Sanchez v Rigos, 45 SCRA 368

Yes.
Period of Acceptance – Art 1324
Facts:
1. Sanchez and Rigos executed an instrument entitled "Option to
Purchase," whereby Mrs. Rigos agreed, promised and committed to
sell to Sanchez the sum of P1,510.00, a parcel of land.
2. With the understanding that said option shall be deemed
terminated and elapsed if Sanchez fails to exercise his right to buy
the property within 2 years from the execution of the contract.
Although there is nothing in the contract to indicate that Mrs. Rigos
agreement, promise and undertaking is supported by a consideration
“distinct from the price” stipulated for the sale of the land.
HOWEVER, Sanchez had offered the sum of Pl,510.00 before any withdrawal
from the contract has been made by Rigos. Since Rigos' offer to sell was
accepted by Sanchez, before she could withdraw her offer, a bilateral
reciprocal contract — to sell and to buy was generated. Hence, Sanchez has
the obligation to purchase back Rigos’ property.

3. Payment of the sum of P1,510.00 made by Sanchez within said

period were rejected by Mrs. Rigos. Subsequently, Sanchez
deposited said amount with the CFI and commenced against Mrs.
Rigos the present action, for specific performance and damages.

4. Mrs. Rigos contended that the contract between the parties "is a
unilateral promise to sell, and the same being unsupported by any
valuable consideration “distinct from the price”, is null and void.”

5. TC: Rendered judgment in favor of Sanchez, ordering Mrs. Rigos to

accept the sum judicially consigned and execute in Sanchez favor
the requisite deed of conveyance.

6. CA: Certified the case to the SC.

Issue:

WON the instrument entered into by the parties imposed upon plaintiff
(Sanchez) the obligation to purchase back Rigos’ property

Held:
Asiain v Jalandoni, 45 Phil 296
Facts:
This case involves a discrepancy of the size of land sold. Asiain and Jalandoni
owned adjacent haciendas in La Carlota, Negros Occidental. In May 1920,
Asiain told Jalandoni that he was willing to sell a portion of his hacienda for
of P55,000. With a wave of his hand, Asiain indicated the land in question,
saying it contained 25-30 hectares, and that the crop of sugarcane then
planted would produce not less than 2,000 piculs of sugar. Jalandoni
remained doubtful about the size of the land throughout the negotiations,
so Asiain repeatedly reassured him. They entered into a memorandum-
agreement for a "Purchase of land...containing 25 hectares more or less of
land..." Jalandoni paid P30,000 upon signing. Once in possession of the land,
he had the sugarcane ground and the land surveyed. The output was 80
piculs and the land area was 18.5 hectares. Because the balance remained
unpaid, Asiain filed an action either to recover the sum of P25,000, or to
obtain the certificate of title plus rent. Jalandoni filed a counter-complaint
asking for the annulment of the contract and mutual restitution, plus
damages. CFI judge annulled the contract and ordered the refund of the
P30,000 and the return of the land and title.
Issue: WON rescission is proper based on the discrepancy on the size?
Ruling: YES. It was a sale in gross in which there was a mutual mistake as to
the quantity of land sold and as to the amount of the standing crop. The
phrase "more or less" in the memorandum-agreement covers only a
reasonable excess or deficiency. This was a case of gross deficiency. The
mistake with reference to the subject matter of the contract is such that, at
the option of the purchaser, it is rescindable. Without such mistake the
agreement would not have been made. Hence, the agreement is inoperative
and void. The ultimate result is to put the parties back in exactly their
respective positions before they became involved in the negotiations and
before accomplishment of the agreement.
(Topic: Mistake or Error)
Heirs of William Sevilla, et al. v Leopold Sevilla, 402 SCRA 501
Tip in reading this case: Be aware sa mga names
FACTS:
· Filomena Almirol de Sevilla died intestate leaving 8 children, namely:
William, Peter, Leopoldo, Felipe, Rosa, Maria, Luzvilla, and Jimmy Sevilla.
William, Jimmy and Maria are now deceased and are survived by their
respective spouses and children.
· Filomena Sevilla left four (4) parcels of land. Parcel no.1 is the
paraphernal property of Filomena which she co-owned with her sisters
(Honorata Almirol and Felisa Almirol – they were both single and without
issue) The other 3 parcels of land are conjugal properties of Filomena and
her husband Andres Sevilla.
· Honorata died and transmitted 1/3 undivided share of parcel no.1 to
Felisa and Heirs of Filomena, thereby acquired the property in the
proportion of ½ share each.
· Felisa and Honorota who were both single, lived together in the house
of Filomena with their nephew respondent Leopoldo and his family.
Respondent Leopoldo attended to the needs of his mother and his two
aunts.
· On August 1986, before Felisa died on 1988, she executed a
document denominated as ‘Donation Inter Vivos’ ceding to Leopoldo Sevilla
½ undivided share(Parcel no.1) which was accepted by Leopoldo in the
same document.
· On September 1986, Felisa and Peter Sevilla, in his own behalf of the
heirs of Filomena Sevilla, executed a Deed of Extra-Judicial Partition.
· On June 1990, Felipe Sevilla, Rosa Sevilla and the heirs of William,
Jimmy, and Maria, all surnamed Sevilla, filed the instant case against
respondents Leopoldo, Peter and Luzvilla Sevilla, for annulment of the Deed
of Donation and the Deed of Extrajudicial Partition.
· They alleged that the donation is tainted with fraud because Felisa
was seriously ill and of unsound mind at the execution and that the deed of
extra-judicial partition was void because it was executed without their
knowledge and consent.
· RTC rendered decision upholding the validity of the deed of donation
and declaring the deed of extra-judicial partition unenforceable.
· CA affirmed in toto the assailed decision of the RTC.
· Considering that she had no legal capacity to give consent to the deed
of partition, it follows that there is no consent given to the execution of the
deed, and therefore, there is no contract to speak of. As such, the deed of
partition is void ab initio, hence, not susceptible of ratification.

