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Associated Bank Vs

Associated Bank Vs

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Associated Bank Vs.

Spouses Montano
In 1964, spouses Justiniano and Ligaya Montano (the Montanos) owned three (3) parcels of land situated in Tanza, Cavite with an aggregate area of 590,558 square meters, more or less,[4] utilized as an integrated farm and as a stud farm used for raising horses.[5] Justiniano was then serving as congressman for the lone district of Cavite and as minority floor leader. In 1972, when then President Ferdinand Marcos placed the country under martial law, Justiniano went on selfexile to the United States of America (USA) to avoid the harassment and threats made against him by the dictator. Sometime in 1975, while still in the USA, the Montanos transferred the said properties to Tres Cruces Agro-Industrial Corporation (TCAIC) in exchange for shares of stock in the company,[6] allowing the Montanos to control 98% of the stockholdings of TCAIC.[7] Thus, on February 17, 1975, the certificates of title registered in the name of the Montanos were cancelled and were replaced with transfer certificates of title (TCTs) in TCAIC’s name. [8] A year later, in October 1976, TCAIC sold the properties to International Country Club, Inc. (ICCI) for P6,000,000.00.[9] The sale resulted in the cancellation of the titles of TCAIC, and in their transfer to ICCI on May 27, 1977.[10] After the transfer, ICCI immediately mortgaged the parcels of land to Citizens Bank and Trust Co. (later renamed as Associated Bank) for P2,000,000.00.[11] The loan matured but remained unpaid, prompting Associated Bank to foreclose the mortgage on May 31, 1984. [12] The properties were then put on public auction and were sold for P5,700,000.00 to Associated Bank, the sole and highest bidder.[13] Ownership over the said properties was consolidated by Associated Bank and, on May 19, 1987, new TCTs were issued in its name.[14] Meanwhile, in 1986, following the ouster of Marcos, the Montanos returned to the country. After discovering the transfer of the properties, the Montanos immediately took physical possession of the same and began cultivating the land.[15] On September 15, 1989, the Montanos filed an action for reconveyance of title against herein petitioner, praying, in sum, that the transfer of the properties from TCAIC to ICCI, and from ICCI to Associated Bank, be declared null and void.[16] In their complaint, respondents averred that the transfer of the parcels of land to TCAIC was done only to avoid the confiscatory acts being applied by the dictator against the Montanos’ properties, in retaliation for the latter’s open

opposition to Marcos.[17] They claimed that TCAIC was only forced to sell the properties to ICCI after the latter intimidated and threatened the relatives of the Montanos who were left in the country.[18]They also argued that the mortgage by ICCI to Associated Bank was made to generate money for the latter’s corporate officers as evidenced by the lack of any effort on the part of ICCI to service the loan.[19] On October 11, 1989, Associated Bank filed an Answer [20] setting forth affirmative defenses. Among its several pleas in avoidance were the arguments that the complaint did not state a cause of action; that the allegation of threat and intimidation was not averred with particularity; that the bank was an innocent purchaser for value; and that, even if the complaint stated a cause of action, the same had already prescribed or had been barred by estoppel and laches. We agree with the RTC’s and the CA’s rulings that petitioner’s argument on the failure of the complaint to state a cause of action is unavailing. When the ground for dismissal is that the complaint states no cause of action, such fact can be determined only from the facts alleged in the complaint and from no other, and the court cannot consider other matters aliunde.[33] The test, therefore, is whether, assuming the allegations of fact in the complaint to be true, a valid judgment could be rendered in accordance with the prayer stated therein. Where the allegations are sufficient but the veracity of the facts is assailed, the motion to dismiss should be denied.[34] In their complaint for reconveyance, respondents alleged that the transfer of the three parcels of land from TCAIC to ICCI was facilitated through threat, duress and intimidation employed by certain individuals. On its face, the complaint clearly states a cause of action and raises issues of fact that can be properly settled only after a full-blown trial. On this ground, petitioner’s motion to dismiss must, perforce, be denied. We do not, however, subscribe to the RTC’s ruling that the action has already prescribed. It is true that an action for reconveyance of real property resulting from fraud may be barred by the statute of limitations, which requires that the action shall be filed within four (4) years from the discovery of the fraud. [35] The RTC, however, seemed to have overlooked the fact that the basis of respondents’ complaint for reconveyance is not fraud but threat, duress and intimidation, allegedly employed by Marcos’ cronies upon the relatives of the Montanos while the latter were on self-exile.[36] In fact, fraud was neither specifically alleged nor remotely implied in the complaint. HSBC VS. PAULI

). Heirs of Maximo Aldon Maximo Aldon married Gimena Almosara in 1936. July 22. Pototan cadastre. The trial court sustained the claim of the defendants." The Court of Appeals described the sale as "invalid" . the heirs of Maximo Aldon. the wife. one-third (1/3) pertaining to the widow.) In the instant case. who was the party responsible for the defect. she adjudicated to herself a parcel of land (Lot 5482. Gimena.) They filed action in 1976 which is well within the period. 166. 1390 et seq. among the voidable contracts are "[T]hose where one of the parties is incapable of giving consent to the contract. 1371 and 1415. 1141. sold lands belonging to the conjugal partnership without the consent of the husband and the sale is not covered by the phrase "except in cases provided by law. and an offer to redeem the mortgage had been refused so they filed the complaint in order to recover the three parcels of land. filed a complaint in the Court of First Instance of Masbate against the Felipes. San Jacinto. Two questions come to mind. Defendant Erlinda Patriarea is a granddaughter of Juliana Armentia. — and which she inherited from her deceased husband and second. Idem. (Art. 1976.(see notes) Felipe Vs. that they had orally mortgaged the same to the defendants. The defendants asserted that they had acquired the lots from the plaintiffs by purchase and subsequent delivery to them. the decision appealed from is hereby REVERSED The legal ground which deserves attention is the legal effect of a sale of lands belonging to the conjugal partnership made by the wife without the consent of the husband. In 1951. 1380 et seq. the husband cannot alienate or encumber any real property of the conjugal partnership without the wife's consent. Felipe. Civil Code. 173. 1403. 172. 1955.) And the wife cannot bind the conjugal partnership without the husband's consent. The case of Sofia and Salvador Aldon is different. (Art. Civil Code. the children's cause of action accrued from the death of their father in 1959 and they had thirty (30) years to institute it (Art. Maximo. It was only in 1976 when the respondents filed action to recover the lands." (Par. The father's share is one-half (1/2) of the lands and their share is two-thirds (2/3) thereof. except in cases provided by law. Jose Someciera is the acknowledged natural son of their deceased mother. the lands were divided into three lots. 1409 et seq.). In the meantime. ARMENTIA VS. Civil Code. The petitioners have been in possession of the lands since 1951. covered by Transfer Certificate of Title 21328.) The voidable contract of Gimena was subject to annulment by her husband only during the marriage because he was the victim who had an interest in the contract. 1390 of the Civil Code. et seq. Defendant Florencia Someciera is a daughter of Jose Someciera. Marta Armentia did two things: First. namely: (1) Have the petitioners acquired the lands by acquisitive prescription? (2) Is the right of action of Sofia and Salvador Aldon barred by the statute of limitations? As to the second question. namely his widow Gimena and their children Sofia and Salvador Aldon. were brother and sisters of the full blood.) In the instant case-Gimena had no capacity to give consent to the contract of sale. unenforceable (Arts.a term which is imprecise when used in relation to contracts because the Civil Code uses specific names in designating defective contracts. and void or inexistent (Arts. 1371 and 1415 of the San Jacinto Public Land Subdivision.). The view that the contract made by Gimena is a voidable contract is supported by the legal provision that contracts entered by the husband without the consent of the wife when such consent is required. On April 26. Maximo Aldon died. for and in consideration of P99. The sale was made without the consent of her husband. Marta Armentia was married to Gregorio Bueno who died sometime in 1942. 1.) Subject to certain exceptions. It is useful at this point to re-state some elementary rules: The husband is the administrator of the conjugal partnership. (Art. The complaint alleged that the plaintiffs were the owners of Lots 1370. Their children could not likewise seek the annulment of the contract while the marriage subsisted because they merely had an inchoate right to the lands sold.) The sale made by Gimena is certainly a defective contract but of what category? The answer: it is a voidable contract. Gimena. [Iloilo]) with the improvements thereon. namely: rescissible (Arts. Idem. In 1960-62. The capacity to give consent belonged not even to the husband alone but to both spouses. PATRIARCA Plaintiff Laurentio Armentia. could not ask for its annulment. and Juliana and Marta Armentia. voidable (Arts. 165. According to Art. The plaintiffs appealed the decision to the Court of Appeals which rendered the following judgment: PREMISES CONSIDERED. are annullable at her instance during the marriage and within ten years from the transaction questioned. 1370. The spouses bought several pieces of land sometime between 1948 and 1950. Gimena Almosara sold the lots to the spouses Eduardo Felipe and Hermogena V. After the death of Maximo they acquired the right to question the defective contract insofar as it deprived them of their hereditary rights in their father's share in the lands. which she acknowledged to have received from Erlinda Patriarca. Masbate. 13 .00. (Art.

