1.

ECE Realty v Mandap

G.R. No. 196182 September 01, 2014

Doctrine: 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.
FACTS:
1. Petitioner ECE Realty is a corporation engaged in the building and development of condominium
units. Sometime in 1995, it started the construction of a condominium project called Central Park
Condominium Building located along Jorge St., Pasay City. However, printed advertisements were
made indicating therein that the said project was to be built in Makati City.
2. December 1995: respondent Mandap, agreed to buy a unit from the above project by paying a
reservation fee and, thereafter, downpayment and monthly installments. On June 18, 1996, respondent
and the representatives of petitioner executed a Contract to Sell. In the said Contract, it was indicated
that the condominium project is located in Pasay City.
3. More than two years after the execution of the Contract to Sell, respondent Mandap, through her
counsel, wrote petitioner a letter demanding the return of P422,500.00, representing the payments she
made, on the ground that she subsequently discovered that the condominium project was being built in
Pasay City and not in Makati City as indicated in its printed advertisements. Instead on answering the
letter, petitioner ECE Realty sent a letter informing her that her unit is already ready for inspection and
occupancy should she decide to move in.
4. Treating the letter as a form of denial of her demand for the return of the sum she had paid to
petitioner ECE Realty, respondent Mandap filed a complaint with the Expanded National Capital
Region Field Office (ENCRFO) of the HLURB seeking the annulment of her contract with petitioner,
the return of her payments, and damages.
5. Sept. 30, 2005: ENCRFO dismissed the complaint and directed the parties to resume the fulfillment
of the terms and conditions of their sales contract. ENCRFO held that the respondent failed to show
or substantiate the legal grounds that consist of a fraudulent or malicious dealing with her by the
[petitioner], such as, the latter's employment of insidious words or machinations which induced or
entrapped her into the contract and which without them, would not have encouraged her to buy the
unit.
6. The HULRB Board of Commissioner and the Office of the President affirmed the decision of the
ENCRFO
7. CA reverses the decision. It annulled the contract between the parties. ECE ordered
to return the payments made with legal interest. The CA held that petitioner
employed fraud and machinations to induce respondent to enter into a contract
with it. The CA also expressed doubt on the due execution of the Contract to Sell
between the parties.

2. G.R. No. 171428, November 11, 2013

Facts: Private respondent Ruperto V. Tankeh was the president of Sterling

Shipping Lines, which was incorporated way back in 1979. In 1980, petitioner Dr.
Alejandro V.Tankeh, the older brother of Ruperto Tankeh, alleged that the latter
approached him wherein the former informed the latter that he was operating a
new shipping line business and offered petitioner one thousand (1,000) shares
worth P1,000,000.00 to be a director of the business. Petitioner accepted his
brothers offer and he became a member of the corporations board. In 1981,
petitioner signed the Assignment of Shares of Stock with Voting Rights and
promissory note where he bound himself solidarily liable with the other corporate
officers as regards the loan obtained by Ruperto for the purchase of a vessel in
order to commence their business. However, the corporation failed to meet their
obligations. Sometime in 1987, the DBP sold the vessel to a Singaporean
enterprise. DBP then informed petitioner that it would still pursue its claim over
the unpaid liabilities of the corporation. Hence, petitioner filed a Complaint for the
annulment of the contracts he signed in 1981 on the ground that he was
fraudulently deceived by Ruperto, the other corporate officers and DBP into
signing the said contracts.

Issue: Whether or not the fraud perpetrated by respondents is serious enough to

warrant annulment of the contract.
Held: No. Only incidental fraud exists in this case. Therefore it is not sufficient to
warrant the annulment of the contracts petitioner entered into but respondent
Ruperto is liable to pay him damages. The distinction between fraud as a ground
for rendering a contract voidable or as basis for an award of damages is provided
in Article 1344:In order that fraud may make a contract voidable, it should be
serious and should not have been employed by both contracting parties.
Incidental fraud only obliges the person employing it to pay damages. There are
two types of fraud contemplated in the performance of contracts: dolo incidente
or incidental fraud and dolo causante or fraud serious enough to render a
contractvoidable. If there is fraud in the performance of the contract, then this
fraud will give rise to damages. If the fraud did not compel the imputing party to
give his or her consent, it may not serve as the basis to annul the contract, which
exhibits dolo causante. However, the party alleging the existence of fraud may
prove the existence of dolo incidente. This may make the party against whom
fraud is alleged liable for damages.

