Civil Law Review II 5th Assignment
76. Vda De Ape v. CA (2005)
Facts:
Cleopas Ape died in 1950 and left a parcel of land
(Lot 2319) to his 11 children. The children never
formally divided the property amongst themselves
except through hantal-hantal whereby each just
occupied a certain portion and developed each. On the
other hand, the spouses Lumayno were interested in
the land so they started buying the portion of land that
each of the heirs occupied. On 11 Apr 1973, one of the
children, Fortunato, entered into a contract of sale with
Lumayno. In exchange of his lot, Lumayno agreed to
pay P5,000.00. She paid in advance P30.00. Fortunato
was given a receipt prepared by Lumaynos son in law
(Andres Flores). Flores also acted as witness. Lumayno
also executed sales transactions with Fortunatos
siblings separately. In 1973, Lumayno compelled
Fortunato to make the the delivery to her of the
registrable deed of sale over Fortunatos portion of the
Lot No. 2319. Fortunato assailed the validity of the
contract of sale. He also invoked his right to redeem
(as a co-owner) the portions of land sold by his siblings
to Lumayno. Fortunato died during the pendency of the
case.
Issue: Whether or not there was a valid contract of
sale.
Held: No. Fortunato was a no read no write person. It
was incumbent for the the other party to prove that
details of the contract was fully explained to Fortunato
before Fortunato signed the receipt. A contract of sale
is a consensual contract, thus, it is perfected by mere
consent of the parties. It is born from the moment
there is a meeting of minds upon the thing which is the
object of the sale and upon the price. Upon its
perfection, the parties may reciprocally demand
performance, that is, the vendee may compel the
transfer of the ownership and to deliver the object of
the sale while the vendor may demand the vendee to
pay the thing sold. For there to be a perfected contract
of sale, however, the following elements must be
present: consent, object, and price in money or its
equivalent.
For consent to be valid, it must meet the following
requisites: (a) it should be intelligent, or with an exact
notion of the matter to which it refers; (b) it should be
free and (c) it should be spontaneous. Intelligence in
consent is vitiated by error; freedom by violence,
intimidation or undue influence; spontaneity by fraud.
Lumayno claimed that she explained fully the
receipt to Fortunato, but Flores testimony belies it.
Flores said there was another witness but the other
was a maid who also lacked education. Further, Flores
himself was not aware that the receipt was to transfer
the ownership of Fortunatos land to her mom-in-law.
It merely occurred to him to explain the details of the
receipt but he never did.
77. Mayor v. Belen (2004)
Facts:
Andrea Mayor owned a parcel of land in San Pablo
City which was purchased by Lourdes Belen. Later on,
Lourdes sold back the property to Andrea evidenced by
a "Kasulatan ng Bilihang Tuluyan" executed by Lourdes.
Thereafter, Andrea executed a real estate mortgage
over the subject property to secure a loan she obtained
from Lourdes evidenced by a Kasulatan ng Sanglaan.
Lourdes later on filed an action to annul the deed of
sale and the contract of real estate mortgage.
According to her, Andrea, through Vergel Romulo,
made her believe that the sale in her favor by Andrea
is void, because the deed of conveyance did not reflect
the true agreement of the parties as to the true mode
of payment of the purchase price (the purchase price
was made on installments and not in cash as stipulated
in the document. Lourdes further averred that she was
also made to believe that she might lose what she had
already paid which amounted to 70% of the purchase
price. She was convinced by the representations of
Andrea and Romulo that it would be best for the latter
to make it appear that Andrea was merely mortgaging
the subject property to her. Lourdes readily agreed to
the scheme believing that it was for the protection of
her rights. It turned out that the scheme was in fact a
ruse employed by Romulo and Andrea to re-acquire the
property, thus, Lourdess consent in the execution of
the Kasulatan ng Bilihang Tuluyan and Kasulatan ng
Sanglaan was obtained through fraud and undue
influence.
The RTC, affirmed by the CA, ruled in favor of
Lourdes and annulled the two contracts. Andrea
contended that the two deeds were duly executed by
the parties thereto in accordance with the formalities
required by law and as public documents the evidence
to overcome their recitals is wanting.
Issue: Whether or not the two deeds are void.
Held: Yes. Art. 1338 of the Civil Code provides: 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. As defined, fraud refers to all
kinds of deception, whether through insidious
machination, manipulation, concealment or
misrepresentation to lead another party into error. The
deceit employed must be serious. It must be sufficient
to impress or lead an ordinarily prudent person into
error, taking into account the circumstances of each
case.
While indeed petitioners point out that the deeds
denominated as Kasulatan ng Bilihang Tuluyan and
Kasulatan ng Sanglaan were executed in Tagalog, a
close scrutiny thereof shows that they are practically
literal translations of their English counterparts. Thus,
the mere fact that the documents were executed in the
vernacular neither clarified nor simplified matters for
Lourdes who admitted on cross-examination that she
merely finished Grade 3, could write a little, and
understand a little of the Tagalog language.
With respect to the fact that the deeds were duly
notarized, the Supreme Court cited its ruling in Suntay
v. CA: Though the notarization of the deed of sale in
question vests in its favor the presumption of
regularity, it is not the intention nor the function of the
notary public to validate and make binding an
instrument never, in the first place, intended to have
 Civil Law Review II 5th Assignment
any binding legal effect upon the parties thereto. The
intention of the parties still and always is the primary
consideration in determining the true nature of the
contract. The impugned documents cannot be
presumed as valid because of the direct challenge
posed thereto by respondents, which is precisely the
reason for the commencement of this case: to bring to
the fore the irregularity in their execution.
78. Orosco v. Gualvez (2014)
Facts:
Petitioner Avelina was one of the children of Eulalio
and Victoria Abarientos. Eulalio and, eventually,
Victoria died intestate. Eulelio left behind an untitled
parcel of land in Legazpi City. Meanwhile, Avelina was
supposedly made to sign two documents by her
daughter and her son-in-law (respondents herein) on
the pretext that the documents were needed to
facilitate the titling of the lot. It was only in 2003 when
Avelina realized that what she signed was an Affidavit
of Self-Adjudication and a Deed of Absolute Sale in
favor of respondents. Thus, Avelina filed an action for
annulment and revocation of the two documents that
she signed.
The RTC ruled in favor of Avelina on the grounds
that (1) with regard to the Affidavit of Self-Adjudication,
she was not the sole heir of her parents and was not
therefore solely entitled to their estate; and (2) in the
case of the Deed of Absolute Sale, Avelina did not
really intend to sell her share in the property as it was
only executed to facilitate the titling of such property.
The CA reversed the RTCs ruling on the ground
that issues on heirship must be made in a special
proceeding.
Issue: Whether or not the Affidavit of Self-Adjudication
and Deed of Absolute Sale should be annulled.
Held: Yes. It has indeed been ruled that the
declaration of heirship must be made in a special
proceeding, not in an independent civil action.
