CONTRACTS 19. ODYSSEY PARK VS. CA Facts: Nov 4, 1981 – Bancom and Odyssey entered a contract to sell whereby Bancom Bancom will sell a parcel of land and Europa lubhouse in Ba!uio" #eb 11, 198$ – Bancom con%rmed and ac&nowled!ed the transfer in favor of Odyssey by virtue of a separate deed of conveyance" 'he a!reed a!reed price for for the contract contract was (),*++,+++"++ to be paid by installment" installment" t was also also a!reed a!reed that in the event that Odyssey fails to pay the purchase purchase price or the interest when it falls due, Bancom has the option to rescind the contract by servin! Odyssey a written notice )+ days in advance and all the amount paid by Odyssey shall be used as rental for the occupancy" Bancom also has an option to re-uire Odyssey to remove the improvements in the property at the latters e.pense" /0E" * of the ON'2' 'O 0E33 Odyssey paid for the amount of 1++& (5( and other payments beyond the stipulated period" Odys Odysse sey y wrot wrote e to Banc Bancom om that that ther there e was was a prot protes estt from from Eur Europa opa ent enter er is not not part part of Euro Europa pa ondominuim 6illas and as&ed for withholdin! of the amorti7ation until the dispute is settled" Bancom demanded Odyssey to pay the overdue account of $"1 includin! other interest and surchar!es otherwise it would rescind the contract" Bancom %led an eectment suit a!ainst Odyssey" 2nd later on, rescission of the contract" ' held in favor of Bancom"5ence this petition Issue: :hether the stipulation of the parties to a contract is bindin! to the parties" /;E0 Ruling: t is clear that the above provisions contemplate neither a conditional sale nor a contract to sell but an absolute sale" :hat must instead be held to rule in the case at bar is the a!reement of the parties themselves" 0ection * of their contract to sell reads< “In the event Odyssey fails to pay any portion of the purchase price of the Property or the interest and service charge thereon as and when it falls due, or otherwise fails to comply with or violate any of the provisions of this Contract, Bancom may at its absolute discretion cancel and rescind this Contract and declare the same as null, void and no further force and eect by serving on Odyssey a written notice of cancellation cancellation and rescission thirty (!" days in advance# In the event this Contract is cancelled and rescinded as provided in this $ection, all the amounts which the Odyssey may have paid to Bancom pursuant to and in accordance with this Contract shall be forfeited in favor of Bancom as rentals for the use and occupancy of the Property and as penalty for the t he breach and violation of this Contract# %urthermore, all the improvements which Odyssey may have intr introd oduc uced ed on the the Prop Proper erty ty shal shalll form form part part ther thereo eoff and belo belong ng to Banc Bancom om with withou outt righ rightt of reimbursements to Odyssey& Provided, that Bancom may at its absolute discretion instead re'uire Odyssey to remove such improvements from the Property at epense of Odyssey#) It is a fai faili lia! a! "#ct "#ct!i !ine ne in t$e t$e la% la% #n c#nt c#nt!a !act cts s t$at t$at t$e t$e &a!t &a!tie ies s a!e a!e '#un '#un" " '( t$e t$e sti&ulati#ns) clauses) te!s an" c#n"iti#ns t$e( $a*e ag!ee" t#) t$e #nl( liitati#n 'eing t$at t$ese sti&ulati#ns) clauses) te!s an" c#n"iti#ns a!e n#t c#nt!a!( t# la%) #!als) &u'lic #!"e! #! &u'lic &#lic(. N#t 'eing !e&ugnant !e&ugnant t# an( legal &!#sc!i&ti#n) t$e ag!eeent ente!e" int# '( t$e &a!ties $e!ein in*#l*e" ust 'e !es&ecte" an" $el" t# 'e t$e la% 'et%een t$e.
+,.S- INVEST-ENTS VS. POSADAS RECIT RECA: 0 = (osadas entered into a oint venture a!reement but when the latter received more lucrative o>ers, it refuses to honor the a!reement thin&in! that it was not yet perfected" 5'( DOCTRINE: ? 2 contract is perfected by mere consent of the parties" n relation to 2rt"1)1*, 2rt"1)18 = 1)19 states the re-uisites of a contract< onsent or meetin! of the minds, Obect certain, = ause@onsideration" ? n !eneral, contracts under!o three distinct sta!es, to wit< ne!otiationA perfection or birthA and consummation" Ne!otiation be!ins from the time the prospective contractin! parties manifest their interest in the contract and ends at the moment of a!reement of the parties" (erfection or birth of the contract ta&es place when the parties a!ree upon the essential elements of the contract" onsummation occurs when the parties ful%ll or perform the terms a!reed upon in the contract, culminatin! in the e.tin!uishment thereof" /0wedish atch, 2B v" 2 Facts: espondent (osadas /Estela, Elena, = 2ida are owners of $"C hectares of land" 0 sent them a written o>er for oint venture for development of the subect property into a 1 st class commercial@residential subdivision, settin! the price at (4&@s-"m", with the sharin! set at C+@4+ basis in favor of respondents, plus payment to them of (+ as !oodwill money" espondents sent a counter? proposal increasin! the !oodwill money at (8+, to which 0 relayed its acceptance" n compliance w@what it considered as perfected contract, 0 sent to respondents 4 drawin!s of the proposed mall = its location w@in the subect property" 5owever, espondents replied that ) months have passed w@c they too& as lac& of interest on the part of 0, and that they received more lucrative o>ers which 0 should better, before they !ive comment to the drawin!s that lac& plans = speci%ations" 0 therefore increased the !oodwill money to (14+" t appearin! that respondents do not honor the oint venture a!reement, 0 %led a case for speci%c performance with dama!es" ' ruled in favor of 0, which was reversed by 2" 5'(" Issue: :hether the ontract for Doint 6enture was perfected Ruling: (etition !ranted" 2ssailed decision is reversed = set aside" 'he Doint 6enture 2!reement is perfected for the followin! reasons< 1" 0 made a complete o>er containin! an obect certain, which is the oint veture for the development of the 0ubect (roperty, a speci%c cause and@or consideration therefor, which are the !oodwill money in the amount of (+ illion, plus a C+@4+ sharin!, in favor of respondents of the said development" $" espondents made a complete counter?o>er conveyin! their acceptance subect to increase of !oodwill money to (8+" )" 0 made an un-uali%ed acceptance on the aspect of the !oodwill money" 'hus, by virtue of 2rt, 1)18 = 1)19 of N, a oint venture a!reement has been perfected in that< there is consent, or a meetin! of the minds, there is an obect certain, which is the oint venture, = there is a cause and@or consideration, which are the !oodwill money and speci%c sharin! scheme" n 0wedish atch, 2B v" 2, the ourt e.plained that in !eneral, contracts under!o three distinct sta!es, to wit< ne!otiationA perfection or birthA and consummation" n the present case, the parties already reached the $nd sta!e" 'he plans = speci%cations will come only after the e.ecution thereof" 'he lac& of a!reement on details = plans of development does not prevent and is not a condition precedent for perfection of the contract" 'he fact that the drawin!s were submitted by 0 more than ) months after the a!reement was perfected is not a valid cause for respondents to unilaterally bac& out" 2lso, anent
