ASIAIN v JALANDONI
Asiain is the owner of a hacienda known as “Maria”. Jalandoni is
the owner of another hacienda adjoining that of Asiain. The two happened to
meet, Asiain proposed tp Jalandoni that he was willing to sell a portion of his
hacienda for the sum of 55,000 pesos. He indicated that it contained
between 25 and 30 hectares and the crop of sugar cane would produce not
less than 2,000 piculs of sugar. Jalandoni was doubtful about the extent of
the land and its crop yield.
Sometimes later, The two prepared and signed the
memorandum-agreement stipulating that Asiain will sell the land to Jalandoni
for 55,000 pesos; 30,000 pesos at the signing of the document and 25,000
pesos within one year with 10 percent interest. Jalandoni remained doubtful
but the agreement was executed.
Once in possession, Jalandoni had the sugar cane but it only
yielded 800 piculs of sugar and 23 cates of centrifugal sugal and also found
out that the land contained only an area of 18 hectares, 54 areas, and 22
centiares. Jalandoni paid only the 30,000 pesos leaving a balance of 25,000
pesos. To recover the sum Asiain instituted an action to recover the sum.
The trial court declared the document null and void and ordered both parties
to return whatever they had received.
Whether or not the contract be rescinded on the ground of mutual mistake
YES. There was mutual mistake, on both parties. Misrepresentation
made in good faith is not fradulent but may constitute error. Asiain believing
in good faith that the land’s measurement was the one who indicated to
Jalandoni and in turn, Jalandoni agreed to buy the land with the
understanding that it contained the quantity guaranteed by Asiain. Without
the mistake as to the quantity of the land and as to the amount of standing
crop, the agreement would not have been made.
The use of the phrase “more or less” in designating quantity covers
only a reasonable excess or deficiency. Such words will relieve from
exactness but not from gross deficiency.
HEIRS OF SEVILLA v SEVILLA
Felisa Almirol co-owned a lot with her sisters Filomena Almirol de
Sevilla, deceased, and Honorata Almirol. Her 1/3 undivided share in said lot
was increased by 1/2 when she and Filomena inherited the 1/3 share of their
sister Honorata after the latter's death. Felisa died single and without issue.
Petitioners, heirs of Filomena, sought the annulment of the two deeds
executed by Felisa during her lifetime.
The first deed executed was denominated as "Donation Inter Vivos"
whereby Felisa ceded to her nephew respondent Leopoldo Sevilla, son of
Filomena, her ½ undivided share in the lot, which was accepted by Leopoldo
in the same document. The second document was executed denominated
as the Deed of Extra-Judicial Partition dividing the share of Honorata to
Felisa and to the heirs of Filomena. Petitioners alleged that the Deed of
Donation was tainted with fraud because Felisa Almirol, who was then 81
years of age, was seriously ill and of unsound mind at the time of execution
thereof; and that the Deed of Extra-judicial Partition was void because it was
executed without their knowledge and consent. Respondents, however,
denied petitioners' allegations.
The trial court upheld the validity of the Deed of Donation, but
declared the Deed of Extra-judicial Partition unenforceable. On appeal, the
Court of Appeals affirmed in toto the assailed decision of the trial court.
Whether or not the donation was invalid because of fraud
Whether or not the partition was proper
NO. The Supreme Court sustained the validity of the Deed of
Donation. According to the Court, the self-serving testimonies of the
petitioners were vague on what acts of Leopoldo Sevilla constituted fraud
and undue influence and on how these acts vitiated the consent of Felisa
Almirol. It held that 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. Moreover, petitioners
failed to show proof why Felisa should be held incapable of exercising
sufficient judgment in ceding her share to respondent Leopoldo. The Court
consistently applied the ancient rule that if the plaintiff, upon whom rests the
burden of proving his cause of action, fails to show in a satisfactory manner
facts on which he bases his claim, the defendant is under no obligation to
prove his exception or defense.