3. On May 31, 1983, Goldstar Conglomerates, Inc. (GCI), represented by

Guillermo Zaldaga (Zaldaga), obtained from Summa Bank, now respondent Paic
Savings and Mortgage Bank, Inc. (PSMB) a loan in the amount of P1,500,000.00
as evidenced by a Loan Agreement. As security therefor, GCI executed in favor of
PSMB six (6) promissory notes6 in the aggregate amount of P1,500,000.00 as well
as a Deed of Real Estate Mortgage over a parcel of land covered by Transfer
Certicate of Title (TCT) No. 308475.7 As additional security, petitioners Francisco
Sierra, Rosario Sierra, and Spouses Felix Gatlabayan and Salome Sierra
mortgaged four(4) parcels of land in Antipolo City. Eventually, GCI defaulted in the
payment of its loan to PSMB. The latter to extrajudicially foreclose the mortgage
on the subject properties. Since petitioners failed to redeem the subject
properties within the redemption period, their certicates of title were cancelled
and new ones were issued in PSMBs name. Petitioners averred that under
pressing need of money, with very limited education and lacking proper
instructions, they fell prey to a group who misrepresented to have connections
with Summa Bank and, thus, could help them secure a loan. Petitioners likewise
lamented that they were not furnished copies of the loan and mortgage
documents, or notied/apprised of the assignment to PSMB, rendering them
unable to comply with their obligations under the subject deed. They further
claimed that they were not furnished a copy of the statement of account nor a
copy of the petition for foreclosure prior to the precipitate extrajudicial foreclosure
and auction sale which failed to comply with the posting and notice requirements.
PSMB maintained that: (a) it acted in good faith with respect to the subject
transactions and that petitioners action should be directed against the group who
deceived them;27 (b) the subject properties were mortgaged to securean
obligation covered by the loan agreement with GCI;28 (c) the mortgage was valid,
having been duly signed by petitioners before a notary public;29 (d) the
foreclosure proceedings were regular, having complied with the formalities
required by law;30 and (e) petitioners allowed time to pass without pursuing their
purported right against Summa Bank and/or PSMB.
ISSUE: 1. WHETHER OR NOT PETITIONERS ARE MERE ACCOMODATION
MORTGAGAGORS2. W/N THE ACTION HAS PRESCRIBED AND BARRED BY LACHES

4. ELIZA ZUNIGA-SANTOS vs. MARIA DIVINA GRACIA SANTOS-GRAN

G.R. No. 197380 October 8, 2014
FACTS: On January 9, 2006, petitioner Eliza Zuiga-Santos (petitioner) led a
Complaint for annulment of sale and revocation of title against Gran. It was
alleged, among others, that: (a) she was the registered owner of three (3) parcels
of land prior to their transfer in the name of Gran; (b) she has a second husband
by the name of Lamberto with whom she did not have any children; (c) she was
forced to take care of Lambertos alleged daughter, Gran, whose birth certicate
was forged to make it appear that the latter was petitioners daughter; (d)
pursuant to void and voidable documents, i.e., a Deed of Sale, Lamberto
succeeded in transferring the subject properties in favor of and in the name of
Gran; (e) despite diligent efforts, said Deed of Sale could not be located; and (f)
she discovered that the subject properties were transferred to Gran sometime in
November 2005. For her part, Gran led a Motion to Dismiss,contending, inter
alia, that (a) the action led by petitioner had prescribed since an action upon a
written contract must be brought within ten (10) years from the time the cause of
action accrues, or in this case, from the time of registration of the questioned
documents before the Registry of Deeds; and (b) the Amended Complaint failed
to state a cause of action as the void and voidable documents sought to be
nullied were not properly identied nor the substance thereof set forth. RTC
granted Grans motion and dismissed the Complaint for its failure to state a cause
of action, considering that the deed of sale sought to be nullied an "essential
and indispensable part of petitioners cause of action" was not attached. It
likewise held that the certicates of title covering the subject properties cannot
be collaterally attacked and that since the action was based on a written contract,
the same had already prescribed under Article 1144 of the Civil Code. CA
sustained the dismissal of petitioners Amended Complaint but on the ground of
insufficiency of factual basis.