ISSUES:
1. Won the the Deed of Donation executed by Felisa Almirol in favor of
Respondent Leopoldo Sevilla ceding to him ½ share portion of parcel no.1 is
void ab initio because it was executed with fraud and undue influence.
2. Won the Deed of Extra-Judicial Partition is unenforceable

RULING:
1.
· No. The ½ undivided share of Felisa in Lot No. 653 (parcel no.1) is
considered a present property which she can validly dispose of at the time
of the execution of the deed of donation.
· In the instant case, the self-serving testimony of the petitioners are
vague on what acts of Leopoldo Sevilla constituted fraud and undue
influence and on how these acts vitiated the consent of Felisa Almirol.
· Fraud and undue influence that vitiated a party’s consent must be
established by full, clear and convincing evidence, otherwise the latter’s
presumed consent to the contract prevails.
· As testified by the notary public who notarized the Deed of Donation,
Felisa confirmed to him her intention to donate her share to Leopoldo.
· Therefore, ½ shall go to respondent Leopoldo Sevilla by virtue of the
deed of donation while the other half shall be divided equally among the
heirs of Filomena Sevilla including Leopoldo Sevilla.
2.
· The SC find that the Deed of Extra-Judicial Partition is void ab initio
and not merely unenforceable
· ITCAB, at the time Felisa executed the deed of extra judicial partition,
she was no longer the owner of ½ share, having previously donated the
same to respondent Leopoldo Sevilla.
(Topic: Mistake or Error) had the maker truly understood the contents of said document, she would
Dumasug v Modelo, 34 Phil 252 neither have accepted nor authenticated it by her mark.
• Therefore, since the consent given is null and void, the document is
Facts: consequently also null and void, and of no value or effect.
• On November 1911, Modelo persuaded Dumasug to sign a • Contracting parties shall restore to each other the things which
document by falsely and maliciously making her believe that it contained an have been the object of the contract, with their fruits, and the value with its
engagement on Dumasug’s part to pay Modelo a certain sum of money as interest (Art. 1303).
expenses of a lawsuit in which plaintiff Dumasug was one of the parties and
was protected and aided by defendant.
• Andrea Dumasug, an illiterate, signed by affixing her mark thereto,
believing in good faith that defendant had told her the truth and that said
document referred to the expenses incurred by defendant.
• However, 3 months after the execution of the document, Modelo
took possession of a carabao and two parcels of land all belonging to
Dumasug.
• Modelo notified Dumasug that she had conveyed to him by
absolute sale said parcels of land and the plow carabao.
• In spite of Dumasug’s opposition and protests, Modelo took
possession of said property and continued to hold possession thereof and to
enjoy the products of the lands and of the labor of the carabao.

Issue:

WON the instrument of purchase and sale of two parcels of land and a plow
carabao signed by Dumasug is null and void.

Ruling:

• Yes. The instrument is null and void.

