein contained, and in special defense alleged that the land, the subjectmatter of the complaint, had an area of only 21 cavanes of seed rice; that, on May 25, 1894, its
owner, the deceased Margarita Espiritu y Yutoc, the plaintiffs' mother, with the due authorization of
her husband Wenceslao Mercado y Arnedo Cruz sold to Luis Espiritu for the sum of P2,000 a portion
of said land, to wit, an area such as is usually required for fifteen cavanes of seed; that
subsequently, on May 14, 1901, Wenceslao Mercado y Arnedo Cruz, the plaintiffs' father, in his
capacity as administrator of the property of his children sold under pacto de retro to the same Luis
Espiritu at the price of P375 the remainder of the said land, to wit, an area covered by six cavanes of
seed to meet the expenses of the maintenance of his (Wenceslao's) children, and this amount being
still insufficient the successively borrowed from said Luis Espiritu other sums of money aggregating a
total of P600; but that later, on May 17,1910, the plaintiffs, alleging themselves to be of legal age,
executed, with their sisters Maria del Consejo and Maria dela Paz, the notarial instrument inserted
integrally in the 5th paragraph of the answer, by which instrument, ratifying said sale under pacto de
retro of the land that had belonged to their mother Margarita Espiritu, effected by their father
Wenceslao Mercado in favor of Luis Espiritu for the sum of P2,600, they sold absolutely and
perpetually to said Luis Espiritu, in consideration of P400, the property that had belonged to their
deceased mother and which they acknowledged having received from the aforementioned
purchaser. In this cross-complaint the defendant alleged that the complaint filed by the plaintiffs was
unfounded and malicious, and that thereby losses and damages in the sum of P1,000 had been

caused to the intestate estate of the said Luis Espiritu. He therefore asked that judgment be
rendered by ordering the plaintiffs to keep perpetual silence with respect to the land in litigation and,
besides, to pay said intestate estate P1,000 for losses and damages, and that the costs of the trial
be charged against them.
In reply to the cross-complaint, the plaintiffs denied each and all of the facts therein set forth, and in
special defense alleged that at the time of the execution of the deed of sale inserted in the crosscomplaint the plaintiffs were still minors, and that since they reached their majority the four years
fixed by law for the annulment of said contract had not yet elapsed. They therefore asked that they
be absolved from the defendant's cross-complaint.
After trial and the introduction of evidence by both parties, the court rendered the judgment
aforementioned, to which the plaintiffs excepted and in writing moved for a reopening of the case
and a new trial. This motion was overruled, exception was taken by the petitioners, and the proper
bill of exceptions having been presented, the same was approved and transmitted to the clerk of this
court.
As the plaintiffs assailed the validity of the deed of sale, Exhibit 3, executed by them on May 17,
1910, on the ground that they were minors when they executed it, the questions submitted to the
decision of this court consist in determining whether it is true that the plaintiffs were then minors and
therefore incapable of selling their property on the date borne by the instrument Exhibit 3; and in
case they then were such, whether a person who is really and truly a minor and, notwithstanding,
attests that he is of legal age, can, after the execution of the deed and within legal period, ask for the
annulment of the instrument executed by him, because of some defect that invalidates the contract,
in accordance with the law (Civ. Code, arts. 1263 and 1300), so that he may obtain the restitution of
the land sold.
The records shows it to have been fully proven that in 1891 Lucas Espiritu obtained title by
composition with the State, to three parcels of land, adjoining each other, in the sitio of Panducot of
the pueblo of Calumpit, Bulacan, containing altogether an area of 75 hectares, 25 ares, and 59
centares, which facts appear in the title Exhibit D; that, upon Luis Espiritu's death, his said lands
passed by inheritance to his four children named Victoria, Ines, Margarita, and Luis; and that, in the
partition of said decedent's estate, the parcel of land described in the complaint as containing fortyseven and odd hectares was allotted to the brother and sister Luis and Margarita, in equal shares.
Margarita Espiritu, married to Wenceslao Mercado y Ardeno Cruz, had by this husband five children,
Maria Consejo, Maria de la Paz, Domingo, Josefa, and Amalia, all surnamed Mercado y Espiritu,
who, at the death of their mother in 1896 inherited, by operation of law, one-half of the land
described in the complaint.