No creditors are defrauded. This appeal exemplifies such exception. 2. 3 The complaint. alleging occupancy of a portion of the land subsequent to plaintiff's. Upon the other hand. He is not obliged principally or subsidiarily under the contract. avers: That the sale made by Marta in favor of Erlinda and Florencia "is null and void because it is simulated and fictitious and if not null and void it is voidable because the said defendants were minors at the time the contract was executed and could not then have given their consent to the sale". This must be construed in conjunction with Article 1311 of the same code providing that "[c]on tracts take effect only between the parties. Block 3 etc. 1. By Article 1397 of the Civil Code. designated as Lot 1. The complaint was met by defendant's motion to dismiss upon two grounds: (1) lack of cause of action and (2) prescription. — the fact that the vendees were minors. the consideration was grossly inadequate. The complaint winds up with the prayer that the deed of sale be "declared inexistent or in the alternative annulled". It should be sustained if the allegations of the complaint — which the motion to dismiss admitted — set out an instance of partial performance. that after liberation she re-occupied it. annullable by them. but in the same breadth characterizes it. Upon a motion to dismiss. True. Laurentio Armentia commenced suit2 against Erlinda Patriarca and Florencia Someciera as principal defendants. Stripped of non-essentials. that when the administration and disposition of the said Lot I (together with other lots in the Ana Sarmiento Estate) were assigned by the Government to the Rural Progress Administration2 plaintiff asserted her right thereto (as occupant) for purposes of purchase. and reamended. if any. recorded in the registry of deeds. Malate. single. that "even assuming hypothetically that there was consideration in the supposed sale. Ortega vs. as owner paying the taxes on the land until she died". he is an intestate heir of Marta. 1960. and. Controlling. at worst. 20 years of age. that the house and lot and sewing machine be partitioned and plaintiff's share be delivered to him. . the subject thereof. Plaintiff's attack is primarily directed at the sale. but he is not a forced heir. the Manila court of first instance ordered dismissal following the above general rule. Marta voluntarily disposed of it. be declared owners of the land in dispute. and that should partition not be feasible. there are none. said properties be sold and plaintiff given his share. The foregoing document was. the conclusion is irresistible that the sale is merely voidable. the purported acts of Marta Armentia after the sale did not indicate that said sale was void from the beginning. plaintiff's case is bottomed on fraud.years of age. defendant asked plaintiff to desist from pressing her claim and definitely promised that if and when he succeeded in getting title to Lot I3 . in essence. their assigns and heirs. which renders the contract voidable. apposite illustrations. Marta Armentia remained in possession of the house and lot. that during the investigation of such conflicting interests. On September 17. and this is not controverted by plaintiff. on July 22. On the contrary. Marta Armentia died intestate and without forced heirs on May 28. Marta was free to dispose of her properties the way she liked it. is the statement of' ultimate facts. Leonardo Well known is the general rule in the Statute of Frauds precluding enforcement of oral contracts for the sale of land. of course. Besides. (hereinafter called Lot I) located at San Andres Street. that "the said sale was fraudulently executed. 1960. Manila. as simulated and fictitious. 6 Hypothetically admitting the truth of these allegations. Because Marta Armentia executed the document. plaintiff sought to compel defendant to comply with their oral contract of sale of a parcel of land. The sum total of all of these is that. UNENFORCEABLE CONTRACTS 17. that the Register of Deeds be directed to cancel Torrens title 18797 in the names of Erlinda Patriarca and Florencia Someciera. These statements and but conclusions of law. and after the supposed sale. Not so well known is exception concerning the partially executed contracts — least our jurisprudence offers few. and that "the heir is not liable beyond the value of the property he received from the decedent". in lieu thereof. 1955. plaintiff has no cause of action to annul or to rescind the sale. Then again. Marta Armentia did not transmit to him by devise or otherwise any rights to the property. Hence this appeal. plaintiff occupied a parcel of land. except in case where the rights and obligations arising from the contract are not transmissible by their nature. Torrens title 21323 was cancelled by Transfer Certificate of Title 18797 in the names of Erlinda Patriarca and Florencia Someciera. or by stipulation or by provision of law". as heir of Marta Armentia.Whereupon. that defendant also asserted a similar right. Plaintiff is not a forced heir. the complaint averred that long before and until her house had been completely destroyed during the liberation of the City of Manila. and Florencia Someciera. Without more. Alleging partial performance. he would sell to her a portion thereof with an area of . that plaintiff Laurentio Armentia and defendant Juliana Armentia. inadequacy of consideration does not imply total want of consideration. Plaintiff charges that the contract therefor was fraudulently executed. as amended. she sold to them the property just mentioned. She had neither ascendants nor descendants. May plaintiff annul the sale on the theory of fraud? Plaintiff was but a brother of the deceased Marta Armentia. to issue a new title in the names of Laurentio Armentia and Juliana Armentia. "[t]he action for annulment of contracts may be instituted by all who are thereby obliged principally or subsidiarily". No legitimes are impaired. makes the contract. single. Therefore.