NO. The Court further ruled that the Deed of Extra-judicial Partition
was void ab initio and not merely unenforceable. According to the Court,
there was no consent given to the execution of the deed, and therefore,
there is no contract to speak of since Felisa had no legal capacity to give
consent to the Deed of Partition at the time of its execution inasmuch as she
was neither the owner nor the authorized representative of respondent
Leopoldo to whom she previously transmitted ownership of her undivided
share on the lot.
DUMASUG v MODELO
Dumasug filed a complaint against Modelo, Dumasug alleged that
Modelo persuaded her to sign a document by falsely and maliciously making
her believe that it contained an engagement on plaintiff’s part to pay
defendant a certain sum of money as expresses occasioned the latter by
reason of a lawsuit in which plaintiff Dumasug was one of the parties and
was protected and aided by defendant.
Defendant took possession of a carabao belonging to plaintiff and
also of two parcels of land, likewise belonging to her, the area and
boundaries of which are specified in the complaint, and notified plaintiff that
she had conveyed to him by absolute sale said parcels of land and the plow
carabao; that in spite of plaintiff’s opposition and protests, defendant took
possession of said property and, up to the date of the complaint, continued
to hold possession thereof and to enjoy the products of the lands and of the
labor of the carabao; and that, by reason of such acts, defendant had
caused loss and damage to plaintiff in the sum of P1,000.
Defendant in his answer denied each and all of the facts alleged in
the complaint, and in special defense set forth that if defendant had in his
possession the property described in the complaint, it was due to the fact
that plaintiff sold it to him, which sale was recorded in a public instrument
duly executed and signed by plaintiff in the
presence of witnesses. The defendant alleges that by means thereof he
acquired the possession and ownership of the said property, defendant
stated in his sworn testimony that the sale of the parcels of land and the
carabao was in payment of a debt of P333.49 while the plaintiff, in turn, sets
forth in her complaint that the said instrument is of no value whatever, as her
consent thereto was obtained by means of fraud and deceit on the part of
defendant. Plaintiff only signed and acknowledged a P101 debt from the
defendant, which she borrowed for an action for a recovery of her land.
Whether or not the public instrument of sale of the land and carabao is void
YES. The lower court held that the statements of Andrea Dumasug
were well worthy of credence, and, taking into consideration the merits of the
case, reached the conclusion that the sole document which plaintiff signed
about the month of November, 1911, related to the sum of P101 which she
acknowledged she was owing to Felix Modelo, and not to the sale of all her
properties.
It is, then, perfectly evident that the document, by means of which
defendant made himself the owner of the properties in question is not the
instrument of debt which Andrea Dumasug had signed, and if it is the same
one its contents were not duly and faithfully explained to plaintiff in the act of
its execution.
In either case, the consent said to have been given by Andrea
Dumasug in said document is null and void, as it was given by mistake (arts.
1265 and 1266, Civil Code). This error invalidates the contract, because it
goes to the very substance of the thing which was the subject matter of said
contract, for, had the maker thereof truly understood the contents of said
document, she would neither have accepted nor authenticated it by her
mark. It is undeniable that she was deceived in order to obtain her consent
thereto.
HEMEDES v CA
Justa Kausapin executed a "Deed of Conveyance of Unregistered
Property by Reversion" whereby she transferred an unregistered parcel of
land to her stepdaughter Maxima Hemedes, pursuant to the resolutory
condition in the deed of donation executed in her favor by her late husband
Jose Hemedes, except the usufruct
thereof which shall remain in her during her lifetime or remarriage, upon
which the same shall automatically revert to Maxima. Thereafter, Maxima
initiated registration proceedings and new title was issued in her name, with
the annotation of usufruct in favor of Justa Kausapin.
Maxima and her spouse mortgaged said property R & B Insurance
as security for a loan, which they obtained. When Maxima failed to pay the
loan, R & B Insurance extrajudicially foreclosed the mortgage. A public
auction sale was held in which R & B Insurance was the highest bidder. For
failure of Maxima to redeem the property, ownership was consolidated in the
name of R & B Insurance and a new title was thereafter issued in its name.
The annotation of usufruct in favor of Justa Kausapin was maintained in the
new title. Despite the earlier conveyance of the subject land in favor of
Maxima, Justa executed a "Kasunduan" whereby she transferred the
same land to her stepson, Enrique D. Hemedes.