the increase in !oodwill money to (14+, it is not evidence of on?!oin! ne!otiations but rather to merely appease the respondents who were lured by subse-uent parties"
+1. /OSTON /ANK VS. -ANAO Facts: avierville Estates /E was the owner of parcels of land in F" E e.ecuted a deed of sale over some lots with Overseas Ban& of anila /OB" E continued sellin! the lots as a!ent of OB" E then contracted the services of analo as an en!ineer for ()4,8"CC" analo proposed to E to purchase a lot and o>ered the amount owed to him as a down payment" E a!reed and analo was told to choose lots" 'he price was pe!!ed ata total of ()48,+C+"++ with a $+G down payment less the amount owed to respondent" 'he analos too& possession of the property and constructed a house, yet they did not pay the balance of the down payment because of the failure to prepare a contract of conditional sale" 0ubse-uently ommercial Ban& of anila /B ac-uired the interests of OB, which included the lots analo had occupied" B then re-uested that they stop on!oin! construction since they were now the new owners" B was informed of the previous contract with OB throu!h E, but the analos could not produce a copy of the contract, so B %led and unlawful detainer claimin! that the analos have been unlawfully occupyin! the property" 'he analos then %led a complaint for speci%c performance a!ainst B, alle!in! they have always been ready and able to pay on the lots sold, but no contract was forthcomin!" 'hey constructed their house in !ood faith and informed the defendant that they will abide by the terms and conditions of their ori!inal a!reement with the defendantHs predecessor in interest" Iefendant raises the defense that plainti>s have no cause of action a!ainst them and that a!reement between E was not bindin! on it, havin! no record of any contract to sell, or statements of accounts from its predecessors" Issue: :hether petitioner or its predecessors in interest, as seller, and respondents, as buyer, for!ed a perfected contract to sell" 0el": No" :e a!ree with petitionerJs contention that, for a perfected contract of sale or contract to sell to e.ist in law, there must be an a!reement of the parties, not only on the price of the property sold, but also on the manner the price is to be paid by the vendee" Knder 2rticle 14*8 of the New ivil ode, in a contract of sale, whether absolute or conditional, one of the contractin! parties obli!es himself to transfer the ownership of and deliver a determinate thin!, and the other to pay therefor a price certain in money or its e-uivalent" 2 contract of sale is perfected at the moment there is a meetin! of the minds upon the thin! which is the obect of the contract and the price" #rom the averment of perfection, the parties are bound, not only to the ful%llment of what has been e.pressly stipulated, but also to all the conse-uences which, accordin! to their nature, may be in &eepin! with !ood faith, usa!e and law" On the other hand, when the contract of sale or to sell is not perfected, it cannot, as an independent source of obli!ation, serve as a bindin! uridical relation between the parties" 2 de%nite a!reement as to the price is an essential element of a bindin! a!reement to sell personal or real property because it seriously a>ects the ri!hts and obli!ations of the parties" (rice is an essential element in the formation of a bindin! and enforceable contract of sale" 'he %.in! of the price can never
be left to the decision of one of the contractin! parties" But a price %.ed by one of the contractin! parties, if accepted by the other, !ives rise to a perfected sale" t is not enou!h for the parties to a!ree on the price of the property" 'he parties must also a!ree on the manner of payment of the price of the property to !ive rise to a bindin! and enforceable contract of sale or contract to sell" 'his is so because the a!reement as to the manner of payment !oes into the price, such that a disa!reement on the manner of payment is tantamount to a failure to a!ree on the price" n a contract to sell property by installments, it is not enou!h that the parties a!ree on the price as well as the amount of down payment" 'he parties must, li&ewise, a!ree on the manner of payment of the balance of the purchase price and on the other terms and conditions relative to the sale" Even if the buyer ma&es a down payment or portion thereof, such payment cannot be considered as suLcient proof of the perfection of any purchase and sale between the parties" :e a!ree with the contention of the petitioner that, as held by the 2, there is no showin!, in the records, of the schedule of payment of the balance of the purchase price on the property" :e have meticulously reviewed the records, includin! the letters to respondents, and %nd that said parties con%ned themselves to a!reein! on the price of the property /()48,+C+"++, the $+G downpayment of the purchase price /(C9,C1$"++, and credited respondents for the()4,88"++ owin! from amos as part of the $+G downpayment" 'he timeline for the payment of the balance of the downpayment /()4,$4")4 was also a!reed upon, that is, on or before E resumed its sellin! operations, on or before Iecember )1, 19$, or within %ve /* days from written notice of such resumption of sellin! operations" 'he parties had also a!reed to incorporate all the terms and conditions relatin! to the sale, inclusive of the terms of payment of the balance of the purchase price and the other substantial terms and conditions in the Mcorrespondin! contract of conditional sale,M to be later si!ned by the parties, simultaneously with respondentsJ settlement of the balance of the downpayment" 'here is no evidence on record to prove that E or OB and the respondents had a!reed, on the terms of payment of the balance of the purchase price of the property and the other substantial terms and conditions relative to the sale" ndeed, the parties are in a!reement that there had been no contract of conditional sale ever e.ecuted by E, OB or petitioner, as vendor, and the respondents, as vendees"