60 square meters (particularly described) at the rate of P25. Especially is this true where the circumstances of the case include the making of substantial. (Art. and that neither "surveying the land"5 nor tender of payment is sufficient. that it would be a fraud upon the plaintiff if the defendant were permitted to oppose performance of his part after he has allowed or induced the former to perform in reliance upon the agreement. she could continue holding the lot as tenant by paying a monthly rental of P10. does not apply. American Jurisprudence in its title "Statute of Frauds" lists other acts of partial performance. (Seesame title secs. if it has already been performed. 475. where accompanied by other acts which characterize the continued possession and refer it to the contract of purchase. Thus. and desisted from further claiming Lot I. argues that the contract in question. 725. Civil Code.00 per square meter. The court below explained in its order of dismissal: It is admitted by both parties that an oral agreement to sell a piece of land is not enforceable. amounts to more than enough. and we do so line with the accepted basis of the doctrine." (49 American Jurisprudence — 44) It is also stated that "The making of valuable permanent improvements on the land by the purchaser. and valuable improvements. permanent. 1403. The desistance to claim is not a part of the contract of sale of the land. But the doctrine now generally accepted. was partially performed because plaintiff desisted from claiming the portion of lot I in question due to the promise of defendant to transfer said portion to her after the issuance of title to defendant. building of improvements. 772. that relying upon their agreement. without cause or reason. With costs against appellee BABAO VS. . survey.755. in reliance on the contract. be sufficiently referable to the parol contract of sale to constitute a part performance thereof. (See 49 American Jurisprudence p. has been held a sufficient part performance. PEREZ Bienvenido Babao vs." (49 American Jurisprudence p. etc.) The paragraph immediately preceding will serve as our comment on the appellee's quotations from American Jurisprudence itself to the effect that "relinquishment" is not part performance. after the plans of subdivision and segregation of the lot had been approved by the Bureau of Lands. 1924. such as possession. This is apparently true where the tender is by a purchaser who has made improvements. plaintiff caused the survey and segregation of the portion which defendant had promised to sell incurring expenses therefor. . by one already in possession as a tenant. The judgment will accordingly be reversed and the record remanded for further proceedings. in a proper case. payment of price being an essential part of the contract of sale. . it surely constitutes a defective statement of the law.00. And at the risk of being repetitious we say: granting that none of the three circumstances indicated by him. . although verbal. The precedents hereinabove transcribed oppose or explain away or qualify the appellee's citations. relinquishment of rights. said portion being now designated as Lot I-B in a duly prepared and approved subdivision plan. Enough to hold that the combination of all of them amounted to partial performance. The court thinks that even granting that plaintiff really desisted to claim not on oral promise to sell made by defendant. Hence. has been said to be the strongest and the most unequivocal act of part performance by which a verbal contract to sell land is taken out of the statute of frauds. 473. Rules of Court. make the verbal contract enforceable. that after defendant had acquired Lot I plaintiff regularly paid him the monthly rental of P10. that in July 1954. that plaintiff accepted defendant's offer.55. 474. provided she paid for the surveying and subdivision of the Lot and provided further that after he acquired title.) And the relinquishment of rights or the compromise thereof has likewise been held to constitute part performance. . the oral promise to sell cannot be enforced. however. Rule 123. plaintiff tendered to defendant the purchase price which the latter refused to accept. that not even the payment of the purchase price. . and is ordinarily an important element in such part performance. in the honest belief that he has a right to make them. has been said to be equivalent to actual payment. (49 American Jurisprudence p. Possession by the purchaser under a parol contract for the purchase of real property. declined by the vendor. is a sufficient part performance. Section 21. Only in essential part of the executory contract will. is deemed a part performance of the contract. We shall not take.00 until said portion shall have been segregated and the purchase price fully paid. and with the knowledge and consent or acquiescence of the vendor. The entry into possession and the making of the improvements are held on amount to such an alteration in the purchaser's position as will warrant the court's entering a degree of specific performance. without something more.) In the light of the above four paragraphs. that defendant finally acquired title thereto. it is stated that "The continuance in possession may. Continued possession under an oral contract of sale. payment of taxes. that in remodelling her son's house constructed on a lot adjoining Lot I she extended it over said Lot I-B. 756. . If the above means that partial performance of a sale contract occurs only when part of the purchase price is paid. Florencio Perez (Article 1324. still the combination of the three with the others already mentioned. the principle excluding parol contracts for the sale of realty. statute of fraud) Facts: Santiago Babao married the niece of Celestina Perez. together with his making valuable and permanent improvements on the property which are referable exclusively to the contract. tender) would separately suffice. (relinquishment. the making of improvements. There may be additional acts or peculiar circumstances which sufficiently refer the possession to the contract. time to discuss whether one or the other or any two or three of them constituted sufficient performance to take the matter away from the operation of the Statute of Frauds. . it is stated that "A tender or offer of payment.) Plaintiff. . tender of payment plus the surveying of the lot at plaintiff's expense and the payment of rentals. as there was partial performance. it would appear that the complaint in this case described several circumstance indicating partial performance: relinquishment of rights4 continued possession. in pursuance of the agreement and with the knowledge of the vendor. Santi and Celestina allegedly had a verbal agreement where Santi was .) Again. for the purposes of determining whether or not there has been a part performance of the contract. rendition of services.

however many tears may have to elapse before the agreement is performed by the other party.. 153 SCRA 532 Facts: Bisaya Land Transportation Company. Issue: whether or not the verbal agreement falls within the Stature of Frauds Held: Contracts which by their terms are not to be performed within one year. G. may be taken out of the statute through performance by one party thereto. t h e p r o p e r t y has beensubject to further alienations until the sa m e w a s c e d e d t o respondent.R.: FACTS:Antonita Orduña purchased a residential lot from Gabriel Sr. and it has been held that. with all the improvements after the death of Celestina. All that is required in such case is complete performance within the year by one party. But. ET AL. 2010 Velasco. Fuentebilla. I t i s a w e l l s e t t l e d r u l e t h a t t h e S t a t u t e o f F r a u d s a s express ed in Article 1403. T i t l e . the statute will apply. No. it is t h u s withdrawn from the purview of the Statute of Frauds. R e c o n v e y a n c e w i t h D a m a g e s w i t h a prayer to acquire ownership over the subject lot upon payment of their remaining balance. No. Thus. planting fruits and other crops. with costs against appellee. by requiring some contracts and transa c t i o n s t o b e evidenced b y a writing signed b y the part y to be charged.. (2). she sold the land to another part. or of the rule which prohibits testimony against deceased persons. in consideration of which Celestina in turn bound herself to convey to Santi or his wife ½ of the land. that all expenses for labor and materials will be at his cost. that he will act as the administrator of the land. J. T h i s w a s l a t e r affirmed by the Court of Appeals. Sanchez. Orduña. The case is dismissed. then filed a Complaint forA n n u l m e n t o f S a l e . Jr. Adolfo V. The installm ents were paid to Gabriel Sr. 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. and Orduñaw a s u n e n f o r c e a b l e u n d e r t h e S t a t u t e o f F r a u d s . and later to Gabri el Jr.bound to improve the land of Celestina by leveling. G. Santi filed this complaint alleging the sale of the land as fraudulent and fictitious and prays to recover the ½ land or the expenses he incurred in improving the land. 176841 June 29. But nothing less than full performance by one party will suffice. Inc. theverbal c ontract of sa le has been partially executed through thepartial paym ents made b y Orduña duly rec eived b y both Gabri el J r . The Regi onal Trial C ourt dismissed thepetition because the verbal sale between Gabriel Sr. ISSUE:W h e t h e r o r n o t t h e s a l e o f t h e s u b j e c t l o t b y G a b r i e l S r . Jr. after b e i n g d e m a n d e d b y Fuentebilla to vacate the disputed land. if anything remains to be done after the expiration of the year besides the mere payment of money. par. FUENTABELLA ORDUÑA. a n d h i s f a t h e r . we find unnecessary to discuss the other issues raised in appellants' brief. Sincet h e r e i s a l r e a d y r a t i f i c a t i o n o f t h e v e r b a l c o n t r a c t t h r o u g h theacceptance of benefits through the partial payments. aft er t h e d e a t h o f t h e f o r m e r . clearing. of the C ivil Cod e is applicableo n l y t o p u r e l y e x e c u t o r y c o n t r a c t s a n d n o t t o c o n t r a c t s w h i c h have alread y been executed either tota lly or partially. Having reached the conclusion that all the parol evidence of appellee was submitted in violation of the Statute of Frauds. T h e p u r p o s e o f t h e S t a t u t e o f F r a u d i s prevention fraud and perjury in the enforcement of obligationsd e p e n d i n g f o r t h e i r e v i d e n c e o n t h e u n a s s i s t e d m e m o r y o f witnesses. FUENTEBELLA. When BISTRANCO was under receivership Mariano Sanchez (Sanchez) was appointed by BISTRANCO as its acting shipping agent for its vessels in Butuan City by its Receiver Atty.R. I m p r o v e m e n t s w e r e t h e r e a f t e r introduced by petitioner and the latter even paid its real propertyt a x s i n c e 1 9 7 9 .payable in installments but no deed of sale was executed. t o Antonita is unenforceable under the Statute of Frauds HELD:N o . Amor (Amor) . 1987. v. Here. Bisaya Land Transportation v. 74623 August 31. ET AL. ORDUNA VS. U n k n o w n t o O r d u ñ a . (BISTRANCO) has been engaged in the shipping business and one of its ports of call is found in Butuan City. shortly before Celestina’s death.

