Documente Academic
Documente Profesional
Documente Cultură
Alcisso, Antonio, Arriola, Cajucom, Calalang, Claudio, Escueta, Fajardo, Imperial, Juaquino, Martin, Martinez, Mendoza, Noel, Plazo Raso, Rosales, Sia, Siron, Venzuela
ARTICLE 1308
SAMPAGUITA BUILDERS v PNB
Mini digest: Sampaguita loaned money from PNB. PNB unilaterally increased rates of interest in the loan w/o informing Sampaguita. PNB claimed they were authorized to do it as there was a clause in the agreement that they may do so. Besides, Usury law was no longer in force = SC said NO! PNB cannot do so; it will violate mutuality of contracts under 1308. Besides, SC may intervene when amount of interest is unconscionable. Facts: Sampaguita secured a loan from PNB in an aggregate amount of 8M pesos, mortgaging the properties of Sampaguitas president and chairman of the board. Sampaguita also executed several promissory notes due on different dates (payment dates). The first promissory note had 19.5% interest rate. The 2nd and 3rd had 21.5%. a uniform clause therein permitted PNB to increase the rate within the limits allowed by law at any time depending on whatever policy it may adopt in the future x x x, without even giving prior notice to petitioners. There was also a clause in the promissory note that stated that if the same is not paid 2 years after release then it shall be converted to a medium term loan and the interest rate for such loan would apply. Later on, Sampaguita defaulted on its payments and failed to comply with obligations on promissory notes. Sampaguita thus requested for a 90 day extension to pay the loan. Again they defaulted, so they asked for loan restructuring. It partly paid the loan and promised to pay the balance later on. AGAIN they failed to pay so PNB extrajudicially foreclosed the mortgaged properties. It was sold for 10M. PNB claimed that Sampaguita owed it 12M so they filed a case in court asking sampaguita to pay for deficiency. RTC found that Sampaguita was automatically entitled to the debt relief package of PNB and ruled that the latter had no cause of action against the former. CA reversed, saying Sampaguita was not entitled, thus ordered them to pay the deficiency Appeal = Went to SC. Sampaguita claims the loan was bloated so they dont really owe PNB anymore, but it just overcharged them! Issues/Ruling: W/N the loan accounts are bloated: YES. There is no deficiency; there is actually an overpayment of more than 3M based on the computation of the SC. Whether PNB could unilaterally increase interest rates: NO
Ratio: Sampaguitas accessory duty to pay interest did not give PNB unrestrained freedom to charge any rate other than that which was agreed upon. No interest shall be due, unless expressly stipulated in writing. It would be the zenith of farcicality to specify and agree upon rates that could be subsequently upgraded at whim by only one party to the agreement. The unilateral determination and imposition of increased rates is violative of the principle of mutuality of contracts ordained in Article 1308 of the Civil Code. One-sided impositions do not have the force of law between the parties, because such impositions are not based on the parties essential equality. Although escalation clauses are valid in maintaining fiscal stability and retaining the value of money on long-term contracts, giving respondent an unbridled right to adjust the interest independently and upwardly would completely take away from petitioners the right to assent to an important modification in their agreement and would also negate the element of mutuality in their contracts. The clause cited earlier made the fulfillment of the contracts dependent exclusively upon the uncontrolled will of respondent and was therefore void. Besides, the pro forma promissory notes have the character of a contract dadhsion, where the parties do not bargain on equal footing, the weaker partys [the debtors] participation being reduced to the alternative to take it or leave it. Circular that lifted the ceiling of interest rates of usury law did not authorize either party to unilaterally raise the interest rate without the others consent. the interest ranging from 26 percent to 35 percent in the statements of account -- must be equitably reduced for being iniquitous, unconscionable and exorbitant. Rates found to be iniquitous or unconscionable are void, as if it there were no express contract thereon. Above all, it is undoubtedly against public policy to charge excessively for the use of money. It cannot be argued that assent to the increases can be implied either from the June 18, 1991 request of petitioners for loan restructuring or from their lack of response to the statements of account sent by respondent. Such request does not indicate any agreement to an interest increase; there can be no implied waiver of a right when there is no clear, unequivocal and decisive act showing such purpose. Besides, the statements were not