• The consent given by Dumasug in the said document is null and
void, as it was given by mistake (arts. 1265 and 1266 of CC).
• It is also undeniable that she was deceived in order to obtain her
consent thereto.
• This error invalidates the contract, because it goes to the very
substance of the thing which was the subject matter of such contract, for
Topic: Mistake of Error
Case: Maxima Hemedes vs CA, Dominium, Enrique Hemedes, R&B
Corporation
Facts:
A parcel of land was originally owned by the late Jose Hemedes,
father of Maxima and Enrique Hemedes. Jose executed a document entitled
“Donation Inter Vivos with Resolutory Conditions” whereby he conveyed
ownership over the subject land, with improvements, in favor of his third
wife, Justa Kauapin, subject to the following resolutory conditions:
(a) Upon the death or remarriage of the DONEE, the title to the property
donated shall revert to any of the children, or their heirs, of the DONOR
expressly designated by the DONEE in a public document conveying the
property to the latter; or
(b) In absence of such an express designation made by the DONEE before
her death or remarriage contained in a public instrument as above
provided, the title to the property shall automatically revert to the legal
heirs of the DONOR in common.
Pursuant to the first condition abovementioned, Justa Kausapin
executed on September 27, 1960 a Deed of Conveyance of Unregistered
Real Property by Reversion conveying to Maxima Hemedes the subject
property with the same conditions. An Original Certificate of Title was
issued in the name of Maxima Hemedes with the annotation that Justa
Kausapin shall have the usufructuary rights over the parcel of land during
her lifetime or widowhood.
Maxima and her husband constituted a real estate mortgage over
the property as security for a loan from R&B Insurance. For their failure to
pay, R&B extrajudicially foreclosed the mortgaged and the land was sold at
a public auction with R&B as the highest bidder and a certificate of sale was
issued in their favor. The annotation of usufruct in favor of Kausapin was
maintained in the new title.
Meanwhile, despite the earlier conveyance of the property in favor
of Maxima, Kausapin executed a “Kasunduan” whereby she transferred the
same land to her stepson Enrique Hemedes pursuant to the resolutory
condition in the deed of donation executed by her late husband. Enrique
Hemedes sold the property to Dominium Realty and Construction
Corporation. Justa Kausapin executed an affidavit affirming the conveyance
of the subject property in favor of Enrique D. Hemedes as embodied in the
Kasunduan, and at the same time denying the conveyance made to Maxima
Hemedes.
Dominium leased the property to its sister company, Asia Brewery, who
even before the signing of the contract of lease constructed two
warehouses. Upon learning of Asia Brewery’s construction in the property,
R&B sent a letter informing the former of its ownership of the property and
of its right to appropriate the construction since Asia Brewery is a builder in
bad faith. A conference was held between the parties but failed to arrive at
an amicable settlement.
Dominium and Enrique D. Hemedes filed a complaint with the CFI for the
annulment of TCT issued in favor of R & B Insurance and/or the
reconveyance to Dominium of the subject property alleging that Dominion
was the absolute owner of the land. The trial court ruled in favor of
Dominium and Enrique Hemedes. CA affirmed. Maxima Hemedes and R&B
both appealed alleging that the CA erred in applying Article 1332 of the New
Civil Code in declaring as spurious the deed of conveyance of unregistered
real property by reversion executed by Kausapin in favour of Maxima.
Issue:
Whether or not the conveyance in favour of Maxima is considered spurious
on the ground of Article 1332 of the New Civil Code and that who is the
rightful owner of the property.
Ruling:
No. R&B Insurance is the rightful owner of the disputed property. The
allegation that the Deed of Conveyance executed by Kausapin in favour of
Maxima is spurious is not supported by evidence. Such is merely a ground
on the denial of Kausapin herself. A party to a contract cannot just evade
compliance with his contractual obligations by the simple expedient of
denying the execution of such contract. Moreover, Kausapin is considered
to be a biased witness who is dependent to Enrique Hemedes for support
due to her old age and worsening physical infirmities.. Enrique could have
easily influenced his aging stepmother to donate the property to him.
CA erred when it declared the deed of conveyance by reversion executed by
Kausapin in favour of Maxima void for failure to comply with Art 1332 that
says: “When one of the parties is unable to read, or if the contract is in a
language not understood by him, and mistake of fraud is alleged, the person
enforcing the contract must show that the terms thereof have been fully
explained to the former.” This article contemplates a situation wherein a
contract has been entered into, but the consent of one of the parties is
vitiated by mistake or fraud committed by the other contracting party.
ITCAB, Kausapin disclaims any knowledge of the deed of conveyance by
reversion in favour or Hemedes and asserts that it was only during the
hearing conducted where she first caught a glimpse of the deed. It is her
own allegations which render the article inapplicable for it is useless to
determine whether or not Kausapin was induced to execute said deed of
conveyance by means of fraud when she denies knowledge of existence in
the first place.
Hill v Veloso, 31 Phil 161
FACTS:
1910, Maximina Ch. Veloso with the consent of her husband
(Manuel Cuana), and Domingo Franco executed and signed a document:
“For value of the goods we have received in La Cooperativa Filipina we
promise to pay jointly and severally to Michael & Co., S. en C the sum of
P6,319 xxx In case said monthly payments are not made in the manner then
all the unpaid principal shall become immediately demandable, at the
option of the owner of this promissory note xxx”
This promissory note was indorsed to L.L. Hill on Jan 12, 1911. The
following indorsement appears on the back: “Pay to the order of L.L. Hill.”
P2000 have been paid on this note — that is, four installments of
P500 each on February 10, March 16, April 16, and May 22, 1911,
respectively.
1911, L.L. Hill brought the present suit to recover P4,319.33 with
interest.
In answer to the complaint, defendants alleged that in the middle of
Dec 1910, the deceased Franco, who was their son-in-law, had stated to
them that Atty Levering, in his capacity as guardian of the minor children of
Potenciano Veloso, had suggested to Franco the necessity of the
defendants' executing in Levering's behalf a document in which it should be
set forth that the defendants would pay to Levering the sum of P8,000
which defendants had borrowed from Damasa Ricablanca, the former
guardian of these minors, in view of the fact that the court had removed
this latter from office and appointed said Atty in her stead; consequently,
defendants signed the said paper for the purpose indicated. But after
Franco died, they learned that at no time had he ever delivered to the said
Atty any document signed by defendants.
Defendants therefore alleged that they had had no transaction with
Michael & Co., S. en C., nor with the plaintiff, as they had not received any
kind of goods from said firm, and it appeared that they, together with the
deceased Franco, seemingly signed the promissory note. All these reasons
induced them to believe that the said deceased, without their consent,
utilized the aforementioned paper for the execution of said promissory
note.
 Defendants further alleged that at no time did they intend to be deceit on the part of the one of the contracting parties exercised upon
execute any promissory note in behalf of Michael & Co., S. en C., that it was the other contracting party, but deceit practiced by a third person.