However, this Court had likewise held that recourse to
administration proceedings to determine who heirs are
is sanctioned only if there is a good and compelling
reason for such recourse. Hence, the Court had allowed
exceptions to the rule requiring administration
proceedings as when the parties in the civil case
already presented their evidence regarding the issue of
heirship, and the RTC had consequently rendered
judgment upon the issues it defined during the pre-
trial.
It appearing, however, that in the present case the
only property of the intestate estate of Portugal is the
Caloocan parcel of land to still subject it, under the
circumstances of the case, to a special proceeding
which could be long, hence, not expeditious, just to
establish the status of petitioners as heirs is not only
impractical; it is burdensome to the estate with the
costs and expenses of an administration proceeding.
And it is superfluous in light of the fact that the parties
to the civil case - subject of the present case, could
and had already in fact presented evidence before the
trial court which assumed jurisdiction over the case
upon the issues it defined during pre-trial.
As admitted by respondents, Avelina was not the
sole heir of Eulalio. In fact, as admitted by respondents,
petitioner Salvador is one of the co-heirs by right of
representation of his mother. Without a doubt, Avelina
had perjured herself when she declared in the affidavit
that she is "the only daughter and sole heir of spouses
EULALIO ABARIENTOS AND VICTORIA VILLAREAL." The
falsity of this claim renders her act of adjudicating to
herself the inheritance left by her father invalid. The
RTC did not, therefore, err in granting Avelinas prayer
to declare the affidavit null and void and so correct the
wrong she has committed. In like manner, the Deed of
Absolute Sale executed by Avelina in favor of
respondents was correctly nullified and voided by the
RTC. Avelina was not in the right position to sell and
transfer the absolute ownership of the subject property
to respondents. As she was not the sole heir of Eulalio
and her Affidavit of Self-Adjudication is void, the
subject property is still subject to partition. Avelina, in
fine, did not have the absolute ownership of the
subject property but only an aliquot portion. What she
could have transferred to respondents was only the
ownership of such aliquot portion. It is apparent from
the admissions of respondents and the records of this
case that Avelina had no intention to transfer the
ownership, of whatever extent, over the property to
respondents. Hence, the Deed of Absolute Sale is
nothing more than a simulated contract.
The Civil Code provides: Art. 1345. Simulation of a
contract may be absolute or relative. The former takes
place when the parties do not intend to be bound at all;
the latter, when the parties conceal their true
agreement. (emphasis supplied) Art. 1346. An
absolutely simulated or fictitious contract is void. A
relative simulation, when it does not prejudice a third
person and is not intended for any purpose contrary to
law, morals, good customs, public order or public policy
binds the parties to their real agreement.
In absolute simulation, there is a colorable contract
but it has no substance as the parties have no
intention to be bound by it. The main characteristic of
an absolute simulation is that the apparent contract is
not really desired or intended to produce legal effect or
in any way alter the juridical situation of the parties. As
a result, an absolutely simulated or fictitious contract is
void, and the parties may recover from each other
what they may have given under the contract.
However, if the parties state a false cause in the
contract to conceal their real agreement, the contract
is relatively simulated and the parties are still bound by
their real agreement. Hence, where the essential
requisites of a contract are present and the simulation
refers only to the content or terms of the contract, the
agreement is absolutely binding and enforceable
between the parties and their successors in interest.
In the present case, the true intention of the
parties in the execution of the Deed of Absolute Sale is
immediately apparent from respondents very own
Answer to petitioners Complaint. As respondents
themselves acknowledge, the purpose of the Deed of
Absolute Sale was simply to "facilitate the titling of the
[subject] property," not to transfer the ownership of the
lot to them. Furthermore, respondents concede that
petitioner Salvador remains in possession of the
 Civil Law Review II 5th Assignment
property and that there is no indication that
respondents ever took possession of the subject
property after its supposed purchase. Such failure to
take exclusive possession of the subject property or, in
the alternative, to collect rentals from its possessor, is
contrary to the principle of ownership and is a clear
badge of simulation that renders the whole transaction
void.
79. Mangahas v. Brobio (2010)
Facts:
Pacifico Bropio died intestate, leaving three parcels
of land. He was survived by his wife, respondent
Eufrocina, and legitimate and illegitimate children,
including petitioner Carmela Mangahas. The heirs of
Pacifico executed a Deed of Extrajudicial Settlement of
Estate whereby petitioner and Pacificos other children,
in consideration of their love and affection for
respondent and the sum of P150,000.00, waived and
ceded their respective shares over the parcels of land
in favor of respondent. According to petitioner,
respondent promised to give her an additional amount
for her share in her fathers estate. But such additional
amount was not given. A year later, while processing
her tax obligations with the Bureau of Internal Revenue
(BIR), respondent was required to submit an original
copy of the Deed. Left with no more original copy of
the Deed, respondent summoned petitioner to her
office on May 31, 2003 and asked her to countersign a
copy of the Deed. Petitioner refused to countersign the
document, demanding that respondent first give her
the additional amount that she promised. Considering
the value of the three parcels of land (which she
claimed to be worth P20M), petitioner asked for P1M,
but respondent begged her to lower the amount.
Petitioner agreed to lower it to P600,000.00. Because
respondent did not have the money at that time and
petitioner refused to countersign the Deed without any
assurance that the amount would be paid, respondent
executed a promissory note whereby she promised to
pay P600,000.00 to petitioner. However, petitioner
remained unpaid.
Petitioner filed an action for specific performance
with damages against respondent. In her defense,
respondent said she signed the promissory note only
because she was forced to do so.
The RTC ruled in favor of petitioner, holding that
the alleged pressure and confused disposition
experienced by respondent and the circumstances that
led to the execution of the promissory note do not
constitute undue influence as would vitiate
respondents consent thereto.
The CA reversed the RTCs ruling as it held that
there was a complete absence of consideration. It
noted that respondent only executed the promissory
note only to secure petitioners signature.
Issue: Whether or not the promissory note is valid.
Held: Yes. Contracts are voidable where consent
thereto is given through mistake, violence,
intimidation, undue influence, or fraud. In determining
whether consent is vitiated by any of these
circumstances, courts are given a wide latitude in
weighing the facts or circumstances in a given case
and in deciding in favor of what they believe actually
occurred, considering the age, physical infirmity,
intelligence, relationship, and conduct of the parties at
the time of the execution of the contract and
subsequent thereto, irrespective of whether the
contract is in a public or private writing.
Nowhere is it alleged that mistake, violence, fraud,
or intimidation attended the execution of the
promissory note.
Respondent may have desperately needed
petitioners signature on the Deed, but there is no
showing that she was deprived of free agency when
she signed the promissory note. Being forced into a
situation does not amount to vitiated consent where it
is not shown that the party is deprived of free will and
choice. Respondent still had a choice: she could have
refused to execute the promissory note and resorted to
judicial means to obtain petitioners signature. Instead,
respondent chose to execute the promissory note to
obtain petitioners signature, thereby agreeing to pay
the amount demanded by petitioner. The fact that
respondent may have felt compelled, under the
circumstances, to execute the promissory note will not
negate the voluntariness of the act. As rightly observed
by the trial court, the execution of the promissory note
in the amount of P600,000.00 was, in fact, the product
of a negotiation between the parties.