000. Consequently. PINEDA VS. due to Receiver Amor's failure to secure the court's approval of said Contracts. Furthermore.250.00 for the unit when he received it.00 subject of his complaint for collection. enforced. Tarlac.00 attorney's fees for legal services rendered as Pineda's counsel in the case being investigated by NARIC. According to Dela Rama. morals. Pineda. object. The petitioner had just purchased a hacienda in Mindoro for P210. It is more logical to believe that Pineda would not borrow P5. Pineda further testified that six cavans of first class rice also .250. there is nothing in the cause. unless they are ratified. Sanchez performed his duties as shipping agent of BISTRANCO. or purpose of the Contracts which can be said as contrary to law. Dela Rama also sued to collect P5. because of the settled distinction that a void and inexistent contract can not be ratified and become enforceable.5 horsepower for the latter's NARIC office. petitioner Pineda has used up all his funds to buy a big hacienda in Mindoro and. Then one day. good customs.00 was purchased by Pineda's son and given to Dela Rama although the latter claims he paid P1. Amor entered into with Sanchez. he had managed to increase the volume of the shipping business of BISTRANCO at Butuan City and helped it flourished. without the approval of the court which appointed him receiver is either void or unenforceable. In addition to filling the suit to collect the loan evidenced by the matured promissory note. based upon the monthly statements of income of BISTRANCO. upon which the commissions of Sanchez were based.00 and P4. Under Sanchez’s endeavors.000.“pending the execution of the formal contract of agency. it is clear that BISTRANCO received material benefits from the contracts of agency of Sanchez. and had P60. By virtue of the Contracts. Contract is valid.00 five days apart from a man whom he calls a "fixer" and whom he had known for only three months.000. However both the Contract of Agency and the Supplemental Shipping Agency Contract (Contracts) were never submitted by Atty. whereas an unenforceable contract may still be ratified and. Citing Article 1409 (1). A court-appointed receiver cannot validly enter into a contract without the approval of the court. Ratio: The determination of whether the questioned contracts are void or merely unenforceable is important.00 deposits in three banks when he executed the note. public order or public policy so as to render them void.00. Issue: Whether the status of the Contracts which Receiver Atty. On the other hand. Article 1403 (1) of the Civil Code provides that contracts "entered into in the name of another person by one who has been given no authority or legal representation. owned sugar and rice lands in Tarlac of around 800 hectares. the questioned Contracts can rightfully be classified as unenforceable for having been entered into by one who had acted beyond his powers. borrowed the P9.000 cavans of palay deposited at his ricemill in Concepcion. These unenforceable Contract were nevertheless deemed ratified by BISTRANCO when they sent three (3) letters to Sanchez which recognizes and gave efficacy to the Contracts. Held: Unenforceable but ratified. BISTRANCO wrote Sanchez that they would commence operating its branch office at Butuan City and thereafter actually operated a branch office which in effect repudiated the Contracts. The NARIC general manager was allegedly an intimate friend of Dela Rama. with no security for the loan and on interest. Rodriguez was asking for one air-conditioning machine of 1. however. Sanchez then executed a Supplemental Shipping Agency Contract after finding that a paragraph of the Contract of Agency was quite prejudicial to him which was then signed by both parties. DELA RAMA FACTS: Dela Rama is a practising lawyer whose services were retained by Pineda for the purpose of making representations with the chairman and general manager of the National Rice and Corn Administration (NARIC) to stop or delay the institution of criminal charges against Pineda who allegedly misappropriated 11.000. We agree with the trial court which believed Pineda. Dela Rama testified that he did not even know what Pineda was going to do with the money he borrowed from him. thereafter. Under the rules of court it is necessary that the acts of the receiver have the approval or authorization of the court which appointed him as a receiver. or who has acted beyond his powers" are unenforceable. There is no dispute that an air-conditioning unit valued at P1. It is indeed unusual for a lawyer to lend money to his client whom he had known for only three months. alleged that he gave the air-conditioning unit because Dela Rama told him that Dr. Amor and Sanchez.” Thereafter a formal Contract of Agency was executed between BISTRANCO. therefore.300. represented by Receiver Atty. Amor to the receivership court for its approval.300.

object or purpose is contrary to law. The promissory note is void ab initio and no cause of action for the collection cases can arise from it. Petitioner brought an action against PAGCOR seeking the redemption of gambling chips valued at US$2. To achieve these objectives. If the act in which the unlawful or forbidden cause consists does not constitute a criminal offense. But later on. PAGCOR launched its Foreign Highroller Marketing Program (Program). playing continuously day and night. PAGCOR is vested with the power to enter into contracts of every kind and for any lawful purpose that pertains to its business. PAGCOR refused to redeem them 6. PAGCOR is a government-owned and controlled corporation tasked to establish and operate gambling clubs and casinos as a means to promote tourism and generate sources of revenue for the government.is contrary to law and public policy.to influence public officers in the performance of their duties . a casino managed and operated by PAGCOR. 5. the gambling chips. every time he departed from Manila Yun Kwan Byung vs PAGCOR 1. together with the airconditioning unit. equipment and furnitures belonged to PAGCOR. claims that he won the gambling chips at the Casino Filipino. Pursuant to this authority. Articles 1409 and 1412 of the Civil Code in part. we agree with the trial court that the promissory note was executed for an illegal consideration. xxx xxx xxx Art. A PAGCOR official who meets him at the airport would bring him to Casino Filipino. neither may recover what he has given by virtue of the contract. ABS Corporation agreed to bring in foreign players to play at the five designated gaming tables of the Casino Filipino Silahis at the Grand Boulevard Hotel in Manila (Casino Filipino). he came to the Philippines four times to play for high stakes at the Casino Filipino. good customs. alleges that from November 1996 to March 1997. Petitioner contends that when he presented the gambling chips for encashment with PAGCOR’s employees or agents. The Korean-based ABS Corporation was one of the international groups that availed of the Program. The card dealers were all PAGCOR employees.1 million.1 million. morals. alleges that every time he would come to Manila.1 million. he was able to accumulate gambling chips worth US$2. Considering the foregoing. PAGCOR would extend to him amenities deserving of a high roller. The following contracts are inexistent and void from the beginning: (1) Those whose cause. Rodriguez but were kept by the lawyer. The Program aims to invite patrons from foreign countries to play at the dollar pit of designated PAGCOR- . the following rules shall be observed: (1) When the fault is on the part of both contracting parties. Petitioner. the casino cashier refused to encash his gambling chips so he had no recourse but to deposit his gambling chips at the Grand Boulevard Hotel’s deposit box. Petitioner states that he was able to redeem his gambling chips with the cashier during his first few winning trips. 1412. a Korean national. 2. operated casinos under specified terms and conditions and in accordance with industry practice 3. and PAGCOR enforced all the regulations dealing with the operation of foreign exchange gambling pits. never reached Dr. The consideration for the promissory note . 4. 1409. public order and public policy. In a letter-agreement dated 25 April 1996 (Junket Agreement). or demand the performance of the other's undertaking.intended for the NARIC Chairman and General Manager. Petitioner claims that in the course of the games. Petitioner presented as evidence during the trial gambling chips with a face value of US$1. provide: Art.