++.OSE AND AIDA YASON VS. FA2STINO A. Facts: 0pouses Emilio and laudia 2rcia!a were owners of a 3ot situated in Baran!ay (utatan, untinlupa ity" 'hey e.ecuted a Ieed of onditional 0ale whereby they sold the 3ot to spouses Ir" Dose and 2ida ;ason, petitioners" 'hey tendered an initial payment" Kpon payment of the balance of , spouses Emilio and laudia 2rcia!a e.ecuted a Ieed of 2bsolute 0ale" 'hat day, laudia died" 0he was survived by her spouse and their si. /C children" (etitioners had the Ieed of 2bsolute 0ale re!istered" 'hey entrusted its re!istration to one Desus edina to whom they delivered the document of sale and funds for capital !ains ta." :ithout their &nowled!e, edina falsi%ed the Ieed of 2bsolute 0ale and had the document re!istered in the e!istry of Ieeds of a&ati ity" 5e made it appear that the sale too& place on Duly $, 199, instead of 2pril 19, 198), and that the price of the lot was only ($*,+++"++, instead of ($C*,+++"++" On the basis of the fabricated deed, '' in the names of spouses 2rcia!a was cancelled and in lieu thereof, was issued in the names of petitioners" 0ubse-uently, petitioners had the lot subdivided into $) smaller lots" 0pouses 2rcia!aJs children learned of the falsi%ed document of sale and %led a complaint for falsi%cation of documents a!ainst petitioners" 5owever, durin! the ( the prosecutor dismissed the complaint" espondents, %led with the ', a complaint for annulment of the 1) land titles, mentioned earlier, a!ainst petitioners" espondents alle!ed inter aliathat the Ieed of 2bsolute 0ale is void ab initio considerin! that /1 laudia 2rcia!a did not !ive her consent to the sale as she was then seriously ill, wea&, and unable to tal& and /$ Desus edina falsi%ed the Ieed of 2bsolute 0aleA that without laudiaJs consent, the contract is voidA and that the 1) land titles are also void because a for!ed deed conveys no title" ' favored the petitioners, 2 reversed" espondents contend that laudia did not !ive her consent to the contracts of sale" 0ince she &new how to read and write, she should have si!ned each document instead of merely aL.in! her thumbmar& thereon" Iomin!o 2rcia!a, one of the respondents, testi%ed that her mother laudia was 8$ years old when she died on 2pril 19, 198) due to Mold a!eM and illness for four /4 months" On arch $8, 198), when the onditional Ieed of 0ale was alle!edly e.ecuted, she was already very wea& and thin and could no lon!er spea&" onsiderin! her physical condition, she could not have aL.ed her thumbmar& on the onditional Ieed of 0ale that day" Issue: :hether the Ieed of 2bsolute 0ale e.ecuted by 0ps" 222 was valid :hether laudia 2rcia!a voluntarily aL.ed her thumbmar& on the documents of sale" Ruling: ;es, the court was convinced and so held that there was consent on the part of laudia 2rcia!a when she e.ecuted the onditional Ieed of 0ale and the Ieed of 2bsolute 0ale bein! assailed by respondents" 'hese documents, therefore, are valid" 'he essential re-uisites of contracts, vi* < /1 consent of the contractin! partiesA /$ obect certain which is the subect matter of the contractA and /) cause of the obli!ation which is established" 2 contract of sale is perfected at the moment there is a meetin! of the minds upon the thin! which is the obect of the contract and upon the price" C#nsent is anifeste" '( t$e eeting #f t$e #3e! an" t$e acce&tance u&#n t$e t$ing an" t$e cause %$ic$ a!e t# c#nstitute t$e c#nt!act " 'o enter into a valid le!al a!reement, the parties must have the capacity to do so"
Only if there is unfairness in the transaction, such as !ross inade-uacy of consideration, the low de!ree of intellectual capacity of the party, may be ta&en into consideration for the purpose of showin! such fraud as will a>ord a !round for annullin! a contract" 5ence, a person is not incapacitated to enter into a contract merely because of advanced years or by reason of physical in%rmities, unless such a!e and in%rmities impair his mental faculties to the e.tent that he is unable to properly, intelli!ently and fairly understand the provisions of said contract" espondents failed to show that laudia was deprived of reason or that her condition hindered her from freely e.ercisin! her own will at the time of the e.ecution of the Ieed of onditional 0ale" 'he law presumes that every person is fully competent to enter into a contract until satisfactory proof to the contrary is presented" 'he burden of proof is on the individual assertin! a lac& of capacity to contract, and this burden has been characteri7ed as re-uirin! for its satisfaction clea! an" c#n*incing e*i"ence" t is of no moment that laudia merely aL.ed her thumbmar& on the document" 'he si!nature may be made by a personJs cross or mar& even thou!h he is able to read and write and is valid if the deed is in all other respects a valid one" 0i!ni%cantly, there is no evidence showin! that laudia was forced or coerced in aL.in! her thumbmar& on the Ieed of onditional 0ale" 'he burden is on the respondents to prove the lac& of capacity on the part of laudia to enter into a contract" 2nd in provin! this, they must o>er clear and convincin! evidence" 'his they failed to do"
+4.-ADARIN VIA VS. CA D#ct!ine: + cardholders oer to pay by means of his credit card constitutes not only an acceptance of the provisions of a stipulation pour autri but also an eplicit communication of his acceptance to the obligor# Facts: (rivate respondent de Desus hosted a dinner at the petitionerJs restaurant, the andarin 6illa 0eafoods 6illa!e in andaluyon! ity" 2fter dinner, the waiter handed to de Desus the bill amountin! to ($,C*8"*+" Ie Desus o>ered his B2NP2I credit card to the waiter for payment" inutes later, the waiter returned and audibly informed that said credit card had e.pired" Ie Desus demonstrated that the card had yet to e.pire on 0ept 199+, as embossed on its face" Ie Desus approached the cashier who a!ain dishonored such card" Ie Desus o>ered his B( e.press credit card instead and this was accepted, honored and veri%ed" 'he incident tri!!ered the %lin! of a suit for dama!es by private respondent" 'he trial court and 2 held petitioner to be ne!li!ent" Issue: :hether petitioner is bound to accept payment by means of credit cardA Ruling: andarin 6illa contends that it cannot be faulted for its cashierJs refusal to accept private respondentJs B2NP2I credit card, the same not bein! a le!al tender" t ar!ues that private respondentJs o>er to pay by means of credit card partoo& of the nature of a proposal to novate an e.istin! obli!ation for which petitioner, as creditor, must %rst !ive its consent otherwise there will be no bindin! contract between them" (etitioner cannot see& refu!e behind this averment" :e note that andarin 6illa 0eafood 6illa!e is aLliated with B2NP2I" n fact, an Q2!reementR entered into by petitioner and B2NP2I which provides that the former STU shall honor validly issued ( credit cards presented by their correspondin! holders in the purchase of !oods and@or services supplied by it provided that the card e.piration date has not elapsed and the card number does not appear on the latest cancellation bulletin of lost STU :hile private respondent may not be a party to the said a!reement, the above-uoted stipulation conferred a favor upon the private respondent, a holder of credit card validly issued by B2NP2I" T$is sti&ulati#n is a sti&ulati#n pour autri an" un"e! A!ticle 1411 #f t$e Ci*il C#"e &!i*ate !es&#n"ent a( "ean" its ful5llent &!#*i"e" $e c#unicate" $is acce&tance t# t$e &etiti#ne! 'ef#!e its !e*#cati#n. In t$is case) &!i*ate !es&#n"ent6s #3e! t# &a( '( eans #f $is /ANKARD c!e"it ca!" c#nstitutes n#t #nl( an acce&tance #f t$e sai" sti&ulati#n 'ut als# an e7&licit c#unicati#n #f $is acce&tance t# t$e #'lig#!.