The plaintiffs' petition for annulment of the sale and the consequent restitution to them of two-fourths
of the land left by their mother, that is, of one-fourth of all the land described in the complaint, and
which, they stated, amounts to 11 hectares, 86 ares and 37 centares. To this claim the defendant
excepted, alleging that the land in question comprised only an area such as is customarily covered
by 21 cavanes of seed.
It was also duly proven that, by a notarial instrument of May 25, 1894, the plaintiffs' mother conveyed
by actual and absolute sale for the sum of P2,000, to her brother Luis Espiritu a portion of the land
now on litigation, or an area such as is usually covered by about 15 cavanes of seed; and that, on
account of the loss of the original of said instrument, which was on the possession of the purchaser
Luis Espiritu, and furthermore because, during the revolution, the protocols or registers of public
documents of the Province of Bulacan were burned, Wenceslao Mercado y Arnedo Cruz, the
widower of the vendor and father of the plaintiffs, executed, at the instance of the interested party

Luis Espiritu, the notarial instrument Exhibit 1, of the date of May 20, 1901, in his own name and
those of his minor children Maria Consejo, Maria de la Paz, Domingo, Josefa, and Amalia, and
therein set forth that it was true that the sale of said portion of land had been made by his
aforementioned wife, then deceased, to Luis Espiritu in 1894.
However, even prior to said date, to wit, on May 14th of the same year, 1901, the widower
Wenceslao Mercado, according to the private document Exhibit 2, pledged or mortgaged to the
same man, Luis Espiritu, for P375, a part, or an area covered by six cavanes of seed, of the land
that had belonged to this vendor's deceased wife, to the said Luis Espiritu and which now forms a
part of the land in question a transaction which Mercado was obliged to make in order to obtain
funds with which "to cover his children's needs." Wenceslao Mercado, the plaintiffs' father, having
died, about the year 1904, the plaintiffs Domingo and Josefa Mercado, together with their sisters
Consejo and Paz, declaring themselves to be of legal age and in possession of the required legal
status to contract, executed and subscribed before a notary the document Exhibit 3, on May 17,
1910, in which referring to the previous sale of the land, effected by their deceased mother for the
sum of P2,600 and with her husband's permission and authorization, they sold absolutely and in
perpetuity to Luis Espiritu, for the sum of P400 "as an increase" of the previous purchase price, the
land described in said instrument and situated in Panducot, pueblo of Calumpit, Bulacan, of an area
equal to that usually sown with 21 cavanes of seed bounded on the north by the lands of Flaviano
Abreu and the heirs of Pedro Espiritu, on the east by those of Victoria Espiritu and Ines Espiritu, on
the south by those of Luis Espiritu, and on the west by those of Hermogenes Tan-Toco and by the
Sapang-Maitu stream.
In this status of the case the plaintiffs seek the annulment of the deed Exhibit 3, on the ground that
on the date of its execution they were minors without legal capacity to contract, and for the further
reason that the deceased purchaser Luis Espiritu availed himself of deceit and fraud in obtaining
their consent for the execution of said deed.
As it was proven by the testimony of the clerk of the parochial church of Apalit (plaintiffs were born in
Apalit) that the baptismal register books of that parish pertaining to the years 1890-1891, were lost
or burned, the witness Maria Consejo Mercado recognized and identified the book Exhibit A, which
she testified had been kept and taken care of by her deceased father Wenceslao Mercado, pages
396 and 397 of which bear the attestation that the plaintiff Domingo Mercado was born on August 4,
1890, and Josefa Mercado, on July 14, 1891. Furthermore, this witness corroborated the averment
of the plaintiffs' minority, by the personal registration certificate of said Domingo Mercado, of the year
1914, Exhibit C, by which it appears that in 1910 he was only 23 years old, whereby it would also be
appear that Josefa Mercado was 22 years of age in 1910, and therefore, on May 17,1910, when the
instrument of purchase and sale, Exhibit 3, was executed, the plaintiffs must have been,
respectively, 19 and 18 years of age.