Justa affirmed the conveyance of the subject property in favor of
Enrique and denied the conveyance made to Maxima. Enrique sold the
property to Dominium Realty and Construction Corporation. Dominium
leased the property to its sister corporation Asia Brewery, Inc. who
immediately constructed two warehouses upon said property. Thereafter R &
B Insurance and Maxima both claimed ownership of the subject property and
the right to appropriate the constructions. Maxima denied the execution of
any real estate mortgage in favor of R & B Insurance. Dominium and
Enrique then filed a complaint for the annulment of the title issued in favor of
R & B Insurance and/or reconveyance to Dominium of the subject property.
The trial court rendered judgment in favor of Dominium and Enrique. On
appeal, the Court of Appeals affirmed in toto the decision of the trial court.
Respondent contended that the deed was in English and Justa did
not know how understand or even read in English; thus, Maxima failed to
discharge the burden to explain the contents. Justa also disclaims any
knowledge regarding of the conveyance to Maxima.
Petitioner retaliated, stating that it is her contention that for such a
provision to be applicable, there must be a party seeking to enforce a
contract; however, she is not enforcing the "Deed of Conveyance of
Unregistered Real Property by Reversion" as her basis in claiming
ownership. And Justa is a biased witness.
Whether or not the Deed of Conveyance to Maxima is valid
YES. Article 1322 is not applicable in this case. Article 1332 was
intended for the protection of a party to a contract who is at a disadvantage
due to his illiteracy, ignorance, mental weakness or other handicap. It is
private respondents' own allegations which render article 1332 inapplicable
for it is useless to determine whether or not Justa Kausapin was induced to
execute said deed of conveyance by means of fraud employed by Maxima
Hemedes, who allegedly took advantage of the fact that the former could not
understand English, when Justa Kausapin denies even having seen the
document before the present case was initiated.
It has been held by this Court that ". . . mere preponderance of
evidence is not sufficient to overthrow a certificate of a notary public to the
effect that the grantor executed a certain document and acknowledged the
fact of its execution before him. To accomplish this result, the evidence must
be so clear, strong and convincing as to exclude all reasonable controversy
as to the falsity of the certi cate, and when the evidence is conflicting, the
certificate will be upheld. In the present case, we hold that private
respondents have failed to produce clear, strong, and convincing evidence
to overcome the positive value of the "Deed of Conveyance of Unregistered
Real Property by Reversion" — a notarized document. The mere denial of its
execution by the donor will not suffice for the purpose.
HILL v VELOSO
Maximina Veloso and Domingo Franco executed a document for
payment of goods from Michael & Co., with a promissory note indorsed to
Hill. Four installments have been paid but later on Hill instituted a suit to
recover the payment against Maximina Veloso. Franco died after.
Maximina Veloso claimed that she was tricked by her son-in-law
Domingo Franco into signing a blank document, unknowingly binding her to
a debt of P6,319 to Michael & Co. She thought, according to her, she was
made to sign to acknowledge an obligation to pay for the guardianship of the
minor children of Potenciano Veloso. And that she learned of the true nature
of the document (a promissory note to Michael & Co.) only after Franco’s
death. But, clearly, her signatures on the promissory note were obtained by
means of fraud.
Whether or not Maximina is liable to pay Franco’s debt
YES. "There is 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 without them he would not have made."
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 of the 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 party of the second part who execute the contract.
Franco, like any other person who might have induced Veloso into
signing the Promissory Note under the influence of deceit, would be but a
third person. Under the Civil Code, deceit by a third person does not in
general annul consent.
Deceit by a third person does not in general annul consent, and in
support of this opinion it is alleged that, in such a case, the two contracting
parties act in good faith (on the hypothesis set forth, Michael & Co., and
Maximina Ch. Veloso); that there is no reason for making one of the parties
suffer for the consequences of the act of a third person in whom the other
contracting party may have reposed an imprudent confidence.
