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10. Cortes vs.

Court of Appeals
G.R. No. 126083, July 12, 2006
Ynares-Santiago, J.
Cortes, as seller, entered into a contract of sale over 3 parcels of land with
Villa Esperanza Development Corp. (VEDC) for the purchase price of Php
3,700,000. On various dates in 1983, VEDC advanced to Cortes the total sum
of Php 1,213,000. In September 1983, the parties executed a deed of
absolute sale, which deed was then retained by Cortes for notarization.
On 14 January 1985, VEDC filed a complaint for specific performance to
compel Cortes to deliver the TCTs and the original copy of the Deed of
Absolute Sale. For his part, Cortes alleged that the owners duplicate copy of
the 3 TCTs were surrendered to VEDC and that it is the latter who refused to
pay the agreed down payment. He added that portion of the subject property
is occupied by his lessee who agreed to vacate the premises upon payment
of disturbance fee. However, due to the Corporation's failure to pay in full the
sum of P2,200,000.00, he in turn failed to fully pay the disturbance fee of the
lessee who now refused to pay monthly rentals. He thus prayed that the
Corporation be ordered to pay the outstanding balance plus interest and in
the alternative, to cancel the sale and forfeit the P1,213,000.00 partial down
payment, with damages in either case.
The RTC rescinded the sale and ordered Cortes to return the down payment
to VEDC. On appeal, the Court of Appeals reversed the decision of the trial
court and directed Cortes to execute a Deed of Absolute Sale conveying the
properties and to deliver the same to the Corporation together with the TCTs,
simultaneous with the Corporation's payment of the balance of the purchase
price of P2,487,000.00.
What is the effect if both parties incur delay in a reciprocal obligation?
Considering that their obligation was reciprocal, performance thereof must
be simultaneous. The mutual inaction of Cortes and the Corporation
therefore gave rise to a compensation morae or default on the part of both
parties because neither has completed their part in their reciprocal
obligation. Cortes is yet to deliver the original copy of the notarized Deed
and the TCTs, while the Corporation is yet to pay in full the agreed down
payment of P2,200,000.00. This mutual delay of the parties cancels out the
effects of default, such that it is as if no one is guilty of delay.

49. Erlinda Gajudo, et al. vs. Traders Royal Bank

G.R. No. 151098, March 21, 2006
Panaganiban, C.J.
In lieu of petitioner Chuas unpaid loan from Traders Royal Bank (TRB), the
latter instituted extrajudicial foreclosure proceedings on the land co-owned
by all petitioners. During the auction sale, TRB, being the highest bidder, was
able to buy the land. The other petitioners failed to redeem the property due
to their lack of knowledge of their right of redemption, and want of sufficient
education. Although the period of redemption had long expired, Chua offered
to buy back, and TRB also agreed to sell back, the foreclosed property, on
the understanding that Chua would pay TRB the amount of Php 40,135.53,
representing the sum that the bank paid at the auction sale, plus interest.
Chua made an initial payment thereon in the amount of P4,000.00, covered
by an Interbank Check dated 16 February 1984, duly receipted by TBR. In a
sudden change of position, TRB wrote Chua, on 20 February 1984, asking
that he could repurchase the property, but based on the current market
value thereof; and that sometime later, or on 22 March 1984, TRB wrote
Chua anew, requiring him to tender a new offer to counter the offer made
thereon by another buyer. Petitioners then filed a complaint for annulment of
the extra-judicial foreclosure and auction sale.
What is a means of proving a firm commitment to pay the redemption price
on a fixed period, which is essential in conventional redemption?
Other than the Interbank check marked "for deposit" by respondent bank, no
other evidence was presented to establish that petitioners had offered to pay
the alleged redemption price of P40,135.53 on a fixed date. For that matter,
petitioners have not shown that they tendered payment of the balance
and/or consigned the payment to the court, in order to fulfill their part of the
purported agreement. These remedies are available to an aggrieved debtor
under Article 1256 of the Civil Code, when the creditor unjustly refuses to
accept the payment of an obligation.

88. Greater Metropolitan Manila Solid Waste Management Committee vs.

Jancom Environmental Corp.
G.R. No. 163663, June 30, 2006
Carpio Morales, J.
Presidential Memorandum Order No. 202 was issued by then President Fidel
V. Ramos creating an Executive Committee to oversee and develop waste-toenergy projects for the waste disposal sites in San Mateo, Rizal and
Carmona, Cavite under the Build-Operate-Transfer (BOT) scheme. Jancom
International was one of the bidders for the San Mateo Waste Disposal Site. It
subsequently entered into a partnership with Asea Brown Boveri under the
firm name JANCOM Environmental Corporation (JANCOM), its co-respondent.
JANCOM was declared as the sole complying bidder for the San Mateo Waste
Disposal Site.
On December 19, 1997, a Contract for the BOT Implementation of the Solid
Waste Management Project for the San Mateo, Rizal Waste Disposal Site was
entered into by the Republic of the Philippines, on one hand, and JANCOM on
the other. The contract was submitted for approval to President Ramos who
subsequently endorsed it to then incoming President Joseph E. Estrada.
Owing to the clamor of the residents of Rizal, the Estrada administration
ordered the closure of the San Mateo landfill. Petitioner GMMSWMC
thereupon adopted a Resolution not to pursue the contract with JANCOM,
citing as reasons therefor the passage of Republic Act 8749, otherwise known
as the Clean Air Act of 1999, the non-availability of the San Mateo site, and
costly tipping fees.
On March 14, 2000, respondents filed a petition for certiorari with the
Regional Trial Court (RTC) to declare the GMMSWMC Resolution and the acts
of the MMDA calling for bids for and authorizing the forging of a new contract
for the Metro Manila waste management as illegal, unconstitutional and void
and to enjoin petitioners from implementing the Resolution and making
another award in lieu thereof.
Can a party revoke a perfected contract without the consent of the other?
No. From the moment of perfection, the parties are bound not only to the
fulfillment of what has been expressly stipulated but also to all the
consequences which, according to their nature, may be in keeping with good
faith, usage, and law. The contract has the force of law between the parties