RULING: YES Mandarin Villa Seafood Village is affiliated with BANKARD. Mandarin and BANKARD entered into agreement which states that The MERCHANT shall honor validly issued PCCCI credit cards presented by their corresponding holders in the purchase of goods and/or services supplied by it provided that the card expiration date has not elapsed and the card number does not appear on the latest cancellation bulletin of lost, suspended and canceled PCCCI credit cards and, no signs of tampering, alterations or irregularities appear on the face of the credit card. While De Jesus may not be a party to the said agreement, the abovequoted stipulation conferred a favor upon DE Jesus, a holder of credit card validly issued by BANKARD. This stipulation is a stipulation pour auturi and under Article 1311 of the Civil Code, De Jesus may demand its fulfillment provided he communicated his acceptance to Mandarin before its revocations. IN the case at bar, De Jesus offer to pay by means of his BANKARD credit card constitutes not only as an acceptance of the said
ARTICLE 1311
MANDARIN VILLA v CA
FACTS: In the evening of October 19, 1989, private respondent De Jesus, a practicing lawyer and businessman, hosted a dinner for his friends at Mandarin Villa Seafoods Village Greenhills, Mandaluyong City. After the dinner, the waiter handed to him the bill in the amount of P2658.50. De Jesus offered to pay the bill through his credit card issued by Philippine Commercial Credit Card Inc. (BANKARD). This card was accepted by the waiter. Ten minutes later, the waiter returned and audibly informed De Jesus that his card had expired. De Jesus argued that his card had yet to expire on September 1990, as embossed on its face. The waiter was unmoved thus De Jesus and two of his guests approached the restaurants
UY v CA
Facts: W. Uy and R. Roxas are agents with power to sell 8 parcels of land by the owners thereof. Under such power, they offered to sell the lands, located in Benguet to National Housing Authority (NHA) to be utilized and developed as a housing project. On Valentines day of 1989, the NHA Board passed a Resolution approving the acquisition of said lands, with an area of 31.8231 hectares, at the cost of P23.867 million, pursuant to which the parties executed a series of Deeds of Absolute Sale covering the subject lands. Of the 8 parcels of land, however, only 5 were paid for by the NHA.1 On 1991, the NHA issued a new Resolution cancelling thesale over the 3 parcels of land. The NHA, through Resolution 2394, subsequently offered the amount ofP1.225 million to the landowners as daos perjuicios. Aggrieved at the loss of a sale, March 1992, Uy and Roxas filed before the RTC Quezon City a Complaint for Damagesa gainst NHA and its General Manager Robert Balao. After trial, the RTC rendered a decision declaring thecancellation of the contract to be justified. To the glee of Uy and Roxas, the trial court still awarded damages to plaintiffs2.
Where the action is brought by an attorney-in-fact of a land owner in his name, (as in our presentaction) and not in the name of his principal, the action was properly dismissed5 Pertinent Civil Law Provision: Article 1311
3
The Court of Appeals found noted that petitioners were mere attorneys-in-fact and, therefore, not the real parties-in-interest in the action before the trial court. This is a side REM issue.
4
A report NHA received from the DENR confirmed tha t the remaining area is located at an notorious landslid e area and therefore, not suit able for development into a housing project.
2
Section 2, Rule 3 of the Rules of Court requires that every action must be prosecuted and defended in the name of the real party-in-interest. The real party-in-interest is the party who stands to be benefited orinjured by the judgment or the party entitled to the avails of the suit. Interest, within the meaning of therule, means material interest, an interest in the issue and to be affected by the decree, as distinguished frommere interest in the question involved, or a mere incidental interest.
5
In th esum of P1.255 million, the same amount initially offered by NHA to petitioners as damages.
Citing Ferrer vs. Villamor, 60 SCRA406 [1974]; Marcelo vs. de Leon, 105 Phil. 1175 because the rule is that every action must be prosecuted inthe name of the real parties-ininterest
Contracts take effect only between the parties, their assigns, and heirs, except in case where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation, or by provision of law. x x x. If a contract should contain some stipulation in favor of a third person, he may demand its fulfillment provided he communicated his acceptance to the obligor before its revocation. A mere incidental benefit or interest of a person is not sufficient. The contracting parties must have clearly and deliberately conferred a favor upon a third person.