Notwithstanding these reasons, the deceit caused by a third person may
produce effects and, in some cases, bring about the nullification of the
contract. This will happen when the third person causes the deceit in
connivance with, or at least with the knowledge, without protest, of the
favored contracting party: the most probable suppositions, in which the latter
cannot be considered exempt from responsibility. Moreover, and even
without the attendance of that circumstance, the deceit caused by a third
person might lead the contracting party upon whom it was practiced into
error, and as such, though it be not deceit, may vitiate consent. In any case,
this deceit may give rise to more or less extensive and serious responsibility
on the part of the third person, and a corresponding right of action for the
contracting party prejudiced".
WOODHOUSE v HALILI
Plaintiff Woodhouse entered into a written agreement with
defendant Halili stating among others that: 1) that they shall organize a
partnership for the bottling and distribution of Missionsoft drinks, plaintiff to
act as industrial partner or manager, and the defendant as a capitalist,
furnishing the capital necessary therefore; 2) that plaintiff was to secure the
Mission Soft Drinks franchise for and in behalf of the proposed partnership
and 3) that the plaintiff was to receive 30 percent of the net profits of the
business.
Prior to entering into this agreement, plaintiff had informed the
Mission Dry Corporation of Los Angeles, California, that he had interested a
prominent financier (defendant herein) in the business, who was willing to
invest half a million dollars in the bottling and distribution of the said
beverages, and requested, in order that he may close the deal with him, that
the right to bottle and distribute be granted him for a limited time under the
condition that it will finally be transferred to the corporation. Pursuant to this
request, plaintiff was given “a thirty days’ option on exclusive bottling and
distribution rights for the Philippines”. The contract was finally signed by
plaintiff on December 3, 1947.
When the bottling plant was already in operation, plaintiff
demanded of defendant that the partnership papers be executed. Defendant
Halili gave excuses and would not execute said agreement, thus the
complaint by the plaintiff.
Plaintiff prays for the : 1.execution of the contract of partnership; 2)
accounting of profits and 3)share thereof of 30 percent with 4) damages in
the amount of P200,000. The Defendant on the other hand claims that: 1)
the defendant’s consent to the agreement, was secured by the
representation of plaintiff that he was the owner, or was about to become
owner of an exclusive bottling franchise, which representation was false, and
that plaintiff did not secure the franchise but was given to defendant himself
2) that defendant did not fail to carry out his undertakings, but that it was
plaintiff who failed and 3) that plaintiff agreed to contribute to the exclusive
franchise to the partnership, but plaintiff failed to do so with a 4)
counterclaim for P200,00 as damages.
The CFI ruling: 1) accounting of profits and to pay plaintiff 15 % of
the profits and that the 2) execution of contract cannot be enforced upon
parties. Lastly, the 3) fraud wasn’t proved.
Whether or not the plaintiff falsely represented that he had an exclusive
franchise to bottle Mission beverages
Whether or not false representation, if it existed, annuls the agreement to
form the partnership
YES. Plaintiff 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
defendant. The trial court reasoned, and the plaintiff on this appeal argues,
that plaintiff only undertook in the agreement “to secure the Mission Dry
franchise for and in behalf of the proposed partnership.” The existence of
this provision in the final agreement does not militate against plaintiff having
represented that he had the exclusive franchise; it rather strengthens belief
that he did actually make the representation. The defendant believed, or was
made to believe, that plaintiff 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 plaintiff.
Again, the immediate reaction of defendant, when in California he
learned that plaintiff did not have the exclusive franchise, was to reduce, as
he himself testified, plaintiff’s participation in the net profits to one half of that
agreed upon. He could not have had such a feeling had not plaintiff actually
made him believe that he(plaintiff) was the exclusive grantee of the
franchise.
NO. The record abounds with circumstances indicative of the fact
that the principal consideration, the main cause that induced defendant to
enter into the partnership agreement with plaintiff, was the ability of plaintiff
to get the exclusive franchise to bottle and distribute for the defendant or for
the partnership. The original draft prepared by defendant's counsel was to
the effect that plaintiff obligated himself to secure a franchise for the
defendant. Correction appears in this same original draft, but the change is
made not as to the said obligation but as to the grantee.