We join the RTC in holding that courts will not set
aside contracts merely because solicitation,
importunity, argument, persuasion, or appeal to
affection was used to obtain the consent of the other
party. Influence obtained by persuasion or argument or
by appeal to affection is not prohibited either in law or
morals and is not obnoxious even in courts of equity.
80. Dauden-Hernaez v. De Los Angeles (1969)
Facts:
Marlene Dauden-Hernaez, an actress, filed a
complaint against Hollywood Far East Productions Inc.
and its president/GM, Ramon Valenzuela, to recover
P14,700.00 representing a balance allegedly due
Marlene for her services as leading actress in two
motion pictures produced by the company. Upon
motion of defendants, the CFI dismissed the complaint
on the ground that Marlenes claim was not evidenced
by a written document in violation of Articles 1356 and
1358 of the Civil Code. Marlene thus filed a petition for
certiorari with the Supreme Court.
Issue: Whether or not the CFI correctly dismissed
Marenes complaint.
Held: No. As a rule, contracts are perfected by mere
consent. The second portion of Art. 1356 provides that
when the law requires a contract be in some form in
order that it may be valid or enforceable, or that
contract be proved in a certain way, that requirement
is absolute and indispensable.
It is thus seen that to the general rule that the form
(oral or written) is irrelevant to the binding effect inter
partes of a contract that possesses the three validating
elements of consent, subject matter, and causa, Article
 Civil Law Review II 5th Assignment
1356 of the Code establishes only two exceptions, to
wit:
(a) Contracts for which the law itself requires
that they be in some particular form (writing) in
order to make them valid and enforceable (the so-
called solemn contracts). Of these the typical
example is the donation of immovable property
that the law (Article 749) requires to be embodied
in a public instrument in order "that the donation
may be valid", i.e., existing or binding. Other
instances are the donation of movables worth more
than P5,000.00 which must be in writing,
"otherwise the donation shall be void" (Article
748); contracts to pay interest on loans (mutuum)
that must be "expressly stipulated in writing"
(Article 1956); and the agreements contemplated
by Article 1744, 1773, 1874 and 2134 of the
present Civil Code.
(b) Contracts that the law requires to be proved
by some writing (memorandum) of its terms, as in
those covered by the old Statute of Frauds, now
Article 1403(2) of the Civil Code. Their existence
not being provable by mere oral testimony (unless
wholly or partly executed), these contracts are
exceptional in requiring a writing embodying the
terms thereof for their enforceability by action in
court.
The contract sued upon by petitioner herein
(compensation for services) does not come under
either exception. It is true that it appears included in
Article 1358, last clause, providing that "all other
contracts where the amount involved exceeds five
hundred pesos must appear in writing, even a private
one." But Article 1358 nowhere provides that the
absence of written form in this case will make the
agreement invalid or unenforceable. On the contrary,
Article 1357 clearly indicates that contracts covered by
Article 1358 are binding and enforceable by action or
suit despite the absence of writing. Art. 1357 provides:
If the law requires a document or other special form,
as in the acts and contracts enumerated in the
following article, the contracting parties may compel
each other to observe that form, once the contract has
been perfected. This right may be exercised
simultaneously with the action the contract.
81. Claudel v. CA (1991)
Facts:
Cecilio Claudel was the original owner of a parcel of
land in Rizal. Several years after his death, two
branches of Cecilios family contested the ownership of
the land. Petitioners are the children of Cecilio, while
respondents are the siblings of Cecilio. Respondents
filed a complaint for the cancellation of titles and
reconveyance against petitioners, alleging their
parents bought the subject land from Cecilio for P30.
The transaction was verbal, but respondents presented
a subdivision plan of the land as proof of the sale.
The CFI ruled in favor of petitioners, but the CA
reversed the lower courts decision.
Issue: Whether or not respondents are the owners of
the subject land.
Held: No. The rule of thumb is that a sale of land, once
consummated, is valid regardless of the form it may
have been entered into. For nowhere does law or
jurisprudence prescribe that the contract of sale be put
in writing before such contract can validly cede or
transmit rights over a certain real property between
the parties themselves.
However, in the event that a third party, as in this
case, disputes the ownership of the property, the
person against whom that claim is brought can not
present any proof of such sale and hence has no
means to enforce the contract. Thus the Statute of
Frauds was precisely devised to protect the parties in a
contract of sale of real property so that no such
contract is enforceable unless certain requisites, for
purposes of proof, are met.
A sale of real property or an interest therein is one
of the contracts which must be in writing to be
enforceable.
The purpose of the Statute of Frauds is to prevent
fraud and perjury in the enforcement of obligations
depending for their evidence upon the unassisted
memory of witnesses by requiring certain enumerated
contracts and transactions to be evidenced in writing.
The provisions of the Statute of Frauds originally
appeared under the old Rules of Evidence. However
when the Civil Code was re-written in 1949 (to take
effect in 1950), the provisions of the Statute of Frauds
were taken out of the Rules of Evidence in order to be
included under the title on Unenforceable Contracts in
the Civil Code. The transfer was not only a matter of
style but to show that the Statute of Frauds is also a
substantive law.
Therefore, except under the conditions provided by
the Statute of Frauds, the existence of the contract of
sale made by Cecilio with his siblings 13 can not be
proved.
Moreover, respondents action has already
prescribed. The belated claim of respondents who filed
a complaint only in 1976 to enforce a right allegedly
acquired as early as 1930 is difficult to comprehend.
82. Berman Memorial v. Cheng (2005)
Facts:
When Francisco Chengs wife died, he purchased
from Berman Memorial Park Inc. (BMPI) a memorial lot
in Iloilo Memorial Park (IMP). He initially bought a lot for
P150,000.00 (for which P110,000.00 was already paid)
but later on he bought a bigger lot for P350,000.00.
Thereafter, dispute arose as to the amount. Cheng filed
a complaint against IMP (the proper party was BMPI),
alleging that he bought a lot from the BMPI for
P250,000.00, less the amount of P150,000.00 he had
paid for the first lot, or a net price of P100,000.00. In
its answer, BMPI contended that the price of the
second lot was actually P350,000.00, but that it agreed
to sell the lot to Cheng for P250,000.00, less
P110,000.00 of the P150,000.00 already paid for the
first lot.
Cheng testified that he purchased 24-Lot for
P250,000.00 and that he discovered his overpayment
 Civil Law Review II 5th Assignment
during the first week of November 1994. He signed a
blank document in printed form which turned out to be
the Pre-Need Purchase Agreement because he was sick
with hernia and had to be operated on in five days. He
was not given a copy of the Pre-Need Purchase
Agreement. He knew that the purchase price of a lot
under a PreNeed Purchase Agreement was
P250,000.00.