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x x x recognizes the assignments of rights of action and also recognizes that when one has a right of action assigned to him he is then the real party in interest and may maintain an action upon such claim or right. The purpose of [this rule] is to require the plaintiff to be the real party in interest, or, in other words, he must be the person to whom the proceeds of the action shall belong, and to prevent actions by persons who have no interest in the result of the same. xxx
Agents rendering service in behalf of parties do not render them parties to the contract of sale Petitioners are not parties to the contract of sale between their principals and NHA. They are mere agents of the owners of the land subject of the sale. As agents, they only render some service or do something in representation or on behalf of their principals. The rendering of such service did not make them parties to the contracts of sale executed in behalf of the latter. Since a contract may be violated only by the parties thereto as against each other, the real parties-ininterest, either as plaintiff or defendant, in an action upon that
ARTICLE 1324
SANCHES v RIGOS(Bayona)
FACTS: In an instrument entitled "Option to Purchase," executed on April 3, 1961, defendant-appellant Severina Rigos "agreed, promised and committed ... to sell" to plaintiff-appellee Nicolas Sanchez for the sum of P1,510.00 within two (2) years from said date, a parcel of land situated in the barrios of Abar and Sibot, San Jose, Nueva Ecija. It was agreed that said option shall be deemed "terminated and elapsed," if Sanchez shall fail to exercise his right to buy the property" within the stipulated period. On March 12, 1963, Sanchez deposited the sum of Pl,510.00 with the CFI of Nueva Ecija and filed an action for specific performance and damages against Rigos for the latters refusal to accept several tenders of payment that Sanchez made to purchase the subject land. Defendant Rigos contended that the contract between them was only a unilateral promise to sell, and the same being unsupported by any valuable consideration, by force of the New Civil Code, is null and void." Plaintiff Sanchez, on the other hand, alleged in his compliant that, by virtue of the option under consideration, "defendant agreed and committed to sell" and "the plaintiff agreed and committed to buy" the land described in the option. The lower court rendered judgment in favor of Sanchez and ordered Rigos to accept the sum Sanchez judicially consigned, and to execute in his favor the requisite deed of conveyance. The Court of Appeals certified the case at bar to the Supreme Court for it involves a question purely of law. ISSUE: Was there a contract to buy and sell between the parties or only a unilateral promise to sell? HELD: The Supreme Court affirmed the lower courts decision. The instrument executed in 1961 is not a "contract to buy and sell," but merely granted plaintiff an "option" to buy, as indicated by its own title "Option to Purchase." The option did not impose upon plaintiff Sanchez the obligation to purchase defendant Rigos' property. Rigos "agreed, promised and
ANG YU v CA
Facts: Ang Yu (buyers) are tenants/lessees of the residential and commercial properties owned by Co Unjieng (vendors). On several occasions, defendants informed plaintiffs that they are offering to sell the premises and are giving them priority to acquire the same. Respondents offered to sell the property for P6M, and plaintiffs counter-offered to buy for P5M. Plaintiffs asked the respondents to put the offer in writing, in which the respondents acceded. Upon receipt of the offer, plaintiffs asked the respondents to specify the terms and conditions of the offer to sell. Since no response was made by the respondents, plaintiffs were compelled to file a complaint against respondents compelling them to sell the property. The lower court decided in favor or the respondents reasoning that since parties did not agree upon the terms and conditions of the proposed sale, hence there was not contract of sale at all. Further, it ruled that if the respondents decide to sell the proper for P11M or lower, then plaintiffs have the right of first refusal. Aggrieved by the decision, plaintiffs appealed to CA. The Court of Appeals affirmed the decision of the lower court with modification: that there was no meeting of the minds between the parties concerning the sale of the property. Absent such requirement, the claim for specific performance will not lie. Appellants demand for actual, moral and exemplary damages will likewise fail as there exists no justifiable ground for its award. CA however granted the plaintiffs the right of first refusal even if the offer price exceeds P11M. Plaintiffs appealed to the Supreme court but was denied for being insufficient in form and substance. While plaintiff asked the SC for reconsideration, respondents transferred the properties in question to respondent Buen Realty and Development Corporation for P15M. Buen Realty after the properties came into its possession and after the titles had been issued under its name, plaintiffs were asked to vacate the premises. Plaintiffs brought the matter to the trial court to enforce the decision rendered by the CA that plaintiffs has the right of first refusal. The lower court ordered respondents to sell the property to plaintiffs for P15M. Respondents appealed to CA. The CA reversed the judgment of the lower court declaring that it has no force and effect. Hence this appeal for certiorari.