false that Michael & Co. delivered goods to them in La Cooperativa Filipina, "In accordance with the text of the Code, which coincides with that
and that of their own free will, they didnt execute any document whatever of other foreign codes, deceit by a third person does not in general annul
in behalf of the creditor mentioned in said promissory note. consent, and in support of this opinion it is alleged that, in such a case, the
CFI rendered judgment absolving defendants from the complaint. two contracting parties act in good faith. The deceit caused by a third
person may produce effects and, in some cases, bring about the nullification
ISSUE: WN the alleged deceit caused by Franco may be a ground for of the contract. This will happen when the third person causes the deceit in
annulment of the contract connivance with, or at least with the knowledge, without protest, of the
favored contracting party: the most probable suppositions, in which the
RULING: latter cannot be considered exempt from the responsibility. Moreover, and
Even granted that it was proven at trial that Franco acted in the even without the attendance of that circumstance, the deceit caused by a
manner stated in the answer and in the defendant Maximina Ch. Veloso's third person might lead the contracting party upon whom it was practiced
testimony, yet even so, the deceit and error alleged could not annul the into error, and as such, though it be not deceit, may vitiate consent. In any
consent of the contracting parties to the promissory note, nor exempt this case, this deceit may give rise to more or less extensive and serious
defendant from the obligation incurred. The deceit, in order that it may responsibility on the part of the third person, and a corresponding right of
annul the consent, must be that which the law defines as a cause. "There is action for the contracting party prejudiced"
deceit when by words or insidious machinations on the part of one of the
contracting parties, the other is induced to execute a contract which Judgment appealed from is reversed.
without them he would not have made." (Civ. Code, art. 1269.)
Domingo Franco is not one of the contracting parties who may have
deceitfully induced the other contracting party, Michael & Co., to execute
the contract. The one and the other contracting parties, to whom the law
refers, are the active and the passive subjects of the obligation, the party of
the first part and the part of the second part who execute the contract. The
active subject and party of the first part of the promissory note in question
is Michael & Co., and the passive subject and the party of the second part
are Maximina Ch. Veloso and Domingo Franco; two, or be they more, who
are one single subject, one single party. Domingo Franco is not one
contracting party with regard to Maximina Ch. Veloso as the other
contracting party. They both are but one single contracting party in
contractual relation with, or as against, Michael & Co. Domingo Franco, like
any other person who might have been able to to induce Maximina Ch.
Veloso to act in the manner she is said to have done, under the influence of
deceit, would be, for this purpose, but a third person. There would then not
Woodhouse v Halili, supra
FACTS:
Plaintiff, Charles Woodhouse, went to Mission Dry Corporation of L.A.
California. He informed them that herein defendant, Fortunato Halili, is
interested in investing half a million dollars in the bottling and distribution
of the beverage product of the company and wants to be granted with the
right to bottle and distribute the same. Mission gave a “thirdy day” option
on exclusive bottling and distribution in the Philippines (Exhibit H).
Afterwards, Woodhouse, entered into an agreement (Exhibit A) with
Halili. The argeement was made after several consultations between them
and with the assistance of their lawyers. It contained the following
provisions:
1. That they shall form a partnership for the bottling and
distribution of Mission soft drinks, with Woodhouse a industrial
manager and Halili as capitalist;
2. That Halili was to decide matters of general policy while
Woodhouse was to attend to the operation and development of the
bottling plant;
3. That the plaintiff was to get the Mission soft drink franchise for
and behalf of the proposed partnership;
4. That the plaintiff was to receive 30% of the net profits of the
business.
On the same day that Woodhouse signed it, he and Halili went to the
US and got a franchise agreement between Mission Dry Corporation and
Woodhouse and/or Halili.
The plant operated on February of 1948. Woodhouse was given Php
2,000 for the mpnth of January and the use of a car. However, on March 9,
1948, he was only given Php 1,000 and the car was withdrawn from him.
Woodhouse demanded that the papers for the partnership be executed
but Halili only promised to do so if the sales of the products have been
increased to Php 50,000. Since Halili refused to give further allowances to
Woodhouse, they tried to arrive to a settlement with the assistance of their
attorneys. It only resulted to this present action.
Woodhouse asks for the execution of the partnership agreement, for
the accounting of the profits and to get his share of 30% of it, and Php
200,000 for damages. However, Halili alleged that (1) his consent to the
agreement was secured by the representation of Woodhouse that he was
about to become an owner of an exclusive bottling franchise, which was
false, (2)that Woodhouse did not secure the franchise but was given to Halili
himself, (3) and that Woodhouse agreed to contribute the exclusive
franchise to the partnership but failed to do so.Halili also presented a
counterclaim of Php 200,000.
CFI rendered judgment demanding Halili give Woodhouse 15% of the
total accounting of the profits. However the contract of partnership cant be
enforced upon them and the defense of fraud was also not proved.
CFI found it improbable that defendant was not shown the letter and
that he went to US w/o knowing Woodhouse’s authority. But Halili insists
that Woodhouse did represent to him that he had an exclusive franchise
however it was already expired, therefore, vitiating Halili’s consent through
fraud. The lawyer of Woodhouse also testified that the latter presented
himself as having the exclusive franchise.
ISSUES:
1 WON plaintiff falsely represented that he had an exclusive franchise to
bottle Mission beverages
2. WON false representation, if it existed, annuls the agreement to form the
partnership
RULING:
1.Yes. Woodhouse did make false representations and this can be
seen through his letters to Mission Dry Corporation asking for the latter to
grant him temporary franchise so that he could settle the agreement with
Halili. The existence of this provision in the final agreement does not
militate against Woodhouse having represented that he had the exclusive
franchise; it rather strengthens belief that he did actually make the
representation. The Halili believed, or was made to believe, that
Woodhouse was the grantee of an exclusive franchise. Thus it is that it was
also agreed upon that the franchise was to be transferred to the name of
the partnership, and that, upon its dissolution or termination, the same
shall be reassigned to the Woodhouse.
The immediate reaction of Halili, when he learned that Woodhouse
did not have the exclusive franchise, was to reduce Woodhouse’s
participation in the net profits to 15%..
from the very language of the agreement that the parties intended that the
execution of the agreement to form a partnership was to be carried out at a
later date. , The defendant may not be compelled against his will to carry
out the agreement nor execute the partnership papers. The law recognizes
the individual’s freedom or liberty to do an act he has promised to do, or
not to do it, as he pleases.
The decision of the trial court was Affirmed with modification.