ISSUE: Whether or not the dismissal of petitioners Amended Complaint should be

sustained.
HELD: YES. A judicious examination of petitioners Complaint readily shows its
failure to
sufficiently state a cause of action. Contrary to the ndings of the CA, the
allegations therein do not proffer ultimate facts which would warrant an action for
nullication of the sale and recovery of the properties in controversy, hence,
rendering the same dismissible. While the Complaint does allege that petitioner
was the registered owner of the subject properties in dispute, nothing in the said
pleading or its annexes would show the basis of that assertion,
either through statements/documents tracing the root of petitioners title or
copies of previous
certicates of title registered in her name. Instead, the certicates of title
covering the said properties that were attached to the Complaint are in the name
of Gran. Indeed, while the facts alleged in the complaint are hypothetically
admitted for purposes of the motion, it must, nevertheless, be remembered that
the hypothetical admission extends only to the relevant and material facts well
pleaded in the complaint as well as to inferences fairly deductible therefrom.

5. Reyes vs Rossi TEODORO A. REYES vs. ETTORE ROSSI G.R. No. 159823
February 18, 2013
FACTS: On October 31, 1997, petitioner Teodoro A. Reyes (Reyes) and Advanced
Foundation Construction Systems Corporation (Advanced Foundation),
represented by its Executive Project Director, respondent Ettore Rossi (Rossi),
executed a deed of conditional sale involving the purchase by Reyes of equipment
consisting of a Warman Dredging Pump HY 300A worth P10,000,000.00. The
parties agreed therein that Reyes would pay the sum of P3,000,000.00 as
downpayment, and the balance of P7,000,000.00 through four post-dated checks.
Reyes complied, but in January 1998, he requested the restructuring of his
obligation under the deed of conditional sale by replacing the four post-dated
checks with nine post- dated checks that would include interest at the rate of
P25,000.00/month accruing on the unpaid portion of the obligation on April 30,
1998, June 30, 1998, July 31, 1998, September 30, 1998 and October 31, 1998.
Advanced Foundation assented to Reyes request, and returned the four
checks. In turn, Reyes issued and delivered the following nine postdated checks in
the aggregate sum of P7,125,000.00 drawn against the United Coconut Planters
Bank Rossi deposited three of the post-dated checks (i.e., No. 72807, No. 79125
and No. 72808) on their maturity dates in Advanced Foundation s bank
account at the PCI Bank in Makati. Two of the checks were denied payment
ostensibly upon Reyes instructions to stop their payment, while the third (i.e.,
No. 72802) was dishonored for insufficiency of funds. Rossi likewise deposited two
more checks (i.e., No. 72809 and No. 72801) in Advanced Foundation s
account at the PCI Bank in Makati, but the checks were returned with the notation
Account Closed stamped on them. He did not anymore deposit the three
remaining checks on the assumption that they would be similarly dishonored. In
the meanwhile, on July 29, 1998, Reyes commenced an action for rescission of
contract and damages in the Regional Trial Court in Quezon City (RTC). Rossi
charged Reyes with ve counts of estafa and ve counts of violation of Batas
Pambansa Blg. 22 in the Office of the City Prosecutor of Makati for the dishonor of
checks and another criminal charge for violation of Batas Pambansa Blg. 22 was
lodged against Reyes in the Office of the City Prosecutor of Quezon City for the
dishonor of Check No. 72802. On September 29, 1998, Reyes submitted his
counter-affidavit in the Office of the City Prosecutor of Makati, At the same time,
Reyes assailed the jurisdiction of the Office of the City Prosecutor of Makati over
the criminal charges against him on the ground that he had issued the checks in
Quezon City; as well as argued that the Office of the City Prosecutor of Makati
should suspend the proceedings because of the pendency in the RTC of the civil
action for rescission of contract that posed a prejudicial question as to the
criminal proceedings. On November 20, 1998, the Assistant City Prosecutor
handling the preliminary investigation recommended the dismissal of the charges
of estafa and the suspension of the proceedings relating to the violation of Batas
Pambansa Blg. 22 based on a prejudicial question On January 5, 1999, the City
Prosecutor of Makati approved the recommendation of the handling Assistant City
Prosecutor. Rossi appealed the resolution of the City Prosecutor to the
Department of Justice, but the Secretary of Justice, , denied Rossi s petition for
review. After the denial of his motion for reconsideration, Rossi challenged the
resolutions of the Secretary of Justice by petition for certiorari in the CA. CA
granted the appeal of Rossi in so far as the issue of the existence of prejudicial
question is concerned but the dismissal of the complaint for estafa was affirmed.
ISSUE: WON there is a prejudicial question
HELD: The rescission of a contract of sale is not a prejudicial question that will
warrant the suspension of the criminal proceedings commenced to prosecute the
buyer for violations of the Bouncing Checks Law (Batas Pambansa Blg. 22) arising
from the dishonor of the checks the buy