WON petitioners can demand specific performance to compel the respondents to sell to them the property Held: No. What the petitioners have been granted is just a mere right of first refusal. In the law on sales, the so-called right of first refusal is an innovative juridical relation. Needless to point out, it cannot be deemed a perfected contract of sale under Article 1458 of the Civil Code. Neither can the right of first refusal, understood in its normal concept, be brought within the purview of an option under the second paragraph of Article 1479, or possibly of an offer under Article 1319 of the same Code. An option or an offer would require, among other things, a clear certainty on both the object and the cause or consideration of the envisioned contract. In a right of first refusal, while the object might be made determinate, the exercise of the right, however, would be dependent not only on the grantors eventual intention to enter into a binding juridical relation with another but also on terms, including the price, that obviously are yet to be later firmed up. Prior thereto, it can at best be so described as merely belonging to a class of preparatory juridical relations governed not by contracts (since the essential elements to establish the vinculum juris would still be indefinite and inconclusive) but by, among other laws of general application, the pertinent scattered provisions of the Civil Code on human conduct. Even on the premise that such right of first refusal has been decreed under a final judgment, like here, its breach cannot justify correspondingly an issuance of a writ of execution under a judgment that merely recognizes its existence, nor would it sanction an action for specific performance without thereby negating the indispensable element of consensuality in the perfection of contracts. It is not to say, however, that the right of first refusal would be inconsequential for, such as already intimated above, an unjustified disregard thereof, given, for instance, the circumstances expressed in Article 19 of the Civil Code, can warrant a recovery for damages. The final judgment in Civil Case No. 87-41058, it must be stressed, has merely accorded a right of first refusal in favor of petitioners. In fine, if, as it is here so conveyed to us, petitioners are aggrieved by the failure of private respondents to honor the right of first refusal, the remedy is not a writ of execution on the judgment, since there is none to execute, but an action for damages in a proper forum for the purpose.
Mayfair replied stating par 8 of their contract and communicating his willingness to purchase the entire property. Carmelo did not reply. In 1978, Carmelo sold the property to Equitorial or P11.3M. This prompted Mayfair to file a case for specific performance and annulment of the sale. RTC Ruled in favor of Carmelo stating, among other things, that paragraph 8 of the contract is an option clause (under Art 1324) which is not supported by a separate consideration. Under Art 1352, Contracts without cause or with unlawful cause, produce no effect whatever. The cause is unlawful if it is contrary to law, morals, good custom, public order
*Art. 1324. When the offerer has allowed the offeree a certain period to accept, the offer may be withdrawn at any time before acceptance by communicating such withdrawal, except when the option is founded upon a consideration, as something paid or promised. **Art. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable. An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price.
xxx 8. That the LESSEE has the option to buy the leased premises during the Fifteen (15) years of the lease. If the LESSEE decides to purchase the premises the terms will be: A) A selling Price of One Million Eight Hundred Thousand Pesos (P1.8 million), Philippine Currency. B) A down payment agreed upon by both parties. C) The balance of the selling price may be paid at the rate of One Hundred Twenty Thousand Pesos (P120,000.00), Philippine Currency, per year. xxx
The foregoing stipulations of the lease contract are the subject of the present controversy. Petitioner Baptist Church paid an initial P84,000 rental payment. This was disputed by petitioners as the consideration for the option to buy the property. Issue: Whether or not the option to buy was founded upon a consideration