2. No. In consequence, article 1270 of the Spanish Civil Code

distinguishes two kinds of (civil) fraud, the causal fraud, which may be
ground for the annulment of a contract, and the incidental deceit, which
renders the party who employs it liable for damages only. The Supreme
Court has held that 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.

The record shows circumstances indicative of the fact that the

principal consideration, the main cause that induced Halili to enter into the
partnership agreement with Woodhouse, was the ability of Woodhouse to
get the exclusive franchise to bottle and distribute for Halili or for the
partnership. But if Woodhouse was guilty of a false representation, this was
not the causal consideration, or the principal inducement, that led Halili to
enter into the partnership agreement. On the other hand, this supposed
ownership of an exclusive franchise was actually the consideration or price
Woodhouse gave in exchange for the share of 30 per cent granted him in
the net profits of the partnership business. Halili agreed to give him 30 per
cent share in the net profits because he was transferring his exclusive
franchise to the partnership.

Having arrived at the conclusion that the contract cannot be

declared null and void, may the agreement be carried out or executed? The
SC finds no merit in the claim of plaintiff that the partnership was already a
fait accompli from the time of the operation of the plant, as it is evident
TOPIC: FRAUD OR DOLO
Geraldez v CA, 230 SCRA 320
FACTS:
Petitioner Geraldez filed an action for damages against respondent Kenstar
Travel Corporation.
Geraldez came to know about Kenstar from numerous
advertisements in newspapers regarding tours in Europe. Geraldez then
contacted Kenstar and the latter sent its representative who gave her the
brochure for the tour. Geraldez chose "VOLARE 3" covering a 22-day tour to
Europe for $2,990.00. She paid P190,000.00 charged by Kenstar for her and
her sister, Dolores.
Geraldez claimed that, during the tour, she was very uneasy and
disappointed when it turned out that, contrary to what was stated in the
brochure, there was no European tour manager for their group of tourists,
the hotels were not first-class, the UGC Leather Factory which was the
highlight of the tour was not visited, and the Filipino lady tour guide was a
first timer thus inexperienced.
Geraldez moved for the issuance of preliminary attachment with the RTC
against Kenstar on the ground that it committed fraud in contracting an
obligation, as contemplated in Section 1 (d), Rule 57 of the Rules of Court,
to which no opposition by the latter appears on the record.
The RTC ordered Kenstar to pay P500k as moral damages, P200k as
nominal damages, P300k as exemplary damages, P50k for attorney's fees.
But later on deleted the award for moral and exemplary damages, and
reduced the awards for nominal damages and attorney's fees to P30,000.00
and P10,000.00, respectively. |||
ISSUES:
1. whether or not Kenstar committed fraudulent misrepresentation
amounting to bad faith in discharging its obligation under the contract.
2. Won the CA erred in deleting the moral and exemplary damages.fkf
| Dolo causante or causal fraud (Article 1338), are those deceptions
HELD:
1.Yes, the SC hold, that Kenstar did commit fraudulent misrepresentations
amounting to bad faith, to the prejudice of petitioner and the members of
the tour group.
Kenstar choice of the tour guide is a manifest disregard of its
specific assurances to the tour group, and which deliberate omission is
contrary to the rules of good faith and fair play. Providing the Volare 3
group with an inexperienced first timer as a tour guide, Kenstar manifested
indifference to the satisfaction, convenience and peace of mind to its
clients.
The election of the tour guide was a deliberate and conscious choice on the
part of Kenstar in order to afford her on-the job-training making the tour
group her unknowing guinea pigs, furthermore the inability to visit the UGC
leather factory is reflective of the ineptness and neglect of the tour guide.
The failure of Kenstar to provide a European Tour Manager although it
specifically advertised and promised to do so is also a contractual breach.
Lastly Kenstar committed grave misrepresentation when it assured
in its tour package that the hotels provided would provide complete
amenities and would be conveniently located along the way for the daily
itineraries. It shows that the hotels were unsanitary and sometimes did not
even provide towels and soap. Further the hotels were also located in
locations far from the city making it difficult to go to.
Kenstar budget constraints is not the fault of the tour group. They
should not have promised such accommodations if they couldn’t afford it.
2. The CA erred in deleting the award for moral and exemplary
damages. Moral damages may be awarded in breaches of contract where
the obligor acted fraudulently or in bad faith. From the facts earlier, Kenstar
can be faulted with fraud in the inducement, which is employed by a party
to a contract in securing the consent of the other. llcd|||
This fraud or dolo which is present or employed at the time of birth or
perfection of a contract may either be dolo causante or dolo incidente.
or misrepresentations of a serious character employed by one party and
without which the other party would not have entered into the contract.
(nullity+damages)
Dolo incidente, or incidental fraud (Article 1344), are those which
are not serious in character and without which the other party would still
have entered into the contract (accident to the obligation). (damages)
The SC ordered P100,000.00 by way of moral damages, P50,000.00
as exemplary damages, and P20,000.00 as and for attorney's fees, with
costs against private respondent. The award for nominal damages is hereby
deleted. |||
Tuason v Marquez, 45 Phil 381
FACTS:
Defendant Marquez, an owner of the Electric Light Plant of Lucena, Tayabas
agreed to franchise with plaintiff Tuason on March of 1921, wherein, it was
agreed that the latter would pay the former a total of P14,400; P2,400
within the 60 days and the remainder , P12K within a year. The 1st
installment was paid subsequent to the 60-day period yet the 2nd
installment has not been paid. It was then that during 1921 to 1922, the
Consolidated Electric Light Plant was in the possession of Tuason. On the
date last mentioned, the property was sold to Gregorio Marquez, brother of
the defendant who paid P5,501.57 for the property.
However, it appeared that on 1913 to 1914, a franchise for 35 years was
granted the Lucena Electric Company. The rights of this Company were
passed to the defendant at sheriff’s sale on 1919. Defendant Marquez
became disgusted with the business result on 1921, prior to the
accomplishment of the contract, as such, he announced to the Public Utility
Commissioner his intention to give up the franchise.
On the other hand, plaintiff Tuason was permitted to operate the company
pursuant to a special license which was to continue until they obtained a
new franchise to be granted by Republic Utility Commissioner with certain
conditions amounting to the renovation of the entire plant. Plaintiff
conceived the idea of bringing active against the defendant for rescission of
the contract. The former filed a complaint in CFI Manila against the latter for
P37,400. The defendant however asked for a dismissal action and an
allowance of P12,654.50 from plaintiff.
ISSUE:
WON, defendant Marquez is liable for the damages on account of the
misrepresentation and fraud perpetrated by the him in selling an electric
light plant with a franchise, when he had already given up his rights to that
franchise?
RULING:
No, there is no proof of fraud on the part of the defendant and the plaintiff
is estopped on the other hand. It is to be emphasized that the contract in
making mention of the property, the Electric Light Company merely
renewed a previous inventory of the property. The franchise, therefore, was
not determining cause of purchase. Indeed the franchise was then in force
and either party could easily have ascertained its status by applying at the
office of the Public Utility Commissioner. The innocent non-disclosure of a
fact does not affect the formation of the contract or operate to discharge
the parties from this agreement. The maxim caveat emptor should be
recalled. The equitable doctrine termed with questionable propriety
“estoppel by laches” has particular applicability to the acquiescence in
existing conditions are a bar to legal. The plaintiff operated the electric light
plant for about 16 months without question. He made the payment on the
contract without protest. He bestirred himself secure what damages he
could from the defendant only after the venture had proven disastrous and
only after the property had passed into the hands of a third party.
Rural Bank of Sta Maria v CA, 314 SCRA 255
Synopsis of the Case:
On January 9, 1985 Manuel Behis mortgaged a parcel of land in favor of the
Rural Bank of Sta. Maria, Pangasinan. After being delinquent in paying his
debts, Manuel sold the land to plaintiffs Rosario Rayandayan and Carmen
Arceño in a Deed of Absolute Sale with Assumption of Mortgage. On the
same date, they executed another agreement whereby the plaintiffs were
indebted to Manuel in the amount of P2,400,000.00, which was the real
consideration of the sale. The title to the land, remained in the name of
Manuel Behis. After Manuel Behis died, plaintiffs Rayandayan and Arceño
negotiated with the rural bank for the assumption of the indebtedness of
Manuel Behis and the subsequent release of the mortgage on the property
by the bank. The bank was not informed of the real consideration of the
sale. Subsequently, the bank consented to the substitution of Rayandayan
and Arceño as mortgage debtors in place of Behis in a Memorandum of
Agreement with restructured and liberalized terms for the payment of the
mortgage debt. When the bank came to know the real consideration of the
agreement, the bank changed heart and transacted the Behis mortgage with
Halsema, Inc. The bank considered its contract with Rayandayan and Arceño
as cancelled. Hence, Rayandayan and Arceño instituted a civil case against