The witness Maria Consejo Mercado also testified that after her father's death her brother and
sisters removed to Manila to live there, although her brother Domingo used to reside with his uncle
Luis Espiritu, who took charge of the administration of the property left by his predecessors in
interest; that it was her uncle Luis who got for her brother Domingo the other cedula, Exhibit B,
pertaining to the year 1910, where in it appears that the latter was then already 23 years of age; that
she did not know why her uncle did so; that she and her brother and sisters merely signed the deed
of May 17, 1910; and that her father Wenceslao Mercado, prior to his death had pledged the land to
her uncle Luis Espiritu.
The witness Ines Espiritu testified that after the death of the plaintiffs' father, it was Luis Espiritu who
directed the cultivation of the land in litigation. This testimony was corroborated by her sister Victoria

Espiritu, who added that her nephew, the plaintiff Domingo, had lived for some time, she did not
know just how long, under the control of Luis Espiritu.
Roque Galang, married to a sister of Luis Espiritu, stated that the land that fell to his wife and to his
sister-in-law Victoria, and which had an area of about 8 hectares less than that of the land allotted to
the aforementioned Luis and Margarita produced for his wife and his sister-in-law Victoria a net and
minimum yield of 507 cavanes in 1907, in spite of its being high land and of inferior quality, as
compared with the land in dispute, and that its yield was still larger in 1914, when the said two
sisters' share was 764 cavanes.
Patricio Tanjucto, the notary before whom the deed Exhibit 3 was ratified, was a witness for the
defendant. He testified that this deed was drawn up by him at the request of the plaintiff Josefa
Mercado; that the grantors of the instrument assured him that they were all of legal age; that said
document was signed by the plaintiffs and the other contracting parties, after it had been read to
them and had been translated into the Pampangan dialect for those of them who did not understand
Spanish. On cross-examination, witness added that ever since he was 18 years of age and began to
court, he had known the plaintiff Josefa Mercado, who was then a young maiden, although she had
not yet commenced to attend social gatherings, and that all this took place about the year 1898, for
witness said that he was then [at the time of his testimony, 1914,] 34 years of age.
Antonio Espiritu, 60 years of age, who knew Lucas Espiritu and the properties owned by the latter,
testified that Espiritu's land contained an area of 84 cavanes, and after its owner's death, was under
witness' administration during to harvest two harvest seasons; that the products yielded by a portion
of this land, to wit, an area such as is sown by about 15 cavanes of seed, had been, since 1894,
utilized by Luis Espiritu, by reason of his having acquired the land; and that, after Margarita Espiritu's
death, her husband Wenceslao Mercado took possession of another portion of the land, containing
an area of six cavanes of seed and which had been left by this deceased, and that he held same
until 1901, when he conveyed it to Luis Espiritu.
lawphi1.net

The defendant-administrator, Jose Espiritu, son of the deceased Luis Espiritu, testified that the
plaintiff Domingo Mercado used to live off and on in the house of his deceased father, about the year
1909 or 1910, and used to go back and forth between his father's house and those of his other
relatives. He denied that his father had at any time administered the property belonging to the
Mercado brother and sisters.
In rebuttal, Antonio Mercado, a cousin of Wenceslao, father of the plaintiffs, testified that he mediate
in several transactions in connection with a piece of land belonging to Margarita Espiritu. When
shown the deed of purchase and sale Exhibit 1, he stated that he was not acquainted with its
contents. This same witness also testified that he mediated in a transaction had between Wenceslao
Mercado and Luis Espiritu (he did not remember the year), in which the former sold to the latter a
parcel of land situated in Panducot. He stated that as he was a witness of the deed of sale he could
identify this instrument were it exhibited to him; but he did not do so, for no instrument whatever was
presented to him for identification. The transaction mentioned must have concerned either the
ratification of the sale of the land of 15 cavanes, in 1901, attested in Exhibit 1, or the mortgage or
pledge of the other parcel of 6 cavanes, given on May 14, 1901, by Wenceslao Mercado to Luis
Espiritu, as may be seen by the private document Exhibit 2. In rebuttal, the plaintiff Josefa Mercado
denied having gone to the house of the notary Tanjutco for the purpose of requesting him to draw up
any document whatever. She stated that she saw the document Exhibit 3 for the first time in the
house of her uncle Luis Espiritu on the day she signed it, on which occasion and while said
document was being signed said notary was not present, nor were the witnesses thereto whose
names appear therein; and that she went to her said uncle's house, because he had sent for her, as
well as her brother and sisters, sending a carromata to fetch them. Victoria Espiritu denied ever

having been in the house of her brother. Luis Espiritu in company with the plaintiffs, for the purpose
of giving her consent to the execution of any deed in behalf of her brother.