Petitioner-lessees filed an action against respondent-heirs and Spouses Sy which the RTC dismissed. This was affirmed by the CA. During this period, the Spouses Sy filed a complaint for Specific Performance against the heirs of Villegas, which the RTC granted. This was affirmed by the CA. Issue: 1. Whether the contract of sale between respondent-heirs and Lita Sy violated the right of first refusal of petitioner-lessees (relevant issue)
VILLEGAS v CA
The offer of P5,000,000 already lapsed when petitioner-lessees failed to accept it within the period granted. The offer was superseded by the new offer of respondent-heirs during the conference. However, it appears from the records that no settlement was reached between the parties during their conference. Even petitioner-lessees witness Miranda testified that petitioner-lessees did not indicate their offer for the property in their letter
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ARTICLE 1345
PAYONGAYONG v CA
Facts: Eduardo Mendoza was the registered owner of a two hundred square meter parcel of land situated in Barrio San Bartolome, Caloocan. Mendoza mortgaged the parcel of land to the Meralco Employees Savings and Loan Association (MESALA) to secure a loan in the amount of P81,700.00. Mendoza then executed a Deed of Sale with Assumption of Mortgage over the parcel of land together with all the improvements thereon (hereinafter referred to as the property) in favor of the Payongayong spouses in consideration of P50,000.00. It is stated in the deed that the Payongayongs bound themselves to assume payment of the balance of the mortgage indebtedness of Mendoza to MESALA. Mendoza, without the knowledge of the spouses, mortgaged the same property to MESALA to secure a loan in the amount of P758,000.00, and was duly annotated in Mendozas title. Thereafter, Mendoza executed a Deed of Absolute Sale over still the same property in favor of the private respondents Salvador spouses, in consideration of P50,000.00. The sale was again duly annotated in Mendozas title. MESALA, on its part, issued a Cancellation of Mortgage acknowledging that for sufficient and valuable consideration which it received from Mendoza, it was cancelling and releasing the real estate mortgage over the property which was annotated on Mendozas title. The Salvador spouses then caused the cancellation of Mendozas title and was issued a transfer certificate of title in their own name. Upon knowledge of the propertys sale to the Salvador spouses, the Payongayongs filed a complaint for annulment of deed of absolute sale and transfer certificate of title with recovery of possession and damages before the RTC of Quezon City. The Payongayongs complaint alleged that the spouses Mendoza maliciously sold to the Salvadors the property which was priorly sold to them and that the Salvadors acted in bad faith in acquiring it, the latter having had knowledge of the existence of the Deed of Absolute Sale with Assumption of Mortgage between them (Payongayongs) and Mendoza. The RTC ruled in favor of the Salvadors and CA affirmed the same.
Whether or not the deed of sale executed by Eduardo Mendoza in favor of the Salvador spouses was simulated and therefore null and void? Ruling: No. The Salvadors did not only rely upon Mendozas title. Rosalia personally inspected the property and verified with the Registry of Deeds of Quezon City if Mendoza was indeed the registered owner. Given this factual backdrop, the Salavadors did indeed purchase the property in good faith and accordingly acquired valid and indefeasible title thereto. The law is thus in the Salvadors favor. Article 1544 of the Civil Code so provides: Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property. Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property. Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith. There being double sale of an immovable property, as the above-quoted provision instructs, ownership shall be transferred (1) to the person acquiring it who in good faith first recorded it in the Registry of Property; (2) in default thereof, to the person who in good faith was first in possession; and (3) in default thereof, to the person who presents the oldest title, provided there is good faith. Simulation occurs when an apparent contract is a declaration of a fictitious will, deliberately made by agreement of the parties, in order to produce, for the purpose of deception, the appearance of a juridical act which does not exist or is different from that which was really executed. Its requisites are: a) an outward declaration of will different from the will of the parties; b) the false appearance must have been intended by mutual agreement; and c) the purpose is to deceive third persons.