+8./PI EPRESS CARD VS. AR-OVIT RECIT RECA: 2rmovit, B( credit card user, used the card at a restaurant to treat her friends but was declined since B( had suspended the card" 0he felt ashamed of what happened thus %led for dama!es" B( claims that they informed her about the suspension and that she needed to submit a new application" ' = 2 found B( liable" Iid not inform her that she needed to submit a new application" 0 aLrmed '5K0 there was no a!reement between the parties to add the submission of the new application form as the means to reactivate the credit card" DOCTRINE: :ith B( E.press redit bein! the party causin! the confusion, the interpretation of the contract could not be done in its favor oreover, it cannot be denied that a credit card contract is considered as a contract of adhesion because its terms and conditions are solely prepared by the credit card issuer" onse-uently, the terms and conditions have to be construed a!ainst B( E.press redit as the party who drafted the contract" FACTS: 2rmovit, a depositor at B( ubao brach was issued a B( e.press credit /pre?approved B( e.press credit cart with a credit limit of $+& and e.piration at arch 199)" On Nov $1, 199$, 2rmovit treated her british friends from 5on!Pon! to lunch at arioJs restaurant" :hen she settled the bill usin! her credit car, it was denied and sait it was already cancelled and B( would not honor it 0ince she relied usin! the credit car, she did not carry cash and hey !uests were made to share the bill 'O 5E E'EE EB2200EN' 0he called B( and learned that her credit card had been summarily cancelled for failure to pay her outstandin! obli!ations" 0he vehemently denied havin! defaulted on her payments" 0he demanded compensation for the 052E, EB2200EN' and 5K32'ON worth $ B( claimed that they sent 2rmovit a tele!raphic messa!e re-uestin! her to pay her arrears for ) consecutive monts and she did not comply causin! it to suspend the card" 'hey claim that they noti%ed her" On arch 1$, 199), 2rmovit received a tele!raphic messa!e from B( E.press redit apolo!i7in! for its error of inadvertently includin! her credit card in aution 3ist No" $$* dated arch 11, 199) sent to its aLliated merchants" 2rmovit sued B( E.press redit for dama!es in the ', insistin! that she had been a credit card holder in !ood standin!, and that she did not have any unpaid billsat the time of the incident" ' – B( Ban& liable ' observed that the terms and conditions !overnin! the issuance and use of the credit card embodied in the application form had been furnished to her for the %rst time only on 2pril 8, 199$, or after her credit card privile!es had already been suspendedA that, accordin!ly, she could not be blamed for not complyin! with the sameA that even if she had been noti%ed of the temporary suspension of her credit card, her payment on 2pril 1, 199$ had rendered the continued suspension of her credit card unusti%edA and that there was no clear showin! that the submission of the application form had been a condition precedent to the liftin! of its suspension" 2 2##EI 2 declared that because 2rmovit had not si!ned any application form in the issuance and renewals of her credit card from 1989 up to 199$, she could not have &nown the terms and conditions embodied in the application form even if the credit card had speci%ed that its use bound the holder to its terms and conditions"
t did not see merit in B( E.press reditJs contention that the submission of a new application form was a pre?re-uisite for the liftin! ofthe suspension of her credit card, inasmuch as such condition was not stated in a clear and une-uivocal manner in its letter dated 2pril 8, 199$" t noted that the letter of apolo!y mentionin! another inadvertence committed, even if it claimed the letter of apolo!y as intended for another card holder, still hi!hli!hted B( E.press reditJs ne!li!ence in its dealin!s with her account" Issue: :hether or not the 2 erred in sustainin! the award of moral and e.emplary dama!es in favor of 2rmovit" Ruling: NO, petition lac&s merit, IE0ON 2##EI" 'he relationship between the credit card issuer and the credit card holder is a contractual one that is !overned by the terms and conditions found in the card membership a!reement 0uch terms and conditions constitute the law between the parties" B( E.press redit contends that it was not !rossly ne!li!ent in refusin! to lift the suspension of 2rmovitJs credit card privile!es inasmuch as she had not complied with the re-uisite submission of a new application formA and that under the circumstances its ne!li!ence, if any, was not so !ross as to amount to malice or bad faith followin! the rulin! in #ar East Ban& and 'rust ompany v" ourt of 2ppeals" The Court disagrees with the contentions of BPI Express Credit. 'he 'erms and onditions overnin! the ssuance and Kse of the B( E.press redit ard printed on the credit card application form spelled out the terms and conditions of the contract between B( E.press redit and its card holders, includin! 2rmovit" 0uch terms and conditions determined the ri!hts and obli!ations of the parties" ;et, a review of such terms and conditions did not reveal that 2rmovit needed to submit her new application as the antecedent condition for her credit card to be ta&en out of the list of suspended cards" onsiderin! that the terms and conditions nowhere stated that the card holder must submit the new application form in order to reactivate her credit card, to allow B( E.press redit to impose the duty to submit the new application form in order to enable 2rmovit to reactivate the credit card would contravene the (arol Evidence ule" 'here was no a!reement between the parties to add the submission of the new application form as the means to reactivate the credit card" :hen she did not promptly settle her outstandin! balance, B( E.press redit sent a messa!e on arch 19, 199$ demandin! payment with the warnin! that her failure to pay would force it to temporarily suspend her credit card e>ective arch )1, 199$" t then sent another demand letter dated arch )1, 199$ re-uestin! her to settle her obli!ation in order to lift the suspension of her credit card and prevent its cancellation" n 2pril 199$, she paid her obli!ation" n the conte.t of the contemporaneous and subse-uent acts of the parties, the only condition for the reinstatement of her credit card was the payment of her outstandin! obli!ation" 'he letter of B( E.press redit dated 2pril 8, 199$ did not clearly and cate!orically inform 2rmovit that the submission of the new application form was the pre?condition for the reactivation of her credit card" 'he statement in the letter /i"e", MT accomplish the enclosed application form and provide us with informations@documents that can help our redit ommittee in reevaluatin! your e.istin!facility with us"M merely raised doubt as to whether the re-uirement had really been a pre?condition or not" :ith B( E.press redit bein! the party causin! the confusion, the interpretation of the contract could not be done in its favor" oreover, it cannot be denied that a credit card contract is considered as a contract of adhesion because its terms and conditions are solely prepared by the credit card issuer" onse-uently,
the terms and conditions have to be construed a!ainst B( E.press redit as the party who drafted the contract" B( E.press redit acted in wanton disre!ard of its contractual obli!ations with her" o :e concur with the apt observation by the 2 that B( E.press reditJs ne!li!ence was even con%rmed by the tele!raphic messa!e it had addressed and sent to 2rmovit apolo!i7in! for the inconvenience caused in inadvertently includin! her credit card in the caution list" B( E.press redit did not observe the prudence e.pected of ban&s whose business was imbued with public interest"