The evidence adduced at the trial does not show, even circumstantially, that the purchaser Luis
Espiritu employed fraud, deceit, violence, or intimidation, in order to effect the sale mentioned in the
document Exhibit 3, executed on May 17, 1910. In this document the vendors, the brother and the
sisters Domingo, Maria del Consejo, Paz and, Josefa surnamed Mercado y Espiritu, attested the
certainty of the previous sale which their mother, during her lifetime, had made in behalf of said
purchaser Luis Espiritu, her brother with the consent of her husband Wenceslao Mercado, father of
the vendors of the portion of land situated in the barrio of Panducot, pueblo of Calumpit, Bulacan;
and in consideration of the fact that the said vendor Luis Espiritu paid them, as an increase, the sum
of P400, by virtue of the contract made with him, they declare having sold to him absolutely and in
perpetuity said parcel of the land, waive and thenceforth any and all rights they may have, inasmuch
as said sum constitutes the just price of the property.
So that said document Exhibit 3 is virtually an acknowledgment of the contract of sale of the parcel
or portion of land that would contain 15 cavanes of seed rice made by the vendors' mother in favor of
the purchaser Luis Espiritu, their uncle, and likewise an acknowledgment of the contract of pledge or
mortgage of the remainder of said land, an area of six cavanes, made with the same purchaser, at
an increase of P400 over the price of P2,600, making an aggregate sum of P3,000, decomposed as
follows: P2,000, collected during her lifetime, by the vendors' father; and the said increase of P400,
collected by the plaintiffs.
In the aforementioned sale, according to the deed of May 25, 1894, Margarita Espiritu conveyed to
her brother Luis the parcel of 15 cavanes of seed, Exhibit 1, and after her death the plaintiffs'
widowed father mortgaged or pledged the remaining parcel or portion of 6 cavanes of seed to her
brother-in-law, Luis Espiritu, in May, 1901 (Exhibit 2). So it is that the notarial instrument Exhibit 3,
which was assailed by the plaintiffs, recognized the validity of the previous contracts, and the totality
of the land, consisting of an area containing 21 cavanes of seed rice, was sold absolutely and in
perpetuity, the vendors receiving in exchange P400 more; and there is no conclusive proof in the
record that this last document was false and simulated on account of the employment of any
violence, intimidation, fraud, or deceit, in the procuring of the consent of the vendors who executed
it.
Considering the relation that exists between the document Exhibit 3 and those of previous dates,
Exhibits 1 and 2, and taking into the account the relationship between the contracting parties, and
also the general custom that prevails in many provinces of these Islands for the vendor or debtor to
obtain an increase in the price of the sale or of the pledge, or an increase in the amount loaned,
without proof to the contrary, it would be improper and illegal to hold, in view of the facts hereinabove
set forth, that the purchaser Luis Espiritu, now deceased, had any need to forge or simulate the
document Exhibit 3 inasmuch as, since May, 1894, he has held in the capacity of owner by virtue of
a prior acquisition, the parcel of land of 15 cavanes of seed, and likewise, since May, 1901,
according to the contract of mortgage or pledge, the parcel of 6 cavanes, or the remainder of the
total area of 21 cavanes.
So that Luis Espiritu was, during his lifetime, and now, after his death, his testate or intestate estate
is in lawful possession of the parcel of land situated in Panducot that contains 21 cavanes of seed,
by virtue of the title of conveyance of ownership of the land measuring 15 cavanes, and, in
consequence of the contract of pledge or mortgage in security for the sum of P600, is likewise in
lawful possession of the remainder of the land, or an area containing 6 cavanes of seed.

The plaintiffs have absolutely no right whatever to recover said first parcel of land, as its ownership
was conveyed to the purchaser by means of a singular title of purchase and sale; and as to the other
portion of 6 cavanes of seed, they could have redeemed it before May 17, 1910, upon the payment
or the return of the sum which their deceased father Wenceslao Mercado had, during his lifetime,
received as a loan under security of the pledged property; but, after the execution of the document
Exhibit 3, the creditor Luis Espiritu definitely acquired the ownership of said parcel of 6 cavanes. It is
therefore a rash venture to attempt to recover this latter parcel by means of the contract of final and
absolute sale, set forth in the deed Exhibit 3.