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ARTICLE 1354
LAW v OLYMPIC SAWMILL
Plaintiff loaned P10,000.00, without interest, to defendant. The loan became due but was not paid, with the debtors asking for an extension of three months. The parties executed another loan document. Payment of the P10,000.00 was extended but the obligation was increased by P6,000.00 as follows: That the sum of SIX THOUSAND PESOS (P6,000.00), Philippine currency shall form part of the principal obligation to answer for attorney's fees, legal interest, and other cost incident thereto to be paid unto the creditor and his successors in interest upon the termination of this agreement. Defendants again failed to pay and plaintiff instituted this collection case. Defendants admitted the P10,000.00 principal obligation, but claimed that the additional P6,000.00 constituted usurious interest. An Order was issued by the Trial Court allowing both parties to submit a Motion for Summary Judgment. The Trial Court rendered decision ordering defendants to pay plaintiff "the amount of P10,000.00 plus the further sum of P6,000.00 by way of liquidated damages . . . with legal rate of interest on both amounts. Defendants appealed. ISSUE: w/n the amount of P6,000 was illegal? NO. Under Article 1354 of the Civil Code, in regards to the agreement of the parties relative to the P6,000.00 obligation, "it is presumed that it exists and is lawful, unless the debtor proves the contrary". No evidentiary hearing having been held, it has to be concluded that defendants had not proven that the P6,000.00 obligation was illegal. Confirming the Trial Court's finding, we view the P6,000.00 obligation as liquidated damages suffered by plaintiff, representing loss of interest income, attorney's fees and incidentals. Defendants claim that the P6,000.00 constituted usurious interest. They insist the claim of usury should have been deemed admitted by plaintiff as it was "not denied specifically and under oath" as required by the Usury
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ARTICLE 1403
ORTEGA v LEONARDO
Facts: Plaintiff and defendant claimed right of ownership over a parcel of land located in San Andres, Manila before the Rural Progress Administration (government). During the investigation of such conflicting interests, defendant asked plaintiff to desist from pressing her claim and definitely promised that if and when he succeeded in getting title to the lot, he would sell to her a portion thereof with an area of 55.60 sqm at P25.00 per sqm, provided she paid for the surveying and subdivision of the lot and provided further that after he acquired title, she could continue holding the lot as tenant by paying a monthly rental of P10.00 until said portion shall have been segregated and the purchase price fully paid. The plaintiff accepted defendant's offer, and desisted from further claiming the lot. The defendant finally acquired title thereto. The plaintiff, according to the agreement, caused the survey and segregation of the portion which defendant had promised to sell incurring expenses for subdivision. Plaintiff continued paying rentals and introduced improvements over the said lot. After the plan of the lot segregation was approved, plaintiff tendered to defendant the purchase price which the latter refused to accept without any cause or reason. Issue: Whether the oral agreement to sell the lot to plaintiff is enforceable. Held: YES. as exception to the general rule because of partial performance. Ratio: The continuance in possession may, in a proper case, be sufficiently referable to the parol contract of sale to constitute a part performance thereof. There may be additional acts or peculiar circumstances which sufficiently refer the possession to the contract. Continued possession under an oral contract of sale, by one already in possession as a tenant, has been held a sufficient part performance, where accompanied by other acts which characterize the continued possession and refer it to the contract of purchase. Especially is this true where the circumstances of the case include the making of substantial, permanent, and valuable improvements." (49 American Jurisprudence 44)
CARBONEL v PONCIO
FACTS: Carbonnel purchased Poncios land for an initial payment of P247.26 with the balance payable upon execution of the deed of sale and assumed Poncios mortgage with the Republic Savings Bank. In a document written in Batanes dialect, they agreed that Poncio would continue staying in said land for one year. However, Poncio sold the same property to the Infantes. Carbonnel sued Poncio and the Infantes for the annulment of the sale, for her to be declared owner of the land, for Poncio to execute the deed of sale, for the Register of Deeds of Rizal to issue the corresponding title, and for defendants pay damages. Defendants filed an MTD on the ground that Carbonnel's claim was unenforceable under the Statute of Frauds. MTD denied. In their Answer, the Infantes alleged that they purchased the land in question in good faith, for value, and without knowledge of the alleged sale to Carbonnel, and that her claim was unenforceable under the Statute of Frauds. In his Answer, Poncio alleged that he had consistently turned down several offers made
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BABAO v PEREZ