BMPIs bookkeeper and accountant testified that on
January 19, 1994, Cheng and his brother Santiago
Cheng arrived in the office to buy a lot at the IMP. She
showed them the price list of the lots. She explained to
them that the at-need price of 12-Lot was P150,000.00,
while the at-need price of 24-Lot, which was bigger
than Lot 12, was P350,000.00. Cheng opted to buy 12-
Lot, and signed the At-Need Purchase Agreement and
Promissory Note. Cheng then returned to BMPI on May
11, 1994 and agreed to purchase 24-Lot at the pre-
need price of P250,000.00, less P110,000.00 of the
P150,000.00 he had paid for 12-Lot, or the net price of
P140,000.00. She averred that the difference of
P40,000.00 between the price of P150,000.00 for 12-
Lot and the price of P110,000.00 credited to Cheng
belonged to BMPI. She also testified that Cheng signed
the Pre-Need Purchase Agreement on May 11, 1994,
and was given a copy of the contract, and her
computations of the purchase price of 24-Lot.[32] As of
September 1996, Cheng had a balance on his account
in the amount of P38,634.75.
The RTC ruled in favor of Cheng, but the CA
reversed.
Issue: Whether or not the price of the second lot was
in fact P350,000.00.
Held: Yes. The respondent failed to adduce evidence
that he was suffering from hernia and that he was to
be operated on in five days after signing the May 11,
1994 Pre-Need Purchase Agreement. Article 1370 of
the New Civil Code provides that if the terms of a
contract are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning
of its stipulation shall control. No amount of extrinsic
aids are required and no further extraneous sources
are necessary in order to ascertain the parties intent,
determinable as it is, from the contract itself. The
records are clear that the respondent understood the
nature of the contract he entered into. If, indeed, the
stipulations as embodied in the aforementioned Pre-
Need Purchase Agreement were not the true intention
of the parties, the respondent should have filed the
corresponding action for reformation of the contract.
But he did not. The hornbook rule on interpretation of
contracts gives primacy to the intention of the parties,
which is the law among them. Ultimately, their
intention is to be deciphered not from the unilateral
post facto assertions of one of the parties, but from the
language used in the contract. And when the terms of
the agreement, as expressed in such language, are
clear, they are to be understood literally, just as they
appear on the face of the contract.
83. Berman Memorial v. Cheng (2005)
Facts:
Africa Valdez de Reynoso leased a parcel of land to
Raoul S. Bonnevie and Christopher Bonnevie for a
period of one year beginning August 8, 1976. Reynoso
alleged that on November 3, 1976 she notified
respondents by registered mail that she was selling the
leased premises for P600,000 and that she was giving
respondents 30 days from receipt of the letter to
exercise their right of first priority to purchase the
subject property as stipulated in their Contract of
Lease. On January 20, 1977, Reynoso sent another
letter to the respondents informing them that the
property had been sold. Respondents wrote back to
Reynoso that they did not receive her first letter and
that they had already signified their interest to
purchase the property beforehand to Reynosos agent
and thus were constrained to refuse Reynosos request
to terminate the lease. Reynoso went on with the sale
in favor of Guzman, Bocaling & Co. for a lesser price,
and filed an ejectment case against the Bonnevies.
Respondents filed an action for annulment of the sale.
The Court of First Instance ruled in favor of the
respondents, declaring the deed of sale executed by
Reynoso in favor of Guzman, Bocaling & Co. null and
void. The Court of Appeals affirmed the lower courts
decision but held that the Contract of Sale was not
voidable but was instead rescissible.
Issue: Whether or not the CA correctly ruled that the
Contract of Sale was rescissible and not voidable.
Held: Yes. Under Article 1380 to 1381 (3) of the Civil
Code, a contract otherwise valid may nonetheless be
subsequently rescinded by reason of injury to third
persons, like creditors. The status of creditors could be
validly accorded the Bonnevies for they had substantial
interests that were prejudiced by the sale of the
subject property to the petitioner without recognizing
their right of first priority under the Contract of Lease.
Rescission is a remedy granted by law to the
contracting parties and even to third persons, to secure
reparation for damages caused to them by a contract,
even if this should be valid, by means of the
restoration of things to their condition at the moment
prior to the celebration of said contract. It is a relief
allowed for the protection of one of the contracting
parties and even third persons from all injury and
damage the contract may cause, or to protect some
incompatible and preferent right created by the
contract. Recission implies a contract which, even if
initially valid, produces a lesion or pecuniary damage
to someone that justifies its invalidation for reasons of
equity.
Petitioner cannot be deemed a purchaser in good
faith for the record shows that it categorically admitted
it was aware of the lease in favor of the Bonnevies,
who were actually occupying the subject property at
the time it was sold to petitioner. A purchaser in good
faith and for value is one who buys the property of
another without notice that some other person has a
right to or interest in such property and pays a full and
fair price for the same at the time of such purchase or
before he has notice of the claim or interest of some
other person in the property. Good faith connotes an
honest intention to abstain from taking
unconscientious advantage of another. Tested by these
principles, the petitioner cannot tenably claim to be a
 Civil Law Review II 5th Assignment
buyer in good faith as it had notice of the lease of the
property by the Bonnevies and such knowledge should
have cautioned it to look deeper into the agreement to
determine if it involved stipulations that would
prejudice its own interests.
84. Equatorial Realty v. Mayfair Theater, Inc.
(1996)
Facts:
Petitioner Carmelo and Bauermann Inc. leased its
parcel of land with 2-storey building to respondent
Mayfair Theater Inc. They entered a contract which
provides that if the LESSOR should desire to sell the
leased premises, the LESSEE shall be given 30-days
exclusive option to purchase the same. Carmelo
informed Mayfair that it will sell the property to
Equatorial. Mayfair made known its interest to buy the
property but only to the extent of the leased premises.
Notwithstanding Mayfairs intention, Carmelo sold the
property to Equatorial.
Issue: Whether or not the sale in favor of Equatorial
should be rescinded.
Held: Yes. The sale of the property should be rescinded
because Mayfair has the right of first refusal. Both
Equatorial and Carmelo are in bad faith because they
knew of the stipulation in the contract regarding the
right of first refusal. The stipulation is a not an option
contract but a right of first refusal and as such the
requirement of a separate consideration for the option,
has no applicability in the instant case. The
consideration is built in the reciprocal obligation of the
parties. In reciprocal contract, the obligation or promise
of each party is the consideration for that of the other.
(Promise to lease in return of the right to first refusal)
With regard to the impossibility of performance, only
Carmelo can be blamed for not including the entire
property in the right of first refusal. Court held that
Mayfair may not have the option to buy the property.
Not only the leased area but the entire property.
85. Air France v. CA (1995)
Facts:
Petitioner Air France filed a complaint for sum of
money against private respondents Multinational Travel
Corporation of the Philippines and Spouses Panopio.
Judgment was rendered in favor of Air France but was
left unsatisfied. It turned out that Spouses Panopio sold
their house and lot to a third person. Air France moved
for the issuance of an alias writ of execution and for
the declaration that the sale made by Spouses Panopio
was made in fraud of creditors. The RTC granted the
motion and issued an order finding the sale of the
house and lot as having been made in fraud of
creditors. The CA, however, annulled the RTCs orders.
Issue: Whether or not the RTC acted correctly in
declaring that the sale of the house and lot was made
in fraud of creditors.