In the corrected draft the word "capitalist" (grantee) is changed to
"partnership." The contract in its final form retains the substituted term
"partnership." The defendant was, therefore, led to the belief that plaintiff
had the exclusive franchise, but that the same was to be secured for or
transferred to the partnership. The plaintiff no longer had the exclusive
franchise, or the option thereto, at the time the contract was perfected. But
while he had already lost his option thereto (when the contract was entered
into), the principal obligation that he assumed or undertook was to secure
said franchise for the partnership, as the bottler and distributor for the
Mission Dry Corporation. The court, therefore, that if he was guilty of a false
representation, this was not the causal consideration, or the principal
inducement, that led plaintiff to enter into the partnership agreement.
From the above that while the representation that plaintiff had the
exclusive franchise did not vitiate defendant's consent to the contract, it was
used by plaintiff to get from defendant a share of 30 percent of the net
profits; in other words, by pretending that he had the exclusive franchise and
promising to transfer it to defendant, he obtained the consent of the latter to
give him (plaintiff) a big slice in the net profits. This is the dolo incidente
defined in article 1270 of the Spanish Civil Code, because it was used to get
the other party's consent to a big share in the profits, an incidental matter in
the agreement.
As the trial court correctly concluded, the defendant may not be
compelled against his will to carry out the agreement nor execute the
partnership papers. Under the Spanish Civil Code, the defendant has an
obligation to do, not to give. 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. It
falls within what Spanish commentators call a very personal act (acto
personalisimo), of which courts may not compel compliance, as it is
considered an act of violence to do so.
GERALDEZ v CA
Geraldez came to know of private respondent from advertisements
offering a European tour. Geraldez contacted the respondent and discussed
the highlights of the tour. Geraldez chose VOLARE 3; a 22-day tour in
Europe for $2,990. She paid the amount of P190,000.00.
Geraldez claimed during the tour her dissatisfaction, from the
incompetent tour guide to the very bad accomodation. The tour guide was a
first-timer and inexperienced, there was no European tour manager which
was promised, no first-class accomodation and they were not able to visit a
highlight landmark of the tour UGC Leather Factory, which she was looking
forward into.
Respondent answered, that they exercised due care on picking the
tour guide, the European tour guide was not a natural person but only a
juridical one and they justified its choice of the hotels, private respondent
contends that it merely provided such "first class" hotels which were
commensurate to the tourists'
budget, or which were, under the given circumstances, the "best for their
money."
Geraldez instituted before the RTC for writ of preliminary
attachment for fraud. RTC ordered respondent to pay for moral, exemplary
and nominal damages. The CA deleted the moral and exemplary damages.
Whether or not respondent is guilty of dolo causante by making
misinterpretations in the contract
YES. In the belief that an experienced tour escort and a European
tour manager would accompany them, with the concomitant reassuring and
comforting thought of having security and assistance readily at hand,
petitioner was induced to join the Volare 3 tourists, instead of travelling
alone. She likewise suffered serious anxiety and distress when the group
was unable to visit the leather factory and when she did not receive
first-class accommodations in their lodgings which were misrepresented as
first-class hotels.
Private respondent likewise committed a grave misrepresentation
when it assured in its Volare 3 tour package that the hotels it had chosen
would provide the tourists complete amenities and were conveniently located
along the way for the daily itineraries. It turned out that some of the hotels
were not sufficiently equipped with even the basic facilities and were at a
distance from the cities covered by the projected tour. Petitioner testified on
her disgust with the conditions and locations of the hotels.
TUASON v MARQUEZ
Crisanto C. Marquez, owner of the electric light plant of Lucena,
Tayabas agreed to franchised with Tuason and to pay Marquez a total of
P14,400; P2,400 within the sixty days and remainder , P12,000 within a
year. The 1st installment was paid subsequent to the sixty-day period; 2nd
installment has not been paid. During March 20, 1921 to July 19, 1922,
Consolidated Electric Light Plant, once in possession by Tuason. The
property was sold to Gregorio Marquez, brother of Crisanto Marquez at
P5,501.57. While on 1913 to 1914, a franchise for thirty-five years was
granted the Lucena Electric Company.