the Rural Bank and Halsema, Inc. for specific performance, declaration of
nullity and/or annulment of mortgage and damages. The lower court
declared that the Deed of Sale with Assumption of Mortgage and the
Agreement between the bank and plaintiffs was valid until annulled or
cancelled. However, the plaintiffs were ordered to pay the bank damages as
litigation expenses because of plaintiffs' bad faith in deceiving the bank to
enter into the Memorandum of Agreement by concealing the real purchase
price of the land sold to them by Manuel Behis. The plaintiffs and defendant
Halsema, Inc. appealed. The Court of Appeals affirmed the validity of the
Memorandum of Agreement between the parties, but reversed the Finding
that there was bad faith on the part of the plaintiffs when the bank entered
into the Memorandum of Agreement.
The Supreme Court affirmed the decision of the Court of Appeals.
Rayandayan and Arceño had no duty to disclose the real consideration of
the sale between them and Manuel Behis. The bank security remained
unimpaired regardless of the consideration of the sale. Under the terms of
the Agreement, the property remains as security for the payment of the
indebtedness, in case of default of payment.
Detailed
Facts:
· A parcel of land of about 49,969 sq.m. located in Baguio City is
registered under the name of Manuel Behis, married to Cristina Behis. This
was part of a bigger tract of land owned by Manuel Behis’ father. And upon
the latter’s death, his children (Saro, Marcelo, Manuel, Lucia, Clara, Arana),
in an extrajudicial settlement with Simultaneous Sale of Inheritance, agreed
to sell the land to Manuel Behis, married to Cristina Behis but which
subsequently was explained as only an arrangement adopted by them to
facilitate transactions over the land in a Confirmation of Co-Ownership over
real Property showing that the Behis siblings, including Manuel, are still co-
owners thereof.
· Manuel mortgaged the land in favor of the Rural Bank of Sta Maria
(Bank) in a Real Estate Mortgage as security for loans obtained, covered by
6 promissory notes and trust receipts under the Supervised Credit Program
for P156,750. Promissory notes and trust receipts bear the signatures of
Manuel and Cristina Behis.
· Manuel was delinquent in paying his debts
· Manuel sold the land to Rosario Rayandayan and Carmen Arceño
(plaintiffs) in a Deed of Absolute Sale with Assumption of Mortgage for
P250,000 which bears the signature of his wife Cristina. Manuel secure the
signature of his wife and came back with it. Rosario Rayandayan and
Carmen Arceño and Manuel simultaneously executed another Agreement
whereby Rural Bank are indebted to Manuel Behis for the sum of
P2,400,000 payable in installments with P10,000 paid upon signing and in
case of default in the installments, Manuel shall have legal recourse to the
portions of the land equivalent to the unpaid balance of the amounts in
installments. The real consideration of the sale of the land of Manuel Behis
to the plaintiffs is contained in this Agreement.
· Rosario Rayandayan and Carmen Arceño did not present the two
contracts to the Register of Deed of Baguio and asked that the title in the
name of Manuel Behis be cancelled and a new one would be issued in their
name which normally a buyer does. Neither did plaintiffs annotate at the
back of the title the two contracts. Nor did they go immediately to the Bank.
Title of the land remained in the name of Manuel
· Pursuant to the two contracts with Manuel, plaintiffs paid him during
his lifetime the sum of P10,000 plus P50,000 plus P145,800, and the sum of
P21,353.75 for the hospitalization, medical and burial expenses of Manuel
Behis when he died. Obviously, the plaintiffs were unable to complete their
full payment to Manuel Behis of the sale of the land of the sum P2,400,000
· The loan in the name of Manuel with the Bank secured by the Real
Estate Mortgage on the land continued to accumulate being delinquent.
Before his death, a Statement of Account was sent to Manuel by the Bank
for collection, the debt of P150,750 increasing to P316,368 with interest and
charges. The Bank, thru its President, Vincente Natividad, initiated
foreclosure proceedings same was discontinued since many parties were
interested to buy the land outside the said procedure but none
materialized.
· Days before his death, Atty William Arceño, in behalf of Manuel, wrote
a letter asking for a more detailed Statement of Account from the Bank
broken down as to principal, interest and other charges.
· Plaintiffs finally presented the Deed of Absolute Sale with Assumption
of Mortgage to the Bank when negotiating with its principal stockholder,
Engr. Edilberto Natividad, but did not show to the latter the agreement with
Manuel providing for the real consideration of P2,400,000.
· After the death of Manuel, a Memorandum of Agreement was entered
into between plaintiffs, as assignees of Manuel, and the Bank. Plaintiffs did
not annotate the Memorandum of Agreement in the title
· Pursuant to the Memorandum of Agreement, plaintiffs paid the bank
completing the payment.
· Cristina Behis, widow of Manuel Behis, wrote a letter to the Bank
claiming the Real Estate mortgage was without her signature. And in
another date, Cristina Behis stressed she did not authorize anybody to
redeem the property in her behalf as one of the mortgagors of the land.
· Plaintiffs demanded in a letter that the Bank (1) release the mortgage
of Manuel, (2) give its consent for the transfer of title in the name of the
plaintiffs, (3) execute a new mortgage with plaintiffs for the balance of
P200,000 over the same land.
· Cristina inquired again her protest about her signature. Bank
suggested she write her objections in a letter for it did not receive her two
letters.
· In a reply to the demand letter of the plaintiffs, the Bank said it cannot
comply and suggested that plaintiffs take up the matter with Cristina Behis
enclosing the two letters of the latter.
· Months passed, nothing was heard from the plaintiffs. Teodoro
Versoza, President of Halsema, Inc., heard about the land and got
interested. An Assignment of Mortgage was entered between Halsema and
the Bank for P520,765 the total amount of Manuel’s indebtedness with the
Bank at the time. Note: What was assigned was the Mortgage made
originally by Manuel and not the Mortgage as assumed by plaintiffs.
· The Bank explained that it entered into the Assignment of Mortgage
because at the time it considered the Memorandum of Agreement
cancelled as plaintiffs failed to settle the objections of Cristina and the
terms of the Memorandum of Agreement have not been fully complied
with; lastly, their consent to the Memorandum of Agreement was secured
by the plaintiffs thru fraud as the Bank was not shown the Agreement
containing the real consideration of P2,400,000 of the sale of land of
Manuel to plaintiffs.
· Vicente Natividad of the Bank sent notice of the Assignment of
Mortgage to debtor mortgagor, Manuel (already dead at the time) and
Cristina Behis not to the plaintiffs. As aforesaid, what was assigned was the
Mortgage originally made by Manuel and not the Mortgage as assumed by
the plaintiffs under the restructured and liberalized terms in the MOA which
was considered by the Bank as cancelled.
· After the assignment, the Bank returned P143,000 to plaintiffs but the
latter rejected maintaining that the MOA is valid until annulled by Court
Action.
· Due to Manuel’s delinquency, Halsema as Mortgage creditor in place
of the Bank instituted foreclosure proceedings by filing an Application for
Foreclosure of Real Estate Mortgage and a public auction was help with
Halsema as the only bidder to whom accordingly the Sheriff’s Certificate of
Sale was issued.
· Since the Bank could not comply with the MOA, petitioners instituted
a Civil Case against the Bank and Halsema.
CA Decision:
· Affirmed the validity of the MOA between the parties;
· Reversed and set aside the finding of the trial court on the bad faith of
Rayandayan and Arceno in concealing the real purchase price of the land
and sold to them by Manuel during negotiations with the bank on the
assumption of the mortgage debt
· Modified the trial court’s findings as to the damages due Rayandayan
and Arceno from the Bank by adding P229,135 as actual damages
· Dismissed the counterclaim for damages by the bank and delete the
portion on the set-off damages due between the Bank, and Rayandayan and
Arceno
Issue:
· WON the MOA entered is voidable and must be annulled.
Held:
· No.
· This brings us to the First issue raised by petitioner bank that the
Memorandum of Agreement is voidable on the ground that its consent to
enter said agreement was vitiated by fraud because private respondents
withheld from petitioner bank the material information that the real
consideration for the sale with assumption of mortgage of the property by
Manuel Behis to Rayandayan and Arceño is P2,400,000.00, and not
P250,000.00 as represented to petitioner bank. According to petitioner
bank, had it known of the real consideration for the sale, i.e. P2.4 million, it
would not have consented into entering the Memorandum of Agreement
with Rayandayan and Arceño as it was put in the dark as to the real capacity
and Financial standing of private respondents to assume the mortgage from
Manuel Behis. Petitioner bank pointed out that it would not have assented
to the agreement, as it could not expect the private respondents to pay the
bank the approximately P343,000.00 mortgage debt when private (a) It was employed by a contracting party upon the other; (b) It induced the
respondents have to pay at the same time P2,400,000.00 to Manuel Behis other party to enter into the contract; (c) It was serious; and, (d) It resulted
on the sale of the land. in damages and injury to the party seeking annulment. Petitioner bank has
· The kind of fraud that will vitiate a contract refers to those insidious not sufficiently shown that it was induced to enter into the agreement by
words or machinations resorted to by one of the contracting parties to the non-disclosure of the purchase price, and that the same resulted in
induce the other to enter into a contract which without them he would not damages to the bank. Indeed, the general rule is that whosoever alleges