Moreover, the notarial document Exhibit 1, are regards the statements made therein, is of the nature
of a public document and is evidence of the fact which gave rise to its execution and of the date of
the latter, even against a third person and his predecessors in interest such as are the plaintiffs. (Civ.
Code, art. 1218.)
The plaintiffs' father, Wenceslao Mercado, recognizing it to be perfectly true that his wife Margarita
Espiritu sold said parcel of land which she inherited from her father, of an area of about "15 cavanes
of seed," to her brother Luis Espiritu, by means of an instrument executed by her on May 25,1894
an instrument that disappeared or was burned and likewise recognizing that the protocols and
register books belonging to the Province of Bulacan were destroyed as a result of the past
revolution, at the request of his brother-in-law Luis Espiritu he had no objection to give the testimony
recorded in said notarial instrument, as it was the truth regarding what had occurred, and in so doing
he acted as the plaintiffs' legitimate father in the exercise of his parental authority, inasmuch as he
had personal knowledge of said sale, he himself being the husband who authorized said
conveyance, notwithstanding that his testimony affected his children's interest and prejudiced his
own, as the owner of any fruits that might be produced by said real property.
The signature and handwriting of the document Exhibit 2 were identified as authentic by one of the
plaintiffs, Consejo Mercado, and as the record shows no evidence whatever that this document is
false, and it does not appear to have been assailed as such, and as it was signed by the plaintiffs'
father, there is no legal ground or well-founded reason why it should be rejected. It was therefore
properly admitted as evidence of the certainty of the facts therein set forth.
The principal defect attributed by the plaintiffs to the document Exhibit 3 consists in that, on the date
of May 17, 1910, when it was executed that they signed it, they were minors, that is, they had not yet
attained the age of 21 years fixed by Act No. 1891, though no evidence appears in the record that
the plaintiffs Josefa and Domingo Mercado were in fact minors, for no certified copies were
presented of their baptismal certificates, nor did the plaintiffs adduce any supplemental evidence
whatever to prove that Domingo was actually 19 and Josefa 18 years of age when they signed the
document Exhibit 3, on May 17, 1910, inasmuch as the copybook, Exhibit A, notwithstanding the
testimony of the plaintiff Consejo Mercado, does not constitute sufficient proof of the dates of births
of the said Domingo and Josefa.
However, even in the doubt whether they certainly were of legal age on the date referred to, it cannot
be gainsaid that in the document Exhibit 3 they stated that they were of legal age at the time they
executed and signed it, and on that account the sale mentioned in said notarial deed Exhibit 3 is
perfectly valid a sale that is considered as limited solely to the parcel of land of 6 cavanes of
seed, pledged by the deceased father of the plaintiffs in security for P600 received by him as a loan
from his brother-in-law Luis Espiritu, for the reason that the parcel of 15 cavanes had been lawfully
sold by its original owner, the plaintiffs' mother.
The courts, in their interpretation of the law, have laid down the rule that the sale of real estate,
made by minors who pretend to be of legal age, when in fact they are not, is valid, and they will not

be permitted to excuse themselves from the fulfillment of the obligations contracted by them, or to
have them annulled in pursuance of the provisions of Law 6, title 19, of the 6th Partida; and the
judgment that holds such a sale to be valid and absolves the purchaser from the complaint filed
against him does not violate the laws relative to the sale of minors' property, nor the juridical rules
established in consonance therewith. (Decisions of the supreme court of Spain, of April 27, 1860,
July 11, 1868, and March 1, 1875.)
itc@alf

With respect to the true age of the plaintiffs, no proof was adduced of the fact that it was Luis Espiritu
who took out Domingo Mercado's personal registration certificate on April 13, 1910, causing the age
of 23 years to be entered therein in order to corroborate the date of the notarial instrument of May
17th of the same year; and the supposition that he did, would also allow it to be supposed, in order
to show the propriety of the claim, that the cedula Exhibit C was taken out on February 14, 1914,
where in it is recorded that Domingo Mercado was on that date 23 years of age, for both these facts
are not proved; neither was any proof adduced against the statement made by the plaintiffs Domingo
and Josefa in the notarial instrument Exhibit 3, that, on the date when they executed it, they were
already of legal age, and, besides the annotation contained in the copybook Exhibit A, no
supplemental proof of their true ages was introduced.