+. ECE REATY VS. -ANDAP RECIT RECA: espondent bou!ht a condominium unit from petitioner developer" Ieveloper advertised that the condominium is located in a&ati" 5owever, respondent discovers that the condominium was bein! built in (asay and not in a&ati" espondent wants to terminate the contract a!reement and refund the reservation fee and downpayments she has made" 53KB dismissed respondentJs complaint" DOCTRINE: +rticle -. of the Civil Code provides that /there is fraud when through insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract which, without them, he would not have agreed to#/ +rticle -00 of the same Code provides that “in order that fraud may ma1e a contract voidable, it should be serious and should not have been employed by both contracting parties#) 2urisprudence has shown that in order to constitute fraud that provides basis to annul contracts, it must ful3ll two conditions# %irst, the fraud must be dolo causante or it must be fraud in obtaining the consent of the party# 4his is referred to as causal fraud# 4he deceit must be serious# 4he fraud is serious when it is su5cient to impress, or to lead an ordinarily prudent person into error& that which cannot deceive a prudent person cannot be a ground for nullity# 4he circumstances of each case should be considered, ta1ing into account the personal conditions of the victim# $econd, the fraud must be proven by clear and convincing evidence and not merely by preponderance thereof# Facts: (etitioner, a corporation en!a!ed in the buildin! and development of condominium units started constructin! entral (ar& ondominium Buildin! located in (asay ity" 5owever, printed advertisements were made indicatin! therein that the said proect was to be built in a&ati ity" espondent, a!reed to buy a unit from the above proect by payin! a reservation fee and, thereafter, downpayment and monthly installments" 'he parties e.ecuted a ontract to 0ell" n the said ontract, it was indicated that the condominium proect is located in (asay ity" ore than two years after the e.ecution of the ontract to 0ell, respondent demanded the return of the payments she made, on the !round that she subse-uently discovered that the condominium proect was bein! built in (asay ity and not in a&ati ity as indicated in its printed advertisements" 5owever, instead of answerin! respondentHs letter, petitioner sent her a written communication informin! her that her unit is ready for inspection and occupancy" espondent %led a complaint with the 53KB see&in! the annulment of her contract with petitioner, the return of her payments, and dama!es" EN#O dismissed respondentHs complaint and held that respondent Mfailed to show or substantiate the le!al !rounds that consist of a fraudulent or malicious
dealin! with her by the petitioner, such as, the latterHs employment of insidious words or machinations which induced or entrapped her into the contract and which, without them, would not have encoura!ed her to buy the unit"M 2 petition was %led with the 2 and the 2 held that petitioner employed fraud and machinations to induce respondent to enter into a contract with it" 'he 2 also e.pressed doubt on the due e.ecution of the ontract to 0ell between the parties" Issue: :hether or not petitioner is !uilty of fraud and if so, whether such fraud is suLcient !round to nullify its contract with respondent" Ruling: NO" 'his ourt %nds that petitioner is !uilty of false representation of a fact" 'his is evidenced by its printed advertisements indicatin! that its subect condominium proect is located in a&ati ity when, in fact, it is in (asay ity" 'he ourt a!rees with the 5ousin! and 3and Kse 2rbiter, the 53KB Board of ommissioners, and the OLce of the (resident, in condemnin! petitionerHs deplorable act of ma&in! misrepresentations in its advertisements and in issuin! a stern warnin! that a repetition of this act shall be dealt with more severely" n his decision, the 5ousin! and 3and Kse 2rbiter found that respondent failed to show that Mthe essential and@or movin! factor that led the SrespondentU to !ive her consent and a!ree to buy the unit was precisely the proectHs advanta!eous or uni-ue location in a&ati SityU – to the e.clusion of other places or city . . ."R Both the 53KB Board of ommissioners and the OLce of the (resident aLrmed the %ndin! of the 2rbiter and unanimously held that respondent failed to prove that the location of the said proect was the causal consideration or the principal inducement which led her into buyin! her unit in the said condominium proect" 'he ourt %nds no co!ent reason to depart from the fore!oin! %ndin!s and conclusion of the above a!encies" ndeed, evidence shows that respondent proceeded to si!n the ontract to 0ell despite information contained therein that the condominium is located in (asay ity" 'his only means that she still a!reed to buy the subect property re!ardless of the fact that it is located in a place di>erent from what she was ori!inally informed" f she had a problem with the propertyHs location, she should not have si!ned the ontract to 0ell and, instead, immediately raised this issue with petitioner" But she did not" 2s correctly observed by the OLce of the (resident, it too& respondent more than two years from the e.ecution of the ontract to 0ell to demand the return of the amount she paid on the !round that she was misled into believin! that the subect property is located in a&ati ity" n the meantime, she continued to ma&e payments" n any case, even assumin! that petitionerJs misrepresentation consists of fraud which could be a !round for annullin! their ontract to 0ell, respondentHs act of aL.in! her si!nature to the said ontract, after havin! ac-uired &nowled!e of the propertyHs actual location, can be construed as an implied rati%cation thereof" ati%cation of a voidable contract is de%ned under 2rticle 1)9) of the ivil ode as follows< 2rt" 1)9)" ati%cation may be e>ected e.pressly or tacitly" t is understood that there is a tacit rati%cation if, with &nowled!e of the reason which renders the contract voidable and such reason havin! ceased, the person who has a ri!ht to invo&e it should e.ecute an act which necessarily implies an intention to waive his ri!ht" mplied rati%cation may ta&e diverse forms, such as by silence or ac-uiescenceA by acts showin! approval or adoption of the contractA or by acceptance and retention of bene%ts Vowin! therefrom" Knder 2rticle 1)9$ of the ivil ode, Mrati%cation e.tin!uishes the action to annul a voidable contract"R n addition, 2rticle 1)9C of the same ode provides that Mrati%cation cleanses the contract from all its defects from the moment it was constituted"M
+;.INS2AR IFE VS. ASSET /2IDERS CORP Facts: nsular 3ife nsurance ompany, 3imited invited companies to participate in the biddin! of the proposed nsular 3ife buildin!" 'he nstruction to Bidders prepared by nsular 3ife e.pressly re-uired a formal acceptance and a period within which such acceptance was to be made &nown to the winner" 2sset Builders orporation submitted a bid proposal secured by bid bonds valid for C+ days" Knder its proposal form, 2sset Builders bound and obli!ed itself to enter into a contract with nsular 3ife within 1+ days from the notice of the award, with !ood and suLcient securities" 'he proect was awarded to the 2sset Builders and a notice to proceed with the construction was sent by nsular 3ife to the former" 5owever, 2sset Builders proect" Neither did it e.ecute any construction a!reement" t informed nsular 3ife that it will not proceed with the proect" Issue: :hether or not there is a perfected contract between nsular 3ife and 2sset Builders" 0el": 'here was indeed no acceptance of the o>er by 2sset Builders" 0uch failure to comply with the condition imposed for the perfection of the contract resulted in the failure of the contract" t is elementary that, bein! consensual, a contract is perfected by mere consent" #rom the moment of a meetin! of the o>er and the acceptance upon the obect and the cause that would constitute the contract, consent arises" 5owever, Mthe o>er must be certainM and Mthe acceptance seasonable and absoluteA if -uali%ed, the acceptance would merely constitute a counter?o>er"M 'here are three distinct sta!es of a contract? preparation or ne!otiation, perfection or consummation" Ne!otiation be!ins when the prospective contractin! parties manifest their interest in the contract and ends at the moment of their a!reement" (erfection occurs when they a!ree upon the essential elements thereof" 'he last sta!e is the consummation where they ful%ll the terms a!reed upon culminatin! in the e.tin!uishment of the contract" n the case at bar, the parties did not !et past the ne!otiation sta!e" n fact, there was only an o>er and a countero>er that did not sum up to any %nal arran!ement containin! the elements of a contract" learly, no meetin! of minds was established"