Facts: Celestina Perez is the owner of a 156-hectare parcel of land. When Celestinas niece married Santiago Babao, it was alleged that on 1924, Santiago and Celestina had a verbal agreement where Santiago was bound to do the following: to improve the land(156 hectares) of Celestina by leveling, clearing, planting fruits and other crops; to act as the administrator of the land and all expenses for labor and materials will be at his cost. In return, Celestina is bound to convey to Santiago or his wife(Celestinas niece) of the land, with all the improvements after the death of Celestina. Santiago alleged that he was able to clear the land and plant the crops in the span of 23 years. However, shortly before Celestinas death, she(Celestina) sold the land to another party through her attorney-in-fact(Leovigildo). Thus, Santiago filed this complaint alleging the sale of the land as fraudulent and fictitious and in violation of the oral agreement. He prays to recover the land or the expenses he incurred in improving the land. Respondents, however, denied the claim and among others claimed that by virtue of the statute of frauds, the oral agreement cannot be given credence. The trial court allowed parole evidence to be introduced to substantiate the agreement. This is now appealed to the Court to determine if parole evidence could be introduced. Issue: Whether the verbal agreement falls within the Statute of Frauds despite partial performance. Held: Yes, the statute, formerly incorporated as Section 21 of Rule 123 of our Rules of Court, is now found in Article 1403 of the new Civil Code, which provides, in so far as pertinent to this case, as follows: In the following cases an agreement hereafter made shall be enforceable by action unless the same, or some note or memorandum thereof, be in writing, and subscribed by the party charged or by his agent, evidence therefore, of the agreement
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(a) An agreement that by its terms is not to be performed within a year from the making thereof. (e) An agreement . . . for the sale of real property or of an interest therein. In order to remove the oral agreement from the statute of frauds, the agreement must be for less than a year as provided in Art. 1403 (a) [at present in Art. 1403 (2)(a)]. In the case at bar, it is clear that the undertaking as alleged in the agreement cannot be done in a period of one (1) year as in fact alleged by Santiago that it took him 23 years to perform his obligation. However, Santiago additionally contends that performance of the contract also remove it from the statute of frauds. In answering such contention, SC said that contracts which by their terms are not to be performed within one year, may be taken out of the statute through performance by one party thereto. However, it is required in such case the complete performance within the year by one party. In this case, Santiago was not able to completely perform the contract within a year from its perfection but it took him many years (23 years) before the agreement was performed. Nothing less than full performance by one party will suffice and if anything remains to be done after the expiration of the year besides the mere payment of money, the statute will apply. It is not therefore correct to state that Santiago Babao has fully complied with his part within the year from the alleged contract in question. The went on and said that assuming that partial performance may suffice, Santiagos cause will still not prosper. Since this is a sale of real property, it must be noted that this statute is one based on equity. It is based on equitable estoppel or estoppel by conduct. It operates only under certain specified conditions and when adequate relief of law is unavailable (49 Am. Jur., Statute of Frauds, Section 422, p. 727). And one of the requisites that need be present is that the agreement relied on must be certain, definite, clear, unambiguous and unequivocal in its terms before the statute may operate. In the case at bar, the alleged agreement was vague for it does not specify how many hectares was to be planted to coconuts, how many to rice and corn, and what portion to bananas and bamboo trees. Having reached the conclusion that all the parol evidence of appellee was submitted in violation of the Statute of Frauds, or of the rule which prohibits testimony against deceased persons, we find unnecessary to discuss the other issues raised in appellants' brief. The case is dismissed, with costs against appellee.
CABAGUE v AUXILIO
Facts: In the justice of the peace court of Basud, Camarines Norte, Felipe Cabague and his son Geronimo sued the defendant Matias Auxilio and his daughter Socorro to recover damages resulting from defendants' refusal to carry out the previously agreed marriage between Socorro and Geronimo. The complaint alleged, in short: (a) that defendants promised such marriage to plaintiffs, provided the latter would improve the defendants' house in Basud and spend for the wedding feast and the needs of the bride; (b) that relying upon such promises plaintiffs made the improvement and spent P700; and (c) that without cause defendants refused to honor their pledged word. The defendants moved to dismiss, arguing that the contract was oral, unenforceable under the rule of evidence hereinbefore mentioned. And the court dismissed the case. On appeal to the Court of First Instance, the plaintiffs reproduced their complaint and defendants reiterated their motion to dismiss. From an order of dismissal this appeal was perfected in due time and form. It should be observed preliminarily that, under the former rules of procedure, when the complaint did not state whether the contract sued on was in writing or not, the statute of frauds could be no ground for demurrer. Under the new Rules "defendant may now present a motion to dismiss on the ground that the contract was not in writing, even if such fact is not apparent on the face of the complaint. The fact may be proved by him." (Moran Rules of Court 2d ed. p. 139 Vol. I.) Issue: According to the Rules of Court parol evidence is not admissible to prove an agreement made upon the consideration of marriage other than a mutual promise to marry. This litigation calls for application of that rule. Courts Ruling: There is no question here that the transaction was not in writing. The only issue is whether it may be proved in court.