WON an implied agency was created Held: NO. the former is solely accountable for all PLAYING CHIPS wagered on the tables. nature and extent is incumbent upon the person alleging it. but the one assuming to act as agent has apparent or ostensible. PAGCOR’s actions did not mislead the public into believing that an agency can be implied from the arrangement with the junket operators.The basis for agency is representation that is. Under PAGCOR’s rules. Ratio: Article 1869 of the Civil Code states that implied agency is derived from the acts of the principal. knowing that another person is acting on his behalf without authority. TC: dismissed the complaint and counterclaim. the junket players would surrender the chips to ABS Corporation. the agent acts for and on behalf of the principal on matters within the scope of his authority and said acts have the same legal effect as if they were 59 personally executed by the principal. while on the part of the agent. is a junket player who played in the dollar pit exclusively leased by ABS Corporation for its junket players. PAGCOR argues that petitioner is not a PAGCOR player because under PAGCOR’s gaming rules. Only ABS Corporation would make an accounting of these chips to PAGCOR’s casino treasury. the principal may clothe the agent with the indicia of authority as to lead a reasonably prudent person to believe that the agent actually has such authority. and the principal becomes estopped to claim that the agent does not have such authority. . who was brought into the Philippines by ABS Corporation. In an agency by estoppel. ABS Corporation distributed these chips to its junket players. CA affirmed. First. although not 49 real. Issue#1. PAGCOR alleges that it provided ABS Corporation with distinct junket chips. There is no implied agency in this case because PAGCOR did not hold out to the public as the principal of ABS Corporation. The Junket Agreement was merely a contract of lease of facilities and services. The gambling chips must be converted to cash at the end of every gaming period as they are inventoried every shift. there is no agency at all. Second. apparent authority is based on estoppel and can arise from two instances. PAGCOR claims that petitioner. Any financial ARRANGEMENT/TRANSACTION between PLAYERS and ABS shall only be binding upon said PLAYERS and ABS out ABS Corporation with any apparent authority to represent it in any capacity. authority to represent another. the principal may knowingly permit the agent to hold himself out as having such authority. gambling chips cannot be brought outside the casino. - 10. there must be an intention to accept the 60 appointment and act on it. is a fact to be proved by deductions or inferences from other facts On the other hand. it is impossible for PAGCOR players to accumulate two million dollars worth of gambling chips and to bring the chips out of the casino premises - - 9. there is generally no agency - 8. from his silence or lack of action. At the end of each playing period. there must be anactual intention to appoint or an intention naturally inferable from his words or actions. nor did it hold . PAGCOR posted a notice written in English and Korean languages which reads: NOTICE This GAMING ROOM is exclusively operated by ABS under arrangement with PAGCOR. ruled that based on PAGCOR’s charter PAGCOR has no authority to lease any portion of the gambling tables to a private party like ABS Corporation. Implied agency.7. On the part of the principal.Whether or not an agency has been created is a question to be determined by the fact that one represents and is acting for another. Absent such mutual intent. The law makes no presumption of agency and proving its existence. As additional information for the junket players playing in the gaming room leased to ABS Corporation. being an actual agency. or his failure to repudiate the agency.

and we affirm. Such proof is lacking in this case. While the appeal in the Agrarian Case was pending before the CA. and availing of the privileges extended only to players brought in by ABS Corporation. PAGCOR cannot delegate its power in view of the legal principle of delegata potestas delegare non potest. and that he was playing in special gaming rooms are all indications that petitioner cannot claim good faith that he believed he was dealing with PAGCOR. which refers to illegal gambling. A void or inexistent contract is one which has no force and effect from the very beginning. inasmuch as there is nothing in the charter to show that it has been expressly authorized to do 41 so. The trial court has declared. it is as if it has never been entered into and cannot be 64 validated either by the passage of time or by ratification. against Carlito for Recovery of Possession and Damages with Preliminary Mandatory Injunction (Possession Case) involving the same fishpond subject of the earlier agrarian case. herein respondents filed the second case. or at least adopted. Alleging that he was an agricultural lessee. in this case. and that. states that no action can be maintained by the winner for the collection of what he has won in a game of chance. to surrender the possession of a fishpond he leased from respondents’ mother. when such is not relevant since the instant case involves liability of the presumed principal in implied agency to a third party HELD: NO. There can be no apparent authority of an agent without acts or conduct on the part of the principal and such acts or conduct of the principal must have been known and relied upon in good faith and as a result of the exercise of reasonable prudence by a third person as claimant. the father of herein petitioners. PAGCOR. Ratio: An agency by estoppel. - - CAMPOS AND CAMPOS-BAUTISTA VS. in turn. and such must have produced a change of 63 position to its detriment. the acts of the agent. V-5417. Article 1409 of the . The Court of Appeals correctly used the intent of the contracting parties in determining whether an agency by estoppel existed in this case. Similarly.Issue # 2 Whether the CA erred in using intent of the contracting parties as the test for creation of agency.PAGCOR has the sole and exclusive authority to operate a gambling activity." RE: VALIDITY OF AGREEMENT: . In the entire duration that petitioner played in Casino Filipino. Salvacion Buenvenida. The Junket Agreement is in direct violation of PAGCOR’s charter and is therefore void. Carlito filed an agrarian case docketed as CAR Case No. PASTRANA The first case arose from the refusal of Carlito Campos (Carlito). Hence. he was dealing only with ABS Corporation. such as gambling contracts. PAGCOR is not allowed under the same charter to relinquish or share its franchise. Civil Case No. gambling between the junket player and the junket operator under such agreement is illegal and may 42 not be enforced by the courts. which is similar to the doctrine of apparent authority requires proof of reliance upon the representations. Petitioner cannot be considered as an innocent third party and he cannot claim entitlement to equitable relief as well Civil Code provides that contracts expressly prohibited or declared void by law. despite the expiration of their contract of lease in 1980. Article 2014 of the Civil Code. by taking only a percentage of the earnings of ABS Corporation from its foreign currency collection. 1196 (Agrarian Case) against his lessor. needs proof that the representations predated the action taken in reliance. "cannot be ratified. The facts that he enjoyed special treatment upon his arrival in Manila and special accommodations in Grand Boulevard Hotel. allowed ABS Corporation to operate gaming tables in the dollar pit. ABS Corporation Held: NO. While PAGCOR is allowed under its charter to enter into operator’s or management contracts. that the Junket Agreement is void. Since the Junket Agreement violates PAGCOR’s charter. Issue#3 Whether the CA erred in failing to consider that PAGCOR ratified.