Held: No. Rescissible contracts, not being void, they
remain legally effective until set aside in a rescissory
action and may convey title. Nor can they be attacked
collaterally upon the grounds for rescission in a land
registration proceeding. An action for rescission may
not be raised or set up in a summary proceeding
through a motion, but in an independent civil action
and only after a full-blown trial. As Article 1383 of the
Civil Code provides: The action for rescission is
subsidiary; it cannot be instituted except when the
party suffering damage has no other legal means to
obtain reparation for the same.
Regarding contracts undertaken in fraud of
creditors, the existence of the intention to prejudice
the same should be determined either by the
presumption established by Article 1387 or by the
proofs presented in the trial of the case. In any case,
the presumption of fraud established by this article is
not conclusive, and may be rebutted by satisfactory
and convincing evidence. To repeat, an independent
action is necessary to prove that the contract is
rescissible. Under Article 1389 of the Civil Code, an
"accion pauliana," the action to rescind contracts made
in favor of creditors, must be commenced within four
years. Clearly, the rights and defenses which the
parties in a rescissible contract may raise or set up
cannot be properly ventilated in a motion but only in a
full trial.
86. China Banking v. CA (2000)
Facts:
Alfonso Roxas Chua and his wife Kiang Mich Chu
Chua were the owners of a land in San Juan which was
sought to be levied in connection with a civil case
between Metrobank and Alfonso. Later on, Metrobank
and Alfonso entered into a compromise agreement to
the effect that the levy on the land was valid and
enforceable only to the extent of the undivided portion
of the property pertaining to the conjucal share of
Alfonso.
Meanwhile, China Bank filed an action for collection
of sum of money against Pacific Multi Agro-Industrial
Corporation and Alfonso anchored on three promissory
notes with an aggregate amount of P2,500,000.00.
The subject land (Alfonsos share) was eventually
levied. Thereafter, Alfonso executed a public
instrument denominated as Assignment of Rights to
Redeem whereby he assigned his rights to redeem the
one-half undivided portion of the property to his son,
Paulino.
On the other hand, in connection with case against
China Bank, a notice of levy on execution was issued.
And thereafter, a certificate of sale on execution was
issued in favor of China Bank.
Paulino his mother, Kiang, filed a complaint against
China Bank, averring that Paulino has a prior and
better right over Alfonsos portion of the land by virtue
of the assignment of rights to redeem made by the
latter.
The trial court rendered a decision on July 15, 1994
in favor of private respondent Paulino Roxas Chua and
against China Banking Corporation. The trial court
ruled that the assignment was made for a valuable
consideration and was executed two years before
petitioner China Bank levied the conjugal share of
 Civil Law Review II 5th Assignment
Alfonso Roxas Chua on TCT 410603. The trial court
found that Paulino redeemed the one-half portion of
the property, using therefor the amount of P100,000.00
which he withdrew from his savings account as
evidenced by his bankbook and the receipts of
Metrobank for his payment of the redemption price.
The court noted that Paulino at that time was already
of age and had his own source of income.
The CA affirmed the RTC. Hence, this petition.
Issue: Whether or not the assignment of the right of
redemptioner made by Alfonso in favor of Paulino was
done to defraud his creditors and may be rescinded
under Article 1387 of the Civil Code.
Held: Yes. The law presumes that there is fraud of
creditors when: a) There is alienation of property by
gratuitous title by the debtor who has not reserved
sufficient property to pay his debts contracted before
such alienation; or b) There is alienation of property by
onerous title made by a debtor against whom some
judgment has been rendered in any instance or some
writ of attachment has been issued. The decision or
attachment need not refer to the property alienated
and need not have been obtained by the party seeking
rescission.
After his conjugal share in TCT 410603 was
foreclosed by Metrobank, the only property that
Alfonso Roxas Chua had was his right to redeem the
same, it forming part of his patrimony. "Property" under
civil law comprehends every species of title, inchoate
or complete, legal or equitable. Alfonso Roxas Chua
sold his right of redemption to his son, Paulino Roxas
Chua, in 1988. Thereafter, Paulino redeemed the
property and caused the annotation thereof at the back
of TCT 410603. This preceded the annotation of the
levy of execution in favor of China Bank by two (2)
years and the certificate of sale in favor of China Bank
by more than three (3) years. On this basis, the Court
of Appeals concluded that the allegation of fraud made
by petitioner China Bank is vague and unsubstantiated.
Such conclusion, however, runs counter to the law
applicable in the case at bar. Inasmuch as the
judgment of the trial court in favor of China Bank
against Alfonso Roxas Chua was rendered as early as
1985, there is a presumption that the 1988 sale of his
property, in this case the right of redemption, is
fraudulent under Article 1387 of the Civil Code. The
fact that private respondent Paulino Roxas Chua
redeemed the property and caused its annotation on
the TCT more than two years ahead of petitioner China
Bank is of no moment. As stated in the case of Cabaliw
vs. Sadorra, "the parties here do not stand in
equipoise, for the petitioners have in their favor, by a
specific provision of law, the presumption of fraudulent
transaction which is not overcome by the mere fact
that the deeds of sale were in the nature of public
instruments." This presumption is strengthened by the
fact that the conveyance has virtually left Alfonsos
other creditors with no other property to attach. It
should be noted that the presumption of fraud or
intention to defraud creditors is not just limited to the
two instances set forth in the first and second
paragraphs of Article 1387 of the Civil Code.
87. Sps. Tongson v. Emergency Pawnshop Bula,
Inc. and Napala (2010)
Facts:
In May 1992, Napala offered to purchase from the
spouses Tongson their 364-square meter parcel of land,
situated in Davao City for P3,000,000.00. The spouses
found the offer acceptable and executed with Napala a
Memorandum of Agreement on May 8, 1992. Upong
signing the Deed of Absolute Sale, Napala paid the
spouses P200,000.00 in cash and issued a post-dated
check in the amount of P2,800,000.00 representing the
remaining balance of the purchase price of the subject
property. When presented for payment, the PNB check
was dishonored for insufficient funds. Despite the
spouses Tongsons repeated demands to either pay the
full value of the check or to return the land, Napala
failed to do either. The spouses filed with the RTC of
Davao City a Complaint for Annulment of Contract and
Damages with a Prayer for the Issuance of a Temporary
Restraining Order and a Writ of Preliminary Injunction.
The trial court found that the purchase price of the
subject property has not been fully paid and that
Napalas assurance to the Spouses Tongson that the
PNB check would not bounce constituted fraud that
induced the Spouses Tongson to enter into the sale.
Without such assurance, the Spouses Tongson would
not have agreed to the contract of sale. Accordingly,
there was fraud within the ambit of Article 1338 of the
Civil Code, justifying the annulment of the contract of
sale, the award of damages and attorneys fees, and
payment of costs. Respondent appealed to the Court of
Appeals.