The rights of this Company passed to Crisanto Marquez at sheriff’s
sale on September 10,1919. Marquez, became disgusted with the business
result on February 28, 1921, prior to the accomplishment of the contract, he
announced to the Public Utility Commissioner his intention to give up the
franchise. Tuason permitted to operate the company pursuant to a special
license which was to continue until they obtained a new franchised granted
by Republic Utility Commissioner with certain conditions amounting to the
renovation of the entire plant. Tuason conceive the idea of bringing active
against Marques for rescission of the contract. The plaintiff filed complain in
CFI Manila against Crisanto Marquez for P37,400. The defendant asked for
a dismissal action and an allowance of P12,654.50 from plaintiff.
Whether or not the defendant is liable for the damages due to honorable
disclosure of fact pertaining to the renovation of plant as a requisite after the
franchise has been granted.
NO. It should 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.
RURAL BANK OF STA. MARIA v CA
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.
Whether or not the agreement is voidable because of fraud
NO. It is believed that the non-disclosure to the bank of the
purchase price of the sale of the land between private respondents and
Manuel Behis cannot be the "fraud" contemplated by Article 1338 of the Civil
Code. From the sole reason submitted by the petitioner bank that it was kept
in the dark as to the financial capacity of private respondents, we cannot see
how the omission or concealment of the real purchase price could have
induced the bank into giving its consent to the agreement; or that the bank
would not have otherwise given its consent had it known of the real
purchase price.
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.
AZARRAGA v GAY
Azarraga sold two parcels of land to Gay for the lump sum of
P47,000.00, payable in installments. The conditions of payment were:
P5,000 at the time of signing the contract Exhibit A; P20,000 upon delivery
by the vendor to the purchaser of the Torrens title to the first parcel
described in the deed of sale, P10,000 upon delivery by the vendor to the
purchaser of Torrens title to the second parcel; and lastly the sum of
P12,000 one
year after the delivery of the Torrens title to the second parcel.
The vendee paid P5,000 to the vendor when the contract was
signed. The vendor delivered the Torrens title to the first parcel to the
vendee who, pursuant to the agreement, paid him P20,000. In the month of
March 1921, Torrens title to the second parcel was issued and forthwith
delivered by the vendor to the vendee who, however, failed to pay the
P10,000 is agreed, neither did she pay the remaining P12,000 one year after
having received the Torrens title to the second parcel.
Azarraga claims the remaining sum with legal interest. Gay
admitted the purchase but alleges that the plaintiff knowing that the second
parcel 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. Gay prays for
indemnification for damages.
Whether or not plaintiff is guilty of misrepresentation of the area of the land
NO. There is no evidence of record that the plaintiff made false
representation to the defendant as to the area of said second parcel, and
even if he did make such false representations as are now imputed to him by
the defendant, the latter accepted such representations at her own risk and
she is the only one responsible for the consequences of her inexcusable
credulousness.
The defendant had ample opportunity to appraise herself of the
condition of the land which she purchased, and the plaintiff did nothing to
prevent her from making such investigation as she deemed fit, and, it was
said in Songco vs. Sellner, supra, when the purchaser proceeds to make
investigations by himself, and the vendor does nothing to prevent such
investigation from being as complete as the former might wish, the
purchaser cannot later allege that the vendor made false representations to
him.
The defendant had document Exhibit 4 in her possession which is
the deed by which the plaintiff acquired the land from the original owner,
Crispulo Beramo, in which document it appears that the area of the second
parcel is about 70 hectares. It was the defendant who intrusted the drawing
of the deed of sale Exhibit A to her attorney and notary, Hontiveros, and it is
to be presumed that both she and the lawyer who drew the document Exhibit
A, had read the contents of the document Exhibit 4.
That the defendant knew that the area of the second parcel was
only about 70 hectares is shown by the fact that she received the document
Exhibit 4 before the execution of the contract Exhibit A, and by the fact that
she received from the plaintiff in the month of June 1924 the copy of the
plans of the two parcels, wherein appear their respective areas; and yet, in
spite of all this, she did not complain of the difference in the area of said
second parcel.