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ARTICLE 1409
LAO v REPUBLIC (De Castro)
I. FACTS: GSIS is the registered owner of 3 parcels of land in Ermita with an area of around 821 m 2, a 5-storey building and improvements. GSIS and the RP, through the Office of the Government Corporate Counsel (OGCC), entered into 2 contracts:
purchase" agreement. GSIS agreed to sell the same property to petitioner for P2,000,000, with a down payment of P200,000 and the balance payable within a period of 15 years at 12% interest per annum, compounded yearly. Under this second contract, GSIS obligated itself to construct for the OGCC a 3-storey building on the Manila Bay reclaimed area OR to make available another property acceptable to the OGCC, to be conveyed to the RP under the same or mutually acceptable terms as those of the first contract. In the meantime, the OGCC was allowed to continue occupying the second to the fifth floors of the building at an annual rental of P100,000, payable to petitioner. Furthermore, petitioner was entitled to lease out the ground floor and collect the corresponding rentals. Pres. Marcos and the Board of Trustees of GSIS approved the contract by signing their signatures on the same.
In 1989, after the overthrow of Marcos (in 1986), respondents filed before the RTC of Manila a complaint against petitioner alleging that: Upon petitioners behest and representations, then Pres. Marcos directed the transfer of the property to petitioner. By reason of insidious machinations, the RP, through the OGCC, was forced, intimidated and coerced to execute a waiver of its rights and interests to the property, and
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ARTICLE 1411
YU BUN GUAN v ONG
FACTS Yu Bun and Elvira were married on April 30, 1961 according to Chinese rites. On April 17, 1968 Elvira purchased a parcel of land using her own separate personal funds so the title to the property was issued and registered in her name. Later on, sometime in 1992, after more than 30 years of marriage and with three children, Yu Bun was able to convince Elvira, through repeated importunings, to execute a Deed of Sale of her property in his favor. Yu Bun promised Elvira that he would construct a commercial building on the property for the benefit of their children. He suggested that the property should be in his name alone so that Elvira would not be involved in the loan with the bank. The consideration of the transfer of the property in his name consisted of his promise to construct a commercial building for the benefit of their children to whom he will in turn, execute a Deed of Absolute Sale, and to pay the loan he had obtained from the bank. Because of Yu Buns glib assurances, Elvira signed a Deed of Absolute Sale in his favor with the ostensible consideration of P200,000 which Yu Bun did not actually pay. So a new title was issued in the name of Yu Bun alone. But to insure that Yu Bun would comply with his promise, Elvira did not deliver the owners copy of the TCT to Yu Bun. From then on, marital trouble worsened as Yu Bun would insist on delivering to him the owners copy of the title which Elvira would ask Yu Bun to comply with his promise. The marital spat was aggravated by Yu Buns promiscuity, volcanic temper and other vicious vices until he finally abandoned Elvira and their children. Yu Bun then fraudulently tried to obtain a new owners title by filing a petition in court alleging that the original title was lost. When Elvira learned about this scheme, she filed an adverse claim and asked the Court to declare the Deed of Sale she signed null and void and Yu Buns title be cancelled. Yu Bun however contended that Elvira should not be granted
RULING: No. The rule of in pari delicto applies to cases where the nullity arises from the illegality of the consideration or the purpose of the contract. In this case, the nullity of the deed arises not because of the illegality of the consideration but because the stated consideration had in fact not been paid and therefore the said deed is fictitious, simulated, inexistent and produces no effect whatsoever for lack of consideration. In the present case, it is clear from the factual findings of both lower courts that the Deed of Sale was completely simulated and, hence, void and without effect. No portion of the P200,000 consideration stated in the Deed was ever paid. And, from the facts of the case, it is clear that neither party had any intention whatsoever to pay that amount. Instead, the Deed of Sale was executed merely to facilitate the transfer of the property to petitioner pursuant to an agreement between the parties to enable him to construct a commercial building and to sell the Juno property to their children. Being merely a subterfuge, that agreement cannot be taken as the consideration for the sale. In pari delicto does not apply to inexistent contract due to lack of consideration or other essential requisites. It applies only to existing contracts with illegal consideration (Yu Bun Guan vs. Ong G.R. No. 144735 October 18, 2001.) Thus, the Deed of Sale being simulated and contrary to public policy is without effect . The Supreme Court in a related case, held that the Deed of Sale that was executed , was made merely to facilitate the transfer of the property to petitioner pursuant to an agreement is void and without effect . Being merely a subterfuge , that agreement cannot be taken as a consideration for the sale
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