The Court of Appeals agreed with the trial courts
finding that Napala employed fraud when he
misrepresented to the Spouses Tongson that the PNB
check in the amount of P2,800,000 would be properly
funded at its maturity. However, the Court of Appeals
found that the issuance and delivery of the PNB check
and fraudulent representation made by Napala could
not be considered as the determining cause for the
sale of the subject parcel of land. Hence, such fraud
could not be made the basis for annulling the contract
of sale. Nevertheless, the fraud employed by Napala is
a proper and valid basis for the entitlement of the
Spouses Tongson to the balance of the purchase price
in the amount of P2,800,000 plus interest at the legal
rate of 6% per annum computed from the date of filing
of the complaint on 11 February 1993. The Spouses
Tongson filed a partial motion for reconsideration which
was denied by the Court of Appeals in its Resolution
dated 10 March 2005. Hence, this petition for review
before the SC.
Issue: Whether or not the contract between Spouses
Tongson and Napala should be annulled.
Held: No. A contract is a meeting of the minds
between two persons, whereby one is bound to give
something or to render some service to the other. A
valid contract requires the concurrence of the following
essential elements: (1) consent or meeting of the
minds, that is, consent to transfer ownership in
exchange for the price; (2) determinate subject matter;
and (3) price certain in money or its equivalent.
 Civil Law Review II 5th Assignment
We find no causal fraud in this case to justify the
annulment of the contract of sale between the parties.
It is clear from the records that the Spouses Tongson
agreed to sell their 364-square meter Davao property
to Napala who offered to pay P3,000,000 as purchase
price therefor. Contrary to the Spouses Tongsons belief
that the fraud employed by Napala was already
operational at the time of the perfection of the contract
of sale, the misrepresentation by Napala that the
postdated PNB check would not bounce on its maturity
hardly equates to dolo causante. Napalas assurance
that the check he issued was fully funded was not the
principal inducement for the Spouses Tongson to sign
the Deed of Absolute Sale. Even before Napala issued
the check, the parties had already consented and
agreed to the sale transaction. The Spouses Tongson
were never tricked into selling their property to Napala.
On the contrary, they willingly accepted Napalas offer
to purchase the property at P3,000,000. In short, there
was a meeting of the minds as to the object of the sale
as well as the consideration therefor. Some of the
instances where this Court found the existence of
causal fraud include: (1) when the seller, who had no
intention to part with her property, was tricked into
believing that what she signed were papers pertinent
to her application for the reconstitution of her burned
certificate of title, not a deed of sale; (2) when the
signature of the authorized corporate officer was
forged; or (3) when the seller was seriously ill, and died
a week after signing the deed of sale raising doubts on
whether the seller could have read, or fully understood,
the contents of the documents he signed or of the
consequences of his act. Suffice it to state that nothing
analogous to these badges of causal fraud exists in this
case. While they did not file an action for the rescission
of the sales contract, the Spouses Tongson specifically
prayed in their complaint for the annulment of the
sales contract, for the immediate execution of a deed
of reconveyance, and for the return of the subject
property to them. The Spouses Tongson likewise
prayed for such other reliefs which may be deemed
just and equitable in the premises. In view of such
prayer, and considering respondents substantial
breach of their obligation under the sales contract, the
rescission of the sales contract is but proper and
justified. Accordingly, respondents must reconvey the
subject property to the Spouses Tongson, who in turn
shall refund the initial payment of P200,000 less the
costs of suit.
88. Cadwaller & Company v. Smith, Bell &
Company (1907)
Facts:
The Pacific Export Lumber Company of Portland
shipped upon the steamer Quito five hundred and
eighty-one (581) piles to the defendant, Henry W.
Peabody & Company, at Manila, on the sale of which
before storage the consignees were to receive a
commission of one half of whatever sum was obtained
over $15 for each pile and 5 per cent of the price of the
piles sold after storage. After the arrival of the steamer
on August 2, Peabody and Company wrote the agent of
the Pacific Company at Shanghai that for lack of a
demand the piles would have to be sold at
considerably less than $15 apiece; whereupon the
company's agent directed them to make the best
possible offer for the piles, in response to which on
August 5 they telegraphed him an offer of $12 apiece.
It was accepted by him on August 6, in consequence of
which the defendant paid the Pacific Company $6,972.
It afterwards appeared that on July 9 Peabody &
Company had entered into negotiations with the
Insular Purchasing Agent for the sale for the piles at
$20 a piece, resulting of August 4 in the sale to the
Government of two hundred and thirteen (213) piles at
$19 each. More of them were afterwards sold to the
Government at the same figure and the remainder to
other parties at carrying prices, the whole realizing to
the defendants $10,41.66, amounting to $3,445.66
above the amount paid by the defendant to the
plaintiff therefor. Thus it is clear that at the time when
the agents were buying from their principal these piles
at $12 apiece on the strength of their representation
that no better price was obtainable, they had already
sold a substantial part of them at $19. In these
transactions the defendant, Smith, Bell & Company,
were associated with the defendants, Henry W.
Peabody & Company, who conducted the negotiations,
and are consequently accountable with them.
The plaintiff, as assignee of the Pacific Export
Lumber Company, sues for $3,486, United States
currency, the differences between the amount turned
over to the company on account of a cargo of cedar
piles consigned to the defendants as its agents and
afterwards bought by them, and the amount actually
received by them on the subsequent sale thereof.
Issue: Whether or not defendant is guilty of fraud.
Held: Yes. It is plaint that in concealing from their
principal the negotiations with the Government,
resulting in a sale of the piles at 19 a piece and in
misrepresenting the condition of the market, the
agents committed a breach of duty from which they
should benefit. The contract of sale to themselves
thereby induced was founded on their fraud and was
subject to annulment by the aggrieved party. (Civil
Code, articles 1265 and 1269.) Upon annulment the
parties should be restored to their original position by
mutual restitution. (Article 1303 and 1306.) Therefore
the defendants are not entitled to retain their
commission realized upon the piles included under the
contract so annulled. In respect of the 213 piles, which
at the time of the making of this contract on August 5
they had already sold under the original agency, their
commission should be allowed.
89. ECE Realty and Development Inc. v. Mandap
(2014)
Facts:
ECE Realty and Development Inc. and respondent
Rachel Mandap entered into a contract to sell whereby
the latter agreed to buy a condominium unit from ECE.
Printed advertisements were made indicating therein
that the condo was to be built in Makati City. But it
turns out that it was actually being built in Pasay City.
This fact was stated in the contract to sell between ECE
and Rachel. Two years after the execution of the
contract, Rachel demanded the return of the payments
 Civil Law Review II 5th Assignment
she made on the ground that she subsequently
discovered that the condominium project was being
built in Pasay and not in Makati, but ECE refused.
Hence, Rachel filed a complaint against ECE with the
HLURB. When the case reached the CA, the appellate
court annulled the contract to sell on the ground that
ECE employed fraud and machinations to induce
Rachel to enter into a contract with it.
Issue: Whether or not the CA was correct in annulling
the contract to sell.
Held: No. Jurisprudence has shown that in order to
constitute fraud that provides basis to annul contracts,
it must fulfill two conditions. First, the fraud must be
dolo causante or it must be fraud in obtaining the
consent of the party. This is referred to as causal fraud.