Cavite. 182057 and 18417. P-9199 and P-9200.8respectively and 2. considering that the questioned conveyances executed by the spouses Campos to their children were allegedly done to evade the enforcement of the writ of execution in the Possession Case. Agricultural Lots 850 and 852 covered by Original Certificates of Title Nos. were able to accumulate several parcels of real property. 1967. the same were registered with the Registry of Deeds only on October 25. the Deeds of Absolute Sale were executed for the purpose of putting the lots in question beyond the reach of creditors CLANOR VS. This conclusion is bolstered by the fact that the supposed notary public before whom the deeds of sale were acknowledged had no valid notarial commission at the time of the notarization of said documents. to their son Jesus for P5. Residential Lots 3715-A and 3715-B-2 covered by Transfer Certificates of Title Nos.393 square meters.600.During the pendency of the Agrarian Case. to their daughter Rosemarie for P7. 198511 and November 2. by virtue of Deeds of Absolute Sale dated October 18. 1990 and September 25. spouses Campos sold the residential lots (Lots 3715-A and 3715-B-2). On February 18.23 Respondents’ arguments 9 10 Respondents argue that the application of Article 1409 on void contracts was a natural and logical consequence of the CA’s finding that subject deeds of sale were absolutely simulated and fictitious.12Specifically. the private respondent Hugo Portugal. 1988.972 square meters. V-7028 (Nullity of Sale Case) Petitioners assail the application of Article 140920 of the Civil Code on void contracts as against Article 1381(3)21 of the Civil Code on rescissible contracts in fraud of creditors. the certificates of title to the above-mentioned parcels of land on the pretext that he had to use them in securing a loan that he . with a total area of 1. While the sales in question transpired on October 18. consistent with the nature of the respondents’ cause of action which was for declaration of nullity of said contracts and the transfer certificates of titles issued pursuant thereto. 1988. borrowed from his mother.00 and the agricultural lots (Lots 850 and 852) with a combined area of 7. Cavite. Trias. We also agree with the findings of the CA that petitioners failed to explain the reasons for the delay in the registration of the sale.24 Respondents also stressed that the CA’s finding is conclusive upon us and that only questions of law may be raised in a petition for review on certiorari under Rule 45 of the Rules of Court. during the lifetime of the latter. as well as prior to the filing of the Possession Case. Gen.25 The subject Deeds of Absolute Sale executed by the Spouses Campos to their children (herein petitioners) are absolutely simulated and fictitious.22 In addition. respectively. When the respondents were about to levy these properties to satisfy the judgment in the Possession Case. they discovered that spouses Carlito and Margarita Campos transferred these lots to their children Rosemarie and Jesus Campos. IAC Petitioner Cornelia Clanor and her late husband Pascual Portugal. evidently to avoid the properties subject thereof from being attached or levied upon by the respondents. Carlito was the registered owner of the following properties: 1. 1985 and November 2. Sometime in January. an agricultural land located at Pasong Kawayan. Cornelia. a son of the spouses. respondents instituted the third case. leading the appellate court to conclude that the conveyances were made only in 1990 or sometime just before their actual registration and that the corresponding Deeds of Absolute Sale were antedated. 1990. Trias. The CA correctly held that the assailed Deeds of Absolute Sale were executed when the Possession Case was already pending. Civil Case No. Gen. 1997. herein petitioners.26 Indeed.00. petitioners allege that the CA misappreciated the facts of this case when it found that the questioned transactions were tainted with badges of fraud. as reflected on the Deeds of Absolute Sale. Among these were a parcel of residential land situated in Poblacion.000.

making spouses file a complaint against petitioner. one of the taxicabs.00 and P7. This falsification was triggered by a deed of sale by which the spouses Pascual Portugal and Cornelia Clanor purportedly sold for P8. Hugo and Emiliano. wished to have all the properties of the spouses collated. (Cornelia herself died on November 12. The matter was never again brought up until after Pascual Portugal died on November 17.T. showed to them the controversial deed. the alleged contract of sale is vitiated by the total absence of a valid cause or consideration. through its representative Manuel Concordia. and which new T. assert that they. Since they had no franchise to operate taxicabs.000. no consideration was ever paid at all by the private respondent. however. In the decision. and 1409 of the new Civil Code in relation to the indispensable requisite of a valid cause or consideration in any contract. 000. Criminal case was filed against Emeterio Martin. 000. Cornelia. Hugo. And to show his good faith. cancelled the two previous ones. and this is not contradicted by the decisions of the courts below. IAC Facts: Spouses Nicasio Ocampo and Francisca Garcia (private respondents) purchased in installment from the Delta Motor Sales Corporation five (5) Toyota Corona Standard cars to be used as taxi. When further questioned. Florante Galvez died from the injuries it sustained. A writ of execution for the decision followed. to institute an action for the annulment of the controversial deed of sale and the reconveyance of the title over Lot. driven by their employee. In the decision of the lower court Lita Enterprises was held liable for damages for the amount of P25. his brother Emiliano Portugal. the petitioners herein. Held: “Kabit system” is defined as. for the purposes of executing an extra-judicial partition of Pascual's estate. while a civil case was filed by the heir of the victim against Lita Enterprises. LITA ENTERPRISES VS. respondent Ocampo decided to register his taxicabs in his own name. Hugo showed the petitioners Transfer Certificate of Title T. 000.00 the two parcels of land adverted to earlier to their two sons.was negotiating.00 and a monthly rental of P200.C. Inc. Lita Enterprise was ordered to return the three certificate of registration not levied in the prior case. Hugo manifested that the said titles no longer exist. Petitioner now prays that private respondent be held liable to pay the amount they have given to the heir of Galvez. for the use of the latter’s certificate of public convenience for a consideration of P1. Issue: Whether or not petitioner can recover from private respondent. A year later. we rule that the disputed deed of sale is void ab initio or inexistent. never knew of the existence of the questioned deed of sale. Confronted by his mother of this fraud. remains with spouses Ocampo and Garcia who operated and maintained the same under Acme Taxi. Inc. And their claim was immeasurably bolstered when the private respondent's co-defendant below. knowing they are in an arrangement known as “kabit system”. his mother and his other brothers and sisters. petitioner’s trade name. 1987. 23539 registered in his and his brother Emiliano Portugal's names. For the agreement to take effect. The manager of petitioner refused to give him the registration papers.00 for attorney’s fees. Emiliano denied any participation. Cornelia asked the private respondent for the return of the two titles she previously loaned. on the other hand. refused to make the necessary restitution thus compelling the petitioners. The petitioners in their complaint. And it is provided in Article 1410 of the Civil Code. the inevitable implication of the allegations is that contrary to the recitals found in the assailed deed. Emeterio Martin. assented and delivered the titles to her son. No. not merely voidable. RT-9356 and which was conveyed to him in the void deed of sale.. upon their repeated entreaties to produce and return the owner's duplicate copy of the transfer certificate of title covering the two parcels of land. 1974. who was allegedly his co-vendee in the transaction. particularly Cornelia.) When the other heirs of the deceased Pascual Portugal. If this is so. when a person who has been granted a certificate of convenience allows another person who owns . 1352. The possession. they contracted with petitioner Lita Enterprise. Emiliano caused the reconveyance of Lot No. 2 of the cars of the respondent’s spouses were levied and were sold to a public auction.00/taxicab unit.T. 2337 previously covered by TCT No. On March 1973.C. the loving and helpful mother that she was. that '(T)he action or defense for the declaration of the inexistence of a contract does not prescribe. disclaimed any knowledge or participation therein. collided with a motorcycle. They claim that they came to know of the supposed sale only after the private respondent. and what constitutes a void or inexistent contract. the cars were registered in the name of Lita Enterprises. Thus. Applying the provisions of Articles 1350. Unfortunately the driver of the motorcycle.