have agreed to. Simply stated, the fraud must be the determining cause of fraud or mistake in any transaction must substantiate his allegation, since it
the contract, or must have caused the consent to be given. It is believed is presumed that a person takes ordinary care for his concerns and that
that the non-disclosure to the bank of the purchase price of the sale of the private transactions have been fair and regular. Petitioner bank's allegation
land between private respondents and Manuel Behis cannot be the "fraud" of fraud and deceit have not been established sufficiently and competently
contemplated by Article 1338 of the Civil Code. From the sole reason to rebut the presumption of regularity and due execution of the agreement
submitted by the petitioner bank that it was kept in the dark as to the
financial capacity of private respondents, we cannot see how the omission
or concealment of the real purchase price could have induced the bank into
giving its consent to the agreement; or that the bank would not have
otherwise given its consent had it known of the real purchase price.
· Secondly, pursuant to Article 1339 of the Civil Code, silence or
concealment, by itself, does not constitute fraud, unless there is a special
duty to disclose certain facts, or unless according to good faith and the
usages of commerce the communication should be made. Verily, private
respondents Rayandayan and Arceño had no duty, and therefore did not act
in bad faith, in failing to disclose the real consideration of the sale between
them and Manuel Behis.
· Thirdly, the bank had other means and opportunity of verifying the
financial capacity of private respondents and cannot avoid the contract on
the ground that they were kept in the dark as to the financial capacity by
the non-disclosure of the purchase price. As correctly pointed out by
respondent court, the bank security remained unimpaired regardless of the
consideration of the sale. Under the terms of the Memorandum of
Agreement, the property remains as security for the payment of the
indebtedness, in case of default of payment.
· Thus, petitioner bank does not and can not even allege that the
agreement was operating to its disadvantage. In fact, the bank admits that
no damages has been suffered by it. Consequently, not all the elements of
fraud vitiating consent for purposes of annulling a contract concur, to wit:
Azarraga v Gay, 52 Phil 599 (1928)
Facts:
· Azarraga (Plaintiff-appelle) sold two parcels of lands to Gay
(defendant-appellant) for the lump sum of 47,000 payable in
instalments.
· The conditions are the following:
o P5,000 at the time of signing the contract
o P20,000 upon delivery by the vendor to the purchaser of
the Torrens title to the first parcel described in the deed
of sale
o P10,000 upon delivery by the vendor to the purchaser of
Torrens title to the second parcel
o the sum of P12,000 one year after the delivery of the
Torrens title to the second parcel.
· All of the conditions were met except for the the 10,000 upond
delivery of the Torrens and 12,000 one year after having received the
Torrens title to second parcel.
· Azarraga claims claims the sum of P22,000, with legal interest from
the month of April 1921 on the sum of P10,000, and from April 1922 on
the sum of P12,000, until full payment of the amounts claimed.
· To counter, Gay alleged that;
o That the plaintiff knowing that the second parcels of land
he sold had an area of 60 hectares, by
misrepresentation lead the defendant to believe that
said second parcel contained 98 hectares, and thus
made it appear in the deed of sale and induced the
vendee to bind herself to pay the price of P47,000 for
the two parcels of land, which he represented
contained an area of no less than 200 hectares, to
which price the defendant would not have bound
herself had she known that the real area of the second
parcel was 60 hectares, and, consequently, she is
entitled to a reduction in the price of the two parcels in
proportion to the area lacking, that is, that the price be
reduced to P38,000
o that the defendant, in addition to the amounts
acknowledged by the plaintiff, had paid other sums
amounting to P4,000;
o that the defendants never refused to pay the justly
reduced price, but the plaintiff refused to receive the
just amount of the debt
· Trial court ruled that there was no deceit or fraud made by Azarraga
since both parties gave any importance to the area of the land in
consenting to the contract in question.
Issue:
· WON the court erred in ruling that there was no fraud or deceit.
Ruling:
· No.
· Gay had ample opportunity to appraise herself of the condition of
the land which she purchased, and Azarraga did nothing to prevent her
from making such investigation as she deemed fit, and as was said in
Songco vs. Sellner when the purchaser proceeds to make investigations
by himself, and the vendor does nothing to prevent such investigation
from being as complete as the former might wish, the purchaser cannot
later allege that the vendor made false representations to him.
· Gay knew that the area of the second parcel was only about 70
hectares is shown by the fact that she received the document before
execution of the contract. Further, she received from the Azarraga in
the month of June 1924 the copy of the plans of the two parcels,
wherein appear their respective areas; and yet, in spite of all this, she
did not complain of the difference in the area of said second parcel.
Laureta Trinidad v IAC, 204 SCRA 524
Topic: Usual exaggerations in trade; opportunity to know the facts
LAURETA TRINIDAD, petitioner,
vs.
INTERMEDIATE APPELLATE COURT and VICENTE J.
FRANCISCO, respondent.
FACTS:
● The subject house is susceptible to flooding
● The house was bungalow belonged to the late Vicente J.
Francisco.
● (early 1969) Laureta Trinidad, the petitioner, approached him
and offered to buy the property.
● Trinidad inspected the house and lot and examined a vicinity
map which indicated drainage canals along the property.
● The purchase price was P70,000.00 with a down payment of
P17,500.00; balance was to be paid in five equal annual
installments at 12% interest per annum.
● Trinidad paid Francisco P5,000.00 as earnest money and
entered into the possession of the house.
● She subsequently heard from her new neighbors that two
buyers had previously vacated the property because it was
subject to flooding.
● She talked to Francisco about this matter and that he told her
everything had been fixed and the house would never be
flooded again.
● She gave him P12,500.00 to complete the down payment and
signed the Contract of Conditional Sale
● Trinidad paid instalments but eventually decided not to
continue paying the amortizations because the house was
flooded again.
● She wrote the City Engineer’s office and requested inspection
of subject premises to determine the cause of flooding
Petitioner/ Plaintiff
● Petitioner filed complaint alleging that she was induced to
enter into contract of sale because of his misrepresentations.
● Asked the agreement to be annulled and her payments be
refunded to her, together with the actual expenses she made on
the house
Respondent/ Defendant
● Respondent denied the charge of misrepresentation and that
petitioner/plaintiff had thoroughly inspected the property
before she decided to buy it
● Claimed creek was a drainage lot and floods complained of
were common in the village; that the floods were fortuitous
events not imputable to him
● Asked for the rescission of the contract and the forfeiture of
payments made by plaintiff plus monthly rentals with interest
Trial Court 3. Petitioner had full opportunity to inspect the premises,
including the drainage canals indicated in the vicinity map
● Ordered annulment of contract of conditional sale entered into
before she entered into the contract of conditional sale
by the parties
4. It is assumed petitioner made appraisal of property with the
● Ordered defendant’s reps to pay plaintiff sum of money
experience and even expertise as she was a licensed real estate
● Ordered plaintiff to return the house and lot in question
broker; she was to blame for the oversight or the bad bargain
IAC
5. Petitioner saw the subject lot; she cannot say she was not
● Appeal of plaintiff dismissed
forewarned of the possibility that the place might be flooded’
● Re appeal of defendant, earlier decision is reversed and set
notwithstanding the condition, she still decided to buy it
aside and another one is rendered dismissing the complaint;
and upon the counterclaim, sustaining the cancellation of the
6. No evidence that two previous owners of the property had
contract of the conditional sale
vacated it because of the floods and that Francisco assured her
● Forfeiture of any and all sums of money paid by plaintiff to the
that the house would not be flooded again.
defendant on account of the contract to be treated as rentals for
the use and occupation of the property
7. Petitioner paid instalments despite the fact of floods.
● Ordering the plaintiff to vacate the premises
8. Petitioner still made annexes and decorations on the house
ISSUES:
despite the floods
WON there was no fraud prior to the sale that induced petitioner to
enter into the said sale
9. IN SHORT: The fact petitioner bought the subject property
notwithstanding the floods, she is deemed to have accepted
RULING:
them at her own risk and must therefore be responsible for the
Note on provision Article 1340 – The usual exaggerations in trade,
consequences of her careless credulousness
when the other party had an opportunity to know the facts, are not in
themselves fraudulent.
10. Also, “one who contracts for the purchase of real estate in
reliance on the representations and statements of the vendor as
1. NO fraud; fraud alleged by petitioner has not been
to its character and value, but after he has visited and examined
satisfactorily established to call for annulment of contract
it for himself it for himself and has had the means and
2. It was petitioner who admittedly approached private
opportunity of verifying such statements, cannot avoid the
respondent; private respondent never advertised the property
contract on the ground that they were false and exaggerated.
nor offered it for sale to her
Songco v Sellner
Facts: Held:

Both Defendant, George C. Sellner and the plaintiff, Lamberto Songco
owned a farm which was contiguous to each other’s land. Both properties
had the sugar cane ready to be cut. The Defendant bought the plaintiff’s
cane for P12,000 and executed three promissory notes of P4,000 each. Two
of these notes were paid; and the third was was instituted to recover. From
a judgement rendered in favor of the plaintiff, the defendant has appealed.
No. Misinterpretation upon a mere matter of opinion is not an actionable
deceit, nor is it a sufficient ground for avoiding a contract as fraudulent. The
law allows considerable latitude to seller’s statements, or dealer’s talk; and
experience teaches that it is exceedingly risky to accept it at its face value.

Assertions concerning the property which is the subject of a contract of sale,

The defendant denied all the allegations of the complaint. He said that the
or in regard to its qualities and characteristics, are the usual and ordinary
promissory note was obtained from him by means of certain false and
means used by defendant to obtain a high price and are always understood
fraudulent representations therein specified.
as affording to buyers no ground for omitting to make inquiries. A man who
relies upon such an affirmation made by a person whose interest might so
readily prompt him to exaggerate the value of his property does so at his
peril, and must take the consequences of his own imprudence
It is claimed that the plaintiff estimated that this cane would produce 3,000
piculs of the sugar and that the defendant bought the crop believing this
estimate to be substantially correct. As the crop turned out it produced
2,017 piculs, gross, and after the toll for milling was deducted the net left to
the defendant was very much less. The court believed it is fairly shown that
the plaintiff knew at the time he made the representation exaggerated the
probable produce of his fields, and it is impossible to believe that his
estimate honestly reflected his true opinion. He knew what these same
fields had been producing over a long period of years; and he knew that,
judging from the customary yield, the harvest of this year should fall far
below the amount stated.

Issue:

Whether or not the plaintiff was guilty of fraudulent representation of his

cane.
Mercado and Mercado v Espiritu, 37 Phil 215 ISSUE:
Topic: Misrepresentation
1. WON Luis employed fraud or, deceit, violence or intimidation in
FACTS:
Plaintiffs Domingo and Josefa Mercado alleged that they and their sisters order to effect the sale
Conception and Paz were the children and sole heirs of Margarita Espiritu, a 2. WON the sale could be rescinded by the issue of minority of the
sister of the deceased respondent Luis Espiritu. Margarita died leaving a plaintiffs when they signed the document.
tract of land (a paraphernal property) which had been held by the Mercados
through their father Wenceslao Mercado. RULING:

Plaintiffs alleged that the defendant successfully and fraudulently induced 1. No. there is no conclusive proof in record that the deed was false
the plaintiffs Domingo and Josefa to sign a deed of sale of the land left by and simulated on the account of the employment of any violence,
their mother for P400. The prayed that the sale of their share of the land be intimidation, fraud, or deceit in procuring the consent of the vendors who
declare null and void and be restored and delivered to them. executed it.

The defendant administrator denied the plaintiffs allegations and alleged Considering the circumstances and relationship of the parties, the court did
that Margarita, the owner of the land, sold to Luis a portion of the said land not find any need for the purchaser Luis to forge or simulate the deed of
and subsequently Wenceslao as the administrator of his children’s property sale.
sold under pacto de retro to Luis the remainder of the said land to meet the
expenses of the maintenance of his children. He successively borrowed from
Luis other sums of money. 2. No. No evidence appears on record that the plaintiffs were minors
at the time they executed the deed. Their misrepresentation of their
Defendant further alleged that the plaintiffs, alleging to be of legal age,
attainment of legal age before a notary when they executed the deed of
ratified the sale of the land under pacto de retro effected by their father
sale cannot invalidate the execution of the document, nor have it annulled.
and that they sold absolutely and perpetually to Luis for P400 as the
increase in the purchase price the property of their mother which they
received from Luis.

Plaintiffs denied such. They assailed the validity of the deed of sale and
alleged that at the time of execution of the deed, the plaintiffs were still
minors and that the time fixed by law for the annulment of the said contract
had not yet elapsed. They further alleged that Luis availed himself of deceit
and fraud in obtaining their consent for the execution of the said deed.

One of the witnesses of the defendant, the notary before whom the deed of
sale was ratified, testified that the plaintiffs assured him that they were of
legal age when they executed the deed.
Braganza v Villa Abrille, 105 Phil 456

Topic: Misrepresentation
FACTS:
• On October 30, 1944, Rosario de Braganza and her minor sons (16
and 18 years old) obtained a loan of Php 70,000.00 in Japanese war notes
from Villa Abrille. They signed a promissory note promising to pay 10,000 in
legal currency plus 2% interest per annum.
• Due to non-payment, Villa Abrille sued them on March 1949.
• Defendants contended that they only received 40,000.00 from Villa
Abrille and that Rosario’s sons, Guillermo and Rodolfo were minors when
they signed the promissory note so they should not be bound by it.
CFI Ruling: Required Rosario and her sons to solidarily pay 10,000.00 plus
2% interest from October 30, 1944
CA Ruling: Affirmed CFI ruling

ISSUE:

Whether or not Guillermo and Rodolfo, who misrepresented their age in the
promissory note they signed, are legally bound by it

HELD:
No. Regarding the promissory note that was signed by defendants,
the Supreme Court held that Rosario’s sons could not be legally bound by it
since they signed it in their minority, and nor was there a juridical duty for
them to disclose their minority to Villa Abrille. However, since they were
benefitted by the said loan, as testified by one of the witnesses that it was
used for their support during the Japanese occupation, Guillermo and
Rodolfo are liable to pay to the extent that the money received was
beneficial to them.
The Supreme Court modified the CA decision and ordered Rosario
Braganza to pay 1/3 of 10,000 as stated in the promissory note with 2%
interest from October 1944, and Guillermo and Rodolfo to jointly pay 2/3 of
the 70,000 loan plus 6% interest from March 1949.