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. Second, the fraud must be proven by clear and
convincing evidence and not merely by a
preponderance thereof.
In the present case, this Court finds that petitioner
is guilty of false representation of a fact. This is
evidenced by its printed advertisements indicating that
its subject condominium project is located in Makati
City when, in fact, it is in Pasay City. The Court agrees
with the Housing and Land Use Arbiter, the HLURB
Board of Commissioners, and the Office of the
President, in condemning petitioner's deplorable act of
making misrepresentations in its advertisements and in
issuing a stern warning that a repetition of this act
shall be dealt with more severely. However, insofar as
the present case is concerned, the Court agrees with
the Housing and Land Use Arbiter, the HLURB Board of
Commissioners, and the Office of the President, that
the misrepresentation made by petitioner in its
advertisements does not constitute causal fraud which
would have been a valid basis in annulling the Contract
to Sell between petitioner and respondent.
Evidence shows that respondent proceeded to sign
the Contract to Sell despite information contained
therein that the condominium is located in Pasay City.
This only means that she still agreed to buy the subject
property regardless of the fact that it is located in a
place different from what she was originally informed.
If she had a problem with the property's location, she
should not have signed the Contract to Sell and,
instead, immediately raised this issue with petitioner.
But she did not. As correctly observed by the Office of
the President, it took respondent more than two years
from the execution of the Contract to Sell to demand
the return of the amount she paid on the ground that
she was misled into believing that the subject property
is located in Makati City. In the meantime, she
continued to make payments.
90. Vda. De Buncio v. Estate of De Leon (1987)
Facts:
This case is about a daughters attempt to claim
her share in her fathers estate some 63 years after the
latters demise. The father, Andres Arroyo, died
sometime in 1901. He was survived by three
compulsory heirs: Felix, Filomena (petitioner herein)
and Simplicio. In 1964, Filomena filed a complaint
against her co-heirs, alleging that her share in the
inheritance had at all times been held in trust by Felix,
and that she had been deprived of that share through
fraud and misrepresentation. The defendants filed a
motion to dismiss on the ground of res judicata, laches
and estoppel among others. The CFI granted the
motion to dismiss. It turned out that in 1940, the CFI
rendered a judgment on the basis of a compromise
agreement entered into by the parties to settle the
estate of their father. In 1946, Filomena filed a motion
to vacate the 1940 decision on the ground of fraud,
misrepresentation, deceit and undue influence vitiating
their consent to the compromise agreement. The trial
court denied the motion, and Filomena kept silent until
she filed the present complaint in 1964.
Issue: Whether or not Filomenas complaint can
prosper.
Held: No. Even if it were legally possible to shunt aside
and ignore the principle of res judicata, this would not
help the appellants' cause one whit. Their cause of
action for the annulment of their convenio de
transaccion on the ground of fraud, undue influence, or
mistake, as also their cause of action for recovery of
property on the theory of constructive trust, assuming
their tenability, would nonetheless be barred by
another insuperable legal obstacle: prescription.
The action to annul a contract on the ground that
consent is vitiated by mistake, violence, intimidation,
undue influence or fraud prescribes in four (4) years;
and the period is reckoned, in case of mistake or fraud,
from the time of the discovery of the same. It is
noteworthy that as early as March 14, 1946 the
appellants already had pleaded fraud in the motion
filed by them on that day to set aside the judgment
rendered in Civil Case No. 7268: their contention was
that their consent to the convenio de transaccion
which the judgment had approved, had been obtained
by fraud, or undue machinations. It is thus not
unreasonable, surely, to consider March 14, 1946 as
the day of the discovery of the fraud. So considered, it
should at once be apparent that the prescriptive period
of four (4) years had long elapsed when Civil Case No.
7200 was instituted by the appellants on February 19,
1964, eighteen (18) years afterwards.
Alternatively categorizing the appellants' cause of
action as one for recovery of property held by
defendants under a constructive trust, would not
improve their situation. The statute of limitations would
still preclude their success. Assuming the creation of
an implied trust over the real property in question from
the time that Felix Arroyo (appellees' predecessor) took
over possession and administration thereof sometime
in 1901, the period of prescription to recover the
property-set by law at ten (10) years-began to run from
the time that Torrens titles were obtained over the
property in the name of the trustee or his successors-
in-interest. It being clear from the record that the
 Civil Law Review II 5th Assignment
appellants had brought their suit, Civil Case No. 7268,
more than ten (10) years after titles had been obtained
over the property claimed by the appellees or their
predecessor-in-interest, their cause of action
predicated on constructive trust is barred by
prescription.
91. Asia Productions v. Pano (1992)
Facts:
Private respondents, who claimed to be the owners
of a building constructed on a lot leased from Lucio San
Andres, offered to sell the buildings to petitioners for
P170,000.00. Petitioners agreed because of private
respondents' assurance that they will also assign to the
petitioners the contract of lease over the land. The
above agreement and promise were not reduced to
writing. Private respondents undertook to deliver to the
petitioners the deed of conveyance over the building
and the deed of assignment of the contract of lease
within sixty (60) days from the date of payment of the
downpayment of P20,000.00. The balance was to be
paid in monthly installments. On 20 March 1976,
petitioners paid the downpayment and issued eight (8)
postdated checks drawn against the Equitable Banking
Corporation for the payment of the eight (8) monthly
installments.
Relying on the good faith of private respondents,
petitioners constructed in May 1976 a weaving factory
on the leased lot. Unfortunately, private respondents,
despite extensions granted, failed to comply with their
undertaking to execute the deed to sale and to assign
the contract despite the fact that they were able to
encash the checks dated 30 June and 30 July 1976 in
the total amount of P30,000.00. Worse, the lot owner
made it plain to petitioners that he was unwilling to
give consent to the assignment of the lease unless
petitioners agreed to certain onerous terms, such as an
increase in rental, or the purchase of the land at a very
unconscionable price. Petitioners were thus compelled
to request for a stop payment order of the six (6)
remaining checks. Succeeding negotiations to save the
transaction proved futile by reason of the continued
failure of private respondents to execute the deed of
sale of the building and the deed of assignment of the
contract of lease.
Petitioners filed a complaint against respondents
for the recovery of their partial payment and for
damages (moral and exemplary). Private respondents
filed a motion to dismiss on the ground that the claim
on which the action is based an alleged purchase of
a building which is not evidenced by any writing
cannot be proved by parol evidence since Article 1356
in relation to Article 1358 of the Civil Code requires
that it should be in writing. The CFI granted the motion
to dismiss.
Issue: Whether or not the CFI was correct in granting
the motion to dismiss.
Held: No. It is well-settled in this jurisdiction that the
Statute of Frauds is applicable only to executory
contracts, not to contracts that are totally or partially
performed. In the words of former Chief Justice Moran:
"The reason is simple. In executory contracts there is a
wide field for fraud because unless they be in writing
there is no palpable evidence of the intention of the
contracting parties. The statute has precisely been
enacted to prevent fraud." (Comments on the Rules of
Court, by Moran, Vol. III [1957 ed.] p. 178). However, if
a contract has been totally or partially performed, the
exclusion of parol evidence would promote fraud or
bad faith, for it would enable the defendant to keep the
benefits already derived by him form the transaction in
litigation, and, at the same time, evade the obligations,
responsibilities or liabilities assumed or contracted by
him thereby.