TRINIDAD v FRANCISCO
The house looked beautiful in summer but not when the waters
came. Then it was flooded five feet deep and less than prepossessing, let
alone livable. Disenchanted, the buyer sued the seller for the annulment of
the sale and damages, alleging fraud.
Trinidad approached Francisco and offered to buy his property.
Trinidad inspected the house and examined the drainage canals along the
property. Trinidad paid Francisco an amount as earnest money and entered
into the possession of the house. Trinidad heard from her neighbors that the
house was subject to flooding and two buyers vacated the property. Trinidad
talked to Francisco about the matter and told her that the house would not
be flooded again.
Trinidad paid for installments but stopped when the house was
flooded, rising as high as five feet. She ordered an inspection in the house
and the engineer state that the lot is low and is a narrowed portion of the
creek.
Trinidad filed a complaint against Francisco alleging that she was
induced to enter the contract because of his misrepresentation. She asked
for annulment of the agreement. Defendant denied the charge of
misinterpretation and that Trinidad thoroughly inspected the property. He
claimed that the creek was a drainage lot and the floods were common in
the area and were regarded as fortuitous events not imputable to him.

Whether or not ther was misinterpretation on the part of Francisco
NO. Fraud is never lightly inferred; it is good faith that is. Under the
Rules of Court, it is presumed that "a person is innocent of crime or wrong"
and that "private transactions have been fair and regular. "While disputable,
these presumptions can be overcome only by clear and preponderant
evidence.
Our finding is that the fraud alleged by the petitioner has not been
satisfactorily established to call for the annulment of the contract. This
finding is based on the following Considerations.
First, it was the petitioner who admittedly approached the private
respondent, who never advertised the property nor offered it for sale to her.
Second, the petitioner had full opportunity to inspect the premises,
including the drainage canals indicated in the vicinity map that was furnished
her, before she entered into the contract of conditional sale.
Third, it is assumed that she made her appraisal of the property not
with the untrained eye of the ordinary prospective buyer but with the
experience and even expertise of the licensed real estate broker that she
was. 9 If she minimized the presence of the drainage canals, she has only
her own negligence to blame.
Fourth, seeing that the lot was depressed and there was a drainage
lot abutting it, she cannot say she was not forewarned of the possibility that
the place might be flooded. Notwithstanding the obvious condition of the
property, she still decided to buy it.
Fifth, there is no evidence except her own testimony that two
previous owners of the property had vacated it because of the floods and
that Francisco assured her that the house would not be flooded again. The
supposed previous owners were not presented as witnesses and neither
were the neighbors. Francisco himself denied having made the alleged
assurance.
Sixth, the petitioner paid the 1970 and 1971 amortizations even if,
according to her Complaint, "since 1969 said lot had been under floods of
about one (1) foot deep," 10 and despite the floods of September and
November 1970.
Seventh, it is also curious that notwithstanding the said floods, the
petitioner still "made annexes and decorations on the house," 11 all of a
permanent nature, for which she now claims reimbursement from the private
respondent.
SONGCO v SELLNER
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.
The defendant denied all the allegations of the complaint. He said
that the promissory note was obtained from him by means of certain false
and fraudulent representations therein specified.
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.
Whether or not the plaintiff was guilty of fraudulent representation of his
cane.
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, or in regard to its qualities and characteristics, are the usual
and ordinary means used by defendant to obtain a high price and are always
understood as affording to buyers no ground for omitting to make inquiries. A
man who relies upon such an affirmation made by a person whose interest
might so readily prompt him to exaggerate the value of his property does so
at his peril, and must take the consequences of his own imprudence.
MERCADO v ESPIRITU
Margarita Espiritu was the owner of a 48 hectare land. In 1897, she
died and the land was left to her husband (Wenceslao Mercado) and her
children, Domingo Mercado, Josefa Mercado and 3 other siblings.
Apparently however, during the lifetime of Margarita in 1894, she
executed a deed of sale transferring about 71% of her land (covering 15
cavanes of seeds) to her brother Luis Espiritu (father of Jose Espiritu) for
P2,000.00. After her death, Wenceslao had a hard time making ends meet
for his family and so he took out a loan from Luis in the amount of P375.00.