+<.SERRA VS. CA DOCTRINE: 2n optional contract is a privile!e e.istin! only in one party W the buyer" #or a separate consideration paid, he is !iven the ri!ht to decide to purchase or not, a certain merchandise or property, at any time within the a!reed period, at a %.ed price" 'his bein! his prero!ative, he may not be compelled to e.ercise the option to buy before the time e.pires" Facts= Iisputed in the present case is the eLcacy of a Montract of 3ease with Option to BuyM, entered into between petitioner #ederico 0erra and private respondent i7al ommercial Ban&in! orporation /B" (etitioner is the owner of a )4 s-uare meter parcel of land located at Fue7on 0t", asbate, asbate" 0ometime in 19*, respondent ban&, in its desire to put up a branch in asbate, asbate, ne!otiated with petitioner for the purchase of the then unre!istered property" 2 contract of 3E20E :'5 O('ON 'O BK; was instead for!ed by the parties 2 complaint for speci%c performance and dama!es were %led by respondent a!ainst petitioner" n the complaint, respondent alle!ed that durin! the ne!otiations it made clear to petitioner that it intends to stay permanently on property once its branch oLce is opened unless the e.i!encies of the business re-uires otherwise" 2side from its prayer for speci%c performance, it li&ewise as&ed for an award of (*+, +++"++ for attorneyHs fees (1++, +++"++ as e.emplary dama!es and the cost of the suit" '< nitially, after trial on the merits, the court dismissed the complaint" 2lthou!h it found the contract to be valid, the court nonetheless ruled that the option to buy in unenforceable because it lac&ed a consideration distinct from the price and B did not e.ercise its option within reasonable time" 'he prayer for readustment of rental was denied, as well as that for moral and e.emplary dama!es" Nevertheless, upon motion for reconsideration of respondent, the court reversed itself, orderin! the land owner to e.ecute and deliver the proper deed of sale in favor of plainti> ban&" 2< 'he ourt of 2ppeals aLrmed the %ndin!s of the trial court that< 1" 'he contract is valid and that the parties perfectly understood the contents thereofA $" 'he option is supported by a distinct and separate consideration as embodied in the a!reementA )" 'here is no basis in !rantin! an adustment in rental" Issue: :ON the contract is valid and the option is enforceable" Ruling: ;es" 'he (etition is devoid of merit" 1" e ontract of adhesion" ontract is valid" 2 contract of adhesion is one wherein a party, usually a corporation, prepares the stipulations in the contract, while the other party merely aL.es his si!nature or his MadhesionM thereto" 'hese types of contracts are as bindin! as ordinary contracts" Because in reality, the party who adheres to the contract is free to reect it entirely" 2lthou!h, this ourt will not hesitate to rule out blind adherence to terms where facts and circumstances will show that it is basically one?sided" (etitioner is a hi!hly educated man, who, at the time of the trial was already a (2?3awyer, and when he entered into the contract, was already a (2, holdin! a respectable position with the etropolitan anila ommission" $" Option is valid" :hether the price Mnot !reater than ':O 5KNIEI (E0O0M is certain or de%nite" ;E0"
2 price is considered certain if it is so with reference to another thin! certain or when the determination thereof is left to the ud!ment of a speci%ed person or persons" 2nd !enerally, !ross inade-uacy of price does not a>ect a contract of sale" )" Durisprudence has tau!ht us that an optional contract is a privile!e e.istin! only in one party W the buyer" #or a separate consideration paid, he is !iven the ri!ht to decide to purchase or not, a certain merchandise or property, at any time within the a!reed period, at a %.ed price" 'his bein! his prero!ative, he may not be compelled to e.ercise the option to buy before the time e.pires" 'he 0upreme a court reiterated its rulin! in one case statin! thus< what may be re!arded as a consideration separate from the price is discussed in the case of 6da" de Fuirino v" (alarca 1C wherein the facts are almost on all fours with the case at bar" 'he said case also involved a lease contract with option to buy where we had occasion to say that Mthe consideration for the lessorHs obli!ation to sell the leased premises to the lessee, should he choose to e.ercise his option to purchase the same, is the obli!ation of the lessee to sell to the lessor the buildin! and@or improvements constructed and@or made by the former, if he fails to e.ercise his option to buy leased premises"M n the present case, the consideration is even more onerous on the part of the lessee since it entails transferrin! of the buildin! and@or improvements on the property to petitioner, should respondent ban& fail to e.ercise its option within the period stipulated 5ence, the contract of M3E20E :'5 O('ON 'O BK;M between petitioner and respondent ban& is valid, e>ective and enforceableA the price bein! certain and that there was consideration distinct from the price to support the option !iven to the lessee"
+>.SANTIA?O VS. CA RECIT RECA: 2 deed of sale was e.ecuted in favor of vendees but vendor still occupied the house and property, lived in the masterJs bedroom with all the amenities while vendees were occupyin! small bedrooms without bath and toilet" 'hese acts are contrary to acts of ownership" 'he deed of sale was simulated and %ctitious" DOCTRINE: 2cts contrary to ownership prove that the sale was not meant to transfer any ri!htA that it is simulated and it is therefore null and void" 2ctions and defenses for declaration of ine.istence of a contract do not prescribe" Facts: (aula 2rce!a, the re!istered owner of a parcel of land, e.ecuted a deed of conditional sale /Iec" 9, 19+ in favor of Dose%na 2rce!a and 0ps" 0antia!o for and in consideration of $+P" 6endees paid & as down payment and upon the payment of remainin! balance of 1)&" (aula 2rce!a e.ecuted an deed of absolute sale /Duly 18, 191 in favor of the vendees" On Duly $+, 191 '' was cancelled in the name of (aula and a new '' was issued in the name of petitioner vendees" 0ubse-uently, (aula died without issue leavin! as heirs hew brothers Narciso and Fuirico /respondent" Fuirico %led a case to declare null and void the deed of absolute sale for bein! %ctitious since the consideration therefor was not actually paid to his sister" (etitioners amon! other thin!s ar!ues that the case was %led more than 14 years after the time the cause of action accrued" 'hey said that the purchase price was actually paid" ' rendered ud!ment in favor of Fuirico and declared the deed as null and void and ordered for the reconveyance of the property" 2 aLrmed in toto the decision of the '" Issue: :hether or not the sale was properly declared as null and void and whether or not laches already set in" Ruling: ;E0" 'he contract was absolutely simulated and %ctitious" 2'" 14+9 says that those contracts which are absolutely simulated or %ctitious are ine.istent and void from the be!innin!" Evidence show that until the time of her death, (aula occupied the house on her parcel of land with the masterJs bedroom and all amenities belon!in! to her and remained in virtually full possession of the property" 'he vendees were occupyin! a small bedroom without bath and toilet" 2ny le!itimate vendee who paid for real property will not accede to an arran!ement whereby the vendor continues to occupy the most favored room in the house while vendees are mere !uest or tenant in the house" 'he failure of vendees to ta&e e.clusive possession of the property alle!edly sold to them and to collect rentals from (aula are acts contrary to the principle of ownership and a clear bad!e of simulation that renders the transaction void" 2s for laches, the same does not apply in the case" 2' 141+ provides that the action or defense for the declaration of the ine.istence of a contract does not prescribe" n this case, it would be unust and patently ini-uitous to apply laches a!ainst the respondent and vest ownership over a valuable piece of property in favor of petitioners by virtue of an absolutely simulated deed of sale, never meant to convey any ri!ht over the subect property"