There can be no dispute that the instant case is not
for specific performance of the agreement to sell the
building and to assign the leasehold right. Petitioners
merely seek to recover their partial payment for the
agreed purchase price of the building, which was to be
paid on installments, with the private respondents
promising to execute the corresponding deed of
conveyance, together with the assignment of the
leasehold rights, within two (2) months from the
payment of the agreed downpayment of P20,000.00.
Besides, even if the action were for specific
performance, it was premature for the respondent
Judge to dismiss the complaint by reason of the Statute
of Frauds despite the explicit allegations of partial
payment.
Under Article 1338 of the Civil Code, 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. In order that fraud may vitiate consent, it
must be the causal (dolo causante), not merely the
incidental (dolo incidente), inducement to the making
of the contract. Additionally, the fraud must be serious.
92. Averia v. Averia (2004)
Facts:
Macaria Francisco (Macaria) was married to Marcos
Averia in which they had six children namely:
petitioners Gregorio and Teresa and respondents
Domingo, Angel, Felipe and Felimon. Upon the death of
Marcos, Macaria contracted a second marriage with
Roberto Romero in which they had no children. Upon
the death of Roberto, he left three adjoining residential
lots. In a Deed of Extrajudicial Partition and Summary
Settlement of the Estate of Romero, a house and lot
(Extremadura property) was apportioned to Macaria.
Macaria then filed an action for annulment of title
and damages alleging that fraud was employed by her
co-heirs in which she was represented by Atty. Mario
C.R. Domingo. The case lasted for 10 years until the
Court of Appeals (CA) decided in favor of Macaria
entitling her to an additional 30 square meters of the
estate of Romero. Her son Gregorio and his family and
Teresas family lived with her in the Extremadura
property until her death. After six years, respondents
Domingo, Angel, Felipe and Filemon filed an action for
judicial partition against petitioners Gregorio and
Teresa.
In their defense Gregorio contends that Macaria
verbally sold of her Extramadura property to him
 Civil Law Review II 5th Assignment
and his wife Agripina because they were the ones who
spent for the litigation expenses in the former civil case
and that Agripina took care of her. Gregorio and co-
petitioner Sylvana claimed that Domingo sold to
Gregorio and Agripina his 1/6 share in the remaining
portion of the property. Upon hearing, Gregorio
presented oral evidence to establish their claim of the
sale of the property to them by Macaria and also the
sale of Domingo of his share. The Regional Trial Court
of (RTC) decided in favor of Gregorio. The CA however,
reversed the decision of the RTC on the ground that
since the sale executed by Macaria in favor of Gregorio
was in violation of the statute of frauds and it cannot
be proven by oral evidence.
Issue: Whether or not parol evidence may be admitted
in proving partial performance.
Held: Yes. With respect to the application by the
appellate court of the Statute of Frauds, Gregorio
contends that the same refers only to purely executory
contracts and not to partially or completely executed
contracts as in the instant case. The finding of the CA
that the testimonies of Gregorios witnesses were
timely objected to by Domingo is not, as Gregorio
insist, borne out in the records of the case except with
respect to his testimony.
Indeed, except for the testimony of petitioner
Gregorio bearing on the verbal sale to him by Macaria
of the property, the testimonies of Gregorios witnesses
Sylvanna Vergara Clutario and Flora Lazaro Rivera
bearing on the same matter were not objected to by
respondents. Just as the testimonies of Gregorio, Jr. and
Veronica Bautista bearing on the receipt by respondent
Domingo on July 23, 1983 from Gregorios wife of
P5,000.00 representing partial payment of the
P10,000.00 valuation of his (Domingos) 1/6 share in
the property, and of the testimony of Felimon
Dagondon bearing on the receipt by Domingo of
P5,000.00 from Gregorio were not objected to.
Following Article 1405 of the Civil Code, the contracts
which infringed the Statute of Frauds were ratified by
the failure to object to the presentation of parol
evidence, hence, enforceable.
Contrary then to the finding of the CA, the admission of
parol evidence upon which the trial court anchored its
decision in favor of respondents is not irregular and is
not foreclosed by Article 1405.
In any event, the Statute of Frauds applies only to
executory contracts and not to contracts which are
either partially or totally performed. In the case at bar,
petitioners claimed that there was total performance of
the contracts, full payment of the objects thereof
having already been made and the vendee Gregorio
having, even after Macarias death in 1983, continued
to occupy the property until and after the filing on
January 19, 1989 of the complaint subject of the case
at bar as in fact he is still occupying it.
However it is not enough for a party to allege
partial performance in order to render the Statute of
Frauds inapplicable; such partial performance must be
duly proved. But neither is such party required to
establish such partial performance by documentary
proof before he could have the opportunity to introduce
oral testimony on the transaction. The partial
performance may be proved by either documentary or
oral evidence.
93. Clemeno v. Lobregat (2004)
Facts:
Spouses Nilus and Teresita Sacramento were the
owner of the parcel of land and house constructed at
Madaling Araw St., Teresita Heights Subd., Novaliches,
Quezon City. Spouses Sacramento mortgaged the
property with the SSS as security for their housing loan
and likewise surrendered the owners and duplicate
copies of the certificate of title. A Deed of Absolute
Sale with Assumption of Mortgage in favor of Spouses
Maria Linda Clemeno and Angel C. Clemeno, Jr. was
entered into by Spouses Sacramental with conformity
of the SSS. 5 years after, Romeo Lobregat and Angel,
who were relatives by consanguinity, entered into a
verbal contract of sale over the property with the
following terms, among others, that the former would
pay the purchase price of the property in the amount of
P270,000.00 inclusive of the balance. When Lobregats
counsel wrote to Angel that he had already paid the
purchase price and was ready to pay the balance, he
demanded that petitioner execute a deed of absolute
sale over the property and deliver the title. In reply,
Angel stated that he ever sold the property but instead
consented to lease the property. Also, that even if
Lobregat wanted to buy the property, the same was
unenforceable, as no document was executed by them
to evince the sale. CA ruled that the contract entered
into was a contract of sale since partial payments had
been made, thus, contract is partly performed.
Issue: Whether or not the essential elements of a
contract of sale are present.
Held: Yes. The Court held that the contract between
the parties is a perfected verbal contract of sale, not a
contract to sell over the subject property with the
petitioner as vendor and respondent as vendee. Sale is
a consensual contract and is perfected by mere
consent, which is manifested by a meeting of the
minds as to the offer and acceptance thereof on three
elements: subject matter, price, and terms of payment
of the price. The evidence shows that upon the
payment made by the respondent of the amount of
P27,000.00, the petitioners vacated their house and
delivered possession. The petitioners cannot re-acquire
ownership and recover possession thereof unless the
contract is rescinded in accordance with law. The
contract of sale of the parties is enforceable
notwithstanding the fact that it was an oral agreement
and not reduced in writing.