The loan was secured by the remainder of the lot. Later, that loan was
increased to P600.00.
In May 1910, Luis entered into a notarized agreement with
Domingo and Josefa whereby the two, while purporting to be of legal age,
acknowledged the sale and the loan previously entered into by their parents
with Luis. In the same agreement, the siblings agreed that for and in
consideration of the amount of P400.00, they are transferring the remainder
29% (covering 6 cavanes of seeds) to Luis.
But later, the siblings contested the said agreement. Luis later died
and he was substituted by Jose. It is the contention of Domingo et al that the
agreement is void because they were only minors, 19 and 18 years of age
respectively, when the contract was entered into in May 1910 (21 being the
age of minority at that time).
Whether or not the agreement between Luis and Domingo et al in May 1910
is valid despite the minority of the latter party.
YES. In the first place, their minority of Domingo and Josefa was
not proven with certainty because of the loss of official records (got burned
down). However, even assuming that they were indeed minors, they are
bound by their declaration in the notarized document where they presented
themselves to be of legal age. Domingo claimed he was 23 years old in the
said document. The Supreme Court declared: the sale of real estate, made
by minors who pretend to be of legal age, when in fact they are not, is valid,
and they will not be permitted to excuse themselves from the fulfillment of
the obligations contracted by them, or to have them annulled in pursuance of
the provisions of Law.
Further, there was no showing that the said notarized document
was attended by any violence, intimidation, fraud, or deceit.
Also, these minors cannot be permitted afterwards to excuse
themselves from compliance with the obligation assumed by them or seek
their annulment. This is in accordance with the provisions of the law on
estoppels. This is in accordance with the provisions of the law on estoppel.
Art 1431 of Civil Code. Through estoppel, an admission or
representation is rendered conclusive upon the person making it, and cannot
be denied or disproved as against the person relying thereon.
This is also in accordance with the provisions of Rule 123, Sec 68,
Par. A
Rule 123, sec 68, Par. A...”Whenever a party has, by his own
declaration, act or omission, intentionally and deliberately led another to
believe a particular thing to be true, and to act upon such belief, he cannot,
in any litigation arising out of such declaration, act or omission, cannot be
permitted to falsify it.
BRAGANZA v VILLA ABRILLE
De Braganza and her sons Rodolfo and Guillermo received from
Villa Abrille a loan of P70,000 in Japanese war notes and in consideration, a
promised in writing to pay him P10,000 in legal currency two years after the
cessation of the hostilities or the International Exchange is established in the
Philippines.
Because of non-payment Abrille sued them.
 Defendants claimed that they only received P40,000 and Rodolfo
and Guillermo were minors when they signed the promissory note. The
Manila court of first instance and CA held the family solidarily liable to pay
according to the contract they signed. The family petitioned to review the
decision of the CA whereby they were ordered to solidarily pay De Villa
Abrille P10,000 + 2% interest, praying for consideration of the minority of the
Braganza sons when they signed the contract.

Whether or not Rodolfo and Guillermo, who were 16 and 18 respectively, are
to be bound by the contract of loan they have signed.

YES. The court found that Rosario will still be liable to pay her
share in the contract because the minority of her sons does not release her
from liability. She is ordered to pay 1/3 of P10,000 + 2% interest.
However with her sons, the SC reversed the decision of the CA which found
them similarly liable due to their failure to disclose their minority. The SC
sustained previous sources in Jurisprudence – “in order to hold the infant
liable, the fraud must be actual and not constructive. It has been held that
his mere silence when making a contract as to his age does not constitute a
fraud which can be made the basis of an action of deceit.”
The boys, though not bound by the provisions of the contract, are
still liable to pay the actual amount they have profited from the loan. Art.
1340 states that even if the written contract is unenforceable because of
their non-age, they shall make restitution to the extent that they may have
profited by the money received. In this case, 2/3 of P70,00, which is
P46,666.66, which when converted to Philippine money is equivalent to
P1,166.67.