Klaus threatened to file a bigamy case against Ederlina. return to the Philippines. He also proposed that they meet in Manila. married. Alfred joined her. Alfred bought several properties in the Philippines for Ederlina’s business and for the couple’s residence using his own funds but since Alfred knew that as an alien he was disqualified from owning lands in the Philippines. This system is not penalized as a criminal offense but is recognized as one that is against public policy.a motor vehicle to operate under such franchise for a fee. Alfred proposed marriage to Ederlina. Alfred reiterated his proposal for Ederlina to stay in the Philippines and engage in business. is on the part of both contracting parties. and married Teresita Santos. but she replied that they should wait a little bit longer. she resided for a time in Germany and was married to Klaus Muller. “the proposition is universal that no action arises. he agreed that only Ederlina's name would appear in the deed of sale as the buyer of the property. Within two weeks of Ederlina's arrival in Manila. indeed. Worse. The latter could charge her for . no suit can be maintained for its specific performance. or damages for its violation. therefore no affirmative relief can be granted to them. In 1981. CATITO FACTS: Petitioner Alfred Fritz Frenzel is an Australian citizen of German descent. Klaus informed Alfred that he and Ederlina had been married on October 16. When Alfred confronted Ederlina. Unknown to Alfred. for a massage where he met EderlinaCatito. When Ederlina opened her own account with HSBC Kowloon. EDERLINA P. where she found employment as a masseuse in the King's Cross nightclub. Ederlina had not been able to secure a divorce from Klaus. a night spot in Sydney.” The parties in this case are in pari delicto. Alfred transferred his with the said bank to this new account. from an illegal contract. On different occasions. the following rules shall be observed: “when the fault. neither may recover what he has given by virtue of the contract. He worked as a pilot with the New Guinea Airlines. but will leave them both where it finds them. Alfred also sold his properties in Australia and the proceeds of the sale were deposited in Alfred's account with the Hong Kong Shanghai Banking Corporation (HSBC). Alfred told Ederlina that he was married but that he was eager to divorce his wife in Australia. or demand the performance of the other’s undertaking. as well as in the title covering the same. Kowloon Branch. she admitted that she and Klaus were. a Filipino citizen. Upon this premise. or to recover the property agreed to sold or delivered. Alfred received a Letter from Klaus Muller. therefore it is void and inexistent. Sometime in February 1983. Alfred and Teresita separated from bed and board without obtaining a divorce. Australia for a vacation. Alfred and Ederlina's relationship started deteriorating. He arrived in the Philippines in 1974. ALFRED FRITZ FRENZEL vs. to which she assented. 1978 and had a blissful married life until Alfred intruded therein. a Filipina. even offering to finance her business venture. Alfred was so enamored with Ederlina that he persuaded her to stop working at King's Cross. She left Germany and tried her luck in Sydney. or damages for its property agreed to be sold or delivered. He went to King's Cross. Specifically Article 1412 states that: “If the act in which the unlawful or forbidden cause consists does not constitute a criminal offense. it was flagrant error on the part of both trial and appellate courts to have accorded the parties relief from their predicament. Klaus stated that he knew of Alfred and Ederlina's amorous relationship and begged Alfred to leave Ederlina alone and to return her to him. a German national. It is fundamental that the court will not aid either of the party to enforce an illegal contract. Alfred decided to stay in the Philippines for good and live with Ederlina.” The principle of in pari delicto is evident in this case. and engage in a wholesome business of her own. Australia. started engaging in business in the country two years thereafter. Alfred was appeased. But she assured Alfred that she would divorce Klaus. He agreed to continue the amorous relationship and wait for the outcome of Ederlina's petition for divorce. Klaus wanted half of all the properties owned by Ederlina in the Philippines before he would agree to a divorce. Ederlina's petition for divorce was denied twice because Klaus opposed the same. Alfred arrived in Sydney. in equity or at law.

as Lord Mansfield stated in the early case of Holman vs. Thus. contrary to the real justice. Alfred filed a Complaint against Ederlina. to her own account with the same bank. or any other means. after due proceedings in the RTC of Davao City. shall return the same to him. with the RTC of Quezon City for recovery of real and personal properties. but it is founded in general principles of policy. the petition at bar. Using the said funds. as between him and the plaintiff. In the meantime. The transactions are void ab initio because they were entered into in violation of the Constitution. he acquired solely through his own efforts and resources real and personal properties in the Philippines valued more or less at P724.000. he had no cause of action against Ederlina for the recovery of the same because as an alien. Shortly thereafter. and damages. managed to transfer funds from their joint account in HSBC Hong Kong. The provision applies only to those contracts which are merely prohibited. the action is proscribed by the Constitution or by the application of the pari delicto doctrine. Ederlina complained that he had ruined her life. the trial court ruled in favor of Erlinda. to allow the petitioner to recover the properties or the money used in the purchase of the parcels of land would be subversive of public policy. 2. In his complaint. He alleged that during the period of their common-law relationship. This provision does not apply if. The sale of the three parcels of land to the petitioner was null and void ab initio. Can petitioner is entitled to recover the property under Article 1416 of the Civil Code? ." ISSUES: 1.00 The RTC of Quezon City ruled in favor of Alfred. Alfred also filed a complaint against Ederlina with the RTC of Davao City for specific performance. however. Alfred alleged that Ederlina. It may be unfair and unjust to bar the petitioner from filing an accion in rem verso over the subject properties. The trial court ruled that based on documentary evidence. that the objection is ever allowed. It is not for his sake. he may. The CA rendered a decision affirming in toto the decision of the RTC Hence. Alfred decided to live separately from Ederlina and cut off all contacts with her. the petitioner was precluded from recovering the properties from the respondent. Ederlina failed to file her answer and was declared in default. An action for recovery of what has been paid without just cause has been designated as an accion in rem verso. or from recovering the money he paid for the said properties. sounds at all times very ill in the mouth of the defendant. It does not apply to contracts void ab initio. The sale of three parcels of land in favor of the petitioner who is a foreigner is illegal per se.bigamy and could even involve Alfred. declaration of ownership of real and personal properties. Ederlina was able to purchase the properties subject of the complaints. who himself was still married. NO. acquires or comes into possession of something at the expense of the latter without just or legal ground. However. without his knowledge and consent. he was disqualified from acquiring and owning lands in the Philippines. To avoid complications. Under Article 1416 of the Civil Code: When the agreement is not illegal per se but is merely prohibited. Johnson: "The objection that a contract is immoral or illegal as between the plaintiff and the defendant. Applying the pari delicto doctrine. recover what he has paid or delivered. as in this case. The court further stated that even if Alfred was the buyer of the properties. and the prohibition by the law is designed for the protection of the plaintiff. NO. but. The provision is expressed in the maxim: "MEMO CUM ALTERIUS DETER DETREMENTO PROTEST" (No person should unjustly enrich himself at the expense of another). sum of money. in order to benefit private interests. Whether petitioner is entitled to recovery under Article 22 of the Civil Code? HELD: 1. which the defendant has the advantage of. Article 22 of the Civil Code provides: Every person who through an act of performance by another. 2. if public policy is thereby enhanced. the purchaser of the three parcels of land subject of the complaint was Ederlina.