+9.REYES V. AS2NCION The primary consideration in determining the true nature of a contract is the intention of the parties. (etitioner and her late husband were the owners of a parcel of land located at (atlin!, 'arlac and forms part of a K"0" ilitary eservation" 0ometime in 198C, petitioner hired respondent as a careta&er of the subect land" n 199, the Bases onversion and Ievelopment 2uthority /BI2 launched a resettlement pro!ram for the victims of the t" (inatubo eruption and be!an to loo& for possible resettlement sites in 'arlac and the subect lot was amon! those considered" n order to prevent the BI2 from convertin! her property into a resettlement site, she and respondent e.ecuted a contract transferrin! her ri!hts over the subect land to the respondent" (etitioner %led a omplaint a!ainst respondent before the ' of apas, 'arlac for the declaration of nullity of the subect contract" ' ruled in favor of the respondent" t ruled that there is no le!al basis to nullify the contract" (etitioner appealed the case to the 2 but the 2 dismissed the appeal" 5ence, the present petition" t is petitionerJs contention that the subect contract is purely simulated, since it purports a transfer of ri!hts over the subect land in favor of the respondent" 5owever, when petitioner e.ecuted the contact, it was never her intention to transfer her ri!hts over the subect land as the primordial consideration was to prevent the BI2 from ta&in! over the property" Issue: s the contract simulated Ruling: NO" 'he ' and 2 found no other evidence to support the alle!ations and self?servin! averments of the petitioner that the contract is simulated" 'he primary consideration in determinin! the true nature of a contract is the intention of the parties" f the words of a contract appear to contravene the evident intention of the parties, the later shall prevail" 0uch intention is determined not only from the e.press terms of their a!reement, but also from the contemporaneous and subse-uent acts of the parties" n 6alerio vs" efresca is instructive on the matter of simulation of contracts< n absolute simulation, there is a colorable contract but it has no substance as the parties have no intention to be bound by it" T$e ain c$a!acte!istic #f an a's#lute siulati#n is t$at t$e a&&a!ent c#nt!act is n#t !eall( "esi!e" #! inten"e" t# &!#"uce legal e3ect #! in an( %a( alte! t$e @u!i"ical situati#n #f t$e &a!ties. 2s a result, an absolutely simulated or %ctitious contract is void, and the parties may recover from each other what they may have !iven under the contract" 0#%e*e!) if t$e &a!ties state a false cause in t$e c#nt!act t# c#nceal t$ei! !eal ag!eeent) t$e c#nt!act is !elati*el( siulate" an" t$e &a!ties a!e still '#un" '( t$ei! !eal ag!eeent. 5ence, where the essential re-uisites of a contract are present and the simulation refers only to the content or terms of the contract, the a!reement is absolutely bindin! and enforceable between the parties and their successors in interest" 3ac&in!, therefore, in an absolutely simulated contract is consent which is essential to a valid and enforceable contract" 'hus, where a person, in order to place his property beyond the reach of his creditors, simulated a transfer of it to another, he does not really intend to divest himself of his title and control of the propertyA hence, the deed of transfer is but a sham" 'he burden of provin! the alle!ed simulation of contract falls on those who impu!n its re!ularity and validity" 2 failure to dischar!e this duty will result in the upholdin! of the contract" 'he primary consideration in determinin! whether a contract is simulated is the intention of the parties as manifested by e.press terms of the a!reement itself, as well as the contemporaneous and subse-uent
actions of the parties" 'he most stri&in! inde. of simulation is not the %lial relationship between the purported seller and buyer, but the complete absence of any attempt in any manner on the part of the latter to assert ri!hts of dominion over the disputed property"
4,.I- VS. CA 'opic< ontracts XX #ormalities 'here are some provisions of law which re-uire certain formalities for particular contracts" 'he %rst is when the form is re-uired for the validity of the contractA the second is when it is re-uired to ma&e the contract e>ective as a!ainst third parties such as those mentioned in 1)* and 1)*8A and the third is when the form is re-uired for the purpose of provin! the e.istence of the contract such as those provided under the 0tatute of #rauds in article 14+)" 2 contract of a!ency to sell on commission basis does not belon! to any of these three cate!ories, hence it is valid and enforceable in whatever form it may be entered into" ase< Estafa Facts: (etitioner osa 3im received from respondent 6ictoria 0uare7 $ pcs of ewelry /a diamond rin! worth 1C9P and a bracelet worth 1+P to be sold on commission basis" 'he a!reement was reVected in a receipt" 'hree months after, petitioner returned the bracelet to 0uare7 but not the diamond rin! or to turn over its proceeds" 2fter verbal and written demands for its return, 3im wrote a letter thru counsel alle!in! that 3im had already returned the $ pcs of ewelry and had no lon!er any liability to 0uare7" 'his ir&ed 0uare7 and prompted her to %le a complaint for Estafa under 2rticle )1* par /b" 3im had a totally di>erent version of the story and claimed that she cannot be liable for Estafa since she never received the ewelries in trust or on commission basis from 0uare7 and that the real a!reement between them was a sale on credit with 0uare7 as the owner?seller and petitioner as buyer as indicated but the bet that petitioner did not si!n on the blan& space provided for the si!nature of the person receivin! the ewelry but at the upper portion thereof" 'he ' found 3im !uilty of Estafa" 2 aLrmed the conviction" Issue: :@N there was a valid contract of a!ency to sell on commission basis between 3im and 0uare7 Ruling: ;es, 'he receipt establishes a contract of a!ency to sell on commission basis between the parties" 'he placement of 3imJs si!nature on the upper portion did not vitiate e>ect the alterin! of terms of the transaction from a contract of a!ency to sell on commission basis to a contract of sale" Neither does it indicate absence or vitiation of consent on the part of 3im to ma&e it void or voidable" 'he moment she aL. her si!nature thereon, petitioner became bound by all the terms stipulated in the receipt" 0he, thus opened herself to all le!al obli!ations that may arise from their breach" 'his is clear from article 1)*C" 5owever, some provisions of law which re-uire certain formalities for particular contracts" 'he %rst is when the form is re-uired for the validity of the contractA the second is when it is re-uired to ma&e the contract e>ective as a!ainst third parties such as those mentioned in 1)* and 1)*8A and the third is when the form is re-uired for the purpose of provin! the e.istence of the contract such as those provided under the 0tatute of #rauds in article 14+)" 2 contract of a!ency to sell on commission basis does not belon! to any of these three cate!ories, hence it is valid and enforceable in whatever form it may be entered into" 2ll the elements of Estafa under 2rt" )1* par /b are present in this case" #irst, the receipt proves that the petitioner 3im received the pieces of ewelry in trust from 0uare7 to be sold on commission basis" 0econd, petitioner misappropriated or converted the ewelry to her own useA and third, such misappropriation obviously caused dama!e and preudice to the private respondent"
41. ?2-AN /OCAIN? V. /ONNEVIE Recit Recall: 'here was a lease contract with a provision that !ives the lessor the ri!ht of priority when the owners decide to sell the property" 'he owner sold the property without !ivin! the respondents their ri!ht of priority" 'he respondents wanted to rescind the contract of petitioner and the landowner" 'he court said it should be rescinded" D#ct!ine: 2 rescissible contract may be subect to attac& by starn!ers to a contract, provided they have su>ered some form of dama!e because of an otherwise valid contract" 'he rescission of the contract would depend on whether the parties were actin! in !ood faith" Facts: (roperty was leased to aoul Bonnevie by eynoso" o 'he contract of lease !ave Bonnevie the ri!ht to be prioriti7ed once eynoso decided to sell the property" o