and they are expected to abide in good faith by their respective contractual
commitments, not weasel out of them. Just as nobody can be forced to enter
into a contract, in the same manner, once a contract is entered into, no party
can renounce it unilaterally or without the consent of the other.

127. Gloria Ocampo and Teresita Tan vs. Land Bank of the Philippines

G.R. No. 164968, July 3, 2009

Peralta, J.
Petitioners obtained from LBP a 10 million pesos quedan loan upon issuance
of promissory notes. QUEDANCOR guaranteed to pay LBP their loan but only
up to 80% of the outstanding loan plus interests at the time of maturity.
Pursuant thereto, Ocampo and Tan delivered to LBP quedans and executed a
Deed of Assignment covering 41, 690 cavans of palay in favor of
Ocampo and Tan constituted a REM over 2 parcels of unregistered land
owned by OCampo to secure the remaining 20%. Such encumbrance was
annotated in the land title when Ocampo filed for the lands registration.
When Ocampo failed to pay the promissory notes, LBP filed an extrajudicial
foreclosure of REM for the 20% part of the loan. The RTC issued a TRO on the
public auction and favored petitioners when they filed a complaint for
declaration of nullity and damages on the basis of forgery regarding the REM
on the 20% of the loan. The CA reversed the RTC decision.
Whether or not the deceit employed in the execution of a contract must be
Yes. Verily, fraud refers to all kinds of deception whether through insidious
machination, manipulation, concealment or misrepresentation that would
lead an ordinarily prudent person into error after taking the circumstances
into account. 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. Unfortunately, Ocampo was unable to
establish clearly and precisely how the Land Bank committed the alleged
fraud. She failed to convince Us that she was deceived, through
misrepresentations and/or insidious actions, into signing a blank form for use
as security to her previous loan.
Granting, for the sake of argument, that appellant bank did not apprise the
appellees of the real nature of the real estate mortgage, such stratagem,
deceit or misrepresentations employed by defendant bank are facts
constitutive of fraud which is defined in Article 1338 of the Civil Code as that
insidious words or machinations of one of the contracting parties, by which
the other is induced to enter into a contract which without them, he would
not have agreed to. When fraud is employed to obtain the consent of the

other party to enter into a contract, the resulting contract is merely a

voidable contract, that is a valid and subsisting contract until annulled or set
aside by a competent court. It must be remembered that an action to declare
a contract null and void on the ground of fraud must be instituted within four
years from the date of discovery of fraud. In this case, it is presumed that the
appellees must have discovered the alleged fraud since 1991 at the time
when the real estate mortgage was registered with the Register of Deeds of
Lingayen, Pangasinan. The appellees cannot now feign ignorance about the
execution of the real estate mortgage.

167. Uniwide Holdings, Inc. vs. Jandecs Transportation Co.

G.R. No. 168522, December 19, 2007
Corona, J.
enteredJandecs Transportation entered
a contract
of Assignment
to operate
into a contract of Assignment of Leasehold Rights under which the latter
was to operate food and snack stalls at petitioners Uniwide Coastal Mall. The
contract was for a period of 18 yrs. For a consideration of P2.4M. Respondent
paid the contract price in full. Petitioner, however, failed to turn over the stall
units on the agreed date. Respondent sought the rescission of the contract
and the refund of its payment. Petitioner refused both. Respondent filed a
complaint in the RTC for a breach of contract, rescission of contract,
damages and issuance of a writ of preliminary attachment. In the complaint,
respondent claimed that despite full payment, petitioner failed to deliver the
stall units on the stipulated date, open its own food and snack stalls near the
cinema area and refused to accommodate its request for the rescission of
the contract and the refund of payment. In its answer, petitioner admitted
respondents full payment of the contract price but averred that it was to
turn over the units only upon completion of the mall. It likewise claimed that,
under the contract, it had option to substitute stalls to respondent, which the
latter, however, rejected.
Whether or not petitioners failure to deliver the units on the commenced
date of lease gave respondent the right to rescind the contract after it had
fully paid the contract price.
Art. 1191 of the CC provides the power to rescind obligations in reciprocal
ones in case one of the obligors should not comply with what is incumbent

upon him while the other is willing and ready to comply. Certainly,
petitioners failure to deliver the units on the commencement date of the
lease gave respondent the right to rescind the contract after the latter had
already paid the contract price in full.
Further, respondents right to rescind the contract cannot be prevented by
the fact that petitioner had the option to substitute the stalls. Even if
petitioner had that option, it did not, however, mean that it could insist on
the continuance of the contract by forcing respondent to accept the
substitution. Neither did it mean that its previous default had been
obliterated completely by the exercise of the option.