T-68737. [respondent] took possession of the properties. recovery of possession of real property. failed to pay the first yearly installment. On April 10. prompting [respondent] to consolidate its ownership over the properties. [petitioners] gave [respondent] the sum of P250. 1976. 12389 was cancelled and a new one. COURT OF APPEALS Respondents.229 – sq. we must discern whether the concealed or hidden act is lawful and the essential requisites of a valid contract are present. the mother of Joselito Villegas. GEORGE JOSELITO VILLEGAS v. it is obvious that the sugar crop loans were relatively simulated contracts and that both parties QUEENSLAND-TOKYO COMMODITIES VS. The loan was secured by a real estate mortgage on [petitioners’] residential house and 5. the Office of the Register of Deeds of Isabela was burned together with all titles in the office. [Petitioners].16. however. Thirteen days after.[8] To determine the enforceability of the actual agreement between the parties. being the highest bidder. At the foreclosure sale.m. Accordingly. TOBACCO Petitioners.312. obtained an agricultural loan of P350.[7] The ostensible act is the contract that the parties pretend to have executed while the hidden act is the true agreement between the parties. Thereafter. the original of TCT No. Petitioners thus and and DOMINGA FORTUNE VILLEGAS. Dumaguete City and covered by TCT No.Failure of the parties to describe the subject property does not render the contract void. Facts: Ciciarco D.72. [respondent]. The agreement reads in part intended to be bound thereby. i. 1989. entered into an agreement denominated as ―Promise to Sell. accounting and damages and. the agreement is void and inexistent under Article 1409[11] of the Civil Code. lot situated in Barrio Bantayan. There are two juridical acts involved in relative simulation— the ostensible act and the hidden act. the Sheriff executed in favor of [respondent] a certificate of sale. Given the factual antecedents of this case. [respondent] and [petitioner] Joaquin Villegas.[10] Consequently. the mortgage was extrajudicially foreclosed. TCT No. payable within a period of five (5) years. Inc. After trial on the merits.] Marilen Victoriano. [respondent] averred that [petitioners] have absolutely no cause of action against it. defendant in the case. 12389. declaring it to be entitled to the property. However. Thereafter. Later. Although these loan and mortgage contracts were concealed and made to appear as sugar crop loans to make them fall within the purview of the Rural Banks Act. the juridical act which binds the parties are the loan and mortgage contracts. through his attorney-in-fact[. in the alternative. the trial court rendered its assailed decision in favor of Fortune Tobacco. 14) was issued in *respondent’s+ name on November 8. CORPORATION. T91864 was administratively reconstituted by the Register of Deeds. (Exh.000. intended to circumvent the Rural Banks Act requirement in the procurement of loans.00 as down payment.00 from [respondent] Rural Bank of Tanjay. Andres and Henson Caigas had four (4) hectares of land registered under their names. TCT No.596. which was subsequently registered with the Registry of Deeds of Dumaguete City. [petitioners]. [Petitioners] failed to redeem the properties within the one-year redemption period. 1982. 1991. they executed a Deed of Reconveyance of the same lot in favor of Filomena Domingo. purchased the foreclosed properties for P367. all the essential requisites of a contract[9] were present. In this case.e. Upon the signing of the agreement. . and that the complaint was filed only to force it to allow [petitioners] to reacquire the foreclosed properties under conditions unilaterally favorable to them. In May. petitioners’ procurement of a loan from respondent.. 1990. the action by [petitioners for declaration of nullity of loan and mortgage contracts. repurchase of real estate] commenced on January 15. Hence. the purpose thereof is illicit. 1987. RURAL BANK Sometime in June. while the parties intended to be bound thereby. They sold the land to Fortune Tobacco Corporation and both executed a joint affidavit declaring that they had no tenants on said lot. In resisting the complaint. spouses Joaquin and Emma Villegas.‖ whereby [respondent] promised to sell to [petitioners] the foreclosed properties for a total price of P713. the trial court upon a petition filed by Fortune ordered the reconstitution of the original of TCT No. reformation is the remedy JOAQUIN VILLEGAS VS. On December 4. For failure of [petitioners] to pay the loan upon maturity.000. 19042.

Fortunes suit for recovery of possession and damages was instituted only on May 29. It also alleges that petitioners admitted the validity of Fortunes title. In the case at bar. It was held however. SEC. (3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right on which he bases his suit. and that petitioners continuous possession of the property cannot defeat said title. or one under whom he claims. As to the fourth element of laches. having proceeded from its so-called reconstitution. There is nothing in the record which shows that petitioners had any inkling of Fortunes intent to possess the subject property. that the Court is clothed with ample authority to review matters. Invoking the prior title rule. Isabela. Petitioners also allege that Andres and Caigas were not the owners of the property at the time it was sold to Fortune. fifteen years after the registration of Filomena Domingos title to the property in 1976. They allege that Fortune should have investigated if the property had any occupants. which is presently in the hands of petitioners. Issues: a) Who among of the parties is entitled to the property based from the validity of their respective titles? b) Has laches set in against private respondent Fortune Tobacco Corporation? Held: It is petitioners contention that Fortune was a buyer in bad faith. Reconstitution of lost or destroyed original of Torrens title. even if they are not assigned as errors in the appeal.e. 110. only the Assistant Commissioner signed it and not the CIR). COMMISIONER CORPORATION OF INTERNAL REVENUE VS. and (4) injury or prejudice to the defendant in the event relief is accorded to the complainant. (c) the fact of receipt by the taxpayer was not indicated in the original copy. with a modification on the award of damages and attorneys fees. (b) the date of acceptance was not indicated. Lastly. 26 insofar as not inconsistent with this Decree. issued by the Regional Trial Court in Cauayan. as the certificate of title in its name was issued before issuance of another title to petitioners predecessor-in-interest. The elements of laches are: (1) conduct on the part of the defendant. having had knowledge or notice of the defendants conduct and having ISSUE: Has the CIR’s right to assess prescribed? HELD: . Fortune claims that petitioners title is spurious.. 1529 provides: been afforded an opportunity to institute a suit. Filomena Domingo. The second element of delay is also present in this case. there is no question on the presence of the first element. If it had done so. if it finds that their consideration is necessary in arriving at a just decision of the case. it would have found petitioners and their predecessors-in-interest in possession thereof. In the case at bar. petitioners claim that Fortunes title is fake and spurious. KUDOS METAL FACTS: CIR assessed Kudos Metal Corporation for taxable year 1998. 1991. which affirmed the trial courts decision. as then petitioners would be deprived of the property on which their households stand. The Decision is granted.appealed this decision to the Court of Appeals. or not held barred. 1991. it goes without saying that petitioners will be prejudiced if Fortunes complaint is accorded relief. The object of Fortunes complaint before the trial court was to recover possession of the property in question. Fortunes title was judicially reconstituted by virtue of an order dated April 10. giving rise to the situation that led to the complaint and for which the complaint seeks a remedy. The CTA issued a Resolution canceling the assessment notices issued against Petitioner for having been issued beyond the prescriptive period as the waiver purportedly failed to (a) have the valid officer execute the same (i. Fortune declares that it is the lawful owner of the property. Original copies of certificates of title lost or destroyed in the offices of Register of Deeds as well as liens and encumbrances affecting the lands covered by such titles shall be reconstituted judicially in accordance with the procedure described in Republic Act No. petitioners invoke the doctrine of laches against Fortunes bid to recover the property. (2) delay in asserting the complainants rights. The third element of laches also present in this case. or the suit is not held barred. Fortune also asserts that it bought the property in good faith. Throughout their pleadings. A Waiver of the Statute of Limitations was executed on December 2001. Section 110 of Presidential Decree No.

to date. when the delays were due to taxpayer’s acts) does not apply. the petitioners did not. and 17 are. 1. Thus. or equitable estoppel. act of tolerance does not constitute approval. Specifically. The requirements for a valid waiver as laid down in RMO 20-90 and RDAO No.000. the flaws in the waiver executed by Kudos Metal were as follows: (a) there was no notarized written authority in favor of the signatory for the company. induces another to believe certain facts to exist and the other rightfully relies and acts on such beliefs so that he will be prejudiced if the former is permitted to deny the existence of such facts. arises when one. remain Neither can it be said that by merely executing the waiver the taxpayer is already estopped from disputing an action by the CIR beyond the statutory 3-year period since the exception under the Suyoc case (i. representations or admissions or by his silence when he ought to speak out. (b) there is no stated date of acceptance by the Commissioner or his representative. plans and works is explicit in Article 1724 of the Civil Code and is deemed written in the contract between the parties. 1.[50] The contract also expressly provides that a mere . and 17.YES. SPOUSES CHUNG VS. acts of tolerance on the petitioners’ part that could not modify the contract. 16.. 16. the petitioners are still liable for the P130. but it should not supplant positive law. 1. and 17 and their non-objection to the other change orders effected by the respondent cannot give rise to estoppel in pais that would render the petitioners liable for the payment of all change orders. do away with the contractual term on change orders nor with the application of Article 1724.[49] In this case. ULANDAY CONSTRUCTION The petitioners’ payment of Change Order Nos.[48] The real office of the equitable norm of estoppel is limited to supplying deficiency in the law. intentionally or through culpable negligence. 16. 16 and 17 that. The payments for Change Order Nos. 5-01 are mandatory to give effect to Section 222 of the Tax Code. and (c) the fact of the receipt of the copy was not indicated in the original waivers. by his acts. Estoppel in pais.e. Consistent with this ruling.00 balance on Change Order Nos. by accepting and paying for Change Order Nos. the requirement for the petitioners’ written consent to any change or alteration in the specifications. at best.

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