eynoso alle!edly sent a letter to Bonnevie o>erin! him the property for sale" But no reply was made" 5ence, another letter was sent by eynoso e.claimin! that the property had been sold to
(etitioner u7man and company" o
Bonnevie sent a letter to eynoso claimin! they havenJt received the letter o>erin! them the property"
o o
3ater, eynoso wrote a letter to Bonnevie demandin! them to vacate the premises" 2n eectment case was %led by eynoso" Y (endin! this case, Bonnevie %led a case for annulment of sale" Y Bonnevie was ordered eected"
Bonnevie %led a case for annulment of sale between eynoso and the petitioners" 'he court ruled that the sale was null and void" 2 aLrmed" n the 0, petitioners claim that the contract of sale was voidable, hence only parties thereto can order its annulment" Bonnevie is a stran!er to the contract and has no personality to see& its annulment" Issue: :hether the lower court is correct in rulin! that the contract of sale is null and void Ruling: ;E0ZZZ espondent Bonnevie had the ri!ht to rescind the contract of sale because of the failure of eynoso to comply with her duty to !ive them the %rst opportunity to purchase the subect property" 'he contract of sale is rescissible" Knder 2rticle 1)8+ to 1)81 /) of the ivil ode, a contract otherwise valid may be subse-uently rescinded by reason of inury to third persons, li&e creditors" 'he status of creditors could validly accorded the Bonnevies for theyt had substantial interest that were preudiced by the sale to petitioner without reco!ni7in! their ri!ht of priority under the contract of lease" escission is a remedy !ranted by law to the contractin! parties and even to third persons, to secure reparation for dama!es caused to them by a contract, even if this should be valid, by means of the restoration of thin!s to their condition at the moment prior to the celebration of said contract"
(etitioners cannot be considered as purchasers in !ood faith to defeat the rescission because they cate!orically admitted that they were aware of the lease in favor of Bonnevie, who were actually occupyin! the subect property at the time it was sold to it" Before for!et, as for the alle!ation of eynoso that he sent letters to Bonnevie o>erin! the property to him for sale, this was not suLciently proved by eynoso" 5ence, the court found that this alle!ation of eynoso was unfounded"
4+.OVAN AND VS. CA Facts: (etitioner Dovan 3and, nc" is a corporation en!a!ed in real estate business" ts (resident is on Doseph 0y" On the other hand, herein private respondent Eu!enio Fuesada is the owner of the F Buildin! located in ayhali!ue, 0ta" ru7, anila" (etitioner learned from one onsolacion endo7a that private respondent was sellin! his ayhali!ue property" 'hus, petitioner thru its president made a written o>er to private respondent" 'he %rst two o>ers were reected" 5owever, on the third attempt, 0y sent a letter to Fuesada constitutin! the o>erA the letter havin! annotation with the phrase Qreceived ori!inal, 9?8?89R beside which appears the si!nature of private respondent" n lieu, petitioner insist that a perfected a!reement to sell the ayhali!ue property e.isted, hence, it %led with the ' of Fue7on ity a complaint for speci%c performance and collection of sum of money and dama!es" 5owever, the trial court ruled a!ainst petitioner" On appeal to the 2, the appellate court ust aLrmed the trial courtJs decision" 5ence this petition" 00KE< :hether or not there was a contract of sale perfected and thus is valid 5E3I< No" 'hat it is a fundamental principle that before a contract of sale be valid, the followin! must be present< 1" consent or meetin! of the mindsA $" determinate subect matterA and, )" price certain in money or its e-uivalent" 'hat until contract of sale is perfected, it cannot, as an independent source of obli!ation, serve as a bindin! uridical relation between the parties" n the case at bar, petitioner anchors its ar!uments on the third letter?o>er, however, the court ruled that there is nothin! written or documentary to show that such o>er was accepted by private respondent and such annotation in the letter is ust a mere memorandum of the receipt" 'he re-uisites of a valid contract of sale are lac&in! in the said receipt and therefore, the QsaleR is not valid"
44.C0IN? V. ?OYANKO Facts: n 194, Doseph oyan&o /oyan&o and Epifania dela ru7 /Epifania were married" Out of the union were born respondents Doseph, Dr", Evelyn, Derry, melda, Dulius, ary Ellen and Dess, all surnamed oyan&o" espondents claim that in 19C1, their parents ac-uired a CC1 s-uare meter property located at $9 #" abahu! 0t", ebu ity but that as they /the parents were hinese citi7ens at the time, the property was re!istered in the name of their aunt, 0ulpicia 6entura /0ulpicia" On ay 1, 199), 0ulpicia e.ecuted a deed of sale over the property in favor of respondentsJ father oyan&o" n turn, oyan&o e.ecuted a deed of sale over the property in favor of his common?law?wife? herein petitioner aria B" hin!" 'ransfer erti%cate of 'itle /'' No" 1)84+* was thus issued in petitionerJs name" 2fter oyan&oJs death in 199C, respondents discovered that ownership of the property had already been transferred in the name of petitioner" espondents thereupon had the purported si!nature of their father in the deed of sale veri%ed by the (hilippine National (olice rime 3aboratory which found the same to be a for!ery" espondents thus %led with the ' a complaint for recovery of property and dama!es a!ainst petitioner, prayin! for the nulli%cation of the deed of sale and of '' No" 1)84+* and the issuance of a new one in favor of their father oyan&o" n defense, petitioner claimed that she is the actual owner of the property as it was she who provided its purchase price" 'o disprove that oyan&oJs si!nature in the -uestioned deed of sale is a for!ery, she presented as witness the notary public who testi%ed that oyan&o appeared and si!ned the document in his presence" 'he trial court dismissed the complaint a!ainst petitioner" Kpon appeal, the appellate court reversed the trial courtHs decision and declared the -uestioned deed of sale and '' No" 1)84+* null and void" Issue: :hether or not the deed of sale entered between oyan&o, 0r" and petitioner, aria B" hin!, was valid 0el": No) the -uestioned deed of sale is not valid for bein! ille!al per se" 'he law emphatically prohibits the spouses from sellin! property to each other subect to certain e.ceptions" 0imilarly, donations between spouses durin! marria!e are prohibited" 2nd this is so because if transfers or conveyances between spouses were allowed durin! marria!e, that would destroy the system of conu!al partnership, a basic policy in civil law" t was also desi!ned to prevent the e.ercise of undue inVuence by one spouse over t he other, as well as to protect the institution of marria!e, which is the cornerstone of family law" 'he prohibitions apply to a couple livin! as husband and wife without bene%t of marria!e, otherwise, Mthe condition of those who incurred !uilt would turn out to be better than those in le!al union"M 5ence, the proscription a!ainst sale of property between spouses applies even to common law relationships" 2s the conveyance in -uestion was made by oyan!&o in favor of his common? law?wife?herein petitioner, thus, it was null and void" 'he nulli%cation of the sale is anchored on its ille!ality per se, it bein! violative of 2rticles 1)*$, 14+9 and 149+ of the ivil ode" 'he pertinent provisions of the ivil ode which apply to the present case read< 2'" 1)*$" Contracts without cause, or with unlawful cause, produce no eect whatever# 4he cause is unlawful if it is contrary to law, morals, good customs, public order or public policy "
2'" 14+9" 4he following contracts are ineistent and void from the beginning6 (-" 4hose whose cause, ob7ect or purpose is contrary to law, morals, good customs, public order or public policy& (8" 4hose which are absolutely simulated or 3ctitious& (" 4hose whose cause or ob7ect did not eist at the time of the transaction& (0" 4hose whose ob7ect is outside the commerce of men& (9" 4hose which contemplate an impossible service& (:" 4hose where the intention of the parties relative to the principal ob7ect of the contract cannot be ascertained& (;" 4hose epressly prohibited or declared void by law# 4hese contracts cannot be rati3ed# -# :5EE#OE, the petition is IENEI for lac& of merit" osts a!ainst petitioner" 0O OIEEI