Aside from the foregoing, from a careful examination of the record in this case, it cannot be
concluded that the plaintiffs, who claim to have minors when they executed the notarial instrument
Exhibit 3, have suffered positive and actual losses and damages in their rights and interests as a
result of the execution of said document, inasmuch as the sale effected by the plaintiffs' mother,
Margarita Espiritu, in May, 1894, of the greater part of the land of 21 cavanes of seed, did not
occasion any damage or prejudice to the plaintiffs, inasmuch as their father stated in the document
Exhibit 2 that he was obliged to mortgage or pledge said remaining portion of the land in order to
secure the loan of the P375 furnished by Luis Espiritu and which was subsequently increased to
P600 so as to provide for certain engagements or perhaps to meet the needs of his children, the
plaintiff; and therefore, to judge from the statements made by their father himself, they received
through him, in exchange for the land of 6 cavanes of seed, which passed into the possession of the
creditor Luis Espiritu, the benefit which must have accrued to them from the sums of money received
as loans; and, finally, on the execution of the impugned document Exhibit 3, the plaintiffs received
and divided between themselves the sum of P400, which sum, added to that P2,000 received by
Margarita Espiritu, and to that of the P600 collected by Wenceslao Mercado, widower of the latter
and father of the plaintiffs, makes all together the sum of P3,000, the amount paid by the purchaser
as the price of all the land containing 21 cavanes of seed, and is the just price of the property, was
not impugned, and, consequently, should be considered as equivalent to, and compensatory for, the
true value of said land.
For the foregoing reasons, whereby the errors assigned to the judgment appealed from have been
refuted, and deeming said judgment to be in accordance with law and the evidence of record, we
should, and do hereby, affirm the same, with costs against the appellants. So ordered.
Arellano, C. J., Johnson, Street, and Malcolm, JJ., concur.

Separate Opinions

CARSON, J., concurring:

I concur.
But in order to avoid misunderstanding, I think it well to indicate that the general statement, in the
prevailing opinion to the effect that the making of false representations as to his age by an infant
executing a contract will preclude him from disaffirming the contract or setting up the defense of
infancy, must be understood as limited to cases wherein, on account of the minor's representations
as to his majority, and because of his near approach thereto, the other party had good reason to
believe, and did in fact believe the minor capable of contracting.
The doctrine set forth in the Partidas, relied upon by the supreme court of Spain in the cases cited in
the prevailing opinion, is substantially similar to the doctrine of estoppel as applied in like instances
by many of the courts in the United States.
For the purposes of convenient comparison, I here insert some citations of authority, Spanish and
American, recognizing the limitations upon the general doctrine to which I am inviting attention at this
time; and in this connection it is worthy of note that the courts of the United States look with rather
less favor than the supreme court of Spain upon the application of the doctrine, doubtless because
the cases wherein it may properly be applied, are much less likely to occur in a jurisdiction where
majority is reached at the age of 21 than a jurisdiction wherein majority is not ordinarily attained until
the infant reaches the age of 25.
Ley 6, tit. 19, Partida 6. is, in part, as follows:
If he who is minor (1) deceitfully says or sets forth in an instrument that he is over twenty-five
years of age, and this assertion is believed by another person who takes him to be of about
that age, (2) in an action at law he should be deemed to be of the age he asserted, and
should no (3) afterwards be released from liability on the plea that he was not of said age
when he assumed the obligation. The reason for this is that the law helps the deceived and
not the deceivers.
In the glossary to these provisions of the Partidas by Gregorio Lopez, I find the following:
(1) De tal tiempo. Nota bene hoc verbum, nam si appareret ex aspectu eum esse minorem,
tunc adversarius non potest dicere se deceptum; imo tam ipse, quam minor videntur esse in
dolo, quo casu competit minori restitutio, quia facta doli compensatione, perinde ast ac si
nullus fuiset in dolo, et ideo datur restitutio; et quia scienti dolus non infertur, l. 1. D. de act.
empt. secundum Cyn. Alberic et Salic. in l. 3. C. si minor se major. dixer. adde Albericum
tenentem, quabndo per aspectum a liter constaret, in authent.sacramenta puberum, col. 3.
C. si advers vendit.
(2) Engoosamente. Adde 1. 2. et 3. C. si minor se major. dixer. Et adverte nam per istam
legem Partitarum, que non distinguit, an adultus, vel pupillus talem assertionem faciat,
videtur comprobari dictum Guillielm. de Cun. de quo per Paul. de Castr. in 1. qui jurasse. in
princ. D. de jurejur. quod si pupillus proximus pubertari juret, cum contrahit, se esse

puberem, et postea etiam juret, quod non veniet contra contractum quod habebit locum
dispositio authenticae sacramenta puberum, sicut si esset pubes: et cum isto dicto transit ibi
Paul. de Cast. multum commendans, dicens, se alibi non legisse; si tamen teneamus illam
opinionem, quod etiam pupillus doli capax obligatur ex juramento, non esset ita miranda
dicat, decissio; vide per Alexand. in dict. 1. qui jurasse, in princ. Item lex ista Partitarum
expresse sentit de adulto, non de pupillo, cum superius dixit, que paresciere de tal tiempo:
Doctores etiam intelligunt de adulto 11. dict. tit. C. si minor. se major. dixer. et patet ex 11.
illius tituli. Quid autem dicemus in dubio, cum non constat de dolo minoris? Azon. in summa
illius tit. in fin. Cynus tamen, et alli, tenent oppositum, quia dolus non praesumitur, nisi
probetur, 1. quotiens, s., qui dolo, D. de probat. Et hoc etiam vult ista lex Partitarum, cum
dicit, si lo faze engoosamente: et ita tenent Alberic. et Salicet. in dict. 1. 3. ubi etiam Bart. in
fin. Si autem minor sui facilitate asserat se mojorem, et ita juret, tunc distingue, ut habetur
dict. 1. 3 quia aut juravit verbo tenus, et tunc non restituitur, nisi per instrumentum seu
scripturam probet se minorem; et si juravit corporaliter, nullo modo restituitur, ut ibi; et per
quae instrumenta probentur, cum verbo tenus juravit, vide per Specul. tit. de restit, in integr.
s. quis autem, col. 4. vers. sed cujusmodi erit scriptura, ubi etiam vide per Speculatorem
aliquas notabiles quaestiones in ista materia, in col. 5. videlicet, an praejudicet sibi minor ex
tali juramento in aliis contractibus, et tenet, quod non; et tenet glossa finalis in 1. de aetate,
D. de minor. in fin. gloss. vide ibi per Speculat. ubi etiam de aliis in ista materia.
In the decision of the supreme court of Spain dated the 27th of April, 1860, I find an excellent
illustration of the conditions under which that court applied the doctrine, as appears from the
following resolution therein set forth.
Sales of real estate made by minors are valid when the latter pretend to be twenty-five years
of age and, due to the circumstances that they are nearly of that age, are married, or have
administration of their property, or on account of other special circumstances affecting them,
the other parties to the contract believe them to be of legal age.
With these citations compare the general doctrine in the United States as set forth in 22 Cyc. (p.
610), supported by numerous citations of authority.
Estoppel to disaffirm (I) In General. The doctrine of estoppel not being as a general
rule applicable to infants, the court will not readily hold that his acts during infancy have
created an estoppel against him to disaffirm his contracts. Certainly the infant cannot be
estopped by the acts or admissions of other persons.
(II) False representations as to age. According to some authorities the fact that an infant
at the time of entering into a contract falsely represented to the person with whom he dealt
that he had attained the age of majority does not give any validity to the contract or estop the
infant from disaffirming the same or setting up the defense of infancy against the
enforcement of any rights thereunder; but there is also authority for the view that such false
representations will create an estoppel against the infant, and under the statutes of some
states no contract can be disaffirmed where, on account of the minor's representations as to
his majority, the other party had good reason to believe the minor capable of contracting.
Where the infant has made no representations whatever as to his age, the mere fact that the
person with whom he dealt believed him to be of age, even though his belief was warranted
by the infant's appearance and the surrounding circumstances, and the infant knew of such
belief, will not render the contract valid or estop the infant to disaffirm.